Grenke AG

In H1 2026, leasing new business increased 1.4% to EUR 1.6 billion. Operating income rose 11% to EUR 353 million, net interest income was EUR 250 million, profit from new and service business was EUR 138 million, and costs were EUR 182 million, up 1.5% year over year. Operating result before settlement of claims and risk provision improved roughly 23% to EUR 171 million, the cost/income ratio improved to 51.6% from 56.4%, risk provisions rose to EUR 119 million from EUR 95 million, and group earnings were EUR 32.6 million versus EUR 26.2 million a year ago. Annualized ROE after taxes was 4.6%, up 80 basis points. For 2026, management confirmed earnings guidance of EUR 74 million to EUR 86 million, expects new business at the lower end of EUR 3.4 billion to EUR 3.6 billion, expects CM2 margin around 16% for the rest of the year, expects the full-year loss rate to remain below 2%, and said the cost/income ratio should come in below prior assumptions; it also expects an equity ratio of around 15% by year-end.

Sebastian Hirsch framed the quarter as evidence that the business is getting stronger even though the macro backdrop remains difficult. He stressed four points: weak investment activity, market share gains in key regions, persistently high insolvencies, and visible operating leverage as income grows faster than costs. His tone was confident but measured, repeatedly saying GRENKE is "on track" toward 2026 guidance and the longer-term goal of 10% ROE by 2030.

Martin Paal emphasized the financial mechanics behind the quarter: leasing new business of EUR 1.6 billion, operating income of EUR 353 million, costs of EUR 182 million, and a cost/income ratio of 51.6%. He highlighted the CM2 margin of 15.9% in H1 and 15.6% in Q2, risk provisions of EUR 119 million, and the 2% loss rate, noting that the first-half tax rate was 26.4% due partly to a one-off in Q2 and the tax mix of core markets. On funding and capital, he said senior unsecured funding stood at EUR 3.5 billion, deposits at EUR 2.3 billion, asset-backed funding at almost EUR 1 billion, external bank funding at nearly EUR 600 million, CET1 was above 14%, total capital ratio was above 17%, and the expected equity ratio is around 15% by year-end.

Analysts focused on whether the improved cost/income ratio is sustainable, why new business in Sweden, Denmark and Finland was being actively steered down, and how long elevated disposal gains might last. Management said the cost/income improvement should be sustainable on a trend basis and is not linked to lower risk costs, while the Nordic steering reflected country-specific profitability and reseller management rather than a single problem area. On disposals, they said elevated gains reflect residual-value mechanics, longer customer retention, and older low-volume portfolios rolling off, but that this should decline over the next years as newer, larger vintages mature.