Mubasher: MubasherTrade Research unit has downgraded its rating for the Commercial International Bank (CIB) to ‘Sell’ from ‘Hold’ with the same Low Risk rating, according to a recent issued report.

CIB posted consolidated net profit of EGP 1.464 million in the second quarter of 2016 compared to EGP 1.148 million a year ago; higher 28%  year-on-year, and 13% Quarter-on-Quarter.

MubasherTrade Research said that the bank’s Q2 results came 6% higher than their estimates of EGP 1.381 million and market consensus of EGP 1.373 million by 7% higher.

 “We keep our price target (PT) unchanged at EGP46.7 (ETR: -4%),” the report said, adding “Cost-to-Income ratio jumped from 20% in Q2 2015 to 23% in Q2 2016.”

Assets growth continued yet with deteriorating quality, including CIB’s net loans which recorded a 10.5% YoY growth to EGP 60.3 billion at end of June 2016, while customer deposits accelerated by 18.6% YoY to EGP 169.5 billion, with the bank's loans-to-deposits (L/D) ratio declining YoY to 35.6%, down from 8.2% in June 2015 (35.5% in March 2016).

 “The bank's coverage ratio increased YoY to 169% up from 142% in June 2015 (171% in March 2016). CAR fell from 15.2% in June 2015 to 14% in June 2016, mainly due to a decline in Tier 1 capital,” according to MubasherTrade Research report.

“It is noteworthy that the CBE minimum CAR requirement is 10%. The bank recorded a net stable funding ratio (NSFR) of 158% in local currency and 115% in foreign currency, and a liquidity coverage ratio (LCR) of 1,353% in local currency and 446% in foreign currency, exceeding the 100% minimum requirement for both ratios under Basel III,” it added.