Standard & Poor's maintains high-risk rating for Egypt banks

Agency says main danger for nation's banks comes from their operating environment and current political uncertainties

Standard and Poor's is maintaining its high-risk assessment of Egypt's banking sector due to political and economic uncertainty, the credit ratings agency said on Wednesday.
S&P's has given Egypt's banks a Banking Industry Country Risk Assessment (BICRA) score of 8 out of 10, reflecting what it says are the country's risks in resilience, credit and economic imbalances.
Other countries to be graded 8 include Argentina, Lebanon, Nigeria and Tunisia.
A statement from Standard and Poor's claimed the main risks facing Egyptian banks relate to their operating environment.
"We expect uncertainties surrounding the political transition phase following February's ouster of President Hosni Mubarak, and potential security issues, to hamper the country's economic growth," it said.
"Egypt is sensitive to a sharp economic downturn because of the low level of wealth in the country (GDP per capita is below $3,000) and the fast-growing population.
"Public finances have also weakened. Combined, these factors are likely to weaken asset quality and profitability indicators for banks," it added, before ending on a more optimistic note.
"Long-term economic prospects remain good. The existing infrastructure and key service industries, such as tourism, underpin Egypt's economic potential."