Corporate Banking and Global Customer Relations (GCR) Groups

In a year of continued uncertainty on the back of the COVID-19 pandemic, CIB’s Corporate Banking and Global Customer Relations (GCR) Groups continued to support their corporate clients’ portfolios by providing best-in-class financial and advisory services. Clientcentricity and the ability to facilitate rapid recovery once an emergency or crisis abates has always been a trademark of CIB. The groups’ creativity and agility, coupled with the Bank’s strong liquidity and financial soundness, provided clients with a multitude of financial products and structures that helped alleviate the fiscal and operational challenges of the pandemic. Backed by a team of highly experienced bankers and the help of a strong credit culture across CIB’s core and support functions, the group was able to support clients in key industries while preserving asset quality.

2021 Highlights

The onset of the COVID-19 pandemic constrained Egypt’s growth prospects and consumption patterns, but 2021 has seen increasing demand on the back of macroeconomic and political stability. While Egypt still needs further structural reforms to sustain growth rates over the long term, the World Bank raised its GDP forecast to 5.5% for FY 2021. The coming period is expected to witness continued reforms on multiple fronts, including energy, government subsidies, and fiscal and monetary policies to help restore macroeconomic stability and spur growth. Additionally, the government is turning its focus to small- and medium-sized enterprises (SMEs) via several CBE-led initiatives to revive and support smaller players in what has become a highly competitive market. As such, Egypt’s economic growth prospects are strong in the medium term due to expected foreign direct investment (FDI), a healthy consumer environment, and the anticipated rebound in tourism activity after the impacts of COVID-19 eventually fade.

In line with CIB’s strategic plans for 2021, the groups’ vision focused on both its existing corporate loan portfolio and on supporting the nation’s development and mega projects as the backbone of the local economy. Top-line performance remained strong, benefitting primarily from robust deposit growth and the impressive revival in corporate lending, with the associated pickup in trade finance and foreign exchange trading activities falling in line with improved economic prospects. This favorable turn of events synchronized with the Bank’s flexible balance sheet structure, which helped preserve the balance between profitability and liquidity.

As of December 2021, the Groups’ loan and investment portfolio recorded EGP 113.47 billion. Corporate Banking and GCR sealed numerous key deals throughout the year, including, but not limited to:

  • Participating in an EGP 5 billion syndicated MTL deal to finance the General Authority for Land and Dry Ports Company’s expansion plans.

  • Extending direct facilities to support the expansion plans of the Egyptian Group for MultiPurpose Terminals to upgrade several quays in its Alexandria Port.

  • Supporting the plastics sector by initiating a transaction under the Egyptian Pollution Abatement Program mechanism (EPAP) to help both public and private institutions revamp existing operational plants and complexes in line with Egyptian environmental laws.

  • Extending medium-term loans to support pharmaceutical industry players by funding the establishment of biosimilar drug complexes and the required upgrades of various essential production lines, in addition to R&D-related expenditure. This will partially decrease dependence on imported vaccines and ensure the inclusion of the latest technological and most innovative in-house vaccine production complexes.

  • Helping an IT company set up a securitization program to support the sector.

  • Extending facilities to various e-payment and digital transformation operators in line with the government’s financial inclusion efforts

  • Participating in an EGP 10 billion syndicated MTL deal to finance the development of the Suez Canal Economic Zone, including, but not limited to, the funding of new terminals and industrial zones and their required power supplies, water and wastewater treatment facilities, gas stations and information technology systems.

  • Taking part in an EGP 11 billion syndicated MTL deal to finance the Egyptian National Railway’s (ENR) network expansion, including establishing new train lines, purchasing new locomotives, and replenishing spare part stocks.

  • Supporting the power sector by participating in both bilateral financing and syndicated facilities to help expand the electricity transmission sector and upgrade the national electricity grid.

  • Participating in a USD 200 million syndicated facility to finance the expansion plans of the Egyptian Natural Gas Company (GASCO), including the addition of a new gas derivatives train.

  • Extending contingent financing related to several key projects in the country, including the Greater Cairo Metro, the New Administrative Capital’s wastewater treatment supply, and the installation and upgrade of the Egypt-Saudi electricity interconnection lines.

2022 Forward-Looking Strategy

The Group’s strategy will continue focusing on its existing portfolio, providing the necessary financial and operational support required to revive macroeconomic stability. While focusing on our basic commercial activities, the group will also expand new offerings, such as green bonds and sustainable financing facility structures, thus driving value for our clients and CIB alike. On a macro level, the group will continue to support national investments in Egypt by financing key projects in the energy, healthcare, education, and infrastructure sectors, among others. Simultaneously, the Bank will continue evolving its digitization initiatives and streamlining its credit approval cycle, as well as automating customers’ daily operations, paving the way for further efficiency. In 2022, the group will continue to provide necessary support to SMEs, which are expected to be the driving force behind the next phase of Egypt’s economic growth.

Direct Investment Group (DIG)

The Direct Investment Group (DIG) is CIB’s investment arm when it comes to its engagement in direct equity finance transactions, such as acquisitions, divestitures, and equity portfolio management across local and regional markets. DIG’s principal objective is to maximize CIB’s return on investments by utilizing the Bank’s designated funds to invest in sectors with high potential for growth, through either buyout or growth capital investment transactions. DIG’s main goals revolve around generating attractive, risk-adjusted returns through dividends and capital appreciation, as well as enabling CIB to offer a complete financing product spectrum to support client growth and maintain CIB’s competitive position with local banks. Furthermore, DIG has a crucial, in-house advisory role supporting other departments that require oversight and validation from an equity, investment, or evaluation perspective.

DIG is led by a team of specialized investment experts executing the Bank’s mandate to invest in private companies with the potential to grow through clear business models, competent management, aligned shareholders, and solid fundamentals. DIG commits to operational excellence by adopting industry best practices, which is supported by our unique value proposition as a full-fledged financial partner.

2021 Highlights

The COVID-19 pandemic has continued to impact worldwide economic activity and the investment climate. However, vaccine rollouts have provided signs of recovery and stabilization across financial markets. In Egypt, signs of equity market recovery have become apparent in 2021 on the back of stabilization in overall market conditions following the success of the Egyptian government’s vaccine program and well-structured finance support packages to the most negatively affected sectors by COVID-19 pandemic.

With this recovery, DIG has been able to successfully execute exit transactions postponed from FY 2020, especially those in the financial services and tourism portfolios, with substantial returns. DIG also managed to secure a healthy level of dividend income from its existing investment portfolio. On the portfolio expansion front, DIG executed a sizeable equity transaction through a full-fledged cooperation agreement with one of Egypt’s top real estate players by establishing a commercial real estate company. DIG is currently in the final stage of executing a stake in another potential company operating in the electrical supply sector.

2022 Forward-Looking Strategy

Capitalizing on Egypt’s focus on key sectors, DIG’s portfolio build-up strategy is to continue to expand and diversify its portfolio by executing quality investment transactions that provide CIB with the opportunity to create possible synergies and strategic alliances, hence generating attractive financial returns for the Bank.

DIG’s marketing team will opportunistically target new acquisitions in sectors that are expected to see sizeable growth, including education, healthcare, pharmaceutical, food and beverage, industrial power, and electricity. With regards to DIG’s planned exits in 2022, the group will take advantage of the expected EGX recovery and offload part of CIB’s investment portfolio that is listed and traded on the EGX to maximize underlying returns. From a portfolio management perspective, DIG will continue safeguarding the Bank’s economic interest in its existing portfolio, maintaining its position as a full-fledged financial service provider. This includes the active participation in companies’ boards and general assemblies, maximizing all possible direct and indirect investment returns from the investment portfolio.

Interest in investment products with ESG mandates has grown exponentially in the last several years. With this in mind, and in accordance with CIB’s responsible investment and banking initiatives, DIG will continue focusing on its green investment initiatives, which target investments in companies that adopt ESG standards or are planning to expand into green projects.

Debt Capital Markets (DCM)

CIB’s Debt Capital Markets Group (DCM) prides itself on its unmatched track record and experience in advisory, underwriting, structuring, and arranging large-ticket syndicated loans and project finance, as well as securitization and bonds. DCM also has a dedicated leading agency and security agency desk.

2021 Highlights

In 2021, DCM was active in the secondary market, working in conjunction with partner banks, as well as Corporate Banking and GCR, to close 18 transactions in the secondary market, resulting in a direct, immediate increase in CIB’s loan portfolio of EGP 19.3 billion in FY 2021.

Additionally, DCM successfully closed syndicated and project finance loans equivalent to EGP 31.5 billion in FY 2021, of which CIB’s share amounted to EGP 4.4 billion, for public and private sector companies across several sectors, including oil and gas, ports, infrastructure, real estate, power, telecom, and construction. In 2021, CIB participated in the arrangement of one of the largest syndicate transactions in the construction sector to finance a landmark project through an EGP 12.2 billion syndicated loan, of which CIB’s share amounted to EGP 1 billion. CIB was appointed security agent, IMLA, and bookrunner for the transaction.

We have also worked with our private sector customers on restructuring and re-engineering their balance sheets, which included providing advisory services to one of the leading companies in the petrochemical sector. Transactions worth EGP 6.7 billion have been successfully closed in this regard, of which CIB’s share amounted to EGP 1.9 billion. DCM is also co-advising a leading real estate developer on establishing the first phase of a state-of-the-art educational platform in one of the newly developed cities for a total investment cost of EGP 3.4 billion. CIB is co-advising on the optimal structuring of the platform by arranging the required funding, including debt and equity from local, regional, and international investors and lenders.

In terms of agency services, DCM was pegged as sole account bank and security agent for the first inland dry port project in Egypt, which is sponsored by a leading Egyptian company and financed by the EBRD. The project is the first public-private partnership (PPP) project in the sector and the first under the EBRD Green Cities program in Egypt.

DCM continued to play a pivotal role in advising and arranging securitization issuances in cooperation with several partner banks, closing deals worth EGP 6.3 billion in FY 2021, thus cementing CIB’s position as one of the leading Egyptian banks in structuring local securitization.

2022 Forward-Looking Strategy

DCM aims to apply a manifold strategy for growth in the year to come. On the project finance and syndicated loan front, including agency and advisory services, DCM will continue screening the market and aligning with Corporate Banking and GCR to capture new business opportunities across sectors, with a special focus on key sectors, such as infrastructure, real estate, construction, petrochemicals, and energy. It will also work on structuring and promoting green loans and sustainable initiatives.

It will also focus on generating additional fee income from the agency services, while continuing to promote DCM products in the market, extending business partner promoters to include reputable international banks and IFIs in the global market. This is set to carve out more business opportunities for CIB to participate in potential international syndications in the local and regional market. As such, for FY 2022 DCM has lined up a solid pipeline of deals in the syndicated loan and project finance space worth EGP 41 billion.

In the securitization and bond space, DCM’s strategy includes maintaining the existing client base by offering services at competitive pricing and attracting new potential clients in the market to position CIB as their bank of choice. We also plan to aggressively introduce new sukuk, green sukuk, and green bonds and to continue working with the regulator to adopt more innovative structures that will pave the way for new industries to enter the debt capital market. As such, DCM has been awarded programs for new securitization and bond issuances valued at EGP 17 billion, with deals worth EGP 9 billion in the pipeline for FY 2022 alone in the following sectors: factoring, mortgage finance, consumer finance, microfinancing, and real estate.

Financial Institutions Group (FIG)

The Financial Institutions Group (FIG) covers three business segments: 1) Correspondent Banking, Trade Finance and International Payments, 2) Non-Bank Financial Institutions, and 3) Development Finance. The teams are CIB’s first point of contact for bank and non-bank financial institutions, and they manage the Bank’s relationships with different global institutions, including loans, trade finance, and investments, as well as agency management and promotion activities for development programs in partnership with development institutions, government agencies, and local banks.

2021 Highlights

2021 saw a continuation of global correspondent banks working remotely and increasing their reliance on communication technology. Africa continued to be a priority for correspondent banking; our coverage has grown to 37 countries through a network of local and Pan-African banks, in addition to several African multilateral financial institutions. This includes CIB’s recently acquired subsidiary in Kenya, Mayfair CIB Bank, in addition to establishing our representative office in Ethiopia, a reflection of CIB’s commitment to growing its business in Africa and to supporting our clients venturing into new markets, especially in sub-Saharan Africa.

In 2021, correspondent banking continued to grow its contingent trade finance portfolio related to mega projects, recording 12% y-o-y growth. This reflected in the total trade finance fees and commissions 10% growth compared to 2020. It is of note that correspondent banking witnessed a 9% total revenue growth.

By the end of December 2021, the Development Finance (DF) segment had, through managing developmental programs, served 13,099 agri-business beneficiaries with approved developmental agri-loans worth a total of EGP 429.4 million. Among those credit lines and development programs is the Sustainable Agriculture Investment and Livelihood Project (SAIL), which targets small farmers to help enhance their living standards by providing tailored loans in certain geographic areas, including Aswan, Beni Suef, and Minya. Development Finance, together with the Non-Banking Financial Institutions (NBFI) team, increased their y-o-y microfinance portfolio by 107% and accomplished a market share of 9%*. Some 41% of this was directed to women micro entrepreneurs. DF also supports CIB’s financial inclusion activities by offering customers a wide range of innovative, tailored financial services to meet their needs, such as digital collections and disbursement to MFIs through CIB’s Smart Wallet. Building on existing CIB services, such as ACH, DF introduced cash management solutions to customers.

Despite a pickup seen in the second quarter of the year, 2021 was challenging for direct loans under the NBFI segment due to intense competition. In saying this, the division captured significant market share of existing demand by introducing lower prices or new products. The NBFI division maintained strong asset quality of financed loan portfolios related to all clients, with zero defaults and minimal NPLs under various financed portfolios directed to the leasing, car finance, and microfinance sectors. NBFI focused on wider market coverage and succeeded in onboarding new-to-bank clients in the newly regulated consumer finance market, among others. This strategy led to loan portfolio growth of 97% in yearend 2020, of which the microfinance portfolio grew by 107%, with the collaboration of DF. Some 42.77% of this was directed to women micro-entrepreneurs. On the investment side, while new issuances were minimal until the third quarter of the year, we participated in the second sukuk issuance transaction of an NBFI company issued for EGP 700 million. Furthermore, the expansion of the market into factoring, consumer finance and the increasing of MFI lending limits promises a rapid growth rate in securitization issues over the coming two years. Other securitization transactions are expected to take place prior to year-end related to leasing and auto finance. We also participated in several securitization transactions prior to year-end, amounting to a total of EGP 1.7 billion, which are related to the leasing sector. This led to an investment portfolio growth of 54% compared to last year.

In line with the Bank’s strategy to promote financial inclusion, we have supported the Digital Channels team in introducing CIB Smart Wallet to microfinance institutions for the automation of micro lending. NFBI also helped the team introduce CIB Business Online, ACH products, and the issuance of Co-Branded Cards to our clients in the nonbank segment. New FX facilities were extended, in addition to the facility granted to a credit-worthy insurance company that enhanced utilization under new CBE initiatives.

2022 Forward-Looking Strategy

FIG will continue to work on expanding our correspondent network in sub-Saharan Africa, especially supporting the growth and development of our subsidiary in Kenya, while identifying potential African trade finance opportunities, as well as select infrastructure projects involving Egyptian contractors in key markets in East Africa. We will also continue to approach credit insurance companies that will boost trade finance activities with other African countries.

We aim to continue being the leading private bank in managing developmental funds. We also intend to enhance our operational effectiveness and efficiency through upgrading the current system and to effectively market our financial services and digital solutions. Development Finance (DF) is working closely with our Sustainability Team to encourage clients to resort to green investments on the back of technical assistance and grant funding arranged by DF.

We are growing our loans to the microfinance sector in line with the CBE’s mandate to direct 25% of the Bank’s total loan portfolio to SMEs and microfinance clients, aiming to prop up financial inclusion and women’s empowerment. We are also looking to expand the sectors we are financing by approaching mortgage and fintech players and increasing the penetration in other NBFI sectors, such as leasing, car financing, microfinance, factoring, and consumer lending. Additionally, we are marketing securitization programs authorized by the FRA, thereby enhancing CIB’s investment portfolio. We are also targeting insurance, investment, and brokerage companies to absorb their LCY deposits.

Treasury Group (TCM)

2021 Highlights

In the current dynamic market conditions, the adaptability and deployment of contemporary technology is primary to achieving the best treasury management results. Consequently, CIB Treasury Group was determined to make the best choice of technology and invest in one of the top Treasury Front Office Systems in financial markets that effectively fits the requirements and rollout an integrated cross-asset value chain.

Putting into consideration that the value of a treasury transaction is not only in its execution but also in both the reporting and information that accompany the transaction, CIB Treasury Group has demonstrated such a significant investment that serves as the foundation of business decisions.

Such distinguished investment has allowed the consolidation of money market trading and banking book exposures, as well as submissions from all investment trading activities, enabling central and local funding needs to be managed on a single platform and optimizing capital usage and risk charges at trading decision level, as well as supporting the development of new business via electronic distribution of vanilla and exotic products to institutions’ core client base and reassessing business strategies.

Despite the exceptional circumstances that were imposed as a result of the pandemic, CIB managed to adapt and implemented extensive measures by setting its policies to ensure staff safety and business continuity.

The lockdown affected every sector—tourism, oil and gas, and airlines, to name a few. This was especially the case for sectors associated with the sell-off from foreign portfolio investors, which caused pressure on the FX, interest rates, liquidity front and a drop in our FX resources at that time. In addition, we managed to maintain sustainable FCY resources, liquidity, and allocations, as there was a struggle to maintain volumes and spreads.

In our quest to optimize strategic balance sheet management, we were able to constantly balance between the funding structure that supports our commercial activities at acceptable costs, introducing diverse maturity schemes to meet our different clients’ clusters needs, and our assets allocation, changing our portfolios mix driven mainly by our interest rate view, tax benefit, and proper duration to maximize the IRR, NIM, and NII. On the Foreign Exchange front, we successfully leveraged on our trading position to benefit from market volatility and play a big role in the interbank market, and we successfully met our clients’ needs at competitive rates.

2022 Forward-Looking Strategy

The Treasury Group’s main focus is to sustain the growth in the net interest income and the net interest margin through the management of short-, mediumand long-term investments at the best rates. The Group will continue to set risk management policies to mitigate any funding risk that might arise from the global tightening or pandemic situation. The foreign exchange team will focus on providing in depth insights to clients to help hedge their exposure and cater to their needs while effectively managing the bank’s position to maximize profitability.

Strategic Relations Group (SRG)

The Strategic Relations Group (SRG) is an institutional banking group dedicated to initiating, nurturing, and growing banking relationships with strategic institutional depositors who are essential contributors to CIB’s stable funding base. The group’s primary objective is to offer a first-class banking experience while maintaining the balance between mainstream commercial banking activities and its clients’ noncommercial needs. CIB takes pride in being the sole bank operating in Egypt with a focus group, exclusively dedicated to servicing its prime institutional entities. SRG carries out this function through highly qualified Relationship Managers whose role is to ensure that customers receive superior, personalized services catering to their respective business needs.

SRG provides tailored banking services with a focus on digital banking solutions, including bespoke GTS products and short-term bridge finance facilities for the educational sector to eliminate cash-flow gaps that develop throughout the year. SRG’s strategic clientele consist of more than 180 diplomatic missions, NGOs, educational entities, and international and local donor agencies. The team facilitates clients’ operations and meets their banking requirements by creating innovative and tailored products and services. Its functions include offering customized digital solutions, the collection of tuition and visa fees, the monitoring and reporting of deposit activities, fund management, and savings plans, as well as providing a settlement system between tourism companies and airlines and special offerings for staff loans. Although COVID-19 led its foreign clients to pause certain activities, SRG successfully continued to conduct its business with foreign entities. SRG lever-aged electronic channels to ensure business continuity and expanded the use of GTS products in accordance with the Bank’s strategy. SRG relies heavily on data analytics and digital banking in all aspects of its busi-ness decisions, including performance analysis, pricing strategies, and customer behavior analysis. Technology, in particular digital banking, is a key marketing tool that the SRG team leverages when marketing CIB products.

2021 Highlights

Despite the hurdles faced in 2021 as a result of the COVID 19 pandemic, the group successfully lever-aged on marketing CIB’s digital banking solutions to increase our funding base, boosting the groups’ SOW with existing clients as well as attracting a significant number of new-to-bank (NTB) clients.

2022 Forward-Looking Strategy

The group has become one of CIB’s primary channels for corporate lead generators, leveraging on existing relationships while simultaneously capturing NTB opportunities by creating a wider networking base. A tailored, short-term bridge finance facility was designed and implemented for the education sector, including universities and schools, to eliminate cash flow gaps that develop during the year. This product is poised to become a major attraction for these institutions, helping expand our institutional depositor rate and enhance the utilization of CIB’s digital banking solutions.

Enterprises and Governmental Relations (EGR)

Since its establishment in 2016, the Enterprises and Governmental Relations (EGR) Group has positioned itself as a market leader, focusing on large enterprises and governmental institutions.

Over the last couple of years, EGR’s role evolved to manage relationships with large private sector companies, conduct fundraising, and attract customers previously segmented under state-owned enterprises, government entities, and sovereign authorities. In 2021, EGR’s role expanded to include a diversity of banking business solu-tions and products to top-tier clients, and to increase the Bank’s market share in this industry. Aside from the usual financial and advisory assistance provided, EGR clients require higher flexibility and constant support in their transactions. The group caters to the needs of these strategic customers through tailored products and services, all while growing CIB’s business.

2021 Highlights

During 2021, EGR continued to leverage the power of digital banking to offer clients an exceptional banking experience in cash management, trade management, and Corporate Payment Services (CPS), allowing it to achieve remarkable growth in all its GTS services ratios. EGR also expanded its institutional banking liabilities portfolio by EGP 18 billion y-o-y, a 28.50% increase, growing its lending capabilities and achievements in the trade finance business in comparison to the previous year by recording aggregate trade finance of EGP 14 billion, a 16% increase from the previous year.

2022 Forward-Looking Strategy

In the coming year, the division seeks to achieve a solid presence in the market and manage its relationships with clients in a sustainable manner that drives value for its customers. EGR aims to do this by growing its market database and utilizing digital banking and other technologies to better the business and ease clients’ rela-tions with the Bank. At the same time, where possible, the Bank will look at decreasing transaction costs to maximize revenue through using alternative digital channels and e-banking business solutions.

In 2022, EGR will continue to play a crucial role, while increasing the Bank’s total portfolio and market share. The team will also continue to match its clients’ requirements with the best banking busi-ness solutions available in the market and increase its customers’ penetration by sustaining its position as a client-centric organization and preferred service provider. This should lead to an increase in banking product penetration and revenues.