Malta-based MeDirect Group (MDB Group) has announced a pre-tax loss of €550,000 for the first six months of 2024 (H1 2024), a significant drop in performance from the €10.6 million pre-tax profit recorded in the same period last year (H1 2023), driven by changes in expected credit losses.
These figures were published on Friday in the group’s interim report for the six months ended 30th June 2024.
MDB Group is the parent company of MeDirect Bank (Malta) plc, a pan-European digital bank that is headquartered in Sliema. In recent years, it also expanded operations to also have a subsidiary bank in Belgium, and also launched its web and mobile platform in the Netherlands.
During the reporting period, MDB Group recorded a slight improvement in net interest income, going up from €39.1 million in H1 2023 to €40.5 million in H1 2024. This was primarily driven by greater income from mortgages and Maltese corporate portfolios.
Net fee and commission income was also on the rise, going up at a more rapid rate of 76.6 per cent to €3.4 million (H1 2023: €1.9 million).
Personnel expenses increased to €13.4 million (H1 2023: €11.6 million), while other administrative expenses rose to €23 million (H1 2023: €21.6 million).
The group registered a net operating profit of €5.4 million, representing an increase of seven per cent from the figure in H1 2023.
During H1 2024, MDB Group strived 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. This is a drop of nine per cent since the end of 2023. It managed its portfolio size through repayments, selected loan sales and limited reinvestments in higher rated loans to large-cap European and US companies.
Net expected credit losses (ECLs) for H1 2024 amounted to a €6 million net charge (H1 2023: €5.5 million net release), primarily driven by adverse changes within MDB Group’s ICL portfolio.
MDB Group stated that the net ECL charge was a result of a deterioration in two specific exposures and losses realised due to the divestment of one additional exposure. These impacts reflected the group’s reduced risk appetite for ICL lending.
It added that during the comparable period in 2023, MDB Group had recorded a substantial recovery of stage three exposures and benefitted from releases of provisions based on ECL model calculations.
The group’s total assets as at the end of the reporting period amounted to €5.1 billion, a slight increase from the €5 million recorded at the end of 2023.
During the past year, MDB Group stated that MeDirect has grown its customer base to 143,000, an increase of 25 per cent over the past 12 months. These clients hold €5.4 billion in financial assets with the group as at the end of the reporting period, an increase of 18 per cent since the same period last year.
This growth in its customer base in Malta, Belgium and the Netherlands came as MeDirect continued to focus on building its digital platform, enabling clients to manage their wealth “with confidence and autonomy.”
Its tier 1 capital ratio stood at 16.6 per cent, with a total capital ratio of 20.1 per cent, both well above regulatory requirements. As at the end of H1 2024, its liquidity coverage ratio stood at 221 per cent, while its net stable funding ratio was 132 per cent, both above the minimum requirements.
Commenting on the performance, CEO Arnaud Denis noted that the first half of 2024 has seen MDB Group’s 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 Net Promoter Score of close to 50,” he continued.
Looking ahead, the group stated that it has a number of developments in the technology and product pipeline, including new developments to MeDirect’s card services, which were launched in Belgium this year.
Mr Denis noted 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,” he added.
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