CEMBRA MONEY BANK AG Annual Report 2023
Table of contents
19 | Risk Management Report |
30 | Sustainability Report |
75 | Corporate Governance Report |
105 | Compensation Report |
132 | Consolidated Financial Statements |
190 | Individual Financial Statements |
- Information for Shareholders
- Where to find us
Business Review
for the financial year 2023
Find the online report with interviews and additional information at reports.cembra.ch
Business Review 2023
Alternative performance measures
To measure its performance, Cembra uses some key figures that are not defined under US GAAP. A glossary of key figures including alternative performance measures is available at www.cembra.ch/financialreports.
Cembra - Annual Report 2023 | 2 |
Key figures and profile
Key figures
Key figures
At 31 December (in CHF millions) | 2023 | 2022 | 2021 | 2020 | 2019 |
Net interest income | 347.2 | 356.2 | 356.7 | 375.0 | 332.0 |
Commission and fee income | 168.5 | 152.7 | 130.3 | 122.3 | 147.7 |
Net revenues | 515.7 | 508.9 | 487.0 | 497.2 | 479.7 |
Provision for losses | -56.9 | -40.9 | -40.3 | -56.4 | -45.1 |
Total operating expenses | -262.6 | -257.5 | -246.3 | -247.4 | -231.8 |
Net income | 158.0 | 169.3 | 161.5 | 152.9 | 159.2 |
Total assets | 8,088 | 7,624 | 7,095 | 7,244 | 7,485 |
Net financing receivables | 6,687 | 6,520 | 6,207 | 6,293 | 6,586 |
Personal loans | 2,370 | 2,387 | 2,292 | 2,408 | 2,625 |
Auto leases and loans | 3,147 | 2,975 | 2,820 | 2,853 | 2,915 |
Credit cards | 1,028 | 1,045 | 1,030 | 970 | 1,029 |
BNPL | 141 | 114 | 65 | 62 | 17 |
Shareholders' equity | 1,250 | 1,274 | 1,200 | 1,127 | 1,091 |
Return on shareholders' equity (ROE) | 12.5% | 13.7% | 13.9% | 13.8% | 15.7% |
Net interest margin | 5.2% | 5.5% | 5.6% | 5.7% | 5.8% |
Cost/income ratio | 50.9% | 50.6% | 50.6% | 49.8% | 48.3% |
Tier 1 capital ratio | 17.2% | 17.8% | 18.9% | 17.7% | 16.3% |
Employees (full-time equivalents) | 902 | 929 | 916 | 928 | 963 |
Credit rating (S&P) | A- | A- | A- | A- | A- |
Basic earnings per share (in CHF) | 5.39 | 5.77 | 5.50 | 5.21 | 5.53 |
Dividend per share (in CHF) | 4.00 | 3.95 | 3.85 | 3.75 | 3.75 |
Book value per share (in CHF) | 41.67 | 42.47 | 40.00 | 37.57 | 36.35 |
Share price (in CHF) | 65.60 | 76.90 | 66.45 | 107.20 | 106.00 |
Market capitalisation | 1,961 | 2,307 | 1,993 | 3,216 | 3,180 |
Cembra - Annual Report 2023 | 3 |
Key figures and profile
Share price Cembra
CHF | |||||||||||||||||||||||
80 | |||||||||||||||||||||||
70 | |||||||||||||||||||||||
60 | |||||||||||||||||||||||
50 | |||||||||||||||||||||||
Jan' 2022 | Feb' 2022 | Mar' 2022 | Apr' 2022 | May 2022 | Jun' 2022 | Jul' 2022 | Aug' 2022 | Sep' 2022 | Oct' 2022 | Nov' 2022 | Dec' 2022 | Jan' 2023 | Feb' 2023 | Mar' 2023 | Apr' 2023 | May 2023 | Jun' 2023 | Jul' 2023 | Aug' 2023 | Sep' 2023 | Oct' 2023 | Nov' 2023 | Dec' 2023 |
Key figures
CHF | ||||
1,960,800,000 | 1,027,000 | 1,030,000 | ||
was the market capitalisation of Cembra | number of credit cards issued by Cembra | bank customers (excluding BNPL) have | ||
at the end of 2023 | chosen Cembra as their preferred partner | |||
in billion CHF | in 1,000 | in 1,000 |
3.0 | ||
2.5 | ||
2.0 | ||
1.5 | ||
1.0 | ||
0.5 | ||
0 | ||
2021 | 2022 | 2023 |
970 |
1,100 | 1,100 | ||||
1,000 | 1,000 | ||||
900 | 900 | ||||
800 | 800 | ||||
700 | 700 | ||||
600 | 600 | ||||
500 | 500 | ||||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 |
CHF | |||||
26 | 4.00 |
employees from more than 40 different nations work for Cembra
sales area managers serve around 3,700 car dealers across Switzerland
dividend per share proposed at Annual General Meeting
in CHF
1,100 | 30 | |
1,000 | 25 | |
900 | 20 | |
800 | 15 | |
700 | 10 | |
600 | 5 | |
500 | 0 | |
2021 | 2022 | 2023 |
4.00 | ||
3.90 | ||
3.80 | ||
3.70 | ||
3.60 | ||
3.50 | ||
3.40 | ||
2021 | 2022 | 2023 |
2021 | 2022 | 2023 |
Cembra - Annual Report 2023 | 4 |
Key figures and profile
About Cembra
Cembra is a leading Swiss provider of financing solutions and services. Our product range includes consumer credit products such as personal loans and auto leases and loans, credit cards, insurance products made available in this context, invoice financing, and deposits and savings products.
Across our business lines Lending and Payments we serve over 2 million customers in Switzerland and employ more than 900 people from over 40 different countries. We have our headquarters in Zurich and operate across Switzerland through our network of branches and our online distribution channels, as well as our credit card partners, independent intermediaries and car dealers.
We have been listed as an independent Swiss bank on the SIX Swiss Exchange since 2013 Cembra is rated A- by Standard & Poor's and is included in the MSCI ESG Leaders Index and in the 2023 Bloomberg Gender-Equality Index.
Offering
We offer a broad range of financing solutions in Switzerland:
- Personal loans: Cembra is a leading provider in the highly competitive personal loans market. We are offering a personalised premium service and our products are available through our branches across Switzerland, through independent intermediaries and online.
- Auto loans and leasing: Cembra is a large brand-independent auto loans and leasing provider in Switzerland. Our products are sold via a distribution network of around 3,700 car dealers, who act as intermediaries. A dedicated sales force of 26 field agents, together with the employees at our four service centres, provide a personalised, flexible and efficient service.
- Credit cards: We are one of the leading credit card providers in Switzerland, with about 1 million cards issued. We offer a range of credit cards through partner programmes with Conforama, FNAC, IKEA, LIPO, SPAR, TCS, and as well as our own credit cards. The cards offer a range of attractive features, such as loyalty points, cash back, personalised designs and no annual fees.
- Buy now pay later (BNPL): Through CembraPay we offer invoice financing services and flexible payment options for both online and point-of-sale channels.
- Insurance products: We provide access to various insurance products. Alongside our personal loans and auto loans and leasing, insurance provides financial protection in case of involuntary unemployment, accident, illness or disability. We also intermediate travel and card protection insurance for our credit card customers as well as car insurance for our vehicle leasing customers.
- Savings and deposits: We provide savings and deposit products at competitive interest rates for both retail customers and institutional clients.
History
The roots of Cembra date back to 1912, when Banque commerciale et agricole E. Uldry & Cie. was founded in Fribourg This bank later became Bank Prokredit. In 1999, GE Capital merged Bank Prokredit with Bank Aufina, which it had acquired in 1997. In October 2013, the Bank separated from its parent company GE and went public as Cembra Money Bank AG. In 2020, we changed our brand name to Cembra. We strengthened our market position by several acquisitions, including the purchase of the consumer finance provider cashgate in 2019.
The Bank is named after the Swiss cembra pine (Pinus cembra), a sturdy and resilient tree with strong roots. This symbolises our Bank's strength and our origin.
Cembra - Annual Report 2023 | 5 |
Letter to Shareholders
Dear Shareholders
Cembra's solid results for 2023 reflect our continued focus on profitable growth.
Net financing receivables increased by 3% and the loss performance remained robust. With our ongoing investments in the strategic transformation and our cost discipline we are on track to deliver on our mid-term targets.
Solid business performance
In 2023 Cembra continued to grow its business selectively and to implement price adaptions in response to the changing interest rate environment. The Group's total net financing receivables at 31 December 2023 amounted to CHF 6.7 billion, an increase of 3% compared with 31 December 2022.
In the personal loans business, net financing receivables decreased by 1% to CHF 2.4 billion in 2023 and interest income rose by 5% to CHF 171.5 million, with a yield of 7.0%. Net financing receivables in auto leases and loans increased by 6% to CHF 3.1 billion in the reporting period. Interest income increased by 13% to CHF 150.8 million, with a yield of 4.9%.
In the credit cards business, net financing receivables declined by 2% to CHF 1.0 billion at 31 December 2023. Interest income in the cards business declined by 1% to CHF 87.9 million, with a yield of 8.4%. The number of cards issued amounted to 1,027,000 at 31 December 2023, a decline of 2% on 31 December 2022.
In the buy now pay later (BNPL) business, billing volumes increased by 88% to CHF 898 million in 2023, driven both by the consolidation of CembraPay (formerly Byjuno) and by organic growth. As a result, commission and fee income from BNPL more than doubled to CHF 39.4 million (2022: CHF 17.6 million).
Net revenues driven by fee income - net interest margin improved in the second half of 2023
Net revenues increased by 1% to CHF 515.7 million in 2023, with commission and fee income more than offsetting lower net interest income. The share of net revenues generated from commissions and fees increased from 30% to 33% in 2023.
Stable cost/income ratio
Total operating expenses increased by 2% to CHF 262.6 million. Personnel expenses rose by 1% to CHF 137.0 million. General and administrative expenses amounted to CHF 125.6 million, an increase of 3% including investments in strategic initiatives and integration costs. This resulted in a stable cost/income ratio of 50.9% (2022: 50.6%). Cembra expects the cost/income ratio to decline in line with its strategic plan for the period up to 2026.
Continued robust loss performance
The provision for losses increased to CHF 56.9 million (2023: CHF 40.9 million) reflecting the expected normalisation of loss levels. This resulted in a loss rate of 0.8% in 2023. The non-performing loans (NPL) ratio increased to 0.8% (2022: 0.7%). Cembra expects the loss rate to be in line with the long-term historical trend and confirms its mid-term target for a loss rate at or below 1%.
Further diversified funding portfolio
The Group's diversified funding portfolio increased by 8% to CHF 6.6 billion in 2023. In the funding mix the share of deposits increased to 53% (2022: 51%). The weighted average duration increased to 2.4 years from 2.1 years at year-end 2022. The end-of-period funding cost amounted to 1.47% (31 December 2022: 0.79%), and average funding costs in 2023 stood at 1.18%.
Cembra - Annual Report 2023 | 6 |
Letter to Shareholders
Dividend increase to CHF 4.00 proposed
Cembra remains very well capitalised, with a strong Tier 1 capital ratio of 17.2% (31 December 2022: 17.8%) including the expected change in the basis of accounting (US GAAP) for regulatory reporting purposes. Shareholders' equity decreased by 2% to CHF 1.250 billion, including an impact of CHF 54 million from the adoption of CECL in US GAAP.
Given Cembra's solid financial performance, the Board of Directors will propose a dividend of CHF 4.00 per share (a 74% payout ratio) at the next General Meeting on 24 April 2024, representing an increase of CHF 0.05 compared to the previous year.
Progress in strategy implementation and on track to deliver mid-term targets by 2026
In 2023, Cembra continued to execute on its key strategic initiatives. The card migration programme was concluded with more than two thirds of the transition portfolio being migrated to the new proprietary offering Certo!. The company also continued to grow its portfolio of other co-branding credit cards. In the BNPL business, Cembra completed the integration of Byjuno. The acquired company was combined with Swissbilling to launch CembraPay and thus create a leading Swiss provider of invoice payment solutions, offering significant further growth potential. In addition, a partnership with TWINT rolled out since August 2023 offers the five million TWINT app users a "pay later" feature for specific merchants. In December 2023, the new IT platform for the leasing business was launched for selected partners, laying the groundwork for further efficiency gains. In February 2024, Cembra introduced a new range of online savings products. Overall, automation and digitalisation initiatives were further advanced in order to improve the customer experience, enhance productivity and increase efficiency.
As a further step in its transformation, Cembra simplifies its organisational structure and now serves its customers through two business lines: Lending and Payments. The Lending business line comprises the personal loans and auto businesses and is led by Peter Schnellmann, previously Chief Sales and Distribution Officer. Christian Stolz, previously CEO of CembraPay (formerly Byjuno), heads the Payments business line, which includes the credit cards and BNPL busi- nesses. In line with the new organisational structure, Cembra will introduce segment reporting on its Payments and Lending business lines from the 2024 financial year on.
In addition, Cembra further leverages the technology and services expertise of its highly qualified team in Riga, Latvia. The team will be expanded to provide services within the Group. Furthermore, Cembra is looking into outsourcing certain customer service processes.
With these measures the company plans to reduce its workforce to around 830 full-time equivalents by the end of 2024 (31 December 2023: 902). Cembra aims to implement these changes through natural attrition and early retirements as far as possible. Where redundancies are unavoidable people affected will be supported by a social plan. A customary consultation process with employee representatives is being initiated.
Outlook
For the 2024 financial year, Cembra expects net revenues to moderately outpace Swiss GDP growth, along with a continued robust loss performance and a cost/income ratio below 49%. As a result, Cembra expects an increase in net income and a ROE of 13-14% for 2024 and confirms its mid-term targets through 2026.1
On behalf of the Board of Directors and Management, we would like to thank our customers, shareholders and business partners for the trust they have placed in us. We would also like to express our particular gratitude to our employees, who shape the success of our Group with their expertise, dedication and engagement.
Franco Morra | Holger Laubenthal |
Chairman | CEO |
1 ROE ≥15% from 2025 on; dividend increasing from 2024 on based on earnings growth; Tier 1 capital ratio target >17%
Cembra - Annual Report 2023 | 7 |
Management Report
8 Management Report
9 Significant developments
10 Macroeconomic environment
11 Product markets
12 Balance sheet analysis
14 Profit and loss analysis
18 Business model and strategy
18 Outlook
Cembra - Annual Report 2023 | 8 |
Management Report
Significant developments
On 19 April 2023, Cembra launched the new business area CembraPay, bundling its subsidiaries Swissbilling and Byjuno. The launch of the new brand was a further step in the expansion of our activities in the growing buy now pay later (BNPL) market.
On 21 April 2023, Cembra held its Annual General Meeting in Zurich. The shareholders approved all proposals of the Board of Directors. Franco Morra was elected as Chairman of the Board of Directors. He succeeded Felix Weber, who after ten years in office, decided not to stand for re-election. All other members of the Board of Directors were re-elected for a further one-year term of office: Jörg Behrens, Marc Berg, Thomas Buess, Alex Finn, Susanne Klöss-Braekler and Monica Mächler.
On 17 August 2023, Cembra launched a new app function which provides greater protection for credit card customers. Cembra is the first Swiss bank to introduce a solution for the integrated digital processing of chargebacks directly in its credit card app. This allows the Bank to offer its customers a simple and fast service which contributes to consumer protection in online payments.
On 25 August 2023, Cembra announced that in collaboration with Swissbilling (part of CembraPay), the Swiss payment provider TWINT is gradually rolling out a new "pay later" feature. It is set to make payments even more flexible. Users shopping with specific merchants can choose whether they want to pay immediately or in 30 days. In this way, TWINT and Cembra reimagined the traditional invoice payment method.
On 30 October 2023, Cembra took its 10-year anniversary as an opportunity to refresh its branding. As part of its strategic transformation into a more digital business model with an expanded offering, the Bank's positioning was refined, and the brand further developed.
Cembra - Annual Report 2023 | 9 |
Management Report
Macroeconomic environment
We operate exclusively in Switzerland and our financial position and revenues are strongly influenced by domestic macroeconomic factors, especially gross domestic product, the unemployment rate and interest rates. We have limited exposure to foreign currencies.
Swiss gross domestic product
Growth in Switzerland's gross domestic product (GDP) is an important indicator for the Group. Swiss GDP increased by 1.3% in 2023, after an increase of 2.5% in 2022. Consumer spending increased by 2.2% (2022: 4.0%)
Interest rates
Interest rates have a major impact on the Group's funding. In 2023, Swiss-franc interest rates increased further in a volatile capital markets environment. Until June 2023 the SNB policy rate was raised by a total of 2.5 percentage points to 1.75%. Since then, it has remained unchanged.
Unemployment rate
The unemployment rate serves as an important indicator for the credit risk profile of the Group's customers. The unemployment rate in Switzerland increased to 2.3% in December 2023 (December 2022: 2.1%). The average unemployment rate in 2023 was 2.0% (2022: 2.2%).
GDP Switzerland
Change versus previous quarter (in %)
1.00 |
0.50 |
0.00 |
-0.50
-1.00
Q4- 2021 | Q1- 2022 | Q2- 2022 | Q3- 2022 | Q4- 2022 | Q1- 2023 | Q2- 2023 | Q3- 2023 | Q4- 2023 |
Source: SECO
CHF 3-year swap rate | Unemployment rate in Switzerland | |
in % | in % |
2.0 | 3.5 | ||||||||||||||||
1.6 | 3.0 | ||||||||||||||||
1.2 | 2.5 | ||||||||||||||||
0.8 | 2.0 | ||||||||||||||||
0.4 | 1.5 | ||||||||||||||||
0.0 | 1.0 | ||||||||||||||||
-0.4 | 0.5 | ||||||||||||||||
-0.8 | 0.0 | ||||||||||||||||
Q4- 2021 | Q1- 2022 | Q2- 2022 | Q3- 2022 | Q4- 2022 | Q1- 2023 | Q2- 2023 | Q3- 2023 | Q4- 2023 | Q4-2021 | Q1-2022 | Q2-2022 | Q3-2022 | Q4-2022 | Q1-2023 | Q2-2023 | Q3-2023 | Q4-2023 |
Source: Bloomberg | Source: SECO |
Cembra - Annual Report 2023 | 10 |
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Disclaimer
Cembra Money Bank AG published this content on 20 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 March 2024 06:00:06 UTC.
