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Leading regional investment bank seespositive contribution from both the Investment Bank and the Commercial Bank, marking a fifth straight quarter of EGP100 million plus of Group profits
Cairo - EFG Hermes, the Arab world's leading investment bank, reported today a 14% year-on-year increase in Group net profit after tax and minority interest to record EGP136 million for the first quarter of 2015 on the back of a 7% year-on-year increase in operating revenuesthat reached EGP611 million during the quarter. This marksthe fifth consecutive quarter in which the Group has delivered net profits in excess of EGP 100 million.
The Group also registered an increase in net operating profit of 9% year-on-year to EGP 250 million, resulting in a Group net operating margin of 41% for the quarter.
Notably, the 14% year-on-year rise in net profit comes with the Investment Bank and the Commercial Bank both contributing positively to the bottom line.
"I am pleased to report such strong earnings despite the challenges that have buffeted our industry since the plunge in oil prices accelerated last fall," said EFG Hermes Chief Executive Officer Karim Awad. "Even as low petroleum prices and geopolitical stress saw brokerage volumes decline for our industry MENA-wide, revenues from our Investment Bank platform were broadly stable in a testament to the quality of our team and operations."
During 1Q15, revenues generated from IPO and M&A activity in Investment Banking and a solid performance from both Asset Management and Capital Markets & Treasury Operations helped counteract lower revenue generated from Brokerage (which was impacted by the lower volumes across most markets) and Private Equity(which continues to build its AUM base while exiting positions from existing funds). Notably, first quarterfee income did not include fees related to the highly successful listing of Edita Food Industries on the EGX and LSE and whichwill be booked in the second quarter of the year.
The Investment Bank's cost-control measures continued to deliver results, with operating expenses remaining well-containeddespite inflationary pressures and currency devaluation challenges. OPEX inched down 1% year-on-year to EGP157 million in 1Q15, with the ratio of employee expenses to operating revenues coming in at 46% in the first quarter of 2015.
Strong cost management at all levels helped the Investment Bank report a net profit after tax and minority interest of EGP67 million in 1Q15, up 11% when compared to the same period in 2014.
The Commercial Bank reportedUSD17.1 million in 1Q15, a 9% rise from1Q14 and reflecting improved operational efficiency on the back of higher net interest income and contained expenses. The Commercial Bank's total assets stood at USD9.3 billion with a loan-to-deposit ratio of 36.5%.
"A very strong start to 2015 -- including multiple high-profile investment banking transactions and our most successful One-on-One investment conference ever in Dubai -- has left us with a deep transaction pipeline from which to execute as the year continues. While we continue to hope for a pick-up in volumes at the Brokerage division, we are actively positioning our other businesses to capture opportunities," Awad said.
"Finally, we are also preparing for the launch,within a month, of our first venture into the key non-bank finance sector with the launch of EFG Hermes Leasing. The manner in which we have developed this exciting new business will serve as a template for further product innovation going forward," he concluded.
Key Operational Highlights
• Securities Brokerage was again the number-one ranked broker by market share of executions on the Egyptian Exchange (EGX) and second in Kuwait and Abu Dhabi,while maintaining a leading position in other regional markets. EFG Hermes held its flagship One-on-One conference in Dubai in March, where the Brokerage team gathered 450 fund managers from over 200 financial institutions in 28 countries with aggregate AUM of over USD 10 trillion, conducting over 7,000 meetings with 107 MENA companies.
• Investment Bankingsuccessfully closed and executed three landmark transactions in Egypt and the United Arab Emirates in the first quarter. The division completed the demerger and subsequent dual listing of OCI N.V.'s construction business -- Orascom Construction Limited -- through a USD1.4 billion share capital reduction and distribution to OCI N.V. shareholders in a transaction that represented the first dual listing between Nasdaq Dubai and the EGX with shares fully fungible between the two exchanges. Additionally, thedivision executed Egypt's first real estate backed security offering, acting as the joint financial advisor and underwriter to Amer Group for a total consideration of USD28 million, while the team was the sell-side advisor on the sale of Schweppes to The Coca Cola Company.Since the close of 1Q15, Investment Banking closed a number of transactions that will be booked during 2Q15. Importantly, the Investment Banking division continued building a healthy pipeline of transactions for the remainder of 2015.
• AuMat Asset Management stood at USD 2.9 billion at the end of 1Q15, down 3.5% quarter-on-quarter. A 2.4% net outflow of AuM-- most of which came in the form of outflows from Egyptian money market funds -- was partially offset by inflows in regional funds and portfolios. The remaining 1.1% decline inAuMs represented declining markets, as the weakening performance of the Egyptian market negated the improvement in regional markets' performance during the quarter. Asset Management's client base remains well-diversified with a particular focus on long-term and institutional clients.
• Meanwhile, AuMat Private Equity stood at USD 0.7 billion at the end of 1Q15. Following up on the division's new strategy, the team is activelycontinuingthe divestment strategy of the firm's ECPIII fund, seeking lucrative exits while executing tailored investments targeting themes such as infrastructure, energy, real estate and consumer driven sector plays.
• The award-winning Research department's coverage universe reached 135companies at the end of 1Q15, representing c.59% of the aggregate regional market capitalization, with further coverage of 11 economies from a macro perspective and eight in terms of regular strategy notes. EFG Hermes Research also played a significant role in providing investment research and marketing roadshows for the Investment Banking's IPOs concluded in the quarter.
-Ends-
About EFG Hermes
Established in 1984, EFG Hermes is the leading investment bank in the Arab world and draws on 30 years of experience to serve as the preeminent investment bank in the region, providing a comprehensive spectrum of financial services including Investment Banking, Asset Management, Securities Brokerage, Research and Private Equity. Additionally, EFG Hermes owns a 63.7% majority stake in the Lebanese commercial bank CréditLibanais. EFG Hermes is listed on both the Egyptian and London stock exchanges.
Through its operations in Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and the UAE, and with more than 800 employees 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 visitwww.efghermes.comand stay connected with us:
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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.
© Press Release 2015
