Coronavirus outbreak delays Egypt’s CIB bank acquisition plans: Ezz Al-Arab

Egypt’s largest private lender, Commercial Bank of Egypt,  said that coronavirus outbreak has delayed the implementation of its integration plan, Chairman Hisham Ezz Al-Arab told Bloomberg.

He also noted that the bank has put further acquisitions on hold until it consolidated the operations of Kenya’s Mayfair Bank Ltd. into its own businesses,He added that CIB last month bought 51 percent of the lender for about $35 million.

CIB is amassing cash so it will be able to consider dividend payouts at the end of the year, when it has assessed the impact of the coronavirus pandemic. CIB has declared dividends once per year since 2011.

The bank has much more capital and liquidity buffers than required by regulators, giving the bank “an ample amount of firepower in case we want to increase dividends next year or keep them the same,” Chairman Hisham Ezz Al-Arab said in an interview with Bloomberg TV. “I don’t see any use for the excess capital we have, unless we carry on with our expansion policy.”

“After we do that and finish with that we can look at other opportunities” as the Covid-19 outbreak has delayed the implementation of the integration plan, he said.

Dividend talk is rare among banks that are being relied upon by regulators to use additional cash being pumped in to support economies battered by measures to contain the virus. Still, CIB is preparing for the fallout: the lender more than doubled provisions in the first quarter in anticipation that non-performing loans may increase, Al-Arab said.

If conditions improve, the bank may release these provisions, or will otherwise increase them. Egyptian banks pay annual dividends and CIB will consider its payout for this year during the first quarter of 2021, he said.

“The challenge we all have now is, we don’t know really when we are going to fly,” Al-Arab said.

CIB is using the coronavirus to determine which functions can be done remotely and which jobs can be automated so employees can be redeployed to more productive work.

“We are looking at the entire way of conducting business, and ways of changing to improve efficiency,” Al-Arab said in a separate interview. “We are functioning well. Our thinking is that things will not go back to normal, the world will change and we should accept that and change with it.”