REG - EFG Holding S.A.E. - 2Q2023 Results

EFG Holding SAEAnnouncement

10/08/2023 07:45

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RNS Number : 9230I  EFG Holding S.A.E.  10 August 2023

http://www.rns-pdf.londonstockexchange.com/rns/9230I_1-2023-8-10.pdf
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(http://www.rns-pdf.londonstockexchange.com/rns/9230I_2-2023-8-10.pdf)

 

EFG HERMES REPORTS FIRST HALF 2023

GROUP EARNINGS OF EGP1.3 BILLION; ON OPERATING REVENUE OF EGP7.6 BILLION

Cairo, August 10(th), 2023 EFG Holding reports a strong set of results for the
first half of 2023, with Group earnings of EGP1.3 billion on operating
revenues of EGP7.6 billion. The Group's total assets stood at EGP114.2 billion
at the end of June 2023.

   Key Highlights

2Q23

·      Another buoyant quarter for EFG Holding Group, with the
Investment Bank (EFG Hermes), EFG Finance and aiBANK, all posting Y-o-Y
revenue growth. Group revenues rose 51% Y-o-Y to reach EGP3.1 billion in 2Q23;
steered by strong unrealized gains on seed capital, higher Brokerage, Asset
Management and Private Equity revenues; together with higher revenues
delivered by valU and aiBANK;

·      Group operating expenses, (including employee expenses, other
G&A and Provisions& ECL) rose 53% Y-o-Y to come at EGP2.1 billion in
2Q23. Employee expenses moved up 40% Y-o-Y to EGP1.1 billion, other G&A
expenses rose 62% Y-o-Y to EGP649 million and provisions & ECL gained 93%
Y-o-Y to EGP320 million, mainly on the back of higher salaries, operating
expenses and provisions & ECL reported by all three verticals to reflect
inflation and USD denominated expenses in Egypt, and the impact of a weaker
EGP on the translation of the non-EGP denominated salaries at EFG Hermes.
Employee expenses/revenues came at 37% in 2Q23 and 41% in 1H23;

·      EFG Holding Group net operating profit and net profit before tax,
rose 46% and 37% Y-o-Y to EGP988 million and EGP842 million, respectively, in
2Q23. Taxes, which rose 76% Y-o-Y to EGP288 million in 2Q23, and was driven
mainly by higher deferred taxes booked by the Investment Bank, weighed down on
the magnitude of the increase in profitability; thus, EFG Holding Group net
profit after tax and minority interest came at EGP405 million, up 20% Y-o-Y,
in 2Q23;

·      EFG Hermes (the Investment Bank) revenues grew 61% Y-o-Y to
EGP1.6 billion in 2Q23, lifted by higher revenues posted by the different
platforms: the sell-side, buy-side and Holding & Treasury. This was
powered by strong unrealized gains on seed capital, higher brokerage
executions in Egypt, Egypt Asset Management's incentive fees, higher Private
Equity AuMs, and generally the impact on revenues generated by operations
outside Egypt and translated to EGP, post the EGP devaluation Y-o-Y;

·      EFG Hermes operating expenses rose 67% Y-o-Y to EGP1.1 billion in
2Q23, driven largely by higher employee expenses, followed by higher other
G&A and ECL booked during the quarter. This was driven by higher salaries
and operating expenses Y-o-Y to reflect the impact of the non-Egypt
operations/offices expenses, the USD denominated expenses in Egypt and the
high inflation levels in Egypt Y-o-Y;

·      EFG Hermes reported decent profitability from its operations in
2Q23, as the Investment Bank net operating profit and net profit before tax,
rose 47% Y-o-Y and 45% Y-o-Y to EGP443 million and EGP405 million,
respectively. Higher taxes from operations and higher deferred taxes dented
profitability; thus, EFG Hermes net profit after tax and minority inched up
only 3% Y-o-Y to EGP212 million;

·      EFG Finance revenues added 23% Y-o-Y to EGP620 million in 2Q23,
underpinned by higher revenues recorded by all lines of business except
Tanmeyah, and predominately on higher revenues posted by valU, which included
EGP75 million of securitization gains;

·      EFG Finance operating expenses rose 30% Y-o-Y to EGP477 million,
mainly on other G&A expenses to reflect inflation and the impact of the
devaluation on USD denominated expenses, and higher provisions & ECL
required as the loan portfolio continued to grow; meanwhile, employee expenses
was largely unchanged;

·      EFG Finance net profit before tax and minority interest declined
24% Y-o-Y, as the quarter included EGP34 million of goodwill amortization
related to Fatura's PPA, which in a requirement within the first anniversary
from the acquisition date. However, net profit after tax and minority reached
EGP54 million, down only 5% Y-o-Y, on Tanmeyah's lower tax charge and minority
interest compared to 2Q22;

·      aiBANK reported revenues of EGP888 million in 2Q23, up 58% Y-o-Y;
driven by stronger net interest income on the back of the growth in interest
earning assets, jointly with higher fees & commissions as trade finance
volumes increased Y-o-Y;

·      aiBANK operating expenses including provisions & ECL rose 49%
Y-o-Y to EGP487 million in 2Q23, on higher salaries on the back of promotions,
inflation, and new hirings during 2Q; higher other G&A expenses to reflect
high inflation levels in Egypt and the devaluation impact on USD denominated
expenses; together with an increase in provisions & ECL as the bank
continues to enhance its coverage ratios, in addition to ECL required for
investments such as securitization that entail higher provisions;

·      The Bank's net profit after tax rose 86% Y-o-Y to EGP271 million
(of which EFG Hermes' share is EGP138 million) in 2Q23, as revenues growth
outpaced the growth in expenses.

For full report and financial statements, please click on the links on top of
the page.

For further information:

Investor Relations Contacts

Email: investor-relations@efg-hermes.com

Group Head of Corporate Strategy & Investor Relations

Hanzada Nessim

Email: hnessim@efg-hermes.com

Tel: +20 (0)2 35356502

www.efg-hermes.com

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