Fitch Ratings upgrades outlook of 4 Egyptian banks to positive
Updated 5/19/2024 7:21:00 AM
Arab Finance: Fitch Ratings has upgraded the outlook of four Egyptian banks’ long-term issuer default ratings (IDRs), namely the National Bank of Egypt (NBE), Banque Misr, Banque Du Caire, and Commercial International Bank (CIB), from stable to positive, affirming IDRs at 'B-', as per a rating action commentary.
The decision follows Fitch's recent adjustment of Egypt's sovereign rating outlook to positive, indicating a strong correlation between the creditworthiness of Egyptian banks and that of the sovereign.
Key drivers behind this upgrade are the banks' substantial exposure to the Egyptian government and public sector companies, reflected in their viability ratings (VRs) of ‘b-‘.
As for the factors contributing to the positive outlook, they encompass recent significant investments from the UAE, support packages from the international Monetary Fund (IMF), enhanced foreign exchange rate flexibility, and improved foreign currency liquidity.
Additionally, Fitch Ratings said that these developments are expected to bolster macroeconomic stability in fiscal year (FY) 2024/25.
At the end of 2023, the banking sector's total exposure to the sovereign and public sectors stood at 53% of total assets, according to the rating agency.
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