Today’s Trading Playbook
KEY THEMES
Commercial International Bank – Egypt [COMI] reported its financial results for Q2 2022 late last night. After an exceptionally high Q1 2022, the bank's net income subsided to EGP3.5bn (-17% q/q, +10% y/y) in Q2 2022. Although COMI’s Net Interest Income (NII) increased to EGP7bn (+7.4% q/q, +18% y/y), it was curbed by many other factors sequentially. First, the bank’s profit on the sale of financial investments went down 96% q/q to EGP44mn after hitting over EGP1bn last quarter on the sale of debt securities. Moreover, COMI booked credit provisions of EGP55mn (-82% y/y) in Q2 2022 against a reversal of EGP41mn in Q1 2022. Meanwhile, net trading income declined 58% q/q to EGP297mn, and the bank’s effective tax rate upped to 33% from 22.4% a quarter before.
COMI’s balance sheet showed a 17% ytd increase in loan portfolio to EGP170bn (+8% q/q), while the bank’s pool of deposits remained flat q/q at EGP428bn (+5% ytd). Hence, the net loans-to-deposits ratio upped to 40% in H1 2022 vs. 36% in 2021. We note that COMI increased its Treasury exposure through buying financial investments (FVOCI) by EGP23.4bn (+12% ytd), again after selling some Treasuries the quarter before. This brought COMI’s total Treasury exposure to EGP223bn (i.e. 43% of total assets). COMI’s annualized Net Interest Margin now stands at 6.12%, up from 5.72% in Q1 2022, while ROAE stands at 23% and ROAA at 3%.
We note that COMI is one of the 15 stocks we had picked in our STANDPoint 2022 strategy outlook published on 30 January 2022. We have an Overweight rating on COMI, with a 12MPT of EGP70.7/share (ETR +91%). COMI is currently traded at H1 2022 annualized P/E of 4.8x and P/B of 1.1x.
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Amany Shaaban | Equity Analyst