Avarda Bank Ab · OMXSTO:AVARDA
Avarda Bank Ab — TF Bank — FY2016 Earnings Presentation
27 slides from Avarda Bank Ab's earnings presentation, February 2017
Slide 1: Full Year 2016 Result Presentation
Full Year 2016 RESULT PRESENTATION
Slide 2: 2016 in summary
2016 in summary Full Year 2016 vs 2015 LOAN BOOK GROWTH +35.5% o Record high organic loan book growth o Strong EPS growth EPS growth +23%1) o Cost efficiency C/I RATIO 38.6% o Strong capital base TOTAL CAPITAL 18.2% RATIO (Dec ’16) 1) Attributable to shareholders of the parent company excluding item
Slide 3: This is TF Bank
This is TF Bank DIVERSIFIED GEOGRAPHICALLY GRANULATED DIVERSIFIED PORTFOLIO NEW OPPORTUNITIES FLEXIBLE IT IN SALES FINANCE PLATFORM WITH AVARDA JV LEAN AND COST CLEAN BALANCE FOCUSED SHEET SALE OF NPL ORGANIZATION 3
Slide 4: Long track record of profitable growth
Long track record of profitable growth Long experience and proven business model Strong track record on growth and profitability SEK million o More than 25 years experience from 2 500 LOAN PORTFOLIO 500 consumer finance industry 2 250 2 000 400 1 750 1 500 300 o Business model combining growth with
Slide 5: Direct to Consumer - Diversified Granulated Portfolio
Direct to Consumer - Diversified Granulated Portfolio Product overview and use of proceeds Loan sizes and customer profile o Unsecured consumer loans of max. SEK 45,000-300,000 Average size Max size SEK (per Dec ’16) depending on market ~24,000 50,000 o Marketed through internal channels and externa
Slide 6: Sales Finance – Drives new lending and builds database
Sales Finance – Drives new lending and builds database Product overview Key financials o The Sales Finance segment enables merchants to offer % OF TOTAL LOAN PORTFOLIO (Q4’16) KEY FACTS financing solutions to their customers 17% o TF Bank offers reliable and attractive white-label Amount 413 SEKm so
Slide 7: Strong loan book growth driven by Direct to Consumer
Strong loan book growth driven by Direct to Consumer TF Bank Group Direct to Consumer segment SEK million SEK million 12M growth 2 800 2 200 +39.6% 2 076 2 000 1 940 2 600 12M growth 2 489 1 766 1 800 +35.5% 1 629 2 400 2 357 1 600 1 487 2 185 1 400 2 200 2015 Q1'16 Q2'16 Q3'16 Q4'16 2 012 Sales Fin
Slide 8: Summary: growth and diversification according to plan
Summary: growth and diversification according to plan Country Loan book growth in MSEK (share of group) Comments Growth Q4’15 Q4’16 during 2016 660 847 o Strong growth in both segments +28% (36%) (34%) Growth Q4’15 Q4’16 during 2016 655 663 +1% o Focus on profitability (36%) (27%) Growth Q4’15 Q4’16
Slide 9: Core market Finland: going from strength to strength
Core market Finland: going from strength to strength Developments Continued strong business development o Goals in 2016: Outstanding consumer loans (SEKm) 900 STABLE GROWTH 875 847 • Increase data for scoring models 850 811 830 825 • Manage loan broker efficiency 800 775 750 726 • Increase sales to
Slide 10: Core market Sweden: protecting market share and margins
Core market Sweden: protecting market share and margins Developments Continued strong business development o Goals in 2016: Outstanding consumer loans (SEKm) STABLE DEVELOPMENT 700 • Focus on protecting margins 675 663 • Not willing to trade margins for volume 655 659 646 650 640 • Protect credit qu
Slide 11: Core / growth market Norway: a welcome addition
Core / growth market Norway: a welcome addition Developments Strong momentum – with more to come o Goals in 2016: CONTINUED GROWTH SINCE ACQUISITION New lending consumer loans (NOKm) • Growth and credit quality >6x • Integration of platforms and processes • Product development • Introduce deposits 0
Slide 12: Growth market Poland: careful growth, focus on credit quality
Growth market Poland: careful growth, focus on credit quality Developments Loan portfolio growth following validation of model PLN million Decreasing Accelerated new o Goals in 2016: collection rate lending • Increase no. of applications • Continue to improve credit quality • Increase in approval ra
Slide 13: Increased operating income and strong margins
Increased operating income and strong margins Operating income Operating income margins Comments SEK million o Operating income Q4 2016 Q4’16/Q4’15 growth +19% vs. Q4 2015 +19% 125 30% 118 114 108 Operating margin o Operating income margin 99 101 25% decreasing mostly due to: 100 22,4% 21,5% 21,3% 2
Slide 14: Cost focused organization
Cost focused organization C/I-ratio Comments Quarterly Full year 45% 42,7% o Cost/Income ratio decreased Q4 2016 vs Q4 2015 40,0% 38,6% 40% o Full-year: Cost/Income ratio increased to 38,6% 37,0% 35% • Excluding Avarda 34,1% (34,4) 30% o Average number of employees 2016: 98 (78) o Outlook 2017: Exte
Slide 15: Net loan loss ratio continues to decrease
Net loan loss ratio continues to decrease Net loan losses Net loan loss ratio Comments SEK million o Clean balance sheet policy 30 28 28 28 28 10% • Non Performing Loans 27 9% are generally sold on 25 forward flow basis after 8% approx. 70 days 7% 20 6,2% 5,8% 5,7% o Net loan loss ratio continue 6%
Slide 16: Strong result 2016
Strong result 2016 Operating profit1) Comments SEK million Quarterly Full year o Operating profit +43% Q4 16 vs Q4 15 2016 vs 2015 Growth +20% 169,6 • “Investments” affecting Q4 15 180 160 141,4 140 o EPS +23%: Delivery on financial target 120 100 Q4 2016 vs Q4 • Operating profit1) +20% full-year 20
Slide 17: Current funding position
Current funding position Strong balance sheet and capital position Comments SEK million BALANCE SHEET, 31 DECEMBER 2016 2,942 A 2,942 Other assets 73 91 Other liabilities Solid liquidity position Loans to credit institution 290 A Liquidity reserve •Liquidity [Comment] reserve 31% of Cash at central
Slide 18: Strong capital position to support further growth
Strong capital position to support further growth Historical and current capital structure 1) Comments o Strong CET1 ratio of 14.5% and total 19.3% 18.5% 18.6% 18.2% 18.2% capital ratio of 18.2% 4.4% 4.0% T2 4.3% 4.2% 3.7% o Significant headroom to legal requirements o CET1 capital requirement: 8.32
Slide 19: Outcome financial targets 2016
Outcome financial targets 2016 Note: Medium term defined as 3-5 years Item Target Outcome Over the medium term, the Company aims to achieve an EPS Growth 231 percent growth of at least 20 percent Over the medium term, the Company aims to achieve a cost to Efficiency 38.6 percent income ratio of belo
Slide 20: Looking ahead into 2017
Looking ahead into 2017 > Continued profitable growth ü Continue to improve credit quality and scoring models ü Opportunities with Avarda ü Continued focus on cost base and improving cost efficiency ü New markets 20
Slide 21: Q&A Session
Q&A Session “IF TFBank
Slide 22: Appendix
Appendix 22
Slide 23: Direct to consumer overview
Direct to consumer overview Loans to the public • Consumer loans % OF TOTAL LOAN PORTFOLIO KEY FACTS • Focus on highly profitable small- to mid-sized consumer loans Amount 2,076 SEKm outstanding (31 Dec2016) • Distribution through own database, websites and credit Loan portfolio +39.6% growth (12M)
Slide 24: Sales Finance overview
Sales Finance overview Loans to the public • Enables retailers to offer an attractive financing % OF TOTAL LOAN PORTFOLIO KEY FACTS solution to their customers 17% Amount 413 SEKm • Payment solution based on invoices that customer outstanding (31 Dec 2016) can choose to convert into a credit (instal
Slide 25: Executive management team
TF Bank team Declan Mac Guinness Johannes Rintaniemi Björn Skytt CEO Head of Finland and Head of CIO Direct to Consumer Executive management team With TF Bank since 2012 With TF Bank since 2010 Previous experience: CEO of Carlson Fonder AB With TF Bank since 2011 Previous experience: Worked as integ
Slide 26: Strong Governance through experienced Board
Strong Governance through experienced Board Mattias Carlsson Thomas Grahn Tone Bjørnov Chairman of the Board since Board member since 2010 Board member since 2015 2015, Board member since 2008 Current commitments: Filmparken AS, chairman, Previous appointments include the Swedish BB Finans AS, Board
Slide 27: Contacts
CONTACTS TF Bank Investor Relations Sture Stölen, IR +46723686507 [email protected] www.tfbankgroup.com 27