ANNUAL REPORT
2007
TABLE OF CONTENTS
Capacity building
Financial Highlights
A Letter from the Chairman
Board of Directors’ Report
2007 Overview
Financial Position
Establishing the Retail Banking
Achieved Quality Growth & Driving Future Growth
Alternative Growth Strategies
Appropriation of Income
Corporate Social Responsibility
Corporate Governance
Our Mission and Purpose
2007 Review of Operations
Strategic Subsidiaries and Affiliates
Corporate Social Responsibility
Financial Statement A. CIB Stand-alone
Financial Statement B. Consolidated CIB & CI-CH
Branches & Public Units
04
05
09
10
11
12
12
12
12
13
15
19
21
31
36
38
66
96
Financial Highlights
FY 07
Consolidated
FY 07
FY 06
FY 05
FY 04
FY 03
US$ Dec. 07
Consolidated
US$ Dec. 07
(1)
Common Share Information
Per Share
-Earning per share (EPS) (2)
-Dividends (DPS)
6.61
1.00
6.32
1.00
4.11
1.00
3.13
1.00
3.89
2.00
3.17
1.50
-Book Value (BV/No of Share)
22.47
22.05
17.06
13.99
18.53
16.54
Share Price
- High
- Low
- Closing
Shares Outstanding (millions)
95.00
53.61
91.77
195
95.00
79.00
63.50
42.25
49.30
53.61
42.11
39.91
22.66
22.00
91.77
57.87
58.68
38.96
22.02
195
195
130
130
130
Market Capitalization (millions)
17,895
17,895
11,285
7,628
5,065
2,863
4
Value Measures
Price to Earnings Multiple (P/E)
Dividend Yield (Based on closing share price)
Dividend Payout Ratio
Market Value to Book Value Ratio
Financial Results (millions)
Net Operating Income(3)
Provision for Credit Losses
-Specific
-General
Total
Non Interest Expense
Net Profits
Financial Measures
Efficiency Ratio
Cost : Income
13.9
1.09%
15.1%
4.08
14.5
14.1
12.5
10.0
6.9
1.09%
1.73%
2.56%
5.13%
6.81%
15.8%
24.3%
21.3%
51.4%
47.3%
4.16
3.39
1.86
2.10
1.33
2,484
2,351
1,741
1,450
1,273
1,012
193
57
250
776
193
57
250
714
1,289
1,232
176
17
193
668
802
197
43
240
474
610
224
32
257
444
506
200
23
222
296
413
1.17
0.18
4.07
17.23
9.72
16.64
195
3,245
13.9
1.09%
15.1%
4.08
441
34
10
44
138
229
1.12
0.18
4.00
17.23
9.72
16.64
195
3,245
14.5
1.09%
15.8%
4.16
417
34
10
44
127
219
27.05%
30.36%
32.32%
28.07%
27.05% 34.73% 29.32% 25.82% 25.29%
28.07%
31.21%
30.36% 38.38% 32.72% 34.92% 29.25%
31.21%
Return on Average Common Equity
33.22%
32.32% 26.49% 23.76% 22.19% 20.09%
33.22%
Net Interest Margin (NII /average interest earn-
ing assets)
2.85%
3.27%
3.14%
3.50%
3.10%
3.00%
2.85%
3.27%
Return on Average Assets
3.02%
2.90%
2.37%
2.09%
1.94%
1.88%
3.02%
Regular Workforce Headcount
3279
2,946
2,477
2,301
2,109
1,760
3279
Balance Sheet and Off Balance
Sheet information (millions)
Cash Resources and Securities
22,444
22,516
14,539
11,718
10,783
9,571
Net Loans and Acceptances
20,376
20,376
17,465
14,039
13,394
12,505
Assets
Deposits
47,763
47,521
37,422
30,390
27,977
24,153
39,476
39,515
31,600
24,870
23,979
20,415
Common Shareholders Equity (2)
4,382
4,299
3,327
2,727
2,409
2,151
Average Assets
42,658
42,472
33,906
29,183
26,065
21,956
Average Interest Earning Assets
42,052
36,603
29,277
25,619
22,897
19,320
Average Common Shareholders Equity
3,879
3,813
3,027
2,568
2,280
2,053
4,070
3,695
8,661
7,159
795
7,571
7,464
689
Balance Sheet Quality Measures
2.90%
2,946
4,083
3,695
8,617
7,166
780
7,538
6,497
677
Common Equity to Risk-Weighted Assets
16.81%
16.49% 14.14% 13.83% 12.71% 12.71%
16.81%
16.49%
Risk-Weighted Assets (billions)
Tier 1 Capital ratio
Total Capital Ratio
Adjusted Capital Adequacy Ratio
Net Impaired Loans after General Allowances
(millions)
26
N/A
N/A
N/A
26
24
20
19
17
10.20% 11.55% 9.78% 10.07% 10.76%
11.73% 12.80% 11.73% 11.41% 12.08%
14.70% 13.60% 13.10% 12.50% 12.60%
5
N/A
N/A
N/A
5
10.20%
11.73%
14.70%
(448)
(448)
(333)
(113)
(175)
(106)
(79)
(79)
Net Impaired Loans to Net Loans and Acceptance
-2.20%
-2.20% -1.90% -0.81% -1.31% -0.85%
-2.20%
-2.20%
(1) Represents the translation of Egyptian pound financial information into US$ using the rate of December 2007 of $ 0.1813 for balance sheet figures and
the average YTD December 2007 rate of $ 0.1775 for average balance and income Statements Items
(2) Common Shareholders Equity Starting 2002 including total Net Profit as per new CBE regulation
(3) Starting 2005 Income Statement was amended to aggregate all Market & FCY investment revaluations in one figure.
(4) Per Share ratios for 2005 were adjusted by 2006 number of Shares ( 195 million Share )
General Comment: All ratios have been amended based on net profit figure before appropriation of income; except for the Capital Ad equacy Ratios.
A Letter from the Chairman
A Letter from the Chairman
2007 was another record year for CIB. The Bank grew its earnings per share for the 30th year of its 32
year history, and has now experienced a compounded annual EPS growth rate of 25% over the last five
years. 2007 brought continued impressive growth in both Corporate Banking market share and overall
profit margins. The year also marked a period of significant investment in our Retail Banking business,
which is well-positioned to take advantage of Egypt’s burgeoning retail market. Additionally, the Bank
maintained its position as one of the safest banks in the emerging markets, with continued high levels of
Capital Adequacy and provision coverage.
As we move through the first part of 2008, I would like to take a moment to highlight a few important
points that best summarize the current characteristics of the Bank:
•
•
•
Largest market capitalization in the Egyptian banking sector
Most profitable commercial bank in Egypt
Superior management, high operating standards and premier training programs
Successful investment in infrastructure over the past few years that will allow the Bank to ex-
•
pand its regional presence
6
The strongest brand equity in Corporate Banking in Egypt and the third strongest in Consumer
•
Banking
•
Internationally recognized as the Best Bank in Egypt
– The Banker, Global Finance, Euromoney and Emerging Markets
•
•
Adoption of international best practices regarding Corporate Governance and Disclosure
Tremendous growth opportunities in Retail and SME banking
Furthermore, not only is CIB well-situated to continue to take advantage of favorable local market condi-
tions, it is also well-equipped to weather any potential economic downturn. This second point is particu-
larly important in light of concerns about a possible global recession.
The past year has undoubtedly been unkind to financial services companies in developed markets.
Emerging market banks and their regulators should not dismiss this crisis as unrelated to
their own situations. There are many lessons to be learned. This crisis also provides an excellent
opportunity for us to explain to CIB shareholders why we believe we will continue to be successful in the
coming years.
So, what happened?
By November 2007, US and EU financial sector companies had already underperformed the FTSE by
18% and 12%, respectively, year-to-date. AA-rated US mortgage-backed securities, which have tra-
ditionally been considered “safe” investments, had lost more than 50% of their value (as per the ABX
index) during the prior 5-month period. Meanwhile, the cost of insuring against credit defaults had in-
creased from less than 0.5% to 6%. The sum effect of all of this was that EU and US banks were facing
trading losses of between 8% and 12% of their total Tier-1 Capital, or approximately US$ 2 trillion.
In the EU, thousands of miles away from the root of the problem in the US, several banks struggled to
avoid bankruptcy, and the UK banking sector suffered the humiliation of the first run on deposits
since the 1800s. In the midst of this predicament, it became clear that the markets had failed, a
stark reminder that liquidity often dries up at the most inopportune moments.
This put public companies, regulators, and auditors in a morally-challenging position, as they at-
tempted to quantify and disclose the extent of trading losses. One key issue was that no one
could accurately estimate the trading losses associated with mortgage-backed securities in the absence
of liquid trading on those securities. The models which banks used to predict theoretical values in their
trading book (what are known as “mark to model” as opposed to “mark to market”) also proved unreli-
able.
What lessons can emerging market banks extract from this crisis? It is obvious that banks’ business
models and economic transactions have become exceedingly complicated. This has hindered the ac-
counting industry from performing its duties with a high level of efficiency and reliability. Regulators
in emerging markets should, therefore, seek to enforce methods that prevent, or at least discourage,
practices leading to changes in banks’ revenue generating activities, to the extent these practices are too
complicated for regulators to analyze. On the other hand, banks should also revisit their risk manage-
ment processes and revise their business models in light of the lessons learnt from this crisis. No bank
A Letter from the Chairman
should invest in any financial instrument that the bank’s officers and risk managers cannot understand.
Banks in emerging markets lack the proper resources and technical skills, and therefore should not in-
dulge in taking positions in overly sophisticated instruments, even if such instruments appear to promise
excellent returns.
Another valuable lesson can be drawn from the way banks across the Atlantic differed in their approach
to disclosing the methodology behind their valuation of crisis-related assets. There is no doubt that the
more transparent approach more recently adopted by US banks will benefit them greatly in the longer
term.
At CIB, we have always advocated that a high degree of disclosure and transparency is beneficial for
shareholder value. It is also good for the economy as a whole, leading to greater efficiency in the man-
agement of assets industry-wide.
CIB is indeed an investor’s “safe haven” among emerging market banks, in good as well as troubled
times. Our prudent risk management policies and adherence above and beyond the Central Bank of
Egypt’s strict regulations have enabled us to maintain a high quality loan portfolio and an adequate
coverage ratio. In fact, we strongly believe in the regulator’s stringent provisioning policies, as operating
in emerging markets necessitates such prudent rules. CIB has continuously demonstrated that conser-
vative provisioning policies, even in periods of economic boom, are accretive to long term shareholder
value.
7
On the local scene, the banking industry has benefited from one of the best years on record in terms
of economic performance. Rather than being driven by consumption expenditure, as was the case in
preceding years, economic growth in the last couple of years has been fuelled by the industrial sector
as well as by domestic and foreign new investment. Previous cycles were driven by services, trade and
agriculture as opposed to the industrial sector, and by consumption as opposed to investment. Further-
more, this all came during a year in which Egypt was ranked “the most reforming country in the world”
by the World Bank.
The competitive dynamics in the banking industry in 2007 confirmed our view of the positive effect of
consolidation and foreign ownership of Egyptian banks on the profitability of all banks. CIB experienced
expanding margins across all client segments in 2007, with the exception of large syndications in corpo-
rate banking, where competition remains intense.
By end of 2007, both investor and consumer confidence in Egypt were very strong, and the country’s
economic resilience has continued into 2008. Our clients are talking of strong capital expenditure in
2008 and showing significant appetite for both debt and equity capital.
There are more reasons to be optimistic about the local market, even if a developed markets reces-
sion materializes. Egypt’s recent growth is relatively less dependent on exports to developed countries
versus other emerging economies. Additionally, the country’s corporate balance sheets have never been
more liquid and solvent, with the private sector enjoying more than EGP 150 billion of deposits with the
banking sector, compared to less than EGP 270 billion of bank debt and negligible public debt. This illus-
trates that corporate Egypt has learned from the excess leverage that marked the last cycle during the
late nineties. Therefore, we believe that even if Egypt experienced a slowdown due to global conditions,
it would likely be short and mild.
Going forward, we intend to solidify our ongoing strategy of capacity building. This strategy is composed
of the following key elements:
•
Focus on customer-centric relationship management to improve service quality
Build and maintain the widest and most customer-friendly physical and electronic delivery chan-
•
nels and network of all of the private and multinational banks
•
Continue to upgrade execution, service quality and customer satisfaction inside the branch
Build the widest product portfolio among the Egyptian banks to attract clients who enjoy one-
•
stop-shop services which save both time and money
The Bank aims to continue its focus on what clients tell us we do best, which is servicing the local needs
of clients better than our competitors. We also intend to attract for our retail banking business talented
leaders who have already experienced success globally and seek to participate in our vision of becoming
Egypt’s foremost regional bank.
A Letter from the Chairman
In addition, the Bank will continue its pursuit of viable entry strategies into regional markets where we
believe our core competences can be replicated to achieve a sustainable competitive advantage. This
will require a tailored entry strategy for each country. For example, in Algeria, we have developed an
entry strategy focused on corporate banking for the private sector and specific state-owned enterprises,
as well as retail banking services that consist primarily of liability products. We continue to liaise with
the Algerian Central Bank to acquire a license there.
In the GCC, we continue to pursue a low cost entry strategy, and intend to adopt a distribution model
based on the targeting of non-resident Egyptians. Carefully designed products are being developed to
satisfy the unique requirements of these individuals. Within corporate banking, we aim to target specific
wholesale/syndicated transactions that make sense for us.
Before I end this year’s letter, I also want to honor the lifetime achievements of Mr. Aly Dabbous, who
passed away in 2007. Mr. Dabbous was an individual to whom CIB, and indeed, the entire Egyptian
banking sector, will always be indebted for his visionary leadership and true friendship.
8
The business review section of this report will shed light on the Bank’s key revenue generating busi-
nesses. I am especially pleased with the progress we have made since the reorganization of our Board
in early 2006. I draw special notice to the sections regarding information technology, risk management
and human resources.
Hisham Ezz Al Arab
Chairman and Managing Director
Board of Directors’ Report
Innovation
Board of Directors’ Report
2007 Overview
Introduction
The Board of Directors is pleased to review the results for the year ending 31/12/2007 at the Annual
General Assembly Meeting.
On a consolidated basis, CIB and CI-CH achieved EGP 2,480 million of Net Operating Income and EGP
1,289 million of Net Profit, representing 35.6% and 51.1% growth, respectively. These earnings results
include a one time capital gain of EGP 148 million related to the sale of a stake in CI Capital. Excluding
this one time item, Net Profit growth would have been 33.7% year-over-year.
Despite strong competition within the banking sector during 2007, CIB not only grew its market share,
but also enhanced its profit margins. This was the result of prudent executive management and efficient
operations.
10
To further enhance our competitiveness and efficiency, as well as improve our delivery of services to our
corporate banking clients, in 2007 we commenced our migration to T-24, the top ranked universal bank-
ing system. In addition, we made significant advances in our retail banking business, including impor-
tant investments in IT and risk management infrastructure, proper segmentation of our client base, and
the development of a more customer-centric model.
During 2007, CIB sustained its position as the market leader and best bank in Egypt. The Bank was
recognized by Banker magazine as “Bank of the Year 2007” as well as for the execution of the “Deal of
the Year 2007.” The Bank was also selected as Global Finance Magazine’s “Best Bank in Egypt” for the
tenth consecutive year, “Best Foreign Exchange Bank in Egypt” for the seventh straight year, “Best Trade
Finance Bank in Egypt” for the third consecutive year, and “Best Provider of Money Market Funds in Af-
rica.” In addition, the Bank received the “Straight Through Processing Excellence” Award from Deutsche
Bank, and was dubbed the “Strongest Brand in Corporate Banking as well as [the] Third Strongest Brand
in Consumer Banking in Egypt,” as per AC Nielson.
Major credit rating agencies continued to rate CIB at the country’s sovereign ceiling, BB+/Stable/B, while
emphasizing that the Bank’s rating is capped by Egypt’s sovereign rating.
In order to avoid any possible conflict of interest with the Bank’s strategy to launch its own branded
auto-finance business, CIB decided in 2007 to sell its stake in Contact, the Bank’s auto loan affiliate. This
divesture, amounting to a 38.4% ownership position, came as part of the Bank’s policy of continuous
development and expansion in our retail banking and consumer finance businesses.
In 2007, we remained focused on our main growth strategies. Our two-fold strategy is based on both
organic growth and expansion via mergers and acquisitions. Although most of the organic growth is
still driven by our corporate and institutional clients, we have also effectively achieved organic growth
through the build-up of our retail banking business via branch expansion and re-engineering. We con-
tinue to examine opportunities for mergers and acquisitions growth and will aggressively pursue those
opportunities that create shareholder value.
The Board believes that the Bank is in an excellent position to meet the challenges of the future, and
that it enjoys significant competitive advantages in its strategy to capture opportunities in the under-
penetrated Egyptian market.
Macro Overview
During 2007, the Egyptian economy witnessed one of its most impressive performances over the past
forty years. Egypt achieved a real GDP growth rate of 7.1%, which is the highest rate since the year of
1985. This strong growth was generated by reforms and solid macro-economic conditions, and illustrat-
ed by Egypt’s increase in rank to 85th from 127th in the economic freedom index. More significant was
the honour bestowed by the World Bank, which ranked Egypt the top reformer in the world during 2007
in its annual Doing Business report.
The nation’s economic growth has been driven by productivity increases. Egypt’s GDP growth has tradi-
tionally been driven by the mining, oil, agriculture and services sectors; for the first time in many years,
though, the Egyptian manufacturing sector became a major growth contributor.
As a result of economic reforms, total investment grew by almost 34%, reaching EGP 155 billion for the
Board of Directors’ Report
year 2006/2007, compared to EGP 116 billion in 2005/2006. Even more encouraging was the fact that
the private sector was the largest contributor of these investments, a result of the government’s reform
efforts and its privatization program. Consequently, this led to the attraction of all-time high FDI net
inflows, reaching US$ 11 billion, an 80% increase compared to 2006. Despite this, we remain somewhat
concerned regarding the country’s high budget deficit, its high levels of sovereign debt, and its above
average level of inflation, as well as with the sustainability of growth in investments.
The economy has started to reap the benefits of the banking reform program, evidenced by the increase
in total bank borrowings of EGP 382 billion in 2007 compared to EGP 344 billion in 2006, a growth rate
of 11%. Private corporate borrowings were EGP 246 billion in 2007 versus EGP 225 billion in 2006, rep-
resenting a growth rate of 9%.
Private corporate FCY borrowing in particular served as an important catalyst for growth, with an in-
crease of 22% to a record US$ 14.8 billion. More impressively, this major increase was anchored by
lending to both the private industrial (13%) and services sectors (10%).
As a natural result of CIB’s focus on private industrial and service businesses, the Bank’s average
monthly market share of total bank borrowings climbed to 5.7% in 2007, versus 4.9% in 2006. On the
FCY lending market side, CIB’s average monthly market share increased slightly to 9.2% in 2007, up
from 8.1% in 2006.
11
On the deposits front, the Egyptian banking sector remains very liquid, as evidenced by a 54% utilization
ratio. Banks hold significant funding bases that can be injected into the economy to achieve even higher
growth rates. In fact, total deposits surged by 19.5% to reach EGP 709 billion in 2007, compared to
EGP 594 billion in 2006.
Financial Position
At CIB, we analyze our performance against a broad spectrum of measures, including growth, asset
quality, risk management, marketing, collaboration, operations, controls and compliance. We continue to
make significant progress on all these fronts. Although we have not yet reached many of our absolute
performance goals, the rapid pace of our improvement has made us very positive about the future.
On a consolidated basis, CIB and CI-CH achieved EGP 2,480 million of Net Operating Income and EGP
1,289 million of Net Profit in 2007. The Bank itself contributed EGP 2,347 million of Net Operating
Income and EGP 1,232 million of Net Profit, representing 33.5% and 53.7% year-over-year growth,
respectively, while CI-CH contributed EGP 133 million of Net Operating Income and EGP 57 million of
Net Profit. On a consolidated basis, CIB and CI-CH achieved a Return on Average Assets of 3.0% and a
Return on Average Equity of 33.1%.
On a standalone basis, Total Shareholder’s Equity and Net Profit increased significantly by 29.2% to EGP
4.3 billion (before appropriation) in 2007, representing 9% of total assets. Furthermore, CIB’s equity
base remained extremely solid, evidenced by a conservative Capital Adequacy Ratio of 11.7% at the end
of 2007, prior to the appropriation of profits. If we account for the proposed appropriation of profits, the
Capital Adequacy Ratio was 14.7%.
CIB also continued its persistent efforts to maintain a high quality loan portfolio. Local and international
credit risk concerns highlight the urgency of employing prudent risk management policies, capacity
building, transparency and full compliance with regulatory capital requirements. The high level of quality
of CIB’s loan portfolio reflects the seriousness with which we take these principles, and represents one of
the major sources of value we offer to our shareholders. CIB’s Non Performing Loans to Total Exposure
Ratio was only 3.0% as of FYE 2007, down from 3.8% as of FYE 2006. Our overall Loan Loss Provisions
Coverage Ratio was 195.7%.
Management’s focus on efficiency was reflected in the decrease of the Cost to Income Ratio from 38.4%
in 2006 to 30.4% in 2007. Despite increased competition in the market, CIB managed to improve its
Net Interest Margin from 3.14% in 2006 to 3.27% in 2007.
CIB’s Return on Average Equity (ROAE) and Return on Average Assets (ROAA) have continued to im-
prove, reaching 32.3% and 2.9% in 2007, compared to 26.5% and 2.4%, respectively, in 2006. These
results, produced with the support of a still-favorable credit environment, are promising but may be
difficult to maintain. Increasing inflation pressures and the government’s budget deficit are still major
concerns.
12
Board of Directors’ Report
During 2007, the Bank hired two key officers from top financial institutions in Compliance and Retail Risk
Management to further enhance our management strength. Both individuals bring significant experience
in their fields to CIB and will work to build our capabilities in their respective areas.
The Board of Directors is optimistic about the Bank’s outlook. This optimism is substantiated by CIB’s
strong financial, operational and market position, and we are confident that the Bank will continue to
maintain its leading position.
Establishing the Retail Banking
CIB’s Corporate Banking division has historically been the prime contributor of the Bank’s earnings and
market share. However, we aggressively expanded our Retail Banking business in 2007. The Bank’s
management team understood the need for building its retail capabilities as a crucial prerequisite to pro-
tecting our asset quality and ensuring sustainable growth. In 2007, we focused on market research, the
creation of the retail business plan, branch re-engineering, human capital recruitment, the construction
of appropriate IT infrastructure, and the drafting of operational procedures and manuals. In collaboration
with an international retail banking consultant, all business and support areas’ managers re-examined
and re-tooled their mission and vision, operational and service models, and target customer base.
During 2007, the retail business experienced significant developments in its delivery and distribution
channels. Since we believe that attracting new clients is the catalyst for our growth and expansion, we
decided to open 45 new outlets, initiated a sales team recruitment process, and enhanced our product
offering.
Despite a number of recent branch expansions in the banking sector, we believe that Egypt’s population
is still under-banked. This is evidenced by the consistency of banking density over the past eight years
of approximately 21,000 per branch. Total bank branches nationwide reached 3,116 branches in Septem-
ber 2007 (including 1,036 village banks), while the economically active population increased to approxi-
mately 29 million individuals.
Achieved Quality Growth & Driving Future Growth
CIB’s strategy and vision is to accomplish real, sustainable growth, but not growth at any cost. In the
financial services world, it is easy to stretch for growth by reducing underwriting standards or taking on
increasingly higher levels of risk. However this runs counter to our principles.
The Bank continues to grow its earnings, but not at the expense of smart, longer-term investments. We
continue to invest in the areas that will drive our future growth. Last year CIB opened 19 new outlets,
added more than 700 staff, logged 75,000 hours of employee training, and spent over EGP 50 million
on IT platform modernization. We have a significant investment plan with respect to our systems and
operating infrastructure, while simultaneously focusing on the reduction of operating expenses. Al-
though there is obviously a short-term cost associated with these investments, we believe the long-term
benefits will be a significant increase in efficiency and improved quality of our services.
Alternative Growth Strategies
In July 2007, CIB officially applied for a banking license from the Central Bank of Algeria. The Algerian
subsidiary is expected to benefit from the booming Algerian economy, especially with many of our corpo-
rate customers expanding their operations to Algeria.
In 2007, we also continued to act upon the mandate approved by the General Assembly in March 2006
to pursue the growth of our institution through mergers and acquisitions.
Appropriation of Income
The Board of Directors has proposed the distribution of a dividend per share of EGP 1.00, in addition to
increasing both the Legal Reserve by EGP 61.6 million to reach EGP 432.9 million and the General Re-
serve by EGP 834 million to reach EGP 1,382.5 million after approval by the shareholders at the Annual
General Meeting. These actions reinforce the Bank’s solid financial position as evidenced by a Capital
Adequacy Ratio of 14.7 %.
Board of Directors’ Report
13
Corporate Social Responsibility
Given the sense of duty and gratitude CIB feels towards our society, and in continuation of the Bank’s
history of initiatives within Egypt, we made a number of donations and spearheaded several fundraising
efforts in 2007. CIB defines corporate responsibility as the continuing commitment by our business to
behave ethically and contribute to Egypt's prosperity while improving the quality of life of the workforce,
their families and the local community and society at large. Our organization seeks to build meaningful
relationships between the corporate sector and the rest of society.
The function of Corporate Social Responsibility is an important component of CIB's business and is con-
sistent with our mission statement’s objective ‘to grow and help others grow.’ It also supports our objec-
tive of contributing to the sustainable development of Egypt's economic growth.
Our community service covers various types of charitable organizations classified into three major fields:
Healthcare, Education, and Social Support & Commitment.
Social Involvement:
•
Misr El Khair Foundation
An organization that promotes education, healthcare services, and food for Egyptians under the
poverty line in Upper Egypt.
•
Yahya Arafa Children’s Charity Foundation
A foundation dedicated to helping children who require surgical operations related to the bones
and heart.
•
Arafa Charity Foundation
A foundation dedicated to the provision of healthcare services for impoverished citizens in the
Delta region.
•
Ein Shams University Hospital
A public hospital that serves disadvantaged individuals.
•
Mahmoud Hospital
A hospital that serves individuals who travel into Cairo from surrounding towns and seek medi-
cal attention.
•
Khayrazad Organization for Social Care
An organization that provides financial support for public hospitals within Cairo.
•
Lung Diseases Center - Faculty of Medicine Menoufeya University
A public university hospital that serves underprivileged individuals in Menoufeya.
•
Center for Social & Preventive Medicine, Faculty of Medicine, Cairo University
Our donation will be utilized for the renovation of this under-equipped hospital, including an X-
ray unit and a dentistry unit.
•
Three public schools
Three schools have been chosen for renovation in disadvantaged communities in Upper Egypt.
Corporate Governance
Transparency
Corporate Governance
Corporate governance issues rate high within CIB, both in terms of aligning the interests of sharehold-
ers and managers and in terms of the monitoring of management through information disclosure and
transparent reporting. CIB adopted a sound and effective system of corporate governance best practice,
comprising highly professional executive directors and senior management, competent board commit-
tees, independent non-executive directors of experience and integrity, an internal audit and control de-
partment equipped with the best qualified and well-trained staff, an efficient investor relations program
and two reputable audit firms with an impeccable record of accounting and auditing practice.
Our corporate governance framework ensures that timely and accurate disclosure occurs with respect
to material matters regarding the Bank, its ownership, operations and financial performance. It also
advocates the equal treatment of all shareholders with sound protection to their voting rights. CIB has a
practice of changing auditors every five years to ensure objectivity and to benefit from new practices.
Another important strength is CIB’s board composition. The Board is comprised of a majority of non-ex-
ecutive directors who play key roles. The varied expertise of the non-executive directors has created an
unusually strong combination of directors, all with relevant knowledge and balanced skills and experi-
ence.
16
The Board of Directors
The Bank’s management structure is based upon centralization of controls at the head office and at the
top management level. The management of the Bank’s business takes guidance from the Board of Direc-
tors, which sets the overall strategy and approves all operating policies.
Our Board consists of eight members. The Directors are elected by the shareholders at the General As-
sembly for a period of three years and meet at least four times per annum. During 2007, the Board of
Directors convened 6 times.
A group of experienced business leaders representing Ripplewood Holdings L.L.C., Eton Park Capital
Management, RHJ International and International Finance Corporation remains from 2006, as part of
the Board, including Robert Willumstad, the former President and Chief Operating Officer of Citigroup,
Lucio Noto, the former Chairman and Chief Executive Officer of Mobil Corporation, and Tim Collins, Chief
Executive Officer of Ripplewood Holdings. Paul Volcker, former Chairman of the Federal Reserve Bank,
serves as Senior Advisor to the Board.
Accordingly, the Board of Directors in its new and expanded form consists of the following individuals:
Hisham Ezz Al-Arab Chairman and Managing Director
Hisham Ezz Al-Arab joined CIB in 1999 as Deputy Managing Director and was elected
Chairman and Managing Director in September 2002. He has had a wide experience of
more than 20 years in global banking activities gained in senior positions at JP Morgan,
Merrill Lynch and more recently Deutsche Bank throughout the United Kingdom, Middle
East and the United States. He holds a degree in Commerce from Cairo University in
1977.
Sahar El-Sallab Vice Chairman & Managing Director
Sahar Sallab is currently Vice Chairman & Managing Director, as well as member of
the High Policies Committee. She joined CIB in 1981 from Citibank and has close to 30
years of local and international banking experience. She is also the Chairperson of Com-
mercial International Brokerage Company (“CIBC”). Ms. Sallab is a graduate in Business
Administration from the American University in Beirut in 1974.
Mahmoud Fahmy Member
Counselor Fahmy is a renowned Egyptian lawyer and international arbitrator. Previously, he was the
Chairman of Egyptian Capital Markets Authority, the General Authority for Investments and the Secretary
General of the National Counsel.
William Mikhail Member and Chairman of the Audit Committee
Dr. Mikhail is currently professor of econometrics at the American University in Cairo (AUC), and has
been member of CIB’s Board since 1997. He obtained his Ph.D. from the London School of Economics,
Corporate Governance
London University, in 1969. Together with his academic career, Dr. Mikhail also worked with international
consulting firms and as a U.N. consultant on econometric modelling and economic policy analysis in
many countries for more than two decades. He published extensively in econometric theory and applied
econometrics in international journals, and supervised many Ph.D. and M.A. theses both in Cairo Univer-
sity and the American University in Cairo.
Dr. Nadia Makram Ebeid Member
Dr. Nadia Makram Ebeid is the Executive Director of the Center for Environment and Development for
the Arab Region and Europe (CEDARE), an international diplomatic position she assumed since Janu-
ary 2004. For a period of five years starting 1997, Dr. Ebeid was Egypt’s first Minister of Environment
becoming the first woman to assume this position in the Arab World. During her earlier career, Dr. Ebeid
assumed several managerial posts with the United Nations Development Program (UNDP), the United
Nations Food and Agriculture Organization's Regional Office for the Near East, Council for Environment
and Development Research. In support of her role in environmental policy and advocacy, Dr. Ebeid was
awarded numerous awards of recognition and distinctions from local and international NGOs, leading
institutions and associations.
Robert Willumstad Member
17
Robert Willumstad is the Chairman of AIG and until recently served as President and Chief Operating
Officer of Citigroup and was a member of its Board of Directors. After 20 years with Chemical Bank, and
11 years with Commercial Credit and its successor companies, in October 1998, Mr. Willumstad played
a critical role in creating Citigroup, a history making combination of the former Travelers Group and
Citicorp. After serving as the Head of Global Consumer Lending, Mr. Willumstad was the Chairman and
CEO of Citigroup’s Global Consumer Group from 2000 to 2003, where he led all consumer businesses,
including credit cards, consumer finance and retail banking. In addition, he had oversight of Citigroup’s
consumer operations in Western Europe, Japan and Mexico.
Mr. Willumstad was named President of Citigroup in 2002, and joined its Board of Directors in 2003; he
became Citigroup’s Chief Operating Officer in October 2003. He is a Director of MasterCard Incorporat-
ed/MasterCard International Incorporated and Habitat for Humanity International. He is a trustee of the
American Scandinavian Foundation and Adelphi University.
Tim Collins Member
Timothy C. Collins is the Chairman and Chief Executive Officer of Ripplewood Holdings, L.L.C., which he
founded in 1995. From 1991 to 1995, Mr. Collins managed the New York office of Onex Corporation,
a Toronto-based investment company. Previously, Mr. Collins was a Vice President at Lazard Freres &
Company. Mr. Collins received an M.B.A. degree from Yale University's School of Organization and Man-
agement and a B.A. degree in Philosophy from DePauw University.
Lucio Noto Member
Lucio Noto is the Managing Partner of Midstream Partners, L.L.C., an energy investment company. Mr.
Noto assumed his current position in March 2001. He retired as Vice Chairman of Exxon Mobil Corpo-
ration in January 2001, a position he had held since the merger of the Exxon and Mobil companies in
November 1999. Mr. Noto has been a director of Altria Group since 1998. Before the merger, Mr. Noto
was Chairman and Chief Executive Officer of Mobil Corporation. Mr. Noto had been employed by Mo-
bil continuously since 1962. Mr. Noto is a director of International Business Machines Corporation and
United Auto Group Inc. He also serves on the International Advisory Councils of Mitsubishi Corp. (Tokyo)
and Temasek (Singapore).
The Board of Directors’ Committees
Following the expansion of the Board of Directors during the first quarter of 2006, the Board will over-
see the Bank through the Board Committees and the reports generated to evaluate the Bank’s periodic
performance regarding all aspects of operations. As such, the Board will meet around six times per year,
physically or through video or tele-conferencing, in Egypt, with one meeting in New York City.
In addition to the Board’s Audit Committee, CIB has recently established Governance & Compensa-
tion and Risk Committees. The structure of each committee ensures the highest standards of corporate
governance, e.g., the Governance & Compensation Committee is only composed of independent directors
Corporate Governance
and meets exclusively without the attendance of the Bank’s executive officers, unless the need arises to
invite one or more of them.
Audit Committee
CIB was one of the first banks in Egypt to set up an audit committee of the Board in compliance with
the basic principles of corporate governance. In September 1998, the Bank’s Board decided to form the
committee in order to ascertain the soundness of the Bank’s internal audit system and compliance with
the rules specified by regulatory authorities.
The Committee’s mandate was extended and articulated in greater detail in the years that followed,
especially in light of the Central Bank of Egypt’s issuance in June 2002 of a number of rules to be ob-
served and guidelines to be followed. Accordingly, the role of the committee was redefined in September
of the same year to emphasize its independent nature. Its scope was also modified to be more specific,
especially in relation to risk management, Basel II compliance, money laundering, as well as internal and
external audit practices.
18
Three independent board members sit on the audit committee. They meet exclusively and regularly
with the Bank’s external auditors. Bank executives are regularly invited to attend certain meetings when
relevant issues are discussed.
The Governance and Compensation Committee
The Committee is to be responsible for the development and review of a set of Corporate Governance
Guidelines, which are then recommended to the Board.
The Committee is to review the remuneration of the Board of Directors (both executive and non-execu-
tive members). This will also incorporate any stock option proposals to the Bank’s Executive and Se-
nior Management Staff. The committee is also to act as a nomination committee when a board seat is
vacated.
The Risk Committee
On the macro level, this committee will set the Bank’s “Credit Risk Strategy” and the portfolio mix
(concentration and limits) for corporate, retail, banks, countries, etc. to be approved by the Board. Expo-
sures according to risk rating, amount & tenor are approved by other committees led by the High Policies
Committee.
Our Mission and Purpose
Teamwork
Our Mission and Purpose
“To grow and help others grow”
“To grow our status as the best financial services partner for our clients anywhere in the world, while
creating outstanding value for both our shareholders and people”
In achieving our mission & purpose, we make decisions that are consistently guided by the following set
of core values:
Integrity:
Exemplify the highest standards of personal and professional ethics in all aspects of our busi-
•
ness.
•
•
Be honest and open at all times.
Stand up for one’s convictions as well as accepting responsibility for one’s own mistakes.
Comply fully with the letter and spirit of the laws, rules and practices that govern CIB work in
•
Egypt and abroad.
20
Client Focus:
•
Say what we do and do what we say.
•
Our clients are at the center of our activities and are the reason behind all that we do.
Our clients are the force behind our excellence and we are committed to individually help them
•
achieve their goals and be the best at what they do.
Innovation:
Pioneer is not a word to us; it is an action and a track record since our inception as the first
•
joint venture bank in Egypt.
We are leading the Egyptian financial services industry to the next level of performance in serv-
•
ing the millions of Egyptian clients who are underserved or who are not banked at all.
Hard Work:
Discipline and perseverance govern our actions to achieve outstanding returns for our stake-
•
holders.
•
Seeking service excellence drives our commitment to better serve our clients.
We endeavor to satisfy our clients’ current demands and to anticipate and plan for their future
•
needs.
Teamwork:
We collaborate, listen and share information candidly within CIB and with our partners, clients
•
and shareholders.
•
•
•
Each one of us consistently presents CIB’s total corporate image.
There is only one CIB in the eyes of our clients.
We value and cherish one another’s different cultural backgrounds.
Respect to the Individual:
We respect the individual whether an employee, a client, a shareholder, or a member of the
•
communities in which we live and operate.
We treat each other with dignity and respect and take time to answer questions and respond to
•
concerns.
•
Each individual must feel free to make suggestions and offer constructive criticism.
CIB is a meritocracy, where all employees have equal opportunity for development and ad-
•
vancement based only on their merits.
2007 Review of Operations
Hard work
2007 Review of Operations
Corporate Banking Group
The year 2007 witnessed remarkable achievements in the corporate banking business, whereby the loan
portfolio surged reflecting an increase in average utilization throughout the year of 27% over last year.
Year on year growth rate reached 20% surpassing the credit market growth rate that reached 11% dur-
ing 2007. The Bank played a leading role in promoting business in various diversified sectors, namely oil,
gas, petrochemicals, fertilizers, telecommunication, agri-business, contracting, real estate development
and other sectors.
The expertise and specialized premium services provided by CIB as an Arranger, Underwriter, Agent and
Security Agent have been well recognized by major Project Financiers and has established CIB’s position
as a leading bank in mobilizing large ticket transactions in the syndication market.
CIB’s total mandated syndicated arrangements in 2007 witnessed significant growth over the year 2006,
reaching EGP 37.5 billion compared to EGP 19.6 billion in 2006. In fact, the syndication team initiated
and contributed in major landmark deals, whereby it played several vital roles such as, but not limited
to, Mandated Lead Arranger, Egyptian Facility Agent, Underwriter, Onshore Account Bank, Book-Runner,
Security Agent, and Financial Advisor. The key sectors that the syndicated department covered during
2007 were mainly petrochemicals, telecommunication, oil and gas, construction and food.
22
CIB continued to enhance the introduction of new financing schemes in the market. We were successful-
ly mandated to act as a Financial Advisor and Lead Arranger for four securitization transactions in 2007
totalling EGP 1.2 billion. Recognizing our lead role in securitization, CIB was awarded “Deal of the Year”
for 2007 by The Banker for its securitization deal. CIB has hence established itself as the leading bank in
Egypt in terms of number of transactions arranged, having successfully closed five securitization deals in
Egypt to date.
The Structured Trade Finance Group continued to secure sizeable trading transactions, reaching a no-
table portfolio of EGP 9 billion in 2007. Total Trade Finance Transactions in Corporate Banking reached
EGP 27.5 billion. CIB was, thus, awarded the "Best Trade Finance Bank in Egypt" by Global Finance for
the second consecutive year.
In the Shipping business, CIB maintained its position as the market leader in the Suez Canal Tolls, with a
market share of approximately 86% and aggregate transfers of nearly USD 3.4 billion. The division also
expanded its financing activities to include local and foreign cargo, tanker & RORO vessels, in addition to
extending financing to the new and existing ports in Egypt. The division’s new finance commitments in
these fields recorded EGP 748 million.
Based on such strong performance in 2007 and CIB’s excellent position as the prime Egyptian private
sector bank operating with international standards, we are confident that CIB's corporate activities will
maintain their growth momentum.
Retail Banking
CIB foresees a breakthrough in the retail banking market in the near future. This expected surge in the
bankable population will likely be the result of sustained growth in Egypt’s GDP and the associated job
creation. In order to allow CIB to fully leverage this opportunity and to further enhance its market share,
our Retail Banking strategy was revamped in 2007.
In order to enhance our delivery and distribution channels, the following actions were taken:
•
In 2007, we approved the opening of 45 branches in order to expand our customer acquisition
channels. 19 of those branches were opened in 2007, while the remaining 24 will be opened dur-
ing 2008. Our branch network has expanded to reach a total of 131 outlets.
CIB commenced the hiring of a dedicated Sales Team within our existing/new branches to
•
complement the sales efforts exerted by the existing Customer Service Team.
The operational process in the branch network was re-engineered to allow branches to focus
•
more on sales and to ensure superior quality service for our clients.
In terms of product offering, CIB revisited its product range in order to ensure our ability to provide each
customer segment with the products that suit its needs at competitive terms & conditions.
2007 Review of Operations
The Retail Risk Management Division was founded in 2007 (in line with the international best practices)
in order to mitigate the inherent credit risk associated with the strong growth in our retail asset portfolio.
Alternative Delivery Channels
In 2007, the ATM network was expanded to reach a total of 435 ATMs providing customers with 24/7
banking services. Furthermore, cash withdrawals from our ATMs during 2007 reached an impressive EGP
8.2 billion.
Our Call Center, which responds to customer inquiries, has extended its hours of operation to 24/7.
Furthermore, during the 1st quarter of 2008, the activities of the call center were extended to include
financial transaction execution, such as internal transfers, credit cards settlements, and the issuance of
debit & credit cards.
The introduction of online E-Banking registration in June 2007 has led to an increase in the number of
our E-Banking subscribers of 33%, with existing subscribers accounting for approximately 4 million hits
during the year.
Credit Cards:
23
In 2007, CIB made its entrance into the Acquiring Business with the deployment of POS machines (which
clear card payments) at merchant sites. In tapping into this market, CIB is committed to employing
state of the art technology and superior customer service. The initial results are extremely promising
and signal that CIB is poised to capture market leadership in this sector in 2008.
CIB also invested heavily in the enhancement of the infrastructure of its Credit Issuing Business. Signifi-
cant focus has been channelled into refinement and automation of the credit assessment process, as well
as added staffing and automation of the central collections function.
Finally, CIB paid considerable attention to managing the existing portfolio of cards in order to simultane-
ously increase customer satisfaction and the Bank‘s profitability.
Residential Property Finance
The Residential Property Finance Group was established during 2007 as a separate business line to seize
leadership in the Egyptian Housing Finance market. The group mission is to provide top quality, well
packaged and tailor-made residential loan services to meet varying financial needs.
Our solid business infrastructure and our unique product offering allowed the Residential Property Fi-
nance Group to successfully carve its niche within the Egyptian Housing finance market.
The business framework is developed to achieve maximum efficiency, volume and profitability. CIB incor-
porated international expertise, highly experienced and well-trained professionals, as well as a custom-
ized and state of the art IT system to design loan products and financing methods that harmonize with
local market conditions.
SME
Only one year post inception, the SME Banking Group successfully penetrated the untapped SME market
in 2007.
CIB’s penetration of this segment of the local market occurred in several areas, resulting in a diversified
loan portfolio with particular focus on the small-medium manufacturing sector, exports, and suppliers
under national programs. This led to the creation of a solid base composed of direct loans which are well
funded by a strong deposit base and a growing contingent business.
The SME group’s objective is to become Egypt’s leading SME banking provider and contribute positively
to the growth and development of Egypt’s economy. Therefore, based on our best-practice infrastruc-
ture, our pioneer penetration of the SME market, and our highly skillful and trained team, we are confi-
dent that the business will continue to grow its profitability in 2008.
2007 Review of Operations
Direct Investment Division
During 2007, the Direct Investment Team carefully maintained its primary task of properly allocating in-
vestment funds into specific industries where CIB’s return on investment would be optimally maximized.
The mission of the division is as follows:
•
Add value to CIB’s shareholders.
Provide a unique opportunity for equity or quasi-equity financing to promising businesses in
•
Egypt and the region.
Provide financial advice to our partners, thereby helping them to realize their growing ambi-
•
tions.
Our mission is accomplished through a hybrid of methods comprising, but not limited to, dividend distri-
bution, capital gains, and entering into new investments whereby the synergies for CIB is the focus.
24
In 2008, the Direct Investment Team will focus on expanding in profitable industries such as fertilizers,
cement, oil and gas, and consumer finance, among others. Investment in locally listed equities is pur-
sued based on a combination of fundamental analysis and market research. Market research is conduct-
ed through alliance with various regional entities in order to gain thorough knowledge of such markets.
Financial Institutions and Correspondent Banking
The FI & Correspondent Banking Group, through its six divisions as well as CIB’s Representative Office in
Dubai, has expanded its diversified activities to include trade finance, cross-border allocation, fundrais-
ing, marketing products, clearing services, custody services and donor programs.
Correspondent Banking is the first point of contact with CIB for financial institutions. It cov-
•
ers mainly: securing outgoing business for CIB, attracting bonding business (LGs), marketing and
cross-selling.
The International Presence was established to penetrate new markets overseas and to market
•
and sell CIB’s and its affiliates’ products to Non Resident Egyptians.
•
Non-Bank Financial Institutions provides services and products to insurance, leasing, invest-
ments and brokerage companies. The loan growth within this division has increased more than ten
fold over the last two years.
Cross-Border Allocation covers syndications of financial institutions and discounts of trade pa-
•
pers related to financial institutions (banks and non-banks).
CIB has maintained its position as the number one custodian in the local market since 2000. In
•
fact, assets under custody reached a total of EGP 252.21 billion in 2007, accounting for approxi-
mately 40% of market capitalization with a customer base of over 46,000.
•
Finance Programs and International Funds is regarded as a unique division within the entire
banking sector. The division mainly handles funds and finance programs provided by international
donors (e.g., USAID, European Union, World Bank, UN, KFW, etc.), with an overall objective of
creating sustainable develop mental funds. In addition, the division offers services including, but
not limited to, fund administration, optimum investment alternatives, disbursement / repayment
mechanisms, technical assessment and monitoring, fund promotional activities and full reporting
services.
•
Our Dubai based Representative Office has acted as CIB's gateway to the GCC. In 2007 the
branch introduced several leading GCC based corporate clients to the Bank, providing syndicated
facilities, investment opportunities, Islamic Sukuk and trade related paper to financial institutions
and corporates operating in the MENA region. These achievements were the result of the estab-
lishment of strong relationships with several reputable financial institutions operating out of Dubai.
On the retail front, the branch focuses on a niche market, providing private banking services to
the Egyptian community working in the UAE. Furthermore, the branch works closely with CI-Capi-
tal, our investment banking arm.
2007 Review of Operations
Treasury Group
The Treasury Group’s strategic priority is the management of Assets and Liabilities of the Bank in terms
of interest rate, liquidity and concentration risk. This is achieved through proactive balance sheet man-
agement with an emphasis on hedging risk. In addition, the Treasury Group is responsible for managing
the proprietary investment portfolio of the Bank.
Treasury diversifies its proprietary investment in traditional and alternative asset classes. CIB’s mutual
funds offer not only a cash management solution to our clients, but also a maximization of their returns,
at a time during which proper liquidity management is viewed as a difficult task. Consequently, CIB was
rewarded with Global Finance Magazine’s “Best Money Market Fund Provider in Africa” award.
During 2007, CIB strengthened its position as a mutual fund provider by widening its client base, becom-
ing a market leader in the offering of mutual fund solutions to Egyptian clientele and contributing to the
Bank’s fee income.
In addition, as demand for Islamic products has increased globally, CIB has introduced an Islamic Fund
jointly with Faisal Islamic Bank, becoming the first bank in Egypt to offer a joint fund. The fund has
proven to be very successful, and other banks have followed the same route.
25
Starting in 2007, CIB adopted new market risk modelling techniques and interest rate management
methodologies that reflect the latest developments in the market place and abide by Basel Committee
recommendations.
It is worth highlighting that Treasury implements a balanced and flexible pricing strategy to support
CIB’s expansion plan, simultaneously maximizing our profits and maintaining our competitive edge.
Dealing Room
For the seventh consecutive year, CIB won the Global Finance Award for the Best Foreign Exchange Bank
in Egypt. The award acknowledged the market’s appreciation of CIB’s pioneer role in providing tight and
competitive market making quotes for banks, corporations and retail clients. Furthermore, CIB expanded
its volumes by nearly 110% compared to last year to reach a total of EGP 200 billion.
The impressive volume and profits resulted from CIB’s ability to respond to the Foreign Exchange needs
of both corporations and large investors. Furthermore, our ability to structure tailor-made hedging and
yield enhancement products has significantly increased our customer base and subsequently our market
share.
Despite the increase of the primary dealers to fifteen members at the beginning of 2007, the CIB Pri-
mary Dealers desk has managed to increase its secondary market bond trading volume by more than
300% and its treasury bills volume by more than 250%. Consequently, CIB successfully acquired a 20%
market share in the secondary market bond trading and a market share of 5.3% in treasury bills.
Moreover, CIB was a co-manager for Egypt’s first dollar dominated bond issue (which matures in 2012).
CIB also offers to its clients a variety of tailored products, structure products, repos, reverse repos and
tailored maturities.
Finally, CIB has always maintained its focus on developing a well-trained Sales force to target new cli-
ents (corporations and individuals) and satisfy existing ones.
Strategic Relations
“Client Focus” being at the core of its activities, CIB takes pride in being the sole bank with a dedicated
Strategic Relations Group (SRG), whose main priority is to nurture its relationship with its major institu-
tional depositors. With a portfolio of over 170 strategic clients, whose deposits contribute substantially
to CIB’s stable funding, the SRG mimics the function of “Private Banking” for its corporate accounts. Of-
fering preferential tailor-made services and innovative products, packaged to meet the unique business
needs of each individual client, is the very essence of the SRG.
The success of the SRG as a function is evidenced by the long-standing client relationships that, despite
fierce competition, date as far back as the 1980s, while maintaining the delicate balance between client
satisfaction and account profitability.
2007 Review of Operations
Risk Management
CIB is currently in the process of procuring a Risk Management Application, not only for the purpose of
Data Management pertaining to Basel II compliance purposes, but also for Portfolio Management and
as well as the upgrade of the Management Information System and Risk Analysis. The Portfolio Man-
agement process focuses on the analysis of risks related to the Bank’s banking book from a portfolio
perspective.
The Department is also responsible for identifying, assessing, monitoring, reporting and controlling /
mitigating Operation Risks, through maintaining a robust Risk Management System and effective policies
and procedures that reflect international best practices.
Risk Exposure Management has made several enhancements to the Approval Process, whereby the
involvement of the Credit Administration / AFU as a risk division is currently included in all levels of the
Retail Approval Process to ensure compliance with CIB’s Policies and Procedures. These enhancements
were a prerequisite for CIB’s expanding strategy in retail.
26
Credit Risk:
The bank has a Statistical Rating Model developed to estimate the PD (Probability of Default) risk param-
eter for every Corporate Obligor within the Corporate Asset Class, in line with the Foundation Internal
Rating Based Approach. The model has currently been used to rate the entire Corporate Banking Portfo-
lio for the last two years. Validation for said model will subsequently take place. On the other hand, the
data collection process has started, for the other two risk parameters namely; LGD (Loss Given Default)
and EAD (Exposure at Default) in order to ultimately adapt the Advanced IRB Approach.
The bank has an expert scoring model for the SME (Small and Medium Enterprises) portfolio, which has
been in current use to score the relevant portfolio for the last two years. The model will be subsequently
validated and calibrated into a PD model once the portfolio reaches a certain size.
Pertaining to retail banking, the Bank has recently developed two expert Scorecards for Credit Cards and
Consumer Loans. The said scorecards will be used to collect data on the Bank’s retail portfolio for the
coming two years and the collected data will then be used to develop models for their risk parameters,
namely: PD, LGD and EAD.
Market Risk:
CIB has developed internally:
Market Risk Modules that measure the CoVariance and Historical VaR estimates of its FOREX
•
and directly managed Equities Positions,
An enhanced module that measures the Interest Rate Exposure in the Banking Book in terms of
•
Expected Loss.
•
Quarterly Stress Test reports on the Market Risk Exposure.
Risk Asset Management:
The primary goal of CIB’s Risk Asset Management is to monitor and handle problem loans at an early
stage before they develop into Non-Performing Loans and convert the maximum possible amounts to
higher credit quality brackets whenever possible. The Department also determines the optimal recovery
prospects that can be achieved from the accounts and constantly strives to maximize the recovery rates.
A detailed Loan Portfolio Quality Analysis Report summarizing movement of accounts and adequacy of
provisioning is prepared monthly by the Risk Asset Management Department.
The Bank’s prudent Risk Rating and Provisioning Policy has enabled CIB to build up substantial provisions
against possible loan losses. Total Loan Loss provisions reached EGP 1.26 billion in December 2007,
compared to EGP 1.15 billion in 2006, despite the write off of EGP 178 million in 2007, compared to EGP
228 million in 2006.
Due to CIB’s prudent Credit and Provisioning Policies and its ability to restructure a significant amount of
Non-Performing Loans, the Bank has improved its General Ratio for both Direct and Contingent Exposure
to 2.74%. The Department continues to make valuable contributions to the Bank’s bottom line with ag-
gregate Recoveries of EGP 251.2 million as of December 2007, up from EGP 206.7 million in 2006.
2007 Review of Operations
27
The tabulation hereunder illustrates some key figures and ratios:
2005
2006
2007
Gross Loans (000's of EGP)
14,988,037
18,503,584
21,465,494
NPL (%of loans)
5.6%
3.8%
3.0%
Charge Offs to Date (000's of EGP)
1,041,294
1,269,741
1,447,577
Recoveries to Date (000's of EGP)
General Ratio
106,680
2.49%
206,742
2.49%
251,214
2.74%
Recoveries to Date / Charge-offs to Date
10.2%
16.3%
17.4%
Human Resources
The main purpose of the HR Department is to provide the best professional services to attract, develop,
and retain a motivated and diverse workforce within a supportive work environment, in order to ensure
the successful delivery of CIB’s Business Plans & Growth Aspirations.
During 2007, CIB's Recruitment Team remained focused on fulfilling the Bank's manpower requirements,
hiring the best caliber candidates – young and experienced – to ensure that business plans are met.
Along this line, the Recruitment and Selection Team has successfully automated significant portions of
the recruitment process, allowing us to fill 729 vacancies within the Bank. Moreover, the revision in the
structure of compensation packages has resulted in a large decrease in the Bank's overall turnover rate;
as well as enabling the Recruitment Team to excel in recruiting the best caliber employees.
The Training and Development Team strongly believes in investing in CIB's human capital. Consequently,
the team utilizes the most reputable and prestigious training institutions, both locally and internationally,
in order to provide the best and highest quality training to CIB employees at all levels. During 2007, 320
training events (135 overseas, 122 local and 63 in-house courses) were held, which benefited a large
number of staff throughout the Bank with a total training hours of 75,000, which represents 62% of the
Bank’s employees. Courses have been carefully and professionally selected, based on the assessment of
employees’ needs, starting from introductory banking level up to the highest technical and specialized
levels in all banking and management fields.
During 2007, and in coordination with the Egyptian Banking Institute, the Training and Development
Division organized the “Bank Risk Game,” which was attended by all the Bank Directors. The Risk Game
provides a stimulating learning experience by giving its participants the opportunity to make decisions
that are similar to those that might be made by the general manager of a commercial bank. Also, the
Training and Development Division continued the Branch Head Certificated Program, covering 11 mod-
ules in Management, Banking Technicalities and other job related subjects. Moreover, 40 Branch Heads
and their Deputies completed the Modules of the Branch Heads Certificate, making the total number of
Certified Branch Heads and Deputies in the Bank 147.
On the Organization Development and Career Planning front during 2007, the focus was on reviewing
all job descriptions bank-wide and improving the synergies between different levels. Also during 2007,
the Team pursued the finalization of different Organization Charts, with special emphasis on emerging
strategic business lines.
During 2007 the department, for the first time, compiled all Human Resources Policies that covered all
HR activities, and made them available on CIB’s Intranet for greater availability to all employees. This
act was supported by the establishment of an HR Information Focal Point, which acted as the first stop
for queries and clarifications regarding HR Policies and Procedures.
Finally the department in 2007 launched the Performance Management Process, which includes the
Annual Performance Appraisal process, in addition to complementary processes that support employee
evaluation and development. The process emphasized the importance of incorporating CIB Core Values
in all of our dealings, the necessity of identifying employees’ competence gaps, and the implementation
of plans to close them out and ensure employee skill development.
Personnel
The primary goal of the Personnel Department is to provide a full range of personnel services to all CIB
employees. This aim is achieved through the implementation of the latest and most up-to-date trends in
2007 Review of Operations
the field, as well as by recommending new and enhancing existing benefits, with the objective of main-
taining and retaining CIB’s most vital asset – Our Staff –.
Among the major achievements, during 2007, were improvements in the structure of compensation
packages, as well as staff loans and job allowances for the different departments, which improved CIB’s
retention rate as well as its ability to attract top talent. Another achievement was the activation of Oracle
system applications through which all pay slips are issued.
Consistent with our goal, the Personnel Department is in the process of launching an Employee Benefits
and Services interactive web page, aiming to make self-service available to all CIB staff. This project is
expected to be finalized during the 2nd quarter of 2008.
The Personnel Department also continuously conducts salary surveys to benchmark various jobs and
positions within CIB to those in the market.
Information and Communication Technology
28
The IT Department has expanded on its state of the art infrastructure and facilities, continuing to provide
services internally and for our customers.
The main IT achievements during 2007 were:
Core Banking System: CIB is currently migrating to T-24, the No. 1 Ranked Universal Banking
•
System (both Retail and Corporate) featuring:
o Enhanced business cycles and shortened time requirements for the fulfilment of important
tasks.
o 24 x 7 non-stop operations with multiple time zones, eliminating the previously required End
of Day (EOD) constraints.
o Integrated environment for business applications, eliminating most of the interfacing/integra-
tion restrictions
The Interactive Voice Response (IVR) System was upgraded to feature the latest technology.
Upgrading CIB's core network, and applying the "wired speed" concept.
•
•
o 435 Automatic Teller Machines (ATM) machines installed, forming the largest widely available
ATM net work in Egypt.
•
E-Security, which provides the vehicle for CIB's initiative of being the first bank in Egypt to
abide by the newly introduced Electronic Signature Law, utilizing PKI, which is an online infrastruc-
ture using encryption, digital signatures and digital certificates to secure applications, communica-
tions and transactions:
o First Installation in the banking sector in Egypt.
o Governorate by ITIDA.
o Implemented on Internet Banking and Corporate Internet.
Personalization Center: Adding VISA to the previously existing MasterCard, and extending our
•
leading setup capabilities for mass production of SIM chip cards (Smart Cards).
•
Introducing Anti Money Laundering (AML) infrastructure, the first in Egypt.
Fraud Monitoring: Added functionality for debit cards beyond existing credit cards, utilizing an
•
active online system.
Acquiring Business: Introduction of CIB as a new strong player in the credit card acquisition
•
market (for both VISA & MasterCard).
•
CIB Printing Center: Featuring the most advanced full colour printing technology.
2007 Review of Operations
Compliance Department
The Compliance Department was set up in March 2007 to perform as an independent function report-
ing to the Chairman of the Board to protect the Bank against any possible Regulatory, Reputation, Anti
Money Laundering and Fraud Risks. It originally operated under the Audit Department, focusing on Anti
Money Laundering. The new structure of the Compliance Department covers three divisions:
Compliance with Regulations, Policies and Procedures responsible for ensuring the availability
of updated Procedures in compliance with the prevailing Regulatory, Local Banking Laws, International
Standards and Best Practices and their proper implementation.
During 2007, the division assessed potential new business and products in terms of the level of compli-
ance risk, especially for non professional customers. It also focused on the escalation and identification
of corrective measures for customer complaints to ensure non-recurrence and that customer protection
is maintained. It reviewed a number of new and updated different policies, procedures and workflows
and followed proper implementation to ensure tight controls are in place.
Anti Money Laundering responsible for the Bank’s Financial Security by ensuring that we know our
customers (“KYC”) through adequate and sufficient customer information, in addition to monitoring
transactions with the branch network and other business areas to be satisfied that our customers only
engage in legitimate business.
29
In 2007 the division updated the individual account opening documentation and the “KYC” form for new
clients to be simpler and concise yet just as informative and clear. Compliance started a project to up-
date the customer information for the entire Bank’s client base that will be finalized by the end of 2008.
This data will also be a strong marketing and cross-selling tool to enable lines of businesses to cater to
different customer segments’ needs. The division also tailored a more user-friendly in-house means of
transaction monitoring. A more sophisticated automated AML solution and filtration system will soon be
in place during 2008 to comply with international standards.
Corporate Governance and Code of Conduct responsible for ensuring that the Bank complies with
the Corporate Governance Code that CIB Board and Management have undertaken to adopt. In addi-
tion, it ensures the Bank’s staff awareness and compliance with corporate ethics governed by the Code
of Conduct. It coordinates with the Board’s Governance Committee to ensure that CIB complies with all
aspects of the Governance Code.
Compliance updated the Bank’s Code of Conduct governed by CIB’s standards of ethics and CIB’s set of
core values in October 2007. In an effort to encourage staff to speak up and report misconduct, viola-
tions or breaches, the concept of “Whistle Blowing” has been introduced among employees, ensuring
confidentiality and not allowing retaliation for staff reporting of such incidents.
Compliance Department in turn, acts as a focal point for internal reporting of suspicious activities such
as policy breaches, law violations, staff misconduct, and external fraud, and works closely with Senior
Management. It presents a quarterly report to the Audit Committee of the Board on such findings, with
recommendations and corrective measures. It cooperates with CBE Anti Money Laundering Unit on any
cases of suspicion of Money Laundering.
The Compliance Department also ensures the availability of employee training programs to raise staff
awareness of such issues, thus helping them report identified cases through the proper channels.
Finally Compliance, in coordination with Human Resources and Personnel, has conducted a risk assess-
ment process for all positions in the Bank. They were segmented to high, medium and low. According to
this assessment, staff is to rotate or assume other positions after a specific period of time, depending
on the level of risk of each area and position. In parallel, the team has reviewed the functions to ensure
that there is no conflict of interest.
Strategic Subsidiaries
and Affiliates
Client focus
Strategic Subsidiaries and Affiliates
CI Capital Holding
Capitalizing on its strength as Egypt’s leading private bank, CIB orchestrated its entry into the market of
financial flows, investment and securities trading with the incorporation of CI Capital Holding in the year
2004 to become CIB’s full fledged investment banking arm.
The entity offers a wide plethora of investment services such as retail and institutional brokerage, in-
vestment banking, asset management, private equity and research to local, regional and international
clients.
Commercial International Brokerage Company
32
Through its brokerage arm, CI Capital offers a wide range of securities brokerage services for both retail
and institutional investors, with a presence in ten of CIB’s branches.
In its pursuit of regional expansion, CI Capital Holding acquired a 50% stake in United Brokerage Com-
pany (UBC) to accentuate the group’s brokerage operations in United Arab Emirates. UBC is a joint ven-
ture company between CI Capital Holding and Oman and Emirates Investment Holding (which is jointly
owned by both the Government of Abu Dhabi and the Government of Oman), creating a cross platform
execution in the Emirates, Egyptian and Omani markets.
Investment Banking
CI Capital Investment Banking activities includes equity capital market products (e.g., private place-
ments, IPO, ADR/GDR listing, and valuation advisory), Merger & Acquisition activities (e.g., buy-side
advisory, sell-side advisory, asset disposal programs & divestitures, and MBOs & LBOs), and debt capital
markets products (e.g., bond issuance, acquisition finance, and debt restructuring advisory).
The investment banking arm successfully concluded privatizations in the Tobacco, Oil & Gas, Telecom and
Retail industries.
Commercial International Asset Management
The asset management division was started in late 2004 to benefit from the fast growing financial wealth
management market in Egypt and the MENA region. The asset management arm became one of the
main investment managers in Egypt in 2007, with arguably one of the strongest reputations, and more
than EGP 8 billion assets under management.
The division serves a variety of clients through mutual funds as well as segregated portfolios. In its
portfolio management operation, the division offers full discretionary services to high net-worth individu-
als and institutional investors. Clients are provided with comprehensive personalized services, which are
tailored to their investment and reporting requirements. The list of existing and targeted clients includes
Egyptian banks, insurance companies and financial institutions as well as pension funds.
Research
Originally, the research department operated as part of the brokerage arm up until 2005, when it was
spun off into a separate entity, serving CIB-wide affiliates with equity, industry, and economic research.
The equity research team includes certified analysts covering the various sectors and companies traded
in the Egyptian stock market. In fact, the industry research team supports investors in their investment-
decision process in the Egyptian market through in-depth studies that cover several sectors. Moreover,
the economic research team tracks, analyzes and projects macroeconomic indicators in the Egyptian
market, which feed into equity and industry research analysis.
Strategic Subsidiaries and Affiliates
Commercial International Life Insurance Company (CIL)
Commercial International Life Insurance Company was formed in 1999 as an Egyptian joint stock com-
pany offering international value-for-money life insurance products. CIB owns 40% of the company’s
stock, the UK’s leading insurer Legal & General owns 40% and the International Finance Corporation and
Mansour & Maghraby for Investment and Development own 10% each. CIL was the first bancassurer in
Egypt and its products are available through the branch network of CIB and other banks.
After 8 years of operations, CIL now occupies a dominant position in the life insurance sector in Egypt,
with around 40% market share measured by new business and total premiums. CIL has received re-
gional awards for its contribution to the development of the insurance industry.
CIL provides long term savings, protection and investment products for both individual and corporate
customers, and it has recently added new investment funds which give customers still more investment
choices. In 2007, CIL’s total Funds under Management exceeded EGP 1.4 billion, which reflects the con-
tinued significant growth of the business and CIL’s capacity to bring new products to market.
CIL’s impressive growth and market leading position is built on a reputation for providing innovative
value-for-money products and superior customer service.
33
Corporate Leasing Company (Egypt) S.A.E
Corplease has successfully operated since 2004 and has become one of the leading leasing and asset
finance companies in Egypt. The company provides a wide range of leasing products and services includ-
ing vendor finance, I.T. leasing, equipment finance, transportation finance as well as large ticket struc-
tured leasing transactions. Corplease has built up a strong client base of mid and large cap corporations
in various segments of the economy.
CIB owns 40% of Corplease’s shares and is joined by the CIB Social Insurance Fund with 12%, Germa-
ny’s DEG, part of KfW Bank, with 22% and France’s U.B.A.F., an affiliate of the Credit Agricole Group,
with 16%.
Corplease achieved strong growth in 2007, whereby the company’s lease portfolio grew by a rate of
125% from 2006. The company continues to benefit from highly favorable asset quality, a controlled cost
structure and conservative liquidity and capitalization levels.
Corplease is actively investing in its human resources, expanding its product offering and diversifying its
funding base.
Haykala Investment Managers
Established in August 2005 as a private equity firm, Haykala is engaged in buyout and turnaround activities.
CIB is the largest shareholder with a 40% stake of the company’s capital, while the remaining 60% is
owned by high net-worth individuals, institutional investors and the Haykala management team.
During 2007, Haykala continued its investment, reaching 85% utilization of its first fund under the name
of “Middle East Turnaround Investments Limited” (Haykala Turnaround Fund). Since inception of the
fund, Middle East Turnaround Investments Limited is considered the only turnaround fund in Egypt, of
which the portfolio comprises 5 investments in different industries/business lines, with 46% in Dairy and
Juice, 17% in confectionery, 32% in steel and 5% in Oil Services.
In all its acquisitions, Haykala Fund takes a stake of between 50 and 100%.
Strategic Subsidiaries and Affiliates
Cotecna Trade Support (CTS)
CTS was established in 2005 to provide Collateral Management and Stock Monitoring services to the
business community in Egypt.
40% of CTS’s shares are owned by CIB, with the remaining 60% owned by the Swiss Company Cotecna
Inspection Services S.A., a market leader in trade finance related services.
The services provided by CTS allow the use of commodities and other goods as collateral security in the
context of a loan. Additionally, the imported goods can be inspected and monitored at origin until the ar-
rival to final destination, to ensure their compliance and conformity with the agreed specifications.
CTS studies and considers carefully each case, in order to apply the services in a manner that meets the
needs and requirements of both the client and the lender.
At the end of 2007, the company had more than USD 15 million value of goods under management, in-
cluding soft commodities, livestock, vehicles, grain and others. The company has a considerable pipeline
and can confidently expect further growth in 2008.
34
Egypt Factors
Licensed by GAFI in 2007, Egypt Factors has become the first factoring company in Egypt.
The company’s authorized capital of USD 15 million and issued capital of USD 5 million is shared among
CIB Group and the Maltese based bank Fimbank, with 40% each, as well as the IFC, with a 20% holding.
With a clear focus on trade finance instruments, Egypt Factors is committed to supporting and promoting
Egyptian cross-border trade, i.e. exports and imports as well as domestic trade.
The elements of its service - packages including Receivables Administration, Bad Debt Protection, and
Funding, are designed to cater to the needs of suppliers both for domestic as well as international deliv-
eries. Also, buyers from domestic or foreign sources are delighted to realize that their purchasing power
increases without the utilization of their banking facilities.
Supported by state of the art systems, Egypt Factors SAE will provide a superb service combined with
access to nearly 70 countries spanning the globe.
International Appraisal & Collection Company. (IACC)
IACC was established in 2007 as an Egyptian joint stock company. CIB is the largest shareholder with
40% stake of the company’s capital, while the National Bank of Egypt owns 20%, CIB Social Insurance
funds 16% and other investors own 24%.
IACC specializes in the evaluation of real estate and movable assets, including the machines, equip-
ments, ships, touristic villages, vehicles & products. The company also conducts inquiries & field inves-
tigations on the individuals and companies, in addition to collecting all debts from debtors. Moreover,
the company performs the ownership research procedures for real estate and movable assets, as well as
taking the necessary procedures to legalize in kind rights (registration & mortgaging of lands & build-
ings) and incorporation of companies. Finally, IACC sells real estate and movable assets through public
auctions or closed proposals.
During 2007, IACC managed to increase collection of criticized debts from 15% to 75%. The company
serves a variety of clients and companies, especially prime local and foreign banks.
Strategic Subsidiaries and Affiliates
Falcon for international Security & Services Company
International Security and Services Company (Falcon) was established during 2006 as a subsidiary en-
gaged in the provision of various security services for the Bank, its affiliated companies, as well as third
party entities. Directly and indirectly through its affiliates, CIB holds a majority stake in the company’s
capital. The company’s services consist of securing & protecting facilities and VIPs, providing High-Tech
industrial and non-industrial security systems, and offering security consultation as well as physical
funds transfer.
The company’s vision is to become the leading local and regional provider of security and security-re-
lated services to all outlets, companies and individuals. According to well-defined geographical segmen-
tation, Falcon penetrated the security and cash transfer market, which was evidenced by the increase in
the number of signed contracts by 57% and 269% respectively in 2007 compared to 2006, to become
the market leader, with an outstanding 40% market share.
During 2007, Falcon received the ISO 9001, the first time in Egypt a security related Services Company
has received this certificate. Furthermore, the company was dubbed by many reputable customers as
the #1 company among all security agencies operating in Egypt.
35
Looking forward, and capitalizing on the company’s 1400 employees, its reputation, and experience
gained in Egypt, the company aims to offer its services abroad, given the high level of demand for secu-
rity services in the Gulf region.
Corporate Social Responsibility
Respect to the individual
Corporate Social Responsibility
The promotion of Corporate Social Responsibility (CSR) is an important component of our business in
its overarching of our mission statement’s objective ‘to grow and help others grow’. In addition, CSR
supports other policy priorities, which include contributing to the sustainable development of Egypt's
economic growth. We believe that a real commitment to CSR unites an organization, strengthens its
reputation, and builds meaningful relationships between the corporate sector and the community in
which our institution operates. CIB is proudly engaged in several activities of social responsibility, includ-
ing fundraising campaigns, sponsorships, social involvement and offering funds with competitive pricing
to create new job opportunities and increase living standards.
CIB regards corporate responsibility as the long-lasting dedication by our business to perform ethically
and participate in economic development, while providing better quality of life for the workforce, their
families, the local community and the society at large.
Fund Raising Management Campaigns
CIB is expanding its charitable fundraising services with the goal of becoming a major contributor to
positive societal change, contributing to a better future for the country and its people. The reach of our
fundraising services has once again been expanded to attract both local and regional donations, using
different channels such as the telephone, internet, automatic teller machines, Bank’s branch network
and swift transfers. CIB also enjoys several alliances with financial institutions in Qatar, Saudi Arabia and
the United Arab Emirates.
37
In fact, CIB has helped in raising funds for the following entities during 2007:
Health and Social Engagements: Providing direct financial contributions to Ein Shams University Hos-
pital (public hospital), Mahmoud Hospital (non-profit hospital), Khayrazad Organization for Social Care
(private sector organization that provides financial support for public hospitals within Cairo), Faculty of
Medicine Menoufeya University – Lung Diseases Center (public university hospital), Faculty of Medicine
Cairo University - Center for Social & Preventive Medicine (major medical hub that provides health treat-
ment for the under the poverty line segment)
Education: Allocating a fund for the renovation of three public schools.
The 3 schools have been chosen in disadvantaged areas in Upper Egypt. CIB will supervise the renova-
tion process, utilizing our projects and purchasing departments, in addition to providing financial sup-
port.
Sponsorships and Social Involvement
CIB’s financial sponsorships and donations are focused on projects that help communities achieve their
goals.
Art Sponsorship: CIB regularly sponsors art galleries organized by the Ministry of Culture, with the aim
of encouraging painters in different levels of their apprenticeship. CIB is also recognized as a significant
collector of Egyptian art.
Our Employees and the Community: CIB encourages its employees to actively participate in commu-
nity development. In fact, the Bank provides the staff with the necessary resources in terms of funding
and training, in order to make a positive contribution within the community.
Funds Directed to Social Development
CIB has a specialized division which handles developmental funds and finance programs provided by
governmental and international donors. These funds are known for their low interest rates and simple
application procedures. The program aims to create new job opportunities and higher income amongst
rural populations with special emphasis on women and small farmers. Moreover, CIB is engaged in envi-
ronmentally friendly projects designed for the preservation of natural resources.
Financial Statement
A. CIB Stand-alone
Attention to details
Financial Statement
A. CIB Stand-alone
39
Financial Statement
A. CIB Stand-alone
Balance Sheet Unconsolidated as of Dec. 31, 2007
Assets
Cash & Due From Central Bank
Due From Banks
Treasury Bills and other Notes Discountable at the CBE
Trading Financial Investments
Available for Sale Financial Investments
Note No.
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
(4)
(5)
(6)
(7)
(8)
4,953,205,430
3,742,876,516
13,782,062,043
5,432,677,413
2,948,674,319
4,058,745,805
588,473,270
887,142,138
2,382,992,007
3,178,163,512
Loans & Overdrafts
(10&9)
20,375,525,133
17,464,675,855
40
(Net Of Provision for Doubtful Debts)
Held to Maturity Financial Investments
Financial Investments in Subsidiary and Associated Co.
Debit Balances & Other Assets
Deferred Tax
Fixed Assets (Net)
Total Assets
Liabilities & Shareholder's Equity
Liabilities
Due to Banks
Customers Deposits
Dividends & Profit Sharing
Credit Balances & Other Liabilities
Long Term Loans
Other Provisions
Total Liabilities
Shareholders' Equity
Issued & Paid - in Capital
Reserves
Reserve for employee stock ownership plan (ESOP)
Total Shareholders' Equity
Net Profit of the Year
(11)
(12)
(14)
(26)
(15)
(16)
(17)
(18)
(19)
(20)
(29)
(21)
443,894,166
822,284,338
365,723,936
475,836,460
1,020,565,573
821,707,644
52,819,475
40,632,719
607,104,820
497,753,223
47,521,040,172 37,422,495,623
2,377,082,435
1,212,524,120
39,514,539,992
31,600,227,198
-
287,235,147
773,862,137
843,634,576
161,356,219
99,166,861
395,332,813
339,825,378
43,222,173,596 34,382,613,280
1,950,000,000
1,950,000,000
1,087,294,215
1,089,882,343
29,159,584
3,066,453,799
3,039,882,343
1,232,412,777
Total Shareholders' Equity & Net Profit
4,298,866,576
3,039,882,343
Total Liabilities & Shareholders' Equity
47,521,040,172 37,422,495,623
Contingent & Commitments Liabilities
(22)
11,529,010,709 6,864,843,585
The Accompanying Notes are an integral part of the Financial Statements " Auditors Report Attached " .
Financial Statement
A. CIB Stand-alone
Income Statement Unconsolidated as of Dec. 31, 2007
Note No.
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
Interest Received from Clients & Banks
2,592,817,080
1,749,822,089
Interest Received from Treasury Bills & Bonds
400,845,143
567,945,991
Deduct
Interest Paid to Clients & Banks
(1,796,702,031)
(1,378,162,881)
Net Interest Income
1,196,960,192
939,605,199
Banking Fees & Commissions
Shares Dividends
Foreign Exchange Profits
547,669,248
399,573,750
66,158,925
47,206,917
41
(23)
167,687,637
108,888,845
Profits From Selling Financial Investments
174,061,817
145,447,016
Profits From Dispose pat of Subsidiaries
(24)
148,393,558
-
Trading Financial Investments Revaluation Differences
7,680,871
16,534,014
Other Income
Total Fee Income
Net Operating Income
Deduct
Provisions
38,433,610
99,613,908
1,150,085,666
817,264,450
2,347,045,858 1,756,869,649
(250,416,667)
(194,312,750)
Other Financial Investments Revaluation Differences
(25)
4,185,378
(15,812,507)
General & Administrative Expenses & Depreciation
(636,363,618)
(604,812,445)
Other Expenses
Net Operating Profits
Non_Operating Income
Net Profit Before Tax
Income Tax
Deferred Tax
Net Profit After Tax
(77,832,699)
(63,627,935)
(960,427,606)
(878,565,637)
1,386,618,252
878,304,012
1,269,870
418,000
1,387,888,122
878,722,012
(27)
(167,662,101)
(83,778,952)
(27& 26)
12,186,756
7,101,704
1,232,412,777
802,044,764
Earning Per Share
(28)
5.59
3.64
42
Financial Statement
A. CIB Stand-alone
Unconsolidated Cash Flow as of Dec. 31, 2007
Cash Flow From Operating Activities
Net Income before tax
1,387,888,122
878,722,012
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
Adjustments To Reconcile Net Income
To Net Cash Provided by operating activities
Depreciation
120,918,839
93,436,004
Provisions (Addition during the Year)
250,416,667
194,312,750
Trading financial investments evaluation differences
(7,680,871)
(16,534,014)
Other financial investments evaluation differences
(4,185,378)
15,812,507
Utilization Of Provisions
(except provision for doubtful debts)
Provisions No Longer Used
FCY revaluation Differences of
Provisions Balances except doubtful debts
-
(330,916,414)
(7,036,600)
-
(1,904,981)
(333,197)
Gains From Selling Fixed Assets
(1,269,870)
(418,000)
Profit From Selling financial Investments
(174,061,817)
(145,447,016)
Profits From Dispose part of a Subsidiary
(148,393,558)
-
Income tax paid
(80,317,367)
(34,049,494)
FCY revaluation diff. of Long Term Loans
1,733,674
1,928,090
Reserve for employee stock ownership plan (ESOP)
29,159,584
Operating Profits Before Changes in
Operating Assets & Liabilities
Net Decrease (Increase ) in Assets
1,365,266,444
656,513,228
Due From Banks
(7,960,703,701)
(1,983,839,488)
Treasury Bills and other Notes Discountable at the CBE
2,266,818,190
(651,338,798)
Trading financial Investments
306,349,739
968,521,368
Available for sale financial investments
1,121,812,258
(865,453,240)
Loans & Overdrafts
(3,054,288,046)
(3,591,677,947)
Debit Balances & Other Assets
(198,443,941)
(351,932,559)
Net Increase (Decrease) In Liabilities
Due to Banks
Customers Deposits
1,164,558,315
492,844,016
7,914,312,794
6,729,969,165
Credit Balances & Other Liabilities
(150,080,573)
(231,362,804)
Net Cash Provided from Operating Activities
2,775,601,479
1,172,242,941
Financial Statement
A. CIB Stand-alone
Unconsolidated Cash Flow as of Dec. 31, 2007
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
Cash Flow From Investment Activities
Sells (purchase) of subsidiaries & associated companies
107,524,396
(363,430,845)
Prepaid for Fixed Assets , Premises
(278,980,037)
(262,195,650)
and Fitting- out of Branches
Redemption Of Held to maturity financial Investments
378,390,172
276,026,346
Net Cash (Used in )
Investment Activities
Cash Flow From Financing Activities
Increase in Long - Term Loans
Dividends Paid
206,934,531
(349,600,149)
60,455,684
(1,032,231)
(287,235,147)
(200,165,754)
43
Reserve for financial investments revaluation Diff.
-
-
Net Cash (Used in)
Financing Activities
(226,779,463)
(201,197,985)
Net cash & cash equivalent changes
2,755,756,547
621,444,808
Beginning Balance of cash & cash equivalent
4,023,396,001
3,401,951,193
Cash & Cash Equivalent Balance At the End of the year
6,779,152,548
4,023,396,001
Cash & Cash Equivalent are Represented as Follows :
Cash and Due from Central Bank
4,953,205,430
3,742,876,516
Due from Banks
13,782,062,043
5,432,677,413
Treasury Bills and other Notes Discountable at the CBE
2,948,674,319
4,058,745,805
Due from Banks (Time Deposits)
(13,264,218,534)
(5,303,514,833)
Treasury Bills with maturity more than three months
(1,640,570,710)
(3,907,388,900)
Total Cash & Cash Equivalent
6,779,152,548
4,023,396,001
Financial Statement
A. CIB Stand-alone
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Financial Statement
A. CIB Stand-alone
Notes to Unconsolidated Financial Statement as of December 31, 2007
(1) Organization and Activities
Commercial International Bank (Egypt) S.A.E was formed as a join stock company on August 7, 1975
under the Investment Law No. 43 for 1974. The Bank is licensed to carry out all commercial banking
activities in Egypt through its Head Office and eighty eight branches, in addition to forty three units.
(2) Significant Accounting Policies
A) Basis of Preparing Financial Statements
The Unconsolidated Financial Statement is prepared in accordance with Central Bank of Egypt Financial
Statements regulations issued on 27 June 2002 and its adjustments.
B) Transactions in Foreign Currencies
- The Accounting records of the bank are maintained in Egyptian pounds. Transactions in foreign
currencies conducted during the year are recorded at the foreign exchange rates prevailing at the time
such transactions take place .
Assets & Liabilities are revalued at the foreign exchange rates prevailing at the end of year , generated
gain and losses are recorded in “Foreign Exchange Income“ in the income statement.
45
- Forward contracts are evaluated at the end of the financial year at its fair value on this date using
the forward rates for the remaining periods until maturity dates of these contracts. The revaluation
differences are recorded in “ Foreign Exchange Income “ in the income statement.
- Currency SWAP contracts are recorded on the date of commitment under contingent liabilities
accounts. The difference between the two parts of the contract is recorded in other liabilities or other
assets as unrealized gain /loss on the date of commitment . The said difference is amortized by crediting
/ debiting the “ Foreign Exchange Income“ in the income statement.
- Premium paid for foreign currencies option contracts is recorded in the Balance Sheet under “ Debit
Balances & Other Assets “ such premium is settled in the unconsolidated income statement according
to the evaluation of these contracts at fair value. The difference between premium received and paid
concern the customers hedging option contracts recorded in the Balance Sheet under “ credit balances &
other liabilities “ category and settled in “ foreign exchange income” on accrual basis.
C) Realization of Income
The bank applies the accrual basis in recording interest received from Loans & Overdrafts, Due from
Banks, Treasury Bills , reverse repose and Bonds. Interest on past due Loans & Overdrafts are not
recorded on the unconsolidated income statement. Dividends income are recognized when declared.
D) Treasury Bills
Treasury Bills are recorded at face value. The issuance discount is recorded in Other Liabilities and
deducted from the Gross Treasury Bills balance on the Balance Sheet.
E) Repos & (Reverse Repos )Transactions
Repos (Reveres Repos) transactions are eliminated (recorded) on the Unconsolidated Balance Sheet
under “ Treasury Bills and Other Notes Discountable at the CBE “ whereas its cost (revenue) is recorded
on the income statement mate term “interest paid to clients & Banks“ (“interest received from treasury
Bills & Bonds “)
F) Evaluation of Trading Investments
- Trading investments including portfolios managed by other party are evaluated at the end of the
financial year at its fair market value and the evaluation difference is recorded in income statement.
- Trading investments not satisfying the trading investment classification condition are evaluated at
their book value. Such value is subject to be reduced in case of a continual decrease based on the
comprehensive objective study of the latest unconsolidated financial statements for the company issued
the securities. The evaluation difference is recorded in the income statement.
Financial Statement
A. CIB Stand-alone
- Mutual fund certificates which have issued by the bank are evaluated at the end of the financial period
at their fair market value and the evaluation difference is recorded in income statement.
G) Evaluation of Available for Sale Investments
Available for Sale Investments are evaluated at the lower of cost (taking in consideration the evaluation
of Foreign Currency ) or fair value for each investment and the differences are recorded in “other
investments evaluation differences “ in Income Statement.
In case of increase in the value , such increase is added to the same category within the limit of amounts
previously charged to income statement for previous financial periods.
Except the difference related to prior years which up to the end of the year 2002 should be recorded as
a special reserve in shareholders’ equity. In case of decreases in the investment value its share in the
special reserve will be utilized , and the remaining balance should be transferred to income statement.
In case of selling the investment, it’s share in the special reserve should be transferred to income
statement .
46
H) Evaluation of Held to Maturity Investments
Bonds purchased from the primary market are evaluated at cost, representing the nominal value
adjusted by the issuing premium/ discount which is amortized using the straight line method. The
amortization value is recorded in the interest received from treasury bills and bonds in the income
statement.
The same treatment is applied to bonds purchased from the secondary market at a value higher or
lower than the nominal value, and the cost is reduced by the gains related to the previous period of the
purchasing date.
In case of downfall of the fair value of each bond the book value shall be adjusted and the difference
is recorded in “other investments revaluation difference” in the unconsolidated income statement. In
case of increase in fair value such increase is added to the same category within the limit of amounts
previously charged to the income statement for previous financial periods.
The book value of foreign currency bonds is amended by the difference resulting from the revaluation
of the foreign currency at the exchange rate prevailing at the evaluation date. Such differences are
recorded in foreign exchange income in the income statement.
- Mutual fund certificates which must be held till maturity date as the bank is the issuer, are evaluated
at cost and in case of downfall of its fair value the book value is adjusted by such downfall and charged
to “Other Investments Revaluation Difference” in the unconsolidated income statement. In case of an
increase in the fair value, such increase will be added to the same category in the income statement
within the limit of the amounts previously charged.
I) Investments in Subsidiaries and Associated Companies
These investments are evaluated at cost and in case of downfall of its fair value, the book value of each
investment is adjusted by such downfall and charged to “Other investments evaluation difference“ in the
income statement. In the case of an increase in the fair value, such increase will be added to the same
category in the income statement within the limit of the amounts previously charged.
J) Assets Acquired for settlement of Debits
These Assets are recorded in the Financial Statement under “ debit balances & Other Assets “ at cost
and in the case of a decrease of the fair value of these assets at the Balance Sheet date, the difference
is charged to the income statement and the increase of the fair value should be credited to the income
statement within the limit of amounts charged in previous financial periods.
K) Provision for Doubtful Debts and Contra Accounts
Provision For Doubtful Debts is established on the basis of an appraisal of the identified risk for specific
facilities and loans in addition to one to five percent for General risk based on the risk inherent in any
loan portfolio which is not specifically identified.
Provision for Doubtful Debts is decreased by loans written off and is increased by recoveries of loans
previously written off. In addition to taking all the necessary legal action required, a continuous follow up
Financial Statement
A. CIB Stand-alone
is performed for the recovery of all or part of the written-off amounts.
L) Contingent Liability Accounts
Contingent Liability Accounts include transactions in which the Bank is involved as a third party, forward
foreign exchange contracts, SWAP transaction, Option. Such transactions do not represent actual bank’s
assets or liabilities at the Balance Sheet date.
M) Cash & Cash Equivalent
In the Statement of Cash Flow, the Cash and Cash Equivalent item includes balances of cash and due
from Central Bank, current account balances with Banks and Treasury Bills with maturities of three
months.
N) Depreciation and Amortization
Depreciation of Fixed Assets ( Except the land ) is calculated on the basis of the estimated useful life of
each asset using the straight-line method.
Improvement and renovation expenses for the bank’s leased premises are amortized over the period of
the lease contract or the estimated useful life whichever is lower.
47
O) Income Tax
Income Tax on the profit or loss for the year comprises current and deferred tax is recognized in the
Income statement.
Current tax is the expected tax payable on the taxable income for the year using tax rates enacted or
substantially enacted at the balance sheet date.
Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes . The amount of deferred
tax provided is based on the expected manner of realization or settlement of the carrying amount of
assets and liabilities , using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realized.
(3) Financial Instruments and their risk management
(3/1) Financial Instruments
A) The bank’s financial instruments are represented in the financial Assets and Liabilities. The financial
assets include cash, due from banks, investments and loans to customers and banks. The financial
liabilities include customers’ deposits, due to banks and long-term loans. Financial investments also
include rights and obligations stated under “contingent liabilities and commitments”.
Note No. (2) of the notes to the unconsolidated financial statements includes the accounting policies
applied to measure and recognize significant financial instruments and the revenues and expenses
related thereto.
B) Financial Instruments Fair Value
Using the valuation basis of the bank’s assets and liabilities, as referred to the notes to the
Unconsolidated Financial Statements, the financial instruments’ fair value do not substantially deviate
from their book values at the Balance Sheet date. The notes No. (8),(11),(12) are showing the fair
value for all investment (except Trading Investment) in the date of unconsolidated financial statement.
C) Forward Contract
According to Central Bank of Egypt instruction the bank doesn’t execute deferred contracts except to the
necessary limit of short term transaction to cover its requirements of Foreign currencies or the bank’s
customers’ requirements to fulfill their obligations resulting from short-term transactions.
Financial Statement
A. CIB Stand-alone
(3/2) Risk Management
A) Interest rate risk
The value of some financial instruments fluctuate due to the fluctuation in interest rates related thereto. The bank
follows some procedures to minimize this risk such as:
- Correlating between the interest rates on borrowing and lending.
- Determining interest rates in consideration with the prevailing discount rates on various currencies.
- Monitoring the maturities of financial assets and liabilities with its related interest rates.
The notes No. (30 & 31) of the notes to the Unconsolidated Financial Statements disclose maturities of the assets and
liabilities and the average interest rates applied to assets and liabilities during the year .
B) Credit risk
48
Loans to customers and Banks, financial Investments (Bonds), due from banks, rights and obligations from others,
are financial assets exposed to credit risk which result in these parties’ inability to repay in part or in full the loan
granted to them at maturity.
The bank adopted the following procedures to minimize the credit risk.
- Preparing credit studies about the customers before dealing with them and determining credit risk rates related
thereto.
- Obtaining adequate guarantees to reduce the risks resulting from insolvency of customers.
- Monitoring and preparing periodic studies about customers in order to evaluate their financial and credit positions
and estimate the required provisions for non - performing loans.
- Distribution of loans portfolio and due from banks over various sectors to avoid concentration of risk.
Note No. (33) discloses the distribution of loans portfolio over various sectors.
C) Foreign Currency Risk
The nature of the bank’s activity requires the bank to deal in many foreign currencies which exposes the bank to
the risk of fluctuation in exchange rates. To minimize this risk, the bank monitors the balancing of foreign currency
positions according to Central Bank of Egypt instructions in that respect. Note No. (34) of the unconsolidated financial
statements discloses significant foreign currency positions at the Balance Sheet date.
Financial Statement
A. CIB Stand-alone
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
1,081,319,202
684,845,076
1,996,073,908
1,489,221,888
1,875,812,320
1,568,809,552
4- Cash And Due From Central Bank
Cash & Cash Items
Reserve Balance with CBE
(A) Current Accounts
(B) Time Deposits
Total Cash & Due From Central Bank
4,953,205,430
3,742,876,516
5- Due from Banks
(A) Central Bank
Time Deposits
Total Due from central bank
(B) Local Banks
Current Accounts
Time Deposits
Total Due from Local Banks
(C) Foreign Banks
Current Accounts
Time Deposits
Total Due From Foreign Banks
7,391,521,850
120,102,850
7,391,521,850
120,102,850
49
8,788,772
14,364,909
155,000,000
85,620,000
163,788,772
99,984,909
.
509,054,737
114,797,671
5,717,696,684
5,097,791,983
6,226,751,421
5,212,589,654
Total Due From Banks
13,782,062,043
5,432,677,413
6- Treasury Bills and other Governmental Notes Discountable At the CBE
CBE CD'S
91 Days Maturity
182 Days Maturity
364 Days Maturity
Issuance Discount
Total
-
3,315,000,000
1,313,750,000
152,950,000
748,800,000
137,150,000
970,750,000
544,825,000
3,033,300,000
4,149,925,000
(84,625,681)
(91,179,195)
2,948,674,319
4,058,745,805
Financial Statement
A. CIB Stand-alone
7- Trading Financial Investments
Portfolio Managed By Other Parties
Mutual Funds
Bonds
Shares
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
64,370,759
478,500,215
371,832,610
239,839,987
51,603,627
95,195,095
100,666,274
73,606,841
Total Trading Financial Investments
588,473,270
887,142,138
The Financial Trading Investments are represented as follows :
50
Financial Investments listed in Stock Exchange
216,640,660
647,302,151
Financial Investments Unlisted in Stock Exchange
371,832,610
239,839,987
588,473,270
887,142,138
8- Available for Sale Financial Investments
(A) Shares
Bank's Shares
Corporate Shares
(B) Bonds
Governmental Bonds
Bank's Bonds
Corporate Bonds
5,031
11,046,621
837,747,721
1,108,735,974
855,848,389
1,477,526,784
103,065,708
85,321,689
586,325,158
495,532,444
2,382,992,007
3,178,163,512
Available for sale financial investments are represented as follows :
Financial Investments listed in Stock Exchange
1,301,157,343
1,941,629,448
Financial Investments unlisted in Stock Exchange
1,081,834,664
1,236,534,064
2,382,992,007
3,178,163,512
The market Value of Available for Sale Investments listed in the Capital market reached EGP 1,617,946,351
On December 31, 2007, compared to EGP 2,288,247,619 on December 31,2006
Financial Statement
A. CIB Stand-alone
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
369,367,153
345,178,132
20,979,609,432
17,719,608,802
398,371,745
652,533,908
21,747,348,330
18,717,320,842
(33,299,487)
(6,134,160)
(1,089,969,238)
(1,038,908,021)
9- Loans and Overdrafts
Discounted Bills
Loans & Overdrafts to Customer
Loans & Overdraft to Banks
Unearned Bills discount
Provision For Doubtful Debts
Unearned Interest & commission
(248,554,472)
(207,602,806)
51
Net Loans & Overdrafts
20,375,525,133
17,464,675,855
Dec. 31, 2007
Specific
EGP
General
EGP
Total
EGP
10- Provision For Doubtful Debts
Balance at beginning of the Year
551,958,000
486,950,021
1,038,908,021
Addition during the Year
91,524,201
101,480,050
193,004,251
written off debts recoveries
Foreign currency revaluation diff.
44,472,711
(8,580,249)
-
-
44,472,711
(8,580,249)
679,374,663
588,430,071
1,267,804,734
Usage during the Year
(177,835,496)
-
(177,835,496)
Transferred from specific to general
(10,008,945)
10,008,945
-
Balance at the end of the Year
491,530,222
598,439,016
1,089,969,238
Dec. 31, 2006
Specific
EGP
General
EGP
Total
EGP
Balance at beginning of the year
583,672,503
365,228,009
948,900,512
Addition during the year
53,833,428
121,722,012
175,555,440
written off debts recoveries
Foreign currency revaluation diff.
100,062,106
(1,264,639)
-
-
100,062,106
(1,264,639)
736,303,398
486,950,021
1,223,253,419
Usage during the Year
(228,447,476)
Transferred from provision of contingent liability
44,102,078
-
-
(228,447,476)
44,102,078
Balance at the end of the Year
551,958,000
486,950,021
1,038,908,021
Financial Statement
A. CIB Stand-alone
11- Held to maturity Financial Investments
A- Bonds
Housing Bonds (maturity Dec.2019)
Corporate Bonds
Treasury Bonds
B- Mutual Funds
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
215,000
215,000
411,179,166
789,569,338
-
-
250,000 Osoul Fund Certificates with market value
25,000,000
25,000,000
52
LE 126.17 per certificate
50,000 Istethmar Fund Certificates with market value
5,000,000
5,000,000
LE 139.87 per certificate
25,000 Aman Fund Certificates with market value
2,500,000
2,500,000
LE 126.42 per certificate
443,894,166
822,284,338
The held to maturity Financial Investments are represented as follows :-
Financial Investments listed in Stock Exchange
311,279,817
667,740,018
Financial Investments Unlisted in Stock Exchange
132,614,349
154,544,320
443,894,166
822,284,338
The market value of Held to Maturity Financial Investments reached EGP 337,511,601 on 31 December ,2007, while
reached EGP 672,356,231 on 31 December 2006
Financial Statement
A. CIB Stand-alone
Dec. 31, 2007
EGP
%
Dec. 31, 2006
EGP
%
12- Financial Investments in Subsidiary
and Associated Companies
A- Subsidiary Companies:
CI Capital Holding co. *
275,511,540
%50.09
368,390,000
%67
B- Associated Companies:
Contact for Cars Trading
31,000,000
%38.4
31,000,000
%38.4
Commercial International life insurance co.
32,000,000
%40
32,000,000
%40
Corplease co.
Giro-Nil
Cotecna Trade Support
Haykala For Investment
Royal & Sun Alliance
Egypt Factors
18,400,000
%40
12,240,000
%40
-
-
12,390,000
%30
53
48,750
%40
48,750
%40
600,000
%40
600,000
%40
-
-
10,872,000
%20
3,763,646
%39
3,895,710
%39
International. Co. for Appraisal & Collection.
400,000
%40
400,000
%40
International Co. for Security & Services
4,000,000
%40
4,000,000
%40
365,723,936
475,836,460
The Financial Investments in subsidiary companies are
represented as follows :-
Financial Investments listed in Stock Exchange
275,511,540
-
Financial Investments Unlisted in Stock
Exchange
90,212,396
475,836,460
365,723,936
475,836,460
* According to the shareholders agreement dated 29. october 2006 :
- CIB share will be diluted to 47.5% after excuting of a shareholders swap.
- The company is jointly controled by CIB and other investores.
Financial Statement
A. CIB Stand-alone
Investments
value EGP
Paid
EGP
Remaining
EGP
13-Capital Commitments (Financial Investments):
The capital commitments for the financial investments reached on
the date of Financial position EGP 251,673,787 as follows :
Available for sale Financial investments
424,746,619
184,608,711
240,137,908
Financial Investments in subsidiaries co.
34,748,275
23,212,396
11,535,879
54
14- Debit Balances and Other Assets
Accrued Interest receivable
Prepaid Expenses
Advances for Purchase of Fixed Assets
Assets Acquired for Settlement of Debts
Accounts receivable & Other Assets
Accrued Balances of Customers Loans *
Deduct
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
460,512,142
52,588,918
204,554,366
29,361,646
275,561,186
241,625,336
286,829,442
28,645,872
154,574,895
78,927,129
271,731,041
252,458,000
1,264,203,594
1,073,166,379
Provision for General Risk & Risk Insurance **
(243,638,021)
Total Debit Balances and Other Assets
1,020,565,573
(251,458,735)
821,707,644
* These balances carried forward from previous year represent certain advances to customers that were made at
one of the branches in violation of the bank's standard operating procedures, resulting in reclassifying these balances
under "other debit balances". Conservative provisions were adequately reallocated from other provisions to meet the
relevant operation risk
** Refer to Note No. 20.
Financial Statement
A. CIB Stand-alone
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Financial Statement
A. CIB Stand-alone
16- Due to Banks
(a) Central Bank
- Current Accounts
- Time Deposits
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
80,028,494
20,044,409
2,012,792,500
867,616,000
Total Due to Central Bank
2,092,820,994
887,660,409
56
(b) Local Banks
- Current Accounts
- Time Deposits
Total Due to Local Banks
(c) Foreign Banks
- Current Accounts
- Time Deposits
24,932,808
15,860,437
28,480,310
107,541,554
53,413,118
123,401,991
199,834,891
201,260,025
31,013,432
201,695
Total Due to foreign Banks
230,848,323
201,461,720
Total Due to Banks
2,377,082,435
1,212,524,120
17- Customers' Deposits
- Demand Deposits
- Time & Notice Deposits
- Saving & Deposit Certificates
- Saving Deposits
- Other Deposits
11,586,418,467
8,836,825,720
13,622,910,338
11,033,225,620
5,957,646,007
5,190,298,212
6,517,256,544
5,349,962,762
1,830,308,636
1,189,914,884
Total Customer Deposits
39,514,539,992
31,600,227,198
18- Credit Balances and Other Liabilities
Accrued Interest Payable
Accrued Expenses
Accounts Payable
Income Tax
Other Liabilities
Total Credit Balances
And Other Liabilities
Financial Statement
A. CIB Stand-alone
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
140,677,147
109,691,056
31,856,339
34,131,526
387,694,032
569,480,973
167,662,101
82,305,727
45,972,518
48,025,294
773,862,137
843,634,576
57
19- Long Term Loans
F.I.S.C.
K.F.W
UNIDO
Rate
%
Maturity date
Maturing
through
next year
Balance as of
Dec-07
Balance as of
Dec-06
7
3-5 years
40,125,600
40,565,200
-
9-10.5
10 YEARS
4,733,269
15,195,955
9,461,379
1
2011
2,866,393
8,038,908
10,483,577
Ministry of Agriculture
(F.S.D.P)
Ministry of Agriculture (V.S.P)
Social Fund
Total
3.5 - 5.5
depends on
maturity date
3.5 - 5.5
depends on
maturity date
3 months T/D
or 9% which
more
3-5 years
54,935,674
92,594,906
70,617,084
3-5 years
10,000
10,000
30,000
2010
1,900,000
4,951,250
8,574,821
104,570,936 161,356,219
99,166,861
Financial Statement
A. CIB Stand-alone
58
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Financial Statement
A. CIB Stand-alone
21- Shareholders Equity
(a) Capital
• The Authorized Capital reached EGP 5000 Million according to the Extraordinary General
Assembly decision on 19,March,2006.
• Issued and Paid - in capital reached to EGP 1950 Million divided to 195 Million shares with par
value EGP 10 per each.
• The Extraordinary General Assembly approved in the meeting of June,26,2006 to Activate a
motivating and rewarding program for the bank's employees & managers through employee
share ownership plans (ESOPs) by issuing a maximum of 5% of issued and paid-in capital at par
value ,through 5 years starting 31,Dec 2006 and delegated the Board of Directors to establish the
rewarding terms & conditions and increase the paid in capital according to the program.
(b) Reserves
• According to the bank statues 5% of net profit is to increase legal reserve until reaches 50% of
the bank's issued and paid -in capital
• Concurrence of Central Bank of Egypt for usage of Special Reserve is required.
• According to CBE regulations, a reserve has been formed for difference revaluation for financial
investment (available for sale) in foreign currency for preceding years (up to 2002) , and this
reserve is used in case of sale or decrease in the value of that investment , and the income
statement will be carried with the difference according to the issued instruction for such matter.
59
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
22- Contingent & Commitments Liabilities
Letters of Guarantee
8,710,811,993
5,636,795,144
Letters of Credit ( import & export )
2,233,007,892
865,777,545
Customers Acceptances
616,046,795
418,344,500
Forward Foreign Exchange contracts (bought)
2,315,808,497
1,353,283,099
Forward Foreign Exchange contracts (sold)
(2,314,413,012)
(1,352,168,802)
Swap Deals (bought)
Swap Deals (sold)
Option (bought)
Option (sold)
Total
2,031,770,686
1,048,742,044
(2,064,022,142)
(1,105,929,945)
4,040,915
60,744,244
(4,040,915)
(60,744,244)
11,529,010,709
6,864,843,585
Financial Statement
A. CIB Stand-alone
23-Foreign Exchange Profits (losses)
Profit from dealing with fore-
ign currencies
Profit (loss) of revaluation of Monetary
assets and Liabilities *
Profit (loss) of Forward deals
revaluation
Profit revaluation of options
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
155,304,325
103,752,327
13,024,355
(841,440)
200,397
3,094,818
1,254,271
787,429
60
Total
167,687,637
108,888,845
* Include an increase of EGP 29,843,292 due to the foreign currencies revaluation differences of the financial
trading & available for sale investments by EGP 5,101,086 & EGP 24,742,206 respectively against decrease in
financial investments revaluation differences' items in income statement .
24- Profits From Selling Financial Investments in Subsidiaries
Include EGP 148,393,558 from selling 9,287,846 shares of CIB'S stake in CI.Holding Co.
25- Other Financial investments revaluation differences
Available for sale financial
investments
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
4,185,378
(15,812,507)
Total
4,185,378
(15,812,507)
Assets (liabilties)
Dec. 31, 2007
EGP
Assets (liabilties)
Dec. 31, 2006
EGP
26- Deferred tax assets and liabilities
Recognized deferred tax assets (liabilities)
Deferred tax assets and liabilities are
attributable to the following:
Deferred tax
Fixed assets depreciation
(22,155,045)
(19,762,207)
Other provisions(excluded loan loss
& contingent liabilities and income tax provisions)
48,952,228
50,517,106
Other items(other investments revalua-
tion difference)
Reserve for employee stock ownership
plan (ESOP)
Total deferred tax
assets(liabilities)
20,190,375
9,877,820
5,831,917
52,819,475
40,632,719
Financial Statement
A. CIB Stand-alone
Last 12 months
Dec. 31, 2007
EGP
Last 12 months
Dec. 31, 2006
EGP
1,387,888,122
878,722,012
20%
20%
277,577,624
175,744,402
(9,606,764)
9,773,223
(139,463,112)
(127,760,292)
26,967,598
18,919,914
155,475,345
76,677,248
61
11.20%
8.73%
1,232,412,777
802,044,764
(18,486,192)
(12,030,671)
(123,241,278)
(80,204,476)
27- Reconciliation of effective tax rate
Profit Before Tax
Tax Rate
Income tax
Add / (Deduct)
Non-deductible expenses
Tax exemptions
Effect of provisions
Income tax
Effective tax rate
28- Earning per share
Net profit for the year
Board members’ bonus
Staff profit sharing
Shareholders' share in profits
1,090,685,308
709,809,616
Number of shares
Earning per share
29- Share-Based Payments:
195,000,000
195,000,000
5.59
3.64
«According to the extraordinary general assembly meeting on June 26, 2006 , the bank actived a new employees
share ownership plan (ESOP) scheme and issued equity-settled share-based payments. Such employees should
complete a term of 3 years of service in the bank to have the right in ordinary shares at face value (right to share)
that will be issued on the vesting date, otherwise such grants will be forfeited. Equity-settled share-based payments
are measured at fair value at the grant date, and expensed on a straight-line basis over the vesting period (3 years)
with corresponding increase in equity based on estimated number of shares that will eventually vest. the fair value
for such equity insturments measured by use of Black-Scholes pricing model.
Details of the rights to share outstanding during the period are as follows:
Outstanding at the beginning of the period
Granted During the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at the end of the period
The estimated fair value of the Equity insturment (Right to share) granted is EGP 45.82 .
-
1,909,350
-
-
-
1,909,350
Number of Shares
Totaling LE 29,159,584 at the end of Dec. 2007
Financial Statement
A. CIB Stand-alone
30- Assets & Liabilities Maturities
Assets
Cash and Due from Central Bank
Due from Banks
Treasury Bills and other Notes Discountable at the CBE
62
Trading Investments
Available for sale investments
Customers' Loans & Overdrafts
Banks' Loans & Overdrafts
Held to maturity Investments
Investments in subsidiary companies
Maturity
Within one year
Maturity
Over One Year
4,953,205,430
13,782,062,043
3,033,300,000
588,473,270
2,382,992,007
-
-
-
-
-
9,858,027,721
11,242,394,392
220,529
398,151,216
-
-
443,894,166
365,723,936
Debit Balances and Other Assets
1,020,565,573
-
Liabilities
Due to Banks
Customer Deposits
Long Term Loans
35,618,846,573
12,450,163,710
2,377,082,435
-
32,819,825,756
6,694,714,236
104,570,936
56,785,283
Credit Balances and Other Liabilities
773,862,137
-
36,075,341,263
6,751,499,520
31- Interest Rate
• The average interest rates applied for Assets and Liabilities during the Year are 6.78 % & 3.91 %
Respectively.
32- Tax Status
• The bank's corporate income tax position has been examined and settled with the Tax
Authority from the start up of operations up to the end of year 1984.
• Corporate income tax for the years from 1985 up to 2000 were paid according to the Tax appeal
Committee decision and the disputes are under discussion in the court of law.
• The bank's corporate income tax position has been examined and settled with the Tax
Authority from 2001 up to 2002 .
• Corporate income tax for the years from 2003 up to 2004 were paid according to the internal
Committee decision and the final settlement is under discussion with the tax apeal committee.
• The bank pays salary tax according to concerning domestic regulations and laws,
and the disputes are under discussion in the court of law.
• The bank pay stamp duty tax according to concerning domestic regulations and laws,
and the disputes are under discussion in the court of law.
33- Distribution of Assets, Liabilities and Contingent Accounts
Assets
1- Due From Banks
2- Loans & Overdrafts
Agriculture Sector
Industrial Sector
Trading Sector
Services Sector
Household Sector
Other Sectors
Financial Statement
A. CIB Stand-alone
Local Currency
Foreign Currency
7,555,310,622
6,226,751,421
61,593,282
8,709,754,272
954,041,289
%
.3
40.
4.4
8,112,056,815
37.3
2,063,672,092
1,846,230,580
9.5
8.5
Total Loans & Overdrafts (Including unearned interest)
21,747,348,330
100
Unearned Discounted Bills
Provision for Doubtful Debts
Unearned Interest & Commission
Net Loans & Overdrafts
Liabilities
1- Due to Banks
2- Customers' Deposits
Agriculture Sector
Industrial Sector
Trading Sector
Services Sector
Household Sector
Other Sector
Total Customers' Deposits
Contingent Accounts
Letters of Guarantee
Letter of Credit ( import & export )
Customers Acceptances
(33,299,487)
(1,089,969,238)
5.0
(248,554,472)
20,375,525,133
Local Currency
Foreign Currency
49,339,486
2,327,742,949
65,997,581
5,142,043,546
2,414,487,913
7,661,870,572
20,526,954,379
3,703,186,002
39,514,539,993
%
.2
13.
6.1
19.4
51.9
9.4
100
Local Currency
Foreign Currency
2,684,248,902
6,026,563,091
21,925,488
2,211,082,404
103,283,915
512,762,880
Forward Foreign Exchange contracts (bought)
298,533,897
2,017,274,600
Forward Foreign Exchange contracts (sold)
(4,427,418)
(2,309,985,594)
Swap Deals (bought)
Swap Deals (sold)
Option (bought)
Option (sold)
-
2,031,770,686
(817,334,150)
(1,246,687,992)
-
-
4,040,915
(4,040,915)
2,286,230,634
9,242,780,075
63
64
Financial Statement
A. CIB Stand-alone
34- Main Currencies Positions
Egyptian Pound
US Dollar
Sterling pound
Japanese Yen
Swiss Franc
Euro
35-Mutual Funds
(1) Osoul Fund
Dec. 31, 2007
in thousand EGP
Dec. 31, 2006
in thousand EGP
(13,959)
(56,955)
(389)
(377)
821
14,449
5,550
(54,691)
2,408
27,721
369
14,894
•
•
•
•
The bank established an accumulated return mutual fund under license no.331 issued from Capital Market
Authority on 22/02/2005. CI Assets Management Co.- joint stock co - manages the fund.
The number of certificates reached 57,068,881 with redeemed value LE 7,200,380,716.
The market value per certificate reached EGP 126.17 on 29/12/2007.
The Bank portion got 3,083,666 certificates with redeemed value EGP 389,066,139 .
(2) Istethmar Fund
•
•
•
•
The bank established the second accumulated return mutual fund under license no.344 issued from Capital
Market Authority on 26/02/2006. CI Assets Management Co.- joint stock co - manages the fund.
The number of certificates reached 2,257,365 with redeemed value LE 315,737,643.
The market value per certificate reached EGP 139.87 on 29/12/2007.
The Bank portion got 115,132 certificates with redeemed value EGP 16,103,513.
(3) Aman Fund ( CIB & Faisal Islamic Bank Mutual Fund)
•
•
•
•
•
The bank & Faisal Islamic Bank established an accumulated return mutual fund under license no.365 issued
from Capital Market Authority on 30/07/2006. CI Assets Management Co.- joint stock co - manages
the fund.
The number of certificates reached 1,021,976 with redeemed value LE 129,198,206.
The market value per certificate reached EGP 126.42 on 29/12/2007.
The Bank portion got 26,571 certificates with redeemed value EGP 3,359,106.
36-Transactions With Related Parties
All Banking transactions with related parties are conducted in accordance with the normal banking practices and
regulations applied to all other customers without any discrimination.
Due from Banks
Loans & Overdrafts
Investment in subsidiary companies
Due to banks
Customer Deposits
Contingent Accounts
EGP
-
499,579,973
365,723,936
-
171,610,151
25,000,000
Financial Statement
A. CIB Stand-alone
Income
Expenses
Contact Co.
16,823,303.12
983,078.53
International Co. for Security & Services
983,078.53
3,033,819
International. Co. for Appraisal & Collection.
-
566,161.67
Corplease co.
54,969,523.64
10,051,223.24
Commercial International life insurance co.
860,674.26
3,170,677.27
Commercial International Brokerage co.
1,270,906
2,602,489
37- Comparative Figures
The Comparative Figures are amended to confirm with the reclassification of the current year and General Assembly
held in 19th of March, 2007 decisions, for ratifying the Appropriation account of year 2006.
65
Financial Statement
B. Consolidated CIB & CI-CH
Integrity
Financial Statement
B. Consolidated CIB & CI-CH
67
Financial Statement
B. Consolidated CIB & CI-CH
Consolidated Balance Sheet as of Dec. 31, 2007
Assets
Cash & Due From Central Bank
Due From Banks
Treasury Bills and other Notes Discountable at the CBE
Trading Financial Investments
Available for Sale Financial Investments
Brokers Debit Balances
Reconcilation accounts-Debit Balances
Note No.
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
(4)
(5)
(6)
(7)
(8)
4,953,205,430
3,742,876,516
13,883,232,504
5,732,124,959
2,951,621,063
4,063,410,070
683,832,861
901,082,369
2,389,267,275
3,185,837,471
122,917,170
29,844,377
21,108,870
7,582,500
Loans & Overdrafts (Net Of Provision for Doubtful Debts)
(9&10)
20,375,525,133
17,464,380,824
68
Held to Maturity Financial Investments
Financial Investments in Associated Co.
Debit Balances & Other Assets
Goodwill
Deferred Tax
Fixed Assets (Net)
Total Assets
Liabilities & Shareholder's Equity Liabilities
Liabilities
Due to Banks
Customers Deposits
Brokers-Credit Balances
Reconcilation accounts-Credit Balances
Credit Balances & Other Liabilities
Long Term Loans
Other Provisions
Total Liabilities
Shareholders' Equity
Issued & Paid-in Capital
Reserves
(11)
(12)
(14)
(15)
(27)
(16)
(17)
(18)
(19)
(20)
(21)
443,894,166
822,284,338
90,714,548
108,060,063
1,035,176,214
925,039,945
140,613,801
23,118,175
51,900,192
40,497,075
620,238,883
506,815,866
47,763,248,110
37,552,954,548
2,378,613,378
1,212,600,638
39,476,052,841
31,567,391,935
162,358,363
147,780,532
1,292,008
798,512,196
801,194,034
161,356,219
99,166,861
397,849,636
342,342,201
43,376,034,641
34,170,476,201
1,950,000,000
1,950,000,000
1,117,015,372
575,072,726
Reserve for employee stock ownership plan (ESOP)
(30)
29,159,584
Minority Interest
Total Shareholders' Equity
Net Profit of the Year
Total Shareholders' Equity & Net Profit
5,263,160
5,825,182
(22)
3,101,438,116
2,530,897,908
1,285,775,353
851,580,439
4,387,213,469
3,382,478,347
Total Liabilities & Shareholders' Equity
47,763,248,110
37,552,954,548
Contingent & Commitments Liabilities
(23)
11,528,985,664
6,864,843,585
The Accompanying Notes are an integral part of the Financial Statements " Auditors Report Attached " .
Financial Statement
B. Consolidated CIB & CI-CH
Consolidated Income Statement as of Dec. 31, 2007
Note No.
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
Interest Received from Clients & Banks
2,593,957,148
1,749,323,991
Interest Received from Treasury Bills & Bonds
404,398,106
568,023,867
Deduct
Interest Paid to Clients & Banks
(1,797,842,883)
(1,375,481,400)
Net Interest Income
1,200,512,371
941,866,458
Banking Fees & Commissions
Shares Dividends
Foreign Exchange Profits
665,185,633
441,311,795
71,536,293
49,790,772
(24)
167,845,005
108,916,719
Profits From Selling Financial Investments
174,663,447
145,618,186
Profits From Dispose part of Subsidiaries
(25)
148,393,558
Trading Financial Investments Revaluation Differences
8,210,793
16,534,014
69
Other Income
Profit of acquiring
Total Fee Income
43,362,321
98,205,425
25,573,096
1,279,197,050
885,950,007
Net Operating Income
2,479,709,421
1,827,816,465
Deduct
Provisions
(250,988,033)
(194,312,750)
Other Financial Investments Revaluation Differences
(26)
4,185,378
(15,812,507)
General & Administrative Expenses & Depreciation
(697,705,207)
(619,316,387)
Other Expenses
Net Operating Profits
Non_Operating Income
Net Profit Before Tax
Income Tax
Deferred Tax
Net Profit After Tax
Distripute by
Minority Interest
CIB Shareholders' Equity
Earning Per Share
(77,832,699)
(63,653,792)
(1,022,340,561)
(893,095,436)
1,457,368,860
934,721,029
1,269,870
418,000.00
1,458,638,730
935,139,029
(28)
(181,576,439)
(89,552,254)
(28&27)
11,459,368
7,048,958
1,288,521,659
852,635,733
2,746,306
1,055,294
1,285,775,353
851,580,439
(29)
5.84
3.86
Financial Statement
B. Consolidated CIB & CI-CH
70
Consolidated Cash Flow as of Dec. 31, 2007
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
Cash Flow From Operating Activities
Net Income before tax
1,458,638,730
935,139,031
Adjustments To Reconcile Net Income To Net Cash Provided by operating activities
Depreciation
Provisions (Addition during the Year)
122,518,015
93,764,839
250,917,567
194,312,750
Trading financial investments evaluation differences
(8,210,793)
(16,534,014)
Other financial investments evaluation differences
(4,185,378)
93,007,586
Utilization Of Provisions (except provision for doubtful debts)
(330,276,044)
Provisions No Longer Used
(7,036,600)
FCY revaluation Differences of Provisions Balances except doubtful debts
(1,904,981)
(333,197)
Gains From Selling Fixed Assets
(1,269,870)
(418,000)
Profit From Selling financial Investments
(174,663,447)
(145,618,187)
Profits From Dispose part of Subsidiaries
(148,393,558)
Income tax paid
FCY revaluation diff.of Long Term Loans
(80,317,367)
(34,049,494)
1,733,674
1,928,090
Reserve for employee stock ownership plan (ESOP)
29,159,584
Profit of acquring
(25,573,096)
Operating Profits Before Changes in Operating Assets & Liabilities
1,436,985,576
765,350,264
Net Decrease (Increase ) in Assets
Due From Banks
(7,961,652,630)
(1,983,839,488)
Treasury Bills and other Notes Discountable at the CBE
2,268,535,711
(656,003,063)
Trading financial Investments
225,460,301
954,581,137
Available for sale financial investments
1,123,421,877
(950,151,108)
Loans & Overdrafts
Debit Balances & Other Assets
Net Increase (Decrease) In Liabilities
Due to Banks
Customers Deposits
Credit Balances & Other Liabilities
(3,054,288,046)
(3,591,382,916)
(213,637,494)
(453,977,899)
1,166,089,258
492,920,535
7,875,825,643
6,697,133,902
(84,436,632)
(280,217,017)
Net Cash Provided from Operating Activities
2,782,303,563
994,414,347
Financial Statement
B. Consolidated CIB & CI-CH
Consolidated Cash Flow as of Dec. 31, 2007
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
Cash Flow From Investment Activities
Sale (Purchase) of subsidiaries & associated companies
15,148,088
4,345,553
Prepaid for Fixed Assets , Premises and Fittingout of Branches
(284,632,707)
(272,125,579)
Redemption Of Held to maturity financial Investments
378,390,172
276,026,346
Cash results from acquisition
77,473,483
Financial Investments in Subsidiary (Goodwill)
(117,495,626)
Net Cash (Used in ) Investment Activities
(8,590,073)
85,719,803
Cash Flow From Financing Activities
Increase in Long-Term Loans
Dividends Paid
Reserve for financial investments revaluation Diff.
Current Shareholders Debit
Capital Paid
71
60,455,684
(1,032,231)
(310,359,381)
(200,165,754)
-
-
-
-
-
181,610,000
Net Cash (Used in) Financing Activities
(249,903,697)
(19,587,985)
Net cash & cash equivalent changes
2,523,809,794
1,060,546,165
Beginning Balance of cash & cash equivalent
4,355,564,286
3,295,018,121
Cash & Cash Equivalent Balance At the End of the year
6,879,374,080
4,355,564,286
Cash & Cash Equivalent are Represented as Follows :
Cash and Due from Central Bank
Due from Banks
4,953,205,430
3,742,876,516
13,883,232,504
5,732,124,959
Treasury Bills and other Notes Discountable at the CBE
2,951,621,063
4,063,410,070
Due from Banks (Time Deposits)
(13,265,167,463)
(5,410,447,905)
Treasury Bills with maturity more than three months
(1,643,517,454)
(3,772,399,354)
Total Cash & Cash Equivalent
6,879,374,080
4,355,564,286
Financial Statement
B. Consolidated CIB & CI-CH
72
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Financial Statement
B. Consolidated CIB & CI-CH
Notes to Consolidated Financial Statement as of December 31, 2007
(1) Organization and Activities
A) Commercial International Bank (Egypt) S.A.E.
It was formed as a joint stock company on August 7th, 1975 under the Investment Law No. 43 for 1974.
The Bank is licensed to carry out all commercial banking activities in Egypt through its Head Office and
eighty eight branches, in addition to forty three units.
B) CI Capital Holding Co S.A.E.
It was formed as a joint stock company on April 9th, 2005 under the capital market law no. 95 for 1992
and its executive regulations. Financial register no. 166798 on April 4th, 2005 and the company has
been licensed by the capital market authority to carry out its activities under license no. 333 on May
24th, 2006.
As of Dec. 31st, 2007 the bank directly owns 27,551,154 shares represents 50.09% of CI Capital Hold-
ing company’s capital . According to the shareholders’ agreement dated October 10, 2006 effective April
2007.
73
As of December 31st, 2007 CI Capital Holding Co. directly owns the following shares in its subsidiaries:
Company Name
No. of Shares
Ownership%
Indirectly Share%
CIBC Co.
CI Assets Management
Concept Co.
In Search Co
Dynamic Brokerage Co.
Blue Nile Co. for consultant
539.88
445.499
448.500
448.500
3.392.000
50.000
United Brokerage Co. – Dubai
5.000.000
(2) Significant Accounting Policies
A) Basis of Preparing Financial Statements
89.98
89.09
89.70
89.70
99.91
100.00
49.00
45.07
44.63
44.93
44.93
50.04
50.09
24.54
The Financial Statement is prepared in accordance with the Central Bank of Egypt’s Financial Statement
Regulations. And takes into consideration on 27 June 2002, and its adjustment.
B) Basis of consolidation
As CIB owns 50.09% of CI Capital holding which is a jointly control company between CIB and other
investors, CIB management decided to follow the proportion method in preparing the consolidated Finan-
cial Statement with retroactive effect in 2006.
The consolidated financial statements include assets and liabilities and results of operation of the Com-
mercial International Bank-Egypt and its subsidiaries which are controlled by the bank. The basis of the
consolidation are as follows:
- Dropping 50.09% from the balances of mutual deals between CIB and C.I. Capital Holding Co.
- All intra-group balances and transactions have been eliminated
- Minority interest in the equity and results of operation of the subsidiaries controlled by the bank is
shown as a separate item in the consolidated financial statements and is calculated based on their share
in the assets and liabilities of the subsidiaries.
C) Transactions in Foreign Currencies
- The Accounting records of the bank are maintained in Egyptian pounds. Transactions in foreign curren-
cies conducted during the year are recorded at the foreign exchange rates prevailing at the time such
transactions take place.
Assets & Liabilities are revalued at the foreign exchange rates prevailing at the end of year, generated
gain and losses are recorded in “Foreign Exchange Income“ in the income statement.
Financial Statement
B. Consolidated CIB & CI-CH
- Forward contracts are evaluated at the end of the financial year at its fair value on this date using the
forward rates for the remaining periods until maturity dates of these contracts. The revaluation differ-
ences are recorded in “ Foreign Exchange Income “ in the income statement .
- Currency SWAP contracts are recorded on the date of commitment under contingent liabilities ac-
counts. The difference between the two parts of the contract is recorded in other liabilities or other as-
sets as unrealized gain /loss on the date of commitment. The said difference is amortized by crediting /
debiting the “ Foreign Exchange Income“ in the income statement.
- Premium paid for foreign currencies option contracts is recorded in the Balance Sheet under “ Debit
Balances & Other Assets “ such premium is settled in the income statement according to the evaluation
of these contracts at fair value. The difference between premium received and paid concern the custom-
ers hedging option contracts recorded in the Balance Sheet under “ credit balances & other liabilities “
category and settled in “ foreign exchange income” on accrual basis.
D) Realization of Income
74
The bank applies the accrual basis in recording interest received from Loans & Overdrafts, Due from
Banks, Treasury Bills, reverse repos and Bonds. Interest on past due Loans & Overdrafts are not record-
ed on the income statement. Dividends income are recognized when declared .
E) Operating revenues in the holding company:
The activities income of the subsidiaries companies comes as soon as the related service is done, the
services are :
- Consultancy services to the group before the acquisition date.
- Securities trading fees & commission for the customers.
- Management fees as follows:
1- Mutual funds & investment portfolios management fees:
- The management fees are calculated as a percentage “ according to the agreement terms & conditions”
of the net mutual fund assets on a monthly basis and classified in the revenue on an accrual basis.
- Commission calculated as a percentage of net mutual fund assets fair value on a daily basis.
2- Performance fees:
performance fees calculated by specific ratios from customers portfolios annual return in case of it
exceeds a specific return based on the contact terms and its calculated based on the return on the net
assets such fees are excluded from revenues unless they meet the booking terms.
F) Treasury Bills & Other Discountable Notes at CBE
Treasury Bills are recorded at face value. The issuance discount is recorded in Other Liabilities and de-
ducted from the Gross Treasury Bills balance on the Balance Sheet.
G) Repos & (Reverse Repos )Transactions
Repos (Reveres Repos) transactions are eliminated (recorded) on the Balance Sheet under “ Treasury
Bills and Other Notes Discountable at the CBE “ whereas its cost (revenue ) is recorded on the income
statement mate term “interest paid to clients & Banks“ (“interest received from treasury Bills & Bonds “)
H) Evaluation of Trading Investments
- Trading investments including portfolios managed by other party are evaluated at the end of the finan-
cial year at its fair market value and the evaluation difference is recorded in income statement.
- Trading investments not satisfying the trading investment classification condition are evaluated at their
book value. Such value is subject to be reduced in case of a continual decrease based on the compre-
hensive objective study of the latest financial statements for the company issued the securities. The
evaluation difference is recorded in the income statement.
- Mutual fund certificates which have issued by the bank are evaluated at the end of the financial period
at their fair market value and the evaluation difference is recorded in income statement .
75
Financial Statement
B. Consolidated CIB & CI-CH
I) Evaluation of Available for Sale Investments
Available for Sale Investments are evaluated at the lower of cost (taking in consideration the evaluation
of Foreign Currency ) or fair value for each investment and the differences are recorded in “other invest-
ments evaluation differences “ in Income Statement.
In case of increase in the value , such increase is added to the same category within the limit of amounts
previously charged to income statement for previous financial periods.
Except the difference related to prior years which up to the end of the year 2002 should be recorded as
a special reserve in shareholders’ equity. In case of decreases in the investment value its share in the
special reserve will be utilized, and the remaining balance should be transferred to income statement.
In case of selling the investment, its share in the special reserve should be transferred to income state-
ment.
J) Evaluation of Held to Maturity Investments
Bonds purchased from the primary market are evaluated at cost, representing the nominal value adjust-
ed by the issuing premium/ discount which is amortized using the straight line method. The amortization
value is recorded in the interest received from treasury bills and bonds in the income statement.
The same treatment is applied to bonds purchased from the secondary market at a value higher or lower
than the nominal value, and the cost is reduced by the gains related to the previous period of the pur-
chasing date.
In case of downfall of the fair value of each bond the book value shall be adjusted and the difference is
recorded in “other investments revaluation difference” in the income statement. In case of increase in
fair value such increase is added to the same category within the limit of amounts previously charged to
the income statement for previous financial periods.
The book value of foreign currency bonds is amended by the difference resulting from the revaluation
of the foreign currency at the exchange rate prevailing at the evaluation date. Such differences are re-
corded in foreign exchange income in the income statement.
- Mutual fund certificates which must be held till maturity date as the bank is the issuer , are evaluated
at cost and in case of downfall of its fair value the book value is adjusted by such downfall and charged
to “Other Investments Revaluation Difference” in the income statement. In case of an increase in the fair
value. Such increase will be added to the same category in the income statement within the limit of the
amounts previously charged.
K) Investments in Subsidiaries and Associated Companies
These investments are evaluated at cost and in case of downfall of its fair value, the book value of each
investment is adjusted by such downfall and charged to “Other investments evaluation difference“ in the
income statement. In the case of an increase in the fair value. Such increase will be added to the same
category in the income statement within the limit of the amounts previously charged. Also investments
in jointly controlled companies are evaluated at cost.
L) Assets Acquired for settlement of Debits
These Assets are recorded in the Financial Statement under “ debit balances & Other Assets “ at cost
and in the case of a decrease of the fair value of these assets at the Balance Sheet date, the difference
is charged to the income statement and the increase of the fair value should be credited to the income
statement within the limit of amounts charged in previous financial periods.
M) Provision for Doubtful Debts and Contra Accounts
Provision For Doubtful Debts is established on the basis of an appraisal of the identified risk for specific
facilities and loans in addition to one to five percent for General risk based on the risk inherent in any
loan portfolio which is not specifically identified.
Financial Statement
B. Consolidated CIB & CI-CH
Provision for Doubtful Debts is decreased by loans written off and is increased by recoveries of loans
previously written off. In addition to taking all the necessary legal action required, a continuous follow up
is performed for the recovery of all or part of the written-off amounts.
N) Contingent Liability Accounts
Contingent Liability Accounts include transactions in which the Bank is involved as a third party , forward
foreign exchange contracts, SWAP transaction , Option. Such transactions do not represent actual bank’s
assets or liabilities at the Balance Sheet date.
O) Cash & Cash Equivalent
In the Statement of Cash Flow, the Cash and Cash Equivalent item includes balances of cash and due
from Central Bank, current account balances with Banks and Treasury Bills with maturities of three
months.
76
P) Depreciation and Amortization
Depreciation of Fixed Assets ( Except the land ) is calculated on the basis of the estimated useful life of
each asset using the straight-line method.
Improvement and renovation expenses for the bank’s leased premises are amortized over the period of
the lease contract or the estimated useful life whichever is lower.
Q) Income Tax
Income Tax on the profit or loss for the year comprises current and deferred tax is recognized in the
Income statement.
Current tax is the expected tax payable on the taxable income for the year using tax rates enacted or
substantially enacted at the balance sheet date .
Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realization or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realized.
L) Intangible Assets ( goodwill)
The basis of calculation was executed primarily and temporarily at the end of the period using assets or
liabilities or contingent liabilities balances for the acquired company.
(3) Financial Instruments and their risk management
(3/1) Financial Instruments
A) The bank’s financial instruments are represented in the financial Assets and Liabilities. The financial
assets include cash, due from banks, investments and loans to customers and banks . The financial
liabilities include customers’ deposits, due to banks and long-term loans. Financial investments also
include rights and obligations stated under « contingent liabilities and commitments
Note No. (2) of the notes to the financial statements includes the accounting policies applied to measure
and recognize significant financial instruments and the revenues and expenses related thereto.
B) Financial Instruments Fair Value
Using the valuation basis of the bank’s assets and liabilities, as referred to the notes to the Financial
Statements, the financial instruments’ fair value do not substantially deviate from their book values at
the Balance Sheet date. The notes No. (8),(11),(12) are showing the fair value for all investment (ex-
Financial Statement
B. Consolidated CIB & CI-CH
cept Trading Investment) in the date of financial statement.
C) Forward Contract
According to Central Bank of Egypt instruction the bank doesn’t execute deferred contracts except to the necessary
limit of short term transaction to cover its requirements of Foreign currencies or the bank’s customers’ requirements to
fulfill their obligations resulting from short-term transactions.
(3/2) Risk Management
A) Interest rate risk
The value of some financial instruments fluctuate due to the fluctuation in interest rates related thereto. The bank fol-
lows some procedures to minimize this risk such as:
- Correlating between the interest rates on borrowing and lending.
- Determining interest rates in consideration with the prevailing discount rates on various currencies.
- Monitoring the maturities of financial assets and liabilities with its related interest rates.
The notes No. (31 & 32) of the notes to the Financial Statements disclose maturities of the assets and liabilities and
the average interest rates applied to assets and liabilities during the year .
77
B) Credit risk
Loans to customers and Banks, financial Investments (Bonds), due from banks, rights and obligations from others,
are financial assets exposed to credit risk which result in these parties’ inability to repay in part or in full the loan
granted to them at maturity.
The bank adopted the following procedures to minimize the credit risk.
- Preparing credit studies about the customers before dealing with them and determining credit risk rates related
thereto .
- Obtaining adequate guarantees to reduce the risks resulting from insolvency of customers.
- Monitoring and preparing periodic studies about customers in order to evaluate their financial and credit positions
and estimate the required provisions for non - performing loans.
- Distribution of loans portfolio and due from banks over various sectors to avoid concentration of risk.
Note No. (34) discloses the distribution of loans portfolio over various sectors.
C) Foreign Currency Risk
The nature of the bank’s activity requires the bank to deal in many foreign currencies which exposes the bank to the
risk of fluctuation in exchange rates. To minimize this risk, the bank monitors the balancing of foreign currency posi-
tions according to Central Bank of Egypt instructions in that respect. Note No. (35) of the financial statements disclos-
es significant foreign currency positions at the Balance Sheet date.
Financial Statement
B. Consolidated CIB & CI-CH
4- Cash And Due From Central Bank
Cash & Cash Items
Reserve Balance with CBE
(A) Current Accounts
(B) Time Deposits
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
1,081,319,202
684,845,076
1,996,073,908
1,489,221,888
1,875,812,320
1,568,809,552
Total Cash & Due From Central Bank
4,953,205,430
3,742,876,516
5- Due from Banks
78
(A) Central Bank
Time Deposits
Total Due from central bank
(B) Local Banks
Current Accounts
Time Deposits
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
7,391,521,850
120,102,850
7,391,521,850
120,102,850
109,010,305
313,812,455
155,948,929
85,620,000
Total Due from Local Banks
264,959,233
399,432,455
(C) Foreign Banks
Current Accounts
Time Deposits
509,054,737
114,797,671
5,717,696,684
5,097,791,983
Total Due From Foreign Banks
6,226,751,421
5,212,589,654
Total Due From Banks
13,883,232,504 5,732,124,959
6- Treasury Bills and other Governmental Notes Discountable At the CBE
CBE CD'S
91 Days Maturity
182 Days Maturity
364 Days Maturity
Issuance Discount
Reverse Repos
Repos
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
3,317,003,600
1,313,750,000
152,950,000
751,830,445
138,903,150
970,750,000
544,825,000
3,036,330,445
4,153,681,750
(84,709,382)
(91,260,207)
2,951,621,063
4,062,421,543
988,527
2,951,621,063
4,063,410,070
7- Trading Financial Investments
Portfolio Managed By Other Parties
Mutual Funds
Bonds
Shares
Financial Statement
B. Consolidated CIB & CI-CH
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
64,370,759
478,500,215
465,016,024
252,017,934
51,603,627
95,195,095
102,842,451
75,369,125
Total Trading Financial Investments
683,832,861
901,082,369
The Financial Trading Investments are represented as follows :
Financial Investments listed in Stock Exchange
218,816,837
649,064,435
Financial Investments Unlisted in Stock Exchange
465,016,024
252,017,934
79
683,832,861
901,082,369
8- Available for Sale Financial Investments
(A) Shares
Bank's Shares
Corporate Shares
(B) Bonds
Governmental Bonds
Bank's Bonds
Corporate Bonds
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
5,031
11,046,621
844,022,989
1,116,409,933
855,848,389
1,477,526,784
103,065,708
85,321,689
586,325,158
495,532,444
2,389,267,275
3,185,837,471
Available for sale financial investments are represented as follows :
Financial Investments listed in Stock Exchange
1,301,157,343
1,941,629,448
Financial Investments unlisted in Stock Exchange
1,088,109,932
1,244,208,023
2,389,267,275
3,185,837,471
The market Value of Available for sale Investments listed in the Capital market reached EGP 1,617,946,351
On Dec. 31, 2007, compared to EGP 2,288,247,619 on December 31,2006
Financial Statement
B. Consolidated CIB & CI-CH
9- Loans and Overdrafts
Discounted Bills
Loans & Overdrafts to Customer
Loans & Overdraft to Banks
Unearned Bills discount
Provision For Doubtful Debts
Unearned Interest & commission
80
Net Loans & Overdrafts
10- Provision For Doubtful Debts
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
369,367,153
345,178,132
20,979,609,432
17,719,313,771
398,371,745
652,533,908
21,747,348,330
18,717,025,811
(33,299,487)
(6,134,160)
(1,089,969,238)
(1,038,908,021)
(248,554,472)
(207,602,806)
20,375,525,133
17,464,380,824
Specific EGP
Dec. 31, 2007
General EGP
Total EGP
Balance at beginning of the Year
551,958,000
486,950,021
1,038,908,021
Addition during the Year
written off debts recoveries
Foreign currency revaluation diff.
91,524,201
101,480,050
193,004,251
44,472,711
(8,580,249)
-
-
44,472,711
(8,580,249)
679,374,663
588,430,071
1,267,804,734
Usage during the Year
(177,835,496)
-
(177,835,496)
Transferred from specific to general
(10,008,945)
10,008,945
-
Balance at the end of the Year
491,530,222
598,439,016
1,089,969,238
Specific EGP
Dec. 31, 2007
General EGP
Total EGP
Balance at beginning of the year
583,672,503
365,228,009
948,900,512
Addition during the year
written off debts recoveries
Foreign currency revaluation diff.
53,833,428
121,722,012
175,555,440
100,062,106
(1,264,639)
-
-
100,062,106
(1,264,639)
736,303,398
486,950,021
1,223,253,419
Usage during the Year
(228,447,476)
Transferred from provision of contingent liability
44,102,078
-
-
(228,447,476)
44,102,078
Balance at the end of the Year
551,958,000
486,950,021
1,038,908,021
Financial Statement
B. Consolidated CIB & CI-CH
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
215,000
215,000
411,179,166
789,569,338
11- Held to maturity Financial Investments
A- Bonds
Housing Bonds (maturity Dec.2019)
Corporate Bonds
B- Mutual Funds
250,000 Osoul Fund Certificates with market value LE 126.17
per certificate
25,000,000
25,000,000
50,000 Istethmar Fund Certificates with market value LE 139.87
per certificate
5,000,000
5,000,000
81
25,000 Aman Fund Certificates with market value LE 126.42
per certificate
2,500,000
2,500,000
443,894,166
822,284,338
The held to maturity Financial Investments are represented as follows :
Financial Investments listed in Stock Exchange
311,279,817
667,740,018
Financial Investments Unlisted in Stock Exchange
132,614,349
154,544,320
443,894,166
822,284,338
The market value of Held to Maturity Financial Investments reached EGP 337,511,601 on 31 December ,2007, while
reached EGP 672,356,231 on 31 December 2006
Financial Statement
B. Consolidated CIB & CI-CH
12- Financial Investments in Associated Companies
A- Associated Companies:
Contact for Cars Trading
31,000,000
%38.4
31,000,000
%38.4
Dec. 31, 2007
EGP
%
Dec. 31, 2007
EGP
%
Commercial International life insurance co.
32,000,000
Corplease co.
Giro-Nil
Cotecna Trade Support
Haykala For Investment
82
Royal & Sun Alliance
Egypt Factors
International. Co. for Appraisal & Collection.
International Co. for Security & Services
18,400,000
%40
%40
32,000,000
12,240,000
-
-
12,390,000
48,750
%40
48,750
601,252
47.5%
712,703
%50.05
-
-
10,872,000
3,763,646
400,000
4,500,900
%39
%40
45%
3,895,710
400,000
4,500,900
%46.7
%40
%40
%30
%40
%20
%39
%40
90,714,548
108,060,063
The Financial Investments in subsidiary companies are represented as follows :-
Financial Investments listed in Stock Exchange
-
Financial Investments Unlisted in Stock Exchange
90,714,548
90,714,548
-
108,060,063
108,060,063
13- Capital Commitments (Financial Investments):
The capital commitments for the financial investments reached on the date of Financial position EGP 251,673,787 as
follows :
Available for sale Financial investments
424,746,619
184,608,711
240,137,908
Financial Investments in subsidiaries co.
34,748,275
23,212,396
11,535,879
Investments value
EGP
Paid
EGP
Remaining
EGP
14- Debit Balances and Other Assets
Accrued Interest receivable
Prepaid Expenses
Advances for Purchase of Fixed Assets
Assets Acquired for Settlement of Debts
Due From Associated Companies
Accounts receivable & Other Assets
Accrued Balances of Customers Loans *
Deduct
Financial Statement
B. Consolidated CIB & CI-CH
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
460,502,319
287,098,900
54,175,158
28,979,566
204,935,394
155,099,982
29,361,646
78,927,129
-
28,019
288,214,383
373,907,084
241,625,336
252,458,000
1,278,814,235
1,176,498,680
83
Provision for General Risk & Risk Insurance **
(243,638,021)
(251,458,735)
Total Debit Balances and Other Assets
1,035,176,214
925,039,945
* These balances represent certain advances to customers that were made at one of the branches in violation of the
bank's standard operating procedures, resulting in reclassifying these balances under "other debit balances".
Conservative provisions were adequately reallocated from other provisions to meet the relevant operation risk
** Refer to Note No. 21.
15- Intangible Asstes ( Goodwill)
Represent 50.09% (CIB share) of the intangible assets results from CI capital holding Acquired 49% of united broker
Co. Dubai on 17/12/2006 ,100% of Blue Nile Consultant Co. on 27/12/2006 and 99.91% of Dynamic Broker Co on
19/02/2007.
According to the inability of determining the fair value for acquire intangible assets for Dynamic Broker Co only . The
difference between the book value and the fair value of the assets, liabilities and Contingent Liabilities represent EGP
234,569,028 recorded as primarily and temporarily Goodwill at the end of the period till maintaning the final calcula-
tion.
Financial Statement
B. Consolidated CIB & CI-CH
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17- Due to Banks
(a) Central Bank
Current Accounts
Time Deposits
Financial Statement
B. Consolidated CIB & CI-CH
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
80,028,494
20,044,409
2,012,792,500
867,616,000
Total Due to Central Bank
2,092,820,994
887,660,409
(b) Local Banks
Current Accounts
Time Deposits
Total Due to Local Banks
(c) Foreign Banks
Current Accounts
Time Deposits
26,463,751
15,936,955
28,480,310
107,541,554
54,944,061
123,478,509
85
199,834,891
201,260,025
31,013,432
201,695
Total Due to foreign Banks
230,848,323
201,461,720
Total Due to Banks
2,378,613,378
1,212,600,638
18- Customers' Deposits
Demand Deposits
Time & Notice Deposits
Saving & Deposit Certificates
Saving Deposits
Other Deposits
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
11,566,831,688
8,822,372,913
13,612,928,991
11,023,762,189
5,948,726,982
5,181,379,187
6,517,256,544
5,349,962,762
1,830,308,636
1,189,914,884
Total Customer Deposits
39,476,052,841 31,567,391,935
19- Credit Balances and Other Liabilities
Accrued Interest Payable
Accrued Expenses
Accounts Payable
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
140,677,147
109,691,056
34,419,304
35,125,589
576,182,550
604,311,441
Due to Associated & Subsidiries Companies
598,907
514,815
Dividends & Profit Sharing
Other Liabilities
2,300,783
46,634,289
49,250,350
Total Credit Balances And Other Liabilities
798,512,196
801,194,034
Financial Statement
B. Consolidated CIB & CI-CH
20- Long Term Loans
F.I.S.C.
K.F.W
UNIDO
Ministry of Agriculture (F.S.D.P)
Ministry of Agriculture (V.S.P)
86
Social Fund
Total
Rate %
Maturity date
Maturing
through next
year
Balance as of
Dec-07
Balance as of
Dec-06
7
3-5 years
40,125,600
40,565,200
9-10.5
10 YEARS
4,733,269
15,195,955
9,461,379
1
2011
2,866,393
8,038,908
10,483,577
3.5 - 5.5
depends on
maturity date
3.5 - 5.5
depends on
maturity date
3 months T/D
or 9% which
more
3-5 years
54,935,674
92,594,906
70,617,084
3-5 years
10,000
10,000
30,000
2010
1,900,000
4,951,250
8,574,821
104,570,936 161,356,219
99,166,861
Financial Statement
B. Consolidated CIB & CI-CH
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Financial Statement
B. Consolidated CIB & CI-CH
22- Shareholders Equity
(a) Capital
•
•
•
The Authorized Capital reached EGP 5000 Million according to the Extraordinary General Assembly decision
on 19,Mar,2006.
Issued and Paid in capital reached to EGP 1950 Million divided to 195 Million shares with par value EGP 10
per each.
The Extraordinary General Assembly approved in the meeting of June,26,2006 to Activate a motivating and
rewarding program for the bank's employees & managers through employee share ownership plans (ESOPs)
by issuing a maximum of 5% of issued and paid-in capital at par value ,through 5 years starting 31,Dec
2006 and delegated the Board of Directors to establish the rewarding terms & conditions and increase the
paid in capital according to the program.
(b) Reserves
•
•
•
88
According to the bank statues 5% of net profit is to increase legal reserve until reaches 50% of the bank's
issued and paid-in capital.
Concurrence of Central Bank of Egypt for usage of Special Reserve is required.
According to CBE regulations, a reserve has been formed for difference revaluation for financial investment
(available for sale) in foreign currency for preceding years (up to 2002) , and this reserve is used in case of
sale or decrease in the value of that investment , and the income statement will be carried with the differ-
ence according to the issued instruction for such matter .
23- Contingent & Commitments Liabilities
Letters of Guarantee
Letters of Credit ( import & export )
Customers Acceptances
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
8,710,786,948
5,636,795,144
2,233,007,892
865,777,545
616,046,795
418,344,500
Forward Foreign Exchange contracts (bought)
2,315,808,497
1,353,283,099
Forward Foreign Exchange contracts (sold)
(2,314,413,012)
(1,352,168,802)
Swap Deals (bought)
Swap Deals (sold)
Option (bought)
Option (sold)
Total
2,031,770,686
1,048,742,044
(2,064,022,142)
(1,105,929,945)
4,040,915
60,744,244
(4,040,915)
(60,744,244)
11,528,985,664
6,864,843,585
Financial Statement
B. Consolidated CIB & CI-CH
89
24- Foreign Exchange Profits (losses
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
Profit from dealing with foreign currencies
155,304,325
103,752,327
Profit (loss) of revaluation of Monetary assets and Liabilities *
13,181,723
3,122,692
Profit (loss) of Forward deals revaluation
Profit revaluation of options
Total
(841,440)
1,254,271
200,397
787,429
167,845,005
108,916,719
* Include an increase of EGP 29,843,292 due to the foreign currencies revaluation differences of the financial trad-
ing & available for sale investments by EGP 5,101,086 & EGP 24,742,206 respectively against decrease in financial
investments revaluation differences' items in income statement.
25- Profits From Selling Financial Investments in Subsidiaries
Include EGP 148,393,558 from selling 9,287,846 shares of CIB'S stake in CI.Holding Co.
26- Other Financial investments revaluation differences
Available for sale financial investments
4,185,378
(15,812,507)
Total
4,185,378
(15,812,507)
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
27- Deferred tax assets and liabilities
Assets (liabilities)
Dec. 31, 2007
EGP
Assets (liabilities)
Dec. 31, 2006
EGP
Recognized deferred tax assets (liabilities)
Deferred tax assets and liabilities are attributable to the following:
Deferred tax
Fixed assets depreciation
(23,074,328)
(19,897,851)
Other provisions(excluded loan loss & contingent liabilities and income tax
provisions)
48,952,228
50,517,106
Other items(other investments revaluation difference)
20,190,375
9,877,820
Reserve for employee stock ownership plan (ESOP)
5,831,917
Total deferred tax assets(liabilities)
51,900,192
40,497,075
Financial Statement
B. Consolidated CIB & CI-CH
28- Reconciliation of effective tax rate
Profit Before Tax
Tax Rate
Income tax
Add / (Deduct)
Non-deductible expenses
Tax exemptions
Effect of provisions
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
1,458,638,730
935,139,029
20%
20%
291,727,746
187,027,806
(2,453,094)
9,939,347
(146,125,178)
(129,112,668)
26,967,598
18,919,914
90
Settlement of tax for profit before acquiring
(4,271,103)
Income tax
Effective tax rate
29- Earning per share
Net profit for the year
Board member's bonus
Staff profit sharing
170,117,071
82,503,296
11.66%
8.82%
Dec. 31, 2007
EGP
Dec. 31, 2006
EGP
1,285,775,353
851,580,439
(19,286,630)
(12,773,707)
(128,577,535)
(85,158,044)
Shareholders' share in profits
1,137,911,187
753,648,689
Number of shares
Earning per share
30- Share-Based Payments:
195,000,000
195,000,000
5.84
3.86
According to the extraordinary general assembly meeting on June 26, 2006 , the bank actived a new employees
share ownership plan (ESOP) scheme and issued equity-settled share-based payments .Such employees should
complete a term of 3 years of service in the bank to have the right in ordinary shares at face value(right to hare)
that will be issued on the vesting date, otherwise such grants will be forfeited. Equity-settled share-based pay-
ments are measured at fair value at the grant date, and expensed on a straight-line basis over the vesting period
(3 years) with corresponding increase in equity based on estimated number of shares that will eventually vest.
The fair value for such equity insturments is measured by use of Black-Scholes pricing model.
Details of the rights to share outstanding during the period are as follows:
Number of Shares
Outstanding at the beginning of the period
-
Granted During the period
1,909,350
Forfeited during the period
Exercised during the period
Expired during the period
-
-
-
Outstanding at the end of the period
1,909,350
The estimated fair value of the Equity insturment (Right to share) granted is EGP 45.82, Totaling LE 29,159,584
at the end of Dec. 2007
31- Assets & Liabilities Maturities
Assets
Cash and Due from Central Bank
Due from Banks
Treasury Bills and other Notes Discountable at the CBE
Trading Investments
Available for sale investments
Customers' Loans & Overdrafts
Banks' Loans & Overdrafts
Held to maturity Investments
Investments in subsidiary companies
Debit Balances and Other Assets
Liabilities
Due to Banks
Customer Deposits
Long Term Loans
Credit Balances and Other Liabilities
Financial Statement
B. Consolidated CIB & CI-CH
Maturity Within
one year
Maturity Over One
Year
4,953,205,430
13,883,232,504
3,036,330,445
683,832,861
2,389,267,275
-
-
-
-
-
9,858,027,721
11,242,394,392
220,529
398,151,216
-
-
443,894,166
90,714,548
1,035,176,214
-
35,839,292,979
12,175,154,322
91
2,378,613,378
-
32,781,338,604
6,694,714,236
104,570,936
56,785,283
798,512,196
-
36,063,035,114
6,751,499,520
32- Interest Rate
The average interest rates applied for Assets and Liabilities during the Year are 6.78 % & 3.91 % Respectively .
33- Tax Status
(A) Commercial International Bank
•
•
•
•
•
•
The bank's corporate income tax position has been examined and settled with the Tax Authority from the
start up of operations up to the end of year 1984.
Corporate income tax for the years from 1985 up to 2000 were paid according to the Tax appeal Committee
decision and the disputes are under discussion in the court of law.
The bank's corporate income tax position has been examined and settled with the Tax Authority from 2001
up to 2002.
Corporate income tax for the years from 2003 up to 2004 were paid according to the internal Committee
decision and the final settlement is under discussion with the tax apeal committee.
The bank pays salary tax according to concerning domestic regulations and laws, and the disputes are under
discussion in the court of law.
The bank pay stamp duty tax according to concerning domestic regulations and laws, and the disputes are
under discussion in the court of law.
(B) CI Capital Holding Co.
•
•
CI Capital Holding company was established on April 9,2005 according to the law # 95 for year 1992 & its
regulations and as for taxation law the company goes under law # 91 for year 2005 & its regulations.
The company did not receive any tax claim concerning income tax , salaries , and stamp duty .
Financial Statement
B. Consolidated CIB & CI-CH
34- Distribution of Assets, Liabilities and Contingent Accounts
Asset
1-Due From Banks
2- Loans & Overdrafts
Agriculture Sector
Industrial Sector
Trading Sector
Services Sector
Household Sector
Other Sectors
Local Currency Foreign Currency
7,656,481,083
6,226,751,421
61,593,282
8,709,754,272
954,041,289
%
.3
40.
4
8,112,056,815
37.2
2,063,672,092
1,846,230,580
9.5
8.5
92
Total Loans & Overdrafts (Including unearned interest)
21,747,348,330
100
Unearned Discounted Bills
Provision for Doubtful Debts
Unearned Interest & Commission
Net Loans & Overdrafts
Liabilities
1- Due to Banks
2- Customers' Deposits
Agriculture Sector
Industrial Sector
Trading Sector
Services Sector
Household Sector
Other Sector
(33,299,487)
(1,089,969,238)
5.0
(248,554,472)
20,375,525,133
Local Currency Foreign Currency
50,870,429
2,327,742,949
65,997,581
5,142,043,546
2,414,487,913
%
.2
13.
6.1
7,623,383,420
19.3
20,526,954,379
3,703,186,002
52.
9.4
Total Customers' Deposits
39,476,052,840
100
Contingent Accounts
Letters of Guarantee
Letter of Credit ( import & export )
Customers Acceptances
Local Currency Foreign Currency
2,684,223,857
6,026,563,091
21,925,488
2,211,082,404
103,283,915
512,762,880
Forward Foreign Exchange contracts (bought)
298,533,897
2,017,274,600
Forward Foreign Exchange contracts (sold)
(4,427,418)
(2,309,985,594)
Swap Deals (bought)
Swap Deals (sold)
Option (bought)
Option (sold)
-
2,031,770,686
(817,334,150)
(1,246,687,992)
-
-
4,040,915
(4,040,915)
2,286,205,589
9,242,780,075
Main Currencies Positions
Egyptian Pound
US Dollar
Sterling pound
Japanese Yen
Swiss Franc
Euro
36- Mutual Funds
(1) Osoul Fund
Financial Statement
B. Consolidated CIB & CI-CH
Dec. 31, 2007
in thousand EGP
Dec. 31, 2006
in thousand EGP
(13,959)
(56,955)
(389)
(377)
821
14,449
5,550
(54,691)
2,408
27,721
369
14,894
93
•
•
•
•
•
•
•
•
•
•
•
•
The bank established an accumulated return mutual fund under license no.331 issued from Capital Market Author-
ity on 22/02/2005. CI Assets Management Co.joint stock co manages the fund.
The number of certificates reached 57,068,881 with redeemed value LE 7,200,380,716.
The market value per certificate reached EGP 126.17 on 29/12/2007.
The Bank portion got 3,083,666 certificates with redeemed value EGP 389,066,139 .
(2) Istethmar Fund
The bank established the second accumulated return mutual fund under license no.344 issued from Capital Market
Authority on 26/02/2006. CI Assets Management Co.joint stock co manages the fund.
The number of certificates reached 2,257,365 with redeemed value LE 315,737,643.
The market value per certificate reached EGP 139.87 on 29/12/2007.
The Bank portion got 115,132 certificates with redeemed value EGP 16,103,513.
(3) Aman Fund ( CIB & Faisal Islamic Bank Mutual Fund)
The bank & Faisal Islamic Bank established an accumulated return mutual fund under license no.365 issued from
Capital Market Authority on 30/07/2006. CI Assets Management Co.joint stock co manages the fund.
The number of certificates reached 1,021,976 with redeemed value LE 129,198,206.
The market value per certificate reached EGP 126.42 on 29/12/2007.
The Bank portion got 26,571 certificates with redeemed value EGP 3,359,106.
37- Transactions With Related Parties
All Banking transactions with related parties are conducted in accordance with the normal banking practices and regula-
tions applied to all other customers without any discrimination.
Due from Banks
Loans & Overdrafts
Investment in subsidiary companies
Due to banks
Customer Deposits
Contingent Accounts
Contact Co.
International Co. for Security & Services
International. Co. for Appraisal & Collection.
Corplease co.
Commercial International life insurance co.
EGP
499,579,973
90,714,548
-
149,823,536
25,000,000
-
-
-
-
-
-
Income
Expenses
16,823,303
983,079
983,079
3,033,819
-
566,162
54,969,524
10,051,223
860,674
3,170,677
Financial Statement
B. Consolidated CIB & CI-CH
38- Comparative Figures
Consolidated balance sheet comparative figures has been adjusted as follows :
1) According to the shareholders agreement dated October 10,2006 . CIB share in CI Capital Holding has been
adjusted to be 50.09 % instead of 67.6% which was previously used in preparing 2006 consolidated Financial
statement.
2) CIB management decided to follow the proportion method in preparing the consolidated financial statement
with retroactive effect in 2006 comparative figures.
- The Comparative figures were amended to cope with the reclassification of the current year .
94
10 years Historical Pro Forma Financial Statements
95
Branches & Public Units
Branches & Public Units
97
Mohandessein
Branches & Public Units
Total Branches
98
Al Haram
Branches & Public Units
99
Dandy Mall
Mansoura
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