Grenke (ETR:GLJ) reported higher first-half earnings and operating income for 2026 as growth in its leasing portfolio and cost discipline helped offset elevated credit losses amid a weak investment environment.
Chief Executive Officer Dr. Sebastian Hirsch said the company remained on track despite geopolitical uncertainty, weak economic growth and persistently high insolvencies. He said Grenke generated about €1.6 billion in new business during the first half and gained market share in Germany, France, Italy and North America.
New business growth led by core markets
Leasing new business increased 1.4% year over year to €1.6 billion in the first six months, according to Chief Financial Officer Dr. Martin Paal. Growth was led by Grenke’s core markets, particularly Germany, followed by France and Italy.
- New business in the DACH region rose 7.5% to €405 million.
- Western Europe increased 3.0% to €429 million.
- Southern Europe grew 3.1% to €422 million.
- Northern and Eastern Europe declined about 11% to €273 million.
- Other regions, including the U.S., Canada and Australia, rose 3.3% to €116 million.
Paal attributed the decline in Northern and Eastern Europe partly to the end of e-bike subsidies in Finland during the second half of 2025. He also cited active steering toward higher local profitability in markets including Denmark and Sweden. In those countries, Grenke has been selective with reseller relationships, a process that can initially reduce new-business volumes, Paal said.
The company’s U.S. business doubled in size during the period, while Canada grew about 10%, Paal said. Grenke issued its first Canadian-dollar bond in May, with a volume of CAD 100 million, to provide dedicated refinancing for Canadian leasing activities.
Income growth outpaces expenses
Operating income rose 11% to €353 million in the first half, driven by net interest income of €250 million and €138 million of profit from new and service business, including disposal gains. Costs increased 1.5% to €182 million.
As a result, operating profit before settlement of claims and risk provisions increased about 23% to €171 million. Paal said the cost-income ratio improved to 51.6% from 56.4% in the prior-year first half. Hirsch said the longer-term improvement reflects investments, consolidation, digitalization and standardization rather than a single-quarter effect.
The group’s contribution margin 2, a metric Grenke uses to assess the profitability of new leasing business, was 15.9% in the first half and 15.6% in the second quarter. Paal said the margin reflected interest-rate conditions, higher risk provisions and a greater share of German new business, which traditionally carries lower contribution margins. Grenke expects its CM2 margin to be around 16% for the rest of the year.
Credit losses remain elevated
Settlement of claims and risk provisions rose to €190 million from €95 million a year earlier, resulting in a 2.0% loss rate. Paal said high insolvencies and weaker payment behavior continued to affect customers, while noting that the rate remains above Grenke’s long-term average of 1.5%.
Management said elevated credit losses were broadly spread across its larger markets rather than concentrated in one country. Hirsch said larger-ticket contracts have shown greater risk than smaller transactions, while the company’s focus on smaller tickets provides diversification.
Grenke has adjusted pricing for risk and is using measures including AI-supported call agents in debt collection, Paal said. Hirsch said the company expects the full-year loss rate to be below 2%, aided by portfolio growth and more selective underwriting based on current data. During the question-and-answer session, he indicated a range of roughly 1.8% to 1.9% would be a fair assumption, depending on volume development.
Management also addressed elevated gains from disposals. Paal said customers have increasingly extended leases on equipment that remains usable, contributing to higher disposal income over the past five to six quarters. He said the trend is not a one-quarter event but is expected to decline over future years as larger new-business portfolios from 2022 and 2023 reach the end of their lease terms.
Guidance maintained
Grenke confirmed its 2026 earnings guidance of €74 million to €86 million. However, it now expects new business to finish at the lower end of its €3.4 billion to €3.6 billion target range because of continued weakness in investment activity.
Hirsch said higher-than-anticipated risk is being offset by better-than-expected operating leverage and cost efficiency. Paal said Grenke expects low single-digit cost growth for the full year and a cost-income ratio below 55%.
First-half group earnings rose to €32.6 million from €26.2 million a year earlier. Return on equity after taxes, annualized, reached 4.6%, up 80 basis points. The tax rate was 26.4%, affected by a one-off item tied to a French tax audit as well as a business mix weighted toward Germany, France and Italy, where tax rates are relatively high.
Grenke’s funding mix included €3.5 billion of senior unsecured funding, €2.3 billion in deposits, nearly €1 billion in asset-backed funding and nearly €600 million in external bank funding. Paal said the company expects an equity ratio of around 15% at year-end and reported a CET1 ratio above 14% and a total capital ratio above 17%.
Management reiterated its longer-term goal of achieving a 10% return on equity by 2030 through selective portfolio growth, disciplined risk management and further cost efficiency improvements.
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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