Download pdf - FY2010 Earnings Release - EFG Hermes · HERMES INVERSTOR RELATIONS 2010 Earnings Release - 30 March 2011 The Commercial Bank loans grew 28% Y -o Y, to USD1.7 billion by the end of

INVESTOR RELATIONS FY2010 Earnings Release

30 March 2011

EFG HERMES REPORTS

CONSOLIDATED NET INCOME OF EGP700 MILLION FOR THE

FULL YEAR 2010; EARNING PER SHARE OF EGP1.83, ON

TOTAL OPERATING REVENUE OF EGP2,463 MILLON

Cairo, March 30, 2011 – EFG Hermes reported consolidated net income of

EGP700.4 million for the year ended 31st December 2010, compared with

EGP551.8 million in FY2009. Consolidated total operating revenue reached

EGP2,463.3 million, from EGP1,430.6 million a year earlier. Total assets stood at

EGP46.7 billion at the end of FY2010.

Fourth quarter consolidated total operating revenue rose to EGP553.4 million

versus EGP378.5 million Y-o-Y. This filters into a consolidated net income of

EGP32.0 million versus EGP84.6 million in 4Q2009.

Key Highlights

EFG Hermes Group ended FY2010 with a solid balance sheet. Total assets

reached EGP46.7 billion and shareholders’ equity stood at EGP9.9 billion, versus

EGP11.0 billion and EGP8.9 billion, respectively, in FY2009. The FY2010 figures

include the consolidation of the Lebanese commercial bank, Crédit Libanais.

Group operating revenue rose 72% Y-o-Y to EGP2,463 million in FY2010, with

Commercial Bank contribution accounting to 23% versus 77% for the Investment

Bank. With operating expenses of EGP1,133 million, the net operating profit

reached EGP1,330 million for FY2010, 90% higher Y-o-Y. Consequently, the net

operating profit margin rose to 54%, versus 49% in FY2009.

For the Investment Bank activities, total revenue rose 92% Y-o-Y to reach

EGP1,907 million in FY2010, including a capital gain of EGP716.6 million from the

sale of Bank Audi. Fee and commission revenue was largely driven by stronger

revenue generated from the investment banking operations as the team

managed to close several transactions during the year. Fee and commission

revenue rose 8% Y-o-Y to reach EGP855 million in FY2010. Revenue generated

from capital markets and treasury operations reached EGP1,052 million in

FY2010, reflecting a capital gain of EGP716.6 million from the sale of Bank Audi,

and strong revenue generated from FX gains and net interest income.

The Commercial Bank reported a net profit of USD77.7 million in FY2010,

representing an increase of 52% over FY2009 and reflecting the strong

performance of both the Lebanese banking sector as well as Crédit Libanais itself.

The growth in earnings was driven by strong recurring and non-recurring income

growth.

Investor Relations Contacts

Mohamed Arafa

CFO

[email protected]

Tel: +20 2 3535 6120

Hanzada Nessim

Associate Vice President

Strategy & Investor Relations

[email protected]

Tel: +20 2 3535 6502

Nada Al-Hamalawy

Associate

Strategy & Investor Relations

[email protected]

Tel: +20 2 3535 6453

EFG Hermes (Main Office)

Building No. B129, Phase 3,

Smart Village – km 28 Cairo

Alexandria Desert Road, 6 October

Egypt 12577

Investor Relations Contacts:

Tel: +20 2 3535 6710

Fax:+20 2 3535 7017

Stock Exchange & Symbol

Cairo: HRHO.CA

London: HRHOq.L

Bloomberg: HRHO EY

Reuters pages: EFGS .HRMS .EFGI

.HFISMCAP HFIDOM

Bloomberg page: EFGH

EFG HERMES INVERSTOR RELATIONS 3Q2010 Earnings Release 30 November 2010 2

EFG HERMES INVERSTOR RELATIONS FY2010 Earnings Release - 30 March 2011 2

The Commercial Bank loans grew 28% Y-o-Y, to USD1.7 billion by the end of FY2010.

While customer deposits rose 17% Y-o-Y; thus pushing loan-to-deposits ratio up to 29.9%

at the end of FY2010, from 27.2% in FY2009.

Group net profit before tax and minority interest reached EGP1.15 billion, up 86% Y-o-Y,

from EGP617.7 million a year earlier. However, the Group net profit after tax and before

minority interest came at EGP815.7 million, representing a 36% Y-o-Y increase.

Our brokerage remained #1 in terms of executions in the Egyptian and the UAE

markets, and maintained its leading position in a number of other regional markets. The

team remains committed to expanding its retail business and penetrating new segments. In

FY2010, average daily commissions came in at USD223 thousands versus USD293

thousands in FY2009.

Public assets under management rose 11% over the year to reach USD4.7 billion. The

team closed several new discretionary portfolios/injections by existing clients during the

year.

Investment Banking remained very active in FY2010, closing 11 transactions with a

value of approximately USD4.6 billion and distributed across the entire investment banking

spectrum which includes ECM, DCM and M&A activities. In January 2011, the team closed

the advisory to Orascom Telecom on the USD1.2 billion sale of its 50% stake in Tunisia’s

second mobile operator Tunisiana to Qatar Telecom.

Private Equity AuMs stood at USD919 million, with a number of exits taking place during

the year.

Fourth quarter 2010, saw the first closing of the InfraMed Fund of EUR385 million, of

which a newly established wholly owned subsidary share is EUR100 million.

Market conditions deteriorated significantly in 2011 as a result of the EGX closing.



A. GROUP PERFORMANCE

I. Group Balance Sheet

Table 1: Key Balance Sheet Indicators

EGP (mn) Investment Bank Commercial Bank Group EFG Hermes

Loans N/M 9,745 9,796

Total Assets 10,409 37,681 46,689

Deposits N/M 33,197 33,190

Equity 8,706 2,852 9,855 Source: EFG Hermes balance sheet

The Group’s balance sheet ended the fourth quarter and the year on strong footing, with total

assets standing at EGP46.7 billion, versus EGP11.0 billion a year earlier. On a Q-o-Q basis, total

assets saw a slight contraction of -0.9%, while the Investment Bank total assets declined post the

completion of Crédit Libanais acquisition for a transaction value of USD542 million in November,

2010. Meanwhile, the Commercial Bank managed to offset the decline, growing its total assets by

3% Q-o-Q.

Total shareholders’ equity increased 9% Q-o-Q to reach EGP9.9 billion at the end of 4Q2010

versus EGP9.0 billion a quarter earlier. For the Investment Bank, shareholders’ equity grew 9% Q-

o-Q while the Commercial Bank shareholders’ equity rose 8% Q-o-Q. Indeed, the increase in total

shareholders’ equity reflects the company’s strong capitalization, which enables the company to

further pursue its growth strategy.

With the consolidation of Crédit Libanais in 3Q2010, the balance sheet expanded on a Y-o-Y basis.

Total assets rose 324% Y-o-Y to reach EGP46.7 billion. Meanwhile, total shareholders’ equity rose

10% Y-o-Y to close at EGP9.9 billion in FY2010, up from EGP8.9 billion in FY2009.

At the end of FY2010, available-for-sale investments amounted to EGP2.8 billion, of which Crédit

Libanais available-for-sale instruments accounted for EGP1.3 billion. Moreover, the held-to-

maturity portfolio, which is attributed to the Commercial Bank, stood at EGP12.2 billion at the end

of the 4Q2010. Worth nothing, that the majority of the Commercial Bank’s available-for-sale and

held-to-maturity investments are held in Lebanese government treasury bills and Eurobonds.

However, on 1st January 2011, the Commercial Bank re-classified all securities to held-to-maturity

investments relevant to instructions from the Central Bank of Lebanon and in compliance with the

IFRS-9.

On the liability side, the creditors and other credit balances fell to EGP1.0 billion at the end of

4Q2010, compared to EGP4.2 billion at the end of 3Q2010, after the settlement of EGP3.1 billion

for the 65% acquisition of Crédit Libanais which was finalized in November, 2010.



II. Performance Indicators and Financial Highlights

Table 2: Key Operational Indicators

Group EFG Hermes

4Q10 3Q10 4Q09 Q-o-Q Y-o-Y

Total Brokerage Executions USD bn 8.4 6.8 24.7 23% -66%

Investment Banking Fees EGP mn 22 40 18 -45% 22%

Assets under Management: USD bn 5.61 5.47 5.31 3% 6%

In Private Equity USD bn 0.92 0.92 0.96 0% -4%

In Asset Management USD bn 4.69 4.55 4.35 3% 8%

Deposits USD bn 5.5 5.3 N/M 3% N/M

Loans USD bn 1.7 1.6 N/M 6% N/M

Group Net Income EGP mn 32 88 85 -64% -62%

Source: Crédit Libanais data, EFG Hermes

Table 3: Investment Bank/Commercial Bank Financial Performance - 4Q2010

Investment Bank Commercial Bank*

EGP (mn) 4Q10 3Q10 4Q09 Q-o-Q Y-o-Y 4Q10 3Q10 Q-o-Q

Total Operating Revenue 253 241 379 5% -33% 301 256 18%

Total Operating Expenses 277 191 264 45% 5% 140 120 16%

Net Operating Profit (24) 50 115 -149% -121% 161 136 19%

Net Operating Margin -10% 21% 30% N/M N/M 54% 53% 1%

Net Profit after Tax & Minority Interest

(44) 20 85 N/M N/M 76 68 11%

*The commercial bank figures represent EFG Hermes 65% stake in Crédit Libanais. Source: Crédit Libanais data, EFG Hermes management accounts

Table 4: Investment Bank/Commercial Bank Financial Performance – FY2010

Investment Bank Commercial Bank

EGP (mn) FY10 FY09 Y-o-Y 2H10

Total Operating Revenue 1,907 1,431 33% 556

Total Operating Expenses 874 730 20% 259

Net Operating Profit 1,033 701 47% 297

Net Operating Margin 54% 49% 11% 53%

Net Profit after Tax & Minority Interest 557 552 1% 144

Source: EFG Hermes management accounts, Crédit Libanais data

Table 5: Group Financial Performance

Group EFG Hermes*

EGP (mn) 4Q10 3Q10 4Q09 Q-o-Q Y-o-Y FY10 FY09 Y-o-Y

Total Operating Revenue 553 497 379 11% 46% 2,463 1,431 72%

Total Operating Expenses 417 311 264 34% 58% 1,133 730 55%

Net Operating Profit 137 186 115 -26% 19% 1,330 701 90%

Net Operating Margin 25% 37% 30% -34% -18% 54% 49% 10%

Net Profit after Tax & Minority Interest

32 88 85 -64% -62% 700 552 27%

*Only 2H2010 figures of commercial bank (Crédit Libanais) are included in consolidated FY2010 results Source: EFG Hermes management accounts



III. Group Revenues

Table 6: Group Revenue Performance

EGP (mn)

4Q10 4Q09 Y-o-Y

FY10* FY09 Y-o-Y

Investment Bank - Fee &

Commission Revenue 198 36% 217 57% -9% 855 35% 792 55% 8%

Investment Bank - Capital

Markets & Treasury

Operations Revenue

55 10% 32 8% 72% 1,052 43% 202 14% 419%

of which:

Net Interest Income** 52 9% 25 7% 109% 307 12% 116 8% 164%

Capital Gain (Loss) on

Investments*** 3 0% 7 2% -62% 745 30% 86 6% 763%

Revenue from Bank

Audi**** 0 0% 130 34% N/R 0 0% 436 30% N/R

Commercial Bank Revenue 301 54% 0 0 N/R 556 23% 0 0 N/R

Total Revenue 553 100% 379 100% 46% 2,463 100% 1,431 100% 72%

* Only 2H2010 revenue of commercial bank (Crédit Libanais) was included in consolidated FY2010 revenue **Net of bank interest paid, bank charges, FX differences and intercompany revenue (expenses)

*** Represents realised & unrealised gains/loss on trade facilities account, includes EGP716.6 million of capital gain on sale of Bank Audi in 1Q10 **** Being share of profit of associate in 4Q09 & FY09

Source: EFG Hermes management accounts

The Group’s revenue for 4Q2010 reached EGP553 million, up 46% Y-o-Y from EGP379 million in

4Q2009. The Commercial Bank contributed by 54% while the investment bank contribution came

at 46%, versus 51.5% and 48.5% respectively, in 3Q2010. The Investment Bank fee &

commission revenue contracted by 9% Y-o-Y, on the back of lower brokerage executions and a

decline in revenue generated by Private Equity. Meanwhile, revenue from capital markets and

treasury operations rose 72% to EGP55 million supported by an increase in net interest income

which reached EGP52 million. Meanwhile, the Commercial Bank contribution to Group revenue

amounted to EGP301 million in 4Q2010.

For the full year 2010, the Group revenue reached EGP2,463 million of which the Commercial

Bank contribution was restricted to 23% versus 77% for the Investment Bank. Noting that, the

Commercial Bank’s figures were only consolidated in 3Q2010, thus only 2H2010 commercial bank

revenue is included in the Group’s FY2010 figures.

The Group’s revenue for FY2010 rose 72% Y-o-Y to EGP2,463 million up from EGP1,431 million a

year earlier. For the Investment Bank, fee & commission revenue rose 8% Y-o-Y to EGP855

million on the back of improving advisory fees generated from Investment Banking. Capital

markets and treasury operations soared 419% to EGP1,052 million underpinned by a capital gain

of EGP716.6 million recognized from the sale of Bank Audi. However, excluding Bank Audi’s capital

gain, revenue from capital markets and treasury operations would rise 66% Y-o-Y to EGP335

million versus EGP202 million in FY2009, with FX gains of EGP157 million being the main driver of

revenue growth. Meanwhile, the Commercial Bank contribution to total revenue came at EGP556

million (representing only 2H2010 revenue).



IV. Group Operating Expenses

Employee expenses remain a significant component of total operating expenses, representing

69.6% of the Group expenses in 4Q2010. Meanwhile, the Group non-employee related expenses

represented the balance, 30.4% of total expenses. In terms of margins, the Investment Bank

4Q2010 net operating profit margin was -9.6% while the Commercial Bank margin was relatively

stable at 53.6%, thus resulting in an operating profit margin for the Group of 24.7% in 4Q2010.

It is worth highlighting that, the Investment Bank’s depressed margins in 4Q2010 were impacted

by a one-off cost item of EGP15 million charged in 4Q2010.

For FY2010, employee expenses as a percentage of total expenses, was slightly lower at 68.0%

and the remaining 32.0% was attributed to non-employees expenses. Meanwhile, the Group net

operating margin for the year reached 54.0%, with solid contribution from both the Investment

Bank (54.2%) and the Commercial Bank (53.4%).

Table 7: Group Operating Expenses – 4Q2010

EGP (mn)

Investment Bank

Commercial Bank

Group EFG Hermes

4Q10 4Q10 4Q10

Total Operating Revenue 253 301 553

Total Operating Expenses 277 140 417

Net Operating Profit -24 161 137

Net Operating Margin -9.6% 53.6% 24.7%

Employee Expenses 211 79 290

Employee Expenses/Total Operating Revenue 83.4% 26.3% 52.4%

Employee Expenses/Total Operating Expenses 76.1% 56.6% 69.6%

Other Operating Expenses 66 61 127

Other Operating Expenses/ Total Operating Revenue 26.2% 20.1% 22.9%

Other Operating Expenses/Total Operating Expenses 23.9% 43.4% 30.4%

Source: EFG Hermes Management Accounts

Table 8: Group Operating Expenses – FY2010

EGP (mn)

Investment Bank

Commercial Bank

Group EFG Hermes

FY10 2H10 FY10*

Total Operating Revenue 1,907 556 2,463

Total Operating Expenses 874 259 1,133

Net Operating Profit 1,033 297 1,330

Net Operating Margin 54.2% 53.4% 54.0%

Employee Expenses 619 151 770

Employee Expenses/Total Operating Revenue 32.5% 27.2% 31.3%

Employee Expenses/Total Operating Expenses 70.8% 58.2% 68.0%

Other Operating Expenses 255 108 363

Other Operating Expenses/Total Operating Revenue 13.4% 19.5% 14.7%

Other Operating Expenses/Total Operating Expenses 29.2% 41.8% 32.0%

* Includes EFG Hermes Investment Bank FY2010 and Crédit Libanais 2H2010 numbers Source: EFG Hermes Management Accounts



B. THE INVESTMENT BANK

I. Investment Bank Revenue Table 9: Investment Bank Revenue

EGP (mn)

4Q10 4Q09 Y-o-Y

FY10 FY09 Y-o-Y

Total Fee & Commission

Revenue 198 78% 217 87% -9% 855 45% 792 80% 8%

Capital Markets &

Treasury Operations

Revenue

55 22% 32 13% 72% 1,052 55% 202 20% 419%

of which:

Net Interest Income* 52 21% 25 10% 109% 307 16% 116 12% 164%

Capital Gain (Loss) on Investments**

3 1% 7 3% -62% 745 39% 86 9% 763%

Total Revenue 253 100% 249 100% 2% 1,907 100% 995 100% 92%

* Net of bank interest paid, bank charges, FX differences and intercompany revenue (expenses) ** Represents realised & unrealised gains/loss on trade facilities account, includes EGP716.6 million of capital gain on sale of Bank Audi in 1Q10 Source: EFG Hermes Management Accounts

Investment Bank total revenue rose 2% Y-o-Y to EGP253 million in 4Q2010, supported by 72%

increase in the capital markets & treasury operations revenue, as fee & commission revenue

declined 9% Y-o-Y in 4Q2010. For the FY2010, total revenue rose 92% Y-o-Y to EGP1,907 million.

However, excluding the capital gain of EGP716.6 million from the sale of Bank Audi in FY2010,

revenue would increase 20% Y-o-Y.

Fee and Commission Revenue

Fee and commission revenue declined 9% Y-o-Y to EGP198 million in 4Q2010. Moreover, fee and

commissions revenue contribution to the total Investment Bank revenue fell, accounting for 78%

in 4Q2010, as capital markets and treasury operations revenue improved. For the full year, fee

and commission revenue rose 8% Y-o-Y to EGP855 million in FY2010, largely driven by stronger

revenue generated from the investment banking activities, and to a lesser degree, by an

improvement in the Asset Management and Private Equity revenues. This all combined, managed

to mitigate the decline in Brokerage operations which weakened as regional markets retreated and

liquidity dropped.



Figure 10: Brokerage Av. Daily Commission Figure 11: Asset Management AuMs

Source: EFG Hermes Source: EFG Hermes

Table 12: Fee and Commission Revenue – 4Q2010

4Q10

4Q09

Y-o-Y (EGP mn)

Brokerage: Egypt 61 31.0% 60 27.6% 3%

Brokerage: UAE 8 3.9% 20 9.1% -61%

Brokerage: KSA 4 2.0% 5 2.5% -29%

Brokerage: Oman 2 1.2% 3 1.5% -26%

Brokerage: Kuwait 9 4.3% 15 7.0% -44%

Brokerage: Jordan 1 0.5% 0 0.0% NR

Total Brokerage 85 42.9% 103 47.7% -18%

Asset Management: Egypt 23 11.5% 19 8.9% 17%

Asset Management: Regional 33 16.6% 24 10.9% 40%

Total Asset Management 56 28.1% 43 19.8% 30%

Private Equity 35 17.6% 52 24.1% -33%

Investment Banking: Egypt 22 11.3% 23 10.5% -2%

Investment Banking: Regional 0 0.0% -5 -2.1% N/M

Total Investment Banking 22 11.3% 18 8.4% 23%

Total Fees & Commissions 198 100% 217 100% -9%


-

100

200

300

400

500

600

700

800

900

1Q

06

2Q

06

3Q

06

4Q

06

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

USD ('000)

0.00.51.01.52.02.53.03.54.04.55.05.56.0

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

USD (bn)



Table 13: Fee and Commission Revenue – FY2010

FY 2010 FY 2009 Y-o-Y

(EGP mn)

Brokerage: Egypt 266 31.1% 300 37.9% -11.4%

Brokerage: UAE 36 4.2% 66 8.4% -46.5%

Brokerage: KSA 13 1.6% 18 2.3% -25.7%

Brokerage: Oman 9 1.1% 14 1.7% -32.8%

Brokerage: Kuwait 51 6.0% 66 8.3% -22.0%

Brokerage: Jordan 1 0.2% 0 0.0% NR

Total Brokerage 377 44.1% 464 58.6% -18.8%

Asset Management: Egypt 65 7.6% 55 7.0% 17.8%

Asset Management: Regional 101 11.8% 99 12.4% 2.5%

Total Asset Management 166 19.4% 154 19.4% 8.0%

Private Equity 145 17.0% 131 16.5% 11.0%

Investment Banking: Egypt 156 18.2% 40 5.1% 286.5%

Investment Banking: Regional 11 1.3% 3 0.4% 286.4%

Total Investment Banking 167 19.5% 43 5.5% 286.5%

Total Fees & Commissions 855 100% 792 100% 8%


For 4Q2010, fee and commission revenue mix changed. Revenue from Investment Banking and

Asset Management rose Y-o-Y, as opposed to a decline from revenue generated from Brokerage

and Private Equity. Brokerage which remains distressed by weaker regional execution in 4Q2010,

accounted for 43% of total revenue versus 48% in 4Q2009.

On a yearly basis, revenue contribution from Investment Banking, Private Equity and Asset

Management rose, offsetting the decline in Brokerage revenue. Worth noting that, Investment

Banking revenue, which saw a significant increase of 287% Y-o-Y, accounted for 20% in FY2010

versus 6% in FY2009. On the other hand, Brokerage contribution to total revenue fell to 44%,

down from 59% a year earlier. This illustrates the company’s ability to diversify and maximize

revenue generated to weather challenging markets conditions.



Fee and Commission Revenue – Brokerage

Over 4Q2010, the regional markets performance slightly improved, with MSCI EM rising c5% and

the S&P Pan Arab Comp ML Index adding c4%. Furthermore, sentiment improved and liquidity

picked up in 4Q, with aggregate liquidity in Egypt and the GCC rising by a weighted average of

25% over 3Q2010 levels.

EFG Hermes Brokerage total value of executions stood at EGP47.7 billion (USD8.4 billion) in

4Q2010, up 23% Q-o-Q. Accordingly, commissions rose to EGP85 million (USD14.6 million), up

19% Q-o-Q. Meanwhile, brokerage revenue declined 18% Y-o-Y, reflecting the decline in the

Group’s executions across different operations (with the exception of Egypt); especially in the

UAE.

In line with Brokerage strategy, the team remains committed to expanding the retail business and

penetrating new segments within the constantly growing regional markets. The retail business

which includes online, call center, branches and VIP individuals represents 53% of total brokerage

revenue by the end of 4Q2010.

With a total of nine branches, the team further cement its retail franchise and expanded its retail

network operations. By the end of FY2010, the team completed the installation of six ATM

machines, to help facilitate money deposits/withdrawals from retail clients’ accounts, with

operations expected to start soon. In 2011, the team plans to install two additional ATM machines

in two branches together with a plan to expand the ATM distribution network in the commercial

malls.

Figure 14: Brokerage Revenue by Desk

Source: EFG Hermes

Western

Institutions

24%

Regional

Institutions

7%Retail & VIP

53%

HNWI

16%



Egypt

After taking a breather in 3Q2010, both performance and liquidity improved on EGX in 4Q2010.

Over the quarter, the Hermes Financial Index (HFI) rose 7.5% and volumes improved c18%

compared to 3Q2010. Additionally, EFG Hermes share of total execution improved 28% over the

same period.

In 4Q2010, Egypt brokerage market share rose to 26% versus 18% in 3Q2010. Worth noting, that

4Q2010 market share is calculated using securities executions on the EGX as opposed to using the

total market executions which include securities trading and primary bond trading.

EFG Hermes remained the #1 broker in the Egyptian market both in terms of volume of

executions and revenues. Over FY2010, our two brokerage companies are ranked #1 and #2, with

their total execution 118% higher than the following broker, thus reflecting the dominant position

of EFG Hermes in the market.

Figure 15: Egypt Executions and Market Share

Source: EGX, EFG Hermes

Revenue contribution from brokerage activity in Egypt rose 23% Q-o-Q to EGP61.4 million in

4Q2010 versus EGP49.8 million in 3Q2010, reflecting higher volumes and executions. However, on

a Y-o-Y basis, Egypt brokerage revenue was muted, up 3% from EGP59.8 million in 4Q2009.

Furthermore, Egypt continued to be the main contributor to Brokerage revenue, accounting for

72%, slightly higher than 70% in 3Q2010.

For FY2010, Egypt brokerage revenue came in at EGP266 million, lower 11% compared to a year

earlier. Nevertheless, Egypt contribution to total brokerage revenue rose to 71% compared to

65% in FY2009, largely attributed to a decline in UAE brokerage revenue, thus driving Egypt’s

weight higher.

17.025.5 23.4

58.2

114.8

55.6

25.9

15.519.0

43.0

18.4

91.3

19.926.0

11.114.6

28.5%

35.1%

30.4%

54.4% 55.1%

32.3% 33.6%

37.2%

40.9%

39.8%

27.6%

53.4%

24.5% 25.1%

18.4%

26.0%

0%

10%

20%

30%

40%

50%

60%

0

20

40

60

80

100

120

140

1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Executed by EFG-Hermes Market Share(EGP bn)



UAE

4Q2010 was marked by improved liquidity on both the UAE markets, with the DFM and the ADX

turnover rising 32% and 22%, respectively. Performance was broadly muted over the quarter, the

Dubai Financial Market General Index (DFMGI) retreated 3.2%; while Abu Dhabi Index (ADI)

inched up 1.8%.

EFG Hermes executions improved 28% Q-o-Q on the ADX, pushing EFG Hermes market share to

its highest level at 24.9% from 23.7% in 3Q2010. On the other hand, EFG Hermes market share

on the DFM fell to 14.6% from 17.5% in 3Q2010, as the 10% increase in EFG Hermes executions

was lower than the 32% increase in the market turnover.

Figure 16: UAE Executions and Market Share

Source: DFM, ADX, EFG Hermes

Total revenue booked by the brokerage operations in the UAE (ADX and DFM) rose 25% Q-o-Q to

EGP8 million in 4Q2010 versus EGP6 million in 3Q2010; however, revenue was significantly lower

Y-o-Y, down 61%. Meanwhile, UAE contribution to total brokerage fee and commissions revenue

improved slightly to 9.2% versus 8.6% a quarter earlier.

In FY2010, UAE brokerage revenue declined 47%Y-o-Y to EGP36 million. Moreover, UAE

contribution to total brokerage revenue fell to 9% from 14% in FY2009.

8.5

14.513.8

21.018.9

25.126.9

10.2

4.0

8.97.4 8.4

4.94.0 3.4 4.0

18%

13%

18%

14%

20%

16%

25%

16%

9%10%

11%11% 10%

13%17%

15%

5%

9%

14%

16%

17%15%

23%21%

15%

12%

18%18.5%

19% 20%

24%25%

0%

5%

10%

15%

20%

25%

30%

0

5

10

15

20

25

30


Executed by EFG-Hermes Market Share in DFM Market Share in ADX(AED bn)



Saudi Arabia

Trading on the Saudi Stock Market (Tadawul) picked up, rising 28% over 4Q2010, while the

Tadawul All Share Index (TASI) increase was restricted to +3.6%. In line with the increase in

liquidity, our total executions rose 33%, thus maintaining our market share up of 1.6%.

Figure 17: KSA Executions and Market Share

Source: Tadawul, EFG Hermes

Revenue generated from the Saudi brokerage rose 32% Q-o-Q to EGP3.9 million from EGP2.9

million in 3Q2010. However, on a Y-o-Y basis, revenue declined 29% from EGP5.5 million a year

earlier. Meanwhile, contribution to the total brokerage stood at 4.6% at the end of 4Q2010,

slightly higher than 4.1% in 3Q2010.

For the full year, revenue from the Saudi brokerage declined 26% to EGP13 million; yet

contribution to total brokerage fee and commission was flat at 4%.

0.1

1.1

4.9

5.8

9.3

8.5

3.7

2.9 3.2

1.3

2.61.9

3.1

2.12.8

0.2%

0.9%

1.4%1.6%

2.4%

1.1%1.0%

0.7%

0.6%

1.1%1.0%

1.2%

1.6% 1.6%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

0

1

2

3

4

5

6

7

8

9

10

2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Executed by EFG-Hermes Market Share(SAR bn)



Oman

Over 4Q2010, turnover on the Muscat Securities Market rose 38% and the Muscat Securities Index

rose 4.4%. At the same time, our executions rose 16% over the quarter and thus pulled our

market share to 18.1% versus 23.3% at the end of 3Q2010.

Figure 18: Oman Executions and Market Share

Source: Muscat Securities Market, EFG Hermes

Revenue generated from Oman brokerage rose 47% Q-o-Q to EGP2.4 million from EGP1.6 million

in 3Q2010. However, revenue declined 29% Y-o-Y compared to EGP3.2 million in 4Q2009.

Meanwhile, contribution to the total brokerage reached 2.9% at the end of 4Q2010, slightly higher

than 2.3% in 3Q2010.

Over 2010, revenue generated from Oman brokerage dropped 33% to EGP9 million; consequently,

Oman contribution to total brokerage revenue fell to 2.4% compared to 2.9% in FY2009.

156.0

204.0212.0

81.067.0

135.0

108.0 98.0

81.072.0

56.865.2

16.9%

14.4%

29.9%

24.3%

19.2%

17.5%

17.2%18.8%

21.5%21.4%23.3%

18.1%

0%

5%

10%

15%

20%

25%

30%

35%

0

50

100

150

200

250

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Executed by EFG-Hermes Market Share(OMR mn)



Kuwait

In 4Q2010, liquidity on the KSE increased slightly, up 8%, while the KSE index was relatively flat,

down 0.4%. EFG Hermes share of total executions rose 15%, thus driving our market share up to

29.7% in 4Q2010, compared to 27.7% in 3Q2010. For the quarter and for the FY2010, EFG

Hermes IFA Brokerage maintained its second ranking on KSE.

Figure 19: Kuwait Executions and Market Share

Source: Kuwait Securities Exchange, EFG Hermes

Revenue generated from Kuwait brokerage reached EGP8.6 million, lower 18% Q-o-Q and 44%

Y-o-Y. In 4Q2010, Kuwait brokerage revenue to total brokerage revenue stood at 10%.

Similarly on a yearly basis, revenue from Kuwait brokerage fell 22% to EGP51 million compared to

EGP66 million in FY2009. However, Kuwait’s contribution to total brokerage revenue represents

13.6% versus 14.1% in FY2009.

Jordan

Revenue booked from Jordan operations (EFG Hermes Jordan), which was consolidated for the

first time in 3Q2010, amounted to EGP1.0 million in 4Q2010 versus EGP0.4 million in 3Q2010.

Meanwhile, market share reached 2.8% in 4Q2010 versus 2.0% in 3Q2010.

3,102

2,807

1,897

1,472

976

2,832

1,496

1,160

1,612

773 691 777

26.3%

26.2% 26.9%

23.5%

29.1% 30.2%

27.3%

36.0% 35.4%

27.4%27.7%

29.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Executed by EFG-Hermes

Market Share(KWD mn)



Research

Figure 20: Research Coverage Universe

Source: EFG Hermes

At the end of 4Q2010 the Research department had 124 companies under coverage, spread across

the region (Egypt 31, UAE 23, KSA 30, Kuwait 7, Oman 18, Qatar 8, Lebanon 4, and Morocco 3);

currently EFG Hermes covers 56% of the regions market capitalization.

Moreover, the research department covers 11 economies from a macro-level and 8 countries in

terms of regular strategy notes. In addition, the research team issues regular publications

including daily morning round-ups, end of session wrap-ups and a regional monthly product. New

products introduced in 2010 include the MENA dashboard and monthly funds flow publications.

This, in addition to regular MENA Report and an annual MENA Investment Perspective.

The team is aiming to extend coverage to the Levant markets as local presence in the Syrian,

Jordanian and Lebanese markets has been established.

13 1325 19 22 27 23

311 5

1716

2120

19

23

611

611

16 22

30

18

2

7

5

4

6

1326

22

0

20

40

60

80

100

120

140

2003 2004 2005 2006 2007 2008 2009 2010

Egypt UAE KSA Oman Others

22

3639

5360

76

90

124



Fee and Commission Revenue – Asset Management

Figure 21: Development of Listed Assets under Management

Source: EFG Hermes

EFG Hermes ended 4Q2010 with USD4.7 billion of assets under management, 8% higher than

USD4.4 billion in 4Q2009. This increase in AUM's during the quarter can be attributed to

improvement in both local and regional markets’ performance. It is also worth noting that the

increase was recorded despite the depreciation of the EGP against the USD (1USD=5.698 in

3Q2010 and 1USD=5.805 in 4Q2010) which had a negative impact on AUM’s in Egypt.

In line with Asset Management strategy of targeting long term perspective clients and increasing

institutional base, the team managed to maintain its diversified client base including institutions,

Sovereign Wealth funds and foundations/ endowment/ insurance companies and add new long

term clients. At the end of the quarter, the client base was skewed towards long term investors,

with Foundation/Pension/Insurance funds representing 26.7% of the client base, followed by

Sovereign Wealth funds which accounted for 23.6%.

In terms of funds’ origination, the team continues to work aggressively on exploring different

funds sourcing options. The investor mix changed slightly in 4Q2010, with the US and the MENA-

based investors reducing their contribution to account for 10.5% and 67.3%, respectively, at the

end of 4Q2010, down from 12.0% and 68.2%, respectively, at the end of 3Q2010. On the other

hand, Europe-based clients increased their contribution to account for 18.7% in 4Q2010, up from

16.3% in 3Q2010.

0

1

2

3

4

5

6

7

8

9


Portfolios

Regional Equity Funds

Money Market & Fixed Income

Egypt Equity Funds

4.64.14.4

2.5

3.8

5.1

6.5

7.6 7.8

6.3

4.18

3.74.01

4.4

USD (bn)

4.5 4.7



Figure 22: Assets under Management by Geography

Source: EFG Hermes

During the fourth quarter, the team managed to close several new discretionary portfolios/

injections by existing clients, totaling to USD15.5 million. The client base was spread across

insurance companies, banks, regional HNWI/Family Office and SWF. At the end of 4Q2010, total

assets in managed equity and fixed income portfolios stood at USD1.14 billion, 1% higher than

end of 3Q2010. The team will continue to pursue potential mandates with Saudi family groups and

institutions, as well as other areas in the GCC including Kuwait, Oman & Qatar. The team will also

continue to target fixed income prospects in the coming quarter.

The team has been actively working on increasing the size of existing mutual funds including

money markets, fixed income and equity funds. This is implemented by conducting training

sessions for sales staff, as well as preparing marketing materials which is used in marketing

campaigns.

EFG Hermes Asset Management has three mandates in the pipeline; a capital protected and a

money market fund, where both are sponsored by the same entity, and an Islamic money market

fund. During 4Q2010, the team received the Central Bank of Egypt’s (CBE) approval for the capital

protected fund and the money market fund, however, pending EFSA approval. Moreover, the team

has completed a distribution agreement with a foreign bank. The bank will begin sales of the Egypt

and MEDA Funds before moving on to other products.

Fee and Commission Revenue – Private Equity

Total funds under management by the Private Equity stood at USD919 million in 4Q2010, as no

exits or investments were made during the quarter. The fourth quarter 2010 saw the first closing

of the InfraMed Fund of EUR385 million of which a newly established wholly owned subsidary

share is EUR100 million.

MENA

67.3%

Western

29.2%

Other

3.4%



Fee and Commission Revenue – Investment Banking

Investment banking wrapped up a very strong 2010 with a solid fourth quarter performance that

saw the division close two important transactions. The first was the sale of the online brokerage

company Arabiya Online to Bank Audi of Lebanon for USD42 million, where EFG Hermes acted as

sole advisor to the selling shareholders. Although EFG Hermes has successfully executed multiple

transactions in the financial services sector, the sale of Arabiya Online marks the first transaction

executed in Egypt’s growing online brokerage sector. The transaction drew the attention of a

number of regional and local financial institutions and was closed at highly attractive multiples

further solidifying our position as Egypt’s premier Sell Side advisor.

In addition to Arabiya Online, EFG Hermes acted as Sole Financial Advisor to the Sixth of October

Development and Investment Company (“SODIC”) on the arrangement of USD76 million of debt

that was extended through a competitive process by Alexbank.

The two transactions capped a very solid year for EFG Hermes Investment banking that saw the

division close two rights issues (Orascom Telecom’s USD800 million rights issue and SODIC’s

USD100 million rights issue), an initial public offering (Juhayna’s USD176 million IPO), two bond

offerings (USD276 million Mobinil fixed rate notes and USD290 million OCI fixed rate notes), one

debt arrangement (SODIC’s USD76 million debt arrangement) and five M&A transactions (Sale of

Arabiya Online for USD42 million, the sale of LinkdotNet for USD130 million, SODIC’s USD40

million acquisition of 50% of Palymera in addition to the sale of the EFG Hermes stake in Bank

Audi and its subsequent acquisition of a controlling stake in Crédit Libanais). In a year where

investment banking activity was largely subdued, our ability to close 11 transactions worth almost

USD4.6 billion across the entire investment banking spectrum of equity, M&A and debt shows the

team’s ongoing ability to grow the investment banking franchise even in less than favorable

market conditions.

In January 2011, the team closed the advisory to Orascom Telecom on the USD1.2 billion sale of

its 50% stake in Tunisia’s second mobile operator Tunisiana to Qatar Telecom. Moreover, the

investment banking pipeline was the healthiest it has been in years with several equity, debt and

M&A mandates including the already announced sale of Olympic Group to Electrolux and our

continued advisory work to Wind Group on its merger with Vimpelcom. However, the recent

political events that have taken place in the Arab world have cast a lot of doubt on our ability to

execute some of those transactions especially in our key market Egypt. While this is bound to

affect our revenue generating capability in 2011, we continue to focus our attention on generating

mandates across the Arab world with several advanced discussions for transactions in Syria,

Lebanon, Sudan, Kuwait and UAE among others. Our ability to successfully land and close those

transactions will help expand our regional reach and further strengthen our franchise in the rest of

the Arab world.



Capital Markets and Treasury Operations Revenue Table 23: Capital Markets and Treasury Operations Revenue

EGP (mn)

4Q10 4Q09 Y-o-Y

FY10 FY09 Y-o-Y

Total Fee & Commission Revenue

198 78% 217 87% -9% 855 45% 792 80% 8%

Capital Markets &

Treasury Operations

Revenue

55 22% 32 13% 72% 1,052 55% 202 20% 419%

of which:

Net Interest Income* 52 21% 25 10% 109% 307 16% 116 12% 164%

Capital Gain (Loss) on

Investments** 3 1% 7 3% -62% 745 39% 86 9% 763%

Total Revenue 253 100% 249 100% 2% 1,907 100% 995 100% 92%

* Net of bank interest paid, bank charges, FX differences and intercompany revenue (expenses)

** Represents realised & unrealised gains/loss on trade facilities account, includes EGP716.6 million of capital gain on

sale of Bank Audi in 1Q10


With ample liquidity on the balance sheet, capital markets and treasury operations continued to be

a key driver for revenue in 4Q2010. Contributing by 22% to the total Investment Bank revenue in

4Q2010, capital markets and treasury operations generated EGP55 million, up 72% Y-o-Y

compared to EGP32 million in 4Q2009.

Net interest income was the largest contributor to revenue generated by capital markets and

treasury operations, with revenue from net interest income rising to EGP52 million in 4Q2010, up

from EGP25 million in 4Q2009, a significant portion of which is attributed to FX gains from the

USD appreciation against the EGP. Meanwhile, revenue generated from the treasury department

investing in fixed income and stocks was limited over 4Q2010. Revenue booked from gain on

investments was EGP3 million, lower than EGP7 million in 4Q2009.

For the full year, revenue generated from capital markets and treasury operations reached

EGP1,052 million, however, excluding the EGP716.6 million realized capital gain from the sale of

Bank Audi, revenue would amount to EGP335 million, higher 66% Y-o-Y compared to EGP202

million in FY2009. Moreover, the largest portion of the revenue generated from the treasury

department is attributed to net interest income, which reached EGP307 million in FY2010, higher

164% Y-o-Y. Of the EGP307 million booked, EGP157 million relates to FX gains and EGP142 million

relates to net interest earned. On a similar note, capital gains on investments of EGP28 million

(excluding Bank Audi capital gain) relates to EGP13 million of realized and unrealized gain on

stocks, while gains from fixed income (realized and unrealized) amounted to EGP9 million.



II. Investment Bank Operating Expenses Table 24: Investment Bank Operating Expenses – 4Q2010

EGP (mn) Fee & Commission Capital Markets &

Treasury Operations Total Investment Bank

4Q10 4Q09

Y-o-Y 4Q10 4Q09

Y-o-Y 4Q10 4Q09 Y-o-Y

Total Operating Revenue 198 217 -9% 55 162 -66% 253 379 -33%

Total Operating Expenses 231 241 -4% 46 23 98% 277 264 5%

Net Operating Profit -33 -24 38% 9 139 -94% -24 115 -121%

Net Operating Margin -17% -11% 16% 86% -10% 30%

Employee Expenses 185 175 6% 26 10 168% 211 185 14%

Employee Expenses/Total Oper.

Revenue 94% 81% 47% 6% 83% 49%


Expenses 80% 73% 56% 41% 76% 70%

Number of Employees 1,080 990 9%

Other Operating Expenses 46 65 -30% 20 14 49% 66 79 -16%

Other Operating Expenses/Total

Oper. Revenue 23% 30% 37% 8% 26% 21%


Oper. Expenses 20% 27% 44% 59% 24% 30%


Table 25: Investment Bank Operating Expenses – FY2010

EGP (mn) Fee & Commission Capital Markets &

Treasury Operations Total Investment Bank

FY10 FY09

Y-o-Y FY10 FY09

Y-o-Y FY10 FY09 Y-o-Y

Total Operating Revenue 855 792 8% 1052 638 65% 1,907 1,431 33%

Total Operating Expenses 754 664 14% 120 66 82% 874 730 20%

Net Operating Profit 101 128 -21% 932 573 63% 1,033 701 47%

Net Operating Margin 12% 16% 89% 90% 54% 49%

Employee Expenses 542 432 25% 77 28 177% 619 460 35%


Revenue 63% 55% 7% 4% 32% 32%


Expenses 72% 65% 64% 42% 71% 63%

Number of Employees 1,080 990 9%

Other Operating Expenses 212 232 -9% 43 38 13% 255 270 -6%


Oper. Revenue 25% 29% 4% 6% 13% 19%


Oper. Expenses 28% 35% 36% 58% 29% 37%


With the management strong efforts to cap costs, non-employee related operating expenses

declined for a second consecutive quarter. The non-employees’ operating expenses, which

represents 24% of total operating expenses, declined 16% Y-o-Y to EGP66 million in 4Q2010,

down from EGP79 million in 4Q2009. However, total operating expenses rose slightly to EGP277

million, up 5% Y-o-Y.



The bulk of the total operating expense is attributed to employees’ expenses, which represents

76% of the total operating expenses. Over the quarter employees expenses rose 14% Y-o-Y to

EGP211 million, reflecting the increase in the number of staff hired (increase of 9% Y-o-Y) to

support the Group’s operational expansion in different countries and the management ongoing

search to hire the best caliber and retain its high-quality human capital. Additionally, the

management took a one-off cost charge of EGP15 million in 4Q2010.

Other operating expenses which includes occupancy expenses, office expenses, communication

expenses (data and telecommunication), travel and marketing expenses, promotion and

advertising expenses and consultant and service fees have declined 16% Y-o-Y to EGP66 million in

4Q2010.

Travel expenses were largely stale, flat Y-o-Y at EGP9 million in 4Q2010. Meanwhile, promotional

and advertising declined 56% Y-o-Y to EGP4 million, down from EGP9 million in 4Q2009.

Occupancy expenses rose slightly, up 3% Y-o-Y to EGP13 million in 4Q2010, and lower than the

EGP13.7 million booked in 3Q2010 as the majority of costs related to the move to the new

headquarters disappeared.

Data communication expenses were slightly reduced to EGP8 million in 4Q2010, down 4% Y-o-Y.

For the consultation fees, expenses rose significantly 79% Y-o-Y to EGP25 million in 4Q2010,

mainly due to an increase in third party fees.

For FY2010, while other operating expenses declined 6% Y-o-Y to EGP255 million, employees’

expenses rose 35% Y-o-Y to EGP619 million, resulting in an overall increase in total operating

expenses which rose 20% to EGP874 million compared to EGP730 million in FY2009. For the year,

employees’ expenses accounted for 71% while other operating expenses accounted for the

balance, 29%.



C. THE COMMERCIAL BANK

Table 26: Commercial Bank Key Indicators

In USD (mn) 4Q10 3Q10 4Q09 Q-o-Q Y-o-Y

Deposits 5,648 5,537 4,821 2% 17%

Loans 1,658 1,584 1,292 5% 28%

Total Assets 6,497 6,280 5,484 3% 18%

Shareholders' Equity 435 410 379 6% 15%

Total Banking Revenue 55 50 41 10% 33%

Net Profit 20 22 11 -10% 83%

Source: EFG Hermes, Crédit Libanais

Crédit Libanais reported 4Q2010 net profit of USD20 million, up 83% Y-o-Y, thus taking FY2010

net profit to USD78 million, up 52% Y-o-Y over FY2009 figures. It is worth noting that FY2010

included two extraordinary items, a capital gain of USD12.0 million from the disposal of a real

estate unit and a gain from the sale of investment securities of USD10.7 million.

Figure 27: Total Assets Figure 28: Total Equity

Source: Crédit Libanais data Source: Crédit Libanais data

The balance sheet grew by 3% over the fourth quarter to reach USD6.5 billion. The loan book

grew by 5% Q-o-Q, mainly driven by a pickup in SME loans which rose 17% over the quarter and

an improvement in corporate loans, which rose 7% Q-o-Q. However, Crédit Libanais remains retail

focused, with retail customers accounting for 52% of total loan portfolio versus 48% for corporate

and SME customers. Meanwhile, deposits grew at a lower rate, rising 2% Q-o-Q reflecting the

increase in term deposits which rose 15% Q-o-Q.

Over FY2010, the bank managed to increase its market share both for the deposits and the loans.

Loans market share rose to 4.69% at the end of FY2010 from 4.51% in FY2009. For the deposits,

market share rose to 5.04% from 4.86% in FY2009.

Crédit Libanais is well capitalized, with USD380 million of Core Tier 1 capital and USD140 million

of subordinated (Tier 2) capital. A total Risk Weighted Assets (RWA) of USD3,072 million,

translates into a Core Tier 1 capital ratio of 12.37% and a total Capital Adequacy Ratio (CAR) of

16.95%.

3,778

4,456

5,484

6,497

0

1000

2000

3000

4000

5000

6000

7000

2007 2008 2009 2010

USD (mn)

311 341

378

435

0

100

200

300

400

500

2007 2008 2009 2010

USD (mn)



Figure 29: Loans and Deposits Market Share Figure 30: Loans-to-Deposits Ratio

Source: Crédit Libanais Source: Crédit Libanais

Total shareholders’ equity stood at USD435 million at the end of 4Q2010 versus USD410 at the

end of 3Q2010. Moreover, other incremental adjustments relating to the bank’s AFS and HTM

securities portfolio include securities with total unrealized capital gains of USD191 million, as at

31st December, 2010. However, as of 1st January, 2011 and in compliance to IFRS-9 and relevant

instructions of the Central Bank of Lebanon, the bank has classified all securities in the HTM

portfolio. As such, these securities will be held to maturity and the above capital gain will be

realized throughout the life of the securities in the form of incremental net interest income. In

addition, the bank owns and uses for its operations real estate, the market value of which is

higher than the recorded book value. It is foreseen that upon transfer of most central

administration functions to the presently under construction, new main administration building in

Beirut, these properties will be available for sale and a capital gain of approximate USD30 million

will be realized.

On a Y-o-Y basis, total assets grew 18% Y-o-Y, underpinned by a loan book growth of 28%.

Meanwhile, deposits rose 17% Y-o-Y, thus pushing loans to deposits ratio to 29.9% from 27.2% at

the end of FY2009.

Figure 31: Loan Book Breakdown by Type

Source: Crédit Libanais data

3.67%3.91%

4.51% 4.69%4.57%4.78% 4.86%

5.04%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2007 2008 2009 2010

Loans Market Share Deposits Market Share

24.06%26.05% 27.17%

29.94%

0%

5%

10%

15%

20%

25%

30%

35%

2007 2008 2009 2010

Corporate

31.5%

Retail

51.8%

SME

16.5%

Accrued

Interest

receivable 0.2%



On the income statement front, total banking income rose to USD55 million in 4Q2010, up 10%

Q-o-Q, driven by an expansion in the non-interest income which rose 81% Q-o-Q to USD22

million, on the back the aforementioned profit realized from the sale of investment securities for a

value of USD11 million. Meanwhile net interest income remained broadly flat over the quarter up

1% Q-o-Q to USD33 million. By the end of 4Q2010, net interest income accounted for 60% of the

total banking income while non-interest income accounted for the remaining 40% versus 66% and

34%, respectively, a quarter earlier. Net profit margin for the quarter stood at 37% at the end of

the quarter. Moreover, cost-to-income came in at 47% at the end of 4Q2010 and for FY2010, as

compared to 52% in FY2009.

For the year, total banking income rose 32% Y-o-Y to USD187 million, driven by strong net

interest income and non-interest income. Net interest income rose 18% to reach USD127 million

in FY2010, the increase in net interest income is attributed to the strong loan growth as the

improvement in net interest spreads was limited to 3bps, the net spreads rose to 2.23% from

2.20% in FY2009. Meanwhile, non-interest income rose 74% to USD60 million, boosted by the

capital gain from the sale of securities investment.

As part of the Bank’s conservative strategy, Crédit Libanais booked net provisions of USD2.9

million in 4Q2010; pushing total provisions to USD8.7 million in FY2010 compared to USD5.7

million in FY2009.

Figure 32: ROAE Figure 33: ROAA

Source: Crédit Libanais Source: Crédit Libanais

As a result, the Bank continues to record very decent returns on its equity and asset bases. Crédit

Libanais reported a return on average equity of 24.5% and a return on assets of 1.52% in

4Q2010, up from 23.9% and 1.49%, respectively at the end of 3Q2010.

11.93%

19.34%17.82%

24.46%

0%

5%

10%

15%

20%

25%

30%

2007 2008 2009 2010

1.00%

1.47%

1.24%

1.52%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

2007 2008 2009 2010



________________________________________________________________________________

In this earnings release EFG Hermes may make forward looking statements, including, for example,

statements about management’s expectations, strategic objectives, growth opportunities and business

prospects. Such forward looking statements by their nature may involve a number of risks, uncertainties

and assumptions that could cause actual results or events to differ materially from those expressed or

implied by these statements. Examples may include financial market volatility; actions and initiatives taken

by current and potential competitors; general economic conditions; and the effect of current, pending and

future legislation, regulations and regulatory actions. Furthermore, forward looking statements contained in

this document that reference past trends or activities should not be taken as a representation that such

trends or activities will continue. EFG Hermes does not undertake any obligation to update or revise any

forward looking statements.

Accordingly, readers are cautioned not to place undue reliance on forward looking statements, which speak

only as of the date on which they are made.

This document is provided for informational purposes only. It does not constitute an offer to sell or a

solicitation of an offer to buy any securities or interests described within it in any jurisdiction. We strongly

advise potential investors to seek financial guidance when determining whether an investment is

appropriate to their needs.

EFG Hermes Holding SAE has its address at Building No. B129, Phase 3, Smart Village – km 28 Cairo

Alexandria Desert Road, 6 October and has an issued capital of EGP 1,939,320,000.

جم 9،131،321،111: رأس المال المصدر السادس من أكتوبزالمزحلة الثالثة، ، ب921القزية الذكية مبنى المجموعة المالية هيزميس القابضة شزكة مساهمة

________________________________________________________________________________

Stock Exchange & Symbol:

Cairo: HRHO.CA

London: HRHOq.L

Bloomberg: EFGH

Reuters pages: EFGS .HRMS .EFGI .HFISMCAP .HFIDOM

________________________________________________________________________________

EFG Hermes (Holding Main Office)

Building No. B129, Phase 3, Smart Village – km 28 Cairo Alexandria Desert Road, 6 October Egypt 12577

Tel +20 2 353 56 499

Fax +20 2 353 70 942

efghermes.com