EFG-Her­mes re­ports strong Q1 profits of EGP 236m

201% y-o-y in­crease in profits was driven by a 106% rise in rev­enues to EGP 825m

The Daily News Egypt - - Business -

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.”

EFG-Her­mes said the to­tal op­er­at­ing rev­enue reached EGP 825m in Q1 2017

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