Avarda Bank AB · OMXSTO:AVARDA
Avarda Bank AB — TF Bank — Q3 2023 Earnings Presentation
23 slides from Avarda Bank AB's earnings presentation, October 2023
Slide 1: 3rd Quarter 2023
3 Quarter 2023 (F) TFBank
Slide 2: Highlights July – September 2023
HIGHLIGHTS JULY – SEPTEMBER 2023 • Controlled growth during the quarter Operating income Operating profit +47% +19% 529 - 4% in local currencies 131 359 110 - Focus on risk-adjusted margin • Operating profit 131 MSEK, +19% vs Q3-2022 Q3'22 Q3'23 Q3'22 Q3'23 C/I ratio Net loan loss ratio - Despite re
Slide 3: Loan Book Growth
LOAN BOOK GROWTH 20 000 28% 2% • TF Bank: Growth in Q3 = 2% (4%*) 16 000 - Year-on-year 28% (24%*) • Consumer Lending: Q3 = -2% (-1%*) SEK million 12 000 - Year-on-year 11% (9%*) 8 000 • Credit Cards: Q3 = 14% (16%*) - Year-on-year 87% (79%*) 4 000 • Ecommerce Solutions: Q3 = -2% (0%*) 0 - Year-on-y
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 • Slow-down in sales and focus on protecting margins Share of TF Bank's loan book Share of TF Bank's operating income when funding costs increase • Improved margins in several markets, proves the value of geographical diversification 54% 46% • Credit quality largely uncha
Slide 6: Credit Cards
CREDIT CARDS Highlights • Another quarter with record volumes in all three markets Share of TF Bank's loan book Share of TF Bank’s operating income • Strong performance during the quarter • Proven scalability in business model 30% 34% • Active customers and net assets grew to 209,000 (181,000) and 5
Slide 7: Ecommerce Solutions
ECOMMERCE SOLUTIONS Highlights Share of TF Bank’s operating income Share of TF Bank's loan book • Repricing to compensate for higher funding costs beginning to bear fruit • Although many companies in the retail sector see reduced 20% 16% demand, we have been able to attract new merchant partners to
Slide 8: Improved Risk-Adjusted Margin
IMPROVED RISK-ADJUSTED MARGIN 529 480 • Risk-adjusted income* 444 ‒ Increased +35 MSEK vs Q2-2023 397 359 ‒ Improved risk-adjusted margin vs Q2-2023 • Operating income** 8,3% SEK million 8,2% 7,9% 8,1% 8,0% ‒ Credit Cards the main driver ‒ Higher income from portfolio growth and 158 172 pricing adju
Slide 9: Opex – Cost/Income Ratio by Segment
OPEX – COST/INCOME RATIO BY SEGMENT 100% 90% • Expenses Q3-23 vs. Q3-22, +44% 80% ‒ Including restructuring costs of 16 MSEK 70% 68% 66% ‒ Seasonal effects lowers OPEX 61% 62% 62% 60% 50% 50% 44% 43% 43% 40% 44% 41% • Cost/income ratio per segment in Q3-23 42% 37% 42% 41% 30% ‒ Consumer Lending 31%
Slide 10: Increased Profit Quarter-by-Quarter
INCREASED PROFIT QUARTER-BY-QUARTER Operating profit 19% • Operating profit Q3-23 vs. Q3-22, +19% 140 131 123 ‒ Despite restructuring costs of 16 MSEK 118 120 114 110 ‒ Driven by segment Credit Cards 100 ‒ Earnings per share, 4.58 SEK • SEK million 80 Improved underlying profitability in Q3-2023 60
Slide 11: Consumer Lending: Improved Profitability
CONSUMER LENDING: IMPROVED PROFITABILITY 90 88 86 83 • Operating profit Q3-23 vs. Q3-22, +5% 80 ‒ Focus on improving margins and credit quality ‒ Return on assets, 3.0% SEK million • Lower loan loss ratio vs. Q2-2023 ‒ Reduced volume impacts IFRS 9 provisions 3,1% 3,0% 1,9% 2,3% 2,8% ‒ Credit qualit
Slide 12: Credit Cards: Strong Operating Profit
CREDIT CARDS: STRONG OPERATING PROFIT 42 • Operating profit Q3-23 vs. Q3-22, +306% ‒ Growing operating income 26 24 22 ‒ Return on assets, 2.6% SEK million • Improved profitability in Q3-2023 10 ‒ Boosted by slightly lower portfolio growth ‒ Lower C/I ratio due to economies of scale 5,9% 6,4% 6,5% 5
Slide 13: Ecommerce Solutions: Nordic Focus
ECOMMERCE SOLUTIONS: NORDIC FOCUS 17 15 • Operating profit Q3-23, 15 MSEK 14 ‒ Focus on increasing margins 11 ‒ Avarda stand-alone impacts OPEX ‒ Return on assets, 1.6% SEK million • Higher loan loss ratio vs. Q2-2023 4 ‒ Increased loan losses in the Nordics 3,4% 3,6% 3,1% 3,1% 2,7% Q3'22 Q4'22 Q1'2
Slide 14: Funding and Liquidity
FUNDING AND LIQUIDITY Deposits from the public 20 000 18,989 • Retail deposits in four markets 18 000 ‒ Germany (SEK 17.5 billion) 16 000 ‒ Norway (SEK 0.9 billion) 14 000 ‒ Finland (SEK 0.3 billion) 12 000 ‒ Sweden (SEK 0.2 billion) SEK million Germany 10 000 ‒ Fixed-term deposits: 39% 8 000 • Liqu
Slide 15: Capital Situation
CAPITAL SITUATION 16,1% • Higher CET1 ratio in Q3-2023 T1+T2 16.1% 13,7% Headroom 3,4% T1 13.7% 12,0% • Issued AT1 instruments in Headroom 3,3% T1+T2 12.7% September, 150 MSEK Headroom 3,3% T1 10.4% T1 10.4% • Optimised capital situation and CET1 12,0% comfortable headroom to legal requirements CET1
Slide 16: Looking Ahead
LOOKING AHEAD • Focus on optimising the capital allocation between markets • Future-proofing the business model, with focus on growth for German credit card • Uncertainty regarding the impact of inflation and energy costs as the winter is coming • Execute on organisational changes according to restr
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