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Egypt's CIB second quarter net profit falls less than expected Egypt's leading private bank sees profits fall 11 per cent on the same period last year but stage an encouraging 44 per cent growth on the previous quarter
Egypt's Commercial International Bank reported an 11 per cent dip in second-quarter net profit on Wednesday after political and economic turmoil dented foreign exchange income, banking fees and the value of investment sales. Net income was LE443 million (US$74.3 million), down from LE496 million in the same period a year earlier, the company said in a statement.Net income was down 11 per cent year on year but up 44 per cent quarter on quarter. It was higher than the average analyst forecast of LE403m in a Reuters poll, and investment bank Beltone FInancial's own estimate of LE350m. Egypt's business sector is struggling to recover from the disruption that followed President Hosni Mubarak's overthrow in February, and banks have been hit further by a weak financial market and an exodus of foreign investors. "In a challenging year filled with unprecedented circumstances, CIB managed to maintain a healthy liquidity position where the bank's balance sheet grew by 3.43 per cent over December 2010," CIB said. "Net income dropped year on year mainly due to the booking of L.E 78 million of provisions in second quarter 2011 (April-June), versus a reversal of L.E 4 million in second quarter 2010. Excluding provisions, net income would have grown 6 per cent year on year,", said Beltone in a statement. Deposits and loans grew by 6.2 per cent and 6.37 per cent, respectively, in the first half of 2011. Quarterly net interest income grew to LE630m from LE572m. But net fee and commission income slipped to LE216m in the second quarter from LE220m a year earlier. Net investment income continued to drop, losing 30 per cent year on year and 8 per cent quarter on quarter, while net interest income witnessed no growth quarter on quarter. Loan impairment losses totalled LE78m in the quarter, compared to a small gain a year earlier, and net trading income slipped to LE65m from LE90m. Non-performing loans edged up to 2.93 per cent of total loans at the end of June from 2.73 per cent six months earlier. Higher payroll costs and a tax bill that grew even as pretax profit fell also weighed on the bottom line. Beltone Financial experts believe that CIB will continue to face growth challenges over the next 6-18 months, depending on the economic and political developments in Egypt. "but the pressure might not be as high as its peers, given the bank's market leadership. Furthermore, asset quality deterioration is another key challenge for CIB and peers", notes the Beltone statement. CIB shares have fallen 48 per cent this year, exceeding the 35 per cent drop by Egypt's benchmark EGX30 index.
