Investing in People Investing in the Future ANNU2012AL REPORT CIB's 5,181 employees bring to the table a balanced blend of seasoned insight coupled youthful vigor — a mix that helps us efficiently serve more than 589,645 customers. Veteran Know-How, Youthful Vigor Contents CIB: An Introduction What We Do . 2 Our History . 2. Key Financial Highlights . .4 . Key Facts . 5. A Strategy that Delivers . 6. A Word from Our Chairman . 8 . Board of Directors’ Report . 10 Key Figures from 2012 . 20 . 2012 in Review Institutional Banking . 24. Global Customer Relations . .32 . Consumer and Business Banking . 34. COO Area . 42 . Risk Group . 48 . Compliance . 53. Strategic Subsidiaries CI Capital Holding . .56 . Egypt Factors . 59 . Commercial International Life Insurance Company . 60. Falcon Group . 60 . Corporate Leasing Company (Egypt) SAE – CORPLEASE . 62 Corporate Governance . 66 Executive Management . 72. Community Development . 76 . CIB Foundation . 78 . Financial Statements . 82 CIB: An Introduction What We Do A Snapshot Of Our Businesses The leading Commercial International Bank (CIB) is the leading private Corporate Banking port this growing market in the coming sector bank in Egypt, offering a broad range of financial prod- private sector Widely recognized as the preeminent cor- years. ucts and services to its customers, which include enterprises porate bank in Egypt, CIB aspires to be- • Deposit Accounts: Offering a wide of all sizes, institutions, households and high-net-worth bank in Egypt come one of the best banks in the region, range of account types to serve our cli- (HNW) individuals. serving industry-leading corporate clients. ents’ deposit and savings needs, includ- In addition to traditional asset and liability products, CIB ing tailored accounts for minors, youth offers wealth management, securitization, direct investment Business Banking and senior citizens, as well as certificates and treasury services, all delivered through client-centric The Business Banking Segment was for- of deposit and care accounts. This is in teams. mally launched at the end of 2011 follow- addition to our standard range of cur- The Bank also owns a number of subsidiaries, including CI ing a successful one-year pilot program, rent, savings and time deposit accounts. Capital (which offers asset management, investment banking, particularly among retail companies in the • Residential Property Finance: Provid- brokerage and research services), Commercial International Egyptian market. It mainly serves small ing loans to finance home purchases, Life Insurance Company, the Falcon Group, Egypt Factors, and midsize companies which are the residential construction and refurbish- and CORPLEASE. backbone of the Egyptian economy with a ment and finishing. CIB strives to provide clients with superior financial so- contribution of almost 80% of total GDP. • Credit and Debit Cards: Offering a lutions to meet all of their financial needs. This enables the This comes as a natural progression of the broad range of credit, debit and prepaid Bank to maintain its leadership position in the market, while Bank’s mission to remain one of Egypt’s cards. providing a stimulating work environment for staff and gen- biggest financial and commercial institu- erating outstanding value for shareholders. tions supporting the Egyptian economy. Wealth Management CIB offers a wide array of investment Mid-Cap Banking products and services to the largest num- This division caters to medium-sized com- ber of affluent clients in Egypt. panies, employing a dedicated team of cer- tified officers who are highly specialized Global Transactional Services Our History in providing advice and assistance to mid- (GTS) sized businesses. The department’s role is The Global Transactional Services (GTS) CIB was established in 1975 as Chase National Bank, a joint to help these businesses grow to become Group serves as a key group within CIB venture between Chase Manhattan Bank and National Bank large corporations in the future. and oversees cash management, trade and of Egypt (NBE). In 1987, Chase divested its ownership stake global securities services. due to a shift in international strategy, and the stake was ac- Debt Capital Markets quired by NBE, at which point the Bank adopted the name CIB’s global product knowledge, local Treasury and Capital Markets Commercial International Bank. expertise and capital resources make the Services Over time, NBE decreased its participation in CIB, which Bank an industry leader in project finance, CIB delivers world class service in the areas eventually dropped to 19% in 2006, when a consortium led syndicated loans and structured finance of cash and liquidity management, capital by Ripplewood Holdings acquired NBE’s remaining stake. In in Egypt. CIB’s project finance and syndi- markets, foreign exchange and derivatives. July 2009, Actis, an emerging market private equity special- cated loans teams provide large borrowers ist, acquired 50% of the stake held by the Ripplewood Con- with better market access and greater ease Direct Investment sortium. Five months later, in December 2009, Actis became and speed of execution. CIB actively participates in select direct the single largest shareholder in CIB with a 9.3% stake after investment opportunities in Egypt Ripplewood sold its remaining share of 4.7% on the open Consumer Banking and across the region. market. The emergence of Actis as the predominant share- CIB registered considerable progress in holder marked a successful transition in the Bank’s strategic 2012 as it continued to build a full-service, Investment Banking Services partnership. world-class consumer bank, as under- Through CI Capital, CIB offers existing scored by the ability to serve clients in a and prospective clients a full suite of invest- challenging environment last year. We ment banking products and services, in- offer a wide array of consumer banking cluding investment banking, advisory and products, including: execution, asset management, brokerage • Personal Loans: Focusing on employees and equity research. CI Capital offers both of our corporate banking clients and deep and broad market knowledge and ex- offering secured overdrafts and trade pertise; the firm is consistently ranked as a products. leading brokerage house serving local and • Auto Loans: Positioned to actively sup- international clients in Egypt. 2 Annual Report 2012 CIB: An Introduction Key Financial Highlights Key Facts FY 12 FY 11 FY 10 FY 12 FY 11 FY 10 FY 09 FY 08 FY 07 FY 06 FY 05 Consoli- Consol- Consol- #1 Bank in terms of: dated idated idated Common Share Information Per Share Earning Per Share (EPS) * 3 .53 2 .43 3 2 .63 4 .89 3 .73 3 .64 2 .77 Dividends (DPS) 1 .25 1 1 1 .5 1 1 1 1 Profitability, Book Value (BV/No of Share) 18 .94 15 .03 14 .59 23 .75 19 .25 20 .93 15 .59 19 .44 achieving Share Price (EGP)** Our High 39.8 47.4 79.49 59.7 93.4 95 79 63.5 EGP 2.2 billion in Low 21.1 18.5 33.75 29.5 27.87 53.61 42.11 39.91 Closing 34.6 18.7 47.4 54.68 37.2 91.77 57.87 58.68 net income. Shares Outstanding 597 .2 593 .5 590 .1 292 .5 292 .5 195 195 130 5,181 (millions) Market Capitalization employees serve some 20,646 11,098 27,973 15,994 10,881 17,895 11,285 7,628 (EGP millions) 589,648 customers . Value Measures Revenue Price to Earnings Multiple (P/E) 9 .8 7 .7 15 .8 20 .8 7 .6 24 .6 15 .9 21 .2 among all Egyptian Dividend Yield 3 .62% 5 .35% 2 .11% 2 .74% 2 .69% 1 .09% 1 .73% 2 .60% (based on closing share price) private sector banks Dividend Payout Ratio 31 .36% 33 .90% 27 .60% 24 .60% 18 .10% 15 .80% 27 .50% 21 .30% Market Value to Book Value Ratio 1 .83 1 .24 3 .25 2 .3 1 .93 4 .39 3 .71 3 .02 with EGP 5.3 billion in Financial Results (EGP millions) total revenues. Net Operating Income 5,344 3,934 3,952 5,108 3,837 3,727 3,173 3,200 2,288 1,741 1,450 EGP Provision for Credit Losses - Specific 610 321 6 610 321 6 9 346 193 176 197 Provision for Credit Losses - General 49 57 18 167 94 .0 bn Total Provisions 610 321 6 610 321 6 9 395 250 193 364 in total assets . Non Interest Expense 1,653 1,557 1,562 1,445 1,337 1,188 1,041 950 636 668 474 Net-worth Net Profits 2,226 1,615 2,021 2,203 1,749 2,141 1,784 1,615 1,233 802 610 Financial Measures among all Cost : Income 30 .93% 39 .58% 39 .52% 28 .29% 34 .84% 31 .87% 32 .80% 29 .69% 27 .82% 38 .38% 32 .72% Egyptian private Return on Average Common Equity 22 .79% 18 .69% 28 .66% 21 .77% 20 .96% 30 .47% 31 .18% 36 .31% 37 .95% 31 .58% 29 .30% (ROAE) sector banks. Net Interest Margin 4 .74% 3 .71% 3 .62% 3 .81% 3 .54% 3 .12% 3 .06% 3 .50% (NII/average interest earning assets) Return on Average Assets (ROAA) 2 .48% 2 .01% 2 .89% 2 .45% 2 .18% 3 .08% 2 .94% 3 .08% 2 .90% 2 .37% 2 .09% Regular Workforce Headcount 5,181 4,867 4,755 4,867 4,517 4,360 4,162 3,809 3,132 2,477 2,301 119,611 Balance Sheet and Off Balance internet banking subscribers . Sheet Information (EGP millions) Cash Resources and Securities Market 16,140 18,990 16,325 16,764 19,821 16,854 16,125 14,473 21,573 13,061 10,537 (Non Governmental) capitalization in the Net Loans and Acceptances 41,877 41,065 35,175 41,877 41,065 35,175 27,443 26,330 20,479 17,465 14,039 Assets 94,014 85,506 75,425 94,405 85,628 75,093 64,063 57,128 47,664 37,422 30,390 Egyptian banking sector.