...Strongly Correlated with Sovereign: National Bank of Egypt's (NBE) Long-Term 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 considers 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 operating environment in Egypt is improving but remains challenging. The Egyptian pound lost about half of its value against the US dollar after it was floated in November 2016. This improved foreign-currency (FC) liquidity, which was previously controlled by the Central Bank of Egypt (CBE) auctions, creating a backlog of FC requirements for corporates. Economic activity is expected to remain subdued in 2017 given the high interest...
