Zurich, Switzerland – Cembra Money Bank reports for the first half-year 2015 an 8% increase in consolidated net income to CHF 69.6 million or CHF 2.37 per share¹. This reflects an annualised return on average shareholders' equity² of 17.7% while maintaining a strong capital position with a Tier 1 capital ratio³ of 18.7% after the CHF 100 million share buyback executed in May 2015. Costs remained well under control as demonstrated by the solid cost/income ratio⁴ of 42.8%. With net financing receivables growing by 1% to CHF 4.1 billion, Cembra Money Bank was able to outperform Swiss GDP growth.

Robert Oudmayer, Chief Executive Officer, said: “In a challenging environment, we showed excellent net income growth. We also managed to deliver on our medium term targets. Furthermore, our business transition from GE is well on track.”

Growing commission and fee income combined with rigorous cost and risk management

Compared to first half 2014, net revenues increased by 2% to CHF 190.3 million. Net interest income, which accounts for 77% of net revenues, was down 1% at CHF 147.3 million, reflecting a net interest margin⁵ of 7.1%. Interest income was down 1% driven by costs of approximately CHF 1.5 million for cash held at the Swiss National Bank (SNB). Interest expense was down 3% on favorable repricing of the Bank's liabilities. Commissions and fee income, which contributes 23% to net revenues, was 15% higher at CHF 43.0 million, mainly driven by a 26% increase in credit cards fee income. Provisions for losses came in at CHF 20.8 million translating into a loss rate⁶ of 1.0% of financing receivables which is in-line with the guidance provided. Cembra Money Bank's prudent risk management approach was reflected in stable delinquencies at low levels: 2.0% for 30+ days past due⁷ and 0.5% for non-performing loans⁸.

Total operating expenses were 2% lower at CHF 81.4 million. While personnel expenses increased by 2% to CHF 48.8 million as a result of higher pension cost, general and administrative expenses of CHF 32.5 million were 6% lower. This decrease is mainly attributable to timing effects related to the ongoing IT transition. General and administrative expenses also included CHF 3.4 million Swiss issuance stamp tax in connection with the sale of 9.5 million Cembra Money Bank shares by General Electric Company in May 2015. This resulted in a solid cost/income ratio of 42.8%. Income before taxes increased by 7% to CHF 88.1 million while the tax rate remained unchanged at approximately 21%. This led to a net income of CHF 69.6 million representing an increase of 8% compared to first half 2014.

Substantial inflows from institutional and retail depositors

Cembra Money Bank recorded substantial inflows in institutional and retail deposits which grew by 11 % to CHF 2,163 million and made up for 55 % of total funding in June. In March, the Bank successfully executed its third auto asset backed security (ABS) transaction of CHF 200 million with maturity of four years at favorable conditions. The cash on the balance sheet of CHF 534 million (down 14 % compared to year-end 2014) was almost entirely at SNB.

Shareholders' equity decreased 13% to CHF 736 million as a result of the CHF 100 million share buyback and the CHF 93 million dividend payment. With risk-weighted assets of CHF 3,730 million (up 1% versus year-end 2014) and eligible Tier 1 capital of CHF 699 million, the Tier 1 capital ratio reached a strong 18.7% by end-June 2015.

Antoine Boublil, Chief Financial Officer, commented: “We are tracking ahead of our funding plan with a strong growth in deposits, which enabled us to complete the repayment of our IPO syndicate loan and of CHF 200 million of GE funding, both executed in July 2015. Besides, following our share buyback in May, we accumulated CHF 27 million of excess capital as of the end of June.“

Growth in net financing receivables driven by credit cards

In an again slightly decreasing market, Personal loans was able to consolidate its strong market position keeping receivables almost flat at CHF 1,840 million. Interest income was 2% lower at CHF 103.7 million compared to first half 2014. As of 1 July 2015, the branch and agent operations have been reorganized and divided into regions to serve clients more efficiently.

The revaluation of the Swiss Franc had a significant impact on the Swiss auto market. While new car registrations benefited from lower import prices, used car transactions in Switzerland were flat in the first six months of 2015. Net financing receivables increased slightly to CHF 1,668 million and interest income fell by 2% to CHF 42.9 million as a result of lower rates offered in the market, compared to first half 2014.

Credit cards again recorded strong growth with net financing receivables increasing by 7% to CHF 595 million compared to year-end 2014. Interest income of CHF 21.8 million was 17% higher than in the corresponding period 2014. All credit card programs contributed to the 3% increase in the number of issued cards to 626,000 (compared to year-end 2014).

Increasing full-year 2015 guidance

Given the seasonality in Cembra Money Bank's business and assuming no major change in the economic environment, net revenue for the second half-year 2015 should exceed first half-year net revenue. Funding costs are expected to benefit from the repayment of loans signed at the time of the IPO and the low interest rate environment. At the same time, due to the scheduled completion of the business transition, IT related operating expenses will increase compared to the first half of the year. Based on these factors, Cembra Money Bank increases its full-year 2015 guidance and is expecting reported earnings per share of between CHF 4.70 and CHF 4.90⁹.

Organisational change to the Board of Directors

Prof. Dr. Peter Athanas, member of the Board of Directors and Chairman of the Audit Committee, has been elected by the Board of Directors as a member of the Compensation and Nomination Committee. He will replace Richard Laxer, who has announced his retirement from the Board of Directors effective 1 September 2015.

All documents (half-year report 2015, investor presentation, letter to shareholders and this media release) are available at www.cembra.ch/en/investor.