Leasing

Overview

Established in 2015 as the integral component of EFG Hermes’s non-bank financial services platform, EFG Hermes Leasing caters to the growing demand for financing among both corporations and SMEs in Egypt. Backed by a team of highly-qualified professionals, EFG Hermes Leasing has established itself as a consistently top-ranked leasing provider by market share since inception.

EFG Hermes Leasing provides tailored leasing solutions and value-added advisory services for several industries and sectors in the Egyptian market. The team has leveraged their multi-disciplinary expertise to provide an expansive pool of diverse clients with the fastest turnaround time in the industry.

Now into its fourth year of operations, the company has maintained its top ranking, positioning itself at the end of 2018 as the fifth-largest leasing company in Egypt with an 8% market share in a highly fragmented market. The company ended the year with a total net portfolio of EGP 2.9 billion in contracts, with the success mainly attributed to management’s efforts to cater to clients of different size across multiple sectors.

EFG Hermes Leasing’s accelerated rate of growth and accomplishments has positioned it as Egypt’s most agile and innovative financial leasing provider as it continues to develop a diverse suite of products for both customers and vendors.

Operational Highlights of 2018

Despite a challenging interest rate environment in 2018, which saw CBE lending rates hover at 17.75%, EFG Hermes Leasing witnessed increased activity as the team worked diligently to diversify and grow its client portfolio, find alternative financing sources as well as increase contributions from its growing SME portfolio, which grew to 15% by the end of 2018 from 8% in 2017.

Despite the operating backdrop, be that the highly competitive, fragmented market or high borrowing costs, the company’s net financed assets reached EGP 1.8 billion by the end of 2018. The success was achieved all while maintaining the same headcount of 44 skilled employees, a testament to the team’s efficiency.

SMEs

EFG Hermes Leasing successfully collaborated with a number of banks throughout the year as well as the Saudi Fund for Development (SFD) to extend low-cost credit to their SME clients.

SMEs currently make up 15% of EFG Hermes Leasing’s portfolio, up from 8% in 2017, a reflection of management’s efforts to continue to diversify its client base to meet aggressive growth targets.

Securitization Program

A significant milestone for 2018 was the launch of the team’s securitization program in the fourth quarter of the year, which will reflect positively on its leverage ratio and create room for further operational expansions. The first issuance of EFG Hermes Leasing’s securitization program took place in November 2018, with a bond issued for EGP 313 million backed by 107 contracts distributed over 47 clients. The net present value of outstanding receivables on the closing date of the transaction was EGP 333 million. The securitization program gives more weight, credibility and diversity to the company and its portfolio.

2019 Outlook

After sustaining business in a very challenging year, EFG Hermes Leasing plans to increase its portfolio as the macro backdrop improves following lowered lending rates and a noticeable pickup in market activity across multiple sectors. With a law regulating financial leasing and factoring now in place, the industry is expected to take off, and EFG Hermes Leasing is perfectly positioned to capture an even greater market share while expanding and diversifying its portfolio.

Key Financial Highlights of 2018

EFG Hermes Leasing contributed total revenue of EGP 436 million to EFG Hermes’ consolidated results in FY18, compared to EGP 295 million in 2017, a 48% y-o-y increase