Balance sheet
Total financing growth went down to a single digit in 9M21, since a significant increase happened within the contingent facilities (LCs and LGs) by almost EGP 7 billion, which did not reflect on lending numbers.
ADIB launched this year a new product which is sharia-compliant mortgage financing, which should add good numbers to the loan portfolio.
SMEs financing in 2021 increased by 1.3 billion, and the bank is on track to reach 25% of the total financing portfolio by 2022 year-end.
Management believes that having a consumer finance company is very profitable for the banks and helps widen unbanked client-base and allows for more lending flexibility.
Consolidated financial statements include subsidiaries like ADIB finance and ADIB Capital in addition to other legacy subsidiaries inherited from the old bank. Standalone financials are pure commercial banking operations.
Income Statement
Margins to come slightly below 5% because of harsh competition among banks especially public sector banks. Target is to maintain NIM healthy, whether through loan book or treasury investments.
Non-funded income declined in 2021 due to weak FX trading income and trade finance activities, but management hopes it improves soon.
OPEX is mainly driven by investments in IT and infrastructure, marketing, and branding, not branch expansion, since the bank is focusing on digitization and increasing non-physical branches. Opex spending should pay off over the next couple of years, management has a target to control it below 30%.
ADIB optimizes its asset allocation so that it yields the lowest effective tax rate.
Net Foreign Position
ADIB has a square position and is closely monitoring it on daily basis according to very strict market risk policy so that it doesn’t exceed the CBE maximum foreign liability threshold which is 10% of assets.
Capital Increase
Management stated that the capital increase would be concluded this year. It will be within the range of EGP3.0 billion to reach the CBE required minimum capital of EGP 5.0 billion. Currently management is in discussions with the CBE to explore options for execution, whether from retained earnings, or a rights issue, or a mix of both.
2022 Growth Targets
ADIB targets growth for balance sheet and income statement in the range of 15-20% with adequate provisioning north of 100%.