Much has changed since last year’s BoD report; some developments were predicted, while others were completely unexpected. On balance, the macro and micro situations are better than they were at this time last year.
Inflows of foreign currency into Egypt’s economy have risen significantly year-on-year (y-o-y), with growth coming from a number of sources. Remittances from Egyptians working abroad soared by 21% y-o-y to record USD 26 billion in FY2018. Tourism is flourishing once more, with tourist arrivals up by 48% and tourism receipts growing at a healthy 124%. As of FY2018, revenues from the Suez Canal had grown by 15% y-o-y. As the Zohr gas field ramps up production, Egypt has taken another step toward self-sufficiency in natural gas. The last shipment of imported liquefied natural gas (LNG) was received in September 2018. By the end of 2019, Egypt should be making annual savings of USD 4-6 billion (or 32%-48%) on its petroleum import bill, which recorded USD 12.5 billion for FY2018. Egypt was named the largest recipient of foreign direct investment (FDI) in Africa in 2018 in a recent report by the United Nations Conference on Trade and Development (UNCTAD), with investments made in the real estate, food processing, oil and gas exploration, and renewable energy sectors. Egypt’s FDIs in 2018 totaled USD 7.7 billion.
These positive developments are reflected in Egypt’s current account: the deficit fell to USD 6 billion for FY2017/18 from USD 14 billion for FY2016/17, a decline of 59%. In FY2017/18 (which began in July 2017 and ended June 2018), Egypt achieved a primary budget surplus of 0.1% of GDP for the first time in over a decade. GDP growth accelerated to 5.2% for the year ended after rising for six consecutive quarters. FCY reserves at the Central Bank of Egypt (CBE) continued to increase on a monthly basis in 2018, recording their highest-ever level at the end of November at USD 44.5 billion, up from USD 36.7 billion a year earlier, before declining by USD 2 billion to USD 42.55 billion in December 2018.
The government pressed ahead with an economic reform program aimed at restoring macroeconomic stability and tackling long-standing impediments to growth. Further cuts were made to fuel and electricity subsidies, which reduced Egypt’s subsidy bill to 5% of GDP for 2017 /18, down from 6% for 2016 /17. In 2018, Egypt received USD 2 billion under the IMF’s three-year USD 12 billion extended fund facility (EFF) agreement signed back in November 2016.
In light of the progress made by the government, Moody’s Investors Service rating agency changed Egypt’s Long-Term Issuer Ratings Outlook to Positive from Stable and affirmed its B3 issuer ratings. In addition, Fitch Ratings affirmed Egypt’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B’ with a Positive Outlook.
Egypt began attracting robust investor demand for local currency (LCY) sovereign debt, with foreign inflows into T-bills recording a peak of USD 23 billion in March. However, due to a crisis in emerging markets beginning in April 2018, foreign investment in Egyptian T-bills fell by c. USD 8 billion between April and September. Nevertheless, these outflows did not result in further currency depreciation, with foreign outflows sourced mostly from the interbank market, indicating ample FCY liquidity.
Inflation eased during the year, recording 12% in December 2018, down from 15.7% in November 2018, and a significant y-o-y drop down from 21.9% in December 2017. Consumer purchasing power strengthened noticeably throughout the year. 2018 saw an uptick in lending to companies for working capital, as firms sought to meet increased demand. Companies continued to postpone capital expenditure (CAPEX), however, as the interest rate environment remained elevated in 2018. Although the CBE cut interest rates by 100 basis points (bps) in February and by a further 100 bps in March, the 700 bps hike implemented since the currency floatation in 2016 means long-term borrowing remains expensive for many firms.
Egypt’s banking sector remained the lifeline of the economy in 2018. The year witnessed steady improvement in asset quality, with aggregate non-performing loans (NPLs) as a percentage of gross loans standing at 4.4% in September 2018, down from 4.9% in FY2017. NPLs were almost fully covered by provisions as of September, with 98% of such assets allotted for. Banks were also well capitalized, with reported system-wide capital adequacy ratio (CAR) standing at 16% in September 2018, comfortably above the regulatory requirement of 11.9%.
In December 2018, the CBE suspended the FCY repatriation mechanism for new portfolio investments (including LCY Egyptian T-bills, T-bonds, and stocks listed on the EGX) due to improved macroeconomic indicators, particularly FCY reserves and liquidity in the banking sector.
In November, the Cabinet approved amendments to laws on income tax that would modify the treatment of sovereign portfolios held by banks and corporations. The Ministry of Finance held meetings with the Federation of Egyptian Banks (FEB) to discuss the proposal and suggested methods for calculating the new tax, the final formula for which has yet to be announced by the ministry.
The EGX was negatively affected by global forces coming to the fore in 2018, declining 13.2% to end December 2018 at 13,035.77 points. In light of this, the government postponed the planned privatization of 23 state-owned companies until conditions improve. Four IPOs took place in 2018, raising a total of EGP 5.2 billion and representing an increase of 25% over 2017.
In short, Egypt’s economic recovery has continued to pick up steam despite persisting challenges. The market offers ample opportunities, which CIB’s executive management and employees are working diligently to turn to the Bank’s advantage.
CIB’s strength lies in a flexible strategy that allows it to adapt to the unremitting changes in market dynamics, creating value for stakeholders at each step. The BoD and executive management share the same philosophy of placing clients at the heart of every decision and achieving sustainable financial and non-financial growth. To accomplish this, we rely on the dedication of our employees, whom we are determined to help develop, while providing them with the latest innovative technology.
Relying on these time-tested values, CIB further consolidated its leading position in the Egyptian market during 2018, assisted by a three-pronged strategy of:
Dynamic Balance Sheet Management
Responding to the high interest rate environment and its impact on long-term borrowing, CIB continued to re-engineer its balance sheet in 2018 with the goal of preserving earnings. The Bank adopted a deposit-gathering strategy aimed at reshaping its funding mix. It attracted 9% of all new deposits in the banking system until October 2018 (according to the most recent available information by the CBE at the time of print), and managed to grow its current account and savings account (CASA) deposits to 56% of total deposits by the end of 2018.
The Bank maintained resilient asset quality in 2018 through its conservative risk-management strategy, while booking provisions adequate to mitigate any potential risks. Provisions for 2018 amounted to EGP 3.1 billion, bringing the loan-loss provision balance to EGP 13 billion. Of this, EGP 1.82 billion pertains to the amount transferred from unearned interest to interest income and was fully provisioned for. NPLs represented 4.06% of the gross loan portfolio, cushioned by a solid 269% coverage ratio.
The Bank remains comfortably covered in terms of capital adequacy, with year-end CAR recording 19.09% (after profit appropriation) — well above the minimum regulatory requirement. The buffer is sufficient to accommodate any increase in capital requirements in 2019 and will preempt any unanticipated changes resulting from macro shifts.
Return on average equity (ROAE) hit 33.1% in 2018 (after profit appropriation, based on the suggested profit appropriation schedule), marking the fifth consecutive year CIB has delivered an ROAE of above 30%. At 20.3%, CIB enjoys one of the lowest cost-to-income ratios among private-sector banks, guided by management’s effort to further enhance CIB’s returns through efficient cost controls.
Investing in Technology
During 2018, CIB continued to upgrade its infrastructure resiliency, optimize its IT storage, and build the platforms required to maintain the Bank’s position in the market.
This year, CIB reaped the benefits of its 2015 move to introduce the concept of big data to the Egyptian banking industry. With the necessary platforms in place and skillful people available to analyze the data, the Bank is ready to further solidify its leadership position through the development of more customer-centric solutions.
During the year, CIB’s Analytics and Data Management (ADM) Department focused on supporting other departments with actionable analytical findings that augment decision-making. It also continued to optimize operational processes, developing solutions to reduce costs and processing times, while developing new products better able to fulfill customer needs.
In 2018, the department implemented the following projects:
- Distributed Ledger Technology (DLT): CIB was one of the Egyptian markets’ first adopters of DLT, joining the Know Your Customer (KYC) project on R3’s Corda blockchain in 2017. This year, the team focused on testing different use cases for potential development into live projects and built a local blockchain network for banks and different financial services providers.
- Segmentation: The Bank revamped its balance-based customer segmentation, developing a fully customized and data-driven behavioral segmentation system that will accelerate CIB’s transformation into a customer- rather than product-centric institution.
- Digital Lending Program (DLP): ADM launched a program to help CIB penetrate the vast market of unbanked credit seekers based on their history, such as Careem captains. The program could be replicated in the future in line with CIB’s commitment to foster financial inclusion in Egypt.
- Anomaly-detection model: In cooperation with the Compliance Department, the ADM team developed a model to minimize fraud by identifying, monitoring, and controlling fraudulent customer behavior.
- Early warning system (EWS): Working with the Business Banking team, ADM developed a set of guided processes that provide early identification of risks posed to business and corporate customers. The system’s function is to help the Bank proactively manage its loan portfolio by reducing unsecured lending risks.
CIB Navigator: In 2018, ADM launched a tool that grants CIB employees access to dashboards, reports, and portals that help expedite decision-making. Integration of the tool into the operations of different business lines will incentivize relationship managers to persuade customers to switch to available digital portals. This year, the migration of a large volume of transactions from traditional channels to digital ones yielded cost synergies in excess of EGP 200 million.
Technological advancement is spurring a broad transformation in the global banking industry. Banking transactions no longer require bank branches only, but rather the internet and smartphones. Embracing such change, CIB has been building its digital banking platforms over the years and now provides its customers the convenience of instant, seamless banking at any time and any place.
In 2018, CIB formulated its digital business plan with the goal of integrating the Bank further into its customers’ daily activities. 2018 saw the Bank upgrade several of its digital platforms, including ATMs, online banking, and its call center, further enhancing the customer experience and improving the efficiency of its services. CIB’s Interactive Voice Response (IVR) service is the only one of its kind in the Egyptian market that allows governmental and non-governmental bill payment and other exclusive solutions such as credit card settlement, while its network of ATMs is the largest of any private Egyptian bank. At 18%, CIB ranks first in terms of activity rate for Egyptian mobile wallets. In 2018, CIB’s online banking activity hit a record 61.4% — fruits of the Bank’s continuous digital investments.
CIB believes that financial inclusion is about more than just extending financial services to the unbanked; it’s about improving people’s lives. Positively contributing to the Egyptian economy’s long-term growth and sustainable development is an objective that rates high on CIB’s agenda, directly aligning with CBE efforts to promote financial inclusion. In line with its firm commitment to help develop Egypt’s financial sector and extend the latest innovative financial offerings to customers, CIB launched CVentures in 2018, Egypt’s first fintech-focused corporate venture capital firm. CVentures will invest in transformational fintech startups and next-generation financial service platforms. Leveraging the firm’s active exposure to international technology hubs and startup ecosystems, CIB expects CVentures to be an ideal addition to its slate of innovative products and services.
More on the fintech front, 2018 saw CIB intensify its fintech engagement by catering to the needs of fintech startups, and thus, helping the Bank build strategic alliances that enhance its financial inclusion objectives. The Bank’s activities aim to create awareness on the opportunities presented by this new segment and encourage entrepreneurs to start their businesses, with the ultimate goal being to support fintech startups as they develop and launch their products and services. To date, CIB has sponsored 46 fintech startups and entrepreneurs operating in various fields. Thirty of these have been introduced to the market with CIB’s backing, receiving airtime on Egypt’s number one entrepreneurship TV show Hona Al Shabab with pre-seed funds awarded to the winners.
The year also saw CIB redouble its focus on agent banking — a tool to help widen the Bank’s reach among Egypt’s unbanked population and control the costs associated with the provision of various services to clients. The Bank established Egypt’s first agent bank, Fawry Plus — a greenfield investment in agent banking. The Bank holds a 23.5% equity stake in Fawry Plus, a joint venture between CIB, Banque Misr, Fawry, and El Alameya For Consultations and Information Systems (ACIS).
In recognition of these efforts, CIB became the first Egyptian bank to receive the “Financial Inclusion Champion of the Year” FinX Award in 2018 from FinTech Galaxy and Entrepreneur Middle East. The award is a testament to the Bank’s support for entrepreneurship and the customer-centric banking services that it has made available for Egyptians.
CIB is committed to cementing its identity as an employer of choice in the Egyptian banking sector, working constantly to provide employees with the capabilities needed to thrive. Starting as early as the onboarding process, employee development and satisfaction is paramount to CIB’s executive management, who focus on learning and development as well as rewards and recognition.
As part of this strategy, CIB participated in 33 events and employment fairs across several universities in Egypt and other venues during the year. To ensure that the search for top-quality candidates is not hindered by geographic logistics, in 2018 CIB established recruitment teams that visited nine governorates across Egypt.
In 2018, CIB sought to further enhance engagement, working to increase satisfaction levels and refine performance-related communication between management and employees. Ten town halls were held with middle management during the year, while 66 HR awareness sessions were conducted with first-line managers. These efforts contributed to increased participation in the fourth Employee Effectiveness Survey (EES), which stood at 92% in 2018 compared to 88% in 2016. The engagement level grew to 63% compared to 59% in 2016.
In 2018, more than 840 training courses covering both technical and soft skills benefited 5,357 employees (79% of staff) across the organization. CIB also hired 587 external individuals in 2018 (59 in increased headcount and 528 replacements) across different areas of the Bank.
Succession planning was also given considerable attention, with the aim of securing CIB’s legacy. Proper succession planning will help the Bank overcome challenges posed by a constantly changing business environment. Executive management is continuously identifying, assessing and developing cadres to ensure CIB has the calibers in place ready to assume responsibility. Forty-two key talents were selected to participate in technical and leadership development programs as part of CIB’s succession plan formulated in 2016. Seventy-two percent of these individuals have been promoted to roles of greater responsibility as of year-end 2018.
2018 Financial Position
CIB reported another remarkable set of results in FY2018, with consolidated net income up 27% y-o-y to EGP 9.58 billion. Standalone net income reached EGP 9.56 billion, up 27% from 2017. Standalone revenues grew 34% over the previous year to EGP 20.4 billion. Net interest income hit EGP 18.1 billion in FY2018, an increase of 45% y-o-y.
While the Bank has historically recognized the interest from doubtful loans, not yet classified as non-performing, in the unearned interest account on the balance sheet without recording it on the income statement out of conservatism, CIB adopted a new convention in 2018, as stipulated by the CBE. These amounts were channeled through interest income and an equal amount was taken as provisions, leaving the bottom line unaffected. Unearned interest accounts pertaining to non-performing clients are now recognized as an off- rather than on-balance-sheet item. The re-engineering of CIB’s unearned interest accounts was conducted over two consecutive quarters. In 2Q2018, EGP 761 million was transferred from unearned interest to interest income, followed by EGP 1.06 billion in 3Q2018. Normalized for EGP 1.82 billion additional interest income related to re-engineering of the unearned interest account, standalone revenues grew 22% and net interest income 31% over the previous year. It is worth noting that all unearned interest amounts eligible for recognition as interest income on the income statement or as an off-balance sheet item are now recognized as such, and such recycling will not recur after 2018. Non-interest income stood at EGP 2.2 billion for FY2018, with net income from fees and commissions recording EGP 2.4 billion.
Despite a challenging year, the Bank’s financial performance was strong, reflected across its financial indicators. Operational efficiency was maintained during 2018, with the cost-to-income ratio standing at 20.3% compared to 20.8% in 2017. ROAE grew to 33.1% on a consolidated basis (post-appropriation) from 32.5% in 2017. Consolidated Return on Average Assets (ROAA) recorded 3.03% (post-appropriation) for 2018, up from 2.69% in 2017. As of year-end 2018, CIB booked a net interest margin (NIM) of 6.43% (or 5.81% after normalizing for the aforementioned recycled amount) — the Bank’s highest-ever — up from 4.97% a year earlier.
CIB’s gross loan portfolio stood at EGP 120 billion at 2018 year-end, growing 17% (EGP 17 billion) y-o-y. This increase met the Bank’s strategic objectives in maintaining asset quality and enhancing profitability. CIB’s market share of total loans amounted to 6.96% in October 2018.
The Bank aggressively pursued deposit growth in 2018, adding EGP 35 billion to its base, which grew to a total of EGP 285 billion over the year, an increase of 14% from 2017. CIB’s share of the deposits market reached 7.68% in October 2018.
CIB ended the year with a buoyant balance sheet and capital base, reflected in its comfortable CAR of 19.09% (after profit appropriation), far exceeding requirements stipulated by the CBE and boosting the Bank’s ability to deal with unforeseen economic circumstances.
In 2018, CIB continued to experience strong growth in net interest income, fees and commissions, and its balance sheet. Relative to peers, CIB maintained its leading position in terms of profitability and the size of its balance sheet. Overall, its strong financial performance in 2018 came in line with P&L targets.
Appropriation of Income
The BoD proposed the distribution of a dividend per share of EGP 1.00, after taking into account the subsequent share distributions after the date of issuance for financial statements, which was authenticated in the Bank’s commercial register as of 28 January 2019.
In addition, CIB is increasing its legal reserve by EGP 478 million to EGP 2,188 million and its general reserve by EGP 6.4 billion to EGP 19.2 billion. This reinforces the Bank’s solid financial position, as evidenced by a capital adequacy ratio (CAR) of 19.09%. The proposed dividend distribution falls in line with the Bank’s strategy of maintaining a healthy capital structure to address more stringent regulations, mitigate associated risks, as well as facilitate and support the Bank’s future growth plans.
2018 Operational Highlights
Despite lingering macroeconomic challenges, the Institutional Banking (IB) Group was able to meet its pre-set performance targets for 2018. The group contributed 78.4% to CIB’s loan growth during 2018.
The Corporate Banking Group continued expanding its loan portfolio across different sectors, taking part in the government’s ambitious plans to develop the economy by financing several mega-projects in the power, construction, food and beverage, textile, telecommunication, and oil and gas sectors. The group grew its loan portfolio by 16.4% y-o-y to EGP 95.6 billion by year-end.
The Debt Capital Markets Division further consolidated CIB’s high ranking among private Egyptian banks in the fields of syndicated loans and bookrunning. CIB came in seventh among African banks on the Bloomberg League Table for African Syndicated Loans in 1Q2018, a reflection of the team’s efforts. With a market share of 3.7% of deals, CIB is ranked third among Egyptian banks in this area. In 3Q2018, CIB was ranked eighth among Initial Mandated Lead Arrangers, up from the 15th in 2017, with a market share in deals of 3.1%. On the domestic front, CIB captured the lion’s share of public sector debt arrangements during 2018, organizing syndicated medium-term loans worth c. EGP 69.1 billion for public sector companies and quasi-sovereigns in the power and oil and gas sectors. The division cemented CIB’s position as the top bank in Egypt in the structuring of local market securitizations, closing securitization deals worth EGP 4.4 billion out of a total EGP 5 billion in the Egyptian market.
Leveraging CIB’s investment in data analytics, Consumer Banking made progress in implementing a behavioral segmentation strategy aimed at attracting, retaining, and deepening relationships with customers. By aligning tailor-made products and services with the specific needs of each segment, the Bank was able to increase customer satisfaction by better catering to its clients’ needs.
In 2018, Consumer Banking introduced a new high-net-worth (HNW) segment called Private, offering an exclusive bundle of products and services tailored to clients with a minimum net worth of EGP 20 million.
Despite price competition from public-sector banks, Consumer Banking was able to increase CIB’s total deposit portfolio by 18.3% y-o-y to EGP 165.2 billion in 2018. The Bank focused on gathering low-cost deposits, particularly CASA, by offering competitive rates and leveraging its long-standing relationships with corporate clients to further gather payrolls. The loan portfolio grew by 21.9% y-o-y to EGP 22.9 billion in 2018, contributing to 21.6% of CIB’s loan growth during 2018.
CIB also moved to digitalize its customer loyalty program in 2018, facilitating the redemption of the loyalty points earned when executing transactions. Substituting the physical voucher with an instant e-voucher, the move was well-received by customers and resulted in higher activation rates.
The Bank’s branch network remains the main channel for serving customers. In 2018, nine new branches were launched, bringing the total network to 203 branches. The Bank added 98 ATMs in 2018, expanding the network to 917. CIB commanded a POS network of 13,446 machines as of December 2018.
On the Business Banking front, revenues grew steadily year-on-year in 2018, recording EGP 2,359 million at year-end 2018, up 16% y-o-y. Deposits grew 21% y-o-y to EGP 47.5 billion, representing 17% of CIB’s total deposits. The division’s client base grew 15% y-o-y to 48,229 companies.
In 2018, the Business Banking Division collaborated with the US government-backed Overseas Private Investment Corporation (OPIC) to hold 12 workshops as part of the Women in Business Capacity Building program. The program aims to increase banking and financial awareness among women-owned and managed startups and small companies, promoting inclusion in the formal sector, providing access to finance, and raising CIB’s standing as an institution that upholds gender equality throughout the sector.
Information Technology and Operations
CIB remains committed to upgrading its IT systems and ensuring that its platforms are continuously updated and capable of comprehensively supporting its growth plans. To improve and streamline the customer experience and enhance the Bank’s product mix, CIB inaugurated two major projects in 2018: the Core Banking Release, which will allow the Bank to transition to the R18 Platform, and a new digital platform for consumers. 2018 also witnessed the delivery of another key project: the Customer Relationship Management program, which is designed to build stronger relationships with customers.
During the year, the IT department continued to improve the resiliency of CIB’s infrastructure, optimize the Bank’s storage, and build the enterprise platforms to maintain CIB’s leadership position within the banking sector. The team also extended its support to the Analytics and Data Management team, integrating state-of-the art technology into the Data Warehouse infrastructure to enhance report extraction and data analysis.
CIB’s transformation strategy has also entailed scalable infrastructure. In 2018, the Bank took the first steps toward implementing a new software defined network (SDN) to create a virtual network across data centers. By using this technology to create a responsive network data center, CIB will enjoy a new generation of distributed applications and will accommodate virtualized and non-virtualized environments. This will aid the Bank in fulfilling current and future business objectives related to digitalization and mobile application solutions.
Operations continue to be at the core of CIB’s automation and re-engineering initiatives, which progressed in 2018 according to the automation roadmap set in late 2017. Developments ranged from shifting different tasks to call centers to re-engineering multiple processes that allow CIB to offload support duties from branch staff and shorten service delivery turnaround time. A focus on straight-through processing (STP) has allowed the Bank to reach an STP rate of 90% for e-remittances.
Meanwhile, the SMS activation of debit cards lowered the number of incoming calls to the call center, thus enhancing resource capacity. CIB’s IVR call tree was also revamped to allow customers to tackle day-to-day activities with ease.
Security and Resilience Management
As technology and the internet have grown in importance, cyber security has become a pressing concern across almost all industries. CIB is continuously developing its capabilities to remain in tune with global trends and best practices. The Bank takes its security and customers’ welfare seriously, and executive management has prioritized cyber security and resilience on its agenda.
CIB maintains a full set of security governance policies covering all aspects of security. These guidelines are based on international standards and best practices and frameworks. The Bank’s visibility on cyber risks and threats is achieved through a fully operational Security Operations Center (SOC). Undergoing continuous enhancement, SOC proactively mitigates risk by monitoring, analyzing, and responding to incidents. In 2018, the SOC introduced Cyber Threat Intelligence to further enhance the Bank’s detection and cyber threat hunting capabilities more proactively, providing CIB with early warning signals on cyber threats and risks.
Over the years, CIB has invested heavily to mitigate cyber risks, deploying the strategies needed to ensure proper management is in place. To improve its security posture, the Bank has invested in security workforce development and enablement, enhancing the security infrastructure technology stack, and has deployed advanced threat prevention through world-class security technologies. CIB operates a dedicated internal security control function to ensure security policies are properly enforced and to raise awareness among staff on cyber security and its importance.
The Bank has been intensifying its efforts and widening the scope of its oversight along the business continuity and contingency management spectrum. To take its business continuity capabilities to the next level, CIB introduced ‘resilience management’ with a widened scope of oversight to cover third parties in addition to internal capabilities. The program seeks to ensure not only the resumption of business after a disruptive event, but also the preemptive protection of CIB’s brand equity, resources, and staff from threats.
In 2018, CIB was the proud recipient of the ISO22301:2012 certification for Business Continuity Management. ISO 22301 certification was awarded to CIB by Professional Evaluation and Certification Board (PECB), a global provider of training, examination, audit, and certification standards, in partnership with EGYBYTE, a leader in the MENA market for IT Service Management. ISO 22301 is the International Standard for Business Continuity Management, providing guidance to certified organizations, allowing them to identify and manage current and potential threats to business. CIB’s ISO-certified Business Continuity Management System puts the Bank in a position to effectively limit the risk of unexpected incidents, allowing it to operate during challenges, reduce the likelihood of operational disruptions, and continue to provide customers with expected services while maintaining the highest level of customer satisfaction.
2019 Business Outlook
In 2019, CIB will remain committed to providing its clients with the highest quality of service and supporting their investment and financial growth plans, along with creating value for its shareholders. The Bank will continue to work diligently to maximize their returns through any operating environment. To this end, CIB will pursue a business strategy that prioritizes asset quality and profitability.
Awards and Recognition in 2018
CIB continued to garner awards during 2018. Financial institutions of global renown recognized the Bank’s efforts to grow and innovate in all facets of business.
In September, CIB was named “World’s Best Emerging Markets Bank” in Global Finance magazine’s World’s Best Banks Awards for 2018, making it the second consecutive time the Bank has received this accolade having been named by Euromoney as the “World’s Best Bank in Emerging Markets” in 2017.
In June, CIB became the first Middle Eastern firm to be analyzed in a case study by the Leadership Institute at the London Business School (LBS), one of the world’s top five business schools. CIB was selected in recognition of its data-driven, customer-centric approach to leading transformation in the face of macroeconomic challenges.
The Bank also ranked 38th on Forbes Middle East’s “Top 100 Listed Companies in the Arab World,” ranking the highest of the four Egyptian companies on the list.
Besides recognizing the significant efforts of the team at CIB, such accolades extend international testament to the outstanding capabilities and competencies of Egyptian organizations in the face of adversity.
CIB received the following awards during 2018:
Awards by Global Finance
- Best Foreign Exchange provider in Egypt 2018
- Best Trade Finance Provider in Egypt for 2018
- Best Treasury & Cash Management Providers in Egypt
- Best Bank in Egypt
- Best Subcustodian Bank in Egypt
- Digital Bank of Distinction – Egypt
- Best Online Cash Management – Egypt
- Best Trade Finance Services – Egypt
- Best Online Portal Services – Egypt
- Best Information Security and Fraud Management – Egypt
- The Innovators
Awards by The Banker Africa
- Best Corporate Bank in North Africa
- Best Corporate Bank in Egypt
- Best Private Bank in Egypt
Awards by EMEA Finance
- Best FX Services in North Africa
- Best Payment Services in North Africa
- Best Local Bank
Awards by Euromoney
- Best Bank Transformation in the Middle East
- Best Bank in Egypt
Other awards include:
- Best Regional Bank – Northern Africa by African Banker
- Financial Inclusion Champion of the Year by FinX 2018
Commitment to Corporate Governance Best Practices, Ethics, and Corporate Values
In its mission to provide best-in-class financial solutions to enterprises and individuals, CIB strives to apply international best practices in the area of corporate governance. The Bank is wholly committed to the principles and corporate values that distinguish the finest governance structures.
CIB’s corporate governance structure is anchored in a team of highly professional executive directors and a distinguished group of independent non-executive directors (NED). The BoD enjoys an optimal mix of skills, experience, and diversity in terms of gender and nationality. No changes to the BoD composition took place during 2018. CIB’s BoD comprises of nine directors, seven of whom are non-executives, with one representing Fairfax’s interest in CIB. Five of the non-executive members are independent, conforming to the international best practices of corporate governance. Chairman and Managing Director Mr. Hisham Ezz Al-Arab and CEO Mr. Hussein Abaza are the BoD’s executive directors.
In line with CBE directives on corporate governance as well as international best practices, the Managing Director is responsible for ensuring adequate and effective governance through managing the independent control functions: risk, compliance, audit and legal, and also focusing on the strategic direction of the Bank. The CEO is responsible for managing the Bank’s business lines and day-to-day operations. CIB’s highly qualified BoD is supported by specialized committees that assist in fulfilling its responsibilities. The BoD has seven standing committees; five non-executive and two executive committees. Each committee chairperson is responsible for briefing the BoD on the major issues raised by the committee he/she chairs.
The BoD’s non-executive committees are:
- Governance and Nomination
- Operations and Technology
The BoD’s executive committees are:
- High Lending and Investment
The BoD is also supported by internal and external auditors as well as other internal control departments (Risk, Compliance, Internal Audit, and Legal). Work carried out by these functions is fully utilized by the BoD to ensure the Bank adheres to international standards of corporate governance.
CIB’s experienced executive management team plays an important role in the governance of the Bank by faithfully and efficiently executing the strategy set by the BoD and properly implementing the Bank’s policies.
The Code of Corporate Governance is a cornerstone of CIB’s governance policy framework, aiming to enhance long-term value for shareholders, employees, and other stakeholders. A Code of Conduct sets out the standards of behavior expected from all employees, providing staff, senior management, and the BoD with a comprehensive frame of reference regarding their rights and duties. The code further enshrines the principles of equal employment opportunity and gender equality. CIB’s Conflict of Interest policy guarantees that all staff and BoD members remain aware of and forthcoming about any conflict of interest between the Bank and their personal, professional, and business interests, providing guidance on how to handle those cases. The Bank’s Whistle-Blowing Policy encourages staff to report suspected violations of the law or Bank policies as well as any wrongdoing, while guaranteeing a supportive and encouraging environment for those who speak out. The Bank handles the claims of whistleblowers, be they employees or external actors, very seriously and at a senior level. CIB’s Conduct Risk Policy makes clear the Bank’s relationship with and duties toward its customers.
CIB’s Governance Framework ensures that timely, transparent, and accurate disclosures are made available with respect to material information regarding the Bank, its ownership, operations, and financial performance. It advocates the equal treatment of all shareholders with sound protection for their voting rights. Backed by a concrete set of policies and procedures relevant to the scope, size, and complexity of CIB’s business, the framework also aims to sustain the success of the Bank’s business and operations, ensure proper implementation of internal and external regulations, and mitigate all possible types of risk.
Commitment to Sustainability
The Bank is proactive in making sustainability a permanent feature of its products and services. CIB takes pride in its role to develop the United Nations Environment Program Financial Initiative (UNEP-FI’s) Principles for Responsible Banking alongside 27 banks from five different continents, accounting for aggregate assets of more than USD 17 trillion. The banks were assisted by 12 civil society organizations from several countries and diverse backgrounds to ensure the principles take into account the various operational and market realities of banks in different countries, as well as banks at different stages of sustainable banking. The Principles for Responsible Banking are the first set of guiding principles to focus specifically on the banking industry and aim to ensure the integration of environmental, social, and governance (ESG) principles at a strategic, operational, and transactional levels in banks.
For years, CIB has worked to provide sustainable capital to help clients grow, give back to the communities in which we live and work, and incite actionable change in the area of environmental business practices. The six UNEP-FI principles — alignment, impact, clients and customers, stakeholders, governance and target setting, transparency and accountability — resonate with CIB’s sustainability culture. Commitment to these principles will empower the Bank to further support and accelerate the fundamental change to which it aspires. CIB encourages other banks to endorse and take part in signing the Principles for Responsible Banking at the signing event in 2019.
Deepening its commitment to responsible banking, in 2018 CIB launched the Solar Loan Program, offering its customers special financing for the purchase and installation of solar panels. Supporting the government’s campaign to rationalize energy consumption by introducing renewable sources, the loan also helps customers switch to more affordable source of energy to mitigate rising living expenses.
The Bank continued to reinforce its internal sustainability agenda during the year, a strategy anchored in three main pillars:
Managing Our Ecological Footprint
CIB managed its environmental footprint by applying the highest standards and devoting resources to manage energy and water consumption, carbon footprint, and waste creation.
- Lighting Efficiency: To support Egypt’s Lighting Efficiency Improvement Initiative, in 2017 CIB began transitioning to LED lighting systems across all its premises. As per the review from Egypt’s Ministry of Electricity and Renewable Energy, the measures cut CIB’s energy consumption by 11 million KWs between 2014 and 2018. In 2018, annual savings on electricity consumption hit 40%, with the payback period reaching 14 months. CIB received a special award from the Energy Efficiency Project in 2018, recognizing the Bank’s outstanding efforts in ensuring energy efficiency.
- Water Efficiency: In 2018, CIB installed 1,600 aerators at select premises, saving the Bank and the environment 103 million liters of water. Consumption of water has been reduced by 40% and CIB has saved EGP 518,000 in water-related expenses. The Bank has developed a plan to install aerators at all of its premises across Egypt.
- Paper Reduction: CIB sells the paper waste created by branches to paper recycling startups. The proceeds are credited to the Sustainability Account and are subsequently used for green projects, such as green rooftops. In 2018, a total EGP 184,326 was credited to the Sustainability Account.
- Electronic Waste (E-waste): At the end of 2017, CIB began implementing an e-waste management initiative, safely disposing of mobiles, computers, iPads, and similar devices, which totaled to EGP 1 million at the end of 2018.
- National Initiative on Plastic Bag Consumption Reduction: CIB is cooperating with the Ministry of Environment in a national campaign to promote the use of biodegradable plastic bags and increase public awareness of the hazardous effects of non-biodegradable plastic. The Bank uses biodegradable plastic bags across all its premises.
- Internal Carpooling Mobile Application: The Bank enlisted young Egyptian entrepreneurs to create a tailor-made carpooling application, Raye7, which is now used by more than 1,000 CIB employees, further reducing its carbon footprint while encouraging young entrepreneurs to develop innovative solutions.
- Green Buildings: Collaborating with the Housing and Building National Research Center, CIB obtained an Egyptian Green Pyramids Certificate. This initiative conforms to the standards of world-class Leadership in Energy and Environmental Design (LEED) programs, indicating that buildings have been constructed and operated in a resource-efficient manner. Two CIB head offices were awarded the highest Green Building Rating under the Green Pyramids Rating System (GPRS).
- Special-needs Accessibility: CIB has successfully equipped 26 branches with ramps, low teller desks, and toilet rails. Ninety-five talking ATMs have been installed at key locations across Egypt. Further broadening the accessibility of its services to visually impaired customers, CIB expanded the use of debit cards from solely ATMs to POS machines. Training sessions on the provision of optimum service for special needs customers have been held for 250 CIB front-liners and customer representatives, and a code of accessibility has been developed to evaluate the ease of use at branches and ATMs in order to identify gaps and appropriate improvements.
Monitoring and Reporting
- CIB Sustainability Report: Since 2014, relevant sustainability KPIs have been identified and reported in an annual sustainability report. The report tracks the Bank’s performance and communicates its progress to stakeholders. CIB adheres to Global Reporting Initiative (GRI) standards, which provide the most comprehensive framework for sustainability reporting.
- Science Based-Target Initiative (SBTi): The SBTi invited CIB to participate in a financial-sector working group to develop a new assessment methodology identifying whether investing and lending activities are aligned with a 2°C trajectory.
- Carbon Disclosure Project (CDP): In early 2018, CIB became the first Egyptian entity to participate in the global disclosure system Carbon Disclosure Project (CDP), which enables companies and states to measure and manage their environmental impacts.
- Bloomberg Gender Equality Index (GEI): Based on 2018 reports and figures, CIB was included on the 2019 Bloomberg Gender Equality Index (GEI). Of the 230 companies selected for the GEI, CIB became the first Arab and African company to be named to the index. The Bloomberg GEI is the world’s only comprehensive investment-quality data source on gender equality.
- FTSE4Good Sustainability Index: In 2018, CIB was recognized by the Financial Times as a constituent of the FTSE4Good Sustainability Index, marking the sixth consecutive year the bank has been a constituent.
- EGX Sustainability Index: CIB ranked first on the EGX Sustainability Index for the fifth consecutive year in 2018.
Commitment to Corporate Social Responsibility
CIB has continued to embed corporate social responsibility (CSR) at the heart of the organization. This year, the Bank expanded its steadfast commitment to the communities in which it operates by diversifying its community development activities, which include supporting sports, fine art, culture, and social care. It has implemented various CSR projects and provided crucial support to the initiatives of other organizations.
The Bank’s CSR agenda in 218 included the following:
- CIB contributed to a charity soccer tournament held in Ramadan 2018 to support the Abu El-Rish Children Hospital by donating the tournament’s funds to the hospital.
- The Bank participated in the exhibition of student projects in the faculties of fine arts at the universities of Luxor, Assuit, Menya, and Mansoura. CIB acquired distinctive artwork to incentivize young talents while enriching the Bank’s art collection.
- CIB sponsored “Night with the Arts” for the second year in a row. This year, the exhibition “Nothing Vanishes, Everything Transforms” held at the historic Manial Palace showcased Egypt’s rich cultural heritage.
- For the first time ever, CIB supported an African painting workshop led by Soma Art School in the Democratic Republic of Congo during the seventh edition of the Rencontre Internationale d’Art Contemporain (RIAC) event.
- CIB maintains its commitment to preserve the legacy of Egypt across different fields, including art and cinema. The Bank sponsored the special “Cinema Edition” of the cultural magazine Rawi, which focuses on Egyptian heritage.
- CIB continued to sponsor “Made in Egypt”, an exhibition of young Egyptian designers held in London featuring the country’s best artistic productions.
- CIB and KidZania’s partnership began in 2013, and since this time, the Bank has successfully organized several trips each year to KidZania for more than 150 underprivileged and special needs children, as well as children with health conditions.
- The Bank continued its sponsorship of the annual ceremony for the Egyptian Advance Society for Persons with Autism and Other Disabilities (ADVANCE) and sponsored 2018 World Autism Awareness Day in Egypt to support the integration of people with disabilities into society. Moreover, the Bank’s Smart Village headquarters and select branches were lit in blue in solidarity on World Autism Awareness Day.
- CIB has been the main partner and financial sponsor of Beena for three consecutive years. Beena is a protocol signed between the Bank and the Ministry of Social Solidarity to encourage active youth participation in the community and monitor the development of social care services. This initiative successfully attracted thousands of volunteers around Egypt who assisted in orphanages, elderly homes, and special-needs houses.
- In 2018, CIB continued its sponsorship of El Sawy Culture Wheel, supporting various intellectual, cultural, and social activities, including concerts by internationally recognized artists, cultural nights, art exhibitions, documentary films, and many more. This year, the Bank launched a new initiative in cooperation with the CIB Foundation and other NGOs to provide entertaining and educational programs at El Sawy Culture Wheel that target children.
- CIB sponsored a science fair for school students to foster scientific thinking from an early age and encourage children to explore future careers in scientific fields. The fair featured groups of students from different grades who submitted projects to a panel of judges, who evaluated each project and awarded numerous titles to winning teams.
- CIB was the sole banking sponsor of the second season of CBC’s televised entrepreneurship competition Hona Al Shabab in 2018. The competition supports young fintech entrepreneurs and business startups.
In 2018, CIB continued to positively affect communities by strengthening its support for sports in Egypt and nurturing the country’s athletic talents. Squash-related initiatives were again at the core of CIB’s CSR agenda.
- CIB maintained its sponsorship of the Egyptian Squash Federation for the seventh consecutive year. The Bank also expanded its commitment by sponsoring the National Women’s and Junior Squash Teams’ international championships. This support has played a direct role in the national teams’ accomplishments throughout the year, as the National Junior Squash Team won the World junior squash championship in India for the sixth time. Almost simultaneously, the National Women’s Squash Team was named Women’s World Team Champion in China, successfully retaining their title.
- In support of young players leading the world’s squash rankings, CIB has created special sponsorships to help six talented players maintain their rankings and continue representing the country around the world. The following players were recipients of these sponsorships:
- Ali Farag – 2nd on the Men’s PSA World Squash List
- Nour El-Tayeb – 4th on the Women’s PSA World Squash List
- Tarek Momen – 3rd on the Men’s PSA World Squash List
- Karim Abdel Gawad – 5th on the Men’s PSA World Squash List
- Ramy Ashour – 24th on the Men’s PSA World Squash List
- Hania El-Hammamy – 17th on the Women’s PSA World Squash List
- CIB announced its partnership with Wadi Degla Clubs to support young Egyptian squash athletes by developing their skills to enhance their international rankings. The additional athletes representing Wadi Degla and sponsored by CIB are:
- Raneem El Welily – 1st on the Women’s PSA World Squash List
- Nouran Gohar – 8th on the Women’s PSA World Squash List
- CIB continued for the second year its “Squash for Everyone” initiative in partnership with prominent Egyptian player Amr Shabana. The program aims to provide underprivileged children with an equal opportunity to practice squash and discover young, rising talents.
The CIB Foundation was established in 2010 as a non-profit organization under the oversight of Egypt’s Ministry of Social Solidarity. It is dedicated to improving health and nutrition outcomes and extending coverage to underprivileged children with limited access to quality healthcare. To meet its objectives, the Foundation relies on valuable partnerships with other institutions working in the field. During 2018, the CIB Foundation’s activities and initiatives included the following:
Approved Projects in 2018
- In April 2018, the Foundation’s Board of Trustees approved an EGP 18.9 million contribution to support the purchase of 33 upgraded monitors and four central station units for the Surgical Intensive Care Unit, Intensive Care Unit, and the Bone Marrow Transplant Unit at Children’s Cancer Hospital 57357. A further EGP 3.5 million was also donated to fund patient care expenses at the Cairo and Tanta branches.
- In April 2018, the CIB Foundation’s Board of Trustees approved over EGP 14 million to fund the complete renovation and outfitting of El-Galaa Teaching Hospital’s Pediatric Intensive Care Unit to extend services to more patients on the waiting list.
- In April 2018, the Board of Trustees approved EGP 10.8 million in funding to Abou El-Reesh Children’s Hospital to purchase a fluoroscopy x-ray machine for the Radiology Department and a laparoscopy and thoracoscopy machine for the Pediatric Surgery Department. In July 2018, the CIB Foundation donated over EGP 3.3 million to cover the first tranche of the project.
- The CIB Foundation allocated EGP 7.5 million in July 2018 to fund the purchase of necessary equipment and supplies for the Pediatric Dentistry Clinic in El Kasr El Aini. The donation will also fund the establishment of another clinic in Sheikh Zayed to increase the efficiency of services provided to children and drastically reduce the number of patients on the waiting list.
- In 2017, the CIB Foundation contributed EGP 640,000 to purchase an outfitted mobile dental caravan for the Faculty of Oral and Dental Medicine at Cairo University, under the management of the Rotary Club of Zamalek. This year, the Foundation allocated an additional EGP 120,000 to cover the operating costs of 12 dental caravans that will be used to treat public school students in remote areas of Cairo and Giza for free.
- In July 2018, the CIB Foundation allocated EGP 7 million to the Magdi Yacoub Heart Foundation to cover costs associated with 70 pediatric open-heart surgeries and donated EGP 3.5 million in October 2018 to cover the first tranche of the project.
- In February 2018, the CIB Foundation donated the final EGP 859,000 in a three-year EGP 15 million project to outfit two research labs in Magdi Yacoub Heart Foundation’s Aswan Heart Center.
- In April 2018, the CIB Foundation’s Board of Trustees approved EGP 6.64 million in funding to outfit the Emergency Department located on the ground floor of the Alexandria University Children’s Hospital in El Shatbi. The CIB Foundation fulfilled its commitment to the project in October 2018.
- The CIB Foundation donated over EGP 1.3 million in 2018 to cover the surgery costs of 39 underprivileged children suffering from congenital heart diseases at El Kasr El Aini Hospital, under the management of the Rotary Club of Giza Metropolitan. This contribution follows our March 2017 allocation of EGP 1.75 million to cover the costs associated with 50 pediatric open-heart surgeries. In addition, in October 2018, the CIB Foundation’s Board of Trustees approved an EGP 3.7 million budget to support another round of the project.
- The Board of Trustees allocated EGP 3.1 million in April 2018 to purchase equipment for the Nasser Institute Hospital’s Pediatric Intensive Care Unit and Neonatal Intensive Care Unit.
- In July 2018, the Foundation contributed a total of EGP 3 million to the annual operating costs of five pediatric units at Ain Shams University Hospital under the management of long-standing partner the Yahiya Arafa Children’s Charity Foundation.
- Over the course of 2018, the CIB Foundation donated over EGP 1 million to cover 289 surgeries as part of the fifth and fourth phase of the Children’s Right to Sight (CRTS) program led by the Rotary Club of Kasr El Nil.
- The CIB Foundation donated EGP 1.67 million to the Egyptian Clothing Bank to provide 50,000 training suits to children in 19 governorates.
- The CIB Foundation’s Board of Trustees approved a proposal to support the outfitting of the sensory and psychomotor rooms at the National Foundation for Family and Community Development’s specialized center for the rehabilitation of autistic children. The EGP 688,000 project will enable the center to serve around 250 children monthly.
- In April 2017, the CIB Foundation fulfilled its commitment to contribute EGP 2 million to the MOVE Foundation for Children with Cerebral Palsy to renovate their premises and expand operations. The CIB Foundation also allocated EGP 608,400 to support the annual operating cost of the MOVE Foundation’s premises. In September 2018, the Foundation donated EGP 152,100 to cover the first installment of this commitment.
- The CIB Foundation dedicated over EGP 5.1 million to fund the Egyptian Liver Care Society’s Children without hepatitis C (C-Free Child) program. This year, the CIB Foundation also invested in increasing the number and quality of hepatitis treatment centers in Egypt.
- In August 2018, the CIB Foundation donated over EGP 91,000 to cover the first tranche of an EGP 4.1 million project to fund the treatment of 400 children with hepatitis C at the National Hepatology & Tropical Medicine Research Institute (NHTMRI).
- In June 2017, the CIB Foundation pledged EGP 3.53 million to the purchase of 40 monitors, 45 infusion pumps, and 25 syringe pumps for the Inpatient Unit at Ain Shams University Hospital. In August 2018, the CIB Foundation donated over EGP 589,000 to cover the final installment for the project.
- The CIB Foundation donated over EGP 14.4 million in 2018 to cover the fourth and fifth tranches of the Gozour Foundation for Development’s 6⁄6 project to fund 264 eye exam caravans and provide 158,400 public school students in impoverished areas across Egypt with free eye examinations.
- In partnership with Al-Noor Magrabi Foundation and Dar El Oyoun, the caravans, which are staffed with 25-30 doctors, nurses, and coordinators, were equipped with advanced medical tools, medications, and eyeglasses. They provided students with free ophthalmic exams, eye medication, and referrals to private hospitals for * complex cases. Moreover, CIB staff members volunteered with the caravans.
- Over 2018, the CIB Foundation donated over EGP 105,000 as part of an EGP 1.5 million partnership with the Sawiris Foundation for Social Development and Star Care Foundation in 2016 to implement comprehensive community development projects in Sohag, Assiut, and Qena.
- In June 2018, the Foundation contributed the final EGP 750,000 of an EGP 1 million pledge to Ahl Masr Foundation in 2016. This contribution funded the treatment of 159 pediatric burn patients whose families could not afford the costs of their treatment.
- In September 2015, the CIB Foundation’s Board of Trustees approved an EGP 710,000 project under the Ophthalmic Clinic in Aswan to establish the first fully equipped diagnosis and referral center for children with glaucoma. In October 2018, the CIB Foundation donated over EGP 472,000 to cover the final installment of the project. CIB supported the Baladi Foundation’s efforts to detect glaucoma in 500 children, treat these patients, and perform 50 surgeries for congenital glaucoma cases, while also training a team of doctors and nurses in Upper Egypt.
- In April 2014, the CIB Foundation’s Board of Trustees approved the allocation of EGP 1 million to fund the outfitting of the Craniofacial Center at Sohag University Hospital. In October 2018, the CIB Foundation donated over EGP 323,000 covering the final installments of the project.
- The Foundation gave 50 KidZania tickets to underprivileged children. Over the course of the year, the CIB Foundation coordinated with its partners to organize multiple visits to KidZania in which underprivileged and disabled children learned about adult professions in a child-friendly way. Children performed different jobs to earn and spend Kidzos, the official currency of KidZania, on games and other entertaining activities.
- In 2018, the CIB Foundation hosted 12 blood donation campaigns across its corporate offices to encourage CIB staff and customers to participate in an activity that saves thousands of lives across the country. Through this effort, 164 bags of blood were collected; these resources can potentially be used to save the lives of over 490 people.
- In February 2018, the CIB Foundation invited CIB colleagues and their families to a bag-packing event at CIB’s Smart Village office to participate in packing of over 5,000 health and hygiene school bags for the students targeted by the 6⁄6 Eye Exam Caravan program.
- In 2018, CIB launched a new initiative in partnership with the CIB Foundation and El Sawy Culture Wheel to develop children’s skills through specialized workshops. Children involved in the initiative enjoyed a full day of educational activities and games that stimulated their cultural and scientific development.
|2018 Performance Measures||Results|
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