EFG Hermes reports 157% rise in net profit to EGP885m in Q1 2023

EFG Hermes Holding recorded a 129 per cent year-on-year (YoY) rise in revenue to EGP4.5bn in Q1 2023, driven by growth in treasury operations, as well as robust results generated from its investment bank and aiBANK during the period, the company said in a statement.

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 per cent YoY during the quarter, operating profit rose 99 per cent YoY to EGP1.5bn, and net profit before tax grew 108 per cent YoY to EGP1.4bn.

EFG Hermes Holdings’ net profit after tax and minority interest climbed 157 per cent YoY to EGP885m in Q1 2023.

EFG Hermes Holding’s group CEO, Karim Awad, said: “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 $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 EGP3bn in Q1 2023 versus EGP901m in Q1 2022.

Performance from core operations came strong in Q1 2023, particularly from the sell-side, which saw its revenues rising 69 per cent YoY to EGP837m and was driven by a stellar 238 per cent YoY surge in investment banking revenue to EGP216m and a 44 per cent YoY increase in brokerage revenues to EGP621m.

EFG Hermes Holding’s other Q1 milestones

The group’s NBFI platform, revenues gained 15 per cent YoY to EGP689m in 1Q23, primarily driven by valU, which booked solid revenue growth of 78 per cent YoY to EGP254m due to securitisation 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 per cent YoY to EGP31m in Q1 2023.

Leasing revenues were broadly unchanged, edging down 2 per cent YoY to EGP44m, while Tanmeyah’s revenues dropped 11 per cent YoY to record EGP351m, impacted by lower sales YoY during the period, the group said.

At aiBANK, revenues rose 65 per cent YoY to EGP727m in Q1 2023, driven by a 56 per cent YoY 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 per cent YoY 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 EGP171m, up 25 per cent YoY (of which EFG Hermes Holdings’ share is EGP87m) in Q1 2023.

Awad said: “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.

“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 capitalise 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.”

Image: EFG Hermes Holding