Interim Presentation | 4rd quarter 2018 | 8 February 2019 - - PowerPoint PPT Presentation

Interim Presentation | 4rd quarter 2018 | 8 February 2019

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Profit after tax

840 2,352 3,706

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018

Monobank

Q4 2018 highlights

NOK million

Net loans

1.7 1.8 3.0 5.7 7.4 10.1 13.8 15.5

• 8.8

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018

NOK million

Forward flow

Growth driven by a more conservative approach in Norway

• Net loan balance up 7.4% to NOK 3 706 million
• Net interest income of NOK 95 million, up 10 % vs Q3’18 and

70 % vs Q4’17

• Growth level reflects reduced marketing spending
• More conservative approach in Norway due to regulatory

environment Profitability negatively affected by NOK 66 million in loan loss provisions due to:

• Increased data and portfolio insight
• Reserve strengthening in Finland
• One-off of NOK 11 million related to identified error in existing

model

• Adjusted model will additionally contribute to somewhat higher

loan loss provisions going forward

3

Financials

4

Key yields and margins

23 30 37 45 56 69 82 86 95 22 28 35 41 53 64 75 76 81 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Net interest income Total income Net profit after tax 14.8 % 14.6 % 14.3 % 14.2 % 14.3 % 14.4 % 14.4 % 14.4 % 14.3 % 12.3 % 12.7 % 12.7 % 12.8 % 12.8 % 12.8 % 12.6 % 8.8 % 8.7 % 8.7 % 8.0 % 7.7 % 7.8 % 8.3 % 7.6 % 7.7 % Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Annualized loan yield (Norway) * Annualized loan yield (Finland) * Annualized NIM ***

Continued high and stable margins

Note(*): yield = weighted average effective annual yield || Note(**): actual end of quarter annual rate || Note(***): NIM = 4x NII in quarter / average total assets in quarter

Income and profit after tax

Per cent (%) NOK (million)

Total income impacted by loan loss provisions and conservative approach in Norway

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6.5 5.5 6.2 6.9 8.0 8.0 12.7 10.6 11.4 4.3 5.6 6.3 6.1 8.6 9.6 9.6 7.9 11.9 4.6 8.1 8.0 7.7 11.3 14.6 12.0 9.9 4.8 0.3 1.1 1.5 2.0 1.4 2.1 2.4 2.5 3.8 15.8 20.3 21.9 22.7 29.2 34.2 36.7 30.9 31.9 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Staff costs Other administrative expenses Marketing expenses Depreciation and amortisation 73% 72% 64% 55% 55% 53% 49% 40% 39% 51% 43% 40% 36% 34% 30% 33% 27% 33% 0% 20% 40% 60% 80% 100% 120% Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Cost / Income Ratio Cost (excl. marketing) / Income Ratio

Efficient operations with economies of scale

Note(*): cost / income ratio = operating expenses (incl. or excl. marketing) / total income

Operational expenses

NOK (million)

Cost / Income ratio *

Reduced marketing expenses due to regulatory uncertainty

Per cent (%)

6

Loan losses and credit quality

Note(*): loan loss ratio = LTM loan losses / average LTM net loans / 2) || Note(**): non-performing loan ratio = >PD90 / gross loans || Note(***): provision ratio = total provisions / >PD90

Gross loans past due (# of days) Provisions Loan losses

NOK (million)

Total provision ratio *** Loan loss ratio * Non-performing loan ratio **

Per cent (%)

2.9 % 2.2 % 2.2 % 2.2 % 2.4 % 2.6 % 2.7 % 2.9 % 4.2 %

Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

40.7 58.7 94.7 135.7 189.1 251.7 332.5 356.6 436.1

Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

31-60 PD 61-90 PD > 90 PD

4.8 % 4.9 % 6.4 % 7.1 % 7.9 % 8.5 % 10.1 % 10.1 % 11.3 %

Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

13.5 18.4 26.3 37.3 50.7 69.5 86.4 91.9 138.5

Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

4 5 8 11 14 19 19 25 66

Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

33% 31% 28% 27% 27% 28% 26% 26% 32%

Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

NOK (million) NOK (million) Per cent (%) Per cent (%)

Note(*): loan loss ratio = LTM loan losses / average net loans ) || Note(**): non-performing loan ratio = >PD90 / gross loans || Note(***): provision ratio = total provisions / >PD90

Negatively affected by one-offs and increased data and portfolio insight

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903 1,138 1,556 2,043 2,652 3,057 3,434 4,239 4,125 331 335 339 345 522 534 548 563 609 1,235 1,472 1,895 2,487 3,272 3,689 4,081 4,901 4,833

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018

Deposits by customers Subordinated loan Equity

Easy access to low-cost deposit funding

Note(*): deposit ratio = deposits / net loans

Liquidity Funding

NOK (million)

Key ratios

301 220 325 489 757 625 687 1,229 852 51 35 52 64 56 65 50 84 109 352 255 377 552 813 691 737 1,313 961

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018

Debt securities Loans and advances to banks NOK (million) 108% 98% 108% 109% 113% 106% 107% 123% 111% 168% 153% 158% 153% 167% 160% 163% 181% 172%

152% 168% 172% 133% 242% 206% 214% 701% 717%

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018

Deposit ratio * NSFR LCR

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16.1 % 27.8 % 21.5 % 21.6 % 22.0 % 25.0 % 21.4 % 20.6 % 19.9 % 19.1 %

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018

CET1 T1 * T2 *

Regulatory capital structure

Note(*): As of Q3 2018 NOK 46m Tier 1 (1.5% of RWA) and NOK 50m Tier 2 (2.0% of RWA) capital counts towards MONO’s capital adequacy ratios || Note(**): capital requirements (Pillar I) are weighted between Norway and Finland

Risk-weighted assets Regulatory capital Reported capital adequacy **

CET1 Capital

• Req. = 13.4%

Total Capital

• Req. = 16.9 %

per cent (%) NOK (million) NOK (million)

309 306 302 401 583 592 604 615 641

• 100

200 300 400 500 600

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018

CET1 T1 * T2 * 785 1,107 1,423 1,401 1,819 2,333 2,765 2,940 3,088 3,356

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018

75% loans 100% loans Other RWA

Note(*): As of Q4 2018 NOK 50m Tier 1 (1.5% of RWA) and NOK 50m Tier 2 (2.0% of RWA) capital counts towards MONO’s capital adequacy ratios || Note(**): capital requirements (Pillar I) are weighted between Norway and Finland

Pro forma Q4 2018 CET1 ratio of ~25% - fully financed to reach NOK 10bn after merger

9

Strategy and

• perations

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Multichannel distribution – Replicating Norwegian formula abroad from head quarter in Norway….

Note(*): current loan portfolio | Note(**): no live relationships with co-branding partners since inception

Monobank call center www.monobank.no

+ potential new partners

Monobank brand Third party agents Co-branding partners

Brand distribution volume *

24%

Co-branding distribution volume **

Not yet applicable

Agent distribution volume *

76%

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Attractive co-branding partner offering

Monobank offering Teaming up for increased value enhancing solutions

MONOBANK MONO PAY Credit card combined platform PARTNER BRANDED FRONT-END INSURANCE PROGRAM Legehjelp 24 – Qualified nurses and doctors available 24/7 Travel insurance TYPICAL POTENTIAL PARTNERS

• Travel agencies

CUSTOMER VALUE Ability to offer relevant customer value towards the customer CO-OPERATION Potential to increase co-operation (credit card and POS finance)

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Appendix

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Customer segmentation

Continuous development and tuning of scorecards to navigate the portfolio

3% 31% 66% Primary school Secondary school Higher education 25% 28% 29% 15% 3% <= 34 years 35-44 years 45-54 years 55-64 years >= 65 years 68% 32% Home owner Tenant

43 years

4% 21% 35% 40% NOK 250k-349k NOK 350k-499k NOK 500k-749k >= NOK 750k Age Income Education Housing Average customer Norway Finland

NOK 643k Higher education Home owner 43 years NOK 475k Higher education Home owner

23% 30% 29% 15% 3% <= 34 years 35-44 years 45-54 years 55-64 years >= 65 years 20% 35% 29% 16% NOK 250k-349k NOK 350k-499k NOK 500k-749k >= NOK 750k 12% 9% 79% Primary school Secondary school Higher education 71% 29% Home owner Tenant

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Detailed financial figures

Quarterly income statement and balance sheet

Balance Sheet Income Statement

Total Q4 Q3 Q2 Q1 In NOK thousands Interest income 403,642 115,206 105,680 98,055 84,702 Interest expenses 71,996 20,149 19,549 16,358 15,940 Net interest income 331,646 95,057 86,131 81,697 68,761 Income comissions and fees 25,970 6,255 6,975 6,255 6,485 Expenses comissions and fees 60,456 19,875 16,706 12,888 10,988 Total income 297,161 81,438 76,400 75,064 64,259 Income/(loss) from trading activities and currency 4,136 3,530

• 348
• 1,182

2,136 Staff costs 42,423 11,354 10,602 12,675 7,793 Other administrative expenses 80,361 16,711 17,753 21,663 24,234

• of which marketing expense

41,393 4,819 9,958 12,018 14,598 Depreciation and amortisation 10,855 3,847 2,513 2,364 2,131 Total operating costs 133,640 31,912 30,868 36,702 34,158 Profit / (loss) before impairment losses 167,658 53,056 45,184 37,181 32,237 Impairment releases/(losses)

• 128,435
• 66,029
• 24,524
• 18,825
• 19,057

Operating profit / (loss) before tax 39,223

• 12,973

20,660 18,356 13,180 Tax charge

• 8,655

4,198

• 5,168
• 4,563
• 3,122

Profit / (Loss) for the period 30,567

• 8,776

15,492 13,793 10,058 2018 Total Q4 Q3 Q2 Q1 In NOK thousands Assets Loans and advances to banks 108,790 108,790 83,630 49,906 65,439 Loans and advances to customers 3,844,229 3,844,229 3,540,868 3,298,138 2,945,025 Provision for impairment losses 138,493 138,493 91,882 86,419 69,470 Net loans and advances to customers 3,705,736 3,705,736 3,448,985 3,211,719 2,875,555 Debt securities 851,879 851,879 1,228,593 686,825 625,089 Deferred tax asset 2,791 2,791 907 5,470 Other intangible assets 67,064 67,064 62,119 55,669 47,157 Property, plant and equipment 2,681 2,681 2,104 2,072 2,094 Financial derivatives 6,644 6,644 2,150 Prepayments, accrued income and other assets 130,341 130,341 120,552 113,827 103,108

• of which accrued commission to agents

121,249 121,249 113,837 107,773 97,586 Total assets 4,875,927 4,875,927 4,948,135 4,120,925 3,723,911 Liabilities Deposits by customers 4,125,245 4,125,245 4,238,973 3,433,627 3,057,120 Provisions, accruals and other liabilities 40,668 40,668 43,154 38,458 30,014 Financial derivatives 2,670 4,489 Subordinated loan 98,739 98,739 98,654 98,568 98,483 Tax payable 2,105 2,105 4,261 Total liabilities 4,266,756 4,266,756 4,385,042 3,573,323 3,190,106 Equity Share capital 274,023 274,023 249,196 249,196 249,196 Surplus capital 286,621 286,621 256,595 256,595 256,591 Retained Earnings 48,527 48,527 57,301 41,810 28,018 Not registered capital Other paid in capital (options) Total equity 609,171 609,171 563,093 547,602 533,805 Total liabilities and equity 4,875,927 4,875,927 4,948,135 4,120,925 3,723,911 2018

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Important Information

Disclaimer

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This presentation (the “Presentation”) has been produced by Monobank ASA (the “Company”, the “Bank”, “Monobank” or “MONO”), 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

• r 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 LAWSAND 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 MATERIALISE, 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 17 October 2018. 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.