The financial services sector's GVA is set to see 13.8% growth in local currency terms in 2017,rising to EGP138.3bn. However, depreciation of the Egyptian pound following floatation in Q416 willensure a 36.4% decline in the value of the market in USD terms to USD7.68bn. By 2026, we envisage thesector will reach EGP359.8bn (USD13.58bn), an increase of 160% in EGP terms and 77% in USD terms.
The main story in the short term will be the ongoing effects of the decline in the Egyptian pound's value onthe attractiveness of the market for investors and the impact of resulting inflation in activity. However, inthe context of better economic and political prospects and the support of the IMF, the situation is lookingmore optimistic.
Latest Trends And Developments
The Egyptian banking sector has proven that it is resilient in the face of immense political and economicchallenges. While risks remain, there are significant growth opportunities for a sector that has significantliquidity and a large unbanked population. Depreciation of the Egyptian pound against the US dollar haschallenged the banking sector. While assets growth has been strong in local currency terms, inflation anddepreciation have undermined the attractiveness of the sector to foreign investors, although expectedexchange rate stability should ensure renewed interest. In 2017, total banking assets are set to grow by athird and by 2026 should be up 175% over 2016 levels. However, assets as a proportion of GDP are set todecline from around 135% to under 100% over this period.