Corporate news
Earning Commentary – EFG Hermes (HRHO)
A standout quarter driven by BANK NXT and strong NBFI momentum.
EFG Holding delivered a strong performance in 3Q25, with net operating revenues rising to EGP 6.3 billion, up 27% year‑on‑year, supported mainly by BANK NXT and EFG Finance, while the Investment Bank’s results were weighed down by losses in Holding and Treasury Activities. Group net profit after tax and minority interest reached roughly EGP 846 million for the quarter, driven by strong banking profitability and solid contributions from the non‑bank financial services platform. BANK NXT remained the standout performer, reporting revenues of EGP 2.7 billion, an increase of 119% year‑on‑year, driven by higher net interest income, stronger fees and commissions, and substantial other revenues from the sale of non‑core assets. The bank’s bottom line surged by 245% year‑on‑year to reach EGP 1.5 billion, with strong balance sheet growth as gross loans increased 67% year‑on‑year to EGP 44.8 billion, deposits grew 23% to EGP 81.5 billion, and key asset quality metrics remained healthy, including a 2.8% NPL ratio and 193% coverage.
EFG Finance continued to deliver solid growth, with revenues rising 38% year‑on‑year to EGP 1.5 billion, supported by strong performance across all business lines. Valu grew revenues by 79% year‑on‑year on the back of higher securitization income, increased fees, and a 34% rise in loan issuances. Leasing revenues increased 28%, factoring grew 12%, and Tanmeyah added 9%, supported by higher interest income. Operating expenses increased 34% year‑on‑year due to higher employee expenses, increased provisions, and inflation‑driven G&A costs. Despite this, revenue growth outpaced the cost increase, resulting in a 48% rise in net operating profit and a 28% increase in net profit after minority interest to EGP 261 million. Portfolio quality remained strong, with Valu maintaining a 0.9% NPL ratio and cost of risk improving to 1.07%.
EFG Hermes (Investment Bank)’ performance was weaker, with revenues declining 20% year‑on‑year to EGP2.1 billion due to a significant swing in Holding and Treasury Activities, which recorded losses compared to large gains in the comparable period. Core business lines, however, grew solidly. Sell‑side revenues increased 27% year-on‑year, supported by 23% growth in Brokerage and 50% growth in Investment Banking, driven by strong advisory activity in the GCC. Buy‑side revenues rose 16% year-on‑year, supported by continued growth in both Private Equity and Asset Management. Operating expenses rose 10% year-on‑year due to higher general and administrative expenses and rising USD‑linked costs. EFG Hermes ended the quarter with a net loss of EGP 170 million, although excluding Holding and Treasury Activities, the platform would have delivered a net profit of EGP 543 million, up 31% year-on‑year.
At the group level, operating expenses increased 19% year-on‑year to EGP 3.8 billion. Employee expenses declined on a nine‑month basis reflecting a reduction in variable compensation at the Investment Bank, partially offsetting inflation‑driven salary increases and the impact of currency weakness on regional office costs. Other G&A expenses increased due to inflation, higher USD‑denominated expenses, costs related to Valu’s listing, and pre‑operating spending for the new wealth management business. Provisions and ECL increased modestly by 6% year-on‑year. Tax expenses declined 35% year‑on‑year due to deferred tax gains, helping support overall bottom‑line resilience. For the first nine months of 2025, group net profit after tax and minority interest reached EGP 2.9 billion, down 13% from the previous year, reflecting primarily the absence of last year’s exceptional gains in the Investment Bank.
Mariam Rafek – Equity Analyst