Today’s Trading Playbook
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Credit Agricole - Egypt's [CIEB] H1 2021 financial indicators depict a number of interesting highlights:
- The bank is reverting back to the growth trajectory, with both gross loans and deposits growing at 6.6% and 6.9% on an ytd basis. This comes after a very depressing 2020, where CIEB deposits dropped some 10% back then. CIEB sustained its key utilization rate (i.e. gross loans-to-total deposits ratio) at a robust 65%.
- EPS growth came in at c.9% y/y to EGP2.22. The reason appears to be a more resilient net interest income, which solidified CIEB’s total banking turnover.
- Growth in interest income is believed to be volume driven, given little changes that took place on the price front. However, given a stable effective tax rate in H1 2021 from a y/y perspective at 27%, we think bottom-line growth was further complemented by either lower credit provisions or an improvement in cost-to-income measures.
- Annualized ROAE in H1 2021 came in at around 20%, showing a 122bps improvement from its ROAE recorded during the entirety of 2020.
The bank is currently traded at an annualized P/E of only 5x, and TTM P/BV of only 0.95x. Our target bottom line for 2021 is EGP1.6bn, which we believe is very achievable; H2 2021 may be witnessing a quicker provisions reversal. We believe as we progress forward in 2021, CIEB will appear even cheaper, especially when compared to its historical P/BV profile. We remind you that we have an Overweight rating on CIEB, with a 12M PT of EGP33/share (+38%).
Positive
CIEB: On a good set of results.