Commercial International Bank Egypt SAE rose the most in two weeks after high-yielding government debt boosted 2012 profit of the country’s biggest publicly traded lender.
Shares of the bank, known as CIB, increased by 0.9 percent, the largest advance since Feb. 4, to 34.39 Egyptian pounds at close in Cairo, on 1.4 times the three-month daily average. The stock was the biggest gainer on the benchmark EGX 30 Index, which fell 0.2 percent.
The Cairo-based lender raised government debt holdings by about 41 percent to 37 billion Egyptian pounds ($5.5 billion) in 2012, according to its financial statement. That helped drive the 38 percent increase in annual profit to 2.23 billion pounds even as loan growth slowed to a 10-year low. The government has relied on local banks to buy its debt, which offers the Middle East’s highest yields among markets tracked by Bloomberg, since an uprising two years led foreign investors to exit their holdings.
The bank achieved “a significant re-balancing of the balance sheet toward higher-yielding local currency products,” Chairman Hisham Ezz Al-Arab said in the statement.
The lender was among five Egyptian banks whose credit ratings were lowered by Moody’s Investors Service last week due to this exposure. CIB’s rating was cut one level to B3, six levels below investment grade and on par with the sovereign.
Loans and advances rose 2.6 percent in 2012, the slowest pace of growth since 2002, according to data compiled by Bloomberg. The loan book expanded 29 percent in 2010, the year before the revolt that ousted the government of President Hosni Mubarak, according to data compiled by Bloomberg.
“We don’t see the bank’s exposure to government debt as a concern,” Sara Boutros, banking analyst at Beltone Finanical, said by telephone. “It was only logical that they diversify their liquidity to treasury securities, because demand for loans has been very low throughout the past two years of the revolution, so they had to invest their liquidity somewhere.”
CIB will hold a shareholder meeting on March 14 to seek approval to raise as much as 5 billion pounds of debt, it said in a filing to the Egypt Exchange today.