Beltone Financial expects net profits of the Housing and Development Bank (HDB) to exceed EGP 800m by the end of this year. HDB achieved growth in its profits during the first quarter of 2017 by 60.2%, reaching EGP 349.4m, compared to EGP 218.1m during the first quarter of last year.
A report issued by the research department in Beltone explained that the initial budget of the bank in 2017 includes a growth of 40% on an annual basis, and a growth of loans by 30%, as well as profits by 30%. This explains that the bank’s net profit will probably exceed EGP 800m, with a 30% increase from the current EGP 611m expectation of the company.
Fathi El Sebaie, chairperson and managing director of the bank, said in earlier statements that according to the bank’s planned budget for 2017, it aims to achieve a net growth of profits by 39% by the end of the year, taking profits up to EGP 975m.
Meanwhile, the consolidated results of the HDB revealed that the bank achieved a net profit of EGP 557m during the first quarter of 2017, equivalent to 2.5 times the net profit achieved in the first quarter of 2016.
Beltone pointed out that the largest difference between the consolidated and independent results is the result of two main factors, which are the income from the housing projects and the income from the companies affiliated to the bank. Beltone noted that these companies’ income increased three times, based on an annual basis.
Regardless of these two indexes, the consolidated results were supported by the fast growth of the net profit from interests, which doubled on an annual basis, recording EGP 551m on the back of the bank’s maintenance of the increase in the interest rate, which neared 8% in the first quarter of 2017.
“Strong loaning and depositing growth in the bank in the first quarter of 2017 continued, where both total loaning and depositing increased by 7%, based on a quarterly basis,” Beltone said.
Total loan portfolio and credit facilitations in the bank increased to EGP 10bn during the first quarter of this year. Clients’ deposits increased to EGP 14.6bn.
According to El Sebaie, the bank aims to increase deposits to EGP 19.4bn by the end of 2017 and to increase the value of the loan portfolio to EGP 10.6bn.
Beltone noted that the bank’s business indexes included a negative side, which is the increase of non-performing loans in the bank to 9.8% by the end of March 2017, compared to 7% in December 2016.
The allocation coverage of these loans dropped to 105% in March 2017, compared to 150% in December 2016.
According to Beltone, the bank’s capital adequacy ratio stood at 15.4% at the end of March 2017, which is much more than the 11.25% minimum set forth by the Central Bank of Egypt (CBE) in 2017.
“We believe that the bank’s recent announcement of a possibility to split the bank’s stock into an arm of the bank and carry out real estate development was met with excitement by investors. The CBE is considering this suggestion after its approval by the bank’s board,” Beltone added.
The banking activities represent 65% of the bank’s activity, while real estate projects represent 35%.
The bank’s board had initially agreed in February 2017 to start studying splitting the bank’s stock to a real estate company and another company specialised in banking activities.
El Sebaie said that the bank is still awaiting the CBE’s approval.
“The performance of HDB’s stock price was good since the beginning of this year, where it increased by 49%, thanks to the good trading volume, recording a new level in 52 weeks at EGP 38.5 on Tuesday,” Beltone noted.
The bank’s stock is being traded now with an increase from the estimations of the fair value at EGP 33.3, which is a justified increase, according to Beltone.
