Good morning and good afternoon, everyone. This is our customary disclosure statement. This call is intended for investors and analysts only. As such, if any media representative has gained access to this call, kindly hang up now. Certain information disclosed during this earnings call consists of forward-looking statements reflecting the current view of the bank with respect to future events and are subject to certain risks, uncertainties, and assumptions. Many factors could cause the actual results, performance, or achievements of the bank to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including worldwide economic trends, the economic and political climates of Egypt, the Middle East, and changes in the business strategy, along with various other factors.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may materially vary from those described in such forward-looking statements. The bank undertakes no obligation to republish revised forward-looking statements to reflect changed events or circumstances. That ends the disclaimer statement. I will now hand it over to Mrs. Yasmine Hemeda to give a brief overview of the bank's result.
Thank you, Nelly. Good afternoon, everyone, and thank you for joining us today for the presentation of our nine months 2026 results. We are pleased to share another set of results that reflect the continued strength and resilience of our franchise. As we reflect on the performance of the first nine months, I think it is worth taking a step back and looking beyond the numbers themselves. In banking, growth opportunities, market dynamics, and business drivers will naturally evolve over time. They create momentum, open new avenues, and add important dimensions to a bank's performance. Ultimately, what defines a successful banking franchise and what allows it to sustain its performance across different cycles is something much more fundamental: the strength of its core business, the quality of its underlying fundamentals, and the consistency of its strategic direction. This is perhaps where our franchise track record speaks for itself.
Over the years, we have navigated different economic cycles, periods of uncertainty, and more recently, a particularly challenging regional environment that was marked by geopolitical tensions and their broader spillover effects on our domestic market and operating environment. Through all this, our core strengths have remained firmly intact. Our ability to preserve the resilience of our business, maintain sound fundamentals, and continue delivering sustainable performance is a reflection of the depth and durability of the franchise we have built. While we remain focused on capturing new opportunities and pursuing our growth ambitions, we do so from a position of fundamental strength, which in our view is what ultimately matters most. With that, let me walk you through the key highlights of our nine months' performance. We delivered consolidated revenues of EGP 103 billion and net income of EGP 63.1 billion, translating into reported earnings of 2% year-on-year.
Importantly, adjusting for the exceptional EGP 13.1 billion provision recalibration release that was recognized in the third quarter of 2025, along with a couple of non-recurring items as well, a regulatory expense reversal of EGP 2 billion and the provision release of EGP 2.1 billion related to a single corporate client repayment, the net income grew by a healthy 18% year-on-year, or 9% in US dollar terms, reflecting the strength of the bank's underlying earnings capacity. A resilient and diversified revenue base remained the primary driver of our performance. Net interest income grew by 19% year-on-year, supported by sustained business expansion and proactive liquidity management, while maintaining a strong funding mix that generated an NIM of 8.40%. Non-interest income also recorded robust growth, increasing by 46% on a normalized basis, supported by 43% continued expansion in the sustainable stream therein, mainly fees and commissions.
Together, these dynamics translated into 20% growth in the bank's normalized top line. Balance sheet expansion remained equally strong. Deposits grew by 31% year-to-date to record EGP 1.45 trillion, with local currency deposits increasing by 42%, while the gross loan portfolio reached EGP 705 billion, representing 22% growth over the same period, with local currency loans increasing by 15%. Notably, 63% of total deposits were maintained in CASA, reinforcing the quality of the bank's funding base and supporting margin resilience that compressed by a confined 53 basis points amid the cumulative 600 basis points of monetary policy rate cuts. Profitability and efficiency remained firmly anchored in disciplined execution. The bank delivered an ROE of 34.3%, and when you adjust for the normalization, around 32.7%, alongside a healthy cost-to-income ratio of 15.6%, which reflects continued expense discipline while investing in our technological infrastructure and digital transformation.
More importantly, these results were achieved while maintaining strong capital and asset quality buffers. The capital adequacy ratio stood at 28.8%, including a common equity tier one ratio of 25.3%, while non-performing loans remained contained at 1.47%, with a coverage ratio of 343%. More relevantly, the unsecured gross loans coverage ratio stood at 7.30%. Taken together, these results reflect more than a strong nine-month performance. They demonstrate the value of CIB's business model that is anchored in strong fundamentals, a strong balance sheet, sound asset quality, and sustained earnings capacity. These have been the constants underpinning CIB's journey through a changing economic and market conditions, and they remain central to our ability to adapt, seize opportunities, and continue to deliver sustainable value for our shareholders over the long term. This ends my opening statement, Aibek. I refer it back to you for the Q&A.
Yeah, thank you very much. I would like to begin the Q&A session. You can raise your hand to ask a question. We will unmute your line, so you can ask a question. You can also send your question into the Q&A box, and in which case we can read it out for you. We will start our first question from the line of Rahul Bajaj. Rahul, please unmute yourself. Please ask your question.
Hi. Thanks for taking my question. This is Rahul from Citi. I have three questions, if I may, please. The first one is on the credit release that we saw in the third quarter. Could you please give some more color on what is driving the sizable credit release and if this is a one-off or you expect more of such releases heading into the fourth quarter in 2027? That is my first question. My second question is on guidance for 2026. If you could provide some big picture pointers of any changes you would see on your earlier sort of communicated guidance, that would be useful. My third and final question, slightly more technical. If I look at note 13 on EPS, I see board member bonus for nine months as EGP 160 million.
But if I look at the first half result, similar disclosure, board member bonus was around EGP 600 million. Just trying to understand how did it go from EGP 600 million in six months to EGP 160 million in the nine months. Am I reading it correctly or if there is maybe a kind of typo there? I do not understand. Thank you.
Thank you, Rahul. I will take the guidance question and then I will hand it over to our Group CFO to tackle the two questions. We still reiterate our guidance that we have been giving since the beginning of the year, and let us start at bottom up. Bottom line, we are expecting growth between 15%-17% over the 70, which is basically normalized for the recalibration of the 13.1. This will be driven by growth both on the net interest income and non-interest income lines. Loan growth will record between 20%-25% on a blended basis. It will be mainly driven by local currency loan growth that will be coming mostly in the form of working capital facilities, very short term. We are talking about somewhere between 25%-30% on the local currency front. On the foreign currency front, we are talking about very low teens.
So the blended will be 20%-25%. The NIMs will continue the gradual compression that we have been naturally and normally seeing since the beginning of the year. We started the year guiding for a compression of around 60-70 basis points for the full year, and it is still the same. We are still expecting the same 60-70 basis points. The ROE will be somewhere between 33%-35%. The only upside or slight difference in terms of guidance is on the deposit side. We started the year guiding to 20%-25%. We are changing that to 30%. What is more important to note that at least 50%-60% of the growth in the deposits will be coming in the form of CASA, and this will continue help us manage the ever-changing interest rate environment and the cost of funds and all of that.
This is the only change to the guidance that we have been giving since the beginning of the year. In terms of cost of risk, we still maintain the same guidance. We are talking about somewhere between 0.5%-0.7%. I will hand it over to our CFO to talk about specifically the reversal of the provision along with the clarification on the note that you asked for.
Thank you, Yasmine. It was the reverse for the provision. It was a single tourism client. It is one-off transaction. It is not recurring by nature. The amount was EGP 2.1 billion. Again, as I said, it is not recurring by nature. Regarding the EPS, it is a very technical point. Thank you, Rahul, for picking that. This EPS standard, according to the IFRS notes guidance, we need to make it according to the bylaws of the bank. This is not exactly what we will pay at the end of the year. What we will pay at the end of the year is basically subject to the general assembly approvals. At the same time, we are obliged to moving with that linear kind of a calculation according to the bylaws.
What we are actually paying will follow the trend we used to follow over the past years. We will not get out of that for sure.
Got it. I have one quick clarification, if I may, on the NIMs. I hear that there is no change in guidance. I just wanted to understand the 100 basis points rate hike, which happened recently. Do you not expect that to have a positive impact on margins in fourth quarter, or should we expect sequentially margins to continue to compress in fourth quarter?
Well, technically, when you look at the NIM, I think you need to look for it as a flow. Technically, when you get back 12 months, the total cuts was at the range of 600 basis points. The sensitivity, because of the elasticity of the curve you are running within the bank, was almost 53 basis points at an NIM level. This is basically the elasticity ratio between 600 basis point and the 53 basis point. We will continue with the same elastic trend, giving our view for growth and the composition of our liability proposition for the coming 12 months even. We are still in the middle of our budgeting exercise. I expect the sensitivity will continue this way going forward.
Understood. That is very clear. Thank you so much.
Thank you.
The next question is coming from the line of Waruna Kumarage.
Hello?
Yes, please go ahead, Waruna.
Yeah. I am audible, right?
Yes. Yeah.
Yes. Thank you. Thank you, Aibek. Thank you, management, for this call. I have a few questions. The first one is related to the cost of funding, because I recall that this has been kind of an issue recently, especially in the Egyptian banking system. I just want to get an idea, especially with, I think, your deposit growth, this quarter is far higher than your loan growth. So, just want to get an idea as to whether this was still the case during this quarter, because you can still see the NIM compression quarter-to-quarter. Looking at the exit rate in 4Q, do you expect, how much more NIM compression do you foresee in next year? Because I think the consensus expectation is that there won't be many interest rate cuts possibly until maybe middle of next year.
If my assumptions are correct, and if this is the case, how NIMs are going to pan out in the next year? That is my first question. Can I ask all the questions, or can we take one by one?
Yes, please. Please, go ahead.
Yeah. Second question is on the loan growth again. I mean, if I look at the run rate, I am not sure whether this is the right way to look at it, but in terms of run rate, the originations in 3Q was, although it was healthy, but it is slower than the previous two quarters. I just want to get an idea as to I mean, this is despite you managed to get the deposits. So was there like a slowdown in demand because of the geopolitical situation, or is it something to do with that? So that is my second question. Thank you.
So, let me highlight first your analysis for the deposit side. When you look at the deposits, you do not need to take a single product and build your analysis on. You need to look at the customer deposit base. So our cost of fund went down actually 290 basis points, even with all the inflationary pressures we are witnessing as we speak, when you take into consideration all the blended cost of funds for each single product. So that is what maintained our sensitivity to interest rate cuts at the range of 53 basis points, to cuts of 600 basis points. At the same time, our funding strategy, it does not depend on term deposit acquisition only. It is very well-diversified funding strategy.
Even with the huge acquisition on the term deposit, you need to know that each EGP 1 we acquire on the term deposit side generates another EGP 2 of current accounts and saving. That is what we led at the end of the day to almost a 66% of CASA to total deposits and reduce the elasticity or the change in our NIMs to the cuts or even the hikes of the moves on the yield curve. A big part of our strategy when it comes to funding is what we are doing with payroll proposition, providing a scalable source of structural low-cost funding. What we do on the acquiring business and creates flow and enhance and strengthen our relation with our corporate clients to secure more float and cheaper funds.
The SME segment currently is a great source of funding when it comes to CIB total funding base, and actually it is very cheap funding base and a great source of foreign currency funding base, by the way. On the loan growth, I think we are running a very healthy loan growth at 22% compared to 31%, and to maintain the loan-to-deposit ratio around the guidance we gave last time at the range of 59%. Omar, do you want to add something on the loans?
I think if you go back to the beginning of the year, we had a tremendous loan growth in Q1. That was before the US-Iran war. Things have been completely different back then, and things have been stabilized in terms of macroeconomic conditions, and the economy was ready to take off. Then the US-Iranian conflict war happened, and then things have been very changed. So we have been very cautious about managing our cost of funds in a tightening monetary policy conditions, and we have been growing our loan portfolio as steady while we are prioritizing the repricing for efficiency of the balance sheet and efficiency of the managing our spreads and NIMs. So we did not trade margins for growth. That is the message I wanted to leave with you, especially for the steady loan growth for Q3.
Okay, thank you. If I may follow up regarding the loan growth. Actually, I was most focused mostly on the third quarter, so maybe that is kind of slowdown is on the back of very strong first half that you had. I mean, if I am to follow up on, I mean, if I am to dig deeper in terms of the breakup of this growth. The foreign currency loan growth has been very healthy this year. So is it mainly coming from tourism or any other export-related? Is that what is driving? In term following up on the NIM question, I was looking to see whether any kind of guidance that you can give into next year, assuming that there won't be I mean, these rate cuts is going to be probably delayed till middle of next year.
What kind of trends of NIMs can we expect next year? Is it too early to predict?
Okay, I will slice the answers to different parts. First part, if you look at the foreign currency loan-to-deposit ratio in the banking sector, inclusive of CIB, it hovers around 90% plus, while for CIB it was much, much more lower. We started the year at almost 30%. We had ample liquidity that we need to deploy. That is why we have been very open to increase our loan portfolio, especially on the foreign currency. That is one. The sectors that we have been witnessing growth, tourism, definitely. Tourism has been doing fantastically well during this year, although the geopolitical tensions that we have been witnessing. Healthcare as well, we saw it. Textiles has been booming. Agri as well has been growing. Education. Education as well. We started to see education in terms of demand on foreign currency loans. It is across the main revenue streams.
I have to remind you that as per the Central Bank of Egypt regulations, we can only lend foreign currency to customers that they can generate only foreign currency on their side. For 2027, we are still in the budget exercise. My rough assumption for now until we finalize, it is between 15%-20%. We might even go up to 25%, but still too early until we finalize the budget exercise.
Sorry, what is that, 15%-20%?
Yeah, so this is like an initial guidance, and I think it's safe to assume that whatever rates that you see in 2026 will be maintained in 2027. Omar was trying to say is that we're still in the budget cycle, and once it's done, I'll be able to communicate with you with a certain degree of affirmation what will be the guidance for 2027. There's still a lot of moving factors. We're still reaching out to the clients, and we're still figuring out how much exactly to expect.
All right. Okay. Thank you and good luck.
Thank you, Waruna. Thank you.
Thank you. We don't have live questions, but we do have a question in the Q&A box, which is about the digital bank. So the question is asking, "Why is the HoldCo for the digital bank is set up in Abu Dhabi, and can you please confirm that CIB owns 100% of the yomo Holding?" Relating to this, I would like to also add one question on the digital bank from myself, right? Can you please explain to us how will yomo target customers and needs that CIB's existing digital franchise does not already serve? That's first part of my question. Relating to that, what customer acquisition break-even milestones will govern further funding for yomo, and how will you manage potential cannibalization risks associated with yomo launch? Thank you.
That is a combo question.
Yes, yes, Zekry.
It is a combo question, yeah. The first one-
I can answer the ones in the box for you, Zekry, and then you can take all the strategic ones. Yes, CIB owns 100% of yomo for now, and the second one that he is asking is, why did we establish the HoldCo in Abu Dhabi? Then all the strategic things that he asked for.
Okay, the choice of Abu Dhabi, or ADGM more specifically, as we've taken that decision after a thorough study across all jurisdictions, where should we have our holding company in. Taking into account many factors, including taxes, geography, the regulatory frameworks, et cetera. We found that ADGM is the most convenient, most suitable jurisdiction where we can have the holding company for future optionality around expansion, inviting more capital to join CIB for that journey, et cetera, for the future options that we may have to explore for future expansion. But definitely there is the tax benefit that would come as a result of building the platform and owning the IP of the technology at the holding level, and having the commercial agreement, a service agreement between the HoldCo and the licensed bank in Egypt to use that technology platform.
So that from the outset, we're building the platform in a way, whenever we have the option or the strategy to deploy in another country with another entry strategy, that would be feasible from both technology and governance standpoint. That is the reason behind the choice. Then the other questions that, and you help me here, remind me with the questions, details. One was around customer acquisition, basically, and cannibalization.
Yes.
What solution is there?
No, these are the main two. Basically, how is yomo or if is yomo going to cannibalize from CIB's client base? And the second one, what are plans for client acquisition?
From a client acquisition perspective, we have an integrated building, an integrated plan now for the go-to-market that leverages building a brand and launching a brand for a category that does not yet exist in Egypt. We are investing a lot in creating the brand that talks to people emotionally, and also from an execution perspective, can walk the talk, basically, in terms of service levels, stability, security, and how much of value we are bringing to customers. In a nutshell, the choices we made around technology and teams and brand would help us unlock vast majority of segments that a conventional bank, even the most progressive ones, will not be able to have the economics to go after, acquire, and serve later on.
From an acquisition perspective, we have an integrated plan that would leverage the brand, the partnerships model, and the pricing mechanism, loyalty platform that would make people not only to join the bank, yomo, but also be engaged with it on a daily basis, because the brand promise revolves around people lives and having less anxiety about the future. I know it is a bit soft, but we put big part and big investment behind bringing that brand to life into the market. We have done really intensive research to make sure that what we will be presenting to the market are most relevant and would tackle people issues they face on a daily basis. In terms of cannibalization, part of that cannibalization will definitely happen. You cannot control how much customers would adopt a new service or a new product. But we think about it this way.
Big part of the cannibalization that will happen will be in the favor of the whole group, because it will come to a better economics platform in terms of service, and not only service cost, but also in terms of revenue realization. The technology stack we are building will enable generating much bigger revenue potential out of a mass customer that now have joined CIB. That is one. Two is that for future growth perspective, we better have the group have a better structure around where the brand, where the distribution would be focused on, so that we can have a better economics on the overall group dynamics and financial performance.
Thank you. We have the next question from the line of Darren Smith. Darren, please announce yourself.
Hi, guys. Yasmine Hemeda , thanks very, very much for the call. Congratulations on a good set of results. Actually, it's Johan, not Darren Smith, from 337. I have two questions that are, I think, slightly related. The one is to do with the ECL model. In light of Egypt's credit upgrading, does that materially change the pathway for your, or the calculation in your ECL model? Can we expect a gradual releasing of the kind of tight over-provisioned situation that we faced over the last few years going forward? I know there has been a glide path that you've talked to before. Does the credit changing, does that alter that in some way? If you maybe just give us a little bit of color there. Then, somewhat related, the capital adequacy ratio still seems extraordinarily high.
I know it's come off a little bit from last year, but can you just talk to that, and how we should be seeing that trend going forward? What's the ideal capital ratio for you? Thanks.
Thank you, Johan. I'll take the second part, and our CRO, Mr. Walid Fawzy, will tackle the provisions part. For the targeted capital adequacy ratio, I mean, you know how we work it out. We work it out backwards. So basically, in terms of the payout, I mean, we sort of take a very deep look into the operating environment and the macro outlook thereof, and we internally set a certain desired level of CAR that we would like to operate at. Naturally, this desired level of CAR changes in accordance to the operating environment and the macro outlook. In normalized conditions, running with a capital adequacy ratio of around 20% is adequate enough to fuel whatever growth plans that we have, plus maintaining an extra buffer above the minimum buffer that is stipulated by the CBE for a bank like CIB.
In times with looming uncertainty, this 20% is 25% plus. This is because of the vulnerabilities that we still have in our capital base. Although over the past few years, we've worked to sort of curb these sensitivities, and we've managed to bring them down to, for every 1% increase in local currency sovereign rates, this eats up around 18 basis points off of the CAR. For every 1% increase in foreign currency sovereign rates, this impacts the CAR with around 45 basis points. For every one pound devaluation, this shakes the CAR with around 15 basis points. So although they're sort of under control, but the fact of the matter is they still remain. Taking all these factors into consideration, and we do our budget, and we sort of set a certain level of growth in the risk-weighted assets, which by definition are very capital-intensive.
Then we look at the profits, and we see how much we need to retain to maintain that desired level of CAR while catering to these growth plans, and the rest we divvy out. Historically speaking, the payout hovered between as low as 5% and as high as the exceptional 30% that we did last year. In our strategy call, we were saying at the beginning of the year, before the start of this whole war and these geopolitical tensions, we said that we were ready to pay out between 25%-30% per year for the coming five years. But now there's a lot of moving factors. It's very hard to give you any degree of certainty how much to expect exactly in terms of payout, and this is a conversation that typically starts at the end of the year.
It's taken at the board level, and then it's presented to the general assembly meeting. But you shouldn't definitely expect anything at 5% or at 30%. It should sit comfortably somewhere in the middle of this range. So that's for the payout. I'll hand it over to our CRO to walk you through the ECL.
Yes, hi. For the ECL part, I think that the upgrading would not much affect the ECL model itself because the model is already built in the economic indicators or the weightage that we take for the different scenarios. They take into consideration such things. So for the upgrade, it's already been embedded. The macroeconomic indicators are embedding that impact, and depending on what's going to happen in the future, these are going to be changing numbers all the way. But the model itself is going to still remain the same, but it's going to be affected by whatever is going to come out from the economic indicators and could be as well tailored according to the weightages that they use between the different scenarios. But fundamentally, there's nothing going to happen in the model itself.
Thank you. We have one question from the or a few questions from the Q&A box. Let me start with the first one. In the press release, you mentioned a EGP 2 billion regulatory expense reversal in other operating income. Could you tell us what that charge was and why it was reversed? We also noticed the same line also showed up a credit of about EGP 1 billion in the fourth quarter of last year after charges through the first nine months. So we'd like to understand whether this is a one-off or an annual true-up and what the normal quarterly charge in that line should be going forward.
That was a one-off non-recurring item. If you guys recall or don't recall, because part of our regulatory regime, when the Central Bank of Egypt issued the regulation in 2020, there were integral components to establish a bank's resolution fund. That bank's resolution fund should act like a bailout mechanism in case any unfavorable scenarios happen within the industry, and it was at the range of 0.5% of the deposit base without defining exactly the critical cutoffs of those deposit bases or the detail of the calculation. But we were accruing since 2020, and then that fund established only just this year with a new calculation mechanism. Accordingly, we've been advised by our external auditor after taking the clearance from the Central Bank of Egypt on the new calculation mechanism to reverse that back on our P&L.
Great. Thank you very much. There's a next question from the Q&A box about the fees. Fees were up 43% over nine months, while trade service fees are up 8%. Which fee lines drove the growth, and how much of it recurs?
Total non-interest income year-over-year showing a 31% growth. A critical part of that is basically the banking fees and commission, which is a critical component of our non-interest income. The main item is basically loan and cards business fees, which witnessed a critical growth, and then the trade finance business, in addition to a 30% growth in our FX income on the back of growth in volume and the value in our spreads.
Mm-hmm. Great. Thank you. There's a question about yomo Bank. Can you please break down the planned $300 million investment into yomo? Also, time period milestones.
Well, most of the spend, for sure, is for the technology and people in technology. That is the vast majority of the investment. There are parts of that also with regards to the operational losses that we will have to face for the first two years. The break-even would come between year three and four of launch, but the vast majority of the investment comes into the technology platform build and the people associated with that technology build, basically. Milestones-wise, I think we have now greater confidence after we have analyzed the detailed requirements for the operational license process. We think that by the end of Q1 next year, we would have completed the technical readiness for launch, and we will be waiting for the Central Bank of Egypt review and approval to launch the services.
Great. Thank you very much. It looks like we have reached the end of the question list, and there are no further live questions on the line. With this, I would like to hand over the call back to you for any closing remarks.
Thank you, Aibek, and thank you everyone who dialed in the call. We remain at your disposal if you have any further inquiries or we have any further clarifications, and talk to each and every one of you soon. Thank you, Aibek.
Thank you. Thank you, everyone.