Morrow Bank AB · OMXSTO:MORROW
Morrow Bank AB — Komplett Bank — Q3 2020 Earnings Presentation
28 slides from Morrow Bank AB's earnings presentation, Nov 5, 2020
Slide 1: Third quarter 2020
@ KOMPLETT bank Third quarter 2020
Slide 2: Disclaimer
Disclaimer This Presentation has been produced by Komplett sometimes identified by the w ords “believes”, expects”, performance or achievements of the company to be information, including projections, estimates, targets Bank ASA (the “Company” or “Komplett Bank”), solely “predicts”, “intends”, “proj
Slide 3: Today's presenters
Today’s presenters CEO Jan Haglund CFO Henning Fagerbakke 3
Slide 4: Increased operational efficiency, improved credit performance and returning to growth from September
Increased operational efficiency, improved credit performance and returning to growth from September • Increased onboarding of new customers - returned to net loan growth in September Returning to growth • On track for quarterly growth in Q4 2020 and onwards Improved credit • Focus on assisting exis
Slide 5: Highlights of the quarter
Highlights of the quarter Q3 2020 Growth NOK MILLION GROWTH Q/Q GROWTH Y/Y • Sales continuously ramped up in Q3 Net loans 8,341 -0.7% -0.2% • Net loans decrease of NOK 62 million (NOK –418 million in Q2 2020), NOK -92 million adjusted for FX and forward flow effects Total income 269 -5.9% -8.6% Prof
Slide 6: Increase in new sales in Q3 and a return to growth in September
Increase in new sales in Q3 and a return to growth in September Growth in net loans (NOK million) Net loan growth distribution (NOK million) 20Q2 20Q3 79 6 -18 -22 -12 -3 -22 -125 -162 -200 326 271 Loans Norway Loans Finland Loans Sweden Credit cards Point-of-sales 187 finance 134 59 -62 19Q1 19Q2 1
Slide 7: Continued improvement of credit quality in Q3
Continued improvement of credit quality in Q3 Consumer Loans Norway Consumer Loans Finland Consumer Loans Sweden • Improvement in default levels in Q3 • Improvement in default levels in Q3 • Stable default levels in Q3 compared compared to previous quarter compared to previous quarter to previous qu
Slide 8: Profitability, solidity and flexibility to withstand a potential increase in loan loss provisions
Profitability, solidity and flexibility to withstand a potential increase in loan loss provisions Net interest margin Profit before tax (pre loss provisions) • Attractive and stable net interest margin NOK million based on a strong customer value proposition 14% 12.5 % 12.3 % 11.9 % 11.6 % 250 12% 1
Slide 9: Third Quarter 2020 Financial review
Third Quarter 2020 Financial review 9
Slide 10: Decreased net loans and provisions affect total income
Decreased net loans and provisions affect total income Total income (NOK million) Number of customers (thousands) -9% 293 278 277 269 303 35 295 295 291 283 286 247 27 30 23 269 230 214 24 20 14 115 119 119 128 95 77 84 51 52 53 55 56 57 60 4 5 6 7 7 7 8 20 22 24 25 26 26 26 49 47 46 44 43 38 37 19Q
Slide 11: Operational expenses down, further potential to reduce cost ratios
Operational expenses down, further potential to reduce cost ratios Operational expenses (NOK million) and cost ratios (% ) 140 70% • OPEX NOK 91 million in Q3 2020 compared to NOK 100 million in Q2 2020 driven mainly by decreased consulting 120 60% spend and a NOK 1 million non-recurring positive ef
Slide 12: Stable loan losses and increased coverage ratio
Stable loan losses and increased coverage ratio Coverage ratios Loan loss ratio (LLR)* (% ) 2.6 % 2.5 % 2.5 % 2.1 % 1.8 % 17.5 % 5.6 % 1.6 % 17.1 % 17.4 % 1.8 % 14.6 % 11.7 % 12.2 % 4.0 % 9.3 % 3.9 % 3.7 % 3.8 % 3.8 % 3.8 % 38.4 % 38.3 % 39.1 % 41.6 % 32.7 % 33.3 % 33.6 % 19Q1 19Q2 19Q3 19Q4 20Q1 20
Slide 13: Improved credit risk performance during the quarter
Improved credit risk performance during the quarter Break-down of Q3 2020 losses on loans • Decrease in stage 1 provisions due to low new sales • Decrease in stage 2 provisions due to better performance as less customers are overdue • Stage 3 & Other performance of portfolio is better in Q3 as volum
Slide 14: Stable profit after tax
Stable profit after tax Profit after tax (NOK million) Annualised ROE ** (% ) 83 79 80 76 77 73 18.8 % 18.5 % 17.9 % 18.1 % 18 63 38 16.1 % 13.6 % 13.9 % 61 78 46 -15 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 20Q3 19Q1 19Q2 * 19Q3 19Q4 * 20Q1 * 20Q2 20Q3 AML fee Additional loan loss provisions • ROE impacted by
Slide 15: Solid capital position provides capacity for both growth and dividends
Solid capital position provides capacity for both growth and dividends Regulatory capital structure (% ) • CET1 ratio increased to 22.2% (21.8%) in Q3 2020 and well above 18.0% target 25.7% which includes a 1.0%-point management buffer 0.8% • Strong total capital ratio of 25.7% (25.3%) 2.7% 21.5% 20
Slide 16: Outlook and summary
Outlook and summary 16
Slide 17: Komplett Bank's financial targets
Komplett Bank’s financial targets Capital adequacy CET1 target of 18.0% Comprised of regulatory CET1 requirement of 17.0% + 1.0% management buffer Return on Equity Above 20% return on equity The Bank does not expect to meet its ROE target in 2020 Excess capital not deployed for growth purposes will
Slide 18: Our strategic priorities
Our strategic priorities Strategic priorities Focus areas • Continue to ramp-up activity levels and improve customer acquisition processes Growth • Expect 5-10% growth in 2021 • Maintain current high focus on credit risk and collection performance Credit quality • Continue to improve data and analyt
Slide 19: Q&A
Q&A
Slide 20: Appendix
APPENDIX 20
Slide 21: Covid-19 update: Limited effects on financials and credit quality so far
Covid-19 update: Limited effects on financials and credit quality so far • Safeguarding the health and well-being of our employees and their families remains a priority Safeguarding employees • Focus on assisting existing customers overcome short-term challenges and supporting customers • Continued
Slide 22: A Nordic specialised consumer finance company
A Nordic specialised consumer finance company • Offering flexible consumer financing solutions to customers across the Nordics • ~290,000 customers across four product areas in Norway, Sweden, Finland and Germany • Strategic partnership with Komplett Group, largest e-commerce company in the Nordics
Slide 23: Diversified product portfolio across the Nordics
Diversified product portfolio across the Nordics Total net loans (NOK million) Distribution of net loans end of Q3 2020 8,821 8,496 9,000 8,403 Thousands 8,361 8,341 8,094 7,844 7,903 7,456 8,000 6,801 7,000 Loans Norway 6% 5,915 9% 6,000 Loans Finland 5,000 39% 15% Loans Sweden 4,000 Credit cards 3
Slide 24: Stable yield on consumer loans and declining funding cost
Stable yield on consumer loans and declining funding cost Yields (% ) Gradual yield decline due to growth in new markets • Stable yields for loans 25% • Decrease in yield for credit cards due to growth in new markets 20% Funding • Positive trend due to increased diversification (NOK, 15% EUR and SEK
Slide 25: Profit and loss
Profit and loss Amounts in NOK million Amounts in NOK million Q3 2020 Q2 2020 Q3 2019 Q2 2019 2019 Net interest margin* (% ) Interest income 317.1 316.7 Interest income 308.7 322.6 1,282.5 12.0 % 11.9 % 12.5 % 12.3 % Interest expenses -37.9 -41.7 11.7 % 11.6 % 11.1 % Interest expenses -37.7 -40.2 -1
Slide 26: Balance sheet
Balance sheet Amounts in NOK million 30.09.2020 30.09.2019 31.12.2019 Liquidity and funding Assets Loans and deposits with credit institutions 1,466.8 1,145.2 614.7 1013% Net loans to customers 8,341.2 8,361.4 8,495.8 Certificates and bonds 716% 2,585.2 1,197.4 1,329.8 Other intangible assets 151.9
Slide 27: Shareholders and Management and Board ownership
Shareholders and Management and Board ownership Top 20 shareholders Management and Board of Directors ownership Shares Shares Share options # Shareholder % Role Name (thousand) (thousand) (thousand) 1 Canica Invest AS 35,747 19.2% Director Legal & HR Wilhelm B. Thomassen 2,018 270 2 State Street Ba
Slide 28: Komplett Bank
@ KOMPLETT bank 28