Thursday 15 November 2018

Karim Awad

EFG Hermes Q3 profit surges 476pc to top $13m

CAIRO, November 16, 2017

EFG Hermes, a leading financial services corporation in Mena, posted a net profit of EGP237 million ($13.4 million) after tax and minority interest for the third quarter (Q3) of the year, marking an increase of 476 per cent.

The Group’s strong performance in the third quarter was driven by its product diversification and geographic expansion strategy, delivering a 184 per cent surge in revenues during 3Q17 to EGP834 million.

“Withstanding the inherent seasonality during the third quarter due to a slow summer season and a number of holidays, our strategy to diversify our product base and expand into newer markets continues to create significant value for our shareholders with another very strong quarter reported by the Firm, in which growth was largely driven by a suite of new initiatives under this strategy,” said EFG Hermes Group chief executive officer Karim Awad.

“Parallel to pursuing new ventures and expansion opportunities, our investment banking platform’s sell-side and buy-side businesses delivered outstanding results. Driven by a world-class team, the platform executed a number of high profile advisory mandates, led regional exchanges in our main markets, and capitalized on the new synergies of a key buy-side investment,” he added.

The Securities Brokerage division, which led five regional exchanges, reported a revenue of EGP172 million in 3Q17, a 101 per cent year-on-year increase largely due to higher revenues from the firm’s traditional markets – namely Egypt & Kuwait – and augmented by contribution from new frontier market operations and continued growth of the newly launched structured products division.

The Investment Banking Division, the top-ranked adviser on Thomson Reuters’ Middle East’s equity capital market rankings, contributed EGP21 million during 3Q17, a year-on-year increase of 58 per cent owed to closing a number of advisory mandates during the quarter. In aggregate, the Firm’s sell-side business grew 95 per cent year-on-year.

The firm’s buy-side business, comprised of both the Private Equity and Asset Management divisions, recorded a year-on-year growth of 161 per cent. The Asset Management Division’s reported a revenue of EGP89 million in 3Q17, a 199 per cent year-on-year increase driven by the Firm’s recently announced investment in Frontier Investment Management Partner Ltd. (FIM) in 3Q17, which also increased the Division’s AUM base to reach USD3.2 billion.  

Similarly, the Firm’s Private Equity Division recorded a year-on-year growth of 95 per cent in revenue during 3Q17 to contribute EGP33 million; largely attributed to an increase in management fees.

EFG Hermes Finance, the Firm’s NBFI platform continued its stellar growth trajectory, recording a 127 per cent year-on-year growth in 3Q17, as EFG Hermes Leasing’s revenues increased 178 per cent year-on-year to EGP86 million. Furthermore, Egypt’s leading private sector Microfinance company, Tanmeyah, recorded an 86 per cent year-on-year increase in revenue to reach EGP72 million.

Supplemented by capital gains realized from seed capital in funds, merchant banking activities, which the Firm initiated as part of its new strategic direction, reported a revenue of EGP361 million, to record a strong 357 per cent year-on-year increase in 3Q17.

Overall during the third quarter, the merchant banking platform generated EGP361 million of revenues, representing c. 43 per cent of the total revenues.  The investment bank delivered 38 per cent of total revenues with a contribution of EGP315 million, while the non-bank financial services platform contributed 19 per cent of total revenues at EGP158 million.

Despite the challenges associated with costs incurred on the back of expanding the business into new ventures and jurisdictions, management continued to maintain the employee expenses’ ratio to operating revenues well below the 50 per cent mark, at 42 per cent during 3Q17 compared to 47 per cent recorded a year earlier.

Accordingly, net operating profit grew at a faster pace than revenues recording 263 per cent rise year-on-year, to reach EGP274 million in 3Q17 and reflecting in a net operating profit margin of 33 per cent in 3Q17. This filtered into a Group net profit after tax and minority interest from continued operations of EGP237 million in 3Q17, up 476 per cent year-on-year.  

“The final months of 2017 will see us make important headway in our strategic goal of expanding our product base, with a major product to be launched under the NBFI platform in the few months ahead,” said Awad. “While pursuing diversification of our products and expanding our presence, EFG Hermes will continue to enhance its traditional lines of business, reinforce its position as the leading financial services corporation in Mena and heighten our execution capabilities across high growth Frontier markets.” – TradeArabia News Service

Tags: Net Profit | EFG hermes | 2017 |

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