Instabank (INSTA) Q3 2024 earnings summary

Executive summary

• Profit before tax reached 35.2 MNOK in Q3-24, down 0.7 MNOK from Q2-24, with profit after tax at 26.4 MNOK and ROE of 11.5%.

• Achieved 30 consecutive quarters of profitability, demonstrating consistent performance.

• Sale of 302 MNOK in non-performing loans in Finland was operating profit-positive and confirmed impaired loan valuations.

• Strong growth in business lending (+107 MNOK) and mortgages (+228 MNOK), now comprising over 50% of total lending.

• Total customer base at quarter-end was 109,639, with 70,096 loan customers and 39,543 deposit customers.

Financial highlights

• Total income for Q3-24 was 128.4 MNOK, up 14% year-over-year, driven by higher loan yields and lending growth.

• Net interest income increased due to 1,057 MNOK gross lending growth and improved loan yield to 11.6%.

• Operating expenses rose to 53.3 MNOK, mainly due to new initiatives, German credit card launch preparations, and higher bonus provisions.

• Cost-to-income ratio increased to 42% from 38% in Q2-24, with management targeting a return below 40%.

• Loan losses were 39.9 MNOK, positively impacted by the NPL sale; loan loss ratio remained at 2.4%.

Outlook and guidance

• 2024 profit after tax outlook is above 90 MNOK, with a mid-term ambition of over 200 MNOK.

• ROE target set above 10%, with gross loans expected to reach ~10 Bn NOK mid-term.

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

• Plans to launch a competitive credit card in Germany and a new security deposit product to reduce funding costs.

• Anticipates approximately 500 MNOK gross loan growth for 2024, net of NPL sales.