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CIB 2000 net profit seen up 5-10 percent
By Khaled Diab
CAIRO,
February 26, 2001 (Reuters) - Egypt's biggest private bank CIB is expected to
post net profit growth of 5-10 percent for calendar 2000, despite high
provisions and dividend payouts, analysts said.
Their forecasts
of net profit for Commercial International Bank range from 369.6 million
Egyptian pounds ($96.20 million) to 386 million pounds, up from 350.8 million
pounds in 1999.
The results are due out late on Tuesday
“CIB's 2000 results are expected to be much
better than its 1999 results, despite the poor market conditions last year,”
said Nashwa Saleh, an analyst at HC Brokerage.
Economists say Egypt's economy slowed in 2000 due to liquidity shortages that
kept interest rates high, amid uncertainty about the government's exchange rate
policy. Analysts attributed CIB's forecast profit growth to an aggressive
policy of diversification into retail banking and other fee-generating
businesses, while keeping costs down.
“CIB had good income growth and tight cost
control and that's why their operating income growth is so high,” noted a
London-based analyst who asked not to be named.
ANALYSTS WARY ON PROVISIONS, DIVIDEND
London-based CSFB's Middle East analyst Ghassan Medawar forecast relatively
flat loan growth for 2000 and customer deposit growth of seven percent over
1999, implying a year-end loan to deposits ratio of 91 percent.
He forecast 606 million pounds in pre-tax
pre-provision profit and 220 million pounds of provisions and tax charges.
Analysts said they were concerned about the high level of provisions, forecast
at 214 to 224 million pounds.
“Large loan loss provisions are expected for
2000 to maintain coverage of non-performing loans (NPLs) given the
deterioration of asset quality... These provisions undercut the bottom line,”
said an analyst at HSBC Securities, who forecast net profit of 386 million
pounds.
“Large provisions are not necessarily a bad
thing because the bank wants to be on the safe side and maintain high coverage
of NPLs,” another analyst said.
Some brokers expressed concern at dividend
pay-outs.
Medawar puts CIB's pay out ratio at 65 to 70
percent of net earnings since it was listed in 1996. "We strongly believe
the bank should significantly reduce its pay-out ratio this year.
“A lower pay-out ratio would boost the bank's
book value and improve its valuation outlook considerably,” he added.
ã Reuters
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