Islamic banking in Egyptian market hits $12.53bln in 2023

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Egypt - The Egyptian Islamic Finance Association (EIFA) reported that Islamic banking in Egypt surged to nearly EGP 606bn by December 2023, marking an increase of EGP 110bn and a growth rate of 22.3% from the previous year. Islamic banking now comprises roughly 4% of the Egyptian banking sector’s total volume.

The EIFA’s recent report highlights that the Egyptian banking landscape includes 14 banks authorized by the Central Bank of Egypt (CBE) to provide Islamic banking products. Among these, three are fully-fledged Islamic banks: Faisal Islamic Bank of Egypt, Abu Dhabi Islamic Bank Egypt, and Al Baraka Bank Egypt. Additionally, 11 conventional banks operate Islamic branches. Notably, Al-Ahli United Bank is transitioning to a fully Islamic bank following its acquisition by Kuwait Finance House.

The EIFA noted that the count of Islamic banking branches expanded to 263 by the end of 2023, an increase of 18 branches from 2022. These branches serve approximately 3.5 million customers. It’s important to mention that some traditional banks with Islamic finance licenses offer Islamic banking services across all their branches.

In terms of market share, Faisal Islamic Bank of Egypt leads with a business volume of EGP 177bn, accounting for 29.2% of the Islamic banking sector’s total volume in Egypt. Abu Dhabi Islamic Bank – Egypt follows closely, ranking second with a rapid growth spurt during the year, achieving a business volume of EGP 161bn, a 26.5% market share, and a remarkable 40% growth rate since 2022—the highest in Egypt’s Islamic banking sector for 2023.

Banque Misr’s Islamic transaction branches rank third with a business volume of EGP 124bn and a 20.5% market share. Al Baraka Bank is fourth with EGP 100.4bn and a 16.6% share, while the United Bank holds fifth place with a business volume of EGP 15bn and a 2.4% share.

The EIFA also reported that deposits adhering to Islamic law reached EGP 447.5bn in 2023, making up 5.8% of the total deposits in Egypt’s banking sector, and showing an increase of EGP 57bn and a growth rate of 14.5% from 2022.

Islamic Sharia-compliant financing climbed to EGP 493bn, representing 4.8% of the total financing volume in the Egyptian banking sector, with an increase of EGP 104bn and a growth rate of 26.8%.

The association emphasized the Egyptian market’s progress in developing a variety of Islamic banking products, now exceeding 65 offerings, including savings accounts, banking services, and various financing and investment options. However, it underscored the need for further development and innovation in Sharia-compliant products across all sectors.

Moreover, enhancing and training human resources to deliver these products remains a significant challenge in the Egyptian market. To address this, the EIFA is providing a professional master’s degree in Islamic finance accredited by the General Council of Islamic Banks and Financial Institutions (CIBAFI).

Lastly, the EIFA disclosed that the global Islamic banking industry’s size reached approximately $4trn in 2023, as per international reports, with projections to hit $4.5trn by the end of 2024.