Economic Research | Country Risk Weekly Bulletin | Country Risk Weekly Bulletin 581 | Egyptian banks' ratings upgraded, outlook 'stable' | Lebanon | Byblos Bank

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Byblos Bank

Country Risk Weekly Bulletin 581

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Egyptian banks' ratings upgraded, outlook 'stable'

Moody's Investors Service upgraded the long-term local currency deposit ratings of National Bank of Egypt (NBE), Banque Misr (BM), Banque Du Caire (BdC) and Commercial International Bank (CIB) from 'B3' to 'B2', as well as the rating of Bank of Alexandria from 'B2' to 'B1'. It also upgraded the five banks' long-term foreign currency deposit ratings from 'Caa1' to 'B3'. The agency revised the outlook on the banks' long-term local currency deposit ratings from 'positive' to 'stable'. It noted that the upgrades follow a similar action on the sovereign ratings and reflect more favorable operating conditions for the banks, given the economic recovery and the implementation of structural reforms. It added that funding conditions, mainly those related to foreign currency, have normalized following the liberalization of the exchange rate. However, it said that the banks' credit conditions remain challenging, mainly due to gaps in the legal framework for secured lending, high borrower concentrations and the significant increase in higher-risk loans to small- and medium-sized enterprises. Further, Moody's noted that the ratings of NBE and BM are supported by their strong franchises, stable deposit-based funding structure, good liquidity buffers and improving profitability. It said that BdC's ratings are driven by its stable deposit-based funding structure, solid core liquidity buffers, strong profitability and moderate non-performing loans ratio. Further, it indicated that CIB's and Bank of Alexandria's ratings are supported by their solid financial performance, resilient deposit-based funding structure and high liquidity buffers. It added that all the banks' ratings are constrained by their high exposure to the Egyptian sovereign.
Source: Moody's Investors Service
 
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