Egypt's largest investment bank reports large drop in net profit as financial crisis continues to hurt Arab stocks.
EFG-Hermes 2008 net profit down 27.7%
CAIRO // EFG-Hermes, Egypt's largest investment bank, reported a 27.7 per cent drop in 2008 net profit to 933.5 million Egyptian pounds (US$166m), as turmoil in Arab stock markets hit its revenues. The investment bank said in a statement it was unrealistic to assume it would not continue to be affected "in the coming months" by the global financial crisis which has hit trading volumes and asset values in the Middle East.
Total revenue fell 15.3 per cent to 2.21 billion pounds, the bank said in a statement earlier today. To cut operating costs, EFG-Hermes said it took measures at the end of 2008 that included redundancies, pay cuts for the top 200 staff members and the relocation of some activities to Egypt. "2008 was a tough year," EFG-Hermes said. "The foundations of capitalism were shaken to the point of collapse."
EFG-Hermes, whose line of business also includes research and brokerage, has a presence in Egypt, Saudi Arabia, the UAE, Oman and Kuwait. It said the investment banking team closed eight transactions in 2008, raising $862m in equity for its clients, in addition to merger and acquisition deals worth $720m. This compares to 13 transactions in 2007 worth $6bn. The dividend was set at 0.5 Egyptian pounds, representing 20.2 per cent of consolidated net profit after tax and minority interest.
The bank said it was also looking at the possibility of share buybacks and cancellations of shares as an alternative form of dividend. * Reuters