Cairo | EcoPulse24

Banque Misr, Egypt's second-largest state-owned bank, recorded a net profit of EGP 68.3 billion during the first nine months of 2025, driven by a strong 36% expansion in its loan portfolio. The bank’s assets exceeded EGP 4.1 trillion for the first time in its history.

Credit Expansion Amid High-Cost Environment

This sharp growth in lending occurred despite historically high interest rates, even as the Central Bank of Egypt cumulatively cut rates by 2% over 2024-2025. The rapid credit expansion, far outpacing Egypt's expected economic growth of 4%, reflects either robust private sector demand for financing, large-scale government project funding, or a combination of both.

The Egyptian banking landscape indicates that a significant portion of these loans target three main sectors: financing major government infrastructure projects - especially in energy and transport, lending to military-affiliated and sovereign entities, and supporting the real estate sector, which is witnessing increased activity in new cities. Traditional industries such as cement, steel, and fertilizers also receive notable banking support to meet urban expansion needs.

Broader Context: Recovery Amid Constraints

Banque Misr’s strong performance is part of a broader recovery in Egypt’s banking sector after years of pressure. The early 2024 Ras El Hekma deal with the UAE, which injected $35 billion into Egypt’s economy, eased the foreign currency crisis and strengthened confidence in the banking sector. Partial currency liberalization and interest rate hikes attracted foreign portfolio investment into short-term government debt instruments.

However, challenges persist. Restrictions on profit repatriation for foreign companies, though eased, have not been fully lifted. Currency volatility remains a risk for companies borrowing in foreign currency. Crucially, Egypt’s current growth model, heavily reliant on infrastructure and real estate, needs diversification toward higher value-added productive sectors for long-term sustainability.

Outlook

Upcoming quarters will test the sustainability of this performance. Interest rate cuts may pressure profit margins, especially if monetary easing continues. Competition from private banks and digital platforms is intensifying, requiring greater investment in digital transformation. Importantly, global regulatory pressures for environmental and social disclosure will inevitably reach Egypt, compelling Banque Misr and other state banks to reassess lending policies and allocate more financing to sustainable projects.

With assets exceeding EGP 4 trillion, Banque Misr has the financial strength to lead green and sustainable finance in the region. However, this will require strategic will and greater transparency in disclosing the direction and impact of its loan portfolio.

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