The outlook for the Egyptian banking system is stable, as economic growth picks up, loan performance remains broadly resilient and banks benefit from a stable deposit base, Moody’s Investors Service says. “The banks are funded by stable and low-cost domestic deposits, mainly from households, a credit strength … We expect increasing banking penetration and increased remittances to spur deposit growth. Though government-owned banks have significantly increased their market funding over the last two years, this funding is mainly from regional banks and multilateral development banks, where refinancing risks are lower,” says Melina Skouridou, Assistant Vice President at Moody’s. The ratings agency does not expect a material deterioration in loan quality, because corporate debt repayment “is supported by relatively low overall levels of debt, as well as government initiatives to help tourist companies and importers” and “retail loans are confined to wealthier households.” Moody’s wants that delinquency rates could increase as new loans matures but also says capital buffers are expected to improve.

…Separately, ratings agency Fitch affirmed CIB’s long-term issuer default rating at B with a stable outlook. “The bank’s significant exposure to sovereign debt is a key driver of the VR and effectively caps the [viability rating] at the level of the Egyptian sovereign. The Stable Outlook on CIB’s IDR reflects that on Egypt’s sovereign rating.”