Coverage: Q2 2026 · Information to 25 September 2026
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Published: 25 September 2026 | Region: Middle East & North Africa | Country: Egypt | Coverage: Q2 2026 (April–June 2026) | Classification: Premium Intelligence
Desk view — Egypt, Q2 2026
- Policy is on hold at a high real rate. The Central Bank of Egypt (CBE) cut by 100 bp on 12 February 2026 and has held at five meetings since, most recently on 24 September, keeping the overnight deposit rate at 19.00% against urban inflation of 14.3% in June.
- Balance sheets grew fast. Sector assets reached EGP 27.66 trillion at end-June 2026, up 15.1% year on year, and customer loans rose 25.0%.
- Profits surged. The sector earned EGP 373.1 billion in H1 2026 (unaudited), up 35.7%, and the five largest banks took 70.1% of it.
- Soundness ratios improved. The NPL ratio fell to 1.8% and the capital adequacy ratio rose to 19.4% from 18.5% at end-March (CET1 14.7%), although provision coverage slipped to 87.6%.
- The risks are sovereign concentration and geopolitics. Securities and treasury bills made up 29.4% of bank assets at end-June 2026, and on 28 August the US proposed cutting Banque Misr’s UAE branches off from US correspondent banking.
Executive summary
Egypt’s banks came through the second quarter of 2026, the last quarter of the state’s July–June fiscal year 2025/26, with higher profits and lower NPL ratios despite the regional conflict. The conflict that broke out in the region in late February drove about US$9.5 billion of portfolio outflows in the first quarter and a sharp fall in the pound. The second quarter brought a partial recovery. The pound appreciated by about 10%, from EGP 54.6 to EGP 49.2 per dollar between end-March and end-June, net international reserves rose to US$55.1 billion, and real GDP growth slowed only slightly, to 4.7% from 5.0% in the first quarter.
The CBE paused its easing cycle on 2 April, after a 100 basis-point cut and a reserve-requirement reduction in February, citing the energy shock and exchange-rate volatility caused by the regional conflict; urban inflation reached 15.2% in March. Inflation eased to 14.3% in June, rose to 14.9% in July on base effects and slowed to 14.5% in August, so real policy rates remain positive by more than four percentage points.
For the banks, the result was rapid balance-sheet growth and sharply higher earnings. First-half net profit reached EGP 373.1 billion, the NPL ratio fell to 1.8% and the capital adequacy ratio recovered to 19.4% from 18.5% at end-March. The weak points are structural: heavy exposure to the sovereign, dominance by two state-owned banks, and geopolitical risk, which reached Banque Misr’s UAE branches directly in late August.