EFG Hermes shuts Oman operations

EFG Hermes has completed its exit from Oman as part of the Egyptian universal bank’s broader strategy to streamline its operations, improve its return on equity metric and better position itself amid a global economic downturn.

The closure of Oman operations reveals the third unspecified market that the universal bank said it planned to exit in addition to Jordan and Pakistan earlier in January.

The Egyptian bank said it will continue to serve its institutional clients base in Oman by executing trades indirectly, providing select research coverage and pursuing investment banking activities through its regional hubs.

“Given our strong belief that these markets’ economic and capital markets potential remains very high, EFG Hermes will remain committed to serving its institutional clients base pursuant to our expected exits,” the investment bank said in a statement earlier this year.

Read: GCC is key investment hub for regional, global investors: EFG Hermes

The move to exit three markets comes in light of EFG Hermes’ efforts to drive shareholders’ value as it continues to look at simplifying its operations and directing its resources to opportunities aligned with its core strength.

The Egyptian Exchange-listed bank said it expects a slight impact on the company’s 2023 financial statements following the exit from Oman. However, EFG Hermes does not expect the exit from Pakistan and Jordan to have any material impact on its revenues as the markets’ combined revenues represented less than 1 per cent of “our Group revenues in 9M 2022 and in the full year of 2021.”

Pakistan and Jordan also accounted for 2 per cent and 3 per cent, respectively, of EFG Hermes’ brokerage revenues over the periods under review.

The Cairo-based universal bank will conduct strategic reviews of its operations in 2023 but does not “expect to exit any other markets in the coming 12 months.”

EFG Hermes’ growth strategy

Meanwhile, EFG Hermes said its annual revenues surged by 77 per cent to $355.4m (EGP11bn) last year, driven by strong growth in its investment banking division, non-bank financial institutions and the better performance of its affiliate, Arab Investment Bank (aiBANK).

The banking group’s full-year net operating profit rose by 63 per cent year-on-year to EGP3.7bn, despite an 85 per cent increase in its operating expenses to EGP7.3bn due to rising inflationary pressures, US dollar-denominated expenses in regional offices and growth of business operations.

EFG Hermes Holding Records Robust Revenue Growth of 77% to EGP 11 Billion Coupled with Strong Profitability Amid Challenging Global Market Conditions in FY22. pic.twitter.com/3HrXsnT9Y6

— EFG Hermes (@efghermes) March 22, 2023

EFG Hermes’ net profit before tax grew by 63 per cent to EGP3.3bn, while net profit after tax and minority interest recorded an 18 per cent increase to EGP1.8bn in 2022, subdued by taxes and deferred taxes.

With a current footprint spanning 14 countries across four continents, EFG Hermes has grown exponentially over the past 38 years while transforming itself from a pure-play investment bank in MENA into a universal bank with the leading investment bank franchise in frontier and emerging markets.

Read: EFG Hermes Holding hosts 16th annual conference in Dubai

The bank’s investment banking division successfully advised Oman’s Abraj Energy Services on its $244m initial public offering (IPO) in March. The transaction marks the bank’s second IPO in 2023 after ADNOC Gas’s $2.5bn IPO on the Abu Dhabi Securities Exchange and is the latest of several landmark transactions EFG Hermes has advised over the past 15 months.

The bank has closed 12 equity capital markets deals valued at $12.8bn since January 2022.