Company Announcements

Final Results FY 2023

Source: RNS
RNS Number : 6179M
EFG Holding S.A.E.
30 April 2024
 

 

 

 

 

EFG Holding Company

(Previously EFG - Hermes Holding Company)

(Egyptian Joint Stock Company)

Consolidated financial statements.

For the year ended 31 December 2023

 

 

 

-   


 

Table of contents

 


Page(s)

Independent auditor's report

1 - 4

Consolidated statement of financial position

Consolidated statement of profit or loss

       5

      6

Consolidated statement of comprehensive income

7

Consolidated statement of changes in equity

8 - 9

Consolidated statement of cash flows

10 - 11

Notes to the consolidated financial statements

12 - 93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Consolidated statement of financial position

As at 31 December 2023

 

 




           2023


          2022




            EGP Thousand


           EGP Thousand

Assets


Notes




Cash and cash equivalents


5

 32,252,243


 26,214,250

Funded facilities to customers


8

19,117,655


 13,904,712

Banking loans and facilities (aiBank)


8.1

21,079,316


 19,317,430

Accounts receivable


7

 6,770,962


 6,168,256

Investments at fair value through profit and loss


6

9,196,191


 6,772,893

Investments at fair value through OCI


9

 11,647,611


 14,080,121

Investments at amortized cost


12

 11,233,860


 11,518,692

Assets held for sale


11

 330,652


 349,701

Equity accounted investees


10

 844,793


 606,433

Investment properties


13

98,701


 118,985

Property and equipment


14

2,177,789


 1,636,043

Goodwill and other intangible assets


15

2,315,613


 1,947,231

Deferred tax assets


22

126,411


 64,486

Other assets


16

4,716,177


 3,401,911

Total assets



121,907,974

 

106,101,144







Liabilities






Due to banks and financial institutions


17

 14,182,413


 12,371,836

Customer deposits


18

 50,634,207


 48,130,172

Loan and borrowings


24

8,004,219


 4,996,029

Creditors and other credit balances


21

6,148,445


 4,982,665

Accounts payable - customers credit balances FVTPL


19

 680,319


 379,039

Accounts payable - customers credit balances


19.1

 11,319,690


 10,194,569

Issued bonds


20

 749,003


 500,000

Provisions


23

 1,167,730


 903,716

Current tax liability



 638,583


 473,873

Deferred tax liabilities


22

 987,436


 800,661

Total liabilities



94,512,045


83,732,560







Equity






Share capital


25

 7,298,030


 5,838,424

Legal reserve



 972,344


 867,455

Share premium



 1,668,624


 1,668,624

Other reserves



 4,843,110


 3,125,556

Retained earnings



 8,538,917


 7,423,239

Equity attributable to owners of the Group

 

 

23,321,025


18,923,298

Non - controlling interests


26

4,074,904


3,445,286

Total equity



27,395,929


22,368,584

Total liabilities and equity



121,907,974

 

106,101,144








 

These financial statements were approved and authorised for issue on 30 April 2024 and signed by:

 

 

 

 

 

 

Mona Zulficar

Chairperson

Karim Awad

Group Chief Executive Officer

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.


Consolidated statement of profit or loss

For the year ended 31 December

 

 

Notes

2023

 

2022

 

 

EGP Thousand

 

EGP Thousand

Interest income

32

 13,484,814


9,295,889

Interest expense


 (8,863,833)


(5,698,005)

Net interest income

 

4,620,981

 

3,597,884

Fee and commission income

32

 7,161,919


4,804,816

Fee and commission expense


 (719,609)


(508,240)

Net fee and commission income


6,442,310

 

4,296,576

Realized securities' Gain ( losses )

2

 171,671


(847,027)

Net changes in the fair value of investments at FVTPL

6

 1,411,890


923,031

Dividend income

32

 81,477


5,661

Other revenues

28

 297,999


159,191

Net Gains on dereceognition of financial assets at amortized cost

32

 432,931


222,310

Impairment loss on financial assets - net of recoveries

29

 (1,030,333)


(726,511)

Foreign currencies exchange differences

32

 1,154,847


2,495,675

Gains on selling assets held for sale

32

 9,797


5,487

Share of Gain from equity accounted investees

32

 45,048


76,562

 

 

13,638,618

 

10,208,839

General and administrative expenses

31

 (8,943,885)


 (6,541,864)

Financial guarantee provision

23

 (38,055)


 (21,174)

Impairment loss on goodwill and intangible assets

32

 (12,002)


 (10,239)

Provisions

23

 (235,053)


 (156,890)

Depreciation and amortisation

31.2

 (476,686)


 (335,734)

Profit before tax


3,932,937


3,142,938

Income tax expense

30

(1,093,997)


(1,103,724)

Profit for the year


2,838,940

 

2,039,214







Attributable to:


 

 


Shareholders of the Holding Company


 2,216,683


 1,687,208

Non-controlling interests


 622,257


 352,006



2,838,940

 

2,039,214

 





Earnings per share:





Basic earning per share - EGP

34

1.52


1.16

Diluted earnings per share - EGP

34

1.52


1.16

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.


Consolidated statement of comprehensive income

For the year ended 31 December 2023

 

 

 

Notes

   2023

 

      2022

 

 

EGP Thousand

 

      EGP Thousand

Profit for the year

 

2,838,940


2,039,214

Other comprehensive income items:





Items that may be reclassified to the consolidated statement of profit or loss





Foreign operations - foreign currency translation differences


 1,919,416


 3,210,783

Foreign currency translation differences - reclassified to profit or loss


 (198,160)


 (852,752)

Net losses on investments in debt instruments at FVOCI- net change in fair value


 (33,483)


 (157,787)

Investments at fair value through OCI-net change in fair value - reclassified to profit or loss


 215,549


 (3,016)

Tax relating to such items

22

 14,319


 24,443


 

1,917,641


2,221,671

Items that will not be reclassified to the consolidated statement of profit or loss





Investment at fair value through OCI - reclassified to retained Earnings


 (1,064)


 (547)

Net (losses) gains on investments in equity instruments designated at fair value through OCI - net change in fair value


 (222,270)


 49,994

Actuarial gain (loss) re-measurement of employees' benefits obligations

23

 3,512


 (4,505)

Share of other comprehensive income of equity accounted investees


 1,310


 206

Other comprehensive income, net of tax


1,699,129


2,266,819

Total comprehensive income for the year


4,538,069

 

4,306,033

 

Attributable to:


 

 

 

 

Shareholders of the Holding Company


 3,829,283


 3,805,108

Non-controlling interests


 708,786


 500,925



4,538,069

 

4,306,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.


Consolidated statement of changes in equity

For the year ended 31 December 2023

 

EGP Thousand

Share

Capital

Legal

reserve

Share premium

General reserve

Translation reserve

Fair value reserve

Employee stock Ownership plan reserve

Operational risk reserve

Retained earnings

Total

Non-controlling interests

Total Equity


 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 31 December 2021, as previously reported

4,865,353

840,273

1,668,624

158

1,810,570

       (1,176,955)

149,647

-

6,390,395

14,548,065

2,758,225

 17,306,290

Impact of Purchase price allocation of aiBank

-

-

-

-

-

-

-

-

 96,524

 96,524

 201,674

 298,198

Restated Balance as at 31 December 2021

 4,865,353

 840,273

 1,668,624

 158

 1,810,570

 (1,176,955)

 149,647

-

6,486,919

14,644,589

2,959,899

17,604,488

Profit for the year

 

-

-

-

-

-

-

-

-

1,687,208

1,687,208

352,006

2,039,214

 

Other comprehensive income for the year

-

-

-

-

2,169,290

 (47,433)

-

-

 (3,958)

 2,117,899

 148,920

 2,266,819

Transactions with owners of the Group

 









 


 

Contributions and distributions










 


 

Dividends

973,071

 -

 -

-

 -

-

-

-

(973,071)

 -

(95,657)

(95,657)

Transferred to legal reserve

-

27,182

 -

-

 -

-

-

-

(27,182)

 -

 -

 -

Employee stock ownership plan (ESOP)

-

 -

 -

-

 -

-

139,364

-

 -

139,364

 -

139,364

Operational risk reserve

-

-

-

-

-

-

-

80,915

(80,915)

-

-

-

Changes in ownership interests










 


 

Changes in ownership interests without loss of control

-

 -

 -

-

 -

-

-

-

334,238

334,238

48,374

382,612

 

PPA effect (note 37)

-

 -

 -

-

 -

-

-

-

 -

 -

31,744

31,744

Balance as at 31 December 2022

5,838,424

867,455

1,668,624

158

3,979,860

(1,224,388)

289,011

80,915

7,423,239

18,923,298

3,445,286

22,368,584

 

 

 

 

 

 

 

                 The accompanying notes form an integral part of these consolidated financial statements.


Consolidated statement of changes in equity (continued)

For the year ended 31 December 2023

EGP Thousand

Share

Capital

Legal

reserve

Share premium

General reserve

Translation reserve

Fair value reserve

Employee stock Ownership plan reserve

Operational risk reserve

Retained earnings

Total

Non-controlling interests

Total Equity


 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 1 January 2023 as previously stated

 5,838,424

 867,455

 1,668,624

    158

 3,979,860

 (1,224,388)

 289,011

 80,915

 7,460,140

 18,960,199

 3,415,904

 22,376,103

PPA effect (note 37)

-

-

-

-

-

-

-

-

 (36,901)

 (36,901)

 29,382

 (7,519)

Balance as at 1 January 2023

5,838,424

867,455

1,668,624

    158

3,979,860

 (1,224,388)

289,011

80,915

7,423,239

18,923,298

3,445,286

22,368,584

Profit for the year

 -

-

-

-

-

-

 -

-

 2,216,683

 2,216,683

 622,257

 2,838,940

Other comprehensive income for the year

-

-

-

-

 1,670,159

 (61,071)

-

-

 4,576

 1,613,664

 86,529

 1,700,193

Total comprehensive income for the year

-

-

-

-

 1,670,159

 (61,071)

-

-

 2,221,259

 3,830,347

 708,786

 4,539,133

Transactions with owners of the Group










 


 

Contributions and distributions










 


 

Dividends

1,459,606

-

-

-

-

-

 -

-

(1,460,450)

(844)

(135,421)

(136,265)

Transferred to legal reserve

 -

104,889

-

-

-

-

 -

-

(104,889)

 -

-

 -

Employee stock ownership plan (ESOP)

 -

-

-

-

-

-

130,939

-

-

130,939

-

130,939

Operational risk reserve

 -

-

-

-

-

-

 -

(22,473)

22,473

 -

-

 -

Changes in ownership interests










 


 

Changes in ownership interests without loss of control

 -

-

-

-

-

-

 -

-

437,285

437,285

56,253

493,538

Balance as at 31 December 2023

 7,298,030

 972,344

 1,668,624

 158

 5,650,019

 (1,285,459)

 419,950

 58,442

 8,538,917

 23,321,025

 4,074,904

 27,395,929

 

 

 

 

 

 

 

 

 

 

 

                  The accompanying notes form an integral part of these consolidated financial statements.


Consolidated statement of cash flows

For the year ended 31 December 2023




 


 



                   2023


         2022


Notes

EGP Thousand


EGP Thousand

Cash flows from operating activities

 




Profit for the year before income tax


3,932,937


3,142,938

Adjustments for:





Depreciation and amortization

31.2

 476,686


 335,734

Provisions movements

23

156,400


60,348

Gains on sale of property, plant and equipment

28

 (3,251)


 (4,200)

Gain from securitization


 (432,931)


 (242,336)

Gain on sale of Investment property


 (56,438)


-

Loss on sale of investment at FVTOCI

9

 6,382


 682,067

Gains on sale of assets held for sale

11

 (9,797)


 (5,487)

Amortization of premium / issue discount


 (1,270,786)


 (216,240)

Changes in the fair value of investments at fair value through

profit and loss

6-32

(1,411,890)


(923,031)

Share of profit of equity-accounted investees

32

 (45,048)


 (76,562)

Impairment loss on assets


 1,042,335


 736,750

Share-based payment

31

 130,938


 139,362

Foreign currency translation differences


 790,711


 3,756,861

Foreign currencies exchange differences

32

 (1,154,847)


 (2,495,675)

Gains on selling of investments in subsidiaries and associates


 (116,059)


-

Operating cash flows before changes in assets and liabilities


2,035,342


4,890,529

Changes in assets and liabilities:





Other assets


 (2,335,299)


 (566,072)

Creditors and other credit balances


 1,551,020


1,957,131

Accounts receivables


 1,854,893


 7,187,678

Accounts payable


 (2,654,272)


 (12,374,159)

Accounts payable - customers credit balance at fair value through profit and loss


 301,280


 (3,089,258)

Loans and facilities to customers 


 (10,303,164)


 (17,537,399)

Due from banks


 (2,142,353)


 17,615,468

Due to banks


 1,890,134


 (270,335)

Customers deposits


 2,504,037


 9,565,434

Investments at fair value through profit and loss


 (445,075)


 5,095,985

Income tax paid


 (772,664)


 (586,295)

Net cash (used in)/from operating activities


 (8,516,121)

 

 11,888,707






Cash flows from investing activities:





Payments to purchase property, plant and equipment and other intangible assets


 (736,314)

      

 (364,198)

Proceeds from sale of property, plant and equipment


 28,763

      

 7,378

Proceeds from Sale of Investment Property


 70,176

      

-

Proceeds from sale of assets held for sale


  60,419

      

-

Proceeds from sale of investment FVTOCI


 25,559,674

      

 17,958,373

Payments to purchase investment FVTOCI


 (17,781,236)

      

 (16,578,049)

Payments to purchase investment in subsidiaries

15

( 69,682)

      

 (844,422)

Proceeds from sale investment in subsidiaries


 179,259

      

 383,229

Payments to purchase equity accounted investees


-

      

 (88,619)

Proceeds from sale equity accounted investees


-

      

 8,127

Dividends collected

 

 23,102

      

   26 088

Net cash generated from investing activities

 

7,334,161

 

507,907

 

 

 

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.


Consolidated statement of cash flows (continued)

For the year ended 31 December 2023

 



             2023


     2022


Notes

EGP Thousand


EGP Thousand

Cash flows from financing activities:





Dividends paid


 (495,060)

      

 (378,140)

Proceeds from securitization


5,035,109

      

  3,374,067

Proceeds from Issued bonds


 249,003

      

 500,000

Payment for issued bonds


-

      

 (550,000)

Payment for from financial institutions


 (13,515)

      

 (8,707,208)

Proceeds from loans and borrowings


 3,571,284

      

 2,186,367

Payment for loans and borrowings


 (1,076,418)

      

 (3,247,267)

Net cash generated from / (used in)financing activities

 

 7,270,403

 

 (6,822,181)


 




Net change in cash and cash equivalents

 

6,088,443


5,574,433

Cash and cash equivalents at 1 January

 

 13,079,583


 4,714,360

Effect of exchange rate changes

 

997,382


2,785,526

Cash from acquisition from subsidiaries

 

3,670


5,264

Cash and cash equivalents at 31 December

5

20,169,078

 

13,079,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.


 

1      Incorporation and principal activities

 

1.1    Incorporation

-     EFG Holding Company (Previously EFG Hermes Holding Company) (Egyptian Joint Stock Company) (the "Group" or "Holding Company") is an Egyptian Joint Stock Company subject to the provisions of the Capital Market Law No.95 of 1992 and its executive regulations. The Group's registered office is located in Smart Village building No. B129, phase 3, KM 28 Cairo / Alexandria Desert Road, 6 October 12577 Egypt.

-     The name of the company has been changed to EFG Holding through the approval the General Assembly dated May 24, 2023 and was reflected in the commercial register on June 14, 2023.

-     EFG Holding shares are listed on the Egyptian Ex-change (EGX) and the London Stock Exchange (LSE) in the form of USD-denominated Global Depository Receipts ("GDRs").

 

1.2    Purpose of the Group

EFG Holding Company (Previously EFG Hermes Holding Company) is a premiere financial services corporation that offers diverse investment banking services including securities brokerage, investment banking, asset management and private equity. In addition the group also have non-bank finance products, which include leasing and micro-finance, installment services, factoring, securitization, collection and tasquek. The purpose of the Group also includes participation in the establishment of companies which issue securities or in increasing their share capital, custody activities, margin trading and commercial bank activities.

 

2      Basis of preparation

Statement of compliance

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRIC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB).

 

Basis of measurement

These consolidated financial statements have been prepared under the historical cost basis, except for the following:

·   Financial assets measured at fair value through profit or loss;

·   Financial assets at fair value through other comprehensive income;

·   Assets held for sale at fair value at the lower of their carrying amount and fair value less costs to sell; and

·   Accounts payable - customers credit balance at fair value through profit and loss.

 

Functional and presentation currency

The Group's consolidated financial statements are presented in Egyptian Pound ("EGP") because the EGP forms the major currency in which the Group transacts and funds its business. The EGP is also the Group's functional currency because it's the most significant currency relevant to the underlying transactions, events and conditions of the Group and its subsidiaries, as well as representing a significant proportion of its funds generated from financing activities

 

Use of estimates and judgments

The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in these consolidated financial statements are described in note 4.


 

3      Summary of material accounting policies

 

3.1    Basis of consolidation

 

Business combination

The Group accounts for business combinations using the acquisition method when control is transferred to the Group.

 

The consideration transferred in the acquisition copmrises of:

·   fair values of the assets transferred

·   liabilities incurred to the former owners of the acquired business

·   equity interests issued by the Group

·   fair value of any asset or liability resulting from a contingent consideration arrangement, and

·   fair value of any pre-existing equity interest in the subsidiary.

 

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets.

 

Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities in which case those instruments are recognized at fair value, net of transaction costs.

 

The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity and acquisition-date fair value of any previous equity interest in the acquired entity, over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

 

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are iscounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value, with changes in fair value recognised in profit or loss.

 

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.

 

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

 

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

 

 

 

 

 

 

 

3      Summary of material accounting policies (continued)

 

3.1    Basis of consolidation (continued)

Subsidiaries (continued)

The consolidated financial statements comprise the financial statements of the Group and those of its following subsidiaries:

Name of subsidiary

Direct ownership %

Indirect ownership %

EFG Hermes International Securities brokerage-

Financial Brokerage Group (Previously)

99.87

0.09

EFG Hermes Fund Management -

Egyptian Fund Management Group(Previously)

88.51

11.49

Hermes Portfolio and Fund Management

78.81

21.19

Hermes Securities Brokerage

97.58

2.42

Hermes Corporate Finance

99.42

0.48

EFG - Hermes Advisory Inc.

100

-

EFG- Hermes Financial Management (Egypt) Ltd.

-

100

EFG - Hermes Promoting & Underwriting

99.88

-

Bayonne Enterprises Ltd.

100

-

EFG- Hermes Fixed Income

99

1

EFG- Hermes Private Equity

96.3

3.7

EFG- Hermes Private Equity-BVI

-

100

EFG- Hermes UAE LLC.

-

100

Flemming CIIC Holding

100

-

Flemming Mansour Securities

-

99.33

Flemming CIIC Securities

-

96

Flemming CIIC Corporate Finance

-

74.92

EFG- Hermes UAE Ltd.

100

-

EFG- Hermes Holding - Lebanon

99

-

EFG- Hermes KSA

73.3

26.7

EFG- Hermes Lebanon

99

0.97

Mena Opportunities Management Limited

-

95

Mena (BVI) Holding Ltd.

-

95

EFG - Hermes Mena Securities Ltd.

-

100

Middle East North Africa Financial Investments W.L.L

-

100

EFG- Hermes Regional Investment Ltd.

100

-

Offset Holding KSC (ii)

-

50

EFG- Hermes IFA Financial Brokerage

-

63.084

IDEAVELOPERS

-                                  

81

EFG- Hermes CB Holding Limited

-                                  

100

EFG- Hermes Global CB Holding Limited

100

 -

Mena Long-Term Value Feeder Holdings Ltd. (ii)                   

-

50

Mena Long-Term Value Master Holdings Ltd. (ii)                  

-

45

Mena Long-Term Value Management Ltd**                         

-

45

EFG - Hermes CL Holding SAL                                            

-

100

EFG-Hermes IB Limited                                                       

100

-

EFG Hermes Securitization-

Financial Group for Securitization (previously)                                        

100

-

Beaufort Investments Company                                             

-                                  

100

EFG Hermes-Direct Investment Fund                                  

64

-

Tanmeyah Micro Enterprise Services S.A.E

-

93.983

EFG- Hermes Brokerage Holding LTD-

EFG - Hermes Frontier Holdings LLC(previously)                                        

100

-

EFG - Hermes USA

100

-

EFG Capital Partners III

-

100

Health Management Company

-

52.5

EFG - Hermes Kenya Ltd.

-

100

EFG Finance Holding

99.82

0.18

EFG - Hermes Pakistan Limited

-

51

EFG - Hermes UK Limited

-

100

OLT Investment International Company (B.S.C)

99.9

-

Frontier Investment Management Partners LTD (ii)

-

50

 

 

 

 

 

3      Summary of material accounting policies (continued)

3.1    Basis of consolidation (continued)

Subsidiaries (continued)

Name of subsidiary

Direct ownership %

Indirect ownership %

EFG-hermes SP Limited

-

100

U Consumer Finance -Valu(previously)

-

94.961

EFG Corp - Solutions-

EFG Hermes Corp-Solutions(previously)

-

100

Beaufort Asset Managers LTD

-

100

EFG Hermes Bangladesh Limited

-

100

EFG Hermes FI Limited

-

100

EFG Securitization-

EFG Hermes Securitization(previously)

-

100

EFG Hermes PE Holding LLC

100

-

Etkan for Inquiry and Collection and Business Processes

-

100

RX Healthcare Management

-

52.5

FIM Partners KSA (ii)

-

50

Egypt Education Fund GP Limited

-

80

EFG Hermes Nigeria Limited

-

100

EFG-Hermes Int. Fin Corp

100

-

FIM Partners UK Ltd

-

50

EFG Hermes Sukuk

90

10

Beaufort Holding LTD.

-

100

Beaufort Management LTD.

-

100

Vortex IV GP LTD.

-

100

Beaufort SLP Holding

-

100

Beaufort Private Investment Holding LTD.

-

100

Frontier Disruption Capital

-

50

Arab Investment Bank

51

-

EFG VA Holdco Limited

-

100

EFG VA Investco Limited

-

100

Lighthouse Energy GP Limited

-

100

Beaufort SLP II Limited

-

100

Lighthouse Energy GP II

-

100

Beaufort Management Spain

-

100

EFG Singapore PTE LTD

-

100

Fatura Netherlands B.V

-

93.983

Fatura L.L.C

-

93.983

ASASY FOR DIGITAL CONTENT

-

93.983

EFG Payment

-

100

FIM Partners Muscat SPC(ii)

-

50

Noutah for electronic commerce

-

93.983

EFG National Holding Limited

-

100

VA ESOP Limited-

EFG RMBV National Investco Limited(previously)

-

100

EFG IB Holdco Limited

-

100

EFG IB Investco Limited

-

100

EFG For SME Financing

-

100

Beaufort Managers SLP Limited

-

100

EFG Finance B.V

-

100

EFG SMEs B.V

-

100

Valu For Payments and Digital Solutions-

Paynas ( Previously )

-

94.961

Paynas BV

-

94.961

Vortex Energy IV Luxembourg GP S.A.R.L

-

100

EFG Hermes PE Holdco Ltd

-

100

EFG Hermes IB Holding Ltd

100

-

(i)  Due to the political situation in Syria, the Group lost its control on the Syrian entities. In 2016, the Group has deconsolidated the Syrian companies and has fully impaired those investments.

(ii) Management has determined that they do control those companies even though the Holding Company may own 50% or less of the issued capital of those entities. This is because the Holding Company is exposed and has the right to the variable returns of those companies and is able to use its power over those companies to affect those returns.

 

3       Summary of material accounting policies (continued)

 

3.1      Basis of consolidation (continued)

 

Non-controlling interests

NCI are measured at their proportionate share of the acquiree's identifiable net assets at the date of acquisition. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

 

Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

 

Interests in equity-accounted investees

The Group's interests in equity-accounted investees comprise interests in associates and a joint venture. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group has joint control, where by the Group has rights to the net assets of the arrangement. Rather than rights to its assets and obligations for its liabilities. Interests in associates and the joint venture are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs.

 

Subsequent to initial recognition, the consolidated financial statements include the Group's share of the profit or loss and OCI of equity accounted investees, until the date on which significant influence or joint control ceases.

 

Transactions eliminated on consolidation

Intra-Group balances and transactions, and any unrealised income and expenses arising from intra-Group transactions, are eliminated. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

 

3.2      Foreign currency

 

Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are recognised in consolidated statement of profit or loss.

 

However, foreign currency differences arising from the translation of the following items are recognised in OCI:

 

-    A financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; and

-    Qualifying cash flow hedges to the extent that the hedges are effective.

 

 

3       Summary of material accounting policies (continued)

 

3.2      Foreign currency (continued)

 

Foreign currency transactions (continued)

 

Exchange differences on a monetary item that is part of a net investment in a foreign operation are recognised in other comprehensive income in consolidated accounts. On disposal of a foreign operation, exchange differences previously recognised in other comprehensive income are reclassified to the income statement as a reclassification adjustment.

 

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated at the exchange rates at the reporting date. The income and expenses of foreign operations are translated at the exchange rates at the dates of the transactions.

Foreign currency differences are recognized in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to Non Controlling Interest (the " NCI").

 

When a foreign operation is disposed off in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

 

3.3      Discontinued operation

 

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group. Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is re-presented as if the operation had been discontinued from the start of the comparative period.

 

3.4      Revenue

 

Gain on sale of investments

Gain (loss) resulting from sale of investments are recognized on transaction date and measured by the difference between cost and selling price less selling commission and expenses.

In case of derecognizing of investments in associates, the difference between the carrying amount and the sum of both the consideration received and cumulative gain or loss that had been recognized in shareholders' equity is recognized in the consolidated statement of profit or loss.

 

Dividend income

Dividend income is recognized when declared and the right to receive payment is established.

 

Custody fee

Custody fees are recognized when the service is provided and the invoice is issued. Assets held in a fiduciary capacity are not treated as assets of the Group as they are only held in trust where the Group acts as a custodian on customers' behalf. The Group has no liability or obligations towards the customer on these assets held in trust. Accordingly, these assets are not included in these consolidated financial statements.

 

3       Summary of material accounting policies (continued)

 

3.4      Revenue (continued)

 

Interest income and expenses

Interest income and expense for all interest-bearing financial instruments, except for those classified as FVTPL or designated at fair value through profit or loss, are recognized within 'interest income' and 'interest expense' in the consolidated statement of profit or loss using the effective interest method. Interest income and expense are recognized in the consolidated statement of profit or loss using the effective interest method. The 'effective interest rate' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

Ø the gross carrying amount of the financial asset; or

Ø the amortized cost of the financial liability.

 

When calculating the effective interest rate for financial instruments other than credit-impaired assets, the Groups estimate future cash flows considering all contractual terms of the financial instrument, but not expected credit losses.

 

The calculation of the effective interest rate includes transaction costs and fees and points paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or financial liability.

 

Presentation

Interest income and expense presented in the consolidated statement of profit or loss and OCI include:

Interest on financial assets and financial liabilities measured at amortized cost calculated on an effective interest basis; and

Interest on financial investment is measured at FVOCI calculated on an effective interest basis; Interest income and expense on other financial assets and financial liabilities at FVTPL are presented in net income from other financial instruments at FVTPL.

 

Amortized cost and gross carrying amount

The 'amortized cost' of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance.

 

The gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any expected credit loss allowance.

 

For financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

 

For financial assets that were credit-impaired on initial recognition, interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of the asset. The calculation of interest income does not revert to a gross basis, even if the credit risk of the asset improves.

 

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability.

 

 

 

 

3       Summary of material accounting policies (continued)

 

3.4      Revenue (continued)

 

Fee and commission income

Fee and commission income and expense that are integral to the effective interest rate of a financial asset or liability are included in the measurement of the effective interest rate.

Other fee and commission income, including account servicing fees, placement fees and syndication fees, are recognised as the related services are performed.

A contract with a customer that results in a recognised financial instrument in the Group's financial statements may be partially in the scope of IFRS 9 and partially in the scope of IFRS 15. If this is the case, then the Group first applies IFRS 9 to separate and measure the part of the contract that is in the scope of IFRS 9 and then applies IFRS 15 to the residual.

Other fees and commission expenses relates mainly to transaction and service fees, which are expensed in the consolidated statement of profit or loss as the services are received.

 

Brokerage commission

Brokerage commission resulting from purchase of and sale of securities in favor of clients are recorded upon the execution of the transaction.

 

Management fee

Management fee is calculated as determined by the management contract of each investment fund & portfolio and recorded on accrual basis.

 

Incentive fee

Incentive fee is calculated based on certain percentages of the annual return realized by the fund and portfolio, however these incentive fee will not be recognized until revenue realization conditions are satisfied and there is adequate assurance of collection.

 

Investment property rental income

Rental income from investment property is recognized as revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease. Rental income from other property is recognized as other income.

 

Revenue from micro-finance services

-      Revenue from micro-finance services is recognized based on time proportion taking into consideration the rate of return on asset. Revenue yield is recognized in the consolidated statement of profit or loss using the effective interest method for all financial instruments that carry a yield, the effective interest method is the method of measuring the amortized cost of a financial asset and distributing the revenue over the life time of the relevant instrument. The effective interest rate is the rate that discounts estimated future cash receipts during the expected life of the financial instrument to reach the book value of the financial asset.

-      When classifying loans to customers as irregular, no income is recognized on its return and it is recognized in marginal records outside the financial statements and are recognized as revenue in accordance with the cash basis when it is collected.

-      The commission income is represented in the value of the difference between the yield of the financing granted micro-enterprises and the accruals of the Group's bank by deducting the services provided directly from the amounts collected from the entrepreneurs.

-      The benefits and commissions resulting from the performance of the service are recognized, according to the accrual basis as soon as the service is provided to the client unless those revenues cover more of the financial period are recognized on a time proportion basis.

-      The administrative commission of the loan granted to customers is collected on contracting in exchange for the issuance of the loan service and administrative commission revenue are proven in the consolidated statement of profit or loss upon the issuance of the loan to the client.

 

3       Summary of material accounting policies (continued)

 

3.4      Revenue (continued)

 

Revenue from micro-finance services (continued)

-      A commission delay in payments of premiums is collected at rates agreed upon within the contracts and are recognized as soon as customers delayed payment on the basis of the extended delay.

Gains from securitization

Gains from securitization is measured as the difference between the fair value of the consideration received or is still due to the Group at the end of securitization process and the carrying amount of the securitization portfolios in the Group's books on the date of the transfer agreement.

 

3.5      Income tax

Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

 

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends. Current tax assets and liabilities are offset only if certain criteria are met.

 

Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognized for:

-      Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

-      Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

-      Taxable temporary differences arising on the initial recognition of goodwill.

 

Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.

 

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

 

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption.

 

Deferred tax assets and liabilities are offset only if certain criteria are met.

 

3        Summary of material accounting policies (continued)

 

3.6      Property and equipment

 

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost of certain items of property, plant and equipment . If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.  Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

 

Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

 

Depreciation

Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.  The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:     

                                                         

 


Estimated useful life (years)

Buildings

20 - 50

Office furniture, equipment & electrical appliances

2 - 16.67

Computer equipment

3.33 - 5

Transportation means

3.33 - 5

 

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

 

Reclassification to investment property

When the use of a property changes from owner-occupied to investment property.

 

3.7      Projects under construction

Projects under construction are recognized initially at cost, the book value is amended by any impairment concerning the value of these projects cost includes all expenditures directly attributable to bringing the asset to a working condition for its intended use. Property and equipment under construction are transferred to property and equipment caption when they are completed and are ready for their intended use.

 

3.8      Intangible assets and goodwill

 

Goodwill

Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred or in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

 

 

3       Summary of material accounting policies (continued)

 

3.8      Intangible assets and goodwill (continued)

 

Goodwill (continued)

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units ("CGU") that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

 

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

 

Research and development

Expenditure on research activities is recognized in profit or loss as incurred.

 

Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset.

Otherwise, it is recognized in profit or loss as incurred.

 

Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses.

 

Other intangible assets

Other intangible assets, are measured at cost less accumulated amortisation and any accumulated impairment losses.

 

3.9      Investment property

Investment properties are measured initially at cost, including transaction costs. Transaction costs include transfer taxes, professional fees for legal services and (only in case of investment property held under a lease) initial leasing commissions to bring the properties to the condition necessary for them to be capable of operating.

 

Subsequent to initial recognition investment property is measured at cost less accumulated depreciation and impairment loss, if any. Investment property is depreciated on a straight line basis over its useful life. The estimated useful life of investment property is 33 years.

 

3.10    Assets held for sale

Non-current assets, or disposal Groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.

 

Such assets, or disposal Groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal Group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property or biological assets, which continue to be measured in accordance with the Group's accounting policies. Impairment losses on initial classification as held-for-sale or held-for distribution and subsequent gains and losses on remeasurement are recognised in profit or loss.

 

 

3       Summary of material accounting policies (continued)

 

3.10    Assets held for sale (continued)

Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortized or depreciated, and any equity-accounted investee is no longer equity accounted.

 

3.11    Financial instruments

Recognition and initial measurement

Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

 

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

 

Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI - debt investment; FVOCI - equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

 

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

-      it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

-      its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

 

-      it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

-      its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

 

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an instrument‑by‑instrument basis.

 

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

 

 

 

 

 

 

 

3       Summary of material accounting policies (continued)

 

3.11    Financial instruments (continued)

 

Classification and subsequent measurement (continued)

Financial assets (continued)

 

Financial assets - Business model assessment

 

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

 

-      The stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management's strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

-      How the performance of the portfolio is evaluated and reported to the Group's management;

-      The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

-      How managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

-      The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

 

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group's continuing recognition of the assets.

 

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

 

Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest

 

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

 

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

-    Contingent events that would change the amount or timing of cash flows;

-    terms that may adjust the contractual coupon rate, including variable rate‑ features;

-    Prepayment and extension features; and

-    Terms that limit the Group's claim to cash flows from specified assets (e.g. non‑recourse features)

 

 

 

 

 

3       Summary of material accounting policies (continued)

3.11    Financial instruments (continued)

 

Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest (continued)

 

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

 

Financial assets - Subsequent measurement and gains and losses

Financial assets at FVTPL

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

Financial assets at amortized cost

These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Financial liabilities - Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held‑for‑trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

 

Derecognition

 

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

 

3       Summary of material accounting policies (continued)

 

3.11    Financial instruments (continued)

 

Derecognition (continued)

 

Financial assets (continued)

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

 

The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.

 

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

 

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non‑cash assets transferred or liabilities assumed) is recognised in profit or loss.

 

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

 

3.12    Fair value measurement

The fair value of financial instruments are determined based on the market value of the financial instrument or similar financial instruments at the date of the financial statements without deducting any estimated future selling costs.

 

3.13    Share capital

 

Ordinary shares

Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity. Income tax relating to transaction costs of an equity transaction are accounted for in accordance with IAS 12.

 

Repurchase and reissue of ordinary shares (treasury shares)

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium.

 

 

 

 

 

3       Summary of material accounting policies (continued)

 

3.14    Legal reserve

The Group's statutes provide for deduction of a sum equal to 5% of the annual net profit for formation of the legal reserve. Such deduction will be ceased when the total reserve reaches an amount equal to half of the Group's issued capital and when the reserve falls below this limit, it shall be necessary to resume.

 

3.15    Impairment

 

Non-derivative financial assets

Financial instruments and contract assets

The Group recognizes loss allowances for Expected Credit Loss (ECLs) on:

-    Financial assets measured at amortized cost;

-    Debt investments measured at FVOCI;

-    Contract assets.

 

The Group also recognizes loss allowances for ECLs on loans receivables.

 

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12‑month ECLs:

-    Debt securities that are determined to have low credit risk at the reporting date; and

-    Other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

 

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, that includes forward‑looking information.

 

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. unless it can be rebutted.

 

The Group considers a financial asset to be in default when:

-    The debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or

-    The financial asset is more than 90 days past due unless it can be rebutted.

 

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12‑month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

 

Measurement of ECLs

ECLs are an unbiased probability‑weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

 

 

 

 

 

3       Summary of material accounting policies (continued)

 

3.15    Impairment (continued)

 

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit‑impaired. A financial asset is 'credit‑impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

 

Evidence that a financial asset is credit‑impaired includes the following observable data:

-    Significant financial difficulty of the debtor;

-    A breach of contract such as a default or being more than 90 days past due;

-    The restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;

-    It is probable that the debtor will enter bankruptcy or other financial reorganisation; or

-    The disappearance of an active market for a security because of financial difficulties.

 

Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

 

For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in OCI.

 

Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write‑off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

 

Non-financial assets

-    At each reporting date, the Group reviews the carrying amounts of its non‑financial assets (other than, investment property, contract assets and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Goodwill is tested annually for impairment.

-    For impairment testing, assets are Grouped together into the smallest Group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or Groups of CGUs that are expected to benefit from the synergies of the combination.

-    The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre‑tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

-    An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

 

 

 

 

3       Summary of material accounting policies (continued)

 

3.15    Impairment (continued)

 

Non-financial assets (continued)

-    Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

-    An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

 

3.16    Provisions

Provisions are recognized when the Group has a legal or constructive current obligation as a result of a past event and it's probable that a flow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the risks specific to the liability. Provisions are reviewed at the financial position date and amended (when necessary) to represent the best current estimate.

 

3.17    Treasury bills

Treasury bills are recorded at nominal value and the accrued revenues is recorded under the item of "Other assets".  Treasury bills are presented on the financial position net of the accrued revenues.

 

3.18    Trade, and notes receivables, debtors and other debit balances

Trade, notes receivables, debtors and other debit balances are stated at nominal value less impairment losses.

 

The Group's lessees and the leased assets are regularly classified & evaluated and their obligations are reduced by the rent value paid in each financial period, and with the assurance of the availability of adequate guarantee to collect the client's rent values.

 

3.19    Cash and cash equivalents

For the purpose of preparing the statement of cash flows, cash and cash equivalents includes the balances, whose maturity do not exceed three months from the date of acquisition, cash on hand, cheques under collection and due from banks and financial institutions.

 

3.20    Profit sharing to employees

The holding company pays 10% of its dividends as profit sharing to its employees provided that it will not exceed total employees' annual salariesand directly charged on the consolidated statement of profit or loss as per IFRS.

 

3.21    Employees benefits

 

Share based payments

Equity settled transactions

For equity-settled share-based payment transactions, the Group measure the services received, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at grant date.

 

Vesting conditions, other than market conditions, are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognized for services received as consideration for the equity instruments granted are based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, no amount is recognized for services received if the equity instruments granted do not vest because of failure to satisfy a vesting condition.

 

3       Summary of material accounting policies (continued)

 

3.21    Employees benefits (continued)

 

Share based payments (continued)

Equity settled transactions (continued)

For equity-settled share-based payment transactions, the Group measure the services received, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at grant date.

 

Vesting conditions, other than market conditions, are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognized for services received as consideration for the equity instruments granted are based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, no amount is recognized for services received if the equity instruments granted do not vest because of failure to satisfy a vesting condition.

 

The Group recognize an amount for the services received during the vesting period based on the best available estimate of the number of equity instruments expected to vest and revise that estimate, if necessary, if subsequent information indicates that the number of equity instruments expected to vest differs from previous estimates. On vesting date, the entity shall revise the estimate to equal the number of equity instruments that ultimately vested

 

3.22    Micro-enterprises receivables

 

Credit policy

Funding Consideration

-    Funding are granted to clients who have previous experience not less than one year in his current activity which is confirmed by the client with adequate documentation and field inquiry.

-    Funding are granted to the client which it's installment is suitable according to his predictable income activity and this is done through analyzing client's revenues and expenses and his foreseeable marginal income, and this is done by the specialists of the Group on the prepared form for this purpose(financial study form and credit decision).

-    Before grant funding, a client activity field inquiry is done.

-    Recording inquiries results about client and guarantor with inquiring forms of the Group which reveal client's activity (visit form & Inquiry form).

-    The Group prohibit grant funding for new client unless the activity is existing with previous one year experience where the granted funds be within a minimum 1 000 EGP and maximum
30 000 EGP with loan duration of 12 months.

-    Inquiries for clients are performed by I-Score Group before granting and in case of approval on granting. The credit limit of the client is considered when calculating the client's revenue and expenses.

 

Client's Life Insurance

The insurance process on the client is performed with the authorized companies from insurance supervisory authority.

 

 

 

 

 

 

 

 

 

3       Summary of material accounting policies (continued)

 

3.22    Micro-enterprises Receivables (continued)

 

Impairment loss of micro financed loans

The Group at the date of the financial statements estimates the impairment loss of micro financed loans, in the light of the basis and rules of granting credit and forming the provisions according to the Board of Directors decision of the Financial Supervisory Authority No. (173) issued on December 21, 2014, to deal with the impairment loss.

 

The accounting policies relating to micro-enterprises receivables are detailed under note 3.11.

 

3.23    Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.

 

As a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand‑alone prices. However, for the leases of property the Group has elected not to separate non‑lease components and account for the lease and non‑lease components as a single lease component.

 

The Group recognizes a right‑of‑use asset and a lease liability at the lease commencement date. The right‑of‑use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

 

The right of use asset is subsequently depreciated using the straightline method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the rightofuse asset reflects that the Group will exercise a purchase option. In that case the rightofuse asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the rightofuse asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

 

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

 

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

 

Lease payments included in the measurement of the lease liability comprise the fixed payments, including in‑substance fixed payments; variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; amounts expected to be payable under a residual value guarantee; and the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

 

 

 

3       Summary of material accounting policies (continued)

 

3.23    Leases (continued)

As a lessee (continued)

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension, or termination option or if there is a revised in‑substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right‑of‑use asset or is recorded in profit or loss if the carrying amount of the right‑of‑use asset has been reduced to zero.

The Group presents right‑of‑use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'loans and borrowings' in the statement of financial position.

 

Short-term leases and leases of low-value assets

The Group has elected not to recognize right‑of‑use assets and lease liabilities for leases of low - value assets and short‑term leases, including IT equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight‑line basis over the lease term.

 

As a lessor

At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand- alone prices.

 

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

 

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for a major part of the economic life of the asset.

 

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

 

If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the consideration in the contract.

 

The Group applies the derecognition and impairment requirements of IFRS 9 to the net investment in the lease. The Group further regularly reviews estimated unguaranteed residual values used in calculating the gross investment in the lease. The Group recognizes lease payments received under operating leases as income on a straight- line basis over the lease term as part of 'other revenue'.

 

Sale and leaseback transactions are tested under IFRS 15 at the date of the transaction, and if the transaction qualifies as a sale, the underlying asset is derecognised and a right-of-use asset with a corresponding liability is recognised equal to the retained interest in the asset. Any gain or loss is recognised immediately in the consolidated income statement for the interest in the asset transferred to the lessor. If the transaction does not qualify as a sale under IFRS 15, a financial liability equal to the sale value is recognised in the consolidated financial statements

 

3    Summary of material accounting policies (continued)

 

3.24    Operating segment

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group's primary format for segment reporting is based on business segment.

 

3.25    Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

 

3.26    Standards, interpretations and amendments to existing standards that are not yet effective and are not early adopted

Amendments effective for accounting periods beginning on or after 1 January 2024

• In January 2020 the IASB published 'Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)' which clarify the Standard's guidance on whether a liability should be classified as either current or noncurrent.

• In September 2022, the IASB issued amendments to IFRS 16, adding requirements for accounting for a sale and leaseback after the date of the transaction.

• In October 2022, the IASB issued some amendments to IAS 1 that aim to improve disclosures about long-term debt with covenants.

• In May 2023, the IASB issued Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) to add

disclosure requirements regarding qualitative and quantitative information about supplier finance arrangements.

• In June 2023, the IASB issued IFRS S1 General Requirements for Disclosure of Sustainability-related

Financial Information which requires an entity to disclose information about its sustainability-related risks and opportunities; and IFRS S2 Climate-related disclosures which requires an entity to disclose information about its climate-related risks and opportunities. The disclosed information as per these standards is useful to users of general purpose financial reports in making decisions relating to providing resources to the entity

 

Amendments effective for accounting periods beginning on or after 1 January 2025

 

In August 2023, the IASB issued Lack of Exchangeability (Amendments to IAS 21) to specify when a currency is exchangeable and how to determine the spot exchange rate if it is not.

The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

 

 

 

 

 

 

 

 

 

 

 

 

4    Significant management judgements and estimates

 

The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

 

Information about significant areas of estimation and uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described below:

 

Impairment charge on financial assets

Impairment losses are evaluated as described in accounting policy 3.15.

 

The measurement of impairment losses both under IFRS 9 across all categories of financial assets requires judgement, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances. The Group's ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgements and estimates include:

·   The Group's internal credit grading model, which assigns PDs to the individual grades

·   The Group's criteria for assessing if there has been a significant increase in credit risk and so allowances for financial assets should be measured on a lifetime ECL basis and the qualitative assessment

·   The segmentation of financial assets when their ECL is assessed on a collective basis

·   Development of ECL models, including the various formulas and the choice of inputs

·   Determination of associations between macroeconomic scenarios and, economic inputs, such as unemployment levels, GDP and inflation rate and the effect on PDs, EADs and LGDs

 

Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the economic inputs into the ECL models It is the Group's policy to regularly review its models in the context of actual loss experience and adjust when necessary.

 

Fair value measurement

The Group's determination of fair value hierarchy of financial instruments is discussed in note 36.

 

The value of financial assets is determined by the the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

·   In the absence of an active market to determine the fair value of financial instruments, the fair value is estimated using various valuation techniques, taking into consideration the prices of the transactions occurred recently, and guided by the current fair value of other similar tools substantially - discounted cash flow method - or any other evaluation method to get resulting values that can rely on.

·   When using the discounted cash flow method to evaluate, the future cash flows are estimated based on the best estimates of management. The discount rate used is determined in the light of the prevailing market price at the date of the financial statements that are similar in nature and conditions.

 

 

 

 

4    Significant management judgements and estimates (continued)

 

The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, the Group determines fair values using other valuation techniques.

 

For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

 

Valuation of financial instruments

The valuation techniques of financial instruments may require certain unobservable inputs to be estimated by the management. These are discussed in detail in note 36.

 

The Group measures fair values using the fair value hierarchy outlined in note 36, which reflects the significance of the inputs used in making the measurements. The Group has an established control framework with respect to the measurement of fair values.

 

This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including level 3 fair values, and reports directly to the CFO. The valuation team regularly reviews significant unobservable inputs and valuation adjustments.

 

The Group recognizes transfers between levels of the fair value hierarchy at the end of reporting period during which the change has occurred. Valuation techniques include net present value and discounted cash flow models, comparison with similar instruments for which market observable prices exist.

 

Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads and other premia used in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations. The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

 

The Group uses widely recognized valuation models for determining the fair value of common and more simple financial instruments, like interest rate and currency swaps that use only observable market data and require little management judgment and estimation. Observable prices or model inputs are usually available in the market for listed debt and equity securities, exchange-traded derivatives and simple over the counter derivatives such as interest rate swaps. Availability of observable market prices and model inputs reduces the need for management judgment and estimation and also reduces the uncertainty associated with determining fair values.

 

Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4    Significant management judgements and estimates (continued)

 

Determination of prelimianry values of assets and liabilities acquired in business combinations

While the Group uses its best estimates and assumptions to accurately apply preliminary values to assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, these estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Group records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the consolidated statements of operations. Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies, and contingent consideration, where applicable. Although the Company believes the assumptions and estimates it has made have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets acquired include; future expected cash flows, estimated market royalty rates, customer attrition rates, cost of developed technology and discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates, or actual results. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

 

 

5    Cash and cash equivalents

 


31 December 2023

 

31 December 2022

Cash on hand

255,811


209,095

Cheques under collection

141,951


140

Obligatory reserve balance with Central Bank of Egypt ( note 5.1)

4,030,033


1,906,215

Banks - current accounts

10,027,157


10,943,423

Banks - time deposits

17,801,324


13,158,396

Balance

32,256,276

 

26,217,269

Impairment loss

(4,033)


(3,019)

Total cash and time deposits (note 5.3)

32,252,243


26,214,250

 

5.1 Obligatory reserve balance with CBE relates to balances with the Central Bank within the statutory reserve ratio.

5.2 The cash and cash equivalents disclosed above and in the statement of cash flows include EGP 4,030,033 (31 December 2022: EGP 1,906,215) which are held by CBE. These deposits are subject to regulatory restrictions and are therefore not available for general use by the other entities within the Group.

5.3 For the purposes of presenting the statement of cash flows, cash and cash equivalents include balances whose maturity dates do not exceed three months from the date of placement

5.4 The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year as follows:


31 December 2023

 

31 December 2022

Cash and time deposits as above

32,252,243

 

26,214,250

ECL For Cash and cash equivalents

4,033


3,019

Time Deposit - (Arab Investment Bank)

(18,538)


-

Obligatory reserve balance with CBE

(4,030,033)


(1,906,215)

Bank overdraft

(11,474,569)


(11,544,331)

Treasury bills maturing in less than 90 days from date of purchase

3,435,942


312,861

Cash and cash equivalents

20,169,078

 

13,079,584

 

 

6   Investments at fair value through profit or loss

 


31 December 2023

 

31 December 2022

Mutual fund certificates

7,355,442


5,231,021

Equity securities

108,293


165,787

Debt securities

832,915


660,607

Treasury bills

219,222


336,439

Structured notes

680,319


379,039


9,196,191

 

6,772,893

 


31 December 2023

 

31 December 2022

Listed

864,104


699,066

Unlisted

8,332,087


6,073,827


9,196,191

 

6,772,893

 

 

Amounts recognized in profit or loss

Net change in the fair value of investments at FVPL as at 31 December 2023 amounted to EGP Thousands 1,411,890 (year ended 31 December 2022: EGP Thousands 923,031) being EGP Thousands 1,516,810 (31 Decemeber 2022: EGP Thousands 940,515) gains and fair value losses of EGP Thousands 104,920 (31 Decemeber 2022: EGP Thousands 17,484). Those are recognized under net changes in the fair value of the investment at fair value through profit and loss on the consolidated statement of profit or losss.

 

7   Accounts receivable


31 December 2023

 

31 December 2022

Accounts receivable

7,230,156


5,613,136

Other brokerage companies

57


870,168

Balance

7,230,213


6,483,304

Impairment loss (ECL)

(459,251)


(315,048)

Balance

6,770,962

 

6,168,256

 

8    Funded facilities to customers


31 December 2023

 

31 December 2022

Micro finance

5,059,721


3,081,638

Finance lease

9,306,990


6,842,562

Consumer finance

6,293,816


3,900,888

Factoring

2,401,033


2,553,049

Other loans

2,350,756


1,441,312

Unearned interest

 (5,787,545)


(3,565,032)

Balance

19,624,771


14,254,417

Impairment loss

 (507,116)


(349,705)


19,117,655

 

13,904,712

 


31 December 2023

 

31 December 2022

Current

10,649,674


8,384,658

Non-current

8,467,981


5,520,054


19,117,655


13,904,712

 

 

 

 

 

8.1    Banking loans and facilities (aiBank)


31 December 2023

 

31 December 2022

Retail




Overdraft

220,707


453,437

Credit Cards

80,550


38,316

Personal loans

6,142,400


4,222,276

Mortgage Loans

1,063,049


630,737


7,506,706


5,344,766

Corporate loans including small loans for economic activities



 

Debit current accounts

447,007


1,816,153

Direct loans

11,473,182


11,750,598

Syndicated loans

3,332,907


1,929,715


15,253,096


15,496,466

Gross loans and facilities to customers

22,759,802


20,841,232

 



 

Less:



 

Expected credit losses

 (1,613,012)


 (1,410,813)

Suspended interest

 (643)


 (52,480)

Unearned interest

 (66,831)


 (60,509)

 

1,680,486

 

1,523,802

Banking loans and facilities (aiBank) - net

21,079,316

 

19,317,430

 


31 December 2023

 

31 December 2022

Current

6,630,556


4,510,080

Non-current

14,448,760


14,807,350


21,079,316


19,317,430

 

 

 

9    Investments at fair value through OCI


31 December 2023

 

31 December 2022

Non-current investments




Equity securities

187,146


159,532

Mutual fund certificates

138,264


116,119

Debt instruments

4,256,243


5,117,914


4,581,653


5,393,565

Current investments



 

Debt instruments

7,065,958


8,686,556


11,647,611


14,080,121

 


31 December 2023

 

31 December 2022

Listed

4,299,771


5,157,079

Unlisted

7,347,840


8,923,042


11,647,611

 

14,080,121

 

Financial assets at fair value through other comprehensive income (FVOCI) comprise:

-     Equity securities and mutual funds certificates are not held for trading and which the Group has irrevocably elected at initial recognition to recognise in this category. These are strategic investments, and the Group considers this classification to be more relevant.

-     Debt securities where the contractual cash flows are solely principal, and interest and the objective of the Group's business model is achieved both by collecting contractual cash flows and selling financial assets.

 

 

10  Equity accounted investees

 

 

 

31 December 2023

 

 

 

Loacation

Assets

Liabilities

Net gain (losses)

Gross Profit

Ownership

%

Value

(a)    Joint ventures

Bedaya Mortgage

Finance Co

Egypt

1,602,404

1,374,318

9,854

41,946

33.34

81,069

EFG-EV Finech

Egypt

55,433

4,773

13,086

21,347

50

23,418

Paytabs

Egypt

22,522

22,781

(11,255)

7,788

51

48,852

API Capital Management Limited

 

UAE

21,376

6,021

(6,563)

775

50

9,139

(b)   Associates

Kaf Life Insurance takaful

Egypt

370,168

256,611

(28,391)

27,957

37.5

49,648

Zahraa Elmaadi

Company*

Egypt

2,531,888

871,390

219,016

311,089

20.33

337,646

Middle East Land Reclamation

Company*

Egypt

47,974

192,215

(24,763)

-

24.47

-

Prime for investment fund management*

Egypt

2,637

159

297

21

20

512

Enmaa Financial

Leasing company*

Egypt

1,701,904

1,394,764

56,155

108,973

31.4

96,530

Paytech 3100 BV

Netherlands

486,877

1,112

(1,112)

-

40.66

197,979

Total

 

 

 

 

 

 

844,793

 

 

 

 

 

 

31 December 2022

 

 

 

Loacation

Assets

Liabilities

Net gain (losses)

Gross Profit

Ownership

%

Value

(a)    Joint ventures

Bedaya Mortgage

Finance Co

Egypt

2,363,820

2,108,838

89,692

147,297

33.34

84,814

EFG-EV Finech

Egypt

62,329

5,442

15,460

24,595

50

18,449

Paytabs

Egypt

55,817

41,912

(10,859)

3,518

51

41,929

API Capital Management Limited

UAE

18,582

3,742

(2,180)

-

50

10,248

(b)   Associates

Kaf Life Insurance takaful

Egypt

340,318

196,555

(25,517)

12,521

37.5

62,030

Zahraa Elmaadi

Company*

Egypt

2,563,500

1,032,639

216,266

307,688

20.30

311,285

Middle East Land Reclamation

Company*

Egypt

47,974

192,215

(24,763)

-

24.47

-

Prime for investment fund management*

Egypt

2,752

199

377

265

20

511

Enmaa Financial

Leasing company*

Egypt

1,982,674

1,737,141

22,113

52,041

31.40

77,167

Total

 

 

 

 

 

 

606,433

 

* Equity accounted investees acquired through Arab Investment Bank (aiBank).

 

 

11  Assets held for sale

 

Assets held for sale represented in the assets that has been acquired by Arab Investment Bank (aiBank) amounted to EGP 330,652 (31 December 2022: EGP 349,701) in exchange of debt account receivables.

 

 

12  Investments at amortized cost


31 December 2023

 

31 December 2022

Debt instruments - Listed

7,209,859


10,964,941

Debt instruments - Un-listed

4,064,121


581,157

Impairment loss

(40,120)


(27,406)


11,233,860

 

11,518,692

 

13  Investment properties


2023

 

2022

Cost




As at 1 January

169,540


169,540

Disposal for the year

(20,203)


-

As at 31 December

149,337


169,540

Accumulated deprecations




As at 1 January

50,555


44,010

Disposal for the year

(6,464)


-

Depreciation charge for the year (note 31.2)

6,545


6,545

As at 31 December

50,636


50,555

Net book amount

98,701

 

118,985

 

 

Investment properties comprise the following:-

 

-     EGP Thousand 93,457 the book value of the area owned by EFG Holding Company ("Previously"    EFG - Hermes Holding Company) in Nile City building, and with a fair value of EGP Thousand 513,600.

-     EGP Thousand 2,817 the book value of the area owned by Hermes Securities Brokerage, one of the subsidiaries, in Elmanial branch and with a fair value of EGP Thousand 13,000.

-      EGP Thousand 2,427 the book value of the area owned by Hermes Securities Brokerage, one of the subsidiaries, in Elharam branch and with a fair value of EGP Thousand  21,716.


 

14  Property and equipment (continued)

 

 

Land & Buildings

Leasehold Improvements

Office furniture, equipment & electrical appliances

Computer Equipment

Vehicles

Right of use assets

Total

Cost

 

 

 

 

 

 

 

Balance as at 1 January 2022

1,199,531

255,000

357,745

530,567

46,411

307,814

2,697,068

Additions

21,000

26,512

88,723

136,813

7,997

112,118

393,163

Disposals

(456)

(324)

(8,726)

(49,249)

(6,499)

(68,578)

(133,832)

Adjustments

-

 -

 -

-

-

20,579

20,579

Acquisition of subsidiaries

-

-

686

2,738

-

2,909

6,333

Foreign currency translation differences

78

1,054

82,852

69,980

5,442

66,100

225,506

Total cost as at 31 December 2022

1,220,153

282,242

521,280

690,849

53,351

440,942

3,208,817

Balance as at 1 January 2023

1,220,153

282,242

521,280

690,849

53,351

440,942

3,208,817

Additions

173,789

159,262

164,284

153,743

32,258

193,595

876,931

Disposals

(46)

(8,102)

(61,994)

(36,654)

(7,162)

(27,722)

(141,680)

Adjustments

-

 -

309

(309)

 -

2,306

2,306

Acquisition of subsidiaries

-

 -

376

844

 -

-

1,220

Foreign currency translation differences

3

(67)

53,252

36,753

3,022

50,778

143,741

Total cost as at 31 December 2023

1,393,899

433,335

677,507

845,226

81,469

659,899

4,091,335

 

 

 

 

 

 

 

 

 

 

 

 

14 Property and equipment (continued)

 


Land & Buildings

Leasehold Improvements

Office furniture, equipment & electrical appliances

Computer Equipment

Vehicles

Right of use assets

Total

Accumulated depreciation








Balance as at 1 January 2022

164,398

204,877

268,844

390,300

29,810

116,526

1,174,755

Depreciation for the year (note 31.2)

40,609

23,843

36,795

82,890

7,780

60,163

252,080

Disposals' accumulated depreciation

(455)

(324)

(8,383)

(47,459)

(4,892)

(11,034)

(72,547)

Adjustment

-

-

-

-

-

20,091

20,091

Acquisition of subsidiaries

-

-

191

715

-

829

1,735

Foreign currency translation differences

43

927

77,372

66,049

3,507

48,762

196,660

Balance as at 31 December 2022

204,595

229,323

374,819

492,495

36,205

235,337

1,572,774

Balance as at 1 January 2023

204,595

229,323

374,819

492,495

36,205

235,337

1,572,774

Depreciation for the year (note 31.2)

45,269

33,573

53,962

99,619

9,473

96,817

338,713

Disposals' accumulated depreciation

(46)

(6,497)

(46,293)

(32,297)

(4,728)

(16,926)

(106,787)

Adjustment

-  

-  

-  

4

-

(12,248)

(12,244)

Acquisition of subsidiaries

-  

-  

365

733

-  

-  

1,098

Foreign currency translation differences

1

(68)

50,158

32,736

1,758

35,407

119,992

Balance as at 31 December 2023

249,819

256,331

433,011

593,290

42,708

338,387

1,913,546









Carrying amount








As at 31 December 2022

1,015,558

52,919

146,461

198,354

17,146

205,605

1,636,043

 

 

 

 

 

 

 

 

As at 31 December 2023

1,144,080

177,004

244,496

251,936

38,761

321,512

2,177,789

 


 

15  Goodwill and other intangible assets

 


31 December 2023

 

31 December 2022

Goodwill (note 15.1 & 15.2)

1,704,024


1,256,048

Customer Relationsships (note 15.1)

346,387


400,637

Retailer List (note 15.1)

41,651


49,340

Licenses (note 15.1)

14,029


14,403

Brand Name (note 15.1)

34,704


34,704

Software (note 15.1)

174,818


192,099


2,315,613


1,947,231

 

15.1 Movement of goodwill and other intangible assets during the year is as follows:

 

2023

Goodwill

Customer Relationships

Retailer List

Licenses

Brand Name

Software

Balance as at 1 January as previously reported

1,751,894

64,547

-

14,403

-

123,905

Adjustment (note 15.2.1)

(495,846)

336,090

49,340

-

34,704

68,194

Balance as at 1 January

1,256,048

400,637

49,340

14,403

34,704

192,099

Additions

-

-

-

-

-

20,665

Acquisitions

459,978

-

-

-

-

17,289

Disposals

-

-

-

-

-

(613)

Amortisation during the year

-

(70,166)

(7,689)

(2,461)

-

(51,112)

Impairment during the year

(12,002)

-

-

 -  

-

-

Acquisitions

-

-

-

-

-

(6,256)

Disposals

-

-

-

-

-

296

Foreign currency translation differences

                     -  

15,916

-

2,087

-

2,450

Balances as at 31 December

1,704,024

346,387

41,651

14,029

34,704

174,818

2022

 

 

 

 

 

 

Balance as at 1 January

896,014

70,691

-

10,368

-

174,719

Adjustment ( Note 15.2.1 )

(495,846)

366,644

53,825

--

34,704

72,418

Balance as at 1 January

400,168

437,335

53,825

10,368

34,704

247,137

Additions

--

16,030

--

9,938

--

70,989

Acquisitions

881,545

--

--

--

--

9,476

Amortisation and impairment as at 1 Jan as previously reported

(15,426)

(31,807)

--

(6,529)

--

(104,190)

Adjustments ( Note 15.2.1 )

-

(30,554)

(4,485)

--

--

(4,224)

Balance as at 1 Jan

(15,426)

(62,361)

(4,485)

(6,529)

-

(108,414)

Amortisation during the year

--

(10,133)

-

(854)

-

(26,859)

Impairment during the year

(10,239)

-

-

-

-

-

Acquisitions

-

-

-

-

-

 (2,024)

Foreign currency translation differences

-

19,766

-

1,480

-

1,794

Balance as at 31 December

1,256,048

400,637

49,340

14,403

34,704

192,099

 

15.2  Goodwill relates to the acquisitions of the below subsidiaries:


31 December 2023

 

31 December 2022

EFG- Hermes IFA Financial Brokerage Company Kuwait -KSC

179,148


179,148

Tanmeyah Micro Enterprise Services S.A.E

365,399


365,399

Frontier Investment Management Partners LTD

325,801


325,801

Fatura Netherlands B.V (note 15.2.1)

373,698


373,698

Noutah for electronic commerce

-


12,002

Paynas BV (note 15.2.1)

459,978


-






1,704,024

 

1,256,048

 

 

 

 

15  Goodwill and other intangible assets (continued)

 

15.2.1  Acquisitions during the year were as follows:

 

 

2023

Paynas BV


EGP Thousands

Acquired total assets

 355,727

Acquired total liabilities

 (420,910)

Net assets(liabilities)

 (65,183)

Non-controlling interests

 (3,099)

Group's share in the acquired net assets (liabilities)

(62,084)

Consideration transferred

397,894

Resulting goodwill

459,978

 

 

Acquisition of Paynas BV

 

On 30, September 2023 U Consumer Finance (Previously ValU) (Subsidiary) acquired 94.96% of Paynas BV shares with an acquisition cost amounting to EGP Thousands 397,894.

The Company's share in the acquired net liabilities on the date of acquisition amounted to EGP Thousands (62,084). Accordingly, the goodwill arisign on the acquistion was recorded as EGP Thousands 459,978.

Paynas was the first fintech in Egypt to receive an Agent Banking License from the CBE, enabling it to integrate SMBs into the financial system by digitizing their wage payments via Paynas's payroll cards - issued in partnership with Banque Misr and powered by Visa. This is provided in tandem with the Paynas app, which provides employee management tools and financial benefits, improving the financial wellness of SMB employees.

The acquisition builds on U's strategy to expand its product offering and penetrate the B2B space, through leveraging the Paynas offering and network. Furthermore, access to the data on the employee management platform will be used to enrich and enhance credit decisions.  This is in addition to the strong technical and business capabilities of the team.

 

 

2022

Fatura Netherlands B.V

Noutah for electronic commerce


EGP Thousands

EGP Thousands

Acquired total assets

19,430

226

Acquired total liabilities

(62,655)

-

Net assets(liabilities) acquired

(43,255)

226

Consideration transferred

826,319

12,228

Resulting goodwill

869,544

12,002

 

 

 

 

 

 

 

 

 

15  Goodwill and other intangible assets (continued)

15.2.1  Acquisitions during the year were as follows (continued):

 

Acquisition of Fatura Netherlands B.V

In June 2022 Tanmeyah Micro Enterprise Services S.A.E (Subsidiary 93.983%) acquired 100% of Fatura Netherlands B.V shares with an acquisition cost amounting to EGP 826,319. As at 31 December 2022, the Group recorded a provisional goodwill of EGP 869,544. In 2023 the group has performed the Purchase Price Allocation (PPA) study to determine the fair value of the identifiable asset and liabilities according to the International Financial Reporting Standards. Accordingly, the provisional goodwill recognised previously has been adjusted and recognised as an estimate change

The following represents final PPA  on the acquisition date:

 


Fatura Netherlands B.V

PPA Effect

Fatura Netherlands B.V


On the date of acquisition

After PPA

Acquired total assets

19,430

527,591

547,021

Acquired total liabilities

(62,655)

--

(62,655)

Net assets(liabilities)

(43,225)

527,591

484,366

Non-controlling interests

--

31,745

31,745

Consideration transferred

826,319

--

826,319

Resulting goodwill

869,544

--

373,698

 

Management of the Group has applied those changes prospectively (note 37).

 

16  Other assets


31 December 2023

 

31 December 2022

Deposits with others (note 16.1)

403,361


47,488

Down payments to suppliers

1,108,232


1,188,540

Prepaid expenses

259,999


197,725

Employees' advances

135,886


117,224

Accrued revenues

1,796,384


1,236,759

Taxes withheld by others

41,232


27,083

Payments for investments

9,259


19,354

Settlement Guarantee Fund

19,869


26,790

Due from Egypt Gulf Bank- Tanmeyah Clients

8,487


10,582

Due from Payment Channels

90,209


27,959

Due from custodian

123,146


-

Receivables-sale of investments

177,803


39,000

Securitization surplus

266,865


178,567

Sundry debtors

312,083


303,448


4,752,815

 

3,420,519

Impairment loss

(36,638)

 

(18,608)


4,716,177


3,401,911

 

16.1 Deposits with others

Deposits with others include an amount of EGP Thousands 17,961 in the name of the subsidiaries,EFG - Hermes Interntional Securities Brokerage and Hermes Securities Brokerage Company which represents blocked deposits for same day trading operations settlement takes place in the Egyptian Stock Exchange. Both companies are not entitled to use these amounts without prior approval from Misr Clearance Company.

 

Deposit with also include an amount of EGP Thousands 319,788 in the name of the subsidary EFG Hermes KSA . This Represent Margin Deposited with the General Clearing Member ( GCM ) as Required by the Clearing House ( Muqassa )

 

17  Due to banks and financial institutions


31 December 2023

 

31 December 2022

Financial institutions

31,750


41,546

Bank overdraft *

11,474,569


11,544,331

Deposits**

2,378,769


515,900

Due to Central Bank**

5,225


-

Current account**

292,100


270,059


14,182,413

 

12,371,836

 

* Banks overdraft include facilities granted from one of the banks which represents the following:

 

Ø A governmental bond has been pledged against facility with a credit limit of EGP Thousands 1,066,632.

Ø A Treasury bill have been pledged against facility with a credit limit of EGP Thousands 741,052.

 

** Related to Arab Investment Bank (aiBank).

 

18  Customer Deposits (aiBank)


31 December 2023

 

31 December 2022

Call deposits

20,261,265


15,239,776

Term deposits

20,316,818


22,111,560

Saving and deposit certificates

8,354,273


8,651,603

Saving deposits

968,657


1,140,599

Other deposits

733,194


986,634

Balance

50,634,207

 

48,130,172

Corporate deposits

35,505,821


35,927,785

Retail

15,128,386


12,202,387

Balance

50,634,207


48,130,172

 

Current

45,494,018


40,923,835

Non-current

5,140,189


7,206,337


50,634,207


48,130,172

 

19  Accounts payable - customers credit balance at fair value through profit and loss

 

This amount represents payable to customers against the structured notes issued by one of the Group companies.these financial liabilities are linked to structured notes purchased by the company. These structured notes are linked mainly to treasury bills and quoted equity securities .

 

19.1 Accounts payable - customers credit balance

 

Accounts payable balances are mainly represented in the advances made by clients to buy shares in the activity of brokerage. Coupons collected and proceeds from sale of shares for the benefit of clients are also being added to these accounts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20  Issued bonds

-     During June 2022 EFG Corp-Solutions (a subsidiary - 100%) issued the first issuance of unsecured medium-term bonds with a value of EGP 500 million for two years. The issuance is part of a three years issuance program with total value of EGP 3 billion. The bonds are tradable and non-convertible to shares but it can be expedited to payment starting from coupon number 5 (seventh month of the issuance). The bonds proceeds will be used to finance different company activities and meet its financial obligations.

-     During April 2023 Hermes Securities Brokerage (a subsidiary - 100%) issued short-term bonds with a value of EGP 250 million (First issuance of second program) that are tradable and non-convertible to shares and with a maturity of 12 months at a par value of EGP 100 (one hundred Egyptian pounds only) for a bond to be paid at the end of the period with a fixed rate of 18.77%, that will be paid at the end of the issuance period and it's non-expedited payment, the bonds proceeds will be used to finance different company activities and meet its financial obligations.

 

 

21  Creditors and other credit balances


31 December 2023

 

31 December 2022

 Accrued expenses

 3,712,173


2,851,514

 Dividends payable (prior years)

 154,368


215,380

 Deferred revenues

 76,617


147,777

 Suppliers

 444,780


382,771

 Clients' coupons - custody activity

 276,902


205,948

 Takaful

 26,915


25,590

 Tax authority

 89,275


43,748

 Social Insurance Association

 16,673


13,507

 Payables- purchase of investments 

 157,359


5,263

 Deposits Due to others 

 14,182


4,041

  Lease liabilities

 419,140


412,473

 Sundry creditors 

 265,067


212,621

 Pre collected Installments

 494,994


462,032


6,148,445

 

4,982,665

 

21.1 Accrued expenses comprise of employee benefits, occupancy expenses and office expenses accruals.

 

21.2 Deposits due to others amounted to EGP Thousands 14,182 as at 31 December 2023 versus EGP Thousands 4,041 as at 31 December 2022 represents the deposits collected from the lessees of EFG Corp- Solutions.

 

 

21.3 Lease liabilities include an amount of EGP Thousands 63,823 (31 December 2022 EGP Thousands 153,253) in the name of EFG Holding that represents sale and lease back agreement. Below table shows the current versus non-current analysis of such balances


31 December 2023

 

31 December 2022

Current

 169,639


108,203

Non-current

 249,501


304,270


419,140

 

412,473

 


 

22  Deferred tax assets (liabilities)

 

 

 

 

 

 

 

 

31 December

2023

Balance as at 1 January

Acquisition

of subsidiaries

Recognized in profit or loss

(note 30)

Recognised in equity

Disposals

Foreign currency differences

Net

Deferred tax assets

Deferred tax Liabilites

Property and equipment depreciation

(110,329)

522

(35,762)

-

-

56

(145,513)

-

(145,513)

Claims provision

185

-

40,804

 -

-

 8

40,997

40,997

-

Impairment loss on assets

1,421

-

-

 -

-

(4)

1,417

1,417

-

Prior year losses carried forward

51,804

-

 11,149

 -

(4,968)

11,013

68,998

68,998

-

Investment at fair value

(469,494)

-

(290,436)

14,319

-

-

(745,611)

-

(745,611)

Foreign currency translation differences

(213,621)

-

139,373

 -

-

(12)

(74,260)

-

(74,260)

Revaluation of investment property

1,867

-

-

 -

-

 -

1,867

1,867

-

Investment in Associates

(7,217)

-

(4,375)

 -

-

 -

(11,592)

-

 (11,592)

ESOP deferred

9,209

-

3,923

 -

-

 -

13,132

13,132

-

Securitization Surplus Revaluation

-

-

(10,460)

-

-

-

(10,460)

-

(10,460)


(736,175)

522

(145,784)

14,319

(4,968)

11,061

(861,025)

126,411

(987,436)

 


 

 

 

 

 

 

 

 

31 December

2022

Balance as at 1 January - as previously stated

Adjustment to opening balance

Balance as at 1 January - as adjusted

Acquisition

of subsidiaries

Recognized in profit or loss

(note 30)

Recognised in equity

Foreign currency differences

Net

Deferred tax assets

Deferred tax liabilities

Property and equipment depreciation

 

 6,086

 

(119,542)

 

 (113,456)

 

(100)

 

 3,168

 -

 

 59

 

 (110,329)

 

-

 

(110,329)

Claims provision

 (398)

-

 (398)

 -

 148

 -

 435

 185

 185

-

Impairment loss on assets

 1,180

-

 1,180

 -

 253

 -

 (12)

 1,421

 1,421

-

Prior year losses carried forward

29,242

-

29,242

-

14,155

-

8,408

51,804

51,804

-

Investment at fair value

 (290,607)

-

 (290,607)

 -

 (203,330)

24,443

 --

 (469,494)

 -

 (469,494)

Foreign currency translation differences

1,457

-

1,457

-

(215,263)

-

185

(213,621)

-

(213,621)

Revaluation of investment property

1,867

-

1,867

-

-

-

--

1,867

1,867

-

Investment in Associates

 (5,583)

-

 (5,583)

 -

 (1,634)

 -

 --

 (7,217)

 -

(7,217)

ESOP deferred

 7,775

-

 7,775

 -

 1,434

 -

 --

 9,209

9,209

-


(248,981)

(119,542)

(368,523)

(100)

(401,069)

24,443

9,075

(736,175)

64,486

(800,661)


 

23  Provisions

 

 

31 December 2023

 

31 December 2022

Claims provision

532,632


406,954

ECL on unfunded exposure (aiBank)

66,278


55,414

Severance pay provision

536,122


405,701

Financial guarantee for contingent liabilities

32,698


35,647


1,167,730


903,716

 

2023

Claims provision

Severance

Pay provision*

Financial guarantee for contingent  liabilities

ECL on unfunded exposure (aiBank)

Total

Balance as at 1 January

406,954

405,701

35,647

55,414

903,716

Charged during the year

163,247

62,556

38,055

9,250

273,108

Foreign currency differences

8,909

100,603

-

1,614

111,126

Used during the year

(40,536)

(29,226)

(41,004)

-

(110,766)

Actuarial gains or losses

-

(3,512)

-

-

(3,512)

Released (note 28)

(5,942)

-

-

-

(5,942)

Balance as at 31 December

532,632

536,122

32,698

66,278

1,167,730

 

 

 

 

 

 

2022

Claims provision

Severance

Pay provision*

Financial guarantee for contingent  liabilities

Commercial bank  contingent liabilities

Total

Balance as at 1 January

372,814

226,617

34,453

56,118

690,002

Charged during the year

96,579

60,311

21,174

-

178,064

Foreign currency differences

11,422

135,536

-

1,903

148,861

Used during the year

(23,438)

(21,268)

(19,980)

-

(64,686)

Actuarial gains or losses

-

4,505

-

-

4,505

Released (note 28)

(50,423)

-

-

(2,607)

(53,030)

Balance as at 31 December

406,954

405,701

35,647

55,414

903,716

* Related to Group entities outside Egypt.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24  Loans and borrowings

Borrowers

EFG Corp-Solutions *

 

Borrowing

Limits

Contract dates

Maturity dates

31 December 2023

31 December 2022



335 million

16-Jul-20

16-Jul-27

115,329

71,975


150 million

27-Feb-20

27-Feb-27

14,271

27,332


600 million

12-Dec-19

12-Dec-26

587,119

314,593


590 million

29-Mar-23

31-Mar-30

585,189

472,734


2 billion

22-Aug-22

22-Aug-28

541,266

715,726


923 million

28-May-23

28-May-33

568,459

374,366


13.5 million

14-Mar-16

30-Jun-23

13,532

24,020


333 million

13-Jul-20

13-Jul-27

83,943

135,448


-

18-Jul-23

18-Jul-28

                 -  

168


450 million

09-Mar-22

31-Mar-29

417,964

141,154


150 million

25-Jun-23

30-May-24

44,516

75,527


400 million

12-Dec-23

12-Dec-28

170,582

173,766


-

24-Apr-17

24-Apr-23

-

409


28 million

06-Sep-23

31-Aug-24

27,622

36,194


250 million

04-Apr-21

04-Apr-28

226,813

50,700


492.8 million

19-Oct-17

19-Oct-22

492,800

493,700


200 million

12-Dec-23

12-Dec-30

147,703

196,836


27.5 million

07-Feb-18

07-Feb-23

27,591

57,591


59.3 million

19-May-20

19-May-27

59,325

101,407


600 million

15-Aug-22

15-Aug-28

36,747

61,293


780 million

06-Feb-22

30-Mar-24

579,079

386,920


100 million

26-Nov-20

26-Nov-27

54,757

62,677


100 million

11-Jul-23

11-Jul-30

76,464

                 -  






4,871,071

3,974,536

aiBank


10.3 million

13-Apr-17

01-Aug-23

-

1,556


25.4 million

13-Apr-17

31-Jul-23

-

5,001






-

6,557

EFG - Hermes Pakistan Limited


41 million

12-May-17

11-May-26

41,085

40,833


49 million

29-Oct-21

28-Oct-24

-

49,000






41,085

89,833

Tanmeyah Micro Enterprise Services S.A.E


100 million

15-Oct-23

30-Oct-23

100,000

59,481


200 million

30-Apr-23

30-Apr-24

188,956

                 -  





288,956

59,481

U consumer Finanace ("previously"ValU)


100 million

11-Dec-17

01-Dec-23

-

8,000


350 million

15-Jun-22

31-Dec-23

349,647

253,949


225 million

05-Sep-22

30-Nov-23

135,817

172,774


375 million

06-Jul-22

30-Sep-24

221,579

430,899


150 million

30-Jan-23

28-Feb-24

128,066

                 -  


100 million

02-Feb-23

28-Feb-24

21,661

                 -  


300 million

05-Feb-23

05-Feb-24

261,514

                 -  


345 million

15-Aug-23

15-Aug-25

342,314

                 -  


100 million

04-Jan-23

04-Jan-24

98,388

                 -  


340 million

13-Jul-22

13-Jul-23

340,356

                 -  


600 million

13-Jun-23

13-Jun-24

600,636

                 -  






2,499,978

865,622

EFG Finance Holding





 



120 million

06-Feb-22

30-Mar-24

120,000

                 -  


200 million

12-Dec-23

12-Dec-30

183,129

                 -  






303,129                  

                   -  

Total





8,004,219

4,996,029






 

 

Distributed as follows:





 

 

Current





3,636,531

1,481,401

Non-current





4,367,688

3,514,628






8,004,219

4,996,029

 

 

* EFG Hermes Corp - Solutions (wholly owned subsidiary), is committed to settle the credit granted by waiving the rental value of the finance lease contracts to the banks within the credit amount.

 

 

25  Share capital

 

-     The company's authorized capital amounts EGP 6 billion and issued capital amounts EGP Thousands 3,843,091 distributed on 768,618,223 shares of par value EGP 5 per share which is fully paid.

-     The company's General Assembly approved in its session held on May 20, 2021 to increase the company's issued capital from EGP Thousands 3,843,091 to EGP Thousands 4,611,709 distributed on 922,341,868 shares with an increase amounting to EGP Thousands 768,618 by issuing 153,723,645 shares with par value EGP 5 through the issuance of one free share for every five shares. This increase is transferred from the company retained earnings that presented in December 31, 2020 financial statements. The required procedures had been taken to register the increase in the Commercial Register.

-     On September 28, 2021, the Company's General Assembly approved the increase in issued capital from EGP Thousands 4,611,709 to EGP Thousands 4,865,353 representing an increase of EGP Thousands 253,644 and distributed on 50,728,803 shares having a par value of EGP 5 per share, The issuance of the capital increase shares were financed from the share premium reserve for the purpose of the Remuneration & Incentive Program of the Employees, Managers & Executive Board Members of the Company and its subsidiaries. The commercial register was updated and the issued shares were allocated under the Remuneration & Incentive Program of the Employees of the Company, and the Beneficiary of the program will be entitled to attend the Ordinary and Extraordinary General Shareholders of the Company and to vote on its resolutions upon the transfer of ownership of the Granted Shares to the Beneficiary.

-     The company's General Assembly approved in its session held on May 19, 2022 to increase the company's issued capital from EGP Thousands 4,865,353 to EGP Thousands 5,838,424 distributed on 1,167,684,806 shares with an increase amounting to EGP Thousands 973,071 by issuing 194,614,135 shares with par value EGP 5 through the issuance of one free share for every five shares. This increase is transferred from the company retained earnings that presented in December 31, 2021 financial statements. The required procedures had been taken to register the increase in the Commercial Register.

-     The company's General Assembly approved in its session held on May 24, 2023 to increase the company's authorized capital from EGP 6 billion to EGP 30 billion and increase the company's issued capital from EGP Thousands 5,838,424 to EGP Thousands 7,298,030 distributed on 1,459,606,008 shares with an increase amounting to EGP Thousands 1,459,606 distributed on 291,921,202 shares with par value EGP 5 through the issuance of one free share for every four shares. This increase is transferred from the company retained earnings that presented in December 31, 2022 financial statements. The required procedures had been taken to register the increase in the Commercial Register.

 

26  Non - controlling interests ("NCIs")


31 December 2023

 

31 December 2022

Non-controlling interests

4,074,904


3,445,286

 

Movement in NCIs during the year was as follows

 

 

 

Balance as at 1 Jaunary - as previously stated (note 37)

3,445,286


2,959,899

Adjustments during the year (note 37)

-


29,382

Balance as at 1 Jaunary (note 37)

3,445,286


2,989,281

Comprehensive income for the year

708,786


503,288

Dividends during the year

(135,421)


(95,657)

Acquisition of a subsidiary

3,110


-

Changes in ownership interests without change in control

53,143


48,374

Balance as at 31 December

4,074,904

 

3,445,286

 

 

 

26 Non - controlling interests ("NCIs") (continued)

 

The Group considers the Arab Investment Bank ("aiBank") as a subsidiary that have a material non-controlling interests to the Group. The principle palce of buisness of aiBank is the Arab Republic of Egypt. The proportion of ownership interests and voting rights held by non-controlling interests in aiBank represents 48.979% as at 31 December 2023 (31 December 2022: 48.979%). Summarised financial information of aiBank is disclosed under note 32 under the Commercial bank (aiBank) business segment.

 

Accumulated non-controlling interests of aiBank amounted to EGP Thousand 3,355,396 as 31 December 2023 (2022: 2,803,578).

 

The profit allocated to non-controlling interests of aiBank during the year ended 31 December 2023 amounted to EGP Thousand 555,435 (2022: 252,426)

 

27 Contingent liabilities

 

The Holding company guarantees its subsidiary EFG- Hermes UAE LLC against the Letters of Guarantee issued from banks amounting to:


31 December

 2023

 

31 December 2022

AED

93,670


83,670

Equivalent to EGP

785,517


562,363

Assets under management (off-financial position item)

159,430,997


108,911,766

 

Securitization and Sukuk transactions

The Group has entered certain securitization and Sukuk transactions, the assets and liabilities related to those transactions do not qualify for the recognition criteria, accordingly the Group has not recognized those assets or liabilities.

 

The assets and liabilities related to those transactions are represented in :

 


31 December

2023

 

31 December 2022

Client portfolios related to securitization transactions

15,241,137


11,694,429

Balances with custodians

1,292,213


1,644,812

Land and Buildings related to Sukuk transactions

600,000


2,350,000

Total Assets

17,133,350


15,689,241

Bonds

12,843,168


8,629,177

Sukuk

480,000


2,350,000

Total liabilities

13,323,168


10,979,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27  Contingent liabilities (continued)

 

The contingent liabilities of aiBank is as follows:

 

(i)    Capital commitments

 

Financial investments

The value of commitments related to financial investments for which payments were not requested until the date of the financial position as at 31 December:

 

 

 

 

USD Thousands

 

 

 

 

31 December 2023

Contribution amount

Amount paid

Residual amount

African Export -Import Bank

4,890

2,116

2,775


 

 

 

Contribution Amount

 

 

 

Amount Paid

 

 

EGP Thousands

 

Residual Amount

Long term assets

1,015,907

804,476

211,432

 

31 December 2022

 

Contribution Amount

 

 

Amount paid

USD Thousands

 

Residual amount

African Export -Import Bank

1,066

586

480


 

 

 

Contribution Amount

 

 

 

Amount Paid

 

 

EGP Thousands

 

Residual Amount

Long term assets

1,026,119

835,921

190,198

 

 

 

(ii)   Commitments on loans, guarantees and facilities are as follows:

 


31 December 2023

31 December 2022

Loan Commitments

933,981

-

Letters of guarantees

2,798,308

2,649,791

Letters of credit (Export and Import)

13,816

330,149

Acceptances of supplier facilities

649,754

236,791


4,395,859

3,216,731

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28  Other Revenue

 

Other revenues includes rental income and non-recurring income as follows:

 


For the year ended


31 December

2023

 

31 December

2022

Release of provisions (note 23)

5,942


53,030

Rental incomes

67,630


44,581

Gain on sale of property and equipment

3,251


4,200

Gain on sale of Investment property

56,438


-

Custodion rebates

16,141


9,013

Advisory fees

92,400


-

Other gains

56,197


48,367


297,999


159,191

 

29  Impairment loss on financial assets - net of recoveries

 


For the year ended


December

2023

 

December

2022

Accounts receivable

133,080


168,004

Funded facilities to customers

219,827


74,674

Banking loans and facilities (aiBank)

622,864


457,372

Cash and cash equivalents

265


273

Other assets

54,435


(1,038)

Investments FVOCI - debt instruments

(7,472)


28,090

Investments at amortized cost - debt instruments

7,334


(864)


1,030,333

 

726,511

 

30  Income tax expense

 


For the year ended


December

2023

 

December

2022

Current income tax

948,213


702,655

Deferred income tax (note 22)

145,784


401,069


1,093,997

 

1,103,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31  General and administrative expenses


For the year ended


31 December

2023

 

December

2022

Wages , salaries and similar items (note 31.1)

6,390,632


4,690,355

Marketing, technology and network expenses

649,957


569,506

Consultancy

549,330


365,708

Leased line and communication expenses

351,313


42,944

Travel , accommodation and transportation

83,874


207,381

Rent and utilities expenses

133,546


93,211

Other expenses

785,233


572,759


8,943,885


6,541,864

 

31.1 Share-based payments.

The Holding Company introduced an Employees Share Ownership plan (ESOP) in accordance with the shareholder's approval at the extraordinary general assembly meeting by issuing Free shares representing 5.5% of the issued capital of the Company shall be granted to employees, managers and executive board members of the Company and its subsidiaries.

 

The duration of this program is five years starting as of 1 January 2021 till 31 December 2025, the vesting period is 3-4 years starting from 1 January 2021 till 31 December 2024. The beneficiary entitled to shares granted to 4 equal installments.

 

The equity instruments for share-based payment are recognized at fair value on the grant date and are record in the income statement with a corresponding increase in equity. The value of expenses charged to the income statement during the period amounted EGP Thousand 130,938.

 

Equity instruments during the year represents the following:

 


For the year ended


December

2023

No. of Shares

 

December

2022

No. of Shares


 

 

 

Total at the beginning of the year

56,204,722


48,504,101

Free shares distributed during the year

13,657,274


9,700,821

Forfeited shares during the year

(1,804,699)


(2,000,200)

Total at the end of the year

68,057,297

 

56,204,722

 

31.2 Depreciation and amortisation expenses

 


For the year ended


December

2023

 

December

2022

Depreciation expenses - investment properties (note13)

 6,545


 6,545

Depreciation expenses - properties and equipment (including depreciation of right-of-use assets) (note14)

 338,713


 252,080

Amortisation expenses - intangible assets (note 15)

 131,428


 77,109


476,686

 

335,734


 

32  Operating segments

Basis for operating segment

Segment information is presented in respect of the Group's business segments.

The primary format, business segment, is based on the Group's management and internal reporting structure. Inter-segment pricing is determined on an arm's length basis. Segment results, assets and liabilities include items directly attributable to a segment. The revenue & expense and assets & liabilities analyses in the table below are based on the type of business activities and services that are distinguishable component.

 

For the year ended 31 December 2023

Holding & Treasury

Brokerage

Asset Management

Investment Banking

Private

Equity

Finance

Holding

Leasing

Micro

Financing

Consumer

Factoring

Commercial banking

Intersegment

eliminations

Total

Interest income

886,840

1,004,774

5,133

42,644

26,751

6,229

1,140,559

1,491,099

868,308

385,040

7,669,036

(41,599)

13,484,814

Interest expense

(706,588)

(296,036)

-

(27,428)

-

-

(923,705)

(770,603)

(727,788)

(337,560)

(5,129,506)

55,381

(8,863,833)

Net Interest Income

180,252

708,738

5,133

15,216

26,751

6,229

216,854

720,496

140,520

47,480

2,539,530

13,782

4,620,981

Fee and commission income

(2)

2,706,287

1,260,115

718,976

226,211

1,131

47,054

573,158

547,637

65,582

1,015,823

(53)

7,161,919

Fee and commission expense

(6,554)

(434,997)

(141,402)

-

(9,567)

(661)

(90)

(15,607)

(1,980)

(51)

(108,700)

-

(719,609)

Net fee and commission income

(6,556)

2,271,290

1,118,713

718,976

216,644

470

46,964

557,551

545,657

65,531

907,123

(53)

6,442,310

Securities' gain

5,707

14,528

-

-

149

58

-

-

2,350

-

148,879

-

171,671

Changes in the fair value of investments at FVTPL

1,462,793

2,122

(104,769)

-

264

51,480

-

-

-

-

-

-

1,411,890

Foreign Currencies Exchnage Differences

1,202,906

6,551

-

-

-

418

50,977

(4,262)

(20,891)

6,622

(87,474)

-

1,154,847

Dividend Income

17,521

50,465

-

-

-

-

-

-

-

-

13,491

-

81,477

Gains on selling Assets held for sale

-

-

-

-

-

-

267

-

-

-

9,530

-

9,797

Share of profit from equity accounted investees

-

-

-

-

(4,166)

(12,694)

-

-

-

-

61,908

-

45,048

Other Revenues

197,497

20,917

(80)

207

6,490

-

4,933

22,598

95,787

-

14,657

(65,007)

297,999

Net gains on dereceognition of financial assets measured at amortized cost

-

-

-

-

-

-

42,594

-

390,337

-

-

-

432,931

Impairment loss on financial assets - net of recoveries

(8,788)

(122,880)

(24,243)

-

(11,518)

(627)

(9,592)

(98,423)

(84,859)

(43,383)

(626,020)

-

(1,030,333)

Total Revenues

3,051,332

2,951,731

994,754

734,399

234,614

45,334

352,997

1,197,960

1,068,901

76,250

2,981,624

(51,278)

13,638,618





























General and administrative expenses

(1,576,902)

(2,439,370)

(649,094)

(807,003)

(245,662)

(98,350)

(142,333)

(1,051,360)

(721,888)

(42,766)

(1,317,252)

148,095

(8,943,885)

Financial Guarantee Provision

-

-

-

-

-

-

-

(38,055)

-

-

-

-

(38,055)

Impairment loss on goodwill and intangible assets

-

-

-

-

-

-

-

(12,002)

-

-

-

-

(12,002)

Provisions

(32,521)

(51,016)

46

(3,561)

(1,185)

(1,712)

-

(24,261)

(3,438)

-

(117,405)

-

(235,053)

Depreciation and Amortization

(134,311)

(38,445)

(9,840)

(342)

(3,912)

(7,098)

(400)

(69,172)

(29,373)

(1,857)

(85,119)

(96,817)

(476,686)

Profit Before Income Tax

1,307,598

422,900

335,866

(76,507)

(16,145)

(61,826)

210,264

3,110

314,202

31,627

1,461,848

-

3,932,937

Income Tax expense

(243,807)

(225,501)

(8,449)

(16,048)

(1,645)

(1,314)

(56,037)

(49,697)

(73,965)

(7,263)

(410,271)

-

(1,093,997)

Profit for the Period

1,063,791

197,399

327,417

(92,555)

(17,790)

(63,140)

154,227

(46,587)

240,237

24,364

1,051,577

-

2,838,940


 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

17,458,594

19,568,959

1,574,356

419,557

411,063

354,651

6,241,397

5,686,611

5,871,252

2,366,864

61,954,670

-

121,907,974

Total liabilities

6,528,678

15,223,112

511,463

378,051

295,123

44,684

5,929,381

4,330,108

4,784,171

1,621,261

54,866,013

-

94,512,045

 

32  Operating segments (continued)

Basis for operating segment (continued)

 

For the year ended 31 December 2022

Holding & Treasury

Brokerage

Asset Management

Investment Banking

Private

Equity

Finance

Holding

Leasing

Micro

Financing

Consumer

Factoring

Commercial banking

Intersegment

eliminations

Total

Interest income

747,964

538,630

1,349

29,388

15,165

2,129

723,666

1,154,849

554,494

232,429

5,389,669

(93,843)

9,295,889

Interest Expense

(427,692)

(224,522)

-

(12,501)

-

-

(600,224)

(434,966)

(270,321)

(199,947)

(3,598,337)

70,505

(5,698,005)

Net Interest income

320,272

314,108

1,349

16,887

15,165

2,129

123,442

719,883

284,173

32,482

1,791,332

(23,338)

3,597,884

Fee and commission income

3

1,771,185

700,473

730,330

113,935

-

56,092

761,952

257,925

50,153

363,806

(1,038)

4,804,816

Fees and commission expense

(1,449)

(358,362)

(72,133)

-

(5,097)

(656)

(300)

(547)

(1,509)

(39)

(69,186)

1,038

(508,240)

Net fees and commission income

(1,446)

1,412,823

628,340

730,330

108,838

(656)

55,792

761,405

256,416

50,114

294,620

-

4,296,576

Securities Loss

(939,808)

15,688

-

187

(227)

-

-

-

-

-

77,133

-

(847,027)

Changes in the investments FVTPL

1,011,125

(8,048)

(79,897)

-

(149)

-

-

-

-

-

-

-

923,031

Foreign currencies' differences

2,473,665

15,258

-

-

-

-

-

2,950

-

-

3,802

-

2,495,675

Dividend income

623

1,664

-

-

-

-

-

-

-

-

3,374

-

5,661

Gains on selling Assets held for sale

-

-

-

-

-

-

1,563

-

-

-

3,924

-

5,487

Share of profit from investees

-

-

-

-

(1,090)

21,596

-

-

-

-

56,056

-

76,562

Other revenues

49,604

28,623

2,928

474

48,008

-

-

15,037

50

-

14,467

-

159,191

Net gains on derecognition of financial assets measured at amortized cost

-

-

-

-

-

-

113,434

-

108,876

-

-

-

222,310

Impairment loss on financial assets - net of recoveries

10,024

(163,477)

(4,171)

-

(32,990)

(1,015)

(16,184)

132

(6,547)

(39,425)

(481,621)

8,763

(726,511)

Total revenues

2,924,059

1,616,639

548,549

747,878

137,555

22,054

278,047

1,499,407

642,968

43,171

1,763,087

(14,575)

10,208,839

General administrative expenses

(1,179,128)

(1,592,914)

(438,778)

(723,399)

(170,719)

(128,435)

(113,852)

(812,790)

(592,385)

(81,683)

(782,519)

74,738

(6,541,864)

Financial guarantee provision

-

-

-

-

-

-

-

(21,174)

-

-

-

-

(21,174)

Impairment loss on assets

-

(8,639)

-

-

(1,600)

-

-

-

-

-

-

-

(10,239)

Provisions

(61,089)

(54,265)

(3,063)

(2,625)

(560)

(3,237)

-

(7,526)

-

-

(24,525)

-

(156,890)

Depreciation and amortisation

(36,876)

(25,983)

(12,751)

(359)

(441)

(6,415)

(349)

(94,910)

(11,918)

(1,807)

(83,762)

(60,163)

(335,734)

Profit before income tax

1,646,966

(65,162)

93,957

21,495

(35,765)

(116,033)

163,846

563,007

38,665

(40,319)

872,281

-

3,142,938

Income tax expense

(413,137)

(108,998)

11,012

(6,240)

(4,827)

149

(49,025)

(163,812)

(6,508)

(5,433)

(356,905)

-

(1,103,724)

Profit for the year

1,233,829

(174,160)

104,969

15,255

(40,592)

(115,884)

114,821

399,195

32,157

(45,752)

515,376

-

2,039,214


 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

13,578,468

17,469,371

1,361,445

732,966

291,949

269,530

5,165,676

4,699,851

4,098,689

2,544,599

55,888,600

-

106,101,144

Total liabilities

5,135,737

13,465,031

445,396

599,833

253,435

39,666

4,662,308

3,225,062

3,666,220

2,131,723

50,108,149

-

83,732,560

 

 


 

32  Operating segments (continued)

Geographical segments

The Group operates in three main geographical areas: Egypt, GCC and other. In presenting the geographic information, segment revenue has been based on the geographical location of operation and the segment assets were based on the geographical location of the assets. The Group's operations are reported under geographical segments, reflecting their respective size of operation.

 

The revenue analysis in the tables below is based on the location of the operating Group, which is the same as the location of the major customers and the location of the operating companies.

December 31, 2023


Egypt

GCC

Other

Total

Total revenues

10,853,984

2,650,040

134,594

13,638,618

Segment assets

98,584,694

15,237,799

8,085,481

121,907,974

December 31, 2022


Egypt

GCC

Other

Total

Total revenues

8,212,319

1,877,900

118,620

10,208,839

Segment assets

84,424,402

14,681,496

6,995,246

106,101,144

 

 


For the year ended

Interest income from:

31 December 2023

 

31 December 2022

Banks and financial institutions

777,923


255,129

Accounts receivables

441,275


291,138

Loans and facilities to customer

9,152,168


5,949,841

Investment through fair value

 1,559,092


 1,535,830

Investment at amortized cost

1,554,356

 

1,263,951

Balance

13,484,814

 

9,295,889

 


For the year ended

Interest expenses paid to:

31 December 2023

 

31 December 2022

Banks and financial institutions

2,381,322


1,408,725

Customer deposits

5,117,932


3,581,633

Loans and borrowings

1,231,978


610,543

Short term bonds

132,601


97,104

Balance

8,863,833

 

5,698,005

33  Tax status (The Holding company)

 

- As to Income Tax, the years till 2019 the competent Tax Inspectorate inspected the parent company's books and all the disputed points have been settled with the Internal Committee and  as to years 2020/2022, have not been inspected yet.

- As to Salaries Tax, the parent company's books had been examined till 2020 and all the disputed points have been settled with the Internal committee and as to years 2021/2023 have not been inspected yet.

- As to Stamp Tax, the parent company's books had been examined from year 1998 till 2018 and all the disputed points have been settled with the competent Tax Inspectorate and as to years 2019/2023 have not been inspected yet.

- As to Property Tax, for Smart Village building the company paid tax till December 31, 2023, and for Nile City building the company paid tax till December 31, 2023.

 

34  Earnings per share

 

Earnings per share is calculated by dividing the net profit for the year after deduction of Tier 1 capital notes payment by the weighted average number of ordinary shares in issue during the year as set out below:

 

31-Dec-23

 

31-Dec-22

Net profit for the year

               2,216,683


               1,687,208

Weighted average number of ordinary shares:




Number of shares issued/deemed to be outstanding from the beginning of the year

1,167,685


973,071

Free shares dividend issued during the year 2022

--


194,614

Free shares dividend issued during the year 2023

291,921


291,921

Weighted average number of shares issued under the share-based payment scheme

--


--

Weighted average number of ordinary shares

1,459,606


1,459,606

Basic earnings per share - EGP

1.52

 

1.16

 

 

 

 

Net profit for the year for calculating diluted earnings per share

2,216,683


1,687,208

Weighted average number of ordinary shares

1,459,606


1,459,606

Weighted average number of dilutive shares under share-based payment scheme

--


--

Weighted average number of ordinary shares in issue for diluted earnings per share

1,459,606


1,459,606

Diluted earnings per share - EGP

1.52

 

1.16

 

Basic and diluted earnings per share are the same due to the fact that the Group has fully issued the shares under share-based payment scheme (note 25) hence, the impact of dilution is nil for the year ended 31 December 2023 and the year ended 31 December 2022.

 

35  Financial risk management

 

The Group, as a result of its activities, is exposed to various financial risks, considering the risk acceptance is the basis of the financial activity. Some risks or a group of risks are analyzed, assessed, and managed collectively, and therefore the Group intends to achieve an appropriate balance between risk and interest and to reduce the potential negative effects on the financial performance of the Bank. The most significant types of financial risks are credit risk, market risk and liquidity risk and other operating risks. Market risk includes foreign exchange rate risk, and interest rate risk.

 

Risk management policies are adopted to determine and analyse risks to limit, control and monitor the risks and commit to limits through the reliable techniques and updated information systems. The Bank periodically reviews and modifies the risk management policies and systems to reflect changes in markets, products, services, and the best recent applications.

 

Risks are managed by Risk Function in terms of the policies approved by the Board of Directors. Risk Function determines, assesses and covers the financial risks in close cooperation with the various operating units of the Bank. The Board of Directors provides written principles for managing the risks as a whole, in addition to written policies covering specific risk areas such as credit risk, foreign exchange risk, interest rate risk and the use of derivative and non-derivative instruments. In addition, the Risk Function is independently responsible for periodic review of the risk management and control environment.

 

 

 

 

35  Financial risk management (continued)

 

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management program seeks to minimize potential adverse effects on the Group's financial performance.

 

Management of financial risk in the commercial bank (aiBank) is conducted through a separate organization from the investment bank due to regulatory rules and operational necessity. Below is a summary of the risk management framework in both business segments.

 

Risk management framework in the investment bank

The investment bank has a central treasury department that works closely with the operating units throughout the Group. The board of directors provides, through its audit and risk committee, guidance to management to issues regarding risk. The board of directors is responsible for:

 

Ø Overseeing, ratifying, and reviewing the duties of the risk management department.

Ø Approving the investment bank's risk appetite framework ("RAF") and ensure it remains consistent with the Firm's short- and long-term strategy, business and capital plans and risk capacity.

Ø Discuss and determine actions if any of the RAF measures are breached.

 

Investment bank market risk

Market risk is defined as the potential loss in both on and off balance sheet positions resulting from movements in market risk factors such as foreign exchange rates, interest rates, and equity prices.

Market risk is represented in the factors which affect values, earnings and profits of all securities negotiated in stock exchange or affect the value, earning and profit of a particular security.

According to the company's investment policy, the following procedures are undertaken to reduce the effect of this risk.

 

-        Performing the necessary studies before investment decision to verify the merits of the investment.

-      Diversification of investments in different sectors and industries.

-      Performing continuous studies required to follow up the company's investments and their development.

 

I.     Foreign exchange risk

The investment bank operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the US dollar and other GCC currencies. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

 

Management requires investment bank companies to manage their foreign currency risk against their functional currency. Commercial transactions are conducted either in the functional currency of the investment bank country or in transaction currency.

 

The investment bank actively manages its currency exposure by holding different currency positions in accordance with the RAF and may use derivatives or hedging tools if needed.If the Egyptian pound had weakened/strengthened by 10% against the US dollar with all other variables held constant the Company would have recognized gains or losses for the year as follows:

 

 

 

 

 

35  Financial risk management (continued)

Risk management framework in the investment bank (continued)

Investment bank market risk (continued)

 

I.     Foreign exchange risk (continued)

 


Year ended

31 December 2023

 

Year ended

31 December 2022

Weakened 10 %

797,165


746,867

Strengthened 10 %

(797,165)


(746,867)

 

II.   Price risk

EFG is exposed to equity price risk on equity investments, through holding of equities of another entity. The fair value of these instruments will fluctuate due changes in the market price. The Group manages this risk through diversification of investments in terms of geographical distribution and industry concentration.

 

The following table estimates the sensitivity to a possible change in equity markets on the Group's income statement. The sensitivity of the income statement is the effect of the assumed change in the reference equity benchmark on the fair value of investments carried at fair value through the income statement and through OCI.

 

Year ended

31 December 2023

Year ended

31 December 2022


5% Increase

5% Decrease

5% Increase

5% Decrease

Net asset value of managed funds and private equities

374,685

(374,685)

266,313

(266,313)

Operating

Exchange Index

1,559

(1,559)

1,923

(1,923)

 

 

 

 

 

 

 

 

 

III.  Interest rate risk

Interest rate risk stems from the sensitivity of earnings to future movements in interest rates applied on assets and liabilities. The Group's management closely monitors interest rate fluctuations on a continuous basis and ensures that assets and liabilities are matched and re-priced in a timely manner.

The Group is exposed to interest rate risk as a result of mismatches or gaps in the amounts of assets and liabilities that mature or are re-priced in a given period. The most important source of interest rate risk derives from the lending, funding and investing activities, where fluctuations in interest rates are reflected in interest margins and earnings.

 

a)    Investment bank credit risk

 

Credit risk is the risk of a person or an organization defaulting in the repayment of their obligations to the Group in respect of the terms and conditions of the credit facilities granted to them by the Group. The management minimizes this risk by spreading its loan portfolio overall economic sectors and by adopting appropriate procedures and controls to evaluate the quality of the credit facilities granted and the creditworthiness of the borrowers. The credit risk of connected accounts is monitored on a united basis. In addition, the effective credit appraisal procedure for examining applications for credit facilities followed by the Group, adopts as the main criteria the repayment capability and obtaining sufficient collateral and/or guarantees depending on the nature of the lending business. The continuous monitoring of credit accounts and the timely preventive action further minimize, to a large extent, the exposure to credit risk.

 

 

35  Financial risk management (continued)

 

Risk management framework in the investment bank (continued)

 

a)    Investment bank credit risk (continued)

International Financial Reporting Standard (IFRS) 9 covering classification and measurement, impairment and hedge accounting. IFRS 9 introduces a forward-looking approach for recognising credit losses in the financial accounts-the Expected Credit Loss (ECL) approach, which takes into account a broad range of information, including forward-looking events and conditions. Under IFRS 9's ECL impairment framework, financial Institutions are required to recognize ECLs at all times, taking into account past events, current conditions and forecast information, and to update the amount of ECLs recognised at each reporting date to reflect changes in an asset's credit risk. It is a more forward-looking approach and will result in more timely recognition of credit losses.

 

IFRS 9 introduces a three-stage approach for the measurement of ECLs of financial assets described as follows:

 

Stage 1 (Performing) - Where there has not been a significant increase in credit risk (SICR) since initial recognition of a financial instrument, an amount equal to 12 months expected credit loss is recorded. The expected credit loss is computed using a probability of default occurring over the next 12 months. For those instruments with a remaining maturity of less than 12 months, a probability of default corresponding to remaining term to maturity is used.

 

Stage 2 - (Under-performing) When a financial instrument experiences a SICR subsequent to origination but is not considered to be in default, it is included in Stage 2. This requires the computation of expected credit loss based on the probability of default over the remaining estimated life of the financial instrument.

 

Stage 3 - (Non-performing) Financial instruments that are considered to be in default are included in this stage. Similar to Stage 2, the allowance for credit losses captures the lifetime expected credit losses.

 

If the credit risk has not increased significantly accounts are held in Stage 1 and accordingly IFRS 9 requires allowances based on 12 month expected losses. If the credit risk has increased significantly, accounts will move to Stage 2 and if the loan is 'credit impaired' then clients move further to Stage 3. For Stage 2 and Stage 3 the standard requires allowances to be based on lifetime expected losses.

 

Defining "SICR":

A significant increase in credit risk is expected to occur prior to delinquency. While behavioral indicators should not be ignored, behavioral indicators (DPD, Partial payments etc.) are often lagging indicators of increases in credit risk and therefore they should be considered in conjunction with other, more forward-looking information.

 

b)    Investment bank liquidity risk

Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under normal and stress circumstances. To limit this risk, management has arranged diversified funding sources.

 

Cash flow forecasting is performed in the operating entities of the bank and aggregated by the central treasury unit. The unit monitors the bank's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its committed short term facilities at all times so that the bank does not breach any capital adequacy rules.

 

35  Financial risk management (continued)

 

Risk management framework in the investment bank (continued)

 

b)    Investment bank liquidity risk (continued)

 

Surplus cash held by the operating entities over and above balance required for working capital management are, with the input of central treasury, are either up streamed to the holding company invested in time deposits, money market accounts and investment funds.

 

c)    Investment bank operational risk

Operational risk is the risk of direct or indirect loss due to an event or action causing failure of technology, process infrastructure, personnel, and other risks having an operational risk impact. The Group seeks to minimize actual or potential losses from operational risk failure through a framework of policies and procedures that identify, assess, control, manage, and report those risks.

 

Controls include effective segregation of duties, access, authorization and reconciliation procedures, staff education and assessment processes.

 

35.1    Credit risk

 

Risk management framework in aiBank

The Bank is exposed to credit risk which is the risk resulting from a party's failure to meet its contractual obligations towards the Bank. The credit risk is considered to be the most significant risk for the Bank, therefore requiring careful management. Credit risk is mainly represented in lending activities that give rise to loans, facilities and investment activities that result in the Bank's assets including debt instruments.

 

Credit risk exists also in financial instruments outside the financial position such as loan commitments. The financial risk management and control are centralized in a financial risk management team in the Bank's Risk Management Department which reports to the Board of Directors and head of each business unit regularly.

 

Loans and facilities to banks and customers (including commitments and financial guarantee contracts)

In measuring credit risk of Funded facilities to customers and to banks, the Bank's rating system is based on three key pillars:

-     Current exposures to the counterparty and its likely future development, from which the Bank derive the (exposure at default);

-     The risk of default failure (Loss given default); and

-     The probability of default by the customer or counterparty on its contractual obligations.

 

These credit risk measurements, are embedded in the Bank's daily operations which reflect expected loss through the expected loss model required by the Banking Supervision Committee, and the operational measures can contradict with the burden of impairment in accordance with the previous standards that depend on the losses that have realized on the date of the financial statements (realized loss model) and not the expected losses as will come after.

 

The Bank assesses the probability of default per each customer using internal rating techniques tailored to the various categories of customers. These techniques have been developed internally and the statistical analyses combine credit officers' personal judgment to reach the appropriate viability rating.

 

 

 

 

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

Customers of the Bank are segmented into four viability rating classes. The Bank's viability rating scale, which is shown below, reflects the range of default probabilities defined for each rating class. This means that, in principle, credit positions migrate between classes as the assessment of their probability of default changes. The rating techniques are kept under review and are upgraded as necessary. The Bank regularly validates the performance of the viability rating techniques and their ability to predict cases of default.

 

Bank's internal rating classes Bank's rating

Rating description

1

Performing debts

2

Standard monitoring

3

Special monitoring

4

Non- performing debts

 

The position exposed to default depends on the amounts expected by the Bank to be outstanding when default occurs. For example, for a loan, this position is the nominal value and for commitments, the Bank recognizes all amounts actually withdrawn in addition to other amounts that are expected to have been withdrawn up to the date of the delay if it occurs.

 

Loss given default or loss severity represents the Bank's expectation of the extent of loss on a claim should a default occur. It is expressed as percentage of loss to debt and typically varies by type of the debtor, seniority of claim and availability of collateral or other credit coverages.

 

Estimation of exposure to credit risks to manage the credit risks is a complex matter that requires the use of statistical and electronic models, as the level of exposure to credit risks changes depending on the changes in market conditions and other economic areas in a complex and rapid degree. The exposure to credit risk changes depending on the changes in the level, value and timing of expected cash flows and the passage of time. Accordingly, assessment of the credit risk of the assets portfolio requires further estimations of the probability of default and the related loss rates. The Bank measures credit risk losses by using the probability of default (default in contractual liabilities) based on the carrying amount balance of the financial instrument at the date of Exposure at Default and loss given default.

 

Classification of credit risks

The Bank assesses the probability of default at the level of each customer / related Group / credit product, by using techniques to classify the customers into different categories, taking into account the minimum rating in accordance with the CBE instructions in terms of determining the creditworthiness of the customers and making the provisions issued during the year 2005. Therefore, the Bank uses a Group of internally developed models and evaluation techniques for the categories of counterparties, customers and the nature of various loans in light of the available information that is collected on the date of adoption of the used model (such as: level of income, level of disposable income and guarantees for individual clients, revenues, type of industry, and other financial and non-financial indicators of the institutions). The Bank completes such indicators with a set of external data, such as the inquiry reports issued by both CBE and credit reporting companies on borrowers and the reports issued by the other local and external credit rating agencies. Moreover, the models used by the Bank allow the systematic exercise of expert assessment by credit risk officials in the final internal credit rating. Therefore, this allows to consider other matters and indicators that may not have been taken as part of other data inputs in the internally or externally developed assessment models and techniques or through external sources.

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Classification of credit risks (continued)

Credit grades are assessed so that the risk of default increases incrementally at each higher risk grade, namely the difference in default rates between the rating grade A and A- is less than the difference in default rates between rating grade B and B-. Additional considerations for each type of credit portfolio held by the Bank are set out below:

 

Individuals, retail banking products and small & micro enterprises

After the date of initial recognition, the borrower's payment behaviour is monitored periodically to calculate a measurement of the payment pattern. Any other information known about the borrower, supposed to be determined by the Bank, may have an impact the creditworthiness, such as unemployment rates and non- payment precedents, as they are included to measure the payment pattern and default rates are, accordingly, determined for each payment pattern measurement.

 

(Large & Medium) Enterprises and Companies

The rating is determined at the level of the borrower / Groups with similar credit risks. Any updated or new credit information or assessments are included in the credit system constantly and periodically. In addition, information about the creditworthiness of the borrower / Groups with similar credit risks is also updated periodically from other sources such as financial statements and other published financial and non-financial statements.

 

Debt Instruments, Treasury Bills and Government Bonds

The Bank uses the external ratings issued by the institutions mentioned in the CBE's instructions to manage the credit risk in terms of the debt instruments in the investment portfolio. These published classifications are monitored and updated regularly and periodically. The default rates associated with each rating are determined based on the rates realized over the previous twelve months, as published by the aforementioned rating agencies. The loss rate of the government and CBE debt instruments dominated in local currency is zero.

 

Future data used in the expected loss model

Future data is used in assessing whether there is a significant increase in the credit risk of financial instruments and estimating the expected credit losses (ECL). The management of Bank determines the main economic variables that affect credit risk and expected credit losses for each credit portfolio by carrying out an analysis of historical data. The economic variables and the related effect on both Probability of Default "PD" and the Exposure at Default "EAD" and Loss Given Default "LGD" are different depending on the financial asset. The Bank will use expert opinions regarding these assumptions and estimates, if necessary.

 

To determine the impact of such economic variables on both Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD), the management of the Bank carries out the "regression analysis" to understand the historical effects arising from such variables on the default rates and the inputs used in calculating both Exposure at Default (EAD) and Loss Given Default (LGD). Further to the key economic scenarios, the management of Bank establishes other potential scenarios in addition to assumptions relating to each scenario separately.

 

 

 

 

35    Financial risk management (continued)

 

35.1    Credit risk (continued)

Risk management framework in aiBank (continued)

Classification of credit risks (continued)

 

Future data used in the expected loss model (continued)

 

The lifetime probability of default (PD) relating to the key assumption and other assumptions are used, as the outcome of multiplication is determined for each assumption with the related probabilities of each, in addition to the supporting indicators and qualitative indicators. Based on the results of such study, it is assessed whether this financial asset is located at the first, second or third level, on the basis of which it is determined whether the expected credit losses "ECL" will be computed on 12- month bases "12-month ECL" or over lifetime of the financial instrument "Lifetime ECL".

 

The expectations and probabilities of occurrence are subject to a high degree of uncertainty, as it is known to any economic forecasts, therefore the actual results may be significantly different from those anticipated. The Bank makes the best estimate of these potential expectations and carries out an analytical study of the irrelevant and non -similar factors for the different credit portfolios to conclude appropriate assumptions for all possible scenarios.

 

Variable Economic Assumptions

 

The most significant assumptions that have an impact on the expected credit losses "ECL" are:

 

(i)    Consumption Pricing Indicators (CPI)

(ii)    Unemployment Rate

(iii)   Gross Domestic Product (GDP)

(iv)   Gross national saving/investment

(v)   Real available income

 

Classification of the instruments relating to the losses measured on basis of the similar Groups

For ECL provisions, Groups are classified on the basis of similar credit risk characteristics, as risk exposure within the Bank is homogeneous. When carrying out this classification, it is taken into consideration that there is sufficient information that enables the Bank to classify the Bank with statistical reliability. When sufficient information is not available, the Bank takes into consideration the complementary internal / external reference data.

 

Corporate loans

-     Probability of default model (S& P) is used.

-     A conciliation was made between "S&P" and "ORR".

-     The model was updated by some economic indicates to keep the probability of default in line with the clients existing in Egypt.

-     The model was updated by the ratios of change in the low credit rating of the other clients of the Bank for two years to keep the ratios of model default in line with the clients of the Bank.

 

Maximum Exposure to Credit Risks - Impaired Financial Instruments

The following table includes the analysis of maximum exposure to the credit risks of financial instruments for which the provision of expected credit risks (ECL) is recognized

 

The following table represents the total carrying amount of the financial assets and the maximum exposure to credit risk on these financial assets.

 

35  Financial risk management (continued)

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Maximum exposure to credit risks - impaired financial instruments (continued)

 

Retail

31 December 2023

 

Order of Expected Credit Losses

 









Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 

Standard monitoring








Overdraft

218,450


1,996


261


220,707

Personal loans

5,534,145


218,152


12,711


5,765,008

Credit cards

73,907


1,653


15


75,575

Mortgage Loans

1,048,884


4,410


6,809


1,060,103

Special monitoring








Personal loans

27,008


205,669


13,819


246,496

Credit cards

2,936


728


35


3,699

Mortgage Loans

--


1,758


771


2,529

Default








Personal loans

7,836


--


123,060


130,896

Credit cards

562


121


593


1,276

Mortgage Loans

--


--


417


417

Total carrying amount

6,913,728

 

434,487

 

158,491

 

7,506,706

Expected credit losses

(20,566)


(14,806)


(153,093)


(188,465)

Net carrying amount

6,893,162

 

419,681

 

5,398

 

7,318,241

Collaterals

2,810,872


321,585


107,631


3,240,088

 

Retail

31 December 2022

 

Order of Expected Credit Losses

 

 

 

 

 

 

 

 

 

Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 

Standard monitoring

 

 

 

 

 

 

 

Overdraft 

448,042


5,203


192

 

453,437

Personal loans

3,775,668


117,842


53,627

 

3,947,137

Credit cards

34,495


501


183

 

35,179

Mortgage Loans

620,411


1,751


7,101

 

629,263

Special monitoring






 

 

Personal loans

78,152


69,460


9,105

 

156,717

Credit cards

1,721


932


2

 

2,655

Mortgage Loans

592


297


306

 

1,195

Default






 

 

Personal loans

--


--


118,422

 

118,422

Credit cards

195


55


232

 

482

Mortgage Loans

--


--


279

 

279

Total carrying amount

4,959,276

 

196,041

 

189,449

 

5,344,766

Expected credit losses

(37,942)


(13,798)


(145,907)

 

(197,647)

Net carrying amount

4,921,334

 

182,243

 

43,542

 

5,147,119

Collaterals

2,103,776


124,953


50,308


2,279,037

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Maximum exposure to credit risks - impaired financial instruments (continued)

 

Corporate

31 December 2023

 

Order of Expected Credit Losses


Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 

Standard monitoring








Overdraft 

446,878


1


--


446,879

Direct loans

10,099,457


271,204


2,777


10,373,438

Syndicated Loans

2,591,978


538,795


--


3,130,773

Special monitoring








Overdraft 

--


10


--


10

Direct loans

--


170,176


--


170,176

Default








Overdraft 

--


--


118


118

Direct loans

--


--


929,568


929,568

Syndicated Loans

--


--


202,134


202,134

Total carrying amount

13,138,313

 

980,186

 

1,134,597

 

15,253,096

Expected credit losses

(347,180)


(167,719)


(909,648)


(1,424,547)

Net carrying amount

12,791,133

 

812,467

 

224,949

 

13,828,549

Collaterals

2,439,021


101,929


117,186


2,658,136

 








EGP Thousands

Corporate

31 December 2022

 

Order of Expected Credit Losses


Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 

Standard monitoring








Overdraft 

1,731,280


84,776


18


1,816,074

Direct loans

9,820,868


667,574


233,194


10,721,636

Syndicated Loans

1,591,379


--


153,501


1,744,880

Special monitoring








Direct loans

--


--


11,728


11,728

Syndicated Loans

--


184,835


--


184,835

Default








Overdraft 

--


--


79


79

Direct loans

--


--


1,017,234


1,017,234

Total carrying amount

13,143,527

 

937,185

 

1,415,754

 

15,496,466

Expected credit losses

(328,511)


(142,588)


(742,067)


(1,213,166)

Net carrying amount

12,815,016

 

794,597

 

673,687

 

14,283,300

Collaterals

3,938,922


135,392


220,298


4,294,612

 

 

 

 

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Maximum exposure to credit risks - impaired financial instruments (continued)








 

Due From Banks

31 December 2023

 

Order of Expected Credit Losses

 









Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 









Standard monitoring

11,529,087


--


--


11,529,087

Total carrying amount

11,529,087

 

--

 

--

 

11,529,087

Expected credit losses

(2,716)


--


--


(2,716)

Net carrying amount

11,526,371

 

--

 

--

 

11,526,371
















 

Financial Investments

31 December 2023

 

Order of Expected Credit Losses

 









Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 









Standard monitoring

19,938,906


--


--


19,938,906

Total carrying amount

19,938,906

 

--

 

--

 

19,938,906

Expected credit losses

(70,434)


--


--


(70,434)

Net carrying amount

19,868,472

 

--

 

--

 

19,868,472

 








 

Other Assets

31 December 2023

 

Order of Expected Credit Losses

 









Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 









Standard monitoring

2,373,963


--


--


2,373,963

Total carrying amount

2,373,963

 

--

 

--

 

2,373,963

Expected credit losses

(9,451)


--


--


(9,451)

Net carrying amount

2,364,512

 

--

 

--

 

2,364,512

 

 

 

35   Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Maximum exposure to credit risks - impaired financial instruments (continued)

 

 

 







 

Due From Banks

31 December 2022

 

Order of Expected Credit Losses

 









Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 









Standard monitoring

8,119,011


--


--


8,119,011

Total carrying amount

8,119,011

 

--

 

--

 

8,119,011

Expected credit losses

(1,582)


--


--


(1,582)

Net carrying amount

8,117,429

 

--

 

--

 

8,117,429

 















 

Financial Investments

31 December 2022

 

Order of Expected Credit Losses

 









Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 









Standard monitoring

22,604,332


--


--


22,604,332

Total carrying amount

22,604,332

 

--

 

--

 

22,604,332

Expected credit losses

(68,737)


--


--


(68,737)

Net carrying amount

22,535,595

 

--

 

--

 

22,535,595

 















 

Other Assets

31 December 2022

 

Order of Expected Credit Losses

 









Stage 1

 

Stage 2

 

Stage 3

 

Total

Credit Rating

12 Month

 

Lifetime

 

Lifetime

 









Standard monitoring

2,335,404


--


--


2,335,404

Total carrying amount

2,335,404

 

--

 

--

 

2,335,404

Expected credit losses

(1,603)


--


--


(1,603)

Net carrying amount

2,333,801

 

--

 

--

 

2,333,801


 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Credit Guarantees

The Bank uses many policies and practices to limit the credit risks. The most widely adopted of these is the acceptability of collateral for debt instruments and loan commitments. The Bank has internal policies regarding classes of collateral that can be accepted to limit or decrease the credit risks.

 

The Bank accrues out an assessment of the guarantees that have been obtained when establishing these loans. This assessment is regularly assessed. The key types of guarantees are:

·       Cash and cash equivalent

·       Real estate mortgage

·       Derivatives margin agreement that has been signed with the Bank as a part of main offsetting agreements.

·       Commercial mortgages

·       Financial assets pledge such as debt instruments and equity instruments.

 

The guarantees held as collateral against the financial assets other than loans and facilities depend on the nature of the instrument, as debt securities, government bonds and other qualified bills are generally not secured, except for the asset-backed securities and similar instruments secured by portfolios of financial instruments. The derivatives are often secured.

 

The policies adopted by the Bank have not been changed significantly in terms of obtaining guarantees during the financial year, and there has been no change in the quality of those guarantees held by the Bank compared to the previous financial year.

 

The Bank closely monitors the guarantees held against the low - credit financial assets, as it is likely that the Bank will hold collateral to mitigate potential credit losses.

 

Written-off Financial Instruments (Loans)

The Bank excludes the financial assets that are still under compulsory collection for unpaid contractual amounts of the bad assets. The Bank seeks to fully recover some amounts legally due that were partially or fully written off due to the lack of a possibility of a full recovery.

 

Modifications of loans terms and rescheduling

The Bank sometimes modifies terms of the loans granted to the customers due to the commercial renegotiation or non-performing to increase the chances of recovery. The activities of restructuring include arrangements of extension of repayment terms, grace periods, exemption from repayment or some or full interests. Restructuring policies and practices are based on indicators or criteria that indicate - based on the discretion of management- that repayment is likely to continue. These policies are constantly reviewed.

 

Reduction and Risk Avoidance Policies

The Bank manages, limits, and controls the concentration of credit risks at the debtor level, Groups, industries, and countries. The Bank regulates the levels of acceptable credit risks by setting limits to the amount of risk that will be accepted at the level of each borrower, or Group of borrowers, and at the level of economic activities and geographical sectors.

 

 

 

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Reduction and Risk Avoidance Policies (continued)

These risks are monitored constantly and are reviewed annually or on a recurring basis, when necessary. Limits of the credit risks at the level of the borrower / bank, producer, sector, and country are quarterly approved by the Board of Directors.

 

Credit limits for any borrower, including banks, are divided into sub-limits that include the amounts on- and off- balance sheet, and the daily risk limit relating to trading items such as forward foreign exchange contracts. Actual amounts are compared with the daily limits. Exposure to credit risks is also managed through periodic analysis of the ability of borrowers and potential borrowers to meet the repayment of their liabilities and by amending lending limits, if appropriate.

 

Means of setting limits of to the risks are shown as following:

Guarantees

The Bank adopts many policies and controls to limit the credit risks. These means include the guarantees obtained against borrowed funds. The Bank sets guiding rules for specific acceptable classes of guarantees. The key types guarantee of loans and facilities are:

·       Real estate mortgages.

·       Mortgage of activity assets such as machinery and merchandise

·       Mortgage of financial instruments such as debt instruments and equity.

 

The financing is often granted in the longer term and loans to the companies are secured. In order to reduce the credit loss to a minimum, the Bank seeks to get additional guarantees from the concerned parties and when indicators of impairment are shown for a loan or facilities. The guarantees taken as collateral for assets other than loans and facilities are determined based on the nature of the instrument. Generally, the debt instruments and treasury bills are not secured, except for Groups of financial instruments covered by Asset-Backed Securities and similar instruments that are secured by a portfolio of financial instruments.

 

Master Netting Arrangements

The Bank further restricts its exposure to credit losses by entering into master netting arrangements with counterparties with which it undertakes a significant volume of transactions. Master netting arrangements do not generally result in an offset of assets and liabilities shown in the balance sheet, as transactions are usually settled on a gross basis. However, the credit risk associated with favorable contracts is reduced by a master netting arrangement to the extent that if a default occurs, all amounts with the counterparty are terminated and settled on a net basis. The Bank's overall exposure to credit risk on derivative instruments subject to master netting arrangements can change substantially within a short year, as it is affected by each transaction subject to the arrangement.

 

Credit Related Commitments

The main purpose of credit-related commitments is to ensure that funds are available to the customer on demand, and financial guarantee contracts carry a credit risk related to loans, and documentary and commercial credits issued by the Bank on behalf of the customer to grant a third party the right to withdraw from the Bank within certain amounts and under specific terms and conditions often secured against the goods being shipped and therefore carries a lower degree of risk than a direct loan.

 

 

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Credit Related Commitments (continued)

 

Commitments to extend credit represent unused portions of authorizations to extend credit in the form of loans, guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Bank is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.

 

Expected Credit Loss Measurement Policy

The Bank's policy requires defining three stages for classifying financial assets that are measured at amortized cost, loan commitments and financial guarantees, as well as debt instruments at fair value through other comprehensive income, according to changes in credit quality since the initial recognition, and then measuring (expected credit losses) in the value related to these instruments as follows:

 

The unimpaired financial asset is classified upon initial recognition in Stage 1 and credit risk is monitored on an ongoing basis by the Bank's credit risk department.

 

If there has been a significant increase in credit risk since initial recognition, the financial asset is transferred to Stage 2 and the financial asset is not considered impaired at this stage (lifetime expected credit loss in the absence of credit impairment).

 

If there are indications of impairment in the value of the financial asset, it is transferred to Stage 3, and the Bank relies on the following indicators to determine whether there are objective evidence indicating.

·       A significant increase in the rate of interest on the financial asset because of the increase in credit risk.

·       Negative material changes in the activity and financial or economic conditions in which the borrower operates.

·       A scheduling request because of difficulties facing the borrower.

·       Negative material changes in actual or expected operating results or cash flows.

·       Early signs of cash flow/liquidity problems such as delays in servicing creditors/business loans.

·       Cancellation of a direct facility by the Bank due to the borrower's high credit risk.

 

General Bank Risk Measurement Model

The management performs classifications in the form of a more detailed subGroup to comply with the requirements of the Central Bank of Egypt, and the assets exposed to credit risk are classified according to detailed rules and conditions that depend largely on the information related to the customer, his activity, his financial status, and the extent of his regularity of payment.

 

The Bank calculates the required provisions in accordance with the instructions of creditworthiness, on the basis of specific ratios by the Central Bank of Egypt, and in the event that the required provisions in accordance with the rules of the Central Bank of Egypt exceed the expected credit losses calculated for the purposes of preparing the financial statements, the general bank risk reserve is set aside within.

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

General Bank Risk Measurement Model (continued)

This reserve is periodically adjusted by increase or decrease so that it is always equal to the amount of the increase between the two provisions, and this reserve is not distributable.

 

Following is a table on the creditworthiness levels for institutions in accordance with the internal assessment bases compared to the Central Bank of Egypt assessment bases and the provision ratios required for the impairment of the assets exposed to credit risk:

 

CBE

Rating

Rating description

Provision

%

Internal rating description

1

Low Risk

0%

Good debts

2

Moderate Risk

1%

Good debts

3

Satisfactory Risk

1%

Good debts

4

Reasonable Risk

2%

Good debts

5

Acceptable Risk

2%

Good debts

6

Marginally Acceptable Risk

3%

Standard monitoring

7

Watch List

5%

Special monitoring

8

Substandard

20%

Non-performing debts

9

Doubtful

50%

Non-performing debts

10

Bad Debt

100%

Non-performing debts

 

Maximum limits for credit risk before collateral



31 December 2023


31 December 2022

Cash and Balances with Central Bank limited to the statutory reserve ratio

 

4,030,033

 

1,906,215

Treasury Bills and other Government Securities


9,849,828


8,701,794

Due from banks


11,526,371


8,117,429

Loans and facilities to customers





Retail Loans

 

 

 

 

Personal loans

 

5,969,104

 

4,035,535

Credit cards


76,961


38,213

Overdraft


220,481


453,375

Mortgage loans


1,051,695


620,066

Corporate Loans





Overdraft

 

439,916

 

1,801,799

Direct loans


10,519,440


10,719,717

Syndicated loans


2,869,193


1,761,714

Suspended interest


(643)


(52,480)

Unearned interest

 

(66,831)

 

(60,509)

Financial Investment





Debt instruments


10,048,958


13,875,131

Other assets - accrued revenue


738,563


797,153



57,273,069


52,715,152

 

 

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

General Bank Risk Measurement Model (continued)

Credit risk exposure item without taking collaterals (off-balance sheet):

31-Dec-23

 

31-Dec-22

Items exposed to credit risk (off-balance sheet)

 

 

 

 




Loan Commitment

933,981


1,280,305

Acceptances on supplier facilities

649,754


236,791

Letters of credit

135,397


697,440

Letters of guarantee

3,310,132


3,038,760


5,029,264

 

5,253,296

 

The above table represents the maximum bank exposure to credit risk as at 31 December 2023 and 31 December 2022, without taking in consideration any collateral held for in-balance sheet items, the balances included are based on net carrying amounts as reported in the balance sheet and as shown above, 36.10% of the maximum exposure arising from loans and facilities to customers against 38.42% at 31 December 2022; While investments in debt tools represent 36%, compared to 41.64% on December 31, 2022.

 

Management is confident in its ability to continue to control and sustain minimal exposure of credit risk to the Bank resulting from both its loan and facility portfolio and debt Instruments based on the following:

 

- 94.45% of the loans and facility portfolio is categorized in the top two grades of the internal rating system against 94.55% at 31 December 2022.

- 84.46% of the loans and facility portfolio without accruals or impairment indicators against 86.17% at 31 December 2022.

- 99.39% of the investments in debt instruments and treasury bills represent the debt instruments on Egyptian Government against 89.46% at 31 December 2022.

 

Loans and facilities

Balances of loans and facilities at 31 December 2023 are set out below:

 


31 December 2023

 

31 December 2022

 




Stage 1

20,052,041


18,102,803

Stage 2

1,414,673


1,133,226

Stage 3

1,293,088


1,605,203

Total

22,759,802

 

20,841,232

 




Less:




Expected credit losses

(1,613,012)


(1,410,813)

Reserved interests

(643)


(52,479)

Interest unearned

(66,831)


(60,509)

Net

21,079,316


19,317,431


 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

 Loans and facilities according to past due periods

 

                                    

31 December 2023

Retail

Corporate

 

EGP Thousand

Grades

Debit current

Accounts

Credit cards

Personal loans

Real estate

loans

 

Debit current

accounts

Direct loans

Syndicated

loans

Total loans and facilities to customers

Performing /No Dues

220,707

66,187

5,324,833

1,049,905

447,007

9,172,630

2,941,754

19,223,023

Past due up to 30 days

--

9,387

440,175

10,197

--

1,130,307

189,019

1,779,085

Past due 30-60 days


1,812

156,432

2,279

--

73,671

--

234,194

Past due more than 60 to 90 days


1,888

90,064

251

--

168,966

--

261,169

Impairment


1,276

130,896

417


--

927,608

202,134

1,262,331

Total

220,707

80,550

6,142,400

1,063,049

 

447,007

11,473,182

3,332,907

22,759,802

 

                                    

31 December 2022

Retail

 

Corporate

 

EGP Thousand

Grades

Debit current

Accounts

Credit cards

Personal loans

Real estate

Loans

 

Debit current

accounts

Direct loans

Syndicated

loans

Total loans and facilities to customers

Performing /No Dues

453,437

30,333

3,609,468

622,892


1,816,153

10,031,512

1,392,241

17,956,036

Past due up to 30 days

                           -  

4,847

337,669

6,371


-  

270,773

158,279

777,939

Past due 30-60 days

                           -  

1,404

107,196

1,007


-  

247,093

-  

356,700

Past due more than 60 to 90 days

                           -  

1,251

49,521

188


-  

 -  

-  

50,960

Impairment

                           -  

481

118,422

279


-  

1,201,220

379,195

1,699,597

Total

453,437

38,316

4,222,276

630,737

 

1,816,153

11,750,598

1,929,715

20,841,232

 

 

 

 

 

 

 

 

 

 

 

 


 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Restructured loans and facilities

Restructuring activities include extending payment arrangements, implementing forced management programs, modifying and postponing payments. Policies for implementing restructuring depend on indicators or criteria that indicate that there is a high probability of Continued payments, based on the personal judgment of management. These policies are subject to continuous review. It is usual to apply restructuring to long-term loans, especially customer financing loans, and the renegotiated loans at 31 December 2023 amounted to EGP 431,513 thousand, compared to EGP 196,563 thousand at 31 December 2022.

 

Written-off loans

In accordance with the Board of Directors' decision or its specialized committees, the written-off loans from the non-performing loans are written-off against its related loan loss provisions and that step is made after exhausting all the possible recovery processes.

 


Debt Instruments and Treasury Bills

The table below presents an analysis of debt instruments, and other treasury bills according to the rating agencies at 31 December 2023, based on Standard & Poor's rating and equivalent.

 

 

 

 

Treasury bills & other Governmental securities

 

Debt Instruments

 

 

Total

31 December 2023 - B

9,863,355

10,075,551

19,938,906

31 December 2022 - B

8,707,793

       13,896,539

22,604,332

 

 

 

 

 

 

 

                                                                                             

                                                                                             


 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

Risk management framework in aiBank (continued)

 

Activity segments

The following table represent the analysis of the Bank's main credit exposure at carrying value categorized by the activities practiced by the bank's customers.

 

31 December 2023

Commercial activity

Industrial
activity

Financial institutions

Real estate companies

Governmental sector

Other 
Activities

Individuals

Total

 

 

 

 

 

 

 

 

 

Cash and balances with Central Bank

--

--

4,240,517

--

--

--

--

4,240,517

Due from banks

--

--

11,529,087

--

--

--

--

11,529,087

Loans and facilities to customers Retail loans

 








Overdraft

--

--

--

--

--

1,321

219,386

220,707

Personal loans

--

--

--

--

--

904

6,141,496

6,142,400

Credit cards

--

--

--

--

--

--

80,550

80,550

Mortgage loans

--

--

--

--

--

--

1,063,049

1,063,049

Corporate loans








 

Overdraft

19

9,851

92,343

4

--

344,790

--

447,007

Direct loans

284,565

5,839,569

1,422,342

971,254

--

2,955,452

--

11,473,182

Syndicated loans

--

656,706

--

1,289,894

264,653

1,121,654

--

3,332,907

Financial investments








 

Debt instruments

--

--

19,938,906

--

--

--

--

19,938,906

Other assets

--

--

767,981

--

--

--

--

767,981

Total at 31 December 2023

284,584

6,506,126

37,991,176

2,261,152

264,653

4,424,121

7,504,481

59,236,293

 

 

 

 

 

 

 

 

 

35  Financial risk management (continued)

 

35.1    Credit risk (continued)

 

 

31 December 2022

 

Commercial activity

 

Industrial
activity

 

Financial institutions

 

Real estate companies

 

Governmental sector

 

Other 
Activities

 

Individuals

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and balances with Central Bank


-


-


2,072,958


-


-


-


-


2,072,958

Due from banks


-


-


8,119,010


-


-


-


-


8,119,010

Loans and facilities to customers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overdraft


-


-


-


-


-


-


453,437


453,437

Personal loans


-


-


-


-


-


-


4,222,276


4,222,276

Credit Cards


-


-


-


-


-


-


38,316


38,316

Mortgage loans


-


-


-


-


-


-


630,737


630,737

Corporate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overdraft


49


179,441


120,579


1,045,529


-


470,555


-


1,816,153

Direct loans


123,738


5,987,374


1,666,493


1,226,697


11,816


2,734,480


-


11,750,598

Syndicated loans


-


291,240


-


596,607


295,486


746,382


-


1,929,715

Financial Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt instruments


-


-


22,604,333


-


-


-


-

 

22,604,333

Other assets


-


-


797,153


-


-


-


-

 

797,153

Total at 31 December 2022

 

123,787

 

6,458,055

 

35,380,526

 

2,868,833

 

307,302

 

3,951,417

 

5,344,766

 

54,434,686


 

35  Financial risk management (continued)

 

35.2    Market risk

 

Risk management framework in aiBank

The Bank is exposed to market risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in interest rate, currency and equity products, all of which are exposed to general and specific market movements and changes in the level of sensitivity of market rates or prices such as interest rates, foreign exchange rates and equity prices. The Bank separates exposures to market risk into either trading or non- trading portfolios.

 

The management of market risks arising from trading or non-trading activities is concentrated in the market risk management of the Bank and is monitored by two teams separately. Periodic reports on market risks are submitted to the Board of Directors and heads of each business unit.

 

Trading portfolios include those positions arising from the Bank's dealings directly with customers and market-making transactions, where the Bank acts as a principal with customers or with the market Non- trading portfolios primarily arise from the interest rate management of the entity's retail and commercial banking assets and liabilities, these portfolios include foreign exchange and equity risks arising from investments at amortized cost and at fair value through other comprehensive income.

 

The Bank uses the method of relating debit interest rate with credit interest rate to avoid the risk of fluctuations in interest rate. The Bank also depends on fluctuated interest rate which does not exceed 3 months except in specific cases interest rates are specified for longer period relating resources portfolio with application portfolio to get return that covers its costs.

 

In addition, the Bank should not exceed the following:

 

(i)    The surplus amount of any foreign currency positions should not exceed 1 % of the capital base

(ii)    The total surplus of foreign currency positions should not exceed 2 % of capital base

(iii)   The total shortage amount in the position of any currency should not exceed 10 % of capital base

(iv)   The total shortage of (local/foreign) currency positions should not exceed 20 % of capital base

 

Market Risk Measurement Techniques

The exchange rate risk is measured and hedged by daily follow-up of foreign exchange rates and purchase or sale operations in proportion to market prices with the adoption of limits for foreign currency positions and daily stop-loss limits in proportion to the risks acceptable to the Bank.

 

The risk of interest rate movements is measured using the standard method for measuring the gap that affects the Bank's profits or the economic value of the Bank.

 

The risks of securities rate fluctuations are measured. The Market Risk Department follows up on the classification, sale, and purchase of financial investments for the purpose of trading and making a daily assessment of them with close follow-up and working to set the necessary limits for them, in cooperation with the treasury sector, while measuring the value at risk of those instruments if they are kept for the purpose of trading to determine the extent of potential losses.


 

35  Financial risk management (continued)

 

35.2    Market risk (continued)

 

Risk management framework in aiBank (continued)

 

Market Risk Measurement Techniques (continued)

Liquidity risk is measured by managing all assets and liabilities inside and outside the balance sheet in line with the Bank's objectives in its management, through the ALCO committee, which identifies the sources from which liquidity risks arise with the management of market risks and the work of possible scenarios for liquidity pressure and management in case of crises.

 

The causes of market risks are due to the risk of interest rates and exchange rate risks that arise due to the Bank's daily activities. The Bank manages the risks it is exposed to in the market through a comprehensive framework that reflects the limited acceptance of those risks. All reports are presented to the Risk Committee and the Assets and Liabilities Committee of the Bank. market risks are measured as follows:

 

Measuring the interest rate risk for positions held not for the purpose of trading, which is the risk that arises from unfavourable movements in the prevailing interest rates in the market during a certain period of time, which may negatively affect the Bank's profitability and the economic value of its equity and consequently the bank's position and the Bank's profitability. The Bank calculates the qualitative and quantitative requirements regarding the rate of interest risks of the positions held for non-trading purposes, while carrying out stress tests on them.

 

Value at risk of non-trading purpose according to risk type

 



31 December 2023

 


Average
EGP

 

Higher

EGP

 

Lower

EGP

Interest rate risk


839,393


1,419,214


329,476

 



31 December 2022

 


Average
EGP

 

Higher

EGP

 

Lower

EGP

Interest rate risk


206,098


345,451


175,299

 

Foreign exchange fluctuation risk

The Bank is exposed to the effects of fluctuations in the foreign currency exchange rates on its financial position and cash flows. The Board of Directors sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are monitored daily. The table below summarizes the Bank's exposure to foreign currency exchange rate risk at the end of financial year, and Bank's financial instruments at carrying amounts, categorized by currency.


 

35  Financial risk management (continued)

 

35.2   Market risk (continued)

 

Risk management framework in aiBank (continued)

Foreign exchange fluctuation risk (continued)

 

31 December 2023

EGP

USD

EUR

GBP

Other
Currencies

Total

 







Financial Assets

 






Cash and balances with Central Bank

4,145,948

77,013

13,709

757

3,090

4,240,517

Due from banks

6,201,523

4,696,110

393,379

229,657

5,702

11,526,371

Loans and facilities to customers

19,100,791

1,958,757

19,768

--

--

21,079,316

Financial Investments

 






Financial Investments at fair value through other comprehensive income

8,338,787

493,308

2,778

--

--

8,834,873

Financial Investments at amortized cost

4,990,053

6,169,819

73,989

--

--

11,233,861

Financial Investments in associates

434,687

--

--

--

--

434,687

Other Financial Investments

653,136

111,504

3,083

258

--

767,981

Total financial assets at 31 December 2023

43,864,925

13,506,511

506,706

230,672

8,792

58,117,606

Financial liabilities






 

Due to banks

5,129

2,650,375

--

--

20,589

2,676,093

Customers' deposits

39,077,242

10,812,453

508,248

230,893

5,371

50,634,207

Other loans

126,684

--

--

--

--

126,684

Other financial liabilities

546,828

44,062

127

9

--

591,026

Total financial liabilities at 31 December 2023

39,755,883

13,506,890

508,375

230,902

25,960

54,028,010

31 December 2023

4,109,042

(379)

(1,669)

(230)

(17,168)

4,089,596

 

 

 

 

 

 

 

 

 

35  Financial risk management (continued)

 

35.2   Market risk (continued)

 

Risk management framework in aiBank (continued)

Foreign exchange fluctuation risk (continued)

 

31 December 2022

 

EGP

 

USD

 

EUR

 

GBP

 

Other
Currencies

Total

 












Financial Assets

 











Cash and balances with Central Bank


2,015,850


45,425


10,458


237


988

2,072,958

Due from banks


6,803,457


839,286


314,997


150,682


9,007

8,117,429

Loans and facilities to customers


17,590,294


1,711,849


15,287


-


-

19,317,430

Financial Investments

 










 

Financial Investments at fair value through other comprehensive income


9,301,609


1,834,998


58,776


-


-

11,195,383

Financial Investments at amortized cost


7,928,983


3,589,709


-


-


-

11,518,692

Financial Investments at Fair value through profit or loss


-


-


-


-


-

-

Financial Investments in associates


388,963


-


-


-


-

388,963

Other Financial Investments


720,465


74,295


2,332


61.00


-

797,153

Total financial assets at 31 December 2022

 

44,749,621


8,095,562


401,850


150,980


9,995

53,408,008

Financial liabilities


-


-


-


-


-

-

Due to banks


-


785,959.00


-


-


-

785,959

Customers' deposits


40,002,099


7,398,695


565,604


151,231


12,543

48,130,172

Other loans


6,557


-


-


-


-

6,557

Other financial liabilities


392,180


11,401


10


5


-

403,596

Total financial liabilities at 31 December 2022

 

40,400,836

 

8,196,055

 

565,614

 

151,236

 

12,543

49,326,284

31 December 2022

 

4,348,785

 

(100,493)

 

(163,764)

 

(256)

 

(2,548)

4,081,724

 

          Interest rate risk

The Bank is exposed to the effects of fluctuations in the levels of the prevailing interest rate in the market, i.e., the risk of cash flows of the interest rate represented in the fluctuation of future cash flows of a financial instrument due to changes in the interest rate of the instrument and fair value risk of the interest rate, i.e., is the risk of fluctuations in the value of the financial instrument as a result of a change in the interest rates in the market. The interest margin may increase due to these changes; however, the profits may decrease if unexpected movements occur. The Bank's Board of Directors sets limits for the level of variation in interest re-pricing that can be maintained by the Bank, and this is monitored daily by the Bank's fund management.

 

35  Financial risk management (continued)

35.2   Market risk (continued)

 

Risk management framework in aiBank (continued)

Interest rate risk (continued)

The tables below summaries the Bank 's exposure to the interest rate fluctuations risk that include carrying amount of the financial instruments categorized based on the repricing dates or the maturity date - whichever is earlier.

31 December 2023

Up to 1 month

More than 1 month to 3 months

More than 3 months to 1 year

More than 1 year to 5 years

More than 5 years

Without interest

Total

Financial Assets

 







Cash and balances with Central Bank

--

--

--

--

--

4,240,517

4,240,517

Due from banks

6,782,038

4,728,513

18,536

--

--

(2,716)

11,526,371

Loans and facilities to customers

1,726,427

10,359,962

1,256,937

7,169,237

2,247,239

(1,680,486)

21,079,316

Financial Investments

 







Financial Investments at fair value through other comprehensive income

2,670,452

3,800,142

1,618,038

521,227

55,065

169,949

8,834,873

Financial Investments at amortized cost

285,936

3,917,998

2,463,559

4,323,498

282,990

(40,120)

11,233,861

Financial Investments in associates

--

--

--

--

--

434,687

434,687

Other Financial Investments

--

--

--

--

--

767,981

767,981

Total financial assets at 31 December 2023

11,464,853

22,806,615

5,357,070

12,013,962

2,585,294

3,889,812

58,117,606

Financial liabilities

--

--

--

--

--

--

--

Due to banks

2,378,769

--

--

--

--

297,324

2,676,093

Customers' deposits

13,898,659

9,562,144

12,239,988

14,153,190

47,032

733,194

50,634,207

Other loans

--

--

--

--

126,684

--

126,684

Other financial liabilities

--

--

--

--

--

591,026

591,026

Total liabilities

16,277,428

9,562,144

12,239,988

14,153,190

173,716

1,621,544

54,028,010

31 December 2023

(4,812,575)

13,244,471

(6,882,918)

(2,139,228)

2,411,578

2,268,268

4,089,596

 

 

 

 

 

 

 

 

 

35  Financial risk management (continued)

35.2   Market risk (continued)

 

Risk management framework in aiBank (continued)

Interest rate risk (continued)

 

 

31 December 2022

Up to 1 month

More than 1 month to 3 months

More than 3 months to 1 year

More than 1 year to 5 years

More than 5 years

Without interest

Total

 








Financial Assets







Cash and balances with Central Bank

--

--

--

--

2,072,958

2,072,958

Due from banks

3,571,704

4,396,591

--

--

149,134

8,117,429

Loans and facilities to customers

2,496,358

8,631,569

1,430,660

3,843,369

(1,523,801)

19,317,430

Financial Investments






 

Financial Investments at fair value through other comprehensive income

1,794,500

1,935,585

5,430,407

1,781,258

730,406

(476,773)

11,195,383

Financial Investments at amortized cost

879,316

2,662,840

2,338,332

395,848

(27,407)

11,518,692

Financial Investments in associates

--

--

--

--

388,963

388,963

Other Financial Investments

--

--

--

--

--

797,153

797,153

Total financial assets at 31 December 2022

8,741,878

17,626,585

9,199,399

11,490,296

4,969,623

1,380,227

53,408,008

Financial liabilities







 

Due to banks

515,900

--

--

--

--

270,059

785,959

Customers' deposits

12,395,706

10,044,977

12,044,897

49,714

986,633

48,130,172

Other loans

--

--

--

6,557

--

6,557

Other financial liabilities

--

--

--

--

403,596

403,596

Total financial liabilities at 31 December 2022

12,911,606

10,044,977

12,044,897

12,608,245

56,271

1,660,288

49,326,284

31 December 2022

(4,169,728)

7,581,608

(2,845,498)

(1,117,949)

4,913,352

(280,061)

4,081,724


 

35  Financial risk management (continued)

 

35.2    Market risk (continued)

Risk management framework in aiBank (continued)

Interest rate risk (ontinued)

Sensitivity analysis of interest rate

 

Changes in interest rates affect equity by the following ways:

 

(i)  Retained Earnings: Increase or decrease in the net interest income and fair value of the financial derivatives included in profits and losses.

(ii) Fair value reserve: Increase or decrease in the fair value of the financial assets at fair value through other comprehensive income recognized directly in the statement of other comprehensive income.

 

35.3    Liquidity risk

 

Risk management framework in aiBank

Liquidity risk is the risk that the Bank is unable to meet its obligations associated with its financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligation to repay depositors and fulfil commitments to lending.

 

Liquidity Risk Management

The Bank's liquidity management process, as carried out within the Bank and monitored by Assets & Liabilities Committee, includes:

 

(i)    Day-to-day funding managed by monitoring future cash flows to ensure that requirements can be met. This includes replenishment of funds as they mature or borrowed by customers. The Bank maintains an active presence in global money markets to enable this to happen.

(ii)    Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow.

(iii)   Monitoring the liquidity ratios against internal and regulatory requirements by the Central Bank of Egypt.

(iv)   Managing the concentration and profile of debt maturities.

 

For monitoring and reporting purpose, the cash flow is measured and projected for the next day, week and month respectively, which are key periods for liquidity management. The starting point for those projections represented in the contractual maturity analysis of the financial liabilities and the expected collection date of the financial assets.

 

Asset and liability management also monitors unmatched medium-term assets, the level and type of undrawn loan commitments, the usage of debit current account facilities and the impact of contingent liabilities such as letters of guarantees and credits.

 

The following table represent the analysis of the Bank's liquidity coverage ratio:

 


31-Dec-23

 

31-Dec-22

Total value of high-quality liquid assets (1)

16,081,143


23,282,621

Total cash outflow

10,601,212


16,130,875





Total cash inflow within the set limit (the value less than: total cash inflows ،75% from total cash outflows)

(7,950,909)


(4,788,014)

Net cash outflows (2)

2,650,303

 

11,342,861

Liquidity coverage ratio (1/2)

606.77%

 

205.26%

 


 

35  Financial risk management (continued)

 

35.4    Capital risk

 

Risk management framework in aiBank

The Bank's objectives on managing capital, which include other elements in addition to the equity shown in the balance sheet, are as follows:

 

Compliance with the legal requirements of capital in the Arab Republic of Egypt.

Protecting the Bank's ability to continue as a going concern and enabling it to continue generating income for shareholders and other parties dealing with the Bank.

Maintaining a strong capital base that supports the growth of activity.

 

The capital adequacy and capital uses are daily reviewed according to the requirements of the Central Bank of Egypt by the Bank's management, through forms based on the guidelines of the Basel Committee on Banking Supervision. The required data are submitted and provided to the Central Bank of Egypt on a quarterly basis.

 

The Central Bank of Egypt requires the Bank to do the following:

Maintain one billion Egyptian pounds as a minimum for issued and paid-up capital.

Maintain a ratio equal to or more than 10% between the elements of capital and the elements of assets and contingent liabilities weighted by risk weights.

 

The numerator of the capital adequacy ratio consists of the following two tiers:

 

Tier I after disposals includes the following:

Some of the items that will be deducted/ will not be considered and mentioned in the "supervisory instructions on the minimum ratio of capital adequacy", Chapter II on the capital base will be dealt with later as stated in the instructions.

 

Continuing core capital after disposals (CET1-Common Equity).

Additional core capital

 

There are some items that will be deducted/ not considered and mentioned in the "supervisory instructions on the minimum ratio of capital adequacy", Chapter II on the capital base. These items are deducted from the continuous core capital if the balance is negative, while they are not considered if it is positive.

 

Tier II after disposals

It includes 45% of the special reserve, loans and subordinated deposits within the limits of the prescribed percentage, as well as the considerable provisions required against the debt instruments, loans, credit facilities and contingent liabilities included in the first stage (Stage 1).

 

The capital adequacy ratio model includes some important notes and points which are as follows:

 

1.  Reserves: include legal, general, statutory, supportive and capital reserves only.

2.  The "general risk reserve" is formed on the beginning date of the application of International Financial Reporting Standard (IFRS 9), in accordance with the supervisory instructions issued to banks on 26 January 2019. It includes the special reserve - credit, the general bank risk reserve - credit and the reserve risk of standard (9), considering that in the subsequent periods of application, the Bank shall abide by what is stated within the instructions on minimum capital adequacy ratio "which is not to consider the bank risk reserve when calculating the ratio."

 

 

 

 

35  Financial risk management (continued)

 

35.4    Capital risk (continued)

 

Risk management framework in aiBank (continued)

 

The numerator of the capital adequacy ratio consists of the following two tiers (continued):

 

Tier II after disposals (continued)

3.  The values of accumulated other comprehensive income items, whether they are positive or negative, are considered.

4.  Interim profits/ (losses): It is allowed to record the net interim profits within the capital base after the limited inspection report prepared by the auditor on the Bank's financial statements on a quarterly basis. As for the interim losses, they are presented without any conditions.

5.  It does not include the part related to credit, and the explanatory instructions of the rules on the preparation and presentation of the financial statements issued by the Central Bank in April 2009, page 7, item (9) must be perused.

6.  It should not exceed 1.25% of total assets and contingent liabilities weighted for credit risk, provided that the required provisions against debt instruments, loans, credit facilities and contingent liabilities included in the Stage 2 and Stage 3 are sufficient to meet the obligations for which the provision is formed.

7.  "The value of exceeding the limits set for investments in countries, weighted by risk weights."

8.  This value must be included in accordance with Form No. 720 related to investments in countries abroad, taking into account that the value of the capital base listed in the aforementioned statement must be adjusted according to the calculated value.

 

Ø The continuing core capital after the regulatory adjustments is Clause 1.1 before excluding contributions to financial companies (shares or investment funds) represented in Clause 1.3.1.1.

Ø Continuing core capital before regulatory adjustments means paid-up capital, reserves, retained earnings, general risk reserve, and accumulated other comprehensive income items net of goodwill and treasury shares.

Ø Subordinated loans (deposits): provided that they do not exceed 50% of Tier I after disposals and that 20% of its value is consumed in each of the last five years.

 

35.5   Financial leverage ratio

 

Risk management framework in aiBank

The Board of Directors of the Central Bank of Egypt, in its session held on 7 July, issued a decision approving the supervisory instructions related to the financial leverage, besides the banks' compliance with the stipulated minimum percentage (3%) on a quarterly basis, as follows:

 

This is in preparation for the consideration of it within the first pillar of Basel decisions (the minimum capital adequacy ratio) for maintaining the strength and integrity of the banking sector and keeping pace with the best international control practices in this regard.

 

The financial leverage reflects the relationship between Tier I of capital used in capital adequacy ratio (after disposals) and the Bank's assets (inside and outside the balance sheet) unweighted with risk weights.

 

 

 

 

 

 

 

36  Fair values and classifications of financial assets and liabilities

 

Financial instruments measured at fair value

 

Bank balances

The fair value of one-day variable-rate placements and deposits represent their present value, and the expected fair value of variable-rate deposits is estimated based on the discounted cash flows using the interest rate prevailing in the capital markets for debts that have similar credit risk and maturity date.

 

Loans and facilities to banks

Loans and facilities to banks represent loans other than bank deposits. The expected fair value of loans and facilities is the discounted value of future cash flows expected to be collected and the cash flows are discounted using the current market interest rate for determining the fair value to determine the fair value to meet all the requirements. This includes replacement of funds on maturity or upon being lent to customers. The Bank is present in global money markets to achieve this objective.

 

Funded facilities to customers

They are recognized at net value after deduction of provision for impairment loss. The expected fair value for these loans and facilities represents the discounted value of estimated future cash flows expected to be collected. Cash flows are deducted using the current interest rate in the market to specify the fair value.

 

Investments in securities

Assets through other comprehensive income or profit or loss are carried at fair value. The fair value is determined based on market prices. If such data is not available, fair value is estimated using prices of capital markets for traded securities with similar credit characteristics, dates of maturity and rates.

 

Due to other banks and customers

The estimated fair value of deposits with undefined maturity date including interest bearing deposits is the amount to be paid upon request. The fair value of fixed interest deposits and non-current other loans are determined in an active market based on discounted cash flows using the interest rate on new debts with similar maturity dates.

 

Issued debt Instruments

Total fair value is calculated based on prices ruling in the capital markets. For securities with no active markets, discounted cash flow model is used based on the current rate appropriate with the remaining period to date of maturity.

 

Financial instruments not measured at fair value

 

Financial investments at amortized cost

They include held-to-maturity financial investments that are listed in the market and are measured at amortized cost in case of bonds, and with respect to investment funds, the evaluation is done at the recoverable amount (fair value).

Management believes that the fair value is not materially different from the carrying amount of these assets.

 

Due from banks

The fair value of one-day variable-rate placements and deposits represent their present value, and the expected fair value of variable-rate deposits is estimated based on the discounted cash flows using the interest rate prevailing in the capital markets for debts that have similar credit risk and maturity date.

 

 

 

 

 

 

36  Fair values and classifications of financial assets and liabilities (continued)

 

Loans and facilities to banks

Loans and facilities to banks represent loans other than bank deposits. The expected fair value of loans and facilities is the discounted value of future cash flows expected to be collected and the cash flows are discounted using the current market interest rate for determining the fair value. Loans and facilities are presented net of provision for impairment losses.

 

Fair value measurement - fair value hierarchy:

The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, the Group determines fair values using other valuation techniques.

 

For financial instruments that trade infrequently and have little price transparency fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions another risks affecting the specific instrument.

 

Fair values of financial instruments

 

a) Valuation models

The Group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the measurements. Th Group has an established control framework with respect to the measurement of fair values.

 

This includes a valuation team that has overall responsibility for overseeing a significant fair value measurements, including level 3 fair values, and report to the management.

 

The valuation team regularly reviews significant unobservable inputs an valuation adjustments.

If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.

 

Significant valuation issues are reported to the Group Audit Committee. When measuring the fair value of an asset or liability, the Group uses mark observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

 

Level 1: inputs that are quoted market prices (unadjusted) in active markets of identical instruments.

 

Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derive from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted price for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.

 

Level 3: inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

 

 


 

36  Fair values and classifications of financial assets and liabilities (continued)

Fair values of financial instruments (continued)

 

b) Financial instruments measured at fair value

 

The following tables analyses financial instruments measured at fair value at the reporting date, the amounts are based on the values recognized in the statement of financial position:

 

Carrying amounts

Fair value level

31 December 2023

Designated
at FVTPL

Amortized
 cost

Designated
at FVOCI

Total

Level 1

Level 2

Level 3

Total

Financial assets measured at Fair Value:

 








Mutual fund certificates (notes 6 and 9)

7,355,442

-

138,264

7,493,706

 43,528

-

7,450,178

7,493,706

Equity securities (notes 6 and 9)

108,293

-

187,146

295,439

 31,190

-

264,249

295,439

Structured notes (notes 6 and 9)

680,319

-

-

680,319

 -

 680,319

-

680,319

Treasury bills (notes 6 and 9)

219,222

-

7,065,958

7,285,180

 -

7,285,180

-

7,285,180

Debt instruments (notes 6 and 9)

832,915

-

4,256,243

5,089,158

5,089,158

-

-

5,089,158


9,196,191

 -

11,647,611

20,843,802

5,163,876

7,965,499

7,714,427

20,843,802

Financial assets not measured at fair value:

 



-

 -

-

-

 

Cash and cash equivalents (note 5)

-

32,252,243

-

32,252,243

 -

-

-

-

Funded facilities to customers (note 8)

-

19,117,655

-

19,117,655

 -

-

-

-

Banking loans and facilities (aiBank) (note 8.1)

-

21,079,316

-

21,079,316

 -

-

-

-

Accounts receivable (note 7)

-

6,770,962

-

6,770,962

 -

-

-

-

Investments at amortized cost (note 12)

-

11,233,860

-

11,233,860

 -

-

-

-

Other assets (note 16)

-

4,716,177

-

4,716,177

 -

-

-

-


-

95,170,213

 -

95,170,213

 -

 -

 -

 -

Financial liabilities measured at fair value:

 



 




 

Accounts payable-Customers credit balances at FVTPL (note 19)

680,319

-

-

680,319

 -

 680,319

-

 680,319


 

 

 

 

 

 

 

 

Financial Liabilities not measured at fair value:

 



 




 

Due to banks and financial institutions

-

14,182,413

-

14,182,413

 -

-

-

-

Customer deposits

-

50,634,207

-

50,634,207

 -

-

-

-

Loans and borrowings

-

8,004,219

-

8,004,219

 -

-

-

-

Creditors and other credit balances

-

6,148,445

-

6,148,445

 -

-

-

-

Account payable-customer credit balances

-

11,319,690

-

11,319,690

 -

-

-

-

Short term bonds

-

 749,003

-

 749,003

 -

-

-

-


-

91,037,977

 -

91,037,977

 -

 -

 -

 -

 

36  Fair values and classifications of financial assets and liabilities (continued)

 

Fair values of financial instruments (continued)

 

b) Financial instruments measured at fair value (continued)

 

 

Carrying amounts

Fair value level

31 December 2022
in EGP

Designated
at FVTPL

Amortized
 cost

Designated
at FVOCI

Total

Level 1

Level 2

Level 3

Total

Financial assets measured at Fair Value:

 








Mutual fund certificates (notes 6 and 9)

5,231,021

-

 116,119

5,347,140

 -

-

5,347,140

5,347,140

Equity securities (notes 6 and 9)

 165,787

-

 159,532

 325,319

 77,624

-

 247,695

 325,319

Structured notes (notes 6 and 9)

 379,039

-

-

 379,039

 -

 379,039

-

 379,039

Treasury bills (notes 6 and 9)

 336,439

-

8,686,556

9,022,995

 -

9,022,995

-

9,022,995

Debt instruments (notes 6 and 9)

 660,607

-

5,117,914

5,778,521

5,778,521

-

-

5,778,521


6,772,893

 -

14,080,121

20,853,014

5,856,145

9,402,034

5,594,835

20,853,014

Financial assets not measured at fair value:




-

 -

-

-

 

Cash and cash equivalents (note 5)

-

26,214,250

-

26,214,250

 -

-

-

-

Funded facilities to customers (note 8)

-

13,904,712

-

13,904,712

 -

-

-

-

Banking loans and facilities (A) (note 8.1)

-

19,317,430

-

19,317,430

 -

-

-

-

Accounts receivable (note 7)

-

6,168,256

-

6,168,256

 -

-

-

-

Investments at amortized cost (note 12)

-

11,518,692

-

11,518,692

 -

-

-

-

Other assets (note 16)

-

3,401,911

-

3,401,911

 -

-

-

-


-

80,525,251

 -

80,525,251

 -

 -

 -

 -

Financial liabilities measured at fair value:




 




 

Accounts payable-Customers credit balances at FVTPL (note 19)

 379,039

-

-

 379,039

 -

 379,039

-

 379,039





 




 

Financial Liabilities not measured at fair value:




 




 

Due to banks and financial institutions

-

12,371,836

-

12,371,836

 -

-

-

-

Customer deposits

-

48,130,172

-

48,130,172

 -

-

-

-

Loans and borrowings

-

4,996,029

-

4,996,029

 -

-

-

-

Creditors and other credit balances

-

4,982,665

-

4,982,665

 -

-

-

-

Account payable-customer credit balances

-

10,194,569

-

10,194,569

 -

-

-

-

Short term bonds

-

 500,000

-

 500,000

 -

-

-

-


-

81,175,271

 -

81,175,271

 -

 -

 -

 -

 


 

37  Change in estimate and reclassifications of comparative figures

 

In June 2022 Tanmeyah Micro Enterprise Services S.A.E (Subsidiary 93.983%) acquired 100% of Fatura Netherlands B.V shares with an acquisition cost amounting to EGP 826,319. In 2023 the group has performed the Purchase Price Allocation (PPA) study to determine the fair value of the identifiable asset and liabilities according to the International Financial Reporting Standards.

 

The Group hasreclassified a number of the comparative information to match the current year's presentation.

 

The table below summarises the reatatement and reclassifications of comparative figures:                                                             

 

Consolidated statement of financial position

As at 31 December 2022 as previously stated

 Adjustments

 

Reclassifications

As at 31 December 2022

Accounts receivables

5,569,133

--

599,123

6,168,256

Goodwill and other intangible assets

1,954,750

(7,519)

--

1,947,231

Accounts payable - customers credit balance

9,595,446

--

599,123

10,194,569

Retained earnings

7,460,140

(36,901)

--

7,423,239

Non - controlling interests

3,415,904

29,382

--

3,445,286

 

 

Consolidated statement of profit or loss

 For the year ended 31 December

2022 as previously stated

Adjustments 

Reclassifications

 For the year ended 31 December 2022






Depreciation and amortisation

(296,471)

(39,263)

--

(335,734)

 

 


 

 


Total impact on the consolidated statement of profit or loss

2,078,477

(39,263)

-

2,039,214

Attributable to:





Shareholders of the Holding Company

1,724,109

(36,901)

-

1,687,208

Non-controlling interests

354,368

(2,362)

-

352,006

 

The Group did not present a third statement of financial position as at the beginning of the preceding period as the restatement did not impact the information in the statement of financial position at the beginning of the preceding period.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
FR EAELEDFSLEFA