Credit Agricole faces tough times in Egypt

Credit Agricole Egypt posted a 13.3 per cent increase in profit compared with last year - but the outlook is much murkier for the year ahead.

This month, the bank was at the centre of a controversy after Abdel Meguid Mahmoud, Egypt's prosecutor general, asked the governor of the central bank to freeze the assets of the business tycoon Yassin Mansour along with those of 25 former ministers, businessmen and public figures, pending investigations into corruption charges.

Mr Mansour owns 19 per cent of Credit Agricole Egypt through his company and holds the title of non-executive member on the bank's board of directors. Mr Mansour is also a representative of Mansour Group and Maghrabi Investment Company, which are owned by the family of the former minister of housing Ahmed al Maghrabi.

Mr al Maghrabi faces charges of using his position to secure government land plots for his company, the property developer Palm Hills, and others in violation of Egyptian law.

Credit Agricole Egypt this month announced that it had frozen Mr Mansour's accounts.

But it is the bank's financial position as much as its political difficulties that concern CI Capital, which cut the lender's rating to "underweight" from "strong buy".

CI lowered the lender's projected loan growth from 26.6 per cent to 11.4 per cent and its deposits growth from 17.6 per cent to 6.7 per cent.

Egyptian banks closed for more than a week amid violence on the streets of Cairo and other cities at the height of the protests that toppled Hosni Mubarak from the presidency. The bank closure the country at least 310 million Egyptian pounds (Dh191.9m) a day, and the short-term economic future remains uncertain.

Credit Agricole shares have been frozen since the Egyptian Exchange closed on January 27 amid the uprising against Mr Mubarak.

The bank, 60 per cent owned by France's Credit Agricole, said its total loans increased 29.3 per cent last year compared with the previous year, while deposits increased by 8.4 per cent.