What:
On Tuesday, Moody’s — one of the Big Three credit rating agencies — upgraded the long-term deposit ratings outlook of five local banks to positive from negative.
The Five Banks:
The credit rating heavyweight confirmed the Caa1 long-term deposit rating for state-owned lenders including the National Bank of Egypt, Banque Misr, and Banque du Caire, along with Egypt’s largest private sector bank, CIB. Additionally, Moody’s has reaffirmed a B3 rating for the Bank of Alexandria.
Claps Class:
The long-term deposit ratings outlook refers to Moody’s assessment of the future trajectory of these banks’ creditworthiness, specifically regarding their ability to meet financial obligations on deposits over an extended period.
But it’s not a rating change. Unlike an actual change in the rating, the outlook change focuses on expectations for the future.
So What:
This change signifies a shift in confidence toward the financial stability and growth potential of these banks, making them more attractive investment options.
For foreign investors, this upgrade signals increased stability and potential profitability in investing in these banks, as it suggests improving financial health and reduced risk.
Now What:
“A ratings upgrade would require a material strengthening of the operating environment and in the government’s credit profile, and provided that the banks maintain their resilient financial performance and adequate foreign currency liquidity,” Moody’s wrote.
Moody’s anticipates that the recent series of reforms will lead to an increased influx of remittances through official channels, alongside a rise in foreign investments and portfolio flows.
