CIB First Half 2016 Earnings release

RNS Number : 4218F

Commercial Intnl Bank (Egypt) SAE

28 July 2016

News Release

28 July 2016

COMMERCIAL INTERNATIONAL BANK ("CIB") REPORTS

SECOND QUARTER 2016 CONSOLIDATED REVENUE OF EGP 2.79 BILLION AND
RECORD NET INCOME OF EGP 1.46 BILLION, OR EGP 1.07 PER SHARE, UP 28% FROM SECOND-QUARTER 2015

· Record Second-Quarter 2016 Consolidated Financial Results

o Record net income of EGP 1.46 billion, up 28% year-on-year (YoY)

o Revenues of EGP 2.79 billion, up 20% YoY

o Return on average equity of 36.9%

o Return on average assets of 3.02%

o Efficiency ratio of 22.9%

o Standalone net interest margin of 5.51%

· Record First-Half 2016 Consolidated Financial Results

o Record net income of EGP 2.76 billion, up 22% YoY

o Revenues of EGP 5.42 billion, up 12% YoY

o Return on average equity of 32.7%

o Return on average assets of 2.94%

o Efficiency ratio of 23.8%

o Standalone net interest margin of 5.64%

· Robust Balance Sheet

o Total tier capital of EGP 14.76 billion, or 14.04% of risk-weighted assets, of which 92% is high quality Tier I capital

o CBE local currency liquidity ratio of 57.0%, foreign currency of 45.5% (comfortably above CBE requirements of 20% and 25% respectively)

o CIB is well above the 100% requirement in the Basel III NSFR and LCR ratios

o High quality of funding, with customer deposits comprising 95% of total liabilities

o Standalone non-performing loans coverage ratio of 169%

· Supporting our Economy

o Funding to businesses and individuals grew by 6% during first half of 2016 to reach EGP 60.3 billion,with a loan market share of 7.84% as of April 2016⁽¹⁾

o Deposits grew by 9% in the first half to EGP 169.5 billion, translating into a deposit market share of 8.23% as of April 2016

o In second quarter of 2016, CIB's operations generated EGP 637.5 million in corporate, payroll and other taxes

· Committed to our Community

o CIB Foundation signed the contract with Gozour Foundation to fund 264 eye exam Caravans, providing free eye exams and care for primary school students in Upper Egypt governorates

o CIB Foundation provided several donations throughout this quarter for the "Right to Sight Program", the renovation and outfitting of the El-Mounira Hospital's original intensive care unit (ICU), the "Right to Life Association", "Maxillo-Facial Center" at Cairo University's Faculty of Dentistry, and "Magdi Yacoub Heart Foundation's Aswan Heart Center"

o CIB Foundation held an event at the Children's Cancer Hospital 57357 during Ramadan with the support of CIB Sustainability Ambassadors

· Awards & Rankings

o BCI: "Middle East Most Effective Recovery in 2016" for Best Response & Recovery from Business Disruption

o Euromoney: "Best Bank in Egypt -Excellence Award"

o Global Finance: "Best Foreign Exchange Providers in Egypt"

o Global Finance: "Best Sub custodian Bank in Egypt"

o The European Bank for Reconstruction and Development (EBRD): "Most Active Issuing Bank in Egypt in 2015" in recognition of the Bank's outstanding commitment to support the Egyptian economy and its distinctive efforts to better serve and meet the trade finance needs of its customers

CAIRO - Commercial International Bank (EGX: COMI) today reported second-quarter 2016 consolidated net income of EGP 1.5 billion, or EGP 1.07 per share, an increase of 28% over second-quarter 2015 net income of EGP 1.1 billion, or EGP 0.86 per share.

Commenting on the results, Management said : "CIB maintained its strong performance in the second-quarter, despite unfavorable economic circumstances, turning in record consolidated first-half top and bottom lines of EGP 5.42 billion and EGP 2.76 billion, up 12% and 22% from last year, respectively.

"CIB continued to take a cautious approach in managing its capital base efficiently, to ensure continuous compliance with CBE regulations. Capital Adequacy Ratio (CAR) recorded 14.04% as of end of June 2016, comfortably above CBE minimum regulatory requirement. The first half of 2016 witnessed a restructure in the Bank's balance sheet in a way that would help lower volatility in the Bank's capital base, especially in light of the current uncertainty in the interest rate environment. This was reflected in a lower balance sheet duration, which, together with the growth in expenses resulting from the acquisition of Citibank branches and retail portfolio and rapid network expansion, were the main reasons behind the increase in the Bank's cost-to-income ratio."

SECOND-QUARTER FINANCIAL HIGHLIGHTS

REVENUES

Second-quarter consolidated revenues were EGP 2.79 billion, up 20% from second-quarter 2015.

Second-quarter standalone revenues were EGP 2.79 billion, up 20% from second-quarter 2015. Growth was driven by a 17% increase in net interest income and a 39% increase in non-interest income.

Net Interest Income

Year-to-date standalone net interest margin (NIM) ⁽²⁾was 5.64%, generating standalone net interest income of EGP 4.53 billion, up 19% YoY.

Non-Interest Income

Consolidated non-interest income for second quarter of 2016 was EGP 527 million (19% of revenues).

Trade service fees for the quarter recorded EGP 123 million. Trade service net outstanding balances stood at EGP 35.4 billion, up 28% YoY. Dealing room profits were EGP 91 million in the second quarter.

OPERATING EXPENSE

Consolidated operating expense for second-quarter 2016 was EGP 646 million, up 39% YoY, due to the opening of 20 new branches, 3 new head office hubs, and expenses related to the Citibank retail portfolio and branches acquisition.

LOANS

CIB's total standalone gross loan portfolio was EGP 67.9 billion, adding EGP 4.9 billion, or 8% YtD. CIB reached market share of 7.84% as of April 2016.

DEPOSITS

Standalone deposits were EGP 169.7 billion, adding EGP 14 billion, or 9% YtD. Deposit market share was 8.23% as of April 2016, maintaining the highest deposit market share of all private sector banks.

ASSET QUALITY

CIB maintained its resilient asset quality. Standalone non-performing loans represented 4.89% of the gross loan portfolio, covered 169% by the bank's EGP 5.6 billion loan loss provision balance. Loan loss provision expenses were EGP 216 million in the second quarter as CIB continued its conservative and proactive risk management strategy to counter potential challenges in certain industries.

CAPITAL AND LIQUIDITY

Total tier capital was EGP 14.8 billion in June 2016, or 14.04% of risk-weighted assets. Tier I capital was EGP 13.6 billion, or 92% of total tier capital.

Over the past years, CIB has always been compliant with CBE regulatory requirements, while constantly keeping an eye on international best practices. CIB maintained its comfortable liquidity position as measured by Basel III Net Stable Funding Ratio (NSFR) and Liquidity Coverage Ratio (LCR), that have been recently enforced by the CBE, in both local currency and foreign currency. As per Basel regulations for NSFR, banks should meet the minimum requirement on an aggregate basis, with no requirement of segregation by currency. CBE, however, has required banks to meet Basel minimum requirements on both local and foreign currency fronts. CIB managed to exceed the minimum required NSFR in foreign currency as it built up a solid base of foreign-currency deposits throughout the past years in order to meet international standards

With an NSFR of 158% in local currency and 115% in foreign currency, and an LCR of 1353% in local currency and 446% in foreign currency, CIB maintained its conservative liquidity position in both local and foreign currencies while remaining comfortably above CBE requirements and Basel III guidelines.

KEY METRICS AND BUSINESS UPDATES^{^[3]}

· #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 52.3 billion, up 6% YtD

· End-of-period deposits were EGP 51.3 billion, up 8% YtD

· Gross outstanding contingent business reached EGP 36.7[4] billion, up 14% YtD

BUSINESS BANKING

· End-of-period gross loans were EGP 2.2 billion, up 14% YtD

· End-of-period deposits were EGP 35.2 billion, below 1% YtD

· Gross outstanding contingent business reached EGP 1.6³ billion, up 10% YtD

RETAIL INDIVIDUALS BANKING

· End-of-period gross loans were EGP 13.4 billion, up 16% YtD

· End-of-period deposits were EGP 83.2 billion, up 15% YtD

· CIB continued to expand its network to reach a total of 161 branches and 24 units throughout Egypt, supported by a network of 693 ATMs

SECURITIES BROKERAGE, ASSET MANAGEMENT & INVESTMENT BANKING

· CI Capital[5] recorded first half 2016 revenues of EGP 297 million and net income of EGP 84 million

· Brokerage reached a market share of 11.6% for CIBC and EGP 54 million in revenue

· EIMA ranked Blom Bank Fund first by 12-month return; CIB Thabat ranked fifth

· Investment Banking successfully closed two transactions in second quarter of 2016

CONSOLIDATED FINANCIAL HIGHLIGHTS
Income Statement	2Q16	1Q16	QoQ Change	2Q15	YoY Change	1H16	1H15	YoY change
Income Statement	EGP million	EGP million	(2Q16 vs. 1Q16)	EGP million	(2Q16 vs. 2Q15)	EGP million	EGP million	(1H16 vs.1H15)
Net Interest Income	2,266	2,268	0%	1,939	17%	4,534	3,808	19%
Non-Interest Income	527	359	47%	394	34%	886	1,051	-16%
Net Operating Income	2,793	2,627	6%	2,333	20%	5,420	4,860	12%
Non-Interest Expense	(646)	(645)	0%	(464)	39%	(1,291)	(952)	36%
Loan loss provision	(216)	(288)	-25%	(228)	-5%	(504)	(648)	-22%
Net Profit before Tax	1,930	1,695	14%	1,642	18%	3,624	3,259	11%
Income Tax	(475)	(483)	-2%	(588)	-19%	(957)	(1,131)	-15%
Deferred Tax	(54)	58	NM	81	NM	5	101	-95%
Net profit from continued operations	1,402	1,270	10%	1,134	24%	2,672	2,229	20%
CI Capital Profit (Net of Tax)	63	26	141%	13	379%	88	27	232%
Net profit	1,464	1,296	13%	1,148	28%	2,760	2,256	22%
Minority Interest	0	5	NM	(0)	NM	5	0	NM
Net Profit After Minority	1,464	1,292	13%	1,148	28%	2,756	2,256	22%

Financial Indicators	2Q16	1Q16	QoQ Change	2Q15	YoY Change	1H16	1H15	YoY change
Financial Indicators			(2Q16 vs. 1Q16)		(2Q16 vs. 2Q15)			(1H16 vs.1H15)
Profitability
ROAE	36.9%	33.2%	10.9%	31.3%	17.7%	32.7%	30.5%	7.2%
ROAA	3.02%	2.77%	8.7%	2.86%	5.5%	2.94%	2.94%	0.0%
Efficiency
Cost-to-Income	22.9%	24.6%	-6.9%	19.7%	16.3%	23.8%	19.4%	22.4%
Liquidity
Gross Loans-to-Deposits	39.6%	39.3%	0.8%	41.5%	-4.5%	39.6%	41.5%	-4.5%
Asset Quality
NPLs-to-Gross Loans	4.95%	4.74%	4.4%	4.54%	8.9%	4.95%	4.54%	8.9%
Capital Adequacy Ratio	14.0%	13.4%	4.8%	15.2%	-7.7%	14.0%	15.2%	-7.7%
STANDALONE FINANCIAL HIGHLIGHTS
Income Statement	2Q16	1Q16	QoQ Change	2Q15	YoY Change	1H16	1H15	YoY change
Income Statement	EGP million	EGP million	(2Q16 vs. 1Q16)	EGP million	(2Q16 vs. 2Q15)	EGP million	EGP million	(1H16 vs.1H15)
Net Interest Income	2,266	2,268	0%	1,939	17%	4,534	3,808	19%
Non-Interest Income	526	417	26%	378	39%	943	1,021	-8%
Net Operating Income	2,792	2,686	4%	2,317	20%	5,477	4,829	13%
Non-Interest Expense	(646)	(645)	0%	(464)	39%	(1,291)	(952)	36%
Loan loss provision	(216)	(288)	-25%	(228)	-5%	(504)	(648)	-22%
Net Profit before Tax	1,929	1,753	10%	1,626	19%	3,682	3,228	14%
Income Tax	(475)	(483)	-2%	(588)	-19%	(957)	(1,131)	-15%
Deferred Tax	(54)	58	NM	81	NM	5	101	-95%
Net Profit	1,401	1,329	5%	1,119	25%	2,729	2,199	24%


Financial Indicators	2Q16	1Q16	QoQ Change	2Q15	YoY Change	1H16	1H15	YoY change
Financial Indicators			(2Q16 vs. 1Q16)		(2Q16 vs. 2Q15)			(1H16vs.1H15)
Profitability
ROAE	35.3%	34.2%	3.3%	30.5%	15.9%	32.4%	29.6%	9.4%
ROAA	2.92%	2.87%	1.6%	2.79%	4.6%	2.93%	2.87%	2.2%
NIM²	5.51%	5.81%	-5.1%	5.63%	-2.0%	5.64%	5.63%	0.3%
Efficiency
Cost-to-Income	23.0%	24.1%	-4.7%	19.9%	15.6%	23.5%	19.5%	20.3%
Liquidity
Gross Loans-to-Deposits	40.0%	39.7%	0.7%	41.9%	-4.5%	40.0%	41.9%	-4.5%
Asset Quality
NPLs-to-Gross Loans	4.89%	4.68%	4.4%	4.49%	9.0%	4.89%	4.49%	9.0%
Direct Coverage Ratio	169%	171%	-1.3%	142%	19.4%	169%	142%	19.4%

BALANCE SHEET
	Consolidated			Standalone
	Jun-16	Dec-15	YtD Change	Jun-16	Dec-15	YtD Change
	EGP million	EGP million	(Jun-16 Vs. Dec-15)	EGP million	EGP million	(Jun-16 Vs. Dec-15)
Cash & Due from Central Bank	11,252	9,849	14%	11,252	9,849	14%
Due from Banks	36,101	21,002	72%	36,101	21,002	72%
Treasury Bills & Governmental Notes	16,950	22,130	-23.4%	16,950	22,130	-23%
Trading Financial Assets	3,798	5,848	-35%	3,798	5,848	-35%
Available-for-Sale Investments	31,068	46,289	-33%	31,068	46,289	-33%
Financial assets held for sale	3,436	1,066	222%	428	503	-15%
Net Loans & Overdrafts	60,299	56,836	6%	61,067	57,211	7%
Financial Derivatives	95	81	17%	95	81	17%
Held-to-Maturity Investments	25,803	9,261	179%	25,803	9,261	179%
Financial Investment in Subsidiaries	36	160	-77%	13	13	0%
Other Assets	6,542	6,977	-6%	6,570	7,006	-6%
Total Assets	195,379	179,500	9%	193,145	179,193	8%
Due to Banks	1,364	1,601	-15%	1,364	1,601	-15%
Customer Deposits	169,463	155,234	9%	169,688	155,370	9%
Other Liabilities	7,162	6,082	18%	4,943	5,711	-13%
Total Liabilities	177,990	162,918	9%	175,995	162,681	8%
Total Shareholders' Equity	14,455	11,806	22%	14,420	11,871	21%
Net Profit for the Period	2,756	4,729	-42%	2,729	4,641	-41%
Shareholders' Equity & Net Profit	17,211	16,535	4%	17,150	16,512	4%
Minority Interest	179	47	277%
Total Liabilities & Shareholders' Equity	195,379	179,500	9%	193,145	179,193	8%