Avarda Bank AB · OMXSTO:AVARDA

Avarda Bank AB — TF Bank — Q2 2018 Earnings Presentation

26 slides from Avarda Bank AB's earnings presentation, June 2018

  1. Slide 1: 2nd Quarter 2018 Result Presentation

    2nd Quarter 2018 RESULT PRESENTATION

  2. Slide 2: Corporate Profile

    CORPORATE PROFILE Our Products Our Geographical footprint Operating with modern and scalable We serve customers in the Nordics and around infrastructure offering our retail customers the Baltic sea online consumer loans, deposits and credit cards. For retailers we offer leading ecommerce and brick-a

  3. Slide 3: January – June 2018 in Summary

    JANUARY – JUNE 2018 IN SUMMARY  Continued organic loan book growth LOAN BOOK +23 % GROWTH SEK 3,876 million OPERATING  Strong operating profit growth PROFIT +12 % GROWTH SEK 102 million  Cost efficiency C/I RATIO 40 %  Capital position TOTAL CAPITAL 17.2 % RATIO 30 Jun 2018 3

  4. Slide 4: Worth Noting January – June 2018

    WORTH NOTING JANUARY – JUNE 2018  In January, the subsidiary Avarda launched a payment solution in Finland, together with several major partners  The Board has appointed Mattias Carlsson as the new CEO of TF Bank. Mattias Carlsson has worked for the bank for almost 10 years and has been the acting

  5. Slide 5: Long Track Record of Profitable Growth

    LONG TRACK RECORD OF PROFITABLE GROWTH Long experience and proven Strong track record on growth and business model profitability  30 years experience from consumer 3,500 600 finance industry 3,000 500 2,500  Highly profitable core markets with 400 SEK million 2,000 proven model for geographical 30

  6. Slide 6: Consumer Lending Diversified Granulated Portfolio

    CONSUMER LENDING DIVERSIFIED GRANULATED PORTFOLIO Product overview and use of proceeds Loan sizes (average) and customer profile  80 % of the loan portfolio  Unsecured consumer loans Low-to-middle income  Marketed trough internal channels and external partners SEK 95,000 Employed  Tenor of loans

  7. Slide 7: Ecommerce Solutions Drives New Lending and Builds Database

    ECOMMERCE SOLUTIONS DRIVES NEW LENDING AND BUILDS DATABASE Product overview Key financials  Full check-out solution (Checkout+) offered Share of the Amount outstanding as one-stop-shop in Finland and Sweden Group’s loan portfolio SEK 807 million with all major payment methods (30 Jun 2018)  Strong

  8. Slide 8: Strong Loan Book Growth

    STRONG LOAN BOOK GROWTH TF Bank Group Consumer Lending 4,000 +33.6 % 4,500 3,068 2,805 3,000 2,561 SEK million +36.7 % 2,296 2,392 4,000 3,876 2,000 3,519 3,500 1,000 3,156 2,950 0 3,000 2,836 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 SEK million Ecommerce Solutions 2,500 2,000 +49.4 % 1,000 807 1,500 800 714 S

  9. Slide 9: Growth and Diversification According to Plan

    GROWTH AND DIVERSIFICATION ACCORDING TO PLAN Norway Loan book SEK 1,238m (31 %) Change H1’18: +38 % Finland Strong growth Loan book SEK 1,070m (28 %) Change H1’18: +17 % Profitability and steady growth Sweden Loan book SEK 609m (16 %) Change H1’18: -3 % Focus on profitability Baltics Loan book SEK 6

  10. Slide 10: Norway 2018

    NORWAY 2018 Development Strong momentum continues  Excellent credit quality 1,200 1,125 1,013 1,000 900 New guidelines on unsecured lending has 774  NOK million 800 672 improved the relative attractiveness of 600 400 BB Bank to new and old customers 200  Largest market in the Groups business 0 Q2

  11. Slide 11: Growth Markets Poland and the Baltics 2018

    GROWTH MARKETS POLAND AND THE BALTICS 2018 Poland Baltics 140 133 70 125 119 58 120 111 60 101 47 100 50 EUR million 41 PLN million 80 40 34 29 60 30 40 20 20 10 0 0 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18  Strong sales in Ecommerce Solutions  Started Lithuanian operations with

  12. Slide 12: Core Markets Finland and Sweden 2018

    CORE MARKETS FINLAND AND SWEDEN 2018 Finland Sweden 120 700 662 644 103 626 603 609 94 98 100 92 92 600 80 500 EUR million SEK million 400 60 300 40 200 20 100 0 0 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18  Strong sales in ecommerce  Fierce competition and price pressure  Switch

  13. Slide 13: Significant Increase in Operating Income

    SIGNIFICANT INCREASE IN OPERATING INCOME Operating income Operating income margin 180 Operating income margin  Operating income Q2 2018 vs. Q2 2017 +19 % 20% 18.8% 18.4% 17.9% 17.6% 160 153 18% 17.2% 141 ‒ Quarter-to-quarter increase: 140 128 130 134 16% 14.2% + SEK 12m 13.8% ‒ Momentum in Norway,

  14. Slide 14: Operating Expenses in Line with Plan

    OPERATING EXPENSES IN LINE WITH PLAN Operating expenses Cost/income ratio 70  Operating expenses Q2 45% 61 40.3% 40.1% 2018 vs. Q2 2017 +29 % 60 40% 57 37.2% 35.2% 36.9% ‒ Average number of 48 49 35% employees 135 (106) 50 46 30% ‒ Investments in IT (Avarda) ‒ Credit volume increased SEK million 40

  15. Slide 15: Stable Net Loan Loss Ratio

    STABLE NET LOAN LOSS RATIO Net loan losses Net loan loss ratio 40 38 5%  Clean balance sheet policy 4.6% 4.6% 36 4.5% 4.5% 35 34 5% 4.3% ‒ NPLs are generally sold on forward 33 32 4% flow basis after approx. 72 days 30 4%  Net loan losses Q2 2018 vs. 25 3% Q2 2017 +17 % SEK million 20 3% ‒ Loan bo

  16. Slide 16: Continued Growth for Operating Profit

    CONTINUED GROWTH FOR OPERATING PROFIT Operating profit Operating income 153 141 140 134 128 130 120  Operating profit Q2 2018 vs. Q2 2017 +11 % 100 ‒ Main driver: Loan book growth SEK million 80  Bridge between operating profit and EPS 60 52 53 ‒ Operating profit +11 % 48 50 49 ‒ Minority interest

  17. Slide 17: KPIs per Segment – Q2 2018

    KPIs PER SEGMENT – Q2 2018 Operating profit Risk-adjusted margin 1) Operating expenses 60 20% + 53 C/I: 40 % +3 + 50 50 70 16% 61 13.4% 60 C/I: 33 % 12.7% 12.9% 40 12% 50 SEK million 39 SEK million 30 40 C/I: 65 % 8% 30 20 22 20 4% 10 10 0 0% 0 Consumer Ecommerce Total Group Consumer Ecommerce Total

  18. Slide 18: Further Diversification of Deposits and Strong Liquidity Position

    FURTHER DIVERSIFICATION OF DEPOSITS AND STRONG LIQUIDITY POSITION Assets and liabilities 122 23 Other assets 112  Cost-efficient funding from diversified retail deposits Shares 5,000 Other liabilities Liquidity 1,050 Loans to credit institutions 987 reserve Deposits Germany ‒ Sweden (SEK 1.6 billio

  19. Slide 19: Capital Ratios Strengthened by AT1 Issue in Q2 2018

    CAPITAL RATIOS STRENGTHENED BY AT1 ISSUE IN Q2 2018 Capital ratios  Capital ratios 30 June (31 March) ‒ CET1 capital ratio: 12.2 % (12.5 %) +4.5% -1.0% -2.5% ‒ T1 capital ratio: 14.7 % (12.5 %) 17.2% ‒ Total capital ratio: 17.2 % (15.1 %) 16.2% 3.0% 2.5% T2  Headroom to legal requirements (incl. P

  20. Slide 20: Outcome Financial Targets 6M 2018

    OUTCOME FINANCIAL TARGETS 6M 2018 Over the medium-term, the Company aims to achieve Growth 9% an EPS growth of at least 20 percent Over the medium-term, the Company aims to achieve Efficiency 40.2 % a cost-to-income ratio of below 35 percent The Company aims to maintain a total capital ratio of Capi

  21. Slide 21: Looking Ahead into H2 2018

    LOOKING AHEAD INTO H2 2018  Continued expansion in ecommerce solutions in Finland; Sweden and Norway next  Leverage on the platform in consumer lending  Lithuania launch  Continued strong competition especially in the Nordics  Gradually improving financial performance in ecommerce segment as in

  22. Slide 22: Q&A Session

    Q&A Session 22

  23. Slide 23: Board of Directors

    Board of Directors Mari Thjømøe Charlotta Björnberg- Tone Bjørnov Chairman of the Board Paul Board member since since 2018 Board member since 2015 Board member since 2017 2017 John Brehmer Bertil Larsson Mattias Carlsson Board member since Board member since Board member since 2010 2007 2008 23

  24. Slide 24: Executive Management Team

    EXECUTIVE MANAGEMENT TEAM Mattias Carlsson Mikael Meomuttel CEO CFO, Deputy CEO and Head of Investor Education: MEng., engineering physics, Uppsala University. Relations Current commitments: BB Bank ASA (board member), Avarda Education: MSc, Business/Economics and Finance, University AB (board membe

  25. Slide 25: Head of countries and functions

    Head of countries and functions 1)  Vilma Sool Regional manager Juho Maanpää Head of Finland Juris Pūce Head of Latvia Björn Skytt CIO Baltics Extensive consumer Before joining TF Bank Before joining TF Bank Head of Estonia finance experience in in 2016, worked for in 2010 worked as 10 years of exp

  26. Slide 26: Contact

    Contact Investor relations Mikael Meomuttel +46 706 26 95 33 [email protected] www.tfbankgroup.com 26

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