Remarkable Growth in Egypt’s Islamic Banking Sector in 2024

In 2024, Egypt’s Islamic banking sector achieved a 68% growth to reach LE 1.14 trillion, accounting for 5% of the banking market. Islamic deposits rose to LE 738 billion, while Sharia-compliant financing reached LE 807 billion. The sector included 15 licensed banks, with significant contributions from leading institutions like ADIB and Faisal Islamic Bank. Additionally, the Sukuk market expanded, and various Islamic financial products were introduced.

In 2024, Egypt’s Islamic banking sector experienced remarkable growth, escalating to LE 1.14 trillion and accounting for 5 percent of the overall banking market. This marked a significant increase of LE 412 billion from December 2023, showcasing an impressive 68 percent growth as reported by Mohamed El-Beltagy, Chairperson of the Egyptian Islamic Finance Association (EIFA).

Islamic deposits reached LE 738 billion by December 2024, contributing 7.3 percent to the total deposits in the banking sector. This growth reflected an increase of LE 290 billion, equating to a 65 percent rise year-on-year. Furthermore, Sharia-compliant financing climbed to LE 807 billion, representing 6 percent of the overall loan portfolio, with a growth of LE 314 billion or 64 percent compared to the prior year.

The Egyptian market has seen the continual enhancement of Islamic banking products, featuring over 65 Sharia-compliant financial instruments, including diverse savings plans and investment products. While acknowledging growth, El-Beltagy highlighted the need for further innovation in Islamic financial services for individuals, corporations, the public sector, SMEs, and non-banking financial institutions.

By 2024, the Central Bank of Egypt had licensed 15 banks to ensure the provision of Sharia-compliant banking services. Out of these, four banks operated solely on Islamic finance principles: Faisal Islamic Bank of Egypt, Al Baraka Bank Egypt, Abu Dhabi Islamic Bank – Egypt, and Kuwait Finance House, which recently acquired Ahli United Bank. In addition, eleven conventional banks extended Islamic banking services through special branches.

The total number of Islamic banking branches in Egypt rose to 311 last year, marking an increase of 51 branches from the previous year. These branches catered to nearly 4 million customers. Notably, some conventional banks holding Islamic finance licenses provided Sharia-compliant services across their networks. Nasser Social Bank, a government-owned entity, continued to offer diverse Islamic financial products.

ADIB retained its status as the market leader in Egypt’s Islamic banking sector, with a business volume of LE 258 billion, securing a 24.5 percent market share and achieving a 62 percent growth rate against the previous year. Faisal Islamic Bank of Egypt followed closely with a volume of LE 240 billion and a 23.6 percent market share, while Banque Misr’s Islamic Transactions Unit ranked third with LE 195 billion and 19 percent of the market.

Al Baraka Bank Egypt was positioned fourth with LE 128 billion in business volume and a 12.5 percent market share, and the United Bank rounded off the top five with LE 17 billion, representing 2 percent of the sector. Apart from traditional banking, the Islamic financial sector also witnessed growth in the Sukuk market, with total issuances reaching LE 100 billion in 2024, reflecting investor interest in Sharia-compliant instruments.

The industry demonstrated further expansion through the operation of 17 Islamic investment funds, seven Takaful (Islamic insurance) firms, and two real estate financing companies adhering to Islamic principles. Moreover, microfinance and consumer finance firms increasingly included Islamic financial products in their offerings.

The Egyptian Islamic banking sector exhibited a remarkable growth trajectory in 2024, with significant increases in deposits and financing. The expansion of Sharia-compliant products and the rise in bank branches underscore the sector’s strength and potential for future innovation. Investment interest in Sukuk and other Islamic financial products further reflects the evolving landscape of finance in Egypt. As the sector continues to grow, ongoing innovation will be essential to meet diverse market needs.

Original Source: www.egypttoday.com