Al Ansari Financial Services reports dip in profits for H1 2023

Image credit: Al Ansari

Al Ansari Financial Services announced its financial results for the fiscal first half (H1) and second quarter (Q2) ending June 30.

It reported an increase in its operating income by 5 per cent year on year (YoY) in H1 2023, backed by robust demand across its product line with significant contributions from offerings and services to corporate customers. The H1 2023 operating income increased 5 per cent YoY to Dhs578m driven by a 10.7 per cent YoY increase in the total number of transactions. This marks the highest six-month period operating income to date.

Al Ansari reports dip in profits

However, Al Ansari that H1 2023 net profit was Dhs263 million, a 2.5 per cent decline compared to H1 2022. It attributed the drop in net profit to predominantly lowered remittance margins, higher costs as well as an increase in financing costs related to interest paid on a loan drawn in December 2022.

The increase in the number of transactions was predominantly driven by very strong demand from the corporate business segment underpinned by expansionary economic conditions in the UAE. It was also owed to a strong increase in the bank notes business including multi-currency Prepaid Cards on the back of the tourism boom and the peak holiday season.

But these increases were partly offset by a marginal reduction in the number of remittance transactions.

The capital expenditure increased by 62 per cent YoY to Dhs20m as the Group continues to invest in scaling its business, in line with its growth strategy. The group reported the opening of 15 new branches since H1 2022, in line with its organic expansion plans.

Performance for Q2 2023

The second quarter of this year saw the group’s operating income increase by 1.2 per cent YoY to Dhs291m. The Q2 2023 EBITDA income declined 8.3 per cent to Dhs147m, on the back of higher operating costs, driven predominantly by the group’s network expansion as well as generally rising costs, an industry-wide phenomenon and lower margin on the Remittance business.

Net profit for the three-month period declined 10.7 per cent to Dhs130m, on the back of higher depreciation charge as a result of an expansion in the branch network and increasing finance costs due to interest payment on an Dhs300m term loan drawn in December 2022.

Performance of other offerings

Worldwide Cash Express, the Group’s money transfer operator, saw a strong 32 per cent YoY growth in the number of transactions in H1 2023, a reflection of the strong demand for this service from corporate customers.

The Wage Protection Services (WPS) business saw a strong increase in operating income, up 18.5 per cent in H1 2023 versus H1 2022. This is predominantly driven by growth in the number of newly acquired corporate customers and the increase in the number of wage disbursals.

CashTrans, the group’s end-to-end cash management solution, is gaining remarkable momentum, with the number of trips increasing by 32.4 per cent YoY. Al Ansari said it expects the growth momentum to continue as it ramps up operating and sales efforts within this product line and as its state-of-the-art cash center in Dubai commences operations in Q3 2023.

Given the group’s strong financial and liquidity position, the board reaffirms its commitment to distributing a minimum amount of Dhs600m as announced during the IPO, and outlined in the Prospectus, for FY 2023 to be paid out semi-annually with the first half expected to be distributed in October 2023 and the second payment to be disbursed in April 2024.

Commenting on the results Rashed A. Al Ansari, group CEO of Al Ansari Financial Services, said, “Our focus since the start of the year has been on executing our growth strategy while continuing to produce robust financial results. I am pleased to say that we have delivered on both fronts.

As the UAE economy continues to grow at a very healthy pace, our diverse offerings served us well, with strong demand from different customer segments, notably SMEs, and inbound and outbound tourism. This has contributed to sustained top-line growth. Moreover, thanks to our leading market position, the quality of our services and value-added products, the efforts of our teams, and our well-recognised brand, we grew and further diversified our customer base during the period. Our efforts to diversify the sources of revenue are contributing towards further enhancing the resilience of our business model.”

Outlook

Al Ansari reported that it anticipates completing the 100 per cent acquisition of Al Ansari Exchange Kuwait before the year-end and expects the impact from the consolidation to be reflected in Q1 2024 and for the revenue and cost synergies to be unlocked thereafter.

The group announced its plans to expand its geographic footprint into Oman through the acquisition of a majority stake in one of the country’s prominent exchange companies. It has received an initial approval subject to meeting the necessary regulatory conditions. The acquisition is still in its initial stage and is subject to the necessary regulatory approvals and due diligence. The anticipated completion date for the acquisition is set for Q1 2024.