The Commercial International Bank (CIB) – Egypt reported a first quarter (1Q) 2022 consolidated net income of EGP 4.24bn — or EGP 1.90 per share — up by 48% from 1Q 2021.
In a statement, the bank’s management commented that “1Q 2022 ended on a challenging note on both global and local fronts as global economic uncertainty intensified with the Russian -Ukrainian War. With this turn of events, the Central Bank of Egypt (CBE) raised the corridor rate by 100 basis points, coupled with devaluation in the Egyptian pound against the USD by EGP 2.5 as a result of the global inflation.”
The CIB’s management opted to accrue provisions of EGP 1bn for direct and contingent facilities in 1Q of 2022 in line with the bank’s prudent risk management, preemptively securing coverage for 11% of the bank’s gross loan portfolio by loan loss provisions.
Moreover, solvency and coverage for unexpected losses remained intact, with the capital adequacy ratio resting comfortably at 31%, safely unscathed by recent developments.
With a focus on core performance, the CIB had a strong start into the year, delivering top- and bottom-line growth of 24% and 48%, respectively, compared to last year.
This came as a result of a balance sheet that sustained growth momentum at administered costs, especially on the local currency front, associated with strong local currency deposit growth from last year, along with proactive treasury management.
Additionally, local currency loans grew by 33% compared to last year, boosting fee and commission income growth with continued progress in trade finance and foreign exchange activities.
“Management remains confident in the bank’s ability to uphold its market-leading performance on both the profitability and solvency fronts, supported by its flexible balance sheet structure and prudent risk management, which would cement the bank’s position against any unforeseen market dynamics.”
The standalone revenues of 1Q 2022 were EGP 7.63bn, up by 22% from 1Q 2021, on the back of net interest income increasing by 16% or EGP 0.93bn, alongside non-interest income increasing by 74% or EGP 0.44bn.
Furthermore, the standalone net interest income recorded EGP 6.60bn, increasing by 16% y-o-y, generating at total NIM of 5.66%, with foreign currency NIM recording 1.30%, increasing by 37bp y-o-y, and exactly offset by local currency NIM decreasing by 35bp to record 7.14%.
The quarter’s standalone non-interest income recorded EGP 1.03bn, increasing 74% y-o-y. Upon adding back-contingent provisions, which are normally deducted from non-interest income as part of other operating expenses, it reached EGP 758m for 1Q 2022 and EGP 121m for 1Q 2021.
Trade service fees also recorded EGP 232m, growing by 18% y-o-y, with an outstanding balance of EGP 106bn.
In terms of standalone operating expenses, the bank recorded EGP 1.55bn, up by 5% y-o-y. It also reported a cost-to-income of 18.4%, 463bp lower y-o-y, remaining comfortably below the desirable level of 30%.
Additionally, gross loan portfolio recorded EGP 177bn, growing by 9% year-to-date (YtD), with a real growth of 4% net of the EGP’s devaluation impact, which added EGP 7.92bn to the EGP equivalent balance.
Growth was driven mainly by local currency loans growing by 8% or EGP 9.38bn, sufficiently counterbalancing net foreign currency loan repayments by 6% or $184m. The CIB’s loan market share also reached 5.27% as of December 2021.
Deposits recorded EGP 428bn, growing by 5% YtD, with a real growth of 1% net of the EGP’s devaluation impact, which added EGP 15.3bn to the EGP equivalent balance.
Growth was driven mainly by foreign currency deposits adding 8% or $468m, covering net local currency deposit outflows by 1% or EGP 2.28bn. The CIB’s deposit market share recorded 6.30% as of December 2021, maintaining the highest deposit market share among all private-sector banks.
Moreover, the CIB maintained its resilient asset quality. Standalone non-performing loans represented 4.90% of the gross loan portfolio, with the bank covering 218% of its EGP 19bn loan loss provision balance.
The quarter’s loan loss provision recorded EGP 41m provision reversals compared to a loan loss provision expense of EGP 702m in 1Q 2021.
The total tier capital recorded EGP 72.8bn, or 30.6% of risk-weighted assets as of March 2022. Tier I capital reached EGP 64.5bn or 89% of the total tier capital.
The CIB maintained its comfortable liquidity position above the CBE requirements and Basel III guidelines in both local currency and foreign currency. The CIB’s local currency liquidity ratio remained well above the regulator’s 20% requirement, recording 51.5% as of March 2022, while its foreign currency liquidity ratio reached 66.5%, above the threshold of 25%.
Furthermore, its NSFR was 259% for local currency and 171% for foreign currency, and LCR was 1921% for local currency and 271% for foreign currency, comfortably above the 100% Basel III requirement.