Crédit Agricole Egypt (CAE) [CIEB]:
Profitability still hurt despite quick lending recovery
Egypt / Banks / Q2 2020 Results
●Stand-alone net profit after tax fell by 42% q/q to EGP257mn in Q2 2020. Lower earnings were driven by a 10% q/q drop in NII to EGP671mn and higher provisions (+EGP123mn q/q). This lifted the cost of risk (CoR) to 238bps in Q2 2020, up from 51bps in Q1 2020.
●ROAE falls on narrower NIM despite higher lending activity. NIM narrowed by 70bps to 6.0% in Q2 2020 as a result of the 300bps corridor rates cut by the CBE. Hence, ROAE retreated to 16.1% in Q2 2020, down from 26.5% in Q1 2020. The pressure was due to CIEB’s short-term maturity gap. From the financial position perspective, net lending inched up 6.7% q/q to c.EGP26bn in June 2020, while total deposits grew marginally by 1% Q/Q to EGP40.7bn in June 2020.
Shihab M. Helmy
Equity Analyst
Tel.: +202 3300 5723