Youm7-
- Group revenues increased by 68% YoY to EGP 5.0 billion in Q3 2024 despite challenging market conditions, driven by strong performance across its various business segments.
- Group net profit after tax and minority interest reached EGP 697 million, up 76% YoY during Q3 2024.
EFG Hermes Holding, the leading financial institution that owns a comprehensive bank in Egypt and the leading investment bank in the MENA region, today announced its financial and operational results for Q3 2024, with the group continuing to grow revenues for the third consecutive quarter of the year to EGP 5.0 billion, up 68% YoY, supported by strong growth across its various operating segments, namely EFG Hermes Investment Bank, EFG Finance and Commercial Bank Next.
The group’s operating expenses (including provisions and expected credit losses) increased by 63% y-o-y to EGP 3.2 billion in Q3 2024, due to higher employee salaries and operating expenses, impacted by the inflationary environment reflecting the impact of the liberalization of the Egyptian pound, which in turn affected all operating expenses. Despite these challenges, the Group’s employee expenses/revenues reached a quarterly low of 39% in Q3 2024, compared to 42% in Q2 2024.
The significant growth in revenues exceeding expenses contributed to an increase in net operating profit and net profit after tax by 78% and 83%, respectively, in Q3 2024.
Despite the challenges facing the economic arena, the Group succeeded in achieving an outstanding performance that reflects its ability to overcome inflationary pressures and adapt to changing geopolitical conditions, which was reflected in the growth in net profit after tax and minority rights by 76% year-on-year to reach EGP 697 million.
In this context, Karim Awad, CEO of EFG Hermes Holding Group, confirmed that the third quarter results of 2024 are a testament to the flexibility of the group’s business model and strategy, which contributed to enhancing its ability to overcome the challenges witnessed by the local market, represented by high inflation rates and the liberalization of the Egyptian pound exchange rate, which resulted in an increase in employee salaries and operating expenses in the group’s three business sectors, especially the investment bank. Awad praised the group’s ability to achieve exceptional growth rates thanks to the strong business strategy it adopts, which resulted in expanding its business scope in a group of promising markets such as the Saudi market. In addition, Awad expressed his pride in the group’s strong performance, which was reflected in the financial results achieved by EFG Hermes, EFG Finance, and the Commercial Bank, which was recently rebranded as Next Bank. EFG Hermes’ investment bank, revenues increased by 87% y-o-y to EGP 2.7 billion, supported by the strong performance of its various operating segments, particularly treasury, which recorded exceptional revenue growth of 180% y-o-y on unrealized gains on initial capital. Securities brokerage and sell-side revenues also increased by 62% y-o-y to EGP 1.4 billion, with sell-side revenues increasing by 201% y-o-y, a three-fold increase on the back of higher advisory fees, while brokerage revenues increased by 50% y-o-y driven by higher commission fees in Egypt and the MENA markets, and growth in structured products. In addition, the Private Equity and Asset Management (Buy-Side) segments achieved strong revenue growth of 71% y-o-y to reach EGP 437 million, supported by the strong performance of the Asset Management segment, which recorded an 81% y-o-y increase in USD-denominated revenues due to higher management fees and incentives from subsidiary Frontier Investment Management (FIM) and the impact of FX liberalization on revenue growth. Meanwhile, the Private Equity segment’s USD-denominated revenues increased by 36% y-o-y due to the FX liberalization measures. Despite an 84% y-o-y increase in operating expenses, EFG Hermes managed to double its net operating profit, which increased by 95% y-o-y to EGP 760 million. Taxes also increased by 168% y-o-y, due to higher profitability of Egyptian operations and deferred taxes on initial capital gains, in addition to a 68% y-o-y increase in net profit after tax and minority interest to EGP 274 million. EFG Finance’s non-banking finance platform, EFG Finance, also achieved strong revenue growth in Q3 2024, reaching EGP 1.1 billion, a 68% year-on-year growth, driven by the excellent performance of all its operating segments. Tanmeyah’s revenues increased by 95% year-on-year, driven by increased customer loans and interest income, while ValU recorded a 36% year-on-year growth, supported by increased loan volumes. Additionally, EFG Financial Solutions’ leasing segment revenues doubled by 103% year-on-year, driven by higher net interest income, fees and commissions, and net profit after tax and minority interest increased by 349% year-on-year to EGP 203 million.
On the other hand, Commercial Bank, which was rebranded as Next Bank in Q3 2024, continued its growth trajectory, with revenues increasing by 38% year-on-year to EGP 1.2 billion, driven by higher net interest income. Net profit after tax also increased by 20% YoY to EGP 428 million, reflecting the strength of its financial position and operations.
In conclusion, Awad stressed his confidence in the ability of the Group’s business sectors to continue achieving more successes, as the year comes to an end, as the Group looks forward to achieving attractive returns from its investments in the Commercial Bank while expanding the scope of the non-banking financing platform services during the coming year. Awad added that the investment bank currently enjoys a leading position in the Middle East and North Africa region, expressing management’s confidence in the growth potential of the region’s markets, despite geopolitical challenges.
To view the financial results report for the third quarter of 2024 and management’s commentary, please visit the company’s website.
