The nation’s banks wrapped a blockbuster 2025 by outmaneuvering the Central Bank of Egypt’s (CBE) monetary easing cycle, transforming what could have been a margin squeeze into a windfall. Banks acted swiftly to lower interest rates on deposits and new certificates, cutting expenses. That, combined with the slower pace of rate cuts, allowed banks to sustain high net interest margins (NIMs) throughout 2025 even as interest rates trended downward, industry insiders tell us.

The “spread” strategy: Throughout 2025, the CBE slashed rates by a total of 725 basis points, bringing the overnight deposit rate to 20.00%. Banks acted offensively rather than waiting for cuts:

  • Cost-cutting: Lenders moved immediately to lower rates on new certificates and deposits;
  • Yield locking: At the same time, their balance sheets remained packed with high-yield bonds and loans secured during the 2024 interest rate peak;
  • The result? This “timing gap” allowed banks to maintain outsized NIMs even as the headline rates trended downward.

By swiftly slashing deposit rates while riding high-yield legacy portfolios, banks saw consolidated net income increase to EGP 433.8 bn in the first nine months of 2025 — a massive jump from the EGP 274.9 bn that banks had accumulated at the half-year mark, according to a CBE report. Net operating income in the sector surpassed the EGP 1 tn mark in the nine months ending 30 September, up from EGP 661.1 bn as at the end of June. Net interest income (NII) reached EGP 766.8 bn in 9M 2025, up from EGP 503.6 bn in 6M 2025, highlighting the sector’s ability to leverage current rate levels to maximize returns. Total banking sector assets rose to EGP 25.37 tn, with the total deposit portfolio reaching approximately EGP 15.32 tn at the end of September.

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Why it matters: The record results likely represent the “top of the curve,” economist Hany Abou El Fotouh tells us, with the real test beginning in 2026 as EGP 1.3 tn worth of 27% certificates mature. The “certificate wars” of the past are being replaced by “cheap liquidity wars,” where the winners will be those who can attract low-cost current and savings accounts (CASA) through digital services rather than with expensive interest rates. Banks might be willing to slightly reduce their income to secure and maintain this liquidity, former Industrial Development Bank Chairman Maged Fahmy tells us.

Banks can no longer rely on “easy income” from the differential between what they pay depositors and the income they generate from parking funds in government paper. We’re witnessing the end of “easy arbitrage,” Abou El Fotouh tells us. For years, banks could thrive as mere “deposit collectors,” parking liquidity in high-yield Treasuries. In 2026, that game is over.

Where will the banks try to make up the difference? Interest rates are still at a level that prevents real corporate borrowing for capital expenditure (though that’s expected to improve as the year wears on).

What to watch in 2026:

  • Companies get more love: With surplus liquidity and lower funding costs, expect a “pricing war” as banks compete to capture high-quality corporate clients;
  • Diversification: Banks will be pushing to drive revenue from more classical investment banking arms as well as non-bank financial services (consumer finance and ins., among others);
  • Fees and commissions will likely rise for everything under the sun;
  • Keep an eye on the rise of green bonds and retail lending — personal loans and credit cards — as banks hunt for higher-margin alternatives to government paper.
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