EGP 97 Billion in Profits: Samer Choucair Says Egyptian Banks Face the Post-High-Interest-Rate Test
Investment leader Samer Choucair said the combined profits of 13 banks listed on the Egyptian Exchange rose 20% in the first half of 2026 to EGP 97.06 billion, compared with EGP 80.84 billion in the same period a year earlier. The increase was supported by a 20% rise in net interest income to EGP 156.3 billion, alongside 12% growth in fees and commissions.
Choucair said investors should look beyond the headline profit-growth figure. The results reflected the banking sector’s continued ability to benefit from elevated interest rates, alongside expanding loan books, investment in government debt instruments, and increasing volumes of digital transactions.
For institutional investors, Samer Choucair said the more important question is whether Egyptian banks can convert today’s favorable interest margins into sustainable credit and fee-based growth before the high-yield window begins to narrow.
Monetary Policy Continues to Support Margins
Choucair said the Central Bank of Egypt kept its key policy rates unchanged in August 2026 at 19% for deposits, 20% for lending, and 19.5% for its main operation, maintaining a restrictive monetary stance despite the easing already delivered since 2025.
He noted that headline inflation stood at 14.9% in July, while core inflation was 14.7%. The central bank is targeting average inflation of 7%, plus or minus two percentage points, by the second half of 2027.
Choucair said keeping rates elevated reflects continued caution over geopolitical risks, energy-price adjustments, and base effects rather than any retreat from the central bank’s inflation objective.
The current environment has kept yields on Treasury bills, government bonds, and floating-rate loans relatively high even as banks continue to face elevated deposit costs.
That means current profitability partly reflects effective balance-sheet management and the ability to reprice assets faster than liabilities.
A Growing Performance Gap Between Banks
Samer Choucair said bank earnings exceeded analyst expectations by approximately 5% to 10%, according to estimates attributed to CI Capital’s head of research, Monsef Morsy, with stronger loan portfolios and growth in fees and commissions contributing to the outperformance.
Commercial International Bank increased first-half net profit by 17.8% to approximately EGP 39.31 billion. Deposits rose 17.8% to EGP 1.31 trillion, while loans increased 17.6% to approximately EGP 597.78 billion.
QNB Egypt, meanwhile, reported consolidated net profit of EGP 18.6 billion, representing growth of 23%, while deposits approached EGP 908 billion and loans reached approximately EGP 526 billion.
Islamic banks delivered even stronger growth, with combined profits increasing to EGP 15.18 billion, up approximately 37%.
At the same time, some banking units belonging to Gulf financial groups recorded declines in profits and assets, reinforcing Choucair’s argument that the current cycle is not benefiting every institution equally.
The Real Test Begins When Interest Rates Fall
Choucair said Egypt’s banking system entered this period from a position of considerable financial strength.
The sector generated EGP 601.6 billion in profits during 2025, an increase of 12.5%, while total assets reached EGP 24.12 trillion. Return on average equity stood at 39%, while non-performing loans were approximately 1.9%.
According to Samer Choucair, institutional investors should evaluate the sector through three interconnected lenses: the quality of earnings, the duration sensitivity of bank balance sheets to changing interest rates, and the ability to finance the real economy without allowing sovereign exposure to become excessively concentrated.
“Egyptian bank profits at this stage resemble a cyclical return generated by tight monetary policy more than a structural return generated by financial intermediation,” Choucair said.
The real challenge, he added, will be demonstrating that loan growth represents genuine expansion of productive credit rather than simply the recycling of liquidity through the public sector.
That distinction becomes particularly important when interest rates begin to decline.
Banks whose earnings are disproportionately dependent on high-yield government securities and wide interest margins could face greater earnings normalization. Institutions with diversified loan books, stronger fee businesses, efficient funding structures, and scalable digital platforms may be better positioned to preserve profitability.
Gulf Capital Is Looking for Sustainable Growth
Choucair said the presence of institutions such as QNB, National Bank of Kuwait, and First Abu Dhabi Bank makes Egypt’s banking sector a direct channel for Gulf banking capital, whether through consolidated earnings or the reallocation of capital between regional markets.
Gulf investment funds and emerging-market managers are unlikely to treat Egyptian banks as a single asset class, he said.
Instead, they are likely to favor institutions that can increase their loan-to-deposit ratios with discipline, improve their mix of fee-based income, maintain a low cost of risk, and manage sovereign exposure effectively.
Choucair said Saudi and Egyptian investment opportunities should also be understood from a portfolio-allocation perspective rather than as competing regional propositions.
“Funds building long-term positions in the Saudi economy through infrastructure, technology, and tourism need to understand the Egyptian cycle as a complementary yield and credit market, not as an alternative market,” Choucair said.
For institutional allocators, this creates the potential to combine exposure to Saudi Arabia’s structural investment and diversification cycle with selected exposure to Egypt’s banking and credit cycle.
2027 Could Reveal the Winners
Samer Choucair said the principal risks facing Egyptian banks include persistent inflation, higher energy prices, exchange-rate pressure, regional geopolitical tensions, and the possibility of deterioration in retail and small-business credit quality if borrowing costs remain elevated for an extended period.
Under the base-case scenario, interest rates would remain relatively high through the end of 2026 before monetary easing progresses gradually during 2027.
Energy or currency shocks could delay that process and keep monetary conditions restrictive for longer.
Faster-than-expected easing would create a different challenge. It could put greater pressure on banks whose profitability depends heavily on the yield curve and high interest margins, while more diversified institutions could benefit from stronger demand for private-sector credit as financing costs decline.
For investors, the transition therefore matters more than the peak.
“Successful institutional investment in Egyptian banks will not depend on betting that high interest rates last forever,” Samer Choucair said. “It will depend on identifying the banks that use this window to invest in human capital, digital systems, and corporate lending franchises before the margin equation changes.”
Choucair concluded that the current 20% earnings growth demonstrates significant operating strength within a high-interest-rate cycle, but it does not by itself determine long-term value.
The more revealing test will come when monetary conditions normalize. That is when investors will be able to distinguish between banks that used the high-rate environment to build durable credit and fee-generating franchises and those that simply harvested the temporary yield available from the cycle.