interim presentation | 1st quarter 2019 | 11 april 2019...interim presentation | 1st quarter 2019 |...
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Interim Presentation | 1st quarter 2019 | 11 April 2019
2
Profit after tax
1 162
2 876
3 988
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
MonobankQ1 2019 highlights
Note(*): ROE = 4x profit after t in quarter / average total equity in the quarter
NOK million
Net loans
1.8 3.05.7 7.4
10.113.8 15.5
-8.8
16.1
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
NOK million
Forward flow
• Profitable growth restored in Q1’19
- Net loan balance increased 7.6 per cent vs Q4’18
- Net interest income of NOK 100.2 million, up 5.4 per cent vs Q4’18
- Net profit after tax of NOK 16.1 million vs a deficit of NOK 8.8 million
in Q4’18
• The proposed merger with BRAbank approved by general
assembly
- Transaction expected to be completed in Q2’19
• Successful launch of digital consumer finance in Sweden
• Improved risk selection in Finland to further improve profitability
• Fully funded to reach critical mass
- Private placement of NOK 58 million successfully completed
3
Financials
4
Key yields and margins
30
37
45
56
69
8286
95
100
28
35
41
53
64
75 76
81
88
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19
Net interest income Total income Net profit after tax
14.6 % 14.3 % 14.2 % 14.3 % 14.4 % 14.4 % 14.4 % 14.3 % 14.1 %
12.3 %12.7 % 12.7 % 12.8 % 12.8 % 12.8 % 12.6 % 12.3 %
8.7 % 8.7 %8.0 %
7.7 % 7.8 %8.3 %
7.6 % 7.7 % 7.9 %
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19
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 forward flow agreement and conservative approach in Norway
5
Efficient operations with economies of scale
Note(*): cost / income ratio = operating expenses (incl. or excl. marketing) / total income
Operational expenses
NOK (million)
5.5 6.2 6.9 8.0 8.0
12.710.6 11.4 11.4
5.66.3 6.1
8.6 9.6
9.6
7.9
11.9 12.5
8.18.0 7.7
11.3
14.6
12.0
9.9
4.86.3
1.11.5 2.0
1.4
2.1
2.4
2.5 3.8
4.6
20.3
21.922.7
29.2
34.2
36.7
30.9 31.9
34.8
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19
Staff costs Other administrative expenses
Marketing expenses Depreciation and amortisation
Cost / Income ratio *
72%
64%
55% 55% 53%49%
40%
39% 40%
43%40%
36%34%
30%33%
27%
33% 33%
0%
20%
40%
60%
80%
100%
120%
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19
Cost / Income Ratio Cost (excl. marketing) / Income Ratio
Stable opex development Q4 18 to Q1 19
Per cent (%)
6
Satisfactory loan losses and credit quality
Stabilizing effect from forward flow agreement on NPL and gross loans PD
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) ProvisionsLoan losses
NOK (million)
Total provision ratio ***Loan loss ratio * Non-performing loan ratio **
Per cent (%)
2.2 %
2.2 %
2.2 %
2.4 %2.6 %2.7 %
2.9 %
4.2 %4.0 %
Q117
Q217
Q317
Q417
Q118
Q218
Q318
Q418
Q119
58.7
94.7 135.7
189.1
251.7
332.5
356.6
436.1
474.7
Q117
Q217
Q317
Q417
Q118
Q218
Q318
Q418
Q119
31-60 PD 61-90 PD > 90 PD
4.9 %
6.4 %7.1 %
7.9 %8.5 %
10.1 %10.1 %11.3 %11.5 %
Q117
Q217
Q317
Q417
Q118
Q218
Q318
Q418
Q119
18.426.3
37.350.7
69.5
86.4 91.9
138.5 146.8
Q117
Q217
Q317
Q417
Q118
Q218
Q318
Q418
Q119
4.9 8.3 10.9 13.819.1 18.8
24.5
66.0
29.1
Q117
Q217
Q317
Q417
Q118
Q218
Q318
Q418
Q119
31%28% 27% 27% 28% 26% 26%
32% 31%
Q117
Q217
Q317
Q417
Q118
Q218
Q318
Q418
Q119
NOK (million) NOK (million)
Per cent (%) Per cent (%)
Note(*): loan loss ratio = LTM loan losses / average LTM net loans) || Note(**): non-performing loan ratio = >PD90 / gross loans || Note(***): provision ratio = total provisions / >PD90
7
1 13
8
1 55
6 2 04
3 2 65
2
3 05
7
3 43
4 4 23
9
4 12
5
4 41
4
335
339
345
522
534
548
563
609
681
1 472
1 895
2 487
3 272
3 689
4 081
4 901 4 833
5 194
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
Deposits by customers Subordinated loan Equity
Easy access to low-cost deposit funding
Note(*): deposit ratio = deposits / net loans
LiquidityFunding
NOK (million)
Key ratios
220 32
5
489
758
625 68
7
1 22
9
852 91
3
35
52
64
56
6550
84
109
108
255
377
552
814
691737
1 313
961
1 021
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
Debt securities Loans and advances to banks
NOK (million)
98% 108% 109% 113% 106% 107%123% 111% 111%
153% 158% 153%167% 160% 163%
181% 172% 172%168% 172%
133%
242%
206% 214%
701%717%
552%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
Deposit ratio * NSFR LCR
8
16.3
%
21.5
%
21.6
%
22.0
%
25.0
%
21.4
%
20.6
%
19.9
%
19.1
%
19.1
%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
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 assetsRegulatory capital Reported capital adequacy **
CET1 Capital
Req. = 13.3%
Total Capital
Req. = 16.8 %
per cent (%)NOK (million) NOK (million)
306 302
401
583 592604 615
641
694
-
100
200
300
400
500
600
700
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
CET1 T1 * T2 *
1 42
3
1 40
1
1 81
9
2 33
3
2 76
5 2 94
0
3 08
8 3 35
6 3 63
6
-
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
75% loans 100% loans Other RWA
Note(*): As of Q1 2019 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
9
Strategy and
operations
10
Gross loans
New credit policies introduced in Finland to improve profitability
• Improved risk selection in Finland
- Risk reduction for new vintages is expected
• Developing Monobank’s own and improved credit
score-card
- Developing new optimised credit score card based on
increased credit database
- Will be implemented in Q2’19
• Finnish market increasingly important
Two years of consumer banking experience in Finland
36
261
451
624
854
1 181
1 435
1 719
1 996
2 363
2 524
2 581
2 589
2 624
407
582
774
960
1256
1511
-
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19
Norway Finland
NOK (million)
11
Debt register in Norway expected to launch in Q2 19Positive experiences from the Finnish consumer finance market
• Debt register data are typically strong predictors
of credit risk
• Monobank with solid experience using debt
register data in Finland.
• Expect long term positive effects on profitability
- Improved risk selection for new underwritings
• Somewhat reduced approval rates as high risk
customers are rejected
• Uncertain short term effect - depends on many factors
• Default rates may temporarily increase as high risk
borrowers will find it increasingly difficult to refinance
• Otherwise limited effects on the existing loan book
• Can collect data on existing customer for scorecard
development, however only a snapshot of current debt
(as opposed to historical records) will be available
New customers Existing customers
Debt
register
12
Customer segmentationContinuous development and tuning of scorecards to navigate the portfolio
3%
31%
66%
Primary school
Secondary school
Higher education
26%
28%28%
15%3%
<= 34 years 35-44 years
45-54 years 55-64 years
>= 65 years
67%
33%
Home owner
Tenant
43 years4%
21%
35%
41%
NOK 250k-349k
NOK 350k-499k
NOK 500k-749k
>= NOK 750k
Age Income Education Housing Average customer
No
rway
Fin
lan
d
NOK 647k
Higher education
Home owner
43 years
NOK 464k
Higher education
Home owner
23%
30%29%
15%3%
<= 34 years 35-44 years
45-54 years 55-64 years
>= 65 years
24%
34%
28%
14%
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
13
• Consumer loan offering launched in Sweden
- Multi-country platform enables continued geographical
expansion and diversification
• Swedish population twice the size of Finland and Norway
- Soft launch to reduce risk
• Expansion fits well with BRAbank’s current presence in the
Swedish consumer credits market
Swedish entry marks the third country for Monobank
Inhabitants (millions)
~5.3
~10.0
~5.5
Monobank enters Sweden with digital consumer finance offering
14
Ramping up partnership commitment
Note(*): current loan portfolio | Note(**): no live relationships with co-branding partners since inception
Multichannel distribution partners
• Gradual increase in marketing commitment
going forward
• New sales channels and campaigns together
with Widerøe
• Monobank’s credit card platform is now
available in more and more channels
• The platform is linked to Google Pay and
Apple Pay
• It possible to use Monobank’s credit card
through Fitbit and Garmin Watches
15
January
February
March
April
May
June
July
August
September
October
November
December
Public announcement
Monobank and BRAbank to combine
General assembly
Approval by the general assembly of both
banks
FSA approval
Expected Norwegian Financial
Supervisory Authority (FSA) to approve
Closing of merger
Expected to close merger and equity
issue in June
Integration process completed
High level timeline of mergerTransaction costs and other effects
• Restructuring costs estimated to be approximately NOK 60
million
• Deferred tax asset from accumulated BRAbank loss of
approx. NOK 60m and
• Expected write down of intangibles of approx. 38m
Capitalization and transaction details
16
Well capitalized
Well positioned
• Fully financed to reach critical mass after BRAbank transaction
• Fully financing the combined bank to reach NOK +10bn by 2024 in net loans
• Monobank and BRAbank with complementary distribution strengths
• Growing database improves credit model and pricing
• Highly scalable business model set for growth
• Full focus on successful integration and cost control
Monobank - A well positioned and well capitalized consumer loan bank
17
Appendix
18
Detailed financial figuresQuarterly income statement and balance sheet
Balance SheetIncome Statement
NOK thousand2019 2018
Q1 Q4 Q3 Q2 Q1
Interest income 118 714 115 206 105 680 98 055 84 702
Interest expenses 18 537 20 149 19 549 16 358 15 940
Net interest income 100 176 95 057 86 131 81 697 68 761
Income comissions and fees 7 676 6 255 6 975 6 255 6 485
Expenses comissions and fees 20 217 19 875 16 706 12 888 10 988
Net comissions and fees -12 541 -13 619 -9 731 -6 633 -4 503
Total income 87 635 81 438 76 400 75 064 64 259
Income / (loss) from trading activities -3 103 3 530 -348 -1 182 2 136
Staff costs 11 413 11 354 10 602 12 675 7 793
Other administrative expenses 18 847 16 711 17 753 21 663 24 234
- of which marketing expenses 6 319 4 819 9 958 12 018 14 598
Depreciation and amortisation 4 617 3 847 2 513 2 364 2 131
Total operating costs 34 876 31 912 30 868 36 702 34 158
Profit / (Loss) before impairment losses 49 655 53 056 45 184 37 181 32 237
Impairment (losses) / releases -29 088 -66 029 -24 524 -18 825 -19 057
Operating profit / (loss) before tax 20 567 -12 973 20 660 18 356 13 180
Tax charge -4 443 4 198 -5 168 -4 563 -3 122
Profit / (Loss) for the year 16 124 -8 776 15 492 13 793 10 058
NOK thousand2019 2018
Q1 Q4 Q3 Q2 Q1
ASSETS
Loans and advances to banks 108 366 108 790 83 630 49 906 65 439
Debt securities 912 844 851 879 1 228 593 686 825 625 089
Loans and advances to customers 4 134 826 3 844 229 3 540 868 3 298 138 2 945 025
Provision for impairment losses 146 806 138 493 91 882 86 419 69 470
Net loans and advances to customers 3 988 020 3 705 736 3 448 985 3 211 719 2 875 555
Debt securities 912 844 851 879 1 228 593 686 825 625 089
Deferred tax asset 2 791 2 791 0 907 5 470
Other intangible assets 70 026 67 064 62 119 55 669 47 157
Property, plant and equipment 2 902 2 681 2 104 2 072 2 094
Financial derivatives 1 832 6 644 2 150 0 0
Prepayments, accrued income & other assets 155 189 130 341 120 552 113 827 103 108
- of which accrued commission to agents 130 791 121 249 113 837 107 773 97 586
Total assets 5 241 971 4 875 927 4 948 135 4 120 925 3 723 911
LIABILITIES & EQUITY
Deposits by customers 4 413 713 4 125 245 4 238 973 3 433 627 3 057 120
Provisions, accruals and other liabilities 48 640 42 772 47 415 41 128 34 503
Subordinated loan 98 823 98 739 98 654 98 568 98 483
Total liabilities 4 561 176 4 266 756 4 385 042 3 573 323 3 190 106
Share capital 304 467 274 023 249 196 249 196 249 196
Surplus capital 311 676 286 621 256 595 256 595 256 591
Retained Earnings 64 651 48 527 57 301 41 810 28 018
Total equity 680 795 609 171 563 093 547 602 533 805
Total liabilities and equity 5 241 971 4 875 927 4 948 135 4 120 925 3 723 911
19
Building a digital bank focused on consumer loans independently from scratch
*optional
Unsecured consumer loans || Deposit & saving accounts
Credit cards
Banking-as-a-service*
SAVING ACCOUNTS NORWAY AND
EUROPE
1
2
3
UNSECURED CONSUMER LOANS
NORWAY AND FINLANDCREDIT CARDS
BUSINESS SOLUTIONS
• Fee based business solution with banks
• Cooperation with partners
P2P AND POS SOLUTIONS
PHASE 1
LOAN PLATFORM
2015-2017
APP DEVELOPMENT
Diverse product portfolio in three phases
PHASE 2
CREDIT CARD
PLATFORM
2018
PHASE 3
“BANKING-AS-A
SERVICE”
2019 -
20
A scalable business model enabling both geographical and product expansion
Core
banking platform
Point of sales
24/7 customer
experience platform
Consumer credit and
deposit accountsCredit cards
150 000
21
Consumers increasingly expect simplicity and flexibility
Source: Brett King with adjustments
The best customer
experience on core
banking services
Free and instant
person-to-person
payments
Instant access to
all your funds in a
mobile app
Instant access to
customer service
when you need it
22
Monobank’s strategy is to develop tomorrow’s solutions
Plastic cards Hybrid solutions Only digital solutions
Yesterday Today Tomorrow
23
Important InformationDisclaimer
23
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
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.
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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.
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This Presentation speaks as of 11 April 2019. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create
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