Grenke Q1 Earnings Call Highlights

Key Points

• Grenke reported Q1 group earnings of EUR 15.5 million, up from EUR 10.2 million a year earlier, with annualized return on equity rising to 4.4%. The company said it remains on track toward its long-term profitability goals despite a difficult macroeconomic backdrop.
• Leasing new business increased 4.2% to EUR 786 million, led by core markets Germany, France, and Italy. Growth was especially strong in the DACH region, while Northern and Eastern Europe declined due to weaker demand and the end of Finnish e-bike subsidies.
• Grenke improved efficiency as operating result rose nearly 21% and the cost-income ratio fell to about 53%, even as risk costs remained elevated. The company reaffirmed full-year guidance for EUR 74 million to EUR 86 million in earnings and EUR 3.4 billion to EUR 3.6 billion in leasing new business.

Grenke ETR: GLJ said its first-quarter 2026 results showed progress on profitability and cost discipline despite what Chief Financial Officer Dr. Martin Paal described as an “unchanged, challenging macroeconomic environment” marked by geopolitical tensions, elevated insolvencies in many European countries and cautious investment behavior among small and midsize enterprises.

On the company’s earnings call, Paal said group earnings rose to EUR 15.5 million, compared with EUR 10.2 million in the prior-year quarter. Annualized return on equity after taxes reached 4.4%, more than 1 percentage point above the level a year earlier. Grenke is targeting a 10% return on equity by 2030.

“Overall, my message to you is clear,” Paal said. “With group earnings of EUR 15.5 million, we are on track, and we are taking the necessary measures to steer Grenke towards its targets.”

Leasing New Business Rises, Led by Core Markets

Grenke reported a 4.2% increase in leasing new business in the quarter to EUR 786 million, bringing the total volume of leased assets to EUR 11.7 billion. Paal said growth was driven by the company’s three largest core markets: Germany, France and Italy.

New business in the DACH region, which includes Germany, rose 11% to EUR 186 million. Western Europe increased 4.7% to EUR 210 million, while Southern Europe grew 6.1% to EUR 202 million.

Northern and Eastern Europe declined 9% to EUR 132 million. Paal attributed the drop to the end of subsidies for e-bikes in Finland in the second half of 2025, a greater focus on local profitability in those markets and broader reluctance among customers to invest. In the Q&A session, Paal told Berenberg analyst Marius Fuhrberg that the company does not expect the weaker development in Northern and Eastern Europe to persist through the full year, saying Grenke expects volumes in those countries to increase, particularly in the second half.

Other regions, including future core markets such as the U.S., Canada and Australia, grew 10.8% to EUR 56 million and are increasingly contributing to leasing new business, Paal said.

Cost Discipline Improves Operating Result

Grenke’s operating result increased nearly 21% to EUR 81 million in the first quarter. Operating income rose 10.2% to EUR 171 million, supported by net interest income of EUR 107 million and profit from new and service business of EUR 64 million.

At the same time, operating costs increased only 2.2% to EUR 90 million, which Paal said was mainly attributable to slightly higher staff costs of EUR 54 million. The cost-income ratio improved to about 53% from roughly 57% a year earlier.

In response to a question from ODDO BHF analyst Roland Pfänder, Paal said staff costs make up about 60% of Grenke’s total cost base and are the most important driver of expenses. He said the company has implemented measures such as carefully evaluating whether to replace departing employees and continuing digitalization efforts, including moving applications to cloud technology to make processes faster and easier.

Paal said Grenke expects the cost-income ratio to remain around the level implied in its guidance, up to about 55%.

Risk Costs Remain Elevated

Paal said the company’s loss rate has remained above its historical average since the first quarter of 2025 and stood at 1.9% in Q1 2026. Settlement of claims and risk provisions amounted to EUR 57 million in the quarter.

He said elevated losses have been largely offset by growth in the operating income base, but emphasized that the company has no direct influence over current insolvency levels or contracts that have already defaulted. Grenke’s focus, he said, is on strengthening debt collection for the existing portfolio and incorporating lessons from defaulted contracts into scoring and expected credit loss assumptions.

Asked by Fuhrberg which markets were most concerning, Paal said risk provisions are affecting “basically all countries” and that there are no countries that are “especially good or especially bad.” He said Grenke does not foresee an immediate positive development in risk provisions, but its full-year guidance assumes a loss rate of 1.6% to 1.7%.

In response to Kepler Cheuvreux analyst Tobias Lukesch, Paal said the first-quarter loss rate was partly affected by a mathematical annualization effect and that the lease volume denominator is expected to rise above EUR 12 billion toward year-end. He also said first-quarter risk provisioning can be higher because service business installments for insurance-like contract components are due at the start of the year, which can contribute to customer defaults in the quarter.

Margin and Net Interest Income Outlook

Grenke reported a CM2 margin of 16.1% in the first quarter. Paal said the margin reflects the current interest rate environment and higher risk provisions, since calculated risk costs are already included in the CM2 measure.

He noted that CM2 margins above 17% in early 2025 benefited from falling interest rates and were not comparable with a normal environment. Compared with the second half of 2025, he said the margin remained stable and increased versus the fourth quarter of 2025.

Asked about confidence in reaching a 16.5% CM2 target, Paal said the current margin already includes the higher risk level Grenke is seeing. He also said the company does not currently see pressure on CM2 from interest rates, while noting that the key operational question is how quickly changes in rates can be passed on to customer conditions.

In response to DZ Bank analyst Philipp Häßler, Paal said net interest income increased 7% in Q1 and would have been closer to a double-digit increase excluding effects related to the Rent for You portfolio. He said Grenke expects full-year net interest income growth from 2025 to 2026 to be “towards double digit.”

Funding Strengthened; Guidance Reaffirmed

Grenke strengthened its liquidity position in the quarter through a EUR 500 million benchmark bond with a 3.875% coupon, a EUR 200 million global loan from German development bank KfW and a new EUR 150 million revolving credit facility with Intesa Sanpaolo.

Paal said the company’s senior unsecured funding pillar now totals EUR 3.4 billion, representing 46% of its refinancing mix. Deposits stood at EUR 2.4 billion, or 32% of the mix. Asset-backed funding reached EUR 1.1 billion, while external bank funding stood at nearly EUR 600 million.

Grenke reaffirmed its annual targets of EUR 74 million to EUR 86 million in group earnings and leasing new business of EUR 3.4 billion to EUR 3.6 billion. Paal said the company remains committed to those goals despite adverse conditions and uncertainty, citing disciplined growth, stronger earnings power and expanded refinancing flexibility as strategic priorities.

“We are firmly on track,” Paal said.

About Grenke ETR: GLJ

Grenke AG, together with its subsidiaries, provides financial services to small and medium-sized (SME) enterprises in Germany, France, Italy, and internationally. It operates through three segments: Leasing, Banking, and Factoring. The company is involved in the leasing activities, such as financing to commercial lessees, rental, service, protection, and maintenance offerings, as well as sale of used equipment; and small-ticket leasing of IT products, such as PCs, notebooks, servers, monitors, software, and other peripheral equipment; leasing office communication products, that includes telecommunication and copier equipment, as well as medical technology products, small machinery and systems, and security devices; and leasing green economy objects, such as wallboxes, photovoltaic systems, and eBikes.

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