Sarwa Capital Holding for Financial Investments net income after minority interest recorded EGP 183m in the first half of 2019 (1H2019), compared to EGP 148m in 1H2018, a hike of 24% year-over-year (y-o-y), while the consolidated earnings before tax went up by 30%, the company announced on Monday.
Meanwhile, the company achieved a growth of 23% in financing revenues during the 1H2019, recording EGP 773m, up from EGP 626m in the same period a year earlier.
Furthermore, Sarwa Capital net interest income recorded EGP 253m during the first six months of 2019, compared to EGP 207m during the same period of 2018, marking an increase of 22% y-o-y.
The corporate’s financing operating income recorded EGP 411m during 1H2019, up from EGP310m, a hike of 33%.
Sarwa Capital explained that this increase in the financing operating income was supported by the enhanced product mix, margin enhancement, and refinancing income. “Quarterly, the timing of refinancing transactions in Q1 2019 but Q2 2018, affected the quarterly distribution of
earnings,” the company revealed.
In regards to the Sarwa Capital insurance business, the company reported 69% hike in 1H2019 in revenue recording EGP 71m, while achieving insurance operating income of EGP 27m in 1H2019, compared to EGP 17m in 1H 2018, an increase of 53%.
The company recorded a net operating income of EGP437m during the first six months of 2019, up from EGP327m in H1 of 2018, a growth of 34%.
Commenting on the results, the management stated that “During Q2, we launched our insurance businesses, began factoring services, expanded our commercial vehicle financing operation, engaged in several important partnerships, and received the first Sukuk issuer license in the market.”
Quarterly, net income after minorities declined by 34% during the second quarter of 2019 (Q2) reaching EGP 63m, down from EGP 96m in Q2 of 2018.
“Total new financing extended for the period [Q2] recorded EGP 1.81 bn, down 16% from EGP 2.15 bn for the period to June 2018,” according to Sarwa Capital.
The company mentioned that the total financing portfolio grew by 11% y-o-y to record EGP 6.3bn at the end of the Q2 2019, noting that the non-auto credit products grew in their share of the portfolio to 20% from 15%.
In terms of the total consolidated debt, the company stated that it achieved total consolidated debt of EGP5,732m in 1H2019, down from EGP 5,599m in H1 of 2018.
It further explained that the total operating costs reached EGP 108 m during the first six months of 2019, increasing 45% from the comparable period in 2018, pushed higher by the launch of the insurance business. Cost to income, as measured by operating expenses, came in at 24.8%, up from
22.8% during the comparable period ending on June 2018.
It explained that the selling, general and administrative expense (SG&A) mostly representing sales commissions, grew 28% to EGP 23.8 m for the 1H2019 also impacted by insurance commissions.
Sarwa Capital revealed that the H12019 annualized return on average equity reached 21.4%, while H12019 annualized return on average assets recorded 5.9%.
Moreover, the consolidated equity net of minority interest reached EGP 1.77bn at the end of the Q2
compared to closing at EGP 781m at the end of the Q2 of 2018, owing to both the EGP 700m capital increase as well as retained earnings.
Upon the approval of shareholders during the upcoming Extraordinary General Meeting, the paid-up capital of the company will be increased from EGP 119.697m to EGP 191.515m.
“With some of the headwinds affecting our underlying markets abating and demand to recover, we see growth potential ahead, enhanced by our expanding insurance operations and ongoing investments in technology with digital capabilities that will propel the business forward,” management concluded.