CIB Rated BBB-/A-3 by S&P; Outlook Stable.

LONDON--(BUSINESS WIRE)--Standard & Poor's CreditWire 5/19/98--Standard & Poor's today assigned its triple-'B'-minus long-term and 'A-3' short-term counterparty ratings to Commercial International Bank, (Egypt) S.A.E. (CIB). These ratings reflect CIB's stable and strong financial profile, as well as its importance to the Egyptian financial system. The bank's credit profile is supported by strong profitability and CIB's status as the leading private-sector bank in Egypt. While growing competition from both public and private sector banks has narrowed net interest margins, the bank has strategically positioned itself to rely on more fee generating businesses over the next few years to offset the decline in spreads. Standard & Poor's believes that CIB possesses both the financial and managerial strengths to benefit from new economic developments in Egypt. Rapid loan growth in recent years and concentrations in single customers in both loans and deposits leave CIB exposed to an economic downturn in Egypt, although its strong credit culture gives it the right tools to manage such an event.

At year-end 1997, CIB had total assets of Egyptian pound (Eu)13.5 billion (US$4.0 billion at Eu3.4 to US$1), making it the country's fifth-largest bank and largest private-sector bank. In terms of capital, CIB ranks second highest among Egyptian banks behind its 19.5% shareholder National Bank of Egypt (NBE). CIB is a wholesale bank serving primarily large private-sector corporations, embassies and export-oriented companies. Although it has a comparatively small domestic network of 26 branches and 21 sub-branches, branches are strategically located to meet the growing needs of major clients. At year-end 1997, the bank had over a 16% market share of lending to the private sector, and leads in domestic loan syndication. Despite strong loan growth over the past six years averaging 34% in nominal terms, CIB's problem loans were less than 2.8% of total loans at year-end 1997, with a provision coverage of 124%. The bank maintains a strong corporate culture, supported by an efficient system of internal controls and risk management developed by its former foreign partner, Chase Manhattan Bank (Chase), as well as the most advanced management information systems in Egypt. At year-end 1997, CIB's capital to asset ratio was adequate at 9%, and in the near-term the bank plans to augment capital to support growth.

CIB is the most profitable bank in Egypt. In 1997, net income rose to US$79 million, reflecting a 2.2% return on average assets and a 24% return on average equity. In an environment of declining inflation, CIB has offset narrowing interest margins through strong loan growth and by developing fee generating business lines. At year-end 1997, CIB had a 26.2% stake and management control of Commercial International Investment Company (CIIC), the leading equity investment, corporate advisory, and merchant bank in Egypt. While Standard & Poor's expects more competition in investment banking services, in the medium term CIB should maintain its leading investment banking position in Egypt through a recently-formed in-house division.

OUTLOOK: Stable.

Standard & Poor's believes that CIB's competitive position and core corporate franchise will remain strong in the years ahead due to its investments in technology and its focus on improving services and products diversity. New fee generating services should off-set the reduction in net interest margins. Over the medium term vulnerabilities in asset quality may occur, particularly if a negative economic trend emerges in Egypt, due to the bank's rapid credit expansion in the private sector during the market liberalization and reform in the first half of the 1990's, Standard & Poor's said.---CreditWire

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