The solid increase in profitability for the quarter was largely driven by higher net profits recorded by the Group’s Investment Bank and NBFI platforms, which posted 26 percent and 138 percent Y-o-Y net profit growth, respectively.
Cairo, Egypt, August 8, 2019: EFG Hermes, the leading financial services corporation in Frontier Emerging Markets (FEM), reported today solid results for second quarter of 2019. The Group recorded a net profit after tax and minority interest of EGP 304 million in 2Q19, up 49 percent YoY, on revenues of EGP 1.1 billion, reflecting a 13 percent YoY increase.
For the first half of 2019, Group revenues reached EGP 2.3 billion to deliver a net profit after tax and minority interest of EGP 676 million, representing a 51 percent increase compared to the same period last year.
Strong top-line growth came on the back of a robust performance by the Group’s NBFI platform, which reported a 73 percent YoY increase in revenues to EGP 322 million in 2Q19 and contributed 31 percent to Group revenues for the quarter. The platform’s results were underpinned by Tanmeyah’s impressive 83 percent YoY revenue growth to EGP 275 million in 2Q19.
“Halfway into the year, EFG Hermes continues to report solid results with our NBFI platform recording stellar growth and increasing its contribution to our top-line to 31% for the quarter up from 20% a year ago,” said EFG Hermes Holding’s Group CEO Karim Awad.
“Our microfinance solutions provider, Tanmeyah, once again posted outstanding results as it continues to grow its active borrowers and loans issued. The rapid growth at our NBFI platform bears testament to the strong demand for financing solutions in Egypt and the ample opportunities present in increasing access to finance and helping fuel broad-based financial inclusion and economic growth,” he added.
Tanmeyah’s strong growth helped drive a 15 percent YoY increase in the Group’s reported Fees and Commissions revenue to EGP 784 million in 2Q19, which continued to make up the lion share of the Group’s top-line at 75 percent for the quarter.
EFG Hermes’ sell-side businesses recorded a 4 percent YoY expansion in revenues to EGP 364 million in the second quarter of the year. Higher revenues reported by the Brokerage business, which rose 10 percent YoY to EGP 297 million primarily on stronger commissions generated in the MENA markets particularly KSA, Kuwait, and the UAE, more than offset a 17 percent YoY contraction in Investment Banking revenues.
“The Brokerage division’s ability to deliver strong top-line growth for the quarter despite difficult market conditions reflects the success of our geographical diversification strategy which, in recent years, has seen us successfully penetrate key MENA and Frontier markets,” said Awad.
He further said “During the quarter we saw Frontier markets, KSA and Kuwait take the lead in terms of contributions to total commissions, a testament to our team’s strong revenue generation capabilities across a multitude of regional markets.”
The Private Equity division delivered a 15 percent YoY rise in its reported revenues to EGP 27 million on the back of higher management fees, following the second closing of the Group’s education fund which stood at USD 133 million.
The Asset Management division revenues recorded EGP 71 million, a drop of 40 percent YoY due to lower incentive fees for the quarter. Accordingly, EFG Hermes’ buy-side business witnessed a 31 percent YoY decrease in revenues to EGP 98 million in 2Q19.
Capital markets & treasury operations’ revenues reported a 6 percent YoY increase to EGP 267 million, making up 25 percent of total Group revenues in 2Q19. Top-line growth for the quarter came largely on the back of net interest earned.
Group operating expenses saw an increase of only 9 percent YoY and a drop of 15 percent QoQ to EGP 672 million in 2Q19, with the increase versus the same quarter last year mainly on higher employee expenses and other operating expenses related to Tanmeyah.
The microfinance player recorded an increase in salaries, monthly commissions and other operating expenses related to the business’ expansion such as an increase in headcount, portfolio expansion and branch rollout.
Group revenue growth surpassed growth in expenses for the quarter, pushing EFG Hermes’ net operating profit to EGP 379 million in 2Q19, a 21 percent YoY increase.
A single digit growth in operating expenses, strong NBFIs revenue growth, and lower taxes for the quarter helped drive an impressive 49 percent YoY increase in the EFG Hermes’ net profit after tax and minority interest to EGP 304 million for the second quarter of 2019.
“We are actively working towards expanding our product offering to meet the evolving needs of our growing client base. In the coming months our mortgage finance company in partnership with GB Capital and Talaat Moustafa Group will commence operations offering mortgage finance to all consumers looking to buy move-in homes across TMG’s existing projects and potential developments,” added Awad.
“EFG Hermes’ driving force continues to be the unmatched know-how, insights and regional depth of our teams across four continents, who are able to realize the Group’s growth strategies and deliver long-term sustainable value to our stakeholders. I look forward to reporting on a continued solid operational and financial performance by our platforms in the quarters ahead,” he concluded.
