Cembra Money Bank Ag · SIX:CMBN
Cembra Money Bank — Investor Day (December 2021)
61 slides from Cembra Money Bank's investor day presentation, Dec 7, 2021
Slide 1: Cembra Investor Day: Updated strategy 2022–2026
Cembra Investor Day Updated strategy 2022–2026 Zurich, 7 December 2021 Cembra
Slide 2: Strategy 2022–2026: Reimagining Cembra
Strategy 2022 – 2026 Reimagining Cembra Key messages Strategic ambition We will leverage technology to deliver the most intuitive customer solutions in consumer finance Cembra’s We will draw on the strengths of our world-class credit factory and our market leadership Core DNA in selected markets Ope
Slide 3: Agenda
Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Holger Laub
Slide 4: About Cembra
Strategic ambition About Cembra A leading provider of financing solutions and services in Switzerland Over 1 million customers Decades of experience in Leading positions Excellent track record in Switzerland Swiss consumer finance in selected markets on execution Outstanding performance 15.9% 4% +66
Slide 5: Trends in Swiss consumer finance
Strategic ambition Trends in Swiss consumer finance Attractive market, with digitisation momentum increasing Attractive market High purchasing power …combined on a GDP per capita basis (USD)1 with ■ Continued robust demand for consumer finance products Balanced 93,520 ■ Increasing yield and margin p
Slide 6: Trends in Swiss consumer finance (cont’d)
Strategic ambition Trends in Swiss consumer finance (cont’d) Operating models evolving, with more integrated solutions Changing operating models ■ Technology is significantly enhancing process efficiencies Effective use of cloud technology reaps considerable benefits ■ From monolithic systems to clo
Slide 7: Embedded finance
Strategic ambition Embedded finance Gradual shift to financing at purchase and post-purchase Traditional Embedded finance money lending Embedded finance presence Instrument Description Pre-purchase at purchase post-purchase Personal loans Unsecured loans Auto leasing and loans Leasing/loan produ
Slide 8: Expected market development
Strategic ambition Expected market development Growth in assets driven by embedded finance solutions Asset / Fee Asset / Fee Loan assets p.a. growth 2017 – 20 p.a. growth 2020 – 25E in CHF bn 4% p.a. 30 30 Embedded 2% 12% finance 25 25 22 20 15 Core 4% 2–3% 10 markets1 5 0 2017 2020 2025E 1 Personal
Slide 9: Our core beliefs
Strategic ambition Our core beliefs Decisive for the success of all our businesses Core Assert sustained leadership in differentiating foundational capabilities – risk selection, underwriting, collections, strong relationship management excellence Customer Move from product-centric to customer-centr
Slide 10: Programmes and targeted outcomes
Strategic ambition Programmes and targeted outcomes Delivering on core beliefs through four strategic programmes Our key strategic ambition Targeted outcome ■ World-class credit factory, strong capital ■ Stable loss performance (≤ 1%) Cembra 2022– 2024– ■ Unique partnerships, deep customer knowledge
Slide 11: Organisation and cultural transformation
Strategic ambition Organisation and cultural transformation We foster a customer-first mindset What matters to us Selected initiatives ■ Strategy and vision communications Dec 2021 Customer Trust and ■ Values and behaviours workshops Q1 2022 obsession team with top leaders The customer is at the for
Slide 12: Agenda
Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Holger Laub
Slide 13: Credit factory
Cembra's DNA Credit factory Proven track record Stable loss rate1 since IPO Customer selection 1.1% 1.1% 1.0% 1.1% 1.0% 0.9% 0.9% 0.7% 0.1% 0.5% 0.8% 0.2% Collections Credit factory Underwriting 2013 2014 2015 2016 2017 2018 2019 2020 Reported loss rate One-off adjustment NPL%2 stable and low for mo
Slide 14: Customer selection
Cembra's DNA Customer selection Covering the population of Swiss consumers Age profile – differences only in distribution tails Income distribution (monthly net) – reflecting affordability 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 0– 1001 – 2001 – 3001 – 4001 – 5001 – 6
Slide 15: Underwriting
Cembra's DNA Underwriting Ensuring a consistent credit risk appetite Credit grades1 – consistent risk taking Scorecard development and monitoring 1 Corr v1 v2 v3 v4 v5 v6 v7 v8 v9 v10 v1 1.00 0.29 -0.06 0.00 0.00 0.51 0.51 0.69 0.04 -0.05 0.8 v2 0.29 1.00 -0.43 0.00 0.00 0.21 0.30 0.19 0.02 0.07 v3
Slide 16: Portfolio management
Cembra's DNA Portfolio management Portfolio quality carefully controlled 30+ delinquencies1 Safeguarding asset quality, e.g. Covid-19 response on personal loans 5% 30+delinquencies 4% 3% 2% 1% Measures taken 0% -6 -5 -4 -3 -2 -1 Apr'20 +1 +2 +3 +4 +5 +6 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-
Slide 17: Collections
Cembra's DNA Collections Segmented strategies ensuring a responsible and efficient process Illustration: weekly early collections metrics1 for quality monitoring Use of hardship tools during pandemic (on personal loans) 500 # loan contracts 0 2020/01 2020/04 2020/07 2020/10 1 5 9 13 17 21 25 29 33 3
Slide 18: Sustainability
Cembra's DNA Sustainability Strong ESG performance, and commitment to further improve Sustainability performance Selected targets External recognition E ■ Reduced direct (scope 1+2) emissions intensity significantly since 2014 Reduce direct carbon emissions Low ESG risk ■ 100% of electric power from
Slide 19: Employees and customers
Cembra's DNA Employees and customers Trusted provider for customers and partners We are passionate about how we perform We know our customers and their needs very well ■ Diverse workforce and talent – 41 nationalities ■ One-stop offering for consumer finance ■ Experienced – 10 years of service on av
Slide 20: Customer intimacy
Cembra's DNA Customer intimacy Trusted provider for customers, car dealers and other business partners ■ AXA (Insurance) “Cembra is a valued and trusted partner.” ■ Milenia (Agent) “Cembra accompanies its partners in the long term.” ■ TCS (Cards) “Cembra shares our values and understands our busines
Slide 21: Agenda
Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Holger Laub
Slide 22: Operational excellence
Operational excellence Operational excellence Reducing the cost base by >CHF 30 million and enabling sustainable growth Our Operational Excellence programme aims to radically simplify our operating model, and fully transform Cembra’s technology landscape to increase profitability and deliver sustain
Slide 23: Operational excellence: next-level technology
Operational excellence Operational excellence Next-level technology to unlock new opportunities From… To… Mind-set Product-centric Customer-centric Customer experience Fragmented Unified and seamless Processes Complex and paper-based Simplified and standardised Data Collected mainly for reporting Re
Slide 24: Scope of transformation
Operational excellence Scope of transformation Immediate optimisation, unlocked opportunities, future-forward foundation Contribution to cost reduction 1 ■ Launch mobile app for card holders and foster adoption Customer value and experience ■ Drive step-wise integration of all Cembra products and ex
Slide 25: Implementation roadmap up to 2025
Operational excellence Implementation roadmap up to 2025 Reduce cost base by >CHF 30 million – first milestones to be reached Q1 2022 H1 2022 H2 2022 2023 2024 2025 From 2026 on Mobile app user adoption Product integration Further embedded 1 | Customer Self-service extension finance integration valu
Slide 26: Agenda
Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Holger Laub
Slide 27: Agenda
Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Holger Laub
Slide 28: Personal loans – market
Business acceleration Personal loans – market 41% market share Personal loans market Key market trends in CHF bn, source: ZEK +1% ■ Continued growth expected in line with Swiss GDP, further increasing average ticket size ■ Yield pressure remains, mostly driven by new players and financing forms 7.24
Slide 29: Personal loans – strategy
Business acceleration Personal loans – strategy Simplify operating model and expand digital offering Cembra’s positioning 13 branches all over Switzerland ■ Diversified distribution channels: branches, online, independent agents/partners ■ Premium pricing supported by segmented and personalised cust
Slide 30: Auto – market
Business acceleration Auto – market 21% market share Auto leasing market Key market trends in CHF bn 0% ■ Leasing share of car sales stable at 50%, share of used cars financed at 73% in H1 2021 (70% in 2020) ■ 2021 chip shortage: longer delivery times for new cars; shortage of used cars has led to i
Slide 31: Auto – strategy
Business acceleration Auto – strategy Grow by extending market reach. Improve efficiency with new leasing platform Cembra’s positioning ■ Focus on used cars (2021 portfolio mix: ~37% new and ~63% used cars) ■ Integrated with ~4,000 distribution partners ■ Dedicated field sales force with 4 processin
Slide 32: Credit cards – market
Business acceleration Credit cards – market 13% market share Credit card market Key market trends Market share Transaction Volume CHF bn, Jan-Sept Growth p.a. ■ Credit cards continuing to replace cash Cembra 34.4 2018-2021E ■ Credit card volumes recovering as travel 13% 32.3 29.0 33.1 picks up after
Slide 33: Credit cards – customer behaviour
Business acceleration Credit cards – customer behaviour We have a deep understanding of customer needs and loyalty Customer insights Strategy 14% Limited customer loyalty1 Retention ■ High customer net promoter score 53% ■ Retention team operational ■ Customer insights and predictive analytics ■ Att
Slide 34: Credit cards – outlook
Business acceleration Credit cards – outlook Aim to recover to pre-Covid levels in assets and revenues1 Cards financing receivables What gives us confidence in long term cards growth1 In CHF bn 1.5 Resilient portfolio dynamics 1.0 1.0 1.0 Pre-Covid level ■ Sound post-Covid recovery in transaction vo
Slide 35: Agenda
Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Holger Laub
Slide 36: The Buy Now Pay Later (BNPL) model
New growth opportunity – Buy Now Pay Later The Buy Now Play Later (BNPL) model The interplay between consumers, merchants and Cembra Consumer gets immediate access Key characteristics to their goods or services ■ POS lending Available as a POS option, with increasing presence in SKU1 page and advert
Slide 37: BNPL offering
New growth opportunity – Buy Now Pay Later BNPL offering BNPL offers clear benefits for both merchants and consumers Benefits of BNPL Share of BNPL in e-com payment methods Benefits for consumers First movers Sweden 25% Convenience Play it safe Germany 18% online Norway 13% Finland 8% Transparency T
Slide 38: Market development in Switzerland
New growth opportunity – Buy Now Pay Later Market development in Switzerland Strong growth of BNPL expected for the Swiss market Swiss retail sales, in CHF bn Financing volumes1, in CHF bn Today’s BNPL players in Switzerland Estimates +2% p.a. +7% p.a. 121 Expected p.a. growth Expected p.a growth 20
Slide 39: About Swissbilling
New growth opportunity – Buy Now Pay Later About Swissbilling Leading BNPL provider in Switzerland, positioned for growth Core competencies BNPL example ■ Billing (IT & logistics) ■ Financing (expertise & resources) ■ Risk (real-time B2C & B2B assessment) ■ IT (agile development) Performance 2021E >
Slide 40: Swissbilling and Cembra propositions
New growth opportunity – Buy Now Pay Later Swissbilling and Cembra propositions Complementary propositions and up-sell opportunities BNPL Invoice Purchase by invoice Invoice financing Auto leases processing (on-/offline) Personal loans Credit cards Deferred payments, and loans typically outsourcing
Slide 41: BNPL strategy
New growth opportunity – Buy Now Pay Later BNPL strategy Scale up existing offering and extend value proposition Swissbilling & Cembra’s positioning ■ Over 800,000 recurring customers and 200 dealers ■ Very strong position in French-speaking Switzerland and great potential in Selected Swissbilling p
Slide 42: Agenda
Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Holger Laub
Slide 43: Trading update FY 2021E
Financial and capital management Trading update FY 2021E Resilient business performance FY 2021 estimates Recovery of cards commissions (in CHF m) Asset development Strong transaction volume recovery since May 2021 Cembra (total): Positive trend in H2 YTD Nov 2021 in CHF m 2021E 2020 (+14% for the p
Slide 44: Financial track record 2013–2021
Financial and capital management Financial track record 2013–2021 Attractive combination of high ROE, strong capital and profitable growth IPO story since 2013 Target Achievement until 2021 2013–2021E In line with ~7% p.a. Asset Asset growth Swiss GDP growth Organic: ~2% p.a. growth = GDP Profitab
Slide 45: Profitability by source since 2016
Financial and capital management Profitability by source since 2016 Interest cap and Covid-19 impact partially offset by strong loss performance Return on financing receivables 1 3.5% 2.8% ~2.5% + Net revenues Net interest income 7.3% Revision of the maximum interest 5.8% rate in CH in 2016 Covid-19
Slide 46: Profitability outlook
Financial and capital management Profitability outlook Continued attractive business, with opportunities for profitable growth Outlook for net financing receivables Outlook for the return on financing receivables + favourable Net financing receivables (in CHF bn) - unfavourable Expected p.a. growth
Slide 47: Expenses outlook
Financial and capital management Expenses outlook Reduce the cost base by > CHF 30m, positive net savings from 2024 on Expected cost and benefits from Operational Excellence P&L (OPEX incl. depreciation) view, in CHF m 40 Net savings ■ > CHF 30m p.a. reduction of the cost base driven mainly by autom
Slide 48: Funding outlook
Financial and capital management Funding outlook Diverse funding profile, low interest rate risk Prudent funding management with balanced and well-diversified portfolio Low interest rate risk, and favourable impact of increase in interest rates CHF bn1 ■ Cembra credit spreads recovered from spike 3%
Slide 49: Capital management outlook
Financial and capital management Capital management outlook Unchanged Tier 1 capital ratio target of 17% Capital position Redeployment of excess capital Tier 1 capital ratio as % 19.2 Additional Tier1 CET1 ratio ■ Mid-term Tier 1 capital ratio target of 17% unchanged 20% 17.7 18.3 16.3 15% 17.0% Mid
Slide 50: Earnings per share outlook
Financial and capital management Earnings per share outlook 20-30% EPS growth until 2026 underpinned by strategic programmes Earnings per share (EPS) CHF per share + 20 – 30% EPS growth by 2026 5.44 1 2021E 1 Operational Business New growth Capital 2026E Excellence Acceleration opportunity - BNPL re
Slide 51: Dividend outlook
Financial and capital management Dividend outlook Maintaining an attractive and increasing dividend Dividends per share (DPS) CHF per share 3.75 3.75 ■ For 2021, Cembra plans to pay a dividend 2.85 of CHF 3.75 ■ For 2022, the dividend is expected to be at least CHF 3.75 ■ From 2023 on, Cembra intend
Slide 52: Financial targets until 2026
Financial and capital management Financial targets until 2026 Update to ROE Tier 1 capital ratio Dividend per share existing 2022–23: 13–14% 2022–23: >17% for 2022: ≥ CHF 3.75 targets 2024–26: >15% 2024–26: >17% for 2023–26: increasing1 Additional Financing receivables Cumulative EPS growth Cost/inc
Slide 53: Agenda
Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Holger Laub
Slide 54: Wrap-up: Strategy 2022–2026
Wrap-up Strategy 2022 – 2026 Reimagining Cembra Key messages Strategic ambition We will leverage technology to deliver the most intuitive customer solutions in consumer finance Cembra’s We will draw on the strengths of our world-class credit factory and our market leadership Core DNA in selected mar
Slide 55: Agenda – Appendix
Appendix Agenda 9:00 Strategic ambition Holger Laubenthal, CEO 3 9:30 Cembra’s DNA Volker Gloe, CRO 12 9:50 Operational excellence Niklaus Mannhart, COO 21 10:10 Q&A 10:30 Break 10:50 Business acceleration Peter Schnellmann, CSDO Holger Laubenthal 27 11:20 New growth opportunity Buy Now Pay Later Ho
Slide 56: Cembra’s Management Board
Appendix Cembra’s Management Board Holger Laubenthal Pascal Perritaz Volker Gloe CEO CFO Chief Risk Officer ■ MSc Industrial Engineering ■ Master in Economics ■ Business Administration (Technical University Berlin) / (University Fribourg) / (University Kiel) MBA (Harvard Business Certified European
Slide 57: Current expected credit losses (CECL)
Appendix Current expected credit losses (CECL) Changed standard for allowance for losses calculation Change from incurred to expected credit loss standard Expected financial impact Main differences Implementation of CECL as of 1 Jan 2023, based on US GAAP accounting Incurred loss concept CECL standa
Slide 58: Glossary of key figures
Appendix Glossary of key figures including alternative performance measures To measure its performance, Cembra uses some key figures that are not defined under US GAAP. This glossary provides definitions of alternative performance measures (APM) and other key figures Key figures (including APM) Defi
Slide 59: Key figures over 10 years
Appendix Key figures over 10 years US GAAP 2012 IPO 2013 2014 2015 2016 2017 2018 2019 2020 2021E Net revenues (CHF m) 356 355 379 389 394 396 439 480 497 482-487 Net income (CHF m) 133 133 140 145 144 145 154 159 153 159-162 Cost/income ratio (%) 46.2 50.5 42.5 41.5 42.5 42.4 44.0 48.3 49.8 ~51% Ne
Slide 60: Cautionary statement regarding forward-looking statements
Appendix Cautionary statement regarding forward-looking statements This presentation by Cembra Money Bank AG (“the Group”) includes forward-looking statements that reflect the Group’s intentions, beliefs or current expectations and projections about the Group’s future results of operations, financia
Slide 61: Calendar and further information
Calendar and further information Visit us at www.cembra.ch/investors Corporate events Investor conferences, roadshows and calls 16 February 2022 Full-year 2021 results 14 December 2021 Berenberg Swiss Seminar, Zurich 16 March 2022 Publication 2021 Annual Report 13 January 2022 Baader Swiss Equities