Last Updated on Wednesday, 10 August, 2022 at 9:18 am by Andre Camilleri
During the first six months of 2022, MeDirect continued its transformation towards becoming a pan-European WealthTech leader and a specialised mortgage lender. By taking advantage of the flexibility offered by its technology and ability to innovate, during the past three years MeDirect Group has successfully executed its strategy, which is based on four pillars: building a world-class WealthTech platform, growing its retail franchise focused on affluent customers, de-risking and diversifying its balance sheet with a focus on mortgages, and improving the efficiency of its operating model.
When announcing its interim financial results for 2022, MeDirect stated that it is on track to complete the delivery of its disruptive Wealth SuperApp featuring a single, user-friendly suite of products combining innovative wealth solutions with daily banking functionalities, which will make MeDirect a one-stop-shop for its customers.
“In the coming months, MeDirect will continue to strengthen its platform with the launch of online advisory and discretionary portfolio management services, as well as, virtual and physical cards to enhance its everyday banking offering. This unique combination of daily banking and wealth services available via both the mobile app and online banking platform is expected to be highly differentiating in the market,” said Arnaud Denis, Chief Executive Officer of MeDirect Group.
In mid-2022, MeDirect revamped its brand in anticipation of the release of its new suite of products. The new branding emphasises that MeDirect offers its clients the tools necessary to empower them to navigate the complexity of the financial world and makes them feel confident and in control of their finances. MeDirect is shifting its customers’ perception of banking from “we” to “me” – my money, my choices.
Another important development has been the building of a scalable specialised mortgage lending platform in Malta, Belgium and the Netherlands. In Malta, MeDirect introduced three new products during the first half of 2022 –green home loans, 10-year fixed-rate mortgages and a home equity product. These products were all well-received and have been gaining momentum in the Maltese market. MeDirect’s home loan offering, which features personalised service ensures a faster and market-leading turnaround for customers financing their homes.
MeDirect’s Dutch government-guaranteed (NHG) mortgage portfolio now represents approximately 40% of the Group’s balance sheet. In December 2021, MeDirect launched its meHomeLoan product in the Belgian market in partnership with Allianz. In addition, MeDirect continues the steady development of its well-established Maltese corporate lending business to support the local economy.
MeDirect’s retail franchise, focused on affluent customers, grew by almost 30% over the past twelve months to more than 106,000 clients. Total client financial assets increased by almost 4% year over year, notwithstanding very challenging market and macroeconomic conditions, reaching €4.3 billion. Strong trust in the MeDirect brand and its award-winning onboarding process enabled MeDirect to increase its wealth client base by 19% over the past twelve months. This growth was supported by high customer satisfaction and retention levels. Success in retaining clients is demonstrated by the fact that over 90% of clients who opened accounts with MeDirect five years ago remain with the bank.
Profit before tax for the period ended 30 June 2022 amounted to €2.7 million, compared to €3.2 million for the period ended 30 June 2021. Operating income grew by 7% year over year whilst improved market conditions led to a €3.5 million net release of loan impairment charges. Net interest income increased by 11% compared with the same period last year, from €25.8 million in 2021 to €28.7 million, while net fee and commission income increased by 8% from €2.8 million in 2021 to €3.1 million.
The Group’s non-performing loan ratio was reduced to 4.6% as at 30 June 2022, from 6.7% in 31 December 2021. The capital and liquidity positions remained strong, supporting the continuation of MeDirect’s business transformation and growth strategy. MeDirect’s Tier 1 capital ratio stood at 13.6%, with a total capital ratio of 17.3% – both well above regulatory requirements. The Group’s liquidity reserves remained strong at €740 million as at 30 June 2022, and the Group’s Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) stood at 247% and 129%, respectively, both well above the minimum requirements.
MeDirect’s mortgage portfolio increased by 9% over the past twelve months. As part of the Group’s de-risking plan, the international corporate lending portfolio was reduced by 12% to €624 million as at 30 June 2022, representing less than 15% of the Group’s balance sheet.
Environmental, Social and Governance (ESG) is an important area of focus, and the Group has integrated ESG principles into its daily business. During the first half of 2022, MeDirect implemented a range of ESG initiatives including, amongst others, incorporating sustainability principles in its credit and investment businesses, launching green home loans, including a feature in its brokerage platform enabling investors to identify and filter funds and ETFs which focus on sustainability and providing ESG training to MeDirect’s Board and employees. These efforts were validated by MeDirect’s improved rating by EcoVadis, one of the top international providers of sustainability ratings. MeDirect’s overall score was in the top 15% of all companies rated by EcoVadis.
When commenting on the outlook for the coming months, Mr Denis said: “MeDirect aims to continue delivering an attractive value proposition to its customers, whilst at the same time diversifying and de-risking its balance sheet despite a challenging geopolitical and macroeconomic environment.”