Egypt's EFG-Hermes says Q2 net profit fell a fifth

Reuters, Monday 15 Aug 2011

Top investment bank sees net gains fall to LE79 million as operating costs outstrip growth in revenue

EFG-Hermes, Egypt's biggest investment bank, said on Sunday its net profit for the second quarter of 2011 fell 19 per cent year on year as operating costs outstripped revenue growth.

Net profit fell to LE79 million (US$13.2 million), the same as 1Q2011, from LE97 million in the second quarter of 2010, it said in an emailed statement. 

Political turmoil in Arab countries hit the region's investment banks by depressing stock markets and drying appetite for fresh capital. Analysts say the outlook remains grim.

EFG-Hermes said its operating revenue soared 94 per cent year-on-year to LE466 million in the second quarter, supported by commercial banking, which produced revenue of LE243 million, or 52 per cent of the total.

Operating expenses at its investment banking business fell 14 per cent to LE173 million, reflecting planned cost-cutting measures. But revenues from investment banking fell 36 per cent on a drop in capital market and treasury operations.

It also blamed a decline in brokerage revenue.

Shares in the Cairo-based investment bank, which also has offices in the UAE, Kuwait, Saudi Arabia, Qatar, Oman and Lebanon, inched 0.63 per cent lower by midday Monday.

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