Com.int.bk.regs Regulatory News (CBKD)

CIB Delivers Historical Performance with over EGP 2 bn in Net Profits

CAIRO, February 23rd, 2011 - Commercial International Bank (CIB), the leading financial institution in Egypt, today released its full year results. With its strong corporate franchise, rapidly-growing consumer business and disciplined risk management, CIB continues to deliver solid profit growth and high returns on assets and equity while maintaining strong asset quality and liquidity.

• On a consolidated basis, CIB achieved EGP 2,006 million of Net Profit After Tax (NPAT) in 2010, an increase of 15% over 2009.Excluding the effect of the Goodwill Amortization charge of EGP 40mn and the Intangible Assets Amortization charge of 129mn, the Bank's profits on a consolidated basis reflect a 24.7% growth over 2009.

• ROAE and ROAA remained healthy at 25.72% and 2.87% respectively.

• On a stand alone basis, Net Interest Margin in December 2010 remained healthy at 3.62%.

• The Bank's loans increased by 26.69% as of December 2010, while the overall market for loans grew by 9.73% during the first eleven months of the year.

• The unabated corporate demand and the increased efficiency of the retail systems led to a rise in CIB's loans to deposits ratio to record 57.95% as compared to 53.03% in December 2009

• CIB's market shares in both loans and deposits increased to record a steady share of 7.77% and 6.64% respectively, as of November 2010.

• CIB continues to maintain strong asset quality, with NPLs/Gross Loans of 2.73 %, and a prudent coverage ratio of 145.57%.

2011 started off with a lot of ambiguity, Egypt has gone through political unrest which will invariably impact the lives of all Egyptians. While the speed and extent of restoring economic activity will be determined by how long it will take for the current situation to resolve, the fundamentals of the Egyptian economy are strong, and the economy will be able to weather the crisis.

Today, our country has changed and is becoming the Egypt we all dreamt it could be. CIB is at a unique advantage to grow and help our country to grow as we are well prepared for the new Egypt. For many years, CIB has been viewed as a local model for international standards, and has worked hard to earn such a reputation. In 2010, CIB was able once again to deliver record profits and consistent results, reinforcing its leadership within the Egyptian banking sector.

On the macro side, Egypt posted Real GDP growth of 5.5% as of July/September of FY 2010/2011 up from 5.4% in Q4 of FY 2009/2010. Other positive prospects include Suez Canal revenues surging by 14.7% as of July/September 2010 over the same period last year and exports showing signs of recovery, where during Q1 of 2011, the volume of non-oil exports increased by 12% over the same period last year. Such positive results have come on the backdrop of broad structural and economic reforms, improved business environment, and appropriate crisis management.

By and large, 2010 was another year that unlocked opportunities for CIB to grow in different areas. Ending the year with EGP 2,006 million of Net Profit After Tax (NPAT) in 2010 on a consolidated basis, CIB posted a growth in profits of 15% over 2009.When normalizing for the Goodwill Amortization and the Intangible Assets Amortization charges, the Bank's profits attained a 24.7% growth over 2009. Such non-cash deductions are related to accounting for the acquisition of CI-CH that took place in mid 2008. On an annual basis, CIB evaluates its investments in CI-CH. This year based on the evaluation, CIB has impaired its investment in CI-CH from EGP 1,045 to 886 million. Despite this impairment, the Bank has managed to exceed EGP 2 billion for the first time in its history.

The success of CIB's strategy is most evident in CIB's Return on Average Equity (RoAE), which equaled 25.72% in 2010, as well as a Return on Average Assets (RoAA) that reached 2.87%. The Bank's loans increased by 26.69%. Such growth was attainable through an increase in corporate loans by 24.67% and net growth in the retail loan portfolio by 46.61%. Furthermore, the increase in deposits by 15.75% predominantly reflects the solid deposit base.

Moreover, CIB's conservative risk management culture enabled the Bank to maintain its asset quality, with no observable deterioration. The Bank's NPLs/Loans ratio declined to reach 2.73% compared to 2.97% in December 2009.

In addition, CIB maintained its strong equity base with a conservative Capital Adequacy Ratio (CAR) of 14.41%, providing a solid cushion for adverse market movements. The year-end CAR, after adjusting to include 2010 attributable profits, reached 16.91%.

On a stand-alone basis, Net Interest Margin (NIM) remained healthy at 3.62 % in 2010. The Bank's NIM in Q4'2010 recorded 3.82% as compared to 3.50% in Q3'2010 thanks to its dynamic Asset and Liability Management, proactive market approach and effective pricing of loans and deposits. In fact, CIB was able to maintain its NIM despite the market environment of basis risk where the Corridor Rate remains stagnant, T-Bill rates are volatile along with the competitiveness of loan and deposits pricing.

• During 2010, consolidated revenues increased by 17.5%, driven by both a healthy rise of 27.32% in non interest income and an 11.21% increase in net interest income.

• The contribution of non interest income to total revenues has been increasing YOY and now stands at 42.5% of total operating revenues, which demonstrates management's commitment to find alternative means of income generation to sustain the growth momentum moving forward.

• Income before provisions has grown by 12.6%, which when normalized for goodwill and intangible assets amortization would record healthy growth of 20.65%.

• LCY loans grew 32.37% compared to December 2009, while FCY loans grew by 21.13%. Such growth reflects the return of market confidence in the economy, where Corporate Egypt wants to benefit from the sustained favorable growth momentum of the economy.

• Total expenses increased by 25.89% to record a cost to income ratio of 39.68% up from 37.04% in December 2009. It is worth mentioning that December 2010 figures include Good will impairment and Intangible assets amortization, when normalized for those charges the increase in expenses would record 12.25% and cost: income would be 35.38%.

• Given that our branch network is already among the largest within the private banking sector, with 153 outlets and an ATM network of 502, only a few select outlets in important strategic locations will be added moving forward.

• The Bank's NPLs/Loans ratio remained healthy at 2.73% as of December 2010.

• CIB provisions for the period dropped by 32.89% attributed to the implementation of the new IFRS standards, and thus reflecting the quality of the Bank's loan portfolio.

• CIB maintained its strong equity base with a conservative Capital Adequacy Ratio (CAR) of 14.41%, providing a solid cushion for adverse market movements. The year-end CAR, after adjusting to include 2010 attributable profits, reached 16.91%.

• On a stand-alone basis, the Bank achieved an NPAT for Year End 2010 of EGP 2,126 million, an increase of 19.19% as compared to the same period of 2009.

• On the back of a competent management team, staff efficiency and prudent risk management policies, CIB has managed to realize a Return on Average Equity (ROAE) of 28.50% and a Return on Average Assets (ROAA) of 3.06% as of December 2010.

• Cost: income ratio stood at 35.19%, recording a 2.48% decrease over the same period last year, which reflects the continuous focus on strategic cost management in CIB.