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-Capital Intelligence upgrades National Societe Generale Bank's FSR to A-.

BANKING AND CREDIT NEWS-October 20, 2010--Capital Intelligence upgrades National Societe Generale Bank's FSR to A-(C)2010 M2 COMMUNICATIONS

20 October 2010 - Capital Intelligence upgraded yesterday to A- from BBB+ the financial strength rating (FSR) of Egypt-based National Societe Generale Bank SAE (NSGB) and affirmed all other ratings of the lender.

The agency issued the following press release:

Capital Intelligence (CI), the international credit rating agency, announced today that it has raised Egypt based Nationale Societe Generale Bank SAE's (NSGB) Financial Strength Rating to A- from BBB+.

The ratings action is based on an assessment of the positive trend in the bank's intrinsic financial strength, as well as of its strong business franchise.

The Support rating is affirmed at 2 given majority ownership by Societe Generale (SocGen) and the strong likelihood of support from Central Bank of Egypt (CBE) should it be required.

The Long- and Short-term Foreign Currency Ratings, which continue to be constrained by Egypt's sovereign ratings, are affirmed at BBB- and A3 respectively.

The outlook remains Stable for all ratings.

The bank's ratings are underpinned by its improving asset quality, its consistently strong profitability and the management support provided by its majority shareholder SocGen.

NSGB has successfully executed a clear business strategy and consolidated its position as the second largest private sector bank in Egypt.

The ratings are constrained by the bank's somewhat lower than peer group liquidity, the heightened credit risks derived from a rising share of retail in the bank's loan book, as well as by the expectation of more competitive operating conditions.

During 2009 growth in loans slowed reflecting lower economic growth in Egypt, reduced demand for credit and careful implementation by the bank of its expansion plans.

Strong collections as well as writeoffs led to a further reduction in NPLs and an improvement in the NPL ratio, which at year end had reached quite a good level, with more than full loan-loss coverage.

The bank's cost of risk is well contained due to stringent risk management policies and a cautious approach to developing new retail business.

Despite only measured growth in loans, NSGB delivered good growth in operating profit and high profitability, even though net profit grew more modestly because of lower releases of bad debt provisions.

The bank's capital adequacy ratio also strengthened to a very good level and continues to do so in 2010 on the back of very strong internal capital generation.

The bank has a strong customer deposit funding base, diversified between corporate and retail clients, which registered strong growth in 2009.

Liquidity remained more than comfortable with a high share of assets placed in local government treasury bills and a strong net interbank lender position.

NSGB was established in 1978 as a joint-venture between National Bank of Egypt (NBE), with a 51% share and SocGen of France, with 49%. The bank is listed on the Egyptian Exchange. In 2005, following the sale of NBE's stake, SocGen raised its share to 77.17%.

The same year NSGB acquired its larger rival Misr International Bank with which it merged in December 2006.

The bank has since then pursued an organic growth model and has achieved a 6.44% market share of loans and 5.04% share of customer deposits. The bank operates a nationwide distribution network of more than 135 branches and offers a broad range of corporate and retail banking products.

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Publication:M2 Banking & Credit News (BCN)
Geographic Code:7EGYP
Date:Oct 20, 2010
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