EFG Hermes Holding reports strong results for third consecutive quarter in 2021

Karim Awad, Group CEO, EFG Hermes Holding
Image Credit: Provided

EFG Hermes Holding, the leading emerging frontier markets (EMF) financial services firm, announced its results for the first nine months of 2021, with revenues up 8% from same period last year to 4 billion EGP and its net profits up 26% year-on-year to 1.1 billion EGP.

“EFG Hermes core businesses continued to perform well and play a key role in strengthening the Group’s position as a leading financial services company in emerging frontier markets”, said Karim Awad, CEO of the EFG Hermes Holding Group. “Our NBFI platform has continued to perform exceptionally well, with our microfinance platform, Tanmeyah, recording a record portfolio value of EGP 3.5 billion, the highest since Tanmeyah’s inception. In addition, valU, our award-winning Buy-Now fintech player, Pay-Later (BNPL), continued to expand its merchant relationships and grow its customer portfolio. In terms of our sales operations, I am pleased with our Investment Banking division, where the team completed a record nine transactions in a single quarter, valued at over $ 2.6 billion. This milestone is a continuing testament to the strength of our operations and our well-established ability to secure a healthy pipeline of deals in the capital markets space, ”added Awad.

In quarterly terms, the Group recorded revenue of EGP 1.2 billion and net profit after tax and minority interests of EGP 356 million in 3Q21, down year-on-year; as the comparable quarter included 349 million EGP in incentive fees from the exit of Vortex III from Private Equity and included strong unrealized gains on the revaluation of seed capital during the comparable period last year.

In the third quarter of 2021, EFG Hermes’ revenues increased 45% year-on-year to EGP 406 million, mainly driven by the exceptional performance of the Group’s Investment Banking and Brokerage divisions. On the investment banking front, revenue increased 184% year-on-year to EGP 107 million, driven by strengthening advisory fees and a higher number of transactions over the period. At the same time, the Brokerage division’s revenues increased 23% year-on-year to EGP 299 million in 3Q21, driven by higher revenues reported by the Group’s operations in Egypt, Kuwait and its structured products office.

Group buy-side revenue decreased 74% year-on-year to 115 million EGP in 3Q21, mainly due to the high base effect associated with 349 million EGP in incentive fees related to the exit of Vortex Energy III generated by the Private Equity division during the same period. Private Equity revenues amounted to EGP 29 million in 3Q21. Nonetheless, the Group’s Asset Management division recorded a 32% year-over-year increase in revenue to EGP 86 million in 3Q21, reflecting the increase in management fees reported by FIM.

The NBFI platform saw a 52% year-over-year increase in revenue to EGP 507 million. The performance of the platform in 3Q21 is mainly due to the increase in revenues generated by the microfinance solutions provider of the Tanmeyah Group and the BNPL “valU” fintech platform of EFG Hermes. Tanmeyah reported 3Q21 revenue of EGP 355 million, up 36% year-on-year thanks to stronger sales and a growing portfolio during the period. At the same time, valU’s revenues more than tripled year over year to EGP 97 million due to portfolio expansion and improved margins in 3Q21.

Revenues generated from EFG Hermes’ capital market and treasury operations contracted 58% year-on-year to 156 million EGP in 3Q21 due to unrealized losses related to revaluations of seed capital against unrealized capital gains recorded during the same period last year.

The Group’s operating expenses decreased by 14% year-on-year to reach EGP 760 million in 3Q21, mainly due to lower personnel costs. With employee expenses / income reaching 44% in 3Q21, down year on year and in QoQ. As a result, EFG Hermes reported net profit after tax and minority interests of EGP 356 million in 3Q21, down 16% year-on-year. Excluding exceptional Private Equity premiums realized in 3Q20, normalized Group net profits after taxes and minority interests would be up 387% year-on-year in 3Q21.

“Looking ahead, we are delighted with the progress we are making in accordance with our strategy to transform into a fully-fledged universal bank in Egypt, as the acquisition of Arab Investment Bank (AIB) is nearing completion. be finalized. The Holding company is now poised to generate increased value for our shareholders through its diversified portfolio. Along with this, I really look forward to meeting our clients, from key investors to global business leaders, face to face as our coveted One on One conference returns to Dubai in 2022 as we capitalize on the standardization of conditions. of the market. Overall, we are confident that as we continue to build on our strong operational capabilities and our diverse lines of business, the Group is well positioned to end 2021 on a high note, ”concluded Awad.

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