Contact Financial Holding, Egypt’s largest non-bank financial services provider, announced on Monday that its financing division saw new financing extended rise by 66% year-on-year to record EGP 4.1bn, in the first quarter of 2023 (1Q2023).
This came in the company’s consolidated financial results for the three-month period ending March 2023.
The company cited Contact’s Consumer Finance, Auto, Commercial Trucks, and Working Capital products, as the main driver behind the strong year-on-year growth. This was supported by the solid expansion in new financing, the division’s operating income expanded 28% year-on-year to reach EGP 462m in 1Q-2023.
The results showed that financing net income fell by 14% while insurance net income rose by 35%, with consolidated normalized net income recording EGP 178m, representing a 3% year-on-year expansion.
Despite the robust growth in financing operating income, an increase in credit loss provisions booked to hedge against potential increases in credit risk during the ongoing economic turbulence weighed on the division’s net income for the quarter which declined 14% year-on-year to EGP 121m.
Meanwhile, at the insurance division, robust results across both Sarwa Life and Sarwa Insurance saw total gross written premiums (GWP) reach EGP 437m in 1Q-2023, representing a remarkable 73% year-on-year increase. Accordingly, insurance operating income was up 43% year-on-year to EGP 81m, with the segment’s net income recording EGP 25m in 1Q-2023, up 35% year-on-year.
Commenting on the results, Contact’s management expressed their satisfaction with another strong set of financial and operational results that set the tone for the rest of 2023. Building on their impressive 2022 performance, they successfully delivered further growth across both the financing and insurance divisions. They also pushed forward on their longer-term growth and value-creation strategy.
The results in the first quarter of 2023 were achieved in the midst of difficult domestic and global macroeconomic environments, showcasing the company’s resilience and the effectiveness of its mitigation and investment strategies.
Looking at the results in more detail, key highlights from the past quarter include the return to robust growth in the Auto and Truck segments, which partially benefited from an initial recovery of the two markets following the easing of import restrictions earlier in the year. In parallel, there was noteworthy growth in the Consumer Financing segment. This growth was supported by a growing merchant network, a broader product offering, and increased market penetration.
On the merchant network front, Contact was particularly happy to announce that earlier this year they secured multiple key partnerships with a number of leading vendors.
In parallel, they continued to effectively ramp up their newly launched ContactNow app, which was responsible for 15% of the total new lending extended for Contact CrediTech in the first three months of the year. The new app more than quintupled the average number of daily downloads during the quarter.
This enabled Contact to reach a larger customer base, boost engagement and retention rates, and deliver an increasingly tailored user experience to new and existing customers. In parallel, their insurance division continued to ramp up at a remarkable pace, achieving impressive growth on the back of increased market penetration and cross-selling, as well as new product launches completed throughout the past twelve months.