Renaissance Capital upgrades CIB to Buy, TP at LE 95.7

CAIRO – 13 July 2017: Renaissance Capital upgraded Thursday its rating on the Commercial International Bank (CIB), Egypt’s largest private bank, to Buy from Hold, raising its target price (TP) to LE 95.7 ($5.33) from LE 83.2.

The investment bank gave CIB a strong earning per share (EPS) growth outlook, in a recently released report.

“CIB is well positioned to deliver 20-25 percent earnings growth even as margins trend lower over the medium term, due to its strong provisioning cover,” the investment bank recommended.

Renaissance Capital noted that the bank enjoys low funding costs and high operational efficiency, suggesting it can focus on growth as the macro recovery picks up.

The investment bank expected the CIB to maintain a 21 percent net income compound annual growth rate (CAGR) over 2016-2021, supported by a lower cost of risk as the economy recovers.

“We expect asset quality to remain challenging this year but improve over the coming years, with the non-performing loan (NPL) ratio reaching 5 percent by 2020,” the report said.

Renaissance Capital mentioned that lower-than-expected loan growth and weaker margins are the key downside risks of the CIB, the report read.