Silver Jubilee 1983-2008 - EBE Bank · Mr. Salah el-Din Ahmed Fahmy Acting Chairman, 1995-1996...

Silver Jubilee 1983-2008

Export Development Bank of Egypt

Annual Report

2008

25 years of remarkable growth

1983-2008

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Salah Taher, 36x46 cm., oil on hardboard, undated.

Contents

Letter from the Chairman 5

EDBE Chairmen (1983-2008) 8

Board of Directors 9

Profile 10

Global Economy 2007/2008 15

Egyptian Economy 2007/2008 16

Business Review 18

Branches 25

Auditors’ Report 26

Balance Sheet 27

Income Statement 28

Statement of Profit Appropriation 29

Statement of Cash Flows 30

Statement of Changes in Shareholders’ Equity 31

Notes to the Financial Statements 32

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Paintings are from the EDBE Collection.

Letter from the Chairman

As we celebrate our silver jubilee, it gives me great honor to present the Annual Report and Financial Statementsof the Export Development Bank of Egypt for the year 2007/2008, marking its 25th years of operation.

We recorded important achievements during the year 2007/2008. The bank's continued growth and prosperityare the outcome of adopting progressive and innovative yet prudent policies within the institution. Constantawareness of international as well as internal and external variables affecting the banking industry helped thebank achieve its goals during 2007/2008, thus guaranteeing growth and preserving shareholders' interests, whilemaintaining a strong reputation in serving our clients.

During the year, the Egyptian economy achieved a healthy growth rate exceeding 7%, mainly due to theeconomic reforms program that started in 2004. The reforms aimed to achieve a sustainable growth necessary toimprove the living standards of the Egyptian population. Another target of these reforms was promoting exports.The economic program included reforming tax and duties policies, privatization, restructuring of the bankingsector and strengthening the monetary and fiscal policies.

In its attempt to strengthen the bank's financial standing, management opted to bridge the gap betweenprovisions and non-performing loans. This full provisioning process, which took place in 2005/2006, resulted in anet loss of L.E 158 million in the same year. By virtue of management insight as well as conservative policies, theloss was converted into a net profit of L.E 7.5 million in 2006/2007. Currently, Export Development Bank has oneof the cleanest loan portfolios amongst Egyptian banks.

The year 2007/2008 witnessed outstanding performance achievement. Net profits reached a record level of L.E310.7 million. Total assets grew by 52.3% while the loan portfolio increased by 39%. Volume of exportsoperations financed by the bank reached LE 3.1 billion. Overall banking operations exceeded LE 9.7 billion.

In line with our strategy of long term and sustainable growth, we are currently implementing a geographicexpansion plan of our branch network. New branches will be launched to service different geographic locationsthroughout the country. This will ensure extending our services and support to all our clients.

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In order to sustain our future expansion plan, the bank increased its capital base during the year 2007/2008.Authorized capital reached L.E 2 billion, whereas paid-up capital amounted to LE 1 billion. This could not havebeen achieved without the support of our shareholders.

In our effort to improve our financial standing and integrity we implemented strict quality control policiesincluding risk management and compliance procedures, as well as corporate governance principles. This was toensure the bank's readiness to comply with the regulatory authorities' dynamic requirements as well as Basel IIstandards.

Being our most valuable asset, human resources have been a major area of priority. Promoting the technical andother work skills of our staff is an on-going process. Constant training together with recruiting high caliberprofessionals, where needed, provide the cornerstone of our overall management strategy.

Finally, on the occasion of our silver jubilee, I extend my sincere thanks and appreciation to my predecessors fortheir contributions to our bank. I would also like to express my thanks to our shareholders, board members andour clients for their support and trust. A special word of thanks goes to our management and our staff for theirgood work and dedication.

We look forward to the future, well prepared to sustain with our achievements and success.

Hisham Ahmed Hassan Youssef

Chairman

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Salah Taher, 53x60 cm., oil on hardboard, 1991.

Celebrating its 25th Anniversary, EDBE recognizes the work of its successive chairmen and deputy chairmen,whose experienced leadership contributed to the growth and success of our bank.

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Dr. Hazem Abdel Aziz el-BeblawiChairman, 1983-1995

Mr. Salah el-Din Ahmed FahmyActing Chairman, 1995-1996Deputy Chairman, 1989-2003

Mr. Mahmoud M. MahmoudChairman, 1996-2003

Mr. Hisham Ahmed Hassan YoussefChairman, 2006-to date

Mr. Mohamed Sherif SharafChairman, 2003-2006

Mrs. Ola Abdel Aziz GadallahDeputy Chairman, 2003-2006

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EDBE Board Members(from right) Front row: Mrs. Dalia Mostafa Kamal, representing National Investment BankDr. Mohamed El Saeed El Dakak, Specialist Board MemberMr. El Sayed Abdel Aziz Eid, representing National Bank of EgyptMr. Hisham Ahmed Hassan Youssef, ChairmanDr. Mohamed Hany Nayel Barakat, Specialist Board MemberMr. El Sayyed Zahran Aly Mostafa, representing Banque du CaireMr. Sayed Aly Osman Farrag, representing Banque MisrDr. Faten Ahmed Hammouda, General Manager, Investment Division, Export Development Bank of EgyptBack row:Mr. Ahmed Abdel Rehim El Sayyad, representing National Investment BankMr. Abdel Halim Mohmed Ibrahim, representing National Investment BankDr. Samir Abdel Sayed Tanagho, representing the Private SectorMr. Maged Fahmy Attia, General Manager, Risk Division, Export Development Bank of Egypt

HE Rashid Mohamed RashidMinister of Trade and Industryand President of EDBE General Assembly

Profile Export Development Bank of Egypt (EDBE) is a specialized business and investment bank with a special mandateto promote and develop Egyptian exports. It was established on 30 July 1983 and launched its activities on 3February 1985.

Mission Established at the initiative of the Egyptian government as a private joint-stock company by special law No. 95 of1983, EDBE’s mission is to develop and promote Egyptian exports and encourage exports in agriculture, industry,and services.

Objectives As Egypt’s main export bank, EDBE plays a significant role in the implementation of the government’sdevelopment plan and supports state policies through the following: . • Promoting and encouraging Egyptian exports, . • Supporting SMEs, . • Attracting foreign direct investments, . • Creating new job opportunities.

Legal Status Export Development Bank of Egypt (EDBE) is a joint stock company established under Law 95/1983. It is governedby the regulations of the Central Bank of Egypt and the Banking and Monetary System Law 88/2003 (replacingLaw 163/1957 for the enactment of the Banking and Credit Law and Law 120/1957 of the Central Bank and theBanking System).

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Import and Export Operations & Employment Opportunities 1(986-2008)

11


Helmi el-Touni, 80x80 cm., oil on canvas, 1986.

12


Sameh el-Banani, 75x60 cm., oil on hardboard, 2000.

Capital and ShareholdersPaid-up capital has increased from L.E 600 million to LE 800 million in March 2007, and to L.E 1,000 million inMarch 2008. Authorized capital increased from L.E 1,000 million to L.E 2,000 million in July 2008. EDBE shares are all in cash with a nominal value of L.E 10 per share. EDBE is fully owned by Egyptian entities, asthe bank’s articles do not allow foreign entities to hold EDBE shares. Subject to Article 6 of EDBE’s IncorporationLaw 95/1983, the public sector share in EDBE paid-up capital shall not go below 75%.

As of 30/6/2008, the shareholding structure of the bank was as follows:

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Shareholders equity and net profits 1986-2008 (L.E millions)

14


Total assets (loans & Investment portfolio) 1986-2008 (L.E millions)

Customer deposits & loan portfolio 1986-2008 (L.E millions)

Global Economy 2007/2008The global economy is going through difficulties, caught between sharply slowing demand in advancedeconomies and rising inflation in emerging and developing economies.

The slowdown in global growth, starting last summer, is expected to continue through the second half of 2008,with only a gradual recovery during 2009. Global growth is projected to moderate from 5% in 2007 to 4.1% in2008 and 3.9% in 2009.

The U.S. economic slowdown—intensified in 2007 dominated by the collapse of the housing sector—began toweigh on domestic spending. The U.S. economy is projected to contract moderately during the second half of2008, before gradually recovering in 2009. Growth projections for the Euro Zone and Japan also show aslowdown in activity in the second half of 2008.

Expansion in emerging and developing economies is expected to lose steam, with growth expected to ease toaround 7% in 2008-09, from 8% in 2007. In China, growth is projected to slowdown from near 12% in 2007to around 10% in 2008-09.

Inflation is a rising concern despite the global slowdown. In many countries, the driving force behind higherinflation is higher food and fuel prices.

In advanced economies, inflation rose to 3.5% in May 2008. However, inflationary pressure is likely to becountered by slowing demand and, with commodity prices projected to stabilize, the expected increase in inflationin 2008 is predicted to be reversed in 2009.

In emerging and developing economies, inflation has risen to 8.6%, the highest rate since the beginning of thedecade. Inflationary pressure is mounting faster, fueled by soaring commodity prices, above-trend growth, andaccommodative macro-economic policies. Hence, inflation forecasts for these economies have reached 9.1% and7.4% in 2008 and 2009, respectively.

Against this background, the top priority for policy makers is to head off rising inflationary pressure, while keepingsight of risks to growth. In many emerging economies, tighter monetary policy and greater fiscal restraint arerequired, combined in some cases with more flexible exchange rate management.

Despite the financial turmoil provoked by a reassessment of risk in the U.S. mortgage market, and large losses insome financial markets, the favorable investment climate maintained in developing economies and theCommonwealth of Independent States more than offset the adverse effects of financial markets turbulence.

Similarly, the adverse effects of scarce credit on the volume of mergers and acquisitions did not affect globalForeign Direct Investment (FDI) flows negatively. The UN Conference on Trade and Development (UNCTAD)estimated that global FDI inflows rose by 18% to USD 1.54 trillion in 2007, mainly driven by a strong increase ofFDI flows to Latin America and Russia.

Looking at world trade, recent robust growth in developing countries has contributed to high commodity prices,notably oil, metals and minerals. This has benefited many commodity exporters, explaining the strong growth ofdemand in some poorer countries. However, the recent increase in grain prices, partly due to increased grainproduction for biofuels, is hurting real incomes among the urban poor.

World trade growth slid to 5.5% in 2007 from 8.5% in 2006 and may grow even more slowly in 2008 at about4.5%, as sharp economic deceleration in key developed countries is only partly offset by continuing strong growthin emerging economies.

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Egyptian Economy 2007/2008

The Egyptian government’s economic reform program, introduced in mid-2004, began to bear fruit. The Egyptianeconomy has registered significant growth and investment has picked up. The foreign exchange position remainshealthy and financial reforms are proceeding at a steady pace. A number of important privatization projects wereconcluded, including the Bank of Alexandria; and FDI flows have exceeded expectations, creating new jobs andreducing unemployment.

Accordingly, Egypt realized an unprecedented economic growth. Gross Domestic Product (GDP) surged to 7.5%during the first half of 2007/2008, compared to 7.1% in fiscal year 2006/2007. The main contribution to this highGDP growth came from strong private sector investments and consumption expenditure.

The government reforms have been praised by several reputable international financial institutions, such as theIMF and JP Morgan. Capital Intelligence (CI), the leading international emerging market rating agency, upgradedthe country’s credit rating from risk to an investment grade in late 2007.

A key macroeconomic challenge is the recent pick-up in inflation that reached 19.7% in May 2008. This wasmainly driven by subsidies and the annual bonus offered to government employees. The recent tightening ofmonetary policy by the Central Bank of Egypt (CBE) has been timely and appropriate to contain inflation, restrainliquidity growth, and ensure market confidence.

Egypt has gradually moved towards a more liberal trade policy. It became a member of the World TradeOrganization (WTO) in 1995, revamping its tariff regime in 2004 as prescribed in the accession agreement. InSeptember 2004, the government announced a new tariff structure, removing service fees and import surcharges.

The revival of the Egyptian economy has relied much upon trade. Egyptian exports are a key growth engine forthe economy. Egypt's trade growth rate reached 8.1% in 2007, and exports increased by 6.7%.

Egypt’s solid export performance, considerably stronger than that of the average Middle East and North Africa(MENA) region, was mainly due to strong demand from Europe and recently initiated reforms to improve thebusiness climate and competitiveness of the export sectors.

The trade deficit is expected to reach 14% of GDP in 2008 from 12.5% in 2007, due to strong domestic demandand high imports of capital and consumer goods. However, high oil prices, increasing remittance inflows, andtourism receipts continue to sustain the current account surplus, which came in at 2.1% of GDP in 2007.

Egypt’s main markets are the EU and the US, while imports (machinery, equipment, foodstuffs, chemicals, woodproducts, and fuels) predominantly originate from Europe, the United States, China, and Saudi Arabia.

To promote Egyptian exports and improve the trade balance, Egypt signed several free trade agreements; themost important of which are: the COMESA agreement, the AGADIR agreement, the EU-Egypt Associationagreement, the Greater Arab Free Trade Area (GAFTA), a Free Trade Area between Egypt and Turkey, and theQualified Industrial Zones (QIZ) agreement, between Egypt, the US and Israel in December 2004, which led toconsiderable growth in Egyptian exports to the US.

Egypt is currently negotiating free trade agreements with India and the Common Markets of the South, a customsunion between Brazil, Argentina, Uruguay, and Paraguay (MERCOSUR), in addition to the European Union.

Egypt has made impressive progress in reforming its investment policies over the last few years. This wasevidenced by the high surge in Foreign Direct Investment (FDI) inflows, which increased from just over USD 0.5billion in 2001 to USD 6.1 billion in 2006, representing a twelve-fold growth. FDI reached USD 11 billion in 2007and USD 7.8 during by the first half of 2008.

The growth in FDI was accompanied by a structural and healthy change in favor of the non-petroleum sector thatnow accounts for more than 80% of the total FDI, with 55% for Greenfield and expansion projects. Additionally,the number of companies established has increased, a key indicator of strong economic performance.

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Anonymous, 87x107 cm., oil on canvas, nd.

Business Review

• The Renovation Plan EDBE has launched a Renovation Plan, aimed at ameliorating and unifying the image of existing branches. Theplan reflects the bank’s recent evolution. The bank is also preparing a new image with a new name and logo—to be introduced during the coming year—demonstrating our history and professionalism in a simple and modern way.

• Branch NetworkThe bank continued its geographical expansion, with two new branches to be launched in Giza and El Obour bythe end of 2008, and three new branches in Borg Al Arab, the 10th of Ramadan and New Cairo during the nexttwo years. This expansion will enhance the bank’s outreach and reach out to potential exporters.

• Lending Activities As EDBE plays a pivotal role in promoting Egyptian exports, it provides export-oriented activities with acomprehensive range of financial products and services in trade, project, and SME finance. In 2007/2008, EDBE pursued its expansion policy by growing funds extended to export oriented projects. The loanportfolio reached LE 7.6 billion, compared to LE 6.5 billion in 2006/2007, an increase of 17.5%. The bank directedgrowth in the loan portfolio to finance labour-intensive export sectors at favorable conditions, enabling thesesectors to increase production capacity, export volume, and consequently generate new job opportunities.

• SMEs Finance Given the importance of small and medium-size enterprises in developing the economy, EDBE puts specialemphasis on supporting the SMEs sector through its recently set up SME department which was established in2005 with the technical assistance of the International Finance Corporation (IFC), the private sector arm of theWorld Bank. In 2007/2008, EDBE extended credit to 92 SME customers of L.E 485 million. SME finance wasprovided to projects in the following sectors:

. • Spinning and weaving,

. • Plastic, printing and packing materials,

. • Food and agricultural projects,

. • Medicine and chemicals,

. • Wood, minerals and building materials.

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Loan portfolio by sector (LE million)

• Foreign Trade Operations During the year, the bank contributed to the following foreign trade operations:

. • Export transactions of L.E 4.3 billion,

. • Imports for export-oriented industries for L.E 8 billion,

. • Guarantees and undertakings to exporters for LE 1.5 billion,

. • Acceptance and supplier facilities for L.E 134 million.

• Investment Activities EDBE's fiscal year 2007/2008 witnessed a considerable growth in investment activities. Our multi-perspectivediversification policy has paid off, preserving the general composition of our investment portfolio and minimizingthe negative effect of the securities market collapse in May 2008. Net Investments of the bank (including treasuryinstruments) reached L.E 2.6 billion in 30 June 2008.

1. Direct capital participation. Net direct capital participation increased during 2007/2008, reaching LE 450.7 million, diversified between theindustrial, export, real estate, tourism, and commercial sectors. These investments include strategic equityparticipations in companies that support Egyptian export mechanisms such as the Export Credit Guarantee Co.,and those supporting the business infrastructure such as the Egyptian Banks Company – EBC, Misr for CentralClearing, Depository, and Registry, and the Egyptian Credit Bureau.

2. Indirect capital participation. In addition to direct capital participation in export-oriented and import-substitution companies, and due to itsproven success, EDBE continued to deploy capital in specialized asset management firms through participating infive private equity funds with a total commitment of L.E 311.5 million, focusing on Industrial, export, real-estate,food and agricultural sectors.

3. Trading portfolios managed by third parties. The outstanding performance of the bank’s chosen external portfolio managers namely Delta Rasmala, Naeem,and Obelisk led EDBE to increase its overall invested capital in portfolios managed by these companies in2007/2008 by L.E 25 million, to a total of L.E 65 million with a market value of L.E 92.6 million as of 30 June2008.

4. Mutual funds. Funds established by EDBE reported solid performance in 2007/2008. EDBE's first mutual fund, El Khabeer,reported an increase in outstanding subscriptions reaching 1,197,596 certificates with a 16.7% increase in value,year on year. Effective return of the certificate was 11.2%. EDBE's mutual fund 2 (money market fund) reportedan 11.4% increase in outstanding subscriptions, year on year, reaching 8,858,285 certificates, with an effectivereturn of nearly 8%. The bank has allocated a portion of its investment portfolio to investing in other mutualfunds registering a market value of L.E 48.9 million as of 30 June 2008.

5. Corporate bonds and alternative investments. EDBE maintained appropriate investment diversification strategy both in terms of sectors and geographically. Suchstrategy was necessary to monitor the balance of investment portfolios in terms of return duration and stability.This balance was achieved through fixed income instruments (excluding treasury instruments) amounting to L.E497.0 million during the year.

• Export Credit Guarantee The bank strongly supported Egyptian exports by participating in the capital increase of the Export CreditGuarantee Company of Egypt. EDBE’s participation increased two-fold to L.E 19.6 million to reach 39.2%. Additionally, EDBE recently signed a cooperation agreement with CESCE SEGUROS DE CREDITO, an independentagency of the Spanish government, to support trade and investment between Egypt and Spain, a main marketfor Egyptian exports.

• Deposits and Savings Certificates Despite fierce competition in the Egyptian banking sector, EDBE continued to augment the level of customerdeposits in local and foreign currencies during fiscal year 2007/2008. Deposits surged by 39% during the year to

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reach L.E 8 billion. With its strategy of upgrading the saving schemes, EDBE introduced a 3 year fixed-income saving certificates tovariable-income saving certificates, provided that yields are not below the Central Bank of Egypt discount rate asper the Corridor System.

• Treasury Services EDBE’s treasury services consist of providing our customers with the best rates for foreign exchange transactions,and various instruments to hedge foreign exchange exposure, in addition to structured products designed to suitexporters’ cash flow with the best return.

• Capital Adequacy Due to its unique role as the export arm of the Egyptian government, EDBE derives its strength from itsshareholding structure, composed mainly of leading public sector institutions. The bank enjoys the ultimatesupport of its shareholders, reflected by the two recent successful increases in paid-up capital from L.E 600 millionto L.E 800 million in March 2007 and then to L.E 1,000 million in March 2008. Authorized capital also increasedfrom L.E 1,000 million to L.E 2,000 million in July 2008.

Capital adequacy ratio stood at 13.5% in 30 June 2008, above the minimum ratio requirement of 10%, stipulatedby the Central Bank of Egypt.

• Local and International Donors To provide Egyptian exporters with their financial needs at favorable conditions in terms of interest and tenor,EDBE has always concentrated on procuring cheap sources of funds. Based on its sound reputation and creditworthiness, EDBE enjoys the confidence of both local and international institutions.

The bank was granted various soft loans from reputable international financial institutions, namely, the EuropeanInvestment Bank (EIB), through both global loans and risk capital loans, the Agricultural Sector DevelopmentProgram (ASDP); the Arab Trade Financing Program, and US AID Private Sector CIP.

During 2007/2008, the Arab Trade Financing Program renewed a facility of USD 15 million, which had alreadybeen fully utilized. The bank was also granted a new loan from The Arab Investment Company for USD 20 million.

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The previous chart reflects the development in the bank’s loans portfolio and the relative share of the industrialand export sectors.

The balance of loan granted to the bank from international institutions, as of 30 June 2008, is as follows: (L.E million)National Investment BankEuropean Investment BankAgricultural Sector Development ProgramArab Trade Financing ProgramWachovia BankThe Arab Investment CompanyTotal

• Correspondent Banking The year under review witnessed a real stride for EDBE in correspondent banking, as it expanded its relationshipsto reach around 130 banks and financial institutions worldwide.

Additionally, country limits were assigned to countries representing potential export outlets, including Turkey,Russia, Spain, Greece, Sudan, India, China, Kazakhstan, and Brazil.

EDBE signed a cooperation agreement with the Russian Bank for Foreign Trade, and a memorandum ofunderstanding with the Turkish TURK EXIMBANK to promote mutual trade and investments. The bank has alsobeen active in leading international syndications.

• Risk Management EDBE has developed a prudent risk rating and provisioning policy through the risk management department tocomply with International Best Practices. The department is currently applying the optimum level of mitigation forcredit, market and operational risks.

During the year, EDBE continued to pay close attention to the quality of assets, thanks to the adoption of strictloan-extension selection policies and prudent provisioning policies. Successful efforts resulted in finalizing 45settlements, collecting around L.E 1 billion.

EDBE had made a crucial decision in 2005/2006 to entirely close the gap between provisions and non-performingloans. This voluntary full provisioning resulted in posting a net loss of L.E 158 million for the fiscal year ending 30June 2006.

This decision had its positive impact on the bank’s operations in 2006/2007 and 2007/2008. The loss was shortlyreversed and EDBE achieved NPAT of L.E 7.5 million in fiscal year 2006/2007, and L.E 310.7 million in fiscal year2007/2008.

EDBE currently enjoys one of the highest quality loan portfolios among Egyptian banks, confirming the solidfinancial position of our bank.

• Compliance To promote corporate governance and comply with Basel II standards, EDBE set up a compliance departmentresponsible for monitoring compliance risks. In addition, EDBE is in the process of launching an operational riskunit within the compliance department, which represents the essential infrastructure required for an effectiveoperational risk management.

• Developing IT Core Banking System EDBE established a new IT department to upgrade the IT infrastructure, including intranet and ATM machines,and introduce e-banking services to our customers. EDBE is currently upgrading its IT core banking system in accordance with International Best Practices and Basel IIstandards. The new system is expected to be launched during 2008/2009.

• Human Resources & Training The bank offered 1,576 training opportunities for 365 employees in different management and banking

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6013725680

267 1071,482

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Anonymous, 86x105 cm., oil on canvas, nd.

specializations at a total cost of L.E 4.3 million during the year. In addition, the staff participated in severalconferences and forums to become acquainted with Best International Practices. A budget of L.E 5 million wasset for the year 2008/2009 to pursue upgrading staff skills.

An overall salary adjustment scheme has been implemented to maintain the competitiveness of our pay schemein the Egyptian banking sector. Salaries have increased by 25% on average, depending on performance.

A budget of around L.E 28 million was set to grant car and personal loans to the staff. A leading health careinstitution was contracted to provide coverage for all employees.

We are in the final process of restructuring and upgrading all departments through state of the art techniques,attracting high calibers from the banking sector and hiring fresh graduates.

• Credit RatingBased on the bank’s creditworthiness, sound financial position, and solid shareholding structure, major creditrating agencies rated EDBE at the Sovereign Rating as follows:

Capital Intelligence:

Meris (affiliate of Moody's):

*One of the highest among Egyptian banks.

• Strategy and Business Plan for 2008/2009In view of EDBE’s role as Egypt’s main export bank, it is constantly developing and reviewing its operationalstrategies to fulfill its mission of promoting Egyptian exports, thus contributing to the Egyptian government’sdevelopment plan.

As EDBE has demonstrated 25 years of consistent and remarkable success, the bank approved the 2008/2009 strategicplan to leverage on our results and expand our presence nationally and internationally, while improving our services.

EDBE made the following commitments in the 2008/2009 strategic plan:

. • Provide Egyptian exporters with financial support at favorable conditions,

. • Expand credit facilities to SMEs,

. • Increase Egyptian exporters’ competitiveness,

. • Develop new export markets,

. • Attract foreign direct investments,

. • Create new business opportunities, • Develop further cooperation with export credit guarantee agencies, especially the Export Credit Guarantee Company of Egypt.

Operational targets for 2008/2009 include the following:

. • Develop and improve the quality of the bank’s overall business and services,

. • Pursue claims collecting and restructuring non-performing loans,

. • Launching IT core banking systems,

. • Proceed with efforts in complying with Basel II standards, • Continue to upgrade staff skills.

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Stable Outlook

BB+ Long Term

Outlook Stable

A-*

B Short Term

Long Term

• Social ResponsibilityIn view of our deep commitment to our society, particularly responsibility toward the more afflicted and lessfortunate, EDBE continually contributes to welfare projects undertaken by civil society. In 2007/2008 the bank’scontributions in social projects were as follows:

• Expansion projects at Cairo University, • The Urology Center at Mansoura University, • The Arafa Foundation for disadvantaged child healthcare, • Rotary/Innerwheel for an ENT clinic and three classrooms for the blind and deaf, • Two scholarships to outstanding students to the French University in Egypt, • Care for 120 orphans in the New Woman Mabarrat Society, • Ophthalmological equipment for the Women’s Medical School at al-Azhar University • Construction of the new headquarters of the Union of Arab Banks in Beirut, • Public campaign for bank awareness.

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• Branches

HEAD OFFICE108 Mohi el-Din Aboul Ezz StreetDokki, GizaTel: +(202) 37619006 Fax: +(202) 3338-5938

MAIN BRANCH108 Mohi el-Din Aboul Ezz StreetDokki, GizaTel: +(202) 3338-5944 Fax: +(202) 3338-5942

ZAMALEK BRANCH9 Shafik Mansour StreetZamalekTel: +(202) 2735-5411 Fax: +(202) 2736-7471

CAIRO BRANCH10 Talaat Harb streetEvergreen buildingTel: +(202) 2577-7003 Fax: +(202) 2579-0934

MOSADAK BRANCH71 Mossadak StreetDokkiTel: +(202) 3338-6810 Fax: +(202) 3338-6814

OROUBA BRANCH1 el-Obour BuildingsSalah Salem, HeliopolisTel: +(202)2262-5477 Fax: +(202) 2262-5465

HELIOPOLIS BRANCH11 el-Higaz StreetHeliopolisTel: +(202) 2453-1994 Fax: +(202) 2455-8125

SIXTH OF OCTOBER BRANCHPart 3/1 Central Axis–Banks districtSixth of OctoberTel: +(202) 3833-0599 Fax: +(202) 3833-0570

TENTH OF RAMADAN BRANCHFirst Zone DTenth of RamadanTel: +(2015) 367-205 Fax: +(2015) 362-638

ALEXANDRIA BRANCH95, 26th of July Road, Selsela Tower, AzaritaAlexandriaTel: +(203) 486-8488 Fax: +(203) 486-9206

RUSHDI BRANCH16 Syria Street, RushdiAlexandriaTel: +(203) 545-0018 Fax: +(203) 545-0009

(to operate in January 2009)OBOUR BRANCH6, 7 & 8 City Club FenceObour CityTel: +(202) 46105071 Fax:+(202) 46105072

AUDITORS’ REPORTTo the shareholders of Export Development Bank of Egypt (S.A.E.)

We have audited the accompanying financial statements of Export Development Bank of Egypt (S.A.E.)represented in the balance sheet as of June 30, 2008 and the related statements of income, cash flows andchanges in shareholders’ equity for the year then ended. These financial statements are the responsibility of theBank’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Egyptian Standards of Auditing and applicable Egyptian laws. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatements. Our audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. Our audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We have obtained all the information and explanations which we deemed necessary forour audit. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements, referred to above, together with the notes attached thereto present fairly,in all material respects, the financial position of Export Development Bank of Egypt as of June 30, 2008 and theresults of its operations and its cash flows and changes in shareholders’ equity for the year then ended inaccordance with Central Bank of Egypt rules and regulations and its amendments for the preparation andpresentation of financial statements issued on June 2002, and in compliance with applicable Egyptian laws andregulations.

The bank keeps proper accounting records, which include all that is required by the law and the bank article ofassociation and the accompanying financial statements are in agreement therewith.

The financial information included in the Board of Directors’ report was prepared in compliance with Law 159 of1981 and its executive regulation and is in agreement with the bank’s accounting records, within the limit thatsuch information is recorded therein.

Cairo, 1/9/2008

Hassanein Kamel Ahmed Zeinab Bayume MousaR.A.A. 2409 Central Auditing OrganizationFellow of Egyptian Tax Society Capital Market Authority. R(2)

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BALANCE SHEETAs at 30 June 2008

30 June 2008 30 June 2007Note L.E. L.E.

AssetsCash and due from Central Bank of Egypt 4Due from banks 5Treasury bills and other governmental notes 6Investments held for trading 7Investments available for sale 8Loans to customers and banks, (net) 9Investments held to maturity 11Investments in subsidiaries and associated companies 12Debit balances and other assets 13Fixed assets, (net) 14Total Assets

Liabilities and shareholders’ equityLiabilitiesDue to banks 15Customers’ deposits 16Credit balances and other liabilities 17Long-term loans 18Other provisions 19Total liabilities

Shareholders’ equityPaid up capital 20Reserves 20Accumulated lossesTotal shareholders’ equity Net Profit for the year Total shareholders’ equity and net profit

Total liabilities and shareholders’ equityContingent liabilities and commitmentsLiabilities against letters of guarantee, Documentary credits and other commitments 21

• The accompanying notes are an integral part of these financial statements. • Auditors’ report attached.

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327,171,9013,121,155,020

982,562,780141,523,079

1,241,189,3206,762,262,964

57,181,943

124,322,465513,218,441105,531,545

13,376,119,458

183,363,2022,181,076,606

487,703,87797,626,356

442,770,1084,907,015,246

53,910,809

120,232,645202,139,005107,028,335

8,782,866,189

2,275,041,9208,053,835,696

126,178,6961,482,545,523

63,231,39612,000,833,231

89,271,6825,790,331,000

117,191,9501,798,043,573 123,441,5157,918,279,720

1,000,000,000211,693,630

(147,107,161)1,064,586,469

310,699,7581,375,286,227

800,000,000211,693,630

(147,107,161)864,586,469 0864,586,469

13,376,119,458

2,539,624,889

8,782,866,189

1,376,508,345

INCOME STATEMENTAs at 30 June 2008

Note

Interest received from loans and due from banks Interest received from treasury bills and bonds Less:Cost of deposits and borrowingNet interest income

Banking fees and commissions incomeDividends and return on investment certificatesGains from foreign currencies transactions 23Gains on sale of investments Investments held for trading valuation differences Other operating income 25Net operating income

Less:Banking fees and commissions expenses Provisions Other investments valuation differences 22General & administrative expenses & depreciation Other operating expenses 26Profit from operating activities Income from non-operating activitiesProfit before taxesLess:TaxesNet profit for the year

Earning per share 24

• The accompanying notes are an integral part of these financial statements.

28


30 June 2008L.E.

739,803,19494,796,681

(566,499,259268,100,616

123,338,60019,055,75933,156,10019,043,31610,967,435

14,165,665487,827,491

(3,897,365)(266,000)

(25,273,272)(141,040,252) (6,650,844)310,699,758 0310,699,758

0310,699,758

2.84

30 June 2007L.E.

437,449,886160,792,691

(391,385,296)206,857,281

108,509,0046,851,845

13,389,44811,329,53923,116,494

11,866,947381,920,558

(2,983,376)(242,220,362)

(8,971,372)(119,853,206)

(654,059)7,238,183 290,5107,528,693

07,528,693

0.09

STATEMENT OF PROFIT APPROPRIATIONFor the year ended 30 June 2008

Net profit for the yearLess:Gain on sale of fixed assets (transferred to capital reserve)Net profit for the year (available for appropriatio

Accumulated losses at the beginning of the yearTotal

Distributed as follows:Legal reserveGeneral reserveDividends to the shareholdersEmployees’ profit shareBoard of directors’ remunerationAccumulated losses at the end of the yearTotal

29


30 June 2008L.E.

310,699,758

0310,699,758

(147,107,161)163,592,597

31,069,9765,522,621

100,000,00022,000,000

5,000,000 0163,592,597

30 June 2007L.E.

7,528,693

(290,510)7,238,183

(153,592,475)(146,354,292)

752,8690000

(147,107,161)(146,354,292

30


STATEMENT OF CASH FLOWSFor the year ended 30 June 2008

Cash flows from operating activitiesNet profit before income tax

Adjustments to reconcile net profit to cash provided from operating activitiesDepreciationProvisionsInvestments held for trading valuation differencesOther investments valuation differencesProvisions used (other than provision for doubtful debts)Foreign currencies revaluation differences for provisions(other than provision for doubtful debts)(Gain) on sale of fixed assets(Gain) on sale of investmentsOperating profit before changes in assets and liabilities used in operating activities

Net decrease (increase) in assetsDeposits with banksTreasury billsInvestments held for tradingInvestments available for saleLoans to customers and banksDebit balances and other assets

Net increase (decrease) in liabilitiesDue to banksCustomers’ depositsCredit balances and other liabilitiesNet cash flows provided from (used in) operating activities

Cash flows from investing activities Investments held to maturityInvestments in subsidiaries and associated companiesPurchase of fixed assets and branches improvementsProceeds from sale of fixed assetsNet cash flows (used in) investing activities

Cash flows from financing activities(Decrease) in Bonds(Decrease) Increase in long-term loansCapital increaseNet cash flows (used in) provided from financing activitiesNet increase (decrease) in cash and cash equivalents during the yearCash and cash equivalents at the beginning of the yearCash and cash equivalents at the end of the year

Cash and cash equivalents are represented in:Cash and due from Central Bank of EgyptDue from banksTreasury bills and other governmental notesDeposits with banksTreasury bills and other governmental notes more than three monthsCash and cash equivalents at the end of the year

• The accompanying notes are an integral part of these financial statements.

30 June 2008L.E.

310,699,758

10,534,121266,000

(10,967,435)25,273,272

(184,385,500)

(9,231)0

(19,043,316)

132,367,669

(903,695,662)(638,665,046)

(32,929,286)(803,201,625)

(1,954,608,271)(85,267,425)

2,185,770,2382,263,504,696

26,947,856190,223,144

(5,653,630)(4,089,820)

(11,640,193) 0(21,383,643)

0(315,498,050)

200,000,000(115,498,050)

53,341,451387,463,976440,805,427

327,171,9013,121,155,0201,012,800,000

(3,077,521,494)(942,800,000)

440,805,427

30 June 2007L.E.

7,528,693

7,736,200242,220,362(23,116,494)

8,971,372(206,025)

(308)(290,510)

(11,329,539)

231,513,751

(1,497,775,418)364,077,522(48,333,409)259,031,719

(1,271,200,648)(31,853,411)

(225,042,462)1,022,166,935

45,865,726(1,151,549,695)

(48,910,809)(17,935,900)(20,415,612)

290,510(86,971,811)

(112,594,000)479,786,098200,000,000567,192,098

(671,329,408)1,058,793,384

387,463,976

183,363,2022,181,076,606

500,050,000(2,173,825,832)

(303,200,000)387,463,976

31


STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFor the year ended 30 June 2008

June 30, 2007

Balance at beginning of year

Net profit for year

Capital increase

Transferred to Reserves

Balance at end of the year

June 30, 2008

Balance at beginning of year

Net profit for year

Capital increase

Balance at end of the year

Capital

L.E.

Legal Reserve

L.E.

General Reserve

L.E.

Other Reserve

L.E.

A c c u m u l a t e dL o s s e s

L.E.

Net Profit forthe year

L.E.

Total

L.E.

600,000,000 154,863,451 15,351,417 31,988,729 (153,592,475) 0 648,611,122

0 752,869 0 290,510 6,485,314 0 7,528,693

200,000,000 0 0 0 0 0 200,000,000

0 0 0 8,446,654 0 0 x8,446,654

800,000,000 155,616,320 15,351,417 x40,725,893 (147,107,161) 0 864,586,469

Capital

L.E.

Legal Reserve

L.E.

General Reserve

L.E.

Other Reserve

L.E.

A c c u m u l a t e dL o s s e s

L.E.

Net Profit forthe year

L.E.

Total

L.E.

800,000,000 155,616,320 15,351,417 40,725,893 (147,107,161) 0 864,586,469

0 0 0 0 0 310,699,758 310,699,758

200,000,000 0 0 0 0 0 200,000,000

1,000,000,000 155,616,320 15,351,417 x40,725,893 (147,107,161) 310,699,758 1,375,286,227

NOTES TO THE FINANCIAL STATEMENTS1. ACTIVITYExport Development Bank of Egypt (Egyptian Joint Stock Company) was established on July 30, 1983 under LawNo. 95 of 1983 and its executive regulations. The objective of the Bank is to encourage and develop Egyptianexport activities and assist in developing agricultural, industrial, commercial and service exporting sectors, also toprovide all investment banking services in local and foreign currencies through its head office and ten branches.

2. THE APPLIED SIGNIFICANT ACCOUNTING POLICIESA) Basis of preparing financial statementsThe financial statements are prepared in accordance with the Egyptian Accounting Standards and applicable locallaws and regulations.

B) Foreign currencies transactionsThe Bank maintains its accounts in Egyptian Pounds, transactions in foreign currencies are translated during thefinancial year at the exchange rates prevalent at the transaction date. At the year-end all monetary assets andliabilities in foreign currencies are revalued at the exchange rates at that date. Foreign currencies translationdifferences are charged to the income statement.

Outstanding balances of forward contracts are valued at year-end using the forward rate of the remaining periodtill the maturity of those contracts. Currency valuation differences are charged to the income statement asgain/loss from foreign currency transactions.

Swap contracts are recorded as contingent liabilities and commitments. At the effective date of the Swapcontract, the Bank recognizes an unearned gain/Loss and records it in other debit balances or other creditbalances. The unearned gain/loss is amortized during the swap contract period as an addition or deduction to theinterest income in the income statement. The gain/loss related to implementing the swap is charged to the incomestatement as gain/loss from foreign currencies transactions.

The premium paid on foreign currency option contracts is recorded in other debit balances. The premium balanceis charged to the income statement as gain/loss from foreign currency transactions based on the valuation of thefair value of option contract.

As for option contracts purchased to cover the risks associated with option contracts sold to customers, the Bankcharges to other credit balances the differences between premiums paid on option contracts sold and premiumcollected on option contracts purchased. These differences are charged to the income statement as gain/loss uponmaturity of option contracts.

C) Revenue recognitionIncome is recognized on accrual basis except for the interest income on classified loans and advances, whichceases when the recovery of interest or principle is doubtful. Dividends from investments are recognized whendeclared.

D) Treasury billsTreasury bills and other governmental notes are recorded at nominal value, and the related discount is includedunder the caption "Credit balances and other liabilities". Treasury bills and other governmental notes appear onthe balance sheet at their nominal value net of discount.

E) Purchased treasury bills under resell commitmentTransactions of purchasing treasury bills, together with the commitment for their resale are recorded on thebalance sheet and the income related is recorded on the income statement, under income from treasury bills.

F) Valuation of investments held for tradingInvestments held for trading including securities portfolios managed by others and mutual fund certificates notissued by banks and insurance companies purchased for trading purposes are to be valued at year-end using the

32


fair value that represents the market price and any valuation differences are to be charged to the income statement.

Investments held for trading that lost one of the conditions to be classified as trading investments are to be valuedat its book value. Book value is to be decreased by any decline based on a detailed study of the latest financialstatements of the investment. Valuation differences are to be charged to the income statement.

Mutual fund certificates issued by banks and insurance companies are to be valued at their fair value which isequal to the recoverable value of the certificate at the date of the valuation. Valuation differences are to becharged to the income statement.

G) Valuation of investments available for saleInvestments available for sale are valued at the lower of cost and fair value (taking into consideration thedifferences in the exchange rates of foreign currencies). Valuation differences are to be charged to incomestatement as other investment valuation differences, except for the previous years differences should be bookedas special reserve in the shareholders’ equity caption. (2003/2004)

In case of impairment of an investment, the special reserve pertaining to the investment is used and the remainingamount is charged to the income statement, in case of selling the investments, its share in the special reserve isadded to the income statement.

H) Valuation of investments held to maturityBonds purchased through public underwriting are to be valued at adjusted cost which equals their nominal valueadjusted for any premiums or discounts at issuance. The issuing premiums and discounts are to be amortizedusing the straight-line method and the amortization is charged to the income statement as bonds and treasurybills income item. Bonds purchased from the stock exchange with a price more or less than nominal value are tobe valued at their acquisition cost adjusted for pre-acquisition interest distribution.

If there is a significant decline in the fair value of the bonds compared with it’s book value, the book value is to beadjusted and the amount is charged to the income statement as other investments valuation differences. If thereis a subsequent increase in the fair value, the recovery amount is to be recognized in the income statement accountto the extent of valuation differences recognized. The book value of bonds in foreign currencies is translated usingprevailing exchange rates at valuation date. Foreign currencies translation differences are to be charged to theincome statement in gain (loss) from foreign currencies transaction item.

Mutual fund certificates issued by the Bank’s fund, that the Bank must hold till maturity, are to be valued at cost.If the net realizable value of the certificates is lower than the cost, the difference is to be charged to the incomestatements as other investments valuation differences. If the net realizable value is higher than the cost, theincrease is to be recognized to the income statement to the extent of valuation differences recognized.

I) Valuation of investments in subsidiaries and associationsInvestments in subsidiaries are to be valued at cost and if there is a decline in the fair value below the book value,the book value is adjusted for each investment separately. Valuation differences are to be charged to the incomestatement as other investments evaluation differences. If the fair value of investment is higher than the cost, theincrease is to be recognized to the income statement to the extent of valuation differences recognized.

J) Valuation of assets acquired by the Bank in settlement of debtsThe assets acquired by the bank in settlement of debts are recorded in the debit balances and other assets on thebasis of their actual acquisition value. In case the assets’ fair value falls below the value at which such assets havebeen acquired by the bank on the balance sheet date, the difference is charged to the income statement. In caseof an increase in the fair value, such an increase is recognized in the income statement to the extent of revaluationlosses recognized in the income statement for previous years.

K) Loans and contingent liabilities provisionsProvisions are made for specific loans and contingent liabilities as per customer credit assessment criteria issued byCentral Bank of Egypt circular dated June 6, 2005 with the management experience and detailed periodic studiesfor the balances of loans and contingent liabilities. Loans are written off against the provision when it is no longer

33


feasible to collect such loans. Collections from loans previously written off are added back to the provision.

L) Contingent liabilities and commitmentsContingent liabilities and commitments resulting from forward deals and swaps contracts are presented as off-balance sheet items under the caption “contra accounts” since they do not represent actual liabilities or assets atthe balance sheet date.

M) Cash and cash equivalentFor the purposes of preparing the cash flow statement, the cash and cash equivalents include cash, reserves withCentral Bank, due from banks and treasury bills due within three months.

N) Depreciation and amortizationThe fixed assets are booked as per actual acquisition cost inclusive all related expenses in the process of obtainingand installing in a usage state. This is on condition that the cost does not exceed market value for the fixed assets.The fixed assets are shown on the financial statements as a net amount after deducting accumulated depreciation.The fixed assets are depreciated using the straight-line method based on appropriate depreciation rates which aredetermined on the basis of estimated life for each asset as follows:Premises 2.5% Electrical equipment 10% Calculators, typewriters, photocopiers & faxes 12.5%Mobiles 33.33%Safe boxes 2% Vehicles and transportation means 20% Furniture 10% Computer 20% Telephone lines & Fire extinguishers 10%Decorations 25% Fittings, improvements and air-conditioners 20%

O) Taxes Tax dues are calculated in accordance with the applicable laws and regulations. Tax provisions are made accordingto a detailed study based on current tax claims.

3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT3.1 Financial Instrumentsa) Financial Instruments of the Bank are represented in its financial assets and liabilities. Financial assets includecash, due from banks, investments and loans to customers. Financial liabilities include customers’ deposits, due tobanks long term loans. Financial instruments also include rights and obligations recorded as contingent liabilitiesand commitments. Note (2) presents the accounting policies for recognizing and measuring the most significantfinancial instruments and the related revenues and expenses.

b) Fair value of financial instrumentsAccording to the Bank’s valuation policies for its assets and liabilities included in the financial statement notes, thefair value for the financial instruments does not differ significantly from its carrying value at the balance sheet date.Notes (8, 11 and 12) to the financial statements refer to the fair value for investments other than tradinginvestments at the balance sheet date.

c) Forward contractsAccording to the Central Bank of Egypt regulations, the Bank does not carry out forward contracts except to coverits required needs of foreign currencies or customers needs to meet their foreign currencies obligations that resultfrom dealing with the Bank. All forward contracts are short-term transactions.

3.2 Risk Management for the Financial Instrumentsa) Interest rate riskThe values of various financial instruments fluctuate due to the fluctuation in interest rates related thereto. TheBank follows certain procedures to minimize that risk such as:• Correlating between the interest rate on borrowing and lending. • Determining interest rate in consideration with the prevailing discount rates on various currencies. Note (29) to the financial statements discloses the average interest rates applied by the Bank during the year onthese financial assets and liabilities.

b) Credit riskLoans to customers, investments in bonds, current accounts, deposits with banks and rights and obligations from

34


others are financial assets exposed to the credit risk which is represented in these parties inability to repay in partor in full amount of the loan granted to them at maturity.

The Bank adopted the following procedures to minimize the credit risk:• Preparing credit studies about the customers before dealing with them and determining of the credit risk ratesrelated thereto.• Obtaining the adequate guarantees to reduce the risks resulting from insolvency of customers. • Monitoring and preparing periodic studies about customers in order to evaluate their financial and creditposition and estimate the required provisions for non-performing loans. • Distribution of loans portfolio and due from banks over various sectors to avoid concentration of risk. • Note (31) to the financial statements discloses the distribution of the loans portfolio among various sectors.

c) Foreign currencies riskDue to the nature of the Bank’s activities, there is a requirement to deal in many foreign currencies which exposesthe Bank to the risk of fluctuation in exchange rates. To minimize this risk, the Bank monitors its foreign currenciespositions according to the relevant Central Bank of Egypt instructions.Note (32) discloses significant foreign currency positions at the date of the balance sheet.

4. CASH AND DUE FROM CENTRAL BANK OF EGYPT

Cash on handDue from Central Bank of Egypt (mandatory reserve)

5. DUE FROM BANKS

A. Central Bank of EgyptTime depositsB. Local BanksCurrent AccountsTime depositsC. Foreign BanksCurrent accountsTime deposits

6. TREASURY BILLS AND OTHER GOVERNMENTAL NOTESTREASURY BILLS

Treasury bills, maturity 91 dayTreasury bills, maturity 182 daysTreasury bills, maturity 364 daysLess : Unearned income

C.B.E. CERTIFICATESCertificates C.B.E. maturity 91 daysCertificates C.B.E. maturity 182 daysCertificates C.B.E. maturity 364 daysLess: Unearned income

Total Treasury bills and other governmental notes

35


30 June 2008L.E.

35,701,828291,470,073327,171,901

30 June 2007L.E.

26,373,258156,989,944

83,363,202

30 June 2008L.E.

2,176,000,000

1,549,88699,943,948

42,083,640 801,577,5463,121,155,020

30 June 2007L.E.

1,722,000,000

1,751,29550,000,000

5,499,479 401,825,8322,181,076,606

30 June 2008L.E.

70,000,000326,350,000616,450,000(30,237,220)982,562,780

------------

---982,562,780

30 June 2007L.E.

68,850,00089,525,000

106,675,000(9,541,236)

255,508,764

128,000,00055,000,0000

52,000,000(2,804,887)

232,195,113487,703,877

7. INVESTMENTS HELD FOR TRADING

EDBE Mutual Fund certificates (the first)Investment funds N.B.E (the forth)Investment funds SANABELDevelopment and agriculture mutual fundPiraeus mutual fundInvestments portfolios managed by others

Investments held for trading are represented in:Listed on the Stock MarketUnlisted on the Stock Market

8. INVESTMENTS AVAILABLE FOR SALE

A. Investments in sharesBank sharesCompany shares

B. Investments in bonds Treasury bondsBank bondsCompany bonds

Investments available for sale are represented in:Listed on the Stock MarketNot listed on the Stock Market

The market value of investments available for sale listed on the stock market amounted to L.E 582,387,356 asat June 30, 2008 in comparison to L.E. 380,560,786 as at June 30, 2007.

9. LOANS TO CUSTOMERS AND BANKS (NET)

Discounted billsLoans to customersLoans to banks

Less:Loan loss provisionInterest in suspense

36


30 June 2008L.E.

22,721,3355,643,148

10,984,0004,804,0004,782,000

92,588,596141,523,079

92,588,59648,934,483

141,523,079

30 June 2007L.E.

23,096,1965,248,307

10,253,000------

59,028,85397,626,356

59,028,85338,597,50397,626,356

30 June 2008L.E.

4,986,449465,595,346

257,025,18948,856,500

464,725,8361,241,189,320

576,660,412 664,528,9081,241,189,320

30 June 2007L.E.

5,326,41494,537,145

342,906,549------

442,770,108

358,475,09584,295,013

442,770,108

30 June 2008L.E.

140,813,2657,178,066,827

284,507,5297,603,387,621

(841,124,657) --- 6,762,262,964

30 June 2007L.E.

69,787,1946,057,628,718

344,456,6606,471,872,572

(1,564,519,128) (338,198) 4,907,015,246

10. LOAN LOSS PROVISION (PERFORMING/NON PERFORMING)June 30, 2008

Balance beginning of the yearCharged during yearTransferred from (to) General provision(specific provision)Transferred from Other provisionsForeign currencies revaluation differencesProvision used during the yearBalance at the end of the year

June 30, 2007

Balance beginning of the yearCharged during yearTransferred from (to) General provision(specific provision)Transferred from Other provisionsForeign currencies revaluation differencesProvision used during the yearBalance at the end of the year

11. INVESTMENTS HELD TO MATURITY

BNP Target ReturnEDBE Mutual Fund certificates (First)EDBE Mutual Fund certificates (Second)

Investments held to maturity are represented in:Listed on the Stock MarketUnlisted on the Stock Market

12. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIES

A. Investments in subsidiaries Egyptian Tourism Development Co.Investments Tourism Company (Sahil Hashish)B. Investments in associated companiesExport Credit Guarantee Co. of EgyptPhilae for HotelsSafeir El Hurghada

Investments in subsidiaries and associations are represented in:Listed on the Stock ExchangeNot listed on the Stock Exchange

37


Non performingL.E.

1,488,048,407---

(15,583,579)(123,848,598)(34,936,874)

(563,736,409)749,942,947

PerformingL.E.

76,470,721---

15,583,579---

(872,590) --- 91,181,710

TotalL.E.

1,564,519,128---

---(123,848,598)(35,809,464)

(563,736,409)841,124,657

Non performingL.E.

1,344,344,856241,231,837

(19,311,657)(4,818,438)(5,300,836)

(68,097,355) 1,488,048,407

PerformingL.E.

57,235,643---

19,311,657---

(76,579) --- 76,470,721

TotalL.E.

1,401,580,499241,231,837

---(4,818,438)(5,377,415)

(68,097,355) 1,564,519,128

30 June 2008L.E.

8,291,9045,000,020

43,890,01957,181,943

---57,181,94357,181,943

30 June 2007L.E.

11,393,4001,711,000

40,806,40953,910,809

---53,910,80953,910,809

30 June 2008L.E.

49,356,40037,671,700

19,615,0001,516,666

16,162,699124,322,465

30 June 2007L.E.

49,356,40037,671,700

19,615,0001,516,666

12,072,879120,232,645

%98.7143.29

39.2327.5083.92

%98.7143.29

39.2327.5062.69

---124,322,465124,322,465

---120,232,645120,232,645

13. DEBIT BALANCES AND OTHER ASSETS

Accrued revenuePrepaid expensesAdvances to purchase fixed assetsAssets acquired in settlement of debtsDeposits and custodianOther debit balances

Valuation of the assets acquired by the bank in settlement of debts is recorded in accordance with the relatedCentral Bank of Egypt regulations. In case the assets’ fair value falls below the value at which such assets havebeen acquired by the bank on the balance sheet date, the difference is charged to other expenses in the incomestatement. In case of an increase in the fair value, such an increase is recognized in the income statement to theextent of revaluation losses recognized in the income statement for previous years.

The accrued revenue is represented in:

Medium term loansDue from banksInvestment securities

14. FIXED ASSETS (NET)

38


30 June 2008L.E.

145,291,5475,024,097

10,248,637343,970,012

602,593 8,081,555513,218,441

30 June 2007L.E.

56,955,1601,207,4717,645,774

120,760,862471,980

15,097,758202,139,005

30 June 2008L.E.

45,097,79485,657,726

14,536,027145,291,547

30 June 2007L.E.

31,934,48216,235,677 8,785,00156,955,160

Premises Computers Vehicles Fixture Equipment Furniture &improvements

Others Total

95,870,329 36,006,376 5,957,910 43,446,503 3,537,995 2,162,396 3,893,499 190,875,008

1,500,000 4,842,408 1,418,000 703,698 348,280 112,075 112,870 9,037,331

Cost at the beginning of the year:

Additions during the year:

--- 1,431,922 --- 41,026 43,960 --- 141,798 1,658,706Disposals during the year:

97,370,329 39,416,862 7,375,910 44,109,175 3,842,315 2,274,471 3,864,571 198,253,633Cost at the end of the year (1):

18,005,649 18,188,355 4,124,488 37,598,705 2,588,197 1,695,740 1,645,539 83,846,673Accumulated depreciation at the beginning of the year:

2,086,983 5,739,714 583,543 1,571,832 262,708 157,750 131,591 10,534,121Depreciation charged for the year:

--- 1,431,922 --- 41,026 43,960 --- 141,798 1,658,706Accumulated depreciation for disposals:

20,092,632 22,496,147 4,708,031 39,129,511 2,806,945 1,853,490 1,635,332 92,722,088Accumulated depreciation at the end of the year (2):

77,277,697 16,920,715 2,667,879 4,979,664 1,035,370 420,981 2,229,239 105,531,545Net book value at the end of the year (1-2):

77,864,680 17,818,021 1,833,422 5,847,798 949,798 466,656 2,247,960 107,028,335Net book value at the beginning of the year:

Other fixed assets are represented in:

Typewriters & CalculatorsSafe boxes

15. DUE TO BANKS

A. Central Bank of EgyptTime deposits

B. Local Banks Current accountsTime deposits

C. Foreign BanksCurrent accountsTime deposits

16. CUSTOMERS’ DEPOSITS

Demand depositsCall and time depositsSaving deposits and certificates of depositsOther deposits

17. CREDIT BALANCES AND OTHER LIABILITIES

Accrued interestUnearned incomeAccrued expensesAccrued tax and insuranceOther credit balances

18. LONGTERM LOANSParticulars

European Investment Bank loan (equity participation)European Investment Bank loan (equity participation)European Investment Bank loanNational Investment Bank loan (5th)National Investment Bank loan (Sixth)National Investment Bank loan (Seventh)National Investment Bank loan (Eighth)National Investment Bank loan (Ninth)National Investment Bank loan (Tenth)

39


30 June 2008L.E.,000

2212,0082,229

30 June 2007L.E.,000

3061,9422,248

30 June 2008L.E.

1,599,930,000

1,815,007631,298,963

16,943,299 25,054,6512,275,041,920

30 June 2007L.E.

---

885,27852,152,485

--- 36,233,91989,271,682

30 June 2008L.E.

939,332,4584,320,243,5222,109,284,232 684,975,484 8,053,835,696

30 June 2007L.E.

945,648,1112,838,126,5651,735,047,855 271,508,469 5,790,331,000

30 June 2008L.E.

48,034,0966,077,1974,465,5895,635,083

61,966,731126,178,696

30 June 2007L.E.

37,360,1533,818,301

20,225,2862,536,340

53,251,870117,191,950

MaturityDate

5/12/201331/10/201315/3/201330/6/201030/6/200930/6/201230/6/201130/6/201230/6/2013

Maturingthroughnext year

L.E.

21,458,8911,000,000

20,833,33322,500,00018,333,33315,833,33322,500,000

Balances asof 30/6/2008

L.E.4,372,246

10,999,519107,294,454

2,000,00020,833,33347,000,00055,000,00063,333,333

112,500,000

Balances asof 30/6/2007

L.E.3,989,011

11,749,444137,531,48821,916,66741,666,66769,500,00073,333,33379,166,667

135,000,000

National Investment Bank loan (Eleventh)National Investment Bank loan (Twelfth)Commercial International Bank (ASDP)Mitsubishi Bank – TokyoEuropean Investment Bank loan – 2European Investment Bank loan – 2European Investment Bank loan (equity participation)Arab Trade Financing Program (1)Arab Trade Financing Program (2)Wachovia Bank LoanArab Investment Company (TAIC)

19. OTHER PROVISIONS

20. PAID UP CAPITAL AND RESERVES

A. CapitalThe authorized capital amounted to L.E. 1,000,000,000. The issued and paid up capital amounted toL.E.1,000,000,000 as of June 30 2008, distributed over 100,000,000 common shares with a par value of L.E. 10each.

The issued and paid up capital has been increased to L.E. 1,000,000,000 according to the Board of Directors’decision dated 17/12/2007. This capital increase has been booked to the Stock Market on 9/3/2008.

40


30/6/201430/6/20152/11/2011

13/10/200715/9/201615/9/2016

31/10/201328/8/20085/11/200812/2/201026/7/2010

25,000,000

30,106,970

31,998,60047,997,900

2 5 7 , 5 6 2 , 3 6 0

150,000,000150,000,00056,148,900

---58,799,104

176,487,38414,463,75047,997,90031,998,600

266,655,000 106,662,0001 , 4 8 2 , 5 4 5 , 5 2 3

150,000,000150,000,00064,960,354

284,835,00062,807,908

161,017,98414,463,75051,270,300

---284,835,000 --

1 , 7 9 8 , 0 4 3 , 5 7 3

Balance beginning of

the year

L.E.

Charged during

the year

L.E.

T r a n s f e r r e dfrom Loan Loss

p r o v i s i o n

L.E.

Transferedfrom otherresources

L.E.

Foreign currencies revaluation d i f f e r e n c e s

L.E.

Used during

the year

L.E.

Balance at the end of

the year

L.E.

109,030,256 988,525 --- 46,965 (308) (178,525) 109,886,913

8,763,664117,793,920

---988,525

4,818,4384,818,438

,-----46,965

---(308)

(27,500)(206,025)

13,554,602123,441,515

Provision for claims:

Provision for contingent liabilities:

Balance beginning of

the year

L.E.

Charged during

the year

L.E.

T r a n s f e r r e dfrom Loan Loss

p r o v i s i o n

L.E.

Transferedfrom otherresources

L.E.

Foreign currencies revaluation d i f f e r e n c e s

L.E.

Used during

the year

L.E.

Balance at the end of

the year

L.E.

109,886,913 266,000 120,840,500 70,014 (9,231) (184,000,000) 47,054,196

13,554,602123,441,515

---266,000

3,008,098123,848,598

---70,014

---(9,231)

(385,500)(184,385,500)

16,177,20063,231,396

Provision for claims:

Provision for contingent liabilities:

30 June 2008

30 June 2007

41


B. Reserves In accordance with the Bank’s statute, a 10% of annual net profit is transferred to the legal reserve, such transfer ispossible to be stopped when the legal reserve reaches 50% of issued capital.

21. CONTINGENT LIABILITIES AND COMMITMENTS

Letters of guaranteeLetters of credit (Import)Letters of credit (export – confirmed)Shipping documents (export)Outstanding forward contracts

22. OTHER INVESTMENTS VALUATION DIFFERENCES

Investments available for saleInvestments held to maturityInvestments in subsidiaries and associations

23. GAIN FROM FOREIGN CURRENCIES TRANSACTIONS

Gain from foreign currencies exchangeDifferences of valuation monetary assets and liabilities balances

24. EARNING PER SHARE

Net profit for the yearBoard of directors remunerationEmployees profit shareShareholders’ share in the net profitWeighted average of number of sharesEarning per share

25. OTHER INCOME

Miscellaneous service incomeCentral keeping incomeCollected Telex, Swift, Postage,Printed matters & PhotocopyCollected Legal ServicesMiscellaneous income

30 June 2008L.E.

1,368,576,231641,480,303150,522,838262,859,478

116,186,0392,539,624,889

30 June 2007L.E.

583,196,113542,801,356

49,745,388178,025,058

22,740,4301,376,508,345

30 June 2008L.E.

(22,890,776)(2,382,496)

---(25,273,272)

30 June 2007L.E.

(11,873,553)---

2,902,181(8,971,372)

30 June 2008L.E.

30,255,972

2,900,12833,156,100

30 June 2007L.E.

13,607,345

(217,897)13,389,448

30 June 2008L.E.

310,699,758(5,000,000)

(22,000,000)283,699,758100,000,000

2.84

30 June 2007L.E.

7,528,693---

---7,528,693

80,000,0000.09

30 June 2008L.E.

4,280,571733,872

6,859,219130,525

2,161,47814,165,665

30 June 2007L.E.

2,956,619394,182

6,239,12682,315

2,194,70511,866,947

26. OTHER EXPENSES

Custody expensesMiscellaneous expensesValuation differences of assets acquired by the bank in settlement of debts

27. THE CAPITAL COMMITMENTSAs of 30/6/2008, the value of the outstanding commitments related to investments which are not requested forpayment amounted to L.E. 153,933 thousands.

Investments available for sale

28. MATURITY OF ASSETS AND LIABILITIES

AssetsCash and due from Central Bank of EgyptDue from banksTreasury bills and other governmental notesInvestments held for tradingInvestments available for saleLoans to customers and banksInvestments held to maturityInvestments in subsidiaries and associations

LiabilitiesDue to banksCustomers’ depositsLong-term loans

29. APPLIED INTEREST RATES DURING THE YEAR The average interest rate on assets and liabilities were 6.25% and 4.25% respectively.

30. TAX STATUSThe Bank is subject to law No. 95 of 1983 and its amendments, so it is exempted from corporate tax for five yearsstarting from the subsequent year to the start up of operations, which was February 3, 1985. Therefore, startingfrom 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 often 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 yearstax 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 agreementwith the Tax Authority (Large Taxpayer Center).

The Stamp Tax has been examined till 31/12/2005 for the majority of bank branches and the remaining branches

42


30 June 2008L.E.

233,0641,047,356

5,370,4246,650,844

30 June 2007L.E.

188,432465,627

---654,059

Value of sharesL.E. '000 336,060336,060

Paid amountL.E. '000 182,127182,127

The rest not requestedL.E. '000 153,933153,933

Maturity within one yearL.E.

327,171,9013,121,155,0201,012,800,000

141,523,079511,604,594

4,315,678,280---

--- 9,429,932,874

2,275,041,9207,009,718,782

257,562,3609,542,323,062

Maturity more than one yearL.E.

------------

729,584,7263,287,709,341

57,181,943 124,322,4654,198,798,475

---1,044,116,914

1,224,983,1632,269,100,077

are under examination. The Bank has paid all stamp taxes as per tax claims. Regarding the salary income tax, alldues have been settled up to the year 2000. The Tax authority has investigated the file for the period from1/1/2000 till 31/12/2004 and the file has been transferred to The Tax Authority designated internal committee.Currently salary income tax for the year 2005 is under examination. The related claims provision is madea c c o r d i n g l y .

31. DISTRIBUTION OF ASSETS AND LIABILITIESAssetsLoans

LiabilitiesCustomers’ Deposits

32. POSITIONS OF SIGNIFICANT CURRENCIES

Egyptian poundsUS Dollars

33. MUTUAL FUNDSA) The Bank has established Export Development Bank of Egypt Mutual Fund (First) under the management of HCSecurities and Investments Company. Outstanding Fund certificates at the balance sheet date were 1,197,596certificates. The number of certificates owned by the Bank was 276,632 certificates. The redemption value percertificate as of June 30, 2008 amounted to L.E. 114.43

B) The Bank has established Export Development Bank of Egypt Fund (Second) under the management of DeltaRasmala Asset Management with capital L.E 100 millions divided to one million of daily accumulative interestcertificates. Outstanding Fund certificates at the balance sheet date were 8,858,285 certificates. The number ofcertificates owned by the Bank was 425,709 certificates. The redemption value per certificate as of June 30, 2008amounted to L.E. 114.1918

34. RELATED PARTY TRANSACTIONS The Bank deals with its related parties on the same basis as it deals with others.

AssetsDue from banksLiabilitiesDue to banksLong-term Loans

35. COMPARATIVE FIGURES Comparative figures were reclassified to conform with the current year presentation.

43


IndustrialL.E’000

4,840,457

TradingL.E’000

933,947

A g r i c u l t u r eL.E’000

334,004

ServicesL.E’000

900,563

F a m i l yL.E’000

309,909

FinancialL.E’000

284,508

TotalL.E’000

7,603,388

IndustrialL.E’000

1,838,150

TradingL.E’000

538,915

A g r i c u l t u r eL.E’00024,669

ServicesL.E’000

1,466,433

F a m i l yL.E’000

2,149,550

FinancialL.E’000

2,036,119

TotalL.E’000

8,053,836

30 June 2008L.E. ‘000

Surplus (deficit)(9,310)1,734

30 June 2007L.E. ‘000

Surplus (deficit)60,901

(10,432)

30 June 2008L.E.

157,739,124

73,752,445600,666,666

30 June 2007L.E.

112,351,274

23,547,041720,583,333

Silver Jubilee 1983-2008 - EBE Bank · Mr. Salah el-Din Ahmed Fahmy Acting Chairman, 1995-1996...

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Transcript of Silver Jubilee 1983-2008 - EBE Bank · Mr. Salah el-Din Ahmed Fahmy Acting Chairman, 1995-1996...