Commercial International Bank (CIB) Monday reported second-quarter 2023 consolidated net income of EGP 7.99bn, or EGP 2.38 per share.
The bank’s management commented: “Building on a strong start to the year in the first quarter, CIB delivered another record set of results in 2Q of 2023, ending the first half of the year with top and bottom line growth of 74% and 82%, respectively, compared to last year, which fed into Return on Average Equity (ROAE) of 49.1% for 2Q and 41.3% for the first half, almost doubling from last year.”
This came as CIB capitalized on its resilient balance sheet in accommodating macroeconomic dynamics, while sustaining fundamentals and growth momentum.
Performance in 2Q came in noteworthy and primarily driven by strong balance sheet growth. At one end, CIB maintained its deposit growth impetus, growing its Local Currency Deposit base by 20% or EGP 75bn, while attracting Foreign Currency Deposits worth of $240m, over 2Q.
Uncompromised by this robust balance sheet growth, Management upheld its due focus on Spreads and Margins, which CIB managed to expand by around 40 basis points over the quarter, notwithstanding the highly-competitive market for deposits, and the inherent pressure posed on Cost of Funds.
This came as CIB remained keen towards maintaining a healthy contribution of Current and Saving Accounts (CASA), of 53% to Total Deposits, despite the current market inclination towards longer-term funding, coupled with the Bank’s proactive Treasury Management that allowed for efficient allocation of excess funds, while preserving the desirable balance between liquidity and profitability.
Those factors combined fed into Net Interest Income (NII) growth of 20% in 2Q, compared to the first, which, being the core top line pillar, sets the stage for second-half performance.
At the other end, the previous came paralleled with growth in the Bank’s sustainable stream of Non-Interest Income, with Core Fees and Commissions growing by 10% over 2Q, echoing decent lending growth, coupled with a rebound in Trade Finance activity.
The latter came especially owing to CIB being well-equipped to cater Foreign Exchange and Trade Finance client needs in a timely manner, as Management continued to prioritize maintaining adequate foreign currency liquidity for potential market needs.
Remaining committed to its role in extending funding to businesses and individuals, CIB grew its Local Currency Loan book by 6% or EGP 9.4bn in the quarter, recording a Total Gross Loan Portfolio of EGP 252bn, in the first half of 2023, and of EGP 273bn, upon considering the Securitization Portfolio of EGP 21.7bn, preserving its position as the largest Lender-and-Securitizer among Private-Sector Banks.
This came while pursuing its role in funding Small-andMedium-Sized-Enterprises (SMEs), exceeding the required target stipulated by CBE.
This growth in lending got through while maintaining solid asset quality, with the proportion of non-performing loans decreasing over the quarter, and with Loan Loss Provision Balance recording EGP 29.9bn in the first half of 2023, securing coverage for 11.9% of the Bank’s Total Gross Loan Portfolio, and 17.7% of the Unsecured Portion therein, consequently, maintaining the Bank’s foremost market position in Coverage for Expected Losses.
Simultaneously, Coverage for Unexpected Losses remained healthy, with Capital Adequacy Ratio (CAR) resting at 19% in the first half of 2023, comfortably above the minimum regulatory threshold, and maintained from last quarter, despite global macroeconomic pressures and robust core business growth.
It is worth highlighting that Management continues to take proactive actions to cement the Bank’s Capital Position and CAR against macroeconomic dynamics. Precisely, and further attesting investor confidence in its solid fundamentals, CIB managed this quarter to secure loans from the International Finance Corporation (IFC) worth of $250m, which comes as a vote of confidence by IFC in the growth prospects and balance sheet fundamentals for CIB amidst current market conditions.
Of this amount, $150m is a Subordinated Loan, which would come to support the Bank’s Capital Base, particularly Tier II Capital, while acting as a partial hedge tool for the Bank’s CAR against potential foreign exchange fluctuations.
The remaining $100m aims at helping CIB boost its focus on funding of green projects, further emphasizing the Bank’s integral role in setting the tone for Responsible Banking, through providing distinct support to businesses that are going green.
Overall, Management is content about CIB’s performance for the first half of the year. And, although the second half encloses a somewhat high degree of ambiguity attending the macroeconomic outlook, on both, global and local fronts, Management yet remains positive, with a strong confidence in the ability of CIB, and the Egyptian Banking Sector as a whole, to endure uncertainties and to well-accommodate macroeconomic and regulatory developments.
Second-quarter 2023 standalone revenues were EGP 13.5bn, up 92% from second-quarter 2022.
First-half 2023 standalone revenues were EGP 25.5bn, up 74% from first-half 2022, on the back of 74% increase in net interest income, coupled with 78% increase in non-interest income.
First-half 2023 standalone net interest income recorded EGP 23.8bn, increasing by 74% YoY, generated at 7.30% Total NIM , which increased by 151 basis points (bp) YoY, with Local Currency NIM1 recording 9.21%, coming 180bp higher YoY, and Foreign Currency NIM1 recording 3.79%, coming 237bp higher YoY.
First-half 2023 standalone non-interest income recorded EGP 1.72bn, coming 78% higher YoY.Trade service fees were EGP 1.17bn, growing by 2.5 YoY, with outstanding balance of EGP 158bn.
First-half 2023 standalone operating expense was EGP 4.17bn, up 29% YoY. Cost-to-income reported 15.6%, coming 469bp lower YoY, and remaining comfortably below the desirable level of 30%.
Gross loan portfolio recorded EGP 252bn, growing by 14% over first-half 2023, with real growth of 6% net of the EGP devaluation impact, which added EGP 16.7bn to the EGP equivalent balance.
Growth was driven wholly by local currency loans, increasing by 12% or EGP 18.5bn, sufficiently counterbalancing net foreign currency loan repayments of 6% or $163m.CIB’s loan market share reached 5.44% as of March 2023.
Deposits recorded EGP 656bn, growing by 24% over first-half 2023, with real growth of 15% net of the EGP devaluation impact, which added EGP 40.0bn to the EGP equivalent balance.
Growth was driven by local currency deposits, increasing by 21% or EGP 77.7bn, together with foreign currency deposits adding 4% or $278m.
CIB’s deposit market share recorded 6.23% as of March 2023, maintaining the highest deposit market share among all private-sector banks.
Standalone non-performing loans represented 5.02% of the gross loan portfolio, and were covered 236% by the Bank’s EGP 29.9bn loan loss provision balance. First-half 2023 loan loss provision expense recorded EGP 1.21bn compared to EGP 14m in first-half 2022.
Total tier capital recorded EGP 83.4bn, or 19.0% of risk-weighted assets as of June 2023.
Tier I capital reached EGP 68.2bn, or 82% of total tier capital. CIB maintained its comfortable liquidity position above CBE requirements and Basel III guidelines in both local currency and foreign currency.
CBE liquidity ratios remained well above the regulator’s requirements, with local currency liquidity ratio recording 37.3% in June 2023, compared to the regulator’s threshold of 20%, and foreign currency liquidity ratio reaching 73.9%, above the threshold of 25%.
NSFR was 226% for local currency and 215% for foreign currency, and LCR was 1438% for local currency and 308% for foreign currency, comfortably above the 100% Basel III requirement.
