2011 - الصفحة الرئيسية Development... · 2017-07-17 · Mr. Hisham Ahmed Hassan...
Transcript of 2011 - الصفحة الرئيسية Development... · 2017-07-17 · Mr. Hisham Ahmed Hassan...
2011Annual Report
Chairman’s Letter Board of Directors Background Facts about the Bank Economic Conditions Business Strategy:
International Relations
Corporate Banking
SMEs
Investment Activities
Treasury
Central Operations
Branches Network
Value-Added
Assets
Customers’ Deposits
Egyptian Capital Market Activities, Custody and Investment Trustees
Inter-bank Operations
Securities and Commercial Papers Portfolio
Organizational Structure:Compliance
Operational Risk
Debt Recovery
Information Technology
Human Resources
Corporate Social Responsibility and Business Community SupportFinancial Indicators:
Auditors’ Report
Unconsolidated Balance Sheet
Unconsolidated Income Statement
Statement of Profit Appropriation
Unconsolidated Statement of Cash Flows
Unconsolidated Statement of Changes in Shareholders’ Equity
Notes to the Unconsolidated Financial Statements
Consolidated Financial Statement
Consolidated Balance Sheet
Notes to the Consolidated Financial Statements
Branches and ATMs
Contents
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Chairman,s Letter
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Board of Directors and Senior Management are proud to present EDBE report
for the year 2010/2011, and explore all facets of activities performed amidst the
political and economic developments taking place on the international, regional
and domestic levels.
That was a challenging year coming along with mounting fears of an imminent
global recession and a series of drastic changes in the economies and policies
of most of the world countries, particularly Middle East. Concurrently, the world
financial systems started to show lower credibility in the viability of the US
Fiscal policies in confronting the economic challenges and the repercussions
of downgrading its long-term debts by a number of rating agencies, on top Standards & Poor’s.
On the European side, the escalating debt problems further contributed to the instability of the world financial
systems. That was evident when the European Central Bank proposed to purchase the bonds of Greece,
Ireland and Portugal aiming at reducing the cost of debt. Further to the urgent meeting held by the European
Decision Makers, the ECB pronounced the intent to buy the bonds of Italy and Spain to alleviate the extent of
the crisis, while Italy has pronounced its plan to reduce the budget deficit. Nevertheless, the European debt
problems are still lingering at the same high-risk levels.
According to IMF assessment of the Egyptian economic performance, post the revolution, Egypt is facing
a number of challenges spanning the constantly rising international food and energy prices, the decline in
tourism proceeds and the waning foreign investments. IMF also pointed to excess burdens impeding Egypt
economy to resume its pre-revolutionary levels; such as demonstrations, protests and claims for higher
salaries, deterioration of the security conditions, and the increasingly issuance of Treasury Bills by the Ministry
of Finance to cover the budget deficit. This was accentuated by the severe drop, up to $ 13 billion, of the
government reserves (as of the date of IMF report) to meet the increasing claims, not to mention the effects
of the devaluation of the Egyptian pounds by 2%.
However, IMF reports still reveal its belief and confidence that the Egyptian revolution should stimulate the
inherent economic powers, through higher levels of transparency, governance, and effective utilization of
economic resources in addition to further strengths such as power of labor, big domestic market, a specialized
geographic location and ease of access to the international markets. Accordingly, Egypt’s medium-term
economic potential is promising, but its recovery will be gradual starting from the next fiscal year, hitting a
GDP growth rate of 4% whereas the inflation problem will remain, leading the economy to a larger deficit in
the trade balance (3.3% of the GDP) by the end of FYE 2011/2012.
Chairman,s Letter
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Naturally, the implications of the international crisis and the inland signs of instability cumulate more pressures
on all types of national economic activities which have already been adversely affected.
Considering such challenges, and owing to our genuine interest to share in the national development, getting
Egypt’s out of current bottleneck, the bank emphasized in its strategy, particularly, during the second half of
the FY 2010/2011, extending the range of services and cooperation to support the business continuity of its
customers, on top of which come the export companies.
Our bank indeed managed to withstand the implications of such crises and difficulties and assisted, along with
other institutions in using resources to sustain the Egyptian economy.
Looking at the bank’s footings as of FYE 2010/2011, aggregate assets amounted to EGP 12.835 Billion,
where the LDOs reached EGP 7.28 Billion, and the funds invested in various commercial paper and financial
instruments recorded EGP 3.83 Billion. As such, loans and deposits with other banks were EGP 691 Million,
and funds allocated to, net fixed assets reached EGP 152 Million.
On the other side, the bank managed to increase its sources of funds, where total deposits amounted
to EGP 9.835 Billion, loans from financial institutions were EGP 1.195 Billion, and Equity amounted
to EGP 1.661 Billion.
As for the Income Statement, the bank’ Net Interest Income amounted to EGP 247 Million, Net Non-Interest
Income reached EGP 93.6 Million and the Net Trading Income recorded EGP 49.6 Million. On the other hand,
general and administrative expenses increased to EGP 227 Million. Nevertheless, the bank managed to
achieve a net income of EGP 161.4 Million, available for distribution.
It is important to note that following to the reporting period, the bank’s management was changed at the level
of the Chairman. I have been honored to take up the post in September 2011, after the outstanding job done
by Mr. Hisham Hassan, the ex-chairman, who managed to run the bank in a very challenging period and
established strong pillars which assisted in alleviating the adverse effects of current crisis. This is in addition
to many other key accomplishments over his term.
Finally, I pray to God that all of the bank’s sincere staff keep up their dedicated efforts, and full cooperation with
the bank’s management and all stakeholders to be able to deliver sustainable long-term value consistently
in a manner that maintains the confidence of all stakeholders in our services and to achieve a real success.
May God guide us all to the best to serve our country.
Yours Sincerely,Maged Fahmy
Chairman,s Letter
Board of Directors
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Board of Directors
Mr. Hisham Ahmed Hassan Youssef
Chairman Until September 2011
Mr. Maged Fahmy Atteya
Deputy Chairman
Chairman From September 2011
Mr. Ahmed Abdel Rehim El Sayad
Representative National Investment Bank
Mr. Abdel Halim Mohamed Ibrahim
Representative National Investment Bank
Mrs. Dalia Mostafa Kamel
Representative National Investment Bank
Mr. Ahmed Mohamed Dessouky
Representative of National Bank of Egypt
Mr. Effat Eshak
Representative Bank Misr
Dr. Suzan Hamdy
Representative Bank Misr
Dr. Mohamed El Saeed El Dakak
Specialist Board Member
Dr. Samir Abdel El Sayed Tanago
Representative of Private Sector
Background
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Background
Export Development Bank of Egypt (EDBE) was established in 1983 with the purpose of boosting Egyptian
exports in agriculture, industrial, commercial and services projects. Soon after, the Bank became the main
funding source of exports operations in Egypt. Through its outstanding performance and policy, based on
diversified investments, which enabled the bank to grow more and more, and to prosper and achieve a
strong financial position. This has helped EDBE to enjoy the confidence of exporters, small and medium-
size enterprises owners and individuals, in addition to the trust of local financial institutions and reputable
international organizations in order to help them and give them a strong push to grow.
EDBE plays a vital role in supporting Egyptian exporters and facilitating the access of Egyptian products
to markets worldwide through the expansion of finance for export and import substitution projects to help
improving the local production and spreading them all over the world to give the local product to stand firmly
against the international. This is besides its significant role in participating in syndicated loans and equity
participations of these projects. The Bank extends its full fledged financing and banking services to exporters
and its entire customer base.
To pave the way for Egyptian exporters, the Bank has built a network of correspondent banks in countries
with common interests and economic ties with Egypt. Moreover, the Bank has set up a network of branches
throughout Egypt to serve the exporters wherever they are based, as we believe in our Egyptian exporters and
trust that they will make a great success whenever they get a chance.
One of EDBE’s most important assignments, as depicted in its articles of association, was the establishment
of Export Credit Guarantee Company of Egypt (ECGE), as the first mechanism of its kind in Egypt.
The Bank continues to support this company, whose activities are integral to complementing the needs of
Egyptian exporters. The Bank foresees a growing role of the company in light of the global economic crisis and
the need to ensure commercial and non-commercial risks, in addition to factoring and discounting.
Since its inception, the Bank has always been adhering to all relevant legal, regulatory, and banking standards,
whether local or international. Moreover, the bank is committed to further upgrading its internal systems to
match any unexpected changes in these parameters. The Bank’s motto is based on the principle “commitment
is the basis of trust”, and it seeks to emphasize on this theme as one of the foundations of its institutional
culture, which reflects positively on the economy as well.
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Facts about the Bank
Legal Status:
EDBE is an Egyptian Joint-Stock Company established under Law 95 for 1983. It is subject to the regulation of
the Central Bank Egypt (CBE) and the financial and banking system, Law 88 for 2003. As an Egyptian Joint-
Stock Company, it is also subject to the provisions of Law 159 for 1981, promulgating the law on joint-stock
companies, companies limited by shares and limited liability companies, unless otherwise provided in the law
establishing EDBE, without prejudice to the provisions thereof.
Capital and Shareholders:
The authorized capital of the Bank is EGP 2 billion, and the issued and paid-up capital amounts to EGP
1.440 billion. All the Bank Shares are of nominal value equaling EGP 10 per share. The bank is fully owned
by Egyptians, as foreign ownership is restricted. According to the provisions of Article Six of the Articles of
Association, Export Development Bank of Egypt (Law 95 of 1983) public shareholding should contribute no
less than 75% of the paid-up capital. The capital structure of the Bank is as follows:
40.75%National Investment Bank
23.13%Banque Misr
11.43%National Bank of Egypt
24.69%Private sector and others (free trade on Egyptian Stock Exchange Market)
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Local Economy:
Total domestic production (at 2006/2007 constant prices) reached the sum of LE 1,019.8 billion during the
period July/March 2010/2011, against LE 1,001.5 billion during the corresponding period of the previous
FY, with a growth rate of 1.8%. Likewise, Gross Domestic Product achieved around LE 1,541.3 billion (at
current prices), against LE 1,357.5 billion, realizing a growth rate of 13.5% as compared with the previous
corresponding period.
GDP (at market and constant prices) reached about LE 666.1 billion during July/March 2010/2011, with a
growth rate of 2.3% as compared with the previous corresponding period. On the other hand, GDP (at market
and current prices) posted about LE 1021.5 billion in the same period, up by 14.0%.
Implemented investments totaled around LE 164.8 billion, up by 0.9%, relative to the previous corresponding
period. Of this amount, the private business sector contributed around around 67.5%, the government sector
about 16.0%, public companies 11.6%, and economic authorities 4.9%.
Headline CPI (urban) published by the Central Agency for Public Mobilization and Statistics on July 10, 2011,
inched up by 0.42 % (m/m) in June, following 0.20 % (m/m) in May. The annual inflation rate remained almost
unchanged at 11.80 % in June 2011. More than half of the increase in monthly headline inflation came on
the back of a rise in regulated prices, driven by higher tobacco prices. The remaining portion is explained by
sporadic increases in the prices of some food items including dairy products, rice and red meat, which were
largely offset by the decline in the prices of fruits and vegetables as well as poultry and eggs.
In the meantime, core CPI computed by the Central Bank of Egypt increased by 0.45% (m/m) in June 2011
following 0.54% (m/m) in May 2011. The annual rate inched up to 8.94% in June compared to 8.81% in May.
Meanwhile, retail prices witnessed a marginal increase, while paid services remained broadly unchanged.
External debt increased by about US$ 1.1 billion or 3.4%, to US$ 34.8 billion at the end of March 2011, as
compared with the end of June 2010. That was an outcome of the increase in most currencies of borrowing
against the US Dollars by US$ 2.0 billion worth. In addition to the realization of net disbursements of US$
874.0 million of loans and facilities. Debt service increased by US$ 137.8 million to US$ 2.4 billion during July/
March 2010/2011 (compared with the corresponding period of the previous FY). The ratio of debt service/
current receipts (including transfers) improved to 5.3% (from 5.4%), due to the rise of 8.3% in current receipts.
The debt balance as a percentage of GDP also rose to 15.1% at the end of March 2011, from 14.7% at the
end of March 2010.
Domestic Public Debt totaled some LE 1001.9 billion at the end of March 2011, of which the government debt
represented 77.7%, public economic authorities debt 6.8%, and NIB debt 15.5%. The balance of government
debt (net) totaled about LE 778.9 billion at the end of March 2011, up by LE 115.1 billion during July/March
Economic Conditions
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2010/2011. Debt of public economic authorities reached about LE 67.6 billion, with a decrease of LE 0.1
billion. NIB debt reached LE 155.4 billion, down by LE 1.7 billion. (This represented NIB debt (net) minus its
intra-debt to economic authorities and government investments in securities (bills and bonds).
During July/March 2010/2011, the Balance of Payments ran an overall deficit of US$ 5.5 billion(against a
surplus of US$ 3.1 billion in the corresponding period a year earlier). The current account deficit declined by
7.9% to US$ 2.4 billion (from US$ 2.6 billion). In the meantime, the capital and financial account achieved a
net outflow of US$ 1.8 billion (against a net inflow of US$ 5.2 billion).
The fall in the current account deficit was an outcome of the increase in remittances by 27.9% recording US$
9.2 billion culminating from the growth in private remittances (workers remittances abroad) by 42.5% reaching
US $ 8.9 billion against US $ 6.3 billion. The slight decline in the trade deficit by 0.7% to US$ 18.4 billion
(against US$ 18.5 billion). Meanwhile, the services surplus went down by 21.8% to US$ 6.8 billion (against
US$ 8.8 billion in the period of comparison). The decline in services proceeds lower services surplus came on
the back of the 2.7% decline in services receipts to US$ 17.3 billion (against US$ 17.7 billion), and the 15.9%
rise in services payments to US$ 10.4 billion (against US$ 9.0 billion).
The international capital and monetary account achieved a net outflow of US$ 1.8 billion (against a net inflow
of US$ 5.2 billion in the period of comparison). It was attributed to the fact that portfolio investments in Egypt
reversed to a net outflow of US$ 968.9 million (against a net inflow of US$ 7.1 billion). Analysis of these flows
illustrates that net inflows reached US$ 4.6 billion in July/Dec. 2010, yet reversed to net outflows of US$
5.5 billion in Jan./March 2011, as foreigners sold their holdings of securities, especially Egyptian TBs that
unfolded a net outflow of US$ 4.9 billion. Moreover, net FDI in Egypt declined by 51.8 % to only US$ 2.1 billion
(against US$ 4.3 billion), in the wake of the events in Egypt and the Arab Region.
The volume of Egypt's foreign trade (total merchandise exports and imports) registered some US$ 56.2 billion
in July/March 2010/2011, up by 7.2% above the level of the comparison period. The EU was the main trade
partner, accounting for 37.7% of the total volume, followed by the Asian Countries (19.7%), and the Arab
countries (14.2%).
Merchandise exports reached US$ 18.9 billion, with a rise of 11.5%, due to the increase of 17.2% in the
proceeds of oil exports and 7.4% in non-oil exports. At the level of merchandise classification, exports of all
groups increased. In detail, semi-finished goods scaled up by 21.1%, fuel and mineral oils by 17.5%, finished
goods by 8.2%, and raw materials by 1.8%.
Economic Conditions
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Import payments increased also by 5.1%, to US$ 37.3 billion, owing to the rise in oil imports by 26.8% and
non-oil imports by 2.9%. At the level of merchandise classification, imports of most groups accelerated: fuel
and mineral oils by 40.0%, raw materials by 30.0%, investment goods by 3.9%, and consumer goods by 3.6%.
However, intermediate goods declined by 1.7%.
Source: Central Bank of Egypt (CBE)
Monthly Statistical Bulletin
Volume No. (172) - July 2011
Economic Conditions
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Global economy:
Activity is temporarily slowing down, and downside risks have increased again. The global expansion remains
unbalanced. Growth in many advanced economies is still weak, considering the depth of the recession. In
addition, the mild slowdown observed in the second quarter of 2011 is alarming. Growth in most emerging and
developing economies continues to be strong. Overall, the global economy expanded at an annualized rate
of 4.3% percent in the first quarter, and forecasts for 2011–12 are broadly unchanged, with offsetting changes
across various economies. However, greater-than-anticipated weakness in U.S. activity and renewed financial
volatility from concerns about the depth of fiscal challenges in the Euro Area periphery pose greater downside
risks. Risks also draw from persistent fiscal and financial sector imbalances in many advanced economies,
while signs of overheating are becoming increasingly apparent in many emerging and developing economies.
Despite some negative surprises, global growth attained an annualized rate of 4.3 % in the first quarter of 2011,
the outturn was underpinned by many unanticipated offsetting factors. Among the negative surprises was the
devastating effect of the earthquake and tsunami on the Japanese economy, with supply disruptions weighing
heavily on industrial production, and consumer sentiment and spending. Growth was also disappointing in
the United States, in part due to transitory factors—including higher commodity, prices, bad weather, and
supply chain disruptions from the Japanese earthquake on U.S. manufacturing. In contrast, growth was also
surpising on the upside in the Euro Area, powered by more upbeat investment in Germany and France.
Growth in emerging and developing economies evolved as expected, but with considerable variation across
regions. Global employment continued to pick up, including in many advanced economies.
Global inflation picked up from 3½ % in the last quarter of 2010 to 4% in the first quarter of 2011. Inflation
accelerated mainly because of larger than- expected increases in commodity prices. However, core inflation
also crept up across a number of economies. Among advanced economies, core inflation remained subdued
in the United States and Japan and rose moderately in the Euro Area. Among emerging and developing
economies, inflation pressures have become increasingly broad-based, reflecting a higher share of food and
fuel in consumption as well as accelerating demand pressure.
Global activity is projected to slow in the second quarter of 2011, and then reaccelerate in the second half of
the year. But activity will remain unbalanced amid elevated downside risks. Growth is set to be sluggish in
advanced economies facing fiscal and financial sector balance sheet problems, which will continue to be a
drag on employment. Activity will continue to expand strongly in advanced economies that do not face such
challenges, as well as in many emerging and developing economies.
Economic Conditions
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Financial risks have risen for three reasons. First, while a multi-speed global recovery remains the base
case, downside risks to this baseline have increased. Second, concern about debt sustainability and support
for adjustment efforts in Europe’s periphery is leading to market pressures and worries about potential
contagion. Political risks are also raising questions about medium term fiscal adjustment in a few advanced
countries, notably, the United States and Japan. Third, notwithstanding some recent pullback in risk appetite,
the prolonged period of low interest rates may push investors into riskier assets in a “search for yield.” This
trend has the potential to build financial imbalances for the future, particularly in some emerging markets.
Against these tensions, deep-routed challenges remain. Although there has been progress, improvements in
monetary system robustness have been insufficient so far.
Markets may lose patience and be in chaos if political developments impede momentum on fiscal consolidation
and financial monetary reform. Given these risks, policymakers need to accelerate actions to address long-
standing financial vulnerabilities, before the window of opportunity to do so vanish.
Source: International Monetary Fund (IMF)
- Update of the key World Economic Outlook Projections Report, June 2011
- Global Financial Stability Report, June 2011
Economic Conditions
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International Relations
EDBE (the Exim Bank of Egypt) has been always working as the influential arm of the government in boosting
trade in general and Egyptian exports specifically. Being the only Exim Bank in the world to have a customer
deposits base which is growing remakarably has privileged the bank of getting access to cheaper sources
funding in comparison to other Exim Banks.
EDBE operates according to a strategy aiming at boosting foreign trade between Egypt and other countries
all over the world. This strategy focuses on a number of fronts, most significantly adopting progressive
policies to enhancing trade and building strong relationships with banks and financial institutions (Over 100
correspondents), thus promoting intra-regional trade, the financing of exporters and importers, and building
a large network of foreign correspondents all over the globe covering banking and commercial transactions.
Great confidence and trust from All International Banks and Financial Institutions has always been there. Since
January/25/2011 events. The bank directed all L/C’s for the purpose of importation of strategic commodities
(wheat and others) to various correspondents having their immediate confirmation even when banks were
closed for two weeks during such period.
On the local Level EDBE has been able to achieve several successful agreements as follows:
- Due to the increase in customers deposits, EBDE has successfully repaid Arab International Bank USD 30
million Bilateral Term Loan 3 years loan granted July 2010 in July 2011. (Two years before Maturity)
- Repayment of the Misr Iran Development Bank Bilateral 3 years Loan for USD 20 million. (Two years before
Maturity).
- In September 2011 EDBE signed with NBE the Danish Fund 69 Million Krone for SME’s with subsidized
interest rates.
On the International Level EDBE again attained several accomplishments as follows:
Due to the increase in customers deposits base, EDBE successfully repaid in February 2011 Wells Fargo
Bank USD 50 Million bilateral; loan granted February 2007.
Renewal of the USD 20 million short-term unsecured line of credit agreement with the Arab Trade Financing
Program.
A cooperation agreement has been signed with JUBMES Banka Beograd Serbia. (November 2010).
A cooperation agreement has been signed with Hrvatska banka Croatia (December 2010).
A cooperation Agreement with Czech Export Bank has been signed April/2012.
As for the other previous loans which have been granted to EDBE more than five years ago from reputable
institutions Like European Investment Bank (EIB), European Community (ARDF) and National Investment
Bank (NIB) balances are showed here-under:
Business Strategy
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Loans
Total Loans recorded a decrease of LE 277 million, reaching LE 802 million as of 30 June 2011 versus LE
1,080 million as of 30 June 2010 as indicated here-below:
(Amounts in LE millions)
Report / Years June 2005
June 2006
June 2007
June 2008
June 2009
June 2010
June 2011
loans 1.600 1.318 1.798 1.183 1.213 1.080 802
Corporate Banking:
In 2011, EDBE’s portfolio of loans, facilities and discounts decreased by 264 million Egyptian pounds from
7.5 billion EGP to 7.3 billion EGP, representing a drop of 3.5%.
The following table shows the changes of loans and facilities during the past years:
(Amounts in LE millions)
Report / Years June 2005
June 2006
June 2007
June 2008
June 2009
June 2010
June 2011
Total portfolio of loans, facilities and discounts 4,726 5,357 6,472 7,603 7,965 7,544 7,280
Business Strategy
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Business Strategy
3%
OthersAgricultural Industrial Commercial Service Family
0%3%17 %
4%
73%
The following table displays the distribution of the bank’s portfolio according to the economic sectors:
(Amounts in LE millions)
Loans, facilities and discounts The Sector
208Agricultural5,293Industrial
314Trading Sector
1,265Services
200 Family
0Other
7,280Total
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SMEs Finance:
Small & Medium Size Enterprises are considered the driving force for the economy. The following reflect
bank’s activities in this respect:
• As of 30 June 2011, number of projects financed by the bank totaled 76 projects
• During the fiscal year 2010/2011, 9 projects were added to the portfolio
• Growth of the Portfolio in absolute figures during FY 2010/2011 was EGP 86 million
Investment activities:
During 2010/2011, particularly after January 25th, the bank has been more prudent in the management of the
investment portfolio. Net investments including treasury bills and bonds - amounted to EGP 3.83 in 30 June
2011. The following are the major aspects of investment activities during the year.
First : Equity Partcipations and Investments
Net direct equity investments as of 30/6/2011 amounted to EGP 1.72 bn. A major feat during the year was the
full transfer of ownership of the bank’s equity holdings in the tourism industry to “Egypt Capital Holding”, a
company established by the bank in March 2010 to act as its investment arm.
Once the required expertise were retained on board, Egypt Capital Holding started to formulate an integrated
strategy for the development and restructuring of tourism projects, in a way to leverage the business cyclicality
low returns culminating from the unstable political and economic conditions thus taking advantage of the
upward trend expected to occur in the near future.
This year also witnessed the re-classification of a component of the Trading portfolio to the Available for Sale
investment category. This exceptional transaction was done in accordance with the CBE’s decree of 7/6/2011.
Second: Investment portfolios managed by others
During the second half of the fiscal year, EDBE revisited its investment policies with regards to the portfolio
managed by specialized companies to be capped at LE 155 million, while considering further policy revisions,
subject to the expectations of the performance of the stock market on the short and medium run.
Business Strategy
21
EDBE Investment Portfolios & Funds:
Al Khabir Fund
• This fund was among the first funds launched in the market. It was established in 1996.
• Total size by the end of June 2011 was EGP 58 million, representing 911 thousand investment certificates
• Total commissions of fund management was EGP 334 thousand.
• The fund is managed by HC Securities, one of the top Investment Management companies in the market.
Accumulated Return Cash Fund
• Total size of the fund at the end of June 2011 reached EGP 754 million, representing 5.23 million investment
certificates.
• Total commissions of the fund management reached EGP 4.4 million by 30/6/2011.
• This fund ranked the fourth among 20 similar funds as per the assessment made by the Egyptian Investment
and Management Association EIMA.
• This fund is successfully managed by RASMALA as reflected in the gradual improvement noted in the
rating of the fund performance.
Future Investment Funds
In line with our plans to launch fixed income funds, at low risk levels, while keeping high liquidity margins
and offering relatively higher returns, EDBE managed to obtain the CBE approval on the issuance of its fixed
income fund that is expected to take place second half of next fiscal year.
Treasury:
• On the side of foreign exchange activities, total volume of transactions reached $3.85 billion, reporting a
growth rate of 14.24% in comparison to the previous year levels. Total profits of such transactions reached
EGP 25.1 million.
• On the other side, the portfolio of Treasury Bonds increased to EGP 995.25 million, with a growth of 42.78%,
compared to EGP 697.05 million in the previous year, reporting an average annual return of 12.17%.
• Total portfolio of Government Treasury bills reached EGP 988.7 million compared to EGP 635 million in the
previous year with a growth rate of 55.67%, reporting an average annual return of 10.43%.
• As for trading of government securities, profits reached EGP 1.54 million. As a primary dealer in governmental
securities, the bank realized EGP 1.26 million commissions with a growth rate of 51.81% compared to the
prior year.
Business Strategy
22
• The bank focused on the medium term sources of finance in foreign currency, in the form of Deposits; CD’S
and medium term bank loans to set a more efficient maturity structure.
• Average value of treasury assets reached EGP 8.05 billion in June 2011 and net interest margin on treasury
assets for the fiscal year 2010/2011 recorded EGP 96.7 million.
• In accordance with the bank policy to increase the customers base of deposits while offering new competitive
products to the family sector, the bank has issued certificates of deposits in EGP with fixed return for 3 and
5 years with the options of monthly, quarterly, semi-annually or annually interest payment. Total value of the
fixed-rate deposit certificates reached EGP 1.64 billion on 30/06/2011 in comparison to EGP 1.06 billion
as of 30/06/2010, reporting a growth rate of 54.72%. Such increase has improved the maturity matching
between assets and liabilities.
Central Operations:
EDBE succeeded in playing a superior role in developing the relationship with other countries through
increasing the international trade and commercial exchange. Despite the challenging environment, the bank
managed to raise its business activities as indicated by the following records:
• Export transactions of EGP 3.4 Billion
• Import transactions of EGP 9.7 Billion
• Total guarantees & undertakings favor of Exporters of up to EGP 0.6 Billion
Branches Network:
EDBE is considered the arm of the Ministry of Trade and Industry in boosting Exports, and one of the biggest
specialized banks in the Middle East and North Africa Regions in that field.
We believe in being ahead of our customers in defining and servicing their needs. We aim to provide the
highest quality and best services to boost our economy. Accordingly our strategy is to:
• Provide various and innovative saving and investment banking products.
• Offer a variety of distinguished banking products and services, with high level of integrity and trust.
• Satisfy the different needs of the whole society, and geographically expanding our network.
In this respect, the bank extends a variety of distinguished products and services at competitive prices that
suits all the needs of the customers spanning the family and individuals sector, small and medium size
companies as well as corporates.
Business Strategy
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In the field of retail banking, the bank offers different saving schemes and products starting from current
accounts, saving accounts and time deposits, credit cards in addition to the certificates of deposits in local and
foreign currencies that yield different rates of returns to match both the tenor of the certificate and its maturity.
The bank expanded its branches network (currently 21 branches) in Cairo, Giza, Alexandria, Delta and other
cities, and extended its ATMs in different strategic locations like Malls, Airports …etc. (Approximately 26
ATMs).
In accordance with its strategy, it is expected during the fiscal year 2011/2012 that the bank will expand its
branches network to be about 28 branches in addition to up to 50 ATMs across Egypt.
Value added:
The following statement shows the value added during the financial year ended at June 30, 2011:
In LE thousandsItem142,120Wages and salaries2,014Rent
538,698Deposits and borrowing costs (locally)
161,407Current activity surplus
844,239Net value added
28,414Depreciation
872,653Total value added
Assets:
Assets rose from L.E. 12.4 billion to L.E. 12.8 billion, an increase of EGP 427 million at a rate of 3.44%. The
following table shows the development of total assets over the past years:
(Amounts in LE millions)
Report / Years June 2005
June 2006
June 2007
June 2008
June 2009
June 2010
June 2011
Total Assets 7,696 7,339 8,783 13,376 12,543 12,408 12,834
Business Strategy
24
Business Strategy
Customers deposits:
Customers deposits at June 30, 2011 rose to L.E. 9,835 billion with an increase of L.E. 1 billion relative to prior
year reporting a growth rate of 12.4 %.
The following table shows the development of customers deposits over the past years and deposits distribution
according to the economic sectors:
(Amounts in LE millions)
Report / Years June 2005
June 2006
June 2007
June 2008
June 2009
June 2010
June 2011
Customers deposits 4,712 4,768 5,790 8,054 8,492 8,753 9,835
25
(Amounts in LE millions)
DepositsSector95Agricultural
1,975Industrial581Commercial
1,394Service4,074Family1,716Other
9.835Total
The Egyptian Capital Market Activities Custody and Investment Trustees:
The bank provides a variety of premium services to investors in the Egyptian Stock Exchange. Trustees
activities have contributed to the operations of the stock market value with over 6180 clients for EGP 5.5 billion
of securities kept at the central depositary, as well as the value of the deposited securities (not held with CBE),
which are estimated to be about EGP 608 million.
- Custody department has contributed by activating custodian services in attracting many of brokerage
companies to open both EGP and USD accounts in our branches.
Inter Bank Operations:-
Due from banks at 30 June 2011 reached EGP 691 Million, a drop of L.E. 96 Million or 12.21% lower relative
to prior year balance of EGP 787 Million, while Due to banks at 30 June 2011 was L.E. 393 Million reporting a
decrease of EGP 172 million or 30.4 % relative to last year.
The outstanding balances of due from banks was as follows: (Amounts In EGP)
30-Jun-2011 691 Million
30-Jun-2010 787 Million
with a decrease of 96 Million
The Average Deviation was - 12.21%
OthersAgricultural Industrial Commercial Service Family
14%
6%
20% 1% 18%
41%
Business Strategy
26
The Outstanding Value For The (Due To banks) was as follows: (Amounts In EGP)
30-Jun-2011 is 393 Million
With a decrease of 172 Million than in 30 June 2010
The Average Deviation is - 30.4%
Securities & Commercial Paper Portfolio
The portfolio size increased to reach L.E. 3.8 billion on June 30, 2011, a growth rate of 14.5 % relative to prior
year.
The following table shows the portfolio breakdown: (Amounts in LE millions)
June2011
June2010
June2009
June2008
June2007
June2006
June 2005Report / Years
8276101,2689834881,4951,452 Treasury bills and othergovernmental documents
1912071941429726144 Financial assets fortrading
2,1802,1191,5061,241443705621 Financial investmentsavailable for sale
803125575455 Financial investmentsheld to maturity date
55137828912412010091 Financial investments in subsidiaries of common interest
3,8293,3453,2822,5471,2022,3312,313Financial investments
Business Strategy
2,313 2,331
1,202
2,547
3,282 3,345
3,829
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
June 2005 June 2006 June 2007 June 2008 June 2009 June 2010 June 2011
27
Compliance:
Compliance has always been a core value of the Bank. Compliance Department is responsible for the
compliance framework and its implementation throughout the Bank and for promoting a high level of awareness
of compliance requirements capable of managing risks.
Its mission is to ensure that the Bank has a robust system for identification and management of compliance
requirements for all jurisdiction regulations.
By so doing, Compliance Department aims to protect the Bank from the risk of violation of the laws and
regulations at both the institution and country levels. That in turn, helps in the mitigation and management of
legal and reputational risks facing the Bank.
Accordingly, Compliance Department’s role consists of the following:
• Advising and educating Bank staff on applicable laws, rules and standards.
• Implementing and monitoring Anti-money Laundering and Terrorism Financing procedures through the
utilization of a Risk Based Approach.
• Developing and updating internal policies and procedures to comply with Anti-money Laundering and
Terrorism Financing procedures.
• Monitoring external transfers to ensure that all transactions’ parties are not listed on the international as well
as local sanctions’ lists.
• Monitoring internal and external transfers to ensure that all transactions do not exceed the limits set by the
Regulatory Authority.
• Identifying, assessing and monitoring compliance risks associated with the Bank’s business activities.
• Monitoring compliance with policies by performing regular and comprehensive compliance risk assessment,
testing and reporting findings on regular basis to the Board of Directors and Senior Management.
• Assessing the appropriateness of internal procedures and guidelines with constant follow up on any
identified deficiencies.
• Monitoring the Bank compliance with Corporate Governance Regulatory requirements regarding:
• Transparency and disclosure requirements.
• Verifying & Checking the formation of the Board Committees and monitoring their performance.
• Ensuring that behavioral standards of conduct are properly met in the Institution through the implementation
of the Bank’s Code of Ethics.
• Reviewing new products and services prior to their launch to ensure compliance with prevailing regulatory
laws and regulations.
Organizational Structure
28
Operational Risk Management (ORM)• The ORM is quite vital to support the bank business activities in terms of risk control, the efficiency and
effectiveness of its resources and minimization of operational losses.• Operational Risk Management Policy aims to establish a general framework for the operational risk
management functions of the Bank. The framework serves to orientate the employees to the objectives, benefits and components of operational risk management, definition, classification of operational risks, and differentiation from and relationship with other types of risks. The framework sets out the roles and responsibilities for management supervision, as well as those tools and methodologies used within the bank for identifying, measuring, reporting, monitoring, and controlling operational risk.
• Operational Risk is managed at both the bank and business line levels. In line with our risk governance, the board provides the oversight of significant operational issues, and oversees the adoption of best practice across the bank. At the business line level, managers and units’ staff are responsible for adherence to the operational risk management policy framework, for oversight of all operational risks specific to the business activities, and for reporting of all operational incidents, near miss and losses. It is an ongoing process with an integrated view where both ORM and business units work together on developing the tools and assessing necessary controls to reduce operational risk and plan mitigation measures. The operational risk reports are produced on both a regular and an event-driven basis.
• During the FY 2010/11, the ORM emphasis was on raising awareness as to the importance of risk identification, monitoring and reporting, reviewing policies, business processes, system support and procedures, and assisting business line management to spot the inherent risks in their day-to-day responsibilities and activities, to perform Risk and Control Self-Assessment (RCSA), and seek tight controls to reduce their risk profile. Through a series of RCSA workshops, and regular monitoring of operational risk profiles and material exposures to losses, the ORM managed to detect and assess key risk indicators and made proposals for corrective actions in the related procedures and processes to the OR committee. Our target is to proactively manage risks by providing early-warning indicators of potential risk exposures and potential breakdown of controls.
• With the cooperation of our IT department, we built an incident database of operational risk events, including near-misses, losses, causes, categorized according to the Basel II business lines and operational risk event types. The data collection process is a bottom up approach and depends on the internally reported risk incidents in addition to all alarming relevant external events. The information is used to analyze and monitor root causes, address trends, frequencies and assess corrective action and set controls.
• In addition, the ORM in collaboration with the business unit managers worked on drafting and submitting the Business Continuity and Contingency Plan for the bank, preparing and submitting the bank’s Outsourcing Policy while setting up a Database of all of the bank’s outsourced services, requesting business units of their updates and performance risk assessment and evaluation, where possible.
• During the year, the ORM also surveyed the best practices to prepare a project aiming to set up a governance framework for the bank, articulating the mandates of the proposed committees. Furthermore, the ORM submitted a proposal to the customer complaints committee to set up a system serving the best interests of our clients and ensuring quality services of the bank.
• During 2010/11, the ORM expanded its organization structure to incorporate the information system risk and security management functions, proposing a set up for monitoring and controlling information integrity and risks.
Organizational Structure
29
Organizational Structure
Debt Recovery: In the field of non-performing debt settlement, the total amount of the settlements rescheduling and reconciliation
that took place during the year reached about 200 million Egyptian Pounds for 12 clients in assets whose
possession has been transferred to the bank for 13 million Egyptian Pounds.
Information Technology:The Bank has always sought to attain the latest technology in order to keep up with all technological
advancements in the banking world, mainly to achieve customer comfort and satisfaction. Hence, rebuilding
the technology infrastructure of EDBE was accomplished successfully in collaboration with one of the most
renowned institutions in the field of Banking Applications, while outfitting the bank’s hardware with the latest
computers/servers configured to increase the degree of harmony with the requirements of Basel II, as well as
to raise the degree of readiness to comply with all regulatory decisions, which would be issued by the Central
Bank of Egypt in this regard.
Moreover, assessment of the company responsible for the automation project at our bank stands witness that
“EDBE is one of the fastest and most successful Banks/Financial Institutions to carry out the stages of a full
Core Banking implementation encountered worldwide” evidenced our bank’s progress and development.
Human Resources Sector: Human Resources Sector is a cornerstone for any institution since it serves the needs of other departments.
It is the backbone of the bank, or in other words, is the heart of the Bank which supplies the bank with staff
according to all departments’ requirements. Human Resources Sector is considered as one of the bank’s
significant sector because one of its main objectives is increasing the knowledge, skills and abilities of the
workforce in all areas.
During the fiscal year 2010/2011 the bank accomplished achievements in the field of human resource, and
can be summarized as follows:
First: Training:Training Department Activities report from 1 July 2010 to 30 June 2011
Number of Training Opportunities 747
Number of Trainees 429
Cost 2360 Thousand Egyptian Pounds
30
TOTAL TRAINING COSTS according to the types of training from 1 July 2010 to 30 June 2011
Cost in Thousand Egyptian PoundsNumber of TraineesTraining Type99738INTERNATIONAL
1,352533 LOCAL11176ON THE JOB
2,360747 Total
Organizational Structure
Training Types
978
747
31
Second: Recruitment and the average ages:
In light of the bank’s approach in developing and updating the organizational structure, and its need for
experienced, developed and distinct functions both technically and linguistically to be able to compete with
the continuous development of the banking business, the bank resorted to experts in the field of employment
to provide a selection of these functions. The Bank undertook several recruitments for distinguished calibers
to fill the vacancies whether from within or outside the bank.
During the financial year ended 30 June 2011 the bank recruited 35 employees including 24 fresh graduate
trainees.
• Employees who ended their service for the same period were 34 employees for the following reasons:
- 10 pension
- 18 resignations
- 2 deaths
- 4 end of contract
• Number of existing employees until 30 June 2011 is 878 employees and the average age is 40 years.
Third: health care services:
Due to the importance of health care of the bank staff and their sense of security, the contract with the health
care company was renewed with the continuation of benefits granted to employees in health care by raising
coverage limit for employees to 20 thousand Egyptian Pounds up to 50 thousand Egyptian Pounds in critical
cases, aiming to increase the sense of staff security and to confirm that the bank will take that matter. Also,
it has been approved to add a feature to the health care system, namely, International Medical Treatment for
some functional levels. However, employees who are not part of these levels, can participate in this system
at their own expense. Moreover, in case of retirement, the individual has the right to continue participating in
this service at his own expense.
Organizational Structure
32
Owing to the business strategy of EDBE, major effort and time contributions are extended to industrial and
commerce chambers and businessmen associations activities. This could be in the form of participation in
exhibitions, seminars, conferences and forums, providing financial support, and orientation needed at the
global level pertaining to the ongoing developments of foreign trade and international business transactions
and the global economy.
EDBE also coordinates with the Ministry of Trade and Industry and specialized Councils to strengthen
relationships with businessmen and exporters. The bank also emphasizes the importance of opening new
markets and boosting commercial exchange and so attend relevant joint meetings, conferences and seminars
that are organized by the chambers and associations, including, but not limited to: American Chamber of
Commerce, Canadian Chamber of Commerce, French Chamber of Commerce, German Chamber of Commerce
and Industry, Federation of Egyptian Industries, Canada-Egypt Business Council, Egyptian Businessmen
Association, Egypt International Economic Forum, International Bankers Association, Belgium Businessmen
Association, German Arab Chamber of Commerce, British Egyptian Businessmen Association, Egyptian
Junior Business Association, Union of Chambers of Commerce, European-Egyptian Council, Association of
Turkish Businessmen, Malaysian-Egyptian Business Council, Union of Arab Banks, the General Authority for
Exhibitions and International Fairs, Nasser Institute for Research.
As such and despite all challenges, EDBE managed to sponsor and support key events such as Forum
Youth Entrepreneur of the Mediterranean countries and the Middle East and Africa, which was held in Cairo
in September 2010, as well as the visit of President Bill Clinton, former President of the United States of
America, which took place in October 2010. The Bank also sponsored and participated in the second Euro-
Mediterranean Conference to finance and support all trade, manufacturing and services sectors in Egypt.
The Bank also participated in the exhibition and conference held by the Egyptian Chamber of Commerce in
Alexandria under the slogan “encourage the Egyptian products” to assist in creating business opportunities
and support cooperation between the trader and manufacturer of Egyptian products with an eye on enhancing
Egypt’s exports.
In a way to assist in combating unemployment problems, the bank participates in employment fairs arranged
by different institutions, and foreign and Egyptian universities, such as the American University in Cairo and
the German University in Cairo and the American Chamber of Commerce as well as companies specialized
in the field of employment. The bank also was keen to participate in the training of up to 50 trainees, through
the Egyptian Banking Institute and in cooperation with the Community Services Division at Cairo University,
that was through subscribing in the program “Training for Employment” which aims to reduce the gap between
academic education and the labor market requirements and fight unemployment.
Corporate Social Responsibility and Business Community Support
33
Corporate Social Responsibility and Business Community Support
Owing to its genuine sense of social responsibility, the bank provided support to the Egyptian-Belgian
Businessmen Association, to serve children with particular disabilities and also assisted in the infrastructure
work concerning their shelter in Zeinhom district.
The bank also provided the support to Banque Misr Institute for Development and Society services in the field
of education, health, job creation and economic and social development, as well as the support to charity
institute of Yahya Arafa for children to extend health care to children especially those suffering from critical
diseases and to improve the conditions of the hospitals that provide free medical services for children.
The Bank also provided support for the National Association for the Development of Orphanes “Aman” to
create equal opportunities for orphans in getting their legitimate rights, care and social services and to protect
them from violence, manipulation and ill-treatment.
Every year, EDBE is keen to continue raising awareness and launching a campaign against breast cancer
through the sponsoring of the Egyptian race, arranged for the Cure from such disease, by the Egyptian
Institution for Breast Cancer.
In line with its expansionary strategy, the bank either opens new or renovates its branches while still keeping
the environment issues into consideration through taking care of greenery and paints of buildings to reflect
beauty and harmony.
EDBE has always been keen in offering the best medical and retirement services and care to its staff which
are considered its main asset. This is performed through the staff Insurance Fund for workers and the staff
Services Association which provide special offers, benefits and a variety of services, as well as recreation trips
and tours of Hajj and Umrah for the employees and their families.
Financial Indicators
37
AUDITORS’ REPORT
On the unconsolidated financial statements of
Export Development Bank of Egypt (S.A.E.)
as at 30 June 2011
To the shareholdersWe have audited the accompanying unconsolidated financial statements of Export Development Bank of Egypt (S.A.E.), which comprise the unconsolidated balance sheet as at 30 June, 2011 and the unconsolidated statements of income, changes in equity and cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.
Management’s responsibility for the unconsolidated Financial StatementsThese unconsolidated financial statements are the responsibility of Bank’s management.Management is responsible for the preparation and fair presentation of these unconsolidated financial statements in accordance with central bank of Egypt’s rules, pertaining to the preparation and presentation & the financial statements and it’s amendments, including amendments that relates to financial investments issued on December 16, 2008 and in light of the prevailing Egyptian laws, management responsibility includes, designing, implementing internal control relevant to the preparation and fair presentation of unconsolidated financial statements that are free from material misstatements, 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 ResponsibilityOur responsibility is to express an opinion on these unconsolidated financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the unconsolidated financial statements are free from material misstatements. 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 financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the unconsolidated financial statements.
Auditors’ Report
38
OpinionIn our opinion, the unconsolidated financial statements, referred to above, present fairly, in all material respects, the unconsolidated financial position of the Export Development Bank of Egypt as of June 30, 2011 and of its financial performance and its cash flows for the year then ended in accordance with Central Bank of Egypt’s rules pertaining to the preparation and presentation of financial statements, issued on June 27, 2002, and its amendments, including amendments that relates to financial investment issued on December 16,2008 and the Egyptian laws and regulations relating to the preparation of these financial statements.
Report On Other Legal and Regulatory RequirementsAccording to the information and explanations given to us – during the financial year ended June 30, 2011 no contravention of the central bank, banking and monetary institution law No. 88 of 2003.The Bank maintains proper books of accounting, which include all that is required by the law and by the statutes of the Bank; the unconsolidated financial statements are in agreement thereto. The unconsolidated financial information included in the Board of Director’s report, prepared in accordance with Law No. 159 of 1981 and its executive regulations, is in agreement with the Bank’s books of account. Cairo, 5 /10/2011
Banks’ Auditors
Hassanein Kamel Ahmed
R.A.A. 2409
Fellow of Egyptian Tax Society
Capital Market Authority. R(2)
Zarook &Co. RODL
Fatma Mohamed Salah El-Din El-Menshawey
Central Auditing Organization
Auditors’ Report
39
30 June 2011 30 June 2010Note EGP EGP
Assets Cash and due from Central Bank of Egypt (14) 1,053,466,482 571,768,138Due from banks (15) 690,816,101 786,891,578Treasury bills and other governmental notes (16) 827,174,397 610,265,221Trading financial assets (17) 190,737,578 208,026,048Loans to customers (18) 6,441,795,141 6,780,729,946Financial Derivatives 0 163,722,545Financial Investments: -Available for sale (19) 2,180,202,176 2,118,584,726 -Held to maturity (19) 80,072,133 30,718,400Financial investments in subsidiaries and associated co. (20) 551,364,061 377,888,466Intangible assets (21) 18,067,504 4,259,107Other assets (22) 649,032,498 604,147,262Fixed assets (23) 152,010,614 151,175,852Total Assets 12,834,738,685 12,408,177,289Liabilities and shareholders’ equity LiabilitiesDue to banks (24) 392,934,743 564,798,673Customers’ deposits (25) 9,835,134,267 8,752,881,041Financial Derivatives 0 164,195,253Other loans (26) 802,612,545 1,079,505,218Other liabilities (27) 108,962,152 265,073,825Other provisions (28) 23,398,344 40,675,341Deferred tax (29) 10,318,127 10,457,322
Total liabilities 11,173,360,178 10,877,586,673Shareholders’ equity Paid up capital (30) 1,440,000,000 1,200,000,000Reserves (30) 31,750,457 160,369,354Retained Earnings (30) 189,628,050 170,221,262
Total shareholders’ equity 1,661,378,507 1,530,590,616
Total liabilities and shareholders’ equity 12,834,738,685 12,408,177,289Contingent liabilities and commitments Liabilities against letters of guarantee, Documentary credits and other commitments (33) 2,461,528,973 2,352,854,578
• The accompanying notes are an integral part of these financial statements. • Auditors’ report attached.
Maged Fahmy AttiyaChairman
Bank’s AuditorsHassanein Kamel Ahmed
R.A.A. 2409Fellow of Egyptian Tax Society Capital Market Authority. R(2)
Zarook &Co. RODL
Fatma Mohamed Salah El-Din El-Menshawey Central Auditing Organization
Unconsolidated Balance SheetAs at 30 June 2011
40
30 June 2011 30 June 2010Note EGP EGP
Interest and similar income (5) 828,884,475 839,752,632Interest and similar expenses (5) (581,432,893) (548,674,789)Net Interest Income 247,451,582 291,077,843
Fees and commissions Income (6) 98,698,302 107,033,782Fees and commissions Expenses (6) (5,094,293) (3,237,218)Net income from fees & commissions 93,604,009 103,796,564
Dividends Income (7) 14,667,275 20,454,073Net Trading Income (8) 49,669,068 27,304,272Profit from Financial Investments (19) 47,858,926 65,637,401Impairment of credit losses (11) (42,522,134) (15,262,875)Administrative expenses (9) (227,012,989) (201,593,189)Other operating income (expense) (10) 9,337,041 55,714,400Net profit before Tax 193,052,778 347,128,489Income Tax (12) (31,785,185) (43,591,174)Deferred tax 139,195 (683,840)
Net profit for the year 161,406,788 302,853,475
Earnings per share (13) 0.98 2.24
The accompanying notes are an integral part of these financial statements.
Maged Fahmy Attiya
Chairman
Unconsolidated Income StatementFor the year ended 30 June 2011
41
30 June 2011 30 June 2010EGP EGP
Net profit for the year 161,406,788 302,853,475Less:Gain on sale of fixed assets (transferred to capital reserve) (784,250) (425,825)
General Banking Risks Reserve (40,428,614) (20,537,124)
Change effect in accounting policies 0 8,588,063
Net profit for the year – available for appropriation 120,193,924 290,478,589
Add:
Accumulated profit at the beginning of the year 28,221,262 74,683,594
Total 148,415,186 365,162,183
Distributed as follows:
Legal reserve 16,062,253 28,362,151
Special reserve 0 12,678,770
Dividends to the shareholders 82,080,000 120,000,000
Employees’ profit share 16,320,000 28,400,000
Board of directors’ remuneration 3,300,000 5,500,000
Accumulated profit at the end of the year 30,652,933 170,221,262
Total 148,415,186 365,162,183
Maged Fahmy Attiya
Chairman
Statement Of Profit AppropriationFor the year ended 30 June 2011
42
30 June 2011 30 June 2010EGP EGP
Cash flows from operating activities Net profit before income tax 193,052,778 347,128,489Adjustments to reconcile net profit to cash provided from operating activities:Depreciation 28,414,170 13,986,670Impairment of assets 68,064,561 72,592,872(Reversal) Impairment of other Provisions (195,401) 0Foreign currencies revaluation differences of provisions(other than provision for doubtful debts) 445,899 (215,967)(Gain) on sale of fixed assets (784,250) (425,825)Operating profit before changes in assets and liabilities used in operating activities 288,997,757 433,066,239
Net decrease (increase) in Assets & LiabilitiesDue from banks (487,693,435) 78,189,566Treasury bills and other governmental notes (411,175,000) 927,900,000Trading financial assets 33,209,285 (13,308,323)Loans to customers 268,843,999 424,539,680Financial Derivatives (Net) (472,708) 0Other assets (11,639,595) (256,119,488)Due to banks (171,863,930) (554,012,376)Customers’ deposits 1,082,253,226 260,991,933Other liabilities 23,328,327 158,071,317Income tax paid (31,785,185) (43,591,174)
Net cash flows provided from operating activities 582,002,741 1,415,727,374
Cash flows from investing activities Purchase of fixed assets and branches improvements (40,538,577) (50,182,429)Proceeds from sale of fixed assets 805,850 425,825Financial investments other than trading financial assets (241,715,570) (538,106,448)Financial investments in subsidiaries and associated co. (116,134,703) (146,561,013)Purchase of intangible assets (25,272, 635) (4,259,107)
Net cash flows (used in) investing activities (422,855,635) (738,683,172)
Unconsolidated Statement of Cash flowsFor the year ended 30 June 2011
43
Cash flows from financing activities (Decrease) in debt instruments & other loans (276,892,674) (263,167,207)Paid Dividends (153,900,000) (150,000,000)
Net cash flows (used in) financing activities (430,792,674) (413,167,207)Net (decrease) increase in cash and cash equivalents during the year (271,645,568) 263,876,995Cash and cash equivalents at the beginning of the year 1,055,249,851 791,372,856Cash and cash equivalents at the end of the year 783,604,283 1,055,249,851
Cash and cash equivalents are represented in:Cash and due from Central Bank of Egypt 1,053,466,482 571,768,138Due from banks 690,816,101 786,891,578Treasury bills and other governmental notes 876,700,000 635,100,100Balances with Central bank of Egypt (Mandatory reserve) (1,032,632,805) (552,568,058)Balances due from Banks with maturities more than three months (28,045,495) (20,416,807)Treasury bills and other governmental notes with maturities more than three months (776,700,000) (365,525,000)
Cash and cash equivalents at the end of the year 783,604,283 1,055,249,851
The accompanying notes are an integral part of these financial statements.
Unconsolidated Statement of Cash flowsFor the year ended 30 June 2011
44
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Res
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Spec
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ings
Net
Pro
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for t
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ear
Tota
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ance
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1,20
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,537
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,554
04,
834,
251
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401,
125,
485
170,
221,
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01,
530,
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616
Net
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161,
406,
788
161,
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788
Cap
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240,
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4,79
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244,
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3,86
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,118
,940
1,12
5,48
528
,221
,262
161,
406,
788
1,66
1,37
8,50
7
Unconsolidated Statement of Changes in Shareholders’ Equity For the year ended 30 June 2011
Notes to the UnconsolidatedFinancial Statements
47
EXPORT DEVELOPMENT BANK OF EGYPT (S.A.E.)The Unconsolidated Financial Statements
As at 30 June 2011
1. General informationExport Development Bank of Egypt (Egyptian Joint Stock Company) was established on July 30, 1983 under
Law No. 95 of 1983 and its executive regulations. The objective of the Bank is to encourage, develop Egyptian
export activities, and assist in developing agricultural, industrial, and commercial and service exporting
sectors, also to provide all investment banking services in local and foreign currencies through its head office
and fifteen branches.
2. Summary of accounting policiesThe principal accounting policies applied in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation of the financial statementsThe financial statements have been prepared in accordance with Egyptian Accounting Standards issued in
2006 and its amendments and in accordance with the instructions of the Central Bank of Egypt approved
by the Board of Directors on December 16, 2008 consistent with the Standards referred to, and have been
prepared under the historical cost modified by the revaluation of trading, financial assets and liabilities held for
trading, and assets and liabilities originally classified as at fair value through profit or loss, financial investments
available for sale and all derivatives contracts. The unconsolidated preparation of these financial statements
was according to relevant domestic laws.
The bank also prepared consolidated financial statements of the Bank and its subsidiaries in accordance
with Egyptian Accounting Standards, the subsidiaries companies are entirely included in the consolidated
financial statements and these companies are the companies that the bank which - directly or indirectly –
has more than half of the voting rights or has the ability to control the financial and operating policies of an
enterprise, regardless of the type of activity, the consolidated financial statements of the Bank can be obtained
from the Bank’s management. The investments in subsidiaries and associate Companies are disclosed in
the standalone financial statements of the Bank and its accounting treatment is at cost after deducting the
impairment losses from it.
Upon the preparation of the financial statements for the financial year ended 30 June 2011, the Bank’s
management changed certain accounting policies, and basis of recognition and measurement in compliance
with the new Accounting Standards and the Basis of Preparation of the Banks’ financial statements and
Principles of Recognition and Measurement as issued by the CBE’s Board of Directors on December 16, 2008.
Financial Indicators
48
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
2.2 Subsidiaries and Associates(a) SubsidiariesSubsidiaries are all entities over which the bank has owned directly or indirectly the power to govern the
financial and operating policies generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the bank has the ability to control the entity.
(b) AssociatesAssociates are all entities over which the bank has significant influence directly or indirectly but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
The accounting for subsidiaries and associates in the unconsolidated financial statements are recorded by cost
method, investments are recognized by the cost of acquisition including any good will, deducting impairment
losses in value, and recording the dividends in the income statement in the adoption of the distribution of these
profits and evidence of the bank right to collect it.
2.3 Segment reportingA business segment is a group of assets and operations related to providing products or services that are
subject to risks and returns that are different from those of other business segments. A geographical segment
is engaged in providing products or services within a particular economic environment that are subject to risks
and returns different from those of segments operating in other economic environments.
2.4 Foreign currency translation(a) Functional and presentation currencyThe financial statements are presented in egyptian pound, which is the bank’s functional and presentation
currency.
(b) Transactions and balances in foreign currenciesThe bank hold accounts in egyptian pounds and prove transactions in other currencies during the financial
year on the basis of prevailing exchange rates at the date of the transaction, and re-evaluation of balances of
assets and liabilities of other monetary currencies at the end of the financial period on the basis of prevailing
exchange rates at that date, and is recognized in the list gains and losses resulting from the settlement of such
transactions and the differences resulting from the assessment within the following items:
- Net trading income or net income from financial instruments classified at fair value through profit and loss of
assets / liabilities held for trading or those classified at fair value through profit and loss according to type.
- Other operating revenues (expenses) for the rest of the items.
• Changes in the fair value of monetary financial instruments denominated in foreign currencies and classified
49
as available for sale investments (debt instruments) are analyzed into valuation differences resulting from
changes in amortized cost of the instrument, translation differences arising from changes in foreign exchange
rates and differences resulting from changes in the fair value of the instrument. Valuation differences are
recognized in profit or loss to the extent they relate to changes in amortized cost and changes in exchange
rates which are reported in the income statement under the line items ‘revenues from loans and similar
activities’ and ‘other operating revenues (expenses)’ respectively. The remaining differences resulting from
changes in fair value of the instrument are carried to ‘reserve for cumulative change in fair value of available
for sale investments’ in the equity section.
• Valuation differences resulting from measuring the non-monetary financial instruments at fair value include
gains and losses resulting from changes in fair value of those items. Revaluation differences arising from
the measurement of equity instruments classified as at fair value through profit or loss are recognized in the
income statement, whereas the revaluation differences arising from the measurement of equity instruments
classified as available for sale financial investments are carried to ‘reserve for cumulative change in fair
value of available for sale investments’ in the equity section.
2.5 Financial assetsThe bank classifies its financial assets in the following categories:
financial assets classified as at fair value through profits or loss, loans and receivables, held to maturity
financial assets, and available for sale financial assets. The Bank’s classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
Management determines the classification of its investments at initial recognition.
(a) Financial assets classified at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value
through profit or loss at inception.
- A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling
or repurchasing in the near term or if it is part of a portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are
also categorized as held for trading unless they are designated as hedging instruments.
- Financial assets are designated at fair value through profit or loss when:
• doing so significantly reduces measurement inconsistencies that would arise if the related derivatives were
treated as held for trading and the underlying financial instruments were carried at amortized cost for loans
and advances to customers or banks and debt securities in issue.
• Certain investments, such as equity investments, are managed and evaluated on a fair value basis in
accordance with a documented risk management or investment strategy and reported to key management
50
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
personnel on that basis are designated at fair value through Profit and loss.
- 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.
- Any financial derivative of a valued financial instruments at fair value not be reclassified through profit and
loss during the retention period or force It also does not re-classification any financial instrument, quoting from
a range of financial instruments at fair value through profit and loss if this tool has been customized by the
bank at initial recognition As assessed at fair value through profit and loss.
- According to the financial assets for trading which are reclassified in the periods that begin form or after first
of Jan 2009 it is reclassified according to the fair value in the date of reclassification.
- Bank in all conditions doesn’t reclassify any financial instrument moving to programs of financial instruments
reclassified with fair value from profit and loss or to financial assets program for trading.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market, other than:
(a) those that the bank intends to sell immediately or in the short term, which are classified as held for trading,
or those that the bank upon initial recognition designates as at fair value through profit or loss;
(b) those that the bank upon initial recognition designates as available for sale, or
(c) those for which the holder may not recover substantially all of its initial investment, other than because of
credit deterioration.
(c) Held-to-maturity financial investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that the Bank’s management has the positive intention and ability to hold to maturity. If the
Bank were to sell other than an insignificant amount of held to-maturity assets, the entire category would be
reclassified as available for sale unless in the necessary cases.
(d) Available-for-sale financial investments
Available-for-sale investments are those intended to be held for an indefinite period of time, which may be sold
in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.
The following is applied to financial assets:
• Regular-way purchases and sales of financial assets at fair value through profit or loss, held to maturity
and available for sale are recognized on trade-date – the date on which the Bank commits to purchase or
sell the asset.
• Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried
51
at fair value through profit or loss. Financial assets carried at fair value through profit and loss are initially
recognized at fair value, and transaction costs are expensed in the income statement.
• Financial assets are derecognized when the rights to receive cash flows from the financial assets have
expired or where the Bank has transferred substantially all risks and rewards of ownership. Financial
liabilities are derecognized when they are extinguished − that is, when the obligation is discharged,
cancelled or expires.
• Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently
carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortized cost
using the effective interest method.
• Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or
loss’ category are recognized in the income statement in the period in which they arise. Gains and losses
arising from changes in the fair value of available-for-sale financial assets are recognized directly in equity,
until the financial asset is derecognized or impaired. At this time, the accumulative gain or loss previously
recognized in equity is recognized in profit or loss.
• Interest calculated using the effective interest method and foreign currency gains and losses on monetary assets
classified as available for sale are recognized in the income statement. Dividends on available-for-sale equity
instruments are recognized in the income statement when the bank’s right to receive payment is established.
• The fair values of quoted investments in active markets are based on current bid prices. If there is no active
market for a financial asset, or no current demand prices available the Bank establishes fair value using
valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow
analysis, option pricing models and other valuation techniques commonly used by market participants If the
bank had been unable to estimate the fair value of equity instruments classified available for sale, value is
measured at cost less any impairment in value.
• The Bank reclassify the financial asset which classified as a financial instruments available for sale, which
left the definition of loans and debts (bonds or loans), to be classified to the group of loans and receivables
or financial assets held to maturity - all as the case - when available Bank has the intent and ability to
hold these financial assets in the foreseeable future or until maturity and reclassification to be booked by
fair value at reclassifications date, and not process any profits or losses on those assets that have been
recognized previously in equity and in the following manner:
1. In case of reclassification of financial asset, which has a fixed maturity are amortized gains or losses over
the remaining life of the investment retained until the maturity date in a manner effective yield is consumed
any difference between the value on the basis of amortized cost and value on an accrual basis over the
remaining life of the financial asset using the effective yield method, and in the case of the decay of the
value of the financial asset is later recognition of any gain or loss previously recognized directly in equity in
the profits and losses.
52
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
2. in the case of financial asset which has no fixed maturity continue to profit or loss in equity until the sale of
the asset or to dispose of it, then be recognized in the profit and loss In the case of erosion of the value of
the financial asset is later recognition of any gain or loss previously recognized directly within equity in the
profits and losses.
• If the Bank to adjust its estimates of payments or receipts are the settlement of the carrying amount of the
financial asset (or group of financial assets) to reflect the actual cash inflows and the adjusted estimates
to be recalculated book value and then calculates the present value of estimated future cash flows at the
effective yield of the financial instrument and is recognized settlement recognized as income or expense in
the profit and loss.
• In all cases, if the bank re-Tab financial asset in accordance with what is referred to The Bank at a later date
to increase its estimate of the proceeds of future cash result of the increase will be recovered from the cash
receipts, is the recognition of the impact of this increase in settlement of the interest rate effective from the
date of change in the estimate and not in settlement of the balance of the original notebook in the history
of change in the estimate.
2.6 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a
legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or
realize the asset and settle the liability simultaneously.
And the clauses of agreements to buy treasury bills with a commitment to re-sale agreements and sale of
treasury bills with a commitment to re-purchase on a net basis within the balance sheet item, treasury bills
and other government papers.
2.7 Derivative financial instruments and hedge accounting
- Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into
and are subsequently re-measured at their fair value. Fair values are obtained from quoted market prices in
active markets, including recent market transactions, and valuation techniques, including discounted cash
flow models and options pricing models, as appropriate. All derivatives are carried as assets when fair value
is positive and as liabilities when fair value is negative.
- Embedded derivatives, such as the conversion option in a convertible bond, are treated as separate
derivatives when their economic characteristics and risks are not closely related to those of the host
contract, provided that the host contract is not classified as at fair value through profit or loss as part of “net
trading income”.
- Embedded derivatives are not split if the Bank chooses to designate the entire hybrid contact as at fair
value through profit or loss.
53
- The accounting treatment used to recognize changes in fair value of derivatives depends on whether or not
the derivative is designated as a hedging instrument under hedge accounting rules and on the nature of the
hedged item. The bank designates certain derivatives as either:
• Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedge).
• Hedging relating to future cash flows attributable to a recognized asset or liability or a highly probable
forecast transaction (cash flow hedge).
• Hedging for net investment in foreign operations relating to future cash flows attributable to a recognized
(net investment hedge).
Hedge accounting is used for derivatives designated in a hedging relationship when the criteria are met.
- The bank documents, at the inception of the transaction, the relationship between hedged items and
hedging instruments, as well as its risk management objective and strategy for undertaking various hedge
transactions. The bank also documents its assessment, both at hedge inception and on an ongoing basis,
of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes
in fair value of hedged items.
2.7.1 Fair value hedgeChanges in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in
profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are
attributable to the hedged risk.
The effective portion of changes in the fair value of the interest rate swaps and the changes in the fair value
of the hedged item attributable to the hedged risk are recognized in the ‘net interest income’. The effective
portion of changes in the fair value of the currency swaps are recognized in the ‘net trading income’. Any
ineffectiveness is recognized in profit or loss in ‘net trading income’.
2.7.2 Cash flow hedgeThe effective portion of changes in the fair value of derivatives designated and effective for cash flow hedge
shall be recognized in equity while changes in fair value relating to the ineffective portion shall be recognized
in the income statement in “net trading income”.
Amounts accumulated in equity are transferred to income statement in the relevant periods when the hedged
item affects the income statement. The effective portion of changes in fair value of interest rate swaps and
options are reported in “net trading income”.
When a hedged item becomes due or is sold or if hedging instrument no longer qualifies for hedge accounting
requirements, gains or losses that have been previously accumulated in equity remain in equity and shall
only be recognized in profit or loss when the forecast transaction ultimately occurs. If the forecast transaction
is no longer expected to occur any related cumulative gain or loss on the hedging instrument that has been
recognized in equity shall be reclassified immediately to income statement.
54
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
2.7.3 Net investment hedge
Accounting for net investment hedge is the same for cash flows hedge. Profit or loss from hedging instrument
related to the effective portion of the hedge to be recognized in equity, while it is recognized in the income
statement directly for hedging instrument not related to the effective portion. Accumulated profit or loss in
equity to be transferred to the income statement upon disposal of foreign transactions.
2.7.4 Derivatives that do not qualify for hedge accounting
Interest on and changes in fair value of any derivative instrument that does not qualify for hedge accounting
is recognized immediately in the income statement in “net trading income” line item. However, gains or 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 “net income from financial instruments designated at fair value
through profit or loss”.
2.8 Interest income and expense
Interest income and expense for all interest-bearing financial instruments, except for those classified as held
for trading or designated as at fair value through profit or loss, are recognized within ‘interest income’ and
‘interest expense’ in the income statement using the effective interest rate method.
The effective interest rate method is a method of calculating the amortized cost of a financial asset or a financial
liability and of allocating the interest income or interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of
the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset
or financial liability. When calculating the effective interest rate, the bank estimates cash flows considering all
contractual terms of the financial instrument (for example, prepayment options) but does not consider future
credit losses. The calculation includes all fees and points paid or received between parties to the contract that
are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.
When loans or debts are classified as non-performing or impaired, related interest income are not recognized
but rather, are carried off balance sheet in statistical records and are recognized as revenues on the cash
basis as follows:
- When collected and after recovery of all arrears for retail loans, personal loans, real estate loans for personal
housing and loans to small business.
- For corporate loans, interest income is also recognized on the cash basis, according to which interest
earned during the periods subsequent to reschedule agreements does not start to accrete on the loan
principal until the Bank collects 25% of the rescheduled installments and after payments of the installments
continue to be regular for at least one year.
55
2.9 Fee and commission income
Fees and commissions charged by the bank for servicing a loan are recognized as revenue as the services
are provided. Recognition of such fees and commission in profit or loss ceases when a loan becomes non-
performing or is impaired in which case fees and commission income is rather marginalized and carried off
the balance sheet. Recognition of such fees and commissions as revenues continues on the cash basis when
the relevant interest income on the financial instrument is recognized since they are generally treated as an
adjustment to the effective interest rate on the financial asset.
If it is probable that the bank will enter into a specific lending arrangement, the commitment fee received
is regarded as compensation for an ongoing involvement with the acquisition of a financial instrument and,
together with the related transaction costs, is deferred and recognized as an adjustment to the effective
interest rate. If the commitment expires without the Bank making the loan, the fee is recognized as revenue
on expiry.
A syndication fee received by the Bank that arranges a loan and retains no part of the loan package for itself
(or retains a part at the same effective interest rate for comparable risk as other participants) is compensation
for the service of syndication. Such a fee is recognized as revenue when the syndication has been completed.
Fees and commissions resulting from direct negotiations or participation in such negotiations for the benefit
of or on behalf of another party, such as those earned on the allotment of shares or other financial assets to a
client or acquisition or disposal of entities for a client, are recognized as revenue when the specific transaction
has been completed.
Administrative and other services fees are recognized as income on a time proportionate basis over the
lifetime of the service.
Fees charged for financial planning services and custodian services provided over long periods are recognized
as income over the period during which the service is rendered.
56
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
2.10 Dividend incomeDividends are recognized in the income statement when the bank’s right to receive payment is established.
2.11 Purchase and resale agreements, sale and repurchase agreementsThe financial instruments sold, subject to repurchase agreements, are reported as additions to the balance
of treasury bills and other governmental notes in the assets side at the balance sheet, whereas the liability
(purchase and resale agreement) is reported in the balance sheet as a deduction therefrom. Difference between
the sale price and repurchase price is recognized as a return throughout the period of the arrangement using
the effective interest rate method.
2.12 Impairment of financial assets(a) Assets carried at amortized costThe bank assesses at each balance sheet date whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the asset a loss (event) and that loss event or (events) has an impact on
the estimated future cash flows of the financial asset or 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:
• Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of
sales).
• Breach of loan covenants or conditions.
• Initiation of bankruptcy proceedings.
• Deterioration of the borrower’s competitive position.
• The Bank for reasons of economic or legal financial difficulties of the borrower by granting concessions may
not agree with the Bank granted in normal circumstances.
• Deterioration in the value of collateral, and
• Downgrading below investment grade level.
The objective evidence of impairment loss for group of financial assets is the clear data indicate to a decline
can be measured in future cash flows expected from this group since its initial recognition, although not
possible to determine the decrease of each asset separately, for example increasing the number of failures in
payment for one of the banking products.
The estimated period between a losses occurring and its identification is determined by local management for
each identified portfolio. In general, the periods used vary between three months and 12 months.
The bank first assesses whether objective evidence of impairment exists individually for financial assets
that are individually significant, and individually or collectively for financial assets that are not individually
57
significant and in this field the following are considered:
- If the Bank determines that no objective evidence of impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses them for impairment according to historical default ratios.
- Assets that are individually assessed for impairment and for which an impairment loss is or continues to be
recognized are not included in a collective assessment of impairment.
- If no impairment losses result from the previous assessment of impairment in this case the asset included in
a collective assessment of impairment.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted
at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the
use of an allowance account and the amount of the loss is recognized in the income statement.
If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate determined under the contract when there is objective
evidence for asset impairment. As a practical expedient, the bank may measure impairment on the basis of an
instrument’s fair value using an observable market price. The calculation of the present value of the estimated
future cash flows of a collateralized financial asset reflects the cash flows that may result from foreclosure less
costs for obtaining and selling the collateral, whether or not foreclosure is probable.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar
credit risk characteristics (i.e., on the basis of the group’s grading process that considers asset type, industry,
geographical location, collateral type, past-due status and other relevant factors). Those characteristics are
relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’
ability to pay all amounts due according to the contractual terms of the assets being evaluated.
For the purposes of evaluation of impairment for a group of a financial assets according to historical default
ratios future cash flows in a group of financial assets that are collectively evaluated for impairment are
estimated on the basis of the contractual cash flows of the assets in the bank and historical loss experience
for assets with credit risk characteristics similar to those in the bank. Historical loss experience is adjusted on
the basis of current observable data to reflect the effects of current conditions that did not affect the period on
which the historical loss experience is based and to remove the effects of conditions in the historical period
that do not currently exist.
Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent
with changes in related observable data from period to period (for example, changes in unemployment rates,
58
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
property prices, payment status, or other factors indicative of changes in the probability of losses in the Bank
and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed
regularly by the Bank.
(b) Assets classified as available for saleThe bank assesses at each balance sheet date whether there is objective evidence that a financial asset or a
group of financial assets classify under available for sale or held to maturity is impaired. In the case of equity
investments classified as available for sale, a significant or prolonged decline in the fair value of the security
below its cost is considered in determining whether the assets are impaired.
The decrease consider significant cause it become 10% from cost of book value and the decrease consider
to be extended if it continue for period more than 9 months, and if the mentioned evidences become available
then the accumulated loss to be post from the equity and disclosed at the income statement, impairment losses
recognized in the income statement on equity instruments are not reversed through the income statement. If,
in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the
increase can be objectively related to an event occurring after the impairment loss was recognized in profit or
loss, the impairment loss is reversed through the income statement.
2.13 Real Estate InvestmentsThe real estate investments represent lands and buildings owned by the bank In order to obtain rental returns
or capital gains and therefore does not include real estate assets which the bank exercised its work through
or those that have owned by the bank as settlement of debts.
2.14 Intangible assets 2.14.1 SoftwareExpenditure on upgrade and maintenance of computer programs is recognized as an expense in the income
Statement in the period in which it is incurred. Expenditures directly incurred in connection with specific
software are recognized as intangible assets if they are controlled by the bank and when it is probable that
they will generate future economic benefits that exceed its cost within more than one year. Direct costs
include the will generate future economic benefits that exceed its cost within more than one year. Direct costs
include the cost of the staff involved in upgrading the software in addition to a reasonable portion of relative
overheads. Upgrade costs are recognized and added to the original cost of the software when it is likely that
such costs will increase the efficiency or enhance the performance of the computers software beyond its
original specification Cost of computer software recognized as an asset shall be amortized over the period of
expected benefits which shall not exceed three years.
59
2.14.2 Other intangible assets Other intangible assets represent intangible assets other than software programs (they include but not limited
to trademark, licenses, and benefits of rental contracts). The other intangible assets are recorded at their
acquisition cost and are amortized on the straight-line method or based on economic benefits expected from
these assets over their estimated useful life. Concerning the assets which do not have a finite useful life, they
are not subject to amortization they are annually assessed for impairment, while value of impairment (if any)
is charged to the income statement.
2.15 Fixed AssetsLands and buildings are mainly represented in head office, branches and offices premises. All fixed assets are
disclosed at historical cost less accumulated depreciation and impairment losses. The historical cost includes
expenditures that are directly attributable to the acquisitions of the fixed assets’ items.
Subsequent costs are included in the assets carrying amount or recognized separately, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of
the item can be measured reliably. Repairs and maintenance expenses are recognized in profit or loss within
“other operating costs” line item during the financial period in which they are incurred.
Land is not depreciated. Depreciation of other fixed assets is calculated using the straight-line method to
allocate their cost to their residual values over their estimated useful lives, as follows:
Premises and constructions 40 yearsFixtures and air conditions 5 years
Safes 50 yearsCopiers and fax 8 years
Vehicles and means of transportation 5 yearsElectric appliances 10 years
Mobile phones 3 yearsTelephone networks, fire extinguishers 10 yearsComputers and computers’ software 3 years
Furniture 10 yearsDecorations 4 years
The residual value and useful lives of the fixed assets are reviewed on the each balance sheet date and
they are adjusted whenever it is necessary. Depreciated assets are reviewed for purposes of determining
extent of impairment when an event or change in conditions occurs suggesting that the book value may not
be recovered. Consequently, the book value of the asset is reduced immediately to the asset’s net realizable
value in case increasing the book value over the net realizable value.
The net realizable value represents the net selling value of the asset or its utilization value whichever is
greater. Gains and losses from the disposal of fixed assets are determined by comparing the net proceeds at
book value. Gains (losses) are included within other operating income (expenses) in the income statement.
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Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
2.16 Impairment of non-financial assetsAssets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.
Assets that are subject to amortization are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for
the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is
the higher of an asset’s fair value less costs to sell or value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating
units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at
each reporting date.
2.17 LeasesThe accounting treatment for the finance lease in accordance with law 95 of 1995, if the contract entitles the
lessee to purchase the asset at a specified date and the value selected, or the current value of the total lease
payments representing at least 90% of the value of the asset. The other leases contracts are considered
operating leases contracts.
(a)Being lesseeLease payments made under operating leases, net of any discounts received from the lessor, are recognized
in profit or loss on a straight-line basis over the term of the contract.
(b)Being lesserAssets leased out under operating lease contracts are reported as part of the fixed assets in the balance sheet
and are depreciated over the expected useful lives of the assets, on the same basis as other property assets.
Lease rental income is recognized net of any discounts granted to the lessee, using the straight line method
over the contract term.
2.18 Cash and cash equivalentsFor the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than
three months’ maturity from the date of acquisition, They include cash and balances due from Central Bank
of Egypt (other than those under the mandatory reserve), balances due from banks, treasury bills and other
governmental notes.
2.19 Other ProvisionsProvisions for restructuring costs and legal claims are recognized when: the Bank has a present legal or
constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be
required to settle the obligation, and the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
61
determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood
of an outflow with respect to any one item included in the same class of obligations may be small. Provisions
which negated the purpose of wholly or partly repaid within the item other operating income (expense).
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation which become due after one year from the financial statement date using appropriate rate for the
due date (without being affected by effective tax rate) which reflect time value of money, and if the due date
is less than one year we calculate the estimated value of obligation but if it have significant impact then it
calculated using the current value.
2.20 Financial GuaranteesA financial guarantee contract is a contract issued by the bank as security for loans or debit current accounts
due from its clients to other entities that requires the bank to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original
or modified terms of a debt instrument. These financial guarantees are presented to the banks, corporations
and other entities on behalf of the bank’s clients. When a financial guarantee is recognized initially, the bank
shall measure it at its fair value that are directly attributable to the issue of such financial guarantee.
The amount initially recognized less, when appropriate, cumulative amortization of security fees recognized in
the income statement using the straight-line method over the term of the guarantee and The best estimate for
the payments required to settle any financial obligation resulting from the financial guarantee at the balance
sheet date such estimates are made based on experience in similar transactions and historical losses as
supported by management judgment. Any increase in the obligations resulting from the financial guarantee,
shall be recognized within other operating income (costs) in the income statement.
2.21 Employees’ benefitsThe bank has employees insurance fund, it was founded at the first of July 2000 under the law of 54 for the
year 1975 and its executive regulations for the purpose of granting insurance and compensation benefits for
the members.
The bank is committed to lead to the fund monthly and annual subscriptions in accordance with the rules of
the fund and its amendments, and there are no obligations to the bank following the payment of additional
contributions. Contributions are recognized in expenses of employee benefits when due. The recognition of
contributions paid in advance as an asset to the extent that its payment to the reduction of future payments
or a cash refund.
2.21 income taxesIncome tax on the profit or loss for the year includes each of year tax and deferred tax and is recognized in
the income statement except for income tax relating to items of equity that are recognized directly in equity.
62
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
Income tax is recognized based on net taxable profit using the tax rates applicable at the date of the balance
sheet in addition to tax adjustments for previous years.
Deferred taxes arising from temporary time differences between the book value of assets and liabilities are
recognized in accordance with the principles of accounting and value according to the foundations of the tax,
this is determining the value of deferred tax on the expected manner to realize or settle the values of assets
and liabilities, using tax rates applicable at the date of the balance sheet.
Deferred tax assets of the bank recognized when there is likely to be possible to achieve profits subject to tax
in the future to be possible through to use that asset, and is reducing the value of deferred tax assets with part
of that will come from tax benefit expected during the following years, that in the case of expected high benefit
tax, deferred tax assets will increase within the limits of the above reduced.
2.22 BorrowingBorrowing is recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently
stated at amortized cost, any difference between proceeds net of transaction costs and the redemption value
is recognized in the income statement over the period of the borrowings using the effective interest method.
2.23 Capital2.23.1 Capital issuance costCost of issuance of new shares, issuance of shares to effect an acquisition, or issue of share options, net of
tax benefits, are reported a deduction from equity.
2.23.2 DividendsDividends are recognized when the general assembly of shareholders approves them. Dividends include
the employees’ profit share and the board of directors’ remuneration as prescribed by the bank’s articles of
association and the corporate law.
2.24 Comparatives figuresComparative figures are reclassified, where necessary, to conform with changes in the current year presentation
3. Financial risk managementThe bank’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation,
acceptance and management of some degree of risk or combination of risks. Taking risk is core to the financial
business, and the operational risks are an inevitable consequence of being in business. The bank’s aim is therefore
to achieve an appropriate balance between risk and return and minimize potential adverse effects on the bank’s
financial performance. And the most important types of financial risks are credit risk, market risk, liquidity risk
and other operating risks. Also market risk includes exchange rate risk, rate of return risk and other prices risks.
63
The bank’s risk management policies are designed to identify and analyses these risks, to set appropriate
risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date
information systems. The bank regularly reviews its risk management policies and systems to reflect changes
in markets, products and emerging best practice.
Risk management is carried out by a risk department under policies approved by the board of directors. Bank
treasury identifies, evaluates and hedges financial risks in close co-operation with the bank’s operating units.
The board provides written principles for overall risk management, as well as written policies covering specific
areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and
non-derivative financial instruments. In addition, credit risk management is responsible for the independent
review of risk management and the control environment.
3.1 Credit riskThe bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the
bank by failing to discharge an obligation. Management therefore carefully manages its exposure to credit
risk. Credit exposures arise principally in loans and advances, debt securities and other bills. There is also
credit risk in off-balance sheet financial arrangements such as loan commitments. The credit risk management
and control are centralized in a credit risk management team in bank treasury and reported to the board of
directors and head of each business unit regularly.
3.1.1 Credit risk measurement(a) Loans and advances to banks and customersTo measure credit risk related to loans and advances extended to banks and customers, the bank examines
the following three components:
• Probability of default of the customer or others in fulfilling their contractual obligations.
• The current position and the likely expected future development from which the bank can conclude the
balance exposed to default (Exposure at default).
• Loss given default.
The daily activities of the bank’s business involves of measurement for credit risk which reflect the expected
loss (The Expected Loss Model) required by the Basel committee on banking supervision. The operating
measures may interfere with the impairment charge according to the Egyptian Accounting Standard no. (26),
which depends on losses realized at the balance sheet’s date (realized losses models) and not on expected
losses.
The bank assesses the probability of default of individual counterparties using internal rating tools tailored to
the various categories of counterparty. They have been developed internally and combine statistical analysis
with credit officer judgment and are validated, where appropriate.
Clients of the bank are segmented into four rating classes.
64
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
The bank’s rating scale, which is shown below, reflects the range of default probabilities defined for each
rating class. This means that, in principle, exposures migrate between classes as the assessment of their
probability of default changes. The rating tools are kept under review and upgraded as necessary. The Bank
regularly validates the performance of the rating and their predictive power with regard to default events.
Bank’s internal ratings scale:
Bank’s internal ratings scale Bank’s rating Description of the grade
1 Performing loans
2 Regular watching
3 Watch list
4 Nonperforming loans
And the loans expose to default depend on the banks expectation for the outstanding amounts when default occur.
example, as for a loan position is the nominal value while for commitments the bank enlists all already drawn
amounts besides these amounts expected to be withdrawn until the date of default, if it happens.
Loss given default or loss severity represents the bank expectation of the extent of loss on a claim should default
occur. It is expressed as percentage loss per unit of exposure and typically varies by type of counterparty, type
and seniority of claim and availability of collateral or other credit mitigation.
(b) Debt securities and other billsFor debt securities and other bills, external rating such as Standard & Poor’s rating or their equivalents are
used by bank treasury for managing of the credit risk exposures, and if this rating is not available, then other
ways similar to those used with the credit customers are uses. The investments in those securities and bills
are viewed as a way to gain a better credit quality mapping and maintain a readily available source to meet
the funding requirement at the same time.
3.1.2 Risk limit control and mitigation policiesThe bank manages, limits and controls concentrations of credit risk wherever they are identified − in particular,
to individual counterparties and banks, and to industries and countries.
The bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in
relation to one borrower, or groups of borrowers, and to geographical and industry segments. Such risks are
monitored on a revolving basis and subject to an annual or more frequent review, when considered necessary.
Limits on the level of credit risk by individual, counterparties, product, and industry sector and by country are
approved quarterly by the board of directors.
The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering
65
on- and off-balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward
foreign exchange contracts. Actual exposures against limits are monitored daily.
Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential
borrowers to meet interest and capital repayment obligations and by changing these lending limits where
appropriate.
Some other specific control and mitigation measures are outlined below:(a) CollateralThe bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is
the taking of security for funds advances, which is common practice. The bank implements guidelines on the
acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans
and advances are:
• Mortgages over residential properties.
• Mortgage business assets such as premises, And inventory.
• Mortgage financial instruments such as debt securities and equities.
Longer-term finance and lending to corporate entities are generally secured. Revolving individual credit
facilities are generally unsecured. In addition, in order to minimize the credit loss the bank will seek additional
collateral from the counterparty as soon as impairment indicators are noticed for the relevant individual loans
and advances.
Collateral held as security for financial assets other than loans and advances is determined by the nature
of the instrument. Debt securities, treasury and other governmental securities are generally unsecured, with
the exception of asset-backed securities and similar instruments, which are secured by portfolios of financial
instruments.
(b) DerivativesThe bank maintains strict control limits on net open derivative positions (i.e., the difference between purchase
and sale contracts), by both amount and term. At any one time, the amount subject to credit risk is limited
to the current fair value of instruments that are favorable to the bank (i.e., assets where their fair value is
positive), which in relation to derivatives is only a small fraction of the contract, or notional values used to
express the volume of instruments outstanding. This credit risk exposure is managed as part of the overall
lending limits with customers, together with potential exposures from market movements. Collateral or other
security is not usually obtained for credit risk exposures on these instruments, except where the bank requires
margin deposits from counterparties.
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation
of a corresponding receipt in cash, securities or equities. Daily settlement limits are established for each
counterparty to cover the aggregate of all settlement risk arising from the Bank market transactions on any
single day.
66
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
(c) Master netting arrangementsThe bank further restricts its exposure to credit losses by entering into master netting arrangements with
counterparties with which it undertakes a significant volume of transactions. Master netting arrangements do not
generally result in an offset of balance sheet assets and liabilities, as transactions are usually settled on a gross
basis. However, the credit risk associated with favorable contracts is reduced by a master netting arrangement
to the extent that if a default occurs, all amounts with the counterparty are terminated and settled on a net basis.
The bank overall exposure to credit risk on derivative instruments subject to master netting arrangements can
change substantially within a short period, as it is affected by each transaction subject to the arrangement.
(d) Credit-related commitmentsThe primary purpose of these instruments is to ensure that funds are available to a customer as required.
Guarantees and standby letters of credit carry the same credit risk as loans. Documentary and commercial
letters of credit – which are written undertakings by the Bank on behalf of a customer authorizing a third party to
draw drafts on the bank up to a stipulated amount under specific terms and conditions – are collateralized by the
underlying shipments of goods to which they relate and therefore carry less risk than a direct loan.
Commitments to extend credit represent unused portions of authorizations to extend credit in the form of loans,
guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the bank is potentially
exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is
less than the total unused commitments, as most commitments to extend credit are contingent upon customers
maintaining specific credit standards. The bank monitors the term to maturity of credit commitments because
longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.
3.1.3 Impairment and provisioning policiesThe internal rating systems described in Note 3.1.1 focus more on credit-quality mapping from the inception of
the lending and investment activities.
In contrast, impairment provisions are recognized for financial reporting purposes only for losses that have been
incurred at the balance sheet date based on objective evidence of impairment due to the different methodologies
applied, the amount of incurred credit losses provided for in the financial statements are usually lower than the
amount determined from the expected loss model that is used for internal operational management and CBE
regulation purposes.
The impairment provision shown in the balance sheet at the year-end is derived from each of the four internal
rating grades. However, the majority of the impairment provision comes from the bottom two grads. The table
below shows the percentage of the Bank’s in balance sheet items relating to loans and advances and the
associated impairment provision for each of the bank’s internal rating categories:
67
Bank’s ratingJune 30,2011 June 30,2010
Loans and advances
Impairment provisions
Loans and advances
Impairment provisions
Performing loans 81% 12% 85% 13%Regular watching 4% 2% 1% 1%Watch list 1% 2% 2% 3%Non-performing loans 14% 84% 12% 83%
100% 100% 100% 100%
The internal rating tools assists management to determine whether objective evidence of impairment exists
under (EAS 26), based on the following criteria set out by the bank:
• Cash flow difficulties experienced by the borrower.
• Breach of loan covenants or conditions.
• Initiation of bankruptcy proceedings.
• Deterioration of the borrower’s competitive position.
• Bank granted concessions may not be approved under normal circumstances, for economic, legal reasons,
or financial difficulties facing the borrower.
• Deterioration in the value of collateral.
• Deterioration in the credit situation.
The bank’s policy requires the review of all financial assets that are above materiality thresholds at least
annually or more regularly when individual circumstances require. Impairment allowances on individually
assessed accounts are determined by an evaluation of the incurred loss at balance-sheet date on a case-by-
case basis, and are applied to all individually significant accounts. The assessment normally encompasses
collateral held (including re-confirmation of its enforceability) and the anticipated receipts for that individual
account.
Collectively assessed impairment allowances are provided portfolios of homogenous assets by using the
available historical experience, experienced judgment and statistical techniques.
3.1.4 Pattern of measuring the general banking riskIn addition to the four categories of measuring credit worthiness discussed in disclosure 3.1.1.a the
management makes small groups more detailed according to the CBE rules. Assets facing credit risk are
classified to detailed conditions relying greatly on customer’s information, activities, financial position and his
regular payments to his debts .
The bank calculates the provisions needed for assets impairment in addition to credit regulations according to
special percentages determined by CBE.
In the case of increase of impairment loss provision needed according to CBE than that for purposes of
making the financial statements according to the EAS, the general banking risk reserve is included in owners’
equity deducted from the retained earning with this increase, this reserve is modified with periodic basis with
68
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
the increase and decrease, which equals the increase in provisions and this reserve is not distributed.
And this are categories of institutional worthiness according to internal ratings compared with CBE ratings and
rates of provisions needed for assets impairment related to credit risk:
CBE Rating Description Provision % Internal Rating Internal Description1 Low Risk 0 1 Performing loans2 Average Risk 1% 1 Performing loans3 Satisfactory Risk 1% 1 Performing loans4 Reasonable Risk 2% 1 Performing loans5 Acceptable Risk 2% 1 Performing loans6 Marginally Acceptable risk 3% 2 Regular watching7 Watch list 5% 3 Watch list8 Substandard 20% 4 Non-performing loans9 Doubtful 50% 4 Non-performing loans
10 Bad Debt 100% 4 Non-performing loans
3.1.5 Maximum exposure to credit risk before collateral heldBalance sheet items exposed to credit risks
June 30, 2011EGP
June 30, 2010EGP
Loans and Advances to customers 7,220,797,844 7,478,723,431Financial Investments: debt instruments 1,663,874,491 1,486,895,379Other assets 649,032,498 604,147,262Total 9,533,704,833 9,569,766,072
Off Balance sheet items exposed to credit risk
June 30, 2011EGP
June 30, 2010EGP
Letter of guarantee 1,218,785,701 1,168,497,246Letter of Credit(Import) 884,732,153 802,830,953Letters of credit (export-confirmed) 7,245,435 29,133,074Shipping documents (export) 166,551,878 145,569,771Outstanding forward contracts 184,213,806 206,823,534Total 2,461,528,973 2,352,854,578
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3.1.6 Loans and advancesBalances of loans and Advances in terms of credit risk rating are as follows:
June 30, 2011EGP
June 30, 2010EGP
Neither have arrears nor impaired 6,017,180,995 6,200,266,989Have arrears but not impaired 270,672,865 310,516,584subject to impairment 992,026,477 1,033,671,796Total 7,279,880,337 7,544,455,369Less: impairment loss provision (838,085,196) (763,725,423)Net 6,441,795,141 6,780,729,946
Loans and advances neither have arrears nor impaired
The credit quality of loans and Advances that do not have arrears and which are not subject to impairment is
assessed by reference to the bank’s internal rating.
Loans and Advances to customers
Rating Retail Corporate Total loans and advances to customers
Performing loans 101,103,978 5,602,088,416 5,703,192,394Regular watching --- 313,988,601 313,988,601Total 101,103,978 5,916,077,017 6,017,180,995
Loans and advances have arrears but are not subject to impairment
These are loans and facilities with past-due installments but are not subject to impairment, unless Information
has otherwise indicated. Loans and facilities to customers which have arrears but are not subject to impairment
are analyzed below:
June 30, 2011 CorporatesDirect loans
Arrears up to 30 days 226,213,706Arrears from 30 to 60 days 24,262,67090 days arrears 20,196,489Total 270,672,865
70
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
Loans and Advances which are individually impairedLoans and Advances to customersAt the end of the current reporting period, the carrying amount of loans and facilities, that are assessed to be
individually impaired excluding any cash flows expected to arise from the associated guarantees, amounted
to thousands EGP 1,080,353.
The following table provides a breakdown of the balance of such loans and facilities which are individually impaired:
CorporatesTotal in June 30, 2011Value in thousands
Loans which are individually impaired 992,026
Restructured loans and Advances:Restructuring activities include extended payment arrangements, execute obligatory management programs,
modification and deferral of payments. Restructuring policies and practices are based on indicators or criteria
which, in the judgment of local management, indicate that payment will most likely continue. These policies are
kept under continuous review. Restructuring is most commonly applied to term loans, in particular customer
finance loans. Renegotiated loans totaled at the end of the financial year:
Loans and advances to customerscorporates
June 30, 2011Value in thousands
Direct loans 59,759
Total 59,759
3.1.7 Debt instruments, treasury bills and other governmental notesThe table below presents an analysis of Debt instruments, treasury bills and other governmental notes by
rating agency designation at 31 December 2010, based on Standard & Poor’s ratings or their equivalent:
Values in thousands
Financial investments
June 30, 2011 June 30, 2010
Treasury bills andother Gov. notes
Financial Investments
Treasury bills andother Gov. notes
Financial Investments
AAA -- 206,896 -- 250,000AA- to AA+ -- 44,350 -- 95,677A- to A+ -- 147,458 -- 169,096Lower than A- -- 175,070 -- 232,695Unrated 876,600 1,090,100 635,100 739,427Total 876,600 1,663,874 635,100 1,486,895
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3.1.8 Acquisition of collateralsDuring the current reporting period, the Bank has acquired foreclosed assets in order to settle debts.
Type of asset Book Value at June 30, 2011 Book Value at June 30, 2010Buildings --- 12,680,000Movables 13,000,000 2,450,000
Foreclosed assets are classified among “other assets” in the balance sheet. Such assets are sold by the bank,
as appropriate.
3.1.9 Concentration of risks of financial assets exposed to credit risks(Geographical segments)The following table provides a breakdown of the gross amount of the most significant credit risk limits to which
the bank is exposed at the end of the current reporting period.
The gross amount of all financial assets is segmented into the geographical regions of the bank’s clients:
Value in thousandsArab Republic of Egypt Total
Cairo Alex and Delta Upper EgyptTreasury bills and other governmental notes 876,700 -- -- 876,700Loans and advances to customers:Personal loans 91,712 9,392 -- 101,104Corporate Loans 2,516,481 2,669,038 1,993,257 7,178,776Available for sale financial investments:Debt instruments 1,601,284 -- -- 1,601,284Total 5,086,177 2,678,430 1,993,257 9,757,864
3.2 MARKET RISKSThe bank is exposed to market risk represented in volatility in fair value or future cash flows resulted from
changes in market prices. Market risk arise from the open positions of interest rates, currency rates and the
equity instruments, the management of market risk resulted from trading, non-trading activities are centralized
in the market risk department in the bank.
3.2.1 Foreign exchange rate volatility riskThe Bank is exposed to foreign exchange rate volatility risk in terms of the financial position and cash flows.
The board of directors set limits for foreign exchange risk at the total value of positions at the end of the day
and during the day when timely control is exercised.
72
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
The following table summarizes the bank’s exposure to the risks of fluctuations in foreign exchange rates at
the end of the reporting period. This table includes the carrying amounts of the financial instruments in terms
of their relevant currencies and in EGP equivalent.
Value in thousands
LE USD GBP EUR Other currencies
Financial assets
Cash and due from central banks 1,064,126 37,995 73 248 204Treasury bills and other governmental notes 876,700 -- -- -- --
Due from banks 266 42,644 3,386 18,662 2,114Trading financial investments 177,652 2,192 -- -- --Available for sale investments 2,204,796 85,985 -- 2,059 --Held to maturity investments 68,134 2,000 -- -- --Loans and advances to customers 5,205,045 274,512 3,402 38,163 524Other financial assets 878,316 15,948 3,005 187Total financial assets 10,475,035 461,276 9,866 59,319 2,842
Financial liabilities
Due to banks 150,092 40,600 -- -- 500Customers deposits 7,578,578 306,482 6,761 37,200 2,313Other loans 288,967 65,191 -- 14,430 --Other provisions 483,513 35,736 61 5,405 --Other financial liabilities 420,953 22,845 3047 2,244 391Total financial liabilities 8,922,103 470,854 9,869 59,279 3,204Net balance 1,552,932 (9,578) (3) 40 (362)
3.2.2 Interest rate riskThe bank is exposed to impact of fluctuations in the levels of interest rates prevailing in the market that is the
cash flow risk of interest rate represented in the volatility of future cash flow of a financial instrument
due to change in the interest rate of the mentioned instrument. Whereas the interest rate is fair value risk is
the risk of fluctuations in the value of the financial instrument due to changes in interest rates in the market.
The interest margin may rise due to these changes but still the profits may decrease if unexpected movements
occur. The board of directors sets limits for the level of difference in the re-pricing of interest rate that the bank
can maintain and Risk department in the bank daily monitors this.
The following table summarizes the extent of the bank’s exposure to the risk of fluctuations in interest rates
that includes the book value of financial instruments divided based on the price of re-pricing dates or maturity
dates whichever is sooner:
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Value in thousands
At the end of June 30, 2011
Up to 1 month
More than 1 month up to 3 months
More than 3
months up to 1
year
More than
1 year up to 3 years
More than
3 yearsInterest
free total
Financial assetsCash and due from central banks -- -- -- -- -- 1,053,466 1,053,466
Due from banks 322,770 45,736 19,416 -- 244,346 58,548 690,816Treasury bills and other governmental notes (112,000) 100,000 888,700 -- -- -- 876,700
Trading financial investments -- -- 190,737 -- -- -- 190,737
Loans and advances to customers 62,664 815,081 2,642,036 784,527 2,975,572 -- 7,279,880
Available for sale investments -- -- -- 343,783 1,257,502 578,917 2,180,202
Held to maturity investments -- -- 50,652 -- 11,938 17,482 80,072
Other financial assets -- -- 5,583 643,449 -- -- 649,032Total financial assets 273,434 960,817 3,797,124 1,771,759 4,489,358 1,708,413 13,000,905Financial liabilitiesDue to banks 389,260 3,582 -- -- -- 93 392,935Customers deposits 1,755,478 1,812,575 1,053,555 444,803 1,000,000 3,768,723 9,835,134Other loans -- -- 22,640 503,121 276,851 -- 802,612Other provisions -- -- -- -- 23,398 -- 23,398Other financial liabilities -- -- -- 108,962 -- -- 108,962Total financial liabilities 2,144,738 1,816,157 1,076,195 1,056,886 1,300,249 3,768,816 11,163,041Net balance (1,871,304) (855,340) 2,720,929 714,873 3,189,109 (2,060,403) 1,837,864
3.3 Liquidity RiskLiquidity risk is the risk that the bank is unable to meet its payment obligations associated with its financial
liabilities when they fall due and to replace funds when they are withdrawn. The consequence may be the
failure to meet obligations to repay depositors and fulfill commitments to lend.
Liquidity Risk Management ProcessThe processes of liquidity risk control carried by assets and liabilities management department in the bank include the following:• The daily funding is managed by monitoring and controlling the future cash flows to ensure the ability to
fulfill all obligations and requirements. This includes replenishment of funds as they mature or is borrowed
by customers. The bank maintains an active presence in the global money markets to ensure achievement
of this target.
• Maintaining a portfolio of highly marketable assets, which can easily be liquidated to meet any interruption
in cash flows.
74
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
• Monitoring liquidity ratios compared to the internal requirements of the bank and the Central Bank of Egypt’s
requirements.
• Management of concentration and profile the debt maturities.
Monitoring and reporting take the form of cash flow measurement and projections for the next day, week, and
month respectively. The starting point for these projections is represented in the analysis of the contractual
maturities of financial liabilities and expected collection dates of financial assets.
Assets and Liabilities management department controls the unmatched medium term assets management,
the level and type of the unutilized portion of loans’ commitments, the extent of utilizing debit current accounts
advances and the impact of contingent liabilities such as letters of guarantees and letters of credit.
Financing approachLiquidity resources are reviewed by a separate team from treasury department of the bank to provide a wide
variety of currencies, geographical regions, resources, products, and maturities.
Assets available to meet all liabilities and cover loan commitments include cash, balances with central banks,
balances due from banks, treasury bills and other governmental notes, and loans and facilities to banks and
clients. Maturity term of percentage of loans to clients that are maturing within a year is extended in the normal
course of the bank’s business. Moreover, some debt instruments, treasury bills and other governmental notes
are pledged to cover liabilities. The bank has the ability to meet unexpected net cash flows through selling
securities, and finding other financing sources.
Off balance sheet items
At the end of June 30, 2011 Up to 1 yearMore than 1 year and less than 5
years
More than 5 years total
Letters of guarantee 779,596 428,402 10,788 1,218,786
Letters of credit(import) 884,732 -- -- 884,732
Letters of credit(export-confirmed) 7,245 -- -- 7,245
Shipping documents (export) 166,552 -- -- 166,552
Outstanding forward contracts 184,214 -- -- 184,214
Capital commitments resulting from acquisition of available for sale investments and investments in subsidiaries and associated companies
124,994 123,915 -- 248,909
Total 2,147,333 552,317 10,788 2,710,438
75
3.3 Fair value of financial assets and liabilitiesFinancial instruments not measured at fair value
The following table summarizes the carrying amount and fair value of financial assets and liabilities that are
not stated in the balance sheet at fair value:
Book value(EGP)
Fair value(EGP)
Financial AssetsDue from banks 690,816,101 690,816,101Loans and advances to customers 7,279,880,337 7,279,880,337Financial investments:Equity instrumentsavailable for sale 578,917,767 578,917,767Held to maturity 80,072,133 81,008,829
Financial liabilitiesDue to banks 392,934,743 392,934,743Customer’s deposits 9,835,134,267 9,835,134,267Other loans 802,612,545 802,612,545
- Due from Banks:The carrying amount of variable interest rate placements and deposits for one day represents its fair value.
Loans and advances to banks
Loans and advances to banks are represented in loans other than deposits with banks.
The expected fair value for loans and advances represents the discounted value of future cash flows expected
to be collected. Cash flows are discounted by adopting the current market rate to determine the fair value.
- Loans and advances to customersLoans and Facilities are net of provisions for impairment. The estimated fair value of loans and Facilities
represents the discounted amount of estimated future cash flows expected to be received. Expected cash
flows are discounted at current market rates to determine fair value.
- Financial InvestmentsInvestments in financial securities in the previous table include only held to maturity bearing assets. Available
for sale assets are assessed at fair value with the exception of equity instruments which the bank has been
unable to evaluate their fair value to a reliable extent. The fair value of financial assets held to maturity is
determined based on market rates or prices obtained from brokers. If these data are unavailable then the fair
value is assessed by applying the financial markets’ rates for negotiable financial securities with similar credit
features, maturity dates as well as similar rates.
76
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
- Due to other banks and customersThe estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits,
is the amount repayable on demand. The estimated fair value of fixed interest-bearing deposits and other
borrowings not quoted in an active market is based on discounted cash flows using interest rates for new
debts with similar remaining maturity.
3.4 Capital ManagementThe bank’s objectives when managing capital, which consists of another items in addition of owner’s equity
stated in balance sheet are:
• To comply with the capital requirements in Egypt.
• To safeguard the bank’s ability to continue as an ongoing concern so that it can continue to provide returns
for shareholders and stakeholders.
• To maintain a strong capital base to support the development of its business.
• Capital adequacy and the use of regulatory capital are monitored daily by the bank’s management,
employing techniques based on the guidelines developed by the Basel committee as implemented by the
Central Bank of Egypt, for supervisory purposes. The required information is filed with the authority on a
quarterly basis.
Central bank Of Egypt requires the following:• Hold the minimum level of the issued and paid up capital of LE500 Million.
• Maintaining a percentage between capital elements and asset and contingent liabilities elements weighted
by risk equals to or exceeds 10%. The numerator of the capital adequacy ratio consists of the following two
tiers:
Tier one:Represented in basic capital which consists of paid-in-capital (after deducting the book value of treasury
shares), retained profits and reserves from profit appropriation with the exception of general banking risk
reserve less any goodwill previously recognized or any carried over losses.
Tier twoSupplementary Capital consists of equivalent of the general risks provision related to creditworthiness bases
issued by the Central Bank Of Egypt and not exceeding 1.25% of the total risk weighted assets and contingent
liabilities, subordinated loans / deposits’ term which exceed 5 years(with amortization of 20%of their value
each year of the last five years of their term) and 45% of the increase between fair value and book value of
financial investments available for sale, held to maturity and associates and subsidiaries.
77
When calculating the total numerator of the capital adequacy ratio it should be taken into consideration that
the supplementary capital does not exceed in any way the basic capital and that subordinated loans (deposits)
do not exceed half of the basic capital.
Asset at risk are weighted ranging from zero up to 100% classified in accordance with the nature of the debit
side of each asset, to reflect the related credit risks, while taking into consideration cash collaterals. Same
treatment is applied on off- balance amounts after making adjustments to reflect the contingent nature and
probable losses of these amounts.
The bank has complied with all local capital requirements at June 30, 2011; the following table summarizes
the components of basic and supplementary capital and capital adequacy ratios as at 30/6/2011 comparing
with 30/6/2010
the following table summarizes the components of basic and supplementary capital and capital adequacy
ratios as at 30/6/2011 comparing with 30/6/2010
Capital June 30, 2011 June 30, 2010Tier one (Basic capital) 1 ,440, 000 1 ,200, 000Share capital (in net after excluding treasury shares) -- --Legal reserve 754 98 ,754Other reserves 26 ,061 56 ,781Retained profits 28 ,221 170 ,221Total basic capital 1 ,495 ,036 1, 525 ,756Tier two (Supplementary capital) -- --Equivalent to general risks provisions 116 ,321 118 ,20645% of the increase in the fair value over book value of held to maturity financial investment an investments in subsidiaries and associated companies
-- --
Total supplementary capital 116 ,321 118 ,206Total capital 1 ,611 ,357 1 ,643 ,962Risk weighted assets and contingent liabilities :Balance sheet's assets 9 ,093 ,377 10 ,011 ,009Contingent liabilities 583 ,266 450 ,497Total risk weighted assets and contingent liabilities 9 ,676 ,643 10 ,461 ,506Capital adequacy ratio (%) 16,65% % 15,72
4. The significant accounting estimates and assumptionsThe bank applies estimates and assumptions, which affect the amounts of assets and liabilities to be disclosed
within the following financial year. Estimates and assumptions are continuously assessed based on historical
experience and other factors as well, including the expectations of future events, which are considered
reasonable in the light of available information and surrounding circumstances.
78
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
(A) Impairment loss on loans and advancesThe bank reviews the loans and advances portfolio on at least a quarterly basis to assess impairment. The
bank applies personal judgment when determine the necessity of recording the impairment charges to the
income statement so as to know if there is any reliable data which refer to the existence of a measurable
decline in the expected future cash flows of the loans portfolio even before being acquainted with the decline
at the level of each loan in the portfolio. These evidences may include observable data, which refer to the
occurrence of a negative change in the ability of a portfolio of borrowers to repay the bank, or local or economic
circumstances related to default in the bank’s assets. On scheduling future cash flows, the management
use estimates based on prior experience of losses of assets with credit risk characteristics in the presence
of objective evidences that refer to impairment similar to those included in the portfolio. The method and
assumptions used in estimating the amount and timing of future cash flows are reviewed on a regular basis to
minimize any differences between estimated and actual losses based on expertise.
(B) Impairment in equity instruments investments available for saleThe bank determine impairment in equity’s instruments’ investments available for sale when there is a
significant or prolonged decline in their fair value below their cost.
Determining whether the decrease is significant or prolonged depends on personal judgment. To reach this
judgment the bank estimates- among other factors- the usual volatility of the share price. Additionally, there
could be impairment if there is evidence on the existence of deterioration in the financial position of the
invested company or in its operating and financing cash flows or if there is deterioration in the industry’s or
sector’s performance or in case of changes in technology.
(C) The fair value of derivativesThe fair values of financial instruments, which are not listed in active markets, is identified by applying valuation
methods. When such methods are used to identify fair value, they are tested and reviewed periodically by
qualified personnel who are independent of the body that prepared them.
(D) Financial investments held - to- maturityThe non-derivative financial assets with payments and maturity dates that are fixed or determinable are
classified as financial investments held to maturity, and this classification requires to a great extent the
application of personal judgment and to reach such decision the bank evaluates the intention and ability to
hold these investments until maturity. If the bank fails to hold these investments until maturity date, with the
exception of very special cases such as selling an insignificant amount near maturity, then these investments,
which were classified held to maturity, should be reclassified available for sale investments. Consequently,
these investments shall be measured by fair value and not by amortized cost in addition to suspension of
classifying any investments under the mentioned item.
79
(E) Income taxesThe bank records the liabilities of the expected results of tax examination according to estimates of the
probability of the emergence of additional taxes. When there is, a variance between the final result of taxes
and the amounts previously recorded then these variances will affect the income tax and deferred tax provision
for the year in which the variance has been identified.
5. Net Interest Income
30 June 2011 30 June 2010EGP EGP
Interest From Loans and Similar Income:Loans and Facilities for Customers 555,847,600 616,301,986Treasury Bills and Bonds 229,704,824 210,970,175Deposits and Current Accounts 39,397,837 12,480,471Other 3,934,214
828,884,475 839,752,632Cost of Deposit and Similar Costs:Deposits and Current Accounts:Banks (46,022,327) (55,064,442)Customers (533,480,840) (448,166,835)Other loans (1,929,726) (45,443,512)
(581,432,893) (548,674,789)Net 247,451,582 291,077,843
6. Net Income From Fees and Commissions
30 June 2011 30 June 2010EGP EGP
Fees and commissions income:Fees and commission related to credit 89,091,591 78,699,179Custody Fees 4,310,947 3,388,924Other Fees 5,295,764 24,945,679
98,698,302 107,033,782Fees and Commissions Expenses:Other fees paid (5,094,293) (3,237,218)Net 93,604,009 103,796,564
80
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
7. Dividend Income
30 June 2011 30 June 2010EGP EGP
Available For Sale Investment 5,848,185 9,575,000Associated and Subsidiary companies 8,819,090 10,879,073
14,667,275 20,454,073
8. Net Trading Income
30 June 2011 30 June 2010EGP EGP
Profit (losses) from foreign exchange 24,571,209 23,294,106Profit (losses) from revaluing trading assets & liabilities in foreign currencies 594,490 183,368
Profit (losses) from interest rate swap contracts 6,986 0Profit (losses) from currencies swap contracts revaluation 300,458 0Profit arising from sale of trading investments 9,624,585 1,023,824Valuation differences of trading investments 14,571,340 2,802,974
49,669,068 27,304,272
9. Administrative expenses
30 June 2011 30 June 2010EGP EGP
Staff CostSalaries and Wages (111,635,822) (98,116,904)Social insurance (4,496,245) (3,910,738)Pension costsDefined contribution scheme (16,223,683) (15,210,819)Other Administrative expenses (94,657,239) (84,354,728)
(227,012,989) (201,593,189)
81
10. Other operating income (expenses)
30 June 2011 30 June 2010EGP EGP
Profit resulting from revaluation of foreign currency balances of assets and liabilities of monetary nature other than those held for trading or originally classified at fair value through profit and loss
(575,386) 6,976,978
Profits arising from selling of equipment and fixed assets 784,250 425,825Valuation differences of assets acquired by bank 0 (1,182,900)Miscellaneous services income 3,636,908 3,868,995Correspondents custody income 152,559 634,051Collected Telex, Swift, Postage, Printed matters & Photocopy 6,835,620 6,307,994Legal service income 80,935 169,264Miscellaneous income 4,573,566 41,771,949Miscellaneous expenses (6,151,411) (3,257,756)
9,337,041 55,714,400
11. Return (Losses) Of Impairment From Loans
30 June 2011 30 June 2010EGP EGP
Loans and overdrafts for customers (46,000,000) (15,262,875)Held to maturity financial investments 3,477,866 0
(42,522,134) (15,262,875)
12.Income tax expense
30 June 2011 30 June 2010EGP EGP
Tax (31,785,185) (43,591,174)(31,785,185) (43,591,174)
82
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
13. Earnings Per Share
30 June 2011 30 June 2010
EGP EGPNet profit for the year 161,406,788 302,853,475Board member’s bonus (3,300,000) (5,500,000)Staff Profit Sharing (16,320,000) (28,400,000)Shareholder’s Share in Profit 141,786,788 268,953,475Average number of shares 144,000,000 120,000,000Earnings Per Share 0.98 2.24
14. Cash and due from central bank of egypt
30 June 2011 30 June 2010EGP EGP
Cash on hand 20,833,677 19,200,080Due from central bank of egypt (mandatory reserve) 1,032,632,805 552,568,058Non bearing interest balances 1,053,466,482 571,768,138
15. Due from banks
30 June 2011 30 June 2010EGP EGP
Current accounts 38,997,563 40,093,787Deposits 651,818,538 746,797,791
690,816,101 786,891,578Central bank 240,487,566 234,446,090Local banks 21,173,238 36,967,912Foreign banks 429,155,297 515,477,576
690,816,101 786,891,578
Nonbearing interest balances 58,548,563 58,822,787Fixed bearing balances 632,267,538 728,068,791
690,816,101 786,891,578Current balances 690,816,101 786,891,578
83
16. Treasury bills and other governmental notes
30 June 2011 30 June 2010EGP EGP
Treasury bills and other governmental notes 939,174,397 610,265,221Treasury Bills (REPO) (112,000,000) 0Treasury Bills And Other Egyptian Governmental Notes 827,174,397 610,265,221Represented in:91 days Maturity 100,000,000 269,575,000182 days Maturity 244,800,000 79,525,000364 days Maturity 643,900,000 286,000,000Subtract:Unearned income (49,525,603) (24,834,779)Total (1) 939,174,397 610,265,221REPOS:
REPOS (112,000,000) --
Total (2) (112,000,000) --Total (1+2) 827,174,397 610,265,221
17. Trading Financial Assets
30 June 2011 30 June 2010EGP EGP
Investment Funds:Investment in EDBE first fund 22,735,754 25,437,954Arab investment bank fund -- 10,029,470Man ahl guaranteed future 3rd fund 13,085,242 11,669,465Investments portofolios managed by others 154,916,582 160,889,159
190,737,578 208,026,048Represented in:Listed in stock market 154,916,582 160,889,159Unlisted in stock market 35,820,996 47,136,889
190,737,578 208,026,048
• According to the Central Bank of Egypt decision on 13-06-2011, financial assets held for trading which
no longer the purpose of the acquisition is the sale or repurchase in the near future (although it may be
acquired or incurred originally for the purpose of selling or repurchasing in the near future) have been
reclassified to financial assets available for sale by the fair value as at the reclassification date as the bank
has the intention and ability to hold for the foreseeable future. Hence reclassification has been made for the
84
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
following items: International Agricultural Crops by amount of EGP 259,104, Citadel Capital by amount of
EGP 40,959,641 and Olympic Group by amount of EGP 5,555,063.
• The total fair value losses that would have been recognized if they were not reclassified TO available for
sale investments amounted to EGP 25,878,085 as follows: International Agricultural Crops for EGP 16,468
- Citadel Capital for EGP 24,862,454 and Olympic Group for EGP 999,162.
18. loans and overdrafts for customers
30 June 2011 30 June 2010EGP EGP
Discounted documents 59,082,493 65,731,938Loans to customers 7,220,797,844 7,478,723,431
7,279,880,337 7,544,455,369Subtract:Loans Provision (838,085,196) (763,725,423)
6,441,795,141 6,780,729,946
Loans Provisions Analysis:
30 June 2011 30 June 2010Specific
ProvisionsCollective Provisions Total Specific
ProvisionsCollective Provisions Total
EGP EGP EGP EGP EGP EGP
Balance at the beginning of the year 629,941,839 133,783,584 763,725,423 595,191,969 141,521,003 736,712,972
Formed during the year 46,000,000 --- 46,000,000 15,262,875 --- 15,262,875Collections from loans previously written-off --- 10,103,656 10,103,656 11,000,000 2,653,567 13,653,567
Transferred from(to)specific provision 38,081,937 (38,081,937) --- 9,212,582 (9,212,582) ---
Transferred from(to)other provisions 15,316,883 --- 15,316,883 --- (757,118) (757,118)
Foreign currency revaluation difference 16,177,386 2,400,342 18,577,728 (210,444) (421,286) (631,730)
Used Provision during the year (15,638,494) --- (15,638,494) (515,143) --- (515,143)
Balance at the end of the year 729,879,551 108,205,645 838,085,196 629,941,839 133,783,584 763,725,423
85
19. Financial Investment
30 June 2011 30 June 2010EGP EGP
Available for sale investment:a- Debt instruments-fair value:Listed in stock market 1,601,284,409 1,162,005,909Unlisted in stock market -- 316,862,655Equity instruments-fair value:Listed in stock market 157,458,263 130,282,191Unlisted in stock market 421,459,504 509,433,971Total available for sale investment 2,180,202,176 2,118,584,726
b- Held to maturity investment:Debt instruments at cost:Listed in stock market 50,652,082 --Unlisted in stock market 11,938,000 8,026,815Investment fund 17,482,051 22,691,585
80,072,133 30,718,400Total held to maturity investment 2,260,274,309 2,149,303,126Current balances 629,551,237 582,375,271Non-current balances 1,630,723,072 1,566,927,855
2,260,274,309 2,149,303,126Fixed interest debt instruments 1,236,958,090 974,977,885Variable interest debt instruments 426,916,401 511,917,494
1,663,874,491 1,486,895,379
Profit (losses) from financial investment30 June 2011 30 June 2010
EGP EGPProfit from selling available for sale investment 433,397 8,637,708(Losses) from impairment of available for sale stocks (40,113,768) (59,447,635)Profit from selling investment in subsidiaries and associates 86,428,614 115,683,328Profit from selling treasury bonds 1,110,683 527,000Profit from selling held to maturity investment -- 237,000
47,858,926 65,637,401
86
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
20. Financial investment in subsidiaries and associated companies
30 June 2011 30 June 2010EGP % EGP %
Participations in subsidiaries companies’ capitalEgypt capital holding company 374,981,250 99,995 199,990,000 99,9Egyptian company for exports guarantee 176,382,811 70,553 176,381,800 70,55Participations in associated companies’ capitalPhilae company for floating hotels -- -- 1,516,666 27,50
551,364,061 377,888,466Represented in:Financial investments listed in stock market -- --Financial investments unlisted in stock market 551,364,061 377,888,466
551,364,061 377,888,466
Reclassification of investments in associated companies to financial investments available for sale occurs
when the bank loses effective influence on them through loss of ability to participate in the financial and
operative policies or when a change occurs at the level of absolute or relative ownership or that The Bank
loses the effective influence as per a contractual agreement.
The following companies were re-classified due to the last sale operations conducted by The Bank for its
shares related to anumberof its contributions: The Egyptian Tourism Development Company was amounted
to EGP 4,214. The Touristic Investment Company (Sahl Hashish) was amounted to EGP 4,345. The Egyptian
Company for Tourism and Services (Safir) was amounted to EGP 10,053.
21. Intangible assets
30 June 2011 30 June 2010EGP EGP
Net book value at the beginning of the year 4,259,107 9,398,696Additions 25,272,635 --Amortization (11,464,238) (5,139,589)Net book value at the end of the year 18,067,504 4,259,107
87
22. Other assets
30 June 2011 30 June 2010EGP EGP
Accrued revenues 92,838,608 85,016,797Prepaid expenses 7,511,849 3,340,558Advances for purchase of fixed assets 55,451,555 32,719,273Acquired assets(Net) 394,198,752 383,685,393Insurances and trusts 947,870 951,014Miscellaneous debt balances 98,083,864 98,434,227
649,032,498 604,147,262
Valuation of the assets acquired by the bank in settlement of debts is recorded in accordance with the related
Central Bank of Egypt regulations. In case the assets’ fair value falls below the value at which such assets
have been acquired by the bank on the balance sheet date, the difference is charged to other expenses in the
income statement. In case of an increase in the fair value, such increase is recognized in the income statement
to the extent of revaluation losses recognized in the income statement for previous financial periods.
Accrued revenues are represented in:30 June 2011 30 June 2010
EGP EGPAccrued income for medium term loans 34,759,780 42,538,287Accrued income for due from banks 488,836 176,087Accrued income for financial investments 57,589,992 42,302,423
92,838,608 85,016,797
Others Fixed Assets are represented in (Net):
30 June 2011 30 June 2010EGP EGP
Type writers and calculators 52 88Safe boxes 2,631 2,253Total 2,683 2,341
88
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
23. F
IXED
ASS
ETS
(NET
)
Part
icul
ars
Land
Prem
ises
Com
pute
rsVe
hicl
esFi
xtur
e an
d im
prov
emen
tsEq
uipm
ent
Furn
iture
Oth
ers
Tota
l
EGP
EGP
EGP
EGP
EGP
EGP
EGP
EGP
EGP
Cos
t at t
he b
egin
ning
of
the
year
14,2
73,9
1198
,619
,387
40,5
21,3
197,
909,
590
81,8
08,8
655,
527,
468
4,50
0,13
33,
828,
526
256,
989,
199
Add
ition
s du
ring
the
year
----
--1,
002,
050
15,5
26,0
3431
7,26
151
4,12
744
6,82
217
,806
,294
Dis
posa
ls d
urin
g th
e ye
ar--
----
2,42
8,57
013
3,42
22,
244
--43
02,
564,
666
Cos
t at t
he e
nd o
f th
e ye
ar (1
)14
,273
,911
98,6
19,3
8740
,521
,319
6,48
3,07
097
,201
,477
5,84
2,48
55,
014,
260
4,27
4,91
827
2,23
0,82
7
Acc
umul
ated
de
prec
iatio
n at
the
begi
nnin
g of
the
year
--24
,549
,782
24,6
52,1
654,
779,
573
45,2
94,4
983,
115,
670
1,93
4,47
21,
487,
187
105,
813,
347
Dep
reci
atio
n ch
arge
d fo
r the
yea
r--
2,46
3,10
21,
341,
298
1,27
9,64
211
,086
,470
333,
107
340,
840
105,
473
16,9
49,9
32
Acc
umul
ated
de
prec
iatio
n fo
r di
spos
als
----
--2,
406,
970
133,
422
2,22
4--
430
2,54
3,06
6
Acc
umul
ated
de
prec
iatio
n at
the
end
of th
e ye
ar (2
)--
27,0
12,8
8425
,993
,463
3,65
2,24
556
,247
,546
3,44
6,53
32,
275,
312
1,59
2,23
012
0,22
0,21
3
Net
boo
k va
lue
at
the
end
of th
e ye
ar
(1-2
)14
,273
,911
71,6
06,5
0314
,527
,856
2,83
0,82
540
,953
,931
2,39
5,95
22,
738,
948
2,68
2,68
815
2,01
0,61
4
Net
boo
k va
lue
at
the
begi
nnin
g of
the
year
14,2
73,9
1174
,069
,605
15,8
69,1
543,
130,
017
36,5
14,3
672,
411,
798
2,56
5,66
12,
341,
339
151,
175,
852
89
24. Due to banks
30 June 2011 30 June 2010EGP EGP
Current Accounts 93,068 93,788Deposits 392,841,675 564,704,885
392,934,743 564,798,673Local Banks 154,174,743 493,608,673Foreign Banks 238,760,000 71,190,000
392,934,743 564,798,673Non Bearing Interest Balances 93,068 93,788Fixed Bearing Interest Balances 392,841,675 564,704,885
392,934,743 564,798,673Current Accounts 392,934,743 564,798,673
25. Customers Deposits
30 June 2011EGP
30 June 2010EGP
Demand Deposits 1,781,049,204 986,177,519Time Deposits 4,456,229,675 4,088,945,422Saving deposits and certificates of deposit 3,429,275,371 3,338,591,777Other Deposits 168,580,017 339,166,323
9,835,134,267 8,752,881,041Nonbearing interest balances 961,343,702 744,796,332Floating Bearing interest balances 1,590,579,082 2,863,694,287Fixed bearing interest balances 7,283,211,483 5,144,390,422
9,835,134,267 8,752,881,041
90
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
26. Other loans
Particulars Maturity date
Rate%
Balances as of
30/06/2011EGP
Balancesas of
30/06/2010EGP
European Investment Bank loan-1 (Contributions) 31/10/2013 -- 10,892,596 10,892,596
European Investment Bank loan-2 (Contributions) 31/10/2013 -- 12,311,064 11,746,350
European Investment Bank loan 15/3/2013 %0.46 48,035,147 68,747,638
National Investment Bank loan (Seventh) 30/6/2012 %6 1,000,000 2,000,000
National Investment Bank loan (Eighth) 30/6/2011 %6 -- 18,333,333
National Investment Bank loan (Ninth) 30/6/2012 %6 15,833,333 31,666,667
National Investment Bank loan (Tenth) 30/6/2013 %6 45,000,000 67,500,000
National Investment Bank loan (Eleventh) 30/6/2014 %6 75,000,000 100,000,000
National Investment Bank loan (Twelfth) 30/6/2015 %6 100,000,000 125,000,000
Commercial International Bank (ASDP) 9/7/2013 -- 41,241,071 46,303,929
European Investment Bank loan – 2 $ 15/9/2016 %0.71 45,244,444 51,017,987
European Investment Bank loan – 2 EURO 15/9/2016 %1.573 124,527,390 119,156,718
Arab Trade Financing Program 15/6/2012 %1.45631 104,457,500 28,476,000
Wells Fargo Bank Loan 11/2/2011 -- -- 284,760,000
Arab investment company (TAIC) 26/7/2010 -- -- 113,904,000
Arab international bank 21/7/2013 %2.8031 179,070,000 --
802,612,545 1,079,505,218
Current Balances 212,307,827 602,478,127
Non-current Balances 590,304,718 477,027,091
802,612,545 1,079,505,218
91
27. Other liabilities
30 June 2011EGP
30 June 2010EGP
Accrued Interest 57,913,450 48,705,063Prepaid Revenues 1,670,058 4,625,216Accrued Expenses 20,309,253 7,731,829Accrued Taxes and Insurances 7,438,564 4,934,360Dividend Payable 105,388 154,005,388Sundry Credit Balances 21,525,439 45,071,969
108,962,152 265,073,825
28. Other Provisions30 June 2011
Balance at the
beginning of the year
Transferred from(to)
loans provision
Transferred from other resources
Foreign currencies revaluation differences
Provision used
during the year
Balance at the end of the year
EGP EGP EGP EGP EGP EGP
Provisions for assets reverted to bank in settlement of debts
2,193,320 --- 786,343 --- (2,979,663) ---
Provision for claims 27,918,846 (15,061,599) --- 1,378 (212,692) 12,645,933
Provision for contingent liabilities 10,563,175 (255,285) --- 444,521 --- 10,752,411
40,675,341 (15,316,884) 786,343 445,899 (3,192,355) 23,398,344
92
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
30 June 2010
Balance at the
beginning of the year
Transferred from(to)
loans provision
Transferred from other resources
Foreign currencies revaluation differences
Provision used
during the year
Balance at the end of the year
EGP EGP EGP EGP EGP EGP
Provisions for assets reverted to bank in settlement of debts
--- --- 2,193,320 --- --- 2,193,320
Provision for claims 29,918,348 --- --- 498 (2,000,000) 27,918,846
Provision for contingent liabilities 10,022,523 757,117 --- (216,465) ---- 10,563,175
39,940,871 757,117 2,193,320 (215,967) (2,000,000) 40,675,341
29. Deferred Taxes LiabilitiesDeferred income tax was fully calculated on the deferred tax difference according to balance sheet
method using a tax rate of 20% for the current financial year.
Deferred tax asset and liabilities are offset against each other to the extent this is a legally enforceable right
when the deferrals belong to the same tax entity.
30 June 2011 30 June 2010EGP EGP
Balances of assets and liabilities deferred taxes:Deferred taxes liabilities balances:Fixed assets 7,782,373 7,921,568Taxes differences (Special reserve) 2,535,754 2,535,754
10,318,127 10,457,322
93
30. Capital and Reserves30.1 CapitalThe authorized capital amounted to LE. 2,000,000,000. The issued and paid up capital amounted to LE.
1,440,000,000 as of June 30, 2011, distributed over 144,000,000 common shares with a par value of EGP 10
each.
An increase of the issued and paid up capital by amount of 240,000,000 EGP to reach amount of 1,440,000,000
EGP has been approved by the General Assembly Meeting On 29/09/2010, such increase took place from
reserves and the retained earnings as of 30/6/2010. And on 9/12/2010, the trade on stocks took place in the
Stock Market, such increase has been recorded in the Central Bank of Egypt on 16/1/2011.
30.2 ReservesIn accordance with the bank’s statute, a 10% of annual net profit is transferred to the legal reserve such
transfer is possible to be ceased when the legal reserve reaches 50% of issued capital.
Reserves on 30 June 2011 represented in the following:30 June 2011 30 June 2010
EGP EGPGeneral banking risk reserve 20,537,124 20,537,124Banking risk reserve – acquired assets 4,799,222 --Legal reserve 753,554 98,753,554Fair value reserve-available for sale investment (30,583,868) 4,834,251Special reserve 35,118,940 35,118,940Capital reserve 1,125,485 1,125,485
31,750,457 160,369,354Reserves are as follows:A - General Banking Risk ReserveBeginning balance 20,537,124 --Transferred from retained earnings -- 20,537,124
20,537,124 20,537,124
CBE regulations require that general Banking risk reserve shall be formed to meet unexpected risks. This reserve is not matter of distribution unless obtaining CBE approval.
B - Legal ReserveBeginning balance 98,753,554 45,426,559Transferred from retained earnings (98,000,000) 53,326,995
753,554 98,753,554C - Special ReserveBeginning balance 35,118,940 2,440,170Transferred from retained earnings -- 12,678,770
35,118,940 35,118,940
94
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
D - Capital ReserveBeginning balance 1,125,485 699,660Transferred from retained earnings -- 425,825
1,125,485 1,125,485E - Fair value reserve - available for sale investmentBeginning balance 4,834,251 (77,325,517)Transferred from retained earnings (35,418,119) 82,159,768
(30,583,868) 4,834,251E - Retained earningsBeginning balance 170,221,262 74,683,594Net profit of the year 161,406,788 302,853,475Previous year dividends -- (153,900,000)Transferred to banking risk reserve -- (20,537,124)Transferred to legal reserve -- (28,362,151)Transferred to capital reserve -- (425,825)Transferred to special reserve -- (12,678,770)The effect of change in accounting policies -- 8,588,063Capital increase (142,000,000) --
189,628,050 170,221,262
31. Shareholders’ DividendsDividends are recognized when the general assembly of shareholders approves them. Dividends include the
employees’ profit share and the board of directors’ remuneration by deducting from the retained earnings as
of June 30,2011.
32. Cash and cash equivalentFor the purpose of presenting the cash flow statement, cash and cash equivalents include the following
balances maturing within less than 3 months from the date of acquisition
30 June 2011 30 June 2010EGP EGP
Cash and due from central bank of Egypt 20,833,677 19,200,080Due from banks 662,770,606 766,474,771Treasury bills and other governmental notes 100,000,000 269,575,000
783,604,283 1,055,249,851
95
33. contingent liabilities and commitmentsA) Legal claims
There are a number of existing cases filed against the bank in 30/6/2011 without provision as it’s not expected
to make any losses from it.
B) Capital commitments
The capital commitments for the financial investment reached on the date of financial position L.E. 248,909
thousands as follows: (In EGP Thousands)
Investment value Paid RemainingAvailable for sale financial investments 320,702 196,787 123,915
Financial investments in associates co. 499,975 374,981 124,994Total 820,677 571,768 248,909
C) Loans, facilities and guarantees commitments
30 June 2011EGP
30 June 2010EGP
Letters of guarantee 1,218,785,701 1,168,497,246Letters of credit (import) 884,732,153 802,830,953Letters of credit (export-confirmed) 7,245,435 29,133,074Shipping documents (export) 166,551,878 145,569,771Outstanding forward contracts 184,213,806 206,823,534
2,461,528,973 2,352,854,578
34. Related party transactionsA number of banking transactions are entered into with related parties in the normal course of business. These
include loans, deposits, and foreign currency transactions.
Related party transactions are represented as follows:
A) Shareholders:30 June 2011 30 June 2010
EGP EGPAssetsDue from banks 79,354,888 119,454,689LiabilitiesDue to banks -- 28,476,000Long term loans 236,833,333 344,500,000
96
Notes to the Unconsolidated Financial StatementsAs at 30 June 2011
B) Board of directors benefits
30 June 2011 30 June 2010EGP EGP
Wages and short term benefits 14,491,475 11,901,091
35. Tax status
• The Bank is subject to law No. 95 of 1983 and its amendments, so it is exempted from corporate tax for five
years starting from the subsequent year to the startup of operations, which was
• February 3, 1985. Therefore, starting from the year 1990/1991, the Bank was subjected to corporate tax.
• The Bank’s branch at 10th of Ramadan City started its activity during 1989/1990, and obtained an approval
of ten years tax exemption for the branch starting January 1, 1990.
• The Bank’s branch at 6th of October City started its activity during 1997, and obtained an approval of ten
years tax exemption for the branch starting July 1, 1997 till June 30, 2007.
• The Bank has paid all of its Corporate & Movable Taxes up to June 30, 2005 based on a mutual final
agreement with the Tax Authority (Large Taxpayer Center), as to years 2005/2006, 2006/2007 have been
examined resulted in null as to corporate tax & other tax bases have been transferred to internal committee.
• An amount of EGP 37 million represents the paid tax is eligible to the bank according to the decision of the
dispute settlement committee which stated that the bank has the right not to be subjected to corporate tax
on capital issuance premium of year 1997.
• The Stamp Tax has been examined till 31/12/2005 for the majority of bank branches and the remaining
branches are under examination. The Bank has paid all stamp taxes as per Taxes claims.
36. Mutual Funds
A) Export Development Bank of Egypt first mutual fund (The Expert fund).
The fund is one of banking activities authorized under the capital market law No. 95 for the year 1992 and its
executive regulations, HC for securities and investment is managing this fund, the fund certificates reached
1million certificate at foundation worth of L.E.100 million, out of these, 50 thousand of the certificates were
allocated to the bank to undertake the funds’ activity (with L.E. 100 nominal value).
The number of the outstanding certificates on the date of financial position was 911,180 certificates as the
97
number of owned certificates by the bank reached 437,573 certificates. The redemption value per certificate
as of June 30, 2011 amounted to L.E. 63.44 and according to the funds’ management contract and its
prospectus, the bank shall obtain fee and commission for supervision on the fund and other managerial
services rendered by the bank, total commissions as at 30 June 2011 including well performance
commission amounted to L.E.894, 295.66 presented under the item of “fee and commission income/other
fees” caption in the income statement.
B) Export Development Bank of Egypt Second Monetary fund.
The fund is one of banking activities authorized under the capital market law No. 95 for the year 1992 and
its executive regulations, Delta Rasmala Securities is managing this fund, the fund certificates Reached
2,867,466 certificates at foundation worth of L.E. 286,746,600, out of these, 143,400 of the certificates
were allocated to the bank to undertake the funds’ activity (with L.E. 100 nominal value). The number of the
outstanding certificates on the date of financial position was 5,230,577 as the number of owned certificates
by the bank reached 104,612 certificates. The redemption value per certificate as of June 30,2011 amounted
to L.E. 144.0761, total commissions amounted to L.E. 4,442,808.42 as at 30 June 2011 Presented under the
item of “fee and commission income/other fees” caption in the income statement
Maged Fahmy Attiya
Chairman
98
Note 30 June 2011EGP
30 June 2010EGP
AssetsCash and due from Central Bank of Egypt 1,053,466,482 571,768,138Due from banks 690,816,101 786,891,578Treasury bills and other governmental notes 880,687,313 640,570,794Trading financial assets 231,932,178 268,662,067Loans to customers 6,429,475,927 6,762,711,434Financial Derivatives 0 163,722,545Financial Investments: -Available for sale 2,244,067,673 2,137,939,062 -Held to maturity 305,909,709 142,793,852Financial investments in subsidiaries and associated co. (3) 198,252,507 43,789,863Intangible assets 18,067,504 4,259,107Other assets 688,519,636 642,846,368Fixed assets 163,033,257 162,883,692Total Assets 12,904,228,287 12,328,838,500Liabilities and shareholders’ equityLiabilitiesDue to banks 392,934,743 564,798,673Customers’ deposits 9,705,000,054 8,521,221,428Financial Derivatives 0 164,195,253Debt instruments 50,000,000 50,000,000Other loans 802,612,545 1,079,505,218Other liabilities 182,708,368 355,227,641Other provisions 52,800,891 69,531,849Deferred tax 10,318,127 10,457,322Total Liabilities 11,196,374,728 10,814,937,384Shareholders’ equityPaid up capital (4) 1,440,000,000 1,200,000,000Reserves (4) 44,586,846 169,973,835Retained Earnings 132,775,250 57,597,383
1,617,362,096 1,427,571,218Minority interest 90,491,463 86,329,898Total Shareholders’ equity 1,707,853,559 1,513,901,116Total Liabilities and Shareholders’ equity 12,904,228,287 12,328,838,500Contingent liabilities and CommitmentsLiabilities against letters of guarantee, documentary credits and other commitments 2,461,528,973 2,352,854,578
• The accompanying notes are an integral part of these financial statements.
Maged Fahmy AttiyaChairman
Bank’s Auditors
Hassanein Kamel AhmedR.A.A. 2409
Fellow of Egyptian Tax Society Capital Market Authority. R(2)
Zarook &Co. RODL
Fatma Mohamed Salah El-Din El-Menshawey
Central Auditing Organization
Consolidated Financial StatementsAs at 30 June 2011
99
Consolidated Balance SheetAs at 30 June 2011
30 June 2011 30 June 2010EGP EGP
Interest and similar income 852,681,645 850,525,801
Interest and similar expenses (570,581,397) (531,176,641)
Net Interest Income 282,100,248 319,349,160
Fees and commissions Income 105,233,455 111,777,528
Fees and commissions Expenses (5,094,293) (3,237,218)
Net income from fees & commissions 100,139,162 108,540,310
Dividends Income 14,667,275 20,454,073
Net Trading Income 51,741,717 28,712,959
Profit from Financial Investments (38,569,688) (50,045,927)
(Impairment) of credit losses (42,522,134) (15,262,875)
Administrative expenses (233,553,651) (207,120,268)
Other operating income (expense) 9,334,938 57,577,460
Net profit before Tax 143,337,867 262,204,892
Income Tax (38,350,087) (48,543,528)
Deferred tax 41,281 (683,840)
Net profit for the year 105,029,061 212,977,524
Represented in:
Bank’s shareholders’ equity 96,634,713 205,377,953
Minority interest 8,394,348 7,599,571
105,029,061 212,977,524
Earnings per share 0.53 1.43
• The accompanying notes are an integral part of these financial statements.
Maged Fahmy Attiya
Chairman
100
1. General information
Export Development Bank of Egypt (Egyptian Joint Stock Company) was established on July 30, 1983 under
Law No. 95 of 1983 and its executive regulations. The objective of the Bank is to encourage, develop Egyptian
export activities, and assist in developing agricultural, industrial, and commercial and service exporting
sectors, also to provide all investment banking services in local and foreign currencies through its head office
and fifteen branches
2. Summary of accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation consolidated financial statementsThe consolidated financial statements for the bank and its subsidiaries have been prepared in accordance
with Egyptian Accounting Standards. The subsidiaries companies are entirely included in the consolidated
financial statements; those companies are entities that the bank has -direcly or indirectly- more than half
of the voting rights or has the ability to control the financial and operating policies of an enterprise. The
consolidated financial statements of the bank can be obtained from the bank’s management. The investments
in subsidiaries and associate companies are disclosed in the unconsolidated financial statements of the bank,
accounting for subsidiaries and associates in the financial statements are recorded by cost after deducting
the impairment losses.
2.2 Basis of Consolidation
2.2.1Subsidiaries
Subsidiaries are all entities over which the Bank has owned directly or indirectly the power to govern the
financial and operating policies generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Bank has the ability to control the entity.
Notes to the Consolidated Financial StatementsAs at 30 June 2011
101
Subsidiary companies consolidated by the bank (the holding co.) represented in the following as at 30-6-2011:
30 June 2011 % 30 June 2010 %EGP EGP
Export Credit Guarantee Company of Egypt 176,382,811 70.55 176,381,800 70.55
Egypt Capital Holding Company* 375,000,000 99.99 199,990,000 99.99
*The company’s Values represent the period from the incorporation date till 30 June 2011(financial year) as it
is the first financial year for the company.
2.2.2The basis of the consolidation is as follows:
Eliminating all balances and transactions between the bank and group companies.
3. Financial investment in subsidiaries and associated companies
30 June 2011 30 June 2011EGP EGP
Participations in subsidiaries companies’ capitalPhilae Company for Floating Hotels 1,533,674 1,516,666Egyptian Tourism Development Co. 170,786,843 29,426,902Egyptian Company for Tourism and Services (Safeir El
Hurghada)25,931,990 12,846,295
198,252,507 43,789,863Represented in:Financial investments listed in stock market 0 0Financial investments unlisted in stock market 198,252,507 43,789,863
198,252,507 43,789,863
4. Paid Up Capital and Reserves
4.1 Capital
The authorized capital amounted to LE. 2,000,000,000. The issued and paid up capital amounted to LE.
1,440,000,000 as of June 30, 2011, distributed over 144,000,000 common shares with a par value of EGP 10
each.
An increase of the issued and paid up capital by amount of 240,000,000 EGP to reach amount of 1,440,000,000
EGP has been approved by the General Assembly Meeting On 29/09/2010, such increase took place from
reserves and the retained earnings as of 30/6/2010. And on 9/12/2010, the trade on stocks took place in the
Stock Market; such increase has been recorded in the Central Bank of Egypt on 16/1/2011.
102
Notes to the Cnsolidated Financial StatementsAs at 30 June 2011
4.2 Reserves
In accordance with the Bank’s statute, a 10% of annual net profit is transferred to the legal reserve; such
transfer is possible to be ceased when the legal reserve reaches 50% of issued capital.
Reserves on 30 June 2011 represented in the following:
30 June 2011 30 June 2010EGP EGP
General banking risk reserve 20,537,124 20,537,124Banking risk reserve – acquired assets 4,799,222 --Legal reserve 5,523,831 101,703,024General reserve 8,066,112 6,655,011Fair value reserve-available for sale investment (30,583,868) 4,834,251Special reserve 35,118,940 35,118,940Capital reserve 1,125,485 1,125,485
44,586,846 169,973,835
5. Comparative Figures
Comparative figures were reclassified to conform to the current year presentation.
Maged Fahmy Attiya
Chairman
Branches
105
Head Office108, Mohy El Din Abu El Ezz Street, Dokki - Giza
Tel: +202-37619006
Fax: +202-33385938 / 40
Greater Cairo Branches: Cairo Branch
10, Talaat Harb Street, Evergreen Building
Tel: +202-25777003
Fax: +202-25790394
Zamalek Branch9, Shafik Mansour Street, Zamalek
Tel: +202-27355411
Fax: +202-27367471
Heliopolis Branch11, El Hegaz Street, Heliopolis
Tel: +202-24531994
Fax: +202-24558125
El Orouba Branch1, El Obour Buildings, Salah Salem Street
Tel: +202-22625477
Fax: +202-22625465
Nasr City Branch4 El Nasr Street cross Makram Ebeid, Shop No.
3 - 4
Tel: + 202-22757366 – 22758456 - 22710261
Fax: +202-22758976
Saint Fatima Branch: 78, Abdel Aziz Fahmy St. – Saint Fatima Square -
Heliopolis
Tel: +202-26438760 / 61 / 62 / 64
Fax: +202-25774553
Giza Branches: Main Branch
108, Mohy El Din Abu El Ezz Street, Dokki
Tel: +202-33385944
Fax: +202-33385942
Mosadak Branch71, Mosadak Street, Dokki
Tel: +202-33386810
Fax: +202-33386814
Nile Branch6, Ibn El Arhab Street
Tel: +202-35711852
Fax: +202-35711769
Sheikh Zayed BranchUnit no. 28, Zone no. 31, Entrance 2, Crazy Water
Axis, Sheikh Zayed, 6th of October
Tel: +202-38518391
Fax: +202-38518392
Faisal Branch43 El Malek Faisal Street
Tel: + 202-37423570 / 76 / 93 / 96 / 97
Fax: +202-37423603
Alexandria Branches: Selsela Branch
95, 26th of July Road, Selsela Tower - Azarita
Tel: +203-4868488
Fax: +203-4869206
Roushdy Branch16, Syria Street, Roushdy
Tel: +203-5450018
Fax: +203-5450009
Branches and ATMs
106
Smouha BranchContinental Tower – Fawzy Moaz cross Road 295
– Smouha
Tel: +203-4293700 / 800 – 4204077 – 4268393
Fax: +203-4201177
Sidi Bishr Branch557 El Gueish Road – Montazah
Tel: +203-5522061 / 2 / 3
Fax: +203-5522064
Industrial Zones Branches: 6th of October Branch
Part 3/1 Center Axis – Banks’ District
Tel: +202-38330599
Fax: +202-38330570
10th of Ramadan BranchBlock #2, Banks Zone, City Centre
MC1, 10th of Ramadan
Tel: +2015-356141-6
Fax: +2015-356140
Obour Branch6, 7 & 8 City Club Fence – Obour City
Tel: + 202-46105071
Fax: +202-46105072
Borg El Arab BranchServices Zone, 5th “Mogawra” in front of Borg El
Arab Municipality Building
Tel: +203-4599511 / 15
Fax: +203-4599510
Governorates Branches: Mansoura Branch
Ragaa El Rahman Tower (A) El Mashaya El
Sofleya St. Corner of Hagrass St.
Tel: +2050-2267435/39/53/60
Fax: +2050-2264711
Damietta BranchSaad Zaghloul Basha St. No. 3 Cornish El Nil –
Damietta 1st section
Tel: +2057-2228635 / 40 / 41
Fax: +2057-2228639
NB: ATMs are available in all EDBE branches as well as
the following off-site locations:
Cairo2nd floor - ATM center phase 2,
Nasr CityCity Stars Mall
CairoTerminal 3 - Arrival Hall, HeliopolisCairo Airport 1
CairoTerminal 1 - Arrival Hall 3, HeliopolisCairo Airport 2
Giza
Entrance 20 beside Spinney’s entrance, 6th of
October
Mall of Arabia
Giza
ATM area -ground floor - ATM centerCairo/Alex Desert
Road
Dandy Mall
QaliubiaATM area -ground floor, Obour CityGolf City Mall
MansouraDelta University
Branches and ATMs