Despite higher interest rates and lower margins, Cembra CEO Holger Laubenthal expects a stable development for the consumer lending bank. The default rate on consumer loans has recently risen slightly.
«We have achieved two important goals. Firstly, growth in line with the overall economy and secondly, that we have achieved a conversion rate of more than half for credit cards from the terminated Migros partnership,» Cembra CEO Holger Laubenthal said at a media call following the release of the consumer bank's first-half results Thursday.
«We're satisfied with developments among credit card customers and see good demand for the Certo! program,» he added.
Cembra's financial performance in the first half of the year was solid, he said, despite the turbulence from interest rate hikes, geopolitics, and the economy. Progress has been made on transformation, and Laubenthal said Cembra plans to continue to focus on selective growth initiatives.
Interest Margins and Market Logic
In an environment of rising interest rates, the performance of the interest margin has followed market logic. There's always a certain delay before prices can be adjusted. For example, the interest rate ceilings were only raised by 100 basis points to 11 percent for cash loans and 13 percent for overdrafts at the beginning of May.
Part of the interest margin was offset by higher commission income, which Laubenthal expects will stabilize.
«Buy Now Pay Later»
Cembra continues to focus on the new growth area of its «Buy Now Pay Later» business and reaffirmed expectations for the unit, with earnings contributions reaching 10 to 20 million Swiss francs by 2026. He says it's difficult to make a precise assessment of the market size, but Laubenthal expects Cembra to reach a market share of 30 to 40 percent for BNPL in Switzerland. In addition, he expects further growth for «Cembra Pay,» which is positive about its cooperation with Twint.
Default Rate Increased
The default rate on loans rose to 0.7 percent in the first half of the year from 0.5 percent a year earlier. «This is a normalization after the Corona pandemic.» As for the loss rate, Laubenthal expects it to stay below one percent.
«We have the credit risks under control and we follow the principles of responsible lending,» and that in the consumer credit market, there are no signs of consumer restraint.
