1st Quarter Earnings Release

RNS Number : 4264N

Commercial Intnl Bank (Egypt) SAE

09 May 2018

News Release

8 May 2018

COMMERCIAL INTERNATIONAL BANK ("CIB") REPORTS

RECORD FIRST-QUARTER 2018 CONSOLIDATED REVENUE OF EGP 4.15 BILLION AND NET INCOME OF EGP 2.02 BILLION, OR EGP 1.54 PER SHARE, UP 17% FROM FIRST-QUARTER 2017

· Strong First-Quarter 2018 Consolidated Financial Results

o Net income of EGP 2.02 billion, up 17% year-on-year (YoY)

o Revenues of EGP 4.15 billion, up 25% YoY

o Return on average equity of 28.7%

o Return on average assets of 2.67%

o Efficiency ratio of 22.9%

o Net interest margin (NIM) of 5.05%¹

· Robust Balance Sheet

o After profit appropriation, total tier capital recorded EGP 31.95 billion, or 17.87% of risk-weighted assets

o CBE local currency liquidity ratio of 68.1%, foreign currency of 56.4% (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 91% of total liabilities

o Non-performing loans coverage ratio of 202%

· Supporting our Economy

o Funding to businesses and individuals grew by 6% during first quarter of 2018 to reach EGP 108 billion, with a loan market share of 7.0%²

o Deposits grew by 2% during first quarter of 2018 to reach EGP 256 billion, translating into a deposit market share of 7.5%²

o In first-quarter 2018, CIB's operations generated EGP 1,097 million in corporate, payroll and other taxes

· Committed to our Community

o CIB Foundation hosted a "Health-and-Hygiene School Bag" packing event for students through the 6/6 Eye Exam Caravan Program.

o CIB Foundation, in collaboration with the Gozour Foundation, implemented 25 one-day caravans, providing free eye exams and care to more than 15 thousand primary school students in Upper Egypt Region.

o CIB Foundation, in partnership with Egyptian Clothing Bank, donated EGP 1.7 million to provide 50,000 training suits to underprivileged children in 19 governorates.

o CIB Foundation, in partnership with Sawiris Foundation for Social Development, Star Care for Helping Children and Assiut Business Women Association, continued installments for the implementation of "Together for Change project".

· Awards & Rankings

o Global Finance: Best Foreign Exchange Provider in Egypt

o Global Finance: Best Trade Finance Provider in Egypt

o Global Finance: Best Treasury & Cash Management Providers in Egypt

o Global Finance: Best Bank in Egypt

CAIRO - Commercial International Bank (EGX: COMI) today reported first-quarter 2018 consolidated revenue of EGP 4.15 billion and net income of EGP 2.02 billion, or EGP 1.54 per share, up 25% and 17% from first-quarter 2017, respectively.

Management commented: "CIB made a good start to 2018 following a challenging year, penciling in record top and bottom lines, more so when excluding one-off capital gains pertaining to sale of investments in both 1Q17 and 1Q18, with both growing by 33% YoY.

CIB managed to decently grow its local currency balance sheet, notwithstanding strong competition over local currency funding, which along with an impressive pick-up in foreign currency lending, boosted the Bank's net interest income by 17% over first-quarter 2017. The first quarter of 2018 witnessed the first corridor rate cut ever since the Egyptian Pound floatation by 100bp in the middle of the quarter, followed by a proportionate cut by quarter-end. The impact of the two consecutive cuts on lending growth is expected to get through over the coming quarters.

CIB remains well-covered in terms of capital adequacy, as evident in its CAR surging to 18% by end of the first-quarter in 2018, comfortably above minimum regulatory requirements and sufficiently accommodating upcoming increases in minimum requirements in 2019, along with any unanticipated alterations in the macroeconomic environment. Having said that, CIB continuously aspires to maintain the appropriate balance between solvency and profitability, especially that additional capital requirements, as expected, placed some pressure on the Bank's return on equity.

Moving forward, we remain confident, in the Bank's solid fundamentals to accommodate macroeconomic and regulatory developments, while reacting cautiously to interest rate movements in a way that does not forego the Bank's profitability."

FIRST-QUARTER FINANCIAL HIGHLIGHTS

REVENUES

First-quarter 2018 standalone revenues were EGP 4.15 billion, up 14% from first-quarter 2017, driven mainly by NII growth, improved trade finance activity, in addition to a capital gain from the sale of one of CIB's direct investments.

Net Interest Income

Standalone net interest margin (NIM) was 5.05%¹, generating net interest income of EGP 3.26 billion, up 17% YoY.

Non-Interest Income

Standalone non-interest income for first-quarter of 2018 was EGP 887 million (21% of revenues).

Trade service fees were EGP 256 million. Trade service net outstanding balances stood at EGP 73.94 billion, 2% higher YtD.

OPERATING EXPENSE

Standalone operating expense for first-quarter 2018 was EGP 957 million, up 28% YoY. Cost-to-income reported 22.9% up from 20.1% in first-quarter 2017, still comfortably below the desirable level of 30%.

LOANS

CIB's total gross loan portfolio was EGP 108 billion, adding EGP 5.7 billion, or 6% YtD. CIB's loan market share reached 7.0% as of December 2017. CIB witnessed 4% growth in its local currency gross loan portfolio during the quarter, adding EGP 2.2 billion, and 7% growth in foreign currency loans, adding an equivalent of EGP 3.5 billion.

DEPOSITS

CIB's deposits were EGP 256 billion, adding EGP 5.4 billion, or 2% YtD. CIB's deposit market share was 7.5% as of December 2017.

ASSET QUALITY

CIB maintained its resilient asset quality. Standalone non-performing loans represented 5.11% of the gross loan portfolio, covered 202% by the Bank's EGP 11.1 billion loan loss provision balance. Loan loss provision expenses were EGP 320 million, 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 31.95 billion, or 17.87% of risk-weighted assets as of March 2018. Tier I capital was EGP 26.60 billion, or 83% of total tier capital.

CIB maintained its comfortable liquidity position above CBE requirements and Basel III guidelines, in both local currency and foreign currency. LCY CBE liquidity ratio remained well above the regulator's 20% requirement, recording 68.1% as of March 2018, while FCY CBE liquidity ratio reached 56.4%, above the threshold of 25%. NSFR was 218% for local currency and 157% for foreign currency, and LCR was 435% for local currency and 300% for foreign currency, comfortably above the 100% Basel III requirement.

KEY METRICS AND BUSINESS UPDATES³

· #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 86.4 billion, 5% higher YtD.

· End-of-period deposits were EGP 65.6 billion, 27% higher YtD.

· Gross outstanding contingent business reached EGP 77.5⁴ billion, 5% higher YtD.

BUSINESS BANKING

· End-of-period gross loans were EGP 1.4 billion, up 3% YtD.

· End-of-period deposits were EGP 42.8 billion, up 9% YtD.

· Gross outstanding contingent business reached EGP 1.7⁴ billion, down 13% YtD.

RETAIL INDIVIDUALS BANKING

· End-of-period gross loans were EGP 20.3 billion, up 8% YtD.

· End-of-period deposits were EGP 147.7 billion, up 5% YtD.

· CIB continued to expand its network to reach a total of 176 branches and 22 units across Egypt, supported by a network of 849 ATMs.

CONSOLIDATED FINANCIAL HIGHLIGHTS
Income Statement	1Q18	4Q17	QoQ Change	1Q17	YoY Change
Income Statement	EGP million	EGP million	(1Q18 vs. 4Q17)	EGP million	(1Q18 vs. 1Q17)
Net Interest Income	3,260	3,194	2%	2,783	17%
Non-Interest Income	890	659	35%	538	65%
Net Operating Income	4,150	3,854	8%	3,322	25%
Non-Interest Expense	(957)	(850)	13%	(746)	28%
Loan loss provision	(320)	(310)	3%	(507)	-37%
Net Profit before Tax	2,873	2,693	7%	2,069	39%
Income Tax	(896)	(834)	8%	(599)	50%
Deferred Tax	45	8	457%	15	206%
Net profit from continued operations	2,021	1,867	8%	1,485	36%
CI Capital Profit (Net of Tax)	-	-	NM	273	NM
Net profit	2,021	1,867	8%	1,757	15%
Minority Interest	-	-	NM	24	NM
Net Profit After Minority	2,021	1,867	8%	1,733	17%

Financial Indicators	1Q18 EGP million	4Q17 EGP million	QoQ Change	1Q17 EGP million	YoY Change
Financial Indicators	1Q18 EGP million	4Q17 EGP million	(1Q18 vs. 4Q17)	1Q17 EGP million	(1Q18 vs. 1Q17)
Profitability
ROAE	28.7%	27.1%	6%	31.9%	-10%
ROAA	2.67%	2.59%	3%	2.57%	4%
Efficiency
Cost-to-Income	22.9%	21.5%	6%	21.9%	5%
Liquidity
Gross Loans-to-Deposits	42.2%	40.8%	3%	41.5%	2%
Asset Quality
NPLs-to-Gross Loans	5.11%	6.95%	-26%	7.02%	-27%
Capital Adequacy Ratio	17.9%	18.0%	-1%	14.5%	23%
STANDALONE FINANCIAL HIGHLIGHTS
Income Statement	1Q18	4Q17	QoQ Change	1Q17	YoY Change
Income Statement	EGP million	EGP million	(1Q18 vs. 4Q17)	EGP million	(1Q18 vs. 1Q17)
Net Interest Income	3,260	3,194	2%	2,783	17%
Non-Interest Income	887	653	36%	839	6%
Net Operating Income	4,147	3,847	8%	3,623	14%
Non-Interest Expense	(957)	(850)	13%	(746)	28%
Loan loss provision	(320)	(310)	3%	(507)	-37%
Net Profit before Tax	2,869	2,687	7%	2,370	21%
Income Tax	(896)	(834)	8%	(599)	50%
Deferred Tax	45	8	457%	15	206%
Net Profit	2,018	1,861	8%	1,785	13%

Financial Indicators	1Q18 EGP million	4Q17 EGP million	QoQ Change	1Q17 EGP million	YoY Change
Financial Indicators	1Q18 EGP million	4Q17 EGP million	(1Q18 vs. 4Q17)	1Q17 EGP million	(1Q18 vs. 1Q17)
Profitability
ROAE	28.7%	27.1%	6%	33.0%	-13%
ROAA	2.67%	2.58%	4%	2.66%	0%
NIM*	5.05%	5.09%	-1%	4.62%	9%
Efficiency
Cost-to-Income	22.9%	21.6%	6%	20.1%	14%
Liquidity
Gross Loans-to-Deposits	42.2%	40.8%	3%	41.5%	2%
Asset Quality
NPLs-to-Gross Loans	5.11%	6.95%	-26%	7.02%	-27%
Direct Coverage Ratio	202%	154%	31%	147%	37%

* NIM based on managerial accounts

BALANCE SHEET
	Consolidated			Standalone
	Mar-18	Dec-17	YtD Change	Mar-18	Dec-17	YtD Change
	EGP million	EGP million	(Mar-18 vs. Dec-17)	EGP million	EGP million	(Mar-18 vs. Dec-17)
Cash & Due from Central Bank	26,182	14,663	79%	26,182	14,663	79%
Due from Banks	42,307	45,320	-7%	42,307	45,320	-7%
Treasury Bills & Governmental Notes	45,937	54,478	-16%	45,937	54,478	-16%
Trading Financial Assets	7,170	7,295	-2%	7,170	7,295	-2%
Available-for-Sale Investments	40,153	30,475	32%	40,153	30,475	32%
Net Loans & Overdrafts	95,304	88,428	8%	95,304	88,428	8%
Financial Derivatives	38	40	-4%	38	40	-4%
Held-to-Maturity Investments	42,360	45,168	-6%	42,360	45,168	-6%
Financial Investment in Subsidiaries	83	65	27%	68	54	26%
Other Assets	10,215	8,850	15%	10,215	8,850	15%
Total Assets	309,750	294,782	5%	309,735	294,771	5%
Due to Banks	11,352	1,878	505%	11,352	1,878	505%
Customer Deposits	256,078	250,723	2%	256,122	250,767	2%
Other Liabilities	14,499	13,742	6%	14,499	13,742	6%
Total Liabilities	281,929	266,343	6%	281,973	266,388	6%
Shareholders' Equity & Net Profit	27,821	28,439	-2%	27,762	28,384	-2%
Total Liabilities & Shareholders' Equity	309,750	294,782	5%	309,735	294,771	5%