EFG-Hermes: Q2 Net Profit Hits EGP188 million

EFG Hermes, the leading investment bank in the Arab world, reported on Thursday its financial results for Q2-14, showing EGP 188 million net profit after tax and minority interest on total operating revenues of EGP 747 million. It is the second consecutive quarter in which the firm has reported strong results.
Total operating revenues were up 48% year-on-year, driving impressive growth in net earnings and marking a significant turnaround from a net loss of EGP 80 million recorded in the same quarter last year, according to the company’s statement.
Core Investment Bank operations in the second quarter were the primary drivers of this impressive quarterly growth as Investment Bank revenues surged to close nearly 2.5x higher than 2Q13. Notably, management’s continuing focus on growing operations in the Gulf Cooperation Council (GCC) countries is beginning to bear fruit, with 45% of the Investment Bank’s fee and commission revenues (excluding capital markets and treasury operations) coming from regional operations.
Growth across the Investment Bank platform was broad-based, with the primary fee-generating arms all delivering solid performances in 2Q14: Egyptian and regional advisory business executions rose at Investment Banking; the Asset Management division generated strong incentive fees; and there was an improvement in the ranking and market share of the Securities Brokerage business in most markets in which it operates to go along with improved market liquidity.
The recovery in Investment Bank revenues was accompanied by a continued focus on cost control that saw the platform’s employee-cost-to-income ratio fall to 39% in 2Q14, far below the 74% rate recorded in the same period of last year. As a result, top-line growth has continued to filter down to strong rises in net operating profit and net income.
Despite seeing its operations impacted by a difficult geopolitical environment during the quarter, Crédit Libanais nevertheless contributed EGP 41 million to EFG Hermes’ group net profit after taxes and minority during 2Q14.