Egyptian investment bank EFG Hermes reported on Wednesday its first quarter results for 2021, with revenues climbing a solid 30 percent year-on-year to 1.3 billion Egyptian pounds ($83 million).
The group said in a statement that the growth was on the back of positive performance across the majority of its lines of business in the first quarter.
“While the challenges posed by the ongoing pandemic are still abound, EFG Hermes continued to reap the benefits of the diversified business model it has built in recent years,” EFG Hermes Holding Group CEO Karim Awad said in the statement.
“This has helped us adapt swiftly to this evolving situation and supported us in delivering robust results across our business lines by end of the first quarter and maintaining our position as the leading financial services player in frontier emerging markets.”
Leading growth for the quarter, the EFG’s NBFI platform recorded a revenue increase of 22 percent year-on-year to 441 million pounds and contributed 35 percent of EFG Hermes’ top line in the first quarter driven by improved performance across its lines of business.
Tanmeyah’s revenues grew 9 percent year-on-year to 321 million pounds on the back of it delivering a strong sales performance for the period, while the Group’s consumer finance business, valU, nearly tripled revenues year-on-year to 56 million pounds on the back of a strong portfolio expansion. The EFG’s Leasing and Factoring platform, EFG Hermes Corp-Solutions, recorded revenue increases of 30 percent and 110 percent year-on-year to 56 million pounds and 8 million pounds, respectively, driven by higher arrangement fees and interest income in the first quarter.
EFG’s sell-side revenues climbed 29 percent year-on-year to 296 million pounds on the back of improved performances at its Investment Banking and Brokerage operations in the first quarter spurred by improved market conditions. The Group’s Investment Banking division more than doubled its revenue performance for the period, recording 42 million pounds on the back of increased advisory fees from the successful close of eight transactions in the first quarter alone. Meanwhile, Brokerage revenues increased 20 percent year-on-year to 255 million pounds, driven by strong results generated from its operations in Egypt for the period.
Moreover, at EFG’s buy-side operations, revenues grew 22 percent year-on-year to 129 million pounds, on the back of improved performance from EFG Hermes Asset Management, where revenues surged 62 percent year-on-year to 99 million pounds due to higher management and incentive fees booked by FIM in the first quarter. At the Group’s Private Equity division, revenues declined 34 percent year-on-year to 29 million pounds in the first quarter, as the comparable period last year had booked incentive fees in relation to the division’s Vezeeta exit.
At EFG Hermes’ Capital Markets and Treasury operations, revenues increased 45 percent year-on-year to 389 million pounds on the back of unrealized gains booked on investments and lower FX losses in the first quarter compared to the same period last year.
“At our NBFI platform, Tanmeyah delivered record sales of 490 million pounds, the highest since its inception and a testament to the Group’s prowess in the microfinancing space.” added Awad
The Group also “maintained valU’s growth trajectory as we continued to expand our partnerships with vendors across the nation and capitalize on Egypt’s ever-growing consumer base. In parallel, our Investment Banking division closed eight transactions across the ECM and DCM spaces, supporting our sell-side performance for the period and further cementing our position as the leading investment bank across the markets we operate in,”
EFG’s operating expenses recorded a decline of 3 percent year-on-year to 802 million pounds as lower loan loss provisions booked by the NBFIs platform offset the increase in employee expenses in the first quarter. In addition, expenses as a percentage of revenues came in well below the 50 percent level and stood at 46 percent for the period.
The Group’s net operating profit more than tripled year-on-year to 453 million pounds in the first quarter, driven by a strong growth in revenues while expenses remained largely flat.
Despite an increase in deferred taxes, EFG recorded a bottom-line of 292 million pounds in the first quarter, reflecting a 223 percent year-on-year increase compared to the 90 million pounds recorded in same period last year. Strong performance from the Group’s NBFI platform and Investment Bank, as well as muted operating expenses, supported EFG Hermes’ healthy bottom-line performance in the first quarter.
“The variables impacting our outlook for 2021 remain plentiful and difficult to predict. Nonetheless, the Group will continue leveraging its comprehensive capacities across its operations and capitalising on what we hope will be an improving external environment as consumers and businesses adjust to the COVID-19 situation, to deliver solid results and sustainable value for the remainder of the year.”
“As always, we will continue to remain cautious and monitor market developments, not only to ensure that we continue to generate value for all stakeholders, but to guarantee the continued health and safety of our people, without whom our exceptional results and continued successes would not have been achieved,” Awad concluded.
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