Telecom Egypt, the country’s sole fixed line provider, posted a 46% jump in second-quarter profit, beating most analyst forecasts, as revenues increased and a foreign exchange gain buoyed earnings. Net profit for the second quarter of the year amounted to 896mn Egyptian pounds ($128mn), up from 616mn pounds in the year ago period, Telecom Egypt said in a statement to the London Stock Exchange yesterday. Revenue in the same period was up 16% to 2.77bn pounds, from 2.39bn pounds, while earnings per share for the period was 0.52 pounds, the company added.
Analysts at Beltone Financial had forecast a second quarter net profit of 705mn pounds, while Cairo-based EFG-Hermes predicted 799mn pounds.
Telecom Egypt said net profit benefited from the reversal of an impairment charge from the previous period, as well as a foreign exchange gain of 137mn pounds. It added that the contribution to profit from its 45%-stake in Vodafone Egypt was 258mn pounds in the second quarter. The telco said it ended the quarter with 7mn fixed-line subscribers and 1.5mn retail ADSL (asymmetric digital subscriber line) customers.
“Our wholesale business, which contributed 57% of total revenues during the quarter, saw significant year-on-year increases in international wholesale traffic, a direct result of the bilateral agreements we have secured,” Mohamed Elnawawy, managing director and chief executive of Telecom Egypt, said in the statement.
The National Telecommunications Regulatory Authority announced in December it would allow Telecom Egypt, which is 80%-owned by the government, to join three existing privately-owned telcos - Vodafone Egypt, Mobinil and Etisalat Misr - in offering mobile services. The regulator will also eventually allow private mobile companies to establish fixed-line systems on existing infrastructure owned by Telecom Egypt, which enjoys a monopoly on land lines. There was no update in the statement on when Telecom Egypt would launch mobile services.
Commercial International Bank
Commercial International Bank, Egypt’s biggest lender by market value, said stronger revenues and improved margins helped drive a 28% rise in second-quarter net profit despite flat loan growth.
The bank, which like many Egyptian businesses is trying to maintain its financial performance amid continuing political uncertainty, said quarterly consolidated net profit was 671mn Egyptian pounds ($96mn), up from 523mn pounds for the same period last year.
The improved results came as revenues climbed 49% on year to 1.83bn pounds, the bank said in an e-mailed statement. Non-interest income performed particularly well, registering an 87% increase over the second quarter of last year to 554mn pounds, it said.
Egypt has been gripped by political uncertainty and violent protests since the military took power from former president Mohamed Mursi in July. CIB has benefited from a reputation as one of the most financially sound institutions in Egypt during its long-running political crisis.
The bank said its cost of funding has been steady in part because of growth in demand deposits, helping boost its margins. The bank, meanwhile, was able to charge higher rates of interest on loans, bringing quarterly net interest income to 1.27bn pounds, a 37% year-on-year rise.
But while deposits grew 6% on quarter, the bank said loan growth was flat. The loan business “remained sluggish due to ongoing economic uncertainty,” chairman and managing director Hisham Ezz al-Arab said in the statement. The bank had 45.7bn pounds of loans at the end of the quarter.
Still, al-Arab said, given the bank’s strong financial position, it “stands ready both to weather continued weakness in the operating environment and grab market opportunities where they arise.”
CIB has the largest lending market share of any private-sector bank in Egypt, it said, at 8.42% of loans in the country as of April.
The bank booked 264mn pounds of loan loss provisions in the second quarter, it said, up from 143mn pounds in the same period last year. Non-performing loans were 3.95% of the total loan portfolio on a standalone basis, it said.
