EFG Hermes Reports Consolidated 1Q12 Earnings of EGP 35 Million
Key Highlights of 1Q2012 Include:
Securities Brokerage maintains its regional leadership, closing the quarter ranked number one in Egypt and maintains a leading position in a number of regional markets
Investment Banking closes landmark de-merger in Egypt and builds its transaction pipeline
Total assets under management stand at USD 4.3 billion at the end of the quarter
Commercial Bank continue to demonstrate sustained organic growth and profitability, and resulting in a pre-tax RoAE of 17.2%
(Cairo, Egypt) -- June 5, 2012 -- EFG Hermes*, the leading investment bank in the Arab world, released today its consolidated financial results for the first quarter of 2012, reporting net profit after tax and minority of EGP 35 million on total consolidated operating revenues of EGP 433 million.
Group revenues rose 6 percent year-on-year to EGP 433 million, supported by a 10 percent rise in the Commercial Bank revenue, which offset a 1 percent decline in revenue from the Investment Bank, underscoring the importance of the Group's universal banking strategy in challenging regional conditions.
Revenues for the quarter split as 62 percent contributed by the Commercial Bank and 38 percent by the Investment Bank.
The Investment Bank fees and commissions declined 24 percent to EGP 125 million amid market conditions regionally and internationally that prompted fewer Investment Banking transactions and lower Brokerage revenues as institutional investors opted to remain on the sidelines. Notably, revenues from capital markets and treasury operations rose 782 percent year-on-year to EGP 41 million.
"The quarter just ended was marked by both regional and global turbulence similar to that which we witnessed in 2011," noted EFG Hermes Chief Executive Officer Hassan Heikal. "Against that backdrop, we have maintained a sharp focus on cost control that has allowed us to preserve profitability and our market leadership while forging a new strategic partnership with QInvest that will allow us to leverage our market presence and human capital across new markets in concert with QInvest 's financial strength and client base."
EFG Hermes Securities Brokerage once more closed the year as the largest broker in the Arab world, with executions higher than the regional uptick in trading volumes the previous quarter. In Egypt, the Division remains the clear number-one broker with executions 76 percent higher than its nearest competitor. Across the board, individual investors accounted for 71 percent of total trading activity as institutional investors remained largely on the sidelines. Also in the quarter, Brokerage received a license from the Emirates Securities and Commodities Authority to offer margin trading in the UAE to its regional clients, a development that will enhance its leadership position in those key markets.
The Investment Banking Division experienced an expectedly quiet quarter in which it advised on the de-merger of Orascom Telecom SAE, a first-of-its-kind transaction in Egypt.
The Asset Management Division saw AUM relatively steady, with a 1 percent increase q-o-q to USD 3.3 billion in 1Q2012. A net outflow of 6 percent from fixed income and equity funds was led by redemptions on local money market funds (accounting for 72 percent of outflows in the quarter) and was offset by improved market performance.
Private Equity AUMs stood at USD 976 million as the Division began focusing on fundraising for InfraMed in the GCC while simultaneously screening for investments in Egypt, Turkey, Morocco and Jordan in the energy and healthcare sectors.
EFG Hermes Research closed 1Q2012 with coverage of 134 companies representing 57 percent of the aggregate regional market capitalisation and was named Best Research House in the Middle East at The Banker Middle East Product Awards.
At the Commercial Bank, Crédit Libanais reported net profit of USD 18.3 million, the highest earnings recorded in the past 12 months, representing a rise of 7 percent year-on-year and nearly 34 percent quarter-on-quarter.
Crédit Libanais reported 3.7 percent quarter-on-quarter growth in total loans to USD 2.05 billion, while total deposits grew 2.1 percent q-o-q to USD 6.42 billion.
"We are particularly pleased with the performance of the Commercial Banking Platform both year-on-year and quarter-on-quarter, a development that underscores the long-term importance of our universal banking strategy as it helps offset capital market volatility," noted EFG Hermes Chief Executive Officer Yasser El Mallawany. "Loans, deposits and total assets all grew within budget and we look forward to growth in net interest income in the coming months, market conditions permitting."
Revenues in 1Q12 split as 62 percent from the Commercial Bank, 29 percent fee and commission income from the Investment Bank, and 10 percent revenue from capital markets and treasury operations.
Highlights of EFG Hermes' performance in 1Q2012 follow. Full financials and Management's detailed analysis of the factors underpinning the Firm's performance in the quarter just ended are now available for download on www.efghermes.com.
1Q12 Performance Highlights
- Total consolidated operating revenues for 1Q2012 were EGP 433 million, a 4 percent increase q-o-q.
- Total operating expenses reached EGP 296 million in 1Q2012, a 17 percent q-o-q decline.
- Net operating profit for the year was EGP 137 million, a 128 percent increase q-o-q.
- Consolidated net income reached EGP 35 million, compared to a loss of EGP 14 million in 4Q2011.
Investment Banking Platform
- Total revenues from the Investment Banking platform were EGP 166 million in 1Q2012, an increase of 31 percent q-o-q.
- Fee and commission income from the Investment Bank increased 20 percent q-o-q to EGP 125 million on the back of higher revenue generated from Securities Brokerage, Asset Management and Investment Banking activities.
- Revenue from capital markets and treasury operations rose 80 percent q-o-q to EGP 41 million, largely attributed to gains on investment made during the quarter.
- Operating expenses were down 9 percent q-o-q to EGP 163 million in 1Q2012, as management maintained cost cutting measures first implemented in 2011.
- Securities Brokerage revenues rose 43 percent q-o-q to EGP 62 million on higher volumes.
- Securities Brokerage remained number one on the Egyptian Stock Exchange and maintained a leading position in a number of other regional markets. Over the quarter, Brokerage executions rose 55 percent to reach USD 5.9 billion in line with the average regional volumes which rose 43 percent q-o-q (excluding KSA).
- The Investment Banking Division closed one transaction during the quarter. The demerger of Orascom Telecom S.A.E. was the first of its kind in Egypt and marks a new line of business for our Investment Banking unit.
- Asset Management AuMs stood at USD3.3 billion at the end of 1Q2012, up 1 percent q-o-q. Aggregate funds saw a net outflow of 6 percent q-o-q, mainly driven by the local money market funds (MMFs), which represented 72 percent of the total outflows. However, improving market performance managed to offset the funds outflow, adding 7 percent to the funds value.
- Private Equity AuMs stood at USD976 million, with no exits taking place during the quarter.
- The Research Division coverage reached 134 companies at the end of 1Q2012, distributed across the region (Egypt 31, UAE 25, KSA 39, Kuwait 8, Oman 13, Qatar 9, Lebanon 4, Morocco 3 and Jordan 2). Currently EFG Hermes covers 57% of the regional market capitalization.
- Total Loans reached USD 2.05 billion at the end of 1Q2012, an increase of 17.2 percent y-o-y and 3.7 percent q-o-q.
- Total Deposits reached USD 6.42 billion at the end of 1Q2012, an increase of 9.1 percent y-o-y and 2.1 percent q-o-q.
- NII rose to USD 31.4 million up 1.8 percent y-o-y in 1Q2012 and declined 1.5 percent q-o-q.
- Fee & Commission Income for the quarter was USD8.0 million, an increase of 12.3 percent y-o-y and a decline of 23.7 percent q-o-q.
- Trading Income reached USD4.1 million, an increase of 51.1 percent y-o-y and a decline of 6.3 percent q-o-q.
- Net Provisions in 1Q2012 were USD0.5 million versus USD0.7 million a year earlier and a positive charge of USD1.6 million in 4Q2011.
- Net Operating Income came at USD44.0 million for 1Q2012, an increase of 7.2 percent y-o-y and a decline of 10.3 percent q-o-q.
- Total Operating Expenses for the quarter were USD23.7 million, higher 9.3 percent y-o-y, yet lower 25.6 percent q-o-q.
- Net Income reached USD18.3 million, an increase of 7 percent y-o-y and 33.5 percent q-o-q.