The country’s financial stability index rose to 0.48 in 1Q 2025 from 0.38 a year earlier, supported by a stronger banking sector, more resilient capital markets, and an improved global economic environment, according to the Central Bank of Egypt’s latest financial stability report (pdf).

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CBE unveils its macroprudential policy framework for the first time: The report also introduced the bank’s new macroprudential policy framework — a first for Egypt — aimed at preserving financial stability, raising awareness among consumers and financial institutions, and strengthening policy coordination across agencies.

FX liquidity improves as inflows pick up: The banking system maintained access to FX liquidity during the quarter thanks to higher non-oil exports, remittances, tourism revenues, and long-term foreign investments, according to the report. These inflows helped reduce systemic risk linked to sudden foreign capital outflows.

Lending increases, led by six key sectors: Total credit facilities extended to the top 100 corporate clients rose 27.7% y-o-y to EGP 1.4 tn as of end-March, with six industries accounting for 74% of total lending — non-bank financial services, real estate, construction, steel, oil and gas, petrochemicals, and telecoms. Meanwhile, total customer loans climbed to EGP 9.1 tn by March, with local currency lending making up the lion’s share.

Banking sector gains ease slightly: Net banking income fell 2.2% y-o-y in 1Q 2025 amid rising operating costs and higher deposit expenses, according to the report. Banking sector assets rose to EGP 22.7 tn at the end of March 2025 from EGP 20.4 tn in June 2024.

Corporate borrowers dominate loan portfolios: Institutional borrowers accounted for 81.6% of total loans in March, up from 78.7% a year earlier. Meanwhile, SME lending slipped to 5.6% of the total, and consumer loans edged down to 12.8%.

Banking sector investment in government debt instruments accounted for 28.4% of total assets, 0.2 percentage points above March 2024 levels.

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