Consumer credit specialist Cembra Money Bank suffered a setback in its lending business, hitting its six-month bottom line. 

Cembra Money Bank said on Tuesday its income fell 3 percent to 192 million Swiss francs. Interest income, which contributes nearly three-quarters of its revenue, fell by 8 percent to 138.6 million francs – a net margin of 6.7 percent.

The reason is a December 2015 Swiss government decision to cap interest rates for consumer credit at 10 percent for personal loans and 12 percent for credit cards. The rules took force last June.

Credit Card Fees 

«As expected, the lowering of the maximum interest rate affected our interest income. Cembra was prepared for this change and managed to raise other income. We reached all our mid-term goals in the first-half,» CEO Robert Oudmayer said in a statement.

Income from commissions and fees, which makes for just one-quarter of income, climbed 14 percent to 53.8 million francs. The rise was mainly due to higher credit card fees, Cembra said. 

The bank's net profit nevertheless dropped 3 percent on the year to 69.4 million francs.

Boosted Loan Volume

Despite persistently hesitant client behavior, Cembra said it lifted its outstanding loans to clients by 2 percent to 4.171 billion francs. In private clients alone, its lending volume edged 1 percent higher to 1.738 billion francs versus year-end.

The bank took 21.1 million francs impairments and write-downs for bad loans, which translates to a loss ratio of 1 percent – steady on the year.

Fintech Tie-Up

The bank backed its goals for this year: Cembra is targeting earnings per share between 4.70 and 5 francs. The firm plans to partially offset the interest rate hit with higher commissions from its growing credit card business, while bad loan write-downs should remain at the previous year's level.

Separately, Zurich-based fintech eny Finance said Cembra is refinancing its private loan portfolio for 42 million francs, and has agreed to finance future loan portfolios as well. The two have set up a special purpose vehicle, to be managed by Cembra.

Cembra said it will invest in digitizing its business, while maintaining a close eye on its spending. The bank predicted a slightly higher cost-income ratio on the year.