Islamic banking in Egypt, accounting for 20% of the country’s banking clientele, has approximately 2.5 million users. Originating in the 1960s from a religious prohibition on usury, Islamic banking in Egypt began with interest-free savings funds. Mohamed El-Beltagy, head of the Egyptian Islamic Finance Association (EIFA), confirms this figure.
Egypt’s first Islamic banking experiment was a local savings bank established in the early 1960s, operating under Islamic Sharia law. The first government Islamic bank, Nasser Social Bank (NSB), was established in 1971. Sharia banking principles were formally defined at the 1972 Islamic Foreign Ministers Conference in Jeddah, Saudi Arabia. In 1974, Prince Mohammed Faisal bin Al-Saud introduced the concept of a Sharia-compliant bank in Egypt, leading to the establishment of the Faisal Islamic Bank of Egypt (FIB) in 1977 as a joint Sharia-compliant stock company. FIB is the first popular Islamic bank in Egypt and the third oldest international Islamic bank. As of December 31, 2012, FIB managed over 1.5 million accounts with assets exceeding $6 billion.
The 2008 global financial crisis saw increased interest in Islamic banking as an alternative financial model. In Egypt, Islamic banking gained prominence during the economic crises and the rise of the Muslim Brotherhood in 2012, who advocated for an Islamic economic system.
Islamic banking, emphasizing risk-sharing over traditional lending and borrowing, has attracted both global and local conventional banks to offer Islamic services. Notable banks in Egypt offering Islamic banking include Banque Misr, United Bank, National Bank of Egypt (NBE), Audi Bank, and Arab Investment Bank (AIB), among others.
By 2009, there were 450 Islamic banks and over 300 conventional banks offering Islamic services. This number grew by 2013, with 500 Islamic banks and approximately 330 conventional banks providing such services. As of June 30, 2014, Islamic banking in Egypt represented 7% of the total banking market, with a business volume of EGP 125 billion. Islamic deposits as of June 30, 2014, accounted for 8.3% of the market, totaling EGP 115.8 billion. Islamic finance, totaling EGP 85.1 billion, represented 6.5% of the market.
Egypt’s banking sector includes 39 banks, with 14 licensed by the Central Bank of Egypt (CBE) to offer Islamic banking products. The total number of Islamic banking branches in Egypt is 135, with Abu Dhabi Islamic Bank leading with 70 branches, followed by AlBaraka Bank with 32, and FIB with 31 branches.