Fitch Ratings SolvencyIIWire via Flicker Fitch Ratings SolvencyIIWire via Flicker

Fitch praises Egypt’s decision on interest rate cuts

By: MENA
Mon, Oct. 14, 2019
WASHINGTON- 14 October 2019: Fitch Ratings has lauded Egypt’s decision on interest rate cuts for the third time this year.

Fitch said in a press release on Monday that September's cut in the Central Bank of Egypt's discount rate to 13.75%, could provide a much-needed boost to private-sector lending, provided positive economic momentum continues.

Fitch said that pent-up private sector credit demand was high thanks to robust economic growth, expecting GDP growth of 5.5% in 2019 and in 2020.

“Government lending still represents a large share of total bank lending at about 29%, but greater exposure to private-sector lending would diversify banks' business models, encouraging a gradual reduction of government loans and bond holdings,” the note said.

“Private-sector customers provide banks with good opportunities for revenue growth and diversification, particularly through fee income and cross-selling. Higher exposure to the private sector would not necessarily compromise banks' underwriting standards or weaken their asset quality. The private sector includes several large, well-established businesses, notably in construction, real estate development, telecommunications and textiles,” the note added.
 
There are no comments on this article.

Leave a comment