Day: 11 August 2021

MeDirect Bank continues its accelerated transformation

Posted on by daniel.briffa@medirect.com.mt

During 2021, MeDirect Group continued to accelerate its investment programme to build its highly customer centric app combining a broad range of investment services seamlessly integrated with daily banking functionality.

The Group’s technology platform has been undergoing an impressive transformation for over the past two years, by leveraging on a unique flexible and scalable technologies along with the objective of delivering best-in-class user experience to support its mission of making digital investment simple, inclusive and empowering for all. Later this year, the Group will launch exciting new functionality to its website, mobile app and other customer touch points.

“In the first half of 2021, MeDirect Group maintained steady progress as it achieved strong growth in all those business lines targeted for new investment, resulting in an encouraging profitable performance following 2020 which was a year impacted by significant impairment provisions due to the COVID-19 pandemic,” said Arnaud Denis, Chief Executive Officer of MeDirect Group.

In the first six months of 2021, MeDirect Group continued to implement its balance sheet diversification by actively planning the launch of its future Belgium residential mortgage business line and by successfully launching the home loan business in Malta earlier in 2021. 

In addition, the Group continued to achieve positive growth in business volumes in jurisdictions in which it operates. In fact, over the past 12 months, total clients in Belgium and Malta increased by 15 per cent to 83,000, leading to a 31 per cent increase in assets under management with an all-time high of Eur0.8 billion (44 per cent increase) in Belgium and Eur0.6 billion (18 per cent increase) in Malta.

Over the past twelve months, the Dutch residential mortgage origination volumes grew by Eur1.0 billion (168 per cent increase) and corporate lending in Malta increased by 25 per cent to €108.4 million as the Group continued to support the local economy.

By starting to benefit from a more diversified business model and given the improving credit outlook, the Group achieved a promising performance in the first half of 2021 as profit before tax was Eur3.2 million compared to a significant loss last year driven by prudent provisioning to reflect the impact of COVID-19.

MeDirect Group continued de-risking its international corporate lending portfolio such that, since the beginning of the financial year, the gross size of the portfolio has been reduced by 24 per cent from Eur903.4 million to Eur691.1 million and by 46 per cent over the last twelve months.

The gross outstanding balances of the Dutch mortgage book grew by 32 per cent throughout this financial period and as at 30 June 2021 amounted to Eur1.6 billion. Total funding increased as a result of the funding from the Dutch mortgage securitisation transactions that increased from Eur348.2 million to Eur682.6 million.

The Group’s liquidity remained robust, and capital ratios remained well above minimum requirements. The total capital ratio remained high at 19.3 per cent as at 30 June 2021. MeDirect Group’s liquidity reserves remained strong at Eur601 million as at 30 June 2021, and the Group’s LCR stood at 625 per cent. 

Mr Denis concluded: “The Group’s financial performance improved with lower impairment charges, better capital ratios. Although the outlook for the rest of the year remains challenging, MeDirect continues its accelerated transformation into a leading retail WealthTech banking platform and is working strongly to revert to sustainable profitability in the medium term as we remain disciplined but cautiously optimistic as the economic recovery unfolds.”

 

MeDirect Bank iżomm ir-ritmu mgħaġġel ta’ bidla b’aktar żvilupp fil-pjattaforma tiegħu tal-WealthTech

Matul l-2021 il-Grupp MeDirect baqa’ għaddej b’ritmu mgħaġġel  bil-programm ta’ investiment biex ikompli jiżviluppa l-app tiegħu iffukata fuq il-ħtiġijiet tal-klijenti, u li tiġbor firxa wiesgħa ta’ servizzi ta’ investimenti u tintegrahom mal-funzjonijiet bankarji l-oħra ta’ kuljum.

Fl-aħħar sentejn, il-pjattaforma diġitali tal-Grupp sarulha għadd ta’ bidliet sinifikanti bis-saħħa ta’ teknoloġiji uniċi li huma flessibbli u addatabbli sabiex toffri esperjenza tal-ogħla livell lil min jużaha ħalli b’hekk ukoll isseħħ il-missjoni tal-Grupp li jagħmel il-proċess tal-investiment diġitali eħfef, inklużiv u li jista’ jintuża minn kulħadd. Aktar tard din is-sena, il-Grupp se jniedi funzjonalità eċċitanti oħra fil-website tiegħu, fil-mobile app u f’mezzi teknoloġiċi oħra li jużaw il-klijenti.

Arnaud Denis, il-Kap Eżekuttiv tal-Grupp MeDirect, qal li: “Fl-ewwel nofs ta’ din is-sena, il-Grupp MeDirect żamm ir-ritmu ta’ progress u kellu tkabbir b’saħħtu fil-linji kollha tan-negozju immirati għal investiment ġdid, li wassal għal riżultat finanzjarju nkoraġġanti bi profitt u dan wara sena diffiċli bħalma kienet is-sena 2020, li ġabet magħha sfidi kbar minħabba l-pandemija tal-COVID-19.”

Fl-ewwel sitt xhur tal-2021, il-Grupp MeDirect kompla jimplimenta d-diversifikazzjoni tal-balance sheet tiegħu billi ppjana, b’mod attiv, it-tnedija fil-futur ta’ self għax-xiri ta’ djar residenzjali fil-Belġju waqt li diġa nieda b’suċċess l-istess tip ta’ negozju tas-self għad-djar f’Malta, aktar kmieni din is-sena.

Barra minn hekk, il-Grupp baqa’ jkollu tkabbir pożittiv fil-volumi tan-negozju fil-pajjiżi li jopera fihom. Fil-fatt, fl-aħħar 12-il xahar, il-klijenti totali fil-Belġju u f’Malta żdiedu bi 15 fil-mija u issa jlaħħqu 83,000 ruħ – żieda ta’ 31 fil-mija fl-assi mmaniġġjati (assets under management) li jammontaw għal ċifri, bla preċedent għal bank, ta’ €0.8 biljun (żieda ta’ 44 fil-mija) fil-Belġju u ta’ €0.6 biljun (żieda ta’ 18 fil-mija) f’Malta.

Matul dawn l-aħħar 12-il xahar, l-ammont ta’ self fuq id-djar, li l-Bank jagħmel fl-Olanda żdiedu b’ €1 biljun (jew b’168 fil-mija) u s-self lill-kumpaniji f’Malta żdied b’25 fil-mija għal €108.4 miljun, u dan fisser li l-Grupp kompla jgħin ukoll lill-ekonomija lokali.

Il-Grupp issa beda jara l-frott mid-deċiżjoni li kien ħa qabel biex jiddiversifika l-mudell ta’ negozju tiegħu u, anke bis-saħħa tat-titjib ġenerali fis-suq tas-self, fl-ewwel nofs tal-2021 kiseb riżultati tajbin, tant li l-profitt qabel it-taxxa, fl-ewwel sitt xhur ta’ din is-sena, kien ta’ €3.2 miljun. Dan huwa riżultat tajjeb meta mqabbel mat-telf sinifikanti li ġarrab il-Grupp is-sena li għaddiet minħabba l-provvedimenti (provisions) li b’mod prudenti kellu jagħmel minħabba l-pandemija tal-COVID-19.

Il-Grupp MeDirect kompla jnaqqas ir-riskju mill-portafoll internazzjonali tiegħu ta’ self korporattiv u, mill-bidu tas-sena finanzjarja (1 ta’ Jannar 2021), id-daqs gross tal-portafoll tnaqqas b’24 fil-mija minn €903.4 miljun għal €691.1 miljun u b’46 fil-mija meta mqabbel ma’ tnax-il xahar ilu.

Il-bilanċi tas-self fuq id-djar fl-Olanda kibru bi 32 fil-mija matul dan il-perjodu finanzjarju u fit-30 ta’ Ġunju 2021 kienu jammontaw għal €1.6 biljun. Il-finanzjament totali żdied minħabba l-finanzjament mit-tranżazzjonijiet tat-titoli ipotekarji (mortgage securitisation transactions), li żdiedu minn €348.2 miljun għal €682.6 miljun.

Il-likwidità tal-Grupp baqgħet b’saħħitha u l-livelli tal-kapital (capital ratios) inżammu ’l fuq sew mir-rekwiżiti minimi. Il-proporzjon tal-kapital totali (total capital ratio) baqa’ għoli, u fit-30 ta’ Ġunju 2021 kien f’livell ta’ 19.3 fil-mija. Ir-riservi tal-likwidità tal-Grupp MeDirect ukoll baqgħu sodi, u fit-30 ta’ Ġunju 2021 kienu jammontaw għal €601 miljun, filwaqt li l-LCR (liquidity coverage ratio) tal-Grupp kien ta’ 625 fil-mija. 

Is-Sur Denis ikkonkluda li: “Il-prestazzjoni finanzjarja tal-Grupp tjiebet grazzi għal provvedimenti (provisions) aktar baxxi, u b’riżultati aħjar fil-livelli tal-kapital (capital ratios). Minkejja li s-sitwazzjoni  għall-bqija ta’ din is-sena se tibqa’ waħda ta’ sfida, MeDirect se jibqa’ għaddej b’ritmu mgħaġġel ta’ bidla biex jagħmel il-pjattaforma bankarja tiegħu tal-WealthTech waħda ewlenija f’dan is-settur, waqt li jaħdem bis-sħiħ biex jilħaq sitwazzjoni sostenibbli ta’ profitt fuq medda ta’ żmien medju. Il-Bank irid jibqa’ jaħdem b’mod dixxiplinat u kawtel u fl-istess ħin huwa ottimist li l-irkuprament tal-ekonomija mill-pandemija se jkompli.”

 

MeDirect Bank (Malta) plc, is licensed to undertake the business of banking in terms of the Banking Act (Cap. 371) and investment services under the Investment Services Act (Cap. 370). 

 

Franklin Templeton Thoughts: Are You Pricing In Water Risk?

Posted on by daniel.briffa@medirect.com.mt

Our Chief Market Strategist, Stephen Dover, believes that the economic implications of risks related to water are significant and should be considered when investing.

Devastating floods, unseasonal hurricanes, excessive droughts, megafires, and more demonstrate how extreme water risk is global now. From an investor’s perspective, the economic implications of risks related to water are significant and should be a consideration when investing.

  • By 2030, the global population will likely exceed nine billion and the world will require 40% more fresh water than it does today.1 The global supply of accessible freshwater accounts for less than 1% of water supplies.
  • In my view, risks associated with water affect economic policies, constrain economic growth, and should be incorporated along with other climate-related market risks. Critical investments in water purification, reuse, efficiency, and delivery infrastructure are required on a global scale and could provide opportunity to investors.
  • The projected declines in freshwater availability will likely affect gross domestic product (GDP) growth, present wide-ranging risks for investors across all asset classes, and encompass a broad range of sectors, from those with logical connections, like agriculture and utilities, to those that may not be so apparent, like packaging and semiconductors.
  • Communities and companies must consider how to plan for and mitigate water risk. Companies that lack a full understanding of water risk, lag in disclosing water risk, or postpone adjustments to regulatory reforms, present long-term risks for both the communities and investors that invest in those companies.
  • Infrastructure investment opportunities may be found globally as governments and municipalities prioritize managing water risk. China’s Maritime Silk Road and Russia’s Ice Silk Road expand their water infrastructure. The US bipartisan infrastructure proposals include investment in sewage systems, water supplies, and replacing lead pipes.

There are also opportunities in identifying companies that can provide solutions to deal with water scarcity, water sanitation, and water efficiency. Water impacts the day-to-day operations of companies and how they think through their business models.

  1. Source: The 2030 Water Resources Group, Annual Report: Building Trust, Growing Resilience, 2019.


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This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as of publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.

Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

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What are the risks?

All investments involve risk, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent a strategy focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a strategy that invests in a wider variety of countries, regions, industries, sectors or investments.

China may be subject to considerable degrees of economic, political and social instability. Investments in securities of Chinese issuers involve risks that are specific to China, including certain legal, regulatory, political and economic risks.


MeDirect Disclaimers:

This information has been accurately reproduced, as received from Franklin Templeton Investment Management Limited (FTIML). No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta) plc.

Blue Whale Update: Where do revenues actually come from?

Posted on by daniel.briffa@medirect.com.mt
Stephen Yiu - Blue Whale Fund Manager Stephen Yiu is the Chief Investment Officer at Blue Whale Capital and Lead Manager of the Blue Whale Growth Fund.
Stephen co-founded Blue Whale Capital with Peter Hargreaves, co-founder of Hargreaves Lansdown, in 2016. The Blue Whale Growth Fund was launched in September 2020 and is a long-only global equity fund focusing on developed markets.
Stephen adopts a high conviction, active approach based on bottom-up, fundamental research.

At Blue Whale, we pride ourselves in the depth of our research and our investment team’s ability to translate insights into fund performance.

Here we offer a sneak peek into our research process to help our investors understand what fund managers do in an otherwise opaque industry.

When we look at a company, we always analyse three things: who they sell to (the customers), what they sell (the product), and how they sell it (the business model). These three things help us assess the company’s ability to outperform the market.

In this article, we focus on understanding where a company delivers value to truly appreciate its underlying economic exposure and understand its impact on portfolio sector diversification.

Follow the Money – where do revenues come from?

Most standard sector classifications are based on what a company sells. Amazon operates an online retailer so it’s often classified along with Walmart as a retailer. Adobe sells software so it’s classified with Microsoft as a tech business.

While this represents a quick way of approximating a company’s sector exposure, we find it less helpful for understanding the true economic exposures behind a company’s performance.

Take Adobe for instance. Adobe’s main customers are creative professionals in the media and entertainment space which exposes the company’s fortunes to video editing, photo editing, online marketing and online advertising. This ties its fate to the producers of content and the platforms through which they’re distributed. That’s why we classify Adobe under Media and Entertainment along with Disney, Netflix, Youtube and Facebook: it’s the demand for digital content that’s driving Adobe’s performance.

Autodesk, on the other hand, sells software mainly to the construction, industrial and manufacturing industries. This makes its underlying economic exposure closer to housebuilders like Ashstead, construction companies like Balfour Beatty, their cement and aggregates suppliers, as well as manufacturing giants like Siemens and Philips. That’s why we prefer to classify Autodesk with Industrials companies: it’s the digitisation of construction and industrials processes that’s driving Autodesk’s growth.

Furthermore, companies like Visa and Mastercard, which are often classified as tech companies but whose clients are mainly banks and other financial institutions, are clearly more exposed to the banking and payment industries. That’s why we prefer to classify Visa and Mastercard as Financial Services rather than Software.

Applying this at the portfolio level helps us better understand the true level of diversification from our collection of companies. We see for instance that almost half of the portfolio is exposed to financial services/payments and media & entertainment, something that’s not immediately observable from standard industry classifications.

Blue Whale Article Image A

A similar exercise can be made when looking at our portfolio’s geographic exposure. Although many of the companies we own are listed in the US (about 70% of our portfolio), almost all are large global companies generating revenues in Europe and Asia (often 40% or more), just like many companies listed on the FTSE 100 Index. Taking this x-ray view of where revenues come from, we can see that our portfolio’s underlying exposure is very well diversified globally.

Blue Whale Article Image B

We believe that doing this helps investors better understand the true level of portfolio concentration risk in any one sector as well as providing a deeper understanding of the key drivers behind portfolio performance. We invite all investors to take a deeper look at their own portfolios and to ask their fund managers to report on their underlying exposures – the results might surprise you!

Blue Whale Growth Fund is manufactured by Blue Whale Capital LLP and represented in Malta by MeDirect Bank (Malta) plc.

Blue Whale Key Risks & Disclaimers:

The Blue Whale Growth Fund was launched in September 2020. All references to actions before this date relate to the LF Blue Whale Growth Fund.  Information on the LF Blue Whale Growth Fund is provided for comparison purposes only; it is a UK UCITS which is not registered for sale in nor is it promoted to investors in the EEA.  Whilst the investment objectives and charges are not identical, both funds are run on the same investment process.

Please note that the information provided in this article is not to be construed as advice and any views we express on holdings do not constitute investment recommendations and must not be viewed as such. If you are unsure as to the suitability of an investment for your circumstances, please seek independent financial advice. Investments can go down in value as well as up so you may get back less than you invested. Your capital is at risk. Past performance is not a guide to future performance.Blue Whale Capital LLP is authorised and regulated by the UK Financial Conduct Authority.

There are significant risks associated with investment in the Fund referred to herein. Investment in the Fund is intended for investors who understand and can accept the risks associated with such an investment including potentially a substantial or complete loss of their investment.

Past performance is not a guide to future performance. The value of investments and any income derived from them can go down as well as up and the value of your investment may be volatile and be subject to sudden and substantial falls.

Investment in a Fund with exposure to emerging markets involves risk factors and special considerations which may not be typically associated with investing in more developed markets. Political or economic change and instability may be more likely to occur and have a greater effect on the economies and markets of emerging countries. Adverse government policies, taxation, restrictions on foreign investment and on currency convertibility and repatriation, currency fluctuations and other developments in the laws and regulations of emerging countries in which investment may be made, including expropriation, nationalisation or other confiscation could result in loss to the Fund.

Income from investments may fluctuate. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. Fund charges may be applied in whole or part to capital, which may result in capital erosion. The Authorised Corporate Director may apply a dilution adjustment as detailed in the Prospectus. The Fund is not traded on an exchange or recognised market.

The foregoing list of risk factors is not complete, and reference should be made to the Fund’s Prospectus, KIID and application form.

MeDirect Disclaimers:

This information has been accurately reproduced, as received from Blue Whale Growth Fund. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta) plc.

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We strive to ensure a streamlined account opening process, via a structured and clear set of requirements and personalised assistance during the initial communication stages. If you are interested in opening a corporate account with MeDirect, please complete an Account Opening Information Questionnaire and send it to corporate@medirect.com.mt.

For a comprehensive list of documentation required to open a corporate account please contact us by email at corporate@medirect.com.mt or by phone on (+356) 2557 4444.