10 Aug 2023
Improving efficiency and solid overall performanceH1 and Q2 Results 2023
Morrow Bank continues to strengthen its operational efficiency and delivered solid results in the second quarter. To maintain a healthy balance between growth and credit risk, the Bank will reduce the growth pace in the near term and continue to adjust credit policies in response to a more challenging macroeconomic environment. The outlook for Nordic consumer finance remains favourable in the medium- to long-term, and the Bank continues to deliver on its improvement efforts targeting to produce an annual growth rate of around 10% and a return on target equity above 12%.
Highlights of the quarter:
Solid growth and stable net yield
- 3% loan balance growth vs. Q1 (15% growth YTD)
- Stable net yield; total income up almost 15% vs. Q1
- Higher market interest rate trajectory to pressure margins in H2
Further improved cost/income, increased credit losses
- Cost/income ratio of 31% (vs. 35% in Q1), in line with the year-end target of 30%
- Loan loss ratio of 4.8% (3.9%) driven by a change in customer payment behaviour
- Stable profitability; PAT at MNOK 41 and ROE of 8% (8%)
Reducing growth in H2 amid a more challenging macroeconomic picture
- Further tightening of credit policies and close dialogue with customers
- Some downside risk seen vs. normalized loan loss ratio of 4-5%, hence H2 2023 profits expected below H1 2023 levels
- Solid capital position with CET1 ratio of 20.6% (19.4%) vs. 17.9% requirement
Commenting on the results, Morrow Bank’s CEO Øyvind Oanes said: “During 2022 and the first half of 2023, we’ve managed to significantly increase throughput, protect our yield, and bring down the cost/income ratio towards our target 30% mark – which is a very competitive level for our industry. As part of our mission to build a new and future-proof bank, we’ve also rebranded in Q2, and I’m delighted to see the alignment and engagement across our highly capable organisation. Combining that with a diversified Nordic consumer loans portfolio and a solid financial position, we are well-positioned for delivering long-term growth and value creation. Near-term, however, we see a more challenging macroeconomic picture where the balance between credit risk and growth needs to be carefully managed. As a result, we’ve tightened our credit policies and reduced sales which will slow loan balance growth in H2 2023. While the macro-outlook is more positive for the medium term, our focus in the near term continues to be on improving operational efficiency”.
The interim report and presentation are available on