The Commercial International Bank Egypt (CIB) announced, on Sunday, that it gained a consolidated net income of EGP 2.87bn in the first quarter (Q1) of 2021, or EGP 1.72 per share, up 20% year-on-year (y-o-y) from Q1 2021.
On the back of the announcement, the bank’s management said, “CIB started 2021 on a positive note, following a year marked with exceptional challenges and uncertainties, recording a bottom line of EGP 2.9bn in Q1, growing 20% from last year.”
The bank’s prudent risk management and intact coverage, through 2020 and earlier, paved the way for normalising provision accumulations. This came despite the ambiguity underlying macroeconomic dynamics, and client creditworthiness gradually tapering-off.
Accordingly, provisions for Q1 of 2021 came down by half from last year, to record EGP 0.8bn for direct and contingent facilities. However, this decline took place without compromising CIB’s prime market position in terms of coverage for expected losses at 13%, while reserving its top-notch capital adequacy for unexpected losses at 31.5%.
Notably, Q1 of 2021 witnessed favourable balance sheet growth, especially on the local currency front, going apace with the management’s strategic focus on growing funds at controlled costs as the key top line booster.
This, along with Treasury Management adept tactics to cope with interest rate volatilities and balance between liquidity and profitability, contributed broadly to upholding the top line performance. It came amidst declining interest rates and consequent pressure posed on spreads.
The bank’s management added, “Moving forward, Management remains positive that CIB will continue to sustain its profitability and solvency against current and potential macroeconomic variations amid the global pandemic, drawing largely on its resilient coverage and strong balance sheet fundamentals.”
In Q1 of 2021, standalone revenues stood at EGP 6.27bn, down 2% from Q1 of 2020, wholly driven by an 8% decrease in net interest income. This was partially offset by non-interest income coming 2.7x higher y-o-y.
Meanwhile, standalone net interest income in the quarter stood at EGP 5.68bn, down 8% y-o-y, due mainly to the maturities of exceptionally-high-yielding bonds previously purchased.
Normalising for the above-market-interest-rate-differential of the aforementioned bonds in Q1 of 2020, net interest income grew by 6% y-o-y, generated at 5.67% Total Net Interest Margin (NIM). This was down 35 basis points (bp) y-o-y, with Local Currency NIM recording 7.49%, down 32bp, and Foreign Currency NIM recording 0.92%, down 85bp y-o-y.
Also in Q1 of 2021, standalone non-interest income stood at EGP 590m, almost tripling on last year, and representing 9% of total revenues.
CIB recorded EGP 121m for Q1 of 2021 and EGP 414m for Q1 of 2020, with standalone non-interest income growing by 13% y-o-y. This was upon adding back contingent provision charged, which is normally deducted from Non-Interest Income as part of Other Operating Expenses.
Trade service fees stood at EGP 197m, growing by 20% y-o-y, with an outstanding balance of EGP 82.9bn in Q1 of 2021. Meanwhile, standalone operating expense stood at EGP 1.47bn, down 3% y-o-y.
Cost-to-income stood at 23.1%, 74bp higher y-o-y, while remaining comfortably below the desirable level of 30% gross loan portfolio recorded EGP 138bn, growing by 2% or EGP 2.07bn year-to-date (ytd).
Growth was driven wholly by local currency loans, which grew by 4% or EGP 3.91bn, sufficiently offsetting foreign currency net loan repayments of $113m or 4%. Meanwhile, CIB’s loan market share reached 5.39%, as of February 2021.
Deposits recorded EGP 365bn, adding 7% or EGP 25.1bn ytd, whilst growth was driven mainly by local currency deposits, which added 8% or EGP 21.1bn, besides foreign currency deposits, which added 5% or $260m.
CIB’s deposit market share recorded 6.49% as of February 2021, maintaining the highest deposit market share among all private-sector banks.
The bank maintained its resilient asset quality, with standalone non-performing loans representing 4.41% of the gross loan portfolio, covered 279% by the Bank’s EGP 17.1bn loan loss provision balance. In Q1 of 2021, loan loss provision expenses stood at EGP 702m, 43% lower y-o-y.
Total tier capital stood at EGP 64.4bn, or 31.5% of risk-weighted assets, as of March 2021, whilst Tier I capital reached EGP 57.7bn, or 90% of total tier capital.
CIB maintained its comfortable liquidity position, above Central Bank of Egypt (CBE) requirements and Basel III guidelines, in both local currency and foreign currency.
The CBE local currency liquidity ratio remained well above the regulator’s 20% requirement, recording 59.6% as of March 2021, while the foreign currency liquidity ratio reached 69.0%, above the threshold of 25%.
The net stable funding ratio (NSFR) stood at 272% for local currency and 166% for foreign currency. Meanwhile, the liquidity coverage ratio (LCR) was 2,204% for local currency and 297% for foreign currency, comfortably above the 100% Basel III requirement.