Avarda Bank AB · OMXSTO:AVARDA
Avarda Bank AB — TF Bank — Q1 2023 Earnings Presentation
23 slides from Avarda Bank AB's earnings presentation, 2023
Slide 1: 1st Quarter 2023 Result Presentation
1st Quarter 2023 RESULT PRESENTATION
Slide 2: Highlights January – March 2023
HIGHLIGHTS JANUARY – MARCH 2023 • Loan portfolio increased by 5%* in the quarter - Loan book growth in Credit Cards came in at a healthy 16% • Operating profit 118 MSEK, +14% vs Q1-2022 - Increase in operating profit for the Credit Cards segment • Issued Tier 2 bonds in the amount of SEK 150 million
Slide 3: Consumer Lending
CONSUMER LENDING Share of TF Bank's loan book Share of TF Bank's operating income • Increase in back book APR, in line or above increase in funding cost • The recent quarter saw some de-risking 58% 50% activity, especially in the Baltics, leading to a slightly lower APR in the front book • Diversifi
Slide 4: Credit Cards
CREDIT CARDS • Record volumes during the first quarter Share of TF Bank's loan book Share of TF Bank’s operating income • Seasonally Q1 is weak in terms of card usage although March came in strong 25% 30% • Active customers and net assets grew to 160,000 (141,000) and 3,781 MSEK (3,264) during the q
Slide 5: Ecommerce Solutions
ECOMMERCE SOLUTIONS • First full quarter with the Jollyroom cooperation Share of TF Bank's loan book Share of TF Bank’s operating income - Expected transaction volume of more than SEK 2 billion • Repricing to compensate for higher funding 17% 20% costs is ongoing • Although many sectors in retail se
Slide 6: Loan Book Growth
LOAN BOOK GROWTH 33% 4% 16 000 15 000 • TF Bank: Growth in Q1 = 4% (5%*) 14 000 13 000 - Year-on-year 33% (28%*) 12 000 11 000 • Consumer Lending: Q1 = 2% (4%*) SEK million 10 000 9 000 - Year-on-year 18% (16%*) 8 000 • Credit Cards: Q1 = 16% (16%*) 7 000 6 000 5 000 4 000 - Year-on-year 99% 3 000 2
Slide 7: Growth and Diversification
GROWTH AND DIVERSIFICATION Sweden ▪ Focus on profitability and e-commerce. Norway ▪ Continued positive long term outlook on the Norwegian economy. Focus on growth and margins. The credit card business keeps growing in importance. Finland Loan book ▪ High competition in consumer lending. Low risk loa
Slide 8: Stabilised Risk-Adjusted Margin
STABILISED RISK-ADJUSTED MARGIN 500 25,0% 450 444 • Operating income 397 400 20,0% ‒ Funding costs transferred to customers 359 350 319 338 ‒ Higher operating income margin 300 15,0% • Net loan losses SEK million 250 ‒ Inflation a challenge for households 8,6% 8,5% 200 8,2% 7,9% 8,1% 10,0% ‒ Higher
Slide 9: Opex – Cost/Income Ratio by Segment
OPEX – COST/INCOME RATIO BY SEGMENT 100% • Expenses Q1-23 vs. Q1-22, +35% 90% 80% ‒ More employees and sales related costs 70% 68% 66% ‒ Higher marketing costs for Credit Cards 61% 61% 60% 58% ‒ Cost/income ratio 42% 50% 50% • 54% 53% 43% 44% Cost/income ratio per segment in Q1-23 40% 43% 44% 44% 42
Slide 10: Increased Profit Quarter-by-Quarter
INCREASED PROFIT QUARTER-BY-QUARTER Operating profit 14% • Operating profit Q1-23 vs. Q1-22, +14% 125 118 110 114 ‒ Driven by segment Credit Cards 107 103 100 ‒ Earnings per share, 4.07 SEK • High profitability in challenging environment SEK million 75 ‒ Return on equity, 22% 50 ‒ Return on assets,
Slide 11: Consumer Lending: Higher Margin & Losses
CONSUMER LENDING: HIGHER MARGIN & LOSSES Operating profit 90 86 86 88 • Operating profit Q1-23 vs. Q1-22, +1% 82 83 80 ‒ Funding costs transferred to customers 70 ‒ Higher net loan loss ratio 60 • Slightly lower profitability in Q1-23 SEK million 50 ‒ Return on assets, 2.9% 40 ‒ Strong volumes in Ma
Slide 12: Credit Cards: Growing Operating Profit
CREDIT CARDS: GROWING OPERATING PROFIT Operating profit 24 24 • Operating profit Q1-23, 24 MSEK 22 21 ‒ Profit turnaround in 2022 18 ‒ Growing operating income 15 ‒ Higher marketing costs SEK million 12 10 • Positive trend for profitability 9 ‒ Lower cost/income ratio 6 ‒ Return on assets, 2.1% 3 4
Slide 13: Ecommerce Solutions: Seasonal Effects
ECOMMERCE SOLUTIONS: SEASONAL EFFECTS Operating profit 30 25 • Operating profit Q1-23, 11 MSEK 20 18 ‒ Higher interest expenses SEK million 17 15 14 ‒ Investments for growth 10 11 • Lower profitability ‒ Return on assets, 1.2% 5 4 0 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 TF Bank 13
Slide 14: Funding and Liquidity
FUNDING AND LIQUIDITY Deposits from the public 16 000 16,061 • Retail deposits in 4 markets 15 000 ‒ Germany (SEK 13.6 billion) 14 000 13 000 ‒ Norway (SEK 2.0 billion) 12 000 ‒ Sweden (SEK 0.3 billion) 11 000 10 000 ‒ Finland (SEK 0.2 billion) SEK million Germany 9 000 8 000 ‒ Fixed-term deposits:
Slide 15: Capital Situation
CAPITAL SITUATION 16.7% T1+T2 16,7% • Stable CET1 and T1 ratio in Q1- 13.9% Headroom 4,2% 2023 T1 13,9% 12.3% Headroom 3,7% T1+T2 12,5% • Successful issue of T2 Headroom 3,8% T1 10,2% T1 10,2% instruments, 150 MSEK CET1 12,3% • Higher countercyclical buffer requirements CET1 8,5% CET1 8,5% CET1 8,5%
Slide 16: Looking Ahead
LOOKING AHEAD • Ambition to continue grow faster than the market in 2023 • Strong performance in credit cards with record number of issued cards gives further evidence for continued strong growth • With rate hikes at a slower pace the repricing of the back book has caught up with increasing funding
Slide 17: Q&A Session
Q&A Session 17
Slide 18: Appendix
Appendix 18
Slide 19: Corporate Profile
CORPORATE PROFILE Our Products Our Geographical footprint Operating with modern and scalable We serve customers in the Nordics, Germany, infrastructure offering our retail customers Austria, Spain, the Baltics and Poland. online consumer loans, deposits and credit cards. For retailers we offer leadi
Slide 20: Long Track Record of Profitable Growth
LONG TRACK RECORD OF PROFITABLE GROWTH Long experience and proven Strong track record on growth business model and profitability • 30 years+ experience from Loan portfolio 16 000 1 600 consumer finance industry 14 000 1 400 • Highly profitable core markets with 12 000 1 200 SEK million 10 000 1 000
Slide 21: Board of Directors
Board of Directors John Brehmer Mari Thjømøe Sara Mindus Chairman of the Board since Board member since 2017 Board member since 2020 2020 Current commitments: Current commitments: Board member since 2010 Chairman: Seilsport Maritimt Forlag AS, Board member: K-Fast Holding AB, ThjømøeKranenAS Besqab
Slide 22: Executive management team
Executive management team Mattias Carlsson Mikael Meomuttel CEO CFO, Deputy CEO and Head of Investor Relations Education: MSc, Engineering Physics, Uppsala University. Education: MSc, Business/Economics and Finance, University of Borås/University of Gothenburg. At TF Bank since 2008 as CEO until 201
Slide 23: Contact
Contact Investor relations Mikael Meomuttel +46 706 26 95 33 ir@tfbank.se www.tfbankgroup.com 23