Commercial International Bank (CIB) announced its third-quarter (3Q) 2023 consolidated net income of EGP 8.35bn, or EGP 2.24 per share, up by 89% from third-quarter 2022.
The bank’s management commented: “Despite the challenging outlook, CIB maintained its strong solvency, liquidity, and asset quality levels, as well as its robust financial performance, driven by its core business growth.”
CIB achieved a Capital Adequacy Ratio (CAR) of 21.4% in 3Q 2023, comfortably above the minimum regulatory requirement and higher than last quarter by 240 basis points, mainly due to the third-quarter interim profits of EGP 8.35bn, resulting in a Return on Average Equity (ROAE) of 45.8% for the quarter.
This was largely driven by CIB’s focus on expanding the Bank’s Balance Sheet and Funding Base, without compromising on spreads and margins, which was possible despite the high competition for local and foreign currency liquidity, thanks to maintaining a healthy share of Current and Saving Accounts (CASA) of 55% to total deposits, which is an ongoing Management strategy that continues to pay off.
This was also accompanied by upholding the bank’s leading market position in asset quality, with a loan loss provision balance covering 11.7% of the bank’s total gross loan portfolio, and 17% of the unsecured portion therein.
At the same time, liquidity levels remained stable with ample room above both, minimum regulatory requirements and Basel III requirements, in both local and foreign currency, with the CBE liquidity ratio recording 34.1% in LCY and 73.5% in FCY, along with Basel III Liquidity Coverage Ratio (LCR) recording 1303% in LCY and 265% in FCY, and Net Stable Funding Ratio (NSFR) recording 208% in LCY and 206% in FCY.
This was achieved while CIB managed to grow its Local Currency Deposit Base, adding EGP 9.1bn over the quarter, while maintaining its Foreign Currency Deposit Base, despite the challenging foreign currency landscape.
Further committed to its prudent and proactive risk management, CIB Management decided to take an accounting impairment on the Bank’s Kenyan Investment, based on significant changes in the macroeconomic assumptions and business plans that were made at the time of the acquisition.
CIB said in a statement: “We would like to assure our stakeholders that we remain confident that the underlying fundamentals of our Kenyan Investment are still valid and that we took measures to cope with these economic changes, and revised the strategy on the ground as well as restructured key management personnel to implement the new strategy.”
“We remain focused on our Kenyan Subsidiary being the first international acquisition and the cornerstone of our East African expansion strategy,” the statement added.
CIB announced its positive outlook for the future despite global and local uncertainties, as it reported strong growth and profitability for the third quarter of 2023. The bank said it would maintain its high solvency and liquidity levels to cope with any potential market fluctuations.
The bank’s standalone revenues for the third quarter reached EGP 12.7bn, a 51% increase from the same period last year. The revenues for the first nine months of the year were EGP 38.2bn, a 66% increase from the previous year, driven by a 73% increase in net interest income.
CIB’s net interest income for the third quarter was EGP 37.6bn, a 73% increase year-on-year, with a total net interest margin of 7.36%. The local currency net interest margin was 9.25%, while the foreign currency net interest margin was 3.78%.
The non-interest income for the third quarter was EGP 647m, with trade service fees accounting for EGP 1.77bn, a 2.2x increase year-on-year. The outstanding balance of trade services was EGP 169bn.
The operating expense for the third quarter was EGP 6.30bn, a 25% increase year-on-year. The cost-to-income ratio was 15.5%, down from 20.4% last year, and well below the target of 30%.
The bank’s gross loan portfolio grew by 15% to EGP 255bn, with real growth of 7% after excluding the impact of the EGP devaluation. The growth was mainly due to the local currency loans, which increased by 15% or EGP 23.1bn, while the foreign currency loans decreased by 8% or USD 221m. The bank’s loan market share was 5.08% as of July 2023.
The bank’s deposits grew by 26% to EGP 666bn, with a real growth of 17% after excluding the impact of the EGP devaluation. The growth was attributed to the local currency deposits, which increased by 23% or EGP 86.7bn, and the foreign currency deposits, which increased by 4% or USD 292m. The bank’s deposit market share was 6.84% as of July 2023, the highest among the private-sector banks.
CIB’s non-performing loans ratio was 5.04% and was covered 233% by the loan loss provision of EGP 29.8bn. The loan loss provision expense for the third quarter was EGP 1.25bn, compared to EGP 263m for the first nine months of 2022.
The bank’s total tier capital was EGP 91.5bn, or 21.4% of the risk-weighted assets as of September 2023. The tier I capital was EGP 76.4bn or 84% of the total tier capital.
The bank maintained its comfortable liquidity and funding position above the CBE requirements and the Basel III guidelines in both local and foreign currencies. The local currency liquidity ratio was 34.1%, and the foreign currency liquidity ratio was 73.5%. The NSFR was 208% for local currency and 206% for foreign currency, and the LCR was 1303% for local currency and 265% for foreign currency.
