Morrow Bank AB · OMXSTO:MORROW
Morrow Bank AB — Komplett Bank — Q2 2020 Earnings Presentation
28 slides from Morrow Bank AB's earnings presentation, Aug 13, 2020
Slide 1: Second quarter 2020
@ KOMPLETT’bank Second quarter 2020
Slide 2: Disclaimer
Disclaimer This Presentation has been produced by Komplett sometimes identified by the words “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”, “proje
Slide 3: Today's presenters
Today’s presenters CEO Jan Haglund CFO Henning Fagerbakke 3
Slide 4: 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 5: Highlights of the quarter
Highlights of the quarter Q2 2020 Growth NOK MILLION GROWTH Q/Q GROWTH Y/Y • Reduced new lending during quarter to mitigate risks related to Covid-19 Net loans 8,403 -4.7% 3.9% • Net loans decrease of NOK 418 million, NOK -278 million adjusted for FX effects Total income 286 -1.5% -3.0% Loan Losses
Slide 6: Continued improvement of credit quality in Q2
Continued improvement of credit quality in Q2 Consumer Loans Norway Consumer Loans Finland Consumer Loans Sweden • Improvement in default levels in Q2 • Stable default levels in Q2 compared to • Improvement in default levels in Q2 compared to previous quarter previous quarter compared to previous qu
Slide 7: 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 NOK million margin based on a strong customer 14% 12.5 % 12.3 % 11.9 % 11.9 % 11.6 % 250 12% 203 value pr
Slide 8: Second Quarter 2020 Financial review
Second Quarter 2020 Financial review 8
Slide 9: Net loans decreased in the quarter due to prudent approach to risk and FX
Net loans decreased in the quarter due to prudent approach to risk and FX Growth in net loans (NOK million) Net loan growth distribution (NOK million) 886 356 20Q1 20Q12 98 655 27 -22 -32 -12 -22 453 389 -124 -162 326 -200 271 Loans Norway Loans Finland Loans Sweden Credit cards Point-of-sales 187 f
Slide 10: Stable income and customer base
Stable income and customer base Total income (NOK million) Number of customers (thousands) -3% 278 277 269 303 296 295 295 291 247 27 30 283 286 23 270 230 24 214 245 209 20 13 14 220 179 119 115 119 12 95 153 84 75 77 129 11 50 9 29 13 52 53 55 56 57 48 50 51 47 48 2 3 4 5 6 7 7 1 7 1 14 17 19 20 2
Slide 11: Increase in operational expenses due to risk improvement projects
Increase in operational expenses due to risk improvement projects Operational expenses (NOK million) and cost ratios* (%) 140 70% • OPEX NOK 100 million in Q2 2020 compared to NOK 97 million in Q1 2020 120 60% ‐ Admin costs impacted by non-recurring effects AML admin fee ‐ Primarily driven by increa
Slide 12: Stable loan losses
Stable loan losses Past due at end of quarter Quarterly loan loss ratio (LLR)** (%) 25% 70% 60% 20% 50% 5.6 % 15% 40% 4.7 % 4.0 % 3.9 % 3.8 % 3.8 % 3.8 % 30% 3.7 % 10% 3.3 % 2.9 % 20% 5% 10% 0% 0% 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 Pas
Slide 13: Improved credit risk performance during the quarter
Improved credit risk performance during the quarter Break-down of Q2 2020 losses on loans • Decrease in stage 1 provisions due to reduction in new lending • Decrease in stage 2 provisions due to better performance as less customers are overdue • Stage 3 + Other on same level as in previous quarters
Slide 14: Increase in profit after tax
Increase in profit after tax Profit after tax (NOK million) Annualised ROE* (%) 25.9 % 25.4 % 97 97 88 21.4 % 83 20.9 % 79 80 75 76 77 18.8 % 18.5 % 18.1 % 18.1 % 18 63 38 16.1 % 13.6 % 61 78 46 -15 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 A
Slide 15: Solid capital position
Solid capital position Regulatory capital structure (%) 25.3% 0.7% • CET1 ratio increased to 21.8% (20.9%) in Q2 2020 and well above 18.0% target 21.5% 2.8% 20.5% which includes a 1.0%-point management buffer 2.0% 2.0% • Strong total capital ratio of 25.3% (22.1%) 1.5% 1.5% 1.0 % • AT1 issue of NOK
Slide 16: Outlook and summary
Outlook and summary 16
Slide 17: A solid and diversified platform for value creation
A solid and diversified platform for value creation Komplett Bank’s diversified product footprint Geographic split of net loans (NOK) Point-of- Consumer Credit Deposit sales loans cards accounts finance Q1 Q4 Q3 Q1 2014 2015 2017 2014 Norway 4.5bn Q1 Q2 (53%) Finland TBD TBD 2017 2019 2.6bn (31%) Q1
Slide 18: Our strategic priorities remain
Our strategic priorities remain Strategic priorities Focus areas • Continue to improve customer acquisition processes Reduce credit losses • Strengthen risk strategy, policy rules and scorecards • Enhance invoicing and collection processes, and bill payment functionality • Continue to improve data a
Slide 19: 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 20: Q&A
Q&A
Slide 21: Appendix
APPENDIX 21
Slide 22: A Nordic specialised consumer finance company
A Nordic specialised consumer finance company • Offering flexible consumer financing solutions to customers across the Nordics • ~280,000 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 Q2 2020 +4% growth 9,000 Tusener 8,000 7,000 Loans Norway 6% 6,000 9% Loans Finland 5,000 41% 14% Loans Sweden 4,000 Credit cards 3,000 Point-of-sales 2,000 31% finance 1,000 0 18Q1 18Q2 1
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 18.3 % • Positive trend due to increased diversification (NOK, 15% 14.6
Slide 25: Profit and loss
Profit and loss Q2 2020 Q2 2019 2019 Amounts in NOK million Net interest margin* (%) Interest income 317.1 316.7 1,282.5 12.7 % 12.5 % 12.5 % 12.3 % Interest expenses -37.9 -41.7 -167.2 12.0 % 11.9 % 11.7 % 11.7 % 11.7 % 11.6 % Net interest income 279.2 275.0 1,115.3 Income commissions and fees 36.7
Slide 26: Balance sheet
Balance sheet Amounts in NOK million 30.06.2020 30.06.2019 31.12.2019 Liquidity and funding Assets 800% Loans and deposits with credit institutions 1,292.1 1,313.5 614.7 Net loans to customers 8,403.2 8,090.4 8,495.8 600% Certificates and bonds 1,498.2 1,150.8 1,329.8 Other intangible assets 151.9 1
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 B
Slide 28: Komplett Bank
@ KOMPLETT’ bank 28