ANNUAL REPORT 2010
A Year To Remember
Facilitating growth in every sector...
CIB: An Introduction .......................................... 04
Chairman’s Note ................................................ 12
Board Of Directors’ Report ................................ 16
2010 In Review - Institutional Banking ................ 26
2010 In Review - Global Customer Relations ...... 34
2010 In Review - Consumer Banking ................. 36
2010 In Review - COO Area ............................... 40
2010 In Review - Risk Management ................... 46
2010 In Review - Compliance ............................ 49
Strategic Subsidiaries ........................................ 52
Corporate Governance ...................................... 62
Executive Management ...................................... 68
Corporate Social Responsibility .......................... 72
Financial Statements .......................................... 76
Annual Report 2010
1
Success Story
American University in Cairo
Educating Our Next
Leaders
Located in the heart of the Egyptian
capital at Tahrir Square, and now at a
new campus in New Cairo, the American
University in Cairo (AUC) is an independ-
ent institution of higher learning offering
some of the most prestigious undergradu-
ate, graduate and research programs in the
Arab world. As one of the Bank's preferred
corporate clients, CIB provides AUC with
a wide spectrum of standard and custom-
ized banking services.
CIB has been a partner to AUC since
1993. Over the years, the two entities have
developed a solid relationship strength-
ened by the Bank’s understanding of
AUC’s unique financial needs and its
ability to address those needs using in-
novative tailored solutions. In addition
to managing the university's payroll and
cash management, CIB devised a system
that standardizes the reporting of tuition
fees collected across its branch network.
The success of this system has prompted
the use of the same mechanism to facili-
tate wider monitoring of the university’s
receivables.
Consistent with its “people-centric”
philosophy, CIB is also responsible for
many of the personal banking needs of
AUC faculty and staff. In addition to of-
fering them standard services and con-
sumer products, the Bank has invested
in tailoring a personal loan program
that complements the university’s HR
policy.
Operating on both university campuses,
CIB has become an integral part of the
AUC community. By offering a wide range
of conventional and tailored banking
services, the Bank has helped enhance the
university’s operational efficiency while
simplifying the banking experience of the
younger generations. CIB expects AUC
to remain the preeminent institution of
higher learning not just in Egypt, but also
in the Middle East at large.
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3
CIB: An Introduction
What We Do
Commercial International Bank (CIB) is
the leading private sector bank in Egypt,
offering a broad range of financial products
and services to its customers which include
enterprises of all sizes, institutions, house-
holds and high net worth (HNW) indi-
viduals. In addition to traditional asset and
liability products, CIB offers wealth man-
agement, securitization, direct investment
and treasury services, all delivered through
client-centric teams. The Bank also owns
a number of subsidiaries, including CI
Capital, which offers asset management, in-
vestment banking, brokerage and research
services, in addition to the Commercial
International Life Insurance Company, the
Falcon Group, and Egypt Factors.
CIB continuously strives to provide
clients with superior financial solutions
to meet all of their financial needs. Man-
agement believes this enables the Group
to maintain its leadership position in the
market, while providing a stimulating work
environment for staff and delivering strong
financial performance for investors.
Our History
CIB was established in 1975 as Chase Na-
tional Bank, a joint venture between Chase
Manhattan and National Bank of Egypt
(NBE). In 1987, Chase divested its owner-
ship stake due to a shift in international
strategy, and the stake was acquired by
NBE at which point the Bank adopted the
name “Commercial International Bank”
(CIB).
Over time, NBE decreased its participa-
tion in CIB, which eventually reached 19%
in 2006, at which point a consortium led
by Ripplewood Holdings acquired NBE’s
remaining stake. In July 2009, Actis, an
emerging market private equity specialist,
acquired 50% of the stake held by the Rip-
plewood Consortium. Five months later,
Actis became the single largest shareholder
in CIB with a 9.3% stake after Ripplewood
sold its remaining share of 4.7% on the
open market in December 2009. The emer-
gence of Actis as the predominant share-
holder signalled a successful transition in
the Bank’s strategic partnership.
CIB is a leading
provider of financial
services to Egyptian
households,
institutions,
enterprises of all
sizes, and high net
worth individuals.
A Snapshot Of Our
Businesses
Corporate Banking
CIB is widely recognized as the
best corporate bank in Egypt and is
committed to being recognized as
one of the best banks in the region,
serving industry-leading corpo-
rate clients as well as small- and
medium-sized businesses.
Debt Capital Markets
CIB’s global product knowledge,
local expertise and capital re-
sources make the Bank an industry
leader in project finance, syndi-
cated loans and structured finance
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
CIB registered considerable
progress in 2010 as it continues to
build a full-service, world-class
consumer bank. We offer a wide
array of consumer banking prod-
ucts, including:
• Personal Loans focuses on
employees of our Corporate
Banking clients and offers fully-
secured Overdrafts and Trade
Products.
• Auto Loans is positioned to
actively support this growing
market in the coming years.
• Deposit Accounts offers numer-
ous account types to address
our clients’ deposit and savings
needs, such as Minor, Youth,
Senior Citizen, Certificate of De-
posits, and Care Accounts as well
as Current, Savings and Time
Deposit Accounts.
• Residential Property Finance
provides loans to finance home
purchases, as well as residential
construction, refurbishment and
finishing.
• Credit and Debit Cards offers a
broad range of credit, debit and
prepaid cards.
Wealth Management
CIB offers a wide array of invest-
ment products and services to the
largest base of affluent clients in
Egypt.
Global Transactional Services
(GTS)
The Global Transactional Services
(GTS) Group serves as a key product
group within CIB, and oversees
the product areas of Cash Manage-
ment, Trade, and Global Securities
Services.
Mid-Cap Banking
Through a dedicated team of
certified officers who are highly
specialized in providing advice and
assistance in every aspect of entre-
preneurial business requirements,
this division caters to medium-sized
companies. The department’s role
is to help these businesses grow to
become large corporations in the
future.
Treasury and Capital Markets
Services
CIB delivers 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 mar-
ket knowledge and expertise. CI
Capital is consistently ranked as
the leading brokerage house serv-
ing local and international clients
in Egypt.
Direct Investment
CIB also actively participates in se-
lect direct investment opportunities
in Egypt and across the region.
4
Annual Report 2010
Annual Report 2010
5
FY 10
Consoli-
dated
FY 09
Consoli-
dated
FY 10
FY 09
FY 08
FY 07
FY 06
FY 05
Key Facts
#1 Bank
in terms of:
CIB: An Introduction
Key Financial Highlights
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
Cost : Income
Return on Average Common Equity
Net Interest Margin (NII /average inter-
est earning Assets)
Return on Average Assets
Regular Workforce Headcount (exclude
non clerk)
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
Equity to Risk-Weighted Assets
Risk-Weighted Assets (billions)
Tier 1 Capital Ratio
Adjusted Capital Adequacy Ratio
* Unadjusted to stock dividends
3.60
1.00
14.60
79.49
33.75
42.62
590.1
27,973
13.2
2.11%
29.3%
2.92
3,707
6
6
1,188
2,126
6.10
1.50
21.55
59.70
29.50
54.68
292.5
15,994
9.0
2.74%
25.0%
2.54
3,173
9
9
1,041
1,784
4.84
1.00
17.62
93.40
27.87
37.20
292.5
10,881
7.69
2.69%
18.1%
2.11
3,326
346
49
395
1,076
1,615
3.71
1.00
20.93
95.00
53.61
91.77
195
17,895
24.7
1.09%
15.8%
4.39
2,313
193
57
250
714
1,233
3.64
1.00
17.06
79.00
42.11
57.87
195
11,285
14.1
1.73%
27.5%
3.39
1,741
176
17
193
668
802
2.77
1.00
13.99
63.50
39.91
58.68
130
7,628
12.5
2.6%
21.3%
1.86
1,450
197
43
240
474
610
3,343
9
9
1,238
1,744
36.92% 34.87% 35.97% 32.36% 30.19% 38.38% 32.72%
27.23% 28.50% 29.42% 34.98% 33.95% 26.49% 23.76%
3.50%
3.54%
3.06%
3.81%
3.62%
3.12%
3,932
6
6
1,562
2,006
39.36%
25.70%
35,175
75,425
54,649
8,572
69,840
62,007
7,803
17.64%
49
13.15%
14.41%
27,443
64,255
63,364
7,034
60,858
53,743
6,405
35,175
75,093
63,480
8,614
69,578
61,624
7,780
27,443
64,063
54,843
6,946
60,595
53,431
6,288
26,330
57,128
48,938
5,631
52,396
44,602
4,876
20,479
47,664
39,515
4,081
42,472
36,603
3,813
17,465
37,422
31,600
3,327
33,906
29,277
3,027
14,039
30,390
24,870
2,727
29,183
25,619
2,568
41
17.22% 17.72% 17.01% 14.82% 13.60% 14.14% 13.83%
22
30
15.28% 13.15% 15.28% 13.74% 10.17%
9.78%
16.53% 14.41% 16.53% 14.99% 14.70% 13.60% 13.10%
26
9.59%
49
41
38
Profitability, achieving
EGP 2.006 billion in net
income.
Our 4,750
employees serve around 557,145
customers.
EGP 75.4 billion
in total assets.
Net-worth among all
Egyptian private sector
banks.
More than 87,486
electronic banking service users.
We serve over 100
“Fortune 500” companies.
Loan book and deposit
base among all Egyptian
private sector banks.
Over 500 of Egypt’s
largest corporations bank with CIB.
2.87%
4,523
2.87%
4,335
3.06%
4,190
2.94%
3,983
3.08%
3,792
2.90%
3,132
2.37%
2,477
2.09%
2,301
28,326
20,720
28,758
21,484
15,964
22,481
14,539
11,718
Market capitalization in
the Egyptian banking sector.
6
Annual Report 2010
Annual Report 2010
7
CIB: An Introduction
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 2010 demonstrates the unique value
proposition we offer our clients. Our un-
wavering commitment to them is the basis
upon which we will continue to provide
our shareholders with consistent, high-
quality returns.
A key component of our success is
our talented staff. CIB’s ability to offer
employees an attractive work environ-
ment, myriad career opportunities and
comprehensive training and feedback
allows us to attract and retain the strong-
est banking professionals in Egypt. Our
employees reciprocate with dedication to
our customers and the wider CIB com-
munity.
30.28% 32.73%
23.80%
26.67% 27.23% 25.72%
20.10%
22.20%
1.90%
1.90% 2.10%
2.40% 3.02%
2.60% 2.87% 2.87%
2003
2004
2005
2006
2007
2008
2009
2010
Return On Average Assets (ROAA)
Return On Average Equity (ROAE)
Our Vision
To be the best financial institution in the Middle East and Africa by 2020.
Our Mission
To provide the best financial solutions for 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 underpin the manner in which CIB employees work
together to deliver effective results for our customers and community:
Integrity:
• Exemplify the highest standards of personal and professional ethics in all
aspects of our business.
• Be honest and transparent at all times.
• Stand behind our convictions and accept responsibility for mistakes if they occur.
• Comply fully with the letter and spirit of the laws, rules and practices that gov-
ern CIB’s business in Egypt and abroad.
Client Focus:
• Total client satisfaction is our number one priority.
• To help our clients achieve their goals, we offer some of the best standard prod-
ucts and services in addition to tailored solutions.
Innovation:
• Since our inception as the first joint venture bank in Egypt, CIB has been a pio-
neer in the financial services industry. We believe innovation is a key competi-
tive advantage and promote it accordingly.
• We strive to lead the Egyptian financial services industry in expanding its
scope to include the millions of Egyptians who remain underserved.
Hard Work:
• Discipline and professionalism help us to achieve outstanding results for our
clients and outstanding returns for our shareholders.
• We work with our clients both to realize their short-term objectives and help
them strategise in the long-run.
Teamwork:
• We collaborate openly within CIB and with our various partners, clients and share-
holders.
• We work hard to ensure that each team member consistently represents CIB’s
overall corporate image, so that there is only one CIB in the eyes of our clients.
• We value and respect one another’s cultural backgrounds and unique perspectives.
Respect for the Individual:
• We respect the individual whether an employee, a client, a shareholder, or a
member of the communities in which we live and operate.
• We treat one another with dignity and respect and take time to answer ques-
tions and respond to concerns.
• We firmly believe each individual must feel free to make suggestions and offer
constructive criticism.
• CIB is a meritocracy, where all employees have equal opportunity for develop-
ment and advancement based solely on their merits.
8
Annual Report 2010
Annual Report 2010
9
Success Story
Al-Hokair Group
Building Africa’s
Largest Mall
One of our largest partners in commercial
real estate, Al-Hokair Group is a leading
shopping centre operator in Saudi Arabia
and one of the region’s fastest growing
property developers. With a span of opera-
tions including ownership and management
of fashion retail outlets, restaurant chains,
furniture stores, shopping malls and other
related investments, Al-Hokair provides
access to valuable retail space in prime
locations across the Gulf as well as the wider
Middle East and North African region.
Our corporate banking division has
provided financing and advisory services
to Al-Hokair Group since its entry into
the Egyptian market with the launch of
“Mall of Arabia”, which will be the largest
shopping mall in Africa once completed.
Operated by Egyptian Centres, Al-
Hokair’s main subsidiary in Egypt, this
441,000-square-meter piece of property
located in Sixth of October City will be
developed over the next few years at a total
investment cost of approximately US$ 294
million. Since the project’s launch in 2008,
CIB has played a key facilitating role,
beginning with the provision of payment
security through a letter of guarantee
followed by the extension of a time loan
facility to partially finance the investment
cost.
Through the capacities of its Debt Capi-
tal Markets Team, CIB has since emerged
as the primary financial advisor of
Egyptian Centres, acting as lead arranger
for Mall of Arabia’s eight year syndicated
loan. CIB views its partnership with Al-
Hokair Group, currently underpinned by
the Mall of Arabia debt facility, as a prom-
ising vehicle through which to capitalize
on the enormous growth potential in the
Egyptian real estate sector.
10
Annual Report 2010
Annual Report 2010
11
Chairman’s Note
The Bank’s
increasing
profitability over the
past decade reflects
the strength of both
our business model
and the long-term
growth potential
of the Egyptian
economy.
12
Annual Report 2010
Dear Shareholders,
As financial institutions around the world
continued to weather the aftereffects of the
global financial crisis, Commercial Inter-
national Bank (CIB) proudly reported out-
standing financial results for 2010 as Egypt
sustained robust economic growth and
maintained a leading share of Africa’s for-
eign direct investment inflows. A testament
to the strength of CIB’s business model, we
attribute much of the Bank’s recent success
to a number of initiatives taken over the
past year. In addition to launching new
products and services across the client spec-
trum, we have also sought to improve CIB’s
corporate culture from within by focusing
more on clients, by increasing inter-depart-
mental synergy, and by expanding our CSR
activities. But before delivering an overview
of our accomplishments for the year just
past and outlining our vision for the future,
a brief word about the circumstances cur-
rently facing Egypt is in order.
As I write this, Egypt finds itself face-to-
face with an opportunity of historic dimen-
sions. Following almost a month of protests,
the people of this great nation discovered
that building a better future for our children
did not have to be just a dream. While the
situation in Egypt continues to unfold and
pose short-term economic uncertainties, we
at CIB believe that the emergence of a more
democratic and transparent political system
will encourage higher levels of investment
in Egypt in the long-run and contribute to
even more sustainable economic growth.
We serve end-consumers and corporate
clients alike, and in the current context, CIB
will continue to expand our products and
services across our broad client spectrum
as we seek to help these individuals and
companies grow and contribute to the con-
tinued economic success of Egypt.
Notwithstanding the short-term uncer-
tainties facing the Egyptian economy, CIB’s
performance in 2010 added yet another
outstanding year to our institution’s long
history of success. We ended the year just past
with consolidated net profits of EGP 2,006
million, a 15% increase over 2009 reflecting
a return on average equity of 25.72% and a
return on average assets of 2.87%. Notably,
the Bank outpaced market growth in several
areas, growing its loan book by over 26%
while increasing its market share in the cards
business, particularly with POS and other ac-
ceptance points. While correlated to a robust
domestic consumer market, our increasing
profitability can be attributed to a number of
initiatives taken across all business segments.
As part of our commitment to imple-
menting a more “client-centric” approach
in our businesses, we expanded our scope
of services to all customers while devoting
special attention to those still in the process
of rebounding from the economic down-
turn of the past few years.
Building on the infrastructure we
established for our Consumer Banking
segment in 2009, CIB followed through by
improving existing services and launching
new ones. Our firm belief in the need for
Egyptian retail customers to do more to
maximize the value of their assets led us to
expand the reach of our wealth manage-
ment services. This project saw CIB add
wealth management desks to 30 different
branches throughout the country in 2010,
significantly increasing the geographic
scope of this service. CIB also registered
outstanding growth in personal and auto
loans, as net growth in retail lending
exceeded 46%. Finally, CIB also launched a
number of new services under the umbrella
of Consumer Banking, including a pay-
roll program for companies as well as the
Hemaya Fund, a new capital protected asset
management vehicle.
CIB has a legacy
of promoting
social solidarity in
Egypt, targeting
disadvantaged
segments of society
through a variety
of institutions and
initiatives.
Applying the same strategy of expanding
and deepening client coverage, CIB made
significant leaps in the institutional banking
segment. As 2010 presented certain chal-
lenges to members of the business commu-
nity, we worked especially hard to support
our corporate clients to raise and re-finance
their debt in light of insufficient foreign cur-
rency sourcing. At the same time, we also
re-organized our corporate banking group
along industry lines in order to enhance
our ability to focus on each client’s specific
needs. In addition to re-structuring and
re-organizing the existing departments of
Institutional Banking, CIB developed new
operational areas, notably by launching
global transactional services (GTS) as well
as non-funded solutions for foreign cur-
rency transactions.
CIB made enormous leaps in 2010 partly
thanks to organisational reform leading to
greater internal efficiency, but I also attrib-
ute our success to a wider shift in our collec-
tive mentality. In this respect, we do not
seek simply to maintain decorum, enforce
the highest standards of mutual respect
between staff, and uphold best practices in
corporate governance; here at CIB, we also
strive to make every employee and cus-
tomer a stakeholder not only in the Bank,
but in Egyptian society as a whole. Beyond
our pursuit of solid financial performance,
our mission here has been to channel our
success to benefit the country on a more
global level. It is thus my pleasure to say that
CIB has been a pioneer in effecting signifi-
cant social change throughout this nation
by expanding our non-banking corporate
social responsibility initiatives.
CIB has a legacy of promoting social
solidarity in Egypt, targeting disadvantaged
segments of society through a number of
outlets including its finance program and in-
ternational donors fund division. One of the
leading partners of Egyptian SME’s, the Bank
uses development funds to create job op-
portunities and establish income generating
projects in rural communities while empha-
sizing the needs of women and small farmers.
Adding to our efforts to reduce poverty
and increase national income, CIB has also
engaged in microfinance, having disbursed
86,000 micro-loans to date since 2007.
In addition to targeting SME’s, the biggest
drivers of economic growth, CIB has also
sought to launch other sustainable initia-
tives, and in May 2010 established the CIB
Foundation, a non-profit organization dedi-
cated to enhancing health and nutritional
services for underprivileged children in
Egypt. Endowed with a donation equivalent
to a fixed percentage of the Bank’s annual
profits, the CIB Foundation partners with
some of the country’s foremost community
leaders and development specialists in order
to deliver change to local communities.
The Foundation has already made major
contributions in child healthcare, most no-
tably in partnership with the Magdi Yacoub
Foundation in Aswan and Abou El Reesh
Children’s Hospital in Mounira, Cairo. In
addition to financing the cost of surgical
procedures and hospital expansions, the
CIB Foundation engages in community
awareness initiatives, a testament to the
organization’s multi-dimensional approach
in advancing its CSR agenda.
Looking forward, CIB embraces the
myriad challenges facing Egypt as we
embark on a new chapter in our nation’s
history. We will continue to grow our insti-
tutional and consumer banking segments,
and lobby for reform on issues which affect
our customers, such as the area of mortgage
finance, critical to the retail segment and
key to greater social stability in Egypt. In
philanthropy, we will build on the success-
es of the CIB Foundation while initiating
action on social problems which remain
endemic, such as human trafficking, as we
aim to become one of Egypt’s most respon-
sible corporate citizens.
The international community has long
called for greater democracy and social
justice in Egypt, and the transforma-
tion that began at the beginning of 2011
presents us with a window of opportunity
to accelerate the forces of modernization
and economic liberalization already set in
motion.
With the continued support of our
global partners and sustained efforts of
our local offices, I am confident that CIB
will continue to play a crucial role in
harnessing Egypt’s growth potential as
we ensure that the society we leave for our
children is not only a richer one, but also a
healthier one.
Annual Report 2010
13
Success Story
Juhayna
Providing Healthy,
Affordable Food Products
One of CIB’s valued partners in the food
and beverage industry, the Juhayna Group
has played a pre-eminent role in the re-
vival of Egypt’s market for packaged juice
and dairy products. Established in 1983,
Juhayna has since diversified its product
offering and expanded its geographic
reach, now exporting to markets as varied
as the Arabian Gulf, Europe and the
United States. CIB facilitated this growth
at many pivotal moments in the com-
pany’s history by providing it with crucial
financial services, helping Juhayna grow
into one of MENA’s top listed consumer
foods companies.
Initially geared towards supplying the
Egyptian market with staple products
such as milk, plain yogurt and a range
of juices, Juhayna began targeting ex-
port markets and launching new brands
as early as 1988. These developments
culminated in 2001 when the company
increased its paid-in capital by EGP 60
million to double its production capacity
and capture a share of the growing Middle
East and African export markets. CIB
assisted Juhayna in arranging the credit
facilities needed to fuel these expansions,
and also helped finance the company’s
acquisition of assets belonging to The
Egyptian Company for Dairy Products,
owned by local rival Domty in 2005.
This long history of cooperation with
Juhayna led CIB most recently to arrange
a credit facility to finance the reconstruc-
tion of one of the group’s factories after
it burned down in April 2010, while the
Bank has also periodically advised Ju-
hayna on the restructuring of its debt.
Producers such as Juhayna are rapidly
bolstering Egypt’s position as a regional
leader in the export of fruit juices and
dairy products, and this is one of the
many reasons why CIB sees Juhayna not
only as a valuable business partner, but
also as a champion of Egyptian industry.
14
Annual Report 2010
Annual Report 2010
15
Board Of Directors’ Report
Board of Directors’ Report
CIB has been working for the past two years
to change the culture of the institution,
to break the “silo mentality”, to develop a
corporate culture that is receptive to change
and to become an internationally-renowned
institution. We have spent these years
preparing for this change and studying
opportunities in the local and international
markets. Today, our country has undergone a
fundamental transformation and has the op-
portunity to become the Egypt we hoped it
could be. CIB is uniquely positioned to grow
and help our country achieve its potential
going forward. For many years, CIB has been
viewed as a local model for international
standards. We have worked hard to earn this
reputation. In 2010, CIB once again delivered
record profits and consistent operational
results, reinforcing its leadership within the
Egyptian banking sector. The following is a
review of our results as well as the significant
events and changes that took place over the
past year.
2010 Macroeconomic Overview
Throughout the global economic turmoil of
recent years, emerging market economies
have proven to be better positioned than
developed economies both structurally
and fundamentally to withstand crises and
deliver growth.
In fact, the Middle East and North Africa
(MENA) region is in a substantially stronger
position to face a global crisis and deliver
growth than it was at the beginning of the
decade. Across the region, economic reform
programs adopted over the past five years
have resulted in structurally stronger econo-
mies and allowed greater flexibility in policy
responses to support growth.
Egypt is no exception, with among the
most potential for sustainable growth in
the region, backed by solid fundamentals
and growth drivers. Egypt had posted real
GDP growth of 5.5% as of July/September
of FY 2010/2011, up from 5.4% in Q4 of FY
2009/2010. Growth drivers include Suez
Canal revenues surging by 14.7% as of July/
September 2010 compared to the same pe-
riod last year, in addition to signs of recovery
in receipts, where the volume of non-oil
exports increased by 12% during Q1 of 2011
compared to Q1 of 2010. This performance is
attributable to a number of factors includ-
ing Egypt’s attractive demographic profile,
monetary stability, under-penetrated and
under-leveraged economy, the sizeable con-
tribution of domestic consumption to GDP,
and relatively low-cost factors of production.
Moreover, inflation has slid on a declining
trend, recording 10.3% as of December 2010.
These positive results have proceeded from a
backdrop of broad structural and economic
reforms, an improved business environment
and appropriate crisis management.
The year 2011 began with ambiguity;
Egypt has experienced significant political
unrest which will invariably impact the lives
of all Egyptians. While the speed and extent
of the recovery of economic activity will be
determined by the length of time required
for the current situation to be resolved, the
fundamentals of the Egyptian economy
are strong, and the economy will be able to
weather the crisis.
2010 Highlights
Both the domestic and international invest-
ment communities have for the past 10
years viewed CIB as a reflection of Egypt’s
economic potential. Our performance and
strategy throughout that time has turned
our institution into a benchmark for the
country and the region’s financial spec-
trum. This reputation was earned through
the dedication and hard work of all of our
staff.
In 2010, CIB once again retained its posi-
tion as a leader in the Egyptian banking
sector and stood out for its dynamic and
successful business model based on the fol-
lowing key pillars:
1. Effective Risk Management
CIB’s Risk Management policies have
retained the confidence and trust of all
stakeholders.
2. Robust Capital Structure and High
Capital Adequacy Ratio (CAR)
The recent developments in the world
economy have shown the importance
of robust equity capital. At EGP 5.9
billion, CIB boasts the highest paid-in
For many years,
CIB has been
viewed as a
local model for
international
standards. In
2010, CIB once
again delivered
record profits
and consistent
operational results,
reinforcing its
leadership within
the Egyptian
banking sector.
capital of any bank in Egypt. And while
the Central Bank of Egypt stipulates a
minimum CAR of 10%, CIB has a CAR
of 14.41%.
economic circumstances and continuous
changes in market demands.
7. Customer Oriented and Innovative
Financial Solutions
3. A Reliable and Diversified Deposit
Base
CIB enjoys a robust deposit structure,
capitalizing on an extensive branch
network. In 2010, CIB achieved a 16%
growth in deposits, increasing its market
share from 6.33% in December 2009 to
6.64% in November 2010. Individual
deposits constitute 66% of total deposits.
4. Loans to Deposits Ratio (LDR)
Our strong focus on customer satisfac-
tion and growing our share of the loan
market, while at the same time preserv-
ing sound risk management policies,
enabled us to increase our market share
in lending to 7.77% as of November 2010
from 6.66% in December 2009. CIB
recorded an LDR of 57.84%.
5. Asset Quality
Preserving asset quality constitutes an in-
tegral part of effective risk management.
To that end, CIB favours growth with a
high quality portfolio. Identifying and
capitalizing on market opportunities as
they arise has always been a key tenet of
CIB’s strategy. We provide loan facilities
to companies from most industry sectors
only after conducting a thorough review
of the management. Applying stringent
risk assessment measures ensures posi-
tive transaction outcomes, especially in
sectors that are vulnerable to interna-
tional trade and have a high obsolescence
risk. CIB recorded a 2.73% Non-Perform-
ing Loan (NPL) ratio in 2010.
6. Strong and Longstanding Customer
Relationships
Maintaining and building on our rela-
tionships with clients has always been an
integral focus of our business model, and
over the years, we have established long-
term relationships with our customers.
As such, we have constantly managed
to adjust our strategy to the prevailing
In addition to being the bank of choice
for over 700 of Egypt’s largest corpora-
tions, CIB is constantly expanding its
product range to cover all its clients’
financial needs, as our primary objective
is to be the best provider of conventional
banking services to corporate clients,
retail customers and mid-cap companies
in Egypt. Accordingly, we have empha-
sized and heavily invested in the quality
and breadth of products and services that
would allow the Bank to penetrate new
segments and target various customers.
On the institutional side, CIB under-
took a number of initiatives to enhance
product offerings, including the launch
of GTS (Global Transaction Services)
as well as greater focus on mid-cap and
GCR (Global Customer Relations).
On the consumer banking front, CIB
has built a robust consumer risk infra-
structure including Specialized and
Centralized Underwriting, Collections
and Portfolio Monitoring units to ef-
fectively manage Consumer Credit Cycle
and support aggressive growth plans
on the anvil. Throughout the course of
the year several product offerings were
launched. Offerings such as the Hemaya
Fund (a capital-protected fund launched
in July 2010), Bancassurance, and Busi-
ness banking will further deepen CIB’s
footprint on the Consumer Banking map
and help the Bank realize its mission of
achieving the highest customer satisfac-
tion in the market and creating a one-
stop-shop for banking services.
Competing with a tough market and
a challenging global environment, the
COO Area has also been proactive in key
initiatives and worked with the business
to enhance the revenues of the Bank.
Efficient use of head count in the COO
Area, better vendor management, and
sustained progress on T24 implementa-
tion as well as implementation of key
bank projects such as online banking and
16
Annual Report 2010
Annual Report 2010
17
Board Of Directors’ Report
trade portal, a well-defined HR strategy,
centralization of operational activities,
implementation of MIS, and implemen-
tation of International Financial Report-
ing Standards (IFRS) have been some of
the tasks completed in 2010. At the same
time, several initiatives were undertaken
in CI Capital Holding (CICH), a fully-
owned subsidiary, on the business plans
and integration of support areas, in
addition to revising business models and
go-to-market strategy.
On the Human Resources level, a
number of steps were taken in 2010 to
enhance the quality of our professional
services. Throughout the past year, efforts
have been made on all aspects of Hu-
man Resources including recruitment,
organisational development, training
and compensation and benefits. New
internal standards were set to enable us to
continue to attract, develop and retain a
talented, motivated and diverse work-
force. We strive to maintain a supportive
work environment while ensuring the
successful achievement of CIB’s business
strategy. The Bank continues to offer its
employees the best training programs
in Egypt, with updated and tailored
courses to enhance operability, service
quality and product knowledge. In fact,
for decades, CIB has invested heavily in
its training and development programs,
where our Corporate Credit Training
Program became a key competitive
advantage for the Bank. Recently, we
launched our Consumer Leadership
Training Program, which will build the
technical and leadership skill sets of our
employees as we strive to become the
prime consumer bank in Egypt.
Through a reliable deposit base, a
robust balance sheet, with customer-
oriented and innovative approaches,
high liquidity, prudent risk management
and transparency, we are confident that
CIB is structurally and financially well-
positioned to maintain our lead as the
number one bank in the country.
Throughout the Bank’s history, inter-
national publications have consistently
recognized CIB for its quality products
and services, sound financial position
and profitability. In 2010, CIB was named
“Best Bank in Egypt” by both Eur-
omoney and Global Finance in addition
to “Best Local Bank” from emeaFinance.
This is the 14th year that CIB has been
recognized by Global Finance as the
“Best Bank in Egypt.” Moreover, CIB re-
ceived many accolades throughout 2010.
Such awards include “Best Sub-Custodi-
an Bank in Egypt,” “‘Best Trade Finance
Bank in Egypt,” and “Best Foreign
Exchange Provider” from Global Finance
as well as “Best PPP Deal in Africa,” “Best
Securitization Deal in EMEA,” “Best
Structured Finance Deal in Africa,” “Best
FX Provider” and “Best Asset Manager of
the Year” from emeaFinance.
2010 Financial Position
CIB’s 2010 financial performance owes
largely to the strength of its business model,
risk management culture, market position
and strategy.
On a consolidated basis, CIB achieved a
net profit after tax (NPAT) of EGP 2,006
million in 2010, an increase of 15% over
2009. Excluding the effect of a Goodwill
Amortization charge of EGP 40 million and
an Intangible Assets Amortization charge
of EGP 129 million, the Bank’s profits on a
consolidated basis reflect 24.7% growth over
2009. These non-cash deductions are related
to accounting for the acquisition of CICH in
mid-2008. CIB evaluates its investments in
CICH on an annual basis; in 2010, based on
the evaluation, CIB has impaired its invest-
ment in CICH from EGP 1,045 million to
EGP 886 million. Despite this impairment,
the Bank has exceeded EGP 2 billion in
NPAT on a standalone basis for the first time
in its history.
The success of CIB’s strategy is most
evident in the Return on Average Equity
(RoAE), which was 25.72% in 2010, as well
as the Return on Average Assets (RoAA) of
2.87%. Diluted Earnings per Share rose by
8.17% to reach EGP 2.78.
The Bank’s loan book increased by 26.69%,
almost 17 percentage points more than the
total market growth of 9.73%, during the
first eleven months of the year. This out
performance was achieved by an increase in
corporate loans of 24.67% and net growth
in the retail loan portfolio of 46.61%. At
the same time, deposits increased 15.75%,
leading to a rise in CIB’s LDR to 57.84%, five
percentage points higher than 52.84% in
December 2009.
Local currency (LCY) loans grew 32.37%
over December 2009, while foreign currency
(FCY) loans grew by 21.13%. This growth
Through a
reliable deposit
base, a robust
balance sheet,
customer-oriented
approaches, high
liquidity, prudent
risk management
and transparency,
we are confident
that CIB is well-
positioned to
maintain our lead
as the number one
bank in the country.
reflects the return of market confidence, with
corporate Egypt seeking to benefit from the
sustained favourable growth momentum of
the economy.
Moreover, CIB’s conservative risk manage-
ment culture enabled the Bank to maintain
its asset quality, with no observable dete-
rioration. The Bank’s NPLs/Loans ratio
declined to reach 2.73% compared to 2.97%
in December 2009.
In response to instructions received from
the Central Bank of Egypt in December
2008, Egypt’s Banking sector began imple-
menting International Financial Reporting
Standards (IFRS). The first phase of im-
plementation was completed in December
2008 and related primarily to treasury
instruments. In 2010, CIB completed im-
plementation of all CBE requirements for
IFRS. Accordingly (and attributed to the
implementation of these new accounting
standards), CIB’s total provisions declined by
32.89%, reflecting the quality of the Bank’s
portfolio. The Bank’s Coverage Ratio of
145.57% reflects CIB’s ability to absorb any
unforeseen rise in NPLs.
In addition, CIB maintained its strong
equity base with a conservative Capital Ad-
equacy Ratio (CAR) of 14.41%, providing a
solid cushion for adverse market movements.
The year-end CAR, after adjusting to include
2010 attributable profits, reached 16.91%.
During 2010, consolidated revenues
increased by 17.50%, with an 11.21% rise in
net interest income and a 27.32% increase
in non-interest income. The contribution of
non-interest income to total revenues has
increased Y-o-Y and now stands at 42.5%
of total operating revenues, demonstrating
management’s commitment to diversifying
income streams to sustain growth momen-
tum moving forward.
7.11% increase over the same period last year,
attributed to the performance of CI Capital
due to current market conditions. It is worth
mentioning that December 2010 figures
include Goodwill impairment and intangible
assets amortization,. When normalized for
those charges the cost to income ratio would
be 35.38%.
Moreover on a standalone basis CIB’s
cost to income ratio reached 35.19% which
reflects the continuous focus on strategic cost
management in CIB.
2010 Activities
By and large, 2010 was a year that unlocked
opportunities for CIB and witnessed the
foundations of growth. As CIB continues to
enhance customer and shareholder value,
we wanted to highlight some of CIB’s many
accomplishments over the past year.
Institutional Banking Activities
With a diverse offering of products and
services, adherence to the highest interna-
tional standards, strong corporate culture,
profound understanding of the local market
and capital resources, the Institutional Bank-
ing Group (IB) in CIB is a market leader in
Egypt.
Continuing our main objective of sup-
porting all the banking needs of our valued
corporate customers, IB was able to further
capitalize on its well established and long-
standing corporate relationships in 2010. It
was a priority during 2010 to work closely
with our corporate customers, supporting
them throughout the economic downturn, as
well as assisting them in raising and refi-
nancing their debt. We continued to meet the
financial needs of corporate customers, while
also expanding our focus to include the mid-
cap customer segment.
On a stand-alone basis, Net Interest
Furthermore, in accordance with our risk
Margin (NIM) remained healthy at 3.62% in
2010. The Bank’s NIM for the fourth quarter
of 2010 recorded 3.82% as compared to 3.50%
in the third quarter thanks to its dynamic
Asset and Liability Management, proactive
market approach and effective pricing of
loans and deposits. In fact, CIB was able to
maintain its NIM despite a market environ-
ment characterized by basis risk where the
Corridor Rate remains stagnant, T-Bill rates
are volatile, and loan and deposits pricing
remains competitive.
On a consolidated basis, the Bank’s Cost
to Income ratio stood at 39.68%, recording a
management principles, we lowered our
appetite for certain high-risk sectors, and
maintained our appetite for specific trans-
actions mainly in connection with mega
projects aimed at developing the country’s
infrastructure base.
The impact of the economic downturn on
some industries and foreign currency (FCY)
sourcing represented the primary challenges
for IB in 2010. To meet these challenges, IB
implemented several internal organisational
changes, such as the reorganization of the
Corporate Banking Group along industry
lines to allow more focus on enhancing
18
Annual Report 2010
Annual Report 2010
19
Board Of Directors’ Report
client coverage; the Financial Institutions
Group was partially restructured to improve
synergies within the group; Mid-Cap’s mode
of operations was redefined to enhance ef-
ficiency and synergies; and finally, the Global
Transaction Services (GTS) group was estab-
lished to provide value-added transactional
banking services to our clients.
By addressing these challenges, IB
achieved growth momentum in the Corpo-
rate, Mid-Cap and Debt Capital Market seg-
ments, while at the same time maintaining
CIB’s high-quality standards in the portfo-
lio’s composition. Additionally, IB developed
non-funded solutions for FCY transactions,
and, with the GTS, commenced implement-
ing cash management solutions for our major
prime customers. The division provides
special focus on institutional customers’
transactional services, cash management and
operational needs.
Consumer Banking Activities
The past three years have seen the achieve-
ment of a number of important milestones
in CIB’s efforts towards the building of a
world-class Consumer Banking Franchise.
In 2009, we focused on establishing a strong
Consumer Banking Organization, the
internal infrastructure to support products,
new business initiatives and a comprehensive
product menu. In 2010, initiatives focused on
aggressively growing profitability. CIB main-
tained its leadership position in the market
for new products, launching new initiatives
planned for the year.
• In line with economic trends, CIB main-
tained its robust Risk Management depart-
ment, and moved to risk-based pricing on
asset products.
• 2010 saw further progress in the Busi-
ness Banking Segment. CIB launched the
Platinum Debit Card, the first of its kind
on the Egyptian market. Additionally, to
further enhance the Bank’s relationship
with Premium customers, CIB customized
offerings and launched the Hemaya Fund,
a capital-protected fund with its Asset
Management arm CIAM.
• The Bank also launched the Payroll
Program for Companies, as part of the
strategy to expand the customer base and
diversify customer segmentation.
• 2010 saw rationalization of the distribu-
tion network, to ensure profitable growth
and realign infrastructure to meet the
changing needs of the market. Growth was
carefully strategised, based on the experi-
ence, and some branches and ATMs were
moved, while others were closed.
• CIB grew market share for almost all
product areas and was the distinct market
leader in the following:
-
-
-
-
-
Cards Business: CIB grew new acquisi-
tions by 37% and the growth in total
portfolio, including Diner’s Club, was
16%. The Bank also launched a Plati-
num Debit Card. CIB’s market share of
POS and other acceptance points grew
to 28% and POS efficiency outpaced
the market growth.
Wealth Management: This new seg-
ment was launched with a range of
products and offers, and in 2010 CIB
grew this service significantly, expand-
ing to 30 wealth centres.
Auto Loans: The Bank captured a lead-
ership position, outstripping market
growth.
Personal Loans: This program was an
overnight success, helping CIB create
a new benchmark, growing by 124%
compared to the previous year.
Residential Property Finance: CIB
continued to grow in this business, but
with a prudent approach, keeping in
mind the trends across the region.
Synergy Realization
The initiatives CIB has undertaken over the
past three years, such as wealth manage-
ment, consumer banking, global customer
relations, Business Banking, Global Transac-
tion Services (GTS) and CI Capital all offer
tremendous opportunities for CIB. There
remains great potential to increase product
penetration, enhance our share of wallet,
i.e., our share of the clients’ business with
all banks, and generate incremental value
through cross-selling.
Through its affiliation with CIB, CI Capi-
tal Investment Banking is the only local in-
vestment bank in the Egyptian market that
enjoys the full backing of a large commercial
bank’s balance sheet. This backing allows
CI Capital to capitalize on the unparalleled
industry expertise and CIB’s close relation-
ships with its corporate clients. In addition,
CI Capital Brokerage achieved impressive
volumes despite severe market contractions
and turbulence, continuing to rank among
the top five brokerage houses in Egypt with a
market share of 5.98%.
Among its
defined set of
responsibilities,
CIB’s Board
constantly
monitors the
Bank’s adherence
to well-defined,
stringently enforced,
fully transparent
corporate
governance
standards.
Appropriation of income
The Board of Directors has proposed the dis-
tribution of a dividend per share of EGP 1. In
addition, CIB is increasing its Legal Reserve
by EGP 106.2 million, to reach EGP 231.3
million, and its General Reserve by EGP
1,066.0 million, to reach EGP 1,144.6 million,
thus reinforcing the Bank’s solid financial
position as evidenced by a Capital Adequacy
Ratio of 14.41% and an Adjusted CAR (in-
cluding profits attributable to shareholders)
reaching 16.91%
Corporate Governance
CIB’s commitment to maintaining the high-
est standards of corporate governance is sup-
ported by several achievements, including:
1. Segregation of Executive Management
and Board of Directors roles.
2. Formation of a highly skilled Investor
Relations Team.
3. Established internal policies and manuals
covering all business aspects, for example:
credit and investment, operational proce-
dures, staff hiring and promotion.
4. Formation of Board’s sub-committees:
Audit Committee, Corporate Govern-
ance and Compensation Committee,
Risk Committee, Management Com-
mittee, High Lending and Investment
Committee.
The Board and its committees are governed
by well-defined charters, and are tasked
with assisting directors in fulfilling their
responsibilities and obligations with respect
to their decision-making roles. CIB’s Board
consists of two Executive and seven Non-
Executive members (the majority of whom
are independent) with a range of industry
expertise. In the event of a vacant Board seat,
the Compensation and Governance Com-
mittee is responsible for nominating a new
member. Among its defined set of responsi-
bilities, CIB’s Board constantly monitors the
Bank’s adherence to well-defined, stringently
enforced, fully transparent corporate govern-
ance standards. The Board fulfils its commit-
ment in the following manner:
• Ensures that Board Members have a clear
understanding of their roles in corporate
governance. Annually reviews the size and
overall composition of the Board and en-
sures it respects its independence criteria.
• Through its Governance and Compensa-
tion Committee, the Board ensures that an
appropriate review and selection process
for new nominees to the Board is in place.
• Establishes the strategic objectives and
ethical standards that will direct the
ongoing activities of the bank, taking into
account the interests of all stakeholders.
• Establishes an internal control environ-
ment which comprises systems, policies,
procedures and processes that are in
compliance with the regulatory require-
ments. These control measures safeguard
bank assets and limit or control risks as the
Board, management and other employees
work to achieve the Bank’s objectives.
• Ensures that senior management imple-
ments policies to identify, prevent or
manage, and disclose potential conflicts
of interest. Oversees the performance of
the Bank, its Managing Director, Chief
Executive Officers and senior management
to ensure that the affairs of the Bank are
conducted in an ethical and moral manner
and in consistency with Board policies.
• Reviews and approves material relating to
disclosure and transparency documents
as may be required in conformity with the
regulatory requirements or as determined
by the Board from time to time.
• Oversees a code of business conduct for
the Bank that governs the behaviour of
directors, officers and employees through
a Compliance department. The Compli-
ance Function in its broad scope was set
up in March 2007. The department’s scope
covers Anti Money Laundering, Policies
and Procedures, Corporate Governance,
and Code of Conduct. The code sets CIB’s
core values as Integrity, Client Focus,
Innovation, Hard Work and Respect for
the Individual. These values encompass
CIB’s commitment to create a culture that
adopts ethical business practices, good cor-
porate citizenship, and an equal and fair
working environment. In the meantime,
it encourages a culture of transparency
to encourage employees to draw atten-
tion to any concerns, unfair or unethical
practices they may see taking place. It is an
independent function monitoring a sound
Compliance program governed by interna-
tional as well as local rules and regulations.
The Central Bank of Egypt’s auditors and
controllers conduct regular audit missions
and review reports submitted to them
periodically. During CBE audit missions,
20
Annual Report 2010
Annual Report 2010
21
Board Of Directors’ Report
Committed to
the communities
in which we live
and work, CIB
contributes to
Egypt’s economic
dynamism by
supporting
development funds,
environmental
projects, as well
as initiatives
relating to poverty
alleviation and
child healthcare.
CIB’s management ensures that they are
provided with all necessary documents to
fully observe their selected audit universe.
CIB’s Internal Audit team closely follows
up Bank’s management in taking all cor-
rective measures with regards to CBE’s
comments.
Corporate Social Responsibility
CIB is committed to the communities in
which we live and work, and CSR is an
integral part of our corporate culture. Under
the slogan “To grow and help others grow,”
contributing to and supporting Egypt’s eco-
nomic growth is one of CIB’s top priorities.
2010 Social Involvement
Through its finance program and interna-
tional donors fund division, CIB is the apex
bank for the largest developmental funds
in the country. These funds are known for
their preferential and concessional terms
and conditions, designed to create new job
opportunities and increase income among
Egypt’s rural population, emphasizing op-
portunities for women and small farmers.
These developmental funds supplied the
market with approximately EGP 2.12 billion
to 90,000 beneficiaries. These standard-
ized loans were available across the country
through a network of 11 participating banks,
enhancing the accessibility of these devel-
opmental funds to small and medium scale
businesses.
CIB also participated in several environ-
mental projects that provide grants to clients
adopting green technology. During 2010,
the division signed an agreement under
KFW (PSI-II) to provide grants for Pollution
Abatement Projects. The percentage of each
grant varies from 20-30% of the industrial
sub-project investment cost.
Finally, in an effort to alleviate pov-
erty, CIB became involved in microfinance
through a service company in 2007. To date,
the Bank has disbursed 86,000 microfinance
loans with total outstanding portfolio EGP
80.9 million. CIB believes that microfinance
is capable of generating employment oppor-
tunities, which contributes positively to the
national economy of Egypt.
CIB Foundation
Seeking to enhance the quality of health
and nutritional services in Egypt, CIB has
made donations on a stand-alone basis over
the past ten years. Observing the positive
impact these donations have had on the
lives of children in Egypt, the Bank recently
moved towards more effective, sustainable
initiatives and in May 2010, established the
CIB Foundation as a non-profit organization
dedicated to enhancing health and nutri-
tional services to underprivileged children
in Egypt. The CIB Foundation seeks to make
valuable contributions to children’s health
and nutrition through multi-faceted initia-
tives. Additionally, the Foundation seeks
to assist school feeding programs, support
children with special needs, and raise com-
munity awareness on health and nutrition-
related issues.
The CIB Foundation is also dedicated to
following up on and comprehensively moni-
toring past CIB child health-related dona-
tions made by the Bank. Through the Magdi
Yacoub Foundation in Aswan, CIB covered
the costs associated with 50 children’s open
heart surgeries.
The Bank also funded the purchase of 56
electric dental chair-sets for the Paediatric
Ward of the Faculty of Oral and Dental Med-
icine at Cairo University. Prior to receiving
the CIB donation, the ward was only meet-
ing 20% of the demand for their services.
The ward, as the only provider of low-cost,
specialized paediatric dental services, is now
expected to open in the first quarter of 2011
at full capacity.
CIB also made a donation to the Paedi-
atric Surgery Unit at Ain Shams University
Hospital for a multi-million Egyptian pound
renovation which included the upgrade of
infrastructure, equipment, medical and non-
medical furniture. The unit now includes two
operating theaters, an intensive care room
and an immediate care ward, allowing it to
perform 3,600 critical operations a year.
A donation was also made to the Breast
Cancer Foundation of Egypt to cover the
costs associated with surgery, prostheses and
lymph edema treatment for 15 breast cancer
patients.
In November 2010, the CIB Founda-
tion signed a protocol of cooperation with
the Friends of Abou El Reesh Children’s
Hospitals Organization for the establishment
of a Paediatric Intensive Care Unit (ICU) at
the Abou El Reesh El Mounira Children’s
Hospital. The 14-month project will see the
development of a ten-bed unit, doubling the
number of critical patients the hospital is
able to serve. Once completed, the unit will
operate alongside the existing ICU, and will
provide quality service and care to patients
from across the country.
Key Figures from 2010
The following is a brief overview of key financial indicators on both a consolidated and
a stand-alone basis for the year ended 31/12/2010:
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
II. Income Statement (in EGP millions):
a. CIB Stand-alone
Interest Income
Interest Expense
Total Fees & Commissions
Net Profit after Tax
b. Consolidated 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
31/12/2010
75.1
11.9
35.2
16.3
8.8
63.5
0.3
8.6
Balance as of
31/12/2010
75.4
11.9
35.2
15.6
8.8
63.4
0.3
8.6
Balance as of
31/12/2010
4,521.4
(2,266.6)
750.3
2,125.9
Balance as of
31/12/2010
4,252.5
(2,267.8)
854.3
2,006.9
2,005.5
Balance as of
31/12/2009
64.1
12.6
27.4
9.5
13.2
54.8
0.4
6.9
Balance as of
31/12/2009
64.3
12.6
27.4
8.5
13.2
54.6
0.4
7.0
Balance as of
31/12/2009
4,026.3
(2,000.9)
637.2
1,783.6
Balance as of
31/12/2009
4,032.6
(2,002.6)
765.4
1,745.5
1,743.96
% Change
17.2
(6)
28.2
71.4
(33.1)
15.7
(30.1)
24.0
% Change
17.4
(6)
28.2
82.9
(33.2)
15.9
(29.1)
21.7
% Change
12.3
13.4
17.8
19.2
% Change
12.2
13.2
11.6
15
15
22
Annual Report 2010
Annual Report 2010
23
Success Story
Al Kharafi Group
Creating A Culture of
Casual Dining in Egypt
If you’ve ever eaten at Pizza Hut, KFC or
Hardees, then you might consider yourself
a client of CIB. Established in 1974 as
a subsidiary of Kuwait Food Company
(Americana), which is part of Al-Kharafi
Group, the Egyptian Company for Inter-
national Touristic Projects (ECITP) leads
the Egyptian market in operating fast food
franchises.
CIB has been a partner to both Al-
Kharafi and its subsidiaries since their
earliest business ventures in Egypt, where
they operate a long list of casual dining in-
stitutions including Pizza Hut, KFC, Har-
dees, Tikka, Grand Café, Costa Café, TGI
Friday’s and Fusion. Since 1978, ECITP
has worked with Americana to expand
the number of fast food outlets, reaching a
total of 300 units as of December 2010.
Among the fruits of this partnership has
been greater vertical integration across
all business lines; vertical integration
has allowed Americana and its partners
to reduce the cost of raw materials and
increase efficiency, ultimately improving
the Group’s profitability.
Through this intricate web of coopera-
tion between Americana, Al-Kharafi and
CIB, the fast food industry in Egypt has
achieved higher returns for its owners,
greater efficiency for the market, and bet-
ter prices for the end-consumer.
24
Annual Report 2010
Annual Report 2010
25
2010 In Review: Institutional Banking
Institutional Banking
Continuing our main objective of sup-
porting our valued corporate customers
with all their banking needs, Institutional
Banking (IB) was able to further capitalize
on its long-standing corporate relation-
ships in 2010. In particular, we made it a
priority to work closely with our clients,
assisting them in raising and refinancing
their debt in the wake of the economic
downturn. In addition to meeting the fi-
nancial needs of major corporate custom-
ers, IB also expanded its focus to include
the Mid-Cap customer segment.
Furthermore, as part of our strength in
risk management we lowered our appetite
for certain high-risk sectors and main-
tained our appetite for specific transac-
tions mainly in connection with mega-
projects aiming to develop the country’s
infrastructure base.
The impact of the economic downturn
on certain industries along with the issue
of foreign currency sourcing presented IB
with some of its main challenges. To meet
these challenges IB implemented several
internal organisational changes, such as
the reorganization of the Corporate Bank-
ing Group along industry lines to further
enhance client coverage, in addition to
the partial restructuring of the Financial
Institutions Group to improve syner-
gies within the group. Additionally, the
management redefined MidCap’s mode
of operations to improve efficiency; while
the Global Transaction Services (GTS)
group was established to provide value
added transactional banking services to
our clients.
By addressing these challenges, IB
managed to achieve growth momentum
in the Corporate, MidCap and Debt
Capital Markets, while at the same time
maintaining high standards in the invest-
ment portfolio, developing non-funded
solutions for foreign currency transac-
tions and with the GTS involvement,
commenced implementing cash man-
agement solutions for our major prime
customers. The following is IB redefined
organisational structure:
Institutional Banking
IB Legal
Advisory
Direct
Invest.
Chief Credit
Officer
Assets
Liabilities
Mgt.
Treasury &
Capital
Markets
Strategic
Relations
Global Trans.
Services
Financial
Institutions
Corporate
Banking
Debt Capital
Markets
Mid-Cap
Banking
By addressing the
challenges presented
by the economic
downturn head
on, Institutional
Banking managed
to achieve growth
momentum across
all segments while
maintaining high
standards in
the investment
portfolio.
Corporate Banking Group
Known for its strong credit culture across
the Egyptian market, Corporate Banking
Group is the bank’s financing and un-
derwriting arm and provides best in class
financing structures and advisory ser-
vices as a result of its extensive expertise
in various sectors of the economy while
promoting CI group products and services
catering to high quality customers.
The group’s foremost target aims to ad-
vance the nation’s economic development.
Accordingly, it is committed to closely
monitoring the performance of projects
and economic entities, with the purpose of
ensuring their viability. Efforts exerted are
based on the belief that economic viability
on the micro level is certain to contribute
and promote macroeconomic welfare.
It is the mission of the corporate bank-
ing group to enhance its current position
as a top corporate and structured finance
bank in the Egyptian market, with strong
emphasis on the quality of our loan port-
folio and maximizing shareholder value.
The Corporate Banking Group’s com-
petitive advantage include:
• Strong corporate business model
• Highly experienced staff reinforced by
continuous training to keep pace with
latest industry and technical know-how.
• Strong clientele with a healthy and di-
versified portfolio that is well positioned
in the main growth industries including
power, building materials, petrochemi-
cals, infrastructure, oil and gas, tour-
ism, real estate, shipping and ports.
• Ability to provide a wide and innovative
array of financing schemes
2010 Accomplishments
• Aggressive penetration of local market
which resulted in a significant increase
in the lending market share
• Captured major deals resulting in a
healthy growth of portfolio
• Presented non-conventional financial
solutions such as structured discounts
and securitization transactions.
• Attracted foreign currency (FCY) deposits
to improve Loan/Deposit ratio in FCY.
• Promoted cash management techniques
in collaboration with the GTS unit such
as payment and receivables solutions,
score, swift and ACH.
• Continued to efficiently manage the
loan and liability book with an im-
proved NIM.
• Maintained a healthy portfolio, in addi-
tion to sustaining efforts both to recover
exposures under such loans and turn
around counter parties.
• On the organisational level, Corpo-
rate Banking went through two major
restructures aiming at focusing efforts
towards growth and enhancing cus-
tomer satisfaction. The broad outline of
the restructure included:
- Establishment of new support areas
to enhance customer satisfaction and
utilization of facilities.
- Moved some areas to other lines of
business for the sake of greater ef-
ficiency.
In 2011, CIB’s Corporate Banking unit will
look to build on the accomplishments of
the year just past and pursue the following
general objectives:
• Continue to selectively expand our
portfolio to achieve high quality growth
in assets under management through
intensified marketing efforts, enhanced
customer relations and regular industry
monitoring.
• Increase product offering, tailored
facilities and penetration rate to meet
increasing customer needs.
• Further ameliorate office structure and
upgrade the system to optimise work-
flow and enhance customer satisfaction.
Debt Capital Markets Division
The Debt Capital Markets Division has
an unprecedented track record and
unparalleled experience in underwrit-
ing, structuring and arranging large scale
Project Finance, Syndicated Loans, Bond
Issuances and Securitization transactions,
supported in many respects by a dedicated
security agency desk.
Total deals closed during 2010 doubled
26
Annual Report 2010
Annual Report 2010
27
2010 In Review: Institutional Banking
Launched this year,
the GTS Group
offers CIB clients
a comprehensive
range of
transactional
banking products
and services, with
a focus on superior
customer service
and efficient
transaction
processing
capabilities.
over the year 2009. The Debt Capital Mar-
kets team contributed to the execution of
major deals by playing the critical roles of
Initial Mandated Lead Arranger, Egyp-
tian Facility Agent, Underwriter, Account
Bank, Book-Runner and Security Agent,
to cite but a few examples. The key sectors
that the Debt Capital Markets team cov-
ered during 2010 were mainly infrastruc-
ture, commercial real estate, petrochemi-
cals and, telecommunications.
Building on its reputation of excellence
in the field of structuring and arranging
deals, CIB won three Deal of the Year
awards in 2010 from Euromoney Project
Finance Magazine:
New Cairo Wastewater – African PPP
Deal of the Year, where CIB acted as
Senior Mandated Lead Arranger, Egyp-
tian Security Agent and Technical Bank
ERC – African Downstream Oil and
Gas Deal of the Year, where CIB acted
as onshore account bank, Egyptian
Security Agent and Egyptian Path-
finder
EHC – African Petrochemicals Deal
of the Year, where CIB acted as Initial
Mandated Lead Arranger, Facility
Agent and Account Bank.
Furthermore, CIB was awarded
the Best Securitization Deal in 2010 by
emeaFinance magazine for the Corplease
receivables securitization transaction.
The Debt Capital Markets team has
also played a unique role in the local mar-
ket by structuring and placing complex
securitization structures, and in 2010 the
division structured and placed four local
securitization deals for non-bank financial
institutions including the first quasi-sov-
ereign entity issuance.
As an ongoing strategy Debt Capital
Markets aims to:
• Continue playing a vital role in eco-
nomic development by mobilizing funds
for large ticket project finance deals and
syndication transactions
• Raise the required debt to fund Egypt’s
substantial infrastructure investments
under the PPP program
• Introduce new financial tools to lead
the development of capital markets in
Egypt.
• Continue to support client needs for
diversified funding sources through in-
novation in asset backed securities.
• Further invest in the enhancement of
our intellectual capital.
Mid-Cap Group
The Mid-Cap group caters to the financing
needs of mid-sized companies, for whom
we create growth opportunities. The
group’s highly trained officers also seek to
instil an understanding of corporate gov-
ernance in their customers and encourage
the application of high reporting stand-
ards and fiduciary protocols.
By virtue of its mandate, the Mid-Cap
Group has a wide developmental role,
given the Egyptian economy’s reliance
on medium sized enterprises. As such it
is considered a cradle for future business
players in the market.
2010 Highlights and Accomplishments:
• Continued focus on providing guidance
to pave the way to convert our clients
into large corporate customers with
strong growth potentials.
• Managed to attract and retain a signifi-
cant number of new clients
• Aggressive growth resulting in the dou-
bling of the overall lending portfolio
The Mid-Cap group’s strategy for 2011 and
beyond will be to continue capturing high
quality clients, grow their businesses and
institutionalize their performance.
Financial Institutions Group
Encompassing diversified lines of busi-
ness, the Financial Institutions (FI) group
plays a major role as a direct contributor
to revenue. Our long standing relation-
ships are part of a deep network which
bolsters the group’s growth and further
supports the bank’s main lines of busi-
ness.
The Group’s main avenues for loan
growth and revenue generation include
discounting drafts and commercial
paper, and lending to non-bank financial
institutions (NBFI), which are typically
companies specialized in trade finance
Known for its
strong credit culture
across the Egyptian
market, the
Corporate Banking
Group draws on the
extensive expertise
of its team members
to deliver best in
class financing
structures and
advisory services to
high profile clients.
or operating in the leasing, insurance,
brokerage and investment industries.
Our Finance Programs and Interna-
tional Donor Funds Division constitutes
a unique area of specialization in Egypt.
Organized under the FI group, the divi-
sion extends exclusive and integrated
management solutions and advisory
services to international donors and lo-
cal and regional agencies. The division
manages funds and creates self sustain-
able credit systems by offering a bundle
of services including but not limited to
investment, monitoring and tailored
operational mechanisms.
The Finance Programs and Interna-
tional Donor Funds division supports
the Egyptian economy’s growth through
its encouragement of the microfinance
industry as it also manages CIB’s direct
lending portfolio in that sector.
2010 Highlights and Accomplishments
In 2010, the FI Group not only im-
proved the quality of products and
services provided to NBFI customers but
also achieved remarkable growth rates
in the total loan portfolio. This year also
witnessed the NBFI Division launch
its “Clearing Bank System” services for
Brokerage companies to manage their
daily trading settlement with MCDR
(Misr for Central Clearing, Depository
and Registry).
Additionally, the Finance Programs
and International Donor Funds Divi-
sion also signed an agreement under
KFW (PSI-II) to provide grants for
Pollution Abatement Projects. The
percentage of grant varies from 20%
to 30% of the industrial sub-project
investment cost.
In the area of microfinance, launched
in late 2007, the Finance Programs and
International Donor Funds division has
to date managed to disburse 86,000 loans
totalling EGP 368 million while retain-
ing 27,500 small to medium size entre-
preneurs as active clients, totalling EGP
81 million as of December 2010 which is
partially financed with US$ 1.19 million
from the Spanish Agency for Interna-
tional Cooperation through the Spanish
Microfinance Fund.
2011 Strategy
The strategy for the FI Group for 2011 will
continue to focus on sustaining growth
and delivering profitable results. We aim
to achieve our growth and bottom line
targets through the following:
• Applying a customer-centric approach
to existing and prospective clients;
• Expanding an already diversified set
of innovative products and services
suiting the needs of various client seg-
ments;
• Maintaining our leading posi-
tion as No.1 Apex Bank within the
country;
• Supporting the Microfinance Market
in Egypt by expanding through the in-
troduction of Microfinance Wholesale
financing for MFIs (Banks, NGOs and
Microfinance companies).
Direct Investment Group
Direct Investment Group (DIG) repre-
sents CIB’s investment arm when intro-
ducing equity finance as an additional
solution to existing or potential clients.
DIG’s main focus is to identify, evaluate,
acquire, monitor, administer and exit
minority equity investments in privately
owned companies that possess commer-
cial value for CIB. Invested funds are
sourced from CIB’s own balance sheet.
The investment process is governed by
a clear and strict set of parameters and
guidelines.
Our primary objectives encompass
generating attractive risk-adjusted finan-
cial returns for CIB through dividend
income and capital appreciation as well as
enabling CIB to offer a broader spectrum
of funding alternatives to support client
growth.
We commit to excellence by adopting
industry best practices and creating a
“win-win” situation for all stakeholders,
this is supported by our unique value
proposition and wealth of experienced
human capital.
Going forward, DIG will continue its
balanced course of successfully off-loading
matured investments while growing the
portfolio through a number of new selec-
tive investments.
28
Annual Report 2010
Annual Report 2010
29
2010 In Review: Institutional Banking
This year saw
Corporate Banking
undergo several
major structural
changes aiming
to focus efforts on
greater growth
and customer
satisfaction.
2010 Highlights and
Accomplishments:
• DIG has continued its healthy contribu-
tion to CIB’s bottom line profitability,
mainly through dividends income.
• A detailed marketing and deal sourcing
strategy was prepared and implemented
in order to promote the DIG brand for
the ultimate aim of soliciting propri-
etary investment deals.
Strategic Relations Group
CIB’s Strategic Relations Group (SRG) is
proud to be branded as the sole bank oper-
ating in Egypt with such a unique “focus
group” dedicated to servicing its prime
institutional depositors. SRG focuses on
a market segment that includes over 70
strategic entities, representing the world’s
most renowned and prestigious donor
and development agencies, as well as the
vast majority of their sovereign diplomatic
missions.
SRG’s edge is in working closely with
each client individually, designing in-
novative tailor-made services to suit the
unique nature of the various business and
operational needs of the clients under its
jurisdiction. In doing so, SRG works to-
wards building and sustaining a substan-
tial portion of CIB stable funding base.
Over the years, and with the testimony
of its clients, the SRG function has proven
to be a great success. As a result, CIB is
committed to fostering these relationships
by continuing to sponsor and support the
SRG to ensure client satisfaction as well as
shareholder value.
Treasury and Capital Markets
Our Treasury and Capital Markets desk
offers a large range of products available to
various types of businesses across numer-
ous regions and distribution channels. Its
responsibilities include foreign exchange
(FX) and money market trading activities,
primary and secondary government debt
trading, management of interest rate gaps
with the associated hedging, and pricing
of preferential deposits.
The Foreign Exchange and Interest Rate
operations cover investment and hedging
styles spread across all major traditional
and alternative asset classes including
forwards, swaps, options, (plain vanilla
and exotic over the counter products
alike), cash export and import, structured
products, FX-linked yield enhancement
products, limit orders, round the clock
FX execution (including Fridays and local
national holidays), complementary daily
market commentary, weekly technical
review and regular mobile SMS alerts
according to CIB client requests. All capa-
bilities can also be combined in multi-
asset strategies.
Through superior risk management,
high operating standards, and premier
training programs, CIB maintained its
position as market leader in Foreign
Exchange profit for full-year 2010. Fur-
thermore, CIB’s Primary Dealers desk
managed to achieve a secondary market
share of 25% in treasury bonds.
The currency market experienced huge
fluctuations during the crisis and the
department accordingly expanded its
advisory role to minimize the companies’
balance sheet and revaluation losses re-
lated to both foreign exchange and interest
rates exposures.
For the ninth consecutive year, CIB won
the Global Finance Award for the Best For-
eign Exchange Bank in Egypt. The award
acknowledged the market’s appreciation of
CIB’s pioneer role in providing tight and
competitive quotes for banks, corporations
and retail clients. Moreover, Euro Money
Institutional Investor PLC -Global Investor
Magazine Middle East Awards 2010- has
recognized CIB as the best FX provider of
the year in the Middle East.
Asset and Liability Management
The Asset and Liability Management
(ALM) Group’s main functions are the
management of liquidity and interest
rate-related risk with external and internal
parameters, and setting the pricing of de-
posits and loans. Objectives are organized
generally as follows, in order of priority:
• Liquidity
• Profitability
• Product Development
Additional tasks include managing the
propriety book, managing the Asset and
Liability Committee (ALCO) admin-
istration, and maintaining all policies
and procedures related to balance sheet
management.
In 2010, despite volatility in internation-
Global Securities Services.
al and local markets, ALM successfully
preserved sound liquidity management
through its pro-active strategy, an accom-
plishment confirmed by regulatory ratios
as well as internal and Basel III measures.
In addition, interest rate management
remains prudent, underpinned by effective
duration management.
Also in 2010, the group commenced the
oversight of the bank’s Basel II project,
which is well on track to meet the CBE
target date in 2012.
Looking forward in 2011, strategic
initiatives will always continue to include
maintaining sound liquidity and interest
rate management through diversifica-
tion of funding options, as well as assist-
ing in the launch of new products. The
ALM Group will also seek to enhance the
performance and capital management
framework of the bank.
Global Transaction Services (GTS)
The Global Transaction Services (GTS)
Group serves as a key product group
within CIB, and oversees product areas
including Cash Management, Trade, and
The objective of the GTS Group is to
provide transparency, efficiency and
value-added services to CIB clients by
offering a comprehensive range of transac-
tional banking products and services, with
a focus on superior customer service and
efficient transaction processing capabili-
ties.
Through the existing sales channels of
Corporate, Mid-Cap, Business and Retail
Banking, the GTS Group develops and
sells products associated with the busi-
nesses of cash management and payments,
trade services, and custody and securities
clearing services.
Cash Management
CIB is a provider of standardized and
tailored cash management products and
solutions aimed at improving the manage-
ment of incoming and outgoing payments,
streamlining reconciliation and informa-
tion management, and enhancing working
capital efficiency for our clients. We offer a
number of unique and innovative prod-
ucts related to payments and payables,
collections and accounts receivables, in
A leading partner
of medium sized
enterprises in Egypt,
the Mid-Cap Group
plays an enormous
developmental
role as the cradle
for future business
players.
30
Annual Report 2010
Annual Report 2010
31
2010 In Review: Institutional Banking
addition to standard and tailored infor-
mation reporting delivered via a variety
of channels, including CIB’s new and
innovative online banking solution called
CIB Cash Online.
Trade Services
CIB is a market leader in trade services
and provides its clients with both stand-
ardized trade services products, such as
Letters of Credit, Documentary Collec-
tions and Letters of Guarantee, as well as
non-conventional trade finance solu-
tions, including forfeiting, structured
trade finance, etc. In addition, CIB offers
a number of different channels through
which the client can submit applications
and associated documents, including an
innovative online trade platform called
CIB Trade Online.
Global Securities Services (GSS)
The Global Securities Services (GSS) unit
is a market leading custodian bank offer-
ing a broad range of securities products
and services since 2000 to a diverse client
base composed of institutions, individuals
and government entities. CIB is the sole
sub-custodian for all Egyptian Deposi-
tory Receipt programs and the leading
provider of trustee services in the market.
The offering includes local and interna-
tional custody services, local sub-custody
services for GDR programs and trustee
services for securitization transactions.
2010 Achievements
As the GTS Group was founded in 2010,
the beginning of the year was spent estab-
lishing and staffing the group and design-
ing the business and operating model.
2010 saw the following key achievements:
• Global Securities Services was named
‘Best Sub Custodian in Egypt’ by Global
Finance magazine for the second con-
secutive year.
• Launched a new and innovative online
banking channel for ‘business’ clients,
called CIB Cash Online
• Launched a new and unique online
trade platform called CIB Trade Online
• Implemented SWIFT Net for a number
of key corporate clients
• Introduced Transactional Servicing
Hubs, a new servicing and processing
concept, into the branch network
• Introduced Corporate Desks, a new
In 2010, the
Financial
Institutions
Group not only
improved the
quality of products
and services, but
also achieved
remarkable growth
rates in the total
loan portfolio.
Total deals closed
by our Debt Capital
Markets Division
in 2010 doubled
over 2009, reaching
approximately EGP
25 billion.
to include another team for handling
Port Said and Canal Zone corporate cli-
ent documentation (2008), and in light
of Asset Protection’s plan to extend its
scope of work, another new team was
successfully established to handle docu-
mentation for clients in Alexandria and
the Delta zone (2009). Finally in 2010,
the Asset Protection Mid-Cap was suc-
cessfully launched to become the Asset
Protection responsible for handling and
maintaining enforceable documentation
for corporate and mid-cap clients.
2010 Highlights and Accomplishments
• Skilfully finalized numerous impor-
tant and complicated transactions for
the bank in record time, in addition to
working on supporting the group’s busi-
ness departments in all required legal
issues.
• By providing professional and special-
ized legal services the IB Legal Advisor
Group contributed significantly to the
closure of several major transactions.
• Supported several subsidiaries (CI
Capital Holding, CIBC, IACC, IIBC,) by
providing all required legal services and
effectively contributing to the genera-
tion of income for those companies.
• Effectively absorbed an increase in the
number of credit and Mid Cap customer
accounts received by Asset Protection,
while a more systematic work-flow was
implemented in order to manage the
documentation more smoothly and ef-
ficiently.
sales and service channel, in key
branches
• Achieved double-digit growth in CIB’s
Cash Management and Global Security
Services businesses
• Maintained market leading custody po-
sition with a market share of over 32%:
• Awarded the local sub-custodianship
for two new GDR programs – resulting
in CIB acting as sub-custodian for all 13
GDR’s in Egypt
• Played a significant role as the major
trustee of several large securitization
transactions and has been awarded the
trustee role in 11 out of the 12 secu-
ritization transactions in the Egyptian
market
Moving forward in 2011, CIB’s GTS Group
intends to further build out the transac-
tion banking product suite and service
offering to all its key client segments.
Institutional Banking Legal
Advisor & Asset Protection Group
The Institutional Banking Legal Advi-
sor’s Department was established in May
2006 due to the need for an in-house Legal
Counsel to deal directly with technical
and complicated legal issues and for the
purpose of enhancing our business area
without resorting to outsider Legal Coun-
sellors.
Escrow Accounts Agreements and
various business Agreements, Legal Due
Diligence, Legal opinions, Syndicated
Loans and Project Finance are exclusively
provided by the IB Legal Advisor to the
Institutional Banking Departments as well
as the Bank Subsidiaries, in order to fa-
cilitate local and international commerce
in an interdependent world by providing
targeted legal advice for local and cross-
border transactions with a high level of
professional legal service.
The Asset Protection Department was
established in Jan. 2003 and its main
target was to manage the completion of
the documentation and supports cover-
ing the Corporate Banking Group clients
documentation (CBG I & CBG II). Since
May 2007 it was associated with The
Institutional Banking Legal Advisor’s
Department while maintaining its own
separate workflow procedures. Since
then, the Asset Protection was extended
32
Annual Report 2010
Annual Report 2010
33
2010 In Review: Global Customer Relations
Global Customer Relations
Introducing the concept of Relationship
Management (RM) to the Egyptian mar-
ket, our GCR team caters its services to
select corporate clients of CIB and other
financial institutions.
• Developing innovative ideas for clients.
• Delivering quality service through
persistent engagement with clients and
immediate follow up on their issues.
• Applying deep understanding and an-
The general objectives our RM officers
ticipation of client needs.
include:
• Maximizing customer satisfaction to
ensure consistent client retention.
• Increasing the Bank’s share of wallet
and penetration rate.
To accomplish goals, CIB RM officers
employ strategies which include the fol-
lowing:
• Ensuring flawless execution across
product lines.
2010 Business Priorities and
Achievements
• Conducted visits to assess client needs
while generating EGP 1.4 billion worth
of new corporate deals.
• Developed relationships externally and
internally by engaging in heavy clean-
ups and adjusting strategies in some
areas to better adapt to clients’ needs.
• Generated new ideas for clients.
• Initiated periodical forum with product
group to assess and plan business strategy.
• Delivered flawless execution and re-
mained responsive to client needs.
• Implemented tracking to monitor key
performance indicators.
• Implemented hard and soft dollar tracking.
• Developed financial and operating
• Introduced Strategic moves and new
concepts.
Goals for 2011
• To roll out expanded GCR coverage to
corporate customers and new clients.
• To continue the ongoing assessment of
key performance indicators to ensure
incremental economic value creation.
• To assess client feedback periodically
• To expand product mix and create new
models for expansion of the GCR unit.
products based on client needs.
• Developed 2011 Budget.
• Initiated several innovative solutions
for the purpose of facilitating work flow
and expediting execution process.
• To focus aggressively on new client
acquisition and uphold deliver life cycle-
based financial solutions and advisory
service.
Through our pro-
active approach
to Relationship
Management, CIB
becomes a one-
stop-shop financial
solutions provider
rather than a
product provider.
34
Annual Report 2010
Annual Report 2010
35
2010 In Review: Consumer Banking
Consumer Banking
In our mission to build a truly world-class
consumer banking franchise, manage-
ment at CIB has made huge leaps over the
last three years, including:
Solidification of Bank Organization
In 2009, we focused on establishing a
strong consumer banking organization,
including a complete backbone to support
existing products, new business initiatives
as well as a comprehensive product menu.
Following these accomplishments, 2010
saw us launch new initiatives to aggres-
sively grow profitability, and we expect
to observe the real impact of these recent
activities in 2011 and beyond.
Cultivation of Future Consumer Bankers
To further re-enforce the Consumer
Banking business and pave the way for
the next line of leadership, CIB launched a
Leadership Program for Consumer Bank-
ers with the objective of creating a pool of
future leaders within the company.
New Progress in Relationship
Management
Our transition into Relationship Manage-
ment by focusing on Customer Segments
yielded tremendous results with particu-
larly aggressive growth in the Wealth
segment.
Sustained Market Leadership
CIB continued to maintain a market–lead-
ing position by launching new products,
and initiatives during 2010. Keeping pace
with economic indicators, CIB contin-
ued to demonstrate robust performance
in risk management, further ensuring a
high quality of business. This line also
saw us move to risk-based pricing on asset
products.
Constant Improvement
Of Customer Relations
Our concern with customer experience
also remained a key priority for 2010 and
onwards, leading us to make additional
investments in IT and operational infra-
structure.
New Initiatives
CIB continued to expand its service and
product menu by introducing best in class
products to the market.
After the launch of “CIB Wealth” for
the affluent segment in 2009, 2010 saw
further progress in the Business Banking
Segment. Our key objective was to provide
not only the best service, but also further
deepen the bank’s relationship with the
Premium segment. In order to tailor its of-
ferings to the needs of affluent customers,
CIB launched projects such as the He-
maya fund, a capital protected fund with
its Asset Management arm CIAM. CIB
also launched the Platinum debit card, a
unique product in the Egyptian market.
In line with the new acquisition strat-
egy, CIB also launched a payroll program
for companies to acquire new customers,
an initiative in line with the segmentation
of CIB customers.
CIB continued to
maintain a market-
leading position
as we continued to
demonstrate robust
performance in risk
management.
36
Annual Report 2010
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37
2010 In Review: Consumer Banking
Reaching Out,
Rationalizing Distribution
Among the many developments of 2010,
CIB focused on the rationalization of
distribution, an initiative seeking not to
expand but to ensure profitable growth
and re-align infrastructure to meet grow-
ing demand in the market. The growth
proceeded according to experience as we
moved certain branches and ATMs while
closing others.
This year also saw CIB focus on raising
profitability by increasing productivity
across all channels. The quality of our
customer relations continued to play a key
role, and we bolstered our performance
in this regard by reaching out to clients
rather than waiting for them to reach us
through our branches. This necessitated
the following actions:
• Upgrade the Direct Sales Unit for cer-
tain key Asset products.
• Build further support through the
outbound Telesales unit.
• Set up a separate well-trained CIB
Wealth Team to cater to new clients
within the Premium segment.
• Expand the ATM network to 502
ATM’s, now the largest in the private
sector.
• CIB also progressed in offering state-
of-the-art ATM’s which include a full
range of functionalities such as bill
payment, cash deposits and 3rd party
transfers.
• Establishing 15 new wealth lounges in
2010.
• Renovating 5 Branches.
CIB also enjoys the largest private sector
branch network now standing at 153 outlets,
in addition to an exemplary reputation for
its service quality which ensures improved
customer experience and fully supports all
channels of distribution.
Together these developments have led to
aggressive new customer acquisitions as well
as further improvement in customer service.
2010 Accomplishments:
CIB continued to report significant
growth across all product lines. The de-
posits book grew by 17%, while CIB estab-
lished itself as a leader on the asset side of
the business. Our loan portfolio book also
registered impressive growth of 43% as
CIB solidifies its reputation as a preferred
bank for personal and auto loans.
CIB’s investment product offerings
continue to benefit from the support of
its subsidiary CIAM through funds such
as Osool, Aman, Hemaya and Estethmar
targeting varying risk profiles. Assets
under Management meanwhile reached
EGP 8.7 billion, an increase of 43%.
As for CIB’s sister company CIL, the
subsidiary launched Elite Premium,
a product specifically tailored for the
Wealth segment and part of a compre-
hensive product menu of customized
savings and insurance schemes.
This year’s achievements can generally
be summarized as follows:
Considerable Growth in Market Share
CIB continued to expand its product
menu and improve the infrastructure
related to Relationship Management,
leading to an increase in market share
on almost all products areas. CIB even
became a distinct Market leader in some
of the newest initiatives.
Excellent Performance in the Cards
Business
CIB grew new acquisitions by 43% while
the growth in portfolio including Din-
ner cards reached 16%. The Bank also
launched a platinum debit card, which will
uphold the highest standards in the mar-
ket. On the cards acquisition side, CIB’s
market share grew to 17% while Point of
Sale efficiency outpaced market growth.
Expansions in Wealth Management
CIB expanded this service to encompass 30
Wealth centres and lounges while launch-
ing a range of new products and offers. A
new well trained set of Wealth Managers
were also appointed to service the affluent
customers.
Growth in Auto Loans
CIB captured a leadership position out-
stripping market growth.
Growth in Personal Loans
CIB Personal Loans have been extremely
successful, helping CIB to register a new
benchmark as the program grew by 101%
over last year.
Representing a
43% increase over
2009, Assets Under
Management at
CIAM reached EGP
8.7 billion in 2010.
Strong Performance in Residential
Property Finance
CIB continued to grow in this segment,
but maintained a prudent approach fol-
lowing economic indicators across the
region.
Ongoing Consumer Banking
Strategy
The ongoing Consumer Banking strategy
consists of the following objectives:
• To Increase Profitability
• Improve Product Penetration
• Reduce Cost to Income Ratio
• Expand Relationship Management
In addition to increasing productivity
across all consumer banking channels in
2011, CIB also plans to launch a business
banking segment as well as expand the
wealth management business.
insurance products among our customers.
As customer service remains the key
concern at CIB, the bank introduces new
services every year in order to position
itself as a market leader. Notably, CIB
plans to invest further in cutting edge
technology and create a robust e-banking
platform.
In our consumer banking section,
which is focused on business orientation
and geared toward optimum earnings,
the focal point remains our customers,
with whom we provide a broad range
of value added products and services.
CIB continues to uphold service qual-
ity as maximum customer satisfaction is
its overriding objective. The creation of
Service quality has helped increase the
number of satisfied customers, generat-
ing greater penetration and loyalty while
creating a base to drive higher revenues
per customer.
Over the coming years, insurance will
With all the building blocks in place,
be one of the key drivers of fee income
as we seek to improve the penetration of
CIB is now clearly poised to position
itself as a market leader.
38
Annual Report 2010
Annual Report 2010
39
2010 In Review: COO Area
COO Area
In the face of tough market competition
and a challenging global environment, the
COO Area has been proactive in driving
key initiatives to enhance the revenues of
the bank. The COO Area departments are
committed to providing the Bank with the
information and support it needs to make
the best decisions for the business.
COO Area completed several crucial
projects in 2010. Internally, the area
undertook a head count rationalization
and worked to improve vendor manage-
ment procedures and to make progress on
planned T24 implementation. The area
departments also successfully completed
key bank projects including an online
banking and trade portal, centralization of
operational activities, implementation of
a Management Information System (MIS)
and International Financial Reporting
Standards (IFRS), as well as the creation
of a well-defined Human Resources (HR)
strategy.
Finance
The role of the Finance Group has shifted
gradually from an emphasis on reporting
functions to an increased involvement
in performance management and the
strategic agenda of the Bank. The Group’s
functions are now focused primarily on
working continuously with key stakehold-
ers to address opportunities and chal-
lenges, and identifying and explaining the
impact of new regulations such as IFRS
and Basel II on the business.
The Performance Management and
Strategic Decision Support department
adopted CIB’s value-based management
approach in which managers are provided
with tools and techniques to support
the development and implementation of
strategies that create value. This approach
also offers incentives for managers to
create value. The Group uses a uniform,
value-oriented management concept that
links goal setting, planning, operational
management, and performance monitor-
ing and measurement to remuneration.
Relationship Management (RM) was
implemented across CIB’s business lines
last year, and as an initiative RM has
proven to be successful throughout 2010.
Relationship Managers across the Bank’s
support functions from Finance to IT and
HR work closely with front line managers
to process information requests, identify
risks and opportunities for the business,
flag early warning signals, and address
other issues from the finance perspective.
We believe that
the restructured
Finance Group
has provided CIB
with a strong
foundation to face a
challenging market
and regulatory
environment.
40
Annual Report 2010
Annual Report 2010
41
2010 In Review: COO Area
2010 was a key
year in IT at CIB,
as we invested in
new technologies to
improve our servers,
IP telephony
equipment as well
as our overall
networking
capabilities.
A new Cost Control Unit was also
established to implement cost control
guidelines which ensure that contracts
and invoices are negotiated and pay-
ment processed in a timely manner while
achieving cost synergies for the Bank.
CIB’s Tax Unit continues to furnish
timely and accurate information to inter-
nal and external stakeholders in accord-
ance with the applicable laws and regula-
tions in Egypt.
We believe that the restructured Finance
Group has provided CIB with a strong
foundation from which to face the chal-
lenging market and regulatory environ-
ment while maintaining its competitive
edge and delivering outstanding value to
its shareholders.
Information Technology
In 2010, CIB’s IT Department focused
on three areas with a view to providing
enhanced services to our clients:
IT Operations
The key focus for IT operations has been
to improve service availability across the
Bank. In this regard, a number of initia-
tives were completed to bring IT opera-
tions in line with the strategic aims of
CIB. These included significant improve-
ments in availability of key systems, a
centralized full-service help desk, and
the definition and implementation of
improved processes for managing all IT
services.
One of the key initiatives kicked off dur-
ing 2010 was the implementation of a Con-
trol Centre aimed at measuring, monitor-
ing and automating IT services across all
functional areas. This system will be the
core of CIB IT and is an important aspect
of the Bank’s IT strategy, which is slated
for completion by the end of 2011.
IT Projects
A number of critical projects were com-
pleted in 2010, advancing the IT dimen-
sion of the Bank’s business plan. 2010 IT
accomplishments include major progress
in the overhaul of CIB’s core systems to
bring them up to the latest capabilities,
implementation of the first part of the En-
terprise Data Warehouse strategy aimed at
providing enhanced information for our
Retail business areas, and new systems
for our branches as well as other delivery
channels such as ATMs, Internet Banking
and Phone Banking. The IT department
has also completed key projects in the In-
stitutional Banking area aimed at improv-
ing existing capabilities as well as offering
new products for our customers including
a Trade Finance and Cash Management
portal. The Department is also creating
new packages for the treasury front and
middle office, providing state-of-the-art
systems focusing on new capabilities for
these areas. In line with the larger goal
of centralizing key operational activities,
further projects aimed at enhancing work-
flow and document management were also
completed.
IT Infrastructure
A number of key initiatives were also com-
pleted in 2010 to enhance the overall tech-
nology infrastructure of the bank. CIB
has continued its investments in networks
and infrastructure, implementing a highly
available, managed and resilient infra-
structure through investments in state of
the art equipment.
As part of its ongoing strategy, CIB
is also investing in new technologies to
improve our servers, IP telephony equip-
ment as well as our overall networking
capabilities. CIB is also in the process of
upgrading its middleware systems to pro-
vide the Bank with future-proof growth
capabilities.
Overall, 2010 was a key year in IT at
CIB, which saw a move to the next level of
maturity in the services that we provide,
as well as the establishment of a strong
technical foundation to help the business
move towards its strategic objectives in the
future.
Operations Group
The Operations Group witnessed major
restructuring in 2010, during which we
successfully managed to shift the reach of
Operations Departments to encompass
Bank-wide support and control func-
tion for all business lines and channels, a
process overseen by a talented and highly
knowledgeable team. In 2010, the Group
focused on setting standards which are
now used as a basis for measuring the pro-
ductivity of each and every staff member
within the group.
Support Functions
Finance
IT
Corporate
Services
Premises
Projects
Operational
Risk
Human
Resources
Marketing
& Commu-
nications
Operations
Tax Unit
Operations
Cost
Control Unit
Projects
Infrastruc-
ture
Business
Continuity
Remittance
Trade Fi-
nance
Recruitment
Organisa-
tional Devel-
opment
Training
Compensa-
tion and
Benefits
The Group has worked on enhancing
efficiency of execution and reducing turn
around time (TAT) to provide better and
more efficient services for CIB custom-
ers. Several initiatives have also been
undertaken to enhance the Bank’s control
culture and ensure that business expan-
sion is measured with risk potential. These
projects include the consolidation of both
Internal Control units under one depart-
ment, Consumer Operations and Central
Operations, and the establishment of the
Treasury Middle Office Unit, which is re-
sponsible for monitoring and controlling
all functions related to Assets and Liability
management independently to ensure all
required controls are in place.
On the customer experience side,
several projects began in 2010 and will
continue into the second quarter of 2011,
including improvement of CIB’s ATM
network performance, distribution and
functionality. The Group is also in the
process of conducting a structured cus-
tomer opinion survey for CIB customers
to better understand the services that add
value to different segments of the Bank’s
customer base in order to address them
directly in future efforts.
On another note, a Business Continu-
ity Unit has been established under the
Operations Group to forward the Bank’s
strategy of implementing and sustain-
ing comprehensive business continuity
capability. The Unit has a clear mandate
to identify critical areas of the business,
develop business continuity policies,
procedures and guidelines, create a plan
for implementing business recovery plans
for all business lines, prepare a disaster
recovery site for CIB critical operations,
and conduct training and awareness ses-
sions in different departments to embed
business continuity concepts within staff
members.
Finally, the Remittance and Trade
Finance departments have successfully
managed to sustain their annual Excel-
lence Awards, which are awarded by well-
known international financial institutions
for exceptional quality in performance of
execution and transactions processing.
Human Resources
CIB’s staff has always been our most
important asset and the development of a
premier team is a key pillar in the strat-
egy of the Bank. The Bank has identified
an aggressive agenda for the Human
Resources Department for the com-
ing years in accordance with the Bank’s
strategic aspirations which will require an
42
Annual Report 2010
Annual Report 2010
43
2010 In Review: COO Area
increased emphasis on hiring, develop-
ment and career progression. Throughout
2010, efforts have been made in all areas of
Human Resources including Recruitment,
Organisational Development, Training,
and Compensation and Benefits. Pro-
jects included staff coaching sessions on
performance management, job evaluation
through an external agency, leadership
training in Consumer Banking, salary
surveys and process re-engineering to
improve services offered to staff.
CIB recognizes that achievement of its
goals is dependent on the recruitment and
the retention of a skilled and commit-
ted workforce. In 2010, the Recruitment
Department was able to re-work several
key hiring steps that had a direct impact
on the hiring life cycle. The Department
successfully partnered with a number of
hiring agencies to identify skill scarcity
within the Firm and effectively build a
strong database of candidates for critical
company roles. CIB hired 670 staff in vari-
ous areas and at different levels in 2010.
At CIB we are proud to have one of
the best training systems in the banking
sector. Our training structure consists
of different training programs offered to
3,112 employees, varying from in-house
programs to local and overseas courses.
These programs cover all areas of devel-
opment from technical to soft skills. In
2010, CIB pursued its training strategy by
implementing courses for changing at-
titudes, upgrading skills and building the
knowledge of its human capital to prepare
them to meet today’s rapidly changing
business climate.
In 2010 further efforts were made in
performance management. This included
a review of the Bank’s smart objectives
formulation process and performance
management cycle. Additionally, an exer-
cise has been initiated by the Bank on job
evaluation to rank positions in CIB on the
basis of the duties and responsibilities as-
signed to each in order to ensure internal
equity at the Bank.
In the area of Compensation and
Benefits, a salary survey was conducted
to gauge the remuneration in the market
and align our compensation structure
to ensure that CIB remains competitive
in hiring and retaining staff. Work was
also done on policies and procedures to
improve the service standards for staff.
Corporate services
The Corporate Services Department
was restructured at the beginning of the
year and given the major challenge of
enhancing the Bank’s services. Corpo-
rate Services has embarked on a mission
to help vendors enhance their perfor-
mance, seek continuous feedback from
staff and customers to improve services,
and optimise costs through various
initiatives.
This proactive partnership has
resulted in enhancement of printing
solutions at the Bank, the reorganization
of fleet management strategy, consolida-
tion of warehouses and other activities
such as insurance and a travel desk. For
facility management, new maintenance
contracts and a cleaning strategy have
been put in place in order to enhance
the facility services across the bank.
A new help desk was established early
in 2010 to receive and register complaints
and requests for improved services from
our internal and external customers. This
With one of the best
training systems
in the Egyptian
banking sector, CIB
offers everything
from in-house
programs to local
and overseas
courses.
has resulted in continuous feedback on
our services, which has helped in improv-
ing the performance of the Corporate
Services Department.
Premises Projects
The main mission of the Premises Projects
department is to optimise our space uti-
lization in the most cost efficient manner,
while maintaining the standards of CIB’s
brand image.
This year a number of projects have
been completed for the head office and the
branch network.
Around 15,000 square meters of the
Head Office premises have been renovat-
ed, upgraded or re-arranged.
In addition to opening a new Tanta
branch, extensive renovation of branches
and upgrade of wealth lounges was com-
pleted this year.
Lastly, a comprehensive road map has
been developed by the Premises Depart-
ment for Head Office and Branch network
enhancement in the coming years.
Marketing and Communications
2010 saw major efforts devoted to posi-
tioning CIB as the brand that delivers the
best financial services. Marketing and
Communications capitalized on CIB’s
strong market position, as well as the
Bank’s recognition by Euromoney, Global
Finance, Global Investor and emeaFi-
nance, in both internal and external
communications to increase CIB’s brand
equity in the market.
In Consumer Banking, our efforts
focused on sustaining the products and
services launched last year though the
development of innovative market cam-
paigns promoting each product, as well
as a series of events held throughout the
year to build awareness and welcome CIB
Wealth customers.
In line with the Bank’s Corporate Social
Responsibility (CSR) strategy, CIB estab-
lished the CIB Foundation to forward the
Bank’s efforts in this area. The Founda-
tion’s brand identity was developed and a
website launched.
In light of
requirements
by the Central
Bank of Egypt’s
implementation
of Basel II,
Operational Risk
has become one of
the key pillars of
CIB’s operations.
44
Annual Report 2010
Annual Report 2010
45
2010 In Review: Risk Management
As the Egyptian
economy rebounded
from some of
the effects of the
global economic
crisis, Credit Risk
Management
played a pivotal
role in supporting
growth in the
Corporate and Mid-
Cap segments by
adopting a prudent
strategy based on
risk mitigation.
financial turbulence in Europe initially
in Greece but then followed by the rest
of the PIIGS countries by the last quarter
of 2010. Thorough analysis and review
concluded that CIB’s exposure to counter-
parties in such countries remains minimal
and confined to financially strong and
stable financial institutions that were able
to emerge safely from this crisis.
Consumer Banking Risk.
The Consumer Risk Management Unit
(CRMU) is an integral pillar of the consum-
er banking framework and has been actively
supporting business growth while ensuring
the quality of our portfolio. While 2009 was
predominately a year of laying the founda-
tion for the Consumer Banking business as
well as the Risk Management framework,
the year just past has been primarily a year
of consolidation and facilitation.
Consumer Risk has partnered in the
launch of new products, such as revolving
overdrafts, and secured overdrafts secured
against capital protected funds, and sav-
ings accounts, in addition to that of many
other programs. Segment expansion prop-
ositions have been launched across the
more stable and long standing products
that revolve around surrogate acquisitions,
line management, countering attrition and
balance-build-up initiatives.
All these growth-facilitating initia-
tives have been made possible primar-
ily through enhanced levels of Portfolio
Monitoring and Analytics coupled with
the controls that have been institutional-
ized across all the Risk Units. Some of the
key initiatives that have added to the bank’s
Portfolio Monitoring capabilities and Seg-
ment Differentiations have been the institu-
tionalization of early warning dashboards
and tripwires. In addition, Consumer Risk
has also effectively transitioned to the widely
accepted IFRS loss recognition and provi-
sioning methodology.
The Consumer Risk Unit has also worked
closely with the Operations Department to
centralize and standardize many processes
that will ensure consistency in performance
standards and strengthen quality controls.
This initiative has also been instrumen-
tal in facilitating off-loading front-end
employees from operational activities so
that their time is dedicated predominantly
to sales and service. There have also been
continuous re-engineering initiatives in
Risk Management
At CIB, we seek to achieve an appropriate
risk-reward balance, and continue to build
and enhance Risk Management capabili-
ties that will assist in achieving our busi-
ness objectives.
Risk Management stands as a core pillar
in the bank’s organisational structure, as
it is an important catalyst in value crea-
tion to our shareholders. This is achieved
through identification, assessment, and
prioritisation of risks followed by coor-
dination and application of resources to
minimize, monitor and control the prob-
ability and/or impact of such risks and to
maximize the realization of opportunities.
In our efforts to address uncertainties, our
Risk Management decisions are taken in a
systematic and structured manner based
on the best available information while
maintaining our ability to respond dy-
namically to changes. We seek to achieve
continual improvement and enhancement
in our Risk Management processes.
To support the processes associated with
Risk Management, CIB has invested in
state-of-the-art solutions, covering Basel
II compliance (standardized and advanced
approaches), portfolio management and
risk analytics. These solutions enforce
best practices in the Risk Management
Department (RMD) and cover the areas of
Credit, Market and Operational risk.
Credit and Investment Exposure
Management:
Institutional and Investment Banking
Risk
Our Credit and Investment Risk Man-
agement teams consist of credit-certified
members with experience at the senior
level, in addition to an average of 10-20
years of experience in the field of risk.
The primary objective of this team is to
establish a framework of controls to ensure
that the Credit and Investment Risks being
taken are based on sound fundamentals,
whereby they continually review, monitor
and analyse Corporate, Midcap, Corre-
spondent Banks’ and Investment portfolios
using strict standards to ensure the quality
of CIB’s portfolio as well as adherence to all
internal policies and regulatory directives.
An important
catalyst in value
creation for our
shareholders, Risk
Management stands
as a cornerstone of
CIB’s organisational
structure.
In 2010, Corporate and Midcap were
poised to grow as the Egyptian economy
partially rebounded from some of the ef-
fects of the global economic crisis. Credit
Risk Management played a pivotal role
in supporting such growth by continuing
to adopt a prudent strategy based on risk
mitigation.
The measures taken to achieve these
goals included managing credit ceilings,
setting industry limits, tightening country
limits, limiting cross border exposure in
high-risk products, close monitoring of
past dues, conducting regular stress tests
to assess portfolio resilience and focusing
on exposures within moderate risk indus-
tries with stable cash flows. As a result,
non-performing loans ratio decreased in
2010 compared to 2009 despite the 26.7%
Y-o-Y growth of our loans portfolio dur-
ing the same period demonstrating CIB’s
ability to achieve healthy growth without
sacrificing its asset quality. This is further
enhanced by a coverage ratio of 145.1%
in 2010 confirming our prudent policy in
maintaining adequate impairment charges
to cover existing non-performing exposure.
On the Correspondent Banking side,
2010 presented certain challenges as
international markets were shaken by the
46
Annual Report 2010
Annual Report 2010
47
2010 In Review: Risk Management
2010 In Review: Compliance
Credit Underwriting and Collections to
enhance service delivery and turnaround
times. The year ahead will be a challenging
year considering the objective of Consumer
Banking to grow against a backdrop of
increased competition in the market. The
focus will be to leverage the expertise, skill-
sets and standardized processes cultivated
over the last two years in order to drive
quality and efficiency given the aggressive
acquisition volumes and asset portfolio.
While we continue to aggressively grow
consumer assets, the guiding principle is to
optimise portfolio quality and manage the
risk-reward balance.
Aggregate Portfolio Quality
And Impairment Charges
Total IFRS based Impairment Charges
reached EGP 1.26 billion in December 2010,
compared to EGP 1.30 billion in 2009, and
despite the write off of EGP 105.6 million in
2010, compared to EGP 65.5 million in 2009.
The Bank’s General Ratio for Direct Expo-
sure decreased from 2.32% as of December
2009 to 2.19% in 2010. Institutional Banking
Recoveries recorded a total of EGP 25.7 mil-
lion in 2010 compared to EGP 22.7 million
in 2009.
The Consumer Banking Unit continues to
make valuable contributions to the Bank’s
performance with aggregate recoveries of 3.5
million as of December 2010, up from EGP
1.2 million in 2009.
Basel II Implementation:
Credit Risk
In accordance with the Central Bank of
Egypt’s (CBE) recommendation for Basel II
compliance, CIB will adopt the Standardized
Approach for Credit Risk across all the asset
classes starting 31 December, 2011. The bank
is currently fully engaged in the implemen-
tation of this approach with the help of the
acquired technology solution.
CIB has a corporate rating model based
on statistical methodology developed in
2006 and which is being used to rate all
corporate customers on an annual basis. It
enables the bank to estimate the PD (Prob-
ability of Default), a key risk component for
the Internal Rating Based (IRB) approach
of the Basel II Accord. CIB is currently
working to validate this rating model in
order to implement the Foundation IRB
Approach as and when permitted by CBE.
48
Annual Report 2010
Gross Loans
(000’s of EGP)
2007
2008
2009
2010
21,465,494
27,738,625
28,981,189
36,716,652
NPL (% of loans)
3.0%
3.0%
2.97%
2.73%
Charge-offs to Date
(000’s of EGP)
Recoveries to Date
(000’s of EGP)
General Ratio (Direct
Exposure only)
Recoveries to Date /
Charge-offs to Date
1,447,577
1,543,638
1,609,105
1,714,960
251,214
314,974
338,928
368,095
N/A
N/A
2.32%
2.19%
17.4%
20.4%
21.0%
21.5%
Market Risk
The Market Risk Management Department
(MRM) is responsible for the measurement,
management and reporting of Market Risk
Exposures within the bank. MRM uses
various techniques and methodologies for
quantifying and modelling the potential
losses that may arise from adverse changes
in market rates and prices including foreign
exchange, equities and interest rates in both
the trading and banking books. These meas-
urements include Value-at-Risk (VaR), stress
testing, scenario analysis and Economic
Value of Equity (EVE).
Regular Market Risk reports are generated
and reported to management and stakehold-
ers to ensure that limits are not breached and
that appropriate action is initiated.
In terms of Basel II Compliance, the bank
is currently implementing a solution to be in
line with the CBE Guidelines.
Operational Risk
Operational Risk Management (ORM) is
a newly-formed department that aims to
manage and control operational risk in an ef-
fective manner, within levels that are consist-
ent with the bank’s risk appetite. The Bank
intends to develop and implement an Opera-
tional Risk process that brings consistency
(risk identification/measurement/reporting)
and standardization within CIB through a
common framework of policies and tools.
In 2010, an Operational Risk Committee
was established, and the framework was for-
malized, with relevant policies implemented.
In terms of Basel II Compliance, the bank is
currently implementing a solution to be in
line with the CBE Guidelines.
Compliance
The Compliance Department is divided
into four divisions: Compliance with Pol-
icies and Procedures; Compliance with
Anti Money Laundering; Compliance
with Corporate Governance and Code of
Conduct; and Complaint Investigation.
In general terms, Compliance contin-
ues to guard the bank against potential
losses and reputation damage. Specifical-
ly, the Department acts as a shield against
regulatory sanctions, legal or material
financial losses a bank may suffer as a
result of its failure to comply with the
law, regulations, and other related self-
regulatory organization standards.
The Compliance Department takes
particular care to protect the Bank
against activities such as money launder-
ing and terrorism financing, and in these
respects works closely with the MLCU
(Money Laundering Combating Unit)
in CBE. Meanwhile the Chief Compli-
ance Officer became a voting member
of the Retail Fraud Risk Management
Committee as Compliance was given the
responsibility of investigating any fraud
issues in other areas of the Bank, due to
an increased focus on the risk of external
and internal fraud.
The year 2010 saw the Department
give increased attention to customer
complaints with a particular emphasis
on highlighting the root causes of dis-
satisfaction and ensuring non-recurrence
through remedial action; major findings
were also raised to and sometimes han-
dled by Senior Management.
Additionally, the Compliance Depart-
ment also started reviewing new products
and services launched to guarantee their
compliance with regulations and ensure
transparency and accurate information
for customers, factors which are expected
to further increase customer satisfaction.
The “whistle–blowing” concept con-
tinues to be the channel available to
employees for reporting violations and
misconduct, while the Chief Compli-
ance Officer acts as the focal point for all
staff, ensuring that they are fully aware
of the code of conduct. In this matter, the
Petition and Code of Conduct Commit-
tees review staff requests, petitions, and
complaints to ensure fair and proper
treatment of such issues.
Looking forward into 2011, we will
focus on:
• Maintaining proper controls to mini-
mize the risk of external and internal
fraud.
• Enhancing Regulatory Compliance by
introducing a compliance mapping pro-
cess for different areas of the Bank while
cooperating with the Operation Risk
Department to cover identified gaps.
• Implementing the international stand-
ards of Corporate Governance fully.
The Compliance
department works
closely with the
Money Laundering
Combating Unit of
the Central Bank of
Egypt to help shield
CIB from potential
losses.
Annual Report 2010
49
Success Story
Orascom Hotels and Development
Developing State-Of-The-Art
Communities
Orascom Hotels and Development (OHD)
is one of the leading property develop-
ers in the Middle East with a portfolio
including a range of integrated communi-
ties, major hotels and marinas, in addition
to the ancillary infrastructure required
for these establishments. They are one
of CIB’s biggest corporate clients, and
a regional heavyweight in the property
development industry.
CIB’s relationship with the group dates
back to 1994, when CIB helped finance the
development of El Gouna, the premier Red
Sea resort town, through a combination of
tailored debt facilities and medium term
loans arranged by industry specialists in
the Bank’s corporate finance division. The
successful launch of El Gouna provided
OHD with a solid basis to expand and
apply their township model to other
countries in the Middle East as well as
in Europe and Africa. After initiating a
number of projects in Egypt including the
areas of Aswan, Fayoum and Taba, ODH
launched developments in Oman, the
UAE and Jordan, where the Group began
work on the country’s first resort project,
located on the Gulf of Aqaba.
In Switzerland, the Group is currently
undertaking a EUR 1 billion project to
transform the town of Andermatt into the
country’s first car-free community and one
of the most eco-friendly places in Europe.
With an environmentally conscious vision,
a well-established reputation and substan-
tial financial means, OHD acts as a pioneer
in the development of sustainable commu-
nities in every country in which it operates.
CIB is among several preferred banks
assisting OHD with project finance as
the company extends its geographical
footprint to encompass the entire MENA
region as well as countries in Europe and
sub-Saharan Africa. The Bank fully in-
tends to build on this partnership moving
forward in 2011.
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51
Strategic Subsidiaries
CI Capital Holding
CI Capital Holding is a fully-fledged investment bank which was founded in 2006 with a
paid-in capital of EGP 550 million.
Capitalizing on its strength as Egypt’s leading private bank, CIB orchestrated its entry
into the market of financial flows, investment and securities trading with the 100%
acquisition of CI Capital Holding in 2008. Since then, CI Capital has operated as CIB’s
full fledged investment banking division, offering financial solutions through its diverse
platform for Securities Brokerage, Investment Banking, and Asset Management; all
served by a strong research arm.
CI Capital’s present network of shareholders, investors and management has con-
siderable access to the Egyptian financial and business communities, helping the firm
identify solid and sustainable growth opportunities for the group.
CI Capital’s experienced management team has formulated and executed many of the
landmark investment banking and brokerage deals in the Egyptian market.
CI Capital’s 2010 Awards
GTM Egyptian Stock Exchange 2010 Awards
• Best Investment Bank
• Best Research Team
The African Investors 2010 Telecom Analyst Nomination
CI Capital’s Telco Team was nominated for the best Telco Team in Africa in the African
Index Series Award
The Global Investor 2010 Awards
CI Asset Management won the best Asset Manager in Egypt
Securities Brokerage
Through its brokerage arm, CI Capital offers a wide range of securities brokerage ser-
vices that cater to a variety of clients through several desks, including:
• International Clients
• GCC & HNWI’s
• Retail
• Local Institutions
• OTC
• Fixed Income & International Equities
• E-Trade
• GDR
CI Capital has two fully-owned local brokerage companies; Commercial International
Brokerage Company (CIBC) and Dynamic Securities, both operating through one of the
widest branch networks, with 11 physical locations.
2010 Accomplishments
In 2010, CI Capital Securities managed to increase its market share more than 2.3%
to reach 6.34% as opposed to 4.05% in 2009. CI Capital also managed to improve its
ranking in the Egyptian brokerage market to 2nd as opposed to 4th a year ago. It is
also worth noting that CIBC was ranked first during the fourth quarter of 2010 with a
market share of 8.2% and a total trading value of EGP 8.6 billion, which increased CICH
total market share to 9.1%. In terms of trading value, CI Capital brokerage performance
was almost stable at EGP 33 billion.
Investment Banking
Carrying on CIB’s investment banking tradition, which dates back to 1991, CI Capital
Investment Banking offers some of the most focused, experienced and professional advi-
sory services and execution capabilities in Egypt.
Being part of the investment banking arm of CIB, CI Capital Investment Banking
enjoys a unique vantage point in terms of:
• Access to deal flow
• Unparalleled sector, industry and company knowledge
• Access to and ability to raise and structure debt capital
CI Capital Investment Banking Offers
Equity Capital Markets:
• Private Placements
• Initial Public Offerings
• ADR / GDR Listing
• Valuation Advisory
Mergers & Acquisitions:
• Buy Side Advisory
• Sell Side Advisory
• Asset Disposal Programs and Divestitures
• Management Buy-Outs and Leveraged Buy-Outs
Mid-Cap Companies
Egypt’s first dedicated unit providing corporate financial advisory and NILEX listing
to mid-size enterprises, CI Capital Investment Banking is characterized by a strategy
which reflects the group philosophy and culture as a team of big relationship bankers
rather than transaction bankers.
As for CI Capital’s Mid-Cap private equity line of business, CI Capital successfully
managed its exit from this business line without any reputation damage following high
level directives earlier this year. In fact, to the contrary, CI Capital positioned itself as
co-sponsor and manager of the Abraaj Egyptian SME funds platform. The fund’s first
closing mobilized EGP 150 million and was announced during the Egypt Euromoney
conference in September 2010.
2010 Accomplishments
CI Capital Investment Banking has executed three M&A and corporate finance deals:
1. Structuring and placing the first public offering after the financial crisis: 48 million
common shares of Housing and Development bank, worth EGP 930 million.
2. Acting as a sell-side advisor for Medco Plast Company, a deal in which Middle East
Glass Company acquired 60% of Medco Plast.
3. CI Capital also acted as the exclusive financial advisor to CIB in the sale of its 27.47%
equity stake in National Vegetable Oils Company and 30.32% equity stake in Nation-
al Stevedoring Company to Cargill.
The company also managed to recruit high caliber talent with international back-
grounds in finance, to enhance its deal-execution teams. In addition, we expanded the
company’s backlog with various deals bearing a high probability of execution over the
coming eighteen months.
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53
Strategic Subsidiaries
Asset Management
CI Capital’s asset management arm, “CI Asset Management (CIAM),” was established in
2004 to manage investment portfolios and mutual funds. CIAM is considered the first
private institutional asset management firm in Egypt with total assets under manage-
ment of over EGP 10.9 billion in December 2010, versus EGP 8 billion in December
2009, a 36% increase.
The company now manages five funds, versus four at the end of last year, namely:
• Osoul, one of the largest and best performing money market funds in Egypt with as-
sets under management of EGP 10.9 billion.
• Istethmar, the company’s first equity fund launched in April 2006 with assets under
management of EGP 236.4 million as of December 2010.
• Aman, a Sharia’a-compliant fund, in cooperation with both CIB and Faisal Islamic
Bank of Egypt, launched in October 2006 with assets under management of EGP 46.3
million as of December 2010.
• Bloom, launched in September 2009 with assets under management of EGP 126.1 mil-
lion as of December 2010.
• Hemaya, CIAMs first capital-protected fund, launched in August 2010 in cooperation
with the CIB. Current assets under management amount to EGP 305.3 million.
CIAM also provides portfolio management services to a wide array of CIB and CI
Capital clients, offering full-discretionary services to high-net-worth individuals and
institutional investors. Clients are provided with comprehensive personalized services,
which are tailored to their investment and reporting requirements.
The list of existing and targeted clients includes Egyptian banks, insurance companies
and financial institutions, as well as pension funds.
Asia Pacific
Consolidating its position on the dual gateway between Egypt and Asia, CI Capital has
established its Asia Pacific office in Hong Kong, becoming the only Egyptian investment
bank with a footprint in East Asia.
This complements our “Resurrecting the Silk Road” initiative and follows a highly
successful Egypt Day in Singapore organized by CI Capital in early 2010.
CI Capital Research
CI Capital Research was established in 2005 as an independent research house to serve
the Group’s institutional and retail clients. The company was later integrated within CI
Capital Holding. Previously, CI Capital Research had been the research department of
CIBC since 1998. The research team comprises some of the most experienced and top
notch industry and equity analysts in Egypt.
These teams have been merged into sector groupings to cover a wide variety of in-
dustries and companies in the Egyptian and other MENA stock markets, but retaining
a capacity for bespoke research. This enables a wide range of research products from
periodicals, short-term trading notes, to longer term thematic pieces, as well as in-depth
industry studies. In addition, the macro research team tracks, analyses and forecasts
macroeconomic indicators, while the strategy team organizes and prepares their re-
search for the purposes of the equity analysts. In this way, Research has been useful not
only for clients looking at the stock market, but for the building of strong relationships
with CICH clients along the “Silk Route” as they study investment opportunities in the
country.
2010 Accomplishments
The Research department expanded its equity coverage from 46 to 50 companies
covering 14 sectors, and now has the widest coverage of the Egyptian market. It also
launched its regional expansion into other MENA countries, an effort which is expected
to continue through 2011 as more companies and countries are added to the scope of CI
Capital Research coverage.
During 2010, the following products were launched:
• Investor’s Guide – Monthly product
• Egypt Book – Third edition
• Macro Economic Watch – Monthly product
• Trading Notes
• Oxford Business Group – Annual book contribution (The Report 2010)
• Borsageya Newspaper – Weekly contribution.
54
Annual Report 2010
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55
Commercial International Life Insurance Company
Commercial International Life Insurance Company (CIL) seeks to meet the savings and
protection needs of individual and corporate customers with insurance products that
offer excellent value-for-money.
Leveraging the strength of its two respected shareholders, Legal & General of the UK
and Commercial International Bank (CIB) of Egypt, and a successful banc-assurance
sales model, CIL has risen rapidly to be among the largest companies in the Egyptian
life insurance industry.
Having celebrated ten years of operations in Egypt, CIL looks forward to another
decade of meeting the high growth expectations of its shareholders and contributing
further to the development of the life insurance sector in Egypt.
2010 Accomplishments
CIL currently insures the lives of more than 250,000 people, and provides retirement
savings programs for almost 20,000 people. Sales increased significantly during the year
and the growth platform for sales and revenue diversification across all lines of business
is being established for the years ahead.
Forward Strategy
In the future, CIL is determined to:
• Build a strong and vibrant company through strong and sustained growth in sales of
profitable products to individual and corporate customers
• Ensure high customer satisfaction by offering competitive, value-for-money products
using a transparent and needs-based sales process, supported by exceptional ongoing
customer service
• Contribute materially to CIB’s revenue base with strong sales growth, high policy
persistency and maximisation of synergies with CIB affiliated companies
Strategic Subsidiaries
Egypt Factors
Egypt Factors S.A.E (EGF) is a joint venture between Commercial International Bank
and Malta-based FIMBank PLC. Each entity holds 40% ownership, while the Interna-
tional Finance Corporation (member of the World Bank Group) holds the remaining
20%. EGF is the first non-banking financial institution in the Arab Republic of Egypt
that specializes wholly in factoring, and in the Register for Factoring Companies, the
company is #1.
Product Type
With a clear focus on non-traditional trade finance instruments, Egypt Factors is com-
mitted to supporting and promoting Egyptian cross-border trade (i.e., exports as well
as imports and domestic trade). To this end, Egypt Factors provides a comprehensive
receivables management service package, comprising the following:
• Administration & Commercial Collection: EGF will take care of complete debtor
bookkeeping as well as monitoring and following-up on all outstanding invoices. All
collection measures will be professionally taken care of by Egypt Factors, covering
more than 60 countries around the world including Egypt. EGF bridges differences in
culture, languages, market habits as well as the legal environment through a huge cor-
respondence network - more than 240 correspondents all over the world.
• Funding: EGF will advance up to 90% of all covered receivables. This turns your sales
on credit terms into cash sales. Your cash flow improves which increases your flexibil-
ity.
• Bad Debt Protection: EGF guarantees 100% payment up to a limit established on each
buyer and we will settle covered and undisputed receivables if not paid after a defined
period past the due date. Buyers are under periodic evaluation to make sure that up-
coming risks are recognized on time.
Target Market
The company targets mid-cap producers, traders, and service providers conducting
transactions based on short-term deferred payments. EGF also caters to domestic buyers
from local or foreign sources, increasing their purchasing power without their banking
facilities being tied up.
For large corporations, factoring is advantageous, since it provides them with value-
added services and non-recourse funding, protecting them and improving their ef-
ficiency and financial ratios. Meanwhile, factoring is still considered more beneficial to
medium-size companies, in terms of liquidity and growth.
2010 Accomplishments
Building on a strong first year of official operations, Egypt Factors successfully main-
tained its strong growth rates to reach a portfolio of:
• 140 factoring facilities (mostly with mid-cap companies) with a growth rate reaching
50%
• More than EGP 500 million in approved facilities, 100% growth over 2009.
• Turnover year-to-date of EGP 900 million, more than 400% growth over 2009
Ongoing Forward Strategy
Our strategy is to expand more in the mid-cap sector, provide such companies with in-
novative, tailored factoring services to best suit their needs, while focusing on the qual-
ity of our factoring portfolio, service, and customer satisfaction.
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57
Strategic Subsidiaries
Falcon Group
Falcon Group (F.G.) is a joint venture between Commercial International Bank, the
Private Fund of the Employees working at CIB, and other partners. CIB holds 40.5%, the
Private Fund of the Employees holds 13.5%, Al Ahly for Marketing and Services holds
5.5%, while 40.5% is held by individual entities.
Product type
Falcon Group provides various products and services through its five subsidiaries:
1. Falcon for Properties and Premises Protection
• Properties and Premises Protection
• Public Event Security
• Personal Protection
• Training Security Dogs
• Corporate Security Training Courses
2. Falcon for Cash in Transit Services
• Cash Management and Transit
• ATM services (feeding and maintenance)
• Sorting and defining money
3. Falcon for Electronic Security Systems
• Security Surveillance Equipment
• Counter Surveillance Equipment
• Access Control Equipment
• Fire Systems
• Safety Equipment
4. Falcon for Services & Project Management
• Cleaning and Maintenance
• Legal Consultancy
• Public Governmental Services (Concierge Services)
• Advertising
• Organizing exhibitions, conferences, and events.
• Catering
5. Falcon Blue for Touristic Services
• Booking International and Domestic Flights
• Booking International and Domestic Hotels
• Visa Handling
• Meet & Assist
• Medical Insurance for Travel
• Assistance in Tracing Lost Baggage
• Tour Arrangements for Groups and Individuals
• Haaj & Omrah
Target Market:
In today’s market, there is a growing demand for superior security products and ser-
vices. Many organizations are considering using managed service providers to meet
some or all of their needs. F.G. provides best-in-class security and properties manage-
ment services, as classified by the UNDSS. F.G. has established a unique mix and calibre
of services to meet the market’s varied needs.
Every year, Falcon Group adds additional services to ensure that the needs of our cli-
ents are met. F.G. has positioned itself as the leading company offering various forms of
relief and assisting the other affiliated companies with marketing themselves as provid-
ers of quality service.
2010 Accomplishments
During 2010, Falcon Group accomplished the vast majority of its objectives. F.G. suc-
ceeded in establishing new companies within the group with the intention to cross-
sell products, while the company notably launched Falcon for Services and Properties
Management.
• Growth rate reached 13% with a turnover of EGP 72 million.
• F.G. assets have grown steadily to reach EGP 21 million.
• Branch network increased to 7 branches in Egypt
Ongoing Forward Strategy
Falcon Group’s strategy is to focus on the industrial, petroleum, and security-related
enterprises holding at least 50% of the market share, which we project will increase our
income by more than EGP 30 million at least in the next three years. In addition, we aim
to open a certified training centre (Falcon Academy), providing the market with Falcon
expertise and introducing world-class standards to Egypt.
Corporate Leasing Company Egypt (CORPLEASE)
Established in 2004, CORPLEASE has quickly become one of the largest financial leas-
ing firms in Egypt, currently ranked among the top three firms in the industry. CIB
holds a 40% share of the company’s capital along with other institutional investors in-
cluding DEG (an arm of KfW Bankengruppe) and U.B.A.F (Union De Banques Arabes
et Francaises).
CORPLEASE, which is a broad-based leasing company, has a robust business model
built on combining solid growth, operational excellence, rigorous underwriting stand-
ards, strong risk management and sophisticated control processes. As a result, COR-
PLEASE has since its inception enjoyed an excellent quality lease portfolio.
2010 Performance
The company’s lease volumes grew by 33% compared to 2009 while net profit after tax
more than doubled despite the fact that in 2010 the company was, for the first time, fully
liable for taxes after the end of its five year tax holiday. The company recorded an after-
tax return on capital in excess of 40% in addition to returns on assets of 4%, while the
quality of the company’s lease portfolio remains solid with minimal collection delays.
In the fourth quarter of 2010, CORPLEASE issued and successfully closed its third
asset-backed securitization by issuing a multi-tier bond of EGP 538 million against a
portfolio of leases with total receivables of EGP 700 million. CIB acted as the sole ar-
ranger, underwriter, back-up servicer and custodian of the issue.
In 2010, CORPLEASE finalized and successfully relocated to its new purpose-built
head office in Smart Village, a premier business park for financial and technology
companies. The company also inaugurated its branch in Mansoura and plans to pursue
further geographical coverage in 2011.
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59
Success Story
El Sewedy Electric
Modernising Local and
Regional Infrastructure
El Sewedy Electric is one of the world’s
leading manufacturers of integrated
electrical products and services. With
factories scattered across the Middle East
and Africa, the company now exports
to markets as diverse as Brazil, Spain,
Eastern Europe and MENA. Having acted
as a financial advisor during key acquisi-
tions and expansions, CIB is proud to have
facilitated the growth that transformed El
Sewedy from a family-run enterprise into
a major multinational company.
Originally established in 1938 as a fam-
ily business involved specifically in the
trading of electrical equipment, El Sewedy
has since expanded its lines of business to
encompass a wide spectrum of industries
including engineering and contracting,
electrical products, wind energy and tele-
communications. These successive expan-
sions necessitated complex cross-border
deals as the company grew its geographi-
cal footprint to include production sites in
countries as dispersed as Zambia, Nigeria,
Ethiopia, Algeria, and Syria. Since 1998,
CIB has constantly supported this growth
strategy and provided financial solutions
to bolster El Sewedy’s expansion into new
industries. In 2007, CIB saw the company
make a historic entry into Europe when
it acquired Slovenian Iskraemeco, one of
the world’s most technologically advanced
producers of metering products and
services.
CIB views El Sewedy, like many of its
corporate clients, as more than just a
source of lucrative transactions, but also
as a driver of macro-economic growth
in Egypt. Working with such clients thus
generates revenues for CIB while simulta-
neously creating dividends for the Egyp-
tian economy at large.
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61
Corporate Governance
The Board of Directors is responsible for ensuring
that the company’s strategy and the controls in
place deliver value to all stakeholders, including
shareholders, customers, employees and the
community.
CIB places a strong emphasis on corpo-
rate governance, striving to both align
business practices with the best interests
of shareholders, and maximize transpar-
ency through timely information dis-
closure and financial reporting. CIB has
adopted a sound and effective system of
corporate governance best practice, with
a professional leadership team composed
of executive directors and senior manag-
ers, independent board committees, and
independent non-executive directors of
experience and integrity.
Our corporate governance framework
ensures that timely and accurate disclo-
sure occurs with respect to material mat-
ters regarding the Bank, its ownership,
operations and financial performance.
The Board is also responsible for ensuring
the equal treatment of all shareholders
and enforcing sound protection of their
voting rights. Furthermore, CIB changes
auditors every five years to ensure objec-
tivity and to benefit from new practices.
The Board of Directors is comprised of
a majority of non-executive directors, all
of whom play key roles in the governance
of the Bank. The breadth of expertise of
the non-executive directors has cre-
ated a particularly strong Board, whose
influence is invaluable to the continuing
strength of CIB.
The Board of Directors
The Bank’s management structure is
based upon centralization of controls at
the head office and at the top manage-
ment level. The management team takes
guidance from the Board of Directors,
which sets the overall strategy and ap-
proves all operating policies.
CIB’s Board of Directors met five times
over the course of 2010, and currently
consists of two executive and seven non-
executive members with experience from
a wide range of industrial sectors. When
a board seat is vacant, the Compensation
and Governance Committee is responsi-
ble for nominating a member, subject to
the Board’s consent, who is then formally
appointed after gaining approval at the
General Assembly and from the Central
Bank of Egypt. The Board meets at least
four times annually.
In July 2009, Actis, an emerging market
private equity specialist, acquired 50%
of the stake in CIB that was originally
held by the Ripplewood consortium. In
December 2009, New York-based Ripple-
wood sold its remaining residual stake in
CIB, thus marking the successful transi-
tion of CIB’s strategic partnership to be
with Actis, who is now the single largest
shareholder in the Bank. Accordingly,
the Board of Directors in its new and
expanded form consists of:
Mr. Hisham Ezz Al-Arab
Chairman and Managing Director
MC/C
Mr. Hisham Ezz Al-Arab joined CIB
in 1999 as Deputy Managing Director
and was elected Chairman and Manag-
ing Director in September 2002. He has
more than 30 years experience in global
banking, having held senior positions
at Merrill Lynch, J.P. Morgan and, more
recently, Deutsche Bank in the United
Kingdom.
Mr. Ezz Al-Arab holds a directorship
of the South Asia, Middle East & Africa
Region Advisory Board of MasterCard
Incorporated. In addition, he is a mem-
ber of the Court of Honor in the Ministry
of Justice of Egypt and the Industrial
Modernization Centre, as well as a prin-
cipal member of the American Chamber
of Commerce. Mr. Ezz El-Arab is also a
member of the Board of Trustees of the
General Association for Social Solidarity
within the Egyptian Ministry of Social
Solidarity.
Mr. Essam El Wakil
Member and CEO Institutional Banking
RC/M, MC/M, HLIC/C
Mr. El Wakil is a prominent banker with
more than 36 years of experience in the
financial industry, including Treasury
& Capital Markets, Corporate Finance,
Project & Trade Finance, Islamic Bank-
ing and Investment Banking.
He began his career in 1976 with the
National Bank of Egypt, followed by
Arab International Bank, Egypt. Begin-
ning in 1980, Mr. El Wakil spent 28 years
with Arab Banking Corporation (ABC)
Group in Bahrain, London, New York,
Singapore and Egypt. During his last 10
years in Bahrain, between 1996 and 2006,
he held several senior banking posi-
tions and directorships in both Islamic
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Annual Report 2010
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63
Corporate Governance
and commercial banks throughout the
MENA region.
In April 2008, he was elected as a board
member of the Egyptian Federation of
Banks.
Mr. El Wakil joined CIB in August
2008, as Board Member and CEO of
Institutional Banking. In May 2009, Mr.
El Wakil was appointed as the Chairman
of the investment banking subsidiary of
CIB, CI Capital. In August 2009, he was
appointed as Deputy Chairman to the
Banking Committee, American Chamber
of Commerce.
Dr. William Mikhail
Member
AC/C
Dr. Mikhail is currently professor of
Econometrics at the American University
in Cairo (AUC), and has been a member
of CIB’s Board of Directors since 1997.
He obtained his PhD from the London
School of Economics, London Univer-
sity, in 1969. In addition to his academic
career, Dr. Mikhail has also worked
with international consulting firms and
as a UN consultant for more than two
decades on econometric modelling and
economic policy analysis in a number
of countries. He has published exten-
sively on econometric theory and applied
econometrics in international journals,
and supervised many PhD and MA the-
ses both at Cairo University and AUC.
Mr. Mahmoud Fahmy
Member
AC/M, GCC/M
Counselor Fahmy is a well-respected
Egyptian lawyer and international arbi-
trator. He is an Attorney at Law admit-
ted to the Egyptian Bar of Civil, Com-
mercial and Criminal Cassation Courts,
the Supreme Administrative Court and
the Supreme Constitutional Court. He
is a member of the General Assembly
of Public Sector’s Banks at the Central
Bank of Egypt, a member of the Egyptian
Businessmen’s Association and head of
its Investment and Economic Legislation
Committee, Chairman of the Egyptian
Legal Association, Chairman of Corpo-
rate Leasing Co. Egypt (Corp-Lease), and
Chairman of The Egyptian Leasing As-
sociation. In addition, Mr Fahmy is the
owner and General Manager of Fahmy’s
Law Office for Legal Profession, Legal
Consultation, Arbitration, Investment
and Capital Markets.
Dr. Nadia Makram Ebeid
Member
GCC/C
Dr. Nadia Makram Ebeid is the Executive
Director of the Centre for Environment
and Development for the Arab Region
and Europe (CEDARE), an international
diplomatic position she has held since
January 2004. For a period of five years
beginning in 1997, Dr. Ebeid served as
Egypt’s first Minister of Environment,
the first woman to assume this position
in the Arab world. Early in her career, Dr.
Ebeid held several managerial posts with
the United Nations Development Pro-
gram (UNDP), the United Nations Food
and Agriculture Organization’s Regional
Office for the Near East, and Council for
Environment and Development Research.
In recognition of her role in environ-
mental policy and advocacy, Dr. Ebeid
has been awarded numerous awards and
distinctions from local and international
NGOs, leading institutions and associa-
tions.
Mr. Walid Shash
Member
RC/M
Mr. Walid Shash is currently the Head
of the MENA Institutional and Private
Wealth Management Business, Union
Bancaire Privée (UBP) Geneva. Since his
graduation in 1982 with a BA in Econom-
ics and Business Administration from the
American University in Cairo, Mr. Shash
has served in a number of renowned
financial institutions, including Misr
American International Bank, Union des
Banques Arabes et Français (UBAF) in
Paris, Lehman Brothers and Prudential
Securities in Geneva.
Dr. Medhat Hassanein
Member
AC/M
Dr. Medhat Hassanein, Egypt’s former
Minister of Finance (1999-2004), is cur-
rently a professor of Finance and Bank-
ing with the Management Department
of the School of Business, Economics &
Communication at the American Univer-
sity in Cairo.
Dr. Hassanein is a senior policy analyst
with long experience in macro-policy
analysis, corporate finance and inter-
national financial management. He has
previously served as advisor to govern-
ments, high-level advisory bodies and
the donor community. During his term
as Minister of Finance, he developed and
instituted the second generation of fiscal
public policy reforms for the Government
of Egypt. Dr. Hassanein has also served as
Chairman and Board Member in public
holding companies, private corporations
and many respected banks in Egypt, most
recently HSBC Egypt (2004-May 2009)
where he chaired its Audit Committee.
Ambassador Frank G. Wisner
Member
GCC/M
Ambassador Frank G. Wisner is the inter-
national affairs advisor to Patton Boggs
LLP, a full-service firm with a national
presence in every major area of legal rep-
resentation. Prior to joining Patton Boggs,
Mr. Wisner served as Vice Chairman of
the American International Group (AIG),
External Affairs, following his retirement
from the US government with the person-
al rank of Career Ambassador, the highest
grade in the Foreign Service.
Mr. Wisner joined the US Department
of State in 1961 and served for 36 years
in overseas and Washington-based posts.
Among his other posts, Ambassador
Wisner served successively as US Ambas-
sador to Zambia, Egypt, the Philippines
and India.
Currently, he is on the board of the
US-India Business Council. Mr. Wisner is
a member of the boards of directors of oil
and natural gas exploration and produc-
tion company EOG Resources and Ethan
Allen, a large furniture manufacturer. He
has been a member of the Board of Direc-
tors of the Pharaonic American Life Insur-
ance Company (ALICO) in Egypt since
2007. He is a senior advisor at Kissinger
Associates and Vice Chairman of the
Business Council on International Under-
standing. His non-profit board affilia-
tions include, among others, Rockefeller
Brothers Fund, the American University
in Cairo, Princeton University’s Middle
Eastern Affairs Advisory Board and the
advisory board at Columbia University’s
SIPA.
Mr. Paul Fletcher
Member
GCC/M
Mr. Paul Fletcher joined CIB’s Board of
Directors in February 2010. Mr. Fletcher
is Senior Partner of Actis, leading the firm
from its London headquarters, which he
joined in 2000. Actis currently has US$ 4.8
billion in funds under management, with
over 100 investment professionals on the
ground in nine offices worldwide.
Originally a banker with Cargill and
Banker’s Trust, Mr. Fletcher transitioned
into corporate finance in the early 1990s
with a role at Citibank.
At Citibank, he led the East African
operations, becoming Head of Emerg-
ing Markets Strategic Planning. With
two decades of experience in emerging
markets, Mr. Fletcher’s career has spanned
Kenya, Tokyo, New York and London.
Mr. Fletcher is a Founding Director of
the Emerging Markets Private Equity As-
sociation (EMPEA). He holds a Masters in
Geography from Oxford University.
Committees of the Board of
Directors
The following sub-committees assist the
Board in the fulfilment of its responsibili-
ties:
Audit Committee
The Audit Committee’s mandate is to en-
sure compliance with the highest levels of
professional conduct, reporting practices,
internal processes and controls. Consist-
ent with the interests of all stakehold-
ers, the Audit Committee also sets and
enforces high standards of transparency
and strict adherence to internal policies
and procedures. In performing these
critical functions, the Audit Committee is
cognizant of the important role CIB plays
in the Egyptian financial sector as a leader
in the aforementioned areas. The Audit
Committee met four times throughout the
course of 2010.
The Governance and Compensation
Committee
The Governance and Compensation
Committee (GCC) is an integral part of
the overall responsibilities of the Board of
Directors. As such, and in line with CIB’s
Corporate Governance Framework, the
GCC is responsible for establishing cor-
64
Annual Report 2010
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65
Corporate Governance
Our corporate
governance
framework ensures
that timely and
accurate disclosure
occurs with
respect to the
Bank’s ownership,
operations
and financial
performance.
porate governance standards, assessing
Board effectiveness and determining the
compensation of members of the Board.
The GCC Committee also determines
the appropriate compensation levels for
the Bank’s senior executives and ensures
that compensation is consistent with
the Bank’s objectives and performance,
strategy and control environment. The
Governance and Compensation Commit-
tee met twice in 2010.
The Risk Committee
The primary mission of the Risk Com-
mittee is to assist the Board in fulfill-
ing its risk oversight responsibilities by
establishing, monitoring and reviewing
internal control and risk management
systems to ensure that the Bank has the
proper focus on risk. It also recommends
to the Board the Bank’s risk strategy, and
explains its associated limits. The Risk
Committee met four times throughout
the course of 2010.
The Management Committee
The representatives of the Management
Committee are the Chairman, the Chief
Executive Officer of Institutional Bank-
ing, the CEO of Consumer Banking and
the Chief Operations Officer. They meet
exclusively, without the attendance of
the Bank’s executive officers. The Man-
agement Committee is responsible for
setting the overall strategy as well as the
financial and operational performance
goals of the Bank. The Management
Committee met 12 times throughout the
course of 2010.
The High Lending and Investment
Committee
Composed of the Bank’s top execu-
tives, the High Lending and Investment
Committee’s prime mandate is to focus
on the credit and investment deci-
sions of the Bank. The High Lending
and Investment Committee regularly
reviews and decides on the Bank’s credit
facilities and equity investments as well
as focusing on the asset quality, alloca-
tion and development. This Commit-
tee is responsible for taking executive
and administrative decisions, thereby
allowing the BoD to focus on strategy
and growth opportunities, and in turn
decreasing inherent conflicts of inter-
est. The High Lending and Investment
Committee met 47 times throughout the
course of 2010.
References
Audit Committee
The Governance and Compensation Committee
Risk Committee
Management Committee
High Lending and Investment Committee
Chairperson
Member
AC
GCC
RC
MC
HLIC
C
M
66
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67
Executive Management
Chief Executive Officers
Mr. Hisham Ezz Al-Arab
Chairman and Managing Director
Mr. Hisham Ezz Al-Arab joined CIB in 1999 as Deputy Managing Director and was
elected Chairman in September 2002. With over 30 years of experience in global bank-
ing activities, he has held senior positions at Merrill Lynch, JP Morgan and Deutsche
Bank. Mr. Ezz Al-Arab also has a directorship of the South Asia, Middle East & Africa
Region Advisory Board of MasterCard Incorporated.
In addition to his work at CIB, Mr. Ezz Al-Arab is very active outside of the Bank, as
he is a member of the Industrial Modernization Centre and the American Chamber of
Commerce. Mr. Ezz El Arab is also member of the board of trustees at the General As-
sociation for Social Solidarity within the Egyptian Ministry of Social Solidarity.
Mr. Essam El Wakil
Chairman of CI Capital
Mr. Essam El Wakil joined CIB in August 2008, as Board Member and CEO of Institu-
tional Banking. In May 2009, Mr. El Wakil was appointed Chairman of CI Capital, the
Investment Banking subsidiary of CIB. Mr. El Wakil brings over 36 years of experience
in various financial areas including Treasury and Capital Markets, Project and Trade
Finance, as well as Islamic Banking. He has held senior positions at the National Bank
of Egypt, the Arab International Bank, as well as the Arab Banking Corporation (ABC)
Group for which he worked in the offices of Bahrain, London, New York, Singapore and
Egypt.
In April 2008, Mr El Wakil was also elected to be a board member of the Egyptian
Federation of Banks, and in August 2009, he was appointed as Deputy Chairman to the
Banking Committee of the American Chamber of Commerce.
Mohamed Abdel Aziz El Toukhy
Chief Executive Officer, Consumer Banking
Mr. Hussein Abaza
Chief Operating Officer
Mr. Mohamed Abdel Aziz El Toukhy is currently the CEO of Consumer Banking at CIB.
In his current role, Mr. Toukhy is entrusted as a key leader in the transformation of the
organization into a modern Consumer Banking franchise. Mr. Toukhy began his career
at CIB in 1979 at the Trade Finance Department, and has since worked in a number
areas including Operations, Branch Management and Corporate Banking. In July 2006,
Mohamed El Toukhy was promoted to be General Manager of Consumer Banking and
since then has led the franchise to unprecedented success.
Under Mr Toukhy’s leadership, Consumer Banking has significantly improved its bal-
ance sheet, expanded its branch network to cover all key governorates in Egypt, and tak-
en leadership positions in the cards, loans and wealth management businesses. Outside
of Consumer Banking, Mr. Toukhy is also Chairman of Commercial International Life
Insurance (CIL), Chairman of Commercial International Asset Management (CIAM),
and a member of the Boards of Commercial International Capital Holding (CICH) and
Bavarian – Contact Car Trading (BMW).
Mr. Hussein Abaza is currently Chief Operating Officer of CIB, where he has also served
as Chairman of CIAM and as a member of the High Lending and Investment Com-
mittee, the Board Risk Committee, as well as on the Board of the CI-Capital Holding
Company. In addition to those positions, Mr. Abaza has a long history at CIB where, as
General Manager and Chief Risk Officer, he was responsible for bank-wide Credit, Mar-
ket and Operational Risk, and Investor Relations. Outside of CIB, Mr. Abaza worked as
Head of Research at EFG-Hermes Asset Management from March 1995 until October
1999.
Mr. Hussein Abaza graduated with a B.A. in Business Administration from the Ameri-
can University in Cairo in 1984, after which he worked at Chase National Bank of Egypt
and underwent intensive training in Belgium, Switzerland, London and New York.
68
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69
Success Story
Magdi Yacoub
Providing Healthcare To
the Disadvantaged
One of the leading consultants in the
field of cardiothoracic surgery, Dr. Magdi
Yacoub is currently working to provide
cutting edge heart surgeries to disad-
vantaged children across Egypt through
the Chain of Hope organization and the
Magdi Yacoub Heart Foundation which he
established.
While he has spent the majority of his
career abroad as a surgeon, professor and
consultant in the United Kingdom, Dr.
Yacoub has worked for more than a dec-
ade to provide much-needed healthcare
services in his country of birth. Starting
with the Aswan Heart Centre, now a repu-
table institution of international standing
currently offering state-of-the-art cardio-
vascular care free of charge, Dr. Yacoub
seeks to create vehicles through which the
private sector can effectively contribute to
the needs of the Egyptian public.
In early 2010, the Magdi Yacoub Heart
Foundation requested CIB’s support in
a number of projects initiated by the or-
ganization. Through this initial partner-
ship, CIB financed 50 open-heart surger-
ies for underprivileged children in need.
Following this cooperation with Magdi
Yacoub in Upper Egypt, CIB established
the CIB Foundation in mid-2010 as part
of the Bank’s corporate social responsi-
bility policy, dedicating one percent of its
net annual profit to enhance health and
nutritional services to Egyptian children.
The CIB Foundation began disbursing
funds to organizations serving disadvan-
taged children in November 2010, and
in early January 2011, signed a second
cooperative agreement with the Magdi
Yacoub Heart Foundation, worth several
million EGP.
The CIB Foundation will also be fund-
ing a ten-bed suite for the paediatric inten-
sive care unit (PICU), a centre aiming to
provide world-class medical services free
of charge to the less privileged. Expected
to open in August 2011, the PICU antici-
pates performing more than 250 paedi-
atric interventions in 2011, while raising
occupancy to 80% by 2015.
By cultivating further partnerships with
other leading experts and community mem-
bers such as Magdi Yacoub, the CIB Founda-
tion helps drive development projects and
encourage system-wide social responsibility
not just in Egypt’s rapidly growing financial
sector, but in the wider business community
as well.
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71
Corporate Social Responsibility
Corporate Social
Responsibility
Because of our commitment to both our community
and our work environment, corporate social
responsibility (CSR) plays a fundamental role in our
operations at CIB. Our business impacts our local
environment and touches the lives of millions of
people across Egypt. This broad footprint has led to
CIB’s unique approach to CSR, which is based on six
key areas.
Community Health
Seeking to enhance the quality of health
and nutritional services in Egypt, CIB has
made donations on a stand-alone basis over
the past ten years. Observing the positive
impact these donations have had on the lives
of children in Egypt, the Bank recently took
an active measure to move towards more
effective, sustainable initiatives. In March
2010, a unanimous decision was taken at
the CIB General Assembly to develop the
CIB Foundation, and in May 2010, the
Foundation was established as a non-profit
organization dedicated to enhancing health
and nutritional services to underprivileged
children in Egypt.
With the generous support of CIB share-
holders, the Bank channels an ongoing al-
location of 1% of its annual net profit to the
Foundation. In addition, the CIB Founda-
tion was granted a donation license from the
Ministry of Social Solidarity, allowing it to
collect donations from Bank stakeholders,
including customers, shareholders, suppli-
ers, affiliates and employees. It is with this
funding that the CIB Foundation seeks to
make valuable contributions to the areas of
child health and nutrition through various
multi-faceted initiatives. The Foundation’s
short and long term goals include, but are
not limited to:
• Purchasing medical equipment for hos-
pitals,
• Renovating and upgrading hospital infra-
structure
• Providing surgical and medicinal treat-
ment to underprivileged children.
Additionally, the Foundation seeks to assist
school feeding programs, support children
with special needs, and raise community
awareness on health and nutrition-related
issues.
The CIB Foundation is dedicated to fol-
lowing up on and comprehensively monitor-
ing past CIB child health-related donations
made by the Bank in early 2010. Through
the Magdi Yacoub Foundation in Aswan,
CIB covered the costs associated with 50
children’s open heart surgeries.
The Bank also funded the purchasing of
56 electric dental chair sets for the Paediat-
ric Ward of the Faculty of Oral and Dental
Medicine at Cairo University. Prior to
receiving the CIB donation, the ward was
only meeting 20% of the demand for their
services. The ward, as the only provider
of low-cost, specialized paediatric dental
services, is now expected to open in January
2011 at full capacity.
CIB also donated to the Paediatric Surgery
Unit at Ain Shams University Hospital in
order to improve the Unit’s efficiency. The
multi-million Egyptian Pound renovation
included infrastructure, equipment, medical
and non-medical furniture. The Unit now
includes two operating theatres, an intensive
care room and an immediate care ward, al-
lowing it to perform 3,600 critical operations
a year.
A donation was also made to the Breast
Cancer Foundation of Egypt to cover the
costs associated with surgery, prostheses and
lymph edema treatment for 15 breast cancer
patients.
In November 2010, the CIB Foundation
signed a protocol of cooperation with the
Friends of Abou El Reesh Children’s Hos-
pitals Organization for the establishment
of a Paediatric Intensive Care Unit (ICU) at
the Abou El Reesh El Mounira Children’s
Hospital. The 14-month project will see the
development of a ten-bed unit, doubling the
number of critical patients the hospital is
able to serve. Once completed, the unit will
operate alongside the existing ICU, and will
provide quality service and care to patients
from across the country.
Community Development
CIB’s firm belief in the importance of devel-
oping a new generation of business leaders
has led it to engage in several types of spon-
sorship and social involvement activities. In
2010, the Bank for the fifth consecutive year
sponsored SIFE, an international organiza-
tion that mobilizes university students to
make a difference in their communities
while developing the necessary skills to
become socially responsible business leaders.
Specifically, the Bank sponsored a national
competition as well as the Business Eth-
ics section of the competition, following
which SIFE Egypt won the 2009 and 2010
SIFE World Cups, and CIB is proud to have
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Annual Report 2010
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73
Corporate Social Responsibility
Now” campaign to promote the seven main
values of the Athens Principles and facilitate
their implementation by companies.
Achieving Employee
Satisfaction
At CIB, we believe that the happiness and
personal development of our employees
is essential to our growth and success as a
bank. In 2010, we employed 670 personnel
across the Bank. In 2010, CIB was named
the Employer of Choice in the banking sec-
tor.
CIB’s Code of Conduct Policy calls for
equal opportunity and fair competition and
treatment among all of our employees and
provides protection against harassment and
intimidation. The Bank also uses a “Whistle
Blowing” policy whereby staff can raise con-
cerns about possible irregularities confiden-
tially. In order to keep pace with the needs
of our employees, CIB consistently conducts
employee satisfaction surveys.
CIB pays special attention to the issue of
gender equity and leads the Egyptian bank-
ing sector on this issue. In 2009, the Bank
received the Gender Equity Seal, and was
the only bank in Egypt and the Middle East
to be invited to participate in the United
Nations Development Fund for Women
(UNIFEM)’s launch of the Gender Equity
Model Project when Egypt became the
second country after Mexico to adopt this
initiative.
Outstanding Customer
Experience
At CIB, our customer service standards set us
apart from our competitors. We believe that
industry-leading customer service earns CIB
the trust and loyalty of our customers. Our
objective is to provide best in class levels of
service, a goal that the Bank has been focused
on since 2007. In 2010, CIB focused on initia-
tives to improve our customer experience.
Meeting Shareholder
Expectations
At CIB we believe that dialogue with exist-
ing as well as potential investors and busi-
ness analysts is the best way to ensure trans-
parency and integrity in our dealings with
clients and the community. We conduct
business in a way that promotes these two
values and provides the community with a
clear understanding of our operations, cor-
porate values, and business relationships.
played a part in these achievements.
CIB also has a specialized division which
handles social development funds and
finance programs provided by governmental
and international donors. These funds are
known for their low interest rates and simple
application procedures. The program aims
to create new job opportunities and promote
higher incomes amongst rural populations
with special emphasis on women and small
farmers.
CIB’s commitment to supporting Egypt’s
talented artists, scholars and intellectuals is
also a pillar of the Bank’s CSR program. CIB
was proud to sponsor the publication of an
anthology of the works of Dr. Farid Fadel
entitled “Egypt, Journey of An Artist”. The
bank also supports the arts through other
initiatives, including the Philharmonic and
Metropolitan Sponsorships.
With regards to our employees and Com-
munity the Bank is committed to provid-
ing our staff with competitive employment
packages and ample training opportunities,
enabling them to contribute positively to
both CIB and the wider community.
Respecting Individuals
CIB is a large institution governed by
strict ethics and regulations. The Bank
acknowledges and respects the fundamen-
tal principles of human rights as declared
by the United Nations and set down in the
Egyptian Labour Law.
CIB has been recognized by organizations
including Realizing Rights and the Busi-
ness & Human Rights Resource Centre for
our public commitment to human rights,
joining an elite group of international
companies committed to upholding these
principles. CIB’s human rights policy covers
key issues including our code of conduct,
employment policy, practices and corporate
social responsibility.
CIB is also actively involved in the fight
against human trafficking. The Bank has
worked with the United Nations Develop-
ment Fund for Women (UNIFEM) and the
United Nations Office on Drugs and Crime
(UNDOC) in addition to other prominent
international organizations to this end.
CIB’s Chairman, Mr. Hisham Ezz Al-Arab,
signed the Athens Ethical Principles, a set of
declarations against human trafficking, in
December 2010. Mr. Ezz Al-Arab was joined
in this act by other private sector CEOs and
NGO representatives. As a signatory of the
Principles, CIB declares its commitment to
the global fight against human trafficking,
and demonstrates a zero-tolerance posi-
tion towards trafficking in human beings,
especially women and children. The group
also launched the “End Human Trafficking
74
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75
Financial Statements
Commercial International Bank (S.A.E.) – Fiscal Year Ending December 31, 2010
76
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77
Table of Contents
Financials: Unconsolidated
Auditor’s Report
Balance Sheet
Income Statement
Cash Flow
Changes in Shareholder’s Equity
Notes
Financials: Consolidated
Auditor’s Report
Balance Sheet
Income Statement
Cash Flow
Changes in Shareholders’ Equity
Notes
78
80
81
82
84
85
142
144
145
146
148
150
Financial Statements: Unconsolidated
Allied for Accounting & Auditing E&Y
Public accountants & consultants
KPMG Hazem Hassan
Public accountants & consultants
AUDITORS’ REPORT
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
To the Shareholders of
Commercial International Bank (Egypt)
Report on the unconsolidated financial statements
audit opinion on the unconsolidated financial statements.
Opinion
In our opinion, the unconsolidated financial statements referred to above present fairly, in all material re-
spects, the unconsolidated financial position of Commercial International Bank (Egypt) as of December
We have audited the accompanying unconsolidated financial statements of Commercial International Bank
31, 2010 and of its financial performance and its cash flows for the year then ended in accordance with
(Egypt) S.A.E, which comprise the unconsolidated balance sheet as at 31 December 2010 , and the uncon-
central bank of Egypt’s rules, pertaining to the preparation and presentation & the financial statements,
solidated statements of income, changes in equity and cash flows for the financial year then ended, and
issued on December 16, 2008 and the Egyptian laws and regulations relating to the preparation of these
a summary of significant accounting policies and other explanatory notes.
Management's Responsibility for the unconsolidated Financial Statements
financial statements.
Emphasis of matter
These unconsolidated financial statements are the responsibility of Bank’s management. Management
Without qualifying our opinion, we draw attention to Note [43] to the unconsolidated financial statements.
is responsible for the preparation and fair presentation of these unconsolidated financial statements in
The bank disclosed that The Arab Republic of Egypt has encountered certain events that have a significant
accordance with central bank of Egypt’s rules, pertaining to the preparation and presentation & the finan-
impact on the economic sectors, in general, a matter which may lead to a substantial decline in the eco-
cial statements, issued on December 16, 2008 and in light of the prevailing Egyptian laws , management
nomic activities in the coming periods.
responsibility includes, designing, implementing and maintaining internal control relevant to the prepara-
tion and fair presentation of unconsolidated financial statements that are free from material misstatement,
Report on Other Legal and Regulatory Requirements
whether due to fraud or error; management responsibility also includes selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
According to the information and explanations given to us – during the financial year ended December 31,
Auditor's Responsibility
2010 no contravention of the central bank, banking and monetary institution law No. 88 of 2003.
The Bank maintains proper books of account, which include all that is required by law and by the statutes
Our responsibility is to express an opinion on these unconsolidated financial statements based on our
of the bank, the unconsolidated financial statements are in agreement thereto.
audit. We conducted our audit in accordance with the Egyptian Standards on Auditing and in the light of
the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan
The unconsolidated financial information included in the Board of Directors’ report, prepared in accordance
and perform the audit to obtain reasonable assurance whether the unconsolidated financial statements are
with Law No. 159 of 1981 and its executive regulations, is in agreement with the Bank’s books of account.
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the as-
sessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presenta-
tion of the financial statements.
Auditors
Cairo, 23 February 2011
78
CIB • Annual Report 2010
Annual Report 2010 • CIB
79
Financial Statements: Unconsolidated
A. CIB Stand-alone
Commercial International Bank (Egypt) S.A.E Balance Sheet as of Dec. 31, 2010
Commercial International Bank (Egypt) S.A.E Unconsolidated Income Statement For The Year Ended
Dec. 31, 2010
Assets:-
» Cash and Due From Central Bank
» Due From Banks
» Treasury Bills and other Governmental Notes
» Trading Financial Assets
» Loans and Overdrafts for Banks (Net After Provision)
» Loans and Overdrafts for Customers (Net After Provision)
» Financial Derivatives
Financial Investments:-
» Available for Sale
» Held to Maturity
» Financial Investments in Subsidiary and Associated Co.
» Real estate investments
» Debit Balances and Other Assets
» Deferred Tax
» Fixed Assets (Net)
Total Assets
Liabilities and Shareholder›s Equity:-
Liabilities:-
» Due to Banks
» Customers Deposits
» Financial Derivatives
» Credit Balances and Other Liabilities
» Long Term Loans
» Other Provisions
Total Liabilities
Shareholders› Equity:-
» Issued and Paid in Capital
» Reserves
» Reserve for employee stock ownership plan (ESOP)
» Retained Earning
Total Shareholders› Equity
» Net Profit of the Year
Total Shareholders› Equity and Net Profit
Total Liabilities and Shareholders› Equity
Contingent Liabilities and Commitments
Note No.
Dec. 31, 2010
EGP
Dec. 31, 2009
EGP
(Restated)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(22)
(23)
(24)
(25)
(33)
(26)
(27)
(28)
(21)
(30)
(29)
(31)
(32)
(32)
5,675,241,791
4,179,212,739
6,769,607,397
7,785,042,557
8,821,003,566
13,191,665,954
1,422,038,841
128,527,576
380,620,682
200,765,433
35,046,013,357
27,242,306,896
139,263,948
225,347,220
13,605,347,030
7,420,529,606
289,151,745
996,317,538
28,695,664
1,375,945,140
79,656,694
716,071,158
579,926,673
1,138,277,487
42,485,364
918,003,882
39,799,318
718,847,964
75,092,881,445
64,062,831,775
1,322,279,909
458,145,229
63,479,883,624
54,842,629,843
113,551,040
150,526,830
1,123,883,898
1,128,964,485
129,113,425
310,238,930
93,237,042
443,728,578
66,478,950,826
57,117,232,007
5,901,443,600
2,925,000,000
416,828,938
149,520,859
20,231,298
2,077,203,969
161,728,985
(1,942,684)
6,488,024,695
5,161,990,269
2,125,905,924
1,783,609,498
8,613,930,619
6,945,599,768
75,092,881,445
64,062,831,775
letters of Credit, Guarantees and Other Commitments
(37)
11,879,748,713
12,637,872,568
The accompanying notes are an integral part of the Financial Statements and are to be read therewith (Audit Report attached)
Hisham Ezz El-Arab
Chairman & Managing Director
» Interest and similar income
» Interest expense and similar charges
Net Interest Income
» Fees & Commissions Income
» Fees & Commissions Expense
Net Fees and Commissions Income
» Dividends Income
» Net Trading Income
» Profit from Financial Investments
» Administrative Expenses
» Other Operating (Expenses) Income
» Return (Losses) Of Impairment From Loans
Net Profit Before Tax
» Income Tax
» Deferred Tax
» Net Profit After Tax
Earning Per Share
» Basic
» Diluted
Note No.
(6)
(6)
(7)
(7)
(8)
(9)
(22)
(10)
(11)
(12)
(13)
Dec. 31, 2010
EGP
4,521,390,287
Dec. 31, 2009
EGP
(Restated)
4,026,337,183
(2,266,569,515)
(2,000,868,483)
2,254,820,772
2,025,468,700
835,154,241
(84,876,559)
750,277,682
184,309,092
413,109,812
102,559,206
704,436,353
(67,147,458)
637,288,895
126,062,373
404,153,055
65,220,692
(1,187,939,937)
(1,040,787,351)
1,771,329
(6,163,496)
(84,879,302)
(9,184,858)
2,512,744,460
2,123,342,204
(426,695,912)
(357,691,456)
(13) & (33)
39,857,376
17,958,750
2,125,905,924
1,783,609,499
(14)
(14)
2.99
2.93
2.63
2.59
Hisham Ezz El-Arab
Chairman
& Managing Director
80
CIB • Annual Report 2010
Annual Report 2010 • CIB
81
Financial Statements: Unconsolidated
Commercial International Bank (Egypt) S.A.E Unconsolidated Cash Flow For The Year Ended Dec. 31, 2010
Commercial International Bank (Egypt) S.A.E Unconsolidated Cash Flow For The Year Ended Dec. 31, 2010
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 Used
» Fcy Revaluation Differences Of Provisions Balances (Except Doubtful
Debts)
» Profits From Selling Fixed Assets
» Profits From Selling Financial Investments
» Losses From Selling An Investment In Associated
» Fcy Revaluation Diff.Of Long Term Loans
» Share Based Payments
179,021,238
184,283,445
84,416,535
(76,970,503)
100,496,321
(1,990,637)
59,026,765
(11,988,038)
22,423,516
(5,934,246)
(178,037,726)
(517,078)
7,340,620
(724,579)
(1,574,746)
(15,797,710)
(209,478,369)
(113,051,948)
96
141,768
-
310,424
66,356,519
75,001,082
Dec. 31, 2010
EGP
Dec. 31, 2009
EGP
(Restated)
Cash Flow From Financing Activities:-
2,512,744,460
2,123,342,204
» Increase (Decrease) In Long - Term Loans
Dec. 31, 2010
EGP
Dec. 31, 2009
EGP
35,734,615
(16,347,315)
(658,369,589)
(478,236,553)
25,721,800
-
(596,913,174)
(494,583,868)
(2,283,391,588)
1,440,295,557
10,062,335,629
8,622,040,072
» Dividends Paid
» Capital Increase
Net Cash (Used In) Financing Activities
» Net Cash And Cash Equivalent Changes
» Beginning Balance Of Cash And Cash Equivalent
» Cash And Cash Equivalent Balance At The End Of The Year
7,778,944,041
10,062,335,629
Cash And Cash Equivalent Are Represented As Follows:-
» Cash And Due From Central Bank
» Due From Banks
» Treasury Bills And Other Governmental Notes
5,675,241,791
4,179,212,739
6,769,607,397
7,785,042,557
8,821,003,566
13,191,665,954
» Due From Banks (Time Deposits)More Than Three Months
(6,394,795,631)
(7,509,460,335)
» Treasury Bills With Maturity More Than Three Months
(7,092,113,082)
(7,584,125,286)
Total Cash And Cash Equivalent
7,778,944,041
10,062,335,629
Operating Profits Before Changes In Operating Assets And Liabilities
2,482,465,576
2,316,373,837
Net Decrease (Increase ) In Assets and Liabilities
» Due From Banks
» Treasury Bills And Other Governmental Notes
» Trading Financial Assets
» Financial Derivatives (Net)
» Loans And Overdrafts
» Debit Balances And Other Assets
» Due To Banks
» Customers Deposits
» Credit Balances And Other Liabilities
Net Cash Provided From Operating Activities
Cash Flow From Investing Activities:-
» (Payments) Incomings form (Purchase) selling Subsidiary and Associ-
ated Co.
1,114,664,704
(1,792,506,063)
492,012,203
1,410,297,463
(964,447,656)
128,921,843
49,107,482
(6,844,342)
(7,776,687,046)
(1,047,276,957)
(452,877,544)
864,134,680
(69,428,725)
244,675,217
8,637,253,781
5,904,520,180
(431,776,495)
(475,728,332)
4,013,849,685
6,613,004,121
(Restated)
141,959,949
(86,222,016)
» Purchase Of Fixed Assets , Premises And Fitting- Out Of Branches
(179,733,400)
(130,621,033)
» Redemption Of Held To Maturity Financial Investments
» Held To Maturity Financial Investment Purchases
311,446,590
(20,671,662)
100,347,556
989,046
» Purchase Of Available For Sale Financial Investment
(5,967,119,276)
(4,567,668,190)
» Real estate investments
13,789,700
5,049,941
» Net Cash (Used In) Provided From Investing Activities
(5,700,328,099)
(4,678,124,696)
82
CIB • Annual Report 2010
Annual Report 2010 • CIB
83
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Commercial International Bank (Egypt) S.A.E.
Notes to the Unconsolidated Financial Statements
For the Financial Period from January 1, 2010 to December 31, 2010
1. General information
Commercial International Bank (Egypt) provide retail, corporate banking and investment banking services in various parts of
Egypt through one hundred & eight branches, in addition to forty five units and employs over 4327 employees in the balance
sheet date.
Commercial International Bank (Egypt) S.A.E was formed as a commercial Bank under the Investment Law No. 43 for 1974 . The
address of its registered office is as follows: Nile Tower 21/23 Sharel Degol St, Giza.
The Bank listing in Egyptian Stock Exchange.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
• The Unconsolidated financial statements have been prepared in accordance with Egyptian Financial Reporting Standards
issued in 2006 and its amendments and in accordance with the instructions of the Central Bank of Egypt approved by the
Board of Directors as of December 16, 2008 consistent with the principles referred to.
The Unconsolidated financial statements have been prepared under the historical cost convention, as modified by the re-
valuation of trading, financial assets and financial liabilities held at fair value through profit or loss, available for sale and all
derivatives contracts.
The preparation of these financial statements are according to relevant domestic laws, and the bank also prepared consoli-
dated financial statements of the Bank and its subsidiaries in accordance with Egyptian Accounting Standards, the affiliated
companies are entirely included in the consolidated financial statements and these companies are the companies that the
bank which - directly or indirectly – has more than half of the voting rights or has the ability to control the financial and op-
erating policies of an enterprise, regardless of the type of activity, the consolidated financial statements of the Bank can be
obtained from the Bank's management. The investments in subsidiaries and associate Companies are Disclosed in the stand
alone financial statements of the Bank and its accounting treatment is at cost deducting Impairment Losses from it.
And stand alone financial statements of the bank should be read with its consolidated financial statements, as of and for the
period ended December 31 , 2010 so you can get complete information on the financial position of the bank for the Results
of its operations and its cash flows and changes in ownership rights.
And the financial statements of the Bank until December 31, 2009 was prepared using the Central Bank of Egypt instruc-
tions in force until that date, which differ in some aspects from the new Egyptian Accounting Standards issued in 2006 and
its amendments. In preparing the financial statements for the fiscal period ended December 31, 2010, management has
amended certain accounting policies and measurement bases to be consistent with new accounting standards and with the
requirements of preparation and presentation of the financial statements of banks and foundations of the recognition and
measurement of the Board of Directors of the Central Bank of Egypt in December 16, 2008.
Central Bank of Egypt instructions amendments published in force from the first January 2010
The management has applied the Central Bank of Egypt instructions concern the rules of preparation and presentation of
the financial statements of banks and foundations of the recognition, measurement and Egyptian Accounting Standards
applicable on the activities of the bank. And the comparative figures have been adjusted for the year 2009 according to cir-
cumstances, in accordance with the requirements of such new instructions and the standards.
Annual Report 2010 • CIB
85
Financial Statements: Unconsolidated
The following is a summary of significant changes in accounting policies and financial statements due to the
application of these accounting adjustments:
• Changed the disclosure requirements of the objectives and policies and methods of risk management, financial manage-
ment and capital adequacy and some other explanatory notes.
• The bank set the relevant parties in accordance with the requirements of the amended and added some new clarifications
on these parties
• Collecting all facilities controlled by the bank directly or indirectly, irrespective of the activity of these installations. Previ-
ously, there were no collection facilities that do not work in banking or finance. The users of these independent financial
statements, reading consolidated financial statements of the Bank, as and for the period ended December 31, 2010, so
for getting complete information on the Bank's financial position and results of its work and its cash flows and changes in
owner equity.
• The Bank's in consolidated financial statements use the equity method in associates companies instead of the cost meth-
od.
And For the purpose of applying the equity method The bank compares the cost of acquisition with the fair value of net assets
of the investee company at the date of acquisition and to determine the difference as goodwill.
And In those cases where the fair value of net assets of the investee company is not available at the date of acquisition
The book values of net assets regarded as equal to the fair value and identify Goodwill on this basis. And after that
changes in equity of the associate company subsequent to the date of acquisition was taken to adjust the book value in the
financial statement As a result of an amendment to retained earnings in first of January 2009 by the amount of (18,601,847)
Egyptian Pound represent The net losses resulting from applying the equity method until this date
And The Bank continued to use the cost method of accounting for associates in these unconsolidated financial statements
cost, has changed, Resulted in cancellation of the General Provisions component of loans and facilities and instead total
provision was provided for groups of assets that carry a credit risk and similar characteristics or individual provision. As a
result of changing the way of provision provided increase the specified provision, which were configured for specific items
by amount of EGP 20,536,766. The total increase in the outstanding provision in the 1st of Jan 2009 had retained to special
reserve in owner's equity according to the new way.
• When the actual rate of return determined for applying the amortized cost method to calculate the income and the cost of
the return on debt instruments, in commissions and fees associated with the acquisition or issuance of debt instruments
and added to or deducted from the value of the acquisition / release as part of the cost of treatment, which lead to change
the actual rate of return of those tools. It was not practicable to apply the impact of this accounting change retroactively,
but that change has been applied to debt instruments acquired or issued on or after the first January 2010
• The Bank has applied the accounting requirements for payment shown on the shares of such regulations in force on or after
the first of January 2010. As a result, the income statement for the fiscal year ended December 31, 2010 added by amount
of EGP 66.356.519 is the cost of stock options granted to employees.
• Purchase accounting was applied to all acquisitions made on or after the first of January 2010 in accordance with the new re-
quirements of accounting, and there was no effect on the bank unconsolidated or consolidated financial statements of the bank.
• The Bank has conducted Assets Acquired as Settlement of Debts of the purpose of ascertaining the applicability of rules
classified as non-current assets held for sale under other assets, did not result in a difference in the classification or value
measured those assets.
2.2 Subsidiaries and Associates
(a) Subsidiaries
• Subsidiaries are all entities (including special purpose entities) over which the Bank has owned directly or indirectly
the power to govern the financial and operating policies generally accompanying a shareholding of more than one half
of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Bank has the ability to control the entity.
As a result of applying Central Bank of Egypt regulations and the EAS, good will accounting policy had been changed start-
ing January 2009 by annual impairment test in the consolidated financial statements affecting income statement with 20%
amortization Annually of the good will or the impairment amount which bigger.
(b) Associates
• Associates are all entities over which the Bank has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights.
• Studying all the differences that result in tax obligations for tax deferred and recognized retroactively, and for deferred tax
• The purchase method of accounting is used to account for the acquisition of subsidiaries by the Bank. The cost of an
assets and retained tax losses, it has been recognized only within the limits of future economic benefits expected of them.
acquisition is measured as the fair value of the assets given and/or, equity instruments issued and/or liabilities incurred
Shows the note (38) the impact of the recognition of differences in the tax numbers comparison
and/or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at
• Note number (35) shows the impact of that change on the item of owner equity and available for sale, investments which
the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the
were previously measured at cost adjusted rate differentials in exchange rates or fair value whichever is less with the in-
fair value of the Bank’s share of the identifiable net assets acquired is recorded as goodwill If the cost of acquisition is
curred of the decline in value of the income statement.
less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income
• As a Result of the application instructions and the new criteria to recognize all derivatives in the first of January 2009 in
the financial statements, as separate derivatives implicit in the history of recognition in the financial statements was the
• Accounting for subsidiaries and associates in the financial statements are recorded by cost method, according to this
statement under the item income (expense) Other operating.
measurement of all derivatives at fair value
method, investments are a cost of acquisition including any good will and deduct any impairment losses in value, and
recorded the dividends in the income statement in the adoption of the distribution of these profits and evidence of the
• The method of measuring loans and facilities impairment and other debt instruments, which are measured at amortized
bank right to collect it.
86
CIB • Annual Report 2010
Annual Report 2010 • CIB
87
Financial Statements: Unconsolidated
2.3 Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject
to risks and returns that are different from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that are subject to risks and returns different
from those of segments operating in other economic environments.
2.4 Foreign currency translation
(a) Functional and presentation currency
The financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.
(b) Transactions and balances in foreign currencies
The bank hold accounts in Egyptian pounds and prove transactions in other currencies during the financial year on the
basis of prevailing exchange rates at the date of the transaction, and re-evaluation of balances of assets and liabilities
of other monetary currencies at the end of the financial period on the basis of prevailing exchange rates at that date,
and is recognized in the list Gains and losses resulting from the settlement of such transactions and the differences
resulting from the assessment within the following items
• Net trading income or net income from financial instruments classified at fair value through profit and loss of assets /
liabilities held for trading or those classified at fair value through profit and loss according to type .
• Income (expense) Other operating for the rest of the items
the analysis of changes in fair value of financial instruments with monetary foreign currency seed available for sale in-
vestments (debt instruments) between the valuation differences resulting from changes in amortized cost of the tool and
the differences resulted from changing the prevailing exchange rates and the differences resulted from changing the fair
value of the tool, and is recognized in the income differentials in the evaluation of changes in the cost of expendable
income loans and similar income and differences related to changing the exchange rate in income (expense) Other op-
erating, and are recognized in equity differential change in fair value (fair value reserve / financial investments available
for sale). Include differences arising on the items non-monetary gains and losses resulting from the change in fair value,
such as equity instruments held at fair value through profit and loss are recognized differences assessment resulting
from equity instruments classified as financial investments available for sale within the fair value reserve in equity
2.5 Financial assets
The Bank classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans
and receivables; held-to-maturity investments; and available-for-sale financial assets. Management determines the classifi-
cation of its investments at initial recognition.
(a) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit
or loss at inception.
A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repur-
chasing in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for
which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held
for trading unless they are designated as hedging instruments.
Financial assets are designated at fair value through profit or loss when:
• doing so significantly reduces measurement inconsistencies that would arise if the related derivatives were treated as
held for trading and the underlying financial instruments were carried at amortised cost for loans and advances to cus-
tomers or banks and debt securities in issue’
• Certain investments, such as equity investments, are managed and evaluated on a fair value basis in accordance with
a documented risk management or investment strategy and reported to key management personnel on that basis are
designated at fair value through profit and loss.
• Financial instruments, such as debt securities held, containing one or more embedded derivatives significantly modify
the cash flows, are designated at fair value through profit and loss.
Any financial derivative of a valued financial instruments at fair value Not be reclassified Through profit and loss during
the retention period or force It also does not re-classification any financial instrument, quoting from a range of financial
instruments at fair value Through profit and loss if this tool has been customized by the bank at initial recognition As
assessed at fair value through profit and loss.
According to the financial assets for trading which are reclassified in the periods that begin form or after first of Jan 2009
it is reclassified according to the fair value in the date of reclassification.
Bank in all conditions doesn't reclassify any financial instrument moving to programs of financial instruments reclassi-
fied with fair value from profit and loss or to financial assets program for trading.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market, other than: (a) those that the bank intends to sell immediately or in the short term, which are classified as
held for trading, or those that the bank upon initial recognition designates as at fair value through profit or loss; (b) those
that the bank upon initial recognition designates as available for sale; or (c) those for which the holder may not recover
substantially all of its initial investment, other than because of credit deterioration.
(c) Held-to-maturity financial assets
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturi-
ties that the Bank's management has the positive intention and ability to hold to maturity. If the Bank were to sell other
than an insignificant amount of held-to-maturity assets, the entire category would be reclassified as available for sale
unless in the necessary cases.
(d) Available-for-sale financial assets
Available-for-sale investments are those intended to be held for an indefinite period of time, which may be sold in re-
sponse to needs for liquidity or changes in interest rates, exchange rates or equity prices.
Regular-way purchases and sales of financial assets at fair value through profit or loss, held to maturity and available for
sale are recognised on trade-date – the date on which the Bank commits to purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit and loss are initially recognised at fair value,
and transaction costs are expensed in the income statement.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where
the Bank has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when
they are extinguished − that is, when the obligation is discharged, cancelled or expires.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair
value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective inter-
est method. Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit
or loss’ category are included in the income statement in the period in which they arise. Gains and losses arising from
changes in the fair value of available-for-sale financial assets are recognised directly in equity, until the financial asset
is derecognised or impaired.
At this time, the cumulative gain or loss previously recognised in equity is recognised in profit or loss. However, interest
calculated using the effective interest method and foreign currency gains and losses on monetary assets classified as
available for sale are recognised in the income statement. Dividends on available-for-sale equity instruments are recog-
nised in the income statement when the bank’s right to receive payment is established.
88
CIB • Annual Report 2010
Annual Report 2010 • CIB
89
Financial Statements: Unconsolidated
The fair values of quoted investments in active markets are based on current bid prices. If there is no active market for a
financial asset, or no current demand prices available the Bank establishes fair value using valuation techniques. These
include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other
valuation techniques commonly used by market participants If the bank had been unable to estimate the fair value of
equity instruments classified available for sale, value is measured at cost less any impairment in value.
The Bank re-tab the financial asset tabbed within the range of financial instruments available for sale, which left the
definition of loans and debts (bonds or loans), quoting a set of tools available for sale to the group of loans and receiva-
bles or financial assets held to maturity - all as the case - when available Bank has the intent and ability to hold these
financial assets in the foreseeable future or until maturity and are re-tab at fair value in the history of re-tab, and not pro-
cess any profits or losses on those assets that have been recognized previously in equity and in the following manner:
1 - In case of financial asset re-tab, which has a fixed maturity are amortized gains or losses over the remaining life of
the investment retained until the maturity date in a manner effective yield is consumed any difference between the value
on the basis of amortized cost and value on an accrual basis over the remaining life of the financial asset using the ef-
fective yield method, and in the case of the decay of the value of the financial asset is later recognition of any gain or
loss previously recognized directly in equity in the profits and losses.
2 - in the case of financial asset which has no fixed maturity continue to profit or loss in equity until the sale of the asset
or to dispose of it, then be recognized in the profit and loss In the case of erosion of the value of the financial asset is
later recognition of any gain or loss previously recognized directly within equity in the profits and losses.
If the Bank to adjust its estimates of payments or receipts are the settlement of the carrying amount of the financial as-
set (or group of financial assets) to reflect the actual cash inflows and the adjusted estimates to be recalculated book
value and then calculates the present value of estimated future cash flows at the effective yield of the financial instru-
ment and is recognized settlement recognized as income or expense in the profit and loss.
In all cases, if the bank re-Tab financial asset in accordance with what is referred to The Bank at a later date to increase
its estimate of the proceeds of future cash result of the increase will be recovered from the cash receipts, is the recogni-
tion of the impact of this increase in settlement of the interest rate effective from the date of change in the estimate and
not in settlement of the balance of the original notebook in the history of change in the estimate.
2.6 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the
liability simultaneously.
And the clauses of agreements to buy treasury bills with a commitment to re-sale agreements and sale of treasury bills with a
commitment to re-purchase on a net basis within the balance sheet item, treasury bills and other government papers.
2.7 Derivative financial instruments and hedge accounting
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
re-measured at their fair value. Fair values are obtained from quoted market prices in active markets, including recent market
transactions, and valuation techniques, including discounted cash flow models and options pricing models, as appropriate.
All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.
Interest income and expense
2.8
Interest income and expense for all interest-bearing financial instruments, except for those classified as held for trading or
designated at fair value through profit or loss, are recognised within ‘interest income’ and ‘interest expense’ in the income
statement using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of
allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appro-
priate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective
interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument (for example, pre-
payment options) but does not consider future credit losses. The calculation includes all fees and points paid or received
between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums
or discounts.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, inter-
est income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss.
when it is collected and this is after redeeming all dues of consumer loans and personnel mortgages also small loans for
economic activities. as for loans given to institutions it is related to the monetary base also , it raises the return after that , ac-
cording to rescheduling conditions on the loan till paying 25% from rescheduling payments with a minimum one year without
being late , if the customer is always paying at his due dates the interest calculated is added to the loan balance which makes
revenues ( interest on rescheduling without deficits ) without interests aside before rescheduling which is avoiding revenues
except after paying all the loan balance in the balance sheet before rescheduling
2.9 Fee and commission income
Fees and commissions are generally recognised on an accrual basis when the service has been provided. Loan commitment
fees for loans that are likely to be drawn down are deferred (together with related direct costs) Where it is recorded in the
records of marginal outside the financial statements, And are recognized as income in accordance with cash basis Income
is recognized when revenue for fees that represent an integral part of the effective yield of the financial asset are generally
treated as an amendment to the actual rate of return.
And postponement of fees is the link on the loans if there is a possibility that he will likely be the withdrawal of such loans and
the fees on the grounds that the link obtained by the Bank are considered compensation for the constant intervention for the
acquisition of a financial instrument, Then be recognized by the amend the effective interest rate on the loan In the case of the
end of the link without issuing bank for the loan fees are recognized as income at the end of the period of validity of the link.
Fees are recognized on the debt instruments that are measured at fair value within the income on initial recognition&
Loan syndication fees are recognised as revenue when the syndication has been completed and the Bank has retained no
part of the loan package for itself or has retained a part at the same effective interest rate as the other participants.
Commission and fees arising from negotiating, or participating in the negotiation of, a transaction for a third party – such as
the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses – are recognised on
completion of the underlying transaction.
Portfolio and other management advisory and service fees are recognised based on the applicable service contracts, usually
on a time-apportion ate basis. Asset management fees related to investment funds are recognised rateably over the period in
which the service is provided. The same principle is applied for wealth management, financial planning and custody services
that are continuously provided over an extended period of time. Performance linked fees or fee components are recognised
when the performance criteria are fulfilled.
2.10 Dividend income
Dividends are recognised in the income statement when the bank’s right to receive payment is established.
90
CIB • Annual Report 2010
Annual Report 2010 • CIB
91
Financial Statements: Unconsolidated
2.11 Sale and repurchase agreements
Securities sold subject to repurchase agreements (‘repos’) are reclassified in the financial statements deducted from treasury
bills balance. Securities purchased subject to resell agreements (‘reveres repos’) are reclassified in the financial statements
added to treasury bills balance. The difference between sale and repurchase price is treated as interest and accrued over the
life of the agreements using the effective interest method.
2.12 Impairment of financial assets
(a) Assets carried at amortised cost
The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are in-
curred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows
of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Bank uses to determine that there is objective evidence of an impairment loss include:
• Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of sales);
• Breach of loan covenants or conditions;
• Initiation of bankruptcy proceedings;
• Deterioration of the borrower’s competitive position;
• The Bank for reasons of economic or legal financial difficulties of the borrower by granting concessions may not agree
with the Bank granted in normal circumstances;
• Deterioration in the value of collateral; and
• Downgrading below investment grade level.
The objective evidence of impairment loss for group of financial assets is the clear data indicate to a decline can be
measured in future cash flows expected from this group since its initial recognition, although not possible to determine
the decrease of each asset separately, for example increasing the number of failures in payment for One of the banking
products.
The estimated period between a losses occurring and its identification is determined by local management for each
identified portfolio. In general, the periods used vary between three months and 12 months.
The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are indi-
vidually significant, and individually or collectively for financial assets that are not individually significant and in this field
the following are considered. If the Bank determines that no objective evidence of impairment exists for an individually
assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit
risk characteristics and collectively assesses them for impairment according to historical default ratios. Assets that are
individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included
in a collective assessment of impairment.
If no impairment losses result from the previous assessment of impairment in this case the asset included in a collective
assessment of impairment.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of es-
timated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and
the amount of the loss is recognised in the income statement. If a loan or held-to-maturity investment has a variable
interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under
the contract when there is objective evidence for asset impairment. As a practical expedient, the Bank may measure
impairment on the basis of an instrument’s fair value using an observable market price.
The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the
cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure
is probable.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk
characteristics (ie, on the basis of the Group’s grading process that considers asset type, industry, geographical loca-
tion, collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of
future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according
to the contractual terms of the assets being evaluated.
For the purposes of evaluation of impairment for a group of a financial assets according to historical default ratios future
cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the
contractual cash flows of the assets in the Bank and historical loss experience for assets with credit risk characteristics
similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect
the effects of current conditions that did not affect the period on which the historical loss experience is based and to
remove the effects of conditions in the historical period that do not currently exist.
Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with chang-
es in related observable data from period to period (for example, changes in unemployment rates, property prices,
payment status, or other factors indicative of changes in the probability of losses in the Bank and their magnitude). The
methodology and assumptions used for estimating future cash flows are reviewed regularly by the Bank .
(b) Assets classified as available for sale
The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of
financial assets classify under available for sale or held to maturity is impaired. In the case of equity investments classi-
fied as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered
in determining whether the assets are impaired. During Periods start from First of January 2009, The Decrease Consider
significant cause it become 10% From cost of book value and the decrease consider to be extended if it continue for
period more than 9 months, and if the mentioned evidences become available then the accumulated loss to be post
from the equity and disclosed at the income statement, impairment losses recognised in the income statement on
equity instruments are not reversed through the income statement. If, in a subsequent period, the fair value of a debt
instrument classified as available for sale increases and the increase can be objectively related to an event occurring af-
ter the impairment loss was recognised in profit or loss, the impairment loss is reversed through the income statement.
2.13 Real Estate Investments
The real estate investments represent lands and buildings owned by the Bank In order to obtain rental returns or capital gains
and therefore does not include real estate assets which the bank exercised its work through or those that have owned by the
bank as settlement of debts.
2.14 Fixed Assets
Land and buildings comprise mainly branches and offices. All property, plant and equipment is stated at historical cost less
depreciation &impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the
items.
Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can
be measured reliably. All other repairs and maintenance are charged to other operating expenses during the financial period
in which they are incurred.
Land is not depreciated. Depreciation of other assets is calculated using the straight-line method to allocate their cost to their
residual values over their estimated useful lives, as follows:
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Financial Statements: Unconsolidated
- Buildings
- Leasehold improvements
- Furniture and safes
- Typewriters, Collocutors &air-conditions
- Transportations
- Computers and Core Systems
- Fixtures and fittings
20 years,
3 years, or over the period of the lease if less
5 years.
8 years
5 years
3/10 years
3 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Assets
that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable amount
if the asset’s carrying amount is greater than its estimated recoverable amount. The recoverable amount is the higher of the
asset’s fair value less costs to sell and value in use.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in other
operating expenses in the income statement.
2.15 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation-except goodwill- and are tested annually for impair-
ment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell or value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered impairment are reviewed for
possible reversal of the impairment at each reporting date.
2.16 Leases
The accounting treatment for the finance lease in accordance with law 95 of 1995, if the contract entitles the lessee to pur-
chase the asset at a specified date and the value selected, or the current value of the total lease payments representing at
least 90% of the value of the asset. The other leases contracts are considered operating leases contracts.
(a) Being lessee
Finance lease contract recognizes the lease cost, including the cost of maintenance of the leased assets, within the
expenses in the income statement for the period in which they occurred. If the bank decided to exercise the rights to
purchase the leased assets, the cost of the right to purchase it as an asset are capitalized and amortized over the useful
life of the expected remaining life of the asset in the same manner as similar assets.
And recognition of payments under the operating lease expense minus any discounts obtained from the lesser under
expenses in the income statement on a straight-line basis over the term of the contract
(b) Being lesser
For assets leased financially, assets are recorded in the fixed assets in the balance sheet and amortized over the ex-
pected useful life of this asset in the same manner as similar assets. Lease income is recognized on the basis of rate
of return on the lease in addition to an amount corresponding to the cost of depreciation for the period. The difference
between the recognized rental income and the total finance lease clients' accounts is transferred to the balance sheet
in the income statement until the expiration of the lease where it is used to off set with a net book value of the leased
asset. Maintenance and insurance expenses are loaded on the income statement when incurred to the extent they are
not charged to the tenant.
For assets leased under operating lease of fixed assets, it appears in the balance sheet and amortized over the expected use-
ful life of the asset in the same way as similar assets, and the lease income recorded less any discounts given to the lessee
on a straight-line method over the contract period.
2.17 Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months’
maturity from the date of acquisition, including cash and non-restricted balances with central banks, treasury bills and other
eligible bills, loans and advances to banks, amounts due from other banks and short-term government securities.
2.18 Other Provisions
Provisions for restructuring costs and legal claims are recognised when: the Bank has a present legal or constructive obliga-
tion as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to
any one item included in the same class of obligations may be small.
Provisions which negated the purpose of wholly or partly repaid within the item other operating income (expense).
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation which be-
come due after one year from the financial statement date using appropriate rate for the due date (without being affected by
effective tax rate) which reflect time value of money ,and if the due date is less than one year we calculate the estimated value
of obligation but if it have significant impact then it calculated using the current value.
2.19 Staff Benefits -Share-Based Compensation
The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in
exchange for the grant of the options is recognised as an expense.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market
vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At
each balance sheet date, the entity revises its estimates of the number of options that are expected to become exercisable.
It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment
to equity over the remaining vesting period.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share
premium when the options are exercised.
2.20 income tax
Income tax on the profit or loss for the year includes each of year tax and deferred tax and is recognized in the income state-
ment except for income tax relating to items of equity that are recognized directly in equity.
Income tax is recognized based on net taxable profit using the tax rates applicable at the date of the balance sheet in addition
to tax adjustments for previous years.
Deferred taxes arising from temporary time differences between the book value of assets and liabilities are recognized in ac-
cordance with the principles of accounting and value according to the foundations of the tax, this is determining the value of
deferred tax on the expected manner to realize or settle the values of assets and liabilities, using tax rates applicable at the
date of the balance sheet.
In case there is objective evidence that the Bank will not be able to collect all assets of financial lease debtors, it will be
reduced to the recoverable amount.
Deferred tax assets of the Bank recognized when there is likely to be possible to achieve profits subject to tax in the future
to be possible through to use that asset, and is reducing the value of deferred tax assets with part of that will come from tax
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CIB • Annual Report 2010
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Financial Statements: Unconsolidated
benefit expected during the following years, that in the case of expected high benefit tax, deferred tax assets will increase
within the limits of the above reduced.
2.21 Borrowings
Borrowings are recognised initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at am-
ortised cost; any difference between proceeds net of transaction costs and the redemption value is recognised in the income
statement over the period of the borrowings using the effective interest method.
2.22 Dividends
Dividends deducted form equity in the period, which the General Assembly of the shareholders acknowledges these distribu-
tions. These distributions include the share of workers in the profits and remuneration of the Board of Directors .
2.23 Comparatives
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
3. Financial risk management
The Bank’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, acceptance and
management of some degree of risk or combination of risks. Taking risk is core to the financial business, and the operational risks
are an inevitable consequence of being in business. The Bank’s aim is therefore to achieve an appropriate balance between risk
and return and minimise potential adverse effects on the Bank’s financial performance. And the most important types of financial
risks are credit risk, market risk, liquidity risk and other operating risks. Also market risk includes exchange rate risk, rate of return
risk and other prices risks.
The Bank’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls,
and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Bank regularly
reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice.
Risk management is carried out by a risk department under policies approved by the Board of Directors. Bank Treasury identifies,
evaluates and hedges financial risks in close co-operation with the Bank’s operating units. The Board provides written principles
for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk,
credit risk, use of derivative financial instruments and non-derivative financial instruments. In addition, credit risk management is
responsible for the independent review of risk management and the control environment.
3.1 Credit risk
The Bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the Bank by fail-
ing to discharge an obligation. Management therefore carefully manages its exposure to credit risk. Credit exposures arise
principally in loans and advances, debt securities and other bills. There is also credit risk in off-balance sheet financial ar-
rangements such as loan commitments. The credit risk management and control are centralised in a credit risk management
team in Bank Treasury and reported to the Board of Directors and head of each business unit regularly.
3.1.1 Credit risk measurement
(a) Loans and advances
In measuring credit risk of loan and advances to customers and to banks at a counterparty level, the Bank reflects
three components (i) the ‘probability of default’ by the client or counterparty on its contractual obligations; (ii) current
exposures to the counterparty and its likely future development, from which the Bank derive the ‘exposure at default’;
and (iii) the likely recovery ratio on the defaulted obligations (the ‘loss given default’).
These credit risk measurements, which reflect expected loss (the ‘expected loss model’) and are required by the Basel
Committee on Banking Regulations and the Supervisory Practices (the Basel Committee), are embedded in the Bank’s
daily operational management. The operational measurements can be contrasted with impairment allowances required
under EAS 26, which are based on losses that have been incurred at the balance sheet date (the ‘incurred loss model’)
rather than expected losses (Note 3/A).
(i) The Bank assesses the probability of default of individual counterparties using internal rating tools tailored to the
various categories of counterparty. They have been developed internally and combine statistical analysis with credit
officer judgment and are validated, where appropriate. Clients of the Bank are segmented into four rating classes. The
Bank’s rating scale, which is shown below, reflects the range of default probabilities defined for each rating class. This
means that, in principle, exposures migrate between classes as the assessment of their probability of default changes.
The rating tools are kept under review and upgraded as necessary. The Bank regularly validates the performance of the
rating and their predictive power with regard to default events.
Bank’s internal ratings scale
Bank’s rating Description of the grade
1
2
3
4
Performing loans
Regular watching
Watch list
Nonperforming loans
And the loans expose to default depend on the banks expectation for the outstanding amounts when default occur.
(iii) Loss given default or loss severity represents the Bank expectation of the extent of loss on a claim should default
occur. It is expressed as percentage loss per unit of exposure and typically varies by type of counterparty, type and
seniority of claim and availability of collateral or other credit mitigation.
(b) Debt securities and other bills
For debt securities and other bills, external rating such as Standard & Poor’s rating or their equivalents are used by bank
Treasury for managing of the credit risk exposures, and if this rating is not available, then other ways similar to those
used with the credit customers are uses. The investments in those securities and bills are viewed as a way to gain a
better credit quality mapping and maintain a readily available source to meet the funding requirement at the same time.
3.1.2 Risk limit control and mitigation policies
The bank manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to indi-
vidual counterparties and banks, and to industries and countries.
The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation
to one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a
revolving basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of
credit risk by individual, counterparties, product, and industry sector and by country are approved quarterly by the
Board of Directors.
The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on- and
off-balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange
contracts. Actual exposures against limits are monitored daily.
Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to
meet interest and capital repayment obligations and by changing these lending limits where appropriate.
Some other specific control and mitigation measures are outlined below.
(a) Collateral
The bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of
security for funds advances, which is common practice. The bank implements guidelines on the acceptability of spe-
cific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are:
• Mortgages over residential properties;
• Mortgage business assets such as premises, And inventory;
96
CIB • Annual Report 2010
Annual Report 2010 • CIB
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Financial Statements: Unconsolidated
• Mortgage financial instruments such as debt securities and equities.
Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are
generally unsecured. In addition, in order to minimise the credit loss the bank will seek additional collateral from the
counterparty as soon as impairment indicators are noticed for the relevant individual loans and advances.
Collateral held as security for financial assets other than loans and advances is determined by the nature of the instru-
ment. Debt securities, treasury and other governmental securities are generally unsecured, with the exception of asset-
backed securities and similar instruments, which are secured by portfolios of financial instruments.
(b) Derivatives
The bank maintains strict control limits on net open derivative positions (i.e., the difference between purchase and sale
contracts), by both amount and term. At any one time, the amount subject to credit risk is limited to the current fair value
of instruments that are favourable to the bank (i.e., assets where their fair value is positive), which in relation to deriva-
tives is only a small fraction of the contract, or notional values used to express the volume of instruments outstanding.
This credit risk exposure is managed as part of the overall lending limits with customers, together with potential expo-
sures from market movements. Collateral or other security is not usually obtained for credit risk exposures on these
instruments, except where the bank requires margin deposits from counterparties.
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a
corresponding receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to
cover the aggregate of all settlement risk arising from the Bank market transactions on any single day.
(c) Master netting arrangements
The bank further restricts its exposure to credit losses by entering into master netting arrangements with counterparties
with which it undertakes a significant volume of transactions. Master netting arrangements do not generally result in an
offset of balance sheet assets and liabilities, as transactions are usually settled on a gross basis. However, the credit
risk associated with favourable contracts is reduced by a master netting arrangement to the extent that if a default oc-
curs, all amounts with the counterparty are terminated and settled on a net basis. The Bank overall exposure to credit
risk on derivative instruments subject to master netting arrangements can change substantially within a short period,
as it is affected by each transaction subject to the arrangement.
(d) Credit-related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees
and standby letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit – which
are written undertakings by the Bank on behalf of a customer authorising a third party to draw drafts on the Bank up to
a stipulated amount under specific terms and conditions – are collateralised by the underlying shipments of goods to
which they relate and therefore carry less risk than a direct loan.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans, guar-
antees or letters of credit. With respect to credit risk on commitments to extend credit, the Bank is potentially exposed
to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total
unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific
credit standards. The Bank monitors the term to maturity of credit commitments because longer-term commitments
generally have a greater degree of credit risk than shorter-term commitments.
Impairment and provisioning policies
3.1.3
The internal rating systems described in Note 3.1.1 focus more on credit-quality mapping from the inception of the
lending and investment activities.
In contrast, impairment provisions are recognized for financial reporting purposes only for losses that have been
incurred at the balance sheet date based on objective evidence of impairment Due to the different methodologies ap-
plied, the amount of incurred credit losses provided for in the financial statements are usually lower than the amount
determined from the expected loss model that is used for internal operational management and CBE regulation pur-
poses.
The impairment provision shown in the balance sheet at the year-end is derived from each of the four internal rating
grades. However, the majority of the impairment provision comes from the bottom two grads. The table below shows
the percentage of the Bank’s in balance sheet items relating to loans and advances and the associated impairment
provision for each of the Bank’s internal rating categories:
Bank’s rating
Dec.31, 2010
Dec.31, 2009
» 1-Performing loans
» 2-Regular watching
» 3-Watch list
» 4-Non performing loans
Loans and
advances (%)
Impairment
provision (%)
Loans and ad-
vances (%)
Impairment
provision (%)
90.91
5.37
0.99
2.73
100.00
54.65
5.24
2.56
37.55
100.00
90.97
4.73
1.33
2.97
100.00
42.93
4.71
2.47
49.89
100.00
The internal rating tools assists management to determine whether objective evidence of impairment exists under EAS
26, based on the following criteria set out by the Bank:
• Cash flow difficulties experienced by the borrower Breach of loan covenants or conditions Initiation of bankruptcy
proceedings
• Deterioration of the borrower’s competitive position
• Bank granted concessions may not be approved under normal circumstances, for economic, legal reasons, or financial
difficulties facing the borrower
• Deterioration in the value of collateral
• Deterioration in the credit situation
The Bank’s policy requires the review of all financial assets that are above materiality thresholds at least annually or
more regularly when individual circumstances require. Impairment allowances on individually assessed accounts are
determined by an evaluation of the incurred loss at balance-sheet date on a case-by-case basis, and are applied to all
individually significant accounts. The assessment normally encompasses collateral held (including re-confirmation of
its enforceability) and the anticipated receipts for that individual account.
Collectively assessed impairment allowances are provided portfolios of homogenous assets by using the available
historical experience, experienced judgment and statistical techniques.
Pattern of measuring the general banking risk
3.1.4
In addition to the four categories of measuring credit worthiness discussed in disclosure 3.1.1.a the management
makes small groups more detailed according to the CBE rules. Assets facing credit risk are classified to detailed con-
ditions relying greatly on customer›s information , activities , financial position and his regular payments to his debts .
The bank calculates the provisions needed for assets impairment in addition to credit regulations according to special
percentages determined by CBE.
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Financial Statements: Unconsolidated
In the case of increase of impairment loss provision needed according to CBE than that for purposes of making the
financial statements according to the EAS , the general banking risk reserve is included in owners equity deducted from
the retained earning with this increase , this reserve is modified with periodic basis with the increase and decrease ,
which equals the increase in provisions and this reserve is not distributed.
And this are categories of institutional worthiness according to internal ratings compared with CBE ratings and rates of
provisions needed for assets impairment related to credit risk :
CBE RATING
Categorization
PROVISION%
1
2
3
4
5
6
7
8
9
10
Low Risk
Average Risk
Satisfactory Risk
Reasonable Risk
Acceptable Risk
Marginally Accept-
able risk
Watch list
Substandard
Doubtful
Bad Debt
0%
1%
1%
2%
2%
3%
5%
20%
50%
100%
INTERNAL
RATING
1
1
1
1
1
2
3
4
4
4
Categorization
Performing loans
Performing loans
Performing loans
Performing loans
Performing loans
Regular watching
Watch list
Non performing loans
Non performing loans
Non performing loans
3.1.5 Maximum exposure to credit risk before collateral held
In Balance sheet items exposed to credit risk
» Treasury Bills and other Governmental Notes
8,821,003,566
13,191,665,954
Dec.31, 2010
Dec.31, 2009
» Trading Financial Assets
» Debt Instruments
» Loans and Overdrafts for Banks
Loans and advances to customers:
Retail:
» Overdrafts
» Credit Cards
» Personal Loans
» Real state Loans
» Other Loans
Corporate:
» Overdrafts
» Direct Loans
» Syndicated loans
» Other Loans
» Financial Derivatives
880,224,887
128,527,576
111,334,360
200,765,433
1,007,205,364
518,583,403
852,902,695
451,907,954
1,914,229,597
1,005,586,641
430,897,165
43,390,803
292,518,318
67,037,522
3,019,878,138
3,434,116,195
21,750,548,380
15,918,861,867
7,751,645,734
6,663,779,140
151,746,100
139,263,948
93,713,728
225,347,220
» Financial Investments (Debt Instruments)
13,355,786,433
7,884,902,625
» Financial Investments in Subsidiary and Associated Co.
996,317,538
1,138,277,487
Total
60,909,248,633
51,532,717,139
Off Balance sheet items exposed to credit risk
» Financial guarantees
» Customers Acceptances
» Letter of Credit
» Letter of guarantee
Total
631,466,319
589,087,209
989,910,137
931,471,000
469,403,911
820,272,115
10,300,751,367
11,348,196,542
12,511,215,032
13,569,343,568
The above table represents the Maximum bank exposure to credit risk at 31 December 2010, without taking account
of any collateral held. For in balance sheet items, the exposures set out above are based on net carrying amounts as
reported in the balance sheet.
As shown above, 60.35% of the total maximum exposure is derived from loans and advances to banks and customers;
23.31% represents investments in debt Instruments.
Management is confident in its ability to continue to control and sustain minimal exposure of credit risk to the bank
resulting from both its loan and advances portfolio and debt Instruments based on the following:
96.28% of the loans and advances portfolio is categorized in the top two grades of the internal rating system.
97.26% of the loans and advances portfolio are considered to be neither past due nor impaired. loans and advances
assessed on an individual basis valued
The bank has implemented more prudent processes when granting loans and advances during the financial year ended
in Dec.31.2010. 83.62% of the investments in debt Instruments are represented in governmental instruments.
EGP 1,002,967,623
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Financial Statements: Unconsolidated
Loans and advances
3.1.6
Loans and advances are summarized as follows:
Dec.31, 2010
Dec.31, 2009
Loans and
advances to
customers
EGP
Loans and
advances to
banks
EGP
Loans and
advances to
customers
EGP
Loans and
advances to
banks
EGP
» Neither past due nor impaired
35,222,569,885
128,527,576
27,533,698,826
200,765,433
» Past due but not impaired
362,587,175
» Individually impaired
1,002,967,623
-
-
384,723,397
862,001,836
-
-
» Gross
36,588,124,684
128,527,576
28,780,424,059
200,765,433
» Less: impairment provision
1,257,882,426
-
1,304,194,445
-
» Net
35,330,242,258
128,527,576
27,476,229,614
200,765,433
Impairment losses for loans and advances has reached EGP 1,257,882,426 and for more details about impairment
provisions and loans for customers and banks see note 19 and 20
During the year ended 31 December 2010, the bank’s total loans and advances increased by 22.26% as a result of the
expansion of the lending business in Egypt. When entering into new markets or new industries, to decrease the credit
risk exposure, the bank focused more on the business with large corporate enterprises or banks with good credit rating
or retail customers providing sufficient collateral.
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CIB • Annual Report 2010
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Financial Statements: Unconsolidated
- Individually impaired loans.
Loans and advances assessed on an individual basis before cash flows from guarantees are totaled EGP 1,002,967,623
The breakdown of the gross amount of individually impaired loans and advances by class, along with the fair value of related
collateral held by the Bank as security, are as follows:
Dec.31, 2010 Overdrafts
Retail
Credit
cards
Personal
loans
Mortgages overdraft
Corporate
Direct
loans
Syndicated
loans
Total
» Individually im-
paired loans
7,394,303 26,646,934 75,338,998
5,834,947 150,193,541 533,870,638
203,688,263 1,002,967,623
Dec.31, 2009
Overdrafts
Retail
Credit
cards
Personal
loans
Corporate
Total
Mortgages overdraft Direct loans
Syndicated
loans
» Individually im-
paired loans
4,978,512
39,136,769 72,300,784
2,540,770
170,916,226 522,861,775
49,267,000
862,001,836
- Loans and advances Restructured
Restructuring activities include extended payment arrangements, execute obligatory management programs, modification
and deferral of payments. Restructuring policies and practices are based on indicators or criteria which, in the judgment of
local management, indicate that payment will most likely continue. These policies are kept under continuous review. Restruc-
turing is most commonly applied to term loans, in particular customer finance loans Renegotiated loans that would otherwise
be past due or impaired totaled at the of the financial year EGP 2,421,912,000
Loans and advances to customers – individuals:
» Direct loans
Total
Dec.31, 2010
Dec.31, 2009
2,421,912,000
2,511,008,801
2,421,912,000
2,511,008,801
3.1.7 Debt instruments, treasury bills and other governmental notes
The table below presents an analysis of Debt instruments, treasury bills and other governmental notes by rating agency
designation at 31 December 2010, based on Standard & Poor’s ratings or their equivalent:
Financial In-
vestments
Designated
at fair value
Total
Dec.31, 2010
» AAA
» AA- to AA+
» A- to A+
Treasury bills
and other
Gov. notes
-
Trading
Financial As-
sets
-
1,348,515,298
-
-
37,648,537
383,075,610
49,169,280
264,572,353
» Lower than A-
8,821,003,566
865,786,819
11,124,145,389
» Unrated
Total
-
469,434,205
1,770,507,662
8,821,003,566
1,422,038,841
14,890,816,313
-
-
-
-
-
-
1,348,515,298
420,724,147
313,741,632
20,810,935,775
2,239,941,867
25,133,858,720
3.1.8 Concentration of risks of financial assets with credit risk exposure
(a) Geographical sectors
The following table breaks down the bank’s main credit exposure at their book values categorized by geographical
region at the end of financial year. For this table, the bank has allocated exposures to regions based on the country of
domicile of its counterparties.
Dec.31, 2010
Cairo
Alex, Delta
& Sinai
Upper
Egypt
Total
EGYPT
Gulf
Countries
Total
» Treasury bills and other
governmental notes
Trading Financial Assets
8,821,003,566
» Debt instruments
880,224,887
» Loans and advances to
banks
Loans and advances to
customers:
128,527,576
-
-
-
-
-
-
8,821,003,566
880,224,887
128,527,576
-
-
-
8,821,003,566
880,224,887
128,527,576
Retail:
» Overdrafts
» Credit cards
432,704,022
486,194,487
85,998,199
1,004,896,708 2,308,656.45 1,007,205,364
383,747,840
111,127,993
23,263,631
518,139,464
443,939.38
518,583,403
» Personal loans
1,269,773,113
513,307,313
130,846,100 1,913,926,526 303,070.73 1,914,229,596
» Mortgages
» Other loans
Corporate:
» Overdrafts
350,289,921
71,943,416
8,663,827
430,897,165
13,052,586
30,338,217
-
43,390,803
2,511,833,720
497,684,059
10,360,359
3,019,878,138
» Direct Loans
15,763,316,160 5,427,094,766 560,137,453 21,750,548,379
» Syndicated loans
7,192,378,694 559,267,040.27
-
7,751,645,734
» Other loans
139,084,252
12,147,595.71
514,252.66
151,746,100
» Financial Derivatives
139,263,948
» Financial Investments
(Debt Instruments)
» Financial Investments
in Subsidiary and As-
sociated Co.
13,355,786,433
996,317,538
-
-
-
-
-
-
139,263,948
13,355,786,433
996,317,538
-
-
-
-
-
-
-
-
-
430,897,165
43,390,803
3,019,878,138
21,750,548,379
7,751,645,734
151,746,100
139,263,948
13,355,786,433
996,317,538
52,377,304,256 7,709,104,887 819,783,823 60,906,192,966 3,055,667 60,909,248,633
104
CIB • Annual Report 2010
Annual Report 2010 • CIB
105
Financial Statements: Unconsolidated
(b) Industry sectors
The following table breaks down the Group’s main credit exposure at their book value categorized by the industry sec-
tors of our counterparties.
Financial
institutions
8,821,003,566
Dec.31, 2010
» Treasury bills and other
governmental bills
Financial Assets for
trading
» Debt Instruments
880,224,887
» Loans and advances to
banks
Retail:
» Overdrafts
» Credit cards
» Term loans
» Mortgages
» Other loans
Corporate:
» Overdrafts
» Direct loans
» Syndicated loans
» Other loans
» Derivative financial
instruments
Investment securities −
debt instrument
» Financial Investments in
Subsidiary and Associ-
ated Co.
128,527,576
-
-
-
-
-
3,019,878,138
21,750,548,379
7,751,645,734
151,746,100
139,263,948
13,355,786,433
996,317,538
56,994,942,300
Manufacturing
Other in-
dustries
Wholesale
and retail
trade
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,821,003,566
880,224,887
128,527,576
1,007,205,364
1,007,205,364
518,583,403
518,583,403
1,914,229,596
1,914,229,596
430,897,165
430,897,165
43,390,803
43,390,803
-
-
-
-
-
-
-
3,019,878,138
21,750,548,379
7,751,645,734
151,746,100
139,263,948
13,355,786,433
996,317,538
3,914,306,332 60,909,248,633
3.2 Market risk
Market Risk is defined as the risk that the value of the Bank’s on- and off-balance sheet positions will be adversely affected
by movements in market rates or prices such as interest rates, foreign exchange rates, equity prices, credit spreads and/or
commodity prices resulting in a loss to earnings and capital. The Bank segregates the exposure to the market risk into either
trading or non-trading portfolios.
Market risks are measured, monitored and controlled by the Market Risk Management Department. In addition, regular re-
ports are submitted to the ALCO, Board Risk Committee and the heads of each business unit.
Trading portfolios include those positions that are revalued at the market prices (Mark to Market), arising from market-making
transactions where the Bank acts as principal with clients or with the market. Non-trading portfolios include those positions
primarily arise from the interest rate management of the entity’s retail and commercial banking assets and liabilities.
3.2.1 Market risk measurement techniques
As part of the management of market risk, the Bank undertakes various hedging strategies. The Bank also enters into
interest rate swaps to match the interest rate risk associated with the fixed-rate long-term debt securities and loans to
which the fair value option has been applied .
The major measurement techniques used to measure and control market risk are outlined below.
(a) Value at risk
The Bank applies a ‘value at risk’ methodology (VAR) to its trading and non-trading portfolios, to estimate the market
risk of positions held and the maximum losses expected under normal market conditions, based upon a number of as-
sumptions for various changes in market conditions.
VAR is a statistically based estimate of the potential loss on the current portfolio from adverse market movements. It ex-
presses the ‘maximum’ amount the Bank might lose , but only to a certain level of confidence (95%). There is therefore
a specified statistical probability (5%) that actual loss could be greater than the VAR estimate. The VAR model assumes
a certain ‘holding period’ until positions can be closed ( 1 month). The Bank is assessing the historical movements in
the market prices based on volatilities and correlations data for the past five years.
The use of this approach does not prevent losses outside of these limits in the event of more significant market move-
ments.
As VAR constitutes an integral part of the Bank’s market risk control regime, the Market Risk Management set Soft VAR
limits, which have been approved by the ALCO, and are monitored and reported on a daily basis to the Senior Manage-
ment. In addition, monthly limits compliance is reported to the ALCO.
(b) Stress tests
Stress tests provide an indication of the potential size of losses that could arise under extreme market conditions.
Therefore, bank computes on a daily basis Stress VaR, combined with Normal VaR to capture the abnormal movements
in financial markets and to give more comprehensive picture of risk. The results of the stress tests are reviewed by the
ALCO on a monthly basis and the Board Risk Committee on a quarterly basis.
106
CIB • Annual Report 2010
Annual Report 2010 • CIB
107
Financial Statements: Unconsolidated
3.2.2 Value at Risk (VAR) Summary
- Total VAR by risk type
1- Foreign exchange risk
Dec.31, 2010
High
1,021,367
Medium
335,428
Low
47,251
Medium
307,823
Dec.31, 2009
High
883,615
Low
116,378
2- Interest rate risk
64,862,911
81,655,436
53,996,397
42,269,890
58,591,001
32,865,596
3.2.3 Foreign exchange risk
The Bank takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its finan-
cial position and cash flows. The Board sets limits on the level of exposure by currency and in aggregate for both over-
night and intra-day positions, which are monitored daily. The table below summarizes the Bank’s exposure to foreign
currency exchange rate risk and Bank’s financial instruments at carrying amounts, categorized by currency.
Equivalent
EGP
Total
» For non trading pur-
poses
48,257,686
63,983,903
38,055,532
45,989,917
67,921,405
29,653,822
EGP
USD
EURO
GBP
Other
» For trading purposes
13,970,809
17,970,757
4,319,514
6,769,105
11,457,200
3,229,241
3- Equities risk
6,140,352
6,714,030
3,478,929
5,899,644
7,221,488
4,866,168
4- Investment fund
1,218,674
1,617,940
1,080,322
1,480,875
1,704,370
1,265,702
Total VAR
66,470,692
83,020,106
55,788,545
44,101,339
60,067,638
35,133,019
- Trading portfolio VAR by risk type
1- Foreign exchange risk
2- Interest rate risk
» For non trading pur-
poses
Dec.31, 2010
High
1,021,367
Medium
335,428
-
-
-
-
Low
47,251
Medium
307,823
-
-
-
-
Dec.31, 2009
High
883,615
Low
116,378
-
-
-
-
» For trading purposes
13,970,809
17,970,757
4,319,514
6,769,105
11,457,200
3,229,241
3- Equities risk
6,140,352
6,714,030
3,478,929
5,899,644
7,221,488
4,866,168
4- investment fund
1,218,674
1,617,940
1,080,322
1,480,875
1,704,370
1,265,702
Total VAR
16,670,238
18,818,850
12,881,880
10,728,264
11,758,526
9,767,308
- Non Trading portfolio VAR by risk type
2- Interest rate risk
» For non trading pur-
poses
Total VAR
Dec.31, 2010
High
-
Medium
-
Low
-
Medium
-
Dec.31, 2009
High
-
Low
-
48,257,686
63,983,903
38,055,532
45,989,917
67,921,405
29,653,822
48,257,686
63,983,903
38,055,532
45,989,917
67,921,405
29,653,822
The aggregate of the trading and non-trading VAR results does not constitute the bank’s VAR due to correlations and
consequent diversification effects between risk types and portfolio types.
Dec.31, 2010
Assets
» Cash and Due From
Central Bank
5,340,511,293 216,752,383
76,246,307
11,565,455
30,166,353
5,675,241,791
» Due from banks
68,963,151
4,061,199,055 2,276,564,976 294,350,174
68,530,040
6,769,607,397
» Treasury Bills and
other Governmen-
tal Notes
» Trading Financial
Assets
» Loans and Over-
drafts for Banks
» Loans and Over-
drafts for Custom-
ers
» Financial Deriva-
tives
Financial Invest-
ments:-
9,237,350,000
-
-
1,245,074,101
112,817,471
7,584,147
-
109,981,246
18,546,329
-
-
-
-
9,237,350,000
56,563,122
1,422,038,841
-
128,527,576
18,983,625,965 16,496,008,965 1,107,426,206
1,062,908
639
36,588,124,684
113,816,994
23,767,459
1,679,495
-
-
-
-
-
-
-
-
139,263,948
13,605,347,030
289,151,744
996,317,538
» Available for Sale
12,362,650,044 1,207,924,447
34,772,539
» Held to Maturity
76,595,875
212,555,870
» Financial Invest-
ments in Subsidiary
and Associated Co.
978,206,250
18,111,288
-
-
Total Financial Assets
48,406,793,673 22,459,118,184 3,522,820,000 306,978,537
155,260,155
74,850,970,548
Liabilities
» Due to Banks
25,950,480
1,269,111,131
24,987,158
39,006
2,192,134
1,322,279,909
» Customers Deposits 38,947,931,229 19,520,385,330 4,242,251,199
418,313,269
351,002,597
63,479,883,624
» Financial Deriva-
tives
72,398,399
35,856,183
5,296,458
» Other loans
113,132,222
6,954,607
9,026,597
-
-
-
-
113,551,040
129,113,426
Total Financial Liabili-
ties
Net on-Balance Sheet
Financial Position
39,159,412,330 20,832,307,250 4,281,561,413 418,352,276
353,194,730
65,044,827,999
9,247,381,343 1,626,810,934 (758,741,413)
(111,373,738)
(197,934,576)
9,806,142,550
108
CIB • Annual Report 2010
Annual Report 2010 • CIB
109
Financial Statements: Unconsolidated
3.2.4 Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will
fluctuate because of changes in market interest rates. The Bank takes on exposure to the effects of fluctuations in the
prevailing levels of market interest rates on both its fair value and cash flow risks. Interest margins may increase as a
result of such changes but may profit decrease in the event that unexpected movements arise. The Board sets limits on
the level of mismatch of interest rate reprising that may be undertaken, which is monitored daily by Assets & Liabilities
Management Dept.
The table below summarizes the Bank’s exposure to interest rate risks. It includes the Bank’s financial instruments at
carrying amounts, categorized by the earlier of reprising or contractual maturity dates.
Up to1
Month
1-3 Months 3-12 Months 1-5 years
Over 5
years
Non- inter-
est bearing
Total
Dec.31, 2010
Assets
» Cash and Due From
Central Bank
-
-
-
» Due from banks
3,544,095,186 2,625,547,452 310,562,150
882,825,000
864,075,000 7,490,450,000
-
-
-
-
-
-
5,675,241,791
5,675,241,791
289,402,609 6,769,607,397
-
9,237,350,000
486,705,408
25,023,555
50,820,797
752,412,704
33,044,393
74,031,983
1,422,038,841
14,689,065
95,292,181
13,763,999
4,782,331
-
19,244,274,971 9,248,598,618 4,490,011,516 3,126,233,619 479,005,960
-
-
128,527,576
36,588,124,684
» Treasury Bills and
other Governmental
Notes (Face Value)
» Trading Financial
Assets
» Loans and overdraft
to banks
» Loans and overdraft
to customers
» Financial Deriva-
tives (including IRS
notional amount)
Financial Investments:-
» Available for sale
650,559,648
122,049,018
1,676,885,635 9,914,066,570 741,658,471
500,127,687 13,605,347,030
» Held to maturity
58,049,000
12,126,923
195,125,071
23,850,750
» Financial Invest-
ments in Subsidiary
and Associated Co.
-
-
-
-
-
-
-
289,151,744
996,317,538
996,317,538
Total Financial Assets 25,482,274,173 13,626,860,328 14,627,589,694 15,527,440,784 1,294,510,973 7,567,797,649 78,126,473,602
Liabilities
» Due to banks
309,172,192
49,341,650
435,367,500
-
-
528,398,567 1,322,279,909
» Customers Deposits 28,596,057,430 7,668,185,243 4,808,527,430 12,002,841,827 468,641,746 9,935,629,948 63,479,883,624
» Financial Deriva-
tives (including IRS
notional amount)
719,459,775 1,595,449,411
66,038,415
454,698,465 505,026,300
48,381,727 3,389,054,094
» Other Loans
12,114,271
19,773,441
69,568,298
27,657,416
-
-
129,113,426
Total financial liabilities 29,636,803,668 9,332,749,745 5,379,501,644 12,485,197,708 973,668,047 10,512,410,242 68,320,331,053
Total interest re-pricing
gap
(4,154,529,495) 4,294,110,583 9,248,088,051 3,042,243,076 320,842,926 (2,944,612,593) 9,806,142,548
601,075,895
634,147,582
399,970,527 1,706,094,810 40,802,149
32,676,040
3,414,767,002
and guarantees.
3.3 Liquidity risk
• Liquidity risk is the risk that the Bank is unable to meet its payment obligations associated with its financial liabilities when
they fall due and to replace funds when they are withdrawn.
• The consequence may be the failure to meet obligations to repay depositors and fulfill commitments to lend.
3.3.1 Liquidity risk management process
• The Bank’s liquidity management process, as carried out within the Bank and monitored by a separate team in Assets
& Liabilities Management Dept, includes:
• Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. This includes
replenishment of funds as they mature or is borrowed by customers.
• The Bank maintains an active presence in global money markets to enable this to happen;
• Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen
interruption to cash flow.
• Monitoring balance sheet liquidity ratios against internal and requirements of central bank of Egypt
• Managing the concentration and profile of debt maturities.
• Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and month
respectively, as these are key periods for liquidity management. The starting point for those projections is an analysis
of the contractual maturity of the financial liabilities and the expected collection date of the financial assets. Assets &
Liabilities Management Dept. also monitors unmatched medium-term assets, the level and type of un drawn lending
commitments, the usage of overdraft facilities and the impact of contingent liabilities such as standby letters of credit
3.3.2 Funding approach
Sources of liquidity are regularly reviewed by a separate jointly by team in Bank Assets & liabilities Management, li-
abilities Investments and Bank Insurance to maintain a wide diversification by currency, provider, product and term.
3.3.3 Non-derivative cash flows
The table below presents the cash flows payable by the Bank under non-derivative financial liabilities by remaining con-
tractual maturities at and the maturities assumption for non contractual products on the basis of there behavior studies
of balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows, whereas the
Bank manages the inherent liquidity risk based on expected undiscounted cash inflows.
110
CIB • Annual Report 2010
Annual Report 2010 • CIB
111
Financial Statements: Unconsolidated
Dec.31, 2010
Up to
One to
Three
Three to
Twelve
1 Month Months
Months
Twelve
Months to
One
Year
Over Five
Total
Years
Liabilities
» Due to Banks
837,570,759
49,341,650 435,367,500
-
-
1,322,279,909
» Customers Deposits
17,816,915,547 9,151,941,806
8,604,334,536 19,192,725,470 8,713,966,264 63,479,883,624
» Other loans
12,114,271
19,773,441
69,568,298
27,657,416
46,109,376
10,090,483
8,806,258
163,196
-
-
129,113,426
65,169,313
» Financial Derivatives
(Foreign Exchange De-
rivatives)
Total liabilities (contrac-
tual maturity dates)
Total financial assets
(contractual maturity
dates)
18,712,709,954 9,231,147,381 9,118,076,592 19,220,546,082 8,713,966,264 64,996,446,272
11,299,649,630 5,289,093,053 16,798,436,292 28,143,692,012 13,446,756,522 74,977,627,508
Dec.31, 2009
Up to
One to
Three
Three to
Twelve
1 Month Months
Months
Twelve
Months to
One
Year
Over Five
Total
Years
Liabilities
» Due to Banks
409,579,156
4,049,703
8,099,405
16,393,099
20,023,867
458,145,229
» Customers Deposits
17,630,864,392
8,479,674,960
7,333,919,085 13,692,437,981
7,705,733,424 54,842,629,843
» Other loans
3,967,682
14,002,441
27,740,623
47,526,296
8,864,618
8,069,253
4,877,954
-
-
-
93,237,042
21,811,825
» Financial Derivatives
(Foreign Exchange De-
rivatives)
» Total liabilities (contrac-
tual maturity dates)
18,053,275,848
8,505,796,357
7,374,637,067 13,756,357,377 7,725,757,291 55,415,823,939
3.3.4 Derivative cash flows
Derivatives settled on a net basis
The Bank’s derivatives that will be settled on a net basis include:
- Foreign exchange derivatives: over-the-counter (OTC) currency options, currency futures, exchange traded currency
options
- Interest rate derivatives: interest rate swaps, forward rate agreements, OTC interest rate options, other interest rate
contracts, exchange traded interest rate futures and exchange traded interest rate options.
- The table below analyses the Bank’s derivative financial liabilities that will be settled on a net basis into relevant
maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows.
Dec.31, 2010
Up to
One to
Three
Three to
Twelve
1 Month Months
Months
Twelve
Months to
One
Year
Over Five
Total
Years
liabilities
» Financial Derivatives
» Foreign exchange
derivatives
» Interest rate deriva-
tives
Total
46,109,376
10,090,483
8,806,258
163,195.72
-
65,169,313
-
547,406.66
311,210
19,972,049
20,321,976
41,152,641
46,109,376
10,637,890
9,117,468
20,135,244
20,321,976
106,321,954
OFF Balance sheet items
Dec.31, 2010
» Financial Guarantees , Bills and
other facilities
Total
Up to 1 year
1-5 years
Over 5 years
Total
9,481,517,644
2,214,095,031
184,136,038
11,879,748,713
9,481,517,644
2,214,095,031
184,136,038
11,879,748,713
Total financial assets
(contractual maturity
dates)
13,715,802,876
5,921,889,859 14,273,219,862 19,288,837,927 11,253,257,091 64,453,007,614
3.4 Fair value of financial assets and liabilities
(a) Financial instruments measured at fair value using a valuation technique
The total amount of the change in fair value estimated using a valuation technique that was recognized in profit or loss
during December 31, 2010 EGP 37,005,804,005 and EGP 29,676,669,820 in December 31, 2009
(b) Financial instruments not measured at fair value
The table below summarizes the book value and fair value of those financial assets and liabilities not presented on the
Bank’s balance sheet at their fair value.
112
CIB • Annual Report 2010
Annual Report 2010 • CIB
113
Financial Statements: Unconsolidated
Financial Assets
» Due from banks
» Loans and overdraft to banks
» Loans and overdraft to customers:
» Retail
» Corporate
Financial Investments:
» Available For Sale
» Held to maturity
Book value
Fair value
Dec.31, 2010 31 Dec.2009 Dec.31, 2010 31 Dec.2009
6,769,607,397
7,785,042,557
-
-
-
-
-
-
-
-
-
-
-
-
-
-
128,527,576
200,765,433
-
-
3,914,306,332
2,669,953,130
32,673,818,352 26,110,470,930
-
115,553,654
289,151,745
579,926,673
3.5 Capital management
The Bank’s objectives when managing capital, which consists of another items in addition of owner›s equity stated in balance
sheet are:
• To comply with the capital requirements in Egypt.
• To safeguard the Bank’s ability to continue as a on going concern so that it can continue to provide returns for shareholders
and stakeholders.
• To maintain a strong capital base to support the development of its business.
• Capital adequacy and the use of regulatory capital are monitored daily by the Bank’s management, employing techniques
based on the guidelines developed by the Basel Committee as implemented by the Central bank Of Egypt, for supervisory
Total Financial Assets
6,769,607,397
7,785,042,557 37,005,804,005 29,676,669,820
purposes. The required information is filed with the Authority on a quarterly basis.
Financial liabilities
» Due to banks
1,322,279,909
458,145,229
» Customers Deposits
63,479,883,624 54,842,629,843
» Other loans
129,113,425
93,237,042
Total Financial Liabilities
64,931,276,958 55,394,012,114
-
-
-
-
-
-
-
-
Due from banks
The fair value of floating rate placements and overnight deposits is their carrying amount. The estimated fair value of
fixed interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for
debts with similar credit risk and remaining maturity.
Loans and overdrafts to banks
Loans and banking facilities represented in loans not from deposits at banks. The expected fair value of the loans and
facilities represents the discounted value of future cash flows expected to be collected. Cash flows are discounted us-
ing the current market rate to determine fair value.
Loans and overdrafts to customers
Loans and advances are net of provisions for impairment. The estimated fair value of loans and advances represents
the discounted amount of estimated future cash flows expected to be received.
Expected cash flows are discounted at current market rates to determine fair value.
Financial Investments
Investment securities include only interest-bearing assets held to maturity; assets classified as available for sale are
measured at fair value. Fair value for held-to-maturity assets is based on market prices or broker/dealer price quota-
tions. Where this information is not available, fair value is estimated using quoted market prices for securities with
similar credit, maturity and yield characteristics.
Due to other banks and customers, other deposits and other borrowings
The estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, is the amount
repayable on demand. The estimated fair value of fixed interest-bearing deposits and other borrowings not quoted in
an active market is based on discounted cash flows using interest rates for new debts with similar remaining maturity.
• Central bank Of Egypt requires the following:
• Hold the minimum level of the issued and paid up capital of EGP500 Million
• Maintain a ratio of total regulatory capital to the risk weighted asset or above the agreed minimum of 10%.
- Tier One:
Tier one, consisting of paid-in capital (after deducting the book value of treasury shares), and retained earnings and
reserves resulting from the distribution of profits with the exception of banking risk reserve and deducting there from
previously recognized goodwill and any transferred loss
- Tier Two:
Qualifying subordinated loan capital , which consists of the equivalent of the risk allocation year according to the princi-
ples of credit issued by the Central Bank of Egypt for not more than 1.25% of total assets and liabilities weighted with
risk, loans / deposits support in excess of the schedule of five years (with consumption of 20% of their value in each
year of the last five years of the schedule) and 45% of the increase between the fair value and book value for each of
the financial investments available for sale and held to maturity in subsidiaries.
When calculating the total dominator of capital adequacy, it shall not exceed the capital cushions (Qualifying subordinated
loan capital) for share capital and loans not to increase (deposits) support for half of the share capital. Assets are risk weight-
ed ranging from zero to 100% classified by the relation of the debtor to all each asset to reflect the credit risk associated
with it, taking the cash collateral account. These are used for the treatment of off balance sheet items after adjustments to
reflect the nature of contingency and the potential loss of those amounts The table below summarizes the composition of
regulatory capital and the ratios of the Bank at the end of financial year and the bank has complied with all Capital adequacy
requirements as following :
114
CIB • Annual Report 2010
Annual Report 2010 • CIB
115
Financial Statements: Unconsolidated
» Tier 1 capital
» Share capital (net of the treasury shares)
5,901,443,600
2,925,000,000
Dec.31, 2010
Dec.31, 2009
» General reserves
» Legal reserve
» Other reserve
» Retained earnings
Total qualifying Tier 1 capital
Tier 2 capital
78,564,646
125,128,337
267,520,908
20,231,298
2,474,395,768
601,454,369
241,133,169
(1,942,684)
6,392,888,789
6,240,040,622
» Redeemable preference shares (general risk provision)
607,483,178
510,442,970
» Loans/deposits
» 45% of the increase in fair value than the book value for A.F.S
Investments:-
Total qualifying Tier 2 capital
» Less investments in associates
Total capital 1+2
Risk-weighted assets:
» In-balance sheet
» Off-balance sheet
Total risk-weighted assets
Capital Adequacy ratio (%)
956,968
-
608,440,147
510,442,970
7,001,328,935
6,750,483,592
43,626,939,621
36,143,068,815
4,971,714,657
4,692,368,750
48,598,654,278
40,835,437,565
14.41%
16.53%
4 Critical accounting estimates and judgments
The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next finan-
cial year. Estimates and judgments are continually evaluated and based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances and available info.
(a) Impairment losses on loans and overdraft
The Bank reviews its loan portfolios to assess impairment at least on a quarterly basis. In determining whether an impairment
loss should be recorded in the income statement, the Bank makes judgments as to whether there is any observable data
indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease
can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has
been an adverse change in the payment status of borrowers in a Bank, or national or local economic conditions that correlate
with defaults on assets in the Bank. Management uses estimates based on historical loss experience for assets with credit
risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash
flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed
regularly to reduce any differences between loss estimates and actual loss experience. To the extent that the net present
value of estimated cash flows differs by +/-5%
(b) Impairment of available for-sale equity investments
The Bank determines that available-for-sale equity investments are impaired when there has been a significant or prolonged
decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making
this judgment, the Bank evaluates among other factors, the normal volatility in share price. In addition, impairment may be
appropriate when there is evidence of a deterioration in the financial health of the investee, industry and sector performance,
changes in technology, and operational and financing cash flows.
(c) Fair value of derivatives
The fair value of financial instruments that are not quoted in active markets are determined by using valuation techniques.
Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically
reviewed by qualified personnel independent of the area that created them. All models are certified before they are used,
and models are calibrated to ensure that outputs reflect actual data and comparative market prices. To the extent practical,
models use only observable data; however, areas such as credit risk (both own and counterparty), volatilities and correla-
tions require management to make estimates. Changes in assumptions about these factors could affect reported fair value of
financial instruments. For example, to the extent that management used a tightening of 20 basis points in the credit spread.
(d) Held-to-maturity investments
The non-derivative financial assets with fixed or determinable payments and fixed maturity are being classified held to matu-
rity. This classification requires significant judgment. In making this judgment, the Bank evaluates its intention and ability to
hold such investments to maturity. If the Bank fails to keep these investments to maturity other than for the specific circum-
stances – for example, selling an insignificant amount close to maturity it will be required to reclassify the entire category as
available for sale. The investments would therefore be measured at fair value not amortized cost.
5 Segment analysis
(a) By business segment
The Bank is divided into main business segments on a worldwide basis:
• Retail banking – incorporating private banking services, private customer current accounts, savings, deposits, investment
savings products, custody, credit and debit cards, consumer loans and mortgages;
• Corporate banking – incorporating direct debit facilities, current accounts, deposits, overdrafts, loan and other credit facili-
ties, foreign currency and derivative products
• Investment banking – incorporating financial instruments trading, structured financing, corporate leasing, and merger and
acquisitions advice.
• Others – other Bank operations comprise fund management, institutional finance and providing computer services, none of
which constitutes a separately reportable segment.
Transactions between the business segments are on normal commercial terms and conditions.
Dec.31, 2010
» Revenue according to business
» Activity gains
Corporate
Banking
2,391,904,590
SME›s
64,900,676
Investment
Banking
(14,712,804)
Total
Retail
Banking
1,481,916,949 3,924,009,412
» Expenses according to business
(532,445,813)
(64,483,675)
(20,267,205)
(794,068,259)
(1,411,264,952)
Activities results by sector
» Profit before tax
» Tax
Profit for the Year
1,859,458,778
1,859,458,778
(282,334,420)
417,001
417,001
(63,316)
(34,980,009)
687,848,690
2,512,744,460
(34,980,009)
687,848,690
2,512,744,460
-
(104,440,799)
(386,838,536)
1,577,124,357
353,685
(34,980,009)
583,407,891
2,125,905,924
» Assets and liabilities according to busi-
ness segment
Total Assets
67,425,351,842 1,014,671,790 1,613,413,684 5,039,444,129 75,092,881,445
67,425,351,842 1,014,671,790 1,613,413,684 5,039,444,129 75,092,881,445
116
CIB • Annual Report 2010
Annual Report 2010 • CIB
117
Financial Statements: Unconsolidated
Dec.31, 2009
» Revenue according to business
SME›s
Corporate
Banking
2,123,286,525 1,233,264,123
Investment
banking
35,755,000
Retail
Banking
40,989,074
Total
3,433,294,722
» Expenses according to business
(499,571,860)
(763,045,467)
(28,445,000)
(18,890,191)
(1,309,952,518)
Activities results by sector
1,623,714,665
470,218,656
7,310,000
22,098,883
2,123,342,204
» Profit before tax
» tax
Profit for the year
1,623,714,665
470,218,656
7,310,000
22,098,883
2,123,342,204
(263,565,633)
(73,899,941)
(1,150,000)
(1,117,132)
(339,732,706)
1,360,149,032
396,318,715
6,160,000
20,981,751
1,783,609,498
Dec.31, 2009
Cairo
Alex, Delta
& Sinai
Upper
Egypt
Total
Egypt
EGP
Other
Countries
Total
» Revenue according to
business
» Expenses according to
business
Activities results by sec-
tor
2,732,486,003
604,289,656
90,005,198
3,426,780,857
6,513,865
3,433,294,722
(887,737,726)
(331,898,850)
(80,523,392)
(1,300,159,968)
(9,792,550)
(1,309,952,518)
1,844,748,277
272,390,806
9,481,806
2,126,620,889
(3,278,685)
2,123,342,204
» Assets and liabilities according to busi-
ness segment
Total assets
(b) By Geographical segment
61,090,037,945
220,223,300
15,311,000
2,737,259,530 64,062,831,775
» Profit before tax
1,844,748,277
272,390,806
9,481,806
2,126,620,889
(3,278,685)
2,123,342,204
61,090,037,945
220,223,300
15,311,000
2,737,259,530 64,062,831,775
» tax
(277,763,925)
(57,301,417)
(4,577,700)
(339,643,042)
(89,664)
(339,732,706)
» Profit for the year
1,566,984,352
215,089,389
4,904,106
1,786,977,847
(3,368,349)
1,783,609,498
Dec.31, 2010
Cairo
Alex, Delta
& Sinai
Upper
Egypt
Total
Egypt
EGP
Total
Other
Countries
» Revenue according to
business
» Expenses according to
business
Activities results by sec-
tor
Unallocated costs
3,021,813,859
775,199,795
118,266,971
3,915,280,625
8,728,787
3,924,009,412
(996,860,718)
(329,539,165)
(83,836,154)
(1,410,236,037)
(1,028,915)
(1,411,264,952)
2,024,953,141
445,660,630
34,430,817
2,505,044,588
7,699,872
2,512,744,460
» Profit before tax
2,024,953,141
445,660,630
34,430,817
2,505,044,588
7,699,872
2,512,744,460
» Tax
(311,742,766)
(68,609,725)
(5,300,645)
(385,653,136)
(1,185,400)
(386,838,536)
» Profit for the Year
1,713,210,375
377,050,905
29,130,172
2,119,391,452
6,514,472
2,125,905,924
Geographical segments
Assets
65,958,915,155 8,492,570,016
638,319,867 75,089,805,039
3,076,406
75,092,881,445
» Interest Paid on deposits and similar items:-
Total Assets
65,958,915,155 8,492,570,016
638,319,867 75,089,805,039
3,076,406
75,092,881,445
Geographical Segments
Assets
58,679,070,495 5,220,836,561
159,979,784 64,059,886,840
2,944,935
64,062,831,775
Total Assets
58,679,070,495 5,220,836,561
159,979,784 64,059,886,840
2,944,935
64,062,831,775
(6) Net Interest Income
Interest Received from Loans and similar items:-
» Banks
» Clients
» Treasury Bills and Bonds
» Reverse Repos
» Financial Investment In Held to Maturity and Available for Sale Debt
Instruments
» Other
Total
» Banks
» Clients
» Financial Instruments Purchased with a Commitment to
Re-Sale (Repos)
» Other
Total
Net
Dec.31, 2010
EGP
Dec.31, 2009
EGP
113,507,031
128,013,500
2,306,925,726
2,136,658,036
2,420,432,757
2,264,671,536
1,929,290,408
1,125,317,343
16,639,271
74,641,951
155,040,368
561,590,964
(12,517)
115,389
4,521,390,287
4,026,337,183
70,469,233
164,842,855
2,193,757,602
1,834,454,011
2,264,226,835
1,999,296,866
219,881
-
2,122,799
1,571,617
2,266,569,515
2,000,868,483
2,254,820,772
2,025,468,700
118
CIB • Annual Report 2010
Annual Report 2010 • CIB
119
Financial Statements: Unconsolidated
(7) Net Income From fees & Commissions
(10) Administrative Expenses
fees & Commissions Income :
» Fees & Commissions Related to Credit
» Custody Fees
» Other Fees
Total
» Other Fees Paid
Total
Net fees & Commissions
(8) Dividends
» Trading Securities
» Available for Sale Securities
» Subsidiaries and Associated
Total
(9) Net Trading Income
» Profit From Foreign exchange
» Profit (Losses) From Revaluations of Trading Assets and Liabilities in
Foreign Currencies
» (Losses)Profit From Forward Foreign exchange Deals Revaluation
» (Losses) Profit From Interest Rate Swaps Revaluation
» (Losses) Profit From Swap Deals Revaluation
» Trading Debt Instruments
» Trading Equity Instruments
Total
Dec.31, 2010
EGP
Dec.31, 2009
EGP
518,885,060
39,158,012
277,111,169
835,154,241
(84,876,559)
(84,876,559)
750,277,682
461,475,536
31,672,575
211,288,242
704,436,353
(67,147,458)
(67,147,458)
637,288,895
Dec.31, 2010
EGP
1,330,647
150,827,877
32,150,568
184,309,092
Dec.31, 2009
EGP
1,763,898
118,815,429
5,483,046
126,062,373
Dec.31, 2010
EGP
334,230,240
Dec.31, 2009
EGP
291,327,008
9,795,800
(1,962,006)
(12,297,737)
(33,053,612)
(17,643,454)
107,408,262
24,670,313
413,109,812
3,460,009
(41,255,686)
(307,591)
156,564,981
(3,673,660)
404,153,055
Staff Costs
» Wages & Salaries
» Social Insurance
» Other Benefits
» Other Administrative Expenses
Total
(11) Other Operating (Expenses) Income
» (Losses) Profits From Assets & Liabilities Revaluation Except Trading
» Profits From Selling Equipments And Fixed Assets
» Return (Losses) Of other Provision
» Others
Total
(12) Return (Losses) Of Impairment From Loans
» Loans And Overdrafts For Customers
» Held to Maturity Financial Investments
Total
(13) Adjustments to Calculate the 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
Dec.31, 2010
EGP
Dec.31, 2009
EGP
476,468,863
412,132,518
21,713,306
29,636,810
19,575,658
14,428,628
660,120,958
594,650,547
1,187,939,937
1,040,787,351
Dec.31, 2010
EGP
(90,859,875)
1,574,746
138,839,630
(47,783,172)
1,771,329
Dec.31, 2009
EGP
6,036,985
15,797,710
(48,794,376)
(57,919,621)
(84,879,302)
Dec.31, 2010
EGP
(6,783,757)
620,261
(6,163,496)
Dec.31, 2009
EGP
(9,715,311)
530,453
(9,184,858)
Dec.31, 2010
EGP
2,512,744,460
Dec.31, 2009
EGP
2,123,342,204
20%
20%
502,548,892
424,668,441
8,023,187
(113,094,263)
(10,639,280)
386,838,536
15.40%
5,760,564
(99,119,357)
8,423,058
339,732,706
16.00%
120
CIB • Annual Report 2010
Annual Report 2010 • CIB
121
Financial Statements: Unconsolidated
(14) Earning Per Share
(17) Treasury Bills And Other Governmental Notes
» Net Profit For The Year Available for Distribution
» Board Member›s Bonus
» Staff Profit Sharing
Shareholders› Share In Profits
» Number Of Shares
Basic Earning Per Share
» By Issuance Of ESOP Earning Per Share Will Be:-
» Number Of Shares Including ESOP Shares
Diluted Earning Per Share
(15) Cash And Due From Central Bank
» Cash
» Reserve Balance With CBE:-
» Current Accounts
Total Cash & Due From Central Bank
Balances without Interest
(16) Due From Banks
» Current Accounts
» Deposits
Total Due From Banks
» Central Banks (Except Obligatory Reserve)
» Local Banks
» Foreign Banks
Total Due From Banks
» Non Bearing Interest Balances
» Fixed Bearing Interest Balances
Total Due From Banks
» Current Balances
Total Due From Banks
Dec.31, 2010
EGP
1,993,991,453
(30,213,341)
(201,422,275)
Dec.31, 2009
EGP
1,756,956,708
(26,354,351)
(175,695,671)
1,762,355,837
1,554,906,687
590,144,360
590,144,360
2.99
2.63
600,695,185
600,695,185
2.93
2.59
Dec.31, 2010
EGP
1,399,250,089
Dec.31, 2009
EGP
911,152,111
4,275,991,702
3,268,060,628
5,675,241,791
4,179,212,739
5,675,241,791
4,179,212,739
Dec.31, 2010
EGP
374,811,766
Dec.31, 2009
EGP
275,582,222
6,394,795,631
7,509,460,335
6,769,607,397
2,539,019,714
540,547,702
7,785,042,557
2,121,116,884
813,100,753
3,690,039,981
4,850,824,920
6,769,607,397
7,785,042,557
289,402,609
275,582,222
6,480,204,788
7,509,460,335
6,769,607,397
6,769,607,397
7,785,042,557
7,785,042,557
6,769,607,397
7,785,042,557
91 Days Maturity
182 Days Maturity
364 Days Maturity
Unearned Income
Total Treasury Bills
Repos
Dec.31, 2010
EGP
2,126,041,239
3,830,900,000
3,659,550,000
Dec.31, 2009
EGP
5,647,025,000
4,539,175,000
3,451,725,000
9,616,491,239
13,637,925,000
(416,346,434)
(446,259,046)
9,200,144,805
13,191,665,954
(379,141,239)
-
Total Treasury Bills And Other Governmental Notes
8,821,003,566
13,191,665,954
Available for sale debt insttruments with an amount of EGP 379,141,239 have been reclassfied under treasury bills and other
governmental notes which have been pledged according to Repo agreement.
(18) Financial Assets For Trading
Debt Instruments:-
» Government Bonds
» Other Debt Instruments
Total Debt Instruments
Equity Instruments:-
» Foreign Company Shares
» Mutual Fund
Total Equity Instruments
Total Financial Assets For Trading
(19) Loans And Overdrafts For Banks
» Time and Term Loans
Total Loans and Overdrafts For Banks
Distributed To:-
» Non-Current Balances
Net Loans And Overdrafts For Banks
Dec.31, 2010
EGP
Dec.31, 2009
EGP
861,157,325
19,067,562
880,224,887
74,031,984
467,781,970
541,813,953
1,422,038,841
75,348,284
35,986,076
111,334,360
57,624,532
211,661,790
269,286,322
380,620,682
Dec.31, 2010
EGP
128,527,576
128,527,576
Dec.31, 2009
EGP
200,765,433
200,765,433
128,527,576
128,527,576
200,765,433
200,765,433
122
CIB • Annual Report 2010
Annual Report 2010 • CIB
123
Financial Statements: Unconsolidated
(20) Loans And Overdrafts For Customers
Retail
» Overdrafts
» Credit Cards
» Personal Loans
» Real state Loans
» Other Loans
Total (1)
Corporate
» Overdrafts
» Direct Loans
» Syndicated loans
» Other Loans
Total (2)
Loans And Overdrafts For Customers (1+2)
» Unearned Bills Discount
» Impairment Provision
» Interest In Suspense
Net Loans And Overdrafts For Customers
Distributed To:-
» Current Balances
» Non-Current Balances
Net Loans And Overdrafts For Customers
Dec.31, 2010
EGP
Dec.31, 2009
EGP
1,007,205,364
518,583,403
852,902,695
451,907,954
1,914,229,597
1,005,586,641
430,897,165
43,390,803
292,518,318
67,037,522
3,914,306,332
2,669,953,130
3,019,878,138
3,434,116,195
21,750,548,380
15,918,861,867
7,751,645,734
6,663,779,140
151,746,100
93,713,728
32,673,818,352
26,110,470,930
36,588,124,684
28,780,424,060
(59,528,351)
(92,637,396)
(1,257,882,426)
(1,304,194,446)
(224,700,550)
(141,285,321)
35,046,013,357
27,242,306,897
13,176,145,651
10,362,261,423
21,869,867,706
16,880,045,473
35,046,013,357
27,242,306,896
(20) Loans And Overdrafts For Customers (Cont.)
- Analysis Of The Impairment Provision For Customers
Dec.31, 2010
» Balance At Beginning Of The Year
6,217,574
Overdrafts
Credit
Cards
63,472,214
Retail
Personal
Loans
123,755,953
Real state
Loans
6,607,506
Total
200,053,247
» Formed During The Year
» Write Off During The Year
» Recoveries From Written Off Debts
» Foreign Currency Revaluation Diff.
1,784,389
(2,677,769)
(41,751,067)
2,280,658
(40,363,789)
-
-
-
(21,890,799)
(762,282)
3,216,180
255,895
-
-
-
-
-
(22,653,081)
3,472,075
-
Balance At The End Of The Year
8,001,963
42,119,826
81,498,499
8,888,164
140,508,452
Overdrafts
Direct
Loans
Corporate
Syndicated
loans
Other
Loans
Total
» Balance At Beginning Of The Year
182,615,379
456,119,614
461,400,856
4,005,349
1,104,141,198
» Formed During The Year
4,274,439
31,517,879
11,256,656
98,572
47,147,546
» Write Off During The Year
» Recoveries From Written Off Debts
» Foreign Currency Revaluation Diff.
-
-
-
(83,201,595)
25,694,981
23,591,844
-
-
-
-
-
-
(83,201,595)
25,694,981
23,591,844
Balance At The End Of The Year
186,889,818
453,722,723
472,657,512
4,103,921
1,117,373,974
Dec.31, 2009
» Balance At Beginning Of The Year
2,439,210
Overdrafts
Credit
Cards
50,894,643
Retail
Personal
Loans
152,213,149
Real state
Loans
3,960,474
Total
209,507,476
» Formed During The Year
3,778,364
11,412,910
(28,457,196)
2,647,032
(10,618,890)
» Write Off During The Year
» Recoveries From Written Off Debts
» Foreign Currency Revaluation Diff.
-
-
-
(63,301)
1,227,962
-
-
-
-
-
-
-
(63,301)
1,227,962
-
Balance At The End Of The Year
6,217,574
63,472,214
123,755,953
6,607,506
200,053,247
» Balance At Beginning Of The Year
187,125,155
Overdrafts
Direct
Loans
451,736,126
Corporate
Syndicated
loans
485,564,104
Other
Loans
4,232,079
Total
1,128,657,464
» Formed During The Year
3,031,459
41,692,243
(24,163,248)
(226,730)
20,333,724
» Write Off During The Year
(11,186,847)
(54,216,933)
» Recoveries From Written Off Debts
3,645,612
19,080,865
» Foreign Currency Revaluation Diff.
-
(2,172,687)
-
-
-
-
-
-
(65,403,780)
22,726,477
(2,172,687)
Balance At The End Of The Year
182,615,379
456,119,614
461,400,856
4,005,349
1,104,141,198
124
CIB • Annual Report 2010
Annual Report 2010 • CIB
125
Financial Statements: Unconsolidated
(21) Financial derivatives
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 inter-
est 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 pe-
riod 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 reflects 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.
A- For Trading Derivatives
Dec.31, 2010
Dec.31, 2009
Notional
Amount
Assets
Liabili-
ties
Notional
Amount
Assets
Liabili-
ties
Foreign Derivatives:-
» Forward Foreign exchange contracts 3,072,183,403 10,189,895
17,784,952 2,216,238,458 11,313,445
6,610,765
» 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)
B- For Hedging Derivatives
5,252,345,990 95,810,458
46,796,806 2,282,456,175 59,700,304
8,520,349
129,589,977
587,555
587,555
1,115,741,508
6,680,711
6,680,711
106,587,908 65,169,313
77,694,460
21,811,825
2,116,390,500 18,033,720
32,936,778 1,468,824,580 25,635,166
6,697,411
18,033,720
32,936,778
25,635,166
6,697,411
37,459,113
7,229,086
7,229,086
219,509,800 122,017,594 122,017,594
7,229,086
7,229,086
122,017,594 122,017,594
131,850,714 105,335,177
225,347,220 150,526,830
Dec.31, 2010
Dec.31, 2009
» Interest rate Swaps
1,159,112,554 7,413,234
Notional
Amount
Assets
Liabili-
ties
8,215,863
Notional
Amount
-
Assets
-
-
Liabili-
ties
-
-
7,413,234
8,215,863
139,263,948 113,551,040
225,347,220 150,526,830
Total Assets ( liability) For Hedg-
ing Derivatives (1+2+3+4)
Total Financial Derivatives
(1+2+3+4)
126
CIB • Annual Report 2010
Annual Report 2010 • CIB
127
Financial Statements: Unconsolidated
(22) Financial Investment
» Available For Sale Financial Investment:-
» Debt Instruments Listed - Fair Value
» Equity Instruments Listed - Fair Value
» Unlisted Instruments
Total Available For Sale Financial Investment
Held To Maturity Financial Investment:-
» Listed Debt Instruments
» Unlisted Instruments
Total Held To Maturity Financial Investment
Total Financial Investment
» Listed Balances
» Unlisted Balances
» Fixed Interest Debt Instruments
» Variable Interest Debt Instruments
Dec.31, 2010
EGP
Dec.31, 2009
EGP
12,182,202,264
6,756,292,076
88,634,556
1,334,510,210
115,553,654
548,683,876
13,605,347,030
7,420,529,606
54,083,377
235,068,368
289,151,745
262,758,830
317,167,843
579,926,673
13,894,498,775
8,000,456,279
11,983,836,014
7,134,604,560
1,910,662,761
865,851,719
13,894,498,775
8,000,456,279
11,505,888,130
5,701,939,359
1,849,898,303
1,601,779,389
13,355,786,433
7,303,718,748
Dec.31, 2010
EGP
Dec.31, 2009
EGP
Profit (Losses) From Financial Investment
» Profit From Selling Available For Sale Financial Instruments
203,689,153
88,188,511
» (Losses) From Impairment Of Equity Instruments Available
For Sale
» Return (Losses) Of Impairment From Available For Sale Debt
Instruments
(9,844,647)
(14,918,896)
68,054,023
(8,035,072)
» (Losses) From Selling Investments In Subsidiaries And As-
sociates.
(96)
» (Losses) From Impairment Of Subsidiaries And Associates.
(159,325,957)
» Profit (Losses) Of Selling Held to Maturity Debt Investments
(13,270)
102,559,206
-
-
(13,851)
65,220,692
(23) Financial Investments in Subsidiary and Associated Companies
(A) Subsidiary Companies:-
» Commercial International Capital Holding Co.
886,086,000
99.98
1,045,411,957
99.98
Dec.31, 2010
Value (EGP)
%
Dec.31, 2009
Value (EGP)
%
- Available for sale debt insttruments with an amount of EGP 379,141,239 have been reclassfied under treasury bills and other
governmental notes which have been pledged according to Repo agreement.
(B) Associated Companies:-
» Commercial International life insurance co.
» Opening Balance 1/1/2009
» Addition
Available for Sale
Financial
Investment
2,762,232,984
Held to Maturity
Financial
Investment
681,263,274
9,345,814,437
-
Total
3,443,496,258
9,345,814,437
» Corplease co.
» Cotecna Trade Support
» Haykala for Investment
» Egypt Factors
» International. Co. for Appraisal and Collection.
» International Co. for Security and Services ( Falcon )
44,520,250
42,000,000
-
600,000
18,111,288
1,000,000
4,000,000
45
40
39
40
39
40
40
44,520,250
32,000,000
48,750
600,000
10,696,530
1,000,000
4,000,000
45
40
39
40
39
40
40
» Deduction ( Selling - Recovery )
(4,578,286,645)
(100,347,555)
(4,678,634,201)
Total
996,317,538
1,138,277,487
» Differences In Revaluation Of The Cash Assets
In Foreign Currencies
(8,035,073)
(989,046)
(9,024,119)
» Profit (Losses)From Fair Value Deference
» Return (Deduct) - Impairment Losses
(86,277,201)
(14,918,896)
-
-
(86,277,201)
(14,918,896)
Balance At The End Of Year
7,420,529,606
579,926,673
8,000,456,279
» Opening Balance 1/1/2010
» Addition
7,420,529,606
579,926,673
9,474,625,202
5,012,500
8,000,456,279
9,479,637,702
» Deduction ( Selling - Recovery )
(3,466,577,997)
(311,446,590)
(3,778,024,587)
» Differences In Revaluation Of The Cash Assets
In Foreign Currencies
68,054,023
15,659,162
83,713,185
» Profit (Losses)From Fair Value Deference
108,716,196
-
108,716,196
Balance At The End Of Year
13,605,347,030
289,151,745
13,894,498,775
The Financial Investments in subsidiary and associated
companies are represented as follows :-
» Financial Investments Unlisted in Stock Exchange
Total
996,317,538
996,317,538
1,138,277,487
1,138,277,487
128
CIB • Annual Report 2010
Annual Report 2010 • CIB
129
Financial Statements: Unconsolidated
(24) Real estate investments
(26) Net Fixed Assets Dec.31, 2010
Assets
» Building number 17 tiba st. Eldokki next to shooting club
» Commercial unit number f 35 in arkadia mall (14 elbahr st. Boulak
kornish el nile )
Dec.31, 2010
EGP
Book value
7,600,000
Dec.31, 2009
EGP
Book value
7,600,000
361,200
361,200
» Floor 3 building number 131 eltahriri st. Eldokki + part of the garage
-
3,239,200
» Appartment in the first floor 230 meters elmadina tower elgomhoria st.
Port said
» 338.32 meters on a land and building the property number 16 elmakri-
zi st. Heliopolis
» Villa number 27/291 elgamil portsaid
» Villa number 113 royal hills 6th of october
» A land area with 1468.85 meters elsaidi basin -markaz nabrouh
eldakahlia
750,000
1,000,000
1,000,000
1,650,000
-
2,000,000
225,000
2,500,000
1,121,965
1,321,965
» Land and a bulding in elmansoura elnahda street 766.3 meters
3,463,000
7,663,000
» Agricultural area 1 feddan 14t and 17.25 shares near el azazi fakous
elsharkia
» Land number 16 mit khamis elmansoura (3 carats, 15 share)which
equals 645 meters
» land with a villa model number 10 on land number 219 Elshorouk 2000
compound villas
» Agriculutral area 47 feddans 11 carats markaz shebin eldakahlia
Total
222,000
322,000
1,935,000
1,935,000
-
10,242,499
28,695,664
2,525,500
12,142,499
42,485,364
(25) Debit Balances and Other Assets
» Accrued Revenues
» Prepaid Expenses
» Advances for Purchase of Fixed Assets
» Accounts receivable and Other Assets **
» Assets Acquired as Settlement of Debts
Dec.31, 2010
EGP
801,607,656
68,889,983
53,943,062
446,874,086
4,630,353
1,375,945,140
Dec.31, 2009
EGP
453,873,774
67,433,667
48,879,348
343,186,740
4,630,353
918,003,882
* This Include The Value Of Premises That Was Not Recorded Under The Bank›s Name By EGP 21.095.664 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.
** Include EGP 6.331.048 as Assets Held For Sale.
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130
CIB • Annual Report 2010
Annual Report 2010 • CIB
131
Financial Statements: Unconsolidated
(27) Due To Banks
(29) Long Term Loans
» Current Accounts
» Deposits
» Central Banks
» Local Banks
» Foreign Banks
» Non Bearing Interest Balances
» Fixed Bearing Interest Balances
» Current Balances
» Non-Current Balances
(28) Customers Deposits
» Demand Deposits
» Time Deposits
» Certificates of Deposit
» Saving Deposits
» Other Deposits
» Corporate Deposits
» Retail Deposits
» Non Bearing Interest Balances
» Floating Bearing Interest Balances
» Fixed Bearing Interest Balances
» Current Balances
» Non-Current Balances
Dec.31, 2010
EGP
628,594,359
693,685,550
1,322,279,909
67,074,769
110,476,364
1,144,728,776
1,322,279,909
528,398,567
793,881,342
1,322,279,909
628,594,359
693,685,550
1,322,279,909
Dec.31, 2009
EGP
258,145,229
200,000,000
458,145,229
33,070,672
215,963,990
209,110,567
458,145,229
258,145,229
200,000,000
458,145,229
258,145,229
200,000,000
458,145,229
Dec.31, 2010
EGP
16,778,775,254
Dec.31, 2009
EGP
14,490,335,257
21,893,614,059
21,669,911,514
15,205,693,671
9,805,872,397
8,321,204,407
8,024,613,798
1,280,596,233
851,896,877
63,479,883,624
54,842,629,843
21,323,876,050
18,712,676,141
42,156,007,574
36,129,953,702
63,479,883,624
54,842,629,843
9,935,629,948
15,342,232,134
-
10,746,100
53,544,253,676
39,489,651,609
63,479,883,624
54,842,629,843
47,968,184,622
44,951,662,006
15,511,699,002
9,890,967,837
63,479,883,624
54,842,629,843
Rate
%
Maturity
Date
Maturing
Through
Next Year
EGP
» F.I.S.C.
7
3-5 years
16,665,283
Balance
as of
Dec.31,
2010
EGP
34,363,003
Balance
as of
Dec.31,
2009
EGP
36,314,000
» KFW Private Sector Industry (Phase II)
10.5 - 9
10 YEARS 5,487,166
8,966,582
9,581,678
» UNIDO
1
2011
29,716
60,014
2,249,926
» Agricultural Research and Development Fund
(ARDF)
» Ministry of Agriculture (V.S.P)
» Social Fund
3.5 - 5.5
depends on
maturity date
3.5 - 5.5
depends on
maturity date
3 months T/D
or 9% which
more
3-5 years
74,802,222
78,352,222
33,687,857
3-5 years
-
-
60,000
2010
249,000
417,000
1,485,844
» Spanish Microfinance Loan
0.5
2012
3,477,302
6,954,604
9,857,737
Total
100,710,689 129,113,425
93,237,042
(30) Credit Balances and Other Liabilities
» Accrued Interest Payable
» Accrued Expenses
» Accounts Payable
» Income Tax
» Other Credit balances
Total
Dec.31, 2010
EGP
208,214,717
95,867,298
376,604,579
426,695,912
16,501,392
Dec.31, 2009
EGP
172,395,377
63,907,016
460,698,162
306,398,840
125,565,090
1,123,883,898
1,128,964,485
132
CIB • Annual Report 2010
Annual Report 2010 • CIB
133
Financial Statements: Unconsolidated
(31) Other Provisions
Dec. 31, 2010 (EGP)
(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.
(33) Deferred Tax Assets and Liabilities
Opening
Balance
Formed
During
the Year
» Provision For Income Tax Claims
146,909,685
-
FCY
Balance
Reval.
Difference
-
Usage
During
the Year
-
Bal-
ance No
Longer
Required
(140,000,000)
Closing
Balance
6,909,685
» Provision For Legal Claims
3,401,533
32,479,464
-
(5,000)
(2,725,450)
33,150,547
» Provision For Contingent
281,592,486
3,094,612
7,334,078
-
(35,312,276)
256,708,900
» Provision For Other Claim
11,824,874
3,624,020
6,542
(1,985,637)
-
13,469,799
Total
443,728,578
39,198,096
7,340,620
(1,990,637)
(178,037,726) 310,238,930
Assets (liabilities)
Dec.31, 2010
EGP
Assets (liabilities)
Dec.31, 2009
EGP
(23,645,342)
(26,940,482)
9,324,074
3,045,281
64,727,644
29,250,318
79,656,694
31,517,523
32,176,996
39,799,318
Opening
Balance
Formed
During
the year
» Provision For Income Tax Claims 146,909,685
-
Dec. 31, 2009 (EGP)
» Fixed Assets (Depreciation)
Deferred tax assets and liabilities are attributable to the following:
FCY
Balance
Reval.
Difference
-
Usage
During
the year
-
Bal-
ance No
Longer
Required
-
Closing
Balance
» Other Provisions(Excluded Loan Loss, Contingent Liabilities And
Income Tax Provisions)
» Other Items(Other Investments Revaluation Difference)
» Reserve For Employee Stock Ownership Plan (ESOP)
146,909,685
Total
» Provision For Legal Claims
1,271,113
2,838,002
-
(190,504)
(517,078)
3,401,533
» Provision For Contingent
244,688,780
37,653,452
(749,746)
-
» Provision For Other Claim
8,723,449
8,820,000
25,167
(5,743,742)
-
-
281,592,486
11,824,874
Total
401,593,027
49,311,454
(724,579)
(5,934,246)
(517,078)
443,728,578
(32) Shareholders Equity
(A) Capital:-
• The authorized capital reached EGP 20 billion according to the extraordinary general assembly decision on 17 Mar,2010
• Issued and Paid in Capital reached EGP 5,901,443,600 to be divided on 590,144,360 shares with EGP 10 par value for each
share based on
1- Increase Issued and Paid up Capital by amount EGP 25,721,800 in April 21, 2010 in according to Board of Directors decision
on November 11,2009 by issuance of first tranch for E.S.O.P program
2- Increase Issued and Paid up Capital by amount EGP 2,950,721,800 in July 15, 2010 according to Board of Directors decision
on May 12 ,2010 by distribution of one share for every outstanding share by capitalizing on the General Reserve and part of
the Legal Reserve.
• The Extraordinary General Assembly approved in the meeting of 26 june,2006 to activate a motivating and re-
warding program
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 and conditions and increase the paid in capital
according to the program.
the bank›s employees and managers
for
(34) Share-Based Payments
According to the extraordinary general assembly meeting on June 26, 2006, the bank launched new employees share owner-
ship 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 ex-
pensed 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
Outstanding At The End Of The Year
Number of Shares
10,322,024
3,388,366
(587,385)
(2,572,180)
10,550,825
• The estimated fair value of the equity instrument granted to the second tranch is EGP 27.06 .
• The estimated fair value of the equity instrument granted to the third tranch is EGP 13.70 .
• The estimated fair value of the equity instrument granted to the forth tranch is EGP21.70 .
• Dividend deducted from shareholders› equity in the Year in which the General Assembly recognizes the shareholders of this
dividend, which includes the share of workers in the profits and remuneration of the Board of Directors stated in the law
• The equity instrument fair value for the second, third and forth trenches have been adjusted to reflect the dilution effect of the
Stock dividend that took place in 2010.
134
CIB • Annual Report 2010
Annual Report 2010 • CIB
135
Financial Statements: Unconsolidated
(35) Reserves and Retained Earnings
(36) Cash And Cash Equivalent
» Legal Reserve
» General Reserve
» Retained Earning
» Special Reserve
» Reserve For A.F.S Investments Revaluation Diff.
» Banking Risks Reserve
Total Reserves and Retained Earnings at the End of the Year
A- Banking Risks Reserve
» Opening Balance
» Transferred from (to) retained earnings
Ending Balance
B- Legal Reserve
» Opening Balance
» Used During The Year
» Transferred from Profits
Ending Balance
Dec.31, 2010
EGP
125,128,337
78,564,646
20,231,298
184,356,569
2,126,596
156,992,515
567,399,960
Dec.31, 2010
EGP
26,652,790
130,339,725
156,992,515
Dec.31, 2010
EGP
513,606,534
(476,326,032)
87,847,835
125,128,337
Dec.31, 2009
EGP
513,606,534
1,463,656,484
(1,942,684)
206,530,551
(106,589,600)
26,652,790
2,101,914,074
Dec.31, 2009
EGP
-
26,652,790
26,652,790
Dec.31, 2009
EGP
432,851,511
-
80,755,023
513,606,534
C- Reserve For A.F.S Investments Revaluation Diff.
» Opening Balance
Dec.31, 2010
EGP
(106,589,600)
Dec.31, 2009
EGP
(20,312,399)
» Gains (Losses) from A.F.S Investment Revaluation
108,716,196
(101,196,097)
» Losses from Impairment
Ending Balance
D- Retained Earning
» Opening Balance
» Transferred To Special Reserve
Ending Balance
-
2,126,596
14,918,896
(106,589,600)
Dec.31, 2010
EGP
(1,942,684)
22,173,982
20,231,298
Dec.31, 2009
EGP
(1,942,684)
-
(1,942,684)
» Cash And Due From Central Bank
» Due From Banks
» Treasury Bills And Other Governmental Notes
Dec. 31, 2010
EGP
5,675,241,791
Dec. 31, 2009
EGP
4,179,212,739
6,769,607,397
7,785,042,557
8,821,003,566
13,191,665,954
» Due From Banks (Time Deposits)More Than Three Months
(6,394,795,631)
(7,509,460,335)
» Treasury Bills With Maturity More Than Three Months
(7,092,113,082)
(7,584,125,286)
Total Cash And Cash Equivalent
7,778,944,041
10,062,335,629
(37) Contingent Liabilities And Commitments
( A ) Legal Claims
There are a number of existing cases filed against the bank in 31/12/2010 without provision as it's not expected to make any
losses from it.
( B ) Capital Commitments
- Financial Investments:-
The capital commitments for the financial investments reached on the date of financial position EGP 142,855,749 as follows:-
» Available for Sale Financial Investments
Investments
value
EGP
477,436,529
Paid
EGP
Remaining
EGP
335,180,780
142,255,749
» Financial Investments in associates Co.
1,200,000
600,000
600,000
- Fixed Assets and Branches Constructions;-
The value of Commitments for the purchase of fixed assets contracts and branches constructions that have not been imple-
mented till the date of financial statement amounted to EGP 2.028.164
( C ) Loans, Facilities and Guarantees Commitments
» Letters Of Guarantee
» Letters Of Credit ( Import And Export )
» Customers Acceptances
Total
Dec.31, 2010
EGP
10,300,751,367
989,910,137
589,087,209
Dec.31, 2009
EGP
11,348,196,542
820,272,115
469,403,911
11,879,748,713
12,637,872,568
(38) Comparative Figures
• The Comparative Figures Are Amended To Confirm With The Reclassification Of The Current Year And General Assembly Held
on 17th Of March, 2010, Decisions, For Ratifying The Appropriation Account Of Year 2009.
• Some items in income statement and balance sheet have been restated According to Central Bank of Egypt new regulation
issued in December 16, 2008 as Follows:-
136
CIB • Annual Report 2010
Annual Report 2010 • CIB
137
Financial Statements: Unconsolidated
» Loans and Overdrafts for Customers (Net After Provision)
» Reconciliation Accounts - Credit Balances
» Other Provisions
» Special Reserve
» Banking Risks Reserve
» Provisions (Income Statement)
» Other Operating (Expenses) Income
» Return (Losses) Of Impairment From Loans
» Income Tax
(39) Mutual Funds
Osoul Fund
Balance Before
Adjustments Year
2009
27,102,918,752
Balance After
Adjustments Year
2009
27,242,306,896
1,106,662,383
1,128,964,485
373,832,092
185,993,785
-
(96,243,322)
(36,084,926)
-
443,728,578
206,530,551
26,652,790
-
(84,879,302)
(9,184,858)
(346,610,611)
(357,691,456)
Hemaya Fund
• CIB bank established an accumulated return mutual fund under license no.585 issued from capital market authority on
23/06/2010. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 2,964,421 with redeemed value EGP 302,993,470.
• The market value per certificate reached EGP 102.21 on 31/12/2010.
• The bank portion got 347,627 certificates with redeemed value EGP 35,530,956.
(40) Transactions With Related Parties
All Banking Transactions With Related Parties Are Conducted In Accordance With The Normal Banking Practices And Regula-
tions Applied To All Other Customers Without Any Discrimination.
• 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.- Egyptian joint stock co - manages the fund.
» Loans & Overdrafts
» Customer Deposits
» Contingent Accounts
• The number of certificates issued reached 60,588,285 with redeemed value EGP 9,703,819,726.
• The market value per certificate reached EGP 160.16 on 31/12/2010.
• The Bank portion got 2,702,313 certificates with redeemed value EGP 432,802,450.
Istethmar Fund
• CIB bank established the second accumulated return mutual fund under license no.344 issued from capital market author-
ity on 26/02/2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 3,037,171 with redeemed value EGP 242,669,963.
• The market value per certificate reached EGP 79.90 on 31/12/2010.
• The bank portion got 194,744 certificates with redeemed value EGP 15,560,046.
Aman Fund ( CIB and Faisal Islamic Bank Mutual Fund)
» International Co. for Security & Services
» Corplease Co.
» Commercial International Life Insurance Co.
» Commercial International Brokerage Co.
» Dinamic Company
» Egypt Factors
» CI Assets Management
» Commercial International Capital Holding Co.
» Haykala for Investment
» CI Capital Researches
(41) Tax Status
• The bank›s corporate income tax position has been examined and settled with the tax authority from the start up of operations
• The bank and Faisal Islamic Bank established an accumulated return mutual fund under license no.365 issued from capital
up to the end of year 1984.
market authority on 30/07/2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 760,909 with redeemed value EGP 45,616,495.
disputes are under discussion in the court of law.
• Corporate income tax for the years from 1985 up to 2000 were paid according to the tax appeal committee decision and the
• The market value per certificate reached EGP 59.95 on 31/12/2010.
• The bank›s corporate income tax position has been examined and settled with the tax authority from 2001 up to 2004.
• The bank portion got 45,434 certificates with redeemed value EGP 2,723,768.
• Corporate income tax for the years 2005-2006 has been examined from the tax authority and paid.
• The bank pays salary tax according to concerning domestic regulations and laws, and the disputes are under discussion in
the court of law.
138
CIB • Annual Report 2010
Annual Report 2010 • CIB
139
EGP
828,308,607
695,818,754
383,754
Income
EGP
684,391
66,245,071
171,309
1,155,777
26,425
7,103,508
6,280
22,315
756
546
Expenses
EGP
50,347
954,343
1,925,320
2,622,284
135,982
56,770
16,009
257,184
3,245
794
Financial Statements: Unconsolidated
• The bank pay stamp duty tax according to concerning domestic regulations and laws, and the disputes are under discussion
in the court of law .
(42) Main Currencies Positions
» Egyptian Pound
» US Dollar
» Sterling Pound
» Japanese Yen
» Swiss Franc
» Euro
Dec. 31, 2010
in thousand EGP
11,966
Dec. 31, 2009
in thousand EGP
60,421
(6,602)
(400)
(433)
130
8,218
(29,077)
279
599
1,081
15,912
(43) Subsequent Events
• The Arab Republic of Egypt has encountered certain events that have a significant impact on the economic sectors, in gen-
eral, a matter which may lead to a substantial decline in the economic activities in the foreseeable future. Therefore, there is a
possibility that the above mentioned events will have a significant impact on the assets, liabilities, its recoverable/ settlement
amounts and the results of operations in the foreseeable future.
• At the present time, it is not possible to quantify the effect on the assets and the liabilities included in the company’s financial
statements, since quantifying the effect of these events relies on the expected range and the time when these events, and its
consequences, are expected to be finished.
• The Bank will continue to assess the situation and will quantify any effect on assets and liabilities once the assessment is
complete.
140
CIB • Annual Report 2010
Annual Report 2010 • CIB
141
Financial Statements: Consolidated
Allied for Accounting & Auditing E&Y
Public accountants & consultants
KPMG Hazem Hassan
Public accountants & consultants
Report on the consolidated financial statements
Opinion
We have audited the accompanying consolidated financial statements of Commercial International Bank
In our opinion, the consolidated financial statements referred to above present fairly, in all material re-
(Egypt) S.A.E, which comprise the consolidated balance sheet as at 31 December 2010, and the
spects, the consolidated financial position of Commercial International Bank (Egypt) as of December 31,
consolidated statements of income, changes in equity and cash flows for the financial year then ended,
2010 and of its financial performance and its cash flows for the year then ended in accordance with central
and a summary of significant accounting policies and other explanatory notes.
bank of Egypt’s rules, pertaining to the preparation and presentation & the financial statements, issued on
December 16, 2008 and the Egyptian laws and regulations relating to the preparation of these financial
Management's Responsibility for the consolidated Financial Statements
statements.
These consolidated financial statements are the responsibility of Bank’s management. Management is
Emphasis of matter
responsible for the preparation and fair presentation of these consolidated financial statements in accord-
ance with central bank of Egypt’s rules, pertaining to the preparation and presentation & the financial state-
Without qualifying our opinion, we draw attention to Note [44] to the consolidated financial statements. The
ments, issued on December 16, 2008 and in light of the prevailing Egyptian laws , management responsi-
bank disclosed that The Arab Republic of Egypt has encountered certain events that have a significant im-
bility includes, designing, implementing and maintaining internal control relevant to the preparation and fair
pact on the economic sectors, in general, a matter which may lead to a substantial decline in the economic
presentation of consolidated financial statements that are free from material misstatement, whether due
activities in the coming periods.
to fraud or error; management responsibility also includes selecting and applying appropriate accounting
policies, and making accounting estimates that are reasonable in the circumstances.
Report on Other Legal and Regulatory Requirements
Auditor's Responsibility
According to the information and explanations given to us – during the financial year ended December 31,
2010 no contravention of the central bank, banking and monetary institution law No. 88 of 2003.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the Egyptian Standards on Auditing and in the light of the
The Bank maintains proper books of account, which include all that is required by law and by the statutes
prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and
of the bank, the consolidated financial statements are in agreement thereto.
perform the audit to obtain reasonable assurance whether the consolidated financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the as-
sessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presenta-
tion of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion on the consolidated financial statements.
The consolidated financial information included in the Board of Directors’ report, prepared in accordance
with Law No. 159 of 1981 and its executive regulations, is in agreement with the Bank’s books of account.
Auditors
Cairo, 23 February 2011
142
CIB • Annual Report 2010
Annual Report 2010 • CIB
143
Financial Statements: Consolidated
B. CIB Consolidated
Commercial International Bank (Egypt) S.A.E Consolidated Balance Sheet In Dec. 31, 2010
Commercial International Bank (Egypt) S.A.E Consolidated Income Statement For The Period Ended
Dec. 31, 2010
Assets:-
» Cash and Due From Central Bank
» Due From Banks
» Treasury Bills and other Governmental Notes
» Trading Financial Assets
» Loans and Overdrafts for Banks (Net After Provision)
» Loans and Overdrafts for Customers (Net After Provision)
» Financial Derivatives
Financial Investments:-
» Available for Sale
» Held to Maturity
» Financial Investments in Associated Co.
» Brokers - Debit Balances
» Reconciliation Accounts- Debit Balances
» Real estate investments
» Debit Balances and Other Assets
» Goodwill
» Intangible Assets
» Deferred Tax
» Fixed Assets (Net)
Total Assets
Liabilities and Shareholders' Equity:-
Liabilities:-
» Due to Banks
» Customers Deposits
» Brokers- Credit Balances
» Financial Derivatives
» Credit Balances and Other Liabilities
» Long Term Loans
» Other Provisions
Total Liabilities
Shareholders' Equity:-
» Issued and Paid in Capital
» Reserves
» Reserve for employee stock ownership plan (ESOP)
» Retained Earning
Total Shareholders' Equity
» Net Profit of the Period / Year
Total Shareholders' Equity and Net Profit
» Minority Interest
Total Minority Interest and Shareholders' Equity
Total Liabilities , Shareholders' Equity and Minority Interest
Contingent Liabilities and Commitments
» letters of Credit, Guarantees and Other Commitments
Note No.
Dec. 31, 2010
EGP
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(22)
(23)
(24)
(25)
(33)
(26)
(27)
(28)
(21)
(30)
(29)
(31)
(32)
(32)
5,675,241,791
7,054,682,826
8,821,003,566
1,585,747,835
128,527,576
35,046,013,357
139,263,948
13,613,839,805
299,250,313
96,827,733
180,368,320
8,185,474
28,695,664
1,384,657,474
160,373,782
376,820,344
117,602,829
708,330,987
75,425,433,625
1,322,279,909
63,364,177,278
393,321,036
113,551,039
1,165,163,338
129,113,426
318,889,536
66,806,495,563
5,901,443,600
719,067,070
149,520,858
(203,604,610)
6,566,426,917
2,005,545,505
8,571,972,422
46,965,639
8,618,938,062
75,425,433,625
Dec. 31, 2009
EGP
(Restated)
4,179,256,489
7,946,147,786
13,198,960,913
491,138,956
200,765,433
27,242,306,896
225,347,220
7,429,977,151
590,057,209
83,827,281
80,154,770
20,302,650
42,485,364
963,058,418
200,467,228
573,471,546
37,232,586
749,602,993
64,254,560,889
458,145,229
54,648,654,522
212,593,347
150,526,830
1,162,019,568
93,237,042
450,056,493
57,175,233,031
2,925,000,000
2,379,311,040
161,728,984
(176,287,838)
5,289,752,186
1,743,968,350
7,033,720,535
45,607,323
7,079,327,858
64,254,560,889
(37)
11,879,698,713
12,637,872,568
The Accompanying Notes are an Integral part of the Financial Statements and are to be Read Therewith (Auditor's Report attached)
Hisham Ezz El-Arab
Chairman & Managing Director
» Interest and similar income
» Interest expense and similar charges
Net Interest Income
» Fees & Commissions Income
» Fees & Commissions Expense
Net Fees and Commissions Income
» Dividends Income
» Net Trading Income
» Profit from Financial Investments
» Goodwill Amortization
» Administrative Expenses
» Other Operating (Expenses) Income
» Return (Losses) Of Impairment From Loans
» Intangible Assets Amortization
» Bank's share in the profits of associates
Net Profit Before Tax
» Income Tax
» Deferred Tax
Net Profit After Tax
» Minority Interest
Bank Shareholders
» Earning Per Share
» Basic
» Diluted
Note No.
Dec. 31, 2010
EGP
Dec. 31, 2009
EGP
(Restated)
(6)
(6)
(7)
(7)
(8)
(9)
(22)
(10)
(11)
(12)
(41)
4,525,477,709
4,032,638,862
(2,267,786,715)
(2,002,606,660)
2,257,690,995
2,030,032,202
939,363,185
(85,056,559)
854,306,626
165,539,152
427,402,497
261,754,102
(40,093,445)
830,270,817
(64,831,578)
765,439,239
133,473,178
419,294,504
65,796,382
-
(1,324,853,724)
(1,170,802,794)
(30,594,217)
(6,163,496)
(196,651,202)
(4,365,556)
(80,311,607)
(9,184,858)
(67,467,240)
9,076,636
2,363,971,731
2,095,345,642
(13)
(435,838,152)
(366,109,247)
(13) & (33)
78,770,242
16,259,820
2,006,903,821
1,745,496,216
1,358,316
1,527,866
2,005,545,505
1,743,968,350
(14)
(14)
2.79
2.74
2.61
2.57
Hisham Ezz El-Arab
Chairman
& Managing Director
144
CIB • Annual Report 2010
Annual Report 2010 • CIB
145
Financial Statements: Consolidated
Commercial International Bank (Egypt) S.A.E Consolidated Cash Flow For The Period Ended Dec. 31, 2010
Commercial International Bank (Egypt) S.A.E Consolidated Cash Flow For The Period Ended Dec. 31, 2010
Dec. 31, 2010
EGP
Dec. 31, 2009
EGP
(Restated)
Net Cash (Used In) Provided From Investing Activities
2,363,971,731
2,095,345,642
Cash Flow From Financing Activities:-
Dec. 31, 2010
EGP
(5,780,554,384)
Dec. 31, 2009
EGP
(4,740,599,833)
35,734,616
(16,347,315)
(661,806,331)
(478,236,553)
25,721,800
-
(600,349,915)
(494,583,868)
(2,172,653,071)
1,452,038,998
10,230,779,568
8,778,740,569
» Increase (Decrease) In Long - Term Loans
» Dividends Paid
» Capital Increase
Net Cash (Used In) Financing Activities
» Net Cash And Cash Equivalent Changes
» Beginning Balance Of Cash And Cash Equivalent
Cash And Cash Equivalent Balance At The End Of The Period
8,058,126,497
10,230,779,567
Cash And Cash Equivalent Are Represented As Follows:-
» Cash And Due From Central Bank
» Due From Banks
» Treasury Bills And Other Governmental Notes
5,675,241,791
4,179,256,489
7,054,682,826
7,946,147,786
8,821,003,566
13,198,960,913
» Due From Banks (Time Deposits) More Than Three Months
(6,400,688,604)
(7,509,460,335)
» Treasury Bills With Maturity More Than Three Months
(7,092,113,082)
(7,584,125,286)
Total Cash And Cash Equivalent
8,058,126,497
10,230,779,567
» Cash Flow From Operating Activities:-
» Net Income Before Tax
Adjustments To Reconcile Net Income To Net Cash Provided By
Operating Activities
» Depreciation
184,081,368
193,535,184
» Provisions (Formed During The Period)
» Trading Financial Investments Evaluation Differences
» Intangible Assets Amortization
» Goodwill Amortization
» Impairment Of Assets
» Utilization Of Provisions (Except Provision For Doubtful Debts)
» Provisions No Longer Used
» Fcy Revaluation Differences Of Provisions Balances (Except Doubtful
Debts)
» Profits From Selling Fixed Assets
» Profits From Selling Financial Investments
» Losses From Selling An Investment In Subsidiary
» Fcy Revaluation Diff.Of Long Term Loans
» Share Based Payments
Operating Profits Before Changes In Operating Assets And Liabili-
ties
Net Decrease (Increase ) In Assets and Liabilities
» Due From Banks
» Treasury Bills And Other Governmental Notes
» Trading Financial Assets
» Financial Derivatives (Net)
» Loans And Overdrafts
» Debit Balances And Other Assets
» Due To Banks
» Customers Deposits
» Credit Balances And Other Liabilities
Net Cash Provided From Operating Activities
Cash Flow From Investing Activities:-
87,221,739
(76,970,503)
(196,651,202)
(40,093,445)
100,496,321
(1,990,637)
(178,520,239)
60,259,903
(11,988,038)
(67,467,240)
-
22,423,516
(6,767,109)
(4,016,965)
7,340,620
(724,579)
(1,574,746)
15,797,710
(209,478,369)
(113,051,948)
96
141,768
-
310,424
66,356,519
75,001,081
2,104,331,021
2,258,657,581
1,108,771,731
(1,780,463,063)
492,012,203
1,410,950,308
(1,017,638,376)
162,476,513
49,107,482
(6,844,342)
(7,776,687,046)
(1,047,276,956)
(171,969,013)
864,134,680
(20,764,886)
229,151,007
8,715,522,756
5,858,624,713
(159,334,210)
(377,288,176)
4,208,251,228
6,687,222,699
» (Payments) Incomings form (Purchase) selling Associated Co.
(13,000,452)
(95,645,157)
» Purchase Of Fixed Assets , Premises And Fitting- Out Of Branches
(106,117,083)
(176,827,213)
» Redemption Of Held To Maturity Financial Investments
» Held To Maturity Financial Investment Purchases
311,478,559
(20,671,662)
100,347,555
(9,141,490)
» Purchase Of Available For Sale Financial Investment
(5,966,033,445)
(4,564,383,469)
» Real estate investments
13,789,700
5,049,941
146
CIB • Annual Report 2010
Annual Report 2010 • CIB
147
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Financial Statements: Consolidated
Commercial International Bank (Egypt) S.A.E.
Notes to the Consolidated Financial Statements
For the Financial Period from January 1, 2010 to December 31, 2010
• 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.
1. General information
• Minority shareholders represent the rights of others in subsidiary companies.
Commercial International Bank (Egypt) provide retail, corporate banking and investment banking services in various parts of Egypt
• Proportional Consolidation is used in consolidating method companies under joint control
through one hundred & eight branches, in addition to forty five units and employs over 4327 employees in the balance sheet date.
Commercial International Bank (Egypt) S.A.E was formed as a commercial Bank under the Investment Law No. 43 for 1974 . The
• The following is a summary of significant changes in accounting policies and financial statements due to the application of
address of its registered office is as follows: Nile Tower 21/23 Sharel Degol St, Giza.
these accounting adjustments:
The Bank listing in Egyptian Stock Exchange.
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
ment and capital adequacy and some other explanatory notes.
• Changed the disclosure requirements of the objectives and policies and methods of risk management, financial manage-
and its executive regulations. Financial register no. 166798 on April 10th, 2005 and the company have been licensed by the capital
market authority to carry out its activities under license no. 353 on May 24th, 2006.
As of December 31, 2010 the bank directly owns 54,988,000 shares representing 99.98% of CI Capital Holding Company’s capital
and on December 31, 2010 CI Capital Holding Co. directly owns the following shares in its subsidiaries:
Company Name
• CIBC Co.
• CI Assets Management
• CI Investment Banking Co.
• CI For Research Co.
• Dynamic Brokerage Co
• United Brokerage Co. – Dubai
No. of Shares
Ownership%
Indirectly Share%
579,570
478,577
81,578
448,500
3,393,500
5,000,000
96.60
95.72
96.30
96.32
99.97
49.00
96.58
95.70
96.28
96.30
99.95
48.99
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of financial statements preparation
• The bank set the relevant parties in accordance with the requirements of the amended and added some new clarifications
on these parties
• Collecting all facilities controlled by the bank directly or indirectly, irrespective of the activity of these installations. Previ-
ously, there were no collection for facilities that do not work in banking or finance. The users of these independent financial
statements, reading consolidated financial statements of the Bank, as and for the period ended December 31, 2010, so
for getting complete information on the Bank's financial position and results of its work and its cash flows and changes in
owner equity.
• The Bank's in consolidated financial statements use the equity method in associates companies instead of the cost method.
And For the purpose of applying the equity method The bank compares the cost of acquisition with the fair value of net
assets of the investee company at the date of acquisition and to determine the difference as goodwill.
And In those cases where the fair value of net assets of the investee company is not available at the date of acquisition
The book values of net assets regarded as equal to the fair value and identify Goodwill on this basis. And after that
changes in equity of the associate company subsequent to the date of acquisition was taken to adjust the book value in the
financial statement As a result of an amendment to retained earnings in first of January 2009 by the amount of (18,601,847)
Egyptian Pound represent The net losses resulting from applying the equity method until this date
And The Bank continued to use the cost method of accounting for associates in these unconsolidated financial statements
• The consolidated financial statements have been prepared in accordance with Egyptian Financial Reporting Standards issued
• Studying all the differences that result in tax obligations for tax deferred and recognized retroactively, and for deferred tax
in 2006 and its amendments and in accordance with the instructions of the Central Bank of Egypt approved by the Board of
assets and retained tax losses, it has been recognized only within the limits of future economic benefits expected of them.
Directors as of December 16, 2008 consistent with the principles referred to.
Shows the note (38) the impact of the recognition of differences in the tax numbers comparison.
The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation
of trading, financial assets and financial liabilities held at fair value through profit or loss, available for sale and all derivatives
contracts.
Basis of consolidation
Given the bank's acquisition of the proportion of 98.99% (full control) in CI Capital Holding, the style of the kidneys is the
basis of the assembly taken in the preparation of consolidated financial statements of the Bank
Consolidated Financial Statements are Consisting of the Financial Statements of Commercial International Bank and Con-
solidated 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.
• Note number (35) shows the impact of that change on the item of owner equity and available for sale, investments which
were previously measured at cost adjusted rate differentials in exchange rates or fair value whichever is less with the in-
curred of the decline in value of the income statement.
• As a Result of the application instructions and the new criteria to recognize all derivatives in the first of January 2009 in the
financial statements, as separate derivatives implicit in the history of recognition in the financial statements was the meas-
urement of all derivatives at fair value.
• The method of measuring loans and facilities impairment and other debt instruments, which are measured at amortized
150
CIB • Annual Report 2010
Annual Report 2010 • CIB
151
Financial Statements: Consolidated
cost has changed, Resulted in cancellation of the General Provisions component of loans and facilities and instead total
• Accounting for subsidiaries and associates in the financial statements are recorded by cost method , according to this
provision was provided for groups of assets that carry a credit risk and similar characteristics or individual provision. As a
method, investments are a cost of acquisition including any good will and deduct any impairment losses in value, and re-
result of changing the way of provision provided increase the specified provision, which were configured for specific items
corded the dividends in the income statement in the adoption of the distribution of these profits and evidence of the bank
by amount of EGP 20,536,766. The total increase in the outstanding provision in the 1st of Jan 2009 had retained to special
right to collect it.
reserve in owner's equity according to the new way.
• When the actual rate of return determined for applying the amortized cost method to calculate the income and the cost of
the return on debt instruments, in commissions and fees associated with the acquisition or issuance of debt instruments
and added to or deducted from the value of the acquisition / release as part of the cost of treatment, which lead to change
the actual rate of return of those tools. It was not practicable to apply the impact of this accounting change retroactively,
but that change has been applied to debt instruments acquired or issued on or after the first January 2010.
• The Bank has applied the new accounting requirements for payment shown on the shares of such regulations in force on
or after the first of January 2010. As a result, the income statement for the fiscal year ended December 31, 2010 added by
amount of EGP 66,356,519 is the cost of stock options granted to employees.
• Purchase accounting was applied to all acquisitions made on or after the first of January 2010 in accordance with the new
requirements of accounting, and there was no effect on the bank unconsolidated or consolidated financial statements of
the bank.
• The Bank has conducted Assets Acquired as Settlement of Debts of the purpose of ascertaining the applicability of rules
classified as non-current assets held for sale under other assets, did not result in a difference in the classification or value
measured those assets.
2.2 Subsidiaries and Associates
(a) Subsidiaries
• Subsidiaries are all entities (including special purpose entities) over which the Bank has owned directly or indirectly the
power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the
voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered
when assessing whether the Bank has the ability to control the entity.
(b) Associates
2.3 Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and
returns that are different from those of other business segments. A geographical segment is engaged in providing products or
services within a particular economic environment that are subject to risks and returns different from those of segments operating
in other economic environments.
2.4 Foreign currency translation
(a) Functional and presentation currency
The financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.
(b) Transactions and balances in foreign currencies
The bank hold accounts in Egyptian pounds and prove transactions in other currencies during the financial year on the
basis of prevailing exchange rates at the date of the transaction, and re-evaluation of balances of assets and liabilities of
other monetary currencies at the end of the financial period on the basis of prevailing exchange rates at that date, and is
recognized in the list Gains and losses resulting from the settlement of such transactions and the differences resulting from
the assessment within the following items
• Net trading income or net income from financial instruments classified at fair value through profit and loss of assets / liabili-
ties held for trading or those classified at fair value through profit and loss according to type .
• Income (expense) Other operating for the rest of the items
• the analysis of changes in fair value of financial instruments with monetary foreign currency seed available for sale invest-
ments (debt instruments) between the valuation differences resulting from changes in amortized cost of the tool and the
differences resulted from changing the prevailing exchange rates and the differences resulted from changing the fair value
of the tool, and is recognized in the income differentials in the evaluation of changes in the cost of expendable income
loans and similar income and differences related to changing the exchange rate in income (expense) Other operating, and
are recognized in equity differential change in fair value (fair value reserve / financial investments available for sale). Include
differences arising on the items non-monetary gains and losses resulting from the change in fair value, such as equity in-
• Associates are all entities over which the Bank has significant influence but not control, generally accompanying a share-
struments held at fair value through profit and loss are recognized differences assessment resulting from equity instruments
holding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method
classified as financial investments available for sale within the fair value reserve in equity
of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill (net of any ac-
cumulated impairment loss) identified on acquisition.
• The purchase method of accounting is used to account for the acquisition of subsidiaries by the Bank. The cost of an
acquisition is measured as the fair value of the assets given or/and, equity instruments issued or/and liabilities incurred or/
and assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the ac-
quisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of
the Bank’s share of the identifiable net assets acquired is recorded as goodwill If the cost of acquisition is less than the fair
value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement under the
item income (expense) Other operating.
2.5 Financial assets
The Bank classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and
receivables; held-to-maturity investments; and available-for-sale financial assets. Management determines the classification of
its investments at initial recognition.
(a) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or
loss at inception.
A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchas-
ing in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which
there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held for trading
unless they are designated as hedging instruments.
152
CIB • Annual Report 2010
Annual Report 2010 • CIB
153
Financial Statements: Consolidated
Financial assets are designated at fair value through profit or loss when:
• doing so significantly reduces measurement inconsistencies that would arise if the related derivatives were treated as held
for trading and the underlying financial instruments were carried at amortised cost for loans and advances to customers
or banks and debt securities in issue’
• Certain investments, such as equity investments, are managed and evaluated on a fair value basis in accordance with a
documented risk management or investment strategy and reported to key management personnel on that basis are desig-
nated at fair value through profit and loss.
• Financial instruments, such as debt securities held, containing one or more embedded derivatives significantly modify the
cash flows, are designated at fair value through profit and loss.
Any financial derivative Of a valued financial instruments at fair value Not be reclassified Through profit and loss during the
retention period or force It also does not re-classification any financial instrument, quoting from a range of financial instru-
ments at fair value Through profit and loss if this tool has been customized by the bank at initial recognition As assessed
at fair value through profit and loss.
according to the financial assets for trading which are reclassified in the periods that begin form or after first of Jan 2009 it
is reclassified according to the fair value in the date of reclassification .
bank in all conditions doesn't reclassify any financial instrument moving to programs of financial instruments reclassified
with fair value from profit and loss or to financial assets program for trading .
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an ac-
tive market, other than: (a) those that the bank intends to sell immediately or in the short term, which are classified as held
for trading, or those that the bank upon initial recognition designates as at fair value through profit or loss; (b) those that the
bank upon initial recognition designates as available for sale; or (c) those for which the holder may not recover substantially
all of its initial investment, other than because of credit deterioration.
(c) Held-to-maturity financial assets
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities
that the Bank's management has the positive intention and ability to hold to maturity. If the Bank were to sell other than an
insignificant amount of held-to-maturity assets, the entire category would be reclassified as available for sale.
(d) Available-for-sale financial assets
Available-for-sale investments are those intended to be held for an indefinite period of time, which may be sold in response
to needs for liquidity or changes in interest rates, exchange rates or equity prices.
Regular-way purchases and sales of financial assets at fair value through profit or loss, held to maturity and available for
sale are recognised on trade-date – the date on which the Bank commits to purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit and loss are initially recognised at fair value, and
transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or where the Bank has transferred substantially all risks and rewards of
ownership. Financial liabilities are derecognised when they are extinguished − that is, when the obligation is discharged,
cancelled or expires.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair
value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest
method. Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’
category are included in the income statement in the period in which they arise. Gains and losses arising from changes in
the fair value of available-for-sale financial assets are recognised directly in equity, until the financial asset is derecognised
or impaired.
At this time, the cumulative gain or loss previously recognised in equity is recognised in profit or loss. However, interest
calculated using the effective interest method and foreign currency gains and losses on monetary assets classified as avail-
able for sale are recognised in the income statement. Dividends on available-for-sale equity instruments are recognised in
the income statement when the bank’s right to receive payment is established.
The fair values of quoted investments in active markets are based on current bid prices. If there is no active market for a
financial asset, or no current demand prices available the Bank establishes fair value using valuation techniques. These
include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valu-
ation techniques commonly used by market participants If the bank had been unable to estimate the fair value of equity
instruments classified available for sale, value is measured at cost less any impairment in value.
The Bank re-tab the financial asset tabbed within the range of financial instruments available for sale, which left the defini-
tion of loans and debts (bonds or loans), quoting a set of tools available for sale to the group of loans and receivables or
financial assets held to maturity - all as the case - when available Bank has the intent and ability to hold these financial as-
sets in the foreseeable future or until maturity and are re-tab at fair value in the history of re-tab, and not process any profits
or losses on those assets that have been recognized previously in
equity and in the following manner:
1 - In case of financial asset re-tab, which has a fixed maturity are amortized gains or losses over the remaining life of the
investment retained until the maturity date in a manner effective yield is consumed any difference between the value on the
basis of amortized cost and value on an accrual basis over the remaining life of the financial asset using the effective yield
method, and in the case of the decay of the value of the financial asset is later recognition of any gain or loss previously
recognized directly in equity in the profits and losses.
2 - in the case of financial asset which has no fixed maturity continue to profit or loss in equity until the sale of the asset
or to dispose of it, then be recognized in the profit and loss In the case of erosion of the value of the financial asset is later
recognition of any gain or loss previously recognized directly within equity in the profits and losses.
If the Bank to adjust its estimates of payments or receipts are the settlement of the carrying amount of the financial asset
(or group of financial assets) to reflect the actual cash inflows and the adjusted estimates to be recalculated book value
and then calculates the present value of estimated future cash flows at the effective yield of the financial instrument and is
recognized settlement recognized as income or expense in the profit and loss.
In all cases, if the bank re-Tab financial asset in accordance with what is referred to The Bank at a later date to increase its
estimate of the proceeds of future cash result of the increase will be recovered from the cash receipts, is the recognition
of the impact of this increase in settlement of the interest rate effective from the date of change in the estimate and not in
settlement of the balance of the original notebook in the history of change in the estimate.
2.6 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability
simultaneously.
And the clauses of agreements to buy treasury bills with a commitment to re-sale agreements and sale of treasury bills with a
commitment to re-purchase on a net basis within the balance sheet item, treasury bills and other government papers.
154
CIB • Annual Report 2010
Annual Report 2010 • CIB
155
Financial Statements: Consolidated
2.7 Derivative financial instruments and hedge accounting
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
re-measured at their fair value. Fair values are obtained from quoted market prices in active markets, including recent market
transactions, and valuation techniques, including discounted cash flow models and options pricing models, as appropriate. All
derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.
Interest income and expense
2.8
Interest income and expense for all interest-bearing financial instruments, except for those classified as held for trading or desig-
nated at fair value through profit or loss, are recognised within ‘interest income’ and ‘interest expense’ in the income statement
using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocat-
ing the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter
period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Bank
estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not
consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are
an integral part of the effective interest rate, transaction costs and all other premiums or discounts.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest
income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impair-
ment loss.
when it is collected and this is after redeeming all dues of consumer loans and personnel mortgages also small loans for eco-
nomic activities. as for loans given to institutions it is related to the monetary base also , it raises the return after that , according
to rescheduling conditions on the loan till paying 25% from rescheduling payments with a minimum one year without being late
, if the customer is always paying at his due dates the interest calculated is added to the loan balance which makes revenues
( interest on rescheduling without deficits ) without interests aside before rescheduling which is avoiding revenues except after
paying all the loan balance in the balance sheet before rescheduling
2.9 Fee and commission income
Fees and commissions are generally recognised on an accrual basis when the service has been provided. Loan commitment fees
for loans that are likely to be drawn down are deferred (together with related direct costs) Where it is recorded in the records of
marginal outside the financial statements, And are recognized as income in accordance with cash basis Income is recognized
when revenue and according to item (2 / i) for fees that represent an integral part of the effective yield of the financial asset are
generally treated as an amendment to the actual rate of return.
And postponement of fees is the link on the loans if there is a possibility that he will likely be the withdrawal of such loans and the
fees on the grounds that the link obtained by the Bank are considered compensation for the constant intervention for the acquisi-
tion of a financial instrument, Then be recognized by the amend the effective interest rate on the loan In the case of the end of the
link without issuing bank for the loan fees are recognized as income at the end of the period of validity of the link.
Fees are recognized on the debt instruments that are measured at fair value within the income on initial recognition&
Loan syndication fees are recognised as revenue when the syndication has been completed and the Bank has retained no part
of the loan package for itself or has retained a part at the same effective interest rate as the other participants.
Commission and fees arising from negotiating, or participating in the negotiation of, a transaction for a third party – such as the
arrangement of the acquisition of shares or other securities or the purchase or sale of businesses – are recognised on completion
of the underlying transaction.
Portfolio and other management advisory and service fees are recognised based on the applicable service contracts, usually on
a time-apportion ate basis. Asset management fees related to investment funds are recognised rateably over the period in which
the service is provided.
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.
- Management fees as follows:
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.
2.10 Dividend income
Dividends are recognised in the income statement when the bank’s right to receive payment is established.
2.11 Sale and repurchase agreements
Securities sold subject to repurchase agreements (‘repos’) are reclassified in the financial statements deducted from treasury bills
balance. Securities purchased subject to resell agreements (‘reveres repos’) are reclassified in the financial statements added
to treasury bills balance. The difference between sale and repurchase price is treated as interest and accrued over the life of the
agreements using the effective interest method.
2.12 Impairment of financial assets
(a) Assets carried at amortised cost
The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or group of finan-
cial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if
there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the
asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset
or group of financial assets that can be reliably estimated.
The criteria that the Bank uses to determine that there is objective evidence of an impairment loss include:
• Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of sales);
• Breach of loan covenants or conditions;
• Initiation of bankruptcy proceedings;
• Deterioration of the borrower’s competitive position;
• The Bank for reasons of economic or legal financial difficulties of the borrower by granting concessions may not agree with
the Bank granted in normal circumstances;
• Deterioration in the value of collateral; and
• Downgrading below investment grade level.
The objective evidence of impairment loss for group of financial assets is the clear data indicate to a decline can be meas-
ured in future cash flows expected from this group since its initial recognition, although not possible to determine the de-
crease of each asset separately, for example increasing the number of failures in payment for One of the banking products.
The estimated period between a loss occurring and its identification is determined by local management for each identified
portfolio. In general, the periods used vary between three months and 12 months.
The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually
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significant, and individually or collectively for financial assets that are not individually significant and in this field the fol-
lowing are considered. If the Bank determines that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk charac-
teristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which
an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of es-
timated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and
the amount of the loss is recognised in the income statement. If a loan or held-to-maturity investment has a variable inter-
est rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the
contract. As a practical expedient, the Bank may measure impairment on the basis of an instrument’s fair value using an
observable market price.
The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows
that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.
preciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to other operating expenses during the financial period in which they are
incurred.
Land is not depreciated. Depreciation of other assets is calculated using the straight-line method to allocate their cost to their
residual values over their estimated useful lives, as follows:
– Buildings
– Leasehold improvements
- Furniture and safes
– Typewriters, Collocutors &air-conditions
- Transportations
- Computers and Core Systems
- Fixtures and fittings
20 years,
3 years, or over the period of the lease if less
5 years
8 years
5 years.
3/10 years
3 years
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk
characteristics (ie, on the basis of the Group’s grading process that considers asset type, industry, geographical location,
collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future
cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the
contractual terms of the assets being evaluated.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Assets that
are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount. The recoverable amount is the higher of the asset’s fair value
less costs to sell and value in use.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of
the contractual cash flows of the assets in the Bank and historical loss experience for assets with credit risk characteristics
similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the ef-
fects of current conditions that did not affect the period on which the historical loss experience is based and to remove the
effects of conditions in the historical period that do not currently exist.
Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with changes
in related observable data from period to period (for example, changes in unemployment rates, property prices, payment
status, or other factors indicative of changes in the probability of losses in the Bank and their magnitude). The methodology
and assumptions used for estimating future cash flows are reviewed regularly by the Bank.
(b) Assets classified as available for sale
The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of
financial assets is impaired. In the case of equity investments 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 the assets are impaired. Impair-
ment losses recognised in the income statement on equity instruments are not reversed through the income statement. If,
in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be
objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is
reversed through the income statement.
2.13 Real Estate Investments
The real estate investments represent lands and buildings owned by the Bank In order to obtain rental returns or capital gains
and therefore does not include real estate assets which the bank exercised its work through or those that have owned by the
bank as settlement of debts.
2.14 Fixed Assets
Land and buildings comprise mainly branches and offices. All property, plant and equipment is stated at historical cost less de-
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in other operat-
ing expenses in the income statement.
2.15 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation -except goodwill- and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
15/1 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 ex-
pected 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.
15/2 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
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2.16 Leases
The accounting treatment for the finance lease in accordance with law 95 of 1995, if the contract entitles the lessee to purchase
the asset at a specified date and the value selected, or the current value of the total lease payments representing at least 90% of
the value of the asset. The other leases contracts are considered operating leases contracts.
Being lessee
Finance lease contract recognizes the lease cost, including the cost of maintenance of the leased assets, within the ex-
penses in the income statement for the period in which they occurred. If the bank decided to exercise the rights to purchase
the leased assets, the cost of the right to purchase it as an asset are capitalized and amortized over the useful life of the
expected remaining life of the asset in the same manner as similar assets.
And recognition of payments under the operating lease expense minus any discounts obtained from the lesser under ex-
penses in the income statement on a straight-line basis over the term of the contract
Being lesser
For assets leased financially, assets are recorded in the fixed assets in the Balance sheet and amortized over the expected
useful life of this asset in the same manner as similar assets. Lease income is recognized on the basis of rate of return on
the lease in addition to an amount corresponding to the cost of depreciation for the period. The difference between the rec-
ognized rental income and the total finance lease clients' accounts is transferred to the balance sheet in the income state-
ment until the expiration of the lease where it is used to off set with a net book value of the leased asset. Maintenance and
insurance expenses are loaded on the income statement when incurred to the extent they are not charged to the tenant.
In case there is objective evidence that the Bank will not be able to collect all assets of financial lease debtors, it will be
reduced to the recoverable amount.
For assets leased under operating lease of fixed assets, it appears in the balance sheet and amortized over the expected
useful life of the asset in the same way as similar assets, and the lease income recorded less any discounts given to the
lessee on a straight-line method over the contract period.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, ex-
cluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance
sheet date, the entity revises its estimates of the number of options that are expected to become exercisable. It recognises the
impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity over the
remaining vesting period.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share
premium when the options are exercised.
2.20 Income Tax
Income tax on the profit or loss for the year includes each of year tax and deferred tax and is recognized in the income statement
except for income tax relating to items of equity that are recognized directly in equity.
Income tax is recognized based on net taxable profit using the tax rates applicable at the date of the balance sheet in addition
to tax adjustments for previous years.
Deferred taxes arising from temporary time differences between the book value of assets and liabilities are recognized in accord-
ance with the principles of accounting and value according to the foundations of the tax, this is determining the value of deferred
tax on the expected manner to realize or settle the values of assets and liabilities, using tax rates applicable at the date of the
balance sheet.
Deferred tax assets of the Bank recognized when there is likely to be possible to achieve profits subject to tax in the future to be
possible through to use that asset, and is reducing the value of deferred tax assets with part of that will come from tax benefit
expected during the following years, that in the case of expected high benefit tax, deferred tax assets will increase within the
limits of the above reduced.
2.17 Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months’ maturity
from the date of acquisition, including cash and non-restricted balances with central banks, treasury bills and other eligible bills,
loans and advances to banks, amounts due from other banks and short-term government securities.
2.21 Borrowings
Borrowings are recognised initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amor-
tised cost; any difference between proceeds net of transaction costs and the redemption value is recognised in the income state-
ment over the period of the borrowings using the effective interest method.
2.18 Other Provisions
Provisions for restructuring costs and legal claims are recognised when: the Bank has a present legal or constructive obligation
as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the
amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions which negated the purpose of wholly or partly repaid within the item other operating income (expense).
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in
the provision due to passage of time is recognised as interest expense.
2.19 Share-Based Compensation
The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in ex-
change for the grant of the options is recognised as an expense.
2.22 Dividends
Dividends deducted form equity in the period, which the General Assembly of the shareholders acknowledges these distribu-
tions. These distributions include the share of workers in the profits and remuneration of the Board of Directors.
2.23 Comparatives
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
3. Financial risk management
The Bank’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, acceptance and
management of some degree of risk or combination of risks. Taking risk is core to the financial business, and the operational risks
are an inevitable consequence of being in business. The Bank’s aim is therefore to achieve an appropriate balance between risk and
return and minimise potential adverse effects on the Bank’s financial performance.
The Bank’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and
to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Bank regularly reviews its
risk management policies and systems to reflect changes in markets, products and emerging best practice.
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Risk management is carried out by a risk department under policies approved by the Board of Directors. Bank Treasury identifies,
3.1.2 Risk limit control and mitigation policies
evaluates and hedges financial risks in close co-operation with the Bank’s operating units.
The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign
exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments. In addi-
tion, credit risk management is responsible for the independent review of risk management and the control environment.
3.1 Credit risk
The Bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the Bank by failing to
discharge an obligation. Management therefore carefully manages its exposure to credit risk. Credit exposures arise principally in
loans and advances, debt securities and other bills. There is also credit risk in off-balance sheet financial arrangements such as
loan commitments. The credit risk management and control are centralised in a credit risk management team in Bank Treasury
and reported to the Board of Directors and head of each business unit regularly.
3.1.1 Credit risk measurement
(a) Loans and advances
In measuring credit risk of loan and advances to customers and to banks at a counterparty level, the Bank reflects three
components (i) the ‘probability of default’ by the client or counterparty on its contractual obligations; (ii) current exposures
to the counterparty and its likely future development, from which the Bank derive the ‘exposure at default’; and (iii) the likely
recovery ratio on the defaulted obligations (the ‘loss given default’).
These credit risk measurements, which reflect expected loss (the ‘expected loss model’) and are required by the Basel
Committee on Banking Regulations and the Supervisory Practices (the Basel Committee), are embedded in the Bank’s daily
operational management. The operational measurements can be contrasted with impairment allowances required under
IAS 26, which are based on losses that have been incurred at the balance sheet date (the ‘incurred loss model’) rather than
expected losses (Note 3/A).
(i) The Bank assesses the probability of default of individual counterparties using internal rating tools tailored to the various
categories of counterparty. They have been developed internally and combine statistical analysis with credit officer judg-
ment and are validated, where appropriate. Clients of the Bank are segmented into four rating classes. The Bank’s rating
scale, which is shown below, reflects the range of default probabilities defined for each rating class. This means that, in
principle, exposures migrate between classes as the assessment of their probability of default changes. The rating tools are
kept under review and upgraded as necessary. The Bank regularly validates the performance of the rating and their predic-
tive power with regard to default events.
Bank’s internal ratings scale
Bank’s rating
1
2
3
4
Description of the grade
Performing loans
Regular watching
Watch list
Non performing loans
The bank manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to indi-
vidual counterparties and banks, and to industries and countries.
The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation
to one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a
revolving basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of
credit risk by product, industry sector and by country are approved quarterly by the Board of Directors.
The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on- and
off-balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange
contracts. Actual exposures against limits are monitored daily.
Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to
meet interest and capital repayment obligations and by changing these lending limits where appropriate.
Some other specific control and mitigation measures are outlined below.
(a) Collateral
The bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of
security for funds advances, which is common practice. The bank implements guidelines on the acceptability of spe-
cific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are:
• Mortgages over residential properties;
• Mortgage business assets such as premises, and inventory .
• Mortgage financial instruments such as debt securities and equities.
Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are
generally unsecured. In addition, in order to minimise the credit loss the bank will seek additional collateral from the
counterparty as soon as impairment indicators are noticed for the relevant individual loans and advances.
Collateral held as security for financial assets other than loans and advances is determined by the nature of the instru-
ment. Debt securities, treasury and other governmental securities are generally unsecured, with the exception of asset-
backed securities and similar instruments, which are secured by portfolios of financial instruments.
(b) Derivatives
The bank maintains strict control limits on net open derivative positions (i.e., the difference between purchase and sale
contracts), by both amount and term. At any one time, the amount subject to credit risk is limited to the current fair value
of instruments that are favourable to the bank (i.e., assets where their fair value is positive), which in relation to deriva-
tives is only a small fraction of the contract, or notional values used to express the volume of instruments outstanding.
This credit risk exposure is managed as part of the overall lending limits with customers, together with potential expo-
sures from market movements. Collateral or other security is not usually obtained for credit risk exposures on these
instruments, except where the bank requires margin deposits from counterparties.
(iii) Loss given default or loss severity represents the Bank expectation of the extent of loss on a claim should default occur.
It is expressed as percentage loss per unit of exposure and typically varies by type of counterparty, type and seniority of
claim and availability of collateral or other credit mitigation.
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a
corresponding receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to
cover the aggregate of all settlement risk arising from the Bank market transactions on any single day.
(b) Debt securities and other bills
For debt securities and other bills, external rating such as Standard & Poor’s rating or their equivalents are used by bank
Treasury for managing of the credit risk exposures. The investments in those securities and bills are viewed as a way to gain
a better credit quality mapping and maintain a readily available source to meet the funding requirement at the same time.
(c) Master netting arrangements
The bank further restricts its exposure to credit losses by entering into master netting arrangements with counterparties
with which it undertakes a significant volume of transactions. Master netting arrangements do not generally result in an
offset of balance sheet assets and liabilities, as transactions are usually settled on a gross basis. However, the credit
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risk associated with favourable contracts is reduced by a master netting arrangement to the extent that if a default oc-
curs, all amounts with the counterparty are terminated and settled on a net basis. The Bank overall exposure to credit
risk on derivative instruments subject to master netting arrangements can change substantially within a short period,
as it is affected by each transaction subject to the arrangement.
(d) Credit-related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees
and standby letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit – which
are written undertakings by the Bank on behalf of a customer authorising a third party to draw drafts on the Bank up to
a stipulated amount under specific terms and conditions – are collateralised by the underlying shipments of goods to
which they relate and therefore carry less risk than a direct loan.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans, guar-
antees or letters of credit. With respect to credit risk on commitments to extend credit, the Bank is potentially exposed
to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total
unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific
credit standards. The Bank monitors the term to maturity of credit commitments because longer-term commitments
generally have a greater degree of credit risk than shorter-term commitments.
3.1.3 Impairment and provisioning policies
The internal rating systems described in Note 3.1.1 focus more on credit-quality mapping from the inception of the
lending and investment activities.
In contrast, impairment provisions are recognized for financial reporting purposes only for losses that have been
incurred at the balance sheet date based on objective evidence of impairment Due to the different methodologies ap-
plied, the amount of incurred credit losses provided for in the financial statements are usually lower than the amount
determined from the expected loss model that is used for internal operational management and CBE regulation pur-
poses.
The impairment provision shown in the balance sheet at the year-end is derived from each of the four internal rating
grades. However, the majority of the impairment provision comes from the bottom two grads. The table below shows
the percentage of the Bank’s in balance sheet items relating to loans and advances and the associated impairment
provision for each of the Bank’s internal rating categories:
Bank’s rating
Bank’s rating
Dec.31, 2010
Dec.31, 2009
1-Performing loans
2-Regular watching
3-Watch list
4-Non performing loans
Loans and
advances (%)
90.91
Impairment
provision (%)
54.65
Loans and
advances (%)
90.97
Impairment
provision (%)
42.93
5.37
0.99
2.73
100.00
5.24
2.56
37.55
100.00
4.73
1.33
2.97
100.00
4.71
2.47
49.89
100.00
The internal rating tools assists management to determine whether objective evidence of impairment exists under EAS
26, based on the following criteria set out by the Bank:
• Cash flow difficulties experienced by the borrower
• Breach of loan covenants or conditions
• Initiation of bankruptcy proceedings
• Deterioration of the borrower’s competitive position
• Bank granted concessions may not be approved under normal circumstances, for economic, legal reasons, or financial
difficulties facing the borrower
• Deterioration in the value of collateral
• Deterioration in the credit situation
The Bank’s policy requires the review of all financial assets that are above materiality thresholds at least annually or
more regularly when individual circumstances require. Impairment allowances on individually assessed accounts are
determined by an evaluation of the incurred loss at balance-sheet date on a case-by-case basis, and are applied to all
individually significant accounts. The assessment normally encompasses collateral held (including re-confirmation of
its enforceability) and the anticipated receipts for that individual account.
Collectively assessed impairment allowances are provided portfolios of homogenous assets by using the available
historical experience, experienced judgment and statistical techniques.
3.1.4 Pattern of measuring the general banking risk
In addition to the four categories of measuring credit worthiness discussed in disclosure 3.1.1.a the management
makes small groups more detailed according to the CBE rules. Assets facing credit risk are classified to detailed con-
ditions relying greatly on customer’s information , activities , financial position and his regular payments to his debts .
The bank calculates the provisions needed for assets impairment in addition to credit regulations according to special
percentages determined by CBE.
In the case of increase of impairment loss provision needed according to CBE than that for purposes of making the
financial statements according to the EAS , the general banking risk reserve is included in owners equity deducted from
the retained earning with this increase , this reserve is modified with periodic basis with the increase and decrease ,
which equals the increase in provisions and this reserve is not distributed.
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And this are categories of institutional worthiness according to internal ratings compared with CBE ratings and rates of
provisions needed for assets impairment related to credit risk :
CBE RATING
Categorization
PROVISION%
1
2
3
4
5
6
7
8
9
10
Low Risk
Average Risk
Satisfactory Risk
Reasonable Risk
Acceptable Risk
Marginally Acceptable risk
Watch list
Substandard
Doubtful
Bad Debt
0%
1%
1%
2%
2%
3%
5%
20%
50%
100%
INTERNAL
RATING
1
1
1
1
1
2
3
4
4
4
Categorization
Performing loans
Performing loans
Performing loans
Performing loans
Performing loans
Regular watching
Watch list
Non performing loans
Non performing loans
Non performing loans
The above table represents the Maximum bank exposure to credit risk at 31 December 2010, without taking account
of any collateral held. For in balance sheet items, the exposures set out above are based on net carrying amounts as
reported in the balance sheet.
As shown above, 60.35% of the total maximum exposure is derived from loans and advances to banks and customers;
23.31% represents investments in debt Instruments.
Management is confident in its ability to continue to control and sustain minimal exposure of credit risk to the bank
resulting from both its loan and advances portfolio and debt Instruments based on the following:
• 96.28% of the loans and advances portfolio is categorized in the top two grades of the internal rating system.
• 97.26% of the loans and advances portfolio are considered to be neither past due nor impaired.
• loans and advances assessed on an individual basis valued EGP 1,002,967,623
• The bank has implemented more prudent processes when granting loans and advances during the financial year ended
3.1.5 Maximum exposure to credit risk before collateral held
in Dec.31.2010.
Dec.31, 2010
Dec.31, 2009
• 83.62% of the investments in debt Instruments are represented in governmental instruments.
In Balance sheet items exposed to credit risk
» Treasury Bills and other Governmental Notes
9,616,491,239
13,645,711,592
» Trading Financial Assets
» Debt Instruments
» Loans and Overdrafts for Banks
» Loans and advances to customers:
Retail:
» Overdrafts
» Credit Cards
» Personal Loans
» Real state Loans
» Other Loans
Corporate:
» Overdrafts
» Direct Loans
» Syndicated loans
» Other Loans
» Financial Derivatives
» Financial Investments (Debt Instruments)
» Financial Investments in Associated Co.
Total
Off Balance sheet items exposed to credit risk
» Financial guarantees
» Customers Acceptances
» Letter of Credit
» Letter of guarantee
Total
166
CIB • Annual Report 2010
1,043,933,881
128,527,576
221,852,634
200,765,433
1,007,205,364
518,583,403
852,902,695
451,907,954
1,914,229,597
1,005,586,641
430,897,165
43,390,803
292,518,318
67,037,522
3,019,878,138
3,434,116,195
21,750,548,380
15,918,861,867
7,751,645,734
6,663,779,140
151,746,100
139,263,948
93,713,728
225,347,220
13,365,885,003
7,303,718,748
96,827,733
83,827,281
60,979,054,064
50,461,646,968
631,466,319
589,087,209
989,910,137
931,471,000
469,403,911
820,272,115
10,300,701,367
11,348,196,542
12,511,165,032
13,569,343,568
3.1.6 Loans and advances
Loans and advances are summarized as follows:
Dec.31, 2010
Dec.31, 2009
Loans and
advances to
customers
EGP
35,222,569,885
Loans and
advances to
banks
EGP
128,527,576
Neither past due nor impaired
Past due but not impaired
362,587,175
Individually impaired
1,002,967,623
-
-
Loans and
advances to
customers
EGP
27,533,698,826
384,723,397
862,001,836
Loans and
advances to
banks
EGP
200,765,433
-
-
Gross
36,588,124,684
128,527,576
28,780,424,059
200,765,433
Less: impairment provision
1,257,882,426
-
1,304,194,445
-
Net
35,330,242,258
128,527,576
27,476,229,614
200,765,433
• Impairment losses for loans and advances has reached EGP 1,257,882,426 and for more details about impairment
provisions and loans for customers and banks see note 19 and 20
• During the year ended 31 December 2010, the bank’s total loans and advances increased by 22.26% as a result of the
expansion of the lending business in Egypt. When entering into new markets or new industries, to decrease the credit
risk exposure, the bank focused more on the business with large corporate enterprises or banks with good credit rating
or retail customers providing sufficient collateral.
Annual Report 2010 • CIB
167
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4
0
6
2
4
0
5
3
1
,
,
5
1
2
9
8
7
3
,
,
7
0
7
9
6
6
1
1
,
,
0
0
7
8
2
4
1
,
,
5
1
6
0
1
3
1
,
- Individually impaired loans.
Loans and advances assessed on an individual basis before cash flows from guarantees are totaled EGP 1,002,967,623
The breakdown of the gross amount of individually impaired loans and advances by class, along with the fair value of related
collateral held by the Bank as security, are as follows:
Retail
Over-
drafts
Credit
cards
Person-
al loans
Mort-
gages
overdraft
Corporate
Direct
loans
Syndicat-
ed loans
Total
7,394,303 26,646,934 75,338,998
5,834,947 150,193,541 533,870,638 203,688,263 1,002,967,623
Dec.31, 2010
» Individually im-
paired loans
Dec.31,
2009
Over-
drafts
Credit
cards
Personal
loans
Mort-
gages
overdraft
Retail
Corporate
Direct
loans
Syndicat-
ed loans
Total
» Individually
impaired loans
4,978,512 39,136,769 72,300,784 2,540,770 170,916,226 522,861,775 49,267,000 862,001,836
- Loans and advances Restructured
Restructuring activities include extended payment arrangements, execute obligatory management programs, modification
and deferral of payments. Restructuring policies and practices are based on indicators or criteria which, in the judgment of
local management, indicate that payment will most likely continue. These policies are kept under continuous review. Restruc-
turing is most commonly applied to term loans, in particular customer finance loans Renegotiated loans that would otherwise
be past due or impaired totaled at the of the financial year EGP 2,421,912,000
» Loans and advances to customers – individuals:
» Direct loans
Total
Dec.31, 2010
Dec.31, 2009
2,421,912,000
2,511,008,801
2,421,912,000
2,511,008,801
3.1.7 Debt instruments, treasury bills and other governmental notes
The table below presents an analysis of Debt instruments, treasury bills and other governmental notes by rating agency
designation at 31 December 2010, based on Standard & Poor’s ratings or their equivalent:
,
6
2
9
2
2
0
8
4
1
,
Dec.31, 2010
AAA
AA- to AA+
A- to A+
Treasury
bills and
other Gov.
notes
-
-
-
Trading
Financial As-
sets
Financial
Investments
Designated
at fair value
Total
-
1,348,515,298
37,648,537
383,075,610
49,169,280
264,572,353
s
y
a
d
0
3
o
t
p
u
e
u
d
t
s
a
P
s
y
a
d
0
6
-
0
3
e
u
d
t
s
a
P
s
y
a
d
0
9
-
0
6
e
u
d
t
s
a
P
l
a
t
o
T
9
0
0
2
,
1
3
.
c
e
D
s
y
a
d
0
3
o
t
p
u
e
u
d
t
s
a
P
s
y
a
d
0
6
-
0
3
e
u
d
t
s
a
P
s
y
a
d
0
9
-
0
6
e
u
d
t
s
a
P
l
a
t
o
T
Lower than A-
8,821,003,566
1,029,495,813 11,124,145,389
Unrated
Total
-
469,434,205
889,609,201
8,821,003,566
1,585,747,835 14,009,917,851
-
-
-
-
-
-
1,348,515,298
420,724,147
313,741,632
20,974,644,769
1,359,043,406
24,416,669,253
Annual Report 2010 • CIB
169
Financial Statements: Consolidated
3.1.8 Concentration of risks of financial assets with credit risk exposure
(a) Geographical sectors
(b) Industry sectors
The following table breaks down the bank’s main credit exposure at their book values categorized by geographical
region at the end of financial year. For this table, the bank has allocated exposures to regions based on the country of
domicile of its counterparties.
EGYPT
Alex,
Delta &
Sinai
Upper
Egypt
Total
Gulf
Countries
Total
-
-
-
-
-
-
9,616,491,239
1,043,933,881
128,527,576
-
-
-
9,616,491,239
1,043,933,881
128,527,576
Dec.31, 2010
Cairo
» Treasury bills and other
governmental notes
Trading Financial Assets
9,616,491,239
» Debt instruments
1,043,933,881
128,527,576
» Loans and advances to
banks
Loans and advances to
customers:
Retail:
» Overdrafts
» Credit cards
432,704,022
486,194,487
85,998,199 1,004,896,708
2,308,656
1,007,205,364
383,747,840
111,127,993
23,263,631
518,139,464
443,939
518,583,403
» Personal loans
1,269,773,113
513,307,313
130,846,100 1,913,926,526
303,071
1,914,229,596
» Mortgages
» Other loans
Corporate:
» Overdrafts
350,289,921
71,943,416
8,663,827
430,897,165
13,052,586
30,338,217
-
43,390,803
2,511,833,720
497,684,059
10,360,359 3,019,878,138
» Direct Loans
15,763,316,160 5,427,094,766
560,137,453 21,750,548,379
» Syndicated loans
7,192,378,694
559,267,040
-
7,751,645,734
» Other loans
139,084,252
12,147,596
514,253
151,746,100
» Financial Derivatives
139,263,948
» Financial Investments
(Debt Instruments)
» Financial Investments in
Associated Co.
13,365,885,003
96,827,733
-
-
-
-
-
-
139,263,948
13,365,885,003
96,827,733
-
-
-
-
-
-
-
-
-
430,897,165
43,390,803
3,019,878,138
21,750,548,379
7,751,645,734
151,746,100
139,263,948
13,365,885,003
96,827,733
52,447,109,687 7,709,104,887 819,783,823 60,975,998,397
3,055,667 60,979,054,064
The following table breaks down the Group’s main credit exposure at their book value categorized by the industry sec-
tors of our counterparties.
Dec.31, 2010
Financial
institutions
Manufac-
turing
Other in-
dustries
» Treasury bills and other
governmental bills
» Financial Assets for
trading
9,616,491,239
-
» Debt Instruments
1,043,933,881
» Loans and advances to
banks
Retail:
» Overdrafts
» Credit cards
» Term loans
» Mortgages
» Other loans
Corporate:
» Overdrafts
» Direct loans
» Syndicated loans
» Other loans
» Derivative financial
instruments
» Investment securities −
debt instrument
» Financial Investments in
Associated Co.
128,527,576
-
-
-
-
-
3,019,878,138
21,750,548,379
7,751,645,734
151,746,100
139,263,948
13,365,885,003
96,827,733
57,064,747,731
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Wholesale
and retail
trade
Total
-
9,616,491,239
-
-
1,043,933,881
128,527,576
1,007,205,364
1,007,205,364
518,583,403
518,583,403
1,914,229,596
1,914,229,596
430,897,165
430,897,165
43,390,803
43,390,803
-
-
-
-
-
-
-
3,019,878,138
21,750,548,379
7,751,645,734
151,746,100
139,263,948
13,365,885,003
96,827,733
3,914,306,332 60,979,054,064
170
CIB • Annual Report 2010
Annual Report 2010 • CIB
171
Financial Statements: Consolidated
3.2 Market risk
3.2.2 Value at Risk (VAR) Summary
Market Risk is defined as the risk that the value of the Bank’s on- and off-balance sheet positions will be adversely affected
by movements in market rates or prices such as interest rates, foreign exchange rates, equity prices, credit spreads and/or
commodity prices resulting in a loss to earnings and capital. The Bank segregates the exposure to the market risk into either
trading or non-trading portfolios.
Market risks are measured, monitored and controlled by the Market Risk Management Department. In addition, regular re-
ports are submitted to the ALCO, Board Risk Committee and the heads of each business unit.
Trading portfolios include those positions that are revalued at the market prices (Mark to Market), arising from market-making
transactions where the Bank acts as principal with clients or with the market. Non-trading portfolios include those positions
primarily arise from the interest rate management of the entity’s retail and commercial banking assets and liabilities.
3.2.1 Market risk measurement techniques
Total VAR by risk
type
1- Foreign exchange
risk
Medium
Dec.31, 2010
High
Low
Medium
Dec.31, 2009
High
Low
335,428
1,021,367
47,251
307,823
883,615
116,378
2- Interest rate risk
64,862,911
81,655,436
53,996,397
42,269,890
58,591,001
32,865,596
- For non trading
purposes
- For trading pur-
poses
48,257,686
63,983,903
38,055,532
45,989,917
67,921,405
29,653,822
13,970,809
17,970,757
4,319,514
6,769,105
11,457,200
3,229,241
3- Equities risk
6,140,352
6,714,030
3,478,929
5,899,644
7,221,488
4,866,168
4- Investment fund
1,218,674
1,617,940
1,080,322
1,480,875
1,704,370
1,265,702
Total VAR
66,470,692
83,020,106
55,788,545
44,101,339
60,067,638
35,133,019
As part of the management of market risk, the Bank undertakes various hedging strategies. The Bank also enters into
interest rate swaps to match the interest rate risk associated with the fixed-rate long-term debt securities and loans to
which the fair value option has been applied .
- Trading portfolio VAR by risk type
(a) Value at risk
The Bank applies a ‘value at risk’ methodology (VAR) to its trading and non-trading portfolios, to estimate the market
risk of positions held and the maximum losses expected under normal market conditions, based upon a number of as-
sumptions for various changes in market conditions.
VAR is a statistically based estimate of the potential loss on the current portfolio from adverse market movements. It ex-
presses the ‘maximum’ amount the Bank might lose , but only to a certain level of confidence (95%). There is therefore
a specified statistical probability (5%) that actual loss could be greater than the VAR estimate. The VAR model assumes
a certain ‘holding period’ until positions can be closed ( 1 month). The Bank is assessing the historical movements in
the market prices based on volatilities and correlations data for the past five years.
Medium
Dec.31, 2010
High
Low
Medium
Dec.31, 2009
High
Low
335,428
1,021,367
47,251
307,823
883,615
116,378
-
-
-
-
-
-
-
-
-
-
-
-
13,970,809
17,970,757
4,319,514
6,769,105
11,457,200
3,229,241
1- Foreign exchange
risk
2- Interest rate risk
- For non trading
purposes
- For trading pur-
poses
3- Equities risk
6,140,352
6,714,030
3,478,929
5,899,644
7,221,488
4,866,168
4- investment fund
1,218,674
1,617,940
1,080,322
1,480,875
1,704,370
1,265,702
Total VAR
16,670,238
18,818,850
12,881,880
10,728,264
11,758,526
9,767,308
The use of this approach does not prevent losses outside of these limits in the event of more significant market move-
ments.
- Non Trading portfolio VAR by risk type
As VAR constitutes an integral part of the Bank’s market risk control regime, the Market Risk Management set Soft VAR
limits, which have been approved by the ALCO, and are monitored and reported on a daily basis to the Senior Manage-
ment. In addition, monthly limits compliance is reported to the ALCO.
(b) Stress tests
Stress tests provide an indication of the potential size of losses that could arise under extreme market conditions.
Therefore, bank computes on a daily basis Stress VaR, combined with Normal Board Risk Committee on a quarterly
basis.
Medium
Dec.31, 2010
High
Low
Medium
Dec.31, 2009
High
Low
48,257,686
63,983,903
38,055,532
45,989,917
67,921,405
29,653,822
- For non trading
purposes
Total VAR
48,257,686
63,983,903
38,055,532
45,989,917
67,921,405
29,653,822
The aggregate of the trading and non-trading VAR results does not constitute the bank’s VAR due to correlations and
consequent diversification effects between risk types and portfolio types.
172
CIB • Annual Report 2010
Annual Report 2010 • CIB
173
Financial Statements: Consolidated
3.2.3 Foreign exchange risk
The Bank takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its finan-
cial position and cash flows. The Board sets limits on the level of exposure by currency and in aggregate for both over-
night and intra-day positions, which are monitored daily. The table below summarizes the Bank’s exposure to foreign
currency exchange rate risk and Bank’s financial instruments at carrying amounts, categorized by currency.
EGP
USD
EURO
GBP
Other
Equivalent
EGP Total
Dec.31, 2010
Assets
» Cash and Due From
Central Bank
5,340,511,293
216,752,383
76,246,307
11,565,455
30,166,353
5,675,241,791
» Due from banks
354,038,580
4,061,199,055
2,276,564,976
294,350,174
68,530,040
7,054,682,826
» Treasury Bills and
other Governmental
Notes
» Trading Financial
Assets
» Loans and Overdrafts
for Banks
» Loans and Overdrafts
for Customers
9,237,350,000
-
-
1,408,783,095
112,817,471
7,584,147
-
109,981,246
18,546,329
-
-
-
-
9,237,350,000
56,563,122
1,585,747,835
-
128,527,576
18,983,625,965 16,496,008,965 1,107,426,206
1,062,908
639
36,588,124,684
» Financial Derivatives
113,816,994
23,767,459
1,679,495
» Financial
Investments
» Available for Sale
12,371,142,819
1,207,924,447
34,772,539
» Held to Maturity
86,694,444
212,555,870
» Financial Investments
in Associated Co.
87,377,442
9,450,291
-
-
-
-
-
-
-
-
-
-
139,263,948
13,613,839,805
299,250,313
96,827,733
Total Financial Assets
47,983,340,632 22,450,457,187 3,522,820,000
306,978,537
155,260,155 74,418,856,511
Liabilities
» Due to Banks
25,950,480
1,269,111,131
24,987,158
39,006
2,192,134
1,322,279,909
» Customers Deposits
38,832,224,883 19,520,385,330 4,242,251,199
418,313,269
351,002,597 63,364,177,278
» Financial Derivatives
72,398,399
35,856,183
5,296,458
» Other loans
113,132,222
6,954,607
9,026,597
-
-
-
-
113,551,040
129,113,426
3.2.4 Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of chang-
es in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate bec
in market interest rates. The Bank takes on exposure to the effects of fluctuations in the prevailing levels of market inter-
est rates on both its fair value and cash flow risks. Interest margins may increase as a result of such changes but may
profit decrease the event that unexpected movements arise. The Board sets limits on the level of mismatch of interest
rate reprising that may be undertaken, which is monitored daily by Assets & Liabilities Management Dept.
The table below summarizes the Bank’s exposure to interest rate risks. It includes the Bank’s financial instruments at
carrying amounts, categorized by the earlier of reprising or contractual maturity dates.
Up to1
Month
1-3
Months
3-12
Months
1-5 years
Over 5
years
Non- in-
terest
bearing
Total
Dec.31, 2010
Assets
» Cash and Due From
Central Bank
-
-
-
» Due from banks
3,829,170,615 2,625,547,452 310,562,150
882,825,000
864,075,000 7,490,450,000
-
-
-
-
-
-
5,675,241,791 5,675,241,791
289,402,609 7,054,682,826
-
9,237,350,000
650,414,402
25,023,555
50,820,797
752,412,704
33,044,393
74,031,983 1,585,747,835
14,689,065
95,292,181
13,763,999
4,782,331
-
19,244,274,971 9,248,598,618 4,490,011,516 3,126,233,619 479,005,960
-
-
128,527,576
36,588,124,684
601,075,895
634,147,582
399,970,527 1,706,094,810
40,802,149
114,443,847 3,496,534,809
» Treasury Bills and
other Governmental
Notes (Face Value)
» Trading Financial
Assets
» Loans and overdraft to
banks
» Loans and overdraft to
customers
» Financial Derivatives
(including IRS notional
amount)
Financial Invest-
ments:-
» Available for sale
650,559,648
130,541,793 1,676,885,635 9,914,066,570 741,658,471
500,127,687 13,613,839,805
» Held to maturity
58,049,000
12,126,923
195,125,071
33,949,319
» Financial Investments
in Associated Co.
-
-
-
-
-
-
-
299,250,313
96,827,733
96,827,733
Total Financial Assets 25,931,058,596 13,635,353,103 14,627,589,694 15,537,539,353 1,294,510,973 6,750,075,651 77,776,127,372
Total Financial Li-
abilities
Net on-Balance Sheet
Financial Position
39,043,705,984 20,832,307,250 4,281,561,413
418,352,276
353,194,730 64,929,121,653
Liabilities
8,939,634,648 1,618,149,937
(758,741,413)
(111,373,738)
(197,934,576)
9,489,734,858
» Customers Deposits 28,480,351,084 7,668,185,243 4,808,527,430 12,002,841,827 468,641,746 9,935,629,948 63,364,177,278
» Due to banks
309,172,192
49,341,650
435,367,500
-
-
528,398,567 1,322,279,909
» Financial Derivatives
(including IRS notional
amount)
719,459,775 1,595,449,411
66,038,415
454,698,465
505,026,300
48,381,727 3,389,054,094
» Other Loans
12,114,271
19,773,441
69,568,298
27,657,416
-
-
129,113,426
» Total financial liabilities 29,521,097,322 9,332,749,745 5,379,501,644 12,485,197,708 973,668,047 10,512,410,242 68,204,624,707
» Total interest re-
pricing gap
(3,590,038,726) 4,302,603,358 9,248,088,051 3,052,341,645 320,842,926 (3,762,334,591) 9,571,502,665
174
CIB • Annual Report 2010
Annual Report 2010 • CIB
175
Financial Statements: Consolidated
3.3 Liquidity risk
• Liquidity risk is the risk that the Bank is unable to meet its payment obligations associated with its financial liabilities when
they fall due and to replace funds when they are withdrawn.
• The consequence may be the failure to meet obligations to repay depositors and fulfill commitments to lend.
3.3.1 Liquidity risk management process
• The Bank’s liquidity management process, as carried out within the Bank and monitored by a separate team in Assets
& Liabilities Management Dept, includes:
• Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. This includes
replenishment of funds as they mature or is borrowed by customers.
• The Bank maintains an active presence in global money markets to enable this to happen;
• Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen
interruption to cash flow.
• Monitoring balance sheet liquidity ratios against internal and requirements of central bank of Egypt
• Managing the concentration and profile of debt maturities.
• Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and month
respectively, as these are key periods for liquidity management. The starting point for those projections is an analysis
of the contractual maturity of the financial liabilities and the expected collection date of the financial assets. Assets &
Liabilities Management Dept. also monitors unmatched medium-term assets, the level and type of un drawn lending
commitments, the usage of overdraft facilities and the impact of contingent liabilities such as standby letters of credit
and guarantees.
3.3.2 Funding approach
Sources of liquidity are regularly reviewed by a separate jointly by team in Bank Assets & liabilities Management, li-
abilities Investments and Bank Insurance to maintain a wide diversification by currency, provider, product and term.
3.3.3 Non-derivative cash flows
The table below presents the cash flows payable by the Bank under non-derivative financial liabilities by remaining con-
tractual maturities at and the maturities assumption for non contractual products on the basis of there behavior studies
of balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows, whereas the
Bank manages the inherent liquidity risk based on expected undiscounted cash inflows.
Dec.31, 2010
Up to
One to
Three
Three to
Twelve
1 Month Months
Months
Twelve
Months to
One
Year
Over Five
Total
Years
Liabilities
» Due to Banks
837,570,759
49,341,650
435,367,500
-
-
1,322,279,909
» Customers De-
posits
17,701,209,201 9,151,941,806 8,604,334,536 19,192,725,470 8,713,966,264 63,364,177,278
» Other loans
12,114,271
19,773,441
69,568,298
27,657,416
46,109,376
10,090,483
8,806,258
163,196
-
-
129,113,426
65,169,313
18,597,003,608 9,231,147,381 9,118,076,592 19,220,546,082 8,713,966,264 64,880,739,926
10,157,510,410 10,277,629,891 10,709,626,276 26,017,873,700 12,604,512,707 69,767,152,985
Dec.31, 2009
Up to
One to
Three
Three to
Twelve
1 Month Months
Months
Twelve
Months to
One
Year
Over Five
Total
Years
Liabilities
» Due to Banks
409,579,156
4,049,703
8,099,405
16,393,099
20,023,867
458,145,229
» Customers De-
posits
17,436,889,071 8,479,674,960 7,333,919,085 13,692,437,981 7,705,733,424 54,648,654,522
» Other loans
3,967,682
14,002,441
27,740,623
47,526,296
8,864,618
8,069,253
4,877,954
-
-
-
93,237,042
21,811,825
17,859,300,527 8,505,796,357 7,374,637,067 13,756,357,377 7,725,757,291 55,221,848,618
13,715,802,876 5,921,889,859 14,273,219,862 19,288,837,927 11,253,257,091 64,453,007,614
» Financial Deriva-
tives (Foreign Ex-
change Derivatives)
Total liabilities (con-
tractual maturity
dates)
Total financial as-
sets (contractual
maturity dates)
» Financial Deriva-
tives (Foreign Ex-
change Derivatives)
Total liabilities (con-
tractual maturity
dates)
Total financial assets
(contractual maturity
dates)
176
CIB • Annual Report 2010
Annual Report 2010 • CIB
177
Financial Statements: Consolidated
3.3.4 Derivative cash flows
Derivatives settled on a net basis
The Bank’s derivatives that will be settled on a net basis include:
• Foreign exchange derivatives: over-the-counter (OTC) currency options, currency futures, exchange traded currency
options
• Interest rate derivatives: interest rate swaps, forward rate agreements, OTC interest rate options, other interest rate
contracts, exchange traded interest rate futures and exchange traded interest rate options.
• The table below analyses the Bank’s derivative financial liabilities that will be settled on a net basis into relevant maturity
groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed
in the table are the contractual undiscounted cash flows.
Up to
One to
Three
Three to
Twelve
Dec.31, 2010
1 Month Months
Months
Twelve
Months to
One
Year
Over Five
Total
Years
liabilities
Financial Derivatives
» Foreign exchange
derivatives
» Interest rate deriva-
tives
Total
OFF Balance sheet items
46,109,376 10,090,483
8,806,258
163,195.72
-
65,169,313
-
547,406.66
311,210
19,972,049
20,321,976
41,152,641
46,109,376 10,637,890
9,117,468
20,135,244
20,321,976 106,321,954
Dec.31, 2010
Up to 1 year
1-5 years
Over 5 years
Total
» Financial Guarantees , Bills and
other facilities
Total
9,481,467,644
2,214,095,031
184,136,038
11,879,698,713
9,481,467,644
2,214,095,031
184,136,038
11,879,698,713
3.4 Fair value of financial assets and liabilities
(a) Financial instruments measured at fair value using a valuation technique
The total amount of the change in fair value estimated using a valuation technique that was recognized in profit or loss
during December 31, 2010 EGP 37,005,804,005 and EGP 29,676,669,820 in December 31, 2009
(b) Financial instruments not measured at fair value
The table below summarizes the book value and fair value of those financial assets and liabilities not presented on the
Bank’s balance sheet at their fair value.
Financial Assets
» Due from banks
» Loans and overdraft to banks
Loans and overdraft to customers:
» Retail
» Corporate
» Financial Investments:
» Available For Sale
» Held to maturity
Book value
Fair value
Dec.31, 2010 Dec.31, 2009 Dec.31, 2010 Dec.31, 2009
7,054,682,826
7,946,147,786
-
-
-
-
-
-
-
-
-
-
-
-
128,527,576
200,765,433
3,914,306,332
2,669,953,130
32,673,818,352 26,110,470,930
-
115,553,654
289,151,745
579,926,673
Total Financial Assets
7,054,682,826
7,946,147,786
37,005,804,005 29,676,669,820
Financial liabilities
» Due to banks
1,322,279,909
458,145,229
» Customers Deposits
63,364,177,278 54,648,654,522
» Other loans
129,113,426
93,237,042
Total Financial Liabilities
64,815,570,613 55,200,036,793
-
-
-
-
-
-
-
-
Due from banks
The fair value of floating rate placements and overnight deposits is their carrying amount. The estimated fair value of
fixed interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for
debts with similar credit risk and remaining maturity.
Loans and overdrafts to banks
Loans and banking facilities represented in loans not from deposits at banks. The expected fair value of the loans and
facilities represents the discounted value of future cash flows expected to be collected. Cash flows are discounted us-
ing the current market rate to determine fair value.
Loans and overdrafts to customers
Loans and advances are net of provisions for impairment. The estimated fair value of loans and advances represents
the discounted amount of estimated future cash flows expected to be received.
Expected cash flows are discounted at current market rates to determine fair value.
Financial Investments
Investment securities include only interest-bearing assets held to maturity; assets classified as available for sale are
measured at fair value. Fair value for held-to-maturity assets is based on market prices or broker/dealer price quota-
tions. Where this information is not available, fair value is estimated using quoted market prices for securities with
similar credit, maturity and yield characteristics.
Due to other banks and customers, other deposits and other borrowings
The estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, is the amount
repayable on demand. The estimated fair value of fixed interest-bearing deposits and other borrowings not quoted in
an active market is based on discounted cash flows using interest rates for new debts with similar remaining maturity.
178
CIB • Annual Report 2010
Annual Report 2010 • CIB
179
Financial Statements: Consolidated
3.5 Capital management
The Bank’s objectives when managing capital, which consists of another items in addition of owner›s equity stated in balance
sheet are:
Tier 1 capital
» Share capital (net of the treasury shares)
5,901,443,600
2,925,000,000
Dec.31, 2010
Dec.31, 2009
• To comply with the capital requirements in Egypt.
• To safeguard the Bank’s ability to continue as a on going concern so that it can continue to provide returns for shareholders
and stakeholders.
• To maintain a strong capital base to support the development of its business.
» General reserves
» Legal reserve
» Other reserve
» Retained earnings
Total qualifying Tier 1 capital
Tier 2 capital
78,564,646
125,128,337
267,520,908
20,231,298
2,474,395,768
601,454,369
241,133,169
(1,942,684)
6,392,888,789
6,240,040,622
» Redeemable preference shares (general risk provision)
607,483,178
510,442,970
• Capital adequacy and the use of regulatory capital are monitored daily by the Bank’s management, employing techniques
» Loans/deposits
based on the guidelines developed by the Basel Committee as implemented by the Central bank Of Egypt, for supervisory
» 45% of the increase in fair value than the book value for A.F.S
purposes. The required information is filed with the Authority on a quarterly basis.
• Central bank Of Egypt requires the following:
• Hold the minimum level of the issued and paid up capital of EGP500 Million
• Maintain a ratio of total regulatory capital to the risk weighted asset or above the agreed minimum of 10%.
Tier One:
Tier one, consisting of paid-in capital (after deducting the book value of treasury shares), and retained earnings and
reserves resulting from the distribution of profits with the exception of banking risk reserve and deducting there from
previously recognized goodwill and any transferred loss
Tier Two:
Qualifying subordinated loan capital , which consists of the equivalent of the risk allocation year according to the princi-
ples of credit issued by the Central Bank of Egypt for not more than 1.25% of total assets and liabilities weighted with
risk, loans / deposits support in excess of the schedule of five years (with consumption of 20% of their value in each
year of the last five years of the schedule) and 45% of the increase between the fair value and book value for each of
the financial investments available for sale and held to maturity in subsidiaries.
When calculating the total dominator of capital adequacy, it shall not exceed the capital cushions (Qualifying subordi-
nated loan capital) for share capital and loans not to increase (deposits) support for half of the share capital. Assets are
risk weighted ranging from zero to 100% classified by the relation of the debtor to all each asset to reflect the credit risk
associated with it, taking the cash collateral account. These are used for the treatment of off balance sheet items after
adjustments to reflect the nature of contingency and the potential loss of those amounts The table below summarizes
the composition of regulatory capital and the ratios of the Bank at the end of financial year and the bank has complied
with all Capital adequacy requirements as following :
Investments:
Total qualifying Tier 2 capital
» Less investments in associates
Total capital 1+2
Risk-weighted assets:
» In-balance sheet
» Off-balance sheet
Total risk-weighted assets
Capital Adequacy ratio (%)
956,968
-
608,440,147
510,442,970
7,001,328,935
6,750,483,592
43,626,939,621
36,143,068,815
4,971,714,657
4,692,368,750
48,598,654,278
40,835,437,565
14.41%
16.53%
(4) Critical accounting estimates and judgments
The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial
year. Estimates and judgments are continually evaluated and based on historical experience and other factors, including expec-
tations of future events that are believed to be reasonable under the circumstances and available info.
(a) Impairment losses on loans and overdraft
The Bank reviews its loan portfolios to assess impairment at least on a quarterly basis. In determining whether an impairment
loss should be recorded in the income statement, the Bank makes judgments as to whether there is any observable data
indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease
can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has
been an adverse change in the payment status of borrowers in a Bank, or national or local economic conditions that correlate
with defaults on assets in the Bank. Management uses estimates based on historical loss experience for assets with credit
risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash
flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed
regularly to reduce any differences between loss estimates and actual loss experience. To the extent that the net present
value of estimated cash flows differs by +/-5%
(b) Impairment of available for-sale equity investments
The Bank determines that available-for-sale equity investments are impaired when there has been a significant or prolonged
decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making
this judgment, the Bank evaluates among other factors, the normal volatility in share price. In addition, impairment may be
appropriate when there is evidence of a deterioration in the financial health of the investee, industry and sector performance,
changes in technology, and operational and financing cash flows.
180
CIB • Annual Report 2010
Annual Report 2010 • CIB
181
Financial Statements: Consolidated
(c) Fair value of derivatives
The fair value of financial instruments that are not quoted in active markets are determined by using valuation techniques.
Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically
reviewed by qualified personnel independent of the area that created them. All models are certified before they are used,
and models are calibrated to ensure that outputs reflect actual data and comparative market prices. To the extent practical,
models use only observable data; however, areas such as credit risk (both own and counterparty), volatilities and correla-
tions require management to make estimates. Changes in assumptions about these factors could affect reported fair value of
financial instruments. For example, to the extent that management used a tightening of 20 basis points in the credit spread.
(d) Held-to-maturity investments
The non-derivative financial assets with fixed or determinable payments and fixed maturity are being classified held to matu-
rity. This classification requires significant judgment. In making this judgment, the Bank evaluates its intention and ability to
hold such investments to maturity. If the Bank fails to keep these investments to maturity other than for the specific circum-
stances – for example, selling an insignificant amount close to maturity it will be required to reclassify the entire category as
available for sale. The investments would therefore be measured at fair value not amortized cost.
(5) Segment analysis
(a) By business segment
The Bank is divided into main business segments on a worldwide basis:
Dec.31, 2009
Corporate
Banking
SME›s
Investment
banking
Retail
Banking
Total
» Revenue according to business seg-
ment
» Expenses according to business
segment
2,093,762,098
1,233,264,123
35,755,000
40,989,074
3,403,770,295
(499,571,860)
(763,045,467)
(28,445,000)
(18,890,191)
(1,309,952,518)
Activities results by sector
1,594,190,238
470,218,656
7,310,000
22,098,883
2,093,817,777
» Profit before tax
1,594,190,238
470,218,656
7,310,000
22,098,883
2,093,817,777
tax
(273,682,354)
(73,899,941)
(1,150,000)
(1,117,132)
(349,849,427)
Profit for the year
1,320,507,884
396,318,715
6,160,000
20,981,751
1,743,968,350
» Assets and liabilities according to
business segment
Total assets
(b) By Geographical segment
61,099,114,582
220,223,300
15,311,000
2,919,912,007 64,254,560,889
61,099,114,582
220,223,300
15,311,000
2,919,912,007 64,254,560,889
Egypt
• Retail banking – incorporating private banking services, private customer current accounts, savings, deposits, investment
savings products, custody, credit and debit cards, consumer loans and mortgages;
Dec.31, 2010
Cairo
Alex, Delta
& Sinai
Upper
Egypt
Total
Other
Countries
Total
• Corporate banking – incorporating direct debit facilities, current accounts, deposits, overdrafts, loan and other credit facili-
ties, foreign currency and derivative products
Revenue according to business
segment
» Expenses according to busi-
ness segment
2,871,682,814
775,199,795
118,266,971 3,765,149,580
8,728,787
3,773,878,367
(996,860,718)
(329,539,165)
(83,836,154)
(1,410,236,037)
(1,028,915)
(1,411,264,952)
• Investment banking – incorporating financial instruments trading, structured financing, corporate leasing, and merger and
Activities results by sector
1,874,822,096
445,660,630
34,430,817 2,354,913,543
7,699,872
2,362,613,415
acquisitions advice.
• Others – other Bank operations comprise fund management, institutional finance and providing computer services, none
of which constitutes a separately reportable segment.
Transactions between the business segments are on normal commercial terms and conditions.
Dec.31, 2010
Corporate
Banking
SME›s
Investment
Banking
Retail
Banking
Total
» Revenue according to business seg-
ment
Activity gains
» Expenses according to business
segment
2,241,773,545
64,900,676
(14,712,804)
1,481,916,949
3,773,878,367
(532,445,813)
(64,483,675)
(20,267,205)
(794,068,260)
(1,411,264,953)
Activities results by sector
1,709,327,733
417,001
(34,980,009)
687,848,689
2,362,613,414
» Profit before tax
1,709,327,733
417,001
(34,980,009)
687,848,689
2,362,613,414
Tax
(252,563,793)
(63,316)
-
(104,440,799)
(357,067,909)
Profit for the Year
1,456,763,939
353,685
(34,980,009)
583,407,890
2,005,545,505
Unallocated costs
» Profit before tax
» Tax
1,874,822,096
445,660,630
34,430,817 2,354,913,543
7,699,872
2,362,613,415
(281,972,140)
(68,609,725)
(5,300,645)
(355,882,510)
(1,185,400)
(357,067,910)
» Profit for the Year
1,592,849,956
377,050,905
29,130,172
1,999,031,033
6,514,472
2,005,545,505
Geographical segments Assets
66,291,467,335 8,492,570,016
638,319,867 75,422,357,218
3,076,406 75,425,433,625
Total Assets
66,291,467,335 8,492,570,016
638,319,867 75,422,357,218
3,076,406 75,425,433,625
Egypt
Dec.31, 2009
Cairo
Alex, Delta
& Sinai
Upper
Egypt
Total
Other
Countries
Total
Revenue according to business
segment
» Expenses according to busi-
ness segment
2,702,961,576
604,289,656
90,005,198 3,397,256,430
6,513,865
3,403,770,295
(887,737,726)
(331,898,850)
(80,523,392)
(1,300,159,968)
(9,792,550)
(1,309,952,518)
Activities results by sector
1,815,223,850
272,390,806
9,481,806
2,097,096,462
(3,278,685)
2,093,817,777
» Profit before tax
1,815,223,850
272,390,806
9,481,806
2,097,096,462
(3,278,685)
2,093,817,777
» tax
(287,880,647)
(57,301,417)
(4,577,700)
(349,759,764)
(89,664)
(349,849,428)
» Profit for the year
1,527,343,204
215,089,389
4,904,106
1,747,336,699
(3,368,349)
1,743,968,350
» Assets and liabilities according to
business segment
Total Assets
182
CIB • Annual Report 2010
67,757,904,022 1,014,671,790
1,613,413,684
5,039,444,129 75,425,433,625
Geographical Segments Assets
58,870,799,609 5,220,836,561
159,979,784 64,251,615,954
2,944,935 64,254,560,889
67,757,904,022 1,014,671,790
1,613,413,684
5,039,444,129 75,425,433,625
Total Assets
58,870,799,609 5,220,836,561
159,979,784 64,251,615,954
2,944,935 64,254,560,889
Annual Report 2010 • CIB
183
Financial Statements: Consolidated
(6) Net Interest Income
(9) Net Trading Income
» Interest Received from Loans and similar items:
» Banks
» Clients
» Treasury Bills and Bonds
» Reverse Repos
» Financial Investment In Held to Maturity and Available for Sale Debt
Instruments
» Other
Total
» Interest Paid on deposits and similar items:-
» Banks
» Clients
» Financial Instruments Purchased with a Commitment to Re-Sale (Re-
pos)
» Other
Total
Net
(7) Net Income From Fees & Commissions
Fees & Commissions Income :
» Fees & Commissions Related to Credit
» Custody Fees
» Other Fees
Total
Fees & Commissions Expense :
» Other Fees Paid
Total
Net Fees & Commissions
(8) Dividends
» Trading Securities
» Available for Sale Securities
» Subsidiaries and Associated
Total
Dec.31, 2010
EGP
Dec.31, 2009
EGP
113,507,031
2,306,925,726
2,420,432,757
1,930,851,872
16,639,271
128,013,500
2,136,658,036
2,264,671,536
1,127,200,403
74,641,951
157,566,326
566,009,583
(12,517)
115,389
» Profit From Foreign exchange
334,230,240
291,327,008
Dec.31, 2010
EGP
Dec.31, 2009
EGP
» Profit (Losses) From Revaluations of Trading Assets and Liabilities in
Foreign Currencies
» (Losses)Profit From Forward Foreign exchange Deals Revaluation
» (Losses) Profit From Interest Rate Swaps Revaluation
» (Losses) Profit From Swap Deals Revaluation
» Trading Debt Instruments
» Trading Equity Instruments
4,525,477,709
4,032,638,862
Total
70,469,233
164,842,855
2,194,974,802
1,836,192,188
2,265,444,035
2,001,035,043
219,881
-
2,122,799
1,571,617
2,267,786,715
2,002,606,660
2,257,690,995
2,030,032,202
Dec.31, 2010
EGP
Dec.31, 2009
EGP
518,885,060
146,052,441
274,425,684
939,363,185
(85,056,559)
(85,056,559)
854,306,626
461,475,536
157,507,039
211,288,242
830,270,817
(64,831,578)
(64,831,578)
765,439,239
Dec.31, 2010
EGP
1,330,647
152,755,829
11,452,676
165,539,152
Dec.31, 2009
EGP
1,763,898
126,226,234
5,483,046
133,473,178
(10) Administrative Expenses
Staff Costs
» Wages & Salaries
» Social Insurance
» Other Benefits
» Other Administrative Expenses
Total
(11) Other Operating (Expenses) Income
» (Losses) Profits From Assets & Liabilities Revaluation Except Trading
» Profits From Selling Equipments And Fixed Assets
» Return (Losses) Of other Provision
» Others
Total
(12) Return (Losses) Of Impairment From Loans
» Loans And Overdrafts For Customers
» Held to Maturity Financial Investments
Total
10,006,998
(1,429,285)
(12,297,737)
(33,053,612)
(17,643,454)
107,408,262
38,751,800
427,402,497
3,460,009
(41,255,686)
(307,591)
156,564,981
10,935,068
419,294,504
Dec.31, 2010
EGP
Dec.31, 2009
EGP
569,710,670
497,321,623
21,713,306
29,636,810
19,575,658
14,428,628
703,792,937
639,476,885
1,324,853,724
1,170,802,794
Dec.31, 2010
EGP
(90,859,875)
1,574,746
106,238,765
(47,547,853)
(30,594,217)
Dec.31, 2010
EGP
EGP
(6,783,757)
620,261
(6,163,496)
Dec.31, 2009
EGP
6,036,985
15,797,710
(46,428,105)
(55,718,197)
(80,311,607)
Dec.31, 2009
EGP
EGP
(9,715,311)
530,453
(9,184,858)
184
CIB • Annual Report 2010
Annual Report 2010 • CIB
185
Financial Statements: Consolidated
(13) Adjustments to Calculate the Effective Tax Rate
(16) Due From Banks
» 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
(14) Earning Per Share
» Net Profit For The Period Available for Distribution
» Board Member›s Bonus
» Staff Profit Sharing
Shareholders› Share In Profits
» Number Of Shares
Basic Earning Per Share
» By Issuance Of ESOP Earning Per Share Will Be:-
» Number Of Shares Including ESOP Shares
Diluted Earning Per Share
(15) Cash And Due From Central Bank
» Cash
» Reserve Balance With CBE:-
» Current Accounts
Total Cash & Due From Central Bank
Balances without Interest
Dec.31, 2010
EGP
2,363,971,731
Dec.31, 2009
EGP
2,095,345,642
20%
20%
472,794,346
419,069,128
7,887,154
(113,810,215)
(9,639,280)
(164,095)
5,686,791
(83,123,598)
8,223,215
(6,110)
357,067,910
349,849,426
15.10%
16.70%
Dec.31, 2010
EGP
1,875,205,780
(30,213,341)
(201,422,275)
Dec.31, 2009
EGP
1,743,968,350
(26,354,351)
(175,695,671)
1,643,570,163
1,541,918,328
590,144,360
590,144,360
2.79
2.61
600,695,185
600,695,185
2.74
2.57
Dec.31, 2010
EGP
1,399,250,089
Dec.31, 2009
EGP
911,195,861
4,275,991,702
3,268,060,628
5,675,241,791
4,179,256,489
5,675,241,791
4,179,256,489
» Current Accounts
» Deposits
Total Due From Banks
» Central Banks (Except Obligatory Reserve)
» Local Banks
» Foreign Banks
Total Due From Banks
» Non Bearing Interest Balances
» Fixed Bearing Interest Balances
Total Due From Banks
» Current Balances
Total Due From Banks
(17) Treasury Bills And Other Governmental Notes
» 91 Days Maturity
» 182 Days Maturity
» 364 Days Maturity
» Unearned Income
» Repos
Total Treasury Bills
Dec.31, 2010
EGP
653,994,222
Dec.31, 2009
EGP
436,687,451
6,400,688,604
7,509,460,335
7,054,682,826
2,539,019,714
825,623,131
7,946,147,786
2,121,116,884
974,205,982
3,690,039,981
4,850,824,920
7,054,682,826
7,946,147,786
289,402,609
436,687,451
6,765,280,217
7,509,460,335
7,054,682,826
7,054,682,826
7,946,147,786
7,946,147,786
7,054,682,826
7,946,147,786
Dec.31, 2010
EGP
2,126,041,239
3,830,900,000
3,659,550,000
Dec.31, 2009
EGP
5,654,811,592
4,539,175,000
3,451,725,000
9,616,491,239
13,645,711,592
(416,346,434)
(446,750,679)
9,200,144,805
13,198,960,913
(379,141,239)
-
Total Treasury Bills And Other Governmental Notes
8,821,003,566
13,198,960,913
- Available for sale debt insttruments with an amount of EGP 379,141,239 have been reclassfied under treasury bills and other
governmental notes which have been pledged according to Repo agreement.
(18) Financial Assets For Trading
Debt Instruments:-
» Government Bonds
» Other Debt Instruments
Total Debt Instruments
Equity Instruments:-
» Foreign Company Shares
» Mutual Fund
Total Equity Instruments
» Funds Managed By Others
Total Financial Assets For Trading
Dec.31, 2010
EGP
Dec.31, 2009
EGP
861,157,325
182,776,556
1,043,933,881
74,031,984
467,781,970
541,813,953
-
1,585,747,835
75,348,284
110,518,274
185,866,558
57,624,532
211,661,790
269,286,322
35,986,076
491,138,956
186
CIB • Annual Report 2010
Annual Report 2010 • CIB
187
Financial Statements: Consolidated
(19) Loans And Overdrafts For Banks
» Time and Term Loans
Total Loans and Overdrafts For Banks
Distributed To:-
» Non-Current Balances
Net Loans And Overdrafts For Banks
(20) Loans And Overdrafts For Customers
Retail
» Overdrafts
» Credit Cards
» Personal Loans
» Real state Loans
» Other Loans
Total (1)
Corporate
» Overdrafts
» Direct Loans
» Syndicated loans
» Other Loans
Total (2)
Loans And Overdrafts For Customers (1+2)
» Unearned Bills Discount
» Provision For Doubtful Debts
» Interest In Suspense
Net Loans And Overdrafts For Customers
Distributed To:-
» Current Balances
» Non-Current Balances
Net Loans And Overdrafts For Customers
Dec.31, 2010
EGP
128,527,576
Dec.31, 2009
EGP
200,765,433
128,527,576
200,765,433
128,527,576
128,527,576
200,765,433
200,765,433
Dec.31, 2010
EGP
Dec.31, 2009
EGP
1,007,205,364
518,583,403
852,902,695
451,907,954
1,914,229,597
1,005,586,641
430,897,165
43,390,803
292,518,318
67,037,522
3,914,306,332
2,669,953,130
3,019,878,138
3,434,116,195
21,750,548,380
15,918,861,867
7,751,645,734
6,663,779,140
151,746,100
93,713,728
32,673,818,352
26,110,470,930
36,588,124,684
28,780,424,060
(59,528,351)
(92,637,396)
(1,257,882,426)
(1,304,194,446)
(224,700,550)
(141,285,321)
35,046,013,357
27,242,306,897
13,176,145,651
10,362,261,423
21,869,867,706
16,880,045,473
35,046,013,357
27,242,306,896
(20) Loans And Overdrafts For Customers (Cont.)
Analysis Of The Doubtful Debts Provision For Customers
Dec.31, 2010
» Balance At Beginning Of The
Period
Overdrafts
Credit
Cards
Retail
Personal
Loans
Real state
Loans
Total
6,217,574
63,472,214
123,755,953
6,607,506
200,053,247
» Formed During The Period
1,784,389
(2,677,769)
(41,751,067)
2,280,658
(40,363,789)
» Write Off During The Period
» Recoveries From Written Off
Debts
» Foreign Currency Revaluation
Diff.
Balance At The End Of The
Period
» Balance At Beginning Of The
Period
-
-
-
(21,890,799)
(762,282)
3,216,180
255,895
-
-
-
-
-
(22,653,081)
3,472,075
-
8,001,963
42,119,826
81,498,499
8,888,164
140,508,452
Overdrafts
Direct
Loans
Corporate
Syndicated
loans
Other
Loans
Total
182,615,379
456,119,614
461,400,856
4,005,349
1,104,141,198
» Formed During The Period
4,274,439
31,517,879
11,256,656
98,572
47,147,546
» Write Off During The Period
» Recoveries From Written Off
Debts
» Foreign Currency Revaluation
Diff.
Balance At The End Of The
Period
-
-
-
(83,201,595)
25,694,981
23,591,844
-
-
-
-
-
-
(83,201,595)
25,694,981
23,591,844
186,889,818
453,722,723
472,657,512
4,103,921
1,117,373,974
188
CIB • Annual Report 2010
Annual Report 2010 • CIB
189
Financial Statements: Consolidated
Dec.31, 2009
• Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to
» Balance At Beginning Of The
Year
Overdrafts
Credit
Cards
Retail
Personal
Loans
Real state
Loans
Total
2,439,210
50,894,643
152,213,149
3,960,474
209,507,476
» Formed During The Year
3,778,364
11,412,910
(28,457,196)
2,647,032
(10,618,890)
» Write Off During The Year
» Recoveries From Written Off
Debts
» Foreign Currency Revaluation
Diff.
-
-
-
(63,301)
1,227,962
-
-
-
-
-
-
-
(63,301)
1,227,962
-
Balance At The End Of The Year
6,217,574
63,472,214
123,755,953
6,607,506
200,053,247
» Balance At Beginning Of The
Year
Overdrafts
Direct
Loans
Corporate
Syndicated
loans
Other
Loans
Total
187,125,155
451,736,126
485,564,104
4,232,079
1,128,657,464
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 op-
tions 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 reflects 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
» Formed During The Year
3,031,459
41,692,243
(24,163,248)
(226,730)
20,333,724
conversely against its benefit and the total fair value of the financial derivatives in assets and liabilities. hereunder are the
» Write Off During The Year
(11,186,847)
(54,216,933)
» Recoveries From Written Off
Debts
» Foreign Currency Revaluation
Diff.
3,645,612
19,080,865
-
(2,172,687)
-
-
-
-
-
-
(65,403,780)
22,726,477
(2,172,687)
Balance At The End Of The Year
182,615,379
456,119,614
461,400,856
4,005,349
1,104,141,198
(21) Financial derivatives
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 con-
tracts 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
fair values of the booked financial derivatives.
A- For Trading Derivatives
Foreign Derivatives:-
» Forward Foreign exchange con-
tracts
» 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)
Dec.31, 2010
Dec.31, 2009
Notional
Amount
Assets
Liabili-
ties
Notional
Amount
Assets
Liabili-
ties
3,072,183,403 10,189,895
17,784,952 2,216,238,458 11,313,445
6,610,765
5,252,345,990 95,810,458
46,796,806 2,282,456,175 59,700,304
8,520,349
129,589,977
587,555
587,555
1,115,741,508
6,680,711
6,680,711
106,587,908 65,169,313
77,694,460
21,811,825
2,116,390,500 18,033,720
32,936,778 1,468,824,580 25,635,166
6,697,411
18,033,720
32,936,778
25,635,166
6,697,411
37,459,113
7,229,086
7,229,086
219,509,800 122,017,594 122,017,594
7,229,086
7,229,086
122,017,594 122,017,594
131,850,714 105,335,177
225,347,220 150,526,830
190
CIB • Annual Report 2010
Annual Report 2010 • CIB
191
Financial Statements: Consolidated
B- For Hedging Derivatives
- Available for sale debt insttruments with an amount of EGP 379,141,239 have been reclassfied under treasury bills and other
governmental notes which have been pledged according to Repo agreement.
Dec.31, 2010
Dec.31, 2009
Notional
Amount
Assets
Liabili-
ties
Notional
Amount
Assets
Liabili-
ties
» Interest rate Swaps
1,159,112,554
7,413,234
8,215,863
-
» Total Assets ( liability) For Hedging
Derivatives ( 1+2+3+4)
7,413,234
8,215,863
-
-
-
-
» Total Financial Derivatives
(1+2+3+4)
(22) Financial Investment
- Available For Sale Financial Investment:-
» Debt Instruments Listed - Fair Value
» Equity Instruments Listed - Fair Value
» Unlisted Instruments
Total Available For Sale Financial Investment
- Held To Maturity Financial Investment:-
» Listed Debt Instruments
» Unlisted Instruments
Total Held To Maturity Financial Investment
Total Financial Investment
» Listed Balances
» Unlisted Balances
» Fixed Interest Debt Instruments
» Variable Interest Debt Instruments
139,263,948 113,551,039
225,347,220 150,526,830
Dec.31, 2010
EGP
Dec.31, 2009
EGP
12,182,202,264
6,756,292,076
88,634,556
1,343,002,985
115,553,654
558,131,421
13,613,839,805
7,429,977,151
64,181,945
235,068,368
299,250,313
272,889,366
317,167,843
590,057,209
13,913,090,118
8,020,034,360
12,002,427,357
7,154,182,641
1,910,662,761
865,851,719
13,913,090,118
8,020,034,360
11,515,986,698
5,701,939,359
1,849,898,303
1,601,779,389
13,365,885,003
7,303,718,748
Opening Balance 1/1/2009
» Addition
Available for
Sale Financial
Investment
2,774,965,250
Held to Maturity
Financial Invest-
ment
681,263,274
9,345,814,437
10,130,536
Total
3,456,228,524
9,355,944,973
» Deduction ( Selling - Recovery )
(4,581,571,366)
(100,347,555)
(4,681,918,922)
» Differences In Revaluation Of The Cash Assets
In Foreign Currencies
» Profit (Losses)From Fair Value Deference
» Return (Deduct) - Impairment Losses
Balance At The End Of Year
Opening Balance 1/1/2010
» Addition
(8,035,073)
(989,046)
(9,024,119)
(86,277,201)
(14,918,896)
7,429,977,151
7,429,977,151
9,474,625,202
-
-
590,057,209
590,057,209
5,012,500
(86,277,201)
(14,918,896)
8,020,034,360
8,020,034,360
9,479,637,702
» Deduction ( Selling - Recovery )
(3,467,532,768)
(311,478,559)
(3,779,011,327)
» Differences In Revaluation Of The Cash Assets
In Foreign Currencies
68,054,023
15,659,162
83,713,185
» Profit (Losses)From Fair Value Deference
108,716,196
-
108,716,196
Balance At The End Of Year
13,613,839,804
299,250,313
13,913,090,117
Profit (Losses) From Financial Investment
» Profit (Losses) From Financial Investment
» Profit From Selling Available For Sale Financial Instruments
» (Losses) From Impairment Of Equity Instruments Available For Sale
» Return (Losses) Of Impairment From Available For Sale Debt Instru-
ments
Dec.31, 2010
EGP
Dec.31, 2009
EGP
203,689,153
(9,844,647)
68,054,023
88,764,201
(14,918,896)
(8,035,072)
(96)
-
» (Losses) From Impairment Of Subsidiaries And Associates.
(144,331)
(13,851)
261,754,102
65,796,382
192
CIB • Annual Report 2010
Annual Report 2010 • CIB
193
Financial Statements: Consolidated
(23) Financial Investments in Associated Companies
(25) Debit Balances and Other Assets
» Accrued Revenues
» Prepaid Expenses
» Advances for Purchase of Fixed Assets
» Accounts receivable and Other Assets **
» Assets Acquired as Settlement of Debts
Dec.31, 2010
EGP
797,806,076
75,174,383
53,943,062
453,103,600
4,630,353
1,384,657,474
Dec.31, 2009
EGP
451,247,581
71,046,513
89,060,595
347,073,376
4,630,353
963,058,418
* This Include The Value Of Premises That Was Not Recorded Under The Bank›s Name By EGP 21.095.664 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.
** Include EGP 6.331.048 as Assets Held For Sale.
» Commercial International life insurance co.
» Corplease co.
» Haykala for Investment
» Egypt Factors
» International. Co. for Appraisal and Collection.
» International Co. for Security and Services (Falcon)
Total
The Financial Investments in Associated companies
are represented as follows :-
» Financial Investments Unlisted in Stock Exchange
Total
(24) Real estate investments *
Dec.31, 2010
Value (EGP)
25,938,603
46,826,581
1,743,685
9,450,291
2,529,580
10,338,993
96,827,733
%
45
40
40
39
40
40
Dec.31, 2009
Value (EGP)
25,938,603
41,212,117
2,478,619
4,144,721
1,759,714
8,293,507
83,827,281
%
45
40
40
39
40
40
96,827,733
96,827,733
83,827,281
83,827,281
Dec.31, 2010
EGP
Book value
Dec.31, 2009
EGP
Book value
Assets
» Building number 17 tiba st. Eldokki next to shooting club
7,600,000
7,600,000
» Commercial unit number f 35 in arkadia mall (14 elbahr st. Boulak
kornish el nile )
361,200
361,200
» Floor 3 building number 131 eltahriri st. Eldokki + part of the garage
-
3,239,200
» Appartment in the first floor 230 meters elmadina tower elgomhoria st.
Port said
» 338.32 meters on a land and building the property number 16 el-
makrizi st. Heliopolis
» Villa number 27/291 elgamil portsaid
» Villa number 113 royal hills 6th of october
» A land area with 1468.85 meters elsaidi basin -markaz nabrouh
eldakahlia
750,000
1,000,000
1,000,000
1,650,000
-
2,000,000
225,000
2,500,000
1,121,965
1,321,965
» Land and a bulding in elmansoura elnahda street 766.3 meters
3,463,000
7,663,000
» Agricultural area 1 feddan 14t and 17.25 shares near el azazi fakous
elsharkia
» Land number 16 mit khamis elmansoura (3 carats, 15 share)which
equals 645 meters
» land with a villa model number 10 on land number 219 Elshorouk 2000
compound villas
» Agriculutral area 47 feddans 11 carats markaz shebin eldakahlia
Total
222,000
322,000
1,935,000
1,935,000
-
10,242,499
28,695,664
2,525,500
12,142,499
42,485,364
194
CIB • Annual Report 2010
Annual Report 2010 • CIB
195
Financial Statements: Consolidated
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(27) Due To Banks
» Current Accounts
» Deposits
» Central Banks
» Local Banks
» Foreign Banks
» Non Bearing Interest Balances
» Fixed Bearing Interest Balances
» Current Balances
» Non-Current Balances
(28) Customers Deposits
» Demand Deposits
» Time Deposits
» Certificates of Deposit
» Saving Deposits
» Other Deposits
» Corporate Deposits
» Retail Deposits
» Non Bearing Interest Balances
» Floating Bearing Interest Balances
» Fixed Bearing Interest Balances
» Current Balances
» Non-Current Balances
Dec.31, 2010
EGP
628,594,359
693,685,550
1,322,279,909
67,074,769
110,476,364
1,144,728,776
1,322,279,909
528,398,567
793,881,342
1,322,279,909
628,594,359
693,685,550
1,322,279,909
Dec.31, 2009
EGP
258,145,229
200,000,000
458,145,229
33,070,672
215,963,990
209,110,567
458,145,229
258,145,229
200,000,000
458,145,229
258,145,229
200,000,000
458,145,229
Dec.31, 2010
EGP
16,663,118,908
Dec.31, 2009
EGP
14,296,409,936
21,893,614,059
21,669,911,514
15,205,693,671
9,805,872,397
8,321,204,407
8,024,613,798
1,280,546,233
851,846,877
63,364,177,278
54,648,654,522
21,208,169,704
18,518,700,820
42,156,007,574
36,129,953,702
63,364,177,278
54,648,654,522
17,943,665,141
15,148,256,813
-
10,746,100
45,420,512,137
39,489,651,609
63,364,177,278
54,648,654,522
47,852,478,276
44,757,686,685
15,511,699,002
9,890,967,837
63,364,177,278
54,648,654,522
196
CIB • Annual Report 2010
Annual Report 2010 • CIB
197
Financial Statements: Consolidated
(29) Long Term Loans
(31) Other Provisions
Dec.31, 2010 EGP
Rate
%
Maturity
Date
Maturing
Through
Next Year
EGP
» F.I.S.C.
7
3-5 years
16,665,283
Balance
as of
Dec.31,
2010
EGP
34,363,003
Balance
as of
Dec.31,
2009
EGP
36,314,000
Opening
Balance
Formed
During the
Year
FCY Bal-
ance
Reval. Dif-
ference
Usage
During the
Year
Balance
No Longer
Required
Closing
Balance
» Provision For Income Tax
Claims
155,953,095
1,257,185
-
-
-
(140,000,000)
17,210,280
(5,000)
(3,086,191)
34,719,567
» KFW Private Sector Industry (Phase II)
10.5 - 9
10 YEARS
5,487,166
8,966,582
9,581,678
» Provision For Legal Claims
3,862,273
33,948,485
» UNIDO
1
2011
29,716
60,014
2,249,926
» Provision For Contingent
281,592,486
3,094,612
7,334,078
-
(35,312,276)
256,708,900
3-5 years
74,802,222
78,352,222
33,687,857
» Provision For End Of Service
291,765
78,998
-
-
(121,772)
248,991
» Provision For Other Claim
8,356,874
3,624,020
6,542
(1,985,637)
-
10,001,799
Total
450,056,493
42,003,300
7,340,620
(1,990,637)
(178,520,239)
318,889,536
» Agricultural Research and Development Fund
(ARDF)
» Ministry of Agriculture (V.S.P)
» Social Fund
3.5 - 5.5
depends on
maturity date
3.5 - 5.5
depends on
maturity date
3 months
T/D or 9%
which more
3-5 years
-
-
60,000
2010
249,000
417,000
1,485,844
» Spanish Microfinance Loan
0.5
2012
3,477,302
6,954,604
9,857,737
Total
100,710,688 129,113,426
93,237,042
(30) Credit Balances and Other Liabilities
» Accrued Interest Payable
» Accrued Expenses
» Accounts Payable
» Income Tax
» Other Credit balances
Total
Dec.31, 2010
EGP
203,493,541
124,551,148
389,798,419
426,695,912
20,624,318
Dec.31, 2009
EGP
168,854,663
95,935,714
461,958,941
306,398,840
128,871,410
1,165,163,338
1,162,019,568
Opening
Balance
Formed
During the
year
FCY Bal-
ance
Reval. Dif-
ference
Usage
During the
year
Balance
No Longer
Required
Closing
Balance
Dec.31, 2009 EGP
» Provision For Income Tax
Claims
155,953,095
-
» Provision For Legal Claims
1,271,113
3,298,742
-
-
-
-
155,953,095
(190,504)
(517,078)
3,862,273
» Provision For Contingent
244,688,780
37,653,452
(749,746)
-
-
281,592,486
» Provision For Other Claim
8,723,449
9,455,000
25,167
(6,346,855)
(3,499,887)
8,356,874
» Provision For End Of Service
383,640
137,875
-
(229,750)
-
291,765
Total
411,020,077
50,545,069
(724,579)
(6,767,109)
(4,016,965)
450,056,493
(32) Shareholders Equity
(A) Capital:
• The authorized capital reached EGP 20 billion according to the extraordinary general assembly decision on 17 Mar, 2010
• Issued and Paid in Capital reached EGP 5,901,443,600 to be divided on 590,144,360 shares with EGP 10 par value for
each share based on
1- Increase Issued and Paid up Capital by amount EGP 25,721,800 in April 21, 2010 in according to Board of Directors deci-
sion on November 11,2009 by issuance of first tranch for E.S.O.P program
2- Increase Issued and Paid up Capital by amount EGP 2,950,721,800 in July 15, 2010 according to Board of Directors decision on May
12 , 2010 by distribution of one share for every outstanding share by capitalizing on the General Reserve and part of the Legal Reserve.
• The Extraordinary General Assembly approved in the meeting of 26 june,2006 to activate a motivating and rewarding pro-
gram for the bank's employees and 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 and conditions and increase the paid in capital according to the program.
198
CIB • Annual Report 2010
Annual Report 2010 • CIB
199
Financial Statements: Consolidated
• Dividend deducted from shareholders› equity in the Year in which the General Assembly recognizes the shareholders of this
(35) Reserves and Retained Earnings
dividend, which includes the share of workers in the profits and remuneration of the Board of Directors stated in the law
(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.
(33) Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the following:
» 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
(34) Share-Based Payments
Assets (liabilities)
Dec.31, 2010
EGP
Assets (liabilities)
Dec.31, 2009
EGP
(24,416,110)
(29,676,018)
9,324,068
3,045,281
102,790,700
29,904,171
117,602,829
31,517,523
32,345,800
37,232,586
• According to the extraordinary general assembly meeting on June 26, 2006, the bank launched 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; oth-
erwise such grants will be forfeited. Equity-settled share-based payments are measured at fair value at the grant date, and ex-
pensed 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
Number of Shares
10,322,024
3,388,366
(587,385)
(2,572,180)
-
10,550,825
• The estimated fair value of the equity instrument granted to the second tranch is EGP 27.06 .
• The estimated fair value of the equity instrument granted to the third tranch is EGP 13.70 .
• The estimated fair value of the equity instrument granted to the forth tranch is EGP21.70 .
• The equity instrument fair value for the second, third and forth trenches have been adjusted to reflect the dilution effect of
the Stock dividend that took place in 2010.
» Legal Reserve
» General Reserve
» Retained Earning
» Special Reserve
» Reserve For A.F.S Investments Revaluation Diff.
» Banking Risks Reserve
» Intangible Assets Value For Bank Share Before Acquisition
Total Reserves and Retained Earnings at the End of the period
A- Banking Risks Reserve
» Opening Balance
» Effect Of Adjusting Accounting Standards
Ending Balance
B- Legal Reserve
» Opening Balance
» Used During The Year
» Transferd from Profits
Ending Balance
C- Reserve For A.F.S Investments Revaluation Diff.
» Opening Balance
» Gains (Losses) from A.F.S Investment Revaluation
Ending Balance
D- Retained Earning
» Opening Balance
» Dividends of the previous Period
» Change During the Period
» Transferred To Special Reserve
» Effect Of Adjusting Accounting Standards
Ending Balance
Dec.31, 2010
EGP
125,128,337
Dec.31, 2009
EGP
513,606,534
78,412,462
1,463,504,300
(203,604,610)
184,356,569
1,722,491
156,992,515
302,794,421
645,802,184
(176,287,838)
206,530,551
(107,124,766)
26,652,790
302,794,421
2,229,675,991
Dec.31, 2010
EGP
26,652,790
130,339,725
156,992,515
Dec.31, 2009
EGP
-
26,652,790
26,652,790
Dec.31, 2010
EGP
513,606,534
(476,326,032)
87,847,835
125,128,337
Dec.31, 2010
EGP
(107,124,766)
108,847,257
1,722,491
Dec.31, 2010
EGP
(176,287,838)
(51,077,889)
1,587,135
22,173,982
Dec.31, 2009
EGP
432,851,511
-
80,755,023
513,606,534
Dec.31, 2009
EGP
(20,985,045)
(86,139,721)
(107,124,766)
Dec.31, 2009
EGP
87,845,690
(244,507,717)
(1,023,965)
-
(18,601,847)
(203,604,610)
(176,287,838)
200
CIB • Annual Report 2010
Annual Report 2010 • CIB
201
Financial Statements: Consolidated
(36) Cash And Cash Equivalent
» Cash And Due From Central Bank
» Due From Banks
» Treasury Bills And Other Governmental Notes
Dec. 31, 2010
EGP
5,675,241,791
Dec. 31, 2009
EGP
4,179,256,489
7,054,682,826
7,946,147,786
8,821,003,566
13,198,960,913
» Due From Banks (Time Deposits) More Than Three Months
(6,400,688,604)
(7,509,460,335)
» Treasury Bills With Maturity More Than Three Months
(7,092,113,082)
(7,584,125,285)
Total Cash And Cash Equivalent
8,058,126,497
10,230,779,568
(37) Contingent Liabilities And Commitments
( A ) Legal Claims
There are a number of existing cases filed against the bank in 31/12/2010 without provision as it›s not expected to make any
losses from it.
» Loans and Overdrafts for Customers (Net After Provision)
» Reconciliation Accounts - Credit Balances
» Other Provisions
» Special Reserve
» Banking Risks Reserve
» Provisions (Income Statement)
» Other Operating (Expenses) Income
» Return (Losses) Of Impairment From Loans
» Income Tax
(39) Mutual Funds
Osoul Fund
Balance Bfore
Adjustments Year
2009
27,102,918,752
Balance After
Adjustments Year
2009
27,242,306,896
1,106,662,383
1,128,964,485
373,832,092
185,993,785
-
(96,243,322)
(36,084,926)
-
443,728,578
206,530,551
26,652,790
-
(84,879,302)
(9,184,858)
(346,610,611)
(357,691,456)
( B ) Capital Commitments
- Financial Investments:-
The capital commitments for the financial investments reached on the date of financial position EGP 142,855,749 as follows:-
• The Bank established an accumulated return mutual fund under license no.331 issued from capital market authority on
22/02/2005.
» Available for Sale Financial Investments
Investments
value
EGP
477,436,529
Paid
EGP
Remaining
EGP
335,180,780
142,255,749
» Financial Investments in associates Co.
1,200,000
600,000
600,000
- Fixed Assets and 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 2.028.164
( C ) Loans, Facilities and Gurantees Commitments
Dec.31, 2010
EGP
10,300,701,367
989,910,137
589,087,209
Dec.31, 2009
EGP
11,348,196,542
820,272,115
469,403,911
» Letters Of Guarantee
» Letters Of Credit ( Import And Export )
» Customers Acceptances
» Loans Commitments
Total
(38) Comparative Figures
• CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 60,588,285 with redeemed value EGP 9,703,819,726.
• The market value per certificate reached EGP 160.16 on 31/12/2010.
• The Bank portion got 2,702,313 certificates with redeemed value EGP 432,802,450.
Istethmar Fund
• CIB bank established the second accumulated return mutual fund under license no.344 issued from capital market authority
on 26/02/2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 3,037,171 with redeemed value EGP 242,669,963.
• The market value per certificate reached EGP 79.90 on 31/12/2010.
-
-
• The bank portion got 194,744 certificates with redeemed value EGP 15,560,046.
11,879,698,713
12,637,872,568
Aman Fund ( CIB and Faisal Islamic Bank Mutual Fund)
• The bank and 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.- Egyptian joint stock co - manages the fund.
• The Comparative Figures Are Amended To Confirm With The Reclassification Of The Current Year And General Assembly
Held on 17th Of March, 2010, Decisions, For Ratifying The Appropriation Account Of Year 2009.
• The number of certificates issued reached 760,909 with redeemed value EGP 45,616,495.
• Some items in income statement and balance sheet have been restated According to Central Bank of Egypt new regulation
• The market value per certificate reached EGP 59.95 on 31/12/2010.
issued in December 16, 2008 as Follows:-
202
CIB • Annual Report 2010
• The bank portion got 45,434 certificates with redeemed value EGP 2,723,768.
Annual Report 2010 • CIB
203
Financial Statements: Consolidated
Hemaya Fund
• CIB bank established an accumulated return mutual fund under license no.585 issued from capital market authority on
23/06/2010. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
(42) Tax Status
1- Bank
• The number of certificates issued reached 2,964,421 with redeemed value EGP 302,993,470.
tions up to the end of year 1984.
• The bank›s corporate income tax position has been examined and settled with the tax authority from the start up of opera-
• The market value per certificate reached EGP 102.21 on 31/12/2010.
• Corporate income tax for the years from 1985 up to 2000 were paid according to the tax appeal committee decision and
• The bank portion got 347,627 certificates with redeemed value EGP 35,530,956.
(40) Transactions With Related Parties
All Banking Transactions With Related Parties Are Conducted In Accordance With The Normal Banking Practices And Regula-
tions Applied To All Other Customers Without Any Discrimination.
» Loans & Overdrafts
» Customer Deposits
» Contingent Accounts
» International Co. for Security & Services
» Corplease Co.
» Commercial International Life Insurance Co.
EGP
828,308,607
695,818,754
383,754
Income
EGP
684,391
66,245,071
171,309
Expenses
EGP
50,347
954,343
1,925,320
(41) Good Will & Intangible Assets
• According to Central Bank Of Egypt Regulation Issued in 16/12/2008, an amortization of of 20% annualy has been applied on
Goodwill starting Year 2010.
• Amortization Amount have been riched EGP 40,093,445 Intangible Assets which has been acquired at the acquisition date are
determined as follows:-
» Brand
» Licenses
» Contracts
» Customer Relationships
Total
» Amortization Till December 2010
Net Intangible Assets
EGP
336,790,272
20,000,000
119,694,389
198,187,745
674,672,406
(297,852,062)
376,820,344
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 has been examined from the tax authority and paid.
• 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 discus-
sion in the court of law .
2- CICH
• The company has been inspected from the beginning of its operation 1999 till 2000
• The company has made an objection over the tax declaration & the re-inspection has been approved but till now no date
has been determined for inspection (no inspection made from year 2001 till 2oo4)
• The tax deceleration has been represented for the years 2005/2007 according to the income tax rule no. 91 year 2005
• The salary tax has been inspected from the beginning of operation till 2004 & has been settled
• no tax inspection has been made from 2005 till now
• The company has been inspected from the beginning of its operation 1999 till 2000
• The company made an objection on the legal time & no date has been determined for internal committee to discuss the
issue
• No tax inspection has been made from 2001 till the cancellation of stamp duty rule on 31/07/2006
• Sales tax is not applied for the company›s operation
204
CIB • Annual Report 2010
Annual Report 2010 • CIB
205
Financial Statements: Consolidated
(43) Main Currencies Positions
» Egyptian Pound
» US Dollar
» Sterling Pound
» Japanese Yen
» Swiss Franc
» Euro
(44) Subsequent Events
Dec. 31, 2010
in thousand EGP
11,966
Dec. 31, 2009
in thousand EGP
60,421
(6,602)
(400)
(433)
130
8,218
(29,077)
279
599
1,081
15,912
• The Arab Republic of Egypt has encountered certain events that have a significant impact on the economic sectors, in gen-
eral, a matter which may lead to a substantial decline in the economic activities in the foreseeable future. Therefore, there is a
possibility that the above mentioned events will have a significant impact on the assets, liabilities, its recoverable/ settlement
amounts and the results of operations in the foreseeable future.
• At the present time, it is not possible to quantify the effect on the assets and the liabilities included in the company’s financial
statements, since quantifying the effect of these events relies on the expected range and the time when these events, and
its consequences, are expected to be finished.
• The Bank will continue to assess the situation and will quantify any effect on assets and liabilities once the assessment is
complete.
Branches & Units
Year
2010
2009
2008
2007
2006
2005
2004
2003
2002
Branches
Units & FX
Total
108
108
104
88
74
61
53
43
38
45
47
48
43
45
39
39
38
44
153
155
152
131
119
100
92
81
82
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206
CIB • Annual Report 2010
Annual Report 2010 • CIB
207
Commercial International Bank S.A.E
Nile Tower Building
21/23 Charles De Gaulle Street
Giza, Cairo, P.O. Box 2430
Tel: (+202) 3747 2000
Fax: (+202) 3570 3632
Website: www.cibeg.com