EFG Hermes, a leading financial services institution in Egypt, has posted a net profit after tax and minority interest of EGP249million ($14 million) on revenues of EGP945 million.

 Net profit after tax and minority interest was up 6 per cent year-on-year (Y-o-Y) Y-o-Y when adjusting for one-off gains related to the sale of our stake in Lebanese bank Credit Libanais realized in the comparable period last year.

Fee and commission income rose 41 per cent Y-o-Y to EGP659 million in 1Q2018, with the Group’s solid performance during the quarter being driven by the strength of its non-bank financial institutions (NBFIs) and buy-side business. Strong gains in fees and commissions were offset by a comparatively weaker quarter for our treasury function given the strong gains from merchant banking exits in 1Q2017.

“In spite of challenging regional market conditions, EFG Hermes is off to a strong start in 2018 aided by a strategy that focuses on building Egypt’s leading NBFI platform, a larger buy side business and a sell side business that extends beyond Mena into frontier markets.  As those business lines continue to ramp up, we will, for the first time, segregate our consolidated profits between the investment bank and the NBFI to give our shareholders greater clarity into the value we have created by launching the latter three years ago,” said EFG Hermes Holding Group CEO Karim Awad.

“Our traditional lines of business continue to bolster the Firm’s standing as a regional leader, with our Investment Banking Division closing four key equity, M&A and debt capital market transactions. Our Securities Brokerage Division was once again the largest broker in the region, while our buy-side platform saw revenues grow more than twofold for the quarter,” Awad noted.

Revenues contributed by the Investment Bank, which recorded EGP718 million in 1Q2018, accounted for approximately 76 per cent of the Group’s total revenues during the period. Proceeds from capital markets, merchant banking activities and treasury operations accounted for 30 per cent of total operating revenue in 1Q2018, reaching EGP285 million.

The Firm’s strategy of diversifying its NBFI offering continued to deliver positive results, with net (after eliminating associated financing costs) revenues more than doubling (+125 per cent Y-o-Y) to EGP227 million, contributing EGP45 million (18 per cent) to the bottom line in 1Q2018. Portfolios continued on a solid path of growth, reaching c.EGP4.0 billion by the end of 1Q2018.

Meanwhile, buy-side revenues rose 110 per cent Y-o-Y to EGP116 million, predominantly on the back of the consolidation of our regional asset manager affiliate FIM and increased private equity management fees. Sell-side revenues were broadly unchanged, up 2 per cent Y-o-Y to EGP316 million backed by frontier executions and higher advisory fees during the quarter.

The Group’s employee expenses stood at 42 per cent of revenues, well below the firm’s longstanding target of 50 per cent.

Net operating profit stood at EGP339 million in the first quarter, while net profit after tax and minority interest was EGP249 million (+6 per cent Y-o-Y after adjusting for 1Q2017 one-off gains).

“2018 will see the continuation of our diversification and expansion strategy, with at least one more on-ground expansion into a new geography and the full operational launch of our factoring business under our NBFI platform both planned during the year,” concluded Awad. – TradeArabia News Service