Commercial International Bank IR presentation 3Q 2013
Disclaimer This document is the property of CIB and it may contain confidential information solely for use as an investor presentation. It must be treated confidentially by attendees at such presentation and should not be reproduced, redistributed or passed to any other person. The information contained in this presentation may contain certain projections and forward looking statements that reflect the bank s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and thus may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the bank s assumptions are correct. Actual results may differ materially from those projected. None of the statements contained in this presentation is to be relied upon as a statement or representation of fact. All parties must satisfy themselves as to the correctness of each of the statements contained in this presentation. This document is provided for informational purposes only. It is not an offer to buy or sell, or a solicitation to buy or sell CIB s shares. Readers should take into account factors of uncertainty and risk when basing their investment decisions on information provided in this document. 2
Agenda Macro-Environment About CIB CIB Financial Highlights Consumer Banking Snapshot CIB Strategy Summary and Conclusion
Egypt Fact Sheet Favorable Demographics -Population: 87.1mn* -Median age: 24 -Growth: 3.1% over 2010 -Private consumption/gdp: 71.7% -Public consumption/gdp: 11.9% -Labor force/population: 27.9%* -Unemployment rate:12%* Attractive Growth Opportunities -Nominal GDP: EGP 381,246bn -GDP Per Capita (PPP): $2,958¹ -Historical GDP growth: 5.31% (2005/2011CAGR)¹ Underleveraged 2 Diversified as % of Total Domestic Production Manageable Debt Robust banking sector reforms -Total bank lending facilities/gdp: 34.14% -Loans/Deposits: 45.46 % (July 2013) -Corporate loans/gdp: 26.18 % -Household debt/gdp: 7.95 % -Agricultural: 9.98% -Gross Exports: 1.14%** * -Transportation: 4.59% -Industrial: 27.78% -Government: 9.51% -Tourism: 3.29% -Mining: 11.76% -Remittances: 2.70%*** -Suez Canal: 1.37% - Financial services 2.1% -Trade:8.96% -Construction: 7.59% -FDIs:0.7 %*** -Net International reserve: $15bn (Sep.2012) -Current A/C balance: $-1535.7*** -LT external debt: $31.5bn*** -ST external debt: $2.9bn*** 80% of debt is in local currency, held by public sector Banking reform program, Phase I (2005-2008) successfully completed Phase II (2009-2012):currently being implemented, aiming at improving the regulatory environment, adopting Basel II and increased focus on corporate governance Stringent regulations limit concentrated risk exposure and proprietary investment 1. IMF WEO Estimates for 2012, April 2012 2. Figures as of June 2013 based on 2012/2013 GDP at market price * Preliminary number *** Figures as of Q4 2011/2012 As of July/March 2011/2012 Source: Central Bank of Egypt (CBE) 5
Macroeconomics Snapshot 8% GDP Growth* 20% Inflation (%) 6% 7.1% 7.2% 5.1% 15% 18.3% 13.5% 4% 2% 4.7% 1.9% 2.2% 2.1% 10% 5% 6.9% 10.3% 9.6% 4.7% 9.7% 0% 06/07 07/08 08/09 09/10 10/11 11/12 12/13 0% 2007 2008 2009 2010 2011 2012 August 2013 100% 75% 87.7% 93.7% 95.1% 84.7% Sovereign Debt 73.5% 72.5% 73.6% 76.2% 80.3% 75.9% 78.7% 83.3% 87.5% 16000 12000 FDI (USD mn) 13,237 50% 25% 0% 38.1% 31.1% 27.6% 22.8% 20.1% 16.9% * 15.9% 15.2% 13.5% * * 11.9% 13.8% 14.9% 17.3% * 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 Q1 12/13 External Debt in LCY/GDP Q2 12/13 Q3 12/13 Gross Domestic Debt/GDP Q4 12/13 8000 4000 0 11,053 6,758 3,902 8,113 3,982 6,111 2,189 428 701 407 3,005 * 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 Source: CBE 6
Egyptian Banking Sector Snapshot 67% 61% 59% 60% 58% 53% 52% 52% 49% 47% 1159 756 820 900 965 438 497 543 571 658 293 304 318 344 382 399 427 464 471 539 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 Apr-13 Total deposits (EGP bn) Total loans (EGP bn) loans to deposits ratio 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 Sept.12 # of banking licenses 62 61 59 43 41 40 39 39 40 Source: CBE 7
Challenges Facing Egypt Egypt s Socio- Economic Problems 1 1 Slow improvement in standards of living; UNDP Human Development Index: Score of 0.662, ranking 112/187 Population Below Poverty Line: 20% of population Low quality health care services; 4.7% of GDP spent on health care services 1 4 1 Lack of educational reforms 3.8% of GDP spent on education Ease of doing business index: Ranked 110/185 in 2012 High unemployment rates: 13.5% as of 2012, and 12% as of 2011 1 2 Low GDP/Capita: USD 6,700 as of 2012 Soaring budget deficit: EGP 239.9 (USD 34.27 at USD/EGP 7) as of FY 2012/2013 3 Corruption Perception Index: In 2012; Scored 32 and ranked 118/176 vs. a score of 29 in 2011 1. CIA World Fact Book 2. Ministry of Finance 3. Transparency.org 4. World Bank 8
Strategic Milestones Chase Divestiture : Renamed CIB First GDR US$ 120M 22.2% of share capital Strategic Subsidiaries established to complement our core business Ripplewood led consortium divested half of its holdings in CIB to Actis 1975 1987 1993 1994 1995 1996 1997 1998 2006 2009 Chase National Established First Egyptian Bank IPO raising US$ 115M 150% oversubscribed First International Rating by S&P and Fitch : BBB- Consortium led by Ripplewood Acquired NBE 19% Stake RW holding sold its remaining stake in CIB, thus marking the transition of strategic partnership to Actis 10
General Information CIB s Stock is listed in the Egyptian Stock Exchange, London Stock Exchange and traded in New York Stock Exchange Shareholding Structure Share Information Actis 9.14% Free Float 90.86% Shares outstanding 600,162,379 Par value EGP 10.00 GDR Ratio 1:1 Last 52 weeks Hi 45.47 Last 52 weeks Lo 26.7 CIB Stock Activity CIB Stock Info. 300 250 200 150 100 50 0 2010 2011 YTD 2013 Market Cap.-EGP 27,972mn 11,097mn 26,875mn Daily Liquidity 57.06mn 26.85mn 32.57mn Avg. Daily Volume 1.51mn 0.953mn 0.932mn Avg. Daily Price-EGP 38.02 28.18 34.95 Source: Bloomberg CIB Index EGX30 Index 11
CI Group Structure 12
CIB s Distribution Network Branch Distribution: Cairo: 87 Alex: 26 Delta: 6 Upper Egypt & Red Sea: 21 Sinai & Canal: 25 Total Outlets: 165 Alternate Channel Distribution: ATMs: 540 POS: 8,317 On-line Banking hits per month: N/A Call Center: 198.8k hits per month through Our 24 hours 7 days a week dedicated Customer Service short number 1966 13
CIB s Business Segments Business Segments Institutional Banking Consumer Banking CI Capital Description Market leader in Egypt The prime contributor to profitability The take-off for a world class consumer banking franchise Full-fledged Investment Banking arm Focus on Multinationals and Egypt s largest corporations, Midcaps, Institutions and Banks Retail customers and SMEs Research Securities Brokerage Asset Management Investment Banking Customers Over 500 493,915 Contribution to Loans Deposits 83.8% 16.2% 25.3% 74.7% 14
Corporate Governance Commitment to Corporate Governance Corporate governance is an issue that rates high on our list of priorities CIB s commitment to maintaining the highest standards of corporate governance is supported by several mandates, including: 1. Segregation of role of Executive Management and Board of Directors 2. Internal policies and manuals covering all business aspects 3. Highly skilled Investor Relations Team 4. Board sub-committees: Audit Committee Corporate Governance and Compensation Committee Risk Committee Management Committee High Lending and Investment Committee Operations and IT Committee Affiliates Committee Sustainability Committee Importance of Corporate Governance It has been demonstrated over and over that effective corporate governance in banks not only enhances investor confidence in the Bank and provides it with a competitive advantage to attract domestic and foreign capital but also helps in withstanding economic downturns 15
Commitment to Corporate Governance CIB was the first Egyptian corporation to establish an Audit Committee in 1998 The Board and its committees are governed by well-defined charters CIB s Board of Directors sets the Bank s overall strategy and ensures that controls are in place to deliver maximum value to all stakeholders; CIB s Board consists of ten members, nine of which are Non-Executive members with a range of industry expertise When a board seat becomes vacant, the Governance Committee is responsible for nominating a new member We take pride in our strong corporate governance structures which include Experienced team of professional executive directors and senior management Competent board committees Distinguished group of non- Executive directors CIB s highly qualified Board of Directors is supported by internal and external auditors, as well as other internal control functions Risk Compliance 16
CIB s Board of Directors 17 17 17
Awards and Recognition 18
Performance Snapshot: 30 September 2013 Total Assets EGP 109,209 mn Year End 2012 : EGP 93,957 mn; + 16.2 % Net Loans EGP 41,855 mn Year End 2012 : EGP41,877 mn; -0.1% Customer Deposits EGP 94,079 mn Year End 2012 :EGP78,729 mm; + 19.5 % Shareholders Equity EGP 11,403 mn Year End 2012 EGP 10,765 mm; +5.9% Revenues EGP 5.24 billion YTD 3Q2012 :EGP 3.83billion ; +37% NPAT EGP 2,249 mn YTD 3Q2012 : EGP 1,639 mn; + 37.3 % NPLs/Gross Loans * 3.98 % Almost flat from the second quarter of 2013 and 35 basis points higher than year end 2012 CAR 14.41 % Based on Basel II according to CBE s new regulations ROAE 33.1 % 3Q2012 : 25.5 %; +29.7% ROAA 3.62 % 3Q2012 : 2.73 %; + 32.8 % Cost/Income 26.0 % 3Q2012 : 25.8 %; +0.7% Net Interest Margin* 5.25% 3Q2012: 4.85% +8.3% Figures are on a consolidated basis except for NIM and NPLs/Gross loan ratios which are are on a standalone basis 20
Historical Performance 1.94% 2.09% 24.4% 28.9% 26.5% 506 610 853 2.37% 2.90% 33.1% 30.0% 26.7% 28.7% 1,286 1,370 1,744 2,020 22.8 19.61% 2,226 1,615 2004 2005 2006 2007 2008 2009 2010 2011 2012 Net Income 3.08% 2.87% 2.89% 75,425 85,534 94,104 27,977 30,389 37,553 47,906 57,462 64,255 ROAE% 2.50 2.01% 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Assets ROAA% 56% 56% 57% 56.3% 55% 56% 54% 52% 50% 71.5 78.7 63.4 48.9 54.8 24.0 24.9 31.6 39.5 14.0 17.5 20.5 26.3 27.4 35.2 41.1 41.8 13.4 2004 2005 2006 2007 2008 2009 2010 2011 2012 Net Loans Deposits Net Loans/ Deposits 38.40% 34.90% 37.00% 39.70% 39.50% 32.70% 30.20% 32.30% 30.60% 14.23% 18.20% 21.22% 15.60% 10.80% 12.30% 14.41% 13.78% 13.60% 5.20% 5.60% 3.80% 3.00% 3.00% 2.90% 2.70% 2.90% 3.60% 2004 2005 2006 2007 2008 2009 2010 2011 2012 CAR NPLs/Gross Loans Cost:income Branches & Outlets Starting 2009, CIB used IFRS 92 100 119 131 152 155 153 154 155 Headcount 2,109 2,301 2,477 3,508 4,014 4,426 4,750 4,845 5,181 Years 2004 2005 2006 2007 2008 2009 2010 2011 2012 21
Peer Analysis Q2 2013 40% 30% 20% 30.85% ROAE 23.49% 22.97% 21.15% 16.72% 3% 2% 2.66% 2.64% ROAA 2.60% 1.74% 1.72% 45% 30% 26.14% Cost to Income 30.77% 39.33% 39.75% 49.61% 10% 1% 15% 0% CAE CIB HSBC NSGB Alex 0% NSGB CIB CAE HSBC Alex 0% CIB NSGB HSBC CAE Alex EGP Millions 1,600 1,324 1,200 800 400 936 Net Income 482 365 349 EGP Billions 120 106 80 40 74 Total Assets 57 40 28 10% 8% 6% 4% 2% 8.02% 7.09% 4.49% 3.80% 2.41% Loans Market Share 8.77% 7.41% 8.05% 8.32% 7.62% 7.36% 4.53% 4.43% 4.03% 4.10% 4.16% 3.95% 2.50% 2.41% 2.60% 0 CIB NSGB HSBC CAE Alex 0 CIB NSGB HSBC Alex CAE 0% Dec-10 Dec-11 Dec-12 Jun-13 CIB NSGB HSBC ALEX CAE 16% 12% 8% 4% 0% Captial Adequacy 14.80% 14.03% 12.48% 12.39% 11.45% NSGB CIB CAE Alex HSBC 80% 60% 40% 20% 0% Gross Loans to Deposits 65.71% 68.11% 59.00% 50.03% 43.67% HSBC CIB CAE Alex NSGB 10% 8% 6% 4% 2% 0% Deposits Market Share 7.23% 7.48% 7.67% 6.67% 5.26% 5.23% 5.02% 5.16% 4.18% 4.26% 4.31% 4.17% 2.90% 2.83% 3.11% 3.07% 2.21% 1.95% 2.05% 2.23% Dec-10 Dec-11 Dec-12 Jun-13 CIB NSGB HSBC ALEX CAE 22
CIB Market Shares Trends 8.02% 8.10% 8.24% 8.30% 8.77% 8.47% 8.45% 8.52% 8.58% 8.52% 8.32% 8.32% 7.58% 6.68% 6.70% 6.12% 6.38% 7.22% 7.04% 6.66% 6.62% 6.56% 6.67% 6.89% 6.98% 7.14% 7.23% 7.39% 7.48% 7.48% 7.23% 7.51% 7.67% 7.75% Total Loans Total Deposits CIB maintained the highest loan market share of all private-sector banks, reaching 8.32 % as of July 2013 Deposit market share was 7.75 % as of July 2013, maintaining CIB s leading position amongst all private-sector banks N.B: CIB s loans market share from performing loans is significantly higher 23
Consumer Banking Assets Portfolio Growth Assets Assets Mix In Million FY 10 FY 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Balanc e 3,915 5,175 5,525 6,083 6,599 6,664 7,073 7,210 7,312 25
CIB s Future Growth Opportunities Here is where we stand today But this is where we will be tomorrow Quality portfolio Product-centric Developed initiatives to instill client focused culture Wealth Management, Business Banking, Mid-Cap Banking, Global Customer Relations (GCR) Longstanding client relationships Optimization of alternative channel strategy Further develop Global Transactional Services solutions (GTS) CIB offers the groundbreaking one-of-a kind Trade online Customer service is continuously added to in order to constantly ensure customer satisfaction Product penetration and increase share of wallet without risking quality Customer-centric solutions Offering +Segment Focus on Mid-Cap, business banking relationships and further enhance ALM Shift to Relationship Management model Become the top e-banking provider in the country Further develop Cash Management to become as competitive as Trade online Deliver superior customer service Start the mortgage lending market Continue offering innovative financial solutions to our clients 27
CIB is the leading financial institution in Egypt, has been a key player in the market for more than 30 years Strongest brand equity in the Egyptian corporate banking sector With prudent credit policies, the Bank is well-equipped to manage future risks CIB s management is strongly committed to shareholder value maximization CIB is well positioned to gain market share and accelerate growth The only one stop shop solutions provider in Egypt Why CIB? Profitability Market leader NPAT EGP 2.249 bn Total revenues 5.24 bn Liquidity High liquidity LDR 47.9% Strategy Clear strategy Corporate leadership Retail break out Asset Quality NPL/Gross loans 3.95% Coverage Ratio 140% KPIs ROA 3.62% ROE 33.1 % Cost: income 26.0% Largest in Total Assets 109.2bn Market Cap 26.875 bn in private banks 29
Conclusion Egypt has been a safe haven for investments, given its favorable demographics (1/3 of the population is under 15 years), its diversified economy and implementation of economic reforms that enhanced accessibility With the revolution of 25th January 2011 and June 30 th 2013, we at CIB feel that the future of this country is positive We believe one of the main milestones achieved by this revolution is the boost in transparency and accountability This will significantly reduce the cost of doing business in Egypt and will ultimately lead to healthy competition without favoritism In fact, moving to a more open political system will support further institutionalization and policy formulation, leading to higher consumer and business confidence The Egyptian banking sector possesses high structural profitability and remains intact CIB s performance during these historical times is impressive CIB demonstrated its leadership of the sector during these past turbulent times CIB has positioned itself to benefit from the upcoming stability and the prosperity Egypt will witness in the years to come CIB is the strongest bank in Egypt with tremendous upside potential: Strong, sustainable core institutional business Incremental institutional initiatives Significant retail opportunity 30
Investor Relations contacts: Sherif Khalil Head of IR Sherif.khalil@cibeg.com Yasmine Hemeda IR Analyst Yasmine.Hemeda@cibeg.com Thank you For more information, please visit www.cibeg.com To read about the projects that the CIB Foundation has helped support and ways in which you can donate, please visit www.cibfoundationegypt.org 31