Cairo – Mubasher: MubasherTrade has maintained their Sell/Moderate Risk rating for the Commercial International Bank Egypt (CIB) with a price target (PT) of EGP 76 per share, according to a recent report on Thursday.
The CIB posted a 25% year-on-year surge in consolidated net profit to reach EGP 7.52 billion in 2017, which came in line with MubasherTrade estimations (MTRe) of EGP 7.59 billion.
The research firm attributed the growth in earnings to a 24.8% year-on-year rise in net interest income (NII) at EGP 12.5 billion, coupled with an 83.4% year-on-year hike in non-interest income to EGP 2.38 billion.
The bank’s net loans rose by 3.6% year-on-year to EGP 88.4 billion in December 2017, while customer deposits increased by 8.2% year-on-year to EGP 250.7 billion, the report said.
Meanwhile, the bank's net loans-to-deposits (L/D) ratio fell to 35.3% from 36.8% in December 2016, which is attributable to the current high-interest rates which led to a slowdown in demand for credit, the report highlighted.
“We believe that lending to corporates and retail clients should increase over the coming period with the expected easing by the Central Bank of Egypt (CBE),” MubasherTrade noted.
CIB's capital adequacy ratio (CAR) increased to 19.3% in December 2017 from 13.97% in December 2016, which is “comfortably above the minimum CAR required by the CBE of 11.25%”.
“This increase in CAR can be attributed to the fact that CIB has already taken steps to support its capital base by securing subordinated loans totaling USD200mn from European Bank for Reconstruction & Development (EBRD) and International Finance Corporation (IFC)”, the report continued.
MubasherTrade forecast that this move will bolster CIB's plan for expansion in Africa, which should be very positive given the current low loans-to-deposits ratio of nearly 50% in Egypt, compared to nearly 80-90% in the GCC, according to the report.
