TF Bank AGM MAY 2018 JANUARY DECEMBER 2017 IN SUMMARY Continued - PowerPoint PPT Presentation

TF Bank AGM MAY 2018

JANUARY – DECEMBER 2017 IN SUMMARY ▪ Continued organic loan book growth LOAN BOOK +27 % (3,16) GROWTH OPERATING ▪ Strong operating profit growth PROFIT 1) +21 % (193 MSEK) GROWTH ▪ Cost efficiency C/I RATIO 37 % ▪ Strong capital base TOTAL CAPITAL 16.2 % RATIO 31 Dec 2017 1) Excluding items affecting comparability. 2

DIRECT TO CONSUMER DIVERSIFIED GRANULATED PORTFOLIO Product overview and use of proceeds Loan sizes (average) and customer profile ▪ 81 % of the loan portfolio ▪ Unsecured consumer loans Low-to-middle income ▪ Marketed trough internal channels and external partners SEK 85,000 Employed ▪ Tenor of loans are typically between 12 and 60 months SEK 28,000 Credit worthy ▪ Estimated average maturity of ~23 months SEK 24,000 SEK 29,000 Middle aged ▪ Average loan size on book of SEK ~33,000 SEK 24,000 ▪ Used for e.g., travel, home improvement, home appliances and car repair SEK 23,000 3

SALES FINANCE DRIVES NEW LENDING AND BUILDS DATABASE Product overview Key financials ▪ Share of the Full check-out solution offered as one- Amount outstanding Group’s loan portfolio SEK 595 million stop-shop with several payment (31 Dec 2017) methods such as; invoice, instalment payment, credit/debit card and direct Loan portfolio growth 19 % bank payments. +44 % (Q4’17 vs Q4’16) ▪ High focus on bringing value to ‒ Growth through three different brands, TF Bank, Avarda merchants with a wide range of and BB Bank products and services that facilitates ‒ Geographical expansion in Europe up-sell and brand building. ‒ Long-term merchant relationships in the Nordics ‒ Strategy to become one of the leading companies in the ▪ Norwegian credit cards (from Q1 2017) Nordic region ‒ Solid development in the credit card business 4

GROWTH AND DIVERSIFICATION ACCORDING TO PLAN Norway Loan book SEK 900m (28 %) Change 2017: +70 % Finland Strong growth in both segments Loan book SEK 911m (29 %) Change 2017: +7 % Profitability and steady growth Sweden Loan book SEK 626m (20 %) Change 2017: -6 % Baltics Focus on profitability Loan book SEK 400m (13 %) Change 2017: +61 % Steady growth and profitability Poland Loan book SEK 281m (9 %) Change 2017: +71 % Strong growth in both segments 5

WORTH NOTING JANUARY – DECEMBER 2017 ▪ Continued loan book growth in both segments ▪ Acquisition of Intrum Justitia’s shares in Avarda ▪ Full e-commerce check-out solution launched ▪ BB Finans received a banking license and became BB Bank ▪ Deposits launched in Norway and Germany ▪ Branch established in Estonia 6

INCREASED OPERATING INCOME AND HIGH MARGINS Operating income Operating income margin ▪ Operating income 2013-2017: 600 24% CAGR 15 % CAGR 512 22% +15 % ‒ Strong organic growth 500 20% 441 ‒ 2014: Introduction of Sales Finance 17,9% 388 (loan book SEK 375 million) 400 18% 347 ‒ 2015: Acquisition of BB Bank in SEK million 16% 292 Norway (loan book SEK 150 million) 300 13,7% 14% ▪ Operating income margin: 17.9 % 12% 200 ‒ Strong compared to peers 9,7% 10% 9,0% 100 8% 0 6% 2013 2014 2015 2016 2017 TF Bank Peer 1 Peer 2 Peer 3 7

COST/INCOME RATIO – LEAN AND COST EFFICIENT ORGANIZATION Operating expenses Cost/income ratio ▪ Operating expenses 2013 vs 200 50% 189 2017: 85 vs 189 (SEK million) 180 170 48% 47,1% ‒ Increased personnel, IT and sales 160 costs 143 46% 140 ‒ 2015-2017: Investments in 44% Avarda 120 SEK million 107 41,4% 100 42% ▪ Cost/income ratio 2017: 37 % 85 80 ‒ Excluding Avarda 34 % 40% 60 37,9% ‒ Best in class compared to peers 38% 37,0% 40 36% 20 0 34% 2013 2014 2015 2016 2017 TF Bank Peer 1 Peer 2 Peer 3 8

NET LOAN LOSS RATIO CONTINUES TO DECREASE Net loan losses Net loan loss ratio ▪ Clean balance sheet policy CAGR 140 9% +7 % 129 8,0% ‒ Non Performing Loans are 7,9% 8% generally sold on forward flow 120 113 112 108 basis after approx. 72 days 7% 98 6,2% 100 ▪ 6% Net loan losses 2013-2017: 5,1% SEK million CAGR 7 % 80 5% 4,5% ‒ Growing loan portfolio drives 4% 60 loan losses 3% ‒ Net loan loss ratio is decreasing 40 2% ‒ Lower loss ratios in growth 20 markets; Norway and the 1% Baltics 0 0% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 9

STABLE GROWTH FOR OPERATING PROFIT 1) Operating profit 1) Operating profit 1) 2013-2017: CAGR 15 % ▪ CAGR 193 200 ‒ Strong loan book growth +15 % ‒ Cost efficient organization 175 159 ‒ Decreasing net loan loss ratio 150 137 Operating profit 1) 2017: +21 % ▪ 127 125 SEK million 110 ‒ Strong loan book growth 100 ‒ Improving cost/income ratio 75 50 25 0 2013 2014 2015 2016 2017 1) Excluding items affecting comparability. 10

DIVERSIFICATION OF DEPOSITS AND STRONG LIQUIDITY POSITION Strong balance sheet and capital position ▪ Cost-efficient funding from diversified retail deposits 4 500 75 Other assets 101 Other liabilities 76 Shares Deposits Germany 489 ‒ Sweden (SEK 1.7 billion) 4 000 1 062 Liquidity Loans to credit institutions ‒ Finland (SEK 0.6 billion) reserve 3 500 960 Deposits Norway 66 Cash at central banks ‒ Norway (SEK 1.0 billion) 60 Treasury bills 3 000 ‒ Germany (SEK 0.5 billion) Deposits Finland 603 SEK million 2 500 ▪ Tier 2 bond SEK 100 million 2 000 ▪ Strong liquidity position 31 Dec 2017 3 156 Loans to the public 1 500 1 703 Deposits Sweden ‒ Liquidity reserve 34 % of deposits 1) 1 000 ‒ Supports further loan book growth Tier 2 capital 98 500 541 Equity (leverage ratio 12.0 %) 0 1) The liquidity reserve includes undrawn credit facilities of SEK 30 million. 11

CAPITAL RATIO vs. CAPITAL REQUIREMENT ▪ CET1 ratio of 13.2 % and total capital ratio 16.2 % 16.2 % 1) T2 3,0% ▪ Significant headroom to legal requirements 12.5 % 0,9% ‒ CET1 capital requirement: 8.7 % Pillar 2 2) Countercyclical 1,1% ‒ T1 capital requirement: 10.4 % buffer Capital conservation 2,5% buffer ‒ Total capital requirement: 12.5 % 2,0% T2 13,2% CET1 ▪ Objective is to maintain a total capital ratio 1,5% AT1 of at least 14.5 % ▪ The Board proposes to the AGM a dividend 4,5% CET1 of SEK 2.25 per share for 2017 TF Bank 31 Dec 2017 Capital requirements 1) In the calculation of the capital adequacy ratio for Q4 2017, own funds include the interim profit after the proposed dividend of SEK 2.25 per share. In contrast, in the calculation of the capital adequacy ratio for Q3 2017, own funds include the foreseeable dividend of 50 % in line with the dividend policy. 2) The Pillar 2 requirement should be covered by capital split similarly as for the Pillar 1 requirement, i.e. the Pillar 2 requirement of 0.9 % is split as follows: CET1 capital 0.6 %, T1 capital 0.8 % and total capital 0.9 %. 12

LOOKING AHEAD INTO 2018 ▪ Avarda scale-up ▪ Continued growth in consumer lending ▪ Expansion into new pockets of the European consumer finance market where good risk adjusted return levels can be sustained over time ▪ Continued fierce competition especially in the Nordics ▪ Increased regulatory burden 13

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