Egyptian banks downgraded

Moody’s has downgraded the ratings
of five Egyptian banks due to ongoing unrest in that nation, a move that could
hurt the ability of those banks to borrow money.

The ratings agency said the
downgrades resulted from a reassessment of Egypt’s capacity to support its
banking system, following the agency’s lowering Monday of the government’s debt
rating.

Moody’s cut the local deposit
ratings of four Egyptian banks by two notches.

The lenders include Bank of
Alexandria, Banque Misr, Commercial International Bank, and National Bank of
Egypt. The agency also cut the local deposit rating of Banque du Caire by one
notch.

It says the new ratings of all five
banks remain under review for possible further downgrade.

Moody’s said the current political
uncertainty in Egypt may “negatively impact foreign direct investment
flows” into the country and “disrupt economic activity.”

It also warned of a possible
weakening in Egypt’s main economic sectors, including tourism, exports,
textiles, real estate and construction.

Moody’s predicted that a worsening
economic environment will hurt Egyptian banks’ loan portfolios, forcing them to
raise their bad loan provisioning and damaging their profitability.

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