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Alisa Bank - For now a waiting game

Alisa Bank’s H2 results were quite in line with our estimates. All eyes our now on if and when the company is able to strengthen its equity capital to enable growth.
H2 corresponded quite well to our estimates
Alisa Bank reported results that were quite well in line with our estimates. Total income during H2/23 amounted to EUR 8.3m (Evli EUR 8.2m) and PTP to EUR -0.1m (Evli EUR 0.1m). Net interest income amounted to EUR 7.3m (Evli EUR 7.2m) and net fee and commission income to EUR 0.9m (Evli EUR 1.0m). Total OPEX amounted to EUR 5.7m (Evli EUR 5.7m). and impairment of receivables to EUR -2.8m Evli EUR -2.4m). Alisa Bank expects its total income, should the actions to strengthen the company’s equity capital during H1 be achieved, to increase in 2024 compared with 2023 while the results before one-offs and taxes is expected to be slightly loss-making in H1/2024. 

Awaiting news on strengthening of equity capital
Alisa Bank’s future development remains heavily reliant upon raising additional capital. Management comments suggest relative confidence in this being achieved during H1/2024. This would enable the much needed growth especially in consumer lending. The cost base is currently in quite good shape and in our view more likely to increase to support growth ambitions. The addition of the new savings account products in Germany and Netherlands in late 2023 appear to have been quite successful, with the deposit base having grown to EUR 388m after the reporting period (2023: EUR 269m). With the current loan portfolio level (2023: EUR 168.5m) allowing around break-even earnings, the next step would be to grow the loan portfolio past EUR 200m to start to benefit from the company’s scalability, which could be achievable in 2024 should the company’s capital raising needs be met. 

HOLD (SELL) with a target price of EUR 0.2
With the share price decline since our last update, we upgrade our rating to HOLD and retain our TP of EUR 0.2.  Uncertainty remains high due to dependance upon  strengthening the equity capital.
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