Annual Report
2010
2
Annual Report
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2010■
CONTENTS
General View
Bank's Main Activities
First : General View.
Speech of Deputy-Chairman of Board of Directors & Managing Director.... 6
,
Bank s strategy & Future Targets ................................................................ 8
Report of Board of Directors......................................................................... 9
Significant Financial Information ................................................................. 16
Financial Indicators........................................................................................ 16
Second : Bank’s Main Activities
Credit sector................................................................................................. 20
Investments.................................................................................................. 22
Financial institutions..................................................................................... 24
Governance
Third : Governance
Board of Directors........................................................................................ 26
Organization Chart....................................................................................... 28
Board Committees........................................................................................ 29
Compliance.................................................................................................. 30
Internal Audit ............................................................................................... 30
Disclosure & Transparency...........................................................................30
Financial Statements
Fourth : Financial Statements
Auditor,s Report........................................................................................... 32
Financial Statements.................................................................................... 34
Notes to Financial Statements..................................................................... 39
Annual Report
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2010■
Interconnection with Bank
Fifth : Interconnection with Bank
General Managers . ..................................................................................... 68
Branches’ Addresses . ................................................................................. 69
3
First :General View
1- Speech of Deputy-Chairman of Board of Directors & Managing Director
2- Strategy of Bank & Future Targets
3- Report of Board of Directors
4- Significant Financial Information
5- Financial Indicators.
Shareholders
Dear Sirs/Madame...
It honors me to submit to you a brief report on the most significant global
and local economic developments and events and to reveal their impact on the
financial performance of our bank during the financial year ended as at the last of
December 2010.
First : The World
The rate of global economic growth during 2010 amounted to approx. 4%
corresponding to 3.4% recession during the previous year as one of the effects of the
global financial crisis which most countries – Thanks Be to Allah – has started to recover
from its negative repercussions.
In spite the recorded rates of growth, yet there are still some challenges that obstruct
the continuance of this growth, most important of which is represented in the rates of
unemployment in several industrial countries at a relatively high level, in addition to the
accumulation of fears from the negative impacts of the Greek sovereign debts crisis and
its extension to include some countries of the euro region with the rising deficit in their
budgets as a rate of the gross domestic product. In spite of the expansionist monetary
and financial policies that were adopted by many countries to face the negative impacts
of the global financial crisis and its repercussions that extended to Financial Year 2009
then the first and second quarters of 2010, yet such policies were not successful in
overcoming the effects of the crisis finally and decisively. As a result of the foregoing,
a status of uncertainty prevails towards the possibility of continuing global economic
growth at high rates.
Several large industrial countries recorded indicators that attest rise in the rates of
inflation as a result of the rise in the prices of most primary goods while maintaining the
rates of interests for major currencies at low levels. Most expectations state that globally
leading central banks will start tending sooner or later to gradually raise interest rates.
The European Central Bank may be the precedent in this trend.
Second : Country of Head Office
2010 witnessed gradual improvement in the real annual growth rate for the GDP (by
the cost of factors of production) to amount to 5.1% corresponding to 4.7% during the
previous year. This rate revolves around the general average of rates of growth of rising
economies at the level of the world estimated at approx. 5.6%.
2010 witnessed stability in the rates of exchange of the Egyptian pound against major
currencies coinciding with the increase in the net international reserves with the Central
Bank of Egypt by US$ 3.9 billion, at a rate of increase amounting to 12.5% annually to
amount to US$ 35.2 billion the matter that will cover 9 months of commodity imports.
The transactions with the outer world during the financial year resulted in a total
surplus in the balance of payments assessed in approx. US$ 3.5 billion against deficit
amounting to US$ 3.4 billion in the previous financial year, the matter that reflects clear
improvement in the cash flows of free currencies after overcoming the negative impacts
of the global financial crisis.
With the radical political transformations what were witnessed by 2011 since its
beginning, Egypt is plunging into a new challenge represented in achieving the full
6
Annual Report
■
2010■
General View
political change while maintaining appropriate rates of economic growth. We are all
confident that Egyptians will be able to face such challenge with success and overcome
the difficulties of the transitional phase to reach the best results represented in sound
political and democratic life and free prosperous economy that guarantees decent life
and social justice for every Egyptian.
Third : The Bank
Bank's Main Activities
The Executive Department was able during the year ended as 31 Dec. 2010 to adopt
more conservative standards in managing the assets of the Bank and implementing the
strategic trend of the Board of Directors by restructuring utilizations in the manner that
achieves minimum risk as follows :
1.Continue liquidating the external investments portfolio whose value as at 31 Dec. 2010
amounted to US$ 383 million corresponding to US$ 534 million as at 31 Dec. 2009
after it was US$ 1225 million as at 31 Dec. 2008.
2.The loans and advances portfolio recorded a rate of growth of approximately 102%
as at 31 Dec. 2010 corresponding to 19% as at 31 Dec. 2009. The components
of this portfolio varied between loans to customers and economic and financial
establishments that enjoy a high degree of solvency with cash flow enabling them
to meet their obligations. This portfolio included promising economic sectors such as
petroleum, gas, electricity and communications.
Governance
3.In spite of the drop in customers’ deposits by approx. 11% as at 31 Dec. 2010 below
that of 31 Dec. 2009, yet the Bank was able to fill the financing gap of long and medium
term loans portfolio through extending lines of credit with Arab and international banks,
where the Bank enjoys a network of correspondents in most countries of the world;
accordingly, banks’ deposits with the Bank increased by approx. 107% as at 31 Dec.
2010 corresponding to 39% as at 31 Dec. 2009.
Financial Statements
4. The management of the Bank was keen during the year ended 31 Dec. 2010 on
continuing to support the provisions withheld to face debts that may default, where the
provisions created to face such risk amounted to US$ 154 million as at 31 Dec. 2010
corresponding to US$ 140 million as at 31 Dec. 2009 to cover 9% of the volume of the
loans portfolio as at 31 Dec. 2010.
Interconnection with Bank
5. In the contentment of the Bank’s management of the achievement realized during
the year ended 31 Dec. 2010 and in spite of the inability to predict the results of the
consecutive events that affected the economic climate whether of some Arab countries
or the country of the head office, the matter with which it becomes difficult to forecast
and determine the amount of this impact on the value of some assets and liabilities, the
Board recommended to the shareholders’ General Assembly the distribution of dividends
among shareholders amounting to US$ 22.5 million (5% of the paid up capital).
At the end, the executive department of the Bank conveys its gratitude to the shareholders
and the staff for the full support they have provided thereto, the matter that has led to
achieving the indicated positive results which we hope will continue by the Grace of Allah.
Mohamed Abduljawad
Deputy Chairman & Managing Director
Annual Report
■
2010■
7
Bank’s Strategy :
Participation in building the Arab economy on strong
grounds that allows meeting the requirements of economic
and social development in the Arab countries
Contribution to the development of production resources
for all Arab countries and encourage employing public and
private funds in the manner that guarantees the evolution
and development of Arab trade and economy.
Future Targets :
•T
he optimum use of the Bank’s resources to achieve
development and obtain a growing share in the banking
services market in the country of the head office and the
founding countries.
• Maximize the returns on assets and the capital and
achieve growing annual rate of growth.
•A
pply and update the principles of governance, risk
management, compliance and internal audit.
• Raise the level of quality of service provided to customers.
• Finance promising sectors from among large establishments of growing demand to
banking services.
• Develop and activate the technological services.
• Update the databases in local and new markets to which the bank will be directed.
8
Annual Report
■
2010■
Report of Board of Directors
General View
First : Financial Position
1. Utilizations
The total utilizations as at 31 Dec. 2010 amounted to the value of US$ 4142 million
corresponding to US$ 4183 million as at 31 Dec. 2009 at a drop amounting to US$ 41
million at a rate of recession of 0.98%. Such utilizations were distributed as follows :
Bank's Main Activities
Million US$
Dec. 2010
Dec. 2009
Value
Value
%
Value
%
Change
Cash balances & deposits with banks
1٫656
40
2٫429
58
(773)
International investments
383
9
511
12
(128)
Loans & advances (net)
1٫504
36
652
16
852
Direct investments
494
12
515
12
(21)
Real estate investments
22
1
22
1
-
Fixed assets & other debit balances
83
2
54
1
29
4٫142
100
4٫183
100
(41)
Total
Governance
Utilizations
A. Cash Balances :
Financial Statements
The cash balances in hand and with banks and correspondents amounted to US$
1656 million as at 31 Dec. 2010 corresponding to US$ 2429 million as at 31 Dec. 2009
at a drop amounting to US$ 773 million, as a result of directing part of such cash
balances to the loans and advances portfolio, especially the portfolio of facilities granted
to banks and financial institutions and the portfolio of loans granted to institutions and
corporations. The rate of such balances as at 31 Dec. 2010 amounted to approx. 40%
of the total assets corresponding to 58% as at 31 Dec. 2009.
The rate of such balances as at 31 Dec. 2010 amounted to approx. 59% of the
volume of customers’ deposits corresponding to 77% as at 31 Dec. 2009.
Interconnection with Bank
B. International Investment Portfolios :
The market value of investment portfolios available for sale, kept till maturity or acquired for trading amounted to US$ 383 million as at 31 Dec. 2010
corresponding to US$ 511 million as at 31 Dec. 2009 at a decrease amounting to US$ 128 million. The volume of this portfolio represents 9% of the total
assets as at 31 Dec. 2010 corresponding to 12% as at 31 Dec. 2009. Hereunder are the components of this portfolio as at 31 Dec. 2009/2010 :
Annual Report
■
2010■
9
Thousand US$
Change
Portfolio
Financial investments available for sale :
Marketed financial issues
Mutual funds
Foreign investment managers
(a)
Investments acquired till maturity :
International bonds
(b)
Investments for trading :
Funds managed by third party
(c)
Total Investments
(a) + (b) + (c)
Dec. 2010
Dec. 2009
Value
59٫364
20٫400
194٫135
273٫899
110٫852
55٫481
289٫213
455٫546
(51٫488)
(35٫081)
(95٫078)
(181٫647)
53٫821
53٫821
55٫284
55٫284
(1٫463)
(1٫463)
55٫582
383٫302
510٫830
55٫582
(127٫528)
C. Loans & Advances Portfolio :
The net loans and advances portfolio amounted to US$ 1504 million as at 31 Dec.
2010 corresponding to US$ 652 million as at 31 Dec. 2009 at an increases amounting
to US$ 853 million. Hereunder is a detailed statement of the loans and advances
portfolio as at 31 Dec. 2010 compared to 31 Dec. 2009
Thousand US$
December
Portfolio
Credit to companies & institutions
Commercial credit
Total
Less
Specific provision
General provisions
Total provisions
Net
2010
1٫351٫824
295٫308
1٫647٫132
2009
455٫685
328٫177
783٫862
Change
Value
896٫139
(32٫869)
863٫270
122٫313
21٫211
143٫524
1٫503٫608
118٫934
13٫283
132٫217
651٫645
(3٫379)
(7٫928)
(11٫307)
851٫963
The defaulting loans portfolio as at 31 Dec. 2010 amounted to the sum of US$
122 million corresponding to US$ 127 million last year. The ratio of provision for
loans and advances to the volume of credit portfolio reached 9% as at 31 Dec. 2010
corresponding to 17% as at 31 Dec. 2009. The rate of covering defaulting loans
amounted to 118% as at 31 Dec. 2010 corresponding to 104% as at Dec. 2009.
The credit portfolio achieved collected interests as at 31 Dec. 2010 totaling to US$
29 million corresponding to US$ 28 million as at Dec. 2009 at an average interest
rate of 2.84% as at 31 Dec. 2010 corresponding to 3.41% as at 31 Dec. 2009.
10
Annual Report
■
2010■
D. Direct Investments Portfolio :
Hereunder is a statement of the names of financial institutions and corporations
in whose capitals the bank contributes :
General View
The volume of the portfolio of direct investments in capitals of corporations
and institutions as at 31 Dec. 2010 amounted to the value of US$ 494 million
corresponding to US$ 515 million last year.
Thousand US$
Rate of Contribution of 20% & More
Rate of
Contribution
Change
Value
*
134٫063
133٫739
50
324
Société Arabe Internationale de
Banque (SAIB)
*
105٫406
99٫590
46
5٫816
116٫138
136٫759
37
(20٫621)
42٫802
42٫754
20
48
Suez Canal Company for Technology
66٫080
72٫196
24
(6٫116)
Arab Leasing International Finance (ALIF) **
7٫641
6٫482
89
1٫159
(A)
472٫130
491٫520
Rate of Contribution less than 20%
Arab International Company for Tourism & Hotels
Arab Financial Services
Studies & Development Co. Tunisia
Multilateral Investment Company
Integral insurance two companies
Miscellaneous
(B)
ُTotal
(A+B)
16٫400
1٫047
1٫583
1٫532
998
883
22٫443
494٫573
16٫400
1٫047
1٫583
1٫532
1٫656
1٫551
23٫769
515٫289
Suez Canal Bank
Société International Tourism
Investment
*
18
2
10
11
10
Governance
(19٫390)
(658)
(668)
(1٫326)
(20٫716)
** The reasons for the increase is attributable to increasing the contribution of
the Bank to the capital of Café Company by US$ 1963 thousand during the year
and reducing the value of contribution by the dividends received by the company for
2008/2009 in the sum of US$ 804 thousand.
Annual Report
■
2010■
11
Interconnection with Bank
* The reasons for the increase and decrease is attributable to amending the
book value of the contribution by the cash dividends that the companies have
carried out during the financial year ended 31 Dec. 2009 in addition to raising the
value of contribution by the share of the Bank in their equity for the year ended
31 Dec. 2010.
Financial Statements
World Trade Center Company
Bank's Main Activities
December
2010
2009
E. Real Estate Investment :
The Bank purchased during the financial year ended 31 Dec. 2008 a plot of land at
a distinguished location on the Nile Corniche. The value of this land was established
pursuant to international standards in the preparation of the financial reports
considering it real estate investment at its market value amounting to
US$ 22 million.
F. Fixed Assets :
The net fixed assets as at 31 Dec. 2010 amounted to the sum of US$ 36387 thousand
corresponding to US$ 7170 thousand as at 31 Dec. 2009 at an increase amounting
to US$ 29217 thousand. The increase in fixed assets is attributable to grossing up
the value of the Bank’s building at Abdel Khaled Tharwat St. to the fixed assets.
2. Resources
The volume of resources as at 31 Dec. 2010 amounted to US$ 4142
million corresponding to US$ 4183 million as at 31 Dec. 2009. The following
table shows the sources of such resources as at 31 Dec. 2010 compared to
their equivalent last year :
Million US$
Sources
Customers, deposits
Deposit certificates
Bank,s deposits
Shareholders, rights &
period,s profits
Other credit balances
Total
Dec. 2010
Value
%
2٫606
63
202
5
548
13
721
17
Dec. 2009
Value
%
2٫949
70
218
5
264
6
709
17
65
4٫142
43
4٫183
2
100
1
100
Change
Value
(343)
(16)
284
12
22
(41)
A. Customers’ Deposits :
The decrease in customers’ deposits and deposit certificates as at 31 Dec. 2010
amounted to a sum of US$ 359 million for the same period of last year at a rate of
recession of 11%, where the decrease in the deposits of individuals amounted to 13%
and the rate of decrease in deposits of corporations and institutions amounted to 10%.
The interests paid on customers’ deposits as at 31 Dec. 2010 amounted to US$
9 million corresponding to US$ 17 million as at 31 Dec. 2009 at an average interest
rate of 0.30% corresponding to 0.53% as at 31 Dec. 2009.
B. Bank’s Deposits :
The banks’ deposits with the Bank as at 31 Dec. 2010 amounted
to a sum of US$ 548 million corresponding to US$ 264 million as
at 31 Dec. 2009 at an increase amounting to US$ 284 million at
a rate of growth of 108% above last year.
The interests paid on banks’ deposits with the Bank as at 31
Dec. 2010 amounted to US$ 1 million at an average interest rate
amounting to 0.68% corresponding to US$ 10 million as at 31
Dec. 2009 at an average interest rate of 2.4%.
12
Annual Report
■
2010■
C. Shareholders’ Rights :
Million US$
December
Reserves
Investments for sale evaluation
differences
Change is equity of sister
companies
Profits brought forward
Year,s net profits
Total
2010
2009
450
161
(22)
450
158
(45)
0
3
23
69
88
(19)
39
24
721
34
24
709
5
0
12
Bank's Main Activities
Item
Paid up capital
Change
Value
General View
The total shareholders’ rights (prior to dividends) as at 31 Dec. 2010
amounted to the value of US$ 721 million corresponding to US$ 709 million as
at 31 Dec. 2009 at an increase amounting to US$ 12 million above the same
period of last year. Hereunder is a detailed statement of the shareholder’s
rights item as at 31 Dec. 2010 and 31 Dec. 2009 :
The total commitments and contingent liabilities as at 31 Dec. 2010
amounted to US$ 628 million corresponding to US$ 330 million as at 31
Dec. 2009 as follows .
Governance
3. Contingent Liabilities & Other Off-Balance Sheet Items :
Thousand US$
December
L/G,s
2010
2009
341.472
158.085
187.141
99.262
154.331
58.823
127.428
655
627.640
42.327
1.732
330.462
85.101
(1.077)
297.178
Financial Statements
Item
L/C,s & L/G,s
L/C,s
Change
Value
Commitments
Loans & advances
Contributions
Total
Annual Report
■
2010■
13
Interconnection with Bank
The increase in contingent liabilities and commitments for letters of credit
and letters of guarantee is attributable to the expansion in granting credit to
large corporations and institutions that enjoy high credit rating.
Third : Income Statement
1. Revenues :
The Bank achieved total operating revenues as at 31 Dec. 2010 that amounted to
US$ 98 million corresponding to US$ 107 million as at 31 Dec. 2009.
Thousand US$
Item
Collected interests
Investment revenues (net)
Profits of subsidiary companies
Other net operating revenues
Total
Dec. 2010
Value
%
43٫580
18٫393
14٫905
21٫488
98٫366
44
19
15
22
100
Dec. 2009
Value
%
51٫191
43٫703
297
11٫990
107٫181
48
41
0
11
100
A. Collected Interests :
The collected interests represent 44% of the total operating revenues as at 31 Dec.
2010 corresponding to 48% as at 31 Dec. 2009. Hereunder is a detailed statement of the
interests collected as at 31 Dec. 2010 compared to its equivalent as at 31 Dec. 2009 :
Thousand US$
Dec. 2010
8٫385
%
19
15٫011
%
29
28٫501
6٫694
43٫580
65
15
100
28٫375
7٫805
51٫191
55
15
100
Collected Interests
Value
From cash balances & deposits
with banks
From loans & advances
From investments kept till maturity
Total
Dec. 2009
Value
B. Investment Revenues :
The revenues from the investments portfolio as at 31 Dec. 2010 amounted to the value
of US$ 33 million corresponding to US$ 44 million as at 31 Dec. 2009 detailed as follows :
Thousand US$
December
Investment Revenues
Investments for trading profits
Investments for sale profits
Revenues from subsidiary companies
Investments impairment losses
Total
C. Other Net Operating Revenues :
2010
2٫053
16٫340
14٫905
33٫298
2009
45٫188
297
(1٫485)
44٫000
The other net operating revenues as at 31 Dec. 2010 amounted to a sum of US$ 21
million corresponding to US$ 12 million as at 31 Dec. 2009 at an increase amounting to
US$ 9 million that were basically concentrated in commissions collected in connection with
the portfolio of credit granted to corporations and institutions amounting to US$ 9 million.
Hereunder is a detailed statement of the items of revenues.
14
Annual Report
■
2010■
Thousand US$
December 2009
Value
%
16٫475
77
7٫679
64
767
3
2٫261
19
4٫246
21٫488
20
100
2٫050
11٫990
17
100
General View
Operating Revenues
Fees and commissions, revenue (net)
Foreign sector & currencies evaluation
difference revenues
Other operating revenues
Total
December 2010
Value
%
The interests paid as at 31 Dec. 2010 amounted to US$ 10 million corresponding to US$ 27 million
as at 31 Dec. 2009. The following table shows a detailed statement of the interests paid :
Thousand US$
Paid Interests
Customers, deposits
Banks, deposits
Deposit certificates
Total
December 2010
Value
%
7٫129
1٫324
1٫877
10٫330
69
13
18
100
December 2009
Value
%
14٫986
10٫009
2٫236
27٫231
55
37
8
100
Bank's Main Activities
2. Expenses :
A. Paid Interests :
B. Administrative & General Expenses :
Thousand US$
December
2010
38.790
9٫006
-47٫796
2009
37٫060
7٫984
4٫784
49٫828
C. Net Revenues :
The Bank achieved this year net profits amounting to US$ 24 million after deducting the
share of the staff and management as well as the support of provisions corresponding to
US$ 24 million last year. Hereunder are the details of the items of revenues and expenses as
31 Dec. 2010 compared to its equivalent as at 31 Dec 2009.
Financial Statements
Item
Salaries, wages & equivalents
Other administrative expenses
Staff Fund support
Total
Governance
The administrative and general expenses as at 31 Dec. 2010 amounted to US$ 48 million
corresponding to US$ 50 million as at 31 Dec. 2009. Hereunder is a detailed statement of
the items of such expenses :
Thousand US$
Item
Operating revenues
Operating expenses
Net operating expenses
Administrative & general expenses
Year's profits before provisions
Provisions support
Year's net profits
2010
98.366
(10.330)
88.036
(47.796)
40.240
(16.593)
23.647
Interconnection with Bank
December
2009
107.181
(27.231)
79.950
(49.828)
30.122
(6.479)
23.643
Annual Report
■
2010■
15
Financial Highlights 2008 : 2010
Dec. 2010 Dec. 2009 Dec. 2008
Earnings
(US$ Thousand)
Total operating income
Operating expenses
Profit before provisions
Provisions for doubtful debts
Net profit
Financial Position
US$ Million)
Total assets
Placement with banks
Net Loans and advances
Marketable securities
Direct Investments
Customers deposits
Shareholders' equity
Ratios (%) 2008-2010
Assets quality
Total assets growth rate (year on year )
Loan-loss reserve to gross loans
Loan-loss reserve to non-performing
loans
16
88,036
47,796
40,240
16,593
23,647
79,950
49,828
30,122
6,479
23,643
12,258
53,679
(41,421)
0,000
(41,421)
4٫142
1٫656
1٫504
383
495
2٫808
721
4٫183
2٫429
652
511
515
3٫167
709
4٫368
1٫935
826
1٫102
438
3٫408
465
(0.83)
7.42
117.48
(4.39)
16.87
104.25
4.00
13.40
96.99
Capital Adequcy
Total capital growth rate (year on year)
Total capital to total assets
1.75
17.41
53.58
16.97
(12.92)
10.65
Liquidity
Net loans to total deposits
Net loans to total customers deposits
Customer deposits to total deposits
Liquid assets ratio
44.81
53.55
83.68
39.98
18.99
20.58
92.31
58.17
21.49
24.22
88.75
44.30
Profitability
Operating Income on average assets
Return on average equity
Return on paid capital
2.24
3.30
5.30
1.90
4.04
7.50
0.29
(8.27)
(13.81)
Annual Report
■
2010■
General View
Assets Breakdown
Distribution Of Gross Loans According to Sectors
9%
41%
10%
3%
11%
38%
30%
Bank's Main Activities
6.5%
0.2%
6.3%
7%
1%
1%
36%
Financials Industrial
Commercial
Tourism
Electricity
Construction
Others
497,781
621,202
165,102
145,023
107,679
4,515
105,830
1,647,132
30%
38%
10%
9%
6.5%
0.2%
6.3%
41%
7%
1%
36%
1%
11%
3%
Resources Breakdown
17%
36%
68%
64%
36%
Customers deposits
Banks Deposits
Shareholders equity
Others
2.808.089
547.518
720.912
65.231
4,141,750
68%
13%
17%
2
Financial Statements
961,824 541,784
1،503،608
2%
13%
64%
Corporate Finance
Commercial Lending
1.655.699
296.342
55.582
1.503.608
53.821
472.130
104.568
4.141.750
Governance
Net Loans & advances by type
Cash at Banks
Available for sale Investments
Trading Book Portfolio
Loans & Advances
held to maturity
Investments in Associates
Others
Associates by Sectors
14%
49%
28%
%9
229,185
42,802
134,063
66,080
472,130
Interconnection with Bank
Financial Institutions Tourism
Commercials & Industrial Technology & Education
49%
9%
28%
14%
Annual Report
■
2010■
17
Customers Deposits
3.000.000
Fixed Deposits Demand Deposits
Certificates Of Deposits
Dec 2010 Dec 2009
2.202.601
403.537
201.951
2.808.089
2.508.582
440.924
217.574
3.167.080
2.500.000
2.000.000
1.500.000
1.000.000
0
Dec 2010
Dec 2009
Fixed
sits
Depo
its
posits
epos
nd De
s Of D
te
a
c
fi
Certi
Dema
2.500.000
Distribution of Customers deposits by Client Type
Corporate Individuals
2.000.000
Dec 2010 Dec 2009
954.040
1.854.049
2.808.089
1.056
2.110.553
3.167.080
Dec 2010
1.500.000
1.000.000
500.000
0
Corporate
Dec 2009
Individuals
450.000
360.000
Distribution of Interbanks Deposits
Local Banks Foreign Banks
270.000
Dec 2010 Dec 2009
121.742
425.776
547.518
60.336
203.599
263.935
180.000
90.000
0
Local Banks
Dec 2010
Foreign Banks
Dec 2009
Net Loans Versus Customers Deposits
Net Loans Customers Deposits
374.747
2.774.007
368.889
2.943.521
701.272
3.208.758
825.510
3.408.473
651.645
3.167.080
1.503.608
2.808.089
2005 2006
2007
2008
2009
2010
4.000.000
3.500.000
3.000.000
2.500.000
2.000.000
1.500.000
1.000.000
500.000
0
2005 2006 2007 2008 2009 2010
Net Loans
Customers Depositsposits
Distribution of assets by Geographical region
Europe Arab world
North America
Others
Dec 2010 Dec 2009
888.720
2.912.479
293.852
46.699
4.141.750
973.126
2.675.803
468.863
65.355
4.183.147
Dec 2010
Dec 2009
18
Annual Report
■
2010■
4.000.000
3.500.000
3.000.000
2.500.000
2.000.000
1.500.000
1.000.000
500.000
0
pe
Euro
Arab
rica
world
Ame
North
rs
Othe
General View
Second :Bank's Main Activities
1- Credit Sector
Bank's Main Activities
2- Investments
3- Financial institutions
Governance
Financial Statements
Interconnection with Bank
Annual Report
■
2010■
19
1. Credit Sector
The credit activity at the Bank has gone through the phases of structural
development during the few last years. The year 2010 witnessed the success of
the new regulatory and marketing strategy that was applied at the credit sector
at the Bank as reflection to the trend of the management; considering the Credit
Department the main driver and source of revenues and profits to the Bank.
From the regulatory aspect, credit decisions have become managed centrally and
all departments working at the credit sector were joined under one regulatory entity
under the name Credit General Department. From the marketing aspect, a new
expansionist strategy has been adopted to multiply the total of the credit portfolio at
the Bank through targeting large and working institutions at the public and private
sectors in the Arab Republic of Egypt and Arab countries.
Achievements of Credit Sector :
 The acquisition of loans submitted to large corporations to about 82% of the credit
portfolio of the Bank.
 The rate of growth of the credit portfolio amounted to approx. 85% in 2010
compared to 2009.
 Total revenues amounting to US$ 35.5 million by the end of 2010 were achieved
compared to US$ 33.7 million by the end of 2009 at a growth rate of 6%. The
growth rate was affected by the drop in the LIBOR during 2010.
 The customers base at the large corporations credit sector witnessed a noticeable
growth compared to 2009, the matter that reflects the new strategy that aims
establish grounds for strong transactions’ grounds with the pioneering companies
in the market working in promising sectors that cover several fields as follows :
20
Annual Report
■
2010■
Million US$
Sector
Petroleum & gas
Electricity
Industrial institutions
Tourism & hotels
Commercial institutions
Contractor services
Educational services
Other institutions & individuals
Total
2010
Bank's Main Activities
Communications
2009
48
205
0
98
86
62
60
130
6
89
784
General View
Financial institutions
2010
498
446
108
175
145
108
57
5
13
92
1647
2009
Governance
Financial Statements
Interconnection with Bank
Annual Report
■
2010■
21
Improvement of Credit Portfolio & Provisions Support :
The defaulting debts settlement sector at the Bank applies developed mechanism
to improve the positions of irregular loans that relies on the collection of defaulting
debts through the interconnection of efforts to collect the biggest amount of them in
compliance with the principle of not accepting the presence of complete bad debts
and intensifying negotiations with debtors with the objective of reaching scheduling
and/or settling programs that achieve the interests of the Bank and the debtors.
Such mechanism has achieved the following results :
 The total of non-performing loans portfolio in 2010 amounted to US$ 122 million
compared to US$ 127 million in 2009.
 The total collections of defaulting debts during 2010 amounted to US$ 2.4
million compared to US$ 3.4 million during 2009.
 The Bank keeps provisions against non-performing loans at a total coverage
rate of collaterals and provisions amounting to 100% of the net value of
indebtedness.
Such success was achieved thanks to the periodic and accurate follow up of the
settlement operations and the application of the best modern methods in creating
provisions in the manner that agrees with the quality degree of loans.
2. Investments
 The investment policy of the Bank aims to contribute to
investment programs and projects related to economic
development, especially projects of joint venture
among Arab countries as well as the incorporation
or purchase of companies, or participation with other
banks and companies that practice businesses
similar to its own.
Contributions in which the Bank owns more than 20% of their capitals :
Sector
% Of Portfolio Total
Total Contribution
47
28
2
9
14
100
221,544
134,063
7,641
42,802
66,080
472,130
Banking
Real estate development
Financial institutions
Tourism projects
Technological & education institutions
Total
14%
Banking
Real estate development
Financial institutions
Tourism projects
Technological & education institutions
22
Annual Report
■
2010■
9%
2%
28%
47%
Investment
General View
 In view of the special nature of the Bank that
confines its transactions and consequently its
resources and utilizations to foreign currency, the
Bank has tended since its founding to use the
biggest part of its resources in capital markets and
global markets.
Total Investment
Funds run by third party
13.6
55,582
International bonds
14.6
59,363
Portfolios run by third party
53
214,535
Equity instruments
5.5
22,444
Government bonds
13.3
53,821
100
405,745
Total
Funds run by third party
13.6%
5.5%
Governance
13.3%
Bank's Main Activities
% Of Portfolio Total
14.6%
International bonds
Portfolios run by third party
Equity instruments
Government bonds
53%
Financial Statements
Interconnection with Bank
Annual Report
■
2010■
23
3. Financial Institutions
 The Bank’s correspondents network cover global banks in all parts of the
world.
 The Bank provides the best terms for dealing the matter that entailed increasing
the volume of L/C’s and L/G’s of our Bank with our correspondents in parts of
the world.
 Capital Intelligence inestitution granted the bank a rating of BBB - with a stable
future vision to accompany the security of long term foreign currencies. The
institution gave the short term foreign currencies portfolio at the bank a rating
of A3 in its report issued in September 2010 for the banking business during
the financial year ended Dec. 2009. The rating institution relied in the foregoing
on the support of the governments contributing to the capital of the Bank.
 The Bank maintained a strong rate of capital adequacy according to Basel II
requirements, where it amounted to 12.38% (requirements of the Central Bank
of Egypt is at least 10%). In addition, the Bank had applied Basel II Accords
as an initiative in 2008 apart from other banks subject to the supervision of the
Central Bank of Egypt, maximized liquidity and covered the full provisions for
defaulting debts.
24
Annual Report
■
2010■
General View
Third :Governance
1- Board of Directors.
Bank's Main Activities
2- Organization Chart
3- Board Committees.
4- Compliance
5- Internal Audit
6- Disclosure & Transparency
Governance
Financial Statements
Interconnection with Bank
Annual Report
■
2010■
25
Governance
The AIB is committed to apply the corporate governance principles according to
Basel committee guidlines, beside the aspects that the Egyptian Central Bank issue
and are applied to Egypt’s working Banks in the light of the treaty establishing the
bank and its states
BASIC PRINCIPLES FOR GOVERNANCE AT AIB
 Securing shareholders and treating them fairly .
 Respecting and ensuring interests and rights of stakeholders .
 Determining rights and responsibilities of the board of directors and the executive
managers .
 Ensuring the importance of the internal & external audit and the audit committees.
 To be committed to the disclosure & transparency standards .
FIRST : BOARD OF DIRECTORS
The board of directors shall be vested with the widest authority to conduct the affairs of the
Bank, except for matters clearly vested in the General Assembly .
The board of directors shall be convened at the head office of the Bank at least once every
three months .
The board of directors main responsibilities :
 Ensuring that the interests of shareholders, depositors and other stakeholders are met.
 Setting the Bank’s strategic targets .
 The board ensures that the Bank is managed prudently and within the framework of laws
and regulations and the Bank’s own policies .
 Ensuring and certifying that the internal control systems are effective and efficient.
Members of Board of Directors :
Mr. Hesham Ramez Abdel Hafez
Chairman of Board of Directors since 21 Apr. 2011
Member of Board of Directors since 23 Aug. 2008
Membership of Board committees :
Supreme & Governance Committee and Remuneration Committee
Mr. Mohamed Ibrahim Abduljawad
Deputy-Chairman of Board of Directors & Managing Director
Date of appointment : 28 Dec. 2005
Membership of Board committees :
Supreme & Governance Committee and Remuneration Committee
Mr. Hamad Salem Kardouss
Deputy-Chairman of Board of Directors since 21 Apr. 2011
Member of Board of Directors since 9 Mar. 1991
Membership of Board committees :
Supreme & Governance Committee
26
Annual Report
■
2010■
Mr. Ashour Khalifa Tarbil
Member of Board of Directors
Date of appointment : 23 Sept. 2001.
General View
Mr. Mahmoud Abdel Aziz Mahmoud
Member of Board of Directors
Date of appointment : 28 Sept. 2003.
Membership of Board committees : Internal Audit Committee
Mr. Ahmed Mohamed El Sayed
Member of Board of Directors
Date of appointment : 27 June 2004.
Bank's Main Activities
Mr. Mohamed Naguib Ahmida El Gamal
Member of Board of Directors
Date of appointment : 20 Sept. 2006.
Membership of Board committees : Remuneration Committee
Mr. Abdel Salam Akil Khoury
Member of Board of Directors
Date of appointment : 20 Sept. 2006.
Membership of Board committees : Internal Audit Committee
Governance
Mr. Mohamed Hajy Khoury
Member of Board of Directors
Date of appointment : 20 Sept. 2006.
Membership of Board committees : Risk Committee and Remuneration Committee
Mr. Amr Yakhlaf Haggag
Member of Board of Directors
Date of appointment : 14 May 2009.
Membership of Board committees : Internal Audit Committee
Financial Statements
Mrs. Lobna Helal
Member of Board of Directors
Date of appointment : 15 May 2009.
Membership of Board committees : Internal Audit Committee
Mr. El Taher Amhamad Sarkaz
Member of Board of Directors
Date of appointment : 21 Jan. 2010.
Membership of Board committees : Risk Committee
Interconnection with Bank
Mr. Gamal Negm
Member of Board of Directors
Date of appointment : 22 Apr. 2010.
Membership of Board committees : Risk Committee
Mr. Mohamed Mohamed Ben Youssef
Member of Board of Directors
Date of appointment : 5 Sept. 2010.
Membership of Board committees :Supreme & Governance Committee
Annual Report
■
2010■
27
28
Annual Report
■
2010■
Provisions Committee
Human Resources Committee
Asset/Liability Committee
Credit Committee
Executive Committee
Branches & Banking Services
Financial Institutions
Treasury
Direct Investments
Board Secreteriat
General Audit
Financial Control
Information Technology
Central Operations
Legal Affairs
Adminstration & Services
Deputy Chairman &
Managing Director
Corporate & Commercial
Lending
Deputy Chairmen
Chairman
Board of Directors
Compliance
Inspection
Risk Management
Risk Committee
Internal Audit Committee
Remuneration Committee
Supreme & Governance
Committee
Board Committees
Second:Organization Chart
1. Supreme & Governance Committee :
Committee Formation
Chairman of Board of Directors
Mr. Mohamed Ibrahim Abduljawad
Deputy- Chairman of Board of Directors &
Managing Director
Mr. Hamad Salem Kardouss
Deputy- Chairman of Board of Directors
Mr. Mohamed Mohamed Ben Youssef
Member of Board of Directors
Bank's Main Activities
Mr.Hesham Ramez Abdel Hafez
2. Internal Audit Committee :
Committee Formation
Committee president
Mr. Abdel Salam Akil Khoury
Member
Mr. Amr Yakhlaf El Haggag
Member
Mrs. Lobna Mohamed Helal
Member
Governance
Mr. Mahmoud Abdel Aziz Mahmoud
General View
Third : Board Committee
Within the framework of applying the principles of governance, technical
committees branching off the Board of Directors were formed to assist it in performing
it tasks. Such committees are represented in the following :
Convening periodicity : At least four times per year.
3. Risk Committee :
Committee Formation
Committee president
Mr. Mohamed Hajy Khoury
Member
Mr. El Taher Amhamad Sarkaz
Member
Financial Statements
Mr. Gamal Negm
Convening periodicity : At least four times per year.
4. Remuneration Committee :
Committee Formation
Committee president
Mr. Mohamed Ibrahim Abduljawad
Member
Mr. Mohamed Naguib El Gamal
Member
Mr. Mohamed Hajy Khoury
Member
Interconnection with Bank
Mr. Hesham Ramez Abdel Hafez
Convening periodicity : At least two times per year.
Annual Report
■
2010■
29
Fourth : Compliance Activity
The bank is considered among the pioneering banks operating in Egypt in establishing
an independent sector for compliance since 2002 to protect the Bank from any
noncompliance risks. A developed policy was ratified for compliance that agrees with
the accords of Basel II in this concern, by virtue of which the Head of Compliance
was determined together with the appointment of Branch Compliance Officers.
The activity of the Compliance Sector depends on three axes :
 Ensure the conformity of business mechanisms,
systems and regulations at the Bank with the
banking standards and policies and with the laws and
instructions issued by the supervisory authorities.
 Anti-money laundering.
 Endorse the principles of governance on sound
banking grounds.
Fifth : Internal Audit
The concept of governance is applied in the system of audit through intensified
auditing plans that aim to maintain stability and confidence in the system available
at the Bank through the following :
 Controlling risks represented basically in credit
risks, market risks and operation risks in addition
to compliance risks, reputation risks and strategy
risks.
 Evaluate the performance of departments and
branches in light of the extent of compliance with
the Bank’s annual plans and the strategy ratified by the top management of
the Bank and the extent of its compliance with the procedures that minimize
risks.
The results of auditing are put forward before the Audit Committee and the Board of
Directors.
Sixth : Disclosure & Transparency
 Disclosure and transparency are achieved pursuant
to the requirements of control of financial information
of the Bank and achieving protection to shareholders
and customers.
 The bank prepares financial statements pursuant to
the international accounting standards in the manner
that achieve disclosure.
 The website of the Bank www.aib.com.eg includes the results of the Bank, its
financial indices, services and activities that the it provides.
30
Annual Report
■
2010■
General View
Fourth :Financial Statements
,
1- Auditor s Report
Bank's Main Activities
2- Financial Statements
3- Notes to Financial Statements
Governance
Financial Statements
Interconnection with Bank
Annual Report
■
2010■
31
AUDITOR'S REPORT
To the shareholders of Arab International Bank
Report on the Financial Statements
We have audited the accompanying financial statements of Arab International Bank, which
comprise the balance sheet as at 31 December 2010, and the income statement, statement
of changes in equity and statement of cash flows for the financial year then ended, and a
summary of significant accounting policies and other explanatory notes.
Management's Responsibility for the Financial Statements
These financial statements are the responsibility of Bank’s management. Management
is responsible for the preparation and fair presentation of these financial statements
in accordance with the International Financial Reporting Standards, management
responsibility includes, designing, implementing and maintaining internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; management responsibility also includes
selecting and applying appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion on the financial statements.
32
Annual Report
■
2010■
Bank's Main Activities
Emphasis of matter
Without qualifying our opinion, we draw attention to Note No. [37] to the financial statements.
The Bank was unable to obtain the appropriate data, which could enable it to disclose the
effect of the subsequent events on the value of the assets, liabilities and the results of
operations in the foreseeable future, since these amounts and results may differ significantly
when reliable indicators and signs become available, which enable the use of those indicators
and signs in identifying the extent and the impact of the subsequent events on the carrying
amount of the assets and liabilities included in the financial statements.
General View
Opinion
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Arab International Bank as of December 31, 2010, and of
its financial performance and its cash flows for the year then ended in accordance with the
International Financial Reporting standards.
Governance
KPMG
Cairo, April 21, 2011
Financial Statements
Interconnection with Bank
Annual Report
■
2010■
33
ARAB INTERNATIONAL BANK
Balance Sheet
As of December 31, 2010
Note
NO.
31/12/2010 31/12/2009
,
U.S.$ 000
,
U.S.$ 000
Assets
Cash and balances with banks
(6)
225,674
260,704
Placements with banks and other financial institutions
(7)
1,430,025
2,168,778
Investments held for trading
(8)
55,582
Available for sale investments
(9)
296,342
479,315
Loans and advances (Net)
(10)
1,503,608
651,645
Held to maturity investments
(11)
53,821
55,284
Investments in associates
(12)
472,130
491,520
Other debit balances and accrued interest ( Net )
(13)
46,124
46,673
Investment properties
(14)
22,058
22,058
Premises and equipment ( Net )
(15)
36,386
7,170
4,141,750
4,183,147
Total assets
Liabilities & Shareholders' equity
Liabilities
Placements from banks and other financial institutions
(16)
547,518
263,935
Customers' deposits
(17)
2,606,138
2,949,506
Certificates of deposits
(18)
201,951
217,574
Other credit balances and accrued interest
(19)
52,009
33,168
Other provisions
(20)
13,222
10,440
3,420,838
3,474,623
Total liabilities
Shareholders' equity
Issued and fully subscribed capital
(21)
600,000
600,000
Paid-in capital
(21)
450,000
450,000
Statutory reserve
87,959
84,326
General reserve
73,582
73,582
Retained earnings
39,257
34,246
(22,487)
(45,076)
68,954
87,803
Available for sale investments fair value reserve
Investments in associates fair value reserve
Net profit for the year
23,647
23,643
Total shareholder's equity
720,912
708,524
4,141,750
4,183,147
Total liabilities & shareholders' equity
* The attached notes from(1) to (39) form an integral part of these financial statements and are to
be read therewith.
* Auditor's report attached
Mohamed Abduljawad
Hisham Ramez
Deputy Chairman
Chairman
& Managing Director
34
Annual Report
■
2010■
ARAB INTERNATIONAL BANK
Statement of Income
For the year ended December 31, 2010
NO.
,
U.S.$ 000
,
U.S.$ 000
Interest income
(22)
43,580
51,191
Interest expense
(23)
(10,330)
(27,231)
33,250
23,960
Operating Income
Net interest income
2,053
-
Investment properties revaluation differences
(14)
-
(127)
losses from held to maturity investments
(11)
-
( 1,358)
14,905
297
45,188
Associates profit shares (net)
Return on available for sale investments
(24)
16,340
Other operating income ( Net )
(25)
21,488
11,990
88,036
79,950
( 24,764)
( 24,374)
Total operating income
Bank's Main Activities
Profit from trading investments (Net)
Operating Expenses
Salaries and wages
Pension fund deficit
(26)
-
( 4,784)
Depreciation
(15)
( 1,194)
( 1,463)
( 6,521)
( 37,142)
54,266
42,808
( 16,593)
( 6,479)
37,673
36,329
( 3,170)
( 3,406)
( 10,856)
( 9,280)
23,647
23,643
1,051
1,513
Operating profit before provisions
Provisions
Net profit for the year before Board of Directors, allowances
& remuneration and employees, profit shares
Board of Directors allowances & remuneration (subject to
the approval of General Assembly)
Employees, profit share (subject to the approval of General
(3-o)
Financial Statements
( 7,812)
( 33,770)
Governance
Other administrative expenses
Total operating expenses
Assembly)
Net profit for the year
Earning per share
(36)
*T
he attached notes from(1) to (39) form an integral part of these financial statements and are to
be read therewith.
Hisham Ramez
Deputy Chairman
Chairman
Interconnection with Bank
Mohamed Abduljawad
& Managing Director
Annual Report
■
2010■
General View
Note 31/12/2010 31/12/2009
35
ARAB INTERNATIONAL BANK
Statement of Changes in Shareholders' Equity
for the year ended December 31, 2010
Share
Capital
,
U.S.$ 000
Statutory
Reserve
,
,
U.S.$ 000 U.S.$ 000
General
Reserve
Net Profit
Total
Retained Available for Investment in
sale
associates ( Loss) For the
Earnings
fair value
fair value
year
reserve
reserve
,
,
,
,
U.S.$ 000
U.S.$ 000
U.S.$ 000
U.S.$ 000
,
U.S.$ 000
-
-
-
- (41,421)
-
83,134
-
-
( 128,210)
-
( 9,594)
-
-
-
97,397
461,341
-
-
-
87,803
75,667
-
-
(45,076)
-
73,582
-
-
-
34,246
-
-
23,647
84,326
-
-
73,582
5,011
22,589
( 18,849)
)23.643 (
23.647
720,912
300,000
Available for sale fair value reserve
-
84,326
-
-
-
-
23.647
Balance as at 31/12/2008
Investment in associates fair value reserve
450,000
3,633
-
-
-
68,954
Capital increase
Balance as at 31/12/2009
150,000
-
( 18,849)
22,589
( 14,999)
708,524
23,643
( 9,594)
83,134
150,000
-
Net profit for the year 2009
-
-
-
-
( 22,487)
-
Profit appropriation for the year 2009
-
-
-
39,257
-
Available for sale fair value reserve
-
-
73,582
losses carried forward for the year 2008
Investment in associates fair value reserve
-
87,959
)41.421(
41.421
23.643
23.643
Net profit for the year 2010 (before the
general assembly resolutions)
450,000
Balance as at 31/12/2010
* The attached notes from(1) to (39) form an integral part of these financial statements and are to be read therewith.
2010■
■
Annual Report
36
ARAB INTERNATIONAL BANK
Statement of cash flows
For the year ended December 31, 2010
Interconnection with Bank
2010■
Financial Statements
■
Governance
Annual Report
Bank's Main Activities
U.S.$ 000
U.S.$ 000
Cash flows from operating activities
Net profit for the year
23,647
23,643
Adjustments to reconcile net profit to net cash provided from
operating activities
1,194
1,463
Depreciation
16,593
6798
Provisions formed during the year
( 2,424)
(319)
Provisions no longer required
(79)
(17)
Provisions used during the year
( 1,881)
Trading investments revaluation differences
( 16,093)
( 45,038)
Profit on sale of available for sale investments
( 14,905)
5,978
Shares of profits in associates
1,463
1,383
Held to maturity investments premium amortization
1,358
Loss on sale of held to maturity investments
245
Investment properties adjustments
(143)
Available for sale investments revaluation differences
781
41
Effect of exchange rate changes on cash and due from banks
8,296
(4,608)
Operation profit (loss) before changes in assets & liabilities
provided from operating activities
Net decrease (increase) in assets
Placements with banks and other financial institutions
738,753
( 335,152)
Trading investments
(53,700)
Loans & advances
( 863,270)
168,222
Other debit balances
(640)
( 1,598)
Net (decrease) increase in liabilities
Placements from banks and other financial institutions
283,580
( 168,115)
Customers' deposits and Certificates of deposits
( 358,991)
( 241,393)
Credit balances and accrued interest
18,070
( 26,882)
Net cash used in operating activities
( 227,902)
( 609,526)
Cash flows from investing activities
Proceeds from sale of available for sale investments
221,655
691,294
Payments to purchase investments in associates
(167)
( 104,826)
Proceeds from sale of held to maturity investments
25,081
Proceeds from investments in associates
17,577
11,693
Payments for purchase of fixed assets
(30,412)
(943)
Net cash provided from investing activities
208,653
622,299
Cash flow from financing activities
Capital increase
150,000
Dividends paid
( 15,000)
( 3,239)
Net cash (used in) provided from financing activities
( 15,000)
146,761
Effect of exchange rate changes on cash and cash equivalents
(781)
(41)
during the year
( 35,030)
159,493
Net (decrease) increase in cash & cash equivalents during the year
Cash & cash equivalents at the beginning of the year
260,704
101,211
Cash & cash equivalents at the end of the year
225,674
260,704
* The attached notes from(1) to (39) form an integral part of these financial statements and are
to be read therewith.
General View
31/12/2010
31/12/2009
,
,
37
ARAB INTERNATIONAL BANK
Statement of Proposed Profit Appropriations
For the year ended December 31, 2010
31/12/2010
,
31/12/2009
U.S.$ 000
,
U.S.$ 000
Net profit for the year before Board of Directors> allowances &
remunerations and employees> profit shares
37,673
36,329
Retained earnings brought forward
39,257
34,246
Profit available for appropriations
76,930
70,575
3,767
3,633
22,500
15,000
Distributed as follows:
Legal reserve 10 %
Shareholders, dividends
Board of Directors, allowances & remunerations
Employees, profit share
3,170
3,406
10,856
9,280
Retained earnings carried forwarda
36,637
39,256
Total
76,930
70,575
* The attached notes from(1) to (39) form an integral part of these financial statements and are to
be read therewith.
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39
Interconnection with Bank
2- Basis of preparation
- The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) and its interpretations adopted by the International
Accounting Standards Board (IASB),
- The preparation of financial statements in conformity with IFRS requires management
to make judgments, estimates and assumptions that affect the application of accounting
policies and reported amounts of assets, liabilities, income and expenses, actual
results may differ from these estimates,
Estimates and underlying assumptions are reviewed on an ongoing basis, Revisions
to accounting estimates are recognized in the period in which the estimates are
revised and in any future periods affected,
In particular, information about significant areas of estimation uncertainty and critical
judgments in applying accounting policies that have the most significant effect on the
amounts recognized in the financial statements is included in Note No, (5)
- the financial statements are prepared under the historical costs convention as modified
by the revaluation of financial assets held for trading, available for sale assets and
derivatives instruments,
- These financial statements were approved by the board of director on April 21, 2011,
Financial Statements
C- Financial year
The financial year of the Bank ends up on June 30 of each year, According to the
extraordinary general assembly resolution dated September 5, 2007 the ending date
of the financial year was amended to be on December 31 of each year,
Governance
B- Bank’s activity
The Bank undertakes all banking, financial and commercial activities relating to
economic development and foreign trade particularly in member states, Arab countries
and other countries,
Bank's Main Activities
1- General
A- Establishment of the Bank
Arab International Bank was established by an International Treaty in 1974,
The registered office of the Bank is located in Cairo, Egypt and the Bank carries out
its business activities through its network of branches in the Arab Republic of Egypt
(7 Branches),
By virtue of the Treaty, the Bank enjoys certain privileges in the territories of the
Member States (shareholders) including:
- Exemption from laws regulating of banks, credit , exchange control , statutory
auditing requirements , public institutions , public companies and joint stock
companies,
- Immunity from all forms of nationalization and seizure of shares in and deposits
with the Bank,
- The Bank’s documents, records and files are inviolable and immuned from judicial,
administrative and accounting control and inspection rules and laws,
- Confidentiality of customers’ accounts with the Bank which are not subject to
judicial or administrative distraining orders,
- Exemption from tax of any kind on its funds, profits, dividends and all its activities
and different transactions, and
- Exemption from taxation and any obligations for the payment, withholding or
collection of any tax or duty, which may be imposed on its customers,
General View
ARAB INTERNATIONAL BANK
Notes to the Financial Statements
For the year ended December 31, 2010
,
(Amount in U.S.$ 000)
3- Significant accounting policies applied
The accounting policies set out below have been applied consistently to all periods
presented in these financial statements,
A- Foreign currency transactions
These financial statements are presented in U,S, Dollar, which is the Bank’s functional
currency,
The Bank maintains its accounts in U,S, Dollar, Transactions denominated in other
currencies during the year are translated into US Dollars at the rate prevailing on the
transactions date and the difference is to be charged to the income statement,
Non-monetary assets and liabilities denominated in other currencies that are measured
at fair value are translated into U,S, Dollar at the spot exchange rate at the date that
the fair value was determined,
Non-monetary assets and liabilities that are measured in terms of historical cost in
other currency are translated using the exchange rate at the date of the transaction,
Exchange differences are recognized in the income statement in the period in which
they arise, Differences arising on translation of non-monetary assets and liabilities
measured at fair value are recorded in the changes of its fair value,
B- Revenue recognition
Interest income is recognized in the income statement as it accrues and the
income gained from the commissions and charges is recognized upon rendering
the service except for interest income on non-performing loans and advances as
the interest are calculated based on the portion expected to be collected thereof
at the contract interest rate to calculate the present value of the future cash flows
related to the portion of the loan that is expected to be repaid,
The Bank’s share in the operating results of the associate companies is recorded
in the books based on the equity method,
Dividend income on equity instruments classified as held for trading or available
for sale investments is accounted for when the right to receive dividend is
established,
Gain or loss on sale of investments is accounted for when the sale is executed,
The revenues of banking services are recorded when the service is rendered,
C- Financial assets:
The Bank classifies its financial assets into the following categories: financial assets
at fair value through profit or loss, loans & liabilities, held–to-maturity investments;
available-for-sale financial assets, Management determines the classification of its
investments at initial recognition,
C,1 Financial assets at fair value through profit or loss:
This category has three sub-categories: financial assets held for trading,
financial assets designated at fair value through profit or loss at inception and
derivatives,
- Financial assets are classified as held for trading if they are acquired or
incurred principally for the purpose of selling in the near term or from part
of a portfolio of identified financial instruments that are managed together
and for which there is evidence of recent actual pattern of short-term profit
taking, Derivatives are also categorized as held for trading unless they are
designated as hedging instruments,
-Financials assets and financial liabilities are designated at
fair value through profit or loss when:
1-Doing so significantly reduces measurement inconstancies that would arise
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41
Interconnection with Bank
Annual Report
Financial Statements
The following are applied for the financial assets:
- Recognition of purchases and sales are for the usual manner of financial assets in the
date of trade which is the date where the Bank is obligated to sell or purchase the asset
(and that is for the recorded assets at fair value through profit and loss), the investments
held to maturity, and the investments available for sale,
- Initial recognition of financial assets, which have not been recorded at its issuance at
fair value through profit and loss at fair value plus the deal costs, The financial assets
recorded on issuance at fair value through profit and loss are recognized at fair value
only, while the deal costs are recorded in the income statement in the net trade income
item,
- Financial assets are excluded\disposed when the term of validity of the contractual right to
receive cash flows from the financial asset comes to an end, or when the Bank transfers
the bulk of the risks and benefits associated with ownership to another party, obligations
are excluded when it comes to end either by disposing, cancellation or the end of their
contract,
- Subsequently, measurement is to be at fair value for each of the financial investments
available for sale and the financial assets classified at fair value through profit and loss
and at amortized cost for loans, debts and investments held to maturity,
- Gains and losses resulting from changes in fair value of financial assets classified at
fair value through profit and loss are recognized in the income statement in the period
Governance
C,3 Investments available for sale:
Investments Available for Sale represents non-derived financial assets with an
intension to held them for a non-determined period, and are sold because of
liquidity needs or changes in the interest rates, exchange rates, or in the shares
prices,
Bank's Main Activities
C,2 Held to maturity investments financial assets:
Held-to-maturity investments are non derivative financial assets with fixed or
determinable payments and fixed maturities that Bank’s management has
positive intention and ability to hold it to maturity, A re-classification takes place
for the whole group to available for sale if the Bank sold a material amount of the
financial assets held to maturity except for the necessity situations,
General View
if the related derivatives were treated as held for trading and underlying
the financial instruments were carried at amortized cost for such as loans
and advances to customers or banks and debt securities in issue,
2-Certain investments, such as equity investments that are managed and
evaluated at the fair value basis in accordance with a documented risk
management or investment strategy and reported to key management
on that basis are designated at fair value through profit and loss,
3-Financial instruments such as debt securities held containing one or more
embedded derivatives significantly modify the cash flows are designated
at fair value through profit and loss,
- Gain and losses arising from changes in the fair value of derivatives that are
managed in conjunction with designated financial assets or financial liabilities
are included in the net income from financial instruments designated at fair
value,
- No reclassification of any financial derivatives from the financial instrument
group at fair value though profit and losses during the held to maturity period
and no reclassification at fair value through profit and losses in case that the
Bank had declared at initial recognition the treatment at fair value from profit
and losses,
-
-
-
-
-
in which they occur, while the profit and loss resulting from the changes in the fair value
of the investments available for sale are recognized directly in the owner’s equity, and
that is till the asset is disposed or impaired, at that time accumulated profit and loss
previously recognized in the owner’s equity are recognized in the income statement,
Calculated interest by the amortized cost, profits and losses of foreign currency related
to monetary assets classified as available for sale and dividends resulting from owner’s
equity classified as available for sale when the Bank has the right to collect it are
recognized in the income statement,
Fair value for the listed investments in an active market is determined according to Bid
Price, But if there is no active market for the financial asset or no present\current demand
prices available, the Bank determines the fair value by using one of the evaluation
methods, this includes using recent neutral\transactions, analyzing the discounted cash
flows, the alternative pricing form, or the other evaluation methods which are commonly
used by the market dealers, If the Bank is unable to estimate the fair value for the Owner’s
equity instruments which are classified available for sale, then it is evaluated by cost
after deducting any impairment in its value,
The Bank re-classify the financial assets which were previously classified as financial
assets available for sale which were defined as loans and debts (bonds and loans) to
be transferred from the available for sale group to the loans and debts group or to the
financial assets held to maturity –each according to the circumstances - and that is when
the Bank has the intension and the ability to hold these financial assets to maturity or till
foreseeable future, Re-classification is at fair value at the re-classification date, Profit or
loss related to these assets which were previously recognized are treated\handled in the
Owner’s equity as follows:
In case of re-classified financial assets with fixed due date, profit or loss is amortized
over the remaining life for the investment held to maturity by the actual yield method,
Any difference between the value at amortized cost basis and that at maturity date is
amortized over the remaining life for the financial asset using the actual yield method,
In case of the subsequent impairment of the financial asset any profit or loss which was
previously recognized directly in Owner’s equity is recorded in profit and losses,
In case of the financial asset with no fixed due date, profit and loss is recorded in Owner’s
equity until the sale or disposal of the asset, at this point it is recorded in profit and loss,
D- Investments in associates
Accounting for investments in companies which the Bank owns 20% or more of the
voting rights is according to the owner’s equity method, Initial recognition is at cost.
which is subsequently increased or decreased based on the Bank’s share of the
change in the investees companies net assets which occur after the acquisition,
The Bank’s share in the change of the investees companies equity subsequent to
the acquisition are recorded directly in the Bank’s equity, The investment cost is
decreased by the dividends received from the investees and impairment losses.
if any.
E- Investment properties
Investment properties are initially recognized at cost plus transaction costs, and
are subsequently measured at fair value, Gains or losses arising from a change in
fair value of these investments are recorded in the income statement in the period
in which they arise.
F- Loans and advances
- Loans and advances are initially recognized at fair value, and re-measured at
amortized cost using the effective interest rate.
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43
Interconnection with Bank
J- Other provisions
A provision is recognized, if as result of a past event, the Bank has a present legal
or constructive obligation that can be estimated reliably, and it is probable that an
outflow of economic benefits will be required to settle the obligation, Provisions
Financial Statements
I- Impairment of financial assets:
I – 1 Held to maturity investments:
The Bank assesses at each balance sheet date whether there is any objective
evidence that a financial asset or a group of financial assets is impaired, A
financial asset or a group of financial assets is deemed to be impaired if,
and only if, there is objective evidence of impairment as a result of one or
more events that has occurred after the initial recognition of the asset “loss
event” and that loss event has an impact on the estimated future cash flows
of the financial asset or the group of financial assets that can be reliably
estimated
The criteria that The Bank uses to determine that there is objective evidence
of an impairment loss include:
-
Substantial financial difficulties facing the debtor,
-
Prediction of bankruptcy of the debtor or the debtor is being sued to
be liquidated,
I - 2 Assets classified as available for sale:
The Bank assesses at each balance sheet date whether there is objective
evidence that a financial assets or a group of financial assets is impaired
which is included as available for sale or the held to maturity,
In the case of equity investments classified as available for sale, significant or
prolonged decline in the fair value of the security below its cost is considered
in determining whether the assets are impaired
Governance
H- Assets reverted to the Bank in settlement the some customers’ debts
Assets reverted to the Bank are stated under the item of “Debit balances and
other assets” on the basis of the value by which they are assigned, In case the
assets fair value falls below the value at which such assets have been reverted
to the Bank in the balance sheet date, the resulting differences are charged to
income statement and in case of increase of the fair value, such increase shall
be added to income statement within the limit of amounts charged to the income
statement in previous financial periods,
Bank's Main Activities
G- Premises and equipment
Property and equipment are stated at cost less accumulated depreciation and
provision for impairment in value, if any, Depreciation is calculated using the
straight-line method at rates ranging from 2% to 20%,
Improvement expenses of lease- hold branches of the Bank are depreciated at the
lower of estimated useful life or lease period,
General View
- Specific allowances are made against the carrying amount of loans and advances
that are identified as being impaired based on regular reviews of outstanding
balances to reduce these loans and advances to their recoverable amounts
based on the present value of estimated future cash flows discounted at the
original effective interest rate, Impairment loss is recognized in the statement of
income,
- When a loan is known to be uncollectible, the loan is directly written off using the
allowance, conversely, collections of loans previously written off are added up to
the allowance,
are determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and the risks
specific to the liability, the unwinding of the discount is recognized as finance cost,
Other provisions balance is reviewed on the balance sheet date and amended
when necessary to indicate the best current estimate thereof,
K- Offsetting:
Financial assets and financial liabilities are only offset and the net amount
reported in the balance sheet when there is a legally enforceable right to offset the
recognized amounts and the Bank intends to settle on a net basis,
L- Derivatives
The Bank enters into derivative contracts which include forward contracts, forward
exchange rates contracts, swap contracts and options contracts etc, These
transactions are recorded at fair value, The fair value of derivatives is represented
in the equivalent of unrecognized profits or losses resulting from re-pricing of
these instruments according to market or based on any other acceptable pricing
method,
The change in fair value derivatives for trading purposes is recorded in the income
statement, in regards to the derivatives for hedging purposes, it is accounted
for based on the Bank’s policies regarding risk management and for accounting
treatment purposes, and it is classified into the following:
(a) Fair value hedges: the change in the fair value of these instruments and the
change in the fair value of the hedged asset or liability are recognized in the
income statement,
(b) Cash flow hedges: change in the fair value of cash flow hedges which prove
to be effective is recognized directly in equity while the ineffective portion is
recognized in income statement, At the due date of these instruments, the
resulting differences from the liquidation and the amounts previously recorded
in equity are recognized in the income statement,
The hedge transaction is considered effective if it is expected, at the beginning
and during the contract, that the change in the fair value of the hedged item will
almost be completely covered by the change in the hedging instrument,
M- Statutory reserve
The Bank’s statutes stipulate that 10% of net income of each financial year be
transferred to a statutory reserve until the accumulated reserve equals the issued
and fully paid share capital,
This reserve is not available for distribution,
N- General reserve
The general reserve is to be formed based on General Assembly resolutions to
enhance the capital base of the Bank,
O- Board of Directors’ remuneration and allowances
According to the International Financial Reporting Standards, the remunerations
and allowances of the Members of Board of Directors constitute a part of the cost
recorded in the income statement while the Bank’s articles of association states
that the remunerations and allowances of the Members of Board of Directors are
part of profits appropriations that are approved by the General Assembly of the
Bank at the end of each year, therefore, the Board of Directors remuneration &
44
Annual Report
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P- Cash and cash equivalents
For the purpose of preparing the cash flow statement, the cash and cash
equivalents include cash and current accounts with Banks,
2010■
45
Interconnection with Bank
■
Financial Statements
Annual Report
Governance
4- Financial risk management
The Bank is exposed to different financial risks based on its activities which include:
- Market risk
- Operational risk
- Liquidity risk
- Credit riskFinancial business is based on acceptance of risks, Some risks or a
group of which are analyzed, assessed and managed with a view to strike a balance
between such risks and return, and to minimize the potential negative impacts on
,
the Bank s financial performance, The most significant risks are credit, market,
liquidity, and operational risks, Market risk includes foreign exchange, interest, and
other risks,
The Bank regularly reviews and amends the risk management policies and
systems to cope with changes in the market, products, and services and make use
of updated applications,
Risks are managed in the light of the policies approved by the Board of Directors,
Risk Management Departments identifies, assesses, and covers financial risks in
close cooperation with other operating units in the Bank, Within framework of the
principles of governance and the sound banking performances related to banking
risks management, the board of directors provides an integrated supervisory
structure of higher committees originated there from , which are the following:- Top management and governance committee,
- Internal Audit committee,
- Risk committee
- Benefits and compensation committee,
The membership of the higher committees formed from the non executive members
of the board of directors, and each committee shall practice its activity within the
frame work of a by – law approved by the board of directors that determines its
competencies and the dates of holding its meetings in addition to the issues of
which its committee is completed to submit its recommendations thereof to the
board of directors,
Through the committees emerging therefrom the board of director provides written
instructions covering certain risk areas such as credit, foreign exchange, and
interest rate, as well as the use of financial derivatives and other instruments, In
addition, Risk Management Department is independently responsible for regular
review of risks and control environment, Risk Management Department is to
identify and adopt methods used to analyze, monitor, and approve a country credit
Bank's Main Activities
Q- Employees’ pension fund
The Bank’s contributory defined pension plan covers the employees’ pensions
and other end of service benefits, The Bank’s contribution to this fund is computed
at a certain percentage of the employees’ annual salaries, in addition to amounts
required to the fund as decided by the Actuary to continue providing its services
and maintain the minimum return on its invested funds,
General View
allowances and employees profit share were recorded in the profits appropriations
statement (pending the approval of the General Assembly), and at the same time,
the same amounts are stated in the income statement to fulfill the International
Financial Reporting Standards requirements,
risk and risk limit, as well as market risk, and operational risk, It carefully reviews
the trading strategies in high risk areas, and actively seeks to improve predictability
and management of such risks,
Risk Management Department works with complete compatibility with the following
principles:
- Independence of Risk Management Department from Operation Department,
- Appling consistent approach for identify and evaluate Bank’s risks,
A- Market risk
Market risk represents the loss resulting from adverse changes in market
prices, This risk is inherent in all trading transactions and some of the Bank’s
operations,
Foreign exchange risks represent losses resulting from changes in interest and
forex rates for balance sheet and off balance sheet items, Theses risks result
from the trading activities of the Bank,
Interest rate risks relate to trading activities and are attributed to the difference
between total assets and total liabilities of fixed interest rates,
The main principle is to minimize the risk of structured interest rate as far as
possible, Micro and macro-hedging is made for such risks whenever it is
possible,
Accordingly, such risks are measured based on the remaining potential risks after
such hedging procedures, It is worth mentioning that non-existence of a market
for derivatives in Egypt exacerbates the difficulty of implementing local currency
hedging transactions,
The Bank is exposed to forex rate volatility risk in terms of the financial position
and cash flows, The Board of Directors sets limits for foreign currencies at the
total value of positions at the end of the day and during the day when timely
control is exercised,
Asset and Liability Management Committee is concerned with identifying policies
and planning to deal with financing and liquidity risks, deciding on the limits of
acceptable interest rate risk, approving the assumptions used to determine and
measure all risks, and assessing, amending, and approving any recommendations
to fill gaps, (if any),
Table (C) illustrates the carrying amounts of financial instruments in relevant
currencies,
B- Operational risk
It includes legal, non-compliance, accounting, environmental, and reputation
risks, This risk results from losses, fraud, financial misstatements, inappropriate
procedures and internal systems, human error, or external events, It also implies
those risks associated with legal and administrative penalties, and disciplinary
actions due to non-compliance with relevant rules and regulations,
Audit committee meets regularly to control operational risk, and ongoing and
regular control managed by the inspection department and internal audit
department,
Legal risks are managed by the legal department and compliance risks are
managed by the Compliance Manager,
C- Liquidity risk
Liquidity risk is defined as a risk resulting from the Bank’s inability to meet cash
outflows on maturity at an appropriate price, Liquidity is considered and followed
up through models of cash flows according to several scenarios,
The Dealing Room is responsible for managing short term liquidity and producing
46
Annual Report
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2010■
reports on financial markets, following up on any sign of potential liquidity crisis,
and reporting to Asset and Liability Management Committee on the Bank’s needs
of liquidity,
December 31, 2009
Loans and
Loans and
facilities
facilities to
to
institutions
customers
(clients)
201,348
455,685
195,214
396,562
455,685
124,820
7,397
68,385
203,357
448,288
Annual Report
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2010■
Interconnection with Bank
Neither past due nor impaired
Past due but not impaired
Impaired
Total
Less: Allowances
Less: Suspense interest
Net
December 31, 2010
Loans and
Loans and
facilities
facilities to
to
institutions
customers
(clients)
173,422
1,351,824
194,885
368,307
1,351,824
122,313
21,211
72,999
172,995
1,330,613
Financial Statements
Table No, (A)
The status of balances of loans and facilities in terms of credit ratings are as follows:
Governance
Table (A) Illustrates the status of balances of loans and facilities in terms of credit ratings and
Table (B) illustrates the loans and facilities in terms of internal rating used by the Bank.
Bank's Main Activities
Credit Risk Management Department is responsible for:
-Determining credit limits for each customer, group of customers, and individual
commercial transactions,
-Approving the customer rating forms and internal standards to determine the credit
rating of the customer (reflecting the repayment credibility of the customer),
-Monitoring credit granted to key clients in all credit portfolios,
-Reviewing the wording of general and specific provisioning policies
More and above, a comprehensive analysis of portfolio is made to provide
guidance to the Bank’s management on general credit risks and those specific
to the Bank, Risk Management department, also helps in determining the criteria
for measuring risk, and identifying appropriate practices for credit provisioning,
General View
D- Credit risks
The Bank is exposed to credit risk which means that a party does not repay the
amount due from it, Credit risk is the most significant risk encountered by the Bank;
therefore, the Bank’s management carefully manages such exposure, Credit risk
is mainly represented in lending activities such as loans, facilities, and investment
activities, as a result, the Bank’s assets include debt instruments, Credit risk also
exists in off balance sheet financial instruments such as loan commitments,
Credit risk management and control operations are the responsibility of Risk
Management Department which regularly reports to the Board of Directors, top
management, and heads of business units,
The Bank applies a tight framework to control credit risk, and the credit policy
and the authority to grant credit are corner stone of this framework, Both credit
policy and the authority to grant credit are determined by the Risk Management
Department and business lines, and they are regularly reviewed and approved
by the Board of Directors.
47
Table No, (B) Loans and facilities in terms of internal rating used by the Bank,
Individuals (retail)
Debit current
accounts
Credit cards
Personal
loans
Total loans and
facilities
1,337
491
42,325
44,153
2, Regular follow-up
-
-
-
-
3, Special follow-up
-
-
-
-
4, Non-performing
-
-
-
-
1,337
491
42,325
44,153
31/12/2010
1, Good
Total
Corporate
Syndicated
&
Total loans and
Other loans
Corporate
facilities
loans
Debit
current
accounts
Direct
loans
2,670
113,183
1,330,664
13,416
1,459,933
2, Regular follow-up
-
-
-
-
-
3, Special follow-up
-
-
21,160
-
21,160
4, Non-performing
-
194,885
-
-
194,885
2,670
308,068
1,351,824
13,416
1,675,978
31/12/2010
1, Good
Total
Individuals (retail)
Debit
current
accounts
Credit cards
Personal
loans
Total loans and
facilities
1,556
431
44,619
46,606
2, Regular follow-up
-
-
-
-
3, Special follow-up
-
-
-
-
4, Non-performing
-
-
-
-
1,556
431
44,619
46,606
31/12/2009
1, Good
Total
Corporate
31/12/2009
1, Good
2, Regular follow-up
3, Special follow-up
4, Non-performing
Total
Debit current
accounts
Direct
loans
3,894
3,894
90,879
12,404
6,417
195,214
304,914
Syndicated
Total loans
& Corporate Other loans
and facilities
loans
402,060
11,148
507,981
83,625
96,029
6,417
195,214
485,685
11,148
805,641
Guaranteed loans are not considered subject to impairment for the non-performing
category after taking into consideration the collectability of the guarantees,
48
Annual Report
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US$
Euro
GBP
EGP
Other
currencies
Total
Cash and balances with banks
194,071
14,531
2,288
3,725
11,059
225,674
Placements with banks
808,550
435,052
176,370
8,837
1,216
1,430,025
1,492,509
10,647
251
6
195
1,503,608
Trading
55,582
-
-
-
-
55,582
Available for sale
287,209
6,507
--
2,610
16
296,342
Held to maturity
53,821
-
-
-
-
53,821
Investments in associates
472,130
-
-
-
-
472,130
3,363,872
466,737
178,909
15,178
12,486
4,037,182
509,478
33,700
2,770
-
1,570
547,518
Clients’ deposits
2,191,792
430,435
175,407
-
10,455
2,808,089
Total financial liabilities
2,701,270
464,135
178,177
-
12,025
3,355,607
662,602
2,602
732
15,178
461
681,575
31/12/2010
Financial assets
Loans and advances
Total financial assets
Bank's Main Activities
Financial investments
Financial Liabilities
Placements from banks
US$
Euro
GBP
EGP
Other
currencies
Total
Cash and balances with banks
241,860
7,374
2,063
54
9,353
260,704
Placements with banks
1,440,860
451 208
212 933
61 761
2 016
2,168,778
510,846
87,937
308
32
52,522
651,645
Available for sale
473,046
6,269
-
-
-
479,315
Held to maturity
55,284
-
-
-
-
55,284
Investments in
associates
491,520
-
-
-
-
491,520
3,213,416
552,788
215,304
61,847
63,891
4,107,246
Placements from
banks
115,214
92,624
2,629
-
53,468
263,935
Clients’ deposits
2,489,884
453,855
211,961
-
11,380
3,167,080
Total financial
liabilities
2,605,098
546,479
214,590
-
64,848
3,431,015
608,318
6,309
714
61,847
(957)
676,231
31/12/2009
Governance
Net financial positionthe balance sheet
General View
Table No, (C)
The following table summarizes the Bank’ exposure to forex fluctuation risks at the
end of the financial year and shows the carrying amounts of financial instruments in
relevant currencies, (value in thousands)
Financial assets
Financial Statements
Loans and advances
Financial investments
Total financial assets
Financial Liabilities
Annual Report
■
2010■
Interconnection with Bank
Net financial
position- the balance
sheet
49
Fair value of financial assets and liabilities
a- Financial instruments measured at fair value using valuation methods:
Held for trading financial assets are measured at fair value and the resulting
difference is recorded in the income statement, Debt instruments classified as
financial instruments available for sale are measured at fair value and the resulting
difference is recorded in the reserve for change in the fair value of available for sale
financial instruments, Equity instruments are measured at fair value (listed shares)
and the resulting difference is recorded in the reserve for change in the fair value of
available for sale financial assets, while unlisted shares are stated at cost,
b- Financial instruments not measured at fair value:
The following table summarizes the current value and fair value of financial assets
and liabilities which are not presented at fair value in the Bank’s balance sheet,
Book value (carrying
amount)
Fair value
31/12/2010
31/12/2009
31/12/2010
31/12/2009
22,444
23,769
N/A
N/A
53,821
55,284
55,280
58,565
financial assets
Financial investments:
Unlisted available for sale equity
instruments
Held to maturity:
Debt instruments
c- Financial investments held to maturity
Financial investments held to maturity as shown in the previous table include
Egyptian treasury bonds classified as financial investments held to maturity, Fair
value of financial assets held to maturity is determined based on market prices
declared in the stock exchange,
5- Accounting estimates and assumptions
The preparation of financial statements requires management to make judgments
and estimates regarding matters that are inherently uncertain, Those judgments
and estimates are based on historical experience and other factors including the
expectations of the future events that can be reasonably estimated based on
available conditions and information,
The most significant areas requiring management to make judgments and
estimates that affect reported amounts and disclosures are as follows:
a) Impairment losses for loans and advances
The Bank reviews the portfolio of loans and advances at least quarterly, The
Bank uses discretionary judgment on determining whether it is necessary to
record impairment loss in the income statement, The Bank has to identify if
there is objective evidence indicating a decline in the expected future cash
flows from loan portfolio before identifying any decline on individual basis,
This evidence include data indicating negative changes in a borrower’s
portfolio ability to repay to the Bank or local or economic circumstances
related to default, On scheduling future cash flows, the management uses
the past experience to determine the credit impairment loss for assets when
50
Annual Report
■
2010■
6- Cash and balances with banks
31/12/2009
Cash on hand
24,412
20,304
Local banks – current A / C
8,746
8,529
Foreign banks – current A / C
192,516
231,871
Total
225,674
260,704
Annual Report
■
2010■
Interconnection with Bank
31/12/2010
Financial Statements
d) Held to maturity investments:
Non-derivative financial assets with fixed or determined payments and fixed
maturity are classified as held to maturity, This classification requires personal
judgment, therefore, the Bank tests whether there is a genuine intent and
ability to hold such investments till maturity, If the Bank fails to hold these
investments till maturity (except for certain tightly defined circumstances such
as if an entity sells an insignificant amount of held-to-maturity investments
close to maturity date) investments held to maturity should be reclassified as
available-for-sale, which will be measured at fair value instead of amortized
cost,
Governance
c) Derivatives’ fair value:
For the unquoted financial instruments, the fair value is determined using a
variety of valuation techniques which are tested and reviewed periodically by
high qualified staffs that are independent of those who created the models,
The models used are validated prior to putting them into use, Inputs to pricing
models are generally market-based when available and taken from reliable
external data sources, While areas like the Bank credit risk, counterparties,
volatility and correlations require management to make judgments and
estimations, Changes in the assumptions related to these factors may affect
the financial instruments fair values which have been disclosed,
Bank's Main Activities
b) Impairment of the available for sale equity instruments:
In the case of available for sale financial investments, a significant or
continuous decline in the fair value of security below its cost is considered as
impairment,
Where such evidence exists, significant or continuous decline needs a
personal judgment, To make this judgment, the Bank assesses-besides other
factors-the common share price volatility, In addition, impairment exits when
there is objective evidence that a certain company has a financial difficulty in
its cash flows from operating and financing activities, industry tool or sector
or technological advances,
General View
there is objective evidence of impairment similar to that of the portfolio in
question, The methods and assumptions used in estimating both the amount
and timing of the future cash flows are reviewed on a regular basis to
minimize any discrepancy between the estimated loss and actual loss based
on experience,
51
7- Placements with banks and other financial institutions
31/12/2010
31/12/2009
318,596
453,867
Placements with foreign banks
1,111,429
1,714,911
Total
1,430,025
2,168,778
31/12/2010
31/12/2009
55,582
-
31/12/2010
31/12/2009
International Bonds
59,363
110,852
Portfolios managed by others
214,535
344,694
Equity instruments at cost
22,444
23,769
Total
296,342
479,315
Placements with local banks
8- Investments for trading
Funds managed by others
9- Investments available for sale
- The following is the unlisted equity instruments book value that where measured at cost
due to the inability to determine fair value:
Ownership%
31/12/2010
31/12/2009
17,59
16,400
16,400
10
1,583
1,583
AFSCO – Bahrain
2,29
1,047
1,047
Arab financine Program
0,11
535
535
-
-
666
3,57
288
288
-
-
828
9,5
998
828
10,75
1,532
1,532
61
62
22,444
23,769
A,I,C,H,T, – Cairo
Societe D’Etudes Et Dev, Tunisia
Mediterranean Smart Cards Company
Egyptian Credit Bureau
Egyptian Banks for Takaful Insurance Co, (life insurance)
Egyptian Banks for Takaful Insurance Co,
(for property and Liability Insurance)
Arab Int, Inv, Co, LAFICO
Other *
Total
* Some investments are fully written down for impairment,
52
Annual Report
■
2010■
10- Loans and advances (Net)
31/12/2009
1,720,131
852,247
Less:
General View
Total loans and advances
31/12/2010
- Specific allowances
122,313
118,934
- Collective allowances
21,211
13,283
- Suspense interest
72,999
68,385
216,523
200,602
1,503,608
651,645
Net loans & advances
Movement on loan loss provision during the year is as follows:
31/12/2010
31/12/2009
Total
Provision
Specific
Provision
Collective
allowances
Total
Provision
118,934
13,283
132,217
120,360
7,371
127,731
)80(
-
)80(
)59(
)50(
)109(
)2,424(
-
)2,424(
)319(
-
)319(
Transfers
1,000
-
1,000
)1,048(
-
)1,048(
Formed during the year
4,883
7,928
12,811
-
5,962
5,962
Total
122,313
21,211
143,524
118,934
13,283
132,217
Balance at the beginning of the year
Written off
Provisions no longer
Required
Governance
Specific Collective
Provision allowances
The classification of loans and advances by sector is as follows:
Financial institutions
497,781
48,276
Industry
621,202
303,053
Commerce
165,102
121,584
Tourism
145,023
85,525
Electricity
107,679
-
4,515
130,194
105,830
95,230
Total
1,647,132
783,862
Less: loan loss allowance
)143,524(
)132,217(
Net
1,503,608
651,645
31/12/2010
31/12/2009
53,000
53,000
821
2,284
53,821
55,284
Construction
Others
11- Held to maturity investments
Government bonds (mature in 2011) 8,75%
Add: Unamortized premium
Total
- Fair market value for held to maturity investments amount to US$ 55 280 K on
December 31, 2010 (US$ 58 565 K on December 31, 2009),
Annual Report
■
2010■
53
Interconnection with Bank
31/12/2009
Financial Statements
31/12/2010
Bank's Main Activities
Non performing loans amount to U,S,$ 122 Million on Dec 31, 2010 compared to U,S,$ 127
Million on Dec 31, 2009, and suspense interest amount to US$ 73 Million on Dec 31, 2010
compared to US$ 68 Million on Dec 31, 2009,
12- Investments in associates
Equity participations where the Bank holds over 20% of the share capital are as follows:
Name of Company
(%) of
Ownership
Compagnie Arabe de Financement
Internationale (CAFI)
89,04 %
World Trade Center ( WTC )
Societe Arabe Internationale de
Banque (SAIB)
Suez Canal Bank (SCB)
50 %
Sector
31/12/2010 31/12/2009
Financial Institution
Real Estate Operating and
Development
7,641
6,482
134,063
133,739
105,406
99,590
46,075 %
Banking
41,50%
Banking
116,138
136,759
66,080
72,196
42,802
42,754
472,130
491,520
Suez Canal Co
24 %
Education
International Company for
Tourist Investments (ICTI)
20 %
Tourism Projects
Total
12-1 The Bank’s direct participation in Societe Arabe Internationale de Banque (SAIB) is
46,075% and the Bank owns 89,043% of the share capital of Compagnie Arabe de
Financement Internationale (CAFI) which has a participation of 4,36% of the share
capital of (SAIB), Accordingly, the Bank’s direct and indirect interest in (SAIB) is 50,435%,
However, since the Bank currently does not have sufficient representation in the Board of
Directors that represent its ownership share in SAIB, no consolidated financial statements
have been prepared,
12-2 The financial statements of Suez Canal Bank for the year 2010 have not been issued yet,
According to the latest Suez Canal Bank’s financial statements available, it’s expected
that the equity of Suez Canal Bank will be affected by the amount of losses resulting from
the accounting treatment of one of the revenue items that were used to increase the Suez
Canal Bank’s provisions related to previous years,
To comply with International Financial Reporting Standers and as a precautionary
measure, the Bank’s management decided to record its share of the expected impact of
the said accounting treatment amounting to US$ 20,79 million as an amount deducted
from “Investments in associates fair value reserve” item in the equity caption in the
balance sheet, with corresponding reduction in the “investments in associates” item in
the balance sheet,
13- Debit balances and accrued interest (Net)
Accrued interest
Sundry debtors (*)
Total
Less : Provision
Net
31/12/2010
8,702
49,256
57,958
)11,834(
46,124
31/12/2009
6,975
51,532
58,507
)11,834(
46,673
(*) Includes US$ 16 518 K representing the value of assets reverted to the Bank as of December 31, 2010 as
a partial settlement of the debt due from some customers compared to US$ 16 491 K as of December 31,
2009,
(*) The sundry debtors as at December 31, 2010 include the amount of U,S $7 666 which represents the
amount disbursed to the employees and the Managing Directors under the account of profits appropriation
for the year 2010 which is in the process of being approved by the General Assembly,
54
Annual Report
■
2010■
14- Investments Properties
31/12/2009
22,058
22,303
Revaluation differences
-
)127(
Adjustments
-
)118(
22,058
22,058
Balance at the beginning of the year
Balance at the end of the year
General View
31/12/2010
15- Premises and equipment ( Net )
Total
Cost as at December 31, 2009
15,195
30,491
45,686
Additions
30,034
378
30,412
Disposals
-
)2(
)2(
Cost as at December 31, 2010
45,229
30,867
76,096
Accumulated depreciation as at December 31, 2009
11,041
27,475
38,516
173
1,021
1,194
Accumulated depreciation as at December 31,
2010 Net book value
11,214
28,496
39,710
December 31, 2010
34,015
2,371
36,386
December 31, 2009
4,154
3,016
7,170
Depreciation for the year
Governance
Furniture
Fittings , Cars
& Equipment
Bank's Main Activities
Buildings &
Improvements
Description
16- Placements from banks and other financial institutions
31/12/2010
US,$’000
31/12/2009
US,$’000
Current accounts
99,668
58,236
Deposits
21,324
750
120,992
58,986
Current accounts
28,776
19,279
Deposits
397,000
184,320
425,776
203,599
750
1,350
750
1,350
547,518
263,935
a) Local banks
Financial Statements
(a)
b) Foreign banks
(b)
c) Financial
(c)
Total
(a) + (b) + (c)
Annual Report
■
2010■
Interconnection with Bank
Current accounts
55
17- Customers’ deposits
31/12/2010
31/12/2009
2,202,601
2,508,582
Current accounts
176,580
206,140
Saving accounts
205,352
209,672
Other deposits
21,605
25,112
2,606,138
2,949,506
Customers’ deposits
Total
18- Certificates of deposit
The Bank issued three years non-negotiable certificates of deposit, The interest is floating
and payable quarterly, semi-annually or annually,
The balance is analyzed as follows:
Issues
Three months
Six months
One year
Total
31/12/2010
51,736
57,788
92,427
201,951
31/12/2009
82,052
66,532
68,990
217,574
31/12/2010
2,143
15,609
24,020
10,237
52,009
31/12/2009
3,165
18,569
11,434
33,168
19- Credit balances and accrued interest
Accrued interest
Unearned interest
Sundry creditors *
Pension fund
Total
(*) The sundry creditors as at December 31, 2010 include an amount of U,S, $14 024 which represents the
employees and the Board of Directors share in the profits appropriation for the year 2010 which is in the
process of being approved by the General Assembly,
20- Other Provisions
31/12/2010
Beginning
Balance Transferred
Description
31/12/2009
Formed
Year end
balance
Beginning
balance
Used
Year end
Transferred balance
Provision for claims
2,200
-
208
2,408
2,217
(17)
-
2,200
Provision for
contingencies
8,240
)1,000(
1,174
8,414
7,404
-
836
8,240
Provision for
general risks
-
-
2,400
2,400
-
-
-
-
3,782
13,222
9,621
(17)
836
10,440
Total
10,440 )1,000(
21- Share Capital
The Issued and Paid-in Capital as at December 31, 2008 amount to U,S, $ 300 Million
distributed over 15 000 ordinary shares of U,S,$ 20 000 each,
The ordinary General Assembly of the Bank that held its meeting on May 14 , 2009
approved to increase the capital from U,S$ 300 million to U,S$ 600 million through
the issuance of 15 thousand ordinary shares, the value of each is U,S $ 20 thousand,
56
Annual Report
■
2010■
On November 3rd , 2009 the amount of U,S $ 150 million was called up and paid on
November 23rd , 2009 thus the paid in capital became U,S$ 450 million,
The subscribed share capital is as follows:
%
11,628
11,628
3,751
1,495
747
751
30,000
232,560
232,560
75,020
29,900
14,940
15,020
600,000
38,76
38,76
12,503
4,984
2,490
2,503
100
Bank's Main Activities
Value
US,$’000
General View
Arab Republic of Egypt
Socialist People’s Libyan Arab Jamahiriya
Abu Dhabi Investment Authority
State of Qatar
The Sultanate of Oman
International Capital Trading Co,
Total
No, of
shares
22- Interest Income
31/12/2010
31/12/2009
Loans and advances
28,501
28,375
Deposits with banks and other financial institutions
8,385
15,011
Other interest bearing investments
6,694
7,805
Total
43,580
51,191
31/12/2009
7,129
1,324
1,877
10,330
14,985
10,009
2,237
27,231
31/12/2010
31/12/2009
16,093
45,038
247
150
16,340
45,188
31/12/2010
31/12/2009
Fee and commission income
18,219
11,263
Fee and commission expense
)1,744(
)3,584(
767
2,261
Other
4,246
2,050
Total
21,488
11,990
Customer deposits
Deposits from banks and other financial institutions
Certificates of deposits
Total
Financial Statements
31/12/2010
Governance
23- Interest Expenses
24- Interest and gain from investments available for sale
Gain (Loss) from available for sale investments
Dividends received
Total
25- Other Operating Income (Net)
Annual Report
■
2010■
Interconnection with Bank
Income from exchange transaction & translation differences
57
26- Pension fund
The Bank has a funded defined benefit contributory pension plan covering all full-time
employees, The benefits provided by the plan are determined by the Board of Directors,
The value of vested benefits according to the plan is determined annually by an Actuary,
The pension reserve funds on December 31, 2010 amounted to US$ 145 Million compared
to US$ 141 Million on December 31, 2009, The Actuary’s report stated that there is no
deficit in the pension reserve funds as of December 31, 2010, thus the pension reserve
funds shall be sufficient to cover the fund’s liabilities,
27- Related party transactions
In the ordinary course of business, the Bank conducts transactions with shareholders,
subsidiaries, associates and other related parties, All the loans and advances to related
parties are performing loans and advances and are free of any provision for possible loan
losses,
The year end balances with related parties in the financial statements as at December 31,
2010, are as follows:
*WTC
*ICTI
*SAIB
* SCB
Staff
Pension
fund
Libyan
foreign
Bank
Total
Loans and
advances
-
-
-
-
44,493
-
44,493
Debit deposits
-
-
8,837
39,000
-
-
47,837
Credit deposits
-
-
-
-
-
350,000
350,000
Credit
balances
7
2
1,784
3,020
1,335
-
6,148
Mutual funds
-
-
2,285
-
-
-
2,285
Debit balances
-
-
3,713
118
-
8,353
12,184
19
-
551
234
-
19,098
19,902
Contra
accounts
(*) See note (12)
28- Commitments and contingent liabilities
This item includes commitments to provide credit facilities, issue L/G’s and guarantees to
meet the needs of the Bank’s clients, These liabilities do not represent any extraordinary
risks after deducting the cash margins for L/C’s and L/G’s and they are detailed as
follows:
31/12/2010
31/12/2009
Letters of credit
341,473
187,141
Letters of guarantee & facilities
158,085
99,262
Commitments for syndicated loans
127,428
42,327
654
1,732
627,640
330,462
Equity participation commitments
Total
58
Annual Report
■
2010■
General View
Bank's Main Activities
201,262
-
Within one
month
-
-
-
Within
1-3
months
6,507
-
-
-
Within
3-6
months
21,681
-
31,506
-
-
-
Within
6-12
months
-
531,195
-
-
25,180
-
-
-
Within
1-5
years
-
391,556
-
-
16,571
-
-
-
Over 5
years
-
-
-
55,582
216,578
472,130
-
24,412
Noninterest
bearing
53,821
1,503,608
1,430,025
55,582
296,342
472,130
201,262
24,412
Total
5,79
2,84
0,47
3,7
-
0,18
-
Effective
interest
rate %
Interconnection with Bank
-
-
809
Financial Statements
-
87,532
53,821
Governance
-
612,982
-
238,316
29- Effective interest rate for assets and liabilities
707,830
-
264,432
December 31, 2010
Placements with banks and
other financial institutions
-
77,300
for
sale
Other
Placements from banks and
other financial institutions
Customer Deposits
Total
Other
-
-
2,556
276,768
1,290,324
986,392
-
1,066,402
-
-
4,365
220,000
842,037
877,414
-
158,129
174,226
-
-
3,540
-
170,686
332,355
-
)35,890(
143,707
-
-
12,551
50,000
81,156
107,817
-
377,436
178,939
-
-
178,939
-
-
556,375
-
407,377
750
-
-
-
750
-
408,127
-
)134,808(
1,008,078
720,912
65,231
-
-
221,935
873,270
104,568
-
4,141,750
720,912
65,231
201,951
547,518
2,606,138
4 141,750
104,568
-
-
0,89
0,68
0,26
Held to maturity investments
Trading investments
Available
investments
Investments in associates
Balances with banks
Cash
Assets
Loans and advances
Shareholders’ equity
1,569,648
)188,988(
Certificates of deposits
-
Total
)583,256(
Liabilities & shareholders’ equity
Net position as of
31/12/2010
59
2010■
■
Annual Report
Other
Held to maturity
investments
202,585
1,602,780
1,776,418
-
-
199,840
1,336,178
-
-
240,400
-
Within
one
month
4 562
60 000
854,557
891,894
-
-
155,622
726,535
9,737
-
-
-
Within
1-3
months
8,231
-
198,637
146,675
-
-
62,043
84,632
-
-
-
-
Within
3-6
months
-
19,125
-
58,747
30,744
-
-
4,611
21,433
4,700
-
-
-
Within
6-12
months
-
182,367
-
-
318,261
-
55 284
203,986
-
58,991
-
-
-
Within
1-5
years
-
-
1,350
-
62,968
-
-
25,543
-
37 425
-
-
-
Over 5
years
43,608
-
-
234,785
956,187
75,901
-
-
-
368,462
491,520
-
20,304
Noninterest
bearing
43,608
217,574
263,935
2,949,506
4,183,147
75,901
55,284
651,645
2,168,778
479,315
491,520
240,400
20,304
Total
-
1,13
2,63
0,53
-
5,87
3,41
0,85
3,5
-
0,21
-
Effective
interest
rate %
December 31, 2009
Placements from banks
and other financial
institutions
3,289
-
Total
Liabilities &
shareholders’ equity
Customer Deposits
Loans and advances
Available for sale
investments
Placements with banks
and other financial
institutions
Investments in associates
Balances with banks
Cash
Assets
Certificates of deposits
1,808,654
-
)27,225(
919,119
-
)60,193(
206,868
-
)47,128(
77,872
-
135,894
182,367
-
61,618
1,350
-
)30 730(
986,917
708,524
-
4,183,147
708,524
-
-
Shareholders’ equity
)32,236(
Other
Total
Net position as of
31/12/2009
2010■
■
Annual Report
60
30- Geographical distribution of assets , liabilities and off balance sheet
items
31/12/2010
Liabilities and Off balance
Shareholders’ sheet items
equity
Liabilities and Off balance
Shareholders’ sheet items
equity
Assets
888,720
23,235
35,838
973,126
7,985
27,546
Arab World
2,912,479
4,059,851
388,379
2,675,803
4,134,719
184,113
568
8,305
11,745
7,889
152
15,085
North American
293,852
12,666
188,450
468,863
5,607
99,644
Latin American
6
12
86
6
11
1,750
Other
46,125
37,681
3,142
57,460
34,673
2,324
Total
4,141,750
4,141,750
627,640
4,183,147
4,183,147
330,462
Asia
Bank's Main Activities
Europe
31- Maturities of Assets and Liabilities in currencies
31/12/2010
Within
one
month
Within
1-3
months
Within
3-6
months
Within
6-12
months
Within
1-5
years
Over 5
years
Total
607,440
727,224
244,037
86,054
885,035
920,668
3,470,458
)65,982(
)2,767,692(
U,S, Dollars
Assets
Liabilities
Governance
Equity
)1,347,454( )942,757( )127,290( )124,196( )160,013(
-
-
-
-
-
)720,912(
)720,912(
403,364
150,190
88,318
21,763
3,566
4,091
671,292
)444,128( )123,645(
)46,936(
)19,511(
)18,926(
-
)653,146(
1,010,804
332,355
107,817
888,601
924,759
4,141,750
)65,982(
)3,420,838(
Other
currencies
Assets
Liabilities
General View
Assets
31/12/2009
Total
Assets
Equity
)1,791,582( )1,066,402( )174,226( )143,707( )178,939(
-
-
-
-
-
)720,912(
)720,912(
Within
one
month
Within
1-3
months
Within
3-6
months
Within
6-12
months
Within
1-5
years
Over 5
years
Total
Assets
1,171,266
704,372
101,765
33,264
688,954
595,878
3,295,499
Liabilities
)1,409,678( )798,167( )163,719( )61,449(
)171,093(
)44,721(
)2,648,827(
U,S, Dollars
U,S, Dollars
-
-
-
-
-
)708,524(
)708,524(
625,456
187,522
44,910
17,128
8,196
4,436
887,648
)633,760( )120,952(
)43,387(
)16,423(
)11,274(
-
)825,796(
Assets
1,796,722
146,675
50,392
697,150
600,314
4,183,147
Liabilities
)2,043,438( )919,119( (207,106) )77,872(
)182,367(
)44,721(
)3,474,623(
-
)708,524(
)708,524(
Other
currencies
Assets
Liabilities
Total
Equity
-
891,894
-
-
-
Annual Report
■
2010■
61
Interconnection with Bank
Equity
Financial Statements
Liabilities
877,414
32- Average interest rates
The average interest rates of instruments of assets and liabilities in major currencies
on the balance sheet date are as follows:
31/12/2010
Within one
month
Within 1-3
months
Within 3-6
months
Within 6-12
months
Over
one
year
%
%
%
%
%
Assets
0,54
0,83
1,56
0,71
0,88
Liabilities
0,30
0,35
0,48
0,81
0,92
Assets
0,32
0,46
0,66
1,00
-
Liabilities
0,09
0,22
0,45
0,81
-
Assets
0,42
0,46
0,68
0,91
1,23
Liabilities
0,17
0,24
0,51
0,72
0,95
U,S, Dollars
Sterling
Euro
31/12/2009
Within one
month
Within 1-3
months
Within 3-6
months
Within 6-12
months
Over one
year
U,S, Dollars
%
%
%
%
%
Assets
0,5
0,98
1,38
0,96
0,81
Liabilities
0,32
0,65
1,1
1,39
0,75
Assets
0,72
1,12
1,46
1,81
-
Liabilities
0,52
0,93
1,28
1,72
-
Assets
0,85
1,22
1,44
1,88
0,94
Liabilities
0,64
0,98
1,37
1,67
-
Sterling
Euro
62
Annual Report
■
2010■
33- Maturity for balance sheet items
The maturity analysis of assets and liabilities based on the remaining period to the
contractual maturity date is as follows:
Within
3-6
months
Within
6-12
months
Within
1-5
years
Over 5
years
Total
Cash
24,412
-
-
-
-
-
24,412
Balances with banks
201,262
-
-
-
-
-
201,262
Investments in associates
-
-
-
-
-
472,130 472,130
Available for sale
investments
-
-
6,507
31,506
219,314
39,015 296,342
Trading investments
Assets
-
-
-
55,582
-
55,582
707,830
612,982
87,532
21,681
-
-
1,430,025
Loans and advances
77,300
264,432
238,316
809
531,195
Held to maturity
investments
-
-
-
53,821
-
Other
-
-
-
-
82,510
22,058 104,568
Total
1,010,804
877,414
332,355
107,817
888,601
924,759 4,141,750
1,512,259 842,037
170,686
81,156
-
-
2,606,138
391,556 1,503,608
-
53,821
Liabilities
Customer deposits
276,768
220,000
-
50,000
-
750
547,518
Certificates of deposits
2,556
4,365
3,540
12,551
178,939
-
201,951
Other
-
-
-
-
-
65,231
65,231
Shareholders’ equity
-
-
-
-
-
720,912 720,912
786,893 4,141,750
Total
1,791,583 1,066,402
174,226
143,707
178,939
Net position as of
31/12/2010
)780,779( )188,988( 158,129
)35,890(
709,662 137,866
-
Financial Statements
Placements from banks
and other financial
institutions
Governance
-
Placements with banks
and other financial
institutions
Bank's Main Activities
Within
1-3
months
General View
Within
one
month
31/12/2010
Interconnection with Bank
Annual Report
■
2010■
63
Within one
month
Within
1-3
months
Within
3-6
months
Within
6-12
months
Within
1-5
years
Over 5
years
Total
20.304
-
-
-
-
-
20.304
240.400
-
-
-
-
-
240.400
Investments in
associates
-
-
-
-
-
Available for sale
investments
-
9.737
-
24.348
84.632
21.433
31/12/2009
Assets
Cash
Balances with banks
Placements with
banks and other
financial institutions
1.336.178 726.535
491.520 491.520
384.037 61.193 479.315
-
-
2.168.778
199.840
155.622
62.043
4 611
Held to maturity
investments
-
-
-
-
55.284
-
55.284
Other
-
-
-
-
53.843
22.058
75.901
Total
1.796.722
891.894
146.675
50.392
697.150
600.314 4.183.147
1.837.564
854.557
198.637
58.748
-
-
2.949.506
202.585
60.000
-
-
-
1.350
263.935
3.289
4.562
8.231
19.125
182.367
-
217.574
Other
-
-
-
-
-
43.608
43.608
Shareholders’ equity
-
-
-
-
-
708.524 708.524
Total
2.043.438
919.119
206.868
77.873
182.367
753.482 4.183.147
Net position as of
31/12/2009
)246.716(
)27.225(
)60.193(
)27.481(
514.783 )153.168(
Loans and advances
203.986 25.543 651.645
Liabilities
Customer deposits
Placements from
banks and
other financial
institutions
Certificates of
deposits
-
34- Position of major currencies
31/12/2010
64
31/12/2009
Surplus
(deficit)
Surplus
(deficit)
US$
)20,985(
)17,406(
EGP
23,418
21,598
Euro
)1,779(
)1,607(
Annual Report
■
2010■
35- Capital Adequacy
The risk asset ratios calculated in accordance with the capital adequacy guidelines
established for the global banking industry are as follows :
31/12/2009
Paid up capital
450,000
450,000
Statutory reserve
87,959
84,326
General reserve
73,582
73,582
)22,487(
)45,076(
Profit carried forward
39,257
34,246
Profit of the year
23,647
23,643
Shareholders’ dividends
)22,500(
)15,000(
Total Tier 1
629,458
605,721
General risks provision
21,211
13,283
Investments in associates fair value reserve
68,954
87,803
Total Tier 2
90,165
101,086
Total Tier1 & Tier 2
719,623
706,807
)229,185(
)242.832(
Non- financial institutions ( over 15% of capital)
)26,119(
)27,718(
Net capital
464,319
436,257
Credit risk
2,685,156
2,051,798
Market risk
587,940
766,144
Operational risk
162,308
146,111
Off-balance sheet items
313,820
165,232
3,749,224
3,129,285
% 12,38
% 13,94
31/12/2010
31/12/2009
Net profit of the year before board of directors allowances and
remunerations and employees profit share (pending General
Assembly approval)
37,673
36,329
Proposed Board of Directors’ remunerations
)3,170(
)3,406(
)10,856(
)9,280(
Net profit for the year
23,647
23,643
Average number of shares
22,500
15,625
Earning per share
1,051
1,513
General View
31/12/2010
Tier 1 Capital
Available for sale fair value reserve
Bank's Main Activities
Tier 2 Capital
Less:
Financial institutions
Governance
Risk weighted
Capital Adequacy Ratio
Financial Statements
Total weighted risk
36- Earning Per Share
profit
share
(pending
General
Assembly
Annual Report
■
2010■
Interconnection with Bank
Employees
approval)
65
37- Subsequent events
The Arab Republic of Egypt has encountered certain events that have a
significant impact on the economic sectors in general, a matter which may lead
to a substantial decline in the economic activities in the foreseeable future,
Therefore, there is a possibility that the above mentioned events will have a
significant impact on the Bank’s assets, liabilities, their recoverable/settlement
amounts and the results of operations in the foreseeable future,
At the present, it is not possible to quantify the effect on the Bank’s assets and
liabilities included in the Bank’s financial statements, since quantifying the effect
of these events relies on the expected extent and the time frame, when these
events and their consequences, are expected to be finished,
38- Number of employees
The number of persons employed by the Bank as at December 31, 2010 was
1 247 (December 31, 2009 was 1 234),
39- Comparative Figures
Certain comparative figures have been restated to conform on the current year
presentation,
66
Annual Report
■
2010■
Fifth :Interconnection with Bank
1- General Managers
2- Branches' Addresses
General Managers
Name
Position Title
Fax no.
e-mail
Mr. Saher Aziz Abuelezz
General manager –Inspection & Control
25745507
saher.abulezz@aib.com.eg
Mr. Mohamed Salah Eldin Osman
General manager –Direct Investment
25777143
salah.osman@aib.com.eg
Mrs. Nadia Ahmed Fouad
General manager – Administrative Affairs
And Secretary General of the Bord of
Directors
23916356
nadia.fouad@aib.com.eg
Mr. Ahmed Rafik Nassef
General manager –Treasury
25740962
ahmed.nassef@aib.com.eg
Mr . Abdel Monsef M. Ali Awad
General manager –Information
Technology
25768304
monsef.ali@aib.com.eg
Mr. Adel Helmy Elsaid Sallam
General manager – General Audit
25773247
adel.sallam@aib.com.eg
Mr. Rami Salah Eldin Sobhy
General manager –Financial Institutions
25745591
ramy.sobhy@aib.com.eg
Mr. Adel Salah Eldin Azzat
General manager –corporate &
commercial Lending
23933705
adel.ezzat@aib.com.eg
Mr. Sayed Said Soliman
General manager – Central Operations
23903014
said.soliman@aib.com.eg
Mr. Hesham Mohamed Hamdy
General manager – Risk Management
25773217
hesham.hamdy@aib.com.eg
Mr. Amr Mahmoud Atalla
General manager – Branches & Banking
Services
25786574
amr.atalla@aib.com.eg
Mr. Ganem Ali Ebrahem
Counsel of Legal Affairs
23919302
Mr. Ahmed Bahaa Eldin
youssef
Assistant General manager
& Compliance
23940213
23962973
ahmedbahaa@aib.com.eg
Mr. Gamal Ahmed Zaghloul
Assistant General manager
– Financial Control
23916275
gamal.zaghloul@aib.com.eg
Branches Managers
Mr. Ali Helmy Elessawy
General Manager – Cairo Main Branch
23903014
aly.essawy@aib.com.eg
Mr. M
ohamed Assem
Abu Shady
General Manager – Alexandria Area
03/4873328
asseme.abushady@aib.com.eg
Mr. Mohamed Ibrahim Ali
M.Basiouny
Manager – Heliopolis Branch
24173524
mohamed.basiouny@aib.com.eg
Mr. Hussein Moheb Kandeil
Manager – Mohandessin Branch
33029651
hussein.kandil@aib.com.eg
Mrs.Wedad Azia Youssef Aziz
Manager – Nasr City Branch
22606321
wedad.aziz@aib.com.eg
Mr.Aman Mohamed Elhelw
Manager – Port Said Branch
06/63225908
aman.elhelw@aib.com.eg
68
Annual Report
■
2010■
General View
Branches Adrress
 International Markets
Capital Markets
Fax : 25745680 – 25745258
Telephone : 25744256 – 25803465
Money Markets
Fax : 25745680
Telephone : 25745277 – 25745275 – 25803466
AIBC : Page on the Monitor
AICE : Reuter Dealing Code
Interconnection with Bank
 Heliopolis Branch : 95 A Merghani Street,
Heliopolis, Cairo, Arab Republic of Egypt.
Fax : 24173524
Telephone : 22902491 -22902069 – 2418794
Swift : ARIBEGCX 005
 Port Said Branch : 23 July & Salah El Din Street,
Port Said , Arab Republic of Egypt.
Fax : (06) 63225908
Telephone: (06) 63223739 –(06)63336653
Swift : ARIBEGCX 006
Web Site : www.aib.com.eg
Annual Report
■
2010■
Financial Statements
 El Tahrir Branch ( Temporary ) : 35 Abdel Khalek
Sarwat Street, Cairo , Arab Republic of Egypt.
P.O. Box : 1563
P. Code : 11511
Cable Address : ARABINBANK
Fax : 23916233 – 23912319
Telephone : 23918794 – 23916391 – 23916492
– 23916120 – 23902084- 23912140
Swift : ARIBEGCX 003
 Alexandria Branch : 2 El Horreya Avenue,
Alexandria, Arab Republic of Egypt.
Fax : (03) 4873230
Telephone : (03) 4869873 – (03) 4869681
Swift : ARIBEGCX 002
Governance
 Cairo Main Branch : 35 Abdel Khalek Sarwat
Street, Cairo , Arab Republic of Egypt.
P.O. Box : 1563
P. Code : 11511
Cable Address : ARABINBANK
Fax : 23916233 – 23912319
Telephone : 23918794 – 23916391 – 23916492
– 23916120 – 23902084- 23912140
Swift : ARIBEGCX 007
 Mohandessin Branch : 60 Mohamed Hassan
Helmi ( Ex Gueziret El Arab Street ), Arab
Republic of Egypt.
Fax : 33029651
Telephone : 33029647 – 33029648 – 33029649
Swift : ARIBEGCX 008
N
asr City Branch : 77 B Nasr Road , Nasr City –
Cairo , Arab Republic of Egypt.
Fax : 22606321
Telephone : 22605914 – 22606359
Swift : ARIBEGCX 004
Bank's Main Activities
 Head Office : 35 Abdel Khalek Sarwat Street,
Cairo , Arab Republic of Egypt.
P.O. Box : 1563
P. Code : 11511
Cable Address : ARABINBANK
Fax : 23916233 – 23912319
Telephone : 23918794 – 23916391 – 23916492
– 23916120 – 23902084- 23912140
Swift : ARIBEGCX 001
69
Bank You Trust