Resurs Bank Interim Report January-June 2019
“We delivered yet another half-year of strong, profitable growth. The core of our business model, Payment Solutions and mainly retail finance, continued to report a strong trend in growth and margins in the half-year.” Kenneth Nilsson, CEO, Resurs Bank AB
1 January—30 June 2019*
- Lending to the public rose 14% to SEK 30,323 million
- Operating income increased 7% to SEK 1,710 million
- Operating profit rose 6% to SEK 735 million
- C/I before credit losses was 39.3 % (40.7%)
- The credit loss ratio was 2.1% (2.0%)
Statement by the CEO
The first six months were characterised by continued robust growth in both of our banking segments and in four Nordic markets. Our lending rose 14 per cent to SEK 30,323 million on 30 June 2019. Profit after tax increased 6 per cent to SEK 568 million (535), achieved through profitable growth based on our responsible credit lending and continued good cost control. The scalability of the business also meant that the cost/income ratio continued to improve to 39.3 per cent (40.7 per cent) in the half-year.
Continued strong trend in Payment Solutions and competition on equal terms in Norway
The core of our business model, Payment Solutions and mainly retail finance, continued to report a strong trend in growth and margins in the half-year. We are proud of the continued confidence shown in us by two leading and well-known retailers, Mio and Bauhaus, both of which chose to continue their strategic partnerships with Resurs as a payment solutions provider. We look forward to continuing to develop the customer journey and shopping experience by leveraging our ability to combine long retail experience with digital expertise to take their omni-retail to the next level.
Consumer Loans also reported high growth in lending in our Nordic markets. The Norwegian consumer loan market remained challenging due to the new law. The intended and expected effects of the rules were also clearly seen during the half-year with a sharp increase in competition for the volumes remaining in the wake of fewer opportunities to grant consumer credit loans. Intensified competition entailed downward pressure on interest-rate margins and in the second quarter, Resurs took a number of measures in the form of interest-rate hikes in June and cost rationalisation and made managerial changes to the Norwegian organisation. After the new law came into effect in mid-May, we believe the consumer loan market is now, to a much greater extent, characterised by competition on equal terms. This immediately had a positive effect for Resurs with an increase in the share of special offers won in the agent channel compared with before the law came into effect, despite price increases on new lending in the second quarter.
Performance driven by investments and strategic partnerships
Resurs is working to continuously establish strategic partnerships that further drive the development of innovation in payment and financing solutions. An example is the commercial partnership that was initiated with fintech company Dicopay during the half-year, in parallel with also becoming a part-owner of the company. A strong customer offering is created with Resurs Checkout in Dicopay’s mobile platform, primarily targeted to a new customer segment for us that comprises small businesses that require simple and fast financing of services rendered.
We were one of the first to offer our Swedish customers the option of receiving post via Kivra’s digital mailbox. We further strengthened our partnership in the first half of the year by investing in Kivra’s new Finnish joint venture. By joining forces with Kivra, we can jointly drive digitisation in the Finnish market while at the same time strengthening our commercial offering. The digital transformation also helps reduce paper consumption and is thus an important part of Resurs’s long-term sustainability efforts.
New credit rating and sustainable business model that is demonstrating its strength
During the quarter, Resurs Bank was awarded an investment grade rating of BBB-, stable outlook from Nordic Credit Rating (NCR). NCR’s credit rating strengthens our conditions for seeking financing on advantageous terms and is entirely aligned with our strategy of actively working with different sources of financing to continue to build up long-term diversified financing.
The ability of our business model to evolve in line with technology, regulations and customer needs is continuously challenged. But one thing is clear, Resurs’s business model with its stable core of retail finance is continuing to deliver and once again demonstrated its strength during the half-year by counterbalancing and compensating the business segments to address the changing conditions in the four Nordic markets. In other words, Resurs stands strong and, as it has become accustomed to, continued to grow faster than the market during the half-year and capture market shares.
CEO, Resurs Bank AB
Resurs is a Nordic niche bank that offers leading payment and financing solutions for the retail industry and its customers. We help companies and private individuals with lending, saving and payments. With more than 40 years of experience in the retail sector, we make shopping online and in stores quick, easy and secure. We focus on the customer experience and make good things happen and the hard feel easier. We have about 6 million private customers and more than 700 employees in the Nordics. When we use the term “Group” in this report, we are referring to the Resurs Bank Group.
* Certain performance measures provided in this section have not been prepared in accordance with IFRS or the capital adequacy rules, meaning that they are alternative performance measures. Calculations and reconciliation against information in the financial statements of these performance measures are provided on the website under “Financial information.” Definitions of performance measures are provided on page 26. The figures in parentheses refer to 30 June 2018 in terms of financial position, and to the year-earlier period in terms of profit/loss items.
This information is information that Resurs Bank AB is obliged to make public pursuant to the Securities Markets Act, the Norwegian Securities Trading Act Section 5-12 and the rules govering notes listed on Nordic ABM. The information was submitted for publication at 07.30 CET on 23 July 2019.