The Central Bank of Egypt (CBE) released its Financial Stability Report covering FY 2024 and the first quarter of 2025, reporting that the financial system continued to support domestic intermediation and that the financial stability index rose on the back of improved macroeconomic and financial-sector indicators. The report also publishes, for the first time, the CBE’s macroprudential policy framework to guide how macroprudential policy is formulated and implemented. The CBE highlighted continued capacity of banks to provide foreign currency financing with lower exposure to systemic risk from sudden capital outflows, supported by stronger foreign exchange availability and Net International Reserves of USD 47.8 billion in March 2025, stated as adequate to cover short-term external debt and more than six months of merchandise imports. Macroprudential measures cited include maintaining a 50% debt-burden ratio cap for consumer lending, with mortgage instalments limited to 40% of total monthly income. For banking soundness, the report cited a capital adequacy ratio of 18.3% in March 2025 versus the CBE minimum of 12.5%, liquidity ratios of 37.1% (local currency) and 73.7% (foreign currency) versus minima of 20% and 25%, and improved profitability (return on average assets of 2.6% and return on equity of 39% in FY 2024). It also pointed to reduced fiscal-imbalance risk transmission to banks alongside a declining share of government securities in banking assets, and noted foreign investors’ share in the domestic treasury bill market at 44.7% in March 2025. Stress tests run with the Financial Regulatory Authority covering banking and non-banking sectors indicated resilience under adverse economic, financial, environmental and geopolitical scenarios, with low to moderate solvency and liquidity risks.
Central Bank of Egypt 2025-11-04
Central Bank of Egypt reports stronger financial stability and publishes first macroprudential policy framework
The Central Bank of Egypt's Financial Stability Report for FY 2024 and Q1 2025 highlights a rise in the financial stability index due to improved macroeconomic indicators and introduces the CBE's macroprudential policy framework. The report notes strong foreign currency financing capacity, Net International Reserves of USD 47.8 billion, and robust banking soundness with a capital adequacy ratio of 18.3%. Stress tests indicate resilience across banking and non-banking sectors under adverse scenarios.