Grenke Q1 2025 earnings drop by 48.5% amid rising expenses

German leasing company Grenke has announced a 48.5% decline in its first-quarter (Q1) earnings for 2025 to €10.2m ($11.4m).

The decrease was the result of a rise in expenses related to the settlement of claims and risk provisions, which are expected to also impact Q2 earnings.

Interest income for Grenke rose by €27.7m, a 20.9% increase, reaching €159.8m in Q1 2025 compared to €132.1m in Q1 2024.

However, interest expenses from refinancing the leasing business also increased by €13.9m to €60m, up from €46.1m in the same period last year.

Consequently, Grenke's net interest income, which is the net difference between interest income and interest expenses, rose by 16% to €99.8m.

The company also saw a boost in income from its operating business, increasing by €22.1m to €155m, due to growth in new business and service business profits.

Operating expenses for Grenke rose by €10.8m year-on-year to €88.0m, with staff costs totalling €51.9m.

Grenke’s cost-income ratio was 56.8% in Q1 2025, compared with 58.1% in Q1 2024 and below its target threshold of less than 60% for the 2025 financial year.

The average number of employees at Grenke, measured in full-time equivalents, increased by 6.5% to 2,296.

Grenke CEO Sebastian Hirsch said: "We have laid the foundation for a long-term, sustainable increase in our profitability. We are in an excellent position to not only unlock the vast growth potential of global small-ticket leasing but also to translate that growth into rising profits."

Due to a high number of insolvencies, the result from the settlement of claims and risk provision amounted to €47.6m in Q1 2025, similar to the latter half of 2024.

The loss rate was under 1.9%, compared with 1.1% in Q1 2024.

The operating result for Grenke was €14m, down from €24.9m in Q1 2024, with group earnings at €10.2m compared to €19.8m previously.

Leasing new business grew by 10.6% in Q1 2025, reaching €740.6m, leading to an increase in lease receivables to €6.7bn by the end of the quarter.

Grenke's equity ratio stood at 16% as of 31 March 2025, consistent with its target of approximately 16%.

Grenke CFO Martin Paal said: "In the first quarter, our operating income grew at a faster pace than our costs. We are confident about the rest of the year, particularly given our earnings strength, which is increasingly evident in the income statement, and are maintaining our forecast."

The company expects leasing new business volume for 2025 to be between €3.2bn and €3.4bn, with group earnings projected to range from €71m to €81m.