DOLLA Q3 Earnings Weighs on YTD Earnings

• Dolla Financial Services Limited (Dolla) reported a 45.8% decline in its Q3 earnings, which resulted in a modest 3.5% increase in net profit to $339.64Mn for the nine months ended September 30, 2024. This was largely due to higher earnings in the first half of the year, which helped offset the weaker Q3 performance.
• Despite a 17.5% (or $52.62Mn) increase in interest income, the quarter’s profit decline was driven by higher interest expenses (+32.8%) and operating expenses (+26.5%).
• However, for the nine-month period, total interest income was $1.09Bn, reflecting a 23.1% (or $205.77Mn) year-over-year (YoY) increase, driven primarily by a 15% YoY growth in sales during H1 2024. Net interest income (NII) before expected credit losses (ECL) reached $903.52Mn, a 22.4% (or $165.53Mn) increase.
• However, this growth was tempered by higher expenses, which stemmed from ongoing investments in staff capacity to manage increased demand, along with regulatory, professional and advisory fees and enhanced marketing initiatives. Consequently, operating expenses rose by 18.9% or $79.37Mn to $499.52Mn.
• After the release of Q3 earnings, Dolla’s stock price fell 12.9% from $3.48 to $3.03, largely driven by heavy selling pressure and high trading volume (72.83 million shares) on the following trading day. Despite this decline, the stock has still appreciated 11.8% since the beginning of the year, closing Tuesday’s trading session at $3.03, reflecting strong performance earlier in the year. At this price, the stock trades at a P/B of 7.2x, above the Junior Market Financial Sector Average of 2.5x.

(Sources: DOLLA Financials & NCBCM Research)