Karim Awad, Group CEO of EFG Holding
Karim Awad, Group CEO of EFG Holding Image Credit: Supplied

EFG Holding, a financial institution with a universal bank in Egypt and a leading investment bank in Frontier and Emerging Markets (FEM), announced today strong financial performance for the third quarter of 2023. The Group booked a robust revenue increase of 27% Y-o-Y to EGP 3.0 billion, with strong contributions from its Investment Bank arm, EFG Hermes, and its commercial bank arm, aiBANK. Although operating expenses, including provisions and Expected Credit Losses (ECL), rose 22% Y-o-Y to EGP 2.0 billion in 3Q23, the Group's net operating profit soared to EGP 1.0 billion, reflecting an impressive 40% Y-o-Y increase. The Group's net profit after tax and minority interest amounted to EGP 395 million, a notable 24% Y-o-Y growth.

Commenting on the performance, Karim Awad, Group CEO of EFG Holding, said: "I am extremely proud to report on yet another solid quarter, a reflection of our team's outstanding achievements during the period despite challenging market landscapes. Our strong financial results — driven by the strong performances of EFG Hermes and aiBANK — validate our strategic approach to revenue diversification and our dedication to delivering superior outcomes for our clients and shareholders. This outstanding performance showcases our ability to thrive by leveraging the diversity of our operating model."

On the investment bank side of the house, EFG Hermes reported robust results for 3Q23, with revenues increasing 30% Y-o-Y to EGP 1.4 billion, supported by strong Brokerage revenues in Egypt and the UAE, higher incentive fees from Asset Management Egypt and through the Asset Management business’ regional arm Frontier Investment Management (FIM), increased management fees in Private Equity, and the positive impact of exchange rate movement. Despite lower revenue contributions from Holding and Treasury Activities, as well as Investment Banking, EFG Hermes' net operating profit amounted to EGP 390 million, a notable 22% Y-o-Y increase.

Revenues at EFG Finance, the Group’s Non-Bank Financial Institutions (NBFI) platform, came in flat Y-o-Y at EGP 666 million in 3Q23, with Valu’s exceptional growth contributing the lion’s share at EGP 314 million, up 105% Y-o-Y. Operating expenses inched up 7% Y-o-Y to EGP 538 million primarily due to higher employee expenses and provisions, leading net operating profit to dip 20% Y-o-Y to EGP 129 million. Net profit after tax and minority interest dropped 51% Y-o-Y for the platform to EGP 30 million.

The decline in EFG Finance's profits can be attributed to several factors, including the adoption of responsible lending guidelines in Tanmeyah, ongoing restructuring efforts across the platform, and a cautious approach to provisioning. These measures reflect the company's commitment to long-term stability and risk management. While they may have temporarily affected revenues, they demonstrate EFG Finance's dedication to responsible practices and optimizing operational efficiency. Despite the current challenges, the company remains optimistic and expects to regain its historically strong growth rates by the end of 1Q24, as these measures lay the groundwork for sustainable success in the future.

aiBANK, a key contributor to EFG Holding's significant financial performance, witnessed an outstanding Y-o-Y revenue growth of 53% in 3Q23, amounting to EGP 890 million. The growth was driven by improved net interest income from increasing interest-earning assets and higher fees and commissions resulting from increased trade finance volumes. Consequently, the bank's net profit after tax soared an impressive 214% Y-o-Y to EGP 345 million.

"While we saw broad-based strength across our multiple verticals this quarter, the outstanding contributions from our innovative fintech company Valu were a strategically important part of the EFG Finance story. We are confident in our ability to leverage technological advancements to meet evolving customer needs and further strengthen our position as not only a leader but an innovator in the financial industry. At the same time, we will continue to leverage the breadth and depth of our comprehensive financial service portfolio, our advisory capabilities, and more as we remain steadfast in our commitment to delivering exceptional value to our shareholders, clients, and employees. We are confident we have the tools, the people, and the strategic planks in place that will allow us to continue offering innovative financial solutions and seizing growth opportunities in the evolving financial market landscape across our footprint," added Awad.