النص الكامل لتقرير «ستاندرد أند بورز» عن بنوك الأهلي ومصر والاسكندرية «إنجليزي»

Outlooks On Egyptian Banks Revised To Negative Following Same Action On Sovereign; Ratings Affirmed “the link“

On April 21, 2023, S&P Global Ratings revised its outlook on Egypt to negative from stable and affirmed the ‘B/B’ long- and short-term sovereign credit ratings.

We do not rate financial institutions in Egypt above the foreign currency sovereign ratings, due to the direct and indirect effects sovereign stress would have on banks’ operations and creditworthiness.

As a result, we revised our outlooks on rated Egyptian banks to negative from stable and affirmed our long- and short-term ratings on these banks.

MADRID (S&P Global Ratings) April 28, 2023–S&P Global Ratings today revised its outlooks on National Bank of Egypt, Banque Misr, and Commercial International Bank (Egypt) S.A.E. to negative from stable. At the same time, we affirmed the ‘B/B’ global long- and short-term issuer credit ratings on the three banks. The rating actions follow the outlook revision on the foreign currency rating on Egypt (see “Egypt Outlook Revised To Negative On External Financing Risks; ‘B/B’ Ratings Affirmed” published April 21, 2023, on Rating Direct).

The outlook revision on the sovereign rating reflects our view that Egypt’s funding sources may not cover its high external financing requirements. We estimate funding needs of about $17 billion for the fiscal year ending June 30, 2023, and $20 billion for fiscal 2024. The lack of sufficient reform implementation has exacerbated pressure on the Egyptian pound and could undermine the timeliness of funding support from multilateral lenders and foreign investors, with negative implications for GDP growth, inflation, and interest rates, among other risks.

Our rated banks operate solely in Egypt. Therefore, we do not believe they would withstand a sovereign default without defaulting on their financial obligations. Furthermore, a lower sovereign credit rating will lead to higher risk weights under our risk-adjusted capital model, which could lead to pressure on the banks’ stand-alone credit profiles (SACPs).

Moreover, Egyptian banks’ creditworthiness is strongly intertwined with that of the sovereign and to domestic economic dynamics. Limited lending opportunities led to increasing banking sector investments in government bonds in recent years, reaching 37% of systemwide assets at Dec. 31, 2022. These investments heightened the nexus between banks and sovereign risk while supporting profitability.

National Bank of Egypt S.A.E. (NBE)

Primary analyst: Marta Heras

Outlook

Our negative outlook on NBE mirrors that on Egypt.

Downside scenario:We would lower the ratings on NBE over the next 12 months if we take a negative rating action on Egypt, or if the operating environment becomes less supportive for banks.

Upside scenario:We will revise the outlook on the bank to stable over the next 12 months if we take a similar action on Egypt, all else being equal.

Ratings Score Snapshot

Issuer credit rating: B/Negative/B

Stand-alone credit profile: b

Anchor: b+

Business position: Strong (+1)

Capital and Earnings: Weak (-1)

Risk position: Moderate (-1)

Funding and Liquidity: Adequate and Adequate (0)

Comparable rating analysis: 0

Support: 0

Additional loss-absorbing capacity (ALAC) support: 0

Government-related entity (GRE) support: 0

Group support: 0

Sovereign support: 0

Additional factors: 0

ESG credit indicators: E-2, S-1, G-4

Banque Misr S.A.E. (Banque Misr)

Primary analyst: Marta Heras

Outlook

Our negative outlook on Banque Misr mirrors that on Egypt.

Downside scenario:We would lower the ratings on Banque Misr over the next 12 months if we take a negative rating action on Egypt, or if the operating environment becomes less supportive for banks.

Upside scenario:We will revise the outlook on the bank to stable over the next 12 months if we take a similar action on Egypt, all else being equal.

Ratings Score Snapshot

Issuer credit rating: B/Negative/B

Stand-alone credit profile: b

Anchor: b+

Business position: Strong (+1)

Capital and Earnings: Weak (-1)

Risk position: Moderate (-1)

Funding and Liquidity: Adequate and Adequate (0)

Comparable rating analysis: 0

Support: 0

ALAC support: 0

GRE support: 0

Group support: 0

Sovereign support: 0

Additional factors: 0

ESG credit indicators: E-2, S-1, G-4

Commercial International Bank (Egypt) S.A.E. (CIB)

Primary analyst: Alessandro Ulliana

Outlook

The negative outlook on CIB mirrors that on Egypt.

Downside scenario:We would lower the ratings on CIB over the next 12 months if we take a negative rating action on Egypt.

Upside scenario:We will revise the outlook on the bank to stable over the next 12 months if we take a similar action on Egypt, all else being equal.

Ratings Score Snapshot

Issuer credit rating: B/Negative/B

Stand-alone credit profile: b+

Anchor: b+

Business position: Strong (+1)

Capital and Earnings: Constrained (0)

Risk position: Moderate (-1)

Funding and Liquidity: Adequate and Adequate (0)

Comparable rating analysis: 0

Support: 0

ALAC support: 0

GRE support: 0

Group support: 0

Sovereign support: 0

Additional factors: -1

ESG credit indicators: E-2, S-2, G-3