Your Bank
At Your Convenience
Annual Report 2017
cibeg.com
A BANK TO TRUST
TABle of
CONTeNTS
Milestones
CIB: An Introduction
Our History
What We Do
A Snapshot of our Business
Key Facts
Key Financial Highlights
Strategy
CIB’s Stock
Chairman’s Note
Board of Directors’ Report
2017 In Review
Institutional Banking
Consumer Banking
Business Banking
Digital Banking and GTS
COO Area
Financial Control Group
Big Data
Human Resources
Risk Group
Compliance
Internal Audit
Marketing and Corporate Communications
CIB Affiliates
Sustainability
Corporate Governance
Management Committee
Sustainability Department
Community Development
CIB Foundation 2017
Corporate Social Responsibility
Financial Statements
Separate Financial Statements
Consolidated Financial Statements
04
10
12
13
14
15
16
18
20
24
28
46
48
54
60
62
70
74
76
79
83
91
93
94
98
102
104
116
120
124
126
134
136
138
194
Timeline of Milestones
Timeline of
Milestones
1975
1977
1983
• First joint venture bank in Egypt was Chase National Bank
• Becomes the first Egyptian bank to introduce an Institutional Banking
Risk Rating Model
• Becomes first private sector bank to create a dedicated division providing
24/7 banking services to shipping clients, with primary focus on business
in the Suez Canal
• 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 minority 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 service to airline passengers
1991
• First Egyptian commercial bank to arrange debt swap transactions
• CIB becomes first bank to launch smart card centre in Egypt
1993
• CIB wins Euromoney’s ‘Best Bank in Egypt’ award for six consecutive
years until 1998
• Bank concludes Egypt’s largest IPO for a domestic bank on 12 September,
with oversubscription rate of 150%, selling 1.5 million shares in a span
of 10 days and generating EGP 390 million in proceeds, using no under-
writers but relying instead on the Bank’s own marketing and placement
capabilities for share sales
1994
1996
1997
1998
• First bank in Egypt to connect with the international SWIFT network
• First Egyptian bank to have a GDR program on the London Stock Exchange
• First Egyptian bank to link to SWIFT via CITA
• CIB concludes first and largest Euro-syndicated loan (USD 200 million)
• Becomes first private sector bank with investment rating (after Luxor
incident) (‘BBB -‘ by Fitch IBCA)
• CIB becomes first private sector bank with investment rating (after Luxor
incident)
• (‘BBB -‘ by S&P)
• First bank to link its database to that of Misr Clearing, Settlement & De-
posit Company (MCSD)
• 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 Custody Department
• One of the first Egyptian banks to establish a brokerage arm (CIBC)
2000
• First two Certified Bank Auditors (CBA)
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5
Timeline of Milestones
eGP BN
7.5
net profit
2001
• First Egyptian bank to register its shares on New York Stock Exchange in
the form of American Depository Receipts (ADR) Level 1 program
• CIB becomes first bank to introduce FX cash services for five currencies
through ATM
2008
• First bank to use Value at Risk (VaR) for trading and banking book for
internal risk management requirements, despite there being no regula-
tory requirements
2004
2005
2006
• Heya becomes the first credit card on the market to acknowledge women’s
financial independence
• 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 Bloomberg for local debt securities
• CIB was the first to adopt a pricing policy according to the client risk rat-
ing as a step forward to abide by Basel II requirements
• CIB was the first bank in Egypt to execute EGP 200 million repo transac-
tion in local market
• First and largest Egyptian bank to provide securitisation trustee services
2007
• Only Bank in Egypt chosen by UNIFEM and World Bank to participate in
the Gender Equity Model (GEM)
• CIB becomes first regional bank to introduce unique concierge and Mas-
terCard emergency services
2009
• Only Egyptian bank recognised as ‘Best Bank in Egypt’ by four publica-
tions: Euromoney, Global Finance, EMEA Finance, and The Banker in
the same year
• First Egyptian bank to establish a GTS department
• Only bank in Egypt able to retain one of the top two positions in the pri-
mary 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 insti-
tutionalised as part of its founding institution’s bylaws, as CIB sharehold-
ers unanimously agreed to dedicate 1% of Bank’s net annual profit to the
Foundation
• CIB-TCM becomes the pioneer of trading in almost 114 new and uncon-
ventional currencies
• CIB becomes the first Egyptian bank to officially establish a Sustainable
Development Department
2010
2011
2012
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7
Timeline of Milestones
• First Egyptian bank to receive JP Morgan Elite STP Award
• First Egyptian bank to upgrade its ADR to be traded on OTCQX platform
• 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 number of blood donors in a cor-
porate 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 introduce an interactive multi-
media platform that offers customers the option of interacting with Call
Centre agents over video calls
• First Egyptian bank to sign agreement with Misr for Central Clearing,
Depository, & Registry (MCDR) to issue debit cards for investors to collect
cash dividends
• CIB launches first co-brand credit card, Mileseverywhere, 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 in-
tensive care units in Sohag through the Foundation, donating EGP 6 mil-
lion to outfit the paediatric department at Sohag University 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 private-sector banks in Egypt (in
the past 10 years)
• CIB becomes the first bank in Egypt to recognise conduct risk and estab-
lish a framework for it, despite the lack of regulatory requirements
2013
2014
2015
• CIB launches its Mobile Banking application, which includes various
banking services, and offers clients numerous features to conveniently
manage their accounts
• CIB becomes the first Egyptian bank recognised 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 Afri-
can Banker
• Recognised for the first time for several awards, including
- Best Bank in Egypt Supporting Women Owned and Women Run Busi-
nesses 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 for 2016 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
• Euromoney names CIB the “World’s Best Bank in the Emerging Markets,”
making it the first bank in the Middle East and Africa to win this presti-
gious award
• CIB is the first Egyptian bank to win the “Best Bank in the Middle East”
award by Euromoney
• CIB is ranked first in the Sustainability Index of the Egyptian Stock Ex-
change ‘S&P/EGX ESG’ for the fourth year in a row since 2014. The EGX
launched the sustainability index in cooperation with Standard and Poor’s
(S&P) and the Egyptian Institute of Directors (EloD) in March 2010.
• CIB becomes the only Egyptian bank in the Financial Times Stock Exchange
(FTSE) for the second consecutive year under the FTSE4Good Index
2016
2017
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9
InTroduCTIon
InTroduCTIon
our
History
What
We do
In March 2014, Actis undertook a partial realisa-
tion of its investment in CIB by selling 2.6% of its
stake on the open market, 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,
making the latter the sole strategic shareholder
in CIB. Fairfax is represented on the board with a
non-executive member.
Commercial International Bank (CIB) was founded
in 1975 as Chase National Bank, a joint venture
between Chase Manhattan Bank and the National
Bank of Egypt (NBE). In 1987, Chase divested its
ownership stake as part of a shift in its international
strategy. NBE acquired the stake, adopting the new
name Commercial International Bank (CIB).
Over time, NBE decreased its participation in CIB,
eventually dropping to 19% in 2006, when a consor-
tium led by Ripplewood Holdings acquired NBE’s
remaining stake. In July 2009, Actis, a Pan-African
private equity firm specialising in emerging mar-
kets, acquired 50% of the Ripplewood Consortium’s
stake. In December 2009, Actis 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 predom-
inant shareholder marked a successful transition in
the Bank’s strategic partnership.
At CIB, we strive to maintain sustainable growth
by consistently creating value for all our stakehold-
ers. With its dynamic business model and superior
technology integrated into its products and ser-
vices, CIB continues to provides its clients with
innovative financial solutions that satisfy all of
their financial needs and facilitate their lives. This
allows us to maintain our market leadership and
allows us to offer our staff an engaging work envi-
ronment while simultaneously generating value for
all our shareholders.
CIB is Egypt’s leading private sector bank, offering
a comprehensive and wide range of financial prod-
ucts and services to its clients, who include enter-
prises and institutions of all sizes, high-net-worth
(HNW) individuals, and retail customers.
CIB operates in every segment of the banking sec-
tor including corporate, commercial, retail wealth
management and SME, all delivered through
client-centric teams.
The Bank also has two affiliates, namely Falcon
Group and CI Capital Holding, with an ownership
of 32.5% and 10%, respectively. Falcon Group offers
security services, cash in transit, property man-
agement, general and technical services, and CI
Capital Holding offers asset management, invest-
ment banking, brokerage and research services,
and financial leasing after it acquired CIB’s stake
in CORPLEASE in December 2015.
12
Annual Report 2017
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13
InTroduCTIon
A Snapshot of
our Businesses
Key
Facts
Corporate Banking and Global
Customer Relations Group
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 cli-
ents, 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 project finance and syndicat-
ed loan teams facilitate market access for large bor-
rowers, 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 department is to make CIB part
of our customers’ daily activities through an out-
standing, 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
international standards, CIB actively participates
in select direct investment opportunities in Egypt
and across the region.
Consumer Banking
The Consumer Banking Division continues to grow
and develop within the institution, dedicating ef-
forts to improve customer satisfaction through
delivering a consistently positive customer experi-
ence every time. We offer a wide array of consumer
banking products that include:
• Personal Loans: These focus primarily on the em-
ployees of our Corporate Banking clients, offering
them secured overdrafts and trade products.
• 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 ac-
counts 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 con-
struction, and refurbishment and finishing.
• Credit and Debit Cards: We offer a broad range
of credit, debit, and prepaid cards.
• Wealth Management: We provide a wide array
of investment products and services to the larg-
est number of affluent clients in Egypt.
• CIB Plus: This division caters to the needs of
medium-net-worth individuals, helping them
pave the way 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 general insurance programs that gener-
ate non-interest revenues in the form of fees for
the Consumer Banking Division.
Business Banking
The Business Banking segment serves small and
medium-sized enterprises (SMEs), as well as large
enterprises with client revenue ranging between
EGP 1 million to over EGP 200 million.
Authorised capital of EGP 20 billion
Completion of LED lighting system bank-wide,
with reduction in consumption by 1,840,229 KWs
Issued and paid-in capital of EGP 11,618,011
thousand
294,839 Internet Banking users
Our 6,551 employees serve some 1,142,550 active
customers
More than 11 million website visits1
Over 500 of Egypt’s largest corporations bank
with CIB
Reduced paper consumption by 4.8% or more
than 1 million sheets of paper
#1 Bank in terms of 2 :
ProFITABILITY
achieving eGP 7.52
billion in net income
rEVEnuE
nET WorTH
among all egyptian
private sector banks
with eGP 14.88 billion in
total revenues
eGP 28.4 billion in
net worth, the highest
among all egyptian
private-sector banks
ToTAL ASSETS
ToTAL dEPoSITS
eGP 295 billion in total
assets, the highest
among all egyptian
private-sector banks
eGP 251 billion in total
deposits with 7.80% market
share, the largest deposit
market share3 among all
private-sector banks
MArKET
CAPITALISATIon
eGP 94.8 billion, the
largest in the egyptian
banking sector 4
1- CIB’s official website: www.cibeg.com | 2- Figures on a consolidated basis | 3- As of September 2017 | 4- As of December 2017
14
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15
InTroduCTIon
Key financial
Highlights
fY 17
Consolidated
fY 16
Consolidated
fY 15
Consolidated
fY 14
Consolidated
fY 13
Consolidated
fY 12
Consolidated
fY 17
fY 16
fY 15
fY 14
fY 13
fY 12
fY 11
fY 10
fY 09
fY 08
fY 17
Consolidated
fY 16
Consolidated
fY 15
Consolidated
fY 14
Consolidated
fY 13
Consolidated
fY 12
Consolidated
fY 17
fY 16
fY 15
fY 14
fY 13
fY 12
fY 11
fY 10
fY 09
fY 08
5.76
4.56
3.58
3.55
2.67
2.42
2.43
3.00
2.63
4.89
Common Share
Information Per Share
financial Measures
1.00
0.50
0.75
1.20
1.00
1.25
1.00
1.00
1.50
1.00
Cost : Income
20.75%
21.36%
19.61%
22.84%
23.54%
30.64% 20.34% 21.26% 19.69% 22.91% 22.89% 28.01% 35.26% 33.11% 32.31% 29.89%
24.43 18.44 14.39 16.31 13.46 18.94 15.03 14.59 23.75
19.25
Return on Average Common
Equity (ROAE)****
Net Interest Margin (NII/average
interest earning assets)
32.45%
34.24%
33.46%
31.31%
29.45%
25.49% 32.71% 34.03% 32.80% 30.25% 24.77% 24.18% 22.23% 30.46% 31.18% 34.98%
4.97% 5.47% 5.74% 5.41% 5.36% 4.74% 3.71% 3.62% 3.81% 3.54%
88.8
73.6
47.4
51.3
45.4
39.8
47.4 79.49
59.7
93.4
Return on Average Assets (ROAA)
2.69%
2.71%
2.95%
2.94%
2.93%
2.51% 2.72% 2.70% 2.90% 2.87% 2.54% 2.47% 2.20% 3.11% 2.97% 3.10%
71.1
30.8
28.9
32.6
27.4
21.1
18.5 33.75
29.5
27.87
Regular Workforce Headcount
6,551
6,714
6,332
5,697
5,490
5,181
6,551
6,422
5,983
5,403
5,193
4,867
4,517
4,360
4,162
3,809
77.4
76.4
38.1
49.2
32.6
34.6
18.7
47.4 54.68
37.2
1161.8 1153.9 1147.1 908.2 900.2 597.2 593.5 590.1 292.5
292.5
89,865 88,155 43,692 44,673 29,330 20,646 11,098 27,973 15,994 10,881
Balance Sheet and off Balance
Sheet Information (eGP millions)
Cash Resources and Securities
(Non. Governmental)
63,684
77,523
34,808
19,328
16,413
16,140 63,673 73,035 34,097 19,430 16,646 16,764 19,821 16,854 16,125
14,473
13.4
16.8
10.6
13.9
12.2
14.3
7.7
15.8
20.8
7.6
1.29% 0.65% 1.97% 2.44% 3.07% 3.62% 5.35% 2.11% 2.74% 2.69%
Assets
Deposits
294,782
267,544
179,500
143,813
113,752
93,957 294,771 263,852 179,193 143,647 113,752 94,405 85,628 75,093 64,063
57,128
250,723
231,741
155,234
121,975
96,846
78,729 250,767 231,965 155,370 122,245 96,940 78,835 71,574 63,480 54,843
48,938
15.4% 9.7% 18.5% 29.9% 34.4% 33.9% 33.9% 27.6% 24.6% 18.1%
Common Shareholders Equity
28,439
21,374
16,535
14,754
11,960
10,765 28,384 21,276 16,512 14,816 12,115 11,311
8,921
8,609
6,946
5,631
3.17
4.14
2.65
3.02
2.42
1.83
1.24
3.25
2.30
1.93
Average Assets
281,163
223,522
161,657
128,783
103,854
89,731 279,312 221,523 161,420 128,700 104,079 90,017 80,361 69,578 60,595
52,396
Net Loans and Acceptances
88,428
85,384
56,836
48,804
41,866
41,877 88,428 86,152 57,211 49,398 41,970 41,877 41,065 35,175 27,443
26,330
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***
14,884
11,315
10,189
7,741
6,700
5,344 15,186 11,370 10,165 7,717 6,206 5,108 3,837 3,727 3,173
3,200
Provision for Credit Losses -
Specific
Provision for Credit Losses -
General
Total Provisions
1,742
893
1,682
589
916
610 1,742
893 1,682
589
916
610
321
1,742
893
1,682
589
916
610 1,742
893 1,682
589
916
610
321
6
6
9
9
346
49
395
Average Interest Earning Assets
257,931
203,053
146,033
117,031
94,749
80,063 258,315 203,625 145,835 117,133 94,605 79,834 70,549 61,624 53,431
44,602
Average Common Shareholders
Equity
Balance Sheet Quality Measures
24,907
18,955
15,645
13,357
11,362
9,738 24,830 18,894 15,664 13,465 11,713 10,116
8,765
7,777
6,288
4,856
Equity to Risk-Weighted Assets****
15.60%
13.34%
15.76%
15.77%
15.28%
14.88% 15.56% 13.28% 15.74% 15.84% 15.50% 15.69% 14.49% 15.85% 15.34% 13.93%
Risk-Weighted Assets (EGP
billions)
169
150
96
84
70
65
169
150
96
84
70
65
55
49
41
37
Non Interest Expense
3,113
2,433
2,025
1,705
1,608
1,653 3,113 2,433 2,028 1,705 1,450 1,445 1,337 1,188 1,041
950
Tier 1 Capital Ratio*****
16.20%
12.90%
15.01%
15.70%
15.23%
14.33% 16.20% 12.90% 15.01% 15.70% 15.23% 14.33% 14.15% 15.66% 15.28% 13.74%
Net Profits
7,516
6,009
4,729
3,741
3,006
2,226 7,550 5,951 4,641 3,648 2,615 2,203 1,749 2,141 1,784
1,615
Adjusted Capital Adequacy
Ratio*****
19.30%
13.97%
16.06%
16.77%
16.32%
15.71% 19.30% 13.97% 16.06% 16.77% 16.32% 15.71% 15.40% 16.92% 16.53% 14.99%
* Based on net profit available for distribution (after deducting staff profit share and board bonus) and unadjusted to stock dividends)
** Unadjusted to stock dividends
*** 2016, 2015 and 2014 exclude CI Capital profit (discontinued operations)
**** Total equity after profit appropriation
***** After profit appropriation, from 2012 to 2017 as per Basel II regulations
16
Annual Report 2017
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17
InTroduCTIon
Strategy
Striving for Excellence is Our Strategy
As we adapt to ever-changing market dynamics,
CIB has persistently delivered strong performance
throughout the years while maintaining a holistic and
forward-looking approach. Our strategy and strength
lies in our continuous ability to create value for our
clients, shareholders and society. Our employees are
the mechanism by which the organisation thrives, and
we are committed to uncovering and developing the
true potential of our human capital while providing
opportunities for growth, innovation and enrichment
to continue building a high-performance culture.
people, strong core values, performance and commit-
ment to inclusive, responsible and sustainable growth.
Our Mission
To create outstanding stakeholder value by providing
best-in-class financial solutions to the individuals and
enterprises that drive Egypt’s economy. Through our
innovative product offerings, superior customer ser-
vice, staff development strategies and commitment to
sustainability, we will realise our ambitions and help
shape the future of banking in Egypt for years to come.
Our clients remain at the heart of our organisation.
With data analytics continuing to broaden our view
of customers’ behaviors and lifestyles, CIB has ex-
erted significant effort toward customer centricity in
terms of product design and service models. Multiple
digital initiatives will pave the way to improved cost
efficiency to support financial inclusion and further
enhance the customer experience and the satisfac-
tion of our retail, SME, and large corporate clients.
Our strategy goes hand-in-hand with the wellbeing
of society and the environment in which we oper-
ate. As the Bank seeks to create value for share-
holders and customers, we also work to embed
socially and environmentally responsible business
practices in our operations.
Our Vision
To uphold CIB’s distinct reputation as a leading and
trusted financial institution in Egypt, respected for its
Our Objective
To grow and help others grow.
Our Values
A number of core values outline the way in which
CIB employees work together to deliver effective
results for our customers and community.
Integrity
• Exemplify the highest standards of personal
and professional ethics in all aspects of our
business
• Be honest and open at all times
• Stand up for one’s convictions and accept re-
sponsibility for one’s own mistakes
• Comply fully with the laws, rules and practices
that govern CIB’s business in Egypt and abroad
• Say what we do and do what we say
An Outstanding Track Record
34.62%
34.98%
31.18% 30.46%
30.25%
32.76%
24.18%
32.71%
24.18%
24.77%
22.23%
28.81%
26.24%
Return on Average Equity (ROAE)*
Return on Average Assets (ROAA)*
2.09%
2.37%
2.90%
3.10%
2.97%
3.11%
2.20%
2.47%
2.54%
2.87%
2.90%
2.70%
2.72%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
* Both after profit appropriation on a standalone basis
Client Focus
Teamwork
• 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
• 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 corporate brand and image
• We value and respect each other’s cultural
backgrounds and unique perspectives
Innovation
Respect for the Individual
• 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 competitive advan-
tage and promote it accordingly
• We seek to lead Egypt’s financial services indus-
try 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 per-
severance to achieve outstanding results for
both our clients and stakeholders
• Our commitment to our clients is guided by
our drive for excellence
• We work with our clients to accomplish their
current goals and anticipate and plan future
goals and objectives
• 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 con-
structive 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 governing decorum
• The observance of good behavior, speech, ac-
tions and dress code is part and parcel of our
culture at CIB
18
Annual Report 2017
Annual Report 2017
19
InTroduCTIon
CIB’s
Stock
Having first offered its shares to the public in 1995,
CIB has since become the biggest constituent on
the Egyptian Stock Exchange (EGX) and is viewed
as the gateway to Egypt. Investors and analysts
often view CIB’s stock as a proxy for the Egyptian
market, with the Bank acting as a mirror for the
local banking sector. The economy’s growth pros-
pects are generally depicted in the credit outlook,
while retail banking is seen as portraying the
longer-term story of financial inclusion.
CIB was the first Egyptian bank to offer its shares on
international markets with a Global Depository Re-
ceipt (GDR) program on the London Stock Exchange
(LSE) in 1996. In 2001, CIB was again a first, being
the first Egyptian bank to register its shares on New
York Stock Exchange (NYSE) in the form of Ameri-
can Depository Receipts (ADR) Level 1 program.
In 2012, the Bank began trading on OTCQX Interna-
tional Premier, a segment of the OTCQX marketplace
reserved for world-leading non-US companies listed
on a qualified international exchange and providing
their home country disclosure to US investors.
In 2017, in relation to the listing and admission
of the official list and trading on the LSE, CIB
increased the number of its allowed GDRs to be
issued by an additional 1,000,000,000 GDRs to
1,680,000,000 from 680,000,000. By the end of 2017,
CIB’s DR outstanding position was 387,213,140,
representing 33.3% of issued shares.
CIB has the highest weight (around 34%) in the EGX
30 index. 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 institu-
tion with a market capitalisation of EGP 89.9 billion
as of end-December 2017. More to the point, CIB’s
market capitalisation surpassed EGP 100 billion in
July 2017, which is the highest ever in EGX history and
the first time a listed company reaches this mark.
As of December 2017, CIB’s institutional shareholder
structure was broken-down by region as follows:
5.66%
4.32%
5.85%
11.76%
14.52%
57.88%
North America
Africa
GCC
UK & Ireland
Continental
europe
Rest of the
World
CIB works diligently to increase value for its stake-
holders. One way to do so is through the Bank’s
active Investor Relations team, which maintains a
proactive investor relations program to keep share-
holders abreast of developments that could have
had an impact on its performance. The Investor
Relations team and senior management invest sig-
nificant time in one-on-one meetings, road shows,
investor conferences, conference calls, and consis-
tent stream of disclosures while simultaneously
ensuring analysts have the information they need
to maintain balanced coverage of the Bank’s shares.
During 2017, the Investor Relations team along with
senior management took part in 12 local and inter-
national investor conferences held in the UK, US, Af-
rica and the Gulf, in addition to seven international
roadshows and two business trips. In addition to
several in-house meetings, the team conducted
a total of 275 meetings throughout the year over
one-on-one as well as group meetings and met with
459 local and international investment funds and
research analysts. CIB hosted several conference
calls throughout the year, bringing its senior man-
agement together with the investor community in
2017. It also conducted presentations on its operat-
ing plan that described its future projections.
Regular updates and releases along with the pre-
sentations were posted on the Investor Relations
website for the convenience of the Bank’s investors
from around the world, giving them easy access to
all the information they need to make informed
investment decisions.
As a result of the team’s conscious efforts to boost cor-
porate access, in a 2017 study conducted by the Middle
East Investor Relations Association (MEIRA) in part-
nership with Extel, CIB’s CEO received the “Best IR by
CEO in the Middle East”, and a member of the IR team
received a nod as the “Best Investor Relations Profes-
sional – Egypt”. This is the fourth year running in which
CIB has received at least one award from MEIRA.
Symbols and Codes
egyptian Stock exchange (eGX)
SYMBOL: COMI
london Stock exchange (lSe)
SYMBOL: CBKD
oTCQX Int’l Premier
(level 1 ADR program)
SYMBOL: CIBEY
20
Annual Report 2017
Annual Report 2017
21
InTroduCTIon / CIB’s Stock
Equity Analysts’ Ratings
CIB is widely covered by leading research houses
both locally and internationally. In 2017, eight
institutions regularly issued research reports on
CIB. As of the end of 2017, 56% analysts held Buy,
31% analysts held Hold and 13% analysts held Sell
recommendations on CIB.
CIB has become the biggest
constituent on the egyptian Stock
exchange (eGX) and is viewed as
the gateway to egypt.
Stock Performance in 2017
CIB Index
EGX30 Index
Mar-14
Jun-14 Sep-14 Dec-14 Mar-15
Jun-15 Sep-15 Dec-15 Mar-16
Jun-16 Sep-16 Dec-16 Mar-17
Jun-17 Sep-17 Dec-17
Key Indicators
93%
Free Float
1:1
GDR Convertibility
34%
Highest Weight on EGX 30
EGP
10
Par Value
EGP BN
89.9
Largest Market Cap
EGP
5.76
Earnings per Share
22
Annual Report 2017
Annual Report 2017
23
InTroduCTIon
A Note from
our Chairman
Our ability to adapt and
commitment to innovation
have driven us throughout the
past seven years.
Dear Shareholders,
If our nation has honed just one skill since 2011, it is our capacity to
innovate — to adapt to changing circumstances brought about by a
sharp reimagining of what our economic future could look like. Born
of revolution, the Sisi administration’s deep economic reform program
has involved everything from a radical (and sorely needed) shift in for-
eign exchange policy to the phase-out of a subsidy regime that has for
decades disproportionately benefitted the wealthy.
Today, two things are clear: First, that bold policy decisions, the natu-
ral diversity of our economy, and a hard-working business community
have seen Egypt emerge as the premier investment destination in the
Middle East and Africa. Our competitive advantages rest on the clar-
ity of our nation’s pro-business policy and regulatory frameworks,
our newfound global export competitiveness, and the sheer size of a
100-million-strong (and growing) consumer market.
Second, we will not make good on our potential unless we redouble our
commitment to innovation.
In our nation’s banking industry, this means continuing to embrace
technology across all segments — from back office to front office,
from nano-credit to the largest syndicated facilities we extend our
corporate clients. Technology will help us bank the unbanked. It will
help us create products that make a meaningful difference in the lives
of our clients. And it will help us develop sustainable profit streams
that accrue to the benefits of our shareholders.
A year ago, on this same page, I noted that one of
the defining questions for our industry was how
we could harness technology to drive financial
inclusion and sharply raise a banking penetration
rate in a market that remains exceptionally under-
banked, regardless of the metric or methodology
underpinning the study.
In doing so, it is imperative that we move away
from backward-looking models and focus on pre-
diction by harnessing the power of data analytics.
The quality and power of the data banks possess is
on par with that held by mobile operators, and it
is already changing how we make credit decisions,
formulate new products and reach the unbanked.
That question has since become high on the
minds of policymakers in both government and
at our industry’s regulator. In the 12 months
since our last annual report, Egypt has created a
National Payments Council headed by the Presi-
dent of the Republic. Egypt hosted in Sharm El
Sheikh the premier global conference on finan-
cial inclusion, attended by central bank gover-
nors, government officials and senior industry
players. Regulations passed by the Central Bank
of Egypt in 2018 are set to pave the way for mobile
payments in the retail space.
The upside potential of this sea of change is why
the transformative power of technology has been
one of the fundamental building blocks of both our
short- and long-term strategies for the past three
years as we build the bank of the future.
Later this quarter, we will harness the power of
data analytics to roll out our first nano-credit
product in partnership with a major technology-
enabled service provider. Our own mobile wallet
is in the pipeline and will allow mobile-to-mobile
payments using the domestic clearinghouse.
In partnership with the Federation of Egyptian
Banks and the regulator, we are moving toward
a day when clients will be able to open new ac-
counts with little-to-no physical paper.
Pilot programs will also allow us to marshal data
analytics to do better at everything from client re-
tention and satisfaction to marketing and corporate
credit decisions. In the last case, we will be taking
everything we know about our clients — from inven-
tory to receivables, salaries, overdrafts and cash
management — and developing predictive models
24
Annual Report 2017
Annual Report 2017
25
InTroduCTIon / Chairman’s Note
eGP MN
89.9
market capitalisation
as of year-end
that will allow us not just to make more informed
up-front credit decisions, but to also reach out to
clients in the earliest phase of a potential challenge
to discuss how we can work together to ensure they
are ultimately successful.
“Credit is follow-up,” the saying goes. Our mis-
sion is to make it about preventive medicine, not
postmortems. It is about taking the drudgery out
of followup by allowing artificial intelligence en-
gines to do what they do best (discern patterns in
large data sets and bring them to the attention of
human beings) and to allow our credit officers to
do not just what they do best, but what they enjoy
most: working directly to help clients be success-
ful in growing their businesses.
In parallel, it is also increasingly obvious that driv-
ing financial inclusion will demand a similarly deep
commitment to innovation. Will the next successful
banking app allow a millennial to order a streaming
video? Order a pizza? Order a taxi cab?
In an age in which banks are increasingly outside
the circle of innovation — when governments can
raise funds for a bond issuance by directly tapping
subscribers on their mobile phones, as Kenya did
last year with its M-Akiba bond — innovation has
never been more critical to our industry.
That’s why we are very excited to be launching a
USD 10 million captive venture capital fund that
will look specifically at opportunities in FinTech
and related verticals.
posted stellar results even as we and our clients
grappled with the impact of record inflation, ex-
ceptional interest rates, the float of the Egyptian
pound and the phase-out of subsidies.
Looking ahead, we are cautiously optimistic that
2018 — the second half in particular — will see Egypt’s
economy gain momentum. An eventual correction in
interest rates will help spur foreign direct investment,
improving appetite for greenfields at the same time as
it prompts existing businesses to resume borrowing.
That cycle, when it begins, will kickstart a long chain of
commercial activities that will ultimately benefit CIB
as the nation’s leading private-sector bank.
Our ability to adapt and commitment to innovation
have driven us throughout the past seven years, but
the story is more nuanced than that: We would not
have preserved — even extended — our market lead-
ership if our competitive metabolism wasn’t high.
That competitive metabolism is deeply rooted in our
organisation, from our strategy to the targets we set
and the people who manage the execution phase. I
have every confidence that technology will help our
outstanding 6,551 staff members raise their com-
petitive metabolism and embrace technology as a
means of creating new value not just for this institu-
tion, but for our valued customers, in the year ahead.
It is against this backdrop that I am very pleased
to be closing the books on 2017, a year in which we
Hisham Ezz Al-Arab
Chairman and Managing Director
26
Annual Report 2017
InTroduCTIon
Board of
directors’ report
eGP
5.76
earnings per share
In a challenging year marked by high inflation,
a tightened monetary policy and a general eco-
nomic slowdown, CIB delivered record results
and solidified its position as a leader of the Egyp-
tian banking industry, posting consolidated net
income of EGP 7.52 billion (up 25.07%y-o-y) and
revenues of EGP 14.88 billion (a 31.54% rise over
the previous year).
Anchored in an approach that prioritises sus-
tainable, disciplined growth, CIB navigated the
turbulent environment of 2017 by calling on its
three-pronged strategy of dynamic balance sheet
management, investing in technology, and talent
enhancement. These pillars allowed CIB to deliv-
er on its commitment to create additional value
for stakeholders while building a sustainable
business model to deliver and maintain growth
going forward.
The Monetary Policy Committee hiked interest rates
by a total of 700 basis points following the currency
float in November 2016 in a program that continued
to deliver rate hikes into the summer of 2017. The
overnight deposit and lending rates were raised
to 18.75% and 19.75%, respectively, in July with the
CBE’s main operation rate recording 19.25%. As a
result, company borrowing slowed drastically at the
same time as domestic demand fell, due to inflation.
Despite these pressures, consumption remained the
primary driver of GDP growth in Egypt, even with a
modest rise in investment and net exports, record-
ing EGP 3,363 billion for FY2016-17. Egypt’s current
account deficit reflected significant improvement as
the year progressed, narrowing 65.7% to USD 1.6 bil-
lion in 1Q2017-18 from USD 4.8 billion a year earlier,
with a surplus of USD 5.1 billion in the balance of
payments during the same period.
The Macro Outlook
2017 was characterised by high interest rates as the
state targeted control of substantial inflation. As a
largely import-reliant economy, inflation recorded
historically high levels throughout the year. Head-
line inflation soared to 30.82% in October, before
falling to 26.00% in November on the base effect
and then improving slightly 1% m-o-m from 1.1%
in October. Annual core inflation fell to 25.54% in
November, down from 30.53% in October.
Foreign currency (FCY) stability encouraged the
CBE to lift restrictions imposed on USD deposits
and withdrawals for importers of non-essential
goods as remittances improved by nearly 40% to
USD 6 billion in 1Q2017-18, and tourism receipts
rose to USD 2.7 billion. Reserves stabilised at
USD 37.02 billion as at 31 December 2017 — the
highest level recorded since 2011. Meanwhile, the
Egyptian pound inched down 1% against the US
dollar at the end of December to EGP 17.73 versus
previously stable levels of EGP 17.60. The year also
saw Egypt receive USD 4 billion of the IMF’s USD
12 billion extended fund facility over two tranch-
es. In December 2017, the IMF approved disbursal
of a third tranche worth USD 2.03 billion expected
in June or July 2018.
The banking sector remained the backbone of the
economy in 2017. The year witnessed steady im-
provement in asset quality, with aggregate non-
performing loans (NPLs) as a percentage of gross
loans recording 5.5% in June 2017, down from
10.5% in FY2011 and 6% in FY2016. System-wide
NPLs were almost fully covered by provisions at
99% as of June. Banks were also well-capitalised
with a reported system-wide CAR of 14.5% in June
2017, comfortably above the regulatory require-
ment of 12.25%. Toward the end of the year, the
CBE increased banks’ required reserve ratios to
its previous level of 14%, up from the 10% level in
place since 2012.
The Egyptian Exchange (EGX) performed well
in 2017, gaining 22% to close December at 15,019
points. Approximately 46 listed companies in-
creased their capital by an aggregate EGP 9.7 bil-
lion, up 86% compared to last year. Six IPOs took
place in 2017, raising a total of EGP 4 billion and
representing an increase of 65% over 2016. In total,
the offerings were 31x oversubscribed.
CIB expects the momentum of 2017 to continue
into 2018 with the exception of minor variances in
interest rates and inflation. While the consensus
is that interest rates will begin to decline, the pace
and sharpness of the anticipated rate cuts remain
in question. Inflation is expected to ease, albeit on
a non-linear trajectory, due to the increase likely
to accompany energy price hikes projected for the
summer. To reduce the cost of funding and the bud-
get gap, further boost foreign currency reserves, and
maintain a healthy mix between local and external
debt, Egypt will tap international debt markets,
through USD- and EUR-denominated bond offer-
ings during the first quarter of 2018.
The government’s proactive reform momentum is
expected to continue, signalling Egypt is ready to
create a welcoming environment for private sector
investment. The Zohr field, the largest natural gas
field in the Mediterranean, has started production
and is projected to lessen Egypt’s import demand for
natural gas and consequently reduce the import bill.
The discovery enables the Ministry of Petroleum to
transform Egypt into a regional energy trade hub.
CIB remains cautiously optimistic about the future
and believes the investment community will keep a
close eye on macroeconomic indicators as well as
the path and pace of structural reform.
28
Annual Report 2017
Annual Report 2017
29
InTroduCTIon / BoD Report
Against this backdrop, CIB was able to solidify its
leading position in the market assisted by it three-
pronged strategy of:
Dynamic Balance Sheet Management
The Bank’s solid performance during the year
hinged first on its long-term, preemptive approach
to balance-sheet management. In the year ending 31
December 2017, our local currency (LCY) liquidity
ratio remained well above the CBE’s 20% require-
ment, recording 74.4% as of December 2017, while
the FCY ratio stood at 55.5%, above the threshold of
25%. CIB’s net stable funding ratio (NSFR) reached
232.4% for local currency and 152.3% for FCY, while
our liquidity coverage ratio (LCR) was 626.6% for lo-
cal currency and 377.1% for FCY, comfortably above
the requirement of 100% Basel III.
Given the high interest rate environment that pre-
vailed last year, the Bank managed its asset mix
and reengineered its balance sheet to mitigate the
impact on earnings and lower capital base volatility,
particularly key given that decreased purchasing
power hindered borrowing. CIB also lowered its bal-
ance sheet duration to minimise the impact of inter-
est rate movements on its capital adequacy levels.
The Bank continued to reshape its funding mix toward
current account and savings account (CASA) deposits,
which accounted for 52% of total customer deposits
as of 31 December 2017. Deposit growth will remain
focused on attracting low-cost, sticky, short-term lo-
cal currency deposit and payroll accounts given their
direct impact on lowering the overall cost of funds.
CIB attracted 4% of all new deposits in the banking
system during the year, and will continue with its
strategy of maintaining a sustainable liability base
supported by stable and cost-effective customer
deposits. The Bank maintained a healthy gross loan-
to-deposits ratio (LDR) of 40.84% in 2017.
CIB continued in 2017 to maintain asset qual-
ity through a proven risk-management strategy,
advanced systems and the booking of prudent provi-
sions. For 2017, the Bank took provisions of EGP 1.7
billion as a buffer against unpredictable market con-
ditions, bringing its loan-loss provision balance to
EGP 11.0 billion. The year saw the Bank record an NPL
ratio of 6.95% and a solid coverage ratio of 154.42%.
Management and the Board continue to pursue
all available alternatives to ensure a sustainable,
comfortable capital base that is less vulnerable to
external factors. CIB took on subordinated loans
in November 2017 from the European Bank for
Reconstruction and Development (EBRD) and
International Finance Corporation (IFC) totalling
USD 200 million. This funding will serve as a hedge
against volatility in currency movements over the
next ten years and support future growth plans.
The loans further increased the capital adequacy
ratio from 16.95% (prior to the sub-debt, which
is comfortably above Basel guidelines) to 19.10%
(considering the total effect of both loans), ending
2017 with CAR of 19.30%.
CIB was able to deliver steady consistent return on
average equity (ROAE) above 30%, ending 2017 with
an ROAE of 32.5% (after profit appropriation based
on the suggested profit appropriation schedule).
The Bank also has one of the lowest cost-to-income
ratios in the Egyptian banking system at 20.8% as
of December 2017, guided by management’s effort to
keep the cost-to-income ratio within the 30%-35%
range stipulated by the Board.
Investing in Technology
In line with the Bank’s customer-centric culture,
CIB invested heavily throughout the year in tech-
nological advancements to improve the customer
experience and streamline operations.
30
Annual Report 2017
InTroduCTIon / BoD Report
20.75%
cost-to-income ratio
Over the course of 2017, CIB focused on scaling up its
infrastructure base to keep pace with ever-changing
industry dynamics through projects that automated
operations and processes. A key component of this
strategy was the Bank’s ongoing focus on the impor-
tance of data analytics and the role it plays in both
long-term growth and short-term decision-making.
Today, CIB has the necessary systems to process,
interpret, organise and structure facts and figures
into useful information that helps management and
the Board make better informed decisions.
In 2017, the Bank’s Big Data team embarked on the
following projects:
• Customer analytics: The team proposed a fully
customised behavioural segmentation that
makes use of customer data to provide targeted
products and services.
• Next Best Action (NBA) Model: This aimed to
develop product offerings based on estimated
appeal to customers according to their portfolio.
journey simulator: Using data
analytics, the team simulated a customer’s teller
transaction journey to optimise processes.
• Customer
• Call centre optimisation: To provide efficient
services to customers, the team used operations
research to streamline the Call Centre experience.
• Anomaly Detection Model: In cooperation
with the Compliance Department, the team de-
veloped a model to identify risk and fraud with
an accuracy level of over 90%. It has cut down
manual fraud detection time by at least 50%.
• Distributed Ledger Technology (also known as
Blockchain): CIB collaborated extensively with
EMC2 on a research paper centred on Block-
chain to adapt to the market’s new realities. It
helped identify possible uses such as operation-
al simplification, regulatory efficiency improve-
ment, and liquidity and capital enhancement.
• R3: The Bank joined this global alliance of over
80 institutions committed to delivering the next
generation of financial infrastructure. Mem-
bers collaborate on research, experimentation,
design and engineering to help advance state-
of-the-art, enterprise-scale ledger solutions to
meet banking requirements for security, reli-
ability, performance, scalability and audit.
Talent Enhancement
CIB strongly believes that employees are the Bank’s
most important asset. The Bank accordingly makes
every effort to provide its staff with the tools neces-
sary to enable them to reach their full potential.
In 2017, a total of 6,567 employees (98% of staff) at-
tended 679 training courses covering a wide range
of both technical and soft skills.
Staff also benefited from leadership training pro-
grams and modules including the Frankfurt School
Leadership Track, which hosted two rounds of its
Transformational Leadership for 145 delegates. A
three-month MADP program took place allowing
junior hires to receive training sessions covering vari-
ous bank areas. Additionally, 50 key staff members at
the managerial level attended the CIB Lead Program.
2017 Financial Position
CIB reported another exceptional set of results, with
consolidated net income up 25.07% y-o-y at EGP 7.52
billion for FY2017. Standalone net income reached EGP
7.55 billion, 26.88% over 2016. Standalone revenues
grew 33.56% over the previous year to EGP 15.19 billion.
The Bank recorded net interest income of EGP 12.50 bil-
lion, an increase of 24.82% y-o-y. Non-interest income
recorded EGP 2.38 billion for the full year. Net fees and
commissions income stood at EGP 2.05 billion.
All financial indicators emphasised the Bank’s strong
financial performance in 2017. CIB maintained its ef-
ficiency during the year, with cost-to-income ratio at
20.75% compared to 21.36% in 2016. The Bank’s ROAE
recorded 32.45% on a consolidated basis (post-appro-
priation), down from 34.24% in 2016, driven mainly
by the increase in the minimum regulatory capital
requirements. Consolidated ROAA recorded 2.69% for
2017 vs. 2.71% in 2016. The Bank recorded a net interest
margin of 4.97% as of year-end 2017 down from 5.47% a
year earlier, mainly on the devaluation impact.
The Bank’s loan portfolio stood at EGP 102.4 billion
at year’s end, growing 5.06% or EGP 4.93 billion y-o-y.
This increase comes in accordance with the Bank’s
strategic objectives in maintaining asset quality and
enhancing profitability. The Bank’s market share of
total loans amounted to 7.15% in September 2017.
CIB aggressively pursued deposit growth in 2017,
adding EGP 18.98 billion to its base, which grew to
EGP 250.7 billion, an increase of 8.19% over 2016.
CIB’s share of the deposits market reached 7.80%
in September 2017.
The Bank ended the year with a buoyant balance
sheet and capital base, which is reflected in its
comfortable capital adequacy level of 19.30%, well
exceeding CBE stipulated ratios and enhancing the
Bank’s ability to face uncertain economic circum-
stances, should any arise.
CIB continued achieving strong growth in net
interest income, fees and commissions and the
balance sheet. Relative to its peer group, CIB main-
tained its leading position in terms of profitability
and balance sheet size. Overall, CIB’s strong finan-
cial performance in 2017 exceeded P&L targets.
Appropriation of Income
The Board of Directors proposed the distribution of a
dividend per share of EGP 1. In addition, CIB is increas-
ing its legal reserve by EGP 377 million to EGP 1,710
million and its general reserve by EGP 3,617 million to
EGP 12,617 million, thus reinforcing the Bank’s solid
financial position, as evidenced by a capital adequacy
ratio of 19.30%.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 facili-
tate and support the Bank’s future growth plans.
2017 Operational Highlights
Institutional Banking
Institutional Banking (IB) continues to be the pri-
mary contributor to CIB’s bottom line, generating
almost 75% of the Bank’s profits. IB’s net income
before tax increased 102% over the year to EGP 7.2
billion in 2017, mainly on higher net interest income,
foreign exchange gains, strong trade services and
controlled expense growth.
The group’s performance in a challenging year was
characterised by its unwavering commitment to
exceeding its corporate clients’ expectations, while ex-
ecuting a prudent growth strategy. The group explored
new, potentially lucrative segments at the same time
as preserving a superior-quality loan portfolio aided by
the Bank’s disciplined and proactive risk framework.
The Treasury Group — another top profit centre
for the Bank — offered a wide range of products
across geographies, capabilities and distribu-
tion channels. Among its responsibilities are FX,
money market and fixed income trading activities,
primary and secondary government debt trading,
management of interest rate gaps and hedging,
pricing of local and foreign currency deposits, and
pricing of preferential deposits.
The Assets and Liability Management team effec-
tively forecasted the market, maintaining liquid-
ity ratios well above regulatory requirements,
thereby increasing profitability and expanding
net interest margins (NIMs).
32
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33
InTroduCTIon / BoD Report
Consumer and Business Banking
In 2017, Consumer and Business Banking focused on
developing customer-centric products as it worked
to expand its customer base. The Bank enhanced
customer convenience by bolstering its technologi-
cal infrastructure to offer clients faster and easier
access to products and services online and through
other digital channels.
This approach led to an accelerated growth in
ATMs, with 135 installed during 2017 for a total of
819 across Egypt. Consumer Banking also leveraged
the Bank’s investment in data analytics, automating
key customer processes and aligning products to
CIB’s key value segments, all in pursuit of continued
sustainable growth. In tandem, CIB continued to
expand its branch network to reach customers who
still prefer traditional channels, opening eight new
branches in 2017 for a total of 196.
On the new product front in 2017, Consumer Bank-
ing launched a Wedding Finance Loan, which offers
flexible financing schemes as well as discounted of-
fers from wedding-related merchants.
On the liability side, Consumer and Business Bank-
ing deposits reached EGP 198 billion in December
2017, an impressive 15% y-o-y increase with the
focus during 2017 being the household segment and
short-term products.
In line with Egypt’s push to support Small and Medium
Enterprises (SMEs) CIB’s Business Banking division
worked to design innovative solutions that best suit
clients of all sizes and from a variety of industries. CIB
believes this sector has enormous growth prospects if
handled in the right fashion. The division developed
attractive products for targeted segments that ranged
from highly standardised small-ticket loans with
rapid disbursement to fully customised offerings for
large clients. The team also sought to develop a closer
relationship with its SME clients by enhancing the
capabilities of its sales team through in-house training
sessions. These and other efforts directly contributed
to the strong financial performance of Business Bank-
ing in 2017, with deposits growing 10% to EGP 59 bil-
lion by year-end, representing 24% of CIB’s deposits.
Operations and Information Technology
CIB again delivered in 2017 on its commitment to
invest in state-of-the-art technology, seamless pro-
cessing capability, profound infrastructure security,
and proper business continuity management cover-
ing cyber and information security.
During 2017, the COO Area continued to ensure the
Bank was responsive to dynamic market changes,
focusing on milestones under CIB’s Security Strat-
egy to enhance the security environment. The Op-
erations Group implemented several automation
and process reengineering initiatives, upgrading
process speed and quality and reducing turnaround
time. In tandem, the Bank is undergoing a gradual
shift toward digitalisation, which will relieve the
burden on branches and the Call Centre.
A specialised branch model serving corporate
customers was also adopted this year, with three
branches currently operating and additional loca-
tions in progress. Other migration initiatives intro-
duced included accepting tuition fees over ATMs to
offload the branch network and several enhance-
ments applied to the IVR call tree to offload Call
Centre agents. CIB also began to allow customers
to activate their cards through text message, which
has reduced the Call Centre workload by approxi-
mately 40%. Also last year, CIB launched its Mobile
Banking App to facilitate engagement, providing
customers with access to their accounts 24/7.
The Bank’s solid commitment to sustainability
was reflected this past year in its paperless branch
34
Annual Report 2017
InTroduCTIon / BoD Report
initiative, which launched as a pilot program in
select branches. The group automated custody
statements and improved the customer experi-
ence by providing one automated statement for
all custody products.
CIB was the first bank in Egypt to implement Zero
Data Loss Recovery capabilities for many core data-
bases as part of the Continuous Data Protection Ini-
tiative. The Group continues to examine the Bank’s
capabilities by running live drills of its services and
systems from alternate sites so as not to impact cus-
tomers in the event of a disruptive situation.
The COO Area also focused on human development
during 2017 by increasing staff knowledge through
tailored technical and soft skill training programs
locally and overseas. A new recognition program
was launched in 2017 — the CIB Star Award — an
award to recognise excellence in delivering ‘Cus-
tomer Experience Excellence.’ The award specifi-
cally acknowledges staff who exemplify a customer-
centric approach in their work and demonstrate a
passion to exceed customers’ expectations.
CIB also prides itself on having become the first
bank in Egypt to acquire the GPRS Green Certificate,
which was awarded to the Smart Village 3 Building.
The Bank is expanding its footprint in Smart Village
through a fourth building (currently in the fit-out
phase) and establishing/operating a state-of-the-art
printing centre in the business district.
Security and Business Continuity
Management
As information proves increasingly valuable, so
rises the importance of protecting it, particularly
with respect to banks, which possess a high volume
of sensitive information on their stakeholders.
In 2017, CIB established a Security Operations Cen-
tre (SOC) — the first of its kind in-house SOC in the
Egyptian financial sector. According to an assess-
ment by an international consultant, the Bank’s SOC
achieved a much higher maturity level than planned
in comparison to other financial institutions in the
MENA region. It contributed significantly to the
Bank’s capability to detect and respond to security-
related incidents, improve auditing and logging
capabilities for critical applications, and manage
brand protection and phishing attempts.
The Bank also began the implementation of a Swift
Security Program (CSP) to fulfil mandatory com-
pliance requirements to ensure that international
standards are met.
CIB has completed the automation of its Business Con-
tinuity Planning lifecycle by putting in place a new plat-
form improving the efficiency of managing disruptions.
CIB’s efforts on this front were recognised by the
business continuity industry, with the Bank being
shortlisted for the 12th time for the Global Award in
Business Continuity from the UK-based CIR magazine.
Offloading Stake in Subsidiaries
As part of CIB’s strategy to consolidate its activi-
ties into its core banking services, CIB progressive-
ly divested the majority of its stake in CI Capital
Holding (CI Capital).
In a transaction valued at EGP 710 million, CIB
transferred 74.75% of its shares in the company to
non-related Egyptian and Gulf investors in March
2017. Another partial sale of 9.99% took place in
early July, generating proceeds of EGP 101 million.
Later that month, CIB transferred another 3.45% in
a transaction worth EGP 45 million. The Bank now
retains a minority stake of 10% in CI Capital.
International Expansion
In its strategic efforts to expand its business and
operations through commercial banking activities,
CIB is exploring opportunities in Sub-Saharan Af-
rica given the fundamental similarities the region
shares with Egypt. In 2017, management received
Board approval on the proposed expansion, and
has been mandated to study potential options.
The continent is home to a number of successful
ventures that target financial inclusion, which is
where banking opportunities lie. Africa is also at-
tractive at this stage due to the strengthening in
interregional trade between and within regional
blocs, such as the Common Market for Eastern and
Southern Africa (COMESA), East African Commu-
nity (EAC), Southern African Development Com-
munity (SADC) and the Economic Community of
West African States (ECOWAS).
Awards and Recognition
The Bank’s solid financial performance and mul-
tiple accomplishments continued to earn recog-
nition from reputable regional and international
organisations. In 2017, CIB became the first bank
in the MENA region to be named the World’s Best
Bank in Emerging Markets by Euromoney. Other
awards earned during the year include:
• Best Trade Finance Provider in Egypt by Global
Finance
• Best Treasury & Cash Management Providers in
Egypt by Global Finance
• Best Foreign Exchange Provider in Egypt by
Global Finance
• Best Bank in Egypt 2017 by Global Finance
• Best Bank in Egypt by Euromoney
• Best Securities Services Providers in Egypt by
Global Finance
• Best Cash Management Services in North Af-
rica by EMEA Finance
• Best FX Services in North Africa by EMEA Finance
• Best Local Bank in Egypt by EMEA Finance
• Most Innovative Bank – Pan Africa by EMEA
Finance
• Achievement in Enterprise Risk Management in
the Middle East and Africa
• Achievement in Liquidity Risk Management in
the Middle East and Africa
2018 Business Outlook
CIB plans to pursue its business strategy focused on
asset quality and profitability, both of which remain
top priorities for management as the Bank remains
committed to prudent, sustainable and profitable
growth that creates value for shareholders.
As part of this strategy, the Bank will utilise de-
tailed and accurate information of its customers
provided by the Big Data team to make more in-
formed decisions that meet their needs.
IT systems will also continue to play a crucial role
for CIB in the coming period a to help boost cus-
tomer satisfaction as it continues to position itself
as one of the most convenience-centric banks.
With regard to the operating environment, the
Bank expects loan demand in 2018 to remain bi-
ased toward short-term working capital facilities
in local currency until purchasing power returns
to pre-floatation
levels. As purchasing power
strengthens, companies will call on their utilisa-
tion capacities as they explore opportunities for
capital expenditure to address renewed demand.
Regardless of the operating environment, as always,
CIB will remain committed to its clients and con-
tinue to support their growth strategies.
Concrete Commitment to Sustainability
CIB has long understood the importance of build-
ing a sustainable organisation that creates last-
ing value for — and imprints a profound, positive
impact on — the environment, community, share-
holders and stakeholders.
36
Annual Report 2017
Annual Report 2017
37
InTroduCTIon / BoD Report
CIB’s sustainability journey is closely aligned with
the 2030 Global Sustainable Development agenda,
its 17 Sustainable Development Goals (SDGs), and
the 169 targets. It is also in line with Egypt’s 2030
Sustainable Development Agenda, aspiring to ad-
vance a sustainable and climate-resilient future.
The main aspects of CIB’s focus on sustainable
banking lie in the following areas:
Being Ecologically Responsible
During 2017, the Bank completed its LED lighting
program Bank-wide, reducing consumption by
more than 1.8 million KWs in 87 branches. The
Bank also reduced its paper consumption by 4.8%
through modified applications of double-sided
printing/copying, among others. Moreover, CIB
implemented the Paper Waste for Cash program
to sell paper waste to recycling startups, with
proceeds of more than EGP 200,000 credited to
a sustainability account starting February 2017.
The Bank also enlisted Egyptian entrepreneurs to
develop a tailored carpooling application for mo-
bile devices called Raye7 CIB, which encouraged
staff members to carpool.
Being Socially Responsible
The Bank is committed to CSR through its dedica-
tion to various cultural, sport, and (in particular)
art initiatives. During 2017, CIB took part in the fol-
lowing activities:
• CIB acquired student art pieces displayed at the
exhibitions of faculties of Fine Arts at Alexan-
dria University and South Valley University.
• The Bank sponsored the Annual Egyptian Youth
Salon for the seventh consecutive year in col-
laboration with the Fine Arts Division at the
Ministry of Culture.
• CIB contributed to the renovation of Aisha Fah-
my Palace as part of the Ministry of Culture’s
Fine Arts Department project to reinstate the
palace as a complex for art and culture.
• The Bank sponsored Egyptian artists at the
57th edition of La Biennale Venezia, one of
the world’s most prestigious arts and culture
institutes, which organises an annual exhibi-
tion of the same name.
• CIB was one of the main sponsors of the Night
of Art at the Egyptian Museum, the inaugural
event of the Eternal Light ‘Something Old,
Something New’ show — the first in a series of
art shows that combines Egypt’s varied heritage
sites with contemporary Egyptian art.
• The Bank was the main sponsor of Egypt’s
‘100% Egyptian Cotton’ exhibition featuring
the country’s best emerging designers in the
International Fashion Showcase (IFS) 2017 as
part of London Fashion Week.
The Bank’s CSR agenda in 2017 included the follow-
ing activities:
• The Bank organised six trips to KidZania in 2017
for more than 150 underprivileged children and
those with special needs and health conditions.
• The Bank maintained its sponsorship of the annual
ceremony held by the ADVANCE Society for Persons
with Autism and Other Disabilities and sponsored
2017 World Autism Awareness Day in Egypt.
• CIB sponsored the screening of two movies
at Zawya with live audio description for more
than 150 visually impaired children.
• CIB began diversifying its contribution to El Sawy
Culture Wheel activities by launching free semi-
nars to help participants create a CV and prepare
for interviews. It also continued its sponsorship of
special screenings of documentary films, cultural
nights, concerts and art exhibitions.
• For the second year, CIB was the main partner
and financial sponsor of Beena, a protocol
signed between the Bank and the Ministry of
Social Solidarity to encourage active youth par-
ticipation in the community and monitor the
development of social care services.
• CIB maintained its sponsorship of the Egyptian
Squash Federation for the sixth year running.
In 2017, the Bank reached out to less fortunate
children through a second phase of the Squash
for Everyone initiative in partnership with the
Egyptian Squash National Teams Director and
Technical Advisor Amr Shabana.
• CIB sponsored the ‘Your Space’ project, launched
by Egyptian adventurer Omar Samra, that
encourages school and university students to
explore space sciences.
• The Bank agreed to sponsor an incubator project
with a total cost of EGP 140 million, in addition
to allocating EGP 10 million targeted to fighting
hepatitis C during 2018.
Advocating for the Social and Environmental
Role of Financial Institutions
Following the implementation of the Social and Envi-
ronmental Credit Policy Guide, it became important
to join international platforms advocating a social
and environmental role for financial institutions.
CIB is currently the only Egyptian bank to partner
with the United Nations Environment/Financial
Institutions (UNE/FI) and endorse their FI State-
ment on Energy Efficiency. The UNE is considered
the global voice and conscience of the environ-
ment, placing CIB at the centre of the world stage
through this collaboration.
For the second consecutive year, CIB was the only
bank in the MENA region to participate in the as-
sessment exercise of the Dow Jones Sustainability
Index 2017. The Bank’s score in 2017 corresponded
with 2016, with CIB ranking in the 40th percentile
among financial institutions.
For the second time in a row, CIB was recognised
as a constituent in the FTSE4Good Sustainabil-
ity Index sponsored by the Financial Times. For the
fourth successive year, CIB was ranked first in the
EGX Sustainability Index.
2017 also saw the bank publicly issue its internation-
ally acclaimed Annual Sustainability Report, which
covers all the Bank’s sustainability initiatives. It fol-
lows the GRI G4 guidelines and was released on the
Bank’s website and social media channels.
Commitment to Corporate Governance Best
Practices, Ethics and Corporate Values
Being an essential factor to achieving and maintain-
ing public trust, effective corporate governance prac-
tices rates high on CIB’s priority list. The Bank has
had long-standing commitment to promoting sound
corporate governance practices across the organisa-
tion and has consistently enhanced its corporate gov-
ernance frameworks. Accordingly, CIB conforms to
relevant regulatory requirements and duly considers
international best practices in corporate governance.
Our corporate governance policies are key to
managing the Bank effectively and achieving
its strategic goals for sustainable banking. This
strategy is founded on:
• Responsibility and meritocracy, which is the
centre of delegation of authority;
• Accountability in the relationships between
management and the Board and between the
Board and all stakeholders;
• Effective disclosure and transparency initia-
tives that allow stakeholders to assess the
Bank’s financial performance and position; and
• Fairness in the treatment of all stakeholders.
CIB’s overall corporate governance framework
is aligned with the interests of shareholders and
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Annual Report 2017
Annual Report 2017
39
InTroduCTIon / BoD Report
managers. It also allows for the effective monitoring
and management of the business through the dis-
semination of information and transparent report-
ing. The Bank’s governance framework is directed
by internal policies and regulations that cover a
wide range of business and fiduciary aspects includ-
ing risk management, compliance, audit, remunera-
tion, 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 vital components
of the Bank’s governance structure to highlight any
potential conflict of interest. The Board approves the
Bank’s strategic goals, as well as oversees the man-
agement of the Bank, while the day-to-day operations
are the responsibility of Senior Management.
In line with CBE directives on corporate governance
as well as international best practices, CIB’s Board
appointed Mr. Hussein Abaza as the Bank’s CEO and
Executive Board Member to manage the Bank’s busi-
ness lines and day-to-day operations. This allows the
Chairman and Managing Director, Mr. Hisham Ezz
Al-Arab, to focus on the strategic direction of the Bank.
The Managing Director is responsible for ensuring
adequate and effective governance through managing
the independent control functions: risk, compliance,
audit and legal. The Managing Director, CEO along
with the management team bring decades of experi-
ence and thought leadership that guide CIB’s direction
and execution of the strategies set by the Board.
The Board has specialised committees, both ex-
ecutive and non-executive, tasked with assisting the
Board in decision-making. The committees consti-
tute key elements of the governance framework and
are governed by well-defined charters.
The Board’s non-executive committees are:
• Audit
• Corporate Governance and Nomination
• Risk
• Compensation
• Operations and IT
Executive committees are:
• Management
• High Lending and Investment
• Affiliates
In March 2017, the General Assembly appointed
CIB’s Board of Directors for its 2017-2019 term,
with the following executive members: Mr. Amin
Hisham Ezz Al Arab (Chairman and Managing
Director), Mr. Hussein Abaza (CEO and Board
member), and the non-executive members: Mr.
Jawaid Ahmed Mirza, Dr. Sherif Hussein Kamel,
Mr. Yasser Zaki Hashem, Mr. Mark William Rich-
ards, and Mr. Bijan Khosrowshahi.
In December 2017, CIB’s Board of Directors wel-
comed two non-executive members, HE Dr. Amani
Abou-Zeid and Mrs. Magda Habib, who adds to the
Board’s existing skillset. This expands CIB’s Board
to nine directors, seven of whom are non-executives,
with one representing Fairfax’s interest in CIB. Five
of the non-executive members are independent,
conforming to the international best practices of
corporate governance. The Board will advise the
General Assembly with the effected changes at its
upcoming meeting.
CIB’s Board met six times in 2017, during which,
with the assistance of its committees, it effectively
fulfilled its main responsibility of exerting the req-
uisite oversight over the Bank. The Board ensured
that CIB’s activities are run in a manner that meets
the highest ethical and fiduciary standards. Long-
term value for shareholders is enhanced through:
• Approving the Bank’s business and risk strategy
as well as major policy decisions;
• Assuring the long-term interests of sharehold-
ers are advanced responsibly as well as guar-
anteeing the disclosure of reliable and timely
information to shareholders;
• Evaluating, compensating and ensuring that
there is proper succession for key manage-
ment roles; and
• Developing and monitoring the Bank’s internal
audit and risk management policies and strategies.
The Board of Directors continued to enhance the
comprehensiveness of the Bank’s corporate gover-
nance framework, especially in the areas of risk
and compliance. The Board sets the risk policies
and the risk appetite and constantly monitors the
Bank’s risk profile against said appetite through
the Risk Group. The Board took concrete steps
in its Enterprise Risk Management (ERM) frame-
work, which is characterised by its uniqueness
among local and regional peers.
ERM adopts an integrated and forward-looking risk
approach combined with dynamic risk culture, robust
data governance and an adaptable technology platform
while being aligned with both business and risk strate-
gies and governed by a robust Risk Appetite Frame-
work. ERM uses risk oversight, control and governance
to efficiently utilise existing risk management capabili-
ties and help improve the operating environment and
reduce operational surprises and thus mitigate risks.
With the objective of continuously improving com-
pliance 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.
The Staff Issues Committee was initiated in 2011 as
a communication channel for employees to express
24.43eGP
book value as of fY2017
their queries, complaints and any work-related issues
to an unbiased body. The committee’s role extends
from dealing and solving staff complaints to setting
recommendations to enhance the work environment
and processes as well as ensuring an engaging work-
place. In 2017, 16 cases were presented to the Staff
Issues Committee. These cases included performance
disagreements, violation to the code of conduct, work-
ing environment issues, misuse of authority and termi-
nation of contracts. The issues raised to the committee
have been thoroughly investigated and analysed
where fair, sound decisions have been taken, and all
cases have since been resolved.
CIB Foundation
Since its establishment in 2010, the CIB Foundation
has strived to ease the burden on families in need of
affordable healthcare services. The CIB Foundation
is committed to enhancing the quality of services in
its partnership with institutions to provide the best
possible care for the country’s younger citizens.
During 2017, the Foundation’s activities and initia-
tives included the following:
• Over the course of 2017, the CIB Foundation
donated over EGP 20.6 million to cover the
second and third tranches of the Gozour Foun-
dation for Development’s project to fund 264
40
Annual Report 2017
Annual Report 2017
41
InTroduCTIon / BoD Report
eGP BN
12.50
net interest income
eye exam caravans, providing 158,400 disad-
vantaged students enrolled at public schools in
poor rural and urban areas with free eye care
services. The CIB Foundation allocated EGP
50.5 million over three years to fund caravans
in Sohag, Qena, Luxor and Aswan through the
6/6 Eye Exam Caravan Program.
• In April 2016, the CIB Foundation’s Board of
Trustees approved an EGP 1.5 million partnership
with the Sawiris Foundation and Star Care Foun-
dation to implement comprehensive community
development projects in Sohag, Assiut and Qena.
In 2017, the CIB Foundation donated over EGP 1.3
million to cover training for the medical staff and
outfitting the community health centres.
• In June 2017, the CIB Foundation’s Board of
Trustees agreed to purchase equipment and
supplies for the Children’s Hospital - Ain Shams
University Hospital for a total of EGP 3.53 mil-
lion over one year. In 2017, the CIB Foundation
donated over EGP 2.9 million to cover the first
instalment for the project.
• In October 2017, the CIB Foundation fulfilled its
commitment to outfit the Neonatal Intensive
Care Unit and the Paediatric Intensive Care
Unit at Raei Misr Hospital for a total of EGP 6.96
million over one year.
• In June 2017, the CIB Foundation’s Board of
Trustees approved supporting the fourth phase
of the Rotary Club of Kasr El Nil’s Children’s
Right to Sight program. The cost is EGP 2 mil-
lion over one year to fund around 500 critical
eye surgeries for underprivileged children. In
2017, the CIB Foundation donated around EGP
1.8 million to cover 543 surgeries.
• The CIB Foundation provided the Children’s
Cancer Hospital 57357 with another PET CT
scanner in July 2017 similar to the one do-
nated in 2016. At a cost of EGP 26.9 million,
the highly specialised equipment will allow
doctors to identify cancerous cells and plan
for removal during operations. The Founda-
tion also donated EGP 3.5 million in January
2017 to fund patient care in both the Cairo and
Tanta branches of the hospital.
• In 2017, the CIB Foundation donated over EGP
6.2 million to cover the outfitting costs of two re-
search labs in Magdi Yacoub Heart Foundation’s
Aswan Heart Center as part of its three-year
commitment to cover a total cost EGP 15 million.
• In July 2016, the CIB Foundation allocated
EGP 4.5 million to the Magdi Yacoub Heart
Foundation to cover the cost of 50 paediatric
open-heart surgeries. In March 2017, the CIB
Foundation donated EGP 2.25 million, covering
the second and final tranche of the project.
• The year saw the CIB Foundation donating EGP
6 million for the final instalments of the Yahiya
Arafa Children’s Charity Foundation’s project to
build a paediatric catheter lab at the Ain Shams
University Hospital. In January, the CIB Foun-
dation fulfilled its commitment to support the
annual operating costs of five paediatric units at
the Ain Shams University Hospital through the
Yahiya Arafa Children’s Charity Foundation at a
cost of EGP 2 million.
• In March 2017, the CIB Foundation allocated
EGP 1.75 million for 50 paediatric open-heart
surgeries at El Kasr El Aini Hospital to de-
crease the number of children on the open-
heart surgery waiting list.
• The CIB Foundation fulfilled its commitment to
cover the tuition expenses of its 50 CIB Founda-
tion Fellows for a five-year academic course of
study at Zewail University of Science and Tech-
nology. Over 2017, the CIB Foundation disbursed
the third year (2015/2016) and the fifth year
(2017/2018) tuition fees, totalling EGP 10 million.
• In June 2015, the CIB Foundation committed
EGP 2 million to the MOVE Foundation for
4.97%
net interest margin
of 400 children infected with hepatitis C virus
under the management of the National Hepatol-
ogy & Tropical Medicine Research Institute at a
cost of EGP 4.1 million over one year.
• The CIB Foundation dedicated over EGP 5.5
million to fund the Egyptian Liver Care Soci-
ety’s Children Without Virus C through ‘C-Free
Child’ program, which is the only program of its
kind in Egypt, screening and treating children
with hepatitis C for free.
• In May 2017, the CIB Foundation hosted 15
blood donation campaigns across its corporate
offices. Over 438 bags of blood were collected in
2017, potentially saving the lives of more than
1,314 people. The Foundation was honoured at
the World Blood Donation Day celebration at
the League of Arab States for its efforts in or-
ganising campaigns.
Children with cerebral palsy to renovate their
premises, allowing them to expand their op-
erations. In 2017, the CIB Foundation donated
over EGP 163,000 to cover the complete reno-
vation of the premises, as well as the purchas-
ing of essential equipment.
• In September 2015, the CIB Foundation’s Board
of Trustees approved funding the annual op-
erating costs of the CIB Foundation-funded
Maxillo-Facial Centre at Cairo University’s
Faculty of Dentistry with a total amount of EGP
45,100. In July 2017, the CIB Foundation donated
over EGP 22,500 to cover the final instalment of
the operating costs.
• In September 2016, the CIB Foundation’s Board
of Trustees approved funding the purchase
of an outfitted mobile dental caravan for the
Faculty of Oral and Dental Medicine at Cairo
University under management of Rotary Club
of Zamalek. The total cost is EGP 640,000,
and the caravan will be used by the Faculty to
perform necessary dental treatment to school
students in remote areas of the Cairo and Giza
governorates free of charge. In September 2017,
the CIB Foundation donated EGP 480,000 to
cover the final instalment for the project.
• CIB Foundation’s Board of Trustees approved in
March 2017 to support Cochlear Implants Sur-
geries for 100 children with hearing disabilities.
The Foundation allocated EGP 2.9 million and
donated over EGP 167,000 in November 2017 to
cover the first instalment of the project.
• In February 2017, the CIB Foundation sup-
ported the annual operating costs for the previ-
ously funded Intensive Care Unit (ICU) at Abou
El Rish El Mounira Children’s Hospital through
Friends of Abu El Rish Children’s Hospitals Or-
ganisation at a cost of EGP 2 million.
• In November 2017, the CIB Foundation’s Board
of Trustees approved funding the treatment
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Annual Report 2017
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43
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2017 Performance Measures
Results
2017 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
• Focus on capital, to cushion the Bank against
any unforeseen external shocks
• ROAE of 32.5% (after profit appropriation)
• 27% EPS growth
• Total tier capital recorded 19.3% of risk-weighted assets
EMPLOYEE
• Improve employee engagement score y-o-y
• Enhance the employee experience by:
1. Listening to 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
• CIB had an average of 6,475 employees in 2017 with an average an-
nual income of EGP 172,500 per employee
• CIB implements an Employee Stock Ownership Plan (ESOP) as
part of its compensation strategy aimed at attracting, motivat-
ing, retraining and rewarding outstanding employees, managers
and Executive Board Members. The ESOP allows designated em-
ployees to own CIB stocks at its face value via “Promise to Sell”
agreements. CIB allocates 1% of its issued and paid in capital to
ESOP. During 2017, CIB allocated a total of 7,935,100 stocks to a
total of 3,871 employees. Since the inception of the program in
2006, and its renewal in 2015, the Bank has allocated 75,460,093
shares to its employees (taking into consideration capital in-
creases throughout said period).
BUSINESS OPERATIONS
• Grow revenue faster than expenses
• Identify market gaps and attain first-mover
advantage by laying the groundwork ahead of
peers to allow the Bank to benefit from rising
opportunities
• Cost-to-income ratio of 20.8%
• Consumer banking net income rose 57% y-o-y to reach EGP 3.3
billion and gathered fresh EGP 27.8 billion and USD 258 million
in deposits, aided by the launch of tailored new products for the
household segment
• Institutional banking net income before tax rose 102% over
last year to reach EGP 7.2 billion, mainly on higher net interest
income, foreign exchange gains, strong trade services perfor-
mance and controlled expense growth
COMMUNITY
• Donate 1.5% of the Bank’s net annual profit
through the CIB Foundation
• Make positive contributions by:
1. Supporting employees’ community involve-
ment and fund-raising efforts
2. Supporting advances in its areas of focus,
which include education, arts, culture,
health and protecting and preserving the
environment
• Please refer to the CSR section for more details on CIB’s social
involvement and community development initiatives
CUSTOMER
1. Improve customer experience
2. Invest in core businesses to enhance customer
experience
• Much effort was exerted to improve cyber security stand-
ing, with a clear strategy and comprehensive plan to improve
security capability and continuously provide a safe banking
environment for customers
SAFEGUARDING THE INTERESTS OF
SHAREHOLDERS
• CIB maintains a proactive investor relations pro-
gram to keep shareholders abreast of developments
that could have had an impact on the Bank’s perfor-
mance. The IR team and Senior Management invest
significant time in one-on-one meetings, road shows,
investor conferences, conference calls and a proac-
tive 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 corpo-
rate access, in a 2017 Middle East Investor Relations Association
(MEIRA), survey carried out by Extel, CIB received Best IR by
CEO in the Middle East, and an IRO member of the team also
received a nod as the “Best Investor Relations Professional
– Egypt.” This is the fourth year running in which CIB has re-
ceived at least one award from MEIRA.
44
Annual Report 2017
Annual Report 2017
45
2017
In rEVIEW
2017 In rEVIEW
Institutional
Banking
Corporate and Global Customer
Relations Groups
Recognised across the Egyptian market for its strong
credit culture, CIB’s financing and underwriting
arm, provides best-in-class financial structures and
advisory services to its clients.
Our foremost goal is promoting the nation’s eco-
nomic development. We are committed to closely
monitoring the performance of projects and eco-
nomic entities that CIB finances to ensure their
ongoing viability.
Throughout 2017, we financed several government
mega projects in the fields of power, construction, tele-
coms, and infrastructure. We also focused on building
strategic alliances with select government entities/
authorities, including but not limited to the Suez Canal
Industrial Zone and New Capital City, which represent
a potential market for CIB products and services.
In tandem with financing mega projects, we are re-
alising the pivotal role of medium-sized companies
in the Egyptian economy. As such, we developed
adequate financial structures and services address-
ing this business segment with the ultimate goal of
bringing this lucrative sector to financial inclusion.
The group’s mission is to constantly innovate and lead
the market while maximising shareholder wealth.
2017 Accomplishments
Despite the challenging operating environment
witnessed during 2017 — reflected in the floatation
Egyptian pound, consecutive increases in interest
rates, energy subsidy cuts, and inflationary pres-
sures — we were able to grow the LCY loan portfolio
by 29% as of December 2017 from the figure seen in
December 2016 through various deals, including:
• Participating in two syndications to finance the
upgrade of Egypt’s National Electricity Grid,
adding 14.4 GW.
• Participating in a syndicated facility granted to
the Egyptian Petroleum Corporation to settle
dues to international concession holders (IOCs).
• Supporting the upgrade to telecom infrastruc-
ture and securing all financing vehicles serving
the transition to 4G technology.
Forward Strategy
Corporate and Global Customer Relations Groups
will continue their prudent, selective growth strate-
gies through pursuing two routes:
Focusing on Quality Loan Portfolio
The groups will set their sights on the government’s
areas of focus to uncover lucrative business oppor-
tunities associated with public spending in the fol-
lowing areas: ports, transportation, telecoms, and
power. In this respect, CIB is also poised to capture
opportunities that might arise in the renewables
sector through supporting green energy and the
Feed-in Tariff Program, which targets installed ca-
pacity of 1,800 MW from solar energy.
Additionally, 2017’s challenging economic land-
scape forced some investors to postpone their
investment plans until interest rates stabilise. As
such, both groups expect that CAPEX financing will
eventually return to previous levels.
Exploring New Segments and Product
Development
• Agency role for international lenders financing
Feed-in-Tariff projects
• Merchant tie-up
• Supply chain finance program
• Marketing eco-friendly loans
• Focus on exporters’ finance
• Further promoting digitisation
Financial Institutions Group
The Financial Institutions Group (FIG) plays an
integral role in the Institutional Banking Division
as it manages CIB’s relationships with other global
institutions and serves as an entry point and point
of first contact for credit institutions through the
collaboration of three specialised teams: Corre-
spondent Banking, Non-Banking Financial Institu-
tions, and Development Finance.
2017 Accomplishments
2017 was a good year for contingent business,
which is the FIG’s main income driver. The high
LG balances led to a 75% growth in LG fee income
and represented the largest contributor to the
growth in gross operating income, which was
55.4% higher than 2016.
FIG relied mainly on deposits to maintain net inter-
est income, with a deposit level of EGP 4.1 billion by
the end of 2017 — a figure that grew 14% compared
to EGP 3.4 billion last year.
Forward Strategy
FIG will continue to focus on growing its contingent
business through:
• Concluding the agreement with the Industrial
& Commercial bank of China (ICBC), the larg-
est bank in the world in terms of total assets, to
open CIB’s first RMB Nostro Account. This is set
to accommodate CIB clients’ import business
(ILC, IDC) denominated in RMB to reduce pres-
sure on USD and EUR and introduce further
products to the RMB umbrella at a later stage.
• Further strengthening and activating commu-
nication channels with exporters/associations,
targeting African markets, to get a better idea
of trade trends and provide better banking solu-
tions to cater to their needs. In parallel, more
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Annual Report 2017
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49
2017 In rEVIEW / Institutional Banking
55.4%
growth in aggregate
contingent business
efforts will be funnelled into strengthening
relationships with select banks in Kenya — the
trade hub for the COMESA region — to better
facilitate trade with East Africa.
• Continuing to aggressively attract LGs re-
lated to new projects launched in 2018, focus-
ing on Europe and Asia, by updating CIB’s
correspondents with all the projects taking
place in Egypt as well as providing a list of all
potential bidders.
Following the 2017 growth in both NBFI and Devel-
opment Finance, FIG expects to:
• Increase the facilities extended to existing
clients operating in leasing, car finance, and
microfinance industries.
• Market medium-term facilities to mortgage fi-
nance companies together with digital solutions.
• Participate in newly issued securitisation trans-
actions related to credit worthy clients.
• Continue to market CIB’s unique “Agency” and
“Participating Bank” services/solutions to in-
crease share of wallet through the inclusion of
the Ministry of Agriculture.
• Design a FCY product under the Agriculture
Development Program (ADP) to enhance re-
turns on deposited FCY grants and reduce the
pressure on LCY.
• Grow the wholesale microfinance loans portfolio
under the NBFI in line with the CBE’s decision
to include microfinance funding into the 20%
threshold under the SME’s funding initiative.
• Continue marketing mobile cash manage-
ment solution to MFIs.
• Enlist CIB as a participating bank under the Envi-
ronmental Pollution Abatement Project (EPAP III)
by signing an agreement with the agent bank NBE.
• Further support the growth of the microfinance
portfolio while maintaining a low/moderate
risk in collaboration with global government.
entities and financial institutions.
10%
fX market share
• Expand and diversify CIB alliances/partner-
ships with the Microfinance Merchants Co-
operation through the help of the NBFI and
Digital Banking Teams.
Treasury Group
CIB’s Treasury Group is one of the Bank’s top profit
centres, providing a wide range of products and
services. Treasury Group interacts with almost all
CIB clients, ranging from large corporate clients,
Business Banking, Retail, Wealth, and CIB Strategic
Relations clients. Treasury Group also interacts
with financial institutions, including funds, insur-
ance companies, brokerage companies, and others.
Treasury Group is segregated into three divisions:
1. The Foreign Exchange Division, which man-
aged to overcome the FX market challenges
through channelling a sufficient FCY base. This
covered all outstanding backlog of pending
trade finance operations, delayed dues and divi-
dend payments for multinational corporations
and foreign aviation companies, and paid off all
outstanding demand loan backlog.
2. The Money Market & Fixed Income Division,
which is responsible for money market, trad-
ing activities, primary and secondary govern-
ment debt trading.
50
Annual Report 2017
2017 In rEVIEW / Institutional Banking
eGP BN
51.5
syndicated, medium-term loans
for public sector companies and
quasi sovereigns
29%
y-o-y increase in lCY
loan portfolio
3. The Asset & Liability Division, which is respon-
sible for managing liquidity, interest rate gaps
(with associated hedging), and pricing local
and foreign currency deposits.
2017 Accomplishments
During 2017, CIB maintained a 10% FX market share
of foreign currency sales by customers and is looking
forward to moving into the cash exportation market
to enhance the cash market share. CIB managed to
build a strong position in the fixed income portfolio
and sovereign debt, benefiting from the interest rate
hikes that occurred in 2017.
The Assets and Liability Management Team did a
good job forecasting the market, maintaining liquidity
ratios in 2017 well above the regulatory requirements.
Forward Strategy
As the private sector business picks up in 2018, the
Bank will have an increased appetite in both depos-
its and loans to cater to customer needs. We will
continue our efforts to increase our turnover in 2018
with a focus on profitability, raising FX local market
share and interbank contribution.
Debt Capital Markets
The Debt Capital Markets Division (DCM) has an
unprecedented track record and unparalleled ex-
perience in underwriting, structuring, and arrang-
ing large-ticket syndicated loans, project finance,
bonds, and securitisation transactions as well
as a dedicated agency and security agency desk.
DCM assists its clients in raising medium- and
large-ticket project financing, PPP financing, and
syndicated loans while:
• Acting as lead arranger, book runner, and finan-
cial advisor;
• Preparing financial models and term sheets while
assessing feasibility studies with a view to advis-
ing on bankable structure for the transaction;
• Debt underwriting;
• Leading due diligence process and acting as
Technical Bank and/or Documentation Bank
to ensure legal, contractual, and technical risks
are properly mitigated; and
• Acting as Agent and Security Agent through one
of the only dedicated units in the banking sector.
2017 Accomplishments
In terms of project finance and syndications, DCM
in coordination with other banks arranged a total
of EGP 51.5 billion syndicated, medium-term loans
for public sector companies and quasi-sovereigns
in the power and oil and gas sectors. For private
sector borrowers, DCM honed in on selective deals
in the real estate, cement, oil and gas, telecoms,
steel, refineries, renewables, and petrochemicals
sectors. We have played a prominent role in the
FIT and BOO financings in the solar and wind
sectors, providing working capital facilities as
well as acting as Onshore Security Agent and Ac-
count Bank for a significant number of projects,
underpinning CIB as a preferred local partner for
the international financial institutions financing
those projects. DCM also focused on refinancing,
restructuring, and reengineering balance sheets
for private sector borrowers in light of unexpected
currency and interest rate movements that took
place and continued to play a prominent market
role in advising and arranging securitisation issu-
ances in cooperation with several partner banks.
Forward Strategy
In terms of project finance and syndications, DCM
will continue to focus on expanding into the alter-
native energy, utilities, and infrastructure sectors
(railways, ports, new economic zones etc.) in light
of the government’s plans to develop these sectors
as well a financing investors expected to set up
business in the Suez Canal Economic Zone.
DCM also plans to introduce new structures in the
market, such as the revolving structure.
Direct Investment Group
The Direct Investment Group (DIG) acts as CIB’s
investment arm with respect to the Bank’s engage-
ment in direct equity transactions. DIG’s main task
revolves around the proper allocation of investment
funds into specific industries where CIB’s return on
investment would be optimally maximised.
2017 Accomplishments
DIG widened the scope of the deal-sourcing process to
include screening the market for small and medium
size (SME) enterprises as well as big-ticket transac-
tions. During 2017, the team screened a large number
of new SMEs that operate in the financial services,
food and beverage, and renewable energy sectors. In
line with the national financial inclusion initiative,
CIB is finalising a new model for agent banking, tar-
geting financial inclusion in areas out of banks’ reach.
DIG is also finalising the Bank’s engagement model
in the venture capital space, with a primary focus on
financial technology. On the divestiture side, DIG has
managed the sale of CIB’s 90% equity stake in CI Capi-
tal Holding in a series of transactions ending July 2017.
Forward Strategy
For 2018, DIG is planning to leverage on economic
recovery by expanding its portfolio. DIG will focus
its efforts on marketing and deal origination, lever-
aging its vast network and the Bank’s proprietary
deal access to achieve its longer expansion strategy.
Strategic Relations Group
CIB’s Strategic Relations Group (SRG)’s main objec-
tive is to bridge the gap between mainstream com-
mercial banking and the non-commercial needs of
its client base, which consists of over 180 of the most
reputable and renowned international and local do-
nor agencies, NGOs, as well as diplomatic missions.
To meet the unique needs of our clients and serve to
facilitate their business operations as well as their
banking requirements, we provide a set of innova-
tive, tailor-made products and services such as:
• Special discount schemes on bank charges
• Tailored digital solutions (tuition fee collection,
visa fee collection, deposit monitoring and re-
porting, fund management and pension savings
plans, BSP Airline Clearing System)
• Mobile tellers upon request – Implant Unit/
Branch at customers’ premises
• Special scheme for staff loans
2017 Accomplishments
• Fully managed the FCY needs of our airline cus-
tomers post the devaluation.
• Grew our special clients’ portfolio to include
two more embassy strategic accounts.
• Won a deal to manage the Arab Academy for
Science and Technology’s end-of-service and
pension scheme.
• Making online payments available through Pay
Fort for the American University in Cairo (AUC),
along with automating their deposits.
• In collaboration with the Embassy of Germany
under the auspices of the Ministry of Foreign
Affairs, we sponsored the first-of-its-kind Em-
bassies Football Tournament as part of CIB’s
CSR agenda, aiming to break down barriers
between nations through promoting sports as a
universal language of peace.
Forward Strategy
• Continue to foster and nurture existing rela-
tionships while focusing on new educational
establishments of high calibre that are set to
open in the New Capital.
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Annual Report 2017
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53
2017 In rEVIEW
Consumer
Banking
The Consumer Banking strategy focuses on moving
toward a customer-centric organisation and uniquely
positioning CIB in terms of its customer experience,
arming it with a brand equity that competitors will
find hard to replicate. We plan to do this by:
• Leveraging our investments in data analyt-
ics, automating key customer processes and
aligning products to our key value segments
(Wealth and Plus).
• Offering richer alternative channels through
further investments in new features to offload
transactions that can be migrated from our
branches and in turn generate value by offering
customers products online.
• Strengthening our customer proposition to
further grow our customer base in our target
segments within the Egyptian banking market
and grow market share of key products.
Key Goals
Egypt’s economic growth is expected to continue to
accelerate in the near term with improved investor
confidence. This coupled with an underpenetrated
banking market provides an encouraging growth
scenario for CIB in the consumer sector. To support
this, we will deliver:
• A value-based market segmentation position to
take advantage of the key segments and target
market and retain and deepen relationships.
• Significantly upgrade the customer experience
106 EGP
BN
in CIB Wealth deposits for 2017
by aligning investments in technology (digital,
CRM, operations, straight through processing
[STP]) with a clear roadmap and plan to mea-
sure our Net Promoters Score (NPS)/customer
satisfaction at each key customer touch point.
• Refinement in our products to create clear dif-
ferentiation to our target market segments and
price them accordingly and in our approach to
the wider Egyptian banking market.
• Alignment of our marketing to segments by
using behavioural segmentation and CRM to
target more accurately and therefore improve
return on spend and deepen relationships.
Wealth Segment
We plan to continue to retain, attract, and grow our
customer base and create advocacy for our Wealth
12%
increase in CIB Plus assets
31%
increase in CIB Wealth assets
brand. Since launching the Wealth segment, the
strategy has been to satisfy the growing needs of
our customers through a unique set of products and
services. At the centre of the Wealth offering are
Wealth Relationship Managers who are responsible
for maintaining a relationship based on trust.
2017 Financial Highlights
• Total deposits reached EGP 106 billion, up
22% y-o-y
• Total asset portfolio hit EGP 1.8 billion, up
31% y-o-y
Key 2017 Highlights
We established a new learning and development
program for our Relationship Managers, exposing
them to a specialised development and training
module. Wealth Relationship Managers are entitled
to sit the International Introduction to Securities
and Investment exam offered by Chartered Institute
of Securities and Investment (CISI). Today, 19 have
attained this accreditation.
One of the main pillars of our 2017 strategy was to
deliver digital solutions aligned with the needs and
expectations of our customers. The plan not only
addresses customers’ digitally evolving behaviour,
but also reflects positively on the overall user expe-
rience, delivering convenience and reliability that
matches our customers’ lifestyle.
In 2017, we pursued several brand-building initia-
tives, sponsorships, and events that increased brand
engagement such as the Amr Diab concert held in
Marassi in August. We also extended a platinum
sponsorship in a charitable event that funnelled all
proceeds to the Ahl Masr Non-profit Hospital — the
first hospital specialised in treating burn patients
both in Egypt and the wider MENA region.
CIB Plus
In 2017, we continued to offer an improved customer
experience through a range of initiatives such as
direct communication with all Plus customers with
their designated Plus Bankers, holding reward and
loyalty events, widening the limits of Internet Bank-
ing for all Plus customers, and increasing withdraw-
al and purchase limits on Titanium debit cards.
We also strive to strengthen relationships with cus-
tomers, increase our understanding and awareness
of how the decisions we make affect them, and of-
fer suitable financial solutions. To support this, we
have increased the number of Plus bankers in our
branches by 20% compared to last year.
2017 Financial Highlights
• Total asset portfolio climbed by 12% y-o-y
• Total revenue grew 41% y-o-y
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Annual Report 2017
Annual Report 2017
55
2017 In rEVIEW / Consumer Banking
41%
increase in CIB
Plus revenue
42%
increase in Personal
Banking revenue
Personal Banking Segment
We are in the process of updating the entire Personal
Banking Segment to realise its full potential. The new
strategic direction will provide a solid launchpad
for the segment in 2018. Having said this, 2017 was
a great year for the Personal Banking segment, with
our customer base growing 23% in 2017 and total
deposits increasing 21%. ssets and CASA also showed
strong growth of 126% and 135% respectively. NTB
customers grew 27% and the number of digital bank-
ing users increased 30%. Revenue grew 41% while
expenses per customer decreased 6%. Digital migra-
tion efforts are paying off, with 7% more transactions
being offloaded from the branch network. In 2018,
the segment’s priorities will be to fully move toward
behavioural segmentation to better respond to cus-
tomer needs, create a new Personal Banking brand
identity, and focus on expense optimisation.
and lifecycle management. This will translate to
providing our clients with need-based propositions.
Cards Business
Credit Cards grew 20% to close ENR at EGP 2.9 bil-
lion despite key market challenges after the CBE’s
interest rate hikes and regulations. Strong growth
recorded in 2017 can be hinged on:
• 18% increase in acquisitions
• 5% increase in portfolio size
• 20% increase in ENR
There was also improved performance across all
portfolio KPIs:
• Drop in annualised attrition rate to 8.28% com-
pared to 12.04% in 2016
• 34% increase in spend
• Significant increase in 2017 balance build-up sales
• Instalment balance build-up sales increased
2017 Financial Highlights
14% in 2017
• Total deposits increased a significant 15% y-o-y
• Total asset portfolio climbed 18% y-o-y
• Total revenue grew 42% y-o-y
Consumer Assets (Household)
The Consumer Asset Portfolio has exhibited significant
growth of EGP 3.5 billion in 2017 despite the many chal-
lenges posed due to changing market dynamics includ-
ing interest rates and regulatory changes. CIB’s market
share grew to 7.68% in September 2017, which is the
highest market share across all private banks. The port-
folio recorded EGP 18.43 billion as of December 2017.
The Consumer Assets Division recorded a total rev-
enue of EGP 910 million as of December 2017, con-
tributing 13% to total Consumer Banking revenue.
Our key objective is to sustain this level of growth
in 2018 and to outpace the market through a more
segment-driven strategy that drives our product
propositions, acquisitions, service models, portfolio,
This increased portfolio was primarily driven by:
• A focus on premium cards acquisition (Platinum
and Titanium): These carry a higher return (1.85%)
than older Gold and Classic cards (1.16%). This has
been achieved through incentivising these more
profitable cards and reducing the entry criteria
for customers to obtain access.
• Portfolio management and balance build up:
Equal Payment Plan (EPP) 2017 enrollments
at EGP 697 million versus 2016 volumes of
EGP 546 million.
• Seasonal spend campaigns: Spend and win
campaigns, Ramadan campaigns (dining), and
Ramadan campaign (supermarket). Overall
campaigns increased spend from EGP 8.99 mil-
lion in 2016 to EGP 12.06 million in 2017. The
spend increase was generated from 29 spend
campaigns across 2017 versus 26 in 2016.
• Activation campaigns: NTB Early Month
on Book (EMOB) program and dormant
campaigns. These have been significantly
enhanced to drive activation performance
resulting in an increase of 6% versus a 2016 ac-
tivation rate of 3 MOB. The increase was due to
the launch of 10 activation campaigns versus 6
campaigns in 2016.
• Proactive attrition management: Credit cards’
annualised attrition decreased from 12.05% in
2016 to 8.28% versus a budget of 11.5%, primar-
ily through 16 reactive retention tools (e.g.: EPP,
bonus points, replacements, cash back etc.) and
proactive retention programs across 16 cus-
tomer card segments.
• Product launches: Heya re-launch.
• Sales contests and incentives: Launch of a
successful sales contest for direct and telesales
from April to June and a revision/revamp of
the incentive scheme.
Personal Instalment Loans Product (PIL)
The Consumer Loans Portfolio exhibited significant
growth of EGP 3.1 billion in 2017 despite market
challenges such as changing market dynamics, cur-
rency devaluation, and CBE interest rate hikes. The
portfolio hit EGP 13.1 billion as of December 2017
while the Personal Loans Business recorded a total
revenue of EGP 610 billion as of December 2017, con-
tributing 10% to total Consumer Banking revenue.
Our key objective is to sustain this level of growth
in 2018 and to outpace the market through a more
segment-driven strategy that drives our product
propositions, acquisitions and service models, and
portfolio quality.
Key Initiatives
CIB launched the Payment Holiday campaign,
which was designed to give more competitive-
ness to the unsecured loans offering and increase
acquisition. The promotion allowed customers to
apply for the CIB Personal Loan in November 2017
3.5 EGP
BN
Consumer Asset Portfolio
and postpone instalments for the first two pay-
ments at no extra fees.
The Overdraft Proposition improved payment conve-
nience through the availability of secured and unse-
cured programs to best meet the needs of our customers.
Acquisitions
PIL acquisitions grew 33% in 2017 mainly driven by
the following:
• Significant policy changes such as tenor exten-
sion, new income computation methodology,
payment holidays, and new payroll programs.
• Continuous training of our sales force.
• Enhancing the application turnaround time
and customer experience.
Portfolio
The portfolio grew 33% in 2017. The key drivers were:
• New initiatives and acquisition campaigns such
as payment holidays, etc.
• Proactive interest rate management in a vola-
tile interest rate environment.
• Better attrition management through exit bar-
rier simulations.
Mortgage Product
The Mortgage Business gained momentum in 2017
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Annual Report 2017
Annual Report 2017
57
2017 In rEVIEW / Consumer Banking
and is positioned as one of the key balance sheet
growth drivers of 2018. CIB is supporting the CBE ini-
tiative for mortgage loans to lower-income individu-
als, which has reflected in the tremendous growth
in sales acquisitions in 2017. Low Income Mortgage
Loans hit EGP 164 million in 2017 compared to EGP
29 million in 2016. The portfolio grew to EGP 200 mil-
lion in 2017 from EGP 39 million in 2016.
The increase in acquisitions was mainly driven by:
• Strong ties with the Mortgage Finance Fund:
CIB is considered one of the key banks financ-
ing low-income mortgages. Over the past year,
the Mortgage Team succeeded in establishing
a solid relationship with the Mortgage Finance
Fund triggered by a significant improvement in
operational process and turnaround time.
• Operational Process: CIB underwent process
enhancements in collaboration with all stake-
holders to reduce turnaround times.
• The Sales and Acquisition Model: The Bank set
up dedicated sales and coordination teams.
Liabilities
The success of CIB Consumer Banking is demon-
strated by the healthy growth in customer deposits,
which reached EGP 198 billion in total deposits by
December 2017, an impressive 15% y-o-y increase of
EGP 26 billion compared to year-end 2016.
CIB’s deposit market share reached 7.8% as of Sep-
tember 2017, maintaining CIB’s leading position
among private sector banks in the country. The
growth is a great achievement in a highly competi-
tive market of 39 banks.
Throughout 2017, Consumer Banking’s strategy
has focused on the household segment, which was
clearly reflected in the household market share
reaching 7.46% as of September 2017. In addition,
the Bank focused on short-term products as one of
the key pillars for 2017, which was reflected in the
CASA mix versus term products (medium and long
term) to 49.4% from 43.7% in December 2016.
We also developed ways to mitigate the volatility in
interest rates in 2017. A key pillar of our success has
been our quick and effective response to the interest
rate market and competitive pricing. The approach
has always been to ‘right-price’ the products with
multiple pricing tools e.g. selective pricing for TDs,
tiered pricing for savings accounts, and restrictive
pricing for FCY deposits.
Insurance Business
The CIB Insurance Business provides life and general
insurance programs that generate non-interest rev-
enues in the form of fees for CIB Consumer Banking.
CIB is now considered the largest distributor of indi-
vidual life insurance policies in Egypt.
Key 2017 Highlights
In 2017, AXA introduced a health insurance product,
exclusively through CIB Distribution Channels, for the
first time in the Egyptian market. This allowed CIB to
be the first bank to market such a significant product
to its customers. The launch capitalised on AXA’s vast
medical network in Egypt, which includes more than
2,400 medical providers to suit all client segments and
caters to the increased demand for adequate health
solutions in the Egyptian market. Furthermore, inter-
national health solutions were introduced with global
coverage that caters to a wide range of customer needs.
Strategic Goals
• Increase revenue contribution to Consumer
Banking.
• Increase market penetration by expanding
CIB’s customer base.
• Leading the market by introducing a wide range
of products from the best insurance providers.
2017 Achievements: Life and Health Insurance
• Life Insurance fee income increased by 16% in
2017 compared to 2016.
• The Life Insurance Business hit EGP 482 million
in 2017 compared to EGP 427 million in 2016,
leading to a significant growth of 13%.
• CIB was the first bank in Egypt to provide indi-
vidual international health solutions that cover
a wide array of global services.
• Realising the full launch of local health solu-
tions starting 2017.
2017 Achievements: General Insurance and
Bundled Products
• Credit Shield fee income increased 46% in 2017
compared to 2016.
• Family Protection Plan fee income increased
22% in 2017 compared to 2016.
• CIB finalised a referral model for Business
Banking’s unsecured customers, replacing the
existing Master Policy. Going forward, CIB will
develop different bundled insurance services
with consumer products and segments.
58
Annual Report 2017
2017 In rEVIEW
Business
Banking
Business Banking serves over 40,000 small, medium
and large enterprises through a dedicated segment
management for each size and a network of over a
hundred highly trained Relationship Managers and
Client Advisors across the country.
We offer a broad range of integrated financial so-
lutions, including cash management, secured and
unsecured lending, trade finance and e-solutions
to help our clients grow and manage their busi-
nesses efficiently.
2017 Accomplishments
Business Banking continued to report strong financial
performance in 2017, with deposits growing 10% to
EGP 59 billion (24% of CIB), before tax figure of EGP
1.6 billion, up 60% y-o-y on a top line of EGP 2.2 billion.
In 2017, Business Banking focused on developing at-
tractive products for our target segments, from highly
standardised small-ticket loans with rapid disburse-
ment to fully customised offerings for large clients.
On the people development front, Business Banking
implemented an individualised training programme
to upgrade our sales team’s capabilities. Relationship
Managers received in-house training sessions tai-
lored to their developmental needs, and more senior
members of the team underwent comprehensive
training that led to certification by the US-based As-
sociation of Accredited Small Business Consultants.
These programmes will promote a closer and more
value-added relationship with our clients.
Ongoing Forward Strategy
In 2018, Business Banking will focus further on op-
timising the customer journey and touch points for
each segment, including the expansion of dedicated
corporate branches and operational hubs, improv-
ing digital channels, and decreasing service times to
provide greater service quality.
Strategic Alliances
In our ongoing efforts to increase our value proposi-
tion to clients, Business Banking has expanded its
offering to include non-banking products and ser-
vices provided through carefully selected partners
on an arm’s-length basis. Initial services offered
include: accounting and auditing, governmental
relationships and legal consultancy, marketing and
advertising, human resources and training, IT, ERP,
CRM, and website development. These services are
offered on highly attractive terms to CIB clients.
Super Business Account Bundle
Business Banking continued to grow its innovative
“Super Business” account bundle targeting smaller
companies with a convenient and comprehensive
bundle of services including:
• Digital banking
• Debit/credit cards
• Point-of-sale solutions
• No minimum balances
• Fee discounts
Credit Products
Business Banking continued developing its range of
financing options for SME clients. Existing clients with
sufficient account activity benefited from our pre-
approved credit offering with rapid disbursement. Mer-
chants taking advantage of our payment acceptance
services similarly qualified for flexible credit facilities
with rapid turnaround times. Larger clients are offered
flexible multi-purpose lines tailored to their lines of
business through a simplified process featuring unified
risk acceptance criteria and limit-setting parameters.
Payment Acceptance
CIB maintained its dominant position in Egypt’s
payment acceptance sector, through 12,000 point-
of-sale (POS) terminals throughout Egypt.
Business Banking’s Payment Acceptance team is
also focusing on the growing e-commerce applica-
tions to capture exciting new business opportuni-
ties, adding 150 new merchants in the year.
2017 saw the introduction of new mobile POS
machines that allow the targeting of smaller mer-
chants and on-the-road transactions, substantially
increasing our addressable market.
The Payment Acceptance team will continue ex-
panding the categories and geographies it serves in
2018, driven by extensive data analysis and research
to target the areas of greatest opportunity.
Business Banking Profitability (eGP mn)
2014
2015
2016
2017
2,243
1,556
1,192
907
1,605
1,016
863
770
638
539
329
138
Total Revenues
Total Expenses
Gross Profits
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2017 In rEVIEW
Digital
Banking and GTS
60%
increase in online transactions
29%
migration rate to
online banking
In today’s world, digitisation gives banks the op-
portunity to take customer satisfaction to the
next level while offering the possibility for much
higher automation and related cost efficiencies.
We believe digitisation takes banks from be-
ing product providers to offering a continuous
contextualised service, helping customers better
understand financial and commercial affairs and
make better decisions.
The Digital Banking and GTS team has focused
on developing solid practices to maximise value
through a wide variety of digital assets built
during the last couple of years. This comes hand
in hand with focusing on how to measure value
from the Bank’s perspective and how to grow the
Bank’s bottom line.
In 2017, we focused on delivering digital value from
our diversified digital portfolio by taking a deep
dive into understanding existing digital channels
compared to those of the market, uncovering how
our customers interact with our digital products
and services, and optimising customer journeys
in various ways to deliver a superior customer ex-
perience. More than 55 million transactions were
processed through our consumer and corporate
digital channels, generating more than EGP 800
million in direct revenues and cost synergy as of
December 2017.
CIB has also been investing heavily over the years
in its infrastructure, security, and digital platforms,
developing all its touch points to serve the evolving
needs, intents, and expectations of customers. The
Bank has been exerting extensive efforts to meet
the varying needs of its customers through tailoring
customised solutions to both consumer and corpo-
rate customers by bundling traditionally consumer-
serving and corporate-serving solutions together to
address unique customer needs.
Our over arching forward-moving strategy will as-
sume the strategic posture that will allow CIB Digi-
tal Banking to improve the way it currently runs,
enhance its readiness to make choices, and allow it
to conduct experiments and develop new business
models that open doors in a resource-constrained
environment. This will be realised through focusing
on three key channels: 1) CIB’s core digital business
by maximising profitable growth from existing
products, customers, and channels, 2) digital busi-
ness optimisation through the utilisation of existing
assets and capabilities and extending them beyond
their intended use cases, and 3) developing new as-
sets and capabilities to create new market opportu-
nities and address new or unmet customer needs to
uncover novel revenue streams and alternate busi-
nesses to traditional banking.
ATM Network
CIB continues to sustain its competitive advantage
in the Egyptian market by running the largest ATM
network among private banks, with a network of
819 ATMs providing various types of functions in-
cluding cash withdrawal and deposit, credit card
settlement, bill payment, mobile top-up, mobile
wallet cash-in/out, and cheque deposit services.
Maximising the utilisation and return from our
ATM assets was a key focus area during 2017, where
we managed to increase the average number of
transactions across our ATMs by 20% by relocating
low utilisation ATMs to higher footfall locations in
conjunction with matching customer needs with
ATMs’ wide range of value-added services.
Additionally, CIB is mobilising and changing the
physical context of ATMs by bundling them with
other retail and corporate digital solutions to support
businesses in managing their cash. The most notable
use of this in 2017 was a partnership with one of the
largest hypermarket chains in the region. CIB created
an ecosystem revolving around customers’ cash-han-
dling processes by deploying cash recycling ATMs
that enabled cashiers to make large cash deposits
with same-day value (or at most the next working day)
through its on-site ATMs, which were equipped with
the ability to dispense the deposited cash to custom-
ers. This provided customers with a simpler experi-
ence and uncovered a major operational cost-saving
opportunity. CIB also benefited from a reduction in
the cost of handling cash and leveraged excess cash
to use in recycling ATMs and acquire a larger share of
customer receivables, hence migrating cash deposits
from our branches to our off site ATMs.
2017 Achievements
• The ATM network continues to serve branch
migration efforts, most notably achieving a 96%
migration rate in card payment transactions ver-
sus branches and a 463% increase in corporate de-
posit card transactions. ATMs contribute to cost
savings by offloading transactions from branches.
• Achieved a 36% increase in ATM network cash
capacity after upgrading our ATM cash capac-
ity and reduced cash replenishments by 9% af-
ter upgrading our Recycler ATMs and widening
our ATMs’ abilities to serve customers.
• Launched Talking ATMs, a first for Egypt, roll-
ing out text-to-speech-capable software across
96 eligible ATMs in our network to deliver a
voice-guided experience to our visually im-
paired customers.
• Launched the ability to pay tuition fees over
ATMs, another first in Egypt, allowing univer-
sity and school tuition fees to be paid across
CIB ATMs in line with the strategy of migrat-
ing transactions away from CIB branches and
extending the availability of the service beyond
branch working hours and locations.
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2017 In rEVIEW / Digital Banking and GTS
• Increased limits for both unique and daily cash
withdrawal transactions at ATMs across all
served segments, with 25,000 unique custom-
ers being migrated from branches to ATMs as
of December 2017.
Forward Strategy
Going forward, we will continue our efforts to drive
customer migration from branches and enhance
the customer experience through adding new
functionalities at competitive prices, maximising
utilisation and profitability from our ATM net-
work. We also plan to focus on various in-branch
digital tactics to help further optimise average
waiting and service times.
Online Banking
CIB launched its Mobile Banking App in 2017, with
a significant adoption rate of almost half our Inter-
net Banking users. Mobile Banking users show an
activity rate of 91% versus 53% for Internet Banking,
further reinforcing our “Mobile First” shift in strat-
egy. Overall, we have seen an increase of 59% y-o-y
in the number of online transactions, contributing
to a significant cost saving from offloading both
branches and the Call Centre.
2017 Achievements
• CIB gave its existing Internet Banking user in-
terface a face lift to create a more user-friendly
experience that is graphically rich.
• Launched e-statement services over Internet
Banking, which represents direct savings arising
from the logistics related to printing statements.
It will also enhance channel penetration and cus-
tomer activity over our online banking channels.
• Increased online banking transfer
limits,
which resulted in a 23% boost in online trans-
fers as of December 2017.
Forward Strategy
CIB Online Banking is a cornerstone of migrating
non-cash transactions from branches and inqui-
ries and requests from our Call Centre. In 2018, we
plan to continue increasing online banking pen-
etration and activity rates, optimising customer
journeys, as well as introducing new value-added
services to support efforts to digitise our custom-
ers’ banking needs.
Phone Banking and Call Centre
The CIB Call Centre handles an average of 3.6 mil-
lion calls annually, serving both CIB and non-CIB
customers. The Call Centre remains a crucial chan-
nel that allows consumer banking clients to speak
to a live agent to inquire about the Bank’s products
and services and submit complaints. During 2017,
we focused on offloading calls to self-service phone
banking, which is a cost-effective way to serve our
calling customers effectively. Today, our Phone
Banking service helps customers inquire about their
account, card balances, and latest transactions,
manage money transfers, pay bills, and activate
cards from anywhere at any time.
2017 Achievements
• Achieved a migration rate of 70% as of Decem-
ber 2017 compared to 53% in 2016 as a result of
migrating inquiries for account and card bal-
ance and movements to self-service functions.
• Conducted various customer journey enhance-
ments over Phone Banking IVR, including
improving the fund transfer customer journey
and introducing an option for customers wait-
ing on the Call Centre queue to be redirected
to self-service Phone Banking, which resulted
in an increase in the number of monthly regis-
trations to Phone Banking to 10,000 from 6,000
registrations in 2016.
Forward Strategy
We plan to continue to offload Call Centre requests by
migrating even more eligible calls to the Phone Bank-
ing self-service channel, aiming to reach a 73% migra-
tion ratio to optimise the Call Centre’s operational cost
and boost agents’ productivity. By the end of 2018, we
plan to build a case for an additional customer touch
point — live chat — with agents and a roadmap to
adopt artificial intelligence through the introduction
of a CIB chatbot to handle non-financial banking in-
quiries seamlessly and without the need for a live agent.
CIB Smart Wallet
CIB Smart Wallet continues to offer an innovative
payment experience serving both the banked and un-
banked segments by providing a convenient, secure,
and cost-effective way to make purchases through
their mobile devices. Customers can easily 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 different agents.
In light of the digital boom and the proliferation of social
media and community-sharing platforms, we focused in
2017 on bundling multiple digital capabilities to address
pain points in our customers’ value chain. By evaluat-
ing how we can play a role in enhancing our corporate
customers’ ability to serve their own clients in a cheaper
and more efficient manner, we formulated customer-
tailored solutions that repositioned our existing digital
capabilities and uncovered new revenue opportunities.
2017 Achievements
• Increased Smart Wallet cash in balance in
addition to increasing the daily and monthly
transaction limits.
• Achieved a 184% increase as of December 2017
in Smart Wallet transactions compared to 2016.
+294 k
Internet Banking users
107.5k
Mobile Banking users
+251k
Smart Wallet users
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65
2017 In rEVIEW / Digital Banking and GTS
173%
y-o-y increase in Smart
Wallet transactions
70%
migration of inquiries
from Call Centre to IVR
• Ran multiple marketing activities and campaigns
leveraging strategic partnerships to increase finan-
cial inclusion and wallet activity rates including:
- Partnership with e-commerce platforms:
Discounts/benefits for anyone who makes
purchases on the e-commerce platforms using
CIB’s Smart Wallet online card.
- Online Card Fee Waiver: Virtual Card Number
(VCN) transactions increased by 32% during
the promotion.
- Ramadan Donation Fee Waiver and Aware-
ness Campaign: Donations through Smart Wal-
let increased 463% compared to Ramadan 2016.
- CBE Awareness Campaign: Conducted through
radio, social media posts, in-branch posters and
flyers, press releases, SMS, and intranet.
- Cash-back Campaign: 10% cash-back on all
bills paid via Smart Wallet, a campaign that
was completed in March 2017.
- Free Beverage Promotion: Conducted an in-
ternal promotion for all Giza HQ CIB employ-
ees, offering a free beverage to anyone making
a purchase using Smart Wallet to promote
m-wallet payments (P2M).
- Social Media Awareness Campaign: Using
digital quotes for several use cases.
- Community Sharing Platform Partner-
ship: CIB announced the first partnership of
its kind with a community sharing platform
by offering CIB bundled digital capabilities
through CIB Smart Wallet to receive incen-
tives and salary disbursements seamlessly for
around 10% of total wallet users.
- Awareness Sessions: Conducted awareness and
education sessions for the microfinance segment.
Forward Strategy
• Throughout 2018, CIB will be working on sev-
eral different fronts, tackling on-boarding and
improving the user experience and customer
journey pain points by increasing granularity in
segmentation for both the banked and unbanked
segments. In addition to upgrading our user in-
terface and technology platform, we will also be
adopting a multi-vendor strategy to maximise
value from our existing assets to ensure we do
not overlook any type of customer. The distri-
bution network will also be a main focus area,
where we will further leverage our strategic part-
nership and grow our agent network to register
new wallets and expand our reach.
CIB Business Online and Corporate
Services
In 2017, CIB revamped its online corporate portals
and brought to market a best-in-class Business
Online corporate portal offering its customers a
single portal to manage their cash management
and trade service needs.
CIB Business Online offers its corporate customers
a single sign on and one-stop-shop suite of tailored
cash management products and services that im-
prove the management of incoming and outgoing
payments, streamline reconciliation and informa-
tion management, and enhance working capital
efficiency. The suite of services also includes several
innovative payment and payable products, collec-
tion and receivable products, and standard and
tailored information reporting delivered through a
variety of channels. As for trade services, for the first
time in Egypt CIB launched a Supply Chain Finance
(SCF) module to further enhance its trade service of-
ferings and enable clients to effectively manage risk
and optimise their cash flow.
SCF solutions support domestic trading transac-
tions, serving buyers and suppliers on the same
electronic platform, accessible from CIB’s website.
CIB can serve buyers and suppliers via the elec-
tronic online portal, enabling collaboration around
invoice submission to release early payments. Under
SCF, CIB will discount supplier invoices, presented
by the supplier online upon being approved and
acknowledged by the buyer (a CIB client). This will
extend needed financing by discounting presented
invoices (purchasing invoices at a discounted rate)
and releasing early payments to suppliers before
receiving a full payment from the buyer at maturity.
2017 Achievements
• Increased transaction volume compared to
2016, with EGP 58.4 billion in transactions com-
pleted over CIB Cash Online and Automated
Clearing House (ACH) direct credit portals as of
December 2017.
• CIB Trade Online reached 1,204 registered cus-
tomers over its trade portal.
• Our Corporate Payment Service (CPS), which
enables CIB clients to complete federal pay-
ments such as taxes, customs, and social insur-
ance online 24/7, hit 278 customers.
• CIB ranked first among all Egyptian banks in
e-finance government payments online.
• CIB currently has the largest market share
among Egyptian banks for both ACH Receivable
and ACH Payable:
- Outgoing payments increased from 43,000 in
-
January 2017 to 93,000 in December 2017.
Internal payment increased from 33,000 in
January 2017 to 67,000 in December 2017.
• Created a feature for corporate users to be able
to upload and validate checks online to reduce
call-back procedures.
• In addition to the reports available at the
Corporate Download Portal, new inquiries
were added for post-dated checks, outgoing
checks, money market, and loans.
• Cash Management’s total registered clients
reached 7,385 as of December 2017 due to our
24/7 accessibility at convenient sites.
• CIB ranked first in terms of volume in EG-ACH
Direct Credit Outgoing.
• CIB ranked first in terms of volume in Direct
Debit Outgoing.
• Named Best Treasury, Cash Management & Trade
Service Providers in 2017 by Global Finance.
Forward Strategy
In 2018 and beyond, we plan to continue our focus on
customer migration from branches to the Business
Online portal to allow customers to transact more
conveniently 24/7 without the need to visit a branch.
We want to offer customers digital solutions that
provide seamless and extensive benefits to their busi-
nesses and support them in achieving their growth
trajectories. CIB Business Online seeks to become a
convenient, secure, and cost-effective platform for
trade and supply chain finance, cash, treasury, and
lending services.
Innovation and FinTech Activities 2017
CIB FinTech Engagement was initiated to cater to Fin-
Tech startup needs, offering them better opportunities
for survival. In 2017, we established an echo-model of
support, built strategic alliances that serve CIB’s fi-
nancial inclusion objectives, and formulated a pipeline
of FinTechs that we can grow and take to market.
In line with our continuous efforts and commitment
to empower our staff to innovate and digitise our
products and services to deliver a more dynamic,
engaging customer experience, we have launched
CIB Digital Studio. Our studio will act as an innova-
tion hub to focus on fostering an entrepreneurship
culture that will challenge employees to innovate
and accelerate our digital proposition. This will de-
velop the services provided across electronic chan-
nels to individuals and enterprises that allow a more
dynamic and engaging customer experience.
Startup Acceleration Activities
In addition to launching the third cycle of the AUC
V-lab for five promising startups this year, 2017 saw
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67
2017 In rEVIEW / Digital Banking and GTS
CIB conduct the first hackathon in Egypt in col-
laboration with Angel Hacks. The activity sought to
create financial inclusion in the Egyptian market,
with themes covered including financial literacy,
micro lending, micro saving, and micro insurance.
The selected startups became part of the third AUC
V-lab cycle, with the event improving the relevance
and quality of admitted startups notably.
After having worked extensively with FinTechs, CIB
came to the conclusion that to create an impact on the
FinTech landscape in Egypt and to uncover tangible
value, it needs to operate beyond funding and accel-
eration activities. Therefore, the Bank took steps to es-
tablish a FinTech ecosystem, which will allow FinTech
startups to develop new products quickly by providing
access to technology, helping to navigate the complex
compliance and regulation landscape, and making it
easier to penetrate the Egyptian market. The ecosys-
tem will enable a framework within which CIB can
establish strategic alliances with key partners across
different industries, creating new business opportuni-
ties enabled by new digital business models.
As part of our efforts to back programs that build
entrepreneurship efforts at universities, we co-
designed a program with a well-known tech hub to
build financial literacy and entrepreneurial capac-
ity among students at the universities of Ain Shams,
Cairo, Suez Canal and El Minya. The program will
also work with schools to achieve the same purpose.
Forward Strategy
During 2018, all innovation and FinTech activities
will adopt a practical approach to value creation,
with all activities set to result in a final product or
service that can be commercialised. We will leverage
our corporate relationships and network of allies to
generate revenues in the short term, which will go
hand in hand with our capacity-building activities
to ensure innovation activities are sustainable.
3.6 MN
Call Centre calls
In-House Acceleration Program
Unlike a typical accelerator, our vision for an in-house
accelerator program sees us inviting startups to sit
one-on-one to develop new solutions that could revo-
lutionise the sector, enabling us to operate faster, safer,
and at a lower cost. The one-year program presents a
unique opportunity for talented, ambitious startups
to be truly supported by CIB’s resources. In addition
to providing industry knowledge, the winning startup
will be incorporated as part of a CIB business line, and
the Bank will commercialise the solutions on terms
negotiated as part of the initial contract with the busi-
ness. CIB plans to join forces with an international
accelerator management firm to manage the 2018
CIB Accelerator as a step toward transitioning to the
management of our own in-house accelerator in 2019.
Partnering with Mature Startups
Because we believe startups have a huge potential
to significantly enhance efficiencies, reduce costs,
and expand reach faster than established compa-
nies, we plan to partner with startups that have
been in business for one to five years and challenge
them to respond to issues specified by the Bank and
partner with us on a revenue-sharing basis. This is
set to create value for CIB and its wide base of cor-
porate customers. The challenges will be held semi-
annually and will create a pipeline of startups for
our in-house accelerator. Partnerships will not be
limited to FinTech startups, but will include those
offering innovative solutions across industries.
Co-Creation Program
We plan to sign co-creation agreements with key
technology providers to jointly develop and com-
mercialise financial/tech solutions targeting the un-
derserved segment or that solve corporate customer
problems. Solutions built will be commercialised
to our corporate/business banking database on a
revenue-sharing basis between CIB and the tech-
nology providers. This endeavour is set to serve all
other innovation initiatives without utilising any of
the limited in-house IT resources.
Global Securities Services
Global Securities Services (GSS) continued to main-
tain its leadership in the Egyptian market in 2017, with
a total market share of 20%. The year also saw the divi-
sion increase the value of total assets under custody to
EGP 334 billion compared to EGP 310 billion in 2016.
2017 Achievements
• Launched sub-account services for international
securities through opening segregated sub-ac-
counts for brokerage companies under CIB’s main
account held at international clearing depositories.
• Renewed the CIB GDR agreement with deposi-
tory bank Bank of New York Mellon (BNYM) for
another five years.
• Named the best sub-custodian bank in Egypt
by Global Finance Magazine for the quality of
services rendered.
• Grew our securities portfolio by EGP 3 billion.
• Assigned BNYM as sub-custodian for three new
GDR programs (Amer Group, Porto Group, and
Madinet Nasr for Housing & Development).
• Acquired three new transactions with a total
value of EGP 2.3 billion, maintaining our posi-
tion as the leading trustee agent in the market
+460k
IVR users
with 15 out of 17 securitisation SPVs for a total
value of EGP 10.5 billion.
• Maintained our leading position as the local
sub-custodian for all Egyptian GDR pro-
grams, handling 16 current programs with a
portfolio of EGP 35 billion.
Forward Strategy
In 2018, GSS will enhance the sub-accounts services
through providing financing services to brokerage
companies to settle international securities (GDRs)
and increase the volume of trading.
Digital Governance
The Digital Governance division was created as a
dedicated entity to manage collaboration between
the Digital Banking and GTS teams, bank gover-
nance support functions, and the CBE with the fol-
lowing main ongoing objectives:
• Coordinating and planning for Management
Committee deliverables and reporting, such as
memos, SLAs, department strategies, etc.
• Leading partnerships to provide new products to
simulate financial inclusion, such as providing
mobile wallet services to microfinance entities.
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69
2017 In rEVIEW
Coo
Area
CIB embraces advancement, putting in place a
long-term vision that is set to be achieved through
ongoing technological progression, enhancing in-
frastructure, and optimising operational efficiency.
This year, the COO Area continued the journey it
began over two years ago to transform the Bank into
one that is responsive to dynamic market changes
by exploiting the power of technology and security
as enablers for achieving our business roadmap and
position customer experience enhancement as the
pinnacle of fulfilling our business strategy.
During 2017, we took steps to fulfil that strategy by
diligently delivering and monitoring various business
projects and initiatives, with special focus given to
implementing the Security Strategy milestones and
enhancing environment security. This was particular-
ly important to cater to our Transformation Program
and digitisation concept and to provide a more secure
environment for our customers to bank safely.
The Operations Group implemented several auto-
mation and process reengineering initiatives to
increase operational efficiency and reduce process-
ing turnaround time to contribute to enhancing
customer experience and staff productivity. This
included the upgrade/change of the existing back-
end workflow system to reduce operational com-
plexities and enhance efficiency. In other areas,
continuous focus was given to enhancing service
standards with significant improvement noted for
Call Centre Service Levels efficiency through a new
Customer Relationship Management (CRM) sys-
tem that significantly increased the capability of
the Call Centre at managing customers’ inquiries
and requests in an efficient manner.
We aligned our customer centric focus with the
Bank’s digitisation strategy with the aim at tak-
ing customer satisfaction to the next level through
developing products, services, and initiatives that
contribute to delivering an exceptional customer
experience. In keeping with this, the Bank invested
heavily in improving its IT infrastructure, systems,
and service stability and scaling up its infrastruc-
ture base to keep pace with changing industry
dynamics. This is set to support CIB’s agenda by de-
livering a significant number of strategic programs,
including an enhanced online banking platform
for retail customers, new corporate online banking
channels, CRM, and others.
Our Corporate Customers can also now enjoy a
completely new online banking platform with
several newly added features, better performance,
and new user interface. The new platform aims at
increasing our Corporate and Business Banking
customers’ wallet share.
Our human capital development continued to be
an area of focus. In 2017 we concentrated on our
resource augmentation plan by hiring the required
calibres, and increasing staff knowledge through a
wide spectrum of technical and soft skill training
programs provided locally and overseas. This was
coupled with numerous initiatives for staff develop-
ment, recognition, and supporting innovation such
as the roll out of an internal Think Tank initiative
that allowed staff from across all Bank functions to
contribute ideas on how to enhance the customer
experience and increase operational efficiency. A
new recognition program was launched this year —
CIB Star Award — which is a Customer Experience
Excellence motivational award that gives CIB staff
the chance to become leaders in incorporating a
customer-centric approach in every aspect of a
customer journey and demonstrating a passion to
exceed customers’ expectations.
CIB continued with its branch expansion strategy to
increase its reach to customers across the country,
delivering eight new branches this year and bring-
ing the total number of CIB branches to 196.
Our digital approach led to an accelerated growth
in ATMs this year, with an additional 135 ATMs
added since the beginning of 2017 for a total of 819
ATMs across Egypt.
The COO Area continues to support and enable the
delivery of the Bank’s aggressive business strategy,
targeting the exponential growth of our customer
base. We have built a strong and robust support
structure to deliver our Transformation Program
and incorporating data analytics and customer
behaviour insights in our decision-making process.
We continue to work on improving our operational
efficiency in parallel with the gradual shift toward
digitisation.
Information Technology
Over the past couple of years, IT has become the major
catalyst for CIB to implement and fulfil its business
strategy at all levels in the organisation. As part of the
Transformation Program, we took a detailed look at
our core banking platform to assess its readiness to
cater to our future business requirements and sustain
our competitive edge. Our objective is to progress to
the latest core banking application version to leverage
more of the systems’ features and its effective main-
tenance and efficiency to cater for new product solu-
tions and our customer segmentation strategy.
Data analytics will accelerate and maximise the
ability to effectively create, integrate, and manage
data for the organisation. Insights from Big Data can
enable the Bank to make better decisions, which has
already began to bear fruit in collaboration with IT.
Focus was given to reinventing consumer-banking
engagement and facilitating the proximity and
diversity of services for the existing consumer
internet-banking model. Extensive technical up-
grades and a face lift was conducted to enhance our
Internet Banking services, empowering the Bank
with web technologies and key features along with
interactive elements. At the start of the year, we
launched our Mobile Banking application to pro-
vide customers with access to their accounts 24/7
and facilitate greater interaction and engagement
between the Bank and customers.
One of the main objectives we initiated for this year
was laying the foundation for clear digital guidelines
that can be used to develop and extend a unified
user experience/interface across different digital
touch points such as the website, Mobile Banking,
and Internet Banking. A comprehensive program
for upgrading our digital platforms is being under-
taken over the next two years.
CIB was the first bank to implement Zero Data Loss
Recovery capabilities for a number of our core da-
tabases as part of the Continuous Data Protection
initiative. We continue to examine our capabilities
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71
2017 In rEVIEW / COO Area
ATM Progression
555
588
641
748
819
2013
2014
2015
2016
2017
through running live drills of our services and sys-
tems from alternate sites in a seamless manner with
no impact on our customers, emphasising CIB’s
commitment to provide continuous services to its
customers and manage any disruptive situations.
2017 was a very rewarding year for IT. We acquired
the certification for Capability Maturity Model Inte-
gration (CMMI L2) designed to address IT Develop-
ment and Project Management and ensure IT can
achieve and comply with industry best practices.
CIB received Hewlett Packard Enterprise’s (HPE)
Shining Star Award at their global forum in Dublin
for the successful implementation of HPE’s monitor-
ing tool. CIB was also awarded the Best Data Protec-
tion Strategy award during the Dell-EMC Customer
Experience Day Event, becoming the first bank to
receive the honour regarding its 2016 strategy of
Continuous Data Protection.
Operations, Channels, and Customer
Experience
Operations, channels, and customer experience
are the three most important inter-related pillars
targeting the enhancement of customer loyalty and
satisfaction. In late 2016, proactive Key Service In-
dicators were set up to measure services from the
customer perspective. We took efforts to improve
the customer journey across all consumer digital
channels to support our digital strategy and in-
crease our customer migration to digital channels
while optimising the customer journey and reduc-
ing the cost to serve. Significant improvement was
noted across all Key Service Indicators, and to en-
sure continued focus on customer satisfaction, Net
Promoter Score surveys are conducted across all
segments and service channels. A new complaint
management module was launched on the CRM ap-
plication, which has reduced complaint-handling
time and enhanced our customers’ satisfaction.
Customer centricity was taken to the next level for
Corporate and Business Banking customers this
year with the launch of a new Corporate Branch
model specialised in exclusively serving Corporate
Customers. Five branches are currently operating
and additional branches are a work in progress. The
new model aims to provide a unique experience for
our Corporate Customers, serving them more ef-
ficiently and enhancing waiting time by breaking off
from retail branches.
To make more space for our front-liners, a number
of initiatives were undertaken (either process reen-
gineering or digitisation) to decrease service areas
at branches from 35% to 20% and expand the space
available to serve clients.
A large share of this year’s initiatives were aimed
at providing customers with new services, such as
the launch of contactless cards and POS tap-and-
go technology for merchant terminals and adding
a new service to send a monthly SMS to inform all
cardholders of their basic account information. A
new ATM monitoring tool was successfully rolled
out to maximise availability and enhance the cus-
tomer experience. More migration initiatives to
digital channels were introduced, such as accept-
ing tuition fees over ATMs to offload the branch
network, and several enhancements were applied
to the IVR call tree to facilitate IVR self-service
and offload Call Centre agents. We also began
sending an activation SMS for credit cards to al-
low customers to activate their cards by sending
a text message to a pre-defined number, which
has offloaded the Call Centre by around 40% and
increased customer satisfaction.
We kicked off the Operations Group Automation
Roadmap to map our straight-through processing
initiatives and their impact on transaction turn-
around time, customer handling, and optimisation
of existing headcount.
Sustainability and social commitment is a value
traced throughout the Bank even down to day-to-
day operations. Our paperless branch initiative was
launched as a pilot in some branches during the year
to support the Bank’s digitisation strategy and en-
hance transaction efficiency and turnaround time.
Furthermore, we successfully automated custody
statements and advises and improved the customer
experience by providing one automated statement
for all custody products.
in the technology, governance, people, processes, and
reporting domains. It contributed significantly to the
Bank’s capability to detect and respond to security-
related incidents, improve auditing and logging ca-
pabilities for top critical applications, and manage
brand protection and phishing attempts.
Significant efforts were exerted on the compliance
side this year. In August, CIB attained its first Pay-
ment Cards Industry – Data Security Standards
(PCI-DSS) certification after the exertion of vast
efforts to ensure the Bank’s compliance with one of
the most sophisticated security standards for card-
holders’ data, hence providing a significantly more
secure banking environment for our customers.
In compliance with CBE regulations for mobile pay-
ments, concrete steps were taken toward fulfilling
the compliance requirements due in November 2017.
Additionally, we began implementing a Swift Secu-
rity Program (CSP) to meet mandatory compliance
requirements that ensure we apply swift regulations
in accordance with international standards. These
efforts anchor the Bank’s commitment to remain
up to date with all regulatory, compliance, and best
practice requirements and guidelines.
On the Business Continuity Management front,
the Bank completed the automation of its Business
Continuity Planning lifecycle by implementing a
new automated platform aimed at improving the ef-
ficiency of managing the plans, efforts, tests, and the
management of any disruptions that could impact
the Bank’s operations. CIB’s efforts on this front are
continuously recognised by the business continuity
industry, with the Bank being shortlisted for the
12th time for the Global Award in Business Continu-
ity from the UK-based CIR magazine.
Branch Progression
153
161
187
192
196
2013
2014
2015
2016
2017
On the premises and real estate front, CIB became
the first bank in Egypt to acquire the GPRS Green
Certificate, which was awarded to the Smart Village
3 Building. CIB is expanding its footprint in Smart
Village through a fourth building that is currently
in the fit-out phase, and we also established and
commenced operating a state-of-the-art printing
centre in the business district. The Bank continues
to uphold the tenets of Corporate Social Responsi-
bility (CSR) by contributing, along with officials in
Hurghada, in the development of the Hurghada CIB
Square next to CIB’s main branch through designing
and implementing the landscape area in addition to
installing CIB branding.
Security & Business Continuity
The evolution of security risks has necessitated
that CIB develop its security structure and its
functions to build and enforce stringent security
governance policies. It has also made it necessary
to continually develop our security functions ma-
turity levels and cover all governance, risk, compli-
ance, and operations/administration aspects. CIB
was able to embark on its security transformation
journey with assurance due to the emphasis placed
on building advanced measures and solutions that
protect the Bank’s customers, data, and market
position. We started by defining the security strat-
egy with two main directions: Managing Security
Risks and Enhancing Cyber Security Posture.
In 2017 CIB established the Security Operations Cen-
tre (SOC) — the first of its kind in-house SOC in the
Egyptian financial sector — which has proven its im-
portance after the global hike in sophisticated cyber-
attacks. SOC made significant strides during the year
and according to an assessment conducted by an
international consultant, it achieved a much higher
maturity level than planned in comparison to other
financial institutions in the Middle East and Africa
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73
2017 In rEVIEW
financial
Control Group
During 2017, the Financial Control Group continued
to broaden its scope and functions, adding to CIB’s
overall efficiency and market-leading performance,
achieving remarkable success in four key milestones.
Established in 2016, the Capital Management Unit
played a key role during 2017, striving to continuously
maintain the optimal capital mix between Tier I and
Tier II capital on one hand, and between local currency
and foreign currency on the other. It also sought to
achieve the lowest possible cost while hedging against
foreign currency fluctuations all the while proposing
the appropriate cash and share dividend mix and ac-
commodating for foreseen macroeconomic and regu-
latory developments. The unit has further delivered
strong performance in monitoring the Bank’s capital
performance and in determining the optimum capital
buffer above regulatory requirements in a way that
manages the trade-off between solvency and profit-
ability. The latter was particularly important in light of
stringent regulatory requirements officially enforced
by the CBE at the outset of 2017, namely the Internal
Capital Adequacy Assessment Process (ICAAP), the
Capital Conservation Buffer, and the Systemically
Important Banks (SIB) buffer. Over and above, the unit
worked under the umbrella of the Bank’s Enterprise
Risk Management (ERM) Division to move from the
Regulatory to the Economic Capital Model.
2017 also witnessed the launch and proximate
finalisation of the IFRS 9 system implementation,
which is expected to be up and running by end
of the first quarter of 2018, thereby successfully
meeting the effective date set by the International
Accounting Standards Board (IASB). This ensures
continuous compliance with international regula-
tions, as required for CIB’s GDR program on the
London Stock Exchange. On the basis of the cur-
rent expectations for national interpretation of
IFRS 9, which has not yet been issued, the Bank
is expected to be prepared to make the necessary
changes based on the CBE’s unique interpretations
of the standards. Further adding to the progress,
the first set of IFRS 9 compliant proxy financial
statements were produced during the last quarter
of 2017, allowing for a better understanding of the
potential effects of the new standard on the Bank’s
profitability and capital levels.
Starting in 2016, the Financial Control Group took
the lead in introducing the Value-at-Stake model to
assess the feasibility of new and recently conducted
projects, given the Bank’s considerable capital expen-
diture, thereby coping with the continuous advance-
ment in Information Technology, while rationalising
investment spending and ensuring the best utilisa-
tion of the Bank’s resources. By the first quarter of
2017, the VAS concept was fully implemented for all
strategic projects with clear and defined guidelines,
being monitored on a quarterly basis to include the
updated performance of the projects in the post-
implementation phase.
Finally, and in line with CIB’s commitment to
maintain the trust of its shareholders, the Taxation
Department played a remarkable role in obtaining
clearance from the Egyptian Tax Authorities re-
garding all tax obligations, giving CIB shareholders
unique transparency and certainty concerning the
largest tax liabilities faced by Egyptian companies.
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Annual Report 2017
The Bank’s solid performance
during the year hinged first on its
long-term, preemptive approach
to balance-sheet management.
2017 In rEVIEW
Big
data
90%
accuracy rate of CIB’s
Anomaly Detection Model
2017 was yet another challenging year for the Ana-
lytics & Data Management team as it attempted to
overcome several hurdles to deliver tangible results.
Our focus this year was divided into three axes:
innovation, consumer analytics, and all while con-
tinuing the infrastructure build-up started last year.
Consumer Analytics
Consumer analytics and focusing on customer behav-
iour has been one of our goals for this year, and likely
years to come. We aimed to transform CIB into a more
customer-centric organisation through numerous
projects. To start, we completely revamped the existing
balance-based customer segmentation represented in
the Wealth, Plus, High Net Worth, and Core segments,
and a fully customised, i.e. data-driven, behavioural
segmentation was proposed that puts the customer
at the heart of the organisation and, hence, decision
making. This puts more emphasis on lifestyle and
consumption behaviour and will help business and
product owners create more targeted promotions and
propositions and improve the customer experience.
The Data Team also worked on establishing an ex-
haustive understanding of the existing base by seg-
ment, including overseas customers. The insights
covered all aspects of CIB product consumption, in-
cluding their adoption behaviour, preferred product
combinations, and associated profitability. It was
further extended to assess customer activity levels
and to identify existing opportunities and threats.
To achieve a 360 view of our customers, several key
data science models were developed to provide a
thorough understanding of a customer’s typical
journey with the Bank. A churn, i.e. affinity, pro-
pensity model was developed to unify the defini-
tion of a potential churner across CIB and identify
(score) customers who are more likely to churn in
the short term unless targeted with the right (tai-
lored) retention offering. The model findings were
coupled with an assessment of the potential losses
associated with the phenomenon of churn during
the previous years. Customers identified by the
model as high risk of churn can be retained and,
accordingly, result in higher customer retention
rates. Based on a simulation done by this model,
there is a potential net profit increase of c.EGP 29
million, resulting from the retention of 33,000 cus-
tomers per annum (based on 2016 figures).
We also created five Customer Indices to standardise
reporting on customer performance. The main aim
was to provide the Consumer Banking Team with
KPIs that represent customer performance during
any given period of time and thus enable stake-
holders to monitor and track how their behaviour
evolves with new marketing propositions or pricing
decisions. The team developed a segmentation of
credit card users by their top merchant category code
(MCC) to help create targeted marketing campaigns,
hence realising higher spends and consequently
profitability and boost customer loyalty. The team
also worked on a post-assessment of Equal Payment
Plan propositions to provide informed recommenda-
tions for enhancing our offerings. Customer Indices
are expected to have a non-financial impact on the
business, but introduced KPIs will allow Consumer
Banking to track and monitor how customer behav-
iour evolves over time with marketing campaigns
and strategic decisions.
We also joined forces with the Compliance Depart-
ment to develop an Anomaly Detection Model with an
accuracy level of over 90% in identifying risk and fraud.
It is worth mentioning that the worldwide standard for
similar models at other banks is an average 70-75% ac-
curacy rate. The model is expected to identify irregular
behaviour of retail customers who use their accounts
for business purposes and should help the Compli-
ance Department take necessary corrective actions
to ensure CIB continues to abide by CBE regulations
at minimum incurred costs. Moreover, it highlights
potential opportunities among retail customers who
need business services and support. The model is cut-
ting down manual fraud detection time by at least 50%.
This year also saw us employ Operations Research
in a project focused on call-centre optimisation and
performance improvement. The project assessed
the current workflow to identify opportunities for
improvement and used statistical forecasting tech-
niques to help anticipate busy periods. This will help
optimise resource allocation and make it easier to
provide the necessary workforce when needed to
provide fast and effective customer service.
We also used analytics to develop a simulator of a
customer’s journey within branches that focuses
mainly on teller transactions. The main objective was
to reengineer and optimise the process and workflow
within branches, which will eventually enhance the
overall customer experience. It provides “what-if”
and scenario analysis capabilities to minimise the
cost of trial and error, which was previously the stan-
dard practice. The team is also currently working on a
Facility Location model, which should help optimise
the location, and hence costs, of any Bank facility
established in the future, be it an ATM or a branch.
As for our Product Recommendation Engine, the team
found this year that including risk appetite in deter-
mining the next bundle offered to customers was not
significant and that replacing it with a purchase pat-
tern would be of better value. As such, a Next Best Ac-
tion (NBA) model was developed to help promote the
next product offering based on its estimated appeal to
customers according to their existing product portfolio
instead of focusing on achieving pre-set targets regard-
less of customer preference. The model is expected to
increase product acquisition by at least 10%.
The team was also responsible for formulating the
business case for the Household Strategy, which was
built in a customer-centric manner and included
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77
2017 In rEVIEW / Big Data
Human
resources
all the expected IT and human capital investments
and their impact on financials. This business case
helped quantify the segment, product, and channel
financial targets as well as the impact of process en-
gineering and IT investments on cost optimisation.
Innovation
We focused our data innovation efforts this year not
just on CIB customers, be they individuals or corpo-
rates, but on all data customers inside and outside
CIB. Whether you’re CIB staff, a consumer, or a peer,
we worked on innovations that can change the finan-
cial landscape and cement CIB’s leadership position.
The centre of our innovation projects this year was
the talk of the financial sector — Distributed Ledger
Technology (DLT) or Blockchain. This technological
advancement could pose a serious threat to the indus-
try, which is why we’re working on being a step ahead
by working extensively with EMC2 on a research paper
to better adapt the new technology for the regulatory
and macro landscapes in Egypt. Through this endeav-
our, we identified the possible uses as:
• Operational simplification: Eliminates man-
ual efforts required to perform reconciliation
and resolve disputes.
• Regulatory efficiency improvement: Enables
real-time monitoring of financial activity be-
tween regulators and regulated entities.
• Counterparty risk reduction: Eliminates the
need to trust counterparties to fulfil obligations
as agreements are codified and executed in a
shared, immutable environment.
• Clearing and settlement time reduction: Inter-
mediates third parties that support transaction
verification/validation and accelerates settlement.
• Liquidity and capital improvement: Reduces
locked-in capital and provides transparency
sourcing liquidity for assets.
• Fraud minimisation: Enables asset provenance
and full transaction history to be established
within a single source of truth.
CIB joined R3, an alliance of over 80 institutions com-
mitted to delivering the next generation of financial
infrastructure. Members will collaborate on re-
search, experimentation, design, and engineering to
help advance state-of-the-art enterprise scale ledger
solutions to meet banking requirements for security,
reliability, performance, scalability, and audit.
Incubation: Fast track ideas by developing proof of
concepts and market propositions quickly to gradu-
ate to accelerator or stop.
Research/Professional services: Drive delivery with
dedicated Corda business and technical experts.
Acceleration: Accelerate proof of concepts into
production.
Community: Collaborate with industry experts and
contemporaries within other R3 member organisations.
Starting 2018, we plan to capitalise on the analytics
work already conducted in 2017 in keeping with our
belief that data is the future. As such, we plan to con-
tinue harnessing the power of data to keep CIB at the
forefront of the Egyptian financial sector and to fulfil
our duty toward our customers and shareholders.
At CIB, we believe our people are the most important
assets in making the Bank’s strategy a reality. Our
Human Resources (HR) strategy focuses on five main
pillars to support the Bank’s expansion, customer
segmentation, digital transformation, and aim to
provide a superior customer experience. These pil-
lars are: Talent Acquisition and Employee Retention,
Talent Management and People Development, Com-
munication, Reward, and Automation.
The aim of our HR strategy is to help drive the required
changes in leadership, talent management, perfor-
mance management, reward and recognition, personal
development, staff communication, and organisation-
al structures that are needed to ensure CIB achieves its
strategic goals and that our employees are satisfied.
Talent Acquisition and Employee
Retention
Our hiring strategy in 2017 directly aligned with the
Bank’s overall strategy of identifying critical missing
roles and formulating tactics to fill those roles at the
soonest possible opportunity. We focused on hiring for
strategic growth areas and worked on the development
of a young workforce through the MADP program, hir-
ing a total of 532 new people during the year.
Last but not least, a 40-event tour was launched
across different universities and venues in Egypt to
promote the CIB Employer Value Proposition and
its competitive advantage. This initiative maintains
CIB’s firm commitment toward the development of
Egyptian youth across different fields and preparing
young people for the labour market, which creates
a new generation of qualified candidates who will
drive the country’s development and growth.
In 2018, HR will continue to attract, identify, develop,
and retain top talents across all areas though focus-
ing on delivering a clear and sustainable recruitment
strategy that encourages and enables the develop-
ment of internal talent. This is in addition to the
identification of external talent, the use of appropri-
ate tools and methods for recruitment, and setting
the GoTo Recruitment Strategy for an outstanding
candidate experience through benchmarking all the
recruitment stages from screening until on-boarding
against top-notch international standards.
CIB will continue to promote career progression
and people development for its talents as we work
toward building a strong internal talent pool
while keeping headcount growth at a minimum.
As such, employee retention is one the Bank’s key
long-term successes, with CIB prioritising retain-
ing their top talent and looking for effective ways
to keep their best employees content. CIB’s over-
all T/O ratio was 6.4% as of December 2017. The
year also saw the standard CIB entrance exam
replaced with a new assessment tool dubbed the
Ability Test, which assesses new hires’ numerical
reasoning, vocabulary, and critical thinking.
Talent Management and People
Development
In 2017, a comprehensive suite of leadership train-
ing programs and modules were resumed. CIB in-
troduced innovative ways to effectively up-skill and
empower CIB managers with the best professional
learning experience by building on the IMD track
(International Institute for Management Develop-
ment) that was introduced in 2016.
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79
2017 In rEVIEW / Human Resources
532
new hires
50
members of the
lead Program
CIB’s HR strategy focuses on
Talent Acquisition and employee
Retention, Talent Management
and People Development,
Communication, Reward, and
Automation to support the
Bank’s growth.
Moreover, the Frankfurt School Leadership Track
was resumed, with two rounds of Transformational
Leadership taking place for 145 delegates over two
modules. Currently, ongoing agreements are taking
place with Frankfurt School to capitalise on the on-
going journey for those who successfully attended
Module I and Module II to pave the way for 2018.
HR continued to enhance its talent management
programs, introducing a newly revamped MADP
program in February 2017. The three-month program
now allows all MADP trainees (junior hires) to re-
ceive training sessions about various bank areas and
product knowledge. Furthermore, middle manage-
ment programs MMDP and MMCC were revamped
and consolidated into a single middle-management
program (the CIB Lead Program). Executive man-
agement identified and assigned 50 key talents at
the management level to the program, all of whom
underwent an online 360 ELP assessment conducted
by Korn Ferry Hay Group. Key talents have a series of
customised training modules to attend (seven core
and three optional) throughout 2017/2018.
Given the Bank’s focus on delivering the best cus-
tomer experience, the Learning & Development
Department (L&D) continued addressing service
quality through designed programs such as the
Icare program. The program focuses on branches,
up-skilling branch managers, front liners, and back
office staff on how to handle a variety of customers
while delivering the best service quality.
In cooperation with the Marketing & Corporate
Communication Department, L&D organised the
Customer Service for Special Needs Program to
coach CIBians on how to professionally engage with
customers and colleagues with special needs.
Moreover, we launched the Service Award Rec-
ognition Program (Star Award) to recognise the
Bank’s best performing staff in an effort to increase
service levels, empower middle management, and
enhance employee morale.
In 2018, CIB will continue to develop and support
the growth of transformational leadership manage-
ment through continuing to innovate the Leader-
ship Development track, which was developed and
kicked off in 2016, with the help of IMD, Frankfurt
School, and other reputable specialised vendors in
this domain. Its aim is to utilise CIB’s leadership
capacity in alignment with the Bank’s strategy and
to build core CIB leadership competencies.
Additionally, L&D plans to build on the Talent
Management Programs initiated in 2017, aiming to
provide young talent with comprehensive exposure
to different business areas, creating a solid pool of
young talents and potential successors.
Furthermore, finalising the Competency Frame-
work will be one of 2018’s key priorities. The funda-
mental basis of the competency-based approach is
to understand the key competencies within any role,
including the settings that cause some individuals
to perform better than others. This takes place
through 1) understanding what skills high perform-
ers possess and the behaviours they demonstrate
that are different to lesser performing individuals
doing similar work, 2) defining the critical per-
formance differentiators to act as a development
template, and 3) developing and managing employ-
ees in line with the high-performance template.
Additionally, performance management system
automation will be finalised and integrated with
the competency framework. These two vital projects
will help CIB build a performance-driven culture by
creating objective tools for measuring talents and
hence creating a solid pool of successors.
A plan was also laid out to utilise rotation programs
and embed CIB internal trainers into the Bank’s
framework to deliver a 2018 training guide and
engage with employees who are enthusiastic about
their work. This is set to be a positive step in enhanc-
ing CIB’s reputation and brand equity.
CIB will continue to develop a high-performing
culture where staff performance is supported,
rewarded, enhanced, and managed effectively
through establishing clear career paths and oppor-
tunities for career progression.
Communication
In continuation of the Bank’s efforts to foster a
high-performing culture and ensure alignment
across divisions, 15 town halls were led by the head
of HR to improve communication and increase
performance-related dialogue. Moreover, 34 focus
groups were conducted across the Bank to develop
action plans linked to the results of the 2016 Em-
ployee Effectiveness Survey (EES).
HR will continue building the needed communi-
cation tools to enhance the level of engagement
within the organisation and increase awareness.
Accordingly, 2017 saw us launch the HR Mobile
Application, integrated with the HR Oracle mod-
ule, offering Oracle self-service functions.
Finally, the fourth EES, which was postponed from
2017, will be launched in 2018. EES aims to assess
the level of employees’ effectiveness in line with
implementing action plans set for 2016/2017.
Reward
In light of the Banks’ objective to improve its Re-
ward Management system, CIB focused in 2017 on
benchmarking the Bank’s compensation and ben-
efits offerings across other local and regional banks
by participating in annual salary surveys with Korn
Ferry Hay Group.
Furthermore, CIB developed a flexible reward
framework that is able to differentiate between
front-liners, technical, support, and back-office roles
to step away from the “one-size-fits-all” approach.
This allows us to place jobholders at different levels
based on their job contribution to the organisation,
while taking into consideration talent scarcity in a
highly competitive market.
One of CIB focus areas this year was preparing a
Job Evaluation program and revamping our grading
and salary structure, both of which resulted in high
levels of satisfaction after the application of a new
profit-sharing calculation methodology. We aligned
CIB staff members’ compensation with market
movements to ensure our external competitiveness
is well positioned in the market, enabling us to at-
tract, retain, and allocate the best calibres.
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15
town halls held
34
focus groups held
EES
employee effectiveness
Survey assesses employee
performance to align with the
Bank’s action plan
Our “Total Reward Approach” is highly valued
by staff and facilitates organisational objectives
through delivering a total Reward Strategy, which
supports the achievement of organisational aims
while positioning us as an employer of choice. As
such, we aim to implement a new employee stock
ownership plan allocation mechanism directly
linked to profit share and improve HR benefits
and medical services across all business areas in
collaboration with the Social Insurance Services
Community and Social Insurance Fund. We also
plan to offer our employees more special offers at
universities, schools, and clubs and provide better
offers for car servicing.
Automation
Ongoing automation initiatives continued in 2017,
seeing us introduce new technologies that auto-
mated numerous activities through introducing
the Oracle Learning Management (OLM) system.
OLM enabled all CIBians to view L&D’s in-house
program catalogue subject to their eligibility
criteria and allowed us to launch online courses
integrated with the Oracle system.
Going forward, we plan to continue to build on au-
tomation initiatives to adopt better, more integrated,
and innovative solutions with functional capabilities
to enhance the Bank’s productivity and efficiency.
Risk
Group
The Risk Group (RG) provides independent risk
oversight and supports the enterprise risk manage-
ment (ERM) framework across the organisation.
The group proactively helps recognise potential
adverse events and establishes appropriate risk
responses, which in turn reduces costs and losses
associated with unexpected business disruptions.
It works to identify, measure, monitor, control, and
manage risk exposure against limits and tolerance
levels and proactively reports to senior manage-
ment and the Board of Directors (BoD). The area
is managed by the Chief Risk Officer (CRO), whose
responsibilities include the day-to-day monitoring
of the following key areas: credit, investment, mar-
ket, operational, conduct, liquidity, interest rate,
security, reputational, regulatory, legal, social &
environmental, and other non-financial risks, as
well as the establishment of a holistic and inte-
grated risk management framework.
Overview
2017 was yet another year of uncertain economic
circumstances, but CIB’s prudent risk manage-
ment framework supported the containment of
losses. Despite the challenges, the Risk Group con-
tinued to align and collaborate with businesses on
product development and risk strategies to drive
growth without compromising portfolio quality,
which was controlled within the risk appetite pa-
rameters and continued to be on sound footing.
ERM
adopts an integrated and
forward-looking risk approach
with dynamic risk culture,
robust data governance, and an
adaptable technology platform
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Risk Management Framework
Financial risks
Board of Directors, Risk, Audit, Operations & Technology Risk Committees
P
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t
S
Risks
Measurements
Governance
Policies
Wholesale
Credit Risk
Consumer
Credit Risk
Business Banking
Credit Risk
Liquidity Risk
Interest Rate Risk
• Sensitivity Model/ Default Ratio/
Coverage Ratio and Provisioning
Monitoring
• High Lending and Invest-
ments Committee
• Institutional Banking Credit
Committees
• Credit Policy
Loss Rates & Provisioning Monitoring
•
• Leading, Coincidental, & Lagged
•
Indicators
Behavioural, Segmentation, Vintage
& Past Dues Analysis
• Consumer Risk Committee
• Consumer Credit
Policy
• Business Banking Risk
Committees
Business Banking
Credit Policy
• Liquidity Gaps
•
•
Net Stable Funding
Liquidity Coverage Ratio
•
•
•
Economic Value of Equity
Earnings at Risk
Interest Rate Gaps
• Asset & Liability Committee
Treasury Policy
Market Risk
• Value at Risk
Investment Risk
•
•
•
Internal Rate of Return
Discounted Cash Flow Models
Market Multiples
• High Lending and Investment
Committee
Direct Investment
Policy
non-Financial risks
Operational Risk
• Conduct Risk
• Vendor Risk
• IT Risk
• Loss Data Base
• Risk and Control Self- Assessment
• Key Risk Indicators
• Heat Map
• Global Database
Control Testing
•
Security Risk
• Cyber Risk
• Information Risk
• Risk/Threat Assessment and
Monitoring
Social & Environ-
mental
Credit Risk
• Portfolio Concentration in High
Social & Environmental Risk Firms
(Category A)
• Percent of Loans in S&Es Sectors
Exclusions List
• Breaches of Social & Environmental
Covenants
Reputational Risk
•
Employee Survey
• Sentimental Report
• Operational & Reputational
Risks Committee
•
•
•
Operational Risk
Policy
Conduct Risk
Policy
Vendor Manage-
ment Policy
• Security Risk Committee
• Security Policies
• Institutional Banking Credit
Committees
• Social & Envi-
ronmental Credit
Risks Policy
• Operational & Reputational
ment Plan
• Crisis Manage-
Risks Committee
• Crisis Communi-
cation Plan
e
r
u
t
l
u
C
&
e
t
i
t
e
p
p
A
k
s
r
i
Management
first line of Defence
Second line of Defence
Third line of Defence
Business Line Management
Independent Risk Compliance
& Legal
Independent Audit Review &
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 entire process
Manage
Control
Evaluate
Governance Overview
CIB’s risk governance structure utilises the lines-of-
defense model, with a robust committee structure
and a comprehensive set of policies and operating
guidelines that are approved by the BoD. The BoD,
directly or in conjunction with BoD 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 mem-
bers of all credit, consumer, business banking, secu-
rity, asset and liability management, and operation-
al and reputational risk committees, are responsible
for the identification, assessment, and reporting of
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 equity investments, and there are
other Credit Committees responsible for approv-
ing 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 poten-
tial impact of future interest rate fluctuations,
liquidity constraints, and foreign exchange
exposures. ALCO monitors the Bank’s liquid-
ity and market risks, economic developments,
market fluctuations, and risk profile to ensure
ongoing activities are compatible with the risk/
reward guidelines approved by the BoD.
• The Consumer Risk Committee’s (CRC) overall
responsibility 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 cur-
rent risk appetite, in addition to prevailing mar-
ket trends, all the while ensuring compliance
with the principles stipulated by the Consumer
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, in-
cluding information confidentiality, integrity and
availability, as well as physical and cyber security,
Bank asset protection, and workplace security.
• Operational & Reputational Risk Committee’s
(ORRC) main objective is to oversee Operational
and Reputational Risks Management functions
and processes independently and concur on ap-
propriate frameworks to enhance Risk Culture.
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2017 In rEVIEW / Risk Group
The Risk Group continued to align
and collaborate with businesses
on product development and risk
strategies to drive growth without
compromising portfolio quality.
Enterprise Risk Management (ERM)
CIB’s ERM Framework is unique among local and
regional peers and is a key pillar for the Bank.
Starting up in 2014, ERM adopts an integrated
and forward-looking risk approach, combined
with dynamic risk culture, robust data gover-
nance, and an adaptable technology platform
while being aligned with both business and risk
strategies and governed by a robust Risk Appetite
Framework. ERM uses risk oversight, control,
and governance to efficiently utilise existing risk
management capabilities and to help improve the
operating environment and reduce operational
surprises and thus mitigate risks.
Risk Appetite
CIB embeds ERM into strategy-setting, budgeting, and
performance management, providing management
with information needed and adopting alternative
strategies. The Bank aligns business objectives with risk
appetite and risk tolerance, quantifying this with earn-
ings volatility, capital adequacy, and stable funding as
the primary Key Risk Indicators (KRIs) that cascade
into risk tolerances by risk category and risk limits.
Culture
CIB’s risk culture encourages effective communication
among employees to facilitate the alignment with busi-
ness and risk strategies. It also promotes an understand-
ing of prevailing risks throughout the organisation,
spreading risk culture and internal controls awareness.
Integrity and reputation are embedded in the Bank’s
culture, being key requirements to operate successfully.
Risk Group plays an important role in spreading risk
culture by expanding awareness sessions across the
entire organisation, including branch staff, and holding
tailored programs for different groups.
Identify, Measure, Manage, Monitor, and
Report (IMMMR)
CIB uses the IMMMR approach to ensure appropriate
risk identification of material risk that may impact
strategy and goals. Adequate risk assessment through
a comprehensive set of measures and techniques
prompt risk response through developing strategic
tactics and contingency plans to mitigate possible
threats, in addition to sufficient controls via a compre-
hensive set of policies and procedures.
Stress Testing
Stress testing is an important tool used by the
Bank, for both internal and external reporting,
utilising local and international best practices. The
main purpose of stress testing is to assess CIB’s
resilience to unfavourable shocks, and its main tar-
get is to formulate forward-looking strategies that
mitigate the effects of these unfavourable shocks
on the Bank’s financial position. Its role is to also
ensure there is ample capital for continuity should
unfavourable conditions arise.
Limits and Policies
CIB has a comprehensive set of risk management
policies, limits, processes, and procedures, which
are regularly updated to align with the Bank’s strat-
egy, Risk Management Framework, market dynam-
ics, and CBE regulations. CIB’s policies, processes,
and procedures are communicated throughout the
organisation and are used as a tool of control over
the Bank’s risk level and tolerance.
Institutional Banking (IB) Credit Risk
CIB continued to pursue its prudent growth mo-
mentum in alignment with the IB credit portfolio
quality. This risk-adjusted growth is a result of the
consistent commitment to the credit risk process
outlined via a comprehensive set of policies and op-
erating guidelines adopted by Bank staff under the
supervision of the BoD.
The following are the key tools used in credit risk
identification and assessment:
• Internal Credit Rating Assessment Model:
This is used to evaluate corporate portfolio
customers’ risk ratings through several phases,
starting with covering all regulatory guide-
lines, consolidating historical
information,
and translating all aspects into qualitative and
quantitative measures.
• Credit Risk Analysis: Senior management has
adopted a more risk forward-looking strategy
in the credit approval process to align risk with
business objectives. The holistic analysis plays
a strategic role in focusing on industry norms
both domestically and internationally.
Financial Institution (FI) and Country Risk
The FI and Country Risk Team was formed to ac-
tively collaborate with international counterpar-
ties and develop a broad network of correspon-
dent relationships coupled with an efficient and
prudent approval process.
Social and Environmental Credit Risk
Management
CIB has a long-standing commitment to sustain-
able development that is deeply rooted in its
operations, policies, and procedures. As part of
the Bank’s proactive contribution to community
development, the Social and Environmental Credit
Risk Department was established in 2014 to focus
on assessing the Bank’s indirect impact on both
society and the environment.
United Nations Environment Programme
(UNEP)
CIB is the first and only financial institution in the
Middle East to have joined the UNEP-Finance Initia-
tive (FI). The Bank collaborated with the UNEP-FI
team and members to address the role of financial
institutions in achieving a worldwide sustainable
finance approach.
CRO
is responsible for the identification,
assessment, and reporting of all
types of risks across the Bank’s
business lines
Consumer and Business Banking
Credit Risk
Consumer and Business Banking Risk is managed
via a robust framework in which businesses operate,
while ensuring portfolio quality is aligned within
the Bank’s risk appetite. The Consumer and Busi-
ness Banking Risk Management structure ensures
that risks are identified and accurately measured,
controlled, and proactively managed throughout all
levels within the organisation through Credit Risk
Assessment and Measurement models to safeguard
the Bank’s financial strength and grow its market
position, while ensuring compliance with the Bank’s
business strategy and regulatory principles.
The Consumer Credit Cycle is presented in five
main stages: Strategic Analytics, Product Plan-
ning, Credit Underwriting, Collections & Recover-
ies, and Account Maintenance, with assignment of
different roles and responsibilities to manage the
Consumer Risk structure.
On the Business Banking front, the Bank has fo-
cused on a revamped strategy aimed at growing
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2017 In rEVIEW / Risk Group
and diversifying the portfolio and portfolio quality
through increased emphasis on small ticket sizes to
diversify risk and build loss-absorption capacity.
Consumer and Business Banking products’
portfolio quality has been sustained, ensuring
advanced portfolio management techniques by
monitoring all current and historical programs’
performances. This complements the identifica-
tion of potential growth segments and the detec-
tion of early warning signals.
Liquidity and Funding Risk
The main measures and monitoring tools used to
assess the Bank’s liquidity risk include regulatory
and internal ratios, gaps, Basel III ratios, asset and
liability gapping mismatch, stress testing, and
funding base concentration. Being proactive by
looking ahead and in response to the current na-
tional and international market conditions, CIB
pursued a successful strategy for sourcing liquidity
as a backup for any stressed scenarios for deposit
runoffs, to support any potential growth in loans,
and comfortably cover any sudden shocks. In 2017,
the Basel III Liquidity Coverage Ratio (LCR) and
Net Stable Funding (NSF) remained strong and in
compliance with regulations.
Interest Rate Risk
The Bank uses a variety of measurement techniques
on the basis of earnings and economic value perspec-
tives to measure and control the potential impact of
interest rate risk on the Bank’s financial position to
obtain a complete picture of exposure, including
Gap Analysis, Economic Value of Equity (EVE), and
Earnings-at-Risk (EaR). CIB promptly responded
to the challenging interest rate environment and
assumed a more conservative and risk-averse bal-
ance sheet growth. The Bank tactically managed
its asset mix and reengineered its balance sheet
in a manner that mitigated the potential negative
impact on earnings and lowered the volatility of the
capital base. In addition, CIB has a robust interest
rate stress testing framework that encompasses an
evaluation of the impact of extreme market changes
on the earnings and economic value based on a dif-
ferent set of variables and assumptions.
Market Risk
CIB has a solid Market Risk Management (MRM)
framework that measures and assesses market
risk in the trading book. MRM sets key limits,
which is part of the Treasury Policy Guide (TPG),
to monitor and control market risk by considering
both the Bank’s risk appetite as well as the pro-
jected business plan. These include position,
stop-loss, and Value at Risk (VaR) limits. CIB was
proactive and assumed further FX devaluation
using multiple scenarios to forecast and measure
the potential risk that might negatively impact the
Bank’s earnings and capital. The Bank has clear
procedures to monitor and control exposure to
FX risk within the internally approved overnight,
intraday, and stop-loss limits set in the TPG.
Operational Risk
CIB maintains a comprehensive Operational Risk
framework, with policies and processes designed
to provide a controlled environment and to moni-
tor the first line of defense in identifying and as-
sessing risks and controls. The Bank monitors
corrective action plan implementation to mitigate
risks in systems, human factors, policies, internal
processes, and external events using CBE guide-
lines and best practices.
Other Non-Financial Risks
In 2017, the Bank enhanced focus on the following
non-financial risks:
• IT Risks: Action plans are monitored and a
framework is under implementation based on
best practices.
• Vendor Risk: An enhanced framework has
been set to ensure all vendors are evaluated,
monitored, and assessed to meet the criteria of
qualified suppliers.
• Reputational Risk: The Bank has success-
fully defined ownership of Reputation Risk as
an independent section, and a framework is
under development.
• Conduct Risk: CIB was the first Egyptian
bank to establish a Conduct Risk Framework
in compliance with the Financial Conduct
Authority (FCA), UK.
• Fraud Risk: A dedicated Fraud Team was re-
located under Operational Risk Management
to determine possible vulnerabilities that may
lead to fraud events and to ensure preventive
measures are in place.
Internal Control Management (ICM)
ICM joined the Risk Group in 2017 to enforce a pro-
active identification and monitoring of controls to
increase independence & reliability and better man-
age the overall risk and control framework. ICM is
considered one of the main pillars of control, and it
ensures a full range of coverage by conducting vari-
ous reviews across the entire branch network and
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11
types of risks assessed
under the Risk Management
framework
Compliance
different departments, in addition to special inves-
tigations and assignments. This allows it to assess
risk and compliance of the applied policies & pro-
ceedures and to ensure that the overall performance
is consistent with the pre-determined standards,
plans and objectives. In addition, ICM provides the
concerned stakeholders and Senior Management
with a comprehensive understanding on the effec-
tiveness of controls for any corrective action.
• Developed new statistical models and enhanced
approaches for detection of early warning sig-
nals and provisioning modules.
2018 Ongoing Forward Strategy
• The ERM Framework strategy that will con-
tinue to enhance the Bank’s risk models for
Credit, Operational, Market, Interest Rate, and
Liquidity Risks.
• Continue to enrich the framework for Non-
2017 Accomplishments
Financial Risks.
• The Risk Group won the Middle East and Africa
awards for the Enterprise Risk Management
and the Liquidity Risk Management from the
Asian Banker Singapore.
• Enhanced Risk Culture via focused training
programs.
• Finalise the implementation of the IFRS9 project.
• Upgrade risk policies and procedures to align
with the business strategy.
• Build a scalable risk infrastructure to attain
customer experience excellence and a value-
based strategy.
• Reengineered Risk Assessment and associated
• Expand the scope and coverage of the Internal
process for IB and Consumer Credit risk.
Control Management.
• Introduce an advanced and dynamic Consumer
Risk Collection & Recovery mechanism.
• Developed Industry Rating model (IRAM) for
Corporate. Consumer Risk predictive analytics
were developed to enhance risk identification
and lending credentials.
• Developed a Non-Bank FI & Micro Finance Risk
Assessment Model.
• Commenced the Non-Financial Risks Frame-
work (Reputational and Vendor Risks).
• Revamped the Real Estate Low Income Scheme
with the objective of increasing the penetration
rate to the unbanked population.
The Compliance Group at CIB is an independent
unit that supports the Bank to pursue its growth
strategies and indicates its reliability. The group
provides intrinsic benefits beyond avoiding fines
and penalties that includes constructive commu-
nication, improved overall business practices, and
better understanding of the regulatory environ-
ment and its application in practice. The group
also works to ensure CIB adheres to compliance
standards to safeguard the Bank against a full
spectrum of compliance risks.
The Compliance Group has five divisions under
its umbrella:
The Policies and Procedures Division ensures that
all controls, laws, and regulations are embedded in the
applied policies and procedures, which are periodi-
cally reviewed to ensure they are up to date. The divi-
sion is also responsible for reviewing and approving
marketing materials, contracts, and customer forms.
The Corporate Governance and Code of Conduct
Division commits to follow international best
practices and market standards by ensuring that
a sound Corporate Governance model is in place.
The CIB Corporate Governance Guidelines provide
the framework for the effective governance of the
Bank to enhance long-term values of shareholders,
employees, other stakeholders, and the community.
The Anti-Money Laundering and Terrorism Fi-
nancing (AML) Division monitors transactions
and customer account activity and screens trans-
actions against negative lists and those related to
sanctioned countries to avoid the Bank’s involve-
ment and shield it against money laundering and
terrorism-financing crimes.
The Foreign Account Tax Compliance Act (FATCA)
Division ensures the right
implementation of
FATCA regulations within CIB and provides a yearly
report to the US Internal Revenue Services (IRS).
The CBE Relations Division serves the entire Bank
to ensure all banking operations comply with CBE
instructions and guidelines.
2017 Accomplishments
In keeping with the preventive measures taken in
2016, the Policies & Procedures Division took on
new initiatives in 2017 to ensure the adherence
to regulations and policies, while achieving qual-
ity service and customer satisfaction. The division’s
main accomplishment this year was highlighting
detected issues to the concerned business heads
and supporting them in taking corrective actions
to comply with set procedures and regulations. The
division participated jointly with the CBE Relations
Division in tailoring new trade finance products to
cope with the new demands of CIB customers.
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2017 In rEVIEW / Compliance
Internal
Audit
CIB’s Internal Audit Group is determined to so-
lidify its position within the Bank and the market
to meet its clients’ expectations while simultane-
ously complying with international standards (IIA
Professional Practice Framework).
The CIB Board Audit Committee is the backbone of
Internal Audit Group, supporting and safeguarding
the independence of the third line of defence to over-
seeing Operation & Risk Management activities, ac-
cording to a risk-based audit methodology.
The Internal Audit Group provides independent
and objective assurance to its stakeholders, in
addition to consulting activities designed to add
value and improve the organisation’s operations.
It supports senior management in accomplish-
ing CIB’s strategic objectives by assessing the
adequacy and effectiveness of the internal control
system. Concurrently, it evaluates and improves
the effectiveness of Enterprise Risk Management
and governance processes.
Internal Audit staff are meticulously selected, have
diversified professional experience that covers all
banking functions, and are backed by numerous
professional certifications (e.g. CIA, CBA, CPA, CISA,
and MBA). Internal Audit staff are continuously in-
volved in internal and external training programs
and regularly attend international conferences to
increase their proficiency and update their knowl-
edge of international trends and methodologies,
such as Enterprise Risk Management (ERM), IFRS,
Basel, etc. Internal Audit staff also attend commit-
tees and meetings sponsored by senior management
to ensure they are kept up to date with manage-
ment’s strategies and objectives.
Triggered by our belief that Internal Audit acts as
a trusted advisor to the organisation, a new divi-
sion was established in 2017 to provide consultan-
cy activities. The division is mainly responsible
for studying challenges and providing consulting
services to management upon request, based on a
preapproved scope. It also conducts special inves-
tigations, if required.
This year, our Follow-Up Division succeeded in
increasing its annual issues closure rate, while our
Quality Assurance Division continued to regularly
obtain surveys from audited entities on the effective-
ness and added value of the Internal Audit teams dur-
ing the year. The division also conducts regular qual-
ity assurance reports after each Audit Engagement to
ensure we comply with international standards.
Empowered by our BoD Audit Committee and in
line with the latest international trends, a complete
synergy between Internal Audit Group and our
strong Data Analytics Division has been created,
which will increase the efficiency of the Internal Au-
dit function and provide a continuous monitoring
mechanism to detect early warning signs.
The Corporate Governance and Code of Conduct Divi-
sion in 2017 succeeded in avoiding potential conflict of
interest by reviewing a considerable number of depart-
ments’ restructuring versus respective job descrip-
tions. Moreover, the division continued with its efforts
to handle staff issues while encouraging a culture of
whistle blowing in good faith. In 2017, the division made
sure no trading of CIB’s stock, either by employees or by
insiders, took place during blackout periods to promote
transparency and integrity to shareholders.
In coordination with the Egyptian Money Launder-
ing Combating Unit (EMLCU), the AML Division
managed in 2017 to adopt a new reporting system
to receive suspicious reports and additional in-
formation by using GoAML software (a product of
UNODC’s Information Technology Service).
Back in 2016, the AML Division handled the logistics
involved in converting to a fully automated moni-
toring system using SAS software — the industry’s
leading analytics software and solutions provider.
In 2017, the system was partially implemented and
is expected to be fully implemented in 2018.
In keeping with the AML Division’s ethos of con-
sistently enhancing performance and applying the
highest international standards and best practices,
the AML team attended international seminars to
keep up to date on AML trends locally and globally.
In doing so, a total of eight AML officers are now
internationally certified by the ACAMS, with more
expected to be certified in the future, making the
team one of the highest qualified in the country.
In 2017, the FATCA Division successfully uploaded
the yearly report to the IRS as a Single Foreign
Financial Institution (FFI) and another report as
Sponsoring Entity for CIB Mutual Funds. After the
sale of CIB’s stake in its subsidiaries, the FATCA
Division updated CIB’s status at the IRS as a Single
Financial Institution instead of Lead Institution,
and for that a new Global Intermediary Identifica-
tion Number (GIIN) for CIB was obtained. Moreover,
the division is completing preparations for the
implementation of the Common Reporting Stan-
dard (CRS) to be ready for reporting once Egyptian
authorities announce the target date.
Due to market conditions and ongoing changes dur-
ing 2017, the CBE Relations Division resumed working
closely with all CIB stakeholders to maintain a smooth
workflow and to ensure compliance with the regula-
tor’s directives. The division had to respond to a sub-
stantial volume of daily inquiries and follow special
CBE approvals for exceptional cases.
In another milestone for the CBE Relations Division
in 2017, the team began to conduct training courses
to enhance awareness of CBE regulations for all staff.
Strategy Going Forward
Going forward, the Compliance Group will con-
tinue to assist the Bank in achieving its financial,
operational, and strategic goals while maintaining
compliance with all associated laws and regulations
through identifying institutional risks, performing
reviews, investigations, and analysis. Moreover,
the Compliance Group will continue to act as the
safeguarding shield against a full spectrum of
compliance risk while upholding compliance issues
through effective education and training programs,
and fostering the values of knowledge, honesty, in-
tegrity, respect, and professionalism.
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2017 In rEVIEW
Marketing and Corporate
Communication
Over the years, CIB has been well positioned as the
largest private bank in the market, strengthening
its brand exposure and leadership on both the local
and international spheres and being a local Egyp-
tian bank with a global view. More importantly, the
Bank succeeded in affixing its reputation to rigid
core values that revolve around loyalty, trust, and
social commitment. These values not only enhance
and expand our brand equity, business growth, and
positioning, but at the epitome of it all support and
contribute to the financial sector’s growth and lead
community development change across Egypt.
CIB kick-started 2017 with significant international
recognition, having its brand value ranked the first
in Egypt by The Banker’s — one of the world’s most
renowned international organisations — in its list
of Top 500 Banking Brands. CIB’s brand value also
saw a notable growth rate of 43% to USD 449 million
from USD 313 million in 2016. CIB was also ranked
sixth in Africa and 269th globally, climbing 57
places since 2016.
Another outstanding achievement for the Bank was
being named by Euromoney as the World’s Best Bank
in Emerging Markets for the first time in the Egyp-
tian, Middle Eastern, and African banking sector. The
award represents a distinguished acknowledgment
of CIB’s role in the banking sector attained by a sound
strategic vision, goals, and defined plans conducted
over the past few years to transform the Bank into a
leading full-fledged financial institution and reaffirm
its position as the most profitable private sector bank
in Egypt, backed by a dedicated staff. Though both
the economic and political conditions were challeng-
ing this year, the Bank also underwent an aggressive
technological upgrade plan, adopting new business
propositions and promoting innovation.
As further recognition of the Bank’s best-in-class
banking services and excellence in introducing
an innovative, unique banking experience, CIB
received the Best Bank in the Middle East award by
Euromoney. The award confirms CIB’s robust foun-
dation and consistent development with a base built
on balance-sheet management, customer-driven
core banking strategy, and consistent operational
efficiency. These factors allowed the Bank to outper-
form on both a regional and global level.
Awards received this year are international testi-
monies for CIB’s leading position, outstanding per-
formance, and effective strategies to meet interna-
tional banking standards and compete with other
organisations globally. Such a strong positioning in
the market attracts investors and communicates a
healthy recovery process for the Egyptian economy.
A full list of the prestigious international awards
that CIB achieved in 2017:
• Best Trade Finance Provider in Egypt by Global
Finance
• Best Treasury & Cash Management Providers in
Egypt by Global Finance
• Best Foreign Exchange Provider in Egypt by
Global Finance
• Best Bank in Egypt 2017 by Global Finance
• Best Bank in Egypt by Euromoney
• Best Securities Services Providers in Egypt by
Global Finance
• Best Cash Management Services in North Af-
rica by EMEA Finance
6th
place ranking in Africa
• Best FX Services in North Africa by EMEA Finance
• Best Local Bank in Egypt by EMEA Finance
• Most Innovative Bank–Pan Africa by EMEA
Finance
• Achievement in Enterprise Risk Management in
the Middle East and Africa
• Achievement in Liquidity Risk Management in
the Middle East and Africa
The Corporate Communication team worked exten-
sively on campaigns to shed light on the Bank’s ac-
complishments by promoting it across the world’s
most prominent foreign media channels. Such
efforts included securing interviews for the Bank’s
senior management with leading media outlets
such as Bloomberg, The Economist, Reuters, Global
Finance, Global Markets, Banker Africa, Euro-
money, EMEA Finance, and The Financial Times.
It also promoted the chairman’s participation in
two significant international events: 1) the Yahoo
Finance! All Markets Summit in New York, where
the chairman was the only participant from the
Middle East, with his session hitting 1.3 million
viewers online, and 2) the Global Financial Forum
organised by Dubai International Financial Centre
(DIFC). Foreign media campaigns also featured the
Bank’s achievements on digital media platforms
with the placement of digital banners to maximise
audience reach, paint Egypt’s image in a positive
light, and market the Bank’s brand globally, mak-
ing Egypt more attractive to investors.
Similarly, the Bank was constantly present on local
and regional media channels, including coverage of
the Bank’s achievements, products launches, news,
interviews, and special editorials across both print
and online high-traffic media platforms. The PR and
media campaigns were held with respected publica-
tions such as Al-Arabiya, Bloomberg Middle East,
Forbes Middle East, and MSNBC.
To further enhance the Bank’s online arena, the
Marketing and Corporate Communications team
aligned with the Bank’s strategy to develop its e-
channels and turn them into mobile-friendly por-
tals, using an intuitive and responsive design that
adapts to tablets and smartphones. Since the Bank’s
internal communication channels are on equal
footing with brand equity, the corporate intranet
was mirrored onto a mobile app to provide a more
convenient platform for CIB employees.
As for brand positioning, the Bank ensured strategic
and exclusive brand exposure in the tubes of Cairo In-
ternational Airport, in addition to its special brand-
ing across the airports of Burg Al-Arab, Hurghada,
and Sharm El-Sheikh. Events and sponsorships were
also piloted to help maintain CIB’s brand identity as a
positive key player in Egyptian society.
The Bank has continued to strengthen its ongoing
commitment to maintain a positive impact on soci-
ety through its diverse Corporate Social Responsi-
bility (CSR) activities focused on recognising Egyp-
tian art, culture, social care, sports and lifestyle.
2017 also saw the Bank embark on a new type of
sponsorship with high-level international events
that promoted Egypt and CIB such as the Bicente-
nary Celebration of Abu Simbel Temple’s Discovery,
held in Le Petit Palais in Paris under the auspices
of the Ministry of Foreign Affairs and the Egyptian
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95
2017 In rEVIEW / Marketing and Corporate Communication
USD MN
449
in brand value
43%
increase in brand value
Embassy in France. The event recognised a UNESCO
campaign to help save Nubia’s historical monu-
ments and was attended by more than 600 public
figures. Such exposure aligned with the Bank’s goal
of reviving Egypt’s historical and cultural legacy
and efforts to boost tourism.
In line with the Bank’s efforts to support Egyptian
youth, CIB was the exclusive banking sponsor of the
‘100% Egyptian Cotton’ fashion installation in the
International Fashion Showcase (IFS) 2017 in Lon-
don, which featured Egypt’s best emerging design-
ers. The Bank was also one of the main sponsors of
the World Youth Forum in Sharm El-Sheikh, which
represented a platform to bring together promising
youth of diverse backgrounds to send a message of
peace and harmony to the entire world. Similarly,
CIB sponsored the Africa 2017 Forum, held under
the patronage of the Egyptian President in Sharm
El-Sheikh, to support a platform for heads of state,
government, the private sector, and business leaders
in Africa and beyond to identify critical issues and
engage in fruitful resolutions.
Strengthening CIB’s leadership has always been
Marketing and Corporate Communications’ guid-
ing principle when selecting sponsorships and
activities that reflect the Bank’s ongoing commit-
ment to maintaining a positive impact on society.
As such, CIB made active contributions to diverse
sponsorships and events, which included:
CSR
• Sawy Culture Wheel
• KidZania
• Autism
• Beena Initiative
• Zawya
• Squash for Everyone
Quality, Lifestyle, and Sports
• IMAX, Americana Plaza and Point 90 cinema
complex
• Egyptian Squash Federation
• El-Gouna E-Bikes
• Inter-Embassy Football Tournament
Art and Culture
• 100% Egyptian Cotton
• Night with Art at the Egyptian Museum
• La Biennale di Venezia
• Youth Salon
• Upper Egypt Salon
• Aisha Fahmy Palace Renovation
Business
• Money and Finance Conference
• ICT
• American Chamber of Commerce in Egypt
• Curing Tourism Conference
• Unifying Religions Conference
• Money and Finance
Throughout all our events, the Creative and Produc-
tion team served as a supportive arm by creating
educational videos and rebranding designs to help
communicate messages and align with the Bank’s
identity in a more creative and innovative manner.
On the marketing communication front, the team
worked this year on launching regular campaigns
for new products focused on branding, and hence
creating a bond between the brand and the custom-
er. We relaunched in early January the Heya credit
card with an extravagant event at the Nile Ritz Carl-
ton Hotel attended by high-end Heya customers
as well as prominent figures. Multiple campaigns,
promotions, and partnership launches in various
specialties were also initiated to enhance the Bank’s
customer experience offering. These ranged from
campaigns empowering women such as the Top
50 Women event, to promotions including CIB-
Egyptair Mileseverywhere, the Instalment Payment
Plan campaign, and Bonus Loyalty program.
Wealth Customers were invited to two CIB spon-
sored events that align with the lifestyle of the
segment, including the Ahl Masr Ramadan Event
featuring prominent classical composer Omar
Khairat and mega-star Amr Diab’s summer con-
cert in Marassi. Many offers and promotions were
customised to Wealth customers, including but not
limited to, complimentary loyalty points on Bonus
program and free five-star hotel vouchers.
The Bank also took significant strides in launch-
ing digital campaigns to align with the Bank’s
overarching digitisation strategy to embody in-
novation and transformation. Building on product
proximity to customers, we launched in 2017 the
Mobile Banking campaign in addition to the ATM
Tuition Fee campaign, which allows universities to
accept tuitions through our ATM network. More-
over, we revamped the CIB website to make it more
user friendly and launched upgraded features and
capabilities. Not only did this boost traffic to the
website significantly, but it greatly increased our
brand equity. The Bank also employed a variety of
online advertising tools, up to date with industry
trends, ranging from search engine marketing to
display ads, to social media sales leads generations
that provided a wealth of data and sales leads for a
spectrum of products allowing the Bank to reach a
wider audience with minimal cost.
Other campaigns launched this year were ones to
increase limits on Internet Banking transfers, the
CBE campaign, Smart Wallet campaign, and the
visually impaired inclusion campaign. Addition-
ally, the Bank focused on launching personal loan
initiatives such as the Self-Employed campaign,
which sought to help self-employed customers
achieve their dreams by offering them loans with
a tenor of up to eight years and a loan amount of
up to EGP 500,000.
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97
CIB
AFFILIATES
CIB AFFILIATES
CIB
Affiliates
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 management’s
strategy is centred on service excellence. The compa-
ny provides a plethora of services including, but not
limited to: security services, money transfer, techni-
cal systems and security products, public services
and project management, and tourism and concierge
services to a variety of industries such as the indus-
trial, commercial, tourism, and public sectors.
The group provides state-of-the-art, holistic solu-
tions tailored to every client’s specific requirements.
Falcon Group’s key strength lies in its single-point-of-
contact solutions that ensure it provides consistent
services at the highest quality, lowest risk, and with
great flexibility at a reasonable cost.
Falcon for Security Services
Falcon for Security Services has been the main secu-
rity service provider for several top-tier government
and non-government organisations, such as the Unit-
ed Nations, and a number of embassies in Egypt. With
a portfolio of over 630 clients, the company provides
services such as property protection, event security,
corporate security and training, personal protection,
as well as safety and industrial training to some of
the biggest companies in Egypt. The company values
clients as business partners, dedicated to providing
them with the highest quality of service and treating
their goals and objectives as its own.
200% in 2017, with the year seeing the company or-
ganise events such as the Egypt Can Conference,
Auto Mac Formula, African Champion’s League
matches, and China Trade Fair.
• The company achieved a market share of 60%
this year and aspires to maintain its market
leadership by growing both organically and
through acquisitions.
Forward-looking Strategy
As part of the group’s goal of providing top-notch
solutions, Falcon companies plan to use managed
service providers for its activities. The group also
expects to target prominent institutions and clients
such as Amer Group and Eni Company for Petroleum
Services to add to its roster of clients while simulta-
neously expanding its product and service offering
to ensure clients remain fully satisfied and confident
in them as their number one choice in terms of effi-
ciency and customer service. In 2018, the group plans
to expand its market presence by 25%.
Falcon for Public Services and Project
Management
Falcon for Public Services and Project Management
operates all facility systems to the comfort and sat-
isfaction of facility occupants. The company offers
general cleaning, landscaping, façade cleaning, and
marble polishing at the highest quality, efficiency, and
cost effectiveness. Falcon for Public Services and Proj-
ect Management holds a market share of 20%, serving
a large client base out of 300 different locations in 2017.
2017 Achievements
2017 Achievements
• Falcon for Security Services achieved its 2017 goal
of working with numerous prominent institutions
and added new segments of clients through secur-
ing several projects such as the new conference
hall, Porto Sokhna, and El Zamalek Sporting Club.
• Increased income in 2017 to 45%.
• Increased the percentage of securing public events
• Through considerable efforts to build solid relation-
ships and gain the trust and confidence of public
and private institutions, the company succeeded in
signing on several new clients such as a new confer-
ence hall, Toshiba El Araby Group, and Cequens.
• The company has also been able to renew
important contracts such as with the Port
Said Security Directorate, the Embassy of the
Sultanate of Oman, the Embassy of the State of
Kuwait, and Mall of Arabia.
Forward-looking Strategy
The company’s strategy is based in its firm belief
that their performance is measured by their cli-
ents’ success. Over the next year, the company
plans to sign sizeable several contracts with gov-
ernment agencies as they continue to carefully
select, train, and supervise their professionals and
staff to ensure they meet client needs and provide
exceptional levels of performance.
Falcon for Cash in Transit Services
Falcon’s Cash in Transit division works with reputable
banks and companies in Egypt, providing CIT servic-
es, ATM replenishment, maintenance, vaulting, cash
management, and valuables transportation through a
highly qualified team. In 2017, the company increased
its market share to 38% through the acquisition of new
award contracts and expanding its client portfolio.
2017 Achievements
• Falcon signed new contracts to increase its mar-
ket presence, achieving growth of 15% in 2017.
• The company served 1,160 ATMs in 2017 com-
pared to 1,100 in 2016.
• Falcon signed a partnership agreement with one
of the largest companies in the world that will al-
low it to provide more services and offer expanded
benefits to its clients.
• The company increased cash volumes to 40%
in 2017.
• Falcon increased gross revenues to 40% in 2017
• The company added nine armoured vehicles to
its fleet.
Forward-looking Strategy
The company plans to grow the segment’s market
share through providing new services for retail, hav-
ing already integrated new solutions to collect cash
from shopping centres. Falcon for Cash in Transit
will also use the latest technology to develop ATM
services and in its managed cash offerings as part
of its strategy to streamline its operations. The com-
pany is also investing considerable resources to train
its team members to consistently provide the highest
level of service to clients.
Falcon Tech
Falcon Security Systems designs, implements, and
maintains all integrated electronic systems in the field
of technical security for facilities and individuals.
Falcon Tech succeeded in expanding its market
share to 60% by signing several new contracts in
2017 to provide security systems to airports, com-
mercial malls, and universities.
2017 Achievements
The company signed several new clients, including:
• The Ministry of Armed Forces
• General Intelligence
• Suez for Petroleum Production
• El Ahly Club
• Civil Protection
• 20 new CIB branches
• Cairo International Airport
Falcon for PR and Communications
(Tawasul)
Falcon for PR and Communications (Tawasul) spe-
cialises in communication services and consultancy
as well as event and conference management. It also
offers media services.
CI Capital
As part of CIB’s strategy to gradually offload its auxiliary
activities to funnel its efforts directly into its core bank-
ing services, CIB took steps to divest part of its stake in
CI Capital Holding (CI Capital). In a transaction valued
at EGP 710 million, CIB transferred 74.75% of its shares
in the company to non-related Egyptian and Gulf inves-
tors in March 2017. Another partial sale of the Bank’s
9.99% shares took place in early July, amounting to EGP
101 million. Later that month, CIB transferred another
3.45% in a transaction worth EGP 45 million. The Bank
now retains a minority stake of 10% in CI Capital.
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101
SuSTAInABILITY
SuSTAInABILITY
Corporate
Governance
32.45%
RoAe
8
standing committees are
tasked with assisting the BoD in
decision-making
Effective corporate governance remains central
to the culture and business practices of CIB as the
Bank seeks to continually upgrade and adopt best
practices in the areas of governance, transparency,
ethics, management and oversight of risk, audit and
compliance. The Bank has an overarching objective
to become the best financial institution in Egypt and
has committed to numerous concrete principles and
corporate values to achieve this objective. Such values
are embedded across the Bank through a corporate
governance framework that is relevant and propor-
tionate to the scope and size of CIB’s businesses.
Striving for the best interests of our shareholders
guides everything we do, and we have established a
sound reporting system that ensures the dissemina-
tion of material information 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 pres-
ent 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, independent directors, who believe man-
dated 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
supported by internal and external auditors, as well
as other internal control functions (Risk, Compli-
ance, 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 integ-
rity, efficiency and, most importantly, 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 communities in which the Bank op-
erates. The Board’s role is to set the Bank’s long-term
strategy and provide proper oversight. It establishes
the appropriate tone at the top, oversees manage-
ment 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 environmental sustainability, perform-
ing its duties with entrepreneurial leadership, sound
strategies and risk management oversight to ensure
risks are assessed and properly managed.
To maintain balance and independence, the Board
went through several reforms this year to further en-
hance its structure and general representation levels
and increase female participation to keep up with
corporate governance best practices both on the lo-
cal as well as the international arenas. Furthermore,
in line with CBE directives on corporate governance
as well as international best practices that have seen
many companies worldwide increasingly separating
the roles of chairman and chief executive officer, and
in view of the Bank’s future growth plan, CIB’s BoD
appointed Mr. Hussein Abaza as the Bank’s CEO and
Executive Board Member to be responsible for man-
aging and directing the Bank’s business lines and
ensuring smooth day-to-day running of the Bank and
execution of strategy approved by the Board, thus
creating more space for the chairman to focus on the
strategic direction of the Bank.
By the end of 2017, CIB’s BoD comprised nine mem-
bers 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 sharehold-
ers. Over the course of 2017, CIB’s BoD met six times.
Being the single largest shareholder in CIB, Fairfax
Financial Holding Ltd, through its wholly owned
subsidiaries, currently holds 6.65% of CIB’s local
shares on the back of its transaction with Actis in
May 2014 and has one representative on the BoD.
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105
SuSTAInABILITY / Corporate Governance
Mr. Hisham Ezz Al-Arab
Chairman and Managing Director
Mr. Hisham Ezz Al-Arab has been chairman and
managing director of CIB since 2002. He leads today
a team of more than 6,500 professionals who have
transformed the institution from a wholesale lender
into Egypt’s largest private-sector bank, leading
the sector on key metrics including revenue, prof-
itability, net worth and market share of deposits.
CIB serves more than 1 million customers, from
individual customers to small- and medium-sized
businesses and leading corporations, among them
Egypt’s 500 largest companies.
The Bank’s market capitalisation has grown from EGP
1 billion at the beginning of Mr. Ezz Al-Arab’s term to
EGP 90 billion, making its stock — a blue chip compo-
nent of the Egyptian Exchange — the global investment
community’s preferred proxy for Egypt and a bench-
mark for the banking industry in emerging markets.
Core to the Bank’s success is its unique culture, which
balances an entrepreneurial spirit that prizes innova-
tion with a commitment to global best practices in
both corporate governance and risk management.
That culture, nurtured over more than 15 years, is the
Bank’s natural competitive advantage and led directly
to the establishment of the first-of-its kind employee
stock ownership program (ESOP) in 2006, thus align-
ing the interest of employees to that of shareholders. In
2010, Mr. Ezz Al-Arab brought to life the CIB Founda-
tion, which is a leading Egyptian voice for universal ac-
cess to quality healthcare extended to underprivileged
children. CIB was named Euromoney’s Best Bank in
the Middle East and Best Bank in Global Emerging
Markets for 2017 and was named African Banker’s
2016 Socially Responsible Bank of the Year. Mr. Ezz
Al-Arab was recognised in 2016 by Euromoney for his
“Outstanding Contribution to Financial Services in
the Middle East” and was EMEA Finance’s “Best CEO
in Egypt and Africa” at the magazine’s 2014 Banking
Awards. Under his leadership, CIB was named the
“World’s Best Bank in the Emerging Markets” by Euro-
money at the Global Awards for Excellence ceremony
held in July 2017, thus becoming the first bank in Egypt,
Africa and the Middle East to ever win this award.
Mr. Ezz Al-Arab leads the Federation of Egyptian
Banks as Chairman, is a member of the Institute
of International Finance’s Emerging Markets Ad-
visory Council and serves as a director of Master-
Card Middle East’s Regional Advisory Board. He
is also the Chairman of Board of Trustees of the
CIB Foundation. Mr. Ezz Al-Arab is Non-executive
Director of Ripplewood Advisors MENA Holdings, a
Non-executive Director of Fairfax Africa Board and
a Non-executive Director of Atlas Mara.
Mr. Ezz Al-Arab joined CIB from Deutsche Bank
and previously served with both JP Morgan and
Merrill Lynch in postings that took him to Bah-
rain, New York and Cairo. He holds a BA in Com-
merce from Cairo University.
Mr. Hussein Abaza
Chief Executive Officer and Board Member
Mr. Jawaid Mirza
Independent, Non-Executive Board Member
Mr. Hussein Abaza is a careered banker with more
than 30 years of experience in the financial services
industry — including both commercial banking
and investment banking — and is well-known in
the global financial community. From October 2011
until his appointment as CEO and BoD member in
March 2017, he was CEO for Institutional Banking
at CIB. He has previously served as the Bank’s Chief
Risk Officer and Chief Operating Officer and began
his journey with CIB in 1985, when the Bank was
known as Chase National Bank of Egypt.
Mr. Jawaid Mirza is the founder and president of Fo-
calone Consulting Company Incorporation in Ontario,
Toronto, Canada. A strong proponent and practitioner
of international corporate governance and well versed
in multi-country compliance, Mr. Mirza brings 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 BoD
and assumed the responsibilities of Managing Direc-
tor, overseeing the daily work of the following areas:
Consumer Banking, COO, Finance Group and IT.
Outside CIB, Mr. Abaza worked as Head of Re-
search at EFG Hermes Asset Management from
March 1995 to October 1999.
Mr. Abaza graduated with a BA in Business Admin-
istration from The American University in Cairo in
1984 and has completed professional training in
Belgium, Switzerland, London and New York.
Mr. Mirza is widely recognised for realigning and
returning to excellence and profitability flounder-
ing business units and building collaboration across
multiple jurisdictions for business and cultural
change. He 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 cultures. Having spearheaded
numerous mergers and acquisitions, 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 cultural diversity, with the ability to
manage teams crossing multiple geographies.
Over the years, Mr. Mirza has worked with global
institutions like Citicorp and ABN AMRO Bank.
He started his career in Citibank as a Financial
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107
SuSTAInABILITY / Corporate Governance
Dr. Sherif Kamel
Independent, Non-Executive Board Member
Mr. Yasser Hashem
Non-Executive Board Member
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 Austra-
lia/New Zealand. He has led successful due dili-
gences 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 Group
COO Board, and served on the board with ABN
AMRO Pakistan Ltd. He took business manage-
ment courses from reputable institutions includ-
ing Queens Business School, Wharton Business
School. He currently serves on the Board of Direc-
tors of Eurobank Greece (Athens) as an Indepen-
dent Board Member and Chair of the Board Risk
Committee. He also served on the Board of Direc-
tors of Prime Bank, ABN AMRO Pakistan Ltd. post
the acquisition and integration of Prime Bank. He
also served on the boards of non-profit organisa-
tions, namely Artistri Sud (Montreal), Humewood
House (Toronto). He is a member of the Institute
of Corporate Directors, Canada.
Mr. Mirza has been a CIB Non-executive Board
Member since January 2014 and chairs the Audit
Committee. He is also a member of the Risk, Opera-
tions & Technology, Compensation and Corporate
Governance and Nomination Committees and a
member of the Sustainability Advisory Board.
Dr. Sherif Kamel is professor of management and found-
ing dean of the school of business at the American
University in Cairo. He also served the university as vice
president for information management and as associate
dean for executive education. Before joining AUC, he was
director of the Regional IT Institute and prior to that he
was training manager of the Cabinet of Egypt Informa-
tion and Decision Support Center. He is an Eisenhower
Fellow and the Center for Global Enterprise Fellow. He
is a member of the AACSB International Middle East
Advisory Council; Egypt-US Business Council and a
board member of Education for Employment Egypt.
Previously, he was a board member of the Egyptian
American Enterprise Fund, executive vice president of
the American Chamber of Commerce and member in
the World Bank Knowledge Advisory Commission. He
was a founding member of the Internet Society of Egypt.
He was invited as panelist/speaker in a variety of policy,
development and leadership conferences and expert
meetings including Asia-Middle East Dialogue, AACSB
International, World Summit on the Information Society,
Center for Strategic and International Studies, Atlantic
Council, German Marshall Fund, Middle East Institute,
the International Monetary Fund and the World Bank.
Kamel holds a PhD in information systems from London
School of Economics and Political Science, an MBA, a BA
in business administration and an MA in Islamic Art and
Architecture from the American University in Cairo. His
research and teaching interests include management of
information technology, information technology trans-
fer to developing nations, organizational transforma-
tion, electronic business, decision support systems and
entrepreneurship. His work is published in information
systems and management journals and books.
Dr. Kamel is CIB Non-executive Board Member since
May 2013 and chairs the Operations & Technology Com-
mittee and a member of the Audit, Compensation, Cor-
porate Governance & Nomination Committees.
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Annual Report 2017
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.
Combining a wide range of extensive legal knowl-
edge with honed networking and interpersonal
skills, Mr. Hashem protects and furthers the inter-
est of over 100 local and international clients. He
received his LL.B. from Cairo University in 1989.
Mr. Hashem has been a CIB Non-executive Board
Member since May 2013 and chairs the Corporate Gov-
ernance and Nomination Committee. He is a member
of the Audit and Compensation Committees.
Mr. Yasser Hashem has been the Managing Partner
of Zaki Hashem & Partners since 1996 and Partner
from 1989 to 1996. He was admitted by the Egyp-
tian Court of Cassation in 2007 and is a member of
the Egyptian Society of International Law and the
Licensing Executive Society. His expertise in cor-
porate M&A and capital markets extended to the
privatisation of public sector entities, the inception
of the private provision of telecom services in Egypt,
and the promulgation of its laws, which have placed
him as a value veteran of Egyptian legal practice.
With a focus on corporate law, Mr. Hashem played
a major role in the privatisation of public sector
entities in Egypt through supporting hundreds
of restructurings, capital market transactions,
incorporations of foreign and domestic compa-
nies and advising foreign and local investors on
the most efficient vehicles and structures for their
investments in Egypt.
Mr. Hashem’s legal skills were also extended to the
telecommunication sector in Egypt throughout
his contribution to the drafting and negotiation
of all major telecom licenses, including public
payphones, mobile cellular networks, private data
networks, satellite and marine fiber optic cabling,
etc. His expertise in the telecom field led to his ap-
pointment by Ministerial Decree as Member of the
New Telecommunication Act Drafting Committee.
He was responsible for most IPOs that took place in
Egypt in the last decade and has reliably represent-
ed acquirers in all major tender offers and M&A
transactions in Egypt. Furthermore, he has led the
largest four major multibillion USD M&A transac-
tions in Egypt after the January 2011 Revolution.
SuSTAInABILITY / Corporate Governance
Mr. Mark Richards
Independent, Non-Executive Board Member
Mr. Bijan Khosrowshahi
Non-Executive Board Member
Mr. Mark Richards is Chief Executive of IPGL (Hold-
ings) Limited, a major corporate holding Company
based in the UK. He is Chairman of Exotix Hold-
ings Limited, a frontier markets brokerage and
investment bank and Director of Singapore Life, a
rapidly growing digital life insurance group oper-
ating across south-east Asia. At Oxford University
he is also an advisor to Oxford Sciences innovation,
the venture capital unit.
Mr. Richards brings considerable experience in
emerging market banking and investment. He was
Partner and Global Head of Financial Services at
Actis, one of the world’s leading and most ethical
emerging market private equity groups. During
11 years at Actis, Mr. Richards was responsible
for building many successful companies in Africa,
Asia and Latin America.
He previously spent 18 years at Barclays in senior
roles including CFO of the International Offshore
Bank, Director of Group Strategy and Head of Group
Corporate Development.
With his 30 years of global experience in Banking
and Financial Services, Mr. Richards serves as
Non-Executive Director for a number of compa-
nies. At CIB, he chairs the Risk Committee and
supports strategy development. He has a first
class degree from Oxford University in modern
history and economics.
Mr. Richards completed the Accelerated Develop-
ment 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.
Appointed in October 2014 representing the interest
of Fairfax Financial Holdings Ltd., Mr. Bijan Khos-
rowshahi was nominated by Fairfax to continue serve
the company’s interest in CIB for the Board Term
2017-2019. He joined Fairfax Financial Holdings in June
2009 and is currently based in London, UK. Fairfax is
a financial services holding company which, through
its subsidiaries, is engaged in property and casualty
insurance and reinsurance and investment manage-
ment. 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, Bah-
rain Kuwait Insurance 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 Pres-
ident and CEO of Fuji Fire & Marine Insurance Company
Limited in Japan. He is the only non-Japanese individual
to have 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 ma-
jor shareholders American International Group (AIG)
and ORIX Corporation. Mr. Khosrowshahi was elected
president in June 2004 and successfully implemented 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 Chairman and Managing Director of AIG Sig-
orta based in Istanbul, Turkey and was involved in
negotiating strategic alliances and joint ventures
with Turkish conglomerates and working with
government 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 in-
creasing responsibilities at AIG’s headquarters in
New York since joining AIG in 1986.
Mr. Khosrowshahi obtained an MBA in 1986 fol-
lowing an undergraduate degree in Mechanical
Engineering in 1983 from Drexel University. He
participated in the Executive Development Pro-
gram at the Wharton School of the University of
Pennsylvania in 2003 and is a regular lecturer at
universities and insurance institutes.
Mr. Khosrowshahi has served on the Board of the
Foreign Affairs Council and the Insurance Society
of Philadelphia. He has also been a council mem-
ber 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 Member since October 2014. He chairs the Com-
pensation Committee and is a member of the Risk and
Corporate Governance & Nomination Committees.
HE Dr. Amani Abou-Zeid
Independent, Non-Executive Board Member
HE Dr. Amani Abou-Zeid is a senior international devel-
opment expert with extensive knowledge of Africa at the
strategic and operational levels. For more than 30 years,
she has served in leadership roles at top-tier internation-
al organisations such as the African Development Bank
(AfDB), UNDP and USAID, with a focus on infrastructure
and energy programmes. She was elected in January 2017
as African Union Commissioner in charge of regional
and continental strategies, policies and partnerships in
the sectors of infrastructure, energy, ICT, and tourism.
Over her career, she has amassed a rare mix of experi-
ence from across Africa, France, the UK and Canada
and worked across constituencies with a wide variety
of stakeholders. She has managed an operational port-
folio of USD 10 billion and implemented national and
continental multi-sectoral development programmes,
including the world’s largest solar power plant (Nour).
An Egyptian national, Dr. Abou-Zeid has a multi-
disciplinary academic training: B.Sc. in Telecommu-
nications Engineering from Cairo University); an MBA
in Project Management from the French University for
African Development (Université Senghor); a Masters
of Public Administration from Harvard University; and
a Ph.D. in Social and Economic Development from The
University of Manchester, UK. She also has a degree in
Arts from Université Sorbonne-Paris IV.
Dr. Abou-Zeid has received numerous international
awards and recognitions for her leadership and excellence
including the Wissam Alaouite de l’Ordre Officier honour
from HM King Mohamed VI of Morocco, “Personalité
d’avenir” from the government of France and was se-
lected as one of The 50 Most Influential Women in Africa.
In 2017, Dr. Abou-Zeid was also named Commissioner
to the Global Leaders Broadband Commission for Sus-
tainable Development and received the “Outstanding
Alumni Award” from the University of Manchester, UK.
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111
SuSTAInABILITY / Corporate Governance
Mrs. Magda Habib
Independent, Non-Executive Board Member
Mrs. Magda Habib is the Co-Founder and Chief Ex-
ecutive Officer of Dawi Clinics, a chain of primary
care clinics established in Egypt in 2016. Mrs. Habib
has vast experience in the technical information
technology and electronic payments fields as well as
smart banking solutions. She has 25 years of exper-
tise in various managerial arenas including strategic
brand management, consumer and retail marketing,
corporate communications and investor relations.
Previously, she was the Co-Founder, Board
Member and Chief Commercial, Marketing &
Strategy Officer at Fawry Banking and Payment
Technology Services. As a co-founder and a key
member in the executive team, Mrs. Habib helped
establish Fawry as the leading electronics pay-
ment platform in Egypt with more than 50,000
payment points nationwide. Mrs. Habib’s journey
with Fawry culminated with a successful exit to a
consortium of private equity funds in 2015.
Prior to Fawry, Mrs. Habib spent nine years as a
member of Raya Holding’s executive team where
she played a key role in the merger and develop-
ment of Raya Group, as well as being responsible
for the creation and development of the Raya brand
to become a leading technology player in Egypt.
Mrs. Habib obtained an MBA from INSEAD, France.
She holds a B.Sc. with Honours in Computer Sci-
ence from The American University in Cairo.
9
members make up CIB’s
renowned BoD, providing the Bank
with the leadership and experience
to manage its business with
integrity, efficiency, and excellence
Board of Directors’ Committees
CIB’s BoD has eight standing committees that as-
sist in fulfilling its responsibilities. Accordingly,
the BoD is provided with all necessary resources
to enable members 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 commit-
tees 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 2017
SuSTAInABILITY / Corporate Governance
Non-Executive Committees
Executive Committees
Committee
Members
Key Responsibilities
Committee
Members
Key Responsibilities
Audit Committee
Supervising the quality and
integrity of CIB’s financial
reporting
Chair:
Mr. Jawaid Mirza
Members:
Dr. Sherif Kamel,
Mr. Yasser
Hashem
Established to offer effective oversight of the integrity of the Bank’s
financial reporting process, the effectiveness of the Bank’s internal
control system and its compliance with all statutory requirements.
The committee is also responsible for overseeing and reviewing the
performance of the Bank’s internal audit and compliance functions,
as well as the work of the Bank’s external auditors to ensure the in-
dependence and objectivity of each and the quality of the audit and
compliance processes. The committee met four times in 2017.
Corporate
Governance and
Nomination
Committee
Responsible for CIB’s
corporate governance
as well as the Board’s
Nomination process and
succession planning
Chair:
Mr. Yasser
Hashem
Members:
All other Non-
Executive Board
Members
Established to advise the Board on the general oversight of gover-
nance matters to ensure the promotion of a sound governance cul-
ture within the Board and the Bank. This entails a periodic review
of the Bank’s corporate governance structure and recommending
changes, when and if necessary, to the BoD. The committee also
sits as the Nomination Committee with the primary objective of
setting criteria for selecting new directors and assisting the BoD
in identifying individuals qualified to become BoD members
and recommending director nominees to shareholders. Also, the
committee provides advice and assistance to the BoD, when nec-
essary, with respect to a potential successor to the Bank’s Chief
Executive Officer. The committee met four times in 2017.
Compensation
Committee
Responsible for compensa-
tion of the BoD and the
Bank’s executive officers
Chair:
Mr. Bijan
Khosrowshahi
Members:
All other Non-
Executive Board
Members
Established to provide guidance to the BoD with regard to
the appropriate compensation for the board directors as well
as Bank’s executive officers and ensure that compensation is
consistent with the Bank’s objectives, strategy and control envi-
ronment. The committee is to ensure that clear policies for the
Bank’s salaries and compensation schemes are in place and that
they are deemed effective to attract and retain the best calibres.
The committee met four times in 2017.
Risk Committee
Supervising risk management
Chair:
Mr. Mark Richards
Members:
Mr. Jawaid Mirza,
Mr. Bijan
Khosrowshahi,
Dr. Amani
Abou-Zeid
Operations and IT
Committee
Assisting the BoD in oversee-
ing Bank operations and
technology strategy and
operations and technology risk
Chair:
Dr. Sherif Kamel
Members:
Mr. Jawaid Mirza,
Mrs. Magda Habib
Established to provide oversight of risk exposure management
functions and to assess management compliance to the set risk
strategies and policies approved by the BoD through periodic re-
ports submitted by the Risk Management Group. The committee
makes recommendations to the BoD with regard to risk manage-
ment strategies and policies (including those related to capital
adequacy, liquidity management, various types of risks: credit,
market, operation, compliance, reputation and any other risks the
Bank might be exposed to). The committee met four times in 2017.
Established to provide oversight of: (a) Bank operations, its tech-
nology strategy, and significant investments in support of this
strategy and (b) operations and technology risk management.
The committee met five times in 2017.
Management
Committee
Responsible executing the
Bank’s strategy
Chair:
Mr. Hussein Abaza
Members:
CIB Senior
Management
This committee is responsible for formulating fundamental
policies and strategic goals, assess the Bank’s performance and
its competitive position, and ensuring proper management of
the Bank’s human and financial resources to maximise return of
equity and preserve shareholders’ value. The committee met 17
times in 2017.
High Lending
and Investment
Committee
Responsible for asset alloca-
tion, quality and development
Chair:
Mr. Hussein Abaza
Members:
CIB Senior
Management
This committee is responsible for managing the Assets side of
the Balance Sheet and its provisioning and taking decisions with
regards to the assets allocation within the authorities delegated
to the committee as stipulated in the Bank’s Credit and Invest-
ment Policies. The committee convened weekly throughout 2017
and met 57 times.
Affiliates Committee
Responsible for steering and
managing CIB affiliates
Chair:
Mr. Hussein Abaza
Members:
CIB Senior
Management
The committee is responsible for steering and managing the
Bank’s affiliates and acting as a think-tank for setting and
initiating all strategic goals related to the Bank’s affiliates. The
committee met five times during 2017
External Auditor
The General Meeting of Shareholders appoints the
external auditor. The Audit Committee recom-
mends the auditor to the BoD, to be proposed for (re)
appointment by the General Meeting of Sharehold-
ers. 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.
Shareholders’ Rights
Our General Assembly is the platform where
shareholders exercise their voting rights. The
Bank’s Annual General Meeting of Sharehold-
ers is held in March each year, no later than six
months after the end of the company’s financial
year. Additional Extraordinary General Share-
holders 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 BoD
• Appointment of the external auditor
• Appointment, suspension or dismissal of the
members of the BoD
• Issuance of shares or rights to shares, restriction
or exclusion of preemptive rights of sharehold-
ers and repurchase or cancellation of shares
• Amendments to the Articles of Association
114
Annual Report 2017
Annual Report 2017
115
SuSTAInABILITY
Management
Committee
Mr. Hisham Ezz Al-Arab
Chairman and Managing Director
Mr. Hisham Ezz Al-Arab has been chairman and
managing director of CIB since 2002. He leads today
a team of more than 6,500 professionals who have
transformed the institution from a wholesale lender
into Egypt’s largest private-sector bank, leading
the sector on key metrics including revenue, prof-
itability, net worth and market share of deposits.
CIB serves more than 1 million customers, from
individual customers to small- and medium-sized
businesses and leading corporations, among them
Egypt’s 500 largest companies.
The Bank’s market capitalisation has grown from EGP
1 billion at the beginning of Mr. Ezz Al-Arab’s term to
EGP 90 billion, making its stock — a blue chip compo-
nent of the Egyptian Exchange — the global investment
community’s preferred proxy for Egypt and a bench-
mark for the banking industry in emerging markets.
Core to the Bank’s success is its unique culture, which
balances an entrepreneurial spirit that prizes innova-
tion with a commitment to global best practices in
both corporate governance and risk management.
That culture, nurtured over more than 15 years, is the
Bank’s natural competitive advantage and led directly
to the establishment of the first-of-its kind employee
stock ownership program (ESOP) in 2006, thus align-
ing the interest of employees to that of shareholders. In
2010, Mr. Ezz Al-Arab brought to life the CIB Founda-
tion, which is a leading Egyptian voice for universal ac-
cess to quality healthcare extended to underprivileged
children. CIB was named Euromoney’s Best Bank in
the Middle East and Best Bank in Global Emerging
Markets for 2017 and was named African Banker’s
2016 Socially Responsible Bank of the Year. Mr. Ezz
Al-Arab was recognised in 2016 by Euromoney for his
“Outstanding Contribution to Financial Services in
the Middle East” and was EMEA Finance’s “Best CEO
in Egypt and Africa” at the magazine’s 2014 Banking
Awards. Under his leadership, CIB was named the
“World’s Best Bank in the Emerging Markets” by Euro-
money at the Global Awards for Excellence ceremony
held in July 2017, thus becoming the first bank in Egypt,
Africa and the Middle East to ever win this award.
Mr. Ezz Al-Arab leads the Federation of Egyptian
Banks as Chairman, is a member of the Institute
of International Finance’s Emerging Markets Ad-
visory Council and serves as a director of Master-
Card Middle East’s Regional Advisory Board. He is
also the Chairman of Board of Trustees of the CIB
Foundation. Mr. Ezz Al-Arab is Non-executive Di-
rector of Ripplewood Advisors MENA Holdings, a
Non-executive Director of Fairfax Africa Board and
a Non-executive Director of Atlas Mara.
Mr. Ezz Al-Arab joined CIB from Deutsche Bank
and previously served with both JP Morgan and
Merrill Lynch in postings that took him to Bahrain,
New York and Cairo. He holds a BA in Commerce
from Cairo University.
Mr. Hussein Abaza
Chief Executive Officer
Mr. Hussein Abaza is a careered banker with more
than 30 years of experience in the financial services
industry — including both commercial banking
and investment banking — and is well-known in
the global financial community. From October 2011
until his appointment as CEO and Board Member in
March 2017, he was CEO for Institutional Banking
at CIB. He has previously served as the Bank’s Chief
Risk Officer and Chief Operating Officer and began
his journey with CIB in 1985, when CIB was known
as Chase National Bank of Egypt.
major expansions within the Operations Area through
the establishment of new divisions serving the expan-
sion of the business or merging several operations
divisions, including Corporate Services, Alternative
Channels and Real Estate and Facility Management.
Outside of CIB, Mr. Abaza worked as Head of Re-
search at EFG Hermes Asset Management from
March 1995 until October 1999.
Mr. Abaza graduated with a BA in Business Admin-
istration from The American University in Cairo in
1984, and has completed professional training in
Belgium, Switzerland, London, and New York.
Mr. Mohamed Sultan
Chief Operating Officer
Mr. Mohamed Sultan is CIB’s Chief Operating Officer,
a role he assumed 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 appointed Head of
Operations & IT before assuming his role as COO.
Under his leadership and management, the Opera-
tions Group was significantly developed, resulting in
In his continuous efforts to enhance the Bank’s
internal and external customer experience in
alignment with CIB’s overall objectives and stra-
tegic goals, multiple departments were established
under CIB operations including Treasury Middle
Office, Operations Control Management, Retail
Operations, and Customer Care Unit.
Following Mr. Sultan’s insightful vision, the Business
Continuity and Information Security Management De-
partment — 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
strategy in the IT Division, which added significant
value to existing technology and enhanced infrastruc-
ture. The aim was a more solid foundation that pro-
vides superior services to customers and allowing the
116
Annual Report 2017
Annual Report 2017
117
CIB’s mission is to create
outstanding stakeholder value
by providing best-in-class
financial solutions to the
individuals and enterprises
that drive egypt’s economy.
SuSTAInABILITY / Management Committee
business to grow smoothly as the Bank moves forward.
Mr. Sultan has also leads the Bank’s strategic Transfor-
mational programs, including digital banking, with an
aim of maintaining CIB’s role as market leader.
Management, IT, Reputation and Social & Environmen-
tal Risks. Ms. Essam is championing the Bank’s Enter-
prise Risk Management framework, with emphasis on
Infrastructure, Process, Environment, and Risk Culture.
Prior to joining CIB, Mr. Sultan held the positions of
Vice President of Branches Operations and Control
Management at Mashreq Bank and Country Opera-
tions Head at National Bank of Oman. He has attended
several leadership programs in top business schools
and is also an alumnus of INSEAD Business School.
Mr. Ahmed Issa
Chief Executive Officer, Retail Banking
Mr. Ahmed Issa has been leading Retail Banking divi-
sions at CIB since 2015 and is a member of the Bank’s
management committee, ALCO, and other group level
management committees. His key responsibilities in-
clude the formulation and execution of the business
strategies across Consumer Banking, Business Banking
and the Bank’s distribution networks. Prior to this, he
was CIB’s Group CFO, Head of Strategic Planning in addi-
tion to a successful career as a Corporate and Investment
Banker at CIB and CI Capital. Mr. Issa was also Chairman
of the Board at CORPLEASE and Falcon Group.
Mr. Issa chairs the Banking and Finance Committee
at the American Chamber of Commerce in Egypt,
chairs the Board Audit Committee at Civil Aviation
Finance Holding Company, and sits on the board of
Egypt’s Internal Trade Development Authority.
Mr. Issa earned his MBA at UNC-Chapel Hill’s Ke-
nan-Flagler Business School in 2003 and re-joined
CIB in the same year. As a Fulbright scholar, Mr.
Issa attended the Program on Investment Appraisal
and Management at Harvard University in 1997
and subsequently interned at Merrill Lynch in NY,
US. Mr. Issa attended more than 25 executive and
leadership development programs including the
industry-leading CIB Credit Course in 1994.
Ms. Pakinam Essam
Chief Risk Officer
Ms. Pakinam Essam serves as CIB’s Chief Risk Officer
(CRO), having been appointed in January 2011. Since
then, she began the Risk Transformation Process, and
the CIB Risk Group evolved into a forward-looking,
holistic organisation with an integrated view of risks,
covering all key areas including Institutional Banking,
Consumer, Business Banking, Market, Operational, Li-
quidity and Interest Rate Risks. The coverage expanded
to focus on emerging non-financial risks, such as
Conduct, Cyber Security, Information Security, Vendor
Under her leadership, CIB has been recognised for
six prestigious risk awards by Asian Banker Singa-
pore for Middle East & Africa in the following cat-
egories: Enterprise Risk Management, Retail Risk,
Liquidity Risk and Operational Risk.
Ms. Essam is a key member of the Bank’s executive
committees 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 the
Faculty of Economics and Political Science, Cairo
University, and has over 25 years of experience in
banking and risk management.
Mr. Amr El Ganainy
Chief Executive Officer, Institutional Banking
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 Department, before assuming
his current role as CEO IB in June 2017.
Mr. El Ganainy is the Chairman of International
Securities & Services Co. (Falcon Group), a Board
Member of CI Capital Holding Co., Board Member of
Telecom Egypt Co., Board Member of Misr for Central
Clearing, Depositary and Registry Co., Board Mem-
ber of The Egyptian Holding Co. for Airports and Air
Navigation, General Assembly Member of Egyptair
Holding Co., Honorary Chairman of Interarab Cam-
bist Association (ICA), Honorary Chairman of Egyp-
tian Dealers Association (ACI Egypt) and a member
of the American Chamber of Commerce in Egypt.
Mr. El Ganainy was the Chairman of CI Asset Man-
agement Co., Chairman of Commercial International
Brokerage Co., Board Member of TE Data, Executive
Board Member of ACI International (The Financial
Market Association), Board Member of Royal & Sun
Alliance Insurance Co. and the Chairman of Capital
Securities Brokerage Co.
Prior to joining CIB, Mr. El Ganainy worked at the
United Bank of Egypt as General Manager, Trea-
surer and Head of Correspondent Banking, Chief
Dealer of Export Development Bank and started his
career as a Dealer at Suez Canal Bank.
118
Annual Report 2017
SuSTAInABILITY
Sustainability
development department
1.8 MN
KW saved in 2017
CIB launched its Sustainability Initiative in
March 2013, rooted in a long-term holistic vi-
sion of the future that strikes a sound balance
between the strategic goal of increasing profit-
ability as well as serving broader socioeconomic,
environmental, and governance interests. This
approach is presently widely accepted as a core
principle of responsible global business ethics
and excellence. That being so, CIB continues to
systematically advance a Bank-wide culture and
mind-set of sustainability through the integra-
tion of environmental and social considerations
in its policies, core business, and day-to-day
operations, within a gradual, steady, responsible,
and inclusive approach. CIB has gained some
very promising ground during this worthwhile
journey while remaining aware that there is still
more that needs to be covered.
CIB’s promising sustainability journey is closely
aligned with the 2030 Global Sustainable Devel-
opment agenda, its 17 Sustainable Development
Goals (SDGs), and the 169 targets. It is also in
line with Egypt’s 2030 Sustainable Development
Agenda, aspiring to advance a sustainable and
climate-resilient future.
Ecologically Responsible
CIB, being a responsible and caring partner in
the Egyptian community, took the lead in various
sustainability initiatives in 2017. The year wit-
nessed the completion of the LED lighting system
Bank wide, and the results were outstanding in
terms of consumption levels, with the Bank man-
aging to reduce KWs by 1,840,229.
Despite being a large financial institution that
depends on paper in its business operations, CIB
succeeded in reducing its paper consumption by
4.8% i.e. 1,197,309 sheets of paper. The current
paper cutback is a result of the modified applica-
tions of double-sided printing/copying, upgraded
Total KWs Consumed in
87 CIB Branches
20,303,366
18,463,137
software applications of Oracle, P2P, archiving,
data saving, E-Business Suite, and the digitalisa-
tion of operations.
We also implemented the Paper Waste for Cash pro-
gram at all major CIB premises. The initiative sees
paper waste sold to paper recycling startups, and pro-
ceeds are credited to a sustainability account. Since
February 2017, a net of EGP 206,500 has been collected.
Recognising the negative impact of electronic waste (e-
waste) on health and the environment, together with
the profitable opportunities in this field, CIB partnered
with the Ministry of Environment to implement a
rewarding e-waste management program in coopera-
tion with companies certified by the ministry. CIB is
contributing to capacity-building in this field and is
taking this initiative mainstream.
The Bank encouraged its staff members to use a tai-
lored carpooling application named Raye7 CIB dur-
ing the year. The mobile application was downloaded
by most staff members and used by hundreds to share
their morning and evening commutes. Alongside the
CIB Paper Consumption
24,848,200
23,750,891
2016
2017
2016
2017
120
Annual Report 2017
Annual Report 2017
121
SuSTAInABILITY / Sustainability Development Department
initiative’s several benefits, it has a positive impact on
the community and the environment and encourages
young Egyptian entrepreneurs.
Sound governance is an integral part of CIB’s
fabric. To this end, carbon audit on all the Bank’s
premises is being conducted to measure CIB’s
impact on Egypt’s environment and people. A
detailed report, which will cover climate change
and other issues is due by 2020 for inclusion in
international reporting journals.
In May 2017, CIB succeeded in acquiring the
second Green Pyramids Certificate for its Third
Smart Village Building. The certificate is based
on Egyptian efforts through a consortium of the
Ministries of Housing and Urban Development,
Energy, and Environment.
Socially Responsible
Building on the impressive social development en-
deavours of the CIB Foundation, the Sustainability
Development Department enhanced collaboration
with individuals with special needs to train CIB
customer service staff on ways to best communicate
and cater to these individuals. To date, 200 customer
service team members have learned this particular
human task. CIB also managed to develop 97 ATM
machines for the visually impaired in Greater Cairo
and other governorates.
Partnership/Reporting
The Bank is also developing a Sustainable Finance
Product to mobilise credit facilities focusing on
energy efficiency over two phases. The first phase
tackles lighting efficiency and appliances and the
second tackles industrial energy efficiency. The pro-
posed fund limit for the pilot phase is USD 3 million.
CIB is also in discussions with the UNDP and Egyp-
tian Ministry of Electricity to provide technical as-
sistance in the form of technical feasibility studies,
technical capacity building, as well as monitoring
and evaluating performance of initiatives by cli-
ents. The endeavour is rooted in a case study con-
ducted with CIB in 2016.
The Bank updated the S&E Credit Risk Procedures
Manual to incorporate more coherent steps for
relevant departments to follow. Procedures will be
circulated to relevant departments upon comple-
tion, with a target date of December 2017.
97
ATMs equipped to serve the
visually impaired
For the second consecutive year, CIB was the only
bank in the MENA region to participate in the as-
sessment exercise of the Dow Jones Sustainability
Index 2017. Our score in 2017 corresponded with
that of 2016, with CIB ranking in the 40th percentile
among financial institutions.
For the second time in a row, CIB was recognised as
a constituent in the FTSE4Good Sustainability In-
dex sponsored by the Financial Times. Meanwhile,
for the fourth successive year, CIB was ranked first
in the EGX Sustainability Index.
2017 also saw the Bank publicly issue its internation-
ally acclaimed Annual Sustainability Report, which
covers all the Bank’s sustainability initiatives. It fol-
lows the GRI G4 guidelines and was released on the
Bank’s website and social media channels.
Sustainability Advisory Board
Concentrating on long-term value drivers that ad-
vance the twin objectives of the sustained success
of the Bank as well as the wellbeing and betterment
of society as a whole, the activities of the Sustain-
ability Development Department are monitored by
the Sustainability Advisory Board Committee. The
committee was established to oversee and approve
all sustainability strategies, initiatives and projects
and proposals through a phased, steady and in-
clusive approach. The committee is chaired by Dr.
Nadia Makram Ebeid, CIB’s former Non-Executive
Board member, and a veteran in the field of envi-
ronmental preservation and human empowerment
with notable achievements throughout her career in
environmental policy and advocacy.
122
Annual Report 2017
COMMUNITy
dEVELoPMEnT
CoMMunITY dEVELoPMEnT
CIB
Foundation 2017
1.5%
of profit allocated to the
CIB foundation
CIB has been involved in a number of initiatives
over the past decade to enhance the quality of
health and nutrition services in Egyptian society,
with special attention paid to underprivileged chil-
dren, as a part of its corporate social responsibility
activities. Seeing the positive impact these initia-
tives has had on the lives of children in Egypt, the
Bank took active measures to turn away from ad
hoc philanthropy and move toward more effective,
sustainable initiatives, through the establishment
of the CIB Foundation.
The CIB Foundation was established in 2010 as a non-
profit organisation dedicated to the enhancement
of health and nutrition services extended to under-
privileged children, particularly those with limited
access to quality health care 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
strive to improve access to health care and promote
positive, life-changing community initiatives.
The Foundation’s role goes beyond being merely a do-
nor institution, but also extends to monitoring and fol-
lowing up on funded initiatives to ensure resources are
being maximised and best results are being achieved.
Over the past years, the CIB Foundation was recog-
nised for its work in the arena of corporate social
responsibility from EMEA Finance 2014 Pan-Africa
Award for Corporate Social Responsibility in 2014,
Banker Africa in 2015, winning the award for “Most
Socially Responsible Bank in North Africa”, and
African Banker in June 2016 winning the award for
“Socially Responsible Bank of the Year”.
Mission and Vision
At the CIB Foundation, we seek to ease the burden on
families in need of affordable healthcare services. To
do so, the CIB Foundation is committed to enhanc-
ing the quality of services in our partner institutions
to provide the best possible care for our youngest
citizens. A productive community requires a healthy
citizenry, and the CIB Foundation strives to ensure
that Egyptian children are receiving the care they
deserve to lead the healthiest lives possible.
Through extensive processes, we work with public
health partners that have the widest community
reach, targeting those most in need. We work hand-
in-hand with these providers to ensure that the
maximum value of our support is reached and that
our donations provide positive, sustainable results.
Budget and Financing
Through the generous support of CIB shareholders,
1.5% of CIB’s annual net profit was allocated to the
CIB Foundation in 2017. It is with this funding that the
CIB Foundation supports initiatives that allow Egypt’s
children to embark on healthy new beginnings.
One hundred percent of the Foundation’s budget,
as well as all donations made to the Foundation’s
dedicated account, are channelled toward the imple-
mentation of child development projects. Through
the coordinated efforts of the Foundation’s Board of
Trustees, staff, and CIB volunteers, the Foundation
ensures its resources are spent efficiently to reach
the greatest number of beneficiaries.
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
The Foundation’s partnerships and initiatives dur-
ing 2017 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 disadvantaged students enrolled
at public schools in poor rural and urban areas in
Egypt with free eye care services through the Go-
zour Foundation. The caravans will be implemented
in Upper Egypt governorates.
The CIB Foundation allocated EGP 50.5 million over
three years to fund caravans in the governorates
of Sohag, Qena, Luxor, and Aswan through the 6/6
Eye Exam Caravan Program. Through a partner-
ship with Magrabi Foundation and Dar El Oyoun,
the caravans are designed to provide public school
students with free ophthalmic exams, eyeglass,
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. Over
the course of 2017, the CIB Foundation donated
over EGP 20.6 million to cover the second and third
tranche of the project.
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127
CoMMunITY dEVELoPMEnT / CIB Foundation
eGP MN
50.5
allocated to the Gozour
foundation for Development
for eye exam caravans
CIB staff members also participated in bag-packing
events where thousands of school bags were packed
with soap, towels, and educational material. They
also participated in the eye exam caravans and pro-
vided children with eyeglasses and eye medication.
Moreover, they lead awareness sessions on healthy
eye practices for the student beneficiaries of the pro-
gram. These events provided valuable opportunities
for CIB staff to learn about the Foundation’s activi-
ties and give back to the community.
Sawiris Foundation and Star Care for
Helping Children: Together for Change
Project
As part of the CIB Foundation’s commitment to
supporting the health sector, in April 2016, the CIB
Foundation’s Board of Trustees approved 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
community health centres, the training of doctors
and nurses, organising health awareness cam-
paigns 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 economic empowerment opportunities. Over
the course of 2017, the CIB Foundation donated over
EGP 1.3 million to cover training for the medical
staff and outfitting the community health centres.
New Children’s Hospital - Ain Shams
University Hospital
In line with its long-term partnership with Ain Shams
University Hospital, the CIB Foundation’s Board of
Trustees agreed in June 2017 to fund the purchase
of the necessary equipment and supplies for the
Inpatient Unit located on the fifth floor of the new Chil-
dren’s Hospital - Ain Shams University Hospital for a
total of EGP 3.53 million over one year. The hospital is
expected to serve around 1,290 patients per month,
with roughly 15,500 children set to benefit from the
service of the new hospital annually. Over the course
of 2017, the CIB Foundation donated over EGP 2.9 mil-
lion to cover the first two instalments for the project.
Raei Masr Hospital in Minya
In December 2016, the CIB Foundation’s Board of
Trustees agreed to fund the outfitting of the Neona-
tal Intensive Care Unit and the Paediatric Intensive
Care Unit at Raei Misr Hospital in the Minya gover-
norate for a total of EGP 6.96 million over one year.
The hospital is located on the main Cairo-Assiut
Agricultural Road and is expected to serve a vast
number of patients from Upper Egypt including As-
siut, Beni Sueif, and El Minya.
The CIB Foundation fulfilled its commitment to the
project in October 2017.
Rotary Club of Kasr El Nil: Children’s
Right to Sight Program
In June 2017, the CIB Foundation’s Board of Trustees
approved supporting the fourth phase of the Children’s
Right to Sight program at a cost of EGP 2 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 dedi-
cated to eradicating blindness by supporting children
and infants requiring critical eye surgeries. Over the
course of 2017, the CIB Foundation donated around
EGP 1.8 million to cover 543 surgeries.
Children’s Cancer Hospital 57357: PET
CT Scanner and Annual Donation
In line with its long-term partnership with the Chil-
dren’s Cancer Hospital 57357, the CIB Foundation
provided the hospital with another PET CT scanner
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CoMMunITY dEVELoPMEnT / CIB Foundation
eGP MN
1.5
partnership between the
Sawiris foundation and Star
Care foundation
similar to the one donated by CIB Foundation in
2016 at a cost of EGP 26.9 million. Having two PET-
CT units will increase the efficiency and extend ser-
vices provided to more patients on the waiting list as
the highly specialised equipment will allow doctors
to identify cancerous cells and plan for removal
during operations. The CIB Foundation fulfilled its
commitment to the project in July 2017. As another
demonstration of the Foundation’s commitment to
the hospital, EGP 3.5 million was donated in Janu-
ary 2017 to fund patient care in both the Cairo and
Tanta branches of the hospital.
Magdi Yacoub Heart Foundation
Research Labs
In April 2015, the CIB Foundation’s Board of Trust-
ees approved 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 understanding of various heart diseases and
shed light on possible therapeutic strategies. The
program serves as an excellent platform from which
young Egyptian scientists and researchers can con-
tribute to the advancement of world-class research
without having to leave the country.
Over the course of 2017, the CIB Foundation donated
over EGP 6.2 million to cover the outfitting costs of
the research labs.
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 associated with 50 paediatric
open-heart surgeries. Through its ongoing dona-
tions, the CIB Foundation supports the Magdi Ya-
coub Foundation’s efforts to drastically minimise
the number of children on the open-heart surgery
waiting list. In March 2017, the CIB Foundation
donated EGP 2.25 million, covering the second
and final tranche of the project.
Yahiya Arafa Children’s Charity
Foundation: Pediatric 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 paedi-
atric catheter lab at the Ain Shams University Hos-
pital, under the supervision and management of the
Yahiya Arafa Foundation. The roughly EGP 8 million
project will enable the hospital to have a Catheter
Lab dedicated for only children, conduct 100 proce-
dures a month, and reduce the waiting list by 90%.
Over the course of 2017, the CIB Foundation donated
EGP 6 million to cover the project’s final instalments.
Additionally, in January 2017, the CIB Foundation
fulfilled its commitment to support the annual
operating costs of five paediatric units at the Ain
Shams University Hospital through the Yahiya
Arafa Children’s Charity Foundation at a cost of
EGP 2 million.
Rotary Club of Giza Metropolitan – 50
Open Heart Surgeries
In March 2017, the CIB Foundation allocated EGP
1.75 million to cover the costs associated with 50
paediatric open-heart surgeries at El Kasr El Eini
Hospital under the management of Rotary Club
of Giza Metropolitan to drastically minimise the
number of children on the open-heart surgery wait-
ing list and change the future of 50 underprivileged
children who are suffering from congenital heart
diseases. In December 2017, the CIB Foundation
donated over EGP 333,000 to cover 11 surgeries.
Zewail University of Science and
Technology: CIB Foundation
Fellowship for Science and Technology
In line with its commitment to quality education,
the CIB Foundation fulfilled its commitment to
cover the tuition expenses of its 50 CIB Founda-
tion Fellows for a five-year academic course of
study at Zewail University of Science and Tech-
nology. The fellowship supported 50 public school
graduates pursuing degrees in advanced sciences
or engineering. Over the course of 2017, the CIB
Foundation disbursed the third year (2015/2016)
and the fifth year (2017-2018) tuition fees, total-
ling EGP 10 million.
MOVE Foundation for Children with
Cerebral Palsy: Premises Renovation
In June 2015, the CIB Foundation committed EGP 2
million to the MOVE Foundation for Children with
cerebral palsy to renovate their premises, allowing
them to expand their operations. The MOVE Foun-
dation was established in 2004 with a 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 pub-
lic-school system to allow them to become healthy,
productive members of society.
Over the course of 2017, the CIB Foundation do-
nated over EGP 163,000 to cover the complete
renovation of the premises, as well as the purchas-
ing of essential equipment.
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 funding the annual operating
costs of the CIB Foundation-funded Maxillo-Facial
Center at Cairo University’s Faculty of Dentistry
with a total amount of EGP 45,100. The centre was
inaugurated in April 2014 and is one of the sole pro-
viders of highly specialised treatment for oral and
nasal cavity deformities, congenital deformities in
newborns, and facial deformities caused by cancer.
In July 2017, the CIB Foundation donated over EGP 22,500
to cover the final instalment of the operating costs.
Mobile Dental Caravan for the Faculty of Oral
& Dental Medicine - Cairo University
In September 2016, the CIB Foundation’s Board of
Trustees approved funding the purchase of an out-
fitted mobile dental caravan for the Faculty of Oral
& Dental Medicine at Cairo University under the
management of Rotary Club of Zamalek at a total
cost of EGP 640,000. In September 2017, the CIB
Foundation donated EGP 480,000 to cover the final
instalment for the project.
The dental caravan will be used by the Faculty of
Oral & Dental Medicine to perform necessary den-
tal treatment (free of charge) to school students in
remote areas of the Cairo and Giza governorates.
Mersal Foundation - Cochlear Implant
Surgeries
The CIB Foundation’s Board of Trustees approved
EGP 2.9 million in March 2017 to support cochlear
implant surgeries for 100 children with hearing
disabilities where certain cells are damaged in
a part of the inner ear causing deafness and, as a
consequence, impacts their speaking. It is a two-
part surgery that involves an internal and external
procedure followed by a speech therapy program.
The CIB Foundation donated over EGP 167,000 in No-
vember 2017 to cover the first instalment of the project.
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131
CoMMunITY dEVELoPMEnT / CIB Foundation
Friends of Abu El Rish Children’s
Hospitals Organisation: Annual
Operating Costs
In line with its commitment to sustainability and on-
going quality service provision, the CIB Foundation
fulfilled its commitment in February 2017 to support
the annual operating costs for the previously funded
Intensive Care Unit (ICU) at Abou El Reesh El Mounira
Children’s Hospital through Friends of Abu El Rish Chil-
dren’s Hospitals Organisation at a cost of EGP 2 million.
National Hepatology & Tropical
Medicine Research Institute
In November 2017, the CIB Foundation’s Board of
Trustees approved funding the treatment of 400
children infected with hepatitis C under the man-
agement of the National Hepatology & Tropical
Medicine Research Institute (NHTMRI) at a cost of
EGP 4.1 million over one year.
NHTMRI was established in 1932 as an institute for
medical research on endemic diseases in Egypt, be-
ginning with what was the most endemic disease at
the time, schistosomiasis. NHTMRI is now the first
centre for hepatitis C treatment and a referral centre
for difficult cases from other centres.
Egyptian Liver Care Society
The CIB Foundation dedicated over EGP 5.5 million
to fund the Egyptian Liver Care Society’s Children
Without Virus C (C-Free Child) program. The Egyp-
tian Liver Care Society was established in 2008 with
specific goals of caring for hepatitis patients, rais-
ing 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 pro-
gram of its kind in Egypt, screening and treating
children with hepatitis C for free.
Blood Donation Campaigns: The
Triple Effect
Over the course of 2017, the CIB Foundation hosted
15 blood donation campaigns across its corporate
offices. The campaign aims to encourage CIB staff
and customers to positively and effectively partici-
pate in an activity that can save the lives of thou-
sands of patients across the country. Some 438 bags
of blood were collected in 2017, potentially saving
the lives of more than 1,314 people. The Foundation
was honoured at the World Blood Donation Day
celebration at the League of Arab States for its ef-
forts in organising campaigns.
KidZania Cairo
Through CIB’s long-term corporate sponsorship of
KidZania Cairo, the CIB Foundation allocated 50
tickets to KidZania each quarter to underprivi-
leged children. Throughout 2017, the CIB Founda-
tion organised multiple visits to the edutainment
city through its partner organisations, where
children were provided the opportunity to experi-
ence adult professions on a child-friendly scale. By
performing sector-specific jobs, children spend the
Kidzos (the official currency of KidZania) that 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 pa-
tients. Through these events, children from mar-
ginalised groups of society were given the chance
to experience activities that would have previously
been unavailable to them.
Squash for Everyone
In 2017, the CIB Foundation organised multiple
sports days for 11 children from the Egyptian Red
Crescent, during which they practiced squash. The
events signalled the launch of the second phase of
“Squash for Everyone” initiative sponsored by CIB
in partnership with Egyptian Squash professional
Amr Shabana, with the aim of offering an equal
opportunity to underprivileged children to explore
and develop their athletic capabilities.
Children’s Cancer Hospital 57357 -
Ramadan Decoration Day
Spreading happiness is one way we can give back
to the community. In May 2017, the Foundation
organised a decoration day at Children’s Cancer
Hospital 57357 where volunteers from CIB had the
opportunity to bring the Ramadan spirit to the lives
of childhood cancer patients and their families.
6/6 Family Bag Packing Event
The CIB Foundation hosted a bag-packing event in
CIB’s Smart Village office in February 2017 where
CIB colleagues were invited to bring their families
to participate in the packing of roughly 5,000 health
and hygiene school bags for the students targeted
through the 6/6 Eye Exam Caravan program. The
events were highly successful, with great turnout
and roughly all participants asking for more events
where they could bring their children.
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CoMMunITY dEVELoPMEnT
Corporate Social
responsibility
Over the past year, CIB heavily focused on boosting
its firm commitment to community development
by leading initiatives in diverse Corporate Social
Responsibility (CSR) projects and by funding ideas
and events immersed in art, culture, and sports.
Supporting art remains the core of the Bank’s CSR
agenda. CIB works hard to uncover hidden art tal-
ents across Egypt to shed light on their distinctive
artwork. The Bank’s support of artistic endeavours
through sponsorships and activities have contrib-
uted greatly to preserving Egyptian art and culture,
while enriching the Bank’s private Art Collection.
Supporting Students of Fine Arts Faculties: As part
of its efforts to encourage Egyptian artistic talent, CIB
acquired distinctive students’ art pieces displayed at
the exhibitions of Faculties of Fine Arts at Alexandria
University and South Valley University. This annual
contribution seeks to incentivise students to further
develop and maintain their talent.
Art Salons: CIB sponsored the Annual Egyptian
Youth Salon for the seventh consecutive year in col-
laboration with the Fine Arts Division at the Min-
istry of Culture. The sponsorship targeted trending
artists under the age of 35.
Aisha Fahmy Palace: CIB proudly contributed to
the renovations of Aisha Fahmy Palace after hav-
ing its doors shut for over a decade. The restoration
project revived the glorious former days of this an-
tique house, currently managed by the Ministry of
Culture’s Fine Arts Department, which is looking to
reinstate the palace as a prestigious complex for art
and culture.
La Biennale di Venezia: CIB supported and spon-
sored Egyptian artists at the 57th edition of La Bi-
ennale Venezia, one of the world’s most prestigious
arts and culture institutes, which organises an
annual exhibition of the same name. Established
in 1895, the Biennale now hosts more than 500,000
visitors at its art exhibition.
Night of Art at the Egyptian Museum: CIB was one
of the key sponsors of the Night of Art at the Egyptian
Museum, the inauguration event of the Eternal Light:
Something Old, Something New show — the first in a se-
ries of art shows that combines Egypt’s varied heritage
sites with contemporary Egyptian art. The event dis-
played 16 artworks by Egypt’s leading modern artists,
where the contrast of the past and present talents shone
through in a vivid showcase of extraordinary work.
The 100% Egyptian Cotton: CIB has been extend-
ing its support to young and talented Egyptian
designers who have succeeded in infiltrating the
global fashion industry and integrating authentic
Egyptian designs into their lines. As such, CIB was
the main sponsor of Egypt’s ‘100% Egyptian Cotton’
exhibition featuring the country’s best emerging de-
signers in the International Fashion Showcase (IFS)
2017. Egypt was the only Arab country represented
at IFS, and ‘100% Egyptian Cotton’ was the most-
visited exhibit at the event with over 10,000 visitors.
Maintaining a sustainable, profound impact on the
lives of people in our community, the Bank has been
conducting several activities and projects support-
ing community development.
KidZania: Through an ongoing partnership that
began in 2013, the Bank successfully organised six
trips to KidZania in 2017 for more than 150 under-
privileged children and those with special needs
and health conditions. Under the auspices of the CIB
Foundation, the trips offered children a fun and en-
tertaining setting in which to learn to perform dif-
ferent banking operations such as issuing cheques
and debit cards and depositing and withdrawing
money using KidZania’s official currency, Kidzos.
Autism: CIB has consistently dedicated a significant
portion of its activities to children, and specifically
children with autism and other disabilities. The aid
is targeted both at supporting their integration into
society and to raise awareness around autism and
other disorders on the spectrum. The Bank not only
maintained its sponsorship of the annual ceremony
held by the ADVANCE Society for Persons with Au-
tism and Other Disabilities, but also sponsored 2017
World Autism Awareness Day in Egypt. As a form of
support, our Smart Village headquarters and a few
branches were lit in blue in solidarity with those
who live with autism and related disorders.
Zawya: Through our partnership with Zawya, an
art-house cinema founded by Misr International
Films, the Bank sponsored the screening of two
movies with live audio description for more than 150
visually impaired children.
Sponsoring the Egyptian Squash Federation: In
line with the Bank’s belief that sports are a key
factor in shaping the health and minds of Egyp-
tian youth, CIB maintained its sponsorship of the
Egyptian Squash Federation for the sixth year run-
ning. In 2017, the Bank expanded its contribution
by reaching out to less fortunate children through
the launch of the second phase of the Squash for
Everyone initiative in partnership with the Egyp-
tian Squash National Teams Director and Techni-
cal Advisor Amr Shabana. The Bank continued to
support the Federation through sponsoring the
Egyptian national squash team in the World Team
Championship, where they won first place for four
consecutive times. The Bank is proud to be a key
supporter of the team and the federation; the play-
ers have been able to maintain Egypt’s winning
stance and strengthen its position as top player
internationally for a strike of years.
El Sawy Culture Wheel: Capitalising on a years-long
partnership, in 2017 CIB began diversifying its contri-
bution to El Sawy Culture Wheel, which span art, cul-
ture, music, and social awareness. In 2017, CIB spring
boarded off 2016’s successful awareness campaign
entitled “Financial Planning for a Safer Future” and
launched similar free seminars under a different theme
of creating a CV and preparing for interviews. CIB
also continued its sponsorship of special screenings of
documentary films, cultural nights, concerts, and art
exhibitions organised by El Sawy Culture Wheel.
Beena Initiative: For the second year, CIB was the
main partner and financial sponsor of Beena, a
protocol signed between the Bank and the Ministry
of Social Solidarity to encourage active youth par-
ticipation in the community and monitor the devel-
opment of social care services. This initiative was
successful in attracting thousands of volunteers
around Egypt, who assisted in orphanages, elderly
homes, and special-needs houses.
Collaborating with Omar Samra: As part of an
innovative initiative for developing the scientific
talents of Egyptian youth, CIB sponsored the “Your
Space” project, launched by famed Egyptian adven-
turer Omar Samra. The project aims to encourage
school and university students to explore space sci-
ences, enrich their knowledge, and develop their sci-
entific competencies. It also grants Egyptian youth
the opportunity to broaden their horizons and
inspire them to discover the field of space sciences
so as to consider it as a career choice. The project of-
fers incentive to educational institutions to develop
engineering, sciences, technology, and mathematics
curriculums that lay the foundations for the future
development of top-notch calibres.
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135
FINANCIAL
STATEMEnTS
Financial StatementS: Separate
138
Annual Report 2017
Annual Report 2017
139
Financial StatementS: Separate
Commercial International Bank (Egypt) S.A.E
Separate balance sheet as at December 31,2017
Commercial International Bank (Egypt) S.A.E
Separate income statement for the year ended December 31,2017
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 and subsidiaries
Non current assets held for sale
Other assets
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
The accompanying notes are an integral part of these financial statements .
Notes
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
15
16
17
18
19
20
21
22
22
23
42
24
41
32
25
26
27
21
29
28
30
31
34
14,663,289
45,319,766
54,478,202
7,295,197
1,313
88,427,103
40,001
30,474,781
45,167,722
54,068
-
6,886,807
368,923
179,630
1,414,519
294,771,321
1,877,918
250,767,370
196,984
2,778,973
5,476,531
3,674,736
1,615,159
266,387,671
11,618,011
8,725,966
489,334
20,833,311
7,550,339
28,383,650
294,771,321
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
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 (Losses) 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
12
13
32 & 13
14
Dec. 31, 2017
EGP Thousands
28,671,170
(16,167,155)
12,504,015
Dec. 31, 2016
EGP Thousands
19,144,218
(9,126,512)
10,017,706
2,676,944
(624,278)
2,052,666
34,514
1,292,215
496,045
(3,112,508)
(1,063,468)
-
(130,208)
(1,742,281)
10,330,990
(2,778,973)
(1,678)
7,550,339
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
5.76
5.67
4.54
4.47
Hisham Ezz Al-Arab
Chairman and Managing Director
140
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Annual Report 2017
141
Hisham Ezz Al-Arab
Chairman and Managing Director
Financial StatementS: Separate
Commercial International Bank (Egypt) S.A.E
Separate cash flow for the year ended December 31,2017
Commercial International Bank (Egypt) S.A.E
Separate cash flow for the year ended December 31,2017 (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, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
3,514,493
(1,350,204)
79,351
2,243,640
(12,309,863)
61,518,700
49,208,837
14,663,289
45,319,766
54,478,202
(8,878,986)
(1,719,586)
(54,653,848)
49,208,837
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
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 non current assets held for sale
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
Non current assets held for sale
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 redemption of subsidiary and associates
Payment (proceeds) for purchases and sell of 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 from selling non current assets held for sale
Net cash used in investing activities
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
10,330,990
8,044,438
351,005
1,742,281
212,622
(248,072)
100,078
-
130,208
(83,079)
(25,463)
(97,897)
11,840
(607)
99,047
-
290,884
(340,504)
12,473,333
(2,594,442)
(16,466,420)
(4,601,991)
95,161
(4,019,132)
(1,121,981)
428,011
(1,131,078)
18,802,058
(2,017,034)
1,897,201
1,743,686
750
(44,318)
(745,089)
13,354,468
(4,597,254)
(25,868,230)
973,963
628,521
(16,297,189)
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)
142
Annual Report 2017
Annual Report 2017
143
Financial StatementS: Separate
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144
Annual Report 2017
Annual Report 2017
145
Financial StatementS: Separate
Notes to the separate financial statements for the year ended
December 31, 2017
1. General information
Commercial International Bank (Egypt) S.A.E. provides retail, corporate and investment banking services in various
parts of Egypt through 174 branches, and 22 units employing 6551 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 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.
2.3. Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks
and returns that are different from those of other business segments. A geographical segment is engaged in providing
products or services within a particular economic environment that are subject to risks and returns different from those
of segments operating in other economic environments.
2.4. Foreign currency translation
2.4.1. Functional and presentation currency
The financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.
2.4.2. Transactions and balances in foreign currencies
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.
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.
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:
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, 2017 to get complete information on the Bank’s financial position, results of operations, cash flows
and changes in ownership rights.
2.2. Subsidiaries and associates
2.2.1. Subsidiaries
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.
• 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.
2.5. Financial assets
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.
146
Annual Report 2017
Annual Report 2017
147
Financial StatementS: Separate
2.5.1. Financial assets at fair value through profit or loss
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.
2.5.2. Loans and advances
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.
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 subse-
quently 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.
2.5.4. 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.
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.
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.
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.
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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.
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 desig-
nated at fair value are recognized in ‘interest income’ and ‘interest expense’ in the income statement using the ef-
fective 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.
2.9. Fee and commission income
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.
2.12. Impairment of financial assets
2.12.1Financial 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 fi-
nancial 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 ( 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.
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.
The objective evidence of impairment loss for a group of financial assets is observable data indicating that there is a mea-
surable 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.
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.
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, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively
assesses them for impairment according to historical default ratios.
• If the Bank determines that an objective evidence of financial asset impairment exist that is individually assessed
for impairment 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.
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.
2.13. 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
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, 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.
2.15. Impairment of non-financial assets
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.
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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.
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.
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’.
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.
2.16.2. 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.
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.
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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, 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.
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 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
instruments. In addition, credit risk management is responsible for the independent review of risk management and the
control environment.
3.1. Credit risk
The Bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the Bank by
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.
3.1.1. Credit risk measurement
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 committee on
banking regulations and the supervisory practices (the Basel committee), and are embedded in the Bank’s daily operational man-
agement. 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.
3.1.2. Risk limit control and mitigation policies
The Bank manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to indi-
vidual counterparties and banks, and to industries and countries.
The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to
one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a revolving
basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of credit risk by
individual, counterparties, product, and industry sector and by country are approved quarterly by the Board of Directors.
The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on- and off-
balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange con-
tracts. Actual exposures against limits are monitored daily.
156
Annual Report 2017
Annual Report 2017
157
Financial StatementS: Separate
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.
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:
December 31, 2017
December 31, 2016
Bank’s rating
1-Performing loans
2-Regular watching
3-Watch list
4-Non-Performing loans
Loans and advances
(%)
69.53
15.53
7.99
6.95
Impairment provision
(%)
11.61
21.51
23.70
43.18
Loans and advances
(%)
68.52
18.29
6.49
6.70
Impairment provision
(%)
13.78
19.53
16.81
49.88
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.
3.1.4. Pattern of measuring the general banking risk
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 categories are classified according to detailed rules and terms depending heavily on information relevant to the
customer, his activity, 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.
158
Annual Report 2017
Annual Report 2017
159
Financial StatementS: Separate
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
Categorization
Provision%
Internal rating
Categorization
1
2
3
4
5
6
7
8
9
10
Low risk
Average risk
Satisfactory risk
Reasonable risk
Acceptable risk
Marginally acceptable risk
Watch list
Substandard
Doubtful
Bad debts
0%
1%
1%
2%
2%
3%
5%
20%
50%
100%
Performing loans
1
Performing loans
1
Performing loans
1
Performing loans
1
Performing loans
1
Regular watching
2
3
Watch list
4 Non performing loans
4 Non performing loans
4 Non performing loans
3.1.5. Maximum exposure to credit risk before collateral held
In balance sheet items exposed to credit risk
Treasury bills and other governmental notes
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 and subsidiaries
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, 2017
Dec. 31, 2016
EGP Thousands
EGP Thousands
54,653,848
39,216,387
6,728,843
1,383
(70)
1,933,420
161,451
(1,800)
1,780,416
2,899,930
13,910,837
416,616
-
12,450,826
44,200,770
26,627,825
112,802
(12,476)
(10,994,446)
(2,965,997)
40,001
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
74,767,989
54,068
224,673,165
58,601,911
10,500
186,183,052
3,605,001
1,017,690
1,700,516
69,514,413
75,837,620
2,832,705
650,607
2,382,849
65,575,370
71,441,531
The above table represents the Bank's Maximum exposure to credit risk on December 31, 2017, 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, 39.38% of the total maximum exposure is derived from loans and advances to banks and customers while
investments in debt instruments represent 36.27%.
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:
• 85.06% of the loans and advances are concentrated in the top two grades of the internal credit risk rating system.
• 93.05% of loans and advances portfolio are considered to be neither past due nor impaired.
• Loans and advances assessed individualy are valued EGP 7,120,106 thousand.
• The Bank has implemented more prudent processes when granting loans and advances during the financial year ended
on December 31, 2017.
• 96.80% of the investments in debt Instruments are Egyptian sovereign instruments.
160
Annual Report 2017
Annual Report 2017
161
Financial StatementS: Separate
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, 2017
EGP Thousands
Dec.31, 2016
EGP Thousands
Loans and advances
to customers
89,395,036
5,884,880
7,120,106
102,400,022
Loans and advances
to banks
1,383
-
-
1,383
Loans and advances
to customers
86,354,393
5,133,220
6,585,667
98,073,280
Loans and advances
to banks
161,451
-
-
161,451
10,994,446
12,476
2,965,997
88,427,103
70
-
-
1,313
9,818,007
5,533
2,257,826
85,991,914
1,800
-
-
159,651
Impairment provision losses for loans and advances reached EGP 10,994,516 thousand.
During the year, the Bank’s total loans and advances increased by 4.24%.
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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Annual Report 2017
Annual Report 2017
163
Financial StatementS: Separate
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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 period:
Loans and advances to customer
Corporate
- Direct loans
Total
Dec.31, 2017
Dec.31, 2016
8,577,197
8,577,197
7,771,415
7,771,415
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, 2017
AAA
AA- to AA+
A- to A+
Lower than A-
Unrated
Total
Treasury bills and
other gov. notes
-
-
-
-
54,478,202
54,478,202
Trading financial debt
instruments
-
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1,721,360
5,007,483
6,728,843
Non-trading financial
debt instruments
-
431,011
1,724,358
4,457,964
68,154,656
74,767,989
EGP Thousands
Total
-
431,011
1,724,358
6,179,324
127,640,341
135,975,034
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164
Annual Report 2017
Annual Report 2017
165
Financial StatementS: Separate
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 year.
The Bank has allocated exposures to regions based on the country of domicile of its counterparties.
Dec.31, 2017
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
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 and subsidiaries
Total
Cairo
54,653,848
Alex, Delta and
Sinai
-
6,728,843
1,383
(70)
956,756
2,329,790
8,632,679
342,764
10,228,588
29,818,885
23,487,639
87,088
(12,476)
(10,994,446)
(2,362,942)
40,001
74,767,989
54,068
198,760,387
-
-
-
621,743
488,529
4,437,647
66,414
1,731,524
11,262,255
2,831,056
25,714
-
-
(495,481)
-
-
-
20,969,401
EGP Thousands
Upper Egypt
Total
-
-
-
-
201,917
81,611
840,511
7,438
490,714
3,119,630
309,130
-
-
-
(107,574)
-
-
-
4,943,377
54,653,848
6,728,843
1,383
(70)
1,780,416
2,899,930
13,910,837
416,616
12,450,826
44,200,770
26,627,825
112,802
(12,476)
(10,994,446)
(2,965,997)
40,001
74,767,989
54,068
224,673,165
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166
Annual Report 2017
Annual Report 2017
167
Financial StatementS: Separate
3.2. Market risk
Market risk represnts 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 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 a
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 Stadardized 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
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
Foreign exchange risk
Interest rate risk
- For non trading purposes
- For trading purposes
Portfolio managed by others risk
Investment fund
Total VaR
Medium
13,647
588,938
553,426
35,512
7,280
370
591,508
High
Low
Medium
High
Low
82,695
815,249
739,977
75,272
10,454
692
826,941
275
363,366
351,674
11,692
4,854
215
364,408
31,561
365,258
340,853
24,405
4,775
392
381,247
300,218
1,028,396
973,882
54,514
10,341
643
1,193,075
276
112,744
102,443
10,301
2,682
264
113,480
Trading portfolio VaR by risk type
Dec. 31, 2017
Dec. 31, 2016
EGP Thousands
Medium
High
Low
Medium
High
Low
Foreign exchange risk
Interest rate risk
- For trading purposes
Funds managed by others risk
Investment fund
Total VaR
13,647
35,512
35,512
7,280
370
46,039
82,695
75,272
75,272
10,454
692
113,250
275
11,692
11,692
4,854
215
13,804
31,561
24,405
24,405
4,775
392
51,651
300,218
54,514
54,514
10,341
643
335,888
276
10,301
10,301
2,682
264
11,285
Non trading portfolio VaR by risk type
Dec. 31, 2017
Dec. 31, 2016
EGP Thousands
Medium
High
Low
Medium
High
Low
Interest rate risk
- For non trading purposes
Total VaR
553,426
553,426
739,977
739,977
351,674
351,674
340,853
340,853
973,882
973,882
102,443
102,443
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.
Equivalent EGP Thousands
Dec. 31, 2017
EGP
USD
EUR
GBP
Other
Total
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 and subsid-
iaries
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
10,910,051
2,419,832
849,425
71,041
412,940
14,663,289
4,465,131
31,854,175
7,996,060
875,492
128,908
45,319,766
45,189,229
12,145,247
1,382,300
-
5,573,837
-
53,565,401
39,714
1,721,360
1,383
46,899,704
287
-
-
1,893,051
-
-
-
41,866
-
24,667,305
45,167,722
5,807,476
-
54,068
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,716,776
7,295,197
1,383
102,400,022
40,001
30,474,781
45,167,722
54,068
189,632,458
100,849,464 12,120,836
988,399
541,848
304,133,005
534,701
152,712,537
55,547
129,196
153,431,981
1,212,410
85,817,271
141,437
3,545,540
45,974
10,952,101
-
-
90,716,658 10,998,075
26,079
935,525
-
-
961,604
58,754
349,936
-
-
408,690
1,877,918
250,767,370
196,984
3,674,736
256,517,008
36,200,477
10,132,806
1,122,761
26,795
133,158
47,615,997
168
Annual Report 2017
Annual Report 2017
169
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
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.
Dec. 31, 2017
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, 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)
Up to
1 month
One to three
months
Three
months
to one year
One year to
five years
Over five
years
Total
EGP
Thousands
1,877,918
31,348,143
36,393
-
21,728,194
6,743
-
-
71,335,328 109,570,301
3,429
82,631
-
1,877,918
16,785,404 250,767,370
3,674,736
3,545,540
33,262,454
21,734,937 71,417,959 109,573,730 20,330,944 256,320,024
57,644,515
33,970,656 79,938,643 96,174,026 36,636,599 304,364,439
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
-
-
55,763,261 108,564,259
14,469
84,614
-
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
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.
36,393
82,631
113,608,924 27,814,445 31,392,977
3,552,283
3,429
50,953,986
-
710,069
3,674,736
44,199,316 268,679,717
-
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.
Financial StatementS: Separate
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.
Up to 1
Month
1-3 Months 3-12 Months
1-5 years Over 5 years
Non-Interest
Bearing
Total
-
-
-
32,633,606
12,038,721
647,439
3,395,960
6,823,666
48,497,150
-
-
-
-
-
-
14,663,289 14,663,289
- 45,319,766
- 58,716,776
99,586
1,383
-
-
904
3,807,571
2,920,368
466,768
7,295,197
-
-
-
-
1,383
65,216,595
11,787,421
14,459,839
8,594,614
2,341,553
- 102,400,022
967,641
494,350
7,628,334
3,112,098
-
287 12,202,710
1,602,509
32,499
-
2,955,001
195,543
9,089,021
15,888,478
25,263,827
12,119,880
7,827,374
668,371 30,474,781
- 45,167,722
-
-
-
-
-
54,068
54,068
103,949,779 34,099,159 80,518,230
56,666,588 25,209,175
15,852,783 316,295,714
1,137,760
106,568,106
-
18,578,123
-
31,298,719
-
50,294,632
-
710,069
740,158
1,877,918
43,317,721 250,767,370
5,866,665
5,684,039
11,627
655,925
-
141,437 12,359,693
Dec. 31, 2017
Financial assets
Cash and balances with
central bank
Due from banks
Treasury bills and other
governmental notes*
Trading financial assets
Gross loans and advances to
banks
Gross loans and advances
to customers
Derivatives financial in-
struments (including IRS
notional amount)
Financial investments
- Available for sale
- Held to maturity
Investments in associates
and subsidiaries
Total financial assets
Financial liabilities
Due to banks
Due to customers
Derivatives financial in-
struments (including IRS
notional amount)
Long term loans
Total financial liabilities
Total interest
re-pricing gap
(9,659,145)
6,284,714 49,125,253
5,712,602 24,499,106 (28,346,533) 47,615,997
* 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 commiments.
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
respectively, as these are key periods for liquidity management.
170
Annual Report 2017
Annual Report 2017
171
Financial StatementS: Separate
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 .
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.
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:
Financial Investments
Investment securities include only interest-bearing assets, held to maturity assets, and available for sale assets that are
measured at fair value.
Dec. 31, 2017
Liabilities
Derivatives financial instruments
- Foreign exchange derivatives
- Interest rate derivatives
Total
Off balance sheet items
Dec. 31, 2017
Up to
1 month
One to three
months
Three months
to one year
One year to
five years
Total
EGP Thousands
28,136
100
28,236
15,784
165
15,949
11,627
38,577
50,204
-
102,595
102,595
55,547
141,437
196,984
Up to 1 year
1-5 years
Over 5 years
Total
Letters of credit, guarantees and other commitments
Total
47,214,887
47,214,887
18,219,180
18,219,180
6,798,552
6,798,552
72,232,619
72,232,619
Credit facilities commitments
Total
Up to 1 year
1,295,563
1,295,563
1-5 years
5,728,813
5,728,813
Total
7,024,376
7,024,376
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.
Fair value for held-to-maturity assets is based on market prices or broker/dealer price quotations. Where this infor-
mation 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 forshareholders 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.
Book value
Fair value
The required data is submitted to the Central Bank of Egypt on a monthly basis.
Dec.31, 2017
Dec.31, 2016
Dec.31, 2017
Dec.31, 2016
Central Bank of Egypt requires the following:
Financial assets
Due from banks
Gross loans and advances to banks
Gross loans and advances to customers
Financial investments
Held to Maturity
Total financial assets
Financial liabilities
Due to banks
Due to customers
Long term loans
Total financial liabilities
45,319,766
1,383
102,400,022
58,011,034
161,451
98,073,280
44,782,984
1,383
96,397,613
56,270,958
161,451
99,578,137
45,167,722
192,888,893
53,924,936
210,170,701
45,595,034
186,777,014
51,541,583
207,552,129
1,877,918
250,767,370
3,674,736
256,320,024
3,008,996
231,965,312
160,243
235,134,551
1,813,466
245,616,661
3,674,736
251,104,863
2,924,416
234,065,309
160,243
237,149,968
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.
• Maintaining EGP 500 million as a minimum requirement for the issued and paid-in capital.
• Maintaining a minimum level of capital adequacy ratio of 11.25%, calculated as the ratio between total value of the capital
elements, and the risk-weighted assets and contingent liabilities of the Bank (credit risk, market risk and opertional risk).
While taking into consideration the conservation buffer.
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, interim profits and deducting previously recog-
nized goodwill and any retained losses
Tier two:
Tier two represents the gone concern capital which is compposed 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.
172
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173
Financial StatementS: Separate
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 tier1.
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.
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
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 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 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%.
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.
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.
Assets risk weight scale ranging from zero to 100% is based on the counterparty risk to reflect the related credit risk
scheme, taking into considration the cash collatrals. Similar criteria are used for off balance sheet items after adjustments
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, 2017
Dec.31, 2016
EGP Thousands
EGP Thousands
11,618,011
-
10,543,783
89,873
(2,450,136)
7,515,555
27,317,086
Restated**
11,538,660
(22,981)
10,542,939
90,025
(2,793,404)
-
19,355,239
Tier 1 capital
Share capital (net of the treasury shares)
Goodwill
Reserves
Retained Earnings (Losses)
Total deductions from tier 1 capital common equity
Net profit for the period
Total qualifying tier 1 capital
Tier 2 capital
45% of special reserve
45% of foreign currencies translation differences
Subordinated Loans
Impairment provision for loans and regular contingent liabilities
Total qualifying tier 2 capital
Total capital 1+2
Risk weighted assets and contingent liabilities
128,698,992
Total credit risk
6,701,579
Total market risk
14,696,762
Total operational risk
150,097,333
Total
*Capital adequacy ratio (%)
13.97%
*Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 24 December 2012.
**After 2016 profit distribution.
49
-
3,545,540
1,679,656
5,225,245
32,542,331
49
3,865
-
1,606,644
1,610,558
20,965,797
141,154,879
9,241,563
18,222,831
168,619,273
19.30%
2.
Leverage ratio
Total qualifying tier 1 capital
On-balance sheet items & derivatives
Off-balance sheet items
Total exposures
*Percentage
Dec.31, 2017
Dec.31, 2016
EGP Thousands
EGP Thousands
27,317,086
300,593,997
44,965,272
345,559,269
7.91%
Restated**
19,355,239
271,962,373
41,080,543
313,042,916
6.18%
*Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 14 July 2015.
**After 2016 profit distribution.
For December 2017 NSFR ratio record 195.33% (LCY 232.44% and FCY 152.27%), and LCR ratio record 1018.68% (LCY
626.59% and FCY 377.14%).
For December 2016 NSFR ratio record 183.3% (LCY 234.4% and FCY 140.0%), and LCR ratio record 1116.8% (LCY
1769.8% and FCY 434.8%) .
174
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175
Financial StatementS: Separate
5. Segment analysis
5.1. By business segment
The Bank is divided into four main business segments on a worldwide basis:
6. Net interest income
• 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, 2017
Revenue according to
business segment
Expenses according to
business segment
Profit before tax
Tax
Profit for the year
Total assets
Corporate
banking
SME's
Investment
banking
Retail
banking
Asset Liability
Mangement
EGP Thousands
Total
5,691,435
2,342,539
2,955,690
4,841,757
639,646
16,471,067
(3,550,176)
(696,877)
(105,293)
(1,780,505)
(7,226)
(6,140,077)
2,141,259
(576,762)
1,564,497
82,138,508
1,645,662
(442,854)
1,202,808
2,352,091
2,850,397
(767,053)
2,083,344
137,645,556
3,061,252
(823,795)
2,237,457
18,444,909
632,420
(170,187)
462,233
54,190,257
10,330,990
(2,780,651)
7,550,339
294,771,321
Dec.31, 2016
Revenue according to
business segment
Expenses according to
business segment
Profit before tax
Tax
Profit for the year
Total assets
Corporate
banking
SME's
Investment
banking
Retail
banking
Asset Liability
Mangement
Total
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
104,231,922
1,083,245
(281,954)
801,291
3,826,756
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
5.2. By geographical segment
Dec. 31, 2017
Revenue according to geographical segment
Expenses according to geographical
segment
Profit before tax
Tax
Profit for the year
Total assets
Dec. 31, 2016
Revenue according to geographical segment
Expenses according to geographical
segment
Profit before tax
Tax
Profit for the year
Total assets
EGP Thousands
Cairo
13,479,965
Alex, Delta &
Sinai
2,499,912
Upper Egypt
Total
491,190
16,471,067
(5,306,193)
(670,176)
(163,708)
(6,140,077)
8,173,772
(2,200,134)
5,973,638
265,654,804
1,829,736
(492,390)
1,337,346
22,598,945
327,482
(88,127)
239,355
6,517,572
10,330,990
(2,780,651)
7,550,339
294,771,321
Cairo
10,883,293
Alex, Delta &
Sinai
1,104,147
Upper Egypt
Total
186,983
12,174,423
(3,464,852)
(499,518)
(165,615)
(4,129,985)
7,418,441
(1,930,944)
5,487,497
237,224,923
604,629
(157,377)
447,252
21,740,165
21,368
(5,562)
15,806
4,886,969
8,044,438
(2,093,883)
5,950,555
263,852,057
Interest and similar income
- Banks
- Clients
Total
Treasury bills and bonds
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 loans
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
8. Dividend income
Trading securities
Available for sale securities
Total
9. Net trading income
Profit (Loss) 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
Dec.31, 2017
EGP Thousands
Dec.31, 2016
EGP Thousands
3,532,278
10,921,054
14,453,332
14,039,447
178,391
28,671,170
(463,409)
(15,686,959)
(16,150,368)
(2,037)
(14,750)
(16,167,155)
12,504,015
2,568,172
6,656,743
9,224,915
9,794,089
125,214
19,144,218
(111,249)
(9,010,782)
(9,122,031)
(153)
(4,328)
(9,126,512)
10,017,706
Dec.31, 2017
EGP Thousands
Dec.31, 2016
EGP Thousands
1,362,658
117,268
1,197,018
2,676,944
(624,278)
(624,278)
2,052,666
965,388
69,967
930,174
1,965,529
(417,573)
(417,573)
1,547,956
Dec.31, 2017
EGP Thousands
11,475
23,039
34,514
Dec.31, 2016
EGP Thousands
5,045
29,191
34,236
Dec.31, 2017
EGP Thousands
764,732
(17,118)
(23,732)
(21,230)
589,563
1,292,215
Dec.31, 2016
EGP Thousands
603,565
12,947
(15,055)
38,472
675,253
1,315,182
176
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177
Financial StatementS: Separate
10. Administrative expenses
15. Cash and balances with central bank
1.Staff costs
Wages and salaries
Social insurance
Other benefits
2.Other administrative expenses
Total
11. Other operating (expenses) income
Profits (losses) 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
13. Adjustments to calculate the effective tax rate
Profit before tax
Tax rate
Income tax based on accounting profit
Add / (Deduct)
Non-deductible expenses
Tax exemptions
Effect of provisions
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
Weighted 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
Dec.31, 2017
EGP Thousands
Dec.31, 2016
EGP Thousands
(1,620,326)
(65,033)
(51,682)
(1,375,467)
(3,112,508)
(1,188,799)
(50,542)
(44,146)
(1,149,165)
(2,432,652)
Dec.31, 2017
EGP Thousands
(61,065)
607
(114,725)
(888,285)
(1,063,468)
Dec.31, 2016
EGP Thousands
(682,556)
1,682
(72,442)
(483,871)
(1,237,187)
Dec.31, 2017
EGP Thousands
(1,742,281)
(1,742,281)
Dec.31, 2016
EGP Thousands
(892,874)
(892,874)
Dec.31, 2017
EGP Thousands
10,330,990
22.50%
2,324,473
Dec.31, 2016
EGP Thousands
8,044,438
22.50%
1,809,999
376,975
(173,358)
256,358
(6,797)
3,000
2,780,651
26.92%
939,873
(113,627)
(588,519)
43,144
3,013
2,093,883
26.03%
Dec.31, 2017
EGP Thousands
7,549,043
(113,236)
(754,904)
6,680,903
1,159,156
5.76
Dec.31, 2016
EGP Thousands
5,948,258
(89,224)
(594,826)
5,264,208
1,159,156
4.54
1,177,722
5.67
1,176,718
4.47
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
17. Treasury bills and other governmental notes
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
Dec.31, 2017
EGP Thousands
5,784,303
Dec.31, 2016
EGP Thousands
5,083,805
8,878,986
14,663,289
14,663,289
5,438,235
10,522,040
10,522,040
Dec.31, 2017
EGP Thousands
2,679,189
42,640,577
45,319,766
15,863,399
3,894,775
25,561,592
45,319,766
-
45,319,766
45,319,766
45,319,766
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, 2017
EGP Thousands
-
1,289,425
57,602,997
(4,238,574)
54,653,848
(175,646)
(175,646)
54,478,202
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, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
6,728,843
6,728,843
1,933,420
1,933,420
99,587
99,587
466,767
7,295,197
180,157
180,157
331,557
2,445,134
178
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179
Financial StatementS: Separate
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
20. Loans and advances to customers, net
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, 2017
EGP Thousands
1,383
(70)
1,313
1,313
-
1,313
Dec. 31, 2016
EGP Thousands
161,451
(1,800)
159,651
110,053
49,598
159,651
Dec. 31, 2017
EGP Thousands
(1,800)
1,697
33
(70)
Dec. 31, 2016
EGP Thousands
(9,899)
20,368
(12,269)
(1,800)
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
1,780,416
2,899,930
13,910,837
416,616
-
19,007,799
12,450,826
44,200,770
26,627,825
112,802
83,392,223
102,400,022
(12,476)
(10,994,446)
(2,965,997)
88,427,103
38,960,491
49,466,612
88,427,103
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
Analysis for impairment provision of loans and advances to customers
Individual
Dec. 31, 2017
Overdraft Credit cards
Beginning balance
Released (charged) released
during the year
Write off during the year
Recoveries during the year
Ending balance
(11,166)
(5,556)
13,425
-
(3,297)
(25,056)
(15,328)
36,477
(21,760)
(25,667)
Personal
loans
(190,592)
(37,906)
1,561
(59)
(226,996)
Real estate
loans
(7,801)
(3,743)
2,080
(32)
(9,496)
Other loans
Total
(20,838)
(255,453)
20,838
(41,695)
-
-
-
53,543
(21,851)
(265,456)
Dec. 31, 2017
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
(1,342,010)
(387,038)
-
-
21,921
(1,707,127)
(6,442,227)
(1,125,372)
382,185
(23,054)
100,778
(7,107,690)
Corporate
Syndicated
loans
(1,775,873)
(189,364)
-
-
54,011
(1,911,226)
Other loans
Total
(2,444)
(509)
-
-
6
(2,947)
(9,562,554)
(1,702,283)
382,185
(23,054)
176,716
(10,728,990)
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)
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.
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181
Financial StatementS: Separate
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).
hedging instruments at December 31, 2017 EGP 19,633 thousand against losses EGP 19,333 thousand at the December 31,
2016. Losses arose from the hedged items at December 31, 2017 reached EGP 44,924 thousand against losses of EGP 30,579
thousand at December 31, 2016.
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
year for a predeterminedamount 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 op-
tions 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:
21.1.1. For trading derivatives
Foreign currencies derivatives
- Forward foreign exchange
contracts
- Currency swap
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
6,820,350
1,640,985
-
Notional
amount
655,925
11,506,784
Dec.31, 2017
Dec.31, 2016
Assets
Liabilities
Notional
amount
Assets
Liabilities
36,597
3,117
39,714
-
-
49,687
2,174,176
182,508
178,479
5,860
55,547
2,662,940
79,890
262,398
61,404
239,883
-
-
34,706
144
144
-
-
39,714
55,547
262,542
239,883
Dec.31, 2017
Dec.31, 2016
Assets
Liabilities
Notional
amount
Assets
Liabilities
-
287
287
25,996
675,861
115,441
141,437
16,382,128
-
6,727
6,727
45,629
45,579
91,208
40,001
196,984
269,269
331,091
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 25,996 thousand at December 31, 2017 against EGP 45,629 thousand at the December 31, 2016, Resulting in gains form
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 115,154
thousand at the end of December 31, 2017 against EGP 38,852 thousand at December 31, 2016, resulting in losses from
hedging instruments at December 31, 2017 of EGP 76,302 thousand against losses of EGP 28,916 thousand at December
31, 2016. Gains arose from the hedged items at December 31, 2017 reached EGP 81,488 thousand against gains EGP 56,314
thousand at December 31 , 2016.
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
Fixed interest debt instruments
Floating interest debt instruments
Total
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
29,632,780
83,346
758,655
30,474,781
4,709,487
97,631
640,173
5,447,291
45,135,209
32,513
45,167,722
53,892,423
32,513
53,924,936
75,642,503
59,372,227
73,721,199
1,921,304
75,642,503
72,612,620
2,155,369
74,767,989
57,097,553
2,274,674
59,372,227
56,090,139
2,511,772
58,601,911
Beginning balance
Addition
Deduction
Exchange revaluation differences for foreign
financial assets
Profit (losses) from fair value difference
Available for sale impairment charges
Ending Balance as of Dec.31, 2016
Beginning balance
Addition
Deduction
Exchange revaluation differences for for-
eign financial assets
Profit (losses) from fair value difference
Released (Impairment) charges of avail-
able for sale
Ending Balance as of Dec.31, 2017
Available for sale
financial
investments
46,289,075
3,334,122
(46,335,658)
2,219,961
42,132
(102,341)
5,447,291
5,447,291
25,868,230
(1,361,027)
(100,078)
512,016
108,349
Held to maturity
financial
investments
9,261,220
44,667,810
(4,094)
-
-
-
53,924,936
53,924,936
4,597,254
(13,354,468)
-
-
-
Total
EGP Thousands
55,550,295
48,001,932
(46,339,752)
2,219,961
42,132
(102,341)
59,372,227
59,372,227
30,465,484
(14,715,495)
(100,078)
512,016
108,349
30,474,781
45,167,722
75,642,503
182
Annual Report 2017
Annual Report 2017
183
Financial StatementS: Separate
22.1. Profits (Losses) on financial investments
25. Property, plant and equipment
Profit (Loss) from selling available for sale financial instruments
Released (Impairment) charges of available for sale equity instruments
Profit (Loss) from selling investments in associates
Released (Impairment) charges of non current assets held for sale
Total
Dec. 31, 2017
EGP Thousands
(99,047)
254,588
-
340,504
496,045
Dec. 31, 2016
EGP Thousands
35,193
(102,078)
(32,793)
131,799
32,121
23. Investments in associates and subsidiaries
Dec. 31, 2017
Company’s
country
Company’s
assets
EGP Thousands
Company’s
revenues
Company’s
net profit
Investment
book value
Stake %
Company’s
liabilities
(without
equity)
Dec. 31, 2017
Land Premises
IT
Vehicles
Fitting
-out
Machines and
equipment
64,709
-
64,709
936,982 1,395,638
250,549
59,647
996,629 1,646,187
87,660
1,703
89,363
607,773
50,570
658,343
459,572
57,191
516,763
EGP
Thousands
Furniture
and
furnishing
144,454
7,235
151,689
Total
3,696,788
426,895
4,123,683
-
-
315,192 1,029,244
47,904
468,368
372,522
124,929
2,358,159
44,507
176,155
5,184
70,311
47,595
7,253
351,005
-
359,699 1,205,399
53,088
538,679
420,117
132,182
2,709,164
64,709
64,709
636,930
621,790
%5
440,788
366,394
%33.3
36,275
39,756
%20
119,664
139,405
%33.3
96,646
87,050
%20
19,507
19,525
%20
1,414,519
1,338,629
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
Subsidiaries
- CVenture Capital
Associates
- International Co. for Secu-
rity and Services (Falcon)
Total
Egypt
-
-
-
-
44,318
99.99
Net fixed assets value on the balance sheet date includes EGP 353,462 thousand non registered assets while their registra-
tions procedures are in process.
Egypt
512,388
367,470
505,461
52,695
9,750
32.5
512,388
367,470
505,461
52,695
54,068
26. Due to banks
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
24. Other assets
Egypt
300,739
208,188
301,390
12,478
10,500
35
300,739
208,188
301,390
12,478
10,500
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, 2017
EGP Thousands
3,870,654
230,296
522,211
2,193,590
45,083
24,973
6,886,807
Dec. 31, 2016
EGP Thousands
3,330,223
144,422
203,410
1,691,603
56,599
19,768
5,446,025
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, 2017
EGP Thousands
1,067,374
810,544
1,877,918
128,527
714,294
1,035,097
1,877,918
740,158
1,137,760
1,877,918
1,877,918
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, 2017
EGP Thousands
72,487,190
49,952,470
70,486,930
53,075,098
4,765,682
250,767,370
107,798,000
142,969,370
250,767,370
43,317,721
207,449,649
250,767,370
178,830,593
71,936,777
250,767,370
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
184
Annual Report 2017
Annual Report 2017
185
Financial StatementS: Separate
28. Long term loans
31 . Equity
Interest rate % Maturity date
Maturing
through next
year
EGP Thousands
Balance on
Dec. 31, 2017
EGP
Thousands
Balance on
Dec. 31, 2016
EGP
Thousands
Financial Investment & Sector
Cooperation (FISC)
Agricultural Research and Develop-
ment Fund (ARDF)
Social Fund for Development (SFD)
European Bank for Reconstruction
and Development (EBRD) subordi-
nated Loan
International Finance Corporation
(IFC) subordinated Loan
Balance
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 months libor +
6.2%
3 months libor +
6.2%
3-5 years
-
-
2,778
3-5 years
83,886
87,314
88,800
04-Jan-20
41,882
41,882
68,665
10 years
10 years
-
-
1,772,770
1,772,770
-
-
125,768
3,674,736
160,243
The variable interest rate on the subordinated loan is determined in advance every 3 months and the subordinated loans
are not repaid before their due dates.
29. Other liabilities
Accrued interest payable
Accrued expenses
Accounts payable
Other credit balances
Total
30. Other provisions
Dec. 31, 2017
Provision for income tax
claims
Provision for legal claims
Provision for contingent
*Provision for other claim
Total
Dec. 31, 2016
Dec. 31, 2017
EGP Thousands
1,516,471
507,543
3,277,350
175,167
5,476,531
Dec. 31, 2016
EGP Thousands
1,455,029
645,979
1,329,189
149,133
3,579,330
Beginning
balance
Charged
amounts
Exchange
revaluation
difference
Utilized
amounts
Reversed
amounts
Ending
balance
EGP
Thousands
6,910
46,035
1,434,703
26,409
1,514,057
-
549
118,370
93,703
212,622
-
(57)
12,627
(730)
11,840
-
-
6,910
(725)
-
(24,738)
(25,463)
(29)
(95,398)
(2,470)
(97,897)
45,773
1,470,302
92,174
1,615,159
Beginning
balance
Charged
amounts
Exchange
revaluation
difference
Utilized
amounts
Reversed
amounts
Ending
balance
EGP
Thousands
6,910
Provision for income tax
claims
41,324
Provision for legal claims
31,000
Provision for Stamp Duty
759,173
Provision for contingent
23,354
Provision for other claim
Total
861,761
* To face the potential risk of banking operations.
-
-
9,630
-
132,845
8,372
150,847
1,456
-
579,997
2,097
583,550
-
(924)
-
-
(2,772)
(3,696)
-
6,910
(5,451)
(31,000)
(37,312)
(4,642)
(78,405)
46,035
-
1,434,703
26,409
1,514,057
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 11,618,011 thousand to be divided on 1,161,801 thousand shares with
EGP 10 par value for each share"and registered in the commercial register dated 17th May 2017.
• Increase issued and Paid in Capital by amount EGP 79,351 thousand on May 24,2017 to reach EGP 11,618,011 thousand ac-
cording to Board of Directors decision on November 9, 2016 by issuance of eighth tranche for E.S.O.P program.
• 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.
• 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 dispersment of this divi-
dend, 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 reseve to reaches 50% of The Bank's issued and
paid in capital.Central Bank of Egypt concurrence for usage of special reserve is required.
186
Annual Report 2017
Annual Report 2017
187
Financial StatementS: Separate
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, 2017
EGP Thousands
(31,409)
31,038
36,712
56,698
110,100
5,340
(37,478)
8,629
179,630
Assets
(Liabilities)
Dec. 31, 2016
EGP Thousands
(28,741)
16,300
17,090
86,845
79,981
3,722
18,338
(12,227)
181,308
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 service in The Bank to have the right in ordinary shares at face value (right to share) that will be issued on
the vesting date, otherwise such grants will be forfeited. Equity-settled share-based payments are measured at fair value
at the grant date, and expensed on a straight-line basis over the vesting period (3 years) with corresponding increase in
equity based on estimated number of shares that will eventually vest(True up model). The fair value for such equity instru-
ments is measured using the Black-Scholes pricing model.
Details of the rights to share outstanding during the year are as follows:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Details of the outstanding tranches are as follows:
Maturity date
2018
2019
2020
Total
Dec. 31, 2017
No. of shares in
thousand
22,351
7,601
(737)
(7,935)
21,280
Dec. 31, 2016
No. of shares in
thousand
20,373
9,262
(478)
(6,806)
22,351
EGP
Exercise price
10.00
10.00
10.00
EGP
Fair value *
31.67
28.43
65.55
No. of shares in
thousand
5,077
8,791
7,412
21,280
The fair value of granted shares is calculated using Black-Scholes pricing model with the following:
Exercise price
Current share price
Expected life (years)
Risk free rate %
Dividend yield%
Volatility%
11th tranche
10
73.08
3
16.77%
0.68%
30%
10th tranche
10
38.09
3
12.40%
2.50%
31%
Volatility is calculated based on the daily standard deviation of returns for the last three years.
34. Reserves
Legal reserve
General reserve
Special reserve
Reserve for A.F.S investments revaluation difference
Banking risks reserve
Total
Dec. 31, 2017
EGP Thousands
1,332,807
9,000,023
32,460
(1,642,958)
3,634
8,725,966
Dec. 31, 2016
EGP Thousands
1,035,363
4,554,403
30,778
(2,180,244)
3,019
3,443,319
On 28 January 2018, Central Bank of Egypt issued instructions indicating the following:
Creating IFRS 9 risk reserve (1% of the total weighted credit risk) deducted from 2017 net profit after
tax, to be used after
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 gain (loss) 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, 2017
EGP Thousands
3,019
615
3,634
Dec. 31, 2016
EGP Thousands
2,513
506
3,019
Dec. 31, 2017
EGP Thousands
1,035,363
297,444
1,332,807
Dec. 31, 2016
EGP Thousands
803,355
232,008
1,035,363
Dec. 31, 2017
EGP Thousands
(2,180,244)
537,286
(1,642,958)
Dec. 31, 2016
EGP Thousands
(2,202,463)
22,219
(2,180,244)
Dec. 31, 2017
EGP Thousands
14,663,289
45,319,766
54,478,202
(8,878,986)
(1,719,586)
(54,653,848)
49,208,837
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
188
Annual Report 2017
Annual Report 2017
189
Financial StatementS: Separate
36 . Contingent liabilities and commitments
36.1. Legal claims
There is a number of existing cases filed against the bank on December 31,2017 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 166,798 thousand
as follows:
Available for sale financial investments
Investments
value
368,650
Paid
Remaining
201,853
166,798
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 196,284 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, 2017
EGP Thousands
69,514,413
1,700,516
1,017,690
72,232,619
Dec. 31, 2016
EGP Thousands
65,575,370
2,382,849
650,607
68,608,826
Dec. 31, 2017
EGP Thousands
7,024,376
Dec. 31, 2016
EGP Thousands
7,245,061
• 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 4,500,204 with redeemed value of EGP 1,408,654 thousands.
• The market value per certificate reached EGP 313.02 on December 31, 2017.
• The Bank portion got 295,425 certificates with redeemed value of EGP 92,474 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 518,708 with redeemed value of EGP 96,366 thousands.
• The market value per certificate reached EGP 185.78 on December 31, 2017.
• The Bank portion got 128,000 certificates with redeemed value of EGP 23,780 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 334,711 with redeemed value of EGP 33,752 thousands.
• The market value per certificate reached EGP 100.84 on December 31, 2017.
• The Bank portion got 39,000 certificates with redeemed value of EGP 3,933 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 96,452 with redeemed value of EGP 18,281 thousands.
• The market value per certificate reached EGP 189.53 on December 31, 2017.
• The Bank portion got 50,000 certificates with redeemed value of EGP 9,477 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 94,470 with redeemed value of EGP 18,237 thousands.
• The market value per certificate reached EGP 193.05 on December 31, 2017.
• The Bank portion got 50,000 certificates with redeemed value of EGP 9,653 thousands.
Takamol fund
• CIB bank established an accumulated return mutual fund under license no.431 issued from financial supervisory author-
ity on February 18, 2015. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 139,586 with redeemed value of EGP 23,241 thousands.
• The market value per certificate reached EGP 166.50 on December 31, 2017.
• The Bank portion got 50,000 certificates with redeemed value of EGP 8,325 thousands.
38. Transactions with related parties
All banking transactions with related parties are conducted in accordance with the normal banking practices and regula-
tions applied to all other customers without any discrimination.
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
EGP Thousands
5,936
64,779
1,372
Income
EGP Thousands
185
Expenses
EGP Thousands
228,429
190
Annual Report 2017
Annual Report 2017
191
Financial StatementS: Separate
39. Main currencies positions
42. Non current assets held for sale
- CI Capital Holding
CIB remained a minority stake of 10.00% of CI Capital Holding.
Dec. 31, 2017
EGP Thousands
Investment book
value
-
Dec. 31, 2016
EGP Thousands
Investment book
value
428,011
Minority stake has been transferred to available for sale due to the bank's intention for maintaining the ownership per-
centage of such investment.
Important Events
On 28 January 2018, the Central Bank of Egypt issued instructions on the following:
IFRS 9 will be applied starting from 1st of January 2019. The bank will issue audited financial statements under the current
CBE regulations as at 31 March 2018, in addition to issuing a drafted financial statements in compliance with the new
instructions recieved from CBE regarding IFRS 9.
"IFRS 9 risk reserve has been created (1% of the total weighted credit risk) of 2017 net profit after tax, to be used after ob-
taining the CBE's consent.
Egyptian pound
US dollar
Sterling pound
Japanese yen
Swiss franc
Euro
40. Tax status
Corporate income tax
Dec. 31, 2017
EGP Thousands
182,639
(313,246)
(1,566)
(523)
637
46,768
Dec. 31, 2016
EGP Thousands
1,371,677
(1,360,474)
266
851
25
4,440
• 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.
• The Bank's corporate income tax has been examined and paid for the period 2015 - 2016.
• 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 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 31/12/2016 according to the protocol
between the Federation of Egyptian banks and the tax authority.
41. Intangible assets:
Book value
Amortization
Net book value
Dec. 31, 2017
EGP Thousands
651,041
(282,118)
368,923
Dec. 31, 2016
EGP Thousands
651,041
(151,910)
499,131
According to CBE's regulation issued on Dec 16, 2008, an annual amortization of 20% has been applied on intangible as-
sets starting from acquisition date.
192
Annual Report 2017
Annual Report 2017
193
Financial StatementS: conSolidated
194
Annual Report 2017
Annual Report 2017
195
Financial StatementS: conSolidated
Commercial International Bank (Egypt) S.A.E
Consolidated balance sheet as at December 31, 2017
Commercial International Bank (Egypt) S.A.E
Consolidated income statement for the year ended
December 31, 2017
Notes
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
Notes
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
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
Non current assets held for sale
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates
Other assets
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.
15
16
17
18
19
20
42
21
22
22
23
24
41
32
25
26
27
42
21
29
28
30
31
34
14,663,289
45,319,766
54,478,202
7,295,197
1,313
88,427,103
-
40,001
30,474,781
45,167,722
65,039
6,886,607
368,923
179,630
1,414,519
294,782,092
1,877,918
250,723,052
-
196,984
2,778,973
5,476,531
3,674,736
1,615,159
266,343,353
11,618,011
8,725,966
489,334
89,873
20,923,184
7,515,555
28,438,739
-
28,438,739
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
294,782,092
267,543,755
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 (Losses) 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 "
Profit (loss) of disposal 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
12
13
32 & 13
43
14
28,671,170
(16,167,155)
12,504,015
19,144,218
(9,126,512)
10,017,706
2,676,944
(624,278)
2,052,666
34,514
1,292,215
165,111
(3,112,508)
(1,063,468)
-
(130,208)
(1,742,281)
29,066
10,029,122
(2,778,973)
(1,678)
7,248,471
122,234
168,900
7,539,605
24,050
7,515,555
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
5.76
5.67
4.54
4.47
Hisham Ezz Al-Arab
Chairman and Managing Director
196
Annual Report 2017
Annual Report 2017
197
Commercial International Bank (Egypt) S.A.E
Consolidated cash flow for the year ended
on December 31, 2017 (Cont.)
Proceeds from selling non current assets held for sale
Net cash used in investing activities
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, 2017
EGP Thousands
628,521
(16,297,189)
Dec. 31, 2016
EGP Thousands
(2,989)
(2,026,482)
3,524,063
(1,350,204)
79,351
2,253,210
(12,309,863)
61,518,700
49,208,837
14,663,289
45,319,766
54,478,202
(8,878,986)
(1,719,586)
(54,653,848)
49,208,837
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
Financial StatementS: conSolidated
Commercial International Bank (Egypt) S.A.E
Consolidated cash flow for the year ended
on December 31, 2017
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 from selling investments in associates
Impairment (Released) charges of associates
Shares based payments
Bank's share in the profits 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
Non current assets held for sale
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 redemption of subsidiary and associates
Payment (proceeds) for purchases and sell of 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
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
10,029,122
-
351,005
1,742,281
212,622
(248,072)
100,078
-
130,208
(83,079)
(25,463)
(97,897)
11,840
(607)
99,047
-
(9,570)
290,884
(38,636)
-
12,463,763
(2,594,442)
(16,466,420)
(4,601,991)
95,161
(4,019,132)
(1,121,981)
428,011
(1,131,078)
18,802,058
(2,017,034)
1,897,201
1,734,116
750
(44,318)
(745,089)
13,354,468
(4,597,254)
(25,868,230)
973,963
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
(131,799)
187,000
-
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
(1,243,669)
(3,334,122)
2,946,710
198
Annual Report 2017
Annual Report 2017
199
Financial StatementS: conSolidated
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200
Annual Report 2017
Annual Report 2017
201
Financial StatementS: conSolidated
Notes to the consolidated financial statements for the year ended
December 31, 2017
1. General information
Commercial International Bank (Egypt) S.A.E. provides retail, corporate and investment banking services in various
parts of Egypt through 174 branches, and 22 units employing 6551 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.
2.2. Subsidiaries and associates
2.2.1. Subsidiaries
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.
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.
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.
As of December 31, 2017 the Bank directly owns 4,114,568 shares representing 10% of CI Capital Holding Company’s capital
and on December 31, 2017 CI Capital Holding Co. Directly owns the following shares in its subsidiaries:
Company name
No. of shares
Ownership% Indirect Share%
• CIBC Co.
• CI Assets Management
• CI Investment Banking Co.
• Dynamic Brokerage Co.
• Corplease
1,979,290
478,577
2,481,578
3,393,500
1,262,237
98.96
95.72
99.27
99.97
72.96
98.94
95.70
99.25
99.95
72.94
The bank owns investments in a subsidiary “C-Ventures”, in which the bank’s share is 99.99%. The company is still under
establishment and has not yet started its operations and has not been registered in the commercial register.
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.
2.1.1. Basis of consolidation
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 until 20 March 2017.
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.
2.4. Foreign currency translation
2.4.1. Functional and presentation currency
The financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.
2.4.2. Transactions and balances in foreign currencies
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.
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:
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.
• 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.
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’.
202
Annual Report 2017
Annual Report 2017
203
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.
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.
2.5. Financial assets
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.
2.5.1. Financial assets at fair value through profit or loss
This category has two sub-categories:
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.
• Financial assets held for trading.
• Financial assets designated at fair value through profit and loss at inception.
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.
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.
2.5.2. Loans and advances
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.
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.
204
Annual Report 2017
Annual Report 2017
205
Financial StatementS: conSolidated
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.
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 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.
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.
2.9. Fee and commission income
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.
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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.\
2.12. Impairment of financial assets
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.
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
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.
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 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.
12.14. Property, plant and equipment
Land 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
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
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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.
2.15. Impairment of non-financial assets
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.
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’.
2.16.3. 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.
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 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 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 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 and
performance conditions and market performance conditions are taken into account when estimating the fair value of eq-
uity 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.
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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.
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.
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.
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.
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:
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
instruments. In addition, credit risk management is responsible for the independent review of risk management and the
control environment.
3.1. Credit risk
The Bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the Bank by
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.
3.1.1. Credit risk measurement
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 ‘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
a. It must be available for immediate sale in its present condition, subject only to terms that are usual and customary
default.
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, 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.
• 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 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.
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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.
3.1.2 Risk limit control and mitigation policies
The Bank manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to indi-
vidual counterparties and banks, and to industries and countries.
The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to
one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a revolving
basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of credit risk by
individual, counterparties, product, and industry sector and by country are approved quarterly by the Board of Directors.
The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on- and off-
balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange 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.
• 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.
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-
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:
December 31, 2017
December 31, 2016
Bank’s rating
1-Performing loans
2-Regular watching
3-Watch list
4-Non-Performing Loans
Loans and advances
(%)
69.53
15.53
7.99
6.95
Impairment provision
(%)
11.61
21.51
23.70
43.18
Loans and advances
(%)
68.27
18.43
6.54
6.76
Impairment provision
(%)
13.78
19.53
16.81
49.88
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.
214
Annual Report 2017
Annual Report 2017
215
Financial StatementS: conSolidated
3.1.4. Pattern of measuring the general banking risk
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 categories are classified according to detailed rules and terms depending heavily on information relevant to the
customer, his activity, 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
Categorization
Provision%
Internal rating
Categorization
1
2
3
4
5
6
7
8
9
10
Low risk
Average risk
Satisfactory risk
Reasonable risk
Acceptable risk
Marginally acceptable risk
Watch list
Substandard
Doubtful
Bad debts
0%
1%
1%
2%
2%
3%
5%
20%
50%
100%
Performing loans
1
Performing loans
1
Performing loans
1
Performing loans
1
Performing loans
1
Regular watching
2
3
Watch list
4 Non performing loans
4 Non performing loans
4 Non performing loans
3.1.5. Maximum exposure to credit risk before collateral held
In balance sheet items exposed to credit risk
Treasury bills and other governmental notes
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, 2017
Dec. 31, 2016
EGP Thousands
EGP Thousands
54,653,848
39,216,387
6,728,843
1,383
(70)
1,933,420
161,451
(1,800)
1,780,416
2,899,930
13,910,837
416,616
-
12,450,826
44,200,770
26,627,825
112,802
(12,476)
(10,994,446)
(2,965,997)
40,001
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
74,767,989
65,039
224,684,136
58,601,911
36,723
185,441,509
3,605,001
1,017,690
1,700,516
69,514,413
75,837,620
2,832,705
650,607
2,382,849
65,575,370
71,441,531
The above table represents the Bank's Maximum exposure to credit risk on December 31, 2017, 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 39.35% of the total maximum exposure is derived from loans and advances to banks and customers while
investments in debt instruments represents 36.26%.
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:
• 85.06% of the loans and advances are concentrated in the top two grades of the internal credit risk rating system.
• 93.05% of loans and advances portfolio are considered to be neither past due nor impaired.
• Loans and advances assessed individualy are valued EGP 7,120,106 thousand.
• The Bank has implemented more prudent processes when granting loans and advances during the financial year ended on
December 31, 2017.
• 96.80% of the investments in debt Instruments are Egyptian sovereign instruments.
216
Annual Report 2017
Annual Report 2017
217
Financial StatementS: conSolidated
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, 2017
EGP Thousands
Dec.31, 2016
EGP Thousands
Loans and advances
to customers
89,395,036
5,884,880
7,120,106
102,400,022
Loans and advances
to banks
1,383
-
-
1,383
Loans and advances
to customers
85,586,627
5,133,220
6,585,667
97,305,514
Loans and advances
to banks
161,451
-
-
161,451
10,994,446
12,476
2,965,997
88,427,103
70
-
-
1,313
9,818,007
5,533
2,257,826
85,224,148
1,800
-
-
159,651
Impairment provision losses for loans and advances reached EGP 10,994,516 thousand.
During the year, the Bank’s total loans and advances increased by 5.06%.
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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218
Annual Report 2017
Annual Report 2017
219
Financial StatementS: conSolidated
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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 period:
Loans and advances to customer
Corporate
- Direct loans
Total
Dec.31, 2017
Dec.31, 2016
8,577,197
8,577,197
7,771,415
7,771,415
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, 2017
AAA
AA- to AA+
A- to A+
Lower than A-
Unrated
Total
Treasury bills and
other gov. notes
-
-
-
-
54,478,202
54,478,202
Trading financial debt
instruments
-
-
-
1,721,360
5,007,483
6,728,843
Non-trading financial
debt instruments
-
431,011
1,724,358
4,457,964
68,154,656
74,767,989
EGP Thousands
Total
-
431,011
1,724,358
6,179,324
127,640,341
135,975,034
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220
Annual Report 2017
Annual Report 2017
221
Financial StatementS: conSolidated
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 year.
The Bank has allocated exposures to regions based on the country of domicile of its counterparties.
EGP Thousands
Upper Egypt
Total
Dec.31, 2017
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
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
54,653,848
Alex, Delta and
Sinai
-
6,728,843
1,383
(70)
956,756
2,329,790
8,632,679
342,764
10,228,588
29,818,885
23,487,639
87,088
(12,476)
(10,994,446)
(2,362,942)
40,001
-
-
-
621,743
488,529
4,437,647
66,414
1,731,524
11,262,255
2,831,056
25,714
-
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(495,481)
-
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-
-
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201,917
81,611
840,511
7,438
490,714
3,119,630
309,130
-
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(107,574)
-
74,767,989
65,039
198,771,358
-
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20,969,401
-
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4,943,377
54,653,848
6,728,843
1,383
(70)
1,780,416
2,899,930
13,910,837
416,616
12,450,826
44,200,770
26,627,825
112,802
(12,476)
(10,994,446)
(2,965,997)
40,001
74,767,989
65,039
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222
Annual Report 2017
Annual Report 2017
223
Financial StatementS: conSolidated
3.2. Market risk
Market risk represnts 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 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 Limits,
for thetrading 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 iscurrently 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
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
Foreign exchange risk
Interest rate risk
- For non trading purposes
- For trading purposes
Portfolio managed by others risk
Investment fund
Total VaR
Medium
13,647
588,938
553,426
35,512
7,280
370
591,508
High
Low
Medium
High
Low
82,695
815,249
739,977
75,272
10,454
692
826,941
275
363,366
351,674
11,692
4,854
215
364,408
31,561
365,258
340,853
24,405
4,775
392
381,247
300,218
1,028,396
973,882
54,514
10,341
643
1,193,075
276
112,744
102,443
10,301
2,682
264
113,480
Trading portfolio VaR by risk type
Dec. 31, 2017
Dec. 31, 2016
EGP Thousands
Medium
High
Low
Medium
High
Low
Foreign exchange risk
Interest rate risk
- For trading purposes
Funds managed by others risk
Investment fund
Total VaR
13,647
35,512
35,512
7,280
370
46,039
82,695
75,272
75,272
10,454
692
113,250
275
11,692
11,692
4,854
215
13,804
31,561
24,405
24,405
4,775
392
51,651
300,218
54,514
54,514
10,341
643
335,888
276
10,301
10,301
2,682
264
11,285
Non trading portfolio VaR by risk type
Dec. 31, 2017
Dec. 31, 2016
EGP Thousands
Medium
High
Low
Medium
High
Low
Interest rate risk
- For non trading purposes
Total VaR
553,426
553,426
739,977
739,977
351,674
351,674
340,853
340,853
973,882
973,882
102,443
102,443
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.
Equivalent EGP Thousands
Dec. 31, 2017
EGP
USD
EUR
GBP
Other
Total
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 cus-
tomers
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
10,910,051
2,419,832
849,425
71,041
412,940
14,663,289
4,465,131
31,854,175
7,996,060
875,492
128,908
45,319,766
45,189,229
12,145,247
1,382,300
5,573,837
-
1,721,360
1,383
-
-
-
-
-
53,565,401
46,899,704
1,893,051
41,866
39,714
287
-
-
-
-
-
-
-
58,716,776
7,295,197
1,383
102,400,022
40,001
24,667,305
45,167,722
65,039
189,643,429
5,807,476
-
-
-
-
-
100,849,464 12,120,836
-
-
-
988,399
-
-
-
541,848
30,474,781
45,167,722
65,039
304,143,976
534,701
152,712,537
55,547
129,196
153,431,981
1,212,410
85,772,953
141,437
3,545,540
45,974
10,952,101
-
-
90,672,340 10,998,075
26,079
935,525
-
-
961,604
58,754
349,936
-
-
408,690
1,877,918
250,723,052
196,984
3,674,736
256,472,690
36,211,448
10,177,124
1,122,761
26,795
133,158
47,671,286
224
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Annual Report 2017
225
Financial StatementS: conSolidated
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 val-
ue and cash flow risks. Interest marginsmay 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, 2017
Financial assets
Cash and balances with
central bank
Due from banks
Treasury bills and other
governmental notes*
Trading financial assets
Gross loans and advances
to banks
Gross loans and advances to
customers
Derivatives financial in-
struments (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 in-
struments (including IRS
notional amount)
Long term loans
Total financial liabilities
Total interest
re-pricing gap
Up to 1
Month
1-3 Months 3-12 Months
1-5 years Over 5 years
Non-Interest
Bearing
Total
-
-
-
32,633,606
12,038,721
647,439
3,395,960
6,823,666
48,497,150
-
-
-
-
-
-
14,663,289 14,663,289
- 45,319,766
- 58,716,776
99,586
1,383
-
-
904
3,807,571
2,920,368
466,768
7,295,197
-
-
-
-
1,383
65,216,595
11,787,421
14,459,839
8,594,614
2,341,553
- 102,400,022
967,641
494,350
7,628,334
3,112,098
-
287 12,202,710
1,602,509
32,499
-
195,543
9,089,021
-
103,949,779 34,099,159 80,518,230
-
2,955,001
-
12,119,880
15,888,478
7,827,374
25,263,827
-
-
56,666,588 25,209,175
668,371 30,474,781
- 45,167,722
65,039
15,863,754 316,306,685
65,039
1,137,760
106,568,106
-
18,578,123
-
31,298,719
-
50,294,632
-
710,069
740,158
1,877,918
43,273,403 250,723,052
5,866,665
5,684,039
11,627
655,925
-
141,437 12,359,693
36,393
82,631
113,608,924 27,814,445 31,392,977
3,552,283
3,429
50,953,986
-
710,069
3,674,736
44,154,998 268,635,399
-
(9,659,145)
6,284,714 49,125,253
5,712,602 24,499,106 (28,291,244) 47,671,286
* 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
respectively, 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
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.
Dec. 31, 2017
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, 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)
Up to
1 month
One to three
months
Three
months
to one year
One year to
five years
Over five
years
Total
EGP
Thousands
1,877,918
31,348,143
36,393
-
21,728,194
6,743
-
-
71,335,328 109,570,301
3,429
82,631
-
1,877,918
16,741,086 250,723,052
3,674,736
3,545,540
33,262,454
21,734,937 71,417,959 109,573,730 20,286,626 256,275,706
57,644,515
33,970,656 79,938,643 96,174,026 36,636,599 304,364,439
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
-
12,690,448
-
3,008,996
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
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 instrumentand 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.
226
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Annual Report 2017
227
Financial StatementS: conSolidated
3.3.4. Derivative cash flows
Derivatives settled on a net basis
The Bank’s derivatives that will be settled on a net basis include:
Foreign exchange derivatives: 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 ratecontracts and exchange traded futures.
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 advancesrepresents 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.
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:
Financial Investments
Investment securities include only interest-bearing assets, held to maturity assets, and available for sale assets that are
measured at fair value.
Dec. 31, 2017
Liabilities
Derivatives financial instruments
- Foreign exchange derivatives
- Interest rate derivatives
Total
Off balance sheet items
Dec. 31, 2017
Up to
1 month
One to three
months
Three months
to one year
One year to
five years
Total
EGP Thousands
28,136
100
28,236
15,784
165
15,949
11,627
38,577
50,204
-
102,595
102,595
55,547
141,437
196,984
Up to 1 year
1-5 years
Over 5 years
Total
Letters of credit, guarantees and other commitments
Total
47,214,887
47,214,887
18,219,180
18,219,180
6,798,552
6,798,552
72,232,619
72,232,619
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:
Credit facilities commitments
Total
Up to 1 year
1,295,563
1,295,563
1-5 years
5,728,813
5,728,813
Total
7,024,376
7,024,376
• 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 forshareholders and other
parties dealing with the bank.
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.
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.
Book value
Fair value
The required data is submitted to the Central Bank of Egypt on a monthly basis.
Dec.31, 2017
Dec.31, 2016
Dec.31, 2017
Dec.31, 2016
Central Bank of Egypt requires the following:
Financial assets
Due from banks
Gross loans and advances to banks
Gross loans and advances to customers
Financial investments
Held to Maturity
Total financial assets
Financial liabilities
Due to banks
Due to customers
Long term loans
Total financial liabilities
45,319,766
1,383
102,400,022
58,011,034
161,451
97,305,514
44,782,984
1,383
96,397,613
56,270,958
161,451
99,578,137
45,167,722
192,888,893
53,924,936
209,402,935
45,595,034
186,777,014
51,541,583
207,552,129
1,877,918
250,723,052
3,674,736
256,275,706
3,008,996
231,740,795
160,243
234,910,034
1,813,466
245,616,661
3,674,736
251,104,863
2,924,416
234,065,309
160,243
237,149,968
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.
• Maintaining EGP 500 million as a minimum requirement for the issued and paid-in capital.
• Maintaining a minimum level of capital adequacy ratio of 11.25%, calculated as the ratio between total value of the capital
elements, and the risk-weighted assets and contingent liabilities of the Bank (credit risk, market risk and opertional risk).
While taking into consideration the conservation buffer.
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, interim profits and deducting previously recog-
nized goodwill and any retained losses
Tier two:
Tier two represents the gone concern capital which is compposed 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.
228
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Annual Report 2017
229
Financial StatementS: conSolidated
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 tier1.
Assets risk weight scale ranging from zero to 100% is based on the counterparty risk to reflect the related credit risk
scheme, taking into considration the cash collatrals. Similar criteria are used for off balance sheet items after adjustments
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, 2017
Dec.31, 2016
EGP Thousands
EGP Thousands
11,618,011
-
10,543,783
89,873
(2,450,136)
7,515,555
27,317,086
Restated**
11,538,660
(22,981)
10,542,939
90,025
(2,793,404)
-
19,355,239
Tier 1 capital
Share capital (net of the treasury shares)
Goodwill
Reserves
Retained Earnings (Losses)
Total deductions from tier 1 capital common equity
Net profit for the period
Total qualifying tier 1 capital
Tier 2 capital
45% of special reserve
45% of foreign currencies translation differences
Subordinated Loans
Impairment provision for loans and regular contingent liabilities
Total qualifying tier 2 capital
Total capital 1+2
Risk weighted assets and contingent liabilities
128,698,992
Total credit risk
6,701,579
Total market risk
14,696,762
Total operational risk
150,097,333
Total
*Capital adequacy ratio (%)
13.97%
*Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 24 December 2012.
**After 2016 profit distribution.
49
-
3,545,540
1,679,656
5,225,245
32,542,331
49
3,865
-
1,606,644
1,610,558
20,965,797
141,154,879
9,241,563
18,222,831
168,619,273
19.30%
2.
Leverage ratio
Total qualifying tier 1 capital
On-balance sheet items & derivatives
Off-balance sheet items
Total exposures
*Percentage
Dec.31, 2017
Dec.31, 2016
EGP Thousands
EGP Thousands
27,317,086
300,593,997
44,965,272
345,559,269
7.91%
Restated**
19,355,239
271,962,373
41,080,543
313,042,916
6.18%
*Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 14 July 2015.
**After 2016 profit distribution.
For December 2017 NSFR ratio record 195.33% (LCY 232.44% and FCY 152.27%), and LCR ratio record 1018.68% (LCY
626.59% and FCY 377.14%).
For December 2016 NSFR ratio record 183.3% (LCY 234.4% and FCY 140.0%), and LCR ratio record 1116.8% (LCY
1769.8% and FCY 434.8%) .
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.
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
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 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 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%
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.
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.
230
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Annual Report 2017
231
Financial StatementS: conSolidated
5. Segment analysis
5.1. By business segment
The Bank is divided into four main business segments on a worldwide basis:
6. Net interest income
• 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, 2017
Revenue according to
business segment
Expenses according to
business segment
Profit before tax
Tax
Profit for the year
Total assets
Dec.31, 2016
Revenue according to
business segment
Expenses according to
business segment
Profit before tax
Tax
Profit for the year
Total assets
Corporate
banking
SME's
Investment
banking
Retail
banking
Asset Liability
Mangement
EGP Thousands
Total
5,656,651
2,342,539
2,955,690
4,841,757
639,646
16,436,283
(3,550,176)
(696,877)
(105,293)
(1,780,505)
(7,226)
(6,140,077)
2,106,475
(576,762)
1,529,713
82,149,279
1,645,662
(442,854)
1,202,808
2,352,091
2,850,397
(767,053)
2,083,344
137,645,556
3,061,252
(823,795)
2,237,457
18,444,909
632,420
(170,187)
462,233
54,190,257
10,296,206
(2,780,651)
7,515,555
294,782,092
Corporate
banking
SME's
Investment
banking
Retail
banking
Asset Liability
Mangement
Total
5,117,764
1,558,634
2,367,468
3,017,976
201,808
12,263,650
(2,327,301)
(475,389)
(53,393)
(1,268,235)
(5,667)
(4,129,985)
2,790,463
(724,546)
2,065,917
107,923,620
1,083,245
(281,954)
801,291
3,826,756
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
39,309,870
8,133,665
(2,124,547)
6,009,118
267,543,755
5.2. By geographical segment
Dec. 31, 2017
Revenue according to geographical segment
Expenses according to geographical segment
Profit before tax
Tax
Profit for the year
Total assets
Dec. 31, 2016
Revenue according to geographical segment
Expenses according to geographical segment
Profit before tax
Tax
Profit for the year
Total assets
232
Annual Report 2017
Cairo
13,445,181
(5,306,193)
8,138,988
(2,200,134)
5,938,854
265,665,575
Cairo
10,972,520
(3,464,852)
7,507,668
(1,961,608)
5,546,060
240,916,621
Alex, Delta &
Sinai
2,499,912
(670,176)
1,829,736
(492,390)
1,337,346
22,598,945
Alex, Delta &
Sinai
1,104,147
(499,518)
604,629
(157,377)
447,252
21,740,165
EGP Thousands
Upper Egypt
Total
491,190
(163,708)
327,482
(88,127)
239,355
6,517,572
16,436,283
(6,140,077)
10,296,206
(2,780,651)
7,515,555
294,782,092
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
Interest and similar income
- Banks
- Clients
Total
Treasury bills and bonds
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 loans
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
8. Dividend income
Trading securities
Available for sale securities
Total
9. Net trading income
Profit (Loss) 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
Dec.31, 2017
EGP Thousands
Dec.31, 2016
EGP Thousands
3,532,278
10,921,054
14,453,332
14,039,447
178,391
28,671,170
(463,409)
(15,686,959)
(16,150,368)
(2,037)
(14,750)
(16,167,155)
12,504,015
2,568,172
6,656,743
9,224,915
9,794,089
125,214
19,144,218
(111,249)
(9,010,782)
(9,122,031)
(153)
(4,328)
(9,126,512)
10,017,706
Dec.31, 2017
EGP Thousands
Dec.31, 2016
EGP Thousands
1,362,658
117,268
1,197,018
2,676,944
(624,278)
(624,278)
2,052,666
965,388
69,967
930,174
1,965,529
(417,573)
(417,573)
1,547,956
Dec.31, 2017
EGP Thousands
11,475
23,039
34,514
Dec.31, 2016
EGP Thousands
5,045
29,191
34,236
Dec.31, 2017
EGP Thousands
764,732
(17,118)
(23,732)
(21,230)
589,563
1,292,215
Dec.31, 2016
EGP Thousands
603,565
12,947
(15,055)
38,472
675,253
1,315,182
Annual Report 2017
233
Financial StatementS: conSolidated
10. Administrative expenses
14. Earning per share
Dec.31, 2017
EGP Thousands
Dec.31, 2016
EGP Thousands
(1,620,326)
(65,033)
(51,682)
(1,375,467)
(3,112,508)
(1,188,799)
(50,542)
(44,146)
(1,149,165)
(2,432,652)
Dec.31, 2017
EGP Thousands
(61,065)
607
(114,725)
(888,285)
(1,063,468)
Dec.31, 2016
EGP Thousands
(682,556)
1,682
(72,442)
(483,871)
(1,237,187)
Dec.31, 2017
EGP Thousands
(1,742,281)
(1,742,281)
Dec.31, 2016
EGP Thousands
(892,874)
(892,874)
Dec.31, 2017
EGP Thousands
10,320,256
22.50%
2,322,058
Dec.31, 2016
EGP Thousands
8,147,813
22.50%
1,833,258
379,390
(173,358)
256,358
(6,797)
3,000
2,780,651
26.94%
922,754
(127,439)
(584,097)
42,922
6,485
2,093,883
25.70%
1.Staff costs
Wages and salaries
Social insurance
Other benefits
2.Other administrative expenses
Total
11. Other operating (expenses) income
Profits (losses) 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
13. Adjustments to calculate the effective tax rate
Profit before tax
Tax rate
Income tax based on accounting profit
Add / (Deduct)
Non-deductible expenses
Tax exemptions
Effect of provisions
Depreciation
10% Withholding tax
Income tax / Deferred tax
Effective tax rate
234
Annual Report 2017
Net profit for the year, available for distribution
Board member's bonus
Staff profit sharing
*Profits shareholders' Stake
Weighted 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
17. Treasury bills and other governmental notes
91 Days maturity
182 Days maturity
364 Days maturity
Unearned interest
Total 1
Repos - treasury bills
Total 2
Net
Dec.31, 2017
EGP Thousands
7,549,043
(113,236)
(754,904)
6,680,903
1,159,156
5.76
Dec.31, 2016
EGP Thousands
5,948,258
(89,224)
(594,826)
5,264,208
1,159,156
4.54
1,177,722
5.67
1,176,718
4.47
Dec.31, 2017
EGP Thousands
5,784,303
Dec.31, 2016
EGP Thousands
5,083,805
8,878,986
14,663,289
14,663,289
5,438,235
10,522,040
10,522,040
Dec.31, 2017
EGP Thousands
2,679,189
42,640,577
45,319,766
15,863,399
3,894,775
25,561,592
45,319,766
-
45,319,766
45,319,766
45,319,766
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, 2017
EGP Thousands
-
1,289,425
57,602,997
(4,238,574)
54,653,848
(175,646)
(175,646)
54,478,202
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
Annual Report 2017
235
Financial StatementS: conSolidated
18. Trading financial assets
20. Loans and advances to customers, net
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, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
6,728,843
6,728,843
99,587
99,587
466,767
7,295,197
1,933,420
1,933,420
180,157
180,157
331,557
2,445,134
Dec. 31, 2017
EGP Thousands
1,383
(70)
1,313
1,313
-
1,313
Dec. 31, 2016
EGP Thousands
161,451
(1,800)
159,651
110,053
49,598
159,651
Dec. 31, 2017
EGP Thousands
(1,800)
1,697
33
(70)
Dec. 31, 2016
EGP Thousands
(9,899)
20,368
(12,269)
(1,800)
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, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
1,780,416
2,899,930
13,910,837
416,616
-
19,007,799
12,450,826
44,200,770
26,627,825
112,802
83,392,223
102,400,022
(12,476)
(10,994,446)
(2,965,997)
88,427,103
38,960,491
49,466,612
88,427,103
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
236
Annual Report 2017
Annual Report 2017
237
Financial StatementS: conSolidated
Analysis for impairment provision of loans and advances to customers
Individual
Dec. 31, 2017
Overdraft Credit cards
Beginning balance
Released (charged) released
during the year
Write off during the year
Recoveries during the year
Ending balance
(11,166)
(5,556)
13,425
-
(3,297)
(25,056)
(15,328)
36,477
(21,760)
(25,667)
Personal
loans
(190,592)
(37,906)
1,561
(59)
(226,996)
Real estate
loans
(7,801)
(3,743)
2,080
(32)
(9,496)
Other loans
Total
(20,838)
(255,453)
20,838
(41,695)
-
-
-
53,543
(21,851)
(265,456)
Dec. 31, 2017
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
(1,342,010)
(387,038)
-
-
21,921
(1,707,127)
(6,442,227)
(1,125,372)
382,185
(23,054)
100,778
(7,107,690)
Corporate
Syndicated
loans
(1,775,873)
(189,364)
-
-
54,011
(1,911,226)
Other loans
Total
(2,444)
(509)
-
-
6
(2,947)
(9,562,554)
(1,702,283)
382,185
(23,054)
176,716
(10,728,990)
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)
21. Derivative financial instruments
21.1Derivatives
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 negoti-
ated 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
contracts are exchange of currencies or interest (fixed rate versus variable rate for example) or both (meaning foreign
exchange and interest rate contracts).
Contractual amounts are not exchanged except for some foreign exchange contracts.
Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to
fulfill their liabilities. This risk is monitored continuously through comparisons of fair value and contractual amount,
and in order to control the outstanding credit risk, the Bank evaluates other parties using the same methods as in bor-
rowing 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 year for a predetermined mamount 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 instru-
ments, 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:
21.1.1 For trading derivatives
Foreign currencies derivatives
- Forward foreign exchange
contracts
- Currency swap
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
6,820,350
1,640,985
-
Notional
amount
655,925
11,506,784
Dec.31, 2017
Dec.31, 2016
Assets
Liabilities
Notional
amount
Assets
Liabilities
36,597
3,117
39,714
-
-
49,687
2,174,176
182,508
178,479
5,860
55,547
2,662,940
79,890
262,398
61,404
239,883
-
-
34,706
144
144
-
-
39,714
55,547
262,542
239,883
Dec.31, 2017
Dec.31, 2016
Assets
Liabilities
Notional
amount
Assets
Liabilities
-
287
287
25,996
675,861
115,441
141,437
16,382,128
-
6,727
6,727
45,629
45,579
91,208
40,001
196,984
269,269
331,091
238
Annual Report 2017
Annual Report 2017
239
Financial StatementS: conSolidated
21.2. Hedging derivatives
21.2.1Fair 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-
ernmentaldebt instruments in foreign currencies. Net derivative value resulting from the related hedging instruments is
EGP 25,996 thousand at December 31, 2017 against EGP 45,629 thousand at the December 31, 2016, Resulting in gains form
hedging instruments at December 31, 2017 EGP 19,633 thousand against losses EGP 19,333 thousand at the December 31,
2016. Losses arose from the hedged items at December 31, 2017 reached EGP 44,924 thousand against losses of EGP 30,579
thousand at December 31, 2016.
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 115,154
thousand at the end of December 31, 2017 against EGP 38,852 thousand at December 31, 2016, resulting in losses from
hedging instruments at December 31, 2017 of EGP 76,302 thousand against losses of EGP 28,916 thousand at December
31, 2016. Gains arose from the hedged items at December 31, 2017 reached EGP 81,488 thousand against gains EGP 56,314
thousand at December 31 , 2016.
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
Fixed interest debt instruments
Floating interest debt instruments
Total
Beginning balance
Addition
Deduction (selling - redemptions)
Exchange revaluation differences for for-
eign financial assets
Profit (losses) from fair value difference
Impairment charges
Ending Balance as of Dec. 31, 2015
Beginning balance
Addition/transfer
Deduction (selling - redemptions - trans-
fer)
Exchange revaluation differences for
foreign financial assets
Profit (losses) from fair value difference
Impairment charges
Ending Balance as of Dec. 31, 2016
Dec. 31, 2017
EGP Thousands
Dec. 31, 2016
EGP Thousands
29,632,780
83,346
758,655
30,474,781
4,709,487
97,631
640,173
5,447,291
45,135,209
32,513
45,167,722
53,892,423
32,513
53,924,936
75,642,503
59,372,227
73,721,199
1,921,304
75,642,503
72,612,620
2,155,369
74,767,989
57,097,553
2,274,674
59,372,227
56,090,139
2,511,772
58,601,911
Available for sale
financial
investments
46,289,075
3,334,122
(46,335,658)
2,219,961
42,132
(102,341)
5,447,291
5,447,291
25,868,230
(1,361,027)
(100,078)
512,016
108,349
30,474,781
Held to maturity
financial
investments
9,261,220
44,667,810
(4,094)
-
-
-
53,924,936
53,924,936
4,597,254
Total
EGP Thousands
55,550,295
48,001,932
(46,339,752)
2,219,961
42,132
(102,341)
59,372,227
59,372,227
30,465,484
(13,354,468)
(14,715,495)
-
-
-
45,167,722
(100,078)
512,016
108,349
75,642,503
240
Annual Report 2017
Annual Report 2017
241
Financial StatementS: conSolidated
22.1 Profits (Losses) on financial investments
25. Property, plant and equipment
Profit (Loss) from selling available for sale financial instruments
Released (Impairment) charges of available for sale equity instruments
Profit (Loss) from selling investments in associates
Released (Impairment) charges of non current assets held for sale
Total
Dec. 31, 2017
EGP Thousands
(99,047)
254,588
-
9,570
165,111
Dec. 31, 2016
EGP Thousands
35,193
(102,078)
(90,447)
131,799
(25,533)
23. Investments in associates
Dec. 31, 2017
Company’s
country
Company’s
assets
EGP Thousands
Company’s
revenues
Company’s
net profit
Investment
book value
Stake %
Company’s
liabilities
(without
equity)
Dec. 31, 2017
EGP
Thousands
Land Premises
IT
Vehicles
Fitting
-out
Machines and
equipment
Furniture
and
furnishing
Total
64,709
-
64,709
919,258 1,395,638
250,549
77,371
87,660 607,773
50,570
1,703
996,629 1,646,187 89,363 658,343
459,572
57,191
516,763
144,454 3,679,064
444,619
151,689 4,123,683
7,235
-
-
315,192 1,029,244
47,904 468,368
372,522
124,929 2,358,159
44,507
176,155
5,184
70,311
47,595
7,253
351,005
-
359,699 1,205,399 53,088 538,679
420,117
132,182 2,709,164
64,709
64,709
636,930
604,066
%5
440,788 36,275 119,664
366,394 39,756 139,405
%20 %33.3
%33.3
96,646
87,050
%20
19,507 1,414,519
19,525 1,320,905
%20
Beginning gross assets (1)
Additions during the year
Ending gross assets (2)
Accumulated depreciation at begin-
ning 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
Net fixed assets value on the balance sheet date includes EGP 353,462 thousand non registered assets while their registrations procedures are in process.
Associates
- International Co.
for Security and
Services (Falcon)
Total
Egypt
512,388
367,470
505,461
52,695
65,039
32.5
512,388
367,470
505,461
52,695
65,039
26. Due to banks
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
24. Other assets
Egypt
300,739
208,188
301,390
12,478
36,723
35
300,739
208,188
301,390
12,478
36,723
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, 2017
EGP Thousands
3,870,454
230,296
522,211
2,193,590
45,083
24,973
6,886,607
Dec. 31, 2016
EGP Thousands
3,318,761
144,422
203,410
1,691,603
56,599
19,768
5,434,563
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, 2017
EGP Thousands
1,067,374
810,544
1,877,918
128,527
714,294
1,035,097
1,877,918
740,158
1,137,760
1,877,918
1,877,918
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, 2017
EGP Thousands
72,442,872
49,952,470
70,486,930
53,075,098
4,765,682
250,723,052
107,753,682
142,969,370
250,723,052
43,229,085
207,493,967
250,723,052
178,786,275
71,936,777
250,723,052
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
26,385,328
205,355,467
231,740,795
159,492,892
72,247,903
231,740,795
242
Annual Report 2017
Annual Report 2017
243
Financial StatementS: conSolidated
28. Long term loans
31. Equity
Interest rate % Maturity date
Financial Investment & Sector
Cooperation (FISC)
Agricultural Research and Develop-
ment Fund (ARDF)
Social Fund for Development (SFD)
European Bank for Reconstruction
and Development (EBRD) subordi-
nated Loan
International Finance Corporation
(IFC) subordinated Loan
Balance
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 months libor +
6.2%
3 months libor +
6.2%
3-5 years
3-5 years
4 January
2020
10 years
10 years
Maturing
through next
year
EGP Thousands
Balance on
Dec. 31, 2017
EGP
Thousands
Balance on
Dec. 31, 2016
EGP
Thousands
-
-
2,778
83,886
87,314
88,800
41,882
41,882
68,665
-
-
1,772,770
1,772,770
-
-
125,768
3,674,736
160,243
The variable interest rate on the subordinated loan is determined in advance every 3 months and the subordinated loans are
not repaid before their due dates.
29. Other liabilities
Accrued interest payable
Accrued expenses
Accounts payable
Other credit balances
Total
30. Other provisions
Dec. 31, 2017
Provision for income tax
claims
Provision for legal claims
Provision for contingent
Provision for other claim
Total
Dec. 31, 2016
Dec. 31, 2017
EGP Thousands
1,516,471
507,543
3,277,350
175,167
5,476,531
Dec. 31, 2016
EGP Thousands
1,455,029
645,979
1,329,189
149,133
3,579,330
Beginning
balance
Charged
amounts
Exchange
revaluation
difference
Utilized
amounts
Reversed
amounts
Ending
balance
EGP
Thousands
22,145
34,267
1,434,704
22,941
1,514,057
-
549
118,370
93,703
212,622
-
(57)
12,627
(730)
11,840
(725)
-
(24,738)
(25,463)
(29)
(95,398)
(2,470)
(97,897)
-
-
22,145
Beginning
balance
Charged
amounts
Exchange
revaluation
difference
Utilized
amounts
Reversed
amounts
34,005
1,470,303
88,706
1,615,159
Ending
balance
EGP
Thousands
22,145
Provision for income tax
claims
29,556
Provision for legal claims
31,000
Provision for Stamp Duty
759,174
Provision for contingent
19,886
Provision for other claim
Total
861,761
* To face the potential risk of banking operations.
-
-
9,630
-
132,845
8,372
150,847
1,456
-
579,997
2,097
583,550
-
(924)
-
-
(2,772)
(3,696)
-
22,145
(5,451)
(31,000)
(37,312)
(4,642)
(78,405)
34,267
-
1,434,704
22,941
1,514,057
244
Annual Report 2017
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 11,618,011 thousand to be divided on 1,161,801 thou-
sand shares with EGP 10 par value for each share"and registered in the commercial register dated 17th May 2017.
• Increase issued and Paid in Capital by amount EGP 79,351 thousand on May 24,2017 to reach EGP 11,618,011 thousand ac-
cording to Board of Directors decision on November 9, 2016 by issuance of eighth tranche for E.S.O.P program.
• 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.
• 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 dispersment of this divi-
dend, 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 reseve 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, 2017
EGP Thousands
(31,409)
31,038
36,712
56,698
110,100
5,340
(37,478)
8,629
179,630
Assets
(Liabilities)
Dec. 31, 2016
EGP Thousands
(28,741)
16,300
17,090
86,845
79,981
3,722
18,338
(12,227)
181,308
Annual Report 2017
245
Financial StatementS: conSolidated
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 service in The Bank to have the right in ordinary shares at face value (right to share) that will be issued on
the vesting date, otherwise such grants will be forfeited. Equity-settled share-based payments are measured at fair value
at the grant date, and expensed on a straight-line basis over the vesting period (3 years) with corresponding increase in
equity based on estimated number of shares that will eventually vest(True up model). The fair value for such equity instru-
ments is measured using the Black-Scholes pricing model.
Details of the rights to share outstanding during the year are as follows:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Details of the outstanding tranches are as follows:
Maturity date
2018
2019
2020
Total
Dec. 31, 2017
No. of shares in
thousand
22,351
7,601
(737)
(7,935)
21,280
Dec. 31, 2016
No. of shares in
thousand
20,373
9,262
(478)
(6,806)
22,351
EGP
Exercise price
10.00
10.00
10.00
EGP
Fair value *
31.67
28.43
65.55
No. of shares in
thousand
5,077
8,791
7,412
21,280
The fair value of granted shares is calculated using Black-Scholes pricing model with the following:
Exercise price
Current share price
Expected life (years)
Risk free rate %
Dividend yield%
Volatility%
11th tranche
10th tranche
10
73.08
3
16.8%
0.68%
30%
10
38.09
3
12%
2.50%
31%
Volatility is calculated based on the daily standard deviation of returns for the last three years.
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
Dec. 31, 2017
EGP Thousands
1,332,807
9,000,023
89,873
32,460
(1,642,958)
3,634
-
8,815,839
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
On 28 January 2018, Central Bank of Egypt issued instructions indicating the following:
Creating IFRS 9 risk reserve (1% of the total weighted credit risk) deducted from 2017 net profit after tax, to be used after
obtaining CBE's approval.
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 gain (loss) from A.F.S investment revaluation
Ending balance
34.4. Retained earnings
Beginning balance
Dividend previous year
Change in ownership percentage
Transferred from special reserve
Transferred to retained earnings (losses)
Transferred from previous year profits
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, 2017
EGP Thousands
3,019
615
3,634
Dec. 31, 2016
EGP Thousands
2,513
506
3,019
Dec. 31, 2017
EGP Thousands
1,035,363
297,444
1,332,807
Dec. 31, 2016
EGP Thousands
803,355
232,008
1,035,363
Dec. 31, 2017
EGP Thousands
(2,180,244)
537,286
(1,642,958)
Dec. 31, 2016
EGP Thousands
(2,202,462)
22,219
(2,180,243)
Dec. 31, 2017
EGP Thousands
31,462
-
-
(152)
-
58,563
89,873
Dec. 31, 2016
EGP Thousands
(64,566)
(3,896)
11,666
-
88,258
-
31,462
Dec. 31, 2017
EGP Thousands
14,663,289
45,319,766
54,478,202
(8,878,986)
(1,719,586)
(54,653,848)
49,208,837
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
36. Contingent liabilities and commitments
36.1. Legal claims
There is a number of existing cases filed against the bank on December 31,2017 without provision as the bank doesn't
expect to incur losses from it.
246
Annual Report 2017
Annual Report 2017
247
Financial StatementS: conSolidated
36.2. Capital commitments
36.2.1. Financial investments
The capital commitments for the financial investments reached on the date of financial position EGP 166,798 thousand
as follows:
Available for sale financial investments
Investments
value
368,650
Paid
Remaining
201,853
166,798
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 196,284 thousand.
• The market value per certificate reached EGP 189.53 on December 31, 2017.
• The Bank portion got 50,000 certificates with redeemed value of EGP 9,477 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 94,470 with redeemed value of EGP 18,237 thousands.
• The market value per certificate reached EGP 193.05 on December 31, 2017.
• The Bank portion got 50,000 certificates with redeemed value of EGP 9,653 thousands.
Takamol fund
36.3. Letters of credit, guarantees and other commitments
• CIB bank established an accumulated return mutual fund under license no.431 issued from financial supervisory author-
Dec. 31, 2017
EGP Thousands
69,514,413
1,700,516
1,017,690
72,232,619
Dec. 31, 2016
EGP Thousands
65,575,370
2,382,849
650,607
68,608,826
Dec. 31, 2017
EGP Thousands
7,024,376
Dec. 31, 2016
EGP Thousands
7,245,061
ity on February 18, 2015. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 139,586 with redeemed value of EGP 23,241 thousands.
• The market value per certificate reached EGP 166.50 on December 31, 2017.
•
The Bank portion got 50,000 certificates with redeemed value of EGP 8,325 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
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
• 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 4,500,204 with redeemed value of EGP 1,408,654 thousands.
• The market value per certificate reached EGP 313.02 on December 31, 2017.
• The Bank portion got 295,425 certificates with redeemed value of EGP 92,474 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 518,708 with redeemed value of EGP 96,366 thousands.
• The market value per certificate reached EGP 185.78 on December 31, 2017.
• The Bank portion got 128,000 certificates with redeemed value of EGP 23,780 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 334,711 with redeemed value of EGP 33,752 thousands.
• The market value per certificate reached EGP 100.84 on December 31, 2017.
• The Bank portion got 39,000 certificates with redeemed value of EGP 3,933 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 96,452 with redeemed value of EGP 18,281 thousands.
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
40. Tax status
EGP Thousands
5,936
64,779
1,372
Income
EGP Thousands
185
Expenses
EGP Thousands
228,429
Dec. 31, 2017
EGP Thousands
182,639
(313,246)
(1,566)
(523)
637
46,768
Dec. 31, 2016
EGP Thousands
1,371,677
(1,360,474)
266
851
25
4,440
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.
The Bank's corporate income tax has been examined and paid for the period 2015 - 2016.
Corporate income tax annual report is submitted.
248
Annual Report 2017
Annual Report 2017
249
Financial StatementS: conSolidated
Salary tax
The Bank's salary tax has been examined, paid and settled since the operations start up until the end of 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 31/12/2016 according to the protocol
between the Federation of Egyptian banks and the tax authority.
41. Intangible assets:
Book value
Amortization
Net book value
Dec. 31, 2017
EGP Thousands
651,041
(282,118)
368,923
Dec. 31, 2016
EGP Thousands
651,041
(151,910)
499,131
According to CBE's regulation issued on Dec 16, 2008, an annual amortization of 20% has been applied on intangible assets
starting from acquisition date.
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
Goodwill
Other 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, 2017
EGP Thousands
-
-
-
-
-
-
-
-
-
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, 2017
EGP Thousands
-
-
-
-
-
-
-
-
-
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
43. Profits from disposal of investments in subsidaries
Profits from disposal of investments in subsidaries
Total
On the 2nd of March 2017, the Egyptian Financial Supervisory Authority (EFSA) granted the bank its non-objection on a
number of non-related Egyptian and Gulf investors for the sale of part of its ownership stake in CI Capital Holding ("CI
Capital"), CIB has successfully executed the transfer of 76.55% of CICH's shares.
Dec. 31, 2017
EGP Thousands
168,900
168,900
Dec. 31, 2016
EGP Thousands
-
-
CIB has executed the transfer of 13.44% of CICH's shares and remained a minority stake of 10.00% of CI Capital Holding.
Minority stake has been transferred to available for sale due to the bank's intention for maintaining the ownership per-
centage of such investment.
Subsidary net assets
Less:
Add/Deduct:
FX translation reserve
Non-controling interests
"CI Capital Holding Co. S.A.E sold stocks (Net)"
Net
"CI Capital
Holding
Co. S.A.E"
Dec. 31, 2017
EGP Thousands
(701,170)
8,588
157,127
704,355
168,900
Although the effective date of selling process is 20 March 2017, however, for the purpose of facilitating the calcula-
tion of the value of profits arising from the sale of shares, the net assets of the subsidary as at 31 December 2016 were
adjusted by 2017 first quarter financial statements which is the earliest reliable date in the calculation of CI Capital
shares selling profit.
Important Events
On 28 January 2018, the Central Bank of Egypt issued instructions on the following:
IFRS 9 will be applied starting from 1st of January 2019. The bank will issue audited financial statements under the current
CBE regulations as at 31 March 2018, in addition to issuing a drafted financial statements in compliance with the new
instructions recieved from CBE regarding IFRS 9.
"IFRS 9 risk reserve has been created (1% of the total weighted credit risk) of 2017 net profit after tax, to be used after ob-
taining the"CBE's consent.
250
Annual Report 2017
Annual Report 2017
251