FY07 Results: Heavy Provisioning in 4Q07 Hits Bottom Line

Drop in Interest from Treasuries Affects NII Growth, NIM and Spread

EGB’s net interest income grew by a modest 2.9% YoY to EGP131.3 million in FY07. Growth was driven by a 37.5% YoY growth in interest from loans and due from banks, which came on the back of 39.3% YoY increase in gross loans and greater funds allocated to the lucrative CBE time deposits, which grew significantly from EGP187.3 million in FY06 to EGP1.3 billion in FY07. Interest expense, on the other hand, grew by 10.0% YoY as deposits advanced by 13.0% YoY.
Interest from T-bills and bonds, however, dropped by 44.7% YoY as the bank reduced its total holdings of T-bills and bonds by 36.2% YoY in response to unattractive yields in the local treasuries market.
The drop in treasury income affected EGB’s NIM and interest spread as both declined by 29 and 8 bps to reach 2.58% and 1.70%, respectively.