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Banking

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    Banking Banking Document Transcript

    • www.moodys.com Moody’s Company Report Banking July 2007 Commercial International Bank (Egypt) SAE Cairo, Egypt Analyst Contacts: Limassol 357.25.586.586 Company Overview 11 Constantinos Kypreos Asst Vice President - Analyst Commercial International Bank SAE (CIB) is Egypt’s fifth largest bank, with total assets of of EGP37.83 billion (US$6.63 billion) as of December 2006, 2,301 11 Mardig Haladjian employees, 119 branches including business units and 387 ATMs. Headquartered in General Manager Cairo (Egypt), CIB is an Egyptian private-sector bank that started out as a wholesale Dubai International Financial corporate bank, but is currently pursuing a strategy of transforming itself to an Centre 9714.365.0287 integrated financial services group, also offering services to the retail and SME sectors while also maintaining a strong brokerage and investment banking franchise. Antoine Yacoub Senior Associate CIB was established in 1975 under the name Chase National Bank of Egypt. It was jointly owned by Chase Manhattan Bank and the state-controlled National Bank of Egypt, which held shares of 49% and 51%, respectively. CIB is now a Ratings: publicly listed company and its shares are traded on the Cairo & Alexandria, Category Moody’s Rating Kuwait and Abu Dhabi stock exchanges. Market capitalisation at end 2006 was Commercial International Bank (Egypt) approximately EGP11.3 billion (US$2.0 billion). SAE 9 Outlook Bank Deposits -Fgn Curr Stable Ba2/NP Summary Rating Rationale Bank Deposits -Dom Curr Baa1/P-2 Moody’s assigns a bank financial strength rating (BFSR) of C- to Commercial Bank Financial Strength C- International Bank (Egypt) S.A.E. (‘CIB’), which translates into a Baseline Credit Assessment of Baa2. This represents the highest rating assigned to an Egyptian bank. CIB is a mid-sized player with an approximate 5% market share and a limited franchise outside Cairo, but is nonetheless one of the most sophisticated banks in Egypt. We consider as key strengths its sound management, strong credit culture and well-trained workforce. CIB also has a good asset quality, with NPLs more than fully covered by provision reserves, strong liquidity, and adequate capital levels. However, the BFSR also incorporates increased competition following the significant consolidation within the Egyptian banking sector, as well as significant credit concentrations. Egypt's weak economic base and low per- capita GDP was also a negative rating driver, but increased foreign investments and the government's apparent commitment to the reform process would imply that operating conditions are improving.
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE CIB’s long-term global local currency (GLC) deposit rating is set at Baa1, an one-notch uplift from the bank’s Baa2 baseline credit assessment. This is based on Moody’s assessment of a very high probability of systemic support in the event of need. Credit Strengths Strong and consistent profitability Sound management, developed infrastructure and well-trained workforce Strong corporate banking franchise and a developing retail and SME business Good asset quality with relatively low NPLs Expected systemic support underpins the deposit ratings Credit Challenges A mid-sized bank with 5% market share and low penetration outside Cairo High credit concentrations Increasing competition from stronger public sector banks and aggressive private sector (mainly foreign) banks Volatile (but improving) operating conditions Rating Outlook All the bank’s ratings carry stable outlooks. What Could Change the Rating UP The BFSR could improve if the bank successfully implements its franchise diversification and growth, maintains a strong financial performance – a significant factor in this rating – and if we witness further and sustainable improvements in the operating environment. What Could Change the Rating DOWN CIB's BFSR could slip if its financial performance were to deteriorate materially (e.g. due to asset quality problems), or if its franchise were to be diminished (e.g. due to growing market competition). Recent Results and Developments CIB announced its 1Q2007 results, with bottom line profits up 42% to EGP266 million. Results were driven by the 19% growth in net interest income to EGP255 million, and the 53% growth in non-interest income to EGP241 million (on the back of a 76% growth in banking fees and commissions). Loans & advances continue to grow strongly – up 8% since the 2006 year-end to EGP18.9 billion (US$3.3 billion) – but with deposits recording a marginal 1% growth to EGP32.0 billion. Total assets were flat, at EGP37.7 billion (US$6.5 billion). Detailed Rating Considerations Detailed considerations for CIB’s currently assigned ratings are as follows: Bank Financial Strength Rating Moody’s BFSR of C- for CIB is supported by the bank's sound management, strong credit culture, well-trained workforce and strong overall financial profile. CIB also has good asset quality (with NPLs more than fully covered by provision reserves), strong liquidity and adequate capital levels. However, the rating also reflects increased competition following the significant consolidation within the Egyptian banking sector, combined with CIB's relatively small market position and significant credit concentrations. Egypt's weak economic base and low per-capita GDP is also a negative rating driver, but increased foreign investments and the government's apparent commitment to the reform process would imply that operating conditions are improving. The C- BFSR assigned to CIB is in line with Moody’s bank financial strength rating scorecard. 2 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Rating Factors [1] Total A B C D E Score Trend Qualitative Factors (70%) D Factor 1: Franchise Value (7%) D+ Neutral Market Share and Sustainability x Geographical Diversification x Earnings Stability x Earnings Diversification [2] Factor 2: Risk Positioning (21%) D Neutral Corporate Governance [2] - Ownership and Organizational Complexity - Key Man Risk - Insider and Related-Party Risks -- -- Controls and Risk Management x - Risk Management x - Controls x Financial Reporting Transparency x - Global Comparability x - Frequency and Timeliness x - Quality of Financial Information x Credit Risk Concentration -- -- -- -- -- - Borrower Concentration -- -- -- -- -- - Industry Concentration -- -- -- -- -- Liquidity Management x Market Risk Appetite x Factor 3: Regulatory Environment (21%) -- -- -- -- -- -- -- Factor 4: Operating Environment (21%) D- Improving Economic Stability x Integrity and Corruption x Legal System x Financial Factors (30%) B Factor 5: Profitability (4.7%) A Neutral PPP % Avg RWA 4.79% Net Income % Avg RWA 3.15% Factor 6: Liquidity (4.7%) B+ Neutral (Mkt funds-Liquid Assets) % Total Assets -43.25% Liquidity Management x Factor 7: Capital Adequacy (4.7%) A Neutral Tier 1 ratio (%) 10.47% Tangible Common Equity % RWA 11.12% Factor 8: Efficiency (2.1%) A Neutral Cost/income ratio 35.59% Factor 9: Asset Quality (4.7%) C Neutral Problem Loans % Gross Loans 4.93% Problem Loans % (Equity + LLR) 20.99% Lowest Combined Score (9%) C Economic Insolvency Override Neutral Total Scorecard Implied BFSR C- Assigned BFSR C- [1] - Where dashes are shown for a particular factor (or sub-factor), the score is based on non public information [2] - A blank score under Earnings diversification or Corporate Governance indicates the risk is neutral 3 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Qualitative Rating Factors (70%) Factor 1: Franchise Value Trend: Neutral CIB is one of the largest private-sector commercial bank with an approximate 5% market share of loans and deposits (along with National Societe Generale Bank and Bank of Alexandria, who roughly have the same balance sheet size). Despite its relatively small size, we believe CIB is an important player in the market and has a number of competitive advantages: it has a sound management and a well-trained workforce, a strong credit culture and a developed IT infrastructure. The top management team has an assertive management style and leads most of its domestic rivals in terms of strategic formulation and implementation. CIB’s main aim is to position itself strongly to benefit from the longer term development of the under-banked Egyptian economy. To this effect, it is pursuing a strategy of transforming itself from a high-end corporate niche bank to an integrated financial services group. Management is already targeting to increase its non-corporate exposure to between 30-40% of gross loans, while its brokerage and investment banking operations were brought under the umbrella of CI Holding Co, its 50.1% subsidiary. CIB is targeting both the retail and SME sectors, and is specifically extending its product range in consumer lending, cards, and mortgages (but avoiding the mass-market), while in the SME sector it is targeting the suppliers/clients of its big corporate clients. Nonetheless, CIB maintains its niche in servicing high-quality private-sector companies. Based on its flexible organisation, qualified staff, good information technology and strong internal systems and controls (which have evolved from those introduced by Chase Manhattan Bank when it managed CIB), the bank distinguishes itself by delivering a professional and efficient customer service and well-packaged banking products. It serves many of the top Egyptian corporates from the manufacturing, industrial, tourism and utilities sectors, including multinational joint-venture and subsidiary companies. It also acts as the main banker to several foreign embassies and is a leader in domestic loan syndications. The bank’s strong position in Egypt is offset by increasing competition following the significant consolidation within the Egyptian banking sector (including the sale of Misr International Bank to National Societe Generale Bank, Egyptian American Bank to Credit Agricole, and the privatisation of Bank of Alexandria), by a retail banking franchise that has not yet been developed, and a lack of geographical diversification (although the bank is in the process of setting up a bank in Algeria, in which it will have a 40% stake and a management contract). CIB scores D+ for franchise value. Factor 2: Risk Positioning Trend: Neutral The bank has a modest market risk appetite and good liquidity management, and its financial reporting transparency is superior to that of the other rated Egyptian banks. There are also no apparent corporate governance-related deficiencies (with a well-composed Board of Directors, and Audit, Governance & Compliance, and Risk committees in place), while the bank has adequate risk management systems that appear to broadly capture the risks it is running. Nevertheless, the risk positioning score gives full weight to the E score for Borrower Concentration, adversely affected by the fact that the top 20 borrowers significantly exceed 200% of Tier 1. CIB scores D for risk positioning. Factor 3: Regulatory Environment Trend: -- Refer to Moody’s forthcoming Banking System Outlook for Egypt to obtain additional information on the regulatory environment. 4 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Factor 4: Operating Environment Trend: Improving This factor is common to all Egyptian banks. Moody’s assigns a D- score for the overall operating environment. Refer to Moody’s forthcoming Banking System Outlook for Egypt to obtain additional comments on the operating environment. Quantitative Rating Factors (30%) Factor 5: Profitability Trend: Neutral CIB’s profitability improved considerably during 2006, both on a pre-provision (up 21%) and bottom line (up 42%) level. The improvements derive from the 62% growth in non-interest income and a 47% reduction in provision charges. The bank scores A for profitability on the back of its strong risk-weighted profitability indicators on both a pre-provision (4.3%) and bottom-line (3.1%) basis. Factor 6: Liquidity Trend: Neutral The bank maintains ample balance sheet liquidity (with liquid assets making up more than 35% of total assets), and relies almost exclusively on deposits to fund its activities. The B+ score for liquidity does not appear to be under threat over the short term. Factor 7: Capital Adequacy Trend: Neutral CIB remains well capitalised with a Tier 1 ratio of 11.6 % (or 10.0% if adjusting risk-weighted assets by assigning a 50% weight to government securities) in December 2006. CIB has adequate capital to support its business growth and to absorb any unexpected losses should the need arise. The A outcome of Moody’s scorecard is adjusted to B+ to reflect the adjustment noted above. Factor 8: Efficiency Trend: Neutral With a three-year average cost-to-income ratio of 36%, the bank scores A for efficiency, on the back of robust revenue growth, tight control of expenses, a fairly low cost base, and despite increased remuneration packages designed to retain its best-performing employees. Factor 9: Asset Quality Trend: Neutral The bank displays the best asset quality among all rated Egyptian banks, with NPLs as a percentage of gross loans down to 3.8% in 2006. NPLs are also well-covered by provision reserves, equal to 6.7% of gross loans, indicating that CIB’s solvency is not under threat from any problematic exposures. The bank scores C for asset quality. 5 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Global Local Currency Deposit Rating (Joint Default Analysis) Moody's assigns a GLC deposit rating of Baa1 to CIB. The GLC deposit rating is supported by CIB’s Baseline Credit Assessment of Baa2, as well as by the A3 local-currency deposit ceiling (LCDC) of its underlying support provider, Egypt. The bank receives a one-notch uplift from its Baseline Credit Assessment, bringing the GLC to Baa1. The probability of systemic support in the event of a stress situation is judged to be very high. This is based on CIB's relative importance to Egypt’s banking system (given its 5.5% market share of deposits), and a track record which shows that the Egyptian authorities continuously support the banks that face difficulties. Moody’s views Egypt as a high support country. Notching Considerations Ratings for CIB’s junior obligations should be notched off the fully supported deposit rating because Moody’s believes that there is no legal authority in place in Egypt to impose losses on subordinated creditors outside of a liquidation scenario. Foreign Currency Deposit Rating Moody’s assigns Ba2/Not-Prime foreign currency deposit ratings to CIB. The rating is constrained by Egypt’s foreign currency bank deposit ceiling of Ba2. Business Activities The bank’s operations are organised along the following lines: The Corporate Banking Group provides products and services to various sectors like Oil, Gas, Petrochemicals, Fertilisers, Telecommunication, Agri-business, Contracting and other manufacturing sectors. The group’s offerings include value–added products structured finance, trade finance, shipping toll collections and project finance besides the traditional suite of corporate banking products. The Retail Banking Group provides products and services to retail and SME clients. During 2006, SME Banking has been hived off as a separate business line. The Direct Investment team manages the investment portfolio of the bank. The Financial Institution & Correspondent Banking Group activities includes trade finance, cross border asset allocation, fund raising, clearing services, custodial services and donor programs. The Treasury Group manages the assets and liabilities of the bank in terms of interest rate, liquidity and concentration risk. This group is responsible for pricing of loans & deposits and introducing cash management and liability products. In addition, it offers equity funds, CDs, securities and derivatives to its customers. In 2006, CIB was the first Egyptian bank to introduce an Islamic fund jointly with Faisal Islamic Bank. Distribution Capacity and Market Share As at December 2006, CIB had 119 branches (including 45 business units and foreign exchange units) and 387 ATMs. The bank’s delivery channels include 25 automated branches, mobile branch services (catering to customers in remote locations and special events), Internet banking services, smart card centre and a call centre. CIB has a representative office in Dubai and three offices that operate out of the premises of its strategic partners in Saudi Arabia (Riyadh & Jeddah) and Qatar, which provide banking services to Egyptian expatriates. CIB has applied for a license to establish a commercial bank in Algeria, in which it will maintain a 40% shareholding. CIB is the second-largest, private-sector commercial bank in the country, the fifth-largest bank with respect to total assets. As of 31 December 2006, CIB was a mid-sized player with a market share of 8% in lending to the industrial sector, 5.3% in deposits and 9.1% in foreign currencies deposits. In the shipping business, the bank had a market share of approximately 88% of total Suez Canal tolls collected. CIB also had a market share of 31% in secondary market bond trading. The bank’s subsidiary, CIBC had a market share of 8.9% and was ranked the No.3 brokerage house in Egypt in 2006. 6 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Ownership & Structure CIB is a publicly listed company and its shares are traded on the Cairo & Alexandria Stock Exchange, the Kuwait Stock Exchange and the Abu Dhabi Stock Exchange. In February 2006, National Bank of Egypt sold its 18.7% stake in CIB to a consortium of investors, including Ripplewood Holdings LLC, Eton Park Capital Management, RHJ International, and International Finance Corporation. Joining the Board of Directors on behalf of this investor group are Lucio Notto, the former Chairman and CEO of Mobil Corporation and Timothy Collins, the CEO of Ripplewood Holdings, while Robert Willumstad, the former President and COO of Citigroup, also joined the BoD. Other shareholders include private individual shareholders with approximately a 14% stake, foreign institutional investors with 11%, Bank of New York for GDR holders 25.6%, other local private shareholders 23.5%, public sector shareholders 4.6%, and International Finance Corporation (IFC) 3.2%. Company History Incorporated in 1975, CIB was the first joint-venture bank to be established following the "Open Door Policy" introduced by former Egyptian president, Anwar Sadat. Initially under the name "Chase National Bank of Egypt" (CNBE), it was jointly owned by Chase Manhattan Bank and the state-controlled National Bank of Egypt (NBE), which held 49% and 51%, respectively, of the share capital. The bank benefited immensely from the patronage of its two parents, and particularly from Chase, whose involvement in setting up and managing CNBE for the first decade was a crucial factor in the bank's successful development. With superior operating systems and procedures and well-trained staff, CNBE was able to develop a good market reputation based on its efficient customer service, and thus was able to attract quality customers. Chase exited the joint venture in 1987, and the bank was renamed Commercial International Bank (Egypt) S.A.E. NBE has gradually reduced its stake in CIB, and in February 2006 it has sold its remaining 18.7% stake in CIB to a consortium of investors, including Ripplewood Holdings LLC, Eton Park Capital Management, RHJ International, and International Finance Corporation. Over the past few years, CIB has also acquired stakes in a number of companies including a 20% stake in Royal & Sun Alliance Egypt, a 30% stake in Giro-Nil SAE, a 40% stake in Egypt Factors, a 40% stake in Commercial International Life Insurance, a 38.4% stake in Contact for Car Trading, and a 40% stake in CorpLease co. 7 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Company Annual Statistics Commercial International Bank (Egypt) SAE 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 Summary Balance Sheet (Egyptian Pounds Millions) Cash & Central Bank 3,743 3,078 2,971 2,674 2,114 Due from Banks 6,014 3,406 4,650 3,782 2,838 Government Securities 4,068 3,494 2,943 1,427 1,322 Trading Securities 910 1,839 673 476 661 Investment Securities 4,015 3,281 2,407 2,572 1,305 Other Liquid Assets 0 0 0 0 0 Gross Loans 18,717 15,168 14,456 13,313 11,416 Loan Loss Reserves (LLR) -1,253 -1,129 -1,062 -808 -498 Net Loans 17,464 14,039 13,394 12,505 10,919 Equity in Affiliates 156 115 82 66 46 Fixed Assets 514 376 295 232 215 Other Assets 943 761 561 418 340 Total Assets 37,827 30,390 27,977 24,153 19,759 Total Assets (USD mn) 6,584 5,302 4,563 3,906 4,249 Customer Deposits 31,535 24,870 23,979 20,415 15,815 Due to Banks 1,213 720 225 163 328 Borrowings 99 98 121 270 626 Other Liabilities 1,362 2,174 1,529 1,397 1,034 Total Liabilities 34,208 27,862 25,854 22,245 17,803 Subordinated Loan Capital 0 0 0 0 0 Minority Interest 226 0 0 0 0 Supplementary Capital 0 0 0 0 0 Shareholders' Equity 3,393 2,527 2,123 1,908 1,956 Total Capital Funds 3,619 2,527 2,123 1,908 1,956 Total Liabilities & Capital Funds 37,827 30,390 27,977 24,153 19,759 Derivatives - Notional Amount — — — 0 0 Derivatives - Replacement Value — — — — — Risk Weighted Assets (RWA) 26,327 21,671 18,900 16,900 14,800 Contingent Liabilities 6,921 4,810 4,966 5,174 4,548 Summary Income Statement (Egyptian Pounds Millions) Interest Income 2,317 2,028 1,617 1,448 1,391 Interest Expense -1,373 -1,132 -908 -869 -883 Net Interest Income 944 896 709 579 507 FX Income 109 142 105 -2 60 Trading Income 0 0 0 0 0 Fees & Commissions 483 343 399 262 252 Other Operating Income 361 104 60 173 96 Total Non Interest Income 953 590 564 433 409 Operating Income 1,897 1,486 1,273 1,011 916 Personnel Expenses 0 0 0 0 0 Other Operating Expenses -618 -442 -398 -256 -197 Operating Funds Flow 1,279 1,044 875 755 718 Amortisation / Depreciation -94 -68 -47 -40 -34 Total Non Interest Expense -712 -510 -444 -296 -232 Preprovision Income (PPI) 1,185 976 828 715 684 Loan Loss Provisions Expenses (LLPE) -194 -365 -224 -200 -282 Non Operating Income 0 0 0 -22 -36 Pretax Income 991 611 604 494 366 Taxes -88 -1 -98 -81 0 Net Income 903 610 506 413 366 Minority Interests -35 0 0 0 0 Net Income (Group share) 868 610 506 413 366 Dividends -200 -286 -242 -239 -232 Transfers to Capital Reserves -668 -324 -263 -174 -127 Other Adjustments 0 0 0 0 -7 8 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Commercial International Bank (Egypt) SAE 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 Summary Balance Sheet - Growth (%) Cash & Central Bank 21.61 3.6 11.09 26.52 14.55 Due from Banks 76.59 -26.76 22.95 33.28 21.67 Government Securities 16.42 18.73 106.21 7.99 63.53 Trading Securities -50.49 173.19 41.36 -27.99 108.81 Investment Securities 22.37 36.35 -6.44 97.08 -12.05 Other Liquid Assets — — — — — Gross Loans 23.4 4.92 8.59 16.61 -2.32 Loan Loss Reserves (LLR) 10.99 6.31 31.46 62.26 -14.27 Net Loans 24.4 4.81 7.11 14.53 -1.7 Equity in Affiliates 35.88 39.07 25.49 44.31 -68.88 Fixed Assets 36.54 27.68 27.04 7.84 17.18 Other Assets 23.84 35.57 34.2 23.16 -10.13 Total Assets 24.47 8.62 15.83 22.24 6.22 Total Assets (USD) 24.19 16.19 16.81 -8.07 5.08 Customer Deposits 26.8 3.72 17.46 29.08 13.01 Due to Banks 68.48 220.36 37.56 -50.21 15.03 Borrowings 0.91 -18.81 -55.24 -56.8 -54.24 Other Liabilities -37.37 42.21 9.44 35.13 -25.05 Total Liabilities 22.78 7.77 16.22 24.95 4.56 Subordinated Loan Capital — — — — — Minority Interest — — — — — Supplementary Capital — — — — — Shareholders' Equity 34.27 19.04 11.26 -2.46 24.18 Total Capital Funds 43.21 19.04 11.26 -2.46 24.18 Total Liabilities & Capital Funds 24.47 8.62 15.83 22.24 6.22 Derivatives - Notional Amount — — — 0 -93.5 Derivatives - Replacement Value — — — — — Risk Weighted Assets (RWA) 21.49 14.66 11.83 14.19 4.23 Contingent Liabilities 43.9 -3.15 -4.02 13.76 -9 Summary Income Statement - Growth (%) Interest Income 14.24 25.42 11.68 4.13 1.99 Interest Expense 21.24 24.68 4.5 -1.61 -4.54 Net Interest Income 5.39 26.37 22.48 14.13 15.77 FX Income -23.44 35.49 -4944.39 -103.61 -62.9 Trading Income — — — — — Fees & Commissions 40.8 -14.05 52.37 3.85 17.69 Other Operating Income 245.78 74.65 -65.42 79.29 31.51 Total Non Interest Income 61.58 4.58 30.36 5.86 -10.19 Operating Income 27.69 16.72 25.85 10.44 2.55 Personnel Expenses — — — — — Other Operating Expenses 39.8 11.06 55.23 29.86 3.63 Operating Funds Flow 22.57 19.28 15.88 5.1 2.25 Amortisation / Depreciation 37.86 46 17.44 16.34 38.43 Total Non Interest Expense 39.54 14.74 50.15 27.86 7.63 Preprovision Income (PPI) 21.5 17.78 15.79 4.54 0.93 Loan Loss Provisions Expenses (LLPE) -46.75 62.59 12.39 -29.3 2.21 Non Operating Income 4046.83 -92.29 -100.6 -39.61 -23745.2 Pretax Income 62.35 1.1 22.27 34.99 -8.91 Taxes 16932.21 -99.47 20.98 — — Net Income 48.01 20.64 22.52 12.8 -8.91 Minority Interests — — — — — Net Income (Group share) 42.31 20.64 22.52 12.8 -8.91 9 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Commercial International Bank (Egypt) SAE 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 Balance Sheet - % of Total Assets Cash & Central Bank 9.89 10.13 10.62 11.07 10.7 Due from Banks 15.9 11.21 16.62 15.66 14.36 Government Securities 10.75 11.5 10.52 5.91 6.69 Trading Securities 2.41 6.05 2.41 1.97 3.35 Investment Securities 10.61 10.8 8.6 10.65 6.61 Other Liquid Assets — — — — — Gross Loans 49.48 49.91 51.67 55.12 57.78 Loan Loss Reserves (LLR) -3.31 -3.71 -3.79 -3.34 -2.52 Net Loans 46.17 46.2 47.88 51.77 55.26 Equity in Affiliates 0.41 0.38 0.29 0.27 0.23 Fixed Assets 1.36 1.24 1.05 0.96 1.09 Other Assets 2.49 2.5 2.01 1.73 1.72 Customer Deposits 83.37 81.84 85.71 84.52 80.04 Due to Banks 3.21 2.37 0.8 0.68 1.66 Borrowings 0.26 0.32 0.43 1.12 3.17 Other Liabilities 3.6 7.15 5.46 5.78 5.23 Total Liabilities 90.43 91.68 92.41 92.1 90.1 Subordinated Loan Capital — — — — — Minority Interest 0.6 — — — — Supplementary Capital — — — — — Shareholders' Equity 8.97 8.32 7.59 7.9 9.9 Total Capital Funds 9.57 8.32 7.59 7.9 9.9 Income Statement - % of Average Assets Interest Income 6.79 6.95 6.2 6.59 7.25 Interest Expense -4.02 -3.88 -3.48 -3.96 -4.61 Net Interest Income 2.77 3.07 2.72 2.64 2.64 FX Income 0.32 0.49 0.4 -0.01 0.31 Trading Income — — — — — Fees & Commissions 1.42 1.18 1.53 1.19 1.31 Other Operating Income 1.06 0.36 0.23 0.79 0.5 Total Non Interest Income 2.79 2.02 2.16 1.97 2.13 Operating Income 5.56 5.09 4.88 4.61 4.77 Personnel Expenses — — — — — Other Operating Expenses -1.81 -1.51 -1.53 -1.17 -1.03 Operating Funds Flow 3.75 3.58 3.36 3.44 3.75 Amortisation / Depreciation -0.28 -0.23 -0.18 -0.18 -0.18 Total Non Interest Expense -2.09 -1.75 -1.71 -1.35 -1.21 Preprovision Income (PPI) 3.48 3.34 3.18 3.26 3.57 Loan Loss Provisions Expenses (LLPE) -0.57 -1.25 -0.86 -0.91 -1.47 Non Operating Income 0 0 0 -0.1 -0.19 Pretax Income 2.91 2.09 2.32 2.25 1.91 Taxes -0.26 0 -0.38 -0.37 — Net Income 2.65 2.09 1.94 1.88 1.91 Minority Interests -0.1 — — — — Net Income (Group share) 2.55 2.09 1.94 1.88 1.91 Income Statement - % of Operating Income Interest Income 122.14 136.53 127.06 143.17 151.84 Interest Expense -72.37 -76.22 -71.36 -85.94 -96.46 Net Interest Income 49.77 60.31 55.7 57.23 55.38 FX Income 5.74 9.58 8.25 -0.21 6.56 Trading Income — — — — — Fees & Commissions 25.46 23.09 31.35 25.89 27.54 Other Operating Income 19.03 7.03 4.7 17.09 10.53 Total Non Interest Income 50.23 39.69 44.3 42.77 44.62 Operating Income 100 100 100 100 100 Personnel Expenses — — — — — Other Operating Expenses -32.56 -29.74 -31.25 -25.33 -21.55 Operating Funds Flow 67.44 70.26 68.75 74.67 78.45 Amortisation / Depreciation -4.96 -4.59 -3.67 -3.94 -3.74 Total Non Interest Expense -37.52 -34.33 -34.92 -29.27 -25.28 Preprovision Income (PPI) 62.48 65.67 65.08 70.73 74.72 Loan Loss Provisions Expenses (LLPE) -10.24 -24.56 -17.63 -19.74 -30.84 Non Operating Income 0.02 0 0.01 -2.14 -3.92 Pretax Income 52.26 41.11 47.46 48.84 39.96 Taxes -4.66 -0.03 -7.72 -8.03 — Net Income 47.61 41.07 39.74 40.82 39.96 Minority Interests -1.83 — — — — Net Income (Group share) 45.77 41.07 39.74 40.82 39.96 10 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Commercial International Bank (Egypt) SAE 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 Profitability Indicators Return on Average Assets (%) 2.65 2.09 1.94 1.88 1.91 Return on Shareholder's Equity - 25.59 24.14 23.82 21.63 18.71 period end (%) Recurring Earning Power [1] 3.48 3.34 3.18 3.26 3.57 PPI (%) Avg Total Capital Funds 38.57 41.95 41.09 37.02 38.75 Interest Expense (%) Interest Income 59.25 55.83 56.16 60.02 63.53 Interest Income (%) Avg Interest Earning Assets [2] 7.61 7.75 6.93 7.4 8.14 Interest Expense (%) Avg Interest Bearing 4.69 4.53 4.02 4.62 5.45 Liabilities [3] Net Spread (%) [4] 2.92 3.23 2.9 2.78 2.69 Net Interest Margin (%) [5] 3.1 3.42 3.04 2.96 2.97 Non-Interest Income (%) Operating income 50.23 39.69 44.3 42.77 44.62 Income Tax (%) Pre-tax Income 8.91 0.08 16.26 16.44 — Efficiency Indicators Non Interest Expense (%) Avg Assets 2.09 1.75 1.71 1.35 1.21 Cost to Income Ratio (%) [6] 37.52 34.33 34.92 29.27 25.28 Personnel Expenses (%) Avg Assets — — — — — Personnel Expenses (%) Operating Income — — — — — Personnel Expenses (%) Non Interest Expense — — — — — Liquidity Indicators Net Loans (%) Customer Deposits 55.38 56.45 55.86 61.26 69.04 Net Loans (%) Total Deposits [7] 53.33 54.86 55.34 60.77 67.64 Average Net Loans (%) Average Customer 55.85 56.16 58.34 64.65 73.89 Deposits Average Net Loans (%) Average Assets 46.18 47 49.68 53.34 57.42 Liquid Assets [8] (%) Total Assets 38.95 38.88 40.17 34.61 35.09 Customer Deposits (%) Total Deposits 96.3 97.19 99.07 99.21 97.97 Customer Deposits / Shareholders' Equity (Times) 9.29 9.84 11.29 10.7 8.08 Due from Banks (%) Due to Banks 495.98 473.22 2069.88 2315.91 865.21 Loan Portfolio Quality Indicators Problem Loans (%) Gross Loans 3.8 5.69 5.3 5.5 3.49 Problem Loans (%) (Shareholders' Equity + LLR) 15.31 23.61 24.06 26.96 16.22 (Problem Loans - LLR) (%) Shareholders' Equity -15.95 -10.51 -13.92 -3.95 -5.1 Loan Loss Reserve (%) Gross Loans 6.69 7.44 7.34 6.07 4.36 Loan Loss Provision Expenses (%) Preprovision 16.39 37.4 27.1 27.91 41.28 Income LLP (%) (Loan Loss Reserve - LLP) 18.36 47.78 26.8 32.85 131.21 Loan Loss Provision Expenses (%) Gross Loans 1.04 2.41 1.55 1.5 2.47 Preprovision Income (%) Net Loans 6.79 6.95 6.18 5.72 6.27 Shareholders' Equity (%) Net Loans 19.43 18 15.85 15.26 17.92 Loans to Related Cos. (%) Gross Loans 2.77 2.63 — — — Capitalization Indicators Tier 1 ratio (%) 9.67 9.77 10.1 10.8 10.6 Shareholders' Equity (%) Total Assets 8.97 8.32 7.59 7.9 9.9 Shareholders' Equity (%) T. Assets + 7.58 7.18 6.44 6.51 8.05 Contingent Liabilities Total Capital funds (%) Total Assets 9.57 8.32 7.59 7.9 9.9 Total Capital (%) T. Assets + Contingent 8.09 7.18 6.44 6.51 8.05 Liabilities Shareholders' Equity (%) Total Capital funds 93.76 100 100 100 100 Contingent Liabilities (%) Total Assets 18.3 15.83 17.75 21.42 23.02 "Free" Capital [9] (%) Sharehoders' Equity 80.27 80.57 82.23 84.4 86.67 Dividend Payout (%) [10] 22.17 46.82 47.94 57.85 63.42 Internal Capital Growth (%) [11] 27.81 15.28 13.8 8.89 8.5 [1] Recurring Earning Power = Preprovision Income (%) Average Total Assets. [2] Interest Earning Assets = Due from Banks + Government Securities + Trading Securities + Investment Securities + Gross Loans. [3] Interest Bearing Liabilities = Customer Deposits + Due to Banks + Borrowings + Subordinated Debt Capital. [4] Net spread = Interest Income (%) Avg Earning Assets - Interest Expense (%) Avg Interest Bearing Liabilities. [5] Net interest margin = Net Interest Income (%) Average Earning Assets. [6] Cost to Income Ratio = Total non interest expense (%) Operating income. [7] Total deposits = Customer deposits + Due to banks. [8] Liquid Assets = Cash & Central Bank + Due from Banks + Government Securities + Trading Securities + Other Liquid Assets. [9] Free Capital = Shareholders' Equity - Fixed Assets - Equity in Affiliates. [10] Dividend Payout = Dividends (%) Net Income. [11] Internal Capital Growth = Current period's Net income - Current period's Dividends (%) Last period's Shareholders' Equity. 11 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE Moody’s Related Research Credit Opinions: Commercial International Bank (Egypt) SAE (7 May 2007) Egypt (4 June 2007) To access any of these reports, click on the entry above. Note that these references are current as of the date of publication 12 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE
    • Company Report Moody’s Banking Commercial International Bank (Egypt) SAE To order reprints of this report (100 copies minimum), please call 1.212.553.1658. Report Number: 103791 Author Senior Associate Editor Production Associate Constantinos Kypreos Antoine Yacoub Patricia Radnor Kerstin Thoma © Copyright 2007, Moody’s Investors Service, Inc. and/or its licensors and affiliates including Moody’s Assurance Company, Inc. (together, “MOODY’S”). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided “as is” without warranty of any kind and MOODY’S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY’S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY’S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY’S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY’S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY’S have, prior to assignment of any rating, agreed to pay to MOODY’S for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,400,000. Moody’s Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody’s Investors Service (MIS), also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody’s website at www.moodys.com under the heading “Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy.” 13 July 2007 Company Report Moody’s Banking - Commercial International Bank (Egypt) SAE