Investing in People Investing in the Future - Trombino
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CIB's 5,181 employees bring to the table a balanced blend of seasoned insight coupled youthful vigor — a mix that helps us efficiently serve more than 589,645 customers. Veteran Know-How, Youthful Vigor Contents CIB: An Introduction What We Do . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Our History . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Key Financial Highlights . . . . . . . . . . . . . . . . . . . . 4 Key Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A Strategy that Delivers . . . . . . . . . . . . . . . . . . . . 6 A Word from Our Chairman . . . . . . . . . . . . . . . . . . 8 Board of Directors’ Report . . . . . . . . . . . . . . . . . 10 Key Figures from 2012 . . . . . . . . . . . . . . . . . . . . 20 2012 in Review Institutional Banking . . . . . . . . . . . . . . . . . . . . . 24 Global Customer Relations . . . . . . . . . . . . . . . . . 32 Consumer and Business Banking . . . . . . . . . . . . . . 34 COO Area . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Risk Group . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Strategic Subsidiaries CI Capital Holding . . . . . . . . . . . . . . . . . . . . . . 56 Egypt Factors . . . . . . . . . . . . . . . . . . . . . . . . . 59 Commercial International Life Insurance Company . . . . 60 Falcon Group . . . . . . . . . . . . . . . . . . . . . . . . . 60 Corporate Leasing Company (Egypt) SAE – CORPLEASE . 62 Corporate Governance . . . . . . . . . . . . . . . . . . . . 66 Executive Management . . . . . . . . . . . . . . . . . . . . 72 Community Development . . . . . . . . . . . . . . . . . . . 76 CIB Foundation . . . . . . . . . . . . . . . . . . . . . . . . . 78 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 82
CIB: An Introduction What We Do A Snapshot Of Our Businesses Commercial International Bank (CIB) is the leading private The leading Corporate Banking port this growing market in the coming sector bank in Egypt, offering a broad range of financial prod- ucts and services to its customers, which include enterprises private sector Widely recognized as the preeminent cor- porate bank in Egypt, CIB aspires to be- years. • Deposit Accounts: Offering a wide of all sizes, institutions, households and high-net-worth (HNW) individuals. bank in Egypt come one of the best banks in the region, serving industry-leading corporate clients. range of account types to serve our cli- ents’ deposit and savings needs, includ- In addition to traditional asset and liability products, CIB ing tailored accounts for minors, youth offers wealth management, securitization, direct investment Business Banking and senior citizens, as well as certificates and treasury services, all delivered through client-centric The Business Banking Segment was for- of deposit and care accounts. This is in teams. mally launched at the end of 2011 follow- addition to our standard range of cur- The Bank also owns a number of subsidiaries, including CI ing a successful one-year pilot program, rent, savings and time deposit accounts. Capital (which offers asset management, investment banking, particularly among retail companies in the • Residential Property Finance: Provid- brokerage and research services), Commercial International Egyptian market. It mainly serves small ing loans to finance home purchases, Life Insurance Company, the Falcon Group, Egypt Factors, and midsize companies which are the residential construction and refurbish- and CORPLEASE. backbone of the Egyptian economy with a ment and finishing. CIB strives to provide clients with superior financial so- contribution of almost 80% of total GDP. • Credit and Debit Cards: Offering a lutions to meet all of their financial needs. This enables the This comes as a natural progression of the broad range of credit, debit and prepaid Bank to maintain its leadership position in the market, while Bank’s mission to remain one of Egypt’s cards. providing a stimulating work environment for staff and gen- biggest financial and commercial institu- erating outstanding value for shareholders. tions supporting the Egyptian economy. Wealth Management CIB offers a wide array of investment Mid-Cap Banking products and services to the largest num- This division caters to medium-sized com- ber of affluent clients in Egypt. panies, employing a dedicated team of cer- Our History tified officers who are highly specialized in providing advice and assistance to mid- sized businesses. The department’s role is Global Transactional Services (GTS) The Global Transactional Services (GTS) CIB was established in 1975 as Chase National Bank, a joint to help these businesses grow to become Group serves as a key group within CIB venture between Chase Manhattan Bank and National Bank large corporations in the future. and oversees cash management, trade and of Egypt (NBE). In 1987, Chase divested its ownership stake global securities services. due to a shift in international strategy, and the stake was ac- Debt Capital Markets quired by NBE, at which point the Bank adopted the name CIB’s global product knowledge, local Treasury and Capital Markets Commercial International Bank. expertise and capital resources make the Services Over time, NBE decreased its participation in CIB, which Bank an industry leader in project finance, CIB delivers world class service in the areas eventually dropped to 19% in 2006, when a consortium led syndicated loans and structured finance of cash and liquidity management, capital by Ripplewood Holdings acquired NBE’s remaining stake. In in Egypt. CIB’s project finance and syndi- markets, foreign exchange and derivatives. July 2009, Actis, an emerging market private equity special- cated loans teams provide large borrowers ist, acquired 50% of the stake held by the Ripplewood Con- with better market access and greater ease Direct Investment sortium. Five months later, in December 2009, Actis became and speed of execution. CIB actively participates in select direct the single largest shareholder in CIB with a 9.3% stake after investment opportunities in Egypt Ripplewood sold its remaining share of 4.7% on the open Consumer Banking and across the region. market. The emergence of Actis as the predominant share- CIB registered considerable progress in holder marked a successful transition in the Bank’s strategic 2012 as it continued to build a full-service, Investment Banking Services partnership. world-class consumer bank, as under- Through CI Capital, CIB offers existing scored by the ability to serve clients in a and prospective clients a full suite of invest- challenging environment last year. We ment banking products and services, in- offer a wide array of consumer banking cluding investment banking, advisory and products, including: execution, asset management, brokerage • Personal Loans: Focusing on employees and equity research. CI Capital offers both of our corporate banking clients and deep and broad market knowledge and ex- offering secured overdrafts and trade pertise; the firm is consistently ranked as a products. leading brokerage house serving local and • Auto Loans: Positioned to actively sup- international clients in Egypt. 2 Annual Report 2012
CIB: An Introduction Key Financial Highlights Key Facts FY 12 FY 11 FY 10 Consoli- Consol- Consol- FY 12 FY 11 FY 10 FY 09 FY 08 FY 07 FY 06 FY 05 #1 Bank in terms of: dated idated idated Common Share Information Per Share Earning Per Share (EPS) * 3.53 2.43 3 2.63 4.89 3.73 3.64 2.77 Dividends (DPS) 1.25 1 1 1.5 1 1 1 1 Profitability, Book Value (BV/No of Share) 18.94 15.03 14.59 23.75 19.25 20.93 15.59 19.44 achieving Share Price (EGP)** Our EGP 2.2 billion in 5,181 High 39.8 47.4 79.49 59.7 93.4 95 79 63.5 Low 21.1 18.5 33.75 29.5 27.87 53.61 42.11 39.91 Closing 34.6 18.7 47.4 54.68 37.2 91.77 57.87 58.68 net income. Shares Outstanding 597.2 593.5 590.1 292.5 292.5 195 195 130 (millions) Market Capitalization employees serve some 20,646 11,098 27,973 15,994 10,881 17,895 11,285 7,628 (EGP millions) Value Measures Revenue 589,648 customers. Price to Earnings Multiple (P/E) 9.8 7.7 15.8 20.8 7.6 24.6 15.9 21.2 Dividend Yield among all Egyptian 3.62% 5.35% 2.11% 2.74% 2.69% 1.09% 1.73% 2.60% (based on closing share price) private sector banks Dividend Payout Ratio 31.36% 33.90% 27.60% 24.60% 18.10% 15.80% 27.50% 21.30% Market Value to Book Value Ratio 1.83 1.24 3.25 2.3 1.93 4.39 3.71 3.02 with EGP 5.3 billion in 94.0 bn Financial Results (EGP millions) total revenues. EGP Net Operating Income 5,344 3,934 3,952 5,108 3,837 3,727 3,173 3,200 2,288 1,741 1,450 Provision for Credit Losses - Specific 610 321 6 610 321 6 9 346 193 176 197 Provision for Credit Losses - General 49 57 18 167 Total Provisions 610 321 6 610 321 6 9 395 250 193 364 in total assets. Non Interest Expense 1,653 1,557 1,562 1,445 1,337 1,188 1,041 950 636 668 474 Net-worth Net Profits 2,226 1,615 2,021 2,203 1,749 2,141 1,784 1,615 1,233 802 610 Financial Measures among all Cost : Income 30.93% 39.58% 39.52% 28.29% 34.84% 31.87% 32.80% 29.69% 27.82% 38.38% 32.72% Egyptian private Return on Average Common Equity 22.79% 18.69% 28.66% 21.77% 20.96% 30.47% 31.18% 36.31% 37.95% 31.58% 29.30% sector banks. 119,611 (ROAE) Net Interest Margin 4.74% 3.71% 3.62% 3.81% 3.54% 3.12% 3.06% 3.50% (NII/average interest earning assets) Return on Average Assets (ROAA) 2.48% 2.01% 2.89% 2.45% 2.18% 3.08% 2.94% 3.08% 2.90% 2.37% 2.09% Regular Workforce Headcount 5,181 4,867 4,755 4,867 4,517 4,360 4,162 3,809 3,132 2,477 2,301 Balance Sheet and Off Balance internet banking subscribers. Sheet Information (EGP millions) Cash Resources and Securities Market 16,140 18,990 16,325 16,764 19,821 16,854 16,125 14,473 21,573 13,061 10,537 (Non Governmental) capitalization in the Net Loans and Acceptances 41,877 41,065 35,175 41,877 41,065 35,175 27,443 26,330 20,479 17,465 14,039 Assets 94,014 85,506 75,425 94,405 85,628 75,093 64,063 57,128 47,664 37,422 30,390 Egyptian banking sector. Deposits 78,729 71,468 63,364 78,835 71,574 63,480 54,843 48,938 39,515 31,600 24,870 Common Shareholders Equity 10,822 8,712 8,567 11,311 8,921 8,609 6,946 5,631 4,081 3,040 2,527 Over 500 Average Assets 89,760 80,480 69,840 90,017 80,361 69,578 60,595 52,396 42,543 33,906 29,183 Average Interest Earning Assets 80,063 70,913 62,007 79,834 70,549 61,624 53,431 44,602 36,603 29,277 25,619 Average Common Shareholders Equity 9,767 8,640 7,800 10,116 8,765 7,777 6,288 4,856 3,560 2,784 2,325 of Balance Sheet Quality Measures Loan and deposit Equity to Risk-Weighted Assets 16.59% 15.79% 17.63% 17.33% 16.11% 17.71% 17.01% 15.19% 13.70% 14.14% 13.83% Egypt’s largest corporations market share Risk-Weighted Assets (EGP billions) 65 55 49 65 55 49 41 37 30 26 22 bank with CIB. Tier 1 Capital Ratio 12.20% 12.53% 15.66% 12.20% 12.53% 15.66% 15.28% 13.74% 10.17% 9.59% 9.78% among all Egyptian Adjusted Capital Adequacy Ratio 13.59%*** 15.40% 16.92% 13.59%*** 15.40% 16.92% 16.53% 14.99% 14.70% 13.60% 13.10% * Based on net profit available to distribution (after deducting staff profit share and board bonus) private sector banks. ** Unadjusted to stock dividends *** As per Basel II regulations before profit appropriation
CIB: An Introduction Our Vision To be the leading and most trusted financial institution in Egypt, admired for our people, strong core values and performance. A Strategy that Delivers Our Mission To create outstanding stakeholder value by providing best-in-class financial solutions to the in- dividuals and enterprises that drive Egypt’s economy. Through our innovative products, focus on superior customer service, development of staff and commitment to our community, we will realize our ambitions and pave the landscape of banking in Egypt for years to come. CIB’s outstanding performance during standing hand-in-hand with our clients ity to offer employees an attractive work the turbulent times since early 2011 re- during these unstable times. Our un- environment, myriad career opportu- Our Objective veals that at CIB, our customers are our wavering commitment to our clients is nities and comprehensive training and To grow and help others grow. top priority. Our continued success de- the basis on which we will continue to feedback, allows us to attract and retain pends not only on our ability to satisfy provide our shareholders with consis- the strongest banking professionals in Our Values their evolving needs, but also to have tent and high-quality returns. Egypt. Our employees reciprocate with A number of core values embody the way in which CIB employees work together to deliver ef- them served in prime time. CIB prides We believe a key component of our dedication to our customers and the fective results for our customers and community. itself on its remarkable performance in success is our skillful staff. CIB’s abil- wider CIB community. Integrity: • Exemplify the highest standards of personal and professional ethics in all aspects of our business. An Outstanding Track Record • Be honest and open at all times. • Stand up for one’s convictions as well as accept responsibility for one’s own mistakes. • Comply fully with the letter and spirit of the laws, rules and practices that govern CIB’s business in Egypt and abroad. • Say what we do and do what we say. Client Focus: • Our clients are at the center of our activities and their satisfaction is our ultimate objective. • Our success is dependent upon our ability to provide the best products and services to our clients; we are committed to helping our clients achieve their goals and be the best at what they do. Innovation: • Since our inception as the first joint venture bank in Egypt, CIB has been a pioneer in the financial services industry. We believe innovation is a core competitive advantage and promote it accord- ingly. • We strive to lead the Egyptian financial services industry to a higher level of performance in serv- ing the millions of Egyptians who remain under-served or un-banked. Hard Work: • Discipline and perseverance govern our actions so as to achieve outstanding results for our clients and outstanding returns for our stakeholders. • Seeking service excellence guides our commitment to our clients. • We work with our clients to reach their current goals while anticipating and planning for their future objectives. Teamwork: • We collaborate, listen and share information openly within CIB and with our partners, clients and shareholders. • Each one of us consistently represents CIB’s total corporate image. • There is only one CIB in the eyes of our clients. • We value and respect one another’s cultural backgrounds and unique perspectives. Respect to the Individual: • We respect the individual whether an employee, a client, a shareholder or a member of the com- munities in which we live and operate. • We treat one another with dignity and respect and take time to answer questions and respond to concerns. • We firmly believe each individual must feel free to make suggestions and offer constructive criti- cism. • CIB is a meritocracy, where all employees have equal opportunity for development and advance- ment based only on their merits.
A Word from Our Chairman Systems Built and Lived by People, For People Managing an institution such as CIB through exception- We retain our best and brightest: We don’t just look As bankers, we have a simple business model: We take ally challenging economic and political times on a regional to recruit the highest-quality individuals possible, we also deposits, and give out loans. It is a simple calculus in most and even international scale is primarily an exercise in ho- invest significantly in their professional development and circumstances, but an utter lack of visibility during the pro- meostasis. Our goal is simple: To maintain our position as retain them for the long term by acknowledging that their tracted post-Revolutionary transition period made business the nation’s leading private-sector financial institution, to best interests are almost always the best interests of our in- judgment not a science, but a dark art. maintain our credit quality, our risk profile and our abil- stitution. I was privileged, against this backdrop, to have worked in ity to respond creatively to new opportunities and threats 2012 with Mr. Hisham Ramez as an equal partner. Hisham alike. We defy conventional wisdom: The global tendency in joined us from the Central Bank of Egypt, and having some- We have succeeded in doing so since 25 January 2011, our industry is to cut wages, slash bonuses and reduce head one with whom to share the burden of leadership was among which is a testament not just to the dedication and skills of count in times of crisis. That’s the obvious, mechanical mod- the highlights of my year. Hisham made a substantial differ- our 5,181 employees, but to the soundness of the systems el: Hammer headcount and fixed costs. Not at CIB. We dig- ence in his time with the bank, and his departure to assume these same people have built in the decades preceding. It is in and persevere. Take 2011, when we clearly acknowledged his duties as the Governor of the CBE is both our nation’s for this reason that a spotlight on our investment in human that short-term savings on the backs of middle management gain and this institution’s loss. He did great work here and we In the wake of the talent is at the heart of this year’s annual report. and the rank and file is not the way to sustain — let alone will definitely miss him. As we pray for his success, our mis- revolution we protected Over a period of years, our staff have built an institution enhance — our competitive edge in a 38-bank environment. sion continues: "To create outstanding value for shareholders that rewards creativity, minimizes risk and maximizes pro- In the wake of the Revolution, we protected middle manage- by being the best bank in Egypt, full stop." middle management ductivity by recruiting, empowering and retaining profes- ment and junior ranks from salary cuts. It was not an ob- Based on our Board Charter, in the absence of one of the and junior ranks sionals capable of building the responsive systems that have vious solution in our industry, but our rationale was clear: managing directors, the other assumes his responsibilities. made us what we are today: Egypt’s largest private-sector Rank and file and mid-level management are the engine of Accordingly, I will temporarily assume Hisham's responsi- from salary cuts. Our bank by assets, revenues and profitability. this institution. They repaid our 2011 investment with inter- bilities as per the mandated authorities by the board. rationale was clear: This has been possible because of a can-do culture that est with their outstanding performance in 2012. As I write these words, it is clear that the challenges of 2012 has been part of the fabric of CIB since our earliest days. The did not come to an end with the change of the calendar year. Rank and file and blueprint for success is as deceptively simple as it is difficult We are nimble: Adaptation and change have become part Our goal for 2013 is thus to maintain continuity in people mid-level management to implement: of our culture, and we have stamped out both institutional and systems to allow us to mitigate risk at every turn. We are the engine of this stagnation and the cancer that is mental rust. Where other will maintain a homeostatic position while we hope that We seek business partners: There’s a reason why top- institutions would have taken half a year to study and debate early seeds of willingness on the part of the opposition and institution. level management welcome middle management to our responses to the challenges of 2011 and 2012, we pivoted our government alike to talk across factional lines blossoms. We weekly meetings, allowing them to learn from and inter- business plans in a matter of weeks. look forward to bedrock political stability returning and to nalize our debates and discussions. There’s a reason why wise guidance by the new governor of the Central Bank of we encourage this practice at all levels of the organization: We show no fear: We are an institution of human beings, Egypt — two factors that we are confident will ultimately see Business partners build for the future and feel sufficiently in- not machines. From the freshest recruit to senior manage- the return of business confidence. vested in to deliver results come hell or high water. ment, we are impacted at work by the outside forces that As local businesses begin investing once more, pent-up shape our private lives: by the way we live and go home, by se- foreign interest in Egypt to translate into fresh investment, We specialize: We instill, manage and measure productiv- curity and the recurrent nightmare of night-time talk shows. attracted by enduring macro fundamentals, a sound finan- ity by creating area specialists. We are not jacks of all trades We cope with difficult times such as these just as we did in cial system and attractive asset prices. As this comes to frui- and masters of none. Every young fast-mover in our orga- the best of times: By learning how to operate with confidence tion, we will be ready to deliver, calling on the same people nization is, first and foremost, someone who has the same outside our comfort zone. That’s what managing change is who created the systems and processes that have allowed us entrepreneurial spirit and systems-backed approach that we all about. Across the bank, our managers have shown a level- to flourish as others have foundered on the rocks. look for in mid-career and senior-level recruits. Our staff are headed approach to business that has instilled confidence in Any organization can write policies and slogans, but con- cross-trained, but they focus on specific areas and become staff throughout this institution. sistent implementation is the key. Implementation and en- industry-recognized experts. forcement on the ground year after year is what makes it part 2012 Performance as an Institution of your DNA. We are efficient: From planning to execution, we work at If you have read more than a single day’s front-page head- all costs to minimize wasted time. Our staff are our greatest lines in any newspaper or website — or watched a single asset, and the number of hours available to them in each day night of television — you know that it is an understatement Hisham Ezz El-Arab is finite. to say 2012 presented a ‘challenging working environment.’ Chairman and Managing Director 8 Annual Report 2012 Annual Report 2012 9
Board of Directors’ Report Board of Directors' Report 2012 Macroeconomic to (4.4%) in 2012 from (4.1%) in 2011 2012 Financial Position Overview and 1.5% in 2010. The year 2012 was a record one for CIB Egypt has been undergoing a period of Egypt recorded a significant drop of on many levels. CIB recorded consoli- profound socio-political change as it as- 58% in the Central Bank of Egypt's net dated net income for FY 2012 of EGP pires to improve its economic, political international reserves, from USD 36 bil- 2,227 million, growing 38% from FY and social conditions post-revolution. lion in 2010 to USD 15 billion in 2012, as 2011. Standalone net income grew 26% Challenging conditions in both the do- the CBE defended the Egyptian pound over 2011 and 2.9% over 2010 figures mestic and global arenas have resulted against devaluation pressures. As a re- to EGP 2,203 million. Total standalone in macroeconomic disruptions and sult, the USD / EGP exchange rate deval- revenues grew 36% over 2011 and 44% kept growth and investment levels from ued from 6.03 at the end of 2011 to 6.31 over 2010 to reach EGP 5,422 million, reaching their full potential. The major by December 2012. Due to continued achieving their highest level of growth challenge currently facing the Egyptian weakness in domestic demand as well as since 2008. economy is a combination of reduced lower global commodity prices, inflation Management’s proactive actions in security and political instability, which (consumer price index in urban areas) Q4 2011 and Q1 2012 to reposition the raise investor concerns and negatively declined from 11% in 2011 to 8.6% as of Bank against looming headwinds were impact tourism, investment, employ- November 2012. instrumental in boosting product reve- ment and production. Despite the unfavorable economic nues, which traditionally have not been Egypt’s real GDP growth showed backdrop, the Egyptian banking system major contributors to top and bottom a relative improvement of 2.2% in lines. In 2012, CIB also witnessed great FY 2011/2012 from 1.8% during FY adaptability and responsiveness in pric- 2010/2011 but remained significantly ing decisions, which led to a restructur- below average historical levels. The Management's proactive ing of the liabilities mix along with mar- main sectors contributing to this actions in Q4 2011 and ket share growth, while simultaneously growth were agriculture, construction, Q1 2012 to reposition securing profitability from a long-dated telecommunications and real estate. sovereign position as the Bank ventures Manufacturing and tourism, Egypt’s the Bank against into a more challenging 2013. traditional economic growth drivers, looming headwinds were In the core business, CIB recorded net showed only modest increases. Tourism interest income (NII) of EGP 4,084 mil- grew by 2.3% (0.1% of real GDP growth) instrumental in boosting lion in FY 2012 constituting approxi- while manufacturing grew by only 0.7% product revenues. mately 75% of its total revenues. Of this (0.1% of real GDP growth). Tourism’s figure, approximately 22% came from contribution to current account receipts the sovereign bond portfolio, which has witnessed steady decline from 20% has remained relatively resilient, liquid grew by nearly 87% during the year. Net in 2010 to 17% in 2011 and to only 14% and well-capitalized. The sector’s loan- income from banking fees and commis- in 2012. to-deposit ratio declined to 47.8% (as of sions grew by 9% during 2012 to reach Low investor confidence caused do- November 2012) from 49.5% in Decem- EGP 943 million as a result of solid mestic investments to contract from ber 2011. The local currency loan-to-de- business growth. 19.5% of GDP in 2010 to 17.1% in 2011 posit ratio declined from 45.7% to 45.3% Driven by strong NII growth, conser- and 16.7% in 2012, while FDI came in while the foreign currency loan-to-de- vative asset growth and tight expense- at just a quarter of 2010 levels (0.8% of posit ratio declined from 61.7% to 56.2%. control, 2012 saw improvements in all of GDP vs. 3.1%). The lack of investor ap- Total market deposits grew by 8.1% from the Bank’s key performance indicators. petite contributed to lower levels of job EGP 989 billion in 2011 to EGP 1.07 tril- CIB recorded ROAE of 22.68% up from creation and caused unemployment to lion in November 2012 on increases of 22.04% in 2011 despite the impact of the reach 12.5% in 2012 (the highest level 8.2% and 7.5% in LCY and FCY depos- higher equity base that resulted from since 2002), from 11.9% in 2011 and its respectively. Total market loans grew the marking to market of the available 8.9% in 2010. Domestic savings declined by 4.5% from EGP 490 billion in 2011 to for sale (AFS) bond portfolio. Driven by from 14.3% of GDP in 2010 to 13% in EGP 512 billion as of November 2012, on concern over the macroeconomic situ- 2011 and 9.1% in 2012 (lower than levels a 7.2% increase in LCY loans and a 2.0% ation and further delays in a return to seen during the global financial crisis decline in FCY loans. The sharp increase growth, CIB maintained its cautious of 2008/2009). The budget deficit in- in sovereign debt rates encouraged local capital base, reflected in a comfortable creased to 10.7% of GDP in 2012 from banks to allocate a larger portion of their capital adequacy level and CBE liquid- 9.8% in 2011 and BOP to GDP declined portfolio to sovereign assets. ity ratios. 10 Annual Report 2012
Board of Directors’ Report In 2012, CIB achieved its lowest cost- peer banks. CIB’s deposit growth of EGP 10.4 billion to serve as a stable 20 places from 2011 to 2012, capturing • The Remittances Department was views the size and overall composition to-income ratio since 2008, which was 8.9% outpaced the overall deposit mar- funding base. a market share of 3% in managing and awarded the “Quality Recognition of the Board and ensures it respects its primarily driven by NII growth, con- ket growth of 8.1%, thus reaching a As part of the Bank’s overall strat- marketing syndicated loans, vs. 0.4% in Award for Outstanding Achievement independence criteria. servative asset growth and controlled market share of 7.29% as of November egy to concentrate on alternative chan- 2011, and rose 35 places among syndi- – Best-in-Class Book Transfer Rate” by • Through its Governance and Compen- expense growth. CIB had ROAA of 2012. nels in order to allow branches to focus cated loan arrangers to capture a mar- JP Morgan. sation Committee, the Board ensures 2.45% up from 2.18% in 2011. Net inter- more on retail customers and sales ac- ket share of 1.6%, vs. 0.5% in 2011. • Global Trade Review acknowledged that an appropriate review and selec- est margin (NIM) also continued its up- Prudent Risk Management tivities, CIB succeeded in offloading a CIB as the “Best Trade Finance Bank in tion process for new nominees to the ward trend to reach 4.74% up 103 basis CIB is well-known for its conservative greater portion of customer activities Subsidiaries Egypt” for the fourth consecutive year. Board is in place. points (bps) from 2011. NIM was also risk management strategy, aiming to from branches to ATMs. In the drive to CI Capital experienced its strongest • In addition, CIB earned the "STP • Establishes the strategic objectives and positively impacted by management’s take proactive steps at the earliest signs lower cash handling costs, tough deci- performance in recent years and main- awards for 2012 in USD and EUR.” ethical standards that will direct the push to raise minimum lending rates of weakening in accounts before actual sions were taken regarding corporate’s tained its third place overall ranking on-going activities of the Bank, taking and re-pricing floating rate loans to bet- downgrades in credit rating become a top teller users that resulted in the re- among the top 10 brokerage companies Corporate Governance into account the interests of all stake- ter reflect risk and enhance margins. reality. Building on this track record, duction of excess cash. during 2012. CIBC achieved transac- We believe that good governance is a holders. Reflecting the prevailing economic CIB took provisions of EGP 610 million Bancassurance was a key initiative tion volumes of around EGP 20.7 bil- cornerstone of our success at CIB and • Establishes an internal control envi- conditions, CIB’s loan portfolio grew for the full year. The Bank’s world-class for Consumer Banking in 2012, with lion on 503 million transactions cover- we are proud of CIB’s leadership posi- ronment, which comprises systems, 3.3% from 2011 to reach EGP 44,351 risk management framework is reflect- revenues of EGP 38 million, an increase ing 2,895 million shares, to capture a tion in board governance. The Board policies, procedures and processes that million, with all growth coming from ed in its best-in-sector asset quality and of 142% over 2011. Business Banking market share of 7.1% in 2012. If a single remains committed to continuous im- are in compliance with regulatory re- local currency loans. On the back of a high-class corporate loan book. was another strategic focus for the year, outsized transaction is excluded, CIBC provement where we regularly review quirements. These control measures management’s actions to enhance ef- adding EGP 1.8 billion of incremental would actually be the brokerage market and update our practices. safeguard Bank assets and limit risks ficiency and improve portfolio quality, Preservation of Asset Quality net sales. leader for listed companies. Expense The overall corporate governance CIB’s loan market share declined from Despite the prevailing economic cir- control and a turnaround in broker- framework of CIB is directed by the 8.77% in 2011 to 8.45% as of November cumstances, CIB maintained its asset Income Appropriation age were the key profit drivers for the Board and its sub-committees: Audit In 2012 CIB was ranked 2012. One of management’s key goals quality and avoided significant deterio- CIB’s primary objective is to enhance Group. During 2012, the entire research Committee, Corporate Governance and for 2012 was to significantly restruc- ration, thanks to its effective credit cul- value for both customers and share- team was restructured with the hiring Compensation Committee, Risk Com- 13th on Bloomberg's ture the loan portfolio’s currency mix ture and stringent risk assessment mea- holders. The Board of Directors pro- of key talent. Additionally, a second mittee, Management Committee, High list of top 20 MENA in favour of higher yielding local cur- sures. CIB reported a 3.63% NPL ratio posed the distribution of a dividend managing director and vice president Lending and Investment Committee. rency loans, which increased by 6.5% in 2012, which is amongst the lowest in per share of EGP 1.25. CIB is increasing joined Investment Banking in Decem- The Board and its committees are banks in managing and from December 2011 to represent 57% the sector with an ample coverage ratio its Legal Reserve balance by 64% (EGP ber 2012. It is expected that this new governed by well-defined charters and marketing syndicated of the total loan portfolio, up from 55% of 120%, further cementing a growth 149 million) from EGP 231 million in investment in human capital will have a are tasked with assisting directors in in 2011. strategy underpinned by an emphasis 2011 to EGP 380 million in 2012 and its strong impact on 2013 revenues. fulfilling their responsibilities and ob- loans and 18th on the CIB increased deposits to reach EGP on maintaining quality standards. General Reserve balance by 65% (EGP ligations with respect to their decision- list of mandated loan 78,835 million, up 10.1% from 2011. 803 million) from EGP 1,234 million to Awards and Recognitions making roles. Several pricing decisions were made Institutional Banking EGP 2,037 million. This reinforces CIB’s An award-winning 2012 added another Such task is further facilitated by the arrangers. throughout the year to manage the pace CIB is widely considered the traditional solid financial position as reflected in chapter to CIB’s success story. CIB has wide array of established internal poli- of deposit gathering and the Bank’s cost institutional banking leader in Egypt. its Basel II Capital Adequacy Ratio of continued to receive global acknowl- cies and manuals covering all business as the Board, management and other of funds. The bulk of 2012’s incremental Despite the impact of domestic politi- 13.6% (before net profit appropriation). edgment awards for the Bank’s excep- aspects such as credit and investment, employees work to achieve the Bank’s deposits came in the form of certificates cal and economic disruptions in 2012, tional performance and reputation, ac- operational procedures, staff hiring and objectives. of deposit, with the remainder coming net income for Institutional Banking 2012 Achievements quiring a total of 12 awards in 2012. promotion. • Ensures that senior management im- from saving accounts. Again, CIB was increased 18% from EGP 1.2 billion in In 2012, CIB for the first time joined • Global Finance magazine acknowl- CIB’s Board consists of nine members, plements policies to identify, prevent, successful in reweighting its balance 2011 to EGP 1.5 billion in 2012 repre- the list of top 20 MENA region banks edged CIB with four awards; “Best seven of which are non-executive mem- manage and disclose potential conflicts sheet towards local currency deposits, senting 61% of CIB’s total profitabil- in managing and marketing syndicated Bank in Egypt” for the 16th time, “Best bers with a wide range of industry exper- of interest. The Board also oversees the which reached 61% of the total portfo- ity. Management instituted minimum loans (ranked 13th) and was among Sub-Custodian Bank in Egypt” for the tise. CIB’s Board met six times over the performance of the Bank, its managing lio (up from 58% in 2011). This achieve- lending rate hikes to increase the prof- the leading mandated loan arrangers fourth consecutive year, “Best Foreign course of 2012. In the event of a vacant director, chief executive officers and se- ment is even more impressive when itability and quality of the Bank’s loan (ranked 18th) according to Bloomberg. Exchange Provider Bank in Egypt” for Board seat, the Compensation and Gov- nior management to ensure that Bank taking into account that the foreign portfolio. This came as CIB arranged for three the ninth year and “Best Trade Finance ernance Committee is responsible for affairs are conducted in an ethical and currency portion of the balance sheet syndicated loans of USD 645 million Bank in Egypt” for the sixth year. nominating a new member. Among its moral manner and in alignment with was boosted by a 5% devaluation dur- Consumer Banking and managed two syndicated loans of • EMEA Finance recognized CIB as defined set of responsibilities, CIB’s Board Board policies. ing 2012. Following the January 25th Revolu- USD 575 million in addition to partici- “Best Local Bank” for the fifth consec- constantly monitors the Bank’s adherence • Reviews and approves material related On the competitive landscape, CIB tion, CIB management adopted a more pating in syndicated loans of USD 5.15 utive year and “Best Asset Manager in to well-defined, stringently enforced and to disclosure and transparency docu- benefitted from the retrenchment of customer-focused strategy. Consumer billion. Egypt” for the second consecutive year. fully transparent corporate governance ments as may be required to conform foreign competitors and achieved the Banking net income increased by 31% In addition to ranking first in market • CIB was Global Investor ISF’s “Best standards. The Board fulfils its commit- with regulatory requirements or as fastest year-on-year revenue growth from 2011 to reach EGP 870 million in share among Egyptian private-sector Asset Manager in Egypt” for the third ment in the following manner: may be determined by the Board from among its closest competitors as of the 2012, accounting for 39% of CIB’s total banks, CIB was also the only Egyptian consecutive year as well as the “Best FX • Ensures that Board Members have a time to time. third quarter of 2012. CIB grew rev- profitability. This growth was largely bank to succeed in improving its rank- Provider in the Middle East” for the clear understanding of their roles in • Oversees a code of conduct to govern enues by 34% from 2011 higher than driven by acquiring LCY deposits of ing in the MENA region. CIB climbed second time. corporate governance. Annually re- the behavior of directors, officers and 12 Annual Report 2012 Annual Report 2012 13
Innovative Financial Solutions In 2012, CIB increased the efficiency and availability of ATM's and conducted a soft-launch of new online banking applications to support the evolving needs of its customers. 119,611 internet banking subscribers. 5 Easy Branches, CIB's new teller- less branch concept in high-end areas using alternative cash channels.
Board of Directors’ Report employees through an independent the network. In addition, the COO Area was the “Easy Branch” concept, a teller- interest in joining CIB. The department our Credit Course was revamped by ex- part of our business culture. Contribut- Compliance function reporting direct- focused on aspects of Human Capi- less branch model located in high-end also played a significant role in selecting ternal consultants and upgraded with ing to our country’s prosperity and wel- ly to the Audit Committee. tal Management, staff-development premises mainly focusing on sales and the 60 interns who joined our new Sum- new case studies and updated course fare has always been among CIB’s top • The Code of Conduct sets CIB's core through effective training, enhancing using alternative cash channels. Five mer Internship Program, which aims to material. Some of the new programs priorities. CIB always works on trans- values as integrity, client focus, inno- performance management and apply- Easy Branches were opened in up-mar- attract the best candidates from the best that were introduced this year includ- lating its social responsibility commit- vation, hard work, and respect for the ing employee engagement initiatives. ket residential areas by December 2012. universities to join the CIB team. ed: Wealth Management, Supervisory ments into actions. We are immensely individual. These values encompass CIB also expanded its distribution net- On the corporate side, CIB ran its Skills and a number of middle manage- proud of supporting Egypt during these CIB’s commitment to create a culture Innovative Financial Solutions work, establishing 12 new branches, as second Employee Engagement Sur- ment programs. turbulent times and are proud of the that adopts ethical business practices, During 2012, CIB Operations Group well as enhancing its image and cus- vey through Hay Group. About 80% of Some of the activities also includ- broad impact that our time, effort and good corporate citizenship, and an managed not only to sustain its high tomer experience through the renova- staff responded and provided feedback ed providing specialized training for resources have had on our community. equal and fair working environment. level of productivity and efficiency, but tion of more than 10 branches and 40 with their impressions of the work en- Wealth Managers, Road to Manage- At the same time, it promotes a culture also took further steps towards being wealth lounges with the new ‘wealth’ vironment. Survey findings showed a ment for first time supervisors, Middle CIB Foundation of transparency, encourages a whistle- a proactive business partner. Multiple image. remarkably positive improvement over Management training, Finance for Line Now in its third year of operations, the blowing environment and provides initiatives were undertaken to improve 2011 results. Presentations of the new Managers, Advanced Consumer Risk, CIB Foundation has successfully expe- protection to the whistle-blower. customer experience. These included Focus on People findings have taken place with high- Advanced Sales Management, Product rienced exponential growth in its activ- launching non-negotiable standards, CIB’s HR strategy for 2012 was to re- lights on areas of opportunity. Knowledge, and specialized programs ities. Following the success of the CIB The Central Bank of Egypt’s audi- CIB Way and key service indicators, as main focused on the Bank’s employees, in Operations. These programs, as well Foundation in 2011, CIB shareholders tors and controllers conduct regular well as standardizing multiple opera- working to increase both productiv- Training as training programs on soft skills like generously agreed to increase the per- audit assignments and review reports tion procedures and customer forms to ity and motivation. With this in mind, In terms of training, 2012 moved in communication skills, presentation centage of CIB’s net annual profit to submitted to them periodically. During provide a consistent, smooth experi- a number of initiatives and projects a more strategic direction in provid- skills and advanced negotiation skills, the Foundation from 1% to 1.5%. This CBE audit missions, CIB’s management ence for our customers. Standard pro- were put in place. Through the “Focus ing training to staff. Our Management provided a vast array of training oppor- translated into more than EGP 26 mil- ensures that the auditors are provided cessing times were also set in place for on People” framework, CIB has dem- Training Programs were once again a tunities to select from. lion being allocated to the CIB Foun- with all necessary documents to fully onstrated leadership and expertise in great success. Training became more These efforts were recognized by staff dation in 2012. It is with this funding perform their audits. CIB’s internal attracting top talent while promoting targeted by concentrating on key areas. and management and evident in the that the CIB Foundation is making audit team closely follows up with the Our commitment to the a highly engaged and motivating work New programs were introduced. Some Employee Engagement Survey which valuable contributions in the areas of Bank’s management to take all correc- environment. of the programs were conducted by showed a marked improvement as child health and nutrition through vari- tive measures with regards to CBE’s au- country in which we live external vendors while others were de- compared to 2011. We look forward to ous multi-faceted initiatives, includ- dit comments. and operate is an integral Recruitment veloped in-house and conducted by our a more exciting 2013 as we introduce ing renovating and upgrading hospital Moreover, given the utmost atten- During 2012, CIB continued to hire own trainers. more programs such as the Basic Bank- infrastructure, purchasing medical tion to maintaining the highest levels part of our business different levels of staff in various areas In 2012, the Training Department’s ing Program for new hires, Job-Family- equipment for hospitals and providing of corporate governance, CIB’s inves- culture. of the Bank, despite the country’s po- focus was to identify gaps in the knowl- based series of training programs, and surgical and medicinal treatment to un- tor relations team is committed to con- litical and economic situation. In total, edge and skills of staff and to deliver targeted technical training programs. derprivileged children. sistently sharing high quality informa- 559 new employees were hired in 2012, the appropriate educational courses to Additionally, the CIB Foundation ac- tion with all stakeholders regarding productivity enhancement. To support compared with 295 new hires in 2011. bridge these gaps. To achieve this objec- Organizational Development tively supports its initiatives with con- the Bank’s activities with emphasis on GTS customer transactions, an addi- Seventy per cent of all new hires in tive, the Training Department worked In order to increase employee interac- tributions made to its dedicated fund transparency. tional 12 service hubs were added to our 2012 headed to Consumer Banking and on a plan to provide educational pro- tion and ensure their voices are heard, raising account. Fully 100% of the do- branch network along with a dedicated branches. Moreover, the Recruitment grams related to technical, management HR administered several initiatives to nations made to the account go towards Operations Platform with GTS operations unit. Improving the ef- Department participated in several ca- and business skills. Our highlight for maintain communication with employ- the implementation of development International Standards ficiency of alternate channels was also reer fairs and campus visits, aiming to the year was the number of programs ees, including the Employee Engagement projects for children. Through the coor- The year 2012 was extremely exciting a key development during this year. In attract the country’s best talent from its that were developed and delivered by Survey, the Salary Surveys and various dinated efforts of both CIB Foundation for the COO Area, which continued 2012, CIB increased the efficiency and top universities. senior staff to enhance overall banking Town Hall meetings. Salary Surveys staff and dedicated CIB volunteers, the with its efforts to implement its agenda availability of ATM’s and conducted a We have continued to seek the right knowledge across all levels. A total of were conducted to assess compensation Foundation ensures its resources are for improvement and standardization. soft-launch of a new online banking ap- prospects and to attract talent from top 4,500 staff members attended the differ- and benefits across the market, with spent efficiently and reach the greatest All departments worked on a number plication to support customers’ evolv- schools. CIB participated in the Har- ent programs. more emphasis on critical / executive po- number of beneficiaries. of activities during the year. Substan- ing needs. vard Business School MENA conference A total of 49 participants from vari- sitions to ensure that the Bank is aligned In January 2012 the Foundation ful- tial progress was made in Finance, HR, The new Bank-wide “Cross Selling” and annual Employment Fair for the ous areas in Consumer Banking and with current market levels. filled its annual commitment to the Premises, Operations, Marketing and initiative was off to a solid start, with second year in a row. This participation Operations enrolled in the Leadership The Standardization of Job Families Children’s Cancer Hospital 57357. This Corporate Services. The progress pro- Consumer Banking staff making 650 has been with a view towards brand- and Development Program for Con- initiative was also launched to ensure donation is part of a five-year partner- vides a framework for our strategy in referrals to Institutional Banking and ing CIB as an employer of choice for sumer Banking (LDP). The Leadership employees have a clear understanding ship that began in 2009 in which the 2013 and beyond. IB staff referring 547 transactions to CB Egyptian students studying at top-tier and Management Program for Senior of their roles in achieving the Bank’s hospital receives EGP 2 million in fund- The COO Area continued to focus on as of December 2012. universities. CIB is sought as an attrac- Officers — which aims to create a sense strategy and mission. ing per year to be used for general op- the enhancement of customer experi- CIB Premises Projects Department tive employer in Egypt for its valuable of synergy and a unified vision for all erational purposes. ence as one of the Bank’s key objectives also undertook a number of key strate- learning experience, modern culture, senior management within CIB — con- Corporate Social Numerous CIB volunteers also par- in multiple areas including the brand- gic initiatives that positively impacted sustainability and leadership. Eleven tinued this year as well, with fifty par- Responsibility ticipated in two events sponsored by ing of branches and providing service the Bank’s external and internal cus- Egyptian candidates have been identi- ticipants attending and successfully Our commitment to the country in the Children’s Cancer Hospital 57357, and quality measurement tools across tomers in 2012. One of these initiatives fied during the event and showed an completing the program. Also in 2012, which we live and operate is an integral including the hospital’s five-year an- 16 Annual Report 2012 Annual Report 2012 17
Board of Directors’ Report niversary where volunteers distributed roughly 700-square-meter Blood Clinic opportunities to volunteers from the gifts to visiting cancer survivors and by restructuring it to streamline move- CIB family to engage with the local current hospital patients, as well as the ment, prevent overcrowding, provide community and spend quality time third annual Terry Fox Run in Egypt, adequate space for beds and chairs for with the less privileged. Volunteers supporting children’s cancer research at blood transfusions as well as providing from head offices, regional offices and the hospital. a waiting area for family members. The branches across the three governorates The Magdi Yacoub Heart Founda- donation also covered the costs of ad- actively participated in the program. tion (MYHF) has been a long-standing ditional computers to develop an elec- In December 2012, the CIB Founda- partner of both CIB and the CIB Foun- tronic patient database and supporting tion donated EGP 1 million to the Ya- dation. In January 2011, a protocol of blood donation campaigns to offset the hiya Arafa Foundation for the upkeep cooperation was signed between the current supply deficit across Egypt. The of the three Pediatric Units at the Ain two foundations for the development renovated Blood Clinic opened its doors Shams University Hospital. The Yahiya and outfitting of a Pediatric Intensive in January 2013. Arafa Foundation has been instrumen- Care Unit (PICU) in Building 2 of the Through the Rotary Kasr El Nile orga- tal in purchasing high-end equipment, Aswan Heart Centre. The new EGP 13 nization, the CIB Foundation commit- as well as training the nurses and doc- million PICU will provide state-of-the- ted EGP 1.5 million to fund 1,000 eye tors working in these units. The CIB art postoperative care to neonates, in- surgeries for children through the Chil- Foundation strongly believes in ensur- fants and children ranging in age from dren’s Right to Sight (CRTS) program. ing the sustainability of its projects, new-born to 16 years free of charge. The Operational for the past six years, CRTS and believes that supporting the Yahiya CIB Foundation’s donation covered the is dedicated to eradicating blindness by Arafa Foundation in its operations will costs associated with the Unit’s medi- supporting children and infants requir- ensure the smooth running of the pre- cal and non-medical equipment. The ing immediate eye surgery. Through viously supported units. The donation PICU had a soft opening in November partnerships with the El Nour Eye Hos- will be used to cover human resources, 2012, and is expected to celebrate its pital in Mohandiseen and the Eye Care equipment maintenance, operating grand opening in the first half of 2013. Hospital in Maadi, the CRTS team will costs and academic research. In August 2012, the CIB Foundation al- oversee 1,000 cataract and glaucoma In line with CIB and the CIB Foun- located EGP 2 million to MYHF for the operations for underprivileged chil- dation’s commitment to community full sponsorship of the children’s play- dren. The CIB Foundation and CIB staff development and fostering quality room in Building 2 of the Aswan Heart are proud to partner and volunteer with in educational opportunities in post- Centre. In the same month, EGP 6 mil- Rotary Kasr El Nile on this project. Pay- revolution Egypt the CIB Foundation lion was allocated to MYHF to cover ment for the first round of surgeries was established the ‘CIB Foundation Fel- the costs associated with 100 children’s completed in November 2012. lowship for Science and Technology’ at open-heart surgeries. The donation is In 2012, the CIB Foundation reaf- Zewail University. In the first phase of being disbursed in two equal tranches, firmed its partnership with the Gozour this partnership with the Zewail City with the first tranche of EGP 3 million Foundation for Development, the non- of Science and Technology, the CIB distributed in September 2012. governmental arm of the Centre for Foundation Fellowship will support Moreover, in August 2012, an EGP Development Services (CDS). In Au- 50 Egyptian public school graduates 2 million Cooperation Agreement was gust 2012, the Foundation donated EGP pursuing degrees in the sciences and signed with the Friends of Abou El 478,170 to fund 10 eye exam caravans engineering, at a total cost of roughly Reesh Children’s Hospitals Organi- for public elementary schools in Cairo, EGP 5 million. zation to cover the annual operating Alexandria and Minya through the 6/6 Going forward, the CIB Foundation expenses of the new ICU. The annual Eye Exam Caravan Program. Through seeks to continue its commitment to en- donation will be used to support staff a partnership with the Alnoor Magrabi hancing health services for underprivi- salaries and incentives, medical and ad- Foundation, the caravans are designed to leged children in Egypt, supporting ministrative supplies, infection control provide public school students with eye mega projects in the health sector and and for the provision of computers and exams, eyeglass frames and lenses, eye providing world-class educational op- other ICU equipment. medication and in-depth eye exams at portunities. The Foundation also seeks This was not the only donation to the private hospitals for complex cases. Each to expand its volunteer activities and Friends of Abou El Reesh Children’s Hospitals Organization: In 2011, the caravan is fully equipped with eye exam machines; 15-20 doctors, nurses and co- more actively involve CIB employees in its community development projects. CIB's highly engaging Friends of Abou El Reesh Children’s Hospitals Organization turned to the ordinators; a fully equipped pharmacy; and an eyeglasses shop. Each one-day Social Development and motivational CIB Foundation for support in renovat- ing El Mounira Hospital’s Blood Clinic. caravan targeted 450 children, with a total of 4,500 children receiving free eye Throughout its history, CIB has been committed to engaging all its stake- environment continues The CIB Foundation’s EGP 800,000 donation was used to upgrade the exams and care by the end of the project. The project also presented valuable holders in a sustainable and responsible manner. CIB is one of the most active to attract top talent 18 Annual Report 2012
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