EFG Hermes reports consolidated 2Q12 earnings of EGP27m
EFG Hermes, the investment bank in the Arab world, released today its consolidated financial results for the second quarter of 2012, reporting net income of EGP27m on total consolidated operating revenues of EGP477m.
Group revenues rose 2 percent year-on-year (and 10% quarter-on-quarter) to EGP477m, backed by a 16% Y-o-Y increase in Credit Libanais' revenues and a 3% Y-o-Y increase in the Investment Bank's fee and commissions, but partially offset by a contraction in capital market and treasury income that saw total Investment Bank revenues decline 13% from 2Q2011.
Revenues for the quarter split as 59% contributed by the Commercial Bank and 41% by the Investment Bank.
The Investment Bank reported a 13% Y-o-Y contraction in revenues to EGP195m. While Investment Bank fee and commission income climbed 3 percent year-on-year and 49% quarter-on-quarter to EGP187m, growth was offset by an 81% contraction in capital markets and treasury revenues on the back of a very strong 2Q2011 figure that included dividend income from EFG Hermes' investment in real estate developer SODIC.
"Continued turbulence in the Middle East and around the world did no favours for market sentiment in the past quarter," noted EFG Hermes Chief Executive Officer Hassan Heikal. "In a very challenging period, I am delighted to report we have maintained profitability while growing our revenues on both a quarter-on-quarter and year-on-year basis. Continued strong performance from our Commercial Banking arm, a very sharp emphasis on cost control measures in place since last year, and the largest equity raising in Egypt of any form since 2007 all contributed to our performance in the second quarter."
EFG Hermes Securities Brokerage again closed the quarter as the largest broker in the Arab world, maintaining its number-one position in Egypt (excluding special transactions) and the Dubai Financial Market, and retaining leading positions in other key regional markets. Across the Arab world, total market volumes fell 17% quarter-on-quarter and most indices recorded poor performance for the quarter. Against that backdrop, EFG Hermes Securities Brokerage reported a 17% decline in revenues to EGP51m, entirely in line with market trends.
The Investment Banking Division turned in a standout performance in the quarter, contributing 45% to the Investment Bank's total fee and commission income (against 10% in 1Q2012) on the back of the raising of $462m in a private placement for the Egyptian Refining Company (ERC). The placement was the largest in Egypt since 2007 and one of the largest in the region to take place this year.
The Asset Management Division saw AUM decline 6% quarter-on-quarter to $3.1bn; redemptions accounted for 5 percentage points of the decline, while poor market performance accounted for 1 point. Redemptions from regional funds and portfolios accounted for 65% of total redemptions. Notably, EFG Hermes Asset Management has maintained balance in its client base, split between institutional, foundation / pension / insurance, and sovereign wealth fund clients.
Private Equity AUMs stood at $970m with no exits in the quarter. The team continues to manage portfolio companies' performance in a very volatile economic environment in Egypt.
EFG Hermes Research closed 2Q2012 with coverage of 137 companies (up three from the end of the previous quarter), representing 58% of the aggregate regional market capitalisation.
At the Commercial Bank, Crédit Libanais reported net income of $17.3m in 2Q2012, representing an operational rise of 9% year-on-year when the impact of an extraordinary $1m tax charge recorded in this quarter is set aside.
"Loans and deposits grew within our expectations, and we are delighted with strong growth in all revenue lines, particularly in fee and commission income, while expenses closed the quarter in line with budget," noted EFG Hermes Chief Executive Officer Yasser El Mallawany. "In sum, Crédit Libanais continues to meet or exceed our expectations and remains a cornerstone of our earnings base, underscoring the wisdom of our adoption of universal banking model prior to 2011."
Crédit Libanais reported 3.9% quarter-on-quarter growth in total loans to $2.1bn, while total deposits grew 1.8 percent Q-o-Q to $6.5bn.
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