Fitch Affirms Banque du Caire at 'B'; Outlook Negative

BDC's IDRs are driven by its standalone creditworthiness, as expressed by its VR. The Negative Outlook on the IDRs mainly reflects that on the Egyptian sovereign, but also operating environment pressures.

The bank's VR reflects the correlation between BDC's credit profile and that of the sovereign given its sizeable holdings of government debt (end-1Q23: 28% of total assets), balances at the Central Bank of Egypt (CBE; 12%) and lending to public-sector companies (5%). The VR also reflects BDC's strong retail franchise, moderate loan quality and stable funding, but also below-average profitability, moderate core capital ratios, and limited external foreign-currency (FC) liquidity.

BDC's National Long-Term Rating of 'AA(egy)' /Stable reflects its creditworthiness relative to that of other issuers in Egypt.

Weaker Operating Conditions: Economic conditions for Egyptian banks have deteriorated since March 2022 on tight external liquidity conditions (underlined by recurring FC shortages), rising inflation (35.7% in June 2023) and weak business conditions in the non-oil sector.