1 st Quarter 2017 RESULT PRESENTATION Q1 2017 in summary Q1 2017 - PowerPoint PPT Presentation

1 st Quarter 2017 RESULT PRESENTATION

Q1 2017 in summary Q1 2017 vs Q4 2016 LOAN BOOK +11% GROWTH o Continued organic loan book growth EPS growth o Strong EPS growth +18% 1) o Cost efficiency C/I RATIO 38.8% o Strong capital base TOTAL CAPITAL 17% RATIO (Mar ’17) 1) ¡ Attributable to shareholders of the parent company excluding items affecting comparability . 2

Strong start to 2017 > Continued profitable growth in all countries ü ü Strong finish to the Quarter led to a strong start to the year ü ü Increased focus on OPEX within the Group ü ü Increased product mix in deposits and lending ü ü Continued geographic diversification of loan book and financing 3

This is TF Bank DIVERSIFIED GEOGRAPHICALLY GRANULATED DIVERSIFIED PORTFOLIO NEW OPPORTUNITIES FLEXIBLE IN SALES FINANCE IT- PLATFORM WITH AVARDA LEAN AND COST CLEAN BALANCE FOCUSED SHEET SALE OF NPL ORGANIZATION 4

Long track record of profitable growth Long experience and proven business model Strong track record on growth and profitability SEK million o More than 25 years experience from 2 500 500 LOAN PORTFOLIO consumer finance industry 2 250 2 000 400 1 750 1 500 300 o Business model combining growth with 1 250 1 000 200 750 500 100 best-in-class returns 250 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 o Highly profitable core markets with proven Loan portfolio Operating income Geographically well diversified model for geographical expansion into new SHARE OF LOAN PORTFOLIO high-growth markets (12M2016) Sales Finance 17% o Over 1 million active customers Direct to Consumer 83% Poland 7% Denmark 1% o Two complementary business segments Estonia 10% Sweden 27% • Direct to Consumer (consumer loans) Norway 21% • Sales Finance (payment solutions to merchants and Finland 34% credit cards) 98 employees (Average) 5

Direct to Consumer - Diversified Granulated Portfolio Product overview and use of proceeds Loan sizes and customer profile Unsecured consumer loans o Average size (SEK) (per Mar ’17) Marketed through internal channels and external partners o ~24,000 Tenor of loans are typically between 12 and 60 months o ~94 000 ~25,000 Average loan on book of SEK ~28,000 o ~22,000 o Estimated average maturity of ~22 months ~18,000 Home Employed improvement Home Low-to- Credit- Travel applia middle worthy nces income Car repair Middle-aged 6

Sales Finance – Drives new lending and builds database Product overview Key financials The Sales Finance segment enables merchants to offer o % OF TOTAL LOAN PORTFOLIO (Q1’17) KEY FACTS financing solutions to their customers 19% TF Bank offers reliable and attractive white-label o 516 SEKm Amount solutions, enabling merchant to use branded invoices outstanding (31 Mar 2017) +35% Invoice payment time of 30-50 days and instalment Loan portfolio o (Q1 /2017 vs Q1 growth plans for up to 36 months 2016) o Norwegian credit cards (from Q1 2017) Growth through two different brands and organisations (100%) (51%) Geographical JV established expansion in 2015 Europe Long-term Strategy to merchant become #2 in the relationships in Nordic region the Nordics 7

Strong loan book growth driven primarily by Direct to Consumer TF Bank Group Direct to Consumer segment SEK million SEK million 12M growth +37.5% 2 400 2 239 2 200 2 076 1 940 2 000 12M growth 2 755 1 766 2 800 +37.0% 1 800 1 629 1 600 2 600 2 489 1 400 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 2 357 2 400 Sales Finance segment 2 185 SEK million 2 200 12M growth +34.6% 516 2 012 500 2 000 419 416 413 1 800 383 400 1 600 300 1 400 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 200 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 8

Summary: growth and diversification according to plan Country Loan book growth in SEK million (share of group) Comments Growth Q4’16 Q1’17 during Q1 2017 Strong growth in new product o 847 900 +6% (33%) (34%) Growth Q4’16 Q1’17 during Q1 2017 Focus on profitability o 663 688 +4% (27%) (25%) Growth Q4’16 Q1’17 during Q1 2017 Strong growth in both segments o 530 642 +21 % (21%) (23%) Growth Q4’16 Q1’17 during Q1 2017 Strong portfolio development o 249 282 +13% (10%) (10%) Growth Q4’16 Q1’17 during Q1 2017 Strong growth in both segments o 164 204 +24% (7%) (7%) 9

Core market Finland: strong growth in new product Developments Continued strong business development Outstanding consumer loans (SEK million) STABLE GROWTH 900 900 847 830 811 • Strong growth in Direct to Consumer in 800 March 726 700 • Increased co-operation with brokers (access 600 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 to new customer base) MORE TO COME – STRATEGIC ROADMAP IN FINLAND • Increased sales to existing customer base ü ü Increase in number of co-operation partners (both segments) Increased online activity, alone and with partners ü ü • Stable credit quality Further development of Avarda and cross selling activities Growth ü ü during Q1 2017 +6% 10

Core market Sweden: continued focus on profitability Developments Continued strong business development Outstanding consumer loans (SEK million) 700 688 663 659 675 646 640 650 • Focus on protecting margins (“not willing 625 600 to trade margins for volume”) 575 550 525 • Focus on cross-selling 500 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 • Focus on credit quality MORE TO COME – STRATEGIC ROADMAP IN SWEDEN Development of scorecard to utilise application volume ü ü • Introduction of new loan brokers Several trademarks via the same broker ü ü Growth Increase in cross selling and number of brokers ü ü during Q1 2017 +4% 11

Core / growth market Norway: growth in both segments Developments Strong momentum continues CONTINUED GROWTH SINCE ACQUISITION New lending consumer loans (NOK million) >6x • Maintaining growth and credit quality 150 100 50 • Product development (SF) 0 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 • Credit card business • Higher margin than for loans • Successful campaigns in February/March MORE TO COME – STRATEGIC ROADMAP IN NORWAY Product development / Credit card ü ü • Increase in the Group’s business mix • Higher average loan Continued focus on growth and credit quality ü ü • Lower interest rate • Lower credit losses Growth Further integration of IT-platform and process ü ü during Q1 2017 • Successful introduction of deposits +21 % 12

Growth market Poland: growth in both segments 2017 Plans and first tangible results Stable new lending improved by risk management Accelerated new PLN million lending Decreasing default rate • Increased volume in Sales Finance segment • Continued focus on credit quality 0 0% Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 • Further decrease in default rate Default rate New lending Collection rate • Controlled increase in portfolio size ON THE RIGHT PATH – STRATEGIC GOALS FOR POLAND ü ü Further development of segmentation and scorecard • Continued focus on approval rates ü ü Further development of IT-platform and process Growth ü ü More brokers and increasing customer base during Q1 2017 +24% 13

Growth market the Baltics: strong in Estonia, start-up in Latvia 2017 Plans and first tangible results Loan portfolio growth Outstanding consumer loans (SEK million) 300 282 275 249 248 250 • Estonia going from strength to strength 227 225 199 200 180 175 • Application to establish a branch in Estonia 150 125 100 • Ongoing product development in both Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 segments ON THE RIGHT PATH – STRATEGIC GOALS FOR BALTICS • Record volume in Estonia in March ü ü Establishment of a branch will give increased local focus ü ü Further development of IT-platform and processes • Synergies between countries Growth ü ü Product innovation during Q1 2017 +13% 14

Increased operating income and strong margins Operating income Operating income margins Comments SEK million Operating income Q1 2017 Q1’17/Q1’16 growth o +19% vs. Q1 2016 +19% 30% 125 119 118 114 • Strong growth in Norway, Operating margin 108 Finland and Estonia 101 25% 100 21,5% 21,3% Decreasing operating income o 20,5% 20,2% 19,4% margin mostly due to; 20% 75 • Growth in Norway (lower 15,7% 15,6% 15,1% 15,1% 14,6% margins) 15% Risk-adjusted operating margin 50 Risk-adjusted margin o 10% (adjusted for net loan losses): 14.6% 25 5% - 0% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 15

Extensive focus on OPEX Operating expenses C/I ratio Comments SEK million Operating expenses Q1 2017 vs. o 50 47 Q1 2016 +20% 46 44% 43 42 • Number of employees 105 (94) 42% 39 40 • Increased IT costs/investments 40,0% 40% 38,8% 38,8% • Sales costs related to lending 38,3% 30 volumes 38% 37,2% Operating expenses decreased Q1 o 36% 20 2017 vs Q4 2016 34% • Extensive focus on OPEX 10 32% Cost/Income ratio Q1 2017: o 38.8% 30% - Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 • Excluding Avarda 36.0% 16