Local banks stand to benefit from the central bank’s hold on interest rates, Beltone Financial bank analyst Nancy Fahmy told Bloomberg in an interview (watch, runtime: 4:16). Fahmy explained that the central bank’s decision to keep rates on hold at its last three meetings — to counter what policymakers see as a transient spike in inflation — has caused treasury yields to rise by 200-250 bps since May, which is actually in “Egyptian banks’ favor.”

Emerging consensus: No further interest rate cuts this year? With inflation likely to rise throughout 3Q2018 before cooling again thereafter, Fahmy says it’s likely that the two rate cuts we saw earlier this year were “it for 2018.” She pointed out, however, that June inflation figures took the biggest hit we’re likely to see, as it reflected recent hikes to the costs of fuel, power, and transportation. (Annual headline inflation had accelerated in June for the first time in almost year to a rate of 14.4%, from 11.6% in May). A number of analysts said at the time they expect the CBE to keep overnight deposit and lending rates unchanged at 16.75% and 17.75%, respectively, until year’s end.

Beltone sees loan growth accelerating this year as banks recover from a 2017 base effect that saw a lot of foreign currency outflows directed towards loan repayment, “This year we’re seeing recovery and also foreign currency lending,” she said, noting that while larger banks have provisioning coverage ratios above 200%, smaller players “might be a little tight on provisioning, especially with the implementation of the IFRS 9 next year.”