Speaker #1: Van is Chief Investment Officer. Management will begin with a presentation on the key highlights of the third quarter, after which we will open the floor for questions.
Speaker #1: With that, I'd like to hand over the call to Munir. Please go ahead.
Speaker #2: Thank you, Elena. Good afternoon, everyone. It is a real pleasure to welcome you to our first earnings call as a listed company. On the 20th of October, MNT Halan began trading on the Egyptian exchange.
Speaker #2: A defining milestone and the start of a new chapter for our company. We raised EGP 4 billion of new capital through our IPO, increasing our equity base by approximately 45% to EGP 13 billion.
Speaker #2: This places us in an exceptionally strong financial position within our sector, and with the capital with this capital, we have a lot of more flexibility to accelerate our next phase of growth.
Speaker #2: I want to thank our investors for their trust and confidence, and we look forward to engaging with you regularly. We enter this new chapter with real momentum.
Speaker #2: MNT Halan delivered a strong third quarter. Net profit more than doubled quarter-on-quarter to 836 million. Revenue rose 15% to 5.4 billion, and our net profit margin nearly doubled from 8% to 15%.
Speaker #2: Our annualized return on average equity reached 41%. For the first 9 months, net profit reached 1.75 billion, already 88% of full year 2025, with a quarter still to go.
Speaker #2: Our lending business continues to grow while becoming higher quality, the gross loan book reached 48.1 billion, up 14% year on year, and disbursements rose about 10% to 34.5 billion in the first 9 months.
Speaker #2: Consumer finance is our standout performer. Disbursements grew 42% to 13 billion Egyptian pounds, and its share of the loan book rose to 29% from 23% a year ago.
Speaker #2: The engine behind this is our hero product, the Halan card, which lets customers use their consumer finance limit at any merchant with a POS, not only within our own network.
Speaker #2: Microfinance, at 39% of the book, retained its market leadership with about 25% market share. At the same time, we have deliberately steered growth toward quality.
Speaker #2: In SME finance, we tightened underwriting, reduced larger ticket exposure, and focused on smaller businesses, particularly asset-backed and consumers, and customers graduating from our microfinance base, with a stronger credit profile.
Speaker #2: High-risk SME lending fell from 25% of disbursements to 15% of disbursements. This was by design. Our funding platform proved its strength this quarter. We offloaded 6.8 billion of principal at a margin of 34.3%, up from 28.7% a year ago.
Speaker #2: Even as market liquidity tightened, that is a that is clear evidence of the market's continued appetite for our instruments. For the 9 months, offloading income grew 51% to 6.9 billion.
Speaker #2: We also released 1.6 billion of restricted cash by replacing cash reserves with bank letters of guarantee, freeing up liquidity to fund growth. Beyond lending, our ecosystem is scaling fast.
Speaker #2: With non-lending revenues more than doubling to 3 billion Egyptian pounds in the first 9 months, we have now issued more than 1.6 million Halan cards.
Speaker #2: Our active card base grew nearly 30% to over 700,000. Card transactions rose 2.6x to more than 3.6 million transactions, and card throughput reached 737 billion.
Speaker #2: In wealth, outstanding investments reached 4.6 billion, nearly 5 times their level a year ago, and active investors more than tripled to around 136,000. This is where the ecosystem pays off.
Speaker #2: Month-on-month retention of consumer finance customers reached 51% in September, 11.7 times its level before we launched the Halan card. This quarter, we also launched Halan Borsa, our digital brokerage platform, supported by our newly granted FRA custodian license.
Speaker #2: It gives our customers fully digital access to EGX-listed equities, with AI-built into making investing simpler, smarter, and more accessible. We launched a factoring business, small-ticket working capital offering for underserved small businesses nationwide.
Speaker #2: This is a unique proposition that, very few others do. It is built on the same playbook we use to scale other businesses, so it's going to scale like we scaled cards, consumer finance, ROSCA, and investment products.
Speaker #2: Scaling is based on 2, 2 strengths of ours, which is distribution, digitally, and physically. We are running the business more efficiently too. SG&A grew only 4% in the first 9 months, well below inflation and below revenue growth of 11%, and our cost-to-income ratio improved to 59.4%, down from 62% in 2025.
Speaker #2: Our net cost of funds fell to 18.2% from 23.7%. Excluding write-offs, that were mostly reported on in Q2, our ECL, or expected credit loss charge, was flat year on year and cost-of-risk edged down to 3.5%.
Speaker #2: On the recent 100 basis point rate hike by CBE, we had already anticipated this, and we had already raised our pricing preemptively. Last year's earnings were heavily concentrated in last year's third quarter, which alone delivered 62% of 9-month 2025 net profits.
Speaker #2: 2020, 5 Q4 net profits were negligible or close to 0. The QonQ trend for this year is therefore a clear read of our performance, and it is firmly upward.
Speaker #2: Looking ahead, our pro- priorities are to deepen customer engagement and enhance operational efficiency. Our technology investments position us to scale AI across the business, delivering hyper-personalized experiences that lift that lift cross-selling and retention faster, turnaround times, and greater operational leverage while AI-powered credit agents strengthen underwriting and credit decisions.
Speaker #2: Our IPO capital reduces our reliance on debt and gives us the flexibility to fund growth where risk-adjusted returns are strongest. Our ambition is to establish MNT Halan as the leading integrated financial ecosystem where customers can borrow, spend, pay, save, and invest on one seamless platform.
Speaker #2: With over 1.9 million active customers, a strengthened capital base, and a technology-driven operating model, we are exceptionally well positioned to deliver sustainable profitability and long-term shareholder value.
Speaker #2: With that, my colleagues, I would be happy to take your questions. Thank you. Moderator, we can now start the Q&A session.
Speaker #1: Thank you very much, Munir, for, the presentation. We'll open the floor now for questions and answers. If you have a question, you can write it in the Q&A designated area, and I will read it from there, or you can also click on the raise hand button, and I will unmute your, microphone.
Speaker #1: we have received a question in the chat from, Nada Hashim, I'll read it how I rece- how it has been received. How material is Halan Borsa and the factoring business?
Speaker #1: What is the expected contribution to revenue?
Speaker #2: Halan Borsa, we're expecting it to be, a very, very exciting proposition that will attract lots and lots of new customers onto our platform. we will, introduce, margin lending, which will give us a unique positioning.
Speaker #2: It is also linked, it has an AI component that advises on, portfolio, management. And, we're it, it is an important asset to complement our, full offering.
Speaker #2: factoring business, our proposition is somewhat unique. We're focused on small-ticket items. We're looking forward to scaling it in 2027. We have already launched and disbursed, 2 tens of customers.
Speaker #2: We will disburse to hundreds of customers before, year-end, and then scale it in 2027.
Speaker #1: Thank you very much. while we wait for, other attendees to ask, questions, perhaps, question from my, side, can you talk about the, securitization market, the trends in so far in the second half of the year, can you discuss also perhaps your recent, securitization that you did, I think, in towards the end of, September, and how do you see the outlook for the rest of the year in light of the recent rate hike, if it has any impact?
Speaker #1: Thank you.
Speaker #2: So, so, I, I don't think the, the rate hike has an impact on the securitization market. maybe on the pricing of the securitization market, but not necessarily on the appetite.
Speaker #2: We are seeing increased appetite month over month, so definitely Q4 will have more appetite than Q3. More and more banks have submitted their policies and gotten their policies approved.
Speaker #2: asset managers that would only subscribe to 13-month, bonds are now interested to subscribe to 18-month bonds. so we're seeing increasing appetite.
Speaker #1: All right. Thank you very much. And also, if you can discuss the impact of the recent, rate hike on, on the NIM for the last, quarter of the year and for 2027.
Speaker #2: We're expect this to be, minimal, Elena. So, this is, currently, as you know, we have half of our nearly half of our total gross loan books still on books.
Speaker #2: So, the 1% could affect, mildly this. However, we have increased our rates more than proportionately, and increased upfront fees that record instant revenue, in the month to offset this increase.
Speaker #2: So we do not see 1% hike as would do any, meaningful, change to our guidance, previously indicated.
Speaker #1: All right. Thank you. That's very clear. we have a question on the chat from, Nitesh, Awarwal. Do you expect any major deviations from previously disclosed guidance for '26 and '27?
Speaker #1: I think you just actually commented on this, but I don't know if you want to add anything. On that.
Speaker #2: We are working very hard to deliver the guidance, and we are somewhat confident to be able to achieve the previously indicated guidance.
Speaker #1: All right. Thank you. Next, question on the, on the Q&A, chat. Do you plan to rely more on securitization gains and less on recurring, recurring interest income going forward?
Speaker #1: If so, how could FRA regulations affect the pace or scale of that shift?
Speaker #2: We are, not shifting, our revenue mix from the previously guided, revenue mix. So the securitization income and, the proportion of revenue coming from securitization income and from on-book yield and fees will remain according to guidance.
Speaker #2: We are taking the guidance extremely seriously to deliver on the guidance.
Speaker #1: Thank you very much. Another question, from Tarek Karam. You say there is more appetite from banks for securitized, products, but what does it mean for MNT Halan?
Speaker #1: I thought the plan was to reduce securitization income going forward.
Speaker #3: Recent disbursements are related to what central disbursements?
Speaker #2: the guidance we have given is that 50% of the disbursements will be offloaded, and we, we are sticking with this. And appetite of se-securitization and offloading is an important, revenue stream of ours, and we will continue to do that.
Speaker #2: The mix now gives us more flexibility with the $4 billion on our balance sheet to optimize for unit economics, and not be subject to opportunistic pricing from banks.
Speaker #2: So we find ourselves in a stronger position where we have options, and we can negotiate pricing significantly better than Q3 and, previous quarters.
Speaker #1: Thank you very much. There is a follow-up question from another Hashim. She is asking if you can, provide some, early indications of Q4, Q4 outlook, Q4 net income, but I guess it's more Q4 outlook.
Speaker #2: we are, working towards the guidance we have given in our, in our roadshow. So we're still wo-working towards the guidance of our roadshow.
Speaker #1: All right. Thank you very much. as a reminder, if you have, a question, you can write it in the Q&A designated area, or you can click on the raise hand button.
Speaker #1: Just, also another question from my side. Is there any impact of the recent, EGP depreciation on your operating expenses for any USD-denominated expenses? Do you expect that to have any material impact in Q4?
Speaker #2: So, Elena, it's good you mentioned this. As you can see, we have a very, very strong grip on our SG&A expenses. Obviously, whatever U.S. dollar-denominated expenses will increase.
Speaker #2: However, these are completely immaterial to our overall total SG&A. We have also indicated in the guidance that the cost-to-income ratio is one of our priorities.
Speaker #2: We continue to, to, deliver on our promise. As you can see, Q3 cost-to-income went down to 59%. We are, committed to deliver on the guidance.
Speaker #2: So, whatever increase that would happen due to the devaluation, we will offset it by reducing other SG&A overall to deliver on the guidance.
Speaker #1: All right. Thank you. We have no, questions, no additional questions. we could pause for a minute or so, just to give the chance for participants to ask questions, and if we don't receive anything, we can, close the call.
Speaker #2: Sure. A little. Yeah. So I think this brings the call to an end.
Speaker #1: Yes, no.
Speaker #2: I would like to.
Speaker #1: yes. Sorry. Go ahead.
Speaker #2: So I would like to thank everyone for their trust, and we are committed to deliver on the results. Thank you, everyone.
Speaker #1: Thank you very much.
