Hisham Ezz Al-Arab, Chief Executive Officer of Commercial International Bank (CIB), has warned that the rapid expansion of Egypt’s non-banking financial sector could create future risks for the broader economy if growth continues without sufficiently strict credit controls and risk-management standards.
Speaking during a televised interview on MBC Egypt’s “El Hekaya” programme, Ezz Al-Arab stressed that his concerns are not directed at the existence of non-banking financial institutions themselves, but rather at the operational standards adopted by some companies, particularly in the fast-growing consumer finance segment. He questioned whether the market could safely absorb the risks associated with thousands of financing companies operating outside the traditional banking framework.
Ezz Al-Arab noted that Egypt’s banking sector consists of only 36 banks operating under strict supervision by the Central Bank of Egypt, yet irregularities may still occasionally emerge. He argued that it would therefore be unrealistic to assume that all of the roughly 2,500 financing companies operating in the market are entirely free of problematic lending practices.
The veteran banker specifically raised concerns regarding credit assessment procedures and the use of Egypt’s “iScore” credit-checking system. According to Ezz Al-Arab, some firms may be extending loans without conducting sufficient credit evaluations or properly assessing borrowers’ existing financial obligations and repayment capacity, potentially increasing future default risks.
He warned that the continued rapid expansion of consumer finance could eventually contribute to the formation of a financing bubble within the Egyptian market, particularly as lending volumes have grown sharply in recent years. Ezz Al-Arab compared the risks of poorly regulated lending practices to the early warning signs that preceded the 2008 global financial crisis, cautioning that “a small spark could affect the entire economy.”
At the same time, Ezz Al-Arab acknowledged that non-banking financial companies play an important role in Egypt’s economy by reaching customer segments often underserved by traditional banks and providing faster, more flexible financing solutions. However, he stressed that such growth must remain tied to stronger governance standards, stricter credit checks, transparency, and balanced regulatory oversight.
His remarks came as Egypt’s Financial Regulatory Authority (FRA) released updated statistics showing the substantial expansion of the country’s non-banking finance sector. According to the authority, financing granted by entities under FRA supervision reached approximately EGP 1.4 trillion by the end of 2025, representing nearly 54% of total financing provided to Egypt’s private sector, households, and individuals.
The FRA also reported that the total size of non-banking financial portfolios reached approximately EGP 417 billion by the end of 2025, while the number of financing contracts exceeded 9.8 million agreements. Despite the rapid expansion, official data indicated that default rates within the sector remained below 3%, which regulators described as evidence of resilience despite regional instability, global interest-rate volatility, and uncertain capital flows across emerging markets.
However, comparison with the traditional banking sector reveals why some financial experts continue to express caution regarding the pace of expansion in non-bank financing activities. According to official Financial Soundness Indicators issued by the Central Bank of Egypt, the banking sector’s non-performing loan (NPL) ratio declined to approximately 1.9% by the end of 2025, reflecting stricter lending standards, stronger provisioning requirements, and tighter regulatory oversight within the banking system.
Analysts note that while the difference between banking-sector default rates and non-bank financing defaults does not currently indicate systemic stress, it nonetheless highlights the relatively higher risk profile often associated with rapidly expanding consumer-finance activities operating outside the conventional banking framework. The gap also partly explains the growing emphasis by regulators and banking executives on tightening credit-evaluation standards before approving financing.
The FRA additionally highlighted strong growth in consumer-finance activity, revealing that financing volumes in the segment rose by roughly 57% year-on-year to exceed EGP 96 billion by the end of 2025. Officials stressed that all licensed entities operate under state supervision and are required to comply with governance and creditworthiness standards.
Meanwhile, Ezz Al-Arab revealed that the Central Bank of Egypt has already instructed banks not to finance consumer-finance portfolios unless proper credit checks on customers are conducted first, reflecting growing official caution toward overly aggressive lending expansion.
As The Middle East Observer notes, the debate surrounding Egypt’s rapidly expanding non-banking financial sector should ultimately be viewed as a healthy and necessary discussion regarding the future structure of financial inclusion and credit growth within the Egyptian economy. While the traditional banking sector remains significantly more regulated and financially resilient, it also continues to operate through relatively rigid lending frameworks that largely favour clients capable of providing strong guarantees, documented income streams, collateral assets, and formal credit histories — conditions that effectively limit access for large segments of the population and many smaller businesses.
In contrast, non-banking financial institutions have increasingly filled an essential economic gap by providing faster and more flexible financing solutions to broader segments of consumers, particularly lower- and middle-income groups traditionally underserved by conventional banks. Their rapid expansion therefore reflects genuine market demand and a structural need within the economy rather than merely aggressive lending behaviour.
The broader strategic question facing regulators may not simply be whether the non-banking sector should continue expanding, but rather how such growth can be safely institutionalised and gradually extended toward more productive commercial activities, including financing for small and medium-sized enterprises (SMEs), entrepreneurship, and wider private-sector growth. Achieving this balance may eventually require the development of more sophisticated regulatory frameworks by the Central Bank of Egypt and financial authorities, potentially including enhanced reserve requirements, guarantee mechanisms, stricter credit-evaluation standards, risk-sharing structures, and unified borrower data systems capable of preserving financial stability while allowing broader access to capital.
Within this context, the current debate increasingly reflects not a conflict between banks and non-bank lenders, but a broader transition in Egypt’s financial architecture as policy makers attempt to balance financial inclusion, economic growth, consumer protection, and long-term systemic stability in an evolving and increasingly diversified credit market.
