Egypt’s EFG-Hermes losses deepen to 67.55 mln Egyptian pounds in second quarter

Egypt’s EFG-Hermes, the country’s largest investment bank, said on Thursday it made a net loss of LE67.55 million ($7.61 million) in the second quarter compared to a net profit of LE177.49 million in the same period last year.

EFG-Hermes slid into losses in the first quarter after taking a non-cash impairment charge on the sale of its stake in Credit Libanais. Net losses in the first six months of the year amounted to LE131.21 million. It did not provide an immediate explanation for the losses.

In June, the bank announced plans to distribute LE1.08 billion ($122 million) to shareholders and step up its growth strategy after selling a 40 percent stake in Lebanese lender Credit Libanais.

Having completed the $310 million stake sale, the bank said it would reward its shareholders in cash and share buybacks while also pursuing plans to boost capital reserves at subsidiaries in the United Arab Emirates, Kuwait and possibly Saudi Arabia.

“We will be required to enhance capital structure, meet capital adequacy requirements and embrace opportunities as they appear by injecting capital in our subsidiaries,” EFG-Hermes said in a bourse statement in June.

EFG-Hermes also announced plans to expand its assets under management. The company said it was studying several projects that would require capital deployment in the coming months, and was also eyeing new markets.

“We have started a due diligence process for the acquisition of a Pakistani entity and we believe there are more geographies that could offer great opportunities, including Morocco, Vietnam, Bangladesh, Sri Lanka and Kenya,” the company said.

EFG-Hermes’ board had approved the sale of a 40 percent stake in Credit Libanais to Arab and Lebanese investors for $33 per share, along with plans to sell the rest of its shares at the same price by May next year.

According to its website, EFG-Hermes held a total of 63.7 percent of shares in Credit Libanais before the sale.

EFG-Hermes bought the stake in 2010 for $542 million. At the time it said that the investment would help it to expand into Lebanon and the Levant and broaden its product range, but Lebanese banks and the broader economy have been hit hard by the civil war in neighbouring Syria.

Source: Egypt Independent