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Cembra Money Bank reports a solid performance in 2013 with a Net Income of CHF 132.9 million – The Bank's transition as a stand-alone company is well on track

3 March 2014

Cembra Money Bank reports a solid performance in 2013 with a Net Income of CHF 132.9 million – The Bank's transition as a stand-alone company is well on track

Net income of CHF 132.9 million on stable net financing receivables of CHF 4.0 billion
Continued growth in credit cards portfolio with receivables up 19%
Cost/income ratio of 50%, including IPO one-off items, 44% adjusted for those
Return on average equity of 14.1% or 16.6% based on 2013 year-end equity
Strong capital base with consolidated Tier 1 ratio of 19.7% after proposed dividend
Dividend per share of CHF 2.85 proposed to annual general meeting – to be paid out of reserves from capital contributions

Zurich, Switzerland – Cembra Money Bank, a leading Swiss consumer finance bank, reports consolidated net income for the financial year 2013 of CHF 132.9 million on a US GAAP basis or CHF 4.43 per share¹. This translates into a return on average equity² of 14.1% or 16.6% based on year-end equity. Costs remained well under control with a cost/income ratio³ of 50% and 44% when excluding IPO-related one-time costs. While net financing receivables remained stable, the funding was changed to become more diversified post IPO. Based on its strong capital position with a Tier 1 capital ratio⁴ of 19.7%, Cembra Money Bank's Board of Directors proposes a dividend per share of CHF 2.85 to be paid out of capital contributions reserves⁵.

Robert Oudmayer, Chief Executive Officer, said: “2013 was an exciting year for our Bank with the successful IPO in October and the rebranding to Cembra Money Bank. We executed on these milestones extremely well. At the same time we didn't lose focus on our daily business as our financial results can demonstrate. We are well positioned in our transition to being a stand-alone company.”

Operating performance

Net revenues were stable at CHF 354.5 million compared to CHF 355.7 million in 2012. Net interest income, which accounts for 80% of net revenues, was virtually unchanged at CHF 282.6 million, reflecting a stable net interest margin⁶ of 7.0%. Lower interest income was compensated by cheaper funding. Commission and fee income, which contributes 20% to net revenues, was down 2% to CHF 71.9 million. Provisions for losses fell to CHF 7.0 million supported by a positive CHF 21.1 million net impact from the sale of a portfolio of loss certificates (CHF 33.1 million partially offset by an estimated CHF 12.0 million recovery impact) in the first half of 2013. Operating expenses were up 9% driven by significant IPO-related one-off costs. These costs amount to CHF 23.3 million and include the rebranding campaign to Cembra Money Bank, transaction-related costs and share issuance costs. The cost/income ratio was 50% including one-off costs and 44% on an adjusted basis.

Cembra Money Bank's prudent risk management approach was reflected in the loss rate⁷ of 0.2% of financing receivables including the gain on loss certificates and delinquencies at low levels: 1.8% for 30+ days past due⁸ and 0.4% for non-performing loans⁹.

Balance sheet and capital developments

Total assets grew by 3% to CHF 4,590 million, mainly as a result of higher cash holdings at year-end. Net financing receivables (representing loans and leases to customers) were barely unchanged at CHF 3,993 million. Continued strong growth in Credit Cards (up 19% versus 2012) was offset by lower receivables in Personal Loans driven by the continued run-off of a product and challenging market conditions in Auto. The funding of the balance sheet changed significantly in 2013. Funding from former parent GE Capital was more than halved to CHF 700 million. Cembra Money Bank tapped capital markets successfully, issuing a second Auto ABS of CHF 200 million in the first half of the year and its first senior unsecured bond for CHF 250 million in the second half of the year. Both issues were very well received by the market and could be executed at attractive terms, reflecting the confidence the market has into Cembra Money Bank as a stand-alone company. Furthermore, institutional deposits grew by 53% to CHF 1,165 million. Additionally, Cembra Money Bank was granted a CHF 450 million loan by a syndicate of international banks. Shareholder's equity fell from CHF 1,081 million to CHF 799 million as a result of CHF 470 million dividend payments prior to the IPO, partially offset by 2013 net income. The consolidated Tier 1 capital ratio stands at high 19.7%, including the proposed dividend pay-out.

Dividend proposal

Based on its strong capital position Cembra Money Bank's Board of Directors will propose to the annual general meeting on 13 May 2014 that a dividend per share of CHF 2.85 be paid out of reserves from capital contributions. The distribution will therefore not be subject to Swiss withholding tax for Swiss individual investors who hold their shares as private assets. The dividend reflects a pay-out ratio of 64% of consolidated net income.

Antoine Boublil, Chief Financial Officer, commented: “We have made good progress in 2013 on our funding plans as an independent company and we are also ahead of our capital ratio guidance.”

Product lines

Net financing receivables in Personal Loans stood at CHF 1.9 billion (decrease of 2% versus 2012) by end 2013 while interest income was down 3% to CHF 218.5 million in 2013.

Credit Cards again recorded double digit growth with net financing receivables increasing by 19% to CHF 0.5 billion. Interest income of CHF 32.3 million was 26% higher than in the previous year. The number of issued cards grew by 17% to 553'000 with the Cumulus MasterCard being the main driver. The contracts with Migros and Conforama were successfully extended.

In a very competitive environment Auto defended its market position. Net financing receivables declined 3% or CHF 56 million to CHF 1.6 billion. Interest income slipped 9% to CHF 92.9 million as a result of lower rates offered in the market.

Outlook

Cembra Money Bank is currently expecting interest rates to stay at historically low levels and therefore pricing competition to remain fierce in particular in Auto. Credit Cards is expected to continue on its growth path. Medium-term targets remain unchanged including a dividend pay-out ratio of 60-70% of net income. Considering the current market conditions Cembra Money Bank is expecting earnings per share of between CHF 4.40 and CHF 4.60 for 2014.

All documents (results presentation, letter to shareholders and this media release) will be available from 07:00 a.m. CET at www.cembra.ch/en/investor

Contacts

Media:

Brigitte Kaps; +41 44 439 8194; brigitte.kaps@cembra.ch

Investor Relations:

Christian Waelti; +41 44 439 8572; christian.waelti@cembra.ch

Key dates

28 March 2014	Publication of Annual Report 2013
13 May 2014	Annual General Meeting 2014
15 May 2014	Ex-dividend date
19 May 2014	Record date
20 May 2014	Dividend payment date
29 August 2014	First-half 2014 results

About Cembra Money Bank AG

Cembra Money Bank is a Bank with a well-established position in Swiss consumer finance. The Bank is regulated by Finma, holds a banking license and provides a range of financial products and services. The Bank holds leading positions in Switzerland for its Personal Loans and Auto business. It has a growing Credit Cards business based on partnering with Swiss retailers and other institutions.

Headquartered in Zurich, the Bank operates exclusively in Switzerland through a nationwide network of 25 branches as well as through alternative distribution and sourcing channels, such as the internet, credit card partners, independent agents and over 3,200 auto dealers.

The Bank generated a net income of CHF 132.9 million in 2013. As at 31 December 2013, the Bank had financing receivables of CHF 4 billion and a consolidated Tier 1 capital ratio of 19.7%. It had ca. 700 full time equivalent employees, serving approximately 624,000 customers.

Presentation for analysts of Cembra Money Bank's 2013 results via audio webcast and telephone conference (in English)

Date and time:	3 March 2014 at 09.00 a.m. CET
Speakers:	Robert Oudmayer, CEO
	Antoine Boublil, CFO
Audio webcast:	www.cembra.ch/en/investor
Telephone:	Europe: +41 (0)58 310 50 00
	UK: +44 (0)203 059 58 62
	USA: +1 (1)631 570 5613
Q&A:	Following the presentation, participants will have the opportunity to ask questions via the telephone conference.

Explanatory notes

¹	Basic earnings per share based on weighted-average numbers of common shares outstanding.
²	The return on average equity is defined as the ratio of net income to average total shareholder’s equity (2-point average).
³	The cost/income ratio is defined as the ratio of total operating expenses to net revenues.
⁴	The Tier 1 capital ratio: this means the ratio (expressed as a percentage) of the Bank’s consolidated Tier 1 capital (CET1) to the Bank’s consolidated risk-weighted assets as at 31 December 2013. The Bank’s consolidated Tier 1 capital as well as the risk-weighted assets have been derived from the Banks’s statutory consolidated financial statements as at 31 December 2013, which were prepared in accordance with Swiss law, and calculated in accordance with applicable Swiss regulatory requirements.
⁵	The capital contributions reserves are discussed in the statutory financial statements of the Parent Office. For US GAAP purposes the dividend will be paid out of retained earnings.
⁶	The net interest margin is defined as the ratio of net interest income to average financing receivables (net of deferred income and costs and before allowance for losses; calculated on a quarterly basis).
⁷	The loss rate is defined as the ratio of provisions for losses on financing receivables to average financing receivables (net of deferred income and costs and before allowance for losses; 2-point average).
⁸	This ratio represents the Bank’s 30+ days past due balances divided by the financing receivables (excluding initial direct costs).
⁹	The non-performing loans (NPL) ratio is defined as the ratio of non-accrual interest-bearing assets (at period-end) to interest-bearing assets

Disclaimer regarding forward-looking statements

This media release by Cembra Money Bank (“the Bank”) includes forward-looking statements that reflect the Bank’s intentions, beliefs or current expectations and projections about the Bank’s future results of operations, financial condition, liquidity, performance, prospects, strategies, opportunities and the industries in which it operates. Forward-looking statements involve matters that are not historical facts. The Bank has tried to identify those forward-looking statements by using the words “may”, “will”, “would”, “should”, “expect”, “intend”, “estimate”, “anticipate”, “project”, “believe”, “seek”, “plan”, “predict”, “continue” and similar expressions. Such statements are made on the basis of assumptions and expectations which, although the Bank believes them to be reasonable at this time, may prove to be erroneous.

These forward-looking statements are subject to risks, uncertainties and assumptions and other factors that could cause the Bank’s actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Important factors that could cause those differences include, but are not limited to: changing business or other market conditions; legislative, fiscal and regulatory developments; general economic conditions in Switzerland, the European Union and elsewhere; and the Bank’s ability to respond to trends in the financial services industry. Additional factors could cause actual results, performance or achievements to differ materially. In view of these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements. The Bank, its directors, officers and employees expressly disclaim any obligation or undertaking to release any update of or revisions to any forwards-looking statements in this presentation and these materials and any change in the Bank’s expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation.