Q1 2020 PRESENTATION Q1 2020 PRESENTATION TODAYS PRESENTERS - - PowerPoint PPT Presentation

Q1 2020 PRESENTATION

TODAY’S PRESENTERS

Christina Kassberg

Interim Chief Financial Officer

Kenneth Nilsson

Chief Executive Officer

Q1 2020 PRESENTATION

Stefan Noderen

Head of Credit & NPL

3

PERFORMANCE FOR THE QUARTER

Total lending

• 29%

(+4%*)

SEKm 294 208 50 100 150 200 250 300 350

Q1 2019 Q1 2020

+7%

SEKm 29 182 31 148 5 000 10 000 15 000 20 000 25 000 30 000 35 000

Q1 2019 Q1 2020

Cost of risk, %

2,2% 2,4%** 3.4% 0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% 3,5% 4,0%

Q1 2019 Q1 2020

Q1 2020 PRESENTATION

Net profit

305*

* Excluding the financial transactions of SEKm -51 and the extra credit provision of SEKm -75 ** Excluding the extra credit provision of SEKm -75

14%

THE STRENGTH OF OUR BUSINESS MODEL

4

– Payment Solutions and Supreme Cards initially affected by declining sales in the travel and tourism segments. Our diversified partner base has mitigated effects by increasing sales in home electronics, DIY, bikes, and spare parts for cars – Moderate impact on Consumer Loans to date, however continued challenges in Norway. As always, our customary conservative risk approach is prioritised ahead of volume and increased lending – We capitalize from the four Nordic countries differing in terms

• f dynamics and competition, and all markets except Norway

see a recovery in the latter part of April – 98 per cent of our customers are private consumers in the Nordic countries, where social security systems have been further enhanced Provid idin ing a alternativ ive fina nanc ncing ng s soluti utions ns drives c con

• nversion
• n of
• f

vis isit itors in into payin ing customer mers

46% 16%

Norway Denmark Finland Sweden

Lending to the public Q1–20

HQ

24%

Three segments – four markets

Q1 2020 PRESENTATION

Q1 IN FIGURES

6

PERFORMANCE IN THE SEGMENTS

Total Lending Payment Solutions

+4%

SEKbn

+7%

SEKbn 29,2 30,3 31,1 31,3 31,1 5 10 15 20 25 30 35 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 10,7 11,1 11,4 11,4 11,1 2 4 6 8 10 12 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 18,5 19,2 19,7 19,9 20,0 4 8 12 16 20 24 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

+8%

Consumer Loans

SEKbn Q1 2020 PRESENTATION

7

OPERATING INCOME

SEKm

Operating income Highlights

– Operating income up to SEK 897 million. – The volatility in the market negatively impacted the investment portfolio through revaluations on the closing date, which affected the item net expense from financial transactions of SEK -51 million. Adjusted for this, operating income increased 6 per cent to SEK 948 million (896).

MARGIN EVOLUTION 896 913 925 945 897 200 400 600 800 1 000 1 200 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

+0%

948*

* Excluding net financial transactions of SEKm -51

(+6%*)

8 SEKm

Highlights

– OPEX increased slightly but with strict cost control. – Cost control compensate for the lower NBI margin, – The cost/income ratio continued to improve based on scalable business model.

363 365 100 200 300 400 Q1 19 Q1 20 40,1% 39,0% 37,6% 39,5% 38,5% 0% 11% 22% 33% 44% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

+0.5% +0%

0.4% 1.6% pts COST INCOME RATIO

Operating Expenses Cost Income Ratio, bank

EVOLUTION OF OPERATING EXPENSES

9 SEKm

Highlights

– Credit losses totalled SEK - 263 million (-155) and the credit loss ratio was 3.4 per cent (2.2 per cent). – Underlying credit losses totalled SEK -188 million. 1 per cent point of the credit loss ratio refers to the extra credit provision. – Excluding the extra credit provision in Q1, CoR ratio was 2.4 per cent.

COST OF RISK

Credit Losses, Net Cost of Risk

EVOLUTION OF COST OF RISK 155 188** 263 60 120 180 240 Q1 19 Q1 20

Excluding extra credit provision of SEKm 35* in Q4 2019 and SEKm 75** in Q1 2020

2,2% 2,0% 2,0% 2,2%* 2,4%** 2.7% 3.4% 0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% 3,5% 4,0% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

10

Operating profit

SEKm Q1 2020 PRESENTATION 378 405 416 364 269 100 200 300 400 500 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

• 29%

(+5%**)

*Q4 19 excluding extra credit provision SEKm 35 **Q1 20 excluding extra credit provision SEKm 75 and net financial transactions of SEKm 51

399*

OPERATING PROFIT

Highlights

– Operating profit decreased 29 per cent to SEK 269 million (378). – Operating profit, adjusted for the extra credit provision of SEK -75 million and net expense from financial transactions of SEK -51 million, amounted to SEK 395 million, an increase of 5%.

395**

11

SEKm

Loan Book NBI margin

10 707 11 148

2 000 4 000 6 000 8 000 10 000 12 000 Q1 19 Q1 20

Highlights

– Payment Solutions’ performance for the first two months of the year was characterised by healthy growth in all markets except Norway, and was then impacted by the effects of the outbreak

• f COVID-19 in March

– Lower NBI margin following growth by retailers with lower margins. – Credit losses for the quarter increased in absolute terms as a percentage of lending, which was mainly an effect of the extra credit provision made as a result of the expected future effects

• f the COVID-19 pandemic.

PAYMENT SOLUTIONS

+4%

Cost of Risk

14,1% 13,4%

0% 3% 6% 9% 12% 15%

1,8% 2,7%

0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% Q1 19 Q1 20 Q1 19 Q1 20

12

SEKm

Loan Book NBI margin

18 475 19 999

5 000 10 000 15 000 20 000 Q1 19 Q1 20

Highlights

– Performance was largely stable, despite challenges in the Norwegian market. – The NBI margin decreased and was mainly negatively impacted by the conditions in the Norwegian Consumer Loans market but also increased ticket size and some margin pressure. – Introducing austerity measures to the credit models during the quarter to counteract higher credit losses.

CONSUMER LOANS

+8%

Cost of Risk

10,5% 10,1%

0% 3% 6% 9% 12% 15% Q1 19 Q1 20

2,4% 3,7%

0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% 3,5% 4,0% Q4 19 Q1 20

13

SEKm

Premium Earned, net

SEKm

Technical Result Highlights

– Premium earned, net up 6 per cent compared with last year. – Strong increase in technical result up 30 per cent compared with last year. – Improved combined ratio. – Negative outcome for net expense from financial transactions of SEK -40 million.

INSURANCE

+6%

Combined ratio

• 2.4% pts

+30%

215 229

100 50 100 150 200 250 300 350 Q1 19 Q1 20

23 30

5 10 15 20 25 30 Q1 19 Q1 20

90.1% 87.7%

0% 20% 40% 60% 80% 100% Q1 19 Q1 20

59 57*

17 10 20 30 40 50 60 Q1 19 Q1 20

Operating income

• 71%

(-0,3%*)

*Excluding financial transactions of SEKm -40

14

STRONG CAPITAL POSITION

7,9% 13,1% 13,7% 1,6% 1,0% 2,2% 1,9% 1,5% 0% 2% 4% 6% 8% 10% 12% 14% 16% Capital requirements 31 Mars 2019 31 Mars 2020 Tier 2 Capital AT 1 CET 1 16.2% 11.7% 15.0%

Highlights

– Strong CET1 and total capital ratios well above requirement and targets. – Reducing the regulatory minimum capital requirement in the countercyclical capital

• buffer. This entailed a total

reduction of about 1.7 percentage points to 0.3 per cent for Resurs.

CAPITAL POSITION

15

CONTINUED DIVERSIFICATION

SEKm

Funding total ex. equity Funding mix Highlights

– The strategy is to actively work with various sources of financing in order to use the most suitable source of financing at any given time and to create diversified financing in the long term – During Q1 SEK 700 million was issued under the MTN program and NCR confirmed Resurs Bank’s credit rating of BBB- – Repurchase of bond shares for a total amount of 300 MSEK in Q1, mainly to support investors, also given some positive P&L effect. – Liquidity remained healthy and the liquidity coverage ratio (LCR) was 263 per cent (264 per cent) in the consolidated situation.

30 756 30 591 32 431 32 081 31 642 5 000 10 000 15 000 20 000 25 000 30 000 35 000 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 74% 75% 76% 76% 75% 10% 10% 9% 9% 9% 16% 15% 15% 15% 16% 0% 50% 100% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Deposit ABS MTN FUNDING EVOLUTION

FINANCIAL TARGET PERFORMANCE

16

*Based on Capital Employed at the boards target CET1 Ratio

MEDIUM TERM FINANCIAL TARGETS

Metric Target Jan-Mar 2020

Annual lending growth > 10% p.a. 7% Risk adjusted NBI margin In line with recent performance (c. 10% – 12%) 7.9% C/I before credit losses excl. Insurance and adjusted for nonrecurring costs < 40% in the medium term 38.5% Return on equity (RoTE) adjusted for nonrecurring costs* ~ 30% in the medium term 20.8% Payout ratio > 50% n/a Common Equity Tier 1 ratio/ Total Capital Ratio >11.5% CET1 >15.0% Total Capital 13.7% CET1 16.2 Total Capital

Q1 CREDIT

18

Payment Solutions Comments PS

– The CoR ratio in Q1 2020 increased by 0,9 of a percentage point vs. Q1 2019, to 2,7 % vs. 1,8 % – Mainly driven by the extra credit provision, due to estimated future effects of COVID-19, but also mechanically from the slightly lower increase in loanbook. – Stable payment pattern from our customers during Q1, which we continue to see throughout April.

COR RATIO

Consumer Loans

1,8% 2,7%

0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0%

Q1 19 Q1 20 2,4% 3,7%

0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% 3,5% 4,0%

Q1 19 Q1 20

Comments CL

– The CoR ratio in Q1 2020 increased by 1,3 percentage point vs. Q1 2019, to 3,7 % vs. 2,2 % – The increase is entirely explained by the extra credit provision, due to estimated future effects of COVID-19 – Stable payment pattern from our customers during Q1, which we continue to see throughout April. – Forecasted impact from Gjeldsregistret in Norway evolves better than forecasted,

• ur conservative approach remains

19

SEK 75 MILLION EXTRA CREDIT PROVISION DUE TO ESTIMATED FUTURE IMPACT FROM COVID-19

– COVID-19 Pandemic has created uncertainty not only for us as a Bank but for the entire world – As of today no signs of deterioration in the credit quality of our assets – The foreseen increased unemployment will however lead to increased credit losses to some extent – IFRS9 requires that we provision for estimated future increase in credit losses – The extra credit provision is based on conservative forecasts to ensure a sustainable level of COVID-19 provision

EXTRA CREDIT PROVISION

20

EVOLUTION OF LENDING STAGES & PROVISION

Comments

– Stable stage 2 in ratio but as expected we see a decrease in value following normalization after the Finnish postal strike – Slight increase of stage 3 share (NPL), impacted by lower growth in loan book – Increase of stage 1 & 2 provision in Q1, driven by the extra credit provision of SEK 75 million – Stage 3 provision stable vs Q3,

STAGES & PROVISIONING

Gross Loan Book

31 Mar 2019 30 Jun 2019 30 Sep 2019 31 Dec 2019 31 Mar 2020 Part of lending to the public stage 1, gross 73% 73% 72% 69% 69% Part of lending to the public stage 2, gross 12% 12% 13% 15% 15% Part of lending to the public stage 3, gross 15% 15% 15% 15% 16%

Provisioning

31 Mar 2019 30 Jun 2019 30 Sep 2019 31 Dec 2019 31 Mar 2020 Provision stage 1 0,8% 0,7% 0,7% 0,7% 0,9% Provision stage 2 9,7% 9,5% 9,5% 8,0% 9,1% Provision stage 3 44,5% 44,1% 43,4% 43,3% 43,2%

21

COVID-19 GOING FORWARD

– Composition of our loan book with 98 % consumer credits, only 2 % corporate/factoring, a good position to meet the upcoming challenges – Tightening of our credit models to reduce risk levels on our new lending – Assisting customers affected by the COVID-19 impact – Strengthen our credit provision to meet the future increase in credit losses – Ongoing daily follow up and analysis to capture effects early, on the credit quality of our loan book

CREDIT MANAGEMENT

THANK YOU!