Banking on tourism is
bAnking on Egypt
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Table of
Contents
Milestones
CIB: An Introduction
Our History
What We Do
A Snapshot of our Business
Key Facts
Key Financial Highlights
Our Strategy
Stock Performance
Chairman’s Note
Board of Directors’ Report
02
06
08
09
10
11
12
14
16
19
22
42
2016 In Review
44
Institutional Banking
54
Global Customer Relations
Consumer and Business Banking
56
Digital Banking 63
68
COO Area
72
Finance Group
74
Big Data
75
Human Resources
78
Risk Group
94
Compliance
96
Internal Audit
98
Brand & Corporate Communications
Strategic Subsidiaries 100
102
CI Capital Holding
104
Falcon Group
Sustainability 106
108
Corporate Governance
116
Management Committee
120
Sustainability Department
Community Development 124
126
CIB Foundation
132
Corporate Social Responsibility
Financial Statements
Standalone Financial Statements
Consolidated Financial Statements
134
136
188
All images in this annual report were shot by Zeina Abaza at
Inktank Communications from 6 November 2016 to 31 January 2017.
Zeina is a graduate of Parsons School of Design.
Historians estimate over 100,000 people were
involved in the construction of the Pyramids
of Giza. The Great Pyramid is made up of
more than 2 million stone blocks weighing
from two to over fifty tons.
CIB • Annual Report 2016 • 1
Timeline of milesTones
Timeline of
milestones
1975
1993
2000
2008
• First joint venture bank in Egypt was Chase
• CIB wins Euromoney’s ‘Best Bank in Egypt’ award
• First two Certified Bank Auditors (CBA)
National Bank
• Becomes the first Egyptian bank to introduce
an Institutional Banking Risk Rating Model
1977
• Becomes first private sector bank to create a
dedicated division providing 24/7 banking ser-
vices to shipping clients, with primary focus on
business in the Suez Canal
1983
• Head office moved to the Nile Tower building
in Giza
1987
• After 12 years in a joint venture, on 15 June
Chase Manhattan divested its stake in the
Bank, based on a decision to reduce its minor-
ity holdings worldwide
• The Bank’s name was effectively changed to
Commercial International Bank (CIB)
1989
• CIB was selected by BSP to become its agent in
Egypt
• CIB remains the only bank that offers this ser-
vice to airline passengers
1991
• First Egyptian commercial bank to arrange
debt swap transactions
• CIB becomes first bank to launch smart card
centre in Egypt
for six consecutive years until 1998
• Bank concludes Egypt’s largest IPO for a domes-
tic bank on 12 September, with oversubscrip-
tion rate of 150%, selling 1.5 million shares in a
span of 10 days and generating EGP 390 million
in proceeds, using no underwriters but rely-
ing instead on the Bank’s own marketing and
placement capabilities for share sales
1994
• First bank in Egypt to connect with the inter-
national SWIFT network
1996
• First Egyptian bank to have a GDR program on
London Stock Exchange
1997
• First Egyptian bank to link to SWIFT via CITA
• CIB concludes first and largest Euro-syndicat-
ed loan (USD 200 million)
• Becomes first private sector bank with investment
rating (after Luxor incident) (‘BBB -‘ by Fitch IBCA)
1998
• CIB becomes first private sector bank with invest-
ment rating (after Luxor incident (‘BBB -‘ by S&P)
• First bank to link its database to that of Misr
Clearing, Settlement & Deposit Company
• First Egyptian bank to form Board of Directors
Audit Committee
• First Internal Audit Department to be independent
• One of the first Egyptian banks to establish a cus-
tody department
• One of the first Egyptian banks that established a
brokerage arm (CIBC)
2001
• First Egyptian bank to register its shares on
New York Stock Exchange in the form of Ameri-
can Depository Receipts (ADR) Level 1 program
• CIB becomes first bank to introduce FX cash
services for five currencies on ATM
2004
• Heya becomes the first credit card on the market
to acknowledge women’s financial independence
2005
• Only bank in Egypt to be awarded JP Morgan
Quality Recognition Award starting 2005 up
until 2012
• CIB launches Osoul, its first money market
fund in LCY
• First bank in Egypt to launch a page on Bloom-
berg for local debt securities
2006
• CIB was the first to adopt a pricing policy ac-
cording to the client risk rating as a step for-
ward to abide by Basel II requirements
• CIB was the first bank in Egypt to execute EGP
200 million Repo transaction in local market
• First and largest Egyptian bank to provide se-
curitisation trustee services
2007
• Only Bank in Egypt chosen by UNIFEM and
World Bank to participate in the Gender Equity
Model (GEM)
• First bank to use Value at Risk (VaR) for trading
and banking book for internal risk manage-
ment requirements, despite there being no
regulatory requirements
2009
• CIB becomes first regional bank to introduce
unique concierge and MasterCard emergency
services
• Only Egyptian bank recognised as ‘Best Bank in
Egypt’ by four publications: Euromoney, Global
Finance, EMEA Finance, and The Banker in the
same year
2010
• First Egyptian bank to establish a GTS Depart-
ment
• Only bank in Egypt able to retain one of the top
two positions in the primary and secondary
markets for Treasury Bills and Treasury Bonds
• CIB is the first and only local bank in Egypt to
begin enforcing Business Continuity Standards
• CIB Foundation becomes the first in Egypt
to have its annual budget institutionalised as
part of its founding institution’s by-laws, as CIB
shareholders unanimously agreed to dedicate
1% of Bank’s net annual profit to the Foundation
2011
• CIB-TCM becomes the pioneer of trading in
almost 114 new and unconventional currencies
2012
• CIB becomes the first Egyptian bank to of-
ficially establish a Sustainable Development
Department
2 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 3
Timeline of milesTones
in 2016, Cib became the first egyptian bank recognised as an active member in the
globally renowned United nations environmental Program - financial initiative.
In ancient times, Luxor, originally known as
Thebes, was Egypt’s centre of power; today
many of its temples and royal tombs remain
astonishingly well-preserved.
2013
2015
• First Egyptian bank to receive JP Morgan
Elite STP Award
• First Egyptian bank to upgrade its ADR to be
traded on OTCQX platform US
• First Egyptian bank to sign an agreement
with Bolero International LTD joining the
Bolero Multi-Bank service for Guarantees
• CIB is the first bank in Egypt to establish
ERM framework and road map, endorsed
and monitored by the BoD
• Becomes the first to use RAROC
• CIB breaks the record for the highest num-
ber of blood donors in a corporate office in
a single-day campaign in Egypt through the
Triple Effect initiative inaugurated by the
CIB Foundation
• CIB becomes the first bank in Egypt to in-
troduce an interactive multimedia platform
that offers customers the option of interact-
ing with call centre agents over video calls
2014
• First Egyptian bank to sign agreement with
Misr for Central Clearing, Depository, and Reg-
istry (MCDR) to issue debit cards for investors
to collect cash dividends
• CIB launches first co-brand credit card, Mile-
severywhere, with national carrier EgyptAir
• Introduces the first interactive social media
platform in the Egyptian banking industry,
available 24/7 to handle all customer queries
• CIB becomes the first bank in Egypt to sponsor
the establishment of intensive care units in Sohag
through the Foundation, donating EGP 6 million
to outfit the pediatric department at Sohag Uni-
versity Hospital with cutting-edge equipment
• The first block trading transaction on the EGX
takes place when Actis sells its 6.5% stake in
CIB to Fairfax
• First Egyptian bank to successfully pass
external quality assurance on Internal Audit
function
• CIB launches roadside assistance services
for the first time in Egypt
• CIB generates highest FX income among pri-
vate-sector banks in Egypt (in the past 10 years)
• CIB becomes the first bank in Egypt to rec-
ognise conduct risk and establish a frame-
work for it, despite the lack of regulatory
requirements
2016
• CIB launches its mobile banking application,
which includes various banking services and
offers clients numerous features to conve-
niently manage their accounts
• CIB becomes the first Egyptian bank recog-
nised as an active member in the globally
renowned United Nations Environmental
Program - Financial Initiative
• CIB wins the Socially Responsible Bank of
the Year 2016 award from African Banker
• Recognised for the first time for several
awards, including:
- Best Bank in Egypt Supporting Women
Owned and Women Run Businesses by the
American Chamber of Commerce in Egypt
- Two awards in Achievement in Liquidity
Risk and Operational Risk for Middle East
& Africa by Asian Banker for 2016
- Best Retail Risk Management Initiative by
Asian Banker for 2016
- Most Active Issuing Bank in Egypt in 2015
by The European Bank for Reconstruction
and Development
- Middle East Most Effective Recovery 2016
by BCI
4 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 5
IntroductIon
At cIB, we strive to maintain sustainable growth by
consistently creating value for all our stakeholders.
The Ramses II temple of Abu Simbel was dismantled in 1968 and
moved 65 meters northwest to save it from becoming submerged
under water after Egypt built the Aswan High Dam; the massive
UNESCO-led project cost over USD 40 mn.
6 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 7
inTroducTion
Taba is one of Egypt’s most strategic and
picturesque coastal towns in South Sinai;
from the mountains of Taba the countries of
Jordan, Saudi Arabia and Israel are all visible.
oUr
History
WhaT
We Do
Commercial International Bank (CIB) was founded in 1975 as
Chase National Bank, a joint venture between Chase Manhat-
tan Bank and the National Bank of Egypt (NBE). In 1987, a shift
in its international strategy caused Chase to divest its owner-
ship stake, which NBE then acquired, adopting the new name
Commercial International Bank.
Over time, NBE decreased its participation in CIB, even-
tually dropping to 19% in 2006, when a consortium led by
Ripplewood Holdings acquired NBE’s remaining stake. In
July 2009, Actis, a Pan-African private equity firm specialis-
ing in emerging markets, acquired 50% of the Ripplewood
Consortium’s stake. Five months later, in December 2009, Ac-
tis became the single largest shareholder in CIB with a 9.09%
stake after Ripplewood sold its remaining share of 4.7% on
the open market. The emergence of Actis as the predominant
shareholder marked a successful transition in the Bank’s
strategic partnership.
In March 2014, Actis undertook a partial realisation of its
investment in CIB by selling 2.6% of its stake on the open mar-
ket, but maintaining its seat on the board. In May 2014, the
private equity firm sold its remaining 6.5% stake to several of
Fairfax Financial Holdings’ wholly owned subsidiaries, mak-
ing the latter the sole strategic shareholder in CIB. Fairfax is
represented on the board by a non-executive member.
CIB is Egypt’s leading private sector bank, offering a compre-
hensive and wide range of financial products and services to
its clients, who include enterprises and institutions of all sizes,
high-net-worth (HNW) individuals and retail customers.
CIB operates in every segment of the banking sector including
corporate, commercial, retail wealth management and SME, all
delivered through client-centric teams.
The Bank also owns two subsidiaries, including CI Capital
Holding (which offers asset management, investment bank-
ing, brokerage and research services, and financial leasing
after it acquired CIB’s stake in Corplease in December 2015)
and Falcon Group.
At CIB, we strive to maintain sustainable growth by con-
sistently creating value for all our stakeholders. With its
dynamic business model and superior technology integrated
into its products and services, CIB continues to provide its
clients with innovative financial solutions that satisfy all of
their financial needs and facilitate their lives. This allows
us to maintain our leading position in the market, offer an
engaging work environment for our staff and generate out-
standing value for shareholders.
8 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 9
inTroducTion
a SnaPShoT of oUr
Business
Corporate banking
Widely recognised as the preeminent corporate bank in
Egypt, CIB aspires to become one of the best banks in the
region, serving industry-leading corporate clients as well as
medium-sized businesses.
Debt Capital Markets
CIB’s global product knowledge, local expertise and capital
resources make the Bank an industry leader in project finance,
syndicated loans and structured finance in Egypt. CIB’s proj-
ect finance and syndicated loan teams facilitate market access
for large borrowers, providing them with world-class services
at execution times that far exceed the market average.
treasury and Capital Market Services
CIB delivers world-class services in the areas of cash and liquidity
management, capital markets, foreign exchange and derivatives.
Digital banking and global transactional Services
Digital Banking & GTS manages all corporate and consumer
online channels from the business side. The vision of the de-
partment is to make CIB part of our customers’ daily activi-
ties through an outstanding, simple, trusted, enjoyable and
advisory digital financial experience that meets customers’
needs anytime, anywhere on any device.
Direct investment
As a local player that adheres to widely acclaimed interna-
tional standards, CIB actively participates in select direct
investment opportunities in Egypt and across the region.
Consumer banking
The Consumer Banking Division continues to assert itself as
a growing and developing business segment within the insti-
tution, dedicating exceptional efforts to improving customer
satisfaction levels by ensuring the delivery of a consistently
positive customer experience every time. We offer a wide ar-
ray of consumer banking products that include:
• Personal Loans: These focus primarily on the employees
of our corporate banking clients, offering them secured
overdrafts and trade products.
10 • Annual Report 2016 • CIB
• Auto-Loans: The division is well positioned to actively
support this growing market in the coming years within
a very competitive, dealer-driven environment.
• Deposit Accounts: We offer a wide range of accounts
that serve all our clients’ deposits and savings needs.
These include tailored accounts for minors, youth and
senior citizens, as well as certificates of deposit and care
accounts. This is in addition to our standard range of
current, savings and time-deposit accounts.
• Residential Property Finance: Provides loans to finance
home purchases, residential construction and refurbish-
ment and finishing.
• Credit and Debit Cards: We offer 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 number of af-
fluent clients in Egypt.
• CIB Plus: This division caters to the needs of medium-
net-worth individuals, helping them pave their way
through to becoming Wealth Segment clients, using
simplified products, fast-track services and personalised
service offerings through our network of Plus Bankers.
• Insurance: CIB’s insurance business provides life and gen-
eral insurance programs that generate non-interest revenues
in the form of fees for the Consumer Banking Division.
business banking
The Business Banking segment is responsible for SMEs in
CIB’s portfolio, managing nearly 40,000 SMEs and offer-
ing them various products and services that best suit their
needs and interests.
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 ex-
ecution, asset management, brokerage and equity research.
CI Capital offers both deep and broad market knowledge
and expertise, and the firm is consistently ranked among
the region’s leading brokerage houses that serve local and
international clients.
Key
FaCts
6,714
employees
serve some
948,594 active
customers
Egp 267.5
billion in total
assets
228,248
internet
banking
subscribers
More than
21,276,165
website views
over 500 of
Egypt’s largest
corporations
bank with Cib
Egypt’s number one bank
in terms of:
pROFITABIlITY
EGP 6.01 billion in net income,
more profitable than any other
Egyptian private-sector bank
REVENUE
EGP 11.3 billion in total
revenues, higher than any other
Egyptian private-sector bank
NET WORTH
EGP 21.4 billion in net worth,
the highest among all Egyptian
private-sector banks
MARKET CApITAlISATION
EGP 84.3 billion, the largest in the
Egyptian banking sector
DEpOSIT MARKET SHARE*
8.10% market share, the largest
among Egyptian private-sector banks
* as of October 2016.
CIB • Annual Report 2016 • 11
inTroducTion
Key finanCial
HigHligHts
FY 16
Consolidated
FY 15
Consolidated
FY 14
Consolidated
FY 13
Consolidated
FY 12
Consolidated
FY 11
Consolidated
FY 16
FY 15
FY 14
FY 13
FY 12
FY 11
FY 10
FY 09
FY 08
FY 07
The temple of Kom Ombo is actually two
temples in one. It’s equally dedicated to the
gods of Haroeris and Sobek. It was built on a
spot where crocodiles traditionally basked in
the sun along the Nile.
Common Share
Information Per Share
Earning Per Share (EPS) *
Dividends (DPS)
Book Value (BV/No of Share)
Share Price (EGP) **
High
Low
Closing
Shares Outstanding (millions)
Market Capitalisation (EGP
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 (EGP millions)
Net Operating Income***
Provision for Credit Losses - Specific
Provision for Credit Losses - General
Total Provisions
Non Interest Expense
Net Profits
Financial Measures
Cost : Income
Return on Average Common Equity
(ROAE)****
Net Interest Margin (NII/average
interest earning assets)
Return on Average Assets (ROAA)
Regular Workforce Headcount
Balance Sheet and Off Balance
Sheet Information (EGP 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 (EGP billions)
Tier 1 Capital Ratio*****
Adjusted Capital Adequacy
Ratio*****
3.58
0.75
3.73
4.56
0.50
1.00
18.44 14.39 16.31 13.46 18.94 15.03 14.59 23.75 19.25 20.93
4.89
1.00
2.43
1.00
3.00
1.00
2.63
1.50
2.42
1.25
2.67
1.00
3.55
1.20
47.4
28.9
38.1
73.6
30.8
73.1
39.8
21.1
34.6
1153.9 1147.1 908.2 900.2 597.2 593.5 590.1 292.5 292.5
95
93.4
59.7
29.5 27.87 53.61
37.2 91.77
195
47.4 79.49
18.5 33.75
18.7
45.4
27.4
32.6
51.3
32.6
49.2
47.4 54.68
84,290 43,692 44,673 29,330 20,646 11,098 27,973 15,994 10,881 17,895
16.0
10.6
13.9
12.2
14.3
7.7
15.8
20.8
7.6
24.6
0.68% 1.97% 2.44% 3.07% 3.62% 5.35% 2.11% 2.74% 2.69% 1.09%
9.7% 18.5% 29.9% 34.4% 33.9% 33.9% 27.6% 24.6% 18.1% 15.8%
4.38
3.96
2.30
1.93
3.25
3.02
1.83
1.24
2.65
2.42
11,315
893
10,189
1,682
893
2,433
6,009
21.36%
34.24%
1,682
2,025
4,729
19.61%
33.46%
7,741
589
589
1,705
3,741
6,700
916
916
1,608
3,006
22.84%
31.31%
23.54%
29.45%
5,344
610
610
1,653
2,226
30.64%
25.49%
589
916
321
893 1,682
3,934 11,370 10,165 7,717 6,206 5,108 3,837 3,727 3,173 3,200 2,288
193
610
57
250
9
916
1,557 2,433 2,028 1,705 1,450 1,445 1,337 1,188 1,041
636
1,615 5,951 4,641 3,648 2,615 2,203 1,749 2,141 1,784 1,615 1,233
346
49
395
950
1682
321
893
610
321
589
321
6
9
6
40.04% 21.26% 19.69% 22.91% 22.89% 28.01% 35.26% 33.11% 32.31% 29.89% 27.12%
20.86% 34.03% 32.80% 30.25% 24.77% 24.18% 22.23% 30.46% 31.18% 34.98% 34.62%
5.47% 5.74% 5.41% 5.36% 4.74% 3.71% 3.62% 3.81% 3.54% 3.12%
2.71%
6,714
2.95%
6,332
2.94%
5,697
2.93%
5,490
2.51%
5,181
2.03% 2.70% 2.90% 2.87% 2.54% 2.47% 2.20% 3.11% 2.97% 3.10% 2.90%
4,867
6,422
5,983
5,403
5,193
4,867
4,517
4,360
4,162
3,809
3,132
77,523
34,808
19,328
16,413
85,384
267,544
231,741
21,374
223,522
203,053
56,836
179,500
155,234
16,535
161,657
146,033
48,804
143,813
121,975
14,754
128,783
117,031
41,866
113,752
96,846
11,960
103,854
94,749
16,140
41,877
93,957
78,729
10,765
89,731
80,063
18,990 73,035 34,097 19,430 16,646 16,764 19,821 16,854 16,125 14,473 21,573
41,065 86,152 57,211 49,398 41,970 41,877 41,065 35,175 27,443 26,330 20,479
85,506 263,852 179,193 143,647 113,752 94,405 85,628 75,093 64,063 57,128 47,664
71,468 231,965 155,370 122,245 96,940 78,835 71,574 63,480 54,843 48,938 39,515
4,081
8,712 21,276 16,512 14,816 12,115 11,311
80,480 221,523 161,420 128,700 104,079 90,017 80,361 69,578 60,595 52,396 42,543
70,913 203,625 145,835 117,133 94,605 79,834 70,549 61,624 53,431 44,602 36,603
6,946
8,609
8,921
5,631
18,955
15,645
13,357
11,362
9,738
8,640 18,894 15,664 13,465 11,713 10,116
8,765
7,777
6,288
4,856
3,560
13.34%
150
12.90%
15.76%
96
15.01%
15.77%
84
15.70%
15.28%
70
15.23%
14.88%
65
14.33%
14.11% 13.28% 15.74% 15.84% 15.50% 15.69% 14.49% 15.85% 15.34% 13.93% 13.60%
30
14.15% 12.90% 15.01% 15.70% 15.23% 14.33% 14.15% 15.66% 15.28% 13.74% 10.17%
150
55
96
70
84
49
37
41
65
55
13.97%
16.06%
16.77%
16.32%
15.71%
15.40% 13.97% 16.06% 16.77% 16.32% 15.71% 15.40% 16.92% 16.53% 14.99% 14.70%
* Based on net profit available to distribution (after deducting staff profit share and board bonus)
** Unadjusted to stock dividends 2,485,501
*** 2016, 2015 and 2014 excluded CI Capital profit (discontinued operations)
**** Total equity after profit appropriation
***** After profit appropriation, from 2012 to 2016 as per Basel II regulations
12 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 13
inTroducTion
oUTPerforming iS
our strategy
Through the innumerable changes that both Egypt and CIB
have lived through over the years, we have remained com-
mitted to a strategy that always prioritises our clients. In
implementing that strategy, CIB has focused on delivering
sustainable profitability and creating value for our clients,
shareholders, and community at large.
Our strategy is simple; it revolves around outperforming
in all aspects of our business. In that quest for excellence,
CIB handpicks its staff members, continuously upgrading
and enhancing their skill set through comprehensive train-
ing programs, as we believe they are vital to our success
formula. Because we offer our employees a host of career
prospects and development opportunities, we attract and
retain some of Egypt’s strongest banking professionals. This
in turn translates into CIB’s remarkable ability to expand
the scope of our high-quality products and unrivalled bank-
ing services to better suit the constantly evolving needs of
our client base.
Building a strong brand image that reinforces CIB’s stand-
ing as “A Bank To Trust” has never been a one-man job, as this
responsibility extends to each and every one of our employees.
our Vision
To uphold CIB’s distinct reputation as a leading and trusted
financial institution in Egypt, respected for its people, strong
core values, performance and commitment to inclusive, re-
sponsible and sustainable growth.
our Mission
To create outstanding stakeholder value by providing best-
in-class financial solutions to the individuals and enter-
prises that drive Egypt’s economy. Through our innovative
product offerings, superior customer service, staff develop-
ment strategies and commitment to sustainability, we will
realise our ambitions and help shape the future of banking
in Egypt for years to come.
our objective
To grow and help others grow.
14 • Annual Report 2016 • CIB
our Values
A number of core values outline the way in which CIB em-
ployees work together to deliver effective results for our cus-
tomers and community.
integrity
• Exemplify the highest standards of personal and profes-
sional ethics in all aspects of our business
• Be honest and open at all times
• Stand up for one’s convictions and accept responsibility
for one’s own mistakes
• Comply fully with the laws, rules and practices that gov-
ern CIB’s business in Egypt and abroad
• Say what we do and do what we say
client focus
• Our clients are at the heart of our activities, and their
satisfaction is our ultimate objective
• Our success is dependent upon our ability to provide
products and services that help our clients achieve
their goals
• We partner with our clients and work together as a single
team with success as our primary objective
innovation
• CIB has been a pioneer of the financial services industry
since its inception as the first joint venture bank in Egypt
40 years ago, and we believe innovation is a core com-
petitive advantage and promote it accordingly
• We seek to lead Egypt’s financial services industry to the
future, with innovation being key to serving the millions
of Egyptians who remain unbanked or underserved
Hard Work
• Our work is governed by discipline and perseverance
to achieve outstanding results for both our clients
and stakeholders
• Our commitment to our clients is guided by our drive
for excellence
An outstanding track Record
Return on Average Equity (ROAE)*
Return on Average Assets (ROAA)*
* Both after profit appropriation on a standalone basis
• We work with our clients to accomplish their current
goals and anticipate and plan future goals and objectives
Teamwork
• We collaborate, listen and share information openly
within the CIB family to enhance every staff member’s
knowledge base and skill set
• Each member of our staff is an ambassador of CIB’s cor-
porate brand and image
• We value and respect each other’s cultural backgrounds
and unique perspectives
respect for the individual
• We respect all individuals, whether employees, clients,
shareholders or community members
• We treat each other with dignity and respect and take
the time to respond to questions and concerns
• We firmly believe each individual should have the space
to make suggestions and offer constructive criticism
• CIB is a meritocracy, where all employees are privy to
equal development opportunities based only on merit
and accomplishments
decorum
• CIB places employee-client and business etiquette in the
highest regard and maintains strict policies for govern-
ing decorum
• The observance of good behavior, speech, actions and
dress code is part and parcel of our culture at CIB
CIB • Annual Report 2016 • 15
inTroducTion
Cib’S
stoCk
Stock performance in 2016
CIB Index
EGX30 Index
CIB first offered its shares to the public in 1995 and has since
become the biggest stock on the EGX and the gateway to
Egypt. Investors and analysts often view CIB as a proxy for the
Egyptian economy, with the Bank acting as a mirror for the
local banking sector: the near-term recovery is captured in
the credit outlook, while the longer-term story of low financial
penetration is captured in the expansion of retail banking.
CIB was the first Egyptian bank to offer its shares on in-
ternational markets with a Global Depository Receipt (GDR)
program on the London Stock Exchange in 1996. In 2001, CIB
was yet again a first, this time being the first Egyptian bank
to register its shares on New York Stock Exchange in the form
of American Depository Receipts (ADR) Level 1 program.
In 2012, the Bank began trading on OTCQX International
Premier, a segment of the OTCQX marketplace reserved for
world-leading non-US companies listed on a qualified inter-
national exchange and providing their home country disclo-
sure to US investors.
Equity Analysts Ratings
CIB is widely covered by leading research houses both
domestically and internationally. In 2016, 15 institutions
regularly issued research reports on CIB. As of the end of
2016, 6 analysts held Buy, 5 analysts held Hold and 4 ana-
lysts held Sell recommendations on CIB.
Analyst Recommendations
Buy ...........6
Hold .........5
Sell ...........4
16 • Annual Report 2016 • CIB
CIB has the highest weight (around 37.6%) in the EGX 30 in-
dex. With a free float ratio of 93% (the highest free float on
the EGX 30), CIB is one of Egypt’s most liquid stocks and the
most valuable financial institution with a market cap of 84.3
billion as of end-December 2016.
CIB’s depository receipt program reached 384,582,396
shares as of year-end 2016.
The institutional shareholder structure of CIB by region is
6.85% UK and Ireland, 57.46% North America, 4.35% Europe,
13.13% Gulf, 13.53% Africa and 4.69% rest of the world.
CIB continuously works toward increasing value created for
stakeholders. The Bank maintains a proactive investor rela-
tions program to keep shareholders abreast of developments
that could have had an impact on the Bank’s performance.
The Investor Relations team and senior management invest
significant time in one-on-one meetings, road shows, inves-
tor conferences, conference calls and a proactive stream of
disclosures while simultaneously ensuring analysts have the
information they needed to maintain balanced coverage of
the Bank’s shares. During 2016, CIB Investor Relations took
part in 12 national and international investor conferences
in the UK, US and Gulf with the participation of senior man-
agement, in addition to 252 one-on-one meetings with 427
international investment funds. CIB hosted several confer-
ence calls throughout the year, bringing its senior manage-
ment together with the investor community in 2016, and held
presentations on its financial results four times during the
year. It also conducted presentations on its operating plan
that described its future projections.
Regular updates and releases along with the presentations
were posted on the Investor Relations website for the conve-
nience of the Bank’s investors from around the world, giving
them easy access to all the information they need.
As a result of the team’s conscious efforts to boost corpo-
rate access, in a 2016 Middle East Investor Relations Study
carried out by Extel in partnership with the Middle East In-
vestor Relations Society (MEIRS), CIB was named the “Lead-
ing Corporate for Investor Relations in Egypt,” while the head
of Investor Relations also received a nod as the “Best Investor
Relations Professional – Egypt”. This is the third year running
in which CIB has received at least one award from MEIRS.
Symbols and Codes
key indicators
Egyptian Stock Exchange (EGX)
SYMBOL: COMI
London Stock Exchange (LSE)
SYMBOL: CBKD
new York Stock Exchange (nYSE)
SYMBOL: CIBEY
1,154 mn
Outstanding Shares
EGP 10.00
1:1
Par Value
GDR Convertibility
EGP 84.3 bn
Largest Market Cap
37.6%
Highest Weight in EGX 30
EGP 4.56
Earnings per Share*
* EPS calculation is based on standalone financial statements.
CIB • Annual Report 2016 • 17
inTroducTion
18 • Annual Report 2016 • CIB
a noTe from
our CHairman
Dear Shareholders,
For more than 18 months, the management team of this
institution has been preoccupied with technology. How
will it help us reach new customers — and better-serve the
long-term corporate and consumer clients who are the back-
bone of this institution? How can it make us more efficient,
whether in cross-selling products or in helping our clients
acquire new businesses, manage payrolls, and remit customs
payments? How can we harness it to drive financial inclusion
and sharply raise the banking penetration rate in a market
that remains exceptionally under-banked, regardless of the
metric or methodology underpinning the study?
In thinking about technology, it has become vogue to
consider not just the opportunity, but the threat: What does
artificial intelligence (AI) mean to industries of all forms?
Will it replace bankers? Will self-driving cars directed by AI
replace whole classes of jobs, from taxi drivers to corporate
logistics fleets? Extend the logic and you have a whole new
field of economics and punditry about what the “rise of the
robots” and declining global populations mean for human-
ity in a future in which we will need fewer people and fewer
resources to deliver products and services.
Our belief in the transformative power of technology is one
of the lynch pins of our short- and long-term strategies alike.
Our awareness of its limits underpin the visual theme of our
2016 Annual Report: The amazing natural, historical and
religious wonders that comprise our tourism industry.
This great nation’s tourism industry has been hard-hit
by the events that have unfolded since 2011, but the Pyra-
mids are still standing, as is the Sphinx. Our white, sandy
beaches and crystal-clear waters are still among the most
attractive in the globe. The only changes desert adventur-
ers will find are those that have been wrought by time and
winds. Coptic Cairo is still thriving, as are Old Cairo and the
historic Citadel district. Alexandria still throngs with the
energy of an ancient seaport.
This holds true today, and with good stewardship it will
stand true for generations to come. Technology and chang-
ing global demographics may erode jobs in traditional
manufacturing and resource industries, but technology
will never supplant the experience of physically going on a
real holiday to a destination.
Our nation is presently undergoing an aggressive eco-
nomic reform program. Our economic future is increasingly
clear: Domestic consumption will be powered by a large,
young and fast-growing population — and the twin impera-
tives of import substitution and export-led growth will fuel
a resurgence in manufacturing. As that unfolds, it is critical
that we remember that tourism is, in many ways, not just the
ultimate export, but a competitive edge that will turbocharge
the growth of countless other industries.
Across decades, tourism will prove to be the ultimate
counter-cyclical play.
From the well-known to the relatively undiscovered, our
annual report this year highlights the many destinations and
activities that will back economic growth in the decades to
come — and which CIB has made a core part of its strategy.
CIB • Annual Report 2016 • 19
Marsa Matrouh boasts
some of the world’s most
stunning beaches and
turquoise-blue waters
inTroducTion
egP 84.3 bn
market capitalisation as of year-end
It is an industry that will be changed by technology, but not
made obsolete by it. It demands upgrades of existing skill
sets, and above all, it demands careful planning.
It will also demand continued vigilance on the security
front and robust investment in education. Our population of
nearly 100 million people is not a liability, but a renewable
resource whose value will be unlocked by education.
The same vision and critical approach that allows us to
see around the corner to what’s next for the tourism indus-
try informed our approach to 2016, a year that can only be
said to have been replete with business surprises — positive
and negative alike. Our management team thus remained
appropriately conservative in its approach to risk manage-
ment. This approach is not new: We have long argued that
the higher risk cliff associated with doing business in an
emerging market demands a conservative, preemptive and
counter-cyclical approach. I am pleased to report that this
same approach allowed us to turn in a record bottom-line
performance despite the challenges of the year.
That said, we are not content to celebrate a single year’s
results: Our operating model prizes sustainability, and the
bedrock on which our long-standing conviction that every
single CIB employee is a risk manager as we look to achieve a
judicious balance between growing the bottom line and pre-
serving the interests of our shareholders over the long term.
Going forward, we are increasingly optimistic about the
macro picture, but cognizant that short-term volatility will
be the order of the day. If the shock to the system in 2016 was
the welcome float of the Egyptian pound, change will come in
2017 from both the adjustment to this new reality and from
the ongoing drive to reform the subsidy system. It is clear
that having 80% of the value of the subsidy program dispro-
portionately benefit the 20% of the society that needs it least
was the wrong formula. This year, every business — from the
single-person micro-businesses to the largest corporations —
will have to re-examine how they do business, from expenses
to pricing. As they do so, they will uncover weaknesses — and
brilliant new opportunities.
That’s why our 2017 focus will be on transformation: From
our business banking segment to our largest corporate cli-
ents, we will be laser-focused on helping our small business
clients become medium-sized enterprises, turning mid-sized
businesses into large corporations, and helping large cor-
porations unlock new value through organic and inorganic
growth alike. The transformation of businesses from one
stage to the next will be at the heart of building a sustainable,
growing economy.
As we do, one thing will remain constant on the expense
side here at CIB: The best investment of shareholder money
that we can make is to invest in our people to ensure our own
sustainability for generations to come.
Hisham Ezz Al-Arab
Chairman and Managing Director
20 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 21
inTroducTion
board of direCTorS
rePort
egP 6.01 bn
consolidated net income in FY2016,
up 27.09% y-o-y
Although 2016 was not short of challenges, CIB again dem-
onstrated its strength and resilience by delivering strong
financial performance in the face of subdued economic
activity while honouring the Bank’s commitment to its
employees, customers and shareholders to be the leading
financial institution in Egypt.
Among many noteworthy achievements of the past year,
the Bank reported record net profit and revenues, produced
healthy loan and deposit growth, maintained a solid capital
foundation and worked to further enhance our excellent
customer service.
Our ability to produce such accomplishments reflects CIB’s
distinctive business model and emphasises the Bank’s agility
to adapt to the changing macro and regulatory environments
while operating within a solid strategic framework focused
on sustainable growth.
Parting from that, we proudly present to you our Board of Di-
rectors Report detailing how CIB managed to work through the
unusual circumstances and come out even stronger yet again.
Egypt: Short-Term Challenges … long-Term
Opportunities
2016 was globally foreseen as a year of opportunities aris-
ing on the back of resumed corporate activity and restored
investor confidence, but year-to-date events have proven
otherwise both on the local as well as the regional arenas.
The Egyptian economy had to deal with a burdensome
agenda of a high budget deficit, foreign currency shortages,
rising inflation, an ailing tourism sector and low remittanc-
es, FDIs or Suez Canal revenues. More economic headwinds
included structural adjustment and a government reform
program of unprecedented proportion — in conjunction with
the IMF loan and other multilateral/bilateral funding sourc-
es — that included gruelling fiscal consolidation measures
and the historical floatation of the Egyptian pound (EGP), in
an attempt to put the country’s economic house in order and
pave the way for economic stability.
To delve deeper into the economic activity over FY2016,
one must look at the macro picture both prior to and after
one major turning point: the liberalisation of the EGP.
22 • Annual Report 2016 • CIB
prior to the Floatation
The Egyptian economy faced major challenges marked by
the high budget deficit of 11.8% of GDP, the severe foreign
currency (FCY) shortages, where net international reserves
were in the range of USD 16-17 billion throughout 2016 and
reached USD 19.5 billion in September along with high and
rising inflation rates exceeding 15% in August, a situation
that led to the revision of Egypt’s GDP growth forecasts down
to 3.3% from 4.4%.
The inadequacy of the foreign currency supply along with
an overvalued EGP hampered Egypt’s competitiveness —
lowering the volume of exports by 26% in 1Q FY2016.
The spread of terrorism in the Middle East as a spill over
from the conflict in Syria and instability in Iraq has hit
Egypt’s already ailing tourism sector, and the crash of the
Russian plane over the Sinai Peninsula brought it to an al-
most complete halt.
Other foreign currency revenues dried up as well. FDIs
remained in a wait-and-see mode, driven by the haziness
in the foreign exchange market and the anticipation of the
devaluation/free float of the EGP. In addition, the persistent
Chinese economic slowdown continued to take its toll on
Suez Canal revenues.
Externally, the sluggish recovery of the Eurozone weighed
on Egypt’s growth, while lower oil prices and a slowdown in
Gulf countries negatively impacted Egyptians’ remittances
and dwindled grants, aid and foreign currency deposits from
GCC states that now must pursue structural reforms and cut
down government spending to meet the new oil realities.
The Central Bank of Egypt (CBE) devalued the EGP by
almost 13% in March 2016. The local currency was devalued
to EGP 8.78 to the USD in an attempt to ease the foreign cur-
rency shortage by bringing the official rate closer to that of
the parallel market and attract FDI.
In an effort to curb rising inflation, the Monetary Policy
Committee (MPC) introduced a series of successive interest
rate hikes: 50 bps in December 2015, 150 bps in March 2016
and 100 bps in June, raising the corridor rates to 11.75% and
12.75% for deposits and lending, respectively. The successive
interest rate hikes had little impact over inflation rates given
the continuous rises on the core and headline readings, and
further restrained growth by raising the cost of borrowing
for companies. Furthermore, such hikes did not support the
government’s ambitions in reducing its widening deficit.
2016 witnessed the resumption of talks with the IMF for
a USD 12 billion Extended Fund Facility (EFF) to support a
government reform program aimed to improve the function-
ing of the foreign exchange markets, bring down the budget
deficit and government debt and create jobs, especially for
women and youth. Some of the steps that were taken by the
government supporting its commitment to reforms include
further rationalisation of energy subsidies and implementing
a value-added-tax (VAT) at 13% (increasing to 14% in 2017),
which Parliament passed in August.
After the Floatation
In early November, the central bank announced that it was
moving with immediate effect to a liberalised exchange
rate regime to quell any distortions in the domestic foreign
currency market and to allow market demand and supply
dynamics to work effectively to create an environment of
reliable and sustainable provision of foreign currency.
At the time of writing, the currency stands at around 18.27/
USD, which represents a drop of 100% against the USD since
before the floatation. Economists’ consensus is that the EGP
will witness further volatility over the next couple of years,
but the big adjustment has already happened.
Besides the complete exchange rate liberalisation, the CBE
also increased the overnight lending and deposit rates by
300 bps, bringing the deposit rate to 14.75% and lending rate
to 15.75%. Also, immediately following the devaluation, the
government upwardly adjusted administrative fuel prices by
approximately 30-40% as phase 1 of a multi-year program to
eliminate energy subsidies.
The costs of these reforms and the floatation translated
to a 23.3% headline inflation and 25.86% core inflation as
of December.
With the disbursement of the first tranche of the IMF loan,
the conclusion of the People’s Bank of China/CBE USD 2.7
billion swap agreement, and the upcoming launch of Egypt’s
USD 2-3 billion Eurobonds, the CBE is set to rebuild a strong
reserve shield rather than support a specific exchange rate.
Hence, net international reserves reached USD 24.3 billion at
the end of December 2016.
Amid these changes, the Egyptian Stock market in 2016
was the world’s best-performing market in 2016, according to
the Egyptian Exchange’s year-end report. The move to a lib-
eralised exchange rate regime triggered one of the strongest
bull equity market rallies in Egypt’s history, portfolio inflows
into equities and fixed income rebounded sharply after al-
most six years of absence and foreign strategic investors have
started to actively eye investment opportunities. The EGX 30
index rose 74% in 2016, and the year saw one of the highest
volume of foreigners’ net-buying in the market and attracted
883 new funds and institutions.
During these extraordinary times, one fact remained un-
changed, that is a safe, strong and resilient banking industry
is absolutely critical to a country’s success. The Egyptian
banking sector has been the lifeblood that kept the economy
going throughout the past six years. Egyptian banks man-
aged through the cycles, continued to support the economy
and came out, to a great extent, unharmed. Banks remain
well funded because of their strong deposit base. Liquidity
remains ample, with the loan-to-deposit ratio at 44.5% (one
of the lowest in emerging economies) and substantial excess
reserves. Stress tests performed by the CBE suggest that pos-
sible losses could be absorbed by banks’ profits and capital
buffers. Reiterating the fact that the fundamentals are solid
and the sector is well poised to absorb the pent-up corporate
demand and is steadfast in its ability to take advantage of the
vast opportunities that still lie within the Egyptian market.
Outlook Moving Forward
As Egypt goes through a clear shift in monetary and fiscal poli-
cies aimed at easing pressure on the EGP and controlling mount-
ing inflation and public spending, 2017 is a year where growth is
expected to slow. But with the government’s solid steps towards
reforms along with an IMF deal now in place, growth should
pick up from 2018 as inflation eases, monetary policy begins to
be loosened and the Zohr gas field comes on stream.
CIB • Annual Report 2016 • 23
inTroducTion
Cib is and has always been at the forefront of change in the egyptian banking
industry, and we continue to grow our core and strategic capabilities to sustain
our competitiveness.
The fall in the EGP’s value will naturally involve some short-
term challenges for the economy. In particular, import costs
will rise, which, combined with measures to tighten fiscal
policy such as the implementation of VAT and fresh subsidy
cuts, will push inflation up in the coming months.
Moving forward, Egypt should be able to take advantage of
the boost in competitiveness from a weaker EGP, which will
help narrow the current account deficit, and there are already
signs that foreign investors are returning to the country. In
collaboration with the IMF, further economic reform is likely,
which will act as an additional pull for foreign investors. All
of this should support stronger medium-term growth. With-
in this context, Egypt is approaching the last mile of a bumpy
25-year economic reform process with full-fledged political
commitment and comprehensive international support.
Heading into 2017, the following elements are needed to
ensure smooth sailing through the current challenges:
• A proactive government that efficiently creates a better
business climate, presses ahead with its reform agenda,
and continues its focus on fiscal adjustment, legislative
reform, improving the international standing and en-
hancing social protection.
• A patient private sector that realises the costs of reforms—
and that demanding protection, special exemptions or a
reversal of course will hinder economic activity.
• Policy stability that clearly defines the forthcoming In-
vestment Act.
• Hard work and persistence that helps overcome current
and potential bottlenecks.
Highlights of 2016
CIB is and has always been at the forefront of change in the
Egyptian banking industry, and we continue to grow our core
and strategic capabilities to sustain our competitiveness.
Our sophisticated interest rate and liquidity risk manage-
ment frameworks prepare us for a range of market scenarios
and ongoing regulatory changes. Our focus on technology,
revolving around developing innovative solutions, capitalis-
ing on big data and investing in cyber defences, underscores
the Bank’s commitment to leadership and excellence, aiming
to be the most effective provider of financial services across
all categories. We continue to invest in our most important
asset, our people. We look forward to serving the needs of the
24 • Annual Report 2016 • CIB
next as well as the current generation of customers, clients
and employees. We remain committed to advancing and
protecting the Bank’s position as a world-class financial in-
stitution in a culture rooted in both ingenuity and integrity.
2016 was no different, we continued to do what we have
always done: manage the Bank and invest for the long run in
line with our growth strategy, that is to achieve sustainable
and profitable growth based on customer centricity, opera-
tional efficiency and organisational development.
The following list of CIB’s competitive advantages and set
of factors and paved the way for the success of our strategy
and translated many of our goals into concrete reality.
Dynamic balance Sheet Management
CIB succeeded over the years to maintain a forward-looking
strategy to sustain any external shocks based on sound
balance sheet management, a solid capitalisation level and
exceptional liquidity, which is well in excess of both local
and international regulations. Despite continuous uncertain
market conditions in 2016, the Bank continues to maintain its
solid reputation as a market leader, serving clients efficiently
and delivering strong results as evident in the following:
• Proactive Liquidity and Interest Rate Risk Management
In 2016, we continued to advance our approach to liquid-
ity and interest rate risk management, cornerstones of
safety and soundness.
Throughout the year, we ensured that the Bank had
sufficient liquidity resources to continue business as
usual under both a short-term and prolonged market and
company-specific stress. Our internal framework is more
conservative than the related Basel II liquidity measures.
Compliance with our framework in 2016 has resulted in
CIB exceeding regulatory minimums as well as Basel III
liquidity guidelines, in both local and foreign currency.
The LCY CBE liquidity ratio remained well above the regu-
lator’s 20% requirement, recording 60.77% as of December
2016, and the FCY CBE liquidity ratio reached 47.80%,
above the threshold of 25%. NSFR was 234% for local cur-
rency and 140% for foreign currency and LCR was 1770%
for local currency and 435% for foreign currency.
Furthermore, CIB maintained a healthy LDR ratio
of 42%. The Bank successfully attracted 7% of all new
deposits in the system in 2016, which is a testament to
A UN study found Moez Street in old Cairo to
have the largest concentration of medieval
architectural treasures in the Islamic world.
CIB • Annual Report 2016 • 25
inTroducTion
the trust the market has in CIB. Having attracted such
deposit inflows without significant increases to our
cost of funding reiterates the Bank’s mission of creat-
ing a sustainable liability base supported by stable,
cost-effective customer deposits. The Bank focused on
enhancing the CIB franchise and building relatively
sticky low-cost current account and savings account
(CASA) deposits, which comprised 43% of total custom-
er deposits as of 31 December 2016. The growth in CASA
deposits helps to drive down overall cost of funds, pro-
viding a strategic advantage for the Bank.
In 2016, CIB used an effective risk-management
process that maintained interest rate risk within
prudent levels and ensured the Bank remained on safe
and stable ground. Measures included lowering the
balance sheet duration as a precautionary measure
to minimise the impact of interest rate movements
on the Bank’s capital adequacy levels. CIB also took
the lead in the reclassification of the Bank’s sovereign
portfolio in a way to ensure that it maintains a proper
balance sheet structure, boosting the return to share-
holders in light of an increasing interest rate environ-
ment, while maintaining its liquidity ratios comfort-
ably above regulatory requirements. As a result, and
despite prevailing economic conditions, we are better
prepared to manage whatever scenario plays out.
• Best-in-Sector Asset Quality Led by Prudent and Well-
Disciplined Risk Management
CIB has always believed that having an effective and
disciplined risk management framework is crucial to
proactively recognise potential adverse events and es-
tablish appropriate risk responses that in turn reduce
costs and prevent losses associated with unexpected
and volatile market conditions. We continually evalu-
ate our risk strategy, appetite and analysis in response
to current and anticipated economic conditions, con-
ducting vigorous stress tests, efficient risk reporting
and analysis, and digitisation of certain monitoring
systems and processes.
Parting from that conviction and led by a dynamic
risk-management strategy to counter potential chal-
lenges and market factors, CIB took provisions of EGP
893 million for the full year. Moreover, asset quality con-
tinued to remain resilient, as reflected in an NPL ratio of
6.70% (5.7% normalised for the EGP devaluation) of the
gross loan portfolio, covered 149% by the Bank’s EGP 9.82
billion loan loss provision balance.
Increasingly Strong Capital Ratio
In a market where capital is the name of the game, CIB
has established a strong capital base that not only allows
the Bank to excel and outperform despite slow eco-
nomic growth, market volatility and heightened macro-
economic challenges, but also distinguishes CIB with
•
an advantageous market position despite having many
players in the banking sector.
The management and Board continue to pursue all avail-
able alternatives to ensure a sustainable, comfortable
capital base that is less vulnerable to external factors.
In 2016, CIB maintained its strong and resilient capi-
tal base, as reflected in a comfortable capital adequacy
level of 10.47% before profit appropriation and 13.97%
after profit appropriation well above CBE requirements
and Basel guidelines.
• Consistently Good Returns on Equity
•
All our businesses are close to best in class, as reflected
in consistently strong return on equity. CIB’s commit-
ment to sustainability was evident in its ability to record
an ROAE of 34.24% (after profit appropriation based on
the suggested profit appropriation schedule).
Efficient Cost Controls
Personnel and administrative expenses increased by
20% in 2016. As we press on with building our businesses
for the future, we will continue to invest for the long-
term growth and sustainability of the Bank, namely in
technology, training and various investments geared
toward automating and improving efficiency and opera-
tions. Nonetheless, the cost-to-income ratio will remain
within the 30%-35% range set by the Board of Directors.
investing in talent and technology
Talent and technology continue to be at the centre of our
success, both today and in the future. We continuously invest
in our human capital to have the best caliber on the ground
who are ready to work with clients wherever they need our
solutions and expertise. And we are committed to arm those
employees with technology tools that enable them to serve
clients efficiently and effectively.
big Data
With the growing wealth of data and customer interactions,
so does the need to utilise Big data to identify opportunities,
spot trends and analyse patterns and transform them into
information, products and insights that can be used exten-
sively to improve our Bank.
To best utilise our data assets and spur innovation we have
built our own in-house big data and are now the first bank
in the region to have an advanced analytics and data man-
agement team and will soon become the first to harness the
power of big data for the benefit of our customers.
In its quest of moving from a descriptive analytics model to
predictive analytics, CIB has been investing aggressively in its
IT and human capital to develop an exceptional infrastructure
that can support its Big Data platforms. Such investments
included data storage and computation platforms to increase
structured data capacity and improve reporting performance
as well as self-service Business Intelligence and real-time in-
26 • Annual Report 2016 • CIB
formation delivery systems to manage petabytes of data for
advanced analytics and new regulatory requirements.
We strongly believe these developments will prove transfor-
mational not just for CIB, but for our customers, clients and
communities. All of which will significantly benefit from big
data technologies and improved data-management practices
across our businesses.
Future-proofing the Cib Franchise
Over the years, we have been very disciplined in our approach
to growth, including resisting calls to skimp on investments
for the future to meet short-term targets, but that is not our
approach for building the business for the long term.
This responsible approach, a strong franchise and stable
financial footing have left us well-positioned for the current
economic challenges.
No one is able to predict what comes next, but we strive to
ensure the Bank has the capacity to adapt to the future — no
matter what it looks like. To this end, CIB devoted significant
attention in 2016 to studying our current business mix to
respond strategically to evolving regulatory requirements as
well as to find ways to be more productive with our resources
and maximise shareholder value.
To meet the evolving needs of our customers as well as the
financial system more broadly, we are committed to continu-
ally developing new solutions while maintaining a robust and
secure infrastructure.
However, we do not innovate for innovation’s sake. Banking
is, and always will be, about people and relationships. Therefore,
our focus will remain on serving the real needs of our customers
and clients: seamless interactions, personal advice and human
experiences. We will continue to build for the future and be
there for our clients in good times and bad. Whatever the future
brings, we will face it from a position of strength and stability.
2016 Financial position
CIB reported another exceptional set of results, with con-
solidated net income up 27.09% y-o-y at EGP 6.01 billion for
FY2016. Standalone net income reached EGP 5.95 billion,
28.22% over 2015. Standalone revenues grew 11.05% over the
previous year to EGP 11.32 billion.
The Bank recorded net interest income of EGP 10.02 billion,
an increase of 23.44% y-o-y. Non-interest income recorded
EGP 1.3 billion for the full year. Net fees and commissions
income stood at EGP 1.55 billion.
All financial indicators emphasised the Bank’s strong
financial performance in 2016. CIB maintained its efficiency
during the year, with cost-to-income ratio at 21.4% compared
to 19.6% in 2015. The Bank continued its upward trend in
ROAE, which recorded 34.24% on a consolidated basis (post-
appropriation), up from 33.46% in 2015. Consolidated ROAA
recorded 2.71% for 2016. The bank recorded a net interest
margin of 5.47% as of year-end 2016.
The Bank’s loan portfolio stood at EGP 97.5 billion at year’s
end, growing 56% or EGP 35.3 billion y-o-y. Excluding the
impact of the devaluation, the gross loan portfolio grew 5%
or EGP 3.39 billion during 2016. This increase comes in ac-
cordance with the Bank’s strategic objectives in maintaining
asset quality and enhancing profitability. The Bank’s market
share of total loans amounted to 6.98% in October 2016.
CIB aggressively pursued deposit growth in 2016, adding
EGP 77 billion to its base, which grew to EGP 231.7 billion, an
increase of 49% over 2015. Excluding the devaluation impact,
deposits grew 12% or EGP 18.61 billion. CIB’s share of the
deposits market reached 8.10% in October 2016.
The Bank ended the year with a buoyant balance sheet and
capital base, which is reflected in its comfortable capital ad-
equacy level of 10.74% and an adjusted CAR (including profits
attributable to shareholders) of 13.97%, well exceeding CBE
stipulated ratios and enhancing the Bank’s ability to face
uncertain economic circumstances, should any arise.
CIB continued achieving strong growth in net interest
income, fees and commissions and the balance sheet. Rela-
tive to its peer group, CIB maintained its leading position in
terms of profitability and balance sheet size. Overall, CIB’s
strong financial performance in 2016 exceeded P&L targets.
Appropriation of Income
The Board of Directors proposed the distribution of a divi-
dend per share of EGP 0.50. In addition, CIB is increasing its
legal reserve by EGP 297 million to EGP 1,333 million and
its general reserve by EGP 4,301 million to EGP 8,855 mil-
lion, thus reinforcing the Bank’s solid financial position, as
evidenced by a capital adequacy ratio of 10.74% and an ad-
justed CAR (including profits attributable to shareholders)
of 13.97%. The proposed dividend distribution comes in line
with the Bank’s strategy of maintaining a healthy capital
structure to address more stringent regulations, mitigate
associated risks as well as facilitate and support the Bank’s
future growth plans.
2016 Activities
CIB’s diverse mix of revenue streams enabled the Bank to
weather a challenging operating environment this year, and
our business model allowed CIB to stay committed to its
growth strategy while building for tomorrow’s success. Once
again, CIB management and employees delivered on all counts
and, in doing so, the Bank achieved its best results to date and
extended its leadership position in areas of strategic impor-
tance. We continue reaffirm our leading position in the indus-
try as the best private sector bank in Egypt, with a number of
impressive recognitions on all sides of our business:
institutional banking Activities
Parting from our conviction that “Winning organisations are
more responsive to their customers, more agile than their
CIB • Annual Report 2016 • 27
inTroducTion
The ib group continued to be the primary contributor to Cib’s bottom-line
profitability, generating almost 66% of the bank’s profits.
egP 5.95 bn
standalone net income in FY2016,
an increase of 28.22% y-o-y
competitors and more flexible in how they go to market,” the
IB group adopted a new strategy during 2016 and embarked
decisively on implementing it. The new strategy is aimed at
reorganising the Group’s business divisions to better align
them with the clients’ needs. The new model is built to en-
hance efficiency and maximise profitability, thus building a
better and stronger franchise.
Throughout 2016, the Group sustained its preferred and
most trusted business partner position through meeting cor-
porate clients’ expectations and needs in a most timely and
precise manner, offering best-in-class financial structures
and advisory services to its clients with its competent team,
customer-oriented approach and innovative product portfo-
lio and distribution channels.
The IB Group continued to be the primary contributor to CIB’s
bottom-line profitability, generating almost 66% of the Bank’s
profits. Institutional Banking’s net income before tax increased
by 18% over last year to reach EGP 5.3 billion in 2016, mainly on
higher net interest income, foreign exchange gains and strong
trade services performance and controlled expense growth.
On another note, the Bank’s strong disciplined and proac-
tive risk framework has been essential in withstanding the
uncertain economic environment in Egypt. Despite chal-
lenges, the risk group continued to align and collaborate with
business on product development and risk strategies to drive
growth without compromising the quality of the portfolio.
Consumer and business banking Activities
The Consumer and Business Banking Divisions had a very
strong year in 2016, building on the Group’s strategy of de-
livering an outstanding customer experience and developing
stronger relationships with our clients.
The distinctiveness of CIB’s offerings lies in following “tailored
and personal messaging” strategies rather than broad-based
“one-size-fits-all” approaches, which is the best way to engage
with customers. The Group focused on enhancing customer ser-
vice and attracting new customers, consequently enabling CIB to
achieve growth in its consumer assets book despite challenging
conditions in 2016, and with no significant deterioration in credit
quality, thus maintaining its competitive edge in the market.
In doing so, Consumer and Business Banking net income
rose 46% over last year to reach EGP 2 billion in 2016, con-
tributing 34% to CIB’s gross profitability. Consumer Banking
28 • Annual Report 2016 • CIB
gathered EGP 25.1 billion and USD 505 million in deposits.
This growth is an outstanding achievement in a highly com-
petitive market of 39 banks and has helped CIB increase its
market share of overall deposits in the Egyptian banking
system, recording 8.09% as of December 2016.
Moreover, throughout 2016, we continued to renovate and
add to the Bank’s extensive branch network, which stood at
168 branches and 748 ATMs as of December 2016.
At CIB, we strongly believe that by understanding custom-
ers well beyond a demographic profile, we can better antici-
pate what they need, and given the fast-paced advancement
of technology and its growing integration into the lives of
customers, it has become indispensable to redefine con-
sumer banking dynamics. The transformational progress of
mobile phones and mobile technology significantly changed
consumer behaviour and expectations. Internet and mobile
banking thus are no longer alternatives, but have become a
necessity, especially for younger generations.
In keeping with the new banking trends, developing inno-
vative digital services is a core focus of CIB. Tailoring truly
customer-centric digital products and delivering all the ser-
vices digitally, versus through traditional channels, is what
differentiates a bank from its peers in the digital era we are in.
This is where we see enormous revenue potential and why we
have heavily invested in our digital platforms to transform our
products and services to keep up with the quick pace of tech-
nology development and the demands of a younger generation
of customers, who comprise 80% of the Egyptian population.
In November 2016, CIB launched its mobile banking applica-
tion, which provides different banking services and offers many
features for clients to manage their accounts conveniently.
Another digital product release in 2016 is CIB Smart Wallet,
which revolutionises traditional payment methods and grants
an advanced, secured, faster and smarter experience. The Wal-
let facilitates the customer’s daily payment process, including
the payment of utility, phone bills, money transfers, mobile
top-up, card-less cash in/out from the ATM, shopping online
through a virtual card or from stores via a QR code, and much
more. This new application integrates different technologies
such as smartphones with banking services to expand the
scope of financial services to reach a broader segment of cus-
tomers. Additionally, CIB offers a variety of customised prod-
ucts to unbanked individuals and provides them with easily
accessible digital solutions. With access to Smart Wallet and
Turbo Cash, any person can transfer money to another in real
time, 24/7, without a bank account, through simple steps using
an ATM. In every case, the goal of these applications is to en-
sure a convenient, seamless and efficient banking experience.
CIB is also partnering with non-financial organisations to di-
versify its digital offering to a wider customer base. These com-
bined efforts are yet another way to stimulate financial inclusion
by reaching unbanked citizens. Such a significant step not only
introduces a new, vast segment of telecom customers into our
banking system, but more importantly increases banking pen-
etration. It also demonstrates how a strategic alliance between
two large entities from both the banking and telecommunica-
tion sectors can generate positive returns for our economy.
operations and it
In 2016, the COO Area was largely focused on the successful
acquisition of Citibank’s retail business, which was based on
the collective and comprehensive efforts exerted across Opera-
tions & IT to complete the complex integration process. CIB
was the only bank among 11 Citibank acquisition deals world-
wide to commit to a six-month transitional service agreement
(TSA) period, making CIB the only bank to successfully com-
plete the migration process in less than 12 months.
Much energy was channelled in 2016 into several IT initia-
tives, with continued efforts to build up our infrastructure
capacity, enhance our production stability, improve our
services monitoring and technology refresh for underlying
infrastructure to create a more agile IT organisation that
has the ability to support our services and provide a seam-
less and improved customer experience.
The COO Area also focused on automation, increasing pro-
ductivity and optimising/streamlining its processes. This in-
cluded several re-engineering efforts to enhance turnaround
times and encourage staff to innovate and bring up new ideas
through a “Think Tank” initiative.
Several key strategic projects were also launched during the
year, such as the Customer Relationship Management Phase 1,
improving internet banking with more secured authentication
mechanisms and upgrades to our Core Banking Platform. To fur-
ther study customer behaviour and make more effective credit
decisions, we initiated a Scoring and Decision Engine project for
both credit cards and personal loan applications to track consumer
risk behaviour and ensure minimal risk to bank operations. This
will allow us to build a unique risk model for each customer.
Despite the challenges faced during the year in terms of
foreign exchange rates and foreign currency regulations set
by the CBE, the COO Area has made every effort to ensure
any extraordinary controls and regulations are seamlessly
embedded in our processes without impacting our business
expansion plans.
In line with CIB’s efforts to expand its reach, nine branches
were instated this year. We also re-branded and renovated ex-
Citibank branches to match CIB’s brand image. As for ATM’s,
CIB continued to expand its network with an additional 86
ATMs added, bringing total ATMs to 748 across the country
by the end of 2016.
Our footprint in Smart Village was also further expanded
this year with the inauguration of the third Head Office, an
award-winning building certified with the Egyptian Green
Pyramids Certificate of Sustainability, emphasising CIB’s
commitment to sustainable development.
The COO Area’s dynamic performance is and will always be
built on our high caliber staff and their expertise. We reflect
this philosophy through our structured hiring plan, tailored
training, leadership development and setting talent manage-
ment plans, and 2016 was no different. The aim is to build
strong second lines with ideal qualifications for those tasked
with our future development and leadership.
Going forward, we are embarking on a digitisation journey,
which we believe is set to be the main player in shaping all
future banking growth. The digital proposition will empower
self-assisted sales and ongoing customer loyalty. Striving to
support innovation led to a new partnership between the
American University in Cairo (AUC) and CIB to launch AUC
Venture Lab FinTech Accelerator to introduce new innova-
tive products and solutions and groom and assist FinTechs to
break into the finance sector.
business Continuity Management & information
Security
The significant evolution of cyber security and its associated
risks has necessitated an emphasis on ensuring a proper Se-
curity Management Program is in place to effectively manage
security risks and guarantee the right governance is in place.
Major efforts were funnelled into the cyber security/informa-
CIB • Annual Report 2016 • 29
inTroducTion
tion security domain to ensure the Bank is fortified with the
ability and scope to handle cyber security threats.
As part of our 2016 roadmap, initiatives undertaken this year
include the following:
• Establishing CIB’s Security Operations Centre, which
will significantly boost its capability for monitoring and
addressing a wide range of security threats in a proactive
manner and build competent and capable Operational
Security Services.
• A Fraud Management Solution was put in place to moni-
tor monetary and non-monetary events on the consumer
and corporate internet banking platforms, utilising cus-
tomer behaviour mapping to minimise operational risks.
• The One-Time Password solution was implemented for
critical internet banking services in accordance with the
Bank’s strategy to ensure compliance with CBE internet
banking regulations and improve security measures
that protect customer transactions.
• A comprehensive security governance, risk and compli-
ance framework was established along with the neces-
sary policies that ensure adequate security governance
across the Bank.
• Concrete steps were taken toward developing the re-
quirements for Business Continuity Management (BCM)
software to automate the full BCM life cycle. Effort went
into guaranteeing the continuous testing of our recov-
ery capabilities to ensure service availability for our
customers. The Bank remains committed to investing in
improving its BCM, bringing aboard a team of dedicated
professionals in charge of the function.
In keeping with our efforts, CIB was awarded the Most Effec-
tive Recovery of the Year Award at the Business Continuity
Institute Middle East Awards in 2016, marking the second
Business Continuity Award for the Bank and our 10th nomi-
nation for similar awards regionally and globally. CIB was
also named finalist this year for the International Award in
Business Continuity by the UK’s CIR Magazine. The recogni-
tion emphasises CIB’s unique positioning in the BCM indus-
try across the financial sector in Egypt.
Subsidiaries
CIB’s businesses provide integrated and diversified products
and services through its affiliation with CI Capital and its
other subsidiaries, which hold numerous opportunities for
CIB and will accelerate our ability to increase product pene-
tration with the aim of generating incremental value through
cross-selling.
CI Capital generated consolidated net income of EGP
113 million, 85% over 2015. Brokerage net income recorded
EGP 55.7 million, with a market share of 9.5% of total trad-
ing as of year-end 2016. CI Capital’s brokerage platform is
complemented by an industry-leading research platform
30 • Annual Report 2016 • CIB
covering more than 75 companies across 11 sectors in seven
markets, with a top-tier analyst team ranked sixth in MENA
Research by the 2015 Extel Survey — second in the MENA
region and first in Egypt.
CI Capital’s Investment Banking arm is the #1 ranked
advisor in Egypt, with c. EGP 106 billion in transactions
since inception and over EGP 72 billion executed since the
beginning of 2013.
CI Asset Management had the best performing Egyptian
equity funds of 2016. The Asset Management division man-
ages fixed income, money market and equity products, with
AUM in excess of EGP 9.9 billion. The division managed to
position itself as a top-quartile asset manager in all types of
funds and portfolios. In 2016, the division was awarded the
“Best Asset Manager in Egypt” by Global Investors for the
seventh consecutive year.
Continued Focus on Commercial Banking
Activities
In line with the Bank’s strategy to gradually exit from its
subsidiaries and affiliated investments, to enable CIB to
focus exclusively on its core banking activities and enhance
its leading position in the market, 2016 saw a continuation of
that strategy where:
• CIB sold its full stake (40%) in Egypt Factors to the Com-
pany’s main shareholder FIM Bank in November 2016.
• In December 2016, the Bank signed sale and purchase
agreements with a group of non-related Egyptian and
Gulf investors for the sale of 71.94% of CI Capital Hold-
ing’s (“CI Capital”) share capital, for a total transaction
value amounting to EGP 683.4 million, with a total
company value of EGP 950 million. The transaction is
expected to be finalised once all necessary regulatory
approvals are obtained.
Awards and Recognition
CIB’s superior performance and distinction continued to
receive recognition by many reputable organisations both
on the regional and international levels. In 2016, the Bank
received a total of 20 prestigious international awards, five of
which were received for the first time, including:
• Best Bank in Egypt Supporting Women-Owned and
Women-Run Businesses awarded by the American
Chamber of Commerce in Egypt (AmCham)
• Best Private Bank in Egypt awarded by Global Finance
• Middle East Most Effective Recovery awarded by The
Business Continuity Institute
• Achievement in Operational and Liquidity Risk Man-
agement Awards for 2016 by The Asian Banker
• FTSE4Good Emerging Index Status and ESG Rating:
Based on an assessment of CIB’s ESG practices and perfor-
mance over April 2015-February 2016, the Bank became a
constituent of the FTSE4Good Emerging Index 2016
Ancient Egyptian architects
constructed the axis of Abu
Simbel so that on October 22
and February 22, the sun would
illuminate the sculptures on
the back wall, except for the
statue of Underworld god Ptah.
CIB • Annual Report 2016 • 31
inTroducTion
The list of 2016 awards also includes:
• Best Trade Finance Provider in Egypt - Global Finance
• Best Treasury and Cash Management Providers in Egypt
- Global Finance
• Best Bank in Egypt - Global Finance
• Best Foreign Exchange Providers in Egypt - Global Finance
• Best Sub-custodian Bank in Egypt - Global Finance
• Best Employee Engagement Initiative in the Middle East
- Asian Banker
• Best Retail Risk Management Initiative in the Middle
East - Asian Banker
• Best Bank in Egypt - Excellence Award - Euromoney
• Most Active Issuing Bank in Egypt in 2015 - The Euro-
pean Bank for Reconstruction and Development
• Best Cash Management Services in North Africa - EMEA
Finance
• Best FX Services in North Africa - EMEA Finance
• Best Bank in Egypt - EMEA Finance
• Bank of the Year in Egypt - The Banker
2017 Business Outlook
While we expect continued challenges in the economic
environment in 2017, we are confident that the changes
under way across the Bank, including those focused on
improving productivity and enhancing mobile and digital
technology capability and offerings, will underpin con-
tinuing strong performance. Our diverse business mix and
franchise model — centred around sustainable growth
—readies CIB to meet today’s ongoing challenges and wel-
comes the opportunities at hand.
We approach 2017 with cautious optimism, tempered by
sound governance and discipline. We look forward to build-
ing on our proven business model, expanding our relation-
ships with current and new customers and maintaining our
conservative approach towards liquidity, capital, expense
and risk management. We are confident that we will keep
driving positive results, continue to expand our market share
and deliver exceptional customer experience.
Moving forward, we are focused on adapting and inno-
vating. We see technology as an essential core competency
and a key differentiator to drive future growth in all our
business segments. New technologies provide us with op-
portunities to extend our leadership position in service and
convenience. We will continue to invest in technology and
tools that will allow CIB customers to engage across every
channel — at branches, the call centre, automated bank
machines and our phone, online and mobile platforms.
Behind all of this is our people. Their understanding of the
banking business — what we do and how we do it — com-
bined with their passion and commitment to live up to our
brand is why CIB will continue to grow and deliver results.
They are why CIB is and always will continue to be “A Bank
to Trust.”
32 • Annual Report 2016 • CIB
Commitment to Sustainability
CIB knows its responsibilities to all its stakeholders, listens
to them carefully and grows based on a transparent, clear
and responsible approach. While moving forward, CIB aims
to create not just economic value, but also a permanent value
to the lives of all its stakeholders, with a philosophy of, “Grow
and help others grow.”
The Bank has always strived to strike a sound balance be-
tween the strategic goal of increased profitability and serving
broader socioeconomic and environmental interests — the
backbone of any sustainable success and distinction.
The main aspects that shape our focus on sustainable
banking are:
• Environmental Sustainability: Minimising the envi-
ronmental and social impacts of the Bank’s activities,
products and services.
• Corporate Social Responsibility: Playing an active role
in establishing high standards for social development,
with creating value for society being the main goal.
• Corporate Governance: Commitment to corporate gov-
ernance best practices, ethics and corporate values.
Environmental sustainability
As the pursuit of sustainability becomes a key focus of lead-
ing financial institutions, CIB is embracing sustainability by
integrating the ideology in its policies, practices, culture and
mindset as well as its vision and mission statements.
CIB’s thinking, course of action and its promising green
journey of transformation and change are closely aligned
with the 2030 Global Sustainable Development Agenda,
its 16 Sustainable Development Goals (SDGs) and as-
sociated 169 targets and with Egypt’s 2030 Agenda. The
underlying focus is to advance a sustainable and climate-
resilient future.
CIB is not only employing different clean energy systems
at its premises but also conforms to green construction
standards to benefit the environment and accommodate
staff members and customers.
Despite the fact that most banks and their associated busi-
nesses are paper dependant, CIB succeeded in tremendously
decreasing its volume of paper requisition and consumption.
Furthermore, CIB is a pioneer in implementing a waste-
segregation process and exchanging waste for cash via sales
to the appropriate recycling outlets.
CIB also approved the activation of ride-sharing application
Carpooling to encourage its staff members to streamline their
fuel expenses, build team camaraderie and encourage fewer
cars, and therefore fewer emissions, on the road. The Bank also
accommodates the special needs’ community through digital
banking channels, the introduction of ATM machines for the
visually impaired and conducting training for branch staff on
communication with individuals with disabilities.
Communicating, sharing our practices and partnering with
international entities around the world, CIB was the first
and only bank in Egypt to join the United Nations Environ-
ment Programme Finance Initiative (UNEP FI) through
signing the UNEP FI Statement of Commitment on Sustain-
able Development. Furthermore, CIB engaged in Dow Jones
2016’s sustainability assessment exercise, ranking 79 out of
131 globally recognised financial entities. CIB was the only
Egyptian bank in the MENA region to participate in this as-
sessment and is committed to improve its ranking in 2017.
CIB is committed to enthusiastically dive into the most
pressing sustainable priorities, building on the SDGs and
Paris Climate Agreement signed by Egypt in mid-2016. It is a
crystal-clear reality that sustainability is a key focus of healthy
and reputable financial institutions. Therefore, CIB pledges to
continue its work towards a green economy through partner-
ing with the government, civil society and others.
One of several new paths being charted by CIB is that a
growing number of startups and entrepreneurs are working
on impressive alternative energy solutions and innovations
in green finance. CIB is confident in Egypt’s youth, seeing
them as the architects of the future with the wisdom and
natural inclination for change.
Corporate Social Responsibility
At CIB, we take our social responsibility towards the com-
munity where we live and operate very seriously. Our CSR
programs provide our business with the vital components
to operate both responsibly and ethically. Being a socially
responsible corporate has always come atop our priorities, as
is evident from the numerous community programs we have
been involved in throughout the year.
community development
Over the last 12 months, CIB maintained its steadfast com-
mitment to community development through diverse cat-
egories of CSR projects in the fields of art, culture and sport.
Some of the activities we conducted during 2016 include:
Student Cultural Trip to Cairo Opera House: In associa-
tion with “Friends of The Opera” association, CIB organised
a cultural trip for 400 students from different public schools
to attend Sergei Prokofiev’s composition “Peter and the Wolf”
performed by the Cairo Symphony Orchestra at the Cairo
Opera House. The trip aimed to promote and nurture musical
appreciation in the children.
KidZania: Throughout its partnership with KidZania, which
began in 2013, CIB has been organising trips to the edutainment
city for underprivileged children. Over the past 12 months, CIB
organised four trips for 100 children with special needs, serious
health conditions and those from underprivileged backgrounds
to KidZania, under the supervision of the CIB Foundation. At
KidZania, children perform simulated jobs and are paid for
their work as firefighters, doctors, police officers, journalists
and the like. CIB’s partnership with KidZania has also been a
chance to raise banking awareness in the youth. The Bank has
a mini-branch on the premises that allows children to perform
different bank operations like writing cheques, issuing debit
cards and depositing or withdrawing KidZos, the official cur-
rency of KidZania, from ATMs around the venue.
Autism: Children with autism and other disabilities have al-
ways been given the highest priority on CIB’s CSR agenda. This
has been reflected in our long-term partnership with the AD-
VANCE Society for Persons with Autism and Other Disabilities
and the Bank’s continuous contributions to its activities. In
2016, CIB continued to sponsor the society’s annual ceremony,
which showcased rhythmic musical compositions performed
by students. The concert serves as a platform from which
awareness can be raised about the creative and expressive
skills of children with disabilities, supporting their integration
into society. Moreover, the Bank sponsored 2016’s World Au-
tism Awareness Day (WAAD) in Egypt, held annually in April
worldwide, which witnessed the participation of more than 75
organisations specialised in the provision of services to those
with learning disabilities and autism across the country.
Zawya: Through CIB’s partnership with Zawya, an art-
house cinema founded by Misr International Films (MIF),
the Bank sponsored the screening of animated film “Hotel
Transylvania 2” with live audio description for more than 150
visually-impaired children from the schools of Taha Hussein,
Mostafa Assaker and Alnour Wal Amal, in addition to the
Fagr El Tanweer Association and Al-Markaz Al-Namoozagy
for the Blind.
El Sawy Culture Wheel: In 2016, the Bank capitalised on
2015’s successful awareness campaign entitled “Financial
Planning for Safer Future” and launched a second round of
free seminars under the theme “Financial Inclusion.” CIB
also continued its sponsorship of special screenings of docu-
mentary films, cultural nights, concerts and art exhibitions
organised by El Sawy Culture Wheel.
Beena Initiative: CIB is the main partner and funder of
“Beena”, a protocol signed with the Social Solidarity Minis-
try to encourage the active participation of youth in society,
and to support and monitor the development of social care
services. The initiative succeeded in attracting thousands
of volunteers across Egypt, who implemented an effective
mechanism for developing and monitoring the quality of
services provided to different social care centres, such as
orphanages, elderly homes and special-needs houses, a seg-
ment of society that is in dire need of adequate care and
higher-quality services.
Sponsoring Art: Supporting art remains the core of CIB’s
CSR agenda. We work to ensure the diversification of our
channels to reach out to distinctive art talents across Egypt
and into as many categories as possible. CIB’s numerous and
varied art-centric sponsorships and activities led to the sig-
nificant enrichment of the Bank’s private art collection.
CIB • Annual Report 2016 • 33
inTroducTion
Supporting Students of Fine Arts Faculties: The Bank
continued to pave the way for more art students to realise
their talents and receive adequate recognition for their
art. This year, CIB extended its reach across Egyptian
universities by adding the newly inaugurated Fine Arts
Faculty at Al-Mansoura University to its agenda, sponsor-
ing the first ever art exhibition held at the premises for
senior students and fresh graduates. CIB’s reach included
the acquisition of participants’ distinctive pieces, adding
them to our private art collection to incentivise the young
talents. Similarly, the Bank sponsored for the second con-
secutive year the art exhibitions of the faculties of Fine
Arts at Alexandria, Minya and South Valley universities,
targeting the same age range of young artists.
Art Exhibitions: This year, CIB developed its already ex-
pansive strategy of supporting art exhibitions by extending
support to individual exhibitions by young artists. The Bank
acquired the finest pieces displayed at each exhibition to
enrich its private art collection.
Cairo Symposium: Maintaining its exclusive position as
the only bank in Egypt sponsoring every category of fine
arts, CIB sponsored the second edition of the Cairo Sym-
posium for Carving Iron Scrap, which was held in April
2016 at Mohamed Mahmoud Khalil Museum. The Bank
has been sponsoring this magnificent art event since its
launch in 2013 and acquired distinctive pieces added to
CIB’s private art collection.
Art Salons: For the sixth consecutive year, CIB sponsored
the annual Egyptian Youth Salon in collaboration with the
Fine Arts Division at the Egyptian Culture Ministry support
trending artists under the age of 35. CIB also sponsored for
the second consecutive year the Upper Egypt Salon, which
was held in Luxor in November 2016, in collaboration with
South Valley University’s Faculty of Fine Arts. This not only
extended the Bank’s geographical reach to untapped areas
of Upper Egypt, but gave artists of various age brackets the
opportunity to display their creative works.
Sponsoring the Egyptian Squash Federation: For more
than five years, CIB has been sponsoring the Egyptian
Squash Federation as part of the Bank’s belief that sports
are an integral facet of shaping the minds and health of
Egyptian youth. The Bank continued its support this year
of young, talented athletes who represent the country
in regional and international arenas. In 2016, the Bank
further expanded this support to include less-fortunate
children by launching the “Squash for Everyone” Initia-
tive in partnership with Egyptian Squash National Teams
Director & Technical Advisor Amr Shabana. The initiative,
supported by CIB Foundation and held in association with
the Egyptian Red Crescent and Logain Foundation, aims
to give underprivileged children and those with special
needs access to sports facilities and to let them explore
and develop their athletic capabilities.
34 • Annual Report 2016 • CIB
Al Ahram Squash Open: CIB was proudly the exclusive bank
for the tournament, which aimed at reviving the Al Ahram
Squash Open that was suspended for the last 10 years.
Partnering with Omar Samra: This year, CIB introduced
the new “Your Space” initiative in the context of its partner-
ship with Egyptian entrepreneur Omar Samra, which aims
to develop the scientific talents of Egyptian youth. This
initiative represents an innovative experience to promote
the culture of space sciences among students at schools and
universities. The objective is to stimulate the development of
engineering, sciences, technology and mathematics curricu-
lums and motivate students’ interests to explore the sciences
of space, making it their future professional choice. In this
regard, different special contests, such as designing a space-
ship or a city for humans on another planet or on the moon,
were organised for students to compete and excel.
ciB foundation
2016 was another strong year for the CIB Foundation. The
organisation reaffirmed its position as a leading supporter of
quality health services for children by growing and expand-
ing across the country and especially in Upper Egypt. In
acknowledgment of the sustainable impact it instills in the
community, the CIB Foundation was recognised for its work
in the arena of corporate social responsibility from African
Banker, winning the award for “Socially Responsible Bank of
the Year in May 2016.” Among the numerous projects that the
CIB Foundation supports was providing Children’s Cancer
Hospital 57357 with a PET CT scanner at a cost of EGP 13.17
million. The highly specialised equipment will allow doctors
and surgeons to less-invasively identify and plan for the re-
moval of cancerous cells. This piece of equipment will also
reduce the level of radiation patients are exposed to.
In partnership with Gozour Foundation for Development,
the CIB Foundation supported the funding of 264 eye exam
caravans in public elementary schools in several governorates
across Egypt, which included Qena, Sohag, Aswan, Luxor.
Through the “6/6 Eye Exam Caravan” program, the Foundation
provides 158,400 disadvantaged students with free eye exams
and necessary care and consultation by the end of the project.
Moreover, it has supported the complete renovation and
outfitting of the Abu El Rish El Mounira Children’s Hospital’s
intensive care unit under the supervision and management
of Friends of Abu El Rish Children’s Hospitals Organization.
The project would help to save the lives of nearly 2,000 chil-
dren annually. Additionally, the Foundation has equipped a
paediatric catheter lab at the Ain Shams University Hospital,
under the supervision and management of the Yahiya Arafa
Foundation, allowing the hospital to separate adult and
paediatric patients, conduct 100 procedures per month and
reduce the waiting list by 90%.
The Foundation also supported the Department of Ra-
diology at the National Cancer Institute with a paediatric
Computed Tomographic (CT) scan machine. The dedicated
piece of equipment will allow the department to increase the
number of urgent cases it can take in daily, decrease mortal-
ity and morbidity rates as early diagnosis rates climb and
eliminate the paediatric waiting list.
In addition, the Foundation has covered the costs of 50
paediatric open-heart surgeries at the Magdi Yacoub Heart
Foundation Center and approximately 10 paediatric burn
patient surgeries at the Ahl Masr Foundation.
The Foundation also continues to bear the maintenance
costs of all the projects it has carried out since its inception to
ensure the continuity and sustainability of the desired health
services quality.
Corporate Governance
CIB believes that effective corporate governance practices are
essential to achieving and maintaining public trust and confi-
dence in the banking system, which are critical to the proper
functioning of the banking sector and economy as a whole.
Stemming from that belief, the Bank has had long-standing com-
mitment to promoting sound corporate governance practices
across the organisation and has consistently and proactively
worked on enhancing our corporate governance frameworks
and actively amending any corporate governance shortcomings
that may arise. Accordingly, CIB continually adjusts to conform
to relevant regulatory requirements and duly considers interna-
tional best practices in corporate governance.
The core principles of our corporate governance policies,
which we view as key for managing the Bank effectively
and achieving its strategic operational plans, goals and
objectives for sustainable banking, are centred around the
following notions:
• Responsibility and meritocracy — the clear division and
delegation of authority;
• Accountability in the relationships between manage-
ment and the Board, and between the Board and the
shareholders and other stakeholders;
• Disclosure and transparency to enable stakeholders to
assess the Bank’s financial performance and position; and
• Fairness in the treatment of all stakeholders.
CIB’s overall corporate governance framework assures the
alignment of the interests of shareholders and managers as
well as monitoring the management of the business through
the dissemination of information and transparent reporting.
In this context, the Bank’s governance framework is directed
by a number of internal policies and regulations that cover a
wide range of business and fiduciary aspects including risk
management, compliance, audit, remuneration, evaluation,
succession planning, ethics and conduct, budgeting and
capital management.
Clear and segregated reporting lines in different areas
of the Bank along with a continuous chain of supervision
and communication channels for the Board’s guidance and
strategy are a vital component of the Bank’s governance
structure to highlight any potential conflict of interest.
With regard to the respective roles of the Board and Senior
Management, the Board approves the Bank’s strategic
goals, as well as oversees the management of the Bank,
while the day-to-day operation of the Bank is the responsi-
bility of Senior Management. The Managing Director along
with the excellent and competent CIB Chief Executives
and Management Team bring decades of experience and
thought leadership that guide CIB’s direction and execution
of the strategies set by the Board in addition to overseeing
the day-to-day tasks of managing the Bank. While direct-
ing this effort, the Managing Director is also responsible
for ensuring adequate and effective governance of the Bank
through managing the independent control functions: risk,
compliance and legal. The CIB Chief executives report to the
Board directly.
The Board and its specialised committees, both executive
and non-executive, constitute key elements of the gover-
nance framework and are governed by well-defined charters.
The Board’s non-executive committees — consisting of the
Audit Committee, Corporate Governance and Compensation
Committee, Risk Committee, Operations and IT Committee
and Sustainability Advisory Board, along with the executive
committees comprising of the Management Committee,
High Lending and Investment Committee and Affiliate Com-
mittee — are tasked with assisting the Board in accomplish-
ing their responsibilities and obligations with respect to their
decision-making roles.
CIB’s Board consists of eight members, one executive and
seven non-executive, one of whom represents Fairfax’s inter-
est in CIB, with three of the non-executive members being in-
dependent. The Board collectively possesses a wide range of
industry expertise and knowledge that adequately enables it
to set balanced strategic direction and to offer management
a clear implementation route for aspired goals.
CIB’s Board met seven times over the course of 2016, during
which, with the assistance of its committees, it effectively ful-
filled its main responsibility of exerting the requisite oversight
over the Bank and ensured that CIB’s activities are run in a man-
ner that meets the highest ethical and fiduciary standards, thus
enhancing the long-term value for the shareholders, through:
• Approving the Bank’s business and risk strategy as well
as major policy decisions.
• Supervising the affairs of the Bank and overseeing the
execution of its strategy by the officers and employees
under the direction of the CEO.
• Assuring the long–term interests of the shareholders are
advanced responsibly as well as guaranteeing the disclo-
sure of reliable and timely information to shareholders.
• Evaluating, compensating and ensuring that there is
proper succession for key management roles.
CIB • Annual Report 2016 • 35
Ras Mohamed is a protectorate that some
locals believe was given its name because
in side view, the contour of its cliff is said to
resemble the face of a bearded man.
inTroducTion
Ci Capital generated consolidated net income of egP 113 million during
the year, 85% over 2015.
The Staff Issues Committee was initiated in 2011 as a com-
munication channel for employees to express their queries,
complaints and any work-related issues to an unbiased body.
The committee’s role extends from dealing and solving cus-
tomer complaints to setting recommendations to enhance
the work environment and processes as well as ensuring an
engaging workplace.
In 2016, 51 cases were presented to the Staff Issues Com-
mittee. These cases included performance disagreements,
violation to the code of conduct, working environment
issues, misuse of authority, termination of contracts and
request for extending unpaid leave. The issues raised to the
committee have been thoroughly investigated and analysed
where fair and sound decisions have been taken and all
cases have since been resolved.
• Developing and monitoring the Bank’s internal audit
and risk management policies and strategies. The Board
sets the risk policies and the risk appetite and constantly
monitors the Bank’s risk profile against said appetite
through the CIB Risk Department.
Furthermore, the Board of Directors continued to work on
enhancing the comprehensiveness of the Bank’s corporate
governance framework especially in connection with risk
and compliance matters. In an effort to reinforce its risk-
based approach, the Board is moving towards an Enterprise
Risk Management (ERM) Framework. CIB’s enterprise risk
monitoring and reporting are critical components that sup-
port Senior Management and the Board’s ability to effectively
perform their risk management and oversight responsibilities.
The ERM concept thus provides the Bank with the necessary
controls, communication and risk-informed decision-making
to achieve the right balance between risk and reward.
CIB has taken concrete steps to ensure accountability
and institutionalise its corporate governance guidelines in
compliance with the applicable laws and regulations of the
regulators. During the central bank’s regular audit missions,
CIB’s management ensures that the auditors are provided
with all the necessary documents to fully perform their audits.
CIB’s Internal Audit team closely follows up with the Bank’s
management to take all corrective measures with regards to
the central bank’s audit comments. Furthermore, given the
utmost attention to maintaining the highest levels of gover-
nance and adherence to the disclosure requirements of the
stock exchanges where the Bank is listed, CIB’s Investor Rela-
tions team is committed to consistently sharing high-quality
information with all stakeholders regarding the Bank’s ac-
tivities, with emphasis on transparency.
Finally, and with the objective of continuously improving
Compliance measures as a key element of the Bank’s control
framework, several channels for staff issues/code of conduct and
petitions have been introduced and announced to employees.
36 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 37
inTroducTion
In Closing: Measuring CIB’s performance
in 2016
Through our performance measures, we communicate our
priorities and benchmark CIB’s performance versus its peers
as we strive to be “A Bank to Trust.” The following table high-
lights our performance against these measures.
2016 performance Measures
Results
2016 performance Measures
Results
finAnciAl
• Maximise shareholders’ equity and deliver above-peer-
average total shareholder return
• Grow earnings per share (EPS)
• Deliver above-peer-average return on risk-weighted assets
Business oPerATions
• Grow revenue faster than expenses
• Identify market gaps and attain first-mover’s advantage
by laying the groundwork ahead of our peers to allow us
the ability to benefit from rising opportunities as they
present themselves
cusTomer
1. Improve customer experience
2. Invest in core businesses to enhance customer experience
emPloYee
• Improve employee engagement score y-o-y
• Enhance the employee experience by:
1. Listening to our employees
2. Providing a healthy, safe and flexible work environment
3. Providing competitive pay, benefits and performance-
based compensation
4. Investing in training and development
• ROAE of 33.1% vs a peer average of 31.6% (as of 3Q2016)
• 28% EPS growth
communiTY
• Donate 1.5% of the Bank’s net annual profit through the
• Refer to the CSR section for more details on CIB’s social
involvement and community development initiatives
CIB Foundation
• Make positive contributions by:
1. Supporting employees’ community involvement and
fund raising efforts
2. Supporting advances in our areas of focus, which in-
clude education, arts, culture, health and protecting
and preserving the environment
sAfeGuArdinG THe inTeresTs of sHAreHolders
CIB maintains a proactive investor relations program to
keep shareholders abreast of developments that could have
had an impact on the Bank’s performance. The Investor Rela-
tions team and Senior Management invest significant time
in one-on-one meetings, road shows, investor conferences,
conference calls and a proactive stream of disclosures while
simultaneously ensuring analysts had the information they
needed to maintain balanced coverage of the Bank’s shares
• As a result of the IR team’s conscious efforts in asserting
corporate access, in a 2016 Middle East Investor Rela-
tions Study, carried out by Extel in partnership with the
Middle East Investor Relations Society, CIB was named
the “Leading Corporate for Investor Relations in Egypt,”
while the head of Investor Relations also received a nod as
the “Best Investor Relations Professional – Egypt”. This is
the third year running in which CIB has received at least
one award from MEIRS.
egP 11.3 bn
consolidated revenues during the
year, gaining 11% y-o-y
• Cost to income recorded 21.4 %
• Consumer Banking net income rose 46% y-o-y to EGP 2
billion and gathered EGP 25.1 billion and USD 505 million
in deposits, aided by the launch of tailored new products
for the household segment designed to add value
• Institutional Banking’s net income before tax increased
18% over last year to EGP 5.3 billion, mainly on higher
net interest income, foreign exchange gains, strong trade
services performance and controlled expense growth
• Much effort was exerted in enhancing the organisa-
tion’s cyber security standing, with a clear strategy and
comprehensive plan put in place to improve our security
capability and continuously provide a safe banking envi-
ronment for our customers
• The Employee Relations Team launched the third Em-
ployee Effectiveness Survey during the year. Some 4,627
employees participated, meaning a considerably high
participation rate of 88%, with the survey revealing
57% engagement and 47% enablement. The results also
revealed key organisational strengths: mainly pride in
working at CIB, believing CIB has high performance
expectations and understanding the link between every
job and the organisation’s goals. The survey revealed
important development opportunities, such as perfor-
mance management, respect and recognition and work
structure and processes. Plans to work on these oppor-
tunities are being developed with the relevant business
heads to address the issues in 2017. The results have been
communicated to senior management and, accordingly,
translated into an action plan
38 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 39
inTroducTion
Appendix: Key Financial Highlights
i. balance Sheet (in Egp billions):
a. ciB standalone
Total assets
Contingent Liabilities and Commitments
Loans and Advances to Banks and Customers
Investments
Treasury Bills and Other Governmental Notes
Due to Customers
Other Provisions
Total equity
b. consolidated ciB and ci-cH
Total assets
Contingent Liabilities and Commitments
Loans and Advances to Banks and Customers
Investments
Treasury Bills and Other Governmental Notes
Due to Customers
Other Provisions
Total equity
ii. income Statement (in Egp million)
a. ciB standalone
Interest and Similar Income
Interest and Similar Expense
Net Income from Fee and Commission
Net Profit After Tax
b. consolidated ciB and ci-cH
Interest and Similar Income
Interest and Similar Expense
Net Income from Fee and Commission
Net Profit from Continued Operations
Net Profit from Discontinued Operations
Net Profit After Tax and Minority Interest
40 • Annual Report 2016 • CIB
balance as of
31/12/2016
balance as of
31/12/2015
% Change
263.9
68.6
86.2
62.5
39.2
232.0
1.5
21.3
179.2
31.0
57.2
62.0
22.1
155.4
0.9
16.5
47.27%
121.29%
50.70%
0.80%
77.38%
49.29%
66.66%
29.09%
balance as of
31/12/2016
balance as of
31/12/2015
% Change
267.5
68.6
85.4
62.1
39.2
231.7
1.5
21.5
179.5
31.0
56.8
61.6
22.1
155.2
0.9
16.6
Jan. 1, 2016
to Dec. 31, 2016
Jan. 1, 2015
to Dec. 31, 2015
19,144
-9.127
1,548
5,951
14,765
-6,650
1,586
4,641
Jan. 1, 2016
to Dec. 31, 2016
Jan. 1, 2015
to Dec. 31, 2015
19,144
-9.127
1,548
5,896
127
6,009
14,765
-6,650
1.586
4,669
61
4,729
49.03%
121.29%
50.35%
0.81%
77.38%
49.29%
66.66%
29.52%
% Change
29.66%
37.25%
-2.39%
28.22%
% Change
29.66%
37.25%
-2.39%
26.28%
108.20%
27.06%
Saint Catherine’s Monastery is believed to
enshrine the burning bush through which
God was first revealed to Moses.
CIB • Annual Report 2016 • 41
2016
In rEvIEw
2016 was not without its challenges, but it was yet
another opportunity for cIB to demonstrate its ability to
remain ahead of the game and “A Bank to trust.”
Declared a UNESCO World Heritage Area, Saint
Catherine’s ecosystem is home to many endemic
and rare species, including the world’s smallest
butterfly — the Sinai baton blue butterfly.
42 • Annual Report 2016 • CIB
42 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 43
CIB • Annual Report 2016 • 43
2016 in revieW
institutional
Banking
Corporate Banking Group (CBG)
Recognised across the Egyptian market for its strong credit
culture, CBG is CIB’s financing arm, providing world-class
financial structures and superior advisory services to
clients. The group caters to the financing needs of large
companies and has broadened its scope to serve medium-
size companies as well, recognising the importance of the
latter’s role in the economy.
CBG’s foremost goal is to advance the nation’s economic
development. It is committed to closely monitor the perfor-
mance of projects and economic entities that CIB finances to
ensure their viability. The group believes economic viability
on the micro level is certain to contribute to and promote
macroeconomic welfare.
The Group’s mission is to enhance its position as the top
corporate bank in Egypt while maximising value for its
shareholders, employees and the community at large. We
strive to create the best possible banking experience for our
clients through developing new innovative products.
Competitive Advantages
• Strong corporate business model.
• Highly experienced staff supported by continuous train-
ing to keep up with the latest industry developments and
technical know-how.
• Strong customer base with a healthy and diversified
portfolio that is well positioned in primary growth in-
dustries, including but not limited to: oil and gas, power,
petrochemicals, infrastructure, food and agribusiness,
tourism, shipping and ports and real estate.
• Ability to provide a wide and innovative array of financ-
ing schemes.
• Broad coverage including companies with sales revenues
above EGP 100 million, thus establishing a foothold in this
untapped segment to create future growth potential.
2016 Achievements
Despite the challenging economic and market conditions
during 2016, the Group was able to grow its loan portfolio
64% y-o-y through the following:
44 • Annual Report 2016 • CIB
• The revaluation of our foreign currency book following
the EGP floatation.
• Participating in two syndicated loans to finance new
energy generation capacities of 16,265 MW in Egypt.
• Participating in a trilateral syndicated agreement with
the Egyptian Electricity Holding Company and Egyptian
General Petroleum Corporation to discount dues be-
tween the parties.
• Leading the market with a share of 37.7% in financing
Egypt’s 4G licenses while improving CIB’s share of wal-
let to 41% in issuing the required performance letters of
credit for the mobile operators.
• Playing part in Egypt’s mega projects such as the Suez Ca-
nal Tunnel Development Project (Ismailia and Port Said).
• Financing major acquisition deals within the health-
care sector.
• Launching the new Discounting Without Recourse Prod-
uct, preliminary introduced to pharmaceutical manu-
facturers in its first phase. Marketing for the product is
ongoing, aiming to gain more exposure in 2017.
• Scoring an overall Net Promoter Score of 27 and a Cus-
tomer Satisfaction Score of 7.7.
2017 Strategy
CBG’s goals in 2017 reflect the Bank’s overall objectives and
mission to create higher stakeholder value while playing a
pivotal role in driving the country’s economy out of our re-
sponsibility as the best bank in Egypt.
Creating higher value for all stakeholders can only be
achieved through the development of new innovative prod-
ucts, creating the best possible client experience and focus-
ing on our asset quality and growing our business.
On the asset quality front, the Group is focusing on restruc-
turing problematic accounts and developing specifically tai-
lored credit facilities to distressed/unconventional industries.
To achieve growth in business, the team is looking at four main
products in 2017, in additional to our existing ones. These are:
1. Discounting of Trader Receivables
2. Securitisation
56% y-o-y
growth in loan portfolio to EGP 97.5
billion by year-end 2016
3. Escrow Arrangements
4. Supplier Finance Scheme
The group intends to continue supporting other areas within
the Bank through marketing CIB’s electronic payment gate-
way to potential customers. The goal is to increase penetra-
tion rates and create a memorable customer experience, refer
small- and medium-size subcontractors and suppliers dealing
with our clients to the Business Banking Group and promote
discounting and forfeiting transactions to CIB’s prime corpo-
rate clients on select import and export transactions.
Financial Institutions Group (FIG)
FIG covers global relationships with credit institutions and
serves as the entry point and first contact for credit institu-
tions with CIB. FIG manages CIB’s business with local and
foreign banking and non-banking financial institutions
through three specialised divisions: 1) Correspondent Bank-
ing, 2) Non-Banking Financial Institutions and 3) Finance
Programs and Donor Funds.
Correspondent Banking Division (CBD)
CBD lies at the core of FIG, acting as the focal point of con-
tact for local and international banks working with CIB. CBD
accounts for almost 91% of FIG business, most of which is in
the form of contingent trade finance exposure. The division is
highly active in supporting and coordinating the relationship
with various correspondent banks and provides an array of
products and services including trade finance, direct lending,
international payments and tailored/structured solutions. A
number of factors underpin the division’s core competencies:
• Experienced regional relationship officers.
• Specialised product managers.
• A diverse network of almost 200 global correspondent
banks.
• Strong ties with multilateral financial institutions.
• Access to prime corporate and business banking clients .
• Proven track record in delivering tailored credit and
trade finance services.
geographical coverage
The division manages its correspondent credit relationships
through dedicated and experienced relationship officers who
are structured regionally as follows:
• Americas and Europe Team
• Asia-Pacific Team
• MENA, Africa and Russia Team
product Management
Complementing the activities of the division is a Trade & Cash
Products Team specialised in structuring products and ser-
vices that meet the unique needs of banks and clients, such as:
• Without recourse financing or discounting of trade in-
struments (forfeiting)
• Letters of credit refinancing
• Risk participations
• Bilateral loans and funding arrangements
• Nostro and Vostro account management
• Commercial and interbank payments and cash letter
collection services
2016 Achievements
• Grew outstanding contingent trade finance portfolio
mainly on the back of successfully attracting letters of
guarantee for mega and infrastructure projects in Egypt.
• Expanded CIB’s correspondent banking relationships in
Asia and Africa.
• Continued to expand in Eastern Europe as a new mar-
ket, focusing on relationships in Poland and the Czech
Republic.
• Continued our initiative of signing trade-facilitation
agreements with multilateral financial institutions to
support Egyptian trade transactions and expand our
coverage of Africa to better cater to the trade finance
needs of Egyptian exporters.
CIB • Annual Report 2016 • 45
2016 in revieW
despite the challenging economic and market conditions during 2016, the
Corporate banking group was able to grow its loan portfolio 64% y-o-y.
2017 Strategy
• Position CIB as the bank of choice for correspondent
banks through applying a customer-centric approach by
acting not only as a correspondent bank to our counter-
parts but also as their local advisor.
• Capitalise on our service quality and efficient processing to
further grow the trade finance business (contingent and direct).
• Further diversify correspondent network by focusing on
relationships with Asia and Africa.
• Continue to apply a “relationship-management model”
to capture more value from our client and correspondent
relationships over time.
• Innovate revenue-generating trade and cash products.
• Maintain our focus on supporting the Egyptian economy.
Non-Banking Financial Institutions
Division (NBFI)
NBFI is a credit-lending division under FIG. It provides
credit facilities, liability products and services to all types
of non-bank financial institutions. Targeted clients include
companies engaged in leasing, insurance, securities broker-
age, car finance, factoring and credit insurance, along with
investment companies and microfinance organisations.
2016 Achievements
• Grew total loan portfolio c. 56% and total deposits 101%.
• Attracted new-to-bank accounts and grew credit facili-
ties extended to existing clients.
• Participated in landmark securitisation transactions.
• Established new limits for existing companies and
identified new NGO accounts to accommodate the
microfinance business.
• Continued to maintain moderate levels of portfolio risk and
managed an effective collection of loan portfolio payments.
2017 Strategy
• Grow loan portfolio and increase share of wallet for exist-
ing prime credit customers in leasing and microfinance.
• Approach new clients in mortgage finance, leasing and
microfinance.
• Focus on bond investments related to securitisation
transactions.
• Market the Bank’s digital products for all existing and
targeted NBFIs.
46 • Annual Report 2016 • CIB
• Grow the loan and investment portfolio with quality
players in the leasing, mortgage and brokerage (clearing
and settlements accounts) sectors in terms of volume
and number of accounts.
• Aggressively market and cross sell CIB liability products.
Finance programs and International Donor
Funds (Fp&IDF)
FP&IDF is uniquely specialised in managing sustainable
development funds and credit lines provided by governmen-
tal entities and international agencies that positively affect
our community and environment. In collaboration with
the Ministry of Agriculture and Land Reclamation, FP&IDF
encouraged private sector involvement in the agribusiness,
while the division is also engaged in various environmental
and pollution-abatement projects that aim to assist compa-
nies in making their operations more eco friendly. FP&IDF
also manages CIB’s direct microfinance portfolio through a
microfinance services company and has recently extended
its focus to include wholesale microfinance.
The division’s main functions include:
Agency Function
CIB acts as APEX (Agent Bank) for several funds, grants and
credit lines, providing an array of tailored operational servic-
es including structuring and providing pre-loan assessment
and post-loan monitoring.
participating Function
CIB acts as a participating bank in several developmental
programs that finance agricultural and environmental proj-
ects with concessional terms.
Microfinance
The division has managed CIB’s direct microfinance portfolio
since 2007. Most recently, the indirect model was launched
through lending microfinance institutions (MFIs) in collabora-
tion with non-bank financing institutions. In 2016, the division
introduced a cash collection solution through the addition of a
new function to CIB Smart Wallet that enabled microfinance
institutions to collect payments from customers.
Carved out of just one ridge of limestone 73
meters long and 20 meters high, the Sphinx of
Giza is considered the greatest monumental
sculpture in the ancient world.
CIB • Annual Report 2016 • 47
2016 in revieW
egP 82.8 bn
in deals expected to materialise
in FY2017
Said to have housed Greek oracle
Jupiter Amun, Siwa’s Temple of the
Oracle is thought to be the first place
Alexander the Great visited in Egypt.
technical Assistance and Consulting Services
FP&IDF offers an array of integrated and competitive consul-
tancy services targeting development programs.
2016 Achievements
• FP&IDF maintained CIB’s position as the leading agent
bank in the market.
• Concessional loans amounting to EGP 672.1 million were
disbursed through the Agricultural Development Program.
• Grew fund programs under management to EGP 1.6 billion.
• Awarded two new agency contracts.
• Launched the Support to Agriculture Small- and Medi-
um-Enterprises Project (SASME Project), amounting to
the equivalent of EUR 30 million in EGP terms.
• Launched the Promotion of Rural Income through the
Market Enhancement Project (PRIME Project), amount-
ing to USD 35 million in EGP terms.
• A joint declaration was signed with AFD to consider two
credit facilities to CIB for EUR 80 million, with EUR 60 mil-
lion as a soft loan granted by AFD and dedicated to promote
renewable energy and energy efficiency, combined with a
EUR 350, 000 grant for a technical assistance program.
• Introduced a cash collection solution through the addition
of a new function to CIB Smart Wallet that enabled microfi-
nance institutions to collect payments from customers.
2017 Strategy
• Sustain CIB’s leadership in agency and participating
bank functions by growing the portfolio of funds un-
der management.
• Grow CIB’s microfinance portfolio in collaboration with
non-bank institutions.
• Market
the cash collection/disbursement solution
through CIB Smart Wallet to our existing customers as
well as other MFIs.
• Continue to enhance CIB’s capacity for microfinance lending
through establishing new agreements with guarantee insti-
tutions and providing technical assistance opportunities.
Debt Capital Markets (DCM)
DCM has an unparalleled track record, with experience in
underwriting, structuring and arranging large-scale project
finance facilities, syndicated loans, bond issues and securiti-
48 • Annual Report 2016 • CIB
sation transactions, all of which are supported by a dedicated
agency desk. The division achieves its objectives by leveraging
CIB’s substantive underwriting capabilities and established
relationships with international financial institutions and
export credit agencies, as well as its placement capabilities
in the local market with banks, insurance companies, the
money market and fixed income funds. Furthermore, the
division provides large-scale borrowers with better market
access and greater ease and speed of execution.
2016 Achievements
DCM has focused its marketing efforts in conjunction
with CBG & GCR (leveraging on CIB’s underwriting ca-
pability), with a focus on local currency denominated
financing particularly in the infrastructure, energy, ports,
petrochemicals sectors and PPP projects, as well as real
estate and telecommunication. We have been successful in
achieving the following: :
• DCM has deals for a total debt size of EGP 31.4 billion
with CIB’s share amounting to EGP 6 billion and EGP
0.6 billion in new and restructured transactions in
2016, CIB is in the final stages of closing an EGP 2.3
billion syndicated facility for the Suez Canal Tunnel
Development Project.
• In light of the government’s plan to expand and develop
the Suez Canal region to become a global hub, CIB is in
the final stage of closing an EGP 3.2 billion syndicated
facility for a tunnels project in the Ismailia governorate.
DCM has also closed deals in FY2016 worth a total issue
size of EGP 3.4 billion in the bunkering and power sec-
tors, namely with Sonker Bunkering Company and the
Egyptian Electricity Holding Company.
• Continued growth in the real estate, education, building
materials, petrochemical, transportation, power and in-
frastructure sectors has provided financing opportuni-
ties, with ongoing negotiations for deals worth EGP 82.8
billion expected to materialise in FY2017.
• DCM has also closed deals in FY2016 for a total debt size of
EGP 15 billion in the bunkering and power sectors.
DCM continues to lead in the securitisation sector, hav-
ing closed deals worth EGP 2.6 billion in 2016. DCM is also
mandated as a Joint Lead Arranger with NBE for Arab Con-
tractors securitization for EGP 500 million and Abdul Latif
Jameel Securitization for EGP 200 million. In addition, deals
in the pipeline amount to EGP 700 million for originators in
the fields of auto finance and leasing among others.
2017 Strategy
• Continue playing a vital role in economic development
by mobilising funds for large-ticket project financing
deals and syndication transactions.
• Position the Bank to raise the required debt to fund
Egypt’s substantial infrastructure and power invest-
ments (with a special focus on renewable and green en-
ergy), whether implemented by public sector companies,
via IPP or PPP programs.
• Introduce new financial tools to lead the development of
capital markets in Egypt.
• Continue to support clients’ needs for diversified funding
sources through innovation in asset-backed securities.
Treasury & Capital Markets (TCM)
TCM is the Bank’s primary pricing arm for all its foreign
exchange (FX) and interest rate products. TCM is a primary
profit centre for CIB, offering a wide range of products to
various types of businesses that we have diversified across
regions, capabilities and distribution channels.
Among its responsibilities are FX, Money Market and Fixed
Income trading activities, primary and secondary government
debt trading, management of interest rate gaps with its respec-
tive hedging, pricing of local and foreign currency deposits and
pricing of preferential deposits. Foreign exchange products
are used by our customers for hedging purposes. Also, our
products are used through third counterparty trading, where
CIB allows its clients to purchase almost any non-tradable
currency that they require, including, for example, the Brazil-
ian riyal, Singaporean dollar, Thai baht, Chinese yuan, Korean
won, and South African rand. The currency is simultaneously
transferred to its country of origin to make payments abroad.
Other products covered are direct forwards and simple/
plain vanilla options, in addition to a wide array of option
structures such as premium embedded options, participat-
ing forwards, zero-cost cylinders, boosted call/put spread,
interest rate swaps and interest rate caps/floors/structured
products. The division’s Primary Dealers team provides
CIB • Annual Report 2016 • 49
2016 in revieW
Ras Sedr was originally developed as a base
town for one of Egypt’s largest oil refineries,
but its beautiful coasts transformed it into a
prime resort area.
clients with transparent advice on their investments in trea-
sury bills and treasury bonds as well as corporate bonds, on
both primary and secondary markets, with very competitive
prices on the secondary market offers. The team has been one
of the most influential players in the local debt market. The
Treasury Division’s team provides the Bank’s clients with an
incomparable quality of service around-the-clock.
Service Model
TCM uses a hybrid customer-centric service model. It contains
some features of the direct customer-centric model, such as
understanding your customer by actively engaging and compre-
hending the customer analytics/information, enhancing the cus-
tomer experience and breaking down silos. It is also composed
of market understanding by pricing TCM products related to
market norms in a way that effectively addresses customer needs.
target Markets
TCM works in collaboration with all customer relationship
sectors, such as Corporate Banking, Business Banking,
Strategic Relations, Enterprise Customer and Financial In-
stitutions such as insurance companies and funds. It targets
clients with long and strong relationships with CIB and those
with large volumes of foreign currency, fixed income, money
market and hedging businesses. It also focuses on customers
with expertise and adequate understanding of our products
to advise them and enhance their treasury business volumes.
2016 Achievements
• Despite the severe shortages in FX during the year, TCM has
been able to secure some FX from its repeat client base, with
a total reaching the equivalent of USD 1.25 billion in 2016.
• In 2Q2016, Global Finance Magazine recognised CIB
TCM as one of Global Finance’s World’s Best Foreign
Exchange Providers in 2016.
• TCM maintained its leading position as the highest net
trading income segment among Egyptian private banks
in 2016, with a total value of EGP 1.315 billion.
• The Ministry of Finance ranked CIB’s Fixed Income Desk
the second best performing bank on the primary market
for treasury bills and bonds and second best on the sec-
ondary market for treasury bonds.
2017 Strategy
Increase TCM’s market share of the foreign exchange business,
especially for foreign currency purchased against the EGP, and
boost the deposit base captured across all customer segments
and share of fixed income and money market generated.
Asset & liability Management (AlM)
The strategic priority for ALM is the management of the
Bank’s assets and liabilities in terms of interest rates, liquid-
ity and concentration risk and maximising the Bank’s net
interest income by managing the excess liquidity portfolio in
all currencies and introducing a variety of diversified prod-
ucts to satisfy both retail and corporate clients’ needs such
as mutual funds and CDs. Moreover, ALM is responsible for
managing the Bank’s Nostro accounts and is also committed
to effectively attracting DDA and Savings Accounts through
proper pricing and coordination with other lines of business.
ALM’s main objectives are to provide adequate liquid-
ity, maintain mandatory ratios and manage liquidity risk
within approved gapping limits. It also focuses on the
Bank’s overall interest rate risk in terms of re-pricing gaps
and duration, which includes the restructuring and hedg-
ing of the balance sheet.
2016 Achievements
• Successfully managed the Bank’s liquidity and contributed
towards increasing the Bank’s LCY net interest margin
compared to the same period of the previous year.
• CIB remained a safe haven even after the liberalisation of
the exchange rate by moving its capital away from riskier
investments.
• Maintained liquidity during the free float by keeping
liquidity ratios solid at higher than regulatory ratios.
Surpassing our liquidity goal was mainly attributed to
our efforts to attract deposits and increasing deposit
rates to attract clientele and higher volumes.
• Continued to maintain liquidity with solid net loans/depos-
its, strong asset quality and a comfortable coverage ratio.
2017 Strategy
ALM anticipates growth in the private sector business driven
by a gradual pickup in several sectors and a boost in investor
confidence. As such, ALM will continue positioning the Bank
to comfortably support all its clients’ needs while enhancing
shareholder value. The Bank has a strong appetite for growth
in both deposits and loans to cater to customer needs and in-
crease bottom-line profits.
Direct Investment Group (DIG)
DIG is CIB’s investment arm, introducing equity finance as
an additional service to existing and potential clients. DIG’s
main focus is to identify, evaluate, acquire, monitor, admin-
ister and exit minority equity investments in privately owned
companies that possess commercial value for CIB.
Invested funds are sourced from CIB’s own balance sheet,
whereby the investment process is governed by a clear and
strict set of parameters and guidelines.
Our primary objectives encompass generating attractive, risk-
adjusted financial returns for our institution through dividend
income and capital appreciation, as well as enabling CIB to offer a
broad spectrum of funding alternatives to support client growth.
We commit to excellence by adopting the industry’s best
practices, creating a “win-win” situation for all stakeholders.
This commitment is supported by our unique value proposi-
tion and team of specialised experts.
2016 Achievements
2016 was a rather exciting year for DIG in light of the changing
market dynamics and investment landscape. As always, DIG
remained positive on Egypt’s long-term economic prosperity
and confident about the country’s ability to overcome short-
term challenges. DIG viewed the current market instability
and scarcity of sizable quality investments as an opportunity
to scan the market, aiming to pursue a wider coverage of the
investment spectrum and add new business lines.
The lack of international investment inflows and the chal-
lenges facing importers resulted in the rise of mid-sized local
players to fill the newly created supply gap. This encouraged
50 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 51
Marsa Alam is home to some of the most
pristine marine life in Egypt, with sea
turtles and dugongs being a common site
at Abu Dabab Beach.
2016 in revieW
egP 1.3 bn
non-interest income for the full year
DIG to explore mid-size investment tickets in industries
showing resilience to market challenges and great potential
to deliver above-average, risk-adjusted reruns. A consider-
able pipeline of mid-sized deals supported adding such in-
vestments as one of our new focus areas.
Moreover, DIG was active in exploring the venture capital
space, being one of the new pillars to drive value for CIB and fuel
economic growth at large. As an initial step to further unleash
the venture capital potential for CIB, DIG was heavily engaged
in the preparation and conclusion of CIB’s sponsorship of FIN-
Tech, a specialised financial technology acceleration track, in
association with AUC’s V-Lab. Additional investment activities
are currently being prepared for CIB to further benefit from
the venture capital space with a risk-conscious approach.
Exits: Despite prevailing market conditions, DIG suc-
ceeded in concluding the full exit from two of CIB’s affiliated
investments, namely Corplease and Egypt Factors, which
falls in line with CIB’s open architecture strategy.
Portfolio Management: DIG continued its on-going sup-
port to its portfolio companies at all levels to provide re-
quired assistance for companies to weather market volatility.
Such efforts have preserved the quality of DIG’s investment
portfolio throughout the year.
The Pipeline: DIG’s dedicated marketing and deal-
sourcing team managed to maintain a healthy deal pipe-
line despite the prevailing investment climate. As a result,
DIG assessed the viability of multiple investment oppor-
tunities, mainly in defensive sectors such as education,
healthcare, food and logistics.
2017 Strategy
DIG is embarking on a portfolio expansionary strategy aim-
ing at doubling assets under management by 2020. Accord-
ingly, DIG will continue its efforts to add lucrative invest-
ments with profound fundamentals, high growth potential
and value proposition for CIB.
Strategic Relations Group (SRG)
SRG as a function was created with the sole purpose of
focusing on and catering to the unique needs of the Bank’s
top non-commercial organisations of sovereign origins
and affiliations.
SRG’s portfolio is made of up global donors, aid and
development agencies supported by their sovereign diplo-
matic missions, international regulatory agencies, major
tier-one educational constituencies and key charity foun-
dations. Their deposits contribute considerable amounts
to CIB’s stable funding base.
SRG is a small group of professionals dedicated to bridg-
ing the gap between CIB’s streamlined services and the
distinct expectations of its clients. Its edge is in working
closely with each client individually, designing innovative,
tailor-made services to suit the various business and opera-
tional needs of clients. Its success is based on long-standing
partnerships with clients, dating as far back as the 1980s,
despite fierce competition.
SRG is committed to continue strengthening these
partnerships to maintain customer loyalty while preserv-
ing the delicate balance between client satisfaction and
account profitability.
52 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 53
2016 in revieW
global CUSTomer
relations
Over the past few decades, cross-border business has expe-
rienced unparalleled growth due to advances in communi-
cation and IT, privatisation and deregulation in emerging
economies and the emergence of the global consumer. As
the era of globalisation continues to manifest itself through
the emergence of global companies, the importance of
Global Customer Relationship Management has become
increasingly significant.
In December 2009, CIB established the Global Customer
Relations Department (GCR), with a team of credit certified
calibers with strong interpersonal and marketing skills.
The GCR model has proven globally to be an effective method
in accelerating business outcomes through superior customer
support/service. The model may be relatively new in Egypt, but
it has been adopted globally over the past 25 years.
Primarily, the GCR’s vision was for CIB to become a one-
stop shop as a financial solutions provider rather than a
product provider. With this vision in mind, our mission was
to maximise customer satisfaction and revenue generation,
through making the most of customer value across the global
customer portfolio within the Bank.
In February 2016, the board decided to adopt key institu-
tions’ best practices of applying a model where the GCR as-
sumes the function of customer acquisition/maintenance,
supported by product officers. Under the new model, the
GCR function is responsible for the client and product profit-
ability, share of wallet (SOW) and product penetration rates,
among other things. Client profitability is composed of vari-
ous products including GTS, treasury and corporate credit.
2016 Achievements
• SCZone: After successful and unwavering efforts, an
MOU with the SCZone was signed, marking CIB’s lead-
ership in the market as the first bank to undertake this
initiative. The MOU entails the cooperation of both enti-
ties in the execution of the SCZone’s development plan
through providing our distinguished commercial, retail,
automation, corporate banking and advisory services as
well as all other financial services provided by the Bank.
The MOU of significant importance to CIB, letting us
54 • Annual Report 2016 • CIB
provide our advisory and technical consultancy services
to the SCZone on projects presented for investments in
the Economic Zone along with the needed financing for
these projects either bilaterally or through arranging the
necessary syndications.
• Renewable Energy: Immense efforts were exerted in the
field of renewable energy during the year, making CIB
the sole mandated bank for many major deals, translated
in the issuance of LGs amounting to EGP 211 million.
• Digital Solutions: In keeping with GCR’s continuous
effort to promote newly launched digital services, CIB
Smart Wallet was launched with success, with clients
signing 112 Smart Wallet applications. Some 18,130 ACH
system transactions were implemented. CPS (Corporate
Payment) transactions for CIB amounted to 50% of to-
tal e-finance volume. Transactions for one GCR client
amounted to EGP 226 million, representing 16.3% of CIB
and 8% of total e-finance transactions.
• Vodafone Cash: CIB signed an agreement with Vodafone
to support Vodafone Cash by migrating approximately
1.8 million wallet users to the MasterCard platform. The
service reflects CIB’s strategy of promoting financial
inclusion in Egypt and attracting various segments of
customers under the umbrella of banking services by
providing a range of innovative electronic solutions that
meet customers’ needs. Total mobile line subscribers
stand at more than 90 million while the total number
of bank clients do not exceed 10 million. This means
the agreement between CIB and Vodafone, the leading
mobile operator in Egypt, will help expand the base of
mobile banking services customers and enhance Egypt’s
general banking awareness. Offering banking services
through electronic channels such as Vodafone Cash is
one of the most significant and important steps in at-
tracting Egypt’s substantial informal economy.
• 4G Financing: Capitalising on its close ties to the indus-
try, CIB financed mobile operators to acquire ground-
breaking 4G licenses in the form of contingent and
direct facilities, for EGP 490 million and EGP 2.8 billion
respectively, with a 41% SOW.
• Portfolio: Increased the loan portfolio to EGP 40.8
billion in 2016. Increased the deposit portfolio to EGP
13.54 billion in 2016
Strategy going Forward
Given GCR’s newly expanded role and the healthy economic
signals that have begun to emerge since October 2016, going
forward GCR’s strategy will focus on:
• Maximise CIB’s profitability through three major channels:
- Explore new business opportunities via market screen-
ing for newly sound customers.
- Increase SOW, penetration rate, profitability, asset
quality and RAROC of all customers.
- Grow the retail banking business through marketing
retail products and services to existing and new clients.
• Strategic collaboration with all CI family, with a specific
focus on CI Capital along with the GTS team to provide
fully rounded solutions to clients.
• Focus on FDIs, especially from the Gulf region after
the EGP float.
• Major attention will be given to mega projects located in
the Suez Canal Zone in addition to the energy (conven-
tional/renewable), EEA, infrastructure, transportation,
logistics and ports sectors in line with the government’s
announced directives and expansion policies.
• Exert more effort to recover problematic/underperforming
accounts to safeguard the quality of CIB’s asset portfolio.
Edfu Temple is one of the best-preserved
shrines in Egypt; the temple is
dedicated to the falcon god Horus,
and the history of its construction is
inscribed on its outer face.
CIB • Annual Report 2016 • 55
2016 in revieW
ConSUmer and bUSineSS
Banking
Cards
payment Acceptance
CIB is the clear market leader in credit and debit card pay-
ment acceptance, processing over 30% of total market vol-
ume, valued at EGP 28 billion.
Wealth Segment
The Wealth segment focused in 2016 on customer centricity
while also preserving our core brand values: personalised so-
lutions, priority services, trust and recognition. Through this,
the division has managed to rake in a total deposit portfolio
of EGP 85.3 billion, representing 47,000 customers, in serving
this crucial segment
CIB plus
CIB Plus continued to focus during the year on priority
services and on providing exceptional-quality services
and personalised facilities that meet the needs of medi-
um-worth individuals through a qualified team of highly
trained Plus Bankers.
2016 Financial Highlights
To better serve our customers and increase our geographic
presence, Plus sales force was increased 20% compared to
2015, leading to:
• Customer count growing 28% y-o-y since December 2015.
• Total deposits increasing a significant 51% y-o-y since
December 2015.
• Total asset portfolio climbing 31% y-o-y since Decem-
2016 Financial Highlights
ber 2015.
• To better serve our customers and increase our geo-
graphic presence, the Wealth sales force was increased
45% y-o-y, leading to a significant 36% y-o-y increase in
the number of customers.
• Total deposits hit EGP 85.3 billion – a 72% y-o-y increase
since December 2015.
• Assets recorded EGP 8.9 billion, up 60% y-o-y.
key 2016 Highlights
A new layer of management was added to the segment in
2016, under which Wealth Managers now report directly
to a Wealth District Head. This opened up more avenues to
lead, liaise with and coach Wealth Managers and helped
recalibrate the strategy and pillars of the Wealth segment
during the year.
In keeping with our efforts to not only gain but retain
our Wealth customers and strengthen brand loyalty, the
Wealth segment continued to provide key financial servic-
es, personal privilege packages and handpicked lifestyle
offerings to our clients. Just some of the benefits offered in
2016 were tickets to the Majida El Roumi Sound and Light
Concert (May 2016), El Classico match in Barcelona (April
2016) and the Dire Straits Experience Concert in Soma Bay
(January 2016).
56 • Annual Report 2016 • CIB
key 2016 Highlights
During the year, training our Plus Bankers has been a key
focus. The bankers were enrolled in the AUC Academy to help
them fine-tune their skills, boost their market knowledge
and hone their customer-management abilities.
We also focused more on our clients through offering
tailored privileges and loyalty packages that meet this seg-
ment’s needs while simultaneously promoting CIB products
to bolster penetration rates.
liabilities
The success of CIB Consumer Banking is demonstrated by
the exceptional growth in customer deposits, which reached
EGP 99 billion in local currency and USD 4 billion in foreign
currency by December 2016 – an impressive 26% y-o-y in-
crease of EGP 20 billion and 11% y-o-y increase of USD 416
million compared to year-end 2015.
CIB’s deposit market share reached 8.1% as of October 2016
(latest published CBE data), maintaining CIB’s leading posi-
tion among private sector banks in the country. The growth is
an outstanding achievement in a highly competitive market
of 39 banks and has helped CIB increase its market share of
overall deposits in the Egyptian banking system.
The success of Cib Consumer banking is demonstrated by the exceptional
growth in customer deposits, which reached egP 99 billion and USd 4 billion by
december 2016, an impressive 12% y-o-y increase.
Consumer Banking’s strategy has focused on the household
segment, which was clearly reflected in the household mar-
ket share increase of 48 basis points to 7.51% as of October
2016 up from 7.02% as of December 2015.
Insurance Business
The CIB Insurance Business provides life and general insurance
programs that generate non-interest revenues in the form of fees
for CIB Consumer Banking. CIB now is considered the largest
distributor of individual life insurance policies in Egypt, with
around 56% of the new business market share in 2016.
In 2000, CIB began promoting life insurance programs such
as protection and savings packages. These programs were
introduced to address a variety of consumer needs through
Commercial Insurance Life Company (CIL). The department
began offering general insurance in 2011 and capitalised on
its strong links to the Egyptian market and the top insurance
providers to find the best solutions for our customers.
key 2016 Highlights
In December 2015, CIB completed the sale of CIL to AXA.
As part of the sale transaction, CIB signed a bancassurance
agreement with AXA giving it the benefits of a 10-year, exclu-
sive life, savings and health distribution.
Several new life insurance programs were also introduced
in 2014/15, with upgraded benefits to better satisfy customer
needs in a variety of segments.
In 2016, AXA introduced for the first time in the Egyptian market
the Health Insurance Product, exclusively through CIB Distribution
Channels, allowing CIB to be the first bank to market such a signifi-
cant product to its customers. The launch capitalised on AXA’s vast
medical network in Egypt, which includes more than 1,800 medical
providers to suit all client segments, and caters to the increased
demand for adequate health solutions in the Egyptian market.
Strategic goals
• Increase revenue contribution to Consumer Banking to
10% by 2017.
• Increase market penetration by expanding CIB’s cus-
tomer base.
• Lead the market by introducing a wide range of products
from the best insurance providers.
2016 Achievements: Life insurance
• Life insurance fee income increased 45% in 2016 com-
pared to 2015. The life insurance business was worth EGP
427 million in 2016 compared to EGP 282 million in 2015,
a significant growth of 51%.
• Continued to provide a wide array of insurance plans to
meet the needs of all consumers.
2016 Achievements: general insurance & bundled
products
• Increased Credit Shield fee income by 42% compared to 2015.
• Increased Family Protection Plan fee income by 27%
compared to 2015.
• Developed the Business Banking Master Policy, provid-
ing CIB Business Banking’s unsecured customers with
property insurance coverage for approved assets.
Going forward, CIB will develop different bundled insurance
services with consumer products and segments.
Marketing & Communication
The growth of the Consumer Banking portfolio can be directly
attributed to the launch of several new successful marketing
activities/campaigns that adopted a personalized targeting
approach, leading to more effective customer engagement
and enhanced loyalty.
CIB • Annual Report 2016 • 57
2016 in revieW
The Consumer assets division recorded a total revenue of egP 956 billion as of
december 2016, contributing 19.4% to total Consumer banking revenue.
Our key objective is to sustain this level of growth in 2017
and to outpace the market through a more segment-driven
strategy that drives our product propositions, acquisitions
and service models, and portfolio and life cycle management.
This will translate into providing our clients with need-based
propositions at the point of need.
Consumer Asset products are designed to be customer-
centric to facilitate a demand-pull approach and gradually
move away from a product-push approach. 2016 saw several
new card product launches and re-launches to ensure effec-
tive product differentiation and that we successfully meet
our clients’ varied needs.
key 2016 Highlights
• Ongoing card realignment and setting a clear product
hierarchy with value differentiation.
• Launching two new card products: White and Titanium
Credit Cards.
• The successful migration of Citibank’s card portfolio,
including an effective product-mapping strategy that
ensured a smooth migration to the equivalent product
at CIB while providing more value at a lower price point
than at Citibank.
• Visa Business credit and debit cards were launched to
serve our business banking customers. These cards
will serve as a very convenient way for both the cor-
poration and the employee to manage and calculate
business-related expenses and digitise their pay-
ments. Special deals and offers targeting the segment
facilitate their daily business such as courier, trans-
portation and travel services. In addition, there will
be extra value-added features such as EPP and cash
on call, which will provide the card holders with more
purchasing power to grow their business.
• Improving customer convenience through IPP with the
launch of merchant-initiated IPP, covering 150 mer-
chants across a variety of sectors.
Due to the shifting dynamics of the Egyptian market during
the year, keeping up with key market research trends was
more important than ever in 2016 in guiding future market-
ing activities. This was effected through measuring custom-
ers’ interests and behaviour by conducting both qualitative
and quantitative research.
Marketing activities/campaigns launched during the
year were designed to support our Consumer Banking
strategy, which aims at a more personalised, targeted ap-
proach when it comes to customer interactions. The goal
was to shift from a product-centric approach to a custom-
er-centric one in terms of appealing to a target group’s age,
demographics and interests.
In more specific terms, the team focused on digital marketing
due to the undeniably pervasive nature of technology in every-
day lives. Incorporating digital campaigns into our marketing
strategy in 2016 was essential to ensuring maximum exposure
and reach for CIB products and services.
Our digital marketing approach focused on two main channels:
• Search Engine Marketing: users proactively searching
for the product/service.
• Digital Display Marketing: users visiting websites that
relate to their needs and interests but not proactively
looking for the product/service.
Various marketing initiatives also took place on CIB’s of-
ficial Facebook page, which boosted the number of fans on
the page to 490,000 (organic fans), up 30% in the third and
fourth quarters of the year compared to the first and second.
The CIB website also saw a tremendous 40% increase in the
number of hits this year to the consumer banking pages.
Consumer Assets
The Consumer Asset Portfolio has exhibited significant
growth of EGP 4.6 billion in 2016 despite the myriad of chal-
lenges posed due to changing market dynamics, currency de-
valuation and regulatory requirements. The portfolio hit EGP
14.8 billion as of December 2016. CIB has been more nimble in
addressing the adverse impact experienced in the market due
to the restrictions on lending and shortage of foreign currency.
The Consumer Assets Division recorded a total revenue of
EGP 956 billion as of December 2016, contributing 19.4% to
total Consumer Banking revenue.
58 • Annual Report 2016 • CIB
The White Canyon in Sinai gets its name
from the high limestone content of the
rocks, which gives the peaks and valleys a
magnificent milky-white appearance.
CIB • Annual Report 2016 • 59
2016 in revieW
egP 77 bn
added to CIB’s deposit base in 2016,
up 49% y-o-y
Loans
The Personal Loan product grew aggressively in 2016 through
a range of initiatives throughout the year:
• Migrating Citibank’s loan portfolio using multiple pro-
grams developed to cater to different customer segments
at Citibank while at the same time providing additional
benefits for migrated loans such as longer terms and
competitive interest rates.
• The Wedding Finance Loan, which offers flexible financ-
ing schemes paid directly to hotel wedding venues. The
package includes additional benefits from Egypt’s most
prestigious hotels as well as discounted offers from
other wedding-related merchants that are already part
of the suite of merchants in CIB’s arsenal.
• The Mortgage product suite mainly focused on the af-
fordable housing segment this year, which is slated for
growth through our mounting relationship with the
Mortgage Finance Fund.
• Overdraft Proposition improved payment convenience
through the availability of secured and unsecured pro-
grams to best meet the needs of every client segment.
Acquisitions
CIB’s acquisition strategy was designed to ensure clear align-
ment between sales channels and corresponding segments,
which enhanced client interactions and ensured a smooth pro-
cess by clearly allocating client segments to the correct channels.
During the year, total credit card acquisitions increased
45% y-o-y to 100,000 in 2016. Total Personal Loans acquisi-
tion volumes increased 41% y-o-y to EGP 5.5 billion in 2016
compared to EGP 3.9 billion in 2015.
Going forward, we expect CRM Phase I deployment will
contribute to a higher number of acquisitions through
lead generation and opportunity management. CIB will
continue to leverage CRM capabilities in 2017 after the
initial deployment.
portfolio Management
Due to shifting market dynamics throughout the year, CIB
adopted a rigorous portfolio management strategy built to
tailor services to various sub-segments based on established
criterions for each product. The card portfolio strategy is
designed for the 17 sub-segments in the portfolio. The sub-
60 • Annual Report 2016 • CIB
segments have been planned based on the transactional
behaviour of card customers, and there are specifically de-
signed initiatives across each segment to maximise the op-
portunities available.
For the loan division, a similar segmented approach was
adopted, with the criteria based on months on book and the
balance of the loan.
Business Banking
Business Banking is one of the oldest and largest bank units
dedicated to serving small- and medium-sized enterprises
(SMEs) in Egypt. The unit has the only complete SME-focused
bundle in the market, offering a broad range of financing, cash
management, trade, payment acceptance and advisory services
to nearly 40,000 SMEs throughout the country. Our credit and
debit card payment acceptance business is the clear market
leader, processing nearly a third of total market volume in 2016.
In addition to offering specialised products such as supply
chain and fleet financing, Business Banking fully supports the
Central Bank’s initiative to expand SME financing as a key pil-
lar of Egypt’s economic growth strategy. Central to this is our
more targeted offering to key client segments and industries.
Business Banking’s experienced team of specialised
SME Relationship Managers provides tailored solutions
and advice, partnering with business managers to take
their enterprises to the next level. In 2016, a new team of
expert Client Advisors was formed to cater specifically to
the needs of large depositors.
Clients enjoy the convenience of our market-leading digital
channels that automate their financial transactions and in-
quiries, providing convenient remote access to CIB’s services
and products outside our branches. Our online platform now
accounts for over 40% of trade business volumes.
The Djoser Step Pyramid at Saqqara is the
first pyramid built in Egypt and the first
large-scale cut-stone structure in the world.
CIB • Annual Report 2016 • 61
2016 in revieW
key Achievements in 2016
Business & Product development
• Products and Services Tailored to Small Businesses
Our new loan programmes offer small business clients
pre-approved credit lines with minimal documentation
and rapid turnaround, while the “Super Business” account
bundles a range of exclusive benefits and services offering
easy, 24/7 account access and cash management. To further
bolster our offering, a new sales team was formed in 2016 to
address the specific needs of the small business market.
• Business Debit & Credit Cards
Business Banking launched Egypt’s first SME credit and
debit cards offering a range of unique benefits, including
easy account monitoring and control, instalment plan op-
tions and exclusive merchant discounts
strategic Partnerships, Training & events
• SME Business Certificate Programme
The SME Business Certificate is a specially developed in-
house training programme providing a range of on-the-job,
soft skills and training courses to prepare our officers to
become successful Business Banking Relationship Manag-
ers. We are proud to have graduated over 40 Relationship
Managers in 2016 from the programme.
• IFC Corporate Governance Workshop
Partnered with the IFC to deliver training on corporate gov-
ernance to our Business Banking clients.
• AUC & Goldman Sachs Women Entrepreneurs Programme
Partnering with the American University in Cairo and
Goldman Sachs to support the “10,000 Women Entrepre-
neurs” programme.
2016 Financial Highlights
• Deposits grew a record EGP 17.5 billion (49%), generat-
ing nearly a quarter of CIB’s total deposit growth.
• Business Banking’s loan portfolio reached EGP 2 billion,
driven by 43% growth in unsecured loans.
• Net profit grew 22% to over EGP 800 million, nearly 14%
of CIB’s total profits.
Deposit growth (Egp mn)
53.2
35.7
28.7
24%
49%
2014
2015
2016
net profit (Egp mn)
812.8
665.5
616.7
8%
22%
2014
2015
2016
digiTal
Banking
CIB Digital Banking’s drive is to pursue digital simplic-
ity. In essence, it is developing digital and data capabilities
that radically simplify our businesses and processes while
dramatically improving the customer experience through
greater efficiency, quality and speed.
Over the past three years, we’ve invested in building di-
versified, resilient, secure digital capabilities. In 2016, we
transformed all legacy systems to drive agility and time to
market and to develop competitive differentiation. Our aim
to improve digital simplicity has driven all the division’s ef-
forts during the year and will continue to be at the core of our
initiatives in 2017 and years to come.
2017 onward will see us building a robust digital frontier
to deliver even more efficient, effective digital products and
services for customers across diversified lines of businesses.
We plan to expand our digital capabilities to provide enhanced
services, deeper analytical capability and personalise the
treatment of every client segment.
Most importantly, we aim to put the customer at the
heart of our digital strategy. Over the next three years,
our Digital Banking team will focus on delivering the best
customer experience by strengthening our multi-channel
business model and targeting untapped segments, be they
businesses or individuals.
AtM network
CIB currently has the largest ATM network among private
banks in Egypt, with a fleet of over 748 machines providing
various types of functions including cash withdrawal, cash
deposits, credit card settlement, bill payment, mobile top-
up, money transfer, Mobile Wallet cash-in/out and cheque
deposits. Our full-fledged ATMs located at convenient sites
(56% of the network installed outside CIB branches) cover a
wide geographical area and provide expedient alternative to
banking at a branch.
2016 Achievements
• Further enhanced our ATM services to assist companies,
adding cheque and cash deposits via the Companies De-
posit Card service.
• The ATM network continues to serve branch migration
efforts, with 84% of individual cash deposits into ac-
counts and 92% of cash deposits into credit cards mi-
grating to the ATM network in 2016.
forward strategy
Going forward, we will continue our efforts to drive customer
migration from branches and enhance the customer experi-
ence through adding new functionalities at competitive
prices to our ATM network.
phone banking & Call Centre
The CIB Call Centre handles an average of 3.5 million calls
annually, serving both CIB and non-CIB customers. The
centre allows consumer banking clients to manage money
transfers, inquire about cards and accounts and activate
cards and manage PIN selection easily anytime, anywhere.
2016 Achievements
• Introducing IVR Self Service helped to offload 53% of the
incoming inquiry calls received by the call centre in 2016
and doubling the number of enrolments to an average of
6,000 per month compared to 3,000 per month in 2015.
• CIB became the first bank to introduce a Bill Payment
& Recharge service to our IVR, leveraging on One-Time
Password (OTP) token capabilities. IVR Bill Payment & Re-
charge gave CIB customers a new touch point and created a
new revenue stream with growth potential.
forward strategy
We plan to continue to offload call centre requests by mi-
grating even more eligible calls to IVR Self Service, aiming
to reach a 70% migration ratio, to optimise the call centre’s
operational cost and boost agents’ productivity. By the end
of 2017, we plan to introduce IVR Self Service for Corporate
Banking clients as well.
62 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 63
2016 in revieW
150 ATms
added in 2016 for a total network of
759 across the country
in 2016, Cib achieved a 10.3% y-o-y increase in the number of transactions
performed via trade online and increased the number of subscribers to 951 clients.
online banking
As tablets and smart phones become the preferred channel
for consumer banking, CIB Online Banking has started to
capitalise on the shift by offering a range of services to all
CIB clients, strongly presenting itself as the go-to channel to
perform day-to-day banking activities.
2016 Achievements
• Enhanced internet banking services for CBE Compliance
transactions through OTP tokens (both software and
hardware tokens).
• Added two new functionalities to enhance credit card
users’ customer experience by enabling credit cards for
registrations and allowing credit card payments to other
CIB credit cards.
• 4Q2016 marked the soft launch of our Mobile Banking
Application for CIB staff, representing a value-adding
extension to the online banking portal. The application
is expected to increase the number of subscribers signifi-
cantly as it matures.
forward strategy
2017 will see the CIB Online Banking focus on digital service
penetration and automation rates.
Cib Smart Wallet
CIB Smart Wallet is one of the newer offerings under CIB Dig-
ital Banking. Launched in January 2016 CIB, this innovative
payment experience gives both the banked and unbanked
community a convenient, secure and cost effective way to
make purchases through mobile devices. With just a few
taps, customers can pay bills, recharge their mobile credit,
send money to any other CIB Smart Wallet holder, cash-in/
cash-out from CIB’s ATM network and deposit/withdraw
money from their CIB Smart Wallet from any Fawry retailer.
2016 Achievements
• Launched microfinance loan instalments (presentment
and collection) via CIB Smart Wallet, making us the first
institution in Egypt to launch a service of this nature to this
64 • Annual Report 2016 • CIB
untapped segment. The move allowed us to grow our cus-
tomer base and improve our reach all while catering to the
needs of the microfinance market in a cost-efficient way.
• Continued to rank number one in terms of activity in the
local market.
• Facilitated the offsite acquisition for CIB Smart Wallet
through piloting with 100 agent outlets.
forward strategy
Going forward, CIB Smart Wallet will customise value
propositions for each segment to widen its customer base
and continue to develop new features and services for un-
tapped segments.
Cash Management
CIB Cash Management provides standardised and tailored
cash-management products and solutions that improve the
management of incoming and outgoing payments, streamline
reconciliation and information management and enhance
working capital efficiency. The product offering includes sev-
eral innovative payment and payable products, collection and
receivable products and standard and tailored information
reporting delivered through a variety of channels.
2016 Achievements
• CIB customers performed 632,090 payable transactions
and 1,482,683 receivable transactions in 2016 via our
intelligent, secure Cash Management portal.
• Cash Management’s total registered clients reached
5, 000 during the year due to our 24/7 accessibility at
convenient sites.
• CIB ranked first in terms of volume in EG-ACH Direct
Credit Sending and Receiving, with a 33% and 20% mar-
ket share, respectively.
• CIB ranks first in terms of Direct Debit Sending with a
99% market share and second in terms of Direct Debit
Receiving with a 17% market share.
• Added Business and Enterprise Banking to our roster
of Cash Management, which has greatly improved cus-
tomer experience.
• The transfer migration rate reached 80% as of December
2016. After beginning to migrate internal transfers in only
2Q2016, we already hit a rate of 18% as of December 2016.
• CIB received the Best Cash Management Award from
EMEA and was named the World’s Best Treasury and Cash
Management Providers 2016 by Egypt Global Finance.
forward strategy
In 2017 and beyond, we plan to continue our focus on customer
migration from branches to Cash Management portals to allow
customers to transact more conveniently 24/7. We also plan to
continually enhance our existing roster of services to boost our
customers’ experience and achieve major cost savings.
trade Services
CIB Trade Services offer both the tools and expertise that allow our
diverse base of clients to realise their business goals. CIB’s trade
solutions (CIB Trade Online and Bolero system) are designed to
enable clients to effectively manage risk and optimise cash flows.
2016 Achievements
• In 2016, CIB achieved a 10.3% y-o-y increase in the
number of transactions performed via trade online and
increased the number of subscribers to 951 clients.
• The percentage of transactions performed via the 61
Trade Hubs and the online channel reached 100% of
bank-wide transactions.
• Our Corporate Payment Service, which enabled CIB clients
to pay their taxes and custom fees online, hit 225 customers
by the end of 2016 and captured a 47.5% market share, al-
lowing CIB to achieve a number-one market ranking.
forward strategy
In 2017, the division plans to launch Supply Chain Finance,
a new suite of products automating financial supply chain
management. The service brings buyers and sellers together
on a single platform to enhance collaboration and invoice
submission and facilitate the release of early payments. Sup-
ply Chain Finance not only taps into a new business, and
therefore revenue stream, but bolsters customer loyalty.
The service will let the Bank approve invoices from sup-
pliers at a discount before receiving full payment from the
buyer at maturity. Buyers benefit from working capital
efficiencies while suppliers can request invoice financing
directly through the platform based on the credit quality
of their buyers to better manage working capital and re-
duce sales outstanding.
global Securities Services
Despite the volatility of the market in 2016, our Global Secu-
rities Services (GSS) successfully maintained our leadership
position in terms of market share and value of assets under
custody, with market share during the year growing to 28%
compared to 21% at the end of 2015 and total assets under
management reading EGP 250 billion compared to EGP 210
billion last year.
2016 Achievements
• Enhanced GSS platform technologies by developing
the current working system. This enabled us to process
357,000 transaction as of the end of December 2016 while
continuing to provide high levels of service to our 24,400
active client base.
• CIB joined the Africa & Middle East Depositories Asso-
ciation as an associate member, being the first Egyptian
bank to hold a membership in 2016.
• Awarded the best sub-custodian bank in Egypt from
Global Finance Magazine for the eighth consecutive year.
• Assigned by the depository bank Bank of New York Mellon
as a sole sub-custodian for Domty’s new Egyptian GDR
program with a total market value of EGP 247 million.
• Acquired three new transactions with a total value of
EGP 1.3 billion, maintaining our position as the leading
trustee agent in the market with 13 out of 14 securitisa-
tion SPVs for a total value of EGP 8.5 billion.
• Maintained our leading position as the local sub-custo-
dian for all Egyptian GDR programs, handling 14 current
programs with a portfolio of EGP 62 billion.
CIB • Annual Report 2016 • 65
The Blue Hole in Dahab is a 94-meter deep
submarine sinkhole known as the “World’s
Most Dangerous Dive Site” due to its depth.
2016 in revieW
1.5 mn
receivable transactions performed
through CIB’s Cash Management
portal in 2016
forward strategy
In 2017 we plan to activate the sub-account services for
international securities through opening segregated sub-
accounts for brokerage companies under CIB’s main account
held at international clearing depositories, which will ensure
that we utilise all available revenue streams.
Digital governance
Due to the dynamic nature of digital solutions, CIB put
together a Digital Governance Division under the umbrella
of our Digital Banking Department. Officially launched in
February 2016, the Digital Governance Division supports a
growing number of required approvals (internal and exter-
nal) while managing the relationship with government and
public sector entities to identify potential business leads.
Digital Channels Governance serves the following key objec-
tives subject and not limited to:
• Obtain all required logistics, official and legislative re-
quirements and approvals from internal stakeholders
(Legal, Compliance, AML, Operational Risk, IT Security,
and Taxation) to support the smooth and effective finali-
sation of any new or amended product/service.
• Maintain solid relationships with internal bank stake-
holders and external regulators.
• Study the gap analysis between previous CBE approvals
/ regulations and the current situation, then prepare the
required action plans to fulfill any missing requirements
in corporation with business owners.
• Maintain CIB’s sound legal position and mitigate any
potential risks arising from digital solutions/activities.
66 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 67
2016 in revieW
Coo
area
by the CBE, the COO Area has put in every effort to ensure
any extraordinary controls and regulations are seamlessly
embedded in our processes without impacting our business
expansion plans.
In line with CIB’s continuous efforts to expand its reach, 16
branches were added this year, in addition to the re-branding
and renovation of ex-Citibank branches to match CIB’s brand
image. CIB continued to expand its ATM network with an
additional 150 ATMs added. The total ATM network is now
made up of 759 ATMs across the country by the end of 2016.
Our footprint in Smart Village was also further expanded this
year with the inauguration of the third Head Office, an award-
winning building certified with the Egyptian Green Pyramids
Certificate of Sustainability, emphasising CIB’s commitment to
sustainable development.
People are one of the Bank’s greatest assets. The COO Area’s
dynamic performance is and will always be built on our high
calibre staff and their expertise. This philosophy is carried out
through our structured hiring plan, tailored training, leader-
ship development and setting talent management plans. The
aim is to build strong second lines with ideal qualifications for
those tasked with our future development and leadership.
The focus as of the end of 2016 and going forward is em-
barking on our digitisation journey, which is the main player
in shaping all future banking growth. The digital proposition
will empower self-assisted sales and ongoing customer loy-
alty. Striving to support innovation led to a new partnership
between the American University in Cairo (AUC) and CIB to
launch AUC Venture Lab FinTech Accelerator to introduce
new innovative products and solutions and groom and assist
FinTechs to break into the finance sector.
In 2016, the COO Area was primarily focused on the successful
acquisition of Citibank’s retail business, which was based on
the collective and comprehensive efforts exerted across Opera-
tions & IT to fulfil this complex integration process. CIB was
the only bank among 11 Citibank acquisition deals worldwide
to commit to a six-month Transitional Service Agreement
(TSA) period, making CIB the only bank to succeed in complet-
ing the migration process in less than 12 months.
Over and above, energy was channelled in 2016 into address-
ing several initiatives within the IT Division, with continued
efforts to build up our infrastructure capacity, enhance our
production stability, improve our service-monitoring and
technology refresh for underlying infrastructure to create a
more agile IT organisation that can support our services and
provide a more seamless and enhanced customer experience.
The COO Area has also focused on automation, increasing
productivity and optimising/streamlining its processes. This
included several re-engineering efforts to enhance turn-
around times and encourage staff to innovate and bring up
new ideas through a “Think Tank” initiative.
A number of key strategic projects were also launched
during the year, including the inauguration of Customer
Relationship Management Phase 1, improving internet bank-
ing with more secured authentication mechanisms and up-
grades to our Core Banking Platform. CIB Smart Wallet was
publicly launched in 2016 along with a kick-off to our mobile
banking implementation, providing more convenient and
easy-to-access platforms for a unique banking experience.
To further study customer behaviour and make more ef-
fective credit decisions, we initiated the Scoring and Deci-
sion Engine project for both credit cards and personal loan
applications to ensure minimal risk to bank operations and
track consumer risk behaviour, which will allow us to build a
unique risk model for each customer.
Much effort was exerted in enhancing the organisation’s Cyber
Security standing, with a clear strategy and comprehensive plan
put in place to improve our security capability and continuously
provide a safe banking environment for our customers.
Despite the challenges faced during the year in terms of
foreign exchange rates and foreign currency regulations set
68 • Annual Report 2016 • CIB
Aswan’s Nubian Museum is dedicated to the
rich culture of the Nubian people, whose long
history in Egypt includes founding a dynasty
that ruled Egypt during the 8th century BCE.
CIB • Annual Report 2016 • 69
2016 in revieW
42%
LDR, exceeding regulatory
minimums and Basel guidelines
information technology
During 2016, the IT Department took some of the first steps
toward becoming a more mature business enablement
partner through launching key transformational technolo-
gies that support advanced customer centricity and better
system-to-system interactions.
The IT infrastructure strategy sought to enhance system re-
siliency and create a robust infrastructure platform to build a
strong, reliable and stable underlying infrastructure to enhance
the banking systems’ performance and time to market. Trans-
formational technologies and infrastructure resilience support
operational efficiency, which is further reinforced and optimised
through projects and initiatives that solidify production stability
and upgrade end-to-end solutions built on it. In turn, all these
efforts have the goal of improving the customer experience.
We laid the foundation for big data to support the business
in performing transactional and behavioural analysis, which is
considered the core of advanced customer base segmentation.
The role of IT as a business enabler was evident in the suc-
cess of the Citibank’s acquisition project – a major milestone
for CIB that required close work with Citibank’s global and
local teams to ensure a successful integration process
Training and people development was also an important
plank for the IT Department in 2016, concentrating on im-
proving the team’s technical skills and filling existing gaps
through external hiring and grooming existing staff.
operations, Channels & Customer Experience
Customer centricity coupled with operational efficiency and
diversified customer touch points are the key pillars of estab-
lishing customer loyalty. This has been an ongoing achieve-
ment for CIB that has been sustained by dynamic initiatives
supported by the Bank’s strategy. In 2016, CRM Phase I was
rolled out across our branch network to assist our customer-
facing staff in streamlining the customer relationship man-
agement process and increase operational efficiency. We set
the foundation of Enterprise Service Bus, a new architecture
that allows the Bank to hasten the time to market for busi-
ness solutions requiring data exchange between systems.
Different enterprise digital transformation projects are
underway to create outstanding customer experience and
consistent capabilities across all bank channels while sup-
porting processes automation.
70 • Annual Report 2016 • CIB
The initiation of an upgrade project for our Corporate Cash
and Trade portals took place this year, aiming at providing
a single platform to serve corporate customers, increasing
customer satisfaction and providing a more streamlined
and seamless online banking experience for corporates.
Our Trade Service hubs increased to 61 from 53 to cover the
Bank’s network and the average transactional increase of
corporate customers for better service offerings.
Continuous enhancement and sustaining service levels
across channels is also of vital importance, with significant
offloading achieved by migrating customers to phone bank-
ing. Automated Equal Payment Plan features have been en-
abled to allow credit card holders to transact directly at the
merchant point of sale using Equal Payment Plan features,
hence reducing processing turnaround time. Internet Bank-
ing Phase II was successfully launched with feasible registra-
tion for credit card customers/non-CIB customers.
We approach customer centricity in a holistic way, conduct-
ing benchmarking exercises to assess the customer experience
journey and services in seven main banks in the market against
CIB’s. As an ongoing practice, we conduct customer satisfaction
surveys across all segments to continue prioritising customer ex-
perience indicators and ensure we meet the regional benchmark.
The Bank’s operational progression was acknowledged
internationally: CIB was selected by the Bank of New York
Mellon to be its main sub-custodian in Egypt.
business Continuity Management & information
Security
The significant evolution of cyber security and its associated
risks has necessitated an emphasis on ensuring a proper Se-
curity Management Program is in place to effectively manage
security risks and guarantee the right governance is in place.
Major efforts were funnelled into the cyber security/informa-
tion security domain to ensure the Bank is fortified with the
ability and scope to handle cyber security threats.
As part of our 2016 roadmap, initiatives undertaken this year
include the following:
• Establishing CIB’s Security Operations Centre, which
will significantly boost its capability for monitoring and
addressing a wide range of security threats in a proactive
Cib was awarded the most effective recovery of the year award at the business
Continuity institute middle east awards in 2016.
manner and build competent and capable Operational
Security Services.
• A Fraud Management Solution was put in place to
monitor monetary and non-monetary events on both the
consumer and corporate internet banking platforms,
utilising customer behaviour mapping to minimise op-
erational risks.
• The One-Time Password Solution was implemented for
critical internet banking services in accordance with the
Bank’s strategy to ensure compliance with CBE internet
banking regulations and improve security measures
that protect customer transactions.
• A comprehensive security governance, risk and compli-
ance framework was established along with the neces-
sary policies that ensure adequate security governance
across the Bank.
• Concrete steps were taken toward developing the re-
quirements for Business Continuity Management (BCM)
software to automate the full BCM life cycle. Effort went
into guaranteeing the continuous testing of our recovery
capabilities to ensure service availability for our cus-
tomers. The Bank remains committed to investing in
improving its BCM, bringing aboard a team of dedicated
professionals in charge of the function.
In keeping with our efforts, CIB was awarded the Most Effective
Recovery of the Year Award at the Business Continuity Institute
Middle East Awards in 2016, marking the second Business Con-
tinuity Award for the Bank and our 10th nomination for similar
awards regionally and globally. CIB was also named finalist this
year for the International Award in Business Continuity by the
UK’s CIR Magazine. The recognition emphasises CIB’s unique po-
sitioning in the BCM industry across the financial sector in Egypt.
Real Estate & Corporate Services
After a full year of consolidating Real Estate & Corporate
Services under one roof, the new division has benefited from
streamlined workflow to provide a better working environment
for our internal customers.
The department worked aggressively during 2016 in the
areas of branch network expansion, head office premises en-
hancement, business development in addition to supporting
CSR and sustainability development.
In keeping with the Branch Network Expansion plan, 16 new
branches and 150 ATMs were added this year. Moreover, 56
ATMs were replaced during the year.
Plans to expand the Head Office premises were realised in
2016 with the completion and operation of the magnificent
third building in Smart Village, accommodating 350 em-
ployees. Another comprehensive Head Office rearrangement
plan – serving more than 1,300 employees across around
eight buildings – was undertaken to streamline the workflow
and accommodate ex-Citibank staff. This included outfitting
and operating seven floors at the Merryland Head Office to
accommodate 500 employees.
As for Real Estate Business Development, the Service Area
Optimisation Strategy was put into action in 2016, aiming
at reducing the service area at branches to 29% from 35%
and providing more area for the business front line through
various initiatives introduced at new branches. The Manage-
ment Hub concept was also implemented to economise space
at branches by moving all managerial posts located that do
not have direct client contact to a consolidated area.
Fostering CIB’s role in CSR, the Real Estate Department in
cooperation with the Sustainability Development Depart-
ment are contributing to the mega national project to restore
the Giza Zoo. Design of the first phase has been completed,
and we are currently putting together the logistics for the
construction phase, which is slated to begin in 2017.
In continuation with the Bank’s directives to facilitate
services offered for customers with special needs, more
branches throughout the country were outfitted during the
year with special needs facilities.
Facility Management continued with efforts to implement
sustainability initiatives through many projects, one of
which included replacing lighting at CIB premises with en-
vironmental friendly LED lights and donating replaced lights
to Abu El Reesh Hospital through the CIB Foundation.
We have continued to improve safety measures through
the centralisation and upgrade of the surveillance camera
systems, a project slated for delivery in 2017.
A new division named Occupational Safety & Health was
established to ensure we provide and maintain a convenient
and healthy working environment for our colleagues in com-
pliance with the most up-to-date Egyptian laws and regula-
tions for health and safety.
CIB • Annual Report 2016 • 71
Aswan’s Nubian Villages are dotted in houses
built in the archetypical Nubian-style and
frequently painted in vibrant colors and
accented with decorative designs.
2016 in revieW
finanCe
grouP
The Finance Group in 2016 witnessed an expansion in its
roles and functions with an increased focus on improving the
overall productivity and performance efficiency of the Bank.
The Group added three new units to achieve higher ef-
ficiency and specialisation in the Group’s functions. A Capi-
tal Management unit has been established with the main
responsibilities of Basel reporting, furnishing the Bank’s
dividend policy and the bank-wide use of RAROC. A Cost and
Investment Control unit has also been introduced with a pri-
mary focus on the application of the Value at Stake concept
for all the Bank’s IT capital projects to maximise sharehold-
ers’ return on the Bank’s investments in IT infrastructure. A
Regulatory Update unit has been established with the main
responsibility of keeping an eye on and ensuring continuous
compliance with developments in international regulations,
mainly IFRS and Basel accords.
Finance Group had three major achievements during the year:
1. The Group drove the centralisation of the CBE reporting
function, which was previously performed by different
departments across the Bank, to ensure consistency and
accuracy in regulatory reporting in a timely manner.
2. The Group achieved commendable control of the
successful and timely migration of Citibank retail ac-
counts into CIB systems.
3. 2016 witnessed the launch of the Financial Control
School, which would ensure smooth transition of ba-
sic, essential knowledge, both theoretical and practi-
cal, necessary to understand the day-to-day process
in Finance. This course is slated to be a mandatory
requirement and prerequisite for joining the Finance
Group as well as a promotion eligibility criterion.
The restructured Finance Group has thus provided CIB
with a solid foundation to operate efficiently within a
challenging regulatory and economic environment while
maintaining its competitive edge and maximising long-
term shareholder value.
72 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 73
2016 in revieW
big
Data
Big data and advanced analytics have been playing a vital
role in transforming the way business is done and is influ-
encing the behaviour of customers in all walks of life, and
the banking industry is no exception. To implement these
rapid developments, bold and swift action was required
from our side to lead change in the industry.
Data has evolved from being a tool to becoming a com-
modity in itself. It represents a fundamental shift in how
we do business by opening a door to a new approach to
strategy. Big data analytics provide a colossal opportunity
for banks to excel by giving them a clear edge to lead the
market. Banks that can transform enormous amounts of
data into valuable insights and then actions will be able to
create a unique and differentiated customer experience.
As CIB has always taken the road less travelled to bench-
mark itself against top global institutions, we are now the
first bank in the region to have an advanced analytics and
data management team and will soon become the first to har-
ness the power of big data for the benefit of our customers.
We understand the importance of moving from a de-
scriptive analytics model to predictive analytics and fully
comprehend the challenges and difficulties this entails.
Therefore, we are investing aggressively in our IT and Hu-
man Capital to develop exceptional infrastructure that
can support us through this journey.
CIB invested in data storage and computation platforms
to increase structured data capacity, improve reporting
performance as well as invest in self-service Business In-
telligence and real-time information delivery systems to
manage petabytes of data for advanced analytics and new
regulatory requirements. Those infrastructure invest-
ments will be the platform by which CIB will conduct our
advanced big data analytics.
We strongly believe these developments will prove trans-
formational not just for CIB, but for the banking industry in
Egypt as we know it. We look forward to embarking on this
transformational journey with our shareholders as we contin-
ue to create more value with our ever-increasing resources.
Hot air balloon rides are an excellent
way to experience Luxor, a city
that was renowned as a center for
knowledge, art, religion and politics
in the 11th Dynasty.
hUman
resourCes
Recruitment & Selection
In line with the Human Resources (HR) strategy to develop
potential talents, the Recruitment Department became even
more responsive when fulfilling hiring requirements during
the year, succeeding in reducing the average time-to-hire to
20 days versus 35 in 2015.
The department also lowered expenses associated with
hiring middle and senior staffers by relying on our network-
ing and direct sourcing to identify talents without using
recruitment agency services. The expenses of over 30 talents
were saved in 2016.
The department conducted a talent-mapping exercise to
allow the Bank to build a database of Egyptian talents in the
GCC, US and Canada for the Bank’s critical positions.
To ensure we are developing our employees as our most im-
portant asset, the division introduced a new team designated
to manage end-to-end internal hiring. The idea was to build
a network to provide growth opportunities for potential tal-
ents within the Bank.
In our continuous efforts to brand CIB as the employer of
choice, the Recruitment Department, in cooperation with
representatives from the business side, participated in more
than 15 employment fairs, awareness sessions and career
events with Egyptian universities, including GUC Career Day,
American Chamber HR Career Day, AUC Banking Awareness
Session, CV Writing Awareness Session and the Cairo Univer-
sity Business Banking Awareness Session.
In 2016, we launched the Thomas International Behavioural
Assessment as an additional screening tool to enhance the
quality of new hires. It was used to analyse potential employ-
ees’; behavioural style at work, identify their key strengths and
limitations and help measure their mental agility before being
interviewed for a position.
Organisation Development
Performance management was one of the key strategic aspects
HR’s Organisational Development Department worked to de-
velop in 2016. An external consultant was brought in to meet
with senior management to discuss and assess the current per-
formance management process, implementation and measure-
ment system to identify the gaps and provide recommendations.
HR was keen to deepen the “job weight approach” intro-
duced in 2015. The concept was to apply a systematic method
of determining the value/worth of a job in relation to others
in the organisation to establish a rational pay structure. The
department, in collaboration with the Reward Management
Department and relevant business stakeholders, finalised
the exercise for all Bank positions, translating Hay Reference
levels to CIB Grades. The outcome was communicated to all
group heads and employees to clarify ambiguities and make
sure the entire organisational structure is on board. The job
weight approach was also translated to relevant HR policies.
Twelve organisational restructuring exercises were ap-
proved throughout 2016 in the COO, Consumer Banking and
Control Areas. The main objectives were to accommodate
new functions, enhance the span of control and ensure better
communication and workflow.
Career maps for all branches, business banking and wealth
management jobs were developed to help create a clear ca-
reer path for employees by highlighting career advancement
opportunities within these areas.
The Employee Relations Team launched the third Employee
Effectiveness Survey during the year. Some 4,627 employees
participated, meaning a considerably high participation rate
of 88%, with the survey revealing 57% engagement and 47%
enablement. The results also revealed key organisational
strengths: mainly pride in working at CIB, believing CIB has
high performance expectations and understanding the link
between every job and the organisation’s goals. The survey
revealed important development opportunities, such as per-
formance management, respect and recognition and work
structure and processes. Plans to work on these opportuni-
ties are being developed with the relevant business heads to
address the issues in 2017.
74 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 75
2016 in revieW
13.97%
CAR after profit appropriation
Compensation & Benefits
Job Weights
We worked closely with the Organisational Development De-
partment to roll out a job evaluation project correlating with
our new CIB Grades to apply the weight of each position to HR’s
operating system. This should help the Organisational Develop-
ment and Recruitment Departments make efficient human
capital decisions and support all the Bank’s lines of business.
Salary Structure
We introduced and implemented a new, flexible salary scale
directly linked to market practices. The new structure will
enhance CIB’s competitive positioning in the market to en-
sure we attract and retain the best human capital assets and
enhance our internal pay equity.
Variable Compensation
We revamped our variable compensation philosophy, taking
the Bank’s strategic direction into consideration. The new
mechanism is driven by varying performance ratings in line
with the individual, division and overall Bank performance.
It also ensures our competitive positioning among rival
banks in the local and regional market.
learning & Development
In 2016, the Learning & Development Department was strategi-
cally engaged with different business lines, offering a compre-
hensive suite of learning and training programs and modules.
We introduced innovative ways to effectively up-skill and em-
power CIB teams with the best professional learning experience.
This year, the department introduced new learning tech-
niques, which included:
• CIB Basic Banking Certificate Program: We revamped
our induction to provide newcomers with diversified
banking knowledge to help them adjust as quickly as
possible and achieve maximum working efficiency.
• Consumer Banking Professional Certificate: Covering
138 Branch Heads, this certificate was designed to de-
velop the skill set required by any CIB Branch Head. The
program included 14 mandatory modules (27 training
days), and courses were spread over one year, culminat-
ing in a team project presented to the Consumer Bank-
ing Sr. Management panel.
76 • Annual Report 2016 • CIB
• Customer Experience Program (iCare): Various training
methods and techniques were applied at all levels, including:
1. Branch Management (People Managers): 546
2. Front Liners: 381 (80*)
3. Tellers & Back Office: 665 (20*)
4. CIBians (internal departments, support functions): 120
Pilot session for the Call Centre was delivered in
5.
October 2016. Rollout was slated for November 2016,
covering 60 agents in 2016. The remaining 290 will
be covered early 2017.
In line with CIB’s strategy, the Learning & Development De-
partment focused on designing and delivering special tracks
and programs that serve strategic business segments, keep
up with ever-changing consumer banking developments, im-
prove the customer experience across customer touch points
and boost leadership and talent capabilities.
These special tracks include:
• Several leadership tracks were designed for different
management tiers (Senior and Middle) to develop a com-
mon understanding on CIB’s priorities/direction as well
as desired management practices across the organiza-
tion. L&D partnered with top-ranked worldwide leader-
ship schools and institutes to deliver the best-in-class
leadership programs. IMD’s Leading with High Impact
Program covering 100 heads of functions.
• Talent programs were designed to develop and equip
fresh junior talents and Middle Management High Po-
tentials that will be running in 2017.
overseas Learning & Development Events
Seventy overseas training courses for key talents and promis-
ing delegates were offered in collaboration with Top Institute
in Leadership Programs:
• Seven delegates were approved to pursue their overseas
postgraduate studies in 20 top universities.
• Twenty-one regional heads and area managers were
given the International Sales Management Diploma,
endorsed by the Institute of Sales and Marketing Man-
agement – England.
The Agha Khan, the influential leader of the
Ismaili sect, liked to spend his winters in
Aswan for his health and was buried there in
an elegant tomb after his death in 1957.
CIB • Annual Report 2016 • 77
Shallow beaches and constantly blowing
winds make Ras Sedr one of the most
ideal kite surfing sites in the world.
2016 in revieW
riSK
grouP
The Risk Group (RG) provides independent risk oversight and
supports the enterprise risk management (ERM) framework
across the organisation. The group proactively assists in rec-
ognising potential adverse events and establishes appropri-
ate risk responses essential for the building of competitive
advantage, which reduces costs and losses associated with
unexpected business disruptions. The group works to iden-
tify, measure, monitor, control and manage risk exposure
against limits and tolerance levels and reports to senior man-
agement and the Board of Directors (BoD). The group is man-
aged by the Chief Risk Officer (CRO), whose responsibilities
entail the day-to-day monitoring of the following key areas:
credit, investment, market, operational, conduct, liquidity,
interest rate, security, reputational, regulatory, social and
environmental risks (referred to as Principal Risks), as well as
the establishment of a holistic risk management framework.
Chief Risk officer
credit & Investment
Exposure Management
credit & Investment
Administration & credit
Information
risk
Management
consumer & Business
Banking risk
credit Exposure
Management
credit & Investment
Administration
ALM risk
credit Information
Market risk
non-Performing
Exposure Management
& Provisioning
Investment Exposure
Management
consumer credit Policy
credit Assessment and
Fulfillment
collection and
recoveries
operational risk
Strategic Analytics
FI & country risk
Enterprise risk
Social &Environmental
credit risk Management
reputational risk &
Strategic risk Initiatives
Application Fraud
Business Banking risk
risk Infrastructure &
control
78 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 79
2016 in revieW
overview
2016 was yet another year of uncertain economic circum-
stances that experienced CIB’s prudent risk management
framework support the containment of losses. Despite chal-
lenges, Risk Group continued to align and collaborate with
business on product development and risk strategies to drive
growth without compromising portfolio quality, which was
maintained within the risk appetite parameters and contin-
ued to be on sound footing despite the difficult conditions.
objectives
• Implement an enterprise risk management framework
with the elements of risk strategy/risk appetite, process,
infrastructure and risk culture.
• Maintain focus on Principle Risks.
• Align our risk profile with the Bank’s risk strategy and
support strategic initiatives with special focus to bal-
ance sheet optimisation.
• Provide independent risk analysis via measurement and
monitoring processes that are closely aligned with the
business and support groups.
• Work on raising efficiency to reduce expected losses,
while maintaining adequate impairment coverage.
• Initiate the process of embedding social and environ-
mental risks as integral components of our risk review
by developing social and benvironmental policies, pro-
cesses and procedures.
• Support business growth while encouraging approval/
delegation authorities to enhance turn-around time.
enterprise risk management (erm)
ERM remains a key pillar for the Bank. Its objective is to
foster an integrated and forward-looking risk approach, dy-
namic risk culture, robust and adaptable technology platform
aligned with the business and risk strategy and Identifying,
Measuring, Managing, Monitoring, & Reporting (IMMMR)
framework to support both financial and non-financial risks.
The Bank is focused on non-financial risks such as conduct,
vendor, reputational, cyber, information security and IT risks.
CIB’s enterprise risk monitoring and reporting are critical
components that support senior management and the Board of
Directors (BoD) to effectively perform their risk management
and oversight responsibilities. Risk Group has strong partner-
ships with key stakeholders throughout the organisation.
Risk Management Framework
Risk Culture
Risk
Governance
Risk
Principles
Risk
Appetite
Limits and
Policies
Risk
Monitoring
Credit
Market
Operational
Liquidity
Interest Rate Environmental
& Social
Investment
Reputational
Emerging Non-
Financial Risks
Stress Testing
Enterprise Risk Management
identify, Measure, Manage and Report (iMMR)
Risk Identification
Risk Assessment
Risk Response
Risk Control
• Identify risks
that may impact
strategy
• Establish an
integrated or
cross-discipline
approach
Environment
Infrastructure
process
• Impact and
prioritisation of
identified risks
• categories of
avoidance or
acceptance of
risks
• Adherence to
producers, policies
and regulations
Cib’s ERM Framework Components
Strategy
Execution
Risk Strategy &
Business Strategy
Risk Appetite
validation /
reassessment
Risk
Identification
Risk
Assessment
Risk
Response
Risk
Control
Organisation
& People
Limits
Methodologies
Data
Systems
Policies
Reporting
Governance
Culture
80 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 81
2016 in revieW
Governance
CIB’s risk governance structure utilises the lines-of-defence
model, with a robust committee structure and a comprehen-
sive set of policies and operating guidelines that are approved
by the BoD. The BoD, directly or in conjunction with Board
Committees, provides oversight of approval processes, risk
levels as well as key performance and risk indicators.
The CRO and other risk officers, who are key members of
all credit, consumer, business banking, security, asset and
liability management and operational risk committees, are
responsible for the identification, assessment and reporting
of all types of risks across all business lines.
Lines of Defence Model
To ensure the effectiveness of an organisation’s risk manage-
ment framework, the BoD and senior management rely on
adequate lines of defence functions, including monitoring
and assurance within the organisation.
board of Directors, Risk, Audit, operations & technology Risk Committees
Management
First Line of Defence
Second Line of Defence
Third Line of Defence
Business line management
independent risk compliance
& legal
independent Audit review and
challenge
Identify and manage the risks
inherent in the activities
Set frameworks and rules, monitor
and report on execution, manage-
ment and control
Provide an independent assess-
ment for the whole process
Manage
Control
Evaluate
Cib is the first and only financial institution in egypt to join the UneP fi.
Principles
CIB’s take on risk is directed by the following principles:
• Business activities are conducted within established risk
categories that are further cascaded down to limits.
• Decision-making is based on a clear understanding of
the given risk, which comes alongside robust analysis
and continuous maintenance of a defined risk appetite.
• Proactively considering changing economic conditions
in a holistic and forward-looking manner.
• Mitigate Social and Environmental risks that may dis-
rupt business performance.
risk Appetite
CIB aligns business objectives with risk appetite and risk toler-
ance, quantifying this using capital adequacy, stable funding
and earnings volatility, as primary key risk indicators (KRIs)
cascaded into risk tolerances by risk category and limits.
Risk appetite is the maximum level of risk the Bank is
prepared to accept to accomplish its business objectives
and is annually reviewed and approved by the BoD. CIB’s
risk appetite statement is defined in both qualitative and
quantitative terms and is integrated into our strategic
planning processes for each line of business. Our frame-
work for risk appetite is guided by the following principles:
• Strong capital adequacy
• Sound management of liquidity and funding risks
• Stability of earnings
limits & Policies
A robust system of risk limits and policies is fundamental
to effective risk management and is guided by the risk
appetite framework. CIB has a comprehensive set of risk
management policies, processes and procedures that are
regularly updated and aligned with CBE regulations, the
Bank’s strategy framework and market dynamics. CIB
policies and procedures are communicated throughout
the organisation and are used to control the Bank’s risk
level and tolerance.
monitoring
Enterprise-level risk monitoring, transparency and reporting
are crucial components of CIB’s risk framework and operat-
ing culture, ensuring the BoD, committees and senior man-
agement are effectively executing their responsibilities. CIB
has developed practices designed to monitor risk and ensure
control measures are exercised.
culture
CIB’s risk culture encourages effective communication among
employees to facilitate alignment of business and risk strate-
gies and promote an understanding of the prevailing risks
throughout the organisation. Integrity and reputation are em-
bedded in CIB’s culture, being key requirements for successful
operation. CIB continues to add learning opportunities and
expand risk training across its departments to raise risk and
internal control awareness and ensure the Bank’s employees
are well equipped to make decisions in an ethical, professional,
coordinated and consistent manner.
stress Testing
Stress testing is performed on a regular basis to assess the
impact of a severe economic downturn on our risk profile and
financial position. The Bank’s methodologies undergo regu-
lar scrutiny to assess the impact of different scenarios. CIB is
working toward having an integrated stress testing approach
as a key component of the ERM framework.
Stress testing is critical in:
• Identifying a unified technique for managing risk Bank wide.
• Providing a forward-looking assessment of risks.
• Addressing limitations in the historical forms and data.
• Facilitating the future planning for capital and liquidity.
• Developing applied risk mitigation techniques/contingency
plans in distressed conditions.
82 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 83
2016 in revieW
Cib’s Current Risk Framework
Risks
Measurements
governance
policies
wholesale credit
risk
• Sensitivity Model/
Default Ratio/Coverage
Ratio and Provisioning
Monitoring
• Institutional Banking
Credit Committee
• High Lending and Invest-
ments Committee
• Credit Policy
g
n
i
t
s
e
T
s
s
e
r
t
S
consumer credit
risk
Business Banking
credit risk
Liquidity risk
Interest rate risk
• Loss Rates & Provision-
ing Monitoring
• Leading, Coincidental,
& Lagged Indicators
• Behavioral, Segmenta-
tion, Vintage & Past
Dues Data Analysis
• Liquidity Gaps
• Net Stable Funding
• Liquidity Coverage
Ratio
• Economic Value of
Banking Book
• Earnings at Risk
• Interest Rate Gaps
Market risk
• Value at Risk
operational risk
& conduct risk
Security risk
Investment risk
Social & Envi-
ronmental credit
risk
• Loss Data Base
• Risk and Control Self-
Assessment
• Key Risk Indicators
• Heat Map
• On-going Risk Assess-
ment
• Risk and Control Self-
Assessment
• Key Risk Indicators
• Heat Map
• IRR
• DCF Model
• Market Multiples
• Portfolio Concentra-
tion in High Social &
Environmental Risk
Firms (Category A)
• Percent of Loans in
S&Es Exclusions List
Sectors
• Breaches of Social
&Environmental
Covenants
• Consumer Risk Com-
mittee
• Consumer Credit Policy
• Business Banking Risk
Committee
• Treasury Policy
• Assets & Liability Com-
mittee
• Treasury Policy
P
A
A
C
I
• Operational Risk Com-
mittee
• Operational Risk Policy
• Conduct Risk Policy
• Security Committee
• Security Governance
Policy
• High Lending and Invest-
• Direct Investment
ments Committee
Policy
• Institutional Banking
Credit Committees
• Social & Environmental
Credit Risk Policy
Chief Risk officer Chart
Chief Risk officer (CRo)
High Lending &
Investment
committee (HILc)
Asset & Liability
committee (ALco)
consumer risk
committee (crc)
operational risk
committee (orc)
Security
committee
The CRO and other risk officers, who are key members of
all credit, consumer, business banking, security, asset and
liability management and operational risk committees are
responsible for identification, assessment and reporting all
types of risks across all business lines.
• The High Lending and Investment Committee (HLIC)
is an Executive Committee composed of members of the
Bank’s senior management team. Its primary mandate
is to manage the asset side of the balance sheet, keeping
a close eye on asset allocation, quality and development,
while ensuring compliance with the Bank’s credit poli-
cies and the CBE’s directives and guidelines. The HLIC
reviews and approves the Bank’s credit facilities and eq-
uity investments, although there are other Credit Com-
mittees responsible for approving different exposures
that carry lower limits, shorter tenors and better Risk
Ratings than those reviewed/approved by the HLIC.
• The Asset & Liability Committee (ALCO) is charged with
optimising the allocation of assets and liabilities, given
expectations of the potential impact of future interest rate
fluctuations, liquidity constraints and foreign exchange
exposures. ALCO monitors the Bank’s liquidity and mar-
ket risks, economic developments, market fluctuations
and risk profile to ensure ongoing activities are compat-
ible with the risk/reward guidelines approved by the BoD.
• The Consumer Risk Committee’s (CRC) overall respon-
sibility entails managing, approving and monitoring
all matters related to the quality and growth of the
consumer portfolio. CRC decisions are guided first and
foremost by the Bank’s current risk appetite, in addition
to prevailing market trends, all the while ensuring com-
pliance with the principles stipulated by the Consumer
Credit Policy Guide, as approved by the BoD.
• The Senior Business Banking Committee’s (SBBC)
overall responsibility is managing, approving and moni-
toring all matters related to the quality and growth of
the Business Banking Portfolio and approval processes.
SBBC decisions are guided first and foremost by the
Bank’s current risk appetite, as well as prevailing market
trends, while ensuring compliance with guidelines stip-
ulated by the CBE and Business Banking Credit Policy
Guide, as approved by the BoD.
• The Security Committee’s main objective is to provide
guidance and advice to help maintain and improve all
matters related to security, including information con-
fidentiality, integrity and availability, as well as physical
security, Bank asset protection and workplace security.
• The Operational Risk Committee’s (ORC) main objec-
tive is to oversee, approve and monitor all affairs per-
taining to the Bank’s compliance with the operational
risk framework and regulatory requirements.
Risk Organisation
Under the Risk Group, risks are monitored by Credit and
Investment Exposure Management, Credit and Investment
Administration and Credit Information, Consumer and Busi-
ness Banking Risk and the Risk Management groups. These
groups actively examine and review exposure to ensure the
diversification of the Bank’s portfolio in terms of capital ad-
equacy, customer base, geography, industry, tenor, currency,
products, countries, risk rating, segments, etc.
Credit & investment Exposure Management (CiEM)
In the current volatile market, CIB has successfully managed
to maintain healthy growth momentum without compromis-
ing the credit portfolio’s quality. Maintaining positive mo-
mentum is the primary objective of the Credit & Investment
Exposure Management Department (CIEM).
This risk-adjusted growth is a result of the consistent
commitment to the credit risk process that outlines the com-
prehensive set of policies and operating guidelines adopted
by Bank staff and under the supervision of the BoD and the
Board Risk Committee. Credit Exposure Management (CEM)
is responsible for the credit quality of the Bank’s portfolio
and Investment Exposure Management (IEM) is responsible
for safeguarding CIB’s interest in its equity investments and
securitised bonds. The Credit & Investment Risk Process
comprises of three Primary Elements, namely:
• Risk identification and assessment
• Risk mitigation
• Risk monitoring and reporting
84 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 85
2016 in revieW
egP 10.02 bn
net interest income in 2016, a rise of
23.44% y-o-y
CiCM Chart
boD
Strategy
Risk Mitigation
Risk Identification
& Assessment
CiEM
Risk Monitoring
& Reporting
Credit policy guide
risk identification and Assessment
CIEM’s primary objective is to evaluate Institutional Bank-
ing’s (IB) lending and investment portfolio and use qualita-
tive and quantitative analysis to maintain a quality portfolio,
enhance the Bank’s seniority, establish adequate protection
and control and develop a solid provisioning process that en-
sures adequate portfolio coverage. The following are the tools
used in risk identification and assessment:
• Internal Credit Rating Assessment Model: CIEM
was able to design an assessment model to evaluate
corporate portfolio customers’ risk ratings through
several phases, starting with gathering all regulatory
guidelines, consolidating historical information and
translating all aspects into qualitative and quantitative
measures. In 2016, CIEM was able to convert the Credit
Risk Rating Assessment Model (CRAM) into a reliable
tool with a well-designed workflow.
86 • Annual Report 2016 • CIB
• Credit Risk Analysis: Credit approval memorandum risk
analysis is the core function of CIEM. Historical perfor-
mance and trends are analysed and stress tested using
prevailing market and industry conditions. Following
the review stage, potential risks are identified and scaled
against the probability of occurrence and impact severity.
The risk review is then calibrated with the output of CRAM
and stress tested to create a holistic view for client cred-
itworthiness and internal risk rating. This holistic view
provides the insights needed in the next element of the
Credit Risk Process.
risk mitigation
Based on the comprehensive analysis, risk mitigation mea-
sures are taken to align with the Bank’s risk appetite. Accept-
ed low-level risks are monitored on a regular basis to account
for any changes in risk evaluation. Medium and critical risks
are either reduced through collaterals, supports, guarantees
and covenants, or transferred to insurance companies.
In terms of additional governance, there are seven Credit
Committees, each consisting of members from IB and CEM.
Appropriate risk mitigation is assigned to assure maintain-
ing a solid credit portfolio, following regulatory guidelines
with precise monitoring triggers.
risk monitoring & reporting
In CIB, we understand the interdependence of all economic
activities. Therefore, credit analysts cover macroeconomic,
environmental, political, social and technological research
for all industries on a daily basis. This information acts as
an alert for any unexpected risks, be they intrinsic, industry,
concentration, FX or counterparty default.
CIEM is responsible for collecting monthly information to as-
sess the Bank’s compliance status and ensure adhering to CBE
limits. It also follows up on past due exposure or problematic
accounts, with corrective actions taken if needed to meet our
goal of maintaining a quality portfolio.
To maintain a quality portfolio, CIEM is continuously
monitoring IB credit exposure and reporting to Senior Man-
agement. The BoD, directly or in conjunction with the Board
Committees, oversees key performance and risk indicators.
The reports delivered on a quarterly basis to the BoD include,
but are not limited to: Portfolio Quality Summary, concentra-
tion levels, government exposure levels, past dues, coverage
ratios, Key Risk Indicators, etc.
in different jurisdictions, provide cross-border services and
support international trade.
The impact of turbulent and stressed market conditions
(i.e. macro and industry specific conditions) took a nega-
tive toll on the portfolio quality, with the CIB Default Ratio
recording 6.7% as of December 2016, which would read 5.7%
if the effect of the devaluation were to be excluded, with an
adequate coverage of 149.11%.
On another note, the exposure of Watch List accounts was in-
flated to EGP 6,238 million in 2016, which would read EGP 3,245
million if the effect of devaluation is excluded, compared to EGP
2,680 million in 2015, mainly as a reflection of the witnessed de-
valuation during said period as 70% of said exposure is related
to the Tourism Industry and is mainly in FCY. Said exposure is
not alarming as the CBE initiative to support the tourism sec-
tor allows banks to restructure and reschedule loans to said
industry without being downgraded to non-performing loans.
The same effect was witnessed on restructured loans reaching
EGP 7,771 million in 2016, up from EGP 3,127 million in 2015, as
tourism and non-performing loans represent 49% and 28% of
said amount respectively.
credit Policy Guide (cPG)
CIEM is responsible for reviewing and updating the Bank’s
Credit Policy Guide (CPG). The CPG regulates credit, industry,
country and counter-party limits, in addition to regulating
the risk appetite, tolerance and approval authorities. In 2016,
CIEM finalised the Credit Processes & Procedures Guide that
includes comprehensive corporate credit lending best practices
and expertise that shaped the Bank’s success story and further
elaborated on different parties’ roles and responsibilities.
moving forward
The BoD endorsed new functions to cope with the dynamic
changes in the market environment over the year. Accordingly,
CIEM has taken proactive steps by establishing two new teams:
The team’s main functions are to:
• Manage country risks along with top down approach
by analysing the country’s economic and industry
risks, the credit risk of economic participants, the
quality and effectiveness of country regulations and
the competitive environment.
• Standardise process and analysis framework using up to
date market data to enable immediate responses and to
develop early warning signals
• Prepare in depth reports covering key updates regarding
the countries/ banks under review.
social & environmental credit risk management
CIB believes in the importance of protecting natural resources
and society as a key facet of any sustained business success. In
light of this, CIEM formalised a Social & Environmental Credit
Risk Management Department, which focuses on procedures
to guarantee the sustainable growth of CIB clients’ businesses
while minimising adverse projects’ impact on the community
and the environment. A framework comprising of a set of actions
and measures has been implemented concurrently with the
Bank’s existing prudent risk management procedures. The Social
& Environmental Credit Risk Policy Guide integrates social and
environmental credit risks into the Bank’s evaluation process.
Green financial solution
The Social & Environmental Credit Risk Department monitors
market opportunities in renewable energy and energy efficien-
cy solutions, providing our clients with the necessary means to
finance their transformation from a business-as-usual model
to a more sustainable one. Energy efficiency solution courses
were conducted internally to raise staff awareness while pro-
viding them with the tools needed to identify opportunities.
financial institution (fi) & country risk Team
The FI & Country Risk Team has been formed to actively col-
laborate with international players and develop a broad net-
work of correspondent relationships with a fast, yet prudent
approval process. The team’s main objective is to meticulous-
ly manage country risks, confidently assess financial services
United Nations Environment Programme (UNEP) – Finance
Initiative as an International Platform
The UNEP – Finance Initiative (FI) partnered with CIB to pro-
mote sustainable finance. Along with over 200 financial institu-
tions, the Bank will work with UNEP FI to understand today’s
environmental challenges and how to actively address them.
CIB • Annual Report 2016 • 87
2016 in revieW
34.24%
ROAE for the year after profit
appropriation
CIB is the first financial institution in Egypt to sign the UNEP
FI Statement of Commitment on Sustainable Development. The
Bank will join forces with the UNEP FI to stimulate a country-
level policy dialogue between finance institutions, supervisors,
regulators and policy makers to promote the Egyptian financial
sector’s involvement in processes such as global climate nego-
tiations and integration of environmental and social consider-
ations into all aspects of financing operations.
Furthermore, CIB took part in the UNEP FI Global Round-
table, which is widely recognised as one of the most promi-
nent global platforms on sustainable finance. In the 14th edi-
tion of the Global Roundtable in Dubai, hundreds of leaders
from all parts of the financial system, civil society, academia,
governments and the United Nations gathered to discuss
Financial Institutions future plans based on the Sustainable
Development Goals (SDGs) and the Paris Climate Agreement.
CIB enjoyed an exceptional representation in the opening
Plenary, CEO’s Luncheon, energy, water and food session, in
addition to the participation in the banking commission.
Credit & investment Administration / Credit
information
The Credit & Investment Administration function ensures
administrative control over institutional and investment
exposures as well as compliance with both credit and invest-
ment policy guidelines and CBE directives.
The department is the backbone of the Investment Bank-
ing (IB) division as it maintains a quality control system that
ensures CIB’s seniority, protection and control. The function
has enhanced efficiency in meeting customer requests to
disburse funds in a timely manner. It is the main focal point
in compiling qualitative information and regulatory report-
ing on credit customers. Controls and compliance have been
enhanced through the data integrity and risk management
platform strategy.
Consumer and business banking Risk
Consumer and Business Banking Risk is a centralised, inde-
pendent group under the Risk Group, monitoring risk for all
Consumer and Business Banking asset products and apply-
ing a diversified set of strategies and mitigation tools.
The framework in which the Consumer and Business Bank-
ing Risk group operates is subject to constant evaluation to en-
88 • Annual Report 2016 • CIB
sure it meets the challenges and requirements of the Egyptian
market, regulatory standards and industry best practices.
The group structure is designed to facilitate the Credit
Cycle and support the growth of the Consumer and Business
Banking portfolio.
consumer Banking risk
The Consumer Banking portfolio consists of a broad range of
asset products, which include personal loans, credit cards,
auto loans, real estate finance loans and overdrafts. Lending
programs and decisions are guided through individual prod-
uct programs that assess each product separately and incor-
porate detailed eligibility criteria, delegation authorities and
approved peak exposures aligned with current risk appetite.
The Consumer Credit Policy Guide (CCPG) sets lending
boundaries and establishes robust limits to oversee ongo-
ing policy management. It provides guidelines on ensuring
prudent risk management and maintaining high-quality
loan portfolios, while keeping in mind the risk and reward
equation. It also regulates the delegated approval authorities
for new product launches, tests and promotions, as well as
transactional approvals.
The consumer cycle comprises five main elements. and
the consumer risk structure and framework mirrors these
stages, each of which is managed entirely by a specialised
functional department:
• The Credit Policy Department, which undertakes prod-
uct planning.
• The Credit Assessment Department, which handles cen-
tralised credit underwriting.
• The Collections and Recoveries Department, which
handles delinquent customers.
• The Strategic Analytics Department, which provides sup-
port for management in all stages, including information
and analytics for decision making and credit actions.
• Account maintenance activities.
Business Banking risk
The Business Banking Risk Department has success-
fully partnered with the Business Team to achieve portfolio
growth while maintaining its solid quality. This is achieved
through regular reviews and dynamic parameter changes to
keep abreast of the market and close monitoring and man-
The inscriptions on the walls of Edfu
provide important information on
language, myth and religion during the
Greco-Roman period in Ancient Egypt.
CIB • Annual Report 2016 • 89
2016 in revieW
21.4%
efficiency ratio as of year-end 2016
aging of high-risk segments. Continuous amendments are
applied based on findings from portfolio reviews, including
in-depth analysis, to ensure consistency in the performance
of the Bank’s portfolio. The Business Banking Risk Depart-
ment along with the Business Team have been focused on
identifying new segments and sub-segments as well as
implementing a simple product program approach that
addresses the needs of those segments, leveraging the “Fac-
tory Approach.” This approach involves implementing a near
straight-through processing mechanism that varies based on
a set of standardised criteria, in addition to support packages
and documentation that allow for a standardised evaluation
and shorter turnaround time.
Portfolio Quality
Consumer and Business Banking portfolio quality has
been sustained, ensuring advanced portfolio manage-
ment techniques by monitoring all current and historical
programs’ performance. This helps in the identification
of potential growth segments and the detection of early
warning signs. The 2016 Consumer and Business Banking
Asset Portfolio stands at EGP 17.4 billion with the loss rate
kept at minimal levels of 1.1%.
Despite the aggressive growth of the unsecured lending
strategy adopted by the Bank, challenging economic circum-
stances and rising inflation, key risk indicators and loss rates
were maintained within risk appetite benchmarks, with non-
performing loans standing at 1.5%.
our Strategy going Forward
consumer Banking risk
• Making the Consumer Risk Processes the best in terms
of market customer experience: A transformation
project was initiated to automate the credit decisioning
process further.
• Revamp Credit Policies & Processes: The division
will work closely with Business Banking to realign and
revamp all policies and processes to realise a segment-
focus approach instead of a product-focused one, in line
with the new Consumer and Business Banking strategy.
• Moving to the next level of advanced bespoke score-
cards: CIB has partnered with a vendor with a suc-
90 • Annual Report 2016 • CIB
cessful track record when it comes to implementing
transformative solutions and cutting-edge technology
for automation of decision rules, application and behav-
ioural scoring models.
Business Banking risk
• Focus on unsecured product programs with simplified
criteria and lending support to business growth.
• Support the Business Team in expanding into further
markets and untapped segments within the small- and
very-small-size enterprise market.
Risk Management Department
The Risk Management Department identifies, measures,
monitors and controls asset and liability management as well
as market, operational and other non-financial risks via Bank
policies, ensuring regulatory and risk analytics requirements
are adequately managed and their status regularly reported
to management and members of the BoD.
enterprise risk management
ERM is dedicated to leading the Bank’s overall enterprise
risk management framework and monitoring infrastructure
initiatives, with the objective of having a holistic, integrated
and forward-looking view of risks and following best prac-
tices, which was endorsed by the BoD via the ERM roadmap.
The initial foundation for the ERM roadmap is strong data
governance and continuous enhancement of quantitative and
qualitative frameworks of Principal Risks.
CIB established a dedicated department within the Risk Group
to lead and implement the ERM roadmap through the following:
• Ensure CIB is in line with international best practices in
modelling techniques.
• Continuous enhancement in quantifying qualitative
risks along with improving statistical techniques used
to capture quantitative risks.
• Align corporate, retail and business banking risk per-
spectives in modelling techniques.
The ICAAP Report is a summary of the Bank’s risk manage-
ment framework, starting from describing current method-
ologies and processes all the way to enhancements and the
optimisation of risk processes and capital planning. The
Cib has a comprehensive liquidity Policy and Contingency funding Plan to
manage liquidity risk, which factors in the bank’s risk profile, risk appetite as
well as market and macroeconomic conditions.
objective of ICAAP is to ensure the Bank understands its risk
profile and has systems in place to assess, quantify and moni-
tor all material risks. CIB maintains the following:
• The assessment process of capital for credit, market and
operational risks.
• Ample capital for covering other types of risks not covered
under regulatory capital, such as interest rate risk, con-
centration risk, counterparty credit risk and liquidity risk.
• Continuous risk management enhancements in line with
local and international best practices.
• BoD and management oversight of the risk manage-
ment framework aligned with the regulatory require-
ments and approving necessary corrective actions in
case of deviations.
In 2016, the Bank enhanced focus on the following Non-
Financial Risks:
•
• Cyber Risk: Protection against potential threats have been
implemented and considered as a top strategic priority.
Information Security Risk: The framework is in progress
and aims to set policy guidelines and controls for manag-
ing and handling information within the organisation.
• IT Risks: Dedicated action plans are being monitored
and implemented for IT risks based on best practices.
• Vendor Risk: A dedicated framework has been put in
place to ensure all vendors are evaluated, monitored
and assessed to meet the criteria of qualified suppliers.
• Reputational Risk: Added a dedicated Reputation Risk
Department in 2016 to build a robust framework.
• Conduct Risk: CIB was the first Egyptian bank to es-
tablish a Conduct Risk framework, in compliance with
the Financial Conduct Authority (FCA), UK. The frame-
work includes: Training and Awareness, Product Risk
Assessment and Conduct Risk RCSA and Heat Map.
• Social & Environmental Credit Risks: A devoted de-
partment was established and policy was approved to
assess and mitigate material Social & Environmental
Credit Risks.
Liquidity Risk arises from the Bank’s inability to meet fi-
nancial obligations and regulatory liquidity requirements.
CIB has a comprehensive Liquidity Policy and Contingency
Funding Plan to manage liquidity risk, which factors in the
Bank’s risk profile, risk appetite as well as market and mac-
roeconomic conditions.
The main measures and monitoring tools used to assess
the Bank’s liquidity risk include regulatory and internal
liquidity ratios, liquidity gaps, Basel III liquidity ratios and
funding base concentration.
CIB managed to maintain a strong liquidity ratio in 2016
compared to the guidelines of both the CBE and Basel III (Li-
quidity Coverage and Net Stable Funding ratios). The CBE’s
liquidity ratios for LCY was 60.77% and FCY 47.80% for the year,
maintaining the Bank’s strong position even during volatile
times. CIB has a robust Contingency Funding Plan (CFP) that
supports diverse funding sources of liquid assets, maintaining
an adequate liquidity buffer with minimal reliance on wholesale
funding. 2016 witnessed an exceptional percentage of customer
deposits to total funding base (a major component of CIB’s Risk
Appetite Statement) of 98.6%. Throughout the year, stress test-
ing scenarios (specific and systemic) showed that no immediate
action was required in the CFP, which was further fortified by
the existence of sufficient high-quality liquid assets (HQLA).
2016
Q1
Q2
Q3 Q4
Percentage of Deposit Base
to Total Funding Base
99.6% 99.2% 99.7% 98.6%
Interest Rate Risk is the potential loss resulting from the
Bank’s exposure to adverse movements in interest rates.
Interest rate risk primarily arises from re-pricing maturity
structures. In 2015, CIB used an effective risk management
process that maintained interest rate risk within prudent
levels that ensured the Bank remains on safe and stable
ground. Additionally, CIB proactively positioned the balance
sheet in a way that allows it to benefit from a volatile interest
rate environment. The Bank uses complementary technical
approaches to measure and control interest rate risk includ-
ing Interest Rate Gaps, Duration, Duration of Equity (CBE
parameters) and Earnings-at-Risk (EaR).
The Bank also has a comprehensive interest rate risk mea-
surement framework that assesses the impact of interest rate
changes in manners that are consistent with the scope of ac-
tivities, evaluating interest rate risk from both the earnings
and economic value perspectives.
CIB • Annual Report 2016 • 91
2016 in revieW
egP 267.5 bn
in total assets
• Optimised our operating model to achieve more effi-
ciency through process reengineering and underwriting
automation initiatives resulting in significant improve-
ments in asset products’ turnaround times, maintaining
enhanced approval rates while achieving significant
headcount optimisation.
• Supported the successful migration of Citibank port-
folios through facilitating the smooth integration of
Citibank’s portfolio and personnel into CIB’s culture by
providing training sessions and orientations for systems,
policies and processes, as well as ensuring all key acqui-
sition risks were effectively managed.
• Reinforced our Collections structure in line with indus-
try best practices; a Collection Strategy Unit was created
to optimise collection capabilities and instilling best
practice activities such as collection contests, champion
challenger approach and developing different strategies
for every bank segment.
• Strengthened the stress-testing model to account for
shifts in risk factors as well as including regression
analysis between KRIs, Probability of Default (PD), and
Macroeconomic Indicators. Results are integrated into
risk management decision-making processes for risk
limits and appetite.
Market Risk is the risk of losses that may arise from adverse
movements of market prices of trading positions, including in-
terest rates, foreign exchange and equity as well as the changes
in the correlations and volatility levels between those risk fac-
dence level and a one-day holding period. VaR is calculated
for the Bank’s total trading book exposures as well as for each
risk class, e.g. interest rate, equity and foreign exchange.
Deposit base Concentration
december 2016
trading VaR for 2016
95% 1-day
Minimum Maximum Average
Trading Book VaR
11.3
335.9
51.7
95% 1-day
Q1
Q2
Q3
Q4
Trading Book VaR
30.9
27.9
14
116.4
Regular back testing of daily profit and loss against the esti-
mated VaR is performed to validate the accuracy and integrity
of the Bank’s VaR model. In addition, the Bank estimates the
Stressed Value at Risk (SVaR) on a daily basis. SVaR measures
the potential loss under stressed market conditions. Stress test-
ing combined with VaR provides a more comprehensive view of
market risk. SVaR is calculated using the maximum volatility
levels witnessed during the observation period and is estimated
by using a 95% confidence level with a one-day holding period.
Regular stress testing is also carried out using a combination
of historical and hypothetical scenarios to monitor the Bank’s
vulnerability to extreme and unexpected shocks.
Operational Risk refers to potential loss that could result
from inadequate or failed internal processes, people or sys-
tems or due to external events. CIB maintains a comprehen-
sive operational risk framework, with policies and processes
designed to provide a controlled environment and to monitor
the first line of defence in identifying and assessing opera-
tional risks and controls.
Current Account..............................26.0%
Time Deposits ..................................24.8%
Certificates of Deposits .............29.8%
Saving Accounts .............................16.6%
Others ..................................................2.8%
tors. Market Risk Management (MRM) sets key limits to moni-
tor and control market risk by considering both the Bank’s risk
appetite as well as the projected business plan.
These limits include position, stop-loss and Value at Risk
(VaR) limits. When limits are exceeded, MRM is responsible
for identifying and escalating those cases instantly.
The Bank primarily uses the VaR technique to quantify the
market risk. VaR is a probabilistic measure of the potential
loss under normal market conditions, at a specific confidence
level over a certain period of time. As the Bank’s trading book
portfolio includes linear level 1 assets, the Variance-Covari-
ance approach is used to calculate VaR, using a 95% confi-
We monitor corrective action plan implementations to
mitigate risks in systems, human factors, policies, internal
processes and external events using CBE guidelines and best
practices. The framework uses the following approaches to
measure and control operational risk:
• Operational Loss Events
• Risk and Control Self-Assessment (RCSA)
• Key Risk Indicators (KRIs)
• Control Testing
• Issues and Action Plans
• Operational Risk Awareness Program
• Operational Risk Champions Program
• Stress Testing
2016 Accomplishments
• CIB Risk Group won three awards in Achievement in
Liquidity Risk, Operational Risk and Best Retail Risk
Management Initiative for Middle East & Africa from
Asian Banker Singapore.
• CIB has been short listed as a finalist for the ERM Strat-
egy of the Year by CIR Magazine in the UK for the Annual
Risk Management Awards. Over the last two years, the
group has won four risk awards in four different catego-
ries (ERM, Retail Risk, Liquidity Risk and Operational
Risk), which validates the strength of our ERM initiative
and overall Risk Group framework.
• CIEM was able to inaugurate the Credit Rating Assess-
ment Model (CRAM).
• CIEM formed the Financial Institution (FI) & Country
Risk and Social and Environmental Credit Risks teams.
• CIB was the first and only bank in Egypt to join the United Na-
tions Environmental Program Finance Initiative (UNEP FI).
• Risk Culture was enhanced by covering almost 50% of
the organization via training courses and awareness ses-
sions. In addition, the Bank achieved a 96% passing and
participation rates for the online organization aware-
ness for Operational and Conduct Risks.
• Supported the growth of high-return portfolios driven by
significant high-yield parameter changes and new pro-
grams launched to support unsecured business growth
while maintaining rigorous controls on portfolio quality.
92 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 93
2016 in revieW
ComPlianCe
Marsa Alam’s Port Ghalib is the only
South Red Sea marina from which safari
boats can make direct trips to some of
the world’s most famous marine sites like
Daedalus Reef and Brothers Island.
The Compliance Group is an independent unit that continues
to support CIB’s business and operations to enable the Bank
to pursue its growth strategies. The group works to ensure
CIB adheres to compliance standards to safeguard the Bank
against a full spectrum of compliance risk, while reducing
the risk of imposed fines by the regulator.
The Compliance Group has five divisions under its umbrella:
The Policies and Procedures Division ensures that all con-
trols, laws and regulations are embedded in the applied
policies and procedures, which are periodically reviewed to
ensure they are up to date. The division is also responsible
for reviewing and approving marketing materials, contracts
and customer forms.
The Corporate Governance and Code of Conduct Division
ensures that a sound corporate governance model is in place
and that the Bank adopts international best practices in
compliance standards. The division also ensures the appro-
priate segregation of duties for all positions across the Bank
by reviewing updated job descriptions versus organisation
charts to detect and escalate cases of conflict of interest.
The Anti-Money Laundering and Terrorism Financing
(AML) Division monitors transactions and customer account
activity and screens transactions against negative lists and
those related to sanctioned countries to avoid the Bank’s
involvement and shield it against money laundering and
terrorism-financing crimes.
The Foreign Account Tax Compliance Act (FATCA) Divi-
sion ensures the Bank and its subsidiaries are consistently in
compliance with FATCA regulations and reports yearly to the
US Internal Revenue Service (IRS).
The CBE Relations Division serves the entire Bank to en-
sure all banking operations comply with CBE instructions
and guidelines.
2016 Accomplishments
In 2016, the Policies and Procedures Division undertook
several new preventative initiatives, such as reviewing the
supporting documentation of new products and ensuring
the required approvals have been obtained to guarantee its
compliance with established policies, laws and regulations.
The AML Division managed in 2016 the logistics involved
in converting to a fully automated monitoring system using
SAS software, the industry’s leading analytics software and
solutions provider. The first phase of the program will be
launched in 1Q2017 and the second phase in 2Q2017.
The AML Division also succeeded in quickly and efficient-
ly migrating Citibank’s retail portfolio, which was acquired
by CIB in 2015, in accordance with CIB’s AML policies and
procedures. It also updated in 2016 the risk assessment to
evaluate the exposure to operational risk in AML.
In keeping with the AML Division’s ethos of consistently en-
hancing performance and applying the highest international
standards and best practices, the AML team attended several
international and local seminars and conferences to keep up
to date on AML trends locally and globally. In doing so, three
AML officers became internationally certified by the ACAMS
in 2016, with more expected to be certified in 2017, making
the team one of the highest qualified in the country.
The FATCA Division successfully outlined the accounts
acquired in the Citibank transaction. It also sent the yearly
reports to the IRS as a Foreign Financial Institution and as a
sponsoring entity for CIB Funds.
To more effectively keep up with the regulator’s direc-
tives, in 2016 a CBE Relations representative joined the
FX Committee to ensure the Bank abides by FX allocation
regulations. Due to market conditions and ongoing changes
during the year, the division had to respond to a substantial
volume of daily inquiries and follow special CBE approvals
for exceptional cases.
In another milestone for the Compliance Department
in 2016, the Chief Compliance Officer was a member of a
committee formed by the Egyptian Financial Supervisory
Authority to develop the “Corporate Governance Guide for
Egyptian Companies,” receiving a certificate of appreciation
for efforts exerted in launching the guide.
goals going Forward
Going forward, the Compliance Group plans to continue to
improve the efficiency of processes and turnaround time, sup-
port CIB through the Group’s five divisions and enhance staff
awareness of key compliance issues to even better safeguard the
Bank against potential risk. The department also plans to en-
sure adequate controls are in place while maintaining a smooth
workflow to boost customer satisfaction.
The aml division quickly and efficiently migrated Citibank’s retail portfolio,
which was acquired by Cib in 2015, in accordance with Cib’s aml policies
and procedures.
94 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 95
2016 in revieW
inTernal
auDit
Being the first Internal Audit Group in Egypt complying with
international standards (IIA Professional Practice Frame-
work), CIB Internal Audit Group is continuously striving to
keep itself ahead and delivering audit services according to
international standards.
CIB Internal Audit Group is backed by a prudent Audit Com-
mittee of the Board of Directors, which ensures the independen-
cy of the IAG as the Third Line of Defence, reviewing activities of
the first two lines of defence based on the risk-based audit plan
and the methodology approved by the Audit Committee.
The role of Internal Audit Group is to provide independent as-
surance to the Audit Committee, Senior Management and the
regulators of the efficiency and effectiveness of governance, risk
management and internal controls to mitigate exposure to risks
and recommend enhancements if necessary on an on-going basis.
Internal Audit Group provides reasonable assurance of the
implementation of the Enterprise Risk Management (ERM) and
assures that the three lines of defence are in complete alignment
with the objectives and strategy of the bank, and that the group
is in full synergy with the Compliance Department and Risk
Management Department, without breaching its independence.
Internal Audit Staff are very well chosen with diversified
experience covering all the banking functions. Some 45% of
the staff is certified (CIA, CBA, CPA, CISA, and MBA). They are
continuously provided with on-the-job training and attend
overseas conferences like annual IIA conferences. Senior
staff freely shares their expertise with junior staff, who also
have consistent access to middle management that expose
them to the latest trends and methodologies worldwide.
The Internal Audit Group works as a true business partner,
which is reflected in the findings of an independent survey
conducted by an outsourced Human Resources consultant
company, indicating that 70% of the bank staff believe “Internal
Audit helps improve the process and is a true business partner.”
The structure of the Internal Audit Group allows the Chief
Audit Executive to maintain quality assurance and to develop
intensive programs to cover all aspects of internal audit activ-
ity. These tasks are implemented by professional auditing teams
that are assigned follow-up functions. The Chief Audit also set
up a separate Quality Assurance Team reporting directly to him.
96 • Annual Report 2016 • CIB
The Citadel at Pharaoh’s Island, a UNESCO
World Heritage Site in the Gulf of Aqaba,
was built in 1170 by crusaders. The island
is surrounded by coral reefs and an
underwater mountain that plunges 24
meters to a huge table of corals.
CIB • Annual Report 2016 • 97
2016 in revieW
brand & CorPoraTe
CommuniCations
With the ongoing, evolving economic changes locally and
internationally, the Brand & Corporate Communications
Department continued to maintain the Bank’s leading brand
image by further solidifying and expanding brand equity,
loyalty, positioning and exposure.
The Brand & Corporate Communications had several ac-
complishments in 2016. The most important was coming out
with the original movie production “CIB: 40 Years of Excel-
lence”, which featured the history of our four decades of suc-
cesses and achievements that brought CIB to the leading posi-
tion in which we stand today. The movie was promoted across
print and online media as well as through social media.
2016 also saw the release of “150 Years of Egyptian Post”,
which celebrates Egyptian heritage – an integral part of our
identity. Another significant release of CIB Books was the
“Scents of Egypt”, which offers a collection of photographs by
renowned artists spanning every geographic pocket of our
country that depicts the essence of our history and culture
and celebrates equally Egypt’s splendid past and vibrant
present. This was in addition to the production of the IR
movie and CIB Foundation’s annual activity report that con-
sisted of its annual movie and 10 documentaries.
Further boosting CIB’s expansive brand exposure, the
Bank maintained its focal, exclusive branding position
across Cairo International Airport, being the first and only
bank with branding inside and outside airport tubes. This
strategic brand positioning also covers the airports of Burg
Al-Arab, Hurghada and Sharm El-Sheikh.
On the international front, CIB maintained its significant
exposure across different foreign media channels, by promoting
pivotal campaigns and CIB editorials across the world’s promi-
nent publications, in addition to securing the premium place-
ments of digital banners in renowned, high-traffic online media
platforms. Some of the leading media platforms that featured
CIB included, but were not limited to, the Wall Street Journal, The
Financial Times, The Economist, Forbes Middle East, Asia Money,
EMEA Finance, Bloomberg, Euromoney and Emerging Markets.
Our international campaigns were not solely focused on promot-
ing our brand image, but supporting Egypt’s by communicating
ongoing, healthy economic reforms and hence contributing to the
98 • Annual Report 2016 • CIB
creation of a favourable perception about the country’s invest-
ment environment and its lucrative opportunities.
Locally, CIB capitalised on its strong presence across Egyp-
tian media platforms and diversified the channels of brand ex-
posure through advertisements, special editorials and inter-
views with various highly regarded publications and websites
including Bloomberg Middle East, MSNBC and Al-Arabiya.
In the digital arena, Brand & Corporate Communications
forged ahead with the Bank’s firm strategy to maintain the
sustainable development of its e-channels to keep up with
the fast-growing digital world. The most important of these
was the CIB website, which saw several enhancements and
features added, turning it into a mobile friendly portal with
an intuitive and responsive design that adapts to all tablets/
smart phones to further enhance the user experience.
Investing on the internal communications channels is of equal
importance to brand equity. The corporate intranet and monthly
newsletter have been the main channels used by the department
to bring all CIBians on the same page throughout the year.
Cementing CIB’s leadership through diverse channels has
always been a core goal for the Brand & Corporate Commu-
nications division. This has translated into various highly
selective sponsorships and activities that not only sustain
the Bank’s firm commitment toward society in general, but
cements the Bank’s support of Egyptian youth in specific.
This year, the Bank further diversified its sponsorships and
sealed new ones:
• Sawy Culture Wheel
• KidZania
• Zawya, an art-house cinema in Downtown Cairo
• Money & Finance Conference
• ICT
• Friends of Opera
• Third Annual Energy Conference
• Egyptian Squash Federation
• Upper Egypt Youth Salon
• Cairo Symposium
• American Chamber of Commerce in Egypt (AmCham)
• Folklore Night by the Embassy of Australia
• IMAX, Americana Plaza and Point 90 cinema complex
500
of Egypt’s largest corporates choose
to bank with CIB
Focusing on CSR activities rooted in CIB’s corporate iden-
tity, many outstanding initiatives took place in 2016, among
which was the distribution of 20,000 Ramadan Food Boxes
in 10 governorates in cooperation with the CIB Foundation.
Another activity was held at the 57357 Children’s Cancer
Hospital before the beginning of Ramadan, which saw our
team decorate the hospital to bring joy to young patients and
their families celebrating the Holy Month.
CIB Awards
CIB’s superior performance and depth of premium service
and products were recognized by many reputable organiza-
tions that granted the Bank different notable on both the
regional and international levels. In 2016, the Bank received a
total of 20 international awards, seven of which were received
for the first time, including:
• Best Bank in Egypt Supporting Women-Owned and Wom-
en-Run Businesses awarded by the American Chamber
of Commerce in Egypt (AmCham): This AmCham award
is given to organizations that dedicate special attention to
women in their community by supporting them through a
bouquet of services and products tailored specifically for
women. It reflects CIB’s distinctive commitment to sup-
porting women, financing their business and endeavours
and offering them many banking services and products,
including, but not limited to, providing credit facilities to
finance projects and offering the exclusive Heya credit card
with tailored benefits.
• Best Private Bank in Egypt 2017 awarded by Global Fi-
nance: Based on an in-depth analysis conducted by Global
Finance, this award is granted to organizations that have
the deepest experience, best value and highest level of cus-
tomer service within the private banking sector. CIB was
certainly deserving of the award seeing as it succeeded
over the year to maintain its outstanding performance
and record of accomplishments, which have cemented the
leading position it occupies today.
• Middle East Most Effective Recovery awarded by The
Business Continuity Institute: This award is one of the
most prestigious of the Business Continuity Management
Regional Excellence Awards, which recognize organiza-
tions that achieve a certain level of excellence in the fields
of continuity management, technology recovery and cri-
sis management. Received for the first time, this award
emphasises the positioning of CIB as a market leader for
implementing BCM best practices and positions it as the
only Egyptian private bank competing against regional
organizations and industry professionals in the business
continuity industry.
• Best Retail Risk Management Initiative in the Middle
East, Best Employee Engagement Initiative in the
Middle East and Achievement in Operational and
Liquidity Risk Management Awards for 2016 by The
Asian Banker: CIB received these four awards in recog-
nition of its firm, effective management frameworks that
supported the Bank in navigating through the economic
volatility and maintaining its leading position as the most
profitable private sector bank in Egypt. This is in addition
to the Bank’s dynamic strategies that have successfully
mitigated potential risks, such as those related to cyber
crime and forged cheques.
The list of 2016 awards also includes:
• Best Trade Finance Provider in Egypt - Global Finance
• Best Treasury and Cash Management Providers in Egypt
- Global Finance
• Best Foreign Exchange Providers in Egypt - Global Finance
• Best Sub-custodian Bank in Egypt - Global Finance
• Best Bank in Egypt - Excellence Award - Euromoney
• Most Active Issuing Bank in Egypt in 2015 - The Euro-
pean Bank for Reconstruction and Development
• Best Cash Management Services in North Africa -
EMEA Finance
• Best FX Services in North Africa - EMEA Finance
• Best Bank in Egypt - EMEA Finance
• Bank of the Year in Egypt - The Banker
• MT 202 ELITE Quality Recognition Award with STP rate
of 99.70% - by JP Morgan
• MT 103 Quality Recognition Award with STP rate of
98.22% - by JP Morgan
CIB • Annual Report 2016 • 99
STraTegiC
SuBSIdIArIES
cIB owns two strategic subsidiaries that allow the Bank
to offer a full suite of services from investment banking
and asset management to security services.
100 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 101
The ancient region of Deshret Reithu near Saint Catherine’s
Monestary provided Ancient Egypt with turquoise, gold and
copper. Ruins of mines and temples can still be found there.
sTrATeGic suBsidiAries
Ci CaPiTal
HolDing
CI Capital Holding (“CI Capital” or the “Group”) is a leading
Egyptian investment banking, securities and investment
management firm. The Group is a wholly owned subsidiary
of CIB, Egypt’s largest private-sector commercial bank.
Through its headquarters in Cairo and offices in New York
and Dubai, CI Capital offers a wide range of financial services
to a diversified client base that includes individual, high-net-
worth and institutional investors and corporate clients. The
Group offers its services across six business lines: Securities
Brokerage, Equity Research, Asset Management, Investment
Banking Advisory, Leasing and Private Equity.
The Group’s Investment Banking arm is the number-one-
ranked advisor in Egypt, having successfully executed c. EGP
106 billion in transactions since inception, with more than
EGP 72 billion executed since the beginning of 2013. The com-
pany advises on mergers and acquisitions, private and public
equity and debt capital raising and financial restructures.
The Securities Brokerage arm is a market-leading broker-
age house in Egypt, ranked number one on the Egyptian
Exchange, with a market share of 9.65% of total trading as
of year-end 2016. The firm’s share among institutional inves-
tors is even higher at 19.9%. CI Capital’s brokerage platform
is complemented by an industry-leading research platform
covering more than 75 companies across 11 sectors in seven
markets, with a top-tier analyst team ranked sixth in MENA
Research by the 2015 Extel Survey – second in the MENA
region and first in Egypt.
The Asset Management Division manages fixed income,
money market and equity products, with AUM in excess of
EGP 9.9 billion. The division managed to position itself as a
top quartile asset manager in all types of funds and portfolios.
The division manages 10 diverse funds and provides portfolio
management services to a wide client base, while also offer-
ing discretionary services to high-net-worth individuals and
institutional investors. Clients are provided with comprehen-
sive, personalised services tailored to their investment and
reporting requirements. The Asset Management team has
always been at the forefront of innovation, launching Egypt’s
first one-year, open-ended capital-protected fund and first-
ever Sharia-compliant money market fund.
102 • Annual Report 2016 • CIB
During 2016, CI Capital acquired a controlling stake in Cor-
please, one of the leading financial leasing companies in Egypt.
CI Capital was recognised as the “Best Investment Bank
in Egypt” by Global Finance in 2014 and 2015, by EMEA
Finance in 2013, 2014, 2015 and 2016 and by International
Finance Magazine in 2014.
2016 Review
securities Brokerage
• CI Capital’s brokerage arm staffs more than 119 em-
ployees, with an average of 11 years of experience in
MENA capital markets. To better compartmentalise
tasks and protect the interest of each segment, CI
Capital’s Securities Brokerage arm is comprised of two
companies: Dynamic Securities, which caters to local
retail investors, and CIBC, which caters to foreign, local
and GCC institutions and high-net-worth Individuals
across Egypt and the GCC.
• The synergies of its Research, Sales and Trading teams al-
lowed CIBC to continue to grow its overall market share
and ranking on the EGX. A market share of 9.8% (exclud-
ing one-off transactions) puts the company in first place
among competition. CIBC remains the largest institu-
tional broker with a 23.6% market share, including a 27.5%
foreign market share compared to 17.6% in 2012.
• CI Capital Research is Egypt’s leading research house, most
recently being ranked fifth (up from sixth) among regional
firms in EMEA Extel’s 2016 Institutional Investor vote and
second among local firms covering the MENA region. Out
of a team of 13, five analysts covering macro, telecoms,
industrials, chemicals, consumer and construction are
ranked among the top 25 in the region, according to EMEA
Extel 2016. The division has active coverage of 30 Egyptian
companies across six sectors, in addition to 41 regional
companies across seven MENA markets: the UAE, Saudi
Arabia, Qatar, Oman, Kuwait, Jordan and Morocco.
• The firm successfully received approval from the UAE Se-
curities and Commodities Authority during 1H2015 and is
currently in the final stages of establishing on-the-ground
presence in Dubai to branch out its regional platform and
grow its GCC client base further. CIBC’s potential pres-
ence in the UAE not only provides direct market access
to the company’s clients but will also diversify revenue
generation from other GCC markets, complimented by a
strong and growing MENA research product.
• CI Capital also hosted the 3rd Annual Egypt Equities Con-
ference in Cape Town in August 2016, receiving excellent
feedback from both investors and corporates alike.
• Finally, and as an extension to its track record of success-
ful flagship conferences, CI Capital Brokerage hosted its
4th Annual Egypt Investor Conference in January 2016,
spanning Cairo and New York. The conference hosted
38 of Egypt’s publicly listed companies meeting one on
one with close to 100 foreign, local and GCC investment
institutions and high-net-worth individuals managing c.
USD 5 trillion in GEM and frontier equities.
Asset management
• The division is recognised as one of the first and best in-
stitutionalised asset managers with a strong manage-
ment team backed by the fastest growing, full-fledged
Investment Bank.
• We are a pioneer in introducing innovative products to the
Egyptian market with AUMs in excess of EGP 8.0 billion
and the widest mandate range in the Egyptian market.
• Our outstanding, sustainable performance in all dif-
ferent asset classes under management in the Egyptian
market have pushed us to outperform both the respec-
tive benchmarks and the average returns of market
peers. Our accomplishments have led to our accredita-
tion by the Egyptian Investment Management Associa-
tion (EIMA) with international recognitions and awards.
• The division puts strong emphasis on corporate gover-
nance and risk management to align business practices
with the best interests of stakeholders while maximising
transparency through timely information disclosure.
• We serve prominent local and foreign institutional cli-
ents with professionalism, integrity and strict abidance
to business codes of ethics.
• CI Asset Management was been awarded 2016’s “Best
Asset Manager in Egypt” by Global Investors for the sev-
enth consecutive year.
• We were also awarded 2016’s “Best Asset Manager in the
Egyptian Market” by Global Business Outlook.
• Year to date, CIB Equity Fund Estithmar has been ranked
second among all other equity funds by EIMA.
• Year to date, CIB / FIB Sharia-Compliant Equity Fund
Aman has been ranked second by EIMA.
• Blom Money Market Fund was ranked first among all
money market funds for seven consecutive years (2009-
2015), maintaining its top ranking in 2016.
investment Banking
• CI Capital Investment Banking acted as the exclusive
financial advisor to Olayan Financing Company on its
EGP 518 million acquisition of a 100% stake in El Rashidi
El Mizan, Egypt’s market-leading confectionery player,
in November 2015.
• CI Capital Investment Banking acted as international
joint lead manager on Orascom Development Holding’s
CHF 135 million rights issue in December 2015. The
highly successful transaction is CI Capital’s first interna-
tional offering on the Swiss SIX Exchange.
• The arm acted as exclusive financial advisor to Qalaa
Holdings on the EGP 422 million sale of a 94% stake in
Tanmeyah Micro Enterprise Services, a leading microfi-
nance player in Egypt, in March 2016.
• CI Capital Investment Banking acted as exclusive finan-
cial advisor to Actis on its EGP 959 million sale of a 7.5%
stake in Edita Food Industries, a leading F&B player in
Egypt and the region, in June 2016.
CIB • Annual Report 2016 • 103
sTrATeGic suBsidiAries
falCon
grouP
Established in 2006 as a joint venture between CIB, the CIB
Employees Fund, Al-Ahly for Marketing and other private
entities, Falcon Group has since grown exponentially into
a full-fledged security services company. The group’s main
lines of business that operate as separate legal entities are
Security Services, Cash in Transit, Technical Services and
General Services and Properties Management.
The Group has been the main security service provider
for several top-tier government and non-government or-
ganisations, such as the United Nations, and a number of
embassies in Egypt. We value our clients as business part-
ners, dedicated to providing them with the highest quality
of service and treating their goals and objectives as our
own. We strive to increase their competitive advantage by
consistently exceeding expectations.
Falcon’s marketing plan for 2017 seeks to upgrade and
develop our lines of service, specifically by targeting banks
and other financial institutions, governmental bodies,
tourism facilities and the construction sector. In addition,
we are committed to safeguarding the wellbeing of our
employees. We have created a fully functioning structure
and utilised systematic procedures for identifying and
minimising the risk of employee harm.
Accomplishments
Falcon for Public Services and Project Management
holds a market share of 18.5%, serving a large client base
out of 295 different locations as of 2016. Our values help
us drive our objectives and provide us with guidelines
by which we achieve meaningful results in the project
management sphere, providing our clients with the best
possible services. The division succeeded in signing key
contracts with several government agencies, such as for
the Interior Ministry’s new building in New Cairo and
for the site of the State Security at Nasr City / Cairo. We
also renewed our cleaning contract with Orange Egypt for
another three years, ending in 2019. Falcon for Security
Services managed to sign security contracts with several
prominent entities and embassies in 2016, including the
Australian Embassy, UNHCR Office, the Belgian Embassy
and the Indian Embassy. Falcon Group also established
a new company named National Falcon, which secured a
contract with Sharm El Sheikh Airport and plans to sign
an agreement with Cairo Airport for security services us-
ing our fully trained security personnel.
Falcon for Security Services has a market share of 55%,
serving a large client base out of 515 locations as of 2016.
Falcon’s Cash in Transit segment has a market share of
35.5% as of 2016. The segment services 133 clients with our
top-notch services and our exemplary track record. The
division signed five new contracts in 2016 and renewed
our agreement with Emirates NBD. Also we increased the
number ATMs served across our bank client network, hit-
ting 1,010 ATMs served versus 800 last year. The segment
saw the amount of transferred cash (Cash in Transit) climb
to EGP 250 billion during the year after increasing the
number of vehicles in our armored vehicle fleet.
Falcon’s Technical Services Division has a market
share of 60% as of 2016. The division managed to sign
contracts with numerous new clients during the year,
including with Cairo Airport’s Technical Support System,
the Egyptian Airport Authority, the Egypt Post Authority
and the Interior Ministry.
2017 Goals
Falcon for Public Services and Project Management:
In 2017, we plan to sign several important contracts with
government agencies, such as the Alexandria Security
Directorate, with prominent resort villages, like Marina
and Marakia, and with top banks such as QNB, HSBC and
Credit Agricole.
In ancient times Aswan was a garrison
town for the military campaigns
against Nubia; its quarries provided
the granite used for ancient Egypt’s
mammoth sculptures and obelisks.
Falcon for Security Services: Our marketing plan for 2017
seeks to upgrade and develop our lines of service, specifi-
cally by targeting diplomatic institutions and more gen-
erally by developing segmented marketing strategies for
every line of business.
We plan to restructure all security contracts in terms
of payment to terminate any loss-making contracts and
ensure we continue to improve our services.
Finally, we plan to further develop our strategy of safeguard-
ing the well-being of our employees by continuing to improve
the structures we employ to minimize employee risk.
Falcon’s Cash in Transit: We are looking to grow our
market share during the year through many new business
avenues, the most important of which is opening a new
centre vault in Alexandria.
Falcon’s Technical Services Division: We plan to con-
tinue not only providing quality services, but improving
our facilities and amenities in 2017. To date, the division
is conducting research into the line of business to identify
new opportunities and map out more specific goals for the
year. Also we signed with Alsmahy for tactical gear autho-
rization and STC authorization.
104 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 105
SuStAInABILItY
Sustainable growth and development are the
cornerstones of any business strategy, which is why they
have long been part and parcel of cIB’s philosophy.
Almost all Egyptian mangrove stands, particularly in
Marsa Alam, are now protected as their dense root
systems filter out sediments and protect coral reefs.
106 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 107
susTAinABiliTY
CorPoraTe
governanCe
We at CIB believe corporate governance is built on a set of
concrete principles and values that aim to not only gain
investors’ trust, but also sustain it. Based on this belief, we
have for years now consistently followed numerous codes
and values derived from the core of corporate governance
best practices. In fact, CIB laid out the foundations of good
governance many years ago, which have now come to form
the framework around which our five-year plan revolves.
Striving for the best interests of our shareholders guides
everything we do, and we have established a sound reporting
system that ensures the dissemination of material informa-
tion in a timely, transparent and accurate manner. The Bank
continues to uphold its mandate of creating value for its
shareholders, something we are firmly committed to in the
present and in the future.
We take pride in our strong corporate governance
structures, which include an experienced team of senior
management professionals, competent Board committees
as well as a distinguished group of non-executive directors,
who believe mandated laws and rules that govern business
activities can never be substituted for ethical behaviour and
voluntary compliance.
CIB’s highly qualified Board of Directors (BoD) is support-
ed by internal and external auditors, as well as other internal
control functions (Risk, Compliance, and Internal Audit) and
effectively utilises the work carried out by those functions to
ensure the Bank adheres to international best practices of
corporate governance.
Board of Directors
CIB prides itself on its strong, renowned BoD that provides
the Bank with the necessary leadership and experience to
manage its business with integrity, efficiency and, most im-
portantly, excellence.
The Board primarily focuses on long-term financial returns
and the best interest of all stakeholders, whether they are
customers, shareholders, employees or members of the com-
munities in which the Bank operates. The Board’s role is to
set the Bank’s long-term strategy and provide proper over-
sight. It establishes the appropriate tone at the top, oversees
108 • Annual Report 2016 • CIB
management and long-term performance, reviews financial
planning and audit process, ensures risk oversight and
compliance, sets compensation and performance goals and
manages director nomination, evaluation and succession
planning. It oversees our economic, social and environmen-
tal sustainability, performing its duties with entrepreneurial
leadership, sound strategies and risk management oversight
to ensure risks are assessed and properly managed.
CIB’s Board is composed of eight members, with a diverse
knowledge base and a balanced skill set that gives the Bank
a distinct competitive edge. The directors meet at least six
times per year to discuss matters that are important to
shareholders. Over the course of 2016, CIB’s BoD met seven
times. Being the single largest shareholder in CIB, Fairfax
Financial Holding Ltd, through its wholly owned subsidiar-
ies, currently holds 6.65% of CIB’s local shares on the back
of its transaction with Actis in May 2014 and has one repre-
sentative on the Board.
Mr. Hisham Ezz Al-Arab
chairman and managing director
Mr. Hisham Ezz Al-Arab has led CIB since 2002 as Chairman and
Managing Director. Under his leadership, CIB expanded its lead-
ing position, grew its market capitalisation from EGP 1 billion to
EGP 84.3 billion and developed from a wholesale lender into the
full-fledged financial institution it is today. His vision transcended
financial performance to include the adoption of best practices in
corporate governance, risk management and building a modern
banking culture. With these efforts, CIB’s stock is now viewed
by the international investment community as a proxy stock for
Egypt and the benchmark for its banking industry.
As Managing Director, Mr. Ezz Al-Arab along with the
excellent and competent CIB Chief Executives and Manage-
ment Team bring decades of experience and thought leader-
ship that guide CIB’s direction in addition to overseeing the
day-to-day tasks of managing the Bank.
While directing this effort, Mr. Ezz Al-Arab is person-
ally responsible for ensuring adequate and effective gov-
ernance of the Bank through managing the Risk, Compli-
ance and Legal Departments.
Striving for the best interests of our shareholders guides everything we do, and
we have established a sound reporting system that ensures the dissemination of
material information in a timely, transparent and accurate manner.
In June 2016, Mr. Ezz Al-Arab received Euromoney’s Award for
Excellence for his “Outstanding Contribution to Financial Ser-
vices in the Middle East”. In January 2015, he was awarded EMEA
Finance African Banking Award’s “Best CEO in Egypt and Africa
Region” for the year 2014 in recognition of the distinguished suc-
cess of CIB in the banking sector under his leadership.
Mr. Ezz Al-Arab is the Chairman of the Board of Trustees
of the CIB Foundation. He has also been a Director at Mas-
terCard Middle East and Africa’s Regional Advisory Board
since June 2007, in addition to being a principal member of
the American Chamber of Commerce. For his distinguished
work, he was elected as a member of the Board of Trustees
for the American University in Cairo in November 2012. In
March 2013, Mr. Ezz Al-Arab was also elected as Chairman
of the Federation of Egyptian Banks. In February 2014, he
became a member of the Institute of International Finance
Emerging Markets Advisory Council – EMAC.
Prior to joining CIB, Mr. Ezz Al-Arab led a reputable bank-
ing career as Managing Director of international investment
banks in London (Deutsche Bank, JP Morgan and Merrill
Lynch), Bahrain, New York and Cairo.
Dr. Medhat Hassanein
non-executive Board member
Dr. Medhat Hassanein is a PhD, DUP (Distinguished Univer-
sity Professor) and Professor of Finance and Banking with
the Management Department of the School of Business at
the American University in Cairo and a former Minister of
Finance (1999-2004). Dr. Hassanein obtained his BA in Eco-
nomics from Cairo University (with Honours) and holds an
MBA from New York University (with Distinction) and a PhD
from Wharton School, University of Pennsylvania, US.
Dr. Hassanein was the senior economist of the Projects Depart-
ment of the Arab Fund for Economic and Social Development in
Kuwait – a regional development fund operating according to
the rules of the World Bank and servicing all developing Arab
countries. During his term with the fund, he participated in
the financing of infrastructural, agro-industrial, industrial and
agricultural projects. Thereafter, he was promoted to Director
of the fund’s Technical Assistance Department.
Dr. Hassanein then joined the Arab Investment Bank in Egypt
as the Director of the Investment Sector in charge of project
finance, asset management and private equity transactions
of the Bank. After his service with the Arab Investment
Bank, he was offered the position of President of the Egyptian
Gulf Bank in Egypt (commercial bank).
Dr. Hassanein is a senior policy analyst with vast experience
in institutional building, macro-policy analysis, financial eco-
nomics, corporate finance and international financial man-
agement. He previously served as advisor to the government,
high-level advisory bodies and the donor community.
During his term as Minister of Finance, he developed and
instituted the second-generation program of the fiscal public
policy reforms of the Egyptian government. These included,
inter-alia, tax, customs reforms, reviewing the procure-
ment system in government, revising the pension system
(pay-as-you-go versus fully funded systems) together with
the investment policy of social insurance funds, introducing
public expenditure reviews and performance-based budget-
ing, building and designing policies for the formalisation of
extra-legal entities, securing international and local funding
packages for the appraisal and implementation of national
projects, developing a program for the corporatisation of
public economic authorities, setting a program for the man-
agement of government cash flow, effecting the public debt-
management function through introducing Egypt’s debut
Eurobond issue in international financial markets, in addi-
tion to the implementation of the primary dealers system and
national debt equity swaps.
He has authored numerous articles and government reports
on topical issues in economics, fiscal and monetary policy,
finance and banking, macroeconomic reforms, privatisation,
capital markets and the extra-legal economy in Egypt.
Dr. Hassanein was a member of the UN’s high-level Com-
mission on the Legal Empowerment of the Poor. He was
selected among commissioners to be the chairman of Group
4, which is entrusted with the study of Entrepreneurship: Ex-
panding Opportunities for Legally Establishing Business and
Fostering Innovative Financial Instruments and Institutions
for the Transition from informal to Formal Business.
CIB • Annual Report 2016 • 109
susTAinABiliTY
Dr. Hassanein holds membership in many local and in-
ternational professional associations. He has served as
Chairman and Board Member of banks (investment, com-
mercial and development), public holding companies and
private corporations.
Dr. Hassanein has been a CIB Non-executive Board Member
and Audit Committee Member since July 2009 and Chaired
the Audit Committee in January 2014. He is also a member of
the Sustainability Advisory Board and the GCC.
Mr. Jawaid Mirza
non-executive Board member
Mr. Jawaid Mirza is the founder and president of Focalone
Consulting Company Incorporation in Ontario, Toronto,
Canada. A strong proponent and practitioner of international
corporate governance and well-versed in multi-country com-
pliance, Mr. Mirza brings with him over 35 years of diversified
experience and a solid track record in all facets of financial,
technology, risk and operation management. In mid-May
2013, he joined CIB’s Board and assumed the responsibilities
of Managing Director overseeing the daily work of the follow-
ing areas: Consumer Banking, COO, Finance Group and IT.
He is widely recognised for realigning and returning to
excellence and profitability floundering business units and
divisions and building collaboration across multiple juris-
dictions for business and cultural change. Mr. Mirza has
extensive experience as a Director, taking a firm and resolute
approach to leading board committees while allowing free
and open discussion and keeping a tight rein on proceedings.
Mr. Mirza has a demonstrated ability to lead a business
through challenges, removing barriers to drive success and
sharpening its competitive edge in all economies and cul-
tures. Having spearheaded numerous mergers and acquisi-
tions, working alongside experts through due diligence to
final negotiation, contractual conclusion and blending of
multicultural resources, he has proven to be an adaptive
leader, intuitive of international business protocol and cul-
tural diversity, with the ability to manage teams crossing
multiple geographies.
Over the years, Mr. Mirza has worked with global institu-
tions like Citicorp and ABN AMRO Bank. He started his ca-
reer in Citibank as a Financial Controller in Pakistan before
serving in a variety of senior regional positions in ABN AMRO
in Central Eastern Europe, Europe, Central Asia, the Middle
East and Africa. He later moved to Hong Kong as Corporate
Executive Vice President and CFO responsible for the Asian
region and Australia/New Zealand. He has led successful due
diligences for acquiring banks in Hungary, Taiwan, Thailand,
Germany, France and Pakistan.
Mr. Mirza was a member of the Top Executive Group of
ABN AMRO bank, member of ABN AMRO Group Finance
Board as well as the Group COO. He also served on the Board
of Directors of Prime Bank and ABN AMRO Pakistan Ltd.
110 • Annual Report 2016 • CIB
after the acquisition and integration of Prime Bank. He also
served on the boards of non-profit organisations, namely
Artistri Sud (Montreal) and Humewood House (Toronto). Mr.
Mirza is also a member of the Institute of Corporate Direc-
tors, Canada and holds business management degrees from
reputable institutions including Queens Business School and
Wharton Business School.
Mr. Mirza has been a CIB Non-executive Board Member
since January 2014, chairs the Operations & Technology
Committee at CIB and is a member of the Risk Committee.
He is also a member of the Advisory Board and the GCC.
Dr. nadia Makram Ebeid
non-executive Board member
Dr. Nadia Makram Ebeid is the Executive Director of the Cen-
tre for Environment and Development for the Arab Region
and Europe (CEDARE), an international diplomatic position
she has held since January 2004. She joined CIB’s Board of
Directors in March 2005 and acts as a member of the CIB
Foundation’s Board of Trustees.
For five years beginning in 1997, Dr. Ebeid served as Egypt’s
first Minister of Environment, becoming the first woman
to assume this position in the Arab world. One of her most
notable achievements was declaring the River Nile free from
polluted industrial wastewater discharge. Proudly, Dr. Ebeid
is the Chairperson of CIB’s Sustainability Advisory Board and
the Governance and Compensation Committee.
Early in her career, Dr. Ebeid held several managerial posts
with the United Nations Development Program (UNDP), the
United Nations Food and Agriculture Organization’s regional
office for the Near East and the Council for Environment and
Development Research. In recognition of her role in environ-
mental policy and advocacy, Dr. Ebeid has been the recipient
of numerous awards and distinctions from local and interna-
tional NGOs and leading institutions and associations.
Dr. Sherif H. kamel
non-executive Board member
Dr. Sherif H. Kamel is the Vice President for Information
Management and is former founding dean of the American
University in Cairo’s (AUC) School of Business (2009-2014).
Dr. Kamel was associate Dean for Executive Education
(2008-2009) and Director of the Management Center (2002-
2008). Before joining AUC, he was director of the Regional IT
Institute (1992-2001) and managed the Training Department
of the Cabinet of Egypt’s Information and Decision Support
Center (1989-1992). His experience focuses on investing in
human capital and building and managing executive de-
velopment institutions addressing IT, management, gover-
nance, entrepreneurial and leadership issues. Dr. Kamel is a
member of the Egypt-US Business Council (2013-present) and
a member of the AACSB International Middle East Advisory
Council (2015-present). He is an Eisenhower Fellow (2005).
Dr. Kamel holds a PhD in Information Systems from London
School of Economics and Political Science (1994) and an MBA
(1990) and MA in Islamic Art and Architecture (2013) from
AUC. His research and teaching interests include IT transfer
to developing nations, IT management, electronic business
and decision support systems. Dr. Kamel received a number
of organisational leadership awards for serving the IT com-
munity from the Cabinet of Egypt (2011), BIT World, Mexico
(2000) and Information Resources Management Association,
US (1999). He also received AUC’s Distinguished Alumni
Faculty Service Award (2014), the UNDP National Human
Resource Development Award (2014), the School of Business
Leadership Award (2013) and the AUC President’s Catalyst of
Change Award for Citizenship and Service (2013).
Mr. Mark Richards
non-executive Board member
As Chairman and Chief Executive of IPGL Ltd., the principle
shareholder of Exotix, Mr. Mark Richards brings considerable
expertise in navigating frontier and emerging markets, most
recently as Partner and Global Head of Financial Services at
Actis, one of the world’s leading and most ethical emerging
market private equity groups focused on Africa, Asia and
Latin America. He has global responsibility for making and
leading investments in fast-growth financial services groups
and in ensuring good governance. During 11 years at Actis,
Mr. Richards was responsible for building many successful
companies, including the market-leading Brazilian broker-
age XP Investmentos.
Dr. Kamel has been a CIB Non-executive Board Member
since May 2014 and is a member of the Audit Committee, the
Operations & Technology Committee and the GCC.
He previously spent 18 years at Barclays in senior roles in-
cluding CFO of the International Offshore Bank, Director of
Group Strategy and Head of Group Corporate Development.
Mr. yasser Hashem
non-executive Board member
Mr. Yasser Hashem has been the Managing Partner at Zaki
Hashem & Partners since 1996 and was Partner from 1989
to 1996, immediately following his graduation from Cairo
University’s Faculty of Law in 1989 with an LL.B. He was
admitted by the Egyptian Court of Cassation in 2007 and is
a member of the Egyptian Society of International Law and
the Licensing Executive Society. The legal skills he has in
corporate M&A and capital markets extends to the privati-
sation of public sector entities, the inception of the private
provision of telecom services in Egypt and the promulga-
tion of its laws, which have placed him as a valued veteran
of legal practice in Egypt.
With a special focus on corporate law, Mr. Hashem played
a major role in the privatisation of public sector entities in
Egypt through his support to hundreds of restructurings,
capital market transaction incorporations of foreign and
domestic companies and advising foreign and local investors
on the most efficient vehicles and structures that suit their
investment in Egypt.
Mr. Hashem’s legal skills were also extended to the telecom-
munication sector in Egypt throughout his contribution to the
drafting and negotiation of all major telecom licenses, including
public pay phones, mobile cellular networks, private data net-
works and satellite and marine fibre optic cabling. His expertise
in the telecom field led to his appointment by Ministerial Decree
as Member of the New Telecommunication Act Drafting Com-
mittee. He has also been responsible for most of Egypt’s IPOs
in the last decade and has reliably represented acquirers in all
major tender offers and M&A transactions in Egypt. Further-
more, he has led the largest four major multibillion USD M&A
transactions in Egypt after the January 2011 Revolution.
Mr. Hashem has been a CIB Non-executive Board Member
since May 2013 and is a member of the Audit Committee.
With his 29 years of global experience in banking and
financial services (including the UK, Africa and Asia), Mr.
Richards serves as Non-executive Director for a number of
companies, including CIB. He has a first-class degree from
Oxford University in modern history and economics.
He completed the Accelerated Development Program
from London Business School and Group Level Strategy
from Ashridge Management College. He also attended the
Leading Professional Services Firms Program at Harvard
Business School.
Mr. Richards has been a CIB Non-executive Board Member
since March 2014 and chairs the Risk Committee. He is also a
member of the Audit Committee and the GCC.
Mr. bijan khosrowshahi
non-executive Board member
Mr. Bijan Khosrowshahi joined Fairfax Financial Holdings in
June 2009 and is currently based in London, UK. Fairfax is a
financial services holding company which, through its sub-
sidiaries, is engaged in property and casualty insurance and
reinsurance and investment management. Fairfax is listed
on the Toronto Stock Exchange.
Mr. Khosrowshahi also represents Fairfax’s interests as a
board member in Gulf Insurance Group and Gulf Insurance
& Reinsurance Company in Kuwait, Bahrain Kuwait Insur-
ance Company, Arab Misr Insurance Group S.A.E. in Egypt,
Arab Orient Insurance Company in Jordan, Gulf Sigorta in
Turkey, Alliance Insurance Company in the UAE as well as
Jordan Kuwait Bank in London and BRIT Limited in the
United Kingdom.
Prior to joining Fairfax, Mr. Khosrowshahi was the President
and CEO of Fuji Fire & Marine Insurance Company Limited in
Japan. He is the only non-Japanese individual who has been the
president of a publicly traded Japanese insurance company. In
2002, Fuji Fire & Marine began a major reform of the company
after investment by its major shareholders American Interna-
CIB • Annual Report 2016 • 111
Saint Catherine boasts Egypt’s highest
mountains and lowest temperatures.
susTAinABiliTY
tional Group (AIG) and ORIX Corporation. Mr. Khosrowshahi
was elected President in June 2004 and successfully imple-
mented a turnaround strategy to return Fuji to profitability and
growth through taking strategically leading positions within
the insurance industry in Japan.
From 2001 to 2004, he was the President of AIG’s General
Insurance operations based in Seoul, South Korea where
a major restructuring plan resulted in significant revenue
and profitability increases through specific product and
channel strategies.
From 1997 until 2001, Mr. Khosrowshahi was the Vice Chair-
man and Managing Director of AIG Sigorta based in Istanbul,
Turkey and was involved in negotiating strategic alliances and
joint ventures with Turkish conglomerates and working with
governmental regulators to improve support for new product
introductions for the emerging Turkish insurance market.
Prior to this position, he was Regional Vice President of
AIG’s domestic property and casualty operations for the Mid-
Atlantic region based in Philadelphia. Mr. Khosrowshahi also
held various underwriting and management positions with
increasing responsibilities at AIG’s headquarters in New York
since joining AIG in 1986.
Mr. Khosrowshahi obtained an MBA in 1986 following an
undergraduate degree in Mechanical Engineering in 1983 from
Drexel University. He participated in the Executive Develop-
ment Program at the Wharton School of the University of Penn-
sylvania in 2003 and is a regular lecturer at universities and
insurance institutes.
He has served on the Board of the Foreign Affairs Council and
the Insurance Society of Philadelphia. He has also been a council
member of USO in South Korea, the Chairman of the Insurance
Committee on the American Chamber of Commerce in South
Korea and a member of the Turkish Businessmen’s Association.
He is also a member of the UK Chartered Insurance Institute.
Mr. Khosrowshahi has been a CIB Non-executive Board Mem-
ber since October 2014, representing the interest of Fairfax Fi-
nancial Holdings Ltd. He was nominated by Fairfax to continue
serving the company’s interest in CIB for the Board Term 2017-
2019. He is also a member of the Risk Committee and the GCC.
Board of Directors’ Committees
CIB’s BoD has eight standing committees that assist the Board
in fulfilling its responsibilities. Accordingly, the BoD is pro-
vided with all necessary resources to enable them to carry out
their duties in an effective manner. Each committee operates
under a written charter that sets out its responsibilities and
composition requirements and the committees report to the
BoD on a regular basis. Separate committees may be set up by
the BoD to consider specific issues when the need arises.
112 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 113
susTAinABiliTY
non-Executive Committees
Executive Committees
Committee
Members
key Responsibilities
Committee
Members
key Responsibilities
Audit committee
Supervising the quality and integ-
rity of CIB’s financial reporting.
chair:
Dr. Medhat Hassanein
members:
Dr. Sherif H. Kamel
Mr. Yasser Hashem
Mr. Mark Richards
Governance and compensation
committee
Responsible
for CIB’s corporate
governance as well as the Board’s
performance evaluation, compen-
sation and succession planning.
chair:
Dr. Nadia Makram Ebeid
members:
All other Non-Executive
Board Members
risk committee
Supervising risk management
at CIB.
chair:
Mr. Mark Richards
members:
Mr. Jawaid Mirza
Mr. Bijan Khosrowshahi
The Committee’s mandate is to ensure compliance with the
highest levels of professional conduct, reporting practices,
internal processes and controls. Consistent with the inter-
ests of all stakeholders, the Audit Committee also insists
on high standards of transparency and strict adherence to
internal policies and procedures. In performing its critical
functions, the Committee is cognisant of the important
role CIB plays in the Egyptian financial sector as a leader
in all the areas. The Committee met four times in 2016.
The Committee is an integral part of the overall responsi-
bilities of the BoD. In line with CIB’s corporate governance
framework, it is responsible for establishing corporate gov-
ernance standards, providing assessment of BoD effective-
ness and determining the compensation of BoD members.
The Committee also determines the appropriate compen-
sation levels for the Bank’s senior executives and ensures
that compensation is consistent with the Bank’s objectives,
performance, strategy and control environment. The Com-
mittee met four times in 2016.
The primary mission of the Risk Committee is to assist
the Board in fulfilling its oversight risk responsibilities by
establishing, monitoring and reviewing internal control
and risk management systems to ensure the Bank has the
proper focus on risk. It also makes recommendations to the
Bank’s risk strategy and associated limits to the Board. The
Committee met four times in 2016.
operations and iT committee
Assisting the BoD in overseeing
Bank operations and technology
strategy as well as operations and
technology risk.
chair:
Mr. Jawaid Mirza
members:
Dr. Sherif H. Kamel
This Committee is appointed by the BoD and assists mem-
bers in their oversight of Bank operations and technology
strategy, significant investments to support that strategy,
and operations and technology risk. The Committee met
five times in 2016.
management committee
Responsible for execution of the
Bank’s strategy.
chair:
Mr. Hisham Ezz Al-Arab
members:
CIB Senior Management
This Committee is responsible for executing the Bank’s
strategy as approved by the BoD. It manages the Bank’s
day-to-day functions to ensure alignment with strategy,
effective controls, risk assessment and efficient use of
Bank resources. The Committee adheres to high ethical
standards and ensures compliance with regulatory and
internal CIB policies. The committee also provides the
BoD with regular updates on the Bank’s financial and
business activities, as well as any key issues. The Commit-
tee met 12 times in 2016.
High lending and investment
committee
Responsible for asset allocation,
quality and development.
chair:
Mr. Hisham Ezz Al-Arab
members:
Senior CIB Management
This Executive Committee is responsible for managing
the assets side of the balance sheet and keeping an eye
on asset allocation, quality and development. As per its
mandate, the Committee convened weekly throughout
2016 and met 52 times.
Affiliates committee
Responsible for steering and man-
aging CIB affiliates.
chair:
Mr. Hisham Ezz Al-Arab
members:
CIB Senior Management
The Affiliates Committee reports to the BoD and is respon-
sible for steering and managing CIB’s affiliates. It also acts
as a think-tank for setting and initiating all strategic goals
related to the Bank’s affiliates. The Committee met five
times during 2016.
Shareholders’ Rights
Our General Assembly is the platform where shareholders
exercise their voting rights. The Bank’s Annual General Meet-
ing of Shareholders is held in March each year, no later than
six months after the end of the company’s financial year. Ad-
ditional Extraordinary General Shareholders meetings may
be convened at any time by the BoD. Shareholders’ consent is
required for key decisions such as:
• Adoption of the financial statements.
• Declaration of dividends.
• Significant changes to the Bank’s corporate governance.
• Remuneration policy.
• Remuneration of Non-Executive Directors.
• Discharge from liability of the Board of Directors.
• Appointment of the external auditor.
• Appointment, suspension or dismissal of the members of
the BoD.
• Issuance of shares or rights to shares, restriction or ex-
clusion of preemptive rights of shareholders and repur-
chase or cancellation of shares.
• Amendments to the Articles of Association.
External Auditor
The General Meeting of Shareholders appoints the external
auditor. The Audit Committee recommends the auditor to
the BoD, to be proposed for (re)appointment by the General
Meeting of Shareholders. In addition, the Audit Committee
evaluates the performance of the external auditor. CIB
changes auditors every five years to ensure objectivity and
the exposure to new practices.
114 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 115
We take pride in our strong corporate governance structures, which include
an experienced team of senior management professionals, competent board
committees as well as a distinguished group of non-executive directors.
susTAinABiliTY
managemenT
Committee
Mr. Hisham Ezz Al-Arab
chairman and managing director
Mr. Hisham Ezz Al-Arab has led CIB since 2002 as Chair-
man and Managing Director. Under his leadership, CIB ex-
panded its leading position, grew its market capitalisation
from EGP 1 billion to EGP 84.3 billion and developed from
a wholesale lender into the full-fledged financial institution
it is today. His vision transcended financial performance to
include the adoption of best practices in corporate gover-
nance, risk management and building a modern banking
culture. With these efforts, CIB’s stock is now viewed by the
international investment community as a proxy stock for
Egypt and the benchmark for its banking industry.
As Managing Director, Mr. Ezz Al-Arab along with the
excellent and competent CIB Chief Executives and Manage-
ment Team bring decades of experience and thought leader-
ship that guide CIB’s direction in addition to overseeing the
day-to-day tasks of managing the Bank.
While directing this effort, Mr. Ezz Al-Arab is personally
responsible for ensuring adequate and effective governance
of the Bank through managing the Risk, Compliance and
Legal Departments.
In June 2016, Mr. Ezz Al-Arab received Euromoney’s
Award for Excellence for his “Outstanding Contribution to
Financial Services in the Middle East”. In January 2015, he
was awarded EMEA Finance African Banking Award’s “Best
CEO in Egypt and Africa Region” for the year 2014 in rec-
ognition of the distinguished success of CIB in the banking
sector under his leadership.
Mr. Ezz Al-Arab is the Chairman of the Board of Trustees
of the CIB Foundation. He has also been a Director at Mas-
terCard Middle East and Africa’s Regional Advisory Board
since June 2007, in addition to being a principal member of
the American Chamber of Commerce. For his distinguished
work, he was elected as a member of the Board of Trustees
for the American University in Cairo in November 2012. In
March 2013, Mr. Ezz Al-Arab was also elected as Chairman
of the Federation of Egyptian Banks. In February 2014, he
became a member of the Institute of International Finance
Emerging Markets Advisory Council – EMAC.
Prior to joining CIB, Mr. Ezz Al-Arab led a reputable bank-
ing career as Managing Director of international investment
banks in London (Deutsche Bank, JP Morgan and Merrill
Lynch), Bahrain, New York and Cairo.
Mr. Hussein Abaza
chief executive officer, institutional Banking
Mr. Hussein Abaza assumed his duties as CEO of Institutional
Banking in October 2011. Prior to that, he was CIB’s Chief Op-
erating Officer, Chairman of CIAM and a member of the High
Lending and Investment Committee, the Management Com-
mittee and the Affiliates Committee, in addition to being on the
board of CI Capital Holdings.
Mr. Abaza’s history with CIB extends beyond these positions;
between 2001 and 2010 he was the General Manager and Chief
Risk Officer whose duties covered a range of responsibilities that
included Credit, Market and Operational Risk, as well as Inves-
tor Relations. Prior to his time at CIB, Mr. Abaza had occupied
the position of Head of Research at EFG Hermes’ Asset Manage-
ment between March 1995 and October 1999. He had started out
his career at Chase National Bank of Egypt, the forerunner to
CIB. He holds a BA in Business Administration from the Ameri-
can University in Cairo.
Mr. Mohamed Sultan
chief operating officer
Mr. Mohamed Sultan is CIB’s Chief Operating Officer, assuming
his role in February 2015. He joined CIB as Head of Consumer
Operations in 2008, and within six months was appointed Head
of the Operations Group. In September 2014, Mr. Sultan was ap-
pointed Head of Operations & IT before assuming his role as COO.
Under his leadership and management, the Operations
Group was significantly developed, resulting in major expan-
sions within the Operations Area through merging several
operations divisions, including Corporate Services, Alterna-
tive Channels and Real Estate and Facility Management.
In his continuous efforts to enhance the Bank’s internal
and external customer experience in alignment with CIB’s
overall objectives and strategic goals, multiple departments
were established under CIB operations including Treasury
116 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 117
SuStainaBility
Middle Office, Operations Control Management, Retail Op-
erations, and Customer Care Unit.
Following Mr. Sultan’s insightful vision, the Business
Continuity and Information Security Management Depart-
ment – headed by the Chief Security Officer – as well as the
Sustainability Department were established, positioning
CIB as the pioneer and leader in these fields among other
financial institutions in the market.
In 2015-2016, Mr. Sultan lead a major transformation strat-
egy in the IT Division, which added significant value to existing
technology and enhanced infrastructure, aiming for a more solid
foundation that provides superior services to customers and al-
lowing the business to grow smoothly as the Bank moves forward.
Mr. Sultan has also been leading the Bank’s Digital Trans-
formation strategy with an aim of positioning CIB as a mar-
ket leader in digital banking.
Prior to joining CIB, Mr. Sultan held the positions of Vice
President of Branches Operations and Control Management at
Mashreq Bank and Country Operations Head at National Bank of
Oman. He has attended several leadership programs in top busi-
ness schools and is also an alumnus of INSEAD Business School.
Mr. Ahmed Issa
CEO Consumer Banking
Mr. Ahmed Issa leads the Retail Banking Division at CIB and is
a member of the Bank’s Management Committee. His key re-
sponsibilities cover Consumer Banking, Business Banking and
the Bank’s distribution strategies and networks. Prior to this,
Mr. Issa was Chairman of the Board at Corplease and at Falcon,
Group CFO at CIB, Co-Founder and Head of Research at CIBC
and Managing Director of Investment Banking at CI Capital.
Mr. Issa is the Co-Chair of the Banking Committee at
AmCham and chairs the Board Audit Committee at Civil
Aviation Finance Holding Company.
He earned his MBA at UNC-Chapel Hill’s Kenan-Flagler Busi-
ness School in 2003 and re-joined CIB the same year.
Mr. Issa is passionate about the role of banks as a fair
intermediary in allocating capital, reversing Egypt’s brain
drain, equality through education, disruption in consumer
banking and how markets work.
Ms. Pakinam Essam
Chief Risk Officer
Ms. Pakinam Essam serves as the Chief Risk Officer (CRO) of
CIB. Ms. Essam was appointed to her current position in Janu-
ary 2011. Since then, she commenced the Risk Transformation
Process, and the CIB Risk Group evolved into a forward-looking,
holistic organization with an integrated view of risks, covering
all the key areas including Institutional Banking, Consumer &
Business Banking, Market, Operational, Liquidity and Interest
Rate Risks. The coverage further expanded to focus on emerging
non-financial risks, such as Conduct, Cyber Security, Informa-
tion Security, Vendor Management, IT, Reputation and Social
118 • Annual Report 2016 • CIB
& Environmental Risks. Ms. Essam is championing the bank’s
Enterprise Risk Management framework, with emphasis on
Infrastructure, Process, Environment, and Risk Culture. Under
her leadership, CIB has been recognised for four prestigious risk
awards by Asian Banker Singapore for Middle East & Africa in
the following categories: Enterprise Risk Management, Retail
Risk, Liquidity Risk, and Operational Risk.
Ms. Essam is a key member of the Bank’s executive commit-
tees and an active member of the Bank’s Sustainability Steering
Committee and the Board of Trustees of the CIB Foundation.
Ms. Essam joined CIB after graduating from Faculty of Eco-
nomics and Political Science, Cairo University, and has over 25
years of experience in banking and risk management.
Mr. Amr El Ganainy
President, Global Customer Relations
Mr. Amr El Ganainy joined CIB in 2004 as General Manager,
Financial Institutions Group. In January 2010, he assumed
his role as President of the Global Customer Relations De-
partment, a one-stop shop to the largest 30 groups in the
Bank. The Relationship Management (RM) concept involved
an incremental layer of client coverage within CIB’s new ap-
proach to product structure that mainly focuses on improv-
ing the overall client relationship via measurable KPIs.
Mr. El Ganainy succeeded in transforming and developing
Global Customer Relations since inception. The accounts under
management witnessed numerous generic and new commit-
ment additions that grew the portfolio from EGP 8.6 billion in
January 2010 to around EGP 100 billion by December 2016. The
success of the RM model led to the February 2016 decision to
cascade this model to all corporate and strategic accounts after
exceeding all set strategic targets and KPIs.
Mr. El Ganainy is also the Chairman of International Se-
curities & Services Co. (Falcon Group), Chairman of CI Asset
Management Co., Board Member of TE DATA, Board Member
of CI Capital Holding Co., Board Member of Misr for Central
Clearing, Depositary and Registry Co., Honorary Chairman
of Interarab Cambist Association (ICA), Honorary Chairman
of Egyptian Dealers Association (ACI Egypt) and a member of
the American Chamber of Commerce in Egypt.
He was the Chairman of Commercial International Broker-
age Co., Chairman of United Brokerage Co., Abu Dhabi, Execu-
tive Board Member of ACI International (The Financial Market
Association), Board Member of Royal & Sun Alliance Insur-
ance Co. and Chairman of Capital Securities Brokerage Co.
Prior to joining CIB, Mr. El Ganainy worked at the United
Bank of Egypt as a General Manager, Treasurer and Head of
Correspondent Banking, Chief Dealer of Export Development
Bank and started his career as a Dealer at Suez Canal Bank.
The River Nile, which is nearly 650 meters
wide in Aswan, includes an archipelago of
picturesque islands.
CIB • Annual Report 2016 • 119
susTAinABiliTY
SUSTainabiliTy
DePartment
Sustainability is a key focus for leading financial institutions
today, with the global financial architecture being redefined
around its foundations. As always, CIB is at the heart of these
changes and challenges and is an internationally recognised
frontrunner in this rapidly evolving, forward-thinking field.
This enlightened approach is rooted in a solid foundation
based on both a clear outlook and pragmatic action. As a
result, embracing sustainability is becoming an increasingly
integral part of the Bank’s policies, practices, culture and
mindset as well as CIB’s vision and mission statements.
CIB’s thinking, course of action and promising green jour-
ney of transformation and change are closely aligned with
the 2030 Global Sustainable Development Agenda and the
16 Sustainable Development Goals (SDGs) and 169 associ-
ated targets. They are also in line with Egypt’s 2030 Agenda,
with the underlying focus being to advance a sustainable
and climate-resilient future.
It is worth noting that CIB has spent EGP 250 million and
counting on its sustainability initiatives, reaping several
prestigious awards and global acclamations along the way.
The Bank’s Sustainability Advisory Board was set up to over-
see, approve and monitor all sustainability strategies, initiatives
and projects. Concentrating on long-term value drivers that
advance the twin objective of the Bank’s sustained success in
addition to the well-being and betterment of society, the board
is one of the fundamental pillars of CIB’s sustainability agenda.
2016 Accomplishments
Affordable & Clean Energy (SDg #7) and Sustainable
Cities & Communities (SDg #11)
CIB understands the importance of acting responsibly and
efficiently with regards to energy usage. By adjusting several
of the Bank’s energy systems and following a sustainable en-
ergy strategy, CIB was able to save over 3 million KWs of en-
ergy equivalent to providing lighting to over 1 million small
homes in Egypt. Amount saved is only over Greater Cairo
branches over 2016. This was achieved by the following:
• CIB employs various clean energy systems around its
premises and offices.
120 • Annual Report 2016 • CIB
• LED lamps were replaced bank wide, with calculated savings
from the project in KW at 40% of post-usage figures as per ac-
creditation of the Electricity and Renewable Energy Ministry.
• CIB has over 180 branches and six head offices all over Egypt.
The magnitude of LED consumption around the bank’s prem-
ises, marketing of the financial benefits and the country’s
energy shortage dilemma all sparked high demand on the
LED requisition. Subsequently, different consumers shifted
to LED and suppliers reduced prices due to the high demand.
CIB installed three solar grid-tied stations over its standalone
buildings, feeding in 20% of the buildings’ electricity.
• CIB operates 35 solar water heaters and switches off the
electric water heaters throughout the long summer months.
• The Bank’s energy-saving initiative not only directly aligns
with national plans to improve energy efficiency but is
regarded as a competent tool for better management and
resource saving. Other financial and non-financial insti-
tutions followed suit, making CIB one of the pillars sup-
porting the “Affordable and Clean Energy” SDG.
• CIB has taken significant strides to protect the environ-
ment by conforming to green construction standards
while accommodating staff members and customers –
foundational pillars of the Bank’s mission and vision.
• CIB built and renovated several of its properties to meet
international green construction standards and ensure
better air circulation mechanisms. Natural plants and
green walls have been installed at branches and offices
to curtail the dissemination of inessential emissions.
Green initiatives are sustained through regular audits
from the Ministries of Environment and Housing.
Reduced inequalities (SDg #10)
CIB sees financial inclusion of non-banking users as one of its
priorities and thus, mitigating our standard operations and
services to accommodate all is a necessity:
• As part of CIB’s efforts to give back to members of our
society most in need, CIB organised awareness sessions
for its staff members on communication with their col-
leagues with physical and mental disabilities.
Pristine dunes surround Siwa Oasis, one of
Egypt’s most isolated settlements with only
about 23,000 Berbers living in the area who
developed a unique culture and distinct
language called Siwi.
CIB • Annual Report 2016 • 121
• CIB was the first financial institution in the Middle East
to join the assessment exercise of the Dow Jones Sustain-
ability Index 2016. Through successful data collection
and cross-functional analytics, CIB managed to rank 79
out of 131 Participating banks. CIB is positioned with the
likes of Wells Fargo & Commerzbank and is working to
improve its global sustainability ranking in 2017.
• CIB is the only Egyptian bank recognised in the FTSE4 Good
Index 2016 Index, key evidence that CIB supports human
rights, maintains good relations with its stakeholders, en-
sures positive labour standards, maintains anti-bribery and
corruption benchmarks and is environmentally sustainable.
• CIB is the first and only bank in Egypt to join the United
Nations Environment Programme Finance Initiative
(UNEP FI) through signing the UNEP FI Statement of
Commitment on Sustainable Development. CIB will
assume the role of UNEP FI’s Sustainability Champion
nationally and regionally. More information is available in
the Credit & Investment Exposure Management segment.
susTAinABiliTY
• CIB also installed the first ATM for the visually impaired
in Egypt. After its successful and well received launch,
the Bank was encouraged to introduce similar mecha-
nisms all over Egypt to advocate for accessibility.
Climate Action (SDg #13)
• CIB is the first Egyptian financial entity developing a
carbon footprint inventory for its premises. Collaborat-
ing with a top-rated international consultancy agency,
we are addressing sustainability issues in a robust and
comprehensive way, positioning our organisation as a
leader in the Egyptian market. The development of a car-
bon inventory is seen as one of the most valuable tools for
the identification of internal actions and measures that
can uncover cost-saving opportunities and help improve
the bottom line. Our results, environmental policy and
projected action plan can be explicitly reviewed in the
Bank’s 2016 Sustainability Report. These requirements
and findings are fundamental for Egypt’s 2018 climate
change strategy, in line with the Paris Agreement.
• CIB approved the activation of mobile application Car-
pooling Ray’eh. The ride-sharing app not only has numer-
ous social benefits, but has the additional advantage of
reducing the number of cars on the road and thereby
quelling emissions of CO2 and other harmful pollutants.
Life on Land (SDg #15)
• CIB firmly believes that the interrelated concepts of waste
management, recycling and changing habits in the work-
place save life on land. Consequently, the Bank has anchored
the basics of waste deployment throughout its premises.
• CIB managed to decrease its paper consumption and
requisition by up to 20% in 2016 compared to 2015, de-
spite an increase in its branch network and headcount.
• CIBians were encouraged to participate in the recycling
initiative and used the segregating bins efficiently. As a
result, different waste items, especially paper, were sold
to recycling outlets and the generated funds were cred-
ited to the CIB Foundation’s account. CIB saved over 6
million sheets of paper, the equivalent of 306 trees, 126,
218 gallons of water and 287, 425 CO2 emissions.
partnership for the goals (SDg #17)
• Sharing our practices and experience with external
stakeholders is a source of motivation, recognition, op-
erational efficiency and continuous development. CIB
partners with different communities and institutions to
generate solutions, striving to be a model of excellence.
• The 2015 Sustainability Report was developed and pub-
lished in June 2016. The report’s architecture followed GRI
G4 guidelines. The report was used as a prototype for other
banks and financial organisations. Furthermore, the Egyp-
tian Stock Authority (EGX) communicated its interest to
follow suit and develop its first Sustainability Report in 2017.
122 • Annual Report 2016 • CIB
Cleopatra Beach at Marsa Matrouh is said to
be where Cleopatra and Mark Anthony swam.
CIB • Annual Report 2016 • 123
CommUniTy
dEvELoPMEnt
the cIB Foundation was established in 2010 as a
nonprofit organisation dedicated to the enhancement of
health and nutrition services.
About 30 pharaohs contributed to the buildings at Karnak Temple in Luxor,
enabling it to reach a size, complexity and diversity not seen elsewhere.
124 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 125
communiTY develoPmenT
Cib
FounDation
The CIB Foundation has seen exponential geographical
growth in terms of its reach during the year. Supporting the
healthcare needs of the Egyptian community in many new ar-
eas across Egypt, the CIB Foundation reaffirmed its position
as a leading supporter and provider of quality health services
across the country. The Foundation was established in 2010
as a non-profit organisation dedicated to the enhancement
of health and nutrition services extended to underprivileged
children in Egypt. Registered under the Ministry of Social
Solidarity – as per the Ministry’s Decree No. 588 of 2010 – the
Foundation focuses on sustainable development initiatives
that result in positive long-term outcomes.
the Cib Foundation is governed by a seven-member
board of trustees:
mr. Hisham ezz Al-Arab
Chairman
mr. rafik madkour
Treasurer
ms. maha el-shahed
Member
dr. nadia makram ebeid
Member
mr. Hossam Abou moussa
Member
ms. Pakinam essam el-din mahmoud
Member
ms. nadia moustafa Hosny
Secretary General
Following the annual shareholders’ General Assembly meet-
ing in early 2016, the CIB Foundation was allocated over EGP
69 million, representing 1.5% of CIB’s annual net profit. With
126 • Annual Report 2016 • CIB
this funding, the organisation continued to expand its op-
erations geographically, creating new beginnings for Egypt’s
youngest citizens across the country.
In late May 2016, the CIB Foundation was recognised for
its work in the arena of corporate social responsibility from
African Banker, winning the award for “Socially Responsible
Bank of the Year.”
The Foundation’s partnerships and initiatives during
2016 included:
gozour Foundation for Development: Eye Exam
Caravans
In July 2016, the CIB Foundation reaffirmed its long-standing
partnership with the Gozour Foundation for Development
to fund 264 eye exam caravans to provide 158,400 disadvan-
taged students enrolled at public schools in poor rural and
urban areas in Egypt with free eye care services through the
Gozour Foundation. The caravans will be implemented in
Upper Egypt governorates.
The CIB Foundation allocated EGP 47 million over three
years to fund caravans in the governorates of Sohag, Qena,
Luxor and Aswan through the 6/6 Eye Exam Caravan Pro-
gram. Through a partnership with Alnoor Magrabi Founda-
tion and Dar El Oyoun, the caravans are designed to provide
public school students with free ophthalmic exams, eyeglass-
es, eye medication if necessary as well as referrals to private
hospitals for complex cases. Each caravan included 25-30
doctors, nurses and coordinators and was fully equipped
with advanced equipment, a fully stocked pharmacy and an
eyeglass shop. Each one-day caravan targeted 600 children.
The CIB Foundation donated over EGP 8 million in July 2016
to cover the first tranche of the project.
CIB staff members also participated in bag-packing events
and the eye exam caravans, where thousands of school bags
were packed with soap, towels and educational material as
well as providing the children with eye care, medication and
glasses. They also lead awareness sessions on healthy eye prac-
tices for the student beneficiaries of the program. These events
provided valuable opportunities for the CIB staff to learn about
the Foundation’s activities and give back to the community.
Magdi yacoub Heart Foundation: Research Labs
In April 2015, the CIB Foundation’s Board of Trustees ap-
proved the complete financing of two research labs in the
Magdi Yacoub Heart Foundation’s Aswan Heart Center. The
EGP 15 million project will be funded over three years.
The centre hopes these research labs will deepen the un-
derstanding of various heart diseases and shed light on pos-
sible therapeutic strategies. Research provides opportunities
for audit, development of critical faculties, enhances patient
care, stimulates discovery and enhances international vis-
ibility of the centre. In addition, training Egyptian doctors
and scientists in research methodology as well as the ex-
ecution of research and publishing in international journals
with high impact factors are essential for the development of
science in the region. The program serves as an excellent plat-
form from which young Egyptian scientists and researchers
can contribute to the advancement of world-class research
without having to leave the country.
Over the course of 2016, the CIB Foundation donated over EGP 7
As another demonstration of the Foundation’s commit-
ment to the hospital, EGP 3.5 million was donated in
March 2016 to fund patient care in both the Cairo and
Tanta branches of the hospital.
Friends of Abu El Rish Children’s Hospitals
organization: paediatric intensive Care Unit
In April 2016, the CIB Foundation’s Board of Trustees ap-
proved EGP 16 million over two years to fund the complete
renovation and outfitting of the El Mounira Hospital’s origi-
nal intensive care unit (ICU) on the seventh floor.
The renovation included the installation of central oxygen and
ventilation networks, covering all surfaces with anti-bacterial
material, constructing isolation rooms, establishing a central
monitoring station, providing emergency electrical supplies and
purchasing state-of-the-art medical equipment, including ICU
beds, resuscitation units, monitors, ventilators, endoscopes, a
mobile x-ray machine, sterilisation unit, and others. The project
would help serve nearly 2,000 children annually.
million to cover the outfitting costs of the research labs.
In June 2016, the CIB Foundation fulfilled its first installment
Magdi yacoub Heart Foundation: 50 open-Heart
Surgeries
In July 2016, the CIB Foundation allocated EGP 4.5 million
to the Magdi Yacoub Heart Foundation to cover the costs as-
sociated with 50 pediatric open-heart surgeries. Through its
ongoing donations, the CIB Foundation supports the Magdi
Yacoub Foundation’s efforts to drastically minimise the
number of children on the open-heart surgery waiting list. In
September 2016, the CIB Foundation donated EGP 2.25 mil-
lion, covering the first tranche of the project.
Children’s Cancer Hospital 57357: pEt Ct scanner
and Annual Donation
In line with its long-term partnership with the Children’s Cancer
Hospital 57357, the CIB Foundation provided the hospital with
a PET CT scanner at a cost of EGP 13.17 million. The highly spe-
cialized equipment will allow doctors to identify cancerous cells
and plan for removal during the operations. The CIB Foundation
fulfilled its commitment to the project in October 2016.
amounting EGP 4 million for the project.
Rotary Club of kasr El nil: Children’s Right to Sight
program
In April 2016, the CIB Foundation’s Board of Trustees ap-
proved supporting the third phase of the Children’s Right to
Sight program at a cost of EGP 1 million over one year under
the management of Rotary Club - Kasr El Nile to fund around
500 critical eye surgeries to underprivileged children. The
CRTS program is dedicated to eradicating blindness by sup-
porting children and infants requiring critical eye surgeries.
Over the course of 2016 the CIB Foundation donated over EGP
309,000 covering 99 surgeries.
Egyptian Clothing bank
In line with its history of supporting national campaigns, the
CIB Foundation supported the “One Million Blankets” national
campaign organised by the Egyptian Clothing Bank (ECB). In
January 2016, the Foundation donated EGP 1 million to the cam-
paign’s “Warm Egypt” initiative, providing sweaters to children
CIB • Annual Report 2016 • 127
communiTY develoPmenT
in Upper Egypt and border governorates. Over the course of the
winter, CIB employees in various governorates were actively
involved in the distribution of 50,000 sweaters to the children.
national Cancer institute: Computed tomographic
(Ct) Scanner
In February 2016, the CIB Foundation fulfilled its first in-
stallment to National Cancer Institute by donating EGP
2.205 million for the purchase of a pediatric Computed
Tomographic (CT) scan machine for the Department of Ra-
diology at a cost of EGP 3.15 million.
The National Cancer Institute is the largest hospital serving
cancer patients in Egypt. It was established at Cairo University
in 1969 and currently receives around 140 children with cancer
daily, of whom around six to eight patients are newly diagnosed.
The Department of Radiology currently receives some 30 patients
daily, in addition to the 10-15 emergency cases that are turned
away due to long waiting lists. The dedicated piece of equipment
will allow the department to increase early diagnosis rates.
In November 2016, the CIB Foundation fulfilled its second
and final installment amounting to EGP 945,000 for the project.
baladi Foundation – ophthalmic Clinic in Aswan
In September 2015, the CIB Foundation’s Board of Trustees
approved an EGP 710,000 project to establish the first fully
equipped diagnosis and referral centre for cases of glaucoma
among children in Upper Egypt. Through the project, the CIB
Foundation will support the Baladi Foundation in the early
detection of the disease in 500 children, treat and perform
follow-up operations for this group and conduct 50 surger-
ies for congenital glaucoma cases. Additionally, the Baladi
Foundation will conduct two events per year to train 25 spe-
cialised doctors. In March 2016, the CIB Foundation donated
EGP 102,000 for the project to cover the purchase of essential
equipment for the Baladi Foundation.
yahiya Arafa Children’s Charity Foundation:
paediatric Catheter Lab and Annual operating Costs
The Yahiya Arafa Children’s Charity Foundation is a long-
standing partner of the CIB Foundation. In September
2015, the CIB Foundation’s Board of Trustees approved
the complete funding of a pediatric catheter lab at the Ain
Shams University Hospital, under the supervision and man-
agement of the Yahiya Arafa Foundation. The roughly EGP
8 million project will enable the hospital to have a Cath-
eter Lab dedicated to children, conduct 100 procedures per
month and reduce the waiting list by 90%.
In July 2016, the CIB Foundation donated EGP 2 million to
cover the first installment for the project.
Additionally, in March 2016, the CIB Foundation fulfilled its
commitment to support the annual operating costs of four pediat-
ric units at the Ain Shams University Hospital through the Yahiya
Arafa Children’s Charity Foundation at EGP 2 million.
128 • Annual Report 2016 • CIB
Zewail University of Science and technology: Cib
Foundation Fellowship for Science and technology
In line with its commitment to quality education, the CIB
Foundation disbursed its year-four donation of EGP 5 mil-
lion to the Zewail University of Science and Technology to
cover the tuition expenses of its 50 CIB Foundation Fellows.
The fellowship supports 50 public school graduates pursuing
degrees in the advanced sciences or engineering.
Egyptian Liver Care Society: Children Without Virus C
program
The CIB Foundation dedicated over EGP 6 million to fund
the Egyptian Liver Care Society’s Children Without Virus
C (C-Free Child) program. The Egyptian Liver Care Society
was established in 2008 with specific goals of caring for
hepatitis patients, raising doctor and nurse hepatitis patient-
care skills, providing financial support to hepatitis patients
(including liver transplants) and increasing the number
and quality of hepatitis-treatment centres in Egypt. The C-
Free Child program is the only program of its kind in Egypt,
screening and treating children with hepatitis C for free.
In March 2016, the CIB Foundation fulfilled its commit-
ment to the Egyptian Liver Care Society with EGP 1.710 mil-
lion donated, representing the final installment of the project.
Right to Live Association
In December 2014, the CIB Foundation’s Board of Trustees
approved EGP 312,600 to fund the renovation of several chil-
dren’s areas at the Right to Live Association, a center for the
schooling and rehabilitation of people with various mental
and physical disabilities.
The CIB Foundation fulfilled its commitment to the Right
to Live Association, with EGP 282,908 donated in April and
June 2016 representing the final installments for the project.
Rotary Club of Zamalek: Maxillo-Facial Center in
the Cairo University Faculty of Dentistry Annual
operating Costs
In September 2015, the CIB Foundation’s Board of Trustees
approved EGP 45,100 in annual operating costs for the CIB
Foundation-funded Maxillo-Facial Center at Cairo University’s
Faculty of Dentistry. The centre was inaugurated in April 2014
and is one of the sole providers of highly specialised treatment
for oral and nasal cavity deformities, congenital deformities in
newborn babies and facial deformities caused by cancer.
In June 2016, the CIB Foundation donated EGP 22,515 to cover
the first installment of the operating costs.
Rotary Club of Zamalek: Mobile Dental Caravan
for the Faculty of oral & Dental Medicine - Cairo
University
In September 2016, the CIB Foundation Board of trustees
approved funding the purchase of an outfitted mobile dental
caravan for the Faculty of Oral & Dental Medicine - Cairo Uni-
versity under the management of Zamalek Rotary Club with
a total amount of EGP 640,000. The CIB Foundation donated
EGP 160,000 to cover the first installment for the project.
The dental caravan will be used by the Faculty of Oral & Dental
Medicine to perform necessary dental treatment (free of charge)
to school students in Cairo and Giza governorates’ remote areas.
MoVE Foundation for Children with Cerebral palsy:
premises Renovation
In June 2015, the CIB Foundation committed EGP 2 mil-
lion to the MOVE Foundation for Children with cerebral
palsy to renovate their premises, allowing them to expand
their operations. The MOVE Foundation was established in
2004 with the mission to positively impact the lives of the
estimated 250,000 children living with the disability. The
organisation aims at mainstreaming those children into
the public-school system to allow them to become healthy,
productive members of society. While cerebral palsy can-
not be cured, it can be managed successfully through early
intervention. The CIB Foundation fulfilled its first commit-
ment to the MOVE Foundation by donating EGP 1.3 million
for the purchase of their current premises.
Over the course of 2016 the CIB Foundation donated over
EGP 514,000 to cover the complete renovation of the prem-
ises, as well as the purchasing of essential equipment.
Sohag University Hospital: Craniofacial Center
In April 2014, the CIB Foundation Board of Trustees approved
EGP 1 million to fund the outfitting of the Craniofacial Cen-
ter at the Sohag University Hospital.
A team of surgeons specialising in hearing, speech ther-
apy and dentistry have established the Craniofacial Centre
to serve patients from Sohag, Qena and Aswan, primarily
with cleft lip and cleft palate deformities. In addition to
prescribing courses of treatment, the centre also conducts
specialised surgeries over long-term time frames. The spe-
cialised services offered in the centre will potentially allow
it to become a major referral centre for patients across the
country. Over the course of 2016, the CIB Foundation do-
nated EGP 447,924 for the project.
Sohag University Hospital: paediatric Critical Care Unit
In April 2016, the CIB Foundation’s Board of Trustees approved
EGP 6 million over one year to fund the outfitting of the Pediat-
ric Critical Care Unit at the Sohag University Hospital.
The outfitting of the Pediatric Critical Care Unit will in-
clude a Pediatric Cardiac Care Unit, Diabetic Ketoacidosis
Management Unit, Pediatric Endoscopy Unit, a comprehen-
sive unit treating poisonings, immune system diseases and
hepatic coma and Kidney Unit.
In July 2016, the CIB Foundation fulfilled its first installment
amounting to EGP 3 million for the project.
Sawiris Foundation and Star Care for Helping
Children: together for Change project
In April 2016, the CIB Foundation’s Board of Trustees ap-
proved a new EGP 1.5 million partnership between the
Sawiris Foundation and Star Care Foundation to implement
comprehensive community development projects in Sohag,
Assiut and Qena, under the management of the Association
of Businesswomen in Assiut.
The project includes the renovation and upgrade of com-
munity health centres, the training of doctors and nurses,
organising health awareness campaigns for locals, raising the
skills of teachers in community schools, distributing in-kind
support to students as well as offering regular sports, soft
skills and recreational activities. The project also offers eco-
nomic empowerment opportunities. The CIB Foundation is
committed to supporting the health sector.
Ahl Masr Foundation burn Victim operations
There are between 80,000 to 100,000 new burn cases in Egypt
every year, 37% of which die of their injuries and 18% of which
suffer from permanent impairment. One quarter of these
cases are children under the age of five, over 50% are under
the age 20 and 75% of all cases are sustained by people from
underprivileged backgrounds.
In April 2016, the CIB Foundation allocated EGP 1 million
to the Ahl Masr Foundation to cover the costs associated
with approximately 10 pediatric burn patient surgeries.
The donation will help support underprivileged children
suffering severe burns without the financial capability to
cover the cost of their treatment. In September 2016, the
CIB Foundation fulfilled its first installment amounting to
EGP 250,000 for the project.
british Council Egypt: Full tuition Support for one
Al-Azhar University Student
In December 2016, the CIB Foundation fulfilled its first
installment in a pledge to support one student of Al-Azhar
University to pursue a PhD in religious studies in the Depart-
ment of Politics, Philosophy and Religion at Lancaster Uni-
versity. The proposed topic of research is Islamic Feminism in
Modern Egypt, a quest for a pragmatic perspective based on
Islamic sources and cultural specificities.
The British Council and Al-Azhar initiative aims to pro-
mote mutual understanding among a new generation of
Muslim and non-Muslim scholars.
CIB • Annual Report 2016 • 129
communiTY develoPmenT
The Cib foundation was recognised for its work in the arena of corporate social
responsibility from african banker, winning the award for “Socially responsible
bank of the year.”
point 90 Cinema
In September 2016, 100 children enjoyed an entertaining trip
to Point 90 Cinema and watched the movie “Pete’s Dragon.”
The trip was organised by the CIB Foundation and sponsored
by CIB, in association with the Advance Society for Autism.
The Foundation also provided the children with transporta-
tion to and from the cinema, as well as healthy refreshments
during the movie.
Squash for Everyone
In September 2016, the CIB Foundation organised a sports
day for 35 children from the Egyptian Red Crescent and
Logain Foundation, during which they practiced squash for
the first time. The event signaled the launch of the first phase
of the “Squash for Everyone” initiative sponsored by CIB in
partnership with renowned Egyptian squash professional
Amr Shabana, offering an equal opportunity to underprivi-
leged children and with special needs to explore and develop
their athletic capabilities.
blood Donation Campaigns: the triple Effect
Over the course of 2016, the CIB Foundation hosted 21 blood
donation campaigns across its corporate offices. The cam-
paign aims to encourage CIB staff and customers to positively
and effectively participate in an activity that can save the lives
of thousands of patients across the country. Over 600 bags of
blood were collected in 2016, potentially saving the lives of
more than 1,800 people. On International Blood Donation Day,
Egypt was attempting to break the Guinness World Record for
the number of blood donation applicants in an eight-hour pe-
riod. CIB’s participation in the event helped secure the record.
kidZania Cairo
Through CIB’s long-term corporate sponsorship of KidZania
Cairo, the CIB Foundation allocated 50 tickets each quar-
ter to underprivileged children. Throughout 2016, the CIB
Foundation organised multiple visits to the edutainment
city through its partner organisations, where children were
provided the opportunity to experience adult professions
on a child-friendly scale. By performing sector-specific
jobs, children could spend the KidZos, the official currency
of KidZania, they earned on games and other entertaining
activities. The CIB Foundation awarded this opportunity to
underprivileged children, children with physical and mental
disabilities, orphans and cancer patients. Through these
events, children from marginalised groups of society were
given the chance to experience activities that would have
previously been unavailable to them.
Americana plaza Cinema
In August 2016, more than 300 children enjoyed an en-
tertaining trip to Americana Plaza Cinema and watched
the animated movie “The Secret Life of Pets.” The trip was
organised by the CIB Foundation and sponsored by CIB,
in association with the Egyptian Red Crescent and other
foundations for children with special needs, including the
MOVE Foundation, Right to Live Association and Logain
Foundation. The Foundation also provided the children
with transportation to and from the cinema, as well as
healthy refreshments during the movie.
Karnak Temple is the largest ancient
religious site in the world consisting
of huge pillars, towering columns and
avenues of sphinxes.
130 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 131
communiTY develoPmenT
CorPoraTe SoCial
resPonsiBility
2016 saw CIB continue to achieve significant milestones in
Corporate Social Responsibility (CSR), further solidifying the
Bank’s commitment to the betterment of society and creat-
ing a profound, positive impact on the lives of citizens.
Community Development
Over the last 12 months, CIB maintained its steadfast com-
mitment to community development through diverse catego-
ries of CSR projects in the fields of art, culture and sport.
Student Cultural Trip to Cairo Opera House: In associa-
tion with the“Friends of The Opera” association, CIB organ-
ised a cultural trip for 400 students from different public
schools to attend Sergei Prokofiev’s composition “Peter and
the Wolf,” performed by the Cairo Symphony Orchestra at the
Cairo Opera House. The trip aimed to promote and nurture
musical appreciation in the children.
KidZania: Throughout its partnership with KidZania,
which began in 2013, CIB has been organising trips to the
edutainment city for underprivileged children. Over the past
12 months, CIB organised four trips for 100 children with spe-
cial needs, serious health conditions and those from under-
privileged backgrounds to KidZania, under the supervision
of the CIB Foundation. At KidZania, children enjoy an edu-
cational, entertaining experience by performing simulated
jobs, such as firefighters, doctors, police officers, journalists
and the like. CIB’s partnership with KidZania has also been
a chance to raise banking awareness in the youth. The Bank
has a mini-branch on the premises that allows children to
perform different bank operations like writing cheques, issu-
ing debit cards and depositing or withdrawing KidZos, the
official currency of KidZania, from ATMs around the venue.
Autism: Children with autism and other disabilities have
always been given the highest priority on CIB’s CSR agenda.
This has been reflected in our long-term partnership with
the ADVANCE Society for Persons with Autism and Other
Disabilities and the Bank’s continuous contributions to its
activities. In 2016, CIB continued to sponsor the society’s
annual ceremony, which showcased rhythmic musical com-
positions performed by students. The concert serves as a plat-
form from which awareness can be raised about the creative
132 • Annual Report 2016 • CIB
and expressive skills of children with disabilities, supporting
their integration into society. Moreover, the Bank sponsored
2016’s World Autism Awareness Day (WAAD) in Egypt, held
annually in April worldwide, which witnessed the participa-
tion of more than 75 organisations specialised in the provi-
sion of services to those with learning disabilities and autism
across the country.
Zawya: Through CIB’s partnership with Zawya, an art-
house cinema founded by Misr International Films (MIF),
the Bank sponsored the screening of the animated film
“Hotel Transylvania 2” with live audio description for more
than 150 visually impaired children from the schools of
Taha Hussein, Mostafa Assaker and Alnour Wal Amal, in
addition to the Fagr El Tanweer Association and Al-Markaz
Al-Namoozagy for the Blind.
El Sawy Culture Wheel: In 2016, the Bank capitalised on
2015’s successful awareness campaign entitled “Financial
Planning for Safer Future” and launched a second round of
free seminars under the theme “Financial Inclusion.” CIB
also continued its sponsorship of special screenings of docu-
mentary films, cultural nights, concerts and art exhibitions
organised by El Sawy Culture Wheel.
Beena Initiative: CIB is the main partner and funder of
“Beena”, a protocol signed with the Social Solidarity Minis-
try to encourage the active participation of youth in society,
and to support and monitor the development of social care
services. The initiative succeeded in attracting thousands
of volunteers across Egypt, who implemented an effective
mechanism for developing and monitoring the quality of
services provided to different social care centres, such as
orphanages, elderly homes and special-needs houses, a seg-
ment of society that is in dire need of adequate care and
higher-quality services.
Sponsoring Art: Supporting art remains the core of CIB’s
CSR agenda. We work to ensure the diversification of our
channels to reach out to distinctive art talents across Egypt
and into as many categories as possible. CIB’s numerous and
varied art-centric sponsorships and activities led to the sig-
nificant enrichment of the Bank’s private art collection.
• Supporting Students of Fine Arts Faculties: The Bank
continued to pave the way for more art students to realise
their talents and receive adequate recognition for their
art. This year, CIB’s reach included the acquisition of par-
ticipants’ distinctive pieces, adding them to our private
art collection to incentivise the young talents. Similarly,
the Bank sponsored for the second consecutive year the
art exhibitions of the faculties of Fine Arts at Alexandria
and South Valley universities, targeting the same age-
range of young artists.
• Art Exhibitions: This year, CIB developed its already ex-
pansive strategy of supporting art exhibitions by extend-
ing support to individual exhibitions by young artists.
The Bank acquired the finest pieces displayed at each
exhibition to enrich its private art collection.
• Cairo Symposium: Maintaining its exclusive position
as the only bank in Egypt sponsoring every category of
fine arts, CIB sponsored the second edition of the Cairo
Symposium for Carving Iron Scrap, which was held in
April 2016 at Mohamed Mahmoud Khalil Museum. The
Bank has been sponsoring this magnificent art event
since its launch in 2013 and acquired distinctive pieces
added to CIB’s private art collection.
• Art Salons: For the sixth consecutive year, CIB sponsored
the annual Egyptian Youth Salon in collaboration with
the Fine Arts Division at the Egyptian Culture Ministry,
supporting trending artists under the age of 35.
CIB also sponsored for the second consecutive year the
Upper Egypt Salon, which was held in Luxor in Novem-
ber 2016, in collaboration with South Valley University’s
Faculty of Fine Arts. This not only extended the Bank’s
geographical reach to untapped areas of Upper Egypt,
but gave artists of various age brackets the opportunity
to display their creative works.
Sponsoring the Egyptian Squash Federation: For more
than five years, CIB has been sponsoring the Egyptian
Squash Federation as part of the Bank’s belief that sports
are an integral facet of shaping the minds and health of
Egyptian youth. The Bank continued its support this year
of young, talented athletes who represent the country
in regional and international arenas. In 2016, the Bank
further expanded this support to include less-fortunate
children by launching the “Squash for Everyone” Initia-
tive in partnership with Egyptian Squash National Teams
Director & Technical Advisor Amr Shabana. The initiative,
supported by the CIB Foundation and held in association
with the Egyptian Red Crescent and Logain Foundation,
aims to give underprivileged children and those with
special needs access to sports facilities and to let them
explore and develop their athletic capabilities.
Al Ahram Squash Open: CIB was proudly the exclusive
bank sponsor for the tournament, which aimed at reviv-
ing the Al Ahram Squash Open that was suspended for the
last 10 years.
Partnering with Omar Samra: This year, CIB support-
ed the new “Your Space” initiative launched by Egyptian
entrepreneur Omar Samra, which aims to develop the sci-
entific talents of Egyptian youth. This initiative represents
an innovative experience to promote the culture of space
science among students at schools and universities. The
objective is to stimulate the development of engineering,
science, technology and mathematics curriculums and
pique students’ interests in not only exploring space, but
also making it their future profession. Various special con-
tests, such as designing a spaceship or a city for humans
on another planet or moon, were organised for students to
compete and excel.
In the context of partnership with Samra, CIB supported
the young adventurer in his expedition to Antarctica.
The most significant achievement of this adventure was
Samra’s successful climbing of three mountains that had
never been climbed before (first ascents). Samra raised
the Egyptian flag along with CIB’s, the main expedition
sponsor, thereby declaring an unprecedented and historic
achievement that truly demonstrates the distinctive skills
and ambition of Egyptian youth pursuing their dreams.
CIB • Annual Report 2016 • 133
finanCial
StAtEMEntS
while 2016 was a turbulent year in terms of the
macroeconomic landscape, cIB managed to weather the
storm and report an exceptional set of results.
Luxor has been called the “world’s greatest open-air museum” as the ruins
of Karnak and Luxor temples lie within the city, and across the Nile are the
Valley of the Kings and Valley of the Queens.
134 • Annual Report 2016 • CIB
134 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 135
CIB • Annual Report 2016 • 135
Financial StatementS: Separate
136 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 137
Financial StatementS: Separate
Commercial International Bank (Egypt) S.A.E
Separate balance sheet as at December 31,2016
Commercial International Bank (Egypt) S.A.E
Separate income statement for the year ended December 31,2016
Notes
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Assets
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Trading financial assets
Loans and advances to banks, net
Loans and advances to customers, net
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates
Non current assets held for sale
Other assets
Goodwill
Intangible assets
Deferred tax assets (Liabilities)
Property, plant and equipment
Total assets
Liabilities and equity
Liabilities
Due to banks
Due to customers
Derivative financial instruments
Current tax liabilities
Other liabilities
Long term loans
Other provisions
Total liabilities
Equity
Issued and paid up capital
Reserves
Reserve for employee stock ownership plan (ESOP)
Total equity
Net profit for the year
Total equity and net profit for the year
Total liabilities and equity
15
16
17
18
19
20
21
22
22
23
42
24
41
41
32
25
26
27
21
29
28
30
31
34
The accompanying notes are an integral part of these financial statements .
10,522,040
58,011,034
39,177,184
2,445,134
159,651
85,991,914
269,269
5,447,291
53,924,936
10,500
428,011
5,446,025
-
499,131
181,308
1,338,629
263,852,057
3,008,996
231,965,312
331,091
2,017,034
3,579,330
160,243
1,514,057
242,576,063
11,538,660
3,443,319
343,460
15,325,439
5,950,555
21,275,994
263,852,057
9,848,954
21,002,305
22,130,170
5,848,377
38,443
57,172,705
80,995
46,289,075
9,261,220
12,600
503,066
4,799,937
209,842
629,340
258,157
1,107,905
179,193,091
1,600,769
155,369,922
145,735
1,949,694
2,622,269
131,328
861,761
162,681,478
11,470,603
152,144
248,148
11,870,895
4,640,718
16,511,613
179,193,091
Hisham Ezz Al-Arab
Chairman and Managing Director
Interest and similar income
Interest and similar expense
Net interest income
Fee and commission income
Fee and commission expense
Net fee and commission income
Dividend income
Net trading income
Profits on financial investments
Administrative expenses
Other operating (expenses) income
Goodwill impairment
Intangible assets amortization
Impairment charge for credit losses
Profit before income tax
Income tax expense
Deferred tax assets (Liabilities)
Net profit for the year
Earning per share
Basic
Diluted
Notes
6
7
8
9
22
10
11
41
41
12
13
32 & 13
14
Dec. 31, 2016
EGP Thousands
19,144,218
(9,126,512)
10,017,706
Dec. 31, 2015
EGP Thousands
14,765,337
(6,650,008)
8,115,329
1,965,529
(417,573)
1,547,956
34,236
1,315,182
32,121
(2,432,652)
(1,237,187)
(209,842)
(130,208)
(892,874)
8,044,438
(2,017,034)
(76,849)
5,950,555
1,885,544
(299,696)
1,585,848
35,062
710,398
270,998
(2,028,404)
(523,490)
(7,236)
(21,701)
(1,682,439)
6,454,365
(1,949,694)
136,047
4,640,718
4.56
4.49
3.56
3.51
Hisham Ezz Al-Arab
Chairman and Managing Director
138 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 139
Financial StatementS: Separate
Commercial International Bank (Egypt) S.A.E
Separate cash flow for the year ended December 31,2016
Commercial International Bank (Egypt) S.A.E
Separate cash flow for the year ended December 31,2016 (Cont.)
Cash flow from financing activities
Increase (decrease) in long term loans
Dividend paid
Capital increase
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalent during the year
Beginning balance of cash and cash equivalent
Cash and cash equivalent at the end of the year
Cash and cash equivalent comprise:
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Obligatory reserve balance with CBE
Due from banks with maturities more than three months
Treasury bills with maturity more than three months
Total cash and cash equivalent
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
28,915
(1,463,450)
68,057
(1,366,478)
38,935,643
22,583,057
61,518,700
10,522,040
58,011,034
39,177,184
(5,438,235)
(2,565,895)
(38,187,428)
61,518,700
(111,550)
(1,563,646)
94,748
(1,580,448)
16,122,814
6,460,243
22,583,057
9,848,954
21,002,305
22,130,170
(8,268,202)
-
(22,130,170)
22,583,057
Cash flow from operating activities
Profit before income tax
Adjustments to reconcile net profit to net cash provided by operating
activities
Fixed assets depreciation
Impairment charge for credit losses
Other provisions charges
Trading financial investments revaluation differences
Available for sale and held to maturity investments exchange revaluation
differences
Goodwill impairment
Intangible assets amortization
Financial investments impairment charge
Utilization of other provisions
Other provisions no longer used
Exchange differences of other provisions
Profits from selling property, plant and equipment
Profits from selling financial investments
Profits (losses) from selling associates
Shares based payments
Impairment (Released) charges of associates
Operating profits before changes in operating assets and liabilities
Net decrease (increase) in assets and liabilities
Due from banks
Treasury bills and other governmental notes
Trading financial assets
Derivative financial instruments
Loans and advances to banks and customers
Other assets
Goodwill
Intangible assets
Due to banks
Due to customers
Income tax obligations paid
Other liabilities
Net cash provided from operating activities
Cash flow from investing activities
Proceeds from selling subsidiary and associates
Payment for purchases of property, plant, equipment and branches construc-
tions
Proceeds from redemption of held to maturity financial investments
Payment for purchases of held to maturity financial investments
Payment for purchases of available for sale financial investments
Proceeds from selling available for sale financial investments
Proceeds (payments) from real estate investments
Net cash used in investing activities
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
8,044,438
6,454,365
285,381
892,874
150,847
(269,283)
(2,219,961)
209,842
130,208
82,428
(3,696)
(78,405)
583,550
(1,682)
(35,193)
32,793
187,000
(131,799)
7,859,342
264,072
(16,057,258)
3,672,526
(2,918)
(29,833,291)
(599,879)
-
-
1,408,227
76,595,390
(1,949,694)
957,061
42,313,578
176,161
(560,631)
4,094
(1,243,669)
(3,334,122)
2,946,710
-
(2,011,457)
223,510
1,682,439
135,866
353,590
(96,638)
7,236
21,701
140,751
(5,286)
(505)
13,330
(564)
(163,270)
(285,431)
133,395
-
8,614,489
2,131,806
8,331,133
(2,474,396)
(20,247)
(9,495,679)
(1,042,543)
(217,078)
(651,041)
469,384
33,124,989
(1,814,609)
80,304
37,036,512
334,451
(360,587)
3,919,074
(4,019,548)
(25,392,460)
5,301,726
884,094
(19,333,250)
140 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 141
Financial StatementS: Separate
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142 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 143
Financial StatementS: Separate
Notes to the separate financial statements for the year ended
December 31, 2016
1. General information
Commercial International Bank (Egypt) S.A.E. provides retail, corporate and investment banking services in various
parts of Egypt through 168 branches, and 24 units employing 6422 employees on the statement of financial position date.
Commercial International Bank (Egypt) S.A.E. was formed as a commercial bank under the investment law no. 43 of 1974.
The address of its registered head office is as follows: Nile tower, 21/23 Charles de Gaulle Street-Giza. The Bank is listed in
the Egyptian stock exchange.
2. Summary of 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 years presented, unless otherwise stated.
2.1. Basis of preparation
The separate financial statements have been prepared in accordance with Egyptian financial reporting standards issued
in 2006 and its amendments and in accordance with the Central Bank of Egypt regulations approved by the Board of Di-
rectors on December 16, 2008.
The separate financial statements have been prepared under the historical cost convention, as modified by the revaluation
of financial assets and liabilities classified as trading or held at fair value through profit or loss, available for sale invest-
ment and all derivatives contracts.
The separate and consolidated financial statements of the Bank and its subsidiaries have been prepared in accordance
with the relevant domestic laws and the Egyptian financial reporting standards, the affiliated companies are entirely
included in the consolidated financial statements and these companies are the companies that the Bank - directly or indi-
rectly – has more than half of the voting rights or has the ability to control the financial and operating policies, regardless
of the type of activity, the Bank’s consolidated financial statements can be obtained from the Bank’s management. The
Bank accounts for investments in subsidiaries and associate companies in the separate financial statements at cost minus
impairment loss.
The separate financial statements of the Bank should be read with its consolidated financial statements, for the year
ended on December 31, 2016 to get complete information on the Bank’s financial position, results of operations, cash flows
and changes in ownership rights.
Subsidiaries
2.2. Subsidiaries and associates
1.2.1
Subsidiaries are all entities (including special purpose entities) over which the Bank has owned directly or indirectly the
control 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 consid-
ered when assessing whether the Bank has the ability to control the entity or not.
associates
2.2.2
Associates are all entities over which the Bank has significant influence but do not reach to the extent of control, generally
accompanying a shareholding between 20% and 50% of the voting rights.
The acquisition method of accounting is used to account for the purchase of subsidiaries. The cost of an acquisition is
measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed, plus any
costs directly related to the acquisition. The excess of the cost of an acquisition over the Bank share of the fair value of the
identifiable net assets acquired is recorded as goodwill. A gain on acquisition is recognized in profit or loss if there is an
excess of the Bank’s share of the fair value of the identifiable net assets acquired over the cost of the acquisition.
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.
Foreign currency translation
2.4.
1.4.1. Functional and presentation currency
The financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.
transactions and balances in foreign currencies
2.4.2.
The Bank maintains its accounting records in Egyptian pound. Transactions in foreign currencies during the period are
translated into the Egyptian pound using the prevailing exchange rates on the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the end of reporting period at the
prevailing exchange rates. Foreign exchange gains and losses resulting from settlement and translation of such transac-
tions and balances are recognized in the income statement and reported under the following line items:
• Net trading income from held-for-trading assets and liabilities.
• Other operating revenues (expenses) from the remaining assets and liabilities.
Changes in the fair value of investments in debt instruments; which represent monetary financial instruments, denomi-
nated in foreign currencies and classified as available for sale assets are analyzed into valuation differences resulting from
changes in the amortized cost of the instrument, differences resulting from changes in the applicable exchange rates and
differences resulting from changes in the fair value of the instrument.
Valuation differences resulting from changes in the amortized cost are recognized and reported in the income statement
in ‘income from loans and similar revenues’ whereas differences resulting from changes in foreign exchange rates are
recognized and reported in ‘other operating revenues (expenses)’. The remaining differences resulting from changes in fair
value are deferred in equity and accumulated in the ‘revaluation reserve of available-for-sale investments’.
Valuation differences resulting from the non-monetary items include gains and losses of the change in fair value of such
equity instruments held at fair value through profit and loss, as for recognition of the differences of valuation resulting
from equity instruments classified as financial investments available for sale within the fair value reserve in equity.
Financial assets
2.5.
The Bank classifies its financial assets in the following categories:
• Financial assets designated at fair value through profit or loss.
• Loans and receivables.
• Held to maturity investments.
• Available for sale financial investments.
Management determines the classification of its investments at initial recognition.
Financial assets at fair value through profit or loss
2.5.1.
This category has two sub-categories:
• Financial assets held for trading.
• Financial assets designated at fair value through profit and 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 short 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 making. Derivatives are also categorized as held for
trading unless they are designated as hedging instruments.
The cost method is applied to account for investments in subsidiaries and associates, whereby, investments are recorded
based on the acquisition cost including any goodwill, deducting any impairment losses, and dividends are recorded in
the income statement in the adoption of the distribution of these profits and evidence of the Bank right to collect them.
Financial instruments, other than those held for trading, are classified as financial assets designated at fair value through
profit and loss if they meet one or more of the criteria set out below:
• When the designation eliminates or significantly reduces measurement and recognition inconsistencies that would arise
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Financial StatementS: Separate
from measuring financial assets or financial liabilities, on different bases. Under this criterion, an accounting mismatch
would arise if the debt securities issued were accounted for at amortized cost, because the related derivatives are mea-
sured at fair value with changes in the fair value recognized in the income statement. The main classes of financial instru-
ments designated by the Bank are loans and advances and long-term debt issues.
• Applies to groups of financial assets, financial liabilities or combinations thereof that are managed, and their performance
evaluated, on a fair value basis in accordance with a documented risk management or investment strategy, and where
information about the groups of financial instruments is reported to management on that basis.
• Relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows
resulting from those financial instruments, including certain debt issues and debt securities held.
• Any financial derivative initially recognized at fair value can’t be reclassified during the holding period. Re-classification is
not allowed for any financial instrument initially recognized at fair value through profit and loss.
loans and advances
2.5.2.
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market, other than:
- Those that the Bank intends to sell immediately or in the short term, which is classified as held for trading, or those that
the Bank upon initial recognition designates as at fair value through profit and loss.
• Those that the Bank upon initial recognition designates and available for sale; or
• Those for which the holder may not recover substantially all of its initial investment, other than credit deterioration.
2.5.3. Held to maturity financial investments
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 till maturity. If the Bank has to sell other
than an insignificant amount of held-to-maturity assets, the entire category would be reclassified as available for sale
unless in necessary cases subject to regulatory approval.
2.5.4. available for sale financial investments
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.
The following are applied in respect to all financial assets:
Debt securities and equity shares intended to be held on a continuing basis, other than those designated at fair value, are
classified as available-for-sale or held-to-maturity. Financial investments are recognized on trade date, when the group
enters into contractual arrangements with counterparties to purchase securities.
Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value
through profit and loss. Financial assets carried at fair value through profit and loss are initially recognized at fair value,
and transaction costs are expensed in the income statement.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or when the
Bank transfers substantially all risks and rewards of the ownership. Financial liabilities are derecognized when they are
extinguished, that is, when the obligation is discharged, cancelled or expired.
Available-for-sale, held–for-trading and financial assets designated at fair value through profit and loss are subsequently
measured at fair value. Loans, receivables and held-to-maturity investments are subsequently measured at amortized cost.
Gains and losses arising from changes in the fair value of the ‘financial assets designated at fair value through profit or
loss’ are recognized in the income statement in ‘net income from financial instruments designated at fair value’. Gains and
losses arising from changes in the fair value of available for sale investments are recognized directly in equity, until the
financial assets are either sold or become impaired. When available-for-sale financial assets are sold, the cumulative gain
or loss previously recognized in equity is recognized in profit or loss.
Interest income is recognized on available for sale debt securities using the effective interest method, calculated over the
asset’s expected life. Premiums and discounts arising on the purchase are included in the calculation of effective interest
rates. Dividends are recognized in the income statement when the right to receive payment has been 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 measures fair value using valuation models. These include
the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation
models commonly used by market participants. If the Bank has not been able to estimate the fair value of equity instru-
ments classified as available for sale, the value is measured at cost less impairment.
Available for sale investments that would have met the definition of loans and receivables at initial recognition may be
reclassified out to loans and advances or financial assets held to maturity. In all cases, when the Bank has the intent and
ability to hold these financial assets in the foreseeable future or till maturity. The financial asset is reclassified at its fair
value on the date of reclassification, and any profits or losses that have been recognized previously in equity, are treated
based on the following:
• If the financial asset has a fixed maturity, gains or losses are amortized over the remaining life of the investment using the
effective interest rate method. In case of subsequent impairment of the financial asset, the previously recognized unreal-
ized gains or losses in equity are recognized directly in the profits and losses.
• In the case of financial asset which has infinite life, any previously recognized profit and loss in equity will remain until the
sale of the asset or its disposal, in the case of impairment of the value of the financial asset after the re-classification, any
gain or loss previously recognized in equity is recycled to the profits and losses.
• If the Bank adjusts its estimates of payments or receipts of a financial asset that in return adjusts the carrying amount of
the asset (or group of financial assets) to reflect the actual cash inflows, the carrying value is recalculated based on the
present value of estimated future cash flows at the effective yield of the financial instrument and the differences are rec-
ognized in profit and loss.
• In all cases, if the Bank re-classifies financial asset in accordance with the above criteria and increases its estimate of the
proceeds of future cash flow, this increase adjusts the effective interest rate of this asset only without affecting the invest-
ment book value.
2.6. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a legally
enforceable right to offset the recognized amounts and there is an intention to be settled on a net basis.
Agreements of repos & reverse repos are shown by the net in the financial statement in treasury bills and other govern-
mental notes.
2.7. Derivative financial instruments and hedge accounting
Derivatives are recognized initially, and subsequently, at fair value. Fair values of exchange traded derivatives are ob-
tained from quoted market prices. Fair values of over-the-counter derivatives are obtained using valuation techniques,
including discounted cash flow models and option pricing models. Derivatives are classified as assets when their fair value
is positive and as liabilities when their fair value is negative.
Embedded derivatives in other financial instruments, such as conversion option in a convertible bond, are treated as
separate derivatives when their economic characteristics and risks are not closely related to those of the host contract,
provided that the host contract is not classified as at fair value through profit and loss. These embedded derivatives are
measured at fair value with changes in fair value recognized in income statement unless the Bank chooses to designate
the hybrid contract as at fair value through net trading income through profit and loss.
The timing method of recognition in profit and loss, of any gains or losses arising from changes in the fair value of deriva-
tives, depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged.
The Bank designates certain derivatives as:
• Hedging instruments of the risks associated with fair value changes of recognized assets or liabilities or firm commit-
ments (fair value hedge).
• Hedging of risks relating to future cash flows attributable to a recognized asset or liability or a highly probable forecast
transaction (cash flow hedge)
• Hedge accounting is used for derivatives designated in a hedging relationship when the following criteria are met.
At the inception of the hedging relationship, the Bank documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge, and on ongoing basis, the Bank documents whether the hedging instrument
is expected to be highly effective in offsetting changes in fair values of the hedged item attributable to the hedged risk.
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Financial StatementS: Separate
Fair value hedge
2.7.1.
Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recognized in profit
and loss immediately together with any changes in the fair value of the hedged asset or liability that is attributable to the
hedged risk. The effective portion of changes in the fair value of the interest rate swaps and the changes in the fair value of
the hedged item attributable to the hedged risk are recognized in the ‘net interest income’ line item of the income state-
ment. Any ineffectiveness is recognized in profit and loss in ‘net trading income’.
When the hedging instrument is no longer qualified for hedge accounting, the adjustment to the carrying amount of a
hedged item, measured at amortized cost, arising from the hedged risk is amortized to profit and loss from that date using
the effective interest method.
2.7.2. Derivatives that do not qualify for hedge accounting
All gains and losses from changes in the fair values of derivatives that do not qualify for hedge accounting are recognized
immediately in the income statement. These gains and losses are reported in ‘net trading income’, except where deriva-
tives are managed in conjunction with financial instruments designated at fair value , in which case gains and losses are
reported in ‘net income from financial instruments designated at fair value’.
Interest income and expense
2.8
Interest income and expense for all financial instruments except for those classified as held-for-trading or designated at fair
value are recognized in ‘interest income’ and ‘interest expense’ in the income statement using the effective interest method.
The effective interest method is a method of calculating the amortized 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 ex-
actly 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 represents an integral part of the effective interest rate, transaction costs
and all other premiums or discounts.
Once loans or debts are classified as nonperforming or impaired, the revenue of interest income will not be recognized and will
be recorded off balance sheet, and are recognized as income subsequently based on a cash basis according to the following:
• When all arrears are collected for consumer loans, personnel mortgages and micro-finance loans.
• When calculated interest for corporate are capitalized according to the rescheduling agreement conditions until paying
25% from rescheduled payments for a minimum performing period of one year, if the customer continues to perform, the
calculated interest will be recognized in interest income (interest on the performing rescheduling agreement balance)
without the marginalized before the rescheduling agreement which will be recognized in interest income after the settle-
ment of the outstanding loan balance.
Fee and commission income
2.9.
Fees charged for servicing a loan or facility that is measured at amortized cost, are recognized as revenue as the service
is provided. Fees and commissions on non-performing or impaired loans or receivables cease to be recognized as income
and are rather recorded off balance sheet. These are recognized as revenue, on a cash basis, only when interest income
on those loans is recognized in profit and loss, at that time, fees and commissions that represent an integral part of the
effective interest rate of a financial asset, are treated as an adjustment to the effective interest rate of that financial asset.
Commitment fees and related direct costs for loans and advances where draw down is probable are deferred and recog-
nized as an adjustment to the effective interest on the loan once drawn. Commitment fees in relation to facilities where
draw down is not probable are recognized at the maturity of the term of the commitment.
Fees are recognized on the debt instruments that are measured at fair value through profit and loss on initial recognition
and syndicated loan fees received by the Bank are recognized when the syndication has been completed and the Bank
does not hold any portion of it or holds a part at the same effective interest rate used for the other participants portions.
Commission and fee 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 and the purchase or sale of properties are recognized upon
completion of the underlying transaction in the income statement .
Other management advisory and service fees are recognized based on the applicable service contracts, usually on accrual
basis. Financial planning fees related to investment funds are recognized steadily over the period in which the service is
provided. The same principle is applied for wealth management; financial planning and custody services that are provided
on the long term are recognized on the accrual basis also.
2.10. Dividend income
Dividends are recognized in the income statement when the right to collect it is declared.
2.11. Sale and repurchase agreements
Securities may be lent or sold according to a commitment to repurchase (Repos) are reclassified in the financial state-
ments and deducted from treasury bills balance. Securities borrowed or purchased according to a commitment to re-
sell them (Reverse Repos) are reclassified in the financial statements and 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 rate method.
Impairment of financial assets
2.12.
2.12.1. Financial assets carried at amortised cost
The Bank assesses on 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 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/s’) and that loss event/s 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 ( e.g, equity ratio, net income percentage of sales).
• Violation of the conditions of the loan agreement such as non-payment.
• 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 or deterioration of the creditworthiness of the borrower.
The objective evidence of impairment loss for a group of financial assets is observable data indicating that there is a
measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition
of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, for
instance an increase in the default rates for a particular banking product.
The Bank estimates the period between a losses occurring and its identification for each specific portfolio. In general, the
periods used vary between three months to twelve months.
The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individu-
ally 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, wheth-
er significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collec-
tively assesses them for impairment according to historical default ratios.
• If the Bank determines that an objective evidence of financial asset impairment exist that is individually assessed for im-
pairment and for which an impairment loss is or continues to be recognized 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 esti-
mated 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 recognized 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 when there is objective evidence for asset impairment. As a practical expedient, the Bank may measure impair-
ment on the basis of an instrument’s fair value using an observable market price.
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Financial StatementS: Separate
The calculation of the present value of the estimated future cash flows of a collateralized 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 (i.e., 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 con-
tractual 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 be reflected together with changes in related observ-
able data from period to period (e.g. changes in unemployment rates, property prices, payment status, or other indicative
factors 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.
2.12.2. available for sale investments
The Bank assesses on each balance sheet date whether there is objective evidence that a financial asset or a group of
financial assets classify under available for sale 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. During periods start from first of January 2009, the decrease consider significant when it became
10% from the book value of the financial instrument and the decrease consider to be extended if it continues for period
more than 9 months, and if the mentioned evidences become available then any cumulative gains or losses previously
recognized in equity are recognized in the income statement , in respect of available for sale equity securities, impairment
losses previously recognized in profit and loss 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 recognized in the income statement, the
impairment loss is reversed through the income statement to the extent of previously recognized impairment charge from
equity to 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 do not include real estate assets which the Bank exercised its work through or those that have owned
by the Bank as settlement of debts. The accounting treatment is the same used with property, plant and equipment.
2.14. Property, plant and equipment
Lands and buildings comprise mainly branches and offices. All property, plant and equipment are stated at historical cost
less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisi-
tion of the items.
Subsequent costs are included in the asset’s carrying amount or as a separate asset, as appropriate, only when it is prob-
able that future economic benefits 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 residual
values over estimated useful lives, as follows:
Buildings
Leasehold improvements
Furniture and safes
Typewriters, calculators and air-conditions
20 years.
3 years, or over the period of the lease if less
3/5 years.
5 years
Vehicles
Computers and core systems
Fixtures and fittings
5 years
3/10 years
3 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, on each balance sheet date. De-
preciable assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recovered. An asset’s carrying amount is written down immediately to its recoverable value if the as-
set’s carrying amount exceeds 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 the selling proceeds with the asset carrying amount and
charged to other operating expenses in the income statement.
Impairment of non-financial assets
2.15.
Assets that have an indefinite useful life are not amortized -except goodwill- and are tested annually for impairment. As-
sets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognized 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. Assets are tested for impair-
ment with reference to the lowest level of cash generating unit(s). A previously recognized impairment loss relating to a
fixed asset may be reversed in part or in full when a change in circumstances leads to a change in the estimates used to
determine the fixed asset’s recoverable amount. The carrying amount of the fixed asset will only be increased up to the
amount that the original impairment not been recognized.
2.15.1. Goodwill
Goodwill is capitalized and represents the excess of acquisition cost over the fair value of the Bank’s share in the ac-
quired entity’s net identifiable assets on the date of acquisition. For the purpose of calculating goodwill, the fair values
of acquired assets, liabilities and contingent liabilities are determined by reference to market values or by discounting
expected future cash flows. Goodwill is included in the cost of investments in associates and subsidiaries in the Bank’s
separate financial statements. Goodwill is tested for impairment, impairment loss is charged to the income statement.
Goodwill is allocated to the cash generating units for the purpose of impairment testing. The cash generating units rep-
resented in the Bank main segments.
2.15.2. Other intangible assets
Is the intangible assets other than goodwill and computer programs (trademarks, licenses, contracts for benefits, the
benefits of contracting with clients).
Other intangible assets that are acquired by the Bank are recognized at cost less accumulated amortization and impair-
ment losses. 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 and tested for impairment.
2.16 Leases
The accounting treatment for the finance lease is complied with law 95/1995, if the contract entitles the lessee to purchase
the asset at a specified date and predefined value, 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.
2.16.1. Being lessee
Finance lease contract recognizes the lease cost, including the cost of maintenance of the leased assets in the income
statement for the period in which they occurred. If the Bank decides to exercise the right to purchase the leased asset the
leased assets are capitalized and included in ‘property, plant and equipment’ and depreciated over the useful life of the
expected remaining life of the asset in the same manner as similar assets.
Operating lease payments leases are accounted for on a straight-line basis over the periods of the leases and are included
in ‘general and administrative expenses’.
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Financial StatementS: Separate
2.16.2. Being lessor
For finance lease, assets are recorded in the property, plant and equipment 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 re-
turn 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 in the income statement
until the expiration of the lease to be reconciled with a net book value of the leased asset. Maintenance and insurance
expenses are charged to the income statement when incurred to the extent that they are not charged to the tenant.
In case there is objective evidence that the Bank will not be able to collect the of financial lease obligations, the finance
lease payments are reduced to the recoverable amount.
For assets leased under operating lease it appears in the balance sheet under property, plant and equipment, and depre-
ciated 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.
Deferred taxes arising from temporary time differences between the book value of assets and liabilities are recognized in
accordance 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 appli-
cable on 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 in-
crease within the limits of the above reduced.
2.21. Borrowings
Borrowings are recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at
amortized cost also any difference between proceeds net of transaction costs and the redemption value is recognized in
the income statement over the period of the borrowings using the effective interest method.
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.
2.22. Dividends
Dividends on ordinary shares and profit sharing are recognized as a charge of equity upon the general assembly approval.
Profit sharing includes the employees’ profit share and the Board of Directors’ remuneration as prescribed by the Bank’s
articles of incorporation and the corporate law.
2.18. Other provisions
Provisions for restructuring costs and legal claims are recognized when the Bank has present legal or constructive obliga-
tions as a result of past events; where it is more likely than not that a transfer of economic benefit will be necessary to settle
the obligation, and it can be reliably estimated.
In case of similar obligations, the related cash outflow should be determined in order to settle these obligations as a group.
The provision is recognized even in case of minor probability that cash outflow will occur for an item of these obligations.
When a provision is wholly or partially no longer required, it is reversed through profit or loss under other operating in-
come (expenses).
Provisions for obligations, other than those for credit risk or employee benefits, due within more than 12 months from the
balance sheet date are recognized based on the present value of the best estimate of the consideration required to settle
the present obligation on the balance sheet date. An appropriate pretax discount rate that reflects the time value of money
is used to calculate the present value of such provisions. For obligations due within less than twelve months from the bal-
ance sheet date, provisions are calculated based on undiscounted expected cash outflows unless the time value of money
has a significant impact on the amount of provision, then it is measured at the present value.
2.19. Share based payments
The Bank applies an equity-settled, share-based compensation plan. The fair value of equity instruments recognized as
an expense over the vesting period using appropriate valuation models, taking into account the terms and conditions
upon which the equity instruments were granted. The vesting period is the period during which all the specified vesting
conditions of a share-based payment arrangement are to be satisfied. Vesting conditions include service conditions, per-
formance conditions and market performance conditions are taken into account when estimating the fair value of equity
instruments on the date of grant. On each balance sheet date the number of options that are expected to be exercised are
estimated. Recognizes estimate changes, 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 and loss for the period and deferred tax are 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 on the date of the balance sheet in ad-
dition to tax adjustments for previous years.
2.23. Comparatives
Comparative figures have been adjusted to conform with changes in the presentation of the current period where necessary.
2.24. Non-current assets held for sale
A non-current asset (or disposal group) to be classified as held for sale if its carrying amount will be recovered principally
through a sale transaction rather than through continuing use.
Determining whether (and when) an asset stops being recovered principally through use and becomes recoverable prin-
cipally through sale.
For an asset (or disposal group) to be classified as held for sale:
(a) It must be available for immediate sale in its present condition, subject only to terms that are usual and customary for
sales of such assets (or disposal groups);
(b) Its sale must be highly probable;
The standard requires that non-current assets (and, in a ‘disposal group’, related liabilities and current assets,) meeting
its criteria to be classified as held for sale be:
(a) Measured at the lower of carrying amount and fair value less costs to sell, with depreciation on them ceasing; and
(b) Presented separately on the face of the statement of financial position with the results of discontinued operations
presented separately in the income statement.
2.25. Discontinued operation
Discontinued operation as ‘a component of an entity that either has been disposed of, or is classified as held for sale, and
(a) Represents a separate major line of business or geographical area of operations,
(b) Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or
(c) Is a subsidiary acquired exclusively with a view to resale.
When presenting discontinued operations in the income statement, the comparative figures should be adjusted as if the
operations had been discontinued in the comparative period.
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 rewards and minimize potential adverse effects on the Bank’s financial performance. The most important types of fi-
nancial 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.
152 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 153
Financial StatementS: Separate
The Bank’s risk management policies are designed to identify and analyze these risks, to set appropriate risk limits and con-
trols, 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 limit control and mitigation policies
3.1.2.
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.
Risk management is carried out by 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 in-
struments. In addition, credit risk management is responsible for the independent review of risk management and the control
environment.
Credit risk
3.1.
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 finan-
cial arrangements such as loan commitments. The credit risk management and control are centralized in a credit risk
management team in bank treasury and reported to the Board of Directors and head of each business unit regularly.
credit risk measurement
3.1.1
3.1.1.1. Loans and advances to banks and customers
In measuring credit risk of loans and facilities to banks and customers 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 expo-
sures 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’) are required by the Basel commit-
tee on banking regulations and the supervisory practices (the Basel committee), and 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 on the balance sheet date (the ‘incurred loss model’) rather
than expected losses (note 3.1).
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
predictive power with regard to default events.
Bank’s rating
1
2
3
4
Description of the grade
Performing loans
Regular watching
Watch list
Non-performing loans
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.
3.1.1.2. Debt instruments and treasury and other bills
For debt instruments and bills, external rating such as standard and poor’s rating or their equivalents are used for man-
aging 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 map-
ping and maintain a readily available source to meet the funding requirement at the same time.
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 con-
tracts. 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:
3.1.2.1. Collateral
The Bank sets 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 specific 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 gen-
erally unsecured. In addition, in order to minimize the credit loss the Bank will seek additional collateral from the coun-
terparty 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.
3.1.2.2. 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 favorable to the Bank (i.e., assets with positive fair value), which in relation to derivatives 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 exposures 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 cor-
responding 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.
3.1.2.3. Master netting arrangements
The Bank further restricts its exposure to credit losses by entering into master netting arrangements with counterpar-
ties 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 favorable contracts is reduced by a master netting arrangement to the extent that if a default occurs,
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 af-
fected by each transaction subject to the arrangement.
154 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 155
Financial StatementS: Separate
3.1.2.4. 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 authorizing a third party to draw drafts on the Bank up to a
stipulated amount under specific terms and conditions – are collateralized 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 authorizations to extend credit in the form of loans, guaran-
tees 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 stan-
dards. 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 system described in Note 3.1.1 focus on the credit-quality mapping from the lending and investment
activities perspective. Conversely, for only financial reporting purposes impairment losses are recognized for that has
been incurred on the balance sheet date when there is an objective evidence of impairment. Due to the different method-
ologies applied, the amount of incurred impairment losses in balance sheet are usually lower than the amount determined
from the expected loss model that is used for internal operational management and CBE regulation purposes.
The impairment provision reported in balance sheet at the end of the period is derived from each of the four internal credit
risk ratings. However, the majority of the impairment provision is usually driven by the last two rating degrees. The follow-
ing table illustrates the proportional distribution of loans and advances reported in the balance sheet for each of the four
internal credit risk ratings of the Bank and their relevant impairment losses:
Bank’s rating
1-Performing loans
2-Regular watching
3-Watch list
4-Non-Performing loans
December 31, 2016
December 31, 2015
Loans and
advances (%)
Impairment
provision (%)
Loans and
advances (%)
Impairment
provision (%)
68.52
18.29
6.49
6.70
13.78
19.53
16.81
49.88
82.27
9.32
4.43
3.98
30.70
12.97
21.78
34.55
The internal rating tools assists management to determine whether objective evidence of impairment exists under EAS 26,
based on the following criteria set by the Bank:
• Cash flow difficulties experienced by the borrower or debtor
• 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 due to economic, legal reasons and financial
difficulties facing the borrower
• Deterioration of the collateral value
• Deterioration of 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 circumstances require. Impairment provisions on individually assessed accounts are determined by an
evaluation of the incurred loss at balance-sheet date, and are applied to all significant accounts individually. The assess-
ment normally encompasses collateral held (including re-confirmation of its enforceability) and the anticipated receipts
for that individual account. Collective impairment provisions are provided portfolios of homogenous assets by using the
available historical loss experience, experienced judgment and statistical techniques.
pattern of measuring the general banking risk
3.1.4.
In addition to the four categories of the Bank’s internal credit ratings indicated in note 3.1.1, management classifies loans and
advances based on more detailed subgroups in accordance with the CBE regulations. Assets exposed to credit risk in these cat-
egories are classified according to detailed rules and terms depending heavily on information relevant to the customer, his activ-
ity, financial position and his repayment track record. The Bank calculates required provisions for impairment of assets exposed
to credit risk, including commitments relating to credit on the basis of rates determined by CBE. In case, the provision required
for impairment losses as per CBE credit worthiness rules exceeds the required provisions by the application used in balance sheet
preparation in accordance with EAS. That excess shall be debited to retained earnings and carried to the general banking risk
reserve in the equity section. Such reserve is always adjusted, on a regular basis, by any increase or decrease so, that reserve shall
always be equivalent to the amount of increase between the two provisions. Such reserve is not available for distribution.
Provision% Internal rating
Below is a statement of institutional worthiness according to internal ratings, compared to CBE ratings and rates of provi-
sions needed for assets impairment related to credit risk:
CBE Rating
1
2
3
4
5
6
7
8
9
10
Categorization
Low risk
Average risk
Satisfactory risk
Reasonable risk
Acceptable risk
Marginally acceptable risk
Watch list
Substandard
Doubtful
Bad debts
Categorization
Performing loans
Performing loans
Performing loans
Performing loans
Performing loans
Regular watching
Watch list
Non performing loans
Non performing loans
Non performing loans
0%
1%
1%
2%
2%
3%
5%
20%
50%
100%
1
1
1
1
1
2
3
4
4
4
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
Trading financial assets:
- Debt instruments
Gross loans and advances to banks
Less:Impairment provision
Gross loans and advances to customers
Individual:
- Overdraft
- Credit cards
- Personal loans
- Mortgages
- Other loans
Corporate:
- Overdraft
- Direct loans
- Syndicated loans
- Other loans
Unamortized bills discount
Impairment provision
Unearned interest
Derivative financial instruments
Financial investments:
-Debt instruments
- Investments in associates
Total
Off balance sheet items exposed to credit risk
Financial guarantees
Customers acceptances
Letters of credit (import and export)
Letter of guarantee
Total
Dec. 31, 2016
EGP Thousands
39,216,387
Dec. 31, 2015
EGP Thousands
22,130,170
1,933,420
161,451
(1,800)
1,901,875
2,423,125
10,745,352
306,930
20,838
13,220,464
44,503,511
24,840,803
110,382
(5,533)
(9,818,007)
(2,257,826)
269,269
58,601,911
10,500
186,183,052
2,832,705
650,607
2,382,849
65,575,370
71,441,531
5,504,524
48,342
(9,899)
1,583,233
2,001,159
8,073,622
298,817
20,881
8,936,219
27,811,737
14,088,786
84,402
(14,375)
(4,709,107)
(1,002,669)
80,995
54,818,500
12,600
139,757,937
2,741,310
504,774
862,279
29,640,729
33,749,092
156 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 157
Financial StatementS: Separate
The above table represents the Bank's Maximum exposure to credit risk on December 31, 2016, before taking into account
any held collateral.
For assets recognized on balance sheet, the exposures set out above are based on net carrying amounts as reported in the
balance sheet.
As shown above, 46.42% of the total maximum exposure is derived from loans and advances to banks and customers while
investments in debt instruments represent 32.51%.
Management is confident in its ability to continue to control and sustain minimal exposure of credit risk resulting from
both the bank's loans and advances portfolio and debt instruments based on the following:
• 86.81% of the loans and advances are concentrated in the top two grades of the internal credit risk rating system.
• 93.30% of loans and advances portfolio are considered to be neither past due nor impaired.
• Loans and advances assessed individualy are valued EGP thousands 6,585,667.
• The Bank has implemented more prudent processes when granting loans and advances during the financial year ended
on December 31, 2016.
• 95.33% of the investments in debt Instruments are Egyptian sovereign instruments.
loans and advances
3.1.6.
Loans and advances are summarized as follows:
Neither past due nor impaired
Past due but not impaired
Individually impaired
Gross
Less:
Impairment provision
Unamortized bills discount
Unearned interest
Net
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Loans and
advances to
customers
86,354,393
5,133,220
6,585,667
98,073,280
9,818,007
5,533
2,257,826
85,991,914
Loans and
advances to
banks
161,451
-
-
161,451
1,800
-
-
159,651
Loans and
advances to
customers
56,649,081
3,765,257
2,484,518
62,898,856
4,709,107
14,375
1,002,669
57,172,705
Loans and
advances to
banks
27,567
-
20,775
48,342
9,899
-
-
38,443
Impairment provision losses for loans and advances reached EGP 9,819,807 thousand.
During the year, the Bank’s total loans and advances increased by 5% representing actual increase after eliminating the
devaluation impact.
In order to minimize the propable exposure to credit risk, the Bank focuses more on the business with large enterprises,banks
or retail customers with good credit rating or sufficient collateral.
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CIB • Annual Report 2016 • 159
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loans and advances restructured
Restructuring activities include rescheduling arrangements, applying obligatory management programs, modifying and
deferral of payments. The application of restructuring policies are based on indicators or criteria of credit performance of the
borrower that is based on the personal judgment of the management, which indicate that payment will most likely continue.
Restructuring is commonly applied to term loans, specially customer loans. Renegotiated loans totaled at the end of the year:
Loans and advances to customer
Corporate
- Direct loans
Total
Dec. 31, 2016
Dec. 31, 2015
7,771,415
7,771,415
3,126,928
3,126,928
Debt instruments, treasury bills and other governmental notes
3.1.7.
The table below presents an analysis of debt instruments, treasury bills and other governmental notes by rating agency
designation at end of financial year, based on Standard & Poor’s ratings or their equivalent:
Dec. 31, 2016
AAA
AA- to AA+
A- to A+
Lower than A-
Unrated
Total
Treasury bills
and other gov.
notes
-
-
-
-
39,177,184
39,177,184
Trading
financial debt
instruments
-
-
-
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1,933,420
1,933,420
Non-trading
financial debt
instruments
72,175
335,898
2,103,699
2,197,716
53,892,423
58,601,911
EGP Thousands
Total
72,175
335,898
2,103,699
2,197,716
95,003,027
99,712,515
concentration of risks of financial assets with credit risk exposure
3.1.8.
3.1.8.1. Geographical sectors
Following is a breakdown of the Bank’s main credit exposure at their book values categorized by geographical region at
the end of the current year.
The Bank has allocated exposures to regions based on the country of domicile of its counterparties.
Dec. 31, 2016
Treasury bills and other governmental notes
Trading financial assets:
- Debt instruments
Gross loans and advances to banks
Less:Impairment provision
Gross loans and advances to customers
Individual:
- Overdrafts
- Credit cards
- Personal loans
- Mortgages
- Other loans
Corporate:
- Overdrafts
- Direct loans
- Syndicated loans
- Other loans
Unamortized bills discount
Impairment provision
Unearned interest
Derivative financial instruments
Financial investments:
-Debt instruments
- Investments in associates
Total
Cairo
39,216,387
Alex, Delta and
Sinai
-
1,933,420
161,451
(1,800)
1,079,308
1,966,055
6,853,463
245,530
-
10,567,240
31,427,313
21,312,520
82,382
(5,533)
(9,818,007)
(1,669,204)
269,269
-
-
-
610,432
389,788
3,245,954
54,338
20,838
1,931,226
11,029,913
3,245,102
28,000
-
-
(483,152)
-
EGP Thousands
Upper Egypt
Total
-
-
-
-
39,216,387
1,933,420
161,451
(1,800)
212,135
67,282
645,935
7,062
-
721,998
2,046,285
283,181
-
-
-
(105,470)
-
1,901,875
2,423,125
10,745,352
306,930
20,838
13,220,464
44,503,511
24,840,803
110,382
(5,533)
(9,818,007)
(2,257,826)
269,269
58,601,911
10,500
162,232,205
-
-
20,072,439
-
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3,878,408
58,601,911
10,500
186,183,052
160 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 161
Financial StatementS: Separate
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Market risk represents as fluctuations in fair value, future cash flow, foreign exchange rates and commodity prices, inter-
est rates, credit spreads and equity prices, and it may reduce the Bank’s income or the value of its portfolios. The bank
assigns the market risk management department to measure, monitor and control the market risk. In addition, regular
reports are submitted to the Asset and Liability"Management Committee (ALCO), Board Risk Committee and the heads
of each business unit.
The bank separates exposures to market risk into trading or non-trading portfolios.
Trading portfolios include positions arising from market-making, position taking and others designated as marked-to-mar-
ket. Non-trading portfolios include positions that primarily arise from the interest rate management of the group’s retail
and commercial banking assets and liabilities, financial investments designated as available for sale and held-to-maturity.
3.2.1. market risk measurement techniques
As part of the management of market risk, the Bank undertakes various hedging strategies and enters into interest rate
swaps to match the interest rate risk associated with the fixed-rate long-term debt instrument and loans to which the fair
value option has been applied .
3.2.1.1. 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
expresses 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 Day). The Bank assesses 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 movements.
As VaR constitutes an integral part of the Bank’s market risk control regime, the Market Risk Management set VaR Lim-
its, for the trading book, which have been approved by the board, and are monitored and reported on a daily basis to the
Senior Management. In addition, monthly limits compliance is reported to the ALCO.
The Bank has developed the internal model to calculate VaR, however, it is not yet approved by the Central Bank as the
regulator is currently applying and requiring banks to calculate the Market Risk Capital Requirements according to Basel
II Standardized Approach.
3.2.1.2. Stress tests
Stress tests provide an indication of the potential size of losses that could arise under extreme market conditions. There-
fore, the bankcomputes on a daily basis trading Stressed VaR, combined with the trading VaR, to capture the abnormal
movements in financial markets and to give more comprehensive picture of risk. The results of the stress tests are re-
viewed by the ALCO on a monthly basis and the board risk committee on a quarterly basis.
Value at risk (Var) Summary
3.2.2.
Total VaR by risk type
Foreign exchange risk
Interest rate risk
- For non trading purposes
- For trading purposes
Portfolio managed by others risk
Investment fund
Total VaR
EGP Thousands
Medium
31,561
365,258
340,853
24,405
4,775
392
381,247
Dec. 31, 2016
High
300,218
1,028,396
973,882
54,514
10,341
643
1,193,075
Low
276
112,744
102,443
10,301
2,682
264
113,480
Medium
248
157,097
134,436
22,661
5,072
361
156,811
Dec. 31, 2015
High
1,894
258,851
217,625
41,227
7,426
492
257,954
Low
5
96,690
88,109
8,581
2,689
287
96,562
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162 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 163
Financial StatementS: Separate
Trading portfolio VaR by risk type
Foreign exchange risk
Interest rate risk
- For trading purposes
Funds managed by others risk
Investment fund
Total VaR
Medium
31,561
24,405
24,405
4,775
392
51,651
Dec. 31, 2016
High
300,218
54,514
54,514
10,341
643
335,888
Low
276
10,301
10,301
2,682
264
11,285
Medium
248
22,661
22,661
5,072
361
23,462
Dec. 31, 2015
High
1,894
41,227
41,227
7,426
492
41,655
Low
5
8,581
8,581
2,689
287
11,345
Non trading portfolio VaR by risk type
Interest rate risk
- For non trading purposes
Total VaR
Medium
Dec. 31, 2016
High
Low
Medium
Dec. 31, 2015
High
Low
340,853
340,853
973,882
973,882
102,443
102,443
134,436
134,436
217,625
217,625
88,109
88,109
The aggregate of the trading and non-trading VaR results does not constitute the Bank’s VaR due to correlations and con-
sequent diversification effects between risk types and portfolio types.
Foreign exchange risk
3.2.3.
The Bank's financial position and cash flows are exposed to fluctuations in foreign currency exchange rates. The Board
sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are
monitored daily. The table below summarizes the Bank’s exposure to foreign exchange rate risk and financial instruments
at carrying amounts, categorized by currency.
Dec. 31, 2016
Financial assets
Cash and balances with central
bank
Due from banks
Treasury bills and other govern-
mental notes
Trading financial assets
Gross loans and advances to banks
Gross loans and advances to
customers
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates
Total financial assets
Financial liabilities
Due to banks
Due to customers
Derivative financial instruments
Long term loans
Total financial liabilities
Net on-balance sheet financial
position
EGP
USD
EUR
Equivalent EGP Thousands
Total
Other
GBP
6,717,875
3,348,337
288,428
72,849
94,551
10,522,040
24,091,475
26,223,227
6,578,352
820,495
297,485
58,011,034
27,521,897
12,514,379
1,337,601
2,445,134
-
-
161,451
-
-
-
-
-
-
-
-
41,373,877
2,445,134
161,451
42,941,757
52,235,498
2,474,259
115,024
306,742
98,073,280
262,398
6,871
-
-
-
269,269
1,497,069
53,924,936
10,500
159,413,041
3,950,222
-
-
-
-
-
98,439,985 10,678,640
-
-
-
1,008,368
-
-
-
698,778
5,447,291
53,924,936
10,500
270,238,812
2,631,353
131,437,810
239,883
160,243
134,469,289
285,468
89,083,074
91,208
-
14,435
10,051,523
-
-
89,459,750 10,065,958
17,021
984,837
-
-
1,001,858
60,719
408,068
-
-
468,787
3,008,996
231,965,312
331,091
160,243
235,465,642
24,943,752
8,980,235
612,682
6,510
229,991
34,773,170
interest rate risk
3.2.4.
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 profit may decrease in the event
that unexpected movements arise. The Board sets limits on the gaps of interest rate repricing that may be undertaken,
which is monitored by the bank's Risk Management Department.
The table below summarizes the Bank’s exposure to interest rate risks. It includes the Bank’s financial instruments at car-
rying amounts, categorized by the earlier of repricing or contractual maturity dates.
Dec. 31, 2016
Up to 1 Month 1-3 Months 3-12 Months
1-5 years Over 5 years
Non- Interest
Bearing
Total
Financial assets
Cash and balances with cen-
tral bank
Due from banks
Treasury bills and other gov-
ernmental notes*
Trading financial assets
Gross loans and advances to
banks
Gross loans and advances to
customers
Derivatives financial instru-
ments (including IRS notional
amount)
Financial investments
- Available for sale
- Held to maturity
Investments in associates
Total financial assets
Financial liabilities
Due to banks
Due to customers
Derivatives financial instru-
ments (including IRS notional
amount)
Long term loans
Total financial liabilities
-
-
-
34,129,196
16,306,169
7,575,636
3,988,539
4,614,183
32,771,155
-
-
-
-
-
-
10,522,040
10,522,040
33
58,011,034
-
41,373,877
210,383
221,987
126,111
1,192,101
362,995
331,557
2,445,134
23,409
57,093
80,949
-
-
-
161,451
54,977,665
15,258,356
18,453,189
7,763,724
1,620,346
-
98,073,280
854,063
564,788
4,792,125
10,650,921
493,196
6,871
17,361,964
-
2,106,096
3,295,916
4,044,117
-
-
100,333,468 40,318,492
48,968
6,669,361
-
32,880
10,287,196
-
70,517,494 51,933,640 12,796,613
2,698,548
29,628,346
-
560,799
-
10,500
5,447,291
53,924,936
10,500
11,431,800 287,331,507
2,463,533
86,564,984
-
23,089,594
-
20,878,127
-
62,657,249
-
1,708,675
545,463
3,008,996
37,066,683 231,965,312
6,817,163
9,819,461
20,093
675,861
-
91,208
17,423,786
49,862
11,298
95,895,542 32,920,353
84,614
14,469
20,982,834 63,347,579
-
1,708,675
160,243
37,703,354 252,558,337
-
Total interest re-pricing gap
4,437,926
7,398,139
49,534,660 (11,413,939) 11,087,938 (26,271,554)
34,773,170
* After adding reverse repos and deducting repos.
Liquidity risk
3.3.
Liquidity risk occurs when the Bank does not have sufficient financial resources to meet its obligations arising from its
financial liabilities as they fall due or to replace funds when they are withdrawn. Consequently, the bank may fail to meet
obligations to repay depositors and fulfill lending commitments.
liquidity risk management process
3.3.1.
The Bank’s liquidity management process, carried by the assets and Liabilities Management Department and monitored
independently by the Risk Management Department, and includes projecting cash flows by major currency under various
stress scenarios and considering the level of liquid assets necessary in relation thereto:
• Maintaining an active presence in global money markets to enable this to happen.
• Maintaining a diverse range of funding sources with back-up facilities.
• Monitoring balance sheet liquidity and advances to core funding ratios against internal and CBE regulations.
• Managing the concentration and profile of debt maturities.
• Monitoring and reporting takes the form of cash flow measurement and projections for the next day, week and month re-
spectively, as these are key periods for liquidity management. The starting point for those assets projections is an analysis
of the contractual maturity of the financial liabilities and the expected collection date of the financial assets. Bank's Risk
Management Department also monitors unmatched medium-term
164 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 165
Financial StatementS: Separate
Funding approach
3.3.2.
Sources of liquidity are regularly reviewed jointly by the Bank's Assets & Liabilities Management Department and Con-
sumer Banking to maintain a wide diversification within currencies, geographical area,depositors, products and tenors.
The table below analyses the Bank’s derivative undiscounted financial liabilities that will be settled on a net basis into
maturity groupings based on the remaining period of the balance sheet to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows:
3.3.3. non-derivative cash flows
The table below presents the undiscounted cash flows payable by the Bank under non-derivative financial liabilities, mea-
sured by the remaining contractual maturities and the maturities assumption for non contractual products are based on
there behavior studies.
Dec. 31, 2016
Financial liabilities
Due to banks
Due to customers
Long term loans
Total liabilities (contrac-
tual and non contractual
maturity dates)
Total financial assets (con-
tractual and non con-
tractual maturity dates)
Dec. 31, 2015
Financial liabilities
Due to banks
Due to customers
Long term loans
Total liabilities (contrac-
tual and non contractual
maturity dates)
Total financial assets (con-
tractual and non con-
tractual maturity dates)
Up to
1 month
One to three
months
Three months
to one year
One year to
five years
Over five
years
Total
EGP Thousands
3,008,996
30,451,687
49,862
-
24,495,657
11,298
-
55,763,261
84,614
-
108,564,259
14,469
-
12,690,448
-
3,008,996
231,965,312
160,243
33,510,545
24,506,955
55,847,875 108,578,728
12,690,448
235,134,551
63,513,318
35,561,586
67,012,053
81,180,812
23,129,786
270,397,555
Up to
1 month
One to three
months
Three months
to one year
One year to
five years
Over five
years
Total
EGP Thousands
1,450,264
21,653,305
46,925
73,900
18,636,129
3,649
76,605
42,695,183
46,372
-
69,919,823
34,382
-
2,465,482
-
1,600,769
155,369,922
131,328
23,150,494
18,713,678
42,818,160
69,954,205
2,465,482
157,102,019
29,723,449
15,309,386
32,853,492
78,479,205
22,348,416
178,713,948
Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, due from CBE and due
from banks, treasury bills, other government notes , loans and advances to banks and customers.
In the normal course of business, a proportion of customer loans contractually repayable within one year will be extended. In
addition, debt instrument and treasury bills and other governmental notes have been pledged to secure liabilities. The Bank
would also be able to meet unexpected net cash outflows by selling securities and accessing additional funding sources such
as asset-backed markets.
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: exchange traded options and over-the-counter (OTC) ,exchange traded forwards cur-
rency options.
Interest rate derivatives: interest rate swaps, forward rate agreements, OTC and exchange traded interest rate options,
other interest rate contracts and exchange traded futures .
Dec. 31, 2016
Liabilities
Derivatives financial instruments
- Foreign exchange derivatives
- Interest rate derivatives
Total
Off balance sheet items
Dec. 31, 2016
Letters of credit, guarantees and other
commitments
Total
Up to
1 month
One to three
months
Three
months
to one year
One year to
five years
Over five
years
Total
EGP Thousands
166,787
-
166,787
73,096
286
73,382
-
11,375
11,375
-
79,547
79,547
-
-
-
239,883
91,208
331,091
Up to 1 year
1-5 years
Over 5 years
EGP Thousands
Total
42,110,948
19,714,615
6,783,263
68,608,826
42,110,948
19,714,615
6,783,263
68,608,826
Dec. 31, 2016
Credit facilities commitments
Total
Up to 1 year
1,997,899
1,997,899
1-5 years
5,247,162
5,247,162
EGP Thousands
Total
7,245,061
7,245,061
3.4.
Fair value of financial assets and liabilities
3.4.1. 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
Gross loans and advances to banks
Gross loans and advances to cus-
tomers
- Individual
- Corporate
Financial investments
Held to Maturity
Total financial assets
Financial liabilities
Due to banks
Due to customers
Long term loans
Total financial liabilities
Book value
Fair value
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2016
58,011,034
161,451
21,002,305
48,342
58,011,034
161,451
21,002,305
48,342
15,398,120
82,675,160
11,977,712
50,921,144
14,148,833
65,854,436
11,292,972
49,738,382
53,924,936
210,170,701
9,261,220
93,210,723
57,393,464
195,569,218
8,864,356
90,946,357
3,008,996
231,965,312
160,243
235,134,551
1,600,769
155,369,922
131,328
157,102,019
3,008,996
175,297,049
160,243
178,466,288
1,600,769
151,400,615
131,328
153,132,712
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 similar maturity date.
Loans and advances to banks
Loans and advances to banks are represented in loans that do not consider bank placing. The expected fair value of the
loans and advances represents the discounted value of future cash flows expected to be collected. Cash flows are dis-
counted using the current market rate to determine fair value.
166 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 167
Financial StatementS: Separate
Loans and advances 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, and available for sale assets that are
measured at fair value.
Fair value for held-to-maturity assets is based on market prices or broker/dealer price quotations. 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
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 maturity date.
Capital management
3.5
For capital management purposes, the Bank’s capital includes total equity as reported in the balance sheet plus some other
elements that are managed as capital. The Bank manages its capital to ensure that the following objectives are achieved:
• Complying with the legally imposed capital requirements in Egypt.
• Protecting the Bank’s ability to continue as a going concern and enabling the generation of yield for shareholders and other
parties dealing" with the bank.
• Maintaining a strong capital base to enhance growth of the Bank’s operations.
Capital adequacy and the use of regulatory capital are monitored on a daily basis by the Bank’s management, employing
techniques based on the guidelines developed by the Basel Committee as implemented by the banking supervision unit
in the Central Bank of Egypt.
The required data is submitted to the Central Bank of Egypt on a quarterly basis.
central Bank of egypt requires the following:
• Maintaining EGP 500 million as a minimum requirement for the issued and paid-in capital.
• Maintaining a minimum level of capital adequacy ratio of 10%, calculated as the ratio between total value of the capital
elements, and the risk-weighted assets and contingent liabilities of the Bank.
Tier one:
Tier one comprises of paid-in capital (after deducting the book value of treasury shares), retained earnings and reserves
resulting from the distribution of profits except the banking risk reserve and deducting previously recognized goodwill
and any retained losses
Tier two:
Tier two represents the gone concern capital which is composed of general risk provision according to the impairment
provision guidelines issued by the Central Bank of Egypt to the maximum of 1.25% risk weighted assets and contingent
liabilities ,subordinated loans with more than five years to maturity (amortizing 20% of its carrying amount in each year
of the remaining five years to maturity) and 45% of the increase in fair value than book value for available for sale , held to
maturity , subsidiaries and associates investments.
When calculating the numerator of capital adequacy ratio, the rules set limits of total tier 2 to no more than tier 1 capital
and also limits the subordinated to no more than 50% of Tier 1.
Assets risk weight scale ranging from zero to 100% is based on the counterparty risk to reflect the related credit risk
scheme, taking into consideration the cash collateral. Similar criteria are used for off balance sheet items after adjust-
ments to reflect the nature of contingency and the potential loss of those amounts. The Bank has complied with all local
capital adequacy requirements for the current year.
The tables below summarize the compositions of Teir 1, Teir 2 , the capital adequacy ratio and leverage ratio .
1-The capital adequacy ratio
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Restated**
11,470,603
(209,842)
5,755,642
-
(2,666,248)
14,350,155
11,538,660
(22,981)
5,756,206
31,462
(2,793,403)
14,509,944
Tier 1 capital
Share capital (net of the treasury shares)
Goodwill
Reserves
Retained Earnings (Losses)
Total deductions from tier 1 capital common equity
Total qualifying tier 1 capital
Tier 2 capital
45% of special reserve
45% of foreign currencies translation differences
45% of the Increase in fair value than the book value for available for
sale and held to maturity investments
Impairment provision for loans and regular contingent liabilities
Total qualifying tier 2 capital
Total capital 1+2
Risk weighted assets and contingent liabilities
Total credit risk
79,363,222
Total market risk
4,030,779
12,225,993
Total operational risk
Total
95,619,994
16.06%
*Capital adequacy ratio (%)
*Based on consolidated financial statement figures and in accordance with Central Bank of Egypt regulation issued on 24 December 2012.
**After 2015 profit distribution.
After the approval of appropriation account for the year 2016, The capital adequacy ratio will reach 13.97%
128,698,992
6,701,579
14,696,762
150,097,333
10.74%
1,606,644
1,610,558
16,120,502
991,210
1,005,216
15,355,371
49
3,865
13,957
49
-
-
2-Leverage ratio
Total qualifying tier 1 capital
On-balance sheet items & derivatives
Off-balance sheet items
Total exposures
*Percentage
Dec. 31, 2016
EGP Thousands
14,509,944
271,962,373
41,080,543
313,042,916
4.64%
Dec. 31, 2015
EGP Thousands
14,350,155
182,221,419
23,224,714
205,446,133
6.98%
*Based on consolidated financial statement figures and in accordance with Central Bank of Egypt regulation issued on 14 July 2015.
**After 2015 profit distribution.
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 expecta-
tions of future events that are believed to be reasonable under the circumstances and available information.
Impairment losses on loans and advances
4.1.
The Bank reviews its loan portfolios to assess impairment on monthly and quarterly basis. In determining whether an impair-
ment loss should be recorded in the income statement, the Bank makes judgments as to whether there is any observable data in-
dicating the availability of 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 indicate that there has been an adverse change in
the payment status of borrowers in the 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 assump-
tions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences be-
tween loss estimates and actual loss experience. To the extent that the net present value of estimated cash flows differs by +/-5%
168 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 169
Financial StatementS: Separate
Impairment of available for-sale equity investments
4.2.
The Bank determines that available-for-sale equity investments are impaired when there has been a significant or pro-
longed 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, impair-
ment 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.
Fair value of derivatives
4.3.
The fair value of financial instruments that are not quoted in active markets are determined by using valuation tech-
niques. These valuation techniques (as models) are validated and periodically reviewed by qualified personnel indepen-
dent 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. For practicality purposes, models use only observable data;
however, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make
estimates. Changes in assumptions about these factors could affect reported fair value of financial instruments.
4.4 Held-to-Maturity investments
The non-derivative financial assets with fixed or determinable payments and fixed maturity are being classified as held
to maturity. This requires significant judgment, in which the bank evaluates its intention and ability to hold such invest-
ments to maturity. If the bank fails to keep these investments to maturity other than for the specific circumstances – 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
By business segment
5.1
The Bank is divided into four main business segments on a worldwide basis:
• Corporate banking – incorporating direct debit facilities, current accounts, deposits, overdrafts, loan and other credit
facilities, foreign currency and derivative products
• Investment banking – incorporating financial instruments Trading, structured financing, Corporate leasing,and merger
and acquisitions advice.
• Retail banking – incorporating private banking services, private customer current accounts, savings, deposits, investment
savings products, custody, credit and debit cards, consumer loans and mortgages;
• Others – Including other banking business, such as Assets Management.
• Transactions between the business segments are on normal commercial terms and conditions.
Dec. 31, 2016
Corporate
banking
SMEs
Investment
banking
Retail
banking
EGP Thousands
Asset
Liability
Management
Total
Revenue according to busi-
ness segment
Expenses according to busi-
ness segment
Profit before tax
Tax
Profit for the year
Total assets
5,118,246
1,558,634
2,277,759
3,017,976
201,808
12,174,423
(2,327,301)
(475,389)
(53,393)
(1,268,235)
(5,667)
(4,129,985)
2,790,945
(726,472)
2,064,473
103,794,642
1,083,245
(281,954)
801,291
4,264,036
2,224,366
(578,971)
1,645,395
101,472,259
1,749,741
(455,433)
1,294,308
15,011,250
196,141
(51,053)
145,088
39,309,870
8,044,438
(2,093,883)
5,950,555
263,852,057
Dec. 31, 2015
Corporate
banking
SMEs
Investment
banking
Retail
banking
Asset
Liability
Management
Total
Revenue according to busi-
ness segment
Expenses according to busi-
ness segment
Profit before tax
Tax
Profit for the year
Total assets
5,076,710
916,342
2,248,793
2,465,783
246,862
10,954,490
(3,059,901)
(209,692)
(93,958)
(1,134,143)
(2,431)
(4,500,125)
2,016,809
(566,713)
1,450,096
52,915,471
706,650
(198,566)
508,084
2,800,385
2,154,835
(605,499)
1,549,336
84,044,508
1,331,640
(374,185)
957,455
10,401,499
244,431
(68,684)
175,747
29,031,228
6,454,365
(1,813,647)
4,640,718
179,193,091
5.2. By geographical segment
Dec. 31, 2016
Revenue according to geographical segment
Expenses according to geographical segment
Profit before tax
Tax
Profit for the year
Total assets
Dec. 31, 2015
Revenue according to geographical segment
Expenses according to geographical segment
Profit before tax
Tax
Profit for the year
Total assets
Cairo
10,883,293
(3,464,852)
7,418,441
(1,930,944)
5,487,497
237,224,923
Cairo
9,343,597
(3,877,962)
5,465,635
(1,535,819)
3,929,816
161,706,218
Alex, Delta &
Sinai
1,104,147
(499,518)
604,629
(157,377)
447,252
21,740,165
Alex, Delta &
Sinai
1,167,385
(420,704)
746,681
(209,814)
536,867
13,712,913
EGP Thousands
Upper Egypt
Total
186,983
(165,615)
21,368
(5,562)
15,806
4,886,969
12,174,423
(4,129,985)
8,044,438
(2,093,883)
5,950,555
263,852,057
Upper Egypt
Total
443,508
(201,459)
242,049
(68,014)
174,035
3,773,960
10,954,490
(4,500,125)
6,454,365
(1,813,647)
4,640,718
179,193,091
6. Net interest income
Interest and similar income
- Banks
- Clients
Total
Treasury bills and bonds
Reverse repos
Financial investments in held to maturity and available for sale debt
instruments
Total
Interest and similar expense
- Banks
- Clients
Total
Financial instruments purchased with a commitment to re-sale (Repos)
Other
Total
Net interest income
7. Net fee and commission income
Fee and commission income
Fee and commissions related to credit
Custody fee
Other fee
Total
Fee and commission expense
Other fee paid
Total
Net income from fee and commission
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
2,568,172
6,656,743
9,224,915
9,794,089
-
125,214
366,302
5,147,557
5,513,859
9,154,619
2,338
94,521
19,144,218
14,765,337
(115,577)
(9,010,782)
(9,126,359)
(153)
-
(9,126,512)
10,017,706
(79,801)
(6,561,613)
(6,641,414)
(7,762)
(832)
(6,650,008)
8,115,329
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
965,388
69,967
930,174
1,965,529
(417,573)
(417,573)
1,547,956
1,041,382
73,268
770,894
1,885,544
(299,696)
(299,696)
1,585,848
170 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 171
Financial StatementS: Separate
8. Dividend income
Trading securities
Available for sale securities
Total
9. Net trading income
Profit (losses) from foreign exchange
Profit (Loss) from forward foreign exchange deals revaluation
Profit (Loss) from interest rate swaps revaluation
Profit (Loss) from currency swap deals revaluation
Trading debt instruments
Total
10. Administrative expenses
1.Staff costs
Wages and salaries
Social insurance
Other benefits
2.Other administrative expenses
Total
11. Other operating (expenses) income
Profits from non-trading assets and liabilities revaluation
Profits from selling property, plant and equipment
Release (charges) of other provisions
Other income/expenses
Total
12. Impairment charge for credit losses
Loans and advances to customers
Total
Dec. 31, 2016
EGP Thousands
5,045
29,191
34,236
Dec. 31, 2015
EGP Thousands
4,060
31,002
35,062
Dec. 31, 2016
EGP Thousands
603,565
12,947
(15,055)
38,472
675,253
1,315,182
Dec. 31, 2015
EGP Thousands
214,574
3,024
(9,240)
7,752
494,288
710,398
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
(1,188,799)
(50,542)
(44,146)
(1,149,165)
(2,432,652)
(993,761)
(54,836)
(37,328)
(942,479)
(2,028,404)
Dec. 31, 2016
EGP Thousands
(682,556)
1,682
(72,442)
(483,871)
(1,237,187)
Dec. 31, 2015
EGP Thousands
42,062
564
(135,361)
(430,755)
(523,490)
Dec. 31, 2016
EGP Thousands
(892,874)
(892,874)
Dec. 31, 2015
EGP Thousands
(1,682,439)
(1,682,439)
13. Adjustments to calculate the effective tax rate
Profit after settlement
Tax rate
Income tax based on accounting profit
Add / (Deduct)
Non-deductible expenses
Tax exemptions
Effect of provisions
Depreciation
10% Withholding tax
Income tax / Deferred tax
Effective tax rate
* As per the law no. 96 of 2015 tax rate became 22.5%.
14. Earning per share
Net profit for the year, available for distribution
Board member's bonus
Staff profit sharing
Profits shareholders' Stake
Average number of shares
Basic earning per share
By issuance of ESOP earning per share will be:
Average number of shares including ESOP shares
Diluted earning per share
15. Cash and balances with central bank
Cash
Obligatory reserve balance with CBE
- Current accounts
Total
Non-interest bearing balances
16. Due from banks
Current accounts
Deposits
Total
Central banks
Local banks
Foreign banks
Total
Non-interest bearing balances
Fixed interest bearing balances
Total
Current balances
Dec. 31, 2016
EGP Thousands
8,044,438
22.50%
1,809,999
Dec. 31, 2015
EGP Thousands
6,454,365
22.50%
1,452,232
939,873
(113,627)
(588,519)
43,144
3,013
2,093,883
26.03%
278,391
(99,540)
186,533
(6,536)
2,567
1,813,647
28.10%
Dec. 31, 2016
EGP Thousands
5,948,258
(89,224)
(594,826)
5,264,208
1,153,866
4.56
Dec. 31, 2015
EGP Thousands
4,639,648
(69,595)
(463,965)
4,106,088
1,153,866
3.56
1,171,428
4.49
1,170,567
3.51
Dec. 31, 2016
EGP Thousands
5,083,805
Dec. 31, 2015
EGP Thousands
1,580,752
5,438,235
10,522,040
10,522,040
8,268,202
9,848,954
9,848,954
Dec. 31, 2016
EGP Thousands
4,090,352
53,920,682
58,011,034
37,447,892
204,309
20,358,833
58,011,034
33
58,011,001
58,011,034
58,011,034
Dec. 31, 2015
EGP Thousands
1,386,078
19,616,227
21,002,305
14,121,507
3,263,306
3,617,492
21,002,305
353,197
20,649,108
21,002,305
21,002,305
172 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 173
Financial StatementS: Separate
17. Treasury bills and other governmental notes
20. Loans and advances to customers, net
91 Days maturity
182 Days maturity
364 Days maturity
Unearned interest
Total 1
Repos - treasury bills
Total 2
Net
18. Trading financial assets
Debt instruments
- Governmental bonds
Total
Equity instruments
- Mutual funds
Total
- Portfolio managed by others
Total
19. Loans and advances to banks, net
Time and term loans
Less: Impairment provision
Total
Current balances
Non-current balances
Total
Analysis for impairment provision of loans and advances to banks
Beginning balance
Release during the year
Exchange revaluation difference
Ending balance
Dec. 31, 2016
EGP Thousands
1,051,375
4,350,975
36,010,730
(2,196,693)
39,216,387
(39,203)
(39,203)
39,177,184
Dec. 31, 2015
EGP Thousands
-
7,600
22,993,553
(870,983)
22,130,170
-
-
22,130,170
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
1,933,420
1,933,420
180,157
180,157
331,557
2,445,134
5,504,524
5,504,524
157,336
157,336
186,517
5,848,377
Dec. 31, 2016
EGP Thousands
161,451
Dec. 31, 2015
EGP Thousands
48,342
(1,800)
159,651
110,053
49,598
159,651
(9,899)
38,443
3,090
35,353
38,443
Dec. 31, 2016
EGP Thousands
(9,899)
20,368
(12,269)
(1,800)
Dec. 31, 2015
EGP Thousands
(14,582)
4,902
(219)
(9,899)
Individual
- Overdraft
- Credit cards
- Personal loans
- Real estate loans
- Other loans
Total 1
Corporate
- Overdraft
- Direct loans
- Syndicated loans
- Other loans
Total 2
Total Loans and advances to customers (1+2)
Less:
Unamortized bills discount
Impairment provision
Unearned interest
Net loans and advances to customers
Distributed to
Current balances
Non-current balances
Total
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
1,901,875
2,423,125
10,745,352
306,930
20,838
15,398,120
13,220,464
44,503,511
24,840,803
110,382
82,675,160
98,073,280
(5,533)
(9,818,007)
(2,257,826)
85,991,914
36,671,277
49,320,637
85,991,914
1,583,233
2,001,159
8,073,622
298,817
20,881
11,977,712
8,936,219
27,811,737
14,088,786
84,402
50,921,144
62,898,856
(14,375)
(4,709,107)
(1,002,669)
57,172,705
25,011,678
32,161,027
57,172,705
Analysis for impairment provision of loans and advances to customers
Dec. 31, 2016
Beginning balance
Released (charged) released during
the year
Write off during the year
Recoveries during the year
Ending balance
Overdraft Credit cards
(11,835)
(26,985)
Individual
Personal
loans
(135,339)
Real estate
loans
(10,192)
669
(20,366)
(55,022)
-
-
(11,166)
37,099
(14,804)
(25,056)
6
(237)
(190,592)
2,391
-
-
(7,801)
Other loans
Total
(20,881)
(205,232)
43
(72,285)
-
-
(20,838)
37,105
(15,041)
(255,453)
Dec. 31, 2016
Beginning balance
Released (charged) released during the year
Write off during the year
Recoveries during the year
Exchange revaluation difference
Ending balance
Overdraft Direct loans
(589,620)
(132,021)
-
-
(620,369)
(1,342,010)
(2,888,702)
(1,206,476)
71,767
(33,221)
(2,385,595)
(6,442,227)
Corporate
Syndicated
loans
(1,024,226)
498,657
-
-
(1,250,304)
(1,775,873)
Other loans
Total
(1,327)
(1,117)
-
-
-
(2,444)
(4,503,875)
(840,957)
71,767
(33,221)
(4,256,268)
(9,562,554)
174 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 175
Overdraft Credit cards
(10,550)
(7,434)
Individual
Personal
loans
(81,153)
Real estate
loans
(8,422)
Other loans
Total
(20,934)
(128,493)
in benefit for 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:
(1,281)
(28,331)
(59,317)
(1,770)
53
(90,646)
21.1.1.
For trading derivatives
Financial StatementS: Separate
Dec. 31, 2015
Beginning balance
Released (charged) released during
the year
Write off during the year
Recoveries during the year
Ending balance
-
(4)
(11,835)
14,120
(5,340)
(26,985)
5,148
(17)
(135,339)
-
-
(10,192)
-
-
(20,881)
19,268
(5,361)
(205,232)
Dec. 31, 2015
Beginning balance
Released (charged) released during the year
Write off during the year
Recoveries during the year
Exchange revaluation difference
Ending balance
Overdraft Direct loans
(491,763)
(79,462)
-
-
(18,395)
(589,620)
(2,172,426)
(1,201,442)
545,777
(3,399)
(57,212)
(2,888,702)
Corporate
Syndicated
loans
(644,225)
(349,313)
-
-
(30,688)
(1,024,226)
Other loans
Total
(4,850)
3,523
-
-
-
(1,327)
(3,313,264)
(1,626,694)
545,777
(3,399)
(106,295)
(4,503,875)
21. Derivative financial instruments
21.1. Derivatives
The Bank uses the following financial derivatives for non hedging purposes.
Forward contracts represent commitments to buy foreign and local currencies including unexecuted spot transactions.
Future contracts for foreign currencies and/or interest rates represent contractual commitments to receive or pay net on
the basis of changes in foreign exchange rates or interest rates, and/or to buy/sell foreign currencies or financial instru-
ments in a future date with a fixed contractual price under active financial market.
Credit risk is considered low, and future interest rate contract represents future exchange rate contracts negotiated for case
by case, These contracts require financial settlements of any differences in contractual interest rates and prevailing market
interest rates on future 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 are exchange of currencies or interest (fixed rate versus variable rate for example) or both (meaning foreign ex-
change and interest rate contracts).Contractual amounts are not exchanged except for some foreign exchange contracts.
Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to fulfill
their liabilities. This risk is monitored continuously through comparisons of fair value and contractual amount, and in order
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 represent contractual agreements for the buyer (issuer) to
the seller (holders) as a right not an obligation whether to buy (buy option) or sell (sell option) at a certain day or within
certain period for a predetermined amount in foreign currency or interest rate. Options contracts are either traded in the
market or negotiated between The Bank and one of its clients (Off balance sheet). The Bank is 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 is considered a base to analyze the realized financial instruments on
the balance sheet, but it doesn’t provide an indicator for the projected cash flows of the fair value for current instruments,
and those amounts don’t reflects credit risk or interest rate risk.
Derivatives in the Bank's benefit that are classified as (assets) are conversely considered (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 as well as the range through which the financial derivatives can be
EGP Thousands
Dec. 31, 2016
Dec. 31, 2015
Notional
amount
2,174,176
2,662,940
-
Assets
Liabilities
182,508
79,890
-
262,398
178,479
61,404
-
239,883
Notional
amount
972,438
3,448,349
26,830
34,706
144
144
14,687
-
-
Assets
Liabilities
16,766
51,258
47
68,071
395
395
25,683
71,244
47
96,974
-
-
262,542
239,883
68,466
96,974
Foreign currencies derivatives
- Forward foreign exchange contracts
- Currency swap
- Options
Total 1
Interest rate derivatives
- Interest rate swaps
Total 2
Total assets (liabilities) for trading
derivatives (1+2)
21.1.2. Fair value hedge
Interest rate derivatives
- Governmental debt instruments
hedging
- Customers deposits hedging
Total 3
Total financial derivatives (1+2+3)
Notional
amount
675,861
16,382,128
Dec. 31, 2016
Dec. 31, 2015
Assets
Liabilities
Notional
amount
Assets
Liabilities
EGP Thousands
-
45,629
286,014
-
26,296
6,727
6,727
269,269
45,579
91,208
331,091
7,965,211
12,529
12,529
80,995
22,465
48,761
145,735
21.2. Hedging derivatives
21.2.1. Fair value hedge
The Bank uses interest rate swap contracts to cover part of the risk of potential decrease in fair value of its fixed rate gov-
ernmental debt instruments in foreign currencies. Net derivative value resulting from the related hedging instruments
is EGP 45,629 thousand at December 31, 2016 against EGP 26,296 thousand at the December 31, 2015, Resulting in losses
form hedging instruments at December 31, 2016 EGP 19,333 thousand against net gains EGP 37,106 thousand at the De-
cember 31, 2015. Net losses arose from the hedged items at December 31, 2016 reached EGP 30.579 thousand against EGP
48,941 thousand at December 31, 2015.
The Bank uses interest rate swap contracts to cover part of the risk of potential increase in fair value of its fixed rate cus-
tomer deposits in foreign currencies. Net derivative value resulting from the related hedging instruments is EGP 38,852
thousand at the end of December 31, 2016 against EGP 9,936 thousand at December 31, 2015, resulting in net losses from
hedging instruments at December 31, 2016 of EGP 28,916 thousand against net losses of EGP 26,618 thousand at December
31, 2015. Gains arose from the hedged items at December 31, 2016 reached EGP 56,314 thousand against gains EGP 27,540
thousand at December 31 , 2015.
176 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 177
Financial StatementS: Separate
22. Financial investments
Available for sale
- Listed debt instruments with fair value
- Listed equity instruments with fair value
- Unlisted instruments
Total
Held to maturity
- Listed debt instruments
- Unlisted instruments
Total
Total financial investment
- Actively traded instruments
- Not actively traded instruments
Total
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
4,709,487
97,631
640,173
5,447,291
53,892,423
32,513
53,924,936
45,589,793
28,496
670,786
46,289,075
9,228,707
32,513
9,261,220
59,372,227
55,550,295
57,097,553
2,274,674
59,372,227
53,957,991
1,592,304
55,550,295
53,244,689
Fixed interest debt instruments
1,573,811
Floating interest debt instruments
Total
54,818,500
*During 2016, an amount of EGP 43,424,141 thousands of governmental bonds has been re-classified from available-for-sale to held to maturity.
56,090,139
2,511,772
58,601,911
Beginning balance
Addition
Deduction (selling - redemptions)
Exchange revaluation differences for foreign
financial assets
Profit (losses) from fair value difference
Impairment charges
Ending Balance as of Dec. 31, 2015
Beginning balance
Addition/transfer
Deduction (selling - redemptions - transfer)
Exchange revaluation differences for foreign
financial assets
Profit (losses) from fair value difference
Impairment charges
Ending Balance as of Dec. 31, 2016
Available for sale
financial
investments
27,688,410
25,392,460
(5,138,456)
Held to maturity
financial
investments
9,160,746
4,019,548
(3,919,074)
96,638
(1,572,274)
(177,703)
46,289,075
46,289,075
3,334,122
(46,335,658)
2,219,961
42,132
(102,341)
5,447,291
-
-
-
9,261,220
9,261,220
44,667,810
(4,094)
-
-
-
53,924,936
Total
EGP Thousands
36,849,156
29,412,008
(9,057,530)
96,638
(1,572,274)
(177,703)
55,550,295
55,550,295
48,001,932
(46,339,752)
2,219,961
42,132
(102,341)
59,372,227
22.1. Profits (Losses) on financial investments
Profit (Loss) from selling available for sale financial instruments
Released (Impairment) charges of available for sale equity instru-
ments
Profit (Loss) from selling investments in associates
Released (Impairment) charges of associates
Profit (Loss) from selling held to maturity debt investments
Total
Dec. 31, 2016
EGP Thousands
35,193
Dec. 31, 2015
EGP Thousands
163,270
(102,341)
(32,793)
131,799
263
32,121
(177,703)
285,431
-
-
270,998
23. Investments in associates
Company's
country
Company's
assets
Company's
liabilities
(without equity)
Company's
revenues
Company's
net profit
Investment
book value
Stake
%
EGP Thousands
Egypt
300,739
208,188
301,390
12,478
10,500
35
300,739
208,188
301,390
12,478
10,500
Company’s
country
Company’s
assets
Company’s
liabilities
(without equity)
Company’s
revenues
Company’s
net profit
Investment
book value
Stake
%
EGP Thousands
Egypt
Egypt
Egypt
5,010
313,515
193,470
511,995
211
272,665
272
20,827
41
(15,672)
600
-
109,644
257,943
36,190
12,000
40
49
40
382,520
279,042
20,559
12,600
Dec. 31, 2016
Associates
- International Co. for Security
and Services (Falcon)
Total
Dec. 31, 2015
Associates
- Haykala for Investment
- Egypt Factors
- International Co. for Security
and Services (Falcon)
Total
24. Other assets
Accrued revenues
Prepaid expenses
Advances to purchase of fixed assets
Accounts receivable and other assets
Assets acquired as settlement of debts
Insurance
Total
Dec. 31, 2016
EGP Thousands
3,330,223
144,422
203,410
1,691,603
56,599
19,768
5,446,025
Dec. 31, 2015
EGP Thousands
2,903,149
123,436
157,202
1,547,660
52,569
15,921
4,799,937
25. Property, plant and equipment
Land
Premises
IT Vehicles
Fitting
-out
Dec. 31, 2016
Beginning gross assets (1)
Additions during the year
64,709
-
822,646
114,336
1,192,514
203,124
70,161
17,499
483,217
124,556
Machines
and
equipment
415,795
43,777
Furniture
and
furnishing
131,641
12,813
Total
3,180,683
516,105
Ending gross assets (2)
64,709
936,982
1,395,638
87,660
607,773
459,572
144,454
3,696,788
Accumulated depreciation at
beginning of the year (3)
Current year depreciation
Accumulated depreciation
at end of the year (4)
Ending net assets (2-4)
Beginning net assets (1-3)
Depreciation rates
-
-
-
64,709
64,709
273,768
897,584
42,250
413,848
327,697
117,631
2,072,778
41,424
131,660
5,654
54,520
44,825
7,298
285,381
315,192
621,790
548,878
%5
1,029,244
366,394
294,930
%33.3
47,904
468,368
372,522
124,929
2,358,159
39,756
27,911
%20
139,405
69,369
%33.3
87,050
88,098
%20
19,525
14,010
%20
1,338,629
1,107,905
Net fixed assets value on the balance sheet date includes EGP 258,773 thousand non registered assets while their registrations
procedures are in process.
178 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 179
Financial StatementS: Separate
26. Due to banks
Current accounts
Deposits
Total
Central banks
Local banks
Foreign banks
Total
Non-interest bearing balances
Fixed interest bearing balances
Total
Current balances
27. Due to customers
Demand deposits
Time deposits
Certificates of deposit
Saving deposits
Other deposits
Total
Corporate deposits
Individual deposits
Total
Non-interest bearing balances
Fixed interest bearing balances
Total
Current balances
Non-current balances
Total
Dec. 31, 2016
EGP Thousands
271,470
2,737,526
3,008,996
163,420
2,636,009
209,567
3,008,996
545,463
2,463,533
3,008,996
3,008,996
Dec. 31, 2016
EGP Thousands
60,293,401
57,478,218
69,215,320
38,519,158
6,459,215
231,965,312
110,382,138
121,583,174
231,965,312
37,066,683
194,898,629
231,965,312
159,717,409
72,247,903
231,965,312
Dec. 31, 2015
EGP Thousands
224,002
1,376,767
1,600,769
816,844
271,845
512,080
1,600,769
59,127
1,541,642
1,600,769
1,600,769
Dec. 31, 2015
EGP Thousands
43,418,352
42,996,421
37,518,922
25,790,179
5,646,048
155,369,922
82,320,757
73,049,165
155,369,922
26,385,328
128,984,594
155,369,922
115,250,582
40,119,340
155,369,922
During the year, the Bank’s total deposits increased by 12% representing actual increase after eliminating the devaluation impact.
28. Long term loans
Interest rate %
Maturity date
Maturing through
next year
Balance on
Dec. 31, 2016
EGP
Thousands
Balance on
Dec. 31, 2015
EGP
Thousands
Financial Investment & Sector
Cooperation (FISC)
Environmental Compliance
Project (ECO)
Agricultural Research and De-
velopment Fund (ARDF)
Social Fund for Development
(SFD)
Balance
3.5 - 5.5 depends on
maturity date
3.5 - 5.5 depends on
maturity date
3.5 - 5.5 depends on
maturity date
3 months T/D or 9%
which is more
3-5 years
3-5 years
3-5 years
04-Jan-20
1,111
2,778
-
-
3,889
550
81,486
88,800
28,000
63,178
68,665
98,889
145,775
160,243
131,328
29. Other liabilities
Accrued interest payable
Accrued expenses
Accounts payable
Other credit balances
Total
30. Other provisions
Dec. 31, 2016
Provision for income tax claims
Provision for legal claims
Provision for Stamp Duty
Provision for contingent
Provision for other claim
Total
Dec. 31, 2015
Provision for income tax claims
Provision for legal claims
Provision for Stamp Duty
Provision for contingent
Provision for other claim
Total
Dec. 31, 2016
EGP Thousands
1,455,029
645,979
1,329,189
149,133
3,579,330
Dec. 31, 2015
EGP Thousands
763,040
586,640
1,078,821
193,768
2,622,269
Beginning
balance
Charged
amounts
6,910
41,324
31,000
759,173
23,354
861,761
-
9,630
-
132,845
8,372
150,847
Beginning
balance
Charged
amounts
6,910
40,247
31,000
620,546
19,653
718,356
-
1,686
-
125,764
8,416
135,866
Exchange
revaluation
difference
-
1,456
-
579,997
2,097
583,550
Exchange
revaluation
difference
-
53
-
12,863
414
13,330
Utilized
amounts
Reversed
amounts
-
(924)
-
-
(2,772)
(3,696)
-
(5,451)
(31,000)
(37,312)
(4,642)
(78,405)
Utilized
amounts
Reversed
amounts
-
(157)
-
-
(5,129)
(5,286)
-
(505)
-
-
-
(505)
Ending
balance
EGP
Thousands
6,910
46,035
-
1,434,703
26,409
1,514,057
Ending
balance
EGP
Thousands
6,910
41,324
31,000
759,173
23,354
861,761
* Provision for other claim formed on December 31, 2016 amounted to EGP 3,730 thousand to face the potential risk of banking operations against
amount EGP 8,416 thousand on December 31, 2015 .
180 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 181
Financial StatementS: Separate
31. Equity
31.1. Capital
The authorized capital reached EGP 20 billion according to the extraordinary general assembly decision on
March 17, 2010.
"Issued and Paid in Capital reached EGP 11,538,660 thousand to be divided on 1,153,866 thousand shares with
EGP 10 par value for each share "and registered in the commercial register dated 19th April 2016.
• Increase issued and Paid in Capital by amount EGP 68,057 thousand on April 19,2016 to reach EGP 11,538,660 thousand
according to Board of Directors decision on November 10, 2015 by issuance of seventh tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 2,294,121 thousand on December 10, 2015 to reach 11,470,603 accord-
ing to Ordinary General Assembly Meeting decision on March 12 ,2015 by distribution of a one share for every four out-
standing shares by capitalizing on the General Reserve.
• Increase issued and Paid in Capital by amount EGP 94,748 thousand on April 5,2015 to reach EGP 9,176,482 thousand ac-
cording to Board of Directors decision on November 11, 2014 by issuance of sixth tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 79,299 thousand on March 23,2014 to reach EGP 9,081,734 thousand
according to Board of Directors decision on December 10, 2013 by issuance of fifth tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 3,000,812 thousand on December 5, 2013 according to Extraordinary
General Assembly Meeting decision on July 15 ,2013 by distribution of a one share for every two outstanding shares by
capitalizing on the General Reserve.
• Increase issued and Paid in Capital by amount EGP 29,348 thousand on April 7,2013 to reach EGP 6,001,624 thousand ac-
cording to Board of Directors decision on October 24,2012 by issuance of fourth tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 37,712 thousand on April 9, 2012 in according to Board of Directors
decision on December 22,2011 by issuance of third tranche for E.S.O.P program.
32. Deferred tax assets (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)
Intangible Assets & Good will
Other investments impairment
Reserve for employee stock ownership plan (ESOP)
Interest rate swaps revaluation
Trading investment revaluation
Forward foreign exchange deals revaluation
Balance
Assets (Liabilities)
Dec. 31, 2016
EGP Thousands
(28,741)
Assets (Liabilities)
Dec. 31, 2015
EGP Thousands
(22,367)
16,300
17,090
86,845
79,981
3,722
18,338
(12,227)
181,308
14,553
3,255
123,243
60,870
335
78,927
(659)
258,157
33. 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. Eligible 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 vest-
ing date,otherwise such grants will be forfeited. Equity-settled share-based payments are measured at fair value at the grant
date, and expensed on a straight-line basis over the vesting period (3 years) with corresponding increase in equity based on
estimated number of shares that will eventually vest(True up model). The fair value for such equity instruments is measured
using the Black-Scholes pricing model.
• Increase issued and Paid in Capital by amount EGP 33,119 thousand on July 31, 2011 in according to Board of Directors
Details of the rights to share outstanding during the year are as follows:
decision on November 10,2010 by issuance of second tranche for E.S.O.P program.
• The Extraordinary General Assembly approved in the meeting of June 26, 2006 to activate a motivating and rewarding
program 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 year 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 Extraordinary General Assembly approved in the meeting of April 13,2011 continue to activate a motivating and re-
warding program 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 year 2011 and delegated the Board
of Directors to establish the rewarding terms and conditions and increase the paid in capital according to the program.
• Dividend deducted from shareholders' equity in the Year that the General Assembly approves the disbursement of this
dividend, which includes staff profit share and remuneration of the Board of Directors stated in the law.
31.2. Reserves
According to The Bank status 5% of net profit is used to increase the legal reserve to reaches 50% of The Bank's issued and
paid in capital.
Central Bank of Egypt concurrence for usage of special reserve is required.
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
Dec. 31, 2016
No. of shares in
thousand
20,373
9,262
(478)
(6,806)
22,351
Details of the outstanding tranches are as follows:
Maturity date
Exercise price
Fair value
2017
2018
2019
Total
10.00
10.00
10.00
18.27
31.67
28.43
The fair value of granted shares is calculated using Black-Scholes pricing model with the following:
10th tranche
10
38.09
3
12.40%
2.50%
31%
Exercise price
Current share price
Expected life (years)
Risk free rate %
Dividend yield%
Volatility%
Volatility is calculated based on the daily standard deviation of returns for the last three years.
34. Reserves
Dec. 31, 2015
No. of shares in
thousand
21,872
8,653
(677)
(9,475)
20,373
No. of shares in
thousand
7,935
5,314
9,102
22,351
9th tranche
10
39.35
3
13.40%
2.00%
31%
182 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 183
Financial StatementS: Separate
Legal reserve
General reserve
Special reserve
Reserve for A.F.S investments revaluation difference
Banking risks reserve
Total
34.1. Banking risks reserve
Beginning balance
Transferred to bank risk reserve
Ending balance
34.2. Legal reserve
Beginning balance
Transferred from previous year profits
Ending balance
34.3. Reserve for A.F.S investments revaluation difference
Beginning balance
Unrealized losses from A.F.S investment revaluation
Ending balance
35. Cash and cash equivalent
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Obligatory reserve balance with CBE
Due from banks with maturities more than three months
Treasury bills with maturities more than three months
Total
Dec. 31, 2016
EGP Thousands
1,035,363
4,554,403
30,778
(2,180,244)
3,019
3,443,319
Dec. 31, 2015
EGP Thousands
803,355
1,518,525
30,214
(2,202,463)
2,513
152,144
Dec. 31, 2016
EGP Thousands
2,513
506
3,019
Dec. 31, 2015
EGP Thousands
1,991
522
2,513
Dec. 31, 2016
EGP Thousands
803,355
232,008
1,035,363
Dec. 31, 2015
EGP Thousands
621,084
182,271
803,355
Dec. 31, 2016
EGP Thousands
(2,202,463)
22,219
(2,180,244)
Dec. 31, 2015
EGP Thousands
(593,237)
(1,609,226)
(2,202,463)
Dec. 31, 2016
EGP Thousands
10,522,040
58,011,034
39,177,184
(5,438,235)
(2,565,895)
(38,187,428)
61,518,700
Dec. 31, 2015
EGP Thousands
9,848,954
21,002,305
22,130,170
(8,268,202)
-
(22,130,170)
22,583,057
36. Contingent liabilities and commitments
36.1. Legal claims
There is a number of existing cases filed against the bank on December 31,2016 without provision as the bank doesn't
expect to incur losses from it
36.2. Capital commitments
36.2.1. Financial investments
The capital commitments for the financial investments reached on the date of financial position EGP 36,533 thousand as
follows:
Available for sale financial investments
Investments value
182,665
Paid
146,132
Remaining
36,533
36.2.2. 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 38,059 thousand.
36.3. Letters of credit, guarantees and other commitments
Letters of guarantee
Letters of credit (import and export)
Customers acceptances
Total
36.4. Credit facilities commitments
Credit facilities commitments
37. Mutual funds
Osoul fund
Dec. 31, 2016
EGP Thousands
65,575,370
2,382,849
650,607
68,608,826
Dec. 31, 2015
EGP Thousands
29,640,729
862,279
504,774
31,007,782
Dec. 31, 2016
EGP Thousands
7,245,061
Dec. 31, 2015
EGP Thousands
24,237,408
• CIB established an accumulated return mutual fund under license no.331 issued from capital market authority on Febru-
ary 22, 2005. CI Assets Management Co. - Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 8,454,956 with redeemed value of EGP 2,346,419 thousands.
• The market value per certificate reached EGP 277.52 on December 31, 2016.
• The Bank portion got 601,064 certificates with redeemed value of EGP 166,807 thousands.
Istethmar fund
• CIB bank established the second accumulated return mutual fund under license no.344 issued from capital market au-
thority on February 26, 2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 789,723 with redeemed value of EGP 101,937 thousands.
• The market value per certificate reached EGP 129.08 on December 31, 2016.
• The Bank portion got 194,744 certificates with redeemed value of EGP 25,138 thousands.
Aman fund (CIB and Faisal Islamic Bank Mutual Fund)
• CIB and Faisal Islamic Bank established an accumulated return mutual fund under license no.365 issued from capital
market authority on July 30, 2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 459,607 with redeemed value of EGP 33,505 thousands.
• The market value per certificate reached EGP 72.90 on December 31, 2016.
• The Bank portion got 51,943 certificates with redeemed value of EGP 3,787 thousands.
Hemaya fund
• CIB bank established an accumulated return mutual fund under license no.585 issued from financial supervisory Author-
ity on June 23, 2010. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 107,340 with redeemed value of EGP 17,577 thousands.
• The market value per certificate reached EGP 163.75 on December 31, 2016.
• The Bank portion got 50,000 certificates with redeemed value of EGP 8,188 thousands.
Thabat fund
• CIB bank established an accumulated return mutual fund under license no.613 issued from financial supervisory author-
ity on September 13, 2011. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 1,007,657 with redeemed value of EGP 164,863 thousands.
• The market value per certificate reached EGP 163.61 on December 31, 2016.
• The Bank portion got 52,404 certificates with redeemed value of EGP 8,574 thousands.
184 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 185
Financial StatementS: Separate
Takamol fund
• CIB bank established an accumulated return mutual fund under license no.431 issued from financial supervisory author-
40. Tax status
ity on February 18, 2015. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 180,767 with redeemed value of EGP 23,344 thousands.
• The market value per certificate reached EGP 129.14 on December 31, 2016.
• The Bank portion got 50,000 certificates with redeemed value of EGP 6,457 thousands.
38. Transactions with related parties
All banking transactions with related parties are conducted in accordance with the normal banking practices and regulations
applied to all other customers without any discrimination.
38.1. Loans, advances, deposits and contingent liabilities
Loans and advances
Deposits
Contingent liabilities
38.2. Other transactions with related parties
International Co. for Security & Services
39. Main currencies positions
Egyptian pound
US dollar
Sterling pound
Japanese yen
Swiss franc
Euro
EGP Thousands
156
169,789
1,436
Income
EGP Thousands
175
Expenses
EGP Thousands
346
Dec. 31, 2016
EGP Thousands
1,371,677
(1,360,474)
266
851
25
4,440
Dec. 31, 2015
EGP Thousands
166,732
(191,276)
(660)
356
32
(8,018)
Important events
The Central Bank of Egypt, in its meeting held on November 3, 2016, decided to float the exchange rate for foreign cur-
rencies in order to give the banks operating in Egypt the flexibility to determine the sale and purchase price for foreign
currencies within legal channels. Foreign currency exchange rates for the period subsequent to the decision have thus
ranged between:
Key currencies
US dollar
Euro
Buy
15.25
16.83
Sell
15.75
17.53
Accordingly, the value of foreign currency-denominated assets and liabilities may differ significantly from the values
reported in the financial statements for the financial year which ended December 31, 2016. The income statement would
also be impacted by the revaluation of the outstanding foreign currency positions on the date of financial position and
in subsequent periods. Along with the exchange rate liberalization, the Central Bank of Egypt also decided to raise the
overnight deposit and lending rates by 300 basis points to 14.75% and 15.75%, respectively, which is expected to impact the
Bank's pricing policies for its current and future products.
Corporate income tax
The Bank's corporate income tax position has been examined, paid and settled with the tax authority since the operations
start up until the end of year 2014.
Corporate income tax annual report is submitted.
Salary tax
The Bank's salary tax has been examined, paid and settled since the operations start up until the end of 2013.
The Bank's salary tax is currently under examination for the period 2014-2015.
Stamp duty tax
The Bank's stamp duty tax has been examined and paid since the operations start up until 31/7/2006. Any disputes are
currently under discussion at the tax appeal committee and the court for adjudication.
The Bank's stamp duty tax is being re-examined for the period from 1/8/2006 till 30/9/2015 according to the protocol be-
tween the Federation of Egyptian banks and the tax authority.
41. Goodwill and Intangible assets:
Due to the acquisition process, Goodwill and Intangible assets have been arisen with the following balances :
41.1. Goodwill:
Book value
Goodwill impairment
Net book value
41.2. Intangible assets:
Book value
Amortization
Net book value
Dec. 31, 2016
EGP Thousands
209,842
(209,842)
-
Dec. 31, 2015
EGP Thousands
217,078
(7,236)
209,842
651,041
(151,910)
499,131
651,041
(21,701)
629,340
According to CBE's regulation issued on December 16, 2008, an annual amortization of 20% has been applied on intan-
gible assets starting from acquisition date. Goodwill amount was fully impaired on 31 December 2016.
42. Non current assets held for sale
Subsidiaries
- CI Capital Holding
Associates
- Corplease
Dec. 31, 2016
EGP Thousands
Investment book value
428,011
Dec. 31, 2015
EGP Thousands
Investment book value
428,011
-
75,055
186 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 187
Financial StatementS: conSolidated
188 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 189
Financial StatementS: conSolidated
Commercial International Bank (Egypt) S.A.E
Consolidated balance sheet as at December 31, 2016
Commercial International Bank (Egypt) S.A.E
Consolidated income statement for the year ended
December 31, 2016
Notes
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Notes
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
15
16
17
18
19
20
42
21
22
22
23
24
41
41
32
25
26
27
42
21
29
28
30
31
34
Assets
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Trading financial assets
Loans and advances to banks, net
Loans and advances to customers, net
Non current assets held for sale
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates
Other assets
Goodwill
Intangible assets
Deferred tax assets (Liabilities)
Property, plant and equipment
Total assets
Liabilities and equity
Liabilities
Due to banks
Due to customers
Non current liabilities held for sale
Derivative financial instruments
Current tax liabilities
Other liabilities
Long term loans
Other provisions
Total liabilities
Equity
Issued and paid up capital
Reserves
Reserve for employee stock ownership plan (ESOP)
Retained earnings (losses)
Total equity
Net profit for the year
Total equity and net profit for the year
Minority interest
Total minority interest, equity and net profit for the year
Total liabilities, equity, minority interest and net profit for the year
The accompanying notes are an integral part of these financial statements.
10,522,040
58,011,034
39,177,184
2,445,134
159,651
85,224,148
4,890,438
269,269
5,447,291
53,924,936
36,723
5,434,563
-
499,131
181,308
1,320,905
267,543,755
3,008,996
231,740,795
3,684,676
331,091
2,017,034
3,579,330
160,243
1,514,057
246,036,222
11,538,660
3,451,756
343,460
31,462
15,365,338
6,009,118
21,374,456
133,077
21,507,533
267,543,755
9,848,954
21,002,305
22,130,170
5,848,377
38,443
56,797,576
1,066,270
80,995
46,289,075
9,261,220
159,983
4,789,291
209,842
629,340
258,157
1,090,181
179,500,179
1,600,769
155,234,416
371,622
145,735
1,949,694
2,622,269
131,328
861,761
162,917,594
11,470,603
151,993
248,148
(64,566)
11,806,178
4,728,976
16,535,154
47,431
16,582,585
179,500,179
Hisham Ezz Al-Arab
Chairman and Managing Director
Continued Operations
Interest and similar income
Interest and similar expense
Net interest income
Fee and commission income
Fee and commission expense
Net fee and commission income
Dividend income
Net trading income
Profits on financial investments
Administrative expenses
Other operating (expenses) income
Goodwill impairment
Intangible assets amortization
Impairment charge for credit losses
Bank's share in the profits of associates
Profit before income tax
Income tax expense
Deferred tax assets (Liabilities)
Net profit from continued operations
"Discontinued Operations "
"Net profit from discontinued operations"
Net profit for the year
Minority interest
Bank shareholders
Earning per share
Basic
Diluted
6
7
8
9
22
10
11
41
41
12
13
32 & 13
42
14
19,144,218
(9,126,512)
10,017,706
1,965,529
(417,573)
1,547,956
34,236
1,315,182
(25,533)
(2,432,652)
(1,237,187)
(209,842)
(130,208)
(892,874)
2,989
7,989,773
(2,017,034)
(76,849)
5,895,890
127,376
6,023,266
14,148
6,009,118
14,765,337
(6,650,008)
8,115,329
1,885,544
(299,696)
1,585,848
35,062
710,398
270,998
(2,024,511)
(527,383)
(7,236)
(21,701)
(1,682,439)
27,829
6,482,194
(1,949,694)
136,047
4,668,547
61,115
4,729,662
686
4,728,976
4.56
4.49
3.56
3.51
Hisham Ezz Al-Arab
Chairman and Managing Director
190 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 191
Financial StatementS: conSolidated
Commercial International Bank (Egypt) S.A.E
Consolidated cash flow for the year ended
on December 31, 2016
Commercial International Bank (Egypt) S.A.E
Consolidated cash flow for the year ended
on December 31, 2016 (Cont.)
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Cash flow from financing activities
Increase (decrease) in long term loans
Dividend paid
Capital increase
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalent during the year
Beginning balance of cash and cash equivalent
Cash and cash equivalent at the end of the year
Cash and cash equivalent comprise:
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Obligatory reserve balance with CBE
Due from banks with maturities more than three months
Treasury bills with maturity more than three months
Total cash and cash equivalent
28,915
(1,463,450)
68,057
(1,366,478)
38,935,643
22,583,057
61,518,700
10,522,040
58,011,034
39,177,184
(5,438,235)
(2,565,895)
(38,187,428)
61,518,700
(111,550)
(1,563,646)
94,748
(1,580,448)
15,871,272
6,711,785
22,583,057
9,848,954
21,002,305
22,130,170
(8,268,202)
-
(22,130,170)
22,583,057
Cash flow from operating activities
Profit before income tax from continued operations
Profit before income tax from discontinued operations
Adjustments to reconcile net profit to net cash provided by operating activities
Fixed assets depreciation
Impairment charge for credit losses
Other provisions charges
Trading financial investments revaluation differences
Available for sale and held to maturity investments exchange revaluation differences
Goodwill impairment
Intangible assets amortization
Financial investments impairment charge
Utilization of other provisions
Other provisions no longer used
Exchange differences of other provisions
Profits from selling property, plant and equipment
Profits from selling financial investments
Profits (losses) from selling associates
Shares based payments
Impairment (Released) charges of associates
Associates financial investments revaluation differences
Operating profits before changes in operating assets and liabilities
Net decrease (increase) in assets and liabilities
Due from banks
Treasury bills and other governmental notes
Trading financial assets
Derivative financial instruments
Loans and advances to banks and customers
Other assets
Goodwill impairment
Intangible Assets
Due to banks
Due to customers
Income tax obligations paid
Other liabilities
Net cash provided from operating activities
Cash flow from investing activities
Payment for purchase of subsidiary and associates
Proceeds from selling subsidiary and associates
Payment for purchases of property, plant, equipment and branches construc-
tions
Proceeds from redemption of held to maturity financial investments
Payment for purchases of held to maturity financial investments
Payment for purchases of available for sale financial investments
Proceeds from selling available for sale financial investments
Proceeds (payments) from real estate investments
Net cash used in investing activities
7,989,773
158,041
285,381
892,874
150,847
(269,283)
(2,219,961)
209,842
130,208
82,428
(3,696)
(78,405)
583,550
(1,682)
(35,193)
90,447
187,000
(131,799)
2,989
8,023,361
264,072
(16,057,258)
3,672,526
(2,918)
(29,440,654)
(4,450,111)
-
-
1,408,227
76,506,379
(1,949,694)
4,354,673
42,328,603
(12,036)
176,161
(560,631)
4,094
(29,979,743)
(3,334,122)
31,682,784
(2,989)
(2,026,482)
6,482,194
71,161
188,256
1,682,439
135,866
353,590
(96,638)
7,236
21,701
140,751
(17,242)
(505)
13,330
(564)
(163,270)
(285,431)
133,395
-
(27,829)
8,638,440
2,131,856
8,331,133
(2,439,249)
(20,247)
(9,714,737)
(1,273,556)
(217,078)
(651,041)
469,384
33,259,457
(1,814,609)
15,319
36,715,072
-
334,451
(304,401)
3,919,074
(4,019,548)
(25,392,460)
5,315,438
884,094
(19,263,352)
192 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 193
Financial StatementS: conSolidated
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B
194 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 195
Financial StatementS: conSolidated
Notes to the consolidated financial statements for the year
ended December 31, 2016
1. General information
Commercial International Bank (Egypt) S.A.E. provides retail, corporate and investment banking services in various parts of
Egypt through 168 branches, and 24 units employing 6422 employees on the statement of financial position date.
Commercial international Bank (Egypt) S.A.E. was formed as a commercial bank under the investment law no. 43 of 1974. The
address of its registered head office is as follows: Nile tower, 21/23 Charles de Gaulle Street-Giza. The Bank is listed in the Egyp-
tian stock exchange.
CI Capital Holding Co S.A.E it was established as a joint stock company on April 9th, 2005 under the capital market law no. 95
of 1992 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, 2016 the Bank directly owns 54,988,500 shares representing 99.98% of CI Capital Holding Company’s capital
and on December 31, 2016 CI Capital Holding Co. Directly owns the following shares in its subsidiaries:
Company name
• CIBC Co.
• CI Assets Management
• CI Investment Banking Co.
• Dynamic Brokerage Co.
• Corplease
No. of shares
1,979,290
478,577
2,481,578
3,393,500
1,262,237
Ownership%
98.96
95.72
99.27
99.97
72.96
Indirect Share%
98.94
95.70
99.25
99.95
72.94
2. Summary of 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 years presented, unless otherwise stated.
2.1. Basis of preparation
The consolidated 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 on December 16, 2008 consistent with the principles referred to.
The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation
of trading, financial assets and liabilities held at fair value through profit or loss, available for sale and all derivatives contracts.
Basis of consolidation
2.1.1.
The method of full consolidation is the basis of the preparation of the consolidated financial statement of the Bank, given
that the Bank’s acquisition proportion is 99.98 % (full control) in CI Capital Holding.
Consolidated financial statements consist of the financial statements of Commercial International Bank and consoli-
dated financial statements of CI Capital Holding and its subsidiaries. Control is achieved through the Bank’s ability to
control the financial and operational policies of the companies that the Bank invests in it in order to obtain benefits from
its activities. The basis of the consolidation is as follows:
•
•
•
•
Eliminating all balances and transactions between the Bank and group companies.
The cost of acquisition of subsidiary companies is based on the company's share in the fair value of assets acquired and
obligations outstanding on the acquisition date.
Minority shareholders represent the rights of others in subsidiary companies.
Proportional consolidation is used in consolidating method for companies under joint control.
Subsidiaries
2.2. Subsidiaries and associates
2.2.1.
Subsidiaries are all entities (including special purpose entities) over which the Bank has owned directly or indirectly the
control 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 consid-
ered when assessing whether the Bank has the ability to control the entity or not.
2.2.2. associates
Associates are all entities over which the Bank has significant influence but do not reach to the extent of control, generally
accompanying a shareholding between 20% and 50% of the voting rights.
The acquisition method of accounting is used to account for the purchase of subsidiaries. The cost of an acquisition is
measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed, plus any
costs directly related to the acquisition. The excess of the cost of an acquisition over the Bank share of the fair value of the
identifiable net assets acquired is recorded as goodwill. A gain on acquisition is recognized in profit or loss if there is an
excess of the Bank’s share of the fair value of the identifiable net assets acquired over the cost of the acquisition.
The equity method is applied to account for investments associates, whereby, investments are recorded based on the
equity method including any goodwill, deducting any impairment losses, and dividends are recorded in the income state-
ment in the adoption of the distribution of these profits and evidence of the Bank right to collect them.
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.
Foreign currency translation
2.4.
2.4.1.
The financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.
Functional and presentation currency
transactions and balances in foreign currencies
2.4.2.
The Bank maintains its accounting records in Egyptian pound. Transactions in foreign currencies during the period are
translated into the Egyptian pound using the prevailing exchange rates at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the end of reporting period at the
prevailing exchange rates. Foreign exchange gains and losses resulting from settlement and translation of such transac-
tions and balances are recognized in the income statement and reported under the following line items:
• Net trading income from held-for-trading assets and liabilities.
• Other operating revenues (expenses) from the remaining assets and liabilities.
Changes in the fair value of investments in debt instruments; which represent monetary financial instruments, denomi-
nated in foreign currencies and classified as available for sale assets are analyzed into valuation differences resulting from
changes in the amortized cost of the instrument, differences resulting from changes in the applicable exchange rates and
differences resulting from changes in the fair value of the instrument.
Valuation differences resulting from changes in the amortized cost are recognized and reported in the income statement
in ‘income from loans and similar revenues’ whereas differences resulting from changes in foreign exchange rates are
recognized and reported in ‘other operating revenues (expenses)’. The remaining differences resulting from changes in fair
value are deferred in equity and accumulated in the ‘revaluation reserve of available-for-sale investments’.
196 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 197
Financial StatementS: conSolidated
Valuation differences resulting from the non-monetary items include gains and losses of the change in fair value of such
equity instruments held at fair value through profit and loss, as for recognition of the differences of valuation resulting
from equity instruments classified as financial investments available for sale within the fair value reserve in equity.
Financial assets
2.5.
The Bank classifies its financial assets in the following categories:
• Financial assets designated at fair value through profit or loss.
• Loans and receivables.
• Held to maturity investments.
• Available for sale financial investments.
Management determines the classification of its investments at initial recognition.
Financial assets at fair value through profit or loss
2.5.1.
This category has two sub-categories:
• Financial assets held for trading.
• Financial assets designated at fair value through profit and 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 short 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 making. Derivatives are also categorized as held for
trading unless they are designated as hedging instruments.
Financial instruments, other than those held for trading, are classified as financial assets designated at fair value through
profit and loss if they meet one or more of the criteria set out below:
• When the designation eliminates or significantly reduces measurement and recognition inconsistencies that would arise
from measuring financial assets or financial liabilities, on different bases. Under this criterion, an accounting mismatch
would arise if the debt securities issued were accounted for at amortized cost, because the related derivatives are mea-
sured at fair value with changes in the fair value recognized in the income statement. The main classes of financial instru-
ments designated by the Bank are loans and advances and long-term debt issues.
• Applies to groups of financial assets, financial liabilities or combinations thereof that are managed, and their performance
evaluated, on a fair value basis in accordance with a documented risk management or investment strategy, and where
information about the groups of financial instruments is reported to management on that basis.
• Relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows
resulting from those financial instruments, including certain debt issues and debt securities held.
Any financial derivative initially recognized at fair value can't be reclassified during the holding period. Re-classification
is not allowed for any financial instrument initially recognized at fair value through profit and loss.
loans and advances
2.5.2.
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market, other than:
• Those that the Bank intends to sell immediately or in the short term, which is classified as held for trading, or those that the
Bank upon initial recognition designates as at fair value through profit or loss.
• Those that the Bank upon initial recognition designates as available for sale; or
• Those for which the holder may not recover substantially all of its initial investment, other than credit deterioration.
2.5.3. Held to maturity financial investments
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 till maturity. If the Bank has to sell other
than an insignificant amount of held-to-maturity assets, the entire category would be reclassified as available for sale
unless in necessary cases subject to regulatory approval.
2.5.4. available for sale financial investments
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.
The following are applied in respect to all financial assets:
Debt securities and equity shares intended to be held on a continuing basis, other than those designated at fair value, are
classified as available-for-sale or held-to-maturity. Financial investments are recognized on trade date, when the group
enters into contractual arrangements with counterparties to purchase securities.
Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value
through profit and loss. Financial assets carried at fair value through profit and loss are initially recognized at fair value,
and transaction costs are expensed in the income statement.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or when the
Bank transfers substantially all risks and rewards of the ownership. Financial liabilities are derecognized when they are
extinguished, that is, when the obligation is discharged, cancelled or expired.
Available-for-sale, held–for-trading and financial assets designated at fair value through profit and loss are subsequently mea-
sured at fair value. Loans and receivables and held-to-maturity investments are subsequently measured at amortized cost.
Gains and losses arising from changes in the fair value of the ‘financial assets designated at fair value through profit or
loss’ are recognized in the income statement in ‘net income from financial instruments designated at fair value’. Gains and
losses arising from changes in the fair value of available for sale investments are recognized directly in equity, until the
financial assets are either sold or become impaired. When available-for-sale financial assets are sold, the cumulative gain
or loss previously recognized in equity is recognized in profit or loss.
Interest income is recognized on available for sale debt securities using the effective interest method, calculated over the
asset’s expected life. Premiums and discounts arising on the purchase are included in the calculation of effective interest
rates. Dividends are recognized in the income statement when the right to receive payment has been 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 measures fair value using valuation models. These include
the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation
models commonly used by market participants. If the Bank has not been able to estimate the fair value of equity instru-
ments classified as available for sale, the value is measured at cost less impairment.
Available for sale investments that would have met the definition of loans and receivables at initial recognition may be
reclassified out to loans and advances or financial assets held to maturity. In all cases, when the Bank has the intent and
ability to hold these financial assets in the foreseeable future or till maturity. The financial asset is reclassified at its fair
value on the date of reclassification, and any profits or losses that has been recognized previously in equity, is treated
based on the following:
• If the financial asset has a fixed maturity, gains or losses are amortized over the remaining life of the investment using the
effective interest rate method. In case of subsequent impairment of the financial asset, the previously recognized unreal-
ized gains or losses in equity are recognized directly in the profits and losses.
• In the case of financial asset which has infinite life, any previously recognized profit or loss in equity will remain until the
sale of the asset or its disposal, in the case of impairment of the value of the financial asset after the re-classification, any
gain or loss previously recognized in equity is recycled to the profits and losses.
• If the Bank adjusts its estimates of payments or receipts of a financial asset that in return adjusts the carrying amount of
the asset (or group of financial assets) to reflect the actual cash inflows, the carrying value is recalculated based on the
present value of estimated future cash flows at the effective yield of the financial instrument and the differences are rec-
ognized in profit and loss.
• In all cases, if the Bank re-classifies financial asset in accordance with the above criteria and increases its estimate of the
proceeds of future cash flow, this increase adjusts the effective interest rate of this asset only without affecting the invest-
ment book value.
2.6. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a legally
enforceable right to offset the recognized amounts and there is an intention to be settled on a net basis.
198 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 199
Financial StatementS: conSolidated
2.7. Derivative financial instruments and hedge accounting
Derivatives are recognized initially, and subsequently, at fair value. Fair values of exchange traded derivatives are ob-
tained from quoted market prices. Fair values of over-the-counter derivatives are obtained using valuation techniques,
including discounted cash flow models and option pricing models. Derivatives are classified as assets when their fair value
is positive and as liabilities when their fair value is negative.
Embedded derivatives in other financial instruments, such as conversion option in a convertible bond, are treated as
separate derivatives when their economic characteristics and risks are not closely related to those of the host contract,
provided that the host contract is not classified as at fair value through profit and loss. These embedded derivatives are
measured at fair value with changes in fair value recognized in income statement unless the Bank chooses to designate
the hybrid contact as at fair value through net trading income in profit or loss.
The timing of recognition in profit and loss, of any gains or losses arising from changes in the fair value of derivatives,
depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged. The
Bank designates certain derivatives as:
• Hedging instruments of the risks associated with fair value changes of recognized assets or liabilities or firm commit-
ments (fair value hedge).
• Hedging of risks relating to future cash flows attributable to a recognized asset or liability or a highly probable forecast
transaction (cash flow hedge)
• Hedge accounting is used for derivatives designated in a hedging relationship when the following criteria are met.
• At the inception of the hedging relationship, the Bank documents the relationship between the hedging instrument
and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transac-
tions. Furthermore,
At the inception of the hedge, and on ongoing basis, the Bank documents whether the hedging instrument is expected to
be highly effective in offsetting changes in fair values of the hedged item attributable to the hedged risk.
Fair value hedge
2.7.1.
Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recognized in profit or
loss immediately together with any changes in the fair value of the hedged asset or liability that are attributable to the
hedged risk. The effective portion of changes in the fair value of the interest rate swaps and the changes in the fair value of
the hedged item attributable to the hedged risk are recognized in the ‘net interest income’ line item of the income state-
ment. Any ineffectiveness is recognized in profit or loss in ‘net trading income’.
When the hedging instrument is no longer qualified for hedge accounting, the adjustment to the carrying amount of a
hedged item, measured at amortized cost, arising from the hedged risk is amortized to profit or loss from that date using
the effective interest method.
2.7.2. derivatives that do not qualify for hedge accounting
All gains and losses from changes in the fair values of derivatives that do not qualify for hedge accounting are recognized
immediately in the income statement. These gains and losses are reported in ‘net trading income’, except where deriva-
tives are managed in conjunction with financial instruments designated at fair value, in which case gains and losses are
reported in ‘net income from financial instruments designated at fair value’.
Interest income and expense
2.8.
Interest income and expense for all financial instruments except for those classified as held-for-trading or designated at fair
value are recognized in ‘interest income’ and ‘interest expense’ in the income statement using the effective interest method.
The effective interest method is a method of calculating the amortized 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 ex-
actly 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 represents an integral part of the effective interest rate, transaction costs
and all other premiums or discounts.
Once loans or debts are classified as nonperforming or impaired, the revenue of interest income will not be recognized and will
be recorded off balance sheet, and are recognized as income subsequently based on a cash basis according to the following:
• When all arrears are collected for consumer loans, personnel mortgages and micro-finance loans.
• When calculated interest for corporate are capitalized according to the rescheduling agreement conditions until paying
25% from rescheduled payments for a minimum performing period of one year, if the customer continues to perform, the
calculated interest will be recognized in interest income (interest on the performing rescheduling agreement balance)
without the marginalized before the rescheduling agreement which will be recognized in interest income after the settle-
ment of the outstanding loan balance.
Fee and commission income
2.9.
Fees charged for servicing a loan or facility that is measured at amortized cost, are recognized as revenue as the service
is provided. Fees and commissions on non-performing or impaired loans or receivables cease to be recognized as income
and are rather recorded off balance sheet. These are recognized as revenue, on a cash basis, only when interest income
on those loans is recognized in profit and loss, at that time, fees and commissions that represent an integral part of the
effective interest rate of a financial asset, are treated as an adjustment to the effective interest rate of that financial asset.
Commitment fees and related direct costs for loans and advances where draw down is probable are deferred and recog-
nized as an adjustment to the effective interest on the loan once drawn. Commitment fees in relation to facilities where
draw down is not probable are recognized at the maturity of the term of the commitment.
Fees are recognized on the debt instruments that are measured at fair value through profit and loss on initial recognition
and syndicated loan fees received by the Bank are recognized when the syndication has been completed and the Bank
does not hold any portion of it or holds a part at the same effective interest rate used for the other participants portions.
Commission and fee 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 properties are recognized upon
completion of the underlying transaction in the income statement.
Other management advisory and service fees are recognized based on the applicable service contracts, usually on accrual
basis. Financial planning fees related to investment funds are recognized steadily over the period in which the service is
provided. The same principle is applied for wealth management; financial planning and custody services that are provided
on the long term are recognized on the accrual basis also.
Operating revenues in the holding company are:
• Commission income is resulting from purchasing and selling securities to a customer account upon receiving the transac-
tion confirmation from the Stock Exchange.
• Mutual funds and investment portfolios management which is calculated as a percentage of the net value of assets under
management according to the terms and conditions of agreement. These amounts are credited to the assets management
company’s revenue pool on a monthly accrual basis.
2.10. Dividend income
Dividends are recognized in the income statement when the right to collect is established.
2.11. Sale and repurchase agreements
Securities may be lent or sold subject to a commitment to repurchase (Repos) are reclassified in the financial statements
and deducted from treasury bills balance. Securities borrowed or purchased subject to a commitment to resell them (Re-
verse Repos) are reclassified in the financial statements and 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.
Impairment of financial assets
2.12.
2.12.1. Financial 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 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/s’) and
that loss event/s has an impact on the estimated future cash flows of the financial asset or group of financial assets that
can be reliably estimated.
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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)
• Violation of the conditions of the loan agreement such as non-payment.
• 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 or deterioration of the creditworthiness of the borrower.
The objective evidence of impairment loss for a group of financial assets is observable data indicating that there is a
measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition
of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, for
instance an increase in the default rates for a particular Banking product.
The Bank estimates the period between a losses occurring and its identification for each specific portfolio. In general, the
periods used vary between three months to twelve months.
The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individu-
ally 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, wheth-
er significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collec-
tively assesses them for impairment according to historical default ratios.
• If the Bank determines that an objective evidence of financial asset impairment exist that are individually assessed for
impairment and for which an impairment loss is or continues to be recognized are not included in a collective assess-
ment of impairment.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of esti-
mated 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 recognized 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 when there is objective evidence for asset impairment. As a practical expedient, the Bank may measure impair-
ment 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 collateralized 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 (i.e., 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 con-
tractual 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 changes
in related observable data from period to period (for example, changes in unemployment rates, property prices, payment
status, or other indicative factors of changes in the probability of losses in the Bank and their magnitude. The methodol-
ogy and assumptions used for estimating future cash flows are reviewed regularly by the Bank.
2.12.2. available for sale investments
The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of finan-
cial assets classify under available for sale 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. During periods start from first of January 2009, the decrease consider significant when it became
10% from the book value of the financial instrument and the decrease consider to be extended if it continues for period
more than 9 months, and if the mentioned evidences become available then any cumulative gains or losses previously
recognized in equity are recognized in the income statement, in respect of available for sale equity securities, impairment
losses previously recognized in profit or loss 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 objec-
tively related to an event occurring after the impairment loss was recognized in the income statement, the impairment loss is re-
versed through the income statement to the extent of previously recognized impairment charge from equity to 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 do not include real estate assets which the Bank exercised its work through or those that have owned
by the Bank as settlement of debts. The accounting treatment is the same used with property, plant and equipment.
2.14. Property, plant and equipment
Land and buildings comprise mainly branches and offices. All property, plant and equipment are stated at historical cost less de-
preciation and 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 as a separate asset, as appropriate, only when it is prob-
able that future economic benefits 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 residual
values over estimated useful lives, as follows:
Buildings
Leasehold improvements
Furniture and safes
Typewriters, calculators and air-conditions
Vehicles
Computers and core systems
Fixtures and fittings
20 years.
3 years, or over the period of the lease if less
3/5 years.
5 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. Depreciable as-
sets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be re-
covered. An asset’s carrying amount is written down immediately to its recoverable value if the asset’s carrying amount exceeds
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 the selling proceeds with the asset carrying amount and
charged to other operating expenses in the income statement.
Impairment of non-financial assets
2.15.
Assets that have an indefinite useful life are not amortized -except goodwill- and are tested annually for impairment. As-
sets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognized 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. Assets are tested for impair-
ment with reference to the lowest level of cash generating unit/s. A previously recognized impairment loss relating to a
fixed asset may be reversed in part or in full when a change in circumstances leads to a change in the estimates used to
determine the fixed asset’s recoverable amount. The carrying amount of the fixed asset will only be increased up to the
amount that it would have been had the original impairment not been recognized.
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2.15.1. Goodwill
Goodwill is capitalized and represents the excess of acquisition cost over the fair value of the Bank’s share in the ac-
quired entity’s net identifiable assets on the date of acquisition. For the purpose of calculating goodwill, the fair values
of acquired assets, liabilities and contingent liabilities are determined by reference to market values or by discounting
expected future cash flows. Goodwill is included in the cost of investments in associates and subsidiaries in the Bank’s
separate financial statements. Goodwill is tested for impairment, impairment loss is charged to the income statement.
Goodwill is allocated to the cash generating units for the purpose of impairment testing. The cash generating units rep-
resented in the Bank main segments.
2.15.2. other intangible assets
Is the intangible assets other than goodwill and computer programs (trademarks, licenses, contracts for benefits, the
benefits of contracting with clients).
Other intangible assets that are acquired by the Bank are recognized at cost less accumulated amortization and impair-
ment losses. 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 and tested for impairment.
2.16. Leases
The accounting treatment for the finance lease is complied with law 95/1995, if the contract entitles the lessee to purchase
the asset at a specified date and predefined value, 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.
2.16.1. Being lessee
Finance lease contract recognizes the lease cost, including the cost of maintenance of the leased assets in the income
statement for the period in which they occurred. If the Bank decides to exercise the right to purchase the leased asset the
leased assets are capitalized and included in ‘property, plant and equipment’ and depreciated over the useful life of the
expected remaining life of the asset in the same manner as similar assets.
Operating lease payments leases are accounted for on a straight-line basis over the periods of the leases and are included
in ‘general and administrative expenses’.
2.16.2. Being lessor
For finance lease, assets are recorded in the property, plant and equipment 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 re-
turn 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 in the income statement
until the expiration of the lease to be reconciled with a net book value of the leased asset. Maintenance and insurance
expenses are charged to the income statement when incurred to the extent that they are not charged to the tenant.
In case there is objective evidence that the Bank will not be able to collect the of financial lease obligations, the finance
lease payments are reduced to the recoverable amount.
For assets leased under operating lease it appears in the balance sheet under property, plant and equipment, and depreci-
ated 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.
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 Bank, 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 recognized when the Bank has present legal or constructive obliga-
tions as a result of past events; where it is more likely than not that a transfer of economic benefit will be necessary to settle
the obligation, and it can be reliably estimated.
In case of similar obligations, the related cash outflow should be determined in order to settle these obligations as a group.
The provision is recognized even in case of minor probability that cash outflow will occur for an item of these obligations.
When a provision is wholly or partially no longer required, it is reversed through profit or loss under other operating income (expenses).
Provisions for obligations, other than those for credit risk or employee benefits, due within more than 12 months from the
balance sheet date are recognized based on the present value of the best estimate of the consideration required to settle
the present obligation at the balance sheet date. An appropriate pretax discount rate that reflects the time value of money
is used to calculate the present value of such provisions. For obligations due within less than twelve months from the bal-
ance sheet date, provisions are calculated based on undiscounted expected cash outflows unless the time value of money
has a significant impact on the amount of provision, then it is measured at the present value.
2.19. Share based payments
The Bank applies an equity-settled, share-based compensation plan. The fair value of equity instruments recognized as an ex-
pense over the vesting period using appropriate valuation models, taking into account the terms and conditions upon which
the equity instruments were granted. The vesting period is the period during which all the specified vesting conditions of a
share-based payment arrangement are to be satisfied. Vesting conditions include service conditions and performance condi-
tions and market performance conditions are taken into account when estimating the fair value of equity instruments at the
date of grant. At each balance sheet date the number of options that are expected to be exercised are estimated. Recognizes
estimate changes, 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 period and deferred tax are 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 ad-
dition to tax adjustments for previous years.
Deferred taxes arising from temporary time differences between the book value of assets and liabilities are recognized in
accordance 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 appli-
cable 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 in-
crease within the limits of the above reduced.
2.21. Borrowings
Borrowings are recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at
amortized cost also any difference between proceeds net of transaction costs and the redemption value is recognized in
the income statement over the period of the borrowings using the effective interest method.
2.22. Dividends
Dividends on ordinary shares and profit sharing are recognized as a charge of equity upon the general assembly approval.
Profit sharing includes the employees’ profit share and the Board of Directors’ remuneration as prescribed by the Bank’s
articles of incorporation and the corporate law.
2.23. Comparatives
Comparative figures have been adjusted to conform to changes in presentation in the current period where necessary.
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2.24. Noncurrent assets held for sale
a non-current asset (or disposal group) to be classified as held for sale if its carrying amount will be recovered principally
through a sale transaction rather than through continuing use.
• The ‘probability of default’ by the client or counterparty on its contractual obligations
• Current exposures to the counterparty and its likely future development, from which the Bank derive the ‘exposure at default.
• The likely recovery ratio on the defaulted obligations (the ‘loss given default’).
Determining whether (and when) an asset stops being recovered principally through use and becomes recoverable prin-
cipally through sale.
For an asset (or disposal group) to be classified as held for sale:
(a) It must be available for immediate sale in its present condition, subject only to terms that are usual and customary for
sales of such assets (or disposal groups);
(b) Its sale must be highly probable;
The standard requires that non-current assets (and, in a 'disposal group', related liabilities and current assets,) meeting its
criteria to be classified as held for sale be:
(a) Measured at the lower of carrying amount and fair value less costs to sell, with depreciation on them ceasing; and
(b) Presented separately on the face of the statement of financial position with the results of discontinued operations
presented separately in the income statement.
2.25. D iscontinued operation
Discontinued operation as 'a component of an entity that either has been disposed of, or is classified as held for sale, and
(a) Represents a separate major line of business or geographical area of operations,
(b) Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or
(c) Is a subsidiary acquired exclusively with a view to resale.
When presenting discontinued operations in the income statement, the comparative figures should be adjusted as if the
operations had been discontinued in the comparative period.
3. Financial risk management
The Bank’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, accep-
tance 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 rewards and minimize potential adverse effects on the Bank’s financial performance. 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.
These credit risk measurements, which reflect expected loss (the ‘expected loss model’) are required by the Basel commit-
tee on banking regulations and the supervisory practices (the Basel committee), and 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 3.1).
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
predictive power with regard to default events.
Bank’s rating
1
2
3
4
description of the grade
performing loans
regular watching
watch list
non-performing loans
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.
3.1.1.2. Debt instruments and treasury and other bills
For debt instruments and bills, external rating such as standard and poor’s rating or their equivalents are used for man-
aging 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 map-
ping and maintain a readily available source to meet the funding requirement at the same time.
The Bank’s risk management policies are designed to identify and analyze 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 limit control and mitigation policies
3.1.2.
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.
Risk management is carried out by 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 for-
eign 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.
Credit risk
3.1.
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 finan-
cial arrangements such as loan commitments. The credit risk management and control are centralized in a credit risk
management team in Bank treasury and reported to the Board of Directors and head of each business unit regularly.
credit risk measurement
3.1.1.
3.1.1.1. Loans and advances to banks and customers
In measuring credit risk of loans and facilities to banks and customers at a counterparty level, the Bank reflects
three components:
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 con-
tracts. 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:
3.1.2.1. 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 specific
classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are:
• Mortgages over residential properties.
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• Mortgage business assets such as premises, and inventory.
• Mortgage financial instruments such as debt securities and equities.
ing table illustrates the proportional distribution of loans and advances reported in the balance sheet for each of the four
internal credit risk ratings of the Bank and their relevant impairment losses:
Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are gen-
erally unsecured. In addition, in order to minimize the credit loss the Bank will seek additional collateral from the coun-
terparty 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.
3.1.2.2. 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 favorable to the Bank (i.e., assets with positive fair value), which in relation to derivatives 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 exposures 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 cor-
responding 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.
3.1.2.3. Master netting arrangements
The Bank further restricts its exposure to credit losses by entering into master netting arrangements with counterpar-
ties 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 favorable contracts is reduced by a master netting arrangement to the extent that if a default occurs,
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 af-
fected by each transaction subject to the arrangement.
3.1.2.4. 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 authorizing a third party to draw drafts on the Bank up to a
stipulated amount under specific terms and conditions – are collateralized 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 authorizations to extend credit in the form of loans, guaran-
tees 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 stan-
dards. 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 system described in Note 3.1.1 focus on the credit-quality mapping from the lending and investment
activities perspective. Conversely, for only financial reporting purposes impairment losses are recognized for that has
been incurred at the balance sheet date when there is an objective evidence of impairment. Due to the different method-
ologies applied, the amount of incurred impairment losses in balance sheet are usually lower than the amount determined
from the expected loss model that is used for internal operational management and CBE regulation purposes.
The impairment provision reported in balance sheet at the end of the period is derived from each of the four internal credit
risk ratings. However, the majority of the impairment provision is usually driven by the last two rating degrees. The follow-
Bank’s rating
1-Performing loans
2-Regular watching
3-Watch list
4-Non-Performing Loans
December 31, 2016
December 31, 2015
Loans and
advances (%)
68.27
18.43
6.54
6.76
Impairment
provision (%)
13.78
19.53
16.81
49.88
Loans and
advances (%)
82.27
9.32
4.43
3.98
Impairment
provision (%)
30.70
12.97
21.78
34.55
The internal rating tools assists management to determine whether objective evidence of impairment exists under EAS 26,
based on the following criteria set by the Bank:
• Cash flow difficulties experienced by the borrower or debtor
• 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 due to economic, legal reasons and financial
difficulties facing the borrower
• Deterioration of the collateral value
• Deterioration of 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 circumstances require. Impairment provisions on individually assessed accounts are determined by an
evaluation of the incurred loss at balance-sheet date, and are applied to all significant accounts individually. The assess-
ment normally encompasses collateral held (including re-confirmation of its enforceability) and the anticipated receipts
for that individual account. Collective impairment provisions are provided portfolios of homogenous assets by using the
available historical loss experience, experienced judgment and statistical techniques.
Pattern of measuring the general banking risk
3.1.4.
In addition to the four categories of the Bank’s internal credit ratings indicated in note 3.1.1, management classifies loans and
advances based on more detailed subgroups in accordance with the CBE regulations. Assets exposed to credit risk in these cat-
egories are classified according to detailed rules and terms depending heavily on information relevant to the customer, his activ-
ity, financial position and his repayment track record. The Bank calculates required provisions for impairment of assets exposed
to credit risk, including commitments relating to credit on the basis of rates determined by CBE. In case, the provision required
for impairment losses as per CBE credit worthiness rules exceeds the required provisions by the application used in balance sheet
preparation in accordance with EAS. That excess shall be debited to retained earnings and carried to the general banking risk
reserve in the equity section. Such reserve is always adjusted, on a regular basis, by any increase or decrease so, that reserve shall
always be equivalent to the amount of increase between the two provisions. Such reserve is not available for distribution.
Below is a statement 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
1
2
3
4
5
6
7
8
9
10
Categorization
Provision%
Internal rating Categorization
Low risk
Average risk
Satisfactory risk
Reasonable risk
Acceptable risk
Marginally acceptable risk
Watch list
Substandard
Doubtful
Bad debts
0%
1%
1%
2%
2%
3%
5%
20%
50%
100%
1
1
1
1
1
2
3
4
4
4
Performing loans
Performing loans
Performing loans
Performing loans
Performing loans
Regular watching
Watch list
Non performing loans
Non performing loans
Non performing loans
208 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 209
Financial StatementS: conSolidated
3.1.5. maximum exposure to credit risk before collateral held
3.1.6. loans and advances
Loans and advances are summarized as follows:
Neither past due nor impaired
Past due but not impaired
Individually impaired
Gross
Less:
Impairment provision
Unamortized bills discount
Unearned interest
Net
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Loans and
advances to
customers
85,586,627
5,133,220
6,585,667
97,305,514
9,818,007
5,533
2,257,826
85,224,148
Loans and
advances to
banks
161,451
-
-
161,451
1,800
-
-
159,651
Loans and
advances to
customers
56,273,952
3,765,257
2,484,518
62,523,727
4,709,107
14,375
1,002,669
56,797,576
Loans and
advances to
banks
27,567
-
20,775
48,342
9,899
-
-
38,443
Impairment provision losses for loans and advances reached EGP 9,819,807 thousand.
During the period the Bank’s total loans and advances increased by 5% representing actual increase after eliminating the
devaluation impact.
In order to minimize the propable exposure to credit risk, the Bank focuses more on the business with large enterprises,banks
or retail customers with good credit rating or sufficient collateral.
In balance sheet items exposed to credit risk
Treasury bills and other governmental notes
Trading financial assets:
- Debt instruments
Gross loans and advances to banks
Less:Impairment provision
Gross loans and advances to customers
Individual:
- Overdraft
- Credit cards
- Personal loans
- Mortgages
- Other loans
Corporate:
- Overdraft
- Direct loans
- Syndicated loans
- Other loans
Unamortized bills discount
Impairment provision
Unearned interest
Derivative financial instruments
Financial investments:
-Debt instruments
-Investments in associates
Total
Off balance sheet items exposed to credit risk
Financial guarantees
Customers acceptances
Letters of credit (import and export)
Letter of guarantee
Total
Dec. 31, 2016
EGP Thousands
39,216,387
Dec. 31, 2015
EGP Thousands
22,130,170
1,933,420
161,451
(1,800)
1,901,875
2,423,125
10,745,352
306,930
20,838
12,452,698
44,503,511
24,840,803
110,382
(5,533)
(9,818,007)
(2,257,826)
269,269
58,601,911
36,723
185,441,509
2,832,705
650,607
2,382,849
65,575,370
71,441,531
5,504,524
48,342
(9,899)
1,583,233
2,001,159
8,073,622
298,817
20,881
8,561,090
27,811,737
14,088,786
84,402
(14,375)
(4,709,107)
(1,002,669)
80,995
54,818,500
159,983
139,530,191
2,741,310
504,774
862,279
29,640,729
33,749,092
The above table represents the Bank's Maximum exposure to credit risk on December 31, 2016, before taking into account
any held collateral.
For assets recognized on balance sheet, the exposures set out above are based on net carrying amounts as reported in the
balance sheet.
As shown above 46.04% of the total maximum exposure is derived from loans and advances to banks and customers while
investments in debt instruments represents 32.64%.
Management is confident in its ability to continue to control and sustain minimal exposure of credit risk resulting from
both its loans and advances portfolio and debt instruments based on the following:
• 86.70% of the loans and advances are concentrated in the top two grades of the internal credit risk rating system.
• 93.30% of loans and advances portfolio are considered to be neither past due nor impaired.
• Loans and advances assessed individualy are valued EGP thousands 6,585,667
• The Bank has implemented more prudent processes when granting loans and advances during the financial year ended
on December 31, 2016.
• 95.33% of the investments in debt Instruments are Egyptian sovereign instruments.
210 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 211
Financial StatementS: conSolidated
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212 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 213
Financial StatementS: conSolidated
loans and advances restructured
Restructuring activities include rescheduling arrangements, applying obligatory management programs, odifying and
deferral of payments. The application of restructuring policies are based on indicators or criteria of credit performance
of the borrower that is based on the personal judgment of the management, which indicate that payment will most likely
continue. Restructuring is commonly applied to term loans, specially customer loans. Renegotiated loans totaled at the
end of the year:
Loans and advances to customer
Corporate
- Direct loans
Total
Dec.31, 2016
Dec.31, 2015
7,771,415
7,771,415
3,126,928
3,126,928
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 end of financial year, based on Standard & Poor’s ratings or their equivalent:
Dec.31, 2016
AAA
AA- to AA+
A- to A+
Lower than A-
Unrated
Total
Treasury bills
and other gov.
notes
-
-
-
-
39,177,184
39,177,184
Trading financial
debt instruments
-
-
-
-
1,933,420
1,933,420
Non-trading
financial debt
instruments
72,175
335,898
2,103,699
2,197,716
53,892,423
58,601,911
EGP Thousands
Total
72,175
335,898
2,103,699
2,197,716
95,003,027
99,712,515
3.1.8. concentration of risks of financial assets with credit risk exposure
3.1.8.1. Geographical sectors
Following is a breakdown of the Bank’s main credit exposure at their book values categorized by geographical region at
the end of the current year.
The Bank has allocated exposures to regions based on the country of domicile of its counterparties.
Dec.31, 2016
Treasury bills and other governmental notes
Trading financial assets:
- Debt instruments
Gross loans and advances to banks
Less:Impairment provision
Gross loans and advances to customers
Individual:
- Overdrafts
- Credit cards
- Personal loans
- Mortgages
- Other loans
Corporate:
- Overdrafts
- Direct loans
- Syndicated loans
- Other loans
Unamortized bills discount
Impairment provision
Unearned interest
Derivative financial instruments
Financial investments:
-Debt instruments
-Investments in associates
Total
Cairo
39,216,387
Alex, Delta and
Sinai
-
1,933,420
161,451
(1,800)
1,079,308
1,966,055
6,853,463
245,530
-
9,799,474
31,427,313
21,312,520
82,382
(5,533)
(9,818,007)
(1,669,204)
269,269
-
-
-
610,432
389,788
3,245,954
54,338
20,838
1,931,226
11,029,913
3,245,102
28,000
-
-
(483,152)
-
Upper Egypt
Total
-
-
-
-
212,135
67,282
645,935
7,062
-
721,998
2,046,285
283,181
-
-
-
(105,470)
-
39,216,387
1,933,420
161,451
(1,800)
1,901,875
2,423,125
10,745,352
306,930
20,838
12,452,698
44,503,511
24,840,803
110,382
(5,533)
(9,818,007)
(2,257,826)
269,269
58,601,911
36,723
161,490,662
-
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20,072,439
-
-
3,878,408
58,601,911
36,723
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214 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 215
Financial StatementS: conSolidated
3.2. Market risk
Market risk represents as fluctuations in fair value, future cash flow, foreign exchange rates and commodity prices, interest
rates, credit spreads and equity prices, and it may reduce the Bank’s income or the value of its portfolios. The bank assigns the
market risk management department to measure, monitor and control the market risk. In addition, regular reports are submit-
ted to the Asset and Liability"Management Committee (ALCO), Board Risk Committee and the heads of each business unit."
The bank separates exposures to market risk into trading or non-trading portfolios.
Trading portfolios include positions arising from market-making, position taking and others designated as marked-to-
market. Non-trading portfolios include positions that primarily arise from the interest rate management of the group’s
retail and commercial banking assets and liabilities, financial investments designated as available for sale and held-to-
maturity.
3.2.1. market risk measurement techniques
As part of the management of market risk, the Bank undertakes various hedging strategies and enters into interest rate
swaps to match the interest rate risk associated with the fixed-rate long-term debt instrument and loans to which the fair
value option has been applied.
3.2.1.1. 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
expresses 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 Day). The Bank assesses 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 movements.
As VaR constitutes an integral part of the Bank’s market risk control regime, the Market Risk Management set VaR Lim-
its, for the trading book, which have been approved by the board, and are monitored and reported on a daily basis to the
Senior Management. In addition, monthly limits compliance is reported to the ALCO.
The Bank has developed the internal model to calculate VaR, however, it is not yet approved by the Central Bank as the
regulator is currently applying and requiring banks to calculate the Market Risk Capital Requirements according to Basel
II Standardized Approach.
3.2.1.2. Stress tests
Stress tests provide an indication of the potential size of losses that could arise under extreme market conditions. There-
fore, the bank computes on a daily basis trading Stressed VaR, combined with the trading VaR, to capture the abnormal
movements in financial markets and to give more comprehensive picture of risk. The results of the stress tests are re-
viewed by the ALCO on a monthly basis and the board risk committee on a quarterly basis.
3.2.2. Value at risk (VaR) Summary
Total VaR by risk type
Foreign exchange risk
Interest rate risk
- For non trading purposes
- For trading purposes
Portfolio managed by others risk
Investment fund
Total VaR
216 • Annual Report 2016 • CIB
EGP Thousands
Medium
31,561
365,258
340,853
24,405
4,775
392
381,247
Dec. 31, 2016
High
300,218
1,028,396
973,882
54,514
10,341
643
1,193,075
Low
276
112,744
102,443
10,301
2,682
264
113,480
Medium
248
157,097
134,436
22,661
5,072
361
156,811
Dec. 31, 2015
High
1,894
258,851
217,625
41,227
7,426
492
257,954
Low
5
96,690
88,109
8,581
2,689
287
96,562
Trading portfolio VaR by risk type
Foreign exchange risk
Interest rate risk
- For trading purposes
Funds managed by others risk
Investment fund
Total VaR
EGP Thousands
Medium
31,561
24,405
24,405
4,775
392
51,651
Dec. 31, 2016
High
300,218
54,514
54,514
10,341
643
335,888
Low
276
10,301
10,301
2,682
264
11,285
Medium
248
22,661
22,661
5,072
361
23,462
Dec. 31, 2015
High
1,894
41,227
41,227
7,426
492
41,655
Low
5
8,581
8,581
2,689
287
11,345
Non trading portfolio VaR by risk type
Interest rate risk
- For non trading purposes
Total VaR
Medium
Dec. 31, 2016
High
Low
Medium
Dec. 31, 2015
High
Low
EGP Thousands
340,853
340,853
973,882
973,882
102,443
102,443
134,436
134,436
217,625
217,625
88,109
88,109
The aggregate of the trading and non-trading VaR results does not constitute the Bank’s VaR due to correlations and con-
sequent diversification effects between risk types and portfolio types.
3.2.3. Foreign exchange risk
The Bank's financial position and cash flows are exposed to fluctuations in foreign currency exchange rates. The Board
sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are
monitored daily. The table below summarizes the Bank’s exposure to foreign exchange rate risk and financial instruments
at carrying amounts, categorized by currency.
Dec. 31, 2016
Financial assets
Cash and balances with central bank
Due from banks
Treasury bills and other governmen-
tal notes
Trading financial assets
Gross loans and advances to banks
Gross loans and advances to custom-
ers
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates
Total financial assets
Financial liabilities
Due to banks
Due to customers
Derivative financial instruments
Long term loans
Total financial liabilities
Net on-balance sheet financial
position
EGP
USD
EUR
Equivalent EGP Thousands
Total
Other
GBP
6,717,875
24,091,475
3,348,337
26,223,227
288,428
6,578,352
72,849
820,495
94,551
297,485
10,522,040
58,011,034
27,521,897
12,514,379
1,337,601
2,445,134
-
-
161,451
-
-
-
-
-
-
-
-
41,373,877
2,445,134
161,451
42,173,991
52,235,498
2,474,259
115,024
306,742
97,305,514
262,398
6,871
-
-
-
269,269
1,497,069
53,924,936
36,723
158,671,498
2,631,353
131,213,293
239,883
160,243
134,244,772
3,950,222
-
-
-
-
-
98,439,985 10,678,640 1,008,368
-
-
-
285,468
89,083,074
91,208
-
17,021
984,837
-
-
89,459,750 10,065,958 1,001,858
14,435
10,051,523
-
-
-
-
-
698,778
5,447,291
53,924,936
36,723
269,497,269
60,719
408,068
-
-
468,787
3,008,996
231,740,795
331,091
160,243
235,241,125
24,426,726
8,980,235
612,682
6,510
229,991
34,256,144
3.2.4. interest rate risk
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 profit may decrease in the event
CIB • Annual Report 2016 • 217
Financial StatementS: conSolidated
that unexpected movements arise. The Board sets limits on the gaps of interest rate repricing that may be undertaken,
which is monitored by the bank's Risk Management Department.
The table below summarizes the Bank’s exposure to interest rate risks. It includes the Bank’s financial instruments at car-
rying amounts, categorized by the earlier of repricing or contractual maturity dates.
Dec. 31, 2016
Up to 1
Month
1-3 Months 3-12 Months
1-5 years Over 5 years
Non-Interest
Bearing
Total
3.3.2. Funding approach
Sources of liquidity are regularly reviewed jointly by the Bank's Assets & Liabilities Management Department and Con-
sumer Banking to maintain a wide diversification within currencies, geographical area, depositors, products and tenors.
3.3.3. non-derivative cash flows
The table below presents the undiscounted cash flows payable by the Bank under non-derivative financial liabilities, mea-
sured by the remaining contractual maturities and the maturities assumption for non contractual products are based on
there behavior studies.
Financial assets
Cash and balances with central
bank
Due from banks
Treasury bills and other gov-
ernmental notes*
Trading financial assets
Gross loans and advances to
banks
Gross loans and advances to
customers
Derivatives financial instru-
ments (including IRS notional
amount)
Financial investments
- Available for sale
- Held to maturity
Investments in associates
Total financial assets
-
-
-
34,129,196
16,306,169
7,575,636
3,988,539
4,614,183
32,771,155
-
-
-
-
-
-
10,522,040 10,522,040
33 58,011,034
- 41,373,877
210,383
221,987
126,111
1,192,101
362,995
331,557
2,445,134
23,409
57,093
80,949
-
-
-
161,451
54,209,899
15,258,356
18,453,189
7,763,724
1,620,346
- 97,305,514
854,063
564,788
4,792,125
10,650,921
493,196
6,871 17,361,964
2,106,096
4,044,117
-
48,968
6,669,361
-
99,565,702 40,318,492 70,517,494
-
3,295,916
-
2,698,548
32,880
29,628,346
10,287,196
-
-
51,933,640 12,796,613
560,799
5,447,291
- 53,924,936
36,723
11,458,023 286,589,964
36,723
Financial liabilities
Due to banks
Due to customers
Derivatives financial instru-
ments (including IRS notional
amount)
Long term loans
Total financial liabilities
2,463,533
86,340,467
-
23,089,594
-
20,878,127
-
62,657,249
-
1,708,675
545,463
3,008,996
37,066,683 231,740,795
6,817,163
9,819,461
20,093
675,861
-
91,208 17,423,786
49,862
84,614
95,671,025 32,920,353 20,982,834
11,298
14,469
63,347,579
-
1,708,675
160,243
37,703,354 252,333,820
-
Total interest re-pricing gap 3,894,677
7,398,139 49,534,660 (11,413,939) 11,087,938 (26,245,331) 34,256,144
* After adding reverse repos and deducting repos.
3.3. Liquidity risk
Liquidity risk occurs when the Bank does not have sufficient financial resources to meet its obligations arising from its
financial liabilities as they fall due or to replace funds when they are withdrawn. Consequently, the bank may fail to meet
obligations to repay depositors and fulfill lending commitments.
3.3.1. liquidity risk management process
The Bank’s liquidity management process, carried by the assets and Liabilities Management Department and monitored
independently by the Risk Management Department, and includes projecting cash flows by major currency under various
stress scenarios and considering the level of liquid assets necessary in relation thereto:
• Maintaining an active presence in global money markets to enable this to happen.
• Maintaining a diverse range of funding sources with back-up facilities.
• Monitoring balance sheet liquidity and advances to core funding ratios against internal and CBE regulations.
• Managing the concentration and profile of debt maturities.
• Monitoring and reporting takes the form of cash flow measurement and projections for the next day, week and month re-
spectively, as these are key periods for liquidity management. The starting point for those assets projections is an analysis
of the contractual maturity of the financial liabilities and the expected collection date of the financial assets. Bank's Risk
Management Department also monitors unmatched medium-term
Dec. 31, 2016
Financial liabilities
Due to banks
Due to customers
Long term loans
Total liabilities (contractual and non
contractual maturity dates)
Total financial assets (contractual and
non contractual maturity dates)
Dec. 31, 2015
Financial liabilities
Due to banks
Due to customers
Long term loans
Total liabilities (contractual and non
contractual maturity dates)
Total financial assets (contractual and
non contractual maturity dates)
Up to
1 month
One to three
months
Three
months
to one year
One year to
five years
Over five
years
Total
EGP
Thousands
3,008,996
30,227,170
49,862
-
24,495,657
11,298
-
-
55,763,261 108,564,259
14,469
84,614
-
3,008,996
12,690,448 231,740,795
160,243
-
33,286,028
24,506,955 55,847,875 108,578,728 12,690,448 234,910,034
63,513,318
35,561,586 67,012,053 81,180,812 23,129,786 270,397,555
Up to
1 month
One to three
months
Three
months
to one year
One year to
five years
Over five
years
Total
EGP
Thousands
1,450,264
21,517,799
46,925
73,900
18,636,129
3,649
76,605
42,695,183
46,372
-
69,919,823
34,382
-
1,600,769
2,465,482 155,234,416
131,328
-
23,014,988
18,713,678 42,818,160 69,954,205
2,465,482 156,966,513
29,723,449
15,309,386 32,853,492 78,479,205 22,348,416 178,713,948
Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, due from CBE and
due from banks, treasury bills, other government notes, loans and advances to banks and customers.
In the normal course of business, a proportion of customer loans contractually repayable within one year will be extend-
ed. In addition, debt instrument and treasury bills and other governmental notes have been pledged to secure liabilities.
The Bank would also be able to meet unexpected net cash outflows by selling securities and accessing additional funding
sources such as asset-backed markets.
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: exchange traded options and over-the-counter (OTC),exchange traded forwards currency options.
Interest rate derivatives: interest rate swaps, forward rate agreements, OTC and exchange traded interest rate options,
other interest rate contracts and exchange traded futures.
The table below analyses the Bank’s derivative undiscounted financial liabilities that will be settled on a net basis into
maturity groupings based on the remaining period of the balance sheet to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows:
Dec. 31, 2016
Liabilities
Derivatives financial instruments
- Foreign exchange derivatives
- Interest rate derivatives
Total
Up to
1 month
One to three
months
Three
months
to one year
One year to
five years
Over five
years
Total
EGP
Thousands
166,787
-
166,787
73,096
286
73,382
-
11,375
11,375
-
79,547
79,547
-
-
-
239,883
91,208
331,091
218 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 219
Financial StatementS: conSolidated
Off balance sheet items
Dec. 31, 2016
Letters of credit, guarantees and other commitments
Total
Credit facilities commitments
Total
Up to 1 year
42,110,948
42,110,948
1-5 years Over 5 years
6,783,263
6,783,263
19,714,615
19,714,615
Total
68,608,826
68,608,826
Up to 1 year
1,997,899
1,997,899
1-5 years
5,247,162
5,247,162
Total
7,245,061
7,245,061
3.4. Fair value of financial assets and liabilities
3.4.1. 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
Gross loans and advances to banks
Gross loans and advances to customers
- Individual
- Corporate
Financial investments
Held to Maturity
Total financial assets
Financial liabilities
Due to banks
Due to customers
Long term loans
Total financial liabilities
Book value
Fair value
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
58,011,034
161,451
15,398,120
81,907,394
21,002,305
48,342
11,977,712
50,546,015
58,011,034
161,451
14,148,833
65,086,670
21,002,305
48,342
11,292,972
49,738,382
53,924,936
209,402,935
9,261,220
92,835,594
57,393,464
194,801,452
8,864,356
90,946,357
3,008,996
231,740,795
160,243
234,910,034
1,600,769
155,234,416
131,328
156,966,513
3,008,996
175,297,049
160,243
178,466,288
1,600,769
151,400,615
131,328
153,132,712
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 similar maturity date.
Loans and advances to banks
Loans and advances to banks are represented in loans that do not consider bank placing. The expected fair value of the
loans and advances represents the discounted value of future cash flows expected to be collected. Cash flows are dis-
counted using the current market rate to determine fair value.
Loans and advances 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, and available for sale assets that are
measured at fair value. Fair value for held-to-maturity assets is based on market prices or broker/dealer price quotations.
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
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 maturity date.
3.5 Capital management
For capital management purposes, the Bank’s capital includes total equity as reported in the balance sheet plus some
other elements that are managed as capital. The Bank manages its capital to ensure that the following objectives are
achieved:
• Complying with the legally imposed capital requirements in Egypt.
• Protecting the Bank’s ability to continue as a going concern and enabling the generation of yield for shareholders and other
parties dealing"with the bank.
Capital adequacy and the use of regulatory capital are monitored on a daily basis by the Bank’s management, employing
techniques based on the guidelines developed by the Basel Committee as implemented by the banking supervision unit in
the Central Bank of Egypt. The required data is submitted to the Central Bank of Egypt on a quarterly basis.
central Bank of egypt requires the following:
• Maintaining EGP 500 million as a minimum requirement for the issued and paid-in capital.
• Maintaining a minimum level of capital adequacy ratio of 10%, calculated as the ratio between total value of the capital
elements, and the risk-weighted assets and contingent liabilities of the Bank.
tier one:
Tier one comprises of paid-in capital (after deducting the book value of treasury shares), retained earnings and reserves
resulting from the distribution of profits except the banking risk reserve and deducting previously recognized goodwill
and any retained losses
tier two:
Tier two represents the gone concern capital which is composed of general risk provision according to the impairment
provision guidelines issued by the Central Bank of Egypt to the maximum of 1.25% risk weighted assets and contingent
liabilities,subordinated loans with more than five years to maturity (amortizing 20% of its carrying amount in each year
of the remaining five years to maturity) and 45% of the increase in fair value than book value for available for sale, held to
maturity, subsidiaries and associates investments.
When calculating the numerator of capital adequacy ratio, the rules set limits of total tier 2 to no more than tier 1 capital
and also limits the subordinated to no more than 50% of Tier-1.
Assets risk weight scale ranging from zero to 100% is based on the counterparty risk to reflect the related credit risk
scheme, taking into consideration the cash collateral. Similar criteria are used for off balance sheet items after adjust-
ments to reflect the nature of contingency and the potential loss of those amounts. The Bank has complied with all local
capital adequacy requirements for the current year.
220 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 221
Financial StatementS: conSolidated
The tables below summarize the compositions of Teir 1, teir 2, the capital adequacy ratio and leverage ratio.
1-The capital adequacy ratio
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Restated**
11,470,603
(209,842)
5,755,642
-
(2,666,248)
14,350,155
11,538,660
(22,981)
5,756,206
31,462
(2,793,403)
14,509,944
Tier 1 capital
Share capital (net of the treasury shares)
Goodwill
Reserves
Retained Earnings (Losses)
Total deductions from tier 1 capital common equity
Total qualifying tier 1 capital
Tier 2 capital
45% of special reserve
45% of foreign currencies translation differences
45% of the Increase in fair value than the book value for available for
sale and held to maturity investments
Impairment provision for loans and regular contingent liabilities
Total qualifying tier 2 capital
Total capital 1+2
Risk weighted assets and contingent liabilities
Total credit risk
79,363,222
Total market risk
4,030,779
Total operational risk
12,225,993
Total
95,619,994
16.06%
*Capital adequacy ratio (%)
*Based on consolidated financial statement figures and in accordance with Central Bank of Egypt regulation issued on 24 December 2012.
**After 2015 profit distribution.
After the approval of appropriation account for the year 2016, The capital adequacy ratio will reach 13.97%
128,698,992
6,701,579
14,696,762
150,097,333
10.74%
1,606,644
1,610,558
16,120,502
991,210
1,005,216
15,355,371
49
3,865
13,957
49
-
-
2-Leverage ratio
Total qualifying tier 1 capital
On-balance sheet items & derivatives
Off-balance sheet items
Total exposures
*Percentage
Dec. 31, 2016
EGP Thousands
14,509,944
271,962,373
41,080,543
313,042,916
4.64%
Dec. 31, 2015
EGP Thousands
14,350,155
182,221,419
23,224,714
205,446,133
6.98%
*Based on consolidated financial statement figures and in accordance with Central Bank of Egypt regulation issued on 14 July 2015.
**After 2015 profit distribution.
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 ex-
pectations of future events that are believed to be reasonable under the circumstances and available information.
4.1. Impairment losses on loans and advances
The Bank reviews its loan portfolios to assess impairment on monthly and 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 ob-
servable data indicating the availability of a measurable portfolio. This evidence may indicate that there has been an
adverse change in the payment status of borrowers in the 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%
4.2. 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 pro-
longed 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, impair-
ment 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.
4.3. Fair value of derivatives
The fair value of financial instruments that are not quoted in active markets are determined by using valuation tech-
niques. These valuation techniques (as models) are validated and periodically reviewed by qualified personnel indepen-
dent 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. For practicality purposes, models use only observable data;
however, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make
estimates. Changes in assumptions about these factors could affect reported fair value of financial instruments.
4.4 Held-to-Maturity investments
The non-derivative financial assets with fixed or determinable payments and fixed maturity are being classified as held
to maturity. This requires significant judgment, in which the bank evaluates its intention and ability to hold such invest-
ments to maturity. If the bank fails to keep these investments to maturity other than for the specific circumstances –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
5.1. By business segment
The Bank is divided into four main business segments on a worldwide basis:
• Corporate banking – incorporating direct debit facilities, current accounts, deposits, overdrafts, loan and other credit
facilities, foreign currency and derivative products
• Investment banking – incorporating financial instruments Trading, structured financing, Corporate leasing,and merger
and acquisitions advice.
• Retail banking – incorporating private banking services, private customer current accounts, savings, deposits, investment
savings products, custody, credit and debit cards, consumer loans and mortgages;
• Others –Including other banking business, such as Assets Management.
• Transactions between the business segments are on normal commercial terms and conditions.
Dec. 31, 2016
Revenue according to
business segment
Expenses according to
business segment
Profit before tax
Tax
Profit for the year
Total assets
Dec. 31, 2015
Revenue according to
business segment
Expenses according to
business segment
Profit before tax
Tax
Profit for the year
Total assets
Corporate
banking
SMEs
Investment
banking
Retail
banking
Asset Liability
Management
Total
5,117,764
1,558,634
2,367,468
3,017,976
201,808
12,263,650
EGP Thousands
(2,327,301)
(475,389)
(53,393)
(1,268,235)
(5,667)
(4,129,985)
2,790,463
(724,546)
2,065,917
107,486,340
1,083,245
(281,954)
801,291
4,264,036
2,314,075
(611,561)
1,702,514
101,472,259
1,749,741
(455,433)
1,294,308
15,011,250
196,141
(51,053)
145,088
8,133,665
(2,124,547)
6,009,118
39,309,870 267,543,755
Corporate
banking
SMEs
Investment
banking
Retail
banking
Asset Liability
Management
Total
5,076,710
916,342
2,347,097
2,465,783
246,862
11,052,794
(3,059,901)
(209,692)
(93,958)
(1,134,143)
(2,431)
(4,500,125)
2,016,809
(564,787)
1,452,022
53,222,559
706,650
(198,566)
508,084
2,800,385
2,253,139
(617,471)
1,635,668
84,044,508
1,331,640
(374,185)
957,455
10,401,499
244,431
(68,684)
175,747
6,552,669
(1,823,693)
4,728,976
29,031,228 179,500,179
222 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 223
Financial StatementS: conSolidated
5.2. By geographical segment
Dec. 31, 2016
Revenue according to geographical segment
Expenses according to geographical segment
Profit before tax
Tax
Profit for the year
Total assets
Dec. 31, 2015
Revenue according to geographical segment
Expenses according to geographical segment
Profit before tax
Tax
Profit for the year
Total assets
Cairo
10,972,520
(3,464,852)
7,507,668
(1,961,608)
5,546,060
240,916,621
Cairo
9,441,901
(3,877,962)
5,563,939
(1,545,865)
4,018,074
162,013,306
Alex, Delta &
Sinai
1,104,147
(499,518)
604,629
(157,377)
447,252
21,740,165
Alex, Delta &
Sinai
1,167,385
(420,704)
746,681
(209,814)
536,867
13,712,913
EGP Thousands
Upper Egypt
Total
186,983
(165,615)
21,368
(5,562)
15,806
4,886,969
12,263,650
(4,129,985)
8,133,665
(2,124,547)
6,009,118
267,543,755
Upper Egypt
Total
443,508
(201,459)
242,049
(68,014)
174,035
3,773,960
11,052,794
(4,500,125)
6,552,669
(1,823,693)
4,728,976
179,500,179
6. Net interest income
Interest and similar income
- Banks
- Clients
Total
Treasury bills and bonds
Reverse repos
Financial investments in held to maturity and available for sale debt
instruments
Total
Interest and similar expense
- Banks
- Clients
Total
Financial instruments purchased with a commitment to re-sale (Repos)
Other
Total
Net interest income
7. Net fee and commission income
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
2,568,172
6,656,743
9,224,915
9,794,089
-
125,214
366,302
5,147,557
5,513,859
9,154,619
2,338
94,521
19,144,218
14,765,337
(115,577)
(9,010,782)
(9,126,359)
(153)
-
(9,126,512)
10,017,706
(79,801)
(6,561,613)
(6,641,414)
(7,762)
(832)
(6,650,008)
8,115,329
8. Dividend income
Trading securities
Available for sale securities
Total
9. Net trading income
Profit (losses) from foreign exchange
Profit (Loss) from forward foreign exchange deals revaluation
Profit (Loss) from interest rate swaps revaluation
Profit (Loss) from currency swap deals revaluation
Trading debt instruments
Total
10. Administrative expenses
1.Staff costs
Wages and salaries
Social insurance
Other benefits
2.Other administrative expenses
Total
11. Other operating (expenses) income
Profits from non-trading assets and liabilities revaluation
Profits from selling property, plant and equipment
Release (charges) of other provisions
Other income/expenses
Total
12. Impairment charge for credit losses
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Loans and advances to customers
Total
Fee and commission income
Fee and commissions related to credit
Custody fee
Other fee
Total
Fee and commission expense
Other fee paid
Total
Net income from fee and commission
965,388
69,967
930,174
1,965,529
(417,573)
(417,573)
1,547,956
1,041,382
73,268
770,894
1,885,544
(299,696)
(299,696)
1,585,848
Dec. 31, 2016
EGP Thousands
5,045
29,191
34,236
Dec. 31, 2015
EGP Thousands
4,060
31,002
35,062
Dec. 31, 2016
EGP Thousands
603,565
12,947
(15,055)
38,472
675,253
1,315,182
Dec. 31, 2015
EGP Thousands
214,574
3,024
(9,240)
7,752
494,288
710,398
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
(1,188,799)
(50,542)
(44,146)
(1,149,165)
(2,432,652)
(993,761)
(54,836)
(37,328)
(938,586)
(2,024,511)
Dec. 31, 2016
EGP Thousands
(682,556)
1,682
(72,442)
(483,871)
(1,237,187)
Dec. 31, 2015
EGP Thousands
42,062
564
(135,361)
(434,648)
(527,383)
Dec. 31, 2016
EGP Thousands
(892,874)
(892,874)
Dec. 31, 2015
EGP Thousands
(1,682,439)
(1,682,439)
224 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 225
Financial StatementS: conSolidated
13. Adjustments to calculate the effective tax rate
17. Treasury bills and other governmental notes
Profit after settlement
Tax rate
Income tax based on accounting profit
Add / (Deduct)
Non-deductible expenses
Tax exemptions
Effect of provisions
Depreciation
10% Withholding tax
Income tax / Deferred tax
Effective tax rate
14. Earning per share
Net profit for the year, available for distribution
Board member's bonus
Staff profit sharing
* Profits shareholders' stake
Average number of shares
Basic earning per share
By issuance of ESOP earning per share will be:
Average number of shares including ESOP shares
Diluted earning per share
* Based on separate financial statement profits.
15. Cash and balances with central bank
Cash
Obligatory reserve balance with CBE
- Current accounts
Total
Non-interest bearing balances
16. Due from banks
Current accounts
Deposits
Total
Central banks
Local banks
Foreign banks
Total
Non-interest bearing balances
Fixed interest bearing balances
Total
Current balances
Dec. 31, 2016
EGP Thousands
8,147,813
22.50%
1,833,258
Dec. 31, 2015
EGP Thousands
6,553,355
22.50%
1,474,506
953,418
(127,439)
(584,097)
42,922
6,485
2,124,547
26.08%
268,903
(103,447)
186,107
(7,259)
4,883
1,823,693
27.83%
Dec. 31, 2016
EGP Thousands
5,948,258
(89,224)
(594,826)
5,264,208
1,153,866
4.56
Dec. 31, 2015
EGP Thousands
4,639,648
(69,595)
(463,965)
4,106,088
1,153,866
3.56
1,171,428
4.49
1,170,567
3.51
Dec. 31, 2016
EGP Thousands
5,083,805
Dec. 31, 2015
EGP Thousands
1,580,752
5,438,235
10,522,040
10,522,040
8,268,202
9,848,954
9,848,954
Dec. 31, 2016
EGP Thousands
4,090,352
53,920,682
58,011,034
37,447,892
204,309
20,358,833
58,011,034
33
58,011,001
58,011,034
58,011,034
Dec. 31, 2015
EGP Thousands
1,386,078
19,616,227
21,002,305
14,121,507
3,263,306
3,617,492
21,002,305
353,197
20,649,108
21,002,305
21,002,305
91 Days maturity
182 Days maturity
364 Days maturity
Unearned interest
Total 1
Repos - treasury bills
Total 2
Net
18. Trading financial assets
Debt instruments
- Governmental bonds
Total
Equity instruments
- Mutual funds
Total
- Portfolio managed by others
Total
19. Loans and advances to banks, net
Time and term loans
Less: Impairment provision
Total
Current balances
Non-current balances
Total
Analysis for impairment provision of loans and advances to banks
Beginning balance
Release during the year
Exchange revaluation difference
Ending balance
Dec. 31, 2016
EGP Thousands
1,051,375
4,350,975
36,010,730
(2,196,693)
39,216,387
(39,203)
(39,203)
39,177,184
Dec. 31, 2015
EGP Thousands
-
7,600
22,993,553
(870,983)
22,130,170
-
-
22,130,170
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
1,933,420
1,933,420
180,157
180,157
331,557
2,445,134
5,504,524
5,504,524
157,336
157,336
186,517
5,848,377
Dec. 31, 2016
EGP Thousands
161,451
Dec. 31, 2015
EGP Thousands
48,342
(1,800)
159,651
110,053
49,598
159,651
(9,899)
38,443
3,090
35,353
38,443
Dec. 31, 2016
EGP Thousands
(9,899)
20,368
(12,269)
(1,800)
Dec. 31, 2015
EGP Thousands
(14,582)
4,902
(219)
(9,899)
226 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 227
Financial StatementS: conSolidated
20. Loans and advances to customers, net
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
Individual
- Overdraft
- Credit cards
- Personal loans
- Real estate loans
- Other loans
Total 1
Corporate
- Overdraft
- Direct loans
- Syndicated loans
- Other loans
Total 2
Total Loans and advances to customers (1+2)
Less:
Unamortized bills discount
Impairment provision
Unearned interest
Net loans and advances to customers
Distributed to
Current balances
Non-current balances
Total
1,901,875
2,423,125
10,745,352
306,930
20,838
15,398,120
12,452,698
44,503,511
24,840,803
110,382
81,907,394
97,305,514
(5,533)
(9,818,007)
(2,257,826)
85,224,148
36,671,277
48,552,871
85,224,148
1,583,233
2,001,159
8,073,622
298,817
20,881
11,977,712
8,561,090
27,811,737
14,088,786
84,402
50,546,015
62,523,727
(14,375)
(4,709,107)
(1,002,669)
56,797,576
25,011,678
31,785,898
56,797,576
Analysis for impairment provision of loans and advances to customers
Dec. 31, 2016
Beginning balance
Released (charged) released during
the year
Write off during the year
Recoveries during the year
Ending balance
Overdraft Credit cards
(11,835)
(26,985)
Individual
Personal
loans
(135,339)
Real estate
loans
(10,192)
669
(20,366)
(55,022)
-
-
(11,166)
37,099
(14,804)
(25,056)
6
(237)
(190,592)
2,391
-
-
(7,801)
Other loans
Total
(20,881)
(205,232)
43
(72,285)
-
-
(20,838)
37,105
(15,041)
(255,453)
Dec. 31, 2016
Beginning balance
Released (charged) released during the year
Write off during the year
Recoveries during the year
Exchange revaluation difference
Ending balance
Overdraft Direct loans
(589,620)
(132,021)
-
-
(620,369)
(1,342,010)
(2,888,702)
(1,206,476)
71,767
(33,221)
(2,385,595)
(6,442,227)
Corporate
Syndicated
loans
(1,024,226)
498,657
-
-
(1,250,304)
(1,775,873)
Other loans
Total
(1,327)
(1,117)
-
-
-
(2,444)
(4,503,875)
(840,957)
71,767
(33,221)
(4,256,268)
(9,562,554)
Dec. 31, 2015
Beginning balance
Released (charged) released during
the year
Write off during the year
Recoveries during the year
Ending balance
Overdraft Credit cards
(10,550)
(7,434)
Individual
Personal
loans
(81,153)
Real estate
loans
(8,422)
Other loans
Total
(20,934)
(128,493)
(1,281)
(28,331)
(59,317)
(1,770)
53
(90,646)
-
(4)
(11,835)
14,120
(5,340)
(26,985)
5,148
(17)
(135,339)
-
-
(10,192)
-
-
(20,881)
19,268
(5,361)
(205,232)
Dec. 31, 2015
Beginning balance
Released (charged) released during the year
Write off during the year
Recoveries during the year
Exchange revaluation difference
Ending balance
Overdraft Direct loans
(491,763)
(79,462)
-
-
(18,395)
(589,620)
(2,172,426)
(1,201,442)
545,777
(3,399)
(57,212)
(2,888,702)
Corporate
Syndicated
loans
(644,225)
(349,313)
-
-
(30,688)
(1,024,226)
Other loans
Total
(4,850)
3,523
-
-
-
(1,327)
(3,313,264)
(1,626,694)
545,777
(3,399)
(106,295)
(4,503,875)
21. Derivative financial instruments
21.1. Derivatives
The Bank uses the following financial derivatives for non hedging purposes.
Forward contracts represent commitments to buy foreign and local currencies including unexecuted spot transactions.
Future contracts for foreign currencies and/or interest rates represent contractual commitments to receive or pay net on
the basis of changes in foreign exchange rates or interest rates, and/or to buy/sell foreign currencies or financial instru-
ments in a future date with a fixed contractual price under active financial market.
Credit risk is considered low, and future interest rate contract represents future exchange rate contracts negotiated for case
by case, These contracts require financial settlements of any differences in contractual interest rates and prevailing market
interest rates on future 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 are exchange of currencies or interest (fixed rate versus variable rate for example) or both (meaning foreign ex-
change and interest rate contracts).Contractual amounts are not exchanged except for some foreign exchange contracts.
Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to fulfill
their liabilities. This risk is monitored continuously through comparisons of fair value and contractual amount, and in order
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 represent contractual agreements for the buyer (issuer) to
the seller (holders) as a right not an obligation whether to buy (buy option) or sell (sell option) at a certain day or within
certain period for a predetermined amount in foreign currency or interest rate. Options contracts are either traded in the
market or negotiated between The Bank and one of its clients (Off balance sheet). The Bank is 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 is considered a base to analyze the realized financial instruments on
the balance sheet, but it doesn’t provide an indicator for the projected cash flows of the fair value for current instruments,
and those amounts don’t reflects credit risk or interest rate risk.
Derivatives in the Bank's benefit that are classified as (assets) are conversely considered (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 as well as the range through which the financial derivatives can be
in benefit for 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:
228 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 229
Financial StatementS: conSolidated
21.1.1 For trading derivatives
Foreign currencies derivatives
- Forward foreign exchange
contracts
- Currency swap
- Options
Total 1
Interest rate derivatives
- Interest rate swaps
Total 2
Total assets (liabilities) for
trading derivatives (1+2)
21.1.2 Fair value hedge
Interest rate derivatives
- Governmental debt instru-
ments hedging
- Customers deposits hedging
Total 3
Total financial derivatives
(1+2+3)
Notional
amount
2,174,176
2,662,940
-
34,706
Dec. 31, 2016
Dec. 31, 2015
Assets
Liabilities
Notional
amount
Assets
Liabilities
182,508
178,479
972,438
79,890
-
262,398
61,404
-
239,883
3,448,349
26,830
144
144
-
-
14,687
16,766
51,258
47
68,071
395
395
25,683
71,244
47
96,974
-
-
262,542
239,883
68,466
96,974
Notional
amount
675,861
16,382,128
Dec. 31, 2016
Dec. 31, 2015
Assets
Liabilities
-
6,727
6,727
45,629
45,579
91,208
Notional
amount
286,014
7,965,211
Assets
Liabilities
-
12,529
12,529
26,296
22,465
48,761
269,269
331,091
80,995
145,735
21.2 Hedging derivatives
21.2.1 Fair value hedge
The Bank uses interest rate swap contracts to cover part of the risk of potential decrease in fair value of its fixed rate gov-
ernmental debt instruments in foreign currencies. Net derivative value resulting from the related hedging instruments
is EGP 45,629 thousand at December 31, 2016 against EGP 26,296 thousand at the December 31, 2015, Resulting in losses
form hedging instruments at December 31, 2016 EGP 19,333 thousand against net gains EGP 37,106 thousand at the De-
cember 31, 2015. Net losses arose from the hedged items at December 31, 2016 reached EGP 30.579 thousand against EGP
48,941 thousand at December 31, 2015.
The Bank uses interest rate swap contracts to cover part of the risk of potential increase in fair value of its fixed rate cus-
tomer deposits in foreign currencies. Net derivative value resulting from the related hedging instruments is EGP 38,852
thousand at the end of December 31, 2016 against EGP 9,936 thousand at December 31, 2015, resulting in net losses from
hedging instruments at December 31, 2016 of EGP 28,916 thousand against net losses of EGP 26,618 thousand at December
31, 2015. Gains arose from the hedged items at December 31, 2016 reached EGP 56,314 thousand against gains EGP 27,540
thousand at December 31, 2015.
22. Financial investments
Available for sale
- Listed debt instruments with fair value
- Listed equity instruments with fair value
- Unlisted instruments
Total
Held to maturity
- Listed debt instruments
- Unlisted instruments
Total
Total financial investment
- Actively traded instruments
- Not actively traded instruments
Total
Dec. 31, 2016
EGP Thousands
Dec. 31, 2015
EGP Thousands
4,709,487
97,631
640,173
5,447,291
53,892,423
32,513
53,924,936
45,589,793
28,496
670,786
46,289,075
9,228,707
32,513
9,261,220
59,372,227
55,550,295
57,097,553
2,274,674
59,372,227
53,957,991
1,592,304
55,550,295
53,244,689
Fixed interest debt instruments
1,573,811
Floating interest debt instruments
Total
54,818,500
* During 2016, an amount of EGP 43,424,141 thousands of governmental bonds has been re-classified from available-for-sale to held to maturity.
56,090,139
2,511,772
58,601,911
Beginning balance
Addition
Deduction (selling - redemptions)
Exchange revaluation differences for foreign
financial assets
Profit (losses) from fair value difference
Impairment charges
Ending Balance as of Dec. 31, 2015
Beginning balance
Addition/transfer
Deduction (selling - redemptions - transfer)
Exchange revaluation differences for foreign
financial assets
Profit (losses) from fair value difference
Impairment charges
Ending Balance as of Dec. 31, 2016
Available for sale
financial
investments
27,702,122
25,392,460
(5,152,168)
Held to maturity
financial
investments
9,160,746
4,019,548
(3,919,074)
96,638
(1,572,274)
(177,703)
46,289,075
46,289,075
3,334,122
(46,335,658)
2,219,961
42,132
(102,341)
5,447,291
-
-
-
9,261,220
9,261,220
44,667,810
(4,094)
-
-
-
53,924,936
Total
EGP Thousands
36,862,868
29,412,008
(9,071,242)
96,638
(1,572,274)
(177,703)
55,550,295
55,550,295
48,001,932
(46,339,752)
2,219,961
42,132
(102,341)
59,372,227
22.1. Profits (Losses) on financial investments
Profit (Loss) from selling available for sale financial instruments
Released (Impairment) charges of available for sale equity instru-
ments
Profit (Loss) from selling investments in associates
Released (Impairment) charges of associates
Profit (Loss) from selling held to maturity debt investments
Total
Dec. 31, 2016
EGP Thousands
35,193
Dec. 31, 2015
EGP Thousands
163,270
(102,341)
(90,447)
131,799
263
(25,533)
(177,703)
285,431
-
-
270,998
230 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 231
Financial StatementS: conSolidated
23 Investments in associates
Dec. 31, 2016
Company’s
country
Company’s
assets
EGP Thousands
Company’s
revenues
Company’s
net profit
Investment
book value
Stake %
Company’s
liabilities
(without
equity)
Associates
- International Co. for
Security and Services
(Falcon)
Total
Egypt
300,739
208,188
301,390
12,478
36,723
35
300,739
208,188
301,390
12,478
36,723
Dec. 31, 2015
Company’s
country
Company’s
assets
EGP Thousands
Company’s
revenues
Company’s
net profit
Investment
book value
Stake %
Company’s
liabilities
(without
equity)
Associates
- Corplease
- Haykala for Investment
- Egypt Factors
- International Co. for
Security and Services
(Falcon)
Total
24. Other assets
Egypt
Egypt
Egypt
2,623,964
5,010
313,515
2,356,465
211
272,665
421,621
272
20,827
24,752
41
(15,672)
124,149
1,202
-
Egypt
193,470
109,644
257,943
36,190
34,632
43
40
49
40
3,135,959
2,738,985
700,663
45,311
159,983
Accrued revenues
Prepaid expenses
Advances to purchase of fixed assets
Accounts receivable and other assets
Assets acquired as settlement of debts
Insurance
Total
Dec. 31, 2016
EGP Thousands
3,318,761
144,422
203,410
1,691,603
56,599
19,768
5,434,563
Dec. 31, 2015
EGP Thousands
2,892,503
123,436
157,202
1,547,660
52,569
15,921
4,789,291
25. Property, plant and equipment
Beginning gross assets (1)
Additions during the year
Ending gross assets (2)
Accumulated depreciation at beginning
of the year (3)
Current year depreciation
Accumulated depreciation at end of
the year (4)
Ending net assets (2-4)
Beginning net assets (1-3)
Depreciation rates
Dec. 31, 2016
Land Premises
IT
Vehicles
Fitting
-out
Machines and
equipment
Furniture
and
furnishing
Total
64,709
-
64,709
70,161 483,217
804,922 1,192,514
17,499 124,556
203,124
114,336
919,258 1,395,638 87,660 607,773
415,795
43,777
459,572
131,641 3,162,959
516,105
12,813
144,454 3,679,064
-
-
280,234
897,584
42,250 413,848
327,697
111,165 2,072,778
34,958
131,660
5,654
54,520
44,825
13,764
285,381
-
315,192 1,029,244 47,904 468,368
372,522
124,929 2,358,159
64,709
64,709
604,066
524,688
%5
366,394 39,756 139,405
294,930 27,911 69,369
%20 %33.3
%33.3
87,050
88,098
%20
19,525 1,320,905
20,476 1,090,181
%20
Net fixed assets value on the balance sheet date includes EGP 258,773 thousand non registered assets while their registrations procedures are in process.
26. Due to banks
Current accounts
Deposits
Total
Central banks
Local banks
Foreign banks
Total
Non-interest bearing balances
Fixed interest bearing balances
Total
Current balances
27. Due to customers
Demand deposits
Time deposits
Certificates of deposit
Saving deposits
Other deposits
Total
Corporate deposits
Individual deposits
Total
Non-interest bearing balances
Fixed interest bearing balances
Total
Current balances
Non-current balances
Total
Dec. 31, 2016
EGP Thousands
271,470
2,737,526
3,008,996
163,420
2,636,009
209,567
3,008,996
545,463
2,463,533
3,008,996
3,008,996
Dec. 31, 2016
EGP Thousands
60,068,884
57,478,218
69,215,320
38,519,158
6,459,215
231,740,795
110,157,621
121,583,174
231,740,795
37,066,683
194,674,112
231,740,795
159,492,892
72,247,903
231,740,795
Dec. 31, 2015
EGP Thousands
224,002
1,376,767
1,600,769
816,844
271,845
512,080
1,600,769
59,127
1,541,642
1,600,769
1,600,769
Dec. 31, 2015
EGP Thousands
43,282,846
42,996,421
37,518,922
25,790,179
5,646,048
155,234,416
82,185,251
73,049,165
155,234,416
26,385,328
128,849,088
155,234,416
115,115,076
40,119,340
155,234,416
During the year, the Bank’s total deposits increased by 12% representing actual increase after eliminating the devaluation impact.
28. Long term loans
Interest rate % Maturity date
Maturing
through next
year
EGP Thousands
Balance on
Dec. 31, 2016
EGP
Thousands
Balance on
Dec. 31, 2015
EGP
Thousands
Financial Investment & Sector Coopera-
tion (FISC)
Environmental Compliance Project
(ECO)
Agricultural Research and Development
Fund (ARDF)
Social Fund for Development (SFD)
3.5 - 5.5 depends
on maturity date
3.5 - 5.5 depends
on maturity date
3.5 - 5.5 depends
on maturity date
3 months T/D or
9% which is more
3-5 years
3-5 years
3-5 years
4 January
2020
Balance
1,111
2,778
-
-
3,889
550
81,486
88,800
28,000
63,178
68,665
98,889
145,775
160,243
131,328
232 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 233
Financial StatementS: conSolidated
29. Other liabilities
Accrued interest payable
Accrued expenses
Accounts payable
Other credit balances
Total
30. Other provisions
Dec. 31, 2016
Provision for income tax claims
Provision for legal claims
Provision for Stamp Duty
Provision for contingent
Provision for other claim
Total
Dec. 31, 2015
Provision for income tax claims
Provision for legal claims
Provision for Stamp Duty
Provision for contingent
Provision for other claim
Total
Dec. 31, 2016
EGP Thousands
1,455,029
645,979
1,329,189
149,133
3,579,330
Dec. 31, 2015
EGP Thousands
763,040
586,640
1,078,821
193,768
2,622,269
Beginning
balance
Charged
amounts
22,145
29,556
31,000
759,174
19,886
861,761
-
9,630
-
132,845
8,372
150,847
Beginning
balance
Charged
amounts
22,145
40,435
31,000
620,547
16,185
730,312
-
1,686
-
125,764
8,416
135,866
Exchange
revaluation
difference
-
1,456
-
579,997
2,097
583,550
Exchange
revaluation
difference
-
53
-
12,863
414
13,330
Utilized
amounts
Reversed
amounts
-
(924)
-
-
(2,772)
(3,696)
-
(5,451)
(31,000)
(37,312)
(4,642)
(78,405)
Utilized
amounts
Reversed
amounts
-
(12,113)
-
-
(5,129)
(17,242)
-
(505)
-
-
-
(505)
Ending
balance
EGP
Thousands
22,145
34,267
-
1,434,704
22,941
1,514,057
Ending
balance
EGP
Thousands
22,145
29,556
31,000
759,174
19,886
861,761
* Total Provision for other claim formed on December 31, 2016 amounted to EGP 3,730 thousand to face the potential risk of banking operations
against amount EGP 8,416 thousand on December 31, 2015.
31. Equity
31.1. Capital
The authorized capital reached EGP 20 billion according to the extraordinary general assembly decision on
March 17, 2010.
"Issued and Paid in Capital reached EGP 11,538,660 thousand to be divided on 1,153,866 thousand shares with
EGP 10 par value for each share "and registered in the commercial register dated 19th April 2016.
• Increase issued and Paid in Capital by amount EGP 68,057 thousand on April 19,2016 to reach EGP 11,538,660 thousand
according to Board of Directors decision on November 10, 2015 by issuance of seventh tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 2,294,121 thousand on December 10, 2015 to reach 11,470,603 accord-
ing to Ordinary General Assembly Meeting decision on March 12,2015 by distribution of a one share for every four out-
standing shares by capitalizing on the General Reserve.
• Increase issued and Paid in Capital by amount EGP 29,348 thousand on April 7,2013 to reach EGP 6,001,624 thousand ac-
cording to Board of Directors decision on October 24,2012 by issuance of fourth tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 37,712 thousand on April 9, 2012 in according to Board of Directors
decision on December 22,2011 by issuance of third tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 33,119 thousand on July 31, 2011 in according to Board of Directors
decision on November 10,2010 by issuance of second tranche for E.S.O.P program.
• The Extraordinary General Assembly approved in the meeting of June 26, 2006 to activate a motivating and rewarding
program 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 year 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 Extraordinary General Assembly approved in the meeting of April 13,2011 continue to activate a motivating and re-
warding program 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 year 2011 and delegated the Board
of Directors to establish the rewarding terms and conditions and increase the paid in capital according to the program.
• Dividend deducted from shareholders' equity in the Year that the General Assembly approves the disbursement of this
dividend, which includes staff profit share and remuneration of the Board of Directors stated in the law.
31.2. Reserves
According to The Bank status 5% of net profit is used to increase the legal reserve to reaches 50% of The Bank's issued and
paid in capital.
Central Bank of Egypt concurrence for usage of special reserve is required.
32. Deferred tax assets (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)
Intangible Assets & Good will
Other investments impairment
Reserve for employee stock ownership plan (ESOP)
Interest rate swaps revaluation
Trading investment revaluation
Forward foreign exchange deals revaluation
Balance
Assets (Liabilities)
Dec. 31, 2016
EGP Thousands
(28,741)
Assets (Liabilities)
Dec. 31, 2015
EGP Thousands
(22,367)
16,300
17,090
86,845
79,981
3,722
18,338
(12,227)
181,308
14,553
3,255
123,243
60,870
335
78,927
(659)
258,157
33. Share-based payments
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. Eligible employees should complete a term of 3 years of ser-
vice in The Bank to have the right in ordinary shares at face value (right to share) that will be issued on the vesting date,otherwise
such grants will be forfeited. Equity-settled share-based payments are measured at fair value at the grant date, and expensed on a
straight-line basis over the vesting period (3 years) with corresponding increase in equity based on estimated number of shares that
will eventually vest(True up model). The fair value for such equity instruments is measured using the Black-Scholes pricing model.
• Increase issued and Paid in Capital by amount EGP 94,748 thousand on April 5,2015 to reach EGP 9,176,482 thousand ac-
Details of the rights to share outstanding during the year are as follows:
cording to Board of Directors decision on November 11, 2014 by issuance of sixth tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 79,299 thousand on March 23,2014 to reach EGP 9,081,734 thousand
according to Board of Directors decision on December 10, 2013 by issuance of fifth tranche for E.S.O.P program.
• Increase issued and Paid in Capital by amount EGP 3,000,812 thousand on December 5, 2013 according to Extraordinary
General Assembly Meeting decision on July 15,2013 by distribution of a one share for every two outstanding shares by capi-
talizing on the General Reserve.
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
234 • Annual Report 2016 • CIB
Dec. 31, 2016
No. of shares in
thousand
20,373
9,262
(478)
(6,806)
22,351
Dec. 31, 2015
No. of shares in
thousand
21,872
8,653
(677)
(9,475)
20,373
CIB • Annual Report 2016 • 235
Financial StatementS: conSolidated
Details of the outstanding tranches are as follows:
34.4. Retained earnings
Maturity date
2017
2018
2019
Total
EGP
Exercise price
10.00
10.00
10.00
EGP
Fair value *
18.27
31.67
28.43
The fair value of granted shares is calculated using Black-Scholes pricing model with the following:
10th tranche
10
38.09
3
12.4%
2.50%
31%
Exercise price
Current share price
Expected life (years)
Risk free rate %
Dividend yield%
Volatility%
Volatility is calculated based on the daily standard deviation of returns for the last three years.
No. of shares in
thousand
7,935
5,314
9,102
22,351
9th tranche
10
39.35
3
13%
2.00%
31%
34. Reserves
Legal reserve
General reserve
Retained earnings (losses)
Special reserve
Reserve for A.F.S investments revaluation difference
Banking risks reserve
Cumulative foreign currencies translation differences
Total
34.1. Banking risks reserve
Beginning balance
Transferred to bank risk reserve
Ending balance
34.2. Legal reserve
Beginning balance
Transferred from previous year profits
Ending balance
34.3. Reserve for A.F.S investments revaluation difference
Beginning balance
Unrealized losses from A.F.S investment revaluation
Ending balance
Dec. 31, 2016
EGP Thousands
1,035,363
4,554,251
31,462
30,778
(2,180,243)
3,019
8,588
3,483,218
Dec. 31, 2015
EGP Thousands
803,355
1,518,373
(64,566)
30,214
(2,202,462)
2,513
-
87,427
Dec. 31, 2016
EGP Thousands
2,513
506
3,019
Dec. 31, 2015
EGP Thousands
1,991
522
2,513
Dec. 31, 2016
EGP Thousands
803,355
232,008
1,035,363
Dec. 31, 2015
EGP Thousands
621,084
182,271
803,355
Dec. 31, 2016
EGP Thousands
(2,202,462)
22,219
(2,180,243)
Dec. 31, 2015
EGP Thousands
(593,236)
(1,609,226)
(2,202,462)
Beginning balance
Dividend previous year
Change in ownership percentage
Transferred to retained earnings (losses)
Ending balance
35. Cash and cash equivalent
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Obligatory reserve balance with CBE
Due from banks with maturities more than three months
Treasury bills with maturities more than three months
Total
36. Contingent liabilities and commitments
Dec. 31, 2016
EGP Thousands
(64,566)
(3,896)
11,666
88,258
31,462
Dec. 31, 2016
EGP Thousands
10,522,040
58,011,034
39,177,184
(5,438,235)
(2,565,895)
(38,187,428)
61,518,700
Dec. 31, 2015
EGP Thousands
(155,160)
(4,700)
1,368
93,926
(64,566)
Dec. 31, 2015
EGP Thousands
9,848,954
21,002,305
22,130,170
(8,268,202)
-
(22,130,170)
22,583,057
36.1. Legal claims
There is a number of existing cases filed against the bank on December 31,2016 without provision as the bank doesn't expect
to incur losses from it
36.2. Capital commitments
36.2.1. Financial investments
The capital commitments for the financial investments reached on the date of financial position EGP 36,533 thousand as
follows:
Available for sale financial investments
Investments value
182,665
Paid
146,132
Remaining
36,533
36.2.2. 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 38,059 thousand.
36.3. Letters of credit, guarantees and other commitments
Letters of guarantee
Letters of credit (import and export)
Customers acceptances
Total
36.4. Credit facilities commitments
Credit facilities commitments
Dec. 31, 2016
EGP Thousands
65,575,370
2,382,849
650,607
68,608,826
Dec. 31, 2015
EGP Thousands
29,640,729
862,279
504,774
31,007,782
Dec. 31, 2016
EGP Thousands
7,245,061
Dec. 31, 2015
EGP Thousands
24,237,408
236 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 237
Financial StatementS: conSolidated
37. Mutual funds
Osoul fund
• CIB established an accumulated return mutual fund under license no.331 issued from capital market authority on Febru-
ary 22, 2005. CI Assets Management Co. - Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 8,454,956 with redeemed value of EGP 2,346,419 thousands.
• The market value per certificate reached EGP 277.52 on December 31, 2016.
• The Bank portion got 601,064 certificates with redeemed value of EGP 166,807 thousands.
Istethmar fund
• CIB bank established the second accumulated return mutual fund under license no.344 issued from capital market au-
thority on February 26, 2006. CI Assets Management Co.- Egyptian joint stock co-manages the fund.
• The number of certificates issued reached 789,723 with redeemed value of EGP 101,937 thousands.
• The market value per certificate reached EGP 129.08 on December 31, 2016.
• The Bank portion got 194,744 certificates with redeemed value of EGP 25,138 thousands.
Aman fund (CIB and Faisal Islamic Bank Mutual Fund)
• CIB and Faisal Islamic Bank established an accumulated return mutual fund under license no.365 issued from capital
market authority on July 30, 2006. CI Assets Management Co. - Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 459,607 with redeemed value of EGP 33,505 thousands.
• The market value per certificate reached EGP 72.90 on December 31, 2016.
• The Bank portion got 51,943 certificates with redeemed value of EGP 3,787 thousands.
Hemaya fund
• CIB bank established an accumulated return mutual fund under license no.585 issued from financial supervisory Author-
ity on June 23, 2010. CI Assets Management Co. - Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 107,340 with redeemed value of EGP 17,577 thousands.
• The market value per certificate reached EGP 163.75 on December 31, 2016.
• The Bank portion got 50,000 certificates with redeemed value of EGP 8,188 thousands.
Thabat fund
• CIB bank established an accumulated return mutual fund under license no.613 issued from financial supervisory authority
on September 13, 2011. CI Assets Management Co. - Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 1,007,657 with redeemed value of EGP 164,863 thousands.
• The market value per certificate reached EGP 163.61 on December 31, 2016.
• The Bank portion got 52,404 certificates with redeemed value of EGP 8,574 thousands.
Takamol fund
• CIB bank established an accumulated return mutual fund under license no.431 issued from financial supervisory authority
on February 18, 2015. CI Assets Management Co. - Egyptian joint stock co. - manages the fund.
• The number of certificates issued reached 180,767 with redeemed value of EGP 23,344 thousands.
• The market value per certificate reached EGP 129.14 on December 31, 2016.
• The Bank portion got 50,000 certificates with redeemed value of EGP 6,457 thousands.
38. Transactions with related parties
All banking transactions with related parties are conducted in accordance with the normal banking practices and regulations
applied to all other customers without any discrimination.
38.1. Loans, advances, deposits and contingent liabilities
Loans and advances
Deposits
Contingent liabilities
EGP Thousands
156
169,789
1,436
38.2. Other transactions with related parties
International Co. for Security & Services
39. Main currencies positions
Egyptian pound
US dollar
Sterling pound
Japanese yen
Swiss franc
Euro
Income
EGP Thousands
175
Expenses
EGP Thousands
346
Dec. 31, 2016
EGP Thousands
1,371,677
(1,360,474)
266
851
25
4,440
Dec. 31, 2015
EGP Thousands
166,732
(191,276)
(660)
356
32
(8,018)
Important events
The Central Bank of Egypt, in its meeting held on November 3, 2016, decided to float the exchange rate for foreign cur-
rencies in order to give the banks operating in Egypt the flexibility to determine the sale and purchase price for foreign
currencies within legal channels. Foreign currency exchange rates for the period subsequent to the decision have thus
ranged between:
Key currencies
US dollar
Euro
Buy
15.25
16.83
Sell
15.75
17.53
Accordingly, the value of foreign currency-denominated assets and liabilities may differ significantly from the values
reported in the financial statements for the financial year which ended December 31, 2016. The income statement would
also be impacted by the revaluation of the outstanding foreign currency positions on the date of financial position and
in subsequent periods. Along with the exchange rate liberalization, the Central Bank of Egypt also decided to raise the
overnight deposit and lending rates by 300 basis points to 14.75% and 15.75%, respectively, which is expected to impact the
Bank's pricing policies for its current and future products.
40. Tax status
Corporate income tax
The Bank's corporate income tax position has been examined, paid and settled with the tax authority since the operations
start up until the end of year 2014.
Corporate income tax annual report is submitted.
Salary tax
The Bank's salary tax has been examined, paid and settled since the operations start up until the end of 2013.
The Bank's salary tax is currently under examination for the period 2014-2015.
Stamp duty tax
The Bank's stamp duty tax has been examined and paid since the operations start up until 31/7/2006. Any disputes are
currently under discussion at the tax appeal committee and the court for adjudication.
The Bank's stamp duty tax is being re-examined for the period from 1/8/2006 till 30/9/2015 according to the protocol
between the Federation of Egyptian banks and the tax authority.
238 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 239
Financial StatementS: conSolidated
41. Goodwill and Intangible assets:
41.1 Goodwill and Intangible assets:
Book value
Goodwill impairment
Net book value
41.2 Intangible assets:
Book value
Amortization
Net book value
Dec. 31, 2016
EGP Thousands
209,842
(209,842)
-
Dec. 31, 2015
EGP Thousands
217,078
(7,236)
209,842
Dec. 31, 2016
EGP Thousands
651,041
(151,910)
499,131
Dec. 31, 2015
EGP Thousands
651,041
(21,701)
629,340
Profit from discontinued operations
Interest and similar income
Interest and similar expense
Fee and commission income
Fee and commission expense
Dividend income
Other provisions
Net trading income
Administrative expenses
Other operating (expenses) income
Financial lease
Net Profit Before Tax
Income tax expense
Deferred tax
Net profit of the year
Dec. 31, 2016
EGP Thousands
122,476
(347,012)
781,147
(1,869)
3,379
(22,127)
75,436
(250,177)
29,263
(232,476)
158,040
(29,778)
(886)
127,376
Dec. 31, 2015
EGP Thousands
7,692
(59,443)
301,859
(1,393)
2,555
-
(6,627)
(181,634)
8,152
-
71,161
(13,653)
3,607
61,115
According to CBE's regulation issued on December 16, 2008, an annual amortization of 20% has been applied on intan-
gible assets starting from acquisition date. Goodwill amount was fully impaired on 31 December 2016.
42. Non current assets held for sale
Assets
Due from banks
Treasury bills and other governmental notes
Trading financial assets
Brokerage clients - debit balances
Financial investments available for sale
Reconciliation accounts- debit balances
Goodwill
Other assets
Deferred tax assets
Property, plant and equipment
Total
Liabilities
Brokerage clients - credit balances
Due to customers
Other liabilities
Current tax liabilities
Other provisions
Total
Minority interest
Net
Dec. 31, 2016
EGP Thousands
653,742
21,214
36,894
463,052
9,850
-
22,981
3,576,254
-
106,451
4,890,438
Dec. 31, 2016
EGP Thousands
616,845
19,589
2,972,202
37,214
38,826
3,684,676
89,689
3,774,365
1,116,073
Dec. 31, 2015
EGP Thousands
246,791
2,085
33,655
657,560
16,123
978
-
86,525
3,234
19,319
1,066,270
Dec. 31, 2015
EGP Thousands
223,840
-
124,628
13,653
9,501
371,622
4,066
375,688
690,582
240 • Annual Report 2016 • CIB
CIB • Annual Report 2016 • 241
CIB EGYPT
Gallery
Cleopatra is believed to have visited Siwa to consult with
Greek oracle Jupiter Amun and bathe in the spring, which is
now named after her.
White Canyon, Dahab.
Citadel of Qaitbay, Alexandria.
Feluccas on the Nile, Aswan.
Shores of Dahab.
Maydom Pyramid, Fayoum.
Kom Ombo Temple, Aswan.
Mortuary Temple of Hatshepsut, Luxor.
Karnak Temple Complex, Luxor.
Karnak Temple Complex, Luxor.
Karnak Temple Complex, Luxor.
Montazah Palace, Alexandria.
Waters of Ras Mohamed.
Shores of Sharm El Sheikh.
Siwa Desert.
Siwa Oasis.
Lake Fetnas, Siwa.
Sunset at Saint Catherine.
Wadi El Rayyan, Fayoum.
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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
www.cibeg.com