EFG Hermes reports eight-fold profit increase in Q2

CAIRO – 15 August 2017: EFG Hermes Group net profit after tax surged 718 percent year-on-year to LE 395 million ($22.2 million), while operating revenue advanced 252 percent to exceed LE 1 billion in the second quarter of 2017, a Tuesday report said.

The solid growth of the advisory, brokerage and asset management businesses that helped group’s revenues exceed the LE 1 billion mark for the quarter, EFG Hermes reported.

“Our strategy to diversify our lines of business has started to create significant value for our shareholders as our non-bank financial operations continued their stellar growth trajectory, with revenues from the platform more than doubling year-on-year in the second quarter,” said EFG Hermes CEO Karim Awad.

The CEO noted that as of the second quarter of this year, the frontier markets and structured products businesses began contributing to the group’s brokerage revenues.

The group reasoned the 22x higher revenues achieved at LE 372 million in Q2 of 2017 to better utilization of the balance sheet liquidity in merchant banking activities.

Fee and commission revenues rose 136 percent year-on-year, contributing LE 639 million to the top line.

Accordingly, EFG Hermes reported a net operating profit of LE 462 million in Q2 of 2017; hiking 507 percent year-on-year, and a net operating profit margin of 46 percent, up from 26 percent a year earlier.

Revenues from the capital gain posted from the sale of Crédit Libanais (CL) shares realized in the quarter would increase by 782 percent in the second quarter, the firm said.

In Q2, the group offloaded an additional 3.65 percent of CL’s shares, leaving the firm with a 9.46 percent stake at the end of the period, the report noted.

Employee expenses represented 39 percent of operating revenues, below 50 percent despite higher overseas salaries following the floatation of the Egyptian pound, inflationary pressure, the hiring of new employees to support the development of new businesses, as well as some one-off expenses.

As for the first half of this year, the group’s net profits from continued operations hit LE 753 million, driven by a very strong second quarter of its investment bank operations, continued growth in the non-bank financial platform and enhanced balance sheet utilization, the statement said.

The group highlighted that the Q2 and H1 were strong, in spite of slower market activity in the second quarter during the Holy Month of Ramadan and the subsequent feast.

EFG Hermes is a leading financial services corporation in the Middle East and North Africa.