Fitch upgrades Egypt’s banks rating

Fitch Ratings has recently upgraded the credit ratings of four major Egyptian banks—National Bank of Egypt (NBE), Banque Misr (BM), Commercial International Bank (CIB), and Banque du Caire (BDC)—to ‘B’/Stable from ‘B-’/Positive. The upgrade is primarily driven by the recent sovereign rating improvement to ‘B’/Stable on November 1, 2024, reflecting the government’s enhanced ability to support the financial sector.

The ratings agency expects Egypt’s real GDP growth to accelerate to 4.2 per cent in 2025 and 5.4 per cent in 2026, supported by stronger investor confidence, rising remittances, and foreign direct investments, while inflation is forecast to decline to 12.5 per cent by mid-2025 from 26.5 per cent in October 2024.

Improved foreign-currency liquidity, with the sector’s net foreign assets deficit narrowing to $130 million in September 2024 from $17.6 billion in January, further supports the banks’ strengthened credit profiles.

The strong correlation between the sovereign’s fiscal health and the banking sector played a significant role in the upgrade, with total sector exposure to the sovereign accounting for 53 per cent of total assets and approximately 8.3 times equity at the end of 2023.

Fitch noted that profitability remains a key strength for Egyptian banks, underpinned by higher sovereign yields and declining credit risks. Additionally, the sector’s Common Equity Tier 1 (CET1) ratio is expected to exceed 13 per cent by the end of 2024, supported by strong internal capital generation and exchange rate stability.

The upgrades highlight the resilience of Egypt’s banking sector as it benefits from a flexible foreign exchange regime, robust portfolio inflows, and steady economic recovery.

Attribution: Fitch Ratings

Subediting: M. S. Salama