Alisa Bank - Suffering from market uncertainty

Issued a profit warning due to decline in financing demand

Alisa Bank issued a profit warning on December 16th due to prolonged market uncertainty, leading to business financing volume growth falling short of the company’s targets due to a decrease in the utilization rate of factoring limits and a general decline in the demand for financing. Alisa Bank now expects total income to remain close to previous year levels and the operating profit before non-recurring items and taxes to be between EUR -0.4m and 0.2m (prev. EUR 0.5-1.5m). The total capital adequacy ratio is expected to exceed 16% at the end of 2024.

Profitability still fairly decent, growth outlook uncertain

We have lowered our estimates for total income and PTP (excl. one-offs) in 2024 to EUR 17.4m (19.3m) and -0.1m (0.7m) respectively. The profit warning reflects the shift in general expectations of recovery in economic activity towards the latter half of 2025 and although negative in the short-term, we find the expected relative profitability for H2 still to be quite decent given the larger difference in total income. This will, however, together with the market conditions continue to strain any future growth given the capital adequacy limiting volumes and growth potential depending on earnings development. We continue to see potential for growth next year, aided by the merger with PURO, but with the overall unfavourable outlook further extended. Profitability should as such also remain clearly positive, but with the weaker volumes below previous expectations. However, uncertainty remains high, and should economic activity not start to pick up during H1/25 any potential volume growth is clearly at risk. 

HOLD with a TP of EUR 0.18

Despite the weak near-term outlook, Alisa Bank has significant profitability scaling potential in the mid-term should financing volumes start to develop favourably. With the currently more challenging valuation levels, we retain our HOLD-rating and target price of EUR 0.18.