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Tue 14 Jul 2009 11:06 PM

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Moody’s upgrades Bank of Alexandria

Ratings agency notes Egyptian government successful in move to clean-up debt at Cairo-based bank.

Moody's has upgraded the bank financial strength rating (BFSR) of Bank of Alexandria (BoA) to D with a stable outlook from D-.

The bank's other ratings on Monday were left unchanged, at Baa2/Prime-2 for global local currency deposit ratings and Ba2/Not Prime for foreign currency deposit ratings; the latter rating constrained by Egypt's country ceiling for foreign currency deposits.

The agency said it recognised the significant improvements made to BoA's financial fundamentals over the past two years, primarily the result of a 'cleaning-up' and restructuring process undertaken by the Egyptian government and the bank's management ahead of its privatisation in 2006.

As a result, non-performing loans are fully covered by provision reserves and no major new problematic exposures have been identified since privatisation, earning power and interest margins have recovered and the bank maintains ample balance sheet liquidity with liquid assets at more than 40% of total assets.

The agency also gave the thumbs up to the bank's efforts to broaden and strengthen its corporate and retail banking franchise, improvements made in its IT and organisational structure, as well as operational support provided by its Italian parent, Intesa Sanpaolo.

That said, the BFSR also reflects the relatively weak operating environment, increased competition, BoA's still developing risk management systems, and high credit concentrations.

In addition, in terms of its lending franchise and product variety, BoA still lags behind its private sector competitors.

The last rating action on BoA's BFSR was implemented on August 4, 2008 when the outlook was changed to positive.

Headquartered in Cairo, Egypt, BoA reported total assets of EGP30.8 billion ($5.4 billion) as of the end of March 2009.

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