EFG Hermes 9-Month Profits Up By 26 Percent

EFG Hermes Holding announced its results for the first nine months of 2021, with revenues rising 8 percent over the same period last year to EGP 4 billion and its net profits jumping 26 percent Y-o-Y to reach EGP 1.1 billion.

“EFG Hermes’ core operations have continued to deliver solid performances and to play a vital role in fortifying the Group’s position as the flagship financial services corporation in Frontier Emerging Markets,” said EFG Hermes Holding’s Group CEO Karim Awad. 

In quarterly terms, the Group recorded a top line of EGP 1.2 billion and a net profit after tax and minority interest of EGP 356 million in 3Q21, down year-on-year; as the comparable quarter included strong EGP 349 million of incentive fees from Private Equity’s Vortex III exit and included strong unrealized gains on seed capital revaluation in the comparable period of last year.

For the third quarter of 2021, EFG Hermes’ sell-side revenues grew by 45 percent Y-o-Y to EGP 406 million, primarily driven by standout performances by the Group’s Investment Banking and Brokerage divisions.

On the Investment Banking front, revenues grew by 184% Y-o-Y to EGP 107 million, driven by strengthening advisory fees and a higher number of transactions for the period.

Meanwhile, revenues from the Brokerage division increased by 23% Y-o-Y to EGP 299 million in 3Q21, driven by the higher revenues reported by the Group’s operations in Egypt, Kuwait, and its structured products desk.

The Group’s buy-side revenues declined by 74 percent Y-o-Y to EGP 115 million in 3Q21 primarily due to the high base effect associated with EGP 349 million in incentive fees from the Vortex Energy III exit generated by the Private Equity division in the comparable period.

Private equity revenues stood at EGP 29 million 3Q21. Nonetheless, the Group’s Asset Management division recorded a top-line increase of 32 percent Y-o-Y to EGP 86 million in 3Q21, reflecting the increase in management fees reported by FIM.

The NBFI platform recorded a 52% Y-o-Y increase in revenues to EGP 507 million. The platform’s performance in 3Q21 was primarily driven by higher revenues generated by the Group’s microfinance solutions provider Tanmeyah and EFG Hermes’ BNPL fintech platform “valU”. Tanmeyah booked revenues of EGP 355 million in 3Q21, up 36% Y-o-Y driven by stronger sales and a growing portfolio during the period. Parallel to this, valU’s revenues grew more than three-fold year-on-year to EGP 97 million due to portfolio expansions and enhanced margins in 3Q21.

Revenues generated by EFG Hermes’ capital market and treasury operations contracted 58% Y-o-Y to EGP 156 million in 3Q21 due to unrealized losses from seed capital revaluations compared to the unrealized gains booked in the same period last year.

The Group’s operating expenses declined 14% Y-o-Y to reach EGP 760 million in 3Q21, predominately on lower employee expenses. With employee expenses/ revenues coming at 44% in 3Q21, lower Y-o-Y, and Q-o-Q. Consequently, EFG Hermes reported a net profit after tax and minority interest of EGP 356 million in 3Q21, down 16% Y-o-Y. Excluding Private Equity exceptional incentive fees realized in 3Q20, normalized Group net profits after tax and minority interest would be up a buoyant 387% Y-o-Y in 3Q21.