Q3 2019 PRESENTATION Q3 2019 PRESENTATION TODAYS PRESENTERS - - PowerPoint PPT Presentation

Q3 2019 PRESENTATION

TODAY’S PRESENTERS

Peter Rosén

Chief Financial Officer

Kenneth Nilsson

Chief Executive Officer

Q3 2019 PRESENTATION

3

STRONG BUSINESS MODEL CONTINUES TO DELIVER

Strong lending Increased net income

+5%

SEKm

306 320

50 100 150 200 250 300 350 Q3 2018 Q3 2019

+13%

SEKm

27 470 31 125

5 000 10 000 15 000 20 000 25 000 30 000 35 000 Q3 2018 Q3 2019 Q3 2019 PRESENTATION

Slightly improved CoR

%

2.1% 2.0%

0,0% 0,5% 1,0% 1,5% 2,0% 2,5% Q3 2018 Q3 2019

• 0.1%

pts

13%

THE STRENGTH OF OUR BUSINESS MODEL

4

– Presence in the Nordic market for almost 20 years and we have driven the development of the various markets for decades. – Head office in Helsingborg, Sweden and full service

• ffices in all of the Nordic countries.

– The Nordic countries differ in terms of dynamics and

• competition. We are able to handle and adapt to new

regulations and situations that arise in the various markets from time to time.

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

45% 12%

Norway Denmark Finland Sweden

Lending to the public Q3–19

HQ

30%

Three segments – four markets

OUR BUSINESS MODEL

5

CONTINUED STRONG PROFITABLE GROWTH

Highlights

– Continued focus on developing existing partnerships driving strong growth. – In Q3 more than 30 per cent of Resurs’s retail finance sales came from e-commerce. – Launched Merchant Portal during the

• quarter. It is a new service that, among
• ther things, allows the partner to

quickly and easily capture all sales statistics in real time, regardless of channel. – Svensk Handel and a number of major players in the aftermarket for car dealerships chose Resurs as new strategic partner during the quarter, mainly because of our omni channel solution: Resurs Checkout.

Strong lending growth

SEKm

+12%

10 185 11 408

2 000 4 000 6 000 8 000 10 000 12 000 Q3 18 Q3 19

Digital application

80% 20%

> 80 per cent used digital application in Sweden in Q3 2019 and we see a continuous increase in all of our markets.

PAYMENT SOLUTIONS

THE RETAIL INDUSTRY IS CHANGING – SO ARE WE

6 PAYMENT SOLUTIONS

Merchant Portal Point of Sale (POS) Push function Mobile Terminal

– Flexibility – Regardless of channel – Simple administration – One technical solution, one API

Resurs Checkout

Resurs Checkout

7

STABLE DEVELOPMENT DURING THE QUARTER

Highlights

– Continued stable loan book growth, strongest performance in absolute numbers in Sweden and strongest relative growth in Finland. – The Norwegian market remained challenging during the quarter. For us it is a matter of designing an offering in pace with the emerging market conditions that meets both the new rules of play, and delivers customer and business value. The fundamental and governing factor for all of our decisions is always to prioritise a high credit rating over volume. – Ticket size on average loan book increased by 15 per cent to kSEK 100 compared with Q3-18, mainly driven by implementation of credit engine. This affects the NBI margin negatively.

Strong lending growth

SEKm

+14%

17 285 19 717

4 000 8 000 12 000 16 000 20 000 Q3 18 Q3 19

Utilising the database

80% 20%

> 80 per cent of sales in Q3 to existing customers in our database. Since most

• f our sales are to customers who are

already known in our database, we can achieve higher margins because this knowledge has a positive impact on acquisition costs and credit risk.

CONSUMER LOANS

8

CONTINUED GROWTH IN PREMIUMS EARNED AND TECHNICAL RESULT

Highlights

– Premium earned net up 10 per cent compared with last year with growth within all lines of business. – Technical result up 14 per cent compared with last year. – Improved profitability with a Combined ratio of 90,2 % compared with 90,6 % last year. – The segment prepared launches of the two new external partners within the business area Personal safety, that was signed in 2019. – The segment continued to develop

• pportunities provided by the

acquisition within car warranties made during Q2.

Technical result Premium earned net

+10%

SEKm

210 232

50 100 150 200 250 Q3 18 Q3 19

+14%

SEKm

21 24

5 10 15 20 25 30 Q3 18 Q3 19 INSURANCE

CONTINUED DIGITISATION

Further development of AI/Machine Learning

• Over the last quarters we have strengthen sales in

Supreme Card through preventing churn using machine

• learning. Using machine learning has proven to be 3 to 5

times more accurate than previous work processes.

• A machine learning model based on recent internal

customer data has been developed in 2019 for advanced customer segmentation. This customer segmentation model gives unique and valuable insights into the behaviours of our current and future customers and it will be applied to other current machine learning models to further enhance them.

• Next step in using machine learning is the development
• f a price model for Consumer Loans.

9 DIGITISATION

Q3 IN FIGURES

11

CONTINUED PROFITABLE GROWTH

Strong lending Net income

+5%

SEKm

306 320

50 100 150 200 250 300 350 Q3 2018 Q3 2019

+13%

SEKm

27 470 31 125

5 000 10 000 15 000 20 000 25 000 30 000 35 000 Q3 2018 Q3 2019 Q3 2019 PRESENTATION 306 284 294 313 320 50 100 150 200 250 300 350 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19

Net income

SEKm

12

STRONG GROWTH IN BOTH SEGMENTS

Total Payment Solutions

+12%

SEKbn

+13%

SEKbn LOAN BOOK EVOLUTION

27.5 28.0 29.2 30.3 31.1

5 10 15 20 25 30 35 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19

10.2 10.5 10.7 11.1 11.4

2 4 6 8 10 12 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19

17.3 17.4 18.5 19.2 19.7

4 8 12 16 20 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19

+14%

Consumer Loans

SEKbn

13

STABLE INCREASE IN OPERATING INCOME

SEKm

Operating income

* NBI for bank calculated as Group operating income less reported insurance segment operating income

%

NBI margin* Highlights

– Stable increase in

• perating income.

– The NBI margin decreased compared with last year and was negatively impacted mainly by the conditions in the Norwegian Consumer Loans market but also increased ticket size and some margin pressure.

MARGIN EVOLUTION 881 925 2 554 2 734 400 800 1200 1600 2000 2400 2800 3200 200 400 600 800 1 000 1 200 Q3 18 Q3 19 YTD 18 YTD 19 12.3% 11.4% 12.6% 11.6% 0% 2% 4% 6% 8% 10% 12% 14% Q3 18 Q3 19 YTD 18 YTD 19

Q3

+5%

YTD

+7%

Q3 YTD

• 0.9%

pts

• 1.0%

pts

14 SEKm %

Highlights

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

348 353 1 047 1 077 200 400 600 800 1000 1200 100 200 300 400 500 Q3 18 Q3 19 YTD 18 YTD 19 39.2% 37.6% 40.5% 38.9% 0% 11% 22% 33% 44% Q3 18 Q3 19 YTD 18 YTD 19

Q3

1%

YTD

+3%

Q3 YTD

• 1.6%

pts

• 1.6%

pts

STRONG IMPROVEMENT IN COST INCOME RATIO

Operating Expenses Cost Income Ratio, bank

EVOLUTION OF OPERATING EXPENSES

15 SEKm %

Highlights

– Credit losses increased mainly following growth

• f the loan book.

– Stable cost of risk development.

139 157 395 459 100 200 300 400 500 50 100 150 200 250 Q3 18 Q3 19 YTD 18 YTD 19 2.1% 2.0% 2.1% 2.1% 0% 1% 1% 2% 2% 3% Q3 18 Q3 19 YTD 18 YTD 19

Q3

+13%

YTD

+16%

Q3 YTD

• 0.1%

pts

+0.0%

pts

STABLE COST OF RISK

Credit Losses, Net Cost of Risk

EVOLUTION OF COST OF RISK

16 SEKm

* NBI for bank calculated as Group operating income less reported insurance segment operating income

%

Highlights

– Stable increase in risk adjusted NBI. – The risk adjusted NBI margin was negatively impacted mainly by the conditions in the Norwegian market but also increased ticket size and some margin pressure.

692 716 2 019 2 111 500 1000 1500 2000 2500 200 400 600 800 1 000 1 200 Q3 18 Q3 19 YTD 18 YTD 19 10.2% 9.3% 10.5% 9.5% 0% 2% 4% 6% 8% 10% 12% Q3 18 Q3 19 YTD 18 YTD 19

Q3

+4%

YTD

+5%

Q3 YTD

• 0.9%

pts

• 1.0%

pts

STABLE DEVELOPMENT IN RISK ADJUSTED NBI

Risk adjusted NBI* Risk adjusted NBI margin*

MARGIN EVOLUTION

17

SEKm

Loan Book

%

NBI margin

10 185 11 408 2 000 4 000 6 000 8 000 10 000 12 000 Q3 18 Q3 19

Highlights

– Strong lending growth mainly driven by existing retail partners. – Lower NBI margin following strong growth by retailers with lower margins. – Improved CoR compared with YTD last year following better underlying credit quality. – Overall somewhat lower risk adjusted NBI margin.

PAYMENT SOLUTIONS

+12%

• 0.6%

pts

%

Risk Adjusted NBI margin

• 0.2%

pts

%

Cost of Risk

• 0.4%

pts

14.3% 13.5% 14.4% 13.8% 0% 3% 6% 9% 12% 15% Q3 18 Q3 19 YTD 18 YTD 19 1.2% 1.2% 1.9% 1.5% 0,0% 0,5% 1,0% 1,5% 2,0% Q3 18 Q3 19 YTD 18 YTD 19 13.1% 12.3% 12.5% 12.3% 0% 3% 6% 9% 12% 15% Q3 18 Q3 19 YTD 18 YTD 19

18

SEKm

Loan Book

%

NBI margin

17 285 19 717 5 000 10 000 15 000 20 000 Q3 18 Q3 19

Highlights

– Continued healthy growth with strongest performance in absolute numbers in Sweden and strongest relative growth in Finland. – The NBI margin decreased and was mainly negatively impacted by theconditions in the Norwegian Consumer Loans market but also increased ticket size and some margin pressure. – Stable CoR compared with Q3-18 and somewhat increased compared with YTD-18 following higher debt collection transfers in the Norwegian market. – Overall lower risk adjusted NBI margin.

CONSUMER LOANS

+14%

• 1.3%

pts

%

Risk Adjusted NBI margin

• 1.5%

pts

%

Cost of Risk

+0.2%

pts

11.3% 10.3% 11.7% 10.4% 0% 3% 6% 9% 12% 15% Q3 18 Q3 19 YTD 18 YTD 19 2.6% 2.5% 2.2% 2.4% 0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% Q3 18 Q3 19 YTD 18 YTD 19 8.7% 7.7% 9.5% 8.0% 0% 3% 6% 9% 12% 15% Q3 18 Q3 19 YTD 18 YTD 19

19

SEKm

Premium Earned, net

SEKm

Technical Result Highlights

– Premium earned, net up 8 per cent compared with last year. – Strong increase in technical result up 12 per cent compared with last year. – Improved combined ratio.

INSURANCE

+8%

%

Combined ratio

• 0.4%

pts

+12%

210 232 616 667 100 200 300 400 500 600 700 800 50 100 150 200 250 300 350 Q3 18 Q3 19 YTD 18 YTD 19 21 24 62 69 10 20 30 40 50 60 70 80 5 10 15 20 25 30 Q3 18 Q3 19 YTD 18 YTD 19 90.6% 90.2% 90.7% 90.3% 0% 20% 40% 60% 80% 100% Q2 18 Q2 19 YTD 18 YTD 19

20

STRONG CAPITAL POSITION

9.5% 13.4% 13.6% 1.6% 2.2% 1.3% 1.9% 0% 2% 4% 6% 8% 10% 12% 14% 16%

Capital requirements 31 Dec 2018 30 Sep 2019

Tier 2 Capital AT 1 CET 1

13.3% 14.7% 15.5%

Highlights

– Strong CET1 and total capital ratios well above requirement and targets.

CAPITAL POSITION

21

CONTINUED DIVERSIFICATION

SEKm

Funding total ex. equity Funding mix Highlights

– Further diversification of funding in the last twelve months with SEK 1,600 million issued under the MTN program.

27 985 28 410 30 756 30 591 32 431

5 000 10 000 15 000 20 000 25 000 30 000 35 000 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 72% 73% 74% 75% 76% 10% 10% 10% 10% 9% 18% 17% 16% 15% 15% 0% 50% 100% Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Deposit ABS MTN FUNDING EVOLUTION

FINANCIAL TARGET PERFORMANCE

22

*Based on Capital Employed at the boards target CET1 Ratio

MEDIUM TERM FINANCIAL TARGETS

Metric Target Jan-Sep 2019

Annual lending growth > 10% p.a. 13% Risk adjusted NBI margin In line with recent performance (c. 10% – 12%) 9.5% C/I before credit losses excl. Insurance and adjusted for nonrecurring costs < 40% in the medium term 38.9% Return on equity (RoTE) adjusted for nonrecurring costs* ~ 30% in the medium term 34.9% Payout ratio > 50% n/a Common Equity Tier 1 ratio/ Total Capital Ratio >11.5% CET1 >14.0% Total Capital 13.6% CET1 15.5% Total Capital

THANK YOU!