Who We Are
Our Businesses in a Snapshot
Key Financial Highlights
Key Facts
A Strategy that Delivers
Chairman’s Letter
Board of Director’s Report
The Year 2008 in a Nutshell
Global Economic Turbulence- Snapshot
Egypt, the Diversified Economy
Financial Position
Key Growth Drivers
Synergy Realization
Appropriation of Income
Corporate Social Responsibility
Key Financial Highlights
Corporate Governance
2008 Review of Operations
Institutional Banking
Consumer Banking
Support Functions
Risk Management
Credit Risk
Market Risk Management (MRM)
Operational Risk Management
Compliance
Strategic Subsidiaries and Affiliates
Corporate Social Responsibility
Financial Statements
Financial Statement A. CIB Stand-alone
Financial Statement B. Consolidated CIB & CI-CH
10 Years Historical Pro Forma Financial Statement
Branches & Public Units
4
12
18
30
36
48
56
60
131
“The winner is the chef who takes the same ingredients as everyone
else and produces the best results.”
Edward de Bono
08
A N N U A L
R E P O R T
Who We Are
Who We Are
The Bank was established as a joint venture between Chase Manhattan and
National Bank of Egypt (NBE) in 1975 and was originally named Chase National
Bank. Chase divested its ownership stake in 1987 due to a shift in international
strategy, and NBE acquired the stake. Following Chase’s divestiture, the Bank
adopted the name “Commercial International Bank” (CIB). Over time NBE
decreased its stake in CIB, eventually reaching 19%. In early 2006, a Consortium
led by Ripplewood Holdings acquired NBE’s remaining stake.
“A Reliable Business Partner”
CIB 2008 ANNUAL REPORT
WHO WE ARE
07
CIB offers a broad range of products and services to its customers and is a
leading provider of financial services to large, medium and small enterprises,
other institutions, households and high net worth (“HNW”) individuals. In
addition to traditional asset, liability and custodial products, CIB offers wealth
management, securitization, private equity and treasury services, all through
client-centric teams. In addition, CI Capital, CIB’s wholly-owned subsidiary,
offers asset management, investment banking, brokerage and research. We
continuously strive to provide our clients with superior financial solutions to
meet all of their financial needs. We believe this enables us to maintain our
leadership position in the market, while providing a stimulating work environment
for our staff, and delivering strong financial performance for our investors.
Our Businesses in a Snapshot
Corporate Banking
CIB is widely recognized as the best corporate
Bank in Egypt and is committed to being recognized
as one of the best corporate Banks in the region,
serving industry-leading corporate clients, as well
as small and medium-sized businesses.
Structured Finance
CIB's global product knowledge, local expertise
and capital resources make CIB an industry
leader in project finance, syndicated loans and
debt capital markets in Egypt. CIB's project
finance and syndicated loans teams provide
large borrowers with better market access and
greater ease and speed of execution.
Consumer Banking
2008 was a year of significant transition for the
Bank that moved us closer to our objective of
- Personal Loans Focusing on employees of
our Corporate Banking clients and offering
fully secured Overdrafts and Trade Products.
- Wealth Management Offers a wide array of
investment products and services to the
largest base of affluent clients in Egypt.
- Auto Loans Launched in December 2008
and positioned to actively support this growing
market in the coming years.
- Deposit Accounts Numerous account types
to address our clients’ deposit and savings
needs, such as Minor, Youth, Senior Citizen,
Certificate of Deposits, Care Accounts as
well as Current, Savings and Time Deposit
Accounts.
- Residential Property Finance Loans to
finance home purchases, as well as
residential construction, refurbishment and
finishing.
Treasury and Dealing Room Services
Delivering high quality services in cash and
liquidity management, capital markets, foreign
exchange and derivatives.
Investment Banking Services
Through CI Capital, CIB offers existing and
prospective clients a full suite of investment
banking products and services, including
investment banking advisory and execution,
asset management, brokerage and equity
research, providing deep and broad market
knowledge and expertise. CI Capital is
consistently ranked as the leading brokerage
house serving local and international clients
- Credit and Debit Cards Offering a broad
in Egypt.
range of credit, debit and prepaid cards.
Private Equity
Actively participating in select direct
building a full-service, world-class consumer
- Women Banking CIB is the only Bank that
Bank. We offer a wide array of consumer banking
offers a dedicated banking platform designed
investment opportunities in Egypt and across
products, including:
to meet the unique needs of women and
the region.
assist in the promotion and expansion of their
wealth and businesses.
FY 2008 Financial Highlights
FY 08
FY 07
FY 08
FY 07
FY 06
FY 05
FY 04
Consolidated Consolidated
US$ Dec. 08 US$ Dec. 08
Consolidated
Common Share Information
Per Share
- Earning per share (EPS)
- Dividends (DPS)
- Book Value (BV/No of Share)
Share Price *
- High
- Low
- Closing
Shares Outstanding (millions)
Market Capitalization (millions)
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
Provision for credit Losses
- Specific
- General
Total
Non Interest Expense
Net Profits
Financial Measures
Efficiency Ratio
Cost: Income
Return on Average Common Equity
Net Interest Margin (NII /Average Interest Earning Assets)
Return on Average Assets
Regular workforce headcount
Balance Sheet and Off Balance
Sheet information (millions)
Cash resources and Securities (Non. Governmental)
Net Loans and Acceptances
Assets
Deposits
Common Shareholders Equity
Average Assets
Average Interest Earning Assets
Average Common Shareholders Equity
Balance Sheet Quality Measures
Common Equity to Risk-Weighted Assets
Risk-Weighted Assets (billions)
Tier 1 Capital Ratio
Total Capital Ratio
Adjusted capital adequacy ratio
Net impaired loans after general allowances (millions)
Net impaired loans to net loans and acceptance
* Unadjusted to stock dividends
4.84
1.00
19.39
3.71
1.00
20.93
3.64
1.00
17.06
95.00
53.61
91.77
195
17,895
79.00
42.11
57.87
195
11,285
2.77
1.00
13.99
63.50
39.91
58.68
130
7,628
3.44
1.75
18.53
42.25
22.66
38.96
130
5,065
24.7
1.09%
15.8%
4.39
14.1
1.73%
27.5%
3.39
12.5
2.6%
21.3%
1.86
10.0
5.1%
51.4%
2.10
93.40
27.87
37.20
292.5
10,881
7.6
2.69%
18.1%
1.92
3,357
2,446
3,274
2,313
1,741
1,450
1,273
346
49
395
1,330
1,365
37.42%
39.61%
26.47%
4.03%
2.59%
4,014
15,941
26,330
57,462
48,790
5,817
52,684
43,935
5,159
N/A
N/A
N/A
N/A
N/A
(577)
(2.19%)
193
57
250
723
1,298
28.53%
29.56%
32.73%
3.28%
3.02%
3,508
22,484
20,479
47,906
39,476
4,501
42,730
35,827
3,939
N/A
N/A
N/A
N/A
N/A
(448)
(2.19%)
346
49
395
1,076
1,615
28.55%
32.34%
33.12%
4.06%
3.08%
3,792
15,964
26,330
57,128
48,938
5,672
52,396
44,602
4,876
14.93%
38
10.47%
11.72%
14.99%
(577)
(2.19%)
193
57
250
714
1,233
176
17
193
668
802
197
43
240
474
610
224
32
257
444
506
26.90% 34.73% 29.32% 25.82%
30.19% 38.38% 32.72% 34.92%
35.21% 26.49% 23.76% 22.19%
3.10%
1.94%
2,109
3.14%
2.37%
2,477
3.27%
2.90%
3,132
3.50%
2.09%
2,301
22,481
20,479
47,664
39,515
4,081
42,472
36,603
3,813
14,539
17,465
37,422
31,600
3,327
33,906
29,277
3,027
11,718
14,039
30,390
24,870
2,727
29,183
25,619
2,568
10,783
13,394
27,977
23,979
2,409
26,065
22,897
2,280
22
26
9.59%
13.60% 14.14% 13.83% 12.71%
30
19
9.78% 10.03%
10.17%
11.70% 10.84% 11.74% 11.38%
14.70% 13.60% 13.10% 12.50%
(175)
(1.31%)
(113)
(0.81%)
(333)
(1.90%)
(448)
(2.19%)
0.87
0.18
3.49
16.81
5.01
6.69
292.5
1,958
7.6
2.69%
18.1%
1.92
589
62
9
71
194
291
28.55%
32.34%
33.12%
4.06%
3.08%
3,792
2,895
4,776
10,361
8,876
1,029
9,503
8,090
884
14.93%
7
10.47%
11.72%
14.70%
(105)
(2.19%)
604
62
9
71
239
246
28.55%
32.34%
33.12%
4.06%
3.08%
3,792
2,891
4,776
10,422
8,849
1,055
9,555
7,969
936
14.93%
7
10.47%
11.72%
14.70%
(105)
(2.19%)
CIB 2008 ANNUAL REPORT
WHO WE ARE
09
More than
About
50,000
electronic banking
service users
500,000
customers served by
over 3,700 employees
Key Facts
EGP 57
billion in total assets
We serve over
Over
100
“Fortune 500”
companies
500 of Egypt’s
largest corporations
bank with CIB
The ONLY
The ONLY
Egyptian financial
Egyptian financial
institution offering both
institution offering both
commercial and investment
commercial and investment
banking services
banking services
No. 1
Bank in terms of:
- Market Capitalization in the
Egyptian banking sector
- Profitability, achieving 1.37
billion net income
- Loan book and deposit base
among all Egyptian private
sector banks
- Net-worth among all Egyptian
private sector banks
A Strategy that Delivers
At CIB, our customers are our top priority and our continued success depends
on our ability to satisfy their evolving needs. CIB’s outstanding financial
performance in 2008 demonstrates the unique value proposition we offer our
clients. Our unwavering client commitment is the basis upon which we will
continue to provide our shareholders with consistent, high-quality returns.
20.1%
22.2%
23.8%
26.5%
34.0%
33.1%
1.9%
1.9%
2.1%
2.4%
2.9%
3.1%
2003 2004 2005 2006 2007 2008
ROAE
ROAA
We believe a key component of our success is our talented staff. CIB’s ability
to offer employees an attractive work environment, myriad career opportunities
and comprehensive training and feedback allows us to attract and retain the
strongest banking professionals in Egypt. Our employees reciprocate with
dedication to our customers, our community and CIB.
CIB 2008 ANNUAL REPORT
WHO WE ARE
11
Our Vision
To be the best financial institution in
the Middle East and Africa by 2020.
Our Mission
To provide the best financial
solutions to our clients and create
more value for our employees,
shareholders and community.
Our Objective
To grow and help others grow.
Our values
A number of core values embody the way in which CIB employees work together to deliver effective results for our customers and community.
Integrity:
- Exemplify the highest standards of personal
- We strive to lead the Egyptian financial
- We value and respect one another’s cultural
and professional ethics in all aspects of our
services industry to a higher level of
backgrounds and unique perspectives.
business.
performance in serving the millions of
Egyptians who remain underserved or
Respect to the Individual:
- Be honest and open at all times.
unbanked.
- Stand up for one’s convictions as well as
Hard Work:
- We respect the individual whether an
employee, a client, a shareholder, or a
member of the communities in which we live
accept responsibility for one’s own mistakes.
- Discipline and perseverance govern our
and operate.
actions so as to achieve outstanding results
- Comply fully with the letter and spirit of the
for our clients and outstanding returns for
- We treat one another with dignity and respect
laws, rules and practices that govern CIB’s
our stakeholders.
and take time to answer questions and
business in Egypt and abroad.
respond to concerns.
- Say what we do and do what we say.
commitment to our clients.
- We firmly believe each individual must feel
- Seeking service excellence guides our
free to make suggestions and offer
Client Focus:
- We work with our clients to reach their current
constructive criticism.
- Our clients are at the center of our activities
goals while anticipating and planning for their
and their satisfaction is our ultimate objective.
future objectives.
- Our success is dependent upon our ability
Teamwork:
to provide the best products and services to
- We collaborate, listen and share information
our clients; we are committed to helping our
openly within CIB and with our partners,
clients achieve their goals and be the best
clients and shareholders.
at what they do.
Innovation:
total corporate image.
- Since our inception as the first joint venture
Bank in Egypt, CIB has been a pioneer in
- There is only one CIB in the eyes of our
- Each one of us consistently represents CIB’s
the financial services industry. We believe
clients.
innovation is a core competitive advantage
and promote it accordingly.
- CIB is a meritocracy, where all employees
have equal opportunity for development and
advancement based only on their merits.
08
A N N U A L
R E P O R T
Chairman’s Letter
“I believe through learning and application of what you learn, you
can solve any problem, overcome any obstacle and achieve any
goal that you can set for yourself.”
Brian Tracy
Chairman’s Letter
Dear Fellow Shareholders,
The year 2008 was historically significant in many respects for CIB. First, the Bank celebrated its 31st year of record earnings in its 33-year history to
maintain its position as Egypt’s most profitable Bank. Strong revenue and profit growth was evident across all business lines, with the exception of CI
Capital, which is currently undergoing a significant restructuring. Corporate Banking, in particular, exhibited strong performance and widened its market
leadership in corporate lending and project finance. The Corporate Bank’s stellar performance enables us to execute our strategy in building other key
business areas, including retail and SME, which are still small but offer tremendous potential. Second, CIB has undertaken and made significant progress
in implementing a number of ambitious initiatives. These include the continued build out of CIB’s Consumer Bank along with the restructuring of global
Bank operations and back office support. In addition, the Bank is in the process of restructuring CI Capital, which involves additional investment and
capacity building to position the enterprise for long-term success. While dedicating significant resources to execute these important initiatives, CIB has
continued to deliver strong growth and profitability.
In 2007, after several years of careful analysis,
the Bank has positioned itself as the premiere
office operations, freeing up staff to focus on
we made the decision to build a world-class
private sector Bank in Egypt, with superior asset
sales and customer service within the branches.
consumer banking platform. Our decision was
quality and measured prudent growth. This is
In addition, the Bank has completed the
made after the market had finally exhibited some
illustrated by the low level of Non-Performing
segmentation of its customer base to enable
signs that warranted our investments. Those
Loans to Gross Loans ratio, which remained at
staff to effectively serve the right customer with
signs included a near-start of the long-awaited
the 3% level at year end.
credit scoring agency, a drop in real interest
the right product/service. The Bank also soft
launched its wealth management business in
rates from the prohibitive levels of few years
The Bank has been vigilant in maintaining
four branches. During the year, CIB expanded
ago, a reversal in the long term decline in real
excellent relationships with its customers. The
its branch network to 152 branches running
disposable household income and many other
experienced and knowledgeable management
more than 472 ATMs.
factors. Our decision was followed by
team has a good understanding of client needs
commensurate organizational changes and the
and market circumstances. These unique
CIB’s management and staff achieved outstanding
recruitment of a new Consumer Banking CEO,
characteristics enabled CIB to thus far withstand
financial and operating results in 2008, despite
who has a vast amount of experience and a long
the current global economic turmoil.
deeply unfavorable global market conditions.
record of achievement in consumer banking in
Throughout the year, CIB has continued to
markets similar to Egypt.
In last year’s letter, the following were set as
implement changes across various business units
our key priorities for the year 2008:
and support areas. In aggregate, we view 2008
The other business line that experienced
• Focus on customer-centric relationship
to be a year of tremendous progress toward
significant reorganization is CI Capital, CIB’s
management to improve service quality.
achieving our long-term objectives.
capital markets business, which includes
investment banking, brokerage, asset
• Build and maintain the widest and most
One of our key operating achievements in 2008
management and research. It became clear to
customer-friendly physical and electronic
was our success in augmenting our skill set with
us at the beginning of 2008 that a wholly-owned
delivery channels and network of all of the
the addition of highly experienced managers
investment bank is the most effective way to
private and multinational banks.
and staff, primarily in the Consumer Banking
deliver a comprehensive product offering and
Segment and Central Operations.
value proposition to our clients, as well as fully
• Continue to upgrade execution, service quality
realize the cross selling potential across the CIB
and customer satisfaction inside the
The negative performance of the Egyptian stock
platform. Hence, in 2008 we acquired 100% of
branches.
our CI Capital subsidiary. During the remainder
market during 2008 was reflective of the global
financial and market turmoil and did not appear
of the year following CIB’s acquisition, CI Capital
• Build the widest product portfolio among the
justified by the country’s strong fundamentals
has made a number of key accomplishments that
Egyptian banks to attract clients who enjoy
and lower financial risks on a relative basis.
should place the business on the path to becoming
one-stop-shopping services, saving both time
Thus far, the financial crisis that began in the
a leading player in investment banking in Egypt.
and money.
US housing market and grew to engulf the global
economy in a deep recession has impacted
Third, CIB remains one of the most stable financial
CIB has made tangible progress implementing
capital markets in emerging economies more
institutions in the region due to its solid financial
these priorities in 2008, and will continue to
severely than the markets of those economies
position, strong capitalization and stringent risk
promote these strategies going forward. The
that were the source of the crisis.
management standards and procedures. In fact,
Bank has centralized nearly all back- and middle-
CIB 2008 ANNUAL REPORT
CHAIRMAN’S LETTER
15
“The past year has undoubtedly been unkind to financial service companies
in developed markets. Emerging market banks and their regulators should
not dismiss this crisis as unrelated to their own situations.”
Chairman’s Letter, CIB Annual Report 2007.
As growth and economic expansion over the
Most of the G7 countries are officially in recession.
economies. The dry corporate credit lines that
long-term in the emerging economies will be
Leading indicators in the US and Europe have
used to finance large companies’ operations
stronger than in the developed economies, we
consistently shown negative change during the
have added new non-financial names to the list
believe accordingly, that emerging markets should
last 12 months. However, we might be sensing
of companies at risk. Those companies are
deliver stronger returns and capital appreciation.
a light at the end of the tunnel, where a barely
mainly operating in the construction, IT and
positive leading indicators’ report for the US
communication and automotive sectors. During
Since the economic domino effect started over
economy was published in December, although
the last quarter of 2008, many multinational
a year and half ago, the world business leaders
not reflected in the current US treasury yield.
companies failed to refinance their long term
continue to face many uncertainties. Economists
debt, to the extent that in some cases, they
and research specialists alike have yet to
Unfortunately, the crisis has gone well beyond
failed to meet their short term obligations, this
determine whether the world economy has
being a global “Financial Institutions” credit
is specifically evident in the automotive sector.
bottomed, or will fall significantly further.
crunch, especially within the G7 and BRIC
Baltic Dry Freight Index
index Jan 4,1985 = 100
Consumer Confidence
number of standard deviations from long-run average
14000
12000
10000
8000
6000
4000
2000
0
2000
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
Japan (ESRI)
Euro Area(EU survey)
U.S. (Conference Board)
2002
2004
2006
2008
2004
2005 2006
2007
2008
The dramatic collapse in global freight rates is a sign of extreme
near-term weakness in global trade flows.
It is unlikely that the ongoing deleveraging would
economy, from crumbling by providing abundant
intervention, significant uncertainty remains
have been as severe without the major capital
liquidity and support. AAA-rated Asset Backed
across virtually all capital markets. Accordingly,
markets shock that occurred following the
securities that were formerly perceived to
most investors and market participants have
collapse of Lehman Brothers in September. In
constitute an investment safe haven are currently
adopted a “wait and see” strategy, particularly
an attempt to stabilize and support the credit
trading with a 500+ bps spread. The global
in markets where credit growth was most heated
markets, Central Banks’ balance sheets have
interbank open market nearly froze following the
during the past few years. Capital market
stretched significantly. In this respect, Central
filing for bankruptcy by Lehman Brothers. While
deterioration has continued into 2009 as the
Banks rushed into saving selective banks, which
these markets experienced a slow return to
depth and breadth of the global
have a direct impact on the welfare of the overall
normalization as a result of Central Bank’s
recession/deleveraging remains unclear.
Central Bank Balance Sheets- Total Assets*
index, end-June 2007=100
Term Interbank Market
3-month Libor/Euribor - overnight index swaps, bps
350
300
250
200
150
100
50
Dec 12 -
coordinated CB
liquidity measures
announced
Mar 17 -
Fed approves
financing of Bear
Stearns purchase
Sep 15 -
Lehman Brothers
files for bankruptcy
400
300
200
100
0
Jun-07
Oct-07 Feb-08 Jun-08 Oct-08
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Fed
ECB Bank of England
U.S.
U.K.
Eurozone
*Assets valued in respective local currencies.
Source: IIF Capital Market Monitor
The current financial crisis has numerous causes,
of 7.2% in 2007/2008. The government is to be
due to falling commodity prices will lead to a
but the lack of long-term planning and mad
commended for its successful efforts to attract
decrease in subsidies allowing the government
scramble for attractive spreads and near-term
both foreign and direct investments. Importantly,
to boost spending without necessarily growing
financial performance were clear factors
the majority of the investments made were
its budget deficit. Recently, the government
precipitating the crisis. The “short-termism” that
directed towards Industrial and Value Adding
announced an EGP 15 billion economic stimulus
seems to have been adopted by the current
sectors amounting to EGP 43 billion. This back
package that will include new infrastructure
generation of business leaders in implementing
log of business startups should help to maintain
projects and other private public partnerships
strategies and producing “novel” products has
reasonable GDP growth rate in the coming year,
to stimulate economic growth.
led to severe systemic damage. We remain
despite considerable global headwinds.
hopeful that future generations of business and
Accordingly, we foresee several positive forces
government leaders will digest the necessary
While trying to assess the coming 12 months
that should help to widen our margins in 2009.
lessons stemming from the current mistakes and
economic outlook, many projections have pointed
The steepening of the yield curve with the short
missteps to avoid these errors in future decades.
to an expected 4 - 5% GDP growth rate in
end dropping on vanishing inflation expectations
2008/09, with a lot of uncertainty prevailing until
and the long end remaining high due to large
As for the Egyptian economic scene, Dr. Nazif’s
we witness positive leading indicators. If achieved,
sovereign debt should help improve our net interest
cabinet has successfully navigated the Egyptian
such a growth rate would be sufficient to help the
margins. Unfortunately, such factors usually occur
economy to another year of strong, broad-based
economy overcome next year’s challenges.
in the context of a slow economy which could
economic growth, achieving real GDP growth
On a positive note, easing inflationary pressures
cause a spike in non-performing loans. Despite
CIB 2008 ANNUAL REPORT
CHAIRMAN’S LETTER
17
these risks, the Bank remains well prepared to
tools should be oriented to address deflationary
face any possible negative performance in the
expectations of businesses and individuals rather
domestic economy or global markets.
than historical inflation indicators. Deflationary
CIB’s strategy for 2009 is three fold;
I. Remain a reliable partner to our existing
customers and a prudent source of support for
expectations could lead to unfavorable economic
companies and consumers in these tumultuous
Due to the CBE’s banking reform program and
contraction. Accordingly, we are expecting cuts
times;
prudent regulatory approach, the Egyptian
in the CBE target rates within the coming months.
Banking sector was nearly immune to the toxic
debt emanating from the US. In addition, the
Once the winds settle down, significant
II. Consolidate our position as the premiere
Bank in Egypt by focusing on asset quality and
liquidity of the banking system acted as a cushion
opportunities across market segments should
monitoring liquidity;
against global liquidity pressures, with its
abound for those banks well positioned to
Loans/Deposits of only 58%. We are looking
capitalize. Banks with strong financial positions
forward to the next phase of the program that
will grow stronger. We believe that in times such
III. Continue building our consumer banking
business, given the significant economy-wide
will entail further requirements for Capital
as these it is paramount to be prudent in
under-penetration of consumer banking relative
Adequacy, Accounting Standards and
maintaining proper asset quality, sufficient
to GDP.
Consolidations. We believe that the CBE’s
liquidity and strong capital ratios. Within the
Monetary Policy Committee (MPC) will be
coming 12 months, businesses should abide by
capable of steering the economy away from any
these policies with zero tolerance for deviations
potential deflationary risk. Monetary policy and
from appropriate risk standards and processes.
Hisham Ezz Al Arab
Chairman and Managing Director
"Nothing stops the man who desires to achieve. Every obstacle is simply a course to
develop his achievement muscle. It's a strengthening of his powers of accomplishment."
Eric Butterworth
08
A N N U A L
R E P O R T
Board of Director’s Report
Board of Director’s Report
Despite worldwide turbulence in the financial sector in 2008, CIB was able
to continue its strong performance and deliver solid results. The following
is a review of the results and of the significant changes and events that
took place during the past fiscal year, ending 31/12/08.
The Year 2008 in a nutshell
CIB aims to maintain its leading market position by continuing to provide high quality service and innovative products. The Bank’s success is ultimately
driven by client satisfaction and retention of highly talented and hard-working employees. In conjunction with its renowned corporate banking franchise,
CIB is dedicated to establishing the leading consumer bank in Egypt, where the Bank currently has the largest branch network amongst private sector
banks, reaching 152 outlets and 472 ATMs in 2008. Moreover, during 2008 CIB introduced new lines of business and undertook organizational
restructuring to address identified service and product gaps. For example, the wealth management services are currently offered in four pilot branches.
Furthermore, the Bank has soft launched both auto and personal loans by the end of 2008. It’s worthy to mention that CIB’s market share from Egypt’s
P.O.S. acquiring business has significantly surged to exceed 20%, up from virtually zero in early 2007.
In addition, the Bank further penetrated the micro finance sector and the SME market, both of which are key contributors to Egypt’s continued economic
development and expansion. A clear example is to leverage on our corporate clients, whereby we attract their bankable suppliers, through our well
developed SME department. The Bank continues to offer its employees the preeminent training programs in Egypt, with updated and specially-tailored
courses to enhance skills, service quality and product knowledge. The Bank continues to make significant investments in its IT infrastructure to
enhance operability and firm wide productivity.
Consistent with its strategic priorities, CIB acquired the outstanding stake in CI Capital Holding in July 2008, making CI Capital a wholly-owned
subsidiary of CIB. CI Capital continues to make progress pursuing its expansion plans within the local market and across the region, capitalizing on
its strategic relationship with CIB. The Bank’s ultimate objective to form Egypt’s premier financial and investment house remains in place.
CIB was again recognized (for the 11th year in a row) by Global Finance as the “Best Bank in Egypt” for its exceptional performance and dedication
in serving its customers. Emerging Markets named CIB “The Best Bank in Egypt”. The Bank’s focused efforts to build its consumer banking business
were rewarded when CIB was selected as “Best Acquiring Bank” in a competition held by Visa Inc. The “Osoul” fund, managed by CIB’s Asset
Management team, was ranked the No.1 money market fund by performance. In addition, CIB, through the Global Securities Services Division, has
become the sole sub-custodian for all Egyptian Depositary Receipt (DR) programs.
CIB maintained its credit rating at BB+/ stable/ B, according to Fitch and S&P, reaffirming the Bank’s sound management and risk control measures.
Unrelenting focus on deepening customer relationships, expanding share of wallet and sound risk management all contributed to the Bank’s success
in increasing its market share in the lending market to 6.56%, up from 5.93% in 2007, while CIB's market share in deposits rose to 6.28%, up from
5.36% in 2007.1
Global Economic Turbulence- Snapshot
Over the past year, the world has experienced the worst financial crisis since the Great Depression. In mid- September, the crisis accelerated with
the collapse of Lehman Brothers, which led to a freezing up of the interbank and credit markets and a steep fall in asset prices across global markets.
The TED spread2 hit a record high, exceeding 300bps as a result of the crisis, reflecting the perception of a high default risk on interbank loans.
1 Market share is based on the latest November 2008 figures.
2 TED spread is the difference between the interest rates on interbank loans and short term US government debt “T-Bills”.
CIB 2008 ANNUAL REPORT
BOARD OF DIRECTOR’S REPORT
21
3-month TED Spread*
U.S. Bank Losses*
percent
7
6
5
4
3
2
1
0
Jun-07
Oct-07 Feb-08 Jun-08 Oct-08
Libor (lhs) Tbill (lhs) TED spread (rhs)
* Spread of US$ Libor over U.S. Treasury bill rate.
Source of data: Capital Market Report; IIF
bps
500
400
300
200
100
0
US$ billions
180
150
120
90
60
30
0
141.8
170.0
Mark-to-market
Credit losses
* Bank of America, Citigroup, Fifth Third, IndyMac, J.P. Morgan, KeyCorp,
National City, Sovereign, U.S. Bancorp, Wachovia, Washington Mutual, and Wells
Fargo. Reported losses since beginning of 2007.
Current estimates of U.S. credit losses range from USD 1-2 trillion (with implied mark-to-market losses in excess of these amounts). With the ongoing
deterioration in the U.S. economy, credit losses are expected to continue to rise. However, a number of positive steps have been taken by governments
worldwide to stabilize the markets. The U.S. Treasury and Federal Reserve have implemented a number of new programs and guarantees to support
the banking sector and credit markets, including the USD 700 billion TARP3 to infuse capital and support financial institutions that suffered severe losses
in the crisis. In addition, financial institutions have been able again to issue U.S. government guaranteed commercial paper (CP) and bonds, enabling
them to raise sufficient funds to refinance their maturing debt. Since the height of the crisis in the Fall, interbank rates in the U.S. and Europe have
continued to fall, suggesting the markets are slowly returning to normalcy. However, much uncertainty and risk remains. Much will depend on how
governments across the globe recapitalize banking sectors, restructure debt levels, stimulate economies and address global trade and capital imbalances.
Bank Stocks
MSCI indices (US$ returns), Jan 1, 2007=100
Cost of Credit Protection for Banks
5-year CDS spread, asset-weighted average, bps
100
80
60
40
20
Jan-07
Jun-07 Nov-07 Apr-08 Sep-08
U.S.
U.K.
Europe
Source: Capital Market Report; IIF
3
Troubled Assets Relief Program
500
400
300
200
100
0
Jan-08
U.S. (Conference Board)
Apr-08 Jul-08 Oct-08 Jan-09
U.S. large banks
U.K.
Europe
Japan
Egypt, the Diversified
Economy
Egypt has been able to maintain GDP growth
In addition, the capital and financial account net inflows significantly grew from USD 0.85 billion in
above 7% in each of the last two years, as a
2007 to USD 7.1 billion in 2008, due to the increase in foreign direct investment. In fact, the capital
direct result of its well-diversified economy. The
account showed a positive balance of USD 2.3 billion for the first time since 2004, as compared to
major contributors to economic growth in FY
a negative balance of USD 39 billion last year.
2007/2008 were tourism (4.2% of GDP, 24.3%
growth), Suez Canal receipts (3.7% of GDP,
FDI inflows/GDP has grown as illustrated in the following diagram:
18% growth), construction (4.5% of GDP, 14.8%
growth) and telecommunications (3.3% of GDP,
14.2% growth)4. Such economic breadth and
diversification is a significant point of strength
in such challenging economic times.
The Egyptian economy is expected to continue
to withstand the storm, while experiencing slower
growth rates, due to a probable decline in tourism
revenues, net exports, foreign direct investment
(FDI) and Suez Canal receipts. GDP is forecast
to grow by 4% in FY 2008/09 driven by local
consumption, FDI and the ability of GoE to
Net FDI Inflows/GDP (%)
8.5
8.1
5.7
4.4
0.6
0.5
0.9
0.5
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
support domestic investment, especially SMEs
Source of data: CBE
and export-oriented businesses.
In 2008, the country’s Balance of Payment (BoP)
Egypt continues to be regarded as a safe place to invest, due to the country’s:
surplus increased by 3% to reach USD 5.4
(a) Attractive demographics and domestic consumption,
In light of the global economic meltdown, FDI is expected to decline in the coming year. However,
billion, with a positive current account balance
(b) Ongoing economic reform,
of nearly one billion dollars. The surplus in the
(c) Diversified economy,
current account is attributable to a growing net
(d) Liquid banking sector,
services balance of 30%, realized despite the
(e) Favorable factors of production and
higher growth witnessed in services outflows.
(f) Geographic location that would enable Egypt to act as an investment hub within the region.
This was due to the surge in Suez Canal receipts
and tourism revenues by 24% and 32%,
One of the drawbacks of the extensive growth in demand seen over the past couple of years has
respectively. Moreover, remittances of Egyptians
been the deterioration of the trade balance, leading to a widening deficit. Moreover, the current
working abroad increased by 35% (rising to USD
global circumstances will likely lead to a downturn in exports and also in the services sectors (tourism,
8.5 billion as of FY 2008).
Suez Canal, remittances). This is a further risk for balancing the accounts. In FY08/09, the current
account is expected to turn into deficit affecting the overall balance of payments surplus and
The trade balance deficit continued its historical
representing one of the main threats in the coming period.
trend, increasing by 44% during the year
2007/08. The surge in import payments of USD
Several measures are being taken in an effort to minimize the spillover effects of the global economic
14.4 billion in 2008 was due to the increase in
turmoil. The government has introduced an economic stimulus package (EGP 10-15 bn) to create
imports of all commodity groups, including
an attractive investment environment, support the industrial sector and, in turn, boost exports. The
intermediate goods and raw materials, as well
package entails the following:
as consumer goods. In addition, the steep rise
in energy prices during the first half of the year
• Boost tax rebates for certain exporters by 50%,
contributed to such rise (average price of oil
USD 98.5 pb during 2008).
• Exempt certain companies from sales tax cut customs duties and reduce import tariffs on certain
capital and intermediary goods to zero percent. (Down from a range of 2-5%),
4
Source: The Financial Monthly, November 2008, Volume 4, No. 1, Ministry of Finance.
CIB 2008 ANNUAL REPORT
BOARD OF DIRECTOR’S REPORT
23
• Provide new financing for technology transfer and industrial training,
The banking sector’s FCY utilization ratio of
69% is a cause for some concern, given the
• Assist companies with storage and distribution costs and freeze electricity and natural gas prices
liquidity pressures related to global financial
at current rates for all factories through the end of 2009 and
crisis and expected economic slowdown.
• Freeze energy prices until the end of 2009. Other measures include a decrease in interest rates
Thus, efficient management of FCY credit
in light of the expected decline in inflation (expected to reach 10-11% during 2009). This estimate
facilities is a priority, given current economic
is based on the fact that 40% of the Egyptian inflationary pressure comes from food and energy
circumstances. Having foreseen this, CIB has
costs, which are rapidly falling worldwide. Accordingly, CIB foresees the CBE easing monetary
implemented conservative credit policies to
policy this year. The likely decline in interest rates should stimulate borrowing and investing
activity in Egypt, particularly among SMEs. In addition, Egypt is one of the largest consumer
markets in the region, due to its large population and growing per capital income. The Egyptian
market possesses tremendous potential for both foreign and domestic investors. Domestic
enforce thorough assessment of various credit
risks including FOREX risk6. In addition, the
Bank has managed to attract a stable FCY
deposit base, mainly through capitalizing on our
investors represent 70% of total investments, reflecting their critical importance to the country’s
strong client relationships throughout the Bank.
economy. Of course, FDIs will continue to be an important factor as a source of economic growth
In this context, CIB recently launched its Wealth
and to maintain a healthy BoP and a stable FX market.
On the macro level, we will continue to monitor a number of factors carefully in 2009: investment
growth, FDIs, Suez Canal receipts, sold touristic nights and remittances.
Management services to cater to the needs of
high net-worth customers.
Over the past year, the country’s retail borrowing
activity increased by 29%, growing from EGP
Egypt’s liquid banking sector, as reflected in a Loans/Deposits ratio of approximately 55.5%, is
63 billion in 2007 to a record EGP 81 billion in
a continued source of economic stability. Domestic liquidity increased by approximately 11.4%
2008, mostly in LCY. Auto loans represent
in 2008, despite the ongoing global economic crisis. Total Deposits rose by 10.7% to reach EGP
approximately 12 to 15% of this year’s new
773 billion in 2008, whereas FCY deposits still comprise approximately 27% of total deposits.
individual borrowings. CIB believes it has chosen
The increase in current liquidity is partly due to depositors’ outlook regarding the continued
the right time to penetrate the consumer finance
decline in inflation, which is leading to a postponement in consumption and a prolonged weak
market with a well-established business platform.
and volatile performance of the stock market.
The country’s recently launched Credit Bureau
“I- Score” should further boost consumer
Total bank credit facilities grew by approximately 13.5%, rising from EGP 378 billion in 2007 to
financing in Egypt, which still represents less
EGP 429 billion in 2008. The growth is mainly attributable to the increase in facilities denominated
than 10% of nominal GDP. The information
in LCY by 11.3%, driven by the rise in the industrial and service sector borrowings by 13.7% and
provided by the newly established I-Score should
1.4%, respectively. The increase in bank finance for these two sectors is in line with the growth
help banks make a better assessment of default
witnessed in value-added and private investments. It is worth noting that there has been an
risk and relative pricing, while maintaining loan
increasing demand for FCY facilities by both sectors, where the growth rate exceeded that of
book quality.
LCY facilities, as seen in following table.
Credit Facilities Growth 2007- 2008
We are living in extraordinary times and the
global problems are certainly affecting Egypt.
However, thus far the government has proven
to be responsive, and has the capabilities to
target continued growth. Whilst the coming year
FCY Facilities
LCY Facilities
is likely to be challenging, CIB is in a strong
Total
Industry
Service
Individuals
18%
18%
5%
95.7%5
11%
14%
1.4%
25.5%
position to capitalize on the opportunities given
Egypt's favorable macro fundamentals. The
country’s populous, domestic consumption-
driven economy and sound financial system
provide Egypt with the opportunity to be a relative
beacon of growth in the midst of a turbulent
global economy.
5
6
Resulting from a very small base for comparison (EGP 3.3 billion in November 2007).
The effect on the customers’ credit worthiness as a result of FX rate fluctuations or FCY funds availability
Financial Position
Preserving a high quality loan portfolio, applying
risk management best practices and complying
30th, 2008, NPAT reached EGP 333 million, an
increase of 1.8% over the same period in 2007.
impairment and amortization of intangibles, on
a consolidated basis the Bank grew by 23%
with the various regulations have always been
This year CIB acquired the remaining 50% stake
compared to 2007 to achieve a NPAT of EGP
entrenched in CIB’s conservative credit culture,
in CICH, resulting in CICH becoming a wholly-
1,588 million.
as reflected below in the Bank’s performance.
owned subsidiary of CIB. As previously
On a consolidated basis, CIB and CICH achieved
mentioned, the NPAT on a consolidated basis
CIB maintained its strong equity base and
EGP 1,370 million Net Profit After Tax (NPAT)
achieved for 2008 was EGP 1,370 million, which
conservative capital adequacy ratio of 11.72%,
respectively for YTD 2008. The Bank, on a stand-
includes the impairment of Goodwill for EGP
providing a solid measure of safety in these times
alone basis, achieved a NPAT for YTD 2008 of
EGP 1,615 million, an increase of 31.01% as
183.6 million based on the third party valuation.
Also, the Bank amortized EGP 33.7 million
of economic uncertainty. Affirming the Bank’s
relative status as a safe store of value, CIB stock
compared to the same period of 2007. Regarding
the period from September 1st to December
intangibles related to the acquisition of CI-CH.
outperformed the Egyptian equity indices during
Without the effect of the previously mentioned
the most severe period of stock market decline.
Comparative Returns
RANGE 8/31/08 - 2/4/09
Period D Daily
157 Day Period
Securities
1 COMI EY Equity
2 CASE Index
3 HERMES Index
Crncy
Prc Appr
Total Ret
Difference
Annual Eq
EGP
EGP
EGP
- 29.18 % - 29.18 % 28.82 %
- 58.00 % - 58.00 %*
- 53.57 % - 53.57 %* 4.44 %
- 55.16 %
-86.70 %
- 83.19 %
COMMERCIAL INTL
CASE 30 INDEX
EGYPT HERMES INDEX
12 SEP
26
10 OCT
24
7 NOV
21
5 DEC
19
2 JAN 09
16
30
(* = No dividends or coupons)
Source: Bloomberg
10
0
-10
-20
-30
-40
-50
-60
-70
The Bank’s NPLs/loans ratio remained stable
that may arise from adverse movements in
reach 4.06% as of December 2008. This
at 3%. Moreover, in line with CIB’s conservative
FOREX, Equities and Interest Rates. The
expansion can be attributed to the Bank’s
credit culture, loan loss provisions reached EGP
conclusion of the aforementioned tests has
effective Asset/Liability management, as well
1.4 billion as of December 2008, increasing by
consistently proved the soundness of the Bank’s
as its large depository base which provides the
approximately 29.2% as compared to 2007.
equity cushion and its well diversified risk profile.
primary source of funding. Moreover, CIB
Consequently, the Bank’s Coverage Ratio of
maintains a favorable mix of deposits, with 44%
194%, reflects CIB’s ability to smoothly absorb
The success of the management strategy is
comprised of lower-cost demand and savings
any unforeseen increases in NPLs.
evident in CIB’s Return on Average Equity
deposits.
(RoAE), which reached 33.12% in 2008, as
Although the Bank has been conservative and
compared to 33.95% in 2007. Return on Average
The Bank’s Cost/Income ratio increased slightly
prudent in its trading book, FOREX and interest
Assets (RoAA) maintained its consistent level
to reach 32.34% as compared to last year’s level
rate exposures, a specialized team has been
of approximately 3%. Diluted Earning per Share
of 30.19%. This was attributable to structural
assigned to monitor the Bank’s market risk.
Market Risk Management (MRM) is in charge
rose by 30.45% to reach EGP 4.84.
changes at CIB, as the Bank continued to build
out its consumer banking business and hired
of quantifying and modeling the Expected Loss
Net Interest Margin (NIM) improved by 0.8% to
close to 1000 employees.
CIB 2008 ANNUAL REPORT
BOARD OF DIRECTOR’S REPORT
25
At the end of December 2008, the CBE
- Providing Personal Loans to customers were
potential customer base for Consumer
announced its amendment to the banking
one of the latest additional services available
Banking products as well as other products
sector’s Financial Reporting Standards. As such,
this year.
new valuation methods relating to Available-for-
and services offered by the Bank’s
subsidiaries, such as insurance, leasing and
Sale, Held-to-Maturity investments and
- Modernization and enhancement of
private equity.
Derivatives have been applied to FYE 2008’s
operations remain top priorities to enable
financial reports. In addition, the comparable
branch staff to focus on better serving
- Supporting CIB’s SME finance business
figures were restated.
customers, while reducing costs, improving
through the establishment of the first private
processing times, and retaining high quality
equity fund, managed by CI-CH to participate
Key Growth Drivers
Last year’s BoD report stipulated that the
standards.
corporate banking business is the main driver
for the Bank’s growth, moreover, major changes
Synergy Realization
Capitalizing on CIB’s strong corporate
in SMEs projects. The fund was a result of
the collaboration between the Industrial
Modernization Centre and CI Capital.
have been achieved in the consumer banking
relationships and broad product and service
- Cooperation between CIB’s Wealth
during 2008 as follows:
offerings, the Bank and its subsidiaries continue
Management (WM) division and CI Capital’s
- Augmenting top and midlevel management,
to focus on cross-selling opportunities as well
Asset Management and Brokerage
including appointing a new CEO of Regional
as expansion opportunities both locally and
companies, providing WM’s affluent
Consumer Banking and recruiting
regionally. In particular, collaboration between
customers with access to unique investment
experienced staff in several critical areas.
CIB and its wholly-owned subsidiary CI-CH has
products.
enormous potential, including:
- Launching new lines of Business, including
- Coordination between CIB’s Corporate
Wealth Management, Auto Loans and payroll-
Banking Group and CI-CH’s investment
Appropriation of Income
The Board of Directors has proposed the
based Personal Loans.
banking unit to provide corporate clients with
distribution of a dividend per share of EGP 1.00.
a broader array of financing alternatives
Moreover, increasing both the Legal Reserve by
- Wealth Management aims to serve CIB’s top
across the capital structure, a comprehensive
EGP 80.75 million, to reach EGP 513.6 million
customers, by offering savings, investment
suite of asset and liability products and
and the General Reserve by EGP 1,056 million,
and insurance products as well as
services, and financial and strategic advice.
to reach EGP 1,463 million will reinforce the
differentiated service.
- CIB’s vast corporate client base offers a new
Bank’s solid financial position as evidenced by a
conservative Capital Adequacy Ratio of 11.72%7
7
Adjusted CAR (including profits attributable to shareholders) reached 15%
Corporate Social Responsibility (CSR)
Given the sense of duty and patriotism CIB feels towards our country, and consistent with prior years, we made a number of sizable donations and
spearheaded several fundraising efforts in 2008.
Based on our mission statement, “to grow and help others grow”, CIB is committed to act ethically and contribute to Egypt’s prosperity, while improving
the quality of life of our workforce, their families and the local communities.
Our community service initiatives focus on charitable organizations in three important areas: Healthcare, Education, and Social Support & Commitment.
The following is a list of charities to which CIB made donations or helped support in the past year:
Social Involvement:
• Misr El Khair Foundation
An organization dedicated to promoting education, healthcare services and food for impoverished Egyptians 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 serving disadvantaged individuals.
• Mahmoud Hospital
A hospital that serves individuals who travel into Cairo from surrounding areas to seek medical 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 serving 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.
• Children’s Cancer Hospital
Hospital 57357 is the first pediatric cancer hospital in Egypt and the Middle East providing effective management and treatment systems
encompassing cancer prevention, education and research for children and their families for free.
• The Egyptian Food Bank
The first non-governmental organization aiming to abolish hunger in Egypt, through monetary and moral support from different organizations and
individuals, in terms of supplying appropriate food to the truly needy on a continuous basis.
CIB 2008 ANNUAL REPORT
BOARD OF DIRECTOR’S REPORT
27
Key Financial Highlights:
The following is a brief overview of key financial indicators on both a consolidated and a stand-alone basis for the year ended 31/12/2008:
I. Balance Sheet (in EGP billions):
a. CIB Stand-Alone
Total Footings
Contingent Liabilities
Net Loan Book
Investments
Treasury Bills and Other Sovereign Securities
Total Deposits
Other Provisions
Total Shareholders’ Equity & Net Profit for the Period
b. Consolidated CIB and CI-CH
Total Footings
Contingent Liabilities
Net Loan Book
Investments
Treasury Bills and Other Sovereign Securities
Total Deposits
Other Provisions
Total Shareholders’ Equity & Net Profit for the Period
Balance as of
Balance as of
31/12/2008
31/12/2007
% Change
57.1
13.3
26.3
5.1
12.4
48.9
0.4
5.7
47.7
11.6
20.5
3.7
2.9
39.5
0.4
4.1
19.7
14.7
28.3
37.8
327.6
23.8
0.0
39.0
Balance as of
Balance as of
31/12/2008
31/12/2007
% Change
57.5
13.3
26.3
4.2
12.4
48.8
0.4
5.8
47.9
11.6
20.5
3.6
2.9
39.5
0.4
4.5
20.0
14.7
28.3
16.7
327.6
23.5
0.0
28.9
II. Income Statement (in EGP millions):
a. CIB Stand-Alone
Interest Income
Interest Expense
Total Fees & Commissions
Net Profit after Tax
b. Consolidate CIB and CI-CH
Interest Income
Interest Expense
Total Fees & Commissions
Net Profit after Tax
Net Profit after Tax and Minority Interest
Balance as of
Balance as of
31/12/2008
31/12/2007
% Change
3,772.9
2,993.4
(1,963.7)
(1,796.7)
612.9
1,615
522.4
1,233
26.0
9.3
17.3
31.0
Balance as of
Balance as of
31/12/2008
31/12/2007
% Change
3,765
(1,966)
748
1,365
1,370
2,998
(1,798)
640
1,289
1,286
25.6
9.34
16.9
5.9
6.5
CIB 2008 ANNUAL REPORT
BOARD OF DIRECTOR’S REPORT
29
“Good business leaders create a vision, articulate the vision, passionately own the
vision, and relentlessly drive it to completion.”
John Wetch
Corporate Governance
Corporate Governance
The Board is responsible for providing leadership for the institution. It ensures
that the right strategy and controls are in place in order to deliver value to
shareholders, employees and the community.
Corporate governance issues rate high within CIB, both in terms of aligning the
interests of shareholders and managers and 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 committees,
independent non-executive directors of experience and integrity. In addition to an
internal audit and control department 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-executive 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 experience.
“Our Strong Commitment to Ensure That We Enjoy
Sound Corporate Governance Help us Deliver
Value to all Our Stakeholders"
CIB 2008 ANNUAL REPORT
CORPORATE GOVERNANCE
33
The Board of Directors
The Bank’s management structure is based
upon centralization of controls from the top
Hisham Ezz Al-Arab
Chairman and Managing Director
MC8...C, HLIC...C
Hisham Ezz Al-Arab joined CIB in 1999 as Deputy
Dr. Nadia Makram Ebeid
Member GCC...C
Dr. Nadia Makram Ebeid is the Executive Director
of the Center for Environment and Development
management level at the Head Office. The Board
Managing Director and was elected Chairman and
for the Arab Region and Europe (CEDARE), an
of Directors direct the Bank’s businesses by
Managing Director in September 2002. He has
international diplomatic position she assumes
setting the overall strategy, and approves all
had a wide experience of more than 30 years in
since January 2004. For a period of five years
operating policies.
global banking activities that he gained in senior
starting 1997, Dr. Ebeid was Egypt’s first Minister
positions at JP Morgan, Merrill Lynch and more
of Environment becoming the first woman in charge
CIB’s BoD currently consists of two executive
and six non-executive members with various
recently Deutsche Bank in the United Kingdom,
Middle East and the United States.
of this position in the Arab World. During her earlier
career, Dr. Ebeid was selected for several
expertise. When a board seat is vacant, the
Compensation and Governance Committee is
responsible for nominating a member, subject
to the board’s consent, who is then formally
appointed after gaining approval at the General
Mr. Essam El Wakil
Member and CEO Institutional
Banking RC...M, MC...M, HLIC...M
Mr. El Wakil enjoys almost 34 years of experience
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
Assembly and the Central Bank of Egypt. The
in various business and supporting areas,
in environmental policy and advocacy, Dr. Ebeid
Directors meet at least four times per annum.
exemplified by: Credit, Corporate, Project and
has received numerous awards of recognition and
During 2008, the Board of Directors convened
Trade Finance, Investment Banking and Strategic
distinctions from local and international NGOs,
six times.
Planning. Mr. El Wakil is a board member of the
leading institutions and associations.
Federation of Egyptian Banks “FEB”.
Starting early 2006, a group of experienced
business leaders representing Ripplewood
Holdings L.L.C., Eton Park Capital Management,
RHJ International and International Finance
Mahmoud Fahmy
Member AC...M, GCC...M
Counselor Fahmy is a renowned Egyptian lawyer
Robert Willumstad
Member AC...C, RC...C
Robert Willumstad is the former Chairman and
CEO of AIG and until recently was President and
Corporation have been part of the Board. This
and international arbitrator. He was the Chairman
Chief Operating Officer of Citigroup, and a member
group includes Robert Willumstad, the former
of Egyptian Capital Markets Authority, the General
of its Board of Directors. After 20 years with
President and Chief Operating Officer of
Authority for Investments, and the Secretary
Chemical Bank, and 11 years with Commercial
Citigroup, Lucio Noto, the former Chairman and
General of the National Counsel.
Credit and its successor companies, in October
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.
William Mikhail
Member and Chairman of the Audit
Committee AC...C, RC...C
Dr. Mikhail is currently an Econometrics professor
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
at the American University in Cairo (AUC), and
Citigroup’s Global Consumer Group from 2000
Accordingly, the Board of Directors in its new
a member of CIB’s Board since 1997. He obtained
to 2003, where he led all consumer businesses,
and expanded form consists of the following
his Ph.D. from the London School of Economics,
including credit cards, consumer finance and retail
individuals:
London University, in 1969. In addition to his
banking. In addition, he had oversight of Citigroup’s
academic career, Dr. Mikhail also worked with
consumer operations in Western Europe, Japan
international consulting firms and as a U.N.
and Mexico.
consultant on Econometric Modeling and
Economic Policy analysis in many countries for
Mr. Willumstad, President of Citigroup in 2002,
more than two decades. He published extensively
joined its Board of Directors in 2003; becoming
in econometric theory and applied econometrics
Citigroup’s Chief Operating Officer in October
in international journals, and supervised many
2003. He is a Director of MasterCard
Ph.D. and M.A. theses in both Cairo University
Incorporated/MasterCard International
and the American University in Cairo.
Incorporated and Habitat for Humanity
International. He is a trustee of the American
Scandinavian Foundation and Adelphi University.
8
Please see the references part, for all abbreviations, at the end of this section
Tim Collins
Member GCC...M
Timothy C. Collins is the Chairman and Chief
Lucio Noto
Member AC...M
Lucio Noto is the Managing Partner of
Executive Officer of Ripplewood Holdings, L.L.C.,
Midstream Partners, L.L.C., an energy
which he founded in 1995. From 1991 to 1995,
investment company. Mr. Noto assumed his
Mr. Collins managed the New York office of
current position in March 2001, after retiring as
Onex Corporation, a Toronto-based investment
Vice Chairman of Exxon Mobil Corporation in
company. Mr. Collins was previously Vice
January 2001; a position he had held since the
President at Lazard Freres & Company.
merger of the Exxon and Mobil companies in
he received an M.B.A. degree from Yale
University's School of Organization and
November 1999. Mr. Noto has been directing
Altria Group since 1998. Mr. Noto was Chairman
Management and a B.A. degree in Philosophy
and Chief Executive Officer of Mobil Corporation
from DePauw University.
before the merger. Mr. Noto was employed by
Mobil in 1962. Mr. Noto is the Director of
International Business Machines Corporation
and United Auto Group Inc. He also works for
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
oversee 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 a year, physically or through Video or
Tele-Conferencing, in Egypt, with one meeting
held in New York City.
In addition to the Board’s Audit Committee, Risk
and Governance and Compensation committees,
CIB has recently established High Lending &
Investment Committee as well as Management
Committee. The structure of each committee
ensures the highest standards of corporate
governance, empowers it and links it to the
strategic direction of the Bank.
Audit Committee
CIB was one of the first banks in Egypt to set
Audit
Committee
Governance
and
Compensation
Committee
Shareholders
Board
of Directors
Management
Committee
Risk
Committee
High Lending
and
Investment
Committee
The Committee’s mandate was extended and
in relation to risk management, Basel II
up an audit committee of the Board in compliance
articulated in greater detail in the years that
compliance, money laundering, as well as
with the basic principles of corporate governance.
followed, especially in light of the Central Bank
internal and external audit practices.
In September 1998, the Bank’s Board decided
of Egypt’s issuance of a number of rules to be
to form the committee in order to ascertain the
observed and guidelines to be followed in June
Three independent board members form the
soundness of the Bank’s internal audit system
2002. Accordingly, the role of the committee
audit committee. They meet exclusively and
and compliance with the rules specified by
was redefined in September of the same year
regularly with the Bank’s external auditors. Bank
regulatory authorities.
to emphasize its independent nature. Its scope
executives are regularly invited to attend certain
was also modified to be more specific, especially
meetings when relevant issues are broached.
CIB 2008 ANNUAL REPORT
CORPORATE GOVERNANCE
35
The Governance and
Compensation Committee
The Committee is responsible for the
development and reviewing of a set of Corporate
Governance Guidelines, which are then
recommended to the Board.
The Committee reviews the remuneration of the
Board of Directors (both executive and non-
executive members.) This also incorporates any
stock option proposals to the Bank’s Executive
and Senior Management Staff. It is also to act as
a nomination committee when a board seat is
vacated.
The Risk Committee
On the macro level, this committee sets 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. Exposures according to risk rating,
It is composed of the Bank’s top executives who
amount and tenor are approved by other
regularly review and decide on the credit facilities,
committees led by the High Policies Committee.
equity investments, focusing on the asset quality,
Management Committee
The Chairman, CEO of Institutional Banking,
allocation and its development. They are
responsible for taking decisions of an executive
or administrative nature; therefore allowing the
CEO of Consumer Banking, and the COO are
BOD to focus on strategies and growth
the representatives of the Management
opportunities and in turn, decrease inherent
Committee. They meet exclusively without the
conflicts of interest.
attendance of the Bank’s executive officers,
unless the need arises to invite one or more of
them. The management committee will be
responsible for setting the overall strategy as
well as the financial and operational performance
of the Bank.
The High Lending and
Investment Committee
The committee’s prime mandate is to focus on
References:
Audit Committee.....AC
The Governance and Compensation
Committee.....GCC
Risk Committee.....RC
Management Committee.....MC
High Lending and Investment Committee.....HLIC
Chairman.....C
the credit and investment decisions of the Bank.
Member.....M
08
A N N U A L
R E P O R T
2008 Review of Operations
“A business is successful to the extent that it provides a product
or service that contributes to happiness in all of its forms."
Mihaly Csikszentmihalyi
2008 Review of Operations
Institutional Banking
In line with our main objective, being our clients’
business partner, Institutional Banking doubled
its efforts by capitalizing on the Bank’s strong
credit culture. In addition, the Bank invested
significantly to provide one of the widest
distribution channels across Egypt as well as a
broad range of products and services to its
customers. Whether working with a financial
institution, a small business or a major
corporation, the Institutional Banking seeks to
create relationships of depth and longevity. This
is achieved through catering to our customers
all possible financial needs, extending specialized
financing including project and structured finance
as well as foreign currency management
solutions. In addition, the Bank partners with
corporates via equity participations and at the
Appraisal and Collection... etc. CIB group
same time assist all type of clients in reaching
comprises the following companies: CI Capital
their strategic objectives. These services are
Holding, Haykala Investment Managers,
provided within the parameters of managing
Commercial International Life Insurance (CIL),
CIB’s balance sheet to ensure matched funding,
Cotecna, International Appraisal and
competitive cost of funding, maximizing fee
Collection Company (IACC), Egypt Factors,
income and returns to our shareholders.
International Security and Services Company
(Falcon Group), Corplease.
Catering institutional customers’ financial needs
has always been the Bank’s driving force. CIB
Business units falling under the Institutional
through its subsidiaries, falling under the
Banking, which are the major contributors to
Institutional Banking, has adopted a strategy to
CIB’s overall profitability, are as follows:
expand its services platform via providing
Corporate Banking, Financial Institutions (FI),
harmonized non-banking products. CIB group
SMEs, Direct Investment, Strategic Relations,
of companies offer a wide spectrum of financial
Treasury and Dealing Room.
products and business solutions, ranging from
Investment Banking, Leasing, Private Equity,
Trade Support and Finance, Life Insurance,
Institutional
Banking
Corporate
Banking Group
Financial
Institutions
Small &
Medium
Enterprises
Direct
Investments
Strategic
Relations Group
Treasury
Dealing Room
Corporate Banking Group (CBG) is a major
contributor to CIB’s profitability. The group offers
a wide variety of products and services to cater
for the requirements of corporate clients across
- Structured Finance Division: the Structured
For the Financial Year 2008, CBG achieved
Finance Division has an unprecedented track
impressive results with a loan portfolio growing
record and unparalleled experience in
structuring and arranging large ticket
by 29% as of December over the same
comparable period of the year 2007, to reach
various sectors both locally and regionally. With
syndicated loans, Project Finance and
EGP 24.1 billion.
CBG’s product knowledge, expertise and
Securitization transactions.
innovation, CBG tailors a broad range of
CIB outperformed the market with a growth of
financing solutions, from simple plain vanilla
- Structured Trade Finance Division: CIB’s
24% in its loan portfolio as of November 2008
facilities to complex structures and solutions.
Structured Trade Finance Division is a
compared to a loan market growth rate of 13.5%.
The group’s strategy has been to target
pioneer in tailoring non-conventional trade
CBG achieved those results on the back of its
numerous sectors with large growth potential
finance solutions for traders.
specialized CBG team’s ability to capture a large
including, but not limited to, Infrastructure, Oil
volume of lending business for a large number
and Gas, Power, Telecoms, Petrochemicals,
- Shipping Division: The Shipping Division
of projects. In addition to its underwriting capacity,
Utilities, Construction, Tourism and Agribusiness.
provides innovative shipping finance solutions
and banking services in addition to a unique
being the largest amongst Egyptian private sector
banks as of December 31st 2008.
Under CBG’s umbrella are the following
payments service tailored for the ports.
specialized divisions:
“We Relentlessly Focus on Operational Superiority”
CIB 2008 ANNUAL REPORT
2008 Review of Operations
39
The Structured Trade Finance division
- Correspondent Banking, being the first point
technical assessment and monitoring, fund
continued to secure sizeable trading transactions,
of contact with CIB for financial institutions,
promotional activities and full reporting
reaching a notable portfolio of EGP 10 billion in
covers mainly: securing outgoing business
services. Furthermore, it handles funds and
2008. Total Trade Finance Transactions in CBG
for CIB, attracting bonding business (LGs),
finance programs provided by Egyptian
reached EGP 26.5 billion. CIB was thus awarded
negotiation of pricing, marketing and cross-
Agencies and international donors.
the "Best Trade Finance Bank in Egypt" by
selling.
Global Finance.
During 2008, FI successfully launched the micro
- The International Presence was established
finance/direct lending portfolio activity for the
In the Shipping business, CIB maintained its
to market CIB and its affiliates’ brand
first time in CIB, through a service company
position as the market leader in Port services.
overseas along with the selling of in-house
model. In addition, CIB has maintained its
During 2008, the division expanded its financing
structured products to Non- Resident
position as the leading custodian in the local
commitments to the offshore shipping business
Egyptians (NREs) and high net worth
market since 2000, with a share of approximately
related to oil activities. In fact, an additional USD
investors. Initially, this division was successful
34% of market capitalization and a customer
295m were lead arranged and financed by CIB
in servicing NREs in the Gulf (mainly UAE,
base of over 49,000. Moreover, Global Securities
for the offshore support vessels industry (OSV)
Qatar and KSA). The division plans to expand
Services Division was able to attract the final
as well as offshore drilling rigs.
its services to reach NREs in other markets,
GDR program in Egypt that was not under its
both regionally and internationally.
custody, thereby having 100% share of the sub
CBG’s total deals closed during 2008 witnessed
custodian market for GDR programs in Egypt.
significant growth over the year 2007; reaching
- Non-Bank Financial Institutions provides
EGP 52.7 billion compared to EGP 37.5 billion
in 2007. In fact, the Structured Finance team
contributed to major prime deals, whereby it
services, products and credit facilities to all
types of FI other than banks, i.e. insurance,
securities brokerage, car finance and leasing
played several vital roles such as, but not limited
companies.
to, Mandated Lead Arranger, Egyptian Facility
With regards to Small & Medium Enterprises
(SME), CIB has spared no effort to serve this
important segment and fulfill their needs whether
for “Finance” or “Financial Advice”. In this respect
the SME department provides a variety of short
Agent, Underwriter, Onshore Account Bank,
- Cross-Border Allocation covers syndications
and medium term asset and liability products,
Book-Runner, Security Agent, and Financial
of financial institutions and discounts of trade
mainly targeting medium size manufacturers.
Advisor. The key sectors that the Structured
papers related to financial institutions (banks
The SME Banking department was established
Finance team covered during 2008 were mainly
and non-banks).
Infrastructure, Commercial Real Estate, Oil and
in September ’06 after laying a world class
infrastructure; since then CIB has been able to
Gas, Power and Agriculture. The Structured
- Global Securities Services with its specialized
provide EGP 1 billion in the form of committed
Finance team has also played a unique role in
activities has placed CIB as the leading
facilities to medium size companies, and had
the local market in structuring and placing
Custodian Bank in the local market and the
helped them grow and develop by nurturing their
complex securitization structures. CIB is the only
sole sub-custodian for Egyptian GDR
needs for growth and expansion.
Bank that structured and placed seven
programs, as well as, the sole provider of
securitization deals locally for non bank financial
Trustee Services in the Egyptian Market.
institutions, of which two were closed in the year
The Direct Investment Department acts as
CIB’s investment arm with respect to the Bank’s
2008.
- Finance Programs and International Funds
engagement in direct equity finance transactions.
Corporate Banking will continue to adopt a
entire banking sector. This division mainly
the proper allocation of investment funds into
strategy of careful expansion on a selective
handles funds and finance programs provided
specific industries with a proper exit scenario
basis in order to enhance our strong foothold in
by Egyptian Agencies and International
where CIB’s return on these investments would
the market and maximise profitability.
Donors (e.g., USAID, European Union, World
be optimally maximized.
are regarded as a unique division within the
The department’s main task revolves around
Bank, UN, KFW, etc.), with an overall
Financial Institutions Group (FIG) with its
diversified approach covers areas such as: trade
objective of creating sustainable
During our holding period of a portfolio company,
developmental funds. In addition, the division
value is added by supporting the company’s
finance, cross-border allocation, fundraising,
offers services including, but not limited to,
growth through active participation in its Board
marketing products, clearing services, custody
agency activities, fund administration,
of Directors. In addition to maximization of
services and donor programs, through its six
optimum investment alternatives,
synergies between the company and CIB’s other
divisions and its representative office in Dubai:
disbursement / repayment mechanisms,
business departments.
By the end of 2008, the department managed
focusing mainly on liquidity; despite the fact that
increase of severe competition in the local
a portfolio whose size at net cost is in the range
2008’s global financial crisis had spillover effects
market, CIB’s Primary Dealers Desk managed
of EGP 1.9 billion (of which EGP 1.1 billion are
on various financial markets, in terms of soaring
to increase its secondary market Treasury Bills
CIB’s subsidiaries), representing 6.2% of CIB’s
credit spreads and liquidity becoming a major
trading volume by more than 80% and its bond
total loan portfolio size while contributing to
issue.
around 7% of CIB’s total profitability. The Team
volume by more than 40%. CIB successfully
acquired a 37% market share in the primary
also achieved an IRR in the range of 30% on
CIB’s foreign currency liquidity position during
market in Treasury Bills and a market share of
exits during the last 2 years.
2008 remained solid and was not negatively
33% in the secondary market Treasury Bonds
CIB is considered the premier Bank in Egypt
with regards to the establishment of a Strategic
Relations Group (SRG). In today’s competitive
market, the quality of services provided to clients
impacted with the events that took place towards
trading. Moreover, CIB was the first local Bank
the year end. Liquidity ratio was maintained at
to execute a Repo deal for Treasury Bonds
a level above 29.96%, against a regulatory level
worth of EGP 2 billion.
of 25%. Our strong performance is a reflection
to the quality of service and the clients’
CIB assisted clients in successfully managing
is key to the success of any bank. With that
confidence in CIB, whereby we have a
their risk exposures to minimize the impact of
being the fundamental platform for its activities,
competitive edge, as client deposits represents
the Credit Crunch’s Volatility on the Business.
the SRG is dedicated to cater to, and nurture
99% of total CIB funding.
CIB’s relationship with its major Institutional
Based on the Clients’ Risk appetite, hedging
strategies were provided to suit the clients’
depositors, whose deposits contribute
Treasury managed the interest rate risk within
needs. On the Local Market, CIB provided the
substantially to CIB’s stable funding.
prudent levels to maximize the Bank’s profitability.
clients with immediate competitive pricing on
In addition, the Treasury continued to diversify
the Egyptian Debt, especially at the time of
SRG focuses on over 180 strategic clients,
its proprietary investments benefiting from the
illiquidity.
representing the most reputable and renowned
proper interest rate outlook.
worldwide and local Donor Agencies and NGOs,
For the eighth consecutive year, CIB won the
as well as the vast majority of Diplomatic
The results of these efforts were rewarding as
Global Finance Award for the Best Foreign
Missions working in Egypt. Through the in-depth
December YTD 2008 net interest income grew
Exchange Bank in Egypt. The award
knowledge of the nature of its clients’ business,
by 51% compared to YTD December 2007.
acknowledged the market’s appreciation of CIB’s
the department takes pride in offering innovative,
Additionally, Net interest margin YTD December
pioneer role in providing tight and competitive
tailor-made products and services to meet the
2008 was 4.06%- being the highest among
market making quotes for banks, corporations
unique individual needs of its clientele base.
Banks operating in Egypt- compared to 3.27%
and retail clients.
These products serve to facilitate the clients’
YTD December 2007.
business operations as well as their banking
requirements.
The Dealing Room at CIB has always been a
major contributor to the Bank’s profits, its
The success of this department as a function is
reputation and marketing outlook. The FX
based on the partnership that it has nurtured
operations covers spots, forwards, swaps,
with its clients over the years. SRG is committed
options (plain vanilla, exotic OTC products),
to continue strengthening this partnership, while
cash export and imports, structured products,
maintaining the delicate balance between client
FX linked yield enhancement products, limit
satisfaction and account profitability.
orders and hedging and investment advisory.
The Treasury Department’s mission is to
efficiently manage the Bank’s assets and
Besides round the clock FX executions (including
Fridays and national vacations), complementary
daily market commentary and regular mobile
liabilities through continuous assessment of
phone SMS alerts covering CIB’s clients’
market risk on the balance sheet. This includes
requests.
liquidity and interest rate risks, along with
maximizing the Bank’s net interest income and
During 2008 the team made a significant upward
introducing mutual funds’ line of business to
shift in its trading volumes reaching an equivalent
clients.
of EGP 300 billion through the year, compared
This year, Treasury achieved its mission by
to EGP 200 billion a year earlier. Despite the
“We Deliver an Exceptional Customer Experience”
CIB 2008 ANNUAL REPORT
2008 Review of Operations
41
Consumer Banking
Business Profile
CIB has commenced on the key journey of
transition from running a Retail Banking arm to
a full-fledged world-class Consumer Banking
franchise. This entails completing the menu of
Consumer product propositions, building
management strength and depth and raising the
bar on quality standards to ensure seamless
end-to-end customer experiences.
Completing the Menu
CIB has built up over the last decade leading
market positions in several key Retail Banking
businesses including Consumer Liabilities, Credit
/ Debit Cards and Mortgage Loans. This has
been built on the foundation of the largest Branch
Banking Network amongst private sector banks
– now standing at 152 branches / units after
adding 21 new branches / units in 2008. In
addition to being the largest private sector Bank
in terms of ATM network – now at 472 ATMs
after adding 37 ATMs in 2008. CIB has continued
its deep penetration into the Consumer market
in 2008 by adding substantially to its customer
liabilities base.
CIB also runs a Personal Loans business
focusing on employees of Corporate Bank
companies and offered fully secured Overdrafts
and Trade Products. CIB is also active in the
local market Investment products through its
subsidiary CIAM including Osoul, Aman, and
Estethmar funds targeting varying risk profiles
and managing assets of EGP 4,897 million.
Finally, the sister company CIL offers customers
a wide range of Saving and Insurance programs.
2008 Accomplishments
The CIB Menu has been expanding over the
years. In line with such commitment some new
products and services were introduced in 2007
and 2008 in the Egyptian market, such as:
1. Cards Acquiring Business. CIB stormed
into this market in August 2007 and has
experienced an unprecedented rise to 21%
market share within 15 months.
2. CIB Wealth Management was launched in
support functions with business functions
September 2008 in four pilot locations and
to operate smoothly. As a result of the
focusing on providing full range of saving,
aforementioned trust and investment
investment and insurance propositions to
allocated to the Consumer Banking, its
the affluent market with both on-shore and
contribution to CIB’s net income grew
off-shore products.
significantly over the last couple of years.
3. CIB Auto Loans has been launched in
December 2008 and is geared up to
Quality Standards
CIB is committed to quality as its single most
aggressively capture considerable share of
important source of strategic and sustainable
this growing market in 2009.
differentiation. This is being translated in all
areas of the business with investments in building
4. Expanding the CIB Personal Loans
world-class standards and benchmarks for proper
program beyond employees of Corporate
and timely completion of all process steps. The
Bank companies will allow CIB to expand
management team is keen on measuring
aggressively in this product with the right
performance in all areas, in order to constantly
revenue – risk trade-offs.
improve the customer experience. This
continuous process of quality improvement is
5. Residential Property Finance (RPF) CIB’s
the pathway for CIB to attain ultimate customer
Residential Property Finance has
satisfaction and loyalty.
successfully penetrated the Egyptian Real
Estate Finance market, gaining a solid
The examples of this strategic intent are plentiful.
market position and establishing itself as a
CIB has moved in 2008 to centralize all credit
leading provider of Residential Property
decisions and collections functions for all
Finance services. RPF products are
Consumer Asset products. This ensures
designed to cater for home finance needs
standardized treatment in an assembly line
of a variety of customer profiles; including
environment thus applying the Bank policies on
employed, self employed and professionals,
all customers.
in addition to financing both resident
foreigners and non-resident Egyptians.
CIB is also strategically aligned to shifting
customer service from the traditional brick-and-
6. Management: CIB has engaged heavily in
mortar channel to alternative electronic channels.
active strategic recruitment starting in 2007
This leads to multiple benefits including
and intensifying in 2008. This was intended
convenient customer access, standardization of
to bring into the CIB management team
the service offering and customer protection
individuals with strong leadership skills and
against potential fraud. Overall, the message is
experience in Consumer Bank management
one of quality service delivery. Today, CIB offers
of banks around the world and thus closing
customers the following alternative channels of
skill gaps. The marriage of such solid
customer interaction: ATMs, Internet Banking,
multinational expertise with the strong brand
Call Center, IVR (Integrated Voice Response)
image and distribution of CIB is the secret
systems, SMS, and e-mail.
recipe for the future success of CIB
Consumer Bank. CIB welcomed in 2008 our
Ongoing Consumer Banking Strategy
new CEO-Regional Consumer Banking.
Egypt is still significantly under-banked,
CIB has also been hiring aggressively in
especially, in terms of low penetration of
several middle management positions to
Consumer Bank products, whereby CIB is
prepare the next line of Consumer Bank
heavily focusing in the upcoming period. As
senior management. Significant re-
the economic development continues, more
structuring has occurred to better align
Egyptians will come into the category of
Consumer Banking. CIB aims to build the
continue to implement changes to our product
experience and unparalleled market knowledge,
management team that can position us as the
mix allowing us to maintain and further enhance
combined with the resources: Human,
Bank of Choice offering the full range of
our leadership in the market.
technology, available at our disposal and above
Consumer products.
all else, familiarity with an excellent knowledge
The coming year is set to witness the business
of our customers and their needs, to formulate
In order to maintain our established status within
transformation of CIB’s product offering, and
a winning formula for continued success and
the market in light of the strong competition, we
service model, with our dedicated team of
leadership in Egypt.
aim to continuously improve and develop our
specialists spread throughout our branch network
loans and deposits products in response to our
ready to assist our customers and make their
customers’ evolving financing needs. It is with
experience a more rewarding one.
this in mind; that we have introduced and will
We will continue to draw upon our solid
“Business Partners Model”
Support Functions
In 2008, CIB rolled out a strategy to relook and
restructure all support areas in the Bank based
on international best practices. Accordingly,
significant improvements in communication and
internal processes have been realized to create
a solid platform that would stand the Bank’s
growth strategies. In this regard, all support
functions were grouped under one area which
required the recruitment of an international and
highly skilled Chief Operations Officer (COO).
In effect, later in 2008, the best in class COO
was hired from international market with
leadership experience in Europe, Latin America,
Asia Pacific, Middle East, and Africa.
Aiming at realizing this new strategy numerous
forums were created to increase interaction
between the support functions and the
businesses to improve communication, foster
team spirit and prioritize the various projects in
the Bank. Currently, this area comprises of
Human Resource, Finance, Corporate Services,
Operations, Information Technology, Premises
Department, and Marketing & Communication.
2008 Accomplishments
Administration Departments have been
combined and renamed Corporate Services.
Also efforts are being made to provide the best
service to clients through a careful evaluation
of services, outsourcing versus in house
decisions and out of the box ideas to optimize
the resources being allocated for the different
services.
Finance Department has been restructured on
international standards. The department in its
new shape will better provide effective
management information for decision making
and performance analysis. In addition, robust
accounting and taxation unit is more capable of
providing timely and accurate information to
internal and external stakeholders based on the
rules and regulations applicable in Egypt.
Moreover, the scope of the payment and
reconciliation departments has been enhanced
to strengthen the control environment.
Premises Department has been working on
optimizing the space utilization for Head Office
Staff as well as opening and renovating branches
across Egypt. This year 17 branches, four units
and 1 foreign exchange branch have been
opened. In addition 4 wealth management
centers have become operational and 4 branches
have been renovated. In addition, a number of
departments have been moved to Smart Village
as part of the overall premises plan of CIB.
Human Resources has been providing the best
professional services to attract, develop, and
retain a motivated and diverse workforce. In
order to ensure the successful delivery of CIB
Business Plans & Growth Aspirations, we have
succeeded to create a supportive work
environment. The department has also been
focusing on providing a full range of personnel
services to all CIB employees. This requires the
implementation of up-to-date trends in the field,
as well as, recommending new benefits, while
enhancing already existing policies, with the
objective of maintaining and retaining CIB’s most
vital asset “our staff”.
In 2008 a number of steps were taken for
development of the staff’s skills and enhancing
the culture of performance versus reward, this
includes the following:
- Ongoing improvements in the structure of
the compensation packages, as well as job
allowances for different departments.
- Approximately 1000 new employees were
hired in different areas of the Bank based on
the requirements of the business (primarily
in the consumer banking business).
- 2896 staff was trained for 120,827 man hours
in 2008 in various training schemes.
- An enhanced Performance Management
Process was launched, which ensures direct
links between objective setting and delivering
Value to the Business and more attention to
CIB Core Values in all of our dealings.
CIB continued its investment in Information
Technology, aiming at enhancing the quality
of services being provided to our customers.
The focus has been on the continous
improvements to the technical infrastructure of
the Bank, in line with our strategy and goals.
CIB 2008 ANNUAL REPORT
2008 Review of Operations
43
Efforts and investments are being exerted to
enhance our core system as well as upgrading
technologies in our customer contact points.
A number of initiatives have been taken in 2008
in this regard, these include:
- Implementation of a new web site for the
Bank as well as working towards the
extension of CIB’s online banking capabilities.
- Increase the efficiency and connectivity of
our branch and ATM network.
- Further enhancing E-Security, aiding CIB's
initiative to be the first Bank in Egypt abiding
by the Electronic Signature law.
- Continuing the expansion of our ATM network
and functionality: with 37 new ATM
installations during the year
A number of initiatives are undertaken in Central
operations to improve productivity of staff
involved in processing customer transactions.
There has also been an effort to centralize
operational activities from the branches to Central
Operations to bring economies of scale, better
controls and allow the branches to have more
time for sales and service for customers.
Marketing & Communication has been working
on two aspects, which are:
- To enhance the CIB Brand within and outside
Egypt as well as focusing on product based
marketing to fulfill the requirements of the
business.
- To carry out internal events to foster team
work in the organization, increase staff
motivation and loyalty to CIB.
On the whole, the shift in strategy and restructure
in the support functions have laid a solid
foundation to support the business growth in
the coming years. The focus will continue on
business partnership, improving productivity
from existing resources, process reengineering
to avoid duplications and work on innovative
ideas to reduce the cost per transaction in the
Bank.
Risk Management
At CIB, we seek to achieve an appropriate risk-reward balance, and continue
to build and enhance the risk management capabilities that will assist in
delivering our growth plans in a well controlled environment.
Our main strategic priority is to seize a top of
The approval chain also entails risk assessment
Board’s directions. The guide defines the broad
the line Risk Management system, not only for
team to review any loan application prior
policies and limits for consumer lending activities,
the purpose of Data Management pertaining to
Basel II compliance purposes, but also for
presenting to any of the approving bodies. In
fact, within that task, thorough analysis is
in addition to, setting guidelines for
implementation. Moreover, a Consumer Risk
Portfolio Management as well as the upgrade
conducted for credit approvals in order to ensure
Committee that reports to the Board Risk
of the Management Information System and
that they meet the Bank’s risk standards. The
Committee was established. In 2009, the strategy
Risk Analysis.
Risk Management Team has historically
is to move towards further enhancement and
Credit Risk
Institutional Banking
CIB’s Institutional Banking Risk Management
experienced various business cycles; and has
automation of its underwriting procedures,
become capable of ensuring presentation of
automated collections and recovery processes.
prudent projections and analysis.
Aggregate Portfolio Quality and Provisioning
The Bank’s prudent Risk Rating and Provisioning
bears imperative responsibility for monitoring
One of the primary goals of CIB’s Risk
the quality of the loan portfolio by pursuing
Management is to monitor problem loans at an
Policy have enabled CIB to build up substantial
stringent measures. The department is in charge
early stage before they develop into Non-
provisions against possible loan losses. Total
of setting prudent risk management policies,
Performing Loans. Furthermore, convert the
Loan Loss provisions reached EGP 1.61 billion
procedures and guidelines that conform to the
maximum possible amounts to higher credit
in December 2008, compared to EGP 1.26 billion
Bank’s rigorous risk practices embodied in our
quality brackets whenever possible. The
in 2007, despite the write off of EGP 96 million
Credit Policy Guide (CPG). Our CPG, the guiding
Department also determines the optimal recovery
in 2008, compared to EGP 177.8 million in 2007.
principle of our lending and provisioning scheme,
prospects that can be achieved from the
is well within the standards and requirements
accounts and constantly strives to maximize the
Due to CIB’s ability to restructure a significant
applied by the Central Bank of Egypt’s (CBE).
recovery rates.
The department also ensures compliance with
all CBE regulations and directives.
Consumer Bank Risk Management Unit
In line with CIB ambitious plans for expanding
amount of Non-Performing Loans, the Bank has
improved its General Ratio for Direct Exposure
to 3.42% as of December 2008, up from 3.37%
in 2007.
One of CIB’s key strength is typified in our
its Consumer Banking business, the Bank is
prominent credit culture, thanks to the Bank’s
in-house credit training program9. All officers
and analysts must be certified by this program,
devoted to ensure that solid risk management
The Department continues to make valuable
infrastructure, policies and tools are in place. In
contributions to the Bank’s performance with
2008, the Bank has set up an independent
aggregate Recoveries of EGP 314.9 million as
leading to the creation of a unified culture where
Consumer Risk unit under its overall Risk
of December 2008, up from EGP 251.2 million
everyone speaks the same business language.
Management umbrella to effectively manage
in 2007.
Consequently, it helped in forming a smooth
the Consumer Credit Cycle. Consequently,
and speedy approval process, which is another
policies, product programs, centralized
vital asset CIB possesses. Over the years, the
underwriting, portfolio monitoring, collections
Bank has completely institutionalized the credit
and recovery functions were essential.
decisions to be made only through a hierarchy
of committees, within their regular weekly
In this respect, several key initiatives were
meetings. In addition, the bank has lately
undertaken, among which was; the development
separated between the Bank’s overall strategic
decisions and higher end exposure approval10.
of a Consumer Policy Guide in line with the
9 Founded in the 70’s by Chase Manhattan Bank based on its credit module.
10 Kindly refer to the Corporate Governance section for more details
“We Grow While Preserving our Supreme Quality”
CIB 2008 ANNUAL REPORT
RISK MANAGEMENT
45
2005
2006
2007
2008
Gross Loans (000's of EGP)
14,988,037
18,503,584
21,465,494
27,738,625
NPL (%of loans)
5.6%
Charge Offs to Date (000's of EGP)
1,041,294
Recoveries to Date (000's of EGP)
106,680
General Ratio (Direct Exposure only)
2.7%
Recoveries to Date / Charge-offs to Date
10.2%
3.8%
1,269,741
206,742
2.8%
16.3%
3.0%
1,447,577
251,214
3.37%
17.4%
3.0%
1,543,638
314,974
3.42%
20.4%
Basel II Grounding
In line with the Bank’s efforts to comply with the
Basel II Accord, the Bank has a Statistical Rating
Model developed to estimate the PD (Probability
of Default) risk component for every obligor
Market Risk Management (MRM)
Despite the Bank historical possession of
Operational Risk Management
As part of Operation Risk, the Bank has
relatively small trading equities, FOREX and
developed an internal control mechanism
interest rates positions, a specialized team has
whereby the Risk Management department can
been assigned to monitor the Bank’s market
identify daily Operational Risk events. In addition,
within the Corporate Asset Class. This is also
implemented in line with the Foundation Internal
risk.
a number of techniques are applied to efficiently
manage Operational Risk in our business by
Rating Based Approach. The model is being
used on an annual basis to rate the entire Loan
Book. In addition, the Bank is developing the
other two risk components for the Corporate
Asset Class namely; LGD (Loss Given Default)
and EAD (Exposure at Default) in order to
ultimately adapt the Advanced IRB Approach.
The Bank utilizes an expert scoring model for
the SME (Small and Medium Enterprises)
portfolio. It is currently being used to score the
SME portfolio on an annual basis. The model
will be subsequently validated and calibrated
into a PD model once the portfolio reaches a
certain size.
Through various techniques the MRM team is
performing bottom-up self assessment
in charge of quantifying and modeling the
techniques to capture and monitor key
Expected Loss that may arise from adverse
Operational Risk indicators.
movements in FOREX, Equities and Interest
Rates. These techniques include Value-at-Risk,
CIB is in process of setting up plan for Crisis
Stress Testing, Scenario Analysis and Economic
Management and Business Continuity
Value of Equity. All the above techniques are
Planning/Disaster Recovery Planning Risk.
regularly conducted to ensure the adequacy and
solvency of the Bank financial position from the
Market Risk perspective. The conclusion of the
aforementioned tests has consistently proved
the soundness of the Bank’s equity cushion and
its well diversified risk profile.
Compliance
Established in March 2007, Compliance acts as an independent function to
protect the Bank against any potential Regulatory, Reputation, Money Laundering
and Fraud Risks.
It is comprised of three divisions:
Compliance with Policies and Procedures: Aligns with all lines of businesses to ensure that CIB conducts business together with compliance based
on existing local regulations as well as international best practices.
Compliance with Anti Money Laundering: Responsible for ensuring proper client due diligence through the Know Your Client concept.
CIB is currently in the process of implementing a full automated AML solution that covers monitoring all Bank transactions.
During 2008, a new swift filtration system along with a full World Check List installation has been implemented to enhance transaction checking
against sanctions and embargoes.
An amended AML and KYC policies have been compiled to align with CBE requirements in this respect.
Corporate Governance and Code of Conduct: Responsible for ensuring that the Bank Complies with the adopted Corporate Governance Code.
In addition, Code of Conduct Compliance remains to be the key for all CIB Board members and Management.
Ongoing staff awareness sessions are also being conducted in this respect. The “Whistle Blowing” concept has been introduced to Bank employees
to encourage them to speak up when identifying misconduct, violations, fraud or breaches.
Exercising full independence, the Chief Compliance Officer presents a quarterly report to the Audit Committee of the Board together with the
recommendations of corrective measures to cover identified weaknesses and violations.
“A Pioneer in Setting Standards”
CIB 2008 ANNUAL REPORT
COMPLIANCE
47
“People with clear, written goals, accomplish far more in a shorter
period of time than people without them could ever imagine.”
Brian Tracy
08
A N N U A L
R E P O R T
Strategic Subsidiaries
and Affiliates
The Client’s and the Lender’s requirements are of key concern, where CTS studies and considers
carefully each case, to offer suitable services.
2008 Accomplishments
By the end of 2008, the Company had more than USD 30 million value of goods under management
which is almost double the value managed during 2007, including soft commodities, livestock,
vehicles, grain, sugar and others.
International Appraisal and Collection Company
Profile
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 the residual is divided among various investors.
IACC specializes in the evaluation of real estate and movable assets, including, but not limited to,
the machines, equipments, ships, touristic villages, vehicles and products. The company also
conducts inquiries and field investigations on the individuals and companies, in addition to debt
collection. Moreover, the company performs the ownership research procedures for real estate and
movable assets, as well as, providing assistance in legalizing in kind rights (registration and
mortgaging of lands and buildings) and incorporation of companies.
In addition, IACC sells real estate and movable assets through public auctions or closed proposals.
2008 Accomplishments
- Offering inspection and damage evaluation services
- IACC was recognized by the CBE as one of the recommended experts in collateral evaluation
Egypt Factors
Profile
Egypt Factors (EGF) is the first factoring company in Egypt, with an authorized capital of USD 15
million and paid-in capital of USD 5 million. EGF is a joint venture between CIB and the Maltese based
bank FIMBank, where each have a 40% equity share, as well as the IFC, holding 20% equity stake.
Product Type
EGF focuses on supporting domestic and international trade, through providing the companies that
conduct transactions on an open account deferred payment basis, with a wide range of services.
These include: domestic factoring, import factoring, export factoring and purchase factoring.
The factoring package involves administration and collection of accounts receivables, protection
against the default of the buyers and immediate funding.
Target Market
The company targets all producers, traders, and service providers conducting transactions based
on short term deferred payments. For large corporations, factoring is advantageous, since it protects
them and improves their efficiency and financial ratios. However, factoring is still considered more
beneficial to the SMEs, in terms of liquidity and growth.
2008 Accomplishments
- Export Factoring was officially launched in November 2008 through the “Egypt Trade & Export
Finance Forum”.
- Announcing the initiation of Domestic Factoring.
“The most important single ingredient in the formula of success is knowing how to get
along with people.”
Theodore Roosevelt
08
A N N U A L
R E P O R T
Corporate Social
Responsibility
Corporate Social Responsibility
Being committed to the community where we live as well as our work
environment, corporate social responsibility plays a fundamental part of the
way we conduct business at CIB. Our business nature has an effect on our
environment and on the lives of millions of people across Egypt. Hence, we
possess a unique approach for CSR, which highlights six key areas where we
have a significant impact on.
1) Committed to Taking Every Reasonable
Step to Ensure the Health and Safety
of our Community
CIB is also recognized as a significant
preservation of natural resources as well as
collector of Egyptian art.
the public commitment to Human Rights
which recognized CIB by Realizing Rights
Providing direct financial contributions to
Our Employees and the Community The
and Business & Human Rights Resource
Children’s Cancer Hospital 57357 as well
Bank provides its staff with the necessary
Centre.
as donations to Cairo University Pediatrics
resources in terms of funding and training,
Hospital (Abu El Reesh Hospital – Public
in order to make a positive contribution within
4) Achieving Employee Satisfaction
Hospital)
the community.
2) Contributing to our Community
Sponsorships and Social Involvement
3) Being Environmentally Responsible
Funds Directed to Social Development
In 2008, we employed 914 people across
the Bank and aim to be the employer of
choice. We believe that the comfort and the
skilled development of our employees are
CIB’s financial sponsorships and donations
CIB has a specialized division which handles
essential to our growth and success. The
are focused on projects that help
development funds and finance programs
employee satisfaction survey that was
communities achieve their goals; like Misr
provided by governmental and international
conducted during 2008 showed outstanding
El-Khair Foundation and Yehia Arafa
donors. These funds are known for their low
results compared to the four surveys that
Children’s Charity Foundation (Private Sector
interest rates and simple application
were previously conducted
Organization that provides financial support
procedures. The program aims to create
(See Figure below)
or public hospitals within Cairo).
new job opportunities and higher income
amongst rural populations with special
The Egyptian Food Bank The first non-
emphasis on women and small farmers.
governmental organization overcoming
Moreover, CIB is engaged in environmental
hunger in Egypt, through accepting monetary
friendly projects designed for the
and moral support from different
organizations and individuals to supply
appropriate food to the truly needy on a
continuous basis.
Art Sponsorship CIB regularly sponsors
art galleries organized by the Ministry of
culture, with the aim of encouraging painters
on different levels and their apprenticeship.
9
8
7
6
5
4
3
2
1
0
8.5
First
Survey
Second
Survey
Third
Survey
Fourth
Survey
Fifth
Survey
2008
Average Satisfaction Score
“Serving All-Embracing Communities”
CIB 2008 ANNUAL REPORT
CORPORATE SOCIAL RESPONSIBILITY
59
5) A Fascinating Customer Experience
Our customer service distinguishes us from our competitors. Our objective is to provide best in class levels of service, in fact, this is what we
have been working on since the year 2007 that will earn us customer trust and loyalty.
6) Meeting our Shareholders Expectations
We encourage a two-way dialogue with existing and potential investors and business commentators. We understand the worth of transparency
and integrity; and hence according to that conviction we do our business, which creates a better understanding of our institution and better
business relationships.
“Some of us will do our jobs well and some will not, but we will be judged by only one
thing, the result.”
Vince Lombardi
A N N U A L
08 Financial Statements
R E P O R T
Financial Statement
A. CIB Stand-alone
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
63
Financial Statement
A. CIB Stand-alone
Commercial International Bank (Egypt) S.A.E. Balance Sheet Unconsolidated as of Dec. 31, 2008
Assets
- Cash & Due From Central Bank
- Due From Banks
- Treasury Bills and other Governmental Notes
- Trading Financial Assets
- Loans & Overdrafts
- Financial Derivatives
- Financial Investments:
Available for Sale
Held to Maturity
- 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
- Financial Derivatives
- 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)
- Retained Earning
- Total Shareholders' Equity
- Net Profit of the year
- Total Shareholders' Equity & Net Profit
- Total Liabilities & Shareholders' Equity
Note No.
Dec. 31, 2008
EGP
(4)
(5)
(6)
(7)
6,493,358,437
4,391,051,249
12,449,007,406
497,554,487
(10&11)
26,330,327,878
(12)
(8)
(8)
(13)
(15)
(16)
(17)
(18)
(12)
(19)
(20)
(21)
(22)
(22)
(30)
704,890,792
2,762,232,983
681,263,274
1,138,332,672
942,621,482
21,840,568
715,251,587
57,127,732,815
213,470,012
48,938,109,663
636,914,744
-
1,194,593,545
109,273,933
363,218,186
51,455,580,083
2,925,000,000
1,033,696,029
86,727,903
11,628,342
4,057,052,274
1,615,100,458
5,672,152,732
57,127,732,815
Dec. 31, 2007
EGP
(Restated)
4,953,205,430
13,782,062,043
2,948,674,319
588,473,270
20,478,590,841
75,307,833
2,347,587,666
443,894,166
365,723,936
1,020,565,573
52,819,475
607,104,820
47,664,009,372
2,377,082,435
39,514,539,992
63,166,763
336,727,470
735,103,795
161,356,219
395,332,813
43,583,309,487
1,950,000,000
2,089,911,959
29,159,584
11,628,342
4,080,699,885
-
4,080,699,885
47,664,009,372
- Contingent Liabilities & Commitments
(23)
13,290,994,705
11,559,866,680
The Accompanying Notes are an integral part of the Financial Statements and are to be read therewith " Audit Report Attached ".
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
65
Dec. 31, 2007
EGP
(Restated)
2,993,373,614
(1,796,702,031)
1,196,671,583
547,669,248
(25,286,540)
522,382,708
66,158,925
276,191,855
(250,416,667)
226,135,001
(636,363,618)
181,676
1,400,941,463
(180,303,950)
12,186,756
1,232,824,269
3.73
3.71
Commercial International Bank (Egypt) S.A.E. Income Statement Unconsolidated For Year Ended Dec. 31, 2008
Note No.
Dec. 31, 2008
- Interest and similar income
- Interest and similar Expenses
Net Interest Income
- Fees & Commissions Income
- Fees & Commissions Expense
Net Income From Fees & Commissions
- Dividends Income
- Net Trading Income
- Provisions
- Profit (Losses) from Financial Investments
- Administrative Expenses
- Other Operating Income
Net Profit Before Tax
- Income Tax
- Deferred Tax
Net Profit After Tax
- Earning Per Share
- Basic
Diluted
EGP
3,772,875,880
(1,963,661,240)
1,809,214,640
686,456,733
(73,587,145)
612,869,588
141,572,634
337,579,386
(394,545,539)
115,831,055
(949,681,007)
183,048,413
1,855,889,170
(209,809,805)
(30,978,907)
1,615,100,458
4.89
4.84
(24)
(24)
(25)
(11&21)
(8)
(9)
(28)
(27)
(29)
(29)
Commercial International Bank (Egypt) S.A.E. Cash flow Unconsolidated For Year Ended Dec. 31, 2008
Cash Flow From Operating Activities
- Net Income before tax
Adjustments To Reconcile Net Income
To Net Cash Provided by operating activities
- Depreciation
- Provisions (Formed during the year)
- Trading financial investments evaluation differences
- Impairment of assets
- Utilization of Provisions
(Except Provision for Doubtful Debts)
- Provisions No Longer required
- FCY Revaluation Differences of Provisions Balances (Except Doubtful Debts)
- Gains From Selling Fixed Assets
- Profit From Selling Financial Investments
- Profits From Selling an Investment in Subsidiary
- FCY Revaluation Diff.of Long Term Loans
- Share based payments
Operating Profits Before Changes in-
Operating Assets & Liabilities
Net Decrease (Increase) in Assets
- Due From Banks
- Treasury Bills and Other governmental Notes
- Trading Financial Assets
- Financial Derivatives (Net)
- Loans & Overdrafts
- Debit Balances & Other Assets
Net Increase (Decrease) In Liabilities
- Due to Banks
- Customers Deposits
- Credit Balances & Other Liabilities
- Income tax paid
Net Cash Provided from Operating Activities
Dec. 31, 2008
EGP
Dec. 31, 2007
EGP
(Restated)
1,855,889,170
1,400,941,463
153,818,325
394,545,539
87,784,923
54,837,345
(10,943,385)
(165,365,215)
516,745
(5,052,568)
(219,181,953)
(50,258,991)
(922,993)
57,568,319
120,918,839
250,416,667
(7,680,871)
(4,185,378)
-
(7,036,600)
(1,904,981)
(1,269,870)
(174,061,817)
(148,393,558)
1,733,674
29,159,584
2,153,235,261
1,458,637,152
9,567,610,757
(7,353,852,038)
3,133,860
(55,834,978)
(6,220,116,065)
(13,465,835)
(2,163,612,423)
9,423,569,671
418,646,064
(155,475,345)
5,603,838,929
(7,960,703,701)
2,266,818,190
306,349,739
(12,141,070)
(3,054,288,046)
(199,356,212)
1,164,558,315
7,914,312,794
(150,080,573)
(80,317,367)
1,653,789,221
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
67
Dec. 31, 2007
EGP
(Restated)
107,524,396
(278,980,037)
-
378,390,172
1,121,812,258
1,328,746,789
60,455,684
(287,235,147)
(226,779,463)
2,755,756,547
4,023,396,001
6,779,152,548
4,953,205,430
13,782,062,043
2,948,674,319
(13,264,218,534)
(1,640,570,710)
Commercial International Bank (Egypt) S.A.E. Cash flow Unconsolidated For Year Ended Dec. 31, 2008
Cash Flow From Investing Activities
- Sale (Purchase) Of Subsidiaries & Associated Companies
- Purchase of Fixed Assets , Premises and Fitting- out of Branches
- Redemption Of Held to Maturity Financial Investments
- Held to Maturity Financial Investment purchases
- Available For Sale Financial Investment
Net Cash (used in) Provided from Investing Activities
Cash Flow From Financing Activities
- Increase (Decrease) in Long - Term Loans
- Dividends Paid
Net Cash (Used in) Financing Activities
Net Cash & Cash Equivalent Changes
- Beginning Balance of Cash & Cash Equivalent
Cash & Cash Equivalent Balance At the End of the year
Cash & Cash Equivalent are Represented as Follows :
- Cash and Due from Central Bank
- Due from Banks
- Treasury Bills and Other Governmental Notes
- Due from Banks (Time Deposits)
- Treasury Bills with maturity more than three months
Dec. 31, 2008
EGP
(772,608,736)
(142,698,585)
276,189,303
(513,558,411)
(200,041,718)
(1,352,718,147)
(51,159,293)
(336,727,470)
(387,886,763)
3,863,234,019
6,779,152,548
10,642,386,567
6,493,358,437
4,391,051,249
12,449,007,406
(3,696,607,777)
(8,994,422,748)
Total Cash & Cash Equivalent
10,642,386,567
6,779,152,548
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Commercial International Bank (Egypt) S.A.E.
Notes to the Unconsolidated Financial Statements
For the Financial Year
from January 1, 2008 to December 31, 2008
(1) Organization and Activities
Commercial International Bank (Egypt) S.A.E.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
69
Commercial International Bank (Egypt) S.A.E. was formed as a commercial Bank 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 one hundred & five branches, in addition
to forty eight units.
(2) Significant Accounting Policies
A) Basis of Preparing Financial Statements
• The Unconsolidated Financial Statements are prepared in accordance with the Central Bank of Egypt regulations issued on 27th of June 2002
and its amendments in addition to amendments made to the financial investments issued on December 16, 2008 and in accordance with the
related Egyptian laws and regulations.
• The available for sale investments measurement have been changed as at 1st of January 2008 as explained in note 2 (F) and (G), from the
lower of cost (taking into consideration the FX revaluations) or fair value with the differences to “Income Statement“ to fair value with changes
to equity. The reclassification impact appears on the "Statement of Changes in Shareholders Equity" and the adjustments related to the previous
years have been done retrospectively.
• As a result of applying the new policies, all outstanding derivatives on the 1st of January 2008 have been recognized in the balance sheet and
measured at fair value and the policy has been applied rate respectively.
B) Transactions in Foreign Currencies
• The Accounting records of the bank are maintained in Egyptian pounds. Transactions in foreign currencies conducted during the period are
recorded at the foreign exchange rates prevailing at the time such transactions take place.
• Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rate prevailing at the balance sheet
date. Currency translation differences on all monetary financial assets and liabilities are reported in the income statement in the following items:
- Net trading income or net income arising from financial instruments originally classified as change in fair value through profit and loss for
financial assets / liabilities held for trading or originally recorded at fair value through profit and loss.
- Other operating income (loss) for other items.
• The changes in fair value arising from monetary financial instruments classified as monetary items foreign currencies as available for sale (Debt
Instruments) should be segregated to revaluation differences arising from changes in the instrument amortized cost to be recorded in “income
from loans” and differences arises from foreign exchange rate changes to be recorded in “other operating income” and differences arises from
change in fair value to be recorded in “fair value reserve for available for sale investments”.
• Translation differences on non-monetary items (equity securities) held at fair value through income are also reported through income statement
whereas for those classified as available-for-sale are recorded directly in equity within ‘Net unrealized gains and losses on available-for-sale
assets’ item.
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 income statement. Dividends income is 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 and accounted for at amortized cost using the effective interest rate.
E) Financial Assets Designated at fair value through income:
• Consists of financial assets held for trading & financial assets that the bank upon initial recognition designates to be measured at fair value with
changes reported in income.
• Financial instruments held for trading are those that the Bank holds primarily for the purpose of short-term profit-taking or if it represents a
part of specified financial instruments portfolio and there is an evidence of short-term profit-taking. Also derivatives are classified as held for
trading unless the derivatives are qualified under hedging accounting.
• Financial assets designated at fair value through income statement are recognized when it relates to an investment portfolio that are managed
and evaluated on a fair value basis according to the investment strategies and the risk management and been reported to the senior management
according to that basis.
• Any derivative or financial instrument that designated to be measured at fair value with changes through profit and loss is not reclassified during
the holding period from the group of financial instruments if it is initially classified as change in fair value through profit and loss.
• At all circumstances the bank should not reclassify any financial instrument into financial instrument measured at fair value with changes through
profit and loss or to financial assets held for trading.
F) Held to Maturity Investments
• Held to Maturity investments are non-derivative assets with fixed or determinable payments and fixed maturity that the bank management has
the ability and the intent to hold it for the foreseeable future or maturity. Any sales of a significant amount not close to their maturity -except the
emergency cases - would result in the reclassification of all held to maturity investments as available-for-sale.
G) Available-for-sale Investments
• Non-derivative assets that have either been designated as available for sale or do not fit into one of the categories described above. Equity
investments held without significant influence, which are not held for trading or elected to fair value through income, are classified as available-
for-sale.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
71
H) Financial Assets
• For the assets classified at fair value through P/L ,held to maturity investments and available for sale investments buying and selling operations
are recognized as usual on the trade date which is the date that the bank is committed to buy or sell the financial asset .
• A financial asset that does not originally classify at fair value through P/L is initially recognized at fair value plus transaction costs. A financial
asset that is originally classified at fair value through P/L is initially recognized at fair value only and the transaction costs are transferred to P/L
in “Net income from trading activities”.
• A financial asset is derecognized when the rights to receive cash flows have expired or the Bank has transferred substantially all the risks and
rewards of ownership.
• Available for sale investments and financial assets designated at fair value through P/L are subsequently held at fair value whereas held to
maturity investments are measured at amortized cost using the effective interest rate method.
• Gains and losses arising from changes in the fair value of available-for-sale assets should be recognized directly in equity, through the statement
of changes in equity, until the financial asset is sold, collected, or otherwise disposed of, at which time the cumulative gain or loss previously
recognized in equity should be recognized in profit or loss.
• Monetary assets’ interest income is recognized based on the amortized cost method in the income statement. The foreign currency revaluations
differences related to available for sale investments are recognized in the income statement. Available for sale equity instruments related dividends
are recognized in the income statement when they declared.
• Fair values are obtained from quoted market prices in liquid markets. Where no active market exists, or quoted prices are unobtainable, the
fair value is estimated using a variety of valuation techniques – including discounted cash flow and other pricing models. Inputs to pricing models
are generally market-based when available and taken from reliable external data sources. If the range of reasonable fair value estimates is
significant and the probabilities of the various estimates cannot be reasonably assessed, an entity may measure the equity instrument at cost
minus any impairment losses.
• Debt instruments can be reclassified from the available for sale investments to held to maturity investments at fair value when the bank has
the intention and ability to hold to maturity. Any related Profits and losses that was previously recognized in equity are treated as follows:
- Financial assets with fixed or determinable payments and fixed maturity valued at amortized cost, using the effective interest method in case
of impairment the profits & losses that has been previously recognized directly in equity is removed from equity and recognized in the income
statement.
- Profits & losses related to financial assets without fixed or determinable maturity are held in equity till selling or dispose the asset then removed
from equity and recognized in the income statement. In case of impairment the profits & losses that has been previously recognized directly
in equity is removed from equity and recognized in the income statement.
I) Investments in Subsidiaries and Associated Companies
• These investments are evaluated at cost and in case of impairment of its fair value; the book value of each investment is adjusted by such
impairment and charged to 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. Also investments in jointly controlled companies are evaluated at cost.
J) Netting
• Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal
right to set off the recognized amounts and there is an intention to settle on a net basis, or to realize an asset and settle the liability simultaneously.
• Treasury Bills, Repos & reveres Repos agreements are netted on the balance sheet in ‘Treasury Bills and other discountable notes at CBE’.
K) Derivatives & Embedded Derivatives
• Derivatives are measured initially at fair value and subsequently re-measured at fair value. Fair values are obtained from quoted prices prevailing
in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and options pricing
models as appropriate. All derivatives are included in assets when their fair value is positive and liabilities when their fair value is negative.
L) Repos & (Reverse Repos) Transactions
• Repos (Reveres Repos) agreements are eliminated (recorded) on the financial position under “Treasury Bills and Other Notes Discountable at
the CBE” whereas its cost (revenue) is recorded in “interest received from treasury Bills & Bonds” item in Income Statement using the effective
interest method.
M) Impairment of financial assets
M/1) Financial Assets held to maturity
The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a portfolio of financial assets is
impaired. A financial asset or portfolio of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence
of impairment as a result of one or more loss events that occurred after the initial recognition of the asset and prior to the balance sheet date
('a loss event') and that loss event or events has had an impact on the estimated future cash flows of the financial asset or the portfolio that
can be reliably estimated. Objective evidence that a financial asset or a portfolio is impaired includes observable data that comes to the attention
of the Bank about the following loss events:
- Significant financial difficulty of the issuer or obligor;
- It becomes probable that the borrower will enter bankruptcy or other financial Re-organization.
M/2) Available-for-sale Investments
- The Bank assess at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets under
available for sale investments or held to maturity investment is impaired. In the case of equity instruments classified as available for sale, a
significant or prolonged decline in the fair value of the security below its cost is considered in determining whether impairment exists.
N) Assets Acquired for settlement of Debits
• These Assets are recorded in the Financial Statement under “debit balances & Other Assets” at cost and in case of a decrease of the fair value
of these assets at the Financial Statement 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.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
73
O) Provision for Doubtful Debts and Contingent Accounts:
• Provision for Doubtful Debts is established on the basis of an appraisal of the identified risk for specific loans and contingent accounts in addition
to general percentages from one to five according to the basis of appraising the customer’s credit worthiness issued by the central bank of Egypt
on 6th of June 2005.
• Provision for Doubtful Debts decreases by loans written off and increases 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.
P) Contingent Liability Accounts
• Contingent Liability Accounts include transactions in which the Bank is involved as a third party. Such transactions do not represent actual bank’s
assets or liabilities at the Financial Statement date.
Q) 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.
R) Depreciation and Amortization:
• Depreciation of Fixed Assets (except for 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.
S) Share-based payments to employees
• The Bank engages in equity settled share-based payment transactions in respect of services received from eligible employees.
• The fair value of the services received is measured by reference to the fair value of the shares or equity instruments granted on the date of the
grant. The cost of the employee services received in respect of the shares or equity instruments granted is recognized in the income statement
over the period that the services are received, which is the vesting period.
• The bank estimate of each balance sheet date the number of options expected to be exercised and account for the change in original estimates,
if any, in income statement with the opposite equity account on the remaining period.
• The net amount received by employees after calculating any related cost will be accounted in capital with par amount and premium account at
the date of exercising the option.
T) Taxes
• Income Tax on the profit or loss for the financial period 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 financial position
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 financial position 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 financial statements includes the accounting policies applied to measure and recognize significant financial
instruments and the revenues and expenses related thereto.
B) 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 fluctuates 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.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
75
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 period.
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 expose the bank to the risk of fluctuation in exchange
rates. To minimize this risk, the bank monitors the balances of foreign currency positions according to Central Bank of Egypt instructions in that
respect. Note No. (35) Of the financial statements discloses significant foreign currency positions at the financial statement date.
(4) Accounting estimates and assumptions
- The preparation of financial statements requires management to make subjective judgments and estimates, at times, regarding matters that are
inherently uncertain. These judgments and estimates affect reported amounts and disclosures. Those judgments and estimates are based on
historical experience and other factors containing the expectations of the future events that are reasonable estimated in accordance of the available
conditions & information.
- The most significant areas requiring management to make judgments and estimates that affect reported amounts and disclosures are as follows:
A) Impairment of the available for sale equity instruments:
• In the case of available for sale financial investments, a significant or Continuous decline in the fair value of the security below its cost is considered
as impairment. Where such evidence exists, significant or Continuous decline needs a personal judgment. To make this judgment the bank
assesses –besides other factors- the common share price volatility. In addition, impairment exists when there is objective evidence that a certain
company has a financial difficulty in its cash flow from operating and financing activities, industry tool or sector or technological advances.
• If each significant or Continuous decline in the fair value of the security below its cost is considered, the bank will charge an additional loss of
EGP 20,312,399 represents transferring all the fair value reserve to P/L.
B) Derivatives’ Fair Value:
• For the unquoted financial instruments, the fair value is determined using a variety of valuation techniques which are tested and reviewed
periodically by high qualified staffs that are independent of those who created the models. The models used are validated prior put into use.
Inputs to pricing models are generally market-based when available and taken from reliable external data sources. While areas like the bank
credit risk, counterparties, volatility and correlations require management to make judgments & estimations. Changes in the assumptions related
to these factors may affect the financial instruments fair values which have been disclosed.
C) Held to maturity Investments:
• Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held to maturity. This category requires
personal judgment therefore the bank tests whether there is a genuine intent and ability to hold such investments to maturity. If the bank fails
to hold such investments till maturity (except for certain tightly defined circumstances such as if an entity sells an insignificant amount of held-
to-maturity investments close to maturity date), investments should be reclassified as available-for-sale, which will be measured at fair value
instead of amortized cost.
• If the bank fails to hold such investments till maturity. The investment book value will be increased (decreased) with EGP 54,035,585 to reach
the fair value against the fair value reserve in equity.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
77
Dec. 31, 2007
EGP
1,081,319,202
1,996,073,908
1,875,812,320
4,953,205,430
Dec. 31, 2007
EGP
7,391,521,850
7,391,521,850
8,788,772
155,000,000
163,788,772
509,054,737
5,717,696,684
6,226,751,421
Dec. 31, 2008
EGP
1,085,952,584
3,387,059,358
2,020,346,495
6,493,358,437
Dec. 31, 2008
EGP
400,757,450
400,757,450
65,708,935
309,143,900
374,852,835
628,734,537
2,986,706,427
3,615,440,964
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
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
Total Due From Banks
4,391,051,249
13,782,062,043
6- Treasury Bills and other Governmental Notes
- 91 Days Maturity
- 182 Days Maturity
- 364 Days Maturity
- Unearned Income
Total
Reverse Repos
Dec. 31, 2008
EGP
3,515,475,000
1,951,800,000
5,627,175,000
11,094,450,000
(612,265,165)
10,482,184,835
1,966,822,571
12,449,007,406
Dec. 31, 2007
EGP
1,313,750,000
748,800,000
970,750,000
3,033,300,000
(84,625,681)
2,948,674,319
-
2,948,674,319
7- Financial Assets For Trading
Debt Instruments
- Government Bonds
- Other Debt Instruments
Total Debt Instruments
Equity Instruments
- Foreign Company Shares
- Mutual Fund
Total Equity Instruments
Dec. 31, 2008
EGP
101,369,914
44,776,795
146,146,709
59,440,478
291,967,300
351,407,778
Dec. 31, 2007
EGP
51,603,627
64,370,759
115,974,386
100,666,274
371,832,610
472,498,884
Total Financial Assets For Trading
497,554,487
588,473,270
8- Financial Investment
Financial Investment Available for Sale
- Debt Instruments Listed - Fair Value
- Equity Instruments Listed - Fair Value
- Unlisted Instruments
Total Financial Investment Available for Sale (1)
Financial Investment Held to Maturity Debt Instruments
- Listed
- Unlisted
Total Financial Investment Held to Maturity (2)
Total Financial Investment (1+2)
Listed Balances
Unlisted Balances
Total
Fixed Interest Debt Instruments
Variable Interest Debt Instruments
Total
Dec. 31, 2008
EGP
1,921,272,094
244,823,746
596,137,143
2,762,232,983
306,374,803
374,888,471
681,263,274
3,443,496,257
2,472,470,643
971,025,614
3,443,496,257
1,832,967,710
769,567,658
2,602,535,368
Dec. 31, 2007
EGP
1,462,208,120
291,333,688
594,045,858
2,347,587,666
311,494,817
132,399,349
443,894,166
2,791,481,832
2,065,036,625
726,445,207
2,791,481,832
1,339,637,012
566,465,274
1,906,102,286
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
79
Total
4,000,447,850
1,814,992,095
(3,037,672,306)
(38,933,733)
56,833,304
(4,185,378)
2,791,481,832
2,791,481,832
11,666,296,137
(10,885,257,036)
(6,576,438)
(81,995,801)
(40,452,436)
3,443,496,258
Dec. 31, 2007
EGP
122,815,034
(29,016,847)
(16,056,744)
148,393,558
Opening Balance 1/1/2007
Addition
Deduction (Selling - Recovery)
Financial
Investment
Available for Sale
3,178,163,512
1,814,992,095
(2,673,473,661)
Differences in revaluation of the Cash Assets in Foreign Currencies
(24,742,206)
Profit from Fair value Difference
Deduct - Impairment Losses
Ending Balance 31/12/2007
Opening Balance 1/1/2008
Addition
Deduction (Selling - Recovery)
Differences in revaluation of the Cash Assets in Foreign Currencies
Profit from Fair value Difference
Deduct - Impairment provision
Ending Balance 31/12/2008
Profit (Losses) from Financial Investment
56,833,304
(4,185,378)
2,347,587,666
2,347,587,666
11,153,380,395
(10,611,700,507)
(7,219,107)
(81,995,801)
(37,819,662)
2,762,232,984
Profit (Losses) from selling Available for Sale Financial Instruments
Losses from Impairment of Equity Instruments Available for Sale
(Losses) From Available for Sale Debt Instruments Reverse of Impairment
Profit (Losses) from Selling Investments in Subsidiaries and associates.
Financial
Investment
Held to Maturity
822,284,338
-
(364,198,645)
(14,191,527)
-
-
443,894,166
443,894,166
512,915,742
(273,556,529)
642,669
-
(2,632,774)
681,263,274
Dec. 31, 2008
EGP
120,409,400
(47,618,230)
(7,219,106)
50,258,991
Total
115,831,055
226,135,001
An Amount Of EGP 207,246,166 Classified as of Held To Maturity Investment Instead Of Available For Sale Investment
9- Other Operating Income
Profits (Losses) From Assets & Liabilities Revaluation Except Trading
Profits (Losses) From Selling Equipments And Fixed Assets
Recovery From Other Provisions
Others
Dec. 31, 2008
Dec. 31, 2007
EGP
8,676,929
5,052,568
165,365,215
3,953,701
183,048,413
EGP
13,024,355
1,269,870
-
(14,112,549)
181,676
10- Loans and Overdrafts
- Discounted Bills
- Loans & Overdrafts to Customer
- Loans & Overdrafts to Banks
- Unearned Bills Discount
- Provision For Doubtful Debts
- Interest in suspense
Net Loans & Overdrafts
11- Provision For Doubtful Debts
Dec. 31, 2008
- Balance at Beginning of The year
- Formed During The year
- Recoveries from Written Off Debts
- Foreign Currency Revaluation Diff.
- Usage During The year
Dec. 31, 2008
Dec. 31, 2007
EGP
795,836,842
26,867,609,401
344,498,810
28,007,945,053
(119,310,349)
(1,408,297,328)
(150,009,498)
26,330,327,878
Specific
EGP
491,530,222
175,941,000
63,759,860
5,054,571
736,285,653
(96,061,356)
EGP
369,367,153
20,979,609,432
501,437,453
21,850,414,038
(33,299,487)
(1,089,969,238)
(248,554,472)
20,478,590,841
General
EGP
598,439,016
169,634,015
-
-
768,073,031
-
Total
EGP
1,089,969,238
345,575,015
63,759,860
5,054,571
1,504,358,684
(96,061,356)
Balance at The End of The year
640,224,297
768,073,031
1,408,297,328
Dec. 31, 2007
- Balance at Beginning of The Year
- Formed During The year
- Recoveries from Written Off Debts
- Foreign Currency Revaluation Diff.
- Usage During The Year
- Transferred from Specific to General Provision
Specific
EGP
551,958,000
91,524,201
44,472,711
(8,580,249)
679,374,663
(177,835,496)
(10,008,945)
General
EGP
486,950,021
101,480,050
-
-
588,430,071
-
10,008,945
Total
EGP
1,038,908,021
193,004,251
44,472,711
(8,580,249)
1,267,804,734
(177,835,496)
-
Balance at the end of the Year
491,530,222
598,439,016
1,089,969,238
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
81
12- Financial Derivatives
The bank uses the following financial derivatives for non hedging purposes.
* Forward contracts represents commitments of buying foreign and local currencies including unexecuted spot transactions. Future contracts for
foreign currencies and/or interest rates represents contractual commitments to receive or pay net amount on the basis of changes in foreign
exchange rates or interest rates, and/or buying or selling foreign currencies or financial instruments in a future date with a fixed contractual price
under active financial market.
* Credit risk is considered low, and future interest rate contracts represents future exchange rate contracts negotiated for case by case, these
contracts requires financial settlements of any differences in contractual interest rates and prevailing market interest rates on future dates based
on contractual amount (nominal value) pre agreed upon.
* Foreign exchange and/or interest rate swap represents commitments to exchange cash flows, resulting from these contracts exchange of currencies
or interest (fixed rate versus variable rate for example) or both (meaning foreign exchange and interest rate contracts)/ contractual amounts are
not exchanged except for some foreign exchange contracts
* Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to fulfill their liabilities. This
risk is monitored continuously through comparisons of fair value and contractual amount, and to control continuously through comparisons of fair
value and contractual amount, and to control the outstanding credit risk, the bank evaluates other parties using the same methods as in borrowing
activities.
* Options contracts in foreign currencies and/or interest rates represents contractual agreements for the buyer (issuer) to seller (holders) as a right
not an obligations whether to buy (buy option) or to sell (sell option) at a certain day or within certain period for a certain amount in foreign currency
or interest rate. Options contracts are either traded in the market or negotiated between the bank and one of its client (Off balance sheet). The
bank exposed to credit risk for purchased options contracts only and in the line of its book cost which represent its fair value.
* The contractual value for some derivatives options considered a base to compare the realized financial instruments on the balance sheet, but it didn’t
provide indicator on the projected cash flows of the fair value for current instruments, those amounts doesn’t reflect credit risk or interest rate risk.
* Derivatives in the banks benefit represent (assets) conversely it represents (liabilities) as a result of the changes in foreign exchange prices or
interest rates related to these derivatives. Contractual / expected total amounts of financial derivatives can fluctuate from time to time and also
the range through which the financial derivatives can be in benefit of the bank or conversely against its benefit and the total fair value of the financial
derivatives in assets and liabilities. Hereunder are the fair values of the booked financial derivatives.
For Trading Derivatives
Foreign Derivatives
- Forward Foreign exchange contracts
2,572,060,181
31,916,357
31,680,875
3,603,088,630
9,729,116
2008
Amount
Assets
Liability
Amount
2007
Assets
Liability
8,983,093
- Currency swap
- Options
Total Derivatives (1)
Interest rate derivatives
- Interest rate Swaps
Total Derivatives (2)
- Commodity
Total Derivatives (3)
Total Assets (liability) For
Trading Derivatives (1+2+3)
3,457,152,333
65,087,047
57,539,919
4,095,848,478
25,528,958
51,068,349
112,099,475
1,080,796
1,080,796
8,018,830
13,753
13,753
98,084,200
90,301,590
-
35,271,827
60,065,195
1,730,052
63,646,403
63,646,403
3,452,965
3,452,965
1,728,760,514
40,036,007
40,036,007
3,101,568
3,101,568
1,235,414,832
543,160,189
543,160,189
543,160,189
543,160,189
-
-
704,890,792
636,914,744
75,307,834
63,166,763
13- Financial Investments in Subsidiary and Associated Companies
A- Subsidiary Companies:
- Commercial International Capital Holding Co. *
1,045,411,957
99.98
275,511,540
50.09
Dec. 31, 2008
%
Dec. 31, 2007
%
EGP
EGP
B- Associated Companies:
- Contact for Cars Trading
- Commercial International life insurance co.
- Corplease co.
- Cotecna Trade Support
- Haykala For Investment
- Egypt Factors
- International. Co. for Appraisal & Collection.
- International Co. for Security & Services ( Falcon )
The Financial Investments in subsidiary companies
are represented as follows :-
- Financial Investments listed in Stock Exchange
- Financial Investments Unlisted in Stock Exchange
-
45
40
39
40
39
40
40
-
44,520,250
32,000,000
48,750
600,000
10,751,715
1,000,000
4,000,000
1,138,332,672
1,045,411,957
92,920,715
1,138,332,672
38.4
40
40
39
40
39
40
40
31,000,000
32,000,000
18,400,000
48,750
600,000
3,763,646
400,000
4,000,000
365,723,936
275,511,540
90,212,396
365,723,936
* CIB Share Reached 99.98% (54988000 Shares) After Finalizing Acquisition Process for Remaining CI Capital Holding Co. in 09/07/2008 According to The Shareholders
agreement Signed in 17/06/2008
14- Capital Commitments :-
- Financial Investments
The Capital Commitments For The Financial Investments Reached On The Date Of balance Sheet EGP198,681,919 as follows :-
Available for Sale Financial Investments
Financial Investments in Subsidiaries and associated companies
Investments value
EGP
611,775,824
1,395,000
Paid
EGP
Remaining
EGP
413,840,156
197,935,669
648,750
746,250
- Fixed Assets & Branches Constructions
The value of Commitments for the purchase of fixed assets contracts and branches constructions that have not been implemented till the date of financial statement
amounted to EGP 4,904,068.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
83
Dec. 31, 2008
Dec. 31, 2007
EGP
406,019,416
53,438,701
90,340,427
52,165,659
340,657,279
-
942,621,482
-
942,621,482
EGP
460,512,142
52,588,918
204,554,366
29,361,646
275,561,186
241,625,336
1,264,203,594
(243,638,021)
1,020,565,573
15- Debit Balances and Other Assets
Accrued Revenues
Prepaid Expenses
Advances for Purchase of Fixed Assets
Assets Acquired as Settlement of Debts *
Accounts receivable & Other Assets ***
Accrued Balances of Customers Loans **
Deduct
Provision for General & Insurance Risk **
Total Debit Balances and Other Assets
*
This Include The Value Of Premises That Was Not Recorded Under The Bank's Name By EGP 32,682,053 Which Were Acquired Against Settlement Of The Debts Mentioned Above, In The Same
Time The Legal Procedures Are Under Process To Register Or Sell These Assets Within The period required by law.
** 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 For Facilities Policies, Resulting In Reclassifying These Balances Under Other Debit Balances Conservative Provisions Were Adequately Reallocated From Other Provisions To Meet
The Relevant Operation Risk And The case Setteled During Year 2008
*** Include EGP 15,955,151 as Assets Held For Sale.
16- Net Fixed Assets (Net of Accumulated Depreciation)
Dec. 31, 2008
Machines &
Furniture &
Land
EGP
Premises
EGP
IT
EGP
Vehicles
Fitting -Out
Equipment
Furnishing
EGP
EGP
EGP
EGP
Total
EGP
Opening Balance (3)
59,786,060
298,200,192
406,196,928
20,771,267
139,643,839 169,413,585
76,822,124
1,170,833,995
Additions (Deductions) During The year
1,283,388
35,162,427
113,059,285
305,448
50,089,658
47,603,582
14,461,304
261,965,092
Closing Balance (1)
61,069,448
333,362,619
519,256,213
21,076,715
189,733,497 217,017,167
91,283,428
1,432,799,087
Accu. Depreciation at Beginning of The year (4)
Current year Depreciation
Accu. Depreciation at end of The year (2)
-
-
-
91,389,674
247,953,560
17,798,473
88,854,558
83,740,254
33,992,656
563,729,175
15,144,584
71,612,245
1,348,769
33,149,425
23,025,895
9,537,407
153,818,325
106,534,258
319,565,805
19,147,242
122,003,983 106,766,149
43,530,063
717,547,500
End of year Net Assets (1-2)
61,069,448
226,828,361
199,690,408
1,929,473
67,729,514 110,251,018
47,753,365
715,251,587
Beginning of year Net Assets (3-4)
59,786,060
206,810,518
158,243,368
2,972,794
50,789,281
85,673,331
42,829,468
607,104,820
Depreciation rates
5%
20%
20%
33.3%
12.5%
10%
* Net fixed assets value on the Balance Sheet date includes EGP 73,303,957 non registered assets while their registrations procedures are in process.
17- Due to Banks
(a) Central Bank
- Current Accounts
- Time Deposits
Total Due to Central Bank
(b) Local Banks
- Current Accounts
- Time Deposits
Total Due to Local Banks
(c) Foreign Banks
- Current Accounts
- Time Deposits
Total Due to Foreign Banks
Dec. 31, 2008
EGP
75,056,264
-
75,056,264
19,309,126
-
19,309,126
116,257,050
2,847,572
119,104,622
Dec. 31, 2007
EGP
80,028,494
2,012,792,500
2,092,820,994
24,932,808
28,480,310
53,413,118
199,834,891
31,013,432
230,848,323
Total Due to Banks
213,470,012
2,377,082,435
18- Customers' Deposits
- Demand Deposits
- Time & Notice Deposits
- Saving & Deposit Certificates
- Saving Deposits
- Other Deposits
Total Customer Deposits
19- Credit Balances and Other Liabilities
- Accrued Interest Payable
- Accrued Expenses
- Accounts Payable
- Income Tax
- Other Credit Balances
Total Credit Balances And Other Liabilities
Dec. 31, 2008
EGP
13,126,519,017
19,946,603,875
7,395,350,361
7,316,052,948
1,153,583,462
48,938,109,663
Dec. 31, 2007
EGP
11,586,418,467
13,622,910,338
5,957,646,007
6,517,256,544
1,830,308,636
39,514,539,992
Dec. 31, 2008
Dec. 31, 2007
EGP
208,568,878
68,214,404
674,949,796
209,809,805
33,050,662
1,194,593,545
EGP
176,020,513
31,856,339
300,867,471
180,386,954
45,972,518
735,103,795
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
85
20- Long Term Loans
- F.I.S.C.
- K.F.W
- UNIDO
Rate
%
Maturity date
Maturing through
Balance as of
Balance as of
7
9-10.5
1
3-5 years
10 years
2011
next year
EGP
12,000,000
6,935,659
517,480
Dec. 08
EGP
Dec. 07
EGP
30,439,600
40,565,200
16,010,946
15,195,955
847,580
8,038,908
- Ministry of Agriculture (F.S.D.P)
3.5 - 5.5
3-5 years
41,884,205
58,804,557
92,594,906
depends on maturity
date
3.5 - 5.5
depends on maturity
date
3-5 years
65,000
125,000
10,000
3 months T/D
2010
1,560,000
3,046,250
4,951,250
or 9% which more
62,962,344
109,273,933
161,356,219
- Ministry of Agriculture (V.S.P)
- Social Fund
Total
21- Other Provisions
Opening
Balance
Formed
FCY Balance
Usage
Balance
Closing
During the year
Reval. Difference
During the year
No Longer Required
Balance
Dec. 31, 2008 EGP
- Provision for Income Tax Claims
227,173,695
-
-
(10,264,010)
(70,000,000)
146,909,685
- Provision for Legal Claims
1,123,118
487,075
- Provision for Contingent
167,036,000
38,760,000
(1,194)
517,939
(337,886)
-
-
-
1,271,113
206,313,939
- Provision for Other Claim
-
9,723,449
-
(341,489)
(658,511)
8,723,449
Total Other Provisions
395,332,813
48,970,524
516,745
(10,943,385)
(70,658,511)
363,218,186
Provision for Income Tax Claims
Provision for Legal Claims
Provision for Contingent
Total Other Provisions
Opening
Balance
227,173,695
1,126,794
111,524,889
339,825,378
Dec. 31, 2007 EGP
Formed
FCY Balance
Usage
Balance
Closing
During the year
Reval. Difference
During the year
No Longer Required
Balance
-
-
57,412,416
57,412,416
-
(3,676)
(1,901,305)
(1,904,981)
-
-
-
-
-
-
-
-
227,173,695
1,123,118
167,036,000
395,332,813
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 EGP 2925 Million To Be Divided On 292.5 Million Shares With EGP 10 Par Value For Each Share On
31/07/2008 According To Board Of Directors Decision On 21/02/2008 By Using 975 Million From General Reserve .
- 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 (ESOP) 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 And Retained earnings Accounts Has Been Formed For Difference Revaluation
For Financial Investment (Available For Sale) For Prior Years
23- Contingent Liabilities & Commitments
Letters of Guarantee
Letters of Credit ( Import & Export )
Customers Acceptances
Dec. 31, 2008
EGP
10,852,904,384
1,933,869,400
504,220,921
Dec. 31, 2007
EGP
8,710,811,993
2,233,007,892
616,046,795
Total
13,290,994,705
11,559,866,680
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
87
Dec. 31, 2007
EGP
3,925,710
1,712,418,676
1,716,344,386
323,476,235
739,391,447
77,368,908
136,792,638
2,993,373,614
69,203,483
1,506,576,968
1,575,780,451
3,579,534
217,342,046
Dec. 31, 2008
EGP
5,549,512
2,003,772,928
2,009,322,440
623,471,960
1,032,068,228
49,785,679
58,227,573
3,772,875,880
97,515,593
1,786,456,286
1,883,971,879
6,245,478
73,443,883
1,963,661,240
1,796,702,031
1,809,214,640
1,196,671,583
Dec. 31, 2008
EGP
277,942,194
(1,319,226)
(1,555,899)
23,259,000
26,932,691
53,231,649
(40,911,023)
337,579,386
Dec. 31, 2007
EGP
153,821,842
(5,101,086)
(689,232)
23,386,836
41,353,081
46,663,091
16,757,323
276,191,855
24- Net Interest Income
Interest Received from Loans and similar items.
Loans & Facilities
Banks
Clients
Total
Treasury Bills & Bonds
Deposits & Current Account
Financial Investment In Debt Instruments Held to Maturity & Available for Sale
Other
Total
Interest Paid on deposits and similar items
Deposits & Current Account:-
Banks
Clients
Total
Other Loans
Other
Total
Net
25- Trading Net Profit
Foreign exchange operations:-
Profit (Losses)From Foreign exchange
Profits (Losses) from Revaluing Trading Assets & Liabilities in Foreign Currencies
Profit (Losses)From Forward Foreign exchange Deals Revaluation
Profit (Losses)From Interest rate Swap Revaluation
Profit (Losses)From Currency Swap Deals Revaluation
Debt Instruments For Trading
Equity Instruments For Trading
Total
26- Comparative Figures
As a Result of Changing The Accounting Standards Concerning The Financial Investments, The Bank Has restated the Comparative Figures (as mentioned in note 2A)
For Some Items In Balance Sheet and Income Statement as Hereunder:
Financial Investment Available For Sale
Financial Derivatives
Debit Balances
Credit Balances
Special Reserves
Fair Value Reserve (Available For Sale Financial Investment)
Retained Earnings
Net Trading Income
Profits (losses) Financial Investments
Income Tax
- The Comparative Figures Are Amended as well To Confirm With The General Assembly Held on 17th
Of March, 2008 Decisions, For Ratifying The Appropriation Account Of Year 2007.
27- 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)
- Other Provisions (Excluded Loan Loss & Contingent Liabilities And Income Tax Provisions)
- Other Items(Other Investments Revaluation Difference)
- Reserve For Employee Stock Ownership Plan (ESOP)
- Total Deferred Tax Assets(Liabilities)
Balance Before Restatement
Balance After Restatement
EGP
2,279,926,299
-
-
162,709,903
4,870,506
-
212,982,610
276,290,900
(167,662,101)
EGP
2,347,587,666
75,307,833
63,166,763
213,609,315
60,903,531
11,628,342
276,191,855
226,135,001
(180,303,950)
Assets (liabilities)
Assets (liabilities)
Dec. 31, 2008
EGP
Dec. 31, 2007
EGP
(26,037,670)
1,998,913
28,533,744
17,345,581
21,840,568
(22,155,045)
48,952,228
20,190,375
5,831,917
52,819,475
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
89
Dec. 31, 2007
EGP
1,400,941,463
20%
280,188,293
424,416
(139,463,112)
26,967,598
168,117,194
12.00%
Dec. 31, 2007
EGP
1,232,824,269
(18,492,364)
(123,282,427)
1,091,049,478
292,500,000
3.73
294,409,350
3.71
Dec. 31, 2008
EGP
1,855,889,170
20%
371,177,834
4,675,448
(130,962,123)
(4,102,447)
240,788,712
12.97%
Dec. 31, 2008
EGP
1,615,100,458
(24,226,507)
(161,510,046)
1,429,363,905
292,500,000
4.89
295,478,665
4.84
28- Reconciliation of effective tax rate
- Profit Before Tax
- Tax Rate
Income Tax based on accounting profit
Add / (Deduct)
- Non-Deductible Expenses
- Tax Exemptions
- Effect Of Provisions
Income Tax
Effective Tax Rate
29- Earning Per Share
- Net Profit For The year
- Board Member's Bonus
- Staff Profit Sharing
- Shareholders' Share In Profits
- Number Of Shares
- Earning Per Share
* By Issuance Of ESOP Shares Earning Per Share Will Be:
- Number Of Shares Including ESOP Shares
- Diluted Earning Per Share
30- Share-Based Payments:
According To The Extraordinary General Assembly Meeting On June 26, 2006 , The Bank launched 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 year (3 Years) With Corresponding Increase In Equity Based On Estimated
Number Of Shares That Will Eventually Vest.The Fair Value For Such Equity Instruments Is Measured By Use Of Black-Scholes Pricing Model.
Details Of The Rights To Share Outstanding During The year Are As Follows:
Outstanding At The Beginning Of The year
Granted During The year
Forfeited During The year
Exercised During The year
Expired During The year
Outstanding At The End Of The year
- The Estimated Fair Value Of The Equity Instrument Granted To The First Tranch Is EGP 45.82 .
- The Estimated Fair Value Of The Equity Instrument Granted To The Second Tranch Is EGP 81.18 .
Number of Shares
1,909,350
1,276,665
(207,350)
-
-
2,978,665
31- Assets & Liabilities Maturities
Assets
- Cash And Due From Central Bank
- Due From Banks
- Treasury Bills And Other Governmental Notes
- 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
Maturity
Within one year
6,493,358,437
4,391,051,249
13,061,272,571
497,554,487
2,762,232,983
14,721,451,328
79,687
20,051,249
-
942,621,482
Maturity
Over One Year
-
-
-
-
-
12,791,985,417
344,419,123
661,212,025
1,138,332,672
-
42,889,673,473
14,935,949,237
213,470,012
41,524,201,001
62,962,344
1,194,593,545
-
7,413,908,662
46,311,589
-
42,995,226,902
7,460,220,251
32- Interest Rate
- The Average Interest Rates Applied for Assets and Liabilities During The Year Are 7.21 % & 3.65 % Respectively.
33- 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 2004 .
- Corporate Income Tax For The Years 2005-2006 Will Be Examined From The Tax Authority
- 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 .
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
91
Local Currency
Foreign Currency
481,576,209
3,909,475,039
62,198,759
10,499,496,255
1,375,973,774
11,392,863,009
2,277,076,866
2,400,336,389
28,007,945,052
(119,310,349)
(1,408,297,328)
(150,009,498)
26,330,327,877
%
0.2
37.5
4.9
40.7
8.1
8.6
100
5.0
Local Currency
Foreign Currency
20,593,961
192,876,051
95,133,156
5,762,542,659
1,955,118,330
11,269,398,263
24,711,197,433
5,144,719,822
48,938,109,663
%
0.2
11.8
4.0
23
50.5
10.5
100
Local Currency
Foreign Currency
3,933,512,215
12,639,451
64,388,766
6,919,392,169
1,921,229,949
439,832,155
4,010,540,432
9,280,454,273
34- 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
Total Loans & Overdrafts (Including unearned interest)
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
35- Main Currencies Positions
- Egyptian Pound
- US Dollar
- Sterling Pound
- Japanese Yen
- Swiss Franc
- Euro
36- Mutual Funds
(1) Osoul Fund
Dec. 31, 2008
in thousand EGP
Dec. 31, 2007
in thousand EGP
(6,756)
4,714
(3,303)
(333)
1,024
15,811
(13,959)
(56,955)
(389)
(377)
821
14,449
- 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 30,647,805 With Redeemed Value LE 4,194,458,592.
- The Market Value Per Certificate Reached EGP 136.86 On 31/12/2008.
- The Bank Portion Got 2,321,802 Certificates With Redeemed Value EGP 317,761,822 .
(2) Istethmar Fund
- CIB 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 3,481,368 With Redeemed Value LE 227,368,144.
- The Market Value Per Certificate Reached EGP 65.31 On 31/12/2008.
- The Bank Portion Got 174,072 Certificates With Redeemed Value EGP 11,368,642.
(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 1,227,413 With Redeemed Value LE 68,501,920.
- The Market Value Per Certificate Reached EGP 55.81 On 31/12/2008.
- The Bank Portion Got 30,686 Certificates With Redeemed Value EGP 1,712,586.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
93
37- 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.
- Loans & Overdrafts
- Investment in Subsidiary Companies
- Customer Deposits
- Contingent Accounts
- International Co. for Security & Services
- Corplease Co.
- Commercial International Life Insurance Co.
- Commercial International Brokerage Co.
- Dynamic Company
- Egypt Factors
- CI Assets Management
- Commercial International Capital Holding Co.
EGP
319,307,234
1,237,667,822
287,923,092
47,864,230
Income (EGP)
Expenses (EGP)
1,001,416
48,104,095
7,265,684
18,594,523
31,316
82,463
3,008,089
111,342
36,639,026
575,188
1,812,838
979,343
-
140,860
74,795
-
Financial Statement
B. Consolidated CIB & CI-CH
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
95
Financial Statement
B. Consolidated CIB & CI-CH
Commercial International Bank (Egypt) S.A.E. Consolidated Balance Sheet as of Dec. 31, 2008
Assets
- Cash & Due From Central Bank
- Due From Banks
- Treasury Bills and other Governmental Notes
- Trading Financial Assets
- Loans & Overdrafts
- Financial Derivatives
- Financial Investments:
Available for Sale
Held to Maturity Financial Investments
- Financial Investments in Associated Co.
- Brokers - Debit Balances
- Reconciliation accounts- Debit Balances
- Debit Balances & Other Assets
- Goodwill
- Intangible Assets
- Deferred Tax
- Fixed Assets (Net)
- Total Assets
Liabilities & Shareholder's Equity
Liabilities
- Due to Banks
- Customers Deposits
- Brokers- Credit Balances
- Reconciliation accounts - Credit Balances
- Financial Derivatives
- Credit Balances & Other Liabilities
- Long Term Loans
- Other Provisions
- Total Liabilities
Shareholders' Equity
- Paid in Capital
- Reserves
- Retained Earnings
- Reserve for employee stock ownership plan (ESOP)
- Net Profit of the year
- Total Shareholders' Equity & Net Profit
- Minority Interest
- Total Shareholders' Equity and Minority Interest
- Total Liabilities & Shareholders' Equity
Note No.
Dec. 31, 2008
EGP
(5)
(6)
(7)
(8)
6,493,360,095
4,551,845,285
12,456,955,210
641,627,430
(11&12)
26,330,327,878
(13)
(9)
(9)
(14)
(16)
(39)
(39)
(28)
(17)
(18)
(19)
(13)
(20)
(21)
(22)
(31)
(23)
704,890,792
2,774,965,250
681,263,274
92,923,215
151,604,732
-
972,855,164
200,523,251
640,938,786
19,372,767
748,340,702
57,461,793,831
228,994,222
48,790,029,809
200,921,933
27,897,554
636,914,744
1,229,280,358
109,273,933
372,645,236
51,595,957,789
2,925,000,000
1,335,817,804
99,069,113
86,727,903
1,370,592,742
5,817,207,562
48,628,480
5,865,836,042
57,461,793,831
Dec. 31, 2007
EGP
(Restated)
4,953,205,430
13,883,232,504
2,951,621,063
683,832,861
20,478,590,841
75,307,833
2,353,862,934
443,894,166
90,714,548
122,917,170
21,108,871
1,035,176,214
140,613,801
-
51,900,192
620,238,882
47,906,217,310
2,378,613,378
39,476,052,841
162,358,363
1,292,008
63,166,763
759,678,951
161,356,219
397,924,539
43,400,443,062
1,950,000,000
1,194,226,652
41,349,498
29,159,584
1,285,775,354
4,500,511,088
5,263,160
4,505,774,248
47,906,217,310
- Contingent Liabilities & Commitments
(24)
13,290,944,705
11,559,841,635
The Accompanying Notes are an integral part of the Financial Statements and are to be read therewith " Audit Report Attached ".
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
97
Dec. 31, 2007
EGP
(Restated)
2,998,066,645
(1,797,842,883)
1,200,223,762
665,185,633
(25,286,540)
639,899,093
71,536,293
276,721,777
(250,988,033)
226,736,631
-
(697,705,206)
5,267,755
-
1,471,692,072
(194,218,288)
11,459,368
1,288,933,152
2,746,306
1,286,186,846
3.89
3.87
Commercial International Bank (Egypt) S.A.E. Consolidated Income Statement For The Year Ended Dec. 31, 2008
Note No.
Dec. 31, 2008
- Interest and similar income
- Interest and similar Expenses
Net Interest Income
- Fees & Commissions Income
- Fees & Commissions Expense
Net Income From Fees & Commissions
- Dividends Income
- Net Trading Income
- Provisions
- Profit (Losses) from Financial Investments
- Goodwill Impairment
- Administrative Expenses
- Other Operating Income
- Intangible Assets Amortization
Net Profit Before Tax
- Income Tax
- Deferred Tax
Net Profit After Tax
- Minority Interest
- Bank Shareholders
- Earning Per Share
- Basic
Diluted
(25)
(25)
(26)
(9)
(10)
(29)
(29& 28)
EGP
3,765,207,513
(1,966,547,421)
1,798,660,092
821,333,569
(73,587,145)
747,746,424
102,559,579
345,367,741
(410,519,381)
109,312,249
(183,698,000)
(1,038,662,088)
179,386,060
(33,733,620)
1,616,419,056
(218,777,585)
(32,226,272)
1,365,415,199
(5,177,543)
1,370,592,742
(30)
(30)
4.15
4.11
Commercial International Bank (Egypt) S.A.E. Consolidated Cash flow For the year Ended Dec. 31, 2008
Cash Flow From Operating Activities
- Net Income before tax
Adjustments To Reconcile Net Income
To Net Cash Provided by operating activities
- Depreciation
- Provisions (Formed during the year)
- Trading financial investments evaluation differences
- Impairment of assets
- Utilization of Provisions
(Except Provision for Doubtful Debts)
- Provisions No Longer required
- FCY Revaluation Differences of Provisions Balances (Except Doubtful Debts)
- Gains From Selling Fixed Assets
- Profit From Selling Financial Investments
- Profits From Selling an investment in Subsidiary
- Goodwill Impairment
- FCY Revaluation Diff.of Long Term Loans
- Share based payments
Operating Profits Before Changes in-
Operating Assets & Liabilities
Net Decrease (Increase) in Assets
- Due From Banks
- Treasury Bills and other Governmental Notes
- Trading financial Investments
- Financial Derivatives (Net)
- Loans & Overdrafts
- Debit Balances & Other Assets
Net Increase (Decrease) In Liabilities
- Due to Banks
- Customers Deposits
- Credit Balances & Other Liabilities
- Income tax paid
Net Cash Provided from Operating Activities
Dec. 31, 2008
EGP
Dec. 31, 2007
EGP
(Restated)
1,616,419,056
1,471,692,072
157,078,362
410,519,381
88,799,961
33,733,620
(11,957,034)
(165,739,690)
518,328
(5,052,568)
(227,427,627)
(50,258,991)
183,698,000
(922,993)
57,568,319
122,518,015
250,988,033
(8,210,793)
-
-
(7,036,600)
(1,904,981)
(1,269,870)
(174,663,447)
(148,393,558)
-
1,733,674
29,159,584
2,086,976,124
1,534,612,129
9,556,516,685
(7,358,853,097)
(46,594,530)
(55,834,978)
(6,220,116,065)
(9,204,729)
(2,149,619,156)
9,313,976,968
618,321,121
(155,475,345)
5,580,092,998
(7,961,652,630)
2,268,535,711
225,460,301
(12,141,070)
(3,054,288,046)
(213,637,494)
1,166,089,258
7,875,825,643
(85,419,369)
(80,317,367)
1,663,067,065
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
99
Dec. 31, 2007
EGP
(Restated)
15,148,088
(284,632,707)
378,390,172
1,119,236,499
(117,495,626)
1,110,646,426
60,455,684
(310,359,381)
(249,903,697)
2,523,809,795
4,355,564,286
6,879,374,081
4,953,205,430
13,883,232,505
2,951,621,063
(13,265,167,463)
(1,643,517,454)
Commercial International Bank (Egypt) S.A.E. Consolidated Cash flow For the year Ended Dec. 31, 2008
Cash Flow From Investing Activities
- Sale (Purchase) Of Subsidiaries & Associated Companies
- Purchase of Fixed Assets , Premises and Fitting out of Branches
- Redemption Of Held to Maturity Financial Investments
- Available For Sale Financial Investment
- Financial Investments in Subsidiary (Goodwill)
Net Cash (Used in ) Provided From Investing Activities
Cash Flow From Financing Activities
- Increase (Decrease) in Long - Term Loans
- Dividends Paid
Net Cash (Used in) Financing Activities
Net cash & cash equivalent changes
- Beginning Balance of cash & cash equivalent
Cash & Cash Equivalent Balance At the End of the year
Cash & Cash Equivalent are Represented as Follows :
- Cash and Due from Central Bank
- Due from Banks
- Treasury Bills and other Governmental Notes
- Due from Banks (Time Deposits)
- Treasury Bills with maturity more than three months
Dec. 31, 2008
EGP
(2,208,667)
(198,887,584)
(237,369,108)
(211,077,065)
(621,580,409)
(1,271,122,833)
(51,159,293)
(346,045,692)
(397,204,985)
3,911,765,180
6,879,374,081
10,791,139,261
6,493,360,095
4,551,845,285
12,456,955,210
(3,708,650,777)
(9,002,370,552)
Total Cash & Cash Equivalent
10,791,139,261
6,879,374,081
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Commercial International Bank (Egypt) S.A.E.
Notes to the Consolidated Financial Statements
For the Financial year
from January 1, 2008 to December 31, 2008
(1) Organization and Activities
a) Commercial International Bank (Egypt) S.A.E.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
101
Commercial International Bank (Egypt) S.A.E. was formed as a commercial Bank 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 one hundred & five branches, in addition
to forty eight 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 10th, 2005 and the company has been licensed by the capital market authority to carry out its activities under license
no. 353 on May 24th, 2006.
As of December 31, 2008 the bank directly owns 54,988,000 shares representing 99.98% of CI Capital Holding Company’s capital and on December
31, 2008 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
CI Investment Banking Co.
CI For Research Co.
Dynamic Brokerage Co.
United Brokerage Co. - Dubai
539,880
445,499
448,500
448,500
3,392,000
5,000,000
89.98
89.09
89.70
89.70
99.91
49.00
89.96
89.07
89.68
89.68
99.89
48.99
(2) Significant Accounting Policies
A) Basis of Preparing Financial Statements
• The consolidated Financial Statements are prepared in accordance with the Central Bank of Egypt regulations issued on 27th of June 2002 and
its amendments issued on December 16, 2008 and in accordance with the related Egyptian laws and regulations regarding to the preparation
of these financial statements.
• The available for sale investments measurement have been changed as at 1st of January 2008 as explained in note 2 (F) and (G), from the
lower of cost (taking into consideration the FX revaluations) or fair value and the differences were reported in “Income Statement” to fair value
with changes reporting direct to equity. The reclassification impact appears on the "Statement of Changes in Shareholders Equity" and the
"Available-for-Sale Investments". Adjustments related to the previous years have been done retrospectively.
• As a result of applying the new regulations, all outstanding derivatives on the 1st of January 2008 have been recognized in the balance sheet
and measured at fair value.
B) Basis of consolidation
Given the increase in the bank's ownership percentage from 50.09% (joint control) to 99.98% (full control) in CI Capital Holding, has been
adjusted form proportional consolidated basis which has been used in the previous financial periods up till June 30, 2008.
Consolidated Financial Statements are Consisting of the Financial Statements of Commercial International Bank and Consolidated Financial
Statements of CI Capital Holding and it's subsidiaries. The control is achieved through the bank's ability to control the financial and operational
policies of the invests in order to obtain benefits from its activities . The basis of the consolidation is follows: -
- Eliminating all balances and transactions between the bank and group companies.
- The cost of acquisition of subsidiary companies is based on the company's share in the fair value of assets acquired and obligations outstanding
the acquisition date.
- Minority shareholders represent the rights of others in subsidiary companies.
- Proportional Consolidation is used in consolidating method companies under joint control
C) 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.
• Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rate prevailing at the balance sheet
date. Currency translation differences on all monetary financial assets and liabilities are reported in the income statement in the following items:-
- Net trading income or net income arising from financial instruments originally recorded at fair value through profit and loss and financial assets
and liabilities held for trading or originally recorded at fair value through profit and loss.
- Other operating income (loss) for the other items.
• The changes in fair value arising from monetary financial instruments classified as foreign investments available for sale (Debt Instruments)
should be segregated to revaluation differences arising from changes in the instrument amortized cost to be recorded in "income from loans"
and differences arises from foreign exchange rate changes to be recorded in "other operating income" and differences arises from change in
fair value to be recorded in "fair value reserve for available for sale investments".
• Translation differences on non-monetary items (such as equities) held at fair value through income are also reported through income statement
whereas for those classified as available-for-sale are recorded directly in equity within ‘Net unrealized gains and losses on available-for-sale assets’
item.
D) 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 income statement. Dividends income is 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.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
103
- Management fees as follows:
1- Mutual funds & investment portfolios management fees:
- The Management fee is calculated as a percentage of the net value of assets under management according to the agreement’s terms and
conditions. These amounts are credited to the assets management company’s revenue pool on a monthly accrual basis.
- Commission is calculated, based on certain ratios of mutual fund’s net asset value, for the valuation of mutual fund’s assets. This valuation
commission is calculated and accrued 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
contract terms and is calculated based on the return on the net assets. Such fees are excluded from revenues unless they meet the booking
terms.
F) 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, which are measured at amortized cost using the effective interest rate.
G) Financial Assets Designated at fair value through profit and loss:
• Consists of financial assets held for trading & financial assets that the bank upon initial recognition designates to be measured at fair value with
changes reported in profit and loss.
• Financial instruments held for trading are those that the Bank holds primarily for the purpose of short-term profit-taking or if it represents a
part of specified financial instruments portfolio and there is an evidence of short-term profit-taking. Also derivatives are classified as held for
trading unless the derivatives are qualified under hedging accounting.
• Financial assets designated at fair value through profit and loss are recognized when it relates to an investment portfolio that are managed and
evaluated on a fair value basis according to the investment strategies and the risk management and have been reported to the senior management
according to that basis.
• Any financial derivative or instrument that designates to be measured at fair value with changes reported in income is not reclassified either
during the holding period or if it is initially recognized at fair value with changes reported to profit and loss.
• At all circumstances the bank does not reclassify any financial instrument to financial instrument measured at fair value with changes reported
to profit and loss or to financial assets held for trading.
H) Held to Maturity Investments
• Held to Maturity investments are non-derivative assets with fixed or determinable payments and fixed maturity that the bank management has
the ability and the positive intent to hold it for the foreseeable future or maturity. Any sales of a significant amount not close to their maturity -
except the emergency cases - would result in the reclassification of all held to maturity investments as available-for-sale.
I) Available-for-sale Investments
• Non-derivative assets that have either been designated as available for sale or do not fit into one of the categories described above. Equity
investments held without significant influence, which are not held for trading or elected to fair value through income, are classified as available-
for-sale.
J) Financial Assets
• For the assets classified at fair value through P/L ,held to maturity investments and available for sale investments buying and selling operations
are recognized as usual on the trade date which is the date that the bank is committed to buy or sell the financial asset.
• A financial asset that does not originally classify at fair value through P/L is initially recognized at fair value plus transaction costs. A financial
asset that is originally classified at fair value through P/L is initially recognized at fair value only and the transaction costs are transferred to P/L
in “Net income from trading activities”.
• Derecognized when the rights to receive cash flows have expired or the Bank has transferred substantially all the risks and rewards of ownership.
• Available for sale investments and financial assets designated at fair value through P/L are subsequently held at fair value whereas held to
maturity investments are measured at amortized cost using the effective interest rate method.
• Gains and losses arising from changes in the fair value of available-for-sale assets should be recognized directly in equity, through the statement
of changes in equity, until the financial asset is sold, collected, or otherwise disposed of, at which time the cumulative gain or loss previously
recognized in equity should be recognized in profit or loss.
• Monetary assets’ interest income is recognized based on the amortized cost method in the income statement. The foreign currency revaluations
differences related to available for sale investments are recognized in the income statement. Available for sale equity instruments related dividends
are recognized in the income statement when they declared.
• Fair values are obtained from quoted market prices in liquid markets. Where no active market exists, or quoted prices are unobtainable, the
fair value is estimated using a variety of valuation techniques - including discounted cash flow and other pricing models. Inputs to pricing models
are generally market-based when available and taken from reliable external data sources. If the range of reasonable fair value estimates is
significant and the probabilities of the various estimates cannot be reasonably assessed, an entity may measure the equity instrument at cost
minus any impairment losses.
• Debt instruments can be reclassified from the available for sale investments to held to maturity investments at fair value when the bank has the
intention and ability to hold to maturity. Any related Profits and losses that was previously recognized in equity are treated as follows:
- Financial assets with fixed or determinable payments and fixed maturity valued at amortized cost, using the effective interest method in case
of impairment the profits & losses that has been previously recognized directly in equity is removed from equity and recognized in the income
statement.
- Profits & losses related to financial assets without fixed or determinable maturity are held in equity till selling or dispose the asset then removed
from equity and recognized in the income statement. In case of impairment the profits & losses that has been previously recognized directly
in equity is removed from equity and recognized in the income statement.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
105
K) Investments in Associated Companies and Jointly controlled 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 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 recorded at cost at acquisition and proportionately consolidated in the consolidated financial statement.
L) Netting:
• Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal
right to set off the recognized amounts and there is an intention to settle on a net basis, or to realize an asset and settle the liability simultaneously.
• Treasury Bills Repos & reveres Repos agreements are netted on the balance sheet in “Treasury Bills and other governmental notes”.
M) Derivatives & Embedded Derivatives:
• Derivatives are measured initially at fair value and subsequently re-measured at fair value. Fair values are obtained from quoted prices prevailing
in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and options pricing
models as appropriate. All derivatives are included in assets when their fair value is positive and liabilities when their fair value is negative.
N) Repos & (Reverse Repos) Transactions:
• Repos (Reveres Repos) agreements are eliminated (recorded) on the balance sheet under “Treasury Bills and Other governmental Notes“
whereas its cost (revenue) is recorded in “interest received from treasury Bills & Bonds“ item in Income Statement using the effective interest
rate method.
O) Impairment of financial assets:
O/1) Financial Assets held to maturity:
The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a portfolio of financial assets is
impaired. A financial asset or portfolio of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence
of impairment as a result of one or more loss events that occurred after the initial recognition of the asset and prior to the balance sheet date
('a loss event') and that loss event or events has had an impact on the estimated future cash flows of the financial asset or the portfolio that
can be reliably estimated. Objective evidence that a financial asset or a portfolio is impaired includes observable data that comes to the attention
of the Bank about the following loss events:
- Significant financial difficulty of the issuer or obligor;
- It becomes probable that the borrower will enter bankruptcy or other financial Re-organization.
O/2) Available-for-sale Investments:
- The Bank assess at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets under
available for sale investments or held to maturity investment is impaired. In the case of equity instruments classified as available for sale, a
significant or prolonged decline in the fair value of the security below its cost is considered in determining whether impairment exists.
P) Intangible Assets:
P/1) Goodwill:
- Goodwill is capitalized and represents the excess of the cost of an acquisition over the fair value of the Bank’s share of the acquired entity’s
net identifiable assets at the date of acquisition. For the purpose of calculating goodwill, the fair values of acquired assets, liabilities and
contingent liabilities are determined by reference to market values or by discounting expected future cash flows to present value. Goodwill is
included in the cost of investments in associated and subsidiaries investments in the Bank standalone financial statements. Goodwill is tested
for impairment whereas the income statements are charged by the impairment.
Goodwill is allocated over the cash generating units for the purpose of testing the impairment. The cash generating units represent the main
segments of the bank.
P/2) Other intangible assets:
- Other intangible assets that are acquired by the Bank are stated at cost less accumulated amortization and any adjustment for impairment
losses. Other intangible assets are comprised of separately identifiable items arising from acquisition of subsidiaries, such as customer
relationships, and certain purchased trademarks and similar items. Amortization is charged to the income statement on a straight-line basis
over the estimated useful lives of the intangible asset with definite life. Intangible assets with indefinite life are not amortized but they are tested
for impairment
Q) Non financial assets impairment:
• Assets with indefinite life (except for Goodwill) are assessed at each balance sheet date or more frequently, to determine whether there is any
indication of impairment. If any such indication exists, the assets are subject to an impairment review.
• An impairment loss is recognized whenever the carrying amount of an asset that generates largely independent cash flows or the cash-generating
unit to which it belongs exceeds its recoverable amount. The recoverable amount of an asset is the greater of its net selling price and value in
use. To calculate value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market rates and the risks specific to the asset.
R) Assets Acquired for settlement of Debts:
• These Assets are recorded in the Financial Statement under “debit balances & Other Assets“ at cost and in case of a decrease of the fair value
of these assets at the Financial Statement 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.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
107
S) Provision for Doubtful Debts and Contingent Accounts:
• Provision for Doubtful Debts is established on the basis of an appraisal of the identified risk for specific loans and contingent accounts in addition
to general percentages from one to five according to the basis of appraising the customer’s credit worthiness issued by the central bank of Egypt
on 6th of June 2005.
• Provision for Doubtful Debts decreases by loans written off and increases 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.
T) Contingent Liability Accounts:
• Contingent Liability Accounts include transactions in which the Bank is involved as a third party. Such transactions do not represent actual bank’s
assets or liabilities at the Financial Statement date.
U) 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 from acquisition.
V) Depreciation and Amortization:
• Depreciation of Fixed Assets (except for lands) 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.
W) Share-based payments to employees:
• The Bank engages in equity settled share-based payment transactions in respect of services received from certain of its employees.
• The fair value of the services received is measured by reference to the fair value of the shares or equity instruments granted on the date of the
grant. The cost of the employee services received in respect of the shares or equity instruments granted is recognized in the income statement
over the period that the services are received, which is the vesting period. The fair value of the equity instruments granted is determined using
option pricing models, which take into account the exercise price of the instrument, the current share price, the risk free interest rate, the expected
volatility of the bank share price over the life of the equity instrument and other relevant factors. Except for those which include terms related to
market conditions, vesting conditions included in the terms of the grant.
• Are not taken into account in estimating fair value. Non-market vesting conditions are taken into account by adjusting the number of shares or
equity instruments included in the measurement of the cost of employee services so that ultimately, the amount recognized in the income
statement reflects the number of vested shares or equity instruments. Where vesting conditions are related to market conditions, the charges
for the services received are recognized regardless of whether or not the market related vesting condition is met, provided that the non-market
vesting conditions are met.
X) Taxes:
• Income Tax on the profit or loss for the financial 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 financial statements includes the accounting policies applied to measure and recognize significant financial
instruments and the revenues and expenses related thereto.
B) 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 fluctuates 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.
Notes No. (32 & 33) 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 period.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
109
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. (35) 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 expose the bank to the risk of fluctuation in exchange
rates. To minimize this risk, the bank monitors the balances of foreign currency positions according to Central Bank of Egypt instructions in that
respect. Note No. (36) Of the financial statements discloses significant foreign currency positions at the balance sheet date.
(4) Accounting estimates and assumptions:
- The preparation of financial statements requires management to make subjective judgments and estimates, at times, regarding matters that are
inherently uncertain. These judgments and estimates affect reported amounts and disclosures. Those judgments and estimates are based on
historical experience and other factors containing the expectations of the future events that are reasonable estimated in accordance of the available
conditions & information.
- The most significant areas requiring management to make judgments and estimates that affect reported amounts and disclosures are as follows:
A) Impairment of the available for sale equity instruments:
• In the case of available for sale equity instruments, a significant or Continuous decline in the fair value of the security below its cost is considered
as impairment. Where such evidence exists, significant or Continuous decline needs a personal judgment. To make this judgment the bank
assesses-besides other factors-the common share price volatility. In addition, impairment exists when there is objective evidence that a certain
company has a financial difficulty in its cash flow from operating and financing activities, industry tool or sector or technological advances.
• If each significant or Continuous decline in the fair value of the security below its cost is considered, the bank will charge an additional loss of
EGP 20,312,399 represents transferring all the fair value reserve to P/L.
B) Derivatives’ Fair Value:
• For the unquoted financial instruments, the fair value is determined using a variety of valuation techniques which are tested and reviewed
periodically by high qualified staffs that are independent of those who created the models. The models used are validated prior put into use.
Inputs to pricing models are generally market-based when available and taken from reliable external data sources. While areas like the bank
credit risk, counterparties, volatility and correlations require management to make judgments & estimations. Changes in the assumptions related
to these factors may affect the financial instruments fair values which have been disclosed.
C) Held to maturity Investments:
• Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held to maturity. This category requires
personal judgment therefore the bank tests whether there is a genuine intent and ability to hold such investments to maturity. If the bank fails
to hold such investments till maturity (except for certain tightly defined circumstances such as if an entity sells an insignificant amount of held-
to-maturity investments close to maturity date), investments should be reclassified as available-for-sale, which will be measured at fair value
instead of amortized cost.
• In case of having the held to maturity portfolio tainted, the book value of the portfolio will decrease by EGP 54 035 585 to reflect the fair value
through debiting the fair value reserve within equity.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
111
Dec. 31, 2007
EGP
1,081,319,202
1,996,073,908
1,875,812,320
4,953,205,430
Dec. 31, 2007
EGP
7,391,521,850
7,391,521,850
109,010,305
155,948,928
264,959,233
509,054,737
5,717,696,684
6,226,751,421
Dec. 31, 2008
EGP
1,085,954,242
3,387,059,358
2,020,346,495
6,493,360,095
Dec. 31, 2008
EGP
400,757,450
400,757,450
214,459,971
321,186,900
535,646,871
628,734,537
2,986,706,427
3,615,440,964
5- 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
6- 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
Total Due From Banks
4,551,845,285
13,883,232,504
7- Treasury Bills and other Governmental Notes
- 91 Days Maturity
- 182 Days Maturity
- 364 Days Maturity
- Unearned Income
Total
Reverse Repos
Grand Total
Dec. 31, 2008
EGP
3,515,475,000
1,960,250,000
5,627,175,000
11,102,900,000
(612,767,361)
10,490,132,639
1,966,822,571
12,456,955,210
Dec. 31, 2007
EGP
1,313,750,000
751,830,445
970,750,000
3,036,330,445
(84,709,382)
2,951,621,063
-
2,951,621,063
8- Financial Assets For Trading
Debt Instruments
- Government Bonds
- Other Debt Instruments
Total Debt Instruments
Equity Instruments
- Foreign Company Shares
- Mutual Fund
Total Equity Instruments
Dec. 31, 2008
EGP
101,369,914
188,849,738
290,219,652
59,440,478
291,967,300
351,407,778
Dec. 31, 2007
EGP
51,603,627
64,370,759
115,974,386
102,842,451
465,016,024
567,858,475
Total Financial Assets For Trading
641,627,430
683,832,861
9- Financial Investment
Financial Investment Available for Sale
- Debt Instruments Listed - Fair Value
- Equity Instruments Listed - Fair Value
- Unlisted Instruments
Total Financial Investment Available for Sale (1)
Financial Investment Held to Maturity
Debt Instruments
- Listed
- Unlisted
Total Financial Investment Held to Maturity (2)
Total Financial Investment (1+2)
Listed Balances
Unlisted Balances
Total
Fixed Interest Debt Instruments
Variable Interest Debt Instruments
Total
Dec. 31, 2008
EGP
1,921,272,094
244,823,746
608,869,410
2,774,965,250
306,374,803
374,888,471
681,263,274
3,456,228,524
2,472,470,643
983,757,881
3,456,228,524
1,832,967,710
769,567,658
2,602,535,368
Dec. 31, 2007
EGP
1,462,208,120
291,333,688
600,321,126
2,353,862,934
311,494,817
132,399,349
443,894,166
2,797,757,100
2,065,036,625
732,720,475
2,797,757,100
1,339,637,012
566,465,274
1,906,102,286
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
113
Total
4,000,447,850
1,821,267,363
(3,037,672,306)
(38,933,733)
56,833,304
(4,185,378)
2,797,757,100
2,797,757,100
11,672,753,135
(10,885,257,036)
(6,576,438)
(81,995,801)
(40,452,436)
3,456,228,524
Dec. 31, 2007
EGP
123,416,664
(29,016,847)
(16,056,744)
148,393,558
Opening Balance 1/1/2007
Addition
Deduction (Selling - Recovery)
Financial
Investment
Available for Sale
3,178,163,512
1,821,267,363
(2,673,473,661)
Differences in revaluation of the Cash Assets in Foreign Currencies
(24,742,206)
Profit from Fair value Differences
Deduct - Impairment Losses
Ending Balance 31/12/2007
Opening Balance 1/1/2008
Addition
Deduction (Selling - Recovery)
Differences in revaluation of the Cash Assets in Foreign Currencies
Profit from Fair value Differences
Deduct - Impairment provision
Ending Balance 31/12/2008
56,833,304
(4,185,378)
2,353,862,934
2,353,862,934
11,159,837,393
(10,611,700,507)
(7,219,107)
(81,995,801)
(37,819,662)
2,774,965,250
Profit (Losses) from Financial Investment
Profit (Losses) from selling Available for Sale Financial Instruments
Losses from Impairment of Equity Instruments Available for Sale
(Losses) From Available for Sale Debt Instruments Reverse of Impairment
Profit (Losses) from Selling Investments in Subsidiaries and associates.
Financial
Investment
Held to Maturity
822,284,338
-
(364,198,645)
(14,191,527)
-
-
443,894,166
443,894,166
512,915,742
(273,556,529)
642,669
-
(2,632,774)
681,263,274
Dec. 31, 2008
EGP
119,846,433
(47,618,230)
(7,219,106)
44,303,152
Total
109,312,249
226,736,631
An Amount Of EGP 207,246,166 Classified as of Held To Maturity Investment Instead Of Available For Sale Investment
10- Other Operating Income
Profits (Losses) From Assets & Liabilities Revaluation Except Trading
Profits (Losses) From Selling Equipments And Fixed Assets
Recovery From Other Provisions
Others
Dec. 31, 2008
Dec. 31, 2007
EGP
8,676,929
5,052,568
165,739,690
(83,127)
179,386,060
EGP
13,181,723
1,269,870
-
(9,183,838)
5,267,755
11- Loans and Overdrafts
- Discounted Bills
- Loans & Overdrafts to Customer
- Loans & Overdrafts to Banks
- Unearned Bills Discount
- Provision For Doubtful Debts
- Interest in suspense
Net Loans & Overdrafts
12- Provision For Doubtful Debts
Dec. 31, 2008
- Balance at Beginning of The year
- Formed During The year
- Recoveries from Written Off Debts
- Foreign Currency Revaluation Diff.
- Usage During The year
Dec. 31, 2008
Dec. 31, 2007
EGP
795,836,842
26,867,609,401
344,498,810
28,007,945,053
(119,310,349)
(1,408,297,328)
(150,009,498)
26,330,327,878
Specific
EGP
491,530,222
175,941,000
63,759,860
5,054,571
736,285,653
(96,061,356)
EGP
369,367,153
20,979,609,432
501,437,453
21,850,414,038
(33,299,487)
(1,089,969,238)
(248,554,472)
20,478,590,841
General
EGP
598,439,016
169,634,015
-
-
768,073,031
-
Total
EGP
1,089,969,238
345,575,015
63,759,860
5,054,571
1,504,358,684
(96,061,356)
Balance at The End of The year
640,224,297
768,073,031
1,408,297,328
Dec. 31, 2007
- Balance at Beginning of The Year
- Formed During The year
- Recoveries from Written Off Debts
- Foreign Currency Revaluation Diff.
- Usage During The Year
- Transferred from Specific to General Provision
Specific
EGP
551,958,000
91,524,201
44,472,711
(8,580,249)
679,374,663
(177,835,496)
(10,008,945)
General
EGP
486,950,021
101,480,050
-
-
588,430,071
-
10,008,945
Total
EGP
1,038,908,021
193,004,251
44,472,711
(8,580,249)
1,267,804,734
(177,835,496)
-
Balance at the end of the Year
491,530,222
598,439,016
1,089,969,238
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
115
13- Financial Derivatives
The bank uses the following financial derivatives for non hedging purposes.
* Forward contracts represents commitments of buying foreign and local currencies including unexecuted spot transactions. Future contracts for
foreign currencies and/or interest rates represents contractual commitments to receive or pay net amount on the basis of changes in foreign
exchange rates or interest rates, and/or buying or selling foreign currencies or financial instruments in a future date with a fixed contractual price
under active financial market.
* Credit risk is considered low, and future interest rate contracts represents future exchange rate contracts negotiated for case by case, these
contracts requires financial settlements of any differences in contractual interest rates and prevailing market interest rates on future dates based
on contractual amount (nominal value) pre agreed upon.
* Foreign exchange and/or interest rate swap represents commitments to exchange cash flows, resulting from these contracts exchange of currencies
or interest (fixed rate versus variable rate for example) or both (meaning foreign exchange and interest rate contracts)/ contractual amounts are
not exchanged except for some foreign exchange contracts
* Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to fulfill their liabilities. This
risk is monitored continuously through comparisons of fair value and contractual amount, and to control continuously through comparisons of fair
value and contractual amount, and to control the outstanding credit risk, the bank evaluates other parties using the same methods as in borrowing
activities.
* Options contracts in foreign currencies and/or interest rates represents contractual agreements for the buyer (issuer) to seller (holders) as a right
not an obligations whether to buy (buy option) or to sell (sell option) at a certain day or within certain period for a certain amount in foreign currency
or interest rate. Options contracts are either traded in the market or negotiated between the bank and one of its client (Off balance sheet). The
bank exposed to credit risk for purchased options contracts only and in the line of its book cost which represent its fair value.
* The contractual value for some derivatives options considered a base to compare the realized financial instruments on the balance sheet, but it didn’t
provide indicator on the projected cash flows of the fair value for current instruments, those amounts doesn’t reflect credit risk or interest rate risk.
* Derivatives in the banks benefit represent (assets) conversely it represents (liabilities) as a result of the changes in foreign exchange prices or
interest rates related to these derivatives. Contractual / expected total amounts of financial derivatives can fluctuate from time to time and also
the range through which the financial derivatives can be in benefit of the bank or conversely against its benefit and the total fair value of the financial
derivatives in assets and liabilities. Hereunder are the fair values of the booked financial derivatives.
For Trading Derivatives
Foreign Derivatives
Amount
Assets
Liability
Amount
2008
2007
Assets
- Forward Foreign exchange contracts
2,572,060,181
31,916,357
31,680,875
3,603,088,630
9,729,116
Liability
8,983,093
- Currency swap
- Options
Total Derivatives (1)
Interest rate derivatives
- Interest rate Swaps
Total Derivatives (2)
Commodity
Total Derivatives (3)
Total Assets (liability) For
Trading Derivatives (1+2+3)
3,457,152,333
65,087,047
57,539,919
4,095,848,478
25,528,958
51,068,349
112,099,475
1,080,796
1,080,796
8,018,830
13,753
13,753
98,084,200
90,301,590
-
35,271,827
60,065,195
1,730,052
63,646,403
63,646,403
3,452,965
3,452,965
1,728,760,514
40,036,006
40,036,006
3,101,568
3,101,568
1,235,414,832
543,160,189
543,160,189
543,160,189
543,160,189
-
-
704,890,792
636,914,744
75,307,833
63,166,763
14- Financial Investments in Associated Companies
Dec. 31, 2008
%
Dec. 31, 2007
- Contact for Cars Trading
- Commercial International life insurance co.
- Corplease co.
- Cotecna Trade Support
- Haykala For Investment
- Egypt Factors
- International. Co. for Appraisal & Collection.
- International Co. for Security & Services ( Falcon )
The Financial Investments in Associated companies
are represented as follows :-
- Financial Investments listed in Stock Exchange
- Financial Investments Unlisted in Stock Exchange
15- Capital Commitments :
A) Commercial International Bank
- Financial Investments
45
40
39
47.5
39
40
40
EGP
-
44,520,250
32,000,000
48,750
602,500
10,751,715
1,000,000
4,000,000
92,923,215
-
92,923,215
92,923,215
EGP
31,000,000
32,000,000
18,400,000
48,750
601,252
3,763,646
400,000
4,500,900
90,714,548
-
90,714,548
90,714,548
%
38.4
40
40
39
47.5
39
40
45
The Capital Commitments For The Financial Investments Reached On The Date Of balance Sheet EGP198,681,919 as follows :-
Available for Sale Financial Investments
Financial Investments in associates Co.
- Fixed Assets & Branches Constructions
Investments value
EGP
611,775,824
1,395,000
Paid
EGP
Remaining
EGP
413,840,156
197,935,669
648,750
746,250
The value of Commitments for the purchase of fixed assets contracts and branches constructions that have not been implemented till the date of financial statement
amounted to EGP 4,904,068
B) CI Capital Holding Co.
CI Capital Holding Co. assigned One of The Biggest Contractors Companies to Held a Premises in Smart Village with Total Budget EGP 37,184,572 And It Will Be
Finished After 16 Months Started in 23 April 2008 And The Co. Paid 20% From The Total Budget and the value of work performed as of the date of the Balance Sheet
amount EGP 8,420,566.
As a Down Payment Against Unconditioned Irrevocable Bank Letter Of Guarantee.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
117
Dec. 31, 2008
Dec. 31, 2007
EGP
398,537,508
57,238,848
118,184,293
52,165,659
346,728,856
-
972,855,164
-
972,855,164
EGP
460,502,319
54,175,157
204,935,394
29,361,646
288,214,383
241,625,336
1,278,814,235
(243,638,021)
1,035,176,214
16- Debit Balances and Other Assets
Accrued Revenues
Prepaid Expenses
Advances for Purchase of Fixed Assets
Assets Acquired as Settlement of Debts *
Accounts receivable & Other Assets ***
Accrued Balances of Customers Loans **
Deduct
Provision for General & Insurance Risk **
Total Debit Balances and Other Assets
*
This Include The Value Of Premises That Was Not Recorded Under The Bank's Name By EGP 32,682,053 Which Were Acquired Against Settlement Of The Debts Mentioned
Above, In The SameTime The Legal Procedures Are Under Process To Register Or Sell These Assets Within The period required by law.
** 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 For Facilities Policies, Resulting In Reclassifying These Balances Under other Debit Balances Conservative Provisions Were Adequately Reallocated From
Other Provisions To Meet The Relevant Operation Risk
*** Include EGP 15,955,151 as Assets Held For Sale.
17- Net Fixed Assets (Net of Accumulated Depreciation)
Land
EGP
Premises
EGP
IT
EGP
Vehicles
Fitting -Out
Equipment
Furnishing
EGP
EGP
EGP
EGP
Total
EGP
Dec. 31, 2008
Machines &
Furniture &
Opening Balance (3)
63,793,260
298,200,192
411,682,566
22,539,347
139,643,839 171,048,907
81,302,725
1,188,210,836
Additions (Deductions) During The year
13,276,188
35,162,427
119,067,190
2,459,093
50,089,658
49,762,116
20,053,455
289,870,127
Closing Balance (1)
77,069,448
333,362,619
530,749,756
24,998,440
189,733,497 220,811,023
101,356,180
1,478,080,963
Accu. Depreciation at Beginning of The year (4)
Current year Depreciation
Accu. Depreciation at end of The year (2)
-
-
-
91,389,674
250,320,234
18,320,122
88,854,558
84,320,370
34,766,996
567,971,954
15,144,584
75,606,602
2,553,138
33,149,425
24,068,975
11,245,583
161,768,307
106,534,258
325,926,836
20,873,260
122,003,983 108,389,345
46,012,579
729,740,261
End of year Net Assets (1-2)
77,069,448
226,828,361
204,822,920
4,125,180
67,729,514 112,421,678
55,343,601
748,340,702
Beginning of year Net Assets (3-4)
63,793,260
206,810,518
161,362,332
4,219,225
50,789,281
86,728,537
46,535,729
620,238,882
Depreciation rates
5%
20%
20%
33.3%
12.5%
10%
* Net fixed assets value on the Balance Sheet date includes EGP 73,303,957 non registered assets while their registrations procedures are in process.
18- Due to Banks
(a) Central Bank
- Current Accounts
- Time Deposits
Total Due to Central Bank
(b) Local Banks
- Current Accounts
- Time Deposits
Total Due to Local Banks
(c) Foreign Banks
- Current Accounts
- Time Deposits
Total Due to Foreign Banks
Dec. 31, 2008
EGP
75,056,264
-
75,056,264
34,833,336
-
34,833,336
116,257,050
2,847,572
119,104,622
Dec. 31, 2007
EGP
80,028,494
2,012,792,500
2,092,820,994
26,463,751
28,480,310
54,944,061
199,834,891
31,013,432
230,848,323
Total Due to Banks
228,994,222
2,378,613,378
19- Customers' Deposits
- Demand Deposits
- Time & Notice Deposits
- Saving & Deposit Certificates
- Saving Deposits
- Other Deposits
Total Customer Deposits
20- Credit Balances and Other Liabilities
- Accrued Interest Payable
- Accrued Expenses
- Accounts Payable
- Due to Associated & Subsidiaries Companies
- Other Liabilities
Total Credit Balances And Other Liabilities
Dec. 31, 2008
EGP
12,978,489,163
19,946,553,875
7,395,350,361
7,316,052,948
1,153,583,462
48,790,029,809
Dec. 31, 2007
EGP
11,566,831,688
13,612,928,991
5,948,726,982
6,517,256,544
1,830,308,636
39,476,052,841
Dec. 31, 2008
Dec. 31, 2007
EGP
208,568,878
63,085,571
916,240,507
-
41,385,402
1,229,280,358
EGP
176,020,513
34,419,303
489,355,989
13,323,760
46,559,386
759,678,951
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
119
21- Long Term Loans
- F.I.S.C.
- K.F.W
- UNIDO
Rate
%
Maturity date
Due through
Balance as of
Balance as of
7
9-10.5
1
3-5 years
10 years
2011
next year
EGP
12,000,000
6,935,659
517,480
Dec. 08
EGP
Dec. 07
EGP
30,439,600
40,565,200
16,010,946
15,195,955
847,580
8,038,908
- Ministry of Agriculture (F.S.D.P)
3.5 - 5.5
3-5 years
41,884,205
58,804,557
92,594,906
depends on maturity
date
3.5 - 5.5
depends on maturity
date
3-5 years
65,000
125,000
10,000
3 months T/D
2010
1,560,000
3,046,250
4,951,250
or 9% which more
62,962,344
109,273,933
161,356,219
- Ministry of Agriculture (V.S.P)
- Social Fund
Total
22- Other Provisions
Opening
Balance
Formed
FCY Balance
Usage
Balance
Closing
During the year
Reval. Difference
During the year
No Longer Required
Balance
Dec. 31, 2008 EGP
- Provision for Income Tax Claims
229,198,246
- Provision for Legal Claims
- Provision for Contingent
- Provision for Other Claim
- Provision of end of service bonus
1,123,118
167,036,000
492,272
74,903
7,017,276
487,075
38,760,000
10,213,953
339,610
1,583
(1,194)
517,939
-
-
(10,264,010)
(337,886)
-
(1,324,265)
(30,873)
(70,000,000)
155,953,095
-
-
1,271,113
206,313,939
(658,511)
8,723,449
383,640
Total Other Provisions
397,924,539
56,817,914
518,328
(11,957,034)
(70,658,511)
372,645,236
Opening
Balance
Formed
FCY Balance
Usage
Balance
Closing
During the year
Reval. Difference
During the year
No Longer Required
Balance
Dec. 31, 2007 EGP
- Provision for Income Tax Claims
229,198,246
- Provision for Legal Claims
1,126,794
-
-
-
(3,676)
- Provision for Contingent
111,524,889
57,412,416
(1,901,305)
- Provision for General risk
- Provision of end of service bonus
492,272
-
-
74,903
-
-
Total Other Provisions
342,342,201
57,487,319
(1,904,981)
-
-
-
-
-
-
-
-
-
-
-
-
229,198,246
1,123,118
167,036,000
492,272
74,903
397,924,539
23- 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 EGP 2925 Million To Be Divided On 292.5 Million Shares With EGP 10 Par Value For Each Share On
31/07/2008 According To Board Of Directors Decision On 21/02/2008 By Using 975 Million From General Reserve .
- 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 (ESOP) 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 And Retained earnings Accounts Has Been Formed For Difference Revaluation For Financial
Investment (Available For Sale) For Prior Years
24- Contingent Liabilities & Commitments
Letters of Guarantee
Letters of Credit (Import & Export)
Customers Acceptances
Dec. 31, 2008
EGP
10,852,854,384
1,933,869,400
504,220,921
Dec. 31, 2007
EGP
8,710,786,948
2,233,007,892
616,046,795
Total
13,290,944,705
11,559,841,635
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
121
Dec. 31, 2007
EGP
3,925,710
1,712,418,676
1,716,344,386
327,029,198
740,531,515
77,368,908
136,792,638
2,998,066,645
69,203,483
1,507,717,820
1,576,921,303
3,579,534
217,342,046
1,797,842,883
Dec. 31, 2008
EGP
5,549,512
2,003,772,928
2,009,322,440
623,807,366
1,024,064,455
49,785,679
58,227,573
3,765,207,513
97,515,593
1,789,342,467
1,886,858,060
6,245,478
73,443,883
1,966,547,421
1,798,660,092
1,200,223,762
Dec. 31, 2008
EGP
277,942,194
(761,507)
(1,555,899)
23,259,000
26,932,691
53,231,649
(33,680,387)
345,367,741
Dec. 31, 2007
EGP
153,821,842
(5,101,086)
(689,232)
23,386,836
41,353,081
46,663,091
17,287,245
276,721,777
25- Net Interest Income
Interest Received from Loans and similar items.
Loans & Facilities
- Banks
- Clients
Total
- Treasury Bills & Bonds
- Deposits & Current Account
- Financial Investment In Debt Instruments Held to Maturity & Available for Sale
- Other
Total
Interest Paid on deposits and similar items
Deposits & Current Account:-
- Banks
- Clients
Total
- Other Loans
- Other
Total
Net
26- Trading Net Profit
Foreign exchange operations:-
- Profit (Losses)From Foreign exchange
- Profits (Losses) from Revaluing Trading Assets & Liabilities in Foreign Currencies
- Profit (Losses)From Forward Foreign exchange Deals Revaluation
- Profit (Losses)From Interest rate Swap Revaluation
- Profit (Losses)From Currency Swap Deals Revaluation
- Debt Instruments For Trading
- Equity Instruments For Trading
Total
27- Comparative Figures
As a Result of Changing The Accounting Standards Concerning The Financial Investments, The Bank Has restated the Comparative Figures (as mentioned
in note 2 A ) For Some Items In Balance Sheet and Income Statement as Hereunder:-
Financial Investment Available For Sale Financial Derivatives
Debit Balances
Credit Balances
Special Reserves
Fair Value Reserve (Available For Sale Financial Investment)
Retained Earnings
Net Trading Income
Profits (losses) Financial Investments
Income Tax
Balance Before
Restatement
EGP
2,382,992,007
-
-
162,709,903
4,870,506
212,982,610
276,290,900
(167,662,101)
Balance After
Restatement
EGP
2,353,862,934
75,307,833
63,166,763
213,609,315
60,903,531
41,349,498
276,721,777
226,736,631
(194,218,288)
- The Comparative Figures Are Amended as well To Confirm With The General Assembly Held on 17th Of March, 2008 Decisions, For Ratifying The Appropriation Account Of Year 2007.
Comparative figures in the bank's Consolidated Financial Statements are Consisting of the Financial Statements of Commercial International Bank and 50.09 % of Consolidated Financial Statements
of CI Capital Holding Company using Proportionate Consolidation therefore the comparative figures can not be directly compared to figures for current year
28- 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)
- Other Provisions(Excluded Loan Loss & Contingent Liabilities And Income Tax Provisions)
- Other Items(Other Investments Revaluation Difference)
- Reserve For Employee Stock Ownership Plan (ESOP)
Total Deferred Tax Assets(Liabilities)
Assets (liabilities)
Dec. 31, 2008
EGP
Assets (liabilities)
Dec. 31, 2007
EGP
(28,505,471)
1,998,913
28,533,744
17,345,581
19,372,767
(23,074,328)
48,952,228
20,190,375
5,831,917
51,900,192
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
123
Dec. 31, 2007
EGP
1,471,692,072
20%
294,338,414
7,578,086
(146,125,178)
26,967,598
182,758,920
12.42%
Dec. 31, 2007
EGP
1,286,186,846
(19,292,803)
(128,618,685)
1,138,275,358
292,500,000
3.89
294,409,350
3.87
Dec. 31, 2008
EGP
1,616,419,056
20%
323,283,811
67,996,440
(136,173,947)
(4,102,447)
251,003,857
15.53%
Dec. 31, 2008
EGP
1,370,592,742
(20,558,891)
(137,059,274)
1,212,974,577
292,500,000
4.15
295,478,665
4.11
29- Reconciliation of effective tax rate
- Profit Before Tax
- Tax Rate
Income Tax based on accounting profit
Add / (Deduct)
- Non-Deductible Expenses
- Tax Exemptions
- Effect Of Provisions
Income Tax
Effective Tax Rate
30- Earning Per Share
- Net Profit For The year
- Board Member's Bonus
- Staff Profit Sharing
- Shareholders' Share In Profits
- Number Of Shares
- Earning Per Share
* By Issuance Of ESOP Shares Earning Per Share Will Be:
- Number Of Shares Including ESOP Shares
- Diluted Earning Per Share
31- Share-Based Payments:
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 year (3 years) with corresponding increase in equity based on estimated number of shares that will
eventually vest.The fair value for such equity instruments is measured by use of Black-Scholes pricing model.
Details Of The Rights To Share Outstanding During The year Are As Follows:
Outstanding At The Beginning Of The year
Granted During The year
Forfeited During The year
Exercised During The year
Expired During The year
Outstanding At The End Of The year
- The Estimated Fair Value Of The Equity Instrument Granted To The First Tranch Is EGP 45.82 .
- The Estimated Fair Value Of The Equity Instrument Granted To The Second Tranch Is EGP 81.18 .
Number of Shares
1,909,350
1,276,665
(207,350)
-
-
2,978,665
32- Assets & Liabilities Maturities
Assets
- Cash And Due From Central Bank
- Due From Banks
- Treasury Bills And Other Governmental Notes
- Trading Investments
- Available For Sale Investments
- Customers' Loans & Overdrafts
- Banks' Loans & Overdrafts
- Held To Maturity Investments
- Investments In Associated Companies
- Debit Balances And Other Assets
Liabilities
- Due to Banks
- Customer Deposits
- Long Term Loans
- Credit Balances and Other Liabilities
Maturity
Within one year
Maturity
Over One Year
6,493,360,095
4,551,845,285
13,069,722,571
641,627,430
2,774,965,250
14,721,451,328
79,687
20,051,249
-
972,855,164
43,245,958,059
228,994,222
41,376,121,147
62,962,344
1,229,280,358
42,897,358,071
-
-
-
-
-
12,791,985,417
344,419,123
661,212,025
92,923,215
-
13,890,539,780
-
7,413,908,662
46,311,589
-
7,460,220,252
33- Interest Rate
The Average Interest Rates Applied for Assets and Liabilities During The Year Are 7.21 % & 3.65 % Respectively.
34- 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 2004.
- Corporate Income Tax For The Years 2005-2006 Will Be Examined From The Tax Authority.
- 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.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
125
Local Currency
Foreign Currency
642,370,245
3,909,475,039
62,198,759
10,499,496,255
1,375,973,774
11,392,863,009
2,277,076,866
2,400,336,389
28,007,945,052
(119,310,349)
(1,408,297,328)
(150,009,498)
26,330,327,877
%
0.2
37.5
4.9
40.7
8.1
8.6
100
5.0
Local Currency
Foreign Currency
36,118,171
192,876,051
95,133,156
5,762,542,659
1,955,118,330
11,121,318,409
24,711,197,433
5,144,719,822
48,790,029,809
%
0.2
11.8
4.0
22.9
50.6
10.5
100
Local Currency
Foreign Currency
3,933,462,215
12,639,451
64,388,766
6,919,392,169
1,921,229,949
439,832,155
35- 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
Total Loans & Overdrafts (Including unearned interest)
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
Total
4,010,490,432
9,280,454,273
36- Main Currencies Positions
- Egyptian Pound
- US Dollar
- Sterling Pound
- Japanese Yen
- Swiss Franc
- Euro
37- Mutual Funds
(1) Osoul Fund
Dec. 31, 2008
Dec. 31, 2007
in thousand EGP
in thousand EGP
(6,756)
4,714
(3,303)
(333)
1,024
15,811
(13,959)
(56,955)
(389)
(377)
821
14,449
- 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 30,647,805 With Redeemed Value LE 4,194,458,592.
- The Market Value Per Certificate Reached EGP 136.86 On 31/12/2008.
- The Bank Portion Got 2,321,802 Certificates With Redeemed Value EGP 317,761,822 .
(2) Istethmar Fund
- CIB 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 3,481,368 With Redeemed Value LE 227,368,144.
- The Market Value Per Certificate Reached EGP 65.31 On 31/12/2008.
- The Bank Portion Got 174,072 Certificates With Redeemed Value EGP 11,368,642.
(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 1,227,413 With Redeemed Value LE 68,501,920.
- The Market Value Per Certificate Reached EGP 55.81 On 31/12/2008.
- The Bank Portion Got 30,686 Certificates With Redeemed Value EGP 1,712,586.
CIB 2008 ANNUAL REPORT
FINANCIAL STATEMENTS
127
38- 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.
- Loans & Overdrafts
- Investment in Subsidiary Companies
- Customer Deposits
- Contingent Accounts
Income And Expenses With Related Parties Are Represented As Follows:
- International Co. for Security & Services
- Egypt Factors
- Corplease Co.
- Commercial International Life Insurance Co.
39- Acquisition Cost
EGP
319,307,234
192,258,365
141,667,446
47,864,230
Income (EGP)
Expenses (EGP)
1,001,416
82,463
48,104,095
7,265,684
36,639,026
140,860
575,188
1,812,838
In July 9,2008 The bank acquired 49.89% as an extra portion in CI Capital Co. to be 99.89% and the Provisional-Consolidation process has been
finished at the end of year 2008 and the consolidation process has a result of goodwill in amount of EGP 384,221,251 in the acquisition date.
As a result of current financial turmoil in the international and local markets, a sharp decline in market indicators has been witnessed from October
2008, so the bank has prepared a study to determine the impairment value in the Goodwill which showed a decline with amount of EGP 183,698,000
which has been carried with income statement at the end of the year
Intangible Assets which has been acquired at the acquisition date are determined as follows:
1- Brand
2- Licenses
3- contracts
4- customer relationships
Total
Amortization from July 2008
Net Intangible Assets
EGP
336,790,272
20,000,000
119,694,389
198,187,745
674,672,406
(33,733,620)
640,938,786
Economic Benefits for the intangible assets are determined to amortized in 10 years unless there is an indicator for the declining and to be carried with income statement.
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08
A N N U A L
R E P O R T
Branches & Public Units
"Individually, we are one drop. Together, we are an ocean."
Ryunosuke Satoro
Branches & Public Units
Year
2008
2007
2006
2005
2004
2003
Branches
Units & FX
Total
104
88
74
61
53
43
48
45
39
39
38
44
152
119
100
92
81
82
180
160
140
120
100
80
60
40
20
0
Total Branches
152
119
100
92
82
81
2003
2004
2005
2006 2007 2008
CIB 2008 ANNUAL REPORT
BRANCHES & PUBLIC UNITS
131
Port Ghalib Branch
w w w . c i b e g . c o m