CIB — Grupo Cibest S.A.

CIB Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Profit: EGP 62.1 billion for the first nine months of 2025, with adjusted profits (excluding a one-time provision reversal) at EGP 50.5 billion.
• Return on Equity (ROE): 45.9%, adjusted to 37.7% excluding the one-off provision.
• Loan Growth: Total loans increased by 30% year-over-year, with local currency loans up 38% and foreign currency loans up 17%.
• Deposits: Total deposits reached EGP 1.04 trillion, an 8% increase year-to-date. CASA deposits grew from 55% to 60% of total deposits.
• Loan-to-Deposit Ratio: Increased to 49.7% from 39.4% year-over-year.
• Net Interest Margin (NIM): Local currency NIM at 13%, blended NIM expected to remain around 9% for 2025.
• Cost-to-Income Ratio: Increased to 14.3% from 12.2% in 2024, attributed to higher administrative expenses.

2. Strategic Updates and Business Highlights

• The bank's growth was supported by a favorable macroeconomic environment, including a decrease in inflation to 12% and a policy rate cut to 21.5%.
• CIB's recalibrated Expected Credit Loss (ECL) model led to a one-time provision release of EGP 13.1 billion, enhancing the bank's capital position.
• Investment in technology and talent continues, with a focus on maintaining a strong balance sheet and supporting economic growth.
• The bank has expanded its credit commitments significantly, with 99 new commitments year-to-date, indicating growing business confidence.

3. Forward Guidance and Outlook

• Loan Growth: Expected to be between 20% to 25% for 2025, with local currency loans growing faster than foreign currency loans.
• NIM Guidance: Anticipated to remain flat at around 9% for the full year 2025, with gradual compression expected due to declining interest rates.
• Cost of Risk: Projected to normalize around 0.5% to 0.7%, with a potential spike in Q4 2025, similar to historical trends.
• Deposit Growth: Expected to be between 10% to 15% for the year, primarily driven by CASA accounts.

4. Bad News, Challenges, or Points of Concern

• Foreign Currency Loan Growth: Slower growth noted due to prepayments, particularly from the tourism sector, which could impact overall loan growth metrics.
• Administrative Expenses: Increased by 35% year-over-year, driven by contract renewals and IT project capitalizations, raising concerns about cost control.
• Interest Rate Sensitivity: Potential for NIM compression as interest rates decline, although management believes the impact will be gradual.
• Regulatory Risks: Uncertainty around the future treatment of the ECL reserves and their potential inclusion in capital calculations.

5. Notable Q&A Insights

• Management clarified that the slowdown in foreign currency loan growth is primarily due to repayments rather than a lack of demand.
• The bank remains focused on loans over sovereign investments, despite the current favorable yields on sovereigns.
• Discussions with the Central Bank regarding the ECL model indicate that while reserves are currently not part of capital, there is potential for future inclusion depending on model stability.
• The bank's strategy includes maintaining a balance between loan growth and sovereign investments, with a focus on client relationships and flow retention.

Overall, CIB reported strong financial performance in Q3 2025, supported by a favorable macroeconomic environment, while also navigating challenges related to cost management and foreign currency loan growth. The outlook remains positive, with strategic initiatives aimed at sustaining growth and profitability.