Last checked at 14 Jul 2020 07:00
News Release
13 July 2020
COMMERCIAL INTERNATIONAL BANK ("CIB") REPORTS
SECOND-QUARTER 2020 CONSOLIDATED REVENUE OF EGP 6.23 BILLION AND NET INCOME OF EGP 2.60 BILLION, OR EGP 1.57 PER SHARE, DOWN 4% FROM SECOND-QUARTER 2019
· Second-Quarter 2020 Consolidated Financial Results
o Net income of EGP 2.60 billion, down 4% year-on-year (YoY)
o Revenues of EGP 6.23 billion, up 20% YoY
o Return on average equity of 21.1%
o Return on average assets of 2.66%
o Efficiency ratio of 19.2%
o Net interest margin (NIM)[1] of 6.99%
· First-Half 2020 Consolidated Financial Results
o Net income of EGP 5.0 billion, down 7% YoY
o Revenues of EGP 12.7 billion, up 17% YoY
o Return on average equity of 19.2%
o Return on average assets of 2.54%
o Efficiency ratio of 20.7%
o Net interest margin1 of 6.96%
· Competent Balance Sheet
o Total tier capital recorded EGP 55.7 billion, or 29.5% of risk-weighted assets
o CBE local currency liquidity ratio of 69.0%, foreign currency liquidity ratio of 59.6% (comfortably above CBE requirements of 20% and 25%, respectively)
o CIB remains well above the 100% requirement in the Basel III NSFR and LCR ratios
o High quality of funding, with customer deposits comprising 92% of total liabilities
o Non-performing loans coverage ratio of 257%
· Supporting our Economy
o Funding to businesses and individuals grew by 2% over first-half 2020 to record EGP 134 billion, with a loan market share of 6.40%[2]
o Deposits grew by 5% over first-half 2020 to record EGP 319 billion, with a deposit market share of 7.00%2
o In second-quarter 2020, CIB's operations generated EGP 1.60 billion in corporate, payroll and other taxes
· Committed to our Community
o CIB Foundation assisted in furnishing "The Egyptian Naval Forces New Children's Hospital" located in Alexandria with the needed medical equipment and financed the completion of the medical requirements and electro-mechanical works.
o CIB Foundation subsidized "Children Cancer Hospital 57357" with the first Instalment for purchasing 390 infusion pumps and 216 syringe pumps.
o CIB Foundation paid the first instalment to "Raei Masr Foundation for Development" for procuring and equipping 2 mobile clinics to conduct 192 medical convoys in Minya and Sohag with an aim to carry out medical check-ups for 96,000 children annually.
o CIB Foundation, in collaboration with "True Light Society Association for the Visually-Impaired", initiated the implementation of a new project supporting visually-impaired children in their overall life needs and in their incorporation into the public schooling system.
· Awards & Rankings
o Global Finance: Best Treasury & Cash Management Providers in Egypt
o Global Finance: Best Foreign Exchange Provider in Egypt
o Global Finance: Best Bank in Egypt
CAIRO - Commercial International Bank (EGX: COMI) today reported second-quarter 2020 consolidated net income of EGP 2.60 billion, or EGP 1.57 per share, down 4% from second-quarter 2019.
Management commented: "Notwithstanding an outlook that is beset with challenges, CIB managed to upkeep its resilient performance in the second quarter of 2020, delivering singular top line growth while leaving its solvency untouched. This came to pass as the Bank entered the crisis in a position of strength, owing largely to its balance sheet positioning over the past years, with a big chunk of assets in high-end corporate facilities and with a large concentration in longer-term bonds, which came to shield the Bank's profitability against a steeply-declining-interest-rate environment. Key besides these factors has been the collaboration between the Bank's Management and staff and commitment to ensure business continuity and to pull through these unprecedented difficult times. This effectuated as Management took a gear change in developing its communication infrastructure while capitalizing on its pre-existent digital solutions and online banking platforms, in order to maintain work efficiency without giving-in the wellbeing of the Bank's staff and clients.
Conforming to its prudent risk management approach, the Bank's Management deemed it appropriate to resort to the highest permissible provision band in the second quarter of 2020, accumulating provisions of EGP 1bn. The recurrent aggressive accumulation of provisions is not only grounded by profound macroeconomic ambiguity but rather builds more on methodical assessments and competent risk-modelling techniques. This further re-instates the previously bespoken affirmation that Management would spare no effort to keep the Bank's solvency uncompromised, even if at the expense of short-term profitability, contingent upon the givens. For the second half of the year, it is more expected than not that Management would not need to replicate the aggressive provisioning of the first half, attaching weight to the economic activity resumption gradually materializing around the globe. Management yet remains pledged not to overlook any upcoming need to accumulate further provisions that may arise upon either or both of macroeconomic variations and risk assessment inferences thereafter.
On a separate note, while further attesting its resolute fundamentals amidst unfavorable global circumstances, CIB succeeded this quarter to finalize its first acquisition outside Egypt, acquiring a majority stake in Kenya's Mayfair Bank. With that, CIB is the first Egyptian Bank to establish a presence in Kenya, further anchoring its previously signified expansion plans in Africa. The partnership largely capitalizes on CIB's global experience and technical know-how, while CIB takes advantage of the Continent's promise in a very well-regulated market as Kenya, hoping to turn the Bank into a trade finance hub in Kenya and neighboring countries, along."
SECOND-QUARTER 2020 FINANCIAL HIGHLIGHTS
REVENUES
Second-quarter 2020 standalone revenues were EGP 6.24 billion, up 20% from second-quarter 2019. First-half 2020 standalone revenues were EGP 12.7 billion, up 17% from first-half 2019, on the back of net interest income growth. Upon adding/deducting back contingent provision charged/released, which is normally deducted from/added to Net Operating Income as part of Other Operating (Expenses) Income, first-half 2020 standalone revenues grew by 28% YoY.
NET INTEREST INCOME
First-half 2020 standalone NIM1 was 6.96%, generating net interest income of EGP 12.5 billion, up 25% YoY.
NON-INTEREST INCOME
First-half 2020 standalone non-interest income recorded EGP 174 million, representing 1% of total revenues. Adding back contingent provision charged amounting to EGP 1.08 billion for first-half 2020, standalone non-interest income represented 9% of revenues. Trade service fees were EGP 331 million, with net outstanding balance of EGP 69.5 billion.
OPERATING EXPENSE
First-half 2020 standalone operating expense was EGP 2.84 billion, up 9% YoY. Cost-to-income reported 20.7%, 364bp lower YoY[3], and comfortably below the desirable level of 30%.
LOANS
Gross loan portfolio recorded EGP 134 billion, growing by 2% or EGP 2.39 billion over first-half 2020. Growth was driven wholly by local currency loans, which grew impressively by 8% or EGP 6.36 billion. CIB's loan market share reached 6.40% as of March 2020.
DEPOSITS
Deposits recorded EGP 319 billion, growing by 5% or EGP 14.5 billion. Growth was driven mostly by local currency deposits, which grew by 6% or EGP 12.4 billion, and foreign currency deposits grew by 2% or USD 98.4 million. CIB's deposit market share recorded 7.00% as of March 2020, maintaining the highest deposit market share among all private-sector banks.
ASSET QUALITY
CIB maintained its resilient asset quality. Standalone non-performing loans represented 4.03% of the gross loan portfolio, covered 257% by the Bank's EGP 13.9 billion loan loss provision balance. Loan Loss provision expense recorded EGP 2.26 billion for first-half 2020, almost 3x higher YoY.
CAPITAL AND LIQUIDITY
Total tier capital recorded EGP 55.7 billion, or 29.5% of risk-weighted assets as of June 2020. Tier I capital reached EGP 50.5 billion, or 91% of total tier capital.
CIB maintained its comfortable liquidity position above CBE requirements and Basel III guidelines in both local currency and foreign currency. Local-currency CBE liquidity ratio remained well above the regulator's 20% requirement, recording 69.0% as of June 2020, while foreign-currency CBE liquidity ratio reached 59.6%, above the threshold of 25%. NSFR was 229% for local currency and 127% for foreign currency, and LCR was 1592% for local currency and 329% for foreign currency, comfortably above the 100% Basel III requirement.
KEY METRICS AND BUSINESS UPDATES[4]
· #1 private-sector bank in Egypt in terms of revenues, net income, deposits, and total assets
INSTITUTIONAL BANKING
· End-of-period gross loans were EGP 103 billion, 2% lower YtD.
· End-of-period deposits were EGP 104 billion, 5% higher YtD.
· Gross outstanding contingent business reached EGP 77.2 billion, 3% higher YtD.
BUSINESS BANKING
· End-of-period gross loans were EGP 1 billion, 19% higher YtD.
· End-of-period deposits were EGP 25 billion, 7% higher YtD.
· Gross outstanding contingent business reached EGP 1.42 billion, 9% higher YtD.
RETAIL INDIVIDUALS BANKING
· End-of-period gross loans were EGP 30 billion, 15% higher YtD.
· End-of-period deposits were EGP 190 billion, 4% higher YtD.
· CIB continued to expand its network to reach a total of 180 branches and 27 units across Egypt, supported by a network of 1,072 ATMs.
CONSOLIDATED FINANCIAL HIGHLIGHTS | |||||||||
| Income Statement | 2Q20 | 1Q20 | QoQ Change | 2Q19 | YoY change | 1H20 | 1H19 | YoY change |
| EGP million | EGP million | (2Q20 vs. 1Q20) | EGP million | (2Q20 vs. 2Q19) | EGP million | EGP million | (1H20 vs. 1H19) | |
| Net Interest Income | 6,282 | 6,195 | 1% | 5,066 | 24% | 12,477 | 10,006 | 25% |
| Non-Interest Income | (53) | 225 | NM | 142 | NM | 173 | 805 | -79% |
| Net Operating Income | 6,229 | 6,421 | -3% | 5,208 | 20% | 12,650 | 10,810 | 17% |
| Non-Interest Expense | (1,323) | (1,525) | -13% | (1,297) | 2% | (2,848) | (2,619) | 9% |
| Loan Loss Provision | (1,020) | (1,240) | -18% | (274) | 272% | (2,260) | (795) | 184% |
| Net Profit before Tax | 3,887 | 3,656 | 6% | 3,637 | 7% | 7,542 | 7,396 | 2% |
| Income Tax | (1,320) | (1,332) | -1% | (969) | 36% | (2,652) | (2,059) | 29% |
| Deferred Tax | 32 | 75 | -57% | 43 | -24% | 108 | 17 | 522% |
| Net profit from Continued Operations | 2,599 | 2,399 | 8% | 2,711 | -4% | 4,998 | 5,355 | -7% |
| Minority Interest | 0 | 0 | NM | 0 | NM | 0 | 0 | NM |
| Net Profit After Minority | 2,599 | 2,399 | 8% | 2,711 | -4% | 4,998 | 5,355 | -7% |
| |||||||||
| Financial Indicators | 2Q20 | 1Q20 | QoQ Change | 2Q19 | YoY change | 1H20 | 1H19 | YoY change |
| (2Q20 vs. 1Q20) | (2Q20 vs. 2Q19) | (1H20 vs. 1H19) | ||||||
| Profitability | ||||||||
| ROAE | 21.1% | 19.6% | 8% | 26.9% | -22% | 19.2% | 28.1% | -32% |
| ROAA | 2.66% | 2.50% | 7% | 3.04% | -13% | 2.54% | 3.04% | -17% |
| Efficiency | ||||||||
| Cost-to-Income | 19.2% | 22.3% | -14% | 24.6% | -22% | 20.7% | 24.4% | -15% |
| Liquidity | ||||||||
| Gross Loans-to-Deposits | 42.2% | 41.7% | 1% | 40.4% | 4% | 42.2% | 40.4% | 4% |
| Asset Quality | ||||||||
| NPLs-to-Gross Loans | 4.01% | 4.00% | 0% | 4.96% | -19% | 4.01% | 4.96% | -19% |
| Capital Adequacy Ratio | 29.5% | 26.3% | 12% | 25.8% | 14% | 29.5% | 25.8% | 14% |
| STANDALONE FINANCIAL HIGHLIGHTS | ||||||||
| Income Statement | 2Q20 | 1Q20 | QoQ Change | 2Q19 | YoY change | 1H20 | 1H19 | YoY change |
| EGP million | EGP million | (2Q20 vs. 1Q20) | EGP million | (2Q20 vs. 2Q19) | EGP million | EGP million | (1H20 vs. 1H19) | |
| Net Interest Income | 6,282 | 6,195 | 1% | 5,066 | 24% | 12,477 | 10,005 | 25% |
| Non-Interest Income | (43) | 217 | NM | 147 | NM | 174 | 807 | -78% |
| Net Operating Income | 6,239 | 6,412 | -3% | 5,213 | 20% | 12,651 | 10,812 | 17% |
| Non-Interest Expense | (1,321) | (1,524) | -13% | (1,297) | 2% | (2,845) | (2,617) | 9% |
| Loan loss provision | (1,020) | (1,240) | -18% | (274) | 272% | (2,260) | (795) | 184% |
| Net Profit before Tax | 3,898 | 3,648 | 7% | 3,642 | 7% | 7,546 | 7,399 | 2% |
| Income Tax | (1,320) | (1,332) | -1% | (969) | 36% | (2,652) | (2,059) | 29% |
| Deferred Tax | 32 | 75 | -57% | 43 | -24% | 108 | 17 | 522% |
| Net Profit | 2,610 | 2,391 | 9% | 2,716 | -4% | 5,002 | 5,358 | -7% |
| |||||||||
| Financial Indicators | 2Q20 | 1Q20 | QoQ Change | 2Q19 | YoY change | 1H20 | 1H19 | YoY change |
| (2Q20 vs. 1Q20) | (2Q20 vs. 2Q19) | (1H20 vs. 1H19) | ||||||
| Profitability | ||||||||
| ROAE | 21.2% | 19.5% | 9% | 27.0% | -22% | 19.2% | 28.2% | -32% |
| ROAA | 2.68% | 2.49% | 8% | 3.05% | -12% | 2.55% | 3.05% | -16% |
| NIM* | 6.99% | 6.94% | 1% | 6.21% | 12% | 6.96% | 6.23% | 12% |
| Efficiency | ||||||||
| Cost-to-Income | 19.1% | 22.3% | -14% | 24.6% | -22% | 20.7% | 24.4% | -15% |
| Liquidity | ||||||||
| Gross Loans-to-Deposits | 42.1% | 41.7% | 1% | 40.4% | 4% | 42.1% | 40.4% | 4% |
| Asset Quality | ||||||||
| NPLs-to-Gross Loans | 4.03% | 4.00% | 1% | 4.96% | -19% | 4.03% | 4.96% | -19% |
| Direct Coverage Ratio | 257% | 247% | 4% | 200% | 29% | 257% | 200% | 29% |
| *NIM based on managerial accounts | ||||||||
Consolidated | Standalone | |||||
BALANCE SHEET | Jun-20 | Dec-19 | YtD Change | Jun-20 | Dec-19 | YtD Change |
EGP million | EGP million | (Jun-20 Vs. Dec-19) | EGP million | EGP million | (Jun-20 Vs. Dec-19) | |
Cash & Due from Central Bank | 31,267 | 28,274 | 11% | 30,421 | 28,274 | 8% |
Due from Banks | 56,949 | 28,353 | 101% | 56,778 | 28,353 | 100% |
Net Loans & Overdrafts | 120,913 | 119,946 | 1% | 120,234 | 119,946 | 0% |
Financial Derivatives | 316 | 216 | 46% | 316 | 216 | 46% |
Financial Investments Securities | 178,430 | 197,542 | -10% | 178,099 | 197,542 | -10% |
Financial Investment in Subsidiaries | 100 | 108 | -7% | 692 | 64 | 982% |
Other Assets | 12,074 | 12,303 | -2% | 11,753 | 12,301 | -4% |
Total Assets | 400,050 | 386,742 | 3% | 398,294 | 386,697 | 3% |
Due to Banks | 12,277 | 11,811 | 4% | 12,271 | 11,811 | 4% |
Customer Deposits | 320,146 | 304,448 | 5% | 318,944 | 304,484 | 5% |
Other Liabilities | 14,762 | 18,603 | -21% | 14,744 | 18,603 | -21% |
Total Liabilities | 347,186 | 334,862 | 4% | 345,959 | 334,897 | 3% |
Shareholders' Equity & Net Profit | 52,411 | 51,880 | 1% | 52,335 | 51,800 | 1% |
Minority Interest | 453 | 0 | NM | 0 | 0 | NM |
Total Liabilities & Shareholders' Equity | 400,050 | 386,742 | 3% | 398,294 | 386,697 | 3% |
[1] Based on managerial accounts.
[2] As of March 2020; latest available CBE data at time of print.
[3] Cost-to-income is, as has normally been, calculated using revenues after adding/deducting back contingent provision charged/released.
[4] Loan, deposit, and outstanding contingent balances based on managerial accounts.