Nordax – A Leading Niche Bank in Northern Europe
Q1 REPORT 2017
APRIL 26
88
MSEK
NET PROFIT
(93 MSEK)
14%
LOAN PORTFOLIO
GROWTH
0.80
SEK
EARNINGS PER SHARE
(0.84 SEK)
14.3%
CET 1 RATIO
(14.0% Q4 2016)
2
131
MSEK
ADJUSTED OPERATING
PROFIT (32% increase)
26.5%
ADJUSTED COST/INCOME
RATIO 12 Month rolling
(28.6%)
11%
LOAN PORTFOLIO
GROWTH
(constant currencies)
25%
ADJUSTED RETURN ON
TANGIBLE EQUITY
12 Month rolling
3
SUSTAINABLE
GROWTH
DIGITAL
EVOLUTION
DIVESTING LOW
PERFORMING LOANS
REGULATORY
FRAMEWORK
4
Lending portfolio end of Q1 2017
In total 12.9 bn SEK, end of March 2017
SWEDEN
10%
Growth LCY
NORWAY
9%
Growth LCY
FINLAND
GERMANY
13%
31%
Growth LCY
Growth LCY
5,099
4,134
4,558
4,414
2,011
2,319
597
806
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
2016
2017
2016
2017
2016
2017
2016
2017
5
Nordax´s customers
SWEDEN
30,000
SEK
NORDAX AVERAGE CUSTOMER
MONTHLY INCOME
(National average 27,000)
84%
ARE OVER 40 YEARS
53%
HOMEOWNERS
NORWAY
39,000
NOK
NORDAX AVERAGE CUSTOMER
MONTHLY INCOME
(National average 43,000)
78%
ARE OVER 40 YEARS
76%
HOMEOWNERS
FINLAND
3,900
EUR
NORDAX AVERAGE CUSTOMER
MONTHLY INCOME
(National average 3,300)
92%
ARE OVER 40 YEARS
88%
HOMEOWNERS
GERMANY
3,700
EUR
NORDAX AVERAGE (CO-APPLICANT)
CUSTOMER MONTHLY INCOME
(National average 3,100)
86%
ARE OVER 40 YEARS
40%
HOMEOWNERS
66
Profit growth driven by growth and improved efficiency
ADJUSTED OPERATING PROFIT, MSEK
KEY TAKEAWAYS
Solid development with 32% increase year
over year
510
Seasonally lower results in Q1 - mainly due
to higher loan loss level
Key enablers for performance
- Growing portfolio
- Stable margins
- Stable credit loss level
- Improved efficiency
392
358
275
131
99
2013
2014
2015
123
138
150
131
99
Q1
Q1
2016
2017
2016
2016
2016
2016
2017
Q1
Q1
Q2
Q3
Q4
Q1
7
Solid portfolio growth
NEW LENDING VOLUMES, MSEK
LOAN PORTFOLIO, Bn SEK
12.8
KEY TAKEAWAYS
12.9
Strong portfolio growth of 14% in SEK
and 11% in LCY Y/Y
Annualised growth rate of 7% in LCY Q/Q
10.8
10.0
1 176
1 214
1 166
1 122
1 124
2017
2016
2016
2016
2016
2017
Q1
Q1
Q2
Q3
Q4
Q1
Stable new lending, increasing all markets
except Norway
8.4
2013
2014
2015
2016
8
Continued topline growth
ADJUSTED TOTAL OPERATING INCOME, MSEK
NET INTEREST MARGIN (NIM), %
KEY TAKEAWAYS
Adjusted total operating income up 15%
Y/Y with growing portfolio
1 113
Stable NIM development
943
9.3
9.2
9.1
9.3
9.3
805
668
261
2013
2014
2015
300
Q1
Q1
2016
2017
2016
2016
2016
2016
2017
Q1
Q1
Q2
Q3
Q4
Q1
9
Improved efficiency through digital evolution
KEY TAKEAWAYS
ADJUSTED COST TO INCOME RATIO, %, 12 MONTH ROLLING
Continued investments in digitalisation
that will enable further efficiency improvements and improve customer offering
Scalable platform - operational costs on
same level as last year with 14% higher
loan portfolio
31.0
2013
Adjusted C/I ratio (excluding marketing
costs) improved by 2.1%-points to 26.5%
Y/Y
29.4
2014
28.5
2015
28.6
28.2
27.7
27.3
26.5
2017
2016
2016
2016
2016
2017
Q1
Q1
Q2
Q3
Q4
Q1
27.3
26.5
2016
10
Solid credit risk performance
CREDIT LOSS LEVEL, %
KEY TAKEAWAYS
Credit loss level stable Y/Y and seasonally
higher compared to Q4
Normal variation between segments
Agreement to start selling part of forward
flow to Lindorff from Q3
Credit loss level continues to be placed well
below through the cycle ambition of 2%
1.8
2012
1.4
2013
1.2
2014
1.5
1.4
2015
2016
1.6
1.7
1.4
1.3
1.3
2016
2016
2016
2016
2017
Q1
Q2
Q3
Q4
Q1
11
Sweden - strong development in new lending
NEW LENDING, MSEK
TOTAL LENDING, MSEK
457
404
375
464
4,134
362
KEY TAKEAWAYS
4,419 4,558
4,199 4,272
New lending increased 15% Y/Y
Growth in portfolio 10% Y/Y
Stable margins
Continued low credit loss level
2016
2016
2016
2016
2017
2016
2016
2016
2016
2017
Q1
Q2
Q3
Q4
Q1
Q1
Q2
Q3
Q4
Q1
NET INTEREST MARGIN, %
8.7
8.4
8.7
CREDIT LOSS LEVEL, %
8.8
8.7
1.3
1.1
1.3
1.2
1.5
2016
2016
2016
2016
2017
2016
2016
2016
2016
2017
Q1
Q2
Q3
Q4
Q1
Q1
Q2
Q3
Q4
Q1
12
Norway - lower new lending levels
NEW LENDING, MNOK
489
486
TOTAL LENDING, MNOK
505
KEY TAKEAWAYS
4,852 4,923 4,903
4,504 4,666
441
New lending decreased by 25% in NOK
Growth in portfolio 9% Y/Y
368
Lower new lending in Q1
- elevated risk level in application flow from brokers continues
- tightened underwriting in broker channel
from Q4
- media focus affects behaviour
2016
2016
2016
2016
2017
2016
2016
2016
2016
2017
Q1
Q2
Q3
Q4
Q1
Q1
Q2
Q3
Q4
Q1
NET INTEREST MARGIN, %
9.6
9.5
8.9
Regulatory focus in Q1
- Implementation of debt register
- Marketing regulations
- Increased capital requirements for high growth Norwegian consumer banks
CREDIT LOSS LEVEL, %
9.1
Margins and credit loss levels stable
9.2
1.9
1.3
1.5
2.2
2.0
2016
2016
2016
2016
2017
2016
2016
2016
2016
2017
Q1
Q2
Q3
Q4
Q1
Q1
Q2
Q3
Q4
Q1
13
Finland - solid growth and performance
NEW LENDING, MEUR
TOTAL LENDING, MEUR
21
17
19
17
21
218
221
229
KEY TAKEAWAYS
236
243
Increased new lending 24% Y/Y
Increased portfolio growth 13% Y/Y
NIM stable over time
Continued strong credit performance
2016
2016
2016
2016
2017
2016
2016
2016
2016
2017
Q1
Q2
Q3
Q4
Q1
Q1
Q2
Q3
Q4
Q1
NET INTEREST MARGIN, %
10.7
10.8
10.8
CREDIT LOSS LEVEL, %
11.1
10.7
1.2
1.6
0.9
2016
2016
2016
2016
2017
2016
2016
2016
Q1
Q2
Q3
Q4
Q1
Q1
Q2
Q3
-1.8
2016
Q4
0.7
2017
Q1
14
Germany - increased new lending and stable growth
NEW LENDING, MEUR
TOTAL LENDING, MEUR
KEY TAKEAWAYS
Improved new lending, increase 22% Y/Y
Portfolio growth 31% Y/Y in EUR
9
11
9
10
Stable NIM over time
11
65
71
75
79
84
2016
2016
2016
2016
2017
2016
2016
2016
2016
2017
Q1
Q2
Q3
Q4
Q1
Q1
Q2
Q3
Q4
Q1
4.3
4.1
NET INTEREST MARGIN, %
9.1
8.8
9.1
Stable credit loss levels, still conservative
provision levels compared to other markets
CREDIT LOSS LEVEL, %
9.7
9.2
4.2
3.8
1.7
2016
2016
2016
2016
2017
2016
2016
2016
2016
2017
Q1
Q2
Q3
Q4
Q1
Q1
Q2
Q3
Q4
Q1
15
Solid capital generation improves capital position
CAPITALISATION, %
KEY TAKEAWAYS
Strong capital position with a CET1 of 14.3%,
improvement with 30 bp in Q1
CET1 buffer of 230 bps to capital target
and 500 bps to capital requirements
Dividend policy 40%
16.3
16.0
T2
13.3
13.3
Pillar 2 Buffer 3
Countercyclical Buffer 2
Capital Conservation
Buffer
1.5
Max T2
2.3
Max AT1
1.7
Leverage ratio 10.8%
2.0
LCR 477% and NSFR 128%
1.3
2.5
CET1
Min CET1
Min Capital requirement 1
2.0
T2
14.0
CET1
14.3
9.3
8.0
Required
Buffers &
Buckets
1. Of which minimum 4,5% CET1
2. Nordax requirements
3. Pillar 2 Buffer 65% CET1, 15% AT1, 20% T2
Required
Capital
by type
2016
Capital
Structure
2017 Q1
Capital
Structure
16
Highlights of performance trends
GROWTH IN LENDING AND MARGIN
Loan portfolio, Bn SEK
Net interest margin, %
12.8
12.9
LOW CREDIT LOSS LEVEL, %
OPERATING LEVERAGE
STRONG PROFIT GROWTH
12 month rolling
Adjusted C/I-ratio, %, 12 month rolling
Adjusted operating profit, MSEK
510
10.8
10.0
8.5
8.9
9.3
9.3
392
358
29.4
28.5
27.3
26.5
131
1.2
2014
2015
2016
2017
Q1
2014
1.5
2015
1.4
2016
1.4
2017
Q1
64
2014
2015
2016
2017
Q1
80
99
Q1
Q1
Q1
Q1
2014
2015
2016
2017
Q1
17
Appendix
APRIL 26, 2017
18
Provides large personal
loans and savings to
financially stable individuals
Established in 2003
with a centralized platform
out of Stockholm
Data-driven and
scientific approach
to credit underwriting
and marketing
Target customers
through 20 sourcing
channels in 4 geographies
Highly diversified
funding
19
Focus on direct distributed personal loans
Share of new sales 2016
52%
DIRECT
MARKETING
20%
23%
5%
REPEAT
SALES
BROKERS
ONLINE AND
ADVERTISING
(Direct Mail, Unaddressed DM,
Cooperation Partners)
20
Clear product utility
LARGE LOANS
LONG
RELATIONSHIP
Average loan:
~ SEK 156,000
Typical use:
Consolidation/Consumption
Up to 15 years
pay back time and
all loans are amortizing
annuity loans
AFFORDABLE
FLEXIBLE
Typical monthly payment
~ SEK 2,700
Possible to borrow more
and pay back at any time
without extra costs
20
21
Product Utility
KEY TAKEAWAYS
• The monthly instalment has a
low sensitivity to changes of
the interest rate due to the
long durations.
SENSITIVITY TO INTEREST RATE AND DURATION
Assuming SEK 165,000 loan with annuity amortisation
Interest Rate
Duration
• Reveals clear product utility,
enables affordable loans of
satisfactory size to meet the
customer need
9%
10%
11%
12%
13%
14%
15%
7Y
2,655
2,739
2,825
2,913
3,002
3,092
3,184
8Y
2,417
2,504
2,592
2,682
2,773
2,866
2,961
9Y
2,235
2,323
2,413
2,505
2,599
2,695
2,793
10Y
2,090
2,180
2,273
2,367
2,464
2,562
2,662
11Y
1,974
2,066
2,160
2,257
2,356
2,456
2,559
12Y
1,878
1,972
2,068
2,167
2,268
2,371
2,476
13Y
1,798
1,894
1,992
2,093
2,196
2,302
2,409
Illustrative Nordax loan
22
Resilient Performance Through the Cycle
PROFITABILITY AND CAPITAL GENERATION
Tangible equity, MSEK
HIGH LOSS ABSORPTION CAPACITY, %
KEY TAKEAWAYS
Credit loss level %
Model proved 2008/09
Operating profit, MSEK
Strong capital generation
510*
Resilient model and earnings in distressed
times
Flexible business model with ability to
control origination
392*
358*
2000
P&L
breakeven
275*
1500
195
182
1000
132
Controlled credit loss level due to underwriting.
185**
117
2.2***
87
500
6.2
1.4
50
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*2012-2016 adjusted for one-offs, FX gains/losses and transaction intangibles amortisation
**Decrease in in 2012 due to change in legal entity
2016
Cyclical
peak
Breakeven
***Excluding Denmark. With Denmark 3.6%
23
Diversified Funding
SIMPLIFIED BALANCE SHEET 16.3Bn SEK
DEPOSIT MIX
STRENGTHS
Diversified
Liquidity Reserve
47%
Deposits
Scalable
EUR
23%
SEK
45%
Bank WH
Loan Portfolio
40%
NOK
32%
ABS & Bonds
Tier 2 bonds
Well-matched ALM
(currency, duration, interest rate risk)
Strong liquidity position
Equity
ASSETS LIABILITIES
STRONG FUNDING AND LIQUIDITY POSITION
GROUP CAPITALISATION, %
On-balance sheet ABS
16.0
16.3
12.6
CET1
ratio
14.0
CET1
ratio
14.3
CET1
ratio
2015
2016
2017
14.6
Bank warehouse facilities
Senior unsecured bonds
Retail deposits
SEK
NOK
EUR
Q1
24
Solid balance sheet
BALANCE SHEET
Other assets1
Bonds
Lending
to credit institutions
KEY TAKEAWAYS
Match duration of assets and liabilities to
mitigate liquidity risk.
61
1,711
Diversified funding key.
1,306
7,782
Deposits from customers
161
Lending
to the general public
12,902
2,709
3,184
247
1,897
ASSETS
Other liabilities2
Issued securities
Liabilities
to credit institutions
Subordinated debt
Tangible equity
LIABILITIES
1
Other assets includes 8 MSEK tangible assets, 24 MSEK prepaid expenses and
accrued income and 29 MSEK other assets
2
Other liabilities includes 32 MSEK current tax liability, 30 MSEK deferred tax liability, 76 MSEK accrued expenses and deferred income and 23 MSEK other liabilities
25
Low and Stable Cost of Risk
Model Tested Through the Crisis
%, CoR (1)
5
3.6
4
3
2.2
2
1
0
2006
2007
CoR
2008
2009
2010
2011
2012
2013
2014
Continuing CoR (i.e. excluding Denmark)
1. Defined as loan losses to average loans
26
Ownership structure
AS OF MARCH 31
1. Carnegie funds
9.8% of the capital
2. SEB Investment management 9.4%
9.1%
3. Swedbank Robur funds
4. Lannebo funds
6.9%
5. Handelsbanken funds
5.6%
6. JP Morgan Asset Management 5.5%
7. Öresund
5.3%
3.3%
8. Allianz Global Investors
9. Vanguard
3.0%
10. Morten Falch
2.4%
Foreign owners:
Swedish owners:
Management, Founders and Board members
own more than 10% together.
Source: Source: Holdings of Modular Finance AB.
Data compiled from Euroclear, Morningstar and the
Swedish Financial Supervisory Authority, among others.
28.1%
71.9%
27
27
Board of Directors
ARNE BERNROTH
SYNNÖVE TRYGG
MORTEN FALCH
CHRISTIAN BECK
Non-executive chairman
Appointed in 2010/2015
Non-executive board member
Appointed in 2015
Executive board member
Appointed in 2004
Non-executive board member
Appointed in 2003
Previous experience:
Senior management positions
in Nordea and Skandia
Previous experience:
CEO at SEB Kort
Previous experience:
Co-founder of Nordax,
senior management positions in
GE Capital and Citigroup
Previous experience:
Multiple board assignments including
Chairman Espresso House
and Banqsoft AS
KATARINA BONDE
JENNY ROSBERG
ANDREW RICH
Non-executive board member
Appointed in 2015
Non-executive board member
Appointed in 2016
Non-executive board member
Appointed in 2010
Previous experience:
Senior management positions in
the IT-industry. Multiple board assignments
Previous experience:
Senior management positions in Nasdaq,
Kreab Gavin Anderson, Erik Penser
Bankaktiebolag and Skandia
Previous experience:
Multiple board
assignments
28
Financial Targets
RETURN
DIVIDEND
CAPITAL
Maintaining a sustainable return
on average net loans through the
cycle, on a 12-month rolling basis,
of above 3 per cent
Maintaining a pay-out ratio of
approximately 40 per cent of
profit after tax for the year.
Maintaining a CET 1 capital
ratio above 12 per cent and a total
capital ratio above 14 per cent
under the current capital
requirements.
The dividend target is based
on current regulatory capital
requirements, and any future
changes regarding regulatory
capital requirements could affect
Nordax’s dividend target
Nordax targets maintaining a
buffer of at least 1.5 percentage
points above its CET 1 capital ratio and total capital ratio requirements
29
Nordax evolution
CREATION
OF
NORDAX
2003
2004
INITIAL
GROWTH
PHASE
2005
2006
PROTECTING
VALUE
2007
Management
and Palamon
2008
Focus on
collection
SUSTAINED
GROWTH AND
EXPANSION
RESTART
2009
2010
Restart
lending
2011
2012
2013
Vision
Capital
Hei
Hej
Moi
Farvel
Hallo
Sweden
Norway
Denmark
Finland
Denmark
Germany
Deposit
platform
2014
Bank
licence
Hej
Warehouse facilities and
ABS funding program
SHAREHOLDER
VALUE
Senior unsecured
bond programe
2015
Listed on
Nasdaq
2016
Global
Compact
30
Income statement
GROUP
Q1
Q4
Q1
Note
2017
2016
2016
Interest income
7
362
361
323
Interest expense
7
-64
-65
-64
298
296
259
All amounts in MSEK
Operating income
Total net interest income
Commission income
7
4
4
4
Net profit from financial transactions
7
-16
-6
17
Other operating income
0
0
0
Total operating income
286
294
280
-73
Operating expenses
General administrative expenses
7
-73
-78
Depreciation, amortisation and impairment of property, plant and equipment and intangible assets
7
-6
-6
-6
Other operating expenses
7
-38
-30
-41
-
-
4
Total operating expenses
Non-recurring items
-117
-114
-116
Profit before credit losses
169
180
164
Net credit losses
7, 8
-55
-40
-45
Operating profit
114
140
119
Tax on profit for the period
-26
-30
-26
88
110
93
88
110
93
-
-
-
NET PROFIT FOR THE PERIOD/COMPREHENSIVE INCOME
2, 7
Attributable to:
The Parent Company's shareholders
Non-controlling interest
Earnings per share, SEK
0,80
0,99
0,84
Diluted earnings per share, SEK
0,80
0,99
0,84
110,802,265
110,845,598
110,945,598
Average number of shares
31
Bridge statutory to adjusted accounts
BRIDGE STATUTORY TO ADJUSTED ACCOUNTS
All amounts in MSEK
Total operating income statutory accounts
Foreign exchange gain/loss
Adjusted total operating income
Total operating expenses statutory accounts
Non-recurring items
Amortization of acquired intangible assets
Q1
Q4
Q1
2017
286
2016
294
2016
280
14
7
-19
300
301
261
117
114
116
0
0
4
-3
-3
-3
Adjusted total operating expenses
114
111
117
Marketing expenses
-37
-28
-41
77
83
76
Net credit losses (as reported)
-55
-40
-45
Operating profit statutory accounts
114
140
119
0
0
-4
14
7
-19
Adjusted total operating expenses excluding marketing costs
Non-recurring items
Foreign exchange gain/loss
Amortization of acquired intangible assets
Adjusted operating profit
3
3
3
131
150
99
Tangible equity
1,897
1,815
1,510
Shareholders’ equity
2,201
2,120
1,826
Intangible assets
-304
-305
-316
24.7%
24.6%
22.9%
Adjusted return on tangible equity (last 12 months)
32
Disclaimer
DISCLAIMER
The information contained in this presentation (the “Information”) contains forward-looking statements. All statements other than statements of historical fact
included in the Information are forward-looking statements. Forward-looking statements give Nordax Group AB (publ)’s (the “Company”) current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,”
“estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such
forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could cause the
Company’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future
business strategies and the environment in which it will operate in the future.
The Information, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future results. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to the Information, including
any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change
in the Company’s expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or
circumstances arising after the date of this document.
Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy any
securities or otherwise to engage in any investment activity.
33