Fitch revises CIB's outlook to stable; affirms IDR at 'B+'

CAIRO - 3 August 2021: Fitch Ratings  announced Monday revising Commercial International Bank (Egypt) S.A.E.'s (CIB) Outlook to Stable from Negative while affirming the bank's Long-Term Issuer Default Rating (IDR) at 'B+' and Viability Rating (VR) at 'b+'. A full list of rating actions is below.

Fitch saw that pressures on the domestic operating environment have eased since end-3Q20, moderating downside risks to Egyptian banks' credit profiles. This reflects improving foreign-currency (FC) liquidity, with the banking sector's net foreign assets (NFAs) reaching $3.5 billion at end-April 2021, a reversal of a net foreign liability position of $5.3 billion at end-April 2020. This was supported by a strong increase in foreign holdings of Egyptian treasuries to $29 billion at end-May 2021 from $10 billion at end-June 2020, sovereign Eurobond issuance and resilient remittances.

Fitch expected real GDP growth to accelerate to 6 percent in 2022 (3 percent in 2021), in line with pre-pandemic levels. The sector's average loan growth was 6 percent in 1Q21, which we expect to accelerate to low double digits for 2021.

The asset quality of Egyptian banks proved resilient as they have largely contained the deterioration in loan quality following the expiry of the Central Bank of Egypt's (CBE) six-month credit moratoria in September 2020.

According to Fitch, The sector's average Stage 3 loans ratio remained stable at 3.4 percent at end-3Q20. Its Stage 2 loans ratio varied significantly across banks, from 2 percent to more than 30 percent of total loans. The higher portion of Stage 2 loans for some banks, in our opinion, is an indication of more conservative loan classifications rather than weaker underlying asset quality. Banks' asset quality is also underpinned by high exposure to the sovereign, including investments in bonds and lending to public-sector entities.