Egypt-based EFG Hermes, leading investment bank in the Arab world, suffered a net loss of EGP29 million ($4.2 million) in the second quarter compared to EGP71.2 million net profit a year earlier, it said on Sunday.

The firm reported total consolidated operating revenues of EGP506 million in 2Q13, with a net profit of EGP81 million after taxes and before minority interest and impairment charges.

EFG Hermes continues to implement a cost-cutting plan with the aim of reducing operating costs to about EGP500 million in 2014, it said in a statement.

“This is very much in line with our longstanding policy of growing our staff base through promotion from within. The reduction in our headcount has been very difficult for everyone involved, but it has been necessary,” said Karim Awad, co-CEO of Investment Bank at EFG Hermes.

“Measures to reduce a multitude of other costs including occupancy, travel and administrative expenses — as well as generating yields from our idle real estate portfolio — are well underway and are expected to deliver clear benefits in the near future.”

Management is also firmly committed to its strategy, announced in May 2013, of shedding non-core assets and returning most of the proceeds to shareholders, all while maintaining a well-capitalized balance sheet.

“Our strategy regarding the disposal of non-core assets is in place,” noted Awad. “But its execution will be a function of market conditions, with timing based on our ongoing monitoring so that we execute at valuations that are accretive for our shareholders.

As part of that strategy, the firm has already finalized the sale of its former headquarters in Dokki, Giza, for a total consideration of EGP38 million, which should generate a capital gain in the third quarter, said Awad.

“Operationally, our core divisions performed quite well in the second quarter even as political events in Egypt continue to weigh heavily on revenue generation,” Awad said.

“Throughout the first half, the firm has maintained its strategy of growing its business in the Gulf to bridge the revenue gap in Egypt. This will remain our emphasis in the future, and we are simultaneously very mindful of opportunities to generate new fees through opportunities in Egypt.” – TradeArabia News Service & Reuters