Instabank (INSTA) Q2 2024 earnings summary

Executive summary

• Profit before tax reached 35.9 MNOK, up 5.8 MNOK year-over-year and 11.7 MNOK sequentially, with profit after tax at 26.9 MNOK and ROE of 12.0%.

• Sale of 167 MNOK in non-performing loans was profit-positive, confirmed impaired loan valuations, and improved asset quality.

• Business lending, launched a year ago, is now the most profitable product, challenging mortgages.

• Instabank is positioned for lending growth in H2 2024, supported by a diverse product range and strong capital ratios.

Financial highlights

• Total income for Q2-24 was 120.8 MNOK, up 18% year-over-year, driven by higher gross lending and increased loan yield.

• Net interest income was 103.9 MNOK, with net other income at 16.9 MNOK, up 5.8 MNOK from Q2-23.

• Operating expenses remained stable at 46.0 MNOK, with a cost-to-income ratio of 38%.

• Loan losses decreased to 38.9 MNOK (2.4% loan loss ratio), down from 46.3 MNOK in Q1-24.

• Gross loans increased to 6,489 MNOK, with mortgages at 2,735 MNOK (42% of total), business lending at 188 MNOK, and unsecured loans at 3,566 MNOK.

Outlook and guidance

• Targeting profit after tax of 90 MNOK for 2024, with a mid-term ambition of over 200 MNOK.

• Aiming for ROE above 10% in 2024 and above 15% mid-term.

• Gross loans expected to reach 7.1 Bn in 2024 and 10.0 Bn mid-term.

• Cost-to-income ratio targeted below 40% in 2024 and below 35% mid-term.

• Focus on expanding mortgage, business lending, and Finnish consumer loan volumes in H2 2024.