Commercial International Bank Egypt SAE led declines among Egyptian banks after Moody’s Investors Service revised its outlook to “negative” for the industry, citing “elevated political uncertainty.”
Commercial International, the nation’s biggest publicly traded lender, lost 4.4 percent to 27.37 Egyptian pounds, the lowest level since December 2009. Credit Agricole Egypt retreated 1.7 percent to 10.73 pounds, its lowest level in more than three weeks. All 10 bank stocks traded in Egypt declined. The benchmark EGX 30 Index fell 1.9 percent.
“We can’t expect these banks to be as profitable as last year,” said Ryan Ayache, an analyst at Deutsche Bank AG in Dubai, who expects up to a 15 percent decline in profits for Egyptian banks. “Profitability is critical but it’s not everything. Other things we’ll be looking at include asset quality, capital position and liquidity, which we expect to be relatively resilient.”
Moody’s yesterday lowered its outlook for the Egyptian banking industry in the next 12 to 18 months from “stable,” as the profitability of Egyptian banks is expected to come “under pressure.”
Egypt’s economic growth may slow to 2 percent over that period and there’s increased “risk involved in an orderly transition toward democratic rule,” Limassol, Cyprus-based analyst Nondas Nicolaides wrote in a research note yesterday.