S&P’s: Egyptian Banks 8th Lowest In Risk Exposure

The Egyptian banking sector was ranked the eighth globally in terms of risk exposure, while Swiss and Canadian banks were ranked the first, said Nicolas Hardy, representative of Standard & Poor’s at the 1st Annual Global Finance & Investment Conference.

The Egyptian banking system is not able enough to face the potential changes and risks in the market, posing a negative impact on the performance and ranking of Egyptian banks, he continued.

The private sector’s contribution to Egyptian banks and the deposits are their main strength points amid the current political turmoil which results in cutting the credit ratings of Egyptian banks. Lack of transparency and low foreign cash reserves also affect the ratings of Egyptian banks. The low credit ratings shake investors’ confidence, he explained.

The Egyptian economy has to achieve growth rate of 1.5% in 2012 to reach 3% or 4% in the upcoming period to overcome the current crisis.

Hardy stated that the Islamic finance represents 5% only of total finances in Egypt and is expected to rise after Arab Spring events and political stability. He cited World Bank’s study which says that Sharia-complaint retail banking products increases the number of banking customers by 10%.