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Q2 2018 Presentation Avida Holding AB Disclaimer This Presentation has been produced by Avida Holding AB (the Company, Avida or Avida Holding), solely for use at the pr esentation to investors and is strictly confidential and may


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Q2 2018 Presentation Avida Holding AB

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Disclaimer

This Presentation has been produced by Avida Holding AB (the “Company”, “Avida” or “Avida Holding”), solely for use at the presentation to investors and is strictly confidential and may not be reproduced or redistributed, in whole or in part, to any other person. To the best of the knowledge of the Company and its board of directors, the information contained in this Presentation is in all material respect in accordance with the facts as of the date hereof, and contains no material omissions likely to affect its import. This Presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading. This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any of their parent or subsidiary undertakings or any such person’s officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results. An investment in the company involves risk, and several factors could cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements that may be expressed or implied by statements and information in this presentation, including, among others, risks or uncertainties associated with the company’s business, segments, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation. The company does not intend, and does not assume any obligation, to update or correct the information included in this presentation. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company or any of their parent or subsidiary undertakings or any such person’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. By attending or receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company’s business. This Presentation speaks as of 30st June. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. All figures presented in this Presentation is unaudited at the time of edit.

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  • The strong volume growth continues with an increase in net

loans of SEK1,902m (92%) YoY and SEK561m (16%) from previous quarter, ending at SEK3,968m.

  • Net revenues increase ending at SEK105m, an increase of

SEK30m (39%) YoY and SEK9m (10%) in the quarter.

  • Earnings before tax at SEK20.5m, an increase of SEK4m

(23%).

  • The CET1 ratio is 14.9% at the end of second quarter 2018,

compared to Avida’s target of 13%.

Second Second qu quarter highlights arter highlights

Avida Group Consumer Finance Business Finance

  • Significant growth during the quarter with increased net

lending of SEK174m (22%) and SEK658m (221%) YoY, ending at a total loan book of SEK957m.

  • Business Finance operations continue to grow rapidly and

winning significant clients. In Q2 Avida have signed its first customer in Belgium. This is in line with Avida’s strategy to grow in Europe together with strategic partners.

  • Net interest margin of 20.8% (23.0% in Q1). The decrease in

net interest margin is due to a change in strategy and continuous shift towards more credit worthy clients to enable faster and more stable growth.

  • Loan loss ratio (rolling 4 quarters) of 2.1% (4.6% in Q1). This

deduction is almost entirely related to the sale of old B2C

  • NPLs. In B2B, where the growth is occurring, there are close to

no losses.

  • Strong growth with YoY increase in net loans of SEK1,148m

(65%). Positive development also during the second quarter with an increase of SEK321m (12%), ending at SEK 3,012m.

  • The net interest margin was 10.9% (11.0% in Q1) driven by

interest yields decreasing from 12.1% in Q1 2018 to 12.0% in Q2 2018 due to stronger growth in lower risk and higher ticket segments.

  • Loan loss ratio (rolling 4 quarters) of 2.0% (1.5% in Q1). The

increase is due to transition to IFRS9.

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Por

  • rtf

tfolio

  • lio growth

th

II II

Net inter et interes est t mar margin gin

III III

Cos Cost t / net inter net interes est income income ratio tio

IV IV

Loan loss Loan losses es

VI VI

Retur eturn on n on equity equity

VII VII

CE CET1 r 1 ratio tio

I

YoY

  • Y growth in net

th in net loans loans of

  • f 92%

92%

  • Tota

tal outsta tstanding loans of f SEK3 K3,968m

Net inter et interes est t mar margin gin of

  • f 15.5%

15.5% Cos Cost t / Income r ncome ratio tio of

  • f 63.1%

63.1% Annualiz Annualized ed loan loss loan losses es of

  • f 1.8%

1.8% ROE of

  • f 13.2%

13.2%

  • Return

turn on req required red CET1 capital tal of f 16.8%

CE CET1 r 1 ratio of tio of 14.9% 14.9%

  • We

Well above ve reg regulatory mi tory minimu mum m req requireme rements ts of f 9.6%

V

Prof

  • fits

its Pre-tax pr tax prof

  • fits

its of

  • f SEK20.5m

20.5m

Q2 20 Q2 2018 18 Finan Financial cial Highligh Highlights ts

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41.1 55.9 63.7 67.5 75.4 84.7 88.8 95.8 105.1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 35.9 41.2 60.3 70.8 75.5 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

Continued strong growth in Net interest income in Q2 2018

Net interest income (SEKm)

+60% CAGR

Con Continu tinued ed stro strong ng gro growth wth

* Adjusted EBT in Q4 for one offs of total SEK12m

Rolling 12 month Operating profit / EBT* (SEKm)

Continued significant growth in rolling EBT 5

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433 937 1,314 1,556 1,765 2,055 2,281 2,588 3,012 268 309 300 289 301 338 554 789 957 701 1,246 1,614 1,845 2,066 2,394 2,835 3,376 3,968 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 Business Finance Consumer Finance 26,094 37,011 40,963 45,147 49,357 54,604 57,770 60,825 60,342 394 394 362 330 332 328 375 404 369 4,034 5,589 6,942 8,925 9,398 11,257 14,216 14,317 14,744 30,522 42,994 48,267 54,402 59,087 66,189 72,361 75,546 75,455 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 Deposits Business Finance Consumer Finance

Continued growth of customers in deposits in Q2 2018 Significant volume growth during Q2 2018

Number of customers (#) Net loans to customers (SEKm)*

Con Continu tinued ed po positive de sitive deve velop lopme ment nt in in ne net l t loa

  • ans

ns

* Excluding external commission

+138% CAGR 6

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17.2 % 14.8 % 12.8 % 12.5 % 12.3 % 12.6 % 12.0 % 12.1 % 12.0 % 16.3% 13.9% 11.9% 11.5% 11.4% 11.6% 10.9% 11.0% 10.9% 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

Yield NIM

433 937 1,314 1,556 1,765 2,055 2,281 2,588 3,012 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 16.3 28.4 38.7 46.6 52.5 61.7 66.6 74.5 84.6 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

3.2%

Income (SEKm)* Yield (%) and NIM (%)*

* Net loans, Income, Yield and NIM is excluding external commission

Sta Status tus Cons Consum umer F er Fina inanc nce

Net loans (SEKm)*

+164% CAGR

Loss ratio (%)**

** Loss ratio is calculated as rolling 4 quarter credit losses divided by average rolling 4 quarter net loans 4.1% 3.4% 3.4% 2.4% 2.1% 2.0% 0.0 % 0.5 % 1.0 % 1.5 % 2.0 % 2.5 % 3.0 % 3.5 % 4.0 % 4.5 % 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

Loss ratio

+128% CAGR 7

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44.1 % 48.8 % 46.9 % 48.0 % 48.2 % 49.7 % 34.2 % 26.1 % 22.0 % 43.2% 47.9% 46.0% 47.0% 47.3% 48.8% 33.2% 25.0% 20.8% 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

Yield NIM

28.8 35.3 36.0 33.9 37.0 39.5 41.9 43.9 48.0 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 268 309 300 289 301 338 554 789 957 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

+89% CAGR

Income (SEKm)* Yield (%) and NIM (%)*

Sta Status Busines tus Business s Fina Financ nce

  • Net loans, Income, Yield and NIM is excluding external commission

Net loans (SEKm)* Loss ratio (%)**

** Loss ratio is calculated as rolling 4 quarter credit losses divided by average rolling 4 quarter net loans. Note; Excluding the B2C loans with an accounting policy that results in big fluctuations regarding credit losses in the P&L, the losses regarding Business Finance is close to zero.

Note; The change in strategy towards a product mix of more larger credit worthy clients affects positively

  • n volumes and loss ratio as well as reducing NIM according to plan.

7.0% 7.2% 8.6% 6.5% 4.6% 2.1% 0.0 % 2.0 % 4.0 % 6.0 % 8.0 % 10.0 % 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

Loss ratio

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Profit & loss Comments

Key development in Consumer Finance operations

  • Consumer Finance operations continue to show growth during the quarter and YoY with

an increase of SEK321m (12%) and SEK1,148m (65%) respectively, ending at SEK3,012m. During the quarter Non Performing Loans (NPLs) have been sold on a monthly basis, and additionally a stock of older NPLs was sold in Sweden.

  • All markets are showing strong growth, where Sweden and Finland had the most

positive development. Norway is showing a slower development, but the team has implemented new strategies to strengthen the development which should result in increased growth over the next few quarters.

  • The Consumer Finance business is highly scalable, and Avida has implemented several

initiatives that will greatly improve the long term cost efficiency and risk management. The change of the consumer ledger in all countries during 2018 has started in Q2 with expected first part launch during the second half 2018. This change will improve Avida´s speed and flexibility particularly when adding new products and features to existing products going forward. Key development in Business Finance operations

  • Business Finance increased its volumes by SEK174m (22%) during the quarter and by

SEK658m YoY, ending at SEK957m. A key driver for the growth is the factoring agreement with Norsk Gjenvinning that went live in Q1 and grew through Q2. The agreement is a significant milestone for Avida, and shows that the company can also handle larger customers with complex needs.

  • The significant investments made in the Business Finance segment keeps paying off,

resulting in positive development for the quarter.

  • The business set up is very scalable and the marginal profitability of new agreements is

expected to be highly accretive.

Pro Profi fit & t & los loss Q s Q2 20 2 2018 18

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130 226 268 327 369 389 536 511 526 14.4 % 16.9 % 14.7 % 15.9 % 16.2 % 15.9 % 18.7 % 15.8 % 14.9 % 0.0 % 2.0 % 4.0 % 6.0 % 8.0 % 10.0 % 12.0 % 14.0 % 16.0 % 18.0 % 20.0 % 100 200 300 400 500 600 700 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

Total equity CET1 ratio

701 1,191 1,660 2,133 2,134 2,728 3,267 3,587 4,254 100% 96% 103% 116% 103% 114% 115% 106% 107% 0% 20% 40% 60% 80% 100% 120% 140% 160% 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300 2,400 2,500 2,600 2,700 2,800 2,900 3,000 3,100 3,200 3,300 3,400 3,500 3,600 3,700 3,800 3,900 4,000 4,100 4,200 4,300 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2

Deposits from customers Deposit ratio

111 113 199 495 300 592 835 501 611 18 37 54 68 67 82 91 129 140 130 151 255 566 370 679 931 638 762 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 Loans to credit institutions 83 Certificates / bonds 19 Other liquid reserves 0

Key ratios Liquidity (SEKm) Funding (SEKm) and deposit ratio (%) Total equity (SEKm) & CET1 ratio (%)

LCR CR De Deposi sit ratio io

127% 107%

Average

  • utst

standing ing l loan s siz ize

~SEK 49,908

Key Key ba balanc lance she sheet et fi figu gures res

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Balance sheet Comments

  • Net loans increased by SEK1,902m YoY and SEK561m during Q2 2018 leading

to a total net loans of SEK3,968m.

  • The funding is mainly comprised of deposits and equity with deposits increasing

by SEK2,122m YoY and SEK652m QoQ leading to a liquidity portfolio of SEK762m.

  • The equity base increased by SEK157m YoY and increased by SEK15m Q2

2018 mainly due to audited profit for Q1, implying a capital ratio of 14.9% - well above the capital targets and requirements.

Balanc Balance she sheet et Q2 201 Q2 2018

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SEKm 2018-06-30 2018-03-31 2017-12-31 2017-09-30 2017-06-30 2016-12-31 Cash and balance to central bank 10.5 8.5 5.5 4.4 3.2 1.8 Certificates and bonds 140.0 128.8 91.0 81.9 67.4 54.5 Loans to credit institutions 611.0 501.3 834.7 592.2 299.5 198.7 Net loans to customers 3 968.1 3 406.7 2 858.0 2 393.7 2 065.7 1 614.0 Shares and shares in ass. Companies 0.0 0.0 0.0 4.0 4.2 4.2 Intangible assets 22.6 22.1 19.9 22.4 21.2 15.3 Machines and inventories 4.9 5.1 5.3 5.4 5.4 5.4 Other assets 37.0 54.7 4.2 16.7 28.8 38.8 Prepaid expenses and accrued income 84.6 75.1 53.7 84.2 70.6 56.7 Total assets 4 878.7 4 202.3 3 872.2 3 204.9 2 566.1 1 989.4 Deposits from customers 4 260.4 3 608.1 3 271.6 2 733.3 2 138.6 1 663.3 Other liabilities 67.8 59.3 41.1 62.2 40.3 40.4 Accrued expenses and prepaid income 24.8 24.3 23.6 15.5 13.6 12.8 Deferred tax liabilities 0.0 0.0 0.0 4.5 4.7 4.7 Total liabilities 4 352.9 3 691.7 3 336.2 2 815.5 2 197.2 1 721.3 Share capital 5.4 5.4 5.4 4.9 4.8 4.4 Retained earnings 491.5 492.1 494.5 351.1 346.8 250.9 Earnings in year 28.8 13.0 36.2 33.5 17.2 12.8 Total equity 525.8 510.6 536.0 389.4 368.9 268.2 Total equity and liabilities 4 878.7 4 202.3 3 872.2 3 204.9 2 566.1 1 989.4

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I II II IV IV

Gr Growth th Retur eturn n on

  • n equ

equit ity

III III

Capital pital ratios tios Div ividen idend d po poli licy

▪ Significant growth opportunity; realistic target of SEK10Bn loan book by 2020 by pursuing opportunities in both consumer and business ▪ Dynamic allocation of capital to products/segments with best risk/reward ▪ Target return on equity of more than 25% in line with industry average ▪ Lower ROE in the short term due to investment in organization and infrastructure ▪ Current CET1 ratio target of ~13% ▪ Current total capital ratio target of 14.5-15.0% ▪ Will leverage capital markets for both debt and additional equity to grow intelligently ▪ Target dividend payout ratio of 35% ▪ No dividend payments in short / medium term due to growth focus

Fina Financ ncial ial targe targets ts

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1 2 3 4 5

Resha eshaped, ped, automa automated pla ted platf tfor

  • rm

m - well ell set set up f up for g

  • r growth acr

wth across

  • ss the

the Nor Nordics dics Diversified business - well positioned to capture large opportunity in the SME market in the Nordics Renewed, strong management team that “has done this before” – set set to do it to do it even en better this better this time time

✓ ✓ ✓ ✓ ✓

Scala Scalable ble model model – tar targeting geting SEKbn SEKbn 10 loan 10 loan book by book by 2020 2020 Shar Shareholder friendl eholder friendly y set set up with up with long long-ter term m and activ and active e key ey shar shareholder eholders

Di Divers versif ified, ied, sca scalable lable an and se d set f t for

  • r high

high gro growth wth

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Issue of new shares

  • In the beginning of July, the Board of directors decided to issue 4,000,000 shares, in total NOK 150m (SEK 160m). Both new and existing

investors participated. With increased CET1 capital Avida is well capitalized for the lending growth going forward.

Sign Signif ifican icant t eve events after nts after the the end end of the qu

  • f the quarter

arter

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  • Avida expects continued strong growth in lending volumes going forward and maintains our expectation for growth in net loans to customers

through 2018, ending at SEK5,000m. We will continue our focus on improving the cost efficiency.

  • Both Business Finance and Consumer Finance have grown according to plan in Q2 and we expect the growth to continue in the second half and

margins to improve as we get scale advantages.

  • Within Business Finance the operation continues to grow rapidly and winning significant clients in the Nordic and European market. We will

constantly evolve our product offering to support our ambitious growth targets.

  • Consumer Finance had a good development in the quarter in Finland and Sweden. The development in Norway however is weaker than
  • expected. The focus is on optimizing our score models to better identfiy proftiable segments to fuel our growth.
  • The cost level during the quarter is within plan but have been higher than in the first quarter due to investments in IT and organisation. Actions

have been implemented to better control the cost development, and the Board remains confident in reaching the targets set out for 2018 with SEK 5bn in credit volume and continued improvements in the C/I ratio.

  • Avida sees good growth prospects in all of the three geographic markets, and our strategy of focusing on both Consumer and Business Finance

gives us ample room to allocate capital to the most profitable opportunities.

  • We continue to see record volume growth in both Consumer Finance and Business Finance which will impact positively on income and profit for

coming quarters

Outl Outloo

  • ok

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STOCKHOLM Visiting address: Södermalmsallén 36 Postal address: Postbox 38101 100 64 Stockholm Contact information: Phone: +46 08-56420100 Email: info@avida.se OSLO Visiting address: Fredrik Selmersvei 6 Postal address: Postbox 6134 Etterstad 0602 Oslo Contact information: Phone: +47 23335000 Email: info@avida.no HELSINKI Visiting address: Säterinportti, Linnoitustie 6 B Postal address: Linnoitustie 6 B 02600 Espoo Contact information: Phone: +358 7575 50070 Email: luotto@avidafinans.fi