Morrow Bank AB · OMXSTO:MORROW
Morrow Bank AB — Q3 2024 Earnings Presentation
30 slides from Morrow Bank AB's earnings presentation, Nov 15, 2024
Slide 1: Third quarter results 2024
morrowbank.com Third quarter results 2024 Morrow Bank ASA
Slide 2: Morrow Bank is positioned for significant value creation
Morrow Bank is positioned for significant value creation morrowbank.com ▪ Established in 2014 and listed on the Oslo Stock Exchange in 2017 ▪ Providing financial flexibility to creditworthy Nordic consumers ▪ Well diversified loan book: 35% in Sweden, 45% in Finland and 20% in Norway BNOK ▪ Develope
Slide 3: Operational highlights and outlook
morrowbank.com Operational highlights and outlook Photo: craftedbygc
Slide 4: Q3 2024 highlights: Strong growth, increased profitability
Q3 2024 highlights: Strong growth, increased profitability morrowbank.com ▪ Gross loan growth of 24.6% from Q2 2024, driven by organic demand and loan acquisitions Strong growth ▪ All-time-high total income of MNOK 321, up 5.2% vs. Q2 2024 ▪ Cost/income ratio at industry-leading 25.7% (26.3% in Q2 2
Slide 5: Improvements across KPIs in Q3 – updated targets
Improvements across KPIs in Q3 – updated targets morrowbank.com Strong gross loan balance growth Cost/income ratio improving Loan loss ratio declining Return on target equity improving BNOK % % % oan oss ratio ( ) 2 4% 9. % 0. % .4% .9% . % Increased ambitions following strong performance 5
Slide 6: Financial review
morrowbank.com Financial review Photo: craftedbygc
Slide 7: Growing in the most profitable markets
Growing in the most profitable markets morrowbank.com Total gross loans MNOK 000 42 % ▪ Gross loan balance growth of 37.5% year-on- year and 24.6 % in Q3 2024 reflecting portfolio 2 243 24 303 9 % acquisitions % 3 % 2% % % 23% 23% ▪ Growth of 7.6% in Finland, 90.2% in Sweden and 23% 22% -4.2% in Nor
Slide 8: Stable yields on performing loans
Stable yields on performing loans morrowbank.com Yields, performing loans and deposits eposits oans Cre it car s . % .0% . % . % . % ▪ Stable underlying yields on loans in Q31 4. % 4. % 4. % 4.3% 3. % ▪ Credit card yield (7% of loan balance) impacted by Finland weighing more in at lower yield ▪ Depo
Slide 9: Total income continues to grow – all-time-high
Total income continues to grow – all-time-high morrowbank.com Total income (MNOK) ▪ Total income growth of 21.7% year-on-year and 5.2% in Q2 2024 ▪ Mainly driven by organic growth and net gains on market- based instruments/bank placements ▪ Limited effect from acquired Qliro portfolio (one month) –
Slide 10: Portfolio acquisitions demonstrating scalability
Portfolio acquisitions demonstrating scalability morrowbank.com Cost/income ( ) ne off Cost/income ratio (%) ▪ Cost/income ratio further improved from 26.3% in Q2 to 25.7% in Q3 ▪ Stable OPEX despite continued loan growth including portfolio acquisitions ▪ Automation enabled 13% FTE reduction in Q3
Slide 11: Loan loss ratio continuing to improve
Loan loss ratio continuing to improve morrowbank.com Loan losses oan osses ( ) oan oss ratio ▪ Increase in nominal losses driven by a larger loan balance, including portfolio acquisitions ▪ Overall loan loss ratio continued to decline in the quarter to 4.8% (5.1%) 4.0-4.5% ▪ Underlying loan losses (
Slide 12: Profitability increasing steadily
Profitability increasing steadily morrowbank.com Profit (MNOK) rofit after tax rofit efore tax et rn on ar et it ( ) ▪ Profit before tax of NOK 72 million in Q3 2024, 2 up 7% from previous quarter ▪ Increase in total income, with stable costs outweighing nominal loan loss increase 4 ▪ Return on targ
Slide 13: Ample capital buffers set to increase
Ample capital buffers set to increase morrowbank.com Capital adequacy ier 2 ( 2) itiona ier ( ) Common it ier (C ) Min. CET1 req. ▪ Capital ratios decreased as portfolio acquisitions increased risk weighted exposures . %p more than profit growth . % ▪ Requirements decreased due to composition .9% of
Slide 14: Business plan set to generate excess capital
Business plan set to generate excess capital morrowbank.com Excess capital (MNOK), Balance growth and ROTE (%) 40% ▪ Outlook for excess capital generation from 2025 and onwards as returns exceed growth 30% ▪ Three main capital allocation options ▪ Increased organic growth 20% Consuming capital ▪ Add
Slide 15: The investment case
morrowbank.com The investment case Photo: craftedbygc
Slide 16: Morrow Bank outperforming peers on growth and efficiency
Morrow Bank outperforming peers on growth and morrowbank.com efficiency Growth last two years1 Cost/income ratio2 Price/book Annualised per 24Q3 24Q3 Available per 30 October 2024 47% 26% 2.9x 30% 28% 1.25x 15% * 31% 0.82x 11% 37% 0.67x * 0.63x 8% 38% 4% 47% 0.54x Morrow Bank * 24Q2 (24Q3 not yet di
Slide 17: Delivering on structural opportunities
Delivering on structural opportunities morrowbank.com Return on Target Equity (ROTE) % ~20% Scalability enables inorganic loan balance growth through portfolio purchases or mergers 12-14% ▪ Market activity increased in recent quarters 10-12% Portfolio acquisitions ▪ Closed acquisition of two Swedish
Slide 18: Key milestones of Swedish redomiciliation process
Key milestones of Swedish redomiciliation process morrowbank.com - Application submitted 31 October 2024 Q1-Q3 2024 Q4 2024 2025 2026 Assessment of potential Establishment of Swedish Start of Swedish banking Q2: SFSA decision redomiciliation options legal entity (AB) operation Positive outcome expec
Slide 19: Scalable banking platform in place, positioned for continued growth and value creation
Scalable banking platform in place, morrowbank.com positioned for continued growth and value creation ▪ Track record of increasing throughput, reducing costs and surpassing targets Highly scalable banking platform ▪ Improving product performance, process automation and IT cost of ownership ▪ Now del
Slide 20: Q&A
morrowbank.com Q&A
Slide 21: Appendix
MORROW morrowbank.com APPENDIX
Slide 22: Improving macro driving growth and reducing credit risk
Improving macro driving growth and reducing credit risk morrowbank.com GDP growth (%) Unemployment (%) Inflation (%) 3 10 NO SE FI 10 9 9 2 8 8 7 7 1 6 6 5 5 0 4 4 3 3 -1 2 2 1 1 -2 0 0 2023 2024 2025 2026 2023 2024 2025 2026 2023 2024 2025 2026 ▪ Continued growth set to drive ▪ Unemployment outlook
Slide 23: Lower risk loan balance driving down credit losses
Lower risk loan balance driving down credit losses morrowbank.com Gross loan balance (BNOK) Key drivers reducing loan losses ▪ Hi er risk appetite in “ i ro t p ase” ic create t e necessar scale for efficient operations ▪ “ e oans” ave ~ % o er risk e to 5.4% ~4.8% stricter credit policy and will ov
Slide 24: Profit and loss
Profit and loss morrowbank.com Amounts in MNOK Q3 2024 Q2 2024 2023 2022 Net interest margin* (%) Interest income 449.5 410.8 1,380.0 907.0 Interest expenses -147.5 -123.4 -359.8 -113.7 Net interest income 301.9 287.4 1,020.2 793.3 8.9 % 9.1 % 8.8 % 8.5 % 8.5 % Commission income and fees 15.1 22.0 6
Slide 25: Balance sheet
Balance sheet morrowbank.com 30 Sept. 30 June 31 Dec. 31 Dec. Amounts in MNOK 2024 2024 2023 2022 Liquidity and funding Assets 528% Loans and deposits with credit 671.2 2,200.3 1,530.0 807.8 institutions Net loans to customers 14,066.4 11,475.5 11,076.0 9,110.7 310% 291% Certificates and bonds 3,071
Slide 26: Shareholder overview
Shareholder overview morrowbank.com Largest 20 shareholders Management and members of the Board of Directors Shares Shares Share options Warrants # Shareholder % Role Name (thousand) (thousand) (thousand) (thousand) 1 Kistefos AS 47,790 20.8 % CFO Eirik Ho te a 2,642 15 800 2 Ubs AG 19,720 8.6 % C
Slide 27: Offering convenient consumer financing to creditworthy individuals in the Nordics
Offering convenient consumer financing morrowbank.com to creditworthy individuals in the Nordics Flexible consumer loans Diversified Nordic loan portfolio1 • NOK 10,000-500,000 without collateral • Same day response to loan application • Annuity loans, Credit Lines and Refinancing 20% No-fees credit
Slide 28: Our typical customer is 40-50 years old, owns a home and earns above average
Our typical customer is 40-50 years old, morrowbank.com morrowbank.com owns a home and earns above average Male Above average annual income 63% of our loan NOK ~600k customers are men Homeowner Solid payer ✓ Zero payment remarks 58% homeownership ✓ Permanent employment Middle aged Average loan amoun
Slide 29: Responsible lending throughout the credit lifecycle
Responsible lending throughout the credit lifecycle Marketing • Guidelines for responsible sales practices and product labeling Attracting • Messaging, channels and marketing suitable for attracting creditworthy customers creditworthy • Making sure affi iate oan interme iaries a ere to orro Bank’s c
Slide 30: morrowbank.com
morrowbank.com