Al Ansari Financial Services reports 7.2% rise in net profit to Dhs133m for Q1 2023

Al Ansari Financial Services announced its financial results for Q1 2023, marking its first financial results since the group listed 10 per cent of its issued share capital through an initial public offering on the Dubai Financial Market on April 6.

The company’s operating income rose by 9.1 per cent year-on-year (YoY) to Dhs287m, driven by an 8.6 per cent YoY increase in the total number of transactions.

According to the company, the increase in the number of transactions was driven by demand from the corporate business segment underpinned by buoyant economic conditions. A strong increase in the bank notes business resulted from the UAE’s tourism boom and increase in outbound tourism.

EBITDA increased by 7.9 per cent YoY to Dhs151m with a steady EBITDA margin near 53 per cent on the back of strong top-line growth, high margin contribution from increased digital transactions and the group’s CAPEX-light model.

Net profit came in at Dhs133m, increasing 7.2 per cent YoY on the back of healthy top-line growth, strong increase in exchange income from the bank notes and pre-paid cards products as well as the group’s significant operating leverage and increase in transactions conducted through digital channels.

Al Ansari Financial Services announced today its financial results for Q1 2023, delivering a robust financial and operational performance. The Group reported a 7.2% YoY increase in net income from Q1 2022, recording a net profit of AED 133 million. https://t.co/TkvJ0NixkH pic.twitter.com/BZs2R2THFR

— Al Ansari Financial Services (@AlAnsariFin) May 11, 2023

Free cash flow (FCF) increased by 3 per cent YoY to Dhs141m, demonstrating the healthy cash flow position of Al Ansari Financial Services. The group’s ability to increase its cash generation is driven by EBITDA growth with around 93 per cent cash conversion rate.

The wage protection system (WPS) business saw a strong increase in operating income, up 23.4 per cent in Q1 2023 versus Q1 2022. This is predominantly driven by growth in the number of newly acquired corporate customers.

While still in its early stages, the end-to-end cash management business, through CashTrans, is gaining remarkable momentum, with the number of customers growing from only 3 in Q1 2022 to 25 in Q1 2023. The group expects this number to continue growing as it ramps up operating and sales efforts within this product line.

Al Ansari Financial Services dividend pay-out

As announced during the IPO, and outlined in the prospectus, the group intends to distribute a minimum of Dhs600m 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. The dividend is subject Board of Directors’ recommendation and shareholder approval.

Rashed Ali Al Ansari, group CEO of Al Ansari Financial Services, said:  “The year is off to a fantastic start, building on the previous year’s strong financial and business performance.  Our integrated offering, multi-channel approach, diverse and growing customer base and capex-light business model have supported our profitable growth over the last three months. The group’s growth is underpinned by a robust UAE economy, specifically the increase in number of inbound tourists, positive consumer confidence and increase in business activities.

“Our latest financial performance demonstrates why we are a compelling investment opportunity, supports our promise to distribute dividends and validates investors’ strong demand in our IPO.

“Looking ahead, we will continue to execute the well-funded and executable growth strategy to unlock shareholder value over the mid to long-term. We expect to further strengthen our market leadership position in our home market within the remittance and banknotes market by increasing our physical branches. We also believe that the digital channels will continue to perform exceptionally, as more and more customers choose the convenience and ease of that channel, which will support margin expansion.

“Staying in our home market, we believe the outstanding growth in demand we saw in our corporate business from new and existing clients will continue to gather pace thanks to our know-how, offerings, market reputation, and our talent. We also expect to expand our footprint in other high-potential GCC markets, supporting our revenue diversification.”

Mohammad Bitar, deputy group CEO, Al Ansari Financial Services, said: “We are encouraged by the strong growth across the business during the first three months of 2023, with the star performer for the period being the bank notes and wage protection system business.

“The bank notes business is buoyed by the significant increase in the number of tourists coming to the UAE, with Dubai alone receiving 4.67 million international visitors in the first quarter of 2023, according to official data. It was also supported by the strong increase in the wholesale banknotes business. The pre-paid cards product also had an outstanding period, with the number of transactions jumping by 40 per cent compared to Q1 2022. The WPS business growth was driven predominately by the increase in both the number of corporate customers and the total number of salary disbursals.

“More generally, we are very pleased with the remarkable growth in the B2B business. This is owed to our strategic initiatives to expand our market share in this very attractive customer segment. We anticipate acquiring more corporate customers and increasing cross-selling to existing ones, in line with our growth strategy. Additionally, our investment in digital channels is paying off, and we are continuing to see a significant uptick in the number of transactions executed through those channels across all our offerings. We anticipate more and more of our customers to opt for a hybrid approach, using both our physical and digital channels for their money transfer and bill payment needs.”