EFG-Hermes, a financial services corporation in the Middle East and North Africa, reported on Monday the first quarter (Q1) results, “with net profit after tax and minority interest from continued operations of EGP 236m,” according to its press statement.
EFG-Hermes said that the total operating revenue reached EGP 825m in Q1 2017, up from EGP 400m in the same quarter of last year, recording an increase of 106% “underpinned by a significant improvement in revenues generated from our traditional agency business—our non-bank finance institution (NBFI), which presently includes EFG-Hermes Leasing and Tanmeyah Microfinance in Egypt—and from treasury operations.”
“We are pleased to report a strong start to the year on the back of a continued recovery in regional markets during the first two months of this year,” said group CEO Karim Awad, according to the statement.
He added that the corporation’s revenue growth “reflects both the robust health of our traditional agency business and a growing contribution from our non-bank financial institution.”
He believes that during the second quarter (Q2) of 2017, the corporation will continue to lay the foundation for profitable revenue growth as it begins integrating its newly acquired Pakistan operation into its platform and press “ahead with the rollout of its frontier markets, more NBFI products, and merchant banking strategies.”
Furthermore, fee and commission revenues rose 76% year-on-year (y-o-y) to EGP 466m in Q1 on higher revenue generated from almost all business lines.
The statement added that securities brokerage was the top contributor to revenue growth, as Egypt and Kuwait executions increased significantly y-o-y, “followed by a higher contribution from the continued ramp-up of our NBFI.”
Meanwhile, capital markets and treasury operations revenues rose 165% y-o-y to EGP 359m, mainly on higher treasury operations revenue, as well as on gains from asset management seed capital and the exit of a legacy merchant banking investment, the statement read.
“The firm remained cautious about its costs despite of the translation impact of overseas salaries following the flotation of the Egyptian pound late last year, significant inflationary pressure in Egypt, and the addition of new businesses. As a result, the ratio of employee expenses to operating revenues stood at 43% in Q1 2017—well below 50% for the thirteenth straight quarter,” according to the press statement.
EFG-Hermes continued to divest its remaining stake in Credit Libanais (CL) after the sale of its majority stake in the bank and its subsequent deconsolidation in the second quarter of last year. In Q1 2017, the firm offloaded an additional 2% of CL’s shares, thus leaving it with a 13.1% stake at the end of the period, the statement noted.
Accordingly, EFG-Hermes reported a net profit from “continued and discontinued operations of EGP 359m in Q1 2017 on gains realised from the sale of the additional stake in CL during the quarter.”