Improving efficiency and solid overall performance
Morrow Bank continues to strengthen its operational efficiency and delivered solid results in the second quarter. To maintain a healthy balance between growth and credit risk, the Bank will reduce the growth pace in the near term and continue to adjust credit policies in response to a more challenging macroeconomic environment. The outlook for Nordic consumer finance remains favourable in the medium- to long-term, and the Bank continues to deliver on its improvement efforts targeting to produce an annual growth rate of around 10% and a return on target equity above 12%.
Highlights of the quarter:
Solid growth and stable net yield
3% loan balance growth vs. Q1 (15% growth YTD)
Stable net yield; total income up almost 15% vs. Q1
Higher market interest rate trajectory to pressure margins in H2
Further improved cost/income, increased credit losses
Cost/income ratio of 31% (vs. 35% in Q1), in line with the year-end target of 30%
Loan loss ratio of 4.8% (3.9%) driven by a change in customer payment behaviour
Stable profitability; PAT at MNOK 41 and ROE of 8% (8%)
Reducing growth in H2 amid a more challenging macroeconomic picture
Further tightening of credit policies and close dialogue with customers
Some downside risk seen vs. normalized loan loss ratio of 4-5%, hence H2 2023 profits expected below H1 2023 levels
Solid capital position with CET1 ratio of 20.6% (19.4%) vs. 17.9% requirement
Commenting on the results, Morrow Bank's CEO Øyvind Oanes said: "During 2022 and the first half of 2023, we've managed to significantly increase throughput, protect our yield, and bring down the cost/income ratio towards our target 30% mark - which is a very competitive level for our industry. As part of our mission to build a new and future-proof bank, we've also rebranded in Q2, and I'm delighted to see the alignment and engagement across our highly capable organisation. Combining that with a diversified Nordic consumer loans portfolio and a solid financial position, we are well-positioned for delivering long-term growth and value creation. Near-term, however, we see a more challenging macroeconomic picture where the balance between credit risk and growth needs to be carefully managed. As a result, we've tightened our credit policies and reduced sales which will slow loan balance growth in H2 2023. While the macro-outlook is more positive for the medium term, our focus in the near term continues to be on improving operational efficiency". The interim report and presentation are available onReports and presentations page
Morrow Bank ASA published this content on 10 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2023 06:52:30 UTC.
Morrow Bank ASA, formerly Komplett Bank ASA, is a Norway-based bank offering convenient payment and financing products to consumers. The Bank is focused on creating value for its customers by offering flexible, convenient financing solutions through efficient, customer friendly processes. Operational efficiency and low cost are foundations for the bank and is enabled by centralized operations, modern systems, and digital set-up. The Bank is pursuing a growth strategy based on geographical and product-wise diversification and expansion. The product portfolio includes consumer loans, credit cards, point-of-sales finance solutions, and high-yield deposit accounts. The Bank operates in Norway, Sweden and Finland.