The reasons and costs for MeDirect Bank’s strategic shift away from international corporate lending (ICL) over the last couple of years was laid bare in 2024, with the segment adversely affecting its top line for the year as realised losses and deterioration of certain lending positions drastically increased its expected credit losses to €19.3 million, from just €0.9 million the previous year.

MeDirect nonetheless continued to execute its business strategy, de-risking its balance sheet and reducing the size of its ICL portfolio by 37 per cent after a similarly large cut in 2023. This led to a decrease of 3.1 per cent in the bank’s operating income to €85.8 million.

Excluding the impact of the ICL portfolio, MeDirect grew its operating income by €9.6 million, or 15.7 per cent. This was principally driven by growth across all sectors of mortgage lending as well as in Maltese corporate portfolios, generating higher net interest income, partially offset by increased cost of funding. Growth of €2.1 million or 40.4 per cent was registered in fees from the wealth business and other commissions for a total amount of €7.2 million in 2024.

Overall, MeDirect Bank delivered a net operating profit of €14.3 million, a decrease of 6.5 per cent from the preceding year. When offset by its expected credit losses, profit before tax amounted to €5 million.

Balance sheet

During 2024, individuals and corporate clients entrusted MeDirect with more of their financial assets, which grew by 19 per cent to each €5.9 billion. Assets under custody grew 22 per cent to €2.1 billion.

MeDirect Bank’s funding mix shifted moderately further toward customer deposits, now standing at €3.9 billion (+17.2 per cent) as the primary source of funding.

Net loans and advances to customers reached €2.9 billion, in increase of 6.3 per cent over the previous year.

The core of MeDirect’s mortgage portfolio is the Dutch Government-guaranteed NHG activity, comprising 40 per cent of the group’s total balance sheet. Meanwhile, its Dutch buy-to-let mortgage portfolio, established in 2022 with Build Finance, more than doubled in size to reach €173.5 million by the end of the year. The group said it is building this line of business in a controlled manner and noted that it benefits from attractive risk-adjusted returns.

Its Belgian and Maltese mortgage lending businesses also expanded in 2024, both registered double-digit growth.

The corporate lending portfolio in Malta grew by 7.5 per cent during the period, reflecting continued support of local businesses through collateralised facilities.

MeDirect’s investment portfolio increased by a net €37.2 million or 2.8 per cent. The effective rate of return on treasury investments improved from 2.4 per cent in 2023 to 3.2 per cent in 2024, largely driven by investment into AAA rated notes issued by securitisations of consumer finance, auto loans and mortgage loan receivables originated in the Dutch and German markets.

Other developments in 2024

The group’s client base grew by 17 per cent throughout 2024, reaching 155,000 by the end of the year. At year-end 2024, it had 118,000 retail clients in Belgium, 34,000 in Malta and 3,000 in the Netherlands.

Its corporate client base has also grown, with MeDirect now serving over 500 corporate customers doing business in 15 countries.

During the year, MeDirect also launched its corporate banking platform to provide businesses with seamless banking experiences. One feature is a salary payment module, enabling businesses to streamline payroll processes with ease and precision. The platform has resulted in highly positive Net Promoter Scores.

The group also rolled out Google Pay and Apple Pay services to its customers in Malta and Belgium.

Underpinning these advancements is MeDirect’s internally developed banking ecosystem, designed for rapid innovation and scalability. Built with cutting-edge technologies, the platform leverages distributed micro-frontends and microservices architecture, hosted on expansive Kubernetes clusters. This architecture provides MeDirect with unparalleled flexibility to scale its services in response to growing customer demands.

The adoption of distributed micro-frontends ensures that different components of the platform can be updated independently, enabling faster feature releases and a smoother user experience. Similarly, the microservices architecture enhances system resilience and reliability, ensuring uninterrupted service delivery even during peak usage.

MeDirect said that by investing in such a robust technological foundation, it has positioned itself to enrich its offerings continuously and respond dynamically to market needs.

“This commitment to innovation has not only reinforced client trust but has also set the stage for future advancements.”

Looking to the future, MeDirect outlined its ambitious roadmap aimed at further enhancing its services, including the introduction of SEPA Instant Payments. In addition, MeDirect is exploring an open model that will allow clients to invest in model portfolios tailored to their financial goals. This solution aims to simplify wealth management, making it more accessible and user-friendly for clients seeking to grow their investments.

Key personnel changes

During 2024, MeDirect Chair Mike Bussey departed the group to focus on other interests. He has been succeeded by Bart Bronselaer, who has been a director of MeDirect Belgium since 2021.

Group CEO Arnaud Denis also decided to part ways after five years at the helm, with his departure taking effect in January 2025. MeDirect said that during his tenure, he led the de-risking, scaling and transformation of the Group into a fully-fledged digital bank offering a wide range of banking, wealth and investment services, and backed by cutting-edge technology.

His successor is Jean-Claude Maher, currently the group’s Chief Operating Officer. Mr Maher has more than 30 years of experience in banking and, prior to joining MeDirect, worked since 1994 with Deutsche Bank AG where he held various roles in research, corporate banking, transaction banking, private banking and country management. His most recent role at Deutsche Bank was as Country Chief Operating Officer and Branch Manager of Deutsche Bank in Belgium.

Change in ownership

In 2024, MeDirect Group’s controlling shareholder, AnaCap Financial Partners II LP, identified a new prospective controlling shareholder for the group, and in late November a share purchase agreement was signed with Banka CREDITAS for 100 per cnt of the group’s share capital.

Banka CREDITAS is a Czech financial institution that is part of CREDITAS Group, a privately-owned investment group with investments primarily in financial services, real estate (rental housing and development) and energy (distribution and generation). The financial services arm of CG has investments in banking, investment services, asset management, leasing and other related areas.

Banka CREDITAS is interested in using the MeDirect banks to grow and diversify its financial services business into additional European markets. As such, it plans to retain both MeDirect banks and to invest additional capital to enable them to continue to build their businesses.