ANNUAL - EBE Bank...Banque Misr National Bank of Egypt Private Sector and others (free trade on Egyptian Stock Exchange Market) 23.13% 11.57% 24.55% 02 About The Bank About The Bank

ANNUAL REPORT

2017 / 2018

TABLE OF CONTENTS

01- MESSAGE FROM THE CHAIRPERSON

02- ABOUT THE BANK

03- BOARD OF DIRECTORS 04- ORGANIZATION CHART

05- ECONOMIC CONDITIONS

- GLOBAL ECONOMY- LOCAL ECONOMY

06- BUSINESS STRATEGY:

- INTERNATIONAL RELATIONS- CORPORATE BANKING AND SYNDICATED LOANS- SMALL AND MEDIUM SIZE ENTERPRISES- INVESTMENT ACTIVITIES- TREASURY- CENTRAL BANKING OPERATIONS- BRANCHES NETWORK AND RETAIL BANKING- GOVERNANCE- GOVERNANCE, COMPLIANCE AND INTERNATIONAL STANDARDS- OPERATIONAL RISK MANAGEMENT- RECOVERY AND SWAP ASSETS- BANKING INVESTIGATION- LEGAL AFFAIRS- INTERNAL AUDIT- BUSINESS TECHNOLOGY- HUMAN RESOURCES- CORPORATE SOCIAL RESPONSIBILITY AND BUSINESS COMMUNITY SUPPORT

07- FINANCIAL INDICATORS:

- AUDITORS’ REPORT- LIMITED REVIEW REPORT- SEPARATE BALANCE SHEET- SEPARATE INCOME STATEMENT- SEPARATE STATEMENT OF CASH FLOWS- SEPARATE PROFIT APPROPRIATION STATEMENT- SEPARATE CHANGES IN SHAREHOLDERS’ EQUITY STATEMENT- NOTES TO THE SEPARATE FINANCIAL STATEMENTS- AUDITORS’ REPORT- LIMITED REVIEW REPORT- CONSOLIDATED BALANCE SHEET- CONSOLIDATED INCOME STATEMENT- CONSOLIDATED CASH FLOW STATEMENT- CONSOLIDATED CHANGES IN SHAREHOLDERS’ EQUITY STATEMENT- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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MESSAGE FROM THE

CHAIRPERSON

Message From The Chairperson 01

01

6 72017-2018 annual report2017-2018 annual report

Message From The Chairperson01 Message From The Chairperson 01

On behalf of the Board of Directors and the Bank's Executive Management, I am delighted and honored to present the Bank’s financial results for the financial year 2017-2018. Throughout the year, the Bank continued its outstanding performance while maintaining growth in core and operating profits; despite some economic challenges faced by the global economy in general, and Egypt in particular.

While the global economy is gaining strength and the current estimates show a global growth in the second half of 2017 reaching 3.8% for the whole year, being the highest growth rate since 2011, further growth to 3.9% in 2018 and 2019 is expected. The Egyptian economy is at an important turning point facing massive challenges.

This drove the Egyptian government to expedite the implementation of a structural reform package to narrow the imbalances in the way the financial policies are dealing with improving growth rates; the most important being the adoption of an expansionary financial policy through launching financial stimulus packages to raise the productivity of the Egyptian economy in parallel with adjusting the State general budget, by reducing government spending, rationalizing subsidies, increasing competitiveness and removing the restrictions on the Egyptian economic potentials.

Concurrently, the Egyptian government has embarked on a number of mega development projects, in addition to enhancing the role of the private sector and supporting public-private partnerships. Moreover, the government supported financing SMEs considering they are the main engine economic growth.

Also, addressing social justice to reduce the geographic gap in the human development index, raising the per capita GDP, optimizing the social security system and developing the social safety nets to accommodate the poor and vulnerable groups.

In view of the above, Export Development Bank of Egypt (EBE) achieved an increase in its profits owing to the prudent management of surrounding risks and effective Asset Liability Management (ALM).

Accordingly, the Bank's net profit for the financial year 2017-2018 reached EGP 703 million, with an increase of 40% equal to EGP 201 million over the previous financial year. Also, net income from fees and commissions increased from EGP 233 million on 30 June 2017 to EGP 293.7 million on 30 June 2018 at a growth rate of 26% Year-on-Year. The total loans and facilities portfolio increased by EGP 5.9 billion to reach EGP 21.4 billion in 30 June 2018, at a growth rate of 37.9% Year-on-Year. The customer deposits portfolio continued to grow by EGP 7.2 billion on 30 June 2018, reaching EGP 34.7 billion at a growth rate of 26% Year-on-Year.

It is worth mentioning that the Bank increased its capital in March 2018 by a total of EGP 1 billion; accordingly, the total capital amounts to EGP 2.728 billion. The key financial indicators continue to reflect the Bank's strong performance, where Return on Equity (ROE) reached 18% in June 2018 compared to 20.3% in June 2017, Year-on-Year, while the Return on Assets (ROA) reached 1.6% in June 2018 compared to 1.5% in June 2017, Year-on-Year, also the rate of Return on Capital (ROC) reached 25.8% in June 2018 compared to 34.9% in June 2017, Year-on-Year. The strong results achieved this year evidenced the success of the Bank's initiatives to increase the operating income and mitigate the risks in the target markets.

During the financial year, the Bank managed to maintain a stable and diversified funding base. Although market conditions still face significant challenges, yet the Bank will continue to focus on selective loan growth, create financing opportunities for exporters, support exporters and open new markets, especially in Africa.

The next financial year 2018-2019 will witness the continued achievements of the Bank's Strategy 2017-2022; focusing on the Bank’s support of Egypt’s economic growth; development of Egyptian exports by financing mega and national projects, the strong expansion in procuring the financing needs of SMEs, coupled with offering retail banking services, in a comprehensive and consistent framework guaranteeing the highest Return on Equity.

Finally, on behalf of the Board of Directors and myself, I would like to thank our shareholders for their continuous trust. Also, the strong performance achieved this year couldn't have been possible without the support and confidence of our customers and partners in success; the dedication and excellence of our team.

Looking forward to a year full of achievements and more progress.

Mervat Soltan

92017-2018 annual report

ABOUT THE BANKExport Development Bank of Egypt was established in 1983 for the purpose of boosting Egyptian exports and supporting establishments of agricultural, industrial, commercial and services sectors. Soon after, the Bank became the main funding source of exports operations in Egypt. Through its outstanding performance and policy, based on diversified investments, the Bank was able to grow more and more, and achieve efficiency and a strong financial position. This has helped the Bank to attain the confidence of exporters, owners of small and medium-size enterprises and individuals, in addition to the trust of local and international financial institutions.

The Bank plays a vital role in supporting Egyptian exporters and facilitating the access of Egyptian products to markets worldwide through the extension of finance of export, and import substitution projects to help improving the local production. This goes along with its significant role in participating in syndicated loans and equity participations of these projects. The Bank extends its full-fledged financing and banking services to exporters and its entire customer base.

To pave the way for Egyptian exporters, the Bank has built a network of correspondent banks in countries with common interests and economic ties with Egypt. Moreover, the Bank has set up network of branches throughout Egypt to serve the customers wherever they are based.

One of the main business lines and activities of the Bank is the Corporate Banking and Loan Syndication Activities, which role is to provide necessary finance for export-oriented and / or import substitution industries, supporting non-export industries finance requirements and securing necessary foreign currency needs, also to provide necessary finance in the form of loan syndications for various industrial sectors, as well as providing diversified finance packages including medium term loans, short term lending to finance working capital requirements for various economic sectors.

As part of the leading role played by the banking sector in supporting the SMEs sector and providing the appropriate finance. Also, considered as one of the main propellers of the economic growth, as they provide self-employments opportunities thus increasing employment rate as they need relatively low startup capital costs. The Bank maintains a leading position among other banks to tap SMEs sector through signing an agreement in 2005 with IFC, showing interest in supporting and developing the SME’s sector which was reflected in the increase in the Bank’s SMEs portfolio.

Additionally, the Bank is keen to obtain customer satisfaction, through providing a wide variety of banking products and services developed with competitive rates such as: time deposits, saving certificates in various currencies and tenors, different types of mutual funds, saving and current accounts, credit and debit cards, call center as well as e-banking services.

It is worth mentioning that the Bank’s future vision is to provide diversified banking products and services at the level of unique and high quality of the services’ standards which will fulfill all the desires and needs of customers. In order to achieve this vision, the Bank presents all of its activity through widespread network of branches, which covers most regions and provinces all over the country, as well as several ATMs located over unique and vital places, commercial centers, and branches. Moreover, out of the keenness of the Bank to be present near the customers to easily provide its banking services and diversified products.

About The Bank 02

ABOUT THE BANK

02

112017-2018 annual report10 2017-2018 annual report

LEGAL STATUSThe Bank is an Egyptian Joint-Stock Company established under Law 95 of 1983. It is subject to the regulations of the Central Bank of Egypt (CBE) and the law of financial and banking system, no. 88 for 2003. As an Egyptian Joint-Stock Company, it is also subject to the provisions of Law 159 for 1981, promulgating the law on joint stock companies, companies limited by shares and limited liability companies, unless otherwise provided in the law establishing the Bank, without prejudice to the provisions thereof.

CAPITAL AND SHAREHOLDERSThe authorized capital of the Bank is EGP 5 billion, and the issued and paid-up capital amounts to EGP 2.728 billion. All the Bank shares are of nominal value and indivisible equaling EGP 10 per share. The Bank is fully owned by Egyptians, as foreign ownership is prohibited. According to the provisions of Article no. 6 of the law of the Bank, Law 95 of 1983 public shareholding should contribute no less than 75% of the paid-up capital.

THE CAPITAL STRUCTURE OF THE BANK IN 30 JUNE 2018 IS AS FOLLOWS:

40.75%National Investment Bank

Banque Misr

National Bank of Egypt

Private Sector and others (free trade on Egyptian Stock Exchange Market)

23.13%

11.57%

24.55%

About The Bank02 About The Bank 02


BOARD OF DIRECTORSMrs. Mervat Zohdy El Sayed SoltanChairperson

Dr. Ahmed Mohamed Galal AbdallahVice Chairman

Mr. Mahmoud Hamed Mahmoud EL-LeithyNational Investment Bank - Representative

Mr. Ashraf Magdy Mohamed AhmedNational Investment Bank - Representative

Mr. Ahmed Abdel-Ghany Mohamed IsmaeelNational Investment Bank - Representative

Mrs. Amal Mohamed Sadek Ahmed El TobgyBanque Misr - Representative

Mrs. Neveen Hamdy Badawy El TahriBanque Misr - Representative

Mr. Hamed Hassouna Hassan HassibNational Bank of Egypt - Representative

Mr. Abdel Aziz Al Sayed Hassan HassoubaPrivate Sector - Representative

Dr. Samir Youssef Aly El-SayyadBoard Member

Mr. El Sayyed M. Mohamed Abu El KomsanBoard Member

(as of 30 June 2018)

Board of Directors 03

BOARD OF DIRECTORS

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Board of Directors03 Board of Directors 03


Mervat Zohdy El Sayed SoltanAppointed as the Chairperson of Export Development Bank of Egypt on 20/11/2016 withthe mandate to drive the Bank’s strategic role in helping to grow the Egyptian export sector.

She enjoys 35 years of banking experience in local, regional and global institutions and brings to EBE vast experience through her senior international and regional roles within these banks. Mervat served various senior positions from 1991 until 2017.

She worked as the Regional Head of Financial Institutions coverage for North Africa & Levant in HSBC Middle East, Dubai; Vice President Global Transaction Banking in Deutsche Bank Egypt covering the same North Africa & Levant region. In addition, she held other various senior roles within local & regional banks and helped develop the business strategy for these banks’ growth in the Egyptian Market.

Mervat Soltan earned both her B.A. and M.B.A. in Business Administration from the American University in Cairo, with highest honors, and has undergone several international training programs that have added to her technical and leadership skills.

Ahmed Mohamed Galal AbdallahAppointed as the Vice Chairman of Export Development Bank of Egypt in August 2017, with 26 years of experience in the fields of corporate banking, investment banking, strategic planning and leasing finance. He earned the Doctorate Degree of Business Administration from the Arab Academy for Technology, Science and Maritime Business, the Master Degree of Business Administration from Maastricht School of Management, Netherlands (1995-2000) and his B.A. in Business Administration from the Faculty of commerce – Cairo University.

Ahmed Galal worked as the Director of Corporate Banking Department at Ahly Bank of Kuwait (previously Piraeus), and is the Founder and Managing Director of ABKE Leasing Company, then the Chairman of the same company afterwards. Additionally, he was the Strategic Planning Manager at the Egyptian Company for Mobile Services (Mobinil), as well as the Relationship Manager in Corporate Banking at Egyptian American Bank (currently Credit Agricole), in addition to other different financial institutions.

Ashraf Magdy Mohamed AhmedMember of the Board of Directors, representing the National Investment Bank. Mr. Ashraf Magdy holds a B.A. Degree in Commerce and a Diploma in Investment and Finance - Ain Shams University. Currently the Chief Financial Officer at National Investment Bank.

He occupied several posts at National Investment Bank among which is the Bank’s representative on the Board of Directors in Suez Petroleum Products Company, where he participated in the restructuring of the debt due to the company from MOPCO.

Among his several achievements was, the participation in re-engineering the accounting structure at the bank in line with the Central Bank of Egypt’s regulations and the Egyptian accounting standards. In addition, he played a major role in establishing the bank’s credit policy and procedures.

Mr. Ashraf Magdy has been with National Investment Bank since 1990 and enjoys 28 yearsof banking experience.

Mahmoud Hamed Mahmoud El-LeithyMember of the Board of Directors representing National Investment Bank; with a B.Sc. Degree in Engineering, Ain Shams University and occupies the position of Deputy for Technical Support & Investment.

He is a member of the board of directors of several companies among which are Nasr Glass & Crystal Company, Taba Mineral Company, Future Urban Development Company, Misr Fertilizers Production Company (MOPCO), the Egyptian Petroleum Products Company and Samannoud Textiles & Towels Company.

Previously occupied several posts among which were, General Manager for the Budget and Research, General Manager for Financial & Economic Consultations and General Manager at the Economic Authorities Credit Sector.

Mr. Mahmoud El-Leithy has been with National Investment Bank since 1990 and has a total of 28years of banking experience.



Amal Mohamed Sadek Ahmed El TobgyMember of the Board of Directors representing Banque Misr; B.A Degree in Commerce –Cairo University. She works as a Financial and Banking Advisor and key partner in AIT Consulting Company.She occupied several posts in Banque Misr and participated in the incorporation of Misr International Bank where she established the International Relations Division until she reached the post of Senior General Manager and Board Member.She contributed to re-engineering and implementing the first Economic Reform steps in 1991.She is also a member of the Board of Directors of the Egyptian Businessmen Association, a founding member of the Canadian – Egyptian Business Council and the Egyptian French Chamber of Commerce.Amal El Tobgy is a member of the Investment Committee at Beltone Company and the Investment Advisor at Chemonics International Company.She earned several awards of which is, the Award of Merits from the French President for her effective contribution to the Egyptian banking sector and raising the efficiency of the Egyptian – French commercial relations.

Neveen Hamdy Badawy El TahriMember of the Board of Directors representing Banque Misr; holder of B.A. Degree in Economics and Political Science - Cairo University, a Diploma in Business Administration from London University and a Diploma in Business Administration from Harvard University.She occupied several posts at Chase National Bank (currently the Commercial InternationalBank) starting at the Credit and Marketing Department until she reached Assistant General Manager supervising the Petroleum, Tourism and Electronics Sectors.

She established several financial companies in partnership with several global banks and was a Member of the Board of Directors of the Egyptian Stock Exchange.Mrs. El Tahri established the first specialized investment bank for Small and Medium Enterprises to support this type of business. She also established and managed the first company in the field of investment risk, Pyramids 138 Fund for Projects Management. She currently occupies the post of the Founder, Chairman of the Board of Directors and Managing Director of the fund. She currently also occupies the post of the Founder and Chairman of the Board of Directors of Delta Inspire Projects Management Company and Delta Shield Investment Company.

Hamed Hassouna Hassan HassibMember of the Board of Directors representing National Bank of Egypt, and the Regional Chief Representative of Union De Banques Arabes Et Francaises – UBAF, a Board Member of Corporate Leasing Company “Corplease”. With a 33 years of experience in different international and local institutions. He holds Masters in Business Administration from Maastricht School of Management – Netherlands and honored with “Best Performing Student”. In addition to a B.A. from Faculty of Commerce – Ain Shams University as well as other specialized certificates during participation in different training courses and seminars in economics, corporate lending and treasury. He also participated in the preliminary studies for the establishment of Misr Bank – Europe, subsidiary of MiBank and represented UBAF as founder of Corplease. He occupied several posts among different divisions at Chase National Bank (currently the Commercial International Bank), MiBank (currently QNB) and Credit Lyonnais Bank.

Hamed Hassouna is an Instructor for Banking and Finance postgraduate course at the American University of Cairo, and is a member in American Chamber of Commerce and in the French Egyptian Business Council.


Ahmed Abdel-Ghany Mohamed IsmaeelMember of the Board of Directors, representing National Investment Bank. Mr. Ahmed Ismaeel holds a B.A. degree in Commerce and a Diploma in Investment and Finance, Faculty of Commerce - Ain Shams University; he has also completed the preliminary studies for the Master’s degree at the Environmental Research and Studies Institute.He is currently the bank’s Senior Deputy for the Finance and Credit of the Service Projects Directorates within Local Management. He occupied several posts at National Investment Bank among which was the General Manager for Feasibility Studies - Authorities and Economic Units’ Projects Sector. In addition, he supervised the Housing, Urbanization, Health & Social Services and Media Projects Department.He is also a member of several committees among which are, the Securities Portfolio follow-up Committee, Joint Securities Portfolio Committee and other committees. Moreover, he is a member of the Board of Directors of the International Company for Leasing (Incolease), the Egyptian Sudanese Agricultural Integration Company, Samannoud Textiles & Towels Company and others.Mr. Ahmed Ismaeel has been with National Investment Bank since 1985 and has a total of 33 years of banking experience.


Samir Youssef Ali El-SayyadIndependent Board Member; holds a B.Sc. Degree in Chemical Engineering, Alexandria University and a PhD in Engineering, Industrial Technology, England.

He currently occupies several positions among which are the Professor of Chemical Industries, Helwan University and the Industry Consultant in Managing and Supervising the Implementation of Integrated Projects. Previously occupied the post of Minister of Trade and Industry, as well as the Acting Minister of Investment. Moreover, he was the Governor representing the Arab Republic of Egypt at the International Bank for Reconstruction and Development as well as the Alternate Governor representing Egypt at the European Bank for Construction and Development.

Additionally, he was previously Member of the Ministerial Group for Economic Policies, Member of the National Committee for International Cooperation and the Ministerial Group for tracking the Economic Performance. He has several books in the fields of training, education, industrial development and foreign trade.

El Sayyed M. Mohamed Abu El KomsanIndependent Board Member. Since 2012 and work as the Advisor to the Minister of Trade and Industry for Trade Affairs.

Previously occupied several posts among which was the Head of the Export & Import Central Department at the Foreign Trade Sector in 1995, the Head of the Exports and Imports Supervisory Authority in 2001 and the Head of the Foreign Trade Sector in 2007.

Participated in several international conferences among which was, the World Trade Centerin Japan for promoting Trade, and Exports Promotion Program in Germany. Moreover, he was a member of the Egyptian Delegation to Moscow to discuss the mutual debts between both countries and explore the issues for the trade agreement. He was also a member of theEgyptian delegation to Brussels negotiating the Egyptian European Partnership Agreements.


Abdel Aziz Al Sayed Hassan HassoubaLawyer before Court of Cassation and Supreme Constitutional Court.

He has been a member of the Board of Directors representing the private sector since 2012. He occupied several posts including the Head of the Legal Sector at Export Development Bank of Egypt until May 2012, Legal Advisor to the Union National Bank, Legal Advisor to the Arab Land Bank and the Legal Advisor to Abu Dhabi National Bank until Oct. 1997. In addition, he is a Member of the Board of Directors of the Egyptian Holding Co. for Airports and Air Aviation.

Abdel Aziz Hassouba has been a certified lecturer at the Egyptian Banking Institute for more than 25 years and the Founder of the Banking Lawyer Certificate at the Institute. Moreover, he is a visiting Lecturer at several centers and conferences related to legal aspects. He has several books on banking operations from a legal perspective, debt recovery, arbitration and settling banking disputes, especially global financial crisis and its repercussions on the Egyptian economy.

Abdel Aziz Hassouba enjoys an experience of 40 years in legal consultations among different banks.


Investment Executive ManagerYasser Ossama

Board Of Directors

30 JUNE 2018

Internal Audit Director

BOD SecretariatTarek Ghaleb

Corporate CommunicationExecutive Manager

Ghada Gheith

Audit Committee

Strategy Committee

Deputy ChairmanAhmed Mohamed Galal

Business Growth GroupConsolidated Risk Group HeadMohamed Aboul Seoud

Risk Committee

Governance and NominationsCommittee

Payroll and RemunerationCommittee

Executive Committee

ChairpersonMervat Soltan

Legal Affairs DirectorGamal Abd El Nasser

Human Resources Director

Governance, Compliance andInternational Standards Director

Operations & AdministrationGroup Head

Mohamed El Hadidy

Financial Control DirectorMohamed Mokhtar

Administration Affairs DirectorAssem Salah

Central Operations DirectorAssem ElAttar

SME’s DirectorMohamed Hamdy

Credit Risk Executive ManagerHisham Kamal

Information Systems & OperationalRisk Director

Ghada Mostafa

Treasury DirectorEman TawfikMarket Risk Department

Credit & Investment AdministrationExecutive ManagerSherif Ismail Amin

Investigation DirectorAhmed Ismail

Standard Operating ProceduresExecutive Manager

Attiya Negm

Debt Recovery & Swap assetsDirector

Gamal Abd Elawad

Branches Network Director Saeed ElNady

International Relations DirectorMai Essam

Retail Banking & Marketing DirectorAhmed Sayed Abd Ellatif

Corporate Banking & SyndicatedLoans Director

Mohamed Mashaly

BusinessTechnologyExecutive Manager

Hany Zakaria

Organization Chart 04

ORGANIZATIONCHART

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GLOBAL ECONOMY: Below is exposed the most important indicators included in the International Monetary Fund IMF report - January 2018 - on the global economic prospects:- The global economic activity is still growing stronger as current estimates show a global growth in the second half of 2017 to reach 3.8%, which is the highest rate achieved since 2011. It is expected for growth to achieve more increase and reach 3.9% in years 2018 and 2019.

- Growth surprises were noticeable in Europe and Asia in particular, but included also a wide range of countries, as the results of the Group of Advanced Economies, Emerging Markets and Developing Economies were 0.1 percentage points higher compared to the fall issued forecasts. Overall growth forecasts remained unchanged for emerging markets and developing economies in 2018 and 2019, with clear differences in the expected forecasts for different regions. Growth forecasts for other developed economies also increased in 2018 and 2019, mainly due to growth expansion in developed Asian economies which are particularly sensitive to global trade and investment prospects. Growth forecasts for Japan increased in 2018 and 2019 in line with the higher external demand forecast and the supplementary budget for 2018.

- Growth rates also witnessed an expected rise of many Euro zone economies, especially Germany, Italy and the Netherlands, reflecting an increase in domestic demand and a rise of external demand.

- According to the report on Regional Economic Outlook in the Middle East, North Africa, Afghanistan and Pakistan of May 2018, the expected improvement in the euro area is a positive issue for the Middle East, North Africa and Afghanistan, especially the oil-importing countries, which will benefit from their increased exports. The region is also expected to benefit from a slight improvement in the expected prospects for China, which is a key trading partner for the region. However, the global outlook also implies an increase in interest rates on global trade while developed economies are moving back to normal monetary policies after a period of exceptional policies, and this could give rise to an increase of weaknesses of public finance and rigidity of credit conditions in the region, especially if the rigidity of the risks of the global financial situation have exceeded expectations.

Economic Conditions 05

ECONOMICCONDITIONS

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Economic Conditions05 Economic Conditions 05

LOCAL ECONOMY:Below is presented the most important indicators included in the monthly report of the Ministry of Finance for June 2018.- The Egyptian economy is going through an important slope with many challenges, which prompted the Egyptian government to accelerate the implementation of a package of structural reforms to address the imbalances in the manner of using financial policies while achieving better growth rates. The most important of these is the adoption of an expansionary financial policy through the initiation of financial stimulus packages to raise the productivity of the Egyptian economy in parallel with an action to control the state general budget by reducing government expenditures, decreasing subsidies, increasing competitiveness and the removal of restrictions on the potential of the Egyptian economy. In parallel, the Egyptian government has embarked on a number of huge development projects as well as promoting the role of the private sector and supporting private-public partnerships to provide financing tools for small and medium-sized companies as being the main engine of the economy structure, as well as achieving social justice, and raising the share per capita in the Gross Domestic Product, enhancing the efficiency of the social protection system and developing the social safety networks to integrate needy and vulnerable communities.

- The Egyptian government adopts an economic vision consisting of the fact that "the Egyptian economy is a disciplined market economy characterized by macroeconomic stability, by competitiveness, diversity, relying on knowledge, and playing an active role in the global economy, capable of adaptation to global changes, and maximizing value added, providing employment opportunities, increasing the individual share of the gross domestic product to reach the ranks of middle-income countries by 2030” (Government Program, March 2016).

- In the context of the comprehensive reform program adopted by Egypt since November 2016, in cooperation with the International Monetary Fund and international partners, the Egyptian economy is witnessing many important positive developments, indicating a starting improvement of the short and medium term economic situation and achieving improvement of the living standards of the Egyptian citizen, and increase of employment rates and creation of real jobs opportunities, and attract many foreign investments, which in turn led to the improvement of a number of macroeconomic performance indicators.

As a confirmation of the above and in a noticeable development, the organization of credit ratings (Moody’s) raised the future prospects for Egypt to positive and confirmed the rating level at B3.- Moody's said that the change of the vision of the future into positive is due to the continued structural improvement in the budget and balance of current transactions and pointed out that there are signs that reforms in the business environment pave the way to sustainable and comprehensive growth that may improve competitiveness in Egypt.

- It also noted that the risks of refinancing remain a major challenge to Egypt's credit rating in the light of a "turbulent" financial environment, except that the significant progress made by the Egyptian government in implementing the reforms agreed with the International Monetary Fund has added some financial stability.

- It also stressed that political stability has been achieved, and is likely to continue, which increases the likelihood of continuing Egyptian public policy in its direction.

- “Moody's” International rating agency welcomed the decision of the new Egyptian government to raise fuel prices by percentages ranging between 35% and 66.6% as part of the reform program agreed with the International Monetary Fund.

- The Foundation said that this step will help the government achieve its goal of reducing the budget deficit to about 8.4% of GDP in the financial year 2018/2019, compared to 9.8% in the current financial year.

And that the decision to increase fuel prices is positive for the credit rating of Egypt because it will contribute to reduce the fuel subsidy bill to 1.7% of GDP in the next financial year, compared to 2.5% expected by the government in the current financial year, and drops the public subsidy bill from 7.5% of the Gross Domestic Product expected during 2017/2018 to 6.5% in the next financial year.


Business Strategy 06

INTERNATIONAL RELATIONSThe International Relations Sector - IR - ensures on going successful banking relationships with financial, non-financial institutions and donor agencies. The IR Sector builds, maintains and expands a solid base of foreign and local correspondents to fulfill its clients’ requirements.

In its efforts to maximize the Bank’s profitability, IR Sector explores and identifies new quality bank relationships focusing on target markets as stipulated by the Bank’s strategy for growth.

It also uses its correspondents’ network to expand its capabilities across countries beyond traditional payments and trade finance transactions to further enhance the Bank’s profitability.

In line with the Egyptian government’s strategy to double the volume of Egyptian exports by 2020 and EBE role as one of the Egyptian government’s arms to develop and increase Egyptian exports, EBE will continue to focus on helping exporters to increase Egyptian exports by opening new outlets and reaching out foreign markets. This includes African markets as well as other potential export markets. It will also provide non-financial services to exporters in the form of specialized market information, advisory and counseling services on foreign markets access.

The International Relations Sector main objectives are summarized as follows:- Continue to build, expand and strengthen the network of external and local correspondents to meet all customer needs.

- Maximize the profitability of the Bank through its network of financial institutions by implementing traditional and non-conventional banking transactions.

- Expand the network of correspondents in the African continent as well as other new potential markets for exporters.

- Strengthen the Bank’s financial resources through funds procurement at competitive prices and as required by the Bank’s business units.

- Work on receiving technical assistance programs / grants from by international financial institutions and donors to implement best practice and increase work efficiency across the Bank Business Units.

- Liaise and work closely with the government export bodies; including Ministry of Trade and Industry, General Organization for Export and Import Control, Exporters Association, Chambers of Commerce and Export Councils to enhance the competitiveness of Egyptian exports, supports export projects with the necessary financing and provide non-financial services as required by Egyptian exporters.

BUSINESSSTRATEGY

06


Agriculture18%

Service 26%

Commercial 4%

Industrial52%

Commercial Services Agriculture Industrial

Business Strategy06 Business Strategy 06

CORPORATE LENDING AND SYNDICATED LOANSThe Corporate Lending and Syndicated Loans strategy was in line with the EBE 2017/2022 vision’s six core concepts during the financial year 2017/2018. The strategy emphasized facilitating business operations (particularly augmenting the credit portfolio), promoting exporters by any fiscal means or consulting services available to aid in developing their presence in the international market especially African markets, supported by the protocols, agreements and products that were initiated throughout the FYE 2017/2018.

This was reflected positively on the volume of corporate banking and syndicated loans portfolio as shown below: 1) Total portfolio (direct utilization)- The percentage of growth in the total direct portfolio by the end of FYE 2017/2018 has reached about 37.5% compared to 30/6/2017

- Our customer base has increased by nearly 49.7% through the FYE 2017/2018

2) Syndicated loans- Our Bank’s participation in syndicated loans has reached EGP 4.5 billion in 30/6/2018 and it is mainly concentrated in financing the industrial sector.

Accordingly, the strategy of corporate banking and syndicated loans during 2018/2019 will be as follows: 1. Working in line with EBE strategy, which is, lends a special consideration to playing a vital role in supporting Egyptian exporting businesses.

2. Achieving growth in the credit portfolio through expanding our customer base while placing a special emphasis on financing exporters.

SMALL AND MEDIUM SIZE ENTERPRISES:SMEs are considered the veins of heavy industries as they are the main providers of raw materials required for the production process of large corporates (every large corporate needs at least 20 SMEs to work with) which lessens the burden put on large corporates concerning their needs of foreign currency required to import raw materials. SMEs gained their importance from their direct effect on GDP, average per-capita income and increase of job opportunities, which have a positive effect on the countries’ economic growth. SMEs represent two third of countries’ economic activities, 90% of the total operating companies in most of world economies. It is worth mentioning that all well-known international companies started as small enterprises then developed into large corporates over the years.

Due to the great importance of SMEs and their role in economic growth, all governmental institutions in Egypt and CBE have been concerned about the growth of such sector throughout the previous years which in turn encouraged banks to expand in financing this sector through the establishment of separate divisions specialized in financing this type of enterprises. In addition to that, the CBE set a unified definition for SMEs among all banks in order to provide an accurate and adequate database available for all banks which will support them to do their role in financing SMEs, in addition to launching initiatives to encourage Egyptian banks to provide funds to SMEs with lower interest rates to finance their working capital and capital expenditures.

Consequently, EBE had the leading position among other banks to tap SMEs sector through the establishment of a separate division specialized in financing SMEs. Thus, EBE signed an agreement in 2005 with the International Finance Corporation (IFC) and started the actual work on 1/7/2005.

As per EBE’s strategy to support small and medium enterprises and specially finance SMEs exporters, EBE signed a protocol on May 2017 with the Export Development Fund in order to finance exporters’ subsidy dues to provide the exporters with adequate finance, which in turn will increase their competitiveness as well as the Bank’s clients’ base.

Furthermore, lately, EBE started offering credit facilities to microfinance institutions that finance micro enterprises in order to combat poverty and to provide them with financial services, which contribute to the economic and social development of the country. This is due to EBE’s faith and desire to support the country’s current policies regarding micro, small and medium enterprises in order for the Bank to have an active role in society.

All the above reflected positively on EBE’s total SME portfolio which reached an amount of EGP 4,125 million as of 30/6/2018 versus EGP 2,714 million as of 30/6/2017 with an increase of 52% knowing that the increase is distributed among various economic sectors.

The below chart gives an insight on the SMEs portfolio distribution among different sectors in 30/6/2018:





INVESTMENT ACTIVITIES:1. Equity InvestmentsThe Bank remains committed to its prudent investment policy, with net direct investments in stocks, non-governmental bonds, and private equity funds reaching EGP 1.8 billion by the end of the fiscal year 2017/2018.

Following the divestment of the remaining portion of the listed stocks during the previous fiscal year, the Bank reduced the value of investments in private equity funds by nearly 30% due to starting liquidation of these funds. These measures are in line with the Bank’s policy of reducing the risk of the investment portfolio.

The Bank succeeded during the fiscal year in restructuring its subsidiaries to ensure the flow of funds to Egyptian Tourism Development Company, which is required to complete the construction of a 204-room hotel in Sahl Hasheesh - Hurghada.

By 30-6-2018, construction has reached an 80% level of completion. This project is expected to provide a significant addition of value to the assets owned by EBE’s subsidiaries, as it complements the activities of “Oberoi Sahl Hashish Hotel”. The latter being a renowned landmark in the same area owned by another subsidiary of EBE which is ranked as the best hotel in Egypt by “Trip advisor” in 2017.

2. Mutual Funds A- Export Development Bank of Egypt -The First fund - Al khabeer.The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations, and is managed by “HC for Securities and Investment”. At inception, the number of fund certificates was 1 million out of which 50 thousand certificates were allocated to the Bank (at a starting nominal value of EGP 100 reduced later in June 2007 by means of a non-cash distribution to EGP 33.33). At the end of the fiscal year 2017/2018 total number of outstanding certificates reached 130677 certificates out of which 79191 certificates are held by the Bank. Redemption value per certificate amounted to EGP 152.01 and the Bank’s commissions amounted to EGP 127.8 thousand and performance fees amounted to EGP 400.9 thousand presented under “fee and commission income / other fees” caption in the income statement.

Annual yield of the IC for the fiscal year 2017/2018 reached 36 % and in May 2018, the fund announced cash dividends of EGP 4 per IC. The Bank’s share of which was EGP 316 thousand.

B- Export Development Bank of Egypt - The Second fund - Money Market.The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations, and is managed by “Rasmala Egypt Asset Management”. At inception, the number of fund certificates was 2,867,466 out of which 143,400 certificates were allocated to the Bank (at a nominal value of EGP 100). At the end of the fiscal year 2017/2018, total number of outstanding certificates reached 1034410 certificates out of which 34415 certificates are held by the Bank. Redemption value per certificate amounted to EGP 292.7565 and the Bank’s commissions amounted to EGP 1018.6 thousand presented under “fee and commission income / other fees” caption in the income statement.

C- Export Development Bank of Egypt -The Third fund Konooz.The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations, and is managed by “Prime Investments Asset Management”. At inception, the number of fund certificates was 612,501 out of which 50,000 certificates were allocated to the Bank (at a nominal value of EGP 100). At the end of the fiscal year 2017/2018, total number of outstanding certificates reached 60941 certificates out of which 50000 certificates are held by the Bank. Redemption value per certificate amounted to EGP 212.4386 and the Bank’s commissions amounted to EGP 48.8 thousand presented under “fee and commission income / other fees” caption in the income statement.

Annual yield of the IC for the fiscal year 2017/2018 reached 38.4% and in End of December 2017, the fund announced cash dividends of EGP 4.5 per IC. The Bank’s share of which was EGP 225 thousand.

On October 2, 2017, the Fund’s new strategy was launched (the fund invests in securities rather than debt instruments), and the fund’s name has been changed to become KONOOZ instead of ALzahaby

TREASURY:• Treasury bonds & bills portfolio in all currencies reached EGP 14.24 billion as of 30/06/2018 from EGP 10.6 billion at the end of June 2017 with growth rate of 34.3%. Due from banks deposits in all currencies stood at EGP 4.15 billion.

• During the fiscal year 2017/2018 and in the field of primary dealers, the Bank achieved a volume of acceptance in Ministry of Finance auctions for Treasury securities amounting to EGP 56.29 billion which represents 404.8% of the required quota as per our share as a primary dealer.

• Commissions from primary dealer’s activity reached EGP 6.99 million for the fiscal year 2017/2018 with an increase of 236% compared to the previous year, with governmental securities secondary trading profits reaching EGP 2.3 million at the end of June 2018.

• In the field of foreign exchange, profits reached EGP 90.1 million at the end of the fiscal year 2017/2018 vs. EGP 37.7 million in the fiscal year 2016/2017, with an increase of 139%, and meanwhile, customer sales of foreign currency increased from $303.4 during the fiscal year 2016/2017 to $706.4 million during fiscal year 2017/2018 with a growth rate of 132.8%.



CENTRAL BANKING OPERATIONS:Export Documentary credits were advised to the Bank's clients with a total amount of EGP 5.120 billion, part of which (EGP 1.894 billion represents 37%) has been confirmed.

This ratio is one of the highest ratios in the level of Egyptian banks in confirming Export Documentary credits.

This reflects directly the ability of the Bank and existing competencies in the central banking operations to bear responsibilities, and take the risk of non-payment of the shipping documents value to the Egyptian exporters for reasons related to documents and its Compliance with terms and conditions of the documentary credit.

Export Shipping Documents has been negotiated through the Bank during this period with a total amount of EGP 9.106 billion.

The Bank discounted Export shipping documents with a total amount of EGP 700 million, paid to the exporters before maturity dates, in order to encourage exporters to get shipping documents value immediately after completion of the shipment process without waiting for the receipt of proceeds.

Improve the technical aspects for the foreign trade processes by joining staff of the Central Banking Operations to the multinational training courses (Certificate for Documentary Credit Specialists – CDCS & Certificate for Specialists in Demand Guarantees - CSDG), which achieved 100% successes.

BRANCHES NETWORK AND RETAIL BANKING:Performance Development: The Bank's future vision is to provide banking products and services at the level of unique and high quality of the services’ standards, which will fulfill all the desires, and needs of customers.

And in order to achieve this vision the Bank presents all of its activity through widespread network of branches which covers most regions and provinces all over the country, as well as many of ATMs located over unique and vital places, commercial centers and branches. In addition, out of the keenness of the Bank to be present near the customers to easily provide its banking services and products to them through the following:

Branches network: Where the number of branches operating at the time being are 32 branches divided geographically to regional areas, which are: Cairo - Giza - Alexandria – Delta – Upper Egypt and Canal.

Moreover, where the strategic direction of the Bank aims to expand and spread branches in the near presence of customers, it is planned to reach 40 branches by the end of next fiscal year 2018 / 2019 distributed over different regions to cover most areas, governorates and cities.

Customer deposits:In accordance, the total Bank's customer deposits in 30/6/2018 reached an amount of EGP 34.6 billion with an increase of EGP 7.1 billion compared to the previous year and a growth rate of almost 26% per annum, the table below shows the evolution of customers’ deposits during the previous years.

Retail BankingThe below retail products were launched:• Daily interest current accounts• Tiered Saving account• Unsecured Credit Cards• Personal Loans (Dream Cash)• e-Payroll• Global account• Launching Mortgage Finance for customers with limited income

(Value in EGP billion)

Year

Deposits 34,709 27,512 21,291 17,533 14,814 12,568

2018 2017 2016 2015 2014 2013


New Head Office - New Cairo




GOVERNANCE:Governance is the set of rules and practices that direct the relationship between the Board of Directors, the management, shareholders and other stakeholders.

Authorities and responsibilities of each party are set by Governance rules.

Governance defines the method adopted by the Board of Directors and the management to guide business and daily activities.

Effective Governance Outlines:A. Board of Directors:In line with Governance rules, the Board of Directors, in addition to running the Bank’s daily business activities, is in charge of setting governance policies concerning conflict of interest, disclosure and transparency, code of ethics and whistleblower policy.

The Board is thus establishing a balance between the Bank’s liabilities towards the shareholders and protecting depositors’ and other stakeholders’ interests.

This is in addition to:• Setting strategies and objectives.• Preparing balance sheets and the profit and loss statements etc., and set the profits appropriations.• Prepare the budget, organization charts and set the regulations of the employees’ structure including salaries, bonuses, incentives and benefits. • Follow-up the regular reports about the Bank’s activities in general. • Providing the auditors with all necessary documentation.• Preparation and presentation of financial statements of the Bank on a regular basis.• Ensuring that the Bank’s business activities are safely and properly implemented in view of applicable laws and regulations.

B. Board of Directors Committees: In view of the importance of implementing Governance requirements, the Bank has formed the following Board Committees:

Audit Committee: Follow-up the activities of the Internal Control and Audit Sector of the Bank, review and discuss the regular reports, the financial indicators of the Bank with the external auditors as well as the reports related to the compliance and anti-money laundering and combating the financing of terrorism (AML/CFT) reports.

Risk Committee: Follow-up the Risk Management functions in the Bank, review and follow-up the compliance to the policies, strategies and regulations set by the Risk Management Group.

Executive Committee: Its role is to evaluate the operational, reputational and financial risks that exists throughout the entire Bank, studies the loans and facilities risks and takes the decisions in line with the credit policies and regulations.

Governance and Nominations Committee: Makes regular assessments about the governance system in the Bank, review the annual report of the Bank in terms of transparency and other governance matters, studies the CBE annotations on the governance systems of the Bank,

Payroll and Remuneration Committee:Reviews the policies related to salaries and bonuses making sure that the Bank maintains a regular review to the criteria of the staff performance appraisals.

Strategy Committee:Develops the strategy of the Bank and follows up on its implementation with the Board Committees and the Bank’s different sectors and departments.



GOVERNANCE, COMPLIANCE AND INTERNATIONAL STANDARDS:Governance, Compliance and International Standards Sector has always been a core value of the Bank. The Sector is responsible for the compliance framework and its implementation throughout the Bank and for promoting a high level of awareness of compliance requirements.

Its mission is to ensure that the Bank has a robust system for identification and management of compliance requirements for all jurisdiction regulations. By so doing, Governance, Compliance and International Standards Sector aims to protect the Bank from the risk of violating of the laws and regulations at the Bank, country and international level.

That in turn, helps in the mitigation and management of legal and reputational risks facing the Bank.

Accordingly, the Sector’s role consists of the following:•Identification, assessment and monitoring of the compliance risks associated with the Bank’s business activities.

• Advising Senior Management on applicable laws, rules and standards.

• Monitoring compliance with policies by performing regular and comprehensive compliance risk assessment, testing and reporting findings on regular basis to the Board of Directors and Senior Management.

• Assessing the appropriateness of internal procedures and guidelines with constant follow up on any identified deficiencies.

• Monitoring external transfers to ensure that all transactions’ parties are not listed on the international as well as local sanctions’ lists.

• Reviewing new products and services prior to their launch to ensure compliance with prevailing regulatory laws and regulations.

• Implementing and monitoring Anti-Money Laundering and Terrorism Financing procedures through the utilization of a Risk Based Approach.

• Complying with the Foreign Account Tax Compliance Act (FATCA) requirements within the required timeframe as well as participating in the preparation of the relevant policies, procedures and IT System.

• Coordination with the Human Resources on setting Training Plans to train the staff on Anti-Money Laundering and Terrorism Financing activities.

Regarding corporate governance, Governance, Compliance and International Standards Sector is monitoring the Bank’s compliance with regulatory requirements for the following:

• Ownership Structure• General Assembly• Board of Directors• Board’s Committees• Disclosure & Transparency• Corporate Social Responsibility• Auditors

This in addition to:1- Monitoring the Bank’s compliance with conflict of interest policy.

2- Ensuring that behavioral standards of conduct are properly met in the institution through the implementation of the Bank’s code of ethics.

3- Whistle blowing on malpractices and protecting the whistleblower.



OPERATIONAL RISK MANAGEMENTOperational Risk is one of the main risk management functions of the risk group in EBE. As Bank’s Operational Risk Function was launched in 2009/2010 by establishing and applying an Operational Risk Management Framework by which the Risk Department in coordination with business identifies analyses and monitors risk factors within Bank activities.

Operational Risk is managed through a consistent framework designed based on transparency, management accountability and independent oversight, to enable the Bank to determine risk profiles, identify early warning signs, and key causes related to risks to promptly define mitigating measures and ensure proper reporting structure and duly oversight.

The framework is supported by a set of comprehensive policies and procedures subject to regular reviews to ensure effective controls’ setup, deal and comply with regulatory changes, and tackle risks arising due to changing economic and political environments.

Operational Risk Management function is involved in the early stages for launching new products and services through pro-actively identifying and assessing Op Risk related to new products and sufficient remediation sustaining good service for EBE customers.

Operational Risk Management emphasis on raising awareness through different channels either internal arrangements for orientations, through workshops in addition to specialized external training programs.The Operational Risk management function performs risk analysis based on well-defined methodology emphasizing root causes, timely reporting of envisaged problems, regular control assessment.

Performance of systematic risk analyses, root cause analyses, while monitoring and tracking external events occurring in the banking industry to ensure the establishment of proactive set of controls and actions, beside regular updating and insuring accuracy of Operational loss events data base.

EBE’s approach encompass but not limited to the use of RCSA, KRIs, incident reports, surveys, in addition to other supporting means to identify areas with high risk potential and determine appropriate risk mitigating measures. KRI risk trends of different activities are monitored and evaluated taking into consideration the acceptable risk limits of the Bank, contributes to determining the necessary controls to limit the rise in indicators.

Basel II: During the fiscal year 2017/2018, EBE fulfilled all requirements for reporting, in accordance with the CBE Basel II directives. The operational risk function tracks the integrity of the compilation process of the required risk information, historical losses as reported by each business line and functional area. EBE complies with the CBE reporting of the internal capital assessment adequacy process (ICAAP) for the fiscal year 2016/2017 ensuring sufficiency of qualitative and quantitative factors for performing the internal capital adequacy assessment process.

Business Technology Risk:In line with EBE’s Information Systems Risk mandate, the IT Risk department (ITRD) carries out a regular plan for the risk assessment and review of all implemented IT applications, programs & network. Accordingly, the ITRD reviewed CBE regulations to ensure and apply all necessary controls and enhance the setup for change management risk within EBE.

Risk Governance:EBE maintains and implements a well-designed risk governance framework, in accordance with the CBE governance mandates.

The Board Risk Committee periodically oversees the Bank’s overall operational risk profile and internal control functions, and reviews Operational Risk Management reports, major risk exposures, control effectiveness and main KRIs trends.

The Operational Risk Management committee regularly reviews and reports risk trends, key risk indicators, business risk profiles and follow-ups on mitigation plans.

In addition, the Internal Audit Division conducts a risk based independent assessment of the activities carried out at the business levels and reports directly to the Board Audit Committee of the Bank.

Market Risk Management:Market Risk is the risk of Loss resulting from unfavorable movements in the value of financial instruments arising from changes in the level and market volatility of interest rates, foreign exchange rates, equities, and other securities.

EBE maintains a consistent framework designed along with a set of policies and procedures to ensure that the overall market risk is comprehensively captured, adequately reported and effectively managed. The Bank classifies sources of market risks into trading and non-trading portfolio risks, which are managed at various organizational levels.

EBE approach in managing Market Risk exposures rests on a consistent set of management processes that drive risk identification, assessment, control and monitoring, to facilitate business growth and profits maximization within a controlled and transparent risk management framework, using robust measurement, limit setting, reporting and oversight, stress testing and scenario analysis.

EBE also complies with CBE’s regulations regarding market risk as well as complying with the internal capital adequacy assessment process (ICAAP), which aims to confirm the Bank's ability to face any significant risks that may affect EBE.

MRM function checks, tracks any potential impact of market price movements on Banks’ positions, portfolios and capital requirements and drives scenarios, assesses and reviews the effectiveness of and adherence to a set of risk limits.





RECOVERY & SWAP ASSETSDuring the financial year 2017 / 2018, EBE succeeded in the following:-· Settlement and rescheduling with 11 Clients with debts amounted EGP 157 million resulted in collections of EGP 35.3 million.

Total collections during the financial year 2017/2018 reached EGP 268.2 million which includes: -· Collections of EGP 201.2 million from sector`s portfolio.

· Collections of EGP 2.7 million from clients whose debts have written off.

· Collections from selling assets of EGP 64.3 million.

· Collection marginal interest of EGP 74.4 million including:

- EGP 48.4 million added to revenue

- Marginal interest collected of EGP 26 million in a suspended account according to CBE instructions.

This has resulted in achieving a surplus in impairment provision of EGP 75.7 million, which supported other clients’ provisions during this year.

BANKING INVESTIGATIONS:Support competitive advantage of our Bank through providing high quality investigation reports covering the needs of related departments. The resulting informed and effective decisions reflected positively on the Bank’s financial performance during the period from 1-7-2017 to 30-6-2018.

LEGAL AFFAIRS : Legal affairs department has the principal role in the preparation of contracts and all documents as soon as a decision is issued by the competent authority, corresponding to this role another important role which is pursuing the defaulting customers in case they fail to fulfill their obligations specified in the contracts signed with them.

Legal services made by the legal department targets two kinds of customers:The first type:- The internal customers:Which are all the Bank’s branches and departments, where the legal department provides them with the legal services that would correspond their various inquiries and overcome obstacles they face. The legal department has given legal advices to the Bank’s employees, which exceeded 2500 advices in either writing or telephone.

The second type of customers targeted by the department is the Bank's default customers, who are being prosecuted in case of non-committing to the conditions and duties agreed upon in contracts signed with them.

The role of the sector in drafting the contracts of loan, credit facilities and guarantees, and the registration and renewal of mortgages of various types, cannot be ignored. To preserve The Bank's various guarantees, which during the period reached about 550 contracts, guarantee, pledge and renewal of mortgages.

The secound type:- The external customers:In addition to the above roles, the role of the legal affairs department extends to being the legal advisor to all the companies that the Bank enters in its establishment. The department undertakes all the procedures required establishing such companies, and after this step, the department takes the procedures of the approval the records of the meetings for the associations and the board of directors or capital increase procedures for these companies.

Within the important and basic role of the banking process , the legal affairs departments has achieved over the past year significant results on all the above-mentioned levels , It managed to obtain the number of 43 judgments in favor of our Bank with a total amount of USD 3,212,540 + Euro 1,100,000 + EGP 96,840,133. On the contrary, no judgments have been issued against the Bank except one of the former employee of the Bank for EGP 100 thousand, and has been issued judgments to reject claims against our Bank to demand payment of approximately EGP 71,306,529.

The legal department was able as a result of judicial pressure to compel a considerable sum of defaulting customers to apply to the Bank for the settlement of their debts due and as a result of that settlement contracts were signed with a total amount of EGP 54,600,000 + Euro 1,760,000.

Moreover, we cannot neglect the important role played by the legal affairs department in obtaining guarantees for the insurance and guarantee of facilities and loans granted to customers, whether these guarantees are in the form of commercial mortgages or real estate mortgages or maritime mortgages or other guarantees, and the legal affairs department over the past year has made commercial mortgages with a total amount of EGP 2,500,000,000 and USD 80,000,000 as well as real estate mortgages with a total amount of EGP 650,000,000.



The legal department also registered at the EGYPTIAN COLLATERAL REGISTRY according to law no 115 of year 2015 and recorded all historical data as well as the new mortgages, which reached to 100 mortgages under the supervision FINANCIAL REGULATORY AUTHORITY.The role of the legal department has not ceased merely as AN ASSISTANT DEPARTMENT but it also extended their work to be a producing revenues, which have been achieved by providing legal services to subsidiaries or by obtaining fees from customers as a result of drafting contracts, the legal department has been able to achieve revenue over the past year amounted to EGP one million.

NOTICE:-• The legal department has increased the issued and paid-up capital of the Bank by EGP 288 million from the retained earnings.

• The legal department increased the Bank's authorized capital to five billion Egyptian pounds and obtained the approval of the Minister of Industry and the Prime Minister of Egypt.

• The legal department increased the Bank's issued capital to EGP 1 billion in cooperation with the concerned sectors.

• The legal department collected EGP 76 million from the liquidation of one of the defaulting customers. During the new financial year, the amount of EGP 67 million is collected from the same liquidation.

INTERNAL AUDIT:• The Internal Audit is an independent, objective and consultant activity aimed to add value to the Bank, improve and develop its business by understanding the major risks, to examine and evaluate the efficiency and effectiveness of the risk management system and internal control procedures.

• The Internal Audit sector has implemented the audit plan for the financial year 2017/2018 prepared in accordance with the risk methodology approved by the Audit Committee to audit the activities of sectors, branches and departments of the Bank, prepare audit reports and submit them to the relevant sectors, the Bank›s management and the Audit Committee.

• The Internal Audit employees has participated in several training courses according to the training plan and business needs.

BUSINESS TECHNOLOGY: Applications and Systems:- New E-Wallet System.- New ultra-modern website. - Internet Banking System (Phase II)- Treasury Bills- Mutual Fund- Fawry payments (Phase II)- Credit Card statements.

- Launch new retail products:- Loans secured by Savings Vessels - Global Accounts- CBE initiatives “Expo Star” and “Mortgage loan 12%”- New Personal Loan- Segmented Saving Account- New EBE Subscription system. - Design and develop (100+) new MIS and control reports.- Implement Fixed Assets Barcode System-Phase I- Apply “I Score” updates.- Implement “Profit and Cost Center (FTP) (Phase II)- Implement Business Lines Activity (according to Basel iii)- Update Anti-Money Laundry system “GO AML”.- Develop and implement Bank Check Printing System.- Implement new Risk Rating system.- Start Mobile Banking implementation.

Infrastructure:- Maintain availability over 98% for Systems, Network, and Data Center.

- Upgrade Bank infrastructure with new PCs, Network devices, Printers, and backup system, which enhances performance, and provide better services for customers.

- Enhance Disaster Recovery Site to insure business continuity. Perform «3» DR Tests with different scenarios.

- Open new branches (Aswan , Ismailia).

- Implement new Disaster Site for:• Dealing room through Reuters, Treasury services.• Internet Banking services.



- Start to implement new infrastructure technologies: - Clouding. - Hyper converged computing. - Upgrade / modernize Digital Signage and Queuing Systems in all EBE branches. - Upgrade Data Center Firewall at (HQ + DR). - Implement Advanced Persistent Threat (APT) (Zero Day Attack Security System). - Maintain and enhance a Secure Network (HQ + DR). - Upgrade of ATM machines’ security against hacking and viruses. - Activate an electronic reporting system through direct contact with the Anti-Money Laundering Unit at the Central Bank of Egypt. - Implement a new Clearing System for the Bank that fully meet Cheques Clearing Department. - Establish New Data Center (new Head Office). - Upgrade Core Banking Servers’ platform.

HUMAN RESOURCES:Human Resources strategy for year 2017 – 2018 was to serve as the catalyst for the Bank’s employees commitment and success through our core values and to ensure a diverse, qualified, healthy and highly motivated workforce focused on achieving the critical outcomes, through the development and administration of cost-effective and results-oriented policies, services and practices.

All through the year, a number of initiatives and projects were put in place to ensure the implementation of this strategy: A. Recruitment:On the recruitment side, we focused on internal recruitment to provide various opportunities for growth and career advancement to our staff. By «Promoting from within» in most of the key positions and through internal transfers to offer new exposure of cross functioning.

However, external job postings still took place to attract mainly fresh graduates as part of our corporate social responsibility for providing employment opportunities to youth. The main channels that were used were; employment fairs, social media networks such as LinkedIn and Facebook; as well as the summer trainings. We have succeeded in attracting 128 fresh graduates, 45 experienced calibers. It is worth mentioning too that 48 employees have left the service, 17 have retired, and 29 resigned and 2 passed away. Having 933 employees in 30 June 2018.

Recruitment & Average Age:In the light of improving the Bank's organizational structure, the need of experienced job vacancies and scientifically and linguistically unique careers that are capable of competing in confronting the improvements of the banking work and due to the importance of these job opportunities and their impact over the Bank's activity. As a result, the Bank has recruited unique employees to fulfill these vacancies, internally or externally.

• The new hires during the end of the financial year in 30/06/2018 were 173 employees, 128 of them were fresh graduates.

• The employees who left the service during the same period were 53 employees for these reasons:- 17 employees reached retirement age. - 29 employees have resigned. - 2 employees have passed away.

• The number of current employees until 30/06/2018 are 933 employees and their average age is 40 years.



B. Training & Development:The Training Department aims to deliver appropriate trainings based on the gaps identified in the knowledge and skills of our staff members; which tackles their technical needs and enhance their soft skills.

This year, we have managed to train approximately 50% of our staff, with a wide range of training programs. The Training Department has provided 1564 training opportunities for 698 employees with a total cost of EGP 5,453,269.66.

Training & Development from 01/07/2017 to 30/06/2018

Total cost according to Training Type

C. Health Care ServicesThe contract between the Bank and the medical service provider was renewed. Human Resources is pursuing permanent follow up to ensure maintaining and improving the level of service provided.

The contract maintained the coverage for a staff member with a ceiling of EGP 30,000 with a pool of 500,000 for critical cases coverage in addition to EGP 50,000 for retirement critical cases.

Human Resources will always follow up with the modified advantages as follow:- The husband will be added to the medical insurance.

- All staff covered by EGP 50,000 instead of EGP 30,000, EGP 30,000 instead of EGP 20,000 for the wife, EGP 20,000 instead of EGP 10,000 for children.

698

5,453,269.66

1564Training Opportunities

Trainees

Cost in EGP

Training Type Number Total in Egyptian Pounds

External 11 EGB 1,312,262.66

Internal 904 EGB 3,942,807

In-House 649 EGB 198.200

Total 1564 EGB 5,453,269.66

- The medical glasses coverage increased to EGP 1000 instead of EGP 500, EGP 300 for medical lenses instead of EGP 100.

- The coverage of medical glasses for the wife and children added by EGP 750 and EGP 200 for medical lenses.

- The coverage of medical equipment and medical earphones increased to EGP 1000 instead of EGP 500.

- Pregnancy follow up increased from EGP 1000 to EGP 3000

- The natural childbirth’s coverage increased from EGP 3000 to EGP 4000 and the caesarean one from EGP 4500 to EGP 6000 for every employee and / or employee’s wife.

- Make a pool with EGP 2,000,000 instead of EGP 500,000 for critical cases and make a pool with EGP 500,000 instead of EGP 50,000 to retired employees.

- The dental treatment covered by the maximum level of coverage.

- The cashback of medical examination increased to EGP 300 instead of EGP 100.

Moreover, the Bank provides international medical coverage for some functional levels and allows any other staff member to have the membership at their own expenses with the Bank’s corporate rate. In case of retirement, the staff member can continue the membership on his / her own expense. The Bank continues its benefit to the retired staff and their spouse, which will be reflected by their loyalty to the Bank.

The Bank also ensures providing the medical coverage to the family of any employee who passed away during his service including the following: • The family of the employees who passed away continues to benefit from the medical care services.

• Spouse unless married.

• Adding the daughter of the employees unless married or working or whichever is closer.

• Sons until finishing college years / work / marriage or reaching age of 26 or whichever is closer.

• Curing 5 cases of Virus C with Solphady cure.

• Applying the above conditions on all families of the employees who passed away during their service, whom the conditions are applicable.



CORPORATE SOCIAL RESPONSIBILITY AND BUSINESS COMMUNITY SUPPORT:1- Corporate Social Responsibilities: EBE Continues this year to supporting both sectors, education and health, out of its belief in its role towards the community and out of its CSR activities. This year, the Bank funded Massr El Kheir foundation in the operational and educational costs of five schools in Essna villages – Luxor Governorate, in Upper Egypt. The fund included the sports, arts, recreational and cultural activities’ costs, and comes out of the Bank’s keenness in improving the level of education especially in Upper Egypt, where a team from the Bank’s staff visited those schools.

On the health sector, the Bank signed more than one protocol to financially support different health issues and cases, through different foundations, such as Ahl Massr foundation for establishing and furnishing a double room in the Burn and Accidents’ Victims Hospital, including the cost of medical equipment. EBE continued to cover the chemotherapy sessions of breast cancer patients in Baheya Hospital for Early Detection and Breast Cancer Treatment, through the MOU signed with the foundation. A group of the Bank’s employees visited the hospital to psychologically, emotionally and morally support the patients. Moreover, the Bank funded the Hospitals of Assuit University for the renovations of different medial sections and buying the latest medical equipment.

This year, the Bank took a new initiative in support to the agricultural sector in a mega project called “Plant – Collect – Export”, in coordination with Massr El Kheir Foundation. Through this initiative EBE is funding the farmers for planting 50 greenhouses on a 50 hectares land in Luxor, the fund will also covers the training programs for these farmers in order to insure the quality of the products to reach the exports’ standards.

In line with CBE Financial Inclusion Initiative, the Bank participated in the initiative, in order to introduce its services and products to a larger and different category and segment of the community. Where the Bank presented these services and products through universities, youth’s centers and clubs as well as small settlements and communities and promoted the account opening at no opening fees.

Moreover, and in order to disseminate the financial awareness to children and youth. The Bank continued to participate in the Global Money Week, for a third consecutive year, by the Egyptian Banking Institute (EBI), in partnership with the Ministry of Education, the Ministry of Youth, and some international schools, where branches visits, workshops and lectures were conducted to different universities and schools’ students. In this line, the Bank also sponsored and adopted the Egyptian Banking Simulation Model - EBSM, organized by the Faculty of Economics and Political Sciences - Cairo University, where financials and banking informative sessions where conducted at the faculty of commerce in Cairo and Ain Shams Universities.

As part of its role towards the community development and corporate social responsibility, and in order to contribute in solving the unemployment issues. The Bank participated in some employment fairs, such as the annual employment fair organized by the German University in Cairo, as well as the American University in Cairo.

2. Business Community Support: EBE continues to participate in different activities organized by the chambers of industries and commerce as well as the businesspersons associations; this is through attending or sponsoring exhibitions, forums, seminars, conferences and roundtables, locally and internationally. The Bank usually provides financial support to such chambers and organizations through memberships and participating in their different events in order to remain an active member among these communities. During this year, the Bank was keen to know about all new implications in the fields of international trade and global economy.

In order to develop and improve business relationship with businesspersons and exporters, the Bank, continuously, coordinates with the Ministry of Trade and Industry as well as some specialized centers. The Bank, always, gives priority to introduce itself to local and international business communities, in order to open new markets for Egyptian products and facilitate the process of commercial trade, through (B2B) events organized by these associations. Such as, The American Chamber of Commerce, Canadian Chamber of Commerce, Union of Arab Banks, El Wafaa’ Association, Federation of Egyptian Banks, Egyptian Banking Institute, Egyptian Capital Market Authority, The Egyptian Stock Market Exchange, Misr for Central Clearing, Depositary & Registry, Egyptian Businessmen Association, the Financial Markets Association, British Egyptian Businessmen Association (BEBA) as well as the Arab Investors Union.

In Line with its strategy to introduce the Egyptian export community, mostly manufacturers from different sectors to key export service providers in Egypt. The Bank was keen to participate, for the third year, in the international event “Fruit Logistica”, which was held in Berlin – Germany, under the auspices of the Agricultural Export Council, in order to develop and expand the Egyptian export especially in the food and agriculture sector. The purpose was to help Egyptian exporters expand sales by providing an opportunity for them to meet providers of key export services in Egypt in a “B2B” event, through networking, data-collection and raising awareness about key resources to expand export sales. Moreover, the Bank participated in Agro-Food exhibition held in Russia, in addition to Gulf Food Exhibition in Dubai organized by the Export Council for Food Industry, where a group of the Corporate Banking and Syndicated Loans as well as the SMEs Sector attended these exhibitions.

EBE this year participated in Uganda and Rwanda Trade Missions, as well as Cote D’Ivoire and Senegal, in coordination with the Federation of Egyptian Industries, which tackled the obstacles, problems that faces the Egyptian Exports, where the Bank seized this opportunity to present its different services and financial products. B2B meetings were conducted with key governmental African and businesspersons’ figures, this is In line with EBE›s strategy targeting to double Egyptian exports to Africa. Moreover, another trade mission to Ghana were also conducted, in line with Egypt’s strategy for opening trade and economics’ channels with African countries for further foreign cooperation.

This year also the Bank sponsored the annual Cairo International Fair, People and Banks Exhibition as well as the conference of the Egyptian Institutions of Plastic Surgeries, where EBE presented its products and services among these huge events.



Additionally, the Bank this year signed different protocols and MOU such as: - The Commercial Representation, for helping in creating better investment environment, which encourages exports.

- The Association of SMEs Investors offering all facilities and financial services to their platform.

- El Tadamon Microfinance Foundation, providing funds and financing the small and microfinance projects owned by women granting trade opportunities.

- Different Export councils of various sectors, agricultural, textiles and garments chemical industry, furniture, metal, food industry etc.…out of the Bank belief in its role in participating to the development of the Egyptian Economy, especially in this critical period that the country faces, where the organizations altogether should give a hand to help, creating investment opportunities.

- A protocol with Afrixim Bank, which offers a combination of programs, products and services designed to help Egyptian exporters to boost their exports to the African market and which is considered one of the ways to get the local economy from its crises in order to achieve the desired growth, and a way of exchanging experiences and economic cooperation.

- Sanad to support the Egyptian small and medium size exporters.


Financial Indicators 07

FINANCIAL INDICATORS

07AUDITORS’ REPORTExport Development Bank of EgyptOn the Separate financial statements as at June 30, 2018To the shareholders of Export Development Bank of Egypt

Report on the separate financial statementsWe have audited the accompanying separate financial statements of Export Development Bank of Egypt (S.A.E.), which comprise the separate balance sheet as at June 30, 2018 and the separate statements of income, changes in equity and cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the separate Financial StatementsThese separate financial statements are the responsibility of Bank’s management.Management is responsible for the preparation and fair presentation of these separate financial statements in accordance with central bank of Egypt’s rules, pertaining to the preparation and presentation and the financial statements and it’s amendments, including amendments that relates to financial investments issued on December 16, 2008 and in light of the prevailing Egyptian laws, management responsibility includes, designing , implementing internal control relevant to the preparation and fair presentation of separate financial statements that are free from material misstatements, whether due to fraud or error, management responsibility also includes selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these separate financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the separate financial statements are free from significant and material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material and significant misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall separate financial statements presentation.


Financial Indicators07 Financial Indicators 07

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the separate financial statements.

OpinionIn our opinion, the separate financial statements, referred to above, present fairly, in all material respects, the separate financial position of the Export Development Bank of Egypt (S.A.E) as of June 30, 2018 and of its financial performance and its cash flows for the year then ended in accordance with Central Bank of Egypt’s rules pertaining to the preparation and presentation of financial statements issued on December 16,2008 and the Egyptian laws and regulations relating to the preparation of these separate financial statements.

Report On Other Legal and Regulatory RequirementsAccording to the information and explanations given to us – during the financial year ended June 30, 2018 no contravention of central bank, banking and monetary institution law No. 88 of 2003 and the bank law No.95 of 1983.

The Bank maintains proper books of accounting, which include all that is required by the law and by the statutes of the Bank; the separate financial statements are in agreement thereto.

The separate financial information included in the Board of Director’s report, prepared in accordance with Law No. 159 of 1981 and its executive regulations, is in agreement with the Bank’s books of account.

Banks’ AuditorsDR. Moustafa Shawki Salwa Younis SaiedMAZARS Moustafa Shawki General Manager Central Auditing Organization

Cairo, 6 September 2018

LIMITED REVIEW REPORTOn the Separate interim financial statements as at March 31, 2018To the Board of Directors of Export Development Bank of Egypt

Introduction

We have performed a limited review for the accompanying separate financial statements of Export Development Bank of Egypt (S.A.E.), which comprise the separate balance sheet as at March 31, 2018 and the related separate statements of income, changes in equity and cash flows for the Nine months then ended on that date, and a summary of significant accounting policies and other explanatory notes.Management is responsible for the preparation and fair presentation of these separate interim financial statements in accordance with central bank of Egypt's rules, pertaining to the preparation and presentation & the financial statements and it's amendments, issued on December 16, 2008 and in light of the prevailing Egyptian laws related to these interim financial statements, Our responsibility is to express a conclusion on these separate interim financial statements based on our limited review.

Scope of Limited ReviewWe conducted our limited review in accordance with Egyptian Standards on Review Engagements 2410, "Limited Review of interim Financial Statements performed by the independent Auditor of the Entity." A Limited review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters in the company, and applying analytical and other limited review procedures.A limited review is substantially less in scope than an audit conducted in accordance with Egyptian Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identifies in an audit.Accordingly, we do not express an audit opinion on these separate interim financial statements.

ConclusionBased on Our limited review nothing has become to our attention causes us to believe that the accompanying separate interim financial statements do not present fairly, in all material respects, the separate financial position of the company as at March 31, 2018 and its separate financial performance and its separate cash flows for the period of Nine months then ended in that date in accordance with Central Bank of Egypt's rules, pertaining to the preparation and presentation & the financial statements and it's amendments, issued on December 16, 2008 and in light of the prevailing Egyptian laws related to these interim financial statements.

Banks’ AuditorsDR. Moustafa Shawki Salwa Younis SaiedMAZARS Moustafa Shawki General Manager Central Auditing OrganizationCairo, May 14, 2018


Separate Balance Sheet As at June 30, 2018 Separate Income Statement For The Year Ended June 30, 2018

The accompanying notes from (1) to (38) are an integral part of these financial statements. Auditors’ report attached.


Assets June 30, 2018 June 30, 2017

Cash and due from Central Bank of Egypt )14( 2,335,055,738 509,565,487

Due from banks )15( 5,487,785,678 4,960,588,515

Treasury bills and other governmental notes )16( 10,819,362,964 6,015,766,045

Loans and advances to customers )17( 19,965,550,801 14,195,613,892

Loans and advances to Banks )17( 88,606,780 0

Financial Derivatives (18) 15,399,045 0

Financial Investments:

-Available for sale )19( 1,459,816,937 1,825,269,055

-Held to maturity )19( 2,139,790,048 3,281,988,751

Financial investments in subsidiaries and associated co. )20( 1,214,881,062 1,214,890,386

Intangible assets )21( 3,846,488 5,040,614

Other assets )22( 794,225,462 699,990,068

Fixed assets )23( 286,159,503 240,706,395

Investment property )24( 2,497,384 2,599,697

Deferred tax (25) 14,137,608 14,137,608

Total Assets 44,627,115,496 32,966,156,513

Liabilities and shareholders’ equity

Liabilities

Due to banks )26( 2,735,291,557 1,045,152,280

Customers’ deposits )27( 34,708,746,085 27,512,313,268

Other loans )28( 1,898,545,977 896,812,982

Other liabilities )29( 538,991,928 412,976,483

Other provisions )30( 101,070,377 88,920,456

Deferred tax )31( 13,384,068 20,746,443

Retirement benefit obligations 11,799,929 11,799,929

Total liabilities 40,007,829,923 29,988,721,841

Shareholders’ equity

Paid up capital )32( 2,728,000,000 1,440,000,000

Reserves )32( 549,308,826 516,160,591

Retained Earnings (32) 1,341,976,748 1,021,274,081

Total shareholders’ equity 4,619,285,574 2,977,434,672

Total liabilities and shareholders’ equity 44,627,115,496 32,966,156,513

Mervat Zohdy Soltan Mohamed Mokhtar Chairperson Financial Control Director


NotesJune 30, 2018 June 30, 2017

EGP EGP

Interest and similar income (5) 4,542,770,671 2,835,501,798

Deposits and similar expenses (5) (3,382,143,558) (1,908,727,893)

Net Interest Income 1,160,627,113 926,773,905

Fees and commissions Income (6) 334,856,587 249,664,353

Fees and commissions Expenses (6) (41,160,937) (16,600,315)

Net income from fees & commissions 293,695,650 233,064,038

Dividends Income (7) 40,522,369 31,737,763

Net Trading Income (8) 105,326,077 37,213,734

Profit (Loss) from Financial Investments (19) (75,561,926) (88,912,191)

Impairment of credit losses (11) (68,635,447) (83,295,818)

Administrative expenses (9) (535,335,278) (394,975,072)

Other operating income (expense) (10) 80,736,234 26,209,782

Net )Loss( profit before Tax 1,001,374,793 687,816,141

Income Tax (12) (298,587,957) (187,766,254)

Deferred tax (0) 2,024,694

Net )Loss( profit for the Year 702,786,837 502,074,581

Earnings Per Share (13) 3.37 3.07

Mervat Zohdy Soltan Mohamed Mokhtar Chairperson Financial Control Director


Separate Cash flows Statement For The Year Ended June 30, 2018


EGP EGP

Cash flows from operating activities

Net profit before income tax 1,001,374,793 687,816,141

Adjustments to reconcile net profit to cash provided from operating activities:

Fixed Assets Depreciation (23) 31,177,332 23,981,946

Intangible Assets Amortization (21) 2,291,550 1,710,732

Investment property Depreciation (24) 102,313 375,426

Reversal - Impairment of Credit losses (11) 68,635,447 83,295,818

AFS investments Impairment (19) 83,663,924 103,637,710

Reversal - Impairment of other Provisions (30) 24,325,074 32,763,047

Capital Profits (10) (8,454,960) (14,956,124)

AFS investments foreign exchange revaluationdifferences

(19)(10,256,462) (422,934,051)

HTM investments foreign exchange revaluationdifferences

(19)(0) (14,047,000)

Foreign currencies revaluation differences of provisions )other than provision for loans( (30) (62,516) 4,815,363

Dividends Income (7) (40,522,369) (31,737,763)

Operating profit before changes in assets and liabilitiesused in operating activities 1,152,274,126 454,721,245

Net decrease )increase( in Assets & Liabilities

Due from banks (1,731,732,296) 1,037,540,200

Treasury bills and other governmental notes (5,083,949,523) (2,609,568,625)

Loans and advances to customers (5,878,780,436) (4,663,553,765)

Financial Derivatives (Net) (15,399,045) (6,687,826)

Other assets (61,692,681) (144,868,211)

Due to banks (26) 1,690,139,277 (259,306,104)

Customers’ deposits (27) 7,196,432,817 6,220,798,049

Other liabilities (29) 24,532,453 57,929,426

Income tax paid (12) (231,147,328) (172,291,574)

Other provisions (20,242,782) (175,973)

Retirement benefit obligations 0 4,672,546

Net cash flows )used in( operating activities (2,959,565,417) (80,790,611)


Cash flows from investing activities

Purchase of fixed assets and branches improve-ments (149,515,101) (81,992,632)

Proceeds from sale of Fixed assets 0 67,816

Capital Profits (10) 8,454,960 14,956,124

Purchase of intangible assets (21) (1,097,423) (4,336,721)

AFS Financial investments purchases (19) (211,132,850) (1,397,595,452)

Proceeds from redemption of AFS Financialinvestments

(19)523,387,168 4,034,612,084

HTM Financial investments purchases (19) (7,828,048) (2,662,254,547)

Proceeds from redemption of HTM Financialinvestments

(19)1,155,882,537 99,248,868

Financial investments in subsidiaries and associated co. 9,324 0

Dividends Income 40,522,369 31,737,763

Net cash flows provided from investing activities 1,358,682,935 34,443,303

Cash flows from financing activities

Net proceeds (repayments) from debt instruments &other loans

(28)1,001,732,995 266,856,664

Capital Increase 1,000,000,000 0

Paid Dividends (60,248,000) (42,135,000)

Net cash flows provided from financing activities 1,941,484,996 224,721,664

Net decrease in cash and cash equivalents duringthe year 340,602,514 184,104,957

Cash and cash equivalents at the beginning of the year 5,559,846,894 5,375,741,937

Cash and cash equivalents at the end of the year (35) 5,900,449,409 5,559,846,894

Cash and cash equivalents are represented in:

Cash and due from Central Bank of Egypt (14) 2,335,055,738 509,565,487

Due from banks (15) 5,487,785,678 4,960,588,515

Treasury bills and other governmental notes (16) 10,819,362,964 6,015,766,045

Balances with Central Bank of Egypt (Mandatory reserve)

(14)(1,963,877,525) (232,145,229)

Treasury bills and other governmental notes withmaturities more than three months

(16)(10,777,877,446) (5,693,927,923)

Cash and cash equivalents at the end of the year 5,900,449,409 5,559,846,894

The accompanying notes from (1) to (39) are an integral part of these financial statements.


Separate Profit Appropriation StatementFor the year ended June 30, 2018

June 30, 2018 June 30, 2017

EGP EGP

Net profit for the year 702,786,837 502,074,581

Less:

Profit from selling fixed assets transferred to capital reserve (8,454,960) (14,956,124)

General Banking Risks Reserve – Acquired assets (2,867,770) (3,139,000)

General Banking Risks Reserve – IFRS9 (271,229,787) 0

Add:

General Banking Risks Reserve – Selling of Acquired assets 2,448,369 1,870,800

Net profit for the year – available for appropriation 422,682,689 485,850,257

Add:

Accumulated profit at the beginning of the year 639,189,912 519,199,500

Total 1,061,872,601 1,005,049,757

Distributed as follows:

Legal reserve 69,433,188 48,711,846

Dividends to the shareholders 136,400,000 0

Employees’ profit share 70,278,684 50,207,000

Board of directors’ remuneration 14,055,737 10,041,000

Accumulated profit at the end of the year 771,704,993 896,089,911

Total 1,061,872,601 1,005,049,757



Separate Changes in Shareholders’ Equity Statement For The Year Ended June 30, 2018

June 30, 2017Capital Legal Reserve General Reserve Special

Reserves Capital Reserves General

Banking RiskReserve

General Bank-ing Risk Re-

serve AcquiredAssets

Reserve of revaluation of available for

saleinvestments

RetainedEarnings Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP EGP

Balance at the beginning of the year 1,440,000,000 123,590,449 172,516,846 35,118,940 4,291,985 106,340,193 14,897,979 83,262,483 600,142,415 2,580,161,290

Transferred to Capital Reserve 0 0 0 0 1,251,225 0 0 0 (1,251,225) 0

Transferred to legal reserve 0 33,480,804 0 0 0 0 0 0 (33,480,804) 0

Transferred to Banking RiskReserve - Acquired Assets 0 0 0 0 0 0 4,075,885 0 (4,075,885) 0

Net change in available- for- saleinvestments 0 0 0 0 0 0 0 (67,776,204) (0) (67,776,204)

Deferred tax - fair valuedifferences of AFS investments 0 0 0 0 0 0 0 5,110,006 (0) 5,110,006

Net profit for the year 0 0 0 0 0 0 0 0 502,074,581 502,074,581

Dividends paid 0 0 0 0 0 0 0 0 (42,135,000) (42,135,000)

Balance at the end of the year 1,440,000,000 157,071,253 172,516,846 35,118,940 5,543,210 106,340,193 18,973,864 20,596,285 1,021,274,081 2,977,434,672

June 30, 2018Capital Legal Reserve General Reserve Special

Reserves Capital Reserves General

Banking RiskReserve

General Bank-ing Risk Re-

serve AcquiredAssets

Reserve of revaluation of available for

saleinvestments

Retained Earn-ings Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP EGP

Balance at the beginning of the year 1,440,000,000 157,071,253 172,516,846 35,118,940 5,543,210 106,340,193 18,973,864 20,596,285 1,021,274,081 2,977,434,672

capital Increase from retainedearnings and reserves 288,000,000 (31,100,000) 0 0 0 0 0 0 (256,900,000)

0

capital Increase from Underwriting 1,000,000,000 (0) 0 0 0 0 0 0 (0) 1,000,000,000

Transferred to Capital Reserve 0 0 0 0 14,956,124 0 0 0 (14,956,124) 0

Transferred to legal reserve 0 48,711,846 0 0 0 0 0 0 (48,711,846) 0

Transferred to Banking RiskReserve-Assets acquired 0 0 0 0 0 0

1,268,2000 (1,268,200) 0

Net change in available- for- saleinvestments 0 0 0 0 0 0

0(8,050,309) 0 (8,050,309)

Deferred tax - fair valuedifferences of AFS investments 0 0 0 0 0 0 0 7,362,374 0 7,362,374

Net profit for the year 0 0 0 0 0 0 0 0 702,786,837 702,786,837

Dividends paid 0 0 0 0 0 0 0 0 (60,248,000) (60,248,000)

Balance at the end of the year 2,728,000,000 174,683,099 172,516,846 35,118,940 20,499,334 106,340,193 20,242,064 19,908,350 1,341,976,749 4,619,285,574






Notes to the separate financial statements For the Year ended June 30, 20181- General informationExport Development Bank of Egypt (Egyptian Joint Stock Company) was established on July 30, 1983 under Law No. 95 of 1983 and its articles of association in the Arab republic of Egypt, The head office located in Giza at 108, Mohy El Din Abu El Ezz Street, Dokki the bank is listed in the Egyptian stock exchange (EGX). The objective of the Bank is to encourage, develop Egyptian export activities, and assist in developing agricultural, industrial, and commercial and service exporting sectors, also to provide all investment banking services in local and foreign currencies through its head office and thirty-one branches. The financial year starts from July first every year ending at June 30 of the next year.These financial statements have been submitted by board of directors in 6 September 2018.

2- Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these financial statements are set out below.

These policies have been consistently applied to all the years presented, unless otherwise stated, The Bank is in the process of applying the requirements of IFRS (9) “Financial Instruments”.

2.1- Basis of preparation of the financial statementsThe financial statements have been prepared in accordance with Egyptian Accounting Standards issued in 2006 and its amendments and in accordance with the instructions of the Central Bank of Egypt approved by the Board of Directors on December 16, 2008 consistent with the Standards referred to, and have been prepared under the historical cost modified by the revaluation of trading, financial assets and liabilities held for trading, and assets and liabilities originally classified as at fair value through profit or loss, financial investments available for sale and all derivatives contracts. The unconsolidated preparation of these financial statements was according to relevant domestic laws.

The bank also prepared consolidated financial statements of the Bank and its subsidiaries in accordance with Egyptian Accounting Standards, the subsidiaries companies are entirely included in the consolidated financial statements and these companies are the companies that the bank which - directly or indirectly has more than half of the voting rights or has the ability to control the financial and operating policies of an enterprise, regardless of the type of activity, the consolidated financial statements of the Bank can be obtained from the Bank’s management. The investments in subsidiaries and associate Companies are disclosed in the standalone financial statements of the Bank and its accounting treatment is at cost after deducting the impairment losses from it.

The separate financial statements of the Bank should be read with its consolidated financial statements, for the Year ended on June 30,2018 to get complete information on the Bank’s financial position, results of operations, cash flows and changes in ownership rights.


2.2 Subsidiaries and associatesSubsidiariesSubsidiaries are all entities over which the Bank has owned directly or indirectly the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Bank has the ability to control the entity.The Accounting for subsidiaries and associates in the unconsolidated financial statements are recorded by cost method, investments are recognized by the cost of acquisition including any good will, deducting impairment losses in value, and recording the dividends in the income statement in the adoption of the distribution of these profits and evidence of the bank right to collect it.

2.3- Segment reportingA business segment is a group of assets and operations related to providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns different from those of segments operating in other economic environments.

2.4- Foreign currency translation(a) Functional and presentation currencyThe financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.

(b) Transactions and balances in foreign currencies- The Bank hold accounts in Egyptian pounds and prove transactions in other currencies during the financial year on the basis of prevailing exchange rates at the date of the transaction, and re-evaluation of balances of assets and liabilities of other monetary currencies at the end of the financial period on the basis of prevailing exchange rates at that date, and is recognized in the list gains and losses resulting from the settlement of such transactions and the differences resulting from the assessment within the following items:

• Net trading income or net income from financial instruments classified at fair value through profit and loss of assets / liabilities held for trading or those classified at fair value through profit and loss according to type.

• Shareholders’ equity of financial derivatives which are eligible qualified hedge for cash flows or eligible for qualified hedge for net investment.

• Other operating revenues (expenses) for the rest of the items.

- Changes in the fair value of monetary financial instruments denominated in foreign currencies and classified as available for sale investments (debt instruments) are analyzed into valuation differences


resulting from changes in amortized cost of the instrument, translation differences arising from changes in foreign exchange rates and differences resulting from changes in the fair value of the instrument. Valuation differences are recognized in profit or loss to the extent they relate to changes in amortized cost and changes in exchange rates which are reported in the income statement under the line items revenues from loans and similar activities’ and ‘other operating revenues (expenses)’ respectively. The remaining differences resulting from changes in fair value of the instrument are carried to ‘reserve for cumulative change in fair value of available for sale investments’ in the equity section.

- Valuation differences resulting from measuring the non-monetary financial instruments at fair value include gains and losses resulting from changes in fair value of those items. Revaluation differences arising from the measurement of equity instruments classified as at fair value through profit or loss are recognized in the income statement, whereas the revaluation differences arising from the measurement of equity instruments classified as available for sale financial investments are carried to ‘reserve for cumulative change in fair value of available for sale investments’ in the equity section.

2.5 Financial assetsThe Bank classifies its financial assets in the following categories:Financial assets classified as at fair value through profits or loss, loans and receivables, held to maturity financial assets, and available for sale financial assets. The Bank’s classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.Management determines the classification of its investments at initial recognition.

(a) Financial assets classified at fair value through profit or lossThis category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception.

- A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorized as held for trading unless they are designated as hedging instruments.

- Financial assets are designated at fair value through profit or loss when:

• Doing so significantly reduces measurement inconsistencies that would arise if the related derivatives were treated as held for trading and the underlying financial instruments were carried at amortized cost for loans and advances to customers or banks and debt securities in issue.

• Certain investments, such as equity investments, are managed and evaluated on a fair value basis in accordance with a documented risk management or investment strategy and reported to key management personnel on that basis are designated at fair value through profit and loss.


• Financial instruments, such as debt securities held, containing one or more embedded derivatives significantly modify the cash flows, are designated at fair value through profit and loss.

- Profits and losses resulted from changes in the fair value of the financial derivatives which are managed in conjunction with the assets and liabilities classified at inception fair value through profit and loss are recorded in the income statement within “net income from financial instruments classified at inception at fair value through profit and loss” item.

- Any derivative from the financial instruments group evaluated at fair value through profit and loss is not to be reclassified during the year of holding it or during its validity period. In addition, any instrument from financial instruments group evaluated at fair value through profit and loss is not to be reclassified if the mentioned instrument has been allocated by the Bank at initial recognition as an instrument to be evaluated at fair value through profit and loss.

(b) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than: (a) those that the Bank intends to sell immediately or in the short term, which are classified as held for trading, or those that the Bank upon initial recognition designates as at fair value through profit or loss; (b) those that the Bank upon initial recognition designates as available for sale; or (c) those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.

(c) Held-to-maturity financial investmentsHeld-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Bank’s management has the positive intention and ability to hold to maturity. If the Bank were to sell a significant amount of held to-maturity assets, the entire category would be reclassified as available for sale unless in the necessary cases.

(d) Available-for-sale financial investmentsAvailable-for-sale investments are non-derivative financial assets with intention to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.

The following is applied to financial assets- Regular-way purchases and sales of financial assets at fair value through profit or loss, held to maturity and available for sale are recognized on trade-date – the date on which the Bank commits to purchase or sell the asset.

- Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit and loss are initially recognized at fair value, and transaction costs are expensed in the income statement.

- Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or where the Bank has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognized when they are extinguished − that is, when the obligation is discharged, cancelled or expires.



- Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortized cost using the effective interest method.

- Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are recognized in the income statement in the period in which they arise. Gains and losses arising from changes in the fair value of available-for-sale financial assets are recognized directly in equity, until the financial asset is derecognized or impaired. At this time, the accumulative gain or loss previously recognized in equity is recognized in profit or loss.

- Interest calculated using the effective interest method and foreign currency gains and losses on monetary assets classified as available for sale are recognized in the income statement. Dividends on available-for-sale equity instruments are recognized in the income statement when the Bank’s right to receive payment is established.

- The fair values of quoted investments in active markets are based on current bid prices. If there is no active market for a financial asset, or no current demand prices available the Bank establishes fair value using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants If the Bank had been unable to estimate the fair value of equity instruments classified available for sale, value is measured at cost less any impairment in value.

- The Bank reclassify the financial asset which classified as a financial instruments available for sale, which left the definition of loans and debts (bonds or loans), to be classified to the group of loans and receivables or financial assets held to maturity - all as the case - when available Bank has the intent and ability to hold these financial assets in the foreseeable future or until maturity and reclassification to be booked by fair value at reclassifications date, and not process any profits or losses on those assets that have been recognized previously in equity and in the following manner:

1 - In case of reclassification of financial asset, which has a fixed maturity are amortized gains or losses over the remaining life of the investment retained until the maturity date in a manner effective yield is consumed any difference between the value on the basis of amortized cost and value on an accrual basis over the remaining life of the financial asset using the effective yield method, and in the case of the decay of the value of the financial asset is later recognition of any gain or loss previously recognized directly in equity in the profits and losses.

2 - In the case of financial asset which has no fixed maturity continue to profit or loss in equity until the sale of the asset or to dispose of it, then be recognized in the profit and loss In the case of erosion of the value of the financial asset is later recognition of any gain or loss previously recognized directly within equity in the profits and losses.

- If the Bank to adjust its estimates of payments or receipts are the settlement of the carrying amount of the financial asset (or group of financial assets) to reflect the actual cash inflows and the adjusted estimates to be recalculated book value and then calculates the present value of estimated future cash flows at the effective yield of the financial instrument and is recognized settlement recognized as income or expense in the profit and loss.

- In all cases, if the Bank re-tab financial asset in accordance with what is referred to the Bank at a later date to increase its estimate of the proceeds of future cash result of the increase will be recovered from the cash receipts, is the recognition of the impact of this increase in settlement of the interest rate effective from the date of change in the estimate and not in settlement of the balance of the original notebook in the history of change in the estimate.

2.6- Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

And the clauses of agreements to buy treasury bills with a commitment to re-sale agreements and sale of treasury bills with a commitment to re-purchase on a net basis within the balance sheet item, treasury bills and other government papers.

2.7- Derivative financial instruments and hedge accounting- Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at their fair value. Fair values are obtained from quoted market prices in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and options pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.

- Embedded derivatives, such as the conversion option in a convertible bond, are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract, provided that the host contract is not classified as at fair value through profit or loss as part of “net trading income”. Embedded derivatives are not split if the Bank chooses to designate the entire hybrid contact as at fair value through profit or loss.

-The accounting treatment used to recognize changes in fair value of derivatives depends on whether or not the derivative is designated as a hedging instrument under hedge accounting rules and on the nature of the hedged item. The Bank designates certain derivatives as either:

• Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedge);

• Hedging relating to future cash flows attributable to a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).

• Hedging for net investment in foreign operations relating to future cash flows attributable to a recognized (net investment hedge).

- Hedge accounting is used for derivatives designated in a hedging relationship when the criteria are met.

- The Bank documents, at the inception of the transaction, the relationship between hedged items and hedging instruments, as well as its risk management objective and strategy for undertaking various hedge transactions. The Bank also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value of hedged items.



2.7.1- Fair value hedgeChanges in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The effective portion of changes in the fair value of the interest rate swaps and the changes in the fair value of the hedged item attributable to the hedged risk are recognized in the ‘net interest income’. The effective portion of changes in the fair value of the currency swaps are recognized in the ‘net trading income’. Any ineffectiveness is recognized in profit or loss in ‘net trading income’.

When the hedging instrument no longer qualified for hedge accounting, the adjustment to the book value of a hedged item is amortized which are accounted for using the amortized cost method, by charging to the profit and loss to the maturity. The adjustments made to the book value of the hedged equity instrument remains in the equity section until being excluded.

2.7.2- Cash flow hedgeThe effective portion of changes in the fair value of derivatives designated and effective for cash flow hedge shall be recognized in equity while changes in fair value relating to the ineffective portion shall be recognized in the income statement in “net trading income”.Amounts accumulated in equity are transferred to income statement in the relevant periods when the hedged item affects the income statement. The effective portion of changes in fair value of interest rate swaps and options are reported in “net trading income”.

When a hedged item becomes due or is sold or if hedging instrument no longer qualifies for hedge accounting requirements, gains or losses that have been previously accumulated in equity remain in equity and shall only be recognized in profit or loss when the forecast transaction ultimately occurs. If the forecast transaction is no longer expected to occur any related cumulative gain or loss on the hedging instrument that has been recognized in equity shall be reclassified immediately to income statement. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item that is measured at amortized cost is amortized to profit or loss over the period to maturity.

2.7.3- Net investment hedgeAccounting for net investment hedge is the same for cash flows hedge. Profit or loss from hedging instrument related to the effective portion of the hedge to be recognized in Equity, while it is recognized in the income statement directly for hedging instrument not related to the effective portion. Accumulated profit or loss in equity to be transferred to the income statement upon disposal of foreign transactions.

2.7.4- Derivatives that do not qualify for hedgeaccountingInterest on and changes in fair value of any derivative instrument that does not qualify for hedge accounting is recognized immediately in the income statement in “net trading income” line item. However, gains or losses arising from changes in the fair value of derivatives that are managed in conjunction with designated financial assets or financial liabilities are included in “net income from financial instruments designated at fair value through profit or loss”.

2.8- Interest income and expenseInterest income and expense for all interest-bearing financial instruments, except for those classified as held for trading or designated as at fair value through profit or loss, are recognized within ‘interest income’ and ‘interest expense’ in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

When loans or debts are classified as non-performing or impaired, related interest income are not recognized but rather, are carried off balance sheet in statistical records and are recognized as revenues on the cash basis as follows:

1- When collected and after recovery of all arrears for retail loans, personal loans, real estate loans for personal housing and loans to small business.

2- For corporate loans, interest income is also recognized on the cash basis, according to which interest earned during the periods subsequent to reschedule agreements does not start to accrete on the loan principal until the Bank collects 25% of the rescheduled installments and after payments of the installments continue to be regular for at least one year. if the customer is always paying at his due dates the interest calculated is added to the loan balance which makes revenues (interest on rescheduling without deficits) without interests aside before rescheduling which is avoiding revenues except after paying all the loan balance in the balance sheet before rescheduling.

2.9 - Fees and commissions incomeFees and commissions charged by the Bank for servicing a loan are recognized as revenue as the services are provided. Recognition of such fees and commission in profit or loss ceases when a loan becomes non-performing or is impaired in which case fees and commission income is rather marginalized and carried off the balance sheet. Recognition of such fees and commissions as revenues continues on the cash basis when the relevant interest income on the financial instrument is recognized since they are generally treated as an adjustment to the effective interest rate on the financial asset.

If it is probable that the Bank will enter into a specific lending arrangement, the commitment fee received is regarded as compensation for an ongoing involvement with the acquisition of a financial instrument and, together with the related transaction costs, is deferred and recognized as an adjustment to the effective interest rate. If the commitment expires without the Bank making the loan, the fee is recognized as revenue on expiry.

A syndication fee received by the Bank that arranges a loan and retains no part of the loan package for itself (or retains a part at the same effective interest rate for comparable risk as other participants) is compensation for the service of syndication. Such a fee is recognized as revenue when the syndication has been completed.



Fees and commissions resulting from direct negotiations or participation in such negotiations for the benefit of or on behalf of another party, such as those earned on the allotment of shares or other financial assets to a client or acquisition or disposal of entities for a client, are recognized as revenue when the specific transaction has been completed.

Administrative and other services fees are recognized as income on a time proportionate basis over the lifetime of the service.

Fees charged for financial planning services and custodian services provided over long periods are recognized as income over the period during which the service is rendered.

2.10- Dividend incomeDividends are recognized in the income statement when the Bank’s right to receive payment is established.

2.11- Purchase and resale agreements, sale and repurchase agreementsThe financial instruments sold, subject to repurchase agreements, are reported as additions to the balance of treasury bills and other governmental notes in the assets side at the balance sheet, whereas the liability (purchase and resale agreement) is reported in the balance sheet as a deduction therefrom. Difference between the sale price and repurchase price is recognized as a return throughout the period of the arrangement using the effective interest rate method.

2.12- Impairment of financial assets(a) Assets carried at amortized costThe Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Bank uses to determine that there is objective evidence of an impairment loss include:• Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of sales);• Breach of loan covenants or conditions;• Initiation of bankruptcy proceedings;• Deterioration of the borrower’s competitive position;• The Bank for reasons of economic or legal financial difficulties of the borrower by granting concessions may not agree with the Bank granted in normal circumstances;• Deterioration in the value of collateral;• Downgrading below investment grade level.The objective evidence of impairment loss for group of financial assets is the clear data indicate to a decline can be measured in future cash flows expected from this group since its initial recognition, although not possible to determine the decrease of each asset separately, for example increasing the number of failures in payment for one of the banking products.

The estimated period between a losses occurring and its identification is determined by local management for each identified portfolio. In general, the periods used vary between three months and 12 months.

The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant and in this field the following are considered.

- If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment according to historical default ratios.

- Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment.

- If no impairment losses result from the previous assessment of impairment in this case the asset included in a collective assessment of impairment.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the income statement.

If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract when there is objective evidence for asset impairment. As a practical expedient, the Bank may measure impairment on the basis of an instrument’s fair value using an observable market price. The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (i.e., on the basis of the Group’s grading process that considers asset type, industry, geographical location, collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated.

For the purposes of evaluation of impairment for a group of a financial assets according to historical default ratios future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the Bank and historical loss experience for assets with credit risk characteristics similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist.Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with changes in related observable data from period to period (for example, changes in unemployment rates, property prices, payment status, or other factors indicative of changes in the probability of losses in the Bank and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Bank.


Premises and constructions 40 years

Fixtures and air conditions 5 years

Safes 50 years

Copiers and fax 8 years

Vehicles and means of transportation 5 years

Electric appliances 10 years

Mobile phones 3 years

Telephone networks, fire extinguishers 10 years

Computers and computers’ software 3 years

Furniture 10 years

Decorations 4 years


(b) Assets classified as available for saleThe Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets classify under available for sale or held to maturity is impaired. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the assets are impaired.

The Decrease Consider significant cause it become 10% From cost of book value and the decrease consider to be extended if it continue for period more than 9 months, and if the mentioned evidences become available then the accumulated loss to be post from the equity and disclosed at the income statement, impairment losses recognized in the income statement on equity instruments are not reversed through the income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through the income statement.

2.13- Real Estate InvestmentsThe real estate investments represent lands and buildings owned by the Bank In order to obtain rental returns or capital gains and therefore does not include real estate assets which the Bank exercised its work through or those that have owned by the bank as settlement of debts. The accounting treatment is the same used with fixed assets.

2.14- Intangible assets 2.14.1- SoftwareExpenditure on upgrade and maintenance of computer programs is recognized as an expense in the income Statement in the period in which it is incurred. Expenditures directly incurred in connection with specific software are recognized as intangible assets if they are controlled by the bank and when it is probable that they will generate future economic benefits that exceed its cost within more than one year.

Direct costs include the will generate future economic benefits that exceed its cost within more than one year. Direct costs include the cost of the staff involved in upgrading the software in addition to a reasonable portion of relative overheads. Upgrade costs are recognized and added to the original cost of the software when it is likely that such costs will increase the efficiency or enhance the performance of the computers software beyond its original specification Cost of computer software recognized as an asset shall be amortized over the period of expected benefits which shall not exceed three years.

2.14.2- Other intangible assets Other intangible assets represent intangible assets other than software programs (they include but not limited to trademark, licenses, and benefits of rental contracts). The other intangible assets are recorded at their acquisition cost and are amortized on the straight-line method or based on economic benefits expected from these assets over their estimated useful life. Concerning the assets which do not have a finite useful life, they are not subject to amortization they are annually assessed for impairment, while value of impairment (if any) is charged to the income statement.

2.15- Fixed AssetsLands and buildings are mainly represented in head office, branches and offices premises. All fixed assets are disclosed at historical cost less accumulated depreciation and impairment losses. The historical cost includes expenditures that are directly attributable to the acquisitions of the fixed assets’ items.

Subsequent costs are included in the assets carrying amount or recognized separately, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. Repairs and maintenance expenses are recognized in profit or loss within “other operating costs” line item during the financial period in which they are incurred.

Land is not depreciated. Depreciation of other fixed assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

The residual value and useful lives of the fixed assets are reviewed on the each balance sheet date and they are adjusted whenever it is necessary. Depreciated assets are reviewed for purposes of determining extent of impairment when an event or change in conditions occurs suggesting that the book value may not be recovered. Consequently, the book value of the asset is reduced immediately to the asset’s net realizable value in case increasing the book value over the net realizable value.

The net realizable value represents the net selling value of the asset or its utilization value whichever is greater. Gains and losses from the disposal of fixed assets are determined by comparing the net proceeds at book value. Gains (losses) are included within other operating income (expenses) in the income statement.



2.16 - Impairment of non-financial assetsAssets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.17- Leases(a) Being lesseeLease payments made under operating leases, net of any discounts received from the lessor, are recognized in profit or loss on a straight-line basis over the term of the contract.

(b) Being lesserAssets leased out under operating lease contracts are reported as part of the fixed assets in the balance sheet and are depreciated over the expected useful lives of the assets, on the same basis as other property assets. Lease rental income is recognized net of any discounts granted to the lessee, using the straight line method over the contract term.

2.18- Cash and cash equivalentsFor the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months’ maturity from the date of acquisition, They include cash and balances due from Central Bank of Egypt (other than those under the mandatory reserve), balances due from banks, treasury bills and other governmental notes.

2.19- Other ProvisionsProvisions for restructuring costs and legal claims are recognized when: the Bank has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions which negated the purpose of wholly or partly repaid within the item other operating income (expense).

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation which become due after one year from the financial statement date using appropriate rate for

the due date (without being affected by effective tax rate) which reflect time value of money, and if the due date is less than one year we calculate the estimated value of obligation but if it have significant impact then it calculated using the current value.

2.20- Financial GuaranteesA financial guarantee contract is a contract issued by the Bank as security for loans or debit current accounts due from its clients to other entities that requires the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. These financial guarantees are presented to the banks, corporations and other entities on behalf of the Bank’s clients. When a financial guarantee is recognized initially, the Bank shall measure it at its fair value that is directly attributable to the issue of such financial guarantee.

The amount initially recognized less, when appropriate, cumulative amortization of security fees recognized in the income statement using the straight-line method over the term of the guarantee and The best estimate for the payments required to settle any financial obligation resulting from the financial guarantee at the balance sheet date Such estimates are made based on experience in similar transactions and historical losses as supported by management judgment. Any increase in the obligations resulting from the financial guarantee, shall be recognized within other operating income (costs) in the income statement.

2.21- Employees’ benefits2.21.1- Pension obligationsThe Bank has employees insurance fund, it was founded at the first of July 2000 under the law of 54 for the year 1975 and its executive regulations for the purpose of granting insurance and compensation benefits for the members. This fund rules and modifications are applied to all the bank staff in the head office and its branches in Arab Republic of Egypt.

The Bank is committed to lead to the fund monthly and annual subscriptions in accordance with the Rules of the Fund and its amendments, and there are no obligations to the Bank following the payment of additional contributions. Contributions are recognized in expenses of employee benefits when due. The recognition of contributions paid in advance as an asset to the extent that its payment to the reduction of future payments or cash refund.

2.22- Income taxesIncome tax on the profit or loss for the year includes each of year tax and deferred tax and is recognized in the income statement except for income tax relating to items of equity that are recognized directly in equity.

Income tax is recognized based on net taxable profit using the tax rates applicable at the date of the balance sheet in addition to tax adjustments for previous years.

Deferred taxes arising from temporary time differences between the book value of assets and liabilities are recognized in accordance with the principles of accounting and value according to the foundations of the tax, this is determining the value of deferred tax on the expected manner to realize or settle the values of assets and liabilities, using tax rates applicable at the date of the balance sheet.



Deferred tax assets of the Bank recognized when there is likely to be possible to achieve profits subject to tax in the future to be possible through to use that asset, and is reducing the value of deferred tax assets with part of that will not come from tax benefit expected during the following years, that in the case of expected high benefit tax, deferred tax assets will increase within the limits of the above reduced.

2.23- BorrowingBorrowing is recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortized cost, any difference between proceeds net of transaction costs and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

2.24- Capital2.24.1- Capital issuance costCost of issuance of new shares, issuance of shares to effect an acquisition, or issue of share options, net of tax benefits, are reported a deduction from equity.

2.24.2- DividendsDividends are recognized when the general assembly of shareholders approves them. Dividends include the employees’ profit share and the board of directors’ remuneration as prescribed by the Bank’s articles of association and the corporate law.

2.24.3- Treasury sharesIn case of purchasing treasury stocks the purchased amount is deducted from shareholders’ equity till its cancellation and in case of selling or reissuing these stocks all collected amounts will be added to shareholders’ equity.

2.25- Trust activitiesThe bank practices trust activities that result in ownerships or management of assets on behalf of individuals, trusts, and retirement benefit plans. These assets and related income are excluded from the Bank’s separate financial statements, as they are assets not owned by the Bank.

2.26- Comparatives figuresComparative figures are reclassified, where necessary, to conform with changes in the current year presentation.

3- Financial risk managementThe Bank’s activities expose it to a variety of financial risks and those activities involve the analysis,

evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is core to the financial business, and the operational risks are an inevitable consequence of being in business. The Bank’s aim is therefore to achieve an appropriate balance between risk and return and minimize potential adverse effects on the Bank’s financial performance. And the most important types of financial risks are credit risk, market risk, liquidity risk and other operating risks. Also market risk includes exchange rate risk, rate of return risk and other prices risks.

The Bank’s risk management policies are designed to identify and analyses these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Bank regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice.

Risk management is carried out by a risk department under policies approved by the Board of Directors. Bank Treasury identifies, evaluates and hedges financial risks in close co-operation with the Bank’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments. In addition, credit risk management is responsible for the independent review of risk management and the control environment.

3.1- Credit riskThe Bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the Bank by failing to discharge an obligation. Management therefore carefully manages its exposure to credit risk. Credit exposures arise principally in loans and advances, debt securities and other bills.

There is also credit risk in off-balance sheet financial arrangements such as loan commitments. The credit risk management and control are centralized in a credit risk management team in Bank Treasury and reported to the Board of Directors and head of each business unit regularly.

3.1.1- Credit risk measurement(a) Loans and advances to banks and customersTo measure credit risk related to loans and advances extended to banks and customers, the Bank examines the following three components:

- Probability of default of the customer or others in fulfilling their contractual obligations.

- The current position and the likely expected future development from which the bank can conclude the balance exposed to default (exposure at default).

- Loss given default.

The daily activities of the Bank’s business involves of measurement for credit risk which reflect the expected loss (The Expected Loss Model) required by the Basel Committee on Banking Supervision. The operating measures may interfere with the impairment charge according to the Egyptian Accounting Standard no. (26), which depends on losses realized at the balance sheet’s date (realized losses models) and not on expected losses.


The Bank assesses the probability of default of individual counterparties using internal rating tools tailored to the various categories of counterparty. They have been developed internally and combine statistical analysis with credit officer judgment and are validated, where appropriate.Clients of the Bank are segmented into four rating classes.

The Bank’s rating scale, which is shown below, reflects the range of default probabilities defined for each rating class. This means that, in principle, exposures migrate between classes as the assessment of their probability of default changes. The rating tools are kept under review and upgraded as necessary. The Bank regularly validates the performance of the rating and their predictive power with regard to default events.

Bank’s internal ratings scale:

And the loans expose to default depend on the banks expectation for the outstanding amounts when default occur.Example, as for a loan position is the nominal value while for commitments the Bank enlists all already drawn amounts besides these amounts expected to be withdrawn until the date of default, if it happens.Loss given default or loss severity represents the Bank expectation of the extent of loss on a claim should default occur. It is expressed as percentage loss per unit of exposure and typically varies by type of counterparty, type and seniority of claim and availability of collateral or other credit mitigation.

(b)- Debt instruments and treasury and other billsFor debt instruments and bills, external rating such as Standard & Poor’s rating or their equivalents are used by bank Treasury for managing of the credit risk exposures, and if this rating is not available, then other ways similar to those used with the credit customers are uses. The investments in those securities and bills are viewed as a way to gain a better credit quality mapping and maintain a readily available source to meet the funding requirement at the same time.

3.1.2- Risk limit control and mitigation policiesThe Bank manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to individual counterparties and banks, and to industries and countries.

The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of credit risk by individual, counterparties, product, and industry sector and by country are approved quarterly by the Board of Directors.

The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on- and off-balance sheet exposures, and daily delivery risk limits in relation to trading items such as


Bank’s rating description of the grade per

Performing loansRegular watchingWatch listNonperforming loans

1234

Bank’s internal ratings scale

forward foreign exchange contracts. Actual exposures against limits are monitored daily.Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to meet interest and capital repayment obligations and by changing these lending limits where appropriate.Some other specific control and mitigation measures are outlined below:

(a) CollateralThe Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security for funds advances, which is common practice. The Bank implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are:

• Mortgages over residential properties;• Mortgage business assets such as premises, And inventory;• Mortgage financial instruments such as debt securities and equities.

Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are generally unsecured. In addition, in order to minimize the credit loss the Bank will seek additional collateral from the counterparty as soon as impairment indicators are noticed for the relevant individual loans and advances.

Collateral held as security for financial assets other than loans and advances is determined by the nature of the instrument. Debt securities, treasury and other governmental securities are generally unsecured, with the exception of asset-backed securities and similar instruments, which are secured by portfolios of financial instruments.

(b) DerivativesThe Bank maintains strict control limits on net open derivative positions (i.e., the difference between purchase and sale contracts), by both amount and term. At any one time, the amount subject to credit risk is limited to the current fair value of instruments that are favorable to the Bank (i.e., assets where their fair value is positive), which in relation to derivatives is only a small fraction of the contract, or notional values used to express the volume of instruments outstanding. This credit risk exposure is managed as part of the overall lending limits with customers, together with potential exposures from market movements. Collateral or other security is not usually obtained for credit risk exposures on these instruments, except where the bank requires margin deposits from counterparties.

Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a corresponding receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to cover the aggregate of all settlement risk arising from the Bank market transactions on any single day.

(c) Master netting arrangementsThe Bank further restricts its exposure to credit losses by entering into master netting arrangements with counterparties with which it undertakes a significant volume of transactions. Master netting arrangements do not generally result in an offset of balance sheet assets and liabilities, as transactions are usually settled on a gross basis. However, the credit risk associated with favorable contracts is reduced by a


Bank’s ratingJune 30, 2018 June 30, 2017

Loans and advances Impairmentprovisions

Loans andadvances

Impairmentprovisions

Performing loans 83.06% 20.58% 78.16% 14.57%

Regular watching 9.69% 8.02% 6.75% 4.63%

Watch list 2.25% 0.60% 8.34% 6.72%

Non-performing loans 4.99% 70.80% 6.75% 74.09%

100% 100% 100% 100%

CBE Rating Description % Provision Internal Rating Internal Description

1 Low Risk 0 1 Performing loans

2 Average Risk 1% 1 Performing loans

3 Satisfactory Risk 1% 1 Performing loans

4 Reasonable Risk 2% 1 Performing loans

5 Acceptable Risk 2% 1 Performing loans

6 Marginally Acceptable risk 3% 2 Regular watching

7 Watch list 5% 3 Watch list

8 Substandard 20% 4 Non-performing loans

9 Doubtful 50% 4 Non-performing loans

10 Bad Debt 100% 4 Non-performing loans


master netting arrangement to the extent that if a default occurs, all amounts with the counterparty are terminated and settled on a net basis. The Bank overall exposure to credit risk on derivative instruments subject to master netting arrangements can change substantially within a short period, as it is affected by each transaction subject to the arrangement.

(d) Credit-related commitmentsThe primary purpose of these instruments is to ensure that funds are available to a customer as required.Guarantees and standby letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit – which are written undertakings by the Bank on behalf of a customer authorizing a third party to draw drafts on the Bank up to a stipulated amount under specific terms and conditions – are collateralized by the underlying shipments of goods to which they relate and therefore carry less risk than a direct loan.Commitments to extend credit represent unused portions of authorizations to extend credit in the form of loans, guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Bank is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.

3.1.3- Impairment and provisioning policiesThe internal rating systems described in Note 3.1.1 focus more on credit-quality mapping from the inception of the lending and investment activities.

In contrast, impairment provisions are recognized for financial reporting purposes only for losses that have been incurred at the balance sheet date based on objective evidence of impairment Due to the different methodologies applied, the amount of incurred credit losses provided for in the financial statements are usually lower than the amount determined from the expected loss model that is used for internal operational management and CBE regulation purposes.

The impairment provision shown in the balance sheet at the year-end is derived from each of the four internal rating grades. However, the majority of the impairment provision comes from the bottom two grads. The table below shows the percentage of the Bank’s in balance sheet items relating to loans and advances and the associated impairment provision for each of the Bank’s internal rating categories:

The internal rating tools assists management to determine whether objective evidence of impairment exists under EAS 26, based on the following criteria set out by the Bank:- Cash flow difficulties experienced by the borrower- Breach of loan covenants or conditions- Initiation of bankruptcy proceedings- Deterioration of the borrower’s competitive position- Bank granted concessions may not be approved under normal circumstances, for economic, legal reasons, or financial difficulties facing the borrower- Deterioration in the value of collateral- Deterioration in the credit situation

The Bank’s policy requires the review of all financial assets that are above materiality thresholds at least annually or more regularly when individual circumstances require. Impairment allowances on individually assessed accounts are determined by an evaluation of the incurred loss at balance-sheet date on a case-by-case basis, and are applied to all individually significant accounts. The assessment normally encompasses collateral held (including re-confirmation of its enforceability) and the anticipated receipts for that individual account.Collectively assessed impairment allowances are provided portfolios of homogenous assets by using the available historical experience, experienced judgment and statistical techniques.

3.1.4- Pattern of measuring the general banking riskIn addition to the four categories of measuring credit worthiness discussed in disclosure 3.1.1.a the management makes small groups more detailed according to the CBE rules. Assets facing credit risk are classified to detailed conditions relying greatly on customer’s information, activities, financial position and his regular payments to his debts.

The Bank calculates the provisions needed for assets impairment in addition to credit regulations according to special percentages determined by CBE.

In the case of increase of impairment loss provision needed according to CBE than that for purposes of making the financial statements according to the EAS, the general banking risk reserve is included in owners’ equity deducted from the retained earning with this increase, this reserve is modified with periodic basis with the increase and decrease, which equals the increase in provisions and this reserve is not distributed.

And this are categories of worthiness according to internal ratings compared with CBE ratings and rates of provisions needed for assets impairment related to credit risk.


Off Balance sheet items exposed to credit riskJune 30, 2018 June 30, 2017

EGP EGP

Letter of guarantee 1,231,350,591 1,208,414,903

Letter of Credit (Import) 847,051,854 396,634,647

Letters of credit (Export-confirmed) 365,924,720 251,725,210

Shipping documents (Export) 447,750,957 235,931,170

Total 2,892,078,122 2,092,705,930

3.1.6- Loans and advancesBalances of loans and Advances in terms of credit risk rating are as follows:

Loans and advances neither have arrears nor impairedThe credit quality of loans and Advances that do not have arrears and which are not subject to impairment is assessed by reference to the bank’s internal rating.

June 30, 2018 June 30, 2017

EGP EGP

Neither have arrears nor impaired 20,205,133,240 14,004,709,725

Have arrears but not impaired 57,008,468 408,473,128

subject to impairment 1,056,777,871 1,044,063,533

Total 21,318,919,579 15,457,246,386

Less: impairment loss provision (1,264,761,999) (1,261,632,494)

Net 20,054,157,581 14,195,613,892

Terms of classification performing loanNon-performing loans

Substandard Doubtful Bad Debt

Delayed payment period - 6 Month 9 Month 12 Month

Provision 3% 20% 50% 100%

RatingLoans and Advances to Customers & Banks )EGP(

June 30, 2018

Retail Corporate Total loans and advances to customers

Performing loans 247,929,620 17,584,774,254 17,832,703,874

Regular watching 0 2,372,429,366 2,372,429,366

Total 247,929,620 19,957,203,620 20,205,133,240

RatingLoans and Advances to Customers & Banks )EGP(

June 30, 2017

Retail Corporate Total loans and advances to customers



Total 208,913,682 13,795,796,043 14,004,709,725


Second: Classification of small loans according to economic activities:

3.1.5- Maximum exposure to credit risk before collateral heldBalance sheet items exposed to credit risks

June 30, 2018 June 30, 2017

EGP EGP

Treasury Bills and other governmental notes 10,819,362,964 6,015,766,045

Loans and Advances to customers & Banks 21,318,919,579 15,457,246,386

Financial Derivatives 15,399,045 0

Financial Investments: AFS and HTM debt instruments 3,061,980,602 4,361,270,917

Other assets 794,225,462 699,990,068

Total 36,009,887,652 26,534,273,416

Loans and advances have arrears but are not subject to impairmentThese are loans and facilities with past-due installments but are not subject to impairment, unless Information has otherwise indicated. Loans and facilities to customers which have arrears but are not subject to impairment are analyzed below:

Corporates Direct loans (EGP)

June 30, 2018 June 30, 2017

Arrears up to 30 days 49,508,513 158,007,064

Arrears from 30 to 60 days 2,500,002 8,724,323

days arrears 90 4,999,953 241,741,741

Total 57,008,468 408,473,128


Corporates )EGP(

June 30, 2018 June 30, 2017

Loans which are individually impaired 1,056,777,871 1,044,063,533

Collaterals Fair value 112,066,938 111,023,830

Loans and advances to customers corporatesJune 30, 2018

EGP thousandsJune 30, 2017

EGP thousands

Direct loans 217,149 205,000

Financial investmentsJune 30, 2018 June 30, 2017

Treasury bills andother Gov. notes

FinancialInvestments

Treasury bills andother Gov. notes

FinancialInvestments

A- to A+ 0 5,527 0 18,899

Lower than A- 10,819,363 3,056,453 6,015,766 4,342,371

Total 10,819,363 3,061,981 6,015,766 4,361,271

Arab Republic of Egypt

Cairo Alex and Delta Upper Egypt Total

Treasury bills and other governmental notes

10,819,362,964 0 0 10,819,362,964

Gross Loans and advances to customers & banks:

Personal loans 135,426,942 61,563,279 11,037,456 208,027,677

Corporate Loans 18,096,923,450 3,013,786,437 182,015 21,110,891,902

Impairment LossProvision-Individual

(327,888) (61,468) 0 (389,356)

Impairment Loss Provision-Corporate

(1,088,518,315) (175,854,328) 0 (1,264,372,643)

Net Loans and advances to customers & banks

17,143,504,190 2,899,433,920 11,219,471 20,054,157,581

Available for sale financial investments:

Debt instruments 937,190,631 0 0 937,190,631

Held to Maturity financial investments:

Debt instruments 2,124,789,971 0 0 2,124,789,971

Total 31,024,847,756 2,899,433,920 11,219,471 33,935,501,147

Loans and Advances which are individually impaired

Loans and Advances to customersLoans and advances individually assessed without taking into consideration cash flows from guaran-tees are totaled EGP 1,056,777,871 on June 30, 2018.The breakdown of the gross amount of individually impaired loans and advances held by the Bank, are as follows:

Restructured loans and Advances:Restructuring activities include rescheduling arrangements, obligatory management programs, modification and deferral of payments. The application of restructuring policies are based on indicators or criteria of credit performance of the borrower that is based on the personal judgment of the management, indicate that payment will most likely continue. Restructuring is commonly applied to term loans, especially customer loans. Renegotiated loans totaled at the end of the year

Renegotiated loans totaled at the end of June 30,2018:

3.1.7 - Debt instruments, treasury bills and other governmental notesThe table below presents an analysis of debt instruments, treasury bills and other governmental notes by rating agency at the end of the financial year based on Standard & Poor’s ratings or their equivalent:

3.1.8- Concentration of risks of financial assets exposed to credit risks3.1.8.1- (Geographical segments)The following table provides a breakdown of the gross amount of the most significant credit risk limits to which the Bank is exposed at the end of the current reporting period.The gross amount of all financial assets is segmented into the geographical regions of the Bank’s clients:


3.1.8.2- (Industry Segments) Financialinstitutions

Manufacturinginstitutions

Governmentsector

Other activi-ties

Total

Treasury Bills and othergov.notes

0 0 10,819,363 0 10,819,363

Trading financial assets:

Loans and advances tocustomers & Banks

135,075 11,392,371 3,172,244 6,619,230 21,318,920

Financial derivatives 0 0 0 15399 15,399

Financial investments:

Debt instruments 0 0 3,056,454 5,527 3,061,981

Total 135,075 11,392,371 17,048,060 6,640,156 35,215,663


3.2- Market RisksThe Bank is exposed to market risk represented in volatility in fair value or future cash flows resulted from changes in market prices. Market risk arise from the open positions of interest rates, currency rates and the equity instruments, the management of market risk resulted from trading, non-trading activities are centralized in the market risk department in the bank.

3.2.1- Foreign exchange rate volatility riskThe Bank is exposed to foreign exchange rate volatility risk in terms of the financial position and cash flows. The board of directors set limits for foreign exchange risk at the total value of positions at the end of the day and during the day when timely control is exercised.The following table summarizes the Bank’s exposure to the risks of fluctuations in foreign exchange rates at the end of the reporting period. This table includes the carrying amounts of the financial instruments in terms of their relevant currencies and in EGP equivalent.


LE USD GBP EUROther curren-

ciesTotal

Financial Assets

Cash and due from central banks 2,217,481,977 76,384,967 764,914 21,989,882 18,433,999 2,335,055,738

Due from banks 3,201,022,009 2,117,044,357 75,553,796 28,789,786 65,375,731 5,487,785,678

Treasury bills and other governmental notes 6,109,728,564 4,360,136,116 0 349,498,284 0 10,819,362,964

Loans and advances to customers 12,647,772,385 6,432,010,707 32,711,872 851,349,681 1,706,157 19,965,550,801

Loans and advances to Banks 88,606,780 0 0 0 0 88,606,780

Financial derivatives 15,399,045 0 0 0 0 15,399,045

Available for sale investments 881,305,222 578,095,994 0 415,720 0 1,459,816,937

Held to maturity investments 2,139,790,048 0 0 0 0 2,139,790,048

Other financial assets 758,061,644 35,184,562 117,954 852,984 8,320 794,225,462

Total financial assets 28,059,167,672 13,598,856,703 109,148,536 1,252,896,336 85,524,206 43,105,593,452

Financial Liabilities

Due to banks 1,700,028,403 773,289,594 0 259,825,306 2,148,255 2,735,291,557

Customers deposits 22,123,703,924 11,421,006,466 108,133,330 988,298,394 67,603,971 34,708,746,085

Other loans 483,966,828 1,414,579,149 0 0 0 1,898,545,977

Other financial liabilities 466,703,636 70,640,905 481,368 1,165,966 54 538,991,928

Total financial liabilities 24,774,402,791 13,679,516,115 108,614,698 1,249,289,666 69,752,279 39,881,575,548

Net balance 3,284,764,882 (80,659,413) 533,837 3,606,670 15,771,927 3,224,017,904



3.2.2 Interest rate riskThe Bank is exposed to impact of fluctuations in the levels of interest rates prevailing in the market that is the cash flow risk of interest rate represented in the volatility of future cash flow of a financial instrument due to change in the interest rate of the mentioned instrument. Whereas the interest rate is fair value risk is the risk of fluctuations in the value of the financial instrument due to changes in interest rates in the market.

The interest margin may rise due to these changes but still the profits may decrease if unexpected movements occur. The board of directors sets limits for the level of difference in the re-pricing of interest rate that the bank can maintain and Risk department in the bank daily monitors this.

The following table summarizes the extent of the bank’s exposure to the risk of fluctuations in interest rates that includes the book value of financial instruments divided based on the price of re-pricing dates or maturity dates whichever is sooner:

Up to 1month

More than 1 month up to

3 months

More than 3 months up

to 1 year

More than 1 year up to 3

years

More than 3years

Interest free total

Financial assets

Cash and due from central banks 0 0 0 0 0 2,335,056 2,335,056

Due from banks 727,333 4,503,234 89,439 0 0 167,781 5,487,786

Treasury bills and other governmental notes 1,020,025 2,937,430 6,861,908 0 0 0 10,819,363

Financial derivatives 0 0 15,399 0 0 0 15,399

Loans and advances to customers 16,553,582 1,337,401 1,330,119 485,051 259,397 0 19,965,551

Loans and advances to banks 88,607 0 0 0 0 0 88,607

Available for sale investments 0 0 76,584 302,149 558,458 522,626 1,459,817

Held to maturity investments 0 123,282 280,530 1,189,434 531,544 15,000 2,139,790

Other financial assets 0 0 0 0 0 794,225 794,225

Total financial assets 18,389,548 8,901,347 8,653,979 1,976,634 1,349,399 3,834,688 43,105,595

Financial liabilities

Due to banks 2,552,271 182,992 0 0 0 28 2,735,292

Customers deposits 14,990,940 5,898,333 5,018,115 4,051,751 478,388 4,271,218 34,708,746

Other loans 0 0 715,512 4,825 1,178,209 0 1,898,546

Other financial liabilities 0 0 0 0 0 538,992 538,992

Total financial liabilities 17,543,211 6,081,326 5,733,627 4,056,576 1,656,597 4,810,239 39,881,576

Net balance 846,336 2,820,022 2,920,352 (2,079,942) (307,198) (975,550) 3,224,019



3.3- Liquidity RiskLiquidity risk is the risk that the Bank is unable to meet its payment obligations associated with its financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors and fulfill commitments to lend.

Liquidity Risk Management ProcessThe processes of liquidity risk control carried by Assets and Liabilities management department in the Bank include the following:

- The daily funding is managed by monitoring and controlling the future cash flows to ensure the ability to fulfill all obligations and requirements. This includes replenishment of funds as they mature or is borrowed by customers. The Bank maintains an active presence in the global money markets to ensure achievement of this target.

- Maintaining a portfolio of highly marketable assets, which can easily be liquidated to meet any interruption in cash flows.

- Monitoring liquidity ratios compared to the internal requirements of the Bank and the Central Bank of Egypt's requirements.

- Management of concentration and profile the debt maturities.

Monitoring and reporting take the form of cash flow measurement and projections for the next day, week, and month respectively.

The starting point for these projections is represented in the analysis of the contractual maturities of financial liabilities and expected collection dates of financial assets. Assets and Liabilities management department controls the unmatched medium term assets management, the level and type of the unutilized portion of loans' commitments, the extent of utilizing debit current accounts advances and the impact of contingent liabilities such as letters of guarantees and letters of credit.

Financing approachLiquidity resources are reviewed by a separate team from treasury department of the Bank to provide a wide variety of currencies, geographical regions, resources, products, and maturities.

Assets available to meet all liabilities and cover loan commitments include cash, balances with central banks, balances due from banks, treasury bills and other governmental notes, and loans and facilities to banks and clients. Maturity term of percentage of loans to clients that are maturing within a year is extended in the normal course of the Bank’s business. Moreover, some debt instruments, treasury bills and other governmental notes are pledged to cover liabilities. The Bank has the ability to meet unexpected net cash flows through selling securities, and finding other financing sources.

3.4- Fair value of financial assets and liabilitiesThe following table summarizes the carrying amount and fair value of financial assets and liabilities that are not stated in the balance sheet at fair value:

Book value Fair value

)EGP( )EGP(

Financial Assets:

Due from banks 5,487,785,678 5,487,785,678

Loans and advances to customers 19,965,550,801 19,965,550,801

Loans and advances to banks 88,606,780 88,606,780


Held to maturity 2,139,790,048 1,875,201,128

Financial liabilities:

Due to banks 2,735,291,557 2,735,291,557

Customers’ deposits 34,708,746,085 34,708,746,085

Other loans 1,898,545,977 1,898,545,977

Due from banks:The fair value of floating rate placements and overnight deposits is their carrying amount. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for debts with similar credit risk and similar maturity date.

Loans and advances to banksLoans and advances to banks are represented in loans other than deposits with banks.The expected fair value for loans and advances represents the discounted value of future cash flows expected to be collected. Cash flows are discounted by adopting the current market rate to determine the fair value.

Loans and advances to customersLoans and Facilities are net of provisions for impairment. The estimated fair value of loans and Facilities represents the discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current market rates to determine fair value.

Financial InvestmentsInvestments in financial securities in the previous table include only held to maturity bearing assets. Available for sale assets are assessed at fair value with the exception of equity instruments which the Bank has been unable to evaluate their fair value to a reliable extent. The fair value of financial assets held to maturity is determined based on market rates or prices obtained from brokers. If these data are unavailable then the fair value is assessed by applying the financial markets' rates for negotiable financial securities with similar credit features, maturity dates as well as similar rates.


Financial Indicators07


Due to other banks and customersThe estimated fair value of deposits with no stated maturity, which includes non-interest-bearing depos-its, is the amount repayable on demand. The estimated fair value of fixed interest-bearing deposits and other borrowings not quoted in an active market is based on discounted cash flows using interest rates for new debts with similar remaining maturity.

3.5 Capital ManagementThe Bank’s objectives when managing capital, which consists of another items in addition of owner's equity stated in balance sheet are:- To comply with the capital requirements in Egypt.- To safeguard the Bank’s ability to continue as an ongoing concern so that it can continue to provide returns for shareholders and stakeholders.- To maintain a strong capital base to support the development of its business.- Capital adequacy and the use of regulatory capital are monitored daily by the Bank’s management, employing techniques based on the guidelines developed by the Basel Committee as implemented by the Central Bank Of Egypt, for supervisory purposes. The required information is filed with the Authority on a quarterly basis.

Central Bank Of Egypt requires the following:- Hold the minimum level of the issued and paid up capital of EGP 500 Million.- Maintaining a percentage between capital elements and asset and contingent liabilities elements weighted by risk equals to or exceeds 11.25 %. The numerator of the capital adequacy ratio consists of the following two tiers:

Tier One:Represented in basic capital which consists of paid-in-capital (after deducting the book value of treasury shares), retained profits and reserves from profit appropriation with the exception of general banking risk reserve less any goodwill previously recognized or any carried over losses and 40% of intangible assets and deferred taxes. The Conservative buffer is formed from the Bank's annual profits as an additional independent pillar of the continuing base capital within the first tranche of the Bank's capital base and thus to the total standard, and the Conservative buffer is originally configured from annual profits but is allowed to be configured if components with the base capital meet this.

Tier TwoSupplementary Capital consists of equivalent of the general risks provision related to creditworthiness bases issued by the Central Bank Of Egypt and not exceeding 1.25% of the total risk weighted assets and contingent liabilities, subordinated loans / deposits' term which exceed 5 years (with amortization of 20% of their value each year of the last five years of their term) and 45% of the increase between fair value and book value of financial investments available for sale, held to maturity and associates and subsidiaries.When calculating the total numerator of the capital adequacy ratio it should be taken into consideration that the supplementary capital does not exceed in any way the basic capital and that subordinated loans (deposits) do not exceed half of the basic capital.Asset at risk are weighted ranging from zero up to 100% classified in accordance with the nature of the debit side of each asset, to reflect the related credit risks, while taking into consideration cash collaterals. Same treatment is applied on off- balance amounts after making adjustments to reflect the contingent nature and probable losses of these amounts.The Bank has complied with all local capital requirements at March 31, 2018 the following table summa-rizes the components of basic and supplementary capital and capital adequacy ratios as at 30/6/2018.

June 30, 2018 June 30, 2017

Capital 4,532,123 2,846,181

Tier one (basic capital):

Paid up capital 2,728,000 1,440,000

Reserves 371,796 337,920

IFRS9 Reserve 271,230 0

Retained profits 408,832 537,972

Value of surplus (deficit) in continuing core capital after exclusions from 4.5%

2,171,195 676,690

Conservative buffer available from surplus of continuing base capital components after exclusions (if any)

416,580 209,709

(-) The value of the deficit in Conservative buffer to be configured 0 0

Interim Profits 501,941 367,678

Uncontrollable interest 59 62

Total deductions from basic capital (119,095) (138,786)

Total basic capital 4,162,763 2,544,846

Tier two (supplementary capital)

45% of special reserve 10,098 10,098

45% of the reserve for foreign exchange differences 26,768 44,131

45% of fair value reserve for financial investments available for sale

3,578 0

Impairment provision for loans and regular contingent liabilities 339,037 256,593

Total deductions from supplementary capital (10,121) (9,487)

Total supplementary capital 369,360 301,335

Risk weighted assets and contingent liabilities :

Total credit risk 27,122,979 20,527,421

The excess value of the top 50 customers for the prescribedlimits is weighted by risk weights

4,076,660 11,157,536

Total market risk 187,212 315,380

Total operational risk 1,939,561 1,553,070

Total 33,326,412 33,553,407

Capital adequacy ratio (%) *Taking into consideration the effectof Top 50 Customers

13.60% 8.48%

Capital adequacy ratio (%) * Without Taking into considerationthe effect of Top 50 Customers

15.49% 12.71%

According to Basel II:

*Based on consolidated financial statement figures and in accordance with Central Bank of Egypt regulation issued on 24 December 2012.*The decision of the Central Bank of Egypt has been implemented to take into consideration the impact of 50 largest clients on the capital adequacy ratio starting from January 2017.



3.6 Leverage RatioThe measurement of financial leverage that supports the measurement of capital adequacy standard as-sociated with the risk scale , simple and straightforward according does not account for the risk weights attributed its effectiveness to its ability to reduce the pressure on the banking system and indicate the leverage ratio to measure the adequacy of the first of its basic capital slide compared with total assets Bank, which is not less than 3% .

The following table summarizes the components o f leverage ratios as at 30/6/2018 :

4- The significant accounting estimates and assumptionsThe Bank applies estimates and assumptions, which affect the amounts of assets and liabilities to be disclosed within the following financial year. Estimates and assumptions are continuously assessed based on historical experience and other factors as well, including the expectations of future events, which are considered reasonable in the light of available information and surrounding circumstances.

(A) Impairment loss on loans and advancesThe Bank reviews the loans and advances portfolio on at least a quarterly basis to assess impairment. The Bank applies personal judgment when determine the necessity of recording the impairment charges to the income statement so as to know if there is any reliable data which refer to the existence of a measurable decline in the expected future cash flows of the loans portfolio even before being acquainted with the decline at the level of each loan in the portfolio. These evidences may include observable data, which refer to the occurrence of a negative change in the ability of a portfolio of borrowers to repay the Bank, or local or economic circumstances related to default in the bank's assets. On scheduling future cash flows, the management use estimates based on prior experience of losses of assets with credit risk

June 30, 2018

Tier one (Basic capital):

Paid up capital 2,728,000

Reserves 371,796

IFRS Reserves 271,230

Retained profits 408,832

Interim Profits 501,941

Uncontrollable interest 59

Total deductions from basic capital (119,095)

Total basic capital 4,162,763

Assets and contingent liabilities :

Assets 44,925,410

contingent liabilities 3,303,610

Total Assets and contingent liabilities 48,229,020

)%( Leverage ratio 8.63%

characteristics in the presence of objective evidences that refer to impairment similar to those included in the portfolio. The method and assumptions used in estimating the amount and timing of future cash flows are reviewed on a regular basis to minimize any differences between estimated and actual losses based on expertise.

(B) Impairment in equity instruments investments available for saleThe Bank determine impairment in equity's instruments' investments available for sale when there is a significant or prolonged decline in their fair value below their cost.

Determining whether the decrease is significant or prolonged depends on personal judgment. To reach this judgment the Bank estimates- among other factors- the usual volatility of the share price. Additionally, there could be impairment if there is evidence on the existence of deterioration in the financial position of the invested company or in its operating and financing cash flows or if there is deterioration in the industry's or sector's performance or in case of changes in technology.

(C) The fair value of derivativesThe fair values of financial instruments, which are not listed in active markets, is identified by applying valuation methods. When such methods are used to identify fair value, they are tested and reviewed periodically by qualified personnel who are independent of the body that prepared them.

(D) Financial investments held - to- maturityThe non-derivative financial assets with payments and maturity dates that are fixed or determinable are classified as financial investments held to maturity, and this classification requires to a great extent the application of personal judgment and to reach such decision the Bank evaluates the intention and ability to hold these investments until maturity. If the Bank fails to hold these investments until maturity date, with the exception of very special cases such as selling an insignificant amount near maturity, then these investments, which were classified held to maturity, should be reclassified available for sale investments. Consequently, these investments shall be measured by fair value and not by amortized cost in addition to suspension of classifying any investments under the mentioned item.

(E) Income taxesThe Bank records the liabilities of the expected results of tax examination according to estimates of the probability of the emergence of additional taxes. When there is, a variance between the final result of taxes and the amounts previously recorded then these variances will affect the income tax and deferred tax provision for the year in which the variance has been identified.



June 30, 2018 June 30, 2017

EGP EGP

Interest From Loans and Similar Income:

Loans and Facilities for Customers 2,299,571,452 1,358,734,466

Treasury Bills 1,089,798,332 388,897,591

Treasury Bonds 540,041,723 645,376,068

Corporate Bonds 1,294,598 5,846,060

Deposits and Current Accounts 612,064,566 436,647,612

4,542,770,671 2,835,501,798

Cost of Deposit and Similar Costs:

Deposits and Current Accounts:

Banks (217,018,732) (173,470,691)

Customers (3,114,116,338) (1,676,724,293)

Other loans (50,442,004) (32,956,589)

REPO (566,484) (25,576,319)

)3,382,143,558( )1,908,727,893(

Net 1,160,627,113 926,773,905

- In the context of the Central Bank's initiative to revitalize the mortgage sector, the interest paid for tranches from other loans has been re-posted to the Treasury bills with a repurchase commitment on June 30, 2018, as well as on June 30, 2017.

6- Net Income from Fees and CommissionsJune 30, 2018 June 30, 2017

EGP EGP

Fees and commissions income:

Fees and commission related to credit 313,962,644 238,457,192

Custody Fees 658,090 573,199

Other Fees 20,235,852 10,633,962

334,856,587 249,664,353

Fees and Commissions Expenses:

Other fees paid (41,160,937) (16,600,315)

(41,160,937) (16,600,315)

Net 293,695,650 233,064,038

June 30, 2018 June 30, 2017

EGP EGP

Mutual funds 541,764 237,573

Financial investments available for sale 14,440,375 8,041,634

Associates and Subsidiary companies 25,540,229 23,458,556

Total 40,522,369 31,737,763

7- Dividend Income

8- Net Trading IncomeJune 30, 2018 June 30, 2017

EGP EGP

Profit (losses) from foreign exchange 90,133,414 37,719,495

Profit (losses) on revaluation of forwardcontracts

15,399,045 0

Profit (losses) from currencies swap contracts (225) (752,579)

Profit (losses) from currencies swap contractsrevaluation

(352,205) 143,281

Profit arising from sale of trading investments 146,048 62,428

Valuation differences of trading investments 0 41,108

Total 105,326,077 37,213,734

5- Net Interest Income


9- Administrative expenses

* Average monthly total salaries of highest 20 employees for the financial year from 1 July 2017 till 30 June 2018 were EGP 2054 thousands .

June 30, 2018 June 30, 2017

EGP EGP

Staff Costs

- Salaries and Wages* (246,613,313) (197,920,541)

- Social insurance (10,232,062) (8,215,288)

Pension costs

- Defined contribution scheme (20,062,806) (18,369,351)

- Defined benefits scheme (49,796,717) (35,649,580)

Other Administrative expenses

- Operations expenses (77,300,726) (41,365,094)

- Communications expenses (16,052,376) (10,372,493)

- Business expenses (14,130,526) (8,204,500)

- Stationary expenses (5,125,656) (2,536,951)

- Service expenses (62,552,215) (46,627,569)

- Depreciation expenses (33,468,881) (25,713,705)

Total (535,335,278) (394,975,072)

10- Other operating income (expenses)June 30, 2018 June 30, 2017

EGP EGP

Profit (loss) resulting from revaluation of foreign currency balances of assets and liabilities of monetary nature other than those held for trading or originally classified at fair value through profit and loss

39,740,320 (28,750,353)

Collected Telex, Swift, Postage, Printed matters & Photocopy 44,002,519 25,530,598

Legal service income 189,750 92,600

( Charges ) release of other provisions (24,325,074) (32,763,047)

Capital profits 8,454,960 14,956,124

Miscellaneous income 14,989,286 44,676,877

Miscellaneous expenses (2,315,525) 2,466,984

Total 80,736,234 26,209,782


11- Impairment (charge) release for credit lossesJune 30, 2018 June 30, 2017

EGP EGP

Loans and advances to customers (68,635,447) (83,295,818)

(68,635,447) (83,295,818)

June 30, 2018 June 30, 2017

EGP EGP

Accrued and paid treasury bills and bonds income tax (298,587,957) (187,766,254)

(298,587,957) (187,766,254)

12- Income Tax expense

13- Earnings Per ShareJune 30, 2018 June 30, 2017

EGP EGP


Board member’s bonus 14,055,737 10,041,492

Staff Profit Sharing 70,278,684 50,207,458

Shareholder’s Share in Profit 618,452,416 441,825,631

Average number of shares 183,607,671 144,000,000

Earnings Per Share 3.37 3.07

14- Cash and due from Central Bank of EgyptJune 30, 2018 June 30, 2017

EGP EGP

Cash on hand 364,178,213 277,420,257

Due from Central Bank of Egypt (mandatory reserve) 1,963,877,525 232,145,229

Checks Purchased 7,000,000 0

Total 2,335,055,738 509,565,487

Non- interest bearing balances 2,335,055,738 509,565,487



15- Due from banksJune 30, 2018 June 30, 2017

EGP EGP

Current accounts 167,780,692 439,336,215

Deposits 5,320,004,986 4,521,252,300

5,487,785,678 4,960,588,515

Central Bank 4,371,266,849 3,457,688,116

Local banks 192,552,657 467,164,890

Foreign banks 923,966,173 1,035,735,509

5,487,785,678 4,960,588,515

Non - interest bearing balances 167,780,692 439,336,215

Fixed bearing balances 5,320,004,986 4,521,252,300

5,487,785,678 4,960,588,515

Current Balances 5,487,785,678 4,960,588,515

Total 5,487,785,678 4,960,588,515

16- Treasury bills and other governmental notes

- Within the item of treasury bills amount EGP 18,025,000 owed to the Central Bank of Egypt against mortgage finance and amount 146,175,000 of small & medium enterprises 7% as of 30/6/2018.

- In the context of the Central Bank’s initiative to revitalize the mortgage sector, the interest paid for tranches from other loans has been re-posted to the Treasury bills with a repurchase commitment on June 30, 2018, as well as on June 30, 2017.

June 30, 2018 June 30, 2017

EGP EGP

Treasury Bills And Other Governmental Notes 10,834,420,315 6,030,955,048

Treasury Bills (REPO) (15,057,351) (15,189,003)

10,819,362,964 6,015,766,045

Represented in:

91 days Maturity 41,525,000 343,000,000

182 days Maturity 417,250,000 249,950,000

273 days Maturity 3,201,575,000 1,079,950,000

364 days Maturity 7,517,953,812 4,565,858,670

11,178,303,812 6,238,758,670

Subtract:

Unearned income (343,883,497) (207,803,622)

Total )1( 10,834,420,315 6,030,955,048

REPOS:

REPOS (15,057,351) (15,189,003)

Total 10,819,362,964 6,015,766,045

17- Loans and overdrafts for customers

Loans Provisions Analysis:

June 30, 2018 June 30, 2017

EGP EGP

Discounted documents 191,021,393 106,202,231

Loans to customers 21,027,052,223 15,333,128,876

Loans to banks 89,483,720 0

Acquired assets debtors 11,362,243 17,915,279

Total 21,318,919,579 15,457,246,386

Less: impairment loss provision customers (1,263,885,059) (1,261,632,494)

Less: impairment loss provision banks (876,940) 0

Net 20,054,157,581 14,195,613,892

June 30, 2018 June 30, 2017

SpecificProvisions

CollectiveProvisions

Total SpecificProvisions


Total

EGP EGP EGP EGP EGP EGP

Balance at the beginningof the year

623,078,319 638,554,175 1,261,632,494 636,668,046 259,051,016 895,719,062

Formed dur-ing the period

68,635,447 0 68,635,447 83,295,818 0 83,295,818

Collections from loans previouslywritten-off

0 2,100,325 2,100,325 0 25,818,601 25,818,601

Reclassifica- tions betweenprovisions

300,542,105 (308,672,251) (8,130,146) (141,122,620) 140,840,245 (282,375)

Foreign cur-rency revalua-tion difference

(5,164,746) (376,013) (5,540,759) 165,338,314 212,844,313 378,182,627

Used Provi- sion duringthe year

(53,935,362) 0 (53,935,362) (121,101,240) 0 (121,101,240)

Balance at the end of theyear

933,155,762 331,606,236 1,264,761,999 623,078,319 638,554,175 1,261,632,494


Book Value Fair Valu

Government Bonds 2,119,262,686 1,836,938,874



18- Financial DerivativesCurrency Swap / yield contracts represent commitments to exchange a range of cash flows. These contracts result in currency exchange or rates (Fixed rate with variable rate, for example) or (all with swap contracts and currencies).

The actual exchange of contract amounts is only in certain currency swap contracts. The Bank’s credit risk is the potential cost of replacing the swap contracts if the other parties fail to perform their obligations.

This risk is monitored on an ongoing basis in comparison to the fair value and by contractual amount , and for credit risk control The Bank evaluates the counterparty using the same techniques used in the lending activities.

The following are the fair values of derivatives as at June 30, 2018:

- On 5/5/2016 the Bank reclassified debt instruments available for sale (government bonds), fair value at that date EGP 701,321,624 from available for sale investments to Held to maturity investments, as the Bank has the ability & intension to keep it till maturity date.

- On 3/7/2016 the Bank reclassified debt instruments available for sale (government bonds), fair value at that date EGP 883,543,119 from available for sale investments to held to maturity investments, as the Bank has the ability & intension to keep it till maturity date.

- On 23/10/2016 the Bank reclassified debt instruments available for sale (government bonds), fair value at that date EGP 1,650,410,085 from available for sale investments to held to maturity investments , as the Bank has the ability & intension to keep it till maturity date.

- On 3/11/2016 the Bank reclassified debt instruments available for sale (corporate bonds), fair value at that date EGP 54,458,133 from available for sale investments to held to maturity investments, as the Bank has the ability & intension to keep it till maturity date.

The following table shows book value & fair value as at 30 June 2018 for reclassified government bonds:

• The fair value that would have been recognized in equity losses if government bonds had not been reclassified amount of EGP 282,323,812.19- Financial Investment

Contract amountEGP

Fair Value

AssetsEGP

LiabiltiesEGP

Forward Deals 202,244,350 15,399,045 0

Total assets (Liab.) of Derivatives 202,244,350 15,399,045 0

June 30, 2018 June 30, 2017

EGP EGP

a. Available for sale investment:

Debt instruments-fair value:

Listed in stock market 937,190,631 1,100,134,407

Equity instruments-fair value:

Unlisted in stock market 522,626,306 725,134,649

Total available for sale investment ( 1 ) 1,459,816,937 1,825,269,055

b. Held to maturity investment:

Debt instruments at amortized cost:

listed in stock market 2,124,789,971 3,261,136,510

Mutual funds:

Certificates of mutual funds issued according to deter-mined percentages

15,000,077 20,852,240

Total held to maturity investment ( 2 ) 2,139,790,048 3,281,988,751

Total Financial Investments ( 1+2 ) 3,599,606,984 5,107,257,806

Current balances 3,061,980,602 4,361,270,917

Non-current balances 537,626,382 745,986,889

3,599,606,984 5,107,257,806

Fixed interest debt instruments 3,061,980,602 4,361,270,917

Total 3,061,980,602 4,361,270,917

AFS FinancialInvestments

HTM FinancialInvestments

Total

Beginning balance at (01-07-2016) 4,153,070,265 739,873,789 4,892,944,054

Additions 1,397,595,452 2,662,254,547 4,059,849,999

Deductions (selling-redemptions) (4,082,431,692) (99,248,868) (4,181,680,560)

Changes in Zero copoun bonds' unearned income

16,894,512 0 16,894,512

Revaluation of foreign currency balances of monetary nature assets

422,726,614 14,047,000 436,773,614

Profit (loss) from change in fair value 21,051,614 (34,937,717) (13,886,103)

Impairment Losses (103,637,710) 0 (103,637,710)

Ending balance at (30-06-2017) 1,825,269,055 3,281,988,751 5,107,257,806

Beginning balance at (01-07-2017) 1,825,269,055 3,281,988,751 5,107,257,806

Additions 211,132,850 7,828,048 218,960,898

Deductions (selling-redemptions) (523,387,168) (1,155,882,537) (1,679,269,705)


18,119,991 0 18,119,991

Revaluation of foreign currency balances of monetary nature assets

(9,470,826) 0 (9,470,826)

Profit (loss) from change in fair value 21,816,958 5,855,787 27,672,745


Ending balance at )30-06-2018( 1,459,816,937 2,139,790,048 3,599,606,985


June 30, 2018 June 30, 2017

EGP EGP

Profit from selling available for sale investment 5,989,502 1,324,006

(Losses) from impairment of available for sale stocks (83,663,924) (103,637,710)

Profit from selling treasury bills 2,112,496 2,394,420

Profit from selling treasury bonds 0 7,092

Profit from selling associated & subsidiaries 0 11,000,000

Total (75,561,926) (88,912,191)

Profit (losses) from financial investment - Financial informations about subsidiaries companies as at June 30, 2018:

- Financial informations about subsidiaries companies as at June 30, 2017:

EGP thousands

EGP thousands


20- Financial investment in subsidiaries and associated companies

June 30, 2018 % June 30, 2017 %

EGP EGP

a. Participations in subsidiaries companies’ capital

Egypt capital holding company 410,979,451 99.995 410,979,451 99.995

The international holding for financialinvestments

249,975,000 99.990 249,975,000 99.990

BETA Financial holding 136,986,300 99.990 136,986,300 99.990

Egyptian Company for Exports Guarantee 176,382,811 70.553 176,382,811 70.553

Egyptian Company for Real Estate 152,865,000 39.500 152,865,000 39.500

A BETA for Real Estate Investment 87,690,000 39.500 87,690,000 39.500

EGY TOURISM DEVELOPMENT CO. 0 0.000 9,324 0.008

EGYPT CAPITAL FOR REAL ESTATE 2,500 0.050 2,500 0.050

Total investment in subsidiaries 1,214,881,062 1,214,890,386

Total investment in subsidiaries andassociated companies

1,214,881,062 1,214,890,386

Company name Total assets Total liabilitiesexcluding equity

Total revenues

Net income

Egypt Capital Holding Company 447,681 1,722 4,113 2,514

The International Holding forFinancial Investments

266,345 764 5,266 3,944

Beta Financial Hholding 138,144 10 532 245

Egyptian Company for ExportsGuarantee

488,648 114,420 88,673 57,548

Egyptian Company for Real Estate 769,224 280,515 43,628 35,736

A Beta for Real Estate Investment 221,730 47 185 (227)

Egypt Capital for RealEstate

6,877 29 672 489

Company name Total assets Total liabilitiesexcluding equity

Total revenues

Net income

Egypt Capital Holding Company 447,262 5,494 24,715 184,432

The International Holding forFinancial Investments

262,195 560 3,946 3,162

Beta Financial Holding 137,887 0 392 133

Egyptian Company for Exports Guarantee

528,651 168,426 76,714 46,731

Egyptian Company for Real Estate 670,398 215,900 39324 31,630

A Beta for Real Estate Investment 221,933 27 236 (89)

Egy Tourism Development co. 190,554 111,212 (34,118) (39,621)

Egypt Capital for RealEstate

6,405 46 519 307



21- Intangible assetsJune 30, 2018 June 30, 2017

EGP EGP

Net book value at the beginning of the year 38,684,107 34,347,386

Additions 1,097,423 4,336,721

Net book value at the end of the year 39,781,530 38,684,107

Accumulated depreciation at the beginning of the year 33,643,492 31,932,760

Amortization expense 2,291,550 1,710,732

Accumulated depreciation at the end of the Year 35,935,042 33,643,492

Net intangible assets at the end of the year 3,846,488 5,040,614

22- Other AssetsJune 30, 2018 June 30, 2017

EGP EGP

Accrued revenues 387,112,440 332,443,177

Prepaid expenses 26,270,428 33,538,137

Advances for purchase of fixed assets 288,314,713 215,592,702

Acquired assets (Net)* 43,377,392 83,645,946

Insurances and trusts 1,922,653 2,040,402

Suspense assets 38,031,503 4,263,050

Suspense assets - Taxes 8,229,852 17,817,825

Commissions under collection 201,978 227,673

Bonds amortization 764,505 10,421,157

Total 794,225,462 699,990,068

*Valuation of the assets acquired by the Bank in settlement of debts is recorded in accordance with the related Central Bank of Egypt regulations. In case the assets’ fair value falls below the value at which such assets have been acquired by the Bank on the balance sheet date, the difference is charged to other expenses in the income statement. In case of an increase in the fair value, such increase is recognized in the income statement to the extent of revaluation losses recognized in the income statement for previous financial periods.

June 30, 2018 June 30, 2017

EGP EGP

Accrued income for medium term loans 148,292,450 107,468,863

Accrued income for due from banks 110,543,048 61,752,456

Accrued income for financial investments 128,276,942 163,221,857

Total 387,112,440 332,443,177

23- Fixed Assets (Net)

Land Premises Computers Vehicles Fixture and

improvementsEquipment Furniture Others Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP

Cost at the beginning of the year

58,702,283 183,935,610 57,635,797 6,343,547 149,570,922 9,143,962 6,771,187 5,213,932 477,317,241

Additions during the year

0 14,771,462 23,449,038 0 22,254,489 2,894,985 12,705,624 591,540 76,667,137

Disposals during the year

0 0 (43,599) (658,000) (5,750) (6,000) (5,750) (10,796) (729,895)

Cost at the end of the year (1)

58,702,283 198,707,072 81,041,236 5,685,547 171,819,661 12,032,947 19,471,061 5,794,676 553,254,483

Accumulated depreciation at the beginning of the year

0 50,066,014 50,258,408 5,268,109 119,558,711 5,369,859 4,570,855 1,518,890 236,610,846

Depreciation charged for the year

0 5,462,624 9,584,717 311,600 13,130,812 872,472 1,688,804 126,305 31,177,332

Accumulated depreciation for disposals

0 0 13,958 (657,996) 0 (2,521) 0 (46,639) (693,198)

Accumulated depreciation at the end of the year (2)

0 55,528,637 59,857,083 4,921,713 132,689,523 6,239,810 6,259,658 1,598,555 267,094,980

Net book value at the end of the year (1-2)

58,702,283 143,178,435 21,184,153 763,834 39,130,138 5,793,137 13,211,403 4,196,121 286,159,503

Net book value at

the beginning of

the year

58,702,283 133,869,596 7,377,389 1,075,438 30,012,211 3,774,103 2,200,332 3,695,042 240,706,395



24- Investment propertyJune 30, 2018 June 30, 2017

EGP EGP

Book value at the beginning of the year 5,461,849 5,461,849

Book value at the end of the year 5,461,849 5,461,849


Depreciation 102,313 375,426

Accumulated depreciation at the end of the year 2,964,465 2,862,152


June 30, 2018 June 30, 2017

EGP EGP

Demand Deposits 13,718,640,580 9,792,080,358

Time Deposits 15,080,155,438 12,606,259,131

Saving deposits and certificates of deposit 5,048,737,742 4,488,094,980

Other Deposits 861,212,325 625,878,798

Total 34,708,746,085 27,512,313,268

June 30, 2018 June 30, 2017

EGP EGP

Current accounts 28,403 48,435

Deposits 2,735,263,154 1,045,103,845

2,735,291,557 1,045,152,280

Local banks 2,511,057,251 900,423,480

Foreign banks 224,234,306 144,728,800

2,735,291,557 1,045,152,280

Non - interest bearing balances 28,403 48,435


2,735,291,557 1,045,152,280


Total 2,735,291,557 1,045,152,280

June 30, 2018 June 30, 2017

EGP EGP

Deferred tax – provisions for contingent liabilities 4,568,123 4,568,123

Deferred tax – other provisions 792,309 792,309

Fixed assets 8,777,176 8,777,176

Total 14,137,608 14,137,608

25- Deferred Tax AssetsDeferred income tax was calculated based on the deferred tax differences according to the liability method using an effective tax rate for the current fiscal year. Deferred tax assets resulting from carried forward tax losses shall not be recognized unless future taxable profits, through which carried forward taxable losses can be utilized, are likely to be proven. Clearing between deferred tax assets and liabilities is made in case of there is a legal justification for Offsetting between current tax on assets and liabilities and also when deferred income tax belong to the same tax authority, the following table represents deferred tax assets and liabilities :

26- Due to banks

27- Customers Deposits

28- Other loans

ParticularsMaturity

dateRate %

Balances as of Balances as of

June 30, 2018 June 30, 2017

EGP EGP

The Arab Investment Company SAA - Bahrain

30-Nov-18 5.12% 268,317,000 271,366,500

Arab Trade Financing Program 01-Oct-18 3.52% 447,195,000 452,277,482

Agricultural Sector Development Pro-gram (ADP)

26-Apr-22 4.43% 356,944,444 148,125,000

European Investment Bank loan 15-Mar-23 2.12% 520,189,149 0

The environmental commitment agreement under the management of the National Bank of Egypt

13-Feb-20 0.75% 4,825,383 2,044,000

Sanad 04-Dec-24 5.09% 178,878,000 0

CBE for small & medium projects 7% 01-Apr-22 3.00% 122,197,000 23,000,000

1,898,545,977 896,812,982

Current Balances 715,512,000 452,277,482

Non-current Balances 1,183,033,977 444,535,500

Total 1,898,545,977 896,812,982

29 -Other liabilitiesJune 30, 2018 June 30, 2017

EGP EGP

Accrued Interest 255,701,254 195,325,946

Prepaid Revenues 6,650,696 4,917,830

Accrued Expenses 151,422,896 81,513,458

Accrued Taxes and Insurances 26,031,403 18,821,897

Sundry Credit Balances 99,185,680 112,397,352

Total 538,991,928 412,976,483



30- Other Provisions

June 30, 2018

Balance at the begin-ning of the

year

Formed during the

year

Foreign curren-cies re-

valuation differ-ences

Reclas-sification between

provisions

Release (charge)Provi-

sions no longer

required

Trans-ferred from(to)

other sourc-

es

Provision used during

the year

Balance at the end of the

year

EGP EGP EGP EGP EGP EGP EGP EGP

Provi- sion forclaims

73,349,167 24,325,074 0 0 0 0 (20,242,782) 77,431,460

Provi- sion forcontin- gentliabilities

15,571,287 0 (62,516) 8,130,146 0 0 0 23,638,917

Total 88,920,455 24,325,074 (62,516) 8,130,146 0 0 (20,242,782) 101,070,377

June 30,2017

Balance atthe begin-

ning of theyear

Formed during the

year

Foreigncurren- cies

revalua-tion dif-ferences

Reclas- sification betweenprovisions

Release(charge)Provi-

sions no longerrequired

Trans-ferred from(to)

other sourc-

es

Provision used during

the year


year


Provi- sion forclaims

40,762,092 32,763,048 0 0 0 0 (175,973) 73,349,167

Provi- sion forcontin- gentliabilities

10,473,551 0 4,815,363 282,375 0 0 0 15,571,287

Total 51,235,643 32,763,048 4,815,363 282,375 0 0 (175,973) 88,920,456

- A provision for potential claims includes provision for claims and tax provision to meet any potential claims.

- A provision for contingent liabilities includes indirect contingent liabilities.

- Other provisions are reviewed in the financial position date and adjusted when necessary to show the best estimate of the situation.

31- Deferred tax liabilitiesDeferred income taxes are calculated on deferred tax differences according to the method liabilities using the effective tax rate for the current financial period , following table shows Deferred taxes:

32- Capital and Reserves

32,1- CapitalThe authorized capital amounted to EGP 5,000,000,000. The issued and paid up capital amounted to EGP 2,728,000,000 as of June 30, 2018, distributed over 272,800,000 common shares with a par value of EGP 10 each, The commercial register has been marked with an increase in capital ofEGP 288,000,000 million from reserves and retained earnings to EGP 1,728,000,000 Egyptian pounds on the date of 1/8/2017, and in the amount of EGP 1,000,000,000 from the IPO of the shareholders to be EGP 2,728,000,000 on the date of 18/4/2018.

32,2 ReservesReserves on June 30,2018 represented in the following:

June 30, 2018 June 30, 2017

EGP EGP

Deferred tax – fair value difference resulting from the evaluation of financial investment available for sale in foregin currencies

13,384,068 20,746,443

Total 13,384,068 20,746,443

June 30, 2018 June 30, 2017

EGP EGP

General banking risk reserve (1) 106,340,193 106,340,193

Banking risk reserve – acquired assets (2) 20,242,064 18,973,864

Legal reserve (3) 174,683,099 157,071,253

General reserve 172,516,846 172,516,846

Fair value reserve-available for sale investment (4) 33,292,418 41,342,727

Deferred Taxes fair value differences resulting from the evaluation of financial investments available for sale in foreign

(13,384,068) (20,746,443)

Special reserve 35,118,940 35,118,940

Capital reserve (5) 20,499,334 5,543,210

Total 549,308,826 516,160,591



1. General bank risk reserve:Represents the increase in the provision for impairment losses calculated on the basis of determining the creditworthiness and composition of allocations issued by the Central Bank of Egypt and the provision for impairment losses on loans carried in the financial statements.

2. Banking risk reserve - acquired assets:If the assets acquired by the Bank are not disposed of in accordance with the provisions of Article 60 of Law 88 of 2003, the general bank risk reserve shall be increased by 10% of the value of these assets annually during the period of retention by the Bank.

3. Legal reserve:In accordance with the Bank’s Articles of Association, an amount equal to 10% of the profits shall be deducted annually to form the statutory reserve. The General Assembly may stop this deduction when the reserve total equals 50% of the issued capital of the Bank.

4. Fair value reserve - available for sale investments:Represents revaluation differences arising from changes in the fair value of financial investments available for sale.

5. Capital reserve:Representing the Profit sale of fixed assets.

Reserves are as follows:June 30, 2018 June 30, 2017

EGP EGP

A - General banking risk reserve

- Beginning balance 106,340,193 106,340,193

106,340,193 106,340,193

B - Banking risk reserve – acquired assets


- Transferred to banking risk reserve – acquired assets 1,268,200 4,075,885

20,242,064 18,973,864

C - Legal reserve


- Transferred from retained earnings 48,711,846 33,480,804

- Transferred from Legal reserve to capital (31,100,000) 0

174,683,099 157,071,253

D – General reserve


172,516,846 172,516,846

E - Special reserve


35,118,940 35,118,940

F - Capital reserve


- Transferred to capital reserve 14,956,124 1,251,225

20,499,334 5,543,210

G - Fair value reserve - available for sale investment


- Net change in fair value (8,050,309) (67,776,204)

- Deffered Tax -Fair value differencies for available for sale investments in foreign currncies 7,362,374 5,110,006

19,908,350 20,596,285

Total reserves at the end of the year 549,308,826 516,160,591

H - Retained earnings

- Beginning balance 1,021,274,081 600,142,415

- Net profit of the Period 702,786,836 502,074,581

- Previous year dividends (60,248,000) (42,135,000)

- Transferred to Reserves (64,936,170) (38,807,914)

- Transferred to Capital (256,900,000) 0

Total 1,341,976,748 1,021,274,081



33- Shareholders’ DividendsDividends are recognized when the general assembly of shareholders approves them. Dividends include the Employees’ profit share and the board of directors’ remuneration by deducting from the retained earnings as of June 30, 2018.

34- Cash and cash equivalentFor the purpose of presenting the cash flow statement, cash and cash equivalents include the following balances maturing within less than 3 months from the date of acquisition.

C) Loans, facilities and guarantees commitments

35- Contingent liabilities and commitmentsA) Legal claimsThere are a number of existing cases filed against the Bank in 30/6/2018 without provision as it’s not expected to make any losses from it.

B) Capital commitmentsThe capital commitments for the financial investment reached on the date of financial position EGP 202,887 thousands as follows:

June 30, 2018 june 30.2017

EGP EGP

Cash and due from Central Bank of Egypt 371,178,213 277,420,257

Due from banks 5,487,785,678 4,960,588,515

Treasury bills and other governmental notes 41,485,518 321,838,122

Total 5,900,449,409 5,559,846,894

June 30, 2018 June 30, 2017

EGP EGP





Total 2,892,078,122 2,092,705,930

Investmentvalue

Paid Remaining

- Available for sale financial investments 642,378 489,486 152,892

- Financial investments in associates co. 299,970 249,975 49,995

Total 942,348 739,461 202,887

36- Related party transactionsA number of Banking transactions are entered into with related parties in the normal course of business. These include loans, deposits, and foreign currency transactions. Related party transactions are represented as follows:

a) Subsidiary and Associated Companies:

b) Shareholders:

c) Board of directors benefits:

June 30, 2018 June 30, 2017

EGP EGP

Assets:

Loans and advances to customers 12,691,212 16,974,525

June 30, 2018 June 30, 2017

EGP EGP

Liabilities:

Customers’ deposits 93,335,135 14,148,894

June 30, 2018 June 30, 2017

EGP EGP

Assets:

Due from banks 182,282,581 197,108,893

Liabilities:

Due to banks 0 50,000,000

Customers’ deposits 2,241,831,000 2,640,195,000

June 30, 2018 june 30.2017

EGP EGP

Wages and short term benefits 22,824,398 8,885,541



37- Tax status- The Bank is subject to law No. 95 of 1983 and its amendments, so it is tax exempted from corporate tax for five years starting from the subsequent year to the startup of operations, which was February 3, 1985. Therefore, starting from the year 1990/1991, the Bank was subjected to corporate tax.

- The Bank’s branch at 10th of Ramadan City started its activity during 1989/1990, and obtained an approval of ten years tax exemption for the branch starting at the first of January 1990.

- The Bank’s branch at 6th of October City started its activity during 1997, and obtained an approval of ten years tax exemption for the branch starting at the first of July 1997 till the end June 2007.

- The Bank has paid all of its Corporate & Movable Taxes up to June 30, 2005 based on a mutual final agreement with the Tax Authority (Large Taxpayer Center), as to years 2005/2006, 2006/2007 have been examined resulted in null as to corporate tax & other tax bases have been transferred to internal committee.

- According to the decision of the dispute settlement committee which stated that the Bank has the right not to be subjected to corporate tax on capital issuance premium of year 1997.

- The Stamp Tax has been examined till 31/7/2006 for the majority of the Bank branches and the remaining branches are under examination. The Bank has paid all stamp taxes as per Taxes claims.

- All tax liabilities related to salary income tax have been settled till year 2000, tax authority examined the period from 1/1/2001 till 31/12/2004, the tax appeal committee decision for this period has resulted in resolving the major conflicts in the Bank’s favor and other items will be objected. Salary income tax for year 2005 has been examined and the Bank objected to the contents and arrangements are currently taking place to transfer the issue to the internal committee.

38- Mutual FundsA- Export Development Bank of Egypt first mutual fund (The Expert fund).The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations, HC for securities and investment is managing this fund, the fund certificates reached 1 million certificate at foundation worth of EGP 100 million, out of these, 50 thousand of the certificates were allocated to the Bank to undertake the funds’ activity (with EGP 100 nominal value).The number of the outstanding certificates on the date of balance sheet was 130,677 certificates as the number of owned certificates by the Bank reached 79191 certificates. The redemption value per certificate as of June 30, 2018 amounted to EGP 152.01 and according to the funds’ management contract and its prospectus, the Bank shall obtain fee and commission for supervision on the fund and other managerial services rendered by the Bank, total commissions as at June 30, 2018 amounted to EGP 127.8 thousands presented under the item of “fee and commission income/other fees” in the income statement , The management commission and commission of good performance amounted to EGP 400.9 thousand by the end of June 2018. In addition to EGP 316.7 thousand (EGP 4 distribution as at 27/5/2018), presented under the item of other fees and commission income / fees in the income statement.

B- Export Development Bank of Egypt Fund -The Second - The Monetary:The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations, Rasmalah masr for funds and securities portfolios management is managing this fund, the fund certificates reached 2,867,466 certificates at foundation worth of EGP 286,746,600 out of these 143,400 of the certificates were allocated to the Bank to undertake the funds’ activity (with EGP 100 nominal value).

The number of the outstanding certificates on the date of balance sheet was 1,034,410 as the number of owned certificates by the Bank reached 34,415 certificates. The redemption value per certificate as of June 30, 2018 amounted to EGP 292.7565 total commissions amounted to EGP 1018,6 thousands as at June 30, 2018 presented under the item of “fee and commission income/other fees” in the income statement.

C- Export Development Bank of Egypt Fund - The Third

- Fixed Income Instruments:The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations; Prime Investments Asset Management is managing this fund, the fund certificates reached 612,501 certificates at foundation worth of EGP 61,250,100 out of these 50,000 of the certificates were allocated to the Bank to undertake the funds’ activity (with EGP 100 nominal value).

The number of the outstanding certificates at the date of balance sheet was 60,941 certificates as the number of owned certificates by the Bank reached 50,000 certificates. The redemption value per certificate as of June 30, 2018 amounted to EGP 212.4386 total commissions amounted to EGP 48,8 thousands as at June 30, 2018 Presented under the item of “fee and commission income/other fees” caption in the income statement ,In addition to EGP 225 thousand (EGP 4.5 distribution as of 31/12/2017) Presented under the item of fee and commission income / other fees in the income statement.



AUDITORS’ REPORTOn the Consolidated financial statements as at June 30, 2018To the shareholders of Export Development Bank of Egypt

Report on the Consolidated financial StatementsWe have audited the accompanying consolidated financial statements of Export Development Bank of Egypt (S.A.E.), which comprise the separate balance sheet as at June 30, 2018 and the separate statements of income, changes in equity and cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Management's responsibility for the Separate Financial StatementsThese consolidated financial are the responsibility of Bank’s management.Management is responsible for the preparation and fair presentation of these separate financial statements in accordance with central bank of Egypt's rules, pertaining to the preparation and presentation & the financial statements and it's amendments, including amendments that relates to financial investments issued on December 16, 2008 and in light of the prevailing Egyptian laws, management responsibility includes, designing , implementing internal control relevant to the preparation and fair presentation of separate financial statements that are free from material misstatements, whether due to fraud or error, management responsibility also includes selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditor's ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the separate financial statements are free from significant and material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material and significant misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall consolidated financial statements presentation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the separate financial statements.

OpinionIn our opinion, the consolidated financial statements, referred to above, present fairly, in all material respects, the separate financial position of the Export Development Bank of Egypt (S.A.E) as of June 30, 2018 and of its financial performance and its cash flows for the year then ended in accordance with Central Bank of Egypt's rules pertaining to the preparation and presentation of financial statements issued on December 16,2008 and the Egyptian laws and regulations relating to the preparation of these separate financial statements.

Report On Other Legal and Regulatory RequirementsAccording to the information and explanations given to us – during the financial year ended June 30, 2018 no contravention of central bank, banking and monetary institution law No. 88 of 2003 and the bank law No.95 of 1983.

The Bank maintains proper books of accounting, which include all that is required by the law and by the statutes of the Bank; the separate financial statements are in agreement thereto.

The separate financial information included in the Board of Director’s report, prepared in accordance with Law No. 159 of 1981 and its executive regulations, is in agreement with the Bank’s books of account.

Pay attention ParagraphWhile not considered a conservative, "The Bank's consolidated financial statements were prepared on 30 June 2018 based on not approved financial statements from subsidiaries’ board of directors and unaudited from the auditors."


Cairo, 6 September 2018


LIMITED REVIEW REPORTOn the Consolidated interim financial statements as at March 31, 2018To the Board of Directors of Export Development Bank of Egypt

IntroductionWe have performed a limited review for the accompanying consolidated financial statements of Export Development Bank of Egypt (S.A.E.), which comprise the consolidated balance sheet as at March 31, 2018 and the related consolidated statements of income, changes in equity and cash flows for the Nine months then ended on that date, and a summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with Central Bank of Egypt's rules, pertaining to the preparation and presentation & the financial statements and it's amendments, issued on December 16, 2008 and in light of the prevailing Egyptian laws related to these interim financial statements, Our responsibility is to express a conclusion on these consolidated interim financial statements based on our limited review.

Scope of Limited ReviewWe conducted our limited review in accordance with Egyptian Standards on Review Engagements 2410, "Limited Review of interim Financial Statements performed by the independent Auditor of the Entity." A Limited review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters in the company, and applying analytical and other limited review procedures.

A limited review is substantially less in scope than an audit conducted in accordance with Egyptian Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identifies in an audit.Accordingly, we do not express an audit opinion on these separate interim financial statements.

ConclusionBased on Our limited review nothing has become to our attention causes us to believe that the accompanying consolidated interim financial statements do not present fairly, in all material respects, the consolidated financial position of the company as at March 31, 2018 and its consolidated financial performance and its consolidated cash flows for the period of Nine months then ended on that date in accordance with Central Bank of Egypt's rules, pertaining to the preparation and presentation & the financial statements and it's amendments, issued on December 16, 2008 and in light of the prevailing Egyptian laws related to these interim financial statements.


Cairo, May 14, 2018



CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2018 CONSOLIDATED INCOME STATEMENT

For the Year Ended June 30, 2018


EGP EGP

Interest and similar income (5) 4,649,064,330 2,945,114,587

Deposits and similar expenses (5 ) (3,346,706,040) (1,909,064,562)

Net Interest Income 1,302,358,290 1,036,050,025

Fees and commissions Income (6) 352,882,732 262,576,575

Fees and commissions Expenses (6 ) (46,940,820) (24,317,575)

Net income from fees & commissions 305,941,912 238,259,000

Dividends Income (7) 15,090,749 8,288,269

Net Trading Income (8) 107,735,251 41,971,197

Profit (Loss) from Financial Investments (18) (75,561,926) (91,198,555)

Impairment of credit losses (9) (68,635,447) (83,295,818)

Administrative expenses (10) (552,487,162) (410,532,517)

Other operating income (expense) (11 ) 80,653,944 13,029,025

Net )Loss( profit before Tax 1,115,095,612 752,570,626

Income Tax (324,743,128) (214,438,064)

Deferred tax (25,097) 1,941,969

Net )Loss( profit for the Period 790,327,387 540,074,530

Represented in:

Bank’s shareholders 766,102,008 525,994,427

Non-Controlling interests 24,225,379 14,080,103


Notes June 30, 2018 June 30, 2017

EGP EGP

Assets


Due from banks (13) 5,487,809,944 4,960,612,781


Trading financial assets (15) 26,441,250 23,990,532

Loans and advances to customers (16) 20,002,114,655 14,217,669,003

Loans and advances to Banks (16) 89,483,720 0

Financial Derivatives (17) 15,399,045 0

Financial Investments:

-Available for sale (18) 1,461,991,224 1,829,116,530

-Held to maturity (18) 2,184,790,048 3,409,717,582

Financial investments in subsidiaries and associated co. (19) 6,875,000 6,875,000

Intangible assets (20) 3,850,072 5,065,286

Other assets (21) 1,048,413,358 888,611,300

Fixed assets (22) 413,732,610 362,923,167

Investment property (23) 304,849,311 304,951,625

Deferred tax assets (24) 14,338,106 14,137,608

Total Assets 44,950,142,958 33,245,082,285

Liabilities and shareholders’ equity

Liabilities

Due to banks (25) 2,735,291,557 1,045,152,280

Customers’ deposits (26) 34,613,007,553 27,498,164,374

Debt Instruments (27) 50,000,000 50,000,000

Other loans (28) 1,898,545,977 896,812,982

Other liabilities (29) 912,462,526 814,725,229

Other provisions (30) 136,075,376 122,277,088

Deferred tax liabilities (31) 21,006,729 27,523,563

Retirement benefit obligations 11,799,929 11,799,929

Total liabilities 40,378,189,649 30,466,455,445

Shareholders’ equity

Paid up capital (32) 2,728,000,000 1,440,000,000

Reserves (32) 371,599,241 330,217,237

Retained Earnings 1,251,564,752 887,981,900

4,351,163,993 2,658,199,137

Non-Controlling interests 220,789,316 120,427,703

Total shareholders’ equity 4,571,953,309 2,778,626,840

Total liabilities and shareholders’ equity 44,950,142,958 33,245,082,285


The accompanying notes from (1) to (36) are an integral part of these financial statements. Auditors’ report attached. Mohamed MokhtarFinancial Control Director



CONSOLIDATED CASH FLOWS STATEMENT FOR THE YEAR ENDED JUNE 30, 2018



EGP EGP

Cash flows from operating activities

Net profit before income tax 1,115,095,612 752,570,626

Adjustments to reconcile net profit to cash provided from operating activities:

Fixed Assets Depreciation (22) 36,395,083 28,922,582

Intangible Assets Amortization (20) 2,312,638 1,710,732

Investment Property Depreciation (23) 102,313 375,425

Reversal - Impairment of Credit losses (9) 68,635,447 83,295,818

AFS investments Impairment (18) 83,663,924 103,637,710

Reversal - Impairment of other Provisions (30) 28,868,768 38,731,909

Dividends Income (7) (15,090,749) (8,288,269)

Capital Profits (11) (8,454,960) (14,956,124)

HFT investments revaluation differences (8) (2,171,968) (2,958,282)

AFS investments foreign exchange revaluationdifferences

(18)(9,915,157) (422,934,051)

HTM investments foreign exchange revaluationdifferences

(18)0 (14,047,000)

Foreign currencies revaluation differences of provisions (other than provision for loans)

(30)(102,562) 4,811,266

Operating profit before changes in assets and liabilities used in operating activities 1,299,388 550,872,342

Net decrease )increase( in Assets & Liabilities

Due from banks (1,731,732,296) 1,037,540,200

Treasury bills and other governmental notes (5,406,778,046) (2,517,427,897)

Trading financial assets (278,750) 30,942,414

Loans and advances to customers (5,831,146,957) (4,703,991,880)

Financial Derivatives (Net) (15,399,045) (6,687,826 )

Other assets (151,805,193) (303,386,646)

Due to banks (25) 1,690,139,277 (259,306,103)

Customers’ deposits (26 ) 7,114,843,179 6,269,988,307

Other liabilities (29) (45,29,6674) 268,183,728

Deferred tax 0 1,489,450

Income tax paid (231,147,328) (214,438,064)

Other provisions (20,242,782) (1,908,473)

Retirement benefit obligations 0 4,672,546

Net cash flows )used in( operating activities (3,329,506,222) 156,542,098

Cash flows from investing activities

Purchase of fixed assets and branches improvements (117,172,229) (73,989,650)

Capital Profits (11 ) 8,454,960 14,956,124

Proceeds from sale of Fixed assets 0 67,816

AFS Financial investments purchases (18) (211,209,662) (1,397,595,452)

Proceeds from redemption of AFS Financialinvestments

(18)525,137,168 4,034,623,909

HTM Financial investments purchases (18) (7,828,048) (2,662,254,547)

Proceeds from redemption of HTM Financialinvestments

(18)1,238,611,368 99,611,116

Dividends Income 15,090,749 8,288,269

Purchase of intangible assets (20) (1,097,423) (4,361,393)

Net cash flows provided from)used in( investing activities 1,449,986,883 19,346,193

Cash flows from financing activities

Net proceeds (repayments) from debt instruments &other loans

(28)1,001,732,995 272,587,264

Capital increase 1,000,000,000 0

Paid Dividends (101,548,000) (80,735,000)

(Buy) sale of treasury shares 0 7,771,781

Net cash flows provided from financing activities 1,900,184,995 199,624,045

Net (decrease) in cash and cash equivalents during the year 20,665,656 375,512,335

Cash and cash equivalents at the beginning of the year 5,863,484,811 5,487,972,475

Cash and cash equivalents at the end of the year (34) 5,884,150,466 5,863,484,811

Cash and cash equivalents are represented in:


Due from banks (13) 5,487,809,944 4,960,612,781


Balances with Central Bank of Egypt (Mandatory reserve)

(12)(1,963,877,525 (232,145,229)

Treasury bills and other governmental notes withmaturities more than three months

(14)(11,529,836,570) (6,092,125,213)

Cash and cash equivalents at the end of the year 5,884,150,466 5,863,484,811

Mohamed MokhtarFinancial Control Director



Consolidated Changes in Shareholders’ Equity Statement For the Year ended June 30, 2018


June 30, 2017Capital Legal

Reserve GeneralReserve

SpecialReserves

Capital Re-serves

General Banking Risk

Reserve


Reserve Acquired

Assets

Reserve of revaluation of available

for saleinvestments

RetainedEarnings

non-controllableinterests Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP EGP EGP

Balance at the beginning of the year 1,431,784,050 84,809,401 16,531,754 35,118,940 4,291,985 106,340,193 14,897,979 83,706,652 448,145,430 117,212,695 2,342,839,078

Transferred to General Risk Reserve 0 0 2,116,500 0 0 0 0 0 (3,000,000) 883,500 0

Transferred to Capital Risk Reserve 0 0 0 0 1,251,225 0 0 0 (1,251,225) 0 0

Transferred to legal reserve 0 36,401,933 0 0 0 0 0 0 (37,498,044) 1,096,111 0

Transferred to Special reserve 0 0 0 3,785,156 0 0 0 0 0 0 3,785,156

Transferred to Banking Risk Reserve - Acquired Assets 0 0 0 0 0 0 4,075,885 0 (4,075,885) 0 0

Transferred to retained earnings 0 0 0 0 0 0 0 0 29,035,703 (1,478,212) 27,557,491

(Buy) sale of treasury shares 8,215,950 0 0 0 0 0 0 (444,169) 0 0 7,771,781

Net change in available- for- sale investments 0 0 0 0 0 0 0 (67,776,204) 0 0 (67,776,204)

Deferred tax - fair value differences of AFS investments 0 0 0 0 0 0 0 5,110,006 0 0 5,110,006

Net profit for the year 0 0 0 0 0 0 0 0 525,994,427 14,080,103 540,074,530

Dividends paid 0 0 0 0 0 0 0 0 (69,368,506) (11,366,494) (80,735,000)

Balance at the end of the year 1,440,000,000 121,211,335 18,648,254 38,904,096 5,543,210 106,340,193 18,973,864 20,596,285 887,981,900 120,427,702 2,778,626,840

June 30, 2018 Capital Legal Re-serve

GeneralReserve

SpecialReserves

Capital Re-serves


Reserve


Reserve Acquired

Assets

Reserve of revaluation of available

for saleinvestments

RetainedEarnings

non-controllableinterests Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP EGP EGP

Balance at the beginning of the year 1,440,000,000 121,211,335 18,648,254 38,904,096 5,543,210 106,340,193 18,973,864 20,596,285 887,981,900 120,427,703 2,778,626,840

capital Increase from retained earnings and reserves 288,000,000 (31,100,000) 0 0 0 0 0 0 (256,900,000) 0 0

capital Increase from retained Underwriting 1,000,000,000 0 0 0 0 0 0 0 0 0 1,000,000,000

Transferred to General Reserve 0 0 2,116,500 0 0 0 0 0 (3,000,000) 883,500 0

Transferred to Capital Reserve 0 0 0 0 14,956,124 0 0 0 (14,956,124) 0 0

Transferred to legal reserve 0 54,829,117 0 0 0 0 0 0 (54,912,228) 1,383,911 1,300,800

Transferred to Banking Risk Reserve-Assets acquired 0 0 0 0 0 0 1,268,200 0 (1,268,200) 0 0

Transferred to retained earnings 0 0 0 0 0 0 0 0 17,903,835 86,030,383 103,934,218

Net change in available- for- sale investments 0 0 0 0 0 0 0 (8,050,309) 0 0 (8,050,309)

Deferred tax - fair value differences of AFS investments 0 0 0 0 0 0 0 7,362,373 0 0 7,362,373

Net profit for the year 0 0 0 0 0 0 0 0 766,102,008 24,225,379 790,327,387

Dividends paid 0 0 0 0 0 0 0 0 (89,386,440) (12,161,560) (101,548,000)

Balance at the end of the year 2,728,000,000 144,940,451 20,764,754 38,904,096 20,499,334 106,340,193 20,242,064 19,908,350 1,251,564,751 220,789,316 4,571,953,309



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS1- General informationExport Development Bank of Egypt (Egyptian Joint Stock Company) was established on July 30, 1983 under Law No. 95 of 1983 and its articles of association in the Arab republic of Egypt, The head office located in Giza at 108, Mohy El Din Abu El Ezz Street, Dokki the Bank is listed in the Egyptian stock exchange (EGX). The objective of the Bank is to encourage, develop Egyptian export activities, and assist in developing agricultural, industrial, and commercial and service exporting sectors, also to provide all investment banking services in local and foreign currencies through its head office and thirty-one branches.

The financial year starts from July first every year ending at June 30 of the next year.

These Financial statements have been submitted by board of directors in 6 September 2018.

2- Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated, The Bank is in the process of applying the requirements of IFRS (9) “Financial Instruments”.

2.1- Basis of preparation of the consolidated financial statementsThe financial statements have been prepared in accordance with Egyptian Accounting Standards issued in 2006 and its amendments and in accordance with the instructions of the Central Bank of Egypt approved by the Board of Directors on December 16, 2008 consistent with the Standards referred to, and have been prepared under the historical cost modified by the revaluation of trading, financial assets and liabilities held for trading, and assets and liabilities originally classified as at fair value through profit or loss, financial investments available for sale and all derivatives contracts. The unconsolidated preparation of these financial statements was according to relevant domestic laws.

The Bank also prepared consolidated financial statements of the Bank and its subsidiaries in accordance with Egyptian Accounting Standards, the subsidiaries companies are entirely included in the consolidated financial statements and these companies are the companies that the Bank which - directly or indirectly has more than half of the voting rights or has the ability to control the financial and operating policies of an enterprise, regardless of the type of activity, the consolidated financial statements of the Bank can be obtained from the Bank’s management. The investments in subsidiaries and associate companies are disclosed in the standalone financial statements of the Bank and its accounting treatment is at cost after deducting the impairment losses from it.


2.2- Basis of consolidation(a) Subsidiaries- Subsidiaries are all entities over which the bank has owned directly or indirectly the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Bank has the ability to control the entity.

- The group fully consolidates its subsidiaries from the effective date in which control is obtained till such control ceases to exist.

- The subsidiary companies which have been owned indirectly have been consolidated from June 30, 2014.

- Subsidiaries and associated companies consolidated by the Bank (The holding co.) represented in the following as at June 30,2018:

A brief description of the activities of the Group:- Egypt Capital Holding Company:Is an Egyptian joint stock company in accordance with the provisions of Law No. 95 of 1992 and its executive regulations (holding companies) of the Egyptian Export Development Bank. The purpose of the company is to participate in establishing companies that issue their securities and increase their capital.

- International holding for Development and Financial Investments:Is an Egyptian joint stock company in accordance with the provisions of Law No. 95 of 1992 and its executive regulations (holding companies) of the Egyptian Export Development Bank. The purpose of the company is to participate in the establishment of companies that issue their securities and increase their capital.

June 30,2018%

30 June 2017%

EGP EGP

Export Credit Guarantee Company of Egypt 176,382,811 70.55 176,382,811 70.55

International holding for financial investments 249,975,000 99.99 249,975,000 99.99

Egypt Capital Holding Company 410,979,451 99.99 410,979,451 99.99

BETA Financial holding 136,986,300 99.99 136,986,300 99.99

Egyptian company for real estate investments 152,865,000 39.50 152,865,000 39.50

A BETA for real estate investment 87,690,000 39.50 87,690,000 39.50

Egypt Capital for real estate investments 2,500 0.05 2,500 0.05

Egyptian tourism development company 0 0 9324 0.01

The Touristic Investment Company (Sahl Hashish) represents an indirect investment that has been consolidated.



Beta Financial Holding Company:Is an Egyptian joint stock company pursuant to the provisions of Law No. 95 of 1992 and its executive regulations (Holding Companies) of the Egyptian Export Development Bank. The purpose of the company is to participate in the establishment of companies that issue their securities and increase their capital.

Export Credit Guarantee Company of Egypt:The Export Development Bank of Egypt stated that it is one of its main purposes to “develop and implement a system to secure the exporters of national goods against commercial and non-commercial risks which may be exposed to them for reasons not due to the exporter’s fault, whether arising before the delivery of goods contracted for export or After the delivery, in accordance with the rules set by the Board of Directors of the Bank. “The Bank created this task to establish the Egyptian Company for Export Guarantee in 1992 an Egyptian joint stock company.

Egyptian company for real estate investments.:Is an Egyptian joint stock company in accordance with the provisions of Law No. 159 of 1981 and its executive regulations are subordinate to the Egyptian Export Development Bank. The purpose of the company is to engage in real estate investment activity of all types throughout the Arab Republic of Egypt.

- ABeta Company for Real Estate Investments:Is an Egyptian joint stock company in accordance with the provisions of Law No. 159 of 1981 and its executive regulations are subordinate to the Egyptian Export Development Bank. The purpose of the company is to engage in real estate investment activity of all types throughout the Arab Republic of Egypt.

Egypt Capital Real Estate Investment Company:Is an Egyptian joint stock company in accordance with the provisions of Law No. 159 of 1981 and its executive regulations are subordinate to the Egyptian Export Development Bank. The purpose of the company is to engage in real estate investment activity of all types throughout the Arab Republic of Egypt.

Egyptian Tourism Development Company:Is an Egyptian joint stock company in accordance with the provisions of Law No. 159 of 1981 and its executive regulations are subordinate to the Egyptian Export Development Bank. The purpose of the company is to establish various tourism projects and establishments such as tourist villages, hotels, motels, establishment and ownership of floating hotel establishments already existing, issuing licenses and restaurants, exploiting, managing, selling and leasing these units in whole or in part and providing all necessary and complementary services To these establishments and to direct all the tourism activities mentioned above both inside and outside the Arab Republic of Egypt and may have an interest or participate in any way with companies and other establishments that carry out works similar to their work or which may have cooperated to achieve their purpose in Egypt and abroad.

Tourism Investment Company in Sahl Hashish:The Tourism Investments Company was established in Sahl Hashish, “Oberoi Hurghada - previously - Egyptian Joint Stock Company” in accordance with the provisions of Law No. 230 of 1989 on the approval of the General Authority for Investment on 19 September 1994 under the Egyptian Export Development Bank. The purpose of the company is to establish a five-star tourist village.

(b) AssociatesAssociates are all entities over which the Bank has significant influence directly or indirectly but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.The Accounting for subsidiaries and associates in the unconsolidated financial statements are recorded by cost method, investments are recognized by the cost of acquisition including any good will, deducting impairment losses in value.

2.3- Segment reportingA business segment is a group of assets and operations related to providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns different from those of segments operating in other economic environments.

2.4- Foreign currency translation(a) Functional and presentation currencyThe financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.

(b) Transactions and balances in foreign currencies- The Bank hold accounts in Egyptian pounds and prove transactions in other currencies during the financial year on the basis of prevailing exchange rates at the date of the transaction, and re-evaluation of balances of assets and liabilities of other monetary currencies at the end of the financial period on the basis of prevailing exchange rates at that date, and is recognized in the list Gains and losses resulting from the settlement of such transactions and the differences resulting from the assessment within the following items:

• Net trading income or net income from financial instruments classified at fair value through profit and loss of assets / liabilities held for trading or those classified at fair value through profit and loss according to type.

• Shareholders’ equity of financial derivatives which are eligible qualified hedge for cash flows or eligible for qualified hedge for net investment.

• Other operating revenues (expenses) for the rest of the items.


- Changes in the fair value of monetary financial instruments denominated in foreign currencies and classified as available for sale investments (debt instruments) are analyzed into valuation differences resulting from changes in amortized cost of the instrument, translation differences arising from changes in foreign exchange rates and differences resulting from changes in the fair value of the instrument.

Valuation differences are recognized in profit or loss to the extent they relate to changes in amortized cost and changes in exchange rates which are reported in the income statement under the line items revenues from loans and similar activities’ and ‘other operating revenues (expenses)’ respectively. The remaining differences resulting from changes in fair value of the instrument are carried to ‘reserve for cumulative change in fair value of available for sale investments’ in the equity section.

- Valuation differences resulting from measuring the non-monetary financial instruments at fair value include gains and losses resulting from changes in fair value of those items. Revaluation differences arising from the measurement of equity instruments classified as at fair value through profit or loss are recognized in the income statement, whereas the revaluation differences arising from the measurement of equity instruments classified as available for sale financial investments are carried to ‘reserve for cumulative change in fair value of available for sale investments’ in the equity section.

2.5- Financial assetsThe Bank classifies its financial assets in the following categories:Financial assets classified as at fair value through profits or loss, loans and receivables, held to maturity financial assets, and available for sale financial assets. The Bank’s classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.Management determines the classification of its investments at initial recognition.

(a) Financial assets classified at fair value through profit or lossThis category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception.

- A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorized as held for trading unless they are designated as hedging instruments.

- Financial assets are designated at fair value through profit or loss when:• Doing so significantly reduces measurement inconsistencies that would arise if the related derivatives were treated as held for trading and the underlying financial instruments were carried at amortized cost for loans and advances to customers or banks and debt securities in issue’.

• Certain investments, such as equity investments, are managed and evaluated on a fair value basis in accordance with a documented risk management or investment strategy and reported to key management personnel on that basis are designated at fair value through Profit and Loss.

• Financial instruments, such as debt securities held, containing one or more embedded derivatives significantly modify the cash flows, are designated at fair value through profit and loss.

- Profits and losses resulted from changes in the fair value of the financial derivatives which are managed in conjunction with the assets and liabilities classified at inception fair value through profit and loss are recorded in the income statement within “net income from financial instruments classified at inception at fair value through profit and loss” item.

- Any derivative from the financial instruments group evaluated at fair value through profit and loss is not to be reclassified during the year of holding it or during its validity period. In addition, any instrument from financial instruments group evaluated at fair value through profit and loss is not to be reclassified if the mentioned instrument has been allocated by the Bank at initial recognition as an instrument to be evaluated at fair value through profit and loss.

(b) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than: (a) those that the Bank intends to sell immediately or in the short term, which are classified as held for trading, or those that the Bank upon initial recognition designates as at fair value through profit or loss; (b) those that the Bank upon initial Recognition designates as available for sale; or (c) those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.

(c) Held-to-maturity financial investmentsHeld-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Bank’s management has the positive intention and ability to hold to maturity. If the Bank were to sell a significant amount of held to-maturity assets, the entire category would be reclassified as available for sale unless in the necessary cases.

(d) Available-for-sale financial investmentsAvailable-for-sale investments are non-derivative financial assets with intention to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.

The following is applied to financial assets- Regular-way purchases and sales of financial assets at fair value through profit or loss, held to maturity and available for sale are recognized on trade-date – the date on which the Bank commits to purchase or sell the asset.

- Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit and loss are initially recognized at fair value, and transaction costs are expensed in the income statement.

- Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or where the Bank has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognized when they are extinguished − that is, when the obligation is discharged, cancelled or expires.




- Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortized cost using the effective interest method.

- Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are recognized in the income statement in the period in which they arise. Gains and losses arising from changes in the fair value of available-for-sale financial assets are recognized directly in equity, until the financial asset is derecognized or impaired. At this time, the accumulative gain or loss previously recognized in equity is recognized in profit or loss.

- Interest calculated using the effective interest method and foreign currency gains and losses on monetary assets classified as available for sale are recognized in the income statement. Dividends on available-for-sale equity instruments are recognized in the income statement when the Bank’s right to receive payment is established.

- The fair values of quoted investments in active markets are based on current bid prices. If there is no active market for a financial asset, or no current demand prices available the Bank establishes fair value using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants If the bank had been unable to estimate the fair value of equity instruments classified available for sale, value is measured at cost less any impairment in value.

- The Bank reclassify the financial asset which classified as a financial instruments available for sale, which left the definition of loans and debts (bonds or loans), to be classified to the group of loans and receivables or financial assets held to maturity - all as the case - when available Bank has the intent and ability to hold these financial assets in the foreseeable future or until maturity and reclassification to be booked by fair value at reclassifications date, and not process any profits or losses on those assets that have been recognized previously in equity and in the following manner:

1 - In case of reclassification of financial asset, which has a fixed maturity are amortized gains or losses over the remaining life of the investment retained until the maturity date in a manner effective yield is consumed any difference between the value on the basis of amortized cost and value on an accrual basis over the remaining life of the financial asset using the effective yield method, and in the case of the decay of the value of the financial asset is later recognition of any gain or loss previously recognized directly in equity in the profits and losses.

2 - In the case of financial asset which has no fixed maturity continue to profit or loss in equity until the sale of the asset or to dispose of it, then be recognized in the profit and loss In the case of erosion of the value of the financial asset is later recognition of any gain or loss previously recognized directly within equity in the profits and losses.

- If the Bank to adjust its estimates of payments or receipts are the settlement of the carrying amount of the financial asset (or group of financial assets) to reflect the actual cash inflows and the adjusted estimates to be recalculated book value and then calculates the present value of estimated future cash flows at the effective yield of the financial instrument and is recognized settlement recognized as income or expense in the profit and loss.

- In all cases, if the Bank re-Tab financial asset in accordance with what is referred to The Bank at a later date to increase its estimate of the proceeds of future cash result of the increase will be recovered from the cash receipts, is the recognition of the impact of this increase in settlement of the interest rate effective from the date of change in the estimate and not in settlement of the balance of the original notebook in the history of change in the estimate.

2.6- Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

And the clauses of agreements to buy treasury bills with a commitment to re-sale agreements and sale of treasury bills with a commitment to re-purchase on a net basis within the balance sheet item, treasury bills and other government papers.

2.7- Derivative financial instruments and hedge accounting- Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at their fair value. Fair values are obtained from quoted market prices in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and options pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.

- Embedded derivatives, such as the conversion option in a convertible bond, are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract, provided that the host contract is not classified as at fair value through profit or loss as part of “net trading income”.

Embedded derivatives are not split if the Bank chooses to designate the entire hybrid contact as at fair value through profit or loss.

- The accounting treatment used to recognize changes in fair value of derivatives depends on whether or not the derivative is designated as a hedging instrument under hedge accounting rules and on the nature of the hedged item. The Bank designates certain derivatives as either:

• Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedge);

• Hedging relating to future cash flows attributable to a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).

• Hedging for net investment in foreign operations relating to future cash flows attributable to a recognized (net investment hedge).

• Hedge accounting is used for derivatives designated in a hedging relationship when the criteria are met.

- The Bank documents, at the inception of the transaction, the relationship between hedged items and hedging instruments, as well as its risk management objective and strategy for undertaking various hedge transactions.

The Bank also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value of hedged items.



2.7.1- Fair value hedgeChanges in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The effective portion of changes in the fair value of the interest rate swaps and the changes in the fair value of the hedged item attributable to the hedged risk are recognized in the ‘net interest income’. The effective portion of changes in the fair value of the currency swaps are recognized in the ‘net trading income’. Any ineffectiveness is recognized in profit or loss in ‘net trading income’.

When the hedging instrument no longer qualified for hedge accounting, the adjustment to the book value of a hedged item is amortized which are accounted for using the amortized cost method, by charging to the profit and loss to the maturity. The adjustments made to the book value of the hedged equity instrument remains in the equity section until being excluded.

2.7.2- Cash flow hedgeThe effective portion of changes in the fair value of derivatives designated and effective for cash flow hedge shall be recognized in equity while changes in fair value relating to the ineffective portion shall be recognized in the income statement in “net trading income”.

Amounts accumulated in equity are transferred to income statement in the relevant periods when the hedged item affects the income statement. The effective portion of changes in fair value of interest rate swaps and options are reported in “net trading income”.

When a hedged item becomes due or is sold or if hedging instrument no longer qualifies for hedge accounting requirements, gains or losses that have been previously accumulated in equity remain in equity and shall only be recognized in profit or loss when the forecast transaction ultimately occurs. If the forecast transaction is no longer expected to occur any related cumulative gain or loss on the hedging instrument that has been recognized in equity shall be reclassified immediately to income statement. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item that is measured at amortized cost is amortized to profit or loss over the period to maturity.

2.7.3- Net investment hedgeAccounting for net investment hedge is the same for cash flows hedge. Profit or loss from hedging instrument related to the effective portion of the hedge to be recognized in Equity, while it is recognized in the income statement directly for hedging instrument not related to the effective portion. Accumulated profit or loss in equity to be transferred to the income statement upon disposal of foreign transactions.

2.7.4- Derivatives that do not qualify for hedge accountingInterest on and changes in fair value of any derivative instrument that does not qualify for hedge accounting is recognized immediately in the income statement in “net trading income” line item. However, gains or losses arising from changes in the fair value of derivatives that are managed in conjunction with designated financial assets or financial liabilities are included in “net income from financial instruments

designated at fair value through profit or loss”.

2.8- Interest income and expenseInterest income and expense for all interest-bearing financial instruments, except for those classified as held for trading or designated as at fair value through profit or loss, are recognized within ‘interest income’ and ‘interest expense’ in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

When loans or debts are classified as non-performing or impaired, related interest income are not recognized but rather, are carried off balance sheet in statistical records and are recognized as revenues on the cash basis as follows:

1- When collected and after recovery of all arrears for retail loans, personal loans, real estate loans for personal housing and loans to small business.

2- For corporate loans, interest income is also recognized on the cash basis, according to which interest earned during the periods subsequent to reschedule agreements does not start to accrete on the loan principal until the Bank collects 25% of the rescheduled installments and after payments of the installments continue to be regular for at least one year. if the customer is always paying at his due dates the interest calculated is added to the loan balance which makes revenues (interest on rescheduling without deficits) without interests aside before rescheduling which is avoiding revenues except after paying all the loan balance in the balance sheet before rescheduling.

2.9- Fees and commissions incomeFees and commissions charged by the Bank for servicing a loan are recognized as revenue as the services are provided. Recognition of such fees and commission in profit or loss ceases when a loan becomes non-performing or is impaired in which case fees and commission income is rather marginalized and carried off the balance sheet. Recognition of such fees and commissions as revenues continues on the cash basis when the relevant interest income on the financial instrument is recognized since they are generally treated as an adjustment to the effective interest rate on the financial asset.

If it is probable that the Bank will enter into a specific lending arrangement, the commitment fee received is regarded as compensation for an ongoing involvement with the acquisition of a financial instrument and, together with the related transaction costs, is deferred and recognized as an adjustment to the effective interest rate. If the commitment expires without the Bank making the loan, the fee is recognized as revenue on expiry.

A syndication fee received by the Bank that arranges a loan and retains no part of the loan package for itself (or retains a part at the same effective interest rate for comparable risk as other participants) is compensation for the service of syndication. Such a fee is recognized as revenue when the syndication has been completed.



Fees and commissions resulting from direct negotiations or participation in such negotiations for the benefit of or on behalf of another party, such as those earned on the allotment of shares or other financial assets to a client or acquisition or disposal of entities for a client, are recognized as revenue when the specific transaction has been completed.Administrative and other services fees are recognized as income on a time proportionate basis over the lifetime of the service.Fees charged for financial planning services and custodian services provided over long periods are recognized as income over the period during which the service is rendered.

2.10- Dividend incomeDividends are recognized in the income statement when the Bank’s right to receive payment is established.

2.11- Purchase and resale agreements, sale and repurchase agreementsThe financial instruments sold, subject to repurchase agreements, are reported as additions to the balance of treasury bills and other governmental notes in the assets side at the balance sheet, whereas the liability (purchase and resale agreement) is reported in the balance sheet as a deduction therefrom. Difference between the sale price and repurchase price is recognized as a return throughout the period of the arrangement using the effective interest rate method.

2.12- Impairment of financial assets(a) Assets carried at amortized costThe Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Bank uses to determine that there is objective evidence of an impairment loss include:

• Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of sales);• Breach of loan covenants or conditions;• Initiation of bankruptcy proceedings;• Deterioration of the borrower’s competitive position;• The Bank for reasons of economic or legal financial difficulties of the borrower by granting concessions may not agree with the Bank granted in normal circumstances;• Deterioration in the value of collateral; and • Downgrading below investment grade level.The objective evidence of impairment loss for group of financial assets is the clear data indicate to a decline can be measured in future cash flows expected from this group since its initial recognition, although not possible to determine the decrease of each asset separately, for example increasing the number of failures in payment for one of the banking products.

The estimated period between a losses occurring and its identification is determined by local management for each identified portfolio. In general, the periods used vary between three months and 12 months.

The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant and in this field the following are considered.

- If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment according to historical default ratios.

- Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment.

- If no impairment losses result from the previous assessment of impairment in this case the asset included in a collective assessment of impairment.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the income statement.

If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract when there is objective evidence for asset impairment. As a practical expedient, the Bank may measure impairment on the basis of an instrument’s fair value using an observable market price. The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (i.e., on the basis of the Group’s grading process that considers asset type, industry, geographical location, collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated.

For the purposes of evaluation of impairment for a group of a financial assets according to historical default ratios future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the Bank and historical loss experience for assets with credit risk characteristics similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist.

Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with changes in related observable data from period to period (for example, changes in unemployment rates, property prices, payment status, or other factors indicative of changes in the probability of losses in the Bank and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Bank.



(b) Assets classified as available for sale and held to maturityThe Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets classify under available for sale or held to maturity is impaired. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the assets are impaired.

The Decrease Consider significant cause it become 10% From cost of book value and the decrease consider to be extended if it continue for period more than 9 months, and if the mentioned evidences become available then the accumulated loss to be post from the equity and disclosed at the income statement, impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through the income statement.

2.13- Real Estate InvestmentsThe real estate investments represent lands and buildings owned by the Bank In order to obtain rental returns or capital gains and therefore does not include real estate assets which the Bank exercised its work through or those that have owned by the Bank as settlement of debts. The accounting treatment is the same used with fixed assets.

2.14- Intangible assets 2.14.1- SoftwareExpenditure on upgrade and maintenance of computer programs is recognized as an expense in the income Statement in the period in which it is incurred. Expenditures directly incurred in connection with specific software are recognized as intangible assets if they are controlled by the Bank and when it is probable that they will generate future economic benefits that exceed its cost within more than one year. Direct costs include the will generate future economic benefits that exceed its cost within more than one year. Direct costs include the cost of the staff involved in upgrading the software in addition to a reasonable portion of relative overheads. Upgrade costs are recognized and added to the original cost of the software when it is likely that such costs will increase the efficiency or enhance the performance of the computers software beyond its original specification Cost of computer software recognized as an asset shall be amortized over the period of expected benefits which shall not exceed three years.

2.14.2- Other intangible assets Other intangible assets represent intangible assets other than software programs (they include but not limited to trademark, licenses, and benefits of rental contracts).

The other intangible assets are recorded at their acquisition cost and are amortized on the straight-line method or based on economic benefits expected from these assets over their estimated useful life.

Concerning the assets which do not have a finite useful life, they are not subject to amortization they are annually assessed for impairment, while value of impairment (if any) is charged to the income statement.

2.15- Fixed AssetsLands and buildings are mainly represented in head office, branches and offices premises. All fixed assets are disclosed at historical cost less accumulated depreciation and impairment losses. The historical cost includes expenditures that are directly attributable to the acquisitions of the fixed assets’ items.

Subsequent costs are included in the assets carrying amount or recognized separately, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. Repairs and maintenance expenses are recognized in profit or loss within “other operating costs” line item during the financial period in which they are incurred.

Land is not depreciated. Depreciation of other fixed assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Premises and constructions 40 years

Fixtures and air conditions 5 years

Safes 50 years

Copiers and fax 8 years

Vehicles and means of transportation 5 years

Electric appliances 10 years

Mobile phones 3 years

Telephone networks, fire extinguishers 10 years

Computers and computers’ software 3 years

Furniture 10 years

Decorations 4 years


The residual value and useful lives of the fixed assets are reviewed on the each balance sheet date and they are adjusted whenever it is necessary. Depreciated assets are reviewed for purposes of determining extent of impairment when an event or change in conditions occurs suggesting that the book value may not be recovered. Consequently, the book value of the asset is reduced immediately to the asset’s net realizable value in case increasing the book value over the net realizable value.

The net realizable value represents the net selling value of the asset or its utilization value whichever is greater. Gains and losses from the disposal of fixed assets are determined by comparing the net proceeds at book value. Gains (losses) are included within other operating income (expenses) in the income statement.

2.16- Impairment of non-financial assetsAssets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.17- Leases(a) Being lesseeLease payments made under operating leases, net of any discounts received from the lessor, are recognized in profit or loss on a straight-line basis over the term of the contract.

(b) Being lesserAssets leased out under operating lease contracts are reported as part of the fixed assets in the balance sheet and are depreciated over the expected useful lives of the assets, on the same basis as other property assets. Lease rental income is recognized net of any discounts granted to the lessee, using the straight line method over the contract term.

2.18- Cash and cash equivalentsFor the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months’ maturity from the date of acquisition, They include cash and balances due from Central Bank of Egypt (other than those under the mandatory reserve), balances due from banks, treasury bills and other governmental notes.

2.19- Other ProvisionsProvisions for restructuring costs and legal claims are recognized when: the Bank has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.


Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions which negated the purpose of wholly or partly repaid within the item other operating income (expense).

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation which become due after one year from the financial statement date using appropriate rate for the due date (without being affected by effective tax rate) which reflect time value of money, and if the due date is less than one year we calculate the estimated value of obligation but if it have significant impact then it calculated using the current value.

2.20- Financial GuaranteesA financial guarantee contract is a contract issued by the Bank as security for loans or debit current accounts due from its clients to other entities that requires the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. These financial guarantees are presented to the banks, corporations and other entities on behalf of the bank’s clients. When a financial guarantee is recognized initially, the Bank shall measure it at its fair value that is directly attributable to the issue of such financial guarantee.

The amount initially recognized less, when appropriate, cumulative amortization of security fees recognized in the income statement using the straight-line method over the term of the guarantee and the best estimate for the payments required to settle any financial obligation resulting from the financial guarantee at the balance sheet date such estimates are made based on experience in similar transactions and historical losses as supported by management judgment.

Any increase in the obligations resulting from the financial guarantee, shall be recognized within other operating income (costs) in the income statement.

2.21- Employees’ benefits2.21.1- Pension obligationsThe Bank has employees insurance fund, it was founded at the first of July 2000 under the law of 54 for the year 1975 and its executive regulations for the purpose of granting insurance and compensation benefits for the members. This fund rules and modifications are applied to all the bank staff in the head office and its branches in Arab Republic of Egypt.

The Bank is committed to lead to the fund monthly and annual subscriptions in accordance with the Rules of the Fund and its amendments, and there are no obligations to the Bank following the payment of additional contributions. Contributions are recognized in expenses of employee benefits when due. The recognition of contributions paid in advance as an asset to the extent that its payment to the reduction of future payments or cash refund.



2.22- Income taxesIncome tax on the profit or loss for the year includes each of year tax and deferred tax and is recognized in the income statement except for income tax relating to items of equity that are recognized directly in equity.

Income tax is recognized based on net taxable profit using the tax rates applicable at the date of the balance sheet in addition to tax adjustments for previous years.

Deferred taxes arising from temporary time differences between the book value of assets and liabilities are recognized in accordance with the principles of accounting and value according to the foundations of the tax, this is determining the value of deferred tax on the expected manner to realize or settle the values of assets and liabilities, using tax rates applicable at the date of the balance sheet.

Deferred tax assets of the Bank recognized when there is likely to be possible to achieve profits subject to tax in the future to be possible through to use that asset, and is reducing the value of deferred tax assets with part of that will not come from tax benefit expected during the following years, that in the case of expected high benefit tax, deferred tax assets will increase within the limits of the above reduced.

2.23- BorrowingBorrowing is recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortized cost, any difference between proceeds net of transaction costs and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

2.24- Capital2.24.1- Capital issuance costCost of issuance of new shares, issuance of shares to effect an acquisition, or issue of share options, net of tax benefits, are reported a deduction from equity.

2.24.2- DividendsDividends are recognized when the general assembly of shareholders approves them. Dividends include the employees’ profit share and the board of directors’ remuneration as prescribed by the Bank’s articles of association and the corporate law.

2.24.3- Treasury sharesThe Bank didn’t deal on the treasury stocks, and in case of purchasing treasury stocks the purchased amount is deducted from shareholders’ equity till its cancellation and in case of selling or reissuing these stocks all collected amounts will be added to shareholders’ equity.

2.25- Trust activitiesThe Bank practices trust activities that result in ownerships or management of assets on behalf of individuals, trusts, and retirement benefit plans. These assets and related income are excluded from the Bank’s separate financial statements, as they are assets not owned by the Bank.

2.26- Comparatives figuresComparative figures are reclassified, where necessary, to conform with changes in the current year presentation.

3- Financial risk managementThe Bank’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is core to the financial business, and the operational risks are an inevitable consequence of being in business. The Bank’s aim is therefore to achieve an appropriate balance between risk and return and minimize potential adverse effects on the Bank’s financial performance. And the most important types of financial risks are credit risk, market risk, liquidity risk and other operating risks. Also market risk includes exchange rate risk, rate of return risk and other prices risks.

The Bank’s risk management policies are designed to identify and analyses these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Bank regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice.

Risk management is carried out by a risk department under policies approved by the Board of Directors. Bank Treasury identifies, evaluates and hedges financial risks in close co-operation with the Bank’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.

In addition, credit risk management is responsible for the independent review of risk management and the control environment.

3.1- Credit riskThe Bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the Bank by failing to discharge an obligation. Management therefore carefully manages its exposure to credit risk. Credit exposures arise principally in loans and advances, debt securities and other bills. There is also credit risk in off-balance sheet financial arrangements such as loan commitments.

The credit risk management and control are centralized in a credit risk management team in Bank Treasury and reported to the Board of Directors and head of each business unit regularly.



3.1.1- Credit risk measurement(a) Loans and advances to banks and customersTo measure credit risk related to loans and advances extended to banks and customers, the Bank examines the following three components:

- Probability of default of the customer or others in fulfilling their contractual obligations.

- The current position and the likely expected future development from which the bank can conclude the balance exposed to default (exposure at default).

- Loss given default.The daily activities of the bank’s business involves of measurement for credit risk which reflect the expected loss (The Expected Loss Model) required by the Basel Committee on Banking Supervision. The operating measures may interfere with the impairment charge according to the Egyptian Accounting Standard no. (26), which depends on losses realized at the balance sheet’s date (realized losses models) and not on expected losses.

The Bank assesses the probability of default of individual counterparties using internal rating tools tailored to the various categories of counterparty. They have been developed internally and combine statistical analysis with credit officer judgment and are validated, where appropriate.

Clients of the Bank are segmented into four rating classes.

The Bank’s rating scale, which is shown below, reflects the range of default probabilities defined for each rating class. This means that, in principle, exposures migrate between classes as the assessment of their probability of default changes. The rating tools are kept under review and upgraded as necessary. The Bank regularly validates the performance of the rating and their predictive power with regard to default events.

Bank’s internal ratings scale:Bank’s internal ratings scale Bank’s rating Description of the grade1 Performing loans2 Regular watching3 Watch list4 Nonperforming loans

And the loans expose to default depend on the banks expectation for the outstanding amounts when default occur.

example, as for a loan position is the nominal value while for commitments the Bank enlists all already drawn amounts besides these amounts expected to be withdrawn until the date of default, if it happens.

Loss given default or loss severity represents the Bank expectation of the extent of loss on a claim should default occur. It is expressed as percentage loss per unit of exposure and typically varies by type of counterparty, type and seniority of claim and availability of collateral or other credit mitigation.

(b) Debt instruments and treasury and other billsFor debt instruments and bills, external rating such as Standard & Poor’s rating or their equivalents are used by the Bank Treasury for managing of the credit risk exposures, and if this rating is not available, then other ways similar to those used with the credit customers are uses. The investments in those securities and bills are viewed as a way to gain a better credit quality mapping and maintain a readily available source to meet the funding requirement at the same time.

3.1.2- Risk limit control and mitigation policiesThe Bank manages, limits and controls concentrations of credit risk wherever they are identified − in particular, to individual counterparties and banks, and to industries and countries.

The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent review, when considered necessary. Limits on the level of credit risk by individual, counterparties, product, and industry sector and by country are approved quarterly by the Board of Directors.

The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on- and off-balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange contracts. Actual exposures against limits are monitored daily.

Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to meet interest and capital repayment obligations and by changing these lending limits where appropriate.Some other specific control and mitigation measures are outlined below:

(a) CollateralThe Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security for funds advances, which is common practice. The Bank implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are:

• Mortgages over residential properties;• Mortgage business assets such as premises, And inventory;• Mortgage financial instruments such as debt securities and equities.

Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are generally unsecured. In addition, in order to minimize the credit loss the Bank will seek additional collateral from the counterparty as soon as impairment indicators are noticed for the relevant individual loans and advances.

Collateral held as security for financial assets other than loans and advances is determined by the nature of the instrument. Debt securities, treasury and other governmental securities are generally unsecured, with the exception of asset-backed securities and similar instruments, which are secured by portfolios of financial instruments.



(b) DerivativesThe Bank maintains strict control limits on net open derivative positions (i.e., the difference between purchase and sale contracts), by both amount and term. At any one time, the amount subject to credit risk is limited to the current fair value of instruments that are favorable to the bank (i.e., assets where their fair value is positive), which in relation to derivatives is only a small fraction of the contract, or notional values used to express the volume of instruments outstanding. This credit risk exposure is managed as part of the overall lending limits with customers, together with potential exposures from market movements. Collateral or other security is not usually obtained for credit risk exposures on these instruments, except where the bank requires margin deposits from counterparties.

Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a corresponding receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to cover the aggregate of all settlement risk arising from the Bank market transactions on any single day.

(c) Master netting arrangementsThe Bank further restricts its exposure to credit losses by entering into master netting arrangements with counterparties with which it undertakes a significant volume of transactions. Master netting arrangements do not generally result in an offset of balance sheet assets and liabilities, as transactions are usually settled on a gross basis. However, the credit risk associated with favorable contracts is reduced by a master netting arrangement to the extent that if a default occurs, all amounts with the counterparty are terminated and settled on a net basis. The Bank overall exposure to credit risk on derivative instruments subject to master netting arrangements can change substantially within a short period, as it is affected by each transaction subject to the arrangement.

(d) Credit-related commitments3.1.3- Impairment and provisioning policiesThe internal rating systems described in Note 3.1.1 focus more on credit-quality mapping from the inception of the lending and investment activities.

In contrast, impairment provisions are recognized for financial reporting purposes only for losses that have been incurred at the balance sheet date based on objective evidence of impairment Due to the different methodologies applied, the amount of incurred credit losses provided for in the financial statements are usually lower than the amount determined from the expected loss model that is used for internal operational management and CBE regulation purposes.

The impairment provision shown in the balance sheet at the year-end is derived from each of the four internal rating grades. However, the majority of the impairment provision comes from the bottom two grads. The table below shows the percentage of the Bank’s in balance sheet items relating to loans and advances and the associated impairment provision for each of the Bank’s internal rating categories:

The internal rating tools assists management to determine whether objective evidence of impairment exists under EAS 26, based on the following criteria set out by the Bank:

- Cash flow difficulties experienced by the borrower

- Breach of loan covenants or conditions

- Initiation of bankruptcy proceedings

- Deterioration of the borrower’s competitive position

- Bank granted concessions may not be approved under normal circumstances, for economic, legal reasons, or financial difficulties facing the borrower

- Deterioration in the value of collateral

- Deterioration in the credit situation

The Bank’s policy requires the review of all financial assets that are above materiality thresholds at least annually or more regularly when individual circumstances require. Impairment allowances on individually assessed accounts are determined by an evaluation of the incurred loss at balance-sheet date on a case-by-case basis, and are applied to all individually significant accounts. The assessment normally encompasses collateral held (including re-confirmation of its enforceability) and the anticipated receipts for that individual account.

Collectively assessed impairment allowances are provided portfolios of homogenous assets by using the available historical experience, experienced judgment and statistical techniques.

3.1.4- Pattern of measuring the general banking riskIn addition to the four categories of measuring credit worthiness discussed in disclosure 3.1.1.a the management makes small groups more detailed according to the CBE rules. Assets facing credit risk are classified to detailed conditions relying greatly on customer’s information, activities, financial position and his regular payments to his debts.

The Bank calculates the provisions needed for assets impairment in addition to credit regulations according to special percentages determined by CBE.

Bank’s ratingJune 30, 2018 June 30, 2017

Loans and advances Impairmentprovisions

Loans andadvances

Impairmentprovisions

Performing loans 83.06% 20.58% 78.16% 14.57%

Regular watching 9.69% 8.02% 6.75% 4.63%

watch list 2.25% 0.60% 8.34% 6.72%

Non-performing loans 4.99% 70.80% 6.75% 74.09%

100% 100% 100% 100%


In the case of increase of impairment loss provision needed according to CBE than that for purposes of making the financial statements according to the EAS, the general banking risk reserve is included in owners’ equity deducted from the retained earning with this increase, this reserve is modified with periodic basis with the increase and decrease, which equals the increase in provisions and this reserve is not distributed. And this are categories of worthiness according to internal ratings compared with CBE ratings and rates of provisions needed for assets impairment related to credit risk:

Second: Classification of small loans according to economic activities:

3.1.5- Maximum exposure to credit risk before collateral held

Balance sheet items exposed to credit risks

Off Balance sheet items exposed to credit risk

3.1.6- Loans and advances

Balances of loans and Advances in terms of credit risk rating are as follows:


CBE Rating Description % Provision Internal Rating Internal Description

1 Low Risk 0 1 Performing loans

2 Average Risk 1% 1 Performing loans

3 Satisfactory Risk 1% 1 Performing loans

4 Reasonable Risk 2% 1 Performing loans

5 Acceptable Risk 2% 1 Performing loans

6 Marginally Acceptable risk 3% 2 Regular watching

7 Watch list 5% 3 Watch list

8 Substandard 20% 4 Non-performing loans

9 Doubtful 50% 4 Non-performing loans

10 Bad Debt 100% 4 Non-performing loans

Terms of classification Performing loansNon- performing loans

Substandard Doubtful Bad Debt

Delay payment period - 6 Months 9 Months 12 Months

Provision 3% 20% 50% 100%

June 30, 2018 June 30, 2017

EGP EGP

Treasury Bills and other governmental notes 11,554,998,879 6,711,846,384

Loans and Advances to customers 21,356,360,373 15,479,301,497

Financial Derivatives 15,399,045 0

Financial Investments: AFS and HTM debt instruments 3,061,980,602 4,443,999,748

Other assets 1,048,413,358 888,611,300

Total 37,037,152,257 27,523,758,929

June 30, 2018 June 30, 2017

EGP EGP





Total 2,892,078,122 2,092,705,930

June 30, 2018 June 30, 2017

EGP EGP

Neither have arrears nor impaired 20,242,574,034 14,026,764,836

Have arrears but not impaired 57,008,468 408,473,128

subject to impairment 1,056,777,871 1,044,063,533

Total 21,356,360,373 15,479,301,497

Less: impairment loss provision (1,264,761,999) (1,261,632,494)

Net 20,091,598,375 14,217,669,003


Loans and advances have arrears but are not subject to impairmentThese are loans and facilities with past-due installments but are not subject to impairment, unless Information has otherwise indicated. Loans and facilities to customers which have arrears but are not subject to impairment are analyzed below:

Loans and Advances which are individually impairedLoans and Advances to customersLoans and advances individually assessed without taking into consideration cash flows from guaran-tees are totaled EGP 1,056,777,871 at june 30,2018 against EGP 1,044,063,533 at June 30,2017.

The breakdown of the gross amount of individually impaired loans and advances held by the Bank, are as follows:

Restructured Loans and Advances:Restructuring activities include rescheduling arrangements, obligatory management programs, modi-fication and deferral of payments. The application of restructuring policies are based on indicators or criteria of credit performance of the borrower that is based on the personal judgment of the manage-ment, indicate that payment will most likely continue. Restructuring is commonly applied to term loans, especially customer loans. Renegotiated loans totaled at the end of the year

Renegotiated loans totaled at the end of June 30, 2018:

3.1.7- Debt instruments, treasury bills and other governmental notesThe table below presents an analysis of debt instruments, treasury bills and other governmental notes by rating agency at the end of the financial year based on Standard & Poor’s ratings or their equivalent:

Loans and advances neither have arrears nor impairedThe credit quality of loans and advances that do not have arrears and which are not subject to impairment is assessed by reference to the Bank’s internal rating.

Rating

Loans and Advances to customers (EGP)June 30, 2018

Retail CorporateTotal loans and advances

to customers



Total 247,929,620 19,994,644,414 20,242,574,034

Rating

Loans and Advances to customers (EGP)June 30, 2017

Retail CorporateTotal loans and advances

to customers



Total 208,913,682 13,817,851,154 14,026,764,836


CorporatesDirect loans (EGP)

June 30, 2018 June 30, 2017

Arrears up to 30 days 49,508,513 158,007,064

Arrears from 30 to 60 days 2,500,002 8,724,323

90 days arrears 4,999,953 241,741,741

Total 57,008,468 408,473,128

Corporates (EGP)

June 30, 2018 June 30, 2017

Loans which are individually impaired 1,056,777,871 1,044,063,533

Collaterals Fair value 112,066,938 111,023,830

Loans and advance to customersEGP thousands

June 30, 2018 June 30, 2017

Direct loans 217,149 205,000

Financial investments

June 30, 2018 June 30, 2017

Treasury bills and FinancialInvestments

Treasury bills and FinancialInvestmentsother Gov. notes other Gov. notes

A- to A+ - 5,527 - 18,899

Lower than A- 11,554,999 3,056,453 6,711,846 4,425,100

Total 11,554,999 3,061,981 6,711,846 4,444,000

EGP thousands


3.1.8- Concentration of risks of financial assets exposed to credit risks

3.1.8.1- (Geographical segments)The following table provides a breakdown of the gross amount of the most significant credit risk limits to which the Bank is exposed at the end of the current reporting period.

The gross amount of all financial assets is segmented into the geographical regions of the Bank’s clients:

3.2- Market RisksThe Bank is exposed to market risk represented in volatility in fair value or future cash flows resulted from changes in market prices. Market risk arise from the open positions of interest rates, currency rates and the equity instruments, the management of market risk resulted from trading, non-trading activities are centralized in the market risk department in the Bank.

3.2.1- Foreign exchange rate volatility riskThe Bank is exposed to foreign exchange rate volatility risk in terms of the financial position and cash flows. The board of directors set limits for foreign exchange risk at the total value of positions at the end of the day and during the day when timely control is exercised.The following table summarizes the bank’s exposure to the risks of fluctuations in foreign exchange rates at the end of the reporting period. This table includes the carrying amounts of the financial instruments in terms of their relevant currencies and in EGP equivalent.

3.2.2- Interest rate riskThe Bank is exposed to impact of fluctuations in the levels of interest rates prevailing in the market that is the cash flow risk of interest rate represented in the volatility of future cash flow of a financial instrument due to change in the interest rate of the mentioned instrument. Whereas the interest rate is fair value risk is the risk of fluctuations in the value of the financial instrument due to changes in interest rates in the market.The interest margin may rise due to these changes but still the profits may decrease if unexpected movements occur. The board of directors sets limits for the level of difference in the re-pricing of interest rate that the Bank can maintain and Risk department in the Bank daily monitors this.The following table summarizes the extent of the Bank’s exposure to the risk of fluctuations in interest rates that includes the book value of financial instruments divided based on the price of re-pricing dates or maturity dates whichever is sooner.

3.1.8.2- (Industry Segments)


Arab Republic of Egypt

Cairo Alex and Delta Upper Egypt Total

Treasury bills and other governmental notes

11,554,998,879 - - 11,554,998,879

Gross Loans and advances to customers & Banks:

0

Personal loans 135,426,942 61,563,279 11,037,456 208,027,677

Corporate Loans 18,134,364,245 3,013,786,437 182,015 21,148,332,697

Impairment LossProvision-Individual

(327,888) (61,468) 0 (389,356)

Impairment LossProvision-Corporate

(1,088,518,315) (175,854,328) 0 (1,264,372,643)

Net Loans and ad-vances to customers & Banks

17,180,944,983 2,899,433,920 11,219,471 20,091,598,375

Available for sale financial investments:

Debt instruments 937,190,631 - - 937,190,631

Held to Maturity financial investments:

Debt instruments 2,124,789,971 - - 2,124,789,971

Total 31,797,924,456 2,899,433,920 11,219,471 34,708,577,865

Financialinstitutions

Manufacturinginstitutions

Governmentsector

Otheractivities

Total

Treasury Bills and other gov.notes

- - 11,554,999 - 11,554,999

Trading financial assets:

Loans and advances tocustomers

135,075 11,392,371 3,172,244 6,656,671 21,356,360

Financial derivatives 0 0 0 15,399 15,399


- Debt instruments 0 0 3,056,453 5,527 3,061,981

Total 135,075 11,392,371 17,783,696 6,677,597 35,988,739

EGP thousands


According to Basel II:


3.3- Liquidity RiskLiquidity risk is the risk that the Bank is unable to meet its payment obligations associated with its financial liabilities when they fall due and to replace funds when they are withdrawn.

3.5- Capital ManagementThe Bank’s objectives when managing capital, which consists of another items in addition of owner’s equity stated in balance sheet are:- To comply with the capital requirements in Egypt.- To safeguard the Bank’s ability to continue as an ongoing concern so that it can continue to provide returns for shareholders and stakeholders.- To maintain a strong capital base to support the development of its business.- Capital adequacy and the use of regulatory capital are monitored daily by the Bank’s management, employing techniques based on the guidelines developed by the Basel Committee as implem ented by the Central Bank Of Egypt, for supervisory purposes. The required information is filed with the Authority on a quarterly basis.Central Bank Of Egypt requires the following:- Hold the minimum level of the issued and paid up capital of EGP 500 Million.- Maintaining a percentage between capital elements and asset and contingent liabilities elements weighted by risk equals to or exceeds 11.25%. The numerator of the capital adequacy ratio consists of the following two tiers:

Tier One:Represented in basic capital which consists of paid-in-capital (after deducting the book value of treasury shares), retained profits and reserves from profit appropriation with the exception of general banking risk reserve less any goodwill previously recognized or any carried over losses and 40% of intangible assets and deferred taxes.The conservative buffer is formed from the Bank’s annual profits as an additional independent pillar of the continuing base capital within the first tranche of the Bank’s capital base and thus to the total standard, and the conservative buffer is originally configured from annual profits but is allowed to be configured if components with the base capital meet this.

Tier Two:Supplementary Capital consists of equivalent of the general risks provision related to creditworthiness bases issued by the Central Bank Of Egypt and not exceeding 1.25% of the total risk weighted assets and contingent liabilities, subordinated loans / deposits’ term which exceed 5 years (with amortization of 20%of their value each year of the last five years of their term) and 45% of the increase between fair value and book value of financial investments available for sale, held to maturity and associates and subsidiaries.When calculating the total numerator of the capital adequacy ratio it should be taken into consideration that the supplementary capital does not exceed in any way the basic capital and that subordinated loans (deposits) do not exceed half of the basic capital.Asset at risk are weighted ranging from zero up to 100% classified in accordance with the nature of the debit side of each asset, to reflect the related credit risks, while taking into consideration cash collaterals. Same treatment is applied on off- balance amounts after making adjustments to reflect the contingent nature and probable losses of these amounts.The Bank has complied with all local capital requirements at June 30,2018 the following table summarizes the components of basic and supplementary capital and capital adequacy ratios as at 30/6/2018.

*Based on consolidated financial statement figures and in accordance with Central Bank of Egypt regulation issued on 24 December 2012.*The decision of the Central Bank of Egypt has been implemented to take into consideration the impact of 50 largest clients on the capital adequacy ratio starting from January 2017.

June 30,2018

June 30,2017

Capital 4,532,123 2,846,181


Paid up capital 2,728,000 1,440,000

Reserves 371,796 337,920

IFRS9 Reserve 271,230 0

Retained profits 408,832 537,972

Value of surplus (deficit) in continuing core capital after exclusions from 4.5%

2,171,195 676,690

Conservative buffer available from surplus of continuing base capital components after exclusions (if any)

416,580 209,709

The value of the deficit in conservative buffer to be configured (-) 0 0

Interim Profits 501,941 367,678

Un controllable interest 59 62

Total deductions from basic capital (119,095) (138,786)

Total basic capital 4,162,763 2,544,846

Tier two (Supplementary capital)

45% of special reserve 10,098 10,098

45% of the reserve for foreign exchange differences 26,768 44,131

45% of fair value reserve for financial investments available for sale 3,578 0

Impairment provision for loans and regular contingent liabilities 339,037 256,593

Total deductions from supplementary capital (10,121) (9,487)

Total supplementary capital 369,360 301,335

Risk weighted assets and contingent liabilities :

Total credit risk 27,122,979 20,527,421

The excess value of the top 50 customers for the prescribed limits isweighted by risk weights

4,076,660 11,157,536

Total market risk 187,212 315,380

Total operational risk 1,939,561 1,553,070

Total 33,326,412 33,553,407

Capital adequacy ratio (%) *Taking into consideration the effect of Top 50Customers

13.60% 8.48%

Capital adequacy ratio (%) * Without Taking into consideration the effectof Top 50 Customers

15.49% 12.71%



3.6- Leverage RatioThe measurement of financial leverage that supports the measurement of capital adequacy standard associated with the risk scale , simple and straightforward according does not account for the risk weights attributed its effectiveness to its ability to reduce the pressure on the banking system and indicate the leverage ratio to measure the adequacy of the first of its basic capital slide compared with total assets Bank, which is not less than 3% .The following table summarizes the components of leverage ratios as at 30/6/2018 :

4 - The significant accounting estimates and assumptionsThe Bank applies estimates and assumptions, which affect the amounts of assets and liabilities to be disclosed within the following financial year. Estimates and assumptions are continuously assessed based on historical experience and other factors as well, including the expectations of future events, which are considered reasonable in the light of available information and surrounding circumstances.

(A) Impairment loss on loans and advancesThe Bank reviews the loans and advances portfolio on at least a quarterly basis to assess impairment.

The Bank applies personal judgment when determine the necessity of recording the impairment charges to the income statement so as to know if there is any reliable data which refer to the existence of a measurable decline in the expected future cash flows of the loans portfolio even before being acquainted with the decline at the level of each loan in the portfolio. These evidences may include observable data, which refer to the occurrence of a negative change in the ability of a portfolio of borrowers to repay the Bank, or local or economic circumstances related to default in the bank’s assets. On scheduling future

cash flows, the management use estimates based on prior experience of losses of assets with credit risk characteristics in the presence of objective evidences that refer to impairment similar to those included in the portfolio.

The method and assumptions used in estimating the amount and timing of future cash flows are reviewed on a regular basis to minimize any differences between estimated and actual losses based on expertise.

(B) Impairment in equity instruments investments available for saleThe Bank determine impairment in equity’s instruments’ investments available for sale when there is a significant or prolonged decline in their fair value below their cost.

Determining whether the decrease is significant or prolonged depends on personal judgment. To reach this judgment the Bank estimates- among other factors- the usual volatility of the share price. Additionally, there could be impairment if there is evidence on the existence of deterioration in the financial position of the invested company or in its operating and financing cash flows or if there is deterioration in the industry’s or sector’s performance or in case of changes in technology.

(C) The fair value of derivativesThe fair values of financial instruments, which are not listed in active markets, is identified by applying valuation methods. When such methods are used to identify fair value, they are tested and reviewed periodically by qualified personnel who are independent of the body that prepared them.

(D) Financial investments held - to- maturityThe non-derivative financial assets with payments and maturity dates that are fixed or determinable are classified as financial investments held to maturity, and this classification requires to a great extent the application of personal judgment and to reach such decision the Bank evaluates the intention and ability to hold these investments until maturity. If the Bank fails to hold these investments until maturity date, with the exception of very special cases such as selling an insignificant amount near maturity, then these investments, which were classified held to maturity, should be reclassified available for sale investments.

Consequently, these investments shall be measured by fair value and not by amortized cost in addition to suspension of classifying any investments under the mentioned item.

(E) Income taxesThe Bank records the liabilities of the expected results of tax examination according to estimates of the probability of the emergence of additional taxes. When there is, a variance between the final result of taxes and the amounts previously recorded then these variances will affect the income tax and deferred tax provision for the year in which the variance has been identified.

June 30, 2018


Paid up capital 2,728,000

Reserves 371,796

IFRS Reserves 271,230

Retained profits 408,832

Interim Profits 501,941

Un controllable interest 59

Total deductions from basic capital (119,095)

Total basic capital 4,162,763

Assets and contingent liabilities :

Assets 44,925,410

contingent liabilities 3,303,610

Total Assets and contingent liabilities 48,229,020

)%( Leverage ratio 8.63%


5- Net Interest IncomeJune 30, 2018 June 30, 2017

EGP EGP

Interest From Loans and Similar Income:

Loans and Facilities for Customers 2,301,865,674 1,360,811,795

Treasury Bills 1,168,077,030 479,301,441

Treasury Bonds 544,573,910 656,078,870


Deposits, Current Accounts and Certificates 619,039,566 443,076,420

Other 14,213,552 0

Total 4,649,064,330 2,945,114,587

Cost of Deposit and Similar Costs:

Deposits and Current Accounts:

Banks (217,018,732) (173,470,691)

Customers (3,072,787,198) (1,672,521,334)

Other loans (56,333,626) (37,692,744)

REPO (566,484) (25,379,792)

Total (3,346,706,040) (1,909,064,562)

Net 1,302,358,290 1,036,050,025

6- Net Income from Fees and Commissions

June 30, 2018 June 30, 2017

EGP EGP

Fees and commissions income:

Fees and commission related to credit 313,962,644 238,457,192

Custody Fees 658,090 573,199

Other Fees 38,261,998 23,546,184

Total 352,882,732 262,576,575

Fees and Commissions Expenses:

Other fees paid (46,940,820) (24,317,575)

Total (46,940,820) (24,317,575)

Net 305,941,912 238,259,000

June 30, 2018 June 30, 2017

EGP EGP

Profit (losses) from foreign exchange 90,133,414 37,719,495

Profit (losses) on revaluation of forward contracts 15,399,045 0

Profit (losses) from currencies swap contracts (225) (752,579)

Profit (losses) from currencies swap contracts revaluation (352,205) 143,281

Profit arising from sale of trading investments 383,255 1,902,717

Valuation differences of trading investments 2,171,968 2,958,282

Total 107,735,251 41,971,197

June 30, 2018 June 30, 2017

EGP EGP

Loans and advance to customer (68,635,447) (83,295,818)

Total (68,635,447) (83,295,818)

in the context of the Central Bank's initiative to revitalize the mortgage sector, the interest paid for tranches from other loans has been re-posted to the Treasury bills with a repurchase commitment on June 30, 2018, as well as on June 30, 2017.

7- Dividend IncomeJune 30, 2018 June 30, 2017

EGP EGP

Mutual funds 541,764 237,573

Financial investments available for sale 14,548,985 8,050,696

Total 15,090,749 8,288,269

8- Net Trading Income

9- Impairment (charge) of credit losses



10- Administrative expensesJune 30, 2018 June 30, 2017

EGP EGP

Staff Costs

- Salaries and Wages (253,786,601) (203,905,019)

- Social insurance (10,602,104) (8,482,315)

Pension costs

- Defined contribution scheme (20,160,963) (18,465,353)

- Defined benefits scheme (51,428,170) (37,747,120)

Other Administrative expenses

- Operations expenses (78,446,831) (41,997,162)

- Communications expenses (16,097,915) (10,409,172)

- Business expenses (15,221,126) (8,872,981)

- Stationary expenses (5,160,122) (2,574,164)

- Service expenses (62,875,610) (47,403,802)

- Depreciation expenses (38,707,720) (30,675,429)

Total (552,487,162) (410,532,517)

June 30, 2018 June 30, 2017

EGP EGP

Profit (loss) resulting from revaluation of foreign currency balances of assets and liabilities of monetary nature other than those held for trading or originally classified at fair value through profit and loss

40,457,205 (44,572,392)

Collected Telex, Swift, Postage, Printed matters & Photocopy

44,002,519 25,530,598

Legal service income 189,750 92,600

( Charges ) release of other provisions (24,715,051) (33,102,502)

Capital profits 8,454,960 14,956,124

Miscellaneous income 18,253,168 47,804,341

Miscellaneous expenses (5,988,606) 2,320,256

Total 80,653,944 13,029,025

June 30, 2018 June 30, 2017

EGP EGP

Current accounts 167,743,679 439,360,481

Deposits 5,320,066,265 4,521,252,300

Total 5,487,809,944 4,960,612,781

Central Bank 4,371,266,849 3,457,688,116

Local banks 192,576,923 467,189,156

Foreign banks 923,966,173 1,035,735,509

Total 5,487,809,944 4,960,612,781

Non - interest bearing balances 167,743,679 439,360,481


Total 5,487,809,944 4,960,612,781


Total 5,487,809,944 4,960,612,781

11- Other operating income (expenses)

12- Cash and due from central bank of Egypt

13- Due from banks


June 30, 2018 June 30, 2017

EGP EGP

Cash on hand 364,178,213 277,420,257

Due from Central Bank of Egypt (mandatory reserve) 1,963,877,525 232,145,229

Checks Purchased 7,000,000 0

Total 2,335,055,738 509,565,487


14- Treasury bills and other governmental notes 16- Loans and overdrafts for customers

15- Trading Financial Assets

June 30, 2018 June 30, 2017

EGP EGP

Treasury Bills And Other Governmental Notes 11,554,998,879 6,711,846,384

11,554,998,879 6,711,846,384

Represented in:

91 days Maturity 61,525,000 639,075,753

182 days Maturity 418,925,000 262,850,000

273 days Maturity 3,248,625,000 1,440,250,000

364 days Maturity 8,234,650,442 4,616,058,670

11,963,725,442 6,958,234,423

Subtract:

Unearned income (393,669,212) (231,199,036)

Total (1) 11,570,056,230 6,727,035,387

REPOS (15,057,351) (15,189,003)

Total 11,554,998,879 6,711,846,384

June 30, 2018 June 30, 2017

EGP EGP

Discounted documents 191,021,393 106,202,231

Loans to customers 21,064,493,017 15,335,138,988

Loans to Banks 89,483,720 0

Acquired assets debtors 11,362,243 17,915,279

Total 21,356,360,373 15,479,301,497

Less: impairment loss provision customers (1,263,885,059) (1,261,632,494)

Less: impairment loss provision Banks (876,940) 0

Net 20,091,598,375 14,217,669,003

June 30, 2018 June 30, 2017

EGP EGP

Debt instruments:

Mutual Funds:

Export Development Bank of Egypt Fund -The Second - The Monetary

26,441,250 23,990,532

Total 26,441,250 23,990,532


- Within the item of treasury bills amount EGP 18,025,000 owed to the Central Bank of Egypt against mortgage finance and amount 146,175,000 of small & medium enterprises 7% as of 30/6/2018.

- In the context of the Central Bank's initiative to revitalize the mortgage sector, the interest paid for tranches from other loans has been re-posted to the Treasury bills with a repurchase commitment on June 30, 2018, as well as on June 30, 2017.

Loans Provisions Analysis:June 30, 2018 June 30, 2017

SpecificProvisions


Total SpecificProvisions


Total

EGP EGP EGP EGP EGP EGP

Balance atthe

beginning of the year

623,078,319 638,554,175 1,261,632,494 636,668,046 259,051,016 895,719,062

Formed during theyear

68,635,447 0 68,635,447 83,295,818 0 83,295,818

Collections from loans previouslywritten-off

0 2,100,325 2,100,325 0 25,818,601 25,818,601

Reclas- sifications betweenprovisions

300,542,105 (308,672,251) (8,130,146) (141,122,620) 140,840,245 (282,375)

Foreign currency revaluationdifference

(5,164,746) (376,013) (5,540,759) 165,338,314 212,844,313 378,182,627

Used Provision during theyear

(53,935,362) 0 (53,935,362) (121,101,240) 0 (121,101,240)

Balance at the end ofthe year

933,155,762 331,606,236 1,264,761,999 623,078,319 638,554,175 1,261,632,494



17- Financial DerivativesCurrency Swap / yield contracts represent commitments to exchange a range of cash flows. These contracts result in currency exchange or rates (Fixed rate with variable rate, for example) or (all with swap contracts and currencies).

The actual exchange of contract amounts is only in certain currency swap contracts. The Bank's credit risk is the potential cost of replacing the swap contracts if the other parties fail to perform their obligations.

This risk is monitored on an ongoing basis in comparison to the fair value and by contractual amount , and for credit risk control The Bank evaluates the counterparty using the same techniques used in the lending activities.

The following are the fair values of derivatives as at June 30, 2018:

18- Financial InvestmentJune 30, 2018 June 30, 2017

EGP EGP

a. Available for sale investment:

Debt instruments-fair value:

Listed in stock market 937,190,631 1,100,134,407

Equity instruments-fair value:

Listed in stock market 0 5,893,055

Unlisted in stock market 524,800,592 723,089,069

Total available for sale investment ) 1 ( 1,461,991,224 1,829,116,530

b. Held to maturity investment:

Debt instruments at amortized cost:

listed in stock market 2,124,789,971 3,343,865,341

Certificate Of Deposits:

Suez Canal certificate Of Deposits 45,000,000 45,000,000

Mutual funds:

Certificates of mutual funds issued according to deter-mined percentages

15,000,077 20,852,240

Total held to maturity investment ) 2 ( 2,184,790,048 3,409,717,582

Total Financial Investments ) 1+2 ( 3,646,781,271 5,238,834,112

Current balances 3,061,980,602 4,449,892,803

Non-current balances 584,800,699 788,941,309

3,646,781,271 5,238,834,112

Fixed interest debt instruments 3,061,980,602 4,443,999,748

Total 3,061,980,602 4,443,999,748

contractual amountFair Value

Assets Liabilities

EGP EGP EGP

Forward Deals 202,244,350 15,399,045 0

Total assets (liabilities) of Financial Derivatives 202,244,350 15,399,045 0

- On 5/5/2016 the Bank reclassified debt instruments available for sale (government bonds), fair value at that date EGP 701,321,624 from available for sale investments to Held to maturity investments , as the Bank has the ability & intension to keep it till maturity date.

- On 3/7/2016 Bank reclassified debt instruments available for sale (government bonds), fair value at that date EGP 883,543,119 from available for sale investments to Held to maturity investments , as the Bank has the ability & intension to keep it till maturity date.

- On 23/10/2016 the Bank reclassified debt instruments available for sale (government bonds), fair value at that date EGP 1,650,410,085 from available for sale investments to Held to maturity investments , as the Bank has the ability & intension to keep it till maturity date.

- On 3/11/2016 the Bank reclassified debt instruments available for sale (corporate bonds), fair value at that date EGP 54,458,133 from available for sale investments to Held to maturity investments, as the Bank has the ability & intension to keep it till maturity date.

EGP Pounds



The following table shows book value & fair value as at 30 June 2018 for reclassified government bonds:

Profit (losses) from financial investment

19- Financial investment in subsidiaries and associated companies

20- Intangible assets

- The fair value that would have been recognized in equity losses if government bonds had not been reclassified amount of EGP 282,323,812.

EGP pound

Book Value Fair Value

Government Bonds 2,119,262,686 1,836,938,874


June 30, 2018 June 30, 2017

EGP EGP

Net book value at the beginning of the year 38,708,779 34,347,386

Additions 1,097,423 4,361,393



Amortization expense 2,312,638 1,710,732

Accumulated Amortization at the end of the year 35,956,130 33,643,492

Net intangible assets at the end of the year 3,850,072 5,065,286

June 30, 2018 June 30, 2017

EGP EGP

Profit from selling available for sale investment 5,989,502 256,344

(Losses) from impairment of available for sale stocks (83,663,924) (103,637,710)

Profit from selling treasury bills 2,112,496 2,394,420

Profit from selling treasury bonds 0 7,092

Profit from selling Associated & subsidiaries 0 9,781,298

Total (75,561,926) (91,198,555)

AFS FinancialInvestments

HTM FinancialInvestments

Total

Beginning balance at (01-07-2016) 4,156,929,565 867,964,868 5,024,894,433

Additions 1,397,595,452 2,662,254,547 4,059,849,999

Deductions (selling-redemptions) (4,082,443,517) (99,611,116) (4,182,054,633)


16,894,511 0 16,894,511

Foreign Exchange revaluation differences 422,726,614 14,047,000 436,773,614

Profit (loss) from change in fair value 21,051,614 (34,937,717) (13,886,103)


Ending balance at )30-06-2017( 1,829,116,530 3,409,717,582 5,238,834,112

Beginning balance at (01-07-2017) 1,829,116,530 3,409,717,582 5,238,834,112

Additions 211,209,662 7,828,048 219,037,710

Deductions (selling-redemptions) (525,137,168) (1,238,611,368) (1,763,748,536)

Changes in Zero copoun bonds' unearnedincome

(18,119,991) 0 18,119,991

Foreign Exchange revaluation differences (9,470,826) 0 (9,470,826)

Profit (loss) from change in fair value 21,816,958 5,855,787 27,672,745


Ending balance at (30-6-2018) 1,461,991,224 2,184,790,048 3,646,718,271

EGP Pounds June 30, 2018 Ratio June 30, 2017 Ratio

EGP % EGP %

Participations in Associated companies’ capital

Philae Cruisers company 6,875,000 28.94% 6,875,000 28.94%

Total 6,875,000 6,875,000



21- Other Assets 22- FIXED ASSETS (NET)June 30, 2018 June 30, 2017

EGP EGP

Accrued revenues 390,258,447 335,535,731

Prepaid expenses 28,710,905 41,581,492

Advances for purchase of fixed assets 409,339,516 304,121,893

Acquired assets (Net)* 43,377,392 83,645,946

Insurances and trusts 1,929,426 2,041,435

Suspense assets 150,437,989 64,420,652

Suspense assets - Taxes 8,229,852 17,930,702

Commissions under collection 6,621,272 360,041

Bonds amortization 764,505 10,421,157

Other Debitors 8,744,054 28,552,252

Total 1,048,413,358 888,611,300

June 30, 2018 June 30, 2017

EGP EGP

Accrued income for medium term loans 148,292,450 107,468,863

Accrued income for due from banks 110,543,048 61,838,288

Accrued income for financial investments 131,422,949 166,228,579

Total 390,258,447 335,535,731

June 30, 2018 June 30, 2017

EGP EGP


Additions during the year 136,375,911 100,798,969

transferred to fixed asset (31,158,288) 0

Balance at the end of year 409,339,516 304,121,893

Advanes for purchase of fixed assets is as follows

* Valuation of the assets acquired by the Bank in settlement of debts is recorded in accordance with the related Central Bank of Egypt regulations. In case the assets’ fair value falls below the value at which such assets have been acquired by the B ank on the balance sheet date, the difference is charged to other expenses in the income statement. In case of an increase in the fair value, such increase is recognized in the income statement to the extent of revaluation losses recognized in the income statement for previous financial periods

Land Premises Computers Vehicles Fixture and

improvementsEquipment Furniture Others Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP

Cost at the beginningof the year

114,643,062 263,705,291 59,882,932 9,335,011 152,100,155 34,454,725 21,668,365 33,192,404 688,981,946

Additions during theYear

0 23,400,051 23,611,693 25,500 22,259,503 3,919,214 13,341,152 684,110 87,241,222

Disposals during theYear

0 0 (43,599) (658,000) (5,750) (6,000) (5,750) (10,796) (729,895)

Cost at the end of the year (1)

114,643,062 287,105,342 83,451,026 8,702,511 174,353,907 38,367,939 35,003,767 33,865,718 775,493,273

Accu- mulateddeprecia- tion at the beginningof the year

0 73,933,876 52,458,887 77,695,62 121,944,002 28,820,325 18,667,869 22,464,257 326,058,778

Depre- ciation charged forthe year

0 75,991,23 96,519,83 527,021 13,178,316 1,535,124 2,109,629 1,793,888 36,395,083

Accumulat-ed depreciation fordisposals

0 0 13,958 (657,996) 0 (2,521) 0 (46,639) (693,198)

Accu-mulated deprecia-tion at the end of the year (2)

0 81,532,999 62,124,828 7,638,588 135,122,318 30,352,928 20,777,498 24,211,505 361,760,664

Net book value at the end of the year (1-2)

114,643,062 205,572,344 21,326,197 1,063,924 39,231,589 8,015,011 14,226,270 9,654,213 413,732,610

Net book value at the beginningof the year

114,643,062 189,771,415 7,424,046 1,565,448 30,156,153 5,634,400 3,000,497 10,728,147 362,923,167


23- Investment property 26- Customers Deposits

27- Debt InstrumentsExport Credit Guarantee Company of Egypt issued Bonds by EGP 50 millions with 5% annually interest rate, and this bonds will be amortized at the end of the company.

28- Other loans24- Deferred Tax Assets

25- Due to banks


June 30, 2018 June 30, 2017

EGP EGP


Book value at the end of the Year 307,790,156 307,790,156


Depreciation 102,313 375,425

Accumulated depreciation at the end of the Year 2,940,845 2,838,531

Net book value at the end of the Year 304,849,311 304,951,625

June 30, 2018 June 30, 2017

EGP EGP

Demand Deposits 13,638,832,991 9,788,506,764

Time Deposits 15,064,224,494 12,595,683,831

Saving deposits and certificates of deposit 5,048,737,742 4,488,094,980

Other Deposits 861,212,325 625,878,798

Total 34,613,007,553 27,498,164,374

June 30, 2018 June 30, 2017

EGP EGP

Deferred tax – provisions for contingent liabilities 4,568,123 4,568,123

Deferred tax – other provisions 987,199 792,309

Fixed assets 8,782,784 8,777,176

Total 14,338,106 14,137,608

June 30, 2018 June 30, 2017

EGP EGP

Current accounts 28,403 48,435

Deposits 2,735,263,154 1,045,103,845

2,735,291,557 1,045,152,280

Local banks 2,511,057,251 900,423,480

Foreign banks 224,234,306 144,728,800

2,735,291,557 1,045,152,280

Non - interest bearing balances 28,403 48,435


2,735,291,557 1,045,152,280


Total 2,735,291,557 1,045,152,280

ParticularsMaturity

date% Rate

Balances as of Balances as of

June 30, 2018 June 30, 2017

EGP EGP

- The Arab Investment Company SAA Bahrain

30-Nov-18 5.12% 268,317,000 271,366,500

Arab Trade Financing Program 01-Oct-18 3.52% 447,195,000 452,277,482

Agricultural Sector Development Program (ADP)

26-Apr-22 4.43% 356,944,444 148,125,000

European Investment Bank loan 15-Mar-23 2.12% 520,189,149 0

The environmental commitment agreement under the management of the NationalBank of Egypt

13-Feb-20 0.75% 4,825,383 2,044,000

Sanad 04-Dec-24 5.09% 178,878,000 0

CBE for small & medium projects 7% 01-Apr-22 3.00% 122,197,000 23,000,000

1,888,545,977 896,812,982

Current Balances 715,512,000 452,277,482

Non-current Balances 1,183,033,977 444,535,500

Total 1,898,545,977 896,812,982

- in the context of the Central Bank's initiative to revitalize the mortgage sector, the interest paid for tranches from other loans has been re-posted to the Treasury bills with a repurchase commitment on June 30, 2018, as well as on June 30, 2017.



29- Other liabilities 30- Other ProvisionsJune 30, 2018 June 30, 2017

EGP EGP

Accrued Interest 257,403,994 197,028,686

Prepaid Revenues 6,776,574 5,199,710

Accrued Expenses 432,231,570 82,747,611

Accrued Taxes and Insurances 51,844,863 46,780,613

Suspense liabilities 164,005,525 437,458,276

Dividend payable 200,000 0

Government Protocol 0 45,510,334

Total 912,462,526 814,725,229

June30.2018

Balance at the beginning of

the year

Formed dur-ing the year

Foreign currencies revaluationdifferences


Release(charge)

Provisions no longerrequired

Trans-ferred

from(to)other

sources

Provision used during the

year


year


Provisionfor claims

74,715,032 25,634,666 0 0 0 0 (20,242,782) 80,106,916

Provisionfor con- tingentliabilities

15,571,288 0 (62,516) 8,130,146 0 0 0 23,638,918

Technicalprovi- sions forprop- erty and casualtyinsurance

31,990,767 3,234,102 (40,046) 0 (2,855,281) 0 0 32,329,543

Total 122,277,087 28,868,768 (102,562) 8,130,146 (2,855,281) 0 (20,242,782) 136,075,376

June30.2017

Balance at the beginning of

the yearFormed dur-ing the year

Foreign currencies revaluationdifferences


Release(charge)

Provisions no longerrequired

Trans- ferredfrom(to) other

sources

Provision used during the

year


year


Provisionfor claims 41,966,045 33,059,759 0 0 0 0 (310,773) 74,715,032

Provisionfor con- tingentliabilities 10,473,551 0 4,815,362 282,375 0 0 0 15,571,288

Technicalprovi- sions forprop- erty and casualtyinsurance 27,920,414 5,672,150 (4,096) 0 0 0 (1,597,701) 31,990,767

Total 80,360,010 38,731,909 4,811,266 282,375 0 0 (1,908,473) 122,277,088

- A provision for potential claims includes provision for claims and tax provision to meet any potential claims.- A provision for contingent liabilities includes indirect contingent liabilities.- Other provisions are reviewed in the financial position date and adjusted when necessary to show the best estimate of the situation.


31.Deferred Tax LiabilitiesDeferred income tax was calculated based on the deferred tax differences according to the liability method using an effective tax rate 25% for the current fiscal year. Deferred tax assets resulting from tax losses carried forward does not recognized with it unless there is estimated tax profit. Clearing between deferred tax assets and liabilities is made in case of there is a legal justification for Offsetting between current tax on assets and liabilities and also when deferred income tax belong to the same tax authority, the following table represents deferred tax liabilities :

1- Central Bank risk reserve:Represents the increase in the provision for impairment losses calculated on the basis of determining the creditworthiness and composition of allocations issued by the Central Bank of Egypt and the provision for impairment losses on loans carried in the financial statements.

2- Banking risk reserve - acquired assets:If the assets acquired by the Bank are not disposed of in accordance with the provisions of Article 60 of Law 88 of 2003, the general bank risk reserve shall be increased by 10% of the value of these assets annually during the period of retention by the Bank.

3- Legal reserve:In accordance with the Bank’s Articles of Association, an amount equal to 10% of the profits shall be deducted annually to form the statutory reserve. The General Assembly may stop this deduction when the reserve total equals 50% of the issued capital of the Bank.

4- Fair value reserve - available for sale investments:Represents revaluation differences arising from changes in the fair value of financial investments available for sale.

5- Capital reserve:Representing the Profit sale of fixed assets.

33- Cash and cash equivalentFor the purpose of presenting the cash flow statement, cash and cash equivalents include the following balances maturing within less than 3 months from the date of acquisition

32- Capital and Reserves32.1- CapitalThe authorized capital amounted to EGP 5,000,000,000. The issued and paid up capital amounted to EGP 2,728,000,000 as of June 30, 2018, distributed over 272,800,000 common shares with a par value of EGP 10 each, The commercial register has been marked with an increase in capital of EGP 288,000,000 from reserves and retained earnings to EGP 1,728,000,000 on the date of 1/8/2017, and in the amount of EGP 1,000,000,000 from the IPO of the shareholders to be EGP 2,728,000,000 on the date of 18/4/2018.

32.2- ReservesReserves on June 30,2018 represented in the following:


June 30, 2018 June 30, 2017

EGP EGP

Effect of difference between the accounting and tax depreciation

(1,058,901) 5,457,933

Deferred Taxes - fair value differences resulting from the evaluation of financial investments available for sale in foreign currencies

22,065,630 22,065,630

Total 21,006,729 27,523,563

June 30, 2018 June 30, 2017

EGP EGP

General banking risk reserve (1) 106,340,193 106,340,193

Banking risk reserve – acquired assets (2) 20,242,064 18,973,864

Legal reserve (3) 144,940,450 121,211,335

General reserve 20,764,754 18,648,254

Fair value reserve-available for sale investment (4) 33,292,418 41,342,727

Deferred Taxes fair value differences resulting from the evaluation of financial investments available for sale in foreign

(13,384,068) (20,746,443)

Special reserve 38,904,096 38,904,096

Capital reserve (5) 20,499,334 5,543,210

Total 371,599,241 330,217,237

June 30, 2018 June 30, 2017

EGP EGP

Cash and due from Central Bank of Egypt 371,178,213 277,420,258

Due from banks 5,487,809,944 4,960,612,781

Treasury bills and other governmental notes 25,162,309 625,451,772

Total 5,884,150,466 5,863,484,811



34- Contingent liabilities and commitmentsA) Legal claimsThere are a number of existing cases filed against the bank in 30/6/2018 without provision as it’s not expected to make any losses from it.

B) Capital commitmentsThe capital commitments for the financial investment reached on the date of financial position EGP 202,887 thousands as follows:

C) Loans, facilities and guarantees commitments

35.Tax status- The Bank’s tax status: • The Bank is subject to law No. 95 of 1983 and its amendments, so it is tax exempted from corporate tax for five years starting from the subsequent year to the startup of operations, which was February 3, 1985. Therefore, starting from the year 1990/1991, the Bank was subjected to corporate tax.

• The Bank’s branch at 10th of Ramadan City started its activity during 1989/1990, and obtained an approval of ten years tax exemption for the branch starting at the first of January 1990.

(EGP Thousands)

Investmentvalue

Paid Remaining

Available for sale financial investments 642,378 489,486 152,892

Financial investments in associates co. 299,970 249,975 49,955

Total 942,348 739,461 202,887

June 30, 2018 June 30, 2017

EGP EGP





Total 2,892,078,122 2,092,705,930

• The Bank’s branch at 6th of October City started its activity during 1997, and obtained an approval of ten years tax exemption for the branch starting at the first of July 1997 till the end June 2007.

• The Bank has paid all of its Corporate & Movable Taxes up to June 30, 2005 based on a mutual final agreement with the Tax Authority (Large Taxpayer Center), as to years 2005/2006, 2006/2007 have been examined resulted in null as to corporate tax & other tax bases have been transferred to internal committee.

• According to the decision of the dispute settlement committee which stated that the bank has the right not to be subjected to corporate tax on capital issuance premium of year 1997.

• The Stamp Tax has been examined till 31/7/2006 for the majority of the Bank branches and the remaining branches are under examination. The Bank has paid all stamp taxes as per Taxes claims.

• All tax liabilities related to salary income tax have been settled till year 2000, tax authority examined the period from 1/1/2001 till 31/12/2004, the tax appeal committee decision for this period has resulted in resolving the major conflicts in the bank’s favor and other items will be objected. Salary income tax for year 2005 has been examined and the Bank objected to the contents and arrangements are currently taking place to transfer the issue to the internal committee.

- Export credit guarantee company tax status: - Checked to pay for earning tax years 2010 - 2011 Total according to demand from the Tax Office.• Checked and payment for stamp taxes until 2006.• Checked and payment for commercial profit taxes until 2005.• Checked and connectivity for real estate taxes until 06.30.2013.• The company has to submit tax returns for the 2014/2015 budget was tax payable upon repayment.• Regarding the years of 1994/1995 until 1998/1999 was sentenced on appeal was issued in favor of the company on 15/3/2009 was issued linking from the IRS based on the rule of the appeal was the payment of taxes owed by the company• The company submitted its tax declaration for year 2015/2016 financial statements.

- Egypt Capital Holding company tax status: • The Company is subject to law No. 91 of 2005 and its amendments, and the company submitted its last tax declarations in June 30, 2015.• Did not examine the company’s books by the IRS to date.• The rest of the companies that have been assembled to provide tax returns in the legal deadlines in accordance with the provisions of Law No. 91 of 2005.

36.Mutual FundsA. Export Development Bank of Egypt first mutual fund (The Expert fund).The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations, HC for securities and investment is managing this fund, the fund certificates reached 1million certificate at foundation worth of EGP 100 million, out of these, 50 thousand

192 2017-2018 annual report


of the certificates were allocated to the Bank to undertake the funds’ activity (with EGP 100 nominal value).

The number of the outstanding certificates on the date of balance sheet was 130,677 certificates as the number of owned certificates by the Bank reached 79191 certificates. The redemption value per certificate as of June 30, 2018 amounted to EGP 152.01 and according to the funds’ management contract and its prospectus, the Bank shall obtain fee and commission for supervision on the fund and other managerial services rendered by the Bank, total commissions as at June 30,2018 amounted to EGP 127.8 thousands presented under the item of “fee and commission income/other fees” caption in the income statement, The management commission and commission of good performance amounted to EGP 400.9 thousand by the end of June 2018. In addition to EGP 316.7 thousand (EGP 4 distribution as at 27/5/2018), presented under the item of other fees and commission income / fees in the income statement.

B. Export Development Bank of Egypt Fund -The Second - The Monetary:The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations, Rasmalah masr for funds and securities portfolios management is managing this fund, the fund certificates Reached 2,867,466 certificates at foundation worth of EGP 286,746,600 out of these 143,400 of the certificates were allocated to the Bank to undertake the funds’ activity (with L.E. 100 nominal value). The number of the outstanding certificates on the date of balance sheet was 1,034,410 as the number of owned certificates by the Bank reached 34,415 certificates. The redemption value per certificate as of June 30,2018amounted to EGP 292.7565 total commissions amounted to EGP 1018,6 thousands as at June 30,2018 Presented under the item of “fee and commission income/other fees” caption in the income statement.

C. Export Development Bank of Egypt Fund - The Third - Fixed Income Instruments:The fund is one of the authorized banking activities under the capital market law No. 95 for the year 1992 and its executive regulations; Prime Investments Asset Management is managing this fund, the fund certificates Reached 612,501 certificates at foundation worth of EGP 61,250,100 out of these 50,000 of the certificates were allocated to the Bank to undertake the funds’ activity (with EGB 100 nominal value). The number of the outstanding certificates at the date of balance sheet was 60,941 certificates as the number of owned certificates by the Bank reached 50,000 certificates. The redemption value per certificate as of June 30, 2018 amounted to EGP 212.4386 total commissions amounted to EGP 48,8 thousands as at June 30, 2018 presented under the item of “fee and commission income/other fees” caption in the income statement,In addition to EGP 225 thousand (EGP 4.5 distribution as of 31/12/2017) presented under the item of fee and commission income / other fees in the income statement.