EFG-Hermes profits drop as trading falls

Investment bank hit by loss of income from commissions.

EFG-Hermes, Egypt's largest listed investment bank, posted a 39 per cent dip in second-quarter profit yesterday as trading volumes on regional stock exchanges sagged and commission income dropped. The bank made 96.7 million Egyptian pounds (Dh61.3m) in the period compared with 176.4m pounds in the same period last year. EFG-Hermes has an extensive presence in the Middle East with offices in the UAE, Saudi Arabia and Kuwait and headquarters in Cairo. The bank is 18.5 per cent owned by Dubai Financial Group, a division of the Government-owned conglomerate Dubai Holding. The profit declines were due mainly to a drop in activity on stock exchanges across the Middle East. EFG-Hermes, which has brokerage, investment banking, asset management and research operations, said revenue from trading on the UAE's markets declined from 33 million pounds in the second quarter of last year to 11 million pounds in the same period this year.

The bank is one of the largest brokers on the UAE's stock markets, with a market share of about 19.6 per cent on the Abu Dhabi Securities Exchange (ADX) and 13.3 per cent on the Dubai Financial Market (DFM). "Both trading volumes and values continued to decline over the quarter," the company said in its earnings release. "Volumes traded declined 31.9 per cent and 29 per cent on the DFM and ADX, respectively, coupled with declines in indices of 20.7 per cent and 13.6 per cent, respectively, over the similar period, due to continued frailness of any economic or market recovery as credit growth remains constrained, private consumption remains weaker than [in] other GCC countries and the continued restructuring of corporates in the UAE." EFG said its investment banking business also suffered because of "adverse global market conditions", while overall performance was impacted by dampened investor sentiment and volatile regional markets.

Revenue from fees and commissions dropped by 10.6 per cent in the second quarter. The company's shares closed down 0.4 per cent yesterday at 27.52 pounds in Cairo. afitch@thenational.ae