Moody’s Upgrades Egypt’s Banking System to ‘Stable’ – Statement

Credit ratings provider Moody’s upgraded its rating of the Egyptian banking system to “stable” from “negative” on Wednesday, saying it expects banks’ funds and liquidity positions to remain strong within the next 12 to 18 months.

Moody’s said in a statement that Egypt’s expected growth in this fiscal year, 5 percent, would be mainly prompted by large, government-led infrastructure projects, increased foreign investment, and a rise in tourism.

“We expect that Egypt’s banking system will benefit from improved operating conditions, resulting in rising consumer confidence and business investments, which in turn will support loan growth and asset quality”, says Melina Skouridou, Moody’s lead analyst for Egyptian banks.

Skourido said Moody’s expects Egyptian banks’ deposit-based funding structure to continue to grow, describing it as a “credit strength”.

The central bank dipped the Egyptian pound by 20 piastres in a double depreciation starting July 2, standing at 7.73 pounds to the dollar.

Analysts say the move could attract cash flow and investment.

On January 18, the central bank allowed the Egyptian pound to weaken in front of the U.S. dollar for the first time in six months.

It said the step was taken to eliminate the unofficial currency market, known as the black market.

In a second blow to the parallel market, the central bank capped on February 5 the amount of dollars that can be deposited in banks.