EFG Hermes, Egypt's biggest investment bank, has revealed its group reports profits tumbled 81 per cent during the turmoil which engulfed the region last year, weeks after announcing it is in merger talks with Qatar's Qinvest.
Total earnings at the Egyptian banking group fell to 133 million Egyptian pounds from 700.4m a year earlier. EFG Hermes blamed the losses on lower revenues due to political unrest in the region during the Arab Spring, and global sovereign debt and growth fears.
Revenues for the year were down 33 per cent at 1.6bn pounds, compared to 2.4bn the year before.
Analysts said the losses did not reflect underlying problems at the company. "It is not a fundamental issue, it is just temporary," said Aybek Islamov, director of emerging market banks equity research at HSBC.
The bank's securities brokerage, investment banking and asset management arms all reported lower earnings as investors fled its core Arab market for safer havens amid outbreaks of revolution, and weak global demand for risk assets."[Last year was] a particularly challenging year, with economic and political uncertainty casting a shadow across not only our region, but the entire globe," said Hassan Heikal, chief executive officer at EFG Hermes.
Heavy losses at the Egyptian bank, which has offices in nine Arab countries, comes as it has announced it is planning a merger with Qinvest, the largest investment bank in Qatar.
The financial giants are discussing a combining some of their operations to create an investment bank covering the Arab world, Africa, Turkey and South and South East Asia
The proposed venture would include securities brokerage, asset management and investment banking operations, the two said in an emailed statement, parts of EFG Hermes' business which took the severest hit last year.