{"id":322857,"date":"2021-08-04T13:06:10","date_gmt":"2021-08-04T13:06:10","guid":{"rendered":"https:\/\/egy-africa.com\/en\/?p=322857"},"modified":"2021-08-04T13:06:10","modified_gmt":"2021-08-04T13:06:10","slug":"egyptian-banks-credit-risks-ease-on-improving-economy-fitch","status":"publish","type":"post","link":"https:\/\/egy-africa.com\/en\/2021\/08\/04\/egyptian-banks-credit-risks-ease-on-improving-economy-fitch\/","title":{"rendered":"Egyptian banks\u2019 credit risks ease on improving economy, Fitch"},"content":{"rendered":"

Fitch Ratings said on Tuesday that pressures on Egyptian banks\u2019 credit profiles and viability ratings have eased on improvements in the country\u2019s operating environment since end of the third quarter of 2020.<\/p>\n

The rating agency has revised its outlook on the Egyptian banking sector\u2019s operating environment to stable from negative in July, largely due to the improvement in foreign-currency (FC) liquidity, which had net foreign assets of $1.7 billion at the end of June 2021.<\/p>\n

\u201cWe revised our outlook on the Egyptian banking sector\u2019s operating environment to stable from negative in July, largely due to the improvement in foreign-currency (FC) liquidity, which had net foreign assets of USD1.7 billion at end-June 2021. This compares with net foreign liabilities of USD5.3 billion at end-April 2020 after foreign investors sold their holdings of local-currency government securities at the start of the pandemic, causing USD17 billion worth of portfolio outflows.\u201d Fitch said in a statement<\/a>.<\/p>\n

\u201cEgyptian banks\u2019 Issuer Default Ratings that are driven by their Viability Ratings are now on Stable Outlook, reflecting the stable outlook on the operating environment.\u201d<\/p>\n

The FC liquidity improved as foreign holdings of Egyptian treasuries rose to $29 billion at the end of May 2021 from $10 billion at the end of June 2020 and the sovereign issued $4.55 billion of Eurobonds between September 2020 and February 2021.<\/p>\n

Fitch added that a $5.2 billion IMF Stand-By Arrangement helped to restore investors\u2019 confidence. FC remittances were also resilient in 2020, increasing 10 percent year-on-year to $30 billion.<\/p>\n

\u201cThe banking sector\u2019s net foreign assets of USD1.7 billion at end-June 2021 were still below pre-pandemic levels (end-February 2020: USD7.3 billion) due to higher foreign liabilities as banks borrowed more from international development finance institutions to support their FC liquidity.\u201d<\/p>\n

Fitch explained that the increase in foreign liabilities poses some repayment risks as banks\u2019 debt-servicing capacity could come under renewed pressure from another wave of sell-offs by foreign investors.
\nHowever, about 70 percent of the sector\u2019s external debt is long-term and banks hold adequate stocks of FC liquid assets against their short-term FC liabilities, the rating agency noted.<\/p>\n

\u201cSome banks have started to pre-pay their FC term loans given their comfortable liquidity buffers and weak demand for FC loans, with lending geared towards working capital financing rather than capex.<\/p>\n

Fitch said it expect banks\u2019 FC liquidity in 2021-2022 to be supported by Egypt\u2019s expected stable current account deficit, higher FX reserves, and a gradual pick-up in tourism.<\/p>\n

\"\"<\/figure>\n","protected":false},"excerpt":{"rendered":"

Fitch Ratings said on Tuesday that pressures on Egyptian banks\u2019 credit profiles and viability ratings have eased on improvements in the country\u2019s operating environment since end of the third quarter of 2020.<\/p>\n","protected":false},"author":4,"featured_media":320008,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[22,33],"tags":[161],"class_list":["post-322857","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","category-main","tag-fitch-ratings"],"yoast_head":"\nEgyptian banks\u2019 credit risks ease on improving economy, Fitch - egy-africa<\/title>\n<meta name=\"description\" content=\"Fitch Ratings said on Tuesday that pressures on Egyptian banks\u2019 credit profiles and viability ratings have eased on improvements in the country\u2019s operating environment since end of the third quarter of 2020.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/egy-africa.com\/en\/2021\/08\/04\/egyptian-banks-credit-risks-ease-on-improving-economy-fitch\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Egyptian banks\u2019 credit risks ease on improving economy, Fitch - 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