reports
- Dalia Bonna
ADIB: Management Meeting Key Takeaways
Call Highlights * Deposit growth for the bank was not affected by the 25% CD issued by public banks supported by the 16% (monthly interest) and 17% (annual interest) CD issued by ADIB during 4Q22, which clients could not break during the first six months of purchasing. * Financing continues to receive a high allocation from deposits in line with the bank's strategy to maintain a financing-to-deposit ratio around the 60% level, with the excess funding parked in sovereign fixed-income ins...
- Bassma Bakry
- Dalia Bonna
Egypt Banking Sector 2023: Attempting to counterbalance macro factors
Please find attached our banking sector update for 2023, in which we present: Sector Outlook, Hopes, Fears, and Picks * Sector Outlook, Hopes, Fears, and Picks * Valuation and Multiples Interbank Comparison * Market Share and Utilization * Balance Sheet * Income Statement * Capital Adequacy * Tax Law Calculation Individual Banks Fundamental Review * Commercial International Bank (COMI) * Qatar National Bank (QNBA) * Credit Agricole Egypt (CIEB)...
HDBK HOUSING & DEVELOPMENT BANK
CIEB CREDIT AGRICOLE EGYPT
EGBE EGYPTIAN GULF BANK
CANA SUEZ CANAL BANK
ADIB ABU DHABI ISLAMIC BANK EGYPT
SAUD AL BARAKA BANK EGYPT
QNBA QATAR NATIONAL BANK ALAHLY
FAIT FAISAL ISLAMIC BANK OF EGYPT
EXPA EXPORT DEVELOPMENT BANK OF EGYPT
- Dalia Bonna
CIB: 3Q22 – Outstanding quarter
STRONG NIM AND NON-INTEREST INCOME TRICKLE DOWN TO BOTTOM LINE DESPITE HIGHER PROVISIONS SEQUENTIALLY AND HIGHER OPEX ANNUALLY; LDR DECLINES ON HIGHER DEPOSITS CIB 3Q22 net profit post minority recorded a robust EGP4.41 billion (+26% q/q, +16% y/y, and 9% higher than our estimates), bringing 9M22 net profit post minority to EGP12.16 billion (+23% y/y).The sequential expansion came on the back of 1) strong NIM, 2) robust non-interest income growth, 3) softer growth in OPEX, and 4) lower effec...
- Dalia Bonna
QNB Alahli: 3Q22 – Strong annual growth; sequentially stable due to pr...
ROBUST MARGINS FAIL TO BOOST EARNINGS AS OPEX, PROVISIONS, AND EFFECTIVE TAX RATE SURGE SEQUENTIALLY; LENDING GROWS QNBA 3Q22 bottom line came in at EGP2,577 million (+1% q/q, +35% y/y), bringing 9M22 bottom line to EGP 7,332 million (+22% y/y). Annual growth was supported by robust margins that trickled down to the bottom line supported by non-interest income and lower OPEX despite a surge in provisions and effective tax rate. Sequential limited growth was caused by: 1) lower investment inc...
- Maryam Saleh
- Monsef Morsy
- Sherif Eletr
Egypt banks | Higher RRR: A manageable headwind; flag CAE
Higher RRR is negative, at face value, … On 22 September, the CBE hiked the reserve requirement ratio (RRR) on short-term LCY deposits by 4pp to 18.0% in effort to tighten liquidity and combat inflationary pressures. We calculate this should result in the absorption of cEGP150bn in excess liquidity from the system, which would be deposited at the CBE with no return. The RRR on FCY deposits was maintained at 10%. We expect banks will satisfy the higher liquidity requirement mainly through reducin...
- Maryam Saleh
- Monsef Morsy
CIEB EY | Recent rally has more steam; Remain OW
Strong fundamentals coupled with a high yield. We continue to favour CAE and maintain our OW rating. CAE’s solid balance sheet and balanced credit exposure allow for the trickling down of the bulk of the impact from the potential margin expansion to total profitability. We expect RoE to stand at c23% over 2022-23e vs. 17.5%, as implied from the current market price. CAE offers a 2022e dividend yield of 12%, among the highest within our Egypt coverage. CAE trades on a 2022e P/BV of 0.83x and P/E ...
- Dalia Bonna
Housing and Development Bank: 2Q22 – Another strong quarter although s...
ROBUST MARGINS FAIL TO BOOST EARNINGS AS OPEX, PROVISIONS AND EFFECTIVE TAX RATE SURGE SEQUENTIALLY; LENDING GROWS HDBK 2Q22 standalone bottom line recorded a healthy figure of EGP564 million (-12% q/q, +48% y/y), bringing 1H22 bottom line to EGP 1,204 million (+20% y/y). Sequential decline was driven by: 1) lower investment income due to high comparable base, which limited the positive impact of strong margins, coupled with 2) higher OPEX, 3) higher provisions and 4) higher effective tax rat...
- Dalia Bonna
ADIB Egypt: 2Q22 – Outstanding quarter
EARNINGS BOOSTED BY STRONG MARGINS AND NON-INTEREST INCOME COUPLED WITH LOWER OPEX DESPITE SURGING PROVISIONS; LDR IMPROVES ADIB 2Q22 consolidated net profit pre minority interest recorded a robust EGP578 million (+29% q/q, +65% y/y) reaching EGP1,017 million (+51% y/y) in 1H22. The strong sequential and annual performance was driven by: 1) improved margins, 2) strong non interest income, 3) lower OPEX, 4) lower sequential effective tax rate despite surging provisions annually and sequentiall...
- Dalia Bonna
Credit Agricole Egypt: 2Q22 – Strong operational quarter; LDR expands
EARNINGS DRIVEN BY INTEREST INCOME, AND LOWER PROVISIONS, DESPITE GROWING OPEX CIEB 2Q22 consolidated bottom line recorded EGP524 million, pre minority interest and appropriations (+7% q/q, +35% y/y), 11% higher than Pharos estimates of EGP471 million, bringing 1H22 bottom line to EGP 1,015 million (+32% y/y). Sequential performance was limited by lower investment income which wiped out the effect of robust margins, while lower provisions supported earnings, coupled with slight growth in OPEX...
- Maryam Saleh
- Monsef Morsy
- Sherif Eletr
ADIB EY | A strong valuation call; Resume at OW
Trading at a deep discount. We resume coverage on ADIB-E with an OW recommendation and a TP of EGP22.0/share. ADIB-E trades on a 2022e P/BV of 0.5x (P/E of 2.8x), a 61% discount to its five-year average and 55.5% to the average valuation of tier-1 peers. Trading at a discount to CIB – the sector’s proxy – could be attributed to size and capitalisation, but the magnitude is not justified, given ADIB-E’s 2022e RoE of 22.7% and 2022-24e EPS CAGR of 18.7%, broadly in line with peers. Phase 1 of capi...
- Dalia Bonna
CIB: 2Q22 – Annually strong quarter but sequentially weak
A plunge in non-interest income and sequentially higher provisions wipe sequential growth while margins and lower OPEX support earnings; LDR improves CIB 2Q22 net profit post minority recorded a robust EGP3,511 billion (-17% q/q, +9% y/y), bringing 1H22 net profit post minority to EGP7.8 billion (+27% y/y).The sequential contraction came on the back of 1) weak non-interest income (on lower fees and commissions and investment income), and 2) higher booked provisions versus provisions reversals...
- Dalia Bonna
Housing and Development Bank: 1Q22 – Strong quarter, annual performanc...
PROFITS SURGE SEQUENTIALLY ON IMPROVED MARGINS, LOWER OPEX, PROVISIONS, AND EFFECTIVE TAX RATE; LDR CONTRACTS HDBK 1Q22 standalone bottom line recorded EGP640 million (+62% q/q, +3% y/y). Limitedannualgrowth comes on the back of higher OPEX and booked provisions versus provisions reversals in the comparative quarter. Robust sequential performance is driven by 1) strong topline growth on improved margins, 2) support coming from dividends from subsidiaries and affiliate companies which compens...
- Dalia Bonna
Credit Agricole Egypt: 1Q22 – Healthy operational quarter; LDR expands
STRONG QUARTER DRIVEN BY INTEREST INCOME, OTHER INCOME, AND LOWER PROVISIONS, DESPITE GROWING OPEX CIEB 1Q22 consolidated bottom line recorded EGP492 million, pre minority interest and appropriations, (+14% q/q, +30% y/y), 4% lower than Pharos estimates of EGP511 million. Healthy sequential performance was driven by: 1) healthy net interest income, 2) strong ‘other income’ driven by reversals of other provisions, 3) lower booked provisions, and 4) slightly lower effective tax rate, despite gr...
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