Last Updated on Sunday, 10 April, 2022 at 2:57 pm by Andre Camilleri
During 2021, MeDirect Group moved forward dynamically in the implementation of its strategic roadmap and demonstrated continued resilience and ability in responding to a rapidly evolving market environment through its transformation and technology strategy.
When announcing the full-year 2021 financial results, MeDirect stated that it continued to transform its balance sheet, developed its WealthTech platform by launching its new Wealth SuperApp in both Malta and Belgium, launched a number of new asset classes such as Belgian and Maltese mortgages and built its capital buffers to historically high levels.
“Our strategic goal is to create a pan-European WealthTech leader and grow a complementary specialised mortgage platform as the two main sources of value creation. The successful delivery of that strategy rests on the ability to build our WealthTech platform, grow our retail franchise focused on affluent customers, de-risk and diversify our balance sheet through mortgages and strengthen the operating model,” said Arnaud Denis, Chief Executive Officer of MeDirect Group.
One core development that took place in 2021 was the continued development of MeDirect’s Wealth SuperApp, designed to meet the needs of the underserved affluent market segment for wealth services. The aim is to offer, on a single platform with open architecture, a broad range of online investment solutions, superior user experience and attractive pricing, combined with high quality transactional banking capabilities. Customers can choose from amongst more than 1,500 mutual funds, as well as 500 ETFs, 3,000 equities and 300 bonds, trading on 17 stock exchanges around the world.
This package of investment services is complemented by seamless and easy-to-use mobile banking with multi-currency capabilities. Later in 2022, MeDirect intends to launch its virtual and physical card product. Through one attractive and easy-to-use platform, MeDirect provides its clients with the choice of how they want to invest and grow their money, while giving them the possibility to use the app seamlessly for everyday banking.
Mr Denis added: “The Group operates as a tech company on par with fintech standards. MeDirect has evolved as a service aggregator with a cloud-agnostic platform designed with scale in-mind and substantial room for growth. As one of its core advantages, MeDirect owns the intellectual property of critical elements of its value proposition, including all client-touchpoints and service aggregation capabilities. This has enabled the delivery of a true omni-channel solution available on both web and mobile.”
He said that the Group’s performance was achieved in a year marked by the extreme disruptions resulting from the Covid-19 pandemic, as well as economic and geo-political dislocations including higher inflation, supply chain disruptions and increased international tensions.
Michael A. Bussey, Chairman of MeDirect Group stated that “notwithstanding these 2021 headwinds, MeDirect Group continued to increase its business activity and recorded rapid growth in its client base in the jurisdictions in which it operates whilst achieving high levels of customer satisfaction. Our Group will continue to develop and deploy new products and improved user experience by leveraging its advanced tech platform.”
MeDirect’s customer base grew to 102,000 in 2021, up 37% from year-end 2020. In addition, a 165% increase in new customers was recorded in 2021, with 30,000 new customers acquired during the year. The Group’s customers accounted for Eur4.5 billion of client financial assets, of which Eur1.5 billion were investments held in custody with MeDirect.
In Belgium, MeDirect was once again rated in the top five banks for digital investing and savings by spaargids.be. In Malta, MeDirect’s digital onboarding solution was the Winner of Tech.MT’s award for Best Use of Technology in Business Transformation.
MeDirect Group continued the de-risking and diversification of its balance sheet, a process that started in 2019. As a result, the Group’s international corporate lending portfolio has been reduced to Eur0.6 billion at year-end 2021, down from a peak of Eur1.8 billion in March 2019.
The capital released has been used to strengthen MeDirect’s capital ratios and to reinvest in mortgage products in the Netherlands and more recently in Malta and Belgium. MeDirect’s low-risk Dutch government guaranteed mortgage portfolio reached Eur1.7 billion by year-end 2021.
MeDirect’s total capital ratio has increased to 19.2%, the highest since it began to be regulated by the European Central Bank as part of the Single Supervisory Mechanism in 2016. MeDirect also maintains ample liquidity, with a Liquidity Coverage Ratio of 363% as of year-end 2021. Such ratios are in excess of all regulatory requirements, recommendations and management buffers.
Overall, borrowers in our corporate credit portfolio have evidenced an improved operating performance during 2021 following the economic recovery during the year. Considering the prudent level of provisioning already applied in 2020 due to the pandemic, impairment losses have been significantly reduced from Eur65 million in 2020 to Eur2 million in 2021.
Notwithstanding significant continuing investment in its technology platform and the growth of its operations, MeDirect has managed to maintain its fixed cost base almost flat when compared to the previous year. As a percentage of total assets, fixed costs were reduced from 1.50% in 2020 to 1.24% in 2021.
The reduction in impairments referred to earlier and cost discipline contributed to a significantly improved financial performance, from a loss before tax of Eur75 million in 2020 to a loss before tax of Eur14 million in 2021, while continuing to significantly invest in the platform.
MeDirect Group has intensified its focus on environmental, social and governance (ESG) initiatives, with the appointment of a Group Head of Sustainability and the set-up of an ESG Committee. In addition, it continues to integrate ESG principles into the business and raise ESG awareness within the organisation. In the context of workplace diversity, MeDirect employs the nationals of over 22 countries and has a workforce that is 41% female, including a number of senior executives.
Mr Denis concluded: “In summary, 2021 witnessed the Group’s recovery from the extraordinary challenges of 2020. In spite of a volatile macroeconomic environment, MeDirect continued to show highly disciplined execution of its strategic transformation roadmap. Notwithstanding the macro-economic challenges, the Group is confident that it can create a sustainable business model by executing its business plan and deploying its leading WealthTech platform at a pan-European level.”