PRESS RELEASE – Q3 - 2016 RESULTS
Strong set of results in a changing environment, generating a net profit of EGP 975.7 million at end of September 2016
Highlights on 2016 results till end of September:
- Growth of Year to Date Net Income after tax by 30.1%, reaching EGP975.7 million
- Growth Deposits by 13.9% reaching EGP30,367.3 million
- Increase of Gross Loans by 3.8% reaching EGP15,234.1 million
An overall satisfactory commercial development:
During the 9 months of 2016, Credit Agricole Egypt has pursued its growth path according to the set strategy putting customers at the top of the bank’s priorities. The global performance of the different lines of business triggered a satisfactory and ongoing evolution in the overall balance sheet up by 10.7% Year on Year.
The bank witnessed a robust growth of clients’ deposits moving upward by 13.9% over December 2015, especially low cost deposits up by 19.5% contributing to maintain low cost of funds despite continuing interest rates hike.
Gross loans portfolio increased by 3.8% over December 2015, due to a selective policy for Retail (+11.9%) and Corporate loans with special emphasis on reducing FCY exposure since beginning of 2016. In addition to Corporates and Enterprises’ weaker demand, it’s led to a decrease in Corporate loans outstanding (-1.1%).
The number of customers has witnessed a growth of 6.2%, over the 9 months of 2015, in parallel to the development of the bank’s network to reach 80 branches as of September 2016 after the recent opening of a new branch in Mansourah.
| Deposits – EGP Million | YTD Sep-2016 |
YTD Dec-2015 |
Variance |
| High Cost | 18,442.4 | 16,682.2 | 10.6% |
| Low Cost | 11,924.9 | 9,981.0 | 19.5% |
| Total | 30,367.3 | 26,663.2 | 13.9% |
| Loans – EGP Million | YTD Sep-2016 |
YTD Dec-2015 |
Variance |
| Retail | 5,269.1 | 4,706.9 | 11.9% |
| Banks | 269.4 | 167.5 | 60.9% |
| Corporate | 9,695.6 | 9,807.2 | -1.1% |
| Total | 15,234.1 | 14,681.6 | 3.8% |
An ongoing sustainable profitability:
During the 9 months of 2016, the growth of the Net Banking Income has reached a very satisfactory level of 15.9% over same period 2015. This is triggered by the rise of the Net Interest Income by 25.7% driven by both higher margins and volumes; especially in Retail banking, local currency loans and low cost deposits. As for the net commissions and fees, it has recorded a decrease of 6.0%, mainly in Trade Finance and Foreign Exchange commissions impacted by the slowdown in volumes of transactions due to foreign currency scarcity.
| Income Statement – EGP Million | Q32016 | Q22016 | Q32015 | Q3-16 Vs.
Q3-15 |
YTD Sep-2016 |
YTD Sep-2015 |
Variance |
| Net Interest Income | 537.1 | 476.2 | 402.2 | 33.5% | 1,455.7 | 1,158.2 | 25.7% |
| Net Fees & Commission Income | 103.9 | 120.9 | 118.1 | -12.0% | 340.0 | 361.8 | -6.0% |
| Net Trading Income | 27.5 | 45.4 | 33.5 | -17.9% | 122.1 | 126.7 | -3.6% |
| Other Operating Income | 4.6 | 7.1 | 1.3 | 253.8% | 14.6 | 20.1 | -27.4% |
| Net Banking Income | 673.1 | 649.7 | 555.1 | 21.3% | 1,932.4 | 1,666.8 | 15.9% |
| Total Expenses | (214.3) | (208.1) | (194.1) | 10.4% | (629.1) | (578.6) | 8.7% |
| Gross Operating Profit | 458.8 | 441.5 | 361.0 | 27.1% | 1,303.3 | 1,088.2 | 19.8% |
| Other Income (Expenses) | 44.0 | (5.7) | 21.5 | 104.7% | 48.3 | 38.0 | 27.1% |
| Income Before Impairment &Tax | 502.8 | 435.8 | 382.5 | 31.5% | 1,351.6 | 1,126.2 | 20.0% |
| Impairment | (65.3) | (18.5) | (38.1) | 71.4% | (89.5) | (89.2) | 0.3% |
| Net Income Before Tax | 437.5 | 417.4 | 344.4 | 27.0% | 1,262.1 | 1,037.0 | 21.7% |
| Tax | (94.1) | (98.5) | (77.5) | 21.4% | (286.4) | (287.1) | -0.2% |
| Net Income | 343.4 | 318.8 | 266.9 | 28.7% | 975.7 | 749.9 | 30.1% |
| Cost / Income Ratio | 31.8% | 32.0% | 35.0% | 32.6% | 34.7% |
Credit Agricole Egypt continued to improve its efficiency, achieving a Cost/Income Ratio of 31.8%; Expenses growth (+8.7%) is driven by staff costs increase, as well as continuous investments to support digital transformation of the bank. It should be noted that September has witnessed the launch of a state-of-the art Mobile banking application (banki by Credit Agricole), a new bank website and the preparations for the Mobile wallet, as part of the Omni Channel development strategy of the bank.
In a context of slower economic growth and higher constrains in foreign exchange market, Credit Agricole Egypt increased its general provisions, explaining growth of Cost of Risk in Q3 2016 despite the moderate increase of non-performant loans. The bank will continue to enhance cautious provisioning policy in Q4 2016.
The income before impairment and taxation reached EGP 1,351.6 million, thus moving up by 20.0%. The tax rate decrease to 22.5% in 9 months 2016 has contributed positively to profit growth.
High profitability, Good Quality of Assets and Strong Solvency:
Continuous strong Risk management, productivity and efficiency metrics are constantly followed and ensured within solid solvency, in order to support the ongoing growth of the bank’s activities.
Following devaluation of EGP early in November 2016 (from 8.88EGP/ 1 USD to 13.0EGP / 1 USD) This was just for the first day after devaluation, Capital Adequacy Ratio decreased from 14.8% to 12.6% as direct impact of currency devaluation in EGP equivalent of Risk Weighted Assets in FCY (increasing denominator of the ratio). No significant impact of interest rates hike which occurred the same day (+300 bp in CBE corridor rates) is recorded on capital base (numerator of the ratio), thanks to prudent management of securities portfolios of the bank. Moreover, high level of profitability will be maintained in the coming months, benefiting from favorable environment of higher interest rates and free floating currency system. This will allow the bank to manage properly its Capital Adequacy Ratio thanks to 2016 Net Profit and continuous support of Credit Agricole Group.
Conclusion:
Credit Agricole Egypt kept delivering high level of performance for the first 9 months of 2016 through robust business and profits growth, while maintaining good quality of assets and strong solvency. As a result, the bank achieved an increase of net income after tax of 30.1% over 2015, which reached EGP975.7 million.
