Avarda Bank (AVARDA) Q2 2019 earnings summary

Executive summary

• Q2 operating profit rose 32.3% YoY to SEK 70.6m; H1 operating profit rose 33.6% to SEK 136.2m, supported by portfolio growth and lower cost/income ratios.

• LTM ROE was 32% excluding SEK 20m of items affecting comparability; H1 adjusted ROE was 31.7%.

Financial highlights

• Q2 operating income rose 23.6% to SEK 188.8m; net profit increased 32.6% to SEK 54.6m and EPS rose to SEK 2.45 from SEK 1.91.

• H1 operating income rose 24.2% to SEK 364.8m; net profit increased 34.0% to SEK 105.1m and EPS rose to SEK 4.73 from SEK 3.65.

• Loans to the public grew 26.4% since year-end to SEK 5,625m; local-currency growth was 20.4%, and new lending rose 39.5% YoY to SEK 2,892m.

• Deposits from the public rose 22.0% since year-end to SEK 6,216m; local-currency growth was 18.2%.

Outlook and guidance

• H1 portfolio growth was expected to support higher income and earnings in H2 2019; new lending was expected to focus more on margins and profitability.

• Consumer Lending new-sales margins were expected to remain stable in coming quarters; the ecommerce pipeline supported further growth.

• 2020 targets: EPS of at least SEK 14.50 and cost/income ratio below 35%; capital ratios targeted at least 2.5 percentage points above regulatory requirements, including Pillar 2.