EFG Hermes, a leading investment bank in the Arab world, has reported a nearly three-fold year-on-year rise in the group net profit after tax and minority interest to EGP119 million on total group operating revenues of EGP 563 million ($16.7 million).

The Egypt-based investment bank made a strong contribution to both bottom-line profitability and to a 14 per cent rise in Group Operating Revenues. In the quarter just ended, EFG Hermes contributed EGP60 million to Group Net Profit After Tax and Minority against a loss of EGP31 million in the first quarter.

The operating revenue increased 27 per cent year-on-year to EGP246 million. Excluding the capital market activities, the core businesses of advisory, securities brokerage, asset management and private equity generated 46 per cent of their revenues from regional operations, with the remaining coming from operations in Egypt.

Core lines of business continue to enjoy market-leading positions in Egypt and a growing share of market activity in the GCC, said the bank in a statement.  

Cost optimization effort, meanwhile, saw the ratio of employee costs to revenues decline to 49.8 per cent in the first quarter of 2014, a range that management will continue to try to target going forward.

By comparison, the ratio of employee costs to income stood at 72 per cent in the fourth quarter of 2013 and 69 per cent in the same quarter of last year.

As a result of cost optimization and the pickup in revenues, the net operating profit at the Investment Bank has risen to EGP 87 million, said the statement.

The Commercial Bank, meanwhile, contributed EGP 59 million to Group Net Profit After Tax and Minority as better net interest income and fee and commission income largely offset the impact of lower trading income.

In line with a strategy to control costs and maximize shareholder value announced in May 2013, EFG Hermes returned EGP 425 million to shareholders in the first quarter through a share buyback, said the statement.

The investment bank continued to dispose non-core assets, including the recent divestment of most of its stake in leading Egyptian real estate developer Sixth of October Development and Investment Company (SODIC), it added.-TradeArabia News Service