2016 In Review

Institutional Banking

Carved out of just one ridge of limestone 73 meters long and 20 meters high, the Sphinx of Giza is considered the greatest monumental sculpture in the ancient world.

Corporate Banking Group (CBG)

Recognised across the Egyptian market for its strong credit culture, CBG is CIB’s financing arm, providing world-class financial structures and superior advisory services to clients. The group caters to the financing needs of large companies and has broadened its scope to serve medium-size companies as well, recognising the importance of the latter’s role in the economy.

CBG’s foremost goal is to advance the nation’s economic development. It is committed to closely monitor the performance of projects and economic entities that CIB finances to ensure their viability. The group believes economic viability on the micro level is certain to contribute to and promote macroeconomic welfare.

The Group’s mission is to enhance its position as the top corporate bank in Egypt while maximising value for its shareholders, employees and the community at large. We strive to create the best possible banking experience for our clients through developing new innovative products.

Competitive Advantages

  • Strong corporate business model.
  • Highly experienced staff supported by continuous training to keep up with the latest industry developments and technical know-how.
  • Strong customer base with a healthy and diversified portfolio that is well positioned in primary growth industries, including but not limited to: oil and gas, power, petrochemicals, infrastructure, food and agribusiness, tourism, shipping and ports and real estate.
  • Ability to provide a wide and innovative array of financing schemes.
  • Broad coverage including companies with sales revenues above EGP 100 million, thus establishing a foothold in this untapped segment to create future growth potential.

2016 Achievements

Despite the challenging economic and market conditions during 2016, the Group was able to grow its loan portfolio 64% y-o-y through the following:

  • The revaluation of our foreign currency book following the EGP floatation.
  • Participating in two syndicated loans to finance new energy generation capacities of 16,265 MW in Egypt.
  • Participating in a trilateral syndicated agreement with the Egyptian Electricity Holding Company and Egyptian General Petroleum Corporation to discount dues between the parties. Leading the market with a share of 37.7% in financing Egypt’s 4G licenses while improving CIB’s share of wallet to 41% in issuing the required performance letters of credit for the mobile operators.
  • Playing part in Egypt’s mega projects such as the Suez Canal Tunnel Development Project (Ismailia and Port Said).
  • Financing major acquisition deals within the healthcare sector.
  • Launching the new Discounting Without Recourse Product, preliminary introduced to pharmaceutical manufacturers in its first phase. Marketing for the product is ongoing, aiming to gain more exposure in 2017.
  • Scoring an overall Net Promoter Score of 27 and a Customer Satisfaction Score of 7.7.

2017 Strategy

CBG’s goals in 2017 reflect the Bank’s overall objectives and mission to create higher stakeholder value while playing a pivotal role in driving the country’s economy out of our responsibility as the best bank in Egypt.

Creating higher value for all stakeholders can only be achieved through the development of new innovative products, creating the best possible client experience and focusing on our asset quality and growing our business.

On the asset quality front, the Group is focusing on restructuring problematic accounts and developing specifically tailored credit facilities to distressed/unconventional industries.

To achieve growth in business, the team is looking at four main products in 2017, in additional to our existing ones. These are:

  1. Discounting of Trader Receivables
  2. Securitisation
  3. Escrow Arrangements
  4. Supplier Finance Scheme

The group intends to continue supporting other areas within the Bank through marketing CIB’s electronic payment gateway to potential customers. The goal is to increase penetration rates and create a memorable customer experience, refer small- and medium-size subcontractors and suppliers dealing with our clients to the Business Banking Group and promote discounting and forfeiting transactions to CIB’s prime corporate clients on select import and export transactions.

Financial Institutions Group (FIG)

FIG covers global relationships with credit institutions and serves as the entry point and first contact for credit institutions with CIB. FIG manages CIB’s business with local and foreign banking and non-banking financial institutions through three specialised divisions: 1) Correspondent Banking, 2) Non-Banking Financial Institutions and 3) Finance Programs and Donor Funds.

Correspondent Banking Division (CBD)

CBD lies at the core of FIG, acting as the focal point of contact for local and international banks working with CIB. CBD accounts for almost 91% of FIG business, most of which is in the form of contingent trade finance exposure. The division is highly active in supporting and coordinating the relationship with various correspondent banks and provides an array of products and services including trade finance, direct lending, international payments and tailored/structured solutions. A number of factors underpin the division’s core competencies:

  • Experienced regional relationship officers.
  • Specialised product managers.
  • A diverse network of almost 200 global correspondent banks.
  • Strong ties with multilateral financial institutions.
  • Access to prime corporate and business banking clients.
  • Proven track record in delivering tailored credit and trade finance services.

Geographical coverage

The division manages its correspondent credit relationships through dedicated and experienced relationship officers who are structured regionally as follows:

  • Americas and Europe Team
  • Asia-Pacific Team
  • MENA, Africa and Russia Team

Product Management

Complementing the activities of the division is a Trade & Cash Products Team specialised in structuring products and services that meet the unique needs of banks and clients, such as:

  • Without recourse financing or discounting of trade instruments (forfeiting)
  • Letters of credit refinancing
  • Risk participations
  • Bilateral loans and funding arrangements
  • Nostro and Vostro account management
  • Commercial and interbank payments and cash letter collection services

2016 Achievements

  • Grew outstanding contingent trade finance portfolio mainly on the back of successfully attracting letters of guarantee for mega and infrastructure projects in Egypt.
  • Expanded CIB’s correspondent banking relationships in Asia and Africa.
  • Continued to expand in Eastern Europe as a new market, focusing on relationships in Poland and the Czech Republic.
  • Continued our initiative of signing trade-facilitation agreements with multilateral financial institutions to support Egyptian trade transactions and expand our coverage of Africa to better cater to the trade finance needs of Egyptian exporters.

Despite the challenging economic and market conditions during 2016, the Corporate Banking Group was able to grow its loan portfolio 64% y-o-y.

2017 Strategy

  • Position CIB as the bank of choice for correspondent banks through applying a customer-centric approach by acting not only as a correspondent bank to our counterparts but also as their local advisor.
  • Capitalise on our service quality and efficient processing to further grow the trade finance business (contingent and direct).
  • Further diversify correspondent network by focusing on relationships with Asia and Africa.
  • Continue to apply a “relationship-management model” to capture more value from our client and correspondent relationships over time.
  • Innovate revenue-generating trade and cash products.
  • Maintain our focus on supporting the Egyptian economy.

Non-Banking Financial Institutions Division (NBFI)

NBFI is a credit-lending division under FIG. It provides credit facilities, liability products and services to all types of non-bank financial institutions. Targeted clients include companies engaged in leasing, insurance, securities brokerage, car finance, factoring and credit insurance, along with investment companies and microfinance organisations.

2016 Achievements

  • Grew total loan portfolio c. 56% and total deposits 101%.
  • Attracted new-to-bank accounts and grew credit facilities extended to existing clients.
  • Participated in landmark securitisation transactions.
  • Established new limits for existing companies and identified new NGO accounts to accommodate the microfinance business.
  • Continued to maintain moderate levels of portfolio risk and managed an effective collection of loan portfolio payments.

2017 Strategy

  • Grow loan portfolio and increase share of wallet for existing prime credit customers in leasing and microfinance.
  • Approach new clients in mortgage finance, leasing and microfinance.
  • Focus on bond investments related to securitisation transactions.
  • Market the Bank’s digital products for all existing and targeted NBFIs.
  • Grow the loan and investment portfolio with quality players in the leasing, mortgage and brokerage (clearing and settlements accounts) sectors in terms of volume and number of accounts.
  • Aggressively market and cross sell CIB liability products.

Finance Programs and International Donor Funds (FP&IDF)

FP&IDF is uniquely specialised in managing sustainable development funds and credit lines provided by governmental entities and international agencies that positively affect our community and environment. In collaboration with the Ministry of Agriculture and Land Reclamation, FP&IDF encouraged private sector involvement in the agribusiness, while the division is also engaged in various environmental and pollution-abatement projects that aim to assist companies in making their operations more eco friendly. FP&IDF also manages CIB’s direct microfinance portfolio through a microfinance services company and has recently extended its focus to include wholesale microfinance.

The division’s main functions include:

Agency Function

CIB acts as APEX (Agent Bank) for several funds, grants and credit lines, providing an array of tailored operational services including structuring and providing pre-loan assessment and post-loan monitoring.

Participating Function

CIB acts as a participating bank in several developmental programs that finance agricultural and environmental projects with concessional terms.

Microfinance

The division has managed CIB’s direct microfinance portfolio since 2007. Most recently, the indirect model was launched through lending microfinance institutions (MFIs) in collaboration with non-bank financing institutions. In 2016, the division introduced a cash collection solution through the addition of a new function to CIB Smart Wallet that enabled microfinance institutions to collect payments from customers.

Technical Assistance and Consulting Services

FP&IDF offers an array of integrated and competitive consultancy services targeting development programs.

2016 Achievements

  • FP&IDF maintained CIB’s position as the leading agent bank in the market.
  • Concessional loans amounting to EGP 672.1 million were disbursed through the Agricultural Development Program.
  • Grew fund programs under management to EGP 1.6 billion.
  • Awarded two new agency contracts.
  • Launched the Support to Agriculture Small- and Medium-Enterprises Project (SASME Project), amounting to the equivalent of EUR 30 million in EGP terms.
  • Launched the Promotion of Rural Income through the Market Enhancement Project (PRIME Project), amounting to USD 35 million in EGP terms.
  • A joint declaration was signed with AFD to consider two credit facilities to CIB for EUR 80 million, with EUR 60 million as a soft loan granted by AFD and dedicated to promote renewable energy and energy efficiency, combined with a EUR 350, 000 grant for a technical assistance program.
  • Introduced a cash collection solution through the addition of a new function to CIB Smart Wallet that enabled microfinance institutions to collect payments from customers.

2017 Strategy

  • Sustain CIB’s leadership in agency and participating bank functions by growing the portfolio of funds under management.
  • Grow CIB’s microfinance portfolio in collaboration with non-bank institutions.
  • Market the cash collection/disbursement solution through CIB Smart Wallet to our existing customers as well as other MFIs.
  • Continue to enhance CIB’s capacity for microfinance lending through establishing new agreements with guarantee institutions and providing technical assistance opportunities.

Debt Capital Markets (DCM)

DCM has an unparalleled track record, with experience in underwriting, structuring and arranging large-scale project finance facilities, syndicated loans, bond issues and securitisation transactions, all of which are supported by a dedicated agency desk. The division achieves its objectives by leveraging CIB’s substantive underwriting capabilities and established relationships with international financial institutions and export credit agencies, as well as its placement capabilities in the local market with banks, insurance companies, the money market and fixed income funds. Furthermore, the division provides large-scale borrowers with better market access and greater ease and speed of execution.

2016 Achievements

DCM has focused its marketing efforts in conjunction with CBG & GCR (leveraging on CIB’s underwriting capability), with a focus on local currency denominated financing particularly in the infrastructure, energy, ports, petrochemicals sectors and PPP projects, as well as real estate and telecommunication. We have been successful in achieving the following:

  • DCM has deals for a total debt size of EGP 31.4 billion with CIB’s share amounting to EGP 6 billion and EGP 0.6 billion in new and restructured transactions in 2016, CIB is in the final stages of closing an EGP 2.3 billion syndicated facility for the Suez Canal Tunnel Development Project.
  • In light of the government’s plan to expand and develop the Suez Canal region to become a global hub, CIB is in the final stage of closing an EGP 3.2 billion syndicated facility for a tunnels project in the Ismailia governorate. DCM has also closed deals in FY2016 worth a total issue size of EGP 3.4 billion in the bunkering and power sectors, namely with Sonker Bunkering Company and the Egyptian Electricity Holding Company.
  • Continued growth in the real estate, education, building materials, petrochemical, transportation, power and infrastructure sectors has provided financing opportunities, with ongoing negotiations for deals worth EGP 82.8 billion expected to materialise in FY2017.
  • DCM has also closed deals in FY2016 for a total debt size of EGP 15 billion in the bunkering and power sectors.

DCM continues to lead in the securitisation sector, having closed deals worth EGP 2.6 billion in 2016. DCM is also mandated as a Joint Lead Arranger with NBE for Arab Contractors securitization for EGP 500 million and Abdul Latif Jameel Securitization for EGP 200 million. In addition, deals in the pipeline amount to EGP 700 million for originators in the fields of auto finance and leasing among others.

2017 Strategy

  • Continue playing a vital role in economic development by mobilising funds for large-ticket project financing deals and syndication transactions.
  • Position the Bank to raise the required debt to fund Egypt’s substantial infrastructure and power investments (with a special focus on renewable and green energy), whether implemented by public sector companies, via IPP or PPP programs.
  • Introduce new financial tools to lead the development of capital markets in Egypt.
  • Continue to support clients’ needs for diversified funding sources through innovation in asset-backed securities.

Treasury & Capital Markets (TCM)

TCM is the Bank’s primary pricing arm for all its foreign exchange (FX) and interest rate products. TCM is a primary profit centre for CIB, offering a wide range of products to various types of businesses that we have diversified across regions, capabilities and distribution channels.

Among its responsibilities are FX, Money Market and Fixed Income trading activities, primary and secondary government debt trading, management of interest rate gaps with its respective hedging, pricing of local and foreign currency deposits and pricing of preferential deposits. Foreign exchange products are used by our customers for hedging purposes. Also, our products are used through third counterparty trading, where CIB allows its clients to purchase almost any non-tradable currency that they require, including, for example, the Brazilian riyal, Singaporean dollar, Thai baht, Chinese yuan, Korean won, and South African rand. The currency is simultaneously transferred to its country of origin to make payments abroad.

Other products covered are direct forwards and simple/plain vanilla options, in addition to a wide array of option structures such as premium embedded options, participating forwards, zero-cost cylinders, boosted call/put spread, interest rate swaps and interest rate caps/floors/structured products. The division’s Primary Dealers team provides clients with transparent advice on their investments in treasury bills and treasury bonds as well as corporate bonds, on both primary and secondary markets, with very competitive prices on the secondary market offers. The team has been one of the most influential players in the local debt market. The Treasury Division’s team provides the Bank’s clients with an incomparable quality of service around-the-clock.

Service Model

TCM uses a hybrid customer-centric service model. It contains some features of the direct customer-centric model, such as understanding your customer by actively engaging and comprehending the customer analytics/information, enhancing the customer experience and breaking down silos. It is also composed of market understanding by pricing TCM products related to market norms in a way that effectively addresses customer needs.

Target Markets

TCM works in collaboration with all customer relationship sectors, such as Corporate Banking, Business Banking, Strategic Relations, Enterprise Customer and Financial Institutions such as insurance companies and funds. It targets clients with long and strong relationships with CIB and those with large volumes of foreign currency, fixed income, money market and hedging businesses. It also focuses on customers with expertise and adequate understanding of our products to advise them and enhance their treasury business volumes.

2016 Achievements

  • Despite the severe shortages in FX during the year, TCM has been able to secure some FX from its repeat client base, with a total reaching the equivalent of USD 1.25 billion in 2016.
  • In 2Q2016, Global Finance Magazine recognised CIB TCM as one of Global Finance’s World’s Best Foreign Exchange Providers in 2016.
  • TCM maintained its leading position as the highest net trading income segment among Egyptian private banks in 2016, with a total value of EGP 1.315 billion.
  • The Ministry of Finance ranked CIB’s Fixed Income Desk the second best performing bank on the primary market for treasury bills and bonds and second best on the secondary market for treasury bonds.

2017 Strategy

Increase TCM’s market share of the foreign exchange business, especially for foreign currency purchased against the EGP, and boost the deposit base captured across all customer segments and share of fixed income and money market generated.

Asset & Liability Management (ALM)

The strategic priority for ALM is the management of the Bank’s assets and liabilities in terms of interest rates, liquidity and concentration risk and maximising the Bank’s net interest income by managing the excess liquidity portfolio in all currencies and introducing a variety of diversified products to satisfy both retail and corporate clients’ needs such as mutual funds and CDs. Moreover, ALM is responsible for managing the Bank’s Nostro accounts and is also committed to effectively attracting DDA and Savings Accounts through proper pricing and coordination with other lines of business. ALM’s main objectives are to provide adequate liquidity, maintain mandatory ratios and manage liquidity risk within approved gapping limits. It also focuses on the Bank’s overall interest rate risk in terms of re-pricing gaps and duration, which includes the restructuring and hedging of the balance sheet.

2016 Achievements

  • Successfully managed the Bank’s liquidity and contributed towards increasing the Bank’s LCY net interest margin compared to the same period of the previous year.
  • CIB remained a safe haven even after the liberalisation of the exchange rate by moving its capital away from riskier investments.
  • Maintained liquidity during the free float by keeping liquidity ratios solid at higher than regulatory ratios. Surpassing our liquidity goal was mainly attributed to our efforts to attract deposits and increasing deposit rates to attract clientele and higher volumes.
  • Continued to maintain liquidity with solid net loans/deposits, strong asset quality and a comfortable coverage ratio.

2017 Strategy

ALM anticipates growth in the private sector business driven by a gradual pickup in several sectors and a boost in investor confidence. As such, ALM will continue positioning the Bank to comfortably support all its clients’ needs while enhancing shareholder value. The Bank has a strong appetite for growth in both deposits and loans to cater to customer needs and increase bottom-line profits.

Direct Investment Group (DIG)

DIG is CIB’s investment arm, introducing equity finance as an additional service to existing and potential clients. DIG’s main focus is to identify, evaluate, acquire, monitor, administer and exit minority equity investments in privately owned companies that possess commercial value for CIB.

Invested funds are sourced from CIB’s own balance sheet, whereby the investment process is governed by a clear and strict set of parameters and guidelines.

Our primary objectives encompass generating attractive, risk-adjusted financial returns for our institution through dividend income and capital appreciation, as well as enabling CIB to offer a broad spectrum of funding alternatives to support client growth.

We commit to excellence by adopting the industry’s best practices, creating a “win-win” situation for all stakeholders. This commitment is supported by our unique value proposition and team of specialised experts.

2016 Achievements

2016 was a rather exciting year for DIG in light of the changing market dynamics and investment landscape. As always, DIG remained positive on Egypt’s long-term economic prosperity and confident about the country’s ability to overcome short-term challenges. DIG viewed the current market instability and scarcity of sizable quality investments as an opportunity to scan the market, aiming to pursue a wider coverage of the investment spectrum and add new business lines.

The lack of international investment inflows and the challenges facing importers resulted in the rise of mid-sized local players to fill the newly created supply gap. This encouraged DIG to explore mid-size investment tickets in industries showing resilience to market challenges and great potential to deliver above-average, risk-adjusted reruns. A considerable pipeline of mid-sized deals supported adding such investments as one of our new focus areas.

Moreover, DIG was active in exploring the venture capital space, being one of the new pillars to drive value for CIB and fuel economic growth at large. As an initial step to further unleash the venture capital potential for CIB, DIG was heavily engaged in the preparation and conclusion of CIB’s sponsorship of FIN-Tech, a specialised financial technology acceleration track, in association with AUC’s V-Lab. Additional investment activities are currently being prepared for CIB to further benefit from the venture capital space with a risk-conscious approach.

Exits: Despite prevailing market conditions, DIG succeeded in concluding the full exit from two of CIB’s affiliated investments, namely Corplease and Egypt Factors, which falls in line with CIB’s open architecture strategy.

Portfolio Management: DIG continued its on-going support to its portfolio companies at all levels to provide required assistance for companies to weather market volatility. Such efforts have preserved the quality of DIG’s investment portfolio throughout the year.

The Pipeline: DIG’s dedicated marketing and deal-sourcing team managed to maintain a healthy deal pipeline despite the prevailing investment climate. As a result, DIG assessed the viability of multiple investment opportunities, mainly in defensive sectors such as education, healthcare, food and logistics.

2017 Strategy

DIG is embarking on a portfolio expansionary strategy aiming at doubling assets under management by 2020. Accordingly, DIG will continue its efforts to add lucrative investments with profound fundamentals, high growth potential and value proposition for CIB.

Strategic Relations Group (SRG)

SRG as a function was created with the sole purpose of focusing on and catering to the unique needs of the Bank’s top non-commercial organisations of sovereign origins and affiliations.

SRG’s portfolio is made of up global donors, aid and development agencies supported by their sovereign diplomatic missions, international regulatory agencies, major tier-one educational constituencies and key charity foundations. Their deposits contribute considerable amounts to CIB’s stable funding base.

SRG is a small group of professionals dedicated to bridging the gap between CIB’s streamlined services and the distinct expectations of its clients. Its edge is in working closely with each client individually, designing innovative, tailor-made services to suit the various business and operational needs of clients. Its success is based on long-standing partnerships with clients, dating as far back as the 1980s, despite fierce competition.

SRG is committed to continue strengthening these partnerships to maintain customer loyalty while preserving the delicate balance between client satisfaction and account profitability.