Zurich – Cembra Money Bank (Ticker: CMBN) reports for the full-year 2015 a 4 % increase in consolidated net income to CHF 145.0 million or CHF 5.04 per share¹. This reflects a return on average shareholders' equity² of 17.7 % while maintaining a strong capital position with a Tier-1 capital ratio³ of 19.8 % after a CHF 100 million share buyback. Costs remained well under control as demonstrated by the solid cost/income ratio⁴ of 41.5 %. Net financing receivables were stable at CHF 4.1 billion.

Robert Oudmayer, Chief Executive Officer, said: “2015 has been a very successful year for Cembra Money Bank, both operationally and financially. On the one hand, we finalised the IT migration from GE to a stand-alone platform after two years of hard work. On the other hand, we kept focused on the daily business and delivered the best results since being a public company.”

Commission and fee income growing double-digit

Net revenues increased by 2 % to CHF 388.7 million compared to CHF 379.4 million in 2014. Net interest income, which accounts for 78 % of net revenues, was up CHF 0.9 million to CHF 301.9 million, reflecting a net interest margin⁵ of 7.3 %. Interest income was down 1% to CHF 338.3 million driven by costs for cash held at the Swiss National Bank (SNB) and lower income in the personal loans and auto business. This was offset by higher interest income from the credit cards business and the 13 % decline in interest expense as a result of the favorable repricing of the Bank's liabilities. Commissions and fee income, which contributes 22 % to net revenues, was up 11 % to CHF 86.7 million, mainly driven by an 18 % increase in credit cards fee income. Provisions for losses came in at CHF 43.6 million translating into a loss rate⁶ of 1.06 % of financing receivables. Delinquencies remained stable at low levels of 1.8 % for 30+ days past due⁷ and 0.4 % for non-performing loans⁸, reflecting the Bank's prudent risk management approach.

Costs well under control with cost/income ratio of 41.5%

Total operating expenses were flat at CHF 161.5 million with some changes in composition. Personnel expenses increased by 4 % or CHF 3.9 million to CHF 99.8 million as a result of higher pension cost and increased headcount due to the IT migration project. General and administrative expenses of CHF 61.7 million were 6 % or CHF 3.8 million lower than in 2014. This decrease is mainly attributable to reduced TSA (fees paid to GE) and consulting costs after the successful completion of the IT separation. This resulted in a solid cost/income ratio of 41.5 %. Income before taxes increased by 4 % to CHF 183.6 million. With an unchanged tax rate of approximately 21 %, this led to a net income of CHF 145.0 million representing an increase of 4 % or CHF 5.1 million compared to 2014.

Strong inflows from institutional and retail depositors

The Bank remained an attractive counterparty to place money with and recorded strong inflows in institutional and retail deposits which grew by 16 % to CHF 2,246 million and made up for 59 % of total funding. The cash on the balance sheet of CHF 572 million was almost entirely held at SNB, on which the Bank incurred a charge of CHF 2.0 million for the full-year 2015.

Shareholders' equity decreased 5 % to CHF 799 million as a result of the CHF 100 million share buyback and the CHF 93 million dividend payment. With unchanged risk-weighted assets of CHF 3,703 million and eligible Tier-1 capital of CHF 733 million, the Tier-1 capital ratio reached a strong 19.8 % by year-end 2015. Excess capital above the Bank's minimum 18 % Tier-1 target amounted to CHF 66 million.

Growth in credit cards receivables offsetting decline in personal loans

In a continuously decreasing market environment, receivables in the personal loans business declined 4 % to CHF 1,784 million. In line with the receivables development, interest income of CHF 207.9 million was 3 % lower in 2015 than in 2014. As the Bank kept its pricing unchanged, the yield⁹ remained stable at 11.2 %.

The revaluation of the Swiss Franc had a significant impact on the Swiss auto market. New car registrations as well as used car transactions benefited from lower prices and reached new multi-year highs. Despite aggressive pricing of competitors, financing receivables remained unchanged at CHF 1,661 million. Interest income fell by 3 % to CHF 85.4 million as a result of lower rates offered in the market. However, the Bank was able to keep its yield above 5 %.

The credit card business continued on its growth path with net financing receivables increasing by 11 % to CHF 617 million compared to year-end 2014. Interest income of CHF 45.7 million was 15 % or CHF 6.0 million higher than in 2014. The yield slightly increased to 7.7 %. The number of issued cards increased by 8 % to 655,000, mainly driven by the Cumulus-MasterCard.

8 % higher dividend of CHF 3.35 per share proposed

Based on the solid results and the strong capital position, the Bank's Board of Directors will propose to the Annual General Meeting on 27 April 2016 an 8 %, or 25 cents, higher dividend per share of CHF 3.35. The dividend will be paid out of reserves from capital contributions and, therefore, will not be subject to Swiss withholding tax. The dividend reflects a pay-out ratio of 66 % of net income. The Bank intends not to pay dividends on the approximately 1.8 million shares bought back in May 2015 and held as treasury shares.

Lower interest rate cap for consumer loans

The Federal Council decided in December 2015 to reduce the maximum interest rate on consumer loans offered under the Consumer Credit Act (CCA) to 10 % for personal loans and to 12 % for credit card overdrafts. The corresponding amendment of the ordinance to the CCA will enter into force as of 1 July 2016 for all new contracts entered thereafter. The Bank has initiated a set of measures to mitigate the financial consequences and is also working on other business initiatives.

Guidance for 2016

Due to the reduction of the maximum interest rate cap effective mid-2016, revenues in the personal loans business are expected to decline, but should be partially offset by continued growth in the credit card business and lower refinancing costs. Loan loss provisions are expected to be in line with prior years' performance. Costs are expected to increase slightly driven by pension costs and a higher IT run-rate. Based on these factors, the Bank is expecting reported earnings per share of between CHF 4.80 and CHF 5.10¹⁰ for the financial year 2016.

Katrina Machin and Ben Tellings proposed for election to the Board of Directors

The Board of Directors of Cembra Money Bank will propose to the next Annual General Meeting on 27 April 2016 the election of Katrina Machin (also known as Cliffe) and Simonis Maria Hubertus (“Ben”) Tellings as new members to the Board of Directors.

British citizen Katrina Machin has spent 20 years of her career in the financial services industry, specialising in consumer lending with companies such as American Express, Lloyds Banking Group, Goldfish Bank Ltd and MBNA International Bank. In 2014, she became a non-executive director with the online retail specialist Shop Direct Finance Company and in 2015 also took a non-executive directorship with ABTA, the UK's largest travel association.

Dutch citizen Ben Tellings has an outstanding experience in consumer finance in several European countries with more than 20 years in different executive roles at ING Group. Since 2010, he is the Chairman of the Supervisory Board of ING-DiBa AG in Germany, after having served as its Chief Executive Officer from 2003 until 2010.

Katrina Machin and Ben Tellings are nominated to replace Richard Laxer and Christopher M. Chambers in the Board of Directors of Cembra Money Bank. Mr. Laxer stepped down from his position as a member of the Board of Directors as of 1 September 2015. Mr. Chambers will not stand for re-election at the next Annual General Meeting on 27 April 2016.

All documents (investor presentation and this media release) are available at www.cembra.ch/en/investor.