Norwegian Finans Holding ASA First quarter 2016 results
First quarter 2016 earnings were 164.9 MNOK, compared with 229.7 MNOK in the fourth quarter Norwegian Finans Holding Group MNOK Q1 2016 Q4 2015 Change Interest income 559.2 482.0 77.2 16 % Interest expenses 82.1 67.1 15.0 22 % Net interest income 477.2 415.0 62.2 15 % Commission and bank services income 55.6 61.9-6.3-10 % Commission and bank services expenses 21.3 23.8-2.6-11 % Net change in value on securities and currency 6.9 6.4 0.5 7 % Net other operating income 41.2 44.5-3.3-7 % Total income 518.4 459.5 58.9 13 % Personnel expenses 17.8 16.6 1.2 7 % General administrative expenses 173.2 132.2 41.0 31 % Ordinary depreciation 3.7 3.3 0.5 14 % Other operating expenses 8.9 7.1 1.7 24 % Total operating expenses 203.5 159.2 44.3 28 % Provision for loan losses 95.0 68.6 26.5 39 % Profit before tax 219.9 231.7-11.9-5 % Tax charge 55.0 62.0-7.1-11 % Profit after tax 164.9 169.7-4.8-3 % MNOK Q1 2016 Q4 2015 Change Profit after tax 164.9 169.7-4.8-3 % Change in fair value for assets held for sale - 60.4-60.4 n/m Tax - -0.5 0.5 n/m Other comprehensive income that may subsequently be reclassified to profit and loss - 60.0-60.0 - Comprehensive income for the period 164.9 229.7-64.8-28 % IFRS implemented as of January 1, 2016. Q4 2015 figures restated. 60.0 MNOK in unrealized gain related to stake in Visa Norway recognized in Q4 2015. Interest income driven by strong loan growth. Full annual deposit insurance levy charged to interest expense in the first quarter. Increase in operating expenses driven by strong loan growth and first full quarter of operations in new markets. Stable provision levels, increase related to strong loan growth in Norway and group provisions in Denmark and Finland. ROE at 37,4 %*. Earnings per share NOK (annualized) 3.81 5.30 2 * Bank Norwegian AS
Strong earnings growth in existing markets - new markets developing stronger than expected Norwegian Finans Holding Group Key figures Norway Sweden Denmark/ Finland MNOK Q1 16 Q4 15 Q1 16 Q4 15 Q1 16 Q4 15 Net interest income 337.6 319.5 18.1 116.7 95.7 21.0 22.8-0.3 23.0 Net fee income 35.9 27.2 8.8 7.4 15.6-8.2-2.0 1.9-3.9 Total income 373.6 346.7 26.9 124.1 111.3 12.8 20.7 1.6 19.1 Total operating expenses 114.7 107.0 7.7 56.3 49.6 6.7 31.8 2.2 29.5 Provision for loan losses 46.0 38.0 8.0 29.8 28.4 1.3 19.3 2.2 17.1 Profit after tax 159.7 148.0 11.7 28.5 24.2 4.3-22.7-2.0-20.7 Fee income in Sweden impacted by reclassification in Q4 and lower interchange fees. First full quarter of operations in Denmark and Finland. Net loans 11,059 10,082 977 4,037 3,633 404 1,106 93 1,013 Deposits 11,577 10,188 1,389 4,184 3,128 1,056 167 50 116 3 Net interest income reflects transfer pricing for internal funding. No allocation of overhead expenses. Q4 2015 figures restated.
Strong loan and core earnings growth. One-off income in the fourth quarter MNOK Quarterly loan growth MNOK Quarterly earnings and comprehensive income 2,800 240 2,400 210 2,000 180 1,600 150 120 1,200 90 800 60 400 30 0 0 2015 figures not restated. 2015 figures restated. 4
Strong balance sheet MNOK 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 367 2,980 2,851 441 2,855 3,102 Assets 352 2,671 3,431 520 2,965 3,895 479 3,332 4,218 Cash & cash equivalents Securities Credit card 1 Total gross loans increased 2,482 MNOK, compared with 1,500 MNOK in the fourth quarter. Installment loans rose 2,158 MNOK and credit card loans grew 324 MNOK. 6,000 4,000 2,000 0 12,467 10,192 9,156 7,468 8,138 182 191 214 236 264 Consumer loans 2 Intangibles Other assets Installment loan run-off 779 MNOK, compared with 748 MNOK in the fourth quarter. MNOK 22,000 20,000 Liabilities & equity Liquid assets comprise 19 % of total assets. 18,000 Deposits up 2,561 MNOK. 16,000 14,000 12,000 10,000 8,000 6,000 9,955 10,873 11,687 13,367 15,928 Deposits Deposits to loans ratio 0.98. LCR 98%. NSFR 135%. 4,000 2,000 0 1,875 1,675 1,675 1,875 1,880 307 310 431 326 338 299 299 299 299 175 1,242 1,371 1,500 1,663 2,007 Debt securities issued Other liabilities Sub debt Equity & hybrids 5 Bank Norwegian AS 1 Includes sales financing 2 Includes personal lines of credit 2015 figures not restated.
Strong loan growth 800 700 600 500 400 300 200 100 0 733 463 479 393 Quarterly loan growth - MNOK 11 257 83 286 229 235 Norway Sweden Denmark Finland Norway Sweden 776 38 Installment loans Q4 15 Q1 16 Credit card 800 700 600 500 400 300 200 100 0 463 733 381 456 Quarterly loan growth - local currency 203 9 9 83 286 229 200 Norway Sweden Denmark Finland Norway Sweden 61 Installment loans Q4 15 Q1 16 Credit card 6 Q4 2015 figures not restated.
Rapid customer growth Number of customers 700,000 650,000 600,000 550,000 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 490,800 446,400 413,100 373,800 342,400 96,600 61,700 66,800 73,200 80,000 73,800 76,000 77,800 81,300 89,200 Deposit Consumer loan Credit card 68,900 new customers in the first quarter. 44,400 new card customers 676,600 total customers. Swedish credit card customers total 167,200. 7
Quarterly balance sheet Norwegian Finans Holding Group MNOK Assets Deposits with Norges Bank 31.3.16 59 0 % 31.12.15 59 0 % Change -0 0 % Loans and deposits with credit institutions 437 2 % 478 3 % -41-1 % Loans to customers 16,202 80 % 13,808 78 % 2,393 87 % Certificates and bonds 3,332 16 % 2,969 17 % 363 13 % Financial derivatives 7 0 % 0 0 % 7 0 % Shares and other securities 0 0 % 0 0 % - 0 % Assets held for sale 60 0 % 60 0 % - 0 % Other intangible assets 45 0 % 42 0 % 2 0 % Deferred tax asset 8 0 % 8 0 % 0 0 % Fixed assets 0 0 % 1 0 % -0 0 % Other assets 196 1 % 178 1 % 18 1 % Total assets 20,347 100 % 17,604 100 % 2,743 100 % Liabilities and equity Deposits from customers 15,928 78 % 13,367 76 % 2,561 93 % Debt securities issued 1,880 9 % 1,880 11 % 1 0 % Financial derivatives 0 0 % 8 0 % -8 0 % Taxes payable 192 1 % 202 1 % -10 0 % Other liabilities 59 0 % 36 0 % 23 1 % Accrued expenses and unearned income received 89 0 % 76 0 % 13 0 % Subordinated debt 175 1 % 175 1 % 0 0 % Total liabilities Share capital Share premium Tier 1 capital 18,323 90 % 15,744 89 % 2,580 94 % 173 1 % 173 1 % - 0 % 150 1 % 150 1 % - 0 % 125 1 % 125 1 % - 0 % Retained earnings 1,575 8 % 1,411 8 % 164 6 % Total equity 2,024 10 % 1,860 11 % 164 6 % Total liabilities and equity 20,347 100 % 17,604 100 % 2,743 100 % Q4 2015 figures restated.
14% Stable yields and margins Norway Margins as a % of average assets 12% 11.2 % 11.2 % 11.2 % 11.1 % 10.7 % Interest income 10% 8% 8.9 % 8.7 % 9.1 % 9.3 % 7.8 % 7.9 % 8.1 % 8.2 % 8.8 % 7.5 % Net interest margin Risk-adjusted margin 6% 4% Margins impacted by IFRS implementation in the first quarter and deposit insurance levy. 2% 0% 18% 16% 14% 12% 2.5 % 2.2 % 1.9 % Asset yield and cost of deposits 15.7 % 15.6 % 15.6 % 15.6 % 15.4 % 15.4 % 15.2 % 14.3 % 14.2 % 14.5 % 14.2 % 13.9 % 13.6 % 13.6 % 13.3 % Interest expenses Installment loan yield Credit card loan yield Risk-adjusted total loan yield Increase in credit card yield due to re-classification of ATM fees. Deposit rates in Norway lowered beginning of first and second quarter 2016. 10% 8% 6% 4% 2% 0% 9 2.8 % 2.5 % 2.2 % 2.1 % 1.9 % 2.3 % 2.2 % 2.1 % 2.2 % 1.8 % 1.6 % 1.9 % 1.4 % 1.3 % Bank Norwegian AS - Norwegian operations Deposit costs Debt securities cost Liquidity yield 2015 figures not restated.
14% Stable yields and margins Sweden Margins as a % of average assets 12% 11.1 % 11.9 % 11.8 % 11.9 % 1 10.9 % 1 11.2 % 11.3 % Interest income 10% 1 Net interest margin 8% 7.3 % 8.2 % 8.2 % 8.0 % 8.5 % Risk-adjusted margin 6% 4% 2% 0% 18% 1.2 % 0.8 % 0.7 % 0.7 % Asset yield and cost of deposits Interest expenses 16% 14% 14.2 % 14.6 % 14.3 % 14.1 % 14.2 % Installment loan yield 12% 11.5 % 10.8 % 11.3 % 11.1 % Credit card loan yield 10% 10.2 % 11.1 % 10.7 % 10.3 % 9.8 % 10.3 % Risk-adjusted total loan yield 8% 6% 4% 2% 0% 1.3 % 1.2 % 0.9 % 0.9 % 0.2 % 0.0% 0.0% 0.2 % Deposit costs Liquidity yield 10 Bank Norwegian AS - Swedish operations in SEK 2015 figures not restated.
High operating efficiency Quarterly operating expenses MNOK 210 180 0.45 0.40 Cost/income ratio impacted by start-up in Denmark and Finland. 150 120 90 60 30-144.6 104.8 102.5 80.8 93.5 16.2 17.0 14.2 15.2 11.2 11.4 15.8 18.6 20.9 13.3 14.9 12.7 15.4 16.0 16.5 5.8 3.2 3.2 3.3 3.7 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Cost/income ratio in Norwegian operations excluding value adjustments was 0.31. Increase in marketing and other expenses driven by higher loan growth and first full quarter of operations in Denmark and Finland. Depreciation IT Other Personnel Marketing Cost/income 11 Bank Norwegian AS
Strong credit metrics Consumer loans - Norway 7.0 % Non-performing loans to loans Loan loss provisions to average loans 6.0 % 2.5 % 5.0 % 1.8 % 4.0 % 2.8 % 3.3 % 3.2 % 3.5 % 3.7 % 1.5 % 1.3 % 1.3 % 1.5 % 1.6 % 0.5 % 3.5 % Loan loss allowance to loans 140% Loan loss allowance to non-performing loans 120% 2.5 % 100% 1.5 % 1.9 % 1.9 % 1.9 % 80% 60% 7 64.6 % 68.7 % 67.2 % 67.3 % 40% 0.5 % 20% 12 0% 2015 figures restated.
Strong credit metrics Credit card loans - Norway Non-performing loans to loans Loan loss provisions to average loans 7.0 % 6.0 % 2.5 % 5.0 % 4.0 % 2.6 % 2.9 % 3.1 % 1.5 % 1.4 % 1.2 % 1.4 % 1.5 % 0.5 % 3.5 % Loan loss allowance to loans 140% Loan loss allowance to non-performing loans 120% 2.5 % 100% 1.8 % 1.9 % 1.8 % 1.8 % 1.8 % 80% 67.0 % 67.7 % 73.9 % 73.2 % 73.5 % 1.5 % 60% 40% 0.5 % 20% 0% 13 2015 figures restated.
Stabilizing credit metrics Consumer loans - Sweden Non-performing loans to loans Loan loss provisions to average loans 1 7.0 % 9.0 % 8.0 % 6.0 % 7.0 % 6.0 % 5.0 % 5.1 % 5.7 % 6.2 % 6.2 % 6.0 % 5.0 % 4.0 % 3.8 % 3.6 % 3.3 % 3.7 % 3.4 % 4.0 % 7.0 % Loan loss allowance to loans 120% Loan loss allowance to non-performing loans 6.0 % 100% 5.0 % 80% 4.0 % 2.7 % 3.3 % 3.6 % 3.8 % 60% 55.9 % 56.6 % 55.8 % 61.4 % 67.3 % 40% 20% 14 0% 2015 figures restated.
Optimizing asset quality Credit card loans - Sweden 6.0 % Non-performing loans to loans 5.0 % Loan loss provisions to average loans 5.0 % 4.0 % 4.0 % 1.9 % 2.4 % 2.9 % 3.3 % 1.4 % 2.2 % 2.6 % 1.9 % 0.9 % 3.5 % Loan loss allowance to loans 120% Loan loss allowance to non-performing loans 100% 2.5 % 80% 1.5 % 1.1 % 1.2 % 1.4 % 1.6 % 1.8 % 60% 40% 59.4 % 53.1 % 52.9 % 58.6 % 60.1 % 0.5 % 20% 15 0% 2015 figures restated.
High profitability 50% 4.5 % 45% 4.0 % 40% 3.5 % 35% 30% 25% 20% 15% 38.4 % 39.6 % 35.6 % 42.5 % 37.4 % 2.5 % 1.5 % 10% 5% 0.5 % 0% ROE ROA Ratios Q4 2015 are based on profit after tax and not comprehensive income. 16 Bank Norwegian AS 2015 figures not restated.
High risk absorption capacity 18% Capital ratios 16% 15.4 % 15.6 % 15.4 % 15.6 % 14% 12% 12.3 % 13.6 % 13.9 % 13.8 % 12.7 % 12.7 % 14.2 % 13.2 % 14.1 % 12.9 % 12.1 % CET 1 ratio of 12.1%. 10% 8.9 % 9.2 % 9.3 % 9.1 % 9.0 % Leverage ratio equals 9.0%. 8% 6% 300 MNOK private placement completed April 5, lifting CET1 to 14.0%. 4% 2% 0% Common equity tier 1 Tier 1 capital Total capital Leverage ratio Subsequent repair offering up to 40 MNOK takes place in June. 17 Bank Norwegian AS 2015 figures not restated for leverage ratio.
Well positioned for continued earnings growth Earnings growth and strong returns Strong loan growth in existing and new markets Stable margins Cost-efficient operations Stable provisions Nordic expansion will dampen earnings growth near term. Denmark and Finland expected to turn profitable after 12 months of operations Stable credit quality Resilient Nordic economies with stable unemployment outlook Enhanced credit models Stable portfolio risk in established markets Higher initial credit losses expected in newly entered markets Strong and resilient balance sheet Strong liquidity position Strong capital generation and capital ratios Capital issues provide adequate capital for growth 18
Top 20 shareholders SHAREHOLDER # OF SHARES 1 NORWEGIAN AIR SHUTTLE 34.638.941 20,00 % 2 FORTELUS SPECIAL SITUATIONS FUND 14.999.999 8,66 % 3 LAGUAN AS 10.871.013 6,28 % 4 BORAK AS 8.580.454 4,95 % 5 STENSHAGEN INVEST AS 7.275.379 4,20 % 6 SPENCER TRADING INC 6.238.450 3,60 % 7 MP PENSJON PK 5.553.800 3,21 % 8 PROTECTOR FORSIKRING 5.093.651 2,94 % 9 SWEDBANK ROBUR NORDENFOND 5.000.000 2,89 % 10 SWEDBANK ROBUR SMÅBOLAGSFOND NORDEN 4.879.132 2,82 % 11 SNEISUNGEN AS 3.720.333 2,15 % 12 TORSTEIN TVENGE 3.500.000 2,02 % 13 HANDELSBANKEN NORGE 3.025.000 1,75 % 14 SOCIETE GENERALE - NOM 2.000.000 1,15 % 15 SONGA AS 2.000.000 1,15 % 16 DANSKE BANK AS MARKET 2.000.000 1,15 % 17 VEVLEN GÅRD AS 2.000.000 1,15 % 18 DIRECTMARKETING INVEST 1.500.000 0,87 % 19 LITHINON AS 1.377.870 0,80 % 20 AAT INVEST AS 1.153.291 0,67 % Top 20 125.407.313 72,41 % Total 173.194.708 Norwegian Finans Holding ASA registered on the NOTC-list with ticker code BANK. The board has resolved to apply for a listing on Oslo Stock Exchange. Anticipated listing date is June 17. Management holds 2.8 % of shares outstanding. The table does not include share increases from the private placement and subsequent repair offering. 19
20