Morrow Bank AB · OMXSTO:MORROW
Morrow Bank AB — Komplett Bank — Investor Presentation (March 2020)
46 slides from Morrow Bank AB's investor presentation, March 2020
Slide 1: A specialised consumer finance company growing across the Nordics
A specialised consumer finance company growing across the Nordics Company presentation
Slide 2: Disclaimer
Disclaimer ABOUT THIS PRESENTATION This presentation has been prepared solely for information purposes by Komplett Bank ASA (the “Company” or “Komplett Bank”). This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ("relevant
Slide 3: Banking is changing
Banking is changing In an increasingly digital society, with a multitude of available options, we understand the importance of flexibility 3
Slide 4: We provide flexible, convenient loans for creditworthy customers
We provide flexible, convenient loans for creditworthy customers Digital platform Specialised consumer Providing flexibility with online offering finance solutions when people need it Consumer loans Credit cards Point-of-sales finance Deposit accounts 4
Slide 5: Nordic countries receptive for digital consumer banking offering
Nordic countries receptive for digital consumer banking offering World’s 50 most digitised countries (NRI index*) Total consumer loans Sweden, Finland and Norway (EUR billion)** 55 50 45 40 35 30 25 20 15 10 5 Austria Belgium Turkey Iceland United Kingdom Estonia Czech Republic Mauritius Hungary Swe
Slide 6: A Nordic specialised consumer finance company
A Nordic specialised consumer finance company • Offering flexible consumer financing solutions to customers across the Nordics • 280,000 customers across four product areas in Norway, Sweden and Finland • Strategic partnership with Komplett Group, largest e-commerce company in the Nordics • Multicha
Slide 7: Proven track record since inception
Proven track record since inception Net loans (NOK million) Profitability 7 844 8 496 331 274 5 461 25% 30% 23% 203 3 322 129 12% 4% 1 601 442 11 2014 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Profit after tax (NOK million) Return on equity Net loans CAGR 2014 - 2019 Average ROE 2016 - 2019
Slide 8: Longstanding partnership with Komplett Group strengthens distribution
Longstanding partnership with Komplett Group strengthens distribution Close cooperation with Komplett Group, 2019 revenue distribution the largest e-commerce company in the Nordics: • IP rights (trade mark, brand). Komplett brand 41% name ranked among the strongest brands in Norway* 59% • Loyalty ca
Slide 9: Strategic support from Canica solidifies long term platform
Strategic support from Canica solidifies long term platform Selection of Canica portfolio companies within retail • Largest Komplett Bank shareholder with 19.4% ownership • Among the largest privately owned investment companies in Norway with NOK 34 billion in assets under management Largest e-comme
Slide 10: Experienced and seasoned management team
Experienced and seasoned management team Mr. Haglund was appointed CEO in January 2019. Mr. Haglund has worked at Kompl ett Bank since 2015 and has previously held the Mr. Holted ahl was appointed Director of Credit Cards in March 2018. Ramstedt has b een with Ko mplet t B ank since early 2017. Befo
Slide 11: Knowledgeable and diligent Board of Directors
Knowledgeable and diligent Board of Directors Stig Eide Sivertsen | Chairperson Mr. Sivertsen has served as independent board member in Komplett Bank ASA since the Jan Ole Stangeland | Board member general meeting of 2018. He was appointed Chairperson of the Board in August 2019. He has Board member
Slide 12: Strategy and product offering
Strategy and product offering 12
Slide 13: Komplett Bank's products address a wide range of customer needs
Komplett Bank’s products address a wide range of customer needs Komplett Bank products Credit cards Point-of-sales finance Consumer loans Deposit accounts Pre-purchase In-purchase Post-purchase High-yield savings Customer Customer applies and Convenient real-time Customer has decided to Online savin
Slide 14: Executing on the strategic roadmap
Executing on the strategic roadmap Komplett Bank follows a Komplett Bank’s strategic roadmap product-wise and Consumer Credit Point-of-sales Deposit geographical expansion loans cards finance accounts strategy to ensure: Q1 Q4 Q3 Q1 2014 2015 2017 2014 Reduced business risk Q1 Q2 TBD TBD 2017 2019 E
Slide 15: Product developments enhance customer experience and ensure competitive offering
Product developments enhance customer experience and ensure competitive offering Q2-Q3 2019 Q4 2019 H1 2020 Launch of new annuity loan product Annuity loan with refinancing functionality SEK deposits • Ensures lower funding cost and contributes to a • Compliant with new Norwegian consumer • Enabling
Slide 16: Following a balanced strategic approach to ensure sustainable growth
Following a balanced strategic approach to ensure sustainable growth To achieve sustainable growth Komplett Bank strives to optimise the balance between three key areas Markets Enter markets and product areas in which there are substantial opportunities for growth and value creation Capabilities Cap
Slide 17: Building a diversified platform for value creation across the Nordics
Building a diversified platform for value creation across the Nordics 2018 - 2022 | “SCALE UP” Total net loans (NOK billion) Capitalise on strategic and operational platform Continue product-wise and geographical expansion 9 Millioner 2016 - 2017 | “BUILD UP” 8 Build and develop desired product- and
Slide 18: Favourable macro conditions in core markets
Favourable macro conditions in core markets Norway Sweden Finland SEK billion 2 227 2 159 NOK billion 1 504 2 077 EUR billion 120 1 449 1 999 116 117 1 393 1 942 113 1 336 1 857 110 1 282 1 788 108 106 1 224 1 728 1 747 104 1 175 1 672 100 1 121 94 1 038 1 073 2010 2011 2012 2013 2014 2015 2016 2017
Slide 19: Flexible consumer loans largest business area
Flexible consumer loans largest business area • Komplett Bank “flexible loans” and annuity loans • Structured as a revolving credit facility with a credit limit of NOK 500,000 / EUR 50,000 • Interest rate offered ranges from 4.9% to 24.9% per year nominally • Launched in Norway in 2014, Finland in 2
Slide 20: Credit cards launched in Norway, Sweden and Finland
Credit cards launched in Norway, Sweden and Finland • Launched in Norway in 2015, Sweden and Finland in 2019 • Integrated access to deferred single payments of 3, 6 and 9 months. Upper credit limit of NOK 100,000 • Tailored for online purchases with relevant insurances and an attractive bonus model
Slide 21: Point-of-sales finance solution being adopted by e-commerce partners
Point-of-sales finance solution being adopted by e-commerce partners • Automated and fully integrated into e-commerce purchasing platforms, offering flexible and convenient payment methods and financing options • Offering includes pay-by-invoice, deferred payment, instalments and account purchases O
Slide 22: Deposit accounts provide funding
Deposit accounts provide funding • High-yield savings accounts offered in Norway for amounts between NOK 50,000 and NOK 2,000,000 • EUR denominated deposits launched in 2018 in Germany for amounts between EUR 5,000 and EUR 100,000 per customer, • SEK denominated deposits launched in January 2020 amo
Slide 23: Financial targets
Financial targets CET1 target of 18.0% Capital adequacy Comprised of regulatory CET1 requirement of 17.0% + 1.0% management buffer Return on Equity Above 20% return on equity The Bank does not expect to meet its ROE target in 2020 Excess capital not deployed for growth purposes will be Dividend Poli
Slide 24: Operations
Operations 24
Slide 25: Digital business model ensures scalability and low cost operations
Digital business model ensures scalability and low cost operations Digital native with centralised operations Lean cross-border operations Data-driven communication Modern and flexible IT architecture • Cross-Nordic operations out of one • Highly digitised customer onboarding • Cloud and API based i
Slide 26: Automated and personalised multichannel communication tools
Automated and personalised multichannel communication tools Advanced customer relationship management (CRM) methodology and -technology ensures customer lifetime value optimisation Customised website communication synchronised with email- and SMS A/B testing to ensure high conversion rates and busin
Slide 27: Customer evaluation tools with sound credit risk management procedures
Customer evaluation tools with sound credit risk management procedures Data sources Fully automated credit scoring model Customer application form Enables high level of customisation and Third party credit information flexibility, tailored to different: Examples of Contingent Internal customer behav
Slide 28: Highly automated and efficient customer onboarding processes
Highly automated and efficient customer onboarding processes Consumer loan application process Fully digital and automated Manual process * Automated* Manual Know Your Credit Pricing and Revised Loan Customer and Document check & Fund worthiness conditional loan offer application Anti-Money budget r
Slide 29: Flexible multichannel distribution and customer acquisition platforms
Flexible multichannel distribution and customer acquisition platforms Direct channels Brand- and conversion marketing Mass-media marketing Performance marketing Brand awareness Search engine marketing Brand preference Search engine optimisation Leads generation Affiliate marketing Front ends komplet
Slide 30: Flexible multichannel distribution and customer acquisition platforms
Flexible multichannel distribution and customer acquisition platforms Indirect channels Partner distribution e-commerce partners Specialist loan brokers (agents) Payment optimisation Yield / Risk optimisation Sales conversion Loyalty creation Front ends e-commerce partners | Loan broker platforms Ko
Slide 31: Financials
Financials 31
Slide 32: Growth was driven by FX in the quarter
Growth was driven by FX in the quarter Growth in net loans (NOK million) Net loan growth distribution (NOK million) 356 19Q4 20Q1 886 125 102 98 105 15 27 -32 655 -124 -214 Loans Norway Loans Finland Loans Sweden Credit cards Point-of-sales finance 453 389 326 Impact of currency changes and forward
Slide 33: Stable income as new lending is reduced
Stable income as new lending is reduced Total income (NOK million) Number of customers (thousands) 3% growth 278 269 303 296 295 295 291 247 27 283 23 270 230 24 214 245 209 20 13 14 220 179 119 115 12 95 153 84 75 77 129 11 50 9 29 13 52 53 55 56 48 50 51 47 48 2 3 4 5 6 7 7 1 1 12 14 17 19 20 22 2
Slide 34: Decrease in operational expenses due to lower marketing activity
Decrease in operational expenses due to lower marketing activity Operational expenses (NOK million) and cost ratios* (%) 140 70% • OPEX NOK 97 million in Q1 2020 compared NOK 99 million in Q4 2019 120 60% ‐ Marketing costs reduced to actively manage loan growth AML admin fee ‐ Increase in external c
Slide 35: Improvement in loan losses
Improvement in loan losses Past due (days) at end of quarter Quarterly loan loss ratio (LLR)** (%) 25% 70% 60% 20% 50% 5,6 % 15% 40% 4,7 % 3,9 % 4,0 % 3,8 % 3,7 % 3,8 % 30% 10% 3,3 % 2,9 % 20% 5% 10% 0% 0% 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 PD 3
Slide 36: Additional loan loss provisions of NOK 50 million related to Covid-19
Additional loan loss provisions of NOK 50 million related to Covid-19 Break-down of Q1 2020 losses on loans • Decrease in stage 1 provisions due to reduction in new lending • Decrease in stage 2 provisions due to better performance as less customers are overdue • Stage 3 + Other on same level as in
Slide 37: Increase in profit after tax
Increase in profit after tax Profit after tax (NOK million) Annualised ROE** (%) 25,9% 25,4% 97 92 88 21,4% 20,9% 83 79 80 75 76 18,8% 18,5% 73 72 18,1% 18,1% 29 18 63 57 38 52 13,6% 97 88 76 80 61 78 46 -15 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 18Q1 18Q2 18Q3 18Q4 19Q1 19
Slide 38: Solid capital position
Solid capital position Regulatory capital structure (%) 22,1% 21,5% 0,7% • CET1 regulatory requirement lowered to 17.0% in Q1 2020 20,5% 0,5% 2,0% 2,0% • CET1 ratio was to 20.9% compared to 21.2% in Q4 2019 and well above 1,5% 1,5% 1,0 % 18.0% target • Transition to Standardised Approach during 2020
Slide 39: Appendix
APPENDIX @& KomPLett bank
Slide 40: Diversified product portfolio across the Nordics
Diversified product portfolio across the Nordics Total net loans (NOK million) Distribution of net loans end of Q1 2020 12% growth 9 000 Tus ener 8 000 6% Loans Norway 7 000 9% Loans Finland 6 000 41% 13% Loans Sweden 5 000 Credit cards 4 000 Point-of-sales 3 000 32% finance 2 000 1 000 0 18Q1 18Q2
Slide 41: Stable yield on consumer loans and declining funding cost
Stable yield on consumer loans and declining funding cost Yields (%) Gradual yield decline due to growth in new markets 25% • Stable yields for consumer loans • Decrease in yield for credit cards due to growth in new markets 20% 18,4 % Funding 15% 14,76% • Positive trend due to increased diversifica
Slide 42: Profit and loss
Profit and loss Full year Q1 2020 Q1 2019 Amounts in NOK million 2019 Net interest margin* (%) Interest income 326.4 310.5 1,282.5 Interest expenses -40.5 -46.0 -167.2 12,7 % 12,5 % 12,5 % Net interest income 285.9 264.1 1,115.3 12,3 % Income commissions and fees 40.8 44.6 172.4 12,0 % 11,9 % Expens
Slide 43: Balance sheet
Balance sheet Amounts in NOK million 31.03.2020 31.03.2019 31.12.2019 Liquidity and funding Assets Loa ns and deposits with credit institutions 666.1 1,059.8 614.7 800% Net l oans to customers 8,821.4 7,902.9 8,495.8 600% 536% Certi ficates and bonds 1,005.6 449.9 1,329.8 Other i ntangible assets 14
Slide 44: Solid investor base
Solid investor base Top 20 shareholders * Management and Board of Directors ownership Shareholders geographical distribution Norway 3% 2% 2% United States 9% United Kingdom Luxembourg Other 84% *Sha reholder l ist updated as of Ma rch 31 2020 44
Slide 45: Ambition to increase sales through own distribution
Ambition to increase sales through own distribution Net consumer loan growth sales channel distribution 13% 11% 13% 20% 17% 16% 29% 26% 31% 35% 35% 39% 46% 39% • 50% of total sales generated through own 37% 39% 49% distribution 44% 28% 34% 44% 21% 24% 29% 28% • Significant share of sales to existing
Slide 46: @ KOMPLETT’bank
@ KOMPLETT’bank