An official source said that EFG Hermes leasing started its first quarter (Q1) of 2019 with additional bookings of EGP 310m, resulting in a net portfolio of EGP 3.2bn.
This happened after the deduction of EGP 313m of securitised portfolio and the settlement of the Q1 of 2019 instalment. This was alongside an 11% quarter-over-quarter (q-o-q) increase in clients. By the end of the Q1 of 2019, it amounted up to 184 clients.
The source also shared that a new subsidised facility amounting to EGP 75m was obtained from the Saudi Fund for Development (SFD) in the Q1 of 2019 while the division continues to focus on increasing the contribution of small and medium-sized enterprises (SMEs) “on books” to the portfolio.
EFG Hermes managed to reach EGP 500m by the end of 2019 compared to EGP 300m by the end of 2018. However, the SMEs contribution remained unchanged at 15% by the end of the Q1 of 2019.
The source added that a plan to launch another securitisation programme before the end of 2019 is in the pipeline, due to the success of the first securitisation programme in November 2018 which enhanced the credibility of EFG Hermes Lease portfolio quality.
Securitisation programmes will continue to be part of the yearly funding plan to support the growth of the division and boost its return on equity (ROE) metrics.
Moreover, quarterly performance of EFG Hermes Leasing added EGP 336m in Q1 of 2019 of new bookings distributed over 35 new contracts.
Of the EGP 336m, EGP 310m are on books and EGP 26m in transactions, where the division acted as a security agent.
This makes the total number of contracts 592 active contracts since inception, with an accumulated bookings value (NFA) of EGP 4.4bn. Of that amount, EGP 3.2bn represents the outstanding portfolio by end of Q1 of 2019.
Despite a challenging macroenvironment and fierce competition with the penetration of new players in the market pressuring business margins, the team successfully reduced the weighted average cost of debt.
The average margins also declined by 0.40% throughout Q1 with no negative effect on the business to date (BTD) average margin which reached 3.69%.
This is in addition to average arrangement fees of 0.72% in Q1 of 2019 with no change compared to Q1 of 2018.
Although EFG Hermes leasing maintained a strict control over the collection process by keeping it at 96% of accumulated receivables by the end of Q1 2019, a provision of EGP 4.7m was taken in the same year, thus bringing the division’s total provisions to EGP 31.2m.
|Q1 of 2019||Q4 of 2018||Q1 of 2018||q-o-q||y-o-y|
|Number of new contracts||35||51||32||-31%||99%|
|Cost of Total Leased Assets (EGP m)||412||850||361||-51%||14%|
|NFA for New Contracts (EGP m)||336||580||307||-42%||99%|
|Receivables Value of New Contracts (EGP m)||459||902||462||-49%||-1%|