Banking sector recovers from December, sees net foreign assets rise 65.8%

Cairo – March 3, 2025: In January, Egypt's banking sector experienced a notable rebound, with net foreign assets rising to $8.7 billion, a substantial 65.8 percent increase from $5.2 billion in December, as reported by the Central Bank of Egypt (CBE).

This growth follows two months of decline, the most recent of which occurred in December, driven by local seasonal factors and heightened demand for foreign exchange resources.

The rise in net foreign assets can largely be attributed to a reduced deficit in commercial banks, contributing significantly to the overall improvement.

The net foreign asset deficit for commercial banks narrowed to $3.3 billion in January, compared to $6.4 billion in December. This was driven by a simultaneous rise in the net foreign assets of commercial banks, which reached $25.2 billion, alongside a reduction in foreign liabilities to $28.5 billion.

The Central Bank of Egypt also saw a modest improvement, with its net foreign asset surplus rising slightly to $12.0 billion in January, up from $11.7 billion in December.

While the CBE’s foreign assets remained unchanged at $45.7 billion, foreign liabilities dropped to just under $33.8 billion from $34.1 billion the previous month.

However, despite the recent uptick, Egypt's net foreign asset surplus has declined by 39.3 percent since its peak of $14.3 billion in May 2024, marking the first time in over two years that Egypt recorded a net foreign asset surplus.

The country has also experienced six consecutive months of a net foreign asset deficit in commercial banks, signaling ongoing challenges in the banking sector.

The May 2024 peak was driven by fresh inflows from the second tranche of the $35 billion Ras El Hekma agreement, which contributed around $14 billion.

Prior to this, Egypt’s net foreign asset position had been in deficit since February 2022, when the Russia/Ukraine war caused a capital outflow of nearly $20 billion.