EFG Hermes Holding, an impact-driven universal bank in Egypt and the leading investment bank franchise in Frontier Emerging Markets (FEM), announced today its results for the second quarter of 2022. The Group recorded a 28 percent Y-o-Y increase in revenues to EGP 2.1 billion on the back of strong growth at the sell-side business coupled with the consolidation of aiBANK’s revenues in 2Q2022. This translated into a Group net profit before tax of EGP 623 million, up by 8 percent Y-o-Y in 2Q2022, and reflects the resilient performance of EFG Hermes’ core operations.
Diversified business model
The Group’s increasingly diversified business model, which aligns with EFG Hermes’ overarching strategy to unlock and generate increased value for stakeholders from multiple channels, has seen the Group generate 48 percent of its revenues from the Investment Bank, 24 percent from the NBFI platform, and the remaining 27 percent from the consolidation of its recent majority stake acquisition in aiBANK in 2Q2022.
“We have successfully carried forward our strong momentum from the start of the year and delivered strong top-line results driven by our various businesses and the consolidation of the Group’s recent majority stake acquisition in aiBANK,” said EFG Hermes Holding’s Group CEO Karim Awad. “We have continued to reap the rewards from our agile operations, with the NBFI platform delivering healthy growth despite challenging inflationary and macroeconomic pressures curbing consumer appetites. On the sell-side, the Group’s Brokerage division maintained its leading positions in Cairo, Dubai, and Nairobi, reflecting our ability to remain ahead amidst global market headwinds. Parallel to this, the Group’s Investment Banking division closed eight transactions valued at USD 9.1 billion, one of those being for public service infrastructure company DEWA, marking the largest listing in the MENA since 2019 and the first-ever listing of a state company in Dubai. The transaction is testament to our long- standing position as the investment bank of choice for key and strategic transactions across the markets the Group operates in,” added Awad.
Sell-side revenues
Sell-side revenues recorded strong growth of 40 percent Y-o-Y to EGP 704 million in 2Q2022 driven by increased revenues at the Investment Banking and Brokerage divisions. Investment Banking revenues grew by 82 percent Y-o-Y to EGP 293 million in 2Q2022 on the back of higher advisory fees generated from strong deal executions during the period. Brokerage revenues increased by 19 percent Y-o-Y to EGP 410 million driven by growing revenues from executions in the GCC market in 2Q2022.
Buy-side revenues
Buy-side revenues increased by 14 percent Y-o-Y to EGP 148 million in 2Q2022 due to healthy performance from the Group’s Asset Management and Private Equity divisions. Asset Management revenues increased by 7 percent Y-o-Y to EGP 120 million as higher management fees generated during the period offset the lower incentive fees recorded in 2Q2022. Parallel to this, higher management fees from growing AUMs at Vortex IV drove a 61 percent Y-o-Y increase in Private Equity revenues to EGP 28 million in 2Q2022.
NBFI
The NBFI platform’s revenues increased by 3 percent Y-o-Y to EGP 503 million in 2Q2022 driven by growing revenues at the Group’s Buy- Now, Pay-Later (BNPL) fintech platform “valU” as well as the leasing business. Revenues at valU grew by 9 percent Y-o-Y to EGP 71 million in 2Q2022, while EFG Hermes Corp-Solutions’ leasing business recorded a revenue increase of 39 percent Y-o-Y to EGP 59 million due to higher interest income driven by portfolio expansion during the period. valU recorded a market share of 29.6 percent, the leasing business booked 13.4 percent, and the factoring business recorded 14.7 percent as of 30 June 2022. As for Tanmeyah, it reported revenues of EGP 357 million, edging down 4 percent Y-o-Y despite stronger sales, as net interest income and fees & commissions were largely flat Y-o-Y in 2Q2022.
Revenues generated from the Group’s Holding & Treasury Activities declined by 71 percent Y-o-Y to EGP 137 million in 2Q2022, primarily driven by lower net interest income and unrealized losses on investments due to challenging macroeconomic conditions.
Operating expenses
The Group’s operating expenses increased by 42 percent Y-o-Y to EGP 1.4 billion in 2Q2022 primarily due to the consolidation of aiBANK’s operating expenses and an increase in other G&A expenses reported by the Investment Bank and the NBFI platform.
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Net profit
The Group’s net profit before tax increased by 8 percent Y-o-Y to EGP 623 million, while net profit after tax and minority interest declined by 15 percent Y-o-Y to EGP 344 million in 2Q2022. The decline in net profit after tax and minority interest was driven by a 23 percent Y-o-Y increase in taxes coupled with a higher minority interest in 2Q2022 due to the consolidation of aiBANK during the period.
“Looking ahead, the Group will remain focused on continuously growing its operations across all its core operations. Parallel to this, we will focus on bolstering the commercial bank’s offering and enhancing its operations to further generate healthy returns. Our increasingly diversified business model leaves us well-positioned to capitalize on our new standing as a universal bank in Egypt in addition to leveraging our leading position as the investment bank of choice in FEM to always provide our clients with best-in-class services and products. I am confident that our talented team’s commitment and deep expertise will continue to propel the Group forward, and allow us to seamlessly navigate through challenges, create effective synergies, and unlock value for our shareholders over the coming quarters and beyond,” concluded Awad.
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