Morrow Bank AB · OMXSTO:MORROW
Morrow Bank AB — Komplett Bank — Investor Presentation (November 2018)
44 slides from Morrow Bank AB's investor presentation, November 2018
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)** 50 45 40 35 30 25 20 15 10 5 Denmark Germany New Zealand South Korea Malaysia Latvia Malta Slovenia Russia Austria Slovaki
Slide 6: A Nordic specialised consumer finance company
A Nordic specialised consumer finance company • Offering flexible consumer financing solutions to customers across the Nordics • 179,500 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) Profit after tax (NOK million) 7,456 274 234 25.3% 29.5% 5,461 21.8% 3,322 129 1,601 3.9% 442 11 2014 2015 2016 2017 Q3 2018 2015 2016 2017 YTD Q3 2018 Profit after tax ROE Net loans CAGR 2014 - 2017 Average ROE 2016 - 2018 (YTD) Total capi
Slide 8: Longstanding partnership with Komplett Group strengthens distribution
Longstanding partnership with Komplett Group strengthens distribution Close cooperation with Komplett Group, 2017 revenue distribution the largest e-commerce company in the Nordics: • IP rights (trade mark, brand). Komplett brand 14% name ranked among the strongest brands in Norway* 35% 51% • Loyalt
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 20% ownership • Among the largest privately owned investment companies in Norway with NOK 30 billion in assets under management Largest e-commerc
Slide 10: Strategy and product offering
Strategy and product offering 10
Slide 11: 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 12: Clear strategic roadmap for product-wise and geographical expansion
Clear strategic roadmap for product-wise and geographical expansion Komplett Bank follows a Komplett Bank’s strategic roadmap strategy for product-wise Consumer Credit Point-of-sales Deposit and geographical expansion loans cards finance accounts to ensure: March November September March 2014 2015 2
Slide 13: 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 14: 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 8 Millions 7 2016 - 2017 | “BUILD UP” Build and develop desired product- and
Slide 15: Favourable macro conditions in core markets
Favourable macro conditions in core markets Norway Sweden Finland NOK billion 1,392 SEK billion 2,017 EUR billion 118 1,365 1,977 116 1,320 1,336 1,934 113 1,290 1,879 110 1,267 1,821 108 1,233 1,783 106 1,750 104 2012 2013 2014 2015 2016 2017 2018E 2012 2013 2014 2015 2016 2017 2018E 2012 2013 2014
Slide 16: Flexible consumer loans largest business area
Flexible consumer loans largest business area • Komplett Bank “flexible 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 2017 and Sweden in
Slide 17: Credit cards launched in Norway, targeting Sweden and Finland
Credit cards launched in Norway, targeting Sweden and Finland • Launched in Norway in Q4 2015 • 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 • Nominal annua
Slide 18: 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 19: 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 per customer • Interest rates consistently on the “top ten” list in Norway • Deposits 100% guaranteed by the Norwegian Banks’ Guarantee Fund • Launch of EUR and SEK denom
Slide 20: Operations
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Slide 21: 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 22: 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 23: 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 Examples of Third party credit information Enables high level of customisation and existing Internal customer behaviour data flexibility, tailored to dif
Slide 24: 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 re
Slide 25: 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 26: 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 27: Financials
Financials 27
Slide 28: Stable and diversified growth in net loans
Stable and diversified growth in net loans Growth in net loans (NOK million) Net loan growth distribution* (NOK million) Growth in net loans 886 509 18Q2 18Q3 Sold portfolio IFRS 9 implementation 663 655 595 601 611 219 570 186 149 167 515 136 100 80 403 13 360 376 328 326 -17 Loans Norway Loans Fin
Slide 29: Continuously improved loan portfolio diversification
Continuously improved loan portfolio diversification Total net loans (NOK million) Distribution of net loans end of Q3 2018 +51% growth 8,000 Thousands Loans Norway Credit cards 7,000 4% 3% Loans Finland Loans NO 6,000 Point-of-sales finance 11% Loans FI 5,000 Loans Sweden Credit cards 4,000 20% 62%
Slide 30: Growing customer base with strong contribution from POS finance
Growing customer base with strong contribution from POS finance Number of customers (thousands) Market share Norway* Deposit customers 2 Loans Norway 5.0 % 5.1 % 1 50 4.5 % Credit cards 4.4 % 4.2 % 4.2 % Loans Finland 29 4.0 % 1 3.7 % Point-of-sales finance 13 17 14 3.4 % 2 12 Loans Sweden 10 3.0 %
Slide 31: Efficient, digital operations with a stable, low cost base
Efficient, digital operations with a stable, low cost base Operational expenses (NOK million) and cost ratios (%) 100 70% Cost 90 Marketing • Efficient and scalable cross border business 60% model 80 Other expenses 70 50% Cost income ratios Q3 2018 (Q2 2018) Depreciation 60 • C/I Ratio: 31.8% (33.6%
Slide 32: Sound credit metrics, but increased loan loss volatility expected from IFRS 9
Sound credit metrics, but increased loan loss volatility expected from new IFRS 9 accounting standard Past due (days) at end of quarter Losses on loans (LTM) / Average net loans (LTM) 5% 20% 70% 18% IAS 39 IFRS 9 60% IAS 39 IFRS 9 16% 4% 14% 50% 12% 40% 3% 10% 30% 8% 6% 20% 2% 4% 10% 2% 0% 0% 1% 15Q
Slide 33: Strong track record with sound profitability
Strong track record with sound profitability Profit after tax (NOK million) Annualised ROE (%) 50.0% 92.2 87.6 40.0% 72.9 75.1 71.5 30.0% 56.8 52.0 44.5 20.0% 40.4 28.3 10.0% 16.0 9.9 4.3 0.0% 0.6 -3.5 -10.0% 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 15Q1 15Q2 15Q3 1
Slide 34: Very solid capital position
Very solid capital position Regulatory capital structure (%) Base CET1 23.2% • Current regulatory capital requirement CET1 of 13.6% 1.0% CET1 New Bank Buffer 0.6% 20.5% • Increase expected in H1 2019 as the bank receives FSA pillar 2 Additional Tier 1 2.0% buffer requirement; Base CET1 target set to
Slide 35: Attractive yields and stable funding costs
Attractive yields and stable funding costs Yields 25% Lending Yields • Yield on loans in Sweden in line with loans in other markets 20% 20.7% • High yield for POS Finance, mainly driven by commission 15.7% income, in line with expectations 15% 14.3% 10% Funding • Stable deposit rates 5% • Launch of
Slide 36: Financial targets
Financial targets Return on Equity Around 30% return on equity in the medium term Regulatory capital Pillar 1 capital req.: CET1: 13.6% and Total: 17.1% adequacy Internal capital req. targets: CET1: 17.0% and Total: 20.5% Dividend Policy Growth will be given priority in the short to medium term 36
Slide 37: Delivering on strategic roadmap
Delivering on strategic roadmap Key priorities going forward Komplett Bank’s strategic roadmap • Capitalise on- and strengthen strategic Consumer Credit Point-of-sales Deposit and operational platform loans cards finance accounts • Continue product-wise and geographical expansion, starting with Marc
Slide 38: Well positioned for further growth and value creation
Well positioned for further growth and value creation Net loans (NOK million) • Specialised consumer finance bank providing a wide range 7,456 of attractive and flexible financing solutions to customers CAGR ‘14-’17 5,461 131% • Strategic partnership with Komplett Group, the largest 3,322 1,601 e-co
Slide 39: Appendix
APPENDIX @ KOMPLeTT bank
Slide 40: Experienced and seasoned management team
Experienced and seasoned management team Co-founder and CEO. Mr. Pettersen has an extensive background Co-founder and COO. Mr. Ursin-Holm has broad experience in the Director of Loans Sweden & Finland since March 2018. Mrs. Dolve within consumer finance. Previous positions include Co-founder and fin
Slide 41: Knowledgeable and diligent Board of Directors
Knowledgeable and diligent Board of Directors Live B. Haukvik | Chairperson Jan Ole Stangeland | Board member Member of the Board of Directors since 2013 and the Chairman of the Board of Directors Board member since March 2018. Mr. Stangeland has broad and relevant financial market since December 20
Slide 42: Solid investor base. Approximately 9% held by management and board
Solid investor base. Approximately 9% held by management and board Top 20 shareholders Management and Board of Directors ownership Shares Shares Share options # Shareholder % Role Name (million) (thousand) (thousand) 1 CANICA INVEST AS 34.157 19.9% CEO Raimond Pettersen 6,786 842 2 STATE STREET BANK
Slide 43: Profit and loss
Profit and loss 2018 2018 2017 2018 2017 2017 Amounts in NOK million Q3 Q2 Q3 YTD YTD Full year Interest income 289.9 265.2 199.6 788.9 535.6 756.2 Interest expenses -40.3 -34.3 -25.1 -100.9 -62.4 -86.5 Net interest income 249.6 230.9 174.4 688.0 473.2 669.8 Income commissions and fees 41.6 34.4 24.
Slide 44: Balance Sheet
Balance Sheet Amounts in NOK million 30.09.2018 30.06.2018 31.12.2017 30.09.2017 Assets Loans and deposits with credit institutions 1,095.4 811.8 442.3 442.4 Net loans to customers 7,455.7 6,801.0 5,461.0 4,946.2 Certificates and bonds 437.0 396.8 381.6 371.6 Other intangible assets 80.7 72.0 56.8 4
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