grenke increases group earnings by 11% in H1 2024

grenke AG, a global financing partner for small and medium-sized enterprises (SMEs), has demonstrated robust financial growth and improved profitability in the first half of 2024. The company’s strategic focus on expanding its new business and enhancing operational efficiency has led to a notable increase in Group earnings, which grew by 11.3% to €45.0 million, compared to €40.4 million in the same period of 2023.

Significant growth in key financial metrics

The positive financial performance in H1 2024 was underpinned by several key metrics that reflect grenke’s ongoing success. The company’s cost-income ratio (CIR) improved to 57.1%, down from 58.3% in the first half of 2023, indicating enhanced operational efficiency. Additionally, the volume of lease receivables reached a record high of €6.1 billion as of June 30, 2024, a substantial increase from €5.4 billion at the same time last year. This growth in lease receivables underscores the company’s effective expansion in leasing new business, driven by a 21.5% increase in the second quarter alone, reaching €790.3 million.

Strategic leadership and financial stability

Dr. Sebastian Hirsch, CEO of Grenke AG, emphasized the company’s commitment to maintaining its growth trajectory despite ongoing market challenges.

“Our robust growth and advancing efficiency are increasingly translating into improved profitability,” he said.

His sentiments were echoed by CFO Dr. Martin Paal, who highlighted the company’s strong refinancing capabilities:

“Our issue of a benchmark bond is further evidence of our refinancing strength and secures our growth. Thanks to our cost management, we have improved our cost-income ratio and are on target for the half-year overall.”

The equity ratio as of June 30, 2024, stood at 18.3%, slightly down from 19.1% at the end of 2023 but still comfortably above the company’s target of at least 16%. This solid equity base, coupled with a return on equity (RoE) before taxes rising to 9.7% in Q2 2024, positions grenke well for future growth. The RoE for the first half of 2024 was 8.5%, up from 7.8% in the same period last year, reflecting improved earnings before taxes with minimal changes in equity.

Challenges and strategic responses

Despite the positive financial outcomes, grenke faced some challenges in H1 2024. Interest expenses for refinancing the leasing business increased significantly to €49.9 million in Q2 2024, up from €29.5 million in Q2 2023, due to persistently high capital market interest rates. However, net interest income still rose by 7.6% to €90.4 million, demonstrating grenke’s ability to manage costs effectively while continuing to grow its income.

Operating results also saw a substantial increase, growing by 17.0% to €33.4 million in Q2 2024. Group earnings for the quarter rose 2.6% to €25.2 million, accompanied by an improved CIR of 56.3%. However, expenses related to the settlement of claims and risk provisions also increased to €28.3 million, driven by higher business volumes and the need for adequate risk provisioning. Despite these rising costs, grenke’s loss rate of 1.2% remained within the expected range and below the forecasted threshold of 1.5%.

Outlook for the full year 2024

Looking ahead, grenke remains optimistic about its financial performance for the full year 2024. The company continues to forecast leasing new business in the range of €3.0 billion to €3.2 billion and Group earnings between €95 million and €115 million.

In the 2024 financial year, grenke also aims for a slight year-on-year increase in its CM2 margin, with a medium-term target of approximately 17%. The company expects to maintain a balance sheet equity ratio above 16%, and the loss rate is anticipated to stay below 1.5%.

Taking into consideration the investments planned in the digitalisation programme, grenke is aiming for a CIR of under 58% in 2024.

Key figures at a glance (in €m)

	Q2 2024	Q2 2023	Δ in %	Q1–Q2 2024	Q1–Q2 2023	Δ in %
Leasing new business	790.3	650.3	21.5	1,460.1	1,260.5	15.8
CM2 margin of leasing new business in %	16.6	16.9	-0.3 pp	16.7	16.8	-0.1 pp
Group earnings	25.2	24.5	2.6	45.0	40.4	11.3
Earnings per share in euros	0.58	0.55	5.5	0.80	0.74	8.1
Cost-income ratio in %	56.3	59.5	-3.2 pp	57.1	58.3	-1.2 pp
Loss rate	1.2	0.9	0.3 pp	1.1	1.0	0.1 pp
RoE before taxes in %	9.7	9.5	0.2 pp	8.5	7.8	0.7 pp
Average no. of employees in full-time equivalents	2,180	2,052	6.2	2,169	2,023	7.2