Nordnet AB · OMXSTO:SAVE
Nordnet AB — Debt Investor Presentation (March 2019)
72 slides from Nordnet AB's debt investor presentation, March 2019
Slide 1: Nordnet AT1 Investor presentation
Nordnet AT1 Investor presentation as Nordnet
Slide 2: Today's presenters
47 Nordnet Today’s presenters Anders Danielsson CEO (acting) With Nordnet since 2017. Anders has a MSc in Corporate Finance from Stockholm School of Economics. He has previously worked at SEB and Bain & Company. Hannes Wadell CFO With Nordnet since 2017. Hannes has a MSc in International Business fr
Slide 3: Agenda
47 Nordnet Agenda Introduction to Nordnet Key Credit Highlights Business Model & Operations Financials and Capital Position Transaction Overview Risk Factors Publicpresentation
Slide 4: This is Nordnet
407 Nordnet This is Nordnet Introducing the award-winning bank Lo as Nordnet
Slide 5: This is Nordnet
47 Nordnet This is Nordnet * Founded in 1996 with ambition to redefine the finance industry * Operates within the three business segments of Savings & investments, Pension and Loans * Businesses in Sweden, Norway, Denmark and Finland * 500 employees * Owned by ~30% Ohman, ~30% the Dinkelspiel family
Slide 6: Nordnet history
Nordnet 2017 Bank of ‘the year, ‘Sweden #rahapodi best pod, Finland ASK, Norway 2 Stockbroker 009 ofthe year, 7 Finland Acquisition — €Q Bank Investment —_— 2011 in Tink 250 000 —— 2013 ‘Customers Personal _— Direct deposit —— loans, Commission 2015 through Swish 1996 2000 investment Sweden free mon
Slide 7: Our promise and vision
47 Nordnet 7 Our promise and vision Our promise P We bring you closer to your aspirations, by offering the most engaging savings and investments experience. Our vision OW The best investor you can be. Public presentation
Slide 8: Digital channels & cutting edge financial products
47 Nordnet Digital channels & cutting edge financial products o Shareville 445 665 * Nordic brokerage with access to global markets and broad * Social investing platform range of exchange traded products 200,000 members Pipeline for new customers . * Digital advisory services: Robosave, Smart Portfo
Slide 9: Recent Nordnet
47 Nordnet Recent Nordnet 2017 Bank of the Year Privata Affarer O) f) Best Finnish Securities Broker Osakesaastajien Keskusliitto #rahapodi best Finnish podcast Jakso.fi Top 100 most attractive employer in Sweden among young professionals Public presentation KARRIAR \ FORETAG } Affarer ARETS SPAR- /
Slide 10: Agenda
47 Nordnet Agenda Introduction to Nordnet Key Credit Highlights Business Model & Operations Financials and Capital Position Transaction Overview Risk Factors Publicpresentation
Slide 11: Key Credit Highlights
47 Nordnet #17 Nordnet "1
Slide 12: A variety of revenue streams
47 Nordnet A variety of revenue streams Net interest income Transaction related commission Aiea 1310 2018 Revenue (MSEK) ‘SV Other income Net financial transactions Non-Transaction related (Primarily FX-fees) commission More than 50% of Group revenues derive from non-brokerage businesses 33% of Grou
Slide 13: Strong pan-Nordic presence
47 Nordnet Strong pan-Nordic presence ~ Sweden mNorway Denmark mFinland q 5.0% 5.8% 4.1% #3 (3.2%)* #2 #3 (3.8%)* (3.0%)* Source: Nasdaq OMX Nordic and Oslo Oslo Bors. January — December 2018. * Market share measured as turnover. January — December 2018. q 5.7% #1 (8.1%)* Solid revenue streams acros
Slide 14: Broad customer offering is key
417 Nordnet Broad customer offering is key Customer intake and cross-selling deliver strong growth * Broadening customer offering — reducing trading importance * 2013-2018, non-trading revenues grew by 200% * 2013-2018, active customers grew by 94% 1200 000 1000 000 800 000 600 000 400 000 200000 to
Slide 15: Unified Nordnet across the Nordics
417 Nordnet Unified Nordnet across the Nordics Nordnet has made significant investments that will prove fruitful in the near term ~ New app launched during H2 2018 — tripled rating in app store ~ New web will be launched in summer 2019 _ Shareville — largest network of influencers within the savings
Slide 16: Diversified low-risk assets
47 Nordnet 16 Diversified low-risk assets Pag ™Margin lending = Personalloans ~—-—- Mortgage _ Mortgage: Targeted at existing Nordnet customers with 16 car 22% . 7 . . . 14 substantial financial assets; policy maximum LTV at 50% B _ Margin lending: Average LTV 28% (31/12 2018), no ° nig . . 3,20 340
Slide 17: Exceptional knowledge of finance in the Nordics
47 Nordnet 7 Exceptional knowledge of finance in the Nordics Nordnet is owned by Ohman (~30%,), the Dinkelspiel family — ; 7 (~30%) and Nordic Capital (~40%) since the start of 2017. Ohman + | Norpic CAPITAL = #17 Nordnet Ohmanis a family-owned, fully independent, company group with ancestry from 19
Slide 18: Agenda
47 Nordnet Agenda Introduction to Nordnet Key Credit Highlights Business Model & Operations Financials and Capital Position Transaction Overview Risk Factors Publicpresentation
Slide 19: Nordnet's operations
47 Nordnet Nordnet’s operations 41> 4a Oo & | investment & Savings [NNN | Pension VY | Morsintencng = V Bev Ev Tv | Pe Ee es es Ee | Personattons ov wf Public presentation Local markets @ Functions: - Customer Service - Sales - Marketing HQ Stockholi Nordic Functions: - IT - Product - Administration
Slide 20: Our offering
47 Nordnet Our offering Investment & Savings Available on all markets Tax efficient account types in Sweden and Norway Stock trading on 7 markets +2000 mutual funds Trading applications Variety of digital advisory services Shareville — influencer investment network Complete pension solutions for pri
Slide 21: Product development
47 Nordnet 21 Product development Successful launches H2 2018 Deliveries planned for H1 2019 180 ea * Tripled app store rating to 4.2 : = 125,000 unique users / week = Trading uplift +30-40% 4.2 & KKK Start of replatforming work Public presentation
Slide 22: Performance per business area
47 Nordnet Performance per business area Savings & investment area is the backbone of Nordnet’s success Savings & investments Pension Loans 22 Net savings, SEKbn Number of accounts Savings capital, SEKbn Revenue, SEKm 904800 5 25 20 11000 000 783900 300g 248 259 1000 753 787 828 20 1“ 800000 646300
Slide 23: Performance per geographic area
47 Nordnet Performance per geographic area Positive developments across all countries riL’ Up 4m Up 23 Number of accounts Number of accounts Number of accounts Number of accounts . 302700 326000 400000 400 4000 268800 300000 300000 300000 228200 0 2000 200000 | 147500 © 85800 2000 97900 ‘110900 a 68
Slide 24: Nordnet's playing field
47 Nordnet Nordnet’s playing field 24 The positive rates trend is strengthening Nordnet’s profitability riLy Up Historical main-index prices 850 1500 650 1300 1100 450 2016 2017 2018 2019 2016 2017 208 2019 — onixsso 2017 _ osepx Interest rates (%) ces 035 065 0s 08s 2016 2017 201 2010 2016 2017 208
Slide 25: Market segments — definition
47 Nordnet Market segments — definition NON- OWNER Owns no stocks and/or funds Think: Buffer Want: Help O TRANSACTIONS | ~|O TRANSACTIONS 11-500 TRANSACTIONS TRADER >500 TRANSACTIONS Owns stocks and/or funds Savings Investment Portfolio Love to trade Tools To engage Target groups Private finances an
Slide 26: Agenda
47 Nordnet Agenda Introduction to Nordnet Key Credit Highlights Business Model & Operations Financials and Capital Position Transaction Overview Risk Factors Publicpresentation
Slide 27: Consolidated income statement
47 Nordnet 27 Consolidated income statement* SEKm 2014 2015 2016 2017 2018 Net Interest Income 47 407 403 386 378 Net Commissions 478 625 590 641 696 Net result of financial income 86 147 152 162 178 Other income 43 60 51 55 59 Total Operating income 1079 1238 1196 1244 1310 Total expenses before cr
Slide 28: Consolidated balance sheet
47 Nordnet Consolidated balance sheet* SEKm 2014 20 2016 2017 2018 Assets Cash and balances in Central banks = = 436 392 1344 Debt securities 11191 13 563 15 485 17 852 20 036 Loans to credit institutions 987 295 329 276 333, Lending to the public 5806 7278 9516 1852 14204 Insurance assets 28 868 35
Slide 29: Capital ratios pre and post Netfonds
47 Nordnet Capital ratios pre and post Netfonds Nordnet consolidated CET1 and capital ratios (post Netfonds indicative) 30% 25% 20% 15% 10% 5% 0% =CET1 @AT1 Publicpresentation Nordnet consolidated leverage ratio (post Netfonds indicative) 6% 5% 4% 3% 2% 1% 0% =CET1 MAT1 29
Slide 30: Funding and liquidity
47 Nordnet Funding and liquidity Nordnet Group Balance sheet 31/12 2018, BSEK Other Lending to the public Insurance assets, Assets a Equity Other liabilities Insurance liabilities Liabilities and Equity Public presentation 500% 400% 300% 200% 100% 0% Nordnet LCR 2016-2018, Consolidated situation 390
Slide 31: Financials — Summary
47 Nordnet Financials — Summary Revenues + Income dominated by fees and commissions from customers’ trading and fund income + Nil declining over time period in connection with decline in market interest rates + Increased cross-border trades by customers drive FX income Costs * Significant investment
Slide 32: Agenda
47 Nordnet Agenda Introduction to Nordnet Key Credit Highlights Business Model & Operations Financials and Capital Position Transaction Overview Risk Factors Public presentation 32
Slide 33: Nordnet group structure overview
417 Nordnet Overview * Nordnet AB (publ) is the parent company of the group and, for the purpose of banking regulations (see right), of the consolidated situation of Nordnet Bank AB. + Nordnet AB (publ) was absorbed by NNB Intressenter AB as of 1 March 2019, and simultaneously NNB Intressenter AB wa
Slide 34: Hold-Co issuance and cash flows
417 Nordnet The Nordnet AB (publ) group has more diverse cashflows than Nordnet Bank AB * Hold-Co issuance of Additional AT1 receives full consolidated capital treatment under current regulations versus bank issuance * The proceeds of the issued debt will be down streamed as equity to the bank * No
Slide 35: Transaction summary
47 Nordnet Transaction summary WN ¢ Support further growth of the business and utilisation of the new platform * Help fund recent acquisition of the leading broker Netfonds and together strengthen market position against large established banks * Optimising and strengthening of the capital base + En
Slide 36: Key Terms and Conditions
417 Nordnet Key Terms and Conditions [issuer Redemption: Interest cancellation: 36
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Slide 38: Slide 38
Slide 39: Agenda
47 Nordnet Agenda Introduction to Nordnet Key Credit Highlights Business Model & Operations Financials and Capital Position Transaction Overview Risk Factors Public presentation 39
Slide 40: Risk Factors
Risk Factors as Nordnet
Slide 41: Definition
47 Nordnet Definition “Agent” means Intertrust (Sweden) AB, Swedish Reg. No. 556625-5476, or another party replacing it, as Agent, in accordance with the Terms and Conditions. _ “Issuer" means Nordnet AB (publ), a public limited liability company incorporated under the laws of Sweden with Reg. No. 5
Slide 42: Competition in the financial services industry
417 Nordnet Competition in the financial services industry Nordnet operates in the savings and investments market and in the consumer lending market. The markets in which Nordnet operates are characterised by a high degree of competition and fragmentation and the strong demand growth in these market
Slide 43: Risks associated with Netfonds; disputes and legal proceedings
417 Nordnet Risks associated with Netfonds Bank AS and Netfonds Livsforsikring AS Nordnet has entered into an agreement to acquire Netfonds Bank AS and Netfonds Livsforsikring AS. The acquisition is subject to regulatory approvals. The acquisition is subject to risks and uncertainties concerning ope
Slide 44: Operational risk
47 Nordnet Operational risk Nordnetis subject to operational risk, meaning the risk of losses due to inappropriate or failed processes, human error, faulty systems or external events. Besides all the risks that may be associated with human error and mistakes, typical examples of operational risks in
Slide 45: Key employees; information technology risk
47 Nordnet Key employees Nordnetis dependent upon a number of key employees whom have together developed the day-to-day operations and systems within Nordnet Should such key personnel leave Nordnet or take up employment with a ‘competing business, and not be adequately replaced with new qualified pe
Slide 46: Liquidity and funding risks
47 Nordnet Liquidity and funding risks Liquidity risk refers to the risk that Nordnet would be unable to finance existing assets or meet its payment obligations, or only be able to do so at significant expense. Liquidity risk can be divided into two components. The first partis the risk of Nordnet h
Slide 47: Systemic risk; insurance risk
47 Nordnet Systemic risk Due to the high level of interdependence between financial institutions, Nordnet and the Issuer are subject to the risk of deterioration of the actual or perceived commercial and financial soundness of other financial institutions and a default or financial difficulties of o
Slide 48: General compliance risk
47 Nordnet General compliance risk Nordnet's operations are subject to legislation, regulations, codes of conduct and government policies in the jurisdictions in which it conducts business (ie. in Sweden, Norway, Finland and Denmark) and in relation to the products it markets and sells. Regulatory a
Slide 49: Risks relating to Nordnet Bank's banking licence
47 Nordnet ag Risks relating to Nordnet Bank’s banking licence ‘The Swedish Banking and Financing Business Act (lagen (2004297) om bank- och finansieringsrérelse) (the “BFBA”) requires all Swedish banking companies to operate under alicence granted by the Swedish FSA. Nordnet Bank's banking licence
Slide 50: Risks relating to Nordnet Pension's insurance licence
417 Nordnet 50 Risks relating to Nordnet Pension’s insurance licence The Swedish Insurance Business Act (forsakringsrérelselagen (2010:2043)) (the “IBA") stipulates that insurance business may only be conducted pursuant to a licence granted by the Swedish FSA. Nordnet Pension's insurance licence has
Slide 51: Regulatory capital requirements
47 Nordnet 51 Regulatory capital requirements Nordnet Bank, Nordnet Consolidated Situation, Nordnet Pension, Nordnet Livsforsikring and Nordnet's insurance group are subject to capital adequacy regulations, which aim to put in place a comprehensive and risksensitive legal framework and to ensure enh
Slide 52: The Recovery and Resolution Directive (1/2)
47 Nordnet The Recovery and Resolution Directive (1/2) ATo complement the CRR/CRD IV legislative package, the EU Directive 2014/59/EU, known as the Bank Recovery and Resolution Directive ("BRRD") was adopted. The BRRD establishes a framework for the recovery and resolution of credit institutions and
Slide 53: The Recovery and Resolution Directive (2/2)
417 Nordnet 53 The Recovery and Resolution Directive (2/2) _ 023 February 2017, the National Debt Office presented the finalised model for the calculation of MREL, stating that systemically important institutions need to replace a portion of their existing bond holdings with subordinated bonds. Howe
Slide 54: Loss absorption at the point of non-viability of Nordnet Bank
47 Nordnet Loss absorption at the point of non-viability of Nordnet Bank A There isa risk that the Notes may be required to absorb losses as a result of statutory powers conferred on resolution and competent authorities in Sweden (the National Debt Office and the Swedish FSA). As noted above, the po
Slide 55: Changes to the Swedish Deposit Insurance Scheme
417 Nordnet Changes to the Swedish Deposit Insurance Scheme ‘The Swedish Deposit Insurance Scheme ("SDIS") guarantees the depositors’ deposits in the event Nordnet Bank is declared bankrupt or if the Swedish FSA determines that the SDIS should be activated in a given situation. The SDIS is administe
Slide 56: Changes in accounting standards
47 Nordnet Changes in accounting standards In addition to the anticipated legislative changes mentioned above, a number of legislations and regulations, taxes and rules can affect the business conducted by Nordnet New or amended legislations and regulations could call for unexpected costs or impose
Slide 57: Changes in tax legislation
47 Nordnet Changes in tax legislation __ Nordnet's business and transactions are conducted in accordance with the Nordnet's interpretation of applicable laws, tax treaties, regulations, case law and requirements of the tax authorities. There can be no assurances that its interpretation of applicable
Slide 58: EU General Data Protection Regulation
417 Nordnet EU General Data Protection Regulation "The EU’s general data protection regulation 2016/679/EU (the “GDPR") has been applicable since 25 May 2018. The main objectives of the GDPR are to harmonise EU laws on personal data and facilitate the flows of data across EU as well as to ensure tha
Slide 59: The Issuer's obligations under the Notes are deeply subordinated
47 Nordnet 59 The Issuer's obligations under the Notes are deeply subordinated The Notes constitute unsecured, deeply subordinated obligations of the Issuer. In the event of the voluntary or involuntary liquidation (likvidation) or bankruptcy (konkurs) of the Issuer, the rights of the Noteholders to
Slide 60: Issuer may issue further debt ranking pari passu or senior
417 Nordnet 60 The Issuer is not (and nor is any other Nordnet group company) prohibited from issuing further debt, which may rank pari passu with or senior to the Notes There is no restriction on the amount or type of debt that the Issuer, or another company within the Nordnet group, may issue or i
Slide 61: Issuer may redeem the Notes on Capital Event or Tax Event
417 Nordnet The Issuer may redeem the Notes on the occurrence of a Capital Event or Tax Event The Issuer may in certain circumstances, at its option, but in each case subject to obtaining the prior consent of the Swedish FSA, redeem the Notes upon the occurrence of a Capital Event or Tax Event at pa
Slide 62: Interest payments on the Notes may be cancelled
417 Nordnet Interest payments on the Notes may be cancelled by the Issuer Any payment of Interest in respect of the Notes shall be payable only out of the Issuer's Distributable Items and: () may be cancelled, at any time, in whole or in part, at the option of the Issuer in its sole discretion and n
Slide 63: Loss Absorption following a Trigger Event
417 Nordnet 63 Loss Absorption following a Trigger Event Ifat any time the CET1 ratio has fallen below 7.00 per cent of Nordnet Consolidated Situation, this constitutes a Trigger Event and the Total Nominal Amount of the Notes shall be reduced (in whole or in part, and in ‘each case as determined by
Slide 64: Structural subordination and dependence on upstreaming of funds
417 Nordnet Structural subordination and dependence on upstreaming of funds The Issuers a holding company and the proceeds from the issue of the Notes will be contributed to Nordnet Bank as an unconditional shareholders’ contribution. Nordnet's business is conducted by the Issuer's subsidiaries and
Slide 65: Noteholder representation and majority decisions
417 Nordnet Noteholder representation and majority decisions by the Noteholders Under the Terms and Conditions, the Agent represents each Noteholder in all matters relating to the Notes. The Terms and Conditions contain provisions to the effect that a Noteholder is prohibited from taking actions on
Slide 66: The price of Notes may be volatile
417 Nordnet The price of Notes may be volatile The market price of the Notes can be subject to significant fluctuations in response to actual or anticipated variations in Nordnet's operating results and those of its competitors, adverse business developments, changes to the regulatory environment in
Slide 67: European Benchmarks Regulation
47 Nordnet European Benchmarks Regulation Following a number of major scandals, the process of the calculation of EURIBOR, LIBOR, STIBOR and other interest rate benchmarks have been subject of the legislators attention. This has resulted in a number of legislative measures, whereof some have been im
Slide 68: Clearing and settlement; exchange rate risks
417 Nordnet 68 Clearing and settlement in the CSD’s account-based system The Notes will be affiliated to and will continue to be affiliated to a central securities depository of notes, currently the CSD’s account-based system, and no physical notes have been or will be issued. Clearing and settlemen
Slide 69: Disclaimer (1/2)
47 Nordnet 69 Disclaimer (1/2) This presentation material (the “Materiaf’) has been prepared by the Nordnet AB (publ) (the ‘Company’? solely for a limited group of potential investors in connection with a potential issue by the Company of additional tier 1 subordinated notes (the “Notes”) governed b
Slide 70: Disclaimer (2/2)
47 Nordnet Disclaimer (2/2) This Material does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The notes may not be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S.
Slide 71: Contact details Nordnet Nordea
47 Nordnet Contact details 417 Nordnet Nordea Qo Anders Danielsson, Acting CEO Gustaf Winberg, Managing Director, FIG DCM <. +46 734 204 907 +46 8 4079164 < v [email protected] [email protected] Hannes Wadell, CFO Niklas Hakansson, Associate Director - FIG DCM 9 +46 721 631 234 +4
Slide 72: Q&A
F 417 Nordnet Ei