Egyptian banks maintained strong financial positions at the end of 2025, supported by solid capital buffers, high liquidity, and robust profitability, according to the Central Bank of Egypt (CBE).
The CBE’s Financial Soundness Indicators showed that the sector’s capital adequacy ratio rose to 19.6 percent by the end of the fourth quarter of 2025, well above the minimum regulatory requirement of 12.5 percent, reflecting banks’ capacity to absorb potential losses and support the economy.
Asset quality also improved, with non-performing loans (NPLs), defined as loans overdue by more than 90 days, declining to 1.9 percent of total loans. Loan-loss coverage for NPLs reached 90.2 percent.
Liquidity levels remained high and stable, with local-currency liquidity at 40.3 percent and foreign-currency liquidity at 79.5 percent, significantly exceeding the minimum requirements of 20 percent and 25 percent, respectively. The loan-to-deposit ratio stood at 66.4 percent at the end of the fourth quarter.
Profitability indicators were also strong, with return on equity reaching 39 percent by the end of fiscal year 2024.
International assessments echoed this resilience. Fitch Ratings said earlier this month that Egyptian banks have so far withstood the economic impact of ongoing regional tensions, supported by strong profitability, solid capital buffers, and improved foreign-currency liquidity.
Under its baseline scenario — which assumes the regional conflict remains short-lived and oil prices average around $70 per barrel in 2026 — Fitch expects the sector’s financial profile to remain stable.
However, risks persist, particularly from Egypt’s reliance on energy imports, pressures on the Egyptian pound, fluctuations in remittance inflows, and the fiscal burden of energy subsidies.
Since the escalation of regional tensions at the end of February, foreign investors have withdrawn more than $6 billion from Egypt’s local-currency treasury bills, adding pressure on the exchange rate.
Looking ahead, Fitch expects the banking sector to remain broadly resilient, with return on equity likely to stay above 20 percent. However, it warned that a prolonged regional conflict or a sustained rise in oil prices could weigh heavily on Egypt’s economic outlook.
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