Moody's on Oct. 10 revised the outlook on the Egyptian banking system to positive from stable, reflecting an increased pace of economic growth, which the rating agency said will support banks' credit growth, profitability and internal capital generation.

The positive outlook also reflects strong ties between banks and the Egyptian state's improving credit profile, which is due to lenders' large exposure to the government through investments in securities and loans, Moody's added.

Moody's said Egypt's improving operating environment, which followed the implementation of reforms that pointed the nation toward sustainable and inclusive growth, was also a key factor in the outlook revision.

Moody's expects Egyptian banks' profitability and their funding and liquidity profiles to remain strong, but noted that their capital buffers will likely improve only modestly as internally generated capital will be used to finance loan growth.