Commercial International Bank (CIB) disclosed on Monday its financial results for the first quarter (Q1) of 2024, revealing a consolidated net income of EGP 11.9bn, or EGP 3.50 per share. This represents a significant increase of 97% compared to the previous year.
The bank’s management stated: “The first quarter of 2024 was marked with several measures adopted to restore stability in the Egyptian economy gradually. Targeting single-digit inflation and re-attracting foreign investments, the CBE resumed its tightening monetary policy by raising the Corridor Rate in two consecutive hikes by a total of 800 basis points, in efforts to expedite disinflation and bring the real interest rate into positive territory. This came while allowing for the USD/EGP Rate to move freely, to unify the foreign exchange rate across. Also, the credit card limits posed earlier on foreign currency transactions were lifted. Such measures translated into securing several foreign currency funding and FDI deals, which, besides an upgrade by Credit Rating Agencies for Egypt Outlook to “Positive” from “Stable” and “Negative”, signal a gradual restoration of confidence in the Egyptian economy.”
Benefiting from its adaptable balance sheet and proactive treasury management, CIB adeptly managed the economic shifts, achieving record-breaking financial outcomes and maintaining exceptional solvency and liquidity standards. Both the Top and Bottom Lines saw an increase of 82% and 97%, respectively, from the previous year, reflecting true growth even after adjusting for the one-time foreign exchange income and its tax implications. The Management’s ongoing commitment to sustainable revenue growth and prudent balance sheet expansion was evident, as well as their efforts to enhance margins.
CIB expanded its local currency deposit base by 26%, amounting to EGP 97bn, and its foreign currency deposit base by 5%, equivalent to USD 304m, compared to last year. The bank sustained a Current and Saving Accounts (CASA) ratio of 55% to Total Deposits. This strategic direction aimed to limit the Cost of Funds increase amidst rising interest rates and a competitive market environment, ultimately contributing to a margin increase of 220 basis points over the previous year.
CIB’s lending activities continued to be vigorous, with a real growth rate of 10%, and 11% when including Securitization Deals valued at EGP 30bn. This solidified CIB’s status as the foremost Lender-and-Securitizer among private sector banks. Additionally, a surge in trade finance activities bolstered net fee and commission income, which grew by 29% from the previous year.
This core business expansion occurred alongside the maintenance of strong asset quality and solvency. Non-Performing Loans (NPLs) accounted for 4.28% of Gross Loans, a decrease from 5.20% in the previous year. The Loan Loss Provision Balance stood at EGP 41bn, covering 13% of the Bank’s Gross Loan Portfolio and 19% of the unsecured portion.
The Capital Adequacy Ratio (CAR) remained robust at 25.2%, despite macroeconomic challenges. The bank’s solid financial performance contributed to a swift growth in the Capital Base, protecting the Bank’s CAR from economic fluctuations. This strong capital position was achieved while the bank reported an impressive Return on Average Equity (ROAE) of 49.9%, underscoring the management’s commitment to safeguarding shareholder interests.
Looking ahead, the bank’s management is confident in the Egyptian Banking sector’s resilience and CIB’s ability to maintain its leading financial performance. The bank is dedicated to addressing market liquidity requirements and ensuring comprehensive coverage for both anticipated and unforeseen losses.
For the first quarter of 2024, standalone revenues reached EGP 21.8bn, an 82% increase from the same period in 2023. This was supported by a 73% rise in net interest income and a threefold increase in non-interest income.
The standalone net interest income for the first quarter of 2024 was EGP 18.8bn, up by 73% year-over-year, yielding a Total Net Interest Margin (NIM) of 9.29%, which is 220 basis points higher than the previous year. The Local Currency NIM was 11.5%, an increase of 233 basis points year-over-year, while the Foreign Currency NIM was 4.22%, up by 70 basis points.
Non-interest income for the standalone first quarter of 2024 was EGP 3.07bn, tripling year-over-year. Trade service fees amounted to EGP 660m, a 21% increase from the previous year, with an outstanding balance of EGP 251bn.
Operating expenses for the standalone first quarter of 2024 were EGP 2.84bn, a 42% increase year-over-year. The cost-to-income ratio was reported at 13.0%, which is 306 basis points lower than the previous year, comfortably below the preferred level of 30%.
The gross loan portfolio reached EGP 314bn, an 18% growth over the first quarter of 2024, with real growth of 3% after adjusting for the EGP devaluation impact, which added EGP 39.2bn to the EGP equivalent balance. The growth was entirely driven by local currency loans, which increased by 5% or EGP 8.83bn, while foreign currency loans remained stable, adding a modest $1.35m. CIB’s loan market share was 4.87% as of December 2023.
Deposits totalled EGP 792bn, a 17% increase over the first quarter of 2024, with a real growth of 1% after accounting for the EGP devaluation impact, which added EGP 112bn to the EGP equivalent balance. The growth was solely attributed to local currency deposits, which rose by 1% or EGP 5.59bn, adequately covering foreign currency deposit outflows of $9.22m. CIB’s deposit market share was 6.64% as of December 2023.
Standalone non-performing loans constituted 4.28% of the gross loan portfolio and were 307% covered by the Bank’s EGP 41.3bn loan loss provision balance. The impairment charge for credit losses in the first quarter of 2024 was EGP 1.48bn, compared to EGP 948m in the first quarter of 2023.
Total tier capital was EGP 122bn, or 25.2% of risk-weighted assets as of March 2024. Tier I capital amounted to EGP 98.1bn, representing 80% of the total tier capital.
CIB continued to maintain a robust liquidity position, surpassing CBE requirements and Basel III guidelines in both local and foreign currencies.
The CBE liquidity ratios exceeded regulatory requirements, with the local currency liquidity ratio at 37.7% by the end of March 2024, well above the 20% threshold, and the foreign currency liquidity ratio at 46.3%, surpassing the 25% threshold. The Net Stable Funding Ratio (NSFR) was 202% for local currency and 229% for foreign currency. In comparison, the Liquidity Coverage Ratio (LCR) was 1820% for local currency and 179% for foreign currency, comfortably exceeding the 100% Basel III standard.
