EFG Hermes Holding reports 28% rise in Q2 revenues to EGP2.1bn

EFG Hermes Holding, a leading investment bank franchise in frontier emerging markets (FEM) and universal bank in Egypt, announced its financial results for Q2 2022.

The group recorded a 28 per cent year-on-year (YoY) increase in revenues to EGP2.1bn on the back of strong growth at the sell-side business coupled with the consolidation of aiBANK’s revenues in Q2 2022. This translated into a group net profit before tax of EGP623m, up by 8 per cent YoY.

The group’s increasingly diversified business model, which aligns with its strategy to unlock and generate increased value for stakeholders from multiple channels, has seen the group generate 48 per cent of its revenues from the investment bank, 24 per cent from the non-banking financial institution (NBFI), and the remaining 27 per cent from the consolidation of its recent majority stake acquisition in aiBANK in Q2 022.

“We have successfully carried forward our strong momentum from the start of the year and delivered strong top-line results driven by our various businesses and the consolidation of the group’s recent majority stake acquisition in aiBANK,” said EFG Hermes Holding’s group CEO Karim Awad.

“We have continued to reap the rewards from our agile operations, with the NBFI platform delivering healthy growth despite challenging inflationary and macroeconomic pressures curbing consumer appetites. On the sell-side, the group’s brokerage division maintained its leading positions in Cairo, Dubai, and Nairobi, reflecting our ability to remain ahead amidst global market headwinds. Parallel to this, the group’s investment banking division closed eight transactions valued at USD9.1bn, one of those being for public service infrastructure company DEWA, marking the largest listing in the MENA since 2019 and the first-ever listing of a state company in Dubai,” added Awad.

Sell-side revenues recorded strong growth of 40 per cent YoY to EGP704m in Q2 2022 driven by increased revenues at the investment banking and brokerage divisions. Investment banking revenues grew by 82 per cent YoY to EGP293m in Q2 2022 on the back of higher advisory fees generated from strong deal executions during the period. Brokerage revenues increased by 19 per cent YoY to EGP410m driven by growing revenues from executions in the GCC market in Q2 2022.

Buy-side revenues increased by 14 per cent YoY to EGP148m in Q2 2022 due to healthy performance from the group’s asset management and private equity divisions. Asset management revenues increased by 7 per cent YoY to EGP120m, as higher management fees generated during the period offset the lower incentive fees recorded in 2Q2022. Parallel to this, higher management fees from growing assets under management at Vortex IV drove a 61 per cent YoY increase in private equity revenues to EGP28m in Q2 2022.

The NBFI platform’s revenues increased by 3 per cent YoY to EGP503m in Q2 2022 driven by growing revenues at the group’s buy-now, pay-later (BNPL) fintech platform ‘valU’ as well as the leasing business.

Revenues at valU grew by 9 per cent YoY to EGP71m in Q2 2022, while EFG Hermes Corp-Solutions’ leasing business recorded a revenue increase of 39 per cent YoY to EGP59m due to higher interest income driven by portfolio expansion during the period. valU recorded a market share of 29.6 per cent, the leasing business booked 13.4 per cent, and the factoring business recorded 14.7 per cent as of June 30.

Tanmeyah reported revenues of EGP357m, edging down per cent YoY despite stronger sales, as net interest income, fees and commissions were largely flat YoY in Q2 2022.

Revenues generated from the group’s holding and treasury activities declined by 71 per cent YoY to EGP137m in Q2 2022, primarily driven by lower net interest income and unrealised losses on investments due to challenging macroeconomic conditions.

The group’s operating expenses increased by 42 per cent YoY to EGP1.4bn in Q2 2022 primarily due to the consolidation of aiBANK’s operating expenses and an increase in other expenses reported by the investment bank and the NBFI platform.

The group’s net profit before tax increased by 8 per cent YoY to EGP623m, while net profit after tax and minority interest declined by 15 per cent YoY to EGP344n in Q2 2022. The decline in net profit after tax and minority interest was driven by a 23 per cent YoY increase in taxes coupled with a higher minority interest in Q2 2022 due to the consolidation of aiBANK during the period.

“Looking ahead, the group will remain focused on continuously growing its operations across all its core operations. Parallel to this, we will focus on bolstering the commercial bank’s offering and enhancing its operations to further generate healthy returns. Our increasingly diversified business model leaves us well-positioned to capitalise on our new standing as a universal bank in Egypt in addition to leveraging our leading position as the investment bank of choice in FEM to always provide our clients with best-in-class services and products,” concluded Awad.

In recent news, EFG Hermes’ investment banking division announced it had successfully concluded advising Egyptian retailer and manufacturer Auf Group’s founders and Tanmiya Capital Ventures on a strategic transaction involving Auf Group and UAE-based food and beverage company, Agthia.

Read: EFG Hermes concludes advisory on Agthia’s majority acquisition of Auf Group