​(Cairo, Egypt) — Successful execution on high-profile regional and domestic investment banking mandates and its continued leadership of the MENA securities brokerage market saw EFG Hermes,* the leading investment bank in the Arab world, complete today its return to full-year profitability as it released its financial results for 4Q and FY14. The Group delivered a strong set of results in 4Q, reporting net profit after tax and minority interest of EGP 131 million on operating revenues of EGP 702 million. On a full-year basis, the Group reported a net profit after tax and minority interest of EGP 538 million on operating revenues of EGP 2,610 million; the Group reported a net loss after tax and minority interest of EGP 540 million a year earlier. Notably, the return to profitability was led by the Investment Bank platform, which made a substantial positive contribution to the Group’s top and bottom lines alike, reporting its highest net profit since 2008. The Investment Bank reported a net profit after tax and minority interest of EGP 304 million from a net loss of EGP 806 million a year earlier. “Our financial performance in 2014 came as we executed on a strategy of cost control, regional growth and the maintenance of dominance in our home market, all while laying the foundation for expansion initiatives that will allow us to begin further diversification of our revenues this year, in part through our entry into the very promising leasing space,” said Karim Awad, EFG Hermes’ Chief Executive Officer. “Our full-year results make clear that EFG Hermes continues to employ the best team of talented professionals in the region — people who are above all experienced, passionate about their business, and committed to creating sustainable value for all our stakeholders.” The decisive factor in the Group’s delivery of strong operational performance was the contribution of fee and commission revenue from the Investment Bank. Fee and commission revenue rose 44% Y-o-Y to EGP 951 million in FY14, largely due to higher revenue generated from regional operations for the Securities Brokerage, Asset Management and Investment Banking divisions; with regional operations representing 51% of fees and commission revenues in FY14; this reflects the firm’s pledge to grow regional operations while maintaining leadership position in its home market. In tandem, management’s ongoing focus on controlling expenses led to operating expenses at the Investment Bank declining 6% Y-o-Y to EGP 748 million in FY14, on lower employee expenses and other operating expenses. The ratio of employee expenses / operating revenue stood at 45% in FY14 compared to 71% the previous year. At the Commercial Banking arm, Crédit Libanais reported a net profit after tax of USD 64.2 million in FY14 a decline of 6% Y-o-Y. The bank’s total assets stood at USD 9.2 billion (up 10% Y-o-Y) with a loan-to-deposit ratio of 36.9%. “Although we might face headwinds in 2015, like all market participants, on the back of rising volatility and, potentially, lower volumes, we believe this year will present great opportunities to create shareholder value. In addition to our upcoming entry to Egypt’s leasing sector, we continue to build a pipeline of both domestic and regional investment banking and private equity transactions, beginning with the upcoming public offering of snack foods maker Edita,” Awad concluded. Key Operational Highlights • Securities Brokerage grew total executions 73% Y-o-Y to USD 47.0 billion in FY14. Revenues reflected executions, with total Brokerage revenue rising 60% Y-o-Y to EGP 451 million in FY14. Brokerage was once again the number-one ranked broker by market share of executions on the Egyptian Exchange (EGX) and improved its ranking in all markets where it operates; climbing to second place in Kuwait, third on ADX and Jordan, fourth in Oman and maintained its sixth place on DFM. Moreover, grew its market share in the Saudi market in anticipation of opening up of the market to foreign investors, together with continuing to target Saudi HNW clients, and GCC HNW and institutional clients who prefer a one-stop-shop in the MENA region. • Investment Banking successfully closed 13 major deals in 2014, the most since 2007, highlighting what was a very strong year for the division in Egypt and the UAE, with transactions including four IPOs: the largest IPO in the UAE market in years (the USD 1.6 billion Emaar Malls Group IPO), the first IPO in Egypt since 2010 (Arabian Cement), the high-profile IPO of Emirates REIT, and the Dubai Parks & Resorts IPO. In addition, the team closed a number of M&A and equity-raising transactions, all of which pushed the division’s revenue up 243% Y-o-Y to reach EGP 137 million in FY14. The team has built a pipeline of mandates from Egypt and the region for future execution as it continues to emphasize regional growth. • Asset Management’s assets under management closed the year at USD 3.1 billion, a 2% increase in FY14 as markets appreciation added 12% to total AUM while net outflows took away 10%. Total asset management revenue rose 32% Y-o-Y to reach EGP 272 million in FY14. The division’s funds continued to outperform, marking a three-year track record much-needed to attract institutional clients. Sales through internal resourcing revived GCC client relationships and forged new ones. The division was named “Best Asset Manager in Egypt” for the second year in a row by EMEA Finance. Asset Management was also the winner in five different categories at the Thomson Reuters / Zawya MENA Asset Management Awards 2014. • Meanwhile, AUM at Private Equity stood at USD 0.8 billion at the close of 4Q14, an increase of c.30% compared to the previous quarter, as during the quarter our infrastructure team alongside co-investors successfully reached financial close for the acquisition of 49% of EDPR's French renewable energy business (330 MW). The investment vehicle was seeded by EFG Hermes and will be managed by our private equity arm on behalf of investors. The team continues to screen similar cash yielding infrastructure opportunities in Europe and the MENA region. Earlier in the year, Private Equity completed the sale of its 19% stake in Damas International Limited to Qatar’s Mannai Corporation QSC in an all-cash transaction valued at USD 150 million, generating IRR of 38% and a cash-on-cash multiple of 1.8x. • The Research department’s coverage universe reached 133 companies at the end of FY14, distributed across the region, representing 57% of the regional market capitalization. In 2014, the Research team revamped publications and introduced new reports, including: combined sectorial / thematic notes; enhanced the value-added of our commentary notes on sectorial quarterly results by comparing analysts’ previews and reviews; launched MENA Markets Weekly Stats; re-launched the coverage of the real estate and contractor sectors in Egypt, the UAE and Saudi Arabia; and, expanded economic data available on the Research portal. Moreover, this year, EFG Hermes Research played a significant role in providing investment research and marketing roadshows for the Investment Banking division’s IPOs.