...Bank and Sovereign Strongly Correlated: National Bank of Egypt's (NBE) Issuer Default Rating (IDR) is driven by its Viability Rating (VR). NBE's VR reflects its significant exposure to the Egyptian sovereign (B/Stable) through its large portfolio of sovereign debt, significant loan concentration and weak capitalisation. The VR also reflects NBE's dominant market position, improved asset quality metrics, solid funding franchise and improved profitability, which is now almost in line with that of private sector peers. Challenging Operating Environment: The domestic operating environment is expected to remain challenging and is exacerbated by the devaluation of the Egyptian pound, shortage of foreign currency (FC) and weak performance of the tourism sector. Credit demand from private commercial counterparties with better credit quality is still modest. Improved Asset Quality Metrics: The impaired loans ratio reduced to about 3% at end-2015 as the bank continued to write off some legacy impaired...
