Moody's Investors Service upgraded the outlook for Egypt's banking system to "positive" from "stable" on Wednesday.

In its report, Moody's attributed the upgrading to increased economic growth, credit growth, bank's profitability and internal capital generation in the North African country.

The positive outlook was also driven by the Egypt's accelerating economy and strong loan demands, the report said.

Other key drivers of Moody's positive outlook for the Egyptian banking system is the improving operating environment, following the implementation of structural reforms, according to the report.

The report expects Egypt's real gross domestic product (GDP) growth to reach 5.5 percent in 2019 from 4.2 percent in 2017.

"Increased domestic private sector investment, large infrastructure projects as well as higher exports will drive economic growth and credit demands," Moody's Assistant Vice President Melina Skouridou said.

The report concluded that Egyptian banks' fund and liquidity profiles will return strong as the two largest government-owned banks, National Bank of Egypt and Banque Misr, have increased their market funding significantly.