EFG Hermes, a financial services corporation in Frontier Emerging Markets (FEM), has released its full year results for 2020. The firm has registered increase in revenues, climbing 12% compared to the previous year, to successfully surpass the EGP 5 billion mark.
The Group’s solid results were propped up by its y-side business, where revenues grew 33% compared to the previous year, to EGP 881 million in FY20. EFG Hermes Asset Management delivered a 28% increase in revenues to EGP 413 million due to higher incentive fees booked by FIM in FY20. However, the Private Equity business generated revenues of EGP 468 million, up 37% compared to the previous year on the back of the Vortex Solar exit in FY20.
“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 CEO Karim Awad.
The NBFI platform contributed positively to the Group’s overall results, with revenues climbing 13% year on year to EGP 1.4 billion. The results were largely driven by the Group’s consumer finance business, ‘valU’, which delivered improved results, where revenues more than quadrupled to EGP 111 million in FY20. The Group’s Leasing and Factoring businesses, which merged to form EFG Hermes Corp-Solutions in 2020, reported revenue increases of 17% Y-o-Y and 178% Y-o-Y to EGP 184 million and EGP 25 million, respectively in FY20.
With the ECM space facing the economic effects of the pandemic, the Investment Banking division recorded a 28% decline in revenues to EGP 237 million in FY20. Brokerage recorded a revenue decline of 17% Y-o-Y to EGP 1.0 billion on the back of lower activity across MENA and Frontier markets in FY20.
EFG Hermes’ Capital Markets and Treasury operations reaped the rewards of recovering regional capital markets and the revaluation of seed capital and investments. As a result, it delivered a top line expansion of 36% year on year to EGP 1.9 billion 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. Meanwhile our Investment Banking division managed to secure a total of 24 transactions in 2020 worth an aggregate value of USD 1.7 billion, the highest number of transactions in a single year,” Awad added.
The Group’s operating expenses recorded an increase of 17% year on year to EGP 3.6 billion on the back of an increase in employee expenses. Despite the increases, expenses as a percentage of revenues came in well below the 50% level and stood at 42% in FY20.
EFG Hermes’ recorded a decline of 5% year on year results to EGP 1.3 billion on the back of higher tax charges over the course of the year. This included deferred taxes for unrealized gains on investments as well as the reversal of FY19 deferred tax gains at the holding level in FY20.