31 Oct 2024
Strong growth, increased profitability and updated ambitionsQ3 results 2024
Morrow Bank delivered another solid quarter with profit before tax of NOK 72 million, up 7% from the previous quarter and 50% year-on-year.
Commenting on the results, Morrow Bank's CEO Øyvind Oanes said:
"With a highly scalable banking platform in place, Morrow Bank delivered improvements across all KPIs in Q3 - which was very much line with our previously stated ambitions. Most remarkably, we managed to grow our loan balance by around 25% while reducing our cost base. The backdrop is that we now leverage our streamlined platform, as it enables us to further automate processes and increase scalability."
Highlights of the quarter:Strong growth
o Gross loan up 24.6% from Q2 2024 driven by organic demand and loan portfolio acquisitions
o All-time-high total income of NOK 321 million, up 5.2% quarter-on quarter amid stable yields
Improved cost efficiency
o Cost/income ratio at industry-leading 25.7% (26.3%) enabled by a scalable banking platform
o Underlying cost level reduced as increased automation enabled ~13% FTEs reduction in Q3
Improved loan loss ratio
o Loan loss ratio declined for the third quarter in a row to 4.8% (5.1%)
o Driven by stricter credit policies implemented in 2023 and a maturing loan book
Increased profitability
o Profit before tax up 7% to NOK 72 million
o Return on equity of 9.0% (8.5%) and return on target equity of 10.1% (9.7%)
Updated ambitions, outlook for excess capital generation from 2025
o Medium-term targets extended to year-end 2026 (vs year-end 2025), now targeting annualised organic loan growth of 5% (10%), cost/income ratio of 23% (26%) and return on target equity of 12-14% (10-12%)
o Current business plan set to generate excess capital from 2025: to be allocated to where it generates the highest long-term shareholder returns
o Application for Swedish banking license submitted: with conditions similar to Swedish peers, return on target equity could increase to 20% in the mid term
Øyvind Oanes commented further:
"Looking ahead, we see several strong value drivers. The combined effect of our recent loan acquisitions and continuous operational improvements is that the Bank is increasingly profitable and positioned to generate excess capital from 2025. In addition, structural opportunities could significantly accelerate further value creation."
The Q3 2024 report and presentation are available here.
Commenting on the results, Morrow Bank's CEO Øyvind Oanes said:
"With a highly scalable banking platform in place, Morrow Bank delivered improvements across all KPIs in Q3 - which was very much line with our previously stated ambitions. Most remarkably, we managed to grow our loan balance by around 25% while reducing our cost base. The backdrop is that we now leverage our streamlined platform, as it enables us to further automate processes and increase scalability."
Highlights of the quarter:Strong growth
o Gross loan up 24.6% from Q2 2024 driven by organic demand and loan portfolio acquisitions
o All-time-high total income of NOK 321 million, up 5.2% quarter-on quarter amid stable yields
Improved cost efficiency
o Cost/income ratio at industry-leading 25.7% (26.3%) enabled by a scalable banking platform
o Underlying cost level reduced as increased automation enabled ~13% FTEs reduction in Q3
Improved loan loss ratio
o Loan loss ratio declined for the third quarter in a row to 4.8% (5.1%)
o Driven by stricter credit policies implemented in 2023 and a maturing loan book
Increased profitability
o Profit before tax up 7% to NOK 72 million
o Return on equity of 9.0% (8.5%) and return on target equity of 10.1% (9.7%)
Updated ambitions, outlook for excess capital generation from 2025
o Medium-term targets extended to year-end 2026 (vs year-end 2025), now targeting annualised organic loan growth of 5% (10%), cost/income ratio of 23% (26%) and return on target equity of 12-14% (10-12%)
o Current business plan set to generate excess capital from 2025: to be allocated to where it generates the highest long-term shareholder returns
o Application for Swedish banking license submitted: with conditions similar to Swedish peers, return on target equity could increase to 20% in the mid term
Øyvind Oanes commented further:
"Looking ahead, we see several strong value drivers. The combined effect of our recent loan acquisitions and continuous operational improvements is that the Bank is increasingly profitable and positioned to generate excess capital from 2025. In addition, structural opportunities could significantly accelerate further value creation."
The Q3 2024 report and presentation are available here.