The Commercial International Bank – Egypt (CIB) reported, on Wednesday, consolidated net income of EGP 2.35bn, or EGP 1.44 per share in the third quarter (3Q) 2020, down 26% from 3Q 2019.
The bank’s management commented, “Approaching the end of one exceptionally dynamic year, CIB managed to deliver another record of strong financial performance, while prioritizing solvency over profitability in light of the macroeconomic challenges that followed the COVID-19 outbreak. Despite wide anticipations of a speedy global economic recovery, ambiguity continued to overshadow the overall outlook and hence the creditworthiness of clients. Accordingly, Management maintained consistency with provisions, accumulating EGP 1.6bn in 3Q 2020, further reinstating the Bank’s prudent Risk Management approach and pledge to put solvency first.”
With that, the bank’s loan loss provision balance recorded EGP 15.4bn, covering 11.5% of the total loan portfolio, and 16% of the unsecured portion, which alongside steadfast capital base of EGP 59bn, translating into 31.0% capital adequacy ratio, affirms the resilient coverage for CIB in terms of both expected and unexpected losses, resting comfortably above regulatory requirements and pioneer in the Egyptian banking sector.
CIB’s bottom line before loan loss provisions recorded a robust growth of 15%, reflecting the Bank’s resilient balance sheet structure, with an asset mix that strikes the balance between liquidity and profitability, while managing to grow funds at controlled costs. Moving forward, the outlook is prone to grow clearer following especially the conclusion of the CBE grace period and the gradual disclosure of client creditworthiness. Further, and despite numerous macroeconomic variations, the Bank’s compact balance sheet structure and solvency cement its solid position in weathering market volatility and uncertainty.
On 22 October, the Bank’s directors received a letter from the Central Bank of Egypt (CBE) informing them that in light of the findings of a limited review inspection, the CBE Board of Directors agreed on a resolution to discharge the Chairperson and Managing Director of CIB and that its Board should elect a Non–Executive Chairperson from among its Non-Executive Directors.
On the following day, the CIB Board convened, during that meeting, the then Chairperson and Managing Director resigned and Sherif Samy was elected Non-Executive Chairperson.
Several meetings were subsequently held at the CBE during which the key findings of the CBE inspection were relayed. The meetings with the CBE Inspection team were attended by CIB’s Non-Executive Chairperson and the Bank’s management. This was followed by a written letter from the CBE being delivered to CIB’s Chairperson documenting the CBE limited review inspection findings.
The Bank carefully assessed all the findings in order to quantify the impact of such findings on CIB in coordination with its advisors, where appropriate at this stage. This required additional time for the Bank to complete its review process, before it could satisfactorily release the 30 September 2020 financial statements and associated disclosures.
As mandated by the BOD, CIB management reviewed the inspection findings and identified corrective actions to be taken. The 3Q financial statements take into account the impact of such findings and actions.
The Bank is responding to the findings and has prepared an action plan for the CBE. Additionally, as directed by the Non-Executive Directors, the Audit Committee is appointing an independent international professional services firm to conduct an in-depth review of the Bank’s controls and lending functions with a view to addressing specific and related areas from the CBE inspection, and to further enhance regulatory compliance and strengthen controls at CIB, as part of the Bank’s commitment to enhancing risk management and the governance culture at the Bank.