The Hopes and Fears of the Egyptian Banking Sector

Transcription

1 The Hopes and Fears of the Egyptian Banking Sector January 15, 2017 Overweight Banks Despite challenges, the best proxy for Egypt s macro transformation story The Hopes Improved USD liquidity, lending growth pickup and higher noninterest income Despite some denials, floatation did improve the USD liquidity within the banking system, partially due to the narrower gap between the parallel and official rates and because of higher confidence in the banking system. With improved USD liquidity within the banking system, working capital financing (rather than capex financing) should show signs of revival in 2017, raising banks asset allocation for lending, which should gradually and partially substitute treasury instruments asset allocation. We realize that several factors will determine the fate of retail lending: lower disposable income; debt service ratio cap at 35% and affordability. We vote that affordability will outweigh others and that retail lending will continue to deliver healthy growth even before corporate lending picks up. The golden age for bank margins has been witnessed between , but we foresee a gradual drop in policy rates over 2H , which would cause NIM to gradually level off, starting 2018, from the peak witnessed in Noninterest income will revive after years of silence, mostly through fees and commissions. The Fears Asset quality shock, tight capital adequacy and cash dividend cuts Some banks including public sector banks have reported net foreign liability positions prefloatation and will incur losses on the short USDpositions. In addition, corporate banking clients with short USDpositions will incur losses that might affect credit quality. Thus, we estimate that the current levels of COR will continue to be booked, in order to maintain conservative provisions coverage. Because banks have foreign currency denominated assets, while most capital bases are in local currency, 4Q16 will witness a significant drop in Capital Adequacy Ratios (CAR). The Central Bank of Egypt had raised the capital charge for client concentration, putting further pressure on CARs. However, banks will revert to capital increases, or tier II funding along with profit retention in 2016 to gradually recover CARs. Due to tight capital positions, we expect a cut in cash dividends, but an attractive alternative will be offering stock dividends, provided that retained earnings or reserves support such a move. Upgrade valuations; Maintain Overweight Commercial International Bank (FV: EGP86.83) is best positioned in the market to embrace the benefits of the macro story. We believe that the bank can sustain a 25% bottom line growth over the forecast horizon, driven by NIM resilience, and noninterest income surge, despite high provisioning. Management is targeting a minimum of 3 lending growth in 2017, along with low cost deposit accumulation in order to build the appropriate funding base for growth. We realize that COMI is currently trading at rich multiples, with P/E 2017e of 13.6x and P/B 2017e of 3.4x. However, with 25% growth in bottom line and ROAE north of 27%, versus regional peers with EPS growth below 1 and ROAE between 1015%, the premium is justified in our view. Credit Agricole Egypt (FV: EGP44.73) has witnessed a significant turnaround in positioning starting The bank s growth and profitability have picked up to catch up with larger private sector banks. The bank provides solid exposure to the underpenetrated retail sector in Egypt, as well as the mediumsized corporations in Egypt. We realize that CIEB is trading at attractive multiples, with P/E 2017e of 8.5x and P/B 2017e of 2.6x. The attractiveness of these multiples is even higher when looking at the bottom line growth (18%) and ROAE (32%). Housing and Development Bank (FV: EGP33.20) has demonstrated healthy momentum in balance sheet growth and solid margins. In addition, its real estate operations have proven to provide some support for noninterest income. HDBK is a high yield stock with estimated dividend yield for 2016 of 8%, on current price. The bank does not have any capital constraints due to the absence of foreign assets on its books and thus has high probability for maintaining high cash dividend distribution. HDBK is trading at attractive multiples, with P/E 2017e of 3.7x and P/B 2017e of 0.7x. The attractiveness of these multiples is even higher when looking at the bottom line growth (14%) and ROAE (21%). Definitely, the stock is over penalized by low liquidity.. Radwa El Swaify Head of Research radwa.elswaify@pharosholding.com ANALYST CERTIFICATIONS AND REQUIRED DISCLOSURES ON LAST PAGE OF THIS REPORT

2 The Hopes and Fears of the Egyptian Banking Sector Overweight Banks Despite challenges, the best proxy for Egypt s macro transformation story Improved USD liquidity within the banking system postfloatation Despite some denials, floatation did massively improve the USD liquidity within the banking system, since banks are fully responsible for the sourcing and allocation of the USD needed by their clients, after being given the proper tool, which is exchange rate adjustment to reach some balance between supply and demand. Bank management have noted that the supply within the banking system has significantly improved, partially due to the narrower gap between the parallel and official rates and because of higher confidence in the banking system. Corporate lending to slowly and gradually substitute treasury investments in asset allocation; pushing utilization ratios higher With improved USD liquidity within the banking system, working capital financing (rather than capex financing) should show signs of revival in 2017, raising the asset allocation for lending, which should gradually substitute treasury instruments asset allocation. While we realize that treasury investments to total assets will continue to be high, the estimated pickup in lending should edge the ratio down over the next five years. As a result, lending to deposit ratio within the system should gradually pick up from the current low levels, which depict significantly high liquidity within the banking system, with the majority of the funding parked in treasury and other short term investments or interbank deposits. Retail lending to show momentum, despite lower disposable income We realize that two opposing factors will determine the fate of retail lending: 1) lower disposable income due to high inflation along with the debt service ratio cap at 35% and 2) the fact that affordability has become an issue for a wide range of products and services after the rerating of prices, to the extent that purchases on credit has become the definite way to go. We vote that the second factor will outweigh the first, especially for the uppermiddle income groups. We believe that factor one will definitely be more valid for lowermiddle and lower income groups. Consequently, we project that the growth in retail lending will continue to deliver healthy growth even before corporate lending picks up. Gradual margin compression is foreseen but its signs to reflect on 2018 numbers The golden age for bank margins has been witnessed between , thanks to the deficit monetization that has been crowding out private sector lending and raising treasury investment allocation. In addition, margins were massively boosted by the 550bps rate hike over 2016, in an attempt to attract foreign portfolio investments in Egypt, increase the attractiveness of the EGP as a savings vehicle, and control spiking inflation. According to our estimates, we foresee a gradual drop in policy rates over 2H , which would cause NIM to gradually level off, starting 2018, from the peak witnessed in Despite the gradual leveling off in spreads, the growth in lending should create resilience in net interest income. Noninterest income to revive after years of silence Noninterest income, mostly through fees and commissions, is poised to witness strong pickup with foreign currency intermediation and the gradual pick up in lending growth. We project noninterest income to gradually reach c.35% of operating income from a current c.2025%. ANALYST CERTIFICATIONS AND REQUIRED DISCLOSURES ON LAST PAGE OF THIS REPORT

3 The Hopes and Fears of the Egyptian Banking Sector NPLs should edge upwards; High COR is there to stay Some banks including public sector banks have reported net foreign liability positions prefloatation and will incur losses on the short USDpositions. In addition, corporate banking clients with short USDpositions, whether in terms of payables for suppliers of raw materials or open importation letters of credit/guarantee prefloatation will incur losses that might affect their credit rating and consequently the corresponding outstanding debts with the banking system will be booked as nonperforming loans. We project that NPLs will edge higher in 2017, being one of the ills of floatation the banking sector has to deal with. We estimate that the current levels of COR, at 23% will continue to be booked, in order to maintain adequate and conservative provisions coverage ratios. CARs to take a hit in 2016; Expect tier II fund raising and capital increases by 1Q17 Because banks have foreign currency denominated assets, which will expand with floatation and consequently raise risk weighted assets, while most capital bases are in local currency, 4Q16 will witness a significant drop in Capital Adequacy Ratios (CAR). In addition, the Central Bank of Egypt has raised the capital charge for client concentration (judging through the top 50 clients per bank) in March 2016, a requirement to be met by March With floatation, and the nominal increase in lending exposure to some clients whose debt is USD denominated, the capital charge will be higher, putting further pressure on CARs. However, bank management have noted that capital increases, or tier II funding is being planned to get the CAR up to at least 11.5% by 2017 end (the minimum required by the central bank for 2017 end). In addition, with healthy profitability in 2017 and sustainable ROAEs above 2 for some of the key banks under coverage, CARs should gradually recover through internal resources fueling banks capital bases. Expect a cut in cash dividends; but stock dividends might be an attractive alternative Due to tight capital positions, we expect a cut in cash dividends, but an attractive alternative for banks boards will be offering stock dividends, provided that retained earnings or reserves support such a move. With all the positives and despite the negatives, we believe that the banking sector in Egypt has been one of the best performing sectors over the last decade and despite highlighted challenges, it will be the proxy for the macroeconomic transformation story in Egypt. The sector should continue to deliver return on equity north of 2 over the coming five years. ANALYST CERTIFICATIONS AND REQUIRED DISCLOSURES ON LAST PAGE OF THIS REPORT

4 Commercial International Bank On Top of Its Game January 15, 2017 RECOMMENDATION Equalweight Fair Value, EGP/Share Last Price, EGP/Share Valuation Gap, % 12.5% The proxy for Egypt; The proxy for EGX We continue to recommend an Equalweight on COMI, since it is best positioned in the market to embrace the benefits of the macro story. We believe that the bank can sustain a 25% bottom line growth over the forecast horizon, driven by NIM resilience, and noninterest income surge, despite high provisioning. Management is targeting a minimum of 3 lending growth in 2017, along with low cost deposit accumulation in order to build the appropriate funding base for growth. Shares Outstanding, m Market Cap, EGP m 52W HL, EGP/Share 52W ADTV, EGP m Reuters/Bloomberg 1,154 88, COMI.CA/COMI EY Upgrade FV to EGP86.83; Maintain Equalweight recommendation We upgrade our FV after accounting for the balance sheet expansion postfloatation. We account for higher lending growth (24% CAGR between ), and higher deposit accumulation pace (22% CAGR), along with slower pace of margin compression and faster pickup in noninterest income. We estimate margins will level off from above 5% in 2016 to 4.5% in 2021, which demonstrates resilience despite lower interest rates, for two key reasons: 1) accumulation of low cost deposits and 2) higher retail lending contribution to overall lending. Noninterest income should pick up from 23% to 37% of operating income, mostly driven by fees and commissions than by investment income growth. We estimate that NPLs will edge higher in 2016 and 2017, which will result in sustained high COR at 1.7%1.9% between CAR will be hit to 13.5% in 2016, but should pick up gradually over the forecast horizon. COMI is trading at rich multiples, but justified by financial projections We realize that COMI is currently trading at rich multiples, with P/E 2017e of 13.6x and P/B 2017e of 3.4x. However, with 25% growth in bottom line and ROAE north of 27%, versus regional peers with EPS growth below 1 and ROAE between 1015%, the premium is justified in our view. Key Indicators EPS, EGP P/E, x BVPS, EGP P/B, x DPS, EGP Dividend Yield, % % 1.3% 1.3% 1.3% 1.3% Implied P/E, x Implied P/B, x Radwa El Swaify radwa.elswaify@pharosholding.com Dalia Bonna dalia.bonna@pharosholding.com 4 ANALYST CERTIFICATIONS AND REQUIRED DISCLOSURES ON LAST PAGE OF THIS REPORT

5 Commercial International Bank Figure 1 Balance sheet growth to pick up gradually starting 2017; 2016 hike is floatation caused Figure 2 Lending growth to reflect on asset allocation 5 45% 4 35% 3 25% 2 15% % 38% 38% 39% 4 41% % Gross Loans, EGP bn Treasury Investments, EGP bn 0. Utilization Ratio Loan Growth Deposit Growth Treasury/Assets Gross Loans/Assets Figure 3 Interest income to level off; To be compensated for by noninterest income Figure 4 NPL ratio to rise in ; High COR will be sustained NonInterest Income/Operating Income NII/Operating Income (RHS) Provisions Coverage (RHS) NPL Ratio COR 195% % % % % % 14 Figure 5 ROE to be sustained above 25% Figure 6 CAR to recover gradually from the 2016 shock 70,000 60,000 50,000 40,000 30,000 20,000 10,000 21% Interest Income NonInterest Income Bottom Line Growth post appropriations (RHS) ROE (RHS) 29% 28% 27% 26% 25% 24% 23% 22% RWA, EGP bn CAR (RHS) 25% 2 15% 1 5% 5

6 Commercial International Bank Income Statement (EGP Mil) Net Interest Income 8,115 9,185 10,867 12,423 14,889 17,842 NonInterest Income 2,677 2,704 3,957 5,876 7,867 10,149 Operating Income 10,792 11,889 14,824 18,300 22,756 27,991 LoanLoss Provisions (1,682) (1,250) (1,686) (2,186) (2,572) (2,869) Operating Expenses (2,627) (3,033) (3,549) (4,165) (4,899) (5,775) Net Operating Profit 6,482 7,606 9,588 11,949 15,285 19,348 Net Profit after Taxes 4,730 5,824 7,335 9,134 11,671 14,760 Balance Sheet (EGP Mil) Cash & Due from Central Bank 9,849 47,276 56,484 68,830 89, ,124 Dur from banks 21,002 44,105 43,664 45,847 52,724 71,177 Treasury Bills and Gov't Notes 22,130 18,380 29,287 38,991 50,547 61,544 Loans & Discounts, gross 62,524 84, , , , ,085 Loans & Discounts, net 56,798 77,684 94, , , ,859 Total Assets 179, , , , , ,207 Due to Banks 1,601 2,017 2,219 2,441 2,685 2,953 Customer Deposits 155, , , , , ,453 Total Liabilities 162, , , , , ,030 Total Net Worth 16,583 20,612 25,986 32,962 42,195 54,177 Key Indicators NIM 5.6% 5.1% 4.9% 4.7% 4.6% 4.5% Noninterest income to operating income 24.8% 22.7% 26.7% 32.1% 34.6% 36.3% OPEXtoassets 1.6% 1.4% 1.2% 1.2% 1.2% 1.1% CosttoIncome 24.3% 25.5% 23.9% 22.8% 21.5% 20.6% Cost of Risk 2.9% 1.7% 1.8% 1.9% 1.8% 1.6% ROAE 26.7% 27.9% % 27.6% 27.3% ROAA 2.6% 2.4% 2.3% 2.4% 2.5% 2.6% CAR 16.1% 13.5% 15.7% 17.7% 18.1% 19.1% Treasury + Investments/Total Assets 46.5% 31.2% 33.9% 35.4% 34.7% 31.9% Utilization (LDR) 40.3% 36.9% 37.6% 38.5% 39.3% 39.7% NPL Ratio % 5.2% % 4.7% Provisions Coverage % 156.9% 170.9% 180.8% 181.2% EPS, EGP P/E, x BVPS, EGP P/B, x DPS, EGP Dividend Yield, % % 1.3% 1.3% 1.3% 1.3% Implied P/E, x Implied P/B, x

7 Credit Agricole Egypt Crème De La Crème January 15, 2017 RECOMMENDATION Overweight Fair Value, EGP/Share Last Price, EGP/Share Valuation Gap, % 15% Shares Outstanding, m Market Cap, EGP m 12,305 52W HL, EGP/Share W ADTV, EGP m 0.5 Reuters/Bloomberg CIEB.CA/CIEB EY Highly profitable; Diversifies exposure We recommend Credit Agricole Egypt due to the significant turnaround in positioning starting The bank s growth and profitability have picked up to catch up with larger private sector banks. The bank provides solid exposure to the underpenetrated retail sector in Egypt, as well as the mediumsized corporations in Egypt. Upgrade FV to EGP44.73; Maintain Overweight recommendation We upgrade our FV after accounting for the balance sheet expansion postfloatation. We account for higher lending growth (16% CAGR between ), and higher deposit accumulation pace (16% CAGR), along with slower pace of margin compression and faster pickup in noninterest income. We estimate margins will level off from above 6.5% in 2016 to 6. in 2021, which demonstrates resilience despite lower interest rates, for two key reasons: 1) accumulation of low cost deposits and 2) higher retail lending contribution to overall lending. Noninterest income should pick up from 28% to 39% of operating income, mostly driven by fees and commissions than by investment income growth. We estimate that NPLs will edge higher in 2016 and 2017, which will result in sustained high COR between CAR will be hit to 13% in 2016, but should pick up gradually over the forecast horizon. CIEB is trading at attractive multiples versus COMI, but it never catches up due to liquidity discount We realize that CIEB is trading at attractive multiples, with P/E 2017e of 8.5x and P/B 2017e of 2.6x. The attractiveness of these multiples is even higher when looking at the bottom line growth (18%) and ROAE (32%). CIEB usually trades in parallel to COMI, but maintaining a spread, because share price performance is penalized by its low liquidity. Key Indicators EPS, EGP P/E, x BVPS, EGP P/B, x DPS, EGP Dividend Yield, % 5.9% 3.7% 8.3% 9.6% 11.3% 12.8% Implied P/E, x Implied P/B, x Radwa El Swaify radwa.elswaify@pharosholding.com Jaida Gamal jaida.gamal@pharosholding.com 7 ANALYST CERTIFICATIONS AND REQUIRED DISCLOSURES ON LAST PAGE OF THIS REPORT

8 Credit Agricole Egypt Figure 7 Balance sheet growth to pick up gradually starting 2017; 2016 hike is floatation caused Figure 8 Lending growth to reflect on asset allocation % 49% 44% 45% 46% 47% 48% 35% 3 25% 2 15% 1 5% Gross Loans, EGP bn Treasury Investments, EGP bn Utilization Ratio Loan Growth (RHS) Deposit Growth (RHS) Treasury/Assets (RHS) Loans/Assets (RHS) Figure 9 Interest income to level off; To be compensated for by noninterest income Figure 10 NPL ratio to rise in ; High COR will be sustained % % % % % % 4.5% % % % % 0. NonInterest Income/Op Income NII/Op Income (RHS) Provisions Coverage NPL Ratio (RHS) Cost of Risk (RHS) Figure 11 ROE to be sustained above 3 Figure 12 CAR to recover gradually from the 2016 shock 6, , , , , , Interest Income Bottom Line Growth (RHS) NonInterest Income ROE (RHS) RWA, EGP bn CAR (RHS) 8

9 Credit Agricole Egypt Income Statement (EGP Mil) Net Interest Income 1,606 2,016 2,114 2,305 2,647 2,871 NonInterest Income ,074 1,328 1,595 1,864 Operating Income 2,275 2,818 3,188 3,634 4,242 4,736 LoanLoss Provisions (118) (229) (185) (222) (262) (305) Operating Expenses (797) (986) (1,116) (1,235) (1,400) (1,515) Net Operating Profit 1,360 1,602 1,887 2,176 2,580 2,916 Net Profit after Taxes 1,037 1,218 1,434 1,654 1,961 2,216 Balance Sheet (EGP Mil) Cash & Due from Central Bank 2,087 6,457 9,046 11,776 15,113 17,469 Dur from banks 6,222 6,533 6,859 7,202 7,563 7,941 Treasury Bills and Gov't Notes 6,274 9,522 10,304 10,812 11,583 12,875 Loans & Discounts, gross 13,777 14,132 17,239 20,349 24,019 27,580 Loans & Discounts, net 14,632 15,217 18,509 21,841 25,772 29,638 Total Assets 31,930 41,146 48,273 55,317 63,823 71,781 Due to Banks Customer Deposits 26,662 34,904 41,368 47,656 55,281 62,246 Total Liabilities 28,447 36,897 43,593 50,142 58,059 65,352 Total Net Worth 3,482 4,249 4,680 5,176 5,764 6,429 Key Indicators NIM, % 5.4% 6.5% 6.1% % 6. Noninterest income to operating income 29% 28% 34% 37% 38% 39% OPEXtoassets 2.5% 2.7% 2.5% 2.4% 2.3% 2.2% CosttoIncome 35% 35% 35% 34% 33% 32% Cost of Risk 0.8% 1.5% 1.1% 1.1% 1.1% 1.1% ROAE 32% 31% 32% 34% 36% 36% ROAA 3.3% 3.3% 3.2% 3.2% 3.3% 3.3% CAR 14% 13% 12% 12% 12% 13% Treasury + Investments/Total Assets 27% 31% 28% 26% 24% 24% Utilization (LDR) 55% 44% 45% 46% 47% 48% NPL Ratio 3% 4% 4% 4% 4% 4% Provisions Coverage 191% 187% 171% % 193% EPS, EGP P/E, x BVPS, EGP P/B, x DPS, EGP Dividend Yield, % 5.9% 3.7% 8.3% 9.6% 11.3% 12.8% Implied P/E, x Implied P/B, x

10 Housing and Development Bank Building for the Future January 15, 2017 RECOMMENDATION Overweight Fair Value, EGP/Share Last Price, EGP/Share Healthy mix between banking and real estate operations HDBK has demonstrated healthy momentum in balance sheet growth and solid margins. In addition, its real estate operations have proven to provide some support for noninterest income. HDBK is a high yield stock with estimated dividend yield for 2016 of 8%, on current price. The bank does not have any capital constraints due to the absence of foreign assets on its books and thus has high probability for maintaining high cash dividend distribution. Valuation Gap, % Shares Outstanding, m Market Cap, EGP m 52W HL, EGP/Share 52W ADTV, EGP m Reuters/Bloomberg 23% , HDBK.CA/HDBK EY Upgrade FV to EGP33.20; Maintain Overweight recommendation We upgrade our FV after accounting for healthy balance sheet growth. We project lending growth (14% CAGR between ), and higher deposit accumulation pace (13% CAGR), along with slower pace of margin compression and faster pickup in noninterest income. We estimate margins will level off from above 6.8% in 2016 to 5.4% in 2021, which demonstrates resilience despite lower interest rates, for two key reasons: 1) accumulation of low cost deposits and 2) higher retail lending contribution to overall lending. Noninterest income is assumed to remain stable as a percentage of operating income. We estimate that NPLs will edge higher in 2016 and 2017, which will result in sustained high COR between CAR will be resilient in 2016, due to the absence of foreign currency assets on the bank s balance sheet. Trading below book, despite high growth potential HDBK is definitely trading at attractive multiples, with P/E 2017e of 3.7x and P/B 2017e of 0.7x. The attractiveness of these multiples is even higher when looking at the bottom line growth (14%) and ROAE (21%). Definitely, the stock is over penalized by low liquidity. Key Indicators EPS, EGP P/E, x BVPS, EGP P/B, x DPS, EGP Dividend Yield, % 6% 8% 9% 11% 13% 13% Implied P/E, x Implied P/B, x Radwa El Swaify radwa.elswaify@pharosholding.com Dalia Bonna dalia.bonna@pharosholding.com 10 ANALYST CERTIFICATIONS AND REQUIRED DISCLOSURES ON LAST PAGE OF THIS REPORT

11 Housing and Development Bank Figure 13 Balance sheet growth to average 15% 86% 84% 83% 82% 82% 82% % 78% 76% 74% 72% 71% 7 68% 66% 64% 35% 3 25% 2 15% 1 5% Figure 14 Lending growth to reflect on asset allocation % 3 25% 2 15% 1 5% Utilization Ratio Loan Growth (RHS) Deposit Growth (RHS) Gross Loans, EGP bn Treasury Investments, EGP bn Treasury/Assets Gross Loans/Assets Figure 15 Interest income to level off; To be compensated for by noninterest income Figure 16 NPL ratio to rise in ; High COR will be sustained Provisions Coverage (RHS) NPL Ratio COR NonInterest Income/Operating Income NII/Operating Income (RHS) Figure 17 ROE to be sustained above 2 Figure 18 CAR to recover gradually from the 2016 shock 7, % 6,000 5,000 4,000 3,000 2,000 1,000 Interest Income NonInterest Income Bottom Line Growth post appropriations ROE (RHS) RWA, EGP bn CAR (RHS) 16% 14% 12% 1 8% 6% 4% 2% 11

12 Housing and Development Bank Income Statement (EGP Mil) Net Interest Income 1, , , , , ,372.2 NonInterest Income , , , ,386.6 Operating Income 1, , , , , ,758.8 LoanLoss Provisions (128.3) (472.9) (577.3) (671.3) (709.0) (728.8) Operating Expenses (708.2) (869.8) (1,001.3) (1,152.7) (1,270.9) (1,401.4) Net Operating Profit , , , , ,628.6 Net Profit after Taxes , , ,091.2 Balance Sheet (EGP Mil) Cash & Due from Central Bank 1,913 1,954 2,916 3,466 3,952 6,213 Dur from banks 6,639 6,904 7,388 7,905 8,458 9,050 Treasury Bills and Gov't Notes 2,827 7,638 8,242 9,139 10,151 10,811 Loans & Discounts, gross 7,506 9,528 10,631 12,041 13,907 15,532 Loans & Discounts, net 8,211 10,706 12,386 14,467 17,042 19,396 Total Assets 27,287 37,004 42,200 48,337 54,719 62,366 Due to Banks ,129 Customer Deposits 11,581 12,877 15,095 17,975 20,716 24,378 Total Liabilities 24,140 33,285 37,922 43,482 49,251 56,340 Total Net Worth 3,148 3,719 4,278 4,855 5,467 6,026 Key Indicators NIM, % 5.6% 6.8% 6.2% 6.2% 5.9% 5.6% Noninterest income to operating income 43.7% 35.1% 36.4% 37.1% 38.7% 36.9% OPEXtoassets 2.8% 2.7% 2.5% 2.5% 2.5% 2.4% CosttoIncome 37.8% 33.7% 33.5% 34.4% 34.6% 37.3% Cost of Risk 1.7% % 4. ROAE 18.9% 24.2% 21.2% 20.1% 19.8% 17.1% ROAA 2.3% 2.6% 2.1% % CAR 17% 14% 13% 13% 12% 12% Treasury + Investments/Total Assets 25% 36% 35% 36% 35% 33% Utilization (LDR) 71% 83% 82% 8 82% 8 NPL Ratio 7.5% 7.1% 7.9% 7.7% 7.6% 7.7% Provisions Coverage 105% 148% 173% 212% 238% 255% EPS, EGP P/E, x BVPS, EGP P/B, x DPS, EGP Dividend Yield, % 6% 8% 9% 11% 13% 13% Implied P/E, x Implied P/B, x

13 Sales and Trading Essam Abdel Hafiez Managing Director Ahmed Raafat Local Institutional Sales Seif Attia High Net Worth Ahmed Abutaleb Foreign Sales Sherif Shebl Foreign Sales Omar Nafie Foreign Sales

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