Avarda Bank AB · OMXSTO:AVARDA

Avarda Bank AB — TF Bank — Q3 2018 Earnings Presentation

26 slides from Avarda Bank AB's earnings presentation, October 2018

  1. Slide 1: 3rd Quarter 2018 Result Presentation

    “It TEBank 3" Quarter 2018 RESULT PRESENTATION

  2. Slide 2: Corporate Profile

    CORPORATE PROFILE Our Products Operating with modern and scalable infrastructure offering our retail customers online consumer loans, deposits and credit cards. For retailers we offer leading ecommerce and brick-and-mortar payment solutions Our DNA We aim to deliver effortless banking to our custome

  3. Slide 3: New Financial Targets 2018

    NEW FINANCIAL TARGETS 2018 Growth TF Bank aims to achieve earnings per share of at least 14.50 SEK in 2020 Efficiency TF Bank aims to achieve a cost/income ratio of below 35 % in 2020 Capital structure | A! capital ratios shall exceed the legal requirement (including pillar 2) by at least 2.5 % poin

  4. Slide 4: Worth Noting January - September 2018

    WORTH NOTING JANUARY - SEPTEMBER 2018 = In January, the subsidiary Avarda launched a payment solution in Finland, together with several major partners = In April, the Board appointed Mattias Carlsson as the new CEO of TF Bank = In June TF Bank issued a Tier 1 capital PC instrument (AT1) of SEK 100 m

  5. Slide 5: Loan portfolio and operating income

     3,500 600 3,000 500  2,500 400 SEK million 2,000 300 1,500 200 1,000 500 100  0 0 1990 1999 2008 2017 Loan portfolio (LHS) Operating income (RHS) 5

  6. Slide 6: Consumer Lending

    CONSUMER LENDING DIVERSIFIED GRANULATED PORTFOLIO At a glance 79 % of the loan portfolio Unsecured consumer loans Marketed trough direct channels, own data base and external partners Tenor of loans are typically between 12 and 60 months Estimated average maturity of ~23 months Average loan size on b

  7. Slide 7: Ecommerce Solutions

    ECOMMERCE SOLUTIONS DRIVES NEW LENDING AND BUILDS DATABASE At a glance Key metrics . Full check-out solution (Checkout+) offered Share of the Amount outstanding as one-stop-shop in Finland and Sweden Group’s loan portfolio SEK 870 million with all major payment methods (30 Sep 2018) = Strong momentu

  8. Slide 8: Loan portfolio by segment

    +39.1 % +42.3 % 4,000 4,500 3,328 4,198 3,068 2,805 3,000 2,561 SEK million 3,876 2,392 4,000 2,000 3,519 3,500 1,000 3,156 2,950 0 3,000 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 SEK million 2,500 2,000 +55.9 % 1,000 870 807 1,500 800 714 SEK million 558 595 600 1,000 400 500 200 0 0 Q3'17 Q4'17 Q1'18 Q2'18 Q3

  9. Slide 9: Growth and Diversification

    GROWTH AND DIVERSIFICATION ACCORDING TO PLAN ef” Norwa' Loan book SEK 1,355m (32 %) Change 9M'18: +51 % Finland Strong growth Loan book SEK 1,122m (27 %) Change 9M'18: +23 % Profitability and steady growth Sweden Loan book SEK 632m (15 %) Change 9M'18: +1 % Focus on profitability Baltics Loan book S

  10. Slide 10: Norway loan book

     1,500 1,248 1,200 1,125  1,013 NOK million 900 900 774 600 300 0 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18   ‒ ‒  10

  11. Slide 11: Baltics and Poland loan books

    160 142 80 133 69 140 125 70 119 58 120 111 60 EUR million PLN million 100 50 47 41 80 40 34 60 30 40 20 20 10 0 0 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18        11

  12. Slide 12: Sweden and Finland loan books

    120 109 700 644 103 626 609 632 98 603 100 92 92 600 80 500 EUR million SEK million 400 60 300 40 200 20 100 0 0 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18       12

  13. Slide 13: Operating income and margin

    180  24% 162 160 153 Operating income 141 21% margin ‒ 140 134 18.4% 130 17.9% 17.6% 18% 17.2% 16.7% 120 ‒ 15% 13.8% 13.4% SEK million 13.1% 12.9% 100 12.6% 12% ‒ 80 Risk-adjusted operating 9% income margin  60 40 6% ‒ 20 3% ‒ 0 0%  Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 13

  14. Slide 14: Cost/income ratio

    70  60% 63 61 60 57 50% ‒ 49 50 40.3% 46 40.1% 39.0% 40% 36.9% ‒ 35.2% SEK million 40 30% ‒ 30 20% 20  10 10% ‒ 0 0% Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 ‒ 14

  15. Slide 15: Credit losses

     ‒ 40 38 7% 36 36 35 34 33 6%  30 5% 4.6% 4.5% 4.5% 4.3% 25 4.1% ‒ SEK million 4% 20 ‒ 3% 15 10 2%  5 1% ‒ 0 0% Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 ‒ 15

  16. Slide 16: Operating profit by quarter

     70 ‒ 63 ‒ 60  52 53 50 49 50 48 43 SEK million 40 ‒ 30 ‒ ‒ 20 10  0 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 16

  17. Slide 17: Profit and margins by segment

    70 20% +6 + 63 C/I: 39 % + 57 60 70 16% 63 50 60 C/I: 32 % 12.5% 12.9% 12.6% 12% 50 40 SEK Million 40 SEK million 40 C/I: 62 % 30 8% 30 23 20 20 4% 10 10 0 0% 0 Consumer Ecommerce Total Group Consumer Ecommerce Total Group Consumer Ecommerce Total Group Lending Solutions Lending Solutions Lending So

  18. Slide 18: Balance sheet and funding

    6,000 126 Other assets 129  22 Shares Other liabilities Liquidity Loans to credit institutions 1,220 5,000 reserve 1,557 Deposits Germany ‒ Cash at central banks 230 Treasury bills ‒ 150 4,000 ‒ Deposits Norway 1,352 ‒ SEK million 3,000 590 Deposits Finland  4,198 Loans to the public ‒ 2,000 1,553

  19. Slide 19: Capital ratios

     17.2% * 17.4% ** ‒ 16.2% 15.1% * 2.5% 2.4% T2 ‒ 3.0% 2.6% 2.5% 2.4% AT1 ‒  ‒ 13.2% 12.6% CET1 ‒ 12.5% 12.2% ‒  ‒ Dec '17 Mar '18 Jun '18 Sep '18 ‒ ‒ 19

  20. Slide 20: Summary: loan book, profit, C/I, capital

     Continued organic loan book growth LOAN BOOK +33 % GROWTH SEK 4,198 million OPERATING  Strong operating profit growth PROFIT +15 % GROWTH SEK 165 million  Cost efficiency C/I RATIO 40 %  Capital position TOTAL CAPITAL 17.4 % RATIO 30 Sep 2018 20

  21. Slide 21: Looking Ahead

    LOOKING AHEAD = Continued expansion in ecommerce solutions = Continue leveraging on the platform in consumer lending = Lithuania and Germany soft launch = Continued strong competition especially in the Nordics = Gradually improving financial performance in ecommerce segment as income grows and opex

  22. Slide 22: Q&A Session

    Q&A Session 22

  23. Slide 23: Board of Directors

    Mari Thjømøe Charlotta Björnberg- Tone Bjørnov Chairman of the Board Paul Board member since since 2018 Board member since 2015 Board member since 2017 2017 John Brehmer Bertil Larsson Mattias Carlsson Board member since Board member since Board member since 2010 2007 2008 23

  24. Slide 24: Management

    Mattias Carlsson Mikael Meomuttel CEO CFO, Deputy CEO and Head of Investor Education: MEng., engineering physics, Uppsala University. Relations Current commitments: BB Bank ASA (board member), Avarda Education: MSc, Business/Economics and Finance, University AB (board member), Avarda Oy (board membe

  25. Slide 25: Regional and functional managers

     Vilma Sool Regional manager Juho Maanpää Head of Finland Juris Pūce Head of Latvia Björn Skytt CIO Baltics Extensive consumer Before joining TF Bank Before joining TF Bank Head of Estonia finance experience in in 2016, worked for in 2010 worked as 10 years of experience Finland within seven years

  26. Slide 26: Contact

    ‘TF TFBank Contact Investor relations Mikael Meomuttel +46 706 26 95 33 ir@tfbank.se www.tfbankgroup.com

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