Fellow Bank updates its long-term financial targets and estimates that the result for 2022 will be clearly negative
FELLOW BANK PLC STOCK EXCHANGE RELEASE, INSIDE INFORMATION 19.4.2022 AT 4:40 PM EEST
Fellow Bank Plc was created on 2 April 2022 when Fellow Finance Plc merged with the company that carries on Evli Bank Plc’s banking services. The resulting Fellow Bank is a digital and customer-oriented bank that serves individuals, SMEs and savers looking for competitive interest rates.
Long-term financial targets for 2022-2026
At the heart of Fellow Bank's strategy is a first-class customer experience in digital services combined with flexible personal customer service. Fellow Bank aims for growth and high profitability by focusing on selected underserved customer segments and product areas that are attractive for the company's earnings. The digital operating model, a limited range of services, modern information systems and an efficient organization enable the pursuit of high operational efficiency.
The Board of Directors of Fellow Bank has confirmed the following long-term goals for the company in accordance with the strategy (2022-2026):
- Growth: annual growth of more than 25% of the loan portfolio
- Profitability: return on equity of more than 15% by the end of the target period
- Capital adequacy ratio: a capital adequacy ratio of at least 18% (T1).
In addition, Fellow Bank strives for customer satisfaction at the same level as the best peers in the industry.
The long-term financial targets presented above replace those of Fellow Bank's long-term financial targets published in the merger and listing prospectus published by Evli Bank Plc on 7 December 2021.
Economic outlook for 2022
In 2022, Fellow Bank will lay the foundation for growth and profitability for years to come.
When banking operations began, Fellow Bank launched an advanced and customer-oriented mobile and online bank for its customers, which will lay the foundation for the bank's digital services. During 2022, the company will further expand its range of services, e.g. with a credit card and payment services, as well as comprehensive banking and financial services for SMEs.
Fellow Bank aims for strong growth in its loan portfolio by investing in new customer acquisition and converting the peer-to-peer and crowdfunding portfolio to the bank's balance sheet. The growth in lending is supported by improved competitiveness due to lower financing costs, more comprehensive services for customers and new digital service channels.
The bank's loan portfolio is estimated to reach at least EUR 150 million at the end of 2022.
The result for 2022 is estimated to be clearly negative due to the non-recurring costs related to the completed corporate reorganization, the investments required by the credit institution's operations and the frontloaded costs caused by the strong growth of the loan portfolio related to new customer acquisition and loan loss provisions.
The merger and listing prospectus published by Evli Bank Plc on 7 December 2021 provides the following information on Fellow Bank's results for the first years of operation: Following the implementation of the arrangement on 2 April 2022, strong growth of the credit portfolio, frontloaded customer acquisition costs and increased personnel costs are expected to weigh on profitability in the first two years. Due to these factors, the result for the first year of operation is estimated to be notably negative. In the future, the operating result is expected to turn strongly profitable through the positive development of net interest income.
Further enquiries
Teemu Nyholm, CEO, Fellow Bank Plc, teemu.nyholm@fellowpankki.fi, tel. +358 50 577 1028
Fellow Bank in brief
Fellow Bank Plc is a new Finnish bank that helps both personal and business customers to manage their day-to-day finances in a flexible and straightforward manner. For savers, we offer an attractive interest rate on deposits. Fellow Bank Plc is regulated by the Financial Supervisory Authority of Finland and listed on Nasdaq Helsinki’s main list (FELLOW). www.fellowbank.com
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