Egypt’s Commercial International Bank (CIB) (COMI.CA) reported an 18 percent increase in second-quarter net income on Tuesday, above the expectations of analysts who say the country’s lenders are benefiting from soaring yields on government debt.
Net profit at the country’s biggest privately owned bank by assets was 523 million Egyptian pounds ($86.17 million), above the 443 million it reported for the same period a year earlier and an analyst consensus forecast of 505 million.
Egypt’s business sector has been struggling to recover from the disruption that followed President Hosni Mubarak’s overthrow last year. Banks such as CIB kept their bottom line growing thanks partly to record-high interest rates paid by the state this year for its short-term borrowing.
Consolidated revenues at CIB grew 23 percent to 1.23 billion pounds, above the average forecast of 1.09 billion in the Reuters poll of analysts.
State borrowing costs have soared as foreign investors exited the local treasury market, tax receipts suffered from a weak economy and the government boosted spending to meet popular demands for better living standards after Mubarak’s overthrow.
“We already saw other banks reporting top-line growth on the higher yields from treasury bills,” Beltone Financial Sara Boutros said earlier on Tuesday ahead of CIB’s results.
She said banks’ retail loan books have also been growing, partially compensating for the decline in corporate lending.
CIB’s gross loans grew 9.6 percent to 42.83 billion pounds at the end of the quarter from a year earlier. Net interest income was 1.80 billion pounds for the first half, up 43 percent from a year earlier.
CIB said higher loan loss provisions meant they now covered 134.8 percent of non-performing loans, up from 120.6 percent at the end of 2011.
“Even with the higher cost of risk resulting from Egypt’s prolonged economic recovery, CIB is well on course to achieving outstanding full-year results,” the bank said in its statement.
CIB shares have gained 52 percent this year, tracking the wider market higher on optimism that the worst of the economic turmoil sparked by Mubarak’s overthrow may be over.
Much of the gain came since late June when a new president was propelled in office with the strongest popular mandate in the country’s history.
Reuters
