3rd Quarter Results

RNS Number : 8549S

Commercial Intnl Bank (Egypt) SAE

13 November 2013

 



News Release

12 November 2013

COMMERCIAL INTERNATIONAL BANK ("CIB") REPORTS RECORD THIRD-QUARTER 2013
CONSOLIDATED NET INCOME OF EGP 920 MILLION, OR EGP 1.00 PER SHARE,
UP 51% FROM THIRD-QUARTER 2012

CIB REPORTS RECORD YEAR-TO-DATE SEPTEMBER-2013 CONSOLIDATED NET INCOME
OF EGP 2.25 BILLION, UP 37% FROM THE SAME PERIOD IN 2012

·     Record Third-Quarter 2013 Consolidated Financial Results:

o  Record quarterly net income of EGP 920 million, or EGP 1.0 per share, up 51% year-on-year (YoY) and 37% quarter-on-quarter (QoQ)

o  Quarterly revenues of EGP 1.8 billion, up 24% YoY

o  Efficiency (cost-to-income) ratio of 26.0%, near recent lows

o  Quarterly standalone net interest margin1 of 5.25%

·     Record Year-to-Date September 2013 Consolidated Financial Results:

o  Record net income of EGP 2.25 billion, or EGP 3.05 per share, up 37% YoY

o  Record revenue of EGP 5.24 billion, up 37% YoY

o  Efficiency ratio improved to 26.6% from 29.6% in the year-ago period

·     Robust Balance Sheet:

o  Total Basel II tier capital2 of EGP 9.7 billion, or 14.4% of risk-weighted assets, of which 92%

is Tier I capital

o  Year-to-Date balance sheet growth of 16%

o  High quality of funding, with customer deposits comprising 96% of total liabilities

o  Local and foreign currency liquidity positions comfortably in excess of regulatory requirements

o  Standalone non-performing loans were 3.98% of the gross loan portfolio

o  Loan loss provision balance of EGP 2.58 billion covered non-performing loans 143%

·     Strong Year-to-Date Returns:

o  Consolidated return on average equity of 27.1% versus 22.9% in the year-ago period

o  Consolidated return on average assets of 2.95% versus 2.44% in the year-ago period

·     Supporting our Economy

o  Funding to businesses and individuals reached EGP 45.1 billion by the end of September 2013

o  Deposits increased 3% in the third quarter to EGP 94.1 billion, with deposit market share of 7.75%3
 

o  In the third quarter of 2013, CIB's operations generated EGP 429 million in corporate, payroll and other taxes

·     Committed to our Community

o  The CIB Foundation's Board of Trustees approved a EGP 14 million exclusive sponsorship of the Second Pediatric Floor in the Aswan Heart Centre. The CIB Foundation is the sole sponsor of pediatric units in the Centre.

o  The CIB Foundation has continued to support the Children's Right to Sight Program through the Rotary Club of Kasr El-Nile. 127 eye surgeries were sponsored in Q3.

·     Awards & Rankings

o  CIB was awarded the "Best On-line Cash Management Regional Award" by Global Finance in recognition of the Bank's efforts to introduce a comprehensive self-service on-line channel for cash management services.

o  CI Capital was recognised as the "Best Investment Bank" of 2013 by the Arab Investment Summit, and was ranked third in terms of announced Middle Eastern Target M&A deals in first-half 2013 by Thomson Reuters and Dealogic.

CAIRO - Commercial International Bank (EGX: COMI) today reported third-quarter 2013 consolidated net income of EGP 920 million, or EGP 1.0 per share, an increase of 51% over third-quarter 2012 net income of EGP 611 million, or EGP 0.90 per share.

Hisham Ezz Al-Arab, Chairman and Managing Director of CIB, commented: "CIB continued its run of record quarterly income, putting us on course for a record full-year performance. Consolidated revenues were EGP 1.8 billion for the quarter, nearly 24% over third-quarter 2012, while income came in at EGP 920 million, 51% over 2012.

"Demonstrating our unwavering commitment to the Egyptian market, CIB continued to gain market share by growing its deposit base, attracting EGP 3 billion during the quarter. This was a key driver of the Bank's growing top line. Additionally, strong non-interest income performance compensated for the effects of a falling interest rate environment in the third quarter.

"Year-to-Date performance has remained solid across all key performance indicators. CIB's strong and resilient balance sheet and liquidity position continue to provide the Bank with great flexibility in dealing with a variable and uncertain economic environment."

THIRD-QUARTER 2013 CONSOLIDATED FINANCIAL HIGHLIGHTS

REVENUES

Third quarter consolidated revenues were EGP 1.8 billion, steady from second-quarter 2013 and up 24% from the EGP 1.45 billion achieved in third-quarter 2012. All revenue lines recorded solid growth, with non-interest income continuing to outpace net interest income.

Consolidated revenues were EGP 5.24 billion YtD, up 37% from the EGP 3.83 billion achieved in the year-ago period.

Net Interest Income

Third-quarter net interest margin (NIM) was 5.25%, up 40 basis points from 4.85% in third-quarter 2012, as net interest income generated EGP 1.28 billion, 24% higher than the year-ago period. The falling interest rate environment (following a sharp decline in sovereign yields, alongside two 50bp cuts by the CBE) led to a slowdown in NII growth, which was almost flat QoQ.

YtD NIM was 5.32%, 67 basis points higher than the year-ago period, while net interest income was EGP 3.7 billion, 30% higher than the year-ago period.

Non-Interest Income4

Consolidated non-interest income for the third quarter was EGP 520 million, an increase of 23% year-on-year. Consolidated non-interest income for the three quarters was EGP 1.55 billion, 55% over the year-ago period.

Trade service fees in the third quarter were EGP 126 million, double the year ago figure, bringing YtD fees to EGP 364 million, up 107% year-on-year. Trade service gross outstanding balances were EGP 14.6 billion.

Dealing room profits for the third quarter were EGP 124 million, bringing YtD profits to EGP 334 million, a 107% YoY increase. Debt Capital Markets generated EGP 29 million in YtD revenues, more than double full-year 2012 revenues, boosted by up-front and agency fees for syndicated loans.

OPERATING EXPENSE

Consolidated operating expense for third-quarter 2013 was EGP 464 million, 2% less than the second quarter, and up 23% YoY. The consolidated efficiency ratio increased marginally to 26.0% versus 25.8% in third-quarter 2012.

YtD operating expense was EGP 1.41 billion, up 23% YoY, with the YtD efficiency ratio improving to 26.6% versus 29.6% in the first nine months of 2012. First three quarters operating expense was inflated by stamp duty accruals taken in relation to the new tax law introduced at the end of 2012. Adjusted for these and other one-offs, expenses would have grown 14% YoY.

LOANS

CIB's total consolidated gross loan portfolio was EGP 45.1 billion at the end of September 2013, adding EGP 740 million, or 2%, over year-end 2012.

CIB maintained the highest loan market share of all private-sector banks, at 8.32% as of July 20135.

DEPOSITS

Customer deposits were EGP 94.1 billion, up EGP 15.3 billion, or 19%, over year-end 2012 and 3% QoQ. Deposit market share was 7.75% as of July 2013, maintaining CIB's leading position amongst all private-sector banks.

The consolidated gross loan-to-deposit ratio was 47.9% by the end of September 2013, versus 55.2% for the comparable year-ago period.

ASSET QUALITY

CIB maintained its resilient asset quality. Standalone non-performing loans represented 3.98% of the gross loan portfolio, almost flat from the second-quarter 2013 level and 35 basis points higher than year-end 2012.

Loan loss provision expenses were EGP 75 million in third-quarter 2013, 72% lower QoQ. Year-to-Date 2013 loan loss provision expense was EGP 566 million. The direct coverage ratio increased to 143% from 140% in second-quarter 2013 and 120% at year-end 2012, based on a total loan loss provision balance of EGP 2.58 billion.

CAPITAL AND LIQUIDITY

Total Basel II tier capital was EGP 9.7 billion6 in September 2013, or 14.41% of risk-weighted assets (EGP

67.4 billion). Tier I capital was EGP 8.95 billion, or 13.3% of risk-weighted assets and 92% of total tier capital.

CIB maintained its conservative liquidity position in both local and foreign currencies, remaining comfortably above CBE requirements. CIB maintained a healthy proforma liquidity coverage ratio of 248%. Net stable funding was 140% (as per Basel III, not currently required by CBE). Liquid assets7 constituted

51% of total assets.

KEY METRICS AND BUSINESS UPDATES8

INSTITUTIONAL BANKING

·     #1 private-sector bank in Egypt in terms of revenues, net income, deposits, loans, total assets, book value and market capitalization

·     End-of-period loans retained were EGP 38 billion, up 1% from year-end 2012

·     End-of-period deposits were EGP 23.8 billion, up 21% from year-end 2012

·     Gross outstanding contingent business reached EGP 14.6 billion

·     Institutional Banking net income for first nine months of 2013 increased 76% YoY to EGP 1.54 billion, representing almost 76% of CIB's total profitability

CONSUMER BANKING

·     End-of-period loans retained were EGP 7.3 billion, 10% over year-end 2012

·     End-of-period deposits were EGP 70.3 billion, 19% over year-end 2012

·     117 branches and 27 units throughout Egypt, supported by a network of 540 ATMs and 8,317 points of sale

·     Consumer Banking net income for first nine months of 2013 increased 7% YoY to reach EGP 633 million

SECURITIES BROKERAGE, ASSET MANAGEMENT & INVESTMENT BANKING

·     CI Capital recorded revenues of EGP 92 million YtD, up 33% YoY, and positive bottom line of EGP 7.2mn.

·     Brokerage continued to gain market share, with revenues increasing 17% QoQ. CI Capital maintained its leading position among brokerage companies during the quarter, recording transaction value of EGP 9.6 billion with 202 million shares traded.

·     Asset Management achieved 9% YoY revenue growth, although assets under management showed a 5% quarterly decrease (to EGP 8.2 billion) due to the CBE's recently introduced restriction on sales of bank-owned money market mutual funds. CIAM attained a fourth place position with market share of 12%.

·   Investment banking turned in a strong quarter with the closing of a major cross-border transaction in the third quarter.

CONSOLIDATED FINANCIAL HIGHLIGHTS
	Consolidated P&L Statement
	3Q13	2Q13	QoQ Change	3Q12	YoY Change	YtD Sep-13	YtD Sep-12	YoY Change
	EGP million	EGP million	(3Q13 vs. 2Q13)	EGP million	(3Q13 vs. 3Q12)	EGP million	EGP million	(YtD 3Q13 vs. YtD 3Q12)
Net Interest Income	1,281	1,272	0.7%	1,030	24.4%	3,691	2,831	30.4%
Non-Interest Income	520	554	-6.2%	422	23.2%	1,546	998	54.8%
Net Operating Income	1,801	1,826	-1.4%	1,452	24.0%	5,237	3,830	36.7%
Non-Interest Expense	(464)	(472)	-1.8%	(376)	23.4%	(1,410)	(1,146)	23.0%
Provisions	(75)	(264)	-71.6%	(247)	-69.6%	(566)	(407)	39.2%
Net Profit before Tax	1,262	1,090	15.8%	829	52.2%	3,261	2,277	43.2%
Income Tax	(351)	(414)	-15.2%	(224)	56.7%	(1,025)	(654)	56.7%
Deferred Tax	9	(4)	NM	6	57.5%	13	17	-22.4%
Net Profit	920	671	37.1%	611	50.6%	2,250	1,640	37.2%
Minority Interest	0	0	NM	1	NM	0	1	NM
Net Profit After Minority	920	671	37.1%	610	50.8%	2,249	1,639	37.3%
	Consolidated Key Financial Indicators
	3Q13	2Q13	QoQ Change	3Q12	YoY Change	YtD Sep-13	YtD Sep-12	YoY Change
			(3Q13 vs. 2Q13)		(3Q13 vs. 3Q12)			(YtD 3Q13 vs. YtD 3Q12)
Profitability
ROAE	33.2%	25.0%	33.1%	25.5%	30.0%	27.1%	22.9%	18.4%
ROAA	3.62%	2.69%	34.7%	2.73%	32.8%	2.95%	2.44%	20.9%
Efficiency
Cost-to-Income	26.0%	25.4%	2.4%	25.8%	0.7%	26.6%	29.6%	-10.0%
Liquidity
Gross Loans-to-Deposits	47.9%	49.8%	-3.8%	55.2%	-13.2%	47.9%	55.2%	-13.2%
Asset Quality
NPLs-to-Gross Loans	4.01%	3.97%	1.0%	3.42%	17.3%	4.01%	3.42%	17.3%
Capital Adequacy Ratio	14.4%	14.0%	2.7%	16.5%	-12.5%	14.4%	16.5%	-12.5%
STANDALONE FINANCIAL HIGHLIGHTS
	Standalone P&L Statement
	3Q13	2Q13	QoQ Change	3Q12	YoY Change	YtD Sep-13	YtD Sep-12	YoY Change
	EGP million	EGP million	(3Q13 vs. 2Q13)	EGP million	(3Q13 vs. 3Q12)	EGP million	EGP million	(YtD 3Q13 vs. YtD 3Q12)
Net Interest Income	1,279	1,271	0.6%	1,027	24.5%	3,685	2,821	30.6%
Non-Interest Income	129	518	-75.0%	388	-66.7%	1,083	918	17.9%
Net Operating Income	1,408	1,788	-21.3%	1,415	-0.5%	4,768	3,740	27.5%
Non-Interest Expense	(404)	(439)	-8.0%	(341)	18.5%	(1,282)	(1,042)	23.0%
Provisions	(75)	(264)	-71.6%	(247)	-69.6%	(566)	(407)	39.2%
Net Profit before Tax	929	1,085	-14.4%	827	12.3%	2,920	2,291	27.5%
Income Tax	(350)	(412)	-15.2%	(222)	57.2%	(1,021)	(650)	57.0%
Deferred Tax	(49)	(4)	NM	6	NM	(44)	18	NM
Net Profit	531	669	-20.6%	611	-13.1%	1,855	1,659	11.8%
	Standalone Key Financial Indicators
	3Q13	2Q13	QoQ Change	3Q12	YoY Change	YtD Sep-13	YtD Sep-12	YoY Change
			(3Q13 vs. 2Q13)		(3Q13 vs. 3Q12)			(YtD 3Q13 vs. YtD 3Q12)
Profitability
ROAE	18.6%	23.7%	-21.7%	24.7%	-24.8%	21.6%	22.4%	-3.3%
ROAA	2.09%	2.67%	-21.8%	2.72%	-23.4%	2.43%	2.46%	-1.5%
NIM9	5.25%	5.44%	-3.5%	4.85%	8.3%	5.32%	4.65%	14.3%
Efficiency
Cost-to-Income	29.0%	24.1%	20.4%	24.0%	20.8%	26.6%	27.6%	-3.6%
Liquidity
Gross Loans-to-Deposits	48.2%	50.0%	-3.7%	55.2%	-12.6%	48.2%	55.2%	-12.6%
Asset Quality
NPLs-to-Gross Loans	3.98%	3.95%	1.0%	3.42%	16.7%	3.98%	3.42%	16.7%
Direct Coverage Ratio	142.7%	140.1%	1.9%	115.3%	23.8%	142.7%	115.3%	23.8%

CONSOLIDATED AND STANDALONE BALANCE SHEETS
Balance Sheet Highlights	Consolidated Balance Sheet			Standalone Balance Sheet
	Sep-13	Dec-12	YtD Change	Sep-13	Dec-12	YtD Change
	EGP million	EGP million		EGP million	EGP million
Cash & Due from Central Bank	3,956	5,394	-26.7%	3,956	5,394	-26.7%
Due from Banks	9,102	8,048	13.1%	8,904	7,958	11.9%
Treasury Bills & Governmental Notes	21,735	8,018	171.1%	21,688	7,978	171.8%
Trading Financial Assets	2,185	1,515	44.2%	2,161	1,472	46.8%
Available-for-Sale Investments	22,049	21,177	4.1%	22,023	21,162	4.1%
Net Loans & Overdrafts	41,855	41,877	-0.1%	42,105	41,877	0.5%
Financial Derivatives	85	137	-37.9%	85	137	-37.9%
Held-to-Maturity Investments	4,202	4,216	-0.3%	4,192	4,206	-0.3%
Financial Investment in Subsidiaries	189	165	14.4%	599	938	-36.1%
Other Assets	3,851	3,409	13.0%	3,571	3,283	8.8%
Total Assets	109,209	93,957	16.2%	109,284	94,405	15.8%
Due to Banks	632	1,715	-63.1%	632	1,715	-63.1%
Customer Deposits	94,079	78,729	19.5%	94,110	78,835	19.4%
Other Liabilities	3,046	2,701	12.8%	2,986	2,545	17.4%
Total Liabilities	97,758	83,144	17.6%	97,728	83,094	17.6%
Total Shareholders' Equity	9,154	8,538	7.2%	9,701	9,108	6.5%
Net Profit for the Period	2,249	2,226	1.0%	1,855	2,203	-15.8%
Shareholders' Equity & Net Profit	11,403	10,765	5.9%	11,556	11,311	2.2%
Minority Interest	48	48	0.7%	-	-
Total Liabilities & Shareholders' Equity	109,209	93,957	16.2%	109,284	94,405	15.8%

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[1] Based on managerial accounts

[2] CBE regulations announced in December 2012 stipulate that banks report capital adequacy according to a Basel II framework (prior to this, reported capital adequacy was based

on Basel I)

[3] As of July 2013 (latest published figures)

[4] Income breakdown based on managerial accounts

[5] As of July 2013 (latest published figures)

[6] 2013 profits are excluded from the capital base as per regulations

[7] Liquid assets include cash, central bank reserves, domestic government debt and corporate bonds rated A or above

[8] Loan and deposit balances, profitability figures based on managerial accounts

[9] Based on managerial accounts

 

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