Zurich – Cembra Money Bank's (Ticker: CMBN) excellent results in the first half-year 2018 were driven by the strong performance of the core businesses coupled with recent growth initiatives. Improvements across all business lines resulted in an asset growth of 4 %, translating into net financing receivables of CHF 4.7 billion.

Robert Oudmayer, Chief Executive Officer, commented: “We are very pleased with our results, as this is the best first half-year result in the history of our company. We achieved growth in all our business lines, while maintaining our prudent risk management strategy and cost efficiency. Cembra remains strongly capitalised, and we aim to continue to invest excess capital in additional future growth. Consequently, we are raising our full-year 2018 earnings-per-share guidance.“

Steady revenue increase

Net revenues increased by 11 % (organic growth 6 %) to CHF 213.0 million. Net interest income, which accounted for approximately 71 % of net revenues, increased by 10 % to CHF 152.1 million, translating into a net interest margin of 6.5 %. The higher interest income was mainly driven by the acquisition of EFL Autoleasing AG in October 2017 and the continued performance of the credit card business. In addition, the Bank had lower interest expenses due to favourable repricing in a continued low interest rate environment. Income from credit cards increased by 25 % to CHF 43.2 million, driven by the increase in the number of cards and higher transaction volume. Consequently, commission and fee income amounted to CHF 60.9 million (an increase of 13 %). Insurance income (CHF 9.8 million) was 18 % lower following the termination of a partnership agreement. Provision for losses on financing receivables were CHF 23.9 million, translating into a loss rate of 1.0 % in line with prior periods, thus reflecting Cembra's continued risk management discipline.

Total operating expenses increased by 9 % to CHF 90.6 million. Compensation and benefits expenses were up 7 % to CHF 52.8 million as a result of higher headcount due to the acquisition of EFL Autoleasing AG and additional employees at Swissbilling. The cost/income ratio slightly decreased to 42.6 % as a result of higher revenues offset by increased operating expenses. Income before taxes increased by 12 % to CHF 98.5 million, translating into a net income of CHF 77.7 million after tax or CHF 2.76 per share.

Sustainable growth across all products

Net financing receivables increased by 4 % to CHF 4.7 billion in the first half-year 2018: personal loans business was up 4 % (CHF 1.9 billion), auto leases and loans were up 2 % (CHF 2.0 billion) and credit card business was up 8 % (CHF 0.9 billion).

The performance of the credit card business was driven by the increase in transaction volume (up 19 %) and by a higher number of circa 850,000 cards (up 11 %) compared to the first half-year 2017, generating a 7.9 % yield. The auto business maintained a 5.0 % yield; cooperations with Hyundai, Honda, Ssang Yong and Harley Davidson performed well in the first half of the year. The company continued to defend its market share in the personal loans segment despite strong competition, with assets growing at 4 % with a 8.6 % yield.

Ongoing optimisation of funding
The Bank further optimised its funding portfolio on the back of the ongoing and persistent low interest rate environment. The end-of-period funding costs of Cembra were down from 52 basis points to 49 basis points. Overall, the funding mix with 64 % deposits and 36 % non-deposits and the average remaining maturity at 2.8 years remained stable.

Shareholders' equity decreased by 2 % to CHF 864 million as a result of the dividend payment of CHF 100.1 million in May, partially offset by the half-year 2018 net income of CHF 77.7 million, translating into a Tier 1 capital ratio of 18.9 % and a leverage ratio of 14.5 %.

Enhanced positioning for small business loans and strengthened Management Board
In March, Cembra signed an agreement with Lendico Schweiz AG, a 100 % subsidiary of PostFinance AG, to finance small business loans sourced via the Lendico online platform. In addition to financing, Cembra will provide collection services for the portfolio financed by Cembra.

In April, the company announced that Niklaus Mannhart has been appointed Chief Operating Officer (COO) of Cembra Money Bank; he will assume the newly created position as of 1 August 2018 and become a member of the Bank's Management Board. In June, Cembra appointed Jörg Fohringer as B2B Leader. He will take over this function on 1 December 2018 and also become a member of the Bank's Management Board.

Increased guidance for full-year 2018
Assuming no major change in the current economic environment and in business performance, the Group raises the full-year EPS guidance to between CHF 5.20 and CHF 5.50 from between CHF 4.80 and CHF 5.10. Additional revenues from the recent acquisitions and the ongoing growth of the credit card business are expected to more than offset the impact of the rate cap on interest income in the personal loans business. Operating expenses are expected to slightly increase, driven by higher headcount and further investments in the digitalisation of the business and growth initiatives, translating into a stable cost/income ratio. Loss performance is expected to be in line with prior years.

Media conference today at 10:30 a.m.
Cembra Money Bank will host a media event today at 10:30 a.m. at the Renaissance Zurich Tower Hotel in Zurich, Turbinenstrasse 20.

All documents (half-year report 2018, shareholder letter, investor presentation and this media release) are available at www.cembra.ch/en/investor.