PROFITABLE RESULT
January-December 2023 in brief
| GROUP’S KEY FIGURES (EUR 1,000) | Jan-Dec 2023 | Jan-Dec 2022 | July-Dec 2023 | July–Dec 2022 |
|---|---|---|---|---|
| Net interest income | 14,757 | 9,053 | 7,331 | 6,590 |
| Net commission and fee income | 1,785 | 1,511 | 938 | 1,502 |
| Total operating expenses | -11,398 | -11,601 | -5,651 | -6,024 |
| Impairment of receivables | -4,999 | -8,321 | -2,765 | -4,147 |
| Profit before taxes | 303 | -9,684 | -87 | -2,303 |
| *Profit before non-recurring items and taxes | 832 | -7,750 | 238 | - |
| * Cost / income ratio, % | 68 | 113 | 68 | 77 |
| Balance sheet total | 312,841 | 291,661 | 312,841 | 291,661 |
| * Return on equity (ROE), % | 1.2 | neg. | 0.3 | neg. |
| Total capital ratio (TC), % | 15.2 | 16.8 | 15.2 | 16.8 |
| Common Equity Tier (CET1), % | 12.0 | 12.6 | 12.0 | 12.6 |
| Number of employees, end of period | 78 | 78 | 78 | 78 |
| Earnings per share (EPS), EUR | 0.00 | -0.14 | 0.00 | -0.05 |
| * Impairment of receivables / loan portfolio, % | 2.9 | 5.1 | 3.2 | 2.5 |
* The calculation principles of alternative performance measures are presented in Appendix A of the Financial Statements Bulletin 2023.
July-December in brief
Teemu Nyholm, CEO
Profitable result achieved
The result before non-recurring items and taxes for the 2023 financial year was EUR 0.8 million, and the result before taxes was EUR 0.3 million. Due to the difficult economic situation, we did not manage to strengthen the company's equity according to our plans. This held back the growth of our credit portfolio in the second half of the year, as well as the tightening of our lending in certain industries. At the same time, we also wanted to maintain our strong capital adequacy level. Because of this, the second half's earnings, EUR 8.3 million, were slightly below the level of the first half and the result before taxes in the second half was EUR -0.1 million.
Development of business
Our credit base grew to EUR 173 million by the end of 2023 before reducing provisions for credit losses.
The growth of corporate customer business was limited by the challenging operating environment of SMEs and our caution in credit risk management in industries with increased credit risk. However, our credit base for corporate financing increased by 31 percent to EUR 41 million in the fiscal year. The quality of the corporate loan portfolio remained good and stable in the second half of the year. Due to successful risk management, we avoided significant credit losses in the second half of the year in corporate lending. As the economic operating environment improves, we believe that our strong competitiveness will create a basis for our growth in the future as well.
In personal customers, our credit base remained unchanged at EUR 132 million. In the market, the demand for consumer financing continued to grow moderately, but our growth was limited by capital restrictions and our tightened credit policy. In the second half of the year, we invested especially in strengthening our profitability in consumer financing and succeeded in improving the net interest income despite the slight increase in financing costs.
At the end of December, our deposit base was EUR 269 million. The structure and sources of our deposit base diversified: the share of time deposits increased and we managed to increase the collection of deposit funds through our digital channels. In November, we opened a savings account product on Europe's leading deposit comparison portal Raisin in Germany, and further in December we also opened this channel in the Netherlands. After the end of the financial year, our deposit base has strengthened strongly, reaching EUR 388 million at the end of January. As the interest rate rose, our financing costs increased somewhat, and at the end of the financial year, the average interest rate on the deposit portfolio was 2.7 percent. At the same time, the bank's interest margin on liquid assets clearly increased with the increase in liquid assets.
The number of active customers continued to grow and was 57,500 at the end of the year. Customer satisfaction also remained at a high level in the second half of the year (Net Promoter Score 45). We achieved the industry's top reviews (4.3/5) in app store reviews.
We continued to implement the cost-saving program, with which we aimed for significant savings in the bank's fixed costs. We have succeeded in cost savings and our operational efficiency developed positively during the review period, with the cost-to-income ratio in the review period being 68 percent. We will enter 2024 at a lower level of fixed costs compared to 2023.
In June, we started offering banking services (BaaS) integrated into financial management systems in cooperation with Talenom Oyj. The services enable Talenom's business customers to have easy-to-use banking services integrated directly into the financial management software. At the beginning of the year, we also announced an online shopping payment solution for SMEs with Paytrail, Finland's largest payment intermediary. Both projects support our strategy in utilizing digital channels for new customer acquisition.
Market environment and risk position
During 2023, the general economic situation deteriorated significantly. Inflation and rising interest rates increased consumers' living costs considerably. At the same time, especially the strong contraction of the construction sector led to unprecedented levels of bankruptcies of SMEs. We expect inflation and the weakening of consumers' purchasing power to subside and the operating conditions of SMEs to gradually strengthen during 2024. The interest rate is also expected to decline during 2024, which supports the recovery of the economic situation.
The bank's liquidity position is very strong, with liquid assets of EUR 135 million. The predicted drop in the interest rate creates challenges for increasing deposit assets and interest margin on deposits, but thanks to our diversified deposit base, we will also be able to generate a significant return on liquid deposit assets in the future.
The bank's solvency remained at a good level of 15.2 percent, however, falling short of the target of 16 percent.
Despite the challenging market environment, we were extremely successful in the bank's credit risk management. Credit losses fell to 2.9 percent of the loan portfolio.
Outlook for the future
Achieving a positive result in 2023 was a significant step in Alisa Bank's growth story. In the future, growth and improving profitability will require strengthening the bank's own capital and thereby increasing the credit base. We have actively promoted measures to strengthen the capital structure and we believe that we will be able to inform about these during the first half of 2024.
In our business during 2024, we will emphasize banking services and financing for SMEs. In proportion to the committed capital, invoice and working capital financing of SMEs is the most profitable business for the bank. We continue to invest in the development of BaaS services together with financial administration operators, which will significantly increase our customer potential in SMEs. In our development projects, we also focus on the development of smooth banking and financial services for SMEs. Our competitiveness in this customer segment is strong, and as the economic situation gradually improves, we believe that our growth will continue to be strong in corporate financing.
Despite the challenging operating environment, we look optimistically at the coming year. I thank our customers, staff and shareholders for the past year.
Teemu Nyholm
CEO
Financial targets and outlook for 2024
In 2023, we achieved a positive result, but due to the unfavorable market situation, the measures aimed at strengthening the capital structure did not proceed according to the targeted schedule during 2023.
The uncertainty of the operating environment and the company's capital structure continue to challenge the earnings development in 2024. Likewise, the expected decrease in interest rates will have a slightly weakening effect on the bank's result. In preparation for these, we have adjusted the company's cost structure during the second half of 2023.
We believe that we will be able to implement the actions to strengthen equity capital during the first half of 2024. If this happens, the total income will increase in 2024 compared to 2023, and the result before non-recurring items and taxes for the financial year 2024 is estimated to be profitable. However, the result for the first half of 2024 before one-off items and taxes is estimated to be slightly loss-making.
The target for the group's total capital ratio is 16 percent.
Further information
Teemu Nyholm, CEO, Alisa Bank Plc
teemu.nyholm@alisapankki.fi
tel. +358 50 577 1028
Alisa Bank in brief
Alisa Bank Plc is a Finnish digital bank that helps both personal and business customers to manage their day-to-day finances in a flexible and straightforward manner. For savers, we offer an attractive interest rate on deposits. Alisa Bank Plc is regulated by the Financial Supervisory Authority of Finland and listed on Nasdaq Helsinki’s main list (ALISA). www.alisabank.com