ADIB Egypt reported 4Q2015 net income of EGP72 million, a spike of 59% Y-o-Y and 160% Q-o-Q, with 3Q2015 being a low base, owing to a large one-off deferred tax charge, as well as a large one-off provisioning charge for contingent liabilities. Actual earnings in 4Q2015 came in largely ahead of our forecast of EGP32 million. Key drivers of the surge in earnings in 4Q2015 and the strong earnings beat are: i) a one-off FX revaluation gain of the bank’s assets and liabilities in 4Q2015 (EGP64 million in 4Q2015); ii) and a release of other provisions also in 4Q2015. FY2015 earnings stood at EGP212 million, a decline of 17% Y-o-Y due to a large deferred tax charge, as ADIB Egypt had to adjust its tax deferred asset downwards to reflect the new, lower tax rate of 22.5%. FY2015 came in 24% ahead of our forecast of EGP171 million, owing to a EGP94 million one-off FX revaluation gain.   Main positives: i) Strong Y-o-Y double-digit growth in net interest income; ii) Strong deposit growth (+23% Y-o-Y; +6% Q-o-Q); iii) Lower-than-expected operating expenses.   Main negatives: i) Weak loan growth (+1% Q-o-Q); ii) Increase in the NPL ratio; iii) Decline in non-interest income and weak fee income; iv) Surge in tax charges and loan loss provisioning costs.   Our view: A mixed set of numbers, in our view. Loan growth slowed in 4Q2015 at 1% Q-o-Q as growth in the corporate book decelerated to 0.3% Q-o-Q (compared to +5.6% Q-o-Q in 3Q2015), although total loan growth was strong on a Y-o-Y basis at 22%. Revenue growth was solid, up 23% Y-o-Y, driven mostly by impressive growth in net interest income (+42% Y-o-Y). The net interest spread widened 25bps Y-o-Y on higher asset yields; however, it narrowed 20bps Q-o-Q due to higher funding costs and lower asset yields compared to 3Q2015. Fee income growth was weak (+5% Y-o-Y; -7% Q-o-Q) as the FX shortage continues to drag down trade finance volumes. Non-interest income was negative owing, mostly to negative FX income in 4Q2015. Loan loss provisioning costs surged in 4Q2015, following a recovery booked in 3Q2015. The bank booked a recovery in other provisions in 4Q2015, driving a recovery in total provisioning. Credit quality deteriorated, with a strong increase in the NPL ratio from 3.6% in September 2015 to 5.9% in December 2015, as NPLs on an absolute basis increased by 67% Q-o-Q (+71% Y-o-Y) in 4Q2015. NPL coverage fell from 71% in September 2015 to 47% in December 2015. (Earnings release, Elena Sanchez-Cabezudo, Rajae Aadel)