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EFG Hermes grows revenue by 20%

EFG Hermes, a financial services corporation in Frontier Emerging Markets (FEM), has posted a strong 2019 full-year results, as its revenues rose by 20% to £4.8 billion.

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EFG Hermes, Investment banking license

EFG Hermes, a financial services corporation in Frontier Emerging Markets (FEM), has posted a strong 2019 full-year result, as its revenues rose by 20% to £4.8 billion. The net profit of the firm also expanded by 36% year-on-year (Y-o-Y) to hit £1.4 billion, which was supported by strong results at both the Group’s Investment Bank and NBFI platforms.

The Group closed 2019 with a net profit after tax and minority interest of £1.4 billion in FY19, up 36% Y-o-Y, on the back of a 20% Y-o-Y expansion in revenues to £4.8 billion.

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Revenue growth for the year was supported by both the Group’s Investment Banking platform, which reported a 12% Y-o-Y rise in revenues to £3.6 billion, and non-bank financial services (NBFI) platform, which saw its revenues reach £1.2 billion, up an impressive 52% compared to the same figure for 2018. Growth at the NBFIs platform was primarily driven by the Group’s microfinance solutions provider, Tanmeyah, which saw its top line reach the £1.0 billion mark in FY19, up 66% Y-o-Y.

“I am particularly satisfied with our progress in expanding our NBFI’s product offering,” said EFG Hermes Holding Group CEO, Karim Awad. “Today, our NBFI footprint encompasses leasing, microfinance, fintech-enabled consumer finance, mortgage finance, factoring and will soon include insurance, giving us greater flexibility to overcome challenges posed by global and regional market conditions and support profitability.”

READ ALSO: EFG Herms thinks CBN’s directives could be damaging to Nigerian banks

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Accounting for 71% of the Group’s revenues in FY19, fee and commission income grew 23% Y-o-Y to £3.4 billion supported by revenues generated by fees and commissions’ three verticals.

The Group’s sell-side businesses reported a 9% Y-o-Y rise in revenues to £1.5 billion in FY19. The expansion came on the back of a 16% Y-o-Y rise in revenues by the Brokerage division which reached £1.2 billion driven by higher revenues generated by the Group’s Saudi Arabian, Kuwaiti, Emirati and Frontier operations and the Group’s Structured Products. EFG Hermes’ Investment Banking division saw a 10% Y-o-Y decline in revenues to £328 million, despite a higher and more diversified deal count for the year. Award continued:

“The year was filled with milestones for our sell-side platform. Our brokerage division continued to hold on to its number one spot in terms of market share in Egypt, Abu Dhabi, Dubai, Nasdaq Dubai, and Kuwait, while further expanding its presence in Nigeria, Kenya, and Pakistan.

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“In parallel, our investment banking team successfully advised on multiple IPOs both in the MENA region and across the wider FEM space, with the division selected as a joint bookrunner in Saudi Aramco’s historic IPO.

“In the final quarter of the year, in line with our strategy to enhance the Group’s DCM capabilities, our DCM-dedicated team successfully completed both Egypt’s first short term securitization transaction and its first short-term bond transaction. The successful conclusion of these two transactions demonstrates our ability to promptly capitalize on changing regulation and incessantly lead innovation across the Egyptian finance industry.”

Buy-side recorded revenues of £624 million in FY19, up 15% Y-o-Y. The solid year-on-year growth was supported by the sale of Vortex Energy’s wind assets in 1Q19, which saw the Group’s Private Equity division report revenues of £341 million, up 133% versus last year’s figure. On the other hand, Asset Management revenues decreased 29% Y-o-Y to £283 million.

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Capital markets & treasury operations, which represented 29% of the Group’s revenues in FY19, saw revenues rise 14% Y-o-Y to £1.4 billion in FY19, largely on the back of higher interest income and realized capital gains.

Group operating expenses rose 17% Y-o-Y to £3.0 billion in FY19, with the rise attributable to higher salaries following a rise in Tanmeyah’s headcount versus last year, an increase in the variable portion of employee expenses in line with revenue growth, and higher operating expenses across both the entire NBFIs platform and Tanmeyah in particular.

In light of the recent political situation and events in Lebanon, and in an effort to reflect a prudent stance amid a very fluid situation; EFG Hermes undertook a 36% haircut (FV re-assessment) to its investment in Credit Libanais through OCI in the FY19 financial statements. In the coming period, EFG Hermes’ management will continue to assess the evolving situation in Lebanon and will take further actions if necessary.

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Patricia

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Appointments

Ecobank Transnational appoints Alain Nkontchou as new Chairman

“I am honoured to be appointed as Chairman of Ecobank Transnational Incorporated.”

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Alain Nkontchou

Ecobank Transnational Incorporated (ETI) has announced the appointment of Alain Nkontchou as its new Chairman of the board of directors.

Nkontchou, who is Camerounian by nationality, has been serving as an Independent Non-Executive Director of the pan-African banking group since 2015. A statement made available to the Nigerian Stock Exchange (NSE) confirmed that his latest appointment took effect on June 30, 2020.

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The Camerounian is taking over from Nigeria’s Emmanuel Ikazoboh, whose six-year tenure as Chairman of Ecobank’s holding company ended last month, even as he just reached the retirement age of 70.  The company also noted that the new appointment is in tandem with its Articles of Association.

While reacting to his own appointment as Chairman, Alain Nkontchou said he is quite honoured and that he was looking forward to working with the rest of the board members.

“I am honoured to be appointed as Chairman of Ecobank Transnational Incorporated. Having served on its Board since 2015, I have seen Ecobank’s resilience and its proud history, built on strong foundation to secure the Bank’s future success. I look forward to working with the Board and Executive team as we continue our journey ahead and I know that we are well-placed to navigate through the current environment and set the standards in financial services for our customers across Africa. I would also like to express my thanks to my predecessor, Mr Emmanuel Ikazoboh, for his leadership of the Board and to wish him all the best for the future,” he said.

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Alain Nkontchou co-founded Enko Capital Management LLP, a London-based asset management company with Johannesburg office. He currently serves as the Managing Partner and of the firm which specialises in prospecting investment opportunities in Africa.

Prior to this time, ETI’s newly-appointed Chairman was a Non-Executive Director at Laurent Perrier champagne between 1999 and 2009. He was also the Managing Director of Credit Suisse’s Global Macro Trading from 1995 to 2008. He held a similar role at JP Morgan Chase & Co.

Meanwhile, from 1989 to 1994, Nkontchou worked with Chemical Bank first in Paris and then New York. At the bank, he rose through the ranks to become the Vice- President, Head of Trading, and Sales. Apparently, he is an accomplished business executive.

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Alain Nkontchou obtained an MSc in Electrical Engineering from Supélec and P.M. Curie University, Paris, and another MSc in Finance and Accounting from ESCP (Ecole Supérieure de Commerce de Paris).


It should be noted that ETI’s stock closed yesterday’s trading session on the Nigerian Stock Exchange with a share price of N4.80. The share price gained by +1.05% to appreciate from its previous close of N4.75. Year to date, ETI’s share price has declined by about 22%.

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Economy & Politics

Nigeria’s public debt is officially N29.83 trillion

Further disaggregation of Nigeria’s total public debt showed that N9.99trn or 34.89% of the debt was external.

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Q1 2020 National Debt report

The total public debt stocks of the Federal Government of Nigeriastates within the Nigerian federation, and the Federal Capital Territory (FCT) jumped to N28.63 trillion as of Q1 2020. This is according to a report by the National Bureau of Statistics (NBS) which was released on Friday. 

A breakdown of the report showed that the total debt stock of the states as of 31 March 2020 is N4.1 trillion. Meanwhile, these states’ total Internally Generated Revenue (IGR) for 2019 was N1.3 trillion. They also received N2.47 trillion from FAAC. 

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Note that as always, Lagos State recorded the highest IGR at N398.7 billion. The state also received N117.8 billion in FAAC disbursements and has a total debt stock of N444.2 billion, thereby making up 10.8% of the total debt stock of the states. 

On the other hand, Yobe State recorded the lowest debt stock out of all the states with just N29.2 billion. This made up just 0.7% of the total debt stock of the states. Meanwhile, the state generated a total IGR of N8.4 billion in 2019. 

Part of the report by the NBS said: 

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“Nigerian States and Federal Debt Stock data as at 31st March 2020 reflected that the country’s total public debt portfolio stood at N28.63trn. Further disaggregation of Nigeria’s total public debt showed that N9.99trn or 34.89% of the debt was external while N18.64trn or 65.11% of the debt was domestic. 

“Similarly, States and FCT domestic debt was put at N4.11trillion with Lagos state accounting for 10.8% of the total domestic debt stock while Yobe State has the least debt stock in this category with a contribution of 0.7%.” 

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Meanwhile, the FCT had total debt of N106.8 billion, making up 2.6% of the total debt stock of the states. The FCT also recorded an IGR of N74.5 billion in 2019 and received N71.9 billion in FAAC. 

The Federal Government’s total domestic debt stock by Q1, 2020 was N14.5 trillion, with FGN bonds making up 72.5% of the total portfolio followed by treasury bills at 18.24%. 

The total public debt stock has risen by 4% since December 2019, as the previous figure stood at N27.4 trillion. 

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You may download NBS’ Nigerian Domestic and Foreign Debt report by clicking here.  

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Coronavirus

COVID-19: WHO reverses itself based on new discovery about the virus

This admission is coming on the heels of criticisms from experts.

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WHO warns countries against rushing to lift coronavirus restrictions

The World Health Organization (WHO) has provided an update on the modes of transmission of SARS-CoV-2, the virus that causes COVID-19, from infected people, based on new scientific evidence.

The WHO on Thursday, formally recognized that the coronavirus can be transmitted indoors by droplets in the air, marking a reversal for the United Nation’s agency.

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In a scientific brief, the WHO said that people who spend time in crowded places with poor ventilation are at risk of being infected by the coronavirus as the droplets circulate throughout the air in indoor gatherings.

This admission is coming on the heels of criticisms from experts who have been putting pressure on the UN health agency to update its description of the spread of the virus to include the possibility of airborne infections.

The WHO now admits that transmissions through aerosols, or tiny air droplets, could have been behind outbreaks of COVID-19 that have been reported in some closed environments such as restaurants, nightclubs, places of worship or places of work where people may be shouting, talking or singing.

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Apart from refraining from having close contact with infected people and frequent hand-washing, the WHO pointed out that people should avoid crowded places, close-contact settings, and confined and enclosed spaces with poor ventilation.

However, the WHO still focuses more on the spread of the virus by larger droplets that are discharged through coughing, sneezing and singing or from contact with a contaminated surface.

The WHO in its statement said, “Respiratory droplet transmission can occur when a person is in close contact (within 1 metre) with an infected person who has respiratory symptoms (e.g. coughing or sneezing) or who is talking or singing; in these circumstances, respiratory droplets that include virus can reach the mouth, nose or eyes of a susceptible person and can result in infection.”

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It also revealed that based on what is currently known, the transmission of COVID-19 primarily occurs from people when they have symptoms and can also occur just before they develop symptoms when they are in close proximity to others for prolonged periods of time. While someone who never develops symptoms can also pass the virus to others, it is still not clear to what extent this occurs and more research is needed in this area.

The UN health agency had previously advised that the spread of the virus through the air is only common when people, mostly health care workers, were involved in medical procedures that produced aerosols, though a lot of evidence has surfaced suggesting that the virus can stay in the air for hours and infect a person when inhaled.

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