Successful first half of 2017 for the Aduno Group
The Aduno Group made very good progress in the first half of 2017. Positive consumer sentiment and the increasing substitution of cash by card payments gave the cards business a boost. Digital services providing greater customer friendliness and security were well received. In Consumer Finance, new pricing models and attractive leasing options resulted in a positive business performance.
In the first half of 2017, the Aduno Group recorded revenue of CHF 263.9 million. Both the Payment division – with the issuing business of Viseca Card Services SA (Viseca), the acquiring business of Aduno SA (Aduno) and the rental deposit guarantee business of AdunoKaution AG (AdunoKaution) and SmartCaution SA (SmartCaution) – and the Consumer Finance division with cashgate AG (cashgate) posted growth compared to the prior-year period. With an expansion in business volume, the Payment division increased its commission income by 14.4 per cent. The division continues to enjoy a high level of new card sales, which is reflected in increasing revenue from annual fees. The Consumer Finance division achieved gratifying growth rates in new business in a market that remained challenging. Because of the reduction that was ordered in the maximum interest rate on personal credit, which applied for a full half year for the first time, interest income was slightly down on the prior-year period.
The result from operating activities in the first half of 2017 amounted to CHF 47.0 million. The reduction against the figure of CHF 89.6 million for the first half of 2016 was attributable to the fact that last year the Aduno Group received a substantial one-off contribution as a result of the acquisition of Visa Europe Ltd. by Visa Inc. Adjusting for this exceptional item, the result from operating activities have been 30.9 per cent higher than in the same period last year. The operating margin was also well above the prior-year period margin of 14.8 per cent on a like-for-like basis, at 17.8 per cent. Net profit in the first half amounted to CHF 42.3 million. As at mid-2017, the Aduno Group employed 823 staff (full-time equivalents).
Payment division posts further growth
In its card business the Aduno Group increased its revenue in the first six months of 2017 by 6.9 per cent to CHF 8.5 billion, with the volume of business split equally between the Issuing and Acquiring segments. The number of transactions actually rose by 15.8 per cent to 105.0 million.
In Issuing, Viseca recorded a transaction volume of CHF 4.3 billion, 7.7 per cent more than in the first half of 2016. The volume of business rose more sharply in Switzerland than abroad, at 8.9 per cent and 6.4 per cent respectively. The sharp growth in domestic card revenue reflects the ongoing substitution of cash. Consumers like being able to make quick and easy contactless payments for their everyday purchases using a card. There is also greater use of credit cards in e-commerce. New sales of credit cards were maintained at the high level recorded in the prior-year period, particularly through solid collaboration with partner banks in distribution as well as successful marketing activities. The total number of issued cards climbed to 1.46 million, with Viseca slightly increasing its share of the Swiss market compared to the prior-year period measured by the number of issued cards.
The success achieved by the VisecaOne digital services also remains unbroken: more than 50 per cent of Viseca customers have registered for VisecaOne. The app has been downloaded more than 580,000 times and 175,000 customers use it actively every month. It offers them a simple yet very secure authentication system for making 3-D Secure online payments, and customers can also use the app to check their spending and available amount and subscribe to push notifications for every card transaction. The high standard of security provided by VisecaOne and further investment in preventive solutions have resulted in a sustained reduction in risk costs. The surprize rewards programme, which is popular with cardholders and merchants, was also linked up with the VisecaOne app in the first half of 2017. This means that customers can use the app to access an overview at any time of what is on offer in the surprize rewards shop. At the same time, additional retail, hotel and consumer goods partners were brought into the surprize network, adding further to the selection of attractive rewards available to cardholders.
Aduno's Acquiring business likewise recorded a solid performance in the first six months of 2017, with an increase in volume of 6.0 per cent to CHF 4.2 billion. Growth was achieved across all areas: in credit business volume was up by 8.1 per cent, while in debit business the increase was 4.5 per cent.
At the beginning of 2017, Aduno launched PAX, a new line of very efficient payment terminals. The new PAX Mobile is intended primarily for customers in the hotels and restaurants business, providing first-rate connection quality. Wherever the WLAN network reaches its limits, the PAX Mobile terminal automatically switches to the mobile network.
Consumer Finance division back on a growth track
The Consumer Finance division, comprising cashgate’s personal credit and leasing business, returned to a growth track in the first six months of 2017 following a decline in the prior-year period on account of market conditions. Overall, new business expanded by 10.7 per cent to CHF 461.1 million. This increase enabled the Consumer Finance division to hold on to its market share despite fiercer competition.
In the personal credit business, cashgate recorded a rise in new volumes of 7.0 per cent. The credit portfolio expanded by 5.2 per cent. A particular driver of this positive performance was the competitive interest rate of 4.9 per cent that cashgate introduced last year for customers who own residential property and therefore represent a very low risk. The low interest rate and the transparent lending criteria were well received by borrowers and partner banks, enabling cashgate partially to offset the lower margins resulting from the maximum interest rate introduced in 2016 through higher volumes of business. Direct business posted a particularly positive performance compared to the prior-year period.
The leasing segment increased its new volumes by 15.5 per cent in the first half of 2017; the portfolio as at the end of June 2017 was slightly smaller than in the prior-year period. The fact that cashgate was able to expand its new business to such an extent in a market environment that remained challenging and was characterised by aggressive pricing on the part of manufacturers’ own leasing companies is to be viewed as a positive. One factor in its success is the established collaboration with garage owners and importers, which has been enhanced in recent months through innovative offers and services. Additional revenue was generated by cashgate mainly through its new financing service for stock vehicles. This means that dealers can finance their vehicle stock through cashgate. The service was well received by existing customers and also allowed new dealers to be acquired.