The Asian Banker Thursday, 12 December 2024

Commercial International Bank releases Q2 2017 financial results

Record Second-Quarter 2017 Consolidated Financial Results

Record First-Half 2017 Consolidated Financial Results

Robust Balance Sheet

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Commercial International Bank reported second-quarter 2017 consolidated revenue of EGP 3.55 billion and net income of EGP 1.83 billion, or EGP 1.39 per share, up 25% from second-quarter 2016.

Management commented: “As clearly stated in our last couple of releases, CIB’s Management anticipated a forthcoming increase in corridor rates, despite a 300bp hike having already taken place towards the end of 2016 post the Egyptian Pound floatation. Responsively, Management started reengineering the Bank’s balance sheet beforehand, continuing to direct funds towards shorter-duration assets in order to make the most of any interest rate movements. Only a few months later, our expectation actually materialized, as the CBE took the decision to raise benchmark rates by 200bp during the second quarter of 2017. CIB, however, managed to deliver commendable results, achieving record top and bottom lines and impressively growing its loan portfolio, despite the backdrop of a shortage in local currency liquidity and subdued growth in lending, which adversely impacted margins in the Egyptian Banking sector.

Amid the current ambiguity of the situation, especially with regards to the CBE corridor rate movement decisions, we remain comfortable with the Bank’s resilient fundamentals to withstand economic pressures and to continue to deliver market-leading performance while maintaining comfortable capital and liquidity positions, in accordance with both CBE regulations and international best practices, as the Bank’s balance sheet has become more lenient to accommodate any up- or down-moves in both interest rates and currency exchange rates. We expect the second half of 2017 to be challenging and eventful, as the effects of the country’s economic reforms continue to ripple through the economy. Specifically, the road ahead is beset by challenges, ranging from current inflation rates to the more recent 200bp corridor rate hike.”

SECOND-QUARTER FINANCIAL HIGHLIGHTS

REVENUES

Second-quarter 2017 standalone revenues were EGP 3.55 billion, up 29% from second-quarter 2016, driven mainly by NII growth.

Net Interest Income

Year-to-date (YtD) net interest margin (NIM)2 was 4.66%, generating net interest income of EGP 5.74 billion, up 27% YoY.

Non-Interest Income

Standalone non-interest income for first half of 2017 was EGP 1.43 billion (20% of revenues). Trade service fees were EGP 423 million. Trade service net outstanding balances stood at EGP 71.08 billion, 4% higher YtD.

OPERATING EXPENSE

Standalone operating expense for first half of 2017 was EGP 1.5 billion, up 25% YoY. Cost-to-income reported 20.78% down from 22.29% in first-half 2016, comfortably below the desirable level of 30%.

LOANS

CIB’s total consolidated gross loan portfolio was EGP 104 billion, adding EGP 7.01 billion, or 7% YtD. CIB’s loan market share reached 7.40% as of March 2017. CIB witnessed 30% growth in its local currency gross loan portfolio in first half of the year adding EGP 13bn and outweighing foreign currency loan repayments by an equivalent of EGP 6bn.

DEPOSITS

Deposits were EGP 245 billion, adding EGP 13.42 billion, or 6% YtD. CIB’s deposit market share was 8.36% as of March 2017, maintaining the highest deposit market share among all private-sector banks.

ASSET QUALITY

CIB maintained its resilient asset quality. Standalone non-performing loans represented 6.81% of the gross loan portfolio, covered 148.41% by the Bank’s EGP 10.56 billion loan loss provision balance. Loan loss provision expenses were EGP 303 million in the second quarter of 2017, as CIB continued its conservative risk management strategy to counter current and potential economic challenges in certain industries.

CAPITAL AND LIQUIDITY

Total tier capital was EGP 24.77 billion, or 15.61% of risk-weighted assets as of June 2017. Tier I capital was EGP 23.10 billion, or 93% of total tier capital.

CIB maintained its comfortable liquidity position above CBE requirements and Basel III guidelines, which have been recently enforced by the CBE, in both local currency and foreign currency. LCY CBE liquidity ratio remained well above the regulator’s 20% requirement, recording 57.18% as of June 2017, while FCY CBE liquidity ratio reached 55.41%, above the threshold of 25%. NSFR was 195.92% for local currency and 144.93% for foreign currency, and LCR was 659.23% for local currency and 475.25% for foreign currency, comfortably above the 100% Basel III requirement.

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