The Bank has reported a net income after taxation for 2011 of EGP 308.0 million.
Crédit Agricole Egypt maintained its commitment to finance the Egyptian economy with a solid 6.4% growth in net loans in 2011.
Our core revenues are growing, with net interest income up 12.6% over 2010 and net fee and commission income up 7.6%. While these increases are below those seen in 2010, they are quite satisfactory given the economic challenges we have faced in 2011.
Total expenses grew 18.2% over 2010. However, expenses include stamp duty and other charges that distort the real core expense trend. A higher net stamp duty expense in 2011, as well as a one-off charge for the Bank’s medical provision in 2011, that are not ‘core’ operating costs but are included in the expense line, mean that the 18.2% year over year increase is distorted upwards. Without these two exceptional items, the core expense increase is 13.9%, reasonably well contained given the inflationary pressures seen in 2011, and the average 16% salary increases awarded to staff at the beginning of 2011.
From a core business performance perspective, net operating income before provisions and taxation was broadly in line with 2010.
Pre-tax income of EGP457.5 million is 17.1% lower than 2010. This decrease is essentially driven by the increased provision expense in 2011, with the net provision cost increasing from EGP44.1 million to EGP137.3 million. Given the events of early 2011, there was an increase in Retail delinquencies driving a much higher Retail provision than 2010. However, on the Corporate and Enterprise Banking side, the provision increase was largely driven by a more conservative approach taken by the Bank to our general provision coverage given the uncertain business conditions
The Bank’s taxation expense increased in 2011, despite the reduction in pre-tax income. Our tax expense is withholding tax paid on the maturity of Treasury Bills and Bond coupon dates. With the significant increase in investments in Treasury Bills seen during 2010 that matured or had coupon payments due in 2011, our taxation expense increased accordingly.
The 2011 net income after taxation compares with EGP444.9 million in 2010, and has therefore decreased by 30.8%.
The Bank also enjoys a healthy solvency ratio, 12.84% at the end of 2011 (against 10% requested by the Central Bank of Egypt), which gives us some room to grow our business in the near term within our existing capital base.
The Egyptian Housing Finance Company (“EHFC”) is a 100% subsidiary of the Bank. EHFC was established in 2004 to offer mortgage products to the Egyptian Market. The company had around EGP277 million in mortgage loans at the end of 2011, and achieved a net income after tax of EGP4.9 million in 2011 (2010: EGP3.4 million), a 45.2% increase.
The events of early 2011, and the still uncertainty of the future economic outlook, is likely to impact our performance to some extent in 2012, but we are committed to our presence in Egypt, to supporting our clients’ business needs, even more critical at this time, and to being very much a continued part of the Egyptian banking sector as the country moves forward in another phase of its history. We are confident that this will bring about new opportunities for the Bank and our customers in Egypt.
Established in 2006, Crédit Agricole Egypt is a subsidiary of the worldwide leading financial Crédit Agricole Group. CAE has a committed team of experts offers a wide range of products and services designed to meet the demands of leading national and regional Corporations, SMEs, high net worth and retail customers. In addition to its branch network totaled 72 branches at end of 2011, conveniently located throughout the country, Crédit Agricole Egypt offers online banking services for easy access and convenient transactions (www.ca-egypt.com) in addition to its call center (19191) available 24 hours, 7 days a week.