RTTNews - Moody's Investors Service on Wednesday said the outlook for the Egyptian banking sector is stable, reflecting the system's relative isolation from and resilience to the global crisis as also the considerable progress of the banking sector reforms.
At the same time, the firm said downside risks remain, with the potential intensification of the economic slowdown and its impact on the banking sector being the major risk to the stable outlook.
The stable outlook for the direction of credit conditions in the Egyptian banking system reflects the considerable progress achieved in the Central Bank of Egypt (CBE) reform programme, which has led to sector consolidation. This reform has also helped banks address the issue of the high level of legacy non-performing loans (NPLs) and the ongoing financial and managerial restructuring of state-owned banks, Constantinos Kypreos, a Moody's Vice President-Senior Analyst, and author of the report said.
However, a number of challenges remained, in the form of high lending concentrations, mismatches in the maturity profile of assets and liabilities, and the still weak financial fundamentals of state-owned banks, which were the downside risks to the stable outlook, Moody's said.
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