Commercial International Bank (CIB) posted a consolidated net income of EGP 7.23bn in the fourth quarter of 2023, an increase of 83% from the same period in 2022. The bank’s full-year 2023 net income reached EGP 29.6bn (EGP 8.59 per share), up by 84% year-on-year.

The bank’s management said: “CIB has proven the strength and sustainability of its business model by delivering another year of outstanding financial performance, while maintaining the highest solvency levels in the market, despite the adverse market conditions caused by the global and local events.

Facing an uncertain macroeconomic outlook and persistent challenges since 2022, Management adopted prudent and proactive risk management practices, setting aside EGP 3.5bn of provisions in the fourth quarter of 2023, to account for any potential deterioration in asset quality and to protect the bank from any unforeseen circumstances. As a result, CIB maintained its Coverage for Expected Losses in the Sector, with a Loan Loss Provision Balance of EGP 29.2bn, covering 11% of the bank’s Gross Loan Portfolio, and 16% of the unsecured portion. Liquidity management was also a key priority for CIB.

The bank is committed to keeping sufficient liquidity levels and meeting the market needs. Therefore, liquidity ratios remained comfortable, in both local and foreign currency, well above the minimum regulatory requirements and Basel III standards.

Leveraging CIB’s flexible balance sheet structure, the bank achieved strong profitability growth, with a full-year 2023 bottom line of EGP 29.6bn, an 84% increase from last year, and a remarkable top-line growth of 70%.

The CIB’s management focused on the sustainable revenue stream, growing funds at a healthy rate, with an 18% real growth in deposits. This growth was supported by the bank’s ability to control its cost of funds, as CIB successfully maintained its high share of Current and Saving Accounts (CASA) of 55% of total deposits.

The year also witnessed robust lending activity, along with strong fee income growth, growing at a real growth rate of 11%, and 15% after accounting for securitization deals, to maintain its market position as the largest lender-and-securitizer among private-sector banks.

This impressive financial performance contributed to a stronger Capital Base with a Capital Adequacy Ratio (CAR) of 26.2%, after accounting for the 2023 Proposed Profit Appropriation, despite the turbulent times. This was achieved by Management’s focus on growing the bank’s core business while generating returns that would result in fast growth in the bank’s Capital Base and preserve the CAR against adverse economic fluctuations.

Furthermore, on the capital front, and to ensure a sustainable, comfortable Capital Base that is less exposed to external factors, this quarter, CIB secured a $150m subordinated Tier II loan from The European Bank for Reconstruction and Development (EBRD), with a 10-year maturity, following another loan secured from the International Finance Corporation (IFC) in the second quarter of 2023.

The aforementioned capital position improved while delivering a Return on Average Equity (ROAE) of 39.7% – one of the highest in the sector – up by 15% from last year after accounting for 2023 Proposed Profit Appropriation.

Overall, despite the challenges faced throughout the year, which are expected to continue, Management remains optimistic about CIB’s growth and profitability, with great confidence in the bank’s ability to efficiently navigate through challenging market conditions, capitalizing on its solid balance sheet fundamentals and well-established solvency.”

The standalone revenues for the fourth quarter of 2023 reached EGP 16.3bn, a 69% increase from the same period in 2022. The full-year 2023 revenues amounted to EGP 54.6bn, a 67% rise from 2022, driven by a 71% surge in net interest income. The noninterest income, however, slightly declined by 4%.

The net interest income for the full year of 2023 was EGP 52.7bn, up 71% year-on-year, with a total net interest margin (NIM) of 7.55%, which improved by 145 basis points (bp) year-on-year. The local currency NIM was 9.37%, an increase of 181bp year-on-year, while the foreign currency NIM was 3.87%, an increase of 153bp year-on-year.

The non-interest income for the full year of 2023 was EGP 1.83bn, with trade service fees accounting for EGP 2.28bn, a 96% growth year-on-year, and an outstanding balance of EGP 174bn.

The operating expense for the full year of 2023 was EGP 9.77bn, a 36% increase year-on-year. The cost-to-income ratio was 17.0%, a decrease of 373bp year-on-year, and well below the desired level of 30%.

The gross loan portfolio was EGP 266bn, a 20% growth over 2023, with real growth of 12% after adjusting for the EGP devaluation impact, which added EGP 16.7bn to the EGP equivalent balance. The growth was entirely driven by local currency loans, which increased by 24% or EGP 37.2bn, offsetting the net foreign currency loan repayments of 11% or $310m. The loan market share of CIB was 4.97% as of August 2023.

The deposits were EGP 675bn, a 27% growth over 2023, with a real growth of 18% after adjusting for the EGP devaluation impact, which added EGP 40bn to the EGP equivalent balance. The growth was fueled by local currency deposits, which increased by 26% or EGP 94.3bn, along with foreign currency deposits, which increased by 5% or $352m. The deposit market share of CIB was 6.81% as of August 2023.

The non-performing loans accounted for 3.54% of the gross loan portfolio and were covered 309% by the bank’s EGP 29.1bn loan loss provision balance. The impairment charge for credit losses for the full year of 2023 was EGP 4.29bn, compared to EGP 1.51bn in 2022.

The total tier capital was EGP 100bn, or 26.2% of risk-weighted assets as of December 2023. The tier I capital was EGP 83.8bn or 84% of total tier capital.

CIB maintained its comfortable liquidity and funding position above the CBE requirements and the Basel III guidelines in both local currency and foreign currency. The CBE liquidity ratios were well above the regulator’s requirements, with the local currency liquidity ratio at 30.2% by the end of December 2023, compared to the regulator’s threshold of 20%, and the foreign currency liquidity ratio at 45.3%, above the threshold of 25%. The net stable funding ratio (NSFR) was 264% for local currency and 229% for foreign currency, and the liquidity coverage ratio (LCR) was 2250% for local currency and 175% for foreign currency, comfortably above the 100% Basel III requirement.

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