Morrow Bank (OM:MORROW) Stock Growth Meets Uncomfortable Credit Risk Reality

Morrow Bank stock has been grinding higher in recent months, yet today’s Q2 release put the focus squarely on the less comfortable side of the story. The headline looks clean enough with basic earnings per share at 0.31 SEK and profit before tax at SEK 100m, but the real flashpoint sits on the balance sheet. A high share of non performing loans and a relatively thin allowance for bad debts now matter more than the headline growth narrative.

Love the earnings momentum in Morrow Bank but uneasy about the high share of non performing loans and thin loss reserves? Take a look at our list of solid balance sheet and fundamentals stocks (432 results).

Q2 2026 Earnings Summary

• Total Revenue (Q2 2026 vs Q2 2025): SEK 213.6m vs. SEK 170.3m (up 25.4%)
• Net Income (Excl. Extra Items, Q2 2026 vs Q2 2025): SEK 78.3m vs. SEK 61.5m (up 27.4%)
• Basic EPS (Q2 2026 vs Q2 2025): SEK 0.31 vs. SEK 0.26 (up 19.2%)
• Non Performing Loans ratio (NPL ratio, Q2 2026 vs Q2 2025): 16.3% vs. 18.2% (improved by 1.9 percentage points)

Prefer clear charts instead of another wall of earnings tables and loan quality ratios? See Morrow Bank’s full visual breakdown, including a clean view of its balance sheet strength and non performing loan exposure, in our company report for Morrow Bank.

Morrow Bank growth story vs execution milestones

Bulls argue that Morrow Bank is building a scalable Nordic consumer platform where tech and M&A combine to grow earnings faster than costs. Q2 gives some support to that idea. Gross lending reached SEK 18b with underlying 2% quarter on quarter growth even after an April non performing loan sale. Revenue of SEK 213.6m and net income of SEK 78.3m both moved ahead of last year, while the loan loss ratio improved to 3.5% from 4.3%. That suggests tighter underwriting and collections are feeding through. Cost/income below 28% and a 16% return on target equity indicate that the model is starting to scale, even with one off items of about SEK 10m. The MedMera acquisition, which adds about 65% to the loan book and a lower risk portfolio, sets a clear path to the SEK 150m synergy goal by 2028, but this remains a future milestone rather than a current fact.

Credit risk and integration fears under the microscope

Bears focus on credit risk, thin loss reserves and integration strain. Q2 does not fully validate that view, yet it does not neutralise it either. The non performing loans ratio sits at 16.3%. That is better than 18.2% a year ago, but still high for a consumer lender. The loan loss ratio at 3.5% is down from 4.3%, helped by tighter models and an April NPL sale of SEK 440m, so part of the progress is transactional rather than purely organic. Cost/income below 28% remains well above the 20% target that management repeats for 2028, and near term costs are rising as the bank invests for scale. Capital is described as close to target after the rights issue and MedMera funding, which implies limited excess capacity for further large deals without fresh capital. The quarter softens the bear case, but leaves several risk flags still waving.

After a quarter in which Morrow Bank still carries 16.3% bad loans, it is fair to ask whether these issues are fully recognised or simply the visible part of a deeper credit problem. Review the independent risk analysis for Morrow Bank which shows 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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