Aprila Bank (APRILA) Q2 2024 earnings summary

Executive summary

• Achieved record gross lending growth of NOK 113 million in Q2, up 33% year-over-year and 12% quarter-over-quarter, with total gross lending at NOK 1,079 million.

• Total income increased 36% year-over-year and 5% sequentially to NOK 51 million, driven by credit line growth.

• Pre-tax profit reached NOK 14 million, with return on equity at 20.6%, up from 16.1% in Q2 2023.

• Customer growth slowed and customer base declined 5% year-over-year due to the discontinuation of spot factoring and a small business recession.

• Maintained a solid capital position with a CET1 ratio of 31.6% as of 30 June 2024.

Financial highlights

• Gross loans rose to NOK 1,079 million from NOK 811 million year-over-year; total income reached NOK 51 million from NOK 37 million year-over-year.

• Q2 profit reached an all-time high of NOK 14 million, with a return on equity of nearly 21%.

• Cost/income ratio improved to 46% in Q2 and 54% for the trailing 12 months.

• Loan losses totaled NOK 13.3 million, with annualized loan losses at 5.2% of gross lending, down from 7.0% year-over-year.

• Interest income for Q2 2024 was NOK 56.3 million, up from NOK 40.7 million in Q2 2023.

Outlook and guidance

• Targeting a total income run-rate of NOK 225 million by year-end 2024, with a cost/income ratio around 57% and at least 5,700 credit line customers.

• Confident in continued high growth and profitability, with room to grow faster than 15% annually without additional capital.

• Norges Bank kept the key policy rate at 4.5% and expects it to remain unchanged through 2024.

• Aprila expects potential future rate cuts to benefit profitability as funding costs may decrease faster than lending rates.

• Key uncertainties include the impact of high inflation and low economic growth on customer credit quality.