"Our ratings on Arab Mediterranean banks have been dragged down since the end of 2010 by the deteriorating creditworthiness of their respective sovereigns, especially given the concentration of government paper that banks carry on their balance sheets," said S&P.
"Sovereign creditworthiness will likely remain the main driver behind bank ratings changes over the period. But we note that many other risk metrics for the banks have remained fairly resilient, from profitability to funding and asset quality," said Standard & Poor's credit analyst
Egyptian, Lebanese, and Tunisian banks have been suffering from muted corporate lending growth but, surprisingly, the reported deterioration of asset quality indicators is so far well-contained, despite the magnitude of the geopolitical events civil societies are going through in these countries, and their spill over effects on economic growth.
S&P continues to believe that banks in the region are poised for recovery if political and geopolitical risks abate, because of the real economic growth potential of supportive demographics, educated workforces, increasing financial inclusion, and product sophistication. "Our expectations are supported by our observation that the region's banking sectors, unlike its political institutions, have resisted the crisis well," Hardy said.
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
OCTOBER 31, 2014
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