Credit Agricole Egypt has released more details on its 4Q/FY16 results (net earnings had been disclosed a few weeks ago). Revenue growth was strong both in 4Q16 (+56% Y-o-Y; +24% Q-o-Q) and in FY16 (+25% Y-o-Y), thanks to stronger spreads and strong non-interest income. Net income in 4Q16 increased 37% Y-o-Y and 22% Q-o-Q despite a large provisioning charge during the quarter. FY16 net income increased 30% Y-o-Y to EGP1,354mn.   The Board of Directors has proposed a cash DPS of EGP0.86, below our forecast of EGP1.8 and a 2015 cash dividend of EGP1.95 per share. CAE has reported capital adequacy ratio of 11.6% for December 2016, which is above the minimum required by Egypt’s Central Bank of 10.6%. On our estimates, including the appropriation of earnings for 2016 (which Egypt banks can only include after the AGM), the capital adequacy ratio would increase to c15%. CAE is well-capitalised, bearing in mind that it is planning to raise subordinated debt from the parent company worth USD30mn during 1H16, which will boost tier-2 capital.   Key highlights:   Loan growth driven by appreciation of USD loans, but there was also decent growth in EGP portfolio: Customer loans increased 27% Y-o-Y and 24% Q-o-Q, as USD loans were translated at a higher EGP value in December 2016. EGP loans increased 5% Q-o-Q and 12% Y-o-Y, with retail lending being a key driver of growth   Strong spreads: The net interest spread rose c10bps Q-o-Q to 5.92% (c40bps Y-o-Y increase in the FY16 net interest spread). Both spread expansion and strong growth in interest earning assets drove a 50% Y-o-Y and 19% Q-o-Q increase in net interest income   Weaker-than-expected fee income: Fee and commission income came as a negative surprise and fell 9% Y-o-Y in 4Q16. There was only a slight 3% Q-o-Q recovery in fees in 4Q16, but we had expected a stronger pick-up on higher trade finance volumes (a trend we have seen at CIB and QNB Alahly’s 4Q16 results)   Higher NPL ratio Q-o-Q, NPL coverage unchanged: There was a c48% Q-o-Q increase in absolute NPLs in 4Q16, but this number is distorted by the translation of USD NPLs to a higher EGP value. The NPL ratio rose to 4.12% in December 2016, from 3.5% in September 2016. NPL coverage in December 2016 was broadly flat Q-o-Q at 182%. (Company disclosure, Elena Sanchez-Cabezudo)   Credit Agricole: EGP36.01 as of 20 Feb. 2017, Rating: Buy, TP: EGP48.00/share, MCap: USD712mn, CIEB EY/CIEB.CA