Egypt’s investment bank EFG Hermes Holding reported on Wednesday a 12 percent year-on-year growth to reach 5.5 billion Egyptian pounds (349.6 million) despite the impact COVID-19 had on global economies and capital markets.
“2020 was a year unlike any other, not just for us at EFG Hermes but for business the world over. Despite its challenges, however, I am proud to report that the year was marked by numerous accomplishments that served to highlight our perseverance,” said EFG Hermes Holding Group’s chief executive Karim Awad.
“The Group’s solid results were propped up by its buy-side business,” EFG said in a statement, adding that revenues grew 33 percent year-on-year to 881 million pounds in FY20.
EFG Hermes Asset Management delivered a 28 percent year-on-year increase in revenues to 413 million pounds due to higher incentive fees booked by FIM in FY20. Its Private Equity business generated revenues of 468 million percent, up 37 percent year-on-year on the back of the Vortex Solar exit in FY20.
The NBFI platform contributed positively to the Group’s overall results, with revenues climbing 13 percent year-on-year to 1.4 billion pounds as a result of year-on-year growth across all its businesses.
The results were largely driven by the Group’s consumer finance business, ‘valU’, which delivered stellar results, where revenues more than quadrupled to 111 million pounds in FY20, EFG statement added.
The Group’s Leasing and Factoring businesses, which merged to form EFG Hermes Corp-Solutions in 2020, reported revenue increases of 17 percent year-on-year and 178 percent year-on-year to 184 million pounds and 25 million pounds, respectively in FY20.
Tanmeyah revenues inched up 3 percent year-on-year to 1.1 billion pounds as its portfolio remained largely flat in FY20.
COVID-19 heavily impacted global capital market sentiment, thereby dampening the performance of the Group’s sell-side business, where revenues declined by 19 percent year-on-year to 1.2 billion pounds in FY20. With the ECM space bearing the brunt of the pandemic, the Investment Banking division recorded a 28 percent year-on-year decline in revenues to 237 million pounds in FY20, while Brokerage recorded a revenue decline of 17 percent year-on-year to 1.0 billion pounds on the back of lower activity across MENA and Frontier markets in FY20.
EFG Hermes’ Capital Markets & Treasury operations reaped the rewards of recovering regional capital markets and the subsequent revaluation of seed capital and investments and delivered a top line expansion of 36 percent year-on-year to 1.9 billion pounds in FY20.
“With dampened equity capital market activity pressuring performance on our sell side business, we were still able to maintain our market positions across our brokerage operations, leading the ranks in Egypt, Kuwait, Dubai and Kenya.” Awad said.
“Meanwhile our Investment Banking division managed to secure a total of 24 transactions in 2020 worth an aggregate value of $1.7 billion – the highest number of transactions in a single year. We continued to leverage our expansive footprint and access to a comprehensive network of investors to grow our Asset Management operations, and our strategic exit from Vortex Solar significantly buoyed to our top line performance.”
At our NBFI platform, we reaped the rewards of the merger of our factoring and leasing operations under EFG Hermes Corp-Solutions and recorded double-digit growth across both lines of business,” Awad added.
The Group’s operating expenses recorded an increase of 17 percent year-on-year to 3.6 billion pounds on the back of an increase in employee expenses as EFG Hermes continued to expand its team, other operating expenses, as well as an increase in provisions and impairment charges over the course of the year. Despite the increases, expenses as a percentage of revenues came in well below the 50 percent level and stood at 42 percent in FY20.
The Group recorded a gross operating profit (before provisions) of 2.2 billion pounds, reflecting an increase of 16 percent year-on-year, as well as a 4 percent year-on-year growth to 1.9 billion pounds in net operating profits in FY20.
“The results stand as a testament to EFG Hermes’ ability to deliver strong profitability despite unprecedented market conditions.” EFG statement read.
EFG Hermes’ bottom-line recorded a decline of 5 percent year-on-year to 1.3 billion pounds on the back of higher tax charges over the course of the year, which included deferred taxes for unrealized gains on investments as well as the reversal of FY19 deferred tax gains at the holding level in FY20.
“It is clear to me this year more than any years previous that our product diversification strategy has and will continue to bear fruit.” Awad said.
“Looking ahead, we’re optimistic about the Group’s outlook, having already witnessed the positive impacts of recovering capital markets on our operations in the new year, which help us deliver on our commitment to maximising value for all our stakeholders, be that in terms of returns, employee engagement, or community development,”
