ANNUAL REPORT 2014 BANKING ON SUSTAINABILITY CIB: AN INTRODUCTION 02 CONTENTS Our History 02 What We Do 02 A Snapshot Of Our Business 03 Key Facts 04 Key Financial Highlights 06 A Strategy that Delivers 08 Chairman’s Note 10 Board of Directors’ Report 12 2014 IN REVIEW 24 Institutional Banking 26 Global Customer Relations 34 Consumer and Business Banking 36 COO Area 44 Risk Group 50 Compliance 60 Internal Audit 62 STRATEGIC SUbsiDiaRIES 64 CI Capital Holding 66 Egypt Factors 70 Commercial International Life Insurance Company (CIL) 71 CORPLEASE 71 Falcon Group 72 SUSTAINABILITY AT CIB 74 What Egypt Needs Now is Sustainable Growth 76 Corporate Governance 78 Executive Management 84 Banking on Sustainability 86 COMMUNITY DEVELOPMENT 88 CIB Foundation 90 FINANciaL STATEMENTs 96 CIB: AN INTRODUCTION Our History and Strategic Milestones What We Do A Snapshot of Our Business CIB was established in 1975 as Chase National Bank, a joint Commercial International Bank (CIB) is the leading private responding to their needs through focusing on promoting a venture between Chase Manhattan Bank and National Bank sector bank in Egypt, offering a broad range of financial Corporate Banking consistent, positive customer experience. We offer a wide ar- of Egypt (NBE). In 1987, Chase divested its ownership stake products and services to its customers, which include en- Widely recognized as the preeminent corporate bank in ray of consumer banking products, including: due to a shift in international strategy, and the stake was ac- terprises of all sizes, institutions, households and high-net- Egypt, CIB aspires to become one of the best banks in the • Personal Loans: Focusing on employees of our corporate quired by NBE, at which point the Bank adopted the name worth (HNW) individuals. region, serving industry-leading corporate clients as well as banking clients and offering secured overdrafts and trade Commercial International Bank. In addition to traditional asset and liability products, CIB medium-sized businesses. products. Over time, NBE decreased its participation in CIB, which offers wealth management, securitization, direct invest- • Auto Loans: Positioned to actively support this growing eventually dropped to 19% in 2006, when a consortium led by ment and treasury services, all delivered through client- Debt Capital Markets market in the coming years. Ripplewood Holdings acquired NBE’s remaining stake. In July centric teams. CIB’s global product knowledge, local expertise and capi- • Deposit Accounts: Offering a wide range of account 2009, Actis, an emerging market private equity specialist, ac- The Bank also owns a number of subsidiaries, including CI tal resources make the Bank an industry leader in project types to serve our clients’ deposit and savings needs, in- quired 50% of the stake held by the Ripplewood Consortium. Capital (which offers asset management, investment bank- finance, syndicated loans and structured finance in Egypt. cluding tailored accounts for minors, youth and senior Five months later, in December 2009, Actis became the single ing, brokerage and research services), Commercial Interna- CIB’s project finance and syndicated loans teams provide citizens, as well as certificates of deposit and care ac- largest shareholder in CIB with a 9.09% stake after Ripplewood tional Life Insurance Company, the Falcon Group, Egypt Fac- large borrowers with better market access and greater ease counts. This is in addition to our standard range of cur- sold its remaining share of 4.7% on the open market. The emer- tors, and CORPLEASE. and speed of execution. rent, savings and time deposit accounts. gence of Actis as the predominant shareholder marked a suc- CIB strives to provide clients with superior financial so- • Residential Property Finance: Providing loans to finance cessful transition in the Bank’s strategic partnership. lutions to meet all of their financial needs. This enables the Global Transactional Services (GTS) home purchases, residential construction and refurbish- In 2014, Actis undertook a partial realization of its investment Bank to maintain its leadership position in the market, while The Global Transactional Services (GTS) Group serves as a ment and finishing. in CIB by selling 2.6% of its stake through the open market in providing a stimulating work environment for staff and gen- key group within CIB and oversees cash management, trade • Credit and Debit Cards: Offering a broad range of credit, March 2014, while keeping its Board seat. In May 2014, the pan- erating outstanding value for shareholders. and global securities services. debit and prepaid cards. African emerging market investor sold its remaining 6.5% stake • Wealth Management: CIB offers a wide array of invest- to several wholly owned subsidiaries of Fairfax Financial hold- Treasury and Capital Markets Services ment products and services to the largest number of af- ings Ltd “Fairfax”, thus becoming the only strategic shareholder CIB delivers world class service in the areas of cash and li- fluent clients in Egypt. in CIB. Fairfax Financial Services Holding Company is repre- quidity management, capital markets, foreign exchange and • Plus: Launched in June 2014, CIB Plus caters to the needs of sented on CIB’s board with a non-executive Board member. derivatives. medium-net-worth individuals and helps pave the way to move up to becoming a Wealth segment client using sim- Direct Investment plified products, fast track service and personalized service CIB actively participates in select direct investment opportu- offerings through a network of Plus Bankers. nities in Egypt and across the region. • Insurance: The CIB Insurance Business provides Life and General Insurance programs that generate non-interest Business Banking revenues in the form of fees for CIB Consumer Banking. The Business Banking segment is responsible for SMEs under CIB’s portfolio, managing over 4,000 retail companies and of- Investment Banking Services fering them various products and services that best suit their Through CI Capital, CIB offers existing and prospective cli- needs and interests. ents a full suite of investment banking products and services, including investment banking, advisory and execution, asset Consumer Banking management, brokerage and equity research. CI Capital of- The Consumer Banking division continues to assert itself as fers both deep and broad market knowledge and expertise; a growing and developing business segment, dedicating ex- the firm is consistently ranked as a leading brokerage house traordinary efforts to improving customer satisfaction and serving local and international clients in Egypt. 2 ANNUAL REPORT 2014 ANNUAL REPORT 2014 3 CIB: An Introduction EgYPT’S NUmbER #1 BANK CIB’s state-of-the-art Smart Village building IN TErmS OF PrOfiTabiLITY AND SUSTaiNabiLITY A sustainable future is one that strikes a good balance between profitability, financial health and serving the country’s broader socioeconomic and environmental health. • Profitability achieving EGP 3.7 billion in net income • Revenue among all Egyptian private sector banks with EGP 8.0 billion in total revenues • Loan and deposit market share among all Egyptian private sector banks • Net worth among all Egyptian private sector banks # • Market capitalization in the Egyptian banking sector 1 KEY FacTS Our 5,697 employees EGP 143.8 billion in serve some 697,936 total assets active customers Over 500 of Egypt’s 125,000 Internet largest corporations banking subscribers bank with CIB The installation of LED Planting rooftop gardens lighting will reduce and green walls is energy consumption decreasing CO emissions by 35% 2 The installation of Double-sided printing water restrictors has decreased paper has reduced water consumption by 45% consumption by 30% 4 ANNUAL REPORT 2014 ANNUAL REPORT 2014 5 CIB: An Introduction The installation of LED lighting in CIB branches KEY FINANciaL was one of the bank’s major energy savings HighLighTS initiatives in 2014 FY 14 FY 13 FY 12 FY 11 Consoli- Consoli- Consoli- Consoli- FY 14 FY 13 FY 12 FY 11 FY 10 FY 09 FY 08 FY 07 FY 06 FY 05 dated dated dated dated Common Share Information Per Share Earning Per Share (EPS) * 3.55 2.67 2.42 2.43 3.00 2.63 4.89 3.73 3.64 2.77 Dividends (DPS) 1.2 1.0 1.25 1.00 1.00 1.50 1.00 1.00 1.00 1.00 Book Value (BV/No of Share) 16.31 13.46 18.94 15.03 14.59 23.75 19.25 20.93 15.59 19.44 Share Price (EGP) ** High 51.3 45.4 39.8 47.4 79.49 59.7 93.4 95 79 63.5 Low 32.6 27.4 21.1 18.5 33.75 29.5 27.87 53.61 42.11 39.91 Closing 49.2 32.6 34.6 18.7 47.4 54.68 37.2 91.77 57.87 58.68 Shares Outstanding (millions) 908.2 900.2 597.2 593.5 590.1 292.5 292.5 195 195 130 Market Capitalization 44,673 29,330 20,646 11,098 27,973 15,994 10,881 17,895 11,285 7,628 (EGP millions) Value Measures Price to Earnings Multiple (P/E) 13.9 12.2 14.3 7.7 15.8 20.8 7.6 24.6 15.9 21.2 Dividend Yield 2.44% 3.07% 3.62% 5.35% 2.11% 2.74% 2.69% 1.09% 1.73% 1.70% (based on closing share price) Dividend Payout Ratio 29.88% 34.42% 33.9% 33.9% 27.6% 24.6% 18.1% 15.8% 27.5% 21.3% Market Value to Book Value Ratio 3.02 2.42 1.83 1.24 3.25 2.30 1.93 4.38 3.71 3.02 Financial Results (EGP millions) Net Operating Income 8,001 6,700 5,344 3,934 7,717 6,206 5,108 3,837 3,727 3,173 3,200 2,288 1,741 1,450 Provision for Credit Losses - 589 916 610 321 589 916 610 321 6 9 346 193 176 197 Specific Provision for Credit Losses - 49 57 18 167 General Total Provisions 589 916 610 321 589 916 610 321 6 9 395 250 193 364 Non Interest Expense 1,876 1,608 1,653 1,557 1,705 1,450