Cembra Money Bank, a Swiss consumer credit institute, increased its profit in the first half of the year despite lower income from the consumer loans business. The company successfully diversified and is reaping the benefits.
Cembra Money Bank had net income of 71.8 million Swiss francs in the first six months of 2016, the Zurich-based company said in a statement today. This is 3 percent more than in the same period of 2015.
«Our bank achieved the best first half-year result since the IPO in 2013 despite a challenging economic environment,» said Robert Oudmayer, CEO at Cembra, in the statement. «The bank remains strongly capitalized and is now 100 percent stand-alone funded.»
Strong Credit Card Unit
The increase in profit is mainly due to higher fees for credit cards and a rise in the insurance profit share.
The volume of the personal loans business meanwhile decreased by 2 percent. Profit fell to 98.7 million from 103.7 million francs a year earlier (down 5 percent). The margin remained at 10.9 percent.
In the credit card unit, Cembra earned 25 million francs in interest income, up 14 percent from a year ago. Cembra has 693,000 credit cards in circulation.
Lower Interest Income From Consumer Loans
Cembra also faces lower refinancing costs after it paid back the remaining 250 million franc loan to General Electric Group in January and July. The bank is now 100 percent independently funded.
Looking forward, Cembra expects interest income from personal loans to decline after the government introduced a 10 percent maximum interest rate cap effective July 1, 2016. The maximum rate personal loans firms previously were allowed to charge was 15 percent. The maximum interest rate on credit card overdraft was cut to 12 percent.
On the plus side, Cembra sees lower refinancing costs and continued growth in the credit card business both boosting its profit.
