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Interim Presentation | 3rd quarter 2018 | 17 October 2018
2
Profit after tax
624
1,867
3,449
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 2017 2018
Continued growth and improved profitabilityQ3 2018 highlights
Note(*): ROE = 4x profit after t in quarter / average total equity in the quarter
NOK million
Net loans
0.51.7 1.8
3.0
5.77.4
10.1
13.815.5
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 2017 2018
NOK million
Forward flow
Growth driven by geographical expansion
• Net loan balance up 7.4% including NOK 86 million
effect from forward flow agreement
• Loan growth of 24% in Finland vs. Q2,
corresponding to NOK 186 million in loans
• Growth of 5 % vs. Q2 reflects reduced marketing
spending – more conservative approach in Norway
due to regulatory environment
• Net interest income NOK 86.1 million,
up 5 % vs Q2’18 and up 112 % vs. Q3’17
Improved profitability driven by increasing economies of scale
• Net profit after tax up 12% vs. Q2
• Net profit YTD Q3’18 of NOK 39.3 million,
up 372.4% vs YTD Q3’17
• Investments in emerging fintech business reduce
short term company profitability
ROE 11.2%*
3
Financials
4
Key yields and margins
15
23
30
37
45
56
69
82
86
14
22
28
35
41
53
64
75 76
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18
Net interest income Total income Net profit after tax
14.9 % 14.8 % 14.6 % 14.3 % 14.2 % 14.3 % 14.4 % 14.4 % 14.4 %
12.3 %12.7 % 12.7 % 12.8 % 12.8 % 12.8 %
8.1 %8.8 % 8.7 % 8.7 %
8.0 %7.7 % 7.8 %
8.3 %7.6 %
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 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 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)
2.2
6.5 5.5 6.2 6.9 8.0 8.0
12.710.6
3.4
4.3 5.66.3 6.1
8.6 9.6
9.6
7.9
3.6
4.6
8.18.0 7.7
11.3
14.6
12.0
9.9
0.5
0.3
1.11.5 2.0
1.4
2.1
2.4
2.5
9.7
15.8
20.3
21.922.7
29.2
34.2
36.7
30.9
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18
Staff costs Other administrative expenses
Marketing expenses Depreciation and amortisation
Cost / Income ratio *
67%73% 72%
64%
55% 55% 53%49%
40%42%
51%
43%40%
36%34%
30%33%
27%
0%
20%
40%
60%
80%
100%
120%
Q2 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18
Cost / Income Ratio Cost (excl. marketing) / Income Ratio
Temporary dip in administrative costs in the quarter
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 (%)
3.2 %
2.9 %
2.2 %
2.2 %2.2 %2.4 %2.6 % 2.7 %
2.9 %
Q316
Q416
Q117
Q217
Q317
Q418
Q118
Q218
Q318
23.5
40.7
58.7
94.7 13
5.7 18
9.1
251.
7
332.
5
356.
6
Q216
Q316
Q416
Q117
Q217
Q317
Q418
Q118
Q218
Q318
31-60 PD 61-90 PD > 90 PD
n.a.n.a. 4.9 %
6.4 %7.1 %
7.9 %8.5 %
10.1 %10.1 %
Q316
Q416
Q117
Q217
Q317
Q418
Q118
Q218
Q318
9.913.5
18.426.3
37.3
50.7
69.5
86.4 91.9
Q316
Q416
Q117
Q217
Q317
Q418
Q118
Q218
Q318
3.1 4.2 3.7 4.9
8.3 10.9
13.8
19.1 18.8
24.5
Q216
Q316
Q416
Q117
Q217
Q317
Q418
Q118
Q218
Q318
n.a.
n.a. 31.4 %27.8 %27.5 %
26.8 %27.6 %
25.9 %25.8 %
Q316
Q416
Q117
Q217
Q317
Q418
Q118
Q218
Q318
NOK (million) NOK (million)
Per cent (%) Per cent (%)
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
7
638 90
3
1,13
8
1,55
6 2,04
3 2,65
2
3,05
7
3,43
4 4,23
9
157
331 33
5
339
345
522
534
548
563
794
1,2351,472
1,895
2,487
3,272
3,689
4,081
4,901
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018
Deposits by customers Subordinated loan Equity
Easy access to low-cost deposit funding
Note(*): deposit ratio = deposits / net loans
LiquidityFunding
NOK (million)
Key ratios
110
301
220 32
5
489
758
625 68
7
1,22
9
28
51
35
52
64
56
6550
84
138
352
255
377
552
814
691737
1,313
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 2017 2018
Debt securities Loans and advances to banks
NOK (million)
102% 108% 98% 108% 109% 113% 106% 107%123%
159% 168%153% 158% 153%
167% 160% 163%181%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018
Deposit ratio * NSFR LCR
8
16.7
%
17.7
%
27.8
%
21.5
%
21.6
%
22.0
% 25.0
%
21.4
%
20.6
%
19.9
%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 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 assetsRegulatory capital Reported capital adequacy **
CET1 Capital
Req. = 13.5%
Total Capital
Req. = 17.0 %
per cent (%)NOK (million) NOK (million)
139
309 306 302
401
583 592604 615
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018
CET1 T1 * T2 *
785
1,10
7
1,42
3
1,40
1
1,81
9
2,33
3
2,76
5 2,94
0
3,08
8
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 2017 2018
75% loans 100% loans Other RWA
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
9
Strategy and
operations
10
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 -
11
A scalable business model enabling both geographical and product expansion
Core
banking platform
New “fintech” products
within consumer credit
24/7 customer
experience platform
Consumer credit and
deposit accountsCredit cards
150 000
12
Combining people, technology and systems to deliver superior performance
LEAN
Only 46 full-time employees
and 5 part-time employees
SCALABLE
Organization scaled for considerable
growth in the Nordic markets
COMPETENT
Experienced staff with long track-
record within the financial sector,
technology and analytics
DILLIGENT
Organization with efficient and
hands-on execution approach
Bent H. Gjendem
CEO
Head of Customers
Product Consultant + 4 employees
Customer Support
+ 13 employees
IT Architect
IT Architect
IT Architect
Controller Head of Compliance
Head of Marketing (NO)
Head of Analytics
Head of Sales
Treasury
Head of Marketing (FI) Product Consultant
IT Architect
COO CTO CFO CRO
Head of Credit (FI)
Senior Analyst/Data Scientist
CPO
Performance Specialist
Office manager Creditcard
Product Consultant
IT Architect
IT Architect
IT Architect
Controller
On leave
Kitchen Operations consultant
Accountant
Legal Counsel
Product manager Creditcard
13
Our ambition is to deliver the best customer experience in our segment
Monobank
digital consumer banking
platform
Consumer financial
services needs
Consumer loans Credit cardpayment
Purchaseinsurance
Consumer everyday
life and goalsUtilities
Shopping
Entertainment
Travel Health
Wedding
Car
Home
Deposit
14
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
15
Established position in digital consumer banking
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18
Norway Finland
624
0
5,000
10,000
15,000
20,000
25,000
30,000
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18
Deposit customers, NorwayLoan customers, NorwayLoan customers, FinlandDeposits customers, EuroCredit card customers, Norway
24 781
3 671
Net loans Number of customers
NOK (million) Number
* Net of NOK 86 million transferred in a forward flow agreement
3 449*
Ambition of NOK 10 bn in net loans within 3-4 years
16
Monobank’s strategy is to develop tomorrow’s solutions
Plastic cards Hybrid solutions Only digital solutions
Yesterday Today Tomorrow
17
Future growth fuelled by innovative solutions and strategic partnershipsWiderøe first partner roll-out
Gradual launch
• Monobank Mono Pay credit
card combined platform
• Widerøe branded front-end
• Launch towards employees
in September
• Campaigns in Widerøe’s owned
channels starting Q4 2018
18
Outlook and StrategyKey highlights
Profitable
organic growth
Multi-country
operation
Mono Pay / Monocard
Credit card
platform
Point-of-sale
solutions
• Attractive margins in Norway and Finland enables high organic growth
• Efficient and scalable operation
• Diligent credit risk management
= CONTINUED PROFITABLE GROWTH
No official guiding as of now. Profitable
growth will be given priority over dividend
payouts in short / medium term
KEY LONG-TERM FINANCIAL RATIOS
Dividends
Net loans of ~ NOK 3.7-3.8 bn and
Profit after tax of ~NOK 55-60m
within year-end 2018
Net loans of NOK 10 bn in 3-4 years
Net loans & Profit after tax
No official guiding as of now.
Investments in growth will impact
ROE short / medium term
Return on Equity
No official guiding as of now. SREP
initiated by the NFSA with estimated
completion by year-end 2018
Regulatory capital adequacy
• Operationalize and fine-tune the Finnish consumer loan portfolio
• Expand EUR funding through Raisin further
• Launch consumer loan business in Sweden in Q1 2019
• Innovative and flexible solution with technological edge
• Launch of joint credit card with Widerøe and Eurobonus in Q3 2018
• Monobank will continuously seek to establish new agreements with third-party partners
• Operational partner for other financial institutions
• Represents an asset light source of “other income” providing diversification
• Monobank will continuously seek to establish new agreements with third-party
partners
• Provide easy to use point-of-sale solutions online and in-store
• In discussions with Widerøe
• Monobank will continuously seek to establish new agreements with third-party partners
19
Appendix
20
Customer segmentationContinuous development and tuning of scorecards to navigate the portfolio
3%
31%
66%
Primary school
Secondary school
Higher education
25%
28%29%
14%3%
<= 34 years 35-44 years
45-54 years 55-64 years
>= 65 years
69%
31%
Home owner
Tenant
43 years4%
22%
35%
39%
NOK 250k-349k
NOK 350k-499k
NOK 500k-749k
>= NOK 750k
Age Income Education Housing Average customer
No
rway
Fin
lan
d
NOK 638k
Higher education
Home owner
43 years
NOK 454k
Higher education
Home owner
23%
30%29%
15%3%
<= 34 years 35-44 years
45-54 years 55-64 years
>= 65 years
25%
33%
28%
14%
NOK 250k-349k
NOK 350k-499k
NOK 500k-749k
>= NOK 750k
12%
8%
80%
Primary school
Secondary school
Higher education
71%
29%
Home owner
Tenant
21
Detailed financial figuresQuarterly income statement and balance sheet
Balance SheetIncome Statement
NOK thousand2018 2017
Q3 Q2 Q1 Q4 Q3 Q2 Q1
Interest income 105,680 98,055 84,702 70,275 53,535 43,218 34,174
Interest expenses 19,549 16,358 15,940 14,365 8,953 6,110 4,305
Net interest income 86,131 81,697 68,762 55,910 44,581 37,108 29,869
Income comissions and fees 6,975 6,255 6,485 5,209 4,076 2,931 2,641
Expenses comissions and fees 16,706 12,888 19,988 7,898 7,201 5,533 4,350
Net comissions and fees -9,731 -6,633 -13,503 -2,689 -3,125 -2,603 -1,709
Total income 76,400 75,064 64,259 53,220 41,457 34,505 28,160
Income / (loss) from trading activities -348 -1,182.00 2,136.00 -459.00 -279 -246 -472
Staff costs 10,602 12,675 7,793 7,965 6,862 6,162 5,514
Other administrative expenses 7,795 21,663 24,234 19,882 13,806 14,284 13,736
- of which marketing expenses 9,958 12,018 14,598 11,311 7,705 7,992 8,133
Depreciation and amortisation 2,513 2,364 2,131 379 1,999 1,500 1,079
Total operating costs 30,868 36,702 34,158 28,226 22,666 21,946 20,329
Profit / (Loss) before impairment losses 45,184 37,181 32,237 23,536 18,511 12,313 7,359
Impairment (losses) / releases -24,524 -18,825 -19,057 -13,834 -10,946 -8,277 -4,919
Operating profit / (loss) before tax 20,660 18,356 13,180 9,702 7,565 4,036 2,440
Tax charge -5,168 -4,563 -3,122 -2,306 -1,857 -1,009 -611
Profit / (Loss) for the year 15,492 13,793 10,058 7,396 5,708 3,027 1,829
NOK thousand2018 2017
Q3 Q2 Q1 Q4 Q3 Q2 Q1
ASSETS
Loans and advances to banks 83,630 49,906 65,439 56,000 63,559 52,081 34,536
Debt securities 1,228,593 686,825 652,089 757,910 488,535 324,510 220,474
Loans and advances to customers 3,540,868 3,298,138 2,945,025 2,402,869 1,904,116 1,472,644 1,180,590
Provision for impairment losses 91,882 86,419 69,470 50,681 37,278 26,340 18,439
Net loans and advances to customers 3,448,985 3,211,719 2,875,555 2,352,188 1,866,839 1,446,304 1,162,150
Deferred tax asset - 907 5,470 8,592 8,902 10,760 11,769
Other intangible assets 62,119 55,669 47,157 39,349 31,606 27,042 19,133
Property, plant and equipment 2,104 2,072 2,094 1,755 1,675 1,513 433
Prepayments, accrued income & other
assets120,552 113,827 103,108 85,095 65,980 52,525 43,360
- of which accrued commission to agents 113,837 107,773 97,586 80,817 62,677 49,677 40,504
Other assets 1,499,150 172,475 157,829 134,791 108,163 91,841 74,695
Total assets 4,948,135 4,120,925 3,723,911 3,300,888 2,527,096 1,914,735 1,491,856
LIABILITIES & EQUITY
Deposits by customers 4,238,973 3,433,627 3,057,120 3,651,861 2,042,687 1,556,326 1,137,690
Provisions, acrruals and other liabilities 47,415 41,128 34,503 28,797 40,370 19,512 19,458
Subordinated loan 98,654 98,568 98,483 98,399 98,811 - -
Total liabilities 4,385,042 3,573,323 3,190,106 3,779,057 2,181,868 1,575,838 1,157,148
Share capital 249,196 249,196 249,196 248,318 200,746 200,746 200,461
Surplus capital 313,897 298,406 284,609 273,129 143,475 137,767 133,862
Not registered capital - - - - 622 - -
Other equity - - - 384 384 384 384
Total equity 563,093 547,602 533,805 521,831 345,228 338,897 334,708
Total liabilities and equity 4,948,135 4,120,925 3,723,911 4,300,888 2,527,096 1,914,735 1,491,856
22
Important InformationDisclaimer
22
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.
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.