Q: After a turbulent period, Egypt’s economic outlook is improving. How do you assess the current state of the country’s economy and the banking sector?
EL-Husseiny: Despite the turbulence of the past year and the macro-economic challenges, the banking sector remained resilient throughout. Net interest margins, solvency and capital adequacy ratios continue to be strong. The recent foreign investment and the IMF programme, together with Central Bank of Egypt’s (CBE) free floating of the currency have injected fresh confidence in the Egyptian economy. The resulting return of foreign currency liquidity to the market immediately benefited the banking sector.
The Egyptian government and the CBE continue to take proactive measures to empower Egypt’s economy. Egypt recognizes the crucial role that the private sector plays in driving sustainable development, providing employment opportunities, achieving economic diversity, and increasing GDP.
To that end, the government’s plan to increase foreign and local private sector investment has resulted in a 40% increase over the last year. In addition, a set of measures has been implemented to enhance private sector investment, ranging from developing a state-owned property policy to streamlining investment law procedures.
Q: CIB’s financial performance last year looked strong. What were the key drivers of this performance, and do you expect those drivers to persist this year?
EL-Husseiny: CIB was able to capitalize on its flexible balance sheet structure and delivered profitable growth last year. Fourth quarter consolidated net income was E£7.23 billion – a 83% increase on the same period in 2022 – with full-year consolidated net income hitting E£29.6 billion (up 84% versus 2022) on revenues of E£56 billion (a 70% year-on-year rise).
CIB was able to capitalize on its flexible balance sheet structure and delivered profitable growth last year.
CIB’s management focused on sustainable revenues, recording 18% net growth in deposits to E£675 billion. Such growth underlines the bank’s commitment towards controlling its cost of funds. In addition, CIB was able to successfully maintain a healthy 55% market share of current and saving accounts compared to total deposits.
CIB’s management are optimistic about the bank’s profitability and growth. The bank is confident in its ability to efficiently navigate changing market conditions through capitalizing on its solid balance sheet.
Q: The bank has made strategic investments in Ethiopia and Kenya in recent years. What is CIB’s regional growth strategy, and does that potentially include acquiring or buying another stake in a bank?
EL-Husseiny: The goal of CIB’s growth strategy is creating value for its stakeholders. In January 2023, CIB acquired CIB Kenya Limited, making it the first Egyptian bank to expand its operations into the sub-Saharan region. This acquisition is CIB’s first step in identifying and evaluating potential markets and suitable entry methods that complement its Africa expansion aspirations.
Kenya presented itself as an attractive investment opportunity due to its strategic location as a regional financial, communication, and transportation hub. The bank’s strategy for CIB Kenya is to support the growth in east Africa’s digital and business hub, providing Egypt and Kenya with the opportunity to become members in trade agreements, mainly the African Continental Free Trade Agreement. The bank’s priorities also include providing digital banking services and credit solutions to Egyptian corporates and small and medium-sized corporate customers.
Q: Sustainable finance is a growth area for many banks. How much demand is there for this type of financing from your institutional clients?
The bank has been playing a role in creating demand in the market for sustainable finance. This started in 2021 when we launched the Egypt’s first corporate green bond in collaboration with the International Finance Corporation (IFC).
The proceeds from the $100 million transaction have been fully utilized in projects across a variety of sectors, including but not limited to: food and beverages; electric power; utilities; construction and real estate; education services; health care; textiles; apparel and leather; cables; plastics and rubber.
CIB has also signed a $100 million seven-year loan with the IFC for support the provision of transition finance, which will help enhance sectoral decarbonization. Proceeds from the loan will be used to finance projects in the wide range of areas from energy efficiency and renewable energy to sustainable agriculture and transport.
Other initiatives the bank has supported include partnering with the Ministry of Agriculture and Land Reclamation to launch a green financing initiative worth E£1 billion, and investing in its Sustaining Sectors and Sustaining SMEs programmes, which are aimed at promoting sustainable finance in the corporate sector.
For instance, the sector-focused programme provides companies across industries with technical assistance, customized capacity building, sectoral studies, guidelines and certifications, and energy walk-through audits.
The SME-focused programme aims to help integrate environmental, social and governance principles into Egypt's SMEs across different sectors, and provide sustainable finance solutions in partnership with Gesellschaft für Internationale Zusammenarbeit, the German development agency.