S&P downgrades outlook for three Egyptian banks to negative

The National Bank of Egypt (NBE), Banque Misr, and the Commercial International Bank (CIB) have had their outlooks downgraded by Standard & Poor (S&P) Global Ratings, dropping its outlook for the three banks to negative from stable.

This follows its revision of Egypt’s sovereign outlook to negative in late April.

S&P stated that any future declines in Egypt’s sovereign credit rating will negatively impact the banks' stand-alone credit profiles (SACPs) or if the country’s operating environment becomes less supportive for banks.

To support the country’s banking sector, curb inflation, and attract more foreign currency, Egypt has unveiled and/or accelerated several initiatives over the past few months. In response to S&P’s decision on Egypt’s sovereign outlook in April, Minister of Finance Mohamed Maait highlighted that Egypt has been seeing positive growth in FX inflows, particularly from Egyptian expats' remittances and petroleum export revenues.

S&P also highlighted that the three banks are key issuers of high-yield certificates of deposits (CDs) in Egypt, which were issued as part of efforts to curb inflation caused by the Russia/Ukraine war.

Since March 2022, the three banks released multiple types of high-yield CDs, ranging from annual yields of 18 percent to 25 percent.