Beyond Banking - Commercial International Bank · 2019-05-02 · Commercial International Bank (CIB) was founded in 1975 as Chase National Bank, a joint venture between Chase Manhattan

Beyond

Banking

18

Banking Beyond the Surface

CIB: An Introduction 04

Timeline of Milestones 06Our History 12What We Do 13A Snapshot of Our Business 14Key Financial Highlights 16Strategy 18CIB’s Stock 24A Note From Our Chairman 28A Note From Our CEO 32Board of Directors’ Report 36

2018 In Review 58

Institutional Banking 60Retail Banking 66COO Area 72Digital Banking and GTS 76Big Data 84Human Resources 88Financial Control Group 92Marketing and Corporate Communications 94Risk Group 98Compliance Group 108Internal Audit 110

Sustainability 112

Corporate Governance 114Management Committee 128Sustainable Development Department 132

Community Development 140

Corporate Social Responsibility 142Supporting the Best in Class: Squash 144CIB Foundation 148

Subsidiaries and Affiliates 154

CVentures 156Falcon Group 157Fawry Plus 159

Financial Statements 160

Separate Financial Statements 162Consolidated Financial Statements 230

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Table ofContents

CIB Introduction

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Timeline of Milestones

1975• BecomesfirstjointventurebankinEgyptasChaseNationalBank• Becomes the firstEgyptianbank to introducean InstitutionalBanking

RiskRatingModel

1977• Becomesfirstprivatesectorbanktocreateadedicateddivisionproviding

24/7bankingservicestoshippingclients,withprimaryfocusonbusinessintheSuezCanal

1983• After12yearsinajointventure,on15JuneChaseManhattandivestsitsstake

intheBank,decidingtoreduceitsminorityholdingsworldwide• ChangesitsnametoCommercialInternationalBank(CIB)

1989 • SelectedbyBSPtobecomeitsagentinEgypt• Remainstheonlybankthatoffersthisservicetoairlinepassengers

1991 • FirstEgyptiancommercialbanktoarrangedebtswaptransactions• BecomesfirstbanktolaunchsmartcardcenterinEgypt

1993

• WinsEuromoney’s‘BestBankinEgypt’award,thefirstofsixconsecutivewinsthroughto1998

• ConcludesEgypt’slargestIPOforadomesticbankon12September,withoversubscription rateof 150%, selling1.5million shares ina spanof 10daysandgeneratingEGP390millioninproceeds,usingnounderwritersbutrelyinginsteadontheBank’sownmarketingandplacementcapabili-tiesforsharesales

1994 • FirstbankinEgypttoconnectwiththeinternationalSWIFTnetwork

1996 • FirstEgyptianbanktohaveaGlobalDepositoryReceipt(GDR)programontheLondonStockExchange

1997• FirstEgyptianbanktolinktoSWIFTviaCITA• ConcludesfirstandlargestEuro-syndicatedloan(USD200million)• Becomes first private sector bank with investment rating (after Luxor

incident),rated‘BBB-’byFitchIBCA

1998

• Rated‘BBB-’byS&P• FirstbanktolinkitsdatabasetothatofMisrClearing,Settlement&De-

positCompany• FirstEgyptianbanktoformaBoardofDirectorsAuditCommittee• FirstInternalAuditDepartmenttobeindependent• OneofthefirstEgyptianbankstoestablishaCustodyDepartment• OneofthefirstEgyptianbankstoestablishabrokeragearm(CIBC)

2000 • HiresfirsttwoCertifiedBankAuditors(CBA)

EGP BN

9.6Net profit in 2018

6 Annual Report 2018 Annual Report 2018 7

CIB InTRoDuCTIon

2001• FirstEgyptianbanktoregisteritssharesontheNewYorkStockExchange

(NYSE)intheformofAmericanDepositoryReceipts(ADR)Level1program• FirstbanktointroduceFXcashservicesforfivecurrenciesthroughATM

2004 • Introduces Heya, the first credit card on the market to acknowledgewomen’sfinancialindependence

2005• Only bank in Egypt to be awarded the JPMorganQuality Recognition

Award,receivingtheaannuallythroughto2012• LaunchesOsoul,itsfirstmoneymarketfundinlocalcurrency• FirstbankinEgypttolaunchapageonBloombergforlocaldebtsecurities

2006

• Firsttoadoptapricingpolicyaccordingtoclientriskratingasastepfor-wardtoabidebyBaselIIrequirements

• FirstEgyptianbanktoexecuteaEGP200millionrepotransactioninthelocalmarket

• FirstandlargestEgyptianbanktoprovidesecuritizationtrusteeservices

2007 • OnlyBankinEgyptchosenbyUNIFEMandWorldBanktoparticipateintheGenderEquityModel(GEM)

2008• FirstbanktouseValueatRisk(VaR)fortradingandbankingbookfor

internalriskmanagementrequirements,despitetherebeingnoregula-toryrequirements

2009

• First regional bank to introduce unique concierge and Mastercardemergencyservices

• OnlyEgyptianbankrecognizedas‘BestBankinEgypt’byfourpublica-tions—Euromoney,GlobalFinance,EMEAFinance,andTheBanker—inthesameyear

2010

• FirstEgyptianbanktoestablishaglobaltransactionservicedepartment• OnlybankinEgyptabletoretainoneofthetoptwopositionsinthepri-

maryandsecondarymarketsforTreasuryBillsandTreasuryBonds• FirstandonlyEgyptianbanktoenforcebusinesscontinuitystandards• CIBFoundationbecomesthefirstinEgypttohaveitsannualbudgetinsti-

tutionalizedaspartofitsfoundinginstitution’sbylaws,asCIBshareholdersunanimouslyagreetodedicate1%ofnetannualprofittotheFoundation

2011 • CIB-TCMbecomespioneer in trading inalmost114newandunconven-tionalcurrencies

2012 • FirstEgyptianbanktoofficiallyestablishaSustainableDevelopmentDepartment

EGP BN

20.4Revenue in 2018


CIB InTRoDuCTIon >> Timeline of Milestones

2013

• FirstEgyptianbanktoreceiveJPMorganEliteSTPAward• FirstEgyptianbanktoupgradeitsADRstotradeontheOTCQXplatform• FirstEgyptianbanktosignanagreementwithBoleroInternational,join-

ingtheBoleromulti-bankserviceforguarantees• First Egyptian bank to establish anERM framework and roadmap, en-

dorsedandmonitoredbytheboard• BecomesfirstEgyptianbanktouseRAROC• Breakstherecordforthehighestnumberofblooddonorsinacorporate

officeinasingle-daycampaigninEgyptthroughtheTripleEffectinitia-tiveinauguratedbytheCIBFoundation

• FirstEgyptianbankto introducean interactivemultimediaplatformthatofferscustomerstheoptionofinteractingwithcallcenteragentsovervideocalls

2014

• FirstEgyptianbanktosignanagreementwithMisrforCentralClearing,De-pository&Registrytoissuedebitcardsforinvestorstocollectcashdividends

• Launchesfirstco-brandcreditcard,Mileseverywhere,withnationalcar-rierEgyptair

• Introduces the first interactive social media platform in the Egyptianbankingindustry,available24/7tohandleallcustomerqueries

• BecomesthefirstbankinEgypttosponsortheestablishmentofintensivecareunitsinSohagthroughtheCIBFoundation,donatingEGP6millionto outfit the Pediatric Department at Sohag University Hospital withcutting-edgeequipment

• The first block trading transaction on the EGX takes placewhenActissellsits6.5%stakeinCIBtoFairfax

2015

• FirstEgyptianbanktosuccessfullypassexternalqualityassuranceonitsInternalAuditDepartment

• LaunchesroadsideassistanceservicesinEgypt• GenerateshighestFXincomein10yearsamongprivate-sectorbanksinEgypt• FirstEgyptianbanktorecognizeconductriskandestablishaframework

forit,despitethelackofregulatoryrequirements

2016

• Launchesmobilebankingapplication,which includes variousbank-ing services, and offers clients numerous features to convenientlymanagetheiraccounts

• BecomesthefirstEgyptianbankrecognizedasanactivememberintheglob-allyrenownedUnitedNationsEnvironmentalProgram–FinancialInitiative

• WinstheSociallyResponsibleBankoftheYear2016awardfromAfricanBanker• Recognizedforthefirsttimeforseveralawards,including

- Best Bank in Egypt Supporting Women-Owned and Women-RunBusinessesbytheAmericanChamberofCommerceinEgypt

- TwoawardsinAchievementinLiquidityRiskandOperationalRiskfortheMiddleEastandAfricabyAsianBanker

- BestRetailRiskManagementInitiativein2016byAsianBanker- MostActiveIssuingBankinEgyptin2015bytheEuropeanBankforReconstructionandDevelopment

- MiddleEastMostEffectiveRecovery2016byBCI

2017

• Named‘World’sBestBankintheEmergingMarkets’byEuromoney,makingitthefirstbankintheMiddleEastandAfricatowinthisprestigiousaward

• FirstEgyptianbankbenamed‘BestBankintheMiddleEast’byEuromoney• RanksfirstontheEGX’ssustainabilityindex(S&P/EGXESG)forthefourth

yearinarowsince2014• Becomes the only Egyptian bank ranked on the FTSE4Good Sustain-

abilityIndex

2018

• Named ‘World’s Best Emerging Markets Bank’ by Global Finance, thesecondconsecutiveyear inwhichCIBhasbeenawardedthistitlebyaninternational institution;CIB is the first bank inEgypt and theMiddleEasttowinthisprestigiousaward

• FirstMiddleEasterncompanytobeanalyzedinacasestudyconductedbytheLeadershipInstituteoftheLondonBusinessSchool;CIBwasselectedin recognition of its data-driven, human-centric approach to leadingtransformationinthefaceofmacroeconomicchallenges

• Establishes CVentures, Egypt’s first corporate venture capital firm pri-marily focused on investing in transformational fintech startups andnext-generationfinancialservicesplatforms

• Receives ISO22301:2012 certification for Business ContinuityManage-ment by PECB, a global provider of training, examination, audit, andcertification standards, inpartnershipwithEGYBYTE,a leader in theMENAmarketforITservicemanagement

• RanksfirstontheEGXSustainabilityIndexforthefifthconsecutiveyear


CIB InTRoDuCTIon >> Timeline of Milestones

our History

What We Do

CommercialInternationalBank(CIB)wasfoundedin 1975 as Chase National Bank, a joint venturebetweenChaseManhattanBankand theNationalBank of Egypt (NBE) with ownership of 49% and51%,respectively.In1987,Chasedivesteditsowner-shipstakeaspartofashiftinitsinternationalstrat-egy.NBEacquiredthatstake,renamingtheformerjointventureCommercialInternationalBank(CIB).

Over time,NBE’sownershipstake inCIBdeclined,falling to19% in2006.Thatyear,aconsortium ledby Ripplewood Holdings acquired NBE’s remain-ingstake.InJuly2009,Actis,aPan-Africanprivateequity firm specializing in emerging markets, ac-quired50%of theRipplewoodConsortium’s stake.InDecember2009,Actisbecamethesingle largestshareholderinCIBwitha9.09%stakeafterRipple-woodsold itsremainingshareof4.7%ontheopenmarket.TheemergenceofActisasthepredominantshareholdermarked a successful transition in theBank’sstrategicpartnership.

CIBisEgypt’sleadingprivate-sectorbank.Itisanaward-winning institution dedicated to creatingoutstandingstakeholdervalueandprovidingsupe-riorcustomerservicesolutionstoabroadrangeofclients.TheBankfurnishesitsclientswithinnova-tivesolutionsthatsatisfytheirbankingneedsandfacilitatetheirfinanciallives.TheBank’sdynamicbusinessmodelandcommitmenttofullyintegrat-ingsuperiortechnologyintoitsproductsandser-vicesallowittomaintainitsmarketleadershipandtoofferstaffanengagingworkenvironmentwhilegeneratingmountingvalue.

The Bank serves an expansive network of retailcustomers, high-net-worth (HNW) individuals, andenterprises and institutions that drive the Egyptianeconomy. With a well-established network of 203branches and aworkforce comprising 6,759 employ-ees, CIB provides tailored, client-centric services toclients in the corporate, commercial, retail, wealth,andsmall-andmedium-sizeenterprise(SME)sphereswhile working to deliver themost streamlined, effi-cientbankingserviceofferingintheEgyptianmarket.

TheBankhasone fullyownedsubsidiary,CVen-tures,andtwoaffiliates,FalconGroupandFawry

InMarch 2014,Actis undertook a partial realiza-tionof its investment inCIBbyselling2.6%of itsstakeontheopenmarket,maintainingitsseatontheboard.InMay2014,theprivateequityfirmsoldits remaining6.5%stake toseveralwholly-ownedsubsidiariesofFairfaxFinancialHoldings,makingthelatterthesolestrategicandlargestshareholderinCIB.FairfaxisrepresentedonCIB’sBoardofDi-rectors(BoD)byanon-executivemember.

Plus,inwhichitownsstakesof32.5%and23.5%,respectively. CVentures was established in 2018and is Egypt’s first corporate venture capitalfirm focusedprimarily on investing in category-defining companies in the field of financialservices. Falcon Group is a provider of securityservices, cash-in-transit, property management,and general and technical services. Fawry Plusoffersagentbankingfinancialservices,includinglimitedKYCservies,thecollectionofdocumentsneededformobilewalletregistration,prepaidandcreditcard issuance, loan issuance,andaccountopening,whilealso takingcareof repaying loanandcreditcardduesandotherpaymentssuchasutility,telecom,taxes,andfines.

For several years, CIB has also enjoyed the titlesof most profitable bank operating in Egypt andthe bank of choice for over 500 of Egypt’s largestcorporations.CIBwasalsonamedtheWorld’sBestBankintheEmergingMarketsattheGlobalFinance2018specialawardsceremony,oneyearafteritwasawardedsametitlefromEuromoney.


CIB InTRoDuCTIon

Corporate Banking and Global Customer Relations GroupWidely recognized as Egypt’s preeminent corporatebank, CIB strives to be one of the region’s leadingbanks, serving enterprises ranging from industry-leadingcorporatestomedium-sizedbusinesses.

Debt Capital MarketsGlobal product knowledge, local expertise, andcapital resourcesmakeCIBanEgyptian industryleaderinprojectfinance,syndicatedloans,securi-tization,bonds,andstructuredfinance.CIB’sproj-ect finance and syndicated loan teams facilitatemarketaccessforlargeborrowers,providingthemwithworld-class services at execution times thatarebetterthanthemarketaverage.

Treasury and Capital Market ServicesCIBdeliversworld-classservicesintheareasofcashand liquidity management, capital markets, foreignexchange,andderivatives.

Digital Banking and Global Transactional Services (GTS)TheBank’sDigitalBankingandGTSDivisionman-agesall corporateandconsumeronlinechannelsfrom the business side. Making CIB part of ourcustomers’ daily activities is the department’sprimaryobjective,whichitworkstoachievebyde-velopingasimple,trusted,andconsultativedigitalexperience thatmeets customers’needsanytime,anywhere,andonanydevice.

Direct InvestmentAs a local player that adheres to widely acclaimedinternationalstandards,CIBactivelyparticipatesinselectdirectinvestmentopportunitiesinEgyptandacrosstheregion,maximizingreturnoninvestment.

Consumer Banking The Consumer Banking Division continues togrow and develop within the institution. Dedi-catedtoimprovingcustomersatisfactionandde-livering a consistently positive experience everytime,wehavedifferentsegmentsandofferawidearrayofconsumerbankingproductsthatinclude:• Private: Thissegmentcaterstothebankingand

investment needs of clients with a minimumassetsundermanagement (AUM) thresholdofEGP20million througha rangeof alternativesolutions,including:tailoredbankingproductsandservices,newlendingproducts,investmentsolutions,andotherwealth-relatedservices.

• Wealth: This segment provides numerous in-vestment products and services to the largestnumber of affluent clients in Egypt, offeringcustomersauniquesetofproductsandservicesandanexceptionalcustomerexperience.

• Plus: This segment caters to the needs ofmedium-net-worth individuals, providingthemwithdedicatedPlusBankers,simplifiedproducts, fast-track services, and personal-izedserviceofferings.

• Core: This segment relies on a customer-centric brandproposition anduse of behavioral

segmentation to deepen relationships and im-proveloyaltyamongpersonalbankingcustomers.

• Personal Loans: We extend facilities to new-to-bank(NTB)clients,selfemployedclients,andthosewithAUMsoutsideCIB.Wealsofocusonallsegmentsandpayrollclients.

• Deposit Accounts: Weofferawiderangeofac-counts that serve all client deposit and savingsneeds,whichincludetailoredaccountsforminors,youth,andseniorcitizens,aswellascertificatesofdeposit.Thisisinadditiontoourstandardrangeofcurrent,savings,andtime-depositproducts.

• Credit and Debit Cards: CIB offers a broadrangeofcredit,debit,andprepaidcardsissuedinassociationwithVisaandMastercard.

• Insurance Products: CIB’s insurance busi-ness provides life and insurance programsaimedatallsegments.

Business BankingThe Business Banking segment serves over 48,000SMEs and large enterprises with revenues rangingfromEGP1milliontooverEGP200million.

A Snapshot of our Businesses

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CIB InTRoDuCTIon

Key Financial Highlights

FY18Consolidated

FY17Consolidated

FY16Consolidated

FY15Consolidated

FY14Consolidated

FY13Consolidated

FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09

Common Share Information Per Share

EarningPerShare(EPS)* 7.26 5.76 4.56 3.58 3.55 2.67 2.42 2.43 3.00 2.63

Dividends(DPS)** 1.00 1.00 0.50 0.75 1.20 1.00 1.25 1.00 1.00 1.50

BookValue(BV/NoofShare) 29.26 24.43 18.44 14.39 16.31 13.46 18.94 15.03 14.59 23.75

SharePrice(EGP)***

High 96.5 88.8 73.6 47.4 51.3 45.4 39.8 47.4 79.49 59.7

Low 67.0 71.1 30.8 28.9 32.6 27.4 21.1 18.5 33.75 29.5

Closing 74.1 77.4 76.4 38.1 49.2 32.6 34.6 18.7 47.4 54.68

SharesOutstanding(millions) 1166.8 1161.8 1153.9 1147.1 908.2 900.2 597.2 593.5 590.1 292.5

MarketCapitalization(EGPmillions)

86,439 89,865 88,155 43,692 44,673 29,330 20,646 11,098 27,973 15,994

Value Measures

PricetoEarningsMultiple(P/E) 10.2 13.4 16.8 10.6 13.9 12.2 14.3 7.7 15.8 20.8

DividendYield(basedonclosingshareprice)

1.35% 1.29% 0.65% 1.97% 2.44% 3.07% 3.62% 5.35% 2.11% 2.74%

DividendPayoutRatio 15.3% 15.4% 9.7% 18.5% 29.9% 34.4% 33.9% 33.9% 27.6% 24.6%

MarketValuetoBookValueRatio 2.53 3.17 4.14 2.65 3.02 2.42 1.83 1.24 3.25 2.30

Financial Results (EGP millions)

NetOperatingIncome**** 20,379 14,890 11,315 10,189 7,741 6,700 20,351 15,192 11,370 10,165 7,717 6,206 5,108 3,837 3,727 3,173

ProvisionforCreditLosses-Specific

3,076 1,742 893 1,682 589 916 3,076 1,742 893 1,682 589 916 610 321 6 9

ProvisionforCreditLosses-General

TotalProvisions 3,076 1,742 893 1,682 589 916 3,076 1,742 893 1,682 589 916 610 321 6 9

NonInterestExpense 4,224 3,119 2,433 2,025 1,705 1,608 4,223 3,119 2,433 2,028 1,705 1,450 1,445 1,337 1,188 1,041

NetProfits 9,582 7,516 6,009 4,729 3,741 3,006 9,556 7,550 5,951 4,641 3,648 2,615 2,203 1,749 2,141 1,784

FY18Consolidated

FY17Consolidated

FY16Consolidated

FY15Consolidated

FY14Consolidated

FY13Consolidated

FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09

Common Share Information Per Share

Financial Measures

Cost:Income 20.33% 20.79% 21.36% 19.61% 22.84% 23.54% 20.35% 20.38% 21.26% 19.69% 22.91% 22.89% 28.01% 35.26% 33.11% 32.31%

ReturnonAverageCommonEquity(ROAE)*****

33.14% 32.45% 34.24% 33.46% 31.31% 29.45% 33.13% 32.71% 34.03% 32.80% 30.25% 24.77% 24.18% 22.23% 30.46% 31.18%

NetInterestMargin(NII/averageinterestearningassets)

6.43% 4.97% 5.47% 5.74% 5.41% 5.36% 4.74% 3.71% 3.62% 3.81%

ReturnonAverageAssets(ROAA) 3.03% 2.69% 2.71% 2.95% 2.94% 2.93% 3.02% 2.72% 2.70% 2.90% 2.87% 2.54% 2.47% 2.20% 3.11% 2.97%

RegularWorkforceHeadcount 6,759 6,551 6,714 6,332 5,697 5,490 6,759 6,551 6,422 5,983 5,403 5,193 4,867 4,517 4,360 4,162

Balance Sheet and Off Balance

Sheet Information (EGP millions)

CashResourcesandSecurities(Non.Governmental)

69,068 63,684 77,523 34,808 19,328 16,413 69,030 63,673 73,035 34,097 19,430 16,646 16,764 19,821 16,854 16,125

NetLoansandAcceptances 106,377 88,428 85,384 56,836 48,804 41,866 106,377 88,428 86,152 57,211 49,398 41,970 41,877 41,065 35,175 27,443

Assets 342,461 294,782 267,544 179,500 143,813 113,752 342,423 294,771 263,852 179,193 143,647 113,752 94,405 85,628 75,093 64,063

Deposits 285,297 250,723 231,741 155,234 121,975 96,846 285,340 250,767 231,965 155,370 122,245 96,940 78,835 71,574 63,480 54,843

CommonShareholdersEquity 34,228 28,439 21,374 16,535 14,754 11,960 34,147 28,384 21,276 16,512 14,816 12,115 11,311 8,921 8,609 6,946

AverageAssets 318,622 281,163 223,522 161,657 128,783 103,854 318,597 279,312 221,523 161,420 128,700 104,079 90,017 80,361 69,578 60,595

AverageInterestEarningAssets 290,869 257,931 203,053 146,033 117,031 94,749 290,869 258,315 203,625 145,835 117,133 94,605 79,834 70,549 61,624 53,431

AverageCommonShareholdersEquity

31,334 24,907 18,955 15,645 13,357 11,362 31,265 24,830 18,894 15,664 13,465 11,713 10,116 8,765 7,777 6,288

Balance Sheet Quality Measures

EquitytoRisk-WeightedAssets****** 16.93% 15.59% 13.34% 15.76% 15.77% 15.28% 16.89% 15.56% 13.28% 15.74% 15.84% 15.50% 15.69% 14.49% 15.85% 15.34%

Risk-WeightedAssets(EGPbillions) 186 169 150 96 84 70 186 169 150 96 84 70 65 55 49 41

Tier1CapitalRatio****** 16.16% 14.93% 12.90% 15.01% 15.70% 15.23% 16.16% 14.93% 12.90% 15.01% 15.70% 15.23% 14.33% 14.15% 15.66% 15.28%

AdjustedCapitalAdequacyRatio******

19.09% 18.03% 13.97% 16.06% 16.77% 16.32% 19.09% 18.03% 13.97% 16.06% 16.77% 16.32% 15.71% 15.40% 16.92% 16.53%

***** Total equity after profit appropriation****** After profit appropriation, from 2012 to 2018 as per Basel II regulations

* Based on net profit available for distribution (after deducting staff profit share and board bonus) and unadjusted for stock dividends** 2018 DPS after taking into account the share distributions of one share for every four shares*** Unadjusted to stock dividends**** 2016, 2015, and 2014 excluded CI capital profit (discontinued operation)


CIB InTRoDuCTIon

CIB’sstrengthliesinaflexiblestrategythatallowsittoconstantlyadapttounremittingchangesinmarketdynamics,creatingvalueforstakeholderseachstepoftheway.TheBoDandexecutivemanagementshareaphilosophyofplacingclientsattheheartofeveryde-cisionandthesamemissionofachievingsustainablefinancial and non-financial growth. To accomplishthis,werelyonouremployeesandaredeterminedtoconstantlydeveloptheirskillsandprovidethemwiththelatestinnovativetechnology.

Our VisionToupholdCIB’sdistinct reputationasa leadingandtrustedfinancialinstitutioninEgypt,respectedforitspeople,strongcorevalues,performance,andcommit-menttoinclusive,responsible,andsustainablegrowth.

Our MissionTo create outstanding stakeholder value by pro-viding best-in-class financial solutions to theindividuals and enterprises that drive Egypt’seconomy.Throughour innovativeproduct offer-ings,superiorcustomerservice,staffdevelopmentstrategies,andcommitmenttosustainability,wewillrealizeourambitionsandhelpshapethefu-tureofbankinginEgyptforyearstocome.

Our ObjectiveTogrowandhelpothersgrow.

Our ValuesAnumberofcorevaluesoutlinethewayinwhichCIBemployeesworktogethertodelivereffectiveresultsforourcustomersandcommunity.

• Ourcommitmenttoourclientsisguidedbyourdriveforexcellence

• Weworkwith our clients to accomplish theircurrentgoalsandanticipateandplanfortheirfuturegoalsandobjectives

Teamwork• We collaborate, listen, and share information

openlywithintheCIBfamilytoenhanceeverystaffmember’sknowledgebaseandskillset

• EachmemberofourstaffisanambassadorforCIB’scorporatebrandandimage

• We value and respect each other’s culturalbackgroundsanduniqueperspectives

Respect for the Individual• Werespectallindividuals,whetheremployees,

clients,shareholders,orcommunitymembers• Wetreateachotherwithdignityandrespectand

takethetimetorespondtoquestionsandconcerns• Wefirmlybelieveeach individual shouldhave

the space tomake suggestions and offer con-structivecriticism

• CIB is ameritocracy,where all employees areprivytoequaldevelopmentopportunitiesbasedonlyonmeritandaccomplishments

Decorum• CIBholdsemployee-clientandbusinessetiquette

inthehighestregardandmaintainsstrictpoliciesforgoverningdecorum

• Theobservanceofgoodbehavior,speech,ac-tions,anddresscodeispartandparcelofourcultureatCIB

Integrity• Exemplifythehigheststandardsofpersonaland

professionalethicsinallaspectsofourbusiness• Behonestandopenatalltimes• Standupforourconvictionsandacceptrespon-

sibilityforourownmistakes• Complyfullywiththelaws,rules,andpractices

thatgovernCIB’sbusinessinEgyptandabroad• Saywhatwedoanddowhatwesay

Client Focus• Ourclientsareattheheartofouractivities,and

theirsatisfactionisourultimateobjective• Our success is dependent upon our ability to

provide products and services that help ourclientsachievetheirgoals

• Wepartnerwithourclientsandworktogetherasasingleteamwithsuccessasourprimaryobjective

Innovation• CIBhasbeenapioneerinthefinancialservices

industry since inception 40 years ago as thefirstjointventurebankinEgypt;webelievein-novation is a core competitive advantage andpromoteitaccordingly

• WeseektoleadEgypt’sfinancialservicesindus-tryintothefuture,withinnovationbeingkeytoserving themillions of Egyptianswho remainunbankedorunderserved

Hard Work• Ourwork is governedbydisciplineandperse-

verancetoachieveoutstandingresultsforbothourclientsandstakeholders

Value Creation ModelValue creation is and has always been one of themainpillarsoftheBank’sstrategyandfocus.CIBworksdiligently to create value for its sharehold-ers,customers,employees,andsociety.Todothis,the Bank efficiently utilizes its key resources tobest serve its strategic priorities, taking into ac-count all themacroeconomic driving forces thatprevail.Thisresultsincreatingbothfinancialandnon-financialvalueforCIB’sstakeholders.

Strategy 40+Years of innovative services

CIB’s strength lies in a flexible strategy that allows it to constantly adapt to unremitting changes in market dynamics, creating value for stakeholders each step of the way.


CIB InTRoDuCTIon

Resources (Input) Value Created (Outcome)

Financial CapitalStrongfinancialcapitalisalwaysre-investedintheBank’sactivities

• EGP 9.58 billioninnetincome• EGP 20.38 billiontotalrevenues• EGP 34.2 billion networth• EGP 342 billiontotalassets• EGP 285 billiontotaldeposits• EGP 86.4 billion market

capitalization• 33.1%ROAE• 4.06%NPLs• 20.3%cost/income

Financial Performance• Ranked#1bankamongallEgyptian

private-sector banks in terms ofrevenues,networth,totalassets,anddeposits

• The largestmarket capitalization intheEgyptianbankingsector

• One of the highest ROEs, comparedtoamarketaverageof21.5%

• One of the lowest efficiency ratiosamongEgyptianprivate-sectorbanks

Human CapitalCIB’sin-depthexpertiseindiffer-entindustriesismainlyrootedinourskilled,specializedanddedicatedstaff

• 6,759totalworkforceasofyear-end• 291,466traininghours• 92%ofemployeescompletedthefourth

EmployeeEffectivenessSurvey(EES)• 63%engagementlevel• 52%enablementlevel

Human Capital• Highly skilled staff capable of sus-

taining CIB’s path of success andmaintainingtheBank’sleadingposi-tionwithinthemarket

Technological InfrastructureTheBankcontinuouslyinvestsinitsITsystemsandensuretheyareup-to-datetomakecertainthatthebusinessrunssmoothly

• CIB’ssystemsavailabilityexceeded99% Technological Infrastructure• Stable, agile, and safe systems that

provide seamless services to clientsthrough CIB’s swift adoption of thelatesttechnologyasitarises

Value Creation Model

Strategic Priorities

Customer Centricity

organizational Development and

Sustainability

operational Efficiency

Financial Performance

• Offerneed-basedbundledvaluepropositionsincludingdigitalsolutionsthroughdataanalytics

• Qualityofserviceinitiativestoenhancecustomerexperience

• Performance-drivenculture

• Socialandenvironmentalmanagementsystem

• Humancapitaldevelopment

• CentralizationofoperationalprocesseswithfocusonautomationthroughSTP

• Businesscontinuity,cybersecurityandresiliencemanagement

• Assetquality• Profitability• Loangrowth

Clients Shareholders and Investors Employees Society

Key Stakeholders


CIB InTRoDuCTIon >> Strategy


InnovationInnovationischiseledintheBank’sDNA,andCIBisattheforefrontofthemarketinofferingsimple,fast,andcontextualexperiencestoitscustomers,withaspecialfocusondigitalization

• #1 in mobile wallet activityinEgypt• #1 in mobile banking penetration

inEgypt• 61% y-o-y increase in number of new

mobilebankingdownloads,and49%y-o-yincreaseinnumberoftransactions

• 95%y-o-y increase innumberofnewinternetbankingclients,and26%y-o-yincreaseinnumberoftransactions

• 50%y-o-yincreaseinnumberofnewsmart wallet users, and 50% y-o-yincreaseinnumberoftransactions

• Largest ATM network amongprivatebanks,at917ATMs

Innovation• Expanding indigitalbankingplat-

formsthroughavailingmoreservic-esondigitalportals toourclients.CIB offers bill payment throughIVR; a service offered by no otherbankinthemarket.Digitalbankingachieved total cost synergyofEGP1.5billion,a156%y-o-yincrease

Client RelationshipsCIBhaslong-standingrelationshipswithclientsthatarebuiltontrust

• 19%y-o-yincreaseincustomer-base,reachingmore than1.3 million cli-entsin2018

• 6%y-o-yincreaseintotalnewtobankclientsin2018

• More than 250 MNCs and interna-tional Companies are CIB clients,with32beingFortune500companies

• CSAT:- Wealth8.4in2018(upfrom8.3in2017)

- Plus 8.3 in 2018 (up from 8.2 in2017)

- Corporate8.1in2018(upfrom7.5in2017)

• NPS:- Wealth47(vs20.3NPSMEBenchmark)

- Plus43(vs20.3NPSMEBench-mark)

- Corporate43(vs37.9NPSMEBenchmark)

Client Relationships• CIBlistensattentivelytoitsclientsand

continuously incorporates customerfeedback into its financial offering aspartoftheBank’scustomer-centricitystrategy.Asaresult,CIB’sNetPromoterScore(NPS)andCustomerSatisfaction(CSAT)scoreimprovedyearonyear


Brand RecognitionCIB’scorevaluesenabledtheBanktopreserveandstrengthenitsbrandpositioninginthefinancialservicesmarketinEgyptasthelargestprivatebank

• #38 on ForbesMiddle East “Top 100ListedCompaniesintheArabWorld”,andranked#1aheadoftheotherthreeEgyptiancompaniesonthelist

Brand Recognition• CIBwasnamed“World’sBestEmerg-

ingMarketsBank”byGlobalFinancefor 2018 for the second consecutiveyearafterbeingnamed“World’sBestBankinEmergingMarkets”byEuro-moneyin2017.CIBisthefirstbankintheMiddleEastandAfricatowinthisprestigiousaward

SustainabilityCIBismanagingitsenvironmentalfootprintbyapplyingthehigheststandardsrelatedtoitsenergyandwaterconsumption,carbonfootprint,andwastemanagement

• 2.53% decline in electricity con-sumptionin90megabuildings

• Saved 103 million liters of water;40%reductioninwaterconsumption

• Saved737A4paperboxes• Twoheadofficesareawardedthehigh-

estenvironmentalGPRSGreenLevel• Ranked#1ontheEGXSustainabilityIn-

dexin2018forthefifthconsecutiveyear• CIBbecamethefirst Arab and Afri-

can companytobelistedonthe2019Bloomberg Gender Equality Index(GEI)—theworld’sonlycomprehen-sive investment-quality data sourceongenderequality

Sustainability• AligningouractivitieswiththeSus-

tainableDevelopmentGoals (SDGs),Egypt’sVision2030,andParisAgree-mentonClimateChange

• We have an e-waste managementinitiativetosafelydisposeofmobiles,computers,andothers

• Biodegradable plastic bags are nowusedacrossCIB

• OurannualSustainabilityReportisinlinewiththeGlobalReportingInitia-tive(GRI)CoreStandards,whichpro-vide themost comprehensive frame-workforsustainabilityreporting

• CIB is one of only two banks inEgyptandtheMENAregiontopar-ticipate in the development of theUNEP-FI’s Principles forResponsi-bleBanking,thefirstsetofguidingprinciples focusing specifically onthebankingindustry


CIB InTRoDuCTIon >> Strategy

Having first offered its shares to the public in 1995,CIBhassincebecomethebiggestconstituentontheEgyptianStockExchange(EGX)andisviewedasthegateway toEgypt. Investors and analysts often viewCIB’sstockasaproxyfortheEgyptianmarket,withtheBankactingasamirrorforthelocalbankingsector.Theeconomy’sgrowthprospectsisgenerallydepictedin thecreditoutlook,while retailbanking is seenasportrayingthelonger-termstoryoffinancialinclusion.

CIBwasthefirstEgyptianbanktoofferitssharesoninternationalmarketswithaGDRprogramontheLondonStockExchange(LSE)in1996.In2001,CIB was again a first, being the first EgyptianbanktoregisteritssharesontheNYSEintheformofADRLevel1program.

In2012, theBankbegantradingonOTCQXInterna-tionalPremier,asegmentoftheOTCQXmarketplacereserved forworld-leading, non-US companies listedonaqualified international exchangeandprovidingtheirhomecountrydisclosuretoUSinvestors.

In 2018, CIB increased its ADR program by anadditional 450 million ADRs to reach 500 mil-lion. By the end 2018, CIB’s total issued shareswere 1,166,832,640, the Bank’s GDR outstandingpositionreached358,139,055shares,representing30.70%ofissuedshares,anditsADRoutstandingpositionrecorded16,946,344shares,representing1.45%ofissuedshares.

CIBhasthehighestweightontheEGX30,account-ingfor34.19%oftheindex,andhasthehighestfree

CIB works diligently to increase value for itsstakeholders. One way it does so is through theBank’s active Investor Relations Division, whichmaintains aproactive investor relationsprogramtokeep shareholders and investors abreast ofde-velopments that couldhavehad an impact on itsperformance. The team and senior managementinvest significant time in one-on-one meetings,roadshows, investor conferences, and conferencecalls.The team spares no effort in providing theinvestmentcommunitywithaconsistentstreamoftransparent disclosureswhile simultaneously en-suringanalystshavetheinformationtheyneedtomaintainbalancedcoverageoftheBank’sshares.

During2018,theteamalongwithseniormanagementtook part in nine local and international investorconferencesheld intheUK,US,Africa,andtheGulf,in addition to seven roadshows and one businesstrip. Alongside several in-house meetings, the teamconductedatotalof255one-on-oneandgroupmeet-ingsthroughouttheyearandmetwith491localandinternationalinvestmentfundsandresearchanalysts.CIBhostedseveralconferencecalls in2018,bringingits senior management together with the investorcommunity.

Disclosures, including regular updates and re-leases, were periodicallymade available on CIB’sInvestorRelationswebsiteaswellastheEGX,LSE,and OTCQX portals in a timely manner that en-suresfairaccesstoinformationforinvestorsfromaroundtheworld,allowingthemtomakeinformedinvestmentdecisions.

float at 93.4%. The Bank’s stock is one of Egypt’smost liquid, and it is the most valuable financialinstitutionwithamarketcapitalizationofEGP86.4billionasofDecember2018.

AsofDecember2018,CIB’s institutional shareholderstructurewasbrokendownbyregionasfollows:

93%The highest freefloat

on the EGX

CIB InTRoDuCTIon

CIB’s Stock

North America 57.71%

Africa 13.05%

GCC 9.92%

UK & Ireland 7.76%

Continental Europe 6.78%

Rest of the World 4.78%

As a result of the team’s conscious efforts to fur-therenhance its InvestorRelationsprogram,CIB’sHead of Investor Relations received a nod as the“Best InvestorRelationsProfessional–Egypt” ina2018 study conducted by theMiddle East InvestorRelationsAssociation(MEIRA)inpartnershipwithExtel.ThisisthefifthyearrunninginwhichCIBhasreceivedatleastoneawardfromMEIRA.

Symbols and Codes

Egyptian Stock Exchange (EGX)SYMBOL:COMI

London Stock Exchange (LSE)SYMBOL:CBKD

OTCQX Int’l Premier (ADR Level 1 program)

SYMBOL:CIBEY


Equity Analysts’ Ratings CIB iswidely coveredby leading researchhousesboth locallyand internationally. In2018,16 insti-tutions regularly issued research reports on CIB,with 62%of analyst recommendationbeing ‘Buy’,31%‘Hold”,andonly6%‘Sell’.

COMIstartedtheyearwithanopenpriceofEGP76.97 and ended it at EGP 74.08, with -7.14% in

CIB InTRoDuCTIon >> CIB’s Stock

Key Indicators

10EGP Par Value

34.19% Highest Weight on EGX30

COMI

EGX30 Index

Stock Performance in 2018

Dec-18Nov-18Oct-18Sep-18Aug-18Jul-18Jun-18May-18Apr-18Mar-18Feb-18Jan-18

VWAP(y-o-y)mainlyon thebackofglobalpres-sures and negative sentiment toward emergingmarkets.During2018,CIB’spricereachedapeakofEGP96.50andavalleyofEGP67.00.Theaver-ageVWAPprice in 2018was EGP 82.19,with anaveragevolumeof1,037,108,andanaveragemar-ketcapitalizationofEGP96billion.

1:1 GDR Convertibility

86.4EGP Largest Market Cap on EGX30

7.26EGP Earnings per Share


A note From our Chairman

InEgyptandabroad, thepunditshave framedthedefining questions of 2019 in terms that are bothshorttermandbinary:Globalgrowthisslowing—willittipintorecession?WillEgyptcontinuetoat-tractforeignportfolioinvestorstoitsdebtissuancesand stock market? Is this the year that domesticinterestratesstarttocomedown?Willweseesig-nificant foreigndirect investment?Whowillmovefirst:foreignordomesticinvestors?Like every bank and publicly traded company inthe country, CIB has a fully vested interest in theanswerstothesequestions.Butourfutureasanin-stitutionhingesnotonthose,butonmorenuancedanswerstomuchmorelong-termquestions—ques-tionsthatcan,forCIB,beboileddowntojusttwo:• CanwehelpreinventbankinginEgyptforthe

digitalage?• Canwehelpleadaconversationonthereinven-

tionofcapitalism?Oursuccessnotjustasaninstitution,butalsoasanation,hingesontheabilitytoanswertheseques-tions in the affirmative. And as longtime share-holdersknow,wehavebeenworkingonanswersboth inside CIB branches, offices, and dealingrooms since 2011,whenweplaced two things atthecenterofour strategy:First, innovation,andsecond,theimperativetoimprovethecommuni-tiesinwhichwedobusiness.Reinventing banking in Egypt for the digital agehas been central to our strategy since politicalchange swept our nation in 2011. It is a subjectaboutwhichourindustryandpolicymakersalikemust do more. Banks are slowly awaking to theidea that brick-and-mortar branches are not the

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CIB InTRoDuCTIon

onlytouchpointsthatmatter.Buttheyarenotask-ing how they can disrupt themselves before theyare disrupted by third parties. In parallel, policymakersneedtoexpandtherangeofquestionstheyareaskingoftheindustry:Theplaceofpaperinanincreasingly paperless society is only the first ofmanyissuesthatmustbeaddressed,whichrangefrom the rise of cryptocurrencies to the role ofsandboxesinthetrialofnewtechnologies.Ourgovernmenthassignalledclearly that it isgo-ing cashless—which will make it fundamentallypaperless.Thenotionofphysicalsignaturesandofpaperdocumentstoragearethingsofthepast.Theyareamongthemanyobstaclestodigitalinclusion—which,Iargue,iscoretofinancialinclusion.In calling for wider financial inclusion, Egypt isfundamentally calling for the democratization offinancialservices.Butasfinancialservicesincreas-inglygoonline,thismeansthatobstaclestodigitalinclusionare the samebarriers thatprevent fullerfinancialinclusion.Digitalfinancialservices—thesame services that will empower people to bettertheirlives—cannotbeprovidedtoconsumersiftheveryconsumersdonothaveaccesstotheinternet.At itscore, financial inclusionmeansmobilizingmoneysupplyandsavingstofundgrowthandde-velopment—whether that’s ofmicro-businessesor small companies, of national champions orstate-drivenmega-projects.Asanindustryandasasociety,thismeanstakingstockofallchallenges(includingregulatoryones)thatstandinthewayofdigitalinclusionandstartbreakingthemdown.That’swhy,asEgypttakesoverthepresidencyoftheAfrican Union this year, we are working with thegovernmenttomakeaDeclarationonFinancialIn-clusionacornerstoneofdevelopmentpolicynotjustforEgypt,butforourcontinent.Broadbandinternetthatisuniversallyandaffordablyaccessiblebyeventhemosthumbleoflow-incomeearnersiswhatwillmakefinancialinclusionpossible.In parallel, a debate over the future of capitalisminEgypt is essential ifwe are going to create tan-giblevalueinthecommunitiesinwhichweliveandserve.Thisdebateisthenextnaturalstepinashiftthat has seen companiesmove from philanthropy

to corporate social responsibility, then onward toEnvironmental and Social Governance (ESG) ap-proachesand,today,tothenewimperativetocreatesharedvalue(CSV).Intimesgoneby,aphilanthropicapproachtocreat-ingvalueforalow-incomeearnerwastodonatetoacharitythatprovidesabenefittoher—itwasaboutusingcorporatewealthtotrytodriveameasureofsocial change. ACSV-led approachwould, asCEOMagazine wrote in 2016, put that donation in thecontextofaprogramthat ensuredbenefitsflowedbacktothedonorintheformof“improvedmorale,increased staff retention, status as an employer ofchoice[or]attractingnewbusiness.”However, Porter and Kramer, the Harvard pro-fessors who introduced the business concept in2011,takeitfurther—muchclosertoadefinitionwe have used internally since the events of 2011hereinEgypt.TheydefineCSVasacorebusinessstrategy, policies, and operating practices thatenhancethecompetitivenessofacompanywhilesimultaneously advancing the economic andsocialconditions inthecommunities inwhich itoperates.Thismeansthatoursuccessandsocialprogressareinterdependent.

Inthecaseofamicroenterpriseowner, it isn’t justaboutbankingher.It’saboutprovidingherwiththetoolstodaythatwillhelphergrowherbusinessto-morrow.Asshegrowsandcreatesjobs,shebecomesadrivernotjustofourbusinessgrowth,butoftheeconomicgrowthofournation.Thesearethepowerfulideasweknowwillguideourfuture, and they are feedingdirectly intoourfive-yearplan.Itwillbeafive-yearplanthathighlightswaystoput technologyat theheartofwhatwedoandtherebyempowerourpeopletomakethebestpossiblebusinessdecisions.Andit’saboutwayswecreate sharedvalue forouremployees,ourclients,ourshareholders,andthewidereconomy.

Hisham Ezz Al-ArabChairman and Managing Director M

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CIB InTRoDuCTIon >> A Note From Our Chairman

A note From our CEo

Peoplearethecornerstoneonwhichourstrategyisbuilt—brickbybrick,bytebybyte,transactionbytransaction,dayinanddayout.

Attellers’countersandinouroperationcentres,inconversationswith large corporate clients, and bysittingdownwithfreshgraduatesjustenteringtheworkforce, ourpeoplearehelpingEgyptians charttheirfinancial futures.As theydo so, everyoneofthemplays an essential role in delivering amulti-track strategy that creates value for all stakehold-ers, from our clients to our shareholders and thecommunities in which we do business — and forthestaffthemselves,thevastmajorityofwhomareshareholdersinthisinstitution.

This is the cornerstone of our success: Banking isfundamentallyapeoplebusiness,andourtalentedemployeesarethepeoplewhoarebuildingthebankofthefutureandleadingtheconversationaboutourindustry’s role inbuildinga strongernation.Fromourmanagement committee to themost junior ofsupportstaff, thesepeopledeliveredonanaggres-sive strategy that generated outstanding opera-tionalresults—resultsthattranslateddirectlyintooutperformanceinourfinancialsin2018.

Ourstaffofmorethan6,750peopledeliveredtheseresultsbecausewehaveconsistentlyprovidedthemwith the training, motivation, compensation, andsenseofownershiptheyneedtogivetheiralleveryday.Indoingso,theyknowtheyarenotalone:Ourmanagementteampracticesanopen-doorpolicyatall levels,andwehaverampedupoureffort inthepastyeartobroadenlinesofcommunicationandtohold small groupmeetings between regional staffandseniormanagementnationwide.

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CIB InTRoDuCTIon

In the year ahead, we will redouble our effortto reach our clients— current and potential—throughthechannelsthatmatter, fromtheelec-tronic to the physical. Yes, the physical: DigitalbanksarethewaveofthefutureinEgypt,astheyareindevelopedmarkets,andCIBhasclearlyandconsistentlymade significant headway in build-ingoutsomeofthemostinnovativedigitalbank-ing frameworks the market has seen in recentyears. But as experience as far away as Canadahas shown,branches remain important indraw-ingnewclientsintothebankingsystem,whetherthey arebusinessownersornewentrants to theworkforce,employeesorretirees.

And this is the very lynchpin of our strategy tochampion financial inclusion in Egypt. From thebusinesspresstothehallsofpower,financialinclu-sionisthetopicoftheday—asitshouldbe.Ithasalsobeencentraltoourmissionforyearsaswehavesoughttobringemployersandtheirpeopleintothebankingsystem.Bycombining thestrengthofourlong-standingbranchnetworkanddigitalsolutionsthatbringuseverclosertoacashlesssociety,bring-inginasmanypeopleintothebankingfoldaspos-siblebecomesnotjustamissionbutareality.That’swhyourpeopleworktirelesslytomakeiteasierforourclientstobankwithus,bethatthroughtellersatbrick-and-mortar branches or strategists develop-ingourdigitalchannels.

In terms of how we’ve accomplished this on theground in 2018, our consumer banking armdeliv-eredanotherverystrongyear,andweseesubstan-tialroomforcontinuedgrowthin2019onboththeasset and liabilities side. But we are particularlyexcitedabouttheoutlookin2019and2020forourinstitutionalbankingarm—thetraditionalgrowthengineofourbank.Thisoutlookisunderpinnedbya cautiously optimistic reading of the macroeco-nomicclimateinEgypttoday.

The government of Egypt has stayed the coursethrough an aggressive reform process that isleaving us on a much stronger footing. Our fourkey sources of hard currency inflows— tourism,

remittances, the Suez Canal, and the oil and gasindustry—areallontheupswing.Thestatecon-tinuestohaveaccesstoforeigndebtmarkets,andglobal institutional investors returned in early2019toEgyptianlocal-currencydebt.Asanation,our foreign exchange position is strong, and thevolatilitywehavesofarseenin2019intheofficialexchangerateisfundamentallyhealthy.

In parallel, inf lation is edging down toward thesingle digits and it is now clear that consumerpurchasingpoweriscomingback:Egyptiansare,byandlarge,shakingofftheeffectsofthedevalu-ation.While this is obviously good news for ourconsumer banking arm, it is better on the insti-tutionalsideofthebusiness:Capacityutilizationforourcorporateclientsisrisinginlock-stepwiththereturnofconsumersentiment.

Theseutilization rates setbusinessesona straight-line path to a single destination: Borrowing not tofinanceworking capital, but to fund capital expen-ditureonexpansion.BorrowingbycorporateEgyptwillsendalltherightsignalstoforeigninvestorswhohave (outsideof thepetroleum industry) largely satout the last twoyears. Itwill signal that localbusi-nesseshaveconfidenceinthedomesticeconomy.

AllofusatCIBlookforwardtotherealbusinessofbanking:Theprudentmanagementof riskasweextendcapitaltobusinessesandpeoplewhowilluseittodrivegrowthinoureconomy.Itiswhyweallbecamebankers. It iswhyour five-yearstrat-egyiswhatit is.It iswhyweareactivelyleadingtheconversationaboutthefutureofourindustry.Anditiswhatmakesussopassionateaboutleav-ing the communitieswithwhichwedobusinessbetterthanwefoundthem.

Hussein AbazaChief Executive Officer

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CIB InTRoDuCTIon >> A Note From Our CEO

Board of Directors’ Report

IntroductionMuch has changed since last year’s BoD report;some developments were predicted, while otherswerecompletelyunexpected.Onbalance,themacroandmicro situations are better than theywere atthistimelastyear.

Macroeconomic EnvironmentInflows of foreign currency into Egypt’s economyhave risen significantly year-on-year (y-o-y), withgrowth coming from a number of sources. Remit-tancesfromEgyptiansworkingabroadsoaredby21%y-o-ytorecordUSD26billioninFY2018.Tourismisflourishingoncemore,withtouristarrivalsupby48%andtourismreceiptsgrowingatahealthy124%.AsofFY2018,revenuesfromtheSuezCanalhadgrownby15%y-o-y.AstheZohrgasfieldrampsupproduction,Egypthastakenanothersteptowardself-sufficiencyinnaturalgas.Thelastshipmentof importedlique-fied natural gas (LNG) was received in September2018.Bytheendof2019,Egyptshouldbemakingan-nualsavingsofUSD4-6billion(or32%-48%)onitspe-troleumimportbill,whichrecordedUSD12.5billionfor FY2018. Egypt was named the largest recipientof foreigndirect investment (FDI) inAfrica in 2018inarecentreportbytheUnitedNationsConferenceonTradeandDevelopment (UNCTAD),with invest-mentsmade in the real estate, food processing, oiland gas exploration, and renewable energy sectors.Egypt’sFDIsin2018totaledUSD7.7billion.

ThesepositivedevelopmentsarereflectedinEgypt’scurrentaccount:thedeficitfelltoUSD6billionforFY2017/18 fromUSD14billion forFY2016/17,ade-clineof59%.InFY2017/18(whichbeganinJuly2017and ended June 2018), Egypt achieved a primary

didnotresultinfurthercurrencydepreciation,withforeignoutflowssourcedmostlyfromtheinterbankmarket,indicatingampleFCYliquidity.

Inf lationeasedduringtheyear,recording12%inDecember 2018, down from 15.7% in November2018, and a significant y-o-y drop down from21.9% in December 2017. Consumer purchasingpower strengthened noticeably throughout theyear.2018sawanuptickinlendingtocompaniesfor working capital, as firms sought tomeet in-creased demand. Companies continued to post-pone capital expenditure (CAPEX), however, asthe interest rateenvironment remainedelevatedin2018.AlthoughtheCBEcutinterestratesby100basispoints(bps)inFebruaryandbyafurther100bpsinMarch,the700bpshikeimplementedsincethecurrency f loatation in2016means long-termborrowingremainsexpensiveformanyfirms.

Egypt’s banking sector remained the lifeline ofthe economy in 2018. The year witnessed steadyimprovement inassetquality,withaggregatenon-performing loans (NPLs) as a percentage of grossloans standing at 4.4% in September 2018, downfrom4.9%inFY2017.NPLswerealmostfullycoveredbyprovisionsasofSeptember,with98%ofsuchas-sets allotted for. Bankswere alsowell capitalized,with reported system-wide capital adequacy ratio(CAR)standingat16%inSeptember2018,comfort-ablyabovetheregulatoryrequirementof11.9%.

InDecember2018,theCBEsuspendedtheFCYrepa-triationmechanism for new portfolio investments(includingLCYEgyptianT-bills,T-bonds,andstocks

budget surplusof0.1%ofGDP for thefirst time inoveradecade.GDPgrowthacceleratedto5.2%fortheyearendedafterrisingforsixconsecutivequar-ters. FCY reserves at the Central Bank of Egypt(CBE)continued to increaseonamonthlybasis in2018,recordingtheirhighest-everlevelattheendofNovemberatUSD44.5billion,upfromUSD36.7bil-lionayearearlier,beforedecliningbyUSD2billiontoUSD42.55billioninDecember2018.

The government pressed ahead with an economicreformprogramaimedatrestoringmacroeconomicstability and tackling long-standing impedimentstogrowth.Furthercutsweremadetofuelandelec-tricitysubsidies,whichreducedEgypt’ssubsidybillto5%ofGDPfor2017/18,downfrom6%for2016/17.In 2018, Egypt received USD 2 billion under theIMF’sthree-yearUSD12billionextendedfundfacil-ity(EFF)agreementsignedbackinNovember2016.

In light of the progress made by the government,Moody’s Investors Service rating agency changedEgypt’sLong-Term IssuerRatingsOutlook toPosi-tivefromStableandaffirmeditsB3issuerratings.Inaddition,FitchRatingsaffirmedEgypt’sLong-TermForeign-CurrencyIssuerDefaultRating(IDR)at‘B’withaPositiveOutlook.

Egyptbeganattractingrobustinvestordemandforlocal currency (LCY) sovereign debt, with foreigninflowsintoT-billsrecordingapeakofUSD23bil-lioninMarch.However,duetoacrisisinemergingmarketsbeginninginApril2018,foreigninvestmentinEgyptianT-bills fellbyc.USD8billionbetweenApril and September. Nevertheless, these outflows

listedontheEGX)duetoimprovedmacroeconomicindicators, particularly FCY reserves and liquidityinthebankingsector.

InNovember,theCabinetapprovedamendmentstolawsonincometaxthatwouldmodifythetreatmentofsovereignportfoliosheldbybanksandcorpora-tions.TheMinistry of Finance heldmeetingswiththeFederationofEgyptianBanks (FEB) todiscusstheproposalandsuggestedmethodsforcalculatingthenewtax,thefinalformulaforwhichhasyettobeannouncedbytheministry.

TheEGXwasnegativelyaffectedbyglobalforcescoming to the fore in 2018, declining 13.2% toend December 2018 at 13,035.77 points. In lightof this, the government postponed the plannedprivatization of 23 state-owned companies untilconditionsimprove.FourIPOstookplacein2018,raisingatotalofEGP5.2billionandrepresentinganincreaseof25%over2017.

Inshort,Egypt’seconomicrecoveryhascontinuedtopickupsteamdespitepersistingchallenges.Themarket offers ample opportunities, which CIB’sexecutivemanagementandemployeesareworkingdiligentlytoturntotheBank’sadvantage.

CIB’s StrategyCIB’sstrengthliesinaflexiblestrategythatallowsit to adapt to theunremitting changes inmarketdynamics,creatingvalue forstakeholdersateachstep.TheBoDandexecutivemanagementsharethesamephilosophyofplacingclientsat theheartofeverydecisionandachievingsustainablefinancial


CIB InTRoDuCTIon

EGP BN

86Market capitalization

as of 2018

andnon-financialgrowth.Toaccomplishthis,werelyonthededicationofouremployees,whomweare determined to help develop, while providingthemwiththelatestinnovativetechnology.

Relyingonthesetime-testedvalues,CIBfurthercon-solidateditsleadingpositionintheEgyptianmarketduring2018,assistedbyathree-prongedstrategyof:

Dynamic Balance Sheet ManagementRespondingtothehighinterestrateenvironmentand its impacton long-termborrowing,CIB con-tinuedtore-engineeritsbalancesheetin2018withthegoalofpreservingearnings.TheBankadoptedadeposit-gatheringstrategyaimedatreshapingitsfundingmix.Itattracted9%ofallnewdepositsinthebankingsystemuntilOctober2018(accordingto the most recent available information by theCBE at the time of print), and managed to growits current account and savings account (CASA)depositsto56%oftotaldepositsbytheendof2018.

TheBankmaintainedresilientassetqualityin2018throughitsconservativerisk-managementstrategy,whilebookingprovisionsadequatetomitigateanypotentialrisks.Provisionsfor2018amountedtoEGP3.1billion,bringingtheloan-lossprovisionbalancetoEGP13billion.Ofthis,EGP1.82billionpertainsto the amount transferred fromunearned interestto interest income and was fully provisioned for.NPLsrepresented4.06%ofthegrossloanportfolio,cushionedbyasolid269%coverageratio.

The Bank remains comfortably covered in termsofcapitaladequacy,withyear-endCARrecording19.09% (after profit appropriation) — well above

In2018,thedepartmentimplementedthefollow-ingprojects:• Distributed Ledger Technology (DLT): CIB

wasoneoftheEgyptianmarkets’firstadopt-ersofDLT, joiningtheKnowYourCustomer(KYC) project on R3’s Corda blockchain in2017.This year, the team focusedon testingdifferentusecasesforpotentialdevelopmentintoliveprojectsandbuiltalocalblockchainnetwork for banks and different financialservicesproviders.

• Segmentation:TheBankrevampeditsbalance-based customer segmentation, developing afully customized and data-driven behavioralsegmentationsystemthatwillaccelerateCIB’stransformation into a customer- rather thanproduct-centricinstitution.

• Digital Lending Program (DLP): ADMlaunched a program to help CIB penetratethe vastmarket of unbanked credit seekersbasedon theirhistory, suchasCareemcap-tains. The program could be replicated inthe future in linewithCIB’scommitmenttofosterfinancialinclusioninEgypt.

• Anomaly-detection model: In cooperationwith the Compliance Department, the ADMteam developed a model to minimize fraudby identifying, monitoring, and controllingfraudulentcustomerbehavior.

• Early warning system (EWS): WorkingwiththeBusinessBankingteam,ADMdevelopedasetofguidedprocesses thatprovideearly identifica-tion of risks posed to business and corporatecustomers.Thesystem’sfunctionistohelptheBank proactivelymanage its loan portfolio byreducingunsecuredlendingrisks.

theminimum regulatory requirement.Thebufferissufficienttoaccommodateanyincreaseincapi-talrequirementsin2019andwillpreemptanyun-anticipatedchangesresultingfrommacroshifts.

Returnonaverageequity(ROAE)hit33.1%in2018(afterprofitappropriation,basedonthesuggestedprofit appropriation schedule), marking the fifthconsecutive year CIB has delivered an ROAE ofabove30%.At20.3%,CIBenjoysoneofthelowestcost-to-incomeratiosamongprivate-sectorbanks,guidedbymanagement’sefforttofurtherenhanceCIB’sreturnsthroughefficientcostcontrols.

Investing in TechnologyDuring 2018, CIB continued to upgrade its infra-structure resiliency, optimize its IT storage, andbuildtheplatformsrequiredtomaintaintheBank’spositioninthemarket.

Thisyear,CIBreapedthebenefitsof its2015movetointroducetheconceptofbigdatatotheEgyptianbanking industry.Withthenecessaryplatforms inplace and skillful people available to analyze thedata, theBank is ready to furthersolidify its lead-ership position through the development of morecustomer-centricsolutions.

During the year, CIB’s Analytics andDataMan-agement(ADM)Departmentfocusedonsupport-ingotherdepartmentswithactionableanalyticalfindings that augment decision-making. It alsocontinuedtooptimizeoperationalprocesses,de-velopingsolutionstoreducecostsandprocessingtimes,whiledevelopingnewproductsbetterabletofulfillcustomerneeds.

CIB Navigator: In 2018, ADM launched a toolthat grants CIB employees access to dashboards,reports, and portals that help expedite decision-making.Integrationofthetoolintotheoperationsofdifferentbusinesslineswillincentivizerelation-shipmanagerstopersuadecustomerstoswitchtoavailable digital portals.This year, themigrationofa largevolumeoftransactionsfromtraditionalchannels todigital ones yielded cost synergies inexcessofEGP200million.

Technological advancement is spurring a broadtransformation in the global banking industry.Banking transactions no longer require bankbranches only, but rather the internet and smart-phones. Embracing such change, CIB has beenbuildingitsdigitalbankingplatformsovertheyearsandnowprovidesitscustomerstheconvenienceofinstant,seamlessbankingatanytimeandanyplace.

In 2018, CIB formulated its digital business planwiththegoalof integratingtheBankfurther intoits customers’ daily activities. 2018 saw the Bankupgradeseveralof itsdigitalplatforms, includingATMs,onlinebanking,anditscallcenter, furtherenhancingthecustomerexperienceandimprovingtheefficiencyofitsservices.CIB’sInteractiveVoiceResponse(IVR)serviceistheonlyoneofitskindintheEgyptianmarketthatallowsgovernmentalandnon-governmental bill payment and other exclu-sivesolutionssuchascreditcardsettlement,whileits network of ATMs is the largest of any privateEgyptianbank.At18%,CIBranksfirstintermsofactivity rate forEgyptianmobilewallets. In2018,CIB’sonlinebankingactivityhitarecord61.4%—fruitsoftheBank’scontinuousdigitalinvestments.


CIB InTRoDuCTIon >> Board of Directors’ Report

19%CAR as of 2018

CIB believes that financial inclusion is aboutmore than just extending financial services tothe unbanked; it’s about improving people’s lives.Positively contributing to the Egyptian economy’slong-term growth and sustainable development isanobjectivethatrateshighonCIB’sagenda,directlyaligning with CBE efforts to promote financialinclusion.InlinewithitsfirmcommitmenttohelpdevelopEgypt’sfinancialsectorandextendthelat-estinnovativefinancialofferingstocustomers,CIBlaunched CVentures in 2018, Egypt’s first fintech-focused corporate venture capitalfirm.CVentureswillinvestintransformationalfintechstartupsandnext-generationfinancial serviceplatforms.Lever-aging the firm’s active exposure to internationaltechnology hubs and startup ecosystems, CIB ex-pectsCVenturestobeanidealadditiontoitsslateofinnovativeproductsandservices.

More on the fintech front, 2018 saw CIB intensifyitsfintechengagementbycatering to theneedsoffintech startups, and thus, helping theBankbuildstrategicalliancesthatenhanceitsfinancialinclu-sionobjectives.TheBank’sactivitiesaimtocreateawareness on the opportunities presented by thisnew segment and encourage entrepreneurs tostart their businesses, with the ultimate goal be-ingtosupportfintechstartupsastheydevelopandlaunchtheirproductsandservices.Todate,CIBhassponsored 46 fintech startups and entrepreneursoperatinginvariousfields.ThirtyofthesehavebeenintroducedtothemarketwithCIB’sbacking,receiv-ing airtime on Egypt’s number one entrepreneur-shipTVshowHonaAlShababwithpre-seedfundsawardedtothewinners.

TheyearalsosawCIBredouble its focusonagentbanking—a tool tohelpwiden theBank’s reachamong Egypt’s unbanked population and controlthecostsassociatedwiththeprovisionofvariousservices to clients. The Bank established Egypt’sfirstagentbank,FawryPlus—agreenfieldinvest-ment in agent banking. The Bank holds a 23.5%equitystakeinFawryPlus,ajointventurebetweenCIB,BanqueMisr,Fawry,andElAlameyaForCon-sultationsandInformationSystems(ACIS).

PropersuccessionplanningwillhelptheBankover-come challenges posed by a constantly changingbusiness environment. Executive management iscontinuously identifying,assessinganddevelopingcadrestoensureCIBhasthecalibersinplacereadytoassumeresponsibility.Forty-twokeytalentswereselected toparticipate in technicaland leadershipdevelopment programs as part ofCIB’s successionplan formulated in 2016. Seventy-two percent ofthese individuals have been promoted to roles ofgreaterresponsibilityasofyear-end2018.

2018 Financial PositionCIB reported another remarkable set of results inFY2018,withconsolidatednetincomeup27%y-o-ytoEGP9.58billion.StandalonenetincomereachedEGP9.56billion,up27%from2017.Standalonerev-enuesgrew34%overthepreviousyeartoEGP20.4billion.Net interest incomehitEGP18.1 billion inFY2018,anincreaseof45%y-o-y.

While the Bank has historically recognized theinterestfromdoubtfulloans,notyetclassifiedasnon-performing,intheunearnedinterestaccountonthebalancesheetwithoutrecording iton theincome statement out of conservatism, CIB ad-optedanewconvention in2018,asstipulatedbytheCBE.Theseamountswerechanneledthroughinterest incomeandanequalamountwas takenasprovisions,leavingthebottomlineunaffected.Unearned interest accounts pertaining to non-performing clients are now recognized as anoff- rather than on-balance-sheet item. The re-engineering of CIB’s unearned interest accountswas conducted over two consecutive quarters.In2Q2018,EGP761millionwastransferredfromunearnedinteresttointerestincome,followedbyEGP 1.06 billion in 3Q2018. Normalized for EGP1.82billionadditional interest incomerelatedtore-engineeringoftheunearnedinterestaccount,standalone revenues grew 22% and net interestincome 31% over the previous year. It is worthnotingthatallunearnedinterestamountseligibleforrecognitionasinterestincomeontheincomestatementorasanoff-balancesheetitemarenowrecognized as such, and such recycling will not

Inrecognitionoftheseefforts,CIBbecamethefirstEgyptian bank to receive the “Financial InclusionChampion of the Year” FinX Award in 2018 fromFinTechGalaxyandEntrepreneurMiddleEast.Theaward isa testamentto theBank’ssupport foren-trepreneurship and the customer-centric bankingservicesthatithasmadeavailableforEgyptians.

Talent EnhancementCIB is committed to cementing its identity as anemployer of choice in the Egyptian banking sector,working constantly to provide employees with thecapabilities needed to thrive. Starting as early astheonboardingprocess,employeedevelopmentandsatisfactionisparamounttoCIB’sexecutivemanage-ment,whofocusonlearninganddevelopmentaswellasrewardsandrecognition.

As part of this strategy, CIB participated in 33eventsandemploymentfairsacrossseveraluniver-sitiesinEgyptandothervenuesduringtheyear.Toensure that the search for top-quality candidatesisnothinderedbygeographiclogistics,in2018CIBestablishedrecruitmentteamsthatvisitedninegov-ernoratesacrossEgypt.

In 2018, CIB sought to further enhance engagement,workingtoincreasesatisfactionlevelsandrefineperfor-mance-related communicationbetweenmanagementandemployees.Tentownhallswereheldwithmiddlemanagementduring theyear,while66HRawarenesssessions were conducted with first-line managers.TheseeffortscontributedtoincreasedparticipationinthefourthEmployeeEffectivenessSurvey(EES),whichstoodat92%in2018comparedto88%in2016.Theen-gagementlevelgrewto63%comparedto59%in2016.

In 2018, more than 840 training courses coveringboth technical and soft skills benefited 5,357 em-ployees (79%of staff)across theorganization.CIBalso hired 587 external individuals in 2018 (59 inincreasedheadcountand528replacements)acrossdifferentareasoftheBank.

Succession planning was also given considerableattention, with the aim of securing CIB’s legacy.

recur after 2018. Non-interest income stood atEGP2.2billionforFY2018,withnetincomefromfeesandcommissionsrecordingEGP2.4billion.

Despite a challenging year, the Bank’s financialperformance was strong, reflected across itsfinancial indicators. Operational efficiency wasmaintained during 2018,with the cost-to-incomeratiostandingat20.3%comparedto20.8%in2017.ROAEgrewto33.1%onaconsolidatedbasis(post-appropriation) from 32.5% in 2017. ConsolidatedReturnonAverageAssets (ROAA)recorded3.03%(post-appropriation) for 2018, up from 2.69% in2017.Asofyear-end2018,CIBbookedanetinterestmargin(NIM)of6.43%(or5.81%afternormalizingfor the aforementioned recycled amount) — theBank’shighest-ever—upfrom4.97%ayearearlier.

CIB’sgrossloanportfoliostoodatEGP120billionat2018year-end,growing17%(EGP17billion)y-o-y.ThisincreasemettheBank’sstrategicobjectivesinmaintainingassetqualityandenhancingprofit-ability.CIB’smarketshareoftotalloansamountedto6.96%inOctober2018.

TheBank aggressively pursueddeposit growth in2018,addingEGP35billiontoitsbase,whichgrewtoa totalof EGP285billionover theyear,an in-creaseof14%from2017.CIB’sshareofthedepositsmarketreached7.68%inOctober2018.

CIBendedtheyearwithabuoyantbalancesheetand capital base, ref lected in its comfortableCAR of 19.09% (after profit appropriation), far



EGP BN

47.5Business Banking deposits in 2018

exceeding requirements stipulated by the CBEandboosting theBank’s ability to dealwith un-foreseeneconomiccircumstances.

In2018,CIBcontinuedtoexperiencestronggrowthinnet interest income, fees andcommissions, anditsbalancesheet.Relativetopeers,CIBmaintaineditsleadingpositionintermsofprofitabilityandthesizeofitsbalancesheet.Overall,itsstrongfinancialperformancein2018cameinlinewithP&Ltargets.

Appropriation of IncomeThe BoD proposed the distribution of a dividendper share of EGP 1.00, after taking into accountthe subsequent share distributions after the dateof issuance for financial statements, which wasauthenticatedintheBank’scommercialregisterasof28January2019.

In addition, CIB is increasing its legal reserve byEGP478milliontoEGP2,188millionanditsgeneralreservebyEGP6.4billion toEGP19.2billion.ThisreinforcestheBank’ssolidfinancialposition,asevi-dencedbyacapitaladequacyratio(CAR)of19.09%.TheproposeddividenddistributionfallsinlinewiththeBank’sstrategyofmaintainingahealthycapitalstructure to address more stringent regulations,mitigate associated risks, aswell as facilitate andsupporttheBank’sfuturegrowthplans.

2018 Operational Highlights

Institutional BankingDespite lingering macroeconomic challenges, theInstitutional Banking (IB) Group was able tomeetits pre-set performance targets for 2018.The groupcontributed78.4%toCIB’sloangrowthduring2018.

TheCorporateBankingGroupcontinuedexpand-ing its loan portfolio across different sectors,taking part in the government’s ambitious planstodeveloptheeconomybyfinancingseveralmega-projectsinthepower,construction,foodandbev-erage,textile,telecommunication,andoilandgassectors.Thegroupgrewitsloanportfolioby16.4%y-o-ytoEGP95.6billionbyyear-end.

The Debt Capital Markets Division furtherconsolidated CIB’s high ranking among privateEgyptianbanks in the fieldsof syndicated loansand bookrunning. CIB came in seventh amongAfrican banks on the Bloomberg League TableforAfricanSyndicatedLoansin1Q2018,aref lec-tionoftheteam’sefforts.Withamarketshareof3.7%ofdeals,CIBisrankedthirdamongEgyptianbanks in this area. In 3Q2018, CIB was rankedeighth among InitialMandated Lead Arrangers,up fromthe15th in2017,withamarket share indealsof3.1%.Onthedomesticfront,CIBcapturedthelion’sshareofpublicsectordebtarrangementsduring2018,organizingsyndicatedmedium-termloansworth c. EGP 69.1 billion for public sectorcompaniesandquasi-sovereignsinthepowerandoil and gas sectors. Thedivision cementedCIB’spositionasthetopbankinEgyptinthestructur-ingoflocalmarketsecuritizations,closingsecuri-tizationdealsworthEGP4.4billionoutofatotalEGP5billionintheEgyptianmarket.

Retail BankingLeveragingCIB’sinvestmentindataanalytics,Con-sumer Bankingmade progress in implementing abehavioralsegmentationstrategyaimedatattract-ing, retaining, and deepening relationships withcustomers. By aligning tailor-made products and

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90%STP rate for e-remittances

serviceswiththespecificneedsofeachsegment,theBankwasabletoincreasecustomersatisfactionbybettercateringtoitsclients’needs.

In2018,ConsumerBankingintroducedanewhigh-net-worth(HNW)segmentcalledPrivate,offeringanexclusivebundleofproductsandservicestailoredtoclientswithaminimumnetworthofEGP20million.

Despitepricecompetitionfrompublic-sectorbanks,ConsumerBankingwasabletoincreaseCIB’stotaldepositportfolioby18.3%y-o-ytoEGP165.2billionin 2018. The Bank focused on gathering low-costdeposits,particularlyCASA,byofferingcompetitiveratesandleveragingitslong-standingrelationshipswith corporate clients to further gather payrolls.The loanportfoliogrewby21.9%y-o-y toEGP22.9billion in 2018, contributing to 21.6%ofCIB’s loangrowthduring2018.

CIB also moved to digitalize its customer loyaltyprogramin2018,facilitatingtheredemptionoftheloyaltypointsearnedwhenexecutingtransactions.Substituting the physical voucher with an instante-voucher,themovewaswell-receivedbycustomersandresultedinhigheractivationrates.

TheBank’sbranchnetworkremainsthemainchan-nelforservingcustomers.In2018,ninenewbrancheswere launched, bringing the total network to 203branches.TheBankadded98ATMsin2018,expand-ingthenetworkto917.CIBcommandedaPOSnet-workof13,446machinesasofDecember2018.

first steps toward implementing a new softwaredefinednetwork (SDN) tocreateavirtualnetworkacrossdatacenters.Byusingthistechnologytocre-atearesponsivenetworkdatacenter,CIBwillenjoya new generation of distributed applications andwillaccommodatevirtualizedandnon-virtualizedenvironments.This will aid the Bank in fulfillingcurrent and future business objectives related todigitalizationandmobileapplicationsolutions.

Operations continue to be at the core of CIB’sautomation and re-engineering initiatives, whichprogressed in 2018 according to the automationroadmapsetinlate2017.Developmentsrangedfromshifting different tasks to call centers to re-engi-neeringmultipleprocessesthatallowCIBtooffloadsupport duties from branch staff and shorten ser-vicedeliveryturnaroundtime.Afocusonstraight-throughprocessing (STP)hasallowed theBank toreachanSTPrateof90%fore-remittances.

Meanwhile, theSMSactivationofdebit cards low-eredthenumberofincomingcallstothecallcenter,thus enhancing resource capacity. CIB’s IVR calltreewasalsorevampedtoallowcustomerstotackleday-to-dayactivitieswithease.

Security and Resilience ManagementAs technology and the internet have grown inimportance, cyber security has become a press-ing concern across almost all industries. CIB iscontinuouslydevelopingitscapabilitiestoremainintunewithglobaltrendsandbestpractices.TheBanktakesitssecurityandcustomers’welfarese-riously,andexecutivemanagementhasprioritizedcybersecurityandresilienceonitsagenda.

CIBmaintainsafullsetofsecuritygovernancepoli-ciescoveringallaspectsofsecurity.Theseguidelinesarebasedoninternationalstandardsandbestprac-ticesandframeworks.TheBank’svisibilityoncyberrisksandthreats isachievedthrougha fullyopera-tionalSecurityOperationsCenter(SOC).Undergoingcontinuousenhancement,SOCproactivelymitigatesrisk by monitoring, analyzing, and responding to

On the Business Banking front, revenues grewsteadilyyear-on-year in2018, recordingEGP2,359million at year-end 2018, up 16% y-o-y. Depositsgrew 21% y-o-y to EGP 47.5 billion, representing17%ofCIB’stotaldeposits.Thedivision’sclientbasegrew15%y-o-yto48,229companies.

In2018,theBusinessBankingDivisioncollaboratedwith the US government-backed Overseas PrivateInvestmentCorporation(OPIC)tohold12workshopsaspartoftheWomeninBusinessCapacityBuildingprogram. The program aims to increase bankingandfinancial awarenessamongwomen-ownedandmanagedstartupsandsmallcompanies,promotinginclusion in the formal sector, providing access tofinance,andraisingCIB’sstandingasaninstitutionthatupholdsgenderequalitythroughoutthesector.

Information Technology and OperationsCIB remains committed toupgrading its IT sys-temsandensuringthatitsplatformsarecontinu-ously updated and capable of comprehensivelysupporting its growth plans. To improve andstreamlinethecustomerexperienceandenhancethe Bank’s product mix, CIB inaugurated twomajorprojectsin2018:theCoreBankingRelease,whichwillallowtheBanktotransitiontotheR18Platform,andanewdigitalplatformforconsum-ers. 2018 also witnessed the delivery of anotherkey project: theCustomerRelationshipManage-mentprogram,which isdesigned tobuildstron-gerrelationshipswithcustomers.

During the year, the IT department continued toimprove the resiliency of CIB’s infrastructure, op-timizetheBank’sstorage,andbuildtheenterpriseplatforms to maintain CIB’s leadership positionwithinthebankingsector.TheteamalsoextendeditssupporttotheAnalyticsandDataManagementteam, integrating state-of-the art technology intotheDataWarehouse infrastructure toenhance re-portextractionanddataanalysis.

CIB’s transformation strategy has also entailedscalable infrastructure. In2018, theBanktookthe

incidents.In2018,theSOCintroducedCyberThreatIntelligencetofurtherenhancetheBank’sdetectionand cyber threat hunting capabilities more proac-tively, providingCIBwith earlywarning signals oncyberthreatsandrisks.

Overtheyears,CIBhasinvestedheavilytomitigatecyber risks, deploying the strategies needed to en-surepropermanagement is inplace.Toimproveitssecurity posture, theBankhas invested in securityworkforcedevelopmentandenablement,enhancingthesecurityinfrastructuretechnologystack,andhasdeployedadvancedthreatpreventionthroughworld-classsecuritytechnologies.CIBoperatesadedicatedinternalsecuritycontrolfunctiontoensuresecuritypoliciesareproperlyenforcedandtoraiseawarenessamongstaffoncybersecurityanditsimportance.

The Bank has been intensifying its efforts andwideningthescopeofitsoversightalongthebusi-ness continuity and contingency managementspectrum.Totakeitsbusinesscontinuitycapabil-ities to thenext level, CIB introduced ‘resiliencemanagement’with awidened scope of oversighttocoverthirdpartiesinadditiontointernalcapa-bilities.Theprogramseekstoensurenotonlytheresumption of business after a disruptive event,butalsothepreemptiveprotectionofCIB’sbrandequity,resources,andstafffromthreats.

In 2018, CIB was the proud recipient of theISO22301:2012 certification for Business Conti-nuity Management. ISO 22301 certification wasawarded to CIB by Professional Evaluation andCertification Board (PECB), a global providerof training, examination, audit, and certifica-tion standards, inpartnershipwithEGYBYTE, aleader in theMENAmarket for IT ServiceMan-agement.ISO22301istheInternationalStandardfor Business Continuity Management, providingguidance to certified organizations, allowingthem to identify and manage current and po-tential threats to business. CIB’s ISO-certifiedBusiness Continuity Management System putstheBankinapositiontoeffectivelylimittherisk



of unexpected incidents, allowing it to operateduringchallenges,reducethelikelihoodofopera-tional disruptions, and continue to provide cus-tomerswithexpectedserviceswhilemaintainingthehighestlevelofcustomersatisfaction.

2019 Business OutlookIn2019,CIBwillremaincommittedtoprovidingitsclientswiththehighestqualityofserviceandsup-portingtheirinvestmentandfinancialgrowthplans,alongwith creating value for its shareholders.TheBankwillcontinuetoworkdiligentlytomaximizetheir returns through any operating environment.Tothisend,CIBwillpursueabusinessstrategythatprioritizesassetqualityandprofitability.

Awards and Recognition in 2018CIBcontinuedtogarnerawardsduring2018.FinancialinstitutionsofglobalrenownrecognizedtheBank’sef-fortstogrowandinnovateinallfacetsofbusiness.

InSeptember,CIBwasnamed“World’sBestEmerg-ing Markets Bank” in Global Finance magazine’sWorld’sBestBanksAwards for2018,making it thesecondconsecutivetimetheBankhasreceivedthisaccoladehavingbeennamedbyEuromoneyasthe“World’sBestBankinEmergingMarkets”in2017.

InJune,CIBbecamethefirstMiddleEasternfirmto be analyzed in a case study by the LeadershipInstituteattheLondonBusinessSchool(LBS),oneoftheworld’stopfivebusinessschools.CIBwasse-lectedinrecognitionofitsdata-driven,customer-centricapproachtoleadingtransformationinthefaceofmacroeconomicchallenges.

The Bank also ranked 38th on Forbes Middle East’s“Top100ListedCompaniesintheArabWorld,”rankingthehighestofthefourEgyptiancompaniesonthelist.

Besidesrecognizingthesignificanteffortsof theteamatCIB,suchaccoladesextendinternationaltestament to the outstanding capabilities andcompetencies of Egyptian organizations in thefaceofadversity.

CIB’scorporategovernancestructureisanchoredinateamofhighlyprofessionalexecutivedirectorsandadistinguishedgroupofindependentnon-executivedirectors(NED).TheBoDenjoysanoptimalmixofskills, experience,anddiversity in termsofgenderandnationality.NochangestotheBoDcompositiontookplaceduring2018.CIB’sBoDcomprisesofninedirectors, sevenofwhomarenon-executives,withonerepresentingFairfax’sinterestinCIB.Fiveofthenon-executivemembersareindependent,conform-ingtotheinternationalbestpracticesofcorporategovernance.ChairmanandManagingDirectorMr.Hisham Ezz Al-Arab and CEOMr. Hussein AbazaaretheBoD’sexecutivedirectors.

In linewithCBEdirectivesoncorporategovernanceaswellasinternationalbestpractices,theManagingDirector is responsible for ensuring adequate andeffectivegovernancethroughmanagingtheindepen-dent control functions: risk, compliance, audit andlegal,andalsofocusingonthestrategicdirectionoftheBank.TheCEOisresponsibleformanagingtheBank’sbusinesslinesandday-to-dayoperations.CIB’shighlyqualifiedBoDissupportedbyspecializedcommitteesthatassistinfulfillingitsresponsibilities.TheBoDhasseven standing committees; five non-executive andtwoexecutivecommittees.Eachcommitteechairper-son is responsible for briefing theBoDon themajorissuesraisedbythecommitteehe/shechairs.

TheBoD’snon-executivecommitteesare:• Audit• GovernanceandNomination• Compensation• Risk• OperationsandTechnology

TheBoD’sexecutivecommitteesare:• Management• HighLendingandInvestment

TheBoDisalsosupportedbyinternalandexternalauditors as well as other internal control depart-ments (Risk, Compliance, Internal Audit, and

CIBreceivedthefollowingawardsduring2018:Awards by Global Finance• BestForeignExchangeproviderinEgypt2018• BestTradeFinanceProviderinEgyptfor2018• BestTreasury&CashManagementProviders

inEgypt• BestBankinEgypt• BestSubcustodianBankinEgypt• DigitalBankofDistinction–Egypt• BestOnlineCashManagement–Egypt• BestTradeFinanceServices–Egypt• BestOnlinePortalServices–Egypt• Best InformationSecurityandFraudManage-

ment–Egypt• TheInnovators

Awards by The Banker Africa• BestCorporateBankinNorthAfrica• BestCorporateBankinEgypt• BestPrivateBankinEgypt

Awards by EMEA Finance• BestFXServicesinNorthAfrica• BestPaymentServicesinNorthAfrica• BestLocalBank

Awards by Euromoney• BestBankTransformationintheMiddleEast• BestBankinEgypt

Other awards include:• BestRegionalBank –NorthernAfricabyAfri-

canBanker• Financial Inclusion Champion of the Year by

FinX2018

Commitment to Corporate Governance Best Practices, Ethics, and Corporate ValuesIn itsmissiontoprovidebest-in-classfinancialso-lutions to enterprises and individuals, CIB strivestoapply internationalbestpractices in theareaofcorporate governance. The Bank is wholly com-mitted to theprinciples andcorporate values thatdistinguishthefinestgovernancestructures.

Legal).Workcarriedoutbythesefunctionsisfullyutilizedby theBoDtoensure theBankadheres tointernationalstandardsofcorporategovernance.

CIB’s experienced executivemanagement teamplaysan important role in the governance of the Bank byfaithfullyandefficientlyexecutingthestrategysetbytheBoDandproperlyimplementingtheBank’spolicies.

TheCodeofCorporateGovernanceisacornerstoneofCIB’sgovernancepolicyframework,aimingtoen-hance long-term value for shareholders, employees,andotherstakeholders.ACodeofConductsetsoutthestandardsofbehaviorexpectedfromallemploy-ees,providingstaff,seniormanagement,andtheBoDwith a comprehensive frameof reference regardingtheir rights and duties.The code further enshrinestheprinciplesofequalemploymentopportunityandgenderequality.CIB’sConflictofInterestpolicyguar-anteesthatallstaffandBoDmembersremainawareof and forthcoming about any conflict of interestbetween the Bank and their personal, professional,and business interests, providing guidance on howto handle those cases.The Bank’sWhistle-BlowingPolicyencouragesstafftoreportsuspectedviolationsofthelaworBankpoliciesaswellasanywrongdoing,while guaranteeing a supportive and encouragingenvironmentforthosewhospeakout.TheBankhan-dlestheclaimsofwhistleblowers,betheyemployeesorexternalactors,veryseriouslyandataseniorlevel.CIB’sConductRiskPolicymakescleartheBank’sre-lationshipwithanddutiestowarditscustomers.

7.26EGPEPS in 2018



CIB’s Governance Framework ensures that timely,transparent,andaccuratedisclosuresaremadeavail-ablewith respect tomaterial information regardingthe Bank, its ownership, operations, and financialperformance. It advocates theequal treatmentofallshareholders with sound protection for their votingrights. Backedby a concrete set of policies andpro-ceduresrelevanttothescope,size,andcomplexityofCIB’sbusiness,theframeworkalsoaimstosustainthesuccessoftheBank’sbusinessandoperations,ensureproperimplementationofinternalandexternalregu-lations,andmitigateallpossibletypesofrisk.

Commitment to SustainabilityThe Bank is proactive in making sustainability apermanentfeatureofitsproductsandservices.CIBtakesprideinitsroletodeveloptheUnitedNationsEnvironmentProgramFinancial Initiative (UNEP-FI’s)PrinciplesforResponsibleBankingalongside27banksfromfivedifferentcontinents,accountingforaggregateassetsofmore thanUSD17 trillion.Thebankswereassistedby12civilsocietyorganizationsfromseveralcountriesanddiversebackgroundstoensuretheprinciplestakeintoaccountthevariousoperationalandmarketrealitiesofbanksindiffer-entcountries,aswellasbanksatdifferentstagesofsustainablebanking.ThePrinciplesforResponsibleBanking are the first set of guiding principles tofocusspecificallyonthebankingindustryandaim

toensure the integrationofenvironmental, social,andgovernance(ESG)principlesatastrategic,op-erational,andtransactionallevelsinbanks.

Foryears,CIBhasworkedtoprovidesustainablecapi-taltohelpclientsgrow,givebacktothecommunitiesinwhichweliveandwork,andinciteactionablechangein theareaof environmentalbusinesspractices.ThesixUNEP-FIprinciples—alignment, impact, clientsand customers, stakeholders, governance and targetsetting, transparencyandaccountability—resonatewith CIB’s sustainability culture. Commitment totheseprincipleswillempowertheBanktofurthersup-portandacceleratethefundamentalchangetowhichitaspires.CIBencouragesotherbankstoendorseandtake part in signing the Principles for ResponsibleBankingatthesigningeventin2019.

Deepening its commitment to responsible bank-ing,in2018CIBlaunchedtheSolarLoanProgram,offeringitscustomersspecialfinancingforthepur-chase and installation of solar panels. Supportingthe government’s campaign to rationalize energyconsumptionbyintroducingrenewablesources,theloanalsohelpscustomersswitchtomoreaffordablesourceofenergytomitigaterisinglivingexpenses.

TheBankcontinuedtoreinforceitsinternalsustain-abilityagendaduringtheyear,astrategyanchoredinthreemainpillars:

Managing Our Ecological Footprint CIBmanageditsenvironmentalfootprintbyapply-ing the highest standards and devoting resourcestomanageenergyandwaterconsumption,carbonfootprint,andwastecreation.• Lighting Efficiency: To support Egypt’s Light-

ing Efficiency Improvement Initiative, in 2017CIB began transitioning to LED lighting sys-temsacrossall itspremises.AsperthereviewfromEgypt’sMinistryofElectricityandRenew-able Energy, the measures cut CIB’s energyconsumptionby11millionKWsbetween2014and 2018. In 2018, annual savings on electric-ityconsumptionhit40%,withthepaybackpe-riodreaching14months.CIBreceivedaspecialaward from the Energy Efficiency Project in2018, recognizing the Bank’s outstanding ef-fortsinensuringenergyefficiency. D

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Corporate Governance Highlights

Board Independence: The majority ofCIB’sdirectorsarenon-executiveatsevenoutofninemembers,fiveofwhomarein-dependentdirectors.

Gender Diversity: Two of the directorsarewomen.

Deep Banking and Related Knowledge and Experience: CIB’s directors have ex-tensive industry experience ranging frombusinessandmanagementtobanking,law,andinvestment.



40%Reduction in water consumption

• Water Efficiency: In 2018, CIB installed 1,600aerators at select premises, saving the Bankandtheenvironment103millionlitersofwater.Consumptionofwaterhasbeenreducedby40%andCIBhassavedEGP518,000inwater-relatedexpenses.TheBankhasdevelopedaplantoin-stallaeratorsatallofitspremisesacrossEgypt.

• Paper Reduction: CIBsells thepaperwastecreatedbybranchestopaperrecyclingstart-ups.TheproceedsarecreditedtotheSustain-ability Account and are subsequently usedforgreenprojects,suchasgreenrooftops.In2018,atotalEGP184,326wascreditedtotheSustainabilityAccount.

• Electronic Waste (E-waste): Attheendof2017,CIB began implementing an e-wastemanage-ment initiative, safely disposing of mobiles,computers, iPads, and similar devices, whichtotaledtoEGP1millionattheendof2018.

• National Initiative on Plastic Bag Consump-tion Reduction: CIB is cooperatingwith theMinistry of Environment in a national cam-paign to promote the use of biodegradableplasticbagsandincreasepublicawarenessofthe hazardous effects of non-biodegradableplastic.TheBankusesbiodegradableplasticbagsacrossallitspremises.

• Internal Carpooling Mobile Application: TheBank enlisted young Egyptian entrepreneurstocreateatailor-madecarpoolingapplication,Raye7, which is now used bymore than 1,000CIB employees, further reducing its carbonfootprint while encouraging young entrepre-neurstodevelopinnovativesolutions.

• Green Buildings: Collaborating with theHousingandBuildingNationalResearchCen-ter,CIBobtainedanEgyptianGreenPyramidsCertificate. This initiative conforms to thestandardsofworld-classLeadershipinEnergyandEnvironmentalDesign (LEED)programs,indicating that buildings have been con-structed and operated in a resource-efficientmanner. Two CIB head offices were awardedthe highest Green Building Rating under theGreenPyramidsRatingSystem(GPRS).

• FTSE4Good Sustainability Index: In 2018,CIBwasrecognizedbytheFinancialTimesasaconstituentoftheFTSE4GoodSustainabilityIndex,marking the sixth consecutive year thebankhasbeenaconstituent.

• EGX Sustainability Index: CIBrankedfirstontheEGXSustainability Index for thefifthcon-secutiveyearin2018.

Commitment to Corporate Social ResponsibilityCIB has continued to embed corporate social re-sponsibility (CSR)at theheartof theorganization.Thisyear,theBankexpandeditssteadfastcommit-ment to the communities in which it operates bydiversifying itscommunitydevelopmentactivities,which include supporting sports, fine art, culture,and social care. It has implemented various CSRprojectsandprovidedcrucialsupporttotheinitia-tivesofotherorganizations.

TheBank’sCSRagendain218includedthefollowing:• CIBcontributedtoacharitysoccertournament

held in Ramadan 2018 to support the Abu El-RishChildrenHospitalbydonatingthetourna-ment’sfundstothehospital.

• The Bank participated in the exhibition ofstudentprojects in the facultiesoffineartsatthe universities of Luxor, Assuit, Menya, andMansoura.CIBacquireddistinctiveartworktoincentivize young talents while enriching theBank’sartcollection.

• CIB sponsored “Night with the Arts” for thesecondyear ina row.Thisyear, theexhibition“Nothing Vanishes, Everything Transforms”held at the historic Manial Palace showcasedEgypt’srichculturalheritage.

• Forthefirsttimeever,CIBsupportedanAfricanpaintingworkshop led by SomaArt School inthe Democratic Republic of Congo during theseventheditionoftheRencontreInternationaled’ArtContemporain(RIAC)event.

• CIBmaintainsitscommitmenttopreservethelegacyofEgyptacrossdifferentfields,includingartandcinema.TheBanksponsoredthespecial

Inclusion Efforts• Special-needs Accessibility: CIB has success-

fullyequipped26brancheswithramps,lowtellerdesks,andtoiletrails.Ninety-fivetalkingATMshavebeeninstalledatkeylocationsacrossEgypt.Furtherbroadeningtheaccessibilityofitsservic-estovisuallyimpairedcustomers,CIBexpandedtheuseofdebitcardsfromsolelyATMstoPOSmachines.Trainingsessionsontheprovisionofoptimum service for special needs customershavebeenheldfor250CIBfront-linersandcus-tomerrepresentatives,andacodeofaccessibilityhasbeendevelopedtoevaluatetheeaseofuseatbranchesandATMsinordertoidentifygapsandappropriateimprovements.

Monitoring and Reporting• CIB Sustainability Report: Since2014,relevant

sustainability KPIs have been identified andreported in an annual sustainability report.Thereport tracks theBank’sperformanceandcommunicatesitsprogresstostakeholders.CIBadheres to Global Reporting Initiative (GRI)standards,whichprovidethemostcomprehen-siveframeworkforsustainabilityreporting.

• Science Based-Target Initiative (SBTi): TheSBTiinvitedCIBtoparticipateinafinancial-sec-torworkinggroup todevelopanewassessmentmethodology identifying whether investing andlendingactivitiesarealignedwitha2°Ctrajectory.

• Carbon Disclosure Project (CDP): In early2018, CIB became the first Egyptian entity toparticipate in the global disclosure systemCarbonDisclosureProject(CDP),whichenablescompaniesandstatestomeasureandmanagetheirenvironmentalimpacts.

• Bloomberg Gender Equality Index (GEI):Based on 2018 reports and figures, CIBwasincluded on the 2019 Bloomberg GenderEquality Index (GEI). Of the 230 companiesselected for the GEI, CIB became the firstArab and African company to be named tothe index.TheBloombergGEI is theworld’sonlycomprehensiveinvestment-qualitydatasourceongenderequality.

“Cinema Edition” of the cultural magazineRawi,whichfocusesonEgyptianheritage.

• CIB continued to sponsor “Made in Egypt”,an exhibition of young Egyptian designersheld in London featuring the country’s bestartisticproductions.

• CIB and KidZania’s partnership began in2013, and since this time, theBankhas suc-cessfullyorganizedseveraltripseachyeartoKidZania formore than150underprivilegedand special needs children, as well as chil-drenwithhealthconditions.

• The Bank continued its sponsorship of the an-nualceremonyfortheEgyptianAdvanceSocietyfor PersonswithAutismandOtherDisabilities(ADVANCE) and sponsored 2018WorldAutismAwarenessDayinEgypttosupporttheintegra-tionofpeoplewithdisabilitiesintosociety.More-over,theBank’sSmartVillageheadquartersandselectbrancheswere lit inblue in solidarityonWorldAutismAwarenessDay.

• CIB has been the main partner and finan-cial sponsor of Beena for three consecutiveyears.BeenaisaprotocolsignedbetweentheBankandtheMinistryofSocialSolidaritytoencourage active youth participation in thecommunity and monitor the developmentof social care services. This initiative suc-cessfully attracted thousands of volunteersaround Egypt who assisted in orphanages,elderlyhomes,andspecial-needshouses.

• In 2018, CIB continued its sponsorship ofEl Sawy Culture Wheel, supporting various



33.1%ROAE in 2018

CIB continued to positively affect communities by strengthening its support for sports in Egypt and nurturing the country’s athletic talents.

intellectual, cultural, and social activities,including concerts by internationally recog-nizedartists,culturalnights,artexhibitions,documentary films, and many more. Thisyear, the Bank launched a new initiative incooperation with the CIB Foundation andotherNGOstoprovideentertainingandedu-cationalprogramsatElSawyCultureWheelthattargetchildren.

• CIB sponsored a science fair for school stu-dentstofosterscientificthinkingfromanearlyageandencouragechildren toexplore futurecareers in scientific fields. The fair featuredgroupsof students fromdifferentgradeswhosubmitted projects to a panel of judges, whoevaluatedeachprojectandawardednumeroustitlestowinningteams.

• CIBwasthesolebankingsponsorofthesecondseason of CBC’s televised entrepreneurshipcompetitionHonaAlShababin2018.Thecom-petition supports youngfintechentrepreneursandbusinessstartups.

In 2018, CIB continued to positively affect com-munitiesby strengthening its support for sportsinEgyptandnurturingthecountry’sathletictal-ents.Squash-relatedinitiativeswereagainatthecoreofCIB’sCSRagenda.• CIBmaintained its sponsorship of the Egyp-

tian Squash Federation for the seventh con-secutiveyear.TheBankalsoexpandeditscom-mitmentbysponsoringtheNationalWomen’sand Junior Squash Teams’ internationalchampionships. This support has played adirectroleinthenationalteams’accomplish-ments throughout the year, as the NationalJunior Squash Team won the World juniorsquash championship in India for the sixth

CIB FoundationThe CIB Foundation was established in 2010 asa non-profit organization under the oversight ofEgypt’sMinistryofSocialSolidarity.Itisdedicatedto improving health and nutrition outcomes andextending coverage to underprivileged childrenwith limitedaccess toqualityhealthcare.Tomeetits objectives, the Foundation relies on valuablepartnershipswithotherinstitutionsworkinginthefield. During 2018, the CIB Foundation’s activitiesandinitiativesincludedthefollowing:

Approved Projects in 2018• InApril2018,theFoundation’sBoardofTrust-

eesapprovedanEGP18.9millioncontributiontosupport thepurchaseof33upgradedmoni-torsand fourcentralstationunits for theSur-gical IntensiveCareUnit, IntensiveCareUnit,andtheBoneMarrowTransplantUnitatChil-dren’sCancerHospital57357.AfurtherEGP3.5millionwas alsodonated to fundpatient careexpensesattheCairoandTantabranches.

• In April 2018, the CIB Foundation’s BoardofTrustees approvedoverEGP14million tofund the complete renovation andoutfittingofEl-GalaaTeachingHospital’sPediatric In-tensiveCareUnit toextendservices tomorepatientsonthewaitinglist.

• InApril 2018, the Board of Trustees approvedEGP 10.8million in funding toAbouEl-ReeshChildren’s Hospital to purchase a fluoroscopyx-ray machine for the Radiology Departmentand a laparoscopy and thoracoscopymachinefor the Pediatric Surgery Department. In July2018,theCIBFoundationdonatedoverEGP3.3milliontocoverthefirsttrancheoftheproject.

• TheCIBFoundationallocatedEGP7.5millionin July2018 to fundthepurchaseofnecessary

time. Almost simultaneously, the NationalWomen’s Squash Team was named Women’sWorldTeamChampioninChina,successfullyretainingtheirtitle.

• Insupportofyoungplayersleadingtheworld’ssquashrankings,CIBhascreatedspecialspon-sorshipstohelpsixtalentedplayersmaintaintheir rankings andcontinue representing thecountryaroundtheworld.Thefollowingplay-erswererecipientsofthesesponsorships:- Ali Farag – 2nd on the Men’s PSA WorldSquashList

- Nour El-Tayeb – 4th on the Women’s PSAWorldSquashList

- TarekMomen–3rdontheMen’sPSAWorldSquashList

- KarimAbdelGawad–5thontheMen’sPSAWorldSquashList

- RamyAshour–24thontheMen’sPSAWorldSquashList

- HaniaEl-Hammamy–17thontheWomen’sPSAWorldSquashList

• CIBannounceditspartnershipwithWadiDe-glaClubs to support youngEgyptian squashathletesbydevelopingtheirskillstoenhancetheir international rankings. The additionalathletes representingWadi Degla and spon-soredbyCIBare:- RaneemElWelily–1stontheWomen’sPSAWorldSquashList

- Nouran Gohar – 8th on theWomen’s PSAWorldSquashList

• CIBcontinuedforthesecondyearits“Squashfor Everyone” initiative in partnership withprominent Egyptian player Amr Shabana.Theprogramaimstoprovideunderprivilegedchildrenwithanequalopportunitytopracticesquashanddiscoveryoung,risingtalents.

equipmentandsupplies for thePediatricDen-tistryClinicinElKasrElAini.Thedonationwillalso fund the establishment of another clinicin Sheikh Zayed to increase the efficiency ofservicesprovidedtochildrenanddrasticallyre-ducethenumberofpatientsonthewaitinglist.

• In 2017, the CIB Foundation contributed EGP640,000 to purchase an outfittedmobile dentalcaravanfortheFacultyofOralandDentalMedi-cineatCairoUniversity,underthemanagementof the Rotary Club of Zamalek. This year, theFoundationallocatedanadditionalEGP120,000tocovertheoperatingcostsof12dentalcaravansthatwillbeusedtotreatpublicschoolstudentsinremoteareasofCairoandGizaforfree.

• InJuly2018,theCIBFoundationallocatedEGP7million to the Magdi Yacoub Heart Foundationtocovercostsassociatedwith70pediatricopen-heartsurgeriesanddonatedEGP3.5millioninOc-tober2018tocoverthefirsttrancheoftheproject.

• In February 2018, the CIB Foundation donatedthefinalEGP859,000inathree-yearEGP15mil-lionprojecttooutfittworesearchlabsinMagdiYacoubHeartFoundation’sAswanHeartCenter.

• InApril2018,theCIBFoundation’sBoardofTrust-eesapprovedEGP6.64millioninfundingtooutfittheEmergencyDepartmentlocatedonthegroundflooroftheAlexandriaUniversityChildren’sHos-pitalinElShatbi.TheCIBFoundationfulfilleditscommitmenttotheprojectinOctober2018.

• The CIB Foundation donated over EGP 1.3millionin2018tocoverthesurgerycostsof39underprivileged children suffering from con-genitalheartdiseasesatElKasrElAiniHospi-tal,underthemanagementof theRotaryClubofGizaMetropolitan.ThiscontributionfollowsourMarch2017allocationofEGP1.75milliontocoverthecostsassociatedwith50pediatric



open-heart surgeries. In addition, in October2018, the CIB Foundation’s Board of TrusteesapprovedanEGP3.7millionbudgettosupportanotherroundoftheproject.

• TheBoardofTrusteesallocatedEGP3.1millionin April 2018 to purchase equipment for theNasser Institute Hospital’s Pediatric IntensiveCareUnitandNeonatalIntensiveCareUnit.

• InJuly2018,theFoundationcontributedatotalofEGP3milliontotheannualoperatingcostsoffivepediatricunitsatAinShamsUniversityHospitalunderthemanagementoflong-standingpartnertheYahiyaArafaChildren’sCharityFoundation.

• Over the course of 2018, the CIB FoundationdonatedoverEGP1milliontocover289surger-iesaspartof thefifthand fourthphaseof theChildren’sRighttoSight(CRTS)programledbytheRotaryClubofKasrElNil.

• TheCIBFoundationdonatedEGP1.67milliontotheEgyptianClothingBanktoprovide50,000trainingsuitstochildrenin19governorates.

• TheCIBFoundation’sBoardofTrusteesapprovedaproposaltosupporttheoutfittingofthesensoryandpsychomotorroomsattheNationalFounda-tion for Family and Community Development’sspecializedcenterfortherehabilitationofautisticchildren.TheEGP688,000projectwillenablethecentertoservearound250childrenmonthly.

• In April 2017, the CIB Foundation fulfilledits commitment to contributeEGP2millionto the MOVE Foundation for Children withCerebralPalsytorenovatetheirpremisesandexpandoperations.TheCIBFoundationalsoallocatedEGP608,400tosupporttheannualoperating cost of the MOVE Foundation’spremises.InSeptember2018,theFoundationdonatedEGP152,100tocoverthefirstinstall-mentofthiscommitment.

Ongoing Projects• TheCIBFoundationdedicatedoverEGP5.1mil-

lion to fund the Egyptian Liver Care Society’sChildren without hepatitis C (C-Free Child)program. This year, the CIB Foundation alsoinvested in increasingthenumberandqualityofhepatitistreatmentcentersinEgypt.

• In August 2018, the CIB Foundation donatedoverEGP91,000tocoverthefirsttrancheofanEGP 4.1million project to fund the treatmentof400childrenwithhepatitisCattheNationalHepatology & TropicalMedicine Research In-stitute(NHTMRI).

• InJune2017,theCIBFoundationpledgedEGP3.53milliontothepurchaseof40monitors,45infusionpumps,and25syringepumpsfortheInpatientUnitatAinShamsUniversityHospital.InAugust2018,theCIBFoundationdonatedoverEGP589,000tocoverthefinalinstallmentfortheproject.

• The CIB Foundation donated over EGP 14.4million in 2018 to cover the fourth and fifthtranches of the Gozour Foundation for De-velopment’s6/6project to fund264eyeexamcaravans and provide 158,400 public schoolstudents in impoverished areas across Egyptwithfreeeyeexaminations.

• InpartnershipwithAl-NoorMagrabiFounda-tion and Dar El Oyoun, the caravans, whichare staffed with 25-30 doctors, nurses, andcoordinators, were equipped with advancedmedical tools, medications, and eyeglasses.They provided studentswith free ophthalmicexams,eyemedication,andreferralstoprivatehospitals for complex cases. Moreover, CIBstaffmembersvolunteeredwiththecaravans.

• Over 2018, the CIB Foundation donated overEGP105,000aspartofanEGP1.5millionpart-nershipwiththeSawirisFoundationforSocial

DevelopmentandStarCareFoundationin2016toimplementcomprehensivecommunitydevel-opmentprojectsinSohag,Assiut,andQena.

• InJune2018,theFoundationcontributedthefinalEGP750,000ofanEGP1millionpledgetoAhlMasrFoundationin2016.Thiscontri-butionfundedthetreatmentof159pediatricburnpatientswhosefamiliescouldnotaffordthecostsoftheirtreatment.

• In September 2015, the CIB Foundation’sBoard of Trustees approved an EGP 710,000projectundertheOphthalmicClinicinAswantoestablishthefirstfullyequippeddiagnosisand referral center for children with glau-coma. In October 2018, the CIB Foundationdonated over EGP 472,000 to cover the finalinstallmentoftheproject.CIBsupportedtheBaladiFoundation’sefforts todetectglauco-main500children, treat thesepatients,andperform50surgeriesforcongenitalglaucomacases, while also training a team of doctorsandnursesinUpperEgypt.

• In April 2014, the CIB Foundation’s Board ofTrusteesapprovedtheallocationofEGP1millionto fund theoutfittingof theCraniofacialCenteratSohagUniversityHospital.InOctober2018,theCIBFoundationdonatedoverEGP323,000cover-ingthefinalinstallmentsoftheproject.

• The Foundation gave 50 KidZania tickets tounderprivileged children. Over the course oftheyear,theCIBFoundationcoordinatedwithitspartnerstoorganizemultiplevisitstoKid-Zania inwhich underprivileged and disabledchildren learned about adult professions in achild-friendlyway.Childrenperformeddiffer-entjobstoearnandspendKidzos,theofficialcurrency of KidZania, on games and otherentertainingactivities.

• In2018, theCIBFoundationhosted12blooddonation campaigns across its corporate of-fices to encourage CIB staff and customerstoparticipate inanactivity that saves thou-sands of lives across the country. Throughthis effort, 164bagsofbloodwere collected;these resources can potentially be used tosavethelivesofover490people.

• InFebruary2018, theCIBFoundation invitedCIB colleagues and their families to a bag-packingeventatCIB’sSmartVillageoffice toparticipateinpackingofover5,000healthandhygieneschoolbags for thestudents targetedbythe6/6EyeExamCaravanprogram.

• In2018,CIBlaunchedanewinitiativeinpart-nershipwiththeCIBFoundationandElSawyCulture Wheel to develop children’s skillsthrough specialized workshops. Children in-volvedintheinitiativeenjoyedafulldayofed-ucationalactivitiesandgamesthatstimulatedtheirculturalandscientificdevelopment.

342EGPK

Assets in 2018



2018 Performance Measures Results

FINANCIAL • Maximizeshareholderequityand

deliverabove-peer-averagetotalshareholderreturn

• Growearningspershare(EPS)• Deliverabove-peer-averagereturn

onrisk-weightedassets• Focusoncapital,tocushionthe

Bankagainstanyunforeseenexternalshocks

• ROAEof33.1%(afterprofitappropriation)• 26%EPSgrowth• Totaltiercapitalrecorded19.09%ofrisk-weightedassets

BUSINESS OPERATIONS • Growrevenuesfasterthanexpenses• Identifymarketgapsandattain

first-moveradvantagebylayingthegroundworkaheadofpeerstoallowtheBanktobenefitfromrisingopportunities

• Cost-to-incomeratioof20.3%• Institutionalbankingprofitbeforetaxrose19%over

lastyear toreachEGP8.8billion,and loanportfoliogrewbyEGP13.5billion,anincreaseof16%y-o-y

• Retailbankingprofitbeforetaxincreased28%y-o-ytoEGP5.2billion,anddepositsgrewbyEGP33.8billion,translatinginto18.9%y-o-yincrease

CUSTOMER • Improvecustomerexperience• Investincorebusinessestoenhance

customerexperience

• Much effort was exerted to improve cyber securitystanding,withaclearstrategyandcomprehensiveplanto improvesecuritycapabilitiesandcontinuouslypro-videasafebankingenvironmentforcustomers

• CIB received ISO22301:2012 certification for BusinessContinuityManagementbyPECB,aglobalprovideroftraining, examination, audit, and certification stan-dards, in partnership with EGYBYTE, a leader in theMENAmarketforITServiceManagement

2018 Performance Measures Results

EMPLOYEE • Focusonemployeeengagementscore

year-on-year• Enhancetheemployeeexperienceby:

- Listeningtoemployees- Providing ahealthy, safe, andflex-ibleworkenvironment

- Providingcompetitivepay,benefits,andperformance-basedcompensation

- Investingintraininganddevelopment

• CIBhadanaverageof6,635employeesin2018withanaverageannualincomeofEGP209,000peremployee

• CIB implements an Employee Stock Ownership Plan(ESOP) as part of its compensation strategy, aimed atattracting,motivating, retraining, and rewarding out-standing employees, managers, and executive boardmembers. ESOP allows designated employees to ownCIBstocksatfacevaluevia‘promise-to-sell’agreements.CIBallocates1%ofitsissuedandpaid-incapitaltoESOP.During2018,CIBallocatedatotalof5,031,540stocksto4,091employees.Sincetheinceptionoftheprogramin2006, and its renewal in 2015, the Bank has allocated80,491,633sharestoitsemployees(takingintoconsider-ationcapitalincreasesthroughoutsaidperiod)

COMMUNITY • Donate1.5%oftheBank’snetannual

profitthroughtheCIBFoundation• Makepositivecontributionsby:

- Supportingemployees’commu-nityinvolvementandfund-raisingefforts

- Supportingadvancesinitsareasoffocus,whichincludeeducation,arts,culture,health,andprotectingandpreservingtheenvironment

• PleaserefertotheCSRsection formoredetailsonCIB’s social involvement and community develop-mentinitiatives

SAFEGUARDING THE INTERESTS OF SHAREHOLDERS • CIBmaintainsaproactiveinvestor

relationsprogramtokeepsharehold-ersabreastofdevelopmentsthatcouldhaveanimpactontheBank’sperformance.Theteamandseniormanagementinvestsignificanttimeinone-on-onemeetings,roadshows,investorconferences,andconferencecalls.Theteamsparesnoeffortinprovidingtheinvestmentcommunitywithaconsistentstreamoftranspar-entdisclosureswhilesimultaneouslyensuringanalystshavetheinforma-tiontheyneedtomaintainbalancedcoverageoftheBank’sshares

• Asaresultoftheteam’sconsciouseffortsenhanceitsInvestorRelations program,CIB’sHead of InvestorRelationsreceivedanodasthe“BestInvestorRela-tionsProfessional–Egypt”ina2018studyconduct-edbytheMiddleEastInvestorRelationsAssociation(MEIRA) inpartnershipwithExtel.This is thefifthyearrunninginwhichCIBhasreceivedatleastoneawardfromMEIRA



2018in Review

Our operations in 2018 took us beyond traditional banking channels and services, driving our strategy

to deliver a holistic, tailored, and exceptional experience for all stakeholders

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Institutional Banking

Corporate and Global Customer Relations GroupCapitalizingonitsextensiveexperienceintheEgyp-tianmarketanditslargeclientbase,theCorporateBankingGroupcontinuedtosupporttheEgyptianeconomyin2018despiteapersistentlychallengingmacroeconomicenvironment.

CIB’s creative financial structuring capabilities andexperiencedcreditteamshavepreservedourpositionasthetopcorporatebankinEgypt.TheBankoffersawiderangeofinnovativecreditproductstailoredtoitsclients’specificfinancingneedsanddevelopedwithaneyeonmaximizingshareholderreturnoninvestment.

In 2018, the Corporate Banking Group financedmega-projectsinthepower,construction,foodandbeverages, petrochemicals, and oil and gas sec-tors.Thiseffort is in linewith thegroup’s strategyof targeting business opportunities created by thegovernment’s stimuluseffortsandprioritizationofeconomicdevelopment.

Thegroupalsocontinuedtosupportmedium-sizedcompanies by offering customized financial solu-tionscateringtotheirbusinessneeds,ensuringtheirintegrationintothefinancialsector,andpromotingfinancialinclusion.

2018 Highlights2018 posed a number of challenges to the Egyptianbanking sector. Chief among these, the CBE main-tainedinterestratesalmostatthepreviousyear’slevel,emergingmarketswitnessedsubstantialcapitalout-flows,andcontinuoussubsidycutsaddedtoinflation-arypressureontheEgyptianeconomy.Despitetheseand other hurdles, the group’s strategy of growing

• The group is exploring new opportunities forfinancing mega infrastructure projects in thefollowingareas:ports,transportation,infrastruc-ture, andpetrochemicals.Wewill also continueto support strategic sectors suchasoil andgas,refineries,foodandbeverage,andhealthcare.

• Tourism receipts grew by 77% during thefirst half of 2018 to reach USD 4.8 billion,indicatingastrongrecoveryandthesuccessof Egypt’s worldwide marketing campaign.In 2019, the groupwill target the growth ofuntappedtouristicdestinations,suchasNewAlameinCity,andsupport therenovationofexistinghotels.

• Thegroupwillwork to introduceanumberofnewbusinesssegmentsandproducts,includingbutnotlimitedto:- Bundlingexportproducts- Financingprivatesectorgastrading- Developing new sustainable finance prod-ucts

- Furtherpromotingdigitalsolutions- Financingindustrialparks

Financial Institutions GroupThe Financial Institutions Group (FIG) consists ofthree teams: Correspondent Banking, Non-BankFinancialInstitutions,andDevelopmentFinance.To-gether,theseteamsareCIB’sfirstpointofcontactforcredit institutions andmanage theBank’s relation-shipswithdifferentglobalinstitutions.

2018 Highlights• 2018wasanexceptionalyearforcontingentbusi-

ness, FIG’s key income driver, reaching EGP 18.4

its loan portfolio across different sectors met withcontinuedsuccessin2018.AsofDecember2018,CIB’scorporateloanportfoliogrewby20%toarecordEGP88.4billioncomparedtoEGP73.9billioninDecember2017.Thegroupfinalizedseveralkeytransactionsdur-ingtheperiod,includingbutnotlimitedto:• Arrangement of a syndicated facility coupled

with the extension of a bilateral facility tofinance Egypt’s petroleum sector. The Bankhelped ease the liquidity pressure the govern-ment faced in settling its outstandingdues tointernationaloilcompanies.

• Extensionofseveralshort-termtransactionstothetelecomindustrymainlytofinancecompa-nies’capitalandoperatingrequirementsforthe4Gnetworkrollout.

• Advancementofdirectfacilitiesandaggregatecontingent business to finance the upgrade ofEgypt’snationalelectricitygridandrenewableenergyplantsunderthesecondroundofEgypt’ssolarfeed-intariffscheme.

• Finance theworking investmentneedsof lead-ingcompaniesinthefoodandbeveragesector,astrategic,non-cyclical,anddefensivesector.

2019 Forward-Looking StrategyCIB’sCorporateBankingGroupplanstocapitalizeon the Egyptian economy’s growing resilience tomacroeconomicpressures.As such, thegroupwillfocusonthefollowingareas:• In support of the government’s declaration of

2019astheYearofEducationanditsintroduc-tion of associated initiatives, the group willexploreopportunitiestofinanceeffortstoover-haultheeducationsector.

billioninnewbusiness.Thegroup’sL/Gfeescon-tributedto18%ofFIG’stotalfeegrowthin2018.

• FIG’sinvestmentportfoliogrewin2018duetoan exponential increase in its securitizationbusiness.CIB’sparticipation inbonds issuedunder securitization transactions reachedEGP733million,which led thenon-bankingFI investmentportfolio to reachEGP1.2bil-lioninDecember2018.

• FIG’s portfolio of developmental programsreachedatotalofEGP2.64billionbytheendofDecember2018.

2019 Forward-Looking StrategyFIGwill grow its business through several efforts,whichinclude:• Continuing to aggressively attract LGs for

newprojectslaunchedin2018withafocusonEuropeandAsiabycapitalizingonourstrongrelationshipswithcorrespondents;

• Growing the loanportfolio by increasing pen-etration in existing sectors such as leasing,microfinance,andautofinance;

• Launchingdigital cashmanagementsolutionstogrowthemicrofinanceloanportfolio;

• Targeting insurance, investment, and broker-agecompaniestoincreasetheirLCYdeposits;

• Developing the cash business to include newproducts on the Vostro platform to enhancepaymentprocessforcorrespondingVostroandlaunchingthenewfactoringbusiness;

• Continuing to strengthen and activate com-munication channels with exporters and as-sociations targeting African markets, givingthegroupbetterexposuretotradetrendsand

CIB’s creative financial structuring capabilities and experienced credit teams have preserved our position as the top corporate bank in Egypt.


2018 In REvIEW

allowingittoprovideclientswithbankingso-lutionsthatcatertotheirneeds.FIGwillcon-tinuetostrengthenitsrelationshipwithselectbanks in Kenya, the COMESA region’s tradehub,tofacilitatetradewithEastAfrica;and

• Maintaining CIB’s leading position in agencyand participating bank services and solutionswithdonorandgovernmententities.

Treasury GroupCIB’s Treasury Group is one of the best in Egypt,delivering exceptional services in liquidity andcashmanagement,capitalmarkets,andFXandde-rivatives.TheTreasuryGroupconsists of twomainteams:TradingandSales.TheTradingTeam’smainresponsibility is to capitalize onmovements in FX,fixed income, and money markets to enhance theBank’sprofitsonoutstandingpositionsandportfo-lios.TheSalesTeam’staskistoattractnewcustomersandincreasetheflowofbusinesstotradingdesks.

2018 HighlightsCIB’s FX exposure makes a consistently positivecontribution to the Bank’s consolidated reportedearnings.Asofyear-end2018,totalFXgainsstoodat EGP 697.21million, the highest FX profitabilityamongallEgyptianprivatebanks.

CIB’s FXdeskpositively impacted theBank’s non-interestincome,growingthevolumeoftradeprod-uctsopenedatCIBfromthesaleofforeigncurrencythroughfreemarket,incomingdocumentarycollec-tions(IDCs),andlettersofcredit(LCs).

CIB’sFXdeskwonseveralprestigiousglobalawardsin2018,including:• BestFXServicesinNorthAfricafromEMEA• BestFXProviderinEgyptfromGlobalFinance• BestTreasury&CashManagementProvidersin

EgyptfromGlobalFinance

2019 Forward-Looking StrategyOverthecomingquarters,theTreasuryTeamwillseek to further enhance the performance of itstradingandsalesactivities.Thegrouphassetthefollowinggoalsforitsteams:• Manageliquidityefficiently• Cultivate strong and profitable relationships

withcustomers• Takeall necessary steps to ensureproper risk

management• Maximizethegroup’sprofitability• Build on the trust our customers have in our

institutionandthegroup

• Best Syndicated Facility inAfrica for the EGP13.5billionEGPCtransactionattheEMEAFi-nanceAchievementAwards2018

• Best Project Finance Deal in Africa for theUSD900millionEgyptianElectricityHoldingCompanydealattheEMEAFinanceAchieve-mentAwards2018

OntheBloombergAfricaBookrunnerLeagueTable,CIBranked7thamongAfricanbanks in3Q2018,aremarkable jump from our 11th place ranking in2017.DCMwasthirdamongEgyptianbanksonthetablewithamarketshareinAfricaof3.7%.

Regarding the role of Initial Mandated Lead Ar-ranger, CIB ranked third among Egyptian banksand8thamongAfricanbanks,upfrom15thin2017.DCM’smarketsharestoodat3.1%for3Q2018,posi-tioningCIBasthetop-rankingprivatesectorbankinEgypt in both arrangement of syndicated loansandbookrunning.

2019 Forward-Looking Strategy• Project Finance and Syndications: In line

with the Egyptian government’s economicreformprogram,DCMwill continue capital-izingonkeyindustriesandfocusonexpand-ing into alternative energy, utilities, andinfrastructureplays, suchasrailways,ports,and new economic zones. DCM deals in thepipelinefor2019amounttoEGP60billion.

• Securitizations:DCMhasdealsvaluedatEGP6.05billioninthepipelinefor2019,andthedivi-sion plans to introduce new structures in thedebtcapitalmarket.

Direct Investment Group CIB’sinvestmentarm,theDirectInvestmentGroup(DIG), is responsible for the Bank’s direct equityacquisitions,divestitures,andequityportfolioman-agement across local and regional markets. DIGmaximizesCIB’sreturnoninvestmentbyutilizingthe Bank’s designated funds to invest in sectorswithhighpotentialforgrowth.

2018 HighlightsDIG has expanded its deal-sourcing process toinclude SMEs as well as big-ticket transactions,whether independently or through co-investing,leveragingDIG’sexpansivenetworkinthemarket.During 2018, the team screenedmany new SMEsthat operate in financial services, IT, food andbeverage, healthcare, education, and renewable

Debt Capital MarketsCIB’sDebtCapitalMarketsDivision (DCM) is one ofthemostexperienceddivisionsinthemarket,withanunmatched record in underwriting, structuring, andarranginglarge-ticketsyndicatedloans,inadditiontosecuritizationtransactions,bonds,andprojectfinance.

DCMisadedicatedagencyandsecurityagencydeskraisingmedium- and large-ticket project financing,PPPfinancing,andsyndicatedloansforitsclientsby:• Undertaking the role of principal arranger,

bookrunner,andfinancialadvisor• Evaluating feasibility studies to effectively ad-

viseonbankablestructureforthetransactions• Preparingfinancialmodelsandtermsheets• Underwritingdebt• Ensuringcontractual,legal,andtechnicalrisksare

properlymitigatedbyactingastechnicalbankordocumentationbankandapplyingduediligence

• Providingoneof theonlydedicatedagentandsecurityagentunitsinthebankingsector

2018 Highlights • Project Finance and Syndications: DCM orga-

nizedandrestructuredsyndicatedmedium-termloans worth EGP 69.1 billion for public sectorcompaniesandquasi-sovereignsinthepowerandoilandgassectors.CIBcapturedthelion’sshareofpublicsectordebtarrangementsin2018.

• Private Sector Borrowers: DCMconcentratedthisyearontheoilandgas,telecoms,ports,refineries,power, and petrochemicals sectors. Additionally,thedivisionfocusedonrefinancing,restructuring,andre-engineeringbalancesheetsforprivatesec-torborrowers.Itcontinuedtoplayapivotalroleinadvising and arranging securitization issuancesincooperationwithseveralpartnerbanks.

• Securitization:In2018,DCMclosedsecuritiza-tiondealsworthEGP4.4 billion out of a totalEGP5billionintheEgyptianmarket,firmlyce-mentingCIB’spositionasthetopEgyptianbankstructuringsecuritizationsinthelocalmarket.Thedivisionalsopenetratednewsectorsin2018includingmicroandconsumerfinance.

DCM Awards in 2018 • Best Securitization Deal in Africa for Cor-

please’s seventh securitization worth EGP1.072 billion at the EMEA Finance Achieve-mentAwards2018

• BestSecuritizationHouseattheEMEAFinanceAchievementAwards2018

energy. DIG also finalized the establishment ofCIB’sfullyownedventurecapitalfirmCVentures.

On the divestiture side, DIG succeeded in fullyexitingoneof itsportfolio investment companiesoperating in the electricity sector, achieving anIRRofc.50%.DIGalsopartiallyexitedtwooftheBank’sinvestmentsandaffiliatesoperatinginthefinancialservicesandsecurityservicessectors.

On the portfolio acquisitions front,DIG acquiredaminoritystakeinafinancialservicesandinvest-ments company. Additionally, and in line withtheBank’s direction to support the government’sfinancial inclusion initiative, CIB partnered withstrategicshareholdersandestablishedagreenfieldinvestmentinanagentbankingservicescompany.

2019 Forward-Looking StrategyIn2019,DIGwillcontinueexpandingitsportfoliobymakingqualityequityinvestmentsthatprovideCIBwiththeopportunitytocreatesynergiesandstrate-gicalliances,generatinglucrativefinancialreturns.

Strategic Relations GroupTheStrategicRelationsGroup (SRG) is an insti-tutional banking group dedicated to initiating,nurturing, and growing a banking relationshipwith strategic institutional depositors who areessential contributors to CIB’s stable fundingbase.Thegroup’sprimarygoalistoofferafirst-classbankingexperiencewhilemaintaining thedelicate balance betweenmainstream commer-cial banking activities and the non-commercialneedsofitsclients.

SRG’sstrategicclientelecomprisemorethan180diplomaticmissions,NGOs, educational entities,and distinguished international and local donoragencies. The team works tirelessly to facilitateits clients’ business operations and meet theirbanking requirements by creating innovative,tailoredproductsandservices:• Customizeddigitalsolutions• Collectionoftuitionandvisafees• Monitoringandreportingofdepositsactivities• Fundmanagementandpensionsavingsplans• Providingasettlementsystembetweentourism

companiesandairlines• Dispatching mobile tellers upon customer re-

questtoactasatemporarysmallbankingunitatthecustomer’spremises

• Specialofferingsforstaffloans


2018 In REvIEW >> Institutional Banking

2019 Forward-Looking Strategy • ThegroupaimstobecomeoneofCIB’sprimary

corporateleadgenerators,focusingonexistingrelationships while simultaneously capturingnew-to-bank opportunities by leveraging awidernetworkingbase.

• It recently designed a tailor-made, short-termbridge finance facility for the education sec-tor (including universities and schools) toeliminate cash flow gaps that develop duringthe year. This product is poised to become amajor attraction for these institutions, help-ing expand our institutional depositor rate.

Enterprises and Governmental RelationsTheEnterprisesandGovernmentalRelations(EGR)Groupmanages the Bank’s relationship with cus-tomers falling under the umbrella of state-ownedenterprises,governmententities,andsovereignau-thorities.TheEGRGroupfunctionsasarelationshipmanager under the Bank’s IB groups, catering totheneedsofthesestrategiccustomersandgrowingCIB’sbusinesswiththesesectors.

The team possesses a deep understanding ofclient operations that allows itsmembers to actas clients’ advocateswithin theBankwhile alsoproviding continuous support and financial ad-vice. EGR clients require higher f lexibility andconstantsupport intheirtransactionsaswellasfinancialandadvisoryassistance.

EGR Group’s mission is to become the marketleader in the provision of banking services togovernmentandpublicsectorentities.Thegroupworkstirelesslytoacquirenewbusinessintheseareas, capitalizing on our highly experiencedstaff, strong customer base, healthy anddiversi-fied portfolio, and broad coverage of differentsectorsandindustries.

2018 Highlights2018was another successful year as the EGRGroupmanagedtoattractEGP5billionindeposits,growingitsbalancesheetby26%toEGP24.3billionindeposits.

2019 Forward-Looking Strategy• In2019,thegroupplanstofocusongovernmentand

publicsectorentities,whichareexpectedtoseein-creasedcashflowduetotheplannedprivatizationof23publicsectorcompanies,therestructuringofothers, and the establishment of a new sovereignwealthfund.Wearealsoplanningtoattractcash-richholdingcompaniesandtheirsubsidiaries.

• Fortheenterprisesector,thegroupisworkingon retaining existing customers aswell as at-tractingnew-to-bankcompaniesinthissector.

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2018 In REvIEW >> Institutional Banking

Retail Banking

Consumer BankingCIBConsumerBankingremainscommittedtoex-ecuting the segmentation strategydevelopedandcommunicatedin2017.Thisstrategycontinuestodriveoureffortstodeepenourcustomerrelation-ships,executetargetedmarketingcampaigns,andattractnewcustomers.

Pillars of Our Consumer Banking Strategy• Data analytics and behavior segmentation: Le-

veragingtheBank’sinvestmentindataanalyt-ics,wecontinuetodriveatargetedlifestyleandbehavioralapproach to segmentation.Weaimto retain, deepen, and grow our relationshipswith customers through tailored campaigns,alongwithmorespecifictargetingcriteria.

• T24 banking upgrade:Weareupgradingourcurrent core banking IT system (TemenosT24)tobenefitfromnewfeatures,suchasthearrangement architecture, to develop newproducts and expandSTP to improveopera-tionalefficiency.

• Digital transformation to enhance customer experience and drive cost efficiency:CIBiscur-rentlyengagedinanumberoftransformationalprojects, such as loan origination, customeraccountonboarding,andupgradingourdigitalbanking platform. We are implementing seg-mented operational processing and a servicemodel that will ensure that CIB provides thebestcustomerexperienceinthelocalmarket.

• Aligning the product range to segment-specific needs: We continue to align our product of-ferings to our customer segments to enhancethe customer experience, improve productiv-ity, and deepen relationships. In this vein, we

serving clients based in Alexandria. Client.Advisorsarethemaintouchpointforanyser-vicewithintheBank,butclientsalsohavetheoptiontocallCIBshortnumbers.

• Launch of new banking and investment products: The unveiling of the MastercardWorldElitecreditcardwasalignedwith thelaunchof thePrivate segment.Wehavealsodeveloped a branded debit card for Privateclients. Other solutions such as structuredCDsandportfoliomanagementproductsareexpectedtobelaunchedin2019.

Wealth SegmentTheWealthsegmentcontinuedexpandingitsbrandpositionandfocusontargetingaffluentcustomers.TheBankcontinuestooffercustomersauniquesetof products and services and an exceptional cus-tomerexperience.

The division developed an ongoing learning anddevelopment program via our “Wealth Academy”andtheInternationalIntroductiontoSecuritiesandInvestmentexamofferedbytheCharteredInstituteofSecuritiesandInvestment(CISI).AsofDecember2018,wehave48certifiedWealthManagers.

Enhancing service levels and value propositionwill continue to be the main focus. In January2018, he Bank launched concierge services forall Wealth customers in partnership with LesConcierges Egypt. Additionally, it enhanced theWealth internet banking experience by includ-ing the names and contact details of individualWealthofficerstobetterserveclients.

launched our new high-net-worth segmentPrivate togetherwith an entirely newproductandserviceproposition.

• Improving customer loyalty:Wedigitizedthecurrent loyalty scheme, which had amarkedimpact on customers through increasedawarenessandactivity.

Private SegmentThe new segment caters to the banking and in-vestmentneedsofclientswithaminimumAUMthresholdofEGP20millionbyprovidingarangeofalternativesolutions,including:tailoredbank-ingproductsandservices,newlendingproducts,investment solutions, and other wealth-relatedservices.The segment alignswith regional com-petitor HNW propositions delivered via a sepa-ratedistributionmodel.

2018 Private Financial Highlights• TotaldepositsreachedEGP22.0billion• TotalassetportfoliohitEGP2.6billion

Key 2018 Private Milestones• Brand name and marketing plan: The soft

launchofthesegmenttookplaceinMay,andindividual meetings with all Private clientshave already taken place. All branded ma-terials for the new segment, including thewebsite and Internet banking platform, arealignedwithitsidentity.

• Operating model and dedicated premises: ThesegmentwilloperateandwelcomeCairo-basedclients inZamalek.AClientAdvisor isperma-nently located at a brandedCIBPrivate office

In2018, itpursuedseveralbrand-building initia-tives, sponsorships, and events that increasedbrandengagement,themostprominentofwhichwasapartnershipwiththeFourSeasonsSanSte-fanoinAlexandria,offeringspecialperksrangingfrom free nights to discounts and specialmem-bership discounts from Palm Hills club. It alsoofferedthebeINSportsPackageduringtheworldcupandinvitedWealthclientstotheAhlMisrAn-nual Sohour Event. In addition, customers werealso invited to a concert by renowned EgyptiancomposerandpianistOmarKhairataspartofthebenefitsstrategyforthesegment.

2018 Wealth Financial Highlights• TotaldepositsreachedEGP96.3billion• TotalassetportfoliohitEGP11.4billion

Plus SegmentIn2018,wefocusedonenhancingservicesbyintro-ducing a new concierge service to Plus customersthroughourpartnershipwithLesConciergeEgypt.Wearecurrently inthepilotphaseofofferinggov-ernmentserviceassistance.

2018 Plus Financial Highlights• TotaldepositsreachedEGP21.4billion,increas-

ing22.5%y-o-y• TotalassetshitEGP1.7billion, representinga

47.3%increasey-o-y

Personal Banking SegmentIn2018,ourPersonalBankingsegmentdeliveredastrong performance, adding 245,876 new-to-bankcustomers,whichtranslatedtoa21%increaseinour

EGP BN

22.0Total HNW deposits

in 2018


2018 In REvIEW

customerbase.Totaldepositsincreased19.9%whileassets recorded strong growth of 14.9% and sav-ings accounts 16.8%.Theperformance stems fromourcustomer-centricbrandpropositionanduseofbehavioral segmentation to deepen relationshipsand improve loyaltyamongpersonalbankingcus-tomers.Wealsoengaged inportfoliomanagementactivitiestogrowbalancesfromexistingcustomersandreducestagnancyandattrition.

In2018,CIBalsofocusedonincreasingtherevenuegeneratedfrommarginallyprofitablecustomersbycross-sellingassetsandreducingthecosttoserve.We have launched asset cross-sell campaigns andpayrollpackagesdifferentiatedbycompanysize.

Our digital migration efforts are paying off, with23%moretransactionsoff-loadedfromourbranchnetworkin2018resultinginasubstantialincreaseinthenumberofonlinebankingregistrations.In2019,thesegmentwillprioritizecreatinganewpersonalbankingbrandidentityandproductpropositionstoappealtoawiderbaseofconsumersandcontinuetodrivedigitalmigration.

2018 Financial Highlights• Total deposits increased to EGP 18.9 billion, a

19.9%increasey-o-y• TotalassetsclimbedtoEGP6.7billion,increas-

ing14.9%y-o-y

Consumer AssetsTheConsumerBankingHouseholdsegmentachievedsignificant performance and continued to grow itsmarket share of consumer assets, reaching 7.78% in2018 compared to 7.67% in 2017. Additionally, CIBcaptured9.9%ofmarketgrowthin2018despitehavingonly6%ofbranchesbymarketshare.CIBiscurrentlyranked the top private sector bank in terms of con-sumerassets,withourconsumerassetportfolioupby21.9%in2018toEGP22.9billion.Consumerassetsre-cordedtotalrevenuesofEGP1.3billionin2018,whichcontributed23%tototalConsumerBankingrevenues.

customers and sought to raise awarenessabout benefits they could enjoy from CIB’sproductsandservices.

• Zero interest installment campaigns: Strategicpartners included local and international compa-niesandshopssuchasApple,Nestle,Carrefour,Hy-perOne,DeltaGroup,RagabSons,andSouq.com.

• Sales contests and incentives: Launch of suc-cessful sales contests and the revision of theincentivescheme.

CIB’sinvestmentsintechnologyanddataanalyticswill present significant further opportunities forgrowthin2019.

Personal Instalment Loans ProductOurconsumerloansportfoliogrewsignificantlyin2018toreachEGP16.3billiondespitetheeconomicandoverallmarketchallenges.ThePersonalLoansBusinessrecordedtotalrevenuesofEGP749.4mil-lion, contributing 12% to totalConsumerBankingrevenuesin2018drivenby:• Product launches and acquisition campaigns:

Salary up-front revolving overdrafts, securedfacilityCDbundlecampaigns,beINsportscam-paign,andbehavioralsegmentationcampaigns.

• Credit policy changes: Increasing AUM-basedprogram limits, increasing maximum loanamount for self-employed customers, accept-ingcustomersthathave fullsalaryasvariableincome,implementinganewincomecomputa-tionmethodology(self-employed),andexpand-ingoutsourcedcompanies to includeall thosemeetingourpolicycriteria.

• Sales contests and incentives: Launchingsuccessful sales contests and revising theincentivescheme.

Mortgage ProductThe Mortgage Business experienced outstandingperformance throughout 2018. Low-income mort-gage acquisitions registered revenues of EGP 28.8millionin2018andenjoyedastrongflowofreferrals

Ourkeyobjectiveistosustainthislevelofgrowthin 2019 and outpace the market by adopting asegment-drivenstrategythatpromotesourprod-uct propositions, acquisitions, service models,portfolio, and life cycle management. This willtranslate to providing clients with need-basedpropositions.Wewillcontinuebuildingandlever-agingourinvestmentsintechnologytransforma-tionanddigitalplatformin2019.

Cards BusinessOurCreditCardportfoliohasgrownby8%since2017,outpacingtheaveragemarketgrowthrateof7%.AttheendofDecember,ourportfolioincluded494,403cards, and we experienced strong improvement inactivationrates.End-of-periodnetreceivables(ENR)grew22.1%toEGP3.5billion.Wearecurrently thesecondlargestbankinthemarket intermsofENR.CIB’smarket share continued to increase, reaching23.2%attheendoftheyear.Furthermore,CIBisfirstinthemarketintermsofspending,whichwasup31%in2018.Thisperformancewasmainlydrivenby:• Product launches and acquisition campaigns:

Feewaiveracquisitioncampaigns forCoreandPremiumcardsandtheWorldEliteCardlaunch.

• Effective attrition management: Credit card at-tritiondecreasedfrom10.1%in2017to8.1%in2018.

• Activation initiatives and campaigns: WelaunchedanewactivationprocessinadditiontotheNTBEarlyMonthonBookProgramanddormantcampaigns,whichtargetedinactive

fromtheMortgageFinanceFund,whichbodeswellfor future growth. ENR reached EGP 799 million.Significant growth in CIB’s low-income segmentwastriggeredbythefollowing:• Operational process: Processenhancementsin

collaborationwithotherdepartmentstoreduceturnaroundtime.

• Changes in credit risk policies: Outstandingperformanceofthelow-incomemortgageport-folio encouraged the Risk Group to approvecertainpolicychangesthatledtohigheracqui-sitionnumbersthroughouttheyear.

• Recognition and incentives: Monthly salesrecognition is based on productivity andtargetachievement.

Liabilities ThetotaldepositportfolioreachedEGP165billionin2018,up18.3%from2017.Thisgrowthwasachieveddespiteaggressivepricecompetitionwithpublicsec-torbanks.Thekeygrowthdriversin2018included:• Focusing on gathering low-cost deposits spe-

cificallyinCASAbyofferingcompetitiverates.• PromotinglocalcurrencyfloatingCDstocoun-

terpricecompetition.• Introducing competitively priced USD CDs to

meetcorporatelendingrequirements.

Wealsofocusedonimprovingproductprofitabilityand enhancing spreadswhile growing the depositbase.Theseeffortshavetranslatedintoanewport-foliomix for Consumber Banking CASA products;reaching48.8%inCASAcomparedto51.2%interm.

CIBaspirestobuilda“stickycustomerdeposit”basethatislesspricesensitive.

Insurance Business The Insurance Business provides life and generalinsurance programs that generate non-interestrevenues in the form of fees for CIB ConsumerBanking.CIBisthelargestdistributorofindividuallifeinsurancepoliciesinEgyptinpartnershipwith

21.9%Increase in consumer asset portfolio in 2018

EGP BN

22.9Consumer asset portfolio in 2018


2018 In REvIEW >> Retail Banking

AXA.CIBisthefirstbankinEgypttoprovideindi-vidual international health solutions that cover awidearrayofglobalservices.

Strategic Goals• Increase revenue contribution to Consumer

Banking.• Increasecustomerproductpenetrationbyex-

pandingtheinsuranceproductrange.

2018 Achievements in Life and Health Insurance• Lifeinsurancewrittenpremiums(asmeasured

by Annualized premiums insured) increasedto EGP 555.6 million compared to EGP 482millionayearago

• Fee income increased by 26.5% in 2018 com-paredto2017

• The Insurance Business generated EGP 182.6million in revenues in 2018 compared to EGP144.4millionin2017

Business BankingBusiness Banking serves over 48,000 small andmedium-sizedenterprisesthroughanetworkofoverahundredexperiencedrelationshipmanagersacrossthe country. We aim to be the bank of choice forEgypt’s SMEs by providingmarket-leading servicesandaninnovativeportfolioofproductsandsolutionstailoredtotheneedsofsmallerenterprises.

Our broad range of integrated financial solutionsincludescashmanagement,securedandunsecuredlending,tradefinance,payment,ande-commercetohelpourclientsmanageandgrowtheirbusinesses.

2019 Forward-Looking Strategy BusinessBankingwillcontinuetotailoritsofferingtoclients’changingfinancialneedsinordertoofferthebestandmostresponsivecustomerexperienceinthemarket.

Leveraging Data Our increasing use of data to enhance businessdecisionswilldriveinnovationinsegment-focusedsales,riskmanagementandprocessoptimization.

Professional Services AlliancesOurexclusiveallianceswithleadingprovidersofprofessional non-banking services allow clientsto benefit from a wide range of services at dis-countedratesallunderoneroof.

DigitalizationOurmarket-leadingonlinebankingplatformoffersclientstheultimateconvenienceinmanagingtheirfinancialaffairsaroundtheclock.

Dedicated Contact Center A dedicated Business Banking call center will belaunchedin2019toofferanewandflexiblechannelforclientenquiries.

Risk InfrastructureThe build-out of our world-class, end-to-endrisk infrastructure will support the ambitiousgrowth targets for the SMEbusiness.A keypil-larofourriskmanagementstrategyistheactivemonitoringofallaccountsusingcomprehensiveheat maps and early warning indicators thatallow proactive assistance for clients prior toactualfinancialdifficulties.Thedevelopmentofour in-house knowledge database of key indus-trial sectors is also a key differentiating factorforthecreditbusiness.

Payment AcceptanceCIBmaintained itsdominantposition inEgypt’spayment acceptance sector through 13,446 POSmachinesthroughoutEgypt.Around11,000mer-chantsbenefitfromourpaymentande-commerceservices, including our new installment optionforonlinepurchases.In2018,CIBprocessedoverEGP 27 billion in POS transactions, attaining amarket-leading30%shareofalltransactions.

CIBiscommittedtosupportingSMEsasacorner-stoneofbothEgypt’sandCIB’sgrowth.Revenuesfrom the Business Banking Division have beensteadily growing year on year, and we aim tocontinuegrowingourcontributiontotheBank’sprofitabilityandtheEgyptianeconomy.

2018 Highlights Business Banking continued to display strongperformancein2018,asdemonstratedbyitsperfor-manceindicators:• Deposits:reachedEGP48billion,growing21%y-o-y• Trade: EGP 55 billionwas facilitated, grow-

ing34%y-o-y• Payments solutions: attained 30% market

share,processingEGP27billionintransactions• Client base: increased 15% to reach 48,000

companies• Operating profits: increased16%toEGP2.4billion

Empowering Women in Business Business Banking has partnered with the USgovernment-backedOverseasPrivateInvestmentCorporation(OPIC)tohold12workshopsaspartof the “Women in Business” Capacity BuildingProgram that aims to increase banking andfinancial awareness among female-owned andmanaged start-ups and small companies. Theprogrampromotesinclusionintheformalsector,access to finance andbolsters theBank’s stand-ing as an institution that upholds and supportsgenderequalitythroughoutthesector.

Segmentation

Sales Management Marketing Campaigns

Product Enhancement

Clustercustomersbasedontransactionalbehaviortodevelopcustomizedservices

Developmentofautomated,data-drivensalesmanagementtooltoaccelerategrowthand

enhancesalesproductivity

Campaigninsightstoenhancemarketingdecisions

Dataanalyticswilldrivecontinuousen-hancementofproductparametersandthe

customerexperience

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2018 In REvIEW >> Retail Banking

Coo Area

Fewbanksinourregionhavefullyembracedthepo-tentialoftechnologyindigitalization.CIB,however,hasbuckedthistrend,andhasproveditsdevotiontoscalingupthepresenceoffinancialsolutions intheday-to-daylivesofcustomers.

CIB’s commitment to developing innovative prod-ucts and services suited to the digital era is asevidentasever.Thisyear,CIBhasinauguratedtwomajorprojects:theCoreBankingRelease,whichwillallow the Bank to transition to the R18 Platform,and a new digital platform for consumers. Theseinterrelated projects will accelerate the Bank’s ef-fortstoupgradeitsfunctionalities,offercustomersabetter,morestreamlinedexperience,andenhanceCIB’sproductmix.SuchinnovationwillbecrucialtomaintainingtheBank’spositionasamarketleader.

ManysegmentsinEgypt’screditmarketremainun-penetrated, leaving vast opportunities for growth.Seekingtotap intothesesegments, in4Q2018CIBlaunched its Supporting Financial Inclusion pro-gram with the aim of building the infrastructurerequired to bring financial services to unbankedEgyptiansviadigitalchannels.

To stay competitive in themarket, CIBhas supple-mented its customer-centric approachwitha focuson incorporating scalable technologies across allourservices.UndertheSigmaProgram,CIBhassuc-ceededindeliveringprojectsthatenhancecustomerengagement, operational efficiency, and allow theBank to capitalize on new sources of revenue.Theyear has seen CIB reap gains from increased cus-tomer interaction on our new corporate trade andcashplatformsandanewworkflowsystemthathas

basedonjobrequirementstomeettoday’sdynamicworkenvironmentneedsacrosstheCOOarena,withspecialfocusgiventotechnicaltrainingforITstaff.

Ourbranchnetworkremainsthemainchannelforservingcustomers. In2018,wemanagedtodeliverninenewbranchestoreachatotalof203branches.ATMshaveproventobeamainanchorinoffloadingbranchcustomers,andweadded98ATMs in2018foratotalof917ATMsinthenetwork.

In2019,CIBwillcontinuetofocusoninvestinginthetechnologies that bring to fruition our transforma-tionstrategyandallowusto implementourdigita-lizationinitiatives,constructscalablenetworks,andinitiateprojectsthatenhancetheBank’ssecurityandthe performance of its systemswith a data-centricapproach.As foroperations,processre-engineeringandcustomersatisfactionwillbetheprimarydriversformostoftheactivitiestakingplacenextyear.

Information TechnologyThe past couple of years have seen a real trans-formation inCIB’s IT functions.This transforma-tion has been at the heart of all the initiativesandactivitieswehave successfullydelivered.TheBank’s appetite for technological advancementhasrequiredITtoworkonbringingthispowertothewholeBank through integratingBigData en-vironments, upgrading infrastructure resiliency,optimizing our storage, and building enterpriseplatforms to create theprofound shiftneeded forCIBtocontinuetobealeadingserviceprovider.

The rapid adoption of data analysis as a primarytoolforcreatingadiversespectrumofproductsand

optimized theoperations landscape,allowingus toconsolidateallworkflowsunderasinglesystem.

OneofthemajorprojectsdeliveredthisyearwasourCustomer Relationship Management program, withitsaccountopeningandservicerequestmodules.Theprogramisasolutiondesignedtobuildstrongerrela-tionshipswithcustomers,whethertheobjectiveiscus-tomerretentionorgivingaboosttobusinessgrowth.

We continued this year towork on enhancing theBank’ssecurityposturetomanageemergingcybersecuritythreatsandrisk.CIB’songoingtechnologi-caladvancementreliesonalwayskeepingoursecu-ritytechnologiesupdatedtocopewiththespeedofchangeandmaturityofthethreatsandrisks,havingtherightsecuritystrategy,andincorporatingsecu-rityanalysistoactasacornerstoneinallbusinesses.

However, technological advancement can only suc-ceedwithateamoftherightcaliberinplace.Guidedbyourpurposeofbeingan “EmployerofChoice”, anumberof initiativeswerecarriedout to raisestaffmorale.TheseincludeperiodiceventsheldtoawardtopperformersamongCallCenterstaff,whichhavehelped reduce the staff attrition rate to 2.8%. Ourstaff empowerment effortshave involved extendingtheir authorities, training, and motivation in thecontext of our customer-centric philosophy, in ad-ditiontoprovidingthe iCareand iOwntraining forstaff in different domains.On the branch front,welauncheda“GoodtoGreat”programspecificallytai-loredtocustomer-servingstaff.On-the-job trainingcontinuedwith thesamemomentum. Inalignmentwith international norms in the area of buildingstaff skillsets, employeeswereoffered certifications

services customized to every customers’ taste hasmeantinvestingintheconstructionofourBigDataenvironment.Wehaveimplementedstate-of-thearttechnologyintoourdatawarehouseinfrastructuretoenhancereportextractionanddataanalysis.

Naturally,aggressivebusinessgrowthhasmeantexpanding IT across various fronts. This year,wecontinuedoptimizingourstoragetoenhanceperformance, capacity, and data protection ca-pabilities.Growthhasalso requiredongoingde-velopment of our security systems.We continueto reinforce our security strategy by integratingfuture security components, enhancing our net-workanddatasecurity.

CIB’s transformation strategy also entails scalableinfrastructure. In 2018, the Bank took the firststepstowardimplementinganewsoftwaredefinednetwork (SDN) to create a virtual network acrossdata centers. With this technology, CIB can sup-port a new generation of distributed applicationsandaccommodatevirtualizedandnon-virtualizedenvironments. The technology will also help theBank fulfill currentand futurebusinessobjectiveslinkedtotheevolutionindigitalizationandmobileapplicationssolutions.

To better manage its activities, IT has com-menced an enterprise platform implementationstrategy. The new platforms will link data col-lectedfromdifferenttechnologiesquicklyandef-ficiently,simplifyingandunifyingsystems.Theseplatforms grow more valuable as the volume ofbusinessincreases,leadingtoaninf luxofactivitybothbyinternalusersandcustomers.

2.8%Staff attrition rate due to

incentive schemes


2018 In REvIEW

IT began to implement a program of automationandprocessre-engineeringafterassessingoptionsforenhancingITproductivityandsupportingITre-sourcemanagementandefficiency.Furthermore,ITmonitoringcapabilitieshavematuredtodelivervis-ibilityacrosstheentireITlandscapeandprovidesu-pervisionoversystems,businessservices,network,andcustomertouchpoints,aswellasuserbehavior.

Operations Channels and Customer ExperienceTheBank’s success goesbeyondoffering theusualservices to our customers. It hinges onour abilitytoeffectivelyexecutethemovetoamorecustomer-centric approach, whichwill be achieved throughoperationalefficiency,automation,andprocessre-engineering,allwiththeaimofreducingthecostsof service and improving customer satisfaction.Thisinturnwillbeachievedthroughdigitalchan-nels, always with an eye to providing a first-classcustomerexperience.

CIBcontinuestomaintainitsattentiontocustom-ers’voices,furtherdevelopingitsannualCustomerSatisfaction&Net Promoter Score survey tomea-sure customer satisfaction across all segmentsand service channels.Major improvement againstregionalbenchmarkswasrecordedin2018scores,aresultofexpandingkeyserviceindicatorstoincludeamixtureofgloballyrecognizedservicestandardsandcompetitiveanalysismeasures.

When it comes to staying committed to our cus-tomer-centric strategy, it is imperative to build aculture thatempowers staff tohandlecustomers’requestsandcomplaintsswiftly.Oneofthemajorinitiatives theBankadoptedon this front in2018was the First Contact Resolution, implementedacross theCIBCallCenter to allow staff to servethecustomerend-to-endandhandlecomplaintsinadynamicandproactivemanner.

Ourcustomersdependonustoprovidetop-notchservice, and various initiatives were launchedthroughouttheyeartoenhancetheirexperienceby applying amulti-vendor strategywith ATMs.This focus ensures the availability of multipleservice providers, helping avoid any service dis-ruption and maintaining the quality of serviceprovidedtoourcustomers.

has beenworking diligently with supply chain col-leagues toadoptnewe-business suite technologies,helpingreducecostsandsaveprocessingtimes.

Security & Resilience ManagementWith the ever-evolving cyber threat landscapeandtherisingglobalconcernssurroundingcybersecurity, it has become increasingly importanttodevelopadynamicapproachintheareaofSe-curityandorganizationalresilience.CIBaimstocontinuously develop our capabilities to remainintunewithglobaltrendsandbestpractices.CIBtakes its security and customers’ welfare seri-ously,andexecutivemanagementhasprioritizedcybersecurityandresiliencethroughtheinvolve-ment of different committees and amandate toregularlyreportabrieftotheBoD.

The Bank continues to focus on the execution ofthesecuritystrategyadoptedin2015,withvariousprograms implemented since then. Continuousenhancement of the SecurityOperationsCenter isanongoingactivity,andourcapabilitieswereaug-mentedthisyearthroughtheintroductionofcyberthreat intelligence.This system provides CIBwithearlywarning signals formore proactivemanage-mentofthecybersecurityrisksandthreats.

CIBunderstands the importanceofeducationandtrainingwithinthisnon-intuitivesphere,andcon-tinues to runa Security andResilienceAwarenessProgram, offering different activities on multiplechannels targeting customers. The Bank has alsoinstitutedseveralstructuredinternalawarenessac-tivitiesandmandatorytrainingforstaff.Moreover,CIBcontinuestoinvestinenhancingtheskillsoftheSecurity & Resilience Management team throughlearninganddevelopmentprograms.

TheBankhashiredgloballyrenownedsecuritycon-sultancy services, emphasizing the priority it hasplaced on this strategic direction. Our consultingpartnershaveassessedthequalityoftheinvestmentsmadeintheareaofsecurityandfoundthemtoenjoya very structured and valid strategic approach, en-dorsingmanagementdirectionsinthisdomain.

Compliance continues to be an area of focus, andCIBmaintainscertificationstatuswiththePaymentCardIndustry–DataSecurityStandards(PCI-DSS)

Operationscontinuestobeatthecoreoftheauto-mationandre-engineeringinitiatives.MovementinthisarearangedfromshiftingdifferentactivitiestotheCallCentertore-engineeringmultipleprocessesto allow the Bank to offload support duties frombranchstaffandsignificantlyshortenservicedeliv-eryturnaroundtime.

Operationsprogressedin2018withtheautomationroadmapset in late2017.The focusonSTPhasal-lowed theBank to reachanSTPrateof90% fore-remittances.

Orchestrating the digital strategy with both ourefficiency and process re-engineering activities isataskthathasrequiredaligningallinitiativesinacohesivemanner,ultimatelyreflectedinasuperiorcustomerexperience.SMSactivationofdebitcardswaslaunchedduring2Q2018,decreasingtheloadofincomingcallstotheCallCenterandthusenhanc-ingresourcecapacity.Toallowcustomerstotackletheirdayto-dayactivitieswithease,theIVRcalltreewasrevamped.This increasedcustomermigrationtoIVRandenhancedtheIVRresolveratetoallowcustomers to conduct different financial activitiesquicklyandefficiently.

Despite the focus on aligning initiatives with ourdigital strategy, we never neglect opportunities tore-engineerdifferentprocessesacross theCOOarea,proactively applying changes to existing processes.Solidprocessesfollowedbyfront-linersforCorporateAccountOpening have enhanced turnaround times.Remittancetransactionprocessingtimehasimprovedthroughvariousprocessre-engineeringinitiativesthatallowedfortheabsorptionofasignificantincreaseinthevolumeoftransactionswiththesameresources.

CIB increased its presence in Smart Village byopeningafourthbuildingwithanew,state-of-theartTrainingCenter —akeyvenue inCIB’sHeadOfficeexpansion.

The Bank is also utilizing technology to enhancestaff’sworkenvironment.Withtheinitiationofanewautomationinitiative,theQualityManagementSoft-waresystem,toserveboththePremisesandFacilityManagement departments, the Bankwill positivelyinfluenceprocesses in the real estate andpremisesprojectsdivision.During2018,theprocurementteam

forthesecondconsecutiveyear.CIBalsofullycom-plies with the Swift Customer Security Program(CSP)mandatoryrequirements.

Major investmentshavebeendeployed to improveandrefreshCIB’ssecurity infrastructuretechnolo-gies and strengthen our defense-in-depth strategythrough world-class technology solutions coupledwithanenabledworkforce,policies,andprocedures.

Takingourbusinesscontinuitycapabilitiestothenextlevel,resiliencemanagementwasintroduced,with a widened scope of oversight for businesscontinuityandcontingencymanagementtocovercritical third parties in addition to the internalcapabilities.

Finally, this year the Bank proudly receivedISO22301:2012certificationforBusinessContinuityManagement.ISO22301certificationwasawardedto CIB by PECB, a global provider of training, ex-amination, audit, and certification standards, inpartnershipwithEGYBYTE,a leader in theMENAmarketforITServiceManagement.

ISO 22301 is the International Standard for Busi-nessContinuityManagement,providingguidanceto certified organizations allowing them to iden-tify andmanage thecurrentandpotential futurethreatstothebusiness.Hence,takingaproactiveapproach to minimize the impacts of incidents,minimize downtime, improve recovery time, anddemonstrateresiliencetocustomersandsuppliers.

ISO certification is a major recognition of CIB’seffortsonthebusinesscontinuityfront.CIB’sISOcertified Business Continuity Management Sys-temhas left theBank inaposition to effectivelylimit the risk of unexpected incidents, allowingthe Bank to operate during tough situations,reduce the likelihoodofoperationaldisruptions,and continue to provide customers with the ex-pected services while maintaining the highestlevelsofcustomersatisfaction.

CIB is best known for its innovation, and hassucceededinembeddingthiscultureatboththetechnologicalandoperationallevels.Mostimpor-tantly, innovationhasbeensuccessfullyused forthetaskofmakingourcustomershappy.


2018 In REvIEW >> COO Area

Digital Banking and GTS

Thepastthreeyearshaveseenbanksmovequickerthan ever to act on digitalization trends. At CIB,we’renotonlyadoptingthem,butwe’reactivelyen-gagedineducatingourclientsaboutevolvingdigi-talbankingsolutionsandoffering themaccessibletoolsthatmakebankingevenmoresimple.

In 2018, the digital business planwas built on of-feringanoutstanding,trusted,andefficientdigitalfinancial experience tailored to customers’ needs.It also sought to support theBank’s growthwhilekeepingcostslow.

Withthisinmind,CIB’sdigitalstrategyframeworkcentersonfourmainpillars:enhancingthecustom-erexperience,increasingmigrationandautomationratios,optimizingcost,andgeneratingrevenue.

Innovation and FintechCIB Fintech Engagementwas initiated to cater tofintechstartupneeds,providingthemwiththetoolstheyneedtosurviveintoday’scompetitivemarket.In 2018,we established an echo-model of support,built strategic alliances serving CIB’s financialinclusion objectives, and formulated a pipeline offintechstonurtureandintroducetothemarket.

Innovation Activities: Digital StudioCIBDigitalStudio servesasahub that focusesonfosteringacultureofinnovationwithintheBank.Bychallenging employees to adopt aflexiblemindsetandthinkoutsidethebox,theDigitalStudioaimstoaccelerateCIB’sdigitalcapabilities.2018 HighlightsWe took part in the first workshop organized by

forbanksandfinancialinstitutions.ThistripartiteagreementbetweenCIB,AUCV-LabandTemenoswill support startups participating in upcomingfintech cycles by giving them the opportunity totesttheirproductsandservices inasandbox—anon-production cloud-based version of the Teme-nosT24corebankingsystem.

2018 Highlights• Rolled out the third fintech track cycle, which

introducedfourpotentialstartupstothemarket.• Supported Hona Al Shabab, a competition

hosted by leading Egyptian network CBC foremergingbusinessentrepreneurs.Throughthissponsorship,30startupshavebeenintroducedto themarket in fields such as health, e-com-merce,food,payments,andfintech.

• Utilizedour strategicpartnerships andagree-mentswithOrangeLabandDellEMCtosupportinnovationactivitiesandincreaseawareness.

2019 Forward-Looking Strategy In 2019, CIB Fintech Engagement aims to usefintechcompaniesasachannelto launchprofit-ableandinnovativetechnology-enabledbusinessmodels to serve the Egyptianmarket that couldbe replicated in other emerging markets. Thisstrategy will serve two objectives: contribute toEgypt’s financial inclusion initiativeandexplorenew business models that fit existing businesslineswithintheBank.

ATM Network CIB maintained its competitive advantage in theEgyptian market through operating the largestATMnetwork amongprivate banks.By the endof

potential partners, an introductory session called“Innovation andPizza” that explained the innova-tionprocess,the“4Ps”ofinnovation,the“5traitsofsuccessfulinnovators,”andtheideationprocess.

2019 Forward-Looking Strategy In2019,weplantocontinueexpandingCIB’sinter-nal innovation by conducting awareness sessionsandthinkingseminars.Wewillalsoimplementan“IdeaManagement Solution” in collaborationwithpotentialpartners,anautomatedandmonitoredin-termediateplatformbetween the innovation teamand CIB employees. This platform will encourageemployees to come up with new ideas, allow theinnovation team to create specific challenges, andaddressdefinedpainpointsindigitalbanking.

FintechCIBstrivestoprovideclientswithinnovativesolu-tionstomeettheirfinancialneedsandexpectationswhile maintaining sustainable growth throughcreatingvalueforstakeholders.

TheBankcollaboratedwithAUCVentureLab(AUCV-Lab) to create AUC Venture Lab Fintech Accel-erator,poweredbyCIB.ItsobjectiveistobolsterthefintechsceneinEgyptandhelpselectstartupsgrowandenterthemarket.Theacceleratorhascompletedtwocyclesin2018,graduating10startupsandsup-portingover 25 entrepreneurs. It hashelpedbringto themarket innovative fintech startups such asPayMe,7aweshly,Gameya,Ordera,andothers.

In addition to CIB’s long-standing sponsorshipof AUC V-Lab, the Bank has collaborated withTemenos, the market leading software provider

December2018,theBank’snetworkwascomprisedof917ATMs.Thenetworkprovidescustomerswitha variety of services, including cash withdrawaland deposit, credit card settlement, bill payment,mobiletop-up,mobilewalletcash-in/out,andcheckdepositservices.

2018 Highlights• Maximizing theutilizationand return from

ourATMnetworkwasakey focusareadur-ing2018.Theaveragenumberoftransactionsacross the ATM network increased by 12%y-o-y as of year-end, on the back of relocat-ing low-utilized ATMs to higher footfalllocationsandmatchingcustomerneedswithATMs’widerangeofvalue-addedservices.

• The total ATM network increased by 98 ma-chines to 917 in December 2018 from 819 inDecember2017.

• TheATMnetworkcontinuestoservebranchmigration efforts. As of December 2018, itachieved a 95% migration rate in cash de-posit transactions below EGP 10,000 versusbranchdeposittransactions.Italsoachieveda 98.35%migration rate in cash withdrawaltransactions below EGP 20,000 versus with-drawaltransactionsatbranches.

• Corporate deposit card transactions saw a128%increaseasofDecember2018to113,000transactions with a total deposit value ofEGP731million.

• CIBopenednumerousATMcenters in severallocations such as Semouha in Alexandria andHurghada to better serve high demand onATMsintheseareas.

95.1%Migration rate in cash

deposits to the ATM network


2018 In REvIEW

92%Surge in value of Smart Wallet transactions

2019 Forward-Looking Strategy Going forward,wewill continueour efforts to en-courage customer migration from branches andenhancethecustomerexperience.Wewillcontinueadding new functionalities at competitive pricesandmaximizingtheutilizationandprofitabilityofourATMnetwork.Wealsoplantofocusonvariousin-branchdigitaltacticstofurtheroptimizeaveragewaitingandservicetimes.

Internet and Mobile Banking CIB Internet andMobileBanking enable custom-ers to easily access their accounts and conducta broad range of financial transactions. In 2018,we focused on enhancing our Internet Bankingcustomer experience,whichboostedour InternetBankingsubscribersby95%y-o-yasofDecember2018andthenumberoftransactionsby20%y-o-yasofDecember2018.OurMobileBankingappuserbase continued to increase,with a 151% y-o-y in-creaseinthenumberoftransactions.

Additionally, CIB is in the analysis phase ofimplementinganewdigitalplatform. Itwillcre-ate a seamless multichannel experience acrossourdigitalchannelsandprovidecustomerswitha premium Internet andMobileBanking experi-encewitharangeofbankingfunctionalitiesandnewlyaddedservices.

2018 Highlights• Launching the new Internet Banking user inter-

face,whichprovidedanenhanceduser-friendlyex-periencewithnewlyaddedfunctionalitiessuchas:- Organize routine transactions inonecon-venientlocation,makingiteasiertoinitiatetransfersusingaone-timepasswordtoken.

- Activity Calendar: Use the calendar viewto keep track of past, present, and futuretransactionsonallaccounts.

- My Money Tool:Labelandgrouptransactionstoeasilyreviewthemandtrackspending.

- Notifications: Customize and receive notifi-cationsontheInternetBankinghomepagere-gardingaccountbalancesandexchangerates.

mobile devices. Customers can easily pay bills,rechargetheirmobileprepaidline,sendmoneytoanyotherwalletholderinEgypt,anddepositandwithdrawfundsfromCIB’sATMnetworkoranyofourauthorizedbankingagents.

In 2018,we focused on improving the quality of thecustomerexperiencebyleveragingourstrategicpart-nerships,growingourbankingagentnetworktoregis-ternewwallets,andbetterreachourtargetsegment.Wealsopartneredwithexistingvendorstoexpandthenumberofavailableservicesonthewalletandboostclientsatisfaction.Additionally,wecollaboratedwithotherteamsintheBanktoofferahighervalueproposi-tionthroughlaunchingproductsoverthewalletandmeetclients’needsbymonitoringandanalyzingtheirbehaviorandtransactionalhistory.

2018 Highlights• SmartWallettransactionvolumerose51%,and

itsvaluesurged92%y-o-y.• Ranmarketingactivitiesandmultiplecampaigns

toincreasewalletacquisitionandactivityrates.• UpdatedtheSmartWalletuserinterfacetoen-

hancetheuserexperience.

2019 Forward-Looking Strategy Throughout2019,CIBwillworkonimprovingtheuser experience and customer journey. We willupgrade digital user interfaces and platformsand adopt amulti-vendor strategy to derive themost value from existing assets. In doing so,wewill build the capacity to service every kind ofcustomer in the best possible manner. We willalsofocusonourdistributionnetworktofurtherleverageourstrategicpartnershipsandgrowouragentnetwork.Thiswillallowustoregisternewwalletcustomersandexpandourreach.

CIB Business Online and Corporate ServicesCash Management CIB is committed to serving our customers’ so-phisticated business needs through implementing

• Implementingvariouscustomerexperienceen-hancementsovertheMobileBankingappthatfocusonimprovingusabilityandeaseofuse.

• Creating anew InternetBanking interface forthenewlylaunchedPrivatesegment.

2019 Forward-Looking Strategy Throughout 2019, CIB will focus on providing acustomer-centric Internet and Mobile Banking ex-periencewith the help of our newdigital platform,adopting emerging online banking trends, offeringnew digital services, and collaborating with thirdparties.

Phone Banking and Call CenterCIB’sCallCenterhandledatotalof4.4millioncallsasofDecember2018.WehavefocusedonoffloadingcallsfromtheCallCentertotheIVRself-servicebyincreasing customer awareness.This strategy en-hancedtheeligiblemigrationrateforallfinancialinquiries to 78%as ofDecember 2018 versus 70%in December 2017. We explored various chatbotsolutions to help answer customers’ general non-financialquestionssuchasbranchworkinghoursandproductfeatures.

2018 Highlights• LaunchedinstantcreditcardsettlementinSep-

tember2018.

2019 Forward-Looking Strategy IVR:WeplantointroduceanewfeaturetoourIVRto serveCIBcustomersandnon-customers,whichwill reduce our average call handling time andboostourPhoneBankingpenetrationrates.

Call Center:We aim to transform theCallCenterintoamulti-channelcontactcenterbyaddingnewtouchpointssuchaslivechatandchatbots.CIB Mobile Payment (Smart Wallet)CIB Smart Wallet offers an innovative paymentexperience serving the banked and unbankedsegments by providing a convenient, secure,and cost-effective way tomake purchases using

the most convenient, comprehensive, and com-petitivebankingsolutions.TheBankiscommittedtocontinuouslyimprovingitsdigitalmigrationstrategyandfocusingonthee-paymentsmarketbyintroduc-ingthemostcomprehensivepaymentproducts.

Corporate Download PortalTheportal’smainfunctionistoprovidethemostsophisticated and comprehensive reports,whichallow customers to closely monitor escrow ac-countmovements.• Post Dated Check (PDC) Reports:Providing

customerswithPDCmovements anddetailstosupportcompaniesinkeysectors.Itallowsrealestatecorporates,forexample,tocloselyfollow their projects, unit payments, and in-stallmentsprocesses.

• Extra Teller Info Details Service:Providingcash-richcorporates insectorssuchaspetroleum,realestate,andeducationwithreportsshowingthese-lectedordesiredvaluesregardingcounterdeposits.Italsoprovidesotherreportssuchas:- Loansandtimedepositposition- Historicalstatements- Outgoingcheckreports- SwiftstatementMT940

Automated Clearing HouseThe Automated Clearing House (ACH) network isa reliable and efficient nationwide electronic fundtransfer system governed by the Egyptian BanksCompany(EBC)underthesupervisionoftheCBE.


2018 In REvIEW >> Digital Banking and GTS

86%Ongoing transfer migration rate of total bank transactions

2018 HighlightsA noticeable increase in the number of transac-tionsledtoasignificantimpactoncashmanage-ment cost synergy, reaching EGP 178million asof December 2018, along with direct revenues,reachingEGP26.4milliononthebackof:• PresentingtheACHDirectCreditmodeland

enrolling the largest syndicates in the pen-sion payment cycles with 690,751 transac-tionsasofDecember2018.

• BecomingthemarketleaderbyhavingthelargestmarketshareamongEgyptianbanksandrankingnumberoneforcommercialdomesticpayments.This includedACHReceivableandACHPayable(ACHDirectCreditandACHDirectDebit)amongEgyptianbanksontheACHonlineplatform.- ACH Payable: Internal payments reached895,506withavalueofEGP13.5billionandoutgoingpaymentsreached1,156,267withavalueofEGP25.3billionasofDecember.

- ACH Receivable: Collection transactionsreached2.26millionwith a valueofEGP10.4billion.

• ThenumberofACHDirectCredittransactionsreached2millioninDecember2018versus1.5millioninDecember2017.

• The number of ACHDebit transactions reached2.26millioninDecember2018versus1.6millioninDecember2017.

• Thenumber of clients reached 9,247 as ofDe-cember2018versus4,905inDecember2017.

• TotalMigrationRateasofDecember2018:- Outgoing transfer migration rate reached86%oftotalbanktransactions.

- Internal transfer migration rate reached62%oftotalbanktransactions.

2019 Forward-Looking Strategy Weplantoincreasethenumberofsubscribersandtransactionvolumesbyexpandinginternationalre-mittancepaymentsandtargetingnewmarketsandareastoincreaseourmarketshare.

Core Digital Business• Increasing CIB market share of international

remittancesolutions.

9.3millionreductioninthecostofonlinetradetransactions.TradeFinance’sadoptionrateasofDecember2018forGCRwas38%andBB11%.

• Launched theExportCollection-DirectCol-lection via the CIB Business Online portal,a significant step toward improving thecustomer experience and relationships as-sociated with our trade service offeringsoverCIBBusinessOnline.Thenewoutgoingdocument collection service, Export DirectCollection,allowsCIBBusinessOnlinecus-tomers to export their shipping documentsdirectlyfromtheirpremiseswithoutvisitinga CIB branch and gives them direct accesstotrackdocumentsduringeverystageuntiltheyreachtheirfinaldestination.

• Appliedare-engineeringprocessingcycleforun-confirmedexportlettersofcredit(ELC)atalltradeservice hub branches. All shipping documentspresentedbycustomersunderunconfirmedELCswillnowbecompletedonthesameday.

• Offered the Bill Financing Module over CIBBusiness Online as a discounting program toserveexportersaskingtodiscount/forfeittheirELCs for immediate access to cash to servetheirworking-capitalrequirements.

2019 Forward-Looking Strategy Starting2019,weplantocontinue focusingoncus-tomermigrationfrombranchestotheonlineportalto allow customers to perform their transactionsconveniently24/7withouttheneedtovisitabranch.Wewillprovideourcustomerswiththeultimatedigi-talsolutionstobenefittheirbusinessesandsupporttheirgrowthambitions.WewillcontinuetoenhanceBusinessOnline,addingfeaturesthatmakeitamoreconvenientandsecureplatformfortradeandsupplychainfinance,cash,treasury,andlendingservices.

Corporate Payment ServicesAspartoftheMinistryofFinance’saimtocollectallgovernmentpaymentselectronically,anagree-ment was reached between CIB and E-FinanceCompany (which develops and operates e-pay-mentplatformsandchannels)toenablecustoms,tax,andothergovernmentauthorities to receive

• Providing custody, securities, liquidity, andtreasurymodulesoverouronlineplatform.

• ProvidingSMSandemailnotificationsforbank-ingtransactions(debitandcredittransactions).

• RevampingCorporateDownloadPortalreports.• Revampingonlineportals(CIBBusinessOnline

andACH)toincreaseandimprovethecustomerexperience and decrease turnaround time foronlinetransactions.

• Integrating with corporate financial systemssuchasoracle,ERB,andothers.

Strategic Agreements• PartneringwithEgyptPostOfficetoofferover-

the-counter agreements that allow custom-ers to send funds to their chosen beneficiarythroughourACHchannel;thebeneficiarywillbeabletowithdrawtheamountatanypostof-ficebranchusingtheirnationalID.

Trade Finance Management CIBTradeOnlineisournewmarket-leadingonlinetradechannel,offeringclientstheabilitytoconductandmanagetheirtradefinancetransactionsonline.

CIBTradeOnlineprovidescustomerswithmoretrans-parencyandvisibilityintotheirtradetransactions,aswellassavingtimeandmoneythroughitseasyaccess,streamlinedprocessing,andeliminationofpaperwork.

2018 Highlights• Reached1,621registeredcustomerswith18,250

transactionsoveritstradeportalwithamigra-tionrateof22%asofDecember2018,andanEGP

payment and collection services through banksofferingtheseserviceusingtheE-Payportal.

CIB in cooperation with E-Finance successfullyprovidedbillpaymentservicesforcustomersusingE-Pay’sgeneralizedportal.Currently,customerspaygovernmentduesatbrancheswiththehelpofbankclerkswhoutilizeE-Payservicescreens.

To provide the best quality services, we estab-lished the Corporate Payment Service (CPS)portal,whichallowscorporatecustomers topayand manage their government payments in thecomfortoftheiroffices,24/7.

2018 Highlights• CIB was ranked number one among Egyptian

banksine-financegovernmentonlinepayments.• CPSreached512registeredcustomerswith20,750

transactionsandamigrationrateof33%asof2018.• Achieved a revenue of EGP 105 million as of

December2018.• AddedthenewSuezCanalUnifiedInvoiceService

totheE-Payportal,givingustheabilitytocoverthepaymentoftaxes,customs,chargingcustoms,so-cialinsurance,andprivateuniversitytuitionfees.

2019 Forward-Looking Strategy Starting 2019, we plan to continue focusing oncorporate customer migration from branchesto the CPS portal to allow them to perform theirtransactionsconveniently24/7withouttheneedtovisitabranch.Moreover,wewillfocusonprovidinggovernmental collection services for corporatesandconsumersovertheBank’sdigitalchannelsbygivingindividualcustomerstheabilitytopayforallgovernmentservicesthroughtheseplatforms.

Global Securities Services (GSS)In 2018, CIB was recognized as the best sub-custodian in Egypt by Global Finance for theninth consecutive year. It recognized theBank’sdistinguished services provided to more than26,000clientswith totalassetsundercustodyofEGP 367.5 billion through processingmore than300,000transactionsannually.



2018 Highlights• AttractednewportfoliosworthatotalofEGP16

billionduring2018,diversifiedbetweenscript-lessandphysicalsecurities.

• Increasedfixed-incomeinvestmentsundercus-todysignificantlywitha136%growthinT-billsasofDecembertoEGP47billion.

• Appointedasthelocalsub-custodianforAlexan-driaMineralOilsCompany(AMOC)’snewGDRprogrambyglobaldepositorybankBNYMellon.

• Ranked number one in providing trustee ser-vices, handling 19 special purpose vehicles(SPVs)outof22SPVs in themarketwith totalassetsofEGP7.7billion.

2019 Forward-Looking Strategy • Enlarge CIB’s custody market share through

registering the bank’s prime corporate clientsinthecentraldepository.

• Focusonsecuritizationservicesbyapproachingrealestate,leasing,andfinancingcompanies.

• Introducenewinvestmenttoolstoattractnewclients to invest in the stock market and in-creasemarketliquidity.

Digital GovernanceDigital Governance is a dedicated division taskedwithmanagingcollaborationsbetween theDigitalBankingandGTSteamandtheBank’sinternalandexternalstakeholders.

2018 Highlights• Collaborated with the Federation of Egyp-

tianBanks(FEB),theFederationofEgyptian

Industries(FEI),andothersinastudyonthetransformationoftheEgyptianeconomytoacashlesssociety.

• PresentedadetailedstudytotheFEBdiscuss-ing the challenges of the current CBE mobilepaymentregulationsandCIB’ssuggestions foritsenhancement.

2019 Forward-Looking Strategy TheDigitalGovernanceteamwillcontinuework-ing tirelessly to ensure compliance across theBank’sdigitalchannels.Itwillcontinuechalleng-ing stakeholders to adopt new technologies andincrease their digital appetite and ensure thatdigital products, strategies, and financial inclu-sioneffortsfallinlinewithregulatoryguidelinesandregulationsupdates.

Digital Banking and GTS AwardsThe Corporate Channel Management DepartmentreceivedthefollowingawardsfromGlobalFinance:• BestCorporate and InstitutionalDigital Bank

intheMiddleEastin2018• BestOnlineCashManagementProviders• BestTradeFinanceServices• BestOnlinePortalServices• BestInformationSecurityandFraudManagement• BestSub-CustodianAward• Best Payments and Collections, Liquidity,

WorkingCapitalOptimization,Short-TermIn-vestments,andMoneyMarketFund

It also received the award of Financial InclusionChampionoftheYearbyFinTechGalaxy.

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Big Data

Afterlayingasolidfoundationoverpreviousyears,the Analytics and Data Management (ADM) De-partmentflourishedin2018afterhavingsucceededin changing the Bank’s digital culture across theorganization. For over two years, the team hasworkedrelentlesslytopropagateaculturethatpri-oritizesdata scienceandanalyticsand recognizestheirimportance.Theteam’seffortsmaterializedin2018andthebusinessbecamereadytousedatasci-encetoachieveitsgoalsandaccelerategrowth.Theteamsucceededinbuildingafavorabletrackrecordthroughouttheorganizationandbecameatrustedpartnerofvariousdepartments,allowing formorecollaborativeprojectsandhigherdependency.

Additionally,theteamsetaclearagendatoassisttheBankinprovidingpersonalizedproductstocustom-ers, optimizing operational processes, understand-ing fast-paced market alterations and supportingthedecision-makingprocess.AllthiswasconductedwhilemaintainingCIB’spositionasamarketleaderin the banking industry, and was reflected in thenumerousawardsCIBwonduring2018.Thiswasallachievedthrough:• Investingininnovation• Customeranalytics• Riskanalytics• Performanceanalytics• Technologicaladvancements

Moreover, in recognition of the Bank’s extensiveeffortson thedata front,LondonBusinessSchool(LBS)featuredCIB’sdatatransformationasacasestudyin2018,makingCIBthefirstMiddleEasterncompany to be analyzed in a case study by theLeadershipInstitute.

OneoftheCBE’scurrentprioritiesistoimprovetheexistingKYCprocessbylaunchingastudytoexploreusing distributed ledger technology (DLT) to pro-videfinancialservices.TheplanwillbeginwithKYCfor retail customers, andcorporateKYCprocesseswillbeaddedatalaterstage.KYC,oreKYCinthiscase, becomes a stepping-stone toward financialinclusion. By adding data layers, such as medicalrecords, subsidies, and governmental services, tothebasicKYCstructure,wecandevelopeKYCintoafulldigitalidentityforeachcitizenandpavethewayforamoreopenbankingplatform.

Smartcontractsareanotherpromisingapplicationof blockchain technology; they allow customersin variousfields such as shipping, real estate, andinsurancetoexecutetransactionsandagreementsautomaticallywithoutanintermediary.

By investing funds and resources in developingblockchain technology, CIB is making transac-tionsmoresecure,cheaper,andfaster.TheBankwillbeabletoperformcross-bordertransactionsforafractionofthecostandtime;thistechnologycan potentially replace SWIFT and other tradi-tionalpaymentplatforms.

Consumer AnalyticsThroughouttheyear,thedepartmentcontinuedtotransformCIB from a product-centric institutiontoacustomer-centricone, increasingproductac-quisitionandcustomersatisfactionwhileoptimiz-ingmarketingcosts.Theteamcompletedanumberof projects in this area, such as revamping ourbalance-based customer segmentation to a fullycustomized,data-driven,behavioralsegmentation

Thecasestudycoveredtheevolutionof theBank’shuman capital culture, which enabled it to meetits overall data transformation strategy. It alsodiscussedtheBank’ssuccessinchangingtheorga-nizationaldesignandoperatingmodelintoadata-drivenone.Thecasestudywillbetaughtingraduateprogramsforyearstocome.

2018 Highlights Innovation is the ADM team’s main tool to safe-guardtheBank’scurrentpositionasmarketleader.Theindustryismoredynamicthanever,withrapidchanges taking place and new players attemptingtoenterthefield.CIBmustexploreandutilizeup-and-comingtechnologiescapableofaddingvaluetotheBank’scurrentbusinessmodel.TheADMteambelievesthatinvestingtimeandresourcestoembedinnovation in the Bank’s everyday activities willtranslatetofutureearnings.

BlockchainBlockchainhasbeenasubjectofintensestudyforthepastfewyears.Usingblockchaincouldchangethedynamicsofnotonly thebanking sectorbutthe economy as a whole. This technology canbe used to create a digital identity, smart con-tracts,andcross-bordertransactions.AsanearlyadopterofthetechnologyintheEgyptianmarket,CIBwasthefirsttojointheKnowYourCustomer(KYC)projectonR3’sCordablockchainlastyear.Thisyear,theBankisreapingthebenefitsofthestrategicdecisionto jointhisalliance.TheADMteamiscurrentlytestingdifferentusecasestode-velopliveprojectswhilesimultaneouslybuildinga localblockchainnetwork forbanksanddiffer-entfinancialservicesproviders.

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2018 In REvIEW

200 EGPMN

Cost savings due to digital channel migration

thatputsthecustomersattheheartoftheorgani-zationanddecision-makingprocess.Additionally,the department completed a project to segmentcredit cardusersbasedonpurchasebehaviors inorder to provide the cards businesswith distinctcustomersegmentscharacterizedbywell-definedbehaviors,interests,andpreferences.

TheADMteamalsodevelopedachurn-propensitymodel to identify high-risk customers prone tochurn; retention strategies were successfully de-velopedbasedonthismodel.

In 2018, the team also launched a Digital LendingProgram(DLP)topenetrateanuntappedmarketofcreditseekersbasedontheirhistoryasCareemcap-tains.Thisprogramcanbeduplicatedinthefuturetopenetrateunbankedsegmentsandincreasefinancialinclusionthroughtheuseofdataanalyticstools.

Aligned with CIB’s 360-degree customer-centricstrategy, the analytics team developed a tool totrackandmeasurebehavioralKPIsforallcorporateandbusinessbankingcustomer interactions.Vari-ousnewprinciple types of consumer indiceswereestablished by combining newKPIs and customerdatawiththemainobjectiveofspottingat-riskcus-tomersandnewopportunities.

The team’s continuous efforts to analyze CIB cus-tomerdataareexpectedtoincreasesalestonewandexistingcustomers,reducecustomerchurn,andin-creaseloyaltywhilesimultaneouslydeliveringhigherreturnsonmarketingandpromotionsinvestments.

evaluationtoolwascreatedtomeasureandassesstheimpactofanyrecommendedaction,eliminat-ing theneed to invest innew,untestedmethodsandassessthemafterimplementation.

The team also analyzed cash withdrawal activityacrosstheATMnetworkandfoundthattheBank’scurrent ATM cash levels and structure are overfunded. Using this knowledge, the team derived aformula to lower cash costs (largely opportunitylossofinterestincomeandunnecessarycostssuchascashtransportation)andincreasereturnswith-outaffectingcustomersatisfaction.

Another performance analytics tool introducedby the team estimates the number of incomingcallstothecallcenter,allowingforplanningandallocating resources more efficiently. This toolhas accurately captured call center demand ina fully automatedmanner. Insights gained fromthistoolhaveallowedustocreateamorepositivecustomer experience and optimize the depart-ment’sallocationofagents.

This year, the team launched CIB Navigator; adynamic digital performance dashboard thatenables different lines of business to track cus-tomers’ adoption of digital transactions acrossavailableonlinechannels,andhelpsrelationshipmanagersandcustomerserviceofficerspersuademorecustomerstotransitiontoavailabledigitalportals. Greater utilization of digital channelswillreducetrafficatCIBbranchesandhence,in-creasecostsynergies.Inthisregard,theexecution

Risk AnalyticsWiththeriseofcomputingpowerandnewanalyti-caltechniques,bankscannowextractdeeperandmore valuable insights from their ever-growingvolume of data. For the Risk Department, thesetrends present unique opportunities to betteridentify,measure,andmitigaterisk.

The team developed an anomaly-detection modeltominimize fraudby identifying,monitoring, andcontrollingfraudulentcustomerbehaviorthatsug-gestsathreatoftaxevasionunderCBEanti-moneylaunderinglawsandregulations.

The team also collaborated with the BusinessBanking Department to create an early warningsystemcomprisedofasetofguidedprocessesthatidentifyrisksatanearlystageforbusinessbankingandcorporatecustomers.Thesystem’smaintaskistosupportmanagingtheloanportfolioandassistintakingproactivestepstoreducerisksresultingfromunsecuredlending.

Performance AnalyticsPerformance analytics are an essential tool theteam uses to achieve higher productivity and ef-ficiency.Usingthistool,theteamwasabletoantici-patetrends,prioritizeresources,deliverautomationand self-service, push towards consistent serviceimprovement,andalignserviceswithCIB’soverallbusinessgoalsandstrategy.

In 2018, the teamworkedon re-engineering andoptimizingaveragewaittimesatbranches.Anew

ofnumeroustransactionsoveralternativedigitalchannels from traditional ones resulted inmorethanEGP200millioncostsavingin2018.

Ranking dashboards were developed to create acompetitiveenvironmenttoachieveCIB’sstrategicgoalsandobjectives.Manymanagersusethistooltotrack their teams’ performance.These dashboardsaresentonamonthlybasistobranchsalesforces,aswellasthedirectsalesandtelesalesteams,andactsasanelementofencouragementtoincreasesales.

2019 Forward-Looking Strategy Starting2019,theteamwillcapitalizeontheeffortsandoutcomesconductedinthearenaofdataana-lyticsover the last fewyears,parting fromtheno-tionthatdataisthefuture.Thedepartmentplanstocontinueharnessing thepowerandwealthofdataavailable tokeepCIBat the forefrontof theEgyp-tianandregionalfinancialsectorsandfurtherdrivevalueforalltheBank’sstakeholders.


2018 In REvIEW >> Big Data

Human Resources

As CIB continues to grow, the Human ResourcesDepartment will play an increasingly importantrole inmaintainingtheBank’sreputationofexcel-lencesincepeoplearethekeytofullyrealizingtheBank’s strategy. The HR strategy mainly focuseson supporting the Bank’s expansion, employee ef-fectiveness, and digital transformation to provideexceptionalcustomercareandexperience.

Theaimsoutlined in the2019HRstrategy focusonfourmainpillars:skilldevelopmentandtalentmanagement, organizational effectiveness, auto-mation,andenhancedcontrols.Growth in theseareaswillsupportCIB’seffortstoachieveitscorestrategic goals and provide employees with anexceptionalexperience.

The success of the 2019 strategy will depend onourabilitytoattract,retain,motivate,anddevelophighlyqualifiedemployees.Investinginourpeopleremains a key goal, as they are the core channelthroughwhichweprovideanexceptionalcustomerexperienceandcompetitivefinancialservices.

Talent Management and AcquisitionIn 2018, CIB continued to adopt a balanced ap-proachtoexternaltalentacquisitionbyleveragingtheskillsandexperiencewithintheorganization,while simultaneously seeking out the additionalcapabilitiesthatwillhelptheBankachievelong-term sustainable performance. This year, CIBhired 587 external talented individuals (59 newheadcount and 528 replacements), moved 429acrossdifferentareasoftheBank,andinternallypromoted618promisingyoungtalents forbetterexposureandenhancedcareerprogression.

tracks.Forseniormanagers,weworkedwithhighlyexperiencedinternationalvendorstotailorcomplexmaterialsbasedonintensiveassessmentsthatmea-sure the impact of the trainings against employeeprogress.Leadershiptrackswillresumein2019byincludingnewleadershiptopicsandtalentmanage-mentprogramsaimedatexposingthemtonewtop-icsinadditiontotheircorecompetencies.

Moreover,27seniormanagerswho joined INSEADin2016becamepartofthehigh-levelofBuildingaWinningCultureProgramin2018tocontinuetheirleadershipprogression.Atthemiddlemanagementlevel,81IMDparticipantsjoinedINSEADforaone-dayTalentRetention&StaffEngagementProgram.The Essential Supervisory Skills program was de-veloped to help first-line managers enhance theirmanagerialskills.Thetrackwaslaunchedattheendof2018andwillcontinueinto2019.

We tailored learning tracks for various businessareas and segments, including training both lo-callyand international certifications. In2018,79%of employees were trained. Moreover, 26 WealthManagersandPlusBankersweregrantedcertifica-tionsfromCharteredInstituteofSecuritiesandIn-vestmentand30employeesfromBusinessBankingwereaccreditedasSMEConsultantsbySimplifiedExamination to Maximize Profit (SEMP). In 2019,currentlearningtrackswillresume,andwewillalsointroducenewonestargetingareassuchasBusinessBankingRisk,Tellers,Audit,Legal,CashCountingandBlueCollars.Aspart of theBank’s successionplandevelopedin2016,42keytalentswereselectedto enhancing their capabilities and widen theirunderstanding by participating in technical and

Incontinuationofimplementingasmoothonboard-ingprocess,CIBwillcontinueconductingtheBasicBankingCertificateprograminordertoblendandalign all new hires with CIB Culture. In 2019, theLearning and Development Division will conduct23roundsofthisprogramtomeetbusinessgrowthand recruitment requirements. In addition, a newonboardingprogramdesigned specifically forfirstlinemanagersandabovewillbeintroduced.

Moreover, a total of 33 events (Tawarny and Em-ploymentAffairs)wereheldacrossuniversitiesandother venues in Egypt to promote CIB’s employervalue proposition and competitive advantage.Tawarny is an initiative for university students topractice mock HR interviews and provide themwith tipsandconstructive feedback toboost theirconfidencetopreparethemforthecorporateworld.ThisinitiativedemonstratesCIB’sfirmcommitmenttosupportingEgyptianyouthbypreparingthemforthelabormarket.Weaimtocreateanewgenerationofqualifiedcandidateswhowilldrivethecountry’sdevelopmentandgrowth.

Building on our objective to initiate recruitmentmobile teamsoutsideCairo, in2018HR introducedthe“Ma7atetena3andak”initiativeinwhichateamvisited nine areas across Egypt to facilitate the re-cruitmentprocessforcandidatesatlocalhubs.

Skills Development and Talent ManagementCIB leadership trackscontinued in2018, targetingseniormanagement,middlemanagement,andfirst-linemanagers.Weextendedleadershiptrainingto547 employees based on defined and customized

leadershipskillsdevelopmentprograms.Ofthese42delegates,72%werepromotedtolargerrolesaspartoftheircareerprogressionwithinCIB.In2019,CIBwillcontinuetoaddvaluetoemployees’experiencesbysupportingtheirpersonaldevelopmentplansandlinkingtheseplanstothe2019successionplan.

Finalization of the Competency Framework wasa key priority in 2018. The Bank completed thisframeworkmodelbyconducting25competenciesworkshops.Hence, thenowcompletecompetencydictionary will become an integral componentof the performance management system (PMS).Going forward,our skillsdevelopmentand talentmanagementstrategywillfocusonlinkingpastef-fortsinonecomprehensivesystemthatintegratesall talent management initiatives. The strategywillcapitalizeonPMSautomation,integratingthecompetencies framework within the PMS, creat-ing customizedPersonalDevelopmentPlans, andlinking these plans to more personalized train-ingplans.Additionally, the strategywill focusonemploying several phases to identify successors,identifyinghighpotentialemployees,anddevelop-inguser-friendlycareermaps.Asaresult,HRandbusinessmanagerswillhavetheabilitytoidentifygapsanddeveloppersonalizeddevelopmentplanstocreateasolidtalentpool.

Organizational EffectivenessThe Bank’s HR strategy will continue to focus onpromoting organizational effectiveness by improv-ingengagementlevels,supportingcustomerexperi-enceandserviceexcellence,andenhancingtheHRvalue proposition. The strategy will be executedthroughinitiativessuchas:


2018 In REvIEW

63%Staff engagement level

in 2018

92%Of employees completed the fourth EES

Employee EngagementIncontinuationoftheBank’sefforttofosteracul-ture of high performance and ensure alignmentamong bank areas, during 2018 the Chief HumanResources Officer (CHRO) held 10 town halls toimprove communication and increase the perfor-mance-relateddialoguewithmiddlemanagement.Additionally, HR business partners conducted 66awarenesssessionswithprofessionalsandfirst-linemanagers to promote employee awareness of newHRpoliciesandinitiativesandincreasesatisfactionintheworkplace.

Moreover,CIBwillstartdevelopingarobustengage-mentstrategythatwillimprovethecultureandenrichproductivitywhileproducingmoresustainableresults.

Employee Effectiveness SurveyIn 2018, 92% of employees completed the fourthEmployee Effectiveness Survey (EES) compared tothe 88%who participated in 2016.The engagement(measuredbyemployees’ loyalty,pride,andwilling-nessto“gotheextramile”fortheBank)levelwas63%comparedto59%in2016,andenablement(measuredbythedegreetowhichemployeesexperienceanenvi-ronmentthatfostersengagement)levelreached52%comparedto46%in2016.Actionplansforkeyfocusareas were also developed to continue enhancingCIB’seffectivenessprofileinthecomingyears.

Customer ExperienceBuildingontheBank’sstrategytodevelopyoungtal-entandprovidethebestcustomerexperience,CIBlaunchedtheiOwnprogramundertheumbrellaofiCare,aprogramstartedin2018topromoteserviceexcellence. iOwn is a service dedicated tomanag-ingcustomercomplaintstoenhancethequalityof

AutomationIn2018,L&D introducedmoree-learning tools forCIB employees in collaborationwith various busi-nessareas.Elevendifferente-learningcourseswereintroduced.In2019,L&Dwillcontinuetooffermoredigitaltracksto increaseemployees’ levelof learn-ing,engagement,andenablement.

Automation initiatives continued in 2018, withthelaunchofthePMSproject.AutomationofthePMSwill significantly enhance the PerformanceManagementprocessby increasing theaccuracyofmonitoring,performanceevaluations,andcas-cading objectives to ensure alignment acrossareasoftheBank.

Additionally, the Bank implemented the learninganddevelopment systemsolutionasCIB’s officiallearningmanagement system (LMS) to create anempowered automated learning experience forall staff trainingmanagement activities. In 2019,HRwill continuewith the implementation of thenew recruitment system, whichwill enhance theoverall candidate experience by integratingCIB’ssocial media websites and effectively increasingtheBank’sdigitalpresence.Thissystemalsosup-ports growing mobile usage among candidatesbyallowing themtoapplyviaadedicatedmobileapplicationprocess.Going forward,CIBwill con-tinue adopting more integrated and innovativesolutionswithfunctionalcapabilitiesthatenhancetheBanks’productivityandefficiency.

services provided and increase customer satisfac-tion.The programwas designed to empower staffto take full ownership of handling customer com-plaints and equip themwith tools to address cus-tomercomplaintsusingbestpractices.Additionally,thetoolhelpsemployeesseevarioussuccessstoriesand involves branchmanagers anddeputy branchmanagersinmentorshipandcoachingefforts.

In 2019, HR will launch another version of iOwntargetingall frontliners.ThreetailoredversionsofiOwnandiCarecoachingwillalsobeintroducedtothecentraloperationsteamtoensureproperman-agement of customer complaints, increase qualityofservicelevel,andmaintaincustomersatisfaction.

Value PropositionHRwillcontinuetopresentauniquevalueproposi-tiontoproducepositiveoutcomesforkeystakehold-ersandemployees.ThisapproachwillnotonlyallowtheBank toengageemployeesbutalsoattract thebesttalentonthemarket.HRwillimproveitsvalueproposition by further enhancing the variable payprograms to ensure that the distributionmodel isalignedwiththeBank’soverallstrategy.

Finally, CIB has a unique model for deliver-ing employee benefits through HR, CorporateServices, the Social Services Community, andSocial Insurance funds. HR will focus on unify-ing policy design to ensure consistency, marketcompetitiveness,andemployeesatisfactionwhilealigningoperationswiththeBank’sinternalpro-cesses.Additionally,HRwillimprovebenefitsandmedicalservicesacrossallbusinessareasincol-laboration with the Social Services CommunityandSocialInsuranceFunds.


2018 In REvIEW >> Human Resources

Financial Control Group

Throughout2018, theFinancialControlGrouphascontinuedtoexpanditsscopeofinfluence,tacklingnew functional areas andbettering the level of itsworkforce,therebyaddingtoCIB’soverallefficiencyandcontributingeffectivelyto itscontinuousmar-ket-leadingperformance.

CommittingtoCIB’scontinuousrecordofcompli-ance with both local and international account-ing regulations and further adding to its edgeoverpeers in theearlyadoptionof standards, theFinancial Control Group, in collaboration withthe Bank’s Risk Group, successfully finalized theimplementation phase of IFRS 9, which the CBEmandatedtobemetbyallbanksby1January2019.The “Impairment Calculation” model launchedsuccessfully thisyearandreceivedofficialvalida-tionfromMcMillanWoods,inaccordancewiththeCBE’srequirementforanexternalauditvalidation.CIBbecame thefirstbank inEgypt to communi-catetrialfinancialstatementstotheCBEinaccor-dancewith IFRS9 for three consecutivequartersin2018.Thisensures theBankhascompliedwithbothCBEregulationsandthosesetbytheInterna-tional Accounting Standards Board (IASB), withthelatterbeingrequisiteforCIB’sGDRprogramontheLondonStockExchange.

Particularly relevant to its scope, the FinancialControlGroupcontinuestoplayakeyroleindrivingtheBank’sfinancialperformanceandinaddingtoits overall competitiveposition.ThegroupworkedincloseandregularcollaborationwiththeTreasuryGroupthroughouttheyeartoadjustthedynamicsoftheBank’sbalancesheetinawaythatsailsefficient-lywithchangingmarketconditionsandupcoming

with a dedicated taskforce from different groupsacrosstheBank,providedlendingfacilitiestomicrobusinesses.As amemberof theTaxCommitteeoftheFederationofEgyptianBanks(FEB),CIBplayedaleadershiproleinformulatingaprotocolbetweenthe FEB and the Egyptian Tax Authority, whichaimstosettletaxdisputescurrentlyoutstandingatcourtsbetweenbanksandtheTaxAuthority.

Inlinewithmanagement’saimtoelevatethequalityofhumancapitalandcontributing to thedevelop-mentofstaff,theFinancialControlGroupsuccess-fully launched the second phase of the FinancialControl School – an in-house training facility tai-lored toaligning thegroup’s staffwithcontinuousmarketdevelopments.Thecoursetackleskeytopicareas that provide the theoretical and practicalfoundations deemed necessary to better positionfinance staff for various prestigious certifications,mainly in international financial reporting, eco-nomics,derivativesandfixedincome,andbusinessethics. Moving forward, the course is planned toeventually serve as amandatory requirement andprerequisiteforjoiningtheFinancialControlGroupandasapromotioneligibilitycriterion.

regulations suchas the capital charge requiredbythe CBE to account for Interest Rate Risk in theBankingBook(IRRBB)andthenewtaxlawrecentlyenforced by the Egyptian Tax Authority. In 2018,the group alsowidened its role in Enterprise RiskManagement(ERM).ItsettheroadmaprequiredtotaketheBank’sEconomicCapitalModeltothenextlevel,inalignmentwithinternationalbestpractices.ThisisexpectedtoenhancethequalityoftheBank’sCapitalAllocationModelsandoftheentirepricingstrategyforallBankproductsandexposures.

Strivingtoincreasethegroup’s,andhencetheover-allBank’s, efficiency, this year saw the launchofanumberofautomationmechanismstoachievebothstrategicandregulatorymilestonesinatimelyandmeticulousmanner.Thegroup’s units successfullycollaboratedto launchtheSASProjectasanauto-mationmechanismtocalculatetheBank’sCARinamoreaccurateandsystematicway.Furthermore,aneffectualautomationprocesswascompleted tocleanupthenon-performingportionof theBank’sretail loan portfolio. With effective collaborationfrom the CBE, CIB also managed to finalize itsDigitalReportingProject,particularlywithregardsto theprocessof reportingnon-performingclientstotheCBE,reducingturnaroundtimes,andpaperconsumptionrequiredforsuchreporting.

During the year, the group played an importantrole in upholding the Bank’s responsibility to theEgyptianeconomyoverall.Inlinewiththeongoingpushtowardfinancialinclusionacrossthebankingsector,CIB’sFinancialControlGrouphelpedkickoffthefirstphaseintheDigitalLendingProcess.Theen-deavor,whichthegroupcompletedincollaboration

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2018 In REvIEW

Marketing and Corporate Communications

For several years, CIB hasmaintained its positionasthelargestprivatebankintheEgyptianmarket.During this time, the Bank has exemplified thehigheststandardsofprofessionaldedication,ethics,andinnovation.CIB’sconnectiontoitscorevaluesremain strong, and the Bank has strengthened itsbrand position in the financial services sector inEgyptandbeyond.Bothlocallyandinternationally,CIBhadbeenrecognizedforitscustomerfocus,so-cialcommitment,andinnovation.

During2018,CIBreceivedprestigiousawardsfromworld-renowned organizations. For the secondconsecutiveyear,CIBwasnamedthe“World’sBestBankintheEmergingMarkets”byGlobalFinance.TheBankreceivedthesameawardfromEuromoneyin2017.CIBisproudtobethefirstbankinEgyptandtheMiddleEasttowinthisprestigiousaward.

Additionally, CIB has received numerous interna-tionalawardsthatdemonstrateitsexcellenceacrossdifferent business lines. On the digital bankingfront, CIB received Global Finance’s “Digital BankofDistinctioninEgypt”awardandFinTechGalaxy’s“FinancialInclusionChampionoftheYear”awardforthefirsttimein2018.GlobalFinancealsorecognizedCIBashaving the “BestOnlineCashManagement”and“BestOnlinePortalServices” inEgypt. In2018,CIBreceivedthefollowingawardsandrecognitions:• DigitalBankofDistinctioninEgyptbyGlobal

Finance• Best Online Cash Management in Egypt by

GlobalFinance• Best Trade Finance Services in Egypt by

GlobalFinance• BestOnlinePortalServicesinEgyptbyGlobal

Finance

acasestudybytheLeadershipInstituteoftheLBS—oneoftheworld’stopfivebusinessschools.CIBwasselectedinrecognitionofitssuccessinleadingadata-driven,human-centrictransformationinthefaceofmacroeconomicchallenges.

Theawardsand recognitions received this yearserve to reassertCIB’s strong position and out-standingperformanceasalocalbankwithglobalstandards. This recognition is also a testamentto the resilience of Egyptian organizations andthestabilityandpositivegrowthoftheEgyptianeconomy.TheBank’soutstandingachievementssend a clear signal to investors and the inter-national community about the promise of theEgyptianmarket.

TheMarketing and Corporate Communicationsteam has been diversifying its campaigns andactivities to promote the Bank’s achievementsand competitive market services across a va-riety of channels. In foreign media channels,seniormanagementwas featured in theworld’smost prominent publications, including TheFinancial Times, Global Finance, The Banker,Bloomberg, Banker Africa, Yahoo! Finance, andTheEconomist.InadditiontohighlightingCIB’sachievements and leadership, these interviewsalso demonstrate the Bank’s commitment tosupporting the country by sharing stories of itseconomic progress and enhancing its positionworldwide.CIBhasalsobeeninvolvedinseveralhigh-profile international events as a sponsoror key speaker. At the “LeadingTransformationin Turbulent Times: In Conversationwith Com-mercial International Bank-Egypt (CIB)” eventorganizedbyLBS,CIBChairmanandManaging

DirectorHishamEzzAl-ArabgaveinsightonhowCIB has created value for clients, shareholders,andsocietybyinvestingindataandtalent.On the local and regionalmedia front,CIBmain-tained a strong presence over the past year.Through advertisements and news releases pub-lished by reputable outlets, the Bank promotedits product launches and marketing campaigns.Members of CIB’s executive management werefeatured in prominent local publications, such asAkhbarAl-Yom,Al-MasryAl-Yom,Al-AlamAl-Yom,Al-Shorouk,andAl-Borsa.TheMarketingandCor-porateCommunicationsteamhasbeensteadilyex-pandingitsmediarelationshipsandexposureovertheyearswithafocusononlineplatforms.CIBhasincreased its media presence on many renownednewswebsites,suchasYoum7,VetoGate,Al-Watan,andAl-Mogaz,toreachanonlineaudienceofmorethan50millionpeople.In2018,CIBalsosponsoredthenewseasonoftelevisedentrepreneurshipcom-petition Hona Al Shabab hosted by well-knownEgyptianTVhostLameesEl-Hadidi.Byparticipat-ing in thisevent,CIBwidened itsmediaexposureand — most importantly — extended support toseveralpromisingstartups.

The team also focused on expanding its internalcommunication channels. Such efforts includedongoing townhalls and casual staff events, whichmaintain direct communication lines between se-niormanagementandemployees. It also launchedan entertainment show named “CIB Bel 3araby”(CIB in Arabic) exclusively for staff. The first ofits kind in the banking sector, the objective is toprovide employees with a non-traditional corpo-rate communication experienceusinga show that

• Best Information Security and Fraud Man-agementinEgyptbyGlobalFinance

• BestFXServicesinNorthAfricabyEMEAFinance• Best Payment Services in North Africa by

EMEAFinance• Best Foreign Exchange Provider in Egypt by

GlobalFinance• Best Trade Finance Provider in Egypt by

GlobalFinance• BestTreasury&CashManagementProviders

inEgyptbyGlobalFinance• BestBankinEgyptbyGlobalFinance• BestBankinEgyptbyEuromoney• BestBankTransformationintheMiddleEast

byEuromoney• BestRegionalBank-NorthernAfricabyAfri-

canBanker• Best Subcustodian Bank in Egypt by Global

Finance• World’s Best Bank in the EmergingMarkets

byGlobalFinance• BestLocalBankinEgyptbyEMEAFinance• Best Corporate Bank in North Africa by

BankerAfrica• BestCorporateBankinEgyptbyBankerAfrica• BestPrivateBankinEgyptbyBankerAfrica• TheInnovatorsbyGlobalFinance

Moreover, CIB ranked 38th on Forbes MiddleEast’s “Top 100 Listed Companies in the ArabWorld,” rankingthehighestof the fourEgyptiancompaniesonthelist.

Anotherunprecedented internationalachievementof this year is the London Business School’s (LBS)decisiontoconductacasestudyofCIB.TheBankisthefirstMiddleEasterncompanytobeanalyzedin


2018 In REvIEW

The Marketing and Corporate Communications team has been diversifying its campaigns and activities to promote the Bank’s achievements and competitive market services across a variety of channels.

tackles importantBankandemployeeconcerns inahumorousway.Anothernewlymodified internalcommunications channel is the biweekly digitalnewsletter“CIBRound-up”,whichisissuedtoshedlightonCIB-relatednews, thebankingsector,andtheEgyptianeconomyat large.Similarly,theteamlaunched a new edition of the staff photographycompetitiondubbed“CapturetheBeautyofEgypt”,whichallowsstafftoexpresstheirartistictalent.

On the external communications front, other re-centlyintroducedcommunicationchannelsarethedigitalmediascreensinstalledatselectedbranchesand visual marketing materials installed acrossCairo, Burg Al-Arab, Hurghada, Sharm El-Sheikh,andAswanairports.Thesechannelsareconsideredmore appealing, direct channels with customersthatstrengthentheBank’sbrandequity.

In line with CIB’s commitment to supporting thecommunity, theteamcontinuedtoexpanditscor-poratesocialresponsibilityactivitiesbysupportinganarrayofprojectsandinitiativesacrossthecoun-try,focusingonsports,art,culture,andlifestyle.

As anorganization,CIBbelieves that sportsplay anintegralroleinshapingthemindsandhealthofEgyp-tianyouth;theBankhasbeendiversifyingitseffortstosupportEgyptianathletes.ToknowmoreaboutCIB’seffortsinsupportingathletes,pleaserefertotheSup-portingtheBestinClass:Squashsectionofthereport.

The Bank is also an active, long-standing sup-porter of the arts in Egypt. CIB continues tosupportartstudentsinpublicuniversitiesacross

In2018,CIBsponsoredandcontributedtonumerouseventsandvenues,withsponsorshipsencompassingart,culture,sports,CSRinitiatives,andmanyothers.

The Marketing and Corporate Communicationsteamhasworkedextensivelyoncampaignsaswellasproductandsegment launchesthisyear. In linewithCIB’svisionofcustomizingtheBank’sservicesand communication for each segment, the teamrevampedthe identitiesof itsexistingsegmentstoreflect the progressive journey of our customers’growthwithCIB.TheBankhasalsoproudlyintro-duced special campaigns for CIB Private, a newsegmentthatcaterstotheinvestmentandbankingneeds of customers with bankable assets of morethanEGP20million.Theteamlaunchedadedicatedwebpage and a tailored Internet Banking experi-enceforclientsinthissegment.Inaddition,theCIBWorldEliteMastercardwaslaunchedtoprovidetheBank’s HNW customerswith a variety of enticingbenefits,suchaszeromark-upfeeson foreigncur-rencytransactionsandzeroover-limitfees.

Major marketing campaigns include Travel toRussiacontest,theEgyptairApply&Winpromo-tional campaign, and Cash on Phone campaign.CIB has also embarked on several partnershipswith leading digital and technology brands inEgypt, includingApple andSouq.com.TheBankhas also launched product-focused campaigns,including the equalpaymentplan campaign, 0%installments, and seasonal campaigns such asBacktoSchool.ThelattereffortdemonstratestheBank’stransformationandadoptionofamodern,digital-focusedbrandimage.

Digitalbankingwasat thecoreof thisyear’smar-keting campaigns. The team introduced variouspromotional offers and drives to promote CIB’sdigitalbanking servicesandencourage customerstoperformtheireverydaybankingtasksonline.

More recently, CIB has invested more heavily inonline media primarily as we consider it a morepowerfulplatformtotargetandanalyzecustomerbehavior.Tothatend,theDigitalMarketingteambegan utilizing new technologies such as geo-locationtosendSMStocustomers intargetedvi-cinities,mobileadvertising,and internetnetworkcollaboration.ThisstrategywasfirstimplementedinrelationtoATMmachinesinstalledintheNorthCoastduringthesummer.Itledtotheexecutionofover7,400transactionsinasingleweekandsavedover EGP 512,000 in cost synergies. Other newlyemployedtechnologies includeAirpushandMad-dict,whichmakeitpossibletotargetmobiledevic-eswithtailoredadvertisementsthatmatchusers’behaviors.CIBalsocollaboratedwithMastercardto execute four Smart Wallet campaigns in 2018thatresultedinanincreaseintransactionvolumesfromEGP250,000tooverEGP550,000permonth.DuringthemonthofRamadan,acharityawarenesscampaignlaunchedthroughSmartWalletresultedina57%increaseindonationstocharitablecauses,whichreachedoverEGP5million.

thecountry’sgovernoratesbyacquiringselectedpiecesfromtheirprojectsfortheBank’sartcollec-tion.Forthesecondyearinarow,CIBsponsoredtheNightwithArtatthehistoricManialPalace,aneventatwhichmorethan500renownedinter-nationalguestshadtheopportunitytoviewrareanddistinctivepiecesbyEgyptianartistsinare-markablehistoricalshowroom.Moreover,CIBhascontributedtointernationaleventssuchasMadeinEgypt,anexhibitionofyoungEgyptiandesign-ersheldinLondon,andtheAfricaArtWorkshoporganizedbySomaArtSchoolintheDemocraticRepublic of Congo during the seventh edition ofInternational Contemporary Art. Such contribu-tions ref lect the Bank’s steadfast commitmentto Egypt and strengthen its ongoing efforts topromote Egypt’s positive image worldwide. Oneof the significantprojects that complements theBank’s role as an ambassador for the country inregionalandinternationalspheresisCIB’sspecialbook.Thisannualproductioncarriesadifferentthemeeveryyearthatpromotesvariousaspectsofthecountry.Thisyear,theteamproduced“Faces&Places”inpartnershipwiththerenownedjour-nalist and photographer Roger Toll, who sharesthe Bank’s appreciation of Egypt’s complex andvibrantculture.Thisbookhighlightsthediverselandscapesofourcountryaswellasthejuxtapo-sitionofthepastandpresentinourdailylivesinthemost authentic way possible: by sharing theexperiencesofitspeople.Theteamalsoproduceda setofbooksentitled “BuildingModernEgypt”,whichfeaturesDowntownCairo,theSuezCanal,CinemaCairo,theEgyptianBourse,andEgyptianPosttodocumentmodernEgyptianhistory.


2018 In REvIEW >> Marketing and Corporate Communications

Risk Group

TheRisk Group identifies,monitors, controls, andmanages theBank’s risksagainst limitsand toler-ance levels.TheChief RiskOfficer (CRO)managesthe followingriskareas: credit, investment,opera-tional, conduct,market, liquidity, interest rate, IT,security, reputational, regulatory, legal, social andenvironmental, and other non-financial risks, aswellastheTreasuryMiddleOfficeandInternalCon-trolManagementfunctions.TheRiskGroup’sEnter-priseRiskManagement(ERM)frameworkprovidesa holistic overview of all types of risks across theorganization. CIB’s ERM framework dates back to

2014,positioningtheBankasapioneerintheMENAregion.TheERMframeworkprovidestheBankwitha cohesive approach to risk, integrated with anactive risk culture, a flexible technology platform,andstrongdatagovernance,alltiedtogetherwithasolidriskappetiteframework.TheERMframeworkiscomprisedofcontrol,governance,andoversight,whichmitigaterisksbyutilizingexistingrisk-man-agementcapabilities,helpingimprovetheoperatingenvironment and reducing operational surprises.Thegroupproactivelymonitorstriggersforadverseeventsandprovidesaneffectiveriskresponse.

Enterprise Risk Management Main Objectives

Board of Directors

BoD CommitteesRisk, Audit, Operations, and Technology

Risk Functions

Key Governing and Reporting Tools

Identify, measure, and assess major risks

Trace and evaluate major risk triggers

and adopt mitigation plans

Maintain a risk-reward balance in the business

model

Monitor and update major risk indicators

Spread risk culture

Internal Capital Adequacy Assessment Process (ICAAP)

Stress Testing Risk Appetite and Culture

First Line of Defense

Manage

Business Line ManagementIdentify and manage inherent risks in the Bank’s activities

Second Line of Defense

Control

Independent Risk and Compliance•Set framework and rules•Monitor and report on

execution, management, and control

Third Line of Defense

Evaluate

Independent Audit Review/ChallengeProvide an independent assessment of the overall risk management process

Conduct in-house and online

awareness sessions

Provide an integrated, holistic view of the risk

profile

The BoD provides, through the board committees, the core directives for the Risk Group. They approve the Risk Appetite Statement, as well as the policies that govern the main objectives of the Risk Group.

Maintain oversight on major local

and international regulations

Management

Enhance policies and procedures in line with best

practices

Risk Group Framework and GovernanceCIB’s risk governance structure utilizes thelines-of-defense model, with robust committeestructuresandacomprehensivesetofpoliciesandoperatingguidelinesapprovedbytheBoDandthe

Bank’s executive committees. The BoD, directlyorinconjunctionwithBoDCommittees,providesoversightofrisklevelsaswellaskeyperformanceandriskindicators.


2018 In REvIEW

269%NPL coverage ratio in 2018

Risk CommitteesTheCRO along with experienced risk officers, whoarekeymembersofall risk-relatedcommittees,are

responsible for the identification, assessment, andreportingofalltypesofrisksacrossallbusinesslines.

Financial Risks

Institutional Banking Credit RiskCIB continued to pursue its prudent growthmo-mentuminalignmentwiththeIBcreditportfolioquality.Thisrisk-adjustedgrowthisaresultoftheconsistentcommitment to thecredit riskprocessoutlined via a comprehensive set of policies andoperatingguidelinesadoptedbyBank’sstaffunderthesupervisionoftheBoD.

The following are the key tools used in credit riskidentificationandassessment:• Internal Credit Rating Assessment Model:

This is used to evaluate corporate portfoliocustomers’riskratingsthroughseveralphases,capturingallregulatoryguidelinesandhistori-cal financial data and translating all aspectsintoqualitativeandquantitativemeasures.

• Credit Risk Analysis:TheBankemploysarisk-progressive strategy in the credit approvalprocess.Thisstrategytakesintoconsiderationindustry norms, both domestic and interna-tional,alongwithabroadreviewofassociatedcredit risks, which are weighed against theprobabilityofoccurrence.

• Early Warning Signals (EWS) Framework:Thisisacomprehensivetoolthatcloselymoni-tors the quality of the corporate credit loanportfolio to detect at an early stage the dete-riorationofasetofkeyperformanceindicatorsthatcouldadverselyaffectthecreditworthinessof borrowers.The framework sets actions andescalating procedures to minimize foreseenlossesandsafeguardtheBank’sposition.

Financial Institutions and Country RiskThe Financial Institutions (FI) and Country RiskTeamwasformedtoactivelysupportcorrespondentbanks’relationshipsthroughthecontinuousassess-mentofnewmarketsorproductspresentedby thebusinessFIteamsandensuringanefficient,prudent,andtimelyapprovalprocess.

Social and Environmental Credit Risk Management TheSocialandEnvironmentalCreditRiskTeamaimstosafeguardtheBankagainstcreditrisksresultingfromadverse social and/or environmental impacts fromcustomeractivities.Thisisachievedbyimplementinga comprehensiveduediligenceprocess toassess thisrisk for all clients prior to credit facility approval, aswellasprovidingcustomerswithtoolstofacilitateandencouragetheirshifttoagreenereconomy.

Consumer and Business Banking Risk ManagementConsumer and Business Banking risk is man-aged using a robust risk framework based onbestpractices,whichensuressoundriskidentifi-cationandassessment.MitigantsareinplacetoensureportfolioqualityiswithintheBank’sriskappetite.TheRiskTeamleveragesanoptimizedRiskRewardStrategywiththehelpofadvancedearlywarning indicators and soliddata analyt-icstoensureprudenceandduediligenceincus-tomers’ selection as well as proactive portfoliomonitoringtomaximizetheriskadjustedyieldsacrossassetproducts.

Consumer risk follows a holistic credit cyclemanagementapproach,withspecialistteamsandfunctionsmanagingproductsandpolicies:creditunderwriting, collections and recoveries, strate-gic analytics, and accountmaintenance. On theBusinessBankingfront,theBankistransitioningtoanewmodelinlinewithbestpracticesandhasrevamped strategies with an eye on aggressivegrowth to enhance this portfolio in a sustainedand profitablemanner. The new Business Bank-ing Risk Management Structure was enrichedwith a holistic organizational structure encom-passingtheentirecreditcyclewithnewandspe-cializedunitsbeingestablishedforearlywarningand account monitoring, centralized fraud, andrehabilitation of customers to ensure appropri-ate control over the portfolio. Simultaneously,the Business Banking Policy was revamped andapprovedbytheBoDandre-engineeredStandardOperatingProcesseshavebeenputinplace.

The key pillars of the strategy are targeted in-dustry analysis and customer segmentation, theadoption of data-driven analytics for decision-making and customer selection, and the install-mentofarobustriskinfrastructureforaggressivegrowthwithintheBank’sriskappetite.

Committee Name Function Risk Type

High Lending and Investment Committee (HLIC)

Responsible for managing the asset side of thebalancesheet,withtheaimofmaintainingCIB’ssustainablebusinessgrowthratewhileensuringthat the Bank is compliant with internal creditpoliciesandtheCBE’srulesandregulations.

• Institutionalbankingcreditandinvestmentrisk

Consumer Risk Committee (CRC)

Responsibleformanaging,approving,andmoni-toringallmattersrelatedtotheConsumerBank-ing portfolio growth and quality. CRC decisionsareprimarilyguidedbytheBank’sapprovedriskappetite, while ensuring compliance with theprinciples stipulated by the Consumer CreditPolicyGuide.

• Consumercreditrisk

Business Banking Risk Committee (BBRC)

Responsible formanaging,monitoring and con-curring/approvingallaspectsrelatedtothequal-ityandgrowthoftheBusinessBankingportfolio.The Committee’s decisions are guided first andforemostbythecurrentriskappetiteoftheBankaswellastheprevailingmarkettrends,whileen-suringfulladherencetothestipulatedguidelinessetbytheBusinessBankingCreditPolicyGuide.

• Businessbankingcreditrisk

Asset and Liability Committee (ALCO)

Responsible for ensuring the optimal distribu-tionofassetsandliabilities,maintainingaresil-ient risk/reward balance based on current andprojectedmarket conditions and approved BoDguidelines.

• Liquidityrisk• Marketrisk• Interestraterisk

Non-Financial Risks and Compliance Committee (NFRCC)

Responsiblefortheconsolidationofnon-financialand compliance risks and enhancing risk-re-sponseefficiency.Themainobjectiveistooverseeoperational, reputational, conduct, and securityrisksandcomplianceframeworks,inadditiontomonitoring vendor and IT risks, and any newemergingnon-financialrisks.

• Operationalrisk• Reputationalrisk• Conductrisk• Securityrisk• Compliancerisk• Vendorrisk• ITrisk• Modelrisk• Strategicrisk


2018 In REvIEW >> Risk Group

4.06%Default ratio in 2018

WithrespecttotheConsumerandBusinessBank-ing portfolio quality, the Risk Group continues toadopt rigorous portfolio monitoring measures todetectkeyrisksandmaintainahealthyportfolioinlinewith theBank’sapproved riskappetite.More-over, theRiskGroup incorporateddynamiccollec-tion strategies to counter the impact of inflationand volatile macroeconomic conditions and tookpreemptive action to safeguard the Bank’s rights.WithrespecttoportfoliogrowthandsupportingtheConsumerBank’sSegmentationStrategy, theCon-sumerRiskDivisioncollaboratedwiththebusinessto put in place customized programs and promo-tionstotargetnewbusinessfromthekeysegments.

Market Risk

Trading Market Risk CIB sets key limits tomonitor and controlmarketriskbyconsideringboththeBank’sriskappetiteaswellastheprojectedbusinessplan.Theselimitsin-cludeposition,stop-loss,andvalueatrisk(VaR)lim-its.TheBankprimarilyusestheVaRmethodologytoquantifymarketrisk.VaRisaprobabilisticmeasureofthepotentiallossundernormalmarketconditionsataspecificconfidenceleveloveracertainperiod.

Non-Trading Market Risk (Interest Rate Risk in the Banking Book) CIB uses an effective risk-management processthatmaintains interest rate riskwithin prudentlevels that ensure theBank remainson safe andstableground.CIBproactivelypositions thebal-ancesheettobenefitfromavolatileinterestrateenvironment. The Bank uses complementarytechnicalapproachestomeasureandcontrol in-terest rate risk, including duration, re-pricing

assessments using validation processes, riskscategories, control assessments, and the imple-mentationofactionplansandtheirrelatedtrack-ingandtestingmechanisms.TheoutcomeoftheRCSAexerciseistheriskheatmap,whichrepre-sentstheresidualriskassessmentthatevaluatestheadequacyandeffectivenessofthesetcontrols.

• Key Risk Indicators (KRIs) consistofmonitor-ing indicatorsand their results, inaddition toassistingtheconcernedpartieswiththeissuesandidentifiedgaps.

• Stress Testingconsistsofutilizingtheinternalmodelstoproactivelyassessextremeevents.

Thedivisionalsorunsregularawarenessprogramsand trainingsessions topromoteastrongriskcul-ture. Ithasalsocultivated internal riskchampionsthroughtheChampionsProgramwhoareresponsi-bleforidentifyingandmonitoringoperationalrisksintheirrespectivedepartments.

Reputation RiskAs part of the Reputation Risk roadmap, CIBlaunched a socialmedia listening tool formoni-toring day-to-day incidents, tracking sentiment,and capturing the perception of the Bank. TheReputation Risk Team works on engaging theBank’s key internal and external stakeholdersthroughannualsurveystoidentifytheirexpecta-tionsandprioritize the risks toaheatmap.AnyincidentthatcouldimpacttheBank’sreputationis escalated to theReputationRiskTeam,whichinturninvokesthereputationeventmanagementprocess. The Reputation Risk Team holds ongo-ing culture awareness programs for all Bank’semployees through E-learning and one-to-onetechnicalinductionprograms.

Conduct RiskCIB took the initiative tobe thefirst localBank inEgypt to establish a Conduct Risk Framework,benchmarked against the Financial Conduct Au-thority(FCA)intheUK.TheinitiativeispartoftheERMframeworkandincludesaTreatingCustomersFairly(TCF)componentthatemphasizesclientneedsstartingfromproductdesignandapprovalandend-ingwithpost-salesservicesandcomplaintmanage-ment.AconductriskassessmentisperformedforalloftheBank’sproductsanddigitalchannels.

Vendor RiskCIBhasaprocessinplacetoevaluateandmonitoralltheBank’svendorstoensuretheymeetthepre-defined criteria of approved suppliers and also toconductrelevantriskassessments.

Information Technology RiskITrisksareprimarilymonitoredviaRCSAbasedonthebestpracticeCOBIT5Frameworkforthegovernanceand management of enterprise IT. Top IT risks aremonitoredandreportedwithactionplanstotheNon-FinancialRisksandComplianceCommittee(NFRCC)andtheBoardOperationsandTechnologyCommittee.

Model RiskModel risk is establishedas a centralized indepen-dent function under the Risk Group to strengthentheindependencyofinternalmodelvalidation.

Strategic RiskA framework is under development to managethe process of identifying, assessing,monitoring,andmitigatingany internalorexternalrisksthatmightaffecttheBank’sbusinessstrategyandstra-tegicobjectiveexecution.

gaps, change in economic value of equity (EVE),and earnings-at-risk (EaR). TheBank has an In-terestRateRiskPolicy,includingrelatedauthori-tiesandresponsibilitiesforinterestrateriskman-agement.Thepolicy sets andenforcesoperatinglimits and parameters that maintain exposureswithinlevelsconsistentwithinternalparameterscovered in the policy to keep interest rate riskexposurewithingivenboundariesoverarangeofpossiblechangesininterestrates.

Liquidity and Funding Risks The Bank has robust liquidity riskmanagementguidelineswithin theTreasuryPolicyGuideandTreasury RiskGuide that summarize the Bank’sliquidityframework.ThisframeworkiscriticalinmaintainingadequateliquidityandensuringtheBankisabletomeetallpaymentobligations.TheBankhasestablishedaliquidityriskmanagementframeworkthat isseamlessly integrated intotheriskmanagementprocess.

Non-Financial Risks

Operational Risk TheOperationalRiskManagement frameworkwasdeveloped through sound monitoring tools, gov-ernance, and policies to manage operational riskacrossthewholeorganizationandtominimizeandmitigatepotentialandunexpectedlosses.Theframe-workusesthefollowingapproachestomeasureandcontroloperationalrisk:• Loss Events Database includestheBank’sop-

erationalriskevents.• Risk and Control Self-Assessment (RCSA) isthe

identification of operational risks and controlsandtheeffectivenessofeachunit.Itisrelatedto



Other Risk Functions

Internal Control Management (ICM)ICMisconsideredoneofthemainpillarsofcon-trol that captures risks by conducting variousreviews across the entire branch network anddifferentdepartments.Specialinvestigationsandassignments assess the risks and compliance ofappliedpoliciesandprocedurestoensureoverallperformance is consistent with predeterminedstandards,plans,andobjectives.

Treasury Middle Office (TMO)TMOmonitorsandcontrolsalltheTreasuryGrouppositions on an intraday/daily basis against theTreasury Policy Guide (TPG), Credit Policy Guide(CPG),InvestmentPolicyGuide(DirectInvestment)limits,andCBEregulationstoimproveoverallcon-trol.ItalsopreparesTreasuryComplianceReports.

2018 Highlights

Strong Asset Quality CIBmaintained its robustassetquality throughouttheyear.Defaultratioimprovedfrom6.95%in2017to4.06%in2018(5.41%excludingtheeffectofthechangeinunearnedtreatment),evidencingtheBank’seffec-tivestrategyofmaintainingacredit-worthyportfolioduring challenging economic conditions. The NPLcoverageratiorecordedahealthy269%.

Default Ratio

2016

6.8% 6.95%

14%

19.30% 19.09%1097%

1019%

667.84%4.06%

2017 2018 2016 2017 2018 2016 2017 2018

Capital Adequacy Ratio (CAR)

2016

6.8% 6.95%

14%

19.30% 19.09%1097%

1019%

667.84%4.06%

2017 2018 2016 2017 2018 2016 2017 2018

Consolidated Liquidity Coverage Ratio (LCY)

Sustainable Capital and LiquidityCIB maintained its CAR at 19.09%, well above theminimum requirement. The increased minimumrequirements in 2019 do not constitute a threat totheBankasCIBcurrentlyexceedsthisminimumbyareasonablebuffer.TheBankmaintaineditscomfort-able liquidity position above CBE requirements andBaselIIIguidelinesinbothlocalcurrencyandforeigncurrency.TheLCYCBE liquidityratioremainedwellabove the regulator’s 20% requirement, recording66.21%attheendof2018,whiletheFCYliquidityratioreached55.04%,abovetheregulatorythresholdof25%.Netstablefundingratio(NSFR)was243.36%forlocalcurrency and 165.61% for foreign currency, and theliquidity coverage ratio (LCR) was 667.84% for localcurrencyand338.82%for foreigncurrency,allabovethe100%BaselIIIrequirement.

Operational Highlights 2018was rifewithglobal economicuncertainty thatposed a challenge for the Egyptianmarket. Locally,new rules and regulations governing the bankingindustryhave,insomecases,affectedtheBank’sbusi-nessmodel.However,theBankcontinuedtomanagethesevolatileconditionsviaaforward-lookingbalancesheet strategyandadynamicapproach toassessingandimplementingbothlocalandinternationalregu-lationstoensureitisfullypreparedforanychanges.

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2016

6.8% 6.95%

14%

19.30% 19.09%1097%

1019%

667.84%4.06%

2017 2018 2016 2017 2018 2016 2017 2018



The Risk Group continued to conduct trainingsessions to promote risk culture throughout theBank and maintain a common taxonomy in theorganization.ThenumberofOperationalandCon-ductRiskChampionsthroughouttheorganizationnearlydoubledin2018.

TheSASenginewasupgraded forcreditandmarketrisksinlinewithbestpractices.AriskassessmentoftheBank’sdigitalproductswasconductedtoensureCIB’schannelsperformasintendedwithnolossesorinconveniencestoclients.

ThefraudfunctionshavebeencentralizedundertheRiskumbrellawithanenhancedscopeencompassingallnewproductsandservicesincludingdigitalbank-ing,e-commerce,ande-walletsalongwithacentral-ized investigation and recovery team and enhancedmonitoringtoolstominimizefraud.

In line with best practices and the Bank’s strategicgoals,theConsumerRiskDivisionhastakenprogres-sivestepstoputinplaceanenhancedriskinfrastruc-tureforend-to-endautomationofriskprocessesandpolicies. Application and behavioral scorecards arealso being introduced alongwith an advanceddeci-sionengineandaCRMsystem.

CIB is compliant with CBE Interest Rate Riskin the Banking Book (IRRBB)’s final guidelines(aligned with Basel standards) and began to re-portresultsasof3Q2018.

In 2018, CIB alongside 28 other global bankshelped develop guidelines to bring the bank-ing industry’s operations into alignment with

TheConsumerRiskTeamwillimplementend-to-endautomation,undertheumbrellaofConsumerRisk Transformation, to help the business pro-vide instant decision-making, superior servicedelivery,andanenhancedcustomerexperience.Similarly,predictiveanalyticswillbeimplement-ed via the development of newmodels to betterforecast probabilities of default and expectedlosses in line with the implementation of newregulationsforIFRS9.Theteamwillalsosupportthe initiation and expansion of digital productsandpenetrationofuntapped segmentsbyusinginnovativecredittoolsandtechniquesforevalu-ationgiventhesegmenttypicallyincludesclientswhodonothavecredithistory.

ThesystemsandprocessesoftheCollections&Re-coveryStrategy,andrelatedinfrastructure,willbeupgradedtoprovideflexiblemappingofstrategiesandbehavioraldelinquencytrends,facilitatingim-provedcollectionactivitiesandbetterrecoveries.

On theBusinessBanking front, focuswill be placedonbuildingscalableinfrastructuretosupporttheag-gressivegrowthofthebusiness.Attentionwillalsobeturnedtoenhancingthecustomerexperienceandtheproactivedetectionofearlywarningtrendsandtimelyactionstomaintainportfolioquality.

CIBwillalsocontinuetoactasadomesticandre-gional influencer inpromotingtheUNEP-FIPrin-cipals forResponsibleBankingwhile capitalizingonCIB’sGreenFinanceinitiativetointroducenewproducts beyond energy efficiency and renewableenergytechnologies.

internationallyagreedtargetsdetailedintheUN’sParis Agreement and Sustainable DevelopmentGoals.TheprincipleswereunveiledinNovember2018duringtheUNEP-FI’sglobalroundtable.

TheRiskGroupmadesignificantstridesthrough-outtheyear,havingbeeninstrumentalintheun-veiling of theUNEP-FI Principles of Responsiblebanking—asetofframeworksgoverninginterna-tionalbankingprinciplesinlinewithsustainabil-ity standards. The Bank continued throughouttheyeartoupdatetheSocialandEnvironmental(S&E)CreditRiskPolicyGuidetoalignwithinter-nationalstandardsforenvironmental,social,andgovernance(ESG)standardssuchastheInterna-tional Finance Corporation (IFC) PerformanceStandards. CIB launched its Green FinanceCreditLine for customerswhowish to shift toagreener approach to economic growth throughenergyefficiencyandrenewableenergy.TheS&ECreditRiskDepartmentalignedwiththelightingefficiency and solar solutions developed by theMinistryofElectricityandRenewableEnergyandsupported by theUNDP,where this allowedCIBtodeliveracomprehensiveproducttocustomersthatrequirestechnicalsupportandfinancing.

2019 Forward-Looking Strategy The Risk Group will continue to enhance theFinancial and Non-Financial Risks Frameworkswhile leveraging its agile risk infrastructure tosupportthestrategicshiftinthewaybusinesswillbeconductedgoingforward.

TheIFRS9projectiscurrentlyinthefinalimplementa-tionstageandwillbefinalizedin2019.

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Compliance Group

Complianceisamulti-dimensionalpracticewithvari-ousscopes.WithinCIB,theComplianceGroupfocusesoninternationalbestpracticesandpromotesthehigh-eststandardsofhonesty,transparency,andintegrity.

CIB has a well-established independent ComplianceGroup,whichdemonstratestheBank’sreliabilityandhelpssupportthepursuitofgrowthstrategies.

The group protects the Bank from the risk of legalorregulatorysanctions,materialfinancial loss,andloss to reputation resulting from failure to complywith laws, regulations, rules, related self-regulatoryorganization standards, or codes of conduct appli-cabletoitsbankingactivities.Additionally,thegroupprovides intrinsic benefits including constructivecommunication, improved overall business prac-tices, and a better understanding of the regulatoryenvironment.ThegroupensuresthatCIBadherestocompliancestandardstosafeguardtheBankagainstafullspectrumofcompliancerisks.

Compliance, Policies, and Procedures DivisionTheCompliance,Policies,andProceduresDivision ensuresthatallcontrols, laws,andregulationsareembedded in the applied policies and procedures,all of which are periodically reviewed to ensuretheyareuptodate.Thedivisionisalsoresponsiblefor reviewing and approvingmarketingmaterials,contracts,andcustomerforms.Overtime,thescopeofthedivisionhasexpandedtoincludemonitoringbank products through reports to ensure compli-ancewithpolicies,processes,andregulations.

2018 HighlightsFollowing the preventive measures taken by theCompliance Group in 2018, the Compliance Poli-ciesandProceduresDivisionbeganimplementinga risk-based approach to detect any violationsthrough reports and take corrective action withall stakeholders.The practice is considered to bethebasisofCIB’smonitoringandtestingfunction,whichwillbeakeyfocusin2019.

In2018,10caseswerepresentedtotheStaffIssuesCommittee; thesecases includedperformancedis-agreements,mismanagementissues,andviolationsoftheBank’scodeofconduct.Allissuesraisedtothecommittee were thoroughly investigated, and fairandsounddecisionswerereached.

AML and Terrorism Financing Division TheAnti-MoneyLaunderingandTerrorismFinancing(AML)Divisiondevelops, implements,andmaintainstheAMLprogramacrosstheBank.Thedivisionscreenstransactions against negative lists and sanctionedcountries, a measure that shields the Bank againstmoneylaunderingandterrorismfinancingcrimes.Ad-ditionally,thedivisionmaintainsrecordsofcustomersandreportssuspiciousactivitiestoauthorities.

2018 HighlightsIn2018,theAMLDivisionrolledoutSAS–thein-dustry’sleadinganalyticssoftware–tofacilitatebettermonitoring and greater understanding ofcustomers’behavior.

TheAMLDivisionalsorolledout theGoAMLre-porting system that supports secure automatedreportingtotheEgyptianMoneyLaunderingCom-bating Unit (EMLCU). CIB’s AML team attendedseveral international seminars in 2018 to remainuptodateonAMLtrendslocallyandgloballyandensure we upheld our standard of consistentlyenhancingperformanceandapplying thehighestinternationalstandardsandbestpractices.

Foreign Account Tax Compliance Act Division TheForeignAccountTaxComplianceAct(FATCA)DivisionensurescorrectimplementationofFATCAregulations and actively follows up on any newupdatesorrequirements, inadditiontoreportingannuallytotheUSInternalRevenueService(IRS).

2018 HighlightsDuring 2018, the FATCA Division successfullyuploaded two yearly reports to the IRS as a single

ForeignFinancialInstitution(FFI)aswellasanotherreportasaSponsoringEntityforCIBMutualFunds.Thedivisionalsoprovidedcontinuoussupportfordif-ferentcasestofacilitatethesmoothimplementationofFATCAruleswhileensuringcustomersatisfaction.

CBE Relations Division TheCBERelationsDivisionactsasabusinessadvisorforalltheBank’sdepartmentstoensuretheyadheretoallCBEregulationsandinstructions.

2018 HighlightsIn2018,theCBERelationsDivisionassuredadher-ence to regulators’ instructions while eliminatinganyimpactonbusinessneeds.Thedivisionactedasabusinesspartnerbyparticipatinginmeetingsheldtodevelopnew(mostlyconsumer)productsaswellasassisting in structuringcreditapproval lines tocomplywithCBEregulations.

2019 Forward-Looking Strategy Going forward, the Compliance Group plans toenhancetheefficiencyofprocessesandturnaroundtime,supportCIBthroughthegroup’sdivisions,andincrease staff awareness of key compliance issues.At the same time, thegroupwill continue to safe-guard theBank against the full spectrumof com-pliance risks. The group will continue cementingcomplianceissuesbydeliveringeffectiveeducationand trainingprogramsand fostering the values ofknowledge, honesty, integrity, respect, and profes-sionalismacrosstheBank.

TheComplianceGroupwillcontinuetoadoptarisk-basedapproachthatrecognizesthatdifferentareasofthebusinessandregulatoryissuescarryvaryinglevels of regulatory risk. Accordingly, the Bank’sresourcescanbeprioritizedandallocatedtoareaswiththehighestneedtoboostproductivity.

In 2019, the groupplans to complete preparationstoimplementCommonReportingStandards(CRS)inanticipationoflocalregulators’announcementoftheirtargetrolloutdate.

The Compliance Policies and Procedures Divisionenhancedthepercentageofcustomerdataupdatesby implementing severalprocesses that encouragee-customers to update their personal data. At thesame time, the division ensured that all existingcontrolsandCBEregulationsareembeddedinthecore banking systemupgrade alongwith any newcontrols needed. Another accomplishment of 2018involvedreengineeringinitiativestoenhanceturn-aroundtimeandincreasecustomersatisfaction.

Corporate Governance and Code of Conduct Division The Corporate Governance and Code of ConductDivision adopts corporate governance guidelinesand structures CIB’s governance framework to en-hance long-term value for shareholders, employees,thecommunity,andotherstakeholders.Thedivisionalsoworkstoensurethatthecorporategovernancesystemisdocumented,transparent,andunderstand-able.The purpose of this division is to ensure thatinvestors,bothforeignandlocal,customers,employ-ees, and the general public are confident about thewaystheBankismanagedandsupervised.

2018 HighlightsTheCorporateGovernanceandCodeofConductDi-visionupdatedallgroupgovernancepolicies in2018to match current international best practices. Thedivision continued to manage relevant staff issuesandencouragedtheuseoftheBank’swhistleblowingpolicy in cases of suspected wrongdoing. Moreover,thedivisionefficientlymanagedpotentialconflictsofinterestbyreviewingseveraldepartments’restructur-ingincomparisonwiththerespectivejobdescriptions.

ThedivisionalsoensuredthatneitheremployeesnorinsiderstradedCIBstocksduringblackoutperiodsto promote transparency and integrity among allshareholders.Furthermore,thedivisionconductedseveral induction sessions to raise staff awarenessof governance and conduct-related issues, in linewithCIB’sstrategytoensurethatallemployeesarecontinuouslytrainedintopicsrelatedtoconduct.


2018 In REvIEW

Internal Audit

TheInternalAuditGroupprovidesindependentandobjectiveassurancetoitsstakeholders, inadditionto consulting activities designed to add value andimprovetheorganization’soperations.Also,itsup-portsseniormanagementinaccomplishingCIBob-jectivesbyassessingtheadequacyandeffectivenessofthecontrolsystem.Concurrently,itevaluatesandimprovestheeffectivenessofEnterpriseRiskMan-agementandGovernanceprocesses.

TheCIBBoardAuditCommitteeisthebackboneoftheInternalAuditGroup,supportingandsafeguard-ingtheindependenceofthethirdlineofdefense,inadditiontooverseeingoperationandriskmanage-ment,accordingtorisk-basedauditmethodologies.

Backedbythetop-rankedexpertiseofourteammembers, all of whom hold specialization andprofessionalcertifications,thegroupassistedallstakeholderswith issues that arose throughouttheyear.Thetrainingandself-developmentpro-gramsofferedtotheteamareconsideredamongthe best on themarket.We provide our peoplewithknowledgeofthelatestinternalaudit,riskmanagement, finance, regulatory, and gover-nancefunctions.

To ensure their ability to fulfil their functionseffectively, our team members attend variouscommitteesasobservers(non-votingmembers)topresenttheGroup’sinsightsandalignoureffortswithCIB’sstrategicplanandobjectives.Thisway,wealsofulfillourroleasatrustedadvisortoallstakeholderswithinCIB.

2019 Forward-Looking StrategyThegroup’sstrategyforthefutureistocontinueensuringthatCIB’sstakeholdersandseniorman-agementapplyefficientgovernancepracticesandrisk management policies in an established in-ternalcontrolenvironment.Additionally,wewillcontinuetosafeguardCIBastheBank’sthirdlineof defense. The group is also laying the ground-work for future developments in the digital andfintech spheres while simultaneously fortifyingitscybersecuritymanagementframeworks.

2018 Highlights 2018wascharacterizedbyaneedtolookbeyondthe present to the future of the financial indus-try, namely fintech products and the underlyingtrendof leveragingbigdata.Anewdivisionwasintroduced to accommodate the growing needto supportmanagement in directing CIB’s auditteamstoenrichtheirscopeandobjectives.

The Consultancy and Special InvestigationDivision continued to provideCIB’s seniorman-agement with all required in-depth scrutiny ofconcern, while the Follow-up Division’s closurepercentilereacheditshighestlevelinrecentyears.

As for the Quality Assurance Division, the Groupbroadeneditsscopetoaddanothercommunicationssectiontomeettheregulatorandexternalauditors’requirements.The division conducted its standardinternalqualityassurancecheckofallauditengage-mentstoensuretheiralignmentwithIIAstandards.

Inlinewithourroleasamarketleader,CIBbegancom-plyingwith IIA standards in2015, threeyearsbeforethispracticebecamemandatoryintheEgyptianmar-ket.In2018,theInternalAuditGroupagainsucceededincomplyingwithIIAStandards,asweweresubjecttoExternalQualityAssuranceasmandatedbyCBE.Ernst&YoungInternationalconductedthereviewandfoundthat CIB was in full compliance with all standardsexceptone.Thissinglestandardwithwhichwewereinpartialcomplianceleavesroomforfutureimprove-mentandcontinualadvancementastheBankstrivestoremainaheadoflocalandregionalcompetition.

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2018 In REvIEW

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SustainabilityCIB goes beyond simply operating sustainably, but guides industry change by leading in the

development of international frameworks

9Highly qualified individuals make up CIB’s BoD

In itsmissiontobecomethebest financial insti-tutioninEgypt,CIBstrivestoapplyinternationalbestpracticesintheareaofcorporategovernance.The Bank is wholly committed to the principlesand corporate values that distinguish the finestgovernancestructures.

CIB’scorporategovernancestructureisanchoredin highly professional executive directors and adistinguished group of independent non-execu-tivedirectors (NED).TheBoDenjoysanoptimalmixofskills,experience,anddiversityintermsofgenderandnationality.

CIB’shighlyqualifiedBoDissupportedbyspecial-ized Board Committees. Committees are chairedby the NEDs, who brief the BoD onmajor pointsraisedbytheirrespectivecommittee.Theboardisalso supportedby internal andexternal auditors,aswellasotherinternalcontroldepartments(Risk,Compliance,InternalAudit,andLegal).Workcar-riedoutbythese functions is fullyutilizedbytheBoD to ensure the Bank adheres to internationalstandardsofcorporategovernance.

CIB’s experienced executive management teamplaysan important role in thegovernanceof theBank by faithfully and efficiently executing thestrategysetbytheBoDandproperly implement-ingtheBank’spolicies.

CorporategovernanceissuesareacorefocusofCIB’sBoD.TheBank’sgovernanceframeworkensuresthattimely, transparent, and accurate disclosures aremadeavailablewithrespecttomaterialinformation

forthcoming about any conflict of interest be-tweentheBankandtheirpersonal,professional,and business interests, providing guidance onhowtohandlethosecases.

TheBank’sWhistle-BlowingPolicyencouragesstaffto report suspected violations of the law or Bankpolicies aswell as anywrongdoing,while guaran-teeing a supportive and encouraging environmentforthosewhospeakout.TheBankhandlescasesofwhistle-blowing,be they from internal or externalsources,veryseriouslyandataseniorlevel.

CIB’sConductRiskpolicymakesclear theBank’srelationshipwithanddutiestowarditscustomers.

This comprehensive policy structure reflects CIB’sprioritization of a strong governance framework,one that is fullybackedbyeachof theBank’sBoDmembersandfirmleadershipandvision.

regardingtheBank,itsownership,operations,andfinancial performance. It also advocates the equaltreatmentofallshareholderswithsoundprotectionfortheirvotingrights.TheBankcontinuestoupholdits mandate to create value for shareholders in asustainableandvalue-basedmanner.

CIB’s governance framework aims to sustain thesuccess of the Bank’s business and operations,backedbyaconcretesetofpoliciesandproceduresrelevanttothescope,size,andcomplexityofCIB’sbusiness.TheBoDthusworkstoensureproperim-plementation of internal and external regulationsandtomitigateallpossiblerisks.

These mandates are complemented by a set ofgovernancepoliciesdesignedtopromoteacorpo-rateculturethatemphasizesbuildingtrustwithkey stakeholders. Such a culture is alignedwiththe Bank’s purpose and business strategy whilepromotingintegritywithintheBank.

TheCodeofCorporateGovernanceisacornerstoneof CIB’s governance policy framework, aiming toenhancelong-termvalueforshareholders,employ-ees,andother stakeholders.TheCodeofConductsetsout the standardsofbehavior expected fromallemployees,providingstaff,seniormanagement,andtheBoDwithacomprehensiveframeofrefer-ence regarding their rights and duties.The codefurther enshrines the principles of equal employ-mentopportunityandgenderequality.

CIB’s Conflict of Interest policy guarantees thatallstaffandboardmembersremainawareofand

Corporate Governance

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SuSTAInABILITy

Board of Director Highlights

and environmental sustainability initiatives, per-forming its duties with entrepreneurial leadership,asoundstrategy,andriskmanagementoversighttoensurerisksareproperlyassessedandmanaged.

CIB’sBoDconsistsofninememberswhopossessanappropriatebalanceofexperience,competen-cies, and individual qualifications.These collec-tivequalitiesgivetheBankadistinctcompetitiveedge.Overthecourseof2018,CIB’sBoDmetseventimes.BeingthesinglelargestshareholderinCIBthroughitswhollyownedsubsidiaries,FairfaxFi-nancialHoldingLtdcurrentlyholds6.6%ofCIB’slocal shares, following its transactionwithActisinMay 2014. Fairfax Financial Holdings Ltd ap-pointsonerepresentativetotheBank’sBoD.

Board of Directors CIB is headed by a competent BoD, which pro-videstheBankwiththenecessaryleadershipandexperiencetomanageitsbusinesswithintegrity,efficiencyand,mostimportantly,excellence.

The BoD primarily focuses on long-term financialreturns and seeks the best interests of all relatedstakeholders. The board is responsible for settingCIB’s strategic objectives, overseeing implementa-tion of said strategy, providing oversight of seniormanagement, ensuring the effectiveness of theBank’sinternalcontrolsystems,managingrisk,andsecuringCIB’sinstitutionalreputationandlong-termsustainability.Moreover,theboardisresponsibleforsetting compensation and performance goals andmanages director nomination, evaluation, and suc-cessionplanning.ItoverseesCIB’seconomic,social,

Board independence

The majority of CIB’s directors are non-executive at seven out of nine members, five of whom are independent directors

Gender diversity

Two of the directors are women

Deep banking and related knowledge and experience

The majority of CIB’s directors have extensive industry experience ranging from business and management to banking and investment

Mr. Hisham Ezz Al-Arab Chairman and Managing Director

Mr.HishamEzzAl-ArabhasbeenChairmanandMan-agingDirectorofCIBsince2002.He leadsateamofmorethan6,750professionalswhohavetransformedthe institution from a wholesale lender into Egypt’slargestprivate-sectorbank,leadingthesectoronkeymetricsincludingrevenue,profitability,networth,andmarketshareofdeposits.Underhisleadership,CIBhasgrownintoaninstitutionthatnowservesmorethan1.3millioncustomersnationally, fromindividuals tosmall-andmedium-sizedbusinessesandleadingcor-porationsamongEgypt’s500largestfirms.

The Bank’smarket capitalization has grown fromEGP1billionatthebeginningofMr.EzzAl-Arab’stermtoEGP86billionasofDecember2018,makingitsstock—ablue-chipcomponentoftheEgyptianExchange — the global investment community’spreferredproxyforEgyptandabenchmarkforthebankingindustryinemergingmarkets.

Mr.EzzAl-Arab’stermhasseenCIBdevelopauniqueculturethatbalancesaninnovation-drivenentrepre-neurialspiritwithacommitmenttoglobalbestprac-tices incorporategovernanceandriskmanagement.Nurturedforover15years,theBank’scorporatecul-turegivesitanaturalcompetitiveadvantageandleddirectlytotheestablishmentofthefirst-of-its-kindem-ployeestockownershipprogram(ESOP)in2006.Morethan80%ofallemployeeshavebenefitedandcontinuetobenefitfromESOP,makingthemshareholdersandtherebyaligningtheinterestsofbothemployeesandshareholders. In 2010,Mr. EzzAl-Arab launched theCIBFoundation,aleadingEgyptianvoiceforuniversalaccesstoqualityhealthcare,withaparticularfocusontheneedsofunderprivilegedchildren.

In2018,CIBbecamethefirstcorporationintheMiddleEast tobe the subjectof a case studyby theLondon

BusinessSchool.Tomarktheoccasion,Mr.EzzAl-ArabjoineddistinguishedprofessorsfromLBS’sLeadershipInstituteandtheWheelerInstituteforBusinesstodis-cusstheBank’s innovationdriveandthecompetitiveadvantagethisgivesCIBamongotheremergingmar-ketbanks.Healsodiscussedhowartificialintelligence,blockchain,cloudcomputing,andbigdatawillleadarevolutioninthefinancialservicesindustry.

Afirmbelieverineducation,Mr.EzzAl-Arabhasex-pandedCIB’scollaborationwithreputableeducationalorganizationstoprovidediversifiedlearningopportu-nities. Suchcollaborations include theCIBEndowedProfessorshipofBankingatAUC,designedtoexposestudentstomultipleperspectivesthatresultinsuperi-orbusinessleadership.In2016,CIBandAUClaunchedthe AUC Venture Lab FinTech Accelerator, Egypt’sfirstuniversity-based incubator andaccelerator thatsupports fintech entrepreneurs and bridges the gapbetween Egypt’s financial services industry and theemergingentrepreneurialecosystem.

UnderMr. EzzAl-Arab’s leadership, CIB has receivedseveralprestigiousinternationalaccolades,atestamenttotheBank’sexcellenceinmanagementandoutstand-ingperformanceovertheyears.Amongotherawards,CIBreceivedEuromoney’s2018“BestBankTransforma-tionintheMiddleEast”and“BestBankintheMiddleEast” in 2017, Global Finance’s 2017 “Digital Bank ofDistinctioninEgypt”,andwasnamedAfricanBanker’s2016“SociallyResponsibleBankoftheYear”.Mr.EzzAl-Arabwasrecognizedin2016forhis“OutstandingCon-tributiontoFinancialServicesintheMiddleEast”andwasEMEAFinance’s“BestCEOinEgyptandAfrica”atthemagazine’s2014BankingAwards.

In2018,CIBwasnamedthe“World’sBestEmergingMarketsBank”byGlobalFinance,ayearafterbeingrecognizedforthesameawardbyEuromoney.CIBisthefirstbankinEgypt,NorthAfrica,andMiddleEasttoeverwinthisaward.

Mr. Ezz Al-Arab leads the Federation of EgyptianBanks as Chairman, is Co-chair of the Institute ofInternational Finance’s Emerging Markets AdvisoryCouncil,andservesasDirectorofMastercardMiddleEast’sRegionalAdvisoryBoard.HeisalsoChairmanoftheBoardofTrusteesoftheCIBFoundationandisaNon-executiveDirectoroftheBoardatFairfaxAfrica.

Mr.EzzAl-ArabjoinedCIBfromDeutscheBankandpreviouslyservedwithJPMorganandMerrillLynchinpostingsthattookhimtoBahrain,NewYork,andCai-ro.HeholdsaBAinCommercefromCairoUniversity.


SuSTAInABILITy >> Corporate Governance

Mr. Hussein Abaza Chief Executive Officer and Board Member

Mr.HusseinAbazaleadsstrategyandoperationsatCIB,an institutionwithmorethan6,750em-ployeesservingmorethan1.3millioncustomers,including Egypt’s 500 largest corporations, on-lineandat203branches, 917ATMs,and13,446points of sale nationwide. Mr. Abaza has beenChief Executive Officer and a Member of theBoardofDirectorssinceMarch2017.HeisChairof the Board’s Executive Committees (Manage-mentandHighLending& InvestmentCommit-tees). He assumed this position after a six-yearrun as CEO of Institutional Banking. Prior tothis,Mr.Abazawas theBank’sChiefOperatingOfficerand,from2001to2010,itsChiefRiskOf-ficer responsible for managing credit, market,andoperationalriskacrossCIB.

Mr. Abaza is also a leader of the Bank’s award-winning Investor Relations program, in whichcapacityhehashelpedCIBgrow fromamarketcapitalizationofEGP10.8billionin2008toEGP86billionasofDecember2018.UnderMr.Abaza’sleadership,theteammanagedRipplewood’s2009exit from CIB, the entry into the shareholdingstructure of global emerging markets privateequity firm Actis, and the subsequent sale ofActis’s 6.5% stake to Canadian insurance firmFairfax Financial Holding Ltd. in the EgyptianExchange’s first block trading transaction. TheBank’s IR program has taken home wins fromtheExtel/MEIRApollforfiveconsecutiveyears,from2014to2018.

Mr. Jawaid Mirza Non-Executive Director of the Board & Lead Director, Chair of CIB’s Audit Committee

Mr. Jawaid Mirza has been Lead Director andNon-ExecutiveIndependentBoardMemberatCIBsinceJanuary2014.Mr.MirzachairstheBoardAu-ditCommittee,sitsontheBoardRiskCommittee,Operations and Technology Committee (whichhechairedforthreeyearssinceitsinception),theCorporateGovernanceandNominationCommit-tee,andtheCorporateSustainabilityCommittee.

Mr.Mirzaisastrongproponentandpractitionerof international corporate governance practicesandbringswith himover 35 years of diversifiedexperience and a solid track record in all facetsof financial and risk management, technology,mergersandacquisitions,businessturnarounds,andoperationsmanagement.

Overtheyears,Mr.Mirzahasworkedwithglobalinstitutions like Citibank and ABN AMRO BankLtd,whereheheldseveralseniorpositionsasCFOEuropean Region, Managing Director and ChiefOperatingOfficer forGlobalPrivateBanking,As-setManagement andNewGrowthMarkets (Con-sumerBanking),andChiefFinancialOfficerfortheAsian Region including Australia/New ZealandandtheMiddleEast.Mr.MirzahasledseveralduediligencesforacquiringbanksinHungary,Taiwan,Thailand, Germany, Brazil, France, and Pakistan.HewasalsoamemberoftheTopExecutiveGroupat ABNAMROBank and amember of theGroupFinanceandGroupCOOBoard.

Inhismorethan25yearswithCIB,Mr.Abazahasbecome actively involved in the Bank’s region-allyrenownedcredittrainingprogram,providingtalentedyoungbankerswiththetheoreticalbasisand hands-on experience needed to assess thecreditworthinessoforganizationsacrossall sec-torsoftheeconomy.

He brings to CIB a sharp interest in financialmarketsandnon-bankfinancialservices,havingserved as Head of Research and thenManagingDirectoratEFGHermesAssetManagementfrom1995 until his return to CIB in 2001. He calledon that experience from 2014 to 2017 when hewas Chairman of CI Capital, a leading Egyptianinvestmentbankand subsidiaryofCIBuntil theBankexiteditsinvestments.

Mr. Abaza joined CIB after obtaining his BA inBusinessAdministration fromAUC.He has pur-sued post-graduate training and education inBelgium,Switzerland,London,andNewYork.

Mr.Mirza currently serves as IndependentNon-Executive Board member of Eurobank Ergasias(Athens),where he chairs theBoardAuditCom-mitteeandsitsontheBoardRiskCommittee.Mr.Mirzaalso servesasNon-Executive IndependentBoard Member of South Africa Bank of Athens(Johannesburg) and sits on the board’s Audit,Risk,andTechnologyCommittees.

Mr. Mirza holds various business managementdegrees from reputable institutions likeQueensBusiness School (Toronto), Wharton BusinessSchool, Stanford Graduate School of Business,and is a member of the Institute of CorporateDirectors,Canada.



Dr. Sherif Kamel Non-Executive Director of the Board, Chair of CIB’s Operations and Technology Committee

Dr.SherifKamelhasbeenaNon-ExecutiveBoardMember at CIB since May 2013. He chairs theOperations and Technology Committee and is amemberof theAudit,Compensation,andGover-nanceandNominationCommittees.

Dr.Kamel isProfessorofManagementandDeanof the School of Business at AUC. He serves theuniversityasVicePresidentforInformationMan-agementandasAssociateDeanforExecutiveEd-ucationat theSchoolofBusiness.Before joiningAUC,hewasdirectoroftheRegionalITInstituteand TrainingManager at the Cabinet of Egypt’sInformation and Decision Support Center. He isanEisenhowerFellowandaFellowattheCenterforGlobalEnterprise.

Dr. Kamel is a member of the AACSB Interna-tionalMiddleEastAdvisoryCouncil, theEgypt-US Business Council, and a Board Member atthe American Chamber of Commerce in Egyptand Education for Employment Egypt. He hasserved on the board of the Egyptian AmericanEnterprise Fund and has been amember of theWorld Bank Knowledge Advisory Commission.Dr.KamelwasafoundingmemberoftheInternetSocietyofEgypt.Hehasbeeninvitedaspanelistand speaker to a variety of policy, development,andleadershipconferencesandexpertmeetings,includingtheAsia-MiddleEastDialogue,AACSBInternational,WorldSummitontheInformationSociety,theCenterforStrategicandInternation-al Studies, Atlantic Council, German MarshallFund, Middle East Institute, the InternationalMonetaryFund,andtheWorldBank.

Mr. Yasser Hashem Non-Executive Director of the Board, Chair of CIB’s Governance and Nomination Committee

Mr.YasserHashemhasbeenaNon-ExecutiveBoardMemberatCIBsinceMay2013.HechairstheGover-nanceandNominationCommitteeand ismemberoftheAuditandCompensationCommittees.

Mr.HashemhasheldthepositionofManagingPartneratZH&Psince1996.ThelegalskillshehasextendedtotheprivatizationofpublicsectorentitiesandhisroleintheinceptionofprivateprovisionoftelecomservicesinEgypthavemadehimavaluedveteranoflegalpracticeinEgypt.Combiningawide rangeof extensive legalknowledgewithhonednetworkingandinterpersonalskills,Mr.Hashemprotectsandfurtherstheinterestofover100localandinternationalclients.

Withaspecialfocusoncorporatelaw,Mr.Hashemhas supported theprivatizationprogramofpublicsector entities in Egypt through hundreds of re-structurings,incorporationsofforeignanddomes-ticcompanies,andadvisingforeignandlocalinves-torsonthemostefficientvehiclesandstructuresforimplementingtheirinvestmentsinEgypt.

In the fields of M&A and capital markets, he hasreliablyrepresentedacquirersinallmajortenderof-fersandM&AtransactionsinEgyptandhasledthefourlargestmultibilliondollarM&AtransactionsinEgypt.HehasalsoplayedamajorroleinmostIPOsthathavetakenplaceinEgypt.

Mr.HashemhasadvisedonEgypt’smostsignificanttelecomlicenseacquisitionsandM&Atransactions.Thelegalserviceshehasextendedtothissectorin-cludetheacquisitionandmandatorytenderoffersoftelecommunicationcompanies,aswellassupportfor

Dr. Kamel holds a PhD in Information SystemsfromtheLondonSchoolofEconomicsandPoliti-calScience,anMBA,aBAinBusinessAdministra-tion,andanMAinIslamicArtandArchitecturefrom AUC. His research and teaching interestsincludemanagement of information technology,the transfer of information technology to devel-oping nations, organizational transformation,electronic business, decision support systems,and entrepreneurship. His work on informationsystems andmanagement is published in schol-arlyjournalsandbooks.

consortiaonanumberofmobileandfixedwirelessli-censebids.Hehascontributedtothedraftingandne-gotiationofallmajortelecomlicenses,includingpub-licpayphones,mobilecellularnetworks,privatedatanetworks, satellite, and marine fiber-optic cabling,amongothers.Mr.Hashemalsoledtheteamactingfor the largest post-revolution acquisition transac-tions in thetelecommunicationssector in2012andadvisedOrange (oneof theworld’s leadingnetworkoperators formobile,broadband internet,andfixedlines)initssuccessful100%acquisitionofMobinilforapproximatelyUSD3billion.Mr.Hashem’sexpertiseinthetelecomsectorhasledtohisappointmentbyMinisterialDecreeasMemberof theNewTelecom-municationsActDraftingCommittee.

He was recognized by The legal 500 as “LeadingIndividual” for the years 2016, 2017, and 2018 andhis name features inThe legal 500’s Hall of Famefor having been recognized for seven consecutiveyears.HewasalsorankedbyIFLR1000asLeadingLawyerintheFinancialandCorporatePracticefor2016, 2017, and 2018. Mr. Hashem was ranked byChambersandPartnersGlobalasa“Band1”LawyerintheCorporate/M&Apracticefortheyears2017and2018andas“Band1”LawyerintheBankingandFinancepracticefortheyear2018.Hisinitialrank-ingbyChambersandPartnersdatesbackto2000.

Mr. Hashem received his LL.B. from Cairo Uni-versityin1989.HewasadmittedtotheEgyptianCourtofCassationin2007andisamemberoftheEgyptianSocietyofInternationalLawandtheLi-censingExecutiveSociety.Heisf luentinArabic,English,andGerman.



Mr. Mark Richards Non-Executive Director of the Board, Chair of CIB’s Risk Committee

Mr.Mark Richards has served as Non-ExecutiveDirectorofCIB’sBoardofDirectorssinceFebru-ary2014,andchairstheBoard’sRiskCommitteeand ismember of theCompensation andGover-nanceandNominationCommittees.

Mr.RichardswasChiefExecutiveof IPGL(Hold-ings) Ltd., a major corporate holding companybased in theUnitedKingdom.He also served asChairmanofExotixHoldingsLtd.,afrontiermar-kets brokerage and investment bank, andDirec-torofSingaporeLife,arapidlygrowingdigitallifeinsurancegroupoperatingacrossSoutheastAsia.Mr. Richards is also a non-executive director ofinternational financial servicessearchspecialistSheffieldHowarth.

Mr. Richards brings considerable experience inemergingmarketbankingandinvestment.HewasPartnerandGlobalHeadofFinancialServicesatActis,oneoftheworld’sleadingandmostethicalemerging market private equity groups. During11yearsatActis,Mr.Richardswasresponsibleforbuilding many successful companies in Africa,AsiaandLatinAmerica.

Hepreviouslyspent18yearsatBarclaysinseniorrolesincludingCFOoftheInternationalOffshoreBank, Director of Group Strategy, and Head ofGroupCorporateDevelopment.

Mr. Bijan Khosrowshahi Non-Executive Director of the Board, Chair of CIB’s Compensation Committee

Mr.BijanKhosrowshahihas sat onCIB’sBoardof Directors as a Non-Executive Member sinceOctober 2014, representing the interest of Fair-fax Financial Holdings Ltd. Mr. Khosrowshahichairs the Compensation Committee and is amemberof theRiskandGovernanceandNomi-nationCommittees.

Mr. Khosrowshahi is the President and CEO ofFairfaxInternational.HejoinedFairfaxFinancialHoldings in June 2009 and is currently based inLondon,UK.Fairfax is a financial serviceshold-ing company which, through its subsidiaries, isengaged inpropertyandcasualty insuranceandreinsurance and investment management. Fair-faxislistedontheTorontoStockExchange.

Fairfax International focuses on expandingFairfaxFinancialHoldings’ insurancepresenceoutsideNorthAmerica.Mr.Khosrowshahialsorepresents Fairfax’s interests as a boardmem-ber at the Gulf Insurance Group K.S.C.P., GulfInsurance & Reinsurance Company in Kuwait,Bahrain Kuwait Insurance Company B.S.C.,Arab Misr Insurance Group S.A.E. in Egypt,Arab Orient Insurance Company in Jordan,Gulf SigortaA.S. in Turkey, Alliance InsuranceCompanyP.S.CintheUAE,JordanKuwaitBankin Jordan,Colonnade InsuranceS.A. inLuxem-bourg, Southbridge Compañía de Seguros Ge-nerales S.A. in Chile, LaMeridional CompañíaArgentinadeSegurosS.A.inArgentina,andSBSSegurosColombiaS.A.inColombia.

With his 30 years of global experience in Bank-ing and financial services, Mr. Richards servesasNon-ExecutiveDirector for a number of com-panies.AtCIB,hechairstheRiskCommitteeandsupports strategy development. He has a firstclass degree from Oxford University in modernhistory and economics. Mr. Richards completedthe London Business School’s Accelerated De-velopment Program and Ashridge ManagementCollege’sGroupLevel StrategyProgram.He alsoattendedtheLeadingProfessionalServicesFirmsProgramatHarvardBusinessSchool.

Prior to joining Fairfax, Mr. Khosrowshahi wasthePresident andCEOof Fuji Fire&Marine In-suranceCompanyLtd.,based in Japan.He is theonly non-Japanese individual who has been thePresidentofapubliclytradedJapaneseinsurancecompany.In2002,FujiFire&Marineembarkedonheftyreformsafteraninvestmentbymajorshare-holdersAmericanInternationalGroup(AIG)andORIX Corporation. He was elected President inJune 2004 and successfully implemented a turn-aroundstrategytoreturnFujitoprofitabilityandgrowth by taking strategically leading positionswithintheinsuranceindustryinJapan.

From2001to2004,hewasthePresidentofAIG’sGen-eralInsuranceoperationsbasedinSeoul,SouthKo-reawhereamajorrestructuringplanresultedinsig-nificantrevenueandprofitabilityincreasesthroughspecific product and channel strategies. From1997to2001,Mr.KhosrowshahiwasViceChairmanandManagingDirectorofAIGSigortabasedinIstanbul,Turkey, and was involved in negotiating strategicalliancesandjointventureswithTurkishconglomer-ates and working with governmental regulators toimprove support for new product introductions totheemergingTurkishinsurancemarket.

Priortothisposition,hewasRegionalVicePresidentofAIG’sdomesticpropertyandcasualtyoperationsfor the Mid-Atlantic region based in Philadelphia.Healsoheldvariousunderwritingandmanagementpositions with increasing responsibilities at AIG’sheadquartersinNewYorkafterhejoinedAIGin1986.

HehasservedontheboardoftheForeignAffairsCouncil and the Insurance Society of Philadel-phia.HehasalsobeenacouncilmemberofUSOinSouthKorea,theChairmanoftheinsurancecom-mitteeoftheAmericanChamberofCommerceinSouthKorea, andamemberof theTurkishBusi-nessmen’sAssociation.HeisalsoamemberoftheU.K.CharteredInsuranceInstitute.

Mr.KhosrowshahiobtainedanMBA in 1986 fol-lowing an undergraduate degree in MechanicalEngineering in 1983 from Drexel University. Heparticipated in the Executive Development Pro-gramat theWhartonSchoolof theUniversityofPennsylvania in2003andisaregular lectureratuniversitiesandinsuranceinstitutes.



7Committees help the BoD fulfill its responsibilities

Dr. Amani Abou-Zeid Non-Executive Director of the Board

Dr.AmaniAbou-Zeid has served as aNon-Exec-utiveBoardMemberatCIBsinceDecember2017,sitting on the Risk, Compensation, and Gover-nanceandNominationCommittees.

Dr. Abou-Zeid is the African Union Commis-sioner in charge of Infrastructure, Energy, ICTand Tourism. For more than 30 years, she hasserved in leadership positions at internationalorganizations such as theAfricanDevelopmentBank(AfDB),UNDP,andUSAID,withafocusoninfrastructure and energy programs. Over hercareer, she has amassed a remarkable mix ofexperience from across Africa, France, the UK,andCanada,workingacrossconstituencieswithawidearrayofstakeholders.

AsCommissionerof theAfDB, shehasmanagedthe organization’s largest operational portfolioandimplementednationalandcontinentalmulti-sectoral development programs, including theworld’s largestsolarpowerplant(Nour). In2018,CommissionerAbou-ZeidlaunchedtheSingleAf-ricanAirTransportMarket,deliveringonthefirstf lagshipprojectforAfricanIntegrationunderAf-ricanUnionAgenda2063. Shealso launched theAfrican digital identity DotAfrica, among othercontinentalinitiatives.

AnEgyptiannational,Dr.Abou-Zeidhasenjoyeda wide-ranging, multi-disciplinary academictraining,including:aB.Sc.inElectricalEngineer-ing fromCairoUniversity;MBA in ProjectMan-agement from the French University for AfricanDevelopment (Université Senghor); a Masters of

Mrs. Magda Habib Non-Executive Director of the Board

Mrs.MagdaHabibhasbeenaNon-ExecutiveBoardMemberatCIBsinceDecember2017,sittingontheOperations and Technology, Compensation, andGovernanceandNominationCommittees.

Mrs.HabibistheCo-founderandChiefExecutiveOf-ficerofDawiClinics,achainofprimarycareclinicsestablishedinEgyptin2016.Mrs.Habibhasvastex-perienceinthetechnicalinformationtechnologyandelectronicpaymentsfields,aswellassmartbankingsolutions. She draws upon 25 years of expertise invariousmanagerialarenas,includingstrategicbrandmanagement,consumerandretailmarketing,corpo-ratecommunications,andinvestorrelations.

ShehasalsobeenaCo-founder,BoardMember,andChief Commercial,Marketing& StrategyOfficer atFawry Banking and Payment Technology Services.Asaco-founderandakeymemberof theexecutiveteam,Mrs.HabibhelpedestablishFawryasthelead-ingelectronicspaymentplatforminEgyptwithmorethan50,000paymentpointsnationwide.Mrs.Habib’sjourneywithFawryculminatedwithasuccessfulexittoaconsortiumofprivateequityfundsin2015.

PriortoFawry,Mrs.Habibspentnineyearsasamem-berofRayaHolding’sexecutiveteam,wheresheplayeda key role in the merger and development of RayaGroup,aswellasbeingresponsibleforthecreationanddevelopment of the Raya brand during its evolutionintooneofEgypt’sleadingtechnologyplayers.

Mrs. Habib obtained an MBA from INSEAD,France. She holds a B.Sc. with Honors in Com-puterSciencefromAUC.

Board of Directors’ CommitteesCIB’sBoDhassevenstandingcommittees thatas-sistinfulfillingitsresponsibilities.Eachcommitteechairperson is responsible for briefing theBoDonthe major issues raised by the committee he/shechairs. Such briefings enable the members of theBoDtocarryouttheirdutiesinaneffectivemanner.Each committee operates under awritten charterthatsetsoutitsresponsibilitiesandcompositionre-quirements,reportingtotheBoDonaregularbasis.Separatecommitteesmaybe setupby theBoD toconsiderspecificissueswhentheneedarises.

Public Administration (MPA) from the HarvardSchool of Government; and Ph.D. in Social andEconomic Development from the University ofManchester, UK. She also has a degree in ArtsfromUniversitéSorbonne-ParisIV.

Dr. Abou-Zeid has received numerous interna-tionalawardsandrecognitionsforherexcellencein leadership. She has been decorated with theWissam Alaouite from HM King Mohamed VIof Morocco, named “Personalité d’avenir” bythe Government of France, and selected as oneof “The 50 Most Inf luential Women in Africa”.She has also received the “Outstanding AlumniAward”fromtheUniversityofManchester.

Dr. Abou-Zeid is alsomember of the prestigiousGlobal Leaders Broadband Commission for Sus-tainable Development and of the StewardshipBoardforSystemInitiativeonShapingtheFutureofEnergy.Sheco-leadstheSteeringCommitteeofSmartAfricaandtheAfrica-EUDigitalEconomyHighLevelTaskForce.



Non-Executive Committees

Committee Members Key Responsibilities

Audit CommitteeSupervisingthequalityandintegrityofCIB’sfinancialreporting

Chair: Mr.JawaidMirza

Members:Dr.SherifKamelMr.YasserHashem

ThisCommitteewasestablishedtooffereffectiveoversightofthein-tegrityoftheBank’sfinancialreportingprocess,theeffectivenessoftheBank’sinternalcontrolsystem,anditscompliancewithallstatutoryrequirements.TheCommittee is also responsible for overseeing andreviewingtheperformanceoftheBank’sinternalauditandcompliancefunctions,aswellastheworkoftheBank’sexternalauditorstoensuretheindependenceandobjectivityofeachandthequalityoftheauditandcomplianceprocesses.TheCommitteemetfivetimesin2018.

Governance and Nomination CommitteeResponsibleforCIB’scorporategovernanceaswellastheBoD’snominationprocessandsuccessionplanning

Chair: Mr.YasserHashem

Members:AllotherNEDs

ThisCommitteeadvises theBoDonthegeneraloversightofgover-nancemattersandensuresthepromotionofasoundgovernancecul-turewithintheBoDandtheBank.ThisentailsaperiodicreviewoftheBank’scorporategovernancestructureandrecommendingchanges,whenand if necessary, to theBoD.TheCommittee also sits as theNominationCommitteewiththeprimaryobjectiveofsettingcrite-ria for selectingnewdirectorsandassisting theBoD in identifyingindividualsqualified tobecomeBoDmembersand recommendingdirectornomineestoshareholders.Besidesthesefunctions,theCom-mitteeprovidesadviceandassistance to theBoD,whennecessary,with respect toapotential successor to theBank’sChiefExecutiveOfficer.Thecommitteemetfourtimesin2018.

Compensation CommitteeResponsibleforcompensationoftheBoDandtheBank’sexecutiveofficers

Chair: Mr.BijanKhosrow-shahi

Members:AllotherNEDs

ThisCommitteewasestablishedtoprovideguidancetotheBoDwith regards to the appropriate compensation for the BoD andtheBank’sexecutiveofficersandtoensurethatcompensationisconsistentwiththeBank’sobjectives,strategy,andcontrolenvi-ronment.TheCommitteeensuresthatclearpoliciesfortheBank’ssalariesandcompensationschemesareinplaceandthattheyareeffectiveatattractingandretainingthebestcaliberprofessionals.TheCommitteemettwotimesin2018.

Risk CommitteeSupervisingriskmanagement

Chair: Mr.MarkRichards

Members:Mr.JawaidMirzaMr.BijanKhosrow-shahiDr.AmaniAbou-Zeid

This Committee oversees risk exposure management functionsand assessesmanagement’s compliance with the risk strategiesandpoliciesapprovedby theBoD throughperiodic reports sub-mittedbytheRiskManagementGroup.TheCommitteemakesrec-ommendationstotheBoDregardingriskmanagementstrategiesandpolicies(includingthoserelatedtocapitaladequacy,liquiditymanagement,varioustypesofrisk:credit,market,operation,com-pliance,reputation,andanyotherriskstheBankmightbeexposedto).TheCommitteemetfourtimesin2018.

Operations and Technology CommitteeAssistingtheBoDinoverseeingBankoperations,technologystrategy,andoperationsandtechnologyrisk

Chair: Dr.SherifKamel

Members:Mr.JawaidMirzaMrs.MagdaHabib

ThisCommitteewasestablishedtoprovideoversightoftheBank’soperations, technology strategy, and significant investments insupportofthisstrategy,aswellasoperationsandtechnologyriskmanagement.TheCommitteemetfourtimesin2018.

Executive Committees

Committee Members Key Responsibilities

Management CommitteeResponsibleforexecutingtheBank’sstrategyasapprovedbytheBoDandincompliancewiththeBank’spolicies

Chair: Mr.HusseinAbaza

Voting Members:Mr.AhmedIssa–CEOConsumerBanking

Mr.AmrEl-Ganainy–CEOInstitutionalBanking

Mr.MohamedSultan–ChiefOperatingOfficer

Ms.PakinamEssam–ChiefRiskOfficer

TheCommitteeisresponsibleforexecutingtheBank’sstrat-egy as approved by the BoD.TheCommitteemanages theday-to-dayfunctionsoftheBanktoensurealignmentwithstrategy,effectivecontrols,riskassessment,andefficientuseof the Bank’s resources.TheCommittee alsomonitors theBank’sstrategicaffiliatesandsubsidiaries.TheCommitteemet16timesin2018.

High Lending and Investment CommitteeResponsibleforassetalloca-tion,quality,anddevelopment

Chair: Mr.HusseinAbaza

Members:CIBSeniorManagement

ThisCommitteeisresponsibleformanagingtheassetssideofthebalancesheetanditsprovisioning.Undertheauthori-tiesdelegatedtotheCommitteeasstipulatedintheBank’sCreditandInvestmentPolicies,itisempoweredtotakedeci-sionsrespectingassetallocation.TheCommitteeconvenedweeklythroughout2018andmet50times.

Shareholders’ RightsCIB’s Annual General Meeting of Shareholders isheld inMarcheachyear,no later than sixmonthsaftertheendoftheBank’sfinancialyear.TheGen-eralAssemblyprovidesaplatformforshareholderstoexercise their voting rights.AdditionalExtraor-dinaryGeneral Shareholdermeetingsmaybe con-venedatanytimebytheBoD.Shareholderconsentisrequiredforkeydecisionssuchas:• Adoptionoffinancialstatements• VotingonproposeddividendsbytheBoD• Significant changes to the Bank’s corporate

governancepractices• Remunerationpolicy• RemunerationofNon-ExecutiveDirectors• Appointmentoftheexternalauditor• Appointment, suspension, or dismissal of the

membersoftheBoD• Issuanceofsharesorrightstoshares,restriction

orexclusionofpreemptiverightsofsharehold-ers,andrepurchaseorcancellationofshares

• AmendmentstotheArticlesofAssociation

External AuditorThe Board Audit Committee recommends theappointment and/or termination of the externalauditor,whichisapprovedattheGeneralAssemblyMeetingofShareholders.Moreover,theBoardAuditCommittee evaluates the performance of the ex-ternalauditorandendorsesthepreparedfinancialstatementstoensuretheyreflecttheBank’sperfor-mance and faithfully reveal its genuine financialposition.InadherencetoCBEregulations,externalauditorsarereappointedeveryfiveyearstoensureobjectivityandexposuretonewpractices.



Management Committee

Mr. Hussein AbazaChief Executive Officer and Board Member Mr.HusseinAbazaleadsstrategyandoperationsat CIB, an institutionwithmore than 6,750 em-ployeesservingmorethan1.3millioncustomers,includingEgypt’s500largestcorporations,onlineandat203branches,917ATMs,and13,446pointsof sale nationwide. Mr. Abaza has been ChiefExecutiveOfficer and aMember of the Board ofDirectorssinceMarch2017.Heassumedthisposi-tion after a six-year run as CEO of InstitutionalBanking.Priortothis,Mr.AbazawastheBank’sChief Operating Officer and, from 2001 to 2010,its Chief Risk Officer responsible for managingcredit,market,andoperationalriskacrossCIB.

Mr.AbazaisalsoaleaderoftheBank’saward-win-ninginvestorrelationsprogram,inwhichcapacityhehashelpedCIBgrowfromamarketcapitaliza-tionofEGP10.8 billion in 2008 toEGP86billionas ofDecember 2018.UnderHussein’s leadership,the team managed Ripplewood’s 2009 exit fromCIB, the entry into the shareholding structure ofglobalemergingmarketsprivateequityfirmActis,and the subsequent sale of Actis’s 6.5% stake toCanadian insurance firm Fairfax Financial Hold-ing Ltd. in the Egyptian Exchange’s first blocktrading transaction. The Bank’s IR program hastakenhomewinsfromtheExtel/MEIRApoll forfiveconsecutiveyears,from2014to2018.

Inmore than25yearswithCIB,Mr.Abazahasbe-come actively involved in the Bank’s regionally re-nownedcredittrainingprogram,providingtalentedyoungbankerswiththetheoreticalbasisandhands-onexperienceneededtoassessthecreditworthinessoforganizationsacrossallsectorsoftheeconomy.

goals,multipledepartmentswereestablished,in-cludingTreasuryMiddleOffice,OperationsCon-trol Management, Retail Operations, CustomerCare and Experience, as well as the SustainableDevelopmentDepartment.

HisvisionbroughtabouttheestablishmentoftheSecurityandResilienceManagementGroup,witha clear strategicmandate to develop and firmlyestablish theBank’s business continuity and cy-ber securitymanagementcapabilities.Underhisleadership,CIBhasobtained ISO22301:2012Cer-tification in Business Continuity Management,positioningCIBasthepioneerandleaderamongpeerfinancialinstitutionsinthemarket.

In 2015 and 2016, Mr. Sultan led a major trans-formation strategy in the ITDepartment, adding

HebringstoCIBasharpinterestinfinancialmar-ketsandnon-bankfinancialservices,havingservedasHeadofResearchandthenManagingDirectoratEFGHermesAssetManagementfrom1995untilhisreturntoCIBin2001.Hecalledonthatexperiencefrom2014to2017whenhewasChairmanofCICapi-tal,aleadingEgyptianinvestmentbankandsubsid-iaryofCIBuntiltheBankexiteditsinvestments.

Mr.AbazajoinedCIBafterobtaininghisBAinBusi-ness Administration from AUC. He has pursuedpost-graduate training and education in Belgium,Switzerland,London,andNewYork.

Mr. Mohamed SultanChief Operating OfficerMr.MohamedSultan isCIB’sChiefOperatingOf-ficer,aroleheassumedinFebruary2015.HejoinedCIB as Head of Consumer Operations in 2008,andwithinsixmonthswasappointedHeadoftheOperationsGroup. In September 2014,Mr. Sultanwas appointedHead of Operations and IT beforeassuminghisroleasCOO.

Under his leadership andmanagement, the Opera-tionsGroupwassignificantlydeveloped,resultinginmajor expansions within the operations function.New divisions were established serving the expan-sion of the business or merging several operationsdivisions, includingCorporate Services,AlternativeChannels,andRealEstateandFacilityManagement.

InhiscontinuouseffortstoenhancetheBank’sin-ternalandexternalcustomerexperienceinalign-ment with CIB’s overall objectives and strategic

significant value to existing technology and en-hanced infrastructure.The aimwas amore solidfoundationthatprovidessuperiorservicestocus-tomersandallowsthebusiness togrowsmoothlyas the Bank moves forward. Mr. Sultan has alsobeenleadingprogramsundertheBank’sStrategicand Digital Transformational Agenda and hasplayedasignificantroleinexpeditingtheadoptionofdigitaltechnologieswiththeaimofmaintainingCIB’sroleasmarketleaderinthisdomain.

PriortojoiningCIB,Mr.SultanheldthepositionsofVicePresidentofBranchOperationsandCon-trolManagement atMashreqBank andCountryOperationsHead at theNationalBank ofOman.He has attended several leadership programs intop business schools and is also an alumnus ofINSEADBusinessSchool.


SuSTAInABILITy

Mr. Amr El GanainyChief Executive Officer, Institutional BankingMr.AmrElGanainyjoinedCIBin2004asGeneralManager of the Financial Institutions Group. InJanuary 2010, he assumed his role as Presidentof the Global Customer Relations Department,beforetakingonhiscurrentroleinJune2017.

Mr.ElGanainy is theChairmanof InternationalSecurities&ServicesCo.(FalconGroup),aBoardMemberofCICapitalHoldingCo.,BoardMemberofTelecomEgyptCo.,BoardMemberofMisr forCentral Clearing, Depositary and Registry Co.,BoardMember of The Egyptian Holding Co. forAirports and Air Navigation, General AssemblyMemberofEgyptairHoldingCo.,HonoraryChair-man of Inter-Arab Cambist Association (ICA),HonoraryChairmanofEgyptianDealersAssocia-tion(ACIEgypt),andamemberof theAmericanChamberofCommerceinEgypt.

Mr.ElGanainyhasservedasChairmanofCIAssetManagementCo.,ChairmanofCommercialInter-nationalBrokerageCo.,BoardMemberofTEData,ExecutiveBoardMemberofACIInternational(TheFinancial Market Association), BoardMember ofRoyal&SunAllianceInsuranceCo.,andtheChair-manofCapitalSecuritiesBrokerageCo.

Prior to joiningCIB,Mr.ElGanainyworkedattheUnitedBankofEgyptasGeneralManager,TreasurerandHeadofCorrespondentBankingand was Chief Dealer of the Export Develop-mentBank.He beganhis career as a dealer atSuezCanalBank.

Ms. Pakinam Essam Chief Risk Officer Ms. Pakinam Essam serves as CIB’s Chief RiskOfficer (CRO), having been appointed in Janu-ary 2011. Since then, she commenced the RiskTransformationProcess,andtheCIBRiskGroupevolvedintoaforward-looking,holisticorganiza-tion with an integrated view of risks, coveringall key areas including institutional banking,consumer banking, business banking, market,operational,liquidity,andinterestraterisks.Shehas expanded the group’s coverage to focus onemerging non-financial risks, such as conduct,cyber security, information security, vendormanagement, IT, reputation, and social and en-vironmentalrisks.Ms.EssamischampioningtheBank’s Enterprise RiskManagement framework,with emphasis on infrastructure, process, envi-ronment,andriskculture.

Underherleadership,CIBhasbeenrecognizedforsixprestigious riskawardsbyAsianBankerSin-gapore for theMiddleEastandAfrica in the fol-lowing categories: Enterprise RiskManagement,RetailRisk,LiquidityRisk,andOperationalRisk.

Ms.EssamisakeymemberoftheBank’sexecutivecommittee and an active member of the Bank’sSustainabilitySteeringCommitteeandtheBoardofTrusteesoftheCIBFoundation.

Ms.EssamjoinedCIBaftergraduating fromtheFacultyofEconomicsandPoliticalScience,CairoUniversity,andhasover25yearsofexperienceinbankingandriskmanagement.

Mr. Ahmed IssaChief Executive Officer, Retail BankingMr.AhmedIssaistheChiefExecutiveofficerofRetailBanking,aresponsibilityheassumedinJanuary2017.Hestartedhisbankingcareerin1993atCIBbranchesand attended CIB’s industry-leading credit coursein 1994. He was later promoted through the rankswithinCIB’sCorporateandInvestmentBankingdivi-sionsbetween1995and2001.HiscareerhasseenhimtakeonnotablepositionssuchasHeadofResearchatCIBC,ManagingDirectorofCICapitalInvestmentBanking,HeadoftheFinancialInstitutionsGroupatCIB Corporate Banking, Chairman of Egypt’s lead-ing leasefinancecompany,Corplease,ChairmanofEgypt’slargestsecuritycompany,FalconGroup,andthefirstHeadofStrategicPlanningatCIB.

Mr.Issaisanindustryveteran,chairingtheBank-ing and Finance Committee of the AmericanChamber of Commerce in Egypt and speakingregularly at the chamber’s industry committeemeetings.HewasChairoftheAuditCommitteeoftheBoardattheMinistryofCivilAviationFinanceHoldingCompanyandin2017wasselectedbyHisExcellency the PrimeMinister of Egypt to sit ontheBoardofEgypt’sTradeDevelopmentAuthority.InApril2018,at therequestofHisExcellencytheMinister ofAviation, he becameamemberof theBoardofDirectorsatEgyptairHoldingCompany.

Mr.Issahasbeenindustriousaboutself-develop-ment throughout his career. In 2001, he earnedanMBAfromtheUniversityofNorthCarolinaatChapel Hill. He was a Fulbright Scholar at Har-vardUniversityandatMerrillLynchin1997.

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SuSTAInABILITy >> Management Committee

40%Annual savings in energy

consumption

Sustainable Development Department

CIBstrives toadaptandcontribute to theevolv-ing landscape of the business community andharness challenges and opportunities alike tosupport long-term value creation while ensur-ing a more sustainable, inclusive, and climate-resilientfuture.AligningCIB’sactivitieswiththeSustainable Development Goals (SDGs), Egypt’sVision2030,andtheParisAgreementonClimateChangeisacrucialstepinthisdirection.Equallyimportantispartneringwithleadingglobalenti-tiestoachievesynergies.

Instilling a bank-wide culture of sustainability re-mainsatthecoreofCIB’sagenda.Wearealsogradu-allyandresponsiblyintegratingenvironmental,social,andgovernance(ESG)considerationsintoourpolicies,corebusiness,andday-to-daypractices.Thiseffortisreinforcedbysystematicawareness-raisingactivities,cross-departmental training, e-learning programs,andtheuseofavarietyofsocialmediachannels.

Managing our Ecological FootprintCIB is managing its environmental footprint byapplying the highest standards and employing thegreatestresourceswhenitcomestomitigatingitsen-ergyandwaterconsumption,carbon footprint,andwastemanagement.Considerableprogresshasbeenmade since 2014 in this regard despite significantgrowthintheBank’soperationsandheadcount.

CIB Carbon Footprint CalculationsStemming from its serious commitment to sustain-ability and transparency, and in linewith the SDGsand Egypt’s Vision 2030, CIB issued its first CarbonFootprintReportin2017.Thisnewreportingeffortisa natural progression following the Bank’s sustain-abilityreportspublishedin2015,2016,and2017.ThisinitiativeplacesCIBattheforefrontofEgypt’sbankingsectorwithregards toacomprehensivecarbon foot-printassessmentandsetsthestandardsforourpeers.

ThereportprovidesinsightintotheBank’senergyuse and net greenhouse gas (GHG) emissions intermsoftonsofcarbondioxideequivalent(tCO2e).CIB’s2017reportcovers52branchesand899em-ployees in the Giza and Alexandria governorates— two of the top GHG emitting governorates inEgypt,withpopulationsof8.7millionand5.2mil-lioninhabitantsandemissionsof28millionand17millionMtCO2e,respectively.

CIB’semissionsperemployeeforscopes1and2were5.60MtCO2e,higherthanthemedianof thebank-ingsector’semissionsforscope1and2emissionsof4.50MtCO2e/employee and the international bestpractice 2.82 MtCO2e/employee, according to theCarbonDisclosureProjectorganization(CDP).TheBankneedsthereforetocutitsemissionsbyatleast20%toreachmedianranges.

CIB’s EMISSIONS PER SCOPE (MtCO2e)

Scope 1 – Direct Emissions 14%

OwnedVehicles 991.41

RefrigerantsLeakage 60.82

Scope 2 – Direct Emissions 54%

PurchasedElectricity 3,983.60

Scope 3 – Indirect Emissions 32%

Transportation 1,135.90

AerialTransportation 262.82

WaterandWastewater 21.56

PaperConsumption 54.59

SolidWasteDisposal 852.03

Total Emissions 7,362.73

Emissions/Employee MtCo2e 8.19 MtCo2e

Emissions/Employee MtCo2e (Scopes 1 & 2) 5.60 MtCo2e


SuSTAInABILITy

Lighting Efficiency InsupportofEgypt’spromisingnation-wideLightingEfficiencyImprovementInitia-tive,we transitioned toLED lightingsystemsacrossourpremises in2017.Thisre-ducedtheBank’senergyconsumptionby11KWsbetween2014and2018,accordingtoareviewconductedbytheEgyptianMinistryofElectricityandRenewableEnergy.Annualsavingsonelectricityconsumptionreached40%,andthepaybackperiodwas14months.CIBreceivedaspecialawardfromtheEnergyEfficiencyProjectinrecog-nitionofitsoutstandingenergyefficiencyefforts.

Outcome:CIB’selectricityconsumptionisconsistentlybeingmonitoredandfig-uresshowthatusagein90megaCIBbuildings(largepremises)locatedinEgypt’smaincitieshasdropped2.53%in2018to18204316.67KWsfromthe18666336.64KWsconsumedin2017.

Water EfficiencyIn2018,CIBinitiallyinstalled1,600aeratorsaspartofatrialefforttoreducewaterconsumptionacrossitspremises.Thisprojectwashighlysuccessful,andtheBankdevelopedaplantoinstallaeratorsacrossallpremisesinEgyptandallnewbuild-ingsinthecomingyears.Thisefforthasledustosave103millionlitersofwaterin2018,a40%reductioninconsumption.

Outcome:ThisefforthasledustosaveEGP518,000inwater-relatedexpensesandachievedareturnonourinvestmentinonlyfourmonths.

Paper Reduction Paper reduction is a promising area for the division. Paper reduction effortsspurredahealthy“PaperChamps!”competitionbetweenbranchofficesseekingtocutdownonpaperwaste.Anypaperwasteourbranchescreateissoldtopaperrecycling startups. Proceeds are credited to the SustainabilityAccount,whosecreditissubsequentlyusedforgreenprojectssuchasgreenrooftops.

Outcome: In2018,a totalEGP184,326wascredited to theSustainabilityAccountas part of these efforts. Despite the annual increase in CIB’s staff and number ofbranches,bank-widepaperconsumptionrosemarginallytorecord38millionsheetsin2018,upfrom35millionsheetsin2017.

Electronic Waste (E-waste) Withtheworldbecomingdigitallydependent,reducingdigitalwasteisvital.CIBbegan to implement an e-wastemanagement initiative during the latter part of2017tosafelydisposeofmobiles,computers,iPads,andsimilardevices.

Outcome:In2018,atotalofEGP1millionwascreditedtotheSustainabilityAccountaspartoftheseefforts.

National Initiative on Plastic Bag Consumption Reduction CIBiscooperatingwiththeMinistryofEnvironmenttoparticipate inanationalcampaign to promote the use of biodegradable plastic bags. It sets to increasepublicawarenessofthehazardouseffectsofnon-biodegradableplasticonhumanhealth, the environment, and the economy. Biodegradable plastic bags are nowusedacrosstheBank;achangeconsistentwiththeinternationaltrendofsustain-ableconsumptionandproduction.

Internal Carpooling ApplicationCIB encourages its employees to use a tailored carpooling application calledRaye7CIB that connectsCIBianswhowant to carpool to and fromwork everyday.In2018,theapplicationwasusedbyover1,000employees.Thisinitiativehasgeneratedapositiveenvironmentalimpact,strengthenedtiesinourcommunity,andallowedustosupportyoungEgyptianentrepreneurs.


SuSTAInABILITy >> Sustainable Development Department

Green BuildingsCIBcollaboratedcloselywith theHousingandBuildingNationalResearchCentreandtheMinistryofHousing,Utilities,andUrbanDevelopmenttoobtainanEgyptianGreenPyramidsCertificate.Thisworld-class,home-growninitiativeiscomparabletothe internationallyrecognizedLeadership inEnergyandEnvironmentalDesign(LEED)standards.Itisamarkofdistinctionsignifyingthatabuildinghasbeencon-structedorisoperatedinawaythatisgreen,high-performing,andresource-efficient.CIBalsocontributedtothedevelopmentofaGreenBuildingRatingSystem–GreenPyramidsRatingSystem(GPRS).TwoofourheadofficeswereawardedthehighestenvironmentalGPRSGreenLevelformeetingthefollowingcriteria:• Generalaccessibilityanddesignqualitythatprovideseasyaccesstoallstakeholders• Useof renewable energy sources, suchas covering thebuildingwith solar

sheets (rooftop panels and curved façade panels) and installing a centralsolarwaterheater

• Establishmentofinternalandexternalverticalgardensthatimproveair-quality,insulation, andvisual comfort;nativeplants areusedandconsume themini-mumamountofwaterthroughanautomaticirrigationsystem

• Roofdesignedasasocialspacewithseatingandacafeteriashadedbysolar-grids• Efficientenergyperformance throughuseofLED lighting,occupancysensors,

anddouble-glassforinsulation• Connectionofallelectrical,PV,HVAC,andwatermeterstoabuildingmanage-

mentsystemthatensureseffectivemonitoringandoptimization• Preventionofozonedepletionthroughuseofsplitunitswithenvironmentally

friendlyrefrigerant407-A• Installationofphotocelltapsintoiletsandagraywatersystemtominimize

waterconsumption• Adherencetosustainablehousekeepingpractices,suchasenvironmentallyfriendly

pesticidecontrol,wastemanagementpolicies,anduseofsegregatedtrashbins

Noise Audit on Branches Inlinewithourgoaltoprotecttheenvironmentandprovideabettersettingforbothemployeesandcustomers, theBankhasvoluntarilyconductedareviewofnoise ratios at five branches that serve a large number of clients from a crosssectionofthepopulation.

CIBisfollowingupontherecommendationsofthenoiseauditreport.Wehavecre-atedataskforceresponsibleforimplementingthefollowingchanges:• Periodicmaintenancetomaintaindeviceefficiency• Useofsoundproofglassanddouble-glassinlouderareas• ReductioninthesoundoftheQmaticsysteminbranches

Electronic Tuk-tuksCIB led an initiative to transform the tuk-tuk taxi system in El Gouna, a luxuryEgyptianresortontheRedSea.ElGounahasmadesignificanteffortstopreserveitsenvironmentandcommunitythrougheffortssuchasbecomingazerowastetown,producingorganicfood,andworkingtobecometheonlycarbon-freeresortinEgypt.

Because of the noise and pollution created by tuk-tuks, El Gouna was eagerto replace theexisting f leetwithstate-of-the-art, zero-emissionsolarelectricvehicles.CIBproudlycontributedtotheprojectbydeliveringthenecessarye-tuk-tukstoElGouna.

Classic debit cardAccepted locally and globally

Maximum daily limit of

EGP 500

Cash and purchase

Existing debit card pricing

applies

Accepting increase of

daily cash limit through the VIP

Call Center



Inclusion Efforts

Special-needs Accessibility: A Holistic ApproachThis issue has been high on CIB’s list of prioritiesfor a few years now, and by 2018 we successfullyequipped26brancheswithramps,lowtellerdesks,andtoiletrails.Additionally,weinstalled95talkingATMs at key locations across Egypt. In addition,weconductedtrainingsessionsfor250front-linersandcustomerrepresentativesonhowtobestservecustomers with special needs. This training wasconducted in partnership with an NGO with anextensive track record in thefieldof specialneedsadvocacy. CIB is also developing a code of acces-sibilitythatevaluatesbranches’andATMs’easeofusetoidentifygapsandappropriateimprovements.We are also establishing partnerships to increasejob accessibility and recruitment levels for specialneedsindividualsinEgypt.

Recently, CIB extended evenmore accessibility tovisually impaired customers by providing easieraccess to POS terminals. Prior to this, accesswaslimitedtotheuseofATMs.

Monitoring and Reporting

Science Based Targets InitiativeAs no widely accepted approach exists to assesswhetherinvestingandlendingactivitiesarealignedwitha2°Ctrajectory,theScienceBasedTargetsini-tiative(SBTi)invitedCIBtoparticipateinafinancialsectorworkinggrouptodevelopanewassessmentmethodology. SBTi is a partnership between CDP,UNGlobalCompact,WRI,andWWFthatseekstoincrease corporate ambition on climate action bymobilizingcompanies tosetgreenhousegasemis-sionreductiontargetssothatby2020welimitglobalwarming to 2°C.Embedding science-based targetsasafundamentalcomponentofsustainabilityman-agementpracticesiscrucialinachievingthisgoal.

CIB Sustainability Report To track our performance and periodicallybenchmark and communicate our progress tostakeholders, we identify and report on sustain-abilityKPIsrelevanttoourbusiness.CIBadheresto the Global Reporting Initiative (GRI) stan-dards, which provide the most comprehensiveframeworkforsustainabilityreporting.TheBankhas been developing a standalone sustainabilityreporteveryyearsince2014.

Carbon Disclosure ProjectCIBparticipatedforthefirsttimeinearly2018inthis global disclosure system,making it the firstEgyptiancompanytodoso.TheCarbonDisclosureProject enables companiesand states tomeasureandmanagetheirenvironmentalimpacts.

Bloomberg Gender Equality Index (GEI)CIB was included on the 2019 Bloomberg GenderEquality Index (GEI) based on data collected andreported in 2018. Of the 230 companies selectedfortheGEI,CIBbecamethefirstArabandAfricancompanytobenamedontheindex.TheBloombergGEIistheworld’sonlycomprehensive,investment-qualitydatasourceongenderequality.Collectively,these companieshavea combinedmarket capital-izationofUSD9trillionandemployover15millionpeople,7millionofwhomarewomen.

FTSE4Good Sustainability IndexCIBwasrecognizedbytheFinancialTimesasacon-stituentoftheFTSE4GoodSustainabilityIndexforthethirdconsecutiveyearin2018.

EGX Sustainability Index In2018,CIBrankedfirstonintheEGXSustainabil-ityIndexforthefifthconsecutiveyear.

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CommunityDevelopment

CIB’s community development activities run the gamut of support to health, sports,

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CIB continued to positively impact its communities by strengthening its support for sports in Egypt and nurturing the country’s athletic talents.

Corporate Social Responsibility

CIB has continued to embed corporate social re-sponsibility (CSR)at theheartof theorganization.Thisyear,ithasexpandeditssteadfastcommitmenttothecommunitiesinwhichitoperatesbydiversi-fying itscommunitydevelopmentactivities,whichinclude supporting sports, fine art, culture, andsocialcare.IthasimplementedvariousCSRprojectsand provided crucial support to the initiatives ofotherorganizations.

In 2018, CIB continued to positively impact itscommunities by strengthening its support forsports inEgyptandnurturingthecountry’sath-letictalents.Squash-relatedinitiativeswereagainatthecoreofCIB’sCSRagenda,andwebroadenedour support to generatemore opportunities andvalueforawidercommunity.

To know more about CIB’s efforts in supportingEgyptianathletes inthesquasharena,pleaserefertotheSupportingtheBestinClass:Squashsectionofthisreport.

Sponsorship of Ramadan Soccer Tournament for Abu El-Rish Children’s Hospital:CIBcontrib-uted to a charity soccer tournament last Rama-dan,whichwas held to support the Abu El-RishChildren Hospital. All the tournament’s fundsweredonatedtothehospital.

Another significant area in which CIB focused itsCSReffortsin2018isartandculture.Outofabeliefthat the advancement of a nation stems from im-proving the culture andaesthetic senseof society,CIB has been diversifying its support of artisticendeavorsthroughoutEgypt.

CIB’s CSR initiatives and activities are designedwith the goal of making a positive, sustainableimpactonpeople’slives.

KidZania: CIB and KidZania’s partnership beganin2013,andsincethen,theBankhassuccessfullyor-ganizedseveraltripseachyeartoKidZaniaformorethan150underprivilegedchildren,specialneedschil-dren,aswellaschildrenwithhealthconditions.UndertheauspicesoftheCIBFoundation,thetripsprovidedchildrenafunsettinginwhichtolearnaboutdiversebanking operations, such as issuing cheques, debitcards,anddepositingandwithdrawingmoneyusingKidZania’sofficialcurrency:Kidzos.

Autism International Day/ADVANCE:Thisyear,theBankcontinued its sponsorshipof theEgyp-tianAdvanceSocietyforPersonswithAutismandOtherDisabilities(ADVANCE)’sannualceremony.Wealsosponsored2018WorldAutismAwarenessDayinEgypttosupporttheintegrationofpeoplewith disabilities into society. In further efforts,theBank’sSmartVillageheadquartersandselectbranches were lit in blue in solidarity onWorldAutismAwarenessDay.

Beena:CIBhasbeenthemainpartnerandfinan-cial sponsorofBeena for threeconsecutiveyears.Beena isaprotocol signedbetween theBankandtheMinistryofSocialSolidarity toencourageac-tive youth participation in the community andmonitor the development of social care services.ThisinitiativesuccessfullyattractedthousandsofvolunteersaroundEgyptwhoassisted inorphan-ages,elderlyhomes,andspecial-needshouses.

Supporting Students of Fine Arts Faculties: CIBworkshardtouncoverhiddenartistictalentacrossEgyptbysheddinglightondistinctiveartworkandsupportingstudentsinthefacultiesoffinearts.TheBankparticipatedintheexhibitionofstudentproj-ectsattheuniversitiesofLuxor,Assuit,Menya,andMansoura.Weacquireddistinctiveworkstoenrichourartcollectionwhileincentivizingyoungtalents.

Night with Arts at Manial Palace: CIBsponsored“NightwiththeArts”forthesecondyearinarow.Thisyear,theexhibition“NothingVanishes,EverythingTransforms”showcasedEgypt’s rich cultural heritage, havingbeenheldatthehistoricManialPalace.Withmorethan500renownedguests inattendance,CIBdisplayedoneofitsartpiecesfromitsartcollectionforthefirsttime.

Africa Art Workshop: For the first time ever, CIBsupported an African painting workshop led bySoma Art School in the Democratic Republic ofCongoduringtheseventheditionoftheRencontreInternationaled’ArtContemporain(RIAC)event.

Promoting the Legacy of Egyptian Cinema: CIBmaintainsitscommitmenttopreservethelegacyofEgyptacrossdifferentfields,includingartandcin-ema.TheBanksponsoredthespecial“CinemaEdi-tion”oftheculturalmagazine“Rawi”,whichfocusesonEgyptianheritage.

Made in Egypt: CIB aims to support entrepre-neurial spirit in Egypt by identifying distinc-tive artistic talents. This year, CIB continued tosponsor “Made inEgypt”,anexhibitionofyoungEgyptiandesignersheld inLondon featuring thecountry’sbestartisticproductions.

El Sawy Culture Wheel:In2018,CIBcontinueditslong-lastingsponsorshipofElSawyCultureWheel,supporting its various intellectual, cultural, andsocialactivities,includingconcertsbyinternation-allyrecognizedartists,culturalnights,artexhibi-tions,documentaryfilms,andmore.Thisyear,theBanklaunchedanewinitiativeincooperationwiththe CIB Foundation and other NGOs to provideentertainingandeducationalprogramsatElSawyCultureWheelthattargetchildren.

Science Fair Sponsorship: CIB sponsored a sci-encefairforschoolstudentstofosterthescientificthinkingprocessfromanearlyageandencouragechildren to explore future careers in scientificfields.Thefairfeaturedgroupsofstudentsfromdif-ferentgradeswhosubmittedprojectstoapanelofjudges,whichevaluatedeachprojectandawardednumeroustitlestowinningteams.

Exclusive Sponsorship of Hona Al Shabab:Thisyear, CIB was the sole banking sponsor of thesecond season of CBC’s televised entrepreneur-ship competition Hona Al Shabab. Hosted byEgyptianbroadcastpresenterLameesElHadidi,thecompetitionsupportsyoungfintechentrepre-neurs and business startups. Of the 30 startupsinvolved,interactivedesign-labstartupArgineer-ingnabbedthefirstplace.Afterthecompetition,a special eventwas held in CIB headquarters inSmartVillage to celebrate thewinners and con-testantswithCIBseniormanagement.


CoMMunITy DEvELoPMEnT

Supporting the Best in Class: Squash

In 2018, CIB continued to positively impact thecommunity in which it does business through akey component of its social development agenda:supporting and nurturing the country’s athletictalents. At CIB, we recognized early on the truepotential of Egypt’s squash players, who havecome not only to dominate world rankings, butcompletelyrevolutionizethewaythegameisbeingplayed.Thisyear,webroadenedoursupportofthesport to capitalize on the traction its players arecarvingout globally. It is ourbelief that support-ingthesetalentsgeneratesmoreopportunitiesandvalue for the Egyptian athletic community andraisestheprofileofEgyptontheworldstage.

The country’s dominant position in the squashworldstemsfromatight-knitsquashcommunity.Egyptianplayershaveintroducedadynamicnewstyle of squash that emphasizes offense and hasbroughtaf loodofmajorhonorswhileentertain-ing spectators the world over. Egypt’s squashcommunityhasproducedfiveworldnumberonesinthemen’sgameandtwointhewomen’sgame.Six Egyptian players are among the world’s top10menplayersandfourEgyptiansareamongthetop10womenasofFebruary2019.

The squash community embodies the values thatCIBstrivestoinstillinitsownstaffandtopromotein the wider community. Young players from allwalks of life have had the chance to display theirexcellenceontheglobalstagethankstoasteelyper-severance, openness to competition, support frompeers,andtheavailabilityofresources.Squashdem-onstratesclearlywhatEgyptianyoutharecapableofachievinginacompetitivearenawhentheyhavethecommunity’ssupportandattention.

Sponsorship of Egyptian Squash FederationCIBmaintained its sponsorship of the EgyptianSquash Federation for the seventh consecutiveyear. The Bank also expanded its commitmentby sponsoring the NationalWomen’s and JuniorSquash Teams. This support has played a directrole in the national teams’ accomplishmentsthroughout the year, including the fact that theNational Junior Squash Team won the WorldJunior Squash Championship in India for thesixth time since 1994. Almost simultaneously,the NationalWomen’s Squash Team was namedWomen’s World Team Champion in China, suc-cessfullyretainingtheirtitle.

Currently,EgyptianplayersholdtheMen’sWorldTeam Championship, the Women’s World TeamChampionships, and the Juniors’ World TeamChampionshiptitles.

Sponsorship of Squash TournamentsCIB has expanded its squash-related sponsor-shipstoopenupdoorsformoreEgyptianathletesto progress in thePSAworld rankings. The firstwas the CIB Wadi Degla Squash Circuit, whichwas held in October 2018 and involved over 40playersfrom16countries.CIBalsosponsoredtheCIB BlackBall Open in December 2018, the firstmajorPSAPlatinumtournamenttotakeplaceinEgyptsincetheMen’s2016PSAWorldChampion-ship.Theeventwitnessedtheparticipationof48topplayersfromallovertheworldwhocompetedforaprizeofUSD180,000.CIBalsosponsoredtheMaadiClubSquashTournament.

Sponsorship of Egyptian AthletesIn support of young players leading the world’s

squashrankings,CIBhascreatedspecialsponsor-ships to help six talented players maintain theirrankings and continue representing the countryaround the world.The following players were re-cipientsofthesesponsorships:

Ali Farag – 2nd on the Men’s PSA World Squash ListA graduate of Harvard University with a degreeinMechanicalEngineering,Ali Faraghas estab-lishedhimselfasoneofthemostpopularplayersonthePSAWorldTour.The26-yearoldhaswon14PSA titles, including theUSOpen 2017,QatarClassic 2018, and most recently the JP MorganTournamentofChampionsinJanuary,whichwillseehimmovetotheWorldNo.1spotforthefirsttimeinhiscareerinMarch2019.Faragmanagedtoreachthefinalsofallseventournamentsofthisseasonso far.Farag isknownforhissportsman-ship,ashewontheend-of-seasonPSAAwards,theFan’sPlayeroftheSeasonaward,andtheSpiritofSquashawardin2016and2017.

Nour El-Tayeb – 4th on the Women’s PSA World Squash ListKnown for her acrobatic playing style, Nour El-Tayeb isoneof themostentertainingandconsis-tentplayersgracingthePSAWorldTour.Sheisthewinner of eight PSA titles, a three-time EgyptianNational Champion, two-time Women’s WorldTeamChampion,andthe2011WorldJuniorCham-pion. El-Tayeb became the third-youngest Tourtitlewinnerin2010,winningasecondTourtitlein2011.During her career, she has alsowon theUSOpenandWindyCityOpen.In2017,FaragandEl-Tayebmadehistorybybecomingthefirstmarriedcoupletowinamajorsportingeventonthesameday,bothwinningtheUSOpen.

Tarek Momen – 3rd on the Men’s PSA World Squash ListAgraduateofAUC’sSchoolofEngineering,TarekMo-menwonhisfirstTourtitleattheIrishOpenin2011.HeisthewinnerofsixPSAtitles,thebiggestbeingthePSAWorldTourGoldChannelVasOpeninLondon2018.Hewasasemifinalistat theWorldOpen2015inSeattle,finalistattheQatarClassicOpen2017,andtheTournamentofChampionsinNewYork2018.HewasalsoEgypt’sNationalChampionin2009.Momenengineeredoneofthebiggestsquashshocksinrecenthistory when he won the Malaysian Open in 2012despitebeingunseededforthecompetition.In2018,MomennabbedtheChannelVASOpentitle,and in2019hewontheCCIInternational.

Karim Abdel Gawad – 5th on the Men’s PSA World Squash ListKarimAbdelGawademergedasoneoftheworld’sleadingplayers in the2016/17 season.Hewas the2016WorldChampionandWorldNo.1.AbdelGa-wadisthewinnerof20PSAtournaments,andwasthe 2016 Qatar classic winner, 2017 Tournamentof Champions (TOC) winner, and the 2017Worldteam’s winner. With multiple prestigious titlesalreadyunderhisbelt,the2016/17seasonsawhimrakeinanastonishingfiveTourtitlesincludingtheWorld Open to become the fifth Egyptian playerever to top the PSAMen’sWorld Rankings.Mostrecentlyin2018,hewontheCIBBlackBallOpen.

Ramy Ashour – 24th on the Men’s PSA World Squash ListKnownas‘TheArtist,’RamyAshourisoneofthemosttalentedplayers inthehistoryof thegame.In2010,AshourbecametheWorldNo.1attheageof22–theyoungestplayertoreachthatsummit



in26years.Withseveralprestigious titles tohisname including threeWorld Opens, Ashour hasstunnedfansallovertheworldwithhistechnicalexcellence,going49matchesunbeatenin2012.

Hania El-Hammamy – 17th on the Women’s PSA World Squash ListAtjust18yearsold,HaniaEl-Hammamyisalreadya forcetobereckonedwith inthewomen’sgame.In 2015, El-Hammamy shocked the squash worldtobecomethefirstplayerbornthiscenturytolifta PSA World Tour title, and later becoming thesecond youngest PSAWorld Tour title winner inhistory.Theyoungstarbroke into theworld’s top40 inSeptember2016. In2019,El-HammamywontheBritishJuniorOpenandfollowedthisupwithtwoback-to-backtitlesontheSeniortour.

Partnership with Wadi Degla Clubs’ Darwish Squash AcademyCIB announced its partnership withWadi De-gla Clubs to support young Egyptian squashathletes by developing their skills to enhancetheirinternationalrankings.ThepartnershipispartandparceloftheBank’sstrategytosupportup-and-comingtalentsfromthegroundupandbuilds on our pioneering role in this area. Theadditional athletes representing Wadi DeglaandsponsoredbyCIBare:

Raneem El Welily – 1st on the Women’s PSA World Squash ListRaneem El Welily is currently the World’s No.1Women’s Singles player. She snatched her firstprofessionalwinbackin2009andhassincegone

on to win 19 Open titles, including the WorldOpen in Manchester in 2017 where she becametheWorldChampion.ElWeleilyisalsoatwo-timeWorldJuniorChampionandafour-timeWomen’sWorldTeamChampion.Sherecentlysetarecordby reachingeightconsecutive finalson the tour.Her most memorable achievement was in Sep-tember2015,whenshebecamethefirstplayerinovernineyearstodethroneNicolDavidatthetopof the World Rankings, becoming the first everfemaleEgyptianNo.1inanysport.

Nouran Gohar – 8th on the Women’s PSA World Squash ListAnimmenselytalentedyoungster,NouranGohariscurrentlyrankedasthenumbereightWomen’sSingle player in the world. She began 2017 asWorld Number Two. Prior to starting her seniorcareer,GoharwascrownedWorldJuniorchampi-ontwice,winningbacktobacktitlesin2015and2016. In2016, shealsowonher firstOpenSingletitleattheHongKongOpen,awinthatpropelledher to the number three spot in internationalrankingsfortheyear.

Squash for EveryoneCIB continued for the second year its “Squash forEveryone”initiativeinpartnershipwithprominentEgyptianplayerAmrShabana.Theprogramaimstoprovideunderprivilegedchildrenwithanequalop-portunitytopracticesquashandwhiledoingitsroletodiscoveryoung,risingtalents.

Note: All official squash rankings are as of 5th February 2019, the latest available at the time of publication.

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CoMMunITy DEvELoPMEnT >> Supporting the Best in Class: Squash

1.5%Of CIB’s annual net profit

is allocated to the CIB Foundation

CIB Foundation

Established in 2010 as a non-profit organizationunderMinistryofSocialSolidarityDecreeNo.588of2010,theCIBFoundationrepresentsanotheraspectof the Bank’s effort to develop a sustainable andeffectivechannelthroughwhichtheBankcangivebacktotheEgyptiansociety.Asanorganization,theCIB Foundation is dedicated to improving healthandnutritionservicesextendedtounderprivilegedchildrenwith limited access to quality healthcarebydevelopinglife-changingcommunityinitiatives.Oureffortsincludenotonlydonatingmoneybutalsomonitoringandfollowinguponprojects’impact.

Over the years, the CIB Foundation has receivedmultiple awards that serve as a testament to oursuccess increatingameaningfulandsustainableimpact.In2016,wewerenamed“SociallyRespon-sibleBankoftheYear”byAfricanBankerafterhav-ing received the “Most SociallyResponsibleBankinNorthAfrica”titlefromthemthepreviousyear.EMEA Finance Pan-Africa award for “CorporateSocialResponsibility”in2014.

Mission and VisionThegoaloftheCIBFoundationistoeasethebur-den of procuring quality, affordable healthcareservices for families and children in need. It isourbeliefthatforacommunitytobeproductive,all its members must be healthy citizenry andthatchildrendeservetheopportunitytoleadthehealthiestlivespossible.

Weachieveourmissionbyenhancingthequalityofservicesofferedbyourpartnerinstitutions:publichealthpartnersthathaveawidecommunityreachallowing them to target those with the greatestneed.Weworkcloselywithproviderstomaximizethesizeandsustainabilityofourimpact.

Budget and FinancingThrough the generous support of CIB shareholders,1.5%oftheBank’sannualnetprofitisallocatedtotheCIBFoundationeveryyear.Itiswiththisfundingthatthe CIB Foundation supports initiatives that allowEgypt’schildrentoembarkonhealthynewbeginnings.

Onehundredpercent of the Foundation’s budget,aswellasalldonationsmadeto theFoundation’sdedicated account, are channeled toward theimplementationofchilddevelopmentprojects.TheFoundation’sBoardofTrustees, its staff, andCIBvolunteersensurethatourresourcesareutilizedtoreachasmanychildrenaspossible.

TheCIBFoundationisgovernedbyaseven-memberBoardofTrustees:

Mr. Hisham Ezz Al-ArabChairman

Mr. Rafik MadkourTreasurer

Ms. Maha El-ShahedMember

Dr. Nadia Makram EbeidMember

Mr. Hossam Abou MoussaMember

Ms. Pakinam Essam El-Din MahmoudMember

Ms. Nadia Moustafa HosnySecretary General

Approved Projects in 2018

Children’s Cancer Hospital 57357InApril 2018, theFoundation’sBoardofTrusteesapprovedanEGP18.9millioncontributiontosup-port the purchase of 33 upgraded monitors andfourcentralstationunitsfortheSurgicalIntensiveCareUnit,IntensiveCareUnit,andtheBoneMar-rowTransplantUnitatChildren’sCancerHospital57357. This equipment will automatically reportpatients’ physiological and biological functions,preventinghumaninterferenceandincreasingtheefficiencyofservicesprovidedtopatients.

As another demonstration of the Foundation’scommitment to thehospital,EGP3.5millionwasdonatedinApril2018tofundpatientcareexpensesattheCairoandTantabranches.

One of our main goals is to bring happiness aswell as tangible health benefits to children. InMay2018,CIBstaffvolunteerspartneredwiththeFoundationandtheteamattheChildren’sCancerHospital57357todecoratethehospitaltobringtheRamadanspirittopatientsandtheirfamilies.

El-Galaa Teaching HospitalIn April 2018, the CIB Foundation’s Board ofTrusteesapprovedoverEGP14milliontofundthecomplete renovation and outfitting of El-GalaaTeaching Hospital’s Pediatric Intensive CareUnit (PICU)witheightbedsrather than three toextend services tomore patients on thewaitinglist. Once complete, this year-long project willallowthehospitaltohelpnearly1,000additionalchildreneveryyear.

The renovation and construction of the PICUincludes the installation of central oxygen andventilationnetworks,coveringofallsurfaceswithanti-bacterial material, construction of isolationrooms, installation of a medical gas system, andprovision of emergency electrical supplies.More-over, state-of-the-artmedical equipment, such asICU beds, resuscitation units, monitors, ventila-tors,endoscopes,ultrasoundmachine,andcentralmonitoringstationswerepurchased.

Abou El-Reesh Children’s Hospital (Japanese)AbouEl-ReeshChildren’sHospital isa long-standingpartneroftheCIBFoundation,andinApril2018,theBoardofTrusteesapprovedEGP10.8millioninfund-ing to purchase a fluoroscopy x-raymachine for theRadiology Department and a laparoscopy and tho-racoscopymachineforthePediatricSurgeryDepart-ment. InJuly2018, theCIBFoundationdonatedoverEGP3.3milliontocoverthefirsttrancheoftheproject.

Both pieces of equipment will assist the hospitalinincreasingtheefficiencyofservicesprovidedtopatients andminimizing the number of childrenonthewaitinglist.

Faculty of Oral and Dental Medicine at Cairo University

Pediatric Dental ClinicAspartofitslong-termpartnershipwiththeFacultyof Oral and DentalMedicine, the CIB Foundationallocated EGP 7.5million in July 2018 to fund thepurchaseof thenecessaryequipmentandsuppliesforthePediatricDentistryClinicinElKasrElAini.The donation will also fund the establishment of



another clinic in Sheikh Zayed to increase the ef-ficiencyofservicesprovidedtochildren, includingthosewithspecialneeds,anddrasticallyreducethenumberofpatientsonthewaitinglist.

The Faculty of Oral andDentalMedicine at CairoUniversitytreatsover95,000childrenannuallyfromacrossEgypt,anditisoneofthefewprovidersofden-talhealthservicesforchildrenwithspecialneedsinthe country.The department also offers a varietyof practical training programs for undergraduate,graduateandcontinuingeducationstudents.

Mobile Dental Caravan In2017,theCIBFoundationcontributedEGP640,000to purchase an outfitted mobile dental caravan forthe Faculty of Oral and Dental Medicine at CairoUniversity,underthemanagementoftheRotaryClubofZamalek.Thisyear,theFoundationallocatedanad-ditionalEGP120,000tocovertheoperatingcostsof12dentalcaravansthatwillbeusedtotreatpublicschoolstudentsinremoteareasofCairoandGizaforfree.

Magdi Yacoub Heart Foundation

70 Open-Heart SurgeriesIn July 2018, the CIB Foundation allocated EGP7million to theMagdi YacoubHeart Foundationto cover costs associatedwith 70 pediatric open-heartsurgeries.Throughitsongoingcontributions,the CIB Foundation supports the Magdi YacoubFoundation’seffortstodrasticallyreducethenum-berofchildrenontheopen-heartsurgerywaitlist.InOctober2018,theCIBFoundationdonatedEGP3.5milliontocoverthefirsttrancheoftheproject.

Research Labs In February 2018, the CIB Foundation donated thefinal EGP 859,000 in a three-year EGP 15 millionproject tooutfit tworesearch labs in theMagdiYa-coubHeartFoundation’sAswanHeartCenter.Theselabswillhelpresearchersattheheartcentergainadeeperunderstandingofvariousheartdiseasesandidentifypossibletherapeuticstrategies.Throughthisprogram,youngEgyptianscientistsandresearchers

can contribute to the advancement of world-classresearchfromwithintheirowncountry.

Alexandria University Children’s Hospital – El ShatbiInApril 2018, theCIBFoundation’s Board of TrusteesapprovedEGP6.64millioninfundingtooutfittheEmer-gencyDepartmentlocatedonthegroundflooroftheAl-exandriaUniversityChildren’sHospitalinElShatbi.Thehospital servesa largenumberofpatients fromareasacross Egypt, including Alexandria, El-Beheira, KafrEl-Sheikh,andMatrouh.TheCIBFoundationfulfilleditscommitmenttotheprojectinOctober2018.

Rotary Club of Giza Metropolitan – Open Heart Surgeries TheCIBFoundationdonatedoverEGP1.3millionin2018tocoverthesurgerycostsof39underprivi-legedchildrensufferingfromcongenitalheartdis-easesatElKasrElAiniHospital,underthemanage-mentoftheRotaryClubofGizaMetropolitan.Thiscontribution followsourMarch2017allocationofEGP1.75milliontocoverthecostsassociatedwith50 pediatric open-heart surgeries. The initiativewascreatedtoreducethelongwaitlistofchildreninneedofopen-heartsurgery.

In recognitionof the importanceof thisprogramand its initial success, in October 2018, the CIBFoundation’s Board of Trustees approved anEGP3.7millionbudgettosupportanotherroundoftheprojectandfundanadditional100pediatricopen-heartsurgeriesatElKasrElAiniHospital.

Nasser Institute HospitalAs part of the CIB Foundation’s commitment tosupportingthehealthsector,theBoardofTrusteesallocatedEGP3.1millioninApril2018topurchasemuch needed equipment for the Nasser InstituteHospital’sPediatric IntensiveCareUnit andNeo-natalIntensiveCareUnit.

Yahiya Arafa Children’s Charity Foundation: Annual Operating CostsIn linewiththeCIBFoundation’scommitment tosustainability andprovision of quality service, in

July2018wecontributedatotalofEGP3milliontothe annual operating costs of five pediatric unitsatAinShamsUniversityHospitalundertheman-agement of our long-standing partner the YahiyaArafaChildren’sCharityFoundation.

Rotary Club of Kasr El Nil: Children’s Right to Sight ProgramOver the course of 2018, the CIB Foundation do-natedoverEGP1milliontocover289surgeriesaspartofthefifthandfourthphaseoftheChildren’sRight to Sight (CRTS) program led by the RotaryClubofKasrElNil.Theaimofthis initiative istofund between 500 and 600 eye surgeries for a to-talamountofEGP2millionineachphasetohelperadicateblindnessinchildrenandinfants.

The Egyptian Clothing Bank 2018marks the fifth year of the CIB Foundation’spartnershipwiththeEgyptianClothingBank(ECB),anNGOdedicatedtoprovidingclothingandhometextilestothoseinneedinEgypt.TheCIBFounda-tion donated EGP 1.67 million to provide 50,000trainingsuitstochildrenin19governorates.

The National Foundation for Family and Community DevelopmentTheCIBFoundation’sBoardofTrusteesapprovedaproposaltosupporttheoutfittingofthesensoryandpsychomotorroomsattheNationalFounda-tion for Family and Community Development’sspecialized center for the rehabilitation of au-tistic children. These rooms help care providersimprovethesensoryexperiencesofchildrenwithautism, allowing them to become healthier andmore productive members of society. The EGP688,000 project will enable the center to servearound250childrenmonthly.

The National Foundation for Family and Com-munity Development is a non-profit organizationestablished in 1991 to assist Egyptian families inraising their living standards by financingmicroprojects,trainingindividuals,andsponsoringandtrainingpersonswithintellectualdisabilities.

MOVE Foundation for Children with Cerebral PalsyInApril2017,theCIBFoundationfulfilleditscom-mitmenttocontributeEGP2milliontotheMOVEFoundation for Children with Cerebral Palsy torenovate their premises and expand operations.Established in 2004, theMOVEFoundation seekstopositivelyaffectthelivesofanestimated250,000childrenlivingwiththedisabilityinEgypt.MOVEaimstoenrollthesechildrenintothepublicschoolsystem to allow them to become healthier andmoreproductivemembersofsociety.

InanotherdemonstrationoftheFoundation’scom-mitmenttosustainabilityandongoingqualityser-viceprovision, theCIBFoundationallocatedEGP608,400tosupporttheannualoperatingcostoftheMOVEFoundation’spremises. InSeptember2018,theFoundationdonatedEGP152,100tocover thefirstinstallmentofthiscommitment.

Ongoing Projects

Egyptian Liver Care Society - Children Without Virus C ProgramTheCIBFoundationdedicatedoverEGP5.1milliontofundtheEgyptianLiverCareSociety’sChildrenwithout hepatitis C (C-Free Child) program, theonlyprograminEgyptofferingfreescreeningandtreatment for children. Established in 2008, theEgyptianLiverCareSocietyaimstocurehepatitispatients by training medical staff and providingfinancial support for the treatment of hepatitispatients, includingfunding livertransplants.Thisyear,theCIBFoundationalsoinvestedinincreas-ingthenumberandqualityofhepatitistreatmentcentersinEgypt.

National Hepatology & Tropical Medicine Research Institute In August 2018, the CIB Foundation donated overEGP91,000tocoverthefirsttrancheofanEGP4.1millionprojecttofundthetreatmentof400childrenwithhepatitisCattheNationalHepatology&Tropi-calMedicineResearchInstitute (NHTMRI).Estab-lishedin1932,NHTMRIisaninstituteformedical


CoMMunITy DEvELoPMEnT >> CIB Foundation

14.4 EGPMN

Donated in 2018 to the Gozour Foundation for Development

researchonendemicdiseasesinEgypt;itisthefirstcenter in the country to treat hepatitis C patientsandacceptreferralcases.

New Children’s Hospital - Ain Shams University HospitalIn June 2017, the CIB Foundation pledged EGP 3.53million for the purchase of 40monitors, 45 infusionpumps,and25syringepumps for the InpatientUnitatAinShamsUniversityHospital.InAugust2018,theCIBFoundationdonatedoverEGP589,000tocoverthefinal installment for theproject.With1,290patientsservedatthehospitaleachmonth,thiscontributionisexpectedtobenefit15,500childrenannually.

Gozour Foundation for Development: Eye Exam CaravansThe CIB Foundation donated over EGP 14.4 mil-lionin2018tocoverthefourthandfifthtranchesof the Gozour Foundation for Development’s 6/6projecttofund264eyeexamcaravansandprovide158,400publicschoolstudentsinimpoverishedar-easacrossEgyptwithfreeeyeexaminations.Thisyear’sdonationisoneportionofanEGP50.5mil-lioncontributiontofund6/6EyeExamCaravansinthegovernoratesofSohag,Qena,Luxor,andAswanoverathree-yearperiod.

InpartnershipwithAl-NoorMagrabi FoundationandDarElOyoun,thecaravans,whicharestaffedwith25-30doctors,nurses,andcoordinators,wereequipped with advanced medical tools, medica-tions,andeyeglasses.Theyprovidedstudentswithfreeophthalmicexams,eyemedication,andrefer-ralstoprivatehospitalsforcomplexcases.

CIB staff members also joined in this project byvolunteering with the caravans. They distrib-utedeyeglassesandmedicationtochildrenandledawarenesssessionsonhealthyeyepracticesforthestudentbeneficiariesof theprogram.Events such

asthisprovideCIBstaffmemberswithopportuni-tiestolearnmoreabouttheFoundation’sactivitiesanddifferentwaystogivebacktothecommunity.

Sawiris Foundation and Star Care for Helping Children: Together for Change Project Over 2018, CIB Foundation donated over EGP105,000aspartofanEGP1.5millionpartnershipwith the Sawiris Foundation for Social Develop-mentandStarCareFoundation in2016 to imple-ment comprehensive community developmentprojects in Sohag, Assiut, andQena.The projectsare under themanagement of the Association ofBusinesswomeninAssiut.

Theyincludetherenovationandupgradeofcommu-nityhealthcenters,trainingdoctorsandnurses,or-ganizinghealthawarenesscampaigns,building theskillsofteachersincommunityschools,distributingin-kind support to students, and offering regularsports,softskillsrecreationalactivities,andeconom-icempowermentopportunities.TheCIBFoundationiscommittedtofundingthehealthcaresector.

Ahl Masr Foundation - Burn Victim OperationsIn June2018, theFoundationcontributed thefinalEGP750,000ofanEGP1millionpledgetoAhlMasrFoundation in 2016.This contribution funded thetreatmentof159pediatricburnpatientswhosefam-iliescouldnotaffordthecostsoftheirtreatment.

Baladi Foundation - Ophthalmic Clinic in AswanInSeptember2015,theCIBFoundation’sBoardofTrusteesapprovedanEGP710,000projecttoestab-lishthefirstfullyequippeddiagnosisandreferralcenterforchildrenwithglaucomainUpperEgypt.In October 2018, the CIB Foundation donatedover EGP 472,000 to cover the final installmentof the project. CIB supported the Baladi Founda-tion’s efforts to detect glaucoma in 500 children,treat thesepatients, andperform50 surgeries for

congenital glaucoma cases, while also training ateamofdoctorsandnursesinUpperEgypt.

Sohag University Hospital - Craniofacial CenterInApril2014,theCIBFoundation’sBoardofTrust-ees approved the allocation of EGP 1 million tofundtheoutfittingoftheCraniofacialCenteratSo-hagUniversityHospital. InOctober2018, theCIBFoundation donated over EGP 323,000 coveringthefinalinstallmentoftheproject.Ateamofsur-geonsspecialized inhearing,speechtherapy,anddentistryhaveestablishedtheCraniofacialCentreto serve patients from Sohag, Qena, and Aswan,primarilywithcleftlipandcleftpalatedeformities.Inadditiontoprescribingcoursesoftreatment,thecenterperformsspecializedmulti-stagecorrectivesurgeries. The specialized services offered at thecenterwillallowittobecomeamajorreferralcen-terforpatientsfromacrossthecountry.

KidZania CairoCIBhasalong-standingcorporatesponsorshiprela-tionshipwiththeKidZaniaCairoedutainmentcity,andineveryquarterof2018,theFoundationgave50KidZaniaticketstounderprivilegedchildren.Overthecourseof theyear, theCIBFoundationcoordi-natedwith its partners to organizemultiple visitstoKidZaniainwhichunderprivilegedanddisabledchildrenlearnedaboutadultprofessionsinachild-friendly way. Children performed different jobs toearnandspendKidzos,theofficialcurrencyofKid-Zania,ongamesandotherentertainingactivities.

Blood Donation CampaignsThe CIB Foundation hosted 12 blood donationcampaignsacross its corporateoffices to encour-age CIB staff and customers to participate in anactivity that saves thousands of lives across thecountry.Throughthiseffort,121bagsofbloodwerecollected;theseresourcescanpotentiallybeusedtosavethelivesofover490people.

6/6 Eye Exam Caravan Program – CIB Family Bag Packing EventIn February 2018, the CIB Foundation invited CIBcolleaguesandtheirfamiliestoabag-packingeventatCIB’s SmartVillageoffice toparticipate inpack-ingofover5,000healthandhygieneschoolbagsforthestudents targetedbythe6/6EyeExamCaravanprogram.Theeventwashighlysuccessful,andmanyparticipantsexpressedinterestinbringingtheirchil-drentoparticipateinmoreCIBFoundationactivities.

El Sawy Culture Wheel In2018,CIBlaunchedanewinitiativeinpartner-shipwith theCIBFoundationandElSawyCul-tureWheel to develop children’s skills throughspecializedworkshops.Childreninvolvedintheinitiative enjoyed a full day of educational ac-tivitiesandmentalgames that stimulated theircultural and scientific development. The firstseries of workshops hosted the children of RedCrescentSocietyinDarEl-Salam,andadifferentNGOisinvitedeveryweek.


CoMMunITy DEvELoPMEnT >> CIB Foundation

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Subsidiaries and Affiliates

CIB offers a full suite of services that range from security solutions to innovative fintech offerings through one wholly-owned subsidiary and two

strategic affiliates

CVentures has a strong investment bias toward entrepreneurs pushing boundaries and developing solutions based on new and innovative technologies.

Falcon Group

Establishedin2006asa jointventurebetweenCIB,the CIB Employees Fund, Al-Ahly for Marketing,and other private entities, Falcon Group manage-ment’sstrategyiscenteredonserviceexcellence.Thecompany provides a plethora of services including,butnotlimitedto:securityservices,moneytransfer,technicalsystemsandsecurityproducts,publicser-vicesandprojectmanagement,andtourismandcon-ciergeservicestoavarietyof industriessuchastheindustrial,commercial,tourism,andpublicsectors.

The group provides state-of-the-art, holisticsolutions tailored to every client’s specific re-quirements. FalconGroup’s key strength lies initssingle-point-of-contactsolutionsthatensureit provides consistent services at the highestquality, lowestrisk,andwithgreat f lexibilityatareasonablecost.

Falcon for Security Services FalconforSecurityServiceshasbeenthemainsecu-rityserviceproviderforseveraltop-tiergovernmentandnon-governmentorganizations,suchastheUnit-edNations,andanumberofembassiesinEgypt.Withaportfolioofover754clients,thecompanyprovidesservicessuchaspropertyprotection,eventsecurity,corporatesecurityandtraining,personalprotection,aswell as safety and industrial training to someofthebiggestcompaniesinEgypt.Thecompanyvaluesclientsasbusinesspartners,andisdedicatedtopro-vidingthemwiththehighestqualityofserviceandtreatingtheirgoalsandobjectivesasitsown.

2018 HighlightsFalconforSecurityServicesmetallits2018targets,managing to boost its annual income for 2018 by14%.Duringtheyear, thecompanywasable tose-cure work with numerous prominent institutionsand successfully add new segments of clients bysecuringseveralnewprojectssuchasPortoSokhna,El Zamalek Sporting Club, a new conference hall,

several metro stations across Cairo, and all freezonesacrossthecountry.

FalconforSecurityServicesincreaseditsprovisionofsecurityservicesforpubliceventsby100%in2018,withthecompanyprovidingsecurityateventssuchas the Egypt Can Conference, the Automech For-mulaexhibition,severalAfricanChampionsLeaguematches,the2018ChinaTradeFair,andEdex2018.

The company reached amarket share of 70% dur-ing2018andaspirestomaintainitspositionasanindustry leader by growing both organically andthroughacquisitionsduringthecomingyear.

2019 Forward-Looking StrategyAspartofthegroup’sgoalofprovidingtop-notchsolutionsforitscustomers,Falconcompaniesplanto use managed service providers for their ac-tivitiesstarting2019.Inthecomingyear,thegroupexpects to targetmultiple prominent institutions

CIB ......... 32.5% Others ........67.5%

Cventures

Establishedin2018,CVenturesisEgypt’sfirstcor-porate venture capital firm focused primarily oninvestingincategory-definingcompanieswiththepotentialtocreatemeaningfulchangeinfinancialservices. CVentures has a strong investment biastoward entrepreneurs pushing boundaries anddevelopingsolutionsbasedonnewandinnovativetechnologies.Thefirmpartnerswithboldfounderswith deepmarket insights to build truly ground-breaking businesses with fundamentally distin-guishable characteristics anddisruptive businessmodels.CVenturesprimarilyparticipatesinSeriesA and Series B investment rounds, and — on aselective basis— seed investment rounds in corefinancial applications including, but not limitedto,capitalmarketsandpayments,moneytransfersandremittances,digitallendingandfinancialdataplatforms, artificial intelligence, data analyticsandmachinelearning,securityandenterpriseIT,insuretech, blockchain, marketing and customerexperience,alternativefinance,regtech,anddigi-talbankingsolutions.

2019 Forward-Looking Strategy In the next year, we plan to expand our networkand foster meaningful relationships with experi-encedstartupfounders,leadingtechnologyinves-tors, andprominent innovationexecutivesacrossregional and global entrepreneurship ecosystemsand technology hubs.Wewill also look to investincategory-changingcompaniesthatcomplementand intersect with CIB’s core businesses. On anopportunisticbasis,weaimtoattractnon-fintechcompanies and financial inclusion enablers withunique value propositions and promising finan-cial returns.This includes efforts to enhance thecustomer experience and leverage virtualizationtoprovidetransparency,access,andpersonalizedservicesthroughpersistentconnectivity.

Website: www.cventureseg.com

CIB .............................................. 99.98%

CIB Social Insurance Fund .......... 0.001%

CIB Social Community ................ 0.001%

Ownership Ownership


SuBSIDIARIES AnD AFFILIATES

Fawry Plus

FawryPluswasestablishedin2017asa jointven-turebetweenCIB,BanqueMisr,Fawry,andACIS.Its strategy is to become Egypt’s first bankingagentwhileplayinganactive role towardachiev-ingfinancialinclusion.FawryPlusaimstoprovideawide arrayof banking andfinancial services toendconsumersandbusinessesthroughanetworkof retailbranchesacrossEgypt, focusingonserv-ingurbanandunderservedregions.

FawryPlusbrancheswillprovidebankingservicesincluding limitedKYCservicesanddocumentcol-lection required for mobile wallet registration,prepaidandcreditcardissuance,loanissuance,andaccountopening.Otherservices includecollectingbank correspondence and mail, cash withdrawaland deposits, repaying loan and credit card dues,aswellasvariousbillpaymentssuchasutility,tele-com,subscriptionfees,taxes,andfines.

2018 Highlights• Opened36newbranchestoreachatotalof66

operatingbranches• Rentedout91spacesinitsbranchesforbankATMs• WorkedwithseveralbanksandtheCBEtoput

inplacethestandardsandproceduresforagentbankinginEgypt

2019 Forward-Looking StrategyFawryPlusplansonbecomingthepreferreddestina-tionforbankingcustomersin2019,asitsbrancheswillbe lesscrowded,closertoresidentialareas,andworklongerhoursthanbanks.

Thecompanyalsointendstosignseveralsizeablecon-tractswithmultiplebanks,financialinstitutions,andotherindustryplayerstoprovidetheirservicesthroughFawryPlusbranches.ThecompanyislookingtodoubleitscashmanagementservicetoEGP35billionin2019fromEGP18billionin2018.

Fawry Plus will focus on serving the e-commerceindustry in termsof cashmanagementand logistics.Thecompany’sbrancheswillserveasdrop-off/pick-upstations for customersaswell as fulfillmenthubs forcouriercompanies.

Website: www.fawry-plus.com

CIB ......... 23.5% Others ........76.5%

andclients,includingbanks,embassies,andhospi-talstoaddtoitsrosterofcustomers.2019willseeFalconexpand itsproductandserviceoffering toensureclientsremainfullysatisfiedandconfidentin the company’s service quality and continue toregard it as their number one choice in terms ofefficiencyandcustomerservice.In2019,thegroupplanstoexpanditsmarketpresenceby25%.

Falcon for Public Services and Project Management Falcon forPublic Services andProjectManage-ment operates all facility systems to the com-fort and satisfaction of facility occupants. Thecompany offers general cleaning, landscaping,façade cleaning, and marble polishing at thehighestquality,efficiency,andcosteffectiveness.In 2018, Falcon for Public Services and ProjectManagementheldamarketshareof20%,servinga largeclientbaseoutof330different locationsacrossEgypt.

2018 HighlightsThrough considerable efforts to build solid relation-shipsandgainthetrustandconfidenceofpublicandprivateinstitutions,thecompanysucceededinsigningonseveralnewclientssuchasanewconferencehall,ToshibaElArabyGroup,andCequens.

Ontopofsecuringnewcontracts,thecompanyhasalsobeenabletorenewimportantdealssuchaswiththePortSaidSecurityDirectorate, theEmbassyoftheSultanateofOman,theEmbassyoftheStateofKuwait,MallofArabia,FLOWater,theParliament,andAlAzharUniversityHospital.

2019 Forward-Looking StrategyThecompany’sstrategyisbasedonitsfirmbeliefthatperformanceismeasuredbyclients’success.Overthenextyear, thecompanyplanstosignseveralsizeablecontractswithgovernmentagenciesastheycontinueto carefully select, train, and supervise their profes-sionalsandstafftoensuretheymeetclientneedsandprovideexceptionallevelsofperformance.

Falcon for Cash in Transit Services Falcon’sCashinTransitDivisionworkswithrepu-table banks and companies in Egypt, providingCIT services, ATM replenishment, maintenance,vaulting, cashmanagement, and valuables trans-portationthroughahighlyqualifiedteam.In2018,the company increased its market share to 38%through the acquisition of new award contractsandexpandingitsclientportfolio.

2018 HighlightsThroughout the year, Falcon for Cash in Transit Ser-vicessignednewcontractstoincreaseitsmarketpres-ence,achievingamarketshareincreaseof15%in2018.

Thecompanyserved1,450ATMsin2018comparedtothe1,160servedin2017andaddedninenewarmoredvehiclestoitsfleet.

In2018,Falconsignedapartnershipagreementwithone of the largest companies in the world that willallowittoprovidemoreservicesandofferexpandedbenefitstoitsclients.Italsomanagedtoincreasecashvolumesby40%in2018andgrossrevenuesby22%.

2019 Forward-Looking StrategyThecompanyplanstogrowitsmarketsharethroughprovidingnewservicesforretail,havingalreadyin-tegratednewsolutionstocollectcashfromshoppingcenters.FalconforCashinTransitwillalsomakeuseof the latest technologyto further improve itsATMservicesanditsmanagedcashofferings,inlinewithits strategy to streamline operations.The companyis also investing considerable resources to train itsteammembers to ensure they consistently providethehighestlevelofservicetoclients.

Falcon TechFalcon Security Systems designs, implements, andmaintainsallintegratedelectronicsystemsinthefieldoftechnicalsecurityforfacilitiesandindividuals.

In 2018, Falcon Tech succeeded in expanding itsmarketshareto70%bysigningseveralnewimpor-tant contracts, which now allow the company toprovide security systems to airports, commercialmalls,anduniversitiesacrossEgypt.

2018 HighlightsThe company signed deals with several new cli-ents including theMinistry of Armed Forces, theGeneral Intelligence, the Suez for PetroleumPro-ductionCompany,ElAhlyClub,theEgyptianCivilProtectionAuthority,20newCIBbranches,CairoInternationalAirport,andtheEgyptianPost.

Falcon for PR and Communications (Tawasul) FalconforPRandCommunications(Tawasul)special-izes in communication services and consultancy aswell as event and conferencemanagement.Thedivi-sionalsooffersmediaservices.

Website: www.falcongroupinternational.org

Ownership


SuBSIDIARIES AnD AFFILIATES

Financial Statements

Rid

ges

on

the

sid

e of

a s

tack

of s

ilver

coi

ns

Financial StatementS: Separate


Separate balance sheet as at December 31,2018

Separate income statement for the year ended December 31, 2018

Hisham Ezz Al-ArabChairman and Managing Director


EGP Thousands

Notes Dec. 31, 2018 Dec. 31, 2017

AssetsCash and balances with central bank 15 20,058,974 14,663,289 Due from banks 16 46,518,892 45,319,766 Treasury bills and other governmental notes 17 41,999,252 54,478,202 Trading financial assets 18 2,737,705 7,295,197 Loans and advances to banks, net 19 67,703 1,313 Loans and advances to customers, net 20 106,309,205 88,427,103 Derivative financial instruments 21 52,289 40,001 Financial investments- Available for sale 22 39,217,890 30,474,781 - Held to maturity 22 73,630,764 45,167,722 Investments in associates and subsidiaries 23 68,633 54,068 Other assets 24 9,563,218 6,886,807 Intangible assets 41 238,715 368,923 Deferred tax assets (Liabilities) 32 308,370 179,630 Property, plant and equipment 25 1,651,875 1,414,519 Total assets 342,423,485 294,771,321

Liabilities and equity LiabilitiesDue to banks 26 7,259,819 1,877,918 Due to customers 27 285,340,472 250,767,370 Derivative financial instruments 21 132,858 196,984 Current tax liabilities 3,625,579 2,778,973 Other liabilities 29 6,501,553 5,476,531 Other loans 28 3,721,529 3,674,736 Provisions 30 1,694,607 1,615,159 Total liabilities 308,276,417 266,387,671

EquityIssued and paid up capital 31 11,668,326 11,618,011 Reserves 34 12,184,667 10,137,515 Reserve for employee stock ownership plan (ESOP) 34 738,320 489,334 Retained earnings * 34 9,555,755 6,138,790 Total equity 34,147,068 28,383,650 Total liabilities and equity 342,423,485 294,771,321

The accompanying notes are an integral part of these financial statements . (Audit report attached)

* Including net profit for the current year

EGP Thousands

Notes Dec. 31, 2018 Dec. 31, 2017

Interest and similar income 37,403,709 28,671,166 Interest and similar expense (19,260,190) (16,167,155)Net interest income 6 18,143,519 12,504,011

Fee and commission income 3,402,616 2,794,211 Fee and commission expense (991,957) (796,107)Net fee and commission income 7 2,410,659 1,998,104

Dividend income 8 25,958 34,513 Net trading income 9 1,089,076 1,292,215 Profits (Losses) on financial investments 22 402,067 496,045 Administrative expenses 10 (4,222,779) (3,118,839)Other operating (expenses) income 11 (1,589,675) (1,002,570)Intangible assets amortization 41 (130,208) (130,208)Impairment charge for credit losses 12 (3,076,023) (1,742,281)Profit before income tax 13,052,594 10,330,990

Income tax expense 13 (3,625,579) (2,778,973)Deferred tax assets (Liabilities) 32 & 13 128,740 (1,678)Net profit for the year 9,555,755 7,550,339

Earning per share 14 Basic 7.26 5.76 Diluted 7.22 5.67



Separate cash flow for the year ended December 31, 2018

Separate cash flow for the year ended December 31, 2018 (cont.)

EGP Thousands

Notes Dec. 31, 2018 Dec. 31, 2017Cash flow from operating activitiesProfit before income tax 13,052,594 10,330,990 Adjustments to reconcile net profit to net cash provided by operating activitiesFixed assets depreciation 25 390,830 351,005 Impairment charge for credit losses 12 3,076,023 1,742,281 Other provisions charges 30 101,501 212,622 Impairment charge for other assets 24 316,763 - Available for sale investments exchange revaluation differences 22 (102,991) 100,078

Intangible assets amortization 41 130,208 130,208 Financial investments impairment charge 22 39,561 (108,349)Exchange differences in financial investments in subidiary 23 (465) - Utilization of other provisions 30 (2,114) (25,463)Other provisions no longer used 30 (17,670) (97,897)Exchange differences of other provisions 30 (2,269) 11,840 Profits from selling property, plant and equipment 11 (1,045) (607)(Profits) losses from selling financial investments 22 (441,628) 99,047 Shares based payments 408,346 290,884 Released charges of non current assets held for sale - (340,504)Operating profits before changes in operating assets and liabilities 16,947,644 12,696,135

Net decrease (increase) in assets and liabilitiesDue from banks 16 (13,661,577) (2,594,442)Treasury bills and other governmental notes 42 4,640,524 (16,466,420)Trading financial assets 18 4,557,492 (4,850,063)Derivative financial instruments 21 (66,141) 120,431 Loans and advances to banks and customers 19-20 (21,255,952) (4,007,616)Other assets 43 (2,263,465) (1,133,497)Due to banks 26 5,381,901 (1,131,078)Due to customers 27 34,573,102 18,802,058 Income tax obligations paid (2,778,973) (2,017,034)Other liabilities 29 1,025,022 1,897,201 Net cash provided from operating activities 27,099,577 1,315,675

Cash flow from investing activitiesProceeds from redemption of subsidiary and associates - 750 Payment for purchases of subsidiary and associates (10,575) (44,318)Payment for purchases of property, plant, equipment and branches constructions (874,708) (745,696)

Proceeds from selling property, plant and equipment 11 1,045 607 Proceeds from redemption of held to maturity financial investments 22 5,532,271 13,354,468

Payment for purchases of held to maturity financial investments 22 (33,995,313) (4,597,254)

EGP Thousands

Notes Dec. 31, 2018 Dec. 31, 2017Payment for purchases of available for sale financial invest-ments 22 (12,670,761) (25,868,230)Proceeds from selling available for sale financial invest-ments 22 2,059,341 1,261,980

Proceeds from selling non current assets held for sale - 768,515 Net cash used in investing activities (39,958,700) (15,869,178)

Cash flow from financing activitiesIncrease in long term loans 28 46,793 3,514,493 Dividend paid (2,143,177) (1,350,204)Capital increase 50,315 79,351 Net cash used in (provided from) financing activities (2,046,069) 2,243,640

Net increase (decrease) in cash and cash equivalent during the year (14,905,192) (12,309,863)

Beginning balance of cash and cash equivalent 49,208,837 61,518,700 Cash and cash equivalent at the end of the year 34,303,645 49,208,837

Cash and cash equivalent comprise:Cash and balances with central bank 15 20,058,974 14,663,289 Due from banks 16 46,518,892 45,319,766 Treasury bills and other governmental notes 17 41,999,252 54,478,202 Obligatory reserve balance with CBE 15 (13,526,763) (8,878,986)Due from banks with maturities more than three months (10,733,386) (1,719,586)Treasury bills with maturity more than three months 17 (50,013,324) (54,653,848)Total cash and cash equivalent 34,303,645 49,208,837



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proposed appropriation account for the year ended December 31, 2018

EGP Thousands

Dec. 31, 2018 Dec. 31, 2017

Net profit after tax 9,555,755 7,550,339 Profits selling property, plant and equipment transferred to capital reserve according to the law (1,045) (607)

Bank risk reserve (842) (689)Available net profit for distributing 9,553,868 7,549,043

IFRS 9 risk reserve* - (1,411,549)Total 9,553,868 6,137,494

To be distributed as follows:Legal reserve 477,736 377,487 General reserve 6,375,588 3,616,830 Dividends to shareholders** 1,458,541 1,161,801 Staff profit sharing 955,387 754,904 Board members bonus 143,308 113,236 CIB's foundation 143,308 113,236 Total 9,553,868 6,137,494

* The IFRS 9 risk reserve is created 1% of the total weighted credit risk of net profit after tax for 2017 (Note 34).** Based on a dividend per share of EGP 1, after taking into account the subsequent share distributions of one share for every four shares.

1. General informationCommercial International Bank (Egypt) S.A.E. provides retail, corporate and investment banking services in various parts of Egypt through 181 branches, and 22 units employing 6759 employees on the statement of financial position date.Commercial International Bank (Egypt) S.A.E. was formed as a commercial bank under the investment law no. 43 of 1974. The address of its registered head office is as follows: Nile tower, 21/23 Charles de Gaulle Street-Giza. The Bank is listed in the Egyptian stock exchange.

Financial statements have been approved by board of directors on February 4, 2019.

2. Summary of 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 years presented, unless otherwise stated.

2.1. Basis of preparationThe separate financial statements have been prepared in accordance with Egyptian financial reporting standards issued in 2006 and its amendments and in accordance with the Central Bank of Egypt regulations approved by the Board of Di-rectors on December 16, 2008.

The separate financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities classified as trading or held at fair value through profit or loss, available for sale invest-ment and all derivatives contracts.

The separate and consolidated financial statements of the Bank and its subsidiaries have been prepared in accordance with the relevant domestic laws and the Egyptian financial reporting standards, the affiliated companies are entirely included in the consolidated financial statements and these companies are the companies that the Bank - directly or indi-rectly – has more than half of the voting rights or has the ability to control the financial and operating policies, regardless of the type of activity, the Bank’s consolidated financial statements can be obtained from the Bank's management. The Bank accounts for investments in subsidiaries and associate companies in the separate financial statements at cost minus impairment loss.

The separate financial statements of the Bank should be read with its consolidated financial statements, for the year ended on December 31, 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 associates2.2.1. SubsidiariesSubsidiaries are all entities (including special purpose entities) over which the Bank has owned directly or indirectly the control 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 consid-ered when assessing whether the Bank has the ability to control the entity or not.

2.2.2. AssociatesAssociates are all entities over which the Bank has significant influence but do not reach to the extent of control, generally accompanying a shareholding between 20% and 50% of the voting rights.

The acquisition method of accounting is used to account for the purchase of subsidiaries. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed, plus any costs directly related to the acquisition. The excess of the cost of an acquisition over the Bank share of the fair value of the identifiable net assets acquired is recorded as goodwill. A gain on acquisition is recognized in profit or loss if there is an

notes to the separate financial statements for the year ended December 31, 2018



excess of the Bank’s share of the fair value of the identifiable net assets acquired over the cost of the acquisition.The cost method is applied to account for investments in subsidiaries and associates, whereby, investments are recorded based on the acquisition cost including any goodwill, deducting any impairment losses, and dividends are recorded in the income statement in the adoption of the distribution of these profits and evidence of the Bank right to collect them.

2.3. Segment reportingA business segment is a group of assets and operations engaged in 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 translation2.4.1. Functional and presentation currencyThe financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.

2.4.2. Transactions and balances in foreign currenciesThe Bank maintains its accounting records in Egyptian pound. Transactions in foreign currencies during the period are translated into the Egyptian pound using the prevailing exchange rates on the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the end of reporting period at the prevailing exchange rates. Foreign exchange gains and losses resulting from settlement and translation of such transac-tions and balances are recognized in the income statement and reported under the following line items:

• Net trading income from held-for-trading assets and liabilities.• Other operating revenues (expenses) from the remaining assets and liabilities.

Changes in the fair value of investments in debt instruments; which represent monetary financial instruments, denomi-nated in foreign currencies and classified as available for sale assets are analyzed into valuation differences resulting from changes in the amortized cost of the instrument, differences resulting from changes in the applicable exchange rates and differences resulting from changes in the fair value of the instrument.

Valuation differences resulting from changes in the amortized cost are recognized and reported in the income statement in ‘income from loans and similar revenues’ whereas differences resulting from changes in foreign exchange rates are recognized and reported in ‘other operating revenues (expenses)’. The remaining differences resulting from changes in fair value are deferred in equity and accumulated in the ‘revaluation reserve of available-for-sale investments’.

Valuation differences resulting from the non-monetary items include gains and losses of the change in fair value of such equity instruments held at fair value through profit and loss, as for recognition of the differences of valuation resulting from equity instruments classified as financial investments available for sale within the fair value reserve in equity.

2.5. Financial assetsThe Bank classifies its financial assets in the following categories:

• Financial assets designated at fair value through profit or loss.• Loans and receivables.• Held to maturity investments.• Available for sale financial investments.

Management determines the classification of its investments at initial recognition.

2.5.1. Financial assets at fair value through profit or lossThis category has two sub-categories:

• Financial assets held for trading. • Financial assets designated at fair value through profit and 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 repur-chasing in the short 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 making. Derivatives are also categorized as held for trading unless they are designated as hedging instruments.

Financial instruments, other than those held for trading, are classified as financial assets designated at fair value through profit and loss if they meet one or more of the criteria set out below:

• When the designation eliminates or significantly reduces measurement and recognition inconsistencies that would arise from measuring financial assets or financial liabilities, on different bases. Under this criterion, an accounting mismatch would arise if the debt securities issued were accounted for at amortized cost, because the related derivatives are mea-sured at fair value with changes in the fair value recognized in the income statement. The main classes of financial instru-ments designated by the Bank are loans and advances and long-term debt issues.

• Applies to groups of financial assets, financial liabilities or combinations thereof that are managed, and their performance evaluated, on a fair value basis in accordance with a documented risk management or investment strategy, and where information about the groups of financial instruments is reported to management on that basis.

• Relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows resulting from those financial instruments, including certain debt issues and debt securities held.

• Any financial derivative initially recognized at fair value can't be reclassified during the holding period. Re-classification is not allowed for any financial instrument initially recognized at fair value through profit and loss.

2.5.2. Loans and advancesLoans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:

- Those that the Bank intends to sell immediately or in the short term, which is classified as held for trading, or those that the Bank upon initial recognition designates as at fair value through profit and loss.

• Those that the Bank upon initial recognition designates and available for sale; or• Those for which the holder may not recover substantially all of its initial investment, other than credit deterioration.

2.5.3. Held to maturity financial investmentsHeld-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturi-ties that the Bank's management has the positive intention and ability to hold till maturity. If the Bank has to sell other than an insignificant amount of held-to-maturity assets, the entire category would be reclassified as available for sale unless in necessary cases subject to regulatory approval.

2.5.4. Available for sale financial investmentsAvailable-for-sale investments are those intended 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 are applied in respect to all financial assets:

Debt securities and equity shares intended to be held on a continuing basis, other than those designated at fair value, are classified as available-for-sale or held-to-maturity. Financial investments are recognized on trade date, when the group enters into contractual arrangements with counterparties to purchase securities.

Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit and 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 when the Bank transfers substantially all risks and rewards of the ownership. Financial liabilities are derecognized when they are extinguished, that is, when the obligation is discharged, cancelled or expired.

Available-for-sale, held–for-trading and financial assets designated at fair value through profit and loss are subsequently measured at fair value. Loans, receivables and held-to-maturity investments are subsequently measured at amortized cost.



Gains and losses arising from changes in the fair value of the ‘financial assets designated at fair value through profit or loss’ are recognized in the income statement in ‘net income from financial instruments designated at fair value’. Gains and losses arising from changes in the fair value of available for sale investments are recognized directly in equity, until the financial assets are either sold or become impaired. When available-for-sale financial assets are sold, the cumulative gain or loss previously recognized in equity is recognized in profit or loss.

Interest income is recognized on available for sale debt securities using the effective interest method, calculated over the asset’s expected life. Premiums and discounts arising on the purchase are included in the calculation of effective interest rates. Dividends are recognized in the income statement when the right to receive payment has been 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 measures fair value using valuation models. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation models commonly used by market participants. If the Bank has not been able to estimate the fair value of equity instru-ments classified as available for sale, the value is measured at cost less impairment.

Available for sale investments that would have met the definition of loans and receivables at initial recognition may be reclassified out to loans and advances or financial assets held to maturity. In all cases, when the Bank has the intent and ability to hold these financial assets in the foreseeable future or till maturity. The financial asset is reclassified at its fair value on the date of reclassification, and any profits or losses that have been recognized previously in equity, are treated based on the following:

• If the financial asset has a fixed maturity, gains or losses are amortized over the remaining life of the investment using the effective interest rate method. In case of subsequent impairment of the financial asset, the previously recognized unreal-ized gains or losses in equity are recognized directly in the profits and losses.

• In the case of financial asset which has infinite life, any previously recognized profit and loss in equity will remain until the sale of the asset or its disposal, in the case of impairment of the value of the financial asset after the re-classification, any gain or loss previously recognized in equity is recycled to the profits and losses.

• If the Bank adjusts its estimates of payments or receipts of a financial asset that in return adjusts the carrying amount of the asset (or group of financial assets) to reflect the actual cash inflows, the carrying value is recalculated based on the present value of estimated future cash flows at the effective yield of the financial instrument and the differences are rec-ognized in profit and loss.

• In all cases, if the Bank re-classifies financial asset in accordance with the above criteria and increases its estimate of the proceeds of future cash flow, this increase adjusts the effective interest rate of this asset only without affecting the invest-ment book value.

2.6. Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a legally enforceable right to offset the recognized amounts and there is an intention to be settled on a net basis.Agreements of repos & reverse repos are shown by the net in the financial statement in treasury bills and other govern-mental notes.

2.7. Derivative financial instruments and hedge accountingDerivatives are recognized initially, and subsequently, at fair value. Fair values of exchange traded derivatives are ob-tained from quoted market prices. Fair values of over-the-counter derivatives are obtained using valuation techniques, including discounted cash flow models and option pricing models. Derivatives are classified as assets when their fair value is positive and as liabilities when their fair value is negative.

Embedded derivatives in other financial instruments, such as 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 and loss. These embedded derivatives are measured at fair value with changes in fair value recognized in income statement unless the Bank chooses to designate the hybrid contract as at fair value through net trading income through profit and loss.

The timing method of recognition in profit and loss, of any gains or losses arising from changes in the fair value of deriva-tives, depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged. The Bank designates certain derivatives as:

• Hedging instruments of the risks associated with fair value changes of recognized assets or liabilities or firm commit-ments (fair value hedge).

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

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

At the inception of the hedging relationship, the Bank documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge, and on ongoing basis, the Bank documents whether the hedging instrument is expected to be highly effective in offsetting changes in fair values of the hedged item attributable to the hedged risk.

2.7.1. Fair value hedgeChanges in the fair value of derivatives that are designated and qualified as fair value hedges are recognized in profit and loss immediately together with any changes in the fair value of the hedged asset or liability that is 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’ line item of the income state-ment. Any ineffectiveness is recognized in profit and loss in ‘net trading income’.

When the hedging instrument is no longer qualified for hedge accounting, the adjustment to the carrying amount of a hedged item, measured at amortized cost, arising from the hedged risk is amortized to profit and loss from that date using the effective interest method.

2.7.2. Derivatives that do not qualify for hedge accountingAll gains and losses from changes in the fair values of derivatives that do not qualify for hedge accounting are recognized immediately in the income statement. These gains and losses are reported in ‘net trading income’, except where deriva-tives are managed in conjunction with financial instruments designated at fair value , in which case gains and losses are reported in ‘net income from financial instruments designated at fair value’.

2.8. interest income and expenseInterest income and expense for all financial instruments except for those classified as held-for-trading or designated at fair value are recognized in ‘interest income’ and ‘interest expense’ in the income statement using the effective interest method.

The effective interest 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 ex-actly 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 represents an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Once loans or debts are classified as nonperforming or impaired, the revenue of interest income will not be recognized and will be recorded off balance sheet, and are recognized as income subsequently based on a cash basis according to the following:

• When all arrears are collected for consumer loans, personnel mortgages and micro-finance loans.• When calculated interest for corporate are capitalized according to the rescheduling agreement conditions until paying

25% from rescheduled payments for a minimum performing period of one year, if the customer continues to perform, the calculated interest will be recognized in interest income (interest on the performing rescheduling agreement balance) without the marginalized before the rescheduling agreement which will be recognized in interest income after the settle-ment of the outstanding loan balance.



2.9. Fee and commission incomeFees charged for servicing a loan or facility that is measured at amortized cost, are recognized as revenue as the service is provided. Fees and commissions on non-performing or impaired loans or receivables cease to be recognized as income and are rather recorded off balance sheet. These are recognized as revenue, on a cash basis, only when interest income on those loans is recognized in profit and loss, at that time, fees and commissions that represent an integral part of the effective interest rate of a financial asset, are treated as an adjustment to the effective interest rate of that financial asset.

Commitment fees and related direct costs for loans and advances where draw down is probable are deferred and recog-nized as an adjustment to the effective interest on the loan once drawn. Commitment fees in relation to facilities where draw down is not probable are recognized at the maturity of the term of the commitment.

Fees are recognized on the debt instruments that are measured at fair value through profit and loss on initial recognition and syndicated loan fees received by the Bank are recognized when the syndication has been completed and the Bank does not hold any portion of it or holds a part at the same effective interest rate used for the other participants portions.

Commission and fee arising from negotiating, or participating in the negotiation of a transaction for a third party such as the arrangement of the acquisition of shares or other securities and the purchase or sale of properties are recognized upon completion of the underlying transaction in the income statement .

Other management advisory and service fees are recognized based on the applicable service contracts, usually on accrual basis. Financial planning fees related to investment funds are recognized steadily over the period in which the service is provided. The same principle is applied for wealth management; financial planning and custody services that are provided on the long term are recognized on the accrual basis also.

2.10. Dividend incomeDividends are recognized in the income statement when the right to collect it is declared.

2.11. Sale and repurchase agreementsSecurities may be lent or sold according to a commitment to repurchase (Repos) are reclassified in the financial state-ments and deducted from treasury bills balance. Securities borrowed or purchased according to a commitment to re-sell them (Reverse Repos) are reclassified in the financial statements and added to treasury bills balance. The difference between sale and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest rate method.

2.12. impairment of financial assets2.12.1. Financial assets carried at amortised costThe Bank assesses on each balance sheet date whether there is objective evidence that a financial asset or group of fi-nancial assets is impaired. A financial asset or a group of financial assets is impaired 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/s’) and that loss event/s 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 ( e.g, equity ratio, net income percentage of sales).• Violation of the conditions of the loan agreement such as non-payment.• 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 or deterioration of the creditworthiness of the borrower.

The objective evidence of impairment loss for a group of financial assets is observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, for instance an increase in the default rates for a particular banking product.

The Bank estimates the period between a losses occurring and its identification for each specific portfolio. In general, the periods used vary between three months to twelve months.

The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individu-ally 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, wheth-er significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collec-tively assesses them for impairment according to historical default ratios.

• If the Bank determines that an objective evidence of financial asset impairment exist that is individually assessed for im-pairment and for which an impairment loss is or continues to be recognized are not 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 esti-mated 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 inter-est 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 impair-ment 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 con-tractual 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 be reflected together with changes in related observ-able data from period to period (e.g. changes in unemployment rates, property prices, payment status, or other indicative factors 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.

2.12.2. Available for sale investmentsThe Bank assesses on each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets classify under available for sale 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. During periods start from first of January 2009, the decrease consider significant when it became 10% from the book value of the financial instrument and the decrease consider to be extended if it continues for period more than 9 months, and if the mentioned evidences become available then any cumulative gains or losses previously recognized in equity are recognized in the income statement , in respect of available for sale equity securities, impairment losses previously recognized in profit and loss 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 the income statement, the impairment loss is reversed through the income statement to the extent of previously recognized impairment charge from equity to income statement.



2.13. real estate investments The real estate investments represent lands and buildings owned by the Bank in order to obtain rental returns or capital gains and therefore do 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 property, plant and equipment.

2.14. property, plant and equipmentLands and buildings comprise mainly branches and offices. All property, plant and equipment are stated at historical cost less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisi-tion of the items.

Subsequent costs are included in the asset’s carrying amount or as a separate asset, as appropriate, only when it is prob-able that future economic benefits will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance are charged to other operating expenses during the financial period in which they are incurred.

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

Buildings 20 years.

Leasehold improvements 3 years, or over the period of the lease if less

Furniture and safes 3/5 years.Typewriters, calculators and air-conditions 5 yearsVehicles 5 yearsComputers and core systems 3/10 yearsFixtures and fittings 3 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, on each balance sheet date. De-preciable assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recovered. An asset’s carrying amount is written down immediately to its recoverable value if the as-set’s carrying amount exceeds its estimated recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.

Gains and losses on disposals are determined by comparing the selling proceeds with the asset carrying amount and charged to other operating expenses in the income statement.

2.15. impairment of non-financial assetsAssets that have an indefinite useful life are not amortized -except goodwill- and are tested annually for impairment. As-sets 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. Assets are tested for impair-ment with reference to the lowest level of cash generating unit(s). A previously recognized impairment loss relating to a fixed asset may be reversed in part or in full when a change in circumstances leads to a change in the estimates used to determine the fixed asset’s recoverable amount. The carrying amount of the fixed asset will only be increased up to the amount that the original impairment not been recognized.

2.15.1 GoodwillGoodwill is capitalized and represents the excess of acquisition cost over the fair value of the Bank’s share in the ac-quired entity’s net identifiable assets on the date of acquisition. For the purpose of calculating goodwill, the fair values of acquired assets, liabilities and contingent liabilities are determined by reference to market values or by discounting expected future cash flows. Goodwill is included in the cost of investments in associates and subsidiaries in the Bank’s separate financial statements. Goodwill is tested for impairment, impairment loss is charged to the income statement.

Goodwill is allocated to the cash generating units for the purpose of impairment testing. The cash generating units rep-resented in the Bank main segments.

2.15.2. Other intangible assetsIs the intangible assets other than goodwill and computer programs (trademarks, licenses, contracts for benefits, the benefits of contracting with clients).

Other intangible assets that are acquired by the Bank are recognized at cost less accumulated amortization and impair-ment losses. Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of the intangible asset with definite life. Intangible assets with indefinite life are not amortized and tested for impairment.

2.16. leasesThe accounting treatment for the finance lease is complied with law 95/1995, if the contract entitles the lessee to purchase the asset at a specified date and predefined value, or the current value of the total lease payments representing at least 90% of the value of the asset. The other leases contracts are considered operating leases contracts.

2.16.1. Being lesseeFinance lease contract recognizes the lease cost, including the cost of maintenance of the leased assets in the income statement for the period in which they occurred. If the Bank decides to exercise the right to purchase the leased asset the leased assets are capitalized and included in ‘property, plant and equipment’ and depreciated over the useful life of the expected remaining life of the asset in the same manner as similar assets.

Operating lease payments leases are accounted for on a straight-line basis over the periods of the leases and are included in ‘general and administrative expenses’.

2.16.2. Being lessorFor finance lease, assets are recorded in the property, plant and equipment in the balance sheet and amortized over the expected useful life of this asset in the same manner as similar assets. Lease income is recognized on the basis of rate of re-turn on the lease in addition to an amount corresponding to the cost of depreciation for the period. The difference between the recognized rental income and the total finance lease clients' accounts is transferred to the in the income statement until the expiration of the lease to be reconciled with a net book value of the leased asset. Maintenance and insurance expenses are charged to the income statement when incurred to the extent that they are not charged to the tenant.

In case there is objective evidence that the Bank will not be able to collect the of financial lease obligations, the finance lease payments are reduced to the recoverable amount.

For assets leased under operating lease it appears in the balance sheet under property, plant and equipment, and depre-ciated over the expected useful life of the asset in the same way as similar assets, and the lease income recorded less any discounts given to the lessee on a straight-line method over the contract period.

2.17. 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, including cash and non-restricted balances with central banks, treasury bills and other eligible bills, loans and advances to banks, amounts due from other banks and short-term government securities.

2.18. Other provisionsProvisions for restructuring costs and legal claims are recognized when the Bank has present legal or constructive obliga-tions as a result of past events; where it is more likely than not that a transfer of economic benefit will be necessary to settle the obligation, and it can be reliably estimated.

In case of similar obligations, the related cash outflow should be determined in order to settle these obligations as a group. The provision is recognized even in case of minor probability that cash outflow will occur for an item of these obligations.

When a provision is wholly or partially no longer required, it is reversed through profit or loss under other operating income (expenses).

Provisions for obligations, other than those for credit risk or employee benefits, due within more than 12 months from the balance sheet date are recognized based on the present value of the best estimate of the consideration required to settle



the present obligation on the balance sheet date. An appropriate pretax discount rate that reflects the time value of money is used to calculate the present value of such provisions. For obligations due within less than twelve months from the bal-ance sheet date, provisions are calculated based on undiscounted expected cash outflows unless the time value of money has a significant impact on the amount of provision, then it is measured at the present value.

2.19. Share based paymentsThe Bank applies an equity-settled, share-based compensation plan. The fair value of equity instruments recognized as an expense over the vesting period using appropriate valuation models, taking into account the terms and conditions upon which the equity instruments were granted. The vesting period is the period during which all the specified vesting conditions of a share-based payment arrangement are to be satisfied. Vesting conditions include service conditions, per-formance conditions and market performance conditions are taken into account when estimating the fair value of equity instruments on the date of grant. On each balance sheet date the number of options that are expected to be exercised are estimated. Recognizes estimate changes, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

CIB owns a private insurance fund for financing end of service benefits, pensions and medical insurance for employees under the supervision of the Ministry of Social Solidarity.

2.20. income taxIncome tax on the profit and loss for the period and deferred tax are 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 on the date of the balance sheet in ad-dition 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 appli-cable on 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 come from tax benefit expected during the following years, that in the case of expected high benefit tax, deferred tax assets will in-crease within the limits of the above reduced.

2.21. BorrowingsBorrowings are recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortized cost also 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.

2.22. DividendsDividends on ordinary shares and profit sharing are recognized as a charge of equity upon the general assembly approval. Profit sharing includes the employees’ profit share and the Board of Directors’ remuneration as prescribed by the Bank's articles of incorporation and the corporate law.

2.23. comparativesComparative figures have been adjusted to conform with changes in the presentation of the current period where necessary.

2.24. non-current assets held for saleA non-current asset (or disposal group) to be classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use.

Determining whether (and when) an asset stops being recovered principally through use and becomes recoverable prin-cipally through sale.

For an asset (or disposal group) to be classified as held for sale:

a. It must be available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets (or disposal groups);

b. Its sale must be highly probable;

The standard requires that non-current assets (and, in a 'disposal group', related liabilities and current assets,) meeting its criteria to be classified as held for sale be:

a. Measured at the lower of carrying amount and fair value less costs to sell, with depreciation on them ceasing; andb. Presented separately on the face of the statement of financial position with the results of discontinued operations

presented separately in the income statement.

2.25. Discontinued operationDiscontinued operation as 'a component of an entity that either has been disposed of, or is classified as held for sale, and

a. Represents a separate major line of business or geographical area of operations,b. Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations orc. Is a subsidiary acquired exclusively with a view to resale.

When presenting discontinued operations in the income statement, the comparative figures should be adjusted as if the operations had been discontinued in the comparative period.

3. Financial risk managementThe Bank’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, accep-tance 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 rewards and minimize potential adverse effects on the Bank’s financial performance. 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 analyze 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 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 for-eign 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 finan-cial 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 measurement3.1.1.1. Loans and advances to banks and customersIn measuring credit risk of loans and facilities to banks and customers at a counterparty level, the Bank reflects three components (i) the ‘probability of default’ by the client or counterparty on its contractual obligations (ii) current expo-sures to the counterparty and its likely future development, from which the Bank derive the ‘exposure at default’; and (iii) the likely recovery ratio on the defaulted obligations (the ‘loss given default’).



These credit risk measurements, which reflect expected loss (the ‘expected loss model’) are required by the Basel commit-tee on banking regulations and the supervisory practices (the Basel committee), and are embedded in the Bank’s daily operational management. The operational measurements can be contrasted with impairment allowances required under EAS 26, which are based on losses that have been incurred on the balance sheet date (the ‘incurred loss model’) rather than expected losses (note 3.1).

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 judg-ment 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 rating Description of the grade

1 Performing loans2 Regular watching3 Watch list4 Non-performing loans

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.

3.1.1.2. Debt instruments and treasury and other billsFor debt instruments and bills, external rating such as standard and poor’s rating or their equivalents are used for man-aging 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 indi-vidual 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 con-tracts. 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:

3.1.2.1. CollateralThe Bank sets 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 gen-erally unsecured. In addition, in order to minimize the credit loss the Bank will seek additional collateral from the coun-terparty 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 instru-ment. 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.

3.1.2.2. 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 with positive fair value), 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 cor-responding 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.

3.1.2.3. Master netting arrangementsThe Bank further restricts its exposure to credit losses by entering into master netting arrangements with counterpar-ties 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 af-fected by each transaction subject to the arrangement.

3.1.2.4. 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, guaran-tees 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 stan-dards. 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 system described in Note 3.1.1 focus on the credit-quality mapping from the lending and investment activities perspective. Conversely, for only financial reporting purposes impairment losses are recognized for that has been incurred on the balance sheet date when there is an objective evidence of impairment. Due to the different method-ologies applied, the amount of incurred impairment losses in balance sheet 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 reported in balance sheet at the end of the period is derived from each of the four internal credit risk ratings. However, the majority of the impairment provision is usually driven by the last two rating degrees. The follow-ing table illustrates the proportional distribution of loans and advances reported in the balance sheet for each of the four internal credit risk ratings of the Bank and their relevant impairment losses:

December 31, 2018 December 31, 2017

Bank’s ratingLoans and

advances (%)Impairment

provision (%)Loans and


provision (%)

1-Performing loans 78.61 12.61 69.53 11.612-Regular watching 11.65 17.85 15.53 21.513-Watch list 5.68 33.18 7.99 23.70 4-Non-Performing loans 4.06 36.36 6.95 43.18

The internal rating tools assists management to determine whether objective evidence of impairment exists under EAS 26, based on the following criteria set by the Bank:

• Cash flow difficulties experienced by the borrower or debtor• 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 due to economic, legal reasons and financial

difficulties facing the borrower• Deterioration of the collateral value• Deterioration of 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 circumstances require. Impairment provisions on individually assessed accounts are determined by an evaluation of the incurred loss at balance-sheet date, and are applied to all significant accounts individually. The assess-ment normally encompasses collateral held (including re-confirmation of its enforceability) and the anticipated receipts for that individual account. Collective impairment provisions are provided portfolios of homogenous assets by using the available historical loss experience, experienced judgment and statistical techniques.

3.1.4. Pattern of measuring the general banking riskIn addition to the four categories of the Bank's internal credit ratings indicated in note 3.1.1, management classifies loans and advances based on more detailed subgroups in accordance with the CBE regulations. Assets exposed to credit risk in these categories are classified according to detailed rules and terms depending heavily on information relevant to the customer, his activity, financial position and his repayment track record. The Bank calculates required provisions for impairment of assets exposed to credit risk, including commitments relating to credit on the basis of rates determined by CBE. In case, the provision required for impairment losses as per CBE credit worthiness rules exceeds the required provisions by the application used in balance sheet preparation in accordance with EAS. That excess shall be debited to retained earnings and carried to the general banking risk reserve in the equity section. Such reserve is always adjusted, on a regular basis, by any increase or decrease so, that reserve shall always be equivalent to the amount of increase between the two provisions. Such reserve is not available for distribution.

Below is a statement of institutional worthiness according to internal ratings, compared to CBE ratings and rates of provisions needed for assets impairment related to credit risk:

CBE Rating Categorization Provision% Internal rating Categorization

1 Low risk 0% 1 Performing loans2 Average risk 1% 1 Performing loans3 Satisfactory risk 1% 1 Performing loans4 Reasonable risk 2% 1 Performing loans5 Acceptable risk 2% 1 Performing loans

6 Marginally accept-able 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 debts 100% 4 Non performing loans

3.1.5. Maximum exposure to credit risk before collateral held

EGP Thousands

In balance sheet items exposed to credit risk Dec. 31, 2018 Dec. 31, 2017Treasury bills and other governmental notes 50,013,324 54,653,848 Trading financial assets: - Debt instruments 2,270,080 6,728,843 Gross loans and advances to banks 70,949 1,383 Gross loans and advances to customers Individual: - Overdraft 1,635,910 1,780,416 - Credit cards 3,540,849 2,899,930 - Personal loans 17,180,864 13,910,837 - Mortgages 876,372 416,616 Corporate: - Overdraft 13,992,595 12,450,826 - Direct loans 49,179,820 44,200,770 - Syndicated loans 32,899,950 26,627,825 - Other loans 125,429 112,802 Unamortized bills discount (65,718) (12,476)Unearned interest (16,038) (2,965,997)Derivative financial instruments 52,289 40,001 Financial investments:-Debt instruments 112,213,297 74,767,989 - Other assets (Accrued revenues) 4,509,514 3,870,654 Total 288,479,486 239,484,267 Off balance sheet items exposed to credit riskFinancial guarantees 7,962,043 3,605,001 Customers acceptances 1,050,573 1,017,690 Letters of credit (import and export) 4,178,288 1,700,516 Letter of guarantee 66,166,953 69,514,413 Total 79,357,857 75,837,620

The above table represents the Bank's Maximum exposure to credit risk on December 31, 2018, before taking into account any held collateral.



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,120

,106

Loans and advances restructuredRestructuring activities include rescheduling arrangements, applying obligatory management programs, modifying and deferral of payments. The application of restructuring policies are based on indicators or term loans, specially customer loans. Renegotiated loans totaled at the end of the year:

Dec.31, 2018 Dec.31, 2017Loans and advances to customerCorporate - Direct loans 7,673,956 8,577,197 Total 7,673,956 8,577,197

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 designation at end of financial year, based on Standard & Poor’s ratings or their equivalent:

EGP Thousands

Dec.31, 2018

Treasury bills and other gov.

notes

Trading financial debt

instruments

Non-trading financial debt

instruments TotalAAA - - - - AA- to AA+ - - - - A- to A+ - - - - Lower than A- 41,999,252 2,270,080 112,213,297 156,482,629 Total 41,999,252 2,270,080 112,213,297 156,482,629



3.1.8. Concentration of risks of financial assets with credit risk exposure3.1.8.1. Geographical sectorsFollowing is a breakdown of the Bank’s main credit exposure at their book values categorized by geographical region at the end of the year.

The Bank has allocated exposures to regions based on the country of domicile of its counterparties.

EGP Thousands

Dec.31, 2018 CairoAlex, Delta and

Sinai Upper Egypt TotalTreasury bills and other governmen-tal notes 50,013,324 - - 50,013,324

Trading financial assets: - Debt instruments 2,270,080 - - 2,270,080 Gross loans and advances to banks 70,949 - - 70,949 Less:Impairment provision (3,246) - - (3,246)Gross loans and advances to cus-tomers Individual: - Overdrafts 948,571 558,087 129,252 1,635,910 - Credit cards 2,806,734 632,771 101,344 3,540,849 - Personal loans 10,820,446 5,401,963 958,455 17,180,864 - Mortgages 795,852 72,124 8,396 876,372 Corporate: - Overdrafts 11,941,245 1,415,913 635,437 13,992,595 - Direct loans 32,889,668 12,894,439 3,395,713 49,179,820 - Syndicated loans 30,010,681 2,687,040 202,229 32,899,950 - Other loans 80,000 45,429 - 125,429 Unamortized bills discount (65,718) - - (65,718)Impairment provision (9,707,342) (3,024,196) (309,290) (13,040,828)Unearned interest (16,038) - - (16,038)Derivative financial instruments 52,289 - - 52,289 Financial investments:-Debt instruments 112,213,297 - - 112,213,297 Total 245,120,792 20,683,570 5,121,536 270,925,898

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3.2. market riskMarket risk represnts as fluctuations in fair value, future cash flow, foreign exchange rates and commodity prices, interest rates, credit spreads and equity prices, and it may reduce the Bank’s income or the value of its portfolios. The bank assigns the market risk management department to measure, monitor and control the market risk. In addition, regular reports are submitted to the Asset and Liability Management Committee (ALCO), Board Risk Committee and the heads of each business unit.

Trading portfolios include positions arising from market-making, position taking and others designated as marked-to-mar-ket. Non-trading portfolios include positions that primarily arise from the interest rate management of the group’s retail and commercial banking assets and liabilities, financial investments designated as available for sale and held-to-maturity.

3.2.1. Market risk measurement techniquesAs part of the management of market risk, the Bank undertakes various hedging strategies and enters into interest rate swaps to match the interest rate risk associated with the fixed-rate long-term debt instrument and loans to which the fair value option has been applied .

3.2.1.1. Value at RiskThe Bank applies a "Value at Risk" methodology (VaR) to its trading and non-trading portfolios, to estimate the market risk of positions held and the maximum losses expected under normal market conditions, based upon a number of as-sumptions fo various changes in market conditions.

VaR is a statistically based estimate of the potential loss on the current portfolio from adverse market movements. It expresses the ‘maximum’ amount the Bank might lose , but only to a certain level of confidence (95%). There is therefore a specified statisticalprobability (5%) that actual loss could be greater than the VaR estimate. The VaR model assumes a certain ‘holding period’ until positions can be closed ( 1 Day). The Bank assesses the historical movements in the market prices based on volatilities and correlations data for the past five years. The use of this approach does not prevent losses outside of these limits in the event of more significant market movements.

As VaR constitutes an integral part of the Bank’s market risk control regime, the Market Risk Management set VaR Lim-its, for the trading book, which have been approved by the board, and are monitored and reported on a daily basis to the Senior Management.

In addition, monthly limits compliance is reported to the ALCO.

The Bank has developed the internal model to calculate VaR, however, it is not yet approved by the Central Bank as the regulator is currently applying and requiring banks to calculate the Market Risk Capital Requirements according to Basel II Standardized Approach.

3.2.1.2. Stress testsStress tests provide an indication of the potential size of losses that could arise under extreme market conditions. There-fore, the bankcomputes on a daily basis trading Stressed VaR, combined with the trading VaR, to capture the abnormal movements in financial markets and to give more comprehensive picture of risk. The results of the stress tests are re-viewed by the ALCO on a monthly basis and the board risk committee on a quarterly basis.

3.2.2. Value at risk (VaR) Summary Total VaR by risk type

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Medium High Low Medium High Low

Foreign exchange risk 231 1,482 20 13,647 82,695 275 Interest rate risk 453,569 645,193 238,077 588,938 815,249 363,366 - For non trading purposes 429,195 586,852 232,882 553,426 739,977 351,674 - For trading purposes 24,374 58,341 5,195 35,512 75,272 11,692 Portfolio managed by others risk 7,030 11,507 1,969 7,280 10,454 4,854 Investment fund 119 267 55 370 692 215 Total VaR 455,104 647,983 238,493 591,508 826,941 364,408

Trading portfolio VaR by risk type

Dec.31, 2018 Dec.31, 2017


Foreign exchange risk 231 1,482 20 13,647 82,695 275 Interest rate risk 24,374 58,341 5,195 35,512 75,272 11,692 - For trading purposes 24,374 58,341 5,195 35,512 75,272 11,692 Funds managed by others risk 7,030 11,507 1,969 7,280 10,454 4,854 Investment fund 119 267 55 370 692 215 Total VaR 26,165 60,912 5,611 46,039 113,250 13,804

Non trading portfolio VaR by risk type

Dec.31, 2018 Dec.31, 2017


Interest rate risk

- For non trading purposes 429,195 586,852 232,882 553,426 739,977 351,674

Total VaR 429,195 586,852 232,882 553,426 739,977 351,674

The aggregate of the trading and non-trading VaR results does not constitute the Bank’s VaR due to correlations and con-sequent diversification effects between risk types and portfolio types.



3.2.3. Foreign exchange riskThe Bank's financial position and cash flows are exposed to fluctuations in foreign currency exchange rates. The Board sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are monitored daily. The table below summarizes the Bank’s exposure to foreign exchange rate risk and financial instruments at carrying amounts, categorized by currency.

Equivalent EGP Thousands

Dec.31, 2018 EGP USD EUR GBP Other Total

Financial assetsCash and balances with central bank 15,822,884 2,511,902 657,323 80,582 986,283 20,058,974

Due from banks 15,730,309 23,594,720 6,743,789 366,545 83,529 46,518,892 Treasury bills and other governmental notes 31,491,429 12,272,607 1,333,103 - - 45,097,139

Trading financial assets 1,802,626 935,079 - - - 2,737,705 Gross loans and advances to banks - 70,949 - - - 70,949

Gross loans and advances to customers 63,518,898 52,952,122 2,938,691 22,078 - 119,431,789

Derivative financial instruments 39,355 12,934 - - - 52,289 Financial investments - Available for sale 26,664,326 12,367,155 186,409 - - 39,217,890 - Held to maturity 73,630,764 - - - - 73,630,764 Investments in associates and subsidiaries 54,533 14,100 - - - 68,633

Total financial assets 228,755,124 104,731,568 11,859,315 469,205 1,069,812 346,885,024

Financial liabilitiesDue to banks 5,958,780 1,099,145 92,882 12,773 96,239 7,259,819 Due to customers 183,026,820 89,794,399 11,046,226 1,005,452 467,575 285,340,472 Derivative financial instruments 85,912 46,946 - - - 132,858 Other loans 138,809 3,582,720 - - - 3,721,529 Total financial liabilities 189,210,321 94,523,210 11,139,108 1,018,225 563,814 296,454,678

Net on-balance sheet financial position 39,544,803 10,208,358 720,207 (549,020) 505,998 50,430,346

3.2.4. Interest rate riskThe Bank takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its fair value and cash flow risks. Interest margins may increase as a result of such changes but profit may decrease in the event that unexpected movements arise.The Board sets limits on the gaps of interest rate repricing that may be undertaken, which is monitored by the bank's Risk Management Department.

Dec.31, 2018Up to1 Month 1-3 Months

3-12 Months 1-5 years

Over 5 years

Non- Interest Bearing Total

Financial assetsCash and balances with central bank - - - - - 20,058,974 20,058,974

Due from banks 33,676,642 12,438,963 401,563 - - 1,724 46,518,892 Treasury bills and other governmental notes*

(3,711,230) 5,425,047 43,383,322 - - - 45,097,139

Trading financial assets 38,375 - - 1,643,653 626,428 429,249 2,737,705

Gross loans and advances to banks 3,969 5,483 17,829 42,233 1,435 - 70,949

Gross loans and ad-vances to customers 77,155,228 13,993,151 14,231,235 10,708,275 3,343,900 - 119,431,789

Derivatives financial instruments (includ-ing IRS notional amount)

1,510,540 9,650 399,197 5,899,343 - - 7,818,730

Financial investments - Available for sale 132,500 73,030 457,834 19,793,116 18,158,565 602,845 39,217,890 - Held to maturity 9,361,480 2,055,231 26,632,213 27,257,651 8,324,189 - 73,630,764 Investments in associates and subsidiaries

- - - - - 68,633 68,633

Total financial assets 118,167,504 34,000,555 85,523,193 65,344,271 30,454,517 21,161,425 354,651,465

Financial liabilitiesDue to banks 7,002,464 - - - - 257,355 7,259,819 Due to customers 148,906,076 22,012,700 24,470,575 40,675,873 533,317 48,741,931 285,340,472 Derivatives financial instruments (including IRS notional amount)

2,148,569 5,011,865 33,028 705,837 - - 7,899,299

Other loans 33,380 10,000 87,286 443,188 3,147,675 - 3,721,529 Total financial liabilities 158,090,489 27,034,565 24,590,889 41,824,898 3,680,992 48,999,286 304,221,119

Total interest re-pricing gap (39,922,985) 6,965,990 60,932,304 23,519,373 26,773,525 (27,837,861) 50,430,346

* After adding Reverse repos and deducting Repos.



3.3. liquidity riskLiquidity risk occurs when the Bank does not have sufficient financial resources to meet its obligations arising from its financial liabilities as they fall due or to replace funds when they are withdrawn. Consequently, the bank may fail to meet obligations to repay depositors and fulfill lending commitments.

3.3.1. Liquidity risk management processThe Bank’s liquidity management process, carried by the assets and Liabilities Management Department and monitored independently by the Risk Management Department, and includes

Projecting cash flows by major currency under various stress scenarios and considering the level of liquid assets necessary in relation thereto:

• Maintaining an active presence in global money markets to enable this to happen.• Maintaining a diverse range of funding sources with back-up facilities.• Monitoring balance sheet liquidity and advances to core funding ratios against internal and CBE regulations.• Managing the concentration and profile of debt maturities.• Monitoring and reporting takes the form of cash flow measurement and projections for the next day, week and month

respectively, as these are key periods for liquidity management.

The starting point for those assets projections is an analysis of the contractual maturity of the financial liabilities and the expected collection date of the financial assets.

Bank's Risk Management Department also monitors unmatched medium-term

3.3.2. Funding approachSources of liquidity are regularly reviewed jointly by the Bank's Assets & Liabilities Management Department and Consumer Banking to maintain a wide diversification within currencies, geographical area, depositors, products and tenors.

3.3.3. Non-derivative cash flowsThe table below presents the undiscounted cash flows payable by the Bank under non-derivative financial liabilities, mea-sured by the remaining contractual maturities and the maturities assumption for non contractual products are based on there behavior studies.

EGP Thousands

Dec.31, 2018Up to 1 month

One to three

months

Three months to

one yearOne year to

five yearsOver five

yeas TotalFinancial liabilitiesDue to banks 6,632,843 626,976 - - - 7,259,819 Due to customers 29,932,979 23,750,618 72,467,784 145,207,840 13,981,251 285,340,472 Other loans 33,380 10,000 87,286 443,188 3,147,675 3,721,529 Total liabilities (contractual and non contractual maturity dates) 36,599,202 24,387,594 72,555,070 145,651,028 17,128,926 296,321,820

Total financial assets (contractual and non contractual maturity dates) 41,324,915 40,718,467 74,369,489 141,260,576 49,075,657 346,749,104


One to three

months

Three months to

one yearOne year to

five yearsOver five

years TotalFinancial liabilitiesDue to banks 1,877,918 - - - - 1,877,918 Due to customers 31,348,143 21,728,194 71,335,328 109,570,301 16,785,404 250,767,370 Other loans 36,393 6,743 82,631 3,429 3,545,540 3,674,736 Total liabilities (contractual and non contractual maturity dates) 33,262,454 21,734,937 71,417,959 109,573,730 20,330,944 256,320,024


Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, due from CBE and due from banks, treasury bills, other government notes , loans and advances to banks and customers.

In the normal course of business, a proportion of customer loans contractually repayable within one year will be extend-ed. In addition, debt instrument and treasury bills and other governmental notes have been pledged to secure liabilities. The Bank would also be able to meet unexpected net cash outflows by selling securities and accessing additional funding sources such as asset-backed markets.

3.3.4. Derivative cash flowsThe Bank’s derivatives include:

Foreign exchange derivatives: exchange traded options and over-the-counter (OTC) ,exchange traded forwards currency options that will be settled on a gross basis Interest rate derivatives: interest rate swaps, forward rate agreements, OTC and exchange traded interest rate options, other interest rate contracts and exchange traded futures .

The table below analyses the Bank’s derivative undiscounted financial liabilities into maturity groupings based on the re-maining period of the balance sheet to the contractual maturity date will be settled on a net basis. The amounts disclosed in the table are the contractual undiscounted cash flows:

EGP Thousands

Dec.31, 2018 Up to 1 monthOne to three

monthsThree months

to one yearOne year to

five years TotalLiabilities Derivatives financial instruments - Foreign exchange derivatives

34,388 22,205 29,319 - 85,912

- Interest rate derivatives 197 6 3,709 43,034 46,946

Total 34,585 22,211 33,028 43,034 132,858

Off balance sheet items EGP Thousands

Dec.31, 2018 Up to 1 year 1-5 years Over 5 years TotalLetters of credit, guarantees and other commitments 51,260,372 14,088,753 6,046,689 71,395,814

Total 51,260,372 14,088,753 6,046,689 71,395,814

EGP Thousands

Dec.31, 2018 Up to 1 year 1-5 years Total

Credit facilities commitments 1,399,900 7,773,882 9,173,782 Total 1,399,900 7,773,882 9,173,782



3.4. Fair value of financial assets and liabilities3.4.1. Financial instruments not measured at fair valueThe table below summarizes the book value and fair value of those financial assets and liabilities not presented on the Bank’s balance sheet at their fair value.

Book value Fair value

Dec.31, 2018 Dec.31, 2017 Dec.31, 2018 Dec.31, 2017

Financial assetsDue from banks 46,518,892 45,319,766 46,859,224 44,782,984 Gross loans and advances to banks 70,949 1,383 70,949 1,383 Gross loans and advances to customers 119,431,789 102,400,022 115,452,376 96,397,613 Financial investmentsHeld to Maturity 73,630,764 45,167,722 41,237,872 45,595,034 Total financial assets 239,652,394 192,888,893 203,620,421 186,777,014

Financial liabilitiesDue to banks 7,259,819 1,877,918 7,069,442 1,813,466 Due to customers 285,340,472 250,767,370 280,729,572 245,616,661 Other loans 3,721,529 3,674,736 3,721,529 3,674,736 Total financial liabilities 296,321,820 256,320,024 291,520,543 251,104,863

Due from banksThe fair value of floating rate placements and overnight deposits is their carrying amount. The estimated fair value of floating 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 that do not consider bank placing. The expected fair value of the loans and advances represents the discounted value of future cash flows expected to be collected. Cash flows are dis-counted using the current market rate to determine fair value.

Loans and advances to customersLoans and advances are net of provisions for impairment. The estimated fair value of loans and advances 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 InvestmentsInvestment securities include only interest-bearing assets, held to maturity assets, and available for sale assets that are measured at fair value.

Fair value for held-to-maturity assets is based on market prices or broker/dealer price quotations. Where this information is not available, fair value is estimated using quoted market prices for securities with similar credit, maturity and yield characteristics.

Due to other banks and customersThe estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, 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 maturity date.

3.5 capital managementFor capital management purposes, the Bank’s capital includes total equity as reported in the balance sheet plus some other elements that are managed as capital. The Bank manages its capital to ensure that the following objectives are achieved:

• Complying with the legally imposed capital requirements in Egypt.• Protecting the Bank’s ability to continue as a going concern and enabling the generation of yield for shareholders and other

parties dealing" with the bank. • Maintaining a strong capital base to enhance growth of the Bank’s operations.

Capital adequacy and the use of regulatory capital are monitored on a daily basis by the Bank’s management, employing techniques based on the guidelines developed by the Basel Committee as implemented by the banking supervision unit in the Central Bank of Egypt.

The required data is submitted to the Central Bank of Egypt on a monthly basis.

Central Bank of Egypt requires the following:

• Maintaining EGP 500 million as a minimum requirement for the issued and paid-in capital.• Maintaining a minimum level of capital adequacy ratio of 11.875%, calculated as the ratio between total value of the capital

elements, and the risk-weighted assets and contingent liabilities of the Bank (credit risk, market risk and opertional risk). While taking into consideration the conservation buffer.

Tier one: Tier one comprises of paid-in capital (after deducting the book value of treasury shares), retained earnings and reserves resulting from the distribution of profits except the banking risk reserve, interim profits and deducting previously recog-nized goodwill and any retained losses

Tier two: Tier two represents the gone concern capital which is compposed of general risk provision according to the impairment provision guidelines issued by the Central Bank of Egypt to the maximum of 1.25% risk weighted assets and contingent liabilities ,subordinated loans with more than five years to maturity (amortizing 20% of its carrying amount in each year of the remaining five years to maturity) and 45% of the increase in fair value than book value for available for sale , held to maturity , subsidiaries and associates investments.

When calculating the numerator of capital adequacy ratio, the rules set limits of total tier 2 to no more than tier 1 capital and also limits the subordinated to no more than 50% of tier1.

Assets risk weight scale ranging from zero to 400% is based on the counterparty risk to reflect the related credit risk scheme, taking into considration the cash collatrals. Similar criteria are used for off balance sheet items after adjustments to reflect the nature of contingency and the potential loss of those amounts. The Bank has complied with all local capital adequacy requirements for the current year.



The tables below summarize the compositions of teir 1, teir 2 , the capital adequacy ratio and leverage ratio .

1- The capital adequacy ratio

EGP Thousands

Dec.31, 2018 Dec.31, 2017Restated**

Tier 1 capitalShare capital (net of the treasury shares) 11,668,326 11,618,011 Reserves 14,829,948 10,543,783 IFRS 9 Reserve 1,411,549 1,411,549 Retained Earnings (Losses) 55,089 89,873 Total deductions from tier 1 capital common equity (4,754,596) (2,450,399)Net profit for the year 6,881,450 3,960,829 Total qualifying tier 1 capital 30,091,766 25,173,646

Tier 2 capital45% of special reserve 49 49 Subordinated Loans 3,582,720 3,545,540 Impairment provision for loans and regular contingent liabilities 1,879,734 1,679,656 Total qualifying tier 2 capital 5,462,503 5,225,245

Total capital 1+2 35,554,269 30,398,891

Risk weighted assets and contingent liabilitiesTotal credit risk 156,952,618 141,154,879 Total market risk 5,959,133 9,239,998 Total operational risk 23,292,505 18,222,831 Total 186,204,256 168,617,708

*Capital adequacy ratio (%) 19.09% 18.03%

* Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 24 December 2012.** After 2017 profit distribution.

2- Leverage ratio

EGP Thousands


Total qualifying tier 1 capital 30,091,766 25,173,646

On-balance sheet items & derivatives 346,163,131 300,593,997 Off-balance sheet items 45,407,765 44,965,272 Total exposures 391,570,896 345,559,269

*Percentage 7.68% 7.28%

* Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 14 July 2015.** After 2017 profit distribution.

For December 2018 NSFR ratio record 209.70% (LCY 243.36% and FCY 165.61%), and LCR ratio record 601.53% (LCY 667.84% and FCY 338.82%).


4. Critical accounting estimates and judgmentsThe Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year.

Estimates and judgments are continually evaluated and based on historical experience and other factors, including ex-pectations of future events that are believed to be reasonable under the circumstances and available information.

4.1. impairment losses on loans and advancesThe Bank reviews its loan portfolios to assess impairment on quarterly basis. In determining whether an impairment loss should be recorded in the income statement, the Bank makes judgments as to whether there is any observable data indicating the availability of a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may indicate that there has been an adverse change in the payment status of borrowers in the Bank, or national or local economic conditions that correlate with defaults on assets in the Bank. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. To the extent that the net present value of estimated cash flows differs by +/-5%

4.2. impairment of available for-sale equity investmentsThe Bank determines that available-for-sale equity investments are impaired when there has been a significant or pro-longed decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making this judgment, the Bank evaluates among other factors, the normal volatility in share price. In addition, impair-ment may be appropriate when there is evidence of a deterioration in the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows.

4.3. Fair value of derivativesThe fair value of financial instruments that are not quoted in active markets are determined by using valuation tech-niques. these valuation techniques (as models) are validated and periodically reviewed by qualified personnel indepen-dent of the area that created them.

All models are certified before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices.

For practicality purposes, models use only observable data; however, areas such as credit risk (both own and counter-party), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect reported fair value of financial instruments.

4.4 Held-to-maturity investmentsThe non-derivative financial assets with fixed or determinable payments and fixed maturity are being classified as held to maturity. This requires significant judgment, in which the bank evaluates its intention and ability to hold such invest-ments to maturity. If the bank fails to keep these investments to maturity other than for the specific circumstances – for example, selling an insignificant amount close to maturity it will be required to reclassify the entire category as available for sale. The investments would therefore be measured at fair value not amortized cost.



5. Segment analysisThe Bank is divided into four main business segments on a worldwide basis:

• Corporate banking – incorporating direct debit facilities, current accounts, deposits, overdrafts, loan and other credit facilities, foreign currency and derivative products

• Investment banking – incorporating financial instruments Trading, structured financing, Corporate leasing,and merger and acquisitions advice.

• Retail banking – incorporating private banking services, private customer current accounts, savings, deposits, investment savings products, custody, credit and debit cards, consumer loans and mortgages;

• Others –Including other banking business, such as Assets Management.

Transactions between the business segments are on normal commercial terms and conditions.

EGP Thousands

Dec.31, 2018Corporate

banking SME'sInvestment

bankingRetail

banking

Asset Liability

Mangement TotalRevenue according to business segment 8,999,279 2,452,934 3,870,401 6,163,506 639,484 22,125,604

Expenses according to business segment (5,516,282) (739,340) (427,332) (2,373,798) (16,258) (9,073,010)

Profit before tax 3,482,997 1,713,594 3,443,069 3,789,708 623,226 13,052,594

Tax (933,068) (459,085) (922,426) (1,015,293) (166,967) (3,496,839)Profit for the year 2,549,929 1,254,509 2,520,643 2,774,415 456,259 9,555,755

Total assets 102,743,816 2,159,095 165,584,686 22,693,303 49,242,585 342,423,485



bankingRetail

banking

Asset Liability




Tax (576,762) (442,854) (767,053) (823,795) (170,187) (2,780,651)Profit for the year 1,564,497 1,202,808 2,083,344 2,237,457 462,233 7,550,339

Total assets 82,138,508 2,352,091 137,645,556 18,444,909 54,190,257 294,771,321

5.2. By geographical segment

EGP Thousands

Dec.31, 2018 CairoAlex, Delta &

Sinai Upper Egypt TotalRevenue according to geographical segment 17,766,245 3,424,556 934,803 22,125,604

Expenses according to geographical segment (7,545,066) (1,304,228) (223,716) (9,073,010)

Profit before tax 10,221,179 2,120,328 711,087 13,052,594

Tax (2,738,280) (568,053) (190,506) (3,496,839)Profit for the year 7,482,899 1,552,275 520,581 9,555,755

Total assets 316,635,596 19,340,837 6,447,052 342,423,485



Expenses according to geographical segment (5,306,193) (670,176) (163,708) (6,140,077)



Total assets 265,654,804 22,598,945 6,517,572 294,771,321

6. Net interest income

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Interest and similar income - Banks 3,338,266 3,532,274 - Clients 15,274,649 10,921,054 Total 18,612,915 14,453,328

Treasury bills and bonds 18,582,089 14,039,447 Reverse repos 2,519 - Financial investments in held to maturity and available for sale debt instruments 206,186 178,391 Total 37,403,709 28,671,166

Interest and similar expense - Banks (840,233) (463,409) - Clients (18,001,197) (15,686,959)Total (18,841,430) (16,150,368)

Financial instruments purchased with a commitment to re-sale (Repos) (112,366) (2,037)Other loans (306,394) (14,750)Total (19,260,190) (16,167,155)

Net interest income 18,143,519 12,504,011



7. Net fee and commission income

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Fee and commission incomeFee and commissions related to credit 1,456,930 1,362,660 Custody fee 140,247 117,268 Other fee 1,805,439 1,314,283 Total 3,402,616 2,794,211

Fee and commission expenseOther fee paid (991,957) (796,107)Total (991,957) (796,107)

Net income from fee and commission 2,410,659 1,998,104

8. Dividend income

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Trading securities 9,951 11,474 Available for sale securities 16,007 23,039 Total 25,958 34,513

9. Net trading income

EGP Thousands

Dec.31, 2018 Dec.31, 2017Profit (Loss) from foreign exchange 668,071 764,732 Profit (Loss) from forward foreign exchange deals revaluation (38,904) (17,118)Profit (Loss) from interest rate swaps revaluation (20,865) (23,732)Profit (Loss) from currency swap deals revaluation 8,179 (21,230)Trading debt instruments 472,595 589,563 Total 1,089,076 1,292,215

10. Administrative expenses

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Staff costs Wages and salaries (2,237,595) (1,620,326) Social insurance (78,841) (65,033) Other benefits (61,976) (51,682)Other administrative expenses * (1,844,367) (1,381,798)Total (4,222,779) (3,118,839)

* The expenses related to the activity for which the bank obtains a commodity or service and all taxes and charges incurred by the bank - except for income tax - donations, depreciation and impairment of non financial assets other than subsidiaries and associates

11. Other operating (expenses) income

EGP Thousands

Dec.31, 2018 Dec.31, 2017Profits (losses) from non-trading assets and liabilities revaluation 59,863 (61,065)Profits from selling property, plant and equipment 1,045 607 Release (charges) of other provisions (400,596) (114,725)Other income/expenses (1,249,987) (827,387)Total (1,589,675) (1,002,570)

12. Impairment charge for credit losses

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Loans and advances to customers and banks (3,076,023) (1,742,281)Total (3,076,023) (1,742,281)

13. Adjustments to calculate the effective tax rate

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Profit before tax 13,052,594 10,330,990 Tax rate 22.50% 22.50%Income tax based on accounting profit 2,936,834 2,324,473

Add / (Deduct)Non-deductible expenses 872,324 626,536 Tax exemptions (314,360) (173,358)10% Withholding tax 2,041 3,000 Income tax / Deferred tax 3,496,839 2,780,651

Effective tax rate 26.79% 26.92%

14. Earning per share

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Net profit for the year, available for distribution 9,553,868 7,549,043 Board member's bonus (143,308) (113,236)Staff profit sharing (955,387) (754,904)Profits shareholders' Stake 8,455,173 6,680,903

Weighted Average number of shares 1,163,898 1,159,156 Basic earning per share 7.26 5.76

By issuance of ESOP earning per share will be:Average number of shares including ESOP shares 1,171,642 1,177,722 Diluted earning per share 7.22 5.67



15. Cash and balances with central bank

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Cash 6,532,211 5,784,303 Obligatory reserve balance with CBE - Current accounts 13,526,763 8,878,986 Total 20,058,974 14,663,289

Non-interest bearing balances 20,058,974 14,663,289

16. Due from banks

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Current accounts 4,168,973 2,679,189 Deposits 42,349,919 42,640,577 Total 46,518,892 45,319,766

Central banks 25,397,558 15,863,399 Local banks 4,109,576 3,894,775 Foreign banks 17,011,758 25,561,592 Total 46,518,892 45,319,766

Non-interest bearing balances 1,724 - Floating interest bearing balances 10,203,376 9,940,362 Fixed interest bearing balances 36,313,792 35,379,404 Total 46,518,892 45,319,766

Current balances 46,518,892 45,319,766

17. Treasury bills and other governmental notes

EGP Thousands

Dec.31, 2018 Dec.31, 2017

91 Days maturity - - 182 Days maturity 3,669,700 1,289,425 364 Days maturity 49,441,511 57,602,997 Unearned interest (3,097,887) (4,238,574)Total 1 50,013,324 54,653,848

Repos - treasury bills (8,014,072) (175,646)Total 2 (8,014,072) (175,646)

Net 41,999,252 54,478,202

18. Trading financial assets

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Debt instruments - Governmental bonds 2,270,080 6,728,843 Total 2,270,080 6,728,843

Equity instruments - Mutual funds 38,376 99,587 Total 38,376 99,587

- Portfolio managed by others 429,249 466,767 Total 2,737,705 7,295,197

19. Loans and advances to banks, net

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Time and term loans 70,949 1,383

Impairment provision (3,246) (70)Total 67,703 1,313

Current balances 67,703 1,313 Total 67,703 1,313

Analysis for impairment provision of loans and advances to banks

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance (70) (1,800)Release during the year (3,140) 1,697 Exchange revaluation difference (36) 33 Ending balance (3,246) (70)



20. Loans and advances to customers, net

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Individual - Overdraft 1,635,910 1,780,416 - Credit cards 3,540,849 2,899,930 - Personal loans 17,180,864 13,910,837 - Real estate loans 876,372 416,616 Total 1 23,233,995 19,007,799

Corporate - Overdraft 13,992,595 12,450,826 - Direct loans 49,179,820 44,200,770 - Syndicated loans 32,899,950 26,627,825 - Other loans 125,429 112,802 Total 2 96,197,794 83,392,223

Total Loans and advances to customers (1+2) 119,431,789 102,400,022

Less:Unamortized bills discount (65,718) (12,476)Impairment provision* (13,040,828) (10,994,446)Unearned interest (16,038) (2,965,997)Net loans and advances to customers 106,309,205 88,427,103

Distributed toCurrent balances 44,549,290 38,960,491 Non-current balances 61,759,915 49,466,612 Total 106,309,205 88,427,103

* An amount of EGP 1,818mn has been charged to impairment provision against unearned interest recognized in income. Of this amount, EGP 1,057mn has been charged in Q3 2018, which is the second and final re-engineering for such accounts.

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21. Derivative financial instruments21.1. DerivativesThe Bank uses the following financial derivatives for non hedging purposes.

Forward contracts represent commitments to buy foreign and local currencies including unexecuted spot transactions. Future contracts for foreign currencies and/or interest rates represent contractual commitments to receive or pay net on the basis of changes in foreign exchange rates or interest rates, and/or to buy/sell foreign currencies or financial instru-ments in a future date with a fixed contractual price under active financial market.

Credit risk is considered low, and future interest rate contract represents future exchange rate contracts negotiated for case by case, These contracts require financial settlements of any differences in contractual interest rates and prevailing market interest rates on future interest rates on future dates based on contractual amount (nominal value) pre agreed upon.

Foreign exchange and/or interest rate swap represents commitments to exchange cash flows, resulting from these con-tracts are exchange of currencies or interest (fixed rate versus variable rate for example) or both (meaning foreign ex-change and interest rate contracts).

Contractual amounts are not exchanged except for some foreign exchange contracts.

Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to fulfill their liabilities. This risk is monitored continuously through comparisons of fair value and contractual amount, and in order to control the outstanding credit risk, the Bank evaluates other parties using the same methods as in borrowing activities.

Options contracts in foreign currencies and/or interest rates represent contractual agreements for the buyer (issuer) to the seller (holders) as a right not an obligation whether to buy (buy option) or sell (sell option) at a certain day or within certain year for a predetermined amount in foreign currency or interest rate. Options contracts are either traded in the market or negotiated between The Bank and one of its clients (Off balance sheet). The Bank is exposed to credit risk for purchased options contracts only and in the line of its book cost which represent its fair value.

The contractual value for some derivatives options is considered a base to analyze the realized financial instruments on the balance sheet, but it doesn’t provide an indicator for the projected cash flows of the fair value for current instruments, and those amounts don’t reflects credit risk or interest rate risk.

Derivatives in the Bank's benefit that are classified as (assets) are conversely considered (liabilities) as a result of the changes in foreign exchange prices or interest rates related to these derivatives. Contractual / expected total amounts of financial derivatives can fluctuate from time to time as well as the range through which the financial derivatives can be in benefit for the Bank or conversely against its benefit and the total fair value of the financial derivatives in assets and liabilities. Hereunder are the fair values of the booked financial derivatives:

21.1.1. For trading derivatives

EGP Thousands

Dec.31, 2018 Dec.31, 2017Notional amount Assets Liabilities

Notional amount Assets Liabilities

Foreign currencies derivatives - Forward foreign exchange contracts 5,360,272 21,112 73,105 6,820,350 36,597 49,687 - Currency swap 3,628,415 18,243 12,807 1,640,985 3,117 5,860 Total (1) 39,355 85,912 39,714 55,547

21.1.2. Fair value hedge

EGP Thousands



Interest rate derivatives - Governmental debt instruments hedging 662,803 - 9,164 655,925 - 25,996 - Customers deposits hedging 7,103,638 12,934 37,782 11,506,784 287 115,441 Total (2) 12,934 46,946 287 141,437

Total financial derivatives (1+2) 52,289 132,858 40,001 196,984

21.2. Hedging derivatives21.2.1. Fair value hedgeThe Bank uses interest rate swap contracts to cover part of the risk of potential decrease in fair value of its fixed rate gov-ernmental debt instruments in foreign currencies. Net derivative value resulting from the related hedging instruments is EGP 9,164 thousand at December 31, 2018 against EGP 25,996 thousand at the December 31, 2017, Resulting in gains form hedging instruments at December 31, 2018 EGP 16,832 thousand against EGP 19,633 thousand at the December 31, 2017. Losses arose from the hedged items at December 31, 2018 reached EGP 34,193 thousand against losses of EGP 44,924 thousand at December 31, 2017.

The Bank uses interest rate swap contracts to cover part of the risk of potential increase in fair value of its fixed rate cus-tomer deposits in foreign currencies. Net derivative value resulting from the related hedging instruments is EGP 24,848 thousand at the end of December 31, 2018 against EGP 115,154 thousand at December 31, 2017, resulting in gains from hedging instruments at December 31, 2018 of EGP 90,306 thousand against losses of EGP 76,302 thousand at December 31, 2017. Losses arose from the hedged items at December 31, 2018 reached EGP 94,856 thousand against gains EGP 81,488 thousand at December 31 , 2017.



22. Financial investments

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Available for sale - Listed debt instruments with fair value 38,615,045 29,632,780 - Listed equity instruments with fair value 458,094 83,346 - Unlisted equity instruments by amortized cost 144,751 758,655 Total 39,217,890 30,474,781

Held to maturity - Listed debt instruments 73,598,251 45,135,209 - Unlisted instruments 32,513 32,513 Total 73,630,764 45,167,722

Total financial investment 112,848,654 75,642,503

- Actively traded instruments 108,496,980 73,721,199 - Not actively traded instruments 4,351,674 1,921,304 Total 112,848,654 75,642,503

Fixed interest debt instruments 110,985,264 72,612,620 Floating interest debt instruments 1,228,033 2,155,369 Total 112,213,297 74,767,989

EGP Thousands

Available for sale financial investments

Held to maturity financial

investments Total

Beginning balance 5,447,291 53,924,936 59,372,227 Addition 25,868,230 4,597,254 30,465,484 Deduction (1,361,027) (13,354,468) (14,715,495)Exchange revaluation differences for foreign financial as-sets (100,078) - (100,078)

Profit (losses) from fair value difference 512,016 - 512,016 Available for sale impairment charges 108,349 - 108,349 Ending Balance as of Dec.31, 2017 30,474,781 45,167,722 75,642,503

Beginning balance 30,474,781 45,167,722 75,642,503

Addition 12,670,761 33,995,313 46,666,074

Deduction (1,872,988) (5,532,271) (7,405,259)Exchange revaluation differences for foreign financial assets 102,991 - 102,991

Profit (losses) from fair value difference (2,118,094) - (2,118,094)

Released (Impairment) charges of available for sale (39,561) - (39,561)

Ending Balance as of Dec.31, 2018 39,217,890 73,630,764 112,848,654

22.1. profits (losses) on financial investments

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Profit (Loss) from selling available for sale financial instruments 441,628 (99,047)Released (Impairment) charges of available for sale equity instruments (39,561) 254,588 Released (Impairment) charges of non current assets held for sale - 340,504 Total 402,067 496,045

23. Investments in associates and subsidiaries

EGP Thousands

Dec.31, 2018Company's

countryCompany's

assets

Company's liabilities (without

equity)Company's

revenuesCompany's

net profitInvestment book value Stake %

Subsidiaries- CVenture Capital Egypt - - - - 44,783 99.99Associates- Fawry plus Egypt - - - - 14,100 23.50 - International Co. for Security and Services (Falcon)

Egypt 860,057 640,554 926,624 72,954 9,750 32.5

Total 860,057 640,554 926,624 72,954 68,633

EGP Thousands


countryCompany's

assets


equity)Company's

revenuesCompany's


Subsidiaries- CVenture Capital Egypt - - - - 44,318 99.99Associates - International Co. for Security and Services (Falcon)

Egypt 512,388 367,470 505,461 52,695 9,750 32.5

Total 512,388 367,470 505,461 52,695 54,068



24. Other assets

EGP Thousands

Dec.31, 2018 Dec.31, 2017Accrued revenues 4,509,514 3,870,654 Prepaid expenses 186,797 230,296 Advances to purchase of fixed assets 768,733 522,211 Accounts receivable and other assets (after deducting the provision)* 3,790,709 2,193,590 Assets acquired as settlement of debts 276,520 45,083 Insurance 30,945 24,973 Total 9,563,218 6,886,807

* A provision with amount EGP 317 million has been created against pending installments.

This item includes other assets that are not classified under specific items of balance sheet assets, such as: accrued income and prepaid expenses, amounts paid in advance relating to taxes on bills and bonds, custodies, debit accounts under settlement and any balance that has no place in another asset category.

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4,1

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83

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ition

s du

ring

the

year

- 6

1,60

6 3

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76

5,6

01

72,

276

133

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28,1

86

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ls d

urin

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ar*

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gro

ss a

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s (2

) 6

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449

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ccum

ulat

ed d

epre

ciat

ion

at b

egin

ning

of t

he y

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3) -

359

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3,08

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420

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rent

yea

r dep

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atio

n -

50,

099

189

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Dis

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urin

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ciat

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at e

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ets

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) 6

4,70

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598

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9,93

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440

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reci

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on re

gist

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ets

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le th

eir r

egis

trat

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pro

cedu

res

are

in p

roce

ss.

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e w

as n

o im

pair

men

t pro

visi

on c

harg

ed fo

r fixe

d as

sets

.* F

ixed

ass

ets a

re fu

lly d

epre

ciat

ed w

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rete

ntio

n va

lue

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ne p

ound

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sset

s sti

ll in

ope

rati

on.

EG

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hous

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s

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1,

2017

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201

8La

ndP

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ises

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g -

out

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hine

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pm

ent

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and

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rnis

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(1)

64,

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ition

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the

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50,

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s (2

) 6

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89,

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151

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egin

ning

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he y

ear (

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315

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4

7,90

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372

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rent

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507

176

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5

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0,31

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621

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66,3

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139

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8

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ate

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on re

gist

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ass

ets

whi

le th

eir r

egis

trat

ions

pro

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res

are

in p

roce

ss.



26. Due to banks

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Current accounts 503,539 1,067,374 Deposits 6,756,280 810,544 Total 7,259,819 1,877,918

Central banks 190,801 128,527 Local banks 6,009,778 714,294 Foreign banks 1,059,240 1,035,097 Total 7,259,819 1,877,918

Non-interest bearing balances 257,355 740,158 Floating bearing interest balances 89,568 23,169 Fixed interest bearing balances 6,912,896 1,114,591 Total 7,259,819 1,877,918


27. Due to customers

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Demand deposits 92,465,717 72,487,190 Time deposits 43,561,846 49,952,470 Certificates of deposit 81,059,934 70,486,930 Saving deposits 62,812,279 53,075,098 Other deposits 5,440,696 4,765,682 Total 285,340,472 250,767,370

Corporate deposits 116,885,763 107,798,000 Individual deposits 168,454,709 142,969,370 Total 285,340,472 250,767,370

Non-interest bearing balances 48,741,931 43,317,721 Floating interest bearing balances 23,738,113 21,022,474 Fixed interest bearing balances 212,860,428 186,427,175 Total 285,340,472 250,767,370

Current balances 202,169,757 178,830,593 Non-current balances 83,170,715 71,936,777 Total 285,340,472 250,767,370

28. Other loans

EGP Thousands

Interest rate % Maturity date

Maturing through next

year Balance on Balance on

Dec.31, 2018 Dec.31, 2017

Agricultural Research and Develop-ment Fund (ARDF)

3.5 - 5.5 depends on

maturity date3-5 years* 117,286 125,429 87,314

Social Fund for Development (SFD)3 months T/D or 9% which is

more04/01/2020* 13,380 13,380 41,882

European Bank for Reconstruction and Development (EBRD) subordi-nated Loan

3 months libor + 6.2% 10 years - 1,791,360 1,772,770

International Finance Corporation (IFC) subordinated Loan


Balance 130,666 3,721,529 3,674,736

Interest rates on variable-interest subordinated loans are determined in advance every 3 months/every quarter. Subordi-nated loans are not repaid before their repayment dates.

* Represents the date of loan repayment to the lending agent.

29. Other liabilities

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Accrued interest payable 1,347,397 1,516,471 Accrued expenses 733,218 507,543 Accounts payable 4,101,884 3,277,350 Other credit balances 319,054 175,167 Total 6,501,553 5,476,531



30.

Pro

visi

on

s

EG

P T

hous

and

s

Dec

.31,

201

8B

egin

ning

bal

ance

Cha

rged

am

oun

ts

Exc

hang

e re

valu

atio

n d

iffer

ence

Util

ized

am

oun

tsR

ever

sed

am

oun

tsE

ndin

g b

alan

ce

Prov

isio

n fo

r inc

ome

tax

clai

ms

6,9

10

- -

- -

6,9

10

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isio

n fo

r leg

al c

laim

s 4

5,77

3 1

2,82

0 7

(9

23)

- 5

7,67

7 Pr

ovis

ion

for c

ontin

gent

1,4

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02

- (2

,942

) -

(17,

670)

1,4

49,6

90

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isio

n fo

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er c

laim

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(1

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180

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tal

1,6

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101

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(2

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) (2

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7,67

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ance

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rged

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ts

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5 5

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(57)

(725

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(95,

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face

the

pote

ntia

l ris

k of

ban

king

ope

rati

ons.

31.

Eq

uity

31.1

. c

apit

alTh

e au

thor

ized

cap

ital

reac

hed

EGP

20 b

illio

n ac

cord

ing

to th

e ex

trao

rdin

ary

gene

ral a

ssem

bly

deci

sion

on

Mar

ch 1

7, 2

010.

"Iss

ued

and

Paid

in C

apit

al r

each

ed E

GP

11,6

68,3

26 th

ousa

nd a

t bal

ance

she

et d

ate

to b

e di

vide

d on

1,1

66,8

33 th

ousa

nd s

hare

s w

ith

EGP

10 p

ar v

alue

for

each

sha

re

and

regi

ster

ed in

the

com

mer

cial

regi

ster

dat

ed 2

6th

Aug

ust 2

018.

•In

crea

se is

sued

and

Pai

d in

Cap

ital

by a

mou

nt E

GP

50,3

15 th

ousa

nd o

n A

ugus

t 02,

2018

to re

ach

EGP

11,6

68,3

26 th

ousa

nd (a

gain

st E

GP

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18,0

11 th

ousa

nd in

201

7) a

c-co

rdin

g to

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rd o

f Dir

ecto

rs d

ecis

ion

on Ja

nuar

y 31

, 201

8 by

issu

ance

of n

inth

tran

che

for E

.S.O

.P p

rogr

am.

•In

crea

se is

sued

and

Pai

d in

Cap

ital

by a

mou

nt E

GP

79,3

51 th

ousa

nd o

n M

ay 2

4,20

17 to

reac

h EG

P 11

,618

,011

thou

sand

acc

ordi

ng to

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rd o

f Dir

ecto

rs d

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ion

on N

o-ve

mbe

r 9, 2

016

by is

suan

ce o

f eig

hth

tran

che

for E

.S.O

.P p

rogr

am.

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crea

se is

sued

and

Pai

d in

Cap

ital

by a

mou

nt E

GP

68,0

57 th

ousa

nd o

n A

pril

19,2

016

to r

each

EG

P 11

,538

,660

thou

sand

acc

ordi

ng to

Boa

rd o

f Dir

ecto

rs d

ecis

ion

on

Nov

embe

r 10,

201

5 by

issu

ance

of s

even

th tr

anch

e fo

r E.S

.O.P

pro

gram

.•

Incr

ease

issu

ed a

nd P

aid

in C

apita

l by a

mou

nt E

GP

2,29

4,12

1 th

ousa

nd o

n D

ecem

ber 1

0, 2

015

to re

ach

11,4

70,6

03 a

ccor

ding

to O

rdin

ary G

ener

al A

ssem

bly M

eeti

ng d

eci-

sion

on

Mar

ch 1

2 ,2

015

by

dis

trib

utio

n of

a o

ne sh

are

for e

very

four

out

stan

ding

shar

es b

y ca

pita

lizin

g on

the

Gen

eral

Res

erve

.•

Incr

ease

issu

ed a

nd P

aid

in C

apita

l by a

mou

nt E

GP

94,74

8 th

ousa

nd o

n A

pril

5,20

15 to

reac

h EG

P 9,

176,

482

thou

sand

acc

ordi

ng to

Boa

rd o

f Dir

ecto

rs d

ecis

ion

on N

ovem

-

ber 11, 2014 by issuance of sixth tranche for E.S.O.P program.• Increase issued and Paid in Capital by amount EGP 79,299 thousand on March 23,2014 to reach EGP 9,081,734 thousand

according to Board of Directors decision on December 10, 2013 by issuance of fifth tranche for E.S.O.P program.• Increase issued and Paid in Capital by amount EGP 3,000,812 thousand on December 5, 2013 according to Extraordinary

General Assembly Meeting decision on July 15 ,2013 by distribution of a one share for every two outstanding shares by capitalizing on the General Reserve.

• Increase issued and Paid in Capital by amount EGP 29,348 thousand on April 7,2013 to reach EGP 6,001,624 thousand ac-cording to Board of Directors decision on october 24,2012 by issuance of fourth tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 37,712 thousand on April 9, 2012 in according to Board of Directors decision on December 22,2011 by issuance of third tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 33,119 thousand on July 31, 2011 in according to Board of Directors decision on November 10,2010 by issuance of second tranche for E.S.O.P program.

• The Extraordinary General Assembly approved in the meeting of June 26, 2006 to activate a motivating and rewarding program for the Bank's employees and managers through Employee Share Ownership Plans (ESOP) by issuing a maximum of 5% of issued and paid-in capital at par value ,through 5 years starting year 2006 and delegated the Board of Directors to establish the rewarding terms and conditions and increase the paid in capital according to the program.

• The Extraordinary General Assembly approved in the meeting of April 13,2011 continue to activate a motivating and re-warding program for The Bank's employees and managers through Employee Share Ownership Plans (ESOP) by issuing a maximum of 5% of issued and paid- in capital at par value ,through 5 years starting year 2011 and delegated the Board of Directors to establish the rewarding terms and conditions and increase the paid in capital according to the program.

• The Extraordinary General Assembly approved in the meeting of March 21,2016 continue to activate a motivating and rewarding program for The Bank's employees and managers through Employee Share Ownership Plans (ESOP) by issuing a maximum of 10% of issued and paid- in capital at par value ,through 10 years starting year 2016 and delegated the Board of Directors to establish the rewarding terms and conditions and increase the paid in capital according to the program.

• Dividend deducted from shareholders' equity in the Year that the General Assembly approves the dispersment of this divi-dend, which includes staff profit share and remuneration of the Board of Directors stated in the law.

31.2. reservesAccording to The Bank status 5% of net profit is used to increase the legal reseve to reaches 50% of The Bank's issued and paid in capital.

Central Bank of Egypt concurrence for usage of special reserve is required.



32. Deferred tax assets (Liabilities) Deferred tax assets and liabilities are attributable to the following:

EGP Thousands

Assets (Liabilities)


Dec.31, 2018 Dec.31, 2017

Fixed assets (depreciation) (49,750) (31,409)Other provisions (excluded loan loss, contingent liabilities and income tax provi-sions) 53,552 31,038

Intangible Assets 53,657 36,712 Other investments impairment 65,788 56,698 Reserve for employee stock ownership plan (ESOP) 166,122 110,100 Interest rate swaps revaluation 4,695 5,340 Trading investment revaluation 7,394 (37,478)Forward foreign exchange deals revaluation 6,912 8,629 Balance 308,370 179,630

EGP Thousands



Dec.31, 2018 Dec.31, 2017

Movement of Deferred Tax Assets and Liabilities:Beginning Balance 179,630 181,308 Additions / disposals 128,740 (1,678)Ending Balance 308,370 179,630

33. Share-based paymentsAccording to the extraordinary general assembly meeting on June 26, 2006, the Bank launched new Employees Share Ownership Plan (ESOP) scheme and issued equity-settled share-based payments. Eligible employees should complete a term of 3 years of service in The Bank to have the right in ordinary shares at face value (right to share) that will be issued on the vesting date, otherwise such grants will be forfeited. Equity-settled share-based payments are measured at fair value at the grant date, and expensed on a straight-line basis over the vesting period (3 years) with corresponding increase in equity based on estimated number of shares that will eventually vest(True up model). The fair value for such equity instruments is measured using the Black-Scholes pricing model.

Details of the rights to share outstanding during the year are as follows:

Dec.31, 2018 Dec.31, 2017No. of shares in

thousandNo. of shares in

thousand

Outstanding at the beginning of the year 21,280 22,351 Granted during the year 8,338 7,601 Forfeited during the year (828) (737)Exercised during the year (5,032) (7,935)Outstanding at the end of the year 23,758 21,280

Details of the outstanding tranches are as follows:

EGP EGP

Maturity date Exercise price Fair value No. of shares in

thousand

2019 10.00 28.43 8,433 2020 10.00 65.55 7,175 2021 10.00 68.13 8,150 Total 23,758

The fair value of granted shares is calculated using Black-Scholes pricing model with the following:

12th tranche 11th tranche

Exercise price 10 10Current share price 77.35 73.08Expected life (years) 3 3Risk free rate % 15.54% 16.77%Dividend yield% 1.29% 0.68%Volatility% 26% 30%

Volatility is calculated based on the daily standard deviation of returns for the last five years.

34. Reserves and retained earnings

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Legal reserve 1,710,293 1,332,807 General reserve 12,776,215 9,000,023 Capital reserve 12,421 11,815 Retained earnings 9,555,755 6,138,790 Special reserve 20,645 20,645 Reserve for A.F.S investments revaluation difference (3,750,779) (1,642,958)Banking risks reserve 4,323 3,634 IFRS 9 risk reserve 1,411,549 1,411,549 Ending balance 21,740,422 16,276,305

On 28 January 2018, Central Bank of Egypt issued instructions indicating the following:

Creating IFRS 9 risk reserve (1% of the total weighted credit risk) deducted from 2017 net profit after tax, to be used after obtaining CBE's approval, taken into consideration that IFRS 9 will be effective as of January 1, 2019.

34.1. Banking risks reserve

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance 3,634 3,019 Transferred to bank risk reserve 689 615 Ending balance 4,323 3,634



34.2. legal reserve

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance 1,332,807 1,035,363 Transferred from previous year profits 377,486 297,444 Ending balance 1,710,293 1,332,807

34.3 reserve for a.F.S investments revaluation difference

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance (1,642,958) (2,180,244)Unrealized gain (loss) from A.F.S investment revaluation (2,107,821) 537,286 Ending balance (3,750,779) (1,642,958)

34.4. retained earnings

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance 6,138,790 5,950,555 Transferred to reserves (3,994,924) (4,599,736)Dividend paid (2,143,177) (1,350,204)Net profit for the year 9,555,755 7,550,339 Transferred ( from) to bank risk reserve (689) (615)IFRS 9 risk reserve - (1,411,549)Ending balance 9,555,755 6,138,790

34.5 reserve for employee stock ownership plan

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance 489,334 343,460 Transferred to reserves (159,360) (145,010)Cost of employees stock ownership plan (ESOP) 408,346 290,884 Ending balance 738,320 489,334

35. Cash and cash equivalent

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Cash and balances with central bank 20,058,974 14,663,289 Due from banks 46,518,892 45,319,766 Treasury bills and other governmental notes 41,999,252 54,478,202 Obligatory reserve balance with CBE (13,526,763) (8,878,986)Due from banks with maturities more than three months (10,733,386) (1,719,586)Treasury bills with maturities more than three months (50,013,324) (54,653,848)Total 34,303,645 49,208,837

36. Contingent liabilities and commitments 36.1. legal claims

• There is a number of existing cases filed against the bank on December 31,2018 without provision as the bank doesn't ex-pect to incur losses from it.

• A provision for legal cases that are expected to generate losses has been created. (Disclosure No. 30)

26.2 capital commitments26.2.1. Financial investmentsThe capital commitments for the financial investments reached on the date of financial position EGP 165,676 thousand as follows:

Investments value Paid Remaining

Available for sale financial investments 358,268 192,593 165,676

36.2.2. Fixed assets and branches constructionsThe value of commitments for the purchase of fixed assets, contracts, and branches constructions that have not been implemented till the date of financial statement amounted to EGP 198,026 thousand.

36.3. letters of credit, guarantees and other commitments

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Letters of guarantee 66,166,953 69,514,413 Letters of credit (import and export) 4,178,288 1,700,516 Customers acceptances 1,050,573 1,017,690 Total 71,395,814 72,232,619

36.4. credit facilities commitments

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Credit facilities commitments 9,173,782 7,024,376



37. Mutual fundsOsoul fund

• CIB established an accumulated return mutual fund under license no.331 issued from capital market authority on Febru-ary 22, 2005. CI Assets Management Co.- Egyptian joint stock co - manages the fund.

• The number of certificates issued reached 3,449,254 with redeemed value of EGP 1,247,250 thousands.• The market value per certificate reached EGP 361.60 on December 31, 2018.• The Bank portion got 137,112 certificates with redeemed value of EGP 49,580 thousands.

istethmar fund

• CIB bank established the second accumulated return mutual fund under license no.344 issued from capital market au-thority on February 26, 2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.

• The number of certificates issued reached 511,604 with redeemed value of EGP 99,118 thousands.• The market value per certificate reached EGP 193.74 on December 31, 2018.• The Bank portion got 50,000 certificates with redeemed value of EGP 9,687 thousands.

aman fund ( ciB and Faisal islamic Bank mutual Fund)

• CIB and Faisal Islamic Bank established an accumulated return mutual fund under license no.365 issued from capital market authority on July 30, 2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


Hemaya fund

• CIB bank established an accumulated return mutual fund under license no.585 issued from financial supervisory Author-ity on June 23, 2010. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


thabat fund

• CIB bank established an accumulated return mutual fund under license no.613 issued from financial supervisory author-ity on September 13, 2011. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


takamol fund

• CIB bank established an accumulated return mutual fund under license no.431 issued from financial supervisory author-ity on February 18, 2015. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


38. Transactions with related partiesAll banking transactions with related parties are conducted in accordance with the normal banking practices and regula-tions applied to all other customers without any discrimination.

38.1. loans, advances, deposits and contingent liabilities

EGP Thousands

Loans and advances 5,414 Deposits 137,766 Contingent liabilities 1,309

38.2. Other transactions with related parties

Income Expenses

International Co. for Security & Services 94 277,139 CVenture Capital 850 2,041

39. Main currencies positions

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Egyptian pound (636,384) 182,639 US dollar 578,745 (313,246)Sterling pound 2,189 (1,566)Japanese yen (20) (523)Swiss franc 658 637 Euro 37,144 46,768

Main currencies positions above represents what is recognized in the balance sheet position of the Central Bank of Egypt.

40. Tax statuscorporate income tax

• Settlment of corporate income tax since the start of activity till 2016• 2017 examined & paid• The yearly income tax return is submitted in legal dates

Salary tax

• Settlment of salary tax since the start of activity till 2017

Stamp duty tax

• The period since the start of activity till 31/07/2006 was examined & paid, disputed points have been transferred to the court for adjudication

• The period from 01/08/2006 till 31/12/2017 was examined & paid in accordance with the protocol signed between the Fed-eration of Egyptian Banks & the Egyptian Tax Authority



41. Intangible assets:

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Book value 651,041 651,041 Amortization (412,326) (282,118)Net book value 238,715 368,923

According to CBE's regulation issued on Dec 16, 2008, an annual amortization of 20% has been applied on intangible as-sets starting from acquisition date.

Cashflow disclosures

42. Treasury bills and other governmental notes - net increase (decrease)

Dec.31, 2018

Dec.31, 2018 Dec.31, 2017

Total Net Total Net Change 91 Days ma-turity - -

Unearned interest - -

Net - - -

182 Days ma-turity 3,669,700 1,289,425

Unearned interest (86,343) (87,067)

Net 3,583,357 1,202,358 (2,380,999)

364 Days ma-turity 49,441,511 57,602,997

Unearned interest (3,011,544) (4,151,507)

Net 46,429,967 53,451,490 7,021,523

Total unearned interest (3,097,887) (4,238,574)

Net 50,013,324 54,653,848

Change 4,640,524

Dec.31, 2017

Dec.31, 2017 Dec.31, 2016

Total Net Total Net Change 91 Days ma-turity - 1,051,375

Unearned interest - (22,416)

Net - 1,028,959 1,028,959

182 Days ma-turity 1,289,425 4,350,975


Net 1,202,358 4,086,410 2,884,052

364 Days ma-turity 57,602,997 36,010,730


Net 53,451,490 34,101,018 (19,350,472)


Net 54,653,848 38,187,428

Change (16,466,420)



43. Other assets - net increase (decrease)

EGP Thousands

Dec.31, 2018

Total other assets by end of 2017 6,886,807 Assets acquired as settlement of debts (45,083)Advances to purchase of fixed assets (522,211)Total 1 6,319,513

Total other assets by end of 2018 9,563,218 Assets acquired as settlement of debts (276,520)Advances to purchase of fixed assets (768,733)Unrealized amount from avilable for sale investments (251,750)Impairment charge for other assets 316,763 Total 2 8,582,978

Change (1-2) (2,263,465)

EGP Thousands

Dec.31, 2017



Change (1-2) (1,133,497)

non cash transactions:Non-cash transactions that are not included in the statement of cash flows are as follows:

Dec.31, 2018EGP Thousands

Financial statements

balance Non cash

transactions Cash flow

balance

Proceeds from selling available for sale financial investments 2,314,616 255,275 2,059,341 Payment for purchases of subsidiary and associates (14,100) (3,525) (10,575) Other assets (2,515,215) (251,750) (2,263,465)



Financial StatementS: conSolidated


consolidated balance sheet as at december 31, 2018

consolidated income statement for the year ended december 31, 2018



EGP Thousands

Notes Dec. 31, 2018 Dec. 31, 2017

AssetsCash and balances with central bank 15 20,058,974 14,663,289 Due from banks 16 46,518,892 45,319,766 Treasury bills and other governmental notes 17 41,999,252 54,478,202 Trading financial assets 18 2,737,705 7,295,197 Loans and advances to banks, net 19 67,703 1,313 Loans and advances to customers, net 20 106,309,205 88,427,103 Derivative financial instruments 21 52,289 40,001 Financial investments- Available for sale 22 39,217,890 30,474,781 - Held to maturity 22 73,630,764 45,167,722 Investments in associates 23 106,558 65,039 Other assets 24 9,563,018 6,886,607 Intangible assets 41 238,715 368,923 Deferred tax assets (Liabilities) 32 308,370 179,630 Property, plant and equipment 25 1,651,875 1,414,519 Total assets 342,461,210 294,782,092

Liabilities and equity LiabilitiesDue to banks 26 7,259,819 1,877,918 Due to customers 27 285,296,869 250,723,052 Derivative financial instruments 21 132,858 196,984 Current tax liabilities 3,625,579 2,778,973 Other liabilities 29 6,501,553 5,476,531 Other loans 28 3,721,529 3,674,736 Provisions 30 1,694,607 1,615,159 Total liabilities 308,232,814 266,343,353

EquityIssued and paid up capital 31 11,668,326 11,618,011 Reserves 34 12,184,667 10,137,515 Reserve for employee stock ownership plan (ESOP) 34 738,320 489,334 Retained earnings * 34 9,637,083 6,193,879 Total equity 34,228,396 28,438,739 Total liabilities and equity 342,461,210 294,782,092

The accompanying notes are an integral part of these financial statements .

(Audit report attached)

* Including net profit for the current year

EGP Thousands

Notes Dec. 31, 2018 Dec. 31, 2017

Continued Operations Interest and similar income 37,403,709 28,671,166 Interest and similar expense (19,260,190) (16,167,155)Net interest income 6 18,143,519 12,504,011

Fee and commission income 3,402,616 2,794,211 Fee and commission expense (991,957) (796,107)Net fee and commission income 7 2,410,659 1,998,104

Dividend income 8 25,958 34,513 Net trading income 9 1,089,076 1,292,215 Profits (Losses) on financial investments 22 402,067 165,111 Administrative expenses 10 (4,223,959) (3,118,839)Other operating (expenses) income 11 (1,589,675) (1,002,570)Intangible assets amortization 41 (130,208) (130,208)Impairment charge for credit losses 12 (3,076,023) (1,742,281)Bank's share in the profits of associates 27,419 29,066 Profit before income tax 13,078,833 10,029,122

Income tax expense 13 (3,625,579) (2,778,973)Deferred tax assets (Liabilities) 32 & 13 128,740 (1,678)Net profit from continued operations 9,581,994 7,248,471

Discontinued Operations Net profit from discontinued operations - 122,234 Profit (loss) of disposal from discontinued operations 42 - 168,900 Net profit for the year 9,581,994 7,539,605

Minority interest - 24,050 Bank shareholders 9,581,994 7,515,555

Earning per share 14

Basic 7.26 5.76 Diluted 7.22 5.67



consolidated cash flow for the year ended december 31, 2018

Separate cash flow for the year ended december 31, 2018 (cont.)

EGP Thousands

Notes Dec. 31, 2018 Dec. 31, 2017

Cash flow from operating activitiesProfit before income tax from continued operations 13,078,833 10,029,122 Profit before income tax from discontinued operations - 291,134 Adjustments to reconcile net profit to net cash provided by operating activitiesFixed assets depreciation 25 390,830 351,005 Impairment charge for credit losses 12 3,076,023 1,742,281 Other provisions charges 30 101,501 212,622 Impairment charge for other assets 24 316,763 - Available for sale investments exchange revaluation differences 22 (102,991) 100,078 Intangible assets amortization 41 130,208 130,208 Financial investments impairment charge 22 39,561 (108,349)Utilization of other provisions 30 (2,114) (25,463)Other provisions no longer used 30 (17,670) (97,897)Exchange differences of other provisions 30 (2,269) 11,840 Profits from selling property, plant and equipment 11 (1,045) (607)(Profits) losses from selling financial investments 22 (441,628) 99,047 Shares based payments 408,346 290,884 Bank's share in the profits of associates (27,419) (38,636)Operating profits before changes in operating assets and liabilities 16,946,929 12,987,269

Net decrease (increase) in assets and liabilitiesDue from banks 16 (13,661,577) (2,594,442)Treasury bills and other governmental notes 43 4,640,524 (16,466,420)Trading financial assets 18 4,557,492 (4,850,063)Derivative financial instruments 21 (66,141) 120,431 Loans and advances to banks and customers 19-20 (21,255,952) (4,775,382)Other assets 44 (2,263,465) (863,655)Due to banks 26 5,381,901 (1,131,078)Due to customers 27 34,573,817 18,982,257 Income tax obligations paid (2,778,973) (2,017,034)Other liabilities 29 1,025,022 1,897,201 Net cash provided from operating activities 27,099,577 1,289,084

Cash flow from investing activitiesProceeds from redemption of subsidiary and associates - 750 Payment for purchases of associates (10,575) - Payment for purchases of property, plant, equipment and branches constructions (874,708) (763,420)

Proceeds from selling property, plant and equipment 11 1,045 607 Proceeds from redemption of held to maturity financial investments 22 5,532,271 13,354,468 Payment for purchases of held to maturity financial investments 22 (33,995,313) (4,597,254)

EGP Thousands

Notes Dec. 31, 2018 Dec. 31, 2017

Payment for purchases of available for sale financial investments 22 (12,670,761) (25,868,230)Proceeds from selling available for sale financial investments 22 2,059,341 1,261,980 Proceeds from selling non current assets held for sale - 768,515 Net cash used in investing activities (39,958,700) (15,842,584)

Cash flow from financing activitiesIncrease in long term loans 28 46,793 3,514,493 Dividend paid (2,143,177) (1,350,207)Capital increase 50,315 79,351 Net cash used in (provided from) financing activities (2,046,069) 2,243,637

Net increase (decrease) in cash and cash equivalent during the year (14,905,192) (12,309,863)

Beginning balance of cash and cash equivalent 49,208,837 61,518,700 Cash and cash equivalent at the end of the year 34,303,645 49,208,837

Cash and cash equivalent comprise:Cash and balances with central bank 15 20,058,974 14,663,289 Due from banks 16 46,518,892 45,319,766 Treasury bills and other governmental notes 17 41,999,252 54,478,202 Obligatory reserve balance with CBE 15 (13,526,763) (8,878,986)Due from banks with maturities more than three months (10,733,386) (1,719,586)Treasury bills with maturity more than three months 17 (50,013,324) (54,653,848)Total cash and cash equivalent 34,303,645 49,208,837



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1. General informationCommercial International Bank (Egypt) S.A.E. provides retail, corporate and investment banking services in various parts of Egypt through 181 branches, and 22 units employing 6759 employees on the statement of financial position date.Commercial international Bank (Egypt) S.A.E. was formed as a commercial bank under the investment law no. 43 of 1974. The address of its registered head office is as follows: Nile tower, 21/23 Charles de Gaulle Street-Giza. The Bank is listed in the Egyptian stock exchange.

The bank owns investments in a subsidiary “C-Ventures”, in which the bank’s share is 99.99%.

Financial statements have been approved by board of directors on February 4, 2019.

2. Summary of 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 years presented, unless otherwise stated.

2.1. Basis of preparationThe consolidated financial statements have been prepared in accordance with Egyptian financial reporting 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 principles referred to.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of trading, financial assets and liabilities held at fair value through profit or loss, available for sale and all derivatives contracts.

2.1.1. Basis of consolidationThe basis of the consolidation is as follows:

• Eliminating all balances and transactions between the Bank and group companies. • The cost of acquisition of subsidiary companies is based on the company's share in the fair value of assets acquired and

obligations outstanding on the acquisition date. • Minority shareholders represent the rights of others in subsidiary companies. • Proportional consolidation is used in consolidating method for companies under joint control.

2.2. Subsidiaries and associates2.2.1. SubsidiariesSubsidiaries are all entities (including special purpose entities) over which the Bank has owned directly or indirectly the control 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 consid-ered when assessing whether the Bank has the ability to control the entity or not.

2.2.2. AssociatesAssociates are all entities over which the Bank has significant influence but do not reach to the extent of control, generally accompanying a shareholding between 20% and 50% of the voting rights.

The Bank applies the Equity Method in its consolidated financial statements, initially recognizing the Bank’s investments in associate companies at amortized cost. The book value of associate investments is subsequently increased or decreased by recognition of the Bank’s share in the profits or losses of associate companies after the date of acquisition among the Bank’s profit or loss. The book value for associate investments is also decreased by the dividends received from associate companies.

notes to the consolidated financial statements for the year ended december 31, 2018

2.3. Segment reportingA business segment is a group of assets and operations engaged in 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 translation2.4.1. Functional and presentation currencyThe financial statements are presented in Egyptian pound, which is the Bank’s functional and presentation currency.

2.4.2. Transactions and balances in foreign currenciesThe Bank maintains its accounting records in Egyptian pound. Transactions in foreign currencies during the period are translated into the Egyptian pound using the prevailing exchange rates at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the end of reporting period at the prevailing exchange rates. Foreign exchange gains and losses resulting from settlement and translation of such transac-tions and balances are recognized in the income statement and reported under the following line items:

• Net trading income from held-for-trading assets and liabilities.• Other operating revenues (expenses) from the remaining assets and liabilities.

Changes in the fair value of investments in debt instruments; which represent monetary financial instruments, denomi-nated in foreign currencies and classified as available for sale assets are analyzed into valuation differences resulting from changes in the amortized cost of the instrument, differences resulting from changes in the applicable exchange rates and differences resulting from changes in the fair value of the instrument.

Valuation differences resulting from changes in the amortized cost are recognized and reported in the income statement in ‘income from loans and similar revenues’ whereas differences resulting from changes in foreign exchange rates are recognized and reported in ‘other operating revenues (expenses)’. The remaining differences resulting from changes in fair value are deferred in equity and accumulated in the ‘revaluation reserve of available-for-sale investments’.

Valuation differences resulting from the non-monetary items include gains and losses of the change in fair value of such equity instruments held at fair value through profit and loss, as for recognition of the differences of valuation resulting from equity instruments classified as financial investments available for sale within the fair value reserve in equity.

2.5. Financial assetsThe Bank classifies its financial assets in the following categories:

• Financial assets designated at fair value through profit or loss.• Loans and receivables.• Held to maturity investments.• Available for sale financial investments.

Management determines the classification of its investments at initial recognition.

2.5.1. Financial assets at fair value through profit or lossThis category has two sub-categories:

• Financial assets held for trading. • Financial assets designated at fair value through profit and 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 repur-chasing in the short 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 making. Derivatives are also categorized as held for trading unless they are designated as hedging instruments.

Financial instruments, other than those held for trading, are classified as financial assets designated at fair value through profit and loss if they meet one or more of the criteria set out below:

• When the designation eliminates or significantly reduces measurement and recognition inconsistencies that would arise from measuring financial assets or financial liabilities, on different bases. Under this criterion, an accounting mismatch would arise if the debt securities issued were accounted for at amortized cost, because the related derivatives are mea-sured at fair value with changes in the fair value recognized in the income statement. The main classes of financial instru-ments designated by the Bank are loans and advances and long-term debt issues.

• Applies to groups of financial assets, financial liabilities or combinations thereof that are managed, and their performance evaluated, on a fair value basis in accordance with a documented risk management or investment strategy, and where information about the groups of financial instruments is reported to management on that basis.

• Relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows resulting from those financial instruments, including certain debt issues and debt securities held.

Any financial derivative initially recognized at fair value can't be reclassified during the holding period. Re-classification is not allowed for any financial instrument initially recognized at fair value through profit and loss.

2.5.2. Loans and advancesLoans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:

• Those that the Bank intends to sell immediately or in the short term, which is classified as held for trading, or those that the Bank upon initial recognition designates as at fair value through profit or loss.

• Those that the Bank upon initial recognition designates as available for sale; or• Those for which the holder may not recover substantially all of its initial investment, other than credit deterioration.

2.5.3. Held to maturity financial investmentsHeld-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturi-ties that the Bank’s management has the positive intention and ability to hold till maturity. If the Bank has to sell other than an insignificant amount of held-to-maturity assets, the entire category would be reclassified as available for sale unless in necessary cases subject to regulatory approval.

2.5.4. Available for sale financial investmentsAvailable-for-sale investments are those intended 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 are applied in respect to all financial assets:

Debt securities and equity shares intended to be held on a continuing basis, other than those designated at fair value, are classified as available-for-sale or held-to-maturity. Financial investments are recognized on trade date, when the group enters into contractual arrangements with counterparties to purchase securities.

Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit and 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 when the Bank transfers substantially all risks and rewards of the ownership. Financial liabilities are derecognized when they are extinguished, that is, when the obligation is discharged, cancelled or expired.

Available-for-sale, held–for-trading and financial assets designated at fair value through profit and loss are subsequently mea-sured at fair value. Loans and receivables and held-to-maturity investments are subsequently measured at amortized cost.

Gains and losses arising from changes in the fair value of the ‘financial assets designated at fair value through profit or loss’ are recognized in the income statement in ‘net income from financial instruments designated at fair value’. Gains and losses arising from changes in the fair value of available for sale investments are recognized directly in equity, until the financial assets are either sold or become impaired. When available-for-sale financial assets are sold, the cumulative gain or loss previously recognized in equity is recognized in profit or loss.

Interest income is recognized on available for sale debt securities using the effective interest method, calculated over the asset’s expected life. Premiums and discounts arising on the purchase are included in the calculation of effective interest rates. Dividends are recognized in the income statement when the right to receive payment has been 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 measures fair value using valuation models. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation models commonly used by market participants. If the Bank has not been able to estimate the fair value of equity instru-ments classified as available for sale, the value is measured at cost less impairment.

Available for sale investments that would have met the definition of loans and receivables at initial recognition may be reclassified out to loans and advances or financial assets held to maturity. In all cases, when the Bank has the intent and ability to hold these financial assets in the foreseeable future or till maturity. The financial asset is reclassified at its fair value on the date of reclassification, and any profits or losses that has been recognized previously in equity, is treated based on the following:

• If the financial asset has a fixed maturity, gains or losses are amortized over the remaining life of the investment using the effective interest rate method. In case of subsequent impairment of the financial asset, the previously recognized unreal-ized gains or losses in equity are recognized directly in the profits and losses.

• In the case of financial asset which has infinite life, any previously recognized profit or loss in equity will remain until the sale of the asset or its disposal, in the case of impairment of the value of the financial asset after the re-classification, any gain or loss previously recognized in equity is recycled to the profits and losses.

• If the Bank adjusts its estimates of payments or receipts of a financial asset that in return adjusts the carrying amount of the asset (or group of financial assets) to reflect the actual cash inflows, the carrying value is recalculated based on the present value of estimated future cash flows at the effective yield of the financial instrument and the differences are rec-ognized in profit and loss.

• In all cases, if the Bank re-classifies financial asset in accordance with the above criteria and increases its estimate of the proceeds of future cash flow, this increase adjusts the effective interest rate of this asset only without affecting the invest-ment book value.

2.6. offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a legally enforceable right to offset the recognized amounts and there is an intention to be settled on a net basis.

2.7. derivative financial instruments and hedge accountingDerivatives are recognized initially, and subsequently, at fair value. Fair values of exchange traded derivatives are ob-tained from quoted market prices. Fair values of over-the-counter derivatives are obtained using valuation techniques, including discounted cash flow models and option pricing models. Derivatives are classified as assets when their fair value is positive and as liabilities when their fair value is negative.

Embedded derivatives in other financial instruments, such as 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 and loss. These embedded derivatives are measured at fair value with changes in fair value recognized in income statement unless the Bank chooses to designate the hybrid contact as at fair value through net trading income in profit or loss.



The timing of recognition in profit and loss, of any gains or losses arising from changes in the fair value of derivatives, depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged. The Bank designates certain derivatives as:

• Hedging instruments of the risks associated with fair value changes of recognized assets or liabilities or firm commit-ments (fair value hedge).

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

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

At the inception of the hedging relationship, the Bank documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore,

At the inception of the hedge, and on ongoing basis, the Bank documents whether the hedging instrument is expected to be highly effective in offsetting changes in fair values of the hedged item attributable to the hedged risk.

2.7.1. Fair value hedgeChanges in the fair value of derivatives that are designated and qualified 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’ line item of the income state-ment. Any ineffectiveness is recognized in profit or loss in ‘net trading income’.

When the hedging instrument is no longer qualified for hedge accounting, the adjustment to the carrying amount of a hedged item, measured at amortized cost, arising from the hedged risk is amortized to profit or loss from that date using the effective interest method.

2.7.2. Derivatives that do not qualify for hedge accountingAll gains and losses from changes in the fair values of derivatives that do not qualify for hedge accounting are recognized immediately in the income statement. These gains and losses are reported in ‘net trading income’, except where deriva-tives are managed in conjunction with financial instruments designated at fair value , in which case gains and losses are reported in ‘net income from financial instruments designated at fair value’.

2.8. interest income and expenseInterest income and expense for all financial instruments except for those classified as held-for-trading or designated at fair value are recognized in ‘interest income’ and ‘interest expense’ in the income statement using the effective interest method.

The effective interest 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 ex-actly 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 represents an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Once loans or debts are classified as nonperforming or impaired, the revenue of interest income will not be recognized and will be recorded off balance sheet, and are recognized as income subsequently based on a cash basis according to the following:

• When all arrears are collected for consumer loans, personnel mortgages and micro-finance loans. • When calculated interest for corporate are capitalized according to the rescheduling agreement conditions until paying

25% from rescheduled payments for a minimum performing period of one year, if the customer continues to perform, the calculated interest will be recognized in interest income (interest on the performing rescheduling agreement balance) without the marginalized before the rescheduling agreement which will be recognized in interest income after the settle-ment of the outstanding loan balance.

2.9. Fee and commission incomeFees charged for servicing a loan or facility that is measured at amortized cost, are recognized as revenue as the service is provided. Fees and commissions on non-performing or impaired loans or receivables cease to be recognized as income and are rather recorded off balance sheet. These are recognized as revenue, on a cash basis, only when interest income on those loans is recognized in profit and loss, at that time, fees and commissions that represent an integral part of the effec-tive interest rate of a financial asset, are treated as an adjustment to the effective interest rate of that financial asset. Com-mitment fees and related direct costs for loans and advances where draw down is probable are deferred and recognized as an adjustment to the effective interest on the loan once drawn. Commitment fees in relation to facilities where draw down is not probable are recognized at the maturity of the term of the commitment.

Fees are recognized on the debt instruments that are measured at fair value through profit and loss on initial recognition and syndicated loan fees received by the Bank are recognized when the syndication has been completed and the Bank does not hold any portion of it or holds a part at the same effective interest rate used for the other participants portions. Commission and fee arising from negotiating, or participating in the negotiation of a transaction for a third party such as the arrangement of the acquisition of shares or other securities or the purchase or sale of properties are recognized upon completion of the underlying transaction in the income statement .

Other management advisory and service fees are recognized based on the applicable service contracts, usually on accrual basis. Financial planning fees related to investment funds are recognized steadily over the period in which the service is provided. The same principle is applied for wealth management; financial planning and custody services that are provided on the long term are recognized on the accrual basis also.

Operating revenues in the holding company are:

• Commission income is resulting from purchasing and selling securities to a customer account upon receiving the transac-tion confirmation from the Stock Exchange.

• Mutual funds and investment portfolios management which is calculated as a percentage of the net value of assets under management according to the terms and conditions of agreement. These amounts are credited to the assets management company’s revenue pool on a monthly accrual basis.

2.10. dividend incomeDividends are recognized in the income statement when the right to collect is established.

2.11. Sale and repurchase agreementsSecurities may be lent or sold subject to a commitment to repurchase (Repos) are reclassified in the financial statements and deducted from treasury bills balance. Securities borrowed or purchased subject to a commitment to resell them (Re-verse Repos) are reclassified in the financial statements and added to treasury bills balance. The difference between sale and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest method.

2.12. impairment of financial assets2.12.1. Financial assets carried at amortised costThe Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or group of finan-cial assets is impaired. A financial asset or a group of financial assets is impaired 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/s’) and that loss event/s 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)• Violation of the conditions of the loan agreement such as non-payment.• 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 or deterioration of the creditworthiness of the borrower.

The objective evidence of impairment loss for a group of financial assets is observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, for instance an increase in the default rates for a particular Banking product.

The Bank estimates the period between a losses occurring and its identification for each specific portfolio. In general, the periods used vary between three months to twelve months.

The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individu-ally 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, wheth-er significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collec-tively assesses them for impairment according to historical default ratios.

• If the Bank determines that an objective evidence of financial asset impairment exist 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.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of esti-mated 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 inter-est 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 impair-ment 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 con-tractual 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 indicative factors of changes in the probability of losses in the Bank and their magnitude. The methodol-ogy and assumptions used for estimating future cash flows are reviewed regularly by the Bank.

2.12.2. Available for sale investmentsThe Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of finan-cial assets classify under available for sale 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. During periods start from first of January 2009, the decrease consider significant when it became 10% from the book value of the financial instrument and the decrease consider to be extended if it continues for period more than 9 months, and if the mentioned evidences become available then any cumulative gains or losses previously recognized in equity are recognized in the income statement , in respect of available for sale equity securities, impairment losses previously recognized in profit or loss 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 the income statement, the impairment loss is reversed through the income statement to the extent of previously recognized impairment charge from equity to income statement.

2.13. Real estate investments The real estate investments represent lands and buildings owned by the Bank in order to obtain rental returns or capital gains and therefore do 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 property, plant and equipment.

2.14. Property, plant and equipmentLand and buildings comprise mainly branches and offices. All property, plant and equipment are stated at historical cost less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisi-tion of the items.

Subsequent costs are included in the asset’s carrying amount or as a separate asset, as appropriate, only when it is prob-able that future economic benefits will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance are charged to other operating expenses during the financial period in which they are incurred.

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

Buildings 20 years

Leasehold improvements 3 years, or over the period of the lease if less

Furniture and safes 3/5 yearsTypewriters, calculators and air-conditions 5 yearsVehicles 5 yearsComputers and core systems 3/10 yearsFixtures and fittings 3 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Deprecia-ble assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recovered. An asset’s carrying amount is written down immediately to its recoverable value if the asset’s car-rying amount exceeds its estimated recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.

Gains and losses on disposals are determined by comparing the selling proceeds with the asset carrying amount and charged to other operating expenses in the income statement.



2.15. impairment of non-financial assetsAssets that have an indefinite useful life are not amortized -except goodwill- and are tested annually for impairment. As-sets 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. Assets are tested for impair-ment with reference to the lowest level of cash generating unit/s. A previously recognized impairment loss relating to a fixed asset may be reversed in part or in full when a change in circumstances leads to a change in the estimates used to determine the fixed asset’s recoverable amount. The carrying amount of the fixed asset will only be increased up to the amount that it would have been had the original impairment not been recognized.

2.15.1. GoodwillGoodwill is capitalized and represents the excess of acquisition cost over the fair value of the Bank’s share in the ac-quired entity’s net identifiable assets on the date of acquisition. For the purpose of calculating goodwill, the fair values of acquired assets, liabilities and contingent liabilities are determined by reference to market values or by discounting expected future cash flows. Goodwill is included in the cost of investments in associates and subsidiaries in the Bank’s separate financial statements. Goodwill is tested for impairment, impairment loss is charged to the income statement.

Goodwill is allocated to the cash generating units for the purpose of impairment testing. The cash generating units rep-resented in the Bank main segments.

2.15.2. Other intangible assetsIs the intangible assets other than goodwill and computer programs (trademarks, licenses, contracts for benefits, the benefits of contracting with clients).

Other intangible assets that are acquired by the Bank are recognized at cost less accumulated amortization and impair-ment losses. Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of the intangible asset with definite life. Intangible assets with indefinite life are not amortized and tested for impairment.

2.16. leasesThe accounting treatment for the finance lease is complied with law 95/1995, if the contract entitles the lessee to purchase the asset at a specified date and predefined value, or the current value of the total lease payments representing at least 90% of the value of the asset. The other leases contracts are considered operating leases contracts.

2.16.1. Being lesseeFinance lease contract recognizes the lease cost, including the cost of maintenance of the leased assets in the income statement for the period in which they occurred. If the Bank decides to exercise the right to purchase the leased asset the leased assets are capitalized and included in ‘property, plant and equipment’ and depreciated over the useful life of the expected remaining life of the asset in the same manner as similar assets.

Operating lease payments leases are accounted for on a straight-line basis over the periods of the leases and are included in ‘general and administrative expenses’.

2.16.2. Being lessorFor finance lease, assets are recorded in the property, plant and equipment in the balance sheet and amortized over the expected useful life of this asset in the same manner as similar assets. Lease income is recognized on the basis of rate of re-turn on the lease in addition to an amount corresponding to the cost of depreciation for the period. The difference between the recognized rental income and the total finance lease clients' accounts is transferred to the in the income statement until the expiration of the lease to be reconciled with a net book value of the leased asset. Maintenance and insurance expenses are charged to the income statement when incurred to the extent that they are not charged to the tenant.

In case there is objective evidence that the Bank will not be able to collect the of financial lease obligations, the finance lease payments are reduced to the recoverable amount.

For assets leased under operating lease it appears in the balance sheet under property, plant and equipment, and depre-ciated over the expected useful life of the asset in the same way as similar assets, and the lease income recorded less any discounts given to the lessee on a straight-line method over the contract period.

2.17. 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, including cash and non-restricted balances with Central Bank, treasury bills and other eligible bills, loans and advances to banks, amounts due from other banks and short-term government securities.

2.18. other provisionsProvisions for restructuring costs and legal claims are recognized when the Bank has present legal or constructive obliga-tions as a result of past events; where it is more likely than not that a transfer of economic benefit will be necessary to settle the obligation, and it can be reliably estimated.

In case of similar obligations, the related cash outflow should be determined in order to settle these obligations as a group. The provision is recognized even in case of minor probability that cash outflow will occur for an item of these obligations.

When a provision is wholly or partially no longer required, it is reversed through profit or loss under other operating in-come (expenses).

Provisions for obligations, other than those for credit risk or employee benefits, due within more than 12 months from the balance sheet date are recognized based on the present value of the best estimate of the consideration required to settle the present obligation at the balance sheet date. An appropriate pretax discount rate that reflects the time value of money is used to calculate the present value of such provisions. For obligations due within less than twelve months from the bal-ance sheet date, provisions are calculated based on undiscounted expected cash outflows unless the time value of money has a significant impact on the amount of provision, then it is measured at the present value.

2.19. Share based paymentsThe Bank applies an equity-settled, share-based compensation plan. The fair value of equity instruments recognized as an expense over the vesting period using appropriate valuation models, taking into account the terms and conditions upon which the equity instruments were granted. The vesting period is the period during which all the specified vesting conditions of a share-based payment arrangement are to be satisfied. Vesting conditions include service conditions and performance conditions and market performance conditions are taken into account when estimating the fair value of eq-uity instruments at the date of grant. At each balance sheet date the number of options that are expected to be exercised are estimated. Recognizes estimate changes, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

CIB owns a private insurance fund for financing end of service benefits, pensions and medical insurance for employees under the supervision of the Ministry of Social Solidarity.

2.20. income taxIncome tax on the profit or loss for the period and deferred tax are 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 ad-dition 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 appli-cable 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 come from tax benefit expected during the following years, that in the case of expected high benefit tax, deferred tax assets will in-crease within the limits of the above reduced.

2.21. BorrowingsBorrowings are recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortized cost also 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.

2.22. dividendsDividends on ordinary shares and profit sharing are recognized as a charge of equity upon the general assembly approval. Profit sharing includes the employees’ profit share and the Board of Directors’ remuneration as prescribed by the Bank’s articles of incorporation and the corporate law.

2.23. comparativesComparative figures have been adjusted to conform to changes in presentation in the current period where necessary.

2.24. noncurrent assets held for salea non-current asset (or disposal group) to be classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use.

Determining whether (and when) an asset stops being recovered principally through use and becomes recoverable prin-cipally through sale.

For an asset (or disposal group) to be classified as held for sale:

a. It must be available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets (or disposal groups);

b. Its sale must be highly probable;

The standard requires that non-current assets (and, in a 'disposal group', related liabilities and current assets,) meeting its criteria to be classified as held for sale be:

a. Measured at the lower of carrying amount and fair value less costs to sell, with depreciation on them ceasing; andb. Presented separately on the face of the statement of financial position with the results of discontinued operations

presented separately in the income statement.

2.25. discontinued operationDiscontinued operation as 'a component of an entity that either has been disposed of, or is classified as held for sale, and

a. Represents a separate major line of business or geographical area of operations,b. Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations orc. Is a subsidiary acquired exclusively with a view to resale.

When presenting discontinued operations in the income statement, the comparative figures should be adjusted as if the operations had been discontinued in the comparative period.

3. Financial risk managementThe Bank’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, accep-tance 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 rewards and minimize potential adverse effects on the Bank’s financial performance. 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 analyze 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 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 finan-cial 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 measurement3.1.1.1. Loans and advances to banks and customersIn measuring credit risk of loans and facilities to banks and customers at a counterparty level, the Bank reflects three components:

• The ‘probability of default’ by the client or counterparty on its contractual obligations• Current exposures to the counterparty and its likely future development, from which the Bank derive the ‘exposure at

default.• The likely recovery ratio on the defaulted obligations (the ‘loss given default’).

These credit risk measurements, which reflect expected loss (the ‘expected loss model’) are required by the Basel commit-tee on banking regulations and the supervisory practices (the Basel committee), and are embedded in the Bank’s daily operational management. The operational measurements can be contrasted with impairment allowances required under EAS 26, which are based on losses that have been incurred at the balance sheet date (the ‘incurred loss model’) rather than expected losses (note 3.1).

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 judg-ment 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 rating description of the grade

1 performing loans2 regular watching3 watch list4 non-performing loans

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.



3.1.1.2. Debt instruments and treasury and other billsFor debt instruments and bills, external rating such as standard and poor’s rating or their equivalents are used for man-aging 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 map-ping 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 indi-vidual 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 con-tracts. 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:

3.1.2.1. 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 gen-erally unsecured. In addition, in order to minimize the credit loss the Bank will seek additional collateral from the coun-terparty 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 instru-ment. 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.

3.1.2.2. 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 with positive fair value), 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 cor-responding 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.

3.1.2.3. Master netting arrangementsThe Bank further restricts its exposure to credit losses by entering into master netting arrangements with counterpar-ties 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 af-fected by each transaction subject to the arrangement.

3.1.2.4. 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, guaran-tees 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 stan-dards. 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 system described in Note 3.1.1 focus on the credit-quality mapping from the lending and investment activities perspective. Conversely, for only financial reporting purposes impairment losses are recognized for that has been incurred at the balance sheet date when there is an objective evidence of impairment. Due to the different method-ologies applied, the amount of incurred impairment losses in balance sheet 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 reported in balance sheet at the end of the period is derived from each of the four internal credit risk ratings. However, the majority of the impairment provision is usually driven by the last two rating degrees. The follow-ing table illustrates the proportional distribution of loans and advances reported in the balance sheet for each of the four internal credit risk ratings of the Bank and their relevant impairment losses:

December 31, 2018 December 31, 2017

Bank’s ratingLoans and


provision (%)Loans and


provision (%)

1-Performing loans 78.61 12.61 69.53 11.612-Regular watching 11.65 17.85 15.53 21.513-Watch list 5.68 33.18 7.99 23.70 4-Non-Performing Loans 4.06 36.36 6.95 43.18

The internal rating tools assists management to determine whether objective evidence of impairment exists under EAS 26, based on the following criteria set by the Bank:

• Cash flow difficulties experienced by the borrower or debtor• 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 due to economic, legal reasons and financial

difficulties facing the borrower• Deterioration of the collateral value• Deterioration of 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 circumstances require. Impairment provisions on individually assessed accounts are determined by an evaluation of the incurred loss at balance-sheet date, and are applied to all significant accounts individually. The assess-ment normally encompasses collateral held (including re-confirmation of its enforceability) and the anticipated receipts for that individual account. Collective impairment provisions are provided portfolios of homogenous assets by using the available historical loss experience, experienced judgment and statistical techniques.

3.1.4. Pattern of measuring the general banking riskIn addition to the four categories of the Bank’s internal credit ratings indicated in note 3.1.1, management classifies loans and advances based on more detailed subgroups in accordance with the CBE regulations. Assets exposed to credit risk in these categories are classified according to detailed rules and terms depending heavily on information relevant to the customer, his activity, financial position and his repayment track record. The Bank calculates required provisions for impairment of assets exposed to credit risk, including commitments relating to credit on the basis of rates determined by CBE. In case, the provision required for impairment losses as per CBE credit worthiness rules exceeds the required provisions by the application used in balance sheet preparation in accordance with EAS. That excess shall be debited to retained earnings and carried to the general banking risk reserve in the equity section. Such reserve is always adjusted, on a regular basis, by any increase or decrease so, that reserve shall always be equivalent to the amount of increase between the two provisions. Such reserve is not available for distribution.

Below is a statement of institutional worthiness according to internal ratings compared with CBE ratings and rates of provisions needed for assets impairment related to credit risk:

CBE Rating Categorization Provision% Internal rating Categorization

1 Low risk 0% 1 Performing loans2 Average risk 1% 1 Performing loans3 Satisfactory risk 1% 1 Performing loans4 Reasonable risk 2% 1 Performing loans5 Acceptable risk 2% 1 Performing loans

6 Marginally accept-able 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 debts 100% 4 Non performing loans

3.1.5. Maximum exposure to credit risk before collateral held

EGP Thousands

In balance sheet items exposed to credit risk Dec. 31, 2018 Dec. 31, 2017Treasury bills and other governmental notes 50,013,324 54,653,848 Trading financial assets: - Debt instruments 2,270,080 6,728,843 Gross loans and advances to banks 70,949 1,383 Gross loans and advances to customers Individual: - Overdraft 1,635,910 1,780,416 - Credit cards 3,540,849 2,899,930 - Personal loans 17,180,864 13,910,837 - Mortgages 876,372 416,616 Corporate: - Overdraft 13,992,595 12,450,826 - Direct loans 49,179,820 44,200,770 - Syndicated loans 32,899,950 26,627,825 - Other loans 125,429 112,802 Unamortized bills discount (65,718) (12,476)Unearned interest (16,038) (2,965,997)Derivative financial instruments 52,289 40,001 Financial investments:-Debt instruments 112,213,297 74,767,989 - Other assets (Accrued revenues) 4,509,314 3,870,454 Total 288,479,286 239,484,067 Off balance sheet items exposed to credit riskFinancial guarantees 7,962,043 3,605,001 Customers acceptances 1,050,573 1,017,690 Letters of credit (import and export) 4,178,288 1,700,516 Letter of guarantee 66,166,953 69,514,413 Total 79,357,857 75,837,620

The above table represents the Bank's Maximum exposure to credit risk on December 31, 2018, before taking into account any held collateral.

For assets recognized on balance sheet, the exposures set out above are based on net carrying amounts as reported in the balance sheet.

As shown above, 41.40% of the total maximum exposure is derived from loans and advances to banks and customers while investments in debt instruments represent 39.69%.

Management is confident in its ability to continue to control and sustain minimal exposure of credit risk resulting from both the bank's loans and advances portfolio and debt instruments based on the following:

• 90.26% of the loans and advances are concentrated in the top two grades of the internal credit risk rating system.• 95.94% of loans and advances portfolio are considered to be neither past due nor impaired.• Loans and advances assessed individualy are valued EGP 4,855,460 thousand.• The Bank has implemented more prudent processes when granting loans and advances during the financial year ended

on December 31, 2018.• 98.56% of the investments in debt Instruments are Egyptian sovereign instruments.



3.1.6. Loans and advances

EGP ThousandsDec.31, 2018 Dec.31, 2017

Loans and advances to

customers


banks


customers


banksNeither past due nor impaired 110,351,697 70,949 89,395,036 1,383 Past due but not impaired 4,224,632 - 5,884,880 - Individually impaired 4,855,460 - 7,120,106 - Gross 119,431,789 70,949 102,400,022 1,383 Less: Impairment provision 13,040,828 3,246 10,994,446 70 Unamortized bills discount 65,718 - 12,476 - Unearned interest 16,038 - 2,965,997 - Net 106,309,205 67,703 88,427,103 1,313

Impairment provision losses for loans and advances reached EGP 13,044,074 thousand.

During the year, the Bank’s total loans and advances increased by 16.70%.

In order to minimize the propable exposure to credit risk, the Bank focuses more on the business with large enterprises,banks or retail customers with good credit rating or sufficient collateral.

Net

loan

s an

d ad

vanc

es to

cus

tom

ers

and

ban

ks (a

fter

ded

ucti

ng

impa

irm

ent p

rovi

sion

):

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. 31,

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s 1

,499

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3

,383

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122

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52,

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ch li

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57,1

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Non

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s 4

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,377

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9

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- 1

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-

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l 1

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122

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tere

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Dec

. 31,

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ws

from

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are

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led

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The

brea

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the

gros

s am

ount

of i

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ans

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fair

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late

ral h

eld

by th

e Ba

nk, a

re a

s fo

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s:

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. 31,

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lo

ans

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s 4

6,25

3 2

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2 6

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9 6

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-

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311

4,4

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44

172

,664

4

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Dec

. 31,

201

7O

verd

raft

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l lo

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Loans and advances restructuredRestructuring activities include rescheduling arrangements, applying obligatory management programs, modifying 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, which indicate that payment will most likely continue. Restructuring is commonly applied to term loans, specially customer loans. Renegotiated loans totaled at the end of the year:

Dec.31, 2018 Dec.31, 2017Loans and advances to customerCorporate - Direct loans 7,673,956 8,577,197 Total 7,673,956 8,577,197

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 designation at end of financial year, based on Standard & Poor’s ratings or their equivalent:

EGP Thousands

Dec.31, 2018

Treasury bills and other gov.

notes

Trading financial debt

instruments

Non-trading financial debt

instruments TotalAAA - - - - AA- to AA+ - - - - A- to A+ - - - - Lower than A- 41,999,252 2,270,080 112,213,297 156,482,629 Total 41,999,252 2,270,080 112,213,297 156,482,629



3.1.8. concentration of risks of financial assets with credit risk exposure3.1.8.1. Geographical sectorsFollowing is a breakdown of the Bank’s main credit exposure at their book values categorized by geographical region at the end of the year.

The Bank has allocated exposures to regions based on the country of domicile of its counterparties.

EGP Thousands

Dec.31, 2018 CairoAlex, Delta and

Sinai Upper Egypt TotalTreasury bills and other governmen-tal notes 50,013,324 - - 50,013,324

Trading financial assets: - Debt instruments 2,270,080 - - 2,270,080 Gross loans and advances to banks 70,949 - - 70,949 Less:Impairment provision (3,246) - - (3,246)Gross loans and advances to customers Individual: - Overdrafts 948,571 558,087 129,252 1,635,910 - Credit cards 2,806,734 632,771 101,344 3,540,849 - Personal loans 10,820,446 5,401,963 958,455 17,180,864 - Mortgages 795,852 72,124 8,396 876,372 Corporate: - Overdrafts 11,941,245 1,415,913 635,437 13,992,595 - Direct loans 32,889,668 12,894,439 3,395,713 49,179,820 - Syndicated loans 30,010,681 2,687,040 202,229 32,899,950 - Other loans 80,000 45,429 - 125,429 Unamortized bills discount (65,718) - - (65,718)Impairment provision (9,707,342) (3,024,196) (309,290) (13,040,828)Unearned interest (16,038) - - (16,038)Derivative financial instruments 52,289 - - 52,289 Financial investments:-Debt instruments 112,213,297 - - 112,213,297 Total 245,120,792 20,683,570 5,121,536 270,925,898

3.1.

8.2.

Ind

ustr

y se

ctor

sTh

e fo

llow

ing

tabl

e an

alys

is th

e G

roup

’s m

ain

cred

it ex

posu

re a

t the

ir b

ook

valu

e ca

tego

rize

d by

the

Bank

's cu

stom

ers

acti

viti

es.

EG

P T

hous

and

s

Dec

.31,

201

8F

inan

cial

in

stitu

tions

Man

ufac

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hole

sale

and

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tail

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ent

sect

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ctiv

ities

Ind

ivid

ual

Tota

lTr

easu

ry b

ills

and

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r go

vern

men

tal n

otes

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- -

50,

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324

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50,

013,

324

Trad

ing

fina

ncia

l ass

ets:

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ts -

- -

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,270

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ross

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70,

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- -

- -

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70,

949

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(3,2

46)

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(3,2

46)

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ds -

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loan

s -

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oans

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00

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899,

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ther

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3.2. market riskMarket risk represnts as fluctuations in fair value, future cash flow, foreign exchange rates and commodity prices, interest rates, credit spreads and equity prices, and it may reduce the Bank’s income or the value of its portfolios. The bank assigns the market risk management department to measure, monitor and control the market risk. In addition, regular reports are submitted to the Asset and Liability "Management Committee (ALCO), Board Risk Committee and the heads of each business unit."

The bank separates exposures to market risk into trading or non-trading portfolios.

Trading portfolios include positions arising from market-making, position taking and others designated as marked-to-mar-ket. Non-trading portfolios include positions that primarily arise from the interest rate management of the group’s retail and commercial banking assets and liabilities, financial investments designated as available for sale and held-to-maturity.

3.2.1. Market risk measurement techniquesAs part of the management of market risk, the Bank undertakes various hedging strategies and enters into interest rate swaps to match the interest rate risk associated with the fixed-rate long-term debt instrument and loans to which the fair value option has been applied .

3.2.1.1. Value at RiskThe Bank applies a "Value at Risk" methodology (VaR) to its trading and non-trading portfolios, to estimate the market risk of positions held and the maximum losses expected under normal market conditions, based upon a number of as-sumptions for various changes in market conditions.

VaR is a statistically based estimate of the potential loss on the current portfolio from adverse market movements. It expresses the ‘maximum’ amount the Bank might lose , but only to a certain level of confidence (95%). There is therefore a specified statistical probability (5%) that actual loss could be greater than the VaR estimate. The VaR model assumes a certain ‘holding period’ until positions can be closed ( 1 Day). The Bank assesses the historical movements in the market prices based on volatilities and correlations data for the past five years. The use of this approach does not prevent losses outside of these limits in the event of more significant market movements.

As VaR constitutes an integral part of the Bank’s market risk control regime, the Market Risk Management set VaR Lim-its, for the trading book, which have been approved by the board, and are monitored and reported on a daily basis to the Senior Management.

In addition, monthly limits compliance is reported to the ALCO.

The Bank has developed the internal model to calculate VaR, however, it is not yet approved by the Central Bank as the regulator is currently applying and requiring banks to calculate the Market Risk Capital Requirements according to Basel II Standardized Approach.

3.2.1.2. Stress testsStress tests provide an indication of the potential size of losses that could arise under extreme market conditions. There-fore, the bank computes on a daily basis trading Stressed VaR, combined with the trading VaR, to capture the abnormal movements in financial markets and to give more comprehensive picture of risk. The results of the stress tests are re-viewed by the ALCO on a monthly basis and the board risk committee on a quarterly basis.

3.2.2. Value at risk (VaR) Summary Total VaR by risk type

EGP Thousands

Dec.31, 2018 Dec.31, 2017


Foreign exchange risk 231 1,482 20 13,647 82,695 275 Interest rate risk 453,569 645,193 238,077 588,938 815,249 363,366 - For non trading purposes 429,195 586,852 232,882 553,426 739,977 351,674 - For trading purposes 24,374 58,341 5,195 35,512 75,272 11,692 Portfolio managed by others risk 7,030 11,507 1,969 7,280 10,454 4,854 Investment fund 119 267 55 370 692 215 Total VaR 455,104 647,983 238,493 591,508 826,941 364,408

Trading portfolio VaR by risk type

Dec.31, 2018 Dec.31, 2017


Foreign exchange risk 231 1,482 20 13,647 82,695 275 Interest rate risk 24,374 58,341 5,195 35,512 75,272 11,692 - For trading purposes 24,374 58,341 5,195 35,512 75,272 11,692 Funds managed by others risk 7,030 11,507 1,969 7,280 10,454 4,854 Investment fund 119 267 55 370 692 215 Total VaR 26,165 60,912 5,611 46,039 113,250 13,804

Non trading portfolio VaR by risk type

Dec.31, 2018 Dec.31, 2017


Interest rate risk

- For non trading purposes 429,195 586,852 232,882 553,426 739,977 351,674

Total VaR 429,195 586,852 232,882 553,426 739,977 351,674

The aggregate of the trading and non-trading VaR results does not constitute the Bank’s VaR due to correlations and con-sequent diversification effects between risk types and portfolio types.



3.2.3. Foreign exchange riskThe Bank's financial position and cash flows are exposed to fluctuations in foreign currency exchange rates. The Board sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are monitored daily. The table below summarizes the Bank’s exposure to foreign exchange rate risk and financial instruments at carrying amounts, categorized by currency.

Equivalent EGP Thousands

Dec.31, 2018 EGP USD EUR GBP Other Total

Financial assetsCash and balances with central bank 15,822,884 2,511,902 657,323 80,582 986,283 20,058,974

Due from banks 15,730,309 23,594,720 6,743,789 366,545 83,529 46,518,892 Treasury bills and other govern-mental notes 31,491,429 12,272,607 1,333,103 - - 45,097,139

Trading financial assets 1,802,626 935,079 - - - 2,737,705 Gross loans and advances to banks - 70,949 - - - 70,949

Gross loans and advances to customers 63,518,898 52,952,122 2,938,691 22,078 - 119,431,789

Derivative financial instruments 39,355 12,934 - - - 52,289 Financial investments - Available for sale 26,664,326 12,367,155 186,409 - - 39,217,890 - Held to maturity 73,630,764 - - - - 73,630,764 Investments in associates 92,458 14,100 - - - 106,558 Total financial assets 228,793,049 104,731,568 11,859,315 469,205 1,069,812 346,922,949

Financial liabilitiesDue to banks 5,958,780 1,099,145 92,882 12,773 96,239 7,259,819 Due to customers 182,983,217 89,794,399 11,046,226 1,005,452 467,575 285,296,869 Derivative financial instruments 85,912 46,946 - - - 132,858 Other loans 138,809 3,582,720 - - - 3,721,529 Total financial liabilities 189,166,718 94,523,210 11,139,108 1,018,225 563,814 296,411,075

Net on-balance sheet financial position 39,626,331 10,208,358 720,207 (549,020) 505,998 50,511,874

3.2.4. Interest rate riskThe Bank takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its fair value and cash flow risks. Interest margins may increase as a result of such changes but profit may decrease in the event that unexpected movements arise.The Board sets limits on the gaps of interest rate repricing that may be undertaken, which is monitored by the bank's Risk Management Department.

The table below summarizes the Bank’s exposure to interest rate risks. It includes the Bank’s financial instruments at car-rying amounts, categorized by the earlier of repricing or contractual maturity dates.

Dec.31, 2018Up to1 Month 1-3 Months

3-12 Months 1-5 years

Over 5 years

Non- Interest Bearing Total

Financial assetsCash and balances with central bank - - - - - 20,058,974 20,058,974

Due from banks 33,676,642 12,438,963 401,563 - - 1,724 46,518,892 Treasury bills and other governmental notes*

(3,711,230) 5,425,047 43,383,322 - - - 45,097,139

Trading financial assets 38,375 - - 1,643,653 626,428 429,249 2,737,705

Gross loans and advances to banks 3,969 5,483 17,829 42,233 1,435 - 70,949

Gross loans and ad-vances to customers 77,155,228 13,993,151 14,231,235 10,708,275 3,343,900 - 119,431,789

Derivatives financial instruments (includ-ing IRS notional amount)

1,510,540 9,650 399,197 5,899,343 - - 7,818,730

Financial investments - Available for sale 132,500 73,030 457,834 19,793,116 18,158,565 602,845 39,217,890 - Held to maturity 9,361,480 2,055,231 26,632,213 27,257,651 8,324,189 - 73,630,764 Investments in associates - - - - - 106,558 106,558

Total financial assets 118,167,504 34,000,555 85,523,193 65,344,271 30,454,517 21,199,350 354,689,390

Financial liabilitiesDue to banks 7,002,464 - - - - 257,355 7,259,819 Due to customers 148,862,473 22,012,700 24,470,575 40,675,873 533,317 48,741,931 285,296,869 Derivatives financial instruments (including IRS notional amount)

2,148,569 5,011,865 33,028 705,837 - - 7,899,299

Other loans 33,380 10,000 87,286 443,188 3,147,675 - 3,721,529 Total financial liabilities 158,046,886 27,034,565 24,590,889 41,824,898 3,680,992 48,999,286 304,177,516

Total interest re-pricing gap (39,879,382) 6,965,990 60,932,304 23,519,373 26,773,525 (27,799,936) 50,511,874

* After adding Reverse repos and deducting Repos.



3.3. liquidity riskLiquidity risk occurs when the Bank does not have sufficient financial resources to meet its obligations arising from its financial liabilities as they fall due or to replace funds when they are withdrawn. Consequently, the bank may fail to meet obligations to repay depositors and fulfill lending commitments.

3.3.1. Liquidity risk management processThe Bank’s liquidity management process, carried by the assets and Liabilities Management Department and monitored independently by the Risk Management Department, and includes Projecting cash flows by major currency under various stress scenarios and considering the level of liquid assets necessary in relation thereto:

• Maintaining an active presence in global money markets to enable this to happen.• Maintaining a diverse range of funding sources with back-up facilities.• Monitoring balance sheet liquidity and advances to core funding ratios against internal and CBE regulations.• Managing the concentration and profile of debt maturities. • Monitoring and reporting takes the form of cash flow measurement and projections for the next day, week and month

respectively, as these are key periods for liquidity management.

The starting point for those assets projections is an analysis of the contractual maturity of the financial liabilities and the expected collection date of the financial assets.

Bank's Risk Management Department also monitors unmatched medium-term

3.3.2. Funding approachSources of liquidity are regularly reviewed jointly by the Bank's Assets & Liabilities Management Department and Con-sumer Banking to maintain a wide diversification within currencies, geographical area, depositors, products and tenors.

3.3.3. Non-derivative cash flowsThe table below presents the undiscounted cash flows payable by the Bank under non-derivative financial liabilities, mea-sured by the remaining contractual maturities and the maturities assumption for non contractual products are based on there behavior studies.

EGP Thousands


One to three

months

Three months to

one yearOne year to

five yearsOver five

yeas TotalFinancial liabilitiesDue to banks 6,632,843 626,976 - - - 7,259,819 Due to customers 29,932,979 23,750,618 72,467,784 145,207,840 13,937,648 285,296,869 Other loans 33,380 10,000 87,286 443,188 3,147,675 3,721,529 Total liabilities (contractual and non contractual maturity dates) 36,599,202 24,387,594 72,555,070 145,651,028 17,085,323 296,278,217



One to three

months

Three months to

one yearOne year to

five yearsOver five

years TotalFinancial liabilitiesDue to banks 1,877,918 - - - - 1,877,918 Due to customers 31,348,143 21,728,194 71,335,328 109,570,301 16,741,086 250,723,052 Other loans 36,393 6,743 82,631 3,429 3,545,540 3,674,736 Total liabilities (contractual and non contractual maturity dates) 33,262,454 21,734,937 71,417,959 109,573,730 20,286,626 256,275,706


Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, due from CBE and due from banks, treasury bills, other government notes , loans and advances to banks and customers.

In the normal course of business, a proportion of customer loans contractually repayable within one year will be extend-ed. In addition, debt instrument and treasury bills and other governmental notes have been pledged to secure liabilities. The Bank would also be able to meet unexpected net cash outflows by selling securities and accessing additional funding sources such as asset-backed markets.

3.3.4. Derivative cash flows The Bank’s derivatives include: Foreign exchange derivatives: exchange traded options and over-the-counter (OTC) ,exchange traded forwards currency options that will be settled on a gross basis Interest rate derivatives: interest rate swaps, forward rate agreements, OTC and exchange traded interest rate options, other interest rate contracts and exchange traded futures .

The table below analyses the Bank’s derivative undiscounted financial liabilities into maturity groupings based on the re-maining period of the balance sheet to the contractual maturity date will be settled on a net basis. The amounts disclosed in the table are the contractual undiscounted cash flows:

EGP Thousands

Dec.31, 2018 Up to 1 monthOne to three

monthsThree months

to one yearOne year to

five years TotalLiabilities Derivatives financial instruments - Foreign exchange derivatives

34,388 22,205 29,319 - 85,912

- Interest rate derivatives 197 6 3,709 43,034 46,946

Total 34,585 22,211 33,028 43,034 132,858

Off balance sheet items EGP Thousands

Dec.31, 2018 Up to 1 year 1-5 years Over 5 years TotalLetters of credit, guarantees and other commitments 51,260,372 14,088,753 6,046,689 71,395,814

Total 51,260,372 14,088,753 6,046,689 71,395,814

EGP Thousands

Dec.31, 2018 Up to 1 year 1-5 years Total

Credit facilities commitments 1,399,900 7,773,882 9,173,782 Total 1,399,900 7,773,882 9,173,782



3.4. Fair value of financial assets and liabilities3.4.1. Financial instruments not measured at fair valueThe table below summarizes the book value and fair value of those financial assets and liabilities not presented on the Bank’s balance sheet at their fair value.

Book value Fair value

Dec.31, 2018 Dec.31, 2017 Dec.31, 2018 Dec.31, 2017

Financial assetsDue from banks 46,518,892 45,319,766 46,859,224 44,782,984 Gross loans and advances to banks 70,949 1,383 70,949 1,383 Gross loans and advances to customers 119,431,789 102,400,022 115,452,376 96,397,613 Financial investmentsHeld to Maturity 73,630,764 45,167,722 41,237,872 45,595,034 Total financial assets 239,652,394 192,888,893 203,620,421 186,777,014

Financial liabilitiesDue to banks 7,259,819 1,877,918 7,069,442 1,813,466 Due to customers 285,296,869 250,723,052 280,685,969 245,616,661 Other loans 3,721,529 3,674,736 3,721,529 3,674,736 Total financial liabilities 296,278,217 256,275,706 291,476,940 251,104,863

Due from banksThe fair value of floating rate placements and overnight deposits is their carrying amount. The estimated fair value of floating 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 that do not consider bank placing. The expected fair value of the loans and advances represents the discounted value of future cash flows expected to be collected. Cash flows are dis-counted using the current market rate to determine fair value.

Loans and advances to customersLoans and advances are net of provisions for impairment. The estimated fair value of loans and advances 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 InvestmentsInvestment securities include only interest-bearing assets, held to maturity assets, and available for sale assets that are measured at fair value.

Fair value for held-to-maturity assets is based on market prices or broker/dealer price quotations. Where this information is not available, fair value is estimated using quoted market prices for securities with similar credit, maturity and yield characteristics.

Due to other banks and customersThe estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, 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 maturity date.

3.5 capital managementFor capital management purposes, the Bank’s capital includes total equity as reported in the balance sheet plus some other elements that are managed as capital. The Bank manages its capital to ensure that the following objectives are achieved:

• Complying with the legally imposed capital requirements in Egypt.• Protecting the Bank’s ability to continue as a going concern and enabling the generation of yield for shareholders and other

parties dealing with the bank.

Capital adequacy and the use of regulatory capital are monitored on a daily basis by the Bank’s management, employing techniques based on the guidelines developed by the Basel Committee as implemented by the banking supervision unit in the Central Bank of Egypt.

The required data is submitted to the Central Bank of Egypt on a monthly basis.

Central Bank of Egypt requires the following:

• Maintaining EGP 500 million as a minimum requirement for the issued and paid-in capital.• Maintaining a minimum level of capital adequacy ratio of 11.875%, calculated as the ratio between total value of the capital

elements, and the risk-weighted assets and contingent liabilities of the Bank (credit risk, market risk and opertional risk). While taking into consideration the conservation buffer.

Tier one: Tier one comprises of paid-in capital (after deducting the book value of treasury shares), retained earnings and reserves resulting from the distribution of profits except the banking risk reserve, interim profits and deducting previously recog-nized goodwill and any retained losses.

Tier two: Tier two represents the gone concern capital which is compposed of general risk provision according to the impairment provision guidelines issued by the Central Bank of Egypt to the maximum of 1.25% risk weighted assets and contingent liabilities ,subordinated loans with more than five years to maturity (amortizing 20% of its carrying amount in each year of the remaining five years to maturity) and 45% of the increase in fair value than book value for available for sale , held to maturity , subsidiaries and associates investments.

When calculating the numerator of capital adequacy ratio, the rules set limits of total tier 2 to no more than tier 1 capital and also limits the subordinated to no more than 50% of tier1.

Assets risk weight scale ranging from zero to 400% is based on the counterparty risk to reflect the related credit risk scheme, taking into considration the cash collatrals. Similar criteria are used for off balance sheet items after adjustments to reflect the nature of contingency and the potential loss of those amounts. The Bank has complied with all local capital adequacy requirements for the current year.



The tables below summarize the compositions of teir 1, teir 2 , the capital adequacy ratio and leverage ratio .1- The capital adequacy ratio

EGP Thousands


Tier 1 capitalShare capital (net of the treasury shares) 11,668,326 11,618,011 Reserves 14,829,948 10,543,783 IFRS 9 Reserve 1,411,549 1,411,549 Retained Earnings (Losses) 55,089 89,873 Total deductions from tier 1 capital common equity (4,754,596) (2,450,399)Net profit for the year 6,881,450 3,960,829 Total qualifying tier 1 capital 30,091,766 25,173,646

Tier 2 capital45% of special reserve 49 49 Subordinated Loans 3,582,720 3,545,540 Impairment provision for loans and regular contingent liabilities 1,879,734 1,679,656 Total qualifying tier 2 capital 5,462,503 5,225,245

Total capital 1+2 35,554,269 30,398,891

Risk weighted assets and contingent liabilitiesTotal credit risk 156,952,618 141,154,879 Total market risk 5,959,133 9,239,998 Total operational risk 23,292,505 18,222,831 Total 186,204,256 168,617,708

*Capital adequacy ratio (%) 19.09% 18.03%

* Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 24 December 2012.** After 2017 profit distribution.

2- Leverage ratio

EGP Thousands


Total qualifying tier 1 capital 30,091,766 25,173,646

On-balance sheet items & derivatives 346,163,131 300,593,997 Off-balance sheet items 45,407,765 44,965,272 Total exposures 391,570,896 345,559,269

*Percentage 7.68% 7.28%

* Based on consolidated financial statement figures and in accordance with Centeral Bank of Egypt regulation issued on 14 July 2015.** After 2017 profit distribution.



4. Critical accounting estimates and judgmentsThe Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year.

Estimates and judgments are continually evaluated and based on historical experience and other factors, including ex-pectations of future events that are believed to be reasonable under the circumstances and available information.

4.1. impairment losses on loans and advancesThe Bank reviews its loan portfolios to assess impairment on quarterly basis. In determining whether an impairment loss should be recorded in the income statement, the Bank makes judgments as to whether there is any observable data indicating the availability of a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may indicate that there has been an adverse change in the payment status of borrowers in the Bank, or national or local economic conditions that correlate with defaults on assets in the Bank. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. To the extent that the net present value of estimated cash flows differs by +/-5%

4.2. impairment of available for-sale equity investmentsThe Bank determines that available-for-sale equity investments are impaired when there has been a significant or pro-longed decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making this judgment, the Bank evaluates among other factors, the normal volatility in share price. In addition, impair-ment may be appropriate when there is evidence of a deterioration in the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows.

4.3. Fair value of derivativesThe fair value of financial instruments that are not quoted in active markets are determined by using valuation tech-niques. these valuation techniques (as models) are validated and periodically reviewed by qualified personnel indepen-dent of the area that created them.

All models are certified before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices.

For practicality purposes, models use only observable data; however, areas such as credit risk (both own and counter-party), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect reported fair value of financial instruments.

4.4 Held-to-maturity investmentsThe non-derivative financial assets with fixed or determinable payments and fixed maturity are being classified as held to maturity. This requires significant judgment, in which the bank evaluates its intention and ability to hold such invest-ments to maturity. If the bank fails to keep these investments to maturity other than for the specific circumstances – for example, selling an insignificant amount close to maturity it will be required to reclassify the entire category as available for sale. The investments would therefore be measured at fair value not amortized cost.



5. Segment analysis5.1. By business segmentThe Bank is divided into four main business segments on a worldwide basis:

• Corporate banking – incorporating direct debit facilities, current accounts, deposits, overdrafts, loan and other credit facilities, foreign currency and derivative products

• Investment banking – incorporating financial instruments Trading, structured financing, Corporate leasing,and merger and acquisitions advice.

• Retail banking – incorporating private banking services, private customer current accounts, savings, deposits, investment savings products, custody, credit and debit cards, consumer loans and mortgages;

• Others –Including other banking business, such as Assets Management.

Transactions between the business segments are on normal commercial terms and conditions.

EGP Thousands



bankingRetail

banking

Asset Liability




Tax (933,068) (459,085) (922,426) (1,015,293) (166,967) (3,496,839)Profit for the year 2,576,168 1,254,509 2,520,643 2,774,415 456,259 9,581,994

Total assets 102,781,541 2,159,095 165,584,686 22,693,303 49,242,585 342,461,210



bankingRetail

banking

Asset Liability




Tax (576,762) (442,854) (767,053) (823,795) (170,187) (2,780,651)Profit for the year 1,529,713 1,202,808 2,083,344 2,237,457 462,233 7,515,555

Total assets 82,149,279 2,352,091 137,645,556 18,444,909 54,190,257 294,782,092

5.2. By geographical segment

EGP Thousands



Expenses according to geographical segment (7,545,066) (1,304,228) (223,716) (9,073,010)



Total assets 316,673,321 19,340,837 6,447,052 342,461,210



Expenses according to geographical segment (5,306,193) (670,176) (163,708) (6,140,077)



Total assets 265,665,575 22,598,945 6,517,572 294,782,092

6. Net interest income

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Interest and similar income - Banks 3,338,266 3,532,274 - Clients 15,274,649 10,921,054 Total 18,612,915 14,453,328

Treasury bills and bonds 18,582,089 14,039,447 Reverse repos 2,519 - Financial investments in held to maturity and available for sale debt instruments 206,186 178,391 Total 37,403,709 28,671,166

Interest and similar expense - Banks (840,233) (463,409) - Clients (18,001,197) (15,686,959)Total (18,841,430) (16,150,368)

Financial instruments purchased with a commitment to re-sale (Repos) (112,366) (2,037)Other loans (306,394) (14,750)Total (19,260,190) (16,167,155)

Net interest income 18,143,519 12,504,011



7. Net fee and commission income

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Fee and commission incomeFee and commissions related to credit 1,456,930 1,362,660 Custody fee 140,247 117,268 Other fee 1,805,439 1,314,283 Total 3,402,616 2,794,211

Fee and commission expenseOther fee paid (991,957) (796,107)Total (991,957) (796,107)

Net income from fee and commission 2,410,659 1,998,104

8. Dividend income

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Trading securities 9,951 11,474 Available for sale securities 16,007 23,039 Total 25,958 34,513

9. Net trading income

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Profit (Loss) from foreign exchange 668,071 764,732 Profit (Loss) from forward foreign exchange deals revaluation (38,904) (17,118)Profit (Loss) from interest rate swaps revaluation (20,865) (23,732)Profit (Loss) from currency swap deals revaluation 8,179 (21,230)Trading debt instruments 472,595 589,563 Total 1,089,076 1,292,215

10. Administrative expenses

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Staff costs Wages and salaries (2,237,595) (1,620,326) Social insurance (78,841) (65,033) Other benefits (61,976) (51,682)Other administrative expenses * (1,845,547) (1,381,798)Total (4,223,959) (3,118,839)

* The expenses related to the activity for which the bank obtains a commodity or service and all taxes and charges incurred by the bank - except for income tax - donations, depreciation and impairment of non financial assets other than subsidiaries and associates

11. Other operating (expenses) income

EGP Thousands

Dec.31, 2018 Dec.31, 2017Profits (losses) from non-trading assets and liabilities revaluation 59,863 (61,065)Profits from selling property, plant and equipment 1,045 607 Release (charges) of other provisions (400,596) (114,725)Other income/expenses (1,249,987) (827,387)Total (1,589,675) (1,002,570)

12. Impairment charge for credit losses

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Loans and advances to customers and banks (3,076,023) (1,742,281)Total (3,076,023) (1,742,281)

13. Adjustments to calculate the effective tax rate

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Profit before tax 13,078,833 10,320,256 Tax rate 22.50% 22.50%Income tax based on accounting profit 2,942,737 2,322,058

Add / (Deduct)Non-deductible expenses 866,421 628,951 Tax exemptions (314,360) (173,358)10% Withholding tax 2,041 3,000 Income tax / Deferred tax 3,496,839 2,780,651

Effective tax rate 26.74% 26.94%

14. Earning per share

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Net profit for the year, available for distribution 9,553,868 7,549,043 Board member's bonus (143,308) (113,236)Staff profit sharing (955,387) (754,904)Profits shareholders' Stake 8,455,173 6,680,903

Weighted Average number of shares 1,163,898 1,159,156 Basic earning per share 7.26 5.76

By issuance of ESOP earning per share will be:Average number of shares including ESOP shares 1,171,642 1,177,722 Diluted earning per share 7.22 5.67

* Based on separate financial statement profits.



15. Cash and balances with central bank

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Cash 6,532,211 5,784,303 Obligatory reserve balance with CBE - Current accounts 13,526,763 8,878,986 Total 20,058,974 14,663,289

Non-interest bearing balances 20,058,974 14,663,289

16. Due from banks

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Current accounts 4,168,973 2,679,189 Deposits 42,349,919 42,640,577 Total 46,518,892 45,319,766

Central banks 25,397,558 15,863,399 Local banks 4,109,576 3,894,775 Foreign banks 17,011,758 25,561,592 Total 46,518,892 45,319,766

Non-interest bearing balances 1,724 - Floating interest bearing balances 10,203,376 9,940,362 Fixed interest bearing balances 36,313,792 35,379,404 Total 46,518,892 45,319,766


17. Treasury bills and other governmental notes

EGP Thousands

Dec.31, 2018 Dec.31, 2017

91 Days maturity - - 182 Days maturity 3,669,700 1,289,425 364 Days maturity 49,441,511 57,602,997 Unearned interest (3,097,887) (4,238,574)Total 1 50,013,324 54,653,848

Repos - treasury bills (8,014,072) (175,646)Total 2 (8,014,072) (175,646)

Net 41,999,252 54,478,202

18. Trading financial assets

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Debt instruments - Governmental bonds 2,270,080 6,728,843 Total 2,270,080 6,728,843

Equity instruments - Mutual funds 38,376 99,587 Total 38,376 99,587

- Portfolio managed by others 429,249 466,767

Total 2,737,705 7,295,197

19. Loans and advances to banks, net

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Time and term loans 70,949 1,383

Impairment provision (3,246) (70)Total 67,703 1,313

Current balances 67,703 1,313 Total 67,703 1,313

Analysis for impairment provision of loans and advances to banks

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance (70) (1,800)Release during the year (3,140) 1,697 Exchange revaluation difference (36) 33 Ending balance (3,246) (70)



20. Loans and advances to customers, net

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Individual - Overdraft 1,635,910 1,780,416 - Credit cards 3,540,849 2,899,930 - Personal loans 17,180,864 13,910,837 - Real estate loans 876,372 416,616 Total 1 23,233,995 19,007,799

Corporate - Overdraft 13,992,595 12,450,826 - Direct loans 49,179,820 44,200,770 - Syndicated loans 32,899,950 26,627,825 - Other loans 125,429 112,802 Total 2 96,197,794 83,392,223

Total Loans and advances to customers (1+2) 119,431,789 102,400,022

Less:Unamortized bills discount (65,718) (12,476)Impairment provision* (13,040,828) (10,994,446)Unearned interest (16,038) (2,965,997)Net loans and advances to customers 106,309,205 88,427,103

Distributed toCurrent balances 44,549,290 38,960,491 Non-current balances 61,759,915 49,466,612 Total 106,309,205 88,427,103

* An amount of EGP 1,818mn has been charged to impairment provision against unearned interest recognized in income.

Of this amount, EGP 1,057mn has been charged in Q3 2018, which is the second and final re-engineering for such accounts.

an

alys

is f

or

imp

airm

ent

pro

visi

on

of

loan

s an

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nce

s to

cu

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mer

s

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ased

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) (3

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21. Derivative financial instruments21.1 derivativesThe Bank uses the following financial derivatives for non hedging purposes.

Forward contracts represent commitments to buy foreign and local currencies including unexecuted spot transactions. Future contracts for foreign currencies and/or interest rates represent contractual commitments to receive or pay net on the basis of changes in foreign exchange rates or interest rates, and/or to buy/sell foreign currencies or financial instru-ments in a future date with a fixed contractual price under active financial market.

Credit risk is considered low, and future interest rate contract represents future exchange rate contracts negotiated for case by case, These contracts require financial settlements of any differences in contractual interest rates and prevailing market interest rates on future interest rates on future dates based on contractual amount (nominal value) pre agreed upon.

Foreign exchange and/or interest rate swap represents commitments to exchange cash flows, resulting from these con-tracts are exchange of currencies or interest (fixed rate versus variable rate for example) or both (meaning foreign ex-change and interest rate contracts).

Contractual amounts are not exchanged except for some foreign exchange contracts.

Credit risk is represented in the expected cost of foreign exchange contracts that takes place if other parties default to fulfill their liabilities. This risk is monitored continuously through comparisons of fair value and contractual amount, and in order to control the outstanding credit risk, the Bank evaluates other parties using the same methods as in borrowing activities.

Options contracts in foreign currencies and/or interest rates represent contractual agreements for the buyer (issuer) to the seller (holders) as a right not an obligation whether to buy (buy option) or sell (sell option) at a certain day or within certain year for a predetermined amount in foreign currency or interest rate. Options contracts are either traded in the market or negotiated between The Bank and one of its clients (Off balance sheet). The Bank is exposed to credit risk for purchased options contracts only and in the line of its book cost which represent its fair value.

The contractual value for some derivatives options is considered a base to analyze the realized financial instruments on the balance sheet, but it doesn’t provide an indicator for the projected cash flows of the fair value for current instruments, and those amounts don’t reflects credit risk or interest rate risk.

Derivatives in the Bank's benefit that are classified as (assets) are conversely considered (liabilities) as a result of the changes in foreign exchange prices or interest rates related to these derivatives. Contractual / expected total amounts of financial derivatives can fluctuate from time to time as well as the range through which the financial derivatives can be in benefit for the Bank or conversely against its benefit and the total fair value of the financial derivatives in assets and liabilities. Hereunder are the fair values of the booked financial derivatives:

21.1.1. For trading derivatives

EGP Thousands



Foreign currencies derivatives - Forward foreign exchange contracts 5,360,272 21,112 73,105 6,820,350 36,597 49,687 - Currency swap 3,628,415 18,243 12,807 1,640,985 3,117 5,860 Total (1) 39,355 85,912 39,714 55,547

21.1.2. Fair value hedge

EGP Thousands



Interest rate derivatives - Governmental debt instruments hedging 662,803 - 9,164 655,925 - 25,996 - Customers deposits hedging 7,103,638 12,934 37,782 11,506,784 287 115,441 Total (2) 12,934 46,946 287 141,437

Total financial derivatives (1+2) 52,289 132,858 40,001 196,984

21.2. Hedging derivatives21.2.1. Fair value hedgeThe Bank uses interest rate swap contracts to cover part of the risk of potential decrease in fair value of its fixed rate gov-ernmental debt instruments in foreign currencies. Net derivative value resulting from the related hedging instruments is EGP 9,164 thousand at December 31, 2018 against EGP 25,996 thousand at the December 31, 2017, Resulting in gains form hedging instruments at December 31, 2018 EGP 16,832 thousand against EGP 19,633 thousand at the December 31, 2017. Losses arose from the hedged items at December 31, 2018 reached EGP 34,193 thousand against losses of EGP 44,924 thousand at December 31, 2017.

The Bank uses interest rate swap contracts to cover part of the risk of potential increase in fair value of its fixed rate cus-tomer deposits in foreign currencies. Net derivative value resulting from the related hedging instruments is EGP 24,848 thousand at the end of December 31, 2018 against EGP 115,154 thousand at December 31, 2017, resulting in gains from hedging instruments at December 31, 2018 of EGP 90,306 thousand against losses of EGP 76,302 thousand at December 31, 2017. Losses arose from the hedged items at December 31, 2018 reached EGP 94,856 thousand against gains EGP 81,488 thousand at December 31 , 2017.



22. Financial investments

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Available for sale - Listed debt instruments with fair value 38,615,045 29,632,780 - Listed equity instruments with fair value 458,094 83,346 - Unlisted equity instruments by amortized cost 144,751 758,655 Total 39,217,890 30,474,781

Held to maturity - Listed debt instruments 73,598,251 45,135,209 - Unlisted instruments 32,513 32,513 Total 73,630,764 45,167,722

Total financial investment 112,848,654 75,642,503

- Actively traded instruments 108,496,980 73,721,199 - Not actively traded instruments 4,351,674 1,921,304 Total 112,848,654 75,642,503

Fixed interest debt instruments 110,985,264 72,612,620 Floating interest debt instruments 1,228,033 2,155,369 Total 112,213,297 74,767,989

EGP Thousands

Available for sale financial investments

Held to maturity financial

investments Total

Beginning balance 5,447,291 53,924,936 59,372,227 Addition 25,868,230 4,597,254 30,465,484 Deduction (1,361,027) (13,354,468) (14,715,495)Exchange revaluation differences for foreign financial as-sets (100,078) - (100,078)

Profit (losses) from fair value difference 512,016 - 512,016 Available for sale impairment charges 108,349 - 108,349 Ending Balance as of Dec.31, 2017 30,474,781 45,167,722 75,642,503

Beginning balance 30,474,781 45,167,722 75,642,503

Addition 12,670,761 33,995,313 46,666,074

Deduction (1,872,988) (5,532,271) (7,405,259)Exchange revaluation differences for foreign financial assets 102,991 - 102,991

Profit (losses) from fair value difference (2,118,094) - (2,118,094)

Released (Impairment) charges of available for sale (39,561) - (39,561)

Ending Balance as of Dec.31, 2018 39,217,890 73,630,764 112,848,654

21.1. Profits (losses) on financial investments

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Profit (Loss) from selling available for sale financial instruments 441,628 (99,047)Released (Impairment) charges of available for sale equity instruments (39,561) 254,588 Released (Impairment) charges of non current assets held for sale - 9,570 Total 402,067 165,111

23. Investments in associates

EGP Thousands


countryCompany's

assets


equity)Company's

revenuesCompany's


Associates- Fawry plus Egypt - - - - 14,100 23.50 - International Co. for Security and Services (Falcon)

Egypt 860,057 640,554 926,624 72,954 92,458 32.50

Total 860,057 640,554 926,624 72,954 106,558

EGP Thousands


countryCompany's

assets


equity)Company's

revenuesCompany's


Associates - International Co. for Security and Services (Falcon)

Egypt 512,388 367,470 505,461 52,695 65,039 32.50

Total 512,388 367,470 505,461 52,695 65,039



24. Other assets

EGP Thousands

Dec.31, 2018 Dec.31, 2017Accrued revenues 4,509,314 3,870,454 Prepaid expenses 186,797 230,296 Advances to purchase of fixed assets 768,733 522,211 Accounts receivable and other assets (after deducting the provision)* 3,790,709 2,193,590 Assets acquired as settlement of debts 276,520 45,083 Insurance 30,945 24,973 Total 9,563,018 6,886,607

* A provision with amount EGP 317 million has been created against pending installments.

This item includes other assets that are not classified under specific items of balance sheet assets, such as: accrued income and prepaid expenses, amounts paid in advance relating to taxes on bills and bonds, custodies, debit accounts under settlement and any balance that has no place in another asset category.

25.

Pro

per

ty, p

lant

an

d e

qui

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Add

ition

s du

ring

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- 6

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) 6

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359

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Add

ition

s du

ring

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- 7

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50,5

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50,

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57,

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are

in p

roce

ss.



26. Due to banks

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Current accounts 503,539 1,067,374 Deposits 6,756,280 810,544 Total 7,259,819 1,877,918

Central banks 190,801 128,527 Local banks 6,009,778 714,294 Foreign banks 1,059,240 1,035,097 Total 7,259,819 1,877,918

Non-interest bearing balances 257,355 740,158 Floating bearing interest balances 89,568 23,169 Fixed interest bearing balances 6,912,896 1,114,591 Total 7,259,819 1,877,918


27. Due to customers

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Demand deposits 92,422,114 72,442,872 Time deposits 43,561,846 49,952,470 Certificates of deposit 81,059,934 70,486,930 Saving deposits 62,812,279 53,075,098 Other deposits 5,440,696 4,765,682 Total 285,296,869 250,723,052

Corporate deposits 116,842,160 107,753,682 Individual deposits 168,454,709 142,969,370 Total 285,296,869 250,723,052

Non-interest bearing balances 48,741,931 43,229,085 Floating interest bearing balances 23,738,113 21,022,474 Fixed interest bearing balances 212,816,825 186,471,493 Total 285,296,869 250,723,052

Current balances 202,126,154 178,786,275 Non-current balances 83,170,715 71,936,777 Total 285,296,869 250,723,052

28. Other loans

EGP Thousands

Interest rate %

Maturity dateMaturing

through next year

Balance on Balance on

Dec.31, 2018 Dec.31, 2017

Agricultural Research and Develop-ment Fund (ARDF)

3.5 - 5.5 depends on

maturity date3-5 years* 117,286 125,429 87,314

Social Fund for Development (SFD)3 months T/D or 9% which is

more

4 January 2020* 13,380 13,380 41,882

European Bank for Reconstruction and Development (EBRD) subordi-nated Loan


International Finance Corporation (IFC) subordinated Loan


Balance 130,666 3,721,529 3,674,736

Interest rates on variable-interest subordinated loans are determined in advance every 3 months/every quarter. Subordi-nated loans are not repaid before their repayment dates.

* Represents the date of loan repayment to the lending agent.

29. Other liabilities

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Accrued interest payable 1,347,397 1,516,471 Accrued expenses 733,218 507,543 Accounts payable 4,101,884 3,277,350 Other credit balances 319,054 175,167 Total 6,501,553 5,476,531



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31. Equity31.1. capital

"Issued and Paid in Capital reached EGP 11,668,326 thousand at balance sheet date to be divided on 1,166,833 thousand shares with EGP 10 par value for each share and registered in the commercial register dated 26th August 2018.

• Increase issued and Paid in Capital by amount EGP 50,315 thousand on August 02,2018 to reach EGP 11,668,326 thousand (against EGP 11,618,011 thousand in 2017) according to Board of Directors decision on January 31, 2018 by issuance of ninth tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 79,351 thousand on May 24,2017 to reach EGP 11,618,011 thousand ac-cording to Board of Directors decision on November 9, 2016 by issuance of eighth tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 68,057 thousand on April 19,2016 to reach EGP 11,538,660 thousand according to Board of Directors decision on November 10, 2015 by issuance of seventh tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 2,294,121 thousand on December 10, 2015 to reach 11,470,603 accord-ing to Ordinary General Assembly Meeting decision on March 12 ,2015 by distribution of a one share for every four out-standing shares by capitalizing on the General Reserve.

• Increase issued and Paid in Capital by amount EGP 94,748 thousand on April 5,2015 to reach EGP 9,176,482 thousand ac-cording to Board of Directors decision on November 11, 2014 by issuance of sixth tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 79,299 thousand on March 23,2014 to reach EGP 9,081,734 thousand according to Board of Directors decision on December 10, 2013 by issuance of fifth tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 3,000,812 thousand on December 5, 2013 according to Extraordinary General Assembly Meeting decision on July 15 ,2013 by distribution of a one share for every two outstanding shares by capitalizing on the General Reserve.

• Increase issued and Paid in Capital by amount EGP 29,348 thousand on April 7,2013 to reach EGP 6,001,624 thousand ac-cording to Board of Directors decision on october 24,2012 by issuance of fourth tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 37,712 thousand on April 9, 2012 in according to Board of Directors decision on December 22,2011 by issuance of third tranche for E.S.O.P program.

• Increase issued and Paid in Capital by amount EGP 33,119 thousand on July 31, 2011 in according to Board of Directors decision on November 10,2010 by issuance of second tranche for E.S.O.P program.

• The Extraordinary General Assembly approved in the meeting of June 26, 2006 to activate a motivating and rewarding program for the Bank's employees and managers through Employee Share Ownership Plans (ESOP) by issuing a maximum of 5% of issued and paid-in capital at par value ,through 5 years starting year 2006 and delegated the Board of Directors to establish the rewarding terms and conditions and increase the paid in capital according to the program.

• The Extraordinary General Assembly approved in the meeting of April 13,2011 continue to activate a motivating and re-warding program for The Bank's employees and managers through Employee Share Ownership Plans (ESOP) by issuing a maximum of 5% of issued and paid- in capital at par value ,through 5 years starting year 2011 and delegated the Board of Directors to establish the rewarding terms and conditions and increase the paid in capital according to the program.

• The Extraordinary General Assembly approved in the meeting of March 21,2016 continue to activate a motivating and rewarding program for The Bank's employees and managers through Employee Share Ownership Plans (ESOP) by issuing a maximum of 10% of issued and paid- in capital at par value ,through 10 years starting year 2016 and delegated the Board of Directors to establish the rewarding terms and conditions and increase the paid in capital according to the program.

• Dividend deducted from shareholders' equity in the Year that the General Assembly approves the dispersment of this divi-dend, which includes staff profit share and remuneration of the Board of Directors stated in the law.

31.2. ReservesAccording to The Bank status 5% of net profit is used to increase the legal reseve to reaches 50% of The Bank's issued and paid in capital.

Central Bank of Egypt concurrence for usage of special reserve is required.



32. Deferred tax assets (Liabilities) Deferred tax assets and liabilities are attributable to the following:

EGP Thousands



Dec.31, 2018 Dec.31, 2017

Fixed assets (depreciation) (49,750) (31,409)Other provisions (excluded loan loss, contingent liabilities and income tax provisions) 53,552 31,038

Intangible Assets 53,657 36,712 Other investments impairment 65,788 56,698 Reserve for employee stock ownership plan (ESOP) 166,122 110,100 Interest rate swaps revaluation 4,695 5,340 Trading investment revaluation 7,394 (37,478)Forward foreign exchange deals revaluation 6,912 8,629 Balance 308,370 179,630

EGP Thousands



Dec.31, 2018 Dec.31, 2017

Movement of Deferred Tax Assets and Liabilities:Beginning Balance 179,630 181,308 Additions / disposals 128,740 (1,678)Ending Balance 308,370 179,630

33. Share-based payments

According to the extraordinary general assembly meeting on June 26, 2006, the Bank launched new Employees Share Ownership Plan (ESOP) scheme and issued equity-settled share-based payments. Eligible employees should complete a term of 3 years of service in The Bank to have the right in ordinary shares at face value (right to share) that will be issued on the vesting date, otherwise such grants will be forfeited. Equity-settled share-based payments are measured at fair value at the grant date, and expensed on a straight-line basis over the vesting period (3 years) with corresponding increase in equity based on estimated number of shares that will eventually vest(True up model). The fair value for such equity instru-ments is measured using the Black-Scholes pricing model.

Details of the rights to share outstanding during the year are as follows:

Dec.31, 2018 Dec.31, 2017No. of shares in

thousandNo. of shares in

thousand

Outstanding at the beginning of the year 21,280 22,351 Granted during the year 8,338 7,601 Forfeited during the year (828) (737)Exercised during the year (5,032) (7,935)Outstanding at the end of the year 23,758 21,280

Details of the outstanding tranches are as follows:

EGP EGP

Maturity date Exercise price Fair value No. of shares in

thousand

2019 10.00 28.43 8,433 2020 10.00 65.55 7,175 2021 10.00 68.13 8,150 Total 23,758

The fair value of granted shares is calculated using Black-Scholes pricing model with the following:

12th tranche 11th tranche

Exercise price 10 10Current share price 77.35 73.08Expected life (years) 3 3Risk free rate % 15.54% 16.77%Dividend yield% 1.29% 0.68%Volatility% 26% 30%

Volatility is calculated based on the daily standard deviation of returns for the last five years.

34. Reserves and retained earnings

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Legal reserve 1,710,293 1,332,807 General reserve 12,776,215 9,000,023 Capital reserve 12,421 11,815 Retained earnings 9,637,083 6,193,879 Special reserve 20,645 20,645 Reserve for A.F.S investments revaluation difference (3,750,779) (1,642,958)Banking risks reserve 4,323 3,634 IFRS 9 risk reserve 1,411,549 1,411,549 Ending balance 21,821,750 16,331,394

On 28 January 2018, Central Bank of Egypt issued instructions indicating the following:

Creating IFRS 9 risk reserve (1% of the total weighted credit risk) deducted from 2017 net profit after tax, to be used after obtaining CBE's approval, taken into consideration that IFRS 9 will be effective as of January 1, 2019.

34.1. Banking risks reserve

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance 3,634 3,019 Transferred to bank risk reserve 689 615 Ending balance 4,323 3,634



34.2. legal reserve

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance 1,332,807 1,035,363 Transferred from previous year profits 377,486 297,444 Ending balance 1,710,293 1,332,807

34.3. Reserve for a.F.S investments revaluation difference

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance (1,642,958) (2,180,244)Unrealized gain (loss) from A.F.S investment revaluation (2,107,821) 537,286 Ending balance (3,750,779) (1,642,958)

34.4. Retained earnings

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance 6,193,879 6,040,580 Transferred to reserves (3,994,924) (4,599,736)Dividend paid (2,143,177) (1,350,204)Net profit of the year 9,581,994 7,515,555 Transferred ( from) to bank risk reserve (689) (615)Disposal of subsidiary - (152)IFRS 9 risk reserve - (1,411,549)Ending balance 9,637,083 6,193,879

34.5. Reserve for employee stock ownership plan

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Beginning balance 489,334 343,460 Transferred to reserves (159,360) (145,010)Cost of employees stock ownership plan (ESOP) 408,346 290,884 Ending balance 738,320 489,334

35. Cash and cash equivalent

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Cash and balances with central bank 20,058,974 14,663,289 Due from banks 46,518,892 45,319,766 Treasury bills and other governmental notes 41,999,252 54,478,202 Obligatory reserve balance with CBE (13,526,763) (8,878,986)Due from banks with maturities more than three months (10,733,386) (1,719,586)Treasury bills with maturities more than three months (50,013,324) (54,653,848)Total 34,303,645 49,208,837

36. Contingent liabilities and commitments 36.1. legal claims

• There is a number of existing cases filed against the bank on December 31,2018 without provision as the bank doesn't expect to incur losses from it.

• A provision for legal cases that are expected to generate losses has been created. (Disclosure No. 30)

36.2. capital commitments26.2.1. Financial investmentsThe capital commitments for the financial investments reached on the date of financial position EGP 165,676 thousand as follows:

Investments value Paid Remaining

Available for sale financial investments 358,268 192,593 165,676

36.2.2. Fixed assets and branches constructionsThe value of commitments for the purchase of fixed assets, contracts, and branches constructions that have not been implemented till the date of financial statement amounted to EGP 198,026 thousand.

36.3. letters of credit, guarantees and other commitments

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Letters of guarantee 66,166,953 69,514,413 Letters of credit (import and export) 4,178,288 1,700,516 Customers acceptances 1,050,573 1,017,690 Total 71,395,814 72,232,619

36.4. credit facilities commitments

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Credit facilities commitments 9,173,782 7,024,376



37. Mutual fundsosoul fund

• CIB established an accumulated return mutual fund under license no.331 issued from capital market authority on Febru-ary 22, 2005. CI Assets Management Co.- Egyptian joint stock co - manages the fund.

• The number of certificates issued reached 3,449,254 with redeemed value of EGP 1,247,250 thousands.• The market value per certificate reached EGP 361.60 on December 31, 2018.• The Bank portion got 137,112 certificates with redeemed value of EGP 49,580 thousands.

istethmar fund

• CIB bank established the second accumulated return mutual fund under license no.344 issued from capital market au-thority on February 26, 2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


aman fund ( ciB and Faisal islamic Bank mutual Fund)

• CIB and Faisal Islamic Bank established an accumulated return mutual fund under license no.365 issued from capital market authority on July 30, 2006. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


Hemaya fund

• CIB bank established an accumulated return mutual fund under license no.585 issued from financial supervisory Author-ity on June 23, 2010. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


thabat fund

• CIB bank established an accumulated return mutual fund under license no.613 issued from financial supervisory author-ity on September 13, 2011. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


takamol fund

• CIB bank established an accumulated return mutual fund under license no.431 issued from financial supervisory author-ity on February 18, 2015. CI Assets Management Co.- Egyptian joint stock co - manages the fund.


38. Transactions with related partiesAll banking transactions with related parties are conducted in accordance with the normal banking practices and regula-tions applied to all other customers without any discrimination.

38.1. loans, advances, deposits and contingent liabilities

EGP Thousands

Loans and advances 5,414 Deposits 137,766 Contingent liabilities 1,309

other transactions with related parties

Income Expenses

International Co. for Security & Services 94 277,139 CVenture Capital 850 2,041

39. Main currencies positions

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Egyptian pound (636,384) 182,639 US dollar 578,745 (313,246)Sterling pound 2,189 (1,566)Japanese yen (20) (523)Swiss franc 658 637 Euro 37,144 46,768

Main currencies positions above represents what is recognized in the balance sheet position of the Central Bank of Egypt.

40. Tax statuscorporate income tax

• Settlment of corporate income tax since the start of activity till 2016• 2017 examined & paid• The yearly income tax return is submitted in legal dates

Salary tax

• Settlment of salary tax since the start of activity till 2017

Stamp duty tax

• The period since the start of activity till 31/07/2006 was examined & paid, disputed points have been transferred to the court for adjudication

• The period from 01/08/2006 till 31/12/2017 was examined & paid in accordance with the protocol signed between the Fed-eration of Egyptian Banks & the Egyptian Tax Authority



41. Intangible assets:

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Book value 651,041 651,041 Amortization (412,326) (282,118)Net book value 238,715 368,923

According to CBE's regulation issued on Dec 16, 2008, an annual amortization of 20% has been applied on intangible assets

42. Profit (loss) of disposal from discontinued operations

EGP Thousands

Dec.31, 2018 Dec.31, 2017

Profits from disposal of investments in subsidaries - 168,900 Total - 168,900

CIB have a minority stake of 10.00% of CI Capital Holding.

Minority stake has been transferred to available for sale due to the bank's intention for maintaining the ownership per-centage of such investment.

EGP Thousands

"CI Capital Holding Co. S.A.E"

Dec.31, 2018 Dec.31, 2017

Subsidary net assets - (701,170)Less:Add/Deduct:FX translation reserve - 8,588 Non-controling interests - 157,127 CI Capital Holding Co. S.A.E sold stocks (Net) - 704,355 Net - 168,900

Although the effective date of selling process is 20 March 2017, however, for the purpose of facilitating the calculation of the value of profits arising from the sale of shares, the net assets of the subsidary as at 31 December 2016 were adjusted by 2017 first quarter financial statements which is the earliest reliable date in the calculation of CI Capital shares selling profit.

Cashflow disclosures

43. Treasury bills and other governmental notes - net increase (decrease)dec.31, 2018

Dec.31, 2018 Dec.31, 2017

Total Net Total Net Change 91 Days ma-turity - -

Unearned interest - -

Net - - -

182 Days ma-turity 3,669,700 1,289,425


Net 3,583,357 1,202,358 (2,380,999)

364 Days ma-turity 49,441,511 57,602,997


Net 46,429,967 53,451,490 7,021,523


Net 50,013,324 54,653,848 Change 4,640,524

dec.31, 2017

Dec.31, 2017 Dec.31, 2016

Total Net Total Net Change 91 Days ma-turity - 1,051,375

Unearned interest - (22,416)

Net - 1,028,959 1,028,959

182 Days ma-turity 1,289,425 4,350,975


Net 1,202,358 4,086,410 2,884,052

364 Days ma-turity 57,602,997 36,010,730


Net 53,451,490 34,101,018 (19,350,472)


Net 54,653,848 38,187,428 Change (16,466,420)



44. Other assets - net increase (decrease)

EGP Thousands

Dec.31, 2018


Total other assets by end of 2018 9,563,018 Assets acquired as settlement of debts (276,520)Advances to purchase of fixed assets (768,733)Unrealized amount from avilable for sale investments (251,750)Impairment charge for other assets 316,763 Total 2 8,582,778

Change (1-2) (2,263,465)

EGP Thousands

Dec.31, 2017



Change (1-2) (863,655)

non cash transactions:Non-cash transactions that are not included in the statement of cash flows are as follows:

Dec.31, 2018EGP Thousands

Financial statements

balance Non cash

transactions Cash flow

balance

Proceeds from selling available for sale financial investments 2,314,616 255,275 255,275 Payment for purchases of subsidiary and associates (14,100) (3,525) (3,525) Other assets (2,515,215) (251,750) (251,750)


296 Annual Report 2018

Commercial International Bank S.A.E

Nile Tower Building21/23 Charles De Gaulle StreetGiza, Cairo, P.O. Box 2430Tel: (+202) 3747 2000Fax: (+202) 3570 3632www.cibeg.com

Documents

Beyond Banking - Commercial International Bank · 2019-05-02 · Commercial International Bank (CIB) was founded in 1975 as Chase National Bank, a joint venture between Chase Manhattan