Last Updated on Saturday, 10 August, 2024 at 8:20 am by Andre Camilleri
MeDirect Group published its financial results for the first six months of 2024. Net operating profit of €5.4 million was recorded, an increase of by 7% from the equivalent figure for the first half of 2023. This growth in net operating profit was underpinned by an increase of 8.6% in operating income, to €44.7 million, driven largely by higher net interest income from mortgages and Maltese corporate portfolios. Over the past year, MeDirect has grown its customer base to 143,000, an increase of 25% over the past 12 months. These clients hold €5.4 billion in financial assets with the Group as at 30 June 2024, an 18 per cent increase since 30 June 2023. Over the same 12-month period, assets under custody grew by 17% to €1.9 billion.
The growth of MeDirect’s customer base in Malta, Belgium and the Netherlands is underpinned by MeDirect’s continued focus on its mission of building a best-in-class digital platform which enables clients to manage their wealth with confidence and autonomy. During the first half of 2024, MeDirect added functionality to its WealthTech platform, deployed artificial intelligence to increase the efficiency of all aspects of the Group’s operations and services and offered market leading interest rates on savings products, including a 3.6% per annum rate on six-month fixed-term deposits in Malta. Other new functionalities added to the platform include a new corporate e-banking service which enables users to manage all aspects of their corporate banking relationship with MeDirect through a single application or web session.
During the first six months of 2024, MeDirect also continued to de-risk its balance sheet by continuing to reduce the size of its International Corporate Lending (“ICL”) portfolio, which now stands at €300 million (net of provisions), a reduction of 9% since the end of 2023. During the same period, MeDirect grew its aggregate gross mortgage portfolio by 5%, to €2.6 billion. This included growth in MeDirect’s Dutch-government guaranteed NHG mortgage activity, in partnership with HollandWoont, which now comprises 40% of the Group’s total balance sheet. MeDirect’s Dutch buy-to-let mortgage portfolio, established in October 2022 in partnership with Build Finance, reached almost €130 million as at 30 June 2024. MeDirect also further expanded its Belgian and Maltese mortgage lending businesses, both of which registered double-digit growth in the first half of 2024. The corporate lending portfolio in Malta grew by 6% during the period, reflecting continued support to local businesses through fully collateralised facilities.
Net expected credit losses (“ECLs”) for the six-month period ended 30 June 2024 amounted to a €6.0 million net charge (1H 2023: €5.5 million net release), predominantly driven by adverse changes within the ICL portfolio. The net ECL charge resulted from a deterioration in two specific exposures and losses realised because of the divestment of one additional exposure. These impacts reflected the Group’s reduced risk appetite for ICL lending. During the comparable period of 2023, the Group recorded a substantial recovery of Stage 3 exposures and benefited from releases of provisions based on ECL model calculations. With net operating profit of €5.4 million offset by unfavourable ECL impact of €6.0 million, the Group’s net result for the first half of 2024 was a loss before tax of €0.6 million.
MeDirect’s capital and liquidity positions remained adequate, supporting its business transformation strategy and further growth. As at 30 June 2024, MeDirect’s Tier 1 capital ratio stood at 16.6%, with a total capital ratio of 20.1%, both well above regulatory requirements. As at 30 June 2024, the Group’s Liquidity Coverage Ratio stood at 221% (minimum requirement of 100%), and its Net Stable Funding Ratio stood at 132% (minimum requirement of 100%).
Arnaud Denis, Group Chief Executive Officer at MeDirect, said, “The first half of 2024 has seen our business in Malta, Belgium and the Netherlands continue to grow. The fact that an ever increasing number of customers are trusting us with more of their wealth is the best evidence possible that our determined hard work, coupled with an open, innovation-focused culture, is delivering high levels of customer satisfaction, as evidenced by our NPS score of close to 50.”
Innovation at MeDirect is not only restricted to technology but extends to all aspects of how the Group operates. Enhancing brand awareness in the Group’s core markets in a key priority and 2024 has seen the launch of a new marketing strategy focused on MeDirect’s Maltese roots and reflecting the company’s commitment to supporting Maltese talent. Key pillars of this new approach include supporting the first ever edition of MasterChef Malta as well as the use of new channels, particularly in the digital and outdoor space, to reach a broader audience across Malta and Gozo. The new strategy also involved the establishment of new partnerships with key Maltese corporate clients.
As a systemically important bank in Malta and an innovator in the financial services industry across Europe, MeDirect remains committed to its environmental, social and governance responsibilities with the aim of achieving the goals of its ESG Strategy. During the first half of the year, MeDirect completed a project to measure its own and financed scope emissions with the aim of reaching net zero emissions by 2050. Together with the support of its employees, the Group continued to support charitable organisations such as Hospice Malta, Puttinu Cares and the Inspire Foundation in Malta. The Group also supported cancer research in Belgium through participation in the Brussels half-marathon in partnership with Think Pink organisation.
MeDirect’s charitable initiatives were matched with similar commitments to Malta’s sporting and cultural life, which touched numerous fields from water polo to music and dance. In Belgium, MeDirect supports educational initiatives for the community through the creation of an educational webpage, amongst other initiatives. These efforts and accomplishments were recognised in June when MeDirect was awarded a prestigious EcoVadis Platinum Medal, placing MeDirect in the top 1 per cent of the 130,000 companies assessed globally by EcoVadis over the past 12 months.
Looking ahead, there are numerous developments in the technology and product pipeline. These include new developments in MeDirect’s card services which were launched in Belgium this year, following a successful introduction in Malta during 2023. In the coming weeks, instant payments and digital wallets will be launched. This means that customers will soon be able to make purchases using Apple Pay and Google Pay. A major revamp of the investment platform, an easier process for clients to make monthly contributions to savings and investment programmes, and the introduction of new model portfolio services are also on the horizon.
Mr Denis concluded by noting that “In a macro environment which remains challenging and unpredictable, MeDirect is focused on executing its strategic plan and developing further its digital banking platform to deliver seamless customer experience and innovative financial solutions. The Bank is continuing to identify ways to facilitate shareholder transition, which would enable it to accelerate growth and efficiently scale its platform.”
More information is available at https://www.medirect.com.mt/about-us/investor-relations/
—
