Morrow Bank AB · OMXSTO:MORROW
Morrow Bank AB — Q2 2024 Earnings Presentation
30 slides from Morrow Bank AB's earnings presentation, Aug 14, 2024
Slide 1: Second quarter results 2024
morrowbank.com Second quarter results 2024 Morrow Bank ASA
Slide 2: Morrow is positioned for significant value creation
Morrow is positioned for significant value creation morrowbank.com Established Providing financial Developed a Diversified Nordic in 2014 flexibility scalable platform loan portfolio and listed on the to a BNOK ~600 positioning the bank 12.5 BNOK across Oslo Stock Nordic unsecured for significant va
Slide 3: Operational highlights and outlook
morrowbank.com Operational highlights and outlook Photo: craftedbygc
Slide 4: Q2 2024 highlights: Increased ROE and accelerated value creation
Q2 2024 highlights: Increased ROE and accelerated value creation morrowbank.com ▪ Gross loan growth of 1.9% from Q1 2024, continued solid growth in Finland and Sweden Solid growth ▪ Total income of MNOK 305, up 3.1% vs. Q1 2024 ▪ Operating expenses remained stable at MNOK 80 Stable costs ▪ Cost/inco
Slide 5: 2024 targets exceeded following a successful turnaround
2024 targets exceeded following a successful turnaround morrowbank.com Loan balance growth re-established Industry leading cost efficiency achieved BNOK 12.5 54% +50% 22Q1 23Q4 24Q2 22Q1 23Q1 24Q2 Ambition: grow Target achieved Positive trend Ambition: C/I ratio Target achieved Positive trend loan b
Slide 6: 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 7: Improvements across KPIs continued in Q2 2024
Improvements across KPIs continued in Q2 2024 morrowbank.com Stable gross loan balance growth Cost/income ratio improving Loan loss ratio declining Return on target equity improving BNOK % % % oan oss ratio ( ) 1 12% 7% 1% 4% 6 % 7 1% On track for organic medium-term growth and value creation target
Slide 8: Further value upside in structural opportunities
Further value upside in structural opportunities morrowbank.com Return on Target Equity (ROTE) % ~20% Scalability enables inorganic loan balance growth through portfolio purchases or mergers ▪ Agreed to acquire MNOK ~700 portfolio of 12-14% Inorganic growth Swedish performing loans in July + differe
Slide 9: Second quarter financial review
morrowbank.com Second quarter financial review Photo: craftedbygc
Slide 10: Growing in the most profitable markets
Growing in the most profitable markets morrowbank.com Total gross loans MNOK ▪ Gross loan balance growth of 12.3% year-on- year and 1.9% in Q2 2024 1 ▪ Continued strong demand for consumer 12 24 12 477 financing 11 7 11 114 11 % % % 2% % 2% 7% 7% 2 % ▪ Active capital allocation: higher margins and 2
Slide 11: Stable yields on performing loans and deposits
Stable yields on performing loans and deposits morrowbank.com Yields, performing loans and deposits ▪ Strengthened pricing capabilities for loans and eposits oans Credit cards deposits yielding better risk/reward ▪ Stable yields on loans, credit card rates impacted 17 % 17 % 17 1% by seasonality 16
Slide 12: Total income continues to grow
Total income continues to grow morrowbank.com Total income (MNOK) ▪ Total income growth of 13.5% year-on-year and 3.1% in Q2 2024 ▪ Driven by loan growth and increase of MNOK 7.2 in net commissions and fees (MNOK 0.4) ▪ Loan growth to continue to drive total income 12
Slide 13: Improved cost efficiency demonstrating scalability
Improved cost efficiency demonstrating scalability morrowbank.com Cost/income ▪ Stable costs for third consecutive quarter amid ( N ) Cost/income ratio (%) continued loan growth ▪ Reached end-2025 cost/income target in Q2 24, enabled by increased process automation ▪ Portfolio acquisitions will not
Slide 14: On track for lower loan loss ratio
On track for lower loan loss ratio morrowbank.com Loan losses ▪ Loan loss ratio continued to decline in the oan osses ( N ) oan oss ratio quarter to 5.1% (5.2%) ▪ Stabilising loan growth, tightened credit policies and strengthened collection processes have started to weigh in ▪ Partly offset by inte
Slide 15: Profitability increasing
Profitability increasing morrowbank.com Profit (MNOK) ▪ Profit before tax of NOK 67 million in Q2 2024, rofit after tax rofit before tax eturn on arget quity ( ) up 16% from previous quarter 67 ▪ Continued growth with stable cost base ▪ Lower loan losses to improve risk-adjusted 1 4 margins ▪ Potent
Slide 16: Capital levels provide headroom and support growth
Capital levels provide headroom and support growth morrowbank.com Capital adequacy ▪ Improving capital situation driven by lower ier 2 ( 2) dditiona ier 1 ( 1) capital requirements and profit generation Common quity ier 1 (C 1) Min. CET1 req. exceeding growth 2%p ▪ Requirement increased by ~0.5%p in
Slide 17: Value opportunity
morrowbank.com Value opportunity Photo: craftedbygc
Slide 18: Morrow Bank outperforming peers on growth and efficiency, yet trades at lowest multiple
Morrow Bank outperforming peers on growth and morrowbank.com efficiency, yet trades at lowest multiple Growth last two years Cost/income ratio1 Price/book Annualised per 24Q1 24Q2 Per 13. August 2024 31% 26% 2.47x 26% 28% * 0.94x 25% 29% * 0.78x 12% 39% 0.62x 7% 40% 0.59x 5% 44% 0.58x Morrow Bank *
Slide 19: Scalable banking platform in place, positioned for continued growth and value creation
Scalable banking platform in place, positioned for morrowbank.com continued growth and value creation ▪ Continued strong demand, 1.9% loan growth in the quarter to BNOK 12.5 Solid growth ▪ Total income growth of 3.1% ▪ Industry leading cost/income ratio of 26% Scalability driving cost efficiency ▪ C
Slide 20: Q&A
morrowbank.com Q&A
Slide 21: Appendix
MORROW morrowbank.com APPENDIX
Slide 22: Profit and loss
Profit and loss morrowbank.com Amounts in MNOK Q2 2024 Q1 2024 2023 2022 Net interest margin* (%) Interest income 462.4 408.6 1,380.0 907.0 Interest expenses -123.4 -122.1 -359.8 -113.7 9.3 % 8.9 % 9.1 % 8.8 % Net interest income 287.4 286.4 1,020.2 793.3 8.5 % Commission income and fees 22.0 13.9 6
Slide 23: Balance sheet
Balance sheet morrowbank.com 30 June 31 March 31 Dec. 31 Dec. Amounts in MNOK 2024 2024 2023 2022 Liquidity and funding Assets 302% 310% Loans and deposits with credit 291% 282% 2,200.3 2,037.6 1,530.0 807.8 institutions Net loans to customers 11,475.5 11,373.1 11,076.0 9,110.7 196% Certificates and
Slide 24: Shareholder overview
Shareholder overview morrowbank.com Largest 20 shareholders Management and members of the Board of Directors Shares Share options Warrants # Shareholder Shares (thousand) % Role Name (thousand) (thousand) (thousand) 1 Kistefos AS 47,787 20.8% CFO Eirik Ho tedah 2,492 15 800 2 UBS AG 19,716 8.6% CO
Slide 25: Loan loss ratio decreased amid stable losses and lending growth in Q2 24
Loan loss ratio decreased amid stable losses and morrowbank.com lending growth in Q2 24 Figures in MNOK Gross lending Loan loss provisioning Loan losses Stage 1 Stage 2 Stage Stage 1 Stage 2 Stage oan osses ( N ) oan oss ratio (%) ▪ Steady distribution across stages 1 and 2 ▪ Ample provisioning leve
Slide 26: 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 24% 25% No-fees cr
Slide 27: 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 28: Optimising core banking processes and partnering with distribution, servicing and collection specialists
Optimising core banking processes and partnering morrowbank.com with distribution, servicing and collection specialists Origination Onboarding Servicing Debt collection • Targeting creditworthy and • Proprietary scorecard and • Self-service through web • Defaulted loans sold or sent profitable clien
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 affiliated loan intermediaries adhere to Morrow Ban
Slide 30: morrowbank.com
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