EFG Hermes, one of the top investment banks in the Middle East, reported a 27 per cent year-on-year increase in its fourth-quarter net income as revenues for the quarter jumped, offsetting a rise in expenses.
Net profit for the three months ending December 31 climbed to 296 million Egyptian pounds (Dh62.7m), the bank said in a statement on Tuesday. The group's operating profit for the quarter rose 45 per cent to 417m pounds while operating revenues for the period climbed to 1.34 billion pounds from 837m pounds reported for the fourth quarter of 2017.
Operating expenses increased 67 per cent year-on-year to 918m pounds in the last three months of 2018, driven by higher employee and non-employee expenses.
The bank’s 12-month net income after tax and minority interests, however dropped 16 per cent year-on-year to 1bn pounds, mainly on higher tax provisions taken by the brokerage and private equity businesses and higher taxes compared with a year earlier. Net operating profit also slipped 5 per cent year-on-year to 1.4bn pounds at the end of last financial year.
The bank reported group revenues of 4.3bn pounds, up 19 per cent from a year earlier. This was supported by non-banking financial institution's revenues crossing the 1bn pound-mark and all the investment banking business lines posting revenue growth.
“Fees and commissions revenue, which accounted for 71 per cent of the group revenues last year, climbed 34 per cent to 3bn pounds, underpinned by revenue growth delivered by all lines of business,” EFG Hermes noted.
Capital markets and treasury operations revenue, which made up the remaining 29 per cent of the group’s total revenues in 2018, saw a 7 per cent year-on-year decline to 1.3bn pounds, the bank noted, without specifying the reasons.
EFG Hermes, which trades on the Cairo bourse, plans to expand into the South-East Asian market this year to be closer to its investors in the region, its co-chief executive, Mohamed Ebeid, told The National earlier this month.
“We’re very interested on the frontiers side to finish our frontier plan, so definitely we’re working on South-East Asia and a couple more countries on the ground, so this would be for 2019,” he said at the time, adding that the plans are still under study and could materialise in “the next three months”.
Last year, EFG Hermes acquired Primera Africa in Lagos, a brokerage house in Nigeria, Africa’s largest economy, to tap business in the continent, particularly West Africa. The investment bank is currently present in 12 countries.