< Arab Finance - News - Egypt’s banks expected to see further pressure on COVID-19 fallout
Count Down to relaunch



Egypt’s banks expected to see further pressure on COVID-19 fallout

Egypt’s banks expected to see further pressure on COVID-19 fallout

ArabFinance: Egyptian banks are expected to see further pressure on profitability through 2021 amid the economic fallout of the pandemic, Fitch Ratings said in its report on April 7th.

The agency attributed the reason to lower interest rates and higher loan impairment charges as borrower support measures end.

Regulatory capital ratios are inflated by the zero risk-weighting on local-currency sovereign debt.

“Capitalisation remains a credit weakness and foreign-currency liquidity is still vulnerable to external shocks,” the report highlighted.

Egypt’s banking sector could benefit from growth and revenue opportunities, with Egypt’s lockdowns less stringent than those in many jurisdictions, and consumer consumption and public investment more resilient.

The sector average Stage 3 loans ratio was stable at 3.4% at end-3Q20, supported by the Central Bank of Egypt’s (CBE) significant interest rate cuts to boost lending, a six-month deferral of loan repayments and flexibility on how banks classify loans.

“We believe these measures have delayed rather than prevented asset-quality deterioration,” Fitch said.

The rating agency expected the sector average Stage 3 loans ratio to increase to about 4% by end-2021. 

 

 

#Related keywords

'

Recommended Stocks

11 Oct 2020
Tenth Of Ramadan Pharmaceutica... RMDA
Close
00
Change
00
Buy

All rights reserved to Arab Finance 2020 ©

Back to top