QNB ALAHLI continued to deliver growth in results, generating a consolidated net profit of EGP 1.260bn between January and March 2017, up by 39% compared to the same period last year. Total assets grew by 3% to reach EGP 195.780bn. The efficiency ratio improved to 23% in the first quarter of 2017 (Q1 2017), down by 200bps from 25% in Q1 2016. This was driven by an increase in net banking income by 22% year-on-year (YoY), compared to a more moderate growth in cost by 12% YoY. A recent financial statement released by the bank indicated that the quality of assets changed with the nonperforming loan (NPL) ratio having improved to 2.51% in March 2017 as compared to 2.56% at the end of December 2016. The strong capacity of revenue generation combined with prudent risk management accounted for the high coverage ratio of 195% at the end of March 2017. The report added that QNB ALAHLI's total assets increased by 3% to reach EGP 195.780bn compared to EGP 190.932bn in December 2016, with a return on average assets (ROAA) of 2.61% in Q1 2017. Meanwhile, gross loans grew by 2% year to date (YTD) to reach EGP 99.617bn, supported by the growth across the different commercial segments. At the end of December 2016, the loans market share recorded 7.55% on a standalone basis. As part of the Central Bank of Egypt's (CBE) financing to small and medium enterprise (SME) initiative, the bank's SME portfolio represented 16.12% of the total portfolio, as per the definition of the CBE, compared to a target of 20% by 2019. The provision level continues to improve, with a coverage ratio of 195% as of March 2017 compared to 187% at the end of 2016. As for deposits, customers' deposits grew by 1% from December 2016 to reach EGP 159.795bn, predominantly due to a growth in retail deposits. Accordingly, the retail segment share reached 46% of the total deposits as of March 2017. At the end of December 2016, the deposits market share on a standalone basis recorded 5.79%. Furthermore, QNB ALAHLI's liquidity position remained in line with the growth in the balance sheet, with a net loan/deposit ratio of 59% as of March 2017. QNB ALAHLI—97.12% of which is owned by the QNB Group—is the second largest private bank in terms of market capitalisation, with a market value of EGP 30.497bn at the end of March 2017. The bank's capital base amounted to EGP 18.037bn. Due to the strong capitalisation, QNB ALAHLI was able to withstand the impact of the inflated risk-weighted assets (RWA) following the local currency devaluation in November 2016. As of March 2017, the capital adequacy ratio (CAR) and Tier 1 ratios stood at 14.56% and 13.42% respectively, including interim earnings in Q1 2017, which is above the required minimum of 11.25% and 7.25% respectively. Net interest income grew by 32% YoY, driven by an increase in interest earning assets and a net interest margin (NIM) of 5.12% by the end of March 2017. Net fees and commissions reached EGP 433m for Q1 2017, up 40% compared to EGP 310m for Q1 2016, and a 9% growth quarter-on-quarter (QoQ). Other operating income reached EGP 88m. Net banking income for Q1 2017 stood at EGP 2.470bn, increasing 22% YoY. Moreover, consolidated operating expenses reached EGP 575m for Q1 2017—an overall increase of 12%. Given a stronger revenue growth and the controlled growth of expenditure, the cost-to-income ratio improved by around 200bps from 25% for Q1 2016 to 23% for Q1 2017. QNB ALAHLI's gross operating income reached EGP 1.896bn for Q1 2017, up 26% compared to the same period last year. In addition, and despite the stability of the portfolio credit quality, a prudent approach to risk was sustained, with EGP 260m net allocations in the cost of risk that further enhanced the coverage level. Income tax charges for the period increased by 24% as taxable revenue grew. Finally, QNB ALAHLI recorded a net profit of EGP 1.260bn for Q1 2017, marking an increase of 39% YoY and 13% QoQ.
