Hermes Recommends ‘Neutral’ On Crédit Agricole Egypt Stock

EFG-Hermes issued a report on Crédit Agricole Egypt Bank (CIEB.CA), with a “Neutral” rating on the stock. Hermes defined CAE’s fair value at EGP 9.88, compared to its market price of EGP 9.09.

Credit Agricole Egypt (CAE) generated net profit of EGP137 million, up 8% Q-o-Q and 68% Y-o-Y, outperforming estimates of EGP109 million by 26%, due to lower-than-expected provisioning.

Hermes stated; “We have a Neutral rating on CAE, reflecting our concern that its earnings are the most sensitive of the Egyptian banks we cover to credit quality deterioration due to: (i) CAE’s weaker operating profitability; and (ii) its weaker capacity to absorb a provisioning shock. These preliminary figures suggest, however, that credit quality has not materially worsened in the period to June 2012”.