Avarda Bank AB · OMXSTO:AVARDA
Avarda Bank AB — TF Bank — Q4 2023 Earnings Presentation
24 slides from Avarda Bank AB's earnings presentation, February 2024
Slide 1: 4th Quarter 2023 Result Presentation
4th Quarter 2023 RESULT PRESENTATION
Slide 2: Highlights October – December 2023
HIGHLIGHTS OCTOBER – DECEMBER 2023 • Controlled growth during the quarter Operating profit - 6% in local currencies 139 114 • Operating profit 139 MSEK, +21% vs Q4-2022 - Credit Cards and Ecommerce Solutions segment drives EPS Q4'22 Q4'23 • Further development of our customer processes with new digi
Slide 3: Different Business Mix
DIFFERENT BUSINESS MIX Portfolio composition Geographical mix Ticket size 13 6 152 4 3 countries countries countries countries 100% 4 100 13 7 2 17 80% 36 80 40 32 60% 60 68 98 100 100 87 89 40% 40 64 60 51 31 20% 20 16 0% 0 TF Bank Peer 1 Peer 2 Peer 3 TF Bank Peer 1 Peer 2 Peer 3 TF Bank Peer 1 Pe
Slide 4: Loan Book Growth
LOAN BOOK GROWTH 20 000 22% 3% • TF Bank: Growth in Q4 = 3% (6%*) 16 000 - Year-on-year 22% (24%*) • Consumer Lending: Q4 = -3% (0%*) SEK million 12 000 - Year-on-year 4% (7%*) 8 000 • Credit Cards: Q4 = 10% (14%*) - Year-on-year 78% (80%*) 4 000 • Ecommerce Solutions: Q4 = 8% (10%*) 0 - Year-on-yea
Slide 5: Growth and Diversification
GROWTH AND DIVERSIFICATION Market update Loan book split by market Germany and Austria ▪ Credit card product in high demand. Competitive CAC*. Preparing for launching digital payment solutions in Germany. New markets Sweden Norway ▪ Focus on margins in Consumer Lending. The credit card business keep
Slide 6: Consumer Lending
CONSUMER LENDING Highlights • Slow-down in sales and focus on protecting Share of TF Bank's loan book Share of TF Bank's operating income margins when our funding costs increase • Stable margins in several markets 51% 44% • Macro affecting in credit quality, especially in the Nordics Segment descrip
Slide 7: Credit Cards
CREDIT CARDS Highlights • Another quarter with record volumes in all three markets Share of TF Bank's loan book Share of TF Bank’s operating income • Record growth of active customers during the fourth quarter • Continued scalability in the business model 32% 35% • Improved customer onboarding proce
Slide 8: Ecommerce Solutions
ECOMMERCE SOLUTIONS Highlights Share of TF Bank’s operating income Share of TF Bank's loan book • Transaction volumes during Black Week and Christmas shopping were at record levels • Repricing to compensate for higher funding costs protect 17% 21% operating margins • Fast-growing and improved profit
Slide 9: Stable Risk-Adjusted Margin
STABLE RISK-ADJUSTED MARGIN 800 25,0% 700 545 529 20,0% • Risk-adjusted income* 600 479 444 ‒ Stable risk-adjusted margin 500 397 15,0% • Operating income** SEK Million 400 ‒ Credit Cards the main driver 300 8,0% 8,1% 8,0% 8,3% 8,1% 10,0% ‒ Higher margin in the Credit Cards and Ecommerce Solutions s
Slide 10: Opex – Cost/Income Ratio by Segment
OPEX – COST/INCOME RATIO BY SEGMENT 100% 90% • Expenses Q4-23 vs. Q4-22, +32% 80% ‒ Sales-related costs due to record volumes 70% ‒ Expanding our team to cope with larger business 68% volumes 60% 66% 62% 62% 61% 50% 42% 42% 41% 43% 40% 40% 43% 44% 41% 37% 37% • Cost/income ratio per segment in Q4-23
Slide 11: Increased Profit Quarter-by-Quarter
INCREASED PROFIT QUARTER-BY-QUARTER Operating profit 21% • Operating profit Q4-23 vs. Q4-22, +21% 139 130 ‒ Growing operating income 122 118 114 ‒ EPS driven by the Credit Cards and Ecommerce Solutions segment • Stable profitability in Q4-2023 SEK million ‒ Return on equity, 22% ‒ Earnings per share
Slide 12: Consumer Lending: Focus on Margins
CONSUMER LENDING: FOCUS ON MARGINS 89 90 83 80 76 • Operating profit Q4-23 vs. Q4-22, -14% ‒ Growing operating income ‒ Decrease in income margin due to lag in funding costs SEK million ‒ Increase in net loan losses • Reduced new lending in Q4 2023 3,1% 3,0% 2,8% 3,1% 2,3% ‒ Focus on improving margi
Slide 13: Credit Cards: Higher Operating Profit
CREDIT CARDS: HIGHER OPERATING PROFIT 45 42 • Operating profit Q4-23 vs. Q4-22, +109% ‒ Growing operating income ‒ Lower C/I ratio in Q4-23 SEK million 24 25 22 ‒ Return on assets, 2.5% • Improved profitability 5,8% 5,9% 6,4% 6,5% 6,3% ‒ Slow-down in portfolio growth during Q4-23 ‒ Stable risk-adjus
Slide 14: Ecommerce Solutions: Strong Quarter
ECOMMERCE SOLUTIONS: STRONG QUARTER 17 17 15 • Operating profit Q4-23 vs. Q4-22, +336% 11 ‒ Higher operating income ‒ Return on assets, 1.8% SEK million • Loan loan loss ratio increased in Q4-2023 4 3,4% 3,1% 3,1% 3,6% 4,0% ‒ Record volume impacts IFRS 9 provisions ‒ Credit quality in Sweden and Fin
Slide 15: Funding and Liquidity
FUNDING AND LIQUIDITY Deposits from the public 22 000 20,653 • Retail deposits in Europe 20 000 ‒ Germany (SEK 19.3 billion) 18 000 ‒ Nordics (SEK 1.0 billion) 16 000 ‒ New markets (SEK 0.3 billion) 14 000 ‒ Fixed-term deposits: 40% SEK million 12 000 Germany • Liquidity reserve: 25% of deposits 10
Slide 16: Capital Situation
CAPITAL SITUATION 15,9% • Stable capital ratios in Q4-2023 T1+T2 15.9% 13,6% Headroom 3,2% T1 13.6% 12,0% • NPL backstop regulations Headroom 3,1% T1+T2 12.7% impacts own funds Headroom 3,2% T1 10.5% T1 10.5% • Optimised capital situation and CET1 12,0% comfortable headroom to legal requirements CET
Slide 17: Looking Ahead
LOOKING AHEAD • Continue the transformation towards becoming more of a European credit and payment platform • As always, focus on optimising the capital allocation between markets • Launching credit card product in Spain and digital payment solutions in Germany • Close monitoring of credit quality •
Slide 18: Q&A Session
Q&A Session 18
Slide 19: Appendix
Appendix 19
Slide 20: 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, Poland, Ireland online consumer loans, deposits and and the Netherlands. credit cards. Fo
Slide 21: 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 consumer finance industry 20 000 2 500 18 000 • Highly profitable core markets with 16 000 2 000 14 000 proven model for geograp
Slide 22: Board of Directors
Board of Directors John Brehmer Arti Zeighami Sara Mindus Chairman of the Board since Board member since 2023 Board member since 2020 2020 Current commitments: Current commitments: Board member since 2010 Partner & Director, Senior advisor Board member: Styrelseledamot: AI@scale: Boston Consulting G
Slide 23: Executive Management Team
Executive management team Joakim Jansson Mikael Meomuttel CEO CFO, Deputy CEO and Head of Investor Relations Education: PhD in Economics, Uppsala University. Education: MSc, Business/Economics and Finance, University of Borås/University of Gothenburg. At TF Bank since 2023 as CEO. Has previously hel
Slide 24: Contact
Contact Investor relations Mikael Meomuttel +46 706 26 95 33 ir@tfbank.se www.tfbankgroup.com 24