Today’s Trading Playbook
Amany Shaaban | Equity Analyst
KEY THEMES
Commercial International Bank [COMI] announced its Q1 2022 figures over the weekend, revealing an exceptional quarter right after ADQ acquired a stake in the bank. COMI's bottom line surged 47% y/y (+20% q/q) to EGP4.2bn, breaking its all-time high quarterly earnings of EGP3.8bn in Q3 2021. The growth in net income came very bold, despite a tepid net interest income (NII) growth of 16% y/y (albeit -3% q/q) to EGP6.6bn. The main three reasons for the leap in bottom line are: (1) high net trading income of EGP716mn (+535% y/y), (2) increase in profits on financial investments of EGP1bn (+106% y/y), and (3) an EGP40mn reversal of credit provisions against provisions booking of EGP702mn in Q1 2021 and EGP352mn in Q4 2021. We note that other operating expenses grew significantly 170% y/y to EGP1.4bn on the back of contingent provisions.
On the balance sheet side, total assets increased 5% ytd to EGP523bn. We note that COMI allocated more of its growth to interbank assets that increased 51% y/y to EGP121bn (23% of total assets vs. 16% last quarter), against a 7% decrease in debt securities down to EGP188bn (36% of total assets vs. 40% last quarter). Meanwhile, the bank's loan book grew steadily to EGP158bn (+9% ytd), whereas NPL ratio declined 23bps to 4.9%. This new asset allocation scheme clearly translated into the bank's NII, as the yield decreased from 2.83% last quarter to 2.47% in Q1 2022. On the other hand, interbank liabilities jumped 328% to EGP3.7bn, coupled with a 5% increase in deposits which recorded EGP428bn.
COMI's ROE now stands at 25%, up from 20% last quarter. The bank is currently traded at a P/E of 6.6x and a P/BV of 1.3x. We remind you that we have an Overweight rating on COMI, with our 12MPT of EGP72/share (ETR +64%). COMI is one of the 15 stocks we picked in our STANDPoint 2022 strategy outlook published on 30 January 2022.