Zurich Cembra’s net income increased 15% to CHF 90.6 million in the first six months of 2022 compared to the same period last year, or CHF 3.09 per share. Net profit increased by 6%, and commissions and fees increased by 27%. The loss ratio was again very good at 0.5%. As a result, the return on equity was 15.3%, and the Tier 1 capital ratio was 18.8%.
Holger Laubenthal, CEO, said: “We achieved excellent results in the first half of the year and successfully coped with our transformation. We grew profitably in all areas and benefited from the rebound effect after the lifting of the restrictions, but also from our marketing and sales activities. We have made very good progress in implementing our strategy and with the launch of our own Certo credit card offer! has reached an important milestone. We will remain focused on our transformation program to further enhance operational excellence and accelerate growth. ”
Strong business development
Total net customer receivables as at June 30, 2022 amounted to CHF 6.4 billion. This corresponds to an increase of 4% compared to December 31, 2021. In the personal lending industry, receivables increased by 2% to CHF 2.3 billion in the first six months of 2022. competition, interest income in the personal loan segment decreased by 6% to CHF 80.7 million, with a return of 6.8%.
Net loans and advances to customers in vehicle financing increased by 4% to CHF 2.9 billion. Interest income was stable at PLN 64.9 million, and profitability was 4.5%.
In the credit card business, net receivables increased by 8% to CHF 1.1 billion. Interest income increased by 6% to CHF 43.7 million. The return was 8.1%. The transaction volume increased by 18% compared to the same period of the previous year. The number of cards issued continued to grow, by 4% year on year to 1,090,000 cards as of June 30, 2022.
Swissbilling continued to grow significantly in the Buy Now, Pay Later (BNPL) area. Billing volumes increased by 62% to CHF 191 million and fee income was CHF 6.5 million (+ 35%).
Marketing and sales activities and the lifting of restrictions increase net income
Total net income increased by 6% to CHF 250.0 million. Interest income declined slightly by 1% to CHF 188.9 million as a result of a lower receivable base in the private loan sector. Interest expense in the first half of 2022 decreased by 7% to CHF 12.3 million.
Commission and fee income rose 27% to CHF 73.3 million as a result of lifting the Covid-19 restrictions. Credit card fees and commissions increased by 42%. The share of net fee and commission income increased from 25% to 29% compared to June 30, 2021.
Operating expenses decreased by 2% to CHF 122.0 million. Personnel costs fell by 2% to CHF 67.1 million, mainly due to lower full-time equivalents. Other administrative expenses fell by 1% to CHF 54.9 million. The cost / income ratio was 48.8% compared to 52.6% in the same period last year.
Excellent loss rate
Cembra again recorded an excellent loss rate. The loss allowance benefited significantly in the first half of 2022 thanks to the prudent and prudent credit risk policy of the pandemic, especially in the areas of personal and automotive finance. Loss allowance slightly increased by CHF 0.6 million, or 4%, to CHF 15.0 million. The loss given default was 0.5% in the first six months of the year (H1 2021: 0.5% and 0.7% adjusted for the sale of receivables). The share of non-performing loans (NPLs) was 0.6% (H1 2021: 0.7%). The ratio of receivables overdue more than 30 days reached 1.6% (H1 2021: 1.8%). Cembra expects the loss ratio to gradually normalize over the next few years.
In the first six months of 2022, the Group’s diversified financing portfolio grew by 3% to CHF 5.9 billion, with a financing mix of 56% savings and 44% in savings. The weighted average maturity slightly decreased to 2.3 years and the cost of financing at the end of the reporting period was 46 basis points (31 December 2021: 44 basis points).
Cembra remains very well capitalized, with a strong Tier 1 capital ratio of 18.8% (31 December 2021: 18.9%). Equity fell 2% to CHF 1,176 billion after Cembra paid a dividend of CHF 113 million for the 2021 financial year in April 2022.
Strategy implementation in progress
During the first six months, significant progress was made in implementing Cembra’s key strategic initiatives aimed at operational excellence, core business development, additional growth opportunities and cultural transformation. New partnerships were established with the SPAR retail chain and Zurich Insurance Switzerland, and the existing partnerships with Conforama and FNAC were strengthened. In April 2022, Cembra launched a new credit card application to strengthen customer relationships and increase productivity. The last successful launch of the new Certo family of credit cards! was another important step in the implementation of the strategy.
Further progress in terms of sustainable development has been confirmed
In recognition of the bank’s progress in improving governance, socially responsible approach and environmental stewardship, MSCI ESG upgraded the Cembra rating to AAA in May 2022 and Sustainalytics confirmed the low ESG Cembra risk rating.
Cembra currently expects to achieve solid financial results in 2022 and a return on equity of 13-14%, as previously communicated. As announced, the transition to a new credit card offering and investments in IT transformation will impact revenues and expenses. Cembra continues to expect a solid loss rate for 2022 and confirms its medium-term goals1.
All documents (investor presentation, periodic report and this press release) are available at www.cembra.ch/investors.
1 Cembra has a target of a return on equity of 13-14% in 2022-2023 and over 15% from 2024, and intends to pay out a dividend of at least CHF 3.85 in 2022, which will be increased thereafter based on for a sustained increase in profits. The bank also aims to achieve a core capital ratio of over 17%.