18
Beyond
Banking
Table of
Contents
CIB: An Introduction
Timeline of Milestones
Our History
What We Do
A Snapshot of Our Business
Key Financial Highlights
Strategy
CIB’s Stock
A Note From Our Chairman
A Note From Our CEO
Board of Directors’ Report
2018 In Review
Institutional Banking
Retail Banking
COO Area
Digital Banking and GTS
Big Data
Human Resources
Financial Control Group
Marketing and Corporate Communications
Risk Group
Compliance Group
Internal Audit
Sustainability
Corporate Governance
Management Committee
Sustainable Development Department
Community Development
Corporate Social Responsibility
Supporting the Best in Class: Squash
CIB Foundation
Subsidiaries and Affiliates
CVentures
Falcon Group
Fawry Plus
Financial Statements
Separate Financial Statements
Consolidated Financial Statements
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66
72
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108
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Banking Beyond
the Surface
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CIB
Introduction
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CIB InTRoDuCTIon
Timeline of
Milestones
1975
1977
• Becomes first joint venture bank in Egypt as 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 divests its stake
1983
in the Bank, deciding to reduce its minority holdings worldwide
• Changes its name to Commercial International Bank (CIB)
1989
• Selected by BSP to become its agent in Egypt
• Remains the only bank that offers this service to airline passengers
1991
• First Egyptian commercial bank to arrange debt swap transactions
• Becomes first bank to launch smart card center in Egypt
1993
• Wins Euromoney’s ‘Best Bank in Egypt’ award, the first of six consecutive
wins through to 1998
• 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 underwriters
but relying instead on the Bank’s own marketing and placement capabili-
ties for share sales
EGP BN
9.6
Net profit in 2018
1994
1996
1997
1998
• First bank in Egypt to connect with the international SWIFT network
• First Egyptian bank to have a Global Depository Receipt (GDR) program
on the London Stock Exchange
• First Egyptian bank to link to SWIFT via CITA
• Concludes first and largest Euro-syndicated loan (USD 200 million)
• Becomes first private sector bank with investment rating (after Luxor
incident), rated ‘BBB -’ by Fitch IBCA
• Rated ‘BBB -’ by S&P
• First bank to link its database to that of Misr Clearing, Settlement & De-
posit Company
• First Egyptian bank to form a 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
• Hires first two Certified Bank Auditors (CBA)
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CIB InTRoDuCTIon >> Timeline of Milestones
EGP BN
20.4
Revenue in 2018
2001
• First Egyptian bank to register its shares on the New York Stock Exchange
(NYSE) in the form of American Depository Receipts (ADR) Level 1 program
• 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
• Introduces Heya, the first credit card on the market to acknowledge
women’s financial independence
2005
2006
• Only bank in Egypt to be awarded the JP Morgan Quality Recognition
Award, receiving the a annually through to 2012
• Launches Osoul, its first money market fund in local currency
• First bank in Egypt to launch a page on Bloomberg for local debt securities
• First to adopt a pricing policy according to client risk rating as a step for-
ward to abide by Basel II requirements
• First Egyptian bank to execute a EGP 200 million repo transaction in the
local market
• First and largest Egyptian bank to provide securitization trustee services
2007
• Only Bank in Egypt chosen by UNIFEM and World Bank to participate in
the Gender Equity Model (GEM)
• First regional bank to introduce unique concierge and Mastercard
emergency services
2009
• Only Egyptian bank recognized 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 global transaction service 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
• First and only Egyptian bank to enforce business continuity standards
• CIB Foundation becomes the first in Egypt to have its annual budget insti-
tutionalized as part of its founding institution’s bylaws, as CIB shareholders
unanimously agree to dedicate 1% of net annual profit to the Foundation
• CIB-TCM becomes pioneer in trading in almost 114 new and unconven-
tional currencies
• First Egyptian bank to officially establish a Sustainable Development
Department
2010
2011
2012
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CIB InTRoDuCTIon >> Timeline of Milestones
2013
2014
• First Egyptian bank to receive JP Morgan Elite STP Award
• First Egyptian bank to upgrade its ADRs to trade on the OTCQX platform
• First Egyptian bank to sign an agreement with Bolero International, join-
ing the Bolero multi-bank service for guarantees
• First Egyptian bank to establish an ERM framework and roadmap, en-
dorsed and monitored by the board
• Becomes first Egyptian bank to use RAROC
• Breaks the record for the highest number of blood donors in a corporate
office in a single-day campaign in Egypt through the Triple Effect initia-
tive inaugurated by the CIB Foundation
• First Egyptian bank to introduce an interactive multimedia platform
that offers customers the option of interacting with call center agents
over video calls
• First Egyptian bank to sign an agreement with Misr for Central Clearing, De-
pository & Registry to issue debit cards for investors to collect cash dividends
• Launches first co-brand credit card, Mileseverywhere, with national car-
rier Egyptair
• Introduces the first interactive social media platform in the Egyptian
banking industry, available 24/7 to handle all customer queries
• Becomes the first bank in Egypt to sponsor the establishment of intensive
care units in Sohag through the CIB Foundation, donating EGP 6 million
to outfit the Pediatric 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
2016
• Launches mobile banking application, which includes various bank-
ing services, and offers clients numerous features to conveniently
manage their accounts
• Becomes the first Egyptian bank recognized as an active member in the glob-
ally renowned United Nations Environmental Program – Financial Initiative
• Wins the Socially Responsible Bank of the Year 2016 award from African Banker
• Recognized for the first time for several awards, including
- Best Bank in Egypt Supporting Women-Owned and Women-Run
Businesses by the American Chamber of Commerce in Egypt
- Two awards in Achievement in Liquidity Risk and Operational Risk
for the Middle East and Africa by Asian Banker
- Best Retail Risk Management Initiative in 2016 by Asian Banker
- Most Active Issuing Bank in Egypt in 2015 by the European Bank for
Reconstruction and Development
- Middle East Most Effective Recovery 2016 by BCI
2017
• Named ‘World’s Best Bank in the Emerging Markets’ by Euromoney, making
it the first bank in the Middle East and Africa to win this prestigious award
• First Egyptian bank be named ‘Best Bank in the Middle East’ by Euromoney
• Ranks first on the EGX’s sustainability index (S&P/EGX ESG) for the fourth
year in a row since 2014
• Becomes the only Egyptian bank ranked on the FTSE4Good Sustain-
ability Index
2015
• First Egyptian bank to successfully pass external quality assurance on its
Internal Audit Department
• Launches roadside assistance services in Egypt
• Generates highest FX income in 10 years among private-sector banks in Egypt
• First Egyptian bank to recognize conduct risk and establish a framework
for it, despite the lack of regulatory requirements
2018
• Named ‘World’s Best Emerging Markets Bank’ by Global Finance, the
second consecutive year in which CIB has been awarded this title by an
international institution; CIB is the first bank in Egypt and the Middle
East to win this prestigious award
• First Middle Eastern company to be analyzed in a case study conducted by
the Leadership Institute of the London Business School; CIB was selected
in recognition of its data-driven, human-centric approach to leading
transformation in the face of macroeconomic challenges
• Establishes CVentures, Egypt’s first corporate venture capital firm pri-
marily focused on investing in transformational fintech startups and
next-generation financial services platforms
• Receives ISO22301:2012 certification for Business Continuity Manage-
ment by PECB, a global provider of training, examination, audit, and
certification standards, in partnership with EGYBYTE, a leader in the
MENA market for IT service management
• Ranks first on the EGX Sustainability Index for the fifth consecutive year
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CIB InTRoDuCTIon
our
History
What
We Do
In March 2014, Actis undertook a partial realiza-
tion of its investment in CIB by selling 2.6% of its
stake on the open market, maintaining its seat on
the board. In May 2014, the private equity firm sold
its remaining 6.5% stake to several wholly-owned
subsidiaries of Fairfax Financial Holdings, making
the latter the sole strategic and largest shareholder
in CIB. Fairfax is represented on CIB’s Board of Di-
rectors (BoD) by 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) with ownership of 49% and
51%, respectively. In 1987, Chase divested its owner-
ship stake as part of a shift in its international strat-
egy. NBE acquired that stake, renaming the former
joint venture Commercial International Bank (CIB).
Over time, NBE’s ownership stake in CIB declined,
falling to 19% in 2006. That year, a consortium led
by Ripplewood Holdings acquired NBE’s remain-
ing stake. In July 2009, Actis, a Pan-African private
equity firm specializing in emerging markets, ac-
quired 50% of the Ripplewood Consortium’s stake.
In December 2009, Actis became the single largest
shareholder in CIB with a 9.09% stake after Ripple-
wood sold its remaining share of 4.7% on the open
market. The emergence of Actis as the predominant
shareholder marked a successful transition in the
Bank’s strategic partnership.
CIB is Egypt’s leading private-sector bank. It is an
award-winning institution dedicated to creating
outstanding stakeholder value and providing supe-
rior customer service solutions to a broad range of
clients. The Bank furnishes its clients with innova-
tive solutions that satisfy their banking needs and
facilitate their financial lives. The Bank’s dynamic
business model and commitment to fully integrat-
ing superior technology into its products and ser-
vices allow it to maintain its market leadership and
to offer staff an engaging work environment while
generating mounting value.
The Bank serves an expansive network of retail
customers, high-net-worth (HNW) individuals, and
enterprises and institutions that drive the Egyptian
economy. With a well-established network of 203
branches and a workforce comprising 6,759 employ-
ees, CIB provides tailored, client-centric services to
clients in the corporate, commercial, retail, wealth,
and small- and medium-size enterprise (SME) spheres
while working to deliver the most streamlined, effi-
cient banking service offering in the Egyptian market.
The Bank has one fully owned subsidiary, CVen-
tures, and two affiliates, Falcon Group and Fawry
Plus, in which it owns stakes of 32.5% and 23.5%,
respectively. CVentures was established in 2018
and is Egypt’s first corporate venture capital
firm focused primarily on investing in category-
defining companies in the field of financial
services. Falcon Group is a provider of security
services, cash-in-transit, property management,
and general and technical services. Fawry Plus
offers agent banking financial services, including
limited KYC servies, the collection of documents
needed for mobile wallet registration, prepaid and
credit card issuance, loan issuance, and account
opening, while also taking care of repaying loan
and credit card dues and other payments such as
utility, telecom, taxes, and fines.
For several years, CIB has also enjoyed the titles
of most profitable bank operating in Egypt and
the bank of choice for over 500 of Egypt’s largest
corporations. CIB was also named the World’s Best
Bank in the Emerging Markets at the Global Finance
2018 special awards ceremony, one year after it was
awarded same title from Euromoney.
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CIB InTRoDuCTIon
A Snapshot of
our Businesses
Corporate Banking and Global Customer
Relations Group
Widely recognized as Egypt’s preeminent corporate
bank, CIB strives to be one of the region’s leading
banks, serving enterprises ranging from industry-
leading corporates to medium-sized businesses.
Debt Capital Markets
Global product knowledge, local expertise, and
capital resources make CIB an Egyptian industry
leader in project finance, syndicated loans, securi-
tization, bonds, and structured finance. CIB’s proj-
ect finance and syndicated loan teams facilitate
market access for large borrowers, providing them
with world-class services at execution times that
are better than 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 (GTS)
The Bank’s Digital Banking and GTS Division man-
ages all corporate and consumer online channels
from the business side. Making CIB part of our
customers’ daily activities is the department’s
primary objective, which it works to achieve by de-
veloping a simple, trusted, and consultative digital
experience that meets customers’ needs anytime,
anywhere, and 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, maximizing return on investment.
Consumer Banking
The Consumer Banking Division continues to
grow and develop within the institution. Dedi-
cated to improving customer satisfaction and de-
livering a consistently positive experience every
time, we have different segments and offer a wide
array of consumer banking products that include:
• Private: This segment caters to the banking and
investment needs of clients with a minimum
assets under management (AUM) threshold of
EGP 20 million through a range of alternative
solutions, including: tailored banking products
and services, new lending products, investment
solutions, and other wealth-related services.
• Wealth: This segment provides numerous in-
vestment products and services to the largest
number of affluent clients in Egypt, offering
customers a unique set of products and services
and an exceptional customer experience.
• Plus: This segment caters to the needs of
medium-net-worth
individuals, providing
them with dedicated Plus Bankers, simplified
products, fast-track services, and personal-
ized service offerings.
• Core: This segment relies on a customer-
centric brand proposition and use of behavioral
segmentation to deepen relationships and im-
prove loyalty among personal banking customers.
• Personal Loans: We extend facilities to new-
to-bank (NTB) clients, self employed clients, and
those with AUMs outside CIB. We also focus on all
segments and payroll clients.
• Deposit Accounts: We offer a wide range of ac-
counts that serve all client deposit and savings
needs, which include tailored accounts for minors,
youth, and senior citizens, as well as certificates of
deposit. This is in addition to our standard range
of current, savings, and time-deposit products.
• Credit and Debit Cards: CIB offers a broad
range of credit, debit, and prepaid cards issued in
association with Visa and Mastercard.
• Insurance Products: CIB’s insurance busi-
ness provides life and insurance programs
aimed at all segments.
Business Banking
The Business Banking segment serves over 48,000
SMEs and large enterprises with revenues ranging
from EGP 1 million to over EGP 200 million.
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CIB InTRoDuCTIon
Key Financial
Highlights
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 Capitalization
(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)
FY18
Consolidated
FY17
Consolidated
FY16
Consolidated
FY15
Consolidated
FY14
Consolidated
FY13
Consolidated
FY18
FY17
FY16
FY15
FY14
FY13
FY12
FY11
FY10
FY09
FY18
Consolidated
FY17
Consolidated
FY16
Consolidated
FY15
Consolidated
FY14
Consolidated
FY13
Consolidated
FY18
FY17
FY16
FY15
FY14
FY13
FY12
FY11
FY10
FY09
7.26
5.76
4.56
3.58
3.55
2.67
2.42
2.43
3.00
2.63
Common Share
Information Per Share
Financial Measures
1.00
1.00
0.50
0.75
1.20
1.00
1.25
1.00
1.00
1.50
Cost : Income
20.33%
20.79%
21.36%
19.61%
22.84%
23.54% 20.35% 20.38% 21.26% 19.69% 22.91% 22.89% 28.01% 35.26% 33.11% 32.31%
29.26 24.43 18.44 14.39 16.31 13.46 18.94 15.03 14.59
23.75
Return on Average Common
Equity (ROAE)*****
Net Interest Margin (NII/average
interest earning assets)
33.14%
32.45%
34.24%
33.46%
31.31%
29.45% 33.13% 32.71% 34.03% 32.80% 30.25% 24.77% 24.18% 22.23% 30.46% 31.18%
6.43% 4.97% 5.47% 5.74% 5.41% 5.36% 4.74% 3.71% 3.62% 3.81%
96.5
88.8
73.6
47.4
51.3
45.4
39.8
47.4 79.49
59.7
Return on Average Assets (ROAA)
3.03%
2.69%
2.71%
2.95%
2.94%
2.93% 3.02% 2.72% 2.70% 2.90% 2.87% 2.54% 2.47% 2.20% 3.11% 2.97%
67.0
71.1
30.8
28.9
32.6
27.4
21.1
18.5 33.75
29.5
Regular Workforce Headcount
6,759
6,551
6,714
6,332
5,697
5,490
6,759
6,551
6,422
5,983
5,403
5,193
4,867
4,517
4,360
4,162
74.1
77.4
76.4
38.1
49.2
32.6
34.6
18.7
47.4
54.68
1166.8 1161.8 1153.9 1147.1 908.2 900.2 597.2 593.5 590.1
292.5
86,439 89,865 88,155 43,692 44,673 29,330 20,646 11,098 27,973 15,994
10.2
13.4
16.8
10.6
13.9
12.2
14.3
7.7
15.8
20.8
1.35% 1.29% 0.65% 1.97% 2.44% 3.07% 3.62% 5.35% 2.11% 2.74%
15.3% 15.4% 9.7% 18.5% 29.9% 34.4% 33.9% 33.9% 27.6% 24.6%
2.53
3.17
4.14
2.65
3.02
2.42
1.83
1.24
3.25
2.30
Net Operating Income****
20,379
14,890
11,315
10,189
7,741
6,700 20,351 15,192 11,370 10,165 7,717 6,206 5,108 3,837 3,727
3,173
Provision for Credit
Losses - Specific
Provision for Credit
Losses - General
3,076
1,742
893
1,682
589
916 3,076 1,742
893 1,682
589
916
610
321
Total Provisions
3,076
1,742
893
1,682
589
916 3,076 1,742
893 1,682
589
916
610
321
6
6
9
9
Non Interest Expense
4,224
3,119
2,433
2,025
1,705
1,608 4,223 3,119 2,433 2,028 1,705 1,450 1,445 1,337 1,188
1,041
Net Profits
9,582
7,516
6,009
4,729
3,741
3,006 9,556 7,550 5,951 4,641 3,648 2,615 2,203 1,749 2,141
1,784
Balance Sheet and Off Balance
Sheet Information (EGP millions)
Cash Resources and Securities
(Non. Governmental)
69,068
63,684
77,523
34,808
19,328
16,413 69,030 63,673 73,035 34,097 19,430 16,646 16,764 19,821 16,854
16,125
Net Loans and Acceptances
106,377
88,428
85,384
56,836
48,804
41,866 106,377 88,428 86,152 57,211 49,398 41,970 41,877 41,065 35,175
27,443
Assets
Deposits
342,461
294,782
267,544
179,500
143,813
113,752 342,423 294,771 263,852 179,193 143,647 113,752 94,405 85,628 75,093
64,063
285,297
250,723
231,741
155,234
121,975
96,846 285,340 250,767 231,965 155,370 122,245 96,940 78,835 71,574 63,480
54,843
Common Shareholders Equity
34,228
28,439
21,374
16,535
14,754
11,960 34,147 28,384 21,276 16,512 14,816 12,115 11,311
8,921
8,609
6,946
Average Assets
318,622
281,163
223,522
161,657
128,783
103,854 318,597 279,312 221,523 161,420 128,700 104,079 90,017 80,361 69,578
60,595
Average Interest Earning Assets
290,869
257,931
203,053
146,033
117,031
94,749 290,869 258,315 203,625 145,835 117,133 94,605 79,834 70,549 61,624
53,431
Average Common Shareholders
Equity
Balance Sheet Quality Measures
31,334
24,907
18,955
15,645
13,357
11,362 31,265 24,830 18,894 15,664 13,465 11,713 10,116
8,765
7,777
6,288
Equity to Risk-Weighted Assets******
16.93%
15.59%
13.34%
15.76%
15.77%
15.28% 16.89% 15.56% 13.28% 15.74% 15.84% 15.50% 15.69% 14.49% 15.85% 15.34%
Risk-Weighted Assets (EGP billions)
186
169
150
96
84
70
186
169
150
96
84
70
65
55
49
41
Tier 1 Capital Ratio******
16.16%
14.93%
12.90%
15.01%
15.70%
15.23% 16.16% 14.93% 12.90% 15.01% 15.70% 15.23% 14.33% 14.15% 15.66% 15.28%
Adjusted Capital Adequacy
Ratio******
19.09%
18.03%
13.97%
16.06%
16.77%
16.32% 19.09% 18.03% 13.97% 16.06% 16.77% 16.32% 15.71% 15.40% 16.92% 16.53%
* Based on net profit available for distribution (after deducting staff profit share and board bonus) and unadjusted for stock dividends
** 2018 DPS after taking into account the share distributions of one share for every four shares
*** Unadjusted to stock dividends
**** 2016, 2015, and 2014 excluded CI capital profit (discontinued operation)
***** Total equity after profit appropriation
****** After profit appropriation, from 2012 to 2018 as per Basel II regulations
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17
CIB InTRoDuCTIon
Strategy
40+
Years of innovative services
CIB’s strength lies in a flexible strategy that allows it
to constantly adapt to unremitting changes in market
dynamics, creating value for stakeholders each step of
the way. The BoD and executive management share a
philosophy of placing clients at the heart of every de-
cision and the same mission of achieving sustainable
financial and non-financial growth. To accomplish
this, we rely on our employees and are determined to
constantly develop their skills and provide them with
the latest innovative technology.
Our Vision
To uphold CIB’s distinct reputation as a leading and
trusted financial institution in Egypt, respected for its
people, strong core values, performance, and commit-
ment to inclusive, responsible, and sustainable growth.
Our Mission
To create outstanding stakeholder value by pro-
viding best-in-class financial solutions to the
individuals and enterprises that drive Egypt’s
economy. Through our innovative product offer-
ings, superior customer service, staff development
strategies, and commitment to sustainability, we
will realize our ambitions and help shape the fu-
ture of banking in Egypt for years to come.
Our Objective
To grow and help others grow.
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 our convictions and accept respon-
sibility for our 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
Client Focus
• Our clients are at the heart of our activities, and
their satisfaction is our ultimate objective
• Our success is dependent upon our ability to
provide products and services that help our
clients achieve their goals
• We partner with our clients and work together as a
single team with success as our primary objective
Innovation
• CIB has been a pioneer in the financial services
industry since inception 40 years ago as the
first joint venture bank in Egypt; we believe in-
novation is a core competitive advantage and
promote it accordingly
• We seek to lead Egypt’s financial services indus-
try into the future, with innovation being key to
serving the millions of Egyptians who remain
unbanked or underserved
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.
Hard Work
• Our work is governed by discipline and perse-
verance 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 for their
future goals and objectives
Teamwork
• We collaborate, listen, and share information
openly within the CIB family to enhance every
staff member’s knowledge base and skill set
• Each member of our staff is an ambassador for
CIB’s corporate brand and image
• We value and respect each other’s cultural
backgrounds and unique perspectives
Respect for the Individual
• We respect all individuals, whether employees,
clients, shareholders, or community members
• We treat each other with dignity and respect and
take the time to respond to questions and concerns
• We firmly believe each individual should have
the space to make suggestions and offer con-
structive criticism
• CIB is a meritocracy, where all employees are
privy to equal development opportunities based
only on merit and accomplishments
Decorum
• CIB holds 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
Value Creation Model
Value creation is and has always been one of the
main pillars of the Bank’s strategy and focus. CIB
works diligently to create value for its sharehold-
ers, customers, employees, and society. To do this,
the Bank efficiently utilizes its key resources to
best serve its strategic priorities, taking into ac-
count all the macroeconomic driving forces that
prevail. This results in creating both financial and
non-financial value for CIB’s stakeholders.
CIB’s strength lies in a
flexible strategy that allows
it to constantly adapt to
unremitting changes in
market dynamics, creating
value for stakeholders each
step of the way.
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19
CIB InTRoDuCTIon >> Strategy
Value Creation Model
Strategic Priorities
Customer Centricity
• Offer need-based bundled value
propositions including digital
solutions through data analytics
• Quality of service initiatives to
enhance customer experience
Financial
Performance
• Asset quality
• Profitability
• Loan growth
organizational
Development and
Sustainability
• Performance-driven
culture
• Social and
environmental
management system
• Human capital
development
operational Efficiency
• Centralization of operational processes
with focus on automation through STP
• Business continuity, cybersecurity and
resilience management
Key Stakeholders
Clients
Shareholders and Investors
Employees
Society
Resources (Input)
Value Created (Outcome)
Financial Capital
Strong financial capital is
always re-invested in the Bank’s
activities
• EGP 9.58 billion in net income
• EGP 20.38 billion total revenues
• EGP 34.2 billion net worth
• EGP 342 billion total assets
• EGP 285 billion total deposits
• EGP 86.4 billion market
capitalization
• 33.1% ROAE
• 4.06% NPLs
• 20.3% cost/income
Financial Performance
• Ranked #1 bank among all Egyptian
private-sector banks in terms of
revenues, net worth, total assets, and
deposits
• The largest market capitalization in
the Egyptian banking sector
• One of the highest ROEs, compared
to a market average of 21.5%
• One of the lowest efficiency ratios
among Egyptian private-sector banks
Human Capital
CIB’s in-depth expertise in differ-
ent industries is mainly rooted
in our skilled, specialized and
dedicated staff
• 6,759 total workforce as of year-end
• 291,466 training hours
• 92% of employees completed the fourth
Employee Effectiveness Survey (EES)
• 63% engagement level
• 52% enablement level
Human Capital
• Highly skilled staff capable of sus-
taining CIB’s path of success and
maintaining the Bank’s leading posi-
tion within the market
Technological Infrastructure
The Bank continuously invests
in its IT systems and ensure they
are up-to-date to make certain
that the business runs smoothly
• CIB’s systems availability exceeded 99% Technological Infrastructure
• Stable, agile, and safe systems that
provide seamless services to clients
through CIB’s swift adoption of the
latest technology as it arises
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21
CIB InTRoDuCTIon >> Strategy
Resources (Input)
Value Created (Outcome)
Resources (Input)
Value Created (Outcome)
Innovation
Innovation is chiseled in the
Bank’s DNA, and CIB is at
the forefront of the market
in offering simple, fast, and
contextual experiences to its
customers, with a special focus
on digitalization
Innovation
• Expanding in digital banking plat-
forms through availing more servic-
es on digital portals to our clients.
CIB offers bill payment through
IVR; a service offered by no other
bank in the market. Digital banking
achieved total cost synergy of EGP
1.5 billion, a 156% y-o-y increase
• #1 in mobile wallet activity in Egypt
• #1 in mobile banking penetration
in Egypt
• 61% y-o-y increase in number of new
mobile banking downloads, and 49% y-
o-y increase in number of transactions
• 95% y-o-y increase in number of new
internet banking clients, and 26% y-o-
y increase in number of transactions
• 50% y-o-y increase in number of new
smart wallet users, and 50% y-o-y
increase in number of transactions
• Largest ATM network among
private banks, at 917 ATMs
Brand Recognition
CIB’s core values enabled the
Bank to preserve and strengthen
its brand positioning in the
financial services market in
Egypt as the largest private bank
• #38 on Forbes Middle East “Top 100
Listed Companies in the Arab World”,
and ranked #1 ahead of the other three
Egyptian companies on the list
Brand Recognition
• CIB was named “World’s Best Emerg-
ing Markets Bank” by Global Finance
for 2018 for the second consecutive
year after being named “World’s Best
Bank in Emerging Markets” by Euro-
money in 2017. CIB is the first bank
in the Middle East and Africa to win
this prestigious award
Client Relationships
• CIB listens attentively to its clients and
continuously incorporates customer
feedback into its financial offering as
part of the Bank’s customer-centricity
strategy. As a result, CIB’s Net Promoter
Score (NPS) and Customer Satisfaction
(CSAT) score improved year on year
Sustainability
CIB is managing its
environmental footprint by
applying the highest standards
related to its energy and water
consumption, carbon footprint,
and waste management
Client Relationships
CIB has long-standing
relationships with clients that are
built on trust
• 19% y-o-y increase in customer-base,
reaching more than 1.3 million cli-
ents in 2018
• 6% y-o-y increase in total new to bank
clients in 2018
• More than 250 MNCs and interna-
tional Companies are CIB clients,
with 32 being Fortune 500 companies
• CSAT:
- Wealth 8.4 in 2018 (up from 8.3 in
2017)
- Plus 8.3 in 2018 (up from 8.2 in
2017)
- Corporate 8.1 in 2018 (up from 7.5
in 2017)
• NPS:
- Wealth 47 (vs 20.3 NPS ME
Benchmark)
- Plus 43 (vs 20.3 NPS ME Bench-
mark)
- Corporate 43 (vs 37.9 NPS ME
Benchmark)
• 2.53% decline in electricity con-
Sustainability
sumption in 90 mega buildings
• Saved 103 million liters of water;
40% reduction in water consumption
• Saved 737 A4 paper boxes
• Two head offices are awarded the high-
est environmental GPRS Green Level
• Ranked #1 on the EGX Sustainability In-
dex in 2018 for the fifth consecutive year
• CIB became the first Arab and Afri-
can company to be listed on the 2019
Bloomberg Gender Equality Index
(GEI) — the world’s only comprehen-
sive investment-quality data source
on gender equality
• Aligning our activities with the Sus-
tainable Development Goals (SDGs),
Egypt’s Vision 2030, and Paris Agree-
ment on Climate Change
• We have an e-waste management
initiative to safely dispose of mobiles,
computers, and others
• Biodegradable plastic bags are now
used across CIB
• Our annual Sustainability Report is in
line with the Global Reporting Initia-
tive (GRI) Core Standards, which pro-
vide the most comprehensive frame-
work for sustainability reporting
• CIB is one of only two banks in
Egypt and the MENA region to par-
ticipate in the development of the
UNEP-FI’s Principles for Responsi-
ble Banking, the first set of guiding
principles focusing specifically on
the banking industry
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23
CIB InTRoDuCTIon
CIB’s
Stock
93%
The highest freefloat
on the EGX
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 prospects is 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 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 the NYSE in the form
of 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 2018, CIB increased its ADR program by an
additional 450 million ADRs to reach 500 mil-
lion. By the end 2018, CIB’s total issued shares
were 1,166,832,640, the Bank’s GDR outstanding
position reached 358,139,055 shares, representing
30.70% of issued shares, and its ADR outstanding
position recorded 16,946,344 shares, representing
1.45% of issued shares.
CIB has the highest weight on the EGX30, account-
ing for 34.19% of the index, and has the highest free
float at 93.4%. The Bank’s stock is one of Egypt’s
most liquid, and it is the most valuable financial
institution with a market capitalization of EGP 86.4
billion as of December 2018.
As of December 2018, CIB’s institutional shareholder
structure was broken down by region as follows:
North America
Africa
GCC
UK & Ireland
Continental Europe
Rest of the World
57.71%
13.05%
9.92%
7.76%
6.78%
4.78%
CIB works diligently to increase value for its
stakeholders. One way it does so is through the
Bank’s active Investor Relations Division, which
maintains a proactive investor relations program
to keep shareholders and investors abreast of de-
velopments that could have had an impact on its
performance. The team and senior management
invest significant time in one-on-one meetings,
roadshows, investor conferences, and conference
calls. The team spares no effort in providing the
investment community with a consistent stream of
transparent disclosures while simultaneously en-
suring analysts have the information they need to
maintain balanced coverage of the Bank’s shares.
During 2018, the team along with senior management
took part in nine local and international investor
conferences held in the UK, US, Africa, and the Gulf,
in addition to seven roadshows and one business
trip. Alongside several in-house meetings, the team
conducted a total of 255 one-on-one and group meet-
ings throughout the year and met with 491 local and
international investment funds and research analysts.
CIB hosted several conference calls in 2018, bringing
its senior management together with the investor
community.
Disclosures, including regular updates and re-
leases, were periodically made available on CIB’s
Investor Relations website as well as the EGX, LSE,
and OTCQX portals in a timely manner that en-
sures fair access to information for investors from
around the world, allowing them to make informed
investment decisions.
As a result of the team’s conscious efforts to fur-
ther enhance its Investor Relations program, CIB’s
Head of Investor Relations received a nod as the
“Best Investor Relations Professional – Egypt” in a
2018 study conducted by the Middle East Investor
Relations Association (MEIRA) in partnership with
Extel. This is the fifth 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
(ADR Level 1 program)
SYMBOL: CIBEY
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25
CIB InTRoDuCTIon >> CIB’s Stock
Key Indicators
10 EGP
Par Value
1:1
GDR Convertibility
86.4 EGP
Largest Market Cap on EGX30
34.19%
Highest Weight on EGX30
7.26 EGP
Earnings per Share
Equity Analysts’ Ratings
CIB is widely covered by leading research houses
both locally and internationally. In 2018, 16 insti-
tutions regularly issued research reports on CIB,
with 62% of analyst recommendation being ‘Buy’,
31% ‘Hold”, and only 6% ‘Sell’.
COMI started the year with an open price of EGP
76.97 and ended it at EGP 74.08, with -7.14% in
VWAP (y-o-y) mainly on the back of global pres-
sures and negative sentiment toward emerging
markets. During 2018, CIB’s price reached a peak
of EGP 96.50 and a valley of EGP 67.00. The aver-
age VWAP price in 2018 was EGP 82.19, with an
average volume of 1,037,108, and an average mar-
ket capitalization of EGP 96 billion.
Stock Performance in 2018
COMI
EGX30 Index
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
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27
CIB InTRoDuCTIon
A note From
our Chairman
In Egypt and abroad, the pundits have framed the
defining questions of 2019 in terms that are both
short term and binary: Global growth is slowing —
will it tip into recession? Will Egypt continue to at-
tract foreign portfolio investors to its debt issuances
and stock market? Is this the year that domestic
interest rates start to come down? Will we see sig-
nificant foreign direct investment? Who will move
first: foreign or domestic investors?
Like every bank and publicly traded company in
the country, CIB has a fully vested interest in the
answers to these questions. But our future as an in-
stitution hinges not on those, but on more nuanced
answers to much more long-term questions — ques-
tions that can, for CIB, be boiled down to just two:
• Can we help reinvent banking in Egypt for the
digital age?
• Can we help lead a conversation on the reinven-
tion of capitalism?
Our success not just as an institution, but also as a
nation, hinges on the ability to answer these ques-
tions in the affirmative. And as longtime share-
holders know, we have been working on answers
both inside CIB branches, offices, and dealing
rooms since 2011, when we placed two things at
the center of our strategy: First, innovation, and
second, the imperative to improve the communi-
ties in which we do business.
Reinventing banking in Egypt for the digital age
has been central to our strategy since political
change swept our nation in 2011. It is a subject
about which our industry and policy makers alike
must do more. Banks are slowly awaking to the
idea that brick-and-mortar branches are not the
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CIB InTRoDuCTIon >> A Note From Our Chairman
only touchpoints that matter. But they are not ask-
ing how they can disrupt themselves before they
are disrupted by third parties. In parallel, policy
makers need to expand the range of questions they
are asking of the industry: The place of paper in an
increasingly paperless society is only the first of
many issues that must be addressed, which range
from the rise of cryptocurrencies to the role of
sandboxes in the trial of new technologies.
Our government has signalled clearly that it is go-
ing cashless — which will make it fundamentally
paperless. The notion of physical signatures and of
paper document storage are things of the past. They
are among the many obstacles to digital inclusion —
which, I argue, is core to financial inclusion.
In calling for wider financial inclusion, Egypt is
fundamentally calling for the democratization of
financial services. But as financial services increas-
ingly go online, this means that obstacles to digital
inclusion are the same barriers that prevent fuller
financial inclusion. Digital financial services — the
same services that will empower people to better
their lives — cannot be provided to consumers if the
very consumers do not have access to the internet.
At its core, financial inclusion means mobilizing
money supply and savings to fund growth and de-
velopment — whether that’s of micro-businesses
or small companies, of national champions or
state-driven mega-projects. As an industry and as
a society, this means taking stock of all challenges
(including regulatory ones) that stand in the way
of digital inclusion and start breaking them down.
That’s why, as Egypt takes over the presidency of the
African Union this year, we are working with the
government to make a Declaration on Financial In-
clusion a cornerstone of development policy not just
for Egypt, but for our continent. Broadband internet
that is universally and affordably accessible by even
the most humble of low-income earners is what will
make financial inclusion possible.
In parallel, a debate over the future of capitalism
in Egypt is essential if we are going to create tan-
gible value in the communities in which we live and
serve. This debate is the next natural step in a shift
that has seen companies move from philanthropy
to corporate social responsibility, then onward to
Environmental and Social Governance (ESG) ap-
proaches and, today, to the new imperative to create
shared value (CSV).
In times gone by, a philanthropic approach to creat-
ing value for a low-income earner was to donate to a
charity that provides a benefit to her — it was about
using corporate wealth to try to drive a measure of
social change. A CSV-led approach would, as CEO
Magazine wrote in 2016, put that donation in the
context of a program that ensured benefits flowed
back to the donor in the form of “improved morale,
increased staff retention, status as an employer of
choice [or] attracting new business.”
However, Porter and Kramer, the Harvard pro-
fessors who introduced the business concept in
2011, take it further — much closer to a definition
we have used internally since the events of 2011
here in Egypt. They define CSV as a core business
strategy, policies, and operating practices that
enhance the competitiveness of a company while
simultaneously advancing the economic and
social conditions in the communities in which it
operates. This means that our success and social
progress are interdependent.
In the case of a microenterprise owner, it isn’t just
about banking her. It’s about providing her with the
tools today that will help her grow her business to-
morrow. As she grows and creates jobs, she becomes
a driver not just of our business growth, but of the
economic growth of our nation.
These are the powerful ideas we know will guide our
future, and they are feeding directly into our five-
year plan. It will be a five-year plan that highlights
ways to put technology at the heart of what we do
and thereby empower our people to make the best
possible business decisions. And it’s about ways we
create shared value for our employees, our clients,
our shareholders, and the wider economy.
Hisham Ezz Al-Arab
Chairman and Managing Director
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CIB InTRoDuCTIon
A note From
our CEo
People are the cornerstone on which our strategy is
built — brick by brick, byte by byte, transaction by
transaction, day in and day out.
At tellers’ counters and in our operation centres, in
conversations with large corporate clients, and by
sitting down with fresh graduates just entering the
workforce, our people are helping Egyptians chart
their financial futures. As they do so, every one of
them plays an essential role in delivering a multi-
track strategy that creates value for all stakehold-
ers, from our clients to our shareholders and the
communities in which we do business — and for
the staff themselves, the vast majority of whom are
shareholders in this institution.
This is the cornerstone of our success: Banking is
fundamentally a people business, and our talented
employees are the people who are building the bank
of the future and leading the conversation about our
industry’s role in building a stronger nation. From
our management committee to the most junior of
support staff, these people delivered on an aggres-
sive strategy that generated outstanding opera-
tional results — results that translated directly into
outperformance in our financials in 2018.
Our staff of more than 6,750 people delivered these
results because we have consistently provided them
with the training, motivation, compensation, and
sense of ownership they need to give their all every
day. In doing so, they know they are not alone: Our
management team practices an open-door policy at
all levels, and we have ramped up our effort in the
past year to broaden lines of communication and to
hold small group meetings between regional staff
and senior management nationwide.
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CIB InTRoDuCTIon >> A Note From Our CEO
In the year ahead, we will redouble our effort
to reach our clients — current and potential —
through the channels that matter, from the elec-
tronic to the physical. Yes, the physical: Digital
banks are the wave of the future in Egypt, as they
are in developed markets, and CIB has clearly and
consistently made significant headway in build-
ing out some of the most innovative digital bank-
ing frameworks the market has seen in recent
years. But as experience as far away as Canada
has shown, branches remain important in draw-
ing new clients into the banking system, whether
they are business owners or new entrants to the
workforce, employees or retirees.
And this is the very lynchpin of our strategy to
champion financial inclusion in Egypt. From the
business press to the halls of power, financial inclu-
sion is the topic of the day — as it should be. It has
also been central to our mission for years as we have
sought to bring employers and their people into the
banking system. By combining the strength of our
long-standing branch network and digital solutions
that bring us ever closer to a cashless society, bring-
ing in as many people into the banking fold as pos-
sible becomes not just a mission but a reality. That’s
why our people work tirelessly to make it easier for
our clients to bank with us, be that through tellers at
brick-and-mortar branches or strategists develop-
ing our digital channels.
In terms of how we’ve accomplished this on the
ground in 2018, our consumer banking arm deliv-
ered another very strong year, and we see substan-
tial room for continued growth in 2019 on both the
asset and liabilities side. But we are particularly
excited about the outlook in 2019 and 2020 for our
institutional banking arm — the traditional growth
engine of our bank. This outlook is underpinned by
a cautiously optimistic reading of the macroeco-
nomic climate in Egypt today.
remittances, the Suez Canal, and the oil and gas
industry — are all on the upswing. The state con-
tinues to have access to foreign debt markets, and
global institutional investors returned in early
2019 to Egyptian local-currency debt. As a nation,
our foreign exchange position is strong, and the
volatility we have so far seen in 2019 in the official
exchange rate is fundamentally healthy.
In parallel, inflation is edging down toward the
single digits and it is now clear that consumer
purchasing power is coming back: Egyptians are,
by and large, shaking off the effects of the devalu-
ation. While this is obviously good news for our
consumer banking arm, it is better on the insti-
tutional side of the business: Capacity utilization
for our corporate clients is rising in lock-step with
the return of consumer sentiment.
These utilization rates set businesses on a straight-
line path to a single destination: Borrowing not to
finance working capital, but to fund capital expen-
diture on expansion. Borrowing by corporate Egypt
will send all the right signals to foreign investors who
have (outside of the petroleum industry) largely sat
out the last two years. It will signal that local busi-
nesses have confidence in the domestic economy.
All of us at CIB look forward to the real business of
banking: The prudent management of risk as we
extend capital to businesses and people who will
use it to drive growth in our economy. It is why we
all became bankers. It is why our five-year strat-
egy is what it is. It is why we are actively leading
the conversation about the future of our industry.
And it is what makes us so passionate about leav-
ing the communities with which we do business
better than we found them.
The government of Egypt has stayed the course
through an aggressive reform process that is
leaving us on a much stronger footing. Our four
key sources of hard currency inflows — tourism,
Hussein Abaza
Chief Executive Officer
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35
CIB InTRoDuCTIon
Board of
Directors’ Report
Introduction
Much has changed since last year’s BoD report;
some developments were predicted, while others
were completely unexpected. On balance, the macro
and micro situations are better than they were at
this time last year.
Macroeconomic Environment
Inflows of foreign currency into Egypt’s economy
have risen significantly year-on-year (y-o-y), with
growth coming from a number of sources. Remit-
tances from Egyptians working abroad soared by 21%
y-o-y to record USD 26 billion in FY2018. Tourism is
flourishing once more, with tourist arrivals up by 48%
and tourism receipts growing at a healthy 124%. As of
FY2018, revenues from the Suez Canal had grown by
15% y-o-y. As the Zohr gas field ramps up production,
Egypt has taken another step toward self-sufficiency
in natural gas. The last shipment of imported lique-
fied natural gas (LNG) was received in September
2018. By the end of 2019, Egypt should be making an-
nual savings of USD 4-6 billion (or 32%-48%) on its pe-
troleum import bill, which recorded USD 12.5 billion
for FY2018. Egypt was named the largest recipient
of foreign direct investment (FDI) in Africa in 2018
in a recent report by the United Nations Conference
on Trade and Development (UNCTAD), with invest-
ments made in the real estate, food processing, oil
and gas exploration, and renewable energy sectors.
Egypt’s FDIs in 2018 totaled USD 7.7 billion.
These positive developments are reflected in Egypt’s
current account: the deficit fell to USD 6 billion for
FY2017/18 from USD 14 billion for FY2016/17, a de-
cline of 59%. In FY2017/18 (which began in July 2017
and ended June 2018), Egypt achieved a primary
budget surplus of 0.1% of GDP for the first time in
over a decade. GDP growth accelerated to 5.2% for
the year ended after rising for six consecutive quar-
ters. FCY reserves at the Central Bank of Egypt
(CBE) continued to increase on a monthly basis in
2018, recording their highest-ever level at the end of
November at USD 44.5 billion, up from USD 36.7 bil-
lion a year earlier, before declining by USD 2 billion
to USD 42.55 billion in December 2018.
The government pressed ahead with an economic
reform program aimed at restoring macroeconomic
stability and tackling long-standing impediments
to growth. Further cuts were made to fuel and elec-
tricity subsidies, which reduced Egypt’s subsidy bill
to 5% of GDP for 2017/18, down from 6% for 2016/17.
In 2018, Egypt received USD 2 billion under the
IMF’s three-year USD 12 billion extended fund facil-
ity (EFF) agreement signed back in November 2016.
In light of the progress made by the government,
Moody’s Investors Service rating agency changed
Egypt’s Long-Term Issuer Ratings Outlook to Posi-
tive from Stable and affirmed its B3 issuer ratings. In
addition, Fitch Ratings affirmed Egypt’s Long-Term
Foreign-Currency Issuer Default Rating (IDR) at ‘B’
with a Positive Outlook.
Egypt began attracting robust investor demand for
local currency (LCY) sovereign debt, with foreign
inflows into T-bills recording a peak of USD 23 bil-
lion in March. However, due to a crisis in emerging
markets beginning in April 2018, foreign investment
in Egyptian T-bills fell by c. USD 8 billion between
April and September. Nevertheless, these outflows
did not result in further currency depreciation, with
foreign outflows sourced mostly from the interbank
market, indicating ample FCY liquidity.
listed on the EGX) due to improved macroeconomic
indicators, particularly FCY reserves and liquidity
in the banking sector.
Inflation eased during the year, recording 12% in
December 2018, down from 15.7% in November
2018, and a significant y-o-y drop down from
21.9% in December 2017. Consumer purchasing
power strengthened noticeably throughout the
year. 2018 saw an uptick in lending to companies
for working capital, as firms sought to meet in-
creased demand. Companies continued to post-
pone capital expenditure (CAPEX), however, as
the interest rate environment remained elevated
in 2018. Although the CBE cut interest rates by 100
basis points (bps) in February and by a further 100
bps in March, the 700 bps hike implemented since
the currency floatation in 2016 means long-term
borrowing remains expensive for many firms.
Egypt’s banking sector remained the lifeline of
the economy in 2018. The year witnessed steady
improvement in asset quality, with aggregate non-
performing loans (NPLs) as a percentage of gross
loans standing at 4.4% in September 2018, down
from 4.9% in FY2017. NPLs were almost fully covered
by provisions as of September, with 98% of such as-
sets allotted for. Banks were also well capitalized,
with reported system-wide capital adequacy ratio
(CAR) standing at 16% in September 2018, comfort-
ably above the regulatory requirement of 11.9%.
In December 2018, the CBE suspended the FCY repa-
triation mechanism for new portfolio investments
(including LCY Egyptian T-bills, T-bonds, and stocks
In November, the Cabinet approved amendments to
laws on income tax that would modify the treatment
of sovereign portfolios held by banks and corpora-
tions. The Ministry of Finance held meetings with
the Federation of Egyptian Banks (FEB) to discuss
the proposal and suggested methods for calculating
the new tax, the final formula for which has yet to be
announced by the ministry.
The EGX was negatively affected by global forces
coming to the fore in 2018, declining 13.2% to
end December 2018 at 13,035.77 points. In light
of this, the government postponed the planned
privatization of 23 state-owned companies until
conditions improve. Four IPOs took place in 2018,
raising a total of EGP 5.2 billion and representing
an increase of 25% over 2017.
In short, Egypt’s economic recovery has continued
to pick up steam despite persisting challenges. The
market offers ample opportunities, which CIB’s
executive management and employees are working
diligently to turn to the Bank’s advantage.
CIB’s Strategy
CIB’s strength lies in a flexible strategy that allows
it to adapt to the unremitting changes in market
dynamics, creating value for stakeholders at each
step. The BoD and executive management share the
same philosophy of placing clients at the heart of
every decision and achieving sustainable financial
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CIB InTRoDuCTIon >> Board of Directors’ Report
EGP BN
86
Market capitalization
as of 2018
and non-financial growth. To accomplish this, we
rely on the dedication of our employees, whom we
are determined to help develop, while providing
them with the latest innovative technology.
the minimum regulatory requirement. The buffer
is sufficient to accommodate any increase in capi-
tal requirements in 2019 and will preempt any un-
anticipated changes resulting from macro shifts.
Relying on these time-tested values, CIB further con-
solidated its leading position in the Egyptian market
during 2018, assisted by a three-pronged strategy of:
Dynamic Balance Sheet Management
Responding to the high interest rate environment
and its impact on long-term borrowing, CIB con-
tinued to re-engineer its balance sheet in 2018 with
the goal of preserving earnings. The Bank adopted
a deposit-gathering strategy aimed at reshaping its
funding mix. It attracted 9% of all new deposits in
the banking system until October 2018 (according
to the most recent available information by the
CBE at the time of print), and managed to grow
its current account and savings account (CASA)
deposits to 56% of total deposits by the end of 2018.
The Bank maintained resilient asset quality in 2018
through its conservative risk-management strategy,
while booking provisions adequate to mitigate any
potential risks. Provisions for 2018 amounted to EGP
3.1 billion, bringing the loan-loss provision balance
to EGP 13 billion. Of this, EGP 1.82 billion pertains
to the amount transferred from unearned interest
to interest income and was fully provisioned for.
NPLs represented 4.06% of the gross loan portfolio,
cushioned by a solid 269% coverage ratio.
The Bank remains comfortably covered in terms
of capital adequacy, with year-end CAR recording
19.09% (after profit appropriation) — well above
Return on average equity (ROAE) hit 33.1% in 2018
(after profit appropriation, based on the suggested
profit appropriation schedule), marking the fifth
consecutive year CIB has delivered an ROAE of
above 30%. At 20.3%, CIB enjoys one of the lowest
cost-to-income ratios among private-sector banks,
guided by management’s effort to further enhance
CIB’s returns through efficient cost controls.
Investing in Technology
During 2018, CIB continued to upgrade its infra-
structure resiliency, optimize its IT storage, and
build the platforms required to maintain the Bank’s
position in the market.
This year, CIB reaped the benefits of its 2015 move
to introduce the concept of big data to the Egyptian
banking industry. With the necessary platforms in
place and skillful people available to analyze the
data, the Bank is ready to further solidify its lead-
ership position through the development of more
customer-centric solutions.
During the year, CIB’s Analytics and Data Man-
agement (ADM) Department focused on support-
ing other departments with actionable analytical
findings that augment decision-making. It also
continued to optimize operational processes, de-
veloping solutions to reduce costs and processing
times, while developing new products better able
to fulfill customer needs.
In 2018, the department implemented the follow-
ing projects:
• Distributed Ledger Technology (DLT): CIB
was one of the Egyptian markets’ first adopt-
ers of DLT, joining the Know Your Customer
(KYC) project on R3’s Corda blockchain in
2017. This year, the team focused on testing
different use cases for potential development
into live projects and built a local blockchain
network for banks and different financial
services providers.
• Segmentation: The Bank revamped its balance-
based customer segmentation, developing a
fully customized and data-driven behavioral
segmentation system that will accelerate CIB’s
transformation into a customer- rather than
product-centric institution.
• Digital Lending Program (DLP): ADM
launched a program to help CIB penetrate
the vast market of unbanked credit seekers
based on their history, such as Careem cap-
tains. The program could be replicated in
the future in line with CIB’s commitment to
foster financial inclusion in Egypt.
• Anomaly-detection model: In cooperation
with the Compliance Department, the ADM
team developed a model to minimize fraud
by identifying, monitoring, and controlling
fraudulent customer behavior.
• Early warning system (EWS): Working with the
Business Banking team, ADM developed a set of
guided processes that provide early identifica-
tion of risks posed to business and corporate
customers. The system’s function is to help the
Bank proactively manage its loan portfolio by
reducing unsecured lending risks.
CIB Navigator: In 2018, ADM launched a tool
that grants CIB employees access to dashboards,
reports, and portals that help expedite decision-
making. Integration of the tool into the operations
of different business lines will incentivize relation-
ship managers to persuade customers to switch to
available digital portals. This year, the migration
of a large volume of transactions from traditional
channels to digital ones yielded cost synergies in
excess of EGP 200 million.
Technological advancement is spurring a broad
transformation in the global banking industry.
Banking transactions no
longer require bank
branches only, but rather the internet and smart-
phones. Embracing such change, CIB has been
building its digital banking platforms over the years
and now provides its customers the convenience of
instant, seamless banking at any time and any place.
In 2018, CIB formulated its digital business plan
with the goal of integrating the Bank further into
its customers’ daily activities. 2018 saw the Bank
upgrade several of its digital platforms, including
ATMs, online banking, and its call center, further
enhancing the customer experience and improving
the efficiency of its services. CIB’s Interactive Voice
Response (IVR) service is the only one of its kind in
the Egyptian market that allows governmental and
non-governmental bill payment and other exclu-
sive solutions such as credit card settlement, while
its network of ATMs is the largest of any private
Egyptian bank. At 18%, CIB ranks first in terms of
activity rate for Egyptian mobile wallets. In 2018,
CIB’s online banking activity hit a record 61.4% —
fruits of the Bank’s continuous digital investments.
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CIB believes that financial inclusion is about
more than just extending financial services to
the unbanked; it’s about improving people’s lives.
Positively contributing to the Egyptian economy’s
long-term growth and sustainable development is
an objective that rates high on CIB’s agenda, directly
aligning with CBE efforts to promote financial
inclusion. In line with its firm commitment to help
develop Egypt’s financial sector and extend the lat-
est innovative financial offerings to customers, CIB
launched CVentures in 2018, Egypt’s first fintech-
focused corporate venture capital firm. CVentures
will invest in transformational fintech startups and
next-generation financial service platforms. Lever-
aging the firm’s active exposure to international
technology hubs and startup ecosystems, CIB ex-
pects CVentures to be an ideal addition to its slate
of innovative products and services.
More on the fintech front, 2018 saw CIB intensify
its fintech engagement by catering to the needs of
fintech startups, and thus, helping the Bank build
strategic alliances that enhance its financial inclu-
sion objectives. The Bank’s activities aim to create
awareness on the opportunities presented by this
new segment and encourage entrepreneurs to
start their businesses, with the ultimate goal be-
ing to support fintech startups as they develop and
launch their products and services. To date, CIB has
sponsored 46 fintech startups and entrepreneurs
operating in various fields. Thirty of these have been
introduced to the market with CIB’s backing, receiv-
ing airtime on Egypt’s number one entrepreneur-
ship TV show Hona Al Shabab with pre-seed funds
awarded to the winners.
The year also saw CIB redouble its focus on agent
banking — a tool to help widen the Bank’s reach
among Egypt’s unbanked population and control
the costs associated with the provision of various
services to clients. The Bank established Egypt’s
first agent bank, Fawry Plus — a greenfield invest-
ment in agent banking. The Bank holds a 23.5%
equity stake in Fawry Plus, a joint venture between
CIB, Banque Misr, Fawry, and El Alameya For Con-
sultations and Information Systems (ACIS).
In recognition of these efforts, CIB became the first
Egyptian bank to receive the “Financial Inclusion
Champion of the Year” FinX Award in 2018 from
FinTech Galaxy and Entrepreneur Middle East. The
award is a testament to the Bank’s support for en-
trepreneurship and the customer-centric banking
services that it has made available for Egyptians.
Talent Enhancement
CIB is committed to cementing its identity as an
employer of choice in the Egyptian banking sector,
working constantly to provide employees with the
capabilities needed to thrive. Starting as early as
the onboarding process, employee development and
satisfaction is paramount to CIB’s executive manage-
ment, who focus on learning and development as well
as rewards and recognition.
As part of this strategy, CIB participated in 33
events and employment fairs across several univer-
sities in Egypt and other venues during the year. To
ensure that the search for top-quality candidates
is not hindered by geographic logistics, in 2018 CIB
established recruitment teams that visited nine gov-
ernorates across Egypt.
In 2018, CIB sought to further enhance engagement,
working to increase satisfaction levels and refine perfor-
mance-related communication between management
and employees. Ten town halls were held with middle
management during the year, while 66 HR awareness
sessions were conducted with first-line managers.
These efforts contributed to increased participation in
the fourth Employee Effectiveness Survey (EES), which
stood at 92% in 2018 compared to 88% in 2016. The en-
gagement level grew to 63% compared to 59% in 2016.
In 2018, more than 840 training courses covering
both technical and soft skills benefited 5,357 em-
ployees (79% of staff) across the organization. CIB
also hired 587 external individuals in 2018 (59 in
increased headcount and 528 replacements) across
different areas of the Bank.
Succession planning was also given considerable
attention, with the aim of securing CIB’s legacy.
Proper succession planning will help the Bank over-
come challenges posed by a constantly changing
business environment. Executive management is
continuously identifying, assessing and developing
cadres to ensure CIB has the calibers in place ready
to assume responsibility. Forty-two key talents were
selected to participate in technical and leadership
development programs as part of CIB’s succession
plan formulated in 2016. Seventy-two percent of
these individuals have been promoted to roles of
greater responsibility as of year-end 2018.
2018 Financial Position
CIB reported another remarkable set of results in
FY2018, with consolidated net income up 27% y-o-y
to EGP 9.58 billion. Standalone net income reached
EGP 9.56 billion, up 27% from 2017. Standalone rev-
enues grew 34% over the previous year to EGP 20.4
billion. Net interest income hit EGP 18.1 billion in
FY2018, an increase of 45% y-o-y.
While the Bank has historically recognized the
interest from doubtful loans, not yet classified as
non-performing, in the unearned interest account
on the balance sheet without recording it on the
income statement out of conservatism, CIB ad-
opted a new convention in 2018, as stipulated by
the CBE. These amounts were channeled through
interest income and an equal amount was taken
as provisions, leaving the bottom line unaffected.
Unearned interest accounts pertaining to non-
performing clients are now recognized as an
off- rather than on-balance-sheet item. The re-
engineering of CIB’s unearned interest accounts
was conducted over two consecutive quarters.
In 2Q2018, EGP 761 million was transferred from
unearned interest to interest income, followed by
EGP 1.06 billion in 3Q2018. Normalized for EGP
1.82 billion additional interest income related to
re-engineering of the unearned interest account,
standalone revenues grew 22% and net interest
income 31% over the previous year. It is worth
noting that all unearned interest amounts eligible
for recognition as interest income on the income
statement or as an off-balance sheet item are now
recognized as such, and such recycling will not
19%
CAR as of 2018
recur after 2018. Non-interest income stood at
EGP 2.2 billion for FY2018, with net income from
fees and commissions recording EGP 2.4 billion.
Despite a challenging year, the Bank’s financial
its
performance was strong, reflected across
financial indicators. Operational efficiency was
maintained during 2018, with the cost-to-income
ratio standing at 20.3% compared to 20.8% in 2017.
ROAE grew to 33.1% on a consolidated basis (post-
appropriation) from 32.5% in 2017. Consolidated
Return on Average Assets (ROAA) recorded 3.03%
(post-appropriation) for 2018, up from 2.69% in
2017. As of year-end 2018, CIB booked a net interest
margin (NIM) of 6.43% (or 5.81% after normalizing
for the aforementioned recycled amount) — the
Bank’s highest-ever — up from 4.97% a year earlier.
CIB’s gross loan portfolio stood at EGP 120 billion
at 2018 year-end, growing 17% (EGP 17 billion) y-o-
y. This increase met the Bank’s strategic objectives
in maintaining asset quality and enhancing profit-
ability. CIB’s market share of total loans amounted
to 6.96% in October 2018.
The Bank aggressively pursued deposit growth in
2018, adding EGP 35 billion to its base, which grew
to a total of EGP 285 billion over the year, an in-
crease of 14% from 2017. CIB’s share of the deposits
market reached 7.68% in October 2018.
CIB ended the year with a buoyant balance sheet
and capital base, reflected in its comfortable
CAR of 19.09% (after profit appropriation), far
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41
CIB InTRoDuCTIon >> Board of Directors’ Report
EGP BN
47.5
Business Banking
deposits in 2018
exceeding requirements stipulated by the CBE
and boosting the Bank’s ability to deal with un-
foreseen economic circumstances.
In 2018, CIB continued to experience strong growth
in net interest income, fees and commissions, and
its balance sheet. Relative to peers, CIB maintained
its leading position in terms of profitability and the
size of its balance sheet. Overall, its strong financial
performance in 2018 came in line with P&L targets.
Appropriation of Income
The BoD proposed the distribution of a dividend
per share of EGP 1.00, after taking into account
the subsequent share distributions after the date
of issuance for financial statements, which was
authenticated in the Bank’s commercial register as
of 28 January 2019.
In addition, CIB is increasing its legal reserve by
EGP 478 million to EGP 2,188 million and its general
reserve by EGP 6.4 billion to EGP 19.2 billion. This
reinforces the Bank’s solid financial position, as evi-
denced by a capital adequacy ratio (CAR) of 19.09%.
The proposed dividend distribution falls in line with
the Bank’s strategy of maintaining a healthy capital
structure to address more stringent regulations,
mitigate associated risks, as well as facilitate and
support the Bank’s future growth plans.
2018 Operational Highlights
Institutional Banking
Despite lingering macroeconomic challenges, the
Institutional Banking (IB) Group was able to meet
its pre-set performance targets for 2018. The group
contributed 78.4% to CIB’s loan growth during 2018.
The Corporate Banking Group continued expand-
ing its loan portfolio across different sectors,
taking part in the government’s ambitious plans
to develop the economy by financing several mega-
projects in the power, construction, food and bev-
erage, textile, telecommunication, and oil and gas
sectors. The group grew its loan portfolio by 16.4%
y-o-y to EGP 95.6 billion by year-end.
The Debt Capital Markets Division
further
consolidated CIB’s high ranking among private
Egyptian banks in the fields of syndicated loans
and bookrunning. CIB came in seventh among
African banks on the Bloomberg League Table
for African Syndicated Loans in 1Q2018, a reflec-
tion of the team’s efforts. With a market share of
3.7% of deals, CIB is ranked third among Egyptian
banks in this area. In 3Q2018, CIB was ranked
eighth among Initial Mandated Lead Arrangers,
up from the 15th in 2017, with a market share in
deals of 3.1%. On the domestic front, CIB captured
the lion’s share of public sector debt arrangements
during 2018, organizing syndicated medium-term
loans worth c. EGP 69.1 billion for public sector
companies and quasi-sovereigns in the power and
oil and gas sectors. The division cemented CIB’s
position as the top bank in Egypt in the structur-
ing of local market securitizations, closing securi-
tization deals worth EGP 4.4 billion out of a total
EGP 5 billion in the Egyptian market.
Retail Banking
Leveraging CIB’s investment in data analytics, Con-
sumer Banking made progress in implementing a
behavioral segmentation strategy aimed at attract-
ing, retaining, and deepening relationships with
customers. By aligning tailor-made products and
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CIB InTRoDuCTIon >> Board of Directors’ Report
90%
STP rate for
e-remittances
services with the specific needs of each segment, the
Bank was able to increase customer satisfaction by
better catering to its clients’ needs.
In 2018, Consumer Banking introduced a new high-
net-worth (HNW) segment called Private, offering an
exclusive bundle of products and services tailored to
clients with a minimum net worth of EGP 20 million.
Despite price competition from public-sector banks,
Consumer Banking was able to increase CIB’s total
deposit portfolio by 18.3% y-o-y to EGP 165.2 billion
in 2018. The Bank focused on gathering low-cost
deposits, particularly CASA, by offering competitive
rates and leveraging its long-standing relationships
with corporate clients to further gather payrolls.
The loan portfolio grew by 21.9% y-o-y to EGP 22.9
billion in 2018, contributing to 21.6% of CIB’s loan
growth during 2018.
CIB also moved to digitalize its customer loyalty
program in 2018, facilitating the redemption of the
loyalty points earned when executing transactions.
Substituting the physical voucher with an instant
e-voucher, the move was well-received by customers
and resulted in higher activation rates.
The Bank’s branch network remains the main chan-
nel for serving customers. In 2018, nine new branches
were launched, bringing the total network to 203
branches. The Bank added 98 ATMs in 2018, expand-
ing the network to 917. CIB commanded a POS net-
work of 13,446 machines as of December 2018.
On the Business Banking front, revenues grew
steadily year-on-year in 2018, recording EGP 2,359
million at year-end 2018, up 16% y-o-y. Deposits
grew 21% y-o-y to EGP 47.5 billion, representing
17% of CIB’s total deposits. The division’s client base
grew 15% y-o-y to 48,229 companies.
In 2018, the Business Banking Division collaborated
with the US government-backed Overseas Private
Investment Corporation (OPIC) to hold 12 workshops
as part of the Women in Business Capacity Building
program. The program aims to increase banking
and financial awareness among women-owned and
managed startups and small companies, promoting
inclusion in the formal sector, providing access to
finance, and raising CIB’s standing as an institution
that upholds gender equality throughout the sector.
Information Technology and Operations
CIB remains committed to upgrading its IT sys-
tems and ensuring that its platforms are continu-
ously updated and capable of comprehensively
supporting its growth plans. To improve and
streamline the customer experience and enhance
the Bank’s product mix, CIB inaugurated two
major projects in 2018: the Core Banking Release,
which will allow the Bank to transition to the R18
Platform, and a new digital platform for consum-
ers. 2018 also witnessed the delivery of another
key project: the Customer Relationship Manage-
ment program, which is designed to build stron-
ger relationships with customers.
During the year, the IT department continued to
improve the resiliency of CIB’s infrastructure, op-
timize the Bank’s storage, and build the enterprise
platforms to maintain CIB’s leadership position
within the banking sector. The team also extended
its support to the Analytics and Data Management
team, integrating state-of-the art technology into
the Data Warehouse infrastructure to enhance re-
port extraction and data analysis.
CIB’s transformation strategy has also entailed
scalable infrastructure. In 2018, the Bank took the
first steps toward implementing a new software
defined network (SDN) to create a virtual network
across data centers. By using this technology to cre-
ate a responsive network data center, CIB will enjoy
a new generation of distributed applications and
will accommodate virtualized and non-virtualized
environments. This will aid the Bank in fulfilling
current and future business objectives related to
digitalization and mobile application solutions.
Operations continue to be at the core of CIB’s
automation and re-engineering initiatives, which
progressed in 2018 according to the automation
roadmap set in late 2017. Developments ranged from
shifting different tasks to call centers to re-engi-
neering multiple processes that allow CIB to offload
support duties from branch staff and shorten ser-
vice delivery turnaround time. A focus on straight-
through processing (STP) has allowed the Bank to
reach an STP rate of 90% for e-remittances.
Meanwhile, the SMS activation of debit cards low-
ered the number of incoming calls to the call center,
thus enhancing resource capacity. CIB’s IVR call
tree was also revamped to allow customers to tackle
day-to-day activities with ease.
Security and Resilience Management
As technology and the internet have grown in
importance, cyber security has become a press-
ing concern across almost all industries. CIB is
continuously developing its capabilities to remain
in tune with global trends and best practices. The
Bank takes its security and customers’ welfare se-
riously, and executive management has prioritized
cyber security and resilience on its agenda.
CIB maintains a full set of security governance poli-
cies covering all aspects of security. These guidelines
are based on international standards and best prac-
tices and frameworks. The Bank’s visibility on cyber
risks and threats is achieved through a fully opera-
tional Security Operations Center (SOC). Undergoing
continuous enhancement, SOC proactively mitigates
risk by monitoring, analyzing, and responding to
incidents. In 2018, the SOC introduced Cyber Threat
Intelligence to further enhance the Bank’s detection
and cyber threat hunting capabilities more proac-
tively, providing CIB with early warning signals on
cyber threats and risks.
Over the years, CIB has invested heavily to mitigate
cyber risks, deploying the strategies needed to en-
sure proper management is in place. To improve its
security posture, the Bank has invested in security
workforce development and enablement, enhancing
the security infrastructure technology stack, and has
deployed advanced threat prevention through world-
class security technologies. CIB operates a dedicated
internal security control function to ensure security
policies are properly enforced and to raise awareness
among staff on cyber security and its importance.
The Bank has been intensifying its efforts and
widening the scope of its oversight along the busi-
ness continuity and contingency management
spectrum. To take its business continuity capabil-
ities to the next level, CIB introduced ‘resilience
management’ with a widened scope of oversight
to cover third parties in addition to internal capa-
bilities. The program seeks to ensure not only the
resumption of business after a disruptive event,
but also the preemptive protection of CIB’s brand
equity, resources, and staff from threats.
In 2018, CIB was the proud recipient of the
ISO22301:2012 certification for Business Conti-
nuity Management. ISO 22301 certification was
awarded to CIB by Professional Evaluation and
Certification Board (PECB), a global provider
of training, examination, audit, and certifica-
tion standards, in partnership with EGYBYTE, a
leader in the MENA market for IT Service Man-
agement. ISO 22301 is the International Standard
for Business Continuity Management, providing
guidance to certified organizations, allowing
them to identify and manage current and po-
tential threats to business. CIB’s ISO-certified
Business Continuity Management System puts
the Bank in a position to effectively limit the risk
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CIB InTRoDuCTIon >> Board of Directors’ Report
of unexpected incidents, allowing it to operate
during challenges, reduce the likelihood of opera-
tional disruptions, and continue to provide cus-
tomers with expected services while maintaining
the highest level of customer satisfaction.
CIB received the following awards during 2018:
Awards by Global Finance
• Best Foreign Exchange provider in Egypt 2018
• Best Trade Finance Provider in Egypt for 2018
• Best Treasury & Cash Management Providers
2019 Business Outlook
In 2019, CIB will remain committed to providing its
clients with the highest quality of service and sup-
porting their investment and financial growth plans,
along with creating value for its shareholders. The
Bank will continue to work diligently to maximize
their returns through any operating environment.
To this end, CIB will pursue a business strategy that
prioritizes asset quality and profitability.
in Egypt
• Best Bank in Egypt
• Best Subcustodian Bank in Egypt
• Digital Bank of Distinction – Egypt
• Best Online Cash Management – Egypt
• Best Trade Finance Services – Egypt
• Best Online Portal Services – Egypt
• Best Information Security and Fraud Manage-
ment – Egypt
• The Innovators
Awards and Recognition in 2018
CIB continued to garner awards during 2018. Financial
institutions of global renown recognized the Bank’s ef-
forts to grow and innovate in all facets of business.
Awards by The Banker Africa
• Best Corporate Bank in North Africa
• Best Corporate Bank in Egypt
• Best Private Bank in Egypt
In September, CIB was named “World’s Best Emerg-
ing Markets Bank” in Global Finance magazine’s
World’s Best Banks Awards for 2018, making it the
second consecutive time the Bank has received this
accolade having been named by Euromoney as the
“World’s Best Bank in Emerging Markets” in 2017.
In June, CIB became the first Middle Eastern firm
to be analyzed in a case study by the Leadership
Institute at the London Business School (LBS), one
of the world’s top five business schools. CIB was se-
lected in recognition of its data-driven, customer-
centric approach to leading transformation in the
face of macroeconomic challenges.
The Bank also ranked 38th on Forbes Middle East’s
“Top 100 Listed Companies in the Arab World,” ranking
the highest of the four Egyptian companies on the list.
Besides recognizing the significant efforts of the
team at CIB, such accolades extend international
testament to the outstanding capabilities and
competencies of Egyptian organizations in the
face of adversity.
Awards by EMEA Finance
• Best FX Services in North Africa
• Best Payment Services in North Africa
• Best Local Bank
Awards by Euromoney
• Best Bank Transformation in the Middle East
• Best Bank in Egypt
Other awards include:
• Best Regional Bank – Northern Africa by Afri-
can Banker
• Financial Inclusion Champion of the Year by
FinX 2018
Commitment to Corporate Governance
Best Practices, Ethics, and Corporate
Values
In its mission to provide best-in-class financial so-
lutions to enterprises and individuals, CIB strives
to apply international best practices in the area of
corporate governance. The Bank is wholly com-
mitted to the principles and corporate values that
distinguish the finest governance structures.
CIB’s corporate governance structure is anchored in
a team of highly professional executive directors and
a distinguished group of independent non-executive
directors (NED). The BoD enjoys an optimal mix of
skills, experience, and diversity in terms of gender
and nationality. No changes to the BoD composition
took place during 2018. CIB’s BoD comprises of nine
directors, seven of whom are non-executives, with
one representing Fairfax’s interest in CIB. Five of the
non-executive members are independent, conform-
ing to the international best practices of corporate
governance. Chairman and Managing Director Mr.
Hisham Ezz Al-Arab and CEO Mr. Hussein Abaza
are the BoD’s executive directors.
In line with CBE directives on corporate governance
as well as international best practices, the Managing
Director is responsible for ensuring adequate and
effective governance through managing the indepen-
dent control functions: risk, compliance, audit and
legal, and also focusing on the strategic direction of the
Bank. The CEO is responsible for managing the Bank’s
business lines and day-to-day operations. CIB’s highly
qualified BoD is supported by specialized committees
that assist in fulfilling its responsibilities. The BoD has
seven standing committees; five non-executive and
two executive committees. Each committee chairper-
son is responsible for briefing the BoD on the major
issues raised by the committee he/she chairs.
The BoD’s non-executive committees are:
• Audit
• Governance and Nomination
• Compensation
• Risk
• Operations and Technology
The BoD’s executive committees are:
• Management
• High Lending and Investment
The BoD is also supported by internal and external
auditors as well as other internal control depart-
ments (Risk, Compliance, Internal Audit, and
7.26EGP
EPS in 2018
Legal). Work carried out by these functions is fully
utilized by the BoD to ensure the Bank adheres to
international standards of corporate governance.
CIB’s experienced executive management team plays
an important role in the governance of the Bank by
faithfully and efficiently executing the strategy set by
the BoD and properly implementing the Bank’s policies.
The Code of Corporate Governance is a cornerstone
of CIB’s governance policy framework, aiming to en-
hance long-term value for shareholders, employees,
and other stakeholders. A Code of Conduct sets out
the standards of behavior expected from all employ-
ees, providing staff, senior management, and the BoD
with a comprehensive frame of reference regarding
their rights and duties. The code further enshrines
the principles of equal employment opportunity and
gender equality. CIB’s Conflict of Interest policy guar-
antees that all staff and BoD members remain aware
of and forthcoming about any conflict of interest
between the Bank and their personal, professional,
and business interests, providing guidance on how
to handle those cases. The Bank’s Whistle-Blowing
Policy encourages staff to report suspected violations
of the law or Bank policies as well as any wrongdoing,
while guaranteeing a supportive and encouraging
environment for those who speak out. The Bank han-
dles the claims of whistleblowers, be they employees
or external actors, very seriously and at a senior level.
CIB’s Conduct Risk Policy makes clear the Bank’s re-
lationship with and duties toward its customers.
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Corporate Governance Highlights
Board Independence: The majority of
CIB’s directors are non-executive at seven
out of nine members, five of whom are in-
dependent directors.
Gender Diversity: Two of the directors
are women.
Deep Banking and Related Knowledge
and Experience: CIB’s directors have ex-
tensive industry experience ranging from
business and management to banking, law,
and investment.
CIB’s Governance Framework ensures that timely,
transparent, and accurate disclosures are made avail-
able with respect to material information regarding
the Bank, its ownership, operations, and financial
performance. It advocates the equal treatment of all
shareholders with sound protection for their voting
rights. Backed by a concrete set of policies and pro-
cedures relevant to the scope, size, and complexity of
CIB’s business, the framework also aims to sustain the
success of the Bank’s business and operations, ensure
proper implementation of internal and external regu-
lations, and mitigate all possible types of risk.
Commitment to Sustainability
The Bank is proactive in making sustainability a
permanent feature of its products and services. CIB
takes pride in its role to develop the United Nations
Environment Program Financial Initiative (UNEP-
FI’s) Principles for Responsible Banking alongside 27
banks from five different continents, accounting for
aggregate assets of more than USD 17 trillion. The
banks were assisted by 12 civil society organizations
from several countries and diverse backgrounds to
ensure the principles take into account the various
operational and market realities of banks in differ-
ent countries, as well as banks at different stages of
sustainable banking. The Principles for Responsible
Banking are the first set of guiding principles to
focus specifically on the banking industry and aim
to ensure the integration of environmental, social,
and governance (ESG) principles at a strategic, op-
erational, and transactional levels in banks.
For years, CIB has worked to provide sustainable capi-
tal to help clients grow, give back to the communities in
which we live and work, and incite actionable change
in the area of environmental business practices. The
six UNEP-FI principles — alignment, impact, clients
and customers, stakeholders, governance and target
setting, transparency and accountability — resonate
with CIB’s sustainability culture. Commitment to
these principles will empower the Bank to further sup-
port and accelerate the fundamental change to which
it aspires. CIB encourages other banks to endorse and
take part in signing the Principles for Responsible
Banking at the signing event in 2019.
Deepening its commitment to responsible bank-
ing, in 2018 CIB launched the Solar Loan Program,
offering its customers special financing for the pur-
chase and installation of solar panels. Supporting
the government’s campaign to rationalize energy
consumption by introducing renewable sources, the
loan also helps customers switch to more affordable
source of energy to mitigate rising living expenses.
The Bank continued to reinforce its internal sustain-
ability agenda during the year, a strategy anchored
in three main pillars:
Managing Our Ecological Footprint
CIB managed its environmental footprint by apply-
ing the highest standards and devoting resources
to manage energy and water consumption, carbon
footprint, and waste creation.
• Lighting Efficiency: To support Egypt’s Light-
ing Efficiency Improvement Initiative, in 2017
CIB began transitioning to LED lighting sys-
tems across all its premises. As per the review
from Egypt’s Ministry of Electricity and Renew-
able Energy, the measures cut CIB’s energy
consumption by 11 million KWs between 2014
and 2018. In 2018, annual savings on electric-
ity consumption hit 40%, with the payback pe-
riod reaching 14 months. CIB received a special
award from the Energy Efficiency Project in
2018, recognizing the Bank’s outstanding ef-
forts in ensuring energy efficiency.
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• Water Efficiency: In 2018, CIB installed 1,600
aerators at select premises, saving the Bank
and the environment 103 million liters of water.
Consumption of water has been reduced by 40%
and CIB has saved EGP 518,000 in water-related
expenses. The Bank has developed a plan to in-
stall aerators at all of its premises across Egypt.
• Paper Reduction: CIB sells the paper waste
created by branches to paper recycling start-
ups. The proceeds are credited to the Sustain-
ability Account and are subsequently used
for green projects, such as green rooftops. In
2018, a total EGP 184,326 was credited to the
Sustainability Account.
• Electronic Waste (E-waste): At the end of 2017,
CIB began implementing an e-waste manage-
ment initiative, safely disposing of mobiles,
computers, iPads, and similar devices, which
totaled to EGP 1 million at the end of 2018.
• National Initiative on Plastic Bag Consump-
tion Reduction: CIB is cooperating with the
Ministry of Environment in a national cam-
paign to promote the use of biodegradable
plastic bags and increase public awareness of
the hazardous effects of non-biodegradable
plastic. The Bank uses biodegradable plastic
bags across all its premises.
• Internal Carpooling Mobile Application: The
Bank enlisted young Egyptian entrepreneurs
to create a tailor-made carpooling application,
Raye7, which is now used by more than 1,000
CIB employees, further reducing its carbon
footprint while encouraging young entrepre-
neurs to develop innovative solutions.
• Green Buildings: Collaborating with the
Housing and Building National Research Cen-
ter, CIB obtained an Egyptian Green Pyramids
Certificate. This initiative conforms to the
standards of world-class Leadership in Energy
and Environmental Design (LEED) programs,
indicating that buildings have been con-
structed and operated in a resource-efficient
manner. Two CIB head offices were awarded
the highest Green Building Rating under the
Green Pyramids Rating System (GPRS).
Inclusion Efforts
• Special-needs Accessibility: CIB has success-
fully equipped 26 branches with ramps, low teller
desks, and toilet rails. Ninety-five talking ATMs
have been installed at key locations across Egypt.
Further broadening the accessibility of its servic-
es to visually impaired customers, CIB expanded
the use of debit cards from solely ATMs to POS
machines. Training sessions on the provision of
optimum service for special needs customers
have been held for 250 CIB front-liners and cus-
tomer representatives, and a code of accessibility
has been developed to evaluate the ease of use at
branches and ATMs in order to identify gaps and
appropriate improvements.
Monitoring and Reporting
• CIB Sustainability Report: Since 2014, relevant
sustainability KPIs have been identified and
reported in an annual sustainability report.
The report tracks the Bank’s performance and
communicates its progress to stakeholders. CIB
adheres to Global Reporting Initiative (GRI)
standards, which provide the most comprehen-
sive framework for sustainability reporting.
• Science Based-Target Initiative (SBTi): The
SBTi invited CIB to participate in a financial-sec-
tor working group to develop a new assessment
methodology identifying whether investing and
lending activities are aligned with a 2°C trajectory.
• Carbon Disclosure Project (CDP): In early
2018, CIB became the first Egyptian entity to
participate in the global disclosure system
Carbon Disclosure Project (CDP), which enables
companies and states to measure and manage
their environmental impacts.
• Bloomberg Gender Equality Index (GEI):
Based on 2018 reports and figures, CIB was
included on the 2019 Bloomberg Gender
Equality Index (GEI). Of the 230 companies
selected for the GEI, CIB became the first
Arab and African company to be named to
the index. The Bloomberg GEI is the world’s
only comprehensive investment-quality data
source on gender equality.
• FTSE4Good Sustainability Index: In 2018,
CIB was recognized by the Financial Times as
a constituent of the FTSE4Good Sustainability
Index, marking the sixth consecutive year the
bank has been a constituent.
• EGX Sustainability Index: CIB ranked first on
the EGX Sustainability Index for the fifth con-
secutive year in 2018.
Commitment to Corporate Social
Responsibility
CIB has continued to embed corporate social re-
sponsibility (CSR) at the heart of the organization.
This year, the Bank expanded its steadfast commit-
ment to the communities in which it operates by
diversifying its community development activities,
which include supporting sports, fine art, culture,
and social care. It has implemented various CSR
projects and provided crucial support to the initia-
tives of other organizations.
The Bank’s CSR agenda in 218 included the following:
• CIB contributed to a charity soccer tournament
held in Ramadan 2018 to support the Abu El-
Rish Children Hospital by donating the tourna-
ment’s funds to the hospital.
• The Bank participated in the exhibition of
student projects in the faculties of fine arts at
the universities of Luxor, Assuit, Menya, and
Mansoura. CIB acquired distinctive artwork to
incentivize young talents while enriching the
Bank’s art collection.
• CIB sponsored “Night with the Arts” for the
second year in a row. This year, the exhibition
“Nothing Vanishes, Everything Transforms”
held at the historic Manial Palace showcased
Egypt’s rich cultural heritage.
• For the first time ever, CIB supported an African
painting workshop led by Soma Art School in
the Democratic Republic of Congo during the
seventh edition of the Rencontre Internationale
d’Art Contemporain (RIAC) event.
• CIB maintains its commitment to preserve the
legacy of Egypt across different fields, including
art and cinema. The Bank sponsored the special
40%
Reduction in water
consumption
“Cinema Edition” of the cultural magazine
Rawi, which focuses on Egyptian heritage.
• CIB continued to sponsor “Made in Egypt”,
an exhibition of young Egyptian designers
held in London featuring the country’s best
artistic productions.
• CIB and KidZania’s partnership began in
2013, and since this time, the Bank has suc-
cessfully organized several trips each year to
KidZania for more than 150 underprivileged
and special needs children, as well as chil-
dren with health conditions.
• The Bank continued its sponsorship of the an-
nual ceremony for the Egyptian Advance Society
for Persons with Autism and Other Disabilities
(ADVANCE) and sponsored 2018 World Autism
Awareness Day in Egypt to support the integra-
tion of people with disabilities into society. More-
over, the Bank’s Smart Village headquarters and
select branches were lit in blue in solidarity on
World Autism Awareness Day.
• CIB has been the main partner and finan-
cial sponsor of Beena for three consecutive
years. Beena is a protocol signed between the
Bank and the Ministry of Social Solidarity to
encourage active youth participation in the
community and monitor the development
of social care services. This initiative suc-
cessfully attracted thousands of volunteers
around Egypt who assisted in orphanages,
elderly homes, and special-needs houses.
• In 2018, CIB continued its sponsorship of
El Sawy Culture Wheel, supporting various
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CIB continued to positively affect
communities by strengthening its
support for sports in Egypt and
nurturing the country’s athletic talents.
intellectual, cultural, and social activities,
including concerts by internationally recog-
nized artists, cultural nights, art exhibitions,
documentary films, and many more. This
year, the Bank launched a new initiative in
cooperation with the CIB Foundation and
other NGOs to provide entertaining and edu-
cational programs at El Sawy Culture Wheel
that target children.
• CIB sponsored a science fair for school stu-
dents to foster scientific thinking from an early
age and encourage children to explore future
careers in scientific fields. The fair featured
groups of students from different grades who
submitted projects to a panel of judges, who
evaluated each project and awarded numerous
titles to winning teams.
• CIB was the sole banking sponsor of the second
season of CBC’s televised entrepreneurship
competition Hona Al Shabab in 2018. The com-
petition supports young fintech entrepreneurs
and business startups.
In 2018, CIB continued to positively affect com-
munities by strengthening its support for sports
in Egypt and nurturing the country’s athletic tal-
ents. Squash-related initiatives were again at the
core of CIB’s CSR agenda.
Junior Squash Teams’
• CIB maintained its sponsorship of the Egyp-
tian Squash Federation for the seventh con-
secutive year. The Bank also expanded its com-
mitment by sponsoring the National Women’s
and
international
championships. This support has played a
direct role in the national teams’ accomplish-
ments throughout the year, as the National
Junior Squash Team won the World junior
squash championship in India for the sixth
time. Almost simultaneously, the National
Women’s Squash Team was named Women’s
World Team Champion in China, successfully
retaining their title.
• In support of young players leading the world’s
squash rankings, CIB has created special spon-
sorships to help six talented players maintain
their rankings and continue representing the
country around the world. The following play-
ers were recipients of these sponsorships:
- Ali Farag – 2nd on the Men’s PSA World
Squash List
CIB Foundation
The CIB Foundation was established in 2010 as
a non-profit organization under the oversight of
Egypt’s Ministry of Social Solidarity. It is dedicated
to improving health and nutrition outcomes and
extending coverage to underprivileged children
with limited access to quality healthcare. To meet
its objectives, the Foundation relies on valuable
partnerships with other institutions working in the
field. During 2018, the CIB Foundation’s activities
and initiatives included the following:
- Nour El-Tayeb – 4th on the Women’s PSA
Approved Projects in 2018
World Squash List
- Tarek Momen – 3rd on the Men’s PSA World
Squash List
- Karim Abdel Gawad – 5th on the Men’s PSA
World Squash List
- Ramy Ashour – 24th on the Men’s PSA World
Squash List
- Hania El-Hammamy – 17th on the Women’s
PSA World Squash List
• CIB announced its partnership with Wadi De-
gla Clubs to support young Egyptian squash
athletes by developing their skills to enhance
their international rankings. The additional
athletes representing Wadi Degla and spon-
sored by CIB are:
- Raneem El Welily – 1st on the Women’s PSA
World Squash List
- Nouran Gohar – 8th on the Women’s PSA
World Squash List
• CIB continued for the second year its “Squash
for Everyone” initiative in partnership with
prominent Egyptian player Amr Shabana.
The program aims to provide underprivileged
children with an equal opportunity to practice
squash and discover young, rising talents.
• In April 2018, the Foundation’s Board of Trust-
ees approved an EGP 18.9 million contribution
to support the purchase of 33 upgraded moni-
tors and four central station units for the Sur-
gical Intensive Care Unit, Intensive Care Unit,
and the Bone Marrow Transplant Unit at Chil-
dren’s Cancer Hospital 57357. A further EGP 3.5
million was also donated to fund patient care
expenses at the Cairo and Tanta branches.
• In April 2018, the CIB Foundation’s Board
of Trustees approved over EGP 14 million to
fund the complete renovation and outfitting
of El-Galaa Teaching Hospital’s Pediatric In-
tensive Care Unit to extend services to more
patients on the waiting list.
• In April 2018, the Board of Trustees approved
EGP 10.8 million in funding to Abou El-Reesh
Children’s Hospital to purchase a fluoroscopy
x-ray machine for the Radiology Department
and a laparoscopy and thoracoscopy machine
for the Pediatric Surgery Department. In July
2018, the CIB Foundation donated over EGP 3.3
million to cover the first tranche of the project.
• The CIB Foundation allocated EGP 7.5 million
in July 2018 to fund the purchase of necessary
33.1%
ROAE in 2018
equipment and supplies for the Pediatric Den-
tistry Clinic in El Kasr El Aini. The donation will
also fund the establishment of another clinic
in Sheikh Zayed to increase the efficiency of
services provided to children and drastically re-
duce the number of patients on the waiting list.
• In 2017, the CIB Foundation contributed EGP
640,000 to purchase an outfitted mobile dental
caravan for the Faculty of Oral and Dental Medi-
cine at Cairo University, under the management
of the Rotary Club of Zamalek. This year, the
Foundation allocated an additional EGP 120,000
to cover the operating costs of 12 dental caravans
that will be used to treat public school students in
remote areas of Cairo and Giza for free.
• In July 2018, the CIB Foundation allocated EGP 7
million to the Magdi Yacoub Heart Foundation
to cover costs associated with 70 pediatric open-
heart surgeries and donated EGP 3.5 million in Oc-
tober 2018 to cover the first tranche of the project.
• In February 2018, the CIB Foundation donated
the final EGP 859,000 in a three-year EGP 15 mil-
lion project to outfit two research labs in Magdi
Yacoub Heart Foundation’s Aswan Heart Center.
• In April 2018, the CIB Foundation’s Board of Trust-
ees approved EGP 6.64 million in funding to outfit
the Emergency Department located on the ground
floor of the Alexandria University Children’s Hos-
pital in El Shatbi. The CIB Foundation fulfilled its
commitment to the project in October 2018.
• The CIB Foundation donated over EGP 1.3
million in 2018 to cover the surgery costs of 39
underprivileged children suffering from con-
genital heart diseases at El Kasr El Aini Hospi-
tal, under the management of the Rotary Club
of Giza Metropolitan. This contribution follows
our March 2017 allocation of EGP 1.75 million
to cover the costs associated with 50 pediatric
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53
CIB InTRoDuCTIon >> Board of Directors’ Report
open-heart surgeries. In addition, in October
2018, the CIB Foundation’s Board of Trustees
approved an EGP 3.7 million budget to support
another round of the project.
• The Board of Trustees allocated EGP 3.1 million
in April 2018 to purchase equipment for the
Nasser Institute Hospital’s Pediatric Intensive
Care Unit and Neonatal Intensive Care Unit.
• In July 2018, the Foundation contributed a total of
EGP 3 million to the annual operating costs of five
pediatric units at Ain Shams University Hospital
under the management of long-standing partner
the Yahiya Arafa Children’s Charity Foundation.
• Over the course of 2018, the CIB Foundation
donated over EGP 1 million to cover 289 surger-
ies as part of the fifth and fourth phase of the
Children’s Right to Sight (CRTS) program led by
the Rotary Club of Kasr El Nil.
• The CIB Foundation donated EGP 1.67 million
to the Egyptian Clothing Bank to provide 50,000
training suits to children in 19 governorates.
• The CIB Foundation’s Board of Trustees approved
a proposal to support the outfitting of the sensory
and psychomotor rooms at the National Founda-
tion for Family and Community Development’s
specialized center for the rehabilitation of autistic
children. The EGP 688,000 project will enable the
center to serve around 250 children monthly.
• In April 2017, the CIB Foundation fulfilled
its commitment to contribute EGP 2 million
to the MOVE Foundation for Children with
Cerebral Palsy to renovate their premises and
expand operations. The CIB Foundation also
allocated EGP 608,400 to support the annual
operating cost of the MOVE Foundation’s
premises. In September 2018, the Foundation
donated EGP 152,100 to cover the first install-
ment of this commitment.
Ongoing Projects
• The CIB Foundation dedicated over EGP 5.1 mil-
lion to fund the Egyptian Liver Care Society’s
Children without hepatitis C (C-Free Child)
program. This year, the CIB Foundation also
invested in increasing the number and quality
of hepatitis treatment centers in Egypt.
• In August 2018, the CIB Foundation donated
over EGP 91,000 to cover the first tranche of an
EGP 4.1 million project to fund the treatment
of 400 children with hepatitis C at the National
Hepatology & Tropical Medicine Research In-
stitute (NHTMRI).
• In June 2017, the CIB Foundation pledged EGP 3.53
million to the purchase of 40 monitors, 45 infusion
pumps, and 25 syringe pumps for the Inpatient Unit
at Ain Shams University Hospital. In August 2018,
the CIB Foundation donated over EGP 589,000 to
cover the final installment for the project.
• The CIB Foundation donated over EGP 14.4
million in 2018 to cover the fourth and fifth
tranches of the Gozour Foundation for De-
velopment’s 6/6 project to fund 264 eye exam
caravans and provide 158,400 public school
students in impoverished areas across Egypt
with free eye examinations.
• In partnership with Al-Noor Magrabi Founda-
tion and Dar El Oyoun, the caravans, which
are staffed with 25-30 doctors, nurses, and
coordinators, were equipped with advanced
medical tools, medications, and eyeglasses.
They provided students with free ophthalmic
exams, eye medication, and referrals to private
hospitals for complex cases. Moreover, CIB
staff members volunteered with the caravans.
• Over 2018, the CIB Foundation donated over
EGP 105,000 as part of an EGP 1.5 million part-
nership with the Sawiris Foundation for Social
Development and Star Care Foundation in 2016
to implement comprehensive community devel-
opment projects in Sohag, Assiut, and Qena.
• In June 2018, the Foundation contributed the
final EGP 750,000 of an EGP 1 million pledge
to Ahl Masr Foundation in 2016. This contri-
bution funded the treatment of 159 pediatric
burn patients whose families could not afford
the costs of their treatment.
• In September 2015, the CIB Foundation’s
Board of Trustees approved an EGP 710,000
project under the Ophthalmic Clinic in Aswan
to establish the first fully equipped diagnosis
and referral center for children with glau-
coma. In October 2018, the CIB Foundation
donated over EGP 472,000 to cover the final
installment of the project. CIB supported the
Baladi Foundation’s efforts to detect glauco-
ma in 500 children, treat these patients, and
perform 50 surgeries for congenital glaucoma
cases, while also training a team of doctors
and nurses in Upper Egypt.
• In April 2014, the CIB Foundation’s Board of
Trustees approved the allocation of EGP 1 million
to fund the outfitting of the Craniofacial Center
at Sohag University Hospital. In October 2018, the
CIB Foundation donated over EGP 323,000 cover-
ing the final installments of the project.
• The Foundation gave 50 KidZania tickets to
underprivileged children. Over the course of
the year, the CIB Foundation coordinated with
its partners to organize multiple visits to Kid-
Zania in which underprivileged and disabled
children learned about adult professions in a
child-friendly way. Children performed differ-
ent jobs to earn and spend Kidzos, the official
currency of KidZania, on games and other
entertaining activities.
342 EGP
K
Assets in 2018
• In 2018, the CIB Foundation hosted 12 blood
donation campaigns across its corporate of-
fices to encourage CIB staff and customers
to participate in an activity that saves thou-
sands of lives across the country. Through
this effort, 164 bags of blood were collected;
these resources can potentially be used to
save the lives of over 490 people.
• In February 2018, the CIB Foundation invited
CIB colleagues and their families to a bag-
packing event at CIB’s Smart Village office to
participate in packing of over 5,000 health and
hygiene school bags for the students targeted
by the 6/6 Eye Exam Caravan program.
• In 2018, CIB launched a new initiative in part-
nership with the CIB Foundation and El Sawy
Culture Wheel to develop children’s skills
through specialized workshops. Children in-
volved in the initiative enjoyed a full day of ed-
ucational activities and games that stimulated
their cultural and scientific development.
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CIB InTRoDuCTIon >> Board of Directors’ Report
2018 Performance Measures
Results
2018 Performance Measures
Results
FINANCIAL
• Maximize shareholder 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 33.1% (after profit appropriation)
• 26% EPS growth
• Total tier capital recorded 19.09% of risk-weighted assets
BUSINESS OPERATIONS
• Grow revenues 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 20.3%
• Institutional banking profit before tax rose 19% over
last year to reach EGP 8.8 billion, and loan portfolio
grew by EGP 13.5 billion, an increase of 16% y-o-y
• Retail banking profit before tax increased 28% y-o-y to
EGP 5.2 billion, and deposits grew by EGP 33.8 billion,
translating into 18.9% y-o-y increase
CUSTOMER
• Improve customer experience
• Invest in core businesses to enhance
customer experience
• Much effort was exerted to improve cyber security
standing, with a clear strategy and comprehensive plan
to improve security capabilities and continuously pro-
vide a safe banking environment for customers
• CIB received ISO22301:2012 certification for Business
Continuity Management by PECB, a global provider of
training, examination, audit, and certification stan-
dards, in partnership with EGYBYTE, a leader in the
MENA market for IT Service Management
EMPLOYEE
• Focus on employee engagement score
year-on-year
• Enhance the employee experience by:
Listening to employees
-
- Providing a healthy, safe, and flex-
ible work environment
- Providing competitive pay,
benefits, and performance-
based compensation
Investing in training and
development
-
• CIB had an average of 6,635 employees in 2018 with an
average annual income of EGP 209,000 per employee
• CIB implements an Employee Stock Ownership Plan
(ESOP) as part of its compensation strategy, aimed at
attracting, motivating, retraining, and rewarding out-
standing employees, managers, and executive board
members. ESOP allows designated employees to own
CIB stocks at face value via ‘promise-to-sell’ agreements.
CIB allocates 1% of its issued and paid-in capital to ESOP.
During 2018, CIB allocated a total of 5,031,540 stocks to
4,091 employees. Since the inception of the program in
2006, and its renewal in 2015, the Bank has allocated
80,491,633 shares to its employees (taking into consider-
ation capital increases throughout said period)
COMMUNITY
• Donate 1.5% of the Bank’s net annual
profit through the CIB Foundation
• Make positive contributions by:
• Please refer to the CSR section for more details on
CIB’s social involvement and community develop-
ment initiatives
- Supporting employees’ commu-
nity involvement and fund-
raising efforts
- Supporting advances in its areas
of focus, which include education,
arts, culture, health, and protecting
and preserving the environment
SAFEGUARDING THE INTERESTS OF
SHAREHOLDERS
• CIB maintains a proactive investor
relations program to keep sharehold-
ers abreast of developments that
could have an impact on the Bank’s
performance. The team and senior
management invest significant time
in one-on-one meetings, road shows,
investor conferences, and conference
calls. The team spares no effort in
providing the investment community
with a consistent stream of transpar-
ent disclosures while simultaneously
ensuring analysts have the informa-
tion they need to maintain balanced
coverage of the Bank’s shares
• As a result of the team’s conscious efforts enhance its
Investor Relations program, CIB’s Head of Investor
Relations received a nod as the “Best Investor Rela-
tions Professional – Egypt” in a 2018 study conduct-
ed by the Middle East Investor Relations Association
(MEIRA) in partnership with Extel. This is the fifth
year running in which CIB has received at least one
award from MEIRA
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57
2018
in Review
Our operations in 2018 took us beyond traditional
banking channels and services, driving our strategy
to deliver a holistic, tailored, and exceptional
experience for all stakeholders
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2018 In REvIEW
Institutional
Banking
Corporate and Global Customer
Relations Group
Capitalizing on its extensive experience in the Egyp-
tian market and its large client base, the Corporate
Banking Group continued to support the Egyptian
economy in 2018 despite a persistently challenging
macroeconomic environment.
CIB’s creative financial structuring capabilities and
experienced credit teams have preserved our position
as the top corporate bank in Egypt. The Bank offers a
wide range of innovative credit products tailored to its
clients’ specific financing needs and developed with an
eye on maximizing shareholder return on investment.
In 2018, the Corporate Banking Group financed
mega-projects in the power, construction, food and
beverages, petrochemicals, and oil and gas sec-
tors. This effort is in line with the group’s strategy
of targeting business opportunities created by the
government’s stimulus efforts and prioritization of
economic development.
The group also continued to support medium-sized
companies by offering customized financial solu-
tions catering to their business needs, ensuring their
integration into the financial sector, and promoting
financial inclusion.
2018 Highlights
2018 posed a number of challenges to the Egyptian
banking sector. Chief among these, the CBE main-
tained interest rates almost at the previous year’s level,
emerging markets witnessed substantial capital out-
flows, and continuous subsidy cuts added to inflation-
ary pressure on the Egyptian economy. Despite these
and other hurdles, the group’s strategy of growing
its loan portfolio across different sectors met with
continued success in 2018. As of December 2018, CIB’s
corporate loan portfolio grew by 20% to a record EGP
88.4 billion compared to EGP 73.9 billion in December
2017. The group finalized several key transactions dur-
ing the period, including but not limited to:
• Arrangement of a syndicated facility coupled
with the extension of a bilateral facility to
finance Egypt’s petroleum sector. The Bank
helped ease the liquidity pressure the govern-
ment faced in settling its outstanding dues to
international oil companies.
• Extension of several short-term transactions to
the telecom industry mainly to finance compa-
nies’ capital and operating requirements for the
4G network rollout.
• Advancement of direct facilities and aggregate
contingent business to finance the upgrade of
Egypt’s national electricity grid and renewable
energy plants under the second round of Egypt’s
solar feed-in tariff scheme.
• Finance the working investment needs of lead-
ing companies in the food and beverage sector, a
strategic, non-cyclical, and defensive sector.
2019 Forward-Looking Strategy
CIB’s Corporate Banking Group plans to capitalize
on the Egyptian economy’s growing resilience to
macroeconomic pressures. As such, the group will
focus on the following areas:
• In support of the government’s declaration of
2019 as the Year of Education and its introduc-
tion of associated initiatives, the group will
explore opportunities to finance efforts to over-
haul the education sector.
CIB’s creative financial
structuring capabilities
and experienced credit
teams have preserved
our position as the top
corporate bank in Egypt.
• The group is exploring new opportunities for
financing mega infrastructure projects in the
following areas: ports, transportation, infrastruc-
ture, and petrochemicals. We will also continue
to support strategic sectors such as oil and gas,
refineries, food and beverage, and healthcare.
• Tourism receipts grew by 77% during the
first half of 2018 to reach USD 4.8 billion,
indicating a strong recovery and the success
of Egypt’s worldwide marketing campaign.
In 2019, the group will target the growth of
untapped touristic destinations, such as New
Alamein City, and support the renovation of
existing hotels.
• The group will work to introduce a number of
new business segments and products, including
but not limited to:
- Bundling export products
- Financing private sector gas trading
- Developing new sustainable finance prod-
ucts
- Further promoting digital solutions
- Financing industrial parks
Financial Institutions Group
The Financial Institutions Group (FIG) consists of
three teams: Correspondent Banking, Non-Bank
Financial Institutions, and Development Finance. To-
gether, these teams are CIB’s first point of contact for
credit institutions and manage the Bank’s relation-
ships with different global institutions.
2018 Highlights
• 2018 was an exceptional year for contingent busi-
ness, FIG’s key income driver, reaching EGP 18.4
billion in new business. The group’s L/G fees con-
tributed to 18% of FIG’s total fee growth in 2018.
• FIG’s investment portfolio grew in 2018 due to
an exponential increase in its securitization
business. CIB’s participation in bonds issued
under securitization transactions reached
EGP 733 million, which led the non-banking
FI investment portfolio to reach EGP 1.2 bil-
lion in December 2018.
• FIG’s portfolio of developmental programs
reached a total of EGP 2.64 billion by the end
of December 2018.
2019 Forward-Looking Strategy
FIG will grow its business through several efforts,
which include:
• Continuing to aggressively attract LGs for
new projects launched in 2018 with a focus on
Europe and Asia by capitalizing on our strong
relationships with correspondents;
• Growing the loan portfolio by increasing pen-
etration in existing sectors such as leasing,
microfinance, and auto finance;
• Launching digital cash management solutions
to grow the microfinance loan portfolio;
• Targeting insurance, investment, and broker-
age companies to increase their LCY deposits;
• Developing the cash business to include new
products on the Vostro platform to enhance
payment process for corresponding Vostro and
launching the new factoring business;
• Continuing to strengthen and activate com-
munication channels with exporters and as-
sociations targeting African markets, giving
the group better exposure to trade trends and
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61
2018 In REvIEW >> Institutional Banking
allowing it to provide clients with banking so-
lutions that cater to their needs. FIG will con-
tinue to strengthen its relationship with select
banks in Kenya, the COMESA region’s trade
hub, to facilitate trade with East Africa; and
• Maintaining CIB’s leading position in agency
and participating bank services and solutions
with donor and government entities.
Treasury Group
CIB’s Treasury Group is one of the best in Egypt,
delivering exceptional services in liquidity and
cash management, capital markets, and FX and de-
rivatives. The Treasury Group consists of two main
teams: Trading and Sales. The Trading Team’s main
responsibility is to capitalize on movements in FX,
fixed income, and money markets to enhance the
Bank’s profits on outstanding positions and portfo-
lios. The Sales Team’s task is to attract new customers
and increase the flow of business to trading desks.
2018 Highlights
CIB’s FX exposure makes a consistently positive
contribution to the Bank’s consolidated reported
earnings. As of year-end 2018, total FX gains stood
at EGP 697.21 million, the highest FX profitability
among all Egyptian private banks.
CIB’s FX desk positively impacted the Bank’s non-
interest income, growing the volume of trade prod-
ucts opened at CIB from the sale of foreign currency
through free market, incoming documentary collec-
tions (IDCs), and letters of credit (LCs).
CIB’s FX desk won several prestigious global awards
in 2018, including:
• Best FX Services in North Africa from EMEA
• Best FX Provider in Egypt from Global Finance
• Best Treasury & Cash Management Providers in
Egypt from Global Finance
2019 Forward-Looking Strategy
Over the coming quarters, the Treasury Team will
seek to further enhance the performance of its
trading and sales activities. The group has set the
following goals for its teams:
• Manage liquidity efficiently
• Cultivate strong and profitable relationships
with customers
• Take all necessary steps to ensure proper risk
management
• Maximize the group’s profitability
• Build on the trust our customers have in our
Debt Capital Markets
CIB’s Debt Capital Markets Division (DCM) is one of
the most experienced divisions in the market, with an
unmatched record in underwriting, structuring, and
arranging large-ticket syndicated loans, in addition to
securitization transactions, bonds, and project finance.
DCM is a dedicated agency and security agency desk
raising medium- and large-ticket project financing,
PPP financing, and syndicated loans for its clients by:
• Undertaking the role of principal arranger,
book runner, and financial advisor
• Evaluating feasibility studies to effectively ad-
vise on bankable structure for the transactions
• Preparing financial models and term sheets
• Underwriting debt
• Ensuring contractual, legal, and technical risks are
properly mitigated by acting as technical bank or
documentation bank and applying due diligence
• Providing one of the only dedicated agent and
security agent units in the banking sector
2018 Highlights
• Project Finance and Syndications: DCM orga-
nized and restructured syndicated medium-term
loans worth EGP 69.1 billion for public sector
companies and quasi-sovereigns in the power and
oil and gas sectors. CIB captured the lion’s share of
public sector debt arrangements in 2018.
• Private Sector Borrowers: DCM concentrated this
year on the oil and gas, telecoms, ports, refineries,
power, and petrochemicals sectors. Additionally,
the division focused on refinancing, restructuring,
and re-engineering balance sheets for private sec-
tor borrowers. It continued to play a pivotal role in
advising and arranging securitization issuances
in cooperation with several partner banks.
• Securitization: In 2018, DCM closed securitiza-
tion deals worth EGP 4.4 billion out of a total
EGP 5 billion in the Egyptian market, firmly ce-
menting CIB’s position as the top Egyptian bank
structuring securitizations in the local market.
The division also penetrated new sectors in 2018
including micro and consumer finance.
DCM Awards in 2018
• Best Securitization Deal in Africa for Cor-
please’s seventh securitization worth EGP
1.072 billion at the EMEA Finance Achieve-
ment Awards 2018
• Best Securitization House at the EMEA Finance
institution and the group
Achievement Awards 2018
• Best Syndicated Facility in Africa for the EGP
13.5 billion EGPC transaction at the EMEA Fi-
nance Achievement Awards 2018
• Best Project Finance Deal in Africa for the
USD 900 million Egyptian Electricity Holding
Company deal at the EMEA Finance Achieve-
ment Awards 2018
On the Bloomberg Africa Bookrunner League Table,
CIB ranked 7th among African banks in 3Q2018, a
remarkable jump from our 11th place ranking in
2017. DCM was third among Egyptian banks on the
table with a market share in Africa of 3.7%.
Regarding the role of Initial Mandated Lead Ar-
ranger, CIB ranked third among Egyptian banks
and 8th among African banks, up from 15th in 2017.
DCM’s market share stood at 3.1% for 3Q2018, posi-
tioning CIB as the top-ranking private sector bank
in Egypt in both arrangement of syndicated loans
and bookrunning.
2019 Forward-Looking Strategy
• Project Finance and Syndications: In line
with the Egyptian government’s economic
reform program, DCM will continue capital-
izing on key industries and focus on expand-
ing into alternative energy, utilities, and
infrastructure plays, such as railways, ports,
and new economic zones. DCM deals in the
pipeline for 2019 amount to EGP 60 billion.
• Securitizations: DCM has deals valued at EGP
6.05 billion in the pipeline for 2019, and the divi-
sion plans to introduce new structures in the
debt capital market.
Direct Investment Group
CIB’s investment arm, the Direct Investment Group
(DIG), is responsible for the Bank’s direct equity
acquisitions, divestitures, and equity portfolio man-
agement across local and regional markets. DIG
maximizes CIB’s return on investment by utilizing
the Bank’s designated funds to invest in sectors
with high potential for growth.
2018 Highlights
DIG has expanded its deal-sourcing process to
include SMEs as well as big-ticket transactions,
whether independently or through co-investing,
leveraging DIG’s expansive network in the market.
During 2018, the team screened many new SMEs
that operate in financial services, IT, food and
beverage, healthcare, education, and renewable
energy. DIG also finalized the establishment of
CIB’s fully owned venture capital firm CVentures.
On the divestiture side, DIG succeeded in fully
exiting one of its portfolio investment companies
operating in the electricity sector, achieving an
IRR of c. 50%. DIG also partially exited two of the
Bank’s investments and affiliates operating in the
financial services and security services sectors.
On the portfolio acquisitions front, DIG acquired
a minority stake in a financial services and invest-
ments company. Additionally, and in line with
the Bank’s direction to support the government’s
financial inclusion initiative, CIB partnered with
strategic shareholders and established a greenfield
investment in an agent banking services company.
2019 Forward-Looking Strategy
In 2019, DIG will continue expanding its portfolio by
making quality equity investments that provide CIB
with the opportunity to create synergies and strate-
gic alliances, generating lucrative financial returns.
Strategic Relations Group
The Strategic Relations Group (SRG) is an insti-
tutional banking group dedicated to initiating,
nurturing, and growing a banking relationship
with strategic institutional depositors who are
essential contributors to CIB’s stable funding
base. The group’s primary goal is to offer a first-
class banking experience while maintaining the
delicate balance between mainstream commer-
cial banking activities and the non-commercial
needs of its clients.
SRG’s strategic clientele comprise more than 180
diplomatic missions, NGOs, educational entities,
and distinguished international and local donor
agencies. The team works tirelessly to facilitate
its clients’ business operations and meet their
banking requirements by creating innovative,
tailored products and services:
• Customized digital solutions
• Collection of tuition and visa fees
• Monitoring and reporting of deposits activities
• Fund management and pension savings plans
• Providing a settlement system between tourism
companies and airlines
• Dispatching mobile tellers upon customer re-
quest to act as a temporary small banking unit
at the customer’s premises
• Special offerings for staff loans
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2018 In REvIEW >> Institutional Banking
EGP MN
697.2
FX gains in 2018
2019 Forward-Looking Strategy
• The group aims to become one of CIB’s primary
corporate lead generators, focusing on existing
relationships while simultaneously capturing
new-to-bank opportunities by leveraging a
wider networking base.
• It recently designed a tailor-made, short-term
bridge finance facility for the education sec-
tor (including universities and schools) to
eliminate cash flow gaps that develop during
the year. This product is poised to become a
major attraction for these institutions, help-
ing expand our institutional depositor rate.
Enterprises and Governmental Relations
The Enterprises and Governmental Relations (EGR)
Group manages the Bank’s relationship with cus-
tomers falling under the umbrella of state-owned
enterprises, government entities, and sovereign au-
thorities. The EGR Group functions as a relationship
manager under the Bank’s IB groups, catering to
the needs of these strategic customers and growing
CIB’s business with these sectors.
The team possesses a deep understanding of
client operations that allows its members to act
as clients’ advocates within the Bank while also
providing continuous support and financial ad-
vice. EGR clients require higher flexibility and
constant support in their transactions as well as
financial and advisory assistance.
EGR Group’s mission is to become the market
leader in the provision of banking services to
government and public sector entities. The group
works tirelessly to acquire new business in these
areas, capitalizing on our highly experienced
staff, strong customer base, healthy and diversi-
fied portfolio, and broad coverage of different
sectors and industries.
2018 Highlights
2018 was another successful year as the EGR Group
managed to attract EGP 5 billion in deposits, growing
its balance sheet by 26% to EGP 24.3 billion in deposits.
2019 Forward-Looking Strategy
• In 2019, the group plans to focus on government and
public sector entities, which are expected to see in-
creased cash flow due to the planned privatization
of 23 public sector companies, the restructuring of
others, and the establishment of a new sovereign
wealth fund. We are also planning to attract cash-
rich holding companies and their subsidiaries.
• For the enterprise sector, the group is working
on retaining existing customers as well as at-
tracting new-to-bank companies in this sector.
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2018 In REvIEW
Retail
Banking
EGP BN
22.0
Total HNW deposits
in 2018
Consumer Banking
CIB Consumer Banking remains committed to ex-
ecuting the segmentation strategy developed and
communicated in 2017. This strategy continues to
drive our efforts to deepen our customer relation-
ships, execute targeted marketing campaigns, and
attract new customers.
Pillars of Our Consumer Banking Strategy
• Data analytics and behavior segmentation: Le-
veraging the Bank’s investment in data analyt-
ics, we continue to drive a targeted lifestyle and
behavioral approach to segmentation. We aim
to retain, deepen, and grow our relationships
with customers through tailored campaigns,
along with more specific targeting criteria.
• T24 banking upgrade: We are upgrading our
current core banking IT system (Temenos
T24) to benefit from new features, such as the
arrangement architecture, to develop new
products and expand STP to improve opera-
tional efficiency.
• Digital transformation to enhance customer
experience and drive cost efficiency: CIB is cur-
rently engaged in a number of transformational
projects, such as loan origination, customer
account onboarding, and upgrading our digital
banking platform. We are implementing seg-
mented operational processing and a service
model that will ensure that CIB provides the
best customer experience in the local market.
• Aligning the product range to segment-specific
needs: We continue to align our product of-
ferings to our customer segments to enhance
the customer experience, improve productiv-
ity, and deepen relationships. In this vein, we
launched our new high-net-worth segment
Private together with an entirely new product
and service proposition.
• Improving customer loyalty: We digitized the
current loyalty scheme, which had a marked
impact on customers
increased
awareness and activity.
through
Private Segment
The new segment caters to the banking and in-
vestment needs of clients with a minimum AUM
threshold of EGP 20 million by providing a range
of alternative solutions, including: tailored bank-
ing products and services, new lending products,
investment solutions, and other wealth-related
services. The segment aligns with regional com-
petitor HNW propositions delivered via a sepa-
rate distribution model.
2018 Private Financial Highlights
• Total deposits reached EGP 22.0 billion
• Total asset portfolio hit EGP 2.6 billion
Key 2018 Private Milestones
• Brand name and marketing plan: The soft
launch of the segment took place in May, and
individual meetings with all Private clients
have already taken place. All branded ma-
terials for the new segment, including the
website and Internet banking platform, are
aligned with its identity.
• Operating model and dedicated premises: The
segment will operate and welcome Cairo-based
clients in Zamalek. A Client Advisor is perma-
nently located at a branded CIB Private office
serving clients based in Alexandria. Client.
Advisors are the main touch point for any ser-
vice within the Bank, but clients also have the
option to call CIB short numbers.
• Launch of new banking and investment
products: The unveiling of the Mastercard
World Elite credit card was aligned with the
launch of the Private segment. We have also
developed a branded debit card for Private
clients. Other solutions such as structured
CDs and portfolio management products are
expected to be launched in 2019.
Wealth Segment
The Wealth segment continued expanding its brand
position and focus on targeting affluent customers.
The Bank continues to offer customers a unique set
of products and services and an exceptional cus-
tomer experience.
The division developed an ongoing learning and
development program via our “Wealth Academy”
and the International Introduction to Securities and
Investment exam offered by the Chartered Institute
of Securities and Investment (CISI). As of December
2018, we have 48 certified Wealth Managers.
Enhancing service levels and value proposition
will continue to be the main focus. In January
2018, he Bank launched concierge services for
all Wealth customers in partnership with Les
Concierges Egypt. Additionally, it enhanced the
Wealth internet banking experience by includ-
ing the names and contact details of individual
Wealth officers to better serve clients.
In 2018, it pursued several brand-building initia-
tives, sponsorships, and events that increased
brand engagement, the most prominent of which
was a partnership with the Four Seasons San Ste-
fano in Alexandria, offering special perks ranging
from free nights to discounts and special mem-
bership discounts from Palm Hills club. It also
offered the beIN Sports Package during the world
cup and invited Wealth clients to the Ahl Misr An-
nual Sohour Event. In addition, customers were
also invited to a concert by renowned Egyptian
composer and pianist Omar Khairat as part of the
benefits strategy for the segment.
2018 Wealth Financial Highlights
• Total deposits reached EGP 96.3 billion
• Total asset portfolio hit EGP 11.4 billion
Plus Segment
In 2018, we focused on enhancing services by intro-
ducing a new concierge service to Plus customers
through our partnership with Les Concierge Egypt.
We are currently in the pilot phase of offering gov-
ernment service assistance.
2018 Plus Financial Highlights
• Total deposits reached EGP 21.4 billion, increas-
ing 22.5% y-o-y
• Total assets hit EGP 1.7 billion, representing a
47.3% increase y-o-y
Personal Banking Segment
In 2018, our Personal Banking segment delivered a
strong performance, adding 245,876 new-to-bank
customers, which translated to a 21% increase in our
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Annual Report 2018
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67
2018 In REvIEW >> Retail Banking
customer base. Total deposits increased 19.9% while
assets recorded strong growth of 14.9% and sav-
ings accounts 16.8%. The performance stems from
our customer-centric brand proposition and use of
behavioral segmentation to deepen relationships
and improve loyalty among personal banking cus-
tomers. We also engaged in portfolio management
activities to grow balances from existing customers
and reduce stagnancy and attrition.
In 2018, CIB also focused on increasing the revenue
generated from marginally profitable customers by
cross-selling assets and reducing the cost to serve.
We have launched asset cross-sell campaigns and
payroll packages differentiated by company size.
Our digital migration efforts are paying off, with
23% more transactions off-loaded from our branch
network in 2018 resulting in a substantial increase in
the number of online banking registrations. In 2019,
the segment will prioritize creating a new personal
banking brand identity and product propositions to
appeal to a wider base of consumers and continue to
drive digital migration.
2018 Financial Highlights
• Total deposits increased to EGP 18.9 billion, a
19.9% increase y-o-y
• Total assets climbed to EGP 6.7 billion, increas-
ing 14.9% y-o-y
Consumer Assets
The Consumer Banking Household segment achieved
significant performance and continued to grow its
market share of consumer assets, reaching 7.78% in
2018 compared to 7.67% in 2017. Additionally, CIB
captured 9.9% of market growth in 2018 despite having
only 6% of branches by market share. CIB is currently
ranked the top private sector bank in terms of con-
sumer assets, with our consumer asset portfolio up by
21.9% in 2018 to EGP 22.9 billion. Consumer assets re-
corded total revenues of EGP 1.3 billion in 2018, which
contributed 23% to total Consumer Banking revenues.
21.9%
Increase in consumer asset
portfolio in 2018
Our key objective is to sustain this level of growth
in 2019 and outpace the market by adopting a
segment-driven strategy that promotes our prod-
uct propositions, acquisitions, service models,
portfolio, and life cycle management. This will
translate to providing clients with need-based
propositions. We will continue building and lever-
aging our investments in technology transforma-
tion and digital platform in 2019.
Cards Business
Our Credit Card portfolio has grown by 8% since 2017,
outpacing the average market growth rate of 7%. At
the end of December, our portfolio included 494,403
cards, and we experienced strong improvement in
activation rates. End-of-period net receivables (ENR)
grew 22.1% to EGP 3.5 billion. We are currently the
second largest bank in the market in terms of ENR.
CIB’s market share continued to increase, reaching
23.2% at the end of the year. Furthermore, CIB is first
in the market in terms of spending, which was up 31%
in 2018. This performance was mainly driven by:
• Product launches and acquisition campaigns:
Fee waiver acquisition campaigns for Core and
Premium cards and the World Elite Card launch.
• Effective attrition management: Credit card at-
trition decreased from 10.1% in 2017 to 8.1% in 2018.
• Activation initiatives and campaigns: We
launched a new activation process in addition
to the NTB Early Month on Book Program and
dormant campaigns, which targeted inactive
EGP BN
22.9
Consumer asset
portfolio in 2018
customers and sought to raise awareness
about benefits they could enjoy from CIB’s
products and services.
• Zero interest installment campaigns: Strategic
partners included local and international compa-
nies and shops such as Apple, Nestle, Carrefour, Hy-
per One, Delta Group, Ragab Sons, and Souq.com.
• Sales contests and incentives: Launch of suc-
cessful sales contests and the revision of the
incentive scheme.
CIB’s investments in technology and data analytics
will present significant further opportunities for
growth in 2019.
Personal Instalment Loans Product
Our consumer loans portfolio grew significantly in
2018 to reach EGP 16.3 billion despite the economic
and overall market challenges. The Personal Loans
Business recorded total revenues of EGP 749.4 mil-
lion, contributing 12% to total Consumer Banking
revenues in 2018 driven by:
• Product launches and acquisition campaigns:
Salary up-front revolving overdrafts, secured
facility CD bundle campaigns, beIN sports cam-
paign, and behavioral segmentation campaigns.
• Credit policy changes: Increasing AUM-based
program limits, increasing maximum loan
amount for self-employed customers, accept-
ing customers that have full salary as variable
income, implementing a new income computa-
tion methodology (self-employed), and expand-
ing outsourced companies to include all those
meeting our policy criteria.
• Sales contests and incentives: Launching
successful sales contests and revising the
incentive scheme.
Mortgage Product
The Mortgage Business experienced outstanding
performance throughout 2018. Low-income mort-
gage acquisitions registered revenues of EGP 28.8
million in 2018 and enjoyed a strong flow of referrals
from the Mortgage Finance Fund, which bodes well
for future growth. ENR reached EGP 799 million.
Significant growth in CIB’s low-income segment
was triggered by the following:
• Operational process: Process enhancements in
collaboration with other departments to reduce
turnaround time.
• Changes in credit risk policies: Outstanding
performance of the low-income mortgage port-
folio encouraged the Risk Group to approve
certain policy changes that led to higher acqui-
sition numbers throughout the year.
• Recognition and incentives: Monthly sales
recognition is based on productivity and
target achievement.
Liabilities
The total deposit portfolio reached EGP 165 billion in
2018, up 18.3% from 2017. This growth was achieved
despite aggressive price competition with public sec-
tor banks. The key growth drivers in 2018 included:
• Focusing on gathering low-cost deposits spe-
cifically in CASA by offering competitive rates.
• Promoting local currency floating CDs to coun-
ter price competition.
• Introducing competitively priced USD CDs to
meet corporate lending requirements.
We also focused on improving product profitability
and enhancing spreads while growing the deposit
base. These efforts have translated into a new port-
folio mix for Consumber Banking CASA products;
reaching 48.8% in CASA compared to 51.2% in term.
CIB aspires to build a “sticky customer deposit” base
that is less price sensitive.
Insurance Business
The Insurance Business provides life and general
insurance programs that generate non-interest
revenues in the form of fees for CIB Consumer
Banking. CIB is the largest distributor of individual
life insurance policies in Egypt in partnership with
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2018 In REvIEW >> Retail Banking
AXA. CIB is the first bank in Egypt to provide indi-
vidual international health solutions that cover a
wide array of global services.
Strategic Goals
• Increase revenue contribution to Consumer
Banking.
• Increase customer product penetration by ex-
panding the insurance product range.
2018 Achievements in Life and Health Insurance
• Life insurance written premiums (as measured
by Annualized premiums insured) increased
to EGP 555.6 million compared to EGP 482
million a year ago
• Fee income increased by 26.5% in 2018 com-
pared to 2017
• The Insurance Business generated EGP 182.6
million in revenues in 2018 compared to EGP
144.4 million in 2017
Business Banking
Business Banking serves over 48,000 small and
medium-sized enterprises through a network of over
a hundred experienced relationship managers across
the country. We aim to be the bank of choice for
Egypt’s SMEs by providing market-leading services
and an innovative portfolio of products and solutions
tailored to the needs of smaller enterprises.
Our broad range of integrated financial solutions
includes cash management, secured and unsecured
lending, trade finance, payment, and e-commerce to
help our clients manage and grow their businesses.
CIB is committed to supporting SMEs as a corner-
stone of both Egypt’s and CIB’s growth. Revenues
from the Business Banking Division have been
steadily growing year on year, and we aim to
continue growing our contribution to the Bank’s
profitability and the Egyptian economy.
2018 Highlights
Business Banking continued to display strong
performance in 2018, as demonstrated by its perfor-
mance indicators:
• Deposits: reached EGP 48 billion, growing 21% y-o-y
• Trade: EGP 55 billion was facilitated, grow-
ing 34% y-o-y
• Payments solutions: attained 30% market
share, processing EGP 27 billion in transactions
• Client base: increased 15% to reach 48,000
companies
• Operating profits: increased 16% to EGP 2.4 billion
Empowering Women in Business
Business Banking has partnered with the US
government-backed Overseas Private Investment
Corporation (OPIC) to hold 12 workshops as part
of the “Women in Business” Capacity Building
Program that aims to increase banking and
financial awareness among female-owned and
managed start-ups and small companies. The
program promotes inclusion in the formal sector,
access to finance and bolsters the Bank’s stand-
ing as an institution that upholds and supports
gender equality throughout the sector.
Segmentation
Product Enhancement
Cluster customers based on transactional
behavior to develop customized services
Data analytics will drive continuous en-
hancement of product parameters and the
customer experience
Sales Management
Marketing Campaigns
Development of automated, data-driven sales
management tool to accelerate growth and
enhance sales productivity
Campaign insights to enhance marketing
decisions
2019 Forward-Looking Strategy
Business Banking will continue to tailor its offering
to clients’ changing financial needs in order to offer
the best and most responsive customer experience
in the market.
Leveraging Data
Our increasing use of data to enhance business
decisions will drive innovation in segment-focused
sales, risk management and process optimization.
Professional Services Alliances
Our exclusive alliances with leading providers of
professional non-banking services allow clients
to benefit from a wide range of services at dis-
counted rates all under one roof.
Digitalization
Our market-leading online banking platform offers
clients the ultimate convenience in managing their
financial affairs around the clock.
Dedicated Contact Center
A dedicated Business Banking call center will be
launched in 2019 to offer a new and flexible channel
for client enquiries.
Risk Infrastructure
The build-out of our world-class, end-to-end
risk infrastructure will support the ambitious
growth targets for the SME business. A key pil-
lar of our risk management strategy is the active
monitoring of all accounts using comprehensive
heat maps and early warning indicators that
allow proactive assistance for clients prior to
actual financial difficulties. The development of
our in-house knowledge database of key indus-
trial sectors is also a key differentiating factor
for the credit business.
Payment Acceptance
CIB maintained its dominant position in Egypt’s
payment acceptance sector through 13,446 POS
machines throughout Egypt. Around 11,000 mer-
chants benefit from our payment and e-commerce
services, including our new installment option
for online purchases. In 2018, CIB processed over
EGP 27 billion in POS transactions, attaining a
market-leading 30% share of all transactions.
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2018 In REvIEW
Coo
Area
2.8%
Staff attrition rate due to
incentive schemes
Few banks in our region have fully embraced the po-
tential of technology in digitalization. CIB, however,
has bucked this trend, and has proved its devotion
to scaling up the presence of financial solutions in
the day-to-day lives of customers.
CIB’s commitment to developing innovative prod-
ucts and services suited to the digital era is as
evident as ever. This year, CIB has inaugurated two
major projects: the Core Banking Release, which will
allow the Bank to transition to the R18 Platform,
and a new digital platform for consumers. These
interrelated projects will accelerate the Bank’s ef-
forts to upgrade its functionalities, offer customers
a better, more streamlined experience, and enhance
CIB’s product mix. Such innovation will be crucial to
maintaining the Bank’s position as a market leader.
Many segments in Egypt’s credit market remain un-
penetrated, leaving vast opportunities for growth.
Seeking to tap into these segments, in 4Q2018 CIB
launched its Supporting Financial Inclusion pro-
gram with the aim of building the infrastructure
required to bring financial services to unbanked
Egyptians via digital channels.
To stay competitive in the market, CIB has supple-
mented its customer-centric approach with a focus
on incorporating scalable technologies across all
our services. Under the Sigma Program, CIB has suc-
ceeded in delivering projects that enhance customer
engagement, operational efficiency, and allow the
Bank to capitalize on new sources of revenue. The
year has seen CIB reap gains from increased cus-
tomer interaction on our new corporate trade and
cash platforms and a new workflow system that has
optimized the operations landscape, allowing us to
consolidate all workflows under a single system.
One of the major projects delivered this year was our
Customer Relationship Management program, with
its account opening and service request modules. The
program is a solution designed to build stronger rela-
tionships with customers, whether the objective is cus-
tomer retention or giving a boost to business growth.
We continued this year to work on enhancing the
Bank’s security posture to manage emerging cyber
security threats and risk. CIB’s ongoing technologi-
cal advancement relies on always keeping our secu-
rity technologies updated to cope with the speed of
change and maturity of the threats and risks, having
the right security strategy, and incorporating secu-
rity analysis to act as a cornerstone in all businesses.
However, technological advancement can only suc-
ceed with a team of the right caliber in place. Guided
by our purpose of being an “Employer of Choice”, a
number of initiatives were carried out to raise staff
morale. These include periodic events held to award
top performers among Call Center staff, which have
helped reduce the staff attrition rate to 2.8%. Our
staff empowerment efforts have involved extending
their authorities, training, and motivation in the
context of our customer-centric philosophy, in ad-
dition to providing the iCare and iOwn training for
staff in different domains. On the branch front, we
launched a “Good to Great” program specifically tai-
lored to customer-serving staff. On-the-job training
continued with the same momentum. In alignment
with international norms in the area of building
staff skillsets, employees were offered certifications
based on job requirements to meet today’s dynamic
work environment needs across the COO arena, with
special focus given to technical training for IT staff.
Our branch network remains the main channel for
serving customers. In 2018, we managed to deliver
nine new branches to reach a total of 203 branches.
ATMs have proven to be a main anchor in offloading
branch customers, and we added 98 ATMs in 2018
for a total of 917 ATMs in the network.
In 2019, CIB will continue to focus on investing in the
technologies that bring to fruition our transforma-
tion strategy and allow us to implement our digita-
lization initiatives, construct scalable networks, and
initiate projects that enhance the Bank’s security and
the performance of its systems with a data-centric
approach. As for operations, process re-engineering
and customer satisfaction will be the primary drivers
for most of the activities taking place next year.
Information Technology
The past couple of years have seen a real trans-
formation in CIB’s IT functions. This transforma-
tion has been at the heart of all the initiatives
and activities we have successfully delivered. The
Bank’s appetite for technological advancement
has required IT to work on bringing this power to
the whole Bank through integrating Big Data en-
vironments, upgrading infrastructure resiliency,
optimizing our storage, and building enterprise
platforms to create the profound shift needed for
CIB to continue to be a leading service provider.
The rapid adoption of data analysis as a primary
tool for creating a diverse spectrum of products and
services customized to every customers’ taste has
meant investing in the construction of our Big Data
environment. We have implemented state-of-the art
technology into our data warehouse infrastructure
to enhance report extraction and data analysis.
Naturally, aggressive business growth has meant
expanding IT across various fronts. This year,
we continued optimizing our storage to enhance
performance, capacity, and data protection ca-
pabilities. Growth has also required ongoing de-
velopment of our security systems. We continue
to reinforce our security strategy by integrating
future security components, enhancing our net-
work and data security.
CIB’s transformation strategy also entails scalable
infrastructure. In 2018, the Bank took the first
steps toward implementing a new software defined
network (SDN) to create a virtual network across
data centers. With this technology, CIB can sup-
port a new generation of distributed applications
and accommodate virtualized and non-virtualized
environments. The technology will also help the
Bank fulfill current and future business objectives
linked to the evolution in digitalization and mobile
applications solutions.
To better manage its activities, IT has com-
menced an enterprise platform implementation
strategy. The new platforms will link data col-
lected from different technologies quickly and ef-
ficiently, simplifying and unifying systems. These
platforms grow more valuable as the volume of
business increases, leading to an influx of activity
both by internal users and customers.
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2018 In REvIEW >> COO Area
IT began to implement a program of automation
and process re-engineering after assessing options
for enhancing IT productivity and supporting IT re-
source management and efficiency. Furthermore, IT
monitoring capabilities have matured to deliver vis-
ibility across the entire IT landscape and provide su-
pervision over systems, business services, network,
and customer touch points, as well as user behavior.
Operations Channels and Customer
Experience
The Bank’s success goes beyond offering the usual
services to our customers. It hinges on our ability
to effectively execute the move to a more customer-
centric approach, which will be achieved through
operational efficiency, automation, and process re-
engineering, all with the aim of reducing the costs
of service and improving customer satisfaction.
This in turn will be achieved through digital chan-
nels, always with an eye to providing a first-class
customer experience.
CIB continues to maintain its attention to custom-
ers’ voices, further developing its annual Customer
Satisfaction & Net Promoter Score survey to mea-
sure customer satisfaction across all segments
and service channels. Major improvement against
regional benchmarks was recorded in 2018 scores, a
result of expanding key service indicators to include
a mixture of globally recognized service standards
and competitive analysis measures.
When it comes to staying committed to our cus-
tomer-centric strategy, it is imperative to build a
culture that empowers staff to handle customers’
requests and complaints swiftly. One of the major
initiatives the Bank adopted on this front in 2018
was the First Contact Resolution, implemented
across the CIB Call Center to allow staff to serve
the customer end-to-end and handle complaints in
a dynamic and proactive manner.
Our customers depend on us to provide top-notch
service, and various initiatives were launched
throughout the year to enhance their experience
by applying a multi-vendor strategy with ATMs.
This focus ensures the availability of multiple
service providers, helping avoid any service dis-
ruption and maintaining the quality of service
provided to our customers.
Operations continues to be at the core of the auto-
mation and re-engineering initiatives. Movement in
this area ranged from shifting different activities to
the Call Center to re-engineering multiple processes
to allow the Bank to offload support duties from
branch staff and significantly shorten service deliv-
ery turnaround time.
Operations progressed in 2018 with the automation
roadmap set in late 2017. The focus on STP has al-
lowed the Bank to reach an STP rate of 90% for e-
remittances.
Orchestrating the digital strategy with both our
efficiency and process re-engineering activities is
a task that has required aligning all initiatives in a
cohesive manner, ultimately reflected in a superior
customer experience. SMS activation of debit cards
was launched during 2Q2018, decreasing the load of
incoming calls to the Call Center and thus enhanc-
ing resource capacity. To allow customers to tackle
their day to-day activities with ease, the IVR call tree
was revamped. This increased customer migration
to IVR and enhanced the IVR resolve rate to allow
customers to conduct different financial activities
quickly and efficiently.
Despite the focus on aligning initiatives with our
digital strategy, we never neglect opportunities to
re-engineer different processes across the COO area,
proactively applying changes to existing processes.
Solid processes followed by front-liners for Corporate
Account Opening have enhanced turnaround times.
Remittance transaction processing time has improved
through various process re-engineering initiatives that
allowed for the absorption of a significant increase in
the volume of transactions with the same resources.
CIB increased its presence in Smart Village by
opening a fourth building with a new, state-of-the
art Training Center — a key venue in CIB’s Head
Office expansion.
The Bank is also utilizing technology to enhance
staff’s work environment. With the initiation of a new
automation initiative, the Quality Management Soft-
ware system, to serve both the Premises and Facility
Management departments, the Bank will positively
influence processes in the real estate and premises
projects division. During 2018, the procurement team
has been working diligently with supply chain col-
leagues to adopt new e-business suite technologies,
helping reduce costs and save processing times.
for the second consecutive year. CIB also fully com-
plies with the Swift Customer Security Program
(CSP) mandatory requirements.
Security & Resilience Management
With the ever-evolving cyber threat landscape
and the rising global concerns surrounding cyber
security, it has become increasingly important
to develop a dynamic approach in the area of Se-
curity and organizational resilience. CIB aims to
continuously develop our capabilities to remain
in tune with global trends and best practices. CIB
takes its security and customers’ welfare seri-
ously, and executive management has prioritized
cyber security and resilience through the involve-
ment of different committees and a mandate to
regularly report a brief to the BoD.
The Bank continues to focus on the execution of
the security strategy adopted in 2015, with various
programs implemented since then. Continuous
enhancement of the Security Operations Center is
an ongoing activity, and our capabilities were aug-
mented this year through the introduction of cyber
threat intelligence. This system provides CIB with
early warning signals for more proactive manage-
ment of the cyber security risks and threats.
CIB understands the importance of education and
training within this non-intuitive sphere, and con-
tinues to run a Security and Resilience Awareness
Program, offering different activities on multiple
channels targeting customers. The Bank has also
instituted several structured internal awareness ac-
tivities and mandatory training for staff. Moreover,
CIB continues to invest in enhancing the skills of the
Security & Resilience Management team through
learning and development programs.
The Bank has hired globally renowned security con-
sultancy services, emphasizing the priority it has
placed on this strategic direction. Our consulting
partners have assessed the quality of the investments
made in the area of security and found them to enjoy
a very structured and valid strategic approach, en-
dorsing management directions in this domain.
Compliance continues to be an area of focus, and
CIB maintains certification status with the Payment
Card Industry – Data Security Standards (PCI-DSS)
Major investments have been deployed to improve
and refresh CIB’s security infrastructure technolo-
gies and strengthen our defense-in-depth strategy
through world-class technology solutions coupled
with an enabled workforce, policies, and procedures.
Taking our business continuity capabilities to the
next level, resilience management was introduced,
with a widened scope of oversight for business
continuity and contingency management to cover
critical third parties in addition to the internal
capabilities.
Finally, this year the Bank proudly received
ISO22301:2012 certification for Business Continuity
Management. ISO 22301 certification was awarded
to CIB by PECB, a global provider of training, ex-
amination, audit, and certification standards, in
partnership with EGYBYTE, a leader in the MENA
market for IT Service Management.
ISO 22301 is the International Standard for Busi-
ness Continuity Management, providing guidance
to certified organizations allowing them to iden-
tify and manage the current and potential future
threats to the business. Hence, taking a proactive
approach to minimize the impacts of incidents,
minimize downtime, improve recovery time, and
demonstrate resilience to customers and suppliers.
ISO certification is a major recognition of CIB’s
efforts on the business continuity front. CIB’s ISO
certified Business Continuity Management Sys-
tem has left the Bank in a position to effectively
limit the risk of unexpected incidents, allowing
the Bank to operate during tough situations,
reduce the likelihood of operational disruptions,
and continue to provide customers with the ex-
pected services while maintaining the highest
levels of customer satisfaction.
CIB is best known for its innovation, and has
succeeded in embedding this culture at both the
technological and operational levels. Most impor-
tantly, innovation has been successfully used for
the task of making our customers happy.
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2018 In REvIEW
Digital
Banking and GTS
95.1%
Migration rate in cash
deposits to the ATM network
The past three years have seen banks move quicker
than ever to act on digitalization trends. At CIB,
we’re not only adopting them, but we’re actively en-
gaged in educating our clients about evolving digi-
tal banking solutions and offering them accessible
tools that make banking even more simple.
In 2018, the digital business plan was built on of-
fering an outstanding, trusted, and efficient digital
financial experience tailored to customers’ needs.
It also sought to support the Bank’s growth while
keeping costs low.
With this in mind, CIB’s digital strategy framework
centers on four main pillars: enhancing the custom-
er experience, increasing migration and automation
ratios, optimizing cost, and generating revenue.
Innovation and Fintech
CIB Fintech Engagement was initiated to cater to
fintech startup needs, providing them with the tools
they need to survive in today’s competitive market.
In 2018, we established an echo-model of support,
built strategic alliances serving CIB’s financial
inclusion objectives, and formulated a pipeline of
fintechs to nurture and introduce to the market.
Innovation Activities: Digital Studio
CIB Digital Studio serves as a hub that focuses on
fostering a culture of innovation within the Bank. By
challenging employees to adopt a flexible mindset
and think outside the box, the Digital Studio aims to
accelerate CIB’s digital capabilities.
potential partners, an introductory session called
“Innovation and Pizza” that explained the innova-
tion process, the “4 Ps” of innovation, the “5 traits of
successful innovators,” and the ideation process.
2019 Forward-Looking Strategy
In 2019, we plan to continue expanding CIB’s inter-
nal innovation by conducting awareness sessions
and thinking seminars. We will also implement an
“Idea Management Solution” in collaboration with
potential partners, an automated and monitored in-
termediate platform between the innovation team
and CIB employees. This platform will encourage
employees to come up with new ideas, allow the
innovation team to create specific challenges, and
address defined pain points in digital banking.
Fintech
CIB strives to provide clients with innovative solu-
tions to meet their financial needs and expectations
while maintaining sustainable growth through
creating value for stakeholders.
The Bank collaborated with AUC Venture Lab (AUC
V-Lab) to create AUC Venture Lab Fintech Accel-
erator, powered by CIB. Its objective is to bolster the
fintech scene in Egypt and help select startups grow
and enter the market. The accelerator has completed
two cycles in 2018, graduating 10 startups and sup-
porting over 25 entrepreneurs. It has helped bring
to the market innovative fintech startups such as
PayMe, 7aweshly, Gameya, Ordera, and others.
2018 Highlights
We took part in the first workshop organized by
In addition to CIB’s long-standing sponsorship
of AUC V-Lab, the Bank has collaborated with
Temenos, the market leading software provider
for banks and financial institutions. This tripartite
agreement between CIB, AUC V-Lab and Temenos
will support startups participating in upcoming
fintech cycles by giving them the opportunity to
test their products and services in a sandbox — a
non-production cloud-based version of the Teme-
nos T24 core banking system.
2018 Highlights
• Rolled out the third fintech track cycle, which
introduced four potential startups to the market.
• Supported Hona Al Shabab, a competition
hosted by leading Egyptian network CBC for
emerging business entrepreneurs. Through this
sponsorship, 30 startups have been introduced
to the market in fields such as health, e-com-
merce, food, payments, and fintech.
• Utilized our strategic partnerships and agree-
ments with Orange Lab and Dell EMC to support
innovation activities and increase awareness.
2019 Forward-Looking Strategy
In 2019, CIB Fintech Engagement aims to use
fintech companies as a channel to launch profit-
able and innovative technology-enabled business
models to serve the Egyptian market that could
be replicated in other emerging markets. This
strategy will serve two objectives: contribute to
Egypt’s financial inclusion initiative and explore
new business models that fit existing business
lines within the Bank.
ATM Network
CIB maintained its competitive advantage in the
Egyptian market through operating the largest
ATM network among private banks. By the end of
December 2018, the Bank’s network was comprised
of 917 ATMs. The network provides customers with
a variety of services, including cash withdrawal
and deposit, credit card settlement, bill payment,
mobile top-up, mobile wallet cash-in/out, and check
deposit services.
2018 Highlights
• Maximizing the utilization and return from
our ATM network was a key focus area dur-
ing 2018. The average number of transactions
across the ATM network increased by 12%
y-o-y as of year-end, on the back of relocat-
ing low-utilized ATMs to higher footfall
locations and matching customer needs with
ATMs’ wide range of value-added services.
• The total ATM network increased by 98 ma-
chines to 917 in December 2018 from 819 in
December 2017.
• The ATM network continues to serve branch
migration efforts. As of December 2018, it
achieved a 95% migration rate in cash de-
posit transactions below EGP 10,000 versus
branch deposit transactions. It also achieved
a 98.35% migration rate in cash withdrawal
transactions below EGP 20,000 versus with-
drawal transactions at branches.
• Corporate deposit card transactions saw a
128% increase as of December 2018 to 113,000
transactions with a total deposit value of
EGP 731 million.
• CIB opened numerous ATM centers in several
locations such as Semouha in Alexandria and
Hurghada to better serve high demand on
ATMs in these areas.
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2018 In REvIEW >> Digital Banking and GTS
2019 Forward-Looking Strategy
Going forward, we will continue our efforts to en-
courage customer migration from branches and
enhance the customer experience. We will continue
adding new functionalities at competitive prices
and maximizing the utilization and profitability of
our ATM network. We also plan to focus on various
in-branch digital tactics to further optimize average
waiting and service times.
Internet and Mobile Banking
CIB Internet and Mobile Banking enable custom-
ers to easily access their accounts and conduct
a broad range of financial transactions. In 2018,
we focused on enhancing our Internet Banking
customer experience, which boosted our Internet
Banking subscribers by 95% y-o-y as of December
2018 and the number of transactions by 20% y-o-y
as of December 2018. Our Mobile Banking app user
base continued to increase, with a 151% y-o-y in-
crease in the number of transactions.
Additionally, CIB is in the analysis phase of
implementing a new digital platform. It will cre-
ate a seamless multichannel experience across
our digital channels and provide customers with
a premium Internet and Mobile Banking experi-
ence with a range of banking functionalities and
newly added services.
2018 Highlights
• Launching the new Internet Banking user inter-
face, which provided an enhanced user-friendly ex-
perience with newly added functionalities such as:
-
Organize routine transactions in one con-
venient location, making it easier to initiate
transfers using a one-time password token.
- Activity Calendar: Use the calendar view
to keep track of past, present, and future
transactions on all accounts.
• Implementing various customer experience en-
hancements over the Mobile Banking app that
focus on improving usability and ease of use.
• Creating a new Internet Banking interface for
the newly launched Private segment.
2019 Forward-Looking Strategy
Throughout 2019, CIB will focus on providing a
customer-centric Internet and Mobile Banking ex-
perience with the help of our new digital platform,
adopting emerging online banking trends, offering
new digital services, and collaborating with third
parties.
Phone Banking and Call Center
CIB’s Call Center handled a total of 4.4 million calls
as of December 2018. We have focused on offloading
calls from the Call Center to the IVR self-service by
increasing customer awareness. This strategy en-
hanced the eligible migration rate for all financial
inquiries to 78% as of December 2018 versus 70%
in December 2017. We explored various chatbot
solutions to help answer customers’ general non-
financial questions such as branch working hours
and product features.
2018 Highlights
• Launched instant credit card settlement in Sep-
tember 2018.
2019 Forward-Looking Strategy
IVR: We plan to introduce a new feature to our IVR
to serve CIB customers and non-customers, which
will reduce our average call handling time and
boost our Phone Banking penetration rates.
Call Center: We aim to transform the Call Center
into a multi-channel contact center by adding new
touch points such as live chat and chatbots.
- My Money Tool: Label and group transactions
to easily review them and track spending.
- Notifications: Customize and receive notifi-
cations on the Internet Banking homepage re-
garding account balances and exchange rates.
CIB Mobile Payment (Smart Wallet)
CIB Smart Wallet offers an innovative payment
experience serving the banked and unbanked
segments by providing a convenient, secure,
and cost-effective way to make purchases using
mobile devices. Customers can easily pay bills,
recharge their mobile prepaid line, send money to
any other wallet holder in Egypt, and deposit and
withdraw funds from CIB’s ATM network or any of
our authorized banking agents.
In 2018, we focused on improving the quality of the
customer experience by leveraging our strategic part-
nerships, growing our banking agent network to regis-
ter new wallets, and better reach our target segment.
We also partnered with existing vendors to expand the
number of available services on the wallet and boost
client satisfaction. Additionally, we collaborated with
other teams in the Bank to offer a higher value proposi-
tion through launching products over the wallet and
meet clients’ needs by monitoring and analyzing their
behavior and transactional history.
2018 Highlights
• Smart Wallet transaction volume rose 51%, and
its value surged 92% y-o-y.
• Ran marketing activities and multiple campaigns
to increase wallet acquisition and activity rates.
• Updated the Smart Wallet user interface to en-
hance the user experience.
2019 Forward-Looking Strategy
Throughout 2019, CIB will work on improving the
user experience and customer journey. We will
upgrade digital user interfaces and platforms
and adopt a multi-vendor strategy to derive the
most value from existing assets. In doing so, we
will build the capacity to service every kind of
customer in the best possible manner. We will
also focus on our distribution network to further
leverage our strategic partnerships and grow our
agent network. This will allow us to register new
wallet customers and expand our reach.
CIB Business Online and Corporate
Services
Cash Management
CIB is committed to serving our customers’ so-
phisticated business needs through implementing
92%
Surge in value of Smart
Wallet transactions
the most convenient, comprehensive, and com-
petitive banking solutions. The Bank is committed to
continuously improving its digital migration strategy
and focusing on the e-payments market by introduc-
ing the most comprehensive payment products.
Corporate Download Portal
The portal’s main function is to provide the most
sophisticated and comprehensive reports, which
allow customers to closely monitor escrow ac-
count movements.
• Post Dated Check (PDC) Reports: Providing
customers with PDC movements and details
to support companies in key sectors. It allows
real estate corporates, for example, to closely
follow their projects, unit payments, and in-
stallments processes.
• Extra Teller Info Details Service: Providing cash-
rich corporates in sectors such as petroleum, real
estate, and education with reports showing the se-
lected or desired values regarding counter deposits.
It also provides other reports such as:
- Loans and time deposit position
- Historical statements
- Outgoing check reports
- Swift statement MT940
Automated Clearing House
The Automated Clearing House (ACH) network is
a reliable and efficient nationwide electronic fund
transfer system governed by the Egyptian Banks
Company (EBC) under the supervision of the CBE.
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2018 Highlights
A noticeable increase in the number of transac-
tions led to a significant impact on cash manage-
ment cost synergy, reaching EGP 178 million as
of December 2018, along with direct revenues,
reaching EGP 26.4 million on the back of:
• Presenting the ACH Direct Credit model and
enrolling the largest syndicates in the pen-
sion payment cycles with 690,751 transac-
tions as of December 2018.
• Becoming the market leader by having the largest
market share among Egyptian banks and ranking
number one for commercial domestic payments.
This included ACH Receivable and ACH Payable
(ACH Direct Credit and ACH Direct Debit) among
Egyptian banks on the ACH online platform.
- ACH Payable: Internal payments reached
895,506 with a value of EGP 13.5 billion and
outgoing payments reached 1,156,267 with a
value of EGP 25.3 billion as of December.
- ACH Receivable: Collection transactions
reached 2.26 million with a value of EGP
10.4 billion.
• The number of ACH Direct Credit transactions
reached 2 million in December 2018 versus 1.5
million in December 2017.
• The number of ACH Debit transactions reached
2.26 million in December 2018 versus 1.6 million in
December 2017.
• The number of clients reached 9,247 as of De-
cember 2018 versus 4,905 in December 2017.
• Total Migration Rate as of December 2018:
86%
Ongoing transfer
migration rate of total
bank transactions
• Providing custody, securities, liquidity, and
treasury modules over our online platform.
• Providing SMS and email notifications for bank-
ing transactions (debit and credit transactions).
• Revamping Corporate Download Portal reports.
• Revamping online portals (CIB Business Online
and ACH) to increase and improve the customer
experience and decrease turnaround time for
online transactions.
• Integrating with corporate financial systems
such as oracle, ERB, and others.
Strategic Agreements
• Partnering with Egypt Post Office to offer over-
the-counter agreements that allow custom-
ers to send funds to their chosen beneficiary
through our ACH channel; the beneficiary will
be able to withdraw the amount at any post of-
fice branch using their national ID.
- Outgoing transfer migration rate reached
-
86% of total bank transactions.
Internal transfer migration rate reached
62% of total bank transactions.
Trade Finance Management
CIB Trade Online is our new market-leading online
trade channel, offering clients the ability to conduct
and manage their trade finance transactions online.
2019 Forward-Looking Strategy
We plan to increase the number of subscribers and
transaction volumes by expanding international re-
mittance payments and targeting new markets and
areas to increase our market share.
CIB Trade Online provides customers with more trans-
parency and visibility into their trade transactions, as
well as saving time and money through its easy access,
streamlined processing, and elimination of paperwork.
2018 Highlights
Core Digital Business
• Increasing CIB market share of international
remittance solutions.
• Reached 1,621 registered customers with 18,250
transactions over its trade portal with a migra-
tion rate of 22% as of December 2018, and an EGP
9.3 million reduction in the cost of online trade
transactions. Trade Finance’s adoption rate as of
December 2018 for GCR was 38% and BB 11%.
• Launched the Export Collection-Direct Col-
lection via the CIB Business Online portal,
a significant step toward improving the
customer experience and relationships as-
sociated with our trade service offerings
over CIB Business Online. The new outgoing
document collection service, Export Direct
Collection, allows CIB Business Online cus-
tomers to export their shipping documents
directly from their premises without visiting
a CIB branch and gives them direct access
to track documents during every stage until
they reach their final destination.
• Applied a re-engineering processing cycle for un-
confirmed export letters of credit (ELC) at all trade
service hub branches. All shipping documents
presented by customers under unconfirmed ELCs
will now be completed on the same day.
• Offered the Bill Financing Module over CIB
Business Online as a discounting program to
serve exporters asking to discount/forfeit their
ELCs for immediate access to cash to serve
their working-capital requirements.
payment and collection services through banks
offering these service using the E-Pay portal.
CIB in cooperation with E-Finance successfully
provided bill payment services for customers using
E-Pay’s generalized portal. Currently, customers pay
government dues at branches with the help of bank
clerks who utilize E-Pay service screens.
To provide the best quality services, we estab-
lished the Corporate Payment Service (CPS)
portal, which allows corporate customers to pay
and manage their government payments in the
comfort of their offices, 24/7.
2018 Highlights
• CIB was ranked number one among Egyptian
banks in e-finance government online payments.
• CPS reached 512 registered customers with 20,750
transactions and a migration rate of 33% as of 2018.
• Achieved a revenue of EGP 105 million as of
December 2018.
• Added the new Suez Canal Unified Invoice Service
to the E-Pay portal, giving us the ability to cover the
payment of taxes, customs, charging customs, so-
cial insurance, and private university tuition fees.
2019 Forward-Looking Strategy
Starting 2019, we plan to continue focusing on cus-
tomer migration from branches to the online portal
to allow customers to perform their transactions
conveniently 24/7 without the need to visit a branch.
We will provide our customers with the ultimate digi-
tal solutions to benefit their businesses and support
their growth ambitions. We will continue to enhance
Business Online, adding features that make it a more
convenient and secure platform for trade and supply
chain finance, cash, treasury, and lending services.
Corporate Payment Services
As part of the Ministry of Finance’s aim to collect
all government payments electronically, an agree-
ment was reached between CIB and E-Finance
Company (which develops and operates e-pay-
ment platforms and channels) to enable customs,
tax, and other government authorities to receive
2019 Forward-Looking Strategy
Starting 2019, we plan to continue focusing on
corporate customer migration
from branches
to the CPS portal to allow them to perform their
transactions conveniently 24/7 without the need to
visit a branch. Moreover, we will focus on providing
governmental collection services for corporates
and consumers over the Bank’s digital channels by
giving individual customers the ability to pay for all
government services through these platforms.
Global Securities Services (GSS)
In 2018, CIB was recognized as the best sub-
custodian in Egypt by Global Finance for the
ninth consecutive year. It recognized the Bank’s
distinguished services provided to more than
26,000 clients with total assets under custody of
EGP 367.5 billion through processing more than
300,000 transactions annually.
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EGP BN
367.5
Total assets under custody
2018 Highlights
• Attracted new portfolios worth a total of EGP 16
billion during 2018, diversified between script-
less and physical securities.
• Increased fixed-income investments under cus-
tody significantly with a 136% growth in T-bills
as of December to EGP 47 billion.
• Appointed as the local sub-custodian for Alexan-
dria Mineral Oils Company (AMOC)’s new GDR
program by global depository bank BNY Mellon.
• Ranked number one in providing trustee ser-
vices, handling 19 special purpose vehicles
(SPVs) out of 22 SPVs in the market with total
assets of EGP 7.7 billion.
2019 Forward-Looking Strategy
• Enlarge CIB’s custody market share through
registering the bank’s prime corporate clients
in the central depository.
• Focus on securitization services by approaching
real estate, leasing, and financing companies.
• Introduce new investment tools to attract new
clients to invest in the stock market and in-
crease market liquidity.
Digital Governance
Digital Governance is a dedicated division tasked
with managing collaborations between the Digital
Banking and GTS team and the Bank’s internal and
external stakeholders.
2018 Highlights
Industries (FEI), and others in a study on the
transformation of the Egyptian economy to a
cashless society.
• Presented a detailed study to the FEB discuss-
ing the challenges of the current CBE mobile
payment regulations and CIB’s suggestions for
its enhancement.
2019 Forward-Looking Strategy
The Digital Governance team will continue work-
ing tirelessly to ensure compliance across the
Bank’s digital channels. It will continue challeng-
ing stakeholders to adopt new technologies and
increase their digital appetite and ensure that
digital products, strategies, and financial inclu-
sion efforts fall in line with regulatory guidelines
and regulations updates.
Digital Banking and GTS Awards
The Corporate Channel Management Department
received the following awards from Global Finance:
• Best Corporate and Institutional Digital Bank
in the Middle East in 2018
• Best Online Cash Management Providers
• Best Trade Finance Services
• Best Online Portal Services
• Best Information Security and Fraud Management
• Best Sub-Custodian Award
• Best Payments and Collections, Liquidity,
Working Capital Optimization, Short-Term In-
vestments, and Money Market Fund
• Collaborated with the Federation of Egyp-
tian Banks (FEB), the Federation of Egyptian
It also received the award of Financial Inclusion
Champion of the Year by FinTech Galaxy.
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2018 In REvIEW
Big
Data
After laying a solid foundation over previous years,
the Analytics and Data Management (ADM) De-
partment flourished in 2018 after having succeeded
in changing the Bank’s digital culture across the
organization. For over two years, the team has
worked relentlessly to propagate a culture that pri-
oritizes data science and analytics and recognizes
their importance. The team’s efforts materialized in
2018 and the business became ready to use data sci-
ence to achieve its goals and accelerate growth. The
team succeeded in building a favorable track record
throughout the organization and became a trusted
partner of various departments, allowing for more
collaborative projects and higher dependency.
Additionally, the team set a clear agenda to assist the
Bank in providing personalized products to custom-
ers, optimizing operational processes, understand-
ing fast-paced market alterations and supporting
the decision-making process. All this was conducted
while maintaining CIB’s position as a market leader
in the banking industry, and was reflected in the
numerous awards CIB won during 2018. This was all
achieved through:
• Investing in innovation
• Customer analytics
• Risk analytics
• Performance analytics
• Technological advancements
Moreover, in recognition of the Bank’s extensive
efforts on the data front, London Business School
(LBS) featured CIB’s data transformation as a case
study in 2018, making CIB the first Middle Eastern
company to be analyzed in a case study by the
Leadership Institute.
The case study covered the evolution of the Bank’s
human capital culture, which enabled it to meet
its overall data transformation strategy. It also
discussed the Bank’s success in changing the orga-
nizational design and operating model into a data-
driven one. The case study will be taught in graduate
programs for years to come.
2018 Highlights
Innovation is the ADM team’s main tool to safe-
guard the Bank’s current position as market leader.
The industry is more dynamic than ever, with rapid
changes taking place and new players attempting
to enter the field. CIB must explore and utilize up-
and-coming technologies capable of adding value to
the Bank’s current business model. The ADM team
believes that investing time and resources to embed
innovation in the Bank’s everyday activities will
translate to future earnings.
Blockchain
Blockchain has been a subject of intense study for
the past few years. Using blockchain could change
the dynamics of not only the banking sector but
the economy as a whole. This technology can
be used to create a digital identity, smart con-
tracts, and cross-border transactions. As an early
adopter of the technology in the Egyptian market,
CIB was the first to join the Know Your Customer
(KYC) project on R3’s Corda blockchain last year.
This year, the Bank is reaping the benefits of the
strategic decision to join this alliance. The ADM
team is currently testing different use cases to de-
velop live projects while simultaneously building
a local blockchain network for banks and differ-
ent financial services providers.
One of the CBE’s current priorities is to improve the
existing KYC process by launching a study to explore
using distributed ledger technology (DLT) to pro-
vide financial services. The plan will begin with KYC
for retail customers, and corporate KYC processes
will be added at a later stage. KYC, or eKYC in this
case, becomes a stepping-stone toward financial
inclusion. By adding data layers, such as medical
records, subsidies, and governmental services, to
the basic KYC structure, we can develop eKYC into a
full digital identity for each citizen and pave the way
for a more open banking platform.
Smart contracts are another promising application
of blockchain technology; they allow customers
in various fields such as shipping, real estate, and
insurance to execute transactions and agreements
automatically without an intermediary.
By investing funds and resources in developing
blockchain technology, CIB is making transac-
tions more secure, cheaper, and faster. The Bank
will be able to perform cross-border transactions
for a fraction of the cost and time; this technology
can potentially replace SWIFT and other tradi-
tional payment platforms.
Consumer Analytics
Throughout the year, the department continued to
transform CIB from a product-centric institution
to a customer-centric one, increasing product ac-
quisition and customer satisfaction while optimiz-
ing marketing costs. The team completed a number
of projects in this area, such as revamping our
balance-based customer segmentation to a fully
customized, data-driven, behavioral segmentation
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2018 In REvIEW >> Big Data
that puts the customers at the heart of the organi-
zation and decision-making process. Additionally,
the department completed a project to segment
credit card users based on purchase behaviors in
order to provide the cards business with distinct
customer segments characterized by well-defined
behaviors, interests, and preferences.
Risk Analytics
With the rise of computing power and new analyti-
cal techniques, banks can now extract deeper and
more valuable insights from their ever-growing
volume of data. For the Risk Department, these
trends present unique opportunities to better
identify, measure, and mitigate risk.
The ADM team also developed a churn-propensity
model to identify high-risk customers prone to
churn; retention strategies were successfully de-
veloped based on this model.
In 2018, the team also launched a Digital Lending
Program (DLP) to penetrate an untapped market of
credit seekers based on their history as Careem cap-
tains. This program can be duplicated in the future to
penetrate unbanked segments and increase financial
inclusion through the use of data analytics tools.
Aligned with CIB’s 360-degree customer-centric
strategy, the analytics team developed a tool to
track and measure behavioral KPIs for all corporate
and business banking customer interactions. Vari-
ous new principle types of consumer indices were
established by combining new KPIs and customer
data with the main objective of spotting at-risk cus-
tomers and new opportunities.
The team’s continuous efforts to analyze CIB cus-
tomer data are expected to increase sales to new and
existing customers, reduce customer churn, and in-
crease loyalty while simultaneously delivering higher
returns on marketing and promotions investments.
The team developed an anomaly-detection model
to minimize fraud by identifying, monitoring, and
controlling fraudulent customer behavior that sug-
gests a threat of tax evasion under CBE anti-money
laundering laws and regulations.
The team also collaborated with the Business
Banking Department to create an early warning
system comprised of a set of guided processes that
identify risks at an early stage for business banking
and corporate customers. The system’s main task is
to support managing the loan portfolio and assist in
taking proactive steps to reduce risks resulting from
unsecured lending.
Performance Analytics
Performance analytics are an essential tool the
team uses to achieve higher productivity and ef-
ficiency. Using this tool, the team was able to antici-
pate trends, prioritize resources, deliver automation
and self-service, push towards consistent service
improvement, and align services with CIB’s overall
business goals and strategy.
In 2018, the team worked on re-engineering and
optimizing average wait times at branches. A new
evaluation tool was created to measure and assess
the impact of any recommended action, eliminat-
ing the need to invest in new, untested methods
and assess them after implementation.
The team also analyzed cash withdrawal activity
across the ATM network and found that the Bank’s
current ATM cash levels and structure are over
funded. Using this knowledge, the team derived a
formula to lower cash costs (largely opportunity
loss of interest income and unnecessary costs such
as cash transportation) and increase returns with-
out affecting customer satisfaction.
Another performance analytics tool introduced
by the team estimates the number of incoming
calls to the call center, allowing for planning and
allocating resources more efficiently. This tool
has accurately captured call center demand in
a fully automated manner. Insights gained from
this tool have allowed us to create a more positive
customer experience and optimize the depart-
ment’s allocation of agents.
This year, the team launched CIB Navigator; a
dynamic digital performance dashboard that
enables different lines of business to track cus-
tomers’ adoption of digital transactions across
available online channels, and helps relationship
managers and customer service officers persuade
more customers to transition to available digital
portals. Greater utilization of digital channels
will reduce traffic at CIB branches and hence, in-
crease cost synergies. In this regard, the execution
200 EGP
MN
Cost savings due to
digital channel migration
of numerous transactions over alternative digital
channels from traditional ones resulted in more
than EGP 200 million cost saving in 2018.
Ranking dashboards were developed to create a
competitive environment to achieve CIB’s strategic
goals and objectives. Many managers use this tool to
track their teams’ performance. These dashboards
are sent on a monthly basis to branch sales forces, as
well as the direct sales and telesales teams, and acts
as an element of encouragement to increase sales.
2019 Forward-Looking Strategy
Starting 2019, the team will capitalize on the efforts
and outcomes conducted in the arena of data ana-
lytics over the last few years, parting from the no-
tion that data is the future. The department plans to
continue harnessing the power and wealth of data
available to keep CIB at the forefront of the Egyp-
tian and regional financial sectors and further drive
value for all the Bank’s stakeholders.
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2018 In REvIEW
Human
Resources
As CIB continues to grow, the Human Resources
Department will play an increasingly important
role in maintaining the Bank’s reputation of excel-
lence since people are the key to fully realizing the
Bank’s strategy. The HR strategy mainly focuses
on supporting the Bank’s expansion, employee ef-
fectiveness, and digital transformation to provide
exceptional customer care and experience.
The aims outlined in the 2019 HR strategy focus
on four main pillars: skill development and talent
management, organizational effectiveness, auto-
mation, and enhanced controls. Growth in these
areas will support CIB’s efforts to achieve its core
strategic goals and provide employees with an
exceptional experience.
The success of the 2019 strategy will depend on
our ability to attract, retain, motivate, and develop
highly qualified employees. Investing in our people
remains a key goal, as they are the core channel
through which we provide an exceptional customer
experience and competitive financial services.
Talent Management and Acquisition
In 2018, CIB continued to adopt a balanced ap-
proach to external talent acquisition by leveraging
the skills and experience within the organization,
while simultaneously seeking out the additional
capabilities that will help the Bank achieve long-
term sustainable performance. This year, CIB
hired 587 external talented individuals (59 new
headcount and 528 replacements), moved 429
across different areas of the Bank, and internally
promoted 618 promising young talents for better
exposure and enhanced career progression.
In continuation of implementing a smooth onboard-
ing process, CIB will continue conducting the Basic
Banking Certificate program in order to blend and
align all new hires with CIB Culture. In 2019, the
Learning and Development Division will conduct
23 rounds of this program to meet business growth
and recruitment requirements. In addition, a new
onboarding program designed specifically for first
line managers and above will be introduced.
Moreover, a total of 33 events (Tawarny and Em-
ployment Affairs) were held across universities and
other venues in Egypt to promote CIB’s employer
value proposition and competitive advantage.
Tawarny is an initiative for university students to
practice mock HR interviews and provide them
with tips and constructive feedback to boost their
confidence to prepare them for the corporate world.
This initiative demonstrates CIB’s firm commitment
to supporting Egyptian youth by preparing them for
the labor market. We aim to create a new generation
of qualified candidates who will drive the country’s
development and growth.
Building on our objective to initiate recruitment
mobile teams outside Cairo, in 2018 HR introduced
the “Ma7atetena 3andak” initiative in which a team
visited nine areas across Egypt to facilitate the re-
cruitment process for candidates at local hubs.
Skills Development and Talent
Management
CIB leadership tracks continued in 2018, targeting
senior management, middle management, and first-
line managers. We extended leadership training to
547 employees based on defined and customized
tracks. For senior managers, we worked with highly
experienced international vendors to tailor complex
materials based on intensive assessments that mea-
sure the impact of the trainings against employee
progress. Leadership tracks will resume in 2019 by
including new leadership topics and talent manage-
ment programs aimed at exposing them to new top-
ics in addition to their core competencies.
Moreover, 27 senior managers who joined INSEAD
in 2016 became part of the high-level of Building a
Winning Culture Program in 2018 to continue their
leadership progression. At the middle management
level, 81 IMD participants joined INSEAD for a one-
day Talent Retention & Staff Engagement Program.
The Essential Supervisory Skills program was de-
veloped to help first-line managers enhance their
managerial skills. The track was launched at the end
of 2018 and will continue into 2019.
We tailored learning tracks for various business
areas and segments, including training both lo-
cally and international certifications. In 2018, 79%
of employees were trained. Moreover, 26 Wealth
Managers and Plus Bankers were granted certifica-
tions from Chartered Institute of Securities and In-
vestment and 30 employees from Business Banking
were accredited as SME Consultants by Simplified
Examination to Maximize Profit (SEMP). In 2019,
current learning tracks will resume, and we will also
introduce new ones targeting areas such as Business
Banking Risk, Tellers, Audit, Legal, Cash Counting
and Blue Collars. As part of the Bank’s succession
plan developed in 2016, 42 key talents were selected
to enhancing their capabilities and widen their
understanding by participating in technical and
leadership skills development programs. Of these 42
delegates, 72% were promoted to larger roles as part
of their career progression within CIB. In 2019, CIB
will continue to add value to employees’ experiences
by supporting their personal development plans and
linking these plans to the 2019 succession plan.
Finalization of the Competency Framework was
a key priority in 2018. The Bank completed this
framework model by conducting 25 competencies
workshops. Hence, the now complete competency
dictionary will become an integral component
of the performance management system (PMS).
Going forward, our skills development and talent
management strategy will focus on linking past ef-
forts in one comprehensive system that integrates
all talent management initiatives. The strategy
will capitalize on PMS automation, integrating the
competencies framework within the PMS, creat-
ing customized Personal Development Plans, and
linking these plans to more personalized train-
ing plans. Additionally, the strategy will focus on
employing several phases to identify successors,
identifying high potential employees, and develop-
ing user-friendly career maps. As a result, HR and
business managers will have the ability to identify
gaps and develop personalized development plans
to create a solid talent pool.
Organizational Effectiveness
The Bank’s HR strategy will continue to focus on
promoting organizational effectiveness by improv-
ing engagement levels, supporting customer experi-
ence and service excellence, and enhancing the HR
value proposition. The strategy will be executed
through initiatives such as:
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2018 In REvIEW >> Human Resources
63%
Staff engagement level
in 2018
92%
Of employees completed
the fourth EES
Employee Engagement
In continuation of the Bank’s effort to foster a cul-
ture of high performance and ensure alignment
among bank areas, during 2018 the Chief Human
Resources Officer (CHRO) held 10 town halls to
improve communication and increase the perfor-
mance-related dialogue with middle management.
Additionally, HR business partners conducted 66
awareness sessions with professionals and first-line
managers to promote employee awareness of new
HR policies and initiatives and increase satisfaction
in the workplace.
Moreover, CIB will start developing a robust engage-
ment strategy that will improve the culture and enrich
productivity while producing more sustainable results.
Employee Effectiveness Survey
In 2018, 92% of employees completed the fourth
Employee Effectiveness Survey (EES) compared to
the 88% who participated in 2016. The engagement
(measured by employees’ loyalty, pride, and willing-
ness to “go the extra mile” for the Bank) level was 63%
compared to 59% in 2016, and enablement (measured
by the degree to which employees experience an envi-
ronment that fosters engagement) level reached 52%
compared to 46% in 2016. Action plans for key focus
areas were also developed to continue enhancing
CIB’s effectiveness profile in the coming years.
Customer Experience
Building on the Bank’s strategy to develop young tal-
ent and provide the best customer experience, CIB
launched the iOwn program under the umbrella of
iCare, a program started in 2018 to promote service
excellence. iOwn is a service dedicated to manag-
ing customer complaints to enhance the quality of
services provided and increase customer satisfac-
tion. The program was designed to empower staff
to take full ownership of handling customer com-
plaints and equip them with tools to address cus-
tomer complaints using best practices. Additionally,
the tool helps employees see various success stories
and involves branch managers and deputy branch
managers in mentorship and coaching efforts.
In 2019, HR will launch another version of iOwn
targeting all front liners. Three tailored versions of
iOwn and iCare coaching will also be introduced to
the central operations team to ensure proper man-
agement of customer complaints, increase quality
of service level, and maintain customer satisfaction.
Value Proposition
HR will continue to present a unique value proposi-
tion to produce positive outcomes for key stakehold-
ers and employees. This approach will not only allow
the Bank to engage employees but also attract the
best talent on the market. HR will improve its value
proposition by further enhancing the variable pay
programs to ensure that the distribution model is
aligned with the Bank’s overall strategy.
Finally, CIB has a unique model for deliver-
ing employee benefits through HR, Corporate
Services, the Social Services Community, and
Social Insurance funds. HR will focus on unify-
ing policy design to ensure consistency, market
competitiveness, and employee satisfaction while
aligning operations with the Bank’s internal pro-
cesses. Additionally, HR will improve benefits and
medical services across all business areas in col-
laboration with the Social Services Community
and Social Insurance Funds.
Automation
In 2018, L&D introduced more e-learning tools for
CIB employees in collaboration with various busi-
ness areas. Eleven different e-learning courses were
introduced. In 2019, L&D will continue to offer more
digital tracks to increase employees’ level of learn-
ing, engagement, and enablement.
Automation initiatives continued in 2018, with
the launch of the PMS project. Automation of the
PMS will significantly enhance the Performance
Management process by increasing the accuracy
of monitoring, performance evaluations, and cas-
cading objectives to ensure alignment across
areas of the Bank.
Additionally, the Bank implemented the learning
and development system solution as CIB’s official
learning management system (LMS) to create an
empowered automated learning experience for
all staff training management activities. In 2019,
HR will continue with the implementation of the
new recruitment system, which will enhance the
overall candidate experience by integrating CIB’s
social media websites and effectively increasing
the Bank’s digital presence. This system also sup-
ports growing mobile usage among candidates
by allowing them to apply via a dedicated mobile
application process. Going forward, CIB will con-
tinue adopting more integrated and innovative
solutions with functional capabilities that enhance
the Banks’ productivity and efficiency.
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2018 In REvIEW
Financial
Control Group
Throughout 2018, the Financial Control Group has
continued to expand its scope of influence, tackling
new functional areas and bettering the level of its
workforce, thereby adding to CIB’s overall efficiency
and contributing effectively to its continuous mar-
ket-leading performance.
Committing to CIB’s continuous record of compli-
ance with both local and international account-
ing regulations and further adding to its edge
over peers in the early adoption of standards, the
Financial Control Group, in collaboration with
the Bank’s Risk Group, successfully finalized the
implementation phase of IFRS 9, which the CBE
mandated to be met by all banks by 1 January 2019.
The “Impairment Calculation” model launched
successfully this year and received official valida-
tion from McMillan Woods, in accordance with the
CBE’s requirement for an external audit validation.
CIB became the first bank in Egypt to communi-
cate trial financial statements to the CBE in accor-
dance with IFRS 9 for three consecutive quarters
in 2018. This ensures the Bank has complied with
both CBE regulations and those set by the Interna-
tional Accounting Standards Board (IASB), with
the latter being requisite for CIB’s GDR program on
the London Stock Exchange.
Particularly relevant to its scope, the Financial
Control Group continues to play a key role in driving
the Bank’s financial performance and in adding to
its overall competitive position. The group worked
in close and regular collaboration with the Treasury
Group throughout the year to adjust the dynamics of
the Bank’s balance sheet in a way that sails efficient-
ly with changing market conditions and upcoming
regulations such as the capital charge required by
the CBE to account for Interest Rate Risk in the
Banking Book (IRRBB) and the new tax law recently
enforced by the Egyptian Tax Authority. In 2018,
the group also widened its role in Enterprise Risk
Management (ERM). It set the roadmap required to
take the Bank’s Economic Capital Model to the next
level, in alignment with international best practices.
This is expected to enhance the quality of the Bank’s
Capital Allocation Models and of the entire pricing
strategy for all Bank products and exposures.
Striving to increase the group’s, and hence the over-
all Bank’s, efficiency, this year saw the launch of a
number of automation mechanisms to achieve both
strategic and regulatory milestones in a timely and
meticulous manner. The group’s units successfully
collaborated to launch the SAS Project as an auto-
mation mechanism to calculate the Bank’s CAR in
a more accurate and systematic way. Furthermore,
an effectual automation process was completed to
clean up the non-performing portion of the Bank’s
retail loan portfolio. With effective collaboration
from the CBE, CIB also managed to finalize its
Digital Reporting Project, particularly with regards
to the process of reporting non-performing clients
to the CBE, reducing turnaround times, and paper
consumption required for such reporting.
During the year, the group played an important
role in upholding the Bank’s responsibility to the
Egyptian economy overall. In line with the ongoing
push toward financial inclusion across the banking
sector, CIB’s Financial Control Group helped kick off
the first phase in the Digital Lending Process. The en-
deavor, which the group completed in collaboration
with a dedicated taskforce from different groups
across the Bank, provided lending facilities to micro
businesses. As a member of the Tax Committee of
the Federation of Egyptian Banks (FEB), CIB played
a leadership role in formulating a protocol between
the FEB and the Egyptian Tax Authority, which
aims to settle tax disputes currently outstanding at
courts between banks and the Tax Authority.
In line with management’s aim to elevate the quality
of human capital and contributing to the develop-
ment of staff, the Financial Control Group success-
fully launched the second phase of the Financial
Control School – an in-house training facility tai-
lored to aligning the group’s staff with continuous
market developments. The course tackles key topic
areas that provide the theoretical and practical
foundations deemed necessary to better position
finance staff for various prestigious certifications,
mainly in international financial reporting, eco-
nomics, derivatives and fixed income, and business
ethics. Moving forward, the course is planned to
eventually serve as a mandatory requirement and
prerequisite for joining the Financial Control Group
and as a promotion eligibility criterion.
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2018 In REvIEW
Marketing and Corporate
Communications
For several years, CIB has maintained its position
as the largest private bank in the Egyptian market.
During this time, the Bank has exemplified the
highest standards of professional dedication, ethics,
and innovation. CIB’s connection to its core values
remain strong, and the Bank has strengthened its
brand position in the financial services sector in
Egypt and beyond. Both locally and internationally,
CIB had been recognized for its customer focus, so-
cial commitment, and innovation.
During 2018, CIB received prestigious awards from
world-renowned organizations. For the second
consecutive year, CIB was named the “World’s Best
Bank in the Emerging Markets” by Global Finance.
The Bank received the same award from Euromoney
in 2017. CIB is proud to be the first bank in Egypt and
the Middle East to win this prestigious award.
Additionally, CIB has received numerous interna-
tional awards that demonstrate its excellence across
different business lines. On the digital banking
front, CIB received Global Finance’s “Digital Bank
of Distinction in Egypt” award and FinTech Galaxy’s
“Financial Inclusion Champion of the Year” award for
the first time in 2018. Global Finance also recognized
CIB as having the “Best Online Cash Management”
and “Best Online Portal Services” in Egypt. In 2018,
CIB received the following awards and recognitions:
• Digital Bank of Distinction in Egypt by Global
Finance
• Best Online Cash Management in Egypt by
Global Finance
• Best Trade Finance Services in Egypt by
Global Finance
• Best Online Portal Services in Egypt by Global
Finance
• Best Information Security and Fraud Man-
agement in Egypt by Global Finance
• Best FX Services in North Africa by EMEA Finance
• Best Payment Services in North Africa by
EMEA Finance
• Best Foreign Exchange Provider in Egypt by
Global Finance
• Best Trade Finance Provider in Egypt by
Global Finance
• Best Treasury & Cash Management Providers
in Egypt by Global Finance
• Best Bank in Egypt by Global Finance
• Best Bank in Egypt by Euromoney
• Best Bank Transformation in the Middle East
by Euromoney
• Best Regional Bank - Northern Africa by Afri-
can Banker
• Best Subcustodian Bank in Egypt by Global
Finance
• World’s Best Bank in the Emerging Markets
by Global Finance
• Best Local Bank in Egypt by EMEA Finance
• Best Corporate Bank in North Africa by
Banker Africa
• Best Corporate Bank in Egypt by Banker Africa
• Best Private Bank in Egypt by Banker Africa
• The Innovators by Global Finance
Moreover, CIB ranked 38th on Forbes Middle
East’s “Top 100 Listed Companies in the Arab
World,” ranking the highest of the four Egyptian
companies on the list.
Another unprecedented international achievement
of this year is the London Business School’s (LBS)
decision to conduct a case study of CIB. The Bank is
the first Middle Eastern company to be analyzed in
a case study by the Leadership Institute of the LBS
— one of the world’s top five business schools. CIB
was selected in recognition of its success in leading
a data-driven, human-centric transformation in the
face of macroeconomic challenges.
The awards and recognitions received this year
serve to reassert CIB’s strong position and out-
standing performance as a local bank with global
standards. This recognition is also a testament
to the resilience of Egyptian organizations and
the stability and positive growth of the Egyptian
economy. The Bank’s outstanding achievements
send a clear signal to investors and the inter-
national community about the promise of the
Egyptian market.
The Marketing and Corporate Communications
team has been diversifying its campaigns and
activities to promote the Bank’s achievements
and competitive market services across a va-
riety of channels. In foreign media channels,
senior management was featured in the world’s
most prominent publications,
including The
Financial Times, Global Finance, The Banker,
Bloomberg, Banker Africa, Yahoo! Finance, and
The Economist. In addition to highlighting CIB’s
achievements and leadership, these interviews
also demonstrate the Bank’s commitment to
supporting the country by sharing stories of its
economic progress and enhancing its position
worldwide. CIB has also been involved in several
high-profile international events as a sponsor
or key speaker. At the “Leading Transformation
in Turbulent Times: In Conversation with Com-
mercial International Bank-Egypt (CIB)” event
organized by LBS, CIB Chairman and Managing
Director Hisham Ezz Al-Arab gave insight on how
CIB has created value for clients, shareholders,
and society by investing in data and talent.
On the local and regional media front, CIB main-
tained a strong presence over the past year.
Through advertisements and news releases pub-
lished by reputable outlets, the Bank promoted
its product launches and marketing campaigns.
Members of CIB’s executive management were
featured in prominent local publications, such as
Akhbar Al-Yom, Al-Masry Al-Yom, Al-Alam Al-Yom,
Al-Shorouk, and Al-Borsa. The Marketing and Cor-
porate Communications team has been steadily ex-
panding its media relationships and exposure over
the years with a focus on online platforms. CIB has
increased its media presence on many renowned
news websites, such as Youm7, Veto Gate, Al-Watan,
and Al-Mogaz, to reach an online audience of more
than 50 million people. In 2018, CIB also sponsored
the new season of televised entrepreneurship com-
petition Hona Al Shabab hosted by well-known
Egyptian TV host Lamees El-Hadidi. By participat-
ing in this event, CIB widened its media exposure
and — most importantly — extended support to
several promising startups.
The team also focused on expanding its internal
communication channels. Such efforts included
ongoing townhalls and casual staff events, which
maintain direct communication lines between se-
nior management and employees. It also launched
an entertainment show named “CIB Bel 3araby”
(CIB in Arabic) exclusively for staff. The first of
its kind in the banking sector, the objective is to
provide employees with a non-traditional corpo-
rate communication experience using a show that
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2018 In REvIEW >> Marketing and Corporate Communications
The Marketing and Corporate Communications
team has been diversifying its campaigns and
activities to promote the Bank’s achievements
and competitive market services across a
variety of channels.
tackles important Bank and employee concerns in
a humorous way. Another newly modified internal
communications channel is the biweekly digital
newsletter “CIB Round-up”, which is issued to shed
light on CIB-related news, the banking sector, and
the Egyptian economy at large. Similarly, the team
launched a new edition of the staff photography
competition dubbed “Capture the Beauty of Egypt”,
which allows staff to express their artistic talent.
On the external communications front, other re-
cently introduced communication channels are the
digital media screens installed at selected branches
and visual marketing materials installed across
Cairo, Burg Al-Arab, Hurghada, Sharm El-Sheikh,
and Aswan airports. These channels are considered
more appealing, direct channels with customers
that strengthen the Bank’s brand equity.
In line with CIB’s commitment to supporting the
community, the team continued to expand its cor-
porate social responsibility activities by supporting
an array of projects and initiatives across the coun-
try, focusing on sports, art, culture, and lifestyle.
As an organization, CIB believes that sports play an
integral role in shaping the minds and health of Egyp-
tian youth; the Bank has been diversifying its efforts to
support Egyptian athletes. To know more about CIB’s
efforts in supporting athletes, please refer to the Sup-
porting the Best in Class: Squash section of the report.
The Bank is also an active, long-standing sup-
porter of the arts in Egypt. CIB continues to
support art students in public universities across
the country’s governorates by acquiring selected
pieces from their projects for the Bank’s art collec-
tion. For the second year in a row, CIB sponsored
the Night with Art at the historic Manial Palace,
an event at which more than 500 renowned inter-
national guests had the opportunity to view rare
and distinctive pieces by Egyptian artists in a re-
markable historical showroom. Moreover, CIB has
contributed to international events such as Made
in Egypt, an exhibition of young Egyptian design-
ers held in London, and the Africa Art Workshop
organized by Soma Art School in the Democratic
Republic of Congo during the seventh edition of
International Contemporary Art. Such contribu-
tions reflect the Bank’s steadfast commitment
to Egypt and strengthen its ongoing efforts to
promote Egypt’s positive image worldwide. One
of the significant projects that complements the
Bank’s role as an ambassador for the country in
regional and international spheres is CIB’s special
book. This annual production carries a different
theme every year that promotes various aspects of
the country. This year, the team produced “Faces
& Places” in partnership with the renowned jour-
nalist and photographer Roger Toll, who shares
the Bank’s appreciation of Egypt’s complex and
vibrant culture. This book highlights the diverse
landscapes of our country as well as the juxtapo-
sition of the past and present in our daily lives in
the most authentic way possible: by sharing the
experiences of its people. The team also produced
a set of books entitled “Building Modern Egypt”,
which features Downtown Cairo, the Suez Canal,
Cinema Cairo, the Egyptian Bourse, and Egyptian
Post to document modern Egyptian history.
In 2018, CIB sponsored and contributed to numerous
events and venues, with sponsorships encompassing
art, culture, sports, CSR initiatives, and many others.
The Marketing and Corporate Communications
team has worked extensively on campaigns as well
as product and segment launches this year. In line
with CIB’s vision of customizing the Bank’s services
and communication for each segment, the team
revamped the identities of its existing segments to
reflect the progressive journey of our customers’
growth with CIB. The Bank has also proudly intro-
duced special campaigns for CIB Private, a new
segment that caters to the investment and banking
needs of customers with bankable assets of more
than EGP 20 million. The team launched a dedicated
webpage and a tailored Internet Banking experi-
ence for clients in this segment. In addition, the CIB
World Elite Mastercard was launched to provide the
Bank’s HNW customers with a variety of enticing
benefits, such as zero mark-up fees on foreign cur-
rency transactions and zero over-limit fees.
Major marketing campaigns include Travel to
Russia contest, the Egyptair Apply & Win promo-
tional campaign, and Cash on Phone campaign.
CIB has also embarked on several partnerships
with leading digital and technology brands in
Egypt, including Apple and Souq.com. The Bank
has also launched product-focused campaigns,
including the equal payment plan campaign, 0%
installments, and seasonal campaigns such as
Back to School. The latter effort demonstrates the
Bank’s transformation and adoption of a modern,
digital-focused brand image.
Digital banking was at the core of this year’s mar-
keting campaigns. The team introduced various
promotional offers and drives to promote CIB’s
digital banking services and encourage customers
to perform their everyday banking tasks online.
More recently, CIB has invested more heavily in
online media primarily as we consider it a more
powerful platform to target and analyze customer
behavior. To that end, the Digital Marketing team
began utilizing new technologies such as geo-
location to send SMS to customers in targeted vi-
cinities, mobile advertising, and internet network
collaboration. This strategy was first implemented
in relation to ATM machines installed in the North
Coast during the summer. It led to the execution of
over 7,400 transactions in a single week and saved
over EGP 512,000 in cost synergies. Other newly
employed technologies include Airpush and Mad-
dict, which make it possible to target mobile devic-
es with tailored advertisements that match users’
behaviors. CIB also collaborated with Mastercard
to execute four Smart Wallet campaigns in 2018
that resulted in an increase in transaction volumes
from EGP 250,000 to over EGP 550,000 per month.
During the month of Ramadan, a charity awareness
campaign launched through Smart Wallet resulted
in a 57% increase in donations to charitable causes,
which reached over EGP 5 million.
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2018 In REvIEW
Risk
Group
The Risk Group identifies, monitors, controls, and
manages the Bank’s risks against limits and toler-
ance levels. The Chief Risk Officer (CRO) manages
the following risk areas: credit, investment, opera-
tional, conduct, market, liquidity, interest rate, IT,
security, reputational, regulatory, legal, social and
environmental, and other non-financial risks, as
well as the Treasury Middle Office and Internal Con-
trol Management functions. The Risk Group’s Enter-
prise Risk Management (ERM) framework provides
a holistic overview of all types of risks across the
organization. CIB’s ERM framework dates back to
2014, positioning the Bank as a pioneer in the MENA
region. The ERM framework provides the Bank with
a cohesive approach to risk, integrated with an
active risk culture, a flexible technology platform,
and strong data governance, all tied together with a
solid risk appetite framework. The ERM framework
is comprised of control, governance, and oversight,
which mitigate risks by utilizing existing risk-man-
agement capabilities, helping improve the operating
environment and reducing operational surprises.
The group proactively monitors triggers for adverse
events and provides an effective risk response.
Enterprise Risk Management Main Objectives
Identify, measure, and
assess major risks
Maintain a risk-reward
balance in the business
model
Spread risk culture
Provide an integrated,
holistic view of the risk
profile
Risk Functions
Risk Group Framework and Governance
CIB’s risk governance structure utilizes the
lines-of-defense model, with robust committee
structures and a comprehensive set of policies and
operating guidelines approved by the BoD and the
Bank’s executive committees. The BoD, directly
or in conjunction with BoD Committees, provides
oversight of risk levels as well as key performance
and risk indicators.
Board of Directors
BoD Committees
Risk, Audit, Operations, and Technology
The BoD provides, through the board committees, the core directives for the Risk Group. They approve the Risk
Appetite Statement, as well as the policies that govern the main objectives of the Risk Group.
Management
Trace and evaluate
major risk triggers
and adopt
mitigation plans
Monitor and update
major risk indicators
Conduct in-
house and online
awareness sessions
Maintain oversight
on major local
and international
regulations
Enhance policies
and procedures
in line with best
practices
Key Governing and Reporting Tools
First Line of Defense
Second Line of Defense
Third Line of Defense
Business Line Management
Identify and manage inherent
risks in the Bank’s activities
Independent Risk and
Compliance
• Set framework and rules
• Monitor and report on
execution, management, and
control
Independent Audit
Review/Challenge
Provide an independent
assessment of the overall risk
management process
Internal Capital Adequacy
Assessment Process (ICAAP)
Stress Testing
Risk Appetite and Culture
Manage
Control
Evaluate
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2018 In REvIEW >> Risk Group
Risk Committees
The CRO along with experienced risk officers, who
are key members of all risk-related committees, are
responsible for the identification, assessment, and
reporting of all types of risks across all business lines.
Committee Name
Function
Risk Type
High Lending
and Investment
Committee (HLIC)
Responsible for managing the asset side of the
balance sheet, with the aim of maintaining CIB’s
sustainable business growth rate while ensuring
that the Bank is compliant with internal credit
policies and the CBE’s rules and regulations.
• Institutional
banking credit and
investment risk
Consumer Risk
Committee (CRC)
Business Banking
Risk Committee
(BBRC)
Responsible for managing, approving, and moni-
toring all matters related to the Consumer Bank-
ing portfolio growth and quality. CRC decisions
are primarily guided by the Bank’s approved risk
appetite, while ensuring compliance with the
principles stipulated by the Consumer Credit
Policy Guide.
Responsible for managing, monitoring and con-
curring/approving all aspects related to the qual-
ity and growth of the Business Banking portfolio.
The Committee’s decisions are guided first and
foremost by the current risk appetite of the Bank
as well as the prevailing market trends, while en-
suring full adherence to the stipulated guidelines
set by the Business Banking Credit Policy Guide.
• Consumer credit risk
• Business banking
credit risk
Asset and Liability
Committee (ALCO)
Responsible for ensuring the optimal distribu-
tion of assets and liabilities, maintaining a resil-
ient risk/reward balance based on current and
projected market conditions and approved BoD
guidelines.
• Liquidity risk
• Market risk
• Interest rate risk
Non-Financial Risks
and Compliance
Committee (NFRCC)
Responsible for the consolidation of non-financial
and compliance risks and enhancing risk-re-
sponse efficiency. The main objective is to oversee
operational, reputational, conduct, and security
risks and compliance frameworks, in addition to
monitoring vendor and IT risks, and any new
emerging non-financial risks.
• Operational risk
• Reputational risk
• Conduct risk
• Security risk
• Compliance risk
• Vendor risk
• IT risk
• Model risk
• Strategic risk
Financial Risks
Institutional Banking 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
operating guidelines adopted by Bank’s 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,
capturing all regulatory guidelines and histori-
cal financial data and translating all aspects
into qualitative and quantitative measures.
• Credit Risk Analysis: The Bank employs a risk-
progressive strategy in the credit approval
process. This strategy takes into consideration
industry norms, both domestic and interna-
tional, along with a broad review of associated
credit risks, which are weighed against the
probability of occurrence.
• Early Warning Signals (EWS) Framework:
This is a comprehensive tool that closely moni-
tors the quality of the corporate credit loan
portfolio to detect at an early stage the dete-
rioration of a set of key performance indicators
that could adversely affect the creditworthiness
of borrowers. The framework sets actions and
escalating procedures to minimize foreseen
losses and safeguard the Bank’s position.
Financial Institutions and Country Risk
The Financial Institutions (FI) and Country Risk
Team was formed to actively support correspondent
banks’ relationships through the continuous assess-
ment of new markets or products presented by the
business FI teams and ensuring an efficient, prudent,
and timely approval process.
Social and Environmental Credit Risk Management
The Social and Environmental Credit Risk Team aims to
safeguard the Bank against credit risks resulting from
adverse social and/or environmental impacts from
customer activities. This is achieved by implementing
a comprehensive due diligence process to assess this
risk for all clients prior to credit facility approval, as
well as providing customers with tools to facilitate and
encourage their shift to a greener economy.
269%
NPL coverage ratio in 2018
Consumer and Business Banking Risk Management
Consumer and Business Banking risk is man-
aged using a robust risk framework based on
best practices, which ensures sound risk identifi-
cation and assessment. Mitigants are in place to
ensure portfolio quality is within the Bank’s risk
appetite. The Risk Team leverages an optimized
Risk Reward Strategy with the help of advanced
early warning indicators and solid data analyt-
ics to ensure prudence and due diligence in cus-
tomers’ selection as well as proactive portfolio
monitoring to maximize the risk adjusted yields
across asset products.
Consumer risk follows a holistic credit cycle
management approach, with specialist teams and
functions managing products and policies: credit
underwriting, collections and recoveries, strate-
gic analytics, and account maintenance. On the
Business Banking front, the Bank is transitioning
to a new model in line with best practices and has
revamped strategies with an eye on aggressive
growth to enhance this portfolio in a sustained
and profitable manner. The new Business Bank-
ing Risk Management Structure was enriched
with a holistic organizational structure encom-
passing the entire credit cycle with new and spe-
cialized units being established for early warning
and account monitoring, centralized fraud, and
rehabilitation of customers to ensure appropri-
ate control over the portfolio. Simultaneously,
the Business Banking Policy was revamped and
approved by the BoD and re-engineered Standard
Operating Processes have been put in place.
The key pillars of the strategy are targeted in-
dustry analysis and customer segmentation, the
adoption of data-driven analytics for decision-
making and customer selection, and the install-
ment of a robust risk infrastructure for aggressive
growth within the Bank’s risk appetite.
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2018 In REvIEW >> Risk Group
4.06%
Default ratio in 2018
With respect to the Consumer and Business Bank-
ing portfolio quality, the Risk Group continues to
adopt rigorous portfolio monitoring measures to
detect key risks and maintain a healthy portfolio in
line with the Bank’s approved risk appetite. More-
over, the Risk Group incorporated dynamic collec-
tion strategies to counter the impact of inflation
and volatile macroeconomic conditions and took
preemptive action to safeguard the Bank’s rights.
With respect to portfolio growth and supporting the
Consumer Bank’s Segmentation Strategy, the Con-
sumer Risk Division collaborated with the business
to put in place customized programs and promo-
tions to target new business from the key segments.
Market Risk
Trading Market Risk
CIB sets key limits to monitor and control market
risk by considering both the Bank’s risk appetite as
well as the projected business plan. These limits in-
clude position, stop-loss, and value at risk (VaR) lim-
its. The Bank primarily uses the VaR methodology to
quantify market risk. VaR is a probabilistic measure
of the potential loss under normal market conditions
at a specific confidence level over a certain period.
Non-Trading Market Risk (Interest Rate Risk in
the Banking Book)
CIB uses an effective risk-management process
that maintains interest rate risk within prudent
levels that ensure the Bank remains on safe and
stable ground. CIB proactively positions the bal-
ance sheet to benefit from a volatile interest rate
environment. The Bank uses complementary
technical approaches to measure and control in-
terest rate risk, including duration, re-pricing
gaps, change in economic value of equity (EVE),
and earnings-at-risk (EaR). The Bank has an In-
terest Rate Risk Policy, including related authori-
ties and responsibilities for interest rate risk man-
agement. The policy sets and enforces operating
limits and parameters that maintain exposures
within levels consistent with internal parameters
covered in the policy to keep interest rate risk
exposure within given boundaries over a range of
possible changes in interest rates.
Liquidity and Funding Risks
The Bank has robust liquidity risk management
guidelines within the Treasury Policy Guide and
Treasury Risk Guide that summarize the Bank’s
liquidity framework. This framework is critical in
maintaining adequate liquidity and ensuring the
Bank is able to meet all payment obligations. The
Bank has established a liquidity risk management
framework that is seamlessly integrated into the
risk management process.
Non-Financial Risks
Operational Risk
The Operational Risk Management framework was
developed through sound monitoring tools, gov-
ernance, and policies to manage operational risk
across the whole organization and to minimize and
mitigate potential and unexpected losses. The frame-
work uses the following approaches to measure and
control operational risk:
• Loss Events Database includes the Bank’s op-
erational risk events.
• Risk and Control Self-Assessment (RCSA) is the
identification of operational risks and controls
and the effectiveness of each unit. It is related to
assessments using validation processes, risks
categories, control assessments, and the imple-
mentation of action plans and their related track-
ing and testing mechanisms. The outcome of the
RCSA exercise is the risk heat map, which repre-
sents the residual risk assessment that evaluates
the adequacy and effectiveness of the set controls.
• Key Risk Indicators (KRIs) consist of monitor-
ing indicators and their results, in addition to
assisting the concerned parties with the issues
and identified gaps.
• Stress Testing consists of utilizing the internal
models to proactively assess extreme events.
The division also runs regular awareness programs
and training sessions to promote a strong risk cul-
ture. It has also cultivated internal risk champions
through the Champions Program who are responsi-
ble for identifying and monitoring operational risks
in their respective departments.
Reputation Risk
As part of the Reputation Risk roadmap, CIB
launched a social media listening tool for moni-
toring day-to-day incidents, tracking sentiment,
and capturing the perception of the Bank. The
Reputation Risk Team works on engaging the
Bank’s key internal and external stakeholders
through annual surveys to identify their expecta-
tions and prioritize the risks to a heat map. Any
incident that could impact the Bank’s reputation
is escalated to the Reputation Risk Team, which
in turn invokes the reputation event management
process. The Reputation Risk Team holds ongo-
ing culture awareness programs for all Bank’s
employees through E-learning and one-to-one
technical induction programs.
Conduct Risk
CIB took the initiative to be the first local Bank in
Egypt to establish a Conduct Risk Framework,
benchmarked against the Financial Conduct Au-
thority (FCA) in the UK. The initiative is part of the
ERM framework and includes a Treating Customers
Fairly (TCF) component that emphasizes client needs
starting from product design and approval and end-
ing with post-sales services and complaint manage-
ment. A conduct risk assessment is performed for all
of the Bank’s products and digital channels.
Vendor Risk
CIB has a process in place to evaluate and monitor
all the Bank’s vendors to ensure they meet the pre-
defined criteria of approved suppliers and also to
conduct relevant risk assessments.
Information Technology Risk
IT risks are primarily monitored via RCSA based on the
best practice COBIT 5 Framework for the governance
and management of enterprise IT. Top IT risks are
monitored and reported with action plans to the Non-
Financial Risks and Compliance Committee (NFRCC)
and the Board Operations and Technology Committee.
Model Risk
Model risk is established as a centralized indepen-
dent function under the Risk Group to strengthen
the independency of internal model validation.
Strategic Risk
A framework is under development to manage
the process of identifying, assessing, monitoring,
and mitigating any internal or external risks that
might affect the Bank’s business strategy and stra-
tegic objective execution.
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2018 In REvIEW >> Risk Group
Other Risk Functions
Internal Control Management (ICM)
ICM is considered one of the main pillars of con-
trol that captures risks by conducting various
reviews across the entire branch network and
different departments. Special investigations and
assignments assess the risks and compliance of
applied policies and procedures to ensure overall
performance is consistent with predetermined
standards, plans, and objectives.
Treasury Middle Office (TMO)
TMO monitors and controls all the Treasury Group
positions on an intraday/daily basis against the
Treasury Policy Guide (TPG), Credit Policy Guide
(CPG), Investment Policy Guide (Direct Investment)
limits, and CBE regulations to improve overall con-
trol. It also prepares Treasury Compliance Reports.
2018 Highlights
Strong Asset Quality
CIB maintained its robust asset quality throughout
the year. Default ratio improved from 6.95% in 2017 to
4.06% in 2018 (5.41% excluding the effect of the change
in unearned treatment), evidencing the Bank’s effec-
tive strategy of maintaining a credit-worthy portfolio
during challenging economic conditions. The NPL
coverage ratio recorded a healthy 269%.
Sustainable Capital and Liquidity
CIB maintained its CAR at 19.09%, well above the
minimum requirement. The increased minimum
requirements in 2019 do not constitute a threat to
the Bank as CIB currently exceeds this minimum by
a reasonable buffer. The Bank maintained its comfort-
able liquidity position above CBE requirements and
Basel III guidelines in both local currency and foreign
currency. The LCY CBE liquidity ratio remained well
above the regulator’s 20% requirement, recording
66.21% at the end of 2018, while the FCY liquidity ratio
reached 55.04%, above the regulatory threshold of 25%.
Net stable funding ratio (NSFR) was 243.36% for local
currency and 165.61% for foreign currency, and the
liquidity coverage ratio (LCR) was 667.84% for local
currency and 338.82% for foreign currency, all above
the 100% Basel III requirement.
Operational Highlights
2018 was rife with global economic uncertainty that
posed a challenge for the Egyptian market. Locally,
new rules and regulations governing the banking
industry have, in some cases, affected the Bank’s busi-
ness model. However, the Bank continued to manage
these volatile conditions via a forward-looking balance
sheet strategy and a dynamic approach to assessing
and implementing both local and international regu-
lations to ensure it is fully prepared for any changes.
Default Ratio
Capital Adequacy
Ratio (CAR)
Consolidated Liquidity
Coverage Ratio (LCY)
6.8%
6.8%
6.8%
6.95%
6.95%
6.95%
4.06%
4.06%
4.06%
14%
14%
14%
19.30% 19.09%
19.30% 19.09%
19.30% 19.09%
1097%
1097%
1097%
1019%
1019%
1019%
667.84%
667.84%
667.84%
2016
2016
2016
2017
2017
2017
2018
2018
2018
2016
2016
2016
2017
2017
2017
2018
2018
2018
2016
2016
2016
2017
2017
2017
2018
2018
2018
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2018 In REvIEW >> Risk Group
The Risk Group continued to conduct training
sessions to promote risk culture throughout the
Bank and maintain a common taxonomy in the
organization. The number of Operational and Con-
duct Risk Champions throughout the organization
nearly doubled in 2018.
The SAS engine was upgraded for credit and market
risks in line with best practices. A risk assessment of
the Bank’s digital products was conducted to ensure
CIB’s channels perform as intended with no losses or
inconveniences to clients.
The fraud functions have been centralized under the
Risk umbrella with an enhanced scope encompassing
all new products and services including digital bank-
ing, e-commerce, and e-wallets along with a central-
ized investigation and recovery team and enhanced
monitoring tools to minimize fraud.
In line with best practices and the Bank’s strategic
goals, the Consumer Risk Division has taken progres-
sive steps to put in place an enhanced risk infrastruc-
ture for end-to-end automation of risk processes and
policies. Application and behavioral scorecards are
also being introduced along with an advanced deci-
sion engine and a CRM system.
CIB is compliant with CBE Interest Rate Risk
in the Banking Book (IRRBB)’s final guidelines
(aligned with Basel standards) and began to re-
port results as of 3Q2018.
internationally agreed targets detailed in the UN’s
Paris Agreement and Sustainable Development
Goals. The principles were unveiled in November
2018 during the UNEP-FI’s global roundtable.
The Risk Group made significant strides through-
out the year, having been instrumental in the un-
veiling of the UNEP-FI Principles of Responsible
banking — a set of frameworks governing interna-
tional banking principles in line with sustainabil-
ity standards. The Bank continued throughout
the year to update the Social and Environmental
(S&E) Credit Risk Policy Guide to align with inter-
national standards for environmental, social, and
governance (ESG) standards such as the Interna-
tional Finance Corporation (IFC) Performance
Standards. CIB
its Green Finance
Credit Line for customers who wish to shift to a
greener approach to economic growth through
energy efficiency and renewable energy. The S&E
Credit Risk Department aligned with the lighting
efficiency and solar solutions developed by the
Ministry of Electricity and Renewable Energy and
supported by the UNDP, where this allowed CIB
to deliver a comprehensive product to customers
that requires technical support and financing.
launched
2019 Forward-Looking Strategy
The Risk Group will continue to enhance the
Financial and Non-Financial Risks Frameworks
while leveraging its agile risk infrastructure to
support the strategic shift in the way business will
be conducted going forward.
In 2018, CIB alongside 28 other global banks
helped develop guidelines to bring the bank-
ing industry’s operations into alignment with
The IFRS 9 project is currently in the final implementa-
tion stage and will be finalized in 2019.
The Consumer Risk Team will implement end-to-
end automation, under the umbrella of Consumer
Risk Transformation, to help the business pro-
vide instant decision-making, superior service
delivery, and an enhanced customer experience.
Similarly, predictive analytics will be implement-
ed via the development of new models to better
forecast probabilities of default and expected
losses in line with the implementation of new
regulations for IFRS9. The team will also support
the initiation and expansion of digital products
and penetration of untapped segments by using
innovative credit tools and techniques for evalu-
ation given the segment typically includes clients
who do not have credit history.
The systems and processes of the Collections & Re-
covery Strategy, and related infrastructure, will be
upgraded to provide flexible mapping of strategies
and behavioral delinquency trends, facilitating im-
proved collection activities and better recoveries.
On the Business Banking front, focus will be placed
on building scalable infrastructure to support the ag-
gressive growth of the business. Attention will also be
turned to enhancing the customer experience and the
proactive detection of early warning trends and timely
actions to maintain portfolio quality.
CIB will also continue to act as a domestic and re-
gional influencer in promoting the UNEP-FI Prin-
cipals for Responsible Banking while capitalizing
on CIB’s Green Finance initiative to introduce new
products beyond energy efficiency and renewable
energy technologies.
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2018 In REvIEW
Compliance
Group
Compliance is a multi-dimensional practice with vari-
ous scopes. Within CIB, the Compliance Group focuses
on international best practices and promotes the high-
est standards of honesty, transparency, and integrity.
CIB has a well-established independent Compliance
Group, which demonstrates the Bank’s reliability and
helps support the pursuit of growth strategies.
The group protects the Bank from the risk of legal
or regulatory sanctions, material financial loss, and
loss to reputation resulting from failure to comply
with laws, regulations, rules, related self-regulatory
organization standards, or codes of conduct appli-
cable to its banking activities. Additionally, the group
provides intrinsic benefits including constructive
communication, improved overall business prac-
tices, and a better understanding of the regulatory
environment. The group ensures that CIB adheres to
compliance standards to safeguard the Bank against
a full spectrum of compliance risks.
Compliance, Policies, and Procedures
Division
The Compliance, Policies, and Procedures Division
ensures that all controls, laws, and regulations are
embedded in the applied policies and procedures,
all of which are periodically reviewed to ensure
they are up to date. The division is also responsible
for reviewing and approving marketing materials,
contracts, and customer forms. Over time, the scope
of the division has expanded to include monitoring
bank products through reports to ensure compli-
ance with policies, processes, and regulations.
2018 Highlights
Following the preventive measures taken by the
Compliance Group in 2018, the Compliance Poli-
cies and Procedures Division began implementing
a risk-based approach to detect any violations
through reports and take corrective action with
all stakeholders. The practice is considered to be
the basis of CIB’s monitoring and testing function,
which will be a key focus in 2019.
The Compliance Policies and Procedures Division
enhanced the percentage of customer data updates
by implementing several processes that encourage
e-customers to update their personal data. At the
same time, the division ensured that all existing
controls and CBE regulations are embedded in the
core banking system upgrade along with any new
controls needed. Another accomplishment of 2018
involved reengineering initiatives to enhance turn-
around time and increase customer satisfaction.
Corporate Governance and Code of
Conduct Division
The Corporate Governance and Code of Conduct
Division adopts corporate governance guidelines
and structures CIB’s governance framework to en-
hance long-term value for shareholders, employees,
the community, and other stakeholders. The division
also works to ensure that the corporate governance
system is documented, transparent, and understand-
able. The purpose of this division is to ensure that
investors, both foreign and local, customers, employ-
ees, and the general public are confident about the
ways the Bank is managed and supervised.
2018 Highlights
The Corporate Governance and Code of Conduct Di-
vision updated all group governance policies in 2018
to match current international best practices. The
division continued to manage relevant staff issues
and encouraged the use of the Bank’s whistle blowing
policy in cases of suspected wrongdoing. Moreover,
the division efficiently managed potential conflicts of
interest by reviewing several departments’ restructur-
ing in comparison with the respective job descriptions.
The division also ensured that neither employees nor
insiders traded CIB stocks during blackout periods
to promote transparency and integrity among all
shareholders. Furthermore, the division conducted
several induction sessions to raise staff awareness
of governance and conduct-related issues, in line
with CIB’s strategy to ensure that all employees are
continuously trained in topics related to conduct.
In 2018, 10 cases were presented to the Staff Issues
Committee; these cases included performance dis-
agreements, mismanagement issues, and violations
of the Bank’s code of conduct. All issues raised to the
committee were thoroughly investigated, and fair
and sound decisions were reached.
AML and Terrorism Financing Division
The Anti-Money Laundering and Terrorism Financing
(AML) Division develops, implements, and maintains
the AML program across the Bank. The division screens
transactions against negative lists and sanctioned
countries, a measure that shields the Bank against
money laundering and terrorism financing crimes. Ad-
ditionally, the division maintains records of customers
and reports suspicious activities to authorities.
2018 Highlights
In 2018, the AML Division rolled out SAS – the in-
dustry’s leading analytics software – to facilitate
better monitoring and greater understanding of
customers’ behavior.
The AML Division also rolled out the Go AML re-
porting system that supports secure automated
reporting to the Egyptian Money Laundering Com-
bating Unit (EMLCU). CIB’s AML team attended
several international seminars in 2018 to remain
up to date on AML trends locally and globally and
ensure we upheld our standard of consistently
enhancing performance and applying the highest
international standards and best practices.
Foreign Account Tax Compliance Act
Division
The Foreign Account Tax Compliance Act (FATCA)
Division ensures correct implementation of FATCA
regulations and actively follows up on any new
updates or requirements, in addition to reporting
annually to the US Internal Revenue Service (IRS).
2018 Highlights
During 2018, the FATCA Division successfully
uploaded two yearly reports to the IRS as a single
Foreign Financial Institution (FFI) as well as another
report as a Sponsoring Entity for CIB Mutual Funds.
The division also provided continuous support for dif-
ferent cases to facilitate the smooth implementation
of FATCA rules while ensuring customer satisfaction.
CBE Relations Division
The CBE Relations Division acts as a business advisor
for all the Bank’s departments to ensure they adhere to
all CBE regulations and instructions.
2018 Highlights
In 2018, the CBE Relations Division assured adher-
ence to regulators’ instructions while eliminating
any impact on business needs. The division acted as
a business partner by participating in meetings held
to develop new (mostly consumer) products as well
as assisting in structuring credit approval lines to
comply with CBE regulations.
2019 Forward-Looking Strategy
Going forward, the Compliance Group plans to
enhance the efficiency of processes and turnaround
time, support CIB through the group’s divisions, and
increase staff awareness of key compliance issues.
At the same time, the group will continue to safe-
guard the Bank against the full spectrum of com-
pliance risks. The group will continue cementing
compliance issues by delivering effective education
and training programs and fostering the values of
knowledge, honesty, integrity, respect, and profes-
sionalism across the Bank.
The Compliance Group will continue to adopt a risk-
based approach that recognizes that different areas
of the business and regulatory issues carry varying
levels of regulatory risk. Accordingly, the Bank’s
resources can be prioritized and allocated to areas
with the highest need to boost productivity.
In 2019, the group plans to complete preparations
to implement Common Reporting Standards (CRS)
in anticipation of local regulators’ announcement of
their target rollout date.
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2018 In REvIEW
Internal
Audit
2019 Forward-Looking Strategy
The group’s strategy for the future is to continue
ensuring that CIB’s stakeholders and senior man-
agement apply efficient governance practices and
risk management policies in an established in-
ternal control environment. Additionally, we will
continue to safeguard CIB as the Bank’s third line
of defense. The group is also laying the ground-
work for future developments in the digital and
fintech spheres while simultaneously fortifying
its cyber security management frameworks.
The Internal Audit Group provides independent and
objective assurance to its stakeholders, in addition
to consulting activities designed to add value and
improve the organization’s operations. Also, it sup-
ports senior management in accomplishing CIB ob-
jectives by assessing the adequacy and effectiveness
of the control system. Concurrently, it evaluates and
improves the effectiveness of Enterprise Risk Man-
agement and Governance processes.
The CIB Board Audit Committee is the backbone of
the Internal Audit Group, supporting and safeguard-
ing the independence of the third line of defense, in
addition to overseeing operation and risk manage-
ment, according to risk-based audit methodologies.
Backed by the top-ranked expertise of our team
members, all of whom hold specialization and
professional certifications, the group assisted all
stakeholders with issues that arose throughout
the year. The training and self-development pro-
grams offered to the team are considered among
the best on the market. We provide our people
with knowledge of the latest internal audit, risk
management, finance, regulatory, and gover-
nance functions.
To ensure their ability to fulfil their functions
effectively, our team members attend various
committees as observers (non-voting members) to
present the Group’s insights and align our efforts
with CIB’s strategic plan and objectives. This way,
we also fulfill our role as a trusted advisor to all
stakeholders within CIB.
2018 Highlights
2018 was characterized by a need to look beyond
the present to the future of the financial indus-
try, namely fintech products and the underlying
trend of leveraging big data. A new division was
introduced to accommodate the growing need
to support management in directing CIB’s audit
teams to enrich their scope and objectives.
The Consultancy and Special
Investigation
Division continued to provide CIB’s senior man-
agement with all required in-depth scrutiny of
concern, while the Follow-up Division’s closure
percentile reached its highest level in recent years.
As for the Quality Assurance Division, the Group
broadened its scope to add another communications
section to meet the regulator and external auditors’
requirements. The division conducted its standard
internal quality assurance check of all audit engage-
ments to ensure their alignment with IIA standards.
In line with our role as a market leader, CIB began com-
plying with IIA standards in 2015, three years before
this practice became mandatory in the Egyptian mar-
ket. In 2018, the Internal Audit Group again succeeded
in complying with IIA Standards, as we were subject to
External Quality Assurance as mandated by CBE. Ernst
& Young International conducted the review and found
that CIB was in full compliance with all standards
except one. This single standard with which we were
in partial compliance leaves room for future improve-
ment and continual advancement as the Bank strives
to remain ahead of local and regional competition.
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Sustainability
CIB goes beyond simply operating sustainably,
but guides industry change by leading in the
development of international frameworks
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SuSTAInABILITy
Corporate
Governance
In its mission to become the best financial insti-
tution in Egypt, CIB strives to apply international
best practices in the area of corporate governance.
The Bank is wholly committed to the principles
and corporate values that distinguish the finest
governance structures.
regarding the Bank, its ownership, operations, and
financial performance. It also advocates the equal
treatment of all shareholders with sound protection
for their voting rights. The Bank continues to uphold
its mandate to create value for shareholders in a
sustainable and value-based manner.
CIB’s corporate governance structure is anchored
in highly professional executive directors and a
distinguished group of independent non-execu-
tive directors (NED). The BoD enjoys an optimal
mix of skills, experience, and diversity in terms of
gender and nationality.
CIB’s highly qualified BoD is supported by special-
ized Board Committees. Committees are chaired
by the NEDs, who brief the BoD on major points
raised by their respective committee. The board is
also supported by internal and external auditors,
as well as other internal control departments (Risk,
Compliance, Internal Audit, and Legal). Work car-
ried out by these functions is fully utilized by the
BoD to ensure the Bank adheres to international
standards of corporate governance.
CIB’s experienced executive management team
plays an important role in the governance of the
Bank by faithfully and efficiently executing the
strategy set by the BoD and properly implement-
ing the Bank’s policies.
Corporate governance issues are a core focus of CIB’s
BoD. The Bank’s governance framework ensures that
timely, transparent, and accurate disclosures are
made available with respect to material information
CIB’s governance framework aims to sustain the
success of the Bank’s business and operations,
backed by a concrete set of policies and procedures
relevant to the scope, size, and complexity of CIB’s
business. The BoD thus works to ensure proper im-
plementation of internal and external regulations
and to mitigate all possible risks.
These mandates are complemented by a set of
governance policies designed to promote a corpo-
rate culture that emphasizes building trust with
key stakeholders. Such a culture is aligned with
the Bank’s purpose and business strategy while
promoting integrity within the Bank.
The Code of Corporate Governance is a cornerstone
of CIB’s governance policy framework, aiming to
enhance long-term value for shareholders, employ-
ees, and other stakeholders. The Code of Conduct
sets out the standards of behavior expected from
all employees, providing staff, senior management,
and the BoD with a comprehensive frame of refer-
ence regarding their rights and duties. The code
further enshrines the principles of equal employ-
ment opportunity and gender equality.
CIB’s Conflict of Interest policy guarantees that
all staff and board members remain aware of and
9
Highly qualified
individuals make up
CIB’s BoD
forthcoming about any conflict of interest be-
tween the Bank and their personal, professional,
and business interests, providing guidance on
how to handle those cases.
The Bank’s Whistle-Blowing Policy encourages staff
to report suspected violations of the law or Bank
policies as well as any wrongdoing, while guaran-
teeing a supportive and encouraging environment
for those who speak out. The Bank handles cases of
whistle-blowing, be they from internal or external
sources, very seriously and at a senior level.
CIB’s Conduct Risk policy makes clear the Bank’s
relationship with and duties toward its customers.
This comprehensive policy structure reflects CIB’s
prioritization of a strong governance framework,
one that is fully backed by each of the Bank’s BoD
members and firm leadership and vision.
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SuSTAInABILITy >> Corporate Governance
Business School. To mark the occasion, Mr. Ezz Al-Arab
joined distinguished professors from LBS’s Leadership
Institute and the Wheeler Institute for Business to dis-
cuss the Bank’s innovation drive and the competitive
advantage this gives CIB among other emerging mar-
ket banks. He also discussed how artificial intelligence,
blockchain, cloud computing, and big data will lead a
revolution in the financial services industry.
A firm believer in education, Mr. Ezz Al-Arab has ex-
panded CIB’s collaboration with reputable educational
organizations to provide diversified learning opportu-
nities. Such collaborations include the CIB Endowed
Professorship of Banking at AUC, designed to expose
students to multiple perspectives that result in superi-
or business leadership. In 2016, CIB and AUC launched
the AUC Venture Lab FinTech Accelerator, Egypt’s
first university-based incubator and accelerator that
supports fintech entrepreneurs and bridges the gap
between Egypt’s financial services industry and the
emerging entrepreneurial ecosystem.
Under Mr. Ezz Al-Arab’s leadership, CIB has received
several prestigious international accolades, a testament
to the Bank’s excellence in management and outstand-
ing performance over the years. Among other awards,
CIB received Euromoney’s 2018 “Best Bank Transforma-
tion in the Middle East” and “Best Bank in the Middle
East” in 2017, Global Finance’s 2017 “Digital Bank of
Distinction in Egypt”, and was named African Banker’s
2016 “Socially Responsible Bank of the Year”. Mr. Ezz Al-
Arab was recognized in 2016 for his “Outstanding Con-
tribution 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.
In 2018, CIB was named the “World’s Best Emerging
Markets Bank” by Global Finance, a year after being
recognized for the same award by Euromoney. CIB
is the first bank in Egypt, North Africa, and Middle
East to ever win this award.
Mr. Ezz Al-Arab leads the Federation of Egyptian
Banks as Chairman, is Co-chair of the Institute of
International Finance’s Emerging Markets Advisory
Council, and serves as Director of Mastercard Middle
East’s Regional Advisory Board. He is also Chairman
of the Board of Trustees of the CIB Foundation and is a
Non-executive Director of the Board at Fairfax Africa.
Mr. Ezz Al-Arab joined CIB from Deutsche Bank and
previously served with JP Morgan and Merrill Lynch in
postings that took him to Bahrain, New York, and Cai-
ro. He holds a BA in Commerce from Cairo University.
Mr. Hisham Ezz Al-Arab
Chairman and Managing Director
Mr. Hisham Ezz Al-Arab has been Chairman and Man-
aging Director of CIB since 2002. He leads a team of
more than 6,750 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, profitability, net worth, and
market share of deposits. Under his leadership, CIB has
grown into an institution that now serves more than
1.3 million customers nationally, from individuals to
small- and medium-sized businesses and leading cor-
porations among Egypt’s 500 largest firms.
The Bank’s market capitalization has grown from
EGP 1 billion at the beginning of Mr. Ezz Al-Arab’s
term to EGP 86 billion as of December 2018, making
its stock — a blue-chip component of the Egyptian
Exchange — the global investment community’s
preferred proxy for Egypt and a benchmark for the
banking industry in emerging markets.
Mr. Ezz Al-Arab’s term has seen CIB develop a unique
culture that balances an innovation-driven entrepre-
neurial spirit with a commitment to global best prac-
tices in corporate governance and risk management.
Nurtured for over 15 years, the Bank’s corporate cul-
ture gives it a natural competitive advantage and led
directly to the establishment of the first-of-its-kind em-
ployee stock ownership program (ESOP) in 2006. More
than 80% of all employees have benefited and continue
to benefit from ESOP, making them shareholders and
thereby aligning the interests of both employees and
shareholders. In 2010, Mr. Ezz Al-Arab launched the
CIB Foundation, a leading Egyptian voice for universal
access to quality healthcare, with a particular focus on
the needs of underprivileged children.
In 2018, CIB became the first corporation in the Middle
East to be the subject of a case study by the London
Board of Director Highlights
Board independence
The majority of CIB’s
directors are non-executive
at seven out of nine
members, five of whom are
independent directors
Deep banking and
related knowledge
and experience
The majority of CIB’s
directors have extensive
industry experience
ranging from business and
management to banking and
investment
Gender diversity
Two of the directors are
women
Board of Directors
CIB is headed by a competent BoD, which pro-
vides the Bank with the necessary leadership and
experience to manage its business with integrity,
efficiency and, most importantly, excellence.
The BoD primarily focuses on long-term financial
returns and seeks the best interests of all related
stakeholders. The board is responsible for setting
CIB’s strategic objectives, overseeing implementa-
tion of said strategy, providing oversight of senior
management, ensuring the effectiveness of the
Bank’s internal control systems, managing risk, and
securing CIB’s institutional reputation and long-term
sustainability. Moreover, the board is responsible for
setting compensation and performance goals and
manages director nomination, evaluation, and suc-
cession planning. It oversees CIB’s economic, social,
and environmental sustainability initiatives, per-
forming its duties with entrepreneurial leadership,
a sound strategy, and risk management oversight to
ensure risks are properly assessed and managed.
CIB’s BoD consists of nine members who possess
an appropriate balance of experience, competen-
cies, and individual qualifications. These collec-
tive qualities give the Bank a distinct competitive
edge. Over the course of 2018, CIB’s BoD met seven
times. Being the single largest shareholder in CIB
through its wholly owned subsidiaries, Fairfax Fi-
nancial Holding Ltd currently holds 6.6% of CIB’s
local shares, following its transaction with Actis
in May 2014. Fairfax Financial Holdings Ltd ap-
points one representative to the Bank’s BoD.
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117
SuSTAInABILITy >> Corporate Governance
Mr. Hussein Abaza
Chief Executive Officer and Board Member
Mr. Hussein Abaza leads strategy and operations
at CIB, an institution with more than 6,750 em-
ployees serving more than 1.3 million customers,
including Egypt’s 500 largest corporations, on-
line and at 203 branches, 917 ATMs, and 13,446
points of sale nationwide. Mr. Abaza has been
Chief Executive Officer and a Member of the
Board of Directors since March 2017. He is Chair
of the Board’s Executive Committees (Manage-
ment and High Lending & Investment Commit-
tees). He assumed this position after a six-year
run as CEO of Institutional Banking. Prior to
this, Mr. Abaza was the Bank’s Chief Operating
Officer and, from 2001 to 2010, its Chief Risk Of-
ficer responsible for managing credit, market,
and operational risk across CIB.
Mr. Abaza is also a leader of the Bank’s award-
winning Investor Relations program, in which
capacity he has helped CIB grow from a market
capitalization of EGP 10.8 billion in 2008 to EGP
86 billion as of December 2018. Under Mr. Abaza’s
leadership, the team managed Ripplewood’s 2009
exit from CIB, the entry into the shareholding
structure of global emerging markets private
equity firm Actis, and the subsequent sale of
Actis’s 6.5% stake to Canadian insurance firm
Fairfax Financial Holding Ltd. in the Egyptian
Exchange’s first block trading transaction. The
Bank’s IR program has taken home wins from
the Extel / MEIRA poll for five consecutive years,
from 2014 to 2018.
In his more than 25 years with CIB, Mr. Abaza has
become actively involved in the Bank’s region-
ally renowned credit training program, providing
talented young bankers with the theoretical basis
and hands-on experience needed to assess the
creditworthiness of organizations across all sec-
tors of the economy.
He brings to CIB a sharp interest in financial
markets and non-bank financial services, having
served as Head of Research and then Managing
Director at EFG Hermes Asset Management from
1995 until his return to CIB in 2001. He called
on that experience from 2014 to 2017 when he
was Chairman of CI Capital, a leading Egyptian
investment bank and subsidiary of CIB until the
Bank exited its investments.
Mr. Abaza joined CIB after obtaining his BA in
Business Administration from AUC. He has pur-
sued post-graduate training and education in
Belgium, Switzerland, London, and New York.
Mr. Jawaid Mirza
Non-Executive Director of the Board & Lead Director,
Chair of CIB’s Audit Committee
Mr. Jawaid Mirza has been Lead Director and
Non-Executive Independent Board Member at CIB
since January 2014. Mr. Mirza chairs the Board Au-
dit Committee, sits on the Board Risk Committee,
Operations and Technology Committee (which
he chaired for three years since its inception), the
Corporate Governance and Nomination Commit-
tee, and the Corporate Sustainability Committee.
Mr. Mirza currently serves as Independent Non-
Executive Board member of Eurobank Ergasias
(Athens), where he chairs the Board Audit Com-
mittee and sits on the Board Risk Committee. Mr.
Mirza also serves as Non-Executive Independent
Board Member of South Africa Bank of Athens
(Johannesburg) and sits on the board’s Audit,
Risk, and Technology Committees.
Mr. Mirza holds various business management
degrees from reputable institutions like Queens
Business School (Toronto), Wharton Business
School, Stanford Graduate School of Business,
and is a member of the Institute of Corporate
Directors, Canada.
Mr. Mirza is a strong proponent and practitioner
of international corporate governance practices
and brings with him over 35 years of diversified
experience and a solid track record in all facets
of financial and risk management, technology,
mergers and acquisitions, business turnarounds,
and operations management.
Over the years, Mr. Mirza has worked with global
institutions like Citibank and ABN AMRO Bank
Ltd, where he held several senior positions as CFO
European Region, Managing Director and Chief
Operating Officer for Global Private Banking, As-
set Management and New Growth Markets (Con-
sumer Banking), and Chief Financial Officer for the
Asian Region including Australia/New Zealand
and the Middle East. Mr. Mirza has led several due
diligences for acquiring banks in Hungary, Taiwan,
Thailand, Germany, Brazil, France, and Pakistan.
He was also a member of the Top Executive Group
at ABN AMRO Bank and a member of the Group
Finance and Group COO Board.
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Dr. Kamel holds a PhD in Information Systems
from the London School of Economics and Politi-
cal Science, an MBA, a BA in Business Administra-
tion, and an MA in Islamic Art and Architecture
from AUC. His research and teaching interests
include management of information technology,
the transfer of information technology to devel-
oping nations, organizational transformation,
electronic business, decision support systems,
and entrepreneurship. His work on information
systems and management is published in schol-
arly journals and books.
Dr. Sherif Kamel
Non-Executive Director of the Board,
Chair of CIB’s Operations and Technology
Committee
Dr. Sherif Kamel has been a Non-Executive Board
Member at CIB since May 2013. He chairs the
Operations and Technology Committee and is a
member of the Audit, Compensation, and Gover-
nance and Nomination Committees.
Dr. Kamel is Professor of Management and Dean
of the School of Business at AUC. He serves the
university as Vice President for Information Man-
agement and as Associate Dean for Executive Ed-
ucation at the School of Business. Before joining
AUC, he was director of the Regional IT Institute
and Training Manager at the Cabinet of Egypt’s
Information and Decision Support Center. He is
an Eisenhower Fellow and a Fellow at the Center
for Global Enterprise.
Dr. Kamel is a member of the AACSB Interna-
tional Middle East Advisory Council, the Egypt-
US Business Council, and a Board Member at
the American Chamber of Commerce in Egypt
and Education for Employment Egypt. He has
served on the board of the Egyptian American
Enterprise Fund and has been a member of the
World Bank Knowledge Advisory Commission.
Dr. Kamel was a founding member of the Internet
Society of Egypt. He has been invited as panelist
and speaker to a variety of policy, development,
and leadership conferences and expert meetings,
including the Asia-Middle East Dialogue, AACSB
International, World Summit on the Information
Society, the Center for Strategic and Internation-
al Studies, Atlantic Council, German Marshall
Fund, Middle East Institute, the International
Monetary Fund, and the World Bank.
Mr. Yasser Hashem
Non-Executive Director of the Board,
Chair of CIB’s Governance and Nomination
Committee
Mr. Yasser Hashem has been a Non-Executive Board
Member at CIB since May 2013. He chairs the Gover-
nance and Nomination Committee and is member
of the Audit and Compensation Committees.
Mr. Hashem has held the position of Managing Partner
at ZH&P since 1996. The legal skills he has extended to
the privatization of public sector entities and his role in
the inception of private provision of telecom services in
Egypt have made him a valued veteran of legal practice
in Egypt. Combining a wide range of extensive legal
knowledge with honed networking and interpersonal
skills, Mr. Hashem protects and furthers the interest of
over 100 local and international clients.
With a special focus on corporate law, Mr. Hashem
has supported the privatization program of public
sector entities in Egypt through hundreds of re-
structurings, incorporations of foreign and domes-
tic companies, and advising foreign and local inves-
tors on the most efficient vehicles and structures for
implementing their investments in Egypt.
In the fields of M&A and capital markets, he has
reliably represented acquirers in all major tender of-
fers and M&A transactions in Egypt and has led the
four largest multibillion dollar M&A transactions in
Egypt. He has also played a major role in most IPOs
that have taken place in Egypt.
Mr. Hashem has advised on Egypt’s most significant
telecom license acquisitions and M&A transactions.
The legal services he has extended to this sector in-
clude the acquisition and mandatory tender offers of
telecommunication companies, as well as support for
consortia on a number of mobile and fixed wireless li-
cense bids. He has contributed to the drafting and ne-
gotiation of all major telecom licenses, including pub-
lic pay phones, mobile cellular networks, private data
networks, satellite, and marine fiber-optic cabling,
among others. Mr. Hashem also led the team acting
for the largest post-revolution acquisition transac-
tions in the telecommunications sector in 2012 and
advised Orange (one of the world’s leading network
operators for mobile, broadband internet, and fixed
lines) in its successful 100% acquisition of Mobinil for
approximately USD 3 billion. Mr. Hashem’s expertise
in the telecom sector has led to his appointment by
Ministerial Decree as Member of the New Telecom-
munications Act Drafting Committee.
He was recognized by The legal 500 as “Leading
Individual” for the years 2016, 2017, and 2018 and
his name features in The legal 500’s Hall of Fame
for having been recognized for seven consecutive
years. He was also ranked by IFLR 1000 as Leading
Lawyer in the Financial and Corporate Practice for
2016, 2017, and 2018. Mr. Hashem was ranked by
Chambers and Partners Global as a “Band 1” Lawyer
in the Corporate / M&A practice for the years 2017
and 2018 and as “Band 1” Lawyer in the Banking and
Finance practice for the year 2018. His initial rank-
ing by Chambers and Partners dates back to 2000.
Mr. Hashem received his LL.B. from Cairo Uni-
versity in 1989. He was admitted to the Egyptian
Court of Cassation in 2007 and is a member of the
Egyptian Society of International Law and the Li-
censing Executive Society. He is fluent in Arabic,
English, and German.
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SuSTAInABILITy >> Corporate Governance
With his 30 years of global experience in Bank-
ing and financial services, Mr. Richards serves
as Non-Executive Director for a number of com-
panies. 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 London Business School’s Accelerated De-
velopment Program and Ashridge Management
College’s Group Level Strategy Program. He also
attended the Leading Professional Services Firms
Program at Harvard Business School.
Mr. Mark Richards
Non-Executive Director of the Board,
Chair of CIB’s Risk Committee
Mr. Mark Richards has served as Non-Executive
Director of CIB’s Board of Directors since Febru-
ary 2014, and chairs the Board’s Risk Committee
and is member of the Compensation and Gover-
nance and Nomination Committees.
Mr. Richards was Chief Executive of IPGL (Hold-
ings) Ltd., a major corporate holding company
based in the United Kingdom. He also served as
Chairman of Exotix Holdings Ltd., a frontier mar-
kets brokerage and investment bank, and Direc-
tor of Singapore Life, a rapidly growing digital life
insurance group operating across Southeast Asia.
Mr. Richards is also a non-executive director of
international financial services search specialist
Sheffield Howarth.
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.
Prior to joining Fairfax, Mr. Khosrowshahi was
the President and CEO of Fuji Fire & Marine In-
surance Company Ltd., based in Japan. He is the
only non-Japanese individual who has been the
President of a publicly traded Japanese insurance
company. In 2002, Fuji Fire & Marine embarked on
hefty reforms after an investment by major share-
holders American International Group (AIG) and
ORIX Corporation. He was elected President in
June 2004 and successfully implemented a turn-
around strategy to return Fuji to profitability and
growth by taking strategically leading positions
within the insurance industry in Japan.
From 2001 to 2004, he was the President of AIG’s Gen-
eral Insurance operations based in Seoul, South Ko-
rea where a major restructuring plan resulted in sig-
nificant revenue and profitability increases through
specific product and channel strategies. From 1997
to 2001, Mr. Khosrowshahi was Vice Chairman and
Managing Director of AIG Sigorta based in Istanbul,
Turkey, and was involved in negotiating strategic
alliances and joint ventures with Turkish conglomer-
ates and working with governmental regulators to
improve support for new product introductions to
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.
He also held various underwriting and management
positions with increasing responsibilities at AIG’s
headquarters in New York after he joined AIG in 1986.
He has served on the board of the Foreign Affairs
Council and the Insurance Society of Philadel-
phia. He has also been a council member of USO in
South Korea, the Chairman of the insurance com-
mittee of the American Chamber of Commerce in
South Korea, and a member of the Turkish Busi-
nessmen’s Association. He is also a member of the
U.K. Chartered Insurance Institute.
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. Bijan Khosrowshahi
Non-Executive Director of the Board,
Chair of CIB’s Compensation Committee
Mr. Bijan Khosrowshahi has sat on CIB’s Board
of Directors as a Non-Executive Member since
October 2014, representing the interest of Fair-
fax Financial Holdings Ltd. Mr. Khosrowshahi
chairs the Compensation Committee and is a
member of the Risk and Governance and Nomi-
nation Committees.
Mr. Khosrowshahi is the President and CEO of
Fairfax International. He joined Fairfax Financial
Holdings in June 2009 and is currently based in
London, UK. Fairfax is a financial services hold-
ing company which, through its subsidiaries, is
engaged in property and casualty insurance and
reinsurance and investment management. Fair-
fax is listed on the Toronto Stock Exchange.
Fairfax International focuses on expanding
Fairfax Financial Holdings’ insurance presence
outside North America. Mr. Khosrowshahi also
represents Fairfax’s interests as a board mem-
ber at the Gulf Insurance Group K.S.C.P., Gulf
Insurance & Reinsurance Company in Kuwait,
Bahrain Kuwait Insurance Company B.S.C.,
Arab Misr Insurance Group S.A.E. in Egypt,
Arab Orient Insurance Company in Jordan,
Gulf Sigorta A.S. in Turkey, Alliance Insurance
Company P.S.C in the UAE, Jordan Kuwait Bank
in Jordan, Colonnade Insurance S.A. in Luxem-
bourg, Southbridge Compañía de Seguros Ge-
nerales S.A. in Chile, La Meridional Compañía
Argentina de Seguros S.A. in Argentina, and SBS
Seguros Colombia S.A. in Colombia.
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SuSTAInABILITy >> Corporate Governance
Public Administration (MPA) from the Harvard
School of Government; and 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 interna-
tional awards and recognitions for her excellence
in leadership. She has been decorated with the
Wissam Alaouite from HM King Mohamed VI
of Morocco, named “Personalité d’avenir” by
the Government of France, and selected as one
of “The 50 Most Influential Women in Africa”.
She has also received the “Outstanding Alumni
Award” from the University of Manchester.
Dr. Abou-Zeid is also member of the prestigious
Global Leaders Broadband Commission for Sus-
tainable Development and of the Stewardship
Board for System Initiative on Shaping the Future
of Energy. She co-leads the Steering Committee of
Smart Africa and the Africa-EU Digital Economy
High Level Task Force.
Dr. Amani Abou-Zeid
Non-Executive Director of the Board
Dr. Amani Abou-Zeid has served as a Non-Exec-
utive Board Member at CIB since December 2017,
sitting on the Risk, Compensation, and Gover-
nance and Nomination Committees.
Dr. Abou-Zeid is the African Union Commis-
sioner in charge of Infrastructure, Energy, ICT
and Tourism. For more than 30 years, she has
served in leadership positions at international
organizations such as the African Development
Bank (Af DB), UNDP, and USAID, with a focus on
infrastructure and energy programs. Over her
career, she has amassed a remarkable mix of
experience from across Africa, France, the UK,
and Canada, working across constituencies with
a wide array of stakeholders.
As Commissioner of the AfDB, she has managed
the organization’s largest operational portfolio
and implemented national and continental multi-
sectoral development programs, including the
world’s largest solar power plant (Nour). In 2018,
Commissioner Abou-Zeid launched the Single Af-
rican Air Transport Market, delivering on the first
flagship project for African Integration under Af-
rican Union Agenda 2063. She also launched the
African digital identity DotAfrica, among other
continental initiatives.
An Egyptian national, Dr. Abou-Zeid has enjoyed
a wide-ranging, multi-disciplinary academic
training, including: a B.Sc. in Electrical Engineer-
ing from Cairo University; MBA in Project Man-
agement from the French University for African
Development (Université Senghor); a Masters of
Mrs. Magda Habib
Non-Executive Director of the Board
Mrs. Magda Habib has been a Non-Executive Board
Member at CIB since December 2017, sitting on the
Operations and Technology, Compensation, and
Governance and Nomination Committees.
Mrs. Habib is the Co-founder and Chief Executive Of-
ficer of Dawi Clinics, a chain of primary care clinics
established in Egypt in 2016. Mrs. Habib has vast ex-
perience in the technical information technology and
electronic payments fields, as well as smart banking
solutions. She draws upon 25 years of expertise in
various managerial arenas, including strategic brand
management, consumer and retail marketing, corpo-
rate communications, and investor relations.
She has also been a 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 of the executive
team, Mrs. Habib helped establish Fawry as the lead-
ing electronics payment 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 mem-
ber of Raya Holding’s executive team, where she played
a key role in the merger and development of Raya
Group, as well as being responsible for the creation and
development of the Raya brand during its evolution
into one of Egypt’s leading technology players.
Mrs. Habib obtained an MBA from INSEAD,
France. She holds a B.Sc. with Honors in Com-
puter Science from AUC.
7
Committees help
the BoD fulfill its
responsibilities
Board of Directors’ Committees
CIB’s BoD has seven standing committees that as-
sist in fulfilling its responsibilities. Each committee
chairperson is responsible for briefing the BoD on
the major issues raised by the committee he/she
chairs. Such briefings enable the members of the
BoD to carry out their duties in an effective manner.
Each committee operates under a written charter
that sets out its responsibilities and composition re-
quirements, reporting to the BoD on a regular basis.
Separate committees may be set up by the BoD to
consider specific issues when the need arises.
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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
This Committee was established to offer effective oversight of the in-
tegrity 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 independence and objectivity of each and the quality of the audit
and compliance processes. The Committee met five times in 2018.
Management Committee
Responsible for executing the
Bank’s strategy as approved
by the BoD and in compliance
with the Bank’s policies
Governance and Nomination
Committee
Responsible for CIB’s corporate
governance as well as the
BoD’s nomination process and
succession planning
Chair:
Mr. Yasser Hashem
Members:
All other NEDs
This Committee advises the BoD on the general oversight of gover-
nance matters and ensures the promotion of a sound governance cul-
ture within the BoD 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 crite-
ria for selecting new directors and assisting the BoD in identifying
individuals qualified to become BoD members and recommending
director nominees to shareholders. Besides these functions, the Com-
mittee provides advice and assistance to the BoD, when necessary,
with respect to a potential successor to the Bank’s Chief Executive
Officer. The committee met four times in 2018.
Compensation Committee
Responsible for compensation
of the BoD and the Bank’s
executive officers
Chair:
Mr. Bijan Khosrow-
shahi
Members:
All other NEDs
This Committee was established to provide guidance to the BoD
with regards to the appropriate compensation for the BoD and
the Bank’s executive officers and to ensure that compensation is
consistent with the Bank’s objectives, strategy, and control envi-
ronment. The Committee ensures that clear policies for the Bank’s
salaries and compensation schemes are in place and that they are
effective at attracting and retaining the best caliber professionals.
The Committee met two times in 2018.
Risk Committee
Supervising risk management
Chair:
Mr. Mark Richards
Members:
Mr. Jawaid Mirza
Mr. Bijan Khosrow-
shahi
Dr. Amani Abou-Zeid
Operations and Technology
Committee
Assisting the BoD in overseeing
Bank operations, technology
strategy, and operations and
technology risk
Chair:
Dr. Sherif Kamel
Members:
Mr. Jawaid Mirza
Mrs. Magda Habib
This Committee oversees risk exposure management functions
and assesses management’s compliance with the risk strategies
and policies approved by the BoD through periodic reports sub-
mitted by the Risk Management Group. The Committee makes rec-
ommendations to the BoD regarding risk management strategies
and policies (including those related to capital adequacy, liquidity
management, various types of risk: credit, market, operation, com-
pliance, reputation, and any other risks the Bank might be exposed
to). The Committee met four times in 2018.
This Committee was established to provide oversight of the Bank’s
operations, technology strategy, and significant investments in
support of this strategy, as well as operations and technology risk
management. The Committee met four times in 2018.
The Committee is responsible for executing the Bank’s strat-
egy as approved by the BoD. The Committee manages the
day-to-day functions of the Bank to ensure alignment with
strategy, effective controls, risk assessment, and efficient use
of the Bank’s resources. The Committee also monitors the
Bank’s strategic affiliates and subsidiaries. The Committee
met 16 times in 2018.
Chair:
Mr. Hussein Abaza
Voting Members:
Mr. Ahmed Issa – CEO
Consumer Banking
Mr. Amr El-Ganainy
– CEO Institutional
Banking
Mr. Mohamed Sultan –
Chief Operating Officer
Ms. Pakinam Essam –
Chief Risk Officer
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. Under the authori-
ties delegated to the Committee as stipulated in the Bank’s
Credit and Investment Policies, it is empowered to take deci-
sions respecting asset allocation. The Committee convened
weekly throughout 2018 and met 50 times.
External Auditor
The Board Audit Committee recommends the
appointment and/or termination of the external
auditor, which is approved at the General Assembly
Meeting of Shareholders. Moreover, the Board Audit
Committee evaluates the performance of the ex-
ternal auditor and endorses the prepared financial
statements to ensure they reflect the Bank’s perfor-
mance and faithfully reveal its genuine financial
position. In adherence to CBE regulations, external
auditors are reappointed every five years to ensure
objectivity and exposure to new practices.
Shareholders’ Rights
CIB’s Annual General Meeting of Shareholders is
held in March each year, no later than six months
after the end of the Bank’s financial year. The Gen-
eral Assembly provides a platform for shareholders
to exercise their voting rights. Additional Extraor-
dinary General Shareholder meetings may be con-
vened at any time by the BoD. Shareholder consent
is required for key decisions such as:
• Adoption of financial statements
• Voting on proposed dividends by the BoD
• Significant changes to the Bank’s corporate
governance practices
• Remuneration policy
• Remuneration of Non-Executive Directors
• Appointment of the external auditor
• Appointment, suspension, or dismissal of the
members of the BoD
• Issuance of shares or rights to shares, restriction
or exclusion of preemptive rights of sharehold-
ers, and repurchase or cancellation of shares
• Amendments to the Articles of Association
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SuSTAInABILITy
Management
Committee
Mr. Hussein Abaza
Chief Executive Officer and Board Member
Mr. Hussein Abaza leads strategy and operations
at CIB, an institution with more than 6,750 em-
ployees serving more than 1.3 million customers,
including Egypt’s 500 largest corporations, online
and at 203 branches, 917 ATMs, and 13,446 points
of sale nationwide. Mr. Abaza has been Chief
Executive Officer and a Member of the Board of
Directors since March 2017. He assumed this posi-
tion after a six-year run as CEO of Institutional
Banking. Prior to this, Mr. Abaza was the Bank’s
Chief Operating Officer and, from 2001 to 2010,
its Chief Risk Officer responsible for managing
credit, market, and operational risk across CIB.
Mr. Abaza is also a leader of the Bank’s award-win-
ning investor relations program, in which capacity
he has helped CIB grow from a market capitaliza-
tion of EGP 10.8 billion in 2008 to EGP 86 billion
as of December 2018. Under Hussein’s leadership,
the team managed Ripplewood’s 2009 exit from
CIB, the entry into the shareholding structure of
global emerging markets private equity firm Actis,
and the subsequent sale of Actis’s 6.5% stake to
Canadian insurance firm Fairfax Financial Hold-
ing Ltd. in the Egyptian Exchange’s first block
trading transaction. The Bank’s IR program has
taken home wins from the Extel / MEIRA poll for
five consecutive years, from 2014 to 2018.
In more than 25 years with CIB, Mr. Abaza has be-
come actively involved in the Bank’s regionally re-
nowned credit training program, providing talented
young bankers with the theoretical basis and hands-
on experience needed to assess the creditworthiness
of organizations across all sectors of the economy.
He brings to CIB a sharp interest in financial mar-
kets and non-bank financial services, having served
as Head of Research and then Managing Director at
EFG Hermes Asset Management from 1995 until his
return to CIB in 2001. He called on that experience
from 2014 to 2017 when he was Chairman of CI Capi-
tal, a leading Egyptian investment bank and subsid-
iary of CIB until the Bank exited its investments.
Mr. Abaza joined CIB after obtaining his BA in Busi-
ness Administration from AUC. He has pursued
post-graduate training and education in Belgium,
Switzerland, London, and New York.
Mr. Mohamed Sultan
Chief Operating Officer
Mr. Mohamed Sultan is CIB’s Chief Operating Of-
ficer, 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 and IT before
assuming his role as COO.
Under his leadership and management, the Opera-
tions Group was significantly developed, resulting in
major expansions within the operations function.
New divisions were established serving the expan-
sion of the business or merging several operations
divisions, including Corporate Services, Alternative
Channels, and Real Estate and Facility Management.
In his continuous efforts to enhance the Bank’s in-
ternal and external customer experience in align-
ment with CIB’s overall objectives and strategic
goals, multiple departments were established, in-
cluding Treasury Middle Office, Operations Con-
trol Management, Retail Operations, Customer
Care and Experience, as well as the Sustainable
Development Department.
His vision brought about the establishment of the
Security and Resilience Management Group, with
a clear strategic mandate to develop and firmly
establish the Bank’s business continuity and cy-
ber security management capabilities. Under his
leadership, CIB has obtained ISO22301:2012 Cer-
tification in Business Continuity Management,
positioning CIB as the pioneer and leader among
peer financial institutions in the market.
In 2015 and 2016, Mr. Sultan led a major trans-
formation strategy in the IT Department, adding
significant value to existing technology and en-
hanced infrastructure. The aim was a more solid
foundation that provides superior services to cus-
tomers and allows the business to grow smoothly
as the Bank moves forward. Mr. Sultan has also
been leading programs under the Bank’s Strategic
and Digital Transformational Agenda and has
played a significant role in expediting the adoption
of digital technologies with the aim of maintaining
CIB’s role as market leader in this domain.
Prior to joining CIB, Mr. Sultan held the positions
of Vice President of Branch Operations and Con-
trol Management at Mashreq Bank and Country
Operations Head at the National Bank of Oman.
He has attended several leadership programs in
top business schools and is also an alumnus of
INSEAD Business School.
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SuSTAInABILITy >> Management Committee
Mr. Amr El Ganainy
Chief Executive Officer, Institutional Banking
Mr. Amr El Ganainy joined CIB in 2004 as General
Manager of the Financial Institutions Group. In
January 2010, he assumed his role as President
of the Global Customer Relations Department,
before taking on his current role 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 Member of The Egyptian Holding Co. for
Airports and Air Navigation, General Assembly
Member of Egyptair Holding Co., Honorary Chair-
man of Inter-Arab Cambist Association (ICA),
Honorary Chairman of Egyptian Dealers Associa-
tion (ACI Egypt), and a member of the American
Chamber of Commerce in Egypt.
Mr. El Ganainy has served as Chairman of CI Asset
Management Co., Chairman of Commercial Inter-
national 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 Chair-
man of Capital Securities Brokerage Co.
Prior to joining CIB, Mr. El Ganainy worked at
the United Bank of Egypt as General Manager,
Treasurer and Head of Correspondent Banking
and was Chief Dealer of the Export Develop-
ment Bank. He began his career as a dealer at
Suez Canal Bank.
Mr. Ahmed Issa
Chief Executive Officer, Retail Banking
Mr. Ahmed Issa is the Chief Executive officer of Retail
Banking, a responsibility he assumed in January 2017.
He started his banking career in 1993 at CIB branches
and attended CIB’s industry-leading credit course
in 1994. He was later promoted through the ranks
within CIB’s Corporate and Investment Banking divi-
sions between 1995 and 2001. His career has seen him
take on notable positions such as Head of Research
at CIBC, Managing Director of CI Capital Investment
Banking, Head of the Financial Institutions Group at
CIB Corporate Banking, Chairman of Egypt’s lead-
ing lease finance company, Corplease, Chairman of
Egypt’s largest security company, Falcon Group, and
the first Head of Strategic Planning at CIB.
Mr. Issa is an industry veteran, chairing the Bank-
ing and Finance Committee of the American
Chamber of Commerce in Egypt and speaking
regularly at the chamber’s industry committee
meetings. He was Chair of the Audit Committee of
the Board at the Ministry of Civil Aviation Finance
Holding Company and in 2017 was selected by His
Excellency the Prime Minister of Egypt to sit on
the Board of Egypt’s Trade Development Authority.
In April 2018, at the request of His Excellency the
Minister of Aviation, he became a member of the
Board of Directors at Egyptair Holding Company.
Mr. Issa has been industrious about self-develop-
ment throughout his career. In 2001, he earned
an MBA from the University of North Carolina at
Chapel Hill. He was a Fulbright Scholar at Har-
vard University and at Merrill Lynch in 1997.
Ms. Pakinam Essam
Chief Risk Officer
Ms. Pakinam Essam serves as CIB’s Chief Risk
Officer (CRO), having been appointed in Janu-
ary 2011. Since then, she commenced the Risk
Transformation Process, and the CIB Risk Group
evolved into a forward-looking, holistic organiza-
tion with an integrated view of risks, covering
all key areas including institutional banking,
consumer banking, business banking, market,
operational, liquidity, and interest rate risks. She
has expanded the group’s coverage to focus on
emerging non-financial risks, such as conduct,
cyber security,
information security, vendor
management, IT, reputation, and social and en-
vironmental risks. Ms. Essam is championing the
Bank’s Enterprise Risk Management framework,
with emphasis on infrastructure, process, envi-
ronment, and risk culture.
Under her leadership, CIB has been recognized for
six prestigious risk awards by Asian Banker Sin-
gapore for the Middle East and Africa in the fol-
lowing categories: Enterprise Risk Management,
Retail Risk, Liquidity Risk, and Operational Risk.
Ms. Essam is a key member of the Bank’s executive
committee 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.
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SuSTAInABILITy
Sustainable Development
Department
The report provides insight into the Bank’s energy
use and net greenhouse gas (GHG) emissions in
terms of tons of carbon dioxide equivalent (tCO2e).
CIB’s 2017 report covers 52 branches and 899 em-
ployees in the Giza and Alexandria governorates
— two of the top GHG emitting governorates in
Egypt, with populations of 8.7 million and 5.2 mil-
lion inhabitants and emissions of 28 million and 17
million MtCO2e, respectively.
CIB’s emissions per employee for scopes 1 and 2 were
5.60 MtCO2e, higher than the median of the bank-
ing sector’s emissions for scope 1 and 2 emissions of
4.50 MtCO2e/employee and the international best
practice 2.82 MtCO2e/employee, according to the
Carbon Disclosure Project organization (CDP). The
Bank needs therefore to cut its emissions by at least
20% to reach median ranges.
CIB strives to adapt and contribute to the evolv-
ing landscape of the business community and
harness challenges and opportunities alike to
support long-term value creation while ensur-
ing a more sustainable, inclusive, and climate-
resilient future. Aligning CIB’s activities with the
Sustainable Development Goals (SDGs), Egypt’s
Vision 2030, and the Paris Agreement on Climate
Change is a crucial step in this direction. Equally
important is partnering with leading global enti-
ties to achieve synergies.
Instilling a bank-wide culture of sustainability re-
mains at the core of CIB’s agenda. We are also gradu-
ally and responsibly integrating environmental, social,
and governance (ESG) considerations into our policies,
core business, and day-to-day practices. This effort is
reinforced by systematic awareness-raising activities,
cross-departmental training, e-learning programs,
and the use of a variety of social media channels.
Managing our Ecological Footprint
CIB is managing its environmental footprint by
applying the highest standards and employing the
greatest resources when it comes to mitigating its en-
ergy and water consumption, carbon footprint, and
waste management. Considerable progress has been
made since 2014 in this regard despite significant
growth in the Bank’s operations and headcount.
CIB Carbon Footprint Calculations
Stemming from its serious commitment to sustain-
ability and transparency, and in line with the SDGs
and Egypt’s Vision 2030, CIB issued its first Carbon
Footprint Report in 2017. This new reporting effort is
a natural progression following the Bank’s sustain-
ability reports published in 2015, 2016, and 2017. This
initiative places CIB at the forefront of Egypt’s banking
sector with regards to a comprehensive carbon foot-
print assessment and sets the standards for our peers.
40%
Annual savings in energy
consumption
CIB’s EMISSIONS PER SCOPE
(MtCO2e)
Scope 1 – Direct Emissions
Owned Vehicles
Refrigerants Leakage
Scope 2 – Direct Emissions
Purchased Electricity
Scope 3 – Indirect Emissions
Transportation
Aerial Transportation
Water and Wastewater
Paper Consumption
Solid Waste Disposal
14%
991.41
60.82
54%
3,983.60
32%
1,135.90
262.82
21.56
54.59
852.03
Total Emissions
Emissions/Employee MtCo2e
Emissions/Employee MtCo2e (Scopes 1 & 2)
7,362.73
8.19 MtCo2e
5.60 MtCo2e
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SuSTAInABILITy >> Sustainable Development Department
Lighting Efficiency
In support of Egypt’s promising nation-wide Lighting Efficiency Improvement Initia-
tive, we transitioned to LED lighting systems across our premises in 2017. This re-
duced the Bank’s energy consumption by 11 KWs between 2014 and 2018, according
to a review conducted by the Egyptian Ministry of Electricity and Renewable Energy.
Annual savings on electricity consumption reached 40%, and the payback period was
14 months. CIB received a special award from the Energy Efficiency Project in recog-
nition of its outstanding energy efficiency efforts.
Outcome: CIB’s electricity consumption is consistently being monitored and fig-
ures show that usage in 90 mega CIB buildings (large premises) located in Egypt’s
main cities has dropped 2.53% in 2018 to 18204316.67 KWs from the 18666336.64
KWs consumed in 2017.
Water Efficiency
In 2018, CIB initially installed 1,600 aerators as part of a trial effort to reduce water
consumption across its premises. This project was highly successful, and the Bank
developed a plan to install aerators across all premises in Egypt and all new build-
ings in the coming years. This effort has led us to save 103 million liters of water in
2018, a 40% reduction in consumption.
Outcome: This effort has led us to save EGP 518,000 in water-related expenses and
achieved a return on our investment in only four months.
Paper Reduction
Paper reduction is a promising area for the division. Paper reduction efforts
spurred a healthy “Paper Champs!” competition between branch offices seeking
to cut down on paper waste. Any paper waste our branches create is sold to paper
recycling startups. Proceeds are credited to the Sustainability Account, whose
credit is subsequently used for green projects such as green rooftops.
Outcome: In 2018, a total EGP 184,326 was credited to the Sustainability Account
as part of these efforts. Despite the annual increase in CIB’s staff and number of
branches, bank-wide paper consumption rose marginally to record 38 million sheets
in 2018, up from 35 million sheets in 2017.
Electronic Waste (E-waste)
With the world becoming digitally dependent, reducing digital waste is vital. CIB
began to implement an e-waste management initiative during the latter part of
2017 to safely dispose of mobiles, computers, iPads, and similar devices.
Outcome: In 2018, a total of EGP 1 million was credited to the Sustainability Account as
part of these efforts.
National Initiative on Plastic Bag Consumption Reduction
CIB is cooperating with the Ministry of Environment to participate in a national
campaign to promote the use of biodegradable plastic bags. It sets to increase
public awareness of the hazardous effects of non-biodegradable plastic on human
health, the environment, and the economy. Biodegradable plastic bags are now
used across the Bank; a change consistent with the international trend of sustain-
able consumption and production.
Internal Carpooling Application
CIB encourages its employees to use a tailored carpooling application called
Raye7 CIB that connects CIBians who want to carpool to and from work every
day. In 2018, the application was used by over 1,000 employees. This initiative has
generated a positive environmental impact, strengthened ties in our community,
and allowed us to support young Egyptian entrepreneurs.
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SuSTAInABILITy >> Sustainable Development Department
Green Buildings
CIB collaborated closely with the Housing and Building National Research Centre
and the Ministry of Housing, Utilities, and Urban Development to obtain an Egyptian
Green Pyramids Certificate. This world-class, home-grown initiative is comparable
to the internationally recognized Leadership in Energy and Environmental Design
(LEED) standards. It is a mark of distinction signifying that a building has been con-
structed or is operated in a way that is green, high-performing, and resource-efficient.
CIB also contributed to the development of a Green Building Rating System – Green
Pyramids Rating System (GPRS). Two of our head offices were awarded the highest
environmental GPRS Green Level for meeting the following criteria:
• General accessibility and design quality that provides easy access to all stakeholders
• Use of renewable energy sources, such as covering the building with solar
sheets (rooftop panels and curved façade panels) and installing a central
solar water heater
• Establishment of internal and external vertical gardens that improve air-quality,
insulation, and visual comfort; native plants are used and consume the mini-
mum amount of water through an automatic irrigation system
• Roof designed as a social space with seating and a cafeteria shaded by solar-grids
• Efficient energy performance through use of LED lighting, occupancy sensors,
and double-glass for insulation
• Connection of all electrical, PV, HVAC, and water meters to a building manage-
ment system that ensures effective monitoring and optimization
• Prevention of ozone depletion through use of split units with environmentally
friendly refrigerant 407-A
• Installation of photocell taps in toilets and a gray water system to minimize
water consumption
• Adherence to sustainable housekeeping practices, such as environmentally friendly
pesticide control, waste management policies, and use of segregated trash bins
Noise Audit on Branches
In line with our goal to protect the environment and provide a better setting for
both employees and customers, the Bank has voluntarily conducted a review of
noise ratios at five branches that serve a large number of clients from a cross
section of the population.
CIB is following up on the recommendations of the noise audit report. We have cre-
ated a task force responsible for implementing the following changes:
• Periodic maintenance to maintain device efficiency
• Use of soundproof glass and double-glass in louder areas
• Reduction in the sound of the Qmatic system in branches
Electronic Tuk-tuks
CIB led an initiative to transform the tuk-tuk taxi system in El Gouna, a luxury
Egyptian resort on the Red Sea. El Gouna has made significant efforts to preserve its
environment and community through efforts such as becoming a zero waste town,
producing organic food, and working to become the only carbon-free resort in Egypt.
Because of the noise and pollution created by tuk-tuks, El Gouna was eager
to replace the existing fleet with state-of-the-art, zero-emission solar electric
vehicles. CIB proudly contributed to the project by delivering the necessary e-
tuk-tuks to El Gouna.
Accepted locally
and globally
Classic debit card
Cash and
purchase
Maximum
daily limit of
EGP 500
Accepting
increase of
daily cash limit
through the VIP
Call Center
Existing debit
card pricing
applies
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SuSTAInABILITy >> Sustainable Development Department
Inclusion Efforts
Special-needs Accessibility: A Holistic Approach
This issue has been high on CIB’s list of priorities
for a few years now, and by 2018 we successfully
equipped 26 branches with ramps, low teller desks,
and toilet rails. Additionally, we installed 95 talking
ATMs at key locations across Egypt. In addition,
we conducted training sessions for 250 front-liners
and customer representatives on how to best serve
customers with special needs. This training was
conducted in partnership with an NGO with an
extensive track record in the field of special needs
advocacy. CIB is also developing a code of acces-
sibility that evaluates branches’ and ATMs’ ease of
use to identify gaps and appropriate improvements.
We are also establishing partnerships to increase
job accessibility and recruitment levels for special
needs individuals in Egypt.
Recently, CIB extended even more accessibility to
visually impaired customers by providing easier
access to POS terminals. Prior to this, access was
limited to the use of ATMs.
Monitoring and Reporting
Science Based Targets Initiative
As no widely accepted approach exists to assess
whether investing and lending activities are aligned
with a 2°C trajectory, the Science Based Targets ini-
tiative (SBTi) invited CIB to participate in a financial
sector working group to develop a new assessment
methodology. SBTi is a partnership between CDP,
UN Global Compact, WRI, and WWF that seeks to
increase corporate ambition on climate action by
mobilizing companies to set greenhouse gas emis-
sion reduction targets so that by 2020 we limit global
warming to 2°C. Embedding science-based targets
as a fundamental component of sustainability man-
agement practices is crucial in achieving this goal.
CIB Sustainability Report
To track our performance and periodically
benchmark and communicate our progress to
stakeholders, we identify and report on sustain-
ability KPIs relevant to our business. CIB adheres
to the Global Reporting Initiative (GRI) stan-
dards, which provide the most comprehensive
framework for sustainability reporting. The Bank
has been developing a standalone sustainability
report every year since 2014.
Carbon Disclosure Project
CIB participated for the first time in early 2018 in
this global disclosure system, making it the first
Egyptian company to do so. The Carbon Disclosure
Project enables companies and states to measure
and manage their environmental impacts.
Bloomberg Gender Equality Index (GEI)
CIB was included on the 2019 Bloomberg Gender
Equality Index (GEI) based on data collected and
reported in 2018. Of the 230 companies selected
for the GEI, CIB became the first Arab and African
company to be named on the index. The Bloomberg
GEI is the world’s only comprehensive, investment-
quality data source on gender equality. Collectively,
these companies have a combined market capital-
ization of USD 9 trillion and employ over 15 million
people, 7 million of whom are women.
FTSE4Good Sustainability Index
CIB was recognized by the Financial Times as a con-
stituent of the FTSE4Good Sustainability Index for
the third consecutive year in 2018.
EGX Sustainability Index
In 2018, CIB ranked first on in the EGX Sustainabil-
ity Index for the fifth consecutive year.
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Community
Development
CIB’s community development activities
run the gamut of support to health, sports,
social welfare, and art
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CoMMunITy DEvELoPMEnT
Corporate Social
Responsibility
CIB has continued to embed corporate social re-
sponsibility (CSR) at the heart of the organization.
This year, it has expanded its steadfast commitment
to the communities in which it operates by diversi-
fying its community development activities, which
include supporting sports, fine art, culture, and
social care. It has implemented various CSR projects
and provided crucial support to the initiatives of
other organizations.
In 2018, CIB continued to positively impact its
communities by strengthening its support for
sports in Egypt and nurturing the country’s ath-
letic talents. Squash-related initiatives were again
at the core of CIB’s CSR agenda, and we broadened
our support to generate more opportunities and
value for a wider community.
To know more about CIB’s efforts in supporting
Egyptian athletes in the squash arena, please refer
to the Supporting the Best in Class: Squash section
of this report.
Supporting Students of Fine Arts Faculties: CIB
works hard to uncover hidden artistic talent across
Egypt by shedding light on distinctive artwork and
supporting students in the faculties of fine arts. The
Bank participated in the exhibition of student proj-
ects at the universities of Luxor, Assuit, Menya, and
Mansoura. We acquired distinctive works to enrich
our art collection while incentivizing young talents.
Night with Arts at Manial Palace: CIB sponsored “Night
with the Arts” for the second year in a row. This year, the
exhibition “Nothing Vanishes, Everything Transforms”
showcased Egypt’s rich cultural heritage, having been
held at the historic Manial Palace. With more than 500
renowned guests in attendance, CIB displayed one of
its art pieces from its art collection for the first time.
Africa Art Workshop: For the first time ever, CIB
supported an African painting workshop led by
Soma Art School in the Democratic Republic of
Congo during the seventh edition of the Rencontre
Internationale d’Art Contemporain (RIAC) event.
Sponsorship of Ramadan Soccer Tournament
for Abu El-Rish Children’s Hospital: CIB contrib-
uted to a charity soccer tournament last Rama-
dan, which was held to support the Abu El-Rish
Children Hospital. All the tournament’s funds
were donated to the hospital.
Promoting the Legacy of Egyptian Cinema: CIB
maintains its commitment to preserve the legacy of
Egypt across different fields, including art and cin-
ema. The Bank sponsored the special “Cinema Edi-
tion” of the cultural magazine “Rawi”, which focuses
on Egyptian heritage.
Another significant area in which CIB focused its
CSR efforts in 2018 is art and culture. Out of a belief
that the advancement of a nation stems from im-
proving the culture and aesthetic sense of society,
CIB has been diversifying its support of artistic
endeavors throughout Egypt.
Made in Egypt: CIB aims to support entrepre-
neurial spirit in Egypt by identifying distinc-
tive artistic talents. This year, CIB continued to
sponsor “Made in Egypt”, an exhibition of young
Egyptian designers held in London featuring the
country’s best artistic productions.
CIB continued to positively impact
its communities by strengthening
its support for sports in Egypt and
nurturing the country’s athletic talents.
CIB’s CSR initiatives and activities are designed
with the goal of making a positive, sustainable
impact on people’s lives.
KidZania: CIB and KidZania’s partnership began
in 2013, and since then, the Bank has successfully or-
ganized several trips each year to KidZania for more
than 150 underprivileged children, special needs chil-
dren, as well as children with health conditions. Under
the auspices of the CIB Foundation, the trips provided
children a fun setting in which to learn about diverse
banking operations, such as issuing cheques, debit
cards, and depositing and withdrawing money using
KidZania’s official currency: Kidzos.
Autism International Day/ADVANCE: This year,
the Bank continued its sponsorship of the Egyp-
tian Advance Society for Persons with Autism and
Other Disabilities (ADVANCE)’s annual ceremony.
We also sponsored 2018 World Autism Awareness
Day in Egypt to support the integration of people
with disabilities into society. In further efforts,
the Bank’s Smart Village headquarters and select
branches were lit in blue in solidarity on World
Autism Awareness Day.
Beena: CIB has been the main partner and finan-
cial sponsor of Beena for three consecutive years.
Beena is a protocol signed between the Bank and
the Ministry of Social Solidarity to encourage ac-
tive youth participation in the community and
monitor the development of social care services.
This initiative successfully attracted thousands of
volunteers around Egypt who assisted in orphan-
ages, elderly homes, and special-needs houses.
El Sawy Culture Wheel: In 2018, CIB continued its
long-lasting sponsorship of El Sawy Culture Wheel,
supporting its various intellectual, cultural, and
social activities, including concerts by internation-
ally recognized artists, cultural nights, art exhibi-
tions, documentary films, and more. This year, the
Bank launched a new initiative in cooperation with
the CIB Foundation and other NGOs to provide
entertaining and educational programs at El Sawy
Culture Wheel that target children.
Science Fair Sponsorship: CIB sponsored a sci-
ence fair for school students to foster the scientific
thinking process from an early age and encourage
children to explore future careers in scientific
fields. The fair featured groups of students from dif-
ferent grades who submitted projects to a panel of
judges, which evaluated each project and awarded
numerous titles to winning teams.
Exclusive Sponsorship of Hona Al Shabab: This
year, CIB was the sole banking sponsor of the
second season of CBC’s televised entrepreneur-
ship competition Hona Al Shabab. Hosted by
Egyptian broadcast presenter Lamees El Hadidi,
the competition supports young fintech entrepre-
neurs and business startups. Of the 30 startups
involved, interactive design-lab startup Argineer-
ing nabbed the first place. After the competition,
a special event was held in CIB headquarters in
Smart Village to celebrate the winners and con-
testants with CIB senior management.
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CoMMunITy DEvELoPMEnT
Supporting the
Best in Class: Squash
In 2018, CIB continued to positively impact the
community in which it does business through a
key component of its social development agenda:
supporting and nurturing the country’s athletic
talents. At CIB, we recognized early on the true
potential of Egypt’s squash players, who have
come not only to dominate world rankings, but
completely revolutionize the way the game is being
played. This year, we broadened our support of the
sport to capitalize on the traction its players are
carving out globally. It is our belief that support-
ing these talents generates more opportunities and
value for the Egyptian athletic community and
raises the profile of Egypt on the world stage.
Sponsorship of Egyptian Squash Federation
CIB maintained its sponsorship of the Egyptian
Squash Federation for the seventh consecutive
year. The Bank also expanded its commitment
by sponsoring the National Women’s and Junior
Squash Teams. This support has played a direct
role in the national teams’ accomplishments
throughout the year, including the fact that the
National Junior Squash Team won the World
Junior Squash Championship in India for the
sixth time since 1994. Almost simultaneously,
the National Women’s Squash Team was named
Women’s World Team Champion in China, suc-
cessfully retaining their title.
The country’s dominant position in the squash
world stems from a tight-knit squash community.
Egyptian players have introduced a dynamic new
style of squash that emphasizes offense and has
brought a flood of major honors while entertain-
ing spectators the world over. Egypt’s squash
community has produced five world number ones
in the men’s game and two in the women’s game.
Six Egyptian players are among the world’s top
10 men players and four Egyptians are among the
top 10 women as of February 2019.
The squash community embodies the values that
CIB strives to instill in its own staff and to promote
in the wider community. Young players from all
walks of life have had the chance to display their
excellence on the global stage thanks to a steely per-
severance, openness to competition, support from
peers, and the availability of resources. Squash dem-
onstrates clearly what Egyptian youth are capable of
achieving in a competitive arena when they have the
community’s support and attention.
Currently, Egyptian players hold the Men’s World
Team Championship, the Women’s World Team
Championships, and the Juniors’ World Team
Championship titles.
Sponsorship of Squash Tournaments
CIB has expanded its squash-related sponsor-
ships to open up doors for more Egyptian athletes
to progress in the PSA world rankings. The first
was the CIB Wadi Degla Squash Circuit, which
was held in October 2018 and involved over 40
players from 16 countries. CIB also sponsored the
CIB BlackBall Open in December 2018, the first
major PSA Platinum tournament to take place in
Egypt since the Men’s 2016 PSA World Champion-
ship. The event witnessed the participation of 48
top players from all over the world who competed
for a prize of USD 180,000. CIB also sponsored the
Maadi Club Squash Tournament.
Sponsorship of Egyptian Athletes
In support of young players leading the world’s
squash rankings, CIB has created special sponsor-
ships to help six talented players maintain their
rankings and continue representing the country
around the world. The following players were re-
cipients of these sponsorships:
Ali Farag – 2nd on the Men’s PSA World Squash List
A graduate of Harvard University with a degree
in Mechanical Engineering, Ali Farag has estab-
lished himself as one of the most popular players
on the PSA World Tour. The 26-year old has won
14 PSA titles, including the US Open 2017, Qatar
Classic 2018, and most recently the JP Morgan
Tournament of Champions in January, which will
see him move to the World No. 1 spot for the first
time in his career in March 2019. Farag managed
to reach the finals of all seven tournaments of this
season so far. Farag is known for his sportsman-
ship, as he won the end-of-season PSA Awards, the
Fan’s Player of the Season award, and the Spirit of
Squash award in 2016 and 2017.
Nour El-Tayeb – 4th on the Women’s PSA World
Squash List
Known for her acrobatic playing style, Nour El-
Tayeb is one of the most entertaining and consis-
tent players gracing the PSA World Tour. She is the
winner of eight PSA titles, a three-time Egyptian
National Champion, two-time Women’s World
Team Champion, and the 2011 World Junior Cham-
pion. El-Tayeb became the third-youngest Tour
title winner in 2010, winning a second Tour title in
2011. During her career, she has also won the US
Open and Windy City Open. In 2017, Farag and El-
Tayeb made history by becoming the first married
couple to win a major sporting event on the same
day, both winning the US Open.
Tarek Momen – 3rd on the Men’s PSA World
Squash List
A graduate of AUC’s School of Engineering, Tarek Mo-
men won his first Tour title at the Irish Open in 2011.
He is the winner of six PSA titles, the biggest being the
PSA World Tour Gold Channel Vas Open in London
2018. He was a semifinalist at the World Open 2015
in Seattle, finalist at the Qatar Classic Open 2017, and
the Tournament of Champions in New York 2018. He
was also Egypt’s National Champion in 2009. Momen
engineered one of the biggest squash shocks in recent
history when he won the Malaysian Open in 2012
despite being unseeded for the competition. In 2018,
Momen nabbed the Channel VAS Open title, and in
2019 he won the CCI International.
Karim Abdel Gawad – 5th on the Men’s PSA
World Squash List
Karim Abdel Gawad emerged as one of the world’s
leading players in the 2016/17 season. He was the
2016 World Champion and World No.1. Abdel Ga-
wad is the winner of 20 PSA tournaments, and was
the 2016 Qatar classic winner, 2017 Tournament
of Champions (TOC) winner, and the 2017 World
team’s winner. With multiple prestigious titles
already under his belt, the 2016/17 season saw him
rake in an astonishing five Tour titles including the
World Open to become the fifth Egyptian player
ever to top the PSA Men’s World Rankings. Most
recently in 2018, he won the CIB BlackBall Open.
Ramy Ashour – 24th on the Men’s PSA World
Squash List
Known as ‘The Artist,’ Ramy Ashour is one of the
most talented players in the history of the game.
In 2010, Ashour became the World No. 1 at the age
of 22 – the youngest player to reach that summit
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CoMMunITy DEvELoPMEnT >> Supporting the Best in Class: Squash
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in 26 years. With several prestigious titles to his
name including three World Opens, Ashour has
stunned fans all over the world with his technical
excellence, going 49 matches unbeaten in 2012.
Hania El-Hammamy – 17th on the Women’s PSA
World Squash List
At just 18 years old, Hania El-Hammamy is already
a force to be reckoned with in the women’s game.
In 2015, El-Hammamy shocked the squash world
to become the first player born this century to lift
a PSA World Tour title, and later becoming the
second youngest PSA World Tour title winner in
history. The young star broke into the world’s top
40 in September 2016. In 2019, El-Hammamy won
the British Junior Open and followed this up with
two back-to-back titles on the Senior tour.
Partnership with Wadi Degla Clubs’ Darwish
Squash Academy
CIB announced its partnership with Wadi De-
gla Clubs to support young Egyptian squash
athletes by developing their skills to enhance
their international rankings. The partnership is
part and parcel of the Bank’s strategy to support
up-and-coming talents from the ground up and
builds on our pioneering role in this area. The
additional athletes representing Wadi Degla
and sponsored by CIB are:
Raneem El Welily – 1st on the Women’s PSA World
Squash List
Raneem El Welily is currently the World’s No.1
Women’s Singles player. She snatched her first
professional win back in 2009 and has since gone
on to win 19 Open titles, including the World
Open in Manchester in 2017 where she became
the World Champion. El Weleily is also a two-time
World Junior Champion and a four-time Women’s
World Team Champion. She recently set a record
by reaching eight consecutive finals on the tour.
Her most memorable achievement was in Sep-
tember 2015, when she became the first player in
over nine years to dethrone Nicol David at the top
of the World Rankings, becoming the first ever
female Egyptian No.1 in any sport.
Nouran Gohar – 8th on the Women’s PSA World
Squash List
An immensely talented youngster, Nouran Gohar
is currently ranked as the number eight Women’s
Single player in the world. She began 2017 as
World Number Two. Prior to starting her senior
career, Gohar was crowned World Junior champi-
on twice, winning back to back titles in 2015 and
2016. In 2016, she also won her first Open Single
title at the Hong Kong Open, a win that propelled
her to the number three spot in international
rankings for the year.
Squash for Everyone
CIB continued for the second year its “Squash for
Everyone” initiative in partnership with prominent
Egyptian player Amr Shabana. The program aims to
provide underprivileged children with an equal op-
portunity to practice squash and while doing its role
to discover young, rising talents.
Ali Farag
Nour El-Tayeb
Tarek Momen
Raneem El Welily
Nouran Gohar
Ramy Ashour
Note: All official squash rankings are as of 5th February 2019, the latest available at the time of publication.
Hania El-Hammamy
Karim Abdel Gawad
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CoMMunITy DEvELoPMEnT
CIB
Foundation
Established in 2010 as a non-profit organization
under Ministry of Social Solidarity Decree No. 588 of
2010, the CIB Foundation represents another aspect
of the Bank’s effort to develop a sustainable and
effective channel through which the Bank can give
back to the Egyptian society. As an organization, the
CIB Foundation is dedicated to improving health
and nutrition services extended to underprivileged
children with limited access to quality healthcare
by developing life-changing community initiatives.
Our efforts include not only donating money but also
monitoring and following up on projects’ impact.
Over the years, the CIB Foundation has received
multiple awards that serve as a testament to our
success in creating a meaningful and sustainable
impact. In 2016, we were named “Socially Respon-
sible Bank of the Year” by African Banker after hav-
ing received the “Most Socially Responsible Bank
in North Africa” title from them the previous year.
EMEA Finance Pan-Africa award for “Corporate
Social Responsibility” in 2014.
Mission and Vision
The goal of the CIB Foundation is to ease the bur-
den of procuring quality, affordable healthcare
services for families and children in need. It is
our belief that for a community to be productive,
all its members must be healthy citizenry and
that children deserve the opportunity to lead the
healthiest lives possible.
We achieve our mission by enhancing the quality of
services offered by our partner institutions: public
health partners that have a wide community reach
allowing them to target those with the greatest
need. We work closely with providers to maximize
the size and sustainability of our impact.
Budget and Financing
Through the generous support of CIB shareholders,
1.5% of the Bank’s annual net profit is allocated to the
CIB Foundation every year. 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 channeled toward the
implementation of child development projects. The
Foundation’s Board of Trustees, its staff, and CIB
volunteers ensure that our resources are utilized to
reach as many children as possible.
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
1.5%
Of CIB’s annual net profit
is allocated to the CIB
Foundation
Approved Projects in 2018
Children’s Cancer Hospital 57357
In April 2018, the Foundation’s Board of Trustees
approved an EGP 18.9 million contribution to sup-
port the purchase of 33 upgraded monitors and
four central station units for the Surgical Intensive
Care Unit, Intensive Care Unit, and the Bone Mar-
row Transplant Unit at Children’s Cancer Hospital
57357. This equipment will automatically report
patients’ physiological and biological functions,
preventing human interference and increasing the
efficiency of services provided to patients.
As another demonstration of the Foundation’s
commitment to the hospital, EGP 3.5 million was
donated in April 2018 to fund patient care expenses
at the Cairo and Tanta branches.
One of our main goals is to bring happiness as
well as tangible health benefits to children. In
May 2018, CIB staff volunteers partnered with the
Foundation and the team at the Children’s Cancer
Hospital 57357 to decorate the hospital to bring the
Ramadan spirit to patients and their families.
El-Galaa Teaching Hospital
In April 2018, the CIB Foundation’s Board of
Trustees approved over EGP 14 million to fund the
complete renovation and outfitting of El-Galaa
Teaching Hospital’s Pediatric Intensive Care
Unit (PICU) with eight beds rather than three to
extend services to more patients on the waiting
list. Once complete, this year-long project will
allow the hospital to help nearly 1,000 additional
children every year.
The renovation and construction of the PICU
includes the installation of central oxygen and
ventilation networks, covering of all surfaces with
anti-bacterial material, construction of isolation
rooms, installation of a medical gas system, and
provision of emergency electrical supplies. More-
over, state-of-the-art medical equipment, such as
ICU beds, resuscitation units, monitors, ventila-
tors, endoscopes, ultrasound machine, and central
monitoring stations were purchased.
Abou El-Reesh Children’s Hospital (Japanese)
Abou El-Reesh Children’s Hospital is a long-standing
partner of the CIB Foundation, and in April 2018, the
Board of Trustees approved EGP 10.8 million in fund-
ing to purchase a fluoroscopy x-ray machine for the
Radiology Department and a laparoscopy and tho-
racoscopy machine for the Pediatric Surgery Depart-
ment. In July 2018, the CIB Foundation donated over
EGP 3.3 million to cover the first tranche of the project.
Both pieces of equipment will assist the hospital
in increasing the efficiency of services provided to
patients and minimizing the number of children
on the waiting list.
Faculty of Oral and Dental Medicine
at Cairo University
Pediatric Dental Clinic
As part of its long-term partnership with the Faculty
of Oral and Dental Medicine, the CIB Foundation
allocated EGP 7.5 million in July 2018 to fund the
purchase of the necessary equipment and supplies
for the Pediatric Dentistry Clinic in El Kasr El Aini.
The donation will also fund the establishment of
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CoMMunITy DEvELoPMEnT >> CIB Foundation
another clinic in Sheikh Zayed to increase the ef-
ficiency of services provided to children, including
those with special needs, and drastically reduce the
number of patients on the waiting list.
The Faculty of Oral and Dental Medicine at Cairo
University treats over 95,000 children annually from
across Egypt, and it is one of the few providers of den-
tal health services for children with special needs in
the country. The department also offers a variety
of practical training programs for undergraduate,
graduate and continuing education students.
Mobile Dental Caravan
In 2017, the CIB Foundation contributed EGP 640,000
to purchase an outfitted mobile dental caravan for
the Faculty of Oral and Dental Medicine at Cairo
University, under the management of the Rotary Club
of Zamalek. This year, the Foundation allocated an ad-
ditional EGP 120,000 to cover the operating costs of 12
dental caravans that will be used to treat public school
students in remote areas of Cairo and Giza for free.
Magdi Yacoub Heart Foundation
70 Open-Heart Surgeries
In July 2018, the CIB Foundation allocated EGP
7 million to the Magdi Yacoub Heart Foundation
to cover costs associated with 70 pediatric open-
heart surgeries. Through its ongoing contributions,
the CIB Foundation supports the Magdi Yacoub
Foundation’s efforts to drastically reduce the num-
ber of children on the open-heart surgery waitlist.
In October 2018, the CIB Foundation donated EGP
3.5 million to cover the first tranche of the project.
Research Labs
In February 2018, the CIB Foundation donated the
final EGP 859,000 in a three-year EGP 15 million
project to outfit two research labs in the Magdi Ya-
coub Heart Foundation’s Aswan Heart Center. These
labs will help researchers at the heart center gain a
deeper understanding of various heart diseases and
identify possible therapeutic strategies. Through this
program, young Egyptian scientists and researchers
can contribute to the advancement of world-class
research from within their own country.
Alexandria University Children’s Hospital – El Shatbi
In April 2018, the CIB Foundation’s Board of Trustees
approved EGP 6.64 million in funding to outfit the Emer-
gency Department located on the ground floor of the Al-
exandria University Children’s Hospital in El Shatbi. The
hospital serves a large number of patients from areas
across Egypt, including Alexandria, El-Beheira, Kafr
El-Sheikh, and Matrouh. The CIB Foundation fulfilled
its commitment to the project in October 2018.
Rotary Club of Giza Metropolitan – Open Heart
Surgeries
The CIB Foundation donated over EGP 1.3 million
in 2018 to cover the surgery costs of 39 underprivi-
leged children suffering from congenital heart dis-
eases at El Kasr El Aini Hospital, under the manage-
ment of the Rotary Club of Giza Metropolitan. This
contribution follows our March 2017 allocation of
EGP 1.75 million to cover the costs associated with
50 pediatric open-heart surgeries. The initiative
was created to reduce the long waitlist of children
in need of open-heart surgery.
In recognition of the importance of this program
and its initial success, in October 2018, the CIB
Foundation’s Board of Trustees approved an EGP
3.7 million budget to support another round of the
project and fund an additional 100 pediatric open-
heart surgeries at El Kasr El Aini Hospital.
Nasser Institute Hospital
As part of the CIB Foundation’s commitment to
supporting the health sector, the Board of Trustees
allocated EGP 3.1 million in April 2018 to purchase
much needed equipment for the Nasser Institute
Hospital’s Pediatric Intensive Care Unit and Neo-
natal Intensive Care Unit.
Yahiya Arafa Children’s Charity Foundation:
Annual Operating Costs
In line with the CIB Foundation’s commitment to
sustainability and provision of quality service, in
July 2018 we contributed a total of EGP 3 million to
the annual operating costs of five pediatric units
at Ain Shams University Hospital under the man-
agement of our long-standing partner the Yahiya
Arafa Children’s Charity Foundation.
Rotary Club of Kasr El Nil: Children’s Right to
Sight Program
Over the course of 2018, the CIB Foundation do-
nated over EGP 1 million to cover 289 surgeries as
part of the fifth and fourth phase of the Children’s
Right to Sight (CRTS) program led by the Rotary
Club of Kasr El Nil. The aim of this initiative is to
fund between 500 and 600 eye surgeries for a to-
tal amount of EGP 2 million in each phase to help
eradicate blindness in children and infants.
The Egyptian Clothing Bank
2018 marks the fifth year of the CIB Foundation’s
partnership with the Egyptian Clothing Bank (ECB),
an NGO dedicated to providing clothing and home
textiles to those in need in Egypt. The CIB Founda-
tion donated EGP 1.67 million to provide 50,000
training suits to children in 19 governorates.
The National Foundation for Family and
Community Development
The CIB Foundation’s Board of Trustees approved
a proposal to support the outfitting of the sensory
and psychomotor rooms at the National Founda-
tion for Family and Community Development’s
specialized center for the rehabilitation of au-
tistic children. These rooms help care providers
improve the sensory experiences of children with
autism, allowing them to become healthier and
more productive members of society. The EGP
688,000 project will enable the center to serve
around 250 children monthly.
The National Foundation for Family and Com-
munity Development is a non-profit organization
established in 1991 to assist Egyptian families in
raising their living standards by financing micro
projects, training individuals, and sponsoring and
training persons with intellectual disabilities.
MOVE Foundation for Children with Cerebral Palsy
In April 2017, the CIB Foundation fulfilled its com-
mitment to contribute EGP 2 million to the MOVE
Foundation for Children with Cerebral Palsy to
renovate their premises and expand operations.
Established in 2004, the MOVE Foundation seeks
to positively affect the lives of an estimated 250,000
children living with the disability in Egypt. MOVE
aims to enroll these children into the public school
system to allow them to become healthier and
more productive members of society.
In another demonstration of the Foundation’s com-
mitment to sustainability and ongoing quality ser-
vice provision, the CIB Foundation allocated EGP
608,400 to support the annual operating cost of the
MOVE Foundation’s premises. In September 2018,
the Foundation donated EGP 152,100 to cover the
first installment of this commitment.
Ongoing Projects
Egyptian Liver Care Society - Children Without
Virus C Program
The CIB Foundation dedicated over EGP 5.1 million
to fund the Egyptian Liver Care Society’s Children
without hepatitis C (C-Free Child) program, the
only program in Egypt offering free screening and
treatment for children. Established in 2008, the
Egyptian Liver Care Society aims to cure hepatitis
patients by training medical staff and providing
financial support for the treatment of hepatitis
patients, including funding liver transplants. This
year, the CIB Foundation also invested in increas-
ing the number and quality of hepatitis treatment
centers in Egypt.
National Hepatology & Tropical Medicine
Research Institute
In August 2018, the CIB Foundation donated over
EGP 91,000 to cover the first tranche of an EGP 4.1
million project to fund the treatment of 400 children
with hepatitis C at the National Hepatology & Tropi-
cal Medicine Research Institute (NHTMRI). Estab-
lished in 1932, NHTMRI is an institute for medical
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CoMMunITy DEvELoPMEnT >> CIB Foundation
research on endemic diseases in Egypt; it is the first
center in the country to treat hepatitis C patients
and accept referral cases.
as this provide CIB staff members with opportuni-
ties to learn more about the Foundation’s activities
and different ways to give back to the community.
New Children’s Hospital - Ain Shams University
Hospital
In June 2017, the CIB Foundation pledged EGP 3.53
million for the purchase of 40 monitors, 45 infusion
pumps, and 25 syringe pumps for the Inpatient Unit
at Ain Shams University Hospital. In August 2018, the
CIB Foundation donated over EGP 589,000 to cover the
final installment for the project. With 1,290 patients
served at the hospital each month, this contribution is
expected to benefit 15,500 children annually.
Sawiris Foundation and Star Care for Helping
Children: Together for Change Project
Over 2018, CIB Foundation donated over EGP
105,000 as part of an EGP 1.5 million partnership
with the Sawiris Foundation for Social Develop-
ment and Star Care Foundation in 2016 to imple-
ment comprehensive community development
projects in Sohag, Assiut, and Qena. The projects
are under the management of the Association of
Businesswomen in Assiut.
Gozour Foundation for Development: Eye Exam
Caravans
The CIB Foundation donated over EGP 14.4 mil-
lion in 2018 to cover the fourth and fifth tranches
of the Gozour Foundation for Development’s 6/6
project to fund 264 eye exam caravans and provide
158,400 public school students in impoverished ar-
eas across Egypt with free eye examinations. This
year’s donation is one portion of an EGP 50.5 mil-
lion contribution to fund 6/6 Eye Exam Caravans in
the governorates of Sohag, Qena, Luxor, and Aswan
over a three-year period.
In partnership with Al-Noor Magrabi Foundation
and Dar El Oyoun, the caravans, which are staffed
with 25-30 doctors, nurses, and coordinators, were
equipped with advanced medical tools, medica-
tions, and eyeglasses. They provided students with
free ophthalmic exams, eye medication, and refer-
rals to private hospitals for complex cases.
CIB staff members also joined in this project by
volunteering with the caravans. They distrib-
uted eyeglasses and medication to children and led
awareness sessions on healthy eye practices for the
student beneficiaries of the program. Events such
They include the renovation and upgrade of commu-
nity health centers, training doctors and nurses, or-
ganizing health awareness campaigns, building the
skills of teachers in community schools, distributing
in-kind support to students, and offering regular
sports, soft skills recreational activities, and econom-
ic empowerment opportunities. The CIB Foundation
is committed to funding the healthcare sector.
Ahl Masr Foundation - Burn Victim Operations
In June 2018, the Foundation contributed the final
EGP 750,000 of an EGP 1 million pledge to Ahl Masr
Foundation in 2016. This contribution funded the
treatment of 159 pediatric burn patients whose fam-
ilies could not afford the costs of their treatment.
Baladi Foundation - Ophthalmic Clinic in Aswan
In September 2015, the CIB Foundation’s Board of
Trustees approved an EGP 710,000 project to estab-
lish the first fully equipped diagnosis and referral
center for children with glaucoma in Upper Egypt.
In October 2018, the CIB Foundation donated
over EGP 472,000 to cover the final installment
of the project. CIB supported the Baladi Founda-
tion’s efforts to detect glaucoma in 500 children,
treat these patients, and perform 50 surgeries for
congenital glaucoma cases, while also training a
team of doctors and nurses in Upper Egypt.
Sohag University Hospital - Craniofacial Center
In April 2014, the CIB Foundation’s Board of Trust-
ees approved the allocation of EGP 1 million to
fund the outfitting of the Craniofacial Center at So-
hag University Hospital. In October 2018, the CIB
Foundation donated over EGP 323,000 covering
the final installment of the project. A team of sur-
geons specialized in hearing, speech therapy, and
dentistry have established the Craniofacial Centre
to serve patients from Sohag, Qena, and Aswan,
primarily with cleft lip and cleft palate deformities.
In addition to prescribing courses of treatment, the
center performs specialized multi-stage corrective
surgeries. The specialized services offered at the
center will allow it to become a major referral cen-
ter for patients from across the country.
KidZania Cairo
CIB has a long-standing corporate sponsorship rela-
tionship with the KidZania Cairo edutainment city,
and in every quarter of 2018, the Foundation gave 50
KidZania tickets to underprivileged children. Over
the course of the year, the CIB Foundation coordi-
nated with its partners to organize multiple visits
to KidZania in which underprivileged and disabled
children learned about adult professions in a child-
friendly way. Children performed different jobs to
earn and spend Kidzos, the official currency of Kid-
Zania, on games and other entertaining activities.
Blood Donation Campaigns
The CIB Foundation hosted 12 blood donation
campaigns across its corporate offices to encour-
age CIB staff and customers to participate in an
activity that saves thousands of lives across the
country. Through this effort, 121 bags of blood were
collected; these resources can potentially be used
to save the lives of over 490 people.
14.4 EGP
MN
Donated in 2018 to the
Gozour Foundation for
Development
6/6 Eye Exam Caravan Program – CIB Family Bag
Packing Event
In February 2018, the CIB Foundation invited CIB
colleagues and their families to a bag-packing event
at CIB’s Smart Village office to participate in pack-
ing of over 5,000 health and hygiene school bags for
the students targeted by the 6/6 Eye Exam Caravan
program. The event was highly successful, and many
participants expressed interest in bringing their chil-
dren to participate in more CIB Foundation activities.
El Sawy Culture Wheel
In 2018, CIB launched a new initiative in partner-
ship with the CIB Foundation and El Sawy Cul-
ture Wheel to develop children’s skills through
specialized workshops. Children involved in the
initiative enjoyed a full day of educational ac-
tivities and mental games that stimulated their
cultural and scientific development. The first
series of workshops hosted the children of Red
Crescent Society in Dar El-Salam, and a different
NGO is invited every week.
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153
Subsidiaries
and Affiliates
CIB offers a full suite of services that range from
security solutions to innovative fintech offerings
through one wholly-owned subsidiary and two
strategic affiliates
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D
SuBSIDIARIES AnD AFFILIATES
Cventures
Established in 2018, CVentures is Egypt’s first cor-
porate venture capital firm focused primarily on
investing in category-defining companies with the
potential to create meaningful change in financial
services. CVentures has a strong investment bias
toward entrepreneurs pushing boundaries and
developing solutions based on new and innovative
technologies. The firm partners with bold founders
with deep market insights to build truly ground-
breaking businesses with fundamentally distin-
guishable characteristics and disruptive business
models. CVentures primarily participates in Series
A and Series B investment rounds, and — on a
selective basis — seed investment rounds in core
financial applications including, but not limited
to, capital markets and payments, money transfers
and remittances, digital lending and financial data
platforms, artificial intelligence, data analytics
and machine learning, security and enterprise IT,
insuretech, blockchain, marketing and customer
experience, alternative finance, regtech, and digi-
tal banking solutions.
2019 Forward-Looking Strategy
In the next year, we plan to expand our network
and foster meaningful relationships with experi-
enced startup founders, leading technology inves-
tors, and prominent innovation executives across
regional and global entrepreneurship ecosystems
and technology hubs. We will also look to invest
in category-changing companies that complement
and intersect with CIB’s core businesses. On an
opportunistic basis, we aim to attract non-fintech
companies and financial inclusion enablers with
unique value propositions and promising finan-
cial returns. This includes efforts to enhance the
customer experience and leverage virtualization
to provide transparency, access, and personalized
services through persistent connectivity.
Website: www.cventureseg.com
Ownership
CIB .............................................. 99.98%
CIB Social Insurance Fund .......... 0.001%
CIB Social Community ................ 0.001%
CVentures has a strong
investment bias toward
entrepreneurs pushing
boundaries and developing
solutions based on
new and innovative
technologies.
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 manage-
ment’s strategy is centered on service excellence. The
company provides a plethora of services including,
but not limited to: security services, money transfer,
technical systems and security products, public ser-
vices and project management, and tourism and con-
cierge services to a variety of industries such as the
industrial, commercial, tourism, and public sectors.
The group provides state-of-the-art, holistic
solutions tailored to every client’s specific re-
quirements. 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 organizations, such as the Unit-
ed Nations, and a number of embassies in Egypt. With
a portfolio of over 754 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, and is dedicated to pro-
viding them with the highest quality of service and
treating their goals and objectives as its own.
2018 Highlights
Falcon for Security Services met all its 2018 targets,
managing to boost its annual income for 2018 by
14%. During the year, the company was able to se-
cure work with numerous prominent institutions
and successfully add new segments of clients by
securing several new projects such as Porto Sokhna,
El Zamalek Sporting Club, a new conference hall,
Ownership
CIB ......... 32.5%
Others ........67.5%
several metro stations across Cairo, and all free
zones across the country.
Falcon for Security Services increased its provision
of security services for public events by 100% in 2018,
with the company providing security at events such
as the Egypt Can Conference, the Automech For-
mula exhibition, several African Champions League
matches, the 2018 China Trade Fair, and Edex 2018.
The company reached a market share of 70% dur-
ing 2018 and aspires to maintain its position as an
industry leader by growing both organically and
through acquisitions during the coming year.
2019 Forward-Looking Strategy
As part of the group’s goal of providing top-notch
solutions for its customers, Falcon companies plan
to use managed service providers for their ac-
tivities starting 2019. In the coming year, the group
expects to target multiple prominent institutions
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157
SuBSIDIARIES AnD AFFILIATES
and clients, including banks, embassies, and hospi-
tals to add to its roster of customers. 2019 will see
Falcon expand its product and service offering to
ensure clients remain fully satisfied and confident
in the company’s service quality and continue to
regard it as their number one choice in terms of
efficiency and customer service. In 2019, the group
plans to expand its market presence by 25%.
Falcon for Public Services and Project
Management
Falcon for Public Services and Project Manage-
ment operates all facility systems to the com-
fort and satisfaction of facility occupants. The
company offers general cleaning, landscaping,
façade cleaning, and marble polishing at the
highest quality, efficiency, and cost effectiveness.
In 2018, Falcon for Public Services and Project
Management held a market share of 20%, serving
a large client base out of 330 different locations
across Egypt.
2018 Highlights
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 conference hall,
Toshiba El Araby Group, and Cequens.
On top of securing new contracts, the company has
also been able to renew important deals such as with
the Port Said Security Directorate, the Embassy of
the Sultanate of Oman, the Embassy of the State of
Kuwait, Mall of Arabia, FLO Water, the Parliament,
and Al Azhar University Hospital.
2019 Forward-Looking Strategy
The company’s strategy is based on its firm belief that
performance is measured by clients’ success. Over the
next year, the company plans to sign several sizeable
contracts with government agencies as they continue
to carefully select, train, and supervise their profes-
sionals 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 repu-
table banks and companies in Egypt, providing
CIT services, ATM replenishment, maintenance,
vaulting, cash management, and valuables trans-
portation through a highly qualified team. In 2018,
the company increased its market share to 38%
through the acquisition of new award contracts
and expanding its client portfolio.
2018 Highlights
Throughout the year, Falcon for Cash in Transit Ser-
vices signed new contracts to increase its market pres-
ence, achieving a market share increase of 15% in 2018.
The company served 1,450 ATMs in 2018 compared to
the 1,160 served in 2017 and added nine new armored
vehicles to its fleet.
In 2018, Falcon signed a partnership agreement with
one of the largest companies in the world that will
allow it to provide more services and offer expanded
benefits to its clients. It also managed to increase cash
volumes by 40% in 2018 and gross revenues by 22%.
2019 Forward-Looking Strategy
The company plans to grow its market share through
providing new services for retail, having already in-
tegrated new solutions to collect cash from shopping
centers. Falcon for Cash in Transit will also make use
of the latest technology to further improve its ATM
services and its managed cash offerings, in line with
its strategy to streamline operations. The company
is also investing considerable resources to train its
team members to ensure they 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.
In 2018, Falcon Tech succeeded in expanding its
market share to 70% by signing several new impor-
tant contracts, which now allow the company to
provide security systems to airports, commercial
malls, and universities across Egypt.
2018 Highlights
The company signed deals with several new cli-
ents including the Ministry of Armed Forces, the
General Intelligence, the Suez for Petroleum Pro-
duction Company, El Ahly Club, the Egyptian Civil
Protection Authority, 20 new CIB branches, Cairo
International Airport, and the Egyptian Post.
Falcon for PR and Communications
(Tawasul)
Falcon for PR and Communications (Tawasul) special-
izes in communication services and consultancy as
well as event and conference management. The divi-
sion also offers media services.
Website: www.falcongroupinternational.org
Fawry
Plus
Fawry Plus was established in 2017 as a joint ven-
ture between CIB, Banque Misr, Fawry, and ACIS.
Its strategy is to become Egypt’s first banking
agent while playing an active role toward achiev-
ing financial inclusion. Fawry Plus aims to provide
a wide array of banking and financial services to
end consumers and businesses through a network
of retail branches across Egypt, focusing on serv-
ing urban and underserved regions.
Fawry Plus branches will provide banking services
including limited KYC services and document col-
lection required for mobile wallet registration,
prepaid and credit card issuance, loan issuance, and
account opening. Other services include collecting
bank correspondence and mail, cash withdrawal
and deposits, repaying loan and credit card dues,
as well as various bill payments such as utility, tele-
com, subscription fees, taxes, and fines.
2018 Highlights
• Opened 36 new branches to reach a total of 66
operating branches
• Rented out 91 spaces in its branches for bank ATMs
• Worked with several banks and the CBE to put
in place the standards and procedures for agent
banking in Egypt
2019 Forward-Looking Strategy
Fawry Plus plans on becoming the preferred destina-
tion for banking customers in 2019, as its branches will
be less crowded, closer to residential areas, and work
longer hours than banks.
Ownership
CIB ......... 23.5%
Others ........76.5%
The company also intends to sign several sizeable con-
tracts with multiple banks, financial institutions, and
other industry players to provide their services through
Fawry Plus branches. The company is looking to double
its cash management service to EGP 35 billion in 2019
from EGP 18 billion in 2018.
Fawry Plus will focus on serving the e-commerce
industry in terms of cash management and logistics.
The company’s branches will serve as drop-off/pick-up
stations for customers as well as fulfillment hubs for
courier companies.
Website: www.fawry-plus.com
158
Annual Report 2018
Annual Report 2018
159
Financial
Statements
i
s
n
o
c
r
e
v
l
i
s
f
o
k
c
a
t
s
a
f
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i
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i
Financial StatementS: Separate
162
Annual Report 2018
Annual Report 2018
163
Financial StatementS: Separate
Separate balance sheet as at
December 31,2018
Separate income statement for the year
ended December 31, 2018
Notes
Dec. 31, 2018
Dec. 31, 2017
Notes
Dec. 31, 2018
Dec. 31, 2017
EGP Thousands
EGP Thousands
Assets
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Trading financial assets
Loans and advances to banks, net
Loans and advances to customers, net
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates and subsidiaries
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
Other loans
Provisions
Total liabilities
Equity
Issued and paid up capital
Reserves
Reserve for employee stock ownership plan (ESOP)
Retained earnings *
Total equity
Total liabilities and equity
15
16
17
18
19
20
21
22
22
23
24
41
32
25
26
27
21
29
28
30
31
34
34
34
20,058,974
46,518,892
41,999,252
2,737,705
67,703
106,309,205
52,289
39,217,890
73,630,764
68,633
9,563,218
238,715
308,370
1,651,875
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
342,423,485
294,771,321
7,259,819
285,340,472
132,858
3,625,579
6,501,553
3,721,529
1,694,607
308,276,417
11,668,326
12,184,667
738,320
9,555,755
34,147,068
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
10,137,515
489,334
6,138,790
28,383,650
342,423,485
294,771,321
The accompanying notes are an integral part of these financial statements . (Audit report attached)
* Including net profit for the current year
164
Annual Report 2018
Hisham Ezz Al-Arab
Chairman and Managing Director
Interest and similar income
Interest and similar expense
Net interest income
Fee and commission income
Fee and commission expense
Net fee and commission income
Dividend income
Net trading income
Profits (Losses) on financial investments
Administrative expenses
Other operating (expenses) income
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
6
7
8
9
22
10
11
41
12
13
32 & 13
14
37,403,709
(19,260,190)
18,143,519
28,671,166
(16,167,155)
12,504,011
3,402,616
(991,957)
2,410,659
25,958
1,089,076
402,067
(4,222,779)
(1,589,675)
(130,208)
(3,076,023)
13,052,594
(3,625,579)
128,740
9,555,755
2,794,211
(796,107)
1,998,104
34,513
1,292,215
496,045
(3,118,839)
(1,002,570)
(130,208)
(1,742,281)
10,330,990
(2,778,973)
(1,678)
7,550,339
7.26
7.22
5.76
5.67
Hisham Ezz Al-Arab
Chairman and Managing Director
Annual Report 2018
165
Financial StatementS: Separate
Separate cash flow for the year ended
December 31, 2018
Separate cash flow for the year ended
December 31, 2018 (cont.)
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
Impairment charge for other assets
Available for sale investments exchange revaluation
differences
Intangible assets amortization
Financial investments impairment charge
Exchange differences in financial investments in subidiary
Utilization of other provisions
Other provisions no longer used
Exchange differences of other provisions
Profits from selling property, plant and equipment
(Profits) losses from selling financial investments
Shares based payments
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
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 for purchases of subsidiary and associates
Payment for purchases of property, plant, equipment and
branches constructions
Proceeds from selling property, plant and equipment
Proceeds from redemption of held to maturity financial
investments
Payment for purchases of held to maturity financial
investments
166
Annual Report 2018
Notes
Dec. 31, 2018
Dec. 31, 2017
EGP Thousands
13,052,594
10,330,990
25
12
30
24
22
41
22
23
30
30
30
11
22
16
42
18
21
19-20
43
26
27
29
11
22
22
390,830
3,076,023
101,501
316,763
(102,991)
130,208
39,561
(465)
(2,114)
(17,670)
(2,269)
(1,045)
(441,628)
408,346
-
351,005
1,742,281
212,622
-
100,078
130,208
(108,349)
-
(25,463)
(97,897)
11,840
(607)
99,047
290,884
(340,504)
16,947,644
12,696,135
(13,661,577)
4,640,524
4,557,492
(66,141)
(21,255,952)
(2,263,465)
5,381,901
34,573,102
(2,778,973)
1,025,022
27,099,577
-
(10,575)
(874,708)
1,045
(2,594,442)
(16,466,420)
(4,850,063)
120,431
(4,007,616)
(1,133,497)
(1,131,078)
18,802,058
(2,017,034)
1,897,201
1,315,675
750
(44,318)
(745,696)
607
5,532,271
13,354,468
(33,995,313)
(4,597,254)
Notes
Dec. 31, 2018
Dec. 31, 2017
EGP Thousands
Payment for purchases of available for sale financial invest-
ments
Proceeds from selling available for sale financial invest-
ments
Proceeds from selling non current assets held for sale
Net cash used in investing activities
Cash flow from financing activities
Increase in long term loans
Dividend paid
Capital increase
Net cash used in (provided from) 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
22
22
28
15
16
17
15
17
(12,670,761)
(25,868,230)
2,059,341
-
(39,958,700)
1,261,980
768,515
(15,869,178)
46,793
(2,143,177)
50,315
(2,046,069)
3,514,493
(1,350,204)
79,351
2,243,640
(14,905,192)
(12,309,863)
49,208,837
34,303,645
61,518,700
49,208,837
20,058,974
46,518,892
41,999,252
(13,526,763)
(10,733,386)
(50,013,324)
34,303,645
14,663,289
45,319,766
54,478,202
(8,878,986)
(1,719,586)
(54,653,848)
49,208,837
Annual Report 2018
167
Financial StatementS: Separate
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168
Annual Report 2018
Annual Report 2018
169
Financial StatementS: Separate
proposed appropriation account for the
year ended December 31, 2018
notes to the separate financial statements
for the year ended December 31, 2018
Net profit after tax
Profits selling property, plant and equipment transferred to capital reserve according
to the law
Bank risk reserve
Available net profit for distributing
IFRS 9 risk reserve*
Total
To be distributed as follows:
Legal reserve
General reserve
Dividends to shareholders**
Staff profit sharing
Board members bonus
CIB's foundation
Total
EGP Thousands
Dec. 31, 2018
Dec. 31, 2017
9,555,755
7,550,339
(1,045)
(842)
9,553,868
-
9,553,868
477,736
6,375,588
1,458,541
955,387
143,308
143,308
9,553,868
(607)
(689)
7,549,043
(1,411,549)
6,137,494
377,487
3,616,830
1,161,801
754,904
113,236
113,236
6,137,494
* The IFRS 9 risk reserve is created 1% of the total weighted credit risk of net profit after tax for 2017 (Note 34).
** Based on a dividend per share of EGP 1, after taking into account the subsequent share distributions of one share for every four shares.
1. General information
Commercial International Bank (Egypt) S.A.E. provides retail, corporate and investment banking services in various
parts of Egypt through 181 branches, and 22 units employing 6759 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.
Financial statements have been approved by board of directors on February 4, 2019.
2. Summary of accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies
have been consistently applied to all years presented, unless otherwise stated.
2.1. Basis of preparation
The separate financial statements have been prepared in accordance with Egyptian financial reporting standards issued
in 2006 and its amendments and in accordance with the Central Bank of Egypt regulations approved by the Board of Di-
rectors on December 16, 2008.
The separate financial statements have been prepared under the historical cost convention, as modified by the revaluation
of financial assets and liabilities classified as trading or held at fair value through profit or loss, available for sale invest-
ment and all derivatives contracts.
The separate and consolidated financial statements of the Bank and its subsidiaries have been prepared in accordance
with the relevant domestic laws and the Egyptian financial reporting standards, the affiliated companies are entirely
included in the consolidated financial statements and these companies are the companies that the Bank - directly or indi-
rectly – has more than half of the voting rights or has the ability to control the financial and operating policies, regardless
of the type of activity, the Bank’s consolidated financial statements can be obtained from the Bank's management. The
Bank accounts for investments in subsidiaries and associate companies in the separate financial statements at cost minus
impairment loss.
The separate financial statements of the Bank should be read with its consolidated financial statements, for the year
ended on December 31, 2018 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
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171
Financial StatementS: Separate
excess of the Bank’s share of the fair value of the identifiable net assets acquired over the cost of the acquisition.
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.
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.
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.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the end of reporting period at the
prevailing exchange rates. Foreign exchange gains and losses resulting from settlement and translation of such transac-
tions and balances are recognized in the income statement and reported under the following line items:
• Net trading income from held-for-trading assets and liabilities.
• Other operating revenues (expenses) from the remaining assets and liabilities.
Changes in the fair value of investments in debt instruments; which represent monetary financial instruments, denomi-
nated in foreign currencies and classified as available for sale assets are analyzed into valuation differences resulting from
changes in the amortized cost of the instrument, differences resulting from changes in the applicable exchange rates and
differences resulting from changes in the fair value of the instrument.
Valuation differences resulting from changes in the amortized cost are recognized and reported in the income statement
in ‘income from loans and similar revenues’ whereas differences resulting from changes in foreign exchange rates are
recognized and reported in ‘other operating revenues (expenses)’. The remaining differences resulting from changes in fair
value are deferred in equity and accumulated in the ‘revaluation reserve of available-for-sale investments’.
Valuation differences resulting from the non-monetary items include gains and losses of the change in fair value of such
equity instruments held at fair value through profit and loss, as for recognition of the differences of valuation resulting
from equity instruments classified as financial investments available for sale within the fair value reserve in equity.
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:
• Financial assets held for trading.
• Financial assets designated at fair value through profit and loss at inception.
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.
2.5.4. Available for sale financial investments
Available-for-sale investments are those intended to be held for an indefinite period of time, which may be sold in response
to needs for liquidity or changes in interest rates, exchange rates or equity prices.
The following are applied in respect to all financial assets:
Debt securities and equity shares intended to be held on a continuing basis, other than those designated at fair value, are
classified as available-for-sale or held-to-maturity. Financial investments are recognized on trade date, when the group
enters into contractual arrangements with counterparties to purchase securities.
Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value
through profit and loss. Financial assets carried at fair value through profit and loss are initially recognized at fair value,
and transaction costs are expensed in the income statement.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or when the
Bank transfers substantially all risks and rewards of the ownership. Financial liabilities are derecognized when they are
extinguished, that is, when the obligation is discharged, cancelled or expired.
Available-for-sale, held–for-trading and financial assets designated at fair value through profit and loss are subsequently
measured at fair value. Loans, receivables and held-to-maturity investments are subsequently measured at amortized cost.
172
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173
Financial StatementS: Separate
Gains and losses arising from changes in the fair value of the ‘financial assets designated at fair value through profit or
loss’ are recognized in the income statement in ‘net income from financial instruments designated at fair value’. Gains and
losses arising from changes in the fair value of available for sale investments are recognized directly in equity, until the
financial assets are either sold or become impaired. When available-for-sale financial assets are sold, the cumulative gain
or loss previously recognized in equity is recognized in profit or loss.
Interest income is recognized on available for sale debt securities using the effective interest method, calculated over the
asset’s expected life. Premiums and discounts arising on the purchase are included in the calculation of effective interest
rates. Dividends are recognized in the income statement when the right to receive payment has been established.
The fair values of quoted investments in active markets are based on current bid prices. If there is no active market for a
financial asset, or no current demand prices available, the Bank measures fair value using valuation models. These include
the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation
models commonly used by market participants. If the Bank has not been able to estimate the fair value of equity instru-
ments classified as available for sale, the value is measured at cost less impairment.
Available for sale investments that would have met the definition of loans and receivables at initial recognition may be
reclassified out to loans and advances or financial assets held to maturity. In all cases, when the Bank has the intent and
ability to hold these financial assets in the foreseeable future or till maturity. The financial asset is reclassified at its fair
value on the date of reclassification, and any profits or losses that have been recognized previously in equity, are treated
based on the following:
• If the financial asset has a fixed maturity, gains or losses are amortized over the remaining life of the investment using the
effective interest rate method. In case of subsequent impairment of the financial asset, the previously recognized unreal-
ized gains or losses in equity are recognized directly in the profits and losses.
• In the case of financial asset which has infinite life, any previously recognized profit and loss in equity will remain until the
sale of the asset or its disposal, in the case of impairment of the value of the financial asset after the re-classification, any
gain or loss previously recognized in equity is recycled to the profits and losses.
• If the Bank adjusts its estimates of payments or receipts of a financial asset that in return adjusts the carrying amount of
the asset (or group of financial assets) to reflect the actual cash inflows, the carrying value is recalculated based on the
present value of estimated future cash flows at the effective yield of the financial instrument and the differences are rec-
ognized in profit and loss.
• In all cases, if the Bank re-classifies financial asset in accordance with the above criteria and increases its estimate of the
proceeds of future cash flow, this increase adjusts the effective interest rate of this asset only without affecting the invest-
ment book value.
2.6. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a legally
enforceable right to offset the recognized amounts and there is an intention to be settled on a net basis.
Agreements of repos & reverse repos are shown by the net in the financial statement in treasury bills and other govern-
mental notes.
2.7. Derivative financial instruments and hedge accounting
Derivatives are recognized initially, and subsequently, at fair value. Fair values of exchange traded derivatives are ob-
tained from quoted market prices. Fair values of over-the-counter derivatives are obtained using valuation techniques,
including discounted cash flow models and option pricing models. Derivatives are classified as assets when their fair value
is positive and as liabilities when their fair value is negative.
Embedded derivatives in other financial instruments, such as conversion option in a convertible bond, are treated as
separate derivatives when their economic characteristics and risks are not closely related to those of the host contract,
provided that the host contract is not classified as at fair value through profit and loss. These embedded derivatives are
measured at fair value with changes in fair value recognized in income statement unless the Bank chooses to designate
the hybrid contract as at fair value through net trading income through profit and loss.
The timing method of recognition in profit and loss, of any gains or losses arising from changes in the fair value of deriva-
tives, depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged.
The Bank designates certain derivatives as:
• Hedging instruments of the risks associated with fair value changes of recognized assets or liabilities or firm commit-
ments (fair value hedge).
• Hedging of risks relating to future cash flows attributable to a recognized asset or liability or a highly probable forecast
transaction (cash flow hedge)
• Hedge accounting is used for derivatives designated in a hedging relationship when the following criteria are met.
At the inception of the hedging relationship, the Bank documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge, and on ongoing basis, the Bank documents whether the hedging instrument
is expected to be highly effective in offsetting changes in fair values of the hedged item attributable to the hedged risk.
Fair value hedge
2.7.1.
Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recognized in profit
and loss immediately together with any changes in the fair value of the hedged asset or liability that is attributable to the
hedged risk. The effective portion of changes in the fair value of the interest rate swaps and the changes in the fair value of
the hedged item attributable to the hedged risk are recognized in the ‘net interest income’ line item of the income state-
ment. Any ineffectiveness is recognized in profit and loss in ‘net trading income’.
When the hedging instrument is no longer qualified for hedge accounting, the adjustment to the carrying amount of a
hedged item, measured at amortized cost, arising from the hedged risk is amortized to profit and loss from that date using
the effective interest method.
2.7.2. Derivatives that do not qualify for hedge accounting
All gains and losses from changes in the fair values of derivatives that do not qualify for hedge accounting are recognized
immediately in the income statement. These gains and losses are reported in ‘net trading income’, except where deriva-
tives are managed in conjunction with financial instruments designated at fair value , in which case gains and losses are
reported in ‘net income from financial instruments designated at fair value’.
interest income and expense
2.8.
Interest income and expense for all financial instruments except for those classified as held-for-trading or designated at fair
value are recognized in ‘interest income’ and ‘interest expense’ in the income statement using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability and
of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that ex-
actly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when
appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument (for
example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid
or received between parties to the contract that represents an integral part of the effective interest rate, transaction costs
and all other premiums or discounts.
Once loans or debts are classified as nonperforming or impaired, the revenue of interest income will not be recognized and will
be recorded off balance sheet, and are recognized as income subsequently based on a cash basis according to the following:
• When all arrears are collected for consumer loans, personnel mortgages and micro-finance loans.
• When calculated interest for corporate are capitalized according to the rescheduling agreement conditions until paying
25% from rescheduled payments for a minimum performing period of one year, if the customer continues to perform, the
calculated interest will be recognized in interest income (interest on the performing rescheduling agreement balance)
without the marginalized before the rescheduling agreement which will be recognized in interest income after the settle-
ment of the outstanding loan balance.
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175
Financial StatementS: Separate
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
2.12.1. Financial assets carried at amortised cost
The Bank assesses on each balance sheet date whether there is objective evidence that a financial asset or group of 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.
The criteria that the Bank uses to determine that there is objective evidence of an impairment loss include:
• Cash flow difficulties experienced by the borrower ( e.g, equity ratio, net income percentage of sales).
• Violation of the conditions of the loan agreement such as non-payment.
• Initiation of bankruptcy proceedings.
• Deterioration of the borrower’s competitive position.
• The Bank for reasons of economic or legal financial difficulties of the borrower by granting concessions may not agree with
the Bank granted in normal circumstances.
• Deterioration in the value of collateral or deterioration of the creditworthiness of the borrower.
The objective evidence of impairment loss for a group of financial assets is observable data indicating that there is a
measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition
of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, for
instance an increase in the default rates for a particular banking product.
The Bank estimates the period between a losses occurring and its identification for each specific portfolio. In general, the
periods used vary between three months to twelve months.
The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individu-
ally significant, and individually or collectively for financial assets that are not individually significant and in this field the
following are considered:
• If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, wheth-
er significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collec-
tively assesses them for impairment according to historical default ratios.
• If the Bank determines that an objective evidence of financial asset impairment exist that is individually assessed for im-
pairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of
impairment.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of esti-
mated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and
the amount of the loss is recognized in the income statement. If a loan or held to maturity investment has a variable inter-
est rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the
contract when there is objective evidence for asset impairment. As a practical expedient, the Bank may measure impair-
ment on the basis of an instrument’s fair value using an observable market price.
The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows
that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk
characteristics (i.e., on the basis of the group’s grading process that considers asset type, industry, geographical location,
collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future
cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the con-
tractual terms of the assets being evaluated.
For the purposes of evaluation of impairment for a group of a financial assets according to historical default ratios future
cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the
contractual cash flows of the assets in the Bank and historical loss experience for assets with credit risk characteristics
similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the
effects of current conditions that did not affect the period on which the historical loss experience is based and to remove
the effects of conditions in the historical period that do not currently exist.
Estimates of changes in future cash flows for groups of assets should be reflected together with changes in related observ-
able data from period to period (e.g. changes in unemployment rates, property prices, payment status, or other indicative
factors of changes in the probability of losses in the Bank and their magnitude). The methodology and assumptions used
for estimating future cash flows are reviewed regularly by the Bank.
2.12.2. Available for sale investments
The Bank assesses on each balance sheet date whether there is objective evidence that a financial asset or a group of
financial assets classify under available for sale is impaired. In the case of equity investments classified as available for
sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether
the assets are impaired. During periods start from first of January 2009, the decrease consider significant when it became
10% from the book value of the financial instrument and the decrease consider to be extended if it continues for period
more than 9 months, and if the mentioned evidences become available then any cumulative gains or losses previously
recognized in equity are recognized in the income statement , in respect of available for sale equity securities, impairment
losses previously recognized in profit and loss are not reversed through the income statement.
If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase
can be objectively related to an event occurring after the impairment loss was recognized in the income statement, the
impairment loss is reversed through the income statement to the extent of previously recognized impairment charge from
equity to income statement.
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177
Financial StatementS: Separate
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.
The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Assets are tested for impair-
ment with reference to the lowest level of cash generating unit(s). A previously recognized impairment loss relating to a
fixed asset may be reversed in part or in full when a change in circumstances leads to a change in the estimates used to
determine the fixed asset’s recoverable amount. The carrying amount of the fixed asset will only be increased up to the
amount that the original impairment not been recognized.
2.15.1 Goodwill
Goodwill is capitalized and represents the excess of acquisition cost over the fair value of the Bank’s share in the ac-
quired entity’s net identifiable assets on the date of acquisition. For the purpose of calculating goodwill, the fair values
of acquired assets, liabilities and contingent liabilities are determined by reference to market values or by discounting
expected future cash flows. Goodwill is included in the cost of investments in associates and subsidiaries in the Bank’s
separate financial statements. Goodwill is tested for impairment, impairment loss is charged to the income statement.
Goodwill is allocated to the cash generating units for the purpose of impairment testing. The cash generating units rep-
resented in the Bank main segments.
2.15.2. Other intangible assets
Is the intangible assets other than goodwill and computer programs (trademarks, licenses, contracts for benefits, the
benefits of contracting with clients).
Other intangible assets that are acquired by the Bank are recognized at cost less accumulated amortization and impair-
ment losses. Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of
the intangible asset with definite life. Intangible assets with indefinite life are not amortized and tested for impairment.
2.16. leases
The accounting treatment for the finance lease is complied with law 95/1995, if the contract entitles the lessee to purchase
the asset at a specified date and predefined value, or the current value of the total lease payments representing at least 90%
of the value of the asset. The other leases contracts are considered operating leases contracts.
2.16.1. Being lessee
Finance lease contract recognizes the lease cost, including the cost of maintenance of the leased assets in the income
statement for the period in which they occurred. If the Bank decides to exercise the right to purchase the leased asset the
leased assets are capitalized and included in ‘property, plant and equipment’ and depreciated over the useful life of the
expected remaining life of the asset in the same manner as similar assets.
Operating lease payments leases are accounted for on a straight-line basis over the periods of the leases and are included
in ‘general and administrative expenses’.
2.16.2. Being lessor
For finance lease, assets are recorded in the property, plant and equipment in the balance sheet and amortized over the
expected useful life of this asset in the same manner as similar assets. Lease income is recognized on the basis of rate of re-
turn on the lease in addition to an amount corresponding to the cost of depreciation for the period. The difference between
the recognized rental income and the total finance lease clients' accounts is transferred to the in the income statement
until the expiration of the lease to be reconciled with a net book value of the leased asset. Maintenance and insurance
expenses are charged to the income statement when incurred to the extent that they are not charged to the tenant.
In case there is objective evidence that the Bank will not be able to collect the of financial lease obligations, the finance
lease payments are reduced to the recoverable amount.
For assets leased under operating lease it appears in the balance sheet under property, plant and equipment, and depre-
ciated over the expected useful life of the asset in the same way as similar assets, and the lease income recorded less any
discounts given to the lessee on a straight-line method over the contract period.
Cash and cash equivalents
2.17.
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months’
maturity from the date of acquisition, including cash and non-restricted balances with central banks, treasury bills and
other eligible bills, loans and advances to banks, amounts due from other banks and short-term government securities.
2.18. Other provisions
Provisions for restructuring costs and legal claims are recognized when the Bank has present legal or constructive obliga-
tions as a result of past events; where it is more likely than not that a transfer of economic benefit will be necessary to settle
the obligation, and it can be reliably estimated.
In case of similar obligations, the related cash outflow should be determined in order to settle these obligations as a group.
The provision is recognized even in case of minor probability that cash outflow will occur for an item of these obligations.
When a provision is wholly or partially no longer required, it is reversed through profit or loss under other operating
income (expenses).
Provisions for obligations, other than those for credit risk or employee benefits, due within more than 12 months from the
balance sheet date are recognized based on the present value of the best estimate of the consideration required to settle
178
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179
Financial StatementS: Separate
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.
CIB owns a private insurance fund for financing end of service benefits, pensions and medical insurance for employees
under the supervision of the Ministry of Social Solidarity.
2.20. income tax
Income tax on the profit and loss for the period and deferred tax are recognized in the income statement except for income
tax relating to items of equity that are recognized directly in equity.
Income tax is recognized based on net taxable profit using the tax rates applicable on the date of the balance sheet in ad-
dition to tax adjustments for previous years.
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.
2.22. 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 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 for-
eign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
In addition, credit risk management is responsible for the independent review of risk management and the control environment.
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’).
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181
Financial StatementS: Separate
These credit risk measurements, which reflect expected loss (the ‘expected loss model’) are required by the Basel commit-
tee on banking regulations and the supervisory practices (the Basel committee), and are embedded in the Bank’s daily
operational management. The operational measurements can be contrasted with impairment allowances required under
EAS 26, which are based on losses that have been incurred on the balance sheet date (the ‘incurred loss model’) rather
than expected losses (note 3.1).
The Bank assesses the probability of default of individual counterparties using internal rating tools tailored to the various
categories of counterparty. They have been developed internally and combine statistical analysis with credit officer judg-
ment and are validated, where appropriate. Clients of the Bank are segmented into four rating classes. The Bank’s rating
scale, which is shown below, reflects the range of default probabilities defined for each rating class. This means that, in
principle, exposures migrate between classes as the assessment of their probability of default changes. The rating tools
are kept under review and upgraded as necessary. The Bank regularly validates the performance of the rating and their
predictive power with regard to default events.
Bank’s rating
1
2
3
4
Description of the grade
Performing loans
Regular watching
Watch list
Non-performing loans
Loss given default or loss severity represents the Bank expectation of the extent of loss on a claim should default occur. It is
expressed as percentage loss per unit of exposure and typically varies by type of counterparty, type and seniority of claim
and availability of collateral or other credit mitigation.
3.1.1.2. Debt instruments and treasury and other bills
For debt instruments and bills, external rating such as standard and poor’s rating or their equivalents are used for man-
aging of the credit risk exposures, and if this rating is not available, then other ways similar to those used with the credit
customers are uses.
The investments in those securities and bills are viewed as a way to gain a better credit quality mapping and maintain a
readily available source to meet the funding requirement at the same time.
3.1.2. Risk limit control and mitigation policies
The Bank manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to indi-
vidual counterparties and banks, and to industries and countries.
The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to
one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a revolving
basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of credit risk by
individual, counterparties, product, and industry sector and by country are approved quarterly by the Board of Directors.
The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on- and off-
balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange con-
tracts. Actual exposures against limits are monitored daily.
Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to
meet interest and capital repayment obligations and by changing these lending limits where appropriate.
Some other specific control and mitigation measures are outlined below:
3.1.2.1. Collateral
The Bank sets a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security
for funds advances, which is common practice. The Bank implements guidelines on the acceptability of specific classes of
collateral or credit risk mitigation. The principal collateral types for loans and advances are:
• Mortgages over residential properties.
• Mortgage business assets such as premises, and inventory.
• Mortgage financial instruments such as debt securities and equities.
Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are gen-
erally unsecured. In addition, in order to minimize the credit loss the Bank will seek additional collateral from the coun-
terparty as soon as impairment indicators are noticed for the relevant individual loans and advances.
Collateral held as security for financial assets other than loans and advances is determined by the nature of the instru-
ment. Debt securities, treasury and other governmental securities are generally unsecured, with the exception of asset-
backed securities and similar instruments, which are secured by portfolios of financial instruments.
3.1.2.2. Derivatives
The Bank maintains strict control limits on net open derivative positions (i.e., the difference between purchase and sale
contracts), by both amount and term. At any one time, the amount subject to credit risk is limited to the current fair value
of instruments that are favorable to the Bank (i.e., assets with positive fair value), which in relation to derivatives is only a
small fraction of the contract, or notional values used to express the volume of instruments outstanding. This credit risk
exposure is managed as part of the overall lending limits with customers, together with potential exposures from market
movements. Collateral or other security is not usually obtained for credit risk exposures on these instruments, except
where the Bank requires margin deposits from counterparties.
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a cor-
responding receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to cover
the aggregate of all settlement risk arising from the Bank market transactions on any single day.
3.1.2.3. Master netting arrangements
The Bank further restricts its exposure to credit losses by entering into master netting arrangements with counterpar-
ties with which it undertakes a significant volume of transactions. Master netting arrangements do not generally result
in an offset of balance sheet assets and liabilities, as transactions are usually settled on a gross basis. However, the credit
risk associated with favorable contracts is reduced by a master netting arrangement to the extent that if a default occurs,
all amounts with the counterparty are terminated and settled on a net basis. The Bank overall exposure to credit risk on
derivative instruments subject to master netting arrangements can change substantially within a short period, as it is af-
fected by each transaction subject to the arrangement.
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.
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183
Financial StatementS: Separate
Impairment and provisioning policies
3.1.3.
The internal rating system described in Note 3.1.1 focus on the credit-quality mapping from the lending and investment
activities perspective. Conversely, for only financial reporting purposes impairment losses are recognized for that has
been incurred on the balance sheet date when there is an objective evidence of impairment. Due to the different method-
ologies applied, the amount of incurred impairment losses in balance sheet are usually lower than the amount determined
from the expected loss model that is used for internal operational management and CBE regulation purposes.
The impairment provision reported in balance sheet at the end of the period is derived from each of the four internal credit
risk ratings. However, the majority of the impairment provision is usually driven by the last two rating degrees. The follow-
ing table illustrates the proportional distribution of loans and advances reported in the balance sheet for each of the four
internal credit risk ratings of the Bank and their relevant impairment losses:
Bank’s rating
1-Performing loans
2-Regular watching
3-Watch list
4-Non-Performing loans
December 31, 2018
December 31, 2017
Loans and
advances (%)
Impairment
provision (%)
Loans and
advances (%)
Impairment
provision (%)
78.61
11.65
5.68
4.06
12.61
17.85
33.18
36.36
69.53
15.53
7.99
6.95
11.61
21.51
23.70
43.18
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.
Below is a statement of institutional worthiness according to internal ratings, compared to 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 accept-
able risk
Watch list
Substandard
Doubtful
Bad debts
0%
1%
1%
2%
2%
3%
5%
20%
50%
100%
1
1
1
1
1
2
3
4
4
4
Performing loans
Performing loans
Performing loans
Performing loans
Performing loans
Regular watching
Watch list
Non performing
loans
Non performing
loans
Non performing
loans
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
Gross loans and advances to customers Individual:
- Overdraft
- Credit cards
- Personal loans
- Mortgages
Corporate:
- Overdraft
- Direct loans
- Syndicated loans
- Other loans
Unamortized bills discount
Unearned interest
Derivative financial instruments
Financial investments:
-Debt instruments
- Other assets (Accrued revenues)
Total
Off balance sheet items exposed to credit risk
Financial guarantees
Customers acceptances
Letters of credit (import and export)
Letter of guarantee
Total
EGP Thousands
Dec. 31, 2018
50,013,324
Dec. 31, 2017
54,653,848
2,270,080
70,949
1,635,910
3,540,849
17,180,864
876,372
13,992,595
49,179,820
32,899,950
125,429
(65,718)
(16,038)
52,289
112,213,297
4,509,514
288,479,486
7,962,043
1,050,573
4,178,288
66,166,953
79,357,857
6,728,843
1,383
1,780,416
2,899,930
13,910,837
416,616
12,450,826
44,200,770
26,627,825
112,802
(12,476)
(2,965,997)
40,001
74,767,989
3,870,654
239,484,267
3,605,001
1,017,690
1,700,516
69,514,413
75,837,620
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Annual Report 2018
185
The above table represents the Bank's Maximum exposure to credit risk on December 31, 2018, before taking into account
any held collateral.
Financial StatementS: Separate
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P
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 term loans, specially customer
loans. Renegotiated loans totaled at the end of the year:
Loans and advances to customer
Corporate
- Direct loans
Total
Dec.31, 2018
Dec.31, 2017
7,673,956
7,673,956
8,577,197
8,577,197
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, 2018
AAA
AA- to AA+
A- to A+
Lower than A-
Total
Treasury bills
and other gov.
notes
-
-
-
41,999,252
41,999,252
Trading
financial debt
instruments
-
-
-
2,270,080
2,270,080
Non-trading
financial debt
instruments
-
-
-
112,213,297
112,213,297
EGP Thousands
Total
-
-
-
156,482,629
156,482,629
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188
Annual Report 2018
Annual Report 2018
189
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, 2018
Treasury bills and other governmen-
tal notes
Trading financial assets:
- Debt instruments
Gross loans and advances to banks
Less:Impairment provision
Gross loans and advances to cus-
tomers
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
Total
Cairo
50,013,324
2,270,080
70,949
(3,246)
948,571
2,806,734
10,820,446
795,852
11,941,245
32,889,668
30,010,681
80,000
(65,718)
(9,707,342)
(16,038)
52,289
112,213,297
245,120,792
Alex, Delta and
Sinai
Upper Egypt
Total
EGP Thousands
-
-
-
-
558,087
632,771
5,401,963
72,124
1,415,913
12,894,439
2,687,040
45,429
-
(3,024,196)
-
-
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20,683,570
-
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-
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129,252
101,344
958,455
8,396
635,437
3,395,713
202,229
-
-
(309,290)
-
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50,013,324
2,270,080
70,949
(3,246)
1,635,910
3,540,849
17,180,864
876,372
13,992,595
49,179,820
32,899,950
125,429
(65,718)
(13,040,828)
(16,038)
52,289
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5,121,536
112,213,297
270,925,898
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190
Annual Report 2018
Annual Report 2018
191
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.
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 fo 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 statisticalprobability (5%) that actual loss could be greater than the VaR estimate. The VaR model assumes a
certain ‘holding period’ until positions can be closed ( 1 Day). The Bank assesses the historical movements in the market
prices based on volatilities and correlations data for the past five years. The use of this approach does not prevent losses
outside of these limits in the event of more significant market movements.
As VaR constitutes an integral part of the Bank’s market risk control regime, the Market Risk Management set VaR Lim-
its, for the trading book, which have been approved by the board, and are monitored and reported on a daily basis to the
Senior Management.
In addition, monthly limits compliance is reported to the ALCO.
The Bank has developed the internal model to calculate VaR, however, it is not yet approved by the Central Bank as the
regulator is currently applying and requiring banks to calculate the Market Risk Capital Requirements according to Basel
II Standardized Approach.
3.2.1.2. Stress tests
Stress tests provide an indication of the potential size of losses that could arise under extreme market conditions. There-
fore, the bankcomputes on a daily basis trading Stressed VaR, combined with the trading VaR, to capture the abnormal
movements in financial markets and to give more comprehensive picture of risk. The results of the stress tests are re-
viewed by the ALCO on a monthly basis and the board risk committee on a quarterly basis.
3.2.2. Value at risk (VaR) Summary
Total VaR by risk type
Foreign exchange risk
Interest rate risk
- For non trading purposes
- For trading purposes
Portfolio managed by others risk
Investment fund
Total VaR
EGP Thousands
Dec.31, 2018
Dec.31, 2017
Medium
231
453,569
429,195
24,374
7,030
119
High
1,482
645,193
586,852
58,341
11,507
267
Low
Medium
20
238,077
232,882
5,195
1,969
55
13,647
588,938
553,426
35,512
7,280
370
High
82,695
815,249
739,977
75,272
10,454
692
Low
275
363,366
351,674
11,692
4,854
215
455,104
647,983
238,493
591,508
826,941
364,408
Trading portfolio VaR by risk type
Foreign exchange risk
Interest rate risk
- For trading purposes
Funds managed by others risk
Investment fund
Total VaR
Dec.31, 2018
Dec.31, 2017
Medium
231
24,374
24,374
7,030
119
26,165
High
1,482
58,341
58,341
11,507
267
60,912
Low
20
5,195
5,195
1,969
55
5,611
Medium
13,647
35,512
35,512
7,280
370
46,039
High
82,695
75,272
75,272
10,454
692
113,250
Low
275
11,692
11,692
4,854
215
13,804
Non trading portfolio VaR by risk type
Interest rate risk
- For non trading purposes
Total VaR
Dec.31, 2018
Dec.31, 2017
Medium
High
Low
Medium
High
Low
429,195
429,195
586,852
586,852
232,882
232,882
553,426
553,426
739,977
739,977
351,674
351,674
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.
192
Annual Report 2018
Annual Report 2018
193
Financial StatementS: Separate
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.
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.
Dec.31, 2018
EGP
USD
EUR
GBP
Other
Total
Dec.31, 2018
Equivalent EGP Thousands
Up to1
Month 1-3 Months
3-12
Months
1-5 years
Over 5
years
Non-
Interest
Bearing
Total
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
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates and
subsidiaries
Total financial assets
Financial liabilities
Due to banks
Due to customers
Derivative financial instruments
Other loans
Total financial liabilities
Net on-balance sheet financial
position
15,822,884
2,511,902
657,323
80,582
986,283
20,058,974
15,730,309
23,594,720
6,743,789
366,545
83,529
46,518,892
31,491,429
12,272,607
1,333,103
1,802,626
935,079
-
70,949
-
-
-
-
-
63,518,898
52,952,122
2,938,691
22,078
39,355
12,934
-
26,664,326
73,630,764
12,367,155
-
186,409
-
54,533
14,100
-
-
-
-
-
-
-
-
-
-
-
-
-
45,097,139
2,737,705
70,949
119,431,789
52,289
39,217,890
73,630,764
68,633
228,755,124 104,731,568
11,859,315
469,205
1,069,812 346,885,024
5,958,780
183,026,820
85,912
138,809
1,099,145
89,794,399
46,946
3,582,720
92,882
11,046,226
-
-
12,773
1,005,452
-
-
96,239
467,575
-
-
7,259,819
285,340,472
132,858
3,721,529
189,210,321
94,523,210
11,139,108
1,018,225
563,814 296,454,678
39,544,803
10,208,358
720,207
(549,020)
505,998
50,430,346
-
3,969
38,375
(3,711,230)
33,676,642
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 ad-
vances to customers
Derivatives financial
instruments (includ-
ing IRS notional
amount)
Financial
investments
- Available for sale
- Held to maturity
Investments in
associates and
subsidiaries
Total financial assets 118,167,504
132,500
9,361,480
77,155,228
1,510,540
-
-
-
12,438,963
401,563
5,425,047
43,383,322
-
-
-
-
-
-
20,058,974
20,058,974
1,724
46,518,892
-
45,097,139
-
-
1,643,653
626,428
429,249
2,737,705
5,483
17,829
42,233
1,435
-
70,949
13,993,151
14,231,235
10,708,275
3,343,900
-
119,431,789
9,650
399,197
5,899,343
-
-
7,818,730
73,030
2,055,231
457,834
26,632,213
19,793,116
27,257,651
18,158,565
8,324,189
602,845
-
39,217,890
73,630,764
-
-
-
-
68,633
68,633
34,000,555
85,523,193
65,344,271
30,454,517
21,161,425
354,651,465
Financial liabilities
Due to banks
Due to customers
Derivatives financial
instruments
(including IRS
notional amount)
Other loans
Total financial
liabilities
Total interest re-
pricing gap
7,002,464
148,906,076
-
22,012,700
-
24,470,575
-
40,675,873
-
533,317
257,355
48,741,931
7,259,819
285,340,472
2,148,569
5,011,865
33,028
705,837
-
33,380
10,000
87,286
443,188
3,147,675
-
-
7,899,299
3,721,529
158,090,489
27,034,565
24,590,889
41,824,898
3,680,992
48,999,286
304,221,119
(39,922,985)
6,965,990
60,932,304
23,519,373
26,773,525 (27,837,861)
50,430,346
* After adding Reverse repos and deducting Repos.
194
Annual Report 2018
Annual Report 2018
195
Financial StatementS: Separate
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 Consumer
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, 2018
Financial liabilities
Due to banks
Due to customers
Other loans
Total liabilities (contractual and
non contractual maturity dates)
Total financial assets (contractual
and non contractual maturity dates)
Dec.31, 2017
Financial liabilities
Due to banks
Due to customers
Other 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
yeas
Total
EGP Thousands
6,632,843
29,932,979
33,380
626,976
23,750,618
10,000
-
72,467,784
87,286
-
145,207,840
443,188
-
13,981,251
3,147,675
7,259,819
285,340,472
3,721,529
36,599,202
24,387,594
72,555,070
145,651,028
17,128,926
296,321,820
41,324,915
40,718,467
74,369,489
141,260,576
49,075,657
346,749,104
Up to 1
month
One to
three
months
Three
months to
one year
One year to
five years
Over five
years
Total
1,877,918
31,348,143
36,393
-
21,728,194
6,743
-
71,335,328
82,631
-
109,570,301
3,429
-
16,785,404
3,545,540
1,877,918
250,767,370
3,674,736
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
Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, due from CBE and
due from banks, treasury bills, other government notes , loans and advances to banks and customers.
In the normal course of business, a proportion of customer loans contractually repayable within one year will be extend-
ed. In addition, debt instrument and treasury bills and other governmental notes have been pledged to secure liabilities.
The Bank would also be able to meet unexpected net cash outflows by selling securities and accessing additional funding
sources such as asset-backed markets.
3.3.4. Derivative cash flows
The Bank’s derivatives include:
Foreign exchange derivatives: exchange traded options and over-the-counter (OTC) ,exchange traded forwards currency
options that will be settled on a gross basis Interest rate derivatives: interest rate swaps, forward rate agreements, OTC
and exchange traded interest rate options, other interest rate contracts and exchange traded futures .
The table below analyses the Bank’s derivative undiscounted financial liabilities into maturity groupings based on the re-
maining period of the balance sheet to the contractual maturity date will be settled on a net basis. The amounts disclosed
in the table are the contractual undiscounted cash flows:
Up to 1 month
One to three
months
Three months
to one year
One year to
five years
Total
EGP Thousands
Dec.31, 2018
Liabilities
Derivatives
financial
instruments
- Foreign
exchange
derivatives
- Interest rate
derivatives
Total
Off balance sheet items
Dec.31, 2018
Letters of credit, guarantees and
other commitments
Total
Dec.31, 2018
Credit facilities commitments
Total
34,388
197
34,585
22,205
6
22,211
29,319
3,709
33,028
-
85,912
43,034
43,034
46,946
132,858
EGP Thousands
Up to 1 year
1-5 years
Over 5 years
Total
51,260,372
14,088,753
6,046,689
71,395,814
51,260,372
14,088,753
6,046,689
71,395,814
EGP Thousands
Up to 1 year
1,399,900
1,399,900
1-5 years
7,773,882
7,773,882
Total
9,173,782
9,173,782
196
Annual Report 2018
Annual Report 2018
197
Financial StatementS: Separate
3.4. Fair value of financial assets and liabilities
3.4.1. Financial instruments not measured at fair value
The table below summarizes the book value and fair value of those financial assets and liabilities not presented on the
Bank’s balance sheet at their fair value.
Financial assets
Due from banks
Gross loans and advances to banks
Gross loans and advances to customers
Financial investments
Held to Maturity
Total financial assets
Financial liabilities
Due to banks
Due to customers
Other loans
Total financial liabilities
Book value
Fair value
Dec.31, 2018
Dec.31, 2017
Dec.31, 2018
Dec.31, 2017
46,518,892
70,949
119,431,789
45,319,766
1,383
102,400,022
46,859,224
70,949
115,452,376
44,782,984
1,383
96,397,613
73,630,764
239,652,394
45,167,722
192,888,893
41,237,872
203,620,421
45,595,034
186,777,014
7,259,819
285,340,472
3,721,529
296,321,820
1,877,918
250,767,370
3,674,736
256,320,024
7,069,442
280,729,572
3,721,529
291,520,543
1,813,466
245,616,661
3,674,736
251,104,863
Due from banks
The fair value of floating rate placements and overnight deposits is their carrying amount. The estimated fair value of
floating interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for
debts with similar credit risk and similar maturity date.
Loans and advances to banks
Loans and advances to banks are represented in loans that do not consider bank placing. The expected fair value of the
loans and advances represents the discounted value of future cash flows expected to be collected. Cash flows are dis-
counted using the current market rate to determine fair value.
Loans and advances to customers
Loans and advances are net of provisions for impairment. The estimated fair value of loans and advances represents the
discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current
market rates to determine fair value.
Financial Investments
Investment securities include only interest-bearing assets, held to maturity assets, and available for sale assets that are
measured at fair value.
Fair value for held-to-maturity assets is based on market prices or broker/dealer price quotations. Where this information
is not available, fair value is estimated using quoted market prices for securities with similar credit, maturity and yield
characteristics.
Due to other banks and customers
The estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, is the amount
repayable on demand. The estimated fair value of fixed interest-bearing deposits and other borrowings not quoted in an
active market is based on discounted cash flows using interest rates for new debts with similar maturity date.
3.5 capital management
For capital management purposes, the Bank’s capital includes total equity as reported in the balance sheet plus some other
elements that are managed as capital. The Bank manages its capital to ensure that the following objectives are achieved:
• Complying with the legally imposed capital requirements in Egypt.
• Protecting the Bank’s ability to continue as a going concern and enabling the generation of yield for shareholders and other
parties dealing" with the bank.
• Maintaining a strong capital base to enhance growth of the Bank’s operations.
Capital adequacy and the use of regulatory capital are monitored on a daily basis by the Bank’s management, employing
techniques based on the guidelines developed by the Basel Committee as implemented by the banking supervision unit
in the Central Bank of Egypt.
The required data is submitted to the Central Bank of Egypt on a monthly basis.
Central Bank of Egypt requires the following:
• Maintaining EGP 500 million as a minimum requirement for the issued and paid-in capital.
• Maintaining a minimum level of capital adequacy ratio of 11.875%, 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.
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 400% 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.
198
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Annual Report 2018
199
Financial StatementS: Separate
The tables below summarize the compositions of teir 1, teir 2 , the capital adequacy ratio and leverage ratio .
4. Critical accounting estimates and judgments
1- The capital adequacy ratio
Tier 1 capital
Share capital (net of the treasury shares)
Reserves
IFRS 9 Reserve
Retained Earnings (Losses)
Total deductions from tier 1 capital common equity
Net profit for the year
Total qualifying tier 1 capital
Tier 2 capital
45% of special reserve
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
Total credit risk
Total market risk
Total operational risk
Total
*Capital adequacy ratio (%)
Dec.31, 2018
EGP Thousands
Dec.31, 2017
Restated**
11,668,326
14,829,948
1,411,549
55,089
(4,754,596)
6,881,450
30,091,766
49
3,582,720
1,879,734
5,462,503
11,618,011
10,543,783
1,411,549
89,873
(2,450,399)
3,960,829
25,173,646
49
3,545,540
1,679,656
5,225,245
35,554,269
30,398,891
156,952,618
5,959,133
23,292,505
186,204,256
19.09%
141,154,879
9,239,998
18,222,831
168,617,708
18.03%
* Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 24 December 2012.
** After 2017 profit distribution.
2- Leverage ratio
Total qualifying tier 1 capital
On-balance sheet items & derivatives
Off-balance sheet items
Total exposures
*Percentage
Dec.31, 2018
30,091,766
346,163,131
45,407,765
391,570,896
7.68%
EGP Thousands
Dec.31, 2017
Restated**
25,173,646
300,593,997
44,965,272
345,559,269
7.28%
* Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 14 July 2015.
** After 2017 profit distribution.
For December 2018 NSFR ratio record 209.70% (LCY 243.36% and FCY 165.61%), and LCR ratio record 601.53% (LCY
667.84% and FCY 338.82%).
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%).
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 quarterly basis. In determining whether an impairment
loss should be recorded in the income statement, the Bank makes judgments as to whether there is any observable data
indicating 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 counter-
party), 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.
200
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201
Financial StatementS: Separate
5. Segment analysis
The Bank is divided into four main business segments on a worldwide basis:
• Corporate banking – incorporating direct debit facilities, current accounts, deposits, overdrafts, loan and other credit
facilities, foreign currency and derivative products
• Investment banking – incorporating financial instruments Trading, structured financing, Corporate leasing,and merger
and acquisitions advice.
• Retail banking – incorporating private banking services, private customer current accounts, savings, deposits, investment
savings products, custody, credit and debit cards, consumer loans and mortgages;
• Others –Including other banking business, such as Assets Management.
Transactions between the business segments are on normal commercial terms and conditions.
Dec.31, 2018
Revenue according to business
segment
Expenses according to business
segment
Profit before tax
Tax
Profit for the year
Total assets
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
EGP Thousands
Asset
Liability
Mangement
Total
8,999,279
2,452,934
3,870,401
6,163,506
639,484
22,125,604
(5,516,282)
(739,340)
(427,332)
(2,373,798)
(16,258)
(9,073,010)
3,482,997
1,713,594
3,443,069
3,789,708
623,226
13,052,594
(933,068)
(459,085)
(922,426)
(1,015,293)
(166,967)
(3,496,839)
2,549,929
1,254,509
2,520,643
2,774,415
456,259
9,555,755
102,743,816
2,159,095
165,584,686
22,693,303
49,242,585
342,423,485
Corporate
banking
SME's
Investment
banking
Retail
banking
Asset
Liability
Mangement
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
1,645,662
2,850,397
3,061,252
632,420
10,330,990
(576,762)
(442,854)
(767,053)
(823,795)
(170,187)
(2,780,651)
1,564,497
1,202,808
2,083,344
2,237,457
462,233
7,550,339
82,138,508
2,352,091
137,645,556
18,444,909
54,190,257
294,771,321
5.2. By geographical segment
Dec.31, 2018
Revenue according to geographical
segment
Expenses according to geographical
segment
Profit before tax
Tax
Profit for the year
Total assets
Dec.31, 2017
Revenue according to geographical
segment
Expenses according to geographical
segment
Profit before tax
Tax
Profit for the year
Total assets
6. Net interest income
Cairo
Alex, Delta &
Sinai
Upper Egypt
Total
EGP Thousands
17,766,245
3,424,556
934,803
22,125,604
(7,545,066)
(1,304,228)
(223,716)
(9,073,010)
10,221,179
(2,738,280)
7,482,899
2,120,328
(568,053)
1,552,275
316,635,596
19,340,837
711,087
(190,506)
520,581
6,447,052
13,052,594
(3,496,839)
9,555,755
342,423,485
Cairo
Alex, Delta &
Sinai
Upper Egypt
Total
13,479,965
2,499,912
491,190
16,471,067
(5,306,193)
8,173,772
(2,200,134)
5,973,638
(670,176)
1,829,736
(492,390)
1,337,346
(163,708)
(6,140,077)
327,482
(88,127)
239,355
10,330,990
(2,780,651)
7,550,339
265,654,804
22,598,945
6,517,572
294,771,321
Interest and similar income
- Banks
- Clients
Total
Treasury bills and bonds
Reverse repos
Financial investments in held to maturity and available for sale debt instruments
Total
Interest and similar expense
- Banks
- Clients
Total
Financial instruments purchased with a commitment to re-sale (Repos)
Other loans
Total
Net interest income
EGP Thousands
Dec.31, 2018
Dec.31, 2017
3,338,266
15,274,649
18,612,915
18,582,089
2,519
206,186
37,403,709
(840,233)
(18,001,197)
(18,841,430)
(112,366)
(306,394)
3,532,274
10,921,054
14,453,328
14,039,447
-
178,391
28,671,166
(463,409)
(15,686,959)
(16,150,368)
(2,037)
(14,750)
(19,260,190)
(16,167,155)
18,143,519
12,504,011
202
Annual Report 2018
Annual Report 2018
203
Financial StatementS: Separate
7. Net fee and commission income
11. Other operating (expenses) 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
10. Administrative expenses
Staff costs
Wages and salaries
Social insurance
Other benefits
Other administrative expenses *
Total
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,456,930
140,247
1,805,439
3,402,616
(991,957)
(991,957)
2,410,659
1,362,660
117,268
1,314,283
2,794,211
(796,107)
(796,107)
1,998,104
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
EGP Thousands
Loans and advances to customers and banks
Total
Dec.31, 2018
Dec.31, 2017
13. Adjustments to calculate the effective tax rate
9,951
16,007
25,958
11,474
23,039
34,513
EGP Thousands
Dec.31, 2018
Dec.31, 2017
668,071
(38,904)
(20,865)
8,179
472,595
764,732
(17,118)
(23,732)
(21,230)
589,563
1,089,076
1,292,215
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(2,237,595)
(78,841)
(61,976)
(1,844,367)
(4,222,779)
(1,620,326)
(65,033)
(51,682)
(1,381,798)
(3,118,839)
Profit before tax
Tax rate
Income tax based on accounting profit
Add / (Deduct)
Non-deductible expenses
Tax exemptions
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
* The expenses related to the activity for which the bank obtains a commodity or service and all taxes and charges incurred by the bank -
except for income tax - donations, depreciation and impairment of non financial assets other than subsidiaries and associates
204
Annual Report 2018
EGP Thousands
Dec.31, 2018
Dec.31, 2017
59,863
1,045
(400,596)
(1,249,987)
(1,589,675)
(61,065)
607
(114,725)
(827,387)
(1,002,570)
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(3,076,023)
(3,076,023)
(1,742,281)
(1,742,281)
EGP Thousands
Dec.31, 2018
Dec.31, 2017
13,052,594
22.50%
2,936,834
872,324
(314,360)
2,041
3,496,839
26.79%
10,330,990
22.50%
2,324,473
626,536
(173,358)
3,000
2,780,651
26.92%
EGP Thousands
Dec.31, 2018
Dec.31, 2017
9,553,868
(143,308)
(955,387)
8,455,173
1,163,898
7.26
1,171,642
7.22
7,549,043
(113,236)
(754,904)
6,680,903
1,159,156
5.76
1,177,722
5.67
Annual Report 2018
205
Financial StatementS: Separate
15. Cash and balances with central bank
18. Trading financial assets
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
Floating 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
EGP Thousands
Dec.31, 2018
Dec.31, 2017
6,532,211
5,784,303
13,526,763
20,058,974
20,058,974
8,878,986
14,663,289
14,663,289
EGP Thousands
Debt instruments
- Governmental bonds
Total
Equity instruments
- Mutual funds
Total
- Portfolio managed by others
Total
Dec.31, 2018
Dec.31, 2017
19. Loans and advances to banks, net
4,168,973
42,349,919
46,518,892
25,397,558
4,109,576
17,011,758
46,518,892
1,724
10,203,376
36,313,792
46,518,892
46,518,892
2,679,189
42,640,577
45,319,766
15,863,399
3,894,775
25,561,592
45,319,766
-
9,940,362
35,379,404
45,319,766
45,319,766
EGP Thousands
Dec.31, 2018
Dec.31, 2017
-
3,669,700
49,441,511
(3,097,887)
50,013,324
(8,014,072)
(8,014,072)
41,999,252
-
1,289,425
57,602,997
(4,238,574)
54,653,848
(175,646)
(175,646)
54,478,202
Time and term loans
Impairment provision
Total
Current balances
Total
Analysis for impairment provision of loans and advances to banks
Beginning balance
Release during the year
Exchange revaluation difference
Ending balance
EGP Thousands
Dec.31, 2018
Dec.31, 2017
2,270,080
2,270,080
6,728,843
6,728,843
38,376
38,376
429,249
99,587
99,587
466,767
2,737,705
7,295,197
EGP Thousands
Dec.31, 2018
Dec.31, 2017
70,949
(3,246)
67,703
67,703
67,703
1,383
(70)
1,313
1,313
1,313
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(70)
(3,140)
(36)
(3,246)
(1,800)
1,697
33
(70)
206
Annual Report 2018
Annual Report 2018
207
Financial StatementS: Separate
20. Loans and advances to customers, net
Individual
- Overdraft
- Credit cards
- Personal loans
- Real estate 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
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,635,910
3,540,849
17,180,864
876,372
23,233,995
13,992,595
49,179,820
32,899,950
125,429
96,197,794
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
119,431,789
102,400,022
(65,718)
(13,040,828)
(16,038)
106,309,205
44,549,290
61,759,915
106,309,205
(12,476)
(10,994,446)
(2,965,997)
88,427,103
38,960,491
49,466,612
88,427,103
* An amount of EGP 1,818mn has been charged to impairment provision against unearned interest recognized in income.
Of this amount, EGP 1,057mn has been charged in Q3 2018, which is the second and final re-engineering for such accounts.
208
Annual Report 2018
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Annual Report 2018
209
Financial StatementS: Separate
21. Derivative financial instruments
21.1. Derivatives
The Bank uses the following financial derivatives for non hedging purposes.
Forward contracts represent commitments to buy foreign and local currencies including unexecuted spot transactions.
Future contracts for foreign currencies and/or interest rates represent contractual commitments to receive or pay net on
the basis of changes in foreign exchange rates or interest rates, and/or to buy/sell foreign currencies or financial instru-
ments in a future date with a fixed contractual price under active financial market.
Credit risk is considered low, and future interest rate contract represents future exchange rate contracts negotiated for case
by case, These contracts require financial settlements of any differences in contractual interest rates and prevailing market
interest rates on future interest rates on future dates based on contractual amount (nominal value) pre agreed upon.
Foreign exchange and/or interest rate swap represents commitments to exchange cash flows, resulting from these con-
tracts are exchange of currencies or interest (fixed rate versus variable rate for example) or both (meaning foreign ex-
change and interest rate contracts).
Contractual amounts are not exchanged except for some foreign exchange contracts.
Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to fulfill
their liabilities. This risk is monitored continuously through comparisons of fair value and contractual amount, and in order
to control the outstanding credit risk, the Bank evaluates other parties using the same methods as in borrowing activities.
Options contracts in foreign currencies and/or interest rates represent contractual agreements for the buyer (issuer) to
the seller (holders) as a right not an obligation whether to buy (buy option) or sell (sell option) at a certain day or within
certain year for a predetermined amount in foreign currency or interest rate. Options contracts are either traded in the
market or negotiated between The Bank and one of its clients (Off balance sheet). The Bank is exposed to credit risk for
purchased options contracts only and in the line of its book cost which represent its fair value.
The contractual value for some derivatives options is considered a base to analyze the realized financial instruments on
the balance sheet, but it doesn’t provide an indicator for the projected cash flows of the fair value for current instruments,
and those amounts don’t reflects credit risk or interest rate risk.
Derivatives in the Bank's benefit that are classified as (assets) are conversely considered (liabilities) as a result of the
changes in foreign exchange prices or interest rates related to these derivatives. Contractual / expected total amounts of
financial derivatives can fluctuate from time to time as well as the range through which the financial derivatives can be
in benefit for the Bank or conversely against its benefit and the total fair value of the financial derivatives in assets and
liabilities. Hereunder are the fair values of the booked financial derivatives:
21.1.1. For trading derivatives
Foreign currencies derivatives
- Forward foreign exchange contracts
- Currency swap
Total (1)
21.1.2. Fair value hedge
EGP Thousands
Dec.31, 2018
Dec.31, 2017
Notional
amount
5,360,272
3,628,415
Assets
Liabilities
21,112
18,243
39,355
73,105
12,807
85,912
Notional
amount
6,820,350
1,640,985
Assets
Liabilities
36,597
3,117
49,687
5,860
39,714
55,547
Interest rate derivatives
- Governmental debt instruments hedging
- Customers deposits hedging
Total (2)
Total financial derivatives (1+2)
EGP Thousands
Dec.31, 2018
Dec.31, 2017
Notional
amount
662,803
7,103,638
Notional
amount
655,925
11,506,784
Assets
Liabilities
-
12,934
12,934
52,289
9,164
37,782
46,946
132,858
Assets Liabilities
-
287
287
25,996
115,441
141,437
40,001
196,984
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 9,164 thousand at December 31, 2018 against EGP 25,996 thousand at the December 31, 2017, Resulting in gains
form hedging instruments at December 31, 2018 EGP 16,832 thousand against EGP 19,633 thousand at the December 31,
2017. Losses arose from the hedged items at December 31, 2018 reached EGP 34,193 thousand against losses of EGP 44,924
thousand at December 31, 2017.
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 24,848
thousand at the end of December 31, 2018 against EGP 115,154 thousand at December 31, 2017, resulting in gains from
hedging instruments at December 31, 2018 of EGP 90,306 thousand against losses of EGP 76,302 thousand at December
31, 2017. Losses arose from the hedged items at December 31, 2018 reached EGP 94,856 thousand against gains EGP 81,488
thousand at December 31 , 2017.
210
Annual Report 2018
Annual Report 2018
211
Financial StatementS: Separate
22. Financial investments
22.1. profits (losses) on financial investments
Available for sale
- Listed debt instruments with fair value
- Listed equity instruments with fair value
- Unlisted equity instruments by amortized cost
Total
Held to maturity
- Listed debt instruments
- Unlisted instruments
Total
EGP Thousands
Dec.31, 2018
Dec.31, 2017
38,615,045
458,094
144,751
39,217,890
29,632,780
83,346
758,655
30,474,781
73,598,251
32,513
73,630,764
45,135,209
32,513
45,167,722
Total financial investment
112,848,654
75,642,503
- Actively traded instruments
- Not actively traded instruments
Total
Fixed interest debt instruments
Floating interest debt instruments
Total
Beginning balance
Addition
Deduction
Exchange revaluation differences for foreign financial as-
sets
Profit (losses) from fair value difference
Available for sale impairment charges
Ending Balance as of Dec.31, 2017
Beginning balance
Addition
Deduction
Exchange revaluation differences for foreign financial
assets
Profit (losses) from fair value difference
Released (Impairment) charges of available for sale
Ending Balance as of Dec.31, 2018
Available for
sale financial
investments
5,447,291
25,868,230
(1,361,027)
(100,078)
512,016
108,349
30,474,781
30,474,781
12,670,761
(1,872,988)
102,991
(2,118,094)
(39,561)
39,217,890
108,496,980
4,351,674
112,848,654
110,985,264
1,228,033
112,213,297
Held to
maturity
financial
investments
53,924,936
4,597,254
(13,354,468)
73,721,199
1,921,304
75,642,503
72,612,620
2,155,369
74,767,989
EGP Thousands
Total
59,372,227
30,465,484
(14,715,495)
-
(100,078)
-
-
45,167,722
45,167,722
33,995,313
(5,532,271)
-
-
-
512,016
108,349
75,642,503
75,642,503
46,666,074
(7,405,259)
102,991
(2,118,094)
(39,561)
73,630,764
112,848,654
Profit (Loss) from selling available for sale financial instruments
Released (Impairment) charges of available for sale equity instruments
Released (Impairment) charges of non current assets held for sale
Total
23. Investments in associates and subsidiaries
EGP Thousands
Dec.31, 2018
Dec.31, 2017
441,628
(39,561)
-
402,067
(99,047)
254,588
340,504
496,045
Company's
country
Company's
assets
Company's
liabilities
(without
equity)
Company's
revenues
Company's
net profit
Investment
book value
Stake %
EGP Thousands
Egypt
Egypt
-
-
-
-
-
-
-
-
44,783
99.99
14,100
23.50
Egypt
860,057
640,554
926,624
72,954
9,750
32.5
860,057
640,554
926,624
72,954
68,633
Company's
country
Company's
assets
Company's
liabilities
(without
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Company's
revenues
Company's
net profit
Investment
book value
Stake %
EGP Thousands
Egypt
-
-
-
-
44,318
99.99
Egypt
512,388
367,470
505,461
52,695
9,750
32.5
512,388
367,470
505,461
52,695
54,068
Dec.31, 2018
Subsidiaries
- CVenture Capital
Associates
- Fawry plus
- International Co. for
Security and Services
(Falcon)
Total
Dec.31, 2017
Subsidiaries
- CVenture Capital
Associates
- International Co. for
Security and Services
(Falcon)
Total
212
Annual Report 2018
Annual Report 2018
213
Financial StatementS: Separate
24. Other assets
Accrued revenues
Prepaid expenses
Advances to purchase of fixed assets
Accounts receivable and other assets (after deducting the provision)*
Assets acquired as settlement of debts
Insurance
Total
Dec.31, 2018
4,509,514
186,797
768,733
3,790,709
276,520
30,945
9,563,218
EGP Thousands
Dec.31, 2017
3,870,654
230,296
522,211
2,193,590
45,083
24,973
6,886,807
* A provision with amount EGP 317 million has been created against pending installments.
This item includes other assets that are not classified under specific items of balance sheet assets, such as: accrued income
and prepaid expenses, amounts paid in advance relating to taxes on bills and bonds, custodies, debit accounts under
settlement and any balance that has no place in another asset category.
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214
Annual Report 2018
Annual Report 2018
215
Financial StatementS: Separate
26. Due to banks
28. Other loans
Current accounts
Deposits
Total
Central banks
Local banks
Foreign banks
Total
Non-interest bearing balances
Floating bearing interest 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
Floating interest bearing balances
Fixed interest bearing balances
Total
Current balances
Non-current balances
Total
EGP Thousands
Dec.31, 2018
Dec.31, 2017
503,539
6,756,280
7,259,819
190,801
6,009,778
1,059,240
7,259,819
257,355
89,568
6,912,896
7,259,819
7,259,819
1,067,374
810,544
1,877,918
128,527
714,294
1,035,097
1,877,918
740,158
23,169
1,114,591
1,877,918
1,877,918
Interest rate
%
Maturity date
Maturing
through next
year
EGP Thousands
Balance on
Balance on
Dec.31, 2018 Dec.31, 2017
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
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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*
117,286
125,429
87,314
04/01/2020*
13,380
13,380
41,882
10 years
10 years
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1,791,360
1,772,770
1,791,360
1,772,770
130,666
3,721,529
3,674,736
Interest rates on variable-interest subordinated loans are determined in advance every 3 months/every quarter. Subordi-
nated loans are not repaid before their repayment dates.
EGP Thousands
* Represents the date of loan repayment to the lending agent.
Dec.31, 2018
Dec.31, 2017
92,465,717
43,561,846
81,059,934
62,812,279
5,440,696
285,340,472
116,885,763
168,454,709
285,340,472
48,741,931
23,738,113
212,860,428
285,340,472
202,169,757
83,170,715
285,340,472
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
21,022,474
186,427,175
250,767,370
178,830,593
71,936,777
250,767,370
29. Other liabilities
Accrued interest payable
Accrued expenses
Accounts payable
Other credit balances
Total
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,347,397
733,218
4,101,884
319,054
6,501,553
1,516,471
507,543
3,277,350
175,167
5,476,531
216
Annual Report 2018
Annual Report 2018
217
Financial StatementS: Separate
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ber 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.
• The Extraordinary General Assembly approved in the meeting of March 21,2016 continue 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 10% of issued and paid- in capital at par value ,through 10 years starting year 2016 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.
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218
Annual Report 2018
Annual Report 2018
219
Financial StatementS: Separate
32. Deferred tax assets (Liabilities)
Deferred tax assets and liabilities are attributable to the following:
Assets
(Liabilities)
EGP Thousands
Assets
(Liabilities)
Dec.31, 2018
Dec.31, 2017
Fixed assets (depreciation)
Other provisions (excluded loan loss, contingent liabilities and income tax provi-
sions)
Intangible Assets
Other investments impairment
Reserve for employee stock ownership plan (ESOP)
Interest rate swaps revaluation
Trading investment revaluation
Forward foreign exchange deals revaluation
Balance
(49,750)
53,552
53,657
65,788
166,122
4,695
7,394
6,912
308,370
(31,409)
31,038
36,712
56,698
110,100
5,340
(37,478)
8,629
179,630
Movement of Deferred Tax Assets and Liabilities:
Beginning Balance
Additions / disposals
Ending Balance
Assets
(Liabilities)
EGP Thousands
Assets
(Liabilities)
Dec.31, 2018
Dec.31, 2017
179,630
128,740
308,370
181,308
(1,678)
179,630
Details of the outstanding tranches are as follows:
Maturity date
Exercise price
Fair value
EGP
EGP
2019
2020
2021
Total
10.00
10.00
10.00
28.43
65.55
68.13
No. of shares in
thousand
8,433
7,175
8,150
23,758
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%
12th tranche
11th tranche
10
77.35
3
15.54%
1.29%
26%
10
73.08
3
16.77%
0.68%
30%
Volatility is calculated based on the daily standard deviation of returns for the last five years.
34. Reserves and retained earnings
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
instruments is measured using the Black-Scholes pricing model.
Details of the rights to share outstanding during the year are as follows:
Legal reserve
General reserve
Capital reserve
Retained earnings
Special reserve
Reserve for A.F.S investments revaluation difference
Banking risks reserve
IFRS 9 risk reserve
Ending balance
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,710,293
12,776,215
12,421
9,555,755
20,645
(3,750,779)
4,323
1,411,549
21,740,422
1,332,807
9,000,023
11,815
6,138,790
20,645
(1,642,958)
3,634
1,411,549
16,276,305
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
220
Annual Report 2018
Dec.31, 2018
No. of shares in
thousand
Dec.31, 2017
No. of shares in
thousand
21,280
8,338
(828)
(5,032)
23,758
22,351
7,601
(737)
(7,935)
21,280
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, taken into consideration that IFRS 9 will be effective as of January 1, 2019.
34.1. Banking risks reserve
Beginning balance
Transferred to bank risk reserve
Ending balance
EGP Thousands
Dec.31, 2018
Dec.31, 2017
3,634
689
4,323
3,019
615
3,634
Annual Report 2018
221
Financial StatementS: Separate
34.2. legal reserve
35. Cash and cash equivalent
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
Transferred to reserves
Dividend paid
Net profit for the year
Transferred ( from) to bank risk reserve
IFRS 9 risk reserve
Ending balance
34.5 reserve for employee stock ownership plan
Beginning balance
Transferred to reserves
Cost of employees stock ownership plan (ESOP)
Ending balance
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,332,807
377,486
1,710,293
1,035,363
297,444
1,332,807
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(1,642,958)
(2,107,821)
(3,750,779)
(2,180,244)
537,286
(1,642,958)
EGP Thousands
Dec.31, 2018
Dec.31, 2017
6,138,790
(3,994,924)
(2,143,177)
9,555,755
(689)
-
9,555,755
5,950,555
(4,599,736)
(1,350,204)
7,550,339
(615)
(1,411,549)
6,138,790
EGP Thousands
Dec.31, 2018
Dec.31, 2017
489,334
(159,360)
408,346
738,320
343,460
(145,010)
290,884
489,334
222
Annual Report 2018
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Obligatory reserve balance with CBE
Due from banks with maturities more than three months
Treasury bills with maturities more than three months
Total
36. Contingent liabilities and commitments
36.1. legal claims
EGP Thousands
Dec.31, 2018
Dec.31, 2017
20,058,974
46,518,892
41,999,252
(13,526,763)
(10,733,386)
(50,013,324)
34,303,645
14,663,289
45,319,766
54,478,202
(8,878,986)
(1,719,586)
(54,653,848)
49,208,837
• There is a number of existing cases filed against the bank on December 31,2018 without provision as the bank doesn't ex-
pect to incur losses from it.
• A provision for legal cases that are expected to generate losses has been created. (Disclosure No. 30)
26.2 capital commitments
26.2.1. Financial investments
The capital commitments for the financial investments reached on the date of financial position EGP 165,676 thousand as
follows:
Available for sale financial investments
Investments
value
358,268
Paid
192,593
Remaining
165,676
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 198,026 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
EGP Thousands
Dec.31, 2018
Dec.31, 2017
66,166,953
4,178,288
1,050,573
71,395,814
69,514,413
1,700,516
1,017,690
72,232,619
EGP Thousands
Dec.31, 2018
Dec.31, 2017
9,173,782
7,024,376
Annual Report 2018
223
Financial StatementS: Separate
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 3,449,254 with redeemed value of EGP 1,247,250 thousands.
• The market value per certificate reached EGP 361.60 on December 31, 2018.
• The Bank portion got 137,112 certificates with redeemed value of EGP 49,580 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 511,604 with redeemed value of EGP 99,118 thousands.
• The market value per certificate reached EGP 193.74 on December 31, 2018.
• The Bank portion got 50,000 certificates with redeemed value of EGP 9,687 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 335,313 with redeemed value of EGP 34,336 thousands.
• The market value per certificate reached EGP 102.40 on December 31, 2018.
• The Bank portion got 27,690 certificates with redeemed value of EGP 2,835 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 91,131 with redeemed value of EGP 19,353 thousands.
• The market value per certificate reached EGP 212.37 on December 31, 2018.
• The Bank portion got 50,000 certificates with redeemed value of EGP 10,619 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 93,948 with redeemed value of EGP 21,779 thousands.
• The market value per certificate reached EGP 231.82 on December 31, 2018.
• The Bank portion got 50,000 certificates with redeemed value of EGP 11,591 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 145,943 with redeemed value of EGP 26,051 thousands.
• The market value per certificate reached EGP 178.50 on December 31, 2018.
• The Bank portion got 50,000 certificates with redeemed value of EGP 8,925 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
CVenture Capital
39. Main currencies positions
Egyptian pound
US dollar
Sterling pound
Japanese yen
Swiss franc
Euro
EGP Thousands
5,414
137,766
1,309
Income
94
850
Expenses
277,139
2,041
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(636,384)
578,745
2,189
(20)
658
37,144
182,639
(313,246)
(1,566)
(523)
637
46,768
Main currencies positions above represents what is recognized in the balance sheet position of the Central Bank of Egypt.
40. Tax status
corporate income tax
• Settlment of corporate income tax since the start of activity till 2016
• 2017 examined & paid
• The yearly income tax return is submitted in legal dates
Salary tax
• Settlment of salary tax since the start of activity till 2017
Stamp duty tax
• The period since the start of activity till 31/07/2006 was examined & paid, disputed points have been transferred to the
court for adjudication
• The period from 01/08/2006 till 31/12/2017 was examined & paid in accordance with the protocol signed between the Fed-
eration of Egyptian Banks & the Egyptian Tax Authority
224
Annual Report 2018
Annual Report 2018
225
Financial StatementS: Separate
41. Intangible assets:
Book value
Amortization
Net book value
EGP Thousands
Dec.31, 2018
Dec.31, 2017
651,041
(412,326)
238,715
651,041
(282,118)
368,923
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.
Cashflow disclosures
42. Treasury bills and other governmental notes - net increase (decrease)
Dec.31, 2018
91 Days ma-
turity
Unearned
interest
Net
182 Days ma-
turity
Unearned
interest
Net
364 Days ma-
turity
Unearned
interest
Net
Total unearned
interest
Net
Change
Dec.31, 2018
Dec.31, 2017
Total
Net
Total
Net
Change
-
-
3,669,700
(86,343)
49,441,511
(3,011,544)
-
-
-
-
-
1,289,425
(87,067)
3,583,357
1,202,358
(2,380,999)
57,602,997
(4,151,507)
46,429,967
53,451,490
7,021,523
(3,097,887)
(4,238,574)
50,013,324
54,653,848
4,640,524
Dec.31, 2017
91 Days ma-
turity
Unearned
interest
Net
182 Days ma-
turity
Unearned
interest
Net
364 Days ma-
turity
Unearned
interest
Net
Total unearned
interest
Net
Change
Dec.31, 2017
Dec.31, 2016
Total
Net
-
-
1,289,425
(87,067)
57,602,997
(4,151,507)
Net
Change
Total
1,051,375
(22,416)
-
1,028,959
1,028,959
4,350,975
(264,565)
1,202,358
4,086,410
2,884,052
36,010,730
(1,909,712)
53,451,490
34,101,018
(19,350,472)
(4,238,574)
(2,196,693)
54,653,848
38,187,428
(16,466,420)
226
Annual Report 2018
Annual Report 2018
227
Financial StatementS: Separate
43. Other assets - net increase (decrease)
non cash transactions:
Non-cash transactions that are not included in the statement of cash flows are as follows:
Proceeds from selling available for sale financial investments
Payment for purchases of subsidiary and associates
Other assets
Financial
statements
balance
2,314,616
(14,100)
(2,515,215)
Non cash
transactions
255,275
(3,525)
(251,750)
Dec.31, 2018
EGP Thousands
Cash flow
balance
2,059,341
(10,575)
(2,263,465)
Total other assets by end of 2017
Assets acquired as settlement of debts
Advances to purchase of fixed assets
Total 1
Total other assets by end of 2018
Assets acquired as settlement of debts
Advances to purchase of fixed assets
Unrealized amount from avilable for sale investments
Impairment charge for other assets
Total 2
Change (1-2)
Total other assets by end of 2016
Assets acquired as settlement of debts
Advances to purchase of fixed assets
Total 1
Total other assets by end of 2017
Assets acquired as settlement of debts
Advances to purchase of fixed assets
Total 2
Change (1-2)
EGP Thousands
Dec.31, 2018
6,886,807
(45,083)
(522,211)
6,319,513
9,563,218
(276,520)
(768,733)
(251,750)
316,763
8,582,978
(2,263,465)
EGP Thousands
Dec.31, 2017
5,446,025
(56,599)
(203,410)
5,186,016
6,886,807
(45,083)
(522,211)
6,319,513
(1,133,497)
228
Annual Report 2018
Annual Report 2018
229
Financial StatementS: conSolidated
230
Annual Report 2018
Annual Report 2018
231
Financial StatementS: conSolidated
consolidated balance sheet as at
december 31, 2018
consolidated income statement for the
year ended december 31, 2018
Notes
Dec. 31, 2018
Dec. 31, 2017
Notes
Dec. 31, 2018
Dec. 31, 2017
EGP Thousands
EGP Thousands
Assets
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Trading financial assets
Loans and advances to banks, net
Loans and advances to customers, net
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates
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
Other loans
Provisions
Total liabilities
Equity
Issued and paid up capital
Reserves
Reserve for employee stock ownership plan (ESOP)
Retained earnings *
Total equity
Total liabilities and equity
15
16
17
18
19
20
21
22
22
23
24
41
32
25
26
27
21
29
28
30
31
34
34
34
20,058,974
46,518,892
41,999,252
2,737,705
67,703
106,309,205
52,289
39,217,890
73,630,764
106,558
9,563,018
238,715
308,370
1,651,875
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
342,461,210
294,782,092
7,259,819
285,296,869
132,858
3,625,579
6,501,553
3,721,529
1,694,607
1,877,918
250,723,052
196,984
2,778,973
5,476,531
3,674,736
1,615,159
308,232,814
266,343,353
11,668,326
12,184,667
738,320
9,637,083
34,228,396
11,618,011
10,137,515
489,334
6,193,879
28,438,739
342,461,210
294,782,092
The accompanying notes are an integral part of these financial statements .
(Audit report attached)
* Including net profit for the current year
232
Annual Report 2018
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
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
42
14
37,403,709
(19,260,190)
18,143,519
28,671,166
(16,167,155)
12,504,011
3,402,616
(991,957)
2,410,659
25,958
1,089,076
402,067
(4,223,959)
(1,589,675)
(130,208)
(3,076,023)
27,419
13,078,833
(3,625,579)
128,740
9,581,994
-
-
9,581,994
-
9,581,994
2,794,211
(796,107)
1,998,104
34,513
1,292,215
165,111
(3,118,839)
(1,002,570)
(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
7.26
7.22
5.76
5.67
Hisham Ezz Al-Arab
Chairman and Managing Director
Annual Report 2018
233
Financial StatementS: conSolidated
consolidated cash flow for the year ended
december 31, 2018
Separate cash flow for the year ended
december 31, 2018 (cont.)
Notes
Dec. 31, 2018
Dec. 31, 2017
EGP Thousands
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
Cash flow from financing activities
Increase in long term loans
Dividend paid
Capital increase
Net cash used in (provided from) 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
22
22
28
15
16
17
15
17
(12,670,761)
2,059,341
-
(25,868,230)
1,261,980
768,515
(39,958,700)
(15,842,584)
46,793
(2,143,177)
50,315
(2,046,069)
3,514,493
(1,350,207)
79,351
2,243,637
(14,905,192)
(12,309,863)
49,208,837
34,303,645
61,518,700
49,208,837
20,058,974
46,518,892
41,999,252
(13,526,763)
(10,733,386)
(50,013,324)
34,303,645
14,663,289
45,319,766
54,478,202
(8,878,986)
(1,719,586)
(54,653,848)
49,208,837
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
Impairment charge for other assets
Available for sale investments exchange revaluation differences
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) losses from selling financial investments
Shares based payments
Bank's share in the profits of associates
Operating profits before changes in operating assets and
liabilities
Net decrease (increase) in assets and liabilities
Due from banks
Treasury bills and other governmental notes
Trading financial assets
Derivative financial instruments
Loans and advances to banks and customers
Other assets
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 for purchases of associates
Payment for purchases of property, plant, equipment and
branches constructions
Proceeds from selling property, plant and equipment
Proceeds from redemption of held to maturity financial investments
Payment for purchases of held to maturity financial investments
Notes
Dec. 31, 2018
Dec. 31, 2017
EGP Thousands
13,078,833
-
10,029,122
291,134
25
12
30
24
22
41
22
30
30
30
11
22
16
43
18
21
19-20
44
26
27
29
11
22
22
390,830
3,076,023
101,501
316,763
(102,991)
130,208
39,561
(2,114)
(17,670)
(2,269)
(1,045)
(441,628)
408,346
(27,419)
351,005
1,742,281
212,622
-
100,078
130,208
(108,349)
(25,463)
(97,897)
11,840
(607)
99,047
290,884
(38,636)
16,946,929
12,987,269
(13,661,577)
4,640,524
4,557,492
(66,141)
(21,255,952)
(2,263,465)
5,381,901
34,573,817
(2,778,973)
1,025,022
27,099,577
(2,594,442)
(16,466,420)
(4,850,063)
120,431
(4,775,382)
(863,655)
(1,131,078)
18,982,257
(2,017,034)
1,897,201
1,289,084
-
(10,575)
750
-
(874,708)
(763,420)
1,045
5,532,271
(33,995,313)
607
13,354,468
(4,597,254)
234
Annual Report 2018
Annual Report 2018
235
Financial StatementS: conSolidated
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236
Annual Report 2018
Annual Report 2018
237
Financial StatementS: conSolidated
notes to the consolidated financial
statements for the year ended
december 31, 2018
1. General information
Commercial International Bank (Egypt) S.A.E. provides retail, corporate and investment banking services in various
parts of Egypt through 181 branches, and 22 units employing 6759 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.
The bank owns investments in a subsidiary “C-Ventures”, in which the bank’s share is 99.99%.
Financial statements have been approved by board of directors on February 4, 2019.
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.
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.
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:
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 basis of the consolidation is as follows:
• Eliminating all balances and transactions between the Bank and group companies.
• The cost of acquisition of subsidiary companies is based on the company's share in the fair value of assets acquired and
obligations outstanding on the acquisition date.
• Minority shareholders represent the rights of others in subsidiary companies.
• Proportional consolidation is used in consolidating method for companies under joint control.
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 Bank applies the Equity Method in its consolidated financial statements, initially recognizing the Bank’s investments in
associate companies at amortized cost. The book value of associate investments is subsequently increased or decreased by
recognition of the Bank’s share in the profits or losses of associate companies after the date of acquisition among the Bank’s
profit or loss. The book value for associate investments is also decreased by the dividends received from associate companies.
• 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.
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.
238
Annual Report 2018
Annual Report 2018
239
Financial StatementS: conSolidated
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.
2.5.4. Available for sale financial investments
Available-for-sale investments are those intended to be held for an indefinite period of time, which may be sold in response
to needs for liquidity or changes in interest rates, exchange rates or equity prices.
The following are applied in respect to all financial assets:
Debt securities and equity shares intended to be held on a continuing basis, other than those designated at fair value, are
classified as available-for-sale or held-to-maturity. Financial investments are recognized on trade date, when the group
enters into contractual arrangements with counterparties to purchase securities.
Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value
through profit and loss. Financial assets carried at fair value through profit and loss are initially recognized at fair value,
and transaction costs are expensed in the income statement.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or when the
Bank transfers substantially all risks and rewards of the ownership. Financial liabilities are derecognized when they are
extinguished, that is, when the obligation is discharged, cancelled or expired.
Available-for-sale, held–for-trading and financial assets designated at fair value through profit and loss are subsequently mea-
sured at fair value. Loans and receivables and held-to-maturity investments are subsequently measured at amortized cost.
Gains and losses arising from changes in the fair value of the ‘financial assets designated at fair value through profit or
loss’ are recognized in the income statement in ‘net income from financial instruments designated at fair value’. Gains and
losses arising from changes in the fair value of available for sale investments are recognized directly in equity, until the
financial assets are either sold or become impaired. When available-for-sale financial assets are sold, the cumulative gain
or loss previously recognized in equity is recognized in profit or loss.
Interest income is recognized on available for sale debt securities using the effective interest method, calculated over the
asset’s expected life. Premiums and discounts arising on the purchase are included in the calculation of effective interest
rates. Dividends are recognized in the income statement when the right to receive payment has been established.
The fair values of quoted investments in active markets are based on current bid prices. If there is no active market for a
financial asset, or no current demand prices available, the Bank measures fair value using valuation models. These include
the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation
models commonly used by market participants. If the Bank has not been able to estimate the fair value of equity instru-
ments classified as available for sale, the value is measured at cost less impairment.
Available for sale investments that would have met the definition of loans and receivables at initial recognition may be
reclassified out to loans and advances or financial assets held to maturity. In all cases, when the Bank has the intent and
ability to hold these financial assets in the foreseeable future or till maturity. The financial asset is reclassified at its fair
value on the date of reclassification, and any profits or losses that has been recognized previously in equity, is treated
based on the following:
• If the financial asset has a fixed maturity, gains or losses are amortized over the remaining life of the investment using the
effective interest rate method. In case of subsequent impairment of the financial asset, the previously recognized unreal-
ized gains or losses in equity are recognized directly in the profits and losses.
• In the case of financial asset which has infinite life, any previously recognized profit or loss in equity will remain until the
sale of the asset or its disposal, in the case of impairment of the value of the financial asset after the re-classification, any
gain or loss previously recognized in equity is recycled to the profits and losses.
• If the Bank adjusts its estimates of payments or receipts of a financial asset that in return adjusts the carrying amount of
the asset (or group of financial assets) to reflect the actual cash inflows, the carrying value is recalculated based on the
present value of estimated future cash flows at the effective yield of the financial instrument and the differences are rec-
ognized in profit and loss.
• In all cases, if the Bank re-classifies financial asset in accordance with the above criteria and increases its estimate of the
proceeds of future cash flow, this increase adjusts the effective interest rate of this asset only without affecting the invest-
ment book value.
2.6. offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a legally
enforceable right to offset the recognized amounts and there is an intention to be settled on a net basis.
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.
240
Annual Report 2018
Annual Report 2018
241
Financial StatementS: conSolidated
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 effec-
tive interest rate of a financial asset, are treated as an adjustment to the effective interest rate of that financial asset. Com-
mitment fees and related direct costs for loans and advances where draw down is probable are deferred and recognized as
an adjustment to the effective interest on the loan once drawn. Commitment fees in relation to facilities where draw down
is not probable are recognized at the maturity of the term of the commitment.
Fees are recognized on the debt instruments that are measured at fair value through profit and loss on initial recognition
and syndicated loan fees received by the Bank are recognized when the syndication has been completed and the Bank
does not hold any portion of it or holds a part at the same effective interest rate used for the other participants portions.
Commission and fee arising from negotiating, or participating in the negotiation of a transaction for a third party such as
the arrangement of the acquisition of shares or other securities or the purchase or sale of properties are recognized upon
completion of the underlying transaction in the income statement .
Other management advisory and service fees are recognized based on the applicable service contracts, usually on accrual
basis. Financial planning fees related to investment funds are recognized steadily over the period in which the service is
provided. The same principle is applied for wealth management; financial planning and custody services that are provided
on the long term are recognized on the accrual basis also.
Operating revenues in the holding company are:
• Commission income is resulting from purchasing and selling securities to a customer account upon receiving the transac-
tion confirmation from the Stock Exchange.
• Mutual funds and investment portfolios management which is calculated as a percentage of the net value of assets under
management according to the terms and conditions of agreement. These amounts are credited to the assets management
company’s revenue pool on a monthly accrual basis.
2.10. dividend income
Dividends are recognized in the income statement when the right to collect is established.
2.11. Sale and repurchase agreements
Securities may be lent or sold subject to a commitment to repurchase (Repos) are reclassified in the financial statements
and deducted from treasury bills balance. Securities borrowed or purchased subject to a commitment to resell them (Re-
verse Repos) are reclassified in the financial statements and added to treasury bills balance. The difference between sale
and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest method.
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.
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The criteria that the Bank uses to determine that there is objective evidence of an impairment loss include:
• Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of sales)
• Violation of the conditions of the loan agreement such as non-payment.
• Initiation of Bankruptcy proceedings.
• Deterioration of the borrower’s competitive position.
• The Bank for reasons of economic or legal financial difficulties of the borrower by granting concessions may not agree with
the Bank granted in normal circumstances.
• Deterioration in the value of collateral or deterioration of the creditworthiness of the borrower.
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.
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.
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, 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.
2.13. Real estate investments
The real estate investments represent lands and buildings owned by the Bank in order to obtain rental returns or capital
gains and therefore do not include real estate assets which the Bank exercised its work through or those that have owned
by the Bank as settlement of debts. The accounting treatment is the same used with property, plant and equipment.
2.14. Property, plant and equipment
Land and buildings comprise mainly branches and offices. All property, plant and equipment are stated at historical cost
less 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, at each balance sheet date. Deprecia-
ble 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 asset’s car-
rying 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.
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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’.
2.16.2. Being lessor
For finance lease, assets are recorded in the property, plant and equipment in the balance sheet and amortized over the
expected useful life of this asset in the same manner as similar assets. Lease income is recognized on the basis of rate of re-
turn on the lease in addition to an amount corresponding to the cost of depreciation for the period. The difference between
the recognized rental income and the total finance lease clients' accounts is transferred to the in the income statement
until the expiration of the lease to be reconciled with a net book value of the leased asset. Maintenance and insurance
expenses are charged to the income statement when incurred to the extent that they are not charged to the tenant.
In case there is objective evidence that the Bank will not be able to collect the of financial lease obligations, the finance
lease payments are reduced to the recoverable amount.
For assets leased under operating lease it appears in the balance sheet under property, plant and equipment, and depre-
ciated over the expected useful life of the asset in the same way as similar assets, and the lease income recorded less any
discounts given to the lessee on a straight-line method over the contract period.
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.
CIB owns a private insurance fund for financing end of service benefits, pensions and medical insurance for employees
under the supervision of the Ministry of Social Solidarity.
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:
Bank’s rating
1-Performing loans
2-Regular watching
3-Watch list
4-Non-Performing Loans
December 31, 2018
December 31, 2017
Loans and
advances (%)
Impairment
provision (%)
Loans and
advances (%)
Impairment
provision (%)
78.61
11.65
5.68
4.06
12.61
17.85
33.18
36.36
69.53
15.53
7.99
6.95
11.61
21.51
23.70
43.18
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
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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.
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 accept-
able risk
Watch list
Substandard
Doubtful
Bad debts
0%
1%
1%
2%
2%
3%
5%
20%
50%
100%
1
1
1
1
1
2
3
4
4
4
Performing loans
Performing loans
Performing loans
Performing loans
Performing loans
Regular watching
Watch list
Non performing
loans
Non performing
loans
Non performing
loans
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
Gross loans and advances to customers
Individual:
- Overdraft
- Credit cards
- Personal loans
- Mortgages
Corporate:
- Overdraft
- Direct loans
- Syndicated loans
- Other loans
Unamortized bills discount
Unearned interest
Derivative financial instruments
Financial investments:
-Debt instruments
- Other assets (Accrued revenues)
Total
Off balance sheet items exposed to credit risk
Financial guarantees
Customers acceptances
Letters of credit (import and export)
Letter of guarantee
Total
EGP Thousands
Dec. 31, 2018
50,013,324
Dec. 31, 2017
54,653,848
2,270,080
70,949
6,728,843
1,383
1,635,910
3,540,849
17,180,864
876,372
13,992,595
49,179,820
32,899,950
125,429
(65,718)
(16,038)
52,289
112,213,297
4,509,314
288,479,286
7,962,043
1,050,573
4,178,288
66,166,953
79,357,857
1,780,416
2,899,930
13,910,837
416,616
12,450,826
44,200,770
26,627,825
112,802
(12,476)
(2,965,997)
40,001
74,767,989
3,870,454
239,484,067
3,605,001
1,017,690
1,700,516
69,514,413
75,837,620
The above table represents the Bank's Maximum exposure to credit risk on December 31, 2018, 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, 41.40% of the total maximum exposure is derived from loans and advances to banks and customers while
investments in debt instruments represent 39.69%.
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:
• 90.26% of the loans and advances are concentrated in the top two grades of the internal credit risk rating system.
• 95.94% of loans and advances portfolio are considered to be neither past due nor impaired.
• Loans and advances assessed individualy are valued EGP 4,855,460 thousand.
• The Bank has implemented more prudent processes when granting loans and advances during the financial year ended
on December 31, 2018.
• 98.56% of the investments in debt Instruments are Egyptian sovereign instruments.
252
Annual Report 2018
Annual Report 2018
253
Financial StatementS: conSolidated
3.1.6. Loans and advances
Neither past due nor impaired
Past due but not impaired
Individually impaired
Gross
Less:
Impairment provision
Unamortized bills discount
Unearned interest
Net
Dec.31, 2018
Dec.31, 2017
EGP Thousands
Loans and
advances to
customers
110,351,697
4,224,632
4,855,460
119,431,789
13,040,828
65,718
16,038
106,309,205
Loans and
advances to
banks
70,949
-
-
70,949
3,246
-
-
67,703
Loans and
advances to
customers
89,395,036
5,884,880
7,120,106
102,400,022
10,994,446
12,476
2,965,997
88,427,103
Loans and
advances to
banks
1,383
-
-
1,383
70
-
-
1,313
Impairment provision losses for loans and advances reached EGP 13,044,074 thousand.
During the year, the Bank’s total loans and advances increased by 16.70%.
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.
254
Annual Report 2018
:
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Annual Report 2018
255
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 year:
Loans and advances to customer
Corporate
- Direct loans
Total
Dec.31, 2018
Dec.31, 2017
7,673,956
7,673,956
8,577,197
8,577,197
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, 2018
AAA
AA- to AA+
A- to A+
Lower than A-
Total
Treasury bills
and other gov.
notes
-
-
-
41,999,252
41,999,252
Trading
financial debt
instruments
-
-
-
2,270,080
2,270,080
Non-trading
financial debt
instruments
-
-
-
112,213,297
112,213,297
EGP Thousands
Total
-
-
-
156,482,629
156,482,629
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256
Annual Report 2018
Annual Report 2018
257
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.
Dec.31, 2018
Treasury bills and other governmen-
tal 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
Total
Cairo
50,013,324
2,270,080
70,949
(3,246)
948,571
2,806,734
10,820,446
795,852
11,941,245
32,889,668
30,010,681
80,000
(65,718)
(9,707,342)
(16,038)
52,289
112,213,297
245,120,792
Alex, Delta and
Sinai
Upper Egypt
Total
EGP Thousands
-
-
-
-
558,087
632,771
5,401,963
72,124
1,415,913
12,894,439
2,687,040
45,429
-
(3,024,196)
-
-
-
20,683,570
-
-
-
-
129,252
101,344
958,455
8,396
635,437
3,395,713
202,229
-
-
(309,290)
-
-
50,013,324
2,270,080
70,949
(3,246)
1,635,910
3,540,849
17,180,864
876,372
13,992,595
49,179,820
32,899,950
125,429
(65,718)
(13,040,828)
(16,038)
52,289
-
5,121,536
112,213,297
270,925,898
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258
Annual Report 2018
Annual Report 2018
259
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 Lim-
its, for the trading book, which have been approved by the board, and are monitored and reported on a daily basis to the
Senior Management.
In addition, monthly limits compliance is reported to the ALCO.
The Bank has developed the internal model to calculate VaR, however, it is not yet approved by the Central Bank as the
regulator is currently applying and requiring banks to calculate the Market Risk Capital Requirements according to Basel
II Standardized Approach.
3.2.1.2. Stress tests
Stress tests provide an indication of the potential size of losses that could arise under extreme market conditions. There-
fore, the bank computes on a daily basis trading Stressed VaR, combined with the trading VaR, to capture the abnormal
movements in financial markets and to give more comprehensive picture of risk. The results of the stress tests are re-
viewed by the ALCO on a monthly basis and the board risk committee on a quarterly basis.
3.2.2. Value at risk (VaR) Summary
Total VaR by risk type
Foreign exchange risk
Interest rate risk
- For non trading purposes
- For trading purposes
Portfolio managed by others risk
Investment fund
Total VaR
EGP Thousands
Dec.31, 2018
Dec.31, 2017
Medium
231
453,569
429,195
24,374
7,030
119
High
1,482
645,193
586,852
58,341
11,507
267
Low
Medium
20
238,077
232,882
5,195
1,969
55
13,647
588,938
553,426
35,512
7,280
370
High
82,695
815,249
739,977
75,272
10,454
692
Low
275
363,366
351,674
11,692
4,854
215
455,104
647,983
238,493
591,508
826,941
364,408
Trading portfolio VaR by risk type
Foreign exchange risk
Interest rate risk
- For trading purposes
Funds managed by others risk
Investment fund
Total VaR
Dec.31, 2018
Dec.31, 2017
Medium
231
24,374
24,374
7,030
119
26,165
High
1,482
58,341
58,341
11,507
267
60,912
Low
20
5,195
5,195
1,969
55
5,611
Medium
13,647
35,512
35,512
7,280
370
46,039
High
82,695
75,272
75,272
10,454
692
113,250
Low
275
11,692
11,692
4,854
215
13,804
Non trading portfolio VaR by risk type
Interest rate risk
- For non trading purposes
Total VaR
Dec.31, 2018
Dec.31, 2017
Medium
High
Low
Medium
High
Low
429,195
429,195
586,852
586,852
232,882
232,882
553,426
553,426
739,977
739,977
351,674
351,674
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.
260
Annual Report 2018
Annual Report 2018
261
Financial StatementS: conSolidated
3.2.3. Foreign exchange risk
The Bank's financial position and cash flows are exposed to fluctuations in foreign currency exchange rates. The Board
sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are
monitored daily. The table below summarizes the Bank’s exposure to foreign exchange rate risk and financial instruments
at carrying amounts, categorized by currency.
Dec.31, 2018
EGP
USD
EUR
GBP
Other
Total
Equivalent EGP Thousands
Financial assets
Cash and balances with central
bank
Due from banks
Treasury bills and other govern-
mental notes
Trading financial assets
Gross loans and advances to
banks
Gross loans and advances to
customers
Derivative financial instruments
Financial investments
- Available for sale
- Held to maturity
Investments in associates
Total financial assets
Financial liabilities
Due to banks
Due to customers
Derivative financial instruments
Other loans
Total financial liabilities
Net on-balance sheet financial
position
15,822,884
2,511,902
657,323
80,582
986,283
20,058,974
15,730,309
23,594,720
6,743,789
366,545
83,529
46,518,892
31,491,429
12,272,607
1,333,103
1,802,626
935,079
-
70,949
-
-
-
-
-
63,518,898
52,952,122
2,938,691
22,078
39,355
12,934
-
26,664,326
73,630,764
92,458
12,367,155
-
14,100
186,409
-
-
-
-
-
-
-
-
-
-
-
-
-
-
45,097,139
2,737,705
70,949
119,431,789
52,289
39,217,890
73,630,764
106,558
228,793,049
104,731,568
11,859,315
469,205
1,069,812
346,922,949
5,958,780
182,983,217
85,912
138,809
1,099,145
89,794,399
46,946
3,582,720
92,882
11,046,226
-
-
12,773
1,005,452
-
-
96,239
467,575
-
-
7,259,819
285,296,869
132,858
3,721,529
189,166,718
94,523,210
11,139,108
1,018,225
563,814
296,411,075
39,626,331
10,208,358
720,207
(549,020)
505,998
50,511,874
Interest rate risk
3.2.4.
The Bank takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its fair
value and cash flow risks. Interest margins may increase as a result of such changes but profit may decrease in the event
that unexpected movements arise.The Board sets limits on the gaps of interest rate repricing that may be undertaken,
which is monitored by the bank's Risk Management Department.
The table below summarizes the Bank’s exposure to interest rate risks. It includes the Bank’s financial instruments at car-
rying amounts, categorized by the earlier of repricing or contractual maturity dates.
Dec.31, 2018
Up to1
Month 1-3 Months
3-12
Months
1-5 years
Over 5
years
Non-
Interest
Bearing
Total
-
3,969
38,375
(3,711,230)
33,676,642
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 ad-
vances to customers
Derivatives financial
instruments (includ-
ing IRS notional
amount)
Financial
investments
- Available for sale
- Held to maturity
Investments in
associates
Total financial assets 118,167,504
132,500
9,361,480
77,155,228
1,510,540
-
-
-
12,438,963
401,563
5,425,047
43,383,322
-
-
-
-
-
-
20,058,974
20,058,974
1,724
46,518,892
-
45,097,139
-
-
1,643,653
626,428
429,249
2,737,705
5,483
17,829
42,233
1,435
-
70,949
13,993,151
14,231,235
10,708,275
3,343,900
-
119,431,789
9,650
399,197
5,899,343
-
-
7,818,730
73,030
2,055,231
457,834
26,632,213
19,793,116
27,257,651
18,158,565
8,324,189
602,845
-
39,217,890
73,630,764
-
-
-
-
106,558
106,558
34,000,555
85,523,193
65,344,271
30,454,517
21,199,350
354,689,390
Financial liabilities
Due to banks
Due to customers
Derivatives financial
instruments
(including IRS
notional amount)
Other loans
Total financial
liabilities
Total interest re-
pricing gap
7,002,464
148,862,473
-
22,012,700
-
24,470,575
-
40,675,873
-
533,317
257,355
48,741,931
7,259,819
285,296,869
2,148,569
5,011,865
33,028
705,837
-
33,380
10,000
87,286
443,188
3,147,675
-
-
7,899,299
3,721,529
158,046,886
27,034,565
24,590,889
41,824,898
3,680,992
48,999,286
304,177,516
(39,879,382)
6,965,990
60,932,304
23,519,373
26,773,525 (27,799,936)
50,511,874
* After adding Reverse repos and deducting Repos.
262
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263
Financial StatementS: conSolidated
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, 2018
Financial liabilities
Due to banks
Due to customers
Other loans
Total liabilities (contractual and
non contractual maturity dates)
Total financial assets (contractual
and non contractual maturity dates)
Dec.31, 2017
Financial liabilities
Due to banks
Due to customers
Other 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
yeas
Total
EGP Thousands
6,632,843
29,932,979
33,380
626,976
23,750,618
10,000
-
72,467,784
87,286
-
145,207,840
443,188
-
13,937,648
3,147,675
7,259,819
285,296,869
3,721,529
36,599,202
24,387,594
72,555,070
145,651,028
17,085,323
296,278,217
41,324,915
40,718,467
74,369,489
141,260,576
49,075,657
346,749,104
Up to 1
month
One to
three
months
Three
months to
one year
One year to
five years
Over five
years
Total
1,877,918
31,348,143
36,393
-
21,728,194
6,743
-
71,335,328
82,631
-
109,570,301
3,429
-
16,741,086
3,545,540
1,877,918
250,723,052
3,674,736
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
Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, due from CBE and
due from banks, treasury bills, other government notes , loans and advances to banks and customers.
In the normal course of business, a proportion of customer loans contractually repayable within one year will be extend-
ed. In addition, debt instrument and treasury bills and other governmental notes have been pledged to secure liabilities.
The Bank would also be able to meet unexpected net cash outflows by selling securities and accessing additional funding
sources such as asset-backed markets.
3.3.4. Derivative cash flows
The Bank’s derivatives include:
Foreign exchange derivatives: exchange traded options and over-the-counter (OTC) ,exchange traded forwards currency
options that will be settled on a gross basis Interest rate derivatives: interest rate swaps, forward rate agreements, OTC
and exchange traded interest rate options, other interest rate contracts and exchange traded futures .
The table below analyses the Bank’s derivative undiscounted financial liabilities into maturity groupings based on the re-
maining period of the balance sheet to the contractual maturity date will be settled on a net basis. The amounts disclosed
in the table are the contractual undiscounted cash flows:
Up to 1 month
One to three
months
Three months
to one year
One year to
five years
Total
EGP Thousands
Dec.31, 2018
Liabilities
Derivatives
financial
instruments
- Foreign
exchange
derivatives
- Interest rate
derivatives
Total
Off balance sheet items
Dec.31, 2018
Letters of credit, guarantees and
other commitments
Total
Dec.31, 2018
Credit facilities commitments
Total
34,388
197
34,585
22,205
6
22,211
29,319
3,709
33,028
-
85,912
43,034
43,034
46,946
132,858
EGP Thousands
Up to 1 year
1-5 years
Over 5 years
Total
51,260,372
14,088,753
6,046,689
71,395,814
51,260,372
14,088,753
6,046,689
71,395,814
EGP Thousands
Up to 1 year
1,399,900
1,399,900
1-5 years
7,773,882
7,773,882
Total
9,173,782
9,173,782
264
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265
73,630,764
239,652,394
45,167,722
192,888,893
41,237,872
203,620,421
45,595,034
186,777,014
Central Bank of Egypt requires the following:
Financial StatementS: conSolidated
3.4. Fair value of financial assets and liabilities
3.4.1. Financial instruments not measured at fair value
The table below summarizes the book value and fair value of those financial assets and liabilities not presented on the
Bank’s balance sheet at their fair value.
Financial assets
Due from banks
Gross loans and advances to banks
Gross loans and advances to customers
Financial investments
Held to Maturity
Total financial assets
Financial liabilities
Due to banks
Due to customers
Other loans
Total financial liabilities
Book value
Fair value
Dec.31, 2018
Dec.31, 2017
Dec.31, 2018
Dec.31, 2017
46,518,892
70,949
119,431,789
45,319,766
1,383
102,400,022
46,859,224
70,949
115,452,376
44,782,984
1,383
96,397,613
7,259,819
285,296,869
3,721,529
296,278,217
1,877,918
250,723,052
3,674,736
256,275,706
7,069,442
280,685,969
3,721,529
291,476,940
1,813,466
245,616,661
3,674,736
251,104,863
Due from banks
The fair value of floating rate placements and overnight deposits is their carrying amount. The estimated fair value of
floating interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for
debts with similar credit risk and similar maturity date.
Loans and advances to banks
Loans and advances to banks are represented in loans that do not consider bank placing. The expected fair value of the
loans and advances represents the discounted value of future cash flows expected to be collected. Cash flows are dis-
counted using the current market rate to determine fair value.
Loans and advances to customers
Loans and advances are net of provisions for impairment. The estimated fair value of loans and advances represents the
discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current
market rates to determine fair value.
Financial Investments
Investment securities include only interest-bearing assets, held to maturity assets, and available for sale assets that are
measured at fair value.
Fair value for held-to-maturity assets is based on market prices or broker/dealer price quotations. Where this information
is not available, fair value is estimated using quoted market prices for securities with similar credit, maturity and yield
characteristics.
Due to other banks and customers
The estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, is the amount
repayable on demand. The estimated fair value of fixed interest-bearing deposits and other borrowings not quoted in an
active market is based on discounted cash flows using interest rates for new debts with similar maturity date.
3.5 capital management
For capital management purposes, the Bank’s capital includes total equity as reported in the balance sheet plus some other
elements that are managed as capital. The Bank manages its capital to ensure that the following objectives are achieved:
• Complying with the legally imposed capital requirements in Egypt.
• Protecting the Bank’s ability to continue as a going concern and enabling the generation of yield for shareholders and other
parties dealing with the bank.
Capital adequacy and the use of regulatory capital are monitored on a daily basis by the Bank’s management, employing
techniques based on the guidelines developed by the Basel Committee as implemented by the banking supervision unit
in the Central Bank of Egypt.
The required data is submitted to the Central Bank of Egypt on a monthly basis.
• Maintaining EGP 500 million as a minimum requirement for the issued and paid-in capital.
• Maintaining a minimum level of capital adequacy ratio of 11.875%, 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.
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 400% 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.
266
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267
Financial StatementS: conSolidated
The tables below summarize the compositions of teir 1, teir 2 , the capital adequacy ratio and leverage ratio .
1- The capital adequacy ratio
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.
Tier 1 capital
Share capital (net of the treasury shares)
Reserves
IFRS 9 Reserve
Retained Earnings (Losses)
Total deductions from tier 1 capital common equity
Net profit for the year
Total qualifying tier 1 capital
Tier 2 capital
45% of special reserve
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
Total credit risk
Total market risk
Total operational risk
Total
*Capital adequacy ratio (%)
Dec.31, 2018
EGP Thousands
Dec.31, 2017
Restated**
11,668,326
14,829,948
1,411,549
55,089
(4,754,596)
6,881,450
30,091,766
49
3,582,720
1,879,734
5,462,503
11,618,011
10,543,783
1,411,549
89,873
(2,450,399)
3,960,829
25,173,646
49
3,545,540
1,679,656
5,225,245
35,554,269
30,398,891
156,952,618
5,959,133
23,292,505
186,204,256
19.09%
141,154,879
9,239,998
18,222,831
168,617,708
18.03%
* Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 24 December 2012.
** After 2017 profit distribution.
2- Leverage ratio
Total qualifying tier 1 capital
On-balance sheet items & derivatives
Off-balance sheet items
Total exposures
*Percentage
Dec.31, 2018
30,091,766
346,163,131
45,407,765
391,570,896
7.68%
EGP Thousands
Dec.31, 2017
Restated**
25,173,646
300,593,997
44,965,272
345,559,269
7.28%
* Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 14 July 2015.
** After 2017 profit distribution.
For December 2018 NSFR ratio record 209.70% (LCY 243.36% and FCY 165.61%), and LCR ratio record 601.53% (LCY
667.84% and FCY 338.82%).
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%).
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 quarterly basis. In determining whether an impairment
loss should be recorded in the income statement, the Bank makes judgments as to whether there is any observable data
indicating 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 counter-
party), 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.
268
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269
Financial StatementS: conSolidated
5. Segment analysis
5.1. By business segment
The Bank is divided into four main business segments on a worldwide basis:
• Corporate banking – incorporating direct debit facilities, current accounts, deposits, overdrafts, loan and other credit
facilities, foreign currency and derivative products
• Investment banking – incorporating financial instruments Trading, structured financing, Corporate leasing,and merger
and acquisitions advice.
• Retail banking – incorporating private banking services, private customer current accounts, savings, deposits, investment
savings products, custody, credit and debit cards, consumer loans and mortgages;
• Others –Including other banking business, such as Assets Management.
Transactions between the business segments are on normal commercial terms and conditions.
Dec.31, 2018
Revenue according to business
segment
Expenses according to business
segment
Profit before tax
Tax
Profit for the year
Total assets
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
EGP Thousands
Asset
Liability
Mangement
Total
9,025,518
2,452,934
3,870,401
6,163,506
639,484
22,151,843
(5,516,282)
(739,340)
(427,332)
(2,373,798)
(16,258)
(9,073,010)
3,509,236
1,713,594
3,443,069
3,789,708
623,226
13,078,833
(933,068)
(459,085)
(922,426)
(1,015,293)
(166,967)
(3,496,839)
2,576,168
1,254,509
2,520,643
2,774,415
456,259
9,581,994
102,781,541
2,159,095
165,584,686
22,693,303
49,242,585
342,461,210
Corporate
banking
SME's
Investment
banking
Retail
banking
Asset
Liability
Mangement
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
1,645,662
2,850,397
3,061,252
632,420
10,296,206
(576,762)
(442,854)
(767,053)
(823,795)
(170,187)
(2,780,651)
1,529,713
1,202,808
2,083,344
2,237,457
462,233
7,515,555
82,149,279
2,352,091
137,645,556
18,444,909
54,190,257
294,782,092
5.2. By geographical segment
Dec.31, 2018
Revenue according to geographical
segment
Expenses according to geographical
segment
Profit before tax
Tax
Profit for the year
Total assets
Dec.31, 2017
Revenue according to geographical
segment
Expenses according to geographical
segment
Profit before tax
Tax
Profit for the year
Total assets
6. Net interest income
Cairo
Alex, Delta &
Sinai
Upper Egypt
Total
EGP Thousands
17,792,484
3,424,556
934,803
22,151,843
(7,545,066)
(1,304,228)
(223,716)
(9,073,010)
10,247,418
(2,738,280)
7,509,138
2,120,328
(568,053)
1,552,275
316,673,321
19,340,837
711,087
(190,506)
520,581
6,447,052
13,078,833
(3,496,839)
9,581,994
342,461,210
Cairo
Alex, Delta &
Sinai
Upper Egypt
Total
13,445,181
2,499,912
491,190
16,436,283
(5,306,193)
8,138,988
(2,200,134)
5,938,854
(670,176)
1,829,736
(492,390)
1,337,346
(163,708)
(6,140,077)
327,482
(88,127)
239,355
10,296,206
(2,780,651)
7,515,555
265,665,575
22,598,945
6,517,572
294,782,092
Interest and similar income
- Banks
- Clients
Total
Treasury bills and bonds
Reverse repos
Financial investments in held to maturity and available for sale debt instruments
Total
Interest and similar expense
- Banks
- Clients
Total
Financial instruments purchased with a commitment to re-sale (Repos)
Other loans
Total
Net interest income
EGP Thousands
Dec.31, 2018
Dec.31, 2017
3,338,266
15,274,649
18,612,915
18,582,089
2,519
206,186
37,403,709
(840,233)
(18,001,197)
(18,841,430)
(112,366)
(306,394)
3,532,274
10,921,054
14,453,328
14,039,447
-
178,391
28,671,166
(463,409)
(15,686,959)
(16,150,368)
(2,037)
(14,750)
(19,260,190)
(16,167,155)
18,143,519
12,504,011
270
Annual Report 2018
Annual Report 2018
271
Financial StatementS: conSolidated
7. Net fee and commission income
11. Other operating (expenses) 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
10. Administrative expenses
Staff costs
Wages and salaries
Social insurance
Other benefits
Other administrative expenses *
Total
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,456,930
140,247
1,805,439
3,402,616
(991,957)
(991,957)
2,410,659
1,362,660
117,268
1,314,283
2,794,211
(796,107)
(796,107)
1,998,104
EGP Thousands
Dec.31, 2018
Dec.31, 2017
9,951
16,007
25,958
11,474
23,039
34,513
EGP Thousands
Dec.31, 2018
Dec.31, 2017
668,071
(38,904)
(20,865)
8,179
472,595
764,732
(17,118)
(23,732)
(21,230)
589,563
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 and banks
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
10% Withholding tax
Income tax / Deferred tax
Effective tax rate
1,089,076
1,292,215
14. Earning per share
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(2,237,595)
(78,841)
(61,976)
(1,845,547)
(4,223,959)
(1,620,326)
(65,033)
(51,682)
(1,381,798)
(3,118,839)
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.
EGP Thousands
Dec.31, 2018
Dec.31, 2017
59,863
1,045
(400,596)
(1,249,987)
(1,589,675)
(61,065)
607
(114,725)
(827,387)
(1,002,570)
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(3,076,023)
(3,076,023)
(1,742,281)
(1,742,281)
EGP Thousands
Dec.31, 2018
Dec.31, 2017
13,078,833
22.50%
2,942,737
866,421
(314,360)
2,041
3,496,839
26.74%
10,320,256
22.50%
2,322,058
628,951
(173,358)
3,000
2,780,651
26.94%
EGP Thousands
Dec.31, 2018
Dec.31, 2017
9,553,868
(143,308)
(955,387)
8,455,173
1,163,898
7.26
1,171,642
7.22
7,549,043
(113,236)
(754,904)
6,680,903
1,159,156
5.76
1,177,722
5.67
Annual Report 2018
273
* The expenses related to the activity for which the bank obtains a commodity or service and all taxes and charges incurred by the bank -
except for income tax - donations, depreciation and impairment of non financial assets other than subsidiaries and associates
272
Annual Report 2018
Financial StatementS: conSolidated
15. Cash and balances with central bank
18. Trading financial assets
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
Floating 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
EGP Thousands
Dec.31, 2018
Dec.31, 2017
6,532,211
5,784,303
13,526,763
20,058,974
20,058,974
8,878,986
14,663,289
14,663,289
EGP Thousands
Dec.31, 2018
Dec.31, 2017
4,168,973
42,349,919
46,518,892
25,397,558
4,109,576
17,011,758
46,518,892
1,724
10,203,376
36,313,792
46,518,892
46,518,892
2,679,189
42,640,577
45,319,766
15,863,399
3,894,775
25,561,592
45,319,766
-
9,940,362
35,379,404
45,319,766
45,319,766
EGP Thousands
Dec.31, 2018
Dec.31, 2017
-
3,669,700
49,441,511
(3,097,887)
50,013,324
(8,014,072)
(8,014,072)
41,999,252
-
1,289,425
57,602,997
(4,238,574)
54,653,848
(175,646)
(175,646)
54,478,202
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
Impairment provision
Total
Current balances
Total
Analysis for impairment provision of loans and advances to banks
Beginning balance
Release during the year
Exchange revaluation difference
Ending balance
EGP Thousands
Dec.31, 2018
Dec.31, 2017
2,270,080
2,270,080
6,728,843
6,728,843
38,376
38,376
99,587
99,587
429,249
2,737,705
466,767
7,295,197
EGP Thousands
Dec.31, 2018
Dec.31, 2017
70,949
(3,246)
67,703
67,703
67,703
1,383
(70)
1,313
1,313
1,313
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(70)
(3,140)
(36)
(3,246)
(1,800)
1,697
33
(70)
274
Annual Report 2018
Annual Report 2018
275
Financial StatementS: conSolidated
20. Loans and advances to customers, net
Individual
- Overdraft
- Credit cards
- Personal loans
- Real estate 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
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,635,910
3,540,849
17,180,864
876,372
23,233,995
13,992,595
49,179,820
32,899,950
125,429
96,197,794
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
119,431,789
102,400,022
(65,718)
(13,040,828)
(16,038)
106,309,205
44,549,290
61,759,915
106,309,205
(12,476)
(10,994,446)
(2,965,997)
88,427,103
38,960,491
49,466,612
88,427,103
* An amount of EGP 1,818mn has been charged to impairment provision against unearned interest recognized in income.
Of this amount, EGP 1,057mn has been charged in Q3 2018, which is the second and final re-engineering for such accounts.
276
Annual Report 2018
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Annual Report 2018
277
Financial StatementS: conSolidated
21. Derivative financial instruments
21.1 derivatives
The Bank uses the following financial derivatives for non hedging purposes.
Forward contracts represent commitments to buy foreign and local currencies including unexecuted spot transactions.
Future contracts for foreign currencies and/or interest rates represent contractual commitments to receive or pay net on
the basis of changes in foreign exchange rates or interest rates, and/or to buy/sell foreign currencies or financial instru-
ments in a future date with a fixed contractual price under active financial market.
Credit risk is considered low, and future interest rate contract represents future exchange rate contracts negotiated for case
by case, These contracts require financial settlements of any differences in contractual interest rates and prevailing market
interest rates on future interest rates on future dates based on contractual amount (nominal value) pre agreed upon.
Foreign exchange and/or interest rate swap represents commitments to exchange cash flows, resulting from these con-
tracts are exchange of currencies or interest (fixed rate versus variable rate for example) or both (meaning foreign ex-
change and interest rate contracts).
Contractual amounts are not exchanged except for some foreign exchange contracts.
Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to fulfill
their liabilities. This risk is monitored continuously through comparisons of fair value and contractual amount, and in order
to control the outstanding credit risk, the Bank evaluates other parties using the same methods as in borrowing activities.
Options contracts in foreign currencies and/or interest rates represent contractual agreements for the buyer (issuer) to
the seller (holders) as a right not an obligation whether to buy (buy option) or sell (sell option) at a certain day or within
certain year for a predetermined amount in foreign currency or interest rate. Options contracts are either traded in the
market or negotiated between The Bank and one of its clients (Off balance sheet). The Bank is exposed to credit risk for
purchased options contracts only and in the line of its book cost which represent its fair value.
The contractual value for some derivatives options is considered a base to analyze the realized financial instruments on
the balance sheet, but it doesn’t provide an indicator for the projected cash flows of the fair value for current instruments,
and those amounts don’t reflects credit risk or interest rate risk.
Derivatives in the Bank's benefit that are classified as (assets) are conversely considered (liabilities) as a result of the
changes in foreign exchange prices or interest rates related to these derivatives. Contractual / expected total amounts of
financial derivatives can fluctuate from time to time as well as the range through which the financial derivatives can be
in benefit for the Bank or conversely against its benefit and the total fair value of the financial derivatives in assets and
liabilities. Hereunder are the fair values of the booked financial derivatives:
21.1.1. For trading derivatives
Foreign currencies derivatives
- Forward foreign exchange contracts
- Currency swap
Total (1)
21.1.2. Fair value hedge
Dec.31, 2018
Dec.31, 2017
EGP Thousands
Notional
amount
5,360,272
3,628,415
Assets
Liabilities
Notional
amount
Assets
Liabilities
21,112
18,243
39,355
73,105
12,807
85,912
6,820,350
1,640,985
36,597
3,117
49,687
5,860
39,714
55,547
Interest rate derivatives
- Governmental debt instruments hedging
- Customers deposits hedging
Total (2)
Total financial derivatives (1+2)
EGP Thousands
Dec.31, 2018
Dec.31, 2017
Notional
amount
662,803
7,103,638
Notional
amount
655,925
11,506,784
Assets Liabilities
-
12,934
12,934
9,164
37,782
46,946
52,289
132,858
Assets Liabilities
-
287
287
25,996
115,441
141,437
40,001
196,984
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 9,164 thousand at December 31, 2018 against EGP 25,996 thousand at the December 31, 2017, Resulting in gains
form hedging instruments at December 31, 2018 EGP 16,832 thousand against EGP 19,633 thousand at the December 31,
2017. Losses arose from the hedged items at December 31, 2018 reached EGP 34,193 thousand against losses of EGP 44,924
thousand at December 31, 2017.
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 24,848
thousand at the end of December 31, 2018 against EGP 115,154 thousand at December 31, 2017, resulting in gains from
hedging instruments at December 31, 2018 of EGP 90,306 thousand against losses of EGP 76,302 thousand at December
31, 2017. Losses arose from the hedged items at December 31, 2018 reached EGP 94,856 thousand against gains EGP 81,488
thousand at December 31 , 2017.
278
Annual Report 2018
Annual Report 2018
279
Financial StatementS: conSolidated
22. Financial investments
21.1. Profits (losses) on financial investments
Profit (Loss) from selling available for sale financial instruments
Released (Impairment) charges of available for sale equity instruments
Released (Impairment) charges of non current assets held for sale
Total
23. Investments in associates
EGP Thousands
Dec.31, 2018
Dec.31, 2017
441,628
(39,561)
-
402,067
(99,047)
254,588
9,570
165,111
Company's
country
Company's
assets
Company's
liabilities
(without
equity)
Company's
revenues
Company's
net profit
Investment
book value
Stake %
EGP Thousands
Egypt
-
-
-
-
14,100
23.50
Egypt
860,057
640,554
926,624
72,954
92,458
32.50
860,057
640,554
926,624
72,954
106,558
Company's
country
Company's
assets
Company's
liabilities
(without
equity)
Company's
revenues
Company's
net profit
Investment
book value
Stake %
EGP Thousands
Egypt
512,388
367,470
505,461
52,695
65,039
32.50
512,388
367,470
505,461
52,695
65,039
Dec.31, 2018
Associates
- Fawry plus
- International Co. for
Security and Services
(Falcon)
Total
Dec.31, 2017
Associates
- International Co. for
Security and Services
(Falcon)
Total
Available for sale
- Listed debt instruments with fair value
- Listed equity instruments with fair value
- Unlisted equity instruments by amortized cost
Total
Held to maturity
- Listed debt instruments
- Unlisted instruments
Total
EGP Thousands
Dec.31, 2018
Dec.31, 2017
38,615,045
458,094
144,751
39,217,890
29,632,780
83,346
758,655
30,474,781
73,598,251
32,513
73,630,764
45,135,209
32,513
45,167,722
Total financial investment
112,848,654
75,642,503
- Actively traded instruments
- Not actively traded instruments
Total
Fixed interest debt instruments
Floating interest debt instruments
Total
Beginning balance
Addition
Deduction
Exchange revaluation differences for foreign financial as-
sets
Profit (losses) from fair value difference
Available for sale impairment charges
Ending Balance as of Dec.31, 2017
Beginning balance
Addition
Deduction
Exchange revaluation differences for foreign financial
assets
Profit (losses) from fair value difference
Released (Impairment) charges of available for sale
Ending Balance as of Dec.31, 2018
Available for
sale financial
investments
5,447,291
25,868,230
(1,361,027)
(100,078)
512,016
108,349
30,474,781
30,474,781
12,670,761
(1,872,988)
102,991
(2,118,094)
(39,561)
39,217,890
108,496,980
4,351,674
112,848,654
110,985,264
1,228,033
112,213,297
Held to
maturity
financial
investments
53,924,936
4,597,254
(13,354,468)
73,721,199
1,921,304
75,642,503
72,612,620
2,155,369
74,767,989
EGP Thousands
Total
59,372,227
30,465,484
(14,715,495)
-
(100,078)
-
-
45,167,722
45,167,722
33,995,313
(5,532,271)
-
-
-
512,016
108,349
75,642,503
75,642,503
46,666,074
(7,405,259)
102,991
(2,118,094)
(39,561)
73,630,764
112,848,654
280
Annual Report 2018
Annual Report 2018
281
Financial StatementS: conSolidated
24. Other assets
Accrued revenues
Prepaid expenses
Advances to purchase of fixed assets
Accounts receivable and other assets (after deducting the provision)*
Assets acquired as settlement of debts
Insurance
Total
Dec.31, 2018
4,509,314
186,797
768,733
3,790,709
276,520
30,945
9,563,018
EGP Thousands
Dec.31, 2017
3,870,454
230,296
522,211
2,193,590
45,083
24,973
6,886,607
* A provision with amount EGP 317 million has been created against pending installments.
This item includes other assets that are not classified under specific items of balance sheet assets, such as: accrued income
and prepaid expenses, amounts paid in advance relating to taxes on bills and bonds, custodies, debit accounts under
settlement and any balance that has no place in another asset category.
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282
Annual Report 2018
Annual Report 2018
283
Financial StatementS: conSolidated
26. Due to banks
28. Other loans
Current accounts
Deposits
Total
Central banks
Local banks
Foreign banks
Total
Non-interest bearing balances
Floating bearing interest 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
Floating interest bearing balances
Fixed interest bearing balances
Total
Current balances
Non-current balances
Total
EGP Thousands
Dec.31, 2018
Dec.31, 2017
503,539
6,756,280
7,259,819
190,801
6,009,778
1,059,240
7,259,819
257,355
89,568
6,912,896
7,259,819
7,259,819
1,067,374
810,544
1,877,918
128,527
714,294
1,035,097
1,877,918
740,158
23,169
1,114,591
1,877,918
1,877,918
Interest rate
%
Maturity date
Maturing
through next
year
EGP Thousands
Balance on
Balance on
Dec.31, 2018 Dec.31, 2017
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
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maturity date
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or 9% which is
more
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+ 6.2%
3 months libor
+ 6.2%
3-5 years*
117,286
125,429
87,314
4 January
2020*
10 years
10 years
13,380
13,380
41,882
-
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1,791,360
1,772,770
1,791,360
1,772,770
130,666
3,721,529
3,674,736
Interest rates on variable-interest subordinated loans are determined in advance every 3 months/every quarter. Subordi-
nated loans are not repaid before their repayment dates.
EGP Thousands
*
Represents the date of loan repayment to the lending agent.
Dec.31, 2018
Dec.31, 2017
92,422,114
43,561,846
81,059,934
62,812,279
5,440,696
285,296,869
116,842,160
168,454,709
285,296,869
48,741,931
23,738,113
212,816,825
285,296,869
202,126,154
83,170,715
285,296,869
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
21,022,474
186,471,493
250,723,052
178,786,275
71,936,777
250,723,052
29. Other liabilities
Accrued interest payable
Accrued expenses
Accounts payable
Other credit balances
Total
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,347,397
733,218
4,101,884
319,054
6,501,553
1,516,471
507,543
3,277,350
175,167
5,476,531
284
Annual Report 2018
Annual Report 2018
285
Financial StatementS: conSolidated
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31. Equity
31.1. capital
"Issued and Paid in Capital reached EGP 11,668,326 thousand at balance sheet date to be divided on 1,166,833 thousand
shares with EGP 10 par value for each share and registered in the commercial register dated 26th August 2018.
• Increase issued and Paid in Capital by amount EGP 50,315 thousand on August 02,2018 to reach EGP 11,668,326 thousand
(against EGP 11,618,011 thousand in 2017) according to Board of Directors decision on January 31, 2018 by issuance of ninth
tranche for E.S.O.P program.
• 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.
• The Extraordinary General Assembly approved in the meeting of March 21,2016 continue 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 10% of issued and paid- in capital at par value ,through 10 years starting year 2016 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.
286
Annual Report 2018
Annual Report 2018
287
Financial StatementS: conSolidated
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
Other investments impairment
Reserve for employee stock ownership plan (ESOP)
Interest rate swaps revaluation
Trading investment revaluation
Forward foreign exchange deals revaluation
Balance
Movement of Deferred Tax Assets and Liabilities:
Beginning Balance
Additions / disposals
Ending Balance
33. Share-based payments
Assets
(Liabilities)
EGP Thousands
Assets
(Liabilities)
Dec.31, 2018
Dec.31, 2017
(49,750)
53,552
53,657
65,788
166,122
4,695
7,394
6,912
308,370
(31,409)
31,038
36,712
56,698
110,100
5,340
(37,478)
8,629
179,630
Assets
(Liabilities)
EGP Thousands
Assets
(Liabilities)
Dec.31, 2018
Dec.31, 2017
179,630
128,740
308,370
181,308
(1,678)
179,630
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
288
Annual Report 2018
Dec.31, 2018
No. of shares in
thousand
Dec.31, 2017
No. of shares in
thousand
21,280
8,338
(828)
(5,032)
23,758
22,351
7,601
(737)
(7,935)
21,280
Details of the outstanding tranches are as follows:
Maturity date
Exercise price
Fair value
EGP
EGP
2019
2020
2021
Total
10.00
10.00
10.00
28.43
65.55
68.13
No. of shares in
thousand
8,433
7,175
8,150
23,758
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%
12th tranche
11th tranche
10
77.35
3
15.54%
1.29%
26%
10
73.08
3
16.77%
0.68%
30%
Volatility is calculated based on the daily standard deviation of returns for the last five years.
34. Reserves and retained earnings
Legal reserve
General reserve
Capital reserve
Retained earnings
Special reserve
Reserve for A.F.S investments revaluation difference
Banking risks reserve
IFRS 9 risk reserve
Ending balance
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,710,293
12,776,215
12,421
9,637,083
20,645
(3,750,779)
4,323
1,411,549
21,821,750
1,332,807
9,000,023
11,815
6,193,879
20,645
(1,642,958)
3,634
1,411,549
16,331,394
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, taken into consideration that IFRS 9 will be effective as of January 1, 2019.
34.1. Banking risks reserve
Beginning balance
Transferred to bank risk reserve
Ending balance
EGP Thousands
Dec.31, 2018
Dec.31, 2017
3,634
689
4,323
3,019
615
3,634
Annual Report 2018
289
Financial StatementS: conSolidated
34.2. legal reserve
35. Cash and cash equivalent
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
Transferred to reserves
Dividend paid
Net profit of the year
Transferred ( from) to bank risk reserve
Disposal of subsidiary
IFRS 9 risk reserve
Ending balance
34.5. Reserve for employee stock ownership plan
Beginning balance
Transferred to reserves
Cost of employees stock ownership plan (ESOP)
Ending balance
EGP Thousands
Dec.31, 2018
Dec.31, 2017
1,332,807
377,486
1,710,293
1,035,363
297,444
1,332,807
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(1,642,958)
(2,107,821)
(3,750,779)
(2,180,244)
537,286
(1,642,958)
EGP Thousands
Dec.31, 2018
Dec.31, 2017
6,193,879
(3,994,924)
(2,143,177)
9,581,994
(689)
-
-
9,637,083
6,040,580
(4,599,736)
(1,350,204)
7,515,555
(615)
(152)
(1,411,549)
6,193,879
EGP Thousands
Dec.31, 2018
Dec.31, 2017
489,334
(159,360)
408,346
738,320
343,460
(145,010)
290,884
489,334
290
Annual Report 2018
Cash and balances with central bank
Due from banks
Treasury bills and other governmental notes
Obligatory reserve balance with CBE
Due from banks with maturities more than three months
Treasury bills with maturities more than three months
Total
36. Contingent liabilities and commitments
36.1. legal claims
EGP Thousands
Dec.31, 2018
Dec.31, 2017
20,058,974
46,518,892
41,999,252
(13,526,763)
(10,733,386)
(50,013,324)
34,303,645
14,663,289
45,319,766
54,478,202
(8,878,986)
(1,719,586)
(54,653,848)
49,208,837
• There is a number of existing cases filed against the bank on December 31,2018 without provision as the bank doesn't
expect to incur losses from it.
• A provision for legal cases that are expected to generate losses has been created. (Disclosure No. 30)
36.2. capital commitments
26.2.1. Financial investments
The capital commitments for the financial investments reached on the date of financial position EGP 165,676 thousand as
follows:
Available for sale financial investments
358,268
192,593
165,676
Investments
value
Paid
Remaining
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 198,026 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
EGP Thousands
Dec.31, 2018
Dec.31, 2017
66,166,953
4,178,288
1,050,573
71,395,814
69,514,413
1,700,516
1,017,690
72,232,619
EGP Thousands
Dec.31, 2018
Dec.31, 2017
9,173,782
7,024,376
Annual Report 2018
291
Financial StatementS: conSolidated
37. Mutual funds
osoul fund
• CIB established an accumulated return mutual fund under license no.331 issued from capital market authority on Febru-
ary 22, 2005. CI Assets Management Co.- Egyptian joint stock co - manages the fund.
• The number of certificates issued reached 3,449,254 with redeemed value of EGP 1,247,250 thousands.
• The market value per certificate reached EGP 361.60 on December 31, 2018.
• The Bank portion got 137,112 certificates with redeemed value of EGP 49,580 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 511,604 with redeemed value of EGP 99,118 thousands.
• The market value per certificate reached EGP 193.74 on December 31, 2018.
• The Bank portion got 50,000 certificates with redeemed value of EGP 9,687 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 335,313 with redeemed value of EGP 34,336 thousands.
• The market value per certificate reached EGP 102.40 on December 31, 2018.
• The Bank portion got 27,690 certificates with redeemed value of EGP 2,835 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 91,131 with redeemed value of EGP 19,353 thousands.
• The market value per certificate reached EGP 212.37 on December 31, 2018.
• The Bank portion got 50,000 certificates with redeemed value of EGP 10,619 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 93,948 with redeemed value of EGP 21,779 thousands.
• The market value per certificate reached EGP 231.82 on December 31, 2018.
• The Bank portion got 50,000 certificates with redeemed value of EGP 11,591 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 145,943 with redeemed value of EGP 26,051 thousands.
• The market value per certificate reached EGP 178.50 on December 31, 2018.
• The Bank portion got 50,000 certificates with redeemed value of EGP 8,925 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
other transactions with related parties
International Co. for Security & Services
CVenture Capital
39. Main currencies positions
Egyptian pound
US dollar
Sterling pound
Japanese yen
Swiss franc
Euro
EGP Thousands
5,414
137,766
1,309
Income
94
850
Expenses
277,139
2,041
EGP Thousands
Dec.31, 2018
Dec.31, 2017
(636,384)
578,745
2,189
(20)
658
37,144
182,639
(313,246)
(1,566)
(523)
637
46,768
Main currencies positions above represents what is recognized in the balance sheet position of the Central Bank of Egypt.
40. Tax status
corporate income tax
• Settlment of corporate income tax since the start of activity till 2016
• 2017 examined & paid
• The yearly income tax return is submitted in legal dates
Salary tax
• Settlment of salary tax since the start of activity till 2017
Stamp duty tax
• The period since the start of activity till 31/07/2006 was examined & paid, disputed points have been transferred to the
court for adjudication
• The period from 01/08/2006 till 31/12/2017 was examined & paid in accordance with the protocol signed between the Fed-
eration of Egyptian Banks & the Egyptian Tax Authority
292
Annual Report 2018
Annual Report 2018
293
Financial StatementS: conSolidated
41. Intangible assets:
43. Treasury bills and other governmental notes - net increase (decrease)
Book value
Amortization
Net book value
EGP Thousands
Dec.31, 2018
Dec.31, 2017
651,041
(412,326)
238,715
651,041
(282,118)
368,923
According to CBE's regulation issued on Dec 16, 2008, an annual amortization of 20% has been applied on intangible assets
42. Profit (loss) of disposal from discontinued operations
Profits from disposal of investments in subsidaries
Total
CIB have a minority stake of 10.00% of CI Capital Holding.
EGP Thousands
Dec.31, 2018
Dec.31, 2017
-
-
168,900
168,900
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
EGP Thousands
"CI Capital Holding Co. S.A.E"
Dec.31, 2018
Dec.31, 2017
-
-
-
-
-
(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 calculation 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.
Cashflow disclosures
294
Annual Report 2018
dec.31, 2018
91 Days ma-
turity
Unearned
interest
Net
182 Days ma-
turity
Unearned
interest
Net
364 Days ma-
turity
Unearned
interest
Net
Total unearned
interest
Net
Change
dec.31, 2017
91 Days ma-
turity
Unearned
interest
Net
182 Days ma-
turity
Unearned
interest
Net
364 Days ma-
turity
Unearned
interest
Net
Total unearned
interest
Net
Change
Dec.31, 2018
Dec.31, 2017
Total
Net
Total
Net
Change
-
-
3,669,700
(86,343)
49,441,511
(3,011,544)
-
-
-
-
-
1,289,425
(87,067)
3,583,357
1,202,358
(2,380,999)
57,602,997
(4,151,507)
46,429,967
53,451,490
7,021,523
(3,097,887)
(4,238,574)
50,013,324
54,653,848
4,640,524
Dec.31, 2017
Dec.31, 2016
Total
Net
Net
Change
Total
1,051,375
(22,416)
-
1,028,959
1,028,959
4,350,975
(264,565)
1,202,358
4,086,410
2,884,052
36,010,730
(1,909,712)
53,451,490
34,101,018
(19,350,472)
-
-
1,289,425
(87,067)
57,602,997
(4,151,507)
(4,238,574)
(2,196,693)
54,653,848
38,187,428
(16,466,420)
Annual Report 2018
295
Financial StatementS: conSolidated
44. Other assets - net increase (decrease)
Total other assets by end of 2017
Assets acquired as settlement of debts
Advances to purchase of fixed assets
Total 1
Total other assets by end of 2018
Assets acquired as settlement of debts
Advances to purchase of fixed assets
Unrealized amount from avilable for sale investments
Impairment charge for other assets
Total 2
Change (1-2)
Total other assets by end of 2016
Assets acquired as settlement of debts
Advances to purchase of fixed assets
Total 1
Total other assets by end of 2017
Assets acquired as settlement of debts
Advances to purchase of fixed assets
Total 2
Change (1-2)
non cash transactions:
Non-cash transactions that are not included in the statement of cash flows are as follows:
Proceeds from selling available for sale financial investments
Payment for purchases of subsidiary and associates
Other assets
Financial
statements
balance
2,314,616
(14,100)
(2,515,215)
Non cash
transactions
255,275
(3,525)
(251,750)
296
Annual Report 2018
EGP Thousands
Dec.31, 2018
6,886,607
(45,083)
(522,211)
6,319,313
9,563,018
(276,520)
(768,733)
(251,750)
316,763
8,582,778
(2,263,465)
EGP Thousands
Dec.31, 2017
5,715,667
(56,599)
(203,410)
5,455,658
6,886,607
(45,083)
(522,211)
6,319,313
(863,655)
Dec.31, 2018
EGP Thousands
Cash flow
balance
255,275
(3,525)
(251,750)
Commercial International Bank S.A.E
Nile Tower Building
21/23 Charles De Gaulle Street
Giza, Cairo, P.O. Box 2430
Tel: (+202) 3747 2000
Fax: (+202) 3570 3632
www.cibeg.com