EFG Hermes Reports 27.3% Year-on-Year Rise in Net Profit to EGP 98 mn in 1Q13, Looks to Distribute One Bonus Share for Every Five Shares Held by Its Shareholders
Key Highlights of 1Q13 Include:
- EFG Hermes reports a 14% rise in total Group revenues to EGP 494 million, while net income surged 27% to EGP 98 million Y-o-Y.
- Investment Bank revenue rose 17% Y-o-Y to EGP 194 million, driven by an improvement in core business revenue from fees and commissions.
- Fee and commission revenue increased 26% Y-o-Y to EGP 158 million in 1Q13 on higher revenue generated by the Firm’s Securities Brokerage, Asset Management, Investment Banking and Private Equity divisions.
- Securities Brokerage closed the quarter as the number-one broker in Egypt by market share of executions while maintaining a leadership position in other key regional markets.
- Investment Banking closed two transactions in the quarter, and kepta continued focus on building a strong pipeline of transactions.
- EFG Hermes Asset Management closed the quarter with USD 3.1 billion in AUM and notched five wins in the performance-based Zawya MENA Fund Rankings.
- Crédit Libanais reported net profits of USD 16.2 million in 1Q13, up 65% Q-o-Q and lower 12% Y-o-Y. Total assets reached rose 9% Y-o-Y to reach USD8.0 billion at the end of 1Q13, with loans growing 16% Y-o-Y and deposits increasing 10% Y-o-Y.
May 22, 2013
(Cairo, Egypt) —EFG Hermes[*], the leading investment bank in the Arab world, released today its consolidated financial results for the first quarter of 2013, reporting net income after taxes and before minority interest of EGP 98 million on total consolidated operating revenues of EGP 494 million.
Group revenues rose 14% Y-o-Y in 1Q13, driven by 17% growth in Investment Bank revenues to EGP 194 million, reflecting rising contributions from all four fee-earning lines of business. The Commercial Bank’s contribution to Group revenue increased 12% Y-o-Y to EGP 300 million in the quarter.
Revenues for the quarter split as 61% contributed by the Commercial Bank and 39% by the Investment Bank.
At the Investment Bank, total revenues rose 17% Y-o-Y in 1Q13 to EGP 194 million, reflecting a strong improvement in fee and commission income generated by core businesses including Securities Brokerage, Investment Banking, Asset Management and Private Equity. Fee and commission revenues rose 26% Y-o-Y to EGP 158 million in the first quarter.
“Going forward, we have a clear strategy that will allow us to capture opportunities and create shareholder value with the full backing of our Board of Directors,” said Karim Awad, Co-CEO of the Investment Bank, noting, “Revenue generation remains a top focus for all divisions with an increasing focus on regional growth opportunities while continuing to preserve our market share in our home market of Egypt.”
At the same time, the Firm will continue a comprehensive cost-cutting plan, the first phase of which was implemented in 1Q13. EFG Hermes incurred c. EGP26.7 million in one-off expenses during the quarter,a significant portion of which related to the cost restructuring plan.
“We expect the Firm to see more one-off expenses during the year as we continue implementing our plan to streamline operations and generate efficiencies,” Awad said, noting that “the Firm remains committed to its target of reducing its cost base to c. EGP 500 million in 2014 from an estimated EGP 780 million this year. This will ensure the Investment Bank’s ongoing ability to perform amid unpredictable market conditions.”
Finally, the Firm is seeking regulatory approval to issue one bonus share for every five shares held by our shareholders as of the dividend date to raise capital to EGP 2.87 billion.
EFG Hermes Securities Brokerage closed 1Q13 once more ranked number-one in Egypt as well as holding leading positions in other key regional markets. EFG Hermes Brokerage executions rose a sharp 35% to USD 5.4 billion in the first quarter, reflecting preservation of market share and improved market volumes across the region (with the exception of Egypt).
The Firm’s Investment Banking division closed and executed two significant transactions in 1Q13, including a USD 43 million private placement for Wadi Degla for Investments SAE (the first deal of its kind targeting the Egyptian sports sector) and the acquisition by Japan Tobacco International of Al-Nakhla Tobacco in Egypt, the team’s second advisory assignment with global giant Japan Tobacco International. The division continues to focus on building a pipeline of transactions in regional markets with a special emphasis on the UAE and Saudi Arabia.
AUM at EFG Hermes Asset Management fell 7.7% Quarter-on-Quarter to USD 3.1 billion, with net outflows representing 5.6 percentage points of the decline and market performance representing the remaining 2.1 points. The division continues to prioritize long-term clients and growing its institutional base and, in the past quarter, took home five awards from Zawya’s performance-based 2012 Fund Ranking Awards, including MENA Asset Manager of the Year, three awards for number-one ranked Egyptian funds (Best Balanced Fund, Best Equity Fund, Best Islamic Equity Fund) as well as the nod as the Best Qatar Equity Fund, in addition to other awards in 2012.
Private Equity AUM stood at USD 0.6 billion at the end of 1Q13.Exits remain challenging in the short-term given the political unrest in the region.
EFG Hermes Research closed 1Q13 with coverage of 121 companies, representingapproximately 57% of the Arab world’s aggregate market capitalization, down from 61% at the end of FY12 as the team streamlined coverage in line with cost control measures. Research continues to cover 11 countries at the macro level and eight nations with regular strategy notes in addition to country and strategy notes.
At the Commercial Bank, Crédit Libanais continued to deliver a solid, stable performance despite turmoil in Lebanon and regionally. Net Income after tax for 1Q13 stood at USD 16.2 million, a Q-o-Q increase of 64.5% and a Y-o-Y decline of 11.5%, resulting in an after tax RoE of 12.2%. The high quarter-on-quarter rise in net income is mainly due to high one-off expenses in the last quarter of 2012. The Y-o-Y decline is principally due to higher expenses, higher growth in interest expense, and declining margins.
—Ends—
Notes for Editors:
About EFG Hermes
Established in 1984, EFG Hermes is the leading investment bank in the Arab world. The Firm specializes in Securities Brokerage, Investment Banking, Asset Management, Private Equity and Research. EFG Hermes is listed on both the Egyptian and London stock exchanges. The recent acquisition of a 65% stake in Credit Libanais marks the first step towards EFG Hermes’s transformation into a universal bank and will enable it to rapidly expand into retail and commercial banking.
Through its operations in Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria and the UAE, with around 900employees of 25 nationalities, EFG Hermes serves a considerable and diversified client base from the Middle East and North Africa to Europe, Africa and the United States. Our clients include governments, corporations, financial institutions, high net worth clients and individual customers.
For further information about EFG Hermes, please visit
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Note on Forward-Looking Statements
In this press release, EFG Hermes may make forward looking statements, including, for example, statements about management’s expectations, strategic objectives, growth opportunities and business prospects. These forward-looking statements are not historical facts but instead represent only EFG Hermes’ belief regarding future events, many of which, by their nature are inherently uncertain and are beyond management’s control and include among others, financial market volatility; actions and initiatives taken by current and potential competitors; general economic conditions and the effect of current, pending and future legislation, regulations and regulatory actions. Accordingly, the readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made.
[*]Cairo HRHO.CA • London: HRHOq.L • Bloomberg: EFGH •Reuters pages: EFGS.HRMS.EFGI.HFISMCAP.HFIDOM