KRAFT BANK (KRAB) Q2 2024 earnings summary

Executive summary

• Focuses on providing mortgage loans to individuals facing financial challenges, aiming to improve their financial situation and help them return to mainstream banking.

• Business model centers on social responsibility, preventing forced home sales and supporting community stability.

• Since 2018, 1,607 customers have been financially rehabilitated, with 126 in the last quarter.

• Net profit after tax was NOK 2.6 million in Q2 2024, significantly lower than last year due to higher loan loss provisions.

• The wholly owned loan brokerage subsidiary is expected to become profitable in the second half of 2024.

Financial highlights

• Quarterly net profit after tax was NOK 2.6 million, below expectations due to increased loan loss provisions.

• Net loan growth in the quarter was NOK 140 million, with total customer loans at NOK 3,468 million.

• Net interest income was NOK 29.8 million, down from NOK 35.9 million in Q2 2023.

• Loan loss provisions and write-downs totaled NOK 4.3 million, compared to a net reversal of NOK 1.2 million last year.

• Return on equity after tax was 2.3% for Q2 2024; full-year 2024 expected at 6%.

Outlook and guidance

• Expects increased profitability for the remainder of 2024 and maintains a 15% ROE target for 2025.

• Year-end 2024 loan portfolio expected in the NOK 3.7–3.9 billion range.

• Lending brokerage subsidiary expected to be profitable in H2 2024.

• Net loan growth for 2024 is targeted at NOK 1.7 billion in new sales.

• ROE guidance for 2024 is 6%, assuming stable interest rates.