EFG Hermes Holding, the financial institution with a universal bank in Egypt and the investment bank franchise in Frontier and Emerging Markets (FEM), announced Wednesday its results for the three months ended 31 March 2023. The Group recorded a 129% Y-o-Y increase in revenue to EGP 4.5bn in 1Q23, primarily driven by growth in treasury operations, as well as solid results generated from the Investment Bank and aiBANK during the period.
Despite growing inflationary pressures across Egypt and the impact of the Egyptian pound’s devaluation on regional office expenses when translated to local currency, which saw the Group’s operating expenses gain 148% Y-o-Y during the quarter, operating profit rose 99% Y-o-Y to EGP 1.5bn, and net profit before tax grew 108% Y-o-Y to EGP 1.4bn. EFG Hermes Holdings’ net profit after tax and minority interest climbed 157% Y-o-Y to EGP 885m in 1Q23.
EFG Hermes Holding’s Group CEO, Karim Awad, commented on the results: “I am delighted to report that the Group delivered a remarkable performance for the first quarter of 2023, demonstrating the resilience and dynamism of our business model. Despite the challenging global macroeconomic environment, we generated strong results. Our core operational platforms supported our performance for the period, especially on the sell-side of the house. Our Investment Banking division executed a strong pipeline of deals, concluding two equity and seven debt transactions worth an aggregate of USD 2.9bn. These included the landmark IPOs of Abraaj Energy Services on the Muscat Stock Exchange and ADNOC Gas on the Abu Dhabi Securities Exchange — the largest listings on their respective stock exchange — further cementing our position as the region’s investment bank of choice.”
The Investment Bank delivered over a three-fold increase in revenue to EGP 3.0bn in 1Q23 versus EGP 901m in 1Q22. Performance from core operations came strong in 1Q23, particularly from the sell-side, which saw its revenues rising 69% Y-o-Y to EGP 837m and was driven by a stellar 238% Y-o-Y surge in Investment Banking revenue to EGP 216m and a 44% Y-o-Y increase in Brokerage revenues to EGP 621m.
At EFG Hermes Holdings’ NBFI platform, revenues gained 15% Y-o-Y to EGP 689m in 1Q23, primarily driven by valU, which booked strong revenue growth of 78% Y-o-Y to EGP 254m due to securitization gains coupled with increased sales following an expansion in the consumer finance platform’s merchant network. The Group’s factoring activities, under EFG Hermes Corp-Solutions, increased its revenues by 72% Y-o-Y to EGP 31m in 1Q23. Leasing revenues were broadly unchanged, edging down 2% Y-o-Y to EGP 44m, while Tanmeyah’s revenues slipped 11% Y-o-Y to record EGP 351m, pressured by lower sales Y-o-Y during the period.
At aiBANK, revenues climbed 65% Y-o-Y to EGP 727m in 1Q23, driven by a 56% Y-o-Y increase in net interest income mainly due to growth in interest-earning assets and increased allocation of variable-interest-rate assets, in addition to a 352% Y-o-Y surge in net fees and commission income which was driven by an improvement in trade finance volumes. aiBANK reported a net profit after tax of EGP 171m, up 25% Y-o-Y (of which EFG Hermes Holdings’ share is EGP 87m) in 1Q23.
Awad concluded: “Our strong track record at successfully navigating turbulent operating environments not only leaves me confident in our ability to respond to headwinds with agility and preserve our growth trajectory but cements the importance and power of capital when it comes to driving change for businesses, for people, and indeed for the economy. Our performance reflects our commitment to excellence, innovation, and growth for us as a Group and for the stakeholders who place their confidence in us daily. As we continue to leverage our positioning as a universal bank in Egypt with a market-leading investment banking franchise, I remain confident in our ability to navigate the uncertainties ahead and seize opportunities in our home market of Egypt and the wider FEM space. We are well-positioned to capitalize on our strong brand, end-to-end financial service universe, and talented teams across our geographic and operational footprint to deliver sustainable value to our shareholders, clients, and communities where we live and work.”