Cairo – Mubasher: Capital Intelligence Ratings (CI) announced affirming the National Bank of Egypt’s (NBE) long-term foreign currency rating (FCR) at ‘B-’ and the short-term FCR at ‘B’, with a stable outlook, according to a statement issued on Monday. 

These ratings are constrained by CI’s sovereign ratings for Egypt ('B-'/'B'/'Stable') and means significant credit as the Bank’s capacity for timely fulfilling financial obligations “is very vulnerable to adverse changes in internal or external circumstances.”

The bank's Financial Strength Rating (FSR) is backed by its full government ownership, dominant size and market shares, improved loan asset quality, good liquidity and greatly improved profitability metrics during the first half of 2016.

Meanwhile, factors constraining the FSR are high sovereign and political risk factors, low capital ratios, and considerable asset concentrations together with ongoing high credit risk.

“Egypt’s still high, albeit diminishing, economic and political risks continue to weigh on the operating environment and all Egyptian banks as a group,” CI said, noting that a weak balance of payments position and vulnerable exchange rate exacerbate difficult credit conditions.

Regardless of the support of GCC countries and the International Monetary Fund, the operating environment is likely to remain challenging and credit risks significant, the statement revealed.

The report also casted the light on NBE’s high rate of non-performing loans and low capital adequacy ratio, which is just above regulatory requirements.

However, NBE's operating and net profit is expected to grow as its significant government deposits and improved net interest margins inked to an expansion in government securities and net loans.