EFG Holding delivers resilient operational performance in first quarter

Khaleej Times

21-05-2025

EFG Holding, a financial institution with a universal bank in Egypt and the leading investment bank in the Middle East and North Africa (MENA), announced its results for the first quarter of 2025. EFG Holding reported revenues of EGP 5.6 billion in 1Q25, marking a 34% Y-o-Y decline. However, this decrease was entirely attributable to the exceptionally high base in 1Q24, which included the effect of the large devaluation of the EGP against the US Dollar, translating into a substantial foreign exchange (FX) gain. Barring this FX impact, EFG Holding demonstrated exceptional operational performance, with all business lines showing resilience and strength. Excluding the impact of any FX gains over both periods, the Group's revenues would be up 31% Y-o-Y, underscoring the Group's robust execution and momentum across its core activities, mainly the Investment Bank, EFG Hermes, and the Non-Bank Financial Institutions (NBFI) Platform, EFG Finance, followed by the Commercial Bank, Bank NXT.
The Group's total operating expenses (including provisions & ECL) decreased 29% Y-o-Y to EGP 3.5 billion, on lower employee expenses, lower provisions & ECL, and despite higher other G&A. Accordingly, the Group's employee expenses/revenues came in at 37% in 1Q25 compared to 41% in 1Q24. EFG Holding's net operating profit and net profit before taxes both lost 41% Y-o-Y. Consequently, net profit after tax and minority interest slipped 34% Y-o-Y to reach EGP 1.2 billion.
Karim Awad, Group CEO of EFG Holding, commented, 'Our first quarter results reflect the strength and resilience of EFG Holding's diversified platform and geographic footprint, even as we cycle a uniquely high base from last year. The year-on-year decline in revenues and net profit is predominantly attributable to the exceptional FX gains and unrealized investment revaluations recorded in 1Q24 following the large EGP devaluation that saw the EGP lose more than half of its value against the US Dollar in March 2024. When adjusted for these extraordinary items, our performance this quarter demonstrates solid operational growth across all lines of business and a clear trajectory of growth. Our Asset Management platform continues to grow, with AUMs on the rise, while our Investment Banking division executed landmark transactions during the quarter, including our leading role in the IPO of Nice One in KSA and the ADNOC Gas secondary offering in the UAE—further cementing our position as the advisory house of choice in the region.'
EFG Hermes, the Group's Investment Bank, experienced a buoyant start to the year across its Sell-side and Buy-side divisions, with revenues posting solid Y-o-Y growth. However, this increase was pressured by Holding & Treasury Activities recording lower revenues Y-o-Y, as the comparable period included the impact of the EGP devaluation. This resulted in EFG Hermes' revenues declining 54% Y-o-Y to EGP 2.9 billion. Excluding the impact of any FX gains across both periods, EFG Hermes revenues would be up 30% Y-o-Y. Holding & Treasury Activities revenues decreased 91% Y-o-Y to EGP 418 million. Sell-side revenues added 46% Y-o-Y to reach EGP 2 billion, and buy-side revenues rose 50% Y-o-Y to EGP 449 million, with both Egypt and regional AUMs also posting increases. EFG Hermes operating expenses declined 45% Y-o-Y to EGP2 billion, on lower employee expenses, lower provisions & ECL, and despite higher other G&A expenses. EFG Hermes reported net profit after tax and minority interest of EGP 652 million, down 54% Y-o-Y, on the decline of Holding & Treasury Activities.
EFG Finance, the Group's Non-Bank Financial Institutions (NBFI) platform, started the year strong with its revenues rising 23% Y-o-Y to reach EGP 1.3 billion, supported by higher revenues generated by Tanmeyah, followed by Valu, and despite FX gains recorded in the comparable period mainly by Leasing and Factoring through EFG Corp-Solutions. Tanmeyah's portfolio grew a healthy 36% Y-o-Y, representing an absolute increase of EGP 1.9 billion in 1Q25 versus 1Q24. Valu issued EGP 4.2 billion worth of new loans in 1Q25, up 61% Y-o-Y. EFG Finance's operating expenses rose 12% Y-o-Y to EGP 900 million, on higher employee expenses and other G&A, overshadowing lower provisions and ECL. Net profit after tax and minority interest more than doubled, up 108% Y-o-Y to EGP 297 million, boosted by higher profitability reported by all lines of business.
Bank NXT, the Group's Commercial Bank, delivered a steady performance, honing in on strong portfolio growth. Its revenues increased 11% Y-o-Y to EGP 1.4 billion in 1Q25, largely driven by higher net interest income, due to interest rate hikes of 800 bps during 2024, in addition to growth in interest-earning assets. Operating expenses, including provisions & ECL, rose 19% Y-o-Y to EGP 624 million in 1Q25, primarily due to higher salaries, as well as higher other G&A expenses. The Bank's net profit after tax added 5% Y-o-Y to reach EGP 498 million (of which the Group's share is EGP 255 million) in 1Q25, as revenue growth outpaced the growth in expenses.
'During the quarter, our Brokerage business continued to thrive, especially in markets such as Kuwait and the UAE, where our geographic diversification strategy bears fruit. Bank NXT is expanding its portfolio and building a strong pipeline of deals that will support growth and have impactful long-term results. In Private Equity, we're proud to report our first quarter of management fees from the Saudi Education Fund—a key milestone in our regional expansion story. Meanwhile, our Non-Bank Financial Institutions (NBFI) platform remains steadfast in delivering comprehensive financial solutions to clients across the spectrum, from individual retail customers to businesses of all sizes. Valu's progress towards listing represents a significant milestone for the fintech leader, underscoring its remarkable growth trajectory in Egypt and solidifying its position as a trusted provider of innovative financial services. Tanmeyah remains a strong performer in its segment. Looking ahead, we remain focused on executing our strategic priorities, cementing our regional footprint, and creating sustainable value for our shareholders.,' concluded Awad.