National Societe Generale Bank, Egypt's second-biggest publicly listed lender, has reported a 3 per cent rise in profits for the first quarter.
But the lender may still be hurt by the economic fallout from the country's revolution.
National Societe Generale Bank (NSGB), which is 77.2 per cent owned by Societe Generale of France, reported a net income of 364 million Egyptian pounds for the quarter, up from 353m pounds in the same period last year. But non-impaired arrears, which track defaults older than 30 days, nearly doubled to 516m pounds, up from 259m pounds for the first three months of last year. That indicates to some analysts provisions will continue to rise sharply in the coming quarters.
"It is a first sign that asset quality is indeed deteriorating," said Jaap Meijer, an analyst at Alembic HC Securities in Dubai. "It is nevertheless too early to see the full effects of the uprising in Egypt."
Mr Meijer has an "underweight" rating on the stock, with a fair value price of 41.5 pounds.
NSGB, which listed on the Egyptian Exchange, declined 3.5 per cent to 35.45 pounds yesterday. Shares have already lost more than a quarter of their value this year.
Mr Meijer said he was troubled by the share of provisions allocated to Egypt by the parent company.
Societe Generale took Ä50m in collective provisions for its African division, of which Egypt made up 45 per cent. NSGB took only 15.9m pounds in provisions.
If NSGB had been as aggressive with provisions as its parent company, it would have reduced its quarterly profits by about half.
The bank's costs also rose about 23 per cent.
"The company cited the addition of seven new branches as the main reason, but it could also be that salaries have been increased as a result of national strikes and wage increases across the country," Mr Meijer said.