By: Shimaa Youssef
Financial company Hermes recently released its statistics for the 2012 financial year, claiming EGP 1.8bn in total revenues and EGP 211m accumulated in profits before the payment of taxes and the distribution of minority shareholder revenues.
These statistics reflect the turmoil that has engulfed a number of primary regional markets in the Middle East, in addition to demonstrating the financial flexibility exhibited byb financial companies and their efforts to pursue profits and overcome regional challenges.
Company revenues rose 8% throughout 2012, with growth in Hermes’ investment banking sector rising 4%, totaling EGP 694m, as a result of an increase in the rate of treasury activities and use of financial market instruments over the past year. Growth of the company’s commercial bank rose 11% throughout 2012, totaling $1.1bn.
62% of the company’s revenues were accumulated within its commercial bank, with the remaining 38% coming from its investment bank.
Revenues from the company’s investment bank reached EGP 694m throughout 2012, attributed to a 4% increase in treasury activities and financial market tools, at a yearly rate of 26%, with growth in yearly investment returns reaching EGP 104m.
Fee and commission revenues increased 1%, reaching EGP 592m throughout 2012, supported by revenue increases in the final quarter of the previous fiscal year, which saw a 40% increase compared to the same time during the previous year. This was partially the result of large contributions made by a number of investment funds, in addition to high returns seen in the company’s brokerage sector.
The brokerage sector further enhanced its place throughout Arab markets in 2012, being the top traded broker firm on Egypt’s stock exchange, and the second highest in Kuwait. The company recorded $18.6bn worth of brokerage deals in 2012, achieving high rates in most Arab markets, with the exception of Saudi Arabia where the company recorded a 2.4% growth rate.
The company’s promotion and IPO coverage team concluded five investment deals throughout 2012, in all of the Saudi, Jordanian, Lebanese and Emirati markets. Hermes served as the primary investor for the Orascom Telecoms deal that attracted international attention and scrutiny at the beginning of the first quarter of the last fiscal year. The company also invested in the merger between the Al-Mukhtabar and Al-Borg medical research laboratories during the third quarter of the previous fiscal year, the largest acquisitions and merger deal in Egypt in 2012, and the largest in the Arab world’s medical sector.
The amount of assets administered by the company rose 4.2% in 2012 reaching $3.4bn, the result of an improvement in the performance seen throughout regional markets during 2012. During this time, Hermes further sought to diversify its client pool in order to help attract larger numbers of long term individual and institutional investors. As of now the company’s client portfolio consists of a number of sovereign wealth management funds, pension funds and insurance companies.
A number of organisations recognised Hermes as the top performing company in the market, with its investment fund and financial portfolio sector winning the award of “Best Egyptian Asset Fund Manager for 2013” for the third year in a row by the MENA Fund Manager Performance Organisation.
The value of the company’s assets under management rose to $0.68bn throughout 2012, with the company managing to purchase Damas, (the region’s largest jewelry distributor) for $445m, during a consortium held with the Al-Mannai Corporation. This deal so far represented the first purchase ever of a Gulf Cooperation Council company by a subsidiary of the Infrared investment fund. During 2012, the company also invested in the Iskerderum Turkish port deal, the region’s largest container port, being granted rights and concessions to the port for 36 years.
The commercial bank Credit Libanais was reported to have outdid its counterparts in terms of rates of growth for loans and deposits, with the former increasing 13.1%, and the latter 10.6%. This led to an 11% increase in yearly asset growth, totaling $8bn by the end of the year. Net profits for the company after taxes totaled $61.2m, representing a 5.6% decrease compared to the previous fiscal year, whereas returns for shareholders reached 12.9%. The bank further met all supervisory and regulatory regulations necessary for available capital.
Hermes hopes that implementation of its new “lower costs policy”, aimed at prioritising and directing spending in a way that helps the company benefit from an improvement in market indicators, will help the company expand its operations in the region. This is largely in light of upcoming expansions in spending allocations set to take effect in a number of GCC countries, in addition to awaited returns on deals made in the Egyptian market with the eventual stabilisation of the country’s political divisions and economic crises.
Company officials further stated that they look forward to implementing Hermes’ strategic partnership agreement with Qinvest, a move approved by investors in September 2012 and now awaiting approval from the country’s supervisory and regulatory authorities.