Avarda Bank AB · OMXSTO:AVARDA
Avarda Bank AB — TF Bank — Q2 2023 Earnings Presentation
23 slides from Avarda Bank AB's earnings presentation, 2023
Slide 1: 2nd Quarter 2023 Result Presentation
2nd Quarter 2023 RESULT PRESENTATION
Slide 2: Highlights April – June 2023
HIGHLIGHTS APRIL – JUNE 2023 • Exceptional growth during the quarter, 11%*, and strong Operating income Operating profit sales momentum +42% +15% 480 - Record volumes in Credit Cards segment during the quarter 338 107 123 - Improved C/I ratio, 41% - Proving scalability in the business model with inc
Slide 3: Loan Book Growth
LOAN BOOK GROWTH 20,000 35% 11% • TF Bank: Growth in Q2 = 11% (7%*) 16,000 - Year-on-year 35% (27%*) • Consumer Lending: Q2 = 7% (4%*) SEK million 12,000 - Year-on-year 19% (14%*) 8,000 • Credit Cards: Q2 = 23% (18%*) - Year-on-year 100% 4,000 • Ecommerce Solutions: Q2 = 8% (4%*) 0 - Year-on-year 25
Slide 4: Growth and Diversification
GROWTH AND DIVERSIFICATION Market update Loan book split by market Germany and Austria ▪ Credit card product in high demand. Competitive CAC*. New markets Continued large growth potential. Sweden Norway ▪ Continued positive long-term outlook on the Norwegian 1% economy. Focus on margins. The credit
Slide 5: Consumer Lending
CONSUMER LENDING Highlights • Strong growth despite focus on protecting margins Share of TF Bank's loan book Share of TF Bank's operating income when funding costs increase • Reduced price pressure in several markets due to less competition, proves the value of geographical 56% 47% diversification •
Slide 6: Credit Cards
CREDIT CARDS Highlights • Record volumes in all three markets during the Share of TF Bank's loan book Share of TF Bank’s operating income second quarter • Strong performance proves scalability in business model 27% 32% • Active customers and net assets grew to 181,000 (161,000) and 4,663 MSEK (3,781
Slide 7: Ecommerce Solutions
ECOMMERCE SOLUTIONS Highlights Share of TF Bank's loan book Share of TF Bank’s operating income • Strong quarter for the Nordic region with record volumes and improved profitability - Repricing to compensate for higher funding costs beginning to 21% 17% bear fruit • Decision in late June to stop new
Slide 8: Stable Risk-Adjusted Margin
STABLE RISK-ADJUSTED MARGIN 480 • Operating income 444 ‒ Higher income from portfolio growth 397 359 ‒ Credit Cards the main driver 338 • Net loan losses 8.5% SEK million 8.2% 8.1% 7.9% 8.0% ‒ Stabilised loan loss ratio vs Q1-2023 ‒ Record volume impacts IFRS 9 provisions 116 140 158 • Risk-adjusted
Slide 9: Opex – Cost/Income Ratio by Segment
OPEX – COST/INCOME RATIO BY SEGMENT 100% • Expenses Q2-23 vs. Q2-22, +33% 90% 80% ‒ Sales-related costs and more employees 70% 68% 66% ▪ Record volume 61% 61% 62% 60% ‒ Lower cost/income ratio, 41% (-3%) 50% 44% 53% 50% 43% 41% • Cost/income ratio per segment in Q2-23 40% 44% 44% 42% 42% 41% ‒ Consu
Slide 10: Increased Profit Quarter-by-Quarter
INCREASED PROFIT QUARTER-BY-QUARTER Operating profit • Operating profit Q2-23 vs. Q2-22, +15% 15% 123 ‒ Driven by segment Credit Cards 118 ‒ Earnings per share, 4.26 SEK 114 107 110 • Slightly lower profitability year-on-year ‒ Return on equity, 22% SEK million ‒ Return on assets, 2.3% Q2'22 Q3'22 Q
Slide 11: Consumer Lending: Lower Profitability
CONSUMER LENDING: LOWER PROFITABILITY 88 86 86 83 • Operating profit Q2-23 vs. Q2-22, -7% 80 ‒ Start-up costs in Denmark and Spain ‒ Return on assets, 2.7% SEK million • Stabilised loan loss ratio vs. Q1-2023 3.1% 3.0% 1.9% 2.3% 1.7% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Operating profit Loan loss ratio TF
Slide 12: Credit Cards: Growing Operating Profit
CREDIT CARDS: GROWING OPERATING PROFIT 26 24 22 • Operating profit Q2-23, 26 MSEK ‒ Growing operating income ‒ Economies of scale SEK million ‒ Return on assets, 1.9% 10 • Record volume - Increased IFRS 9 provisions 4 6.6% 5.8% 5.8% 5.9% 6.4% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Operating profit Loan loss
Slide 13: Ecommerce Solutions: Nordic Focus
ECOMMERCE SOLUTIONS: NORDIC FOCUS 17 17 • Operating profit Q2-23, 17 MSEK 14 ‒ Ongoing transfer of funding costs to customers 11 ‒ Return on assets, 1.9% • Stabilised loan loss ratio vs. Q1-2023 SEK million 4 3.4% 3.1% 3.1% 2.7% 2.4% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Operating profit Loan loss ratio TF
Slide 14: Funding and Liquidity
FUNDING AND LIQUIDITY 20,000 Deposits from the public 18,390 • Retail deposits in 4 markets 18,000 ‒ Germany (SEK 16.6 billion) 16,000 ‒ Norway (SEK 1.4 billion) 14,000 ‒ Sweden (SEK 0.2 billion) 12,000 ‒ Finland (SEK 0.1 billion) SEK million Germany 10,000 ‒ Fixed-term deposits: 44% 8,000 • Liquidi
Slide 15: Capital Situation
CAPITAL SITUATION 15.0% T1+T2 15.0% Headroom 2.5% • REA increased by currency T1 12.5% 11.8% 12.5% effects (CET1: -0.4%) Headroom 2.2% T1+T2 12.5% Headroom 3.2% • Redemption of AT1 instruments T1 10.3% T1 10.2% in June, 100 MSEK CET1 11.8% • Intention to issue AT1 instruments H2 2023 CET1 8.6% CET1
Slide 16: Looking Ahead
LOOKING AHEAD • Continue defending margins and continue a cool-down of growth that was initiated already at the end of this quarter • Future-proofing the business model, with focus on German credit cards • Increasing funding cost in all markets and still high competition for deposit customers • The
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 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: K-Fast Holding AB, AI@scale: Boston Consulting
Slide 22: 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 23: Contact
Contact Investor relations Mikael Meomuttel +46 706 26 95 33 ir@tfbank.se www.tfbankgroup.com 23