KEY THEMES
Commercial International Bank [COMI] has posted H1 2021 results, with net profits growing to EGP6.1bn (+22% y/y) despite lower net interest income of EGP11.7bn (-6.4% y/y). The growth in bottom line came mainly sponsored by significantly lower credit provisions of EGP1.1bn (-55% y/y). While the figures point to very strong annual growth, benefiting from very weak base in 2020, there are some facts we like to state.
First, the bank lower net interest income is the product of the maturity of an exceptionally high yielding bonds previously purchased. Second, the bank managed to lower its effective tax rate by as much of 400bps. Third, from ytd perspective, the bank grew its balance sheet by a 10%, with lending shadowing total assets growth. Fourth, the bank possesses a whopping 32% Capital Adequacy Ratio (CAR). Fifth, according to our estimates, the name is about to deliver a 3-year projected earnings growth CAGR of 23%, with annualized ROAE of 20.3%, yet trading at P/BV of only 1.2x.
The aforementioned observations suggest that the current market price is already eligible for cherry pickers attention, yet It remains the issue of lacking a short-term catalyst, holding COMI’s momentum back.
For more details, please read our comment on COMI’s recently announced H1 2021 results.