The Aduno Group had a successful year in 2016. Turnover for the cards business improved substantially thanks to higher transaction volumes in Issuing and Acquiring. The personal credit business held up well in a challenging environment. The good business performance and a one-off extraordinary contribution pushed the profit to a record level. The solid capital base provides a foundation for further growth.

After the difficulties of the previous year, the Swiss economy returned to a path of growth in the 2016 financial year. Domestic consumer sentiment continuously improved from the record lows seen in summer 2015. According to the State Secretariat for Economic Affairs (SECO), GDP growth was 1.5 per cent for 2016.

Swiss credit card issuers benefited from the positive consumer sentiment. According to the statistics of the Swiss National Bank, the number of credit cards issued rose by 2.5 per cent in 2016 and the turnover generated by these cards in Switzerland increased by as much as 7.7 per cent. This shows that credit cards are not only becoming more common these days, but are also used more often. Contactless payment is also becoming more accepted. While there were 5.2 million credit cards with a contactless function at the end of December 2015, this number had increased to 5.7 million by the end of 2016. This corresponds to growth of 10.5 per cent.

As in the preceding years, the market for personal credit was in decline in 2016, suffering a contraction of some 3.0 per cent according to our own estimates. The leasing market is in a similar position: the “free” segment of the leasing market after deducting the volumes written by car manufacturers’ own leasing companies declined by 2.0 per cent in the reporting year.

Impressive growth in turnover

Supported by a friendly economic environment, the Aduno Group increased its turnover by 20.4 per cent to CHF 583.0 million in the 2016 financial year. The Payment business grew by 29.1 per cent to CHF 456.7 million. The Consumer Finance segment contributed CHF 96.2 million, which is 1.8 per cent less than in the previous year. A further turnover of CHF 98.4 million can be attributed to the central financing unit.

Of the total turnover, 36.2 per cent came from commission income, 19.9 per cent from annual fees, in particular on cards, 17.1 per cent from interest income and 26.8 per cent from other income. Other income increased noticeably thanks to a substantial one-off contribution paid to the Aduno Group as a member of Visa Europe Ltd. following the latter’s takeover by Visa Inc. The decline in interest income mainly reflects the reduction in the maximum interest rate for personal credits to 10 per cent, which cashgate implemented prematurely on 1 April 2016. Surprisingly, the commission income of the Aduno Group was slightly better than in the previous year in spite of the lower interchange fee. This is primarily due to higher transaction volumes and to a lesser extent also to price adjustments. The encouraging growth in the income earned from annual fees is explained by the higher number of issued cards.

Leap in profit and solid capital base

The operating result for the 2016 financial year was CHF 137.0 million, which is 63.0 per cent more than in the previous year, which, in addition to higher volumes, was largely also due to the extraordinary contribution by Visa. Net profit amounted to CHF 118.5 million compared to CHF 74.6 million in the previous year, allowing the Aduno Group to improve its profit margin of 15.4 per cent in the previous year to 20.3 per cent.

The Aduno Group continued to invest heavily in digital transformation and mobile payment projects in the reporting period. This is also reflected in the number of employees: at the end of 2016, the Aduno Group employed 819 employees (full-time equivalents), 63 more than in the previous year.

As at 31 December 2016, the Aduno Group reported total assets of CHF 2,292 million, compared to CHF 2,207 million at the end of 2015. Equity totalled CHF 642.7 million compared to CHF 543.2 million at the end of 2015. With an equity ratio of 28.0 per cent, the Aduno Group boasts a solid financial foundation to support its future growth.

Payment business strengthens in all segments

In the 2016 financial year, the Payment business improved its transaction volume by 6.0 per cent to CHF 16.5 billion. The Issuing and Acquiring segments each contributed approximately 50 per cent of this volume. The number of transactions grew substantially in 2016 by 14.8 per cent to 193.2 million, with Issuing growing slightly more strongly than Acquiring, just like in the previous year.

In the Issuing business, Viseca reported a transaction volume of CHF 8.3 billion, 6.7 per cent more than in 2015. At 8.9 per cent, domestic sales grew much more strongly than sales transacted abroad, which improved by 4.5 per cent. The smaller growth for foreign transactions is primarily explained by the high levels seen in previous years: thanks to the strong Swiss franc, the Swiss already did so much travelling and shopping abroad that the 2016 growth rate was less pronounced. On the other hand, more tourists visited Switzerland again, which boosted domestic sales. New card sales grew by 4.7 per cent year-on-year, mainly thanks to the successful distribution collaboration with the partner banks. Above all, the offers of banks at which credit cards are sold as a package together with savings accounts and other products contributed to the growth. The number of cards issued rose by more than 56,000 or 4.1 per cent to over 1.4 million cards.

The Aduno Group’s growth in the Acquiring business speeded up again following the stagnation seen in the previous year. Volumes rose by 5.3 per cent, compared to 0.6 per cent in the previous year. With regard to the product range, this growth was mainly driven by the credit business, with volumes growing by 6.7 per cent. In particular, the food and beverages as well as the retail and entertainment sectors trended well in the reporting year. Debit card turnover increased by 4.9 per cent.

Consumer Finance down slightly on previous year

In a challenging 2016 financial year, the Consumer Finance business almost matched the previous year’s performance: at CHF 822.0 million, new business was down by 0.8 per cent, while the credit portfolio contracted by 1.1 per cent to CHF 1,251 million.

The personal credit business held up well and posted new volume growth of 4.4 per cent and credit portfolio growth of 5.5 per cent. cashgate therefore gained market share in a shrinking market while upholding its strict risk policy. The company’s own channels – branches, direct business and online – developed particularly well.

New sales in the leasing business declined by 6.6 per cent on the previous year, and the lease portfolio shrank by 7.6 per cent. This market continues to be subject to very strong competitive pressure from the aggressive price policies of manufacturers’ own leasing companies, some of whom offer 0% leases. Since autumn 2016, manufacturers’ own leasing companies have been offering lease financing for second-hand cars, which was not the case previously.