Cairo – Mubasher: Fitch Ratings has revised the outlook on the long-term issuer default ratings (IDRs) of the National Bank of Egypt (NBE), Banque Misr, Banque du Caire (BDC), and Commercial International Bank (CIB) from stable to positive.

The rating agency also affirmed the banks’ IDRs at 'B-', according to a statement.

Fitch stated that recent investments, financial support packages, and the liberalisation of the pound’s exchange rate, which boosted foreign currency liquidity, will bring “greater macro stability” in the fiscal year (FY) 2024/2025. This development will positively impact Egyptian banks’ business, risk, and financial profiles.

“We expect the banking sector to return to a net foreign assets position by the end of the first half of 2024, driven by continuing disbursements of funds under the Ras Al Hekma deal, as well as recovering remittances and tourism receipts,” Fitch said.

These factors, the rating agency added, contributed to revising the funding and liquidity scores of NBE, Banque du Caire, Banque Misr, and CIB from stable to positive.

Fitch links the four banks’ ratings to Egypt’s due to their “significant direct exposure to the sovereign through sizeable holdings of Egyptian government debt and lending to public sector companies.”

According to the rating agency, the Egyptian banking sector's total exposure to the sovereign and the broader public sector was 53% of total assets, or about 8.30 times the banks' equity, by the end of 2023.

Earlier in May, Fitch Ratings revised the outlook on Egypt's long-term foreign-currency IDR from stable to positive.