Norion Bank AB · OMXSTO:NORION
Norion Bank AB — Collector Bank — Debt Investor Presentation (March 2019)
56 slides from Norion Bank AB's debt investor presentation, Mar 11, 2019
Slide 1: Additional Tier 1 Capital Investor Presentation – March 2019
ADDITIONAL TIER 1 CAPITAL INVESTOR PRESENTATION – MARCH 2019 1
Slide 2: Disclaimer
Disclaimer Background This presentation (including its appendices, the "Presentation") has been produced by Collector Bank AB (the "Company" or "Collector", and together with its parent company and its direct and indirect subsidiaries from time to time, the "Group") solely for use in connection with
Slide 3: Disclaimer
Disclaimer Restrictions in the United States This Presentation does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securit
Slide 4: Today's presenters
Today’s presenters Martin Nossman Magnus Borelius CEO Treasurer Education: Master of Economics from Lund University Education: Degree from University of Gothenburg School of Experience: Several leading positions at Handelsbanken Capital Business, Economics and Law Markets Experience: Several leading
Slide 5: Agenda
Agenda 1 Business Overview & Strategy 6 2 Financial Performance 16 3 Asset Quality 21 4 Funding & Liquidity 26 5 Capital Adequacy 30 6 Summary 33 7 Proposed Transaction 35 8 Appendix 38 9 Risk factors 42 5
Slide 6: Business Overview & Strategy
BUSINESS OVERVIEW & STRATEGY Business Overview & Strategy 6
Slide 7: Introduction to Collector
BUSINESS OVERVIEW & STRATEGY Introduction to Collector in brief Financial highlights 2018 • Collector is a digital niche bank that provides financing Credit portfolio SEK 26bn solutions for retail and corporate customers • The operations compromise of financial services, divided Gross income SEK 2.3
Slide 8: Collector's journey
BUSINESS OVERVIEW & STRATEGY Collector’s journey Collector is founded by Payment solutions for Lena Apler and Johan e-commerce, debt collection Starts offering deposit Opening up offices in Collector offers factoring Starts offering credit cards Möller, with background and consumer loans are account
Slide 9: Stable and long-term shareholders
BUSINESS OVERVIEW & STRATEGY Stable and long-term shareholders Ownership(1) Name % Erik Selin (own holdings and through Fastighets AB Balder and companies) 46.6 • Financially stable and long-term large shareholders • Long-term ownership and commitment shown by the three largest owners Lundström (thr
Slide 10: A well diversified financial services platform
BUSINESS OVERVIEW & STRATEGY A well diversified financial services platform Profit Credit Business Income Future business contribution portfolio Products Sweden Finland Norway Other segments 2018 segments 2018 31 Dec 2018 Personal loans Retail Deposit accounts Retail 32% 49% 61% Credit cards
Slide 11: Retail (1/2)
BUSINESS OVERVIEW & STRATEGY Retail (1/2) Personal loans / Deposit accounts / Credit cards / Residential mortgages Business segment Products Business overview Key statistics • Approximately 87,000 loan customers • Personal loans to private individuals in Sweden and Finland • SEK 134,000 average amou
Slide 12: Retail (2/2)
BUSINESS OVERVIEW & STRATEGY Retail (2/2) Checkout , Instore solutions , B2B & B2C Business segment Products Business overview Key statistics • Collector Checkout, payment gateway with credit and debit payment options • Merchant branded credit account solution instore • Offering solution for both B2
Slide 13: Corporate (1/2)
BUSINESS OVERVIEW & STRATEGY Corporate (1/2) Factoring & Company credits / Real estate credits Business segment Products Business overview Key statistics • Invoice factoring, primarily invoice purchase • Combination of corporate loans and factoring to larger clients • Accounts for 20% of the credit
Slide 14: Corporate (2/2)
BUSINESS OVERVIEW & STRATEGY Corporate (2/2) Debt collection & Purchased debt Business segment Products Business overview Key statistics • Third party debt collection • Strong market position towards the real estate • Works with more than 500 real estate sector companies Debt collection & • B2B & B2
Slide 15: Trends going forward
BUSINESS OVERVIEW & STRATEGY Trends going forward Retail Payments Corporate Colligent • Continued focus on the quality of the • Integration of Lindorff Payments • Continued good demand for real • Continued strong growth in the Real loan portfolio • New strategy to focus on larger estate credits in S
Slide 16: Financial Performance
FINANCIAL PERFORMANCE Financial Performance 16
Slide 17: Maintained high credit quality despite high growth
FINANCIAL PERFORMANCE Maintained high credit quality despite high growth Lending to the public, SEKbn Net credit loss level Retail Corporate 26 1.4% 20 1.3% 51% 1.2% 1.1% 1.1% 13 47% 38% 9 38% 49% 6 53% 34% 62% 62% 66% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018* *Excluding the increased provi
Slide 18: Strong and stable financial development
FINANCIAL PERFORMANCE Strong and stable financial development Operating income, SEKm Cost/income ratio and costs, SEKm Earnings after tax, SEKm Net interest income Other income 1,883 70% 1000 700 56 862 602* 58% 900 1,620 60% 600 54% 763 39 50% 800 517 1,293 50% 47% 46% 500 700 652 74 405 543 600 1,
Slide 19: High profitability
FINANCIAL PERFORMANCE High profitability Return on equity Comment • High profitability generated from a diversified business mix SEK 200m and cost control new equity SEK 400m SEK 513m • Continued focus on income generation and cost efficiency new equity 23% new equity • The new organisation structur
Slide 20: Financial management of Collector
FINANCIAL PERFORMANCE Financial management of Collector Ambition, target or Area Parameter 2018 requirement Capitalisation Total capital ratio >15% 13.7% Financial targets Dividend Focus on growth in medium term, which implies low or no dividend 0% CET1 ratio 9.4% 11.9% Capitalisation Total capital
Slide 21: Asset Quality
ASSET QUALITY Asset Quality 21
Slide 22: Diversified credit portfolio
ASSET QUALITY Diversified credit portfolio Comment Credit portfolio segments Currency distribution Retail Payments Corporate Colligent SEK EUR NOK DKK Other currencies • Operates with a diversified business mix in economically robust Nordic countries • The credit portfolio amounted to SEK 26bn as of
Slide 23: High attention on the development in credit quality
ASSET QUALITY High attention on the development in credit quality Reserves in relation to gross loans 2018 IAS 39 IFRS 9 Loan receivables gross, SEKm 26,104 6% 5% 4% 5% Impaired loans, SEKm 3,063 4% 3% Percentage of impaired loans 12% 2014 2015 2016 2017 2018 Reserves, SEKm 1,191 Reserves in relatio
Slide 24: Risk identification
ASSET QUALITY Risk identification Risks Capital requirements Market risk (0.2%) Interest rate risk (5.7%) CVA risk (0.1%) Operational risk (8.6%) Credit risk Market risk: FX Concentration risk (8.2%) Business risk Market risk: Interest rates Operational risk Concentration risk Liquidity and Credit r
Slide 25: Robust, proven and data driven credit decision processes
ASSET QUALITY Robust, proven and data driven credit decision processes Retail Credit process • Scoring models – outcome affects approval as well as terms Retail Personal loans and credit cards • Automated credit process through both internal Collector record and external credit record • Scoring mode
Slide 26: Funding & Liquidity
FUNDING & LIQUIDITY Funding & Liquidity 26
Slide 27: Access to a wide base of funding sources
FUNDING & LIQUIDITY Access to a wide base of funding sources Funding and liability split as of 31 December 2018 Comment 4% 2% 7% • Strategic focus to reduce refinancing risks by diversification Deposit funding of the funding structure 12% Equity • Deposit funding amounted to SEK 22bn as of 31 Decemb
Slide 28: Large share of stable deposits
FUNDING & LIQUIDITY Large share of stable deposits Deposit funding, SEKm Comment 22,391 • Stable volume growth over the last years, with 87% of the deposits funding covered by the deposit guarantee • 17% of the deposit funding is term deposit • Average deposit is SEK 257,000 15,310 • Weighted averag
Slide 29: Conservative and stable liquidity portfolio
FUNDING & LIQUIDITY Conservative and stable liquidity portfolio Comment Liquidity reserve distribution 12% • The liquidity position shall always be sufficient to meet both normal fluctuations in liquidity and a stressed scenario • The liquidity portfolio consist of cash placements at banks Cash and
Slide 30: Capital Adequacy
CAPITAL ADEQUACY Capital Adequacy 30
Slide 31: Development of capital
CAPITAL ADEQUACY Development of capital Net Profit/REA CET1 and total capital ratio development CET1 Capital ratio Total capital ratio 3.1% 3.1% 3.0% 16.9% 16.9% 17.6% 17.6% 16.8% 2.6% 14.9% 14.9% 14.3% 13.7% 2.1% 11.9% Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 CET1 and t
Slide 32: CET1 and total capital ratios are above requirements
CAPITAL ADEQUACY CET1 and total capital ratios are above requirements CET1 ratio vs. requirement Total capital ratio vs. requirement Illustrative example where SEK 500m AT1 capital is issued* Current buffer vs. requirement 2.2% 15.5% 1.8% 1.8% 0.4% 2.5% 13.3% 13.7% 11.9% 9.4% CET1 ratio Buffer to CE
Slide 33: Summary
| summary Summary collector 33
Slide 34: Key credit highlights
SUMMARY Key credit highlights 1 4 Growth-driven niche bank with excellent credit quality Low-risk funding and liquidity strategy Strong historical growth track record Access to a wide range of funding sources Conservative risk appetite Increased diversification of funding going forward Pro
Slide 35: Proposed Transaction
PROPOSED TRANSACTION Proposed Transaction 35
Slide 36: Overview of the transaction
PROPOSED TRANSACTION Overview of the transaction Transaction rationale, description and comments Overview of the group structure Rationale and description • Collector is looking to raise SEK [500]m of Additional Tier 1 Collector AB (publ) Capital to strengthen the total capital ratio • The transacti
Slide 37: Overview of key terms and conditions
PROPOSED TRANSACTION Overview of key terms and conditions Issuer Collector Bank AB (publ) Tenor Perpetual Status Junior subordinated, senior to share capital only Principal Amount SEK [500m] First Call Date/Redemption Redemption on [ ] (5 years), or on any Interest Payment Date thereafter, subject t
Slide 38: Appendix
| APPENDIX Appendix collector 38
Slide 39: Income statement Group
APPENDIX Income statement Group Amounts in SEK million Full year 2018 Full year 2017 Revenue 2,321 1,933 2,321 1,933 Operating expenses Personnel expenses -285 -246 Depreciation of property, plant and equipment and amortization of intangible non-current assets -83 -60 Other profit/loss - net - - Oth
Slide 40: Balance sheet Group
APPENDIX Balance sheet Group Assets, SEK million Full year 2018 Full year 2017 Equity and Liabilities, SEK million Full year 2018 Full year 2017 Non-current assets Equity Property, plant and equipment Share capital (102,690,502 shares) 10 10 Equipment 18 10 Reserves -3 -6 18 10 Other contributed cap
Slide 41: Committed focus on improving the cost/income ratio
APPENDIX Committed focus on improving the cost/income ratio Quarterly development 2015-2018 0.59 0.58 0.53 0.52 0.52 0.50 0.50 0.50 0.49 0.49 0.48 0.48 0.45 0.43 0.43 0.41 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 41
Slide 42: Risk Factors
RISK FACTORS Risk Factors 42
Slide 43: Risk factors (1/13)
RISK FACTORS Risk factors (1/13) RISK FACTORS Investing in the Bonds involves inherent risks. A number of risk factors and uncertainties may adversely affect Collector Bank AB (the "Company" or the "Issuer", and together with its parent Collector AB (publ) and its subsidiaries, the "Group" or "Colle
Slide 44: Risk factors (2/13)
RISK FACTORS Risk factors (2/13) Risks related to competitors Collector is subject to significant competition relating to all types of financial products and services that Collector offers on the markets in which Collector operates. Competition may increase in some or all of Collector's markets due
Slide 45: Risk factors (3/13)
RISK FACTORS Risk factors (3/13) Risks related to processing of personal data As part of Collector's daily operations, the Group collects and processes personal data of customers and employees, such as information on private individuals and contact persons of corporate customers. Collector is expose
Slide 46: Risk factors (4/13)
RISK FACTORS Risk factors (4/13) Ability to manage growth Collector has had good growth historically and aims to continue to grow, which entails a number of risks that are to some extent difficult to predict. Growth can entail an increase in both the complexity of the business and the responsibility
Slide 47: Risk factors (5/13)
RISK FACTORS Risk factors (5/13) Real estate credits Collector provides junior and senior property financing to certain professional customers with extensive experience. The loans are usually secured by mortgages issued in commercial property or apartment buildings in urban areas, such as Stockholm,
Slide 48: Risk factors (6/13)
RISK FACTORS Risk factors (6/13) Operational risk Operational risk relates to the risk of losses resulting from errors or inadequacies in internal procedures and processes. In addition to errors in administrative procedures, operational risk also includes human error, erroneous systems, IT technical
Slide 49: Risk factors (7/13)
RISK FACTORS Risk factors (7/13) Model and analysis risk Collector uses statistic automatic models in credit assessments, such as scoring models. If such models contain errors or deficiencies, or if updates or calibrations that are continuously made to such models result in errors that prevent the m
Slide 50: Risk factors (8/13)
RISK FACTORS Risk factors (8/13) Risks related to the state deposit guarantee scheme Collector is a bank, which means that deposits by the general public on accounts held by Collector are covered by the state deposit guarantee scheme. Consequently Collector must fulfil specific requirements related
Slide 51: Risk factors (9/13)
RISK FACTORS Risk factors (9/13) Risks related to partners and suppliers Collector relies to some extent on partners and suppliers to perform information gathering and disclosure in connection with lending. This means that Collector bears the risk in relation to customers and regulatory authorities
Slide 52: Risk factors (10/13)
RISK FACTORS Risk factors (10/13) Risks relating to the Bonds Bondholders are subject to credit risks towards the Issuer Investors in the Bonds carry a credit risk relating to the Issuer. The investors' ability to receive payment under the Bonds is therefore dependent on the Issuer's ability to meet
Slide 53: Risk factors (11/13)
RISK FACTORS Risk factors (11/13) The holders of the Bonds may only accelerate the Bonds upon the liquidation or bankruptcy of the Issuer. No payments will be made to the holders of the Bonds before all amounts due, but unpaid, to all other creditors of the Issuer ranking ahead of the holders of the
Slide 54: Risk factors (12/13)
RISK FACTORS Risk factors (12/13) Bondholders may lose all or some of their investment as a result of any such write-down to the nominal amount or payment obligation. Any such write-down shall not constitute an acceleration event and, following such write-down, the bondholders' claims in respect of
Slide 55: Risk factors (13/13)
RISK FACTORS Risk factors (13/13) Exchange rate risks and exchange controls The Issuer will pay principal and interest on the Bonds in SEK. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (t
Slide 56: Collector
collector
Collector Bank — Debt Investor Presentation (March 2019) on 6ix