4 Egyptian banks see ratings downgraded by Fitch Ratings

Fitch ratings lowered its long-term deposit ratings for the National Bank of Egypt (NBE), Banque Misr, Banque du Caire, and the Commercial International Bank (CIB), citing that the four banks have “significant exposure” to debt and lending to public-sector companies, with Fitch estimating their debt to reach 75% of their total assets.

The ratings agency lowered the four banks to B from B+, “reflecting increasing external financing risks given high external financing requirements, constrained external financings conditions and the sensitivity of Egypt's broader financing plan to investor sentiment.”

“All this comes against a background of high uncertainty on the exchange-rate trajectory, and reduced external liquidity buffers,” it added.

The banking sector saw a record net foreign liability position of $14 billion at the end of March 2023, with Fitch writing that “banks' ability to build up foreign assets was hampered by tight FC liquidity and the sovereign's high gross external financing requirements”.

Fitch Ratings recently lowered Egypt’s sovereign credit rating to B from B+ with a negative outlook, downgrading it for the first time since 2013, citing “high external financing requirements, constrained external financing conditions and the sensitivity of Egypt's broader financing plan to investor sentiment.”