Egypt’s Islamic Banking Surges by 27% in 2023, Hits EGP 562 Billion

In a significant leap for the financial sector, Islamic banking in Egypt recorded a robust growth, with the Egyptian Islamic Finance Association (EIFA) reporting an increase in business volume to EGP 562 billion as of September 2023. This remarkable growth, accounting for 5% of the entire Egyptian banking market, represents a 27% rise or an EGP 120 billion increase from the previous year.

The EIFA’s detailed report highlights that 14 Egyptian banks are now licensed by the Central Bank of Egypt (CBE) to offer Islamic banking products. Notably, this includes three wholly Islamic banks: Faisal Islamic Bank of Egypt, Al Baraka Bank Egypt, and Abu Dhabi Islamic Bank – Egypt. Additionally, eleven other banks operate Islamic branches. A key development in the sector is Ahli United Bank’s ongoing transformation into a fully Islamic bank, following its acquisition by Kuwait Finance House.

As of 2023, the number of Islamic banking branches in Egypt has expanded to 260, marking a net addition of 15 branches since 2022. Furthermore, several conventional banks have secured Islamic financing licenses, enabling them to offer Islamic financial services across their entire branch networks.

Faisal Islamic Bank of Egypt leads the Islamic banking sector, commanding a 29.5% market share with a business volume of EGP 171 billion. Abu Dhabi Islamic Bank – Egypt, with a 25.3% market share and a business volume of EGP 147 billion, has not only secured the second position but also achieved the highest annual growth rate in the sector at 41.4%.

The report also sheds light on other key players: Banque Misr’s “Islamic Transactions” holds the third spot with a 20% market share (EGP 121 billion), followed by Al Baraka Bank at 17% (EGP 98.4 billion), and The United Bank with 2.6% market share (EGP 15 billion).

In terms of specific financial services, Sharia-compliant financing in Egypt reached EGP 466.4 billion, making up 4.1% of the total financing portfolio in the Egyptian banking sector. This reflects a 26.5% increase or an addition of EGP 121.6 billion compared to the previous year.

Moreover, Sharia-compliant deposits have witnessed a considerable growth, amounting to EGP 430.8 billion, which is 5.8% of the total deposits in the Egyptian banking sector and an 18% increase (EGP 67 billion) from 2022.

The EIFA report emphasizes the evolving landscape of Islamic banking products in Egypt. With over 65 banking products and services currently available, the sector is increasingly catering to the diverse needs of its customers. The report, however, notes the necessity for further development and innovation in Sharia-compliant products, particularly for individual customers, corporate entities, and the small and medium enterprise sector, underscoring the vast potential for growth in this area.