EFG-Hermes releases third-quarter earnings report amid challenging market conditions

In the first nine months of the year, the firm reported total consolidated revenues of EFG2.1bn, up 37.5% over the same period last year.

As global economic challenges spilled over into regional markets, the firm's 3Q 08 consolidated revenues grew a more modest 6.2% to EFG576.5m; that figure represents a 33.8% dip compared with 2Q 08.

Meanwhile, net profit after tax and minority interest rose 2.8% to EFG913.8m in 9M 08 compared to EFG889.2m in the same period last year, with a 59.8% profit margin when the accrual of bonuses is excluded.

"There is no question these are challenging times for regional markets,"

says EFG-Hermes chief executive officer (CEO) Yasser El-Mallawany.

"That said, the Middle East's macroeconomic fundamentals are as very sound. Look no further than the International Monetary Fund's latest projections for 2009, which forecast 5.9% growth in the region against just 2.2% growth globally."

Core revenue drivers for 9M 08 included brokerage (46.8% of total operating revenues), asset management (29.7%), investment banking (15.5%) and private equity (5.4%).

"While we see the regional market downturn and low valuations rolling into the fourth quarter, we remain firmly optimistic about the long-term outlook for the Middle East and North Africa," said EFG-Hermes CEO Hassan Heikal.

"We are going into this cycle with a very strong and healthy balance sheet that differentiates us from the rest of the market."