APS Bank plc - Interim Results

On 25 July 2024, APS Bank plc published its interim financial statements covering the six-month period ended 30 June 2024.

Net interest income dropped by 10.7% to €33.2 million (H1 2023: €37.1 million) as the increase in gross interest income (+12.9% or €6.4 million) to €56 million was outweighed by the surge in interest expenses (+83.2% or €10.4 million) to €22.9 million. In this respect, APS explained that the higher interest income is attributable to the continued growth of its loan book and higher interest rates across most asset classes. Meanwhile, the higher interest costs reflect the pass-through of interest rates and competitive pricing on various savings products in an increasingly tight market.

Meanwhile, non-interest income increased by 2.1% to €5.3 million, driven by higher levels of net fee and commission income (+12.7% to €4.5 million). Most of the Bank’s non-interest income streams registered growth, but the consolidated performance was dented by a fair value loss of €0.6 million related to the performance of the APS Funds SICAV plc Diversified Bond Fund, compared to a gain of €0.8 million in the same period last year.

APS also recorded a net impairment loss of €2.0 million compared to a net impairment gain of €0.1 million in the first half of 2023. APS explained that these reflect credit charges across the three IFRS 9 stages spread over a growing local commercial book and the international syndicated lending portfolio. In this respect, the Group also highlighted that the non-performing loans ratio as at the end of June 2024 stood at 1.9%, marking the lowest level in many years.

Overall, net operating income amounted to €36.5 million compared to €42.5 million in the corresponding period last year.

On the expenditure side, total operating costs increased by 2.5% to €27 million (H1 2022: €26.3 million) driven by higher employee compensation and other administrative expenses. Furthermore, the cost efficiency ratio deteriorated to 70% compared to 62.1% in H1 2023.

Moreover, APS also recorded a profit of €0.61 million from its share of results of associates in line with the results during the first half of 2023.

After accounting for a tax charge of €3.18 million and non-controlling interests of €0.1 million, profit for the period attributable to shareholders amounted to €6.84 million compared to €10.8 million in the same period last year.

The Statement of Financial Position as at 30 June 2024, when compared to the end of 2023, shows that total assets increased by 3.0% (or €0.11 billion) to €3.77 billion principally composed of a 4.8% (+€0.14 billion) increase in customer loans (including syndicated loans) to €3.02 billion.

Total liabilities expanded by 3.2% (or €0.11 billion) to €3.48 billion largely reflecting a 5.1% (or €0.16 billion) increase in customer deposits to €3.3 billion. Consequently, the loan-to-deposit ratio was 91.5%, relatively unchanged from the end of 2023. Similarly, total equity also remained practically unchanged at €0.29 billion which translates into a net asset value per share of €0.724. As at 30 June 2024, the CET 1 ratio stood at 14.1% (31 December 2023: 14.6%) and the Capital Adequacy Ratio strengthened to 19.8% (31 December 2023: 20.6%).

Dividend

The board declared a net interim dividend of €0.0053 per share which is equivalent to €2.0 million. This cash dividend is payable to all shareholders as at close of trading on 20 August 2024 subject to regulatory approval.

Outlook

In his commentary, the CEO noted that the Group’s business model will continue to take a medium-to-long-term view beyond the recent interest rate cycle. Furthermore, the CEO pointed out that currently, corrective action is being taken to ease pressures on margins. Meanwhile, the Bank is continuing its transformation programme through new products, services, channels and technologies which are being rolled out to make APS Bank the primary bank of choice for customers through greater efficiency and a simpler banking experience. Additionally, the business strategy stands to benefit from scale to maximise value for shareholders.