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Frequently Asked Questions

EFG Hermes Asset Management is the fund manager for Credit Agricole I, Credit Agricole II equity funds and Credit Agricole III money market fund. With over 25 years of experience in the Egyptian market, the fund manager makes investment decisions on behalf of the investors based on through research and close monitoring of market conditions. EFG Hermes Asset Management is responsible for the performance of the funds under its management, as they handle the investment part of the fund.

Mutual funds and Certificates of Deposit (CDs) are two distinct investment options that differ in several key aspects, including structure, risk, returns, diversification and liquidity. below is a comparison:
  1. Investment Type
  • Mutual Funds: Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, treasury bonds, or other securities. The value of your investment fluctuates based on the performance of the underlying assets.
  • CDs: A CD is a fixed-term deposit offered by banks and credit unions. You deposit money for a set period (e.g., 1 year, 3 years, etc.), and the bank pays you a fixed interest rate over that term. The principal is guaranteed, and the interest is usually fixed.
  1. Return and Risk
  • Mutual Funds: These carry market risk because the value of the underlying securities can rise and fall. As a result, returns are variable and depend on the performance of the assets within the fund. Equity mutual funds tend to have higher potential returns, but with greater risk, whereas bond funds offer more stable, albeit lower, returns.
  • CDs: Generally considered low risk because your principal and interest are guaranteed by the issuing bank. However, CDs face interest rate risk- if interest rates rise during the CD term, your fixed rate become less attractive. The return is fixed and predictable, but it is typically lower than the potential mutual fund earnings, especially in a low-interest-rate environment.
  1. Liquidity
  • Mutual Funds: Generally liquid, allowing investors to buy or sell shares daily. Some funds may offer weekly liquidity for entry and exit.
  • CDs: Funds are locked in until the maturity date. Early withdrawals may result in penalties, such as losing some of the accrued interest, and withdrawals are usually not allowed within the first six months.
  1. Diversification
  • Mutual Funds: Provide built-in diversification since the fund invests in a variety of securities, helping to spread risk across multiple assets.
  • CDs: offer no diversification, as the investment is concentrated in a single, fixed-income product.

Redemption orders can be signed at any of the bank’s branches across Egypt. Redemption frequency varies depending on the fund. Some funds offer daily redemption, while others provide weekly redemption. However, in all cases, orders must be submitted before 12:00 pm on any applicable day.

Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of capital market instruments, including equities listed on the stock exchange, treasury bills, treasury bonds, or other securities. Each investor in a mutual fund owns shares of the fund, representing a portion of the overall holdings. These shares are referred to as Investment Certificates, symbolizing the investor’s ownership in the mutual funds. The primary objective of mutual funds is to provide investors with access to a diversified portfolio managed by professional fund managers, reducing risk compared to investing in individual securities. Investors benefit from the collective buying power, professional management, and diversification of the fund, which can be difficult to achieve on their own.

All mutual funds announce the Investment Certificate price on a weekly basis, allowing investors to track their performance. Additionally, the fund manager publishes quarterly fact sheets that provide insights into the fund’s performance.
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PRESS RELEASE – Q3 - 2016 RESULTS

Strong set of results in a changing environment, generating a net profit of EGP 975.7 million at end of September 2016

Highlights on 2016 results till end of September:

  • Growth of Year to Date Net Income after tax by 30.1%, reaching EGP975.7 million
  • Growth Deposits by 13.9% reaching EGP30,367.3 million
  • Increase of Gross Loans by 3.8% reaching EGP15,234.1 million

 An overall satisfactory commercial development:
During the 9 months of 2016, Credit Agricole Egypt has pursued its growth path according to the set strategy putting customers at the top of the bank’s priorities. The global performance of the different lines of business triggered a satisfactory and ongoing evolution in the overall balance sheet up by 10.7% Year on Year.

The bank witnessed a robust growth of clients’ deposits moving upward by 13.9% over December 2015, especially low cost deposits up by 19.5% contributing to maintain low cost of funds despite continuing interest rates hike.

Gross loans portfolio increased by 3.8% over December 2015, due to a selective policy for Retail (+11.9%) and Corporate loans with special emphasis on reducing FCY exposure since beginning of 2016. In addition to Corporates and Enterprises’ weaker demand, it’s led to a decrease in Corporate loans outstanding (-1.1%).

The number of customers has witnessed a growth of 6.2%, over the 9 months of 2015, in parallel to the development of the bank’s network to reach 80 branches as of September 2016 after the recent opening of a new branch in Mansourah.

Deposits – EGP Million YTD
Sep-2016		 YTD
Dec-2015		 Variance
 High Cost 18,442.4 16,682.2 10.6%
 Low Cost 11,924.9 9,981.0 19.5%
Total 30,367.3 26,663.2 13.9%

 

Loans – EGP Million YTD
Sep-2016		 YTD
Dec-2015		 Variance
 Retail 5,269.1 4,706.9 11.9%
 Banks 269.4 167.5 60.9%
 Corporate 9,695.6 9,807.2 -1.1%
Total 15,234.1 14,681.6 3.8%

 

An ongoing  sustainable profitability:

During the 9 months of 2016, the growth of the Net Banking Income has reached a very satisfactory level of 15.9% over same period 2015. This is triggered by the rise of the Net Interest Income by 25.7% driven by both higher margins and volumes; especially in Retail banking, local currency loans and low cost deposits. As for the net commissions and fees, it has recorded a decrease of 6.0%, mainly in Trade Finance and Foreign Exchange commissions impacted by the slowdown in volumes of transactions due to foreign currency scarcity.

Income Statement – EGP Million Q32016 Q22016 Q32015 Q3-16 Vs.

Q3-15

 YTD
Sep-2016		 YTD
Sep-2015		 Variance
Net Interest Income 537.1 476.2 402.2 33.5% 1,455.7 1,158.2 25.7%
Net Fees & Commission Income 103.9 120.9 118.1 -12.0% 340.0 361.8 -6.0%
Net Trading Income 27.5 45.4 33.5 -17.9% 122.1 126.7 -3.6%
Other Operating Income 4.6 7.1 1.3 253.8% 14.6 20.1 -27.4%
Net Banking Income 673.1 649.7 555.1 21.3% 1,932.4 1,666.8 15.9%
Total Expenses (214.3) (208.1) (194.1) 10.4% (629.1) (578.6) 8.7%
Gross Operating Profit 458.8 441.5 361.0 27.1% 1,303.3 1,088.2 19.8%
Other Income (Expenses) 44.0 (5.7) 21.5 104.7% 48.3 38.0 27.1%
Income Before Impairment &Tax 502.8 435.8 382.5 31.5% 1,351.6 1,126.2 20.0%
Impairment (65.3) (18.5) (38.1) 71.4% (89.5) (89.2) 0.3%
Net Income Before Tax 437.5 417.4 344.4 27.0% 1,262.1 1,037.0 21.7%
Tax (94.1) (98.5) (77.5) 21.4% (286.4) (287.1) -0.2%
Net Income 343.4 318.8 266.9 28.7% 975.7 749.9 30.1%
Cost / Income Ratio 31.8% 32.0% 35.0% 32.6% 34.7%

 

Credit Agricole Egypt continued to improve its efficiency, achieving a Cost/Income Ratio of 31.8%; Expenses growth (+8.7%) is driven by staff costs increase, as well as continuous investments to support digital transformation of the bank. It should be noted that September has witnessed the launch of a state-of-the art Mobile banking application (banki by Credit Agricole), a new bank website and the preparations for the Mobile wallet, as part of the Omni Channel development strategy of the bank.

In a context of slower economic growth and higher constrains in foreign exchange market, Credit Agricole Egypt increased its general provisions, explaining growth of Cost of Risk in Q3 2016 despite the moderate increase of non-performant loans. The bank will continue to enhance cautious provisioning policy in Q4 2016.

The income before impairment and taxation reached EGP 1,351.6 million, thus moving up by 20.0%. The tax rate decrease to 22.5% in 9 months 2016 has contributed positively to profit growth.

High profitability, Good Quality of Assets and Strong Solvency:

Continuous strong Risk management, productivity and efficiency metrics are constantly followed and ensured within solid solvency, in order to support the ongoing growth of the bank’s activities.

Following devaluation of EGP early in November 2016 (from 8.88EGP/ 1 USD to 13.0EGP / 1 USD) This was just for the first day after devaluation, Capital Adequacy Ratio decreased from 14.8% to 12.6% as direct impact of currency devaluation in EGP equivalent of Risk Weighted Assets in FCY (increasing denominator of the ratio). No significant impact of interest rates hike which occurred the same day (+300 bp in CBE corridor rates) is recorded on capital base (numerator of the ratio), thanks to prudent management of securities portfolios of the bank. Moreover, high level of profitability will  be maintained in the coming months, benefiting from favorable environment of higher interest rates and free floating currency system. This will allow the bank to manage properly its Capital Adequacy Ratio thanks to 2016 Net Profit and continuous support of Credit Agricole Group.

Conclusion:

Credit Agricole Egypt kept delivering high level of performance for the first 9 months of 2016 through robust business and profits growth, while maintaining good quality of assets and strong solvency. As a result, the bank achieved an increase of net income after tax of 30.1% over 2015, which reached EGP975.7 million.

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