The global credit ratings agency Fitch Ratings has reported that banks in the Gulf Cooperation Council (GCC) are looking to expand into other international markets, including Egypt, as they look to diversify their business models and boost profits.
Fitch believes that several banks in the GCC are seeking to acquire Egyptian banks because of the relatively high growth rates available in Egypt compared to their domestic markets.
While the banking industry in the GCC has now reached a stage of maturity following decades of rapid, commodities-fuelled economic growth, the industry in Egypt has greater growth potential scope in the years ahead. The largest GCC markets have a ratio of banking sector assets to GDP of over 200%, compared with below 100% in Egypt.
Furthermore, the collective population of the GCC was 56.4 million in 2021, while Egypts population is already approaching 115 million and expected to hit 160 million in 2050. The sheer size of Egypts market therefore makes it an attractive proposition to banks in the GCC.
GCC banks exposure to Egypt is steadily increasing. Fitch has estimated that the combined exposure Kuwait Finance House has to Turkish and Egyptian assets represents 19.8% of their total portfolio. Emirates NBD, one of the most prominent banks in the UAE, is not far behind at 16.6%. Turkish and Egyptian assets now account for more than 10% of Qatar National Banks portfolio. Turkey has also been seen as an attractive market for fuelling growth for similar reasons to Egypt.
