comdirect: Growth accelerated significantly
- Good nine-month pre-tax profit for 2018 of €64.3m
- Around 160k new B2C customers in the first three quarters
- comdirect plans to conduct insurance brokerage in the future
- Artificial intelligence an important foundation for faster growth
Quickborn, Frankfurt/Main, Germany. The comdirect group closed the first nine months of 2018 with pre-tax profit of €64.3m (previous year: €72.5m). The pre-tax return on equity stood at 13.7% (previous year: 16.3%). “We have invested heavily in growth, whilst simultaneously achieving a good result,” says comdirect bank AG CEO Arno Walter. “comdirect is a growth company. We gained 60k new B2C customers in the third quarter; that’s around 160k since the start of the year, more than double our customer growth of the previous year.”
Accelerated growth in customer numbers, custody accounts and assets under control
In the previous year’s period, the rise stood at 73k net new customers (excluding inorganic growth resulting from the acquisition of onvista bank customers in April 2017). At the end of the nine-month period 2018, the number of customers in the B2C business segment was 2.45m. In addition, the number of custody accounts rose by 134k to 1.34m – twice the increase in the previous year (increase of 65k). The number of current accounts rose by 83k to 1.51m. Assets under control climbed €6.4bn to €65.4bn and portfolio volume by €4.0bn to €41.1bn, despite price losses on the securities markets. According to Walter, “Our customers have invested more in securities. At €4.7bn, net fund inflows to custody accounts are at an all-time high. We are of course especially pleased about this. In our efforts to be the top address in saving, investing and trading with securities, our goal is to attract even more customers to securities investment. After all, if you only put your money into low-interest investments, increasing inflation means your investment will continue lose value. Securities investment is essential for the long-term accumulation of wealth.”
comdirect offers API for integrating external trading and investment platforms
In order to attract even more customers to securities investment, comdirect has again brought some innovative developments to the market in recent months. One such development is enhanced motif investing, which supports customers in selecting securities according to their investment motives. The options for investment motives that relate to trends , such as robotics and biotechnology, have been added to. Alongside funds, ETFs and shares can also be selected. The digital asset manager cominvest, which now manages around €400m in assets under management, is also being expanded. With savings plans starting from €100 a month, cominvest customers have had the opportunity to additionally invest in their own asset accumulation since the third quarter.
comdirect now offers a modern brokerage interface (API) for the trading, investing and analysis platforms of external partners. The first partner to be integrated is Guidants, one of the largest and most innovative investment platforms in Germany. From the end of November, traders will be able to trade with comdirect without leaving their Guidants-tailored information interface.
Smart financial companion helps to optimise expenses and insurance
Customers can now use comdirect sparCheck to compare electricity and gas suppliers and switch very easily. The amounts saved will then be automatically invested in ETFs. According to Walter, “As a smart financial companion, comdirect not only wants to support its customers in their banking transactions, but also wants to help them optimise their expenditure.” This goes for insurance too. Over the next year, customers will not only be able to easily keep all their insurance contracts together digitally with comdirect, but will be able to optimise them in a few simple steps. This enables customers to have an overview of their insurance policies, in addition to their finances, at all times.
In developing new banking services, comdirect focused on the needs of an increasingly mobile and digital generation in particular. The innovative comdirect app, which already offers chat and voice transfers, and which is set to receive the gold German Design Award 2019, will be enhanced in short development cycles in collaboration with customers. From mid-November, customers will be able to access the app via Apple Watch and view their current account balances with just one click.
Positive development in both net interest income and net commission income
In the nine-month period, comdirect increased the income in its core B2C business by 8% to €252.2m (previous year: €234.3m). Net commission income rose compared with the previous year (€139.1m) by 12% to €155.5m. The increase is primarily due to organic growth and the integration of onvista bank and onvista media GmbH across the 2018 reporting period. At 15.9m, the number of B2C trades in the first nine months of 2018 stood 29% above the previous year (12.3m), reaching a new record high.
Despite the ongoing persistent low interest environment, net interest income after provisions for possible loan losses rose by 18% from €73.2m in the previous year to €86.2m. This was against the background of an increased volume in the deposit and lending business, as well as the moderate adjustment in investment strategy. At €10.4m, other income was below the previous year’s figure of €22.0m, which was influenced by a high result from financial investments.
Growth investments pushed forward in products, technology and marketing
The 16% rise in administrative expenses in the core B2C business of €171.9m in the previous year to €198.8m is essentially due to the increase in other administrative expenses. Alongside the increased costs resulting from the integration of onvista across the entire 2018 reporting period, this predominantly includes increased growth investments in new products, technological development and measures for gaining customers and increasing assets under control. In addition, mandatory contributions for the deposit insurance scheme were higher as a result of growth and the changed assessment basis.
Earnings expectations maintained
The pre-tax profit in the core B2C business at the end of nine months came to €53.4m (previous year: €62.4m). The discontinued activities (ebase) generated pre-tax profit of €10.9m (previous year: €10.1m).
comdirect is maintaining its income expectations for 2018 as a whole of around €145m before taxes for the group announced halfway through the year. The result aimed for takes into account additional growth investments of up to €30m and is subject to the agreed sale of ebase GmbH being concluded in the current year. The sale of subsidiary ebase to the FNZ Group was agreed in July 2018 and remains subject to the approval of the supervisory authorities and fulfilment of contractually agreed closing conditions. If the transaction is concluded in the fourth quarter, it would result in non-recurring pre-tax income of at least €85m for 2018. comdirect significantly increased its growth investments in the second and third quarters, partly in light of the expected non-recurring amount.
Increased use of artificial intelligence (AI)
comdirect will continue to invest in growth in the future. In addition to marketing strategies and investments in innovative products, this includes investing in technological advances through the application of AI components. Current examples of this include intelligent voice response systems and robotic process automation (RPA), which enable standard customer management processes to be automated, and chatbots, which assist customer care agents in their personal contact with customers. According to Walter, “By using AI, we will be able to make processes more convenient, tailored and faster for our customers. AI also forms an important foundation for scaling our business model and cost-efficient growth.”
|€k||Q1 17||Q2 17||Q3 17||Q4 17||Q1 18||Q2 18||Q3 18|
|Net interest income
after provisions for possible loan losses
|Net commission income||44,757||46,885||47,451||55,142||59,247||48,644||47,658|
|Pre-tax profit from
|Pre-tax profit from discontinued activities||3,390||3,529||3,147||3,555||3,399||3,109||4,412|
|Pre-tax consolidated profit||27,427||23,485||21,541||22,408||29,299||18,652||16,319|
|Consolidated net profit||20,372||20,340||15,476||15,356||21,697||13,618||12,002|
|in €k||9M 17||9M 18||9M 18 vs. 9M 17|
Net interest income after provisions
|Net commission income||139,093||155,549||11.8 %|
|Other income||22,037||10,419||-52.7 %|
|Pre-tax profit from continued activities||62,387||53,350||-14.5 %|
|Pre-tax profit from discontinued activities||10,066||10,920||8.5 %|
|Pre-tax consolidated profit||72,453||64,270||-11.3 %|
|Consolidated net profit||56,188||47,317||-15.8 %|
*In connection with the agreed sale, the business of ebase is reported as “discontinued activity”. The previous year’s figures were adjusted accordingly.