Grenke (ETR:GLJ) reported a 14.6% increase in group earnings for the first nine months of 2026 as higher income and largely flat costs helped offset elevated credit losses.
Group earnings rose to €55.7 million from €48.6 million a year earlier, putting the leasing company on track for its full-year target of €74 million to €86 million, Chief Financial Officer Martin Paal said on the company’s third-quarter earnings call.
Grenke specified its full-year expectation for new leasing business at around €3.4 billion, citing selective underwriting and reluctance among some customers to invest. New business rose 1.7% to €2.4 billion in the first nine months.
Income growth outpaces costs
Operating income increased 9.4% to €533 million, driven by both net interest income and service business, including disposals. Costs remained virtually flat at €270 million, Paal said.
The company’s cost-income ratio improved to 50.6% for the first nine months, from more than 55% at the end of 2025. In the third quarter alone, the ratio fell below 50% for the first time in years, according to Paal. Grenke expects the full-year figure to be well below 55%.
Paal attributed the improvement to cost discipline, streamlined processes and digitalization. He said Grenke has been cautious about hiring and replacing staff, particularly in back-office roles, although it has added some employees in growing markets. Lower variable compensation also contributed to personnel cost control.
Payments by lessees increased more than 10% to €2.3 billion during the nine-month period. Annualized return on equity after taxes rose 50 basis points from a year earlier to 5.2%. Grenke is targeting a return on equity above 10% by 2030.
Risk costs remain elevated
Settlement of claims and risk provisions rose to €178 million from €146 million a year earlier. The loss rate was 1.9% for the first nine months, down from 2.0% in the first half but still above Grenke’s long-term average of 1.5% to 1.6%.
Grenke continues to expect its full-year loss rate to remain below 2%. Paal said the decline in the nine-month rate was largely a denominator effect: leased assets increased while quarterly risk costs remained broadly stable.
Most risk provisions stemmed from contracts that had already defaulted, rather than newer business, Paal said. He added that provisions associated with contracts originated and subsequently defaulted within the year were roughly €4 million to €5 million lower than in the comparable period a year earlier. Still, he said it was too early to identify a trend reversal.
The company is pricing higher expected losses into new contracts, being more selective about customers and strengthening collections on contracts in arrears, including through artificial intelligence-based tools.
Margins and new business
Grenke’s CM2 margin, its measure of new-business profitability, was 15.3% in the third quarter and 15.7% for the first nine months. Paal said rising interest rates, higher risk provisions priced into contracts and a greater share of business from traditionally lower-margin Germany weighed on the measure.
The company expects a full-year CM2 margin of roughly 16%. Paal said changes in interest rates generally take about one quarter to pass through to new contracts.
Germany, France and Italy supported new-business growth, while Denmark, Sweden and Finland contributed to softer performance in Northern and Eastern Europe. Paal said Grenke was actively steering the region toward higher profitability as some small and midsize businesses hesitated to invest. The U.S., Canada and Australia continued to grow, he said.
Funding and income outlook
Grenke issued a €300 million bond and a CHF 100 million Swiss bond in the third quarter. Paal said the Swiss issue supported the company’s strategy of expanding local-currency funding.
He expects net interest income to increase for 2026 as a whole compared with 2025. The recent bond issues added some interest expense because they provided funding ahead of immediate liquidity needs, he said, while a growing receivables portfolio should support interest income.
Paal also said gains from disposals, which have benefited from inflation and customers continuing to use assets after lease terms end, are expected to begin normalizing from the start of next year.
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.
