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Alisa Bank - Entering profitable territory

Alisa Bank’s H1 results were weak, as expected, but gave further confirmation of the profit levels to be expected going forward after the combination with PURO Finance.

Top- and bottom-line in line with estimates
Alisa Bank reported H1 results, that on top- and bottom-line basis corresponded to our estimates. Total income amounted to EUR 7.7m (Evli EUR 8.0m), with NII (EUR 7.2m/6.9m act./Evli) slightly better than anticipated while an elevated fee expense level saw lower than anticipated net fee and commission income (EUR 0.4m/1.0m act./Evli). Lower than anticipated total OPEX was a positive, at EUR 6.4m (Evli EUR 7.1m), which coupled with slightly lower realized and expected credit losses (H1: 3.4% of credit portfolio) and the slightly lower top-line resulted in PTP of EUR -2.0m close to our EUR -2.1m estimate. The loan portfolio (before expected credit losses) grew 11% y/y to EUR 192.6m, driven by the combination with PURO Finance.

Expecting clearly more profitable figures going forward
Our 2024e estimates remain close to unchanged after some smaller readjustments to OPEX and income expectations, with our changes to coming year estimates essentially limited to an increase in 2025e PTP. The H1 report in our view held little new information but acted as a further confirmation to the expected run-rate profitability levels after the combination with PURO, which crudely speaking, could be some EUR 3-5m in PTP based on the implied EUR 1.5m-2.5m level for H2/2024 from the company’s guidance. Our 2025e PTP estimate of EUR 3.0m reflects uncertainty relating to expected interest rate cuts, the speed of planned shift in the loan portfolio to higher margin products and loan loss levels having remained somewhat on the higher side.

HOLD with a target price of EUR 0.18 (0.20)
Our estimates put 2025e P/E at 10.8x, while the peer average stands at 6.6x. The expected boost in profitability levels is a good start for increasing the attractivity of the investment case. Given the current constraints to lending due to capital ratio targets and short-term reliance on growth mainly through improving lending margins, current valuation levels in our view remain fair.  

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