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S&P Global Ratings projected in a February 2026 report that Egypt’s real GDP growth would accelerate to 4.8 percent in fiscal 2026 after rebounding to 4.4 percent the previous year. The ratings agency attributed the expansion mainly to higher private sector investment and continued strength in tourism. It anticipated that the Central Bank of Egypt would loosen monetary policy further with the policy rate falling to around 18 percent by the end of June 2026 as inflation declines to an average 12.1 percent from 20.1 percent in 2025. These developments are expected to underpin banking sector lending growth of approximately 25 percent during the year.
According to the S&P assessment, robust loan expansion will not fully offset the pressure from declining interest rates on net interest margins. The sector’s return on equity is therefore forecast to ease to about 20 percent in 2026 from an estimated 25 percent in 2025 after peaking at 39 percent in 2024. Government and public sector entities will continue to account for a substantial share of lending growth given their ongoing financing requirements while private sector demand also rises. The report noted that a large and growing deposit base will fund this expansion with deposits projected to increase at a similar rate.
S&P Global Ratings expects the nonperforming loans ratio to stabilize over the next 12 to 18 months thanks to better financing conditions, economic recovery and lower inflation that should improve borrowers’ repayment capacity. The ratio stood at 2.0 percent as of September 2025, down from 2.9 percent at the end of 2023, the report said. Subsequent Central Bank of Egypt figures and CEIC Data placed the ratio at 1.9 percent by December 2025. The agency cautioned that delays in structural reforms or spillover from regional geopolitical tensions could affect asset quality although it considers such risks limited given the government’s commitment to the IMF program.
Egyptian banks’ external position stabilized following strong portfolio inflows in 2024 with a net asset position of roughly 11.9 billion dollars at the end of November 2025, equivalent to nearly 2 percent of total assets, according to S&P. Most of this external debt consists of long-term bilateral exposures that limit refinancing risk during periods of market volatility. Household deposits, which represent around 74 percent of private sector deposits, are seen supporting further liquidity strength as dollarization eases alongside a more stable Egyptian pound. Central Bank of Egypt data showed net international reserves reaching 52.8 billion dollars by the end of March 2026.
In an April 2026 sovereign rating review S&P Global Ratings affirmed Egypt’s ‘B/B’ rating with a stable outlook but revised its growth forecast for fiscal 2026-27 to 4.3 percent citing renewed geopolitical risks. The International Monetary Fund projected real GDP growth of 4.2 percent for 2026 with consumer prices rising 13.2 percent while the World Bank anticipated average expansion of around 4.6 percent across fiscal 2025-26 and 2026-27. These projections provide broader context for the banking sector outlook issued two months earlier. Egypt’s top five listed banks recorded a combined market capitalization of 14.4 billion dollars during 2026 with Commercial International Bank comprising about two-thirds of the total according to Forbes Middle East.
The October 2025 decision by S&P to raise ratings on three major Egyptian banks reflected lower economic risk and an improved anchor of ‘b+’ for the sector. Liquidity is anticipated to remain one of the system’s core strengths even as lending accelerates. Progress on fiscal consolidation and business environment reforms will play a key role in sustaining the positive momentum for banks over the medium term.
