EFG Hermes, a leading investment bank in the Arab world, reported a 17 per cent year-on-year rise in net profit to E£79 million, after tax and minority interest from continuing operations at the investment bank platform.

Operating revenue from the investment bank surged 62 per cent year-on-year in Q1 to E£397 million, allowing the investment bank platform to deliver a 50 per cent rise in operating profit to E£131 million.

Notably, the bank’s bottom line results in Q1 2016 do not reflect the impact of EFG Hermes’ recent acquisition of leading microfinance platform Tanmeyah, which will be consolidated in the firm’s financials beginning in Q2 2016, a statement said.

The investment bank maintained employee expenses as a percentage of operating revenues at 52 per cent in the first quarter, boosting operating profit even as total investment bank operating expenses rose 69 per cent year-on-year to E£266 million.

The management noted that EFG Hermes is in the process of divesting its stake in Crédit Libanais, thus the commercial bank operation has been reclassified as an asset held for sale and so is reported as a discontinued operation in EFG Hermes’ Q1 2016 financial statements.

That reclassification has resulted in a non-cash impairment charge of E£280 million on the assets held for sale. Despite the profits generated by the bank during the quarter, EFG Hermes has accordingly recognised a non-cash loss of E£207 million contributed by the commercial bank, translating into a group-level  (including both continued and discontinued operations) net loss after tax and minority interest of E£128 million in Q1 2016.

“Our first quarter results demonstrate the strong profitability of the group’s investment bank platform, which is effectively our continuing operation once the sale of Crédit Libanais is completed. This reflects an outstanding performance by our fee-generating lines of business, including the now one-year-old EFG Hermes Leasing subsidiary,” noted group chief executive officer Karim Awad.

Crédit Libanais posted a net profit after tax of $17.4 million in Q1, an increase of 2 per cent year-on-year. Total assets edged above the $10 billion threshold for the first time, driven by an increase in customer deposits directed primarily to placements with the central bank. – TradeArabia News Service