Avarda Bank AB · OMXSTO:AVARDA
Avarda Bank AB — TF Bank — Q4 2022 Earnings Presentation
23 slides from Avarda Bank AB's earnings presentation, 2023
Slide 1: 4th Quarter 2022 Result Presentation
4th Quarter 2022 RESULT PRESENTATION
Slide 2: Highlights October – December 2022
HIGHLIGHTS OCTOBER – DECEMBER 2022 • Loan portfolio increased by 6%* in the quarter • Operating profit 114 MSEK, +16% vs Q4-2021 - Increase in operating profit for the Credit Cards segment - Higher transaction volumes than expected in Ecommerce Solutions in Q4 means higher upfront costs. • Jollyroom
Slide 3: Consumer Lending
CONSUMER LENDING Share of TF Bank's loan book Share of TF Bank's operating income • Diversified portfolio with Nordic base • Product offering tailored for each market - Average loan size on book of SEK – 69,000 59% 53% - Tenor typically between 12 and 60 months • Marketed through direct channels, ow
Slide 4: Credit Cards
CREDIT CARDS • Record volumes during the fourth quarter Share of TF Bank's loan book Share of TF Bank’s operating income • Target group is German, Austrian and Norwegian consumers 22% 25% • Simple and transparent offering – gold card with no fees • Different income profile compared to consumer loans
Slide 5: Ecommerce Solutions
ECOMMERCE SOLUTIONS • Cooperation with Jollyroom live in late Share of TF Bank's loan book Share of TF Bank’s operating income December - Expected transaction volume of more than SEK 2 billion 19% 22% • Digital payment solutions offered in the Nordic region, the Baltics and Poland • Best-in-class wh
Slide 6: Loan Book Growth
LOAN BOOK GROWTH 35% 8% 15,000 14,000 • TF Bank: Growth in Q4 = 8% (+2%*) 13,000 12,000 - Year-on-year 35% (+8%*) 11,000 10,000 • Consumer Lending: Q4 = 4% (2%*) SEK million 9,000 8,000 - Year-on-year 22% (+7%*) 7,000 6,000 • Credit Cards: Q4 = 15% (2%*) 5,000 4,000 - Year-on-year 93% 3,000 2,000 •
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. Credit card issuing at an all time high. Loan book Finland ▪ High competition in consumer lending. Low risk loan book. The B
Slide 8: Higher Risk Adjusted Income
HIGHER RISK ADJUSTED INCOME Operating income* Net loan losses* Risk-adjusted income** 400 397 25.0% 120 116 8.0% 300 20.0% 281 359 267 338 110 257 350 241 319 100 250 20.0% 92 226 16.0% 296 300 90 6.0% 81 78 80 200 250 70 15.0% 70 12.0% SEK million SEK million SEK million 200 60 4.0% 150 11.4% 10.0%
Slide 9: Opex – Cost/Income Ratio by Segment
OPEX – COST/INCOME RATIO BY SEGMENT 100% • Expenses Q4-22 vs. Q4-21, +31% 90% 80% ‒ Sales related costs and more employees 70% 68% ‒ Cost/income ratio 42% 61% 61% 58% 58% 60% ‒ Excl. marketing = 39% 50% 54% 51% 53% 50% 43% • Cost/income ratio per segment in Q4-22 40% 43% 43% 44% 44% 42% ‒ Consumer L
Slide 10: Growing Operating Profit
GROWING OPERATING PROFIT Operating profit 120 16% 114 • Operating profit Q4-22 vs. Q4-21, +16% 110 107 99 103 ‒ Increased profit quarter-to-quarter 100 ‒ Return on assets, 2.4% 80 • Growth combined with high profitability SEK million 60 ‒ Return on equity, 23% in Q4-2022 ‒ Earnings per share, 3.96 S
Slide 11: Consumer Lending: Stable Development
CONSUMER LENDING: STABLE DEVELOPMENT Operating profit 90 86 86 88 • Operating profit Q4-22 vs. Q4-21, +19% 82 80 74 ‒ Higher interest expenses in Q4-2022 70 ‒ Not yet fully transferred to customers 60 ‒ Return on assets, 3.2% SEK million 50 • Higher loan losses in Q4-22 40 ‒ Higher amount in Stage 2
Slide 12: Credit Cards: Higher Operating Profit
CREDIT CARDS: HIGHER OPERATING PROFIT Operating profit 24 22 • Operating profit Q4-22, 22 MSEK 21 ‒ Profit turnaround in 2022 18 ‒ Return on assets, 2.2% • 15 Higher marketing costs from Q2-2022 SEK million 12 10 ‒ Digital channels, impacts OPEX upfront 9 6 3 4 3 2 0 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 TF
Slide 13: Ecommerce Solutions: Nordic Expansion
ECOMMERCE SOLUTIONS: NORDIC EXPANSION Operating profit 30 • Operating profit Q4-22, 4 MSEK 25 ‒ Record volume lowers profit 22 ‒ Sales related costs 20 18 ‒ IFRS 9 provisions SEK million 17 15 14 ‒ Poland is still a drag ‒ Return on assets, 0.5% 10 • Higher interest expenses in Q4-2022 5 4 ‒ Not yet
Slide 14: Funding and Liquidity
FUNDING AND LIQUIDITY Deposits from the public 16,108 16,000 • Retail deposits in 4 markets 15,000 14,000 ‒ Germany (SEK 12.7 billion) 13,000 12,000 ‒ Norway (SEK 2.7 billion) 11,000 ‒ Sweden (SEK 0.3 billion) 10,000 Germany SEK million 9,000 ‒ Finland (SEK 0.3 billion) 8,000 7,000 ‒ Fixed-term depo
Slide 15: Capital Situation
CAPITAL SITUATION 15.6% • Capital ratios impacted by loan T1+T2 15.6% 13.9% Headroom 3.0% book growth T1 13.9% 12.3% Headroom 3.6% T1+T2 12.6% • SFSA has given TF Bank Headroom 3.8% T1 10.3% T1 10.3% permission to use the Alternative Standardised Approach for CET1 12.3% operational risk CET1 8.5% CE
Slide 16: Looking Ahead
LOOKING AHEAD • Ambition to continue grow faster than the market in 2023 • Continued positive development for the credit card business in Germany • With rate hikes at a slower pace the repricing of the back book will catch up with increasing funding cost • We will see slightly higher loan losses but
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 and infrastructure offering our retail customers around the Baltic sea online consumer loans, deposits and credit cards. For retailers we offer leading ecommerce and brick-a
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