INTERIM REPORT Q1 2024
Instabank ASA
Key highlights Q1-24
Profit before tax: 24.2 MNOK vs 31.6 MNOK in Q1-23
Profit after tax: 18.2 MNOK
Growth in gross loans: 321 MNOK to 6,595 MNOK
Increased growth in business lending
New Security deposit account product launched
Will contribute to lower funding costs
The Nordic challenger
About Instabank ASA
Instabank, the Nordic challenger, was established as a fully digital bank in the autumn of 2016. We are dedicated to improving the banking experience for both business and private customers. We believe in challenging established norms and finding agile solutions where others create complexity. Our goal is to make everyday life easier for our customers through better products, technology, and personal contact. In a short time, we have achieved a strong position in the Nordic market and are proud to have more than 100,000 customers who have chosen us for their lending, payment or deposit needs.
Instabank operates in Norway, Finland and Sweden, offering competitive savings, insurance, point of sales (POS) financing, credit cards, mortgages and unsecured loan products to consumers
and small and medium-sized businesses. Instabank also offers deposits in Germany through a partnership with Raisin Bank.
The bank's products and services are distributed primarily through agents, various retail partners and the bank's website and mobile app.
At the end of Q1-24, Instabank had 49 full-time and 13 part-time employees.
Instabank is listed on Euronext Growth at Oslo Børs, ticker INSTA.
Operational Developments
Instabank reports a growth in gross loans of 321 MNOK in Q1-24. The growth comes from solid organizational performance, successfully delivering on the strategy, effective operations, distribution, and product offerings meeting customer demands.
Growth in gross loans
+ 321 MNOK
Growth in gross loans Q1-24
The newly launched product for Small and Medium-Sized Enterprises (SME) performs very well, delivering a solid growth in gross loans of 65 MNOK in the quarter. Instabank considers lending to SMEs an underserved market with attractive yield and volumes. We expect lending to businesses to contribute to Instabank's growth gross loans, margins and profits.
The growth in mortgage lending experienced a dip in the quarter, falling from 174 MNOK in the previous quarter to 91 MNOK. This was primarily due to the low volume of new loans at the start of the quarter. By the end of Q1-24, mortgage lending stood at 2,615 MNOK, accounting for 40 % of total lending.
Unsecured gross loans to consumers grew 165 MNOK in the quarter, of which 79 MNOK came from changes in exchange rates.
Consistent with previous quarters, Instabank has raised the interest rates for both existing lending customers and new loans in response to the increase by the Norwegian Central Bank in December 2023, leading to increased yield.
The funding cost also continued to increase. The average deposit rate was
4.1 % in Q1-24, up from 3.9 % in the previous quarter.
In March, Instabank launched a new security deposit account product in cooperation with Husleie.no, the leading platform for managing tenancies in Norway. Instabank's funding costs are expected to decrease because of this.
At the end of Q1-24, the bank had 103,163 customers, of which 66,753 were loan customers and 36,410 were deposit customers.
Profit and Loss
Instabank reports a profit before tax of
24.2 MNOK, down 8.5 MNOK from the
previous quarter, because of decreased yield on securities and increased funding cost.
Total interest income increased by 44.9 MNOK from the same quarter last year to 164.9 MNOK in Q1-24. The increase comes from a 12-month gross lending growth of 1,300 MNOK and increased loan yield to 11.5 % from 10.4 % in the same quarter last year.
+ 35 %
Growth in Interest income
Interest expenses came in at 71.3 MNOK, up from 65.8 MNOK in the previous quarter, following an increase in deposit volume and an increase in funding cost to 4.6 % from 4.4 % the previous quarter.
Net other income was 22.9 MNOK in the quarter, down 3.1 MNOK from the previous quarter, as the yield on securities decreased from 7.3 % to 3.6 %.
Total income came in at 116.5 MNOK, up 15.8 MNOK / 16 % from the same quarter last year.
+ 16 %
Growth in Total Income
Operating expenses were 45.9 MNOK, up only 0.3 MNOK from the previous
quarter. Personnel costs decreased by
0.8 MNOK, and administrative costs were up by 1.6 MNOK, of which 1.2 MNOK came from increased marketing costs associated with the new SME lending product.
The cost-to-income ratio was 39 % versus 37 % in the previous quarter.
Loan losses came in at 46.3 MNOK or 2.9 % of average gross loans, down from
46.6 MNOK/ 3.1 % in the previous quarter. A decrease in losses on loans in Finland offset an increase in losses on loans for mortgages.
24.2 MNOK
Profit before tax Q1-24
Profit before tax was 24.2 MNOK, and profit after tax was 18.2 MNOK, representing a return on equity of 8.3 %.
Balance Sheet
Instabank achieved growth in gross loans of 321 MNOK in the quarter to 6.595 MNOK at the end of the quarter.
Deposits from customers increased by 283 MNOK to 6.410MNOK at the end of the quarter.
Total assets at the end of Q1-24 were 7.591 MNOK.
Regulatory capital
At the end of the quarter, the Common Equity Tier 1 Capital (CET1) ratio was
18.4 %, 3.8 % points above the regulatory capital requirement. The total capital ratio was 22.3 %, 1.4 %
points above the regulatory capital requirement.
The Ministry of Finance implemented a transitional rule for capital composition applicable to all banks, which came into effect on 31.12.23. The Pillar 2 requirement, currently at 6.2% for Instabank, can be met with a minimum of 56.25% Common Equity Tier 1 (CET1) capital, down from 100%
The Norwegian Financial Supervisory Authority (NFSA) is in the process of setting a new Pillar 2 requirement for Instabank.
Outlook
We expect continued high demand for Instabank 's lending products. For 2024, Instabank will prioritize growth in lending for mortgages, business lending and consumer loans in Finland. The latter as capital requirements have been reduced significantly for exposures in Finland. A new Positive Credit Register will launch in Finland in April, expected to positively impact credit risk in the long-term.
We expect the final decision for the new Pillar 2 requirement, including capital composition, in the second quarter.
Other information
Regarding capital requirement, there has been a limited review of the accounts in accordance with ISRE 2410 as of 31.03.2024 by the bank's auditors and the result after tax is added to retained earnings in full.
Oslo, April 29th, 2024
Board of Directors, Instabank ASA
Condensed statements of profit or loss and other comprehensive income:
NOK 1000 | Note | Q1-2024 | Q1-2023 | YTD 2024 | YTD 2023 | Year 2023 |
Interest Income effective interest method | 162 012 | 119 664 | 162 012 | 119 664 | 556 225 | |
Other interest income | 2 912 | 1 262 | 2 912 | 1 262 | 8 296 | |
Interest expenses | 71 314 | 37 130 | 71 314 | 37 130 | 204 694 | |
Net interest income | 93 610 | 83 796 | 93 610 | 83 796 | 359 828 | |
Income commissions and fees | 15 894 | 12 222 | 15 894 | 12 222 | 54 304 | |
Expenses commissions and fees | 1 096 | 2 109 | 1 096 | 2 109 | 10 629 | |
Net gains/loss on foreign exchange and securities | ||||||
classified as current assets | 8 119 | 6 854 | 8 119 | 6 854 | 37 580 | |
Net other income | 22 918 | 16 967 | 22 918 | 16 967 | 81 256 | |
Total income | 116 528 | 100 763 | 116 528 | 100 763 | 441 083 | |
Salary and other personnel expenses | 18 807 | 15 199 | 18 807 | 15 199 | 68 644 | |
Other administrative expenses, of which: | 21 863 | 18 406 | 21 863 | 18 406 | 76 556 | |
- direct marketing cost | 4 993 | 2 716 | 4 993 | 2 716 | 13 244 | |
Other expenses | 2 146 | 1 797 | 2 146 | 1 797 | 8 475 | |
Depreciation and amortisation | 3 141 | 2 947 | 3 141 | 2 947 | 12 440 | |
Total operating expenses | 45 956 | 38 350 | 45 956 | 38 350 | 166 114 | |
Losses on loans | 2 | 46 332 | 30 849 | 46 332 | 30 849 | 143 740 |
Operating profit before tax | 24 239 | 31 564 | 24 239 | 31 564 | 131 229 | |
Tax expenses | 6 060 | 7 891 | 6 060 | 7 891 | 30 357 | |
Profit and other comprehensive income for the period | 18 179 | 23 673 | 18 179 | 23 673 | 100 872 | |
Earnings per share (NOK) | 0,05 | 0,07 | 0,05 | 0,07 | 0,27 | |
Diluted earnings per share (NOK) | 0,05 | 0,07 | 0,05 | 0,07 | 0,25 |
Condensed statement of financial position:
NOK 1000 | Note | 31.03.2024 | 31.03.2023 | 31.12.2023 |
Loans and deposits with credit institutions | 4 | 226,433 | 174,078 | 264,224 |
Loans to customers | 2, 4 | 6,260,957 | 5,115,359 | 5,993,508 |
Certificates and bonds | 4 | 1,013,267 | 848,185 | 943,254 |
Derivatives | 13,166 | 4,002 | 1,273 | |
Shares and other equity instruments | 6,000 | 0 | 0 | |
Other intangible assets | 5 | 27,451 | 22,756 | 26,923 |
Fixed assets | 14,393 | 3,623 | 15,094 | |
Deferred tax assets | 1,883 | 0 | 1,883 | |
Other receivables | 4 | 27,003 | 36,735 | 31,124 |
Total assets | 7,590,552 | 6,204,739 | 7,277,283 | |
Deposit from and debt to customers | 4 | 6,409,638 | 5,234,665 | 6,126,572 |
Other debts | 4 | 65,965 | 15,145 | 19,648 |
Accrued expenses and liabilities | 25,947 | 13,461 | 31,127 | |
Derivatives | 2,842 | 3,361 | 22,824 | |
Deferred tax | 0 | 734 | 0 | |
Tax payable | 26,501 | 32,956 | 32,974 | |
Subordinated loan capital | 3, 4 | 96,000 | 96,000 | 96,000 |
Total liabilities | 6,626,893 | 5,396,323 | 6,329,145 | |
Share capital | 3 | 378,262 | 332,642 | 378,262 |
Share premium reserve | 3 | 200,430 | 178,192 | 200,430 |
Retained earnings | 3 | 304,068 | 216,682 | 288,547 |
Additional Tier 1 capital | 3 | 80,900 | 80,900 | 80,900 |
Total equity | 963,659 | 808,417 | 948,139 | |
Total liabilities and equity | 7,590,552 | 6,204,739 | 7,277,283 |
Statement of changes in equity:
Retained | |||||
earnings | |||||
Share | Share | Tier 1 | and other | Total | |
NOK 1000 | capital | premium | capital | reserves | equity |
Equity per 01.01.2023 | 332 642 | 178 192 | 80 900 | 194 540 | 786 275 |
Capital issuanse | 45 619 | 22 238 | 67 857 | ||
Profit for the period | 100 872 | 100 872 | |||
Changes in warrants | 3 182 | 3 182 | |||
Paid interest on Tier 1 Capital | -10 048 | -10 048 | |||
Equity per 31.12.2023 | 378 262 | 200 430 | 80 900 | 288 547 | 948 139 |
Equity per 01.01.2024 | 378 262 | 200 430 | 80 900 | 288 547 | 948 139 |
Profit for the period | 18 179 | 18 179 | |||
Changes in warrants | - | ||||
Paid interest on Tier 1 Capital | -2 659 | -2 659 | |||
Equity per 31.03.2024 | 378 262 | 200 430 | 80 900 | 304 068 | 963 659 |
Notes
Note 1: General accounting principles
The interim report is prepared in accordance with chapter 8 in regulations for annual accounts of banks, credit companies and financial institutions, which means interim financial statement in accordance with IAS 34 and those exceptions included in the regulations for annual accounts of banks, credit companies and financial institutions, as presentation of statement of cashflows. For further information see note 1 accounting principles in the annual report of 2022. The interim report was approved by the board of directors on April 29th, 2024.
Note 2: Loans to customers
GROSS AND NET LENDING;
NOK 1000 | 31.03.2024 | 31.03.2023 | 31.12.2023 |
Unsecured consumer loans | 3 846 357 | 3 329 812 | 3 681 338 |
Mortgages | 2 615 233 | 1 965 052 | 2 524 139 |
B2B Credit Line | 133 610 | 0 | 68 382 |
Prepaid agent commission | 146 560 | 136 658 | 149 521 |
Establishment fees | -86 096 | -77 282 | -85 956 |
Gross lending | 6 655 664 | 5 354 240 | 6 337 423 |
Impairment of loans | -394 707 | -238 881 | -343 915 |
Net loans to customers | 6 260 957 | 5 115 359 | 5 993 508 |
CREDIT IMPAIRED AND LOSSES:
NOK 1000 | 31.03.2024 | 31.03.2023 | 31.12.2023 |
Gross credit impaired loans (stage 3) | 794 575 | 443 387 | 663 605 |
Individual impairment of credit impaired loans (stage 3) | -326 710 | -181 500 | -277 168 |
Net credit impaired loans | 467 865 | 261 887 | 386 437 |
Gross credit impaired loans are loans which are more than 90 days in arrear in relation to the agreed payment schedule. |
AGEING OF LOANS:
NOK 1000 | 31.03.2024 | 31.03.2023 | 31.12.2023 |
Loans not past due | 4 693 279 | 4 037 420 | 4 500 310 |
Past due 1-30 days | 761 331 | 563 293 | 794 218 |
Past due 31-60 days | 264 174 | 209 790 | 263 108 |
Past due 61-90 days | 81 841 | 40 974 | 52 618 |
Past due 91+ days | 794 575 | 443 387 | 663 605 |
Total | 6 595 200 | 5 294 864 | 6 273 858 |
31.03.2024 | 31.03.2023 | 31.12.2023 | |
Loans not past due | 71,2 % | 76,3 % | 71,7 % |
Past due 1-30 days | 11,5 % | 10,6 % | 12,7 % |
Past due 31-60 days | 4,0 % | 4,0 % | 4,2 % |
Past due 61-90 days | 1,2 % | 0,8 % | 0,8 % |
Past due 91+ days | 12,0 % | 8,4 % | 10,6 % |
Total | 100,0 % | 100,0 % | 100,0 % |
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Instabank ASA published this content on 30 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2024 05:24:09 UTC.