Ensuring continuity through difficult times
Amid exceptionally challenging global conditions, Egypt’s largest private sector bank revealed resilient performance in 2020, delivering top-line growth.
With Covid-19 buffeting banking sectors across the world, Commercial International Bank (CIB) has managed to register some robust financials thanks to previous years’ efforts to strengthen its balance sheet, with a large number of assets in high-end corporate facilities and with a large concentration in longer-term bonds. These factors helped shield the bank’s profitability in the face of a weakening interest rate environment.
First-half 2020 financial results bear out this resilience. The bank’s total tier capital in the first half of 2020 was EGP55.7bn ($3.53bn), or 29.5% of risk-weighted assets. The local currency liquidity ratio of 69.0% and foreign currency liquidity ratio of 59.6% were comfortably above CBE requirements of 20% and 25%, respectively. CIB remains well above the 100% requirement in the Basel III net stable funding ratio (NSFR) and liquidity coverage ratio (LCR) ratios. It also has high-quality funding, with customer deposits comprising 92% of total liabilities.
CIB has been able to continue supporting the Egyptian economy. Funding to businesses and individuals grew by 2% over first half 2020 to reach EGP134bn, with a loan market share of 6.1% as of June 2020. Deposits grew by 5% over first half 2020 to reach EGP319bn, with a deposit market share of 6.79% as of June 2020.
The bank’s gross loan portfolio was EGP134bn, a 2% (or EGP2.39bn) growth in the first half of 2020. This was driven wholly by local currency loans, which grew by 8% or EGP6.36bn. On the deposit side, the first half of 2020 recorded EGP319bn, a 5% or EGP14.5bn growth. Growth was driven mostly by local currency deposits, which increased by 6% or EGP12.4bn, and foreign currency deposits grew by 2% or $98.4m. CIB’s deposit market share was 7% as of March 2020, meaning it maintained the highest deposit market share among all private-sector banks.
The bank has maintained its resilient asset quality. Standalone non-performing loans represented 4.03% of the gross loan portfolio, covered 257% by the bank’s EGP13.9bn loan loss provision balance as at mid-year 2020. Loan loss provision expenses were EGP2.26bn for first-half 2020, almost three times higher in year-on-year terms.
The bank’s management and staff have worked hard to ensure business continuity through difficult times. Management made a gear change in developing its communication infrastructure, while capitalising on its pre-existent digital solutions and online banking platforms, in order to maintain work efficiency without affecting the wellbeing of the bank’s staff and clients.
The bank’s commitment to supporting the community continues. In 2020, the CIB Foundation assisted in furnishing The Egyptian Naval Forces New Children’s Hospital in Alexandria with medical equipment and financed the completion of the medical infrastructure and electro-mechanical works. The CIB Foundation also subsidised Children Cancer Hospital 57357’s purchase of 390 infusion pumps and 216 syringe pumps. In addition, the foundation paid the first instalment to Raei Masr Foundation for Development for procuring and equipping two mobile clinics to conduct 192 medical convoys in Minya and Sohag, with an aim to carry out medical check-ups for 96,000 children annually. In collaboration with True Light Society Association for the Visually Impaired, the foundation initiated the implementation of a new project supporting visually-impaired children in their overall life needs and in their integration into the public education system.
The bank has continued investing in digital banking platforms – a sign of its ongoing commitment to innovation and technology. 2019 saw the introduction of Zaki the Bot, the virtual assistant that uses artificial intelligence to help the bank’s customers and non-customers learn about CIB’s products and also locates the nearest ATM or branch. The chatbot supports both English and colloquial Arabic operating on both Facebook Messenger and CIB’s public website, off-loading enquiries from both call-centre agents and social media teams, and creates a new customer touch point. Zaki the Bot’s uses will be expanded to serve new customer segments, such as corporate and business banking.
The QR Code is a new payment method which provides a secure and convenient way to process payments through mobile wallets. In 2019, the bank obtained a licence to introduce the QR Code via CIB Smart Wallet as a new payment method which will rapidly expand the bank’s merchant network and be a cheaper channel, compared with the traditional PoS terminals that were previously provided to merchants.
The new payment method will encourage a large portion of the mobile wallet users (currently 13.m users) to activate their wallets and follow the new market trend. Smart Pay is a merchant payments service used as an acquiring tool that allows merchants to accept electronic payments from customers through their mobile devices.
CIB’s business banking solutions are another core focus, serving SMEs through a comprehensive range of financial products. In 2019, the bank launched the revamped SME lending programmes that offer faster delivery and more flexibility, piloted a special offering to encourage women through its new Women In Business Programme, and launched a dedicated Contact Centre. In 2020, it launched the Supply Chain Finance programme and the Growth Loan for small companies.