Norwegian Finans Holding ASA First quarter 2017 results
First quarter 2017 earnings were 328 MNOK, up 38 MNOK compared with the fourth quarter Norwegian Finans Holding Group MNOK Q1 2017 Q4 2016 Change Interest income * 934.0 846.6 87.4 10 % Interest expenses 108.3 93.7 14.7 16 % Net interest income 825.7 752.9 72.8 10 % Commission and bank services income 80.9 62.8 18.1 29 % Commission and bank services expenses 42.1 40.8 1.3 3 % Net change in value on securities and currency 5.5-4.6 10.1-221 % Net other operating income 44.3 17.4 26.9 155 % Total income 870.0 770.3 99.7 13 % Personnel expenses 19.4 14.7 4.7 32 % General administrative expenses* 216.0 223.3-7.4-3 % Ordinary depreciation* 11.4 11.3 0.1 1 % Other operating expenses 11.6 11.3 0.2 2 % Total operating expenses 258.3 260.7-2.4-1 % Provision for loan losses 177.2 144.7 32.6 23 % Profit on ordinary activities before tax 434.4 364.9 69.5 19 % Tax charge 108.6 75.1 33.5 45 % Profit on ordinary activities after tax 325.8 289.8 36.0 12 % Earnings per share (NOK) 1.80 1.61 MNOK Q1 2017 Q4 2016 Change Profit after tax 325.8 289.8 36.0 12 % Change in fair value for assets held for sale, after tax 2.7 0.2 2.4 977 % Comprehensive income for the period 328.5 290.0 38.4 13 % Interest income driven by strong loan growth. Net fee income increased due to higher credit card activity, insurance fees and high card expenses in Q4 16. Positive change in value on securities. Reduced operating expenses due to lower growth. Stable provision levels. 43 MSEK gain on sale of Swedish NPLs to be recognized in Q2 17. 14.0 MNOK tax effect from the Visa Norway proceeds in Q4 16. ROE** was 40.0%. * Accounting for agent commission reclassified in accordance with IAS 38 and IAS 39 ** Bank Norwegian AS 2
Strong earnings growth in all markets Bank Norwegian AS Key figures Norway Sweden Denmark / Finland MNOK Q1 17 Q4 16 Q1 17 Q4 16 Q1 17 Q4 16 Net interest income 468 458 11 161 149 13 196 147 49 Net other income 32 10 22 13 5 8-1 2-3 Total income 501 468 33 174 154 20 195 148 46 Total operating expenses 123 117 7 57 68-11 78 75 2 Provision for loan losses 70 58 12 49 42 7 58 44 13 Profit after tax 230 236-6 51 33 19 45 22 23 Comprehensive income 233 236-3 51 33 19 45 22 23 Net loans 15,141 14,244 898 5,508 5,238 270 6,504 5,053 1,452 Deposits 16,566 14,696 1,869 5,459 5,561-102 6,225 4,166 2,059 Increased fee income and securities value change, amid positive one-offs in Q4 16 in Norway. Fx-gain, reduced card costs and lower marketing in Sweden. Sharp rise in net interest income, fx-loss and lower growth cost in Denmark/Finland. 2016 figures reclassified Net interest income reflects transfer pricing for internal funding No allocation of overhead expenses 3
Strong loan and earnings growth Quarterly loan growth Quarterly earnings MNOK MNOK 3,500 360 3,000 330 300 2,500 270 240 2,000 210 1,500 180 150 1,000 120 90 500 0 60 30 0 4 2016 figures reclassified Earnings related to stake in Visa Norway excluded (Q2 and Q4 16)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Rising market share in Norway Total unsecured loans Market growth and market share BNOK BNOK 100 Credit cards 14 18 % 90 80 70 60 50 Unsecured loans 12 10 8 Bank Norwegian Competitors Market share 16 % 14 % 12 % 10 % 40 6 8 % 30 4 6 % 20 4 % 10 2 2 % - 0 0 % 5 Source: The financial supervisory authority of Norway Breakdown between credit cards and unsecured loan not available prior to 2015
Strong balance sheet MNOK 40,000 35,000 30,000 25,000 20,000 15,000 479 3,332 4,235 928 4,817 4,646 Assets 839 5,544 5,415 1,155 4,464 6,309 1,127 6,568 7,097 Cash & cash equivalents Securities Credit card 1 Total gross loans increased 2,797 MNOK, compared with 3,488 MNOK in the fourth quarter. Installment loans rose 2,009 MNOK and credit card loans grew 788 MNOK. 10,000 5,000 0 21,065 19,056 16,462 14,516 12,520 261 279 252 237 273 Consumer loans Intangibles Other assets Installment loan run-off 1,307 MNOK, compared with 1,165 MNOK in the fourth quarter. MNOK 40,000 Liabilities & equity Liquid assets comprise 22% of total assets. 35,000 30,000 Deposits up 3,826 MNOK. 25,000 Deposits to loans ratio 1.04. 20,000 15,000 10,000 15,928 19,641 22,154 24,424 28,250 Deposits LCR 142%. NSFR 137%. 5,000 6 0 1,799 654 275 338 294 367 542 1,880 1,907 1,992 1,831 175 275 275 175 2,022 2,587 3,042 3,318 4,143 2016 figures reclassified Bank Norwegian AS 1 Includes sales financing Debt securities issued Other liabilities Sub debt Equity & Tier 1 capital
Strong loan growth Quarterly loan growth - MNOK 1,000 800 600 400 200 0 897 806 753 621 521 423 390 335343 192 237 143 179 195 129 120 Norway Sweden Denmark Finland Norway Sweden Denmark Finland Installment loans Q4 16 Q1 17 Credit card 800 600 400 200 0 753 621 374 202 417 307 Quarterly loan growth - local currency 96 85 335 343 227 136 116 95 Norway Sweden Denmark Finland Norway Sweden Denmark Finland 19 21 Installment loans Q4 16 Q1 17 Credit card 7 2016 figures reclassified
Rapid customer growth Number of customers 1,100,000 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 738,000 673,400 609,900 543,000 490,800 158,300 147,100 131,400 113,300 96,600 89,200 101,600 111,300 120,400 136,800 Deposit Consumer loan Credit card 1,033,300 total customers. 92,200 new customers. 64,600 new credit cards issued. Bank Norwegian Card awarded Best Affinity Credit Card for the Europe/Africa region by the Freddie Awards 2017. 8
Quarterly balance sheet Norwegian Finans Holding Group MNOK 31.3.17 31.12.16 Change Assets Deposits with Norges Bank 60 0 % 60 0 % -0 0 % Loans and deposits with credit institutions 1,072 3 % 1,103 4 % -32-3 % Loans to customers * 27,153 77 % 24,534 81 % 2,619 11 % Certificates and bonds 6,568 19 % 4,464 15 % 2,103 47 % Financial derivatives 3 0 % - 0 % 3 N/A Shares and other securities 0 0 % 0 0 % - 0 % Assets held for sale 27 0 % 25 0 % 3 11 % Other intangible assets* 114 0 % 108 0 % 6 5 % Deferred tax asset 8 0 % 8 0 % 0 3 % Fixed 0 0 % 0 0 % -0-16 % Other assets* 126 0 % 100 0 % 27 27 % Total assets 35,131 100 % 30,402 100 % 4,729 16 % Liabilities and equity Deposits from customers 28,250 80 % 24,424 80 % 3,826 16 % Debt securities issued 1,799 5 % 1,824 6 % -25-1 % Financial derivatives - 0 % 7 0 % -7 N/A Taxes payable 311 1 % 297 1 % 14 5 % Other liabilities 253 1 % 141 0 % 112 80 % Accrued expenses and unearned income received 92 0 % 99 0 % -7-7 % Subordinated loan 275 1 % 275 1 % -0 0 % Total liabilities 30,980 88 % 27,067 89 % 3,913 14 % Share capital 187 1 % 180 1 % 7 4 % Share premium reserve 967 3 % 482 2 % 485 101 % Hybrid capital 335 1 % 335 1 % - 0 % Retained earnings and other reserves 2,663 8 % 2,338 8 % 325 14 % Total equity 4,151 12 % 3,335 11 % 816 24 % Total liabilities and equity 35,131 100 % 30,402 100 % 4,729 16 % * Accounting for agent commission reclassified in accordance with IAS 38 and IAS 39 9
Stable yields and margins 14% Margins as a % of average assets 12% 10% 11.7 % 11.7 % 9.9 % 10.4 % 11.1 % 9.8 % 11.6 % 11.7 % 10.3 % 10.3 % Interest income Net interest margin 8% 7.9 % 8.4 % 8.0 % 8.3 % 8.1 % Risk-adjusted margin 6% 4% 2% 1.7 % 1.4 % 1.3 % 1.3 % 1.4 % Interest expenses 0% 16% Asset yield and cost of deposits 14.9 % 14.9 % 14.6 % 14.6 % 14.6 % Installment loan yield 14% 12% 12.9 % 13.0 % 13.0 % 13.4 % 13.3 % 11.9 % 12.1 % 11.9 % 11.8 % 11.5 % Credit card loan yield Risk-adjusted total loan yield 10% 8% 6% 4% 2% 0% 10 1.8 % 1.9 % 1.7 1.9 % 1.9 % 1.8 % 1.5 1.4 1.4 % 1.4 % 1.1 % 1.2 % 1.4 % 1.3 % 1.3 % 2016 figures reclassified Debt securities cost Deposit costs Liquidity yield
High operating efficiency MNOK Quarterly operating expenses 300 0.45 270 240 0.40 0.35 Reduced marketing spending due to slower loan growth. 210 180 150 120 129.9 147.3 176.2 178.4 174.0 0.30 0.25 0.20 Personnel expenses up due to one-off in Q4 16. Lower credit card related costs. 90 60 30-17.0 20.9 15.1 17.5 25.5 29.2 14.3 19.1 35.0 30.6 16.5 18.5 17.0 21.2 22.5 9.9 10.5 10.8 11.3 11.4 0.15 0.10 0.05 0.00 FTE count at 63. Depreciation IT Other Personnel Marketing Cost/income 11 Bank Norwegian AS 2016 figures reclassified The cost/income ratio excludes net proceeds from Visa Norway
Strong credit metrics Consumer loans 8.0 % Non-performing loans to loans 5.0 % Loan loss provisions to average loans 7.0 % 6.0 % 4.0 % 5.0 % 4.0 % 3.9 % 3.9 % 4.0 % 4.3 % 4.9 % 3.0 % 2.7 % 2.5 % 2.2 % 2.7 % 2.9 % 3.0 % 2.0 % 2.0 % 1.0 % 1.0 % 0.0 % 0.0 % 5.0 % Loan loss allowance to loans 140% Loan loss allowance to non-performing loans 4.0 % 120% 100% 3.0 % 2.5 % 2.5 % 2.6 % 2.7 % 3.0 % 80% 72.4 % 74.9 % 76.2 % 73.6 % 69.6 % 2.0 % 60% 40% 1.0 % 20% 0.0 % 0% 12 Figures are not reclassified
Strong credit metrics Credit card loans 7.0 % Non-performing loans to loans 5.0 % Loan loss provisions to average loans 6.0 % 4.0 % 5.0 % 4.0 % 3.0 % 2.0 % 3.2 % 3.3 % 3.0 % 3.4 % 3.8 % 3.0 % 2.0 % 1.6 % 1.7 % 1.7 % 2.3 % 2.4 % 1.0 % 1.0 % 0.0 % 0.0 % 4.0 % Loan loss allowance to loans 140% Loan loss allowance to non-performing loans 120% 3.0 % 100% 2.0 % 1.8 % 1.8 % 1.8 % 1.9 % 2.1 % 80% 60% 69.8 % 71.1 % 77.4 % 71.7 % 68.6 % 1.0 % 40% 20% 0.0 % 0% 13 Figures are not reclassified
High profitability 50% 5.0 % 45% 40% 4.0 % 35% 30% 3.0 % 25% 20% 37.4 % 40.9 % 38.9 % 39.5 % 40.0 % 2.0 % 15% 10% 1.0 % 5% 0% ROE ROA 0.0 % 14 Bank Norwegian AS ROE and ROA in Q2 16 and Q4 16 adjusted for the proceeds from stake in Visa Norway
Risk absorption capacity bolstered by capital increase 20% Capital ratios 18% 16% 14% 12% 10% 8% 13.8 % 12.7 % 11.8 % 9.0 % 17.1 % 16.4 % 15.5 % 15.6 % 14.5 % 15.1 % 13.8 % 13.9 % 13.5 % 9.5 % 10.0 % 10.1 % 17.5 % 16.4 % 15.0 % 10.8 % Strong CET 1 ratio of 15.0%. Leverage ratio equals 10.8%. Pillar 2 requirements to be met by end of Q3 17. 6% 4% 2% Revised capital targets will be communicated pending appeal of pillar 2 requirements from NFSA. 0% Common equity tier 1 Tier 1 capital Total capital Leverage ratio 15 Bank Norwegian AS 2016 figures reclassified
Well positioned for continued earnings growth Earnings growth and strong returns Loan growth commensurate with the capital base near term Broad Nordic growth platform Enacted and proposed regulations expected to have limited impact on loan growth Stable margins Cost-efficient operations and lower growth costs Stable provisions Stable credit quality Resilient Nordic economies with favourable unemployment outlook Enhanced credit models implementation of IFRS 9 framework and models on track Stable portfolio risk Continued expectations of higher initial credit losses in Denmark Gain on sale of Swedish NPLs underscores solid lending practice Strong and resilient balance sheet Assigned BBB rating by S&P Global Ratings Strong liquidity position Strong capital generation and capital ratios Adequate capital for growth 16
Top 20 shareholders SHAREHOLDER # OF SHARES 1 NORWEGIAN AIR SHUTTLE 37,323,739 20.00 % 2 GOLDMAN, SACHS & CO. 15,609,052 8.36 % 3 STENSHAGEN INVEST AS 8,636,416 4.63 % 4 BRUMM AS 7,622,653 4.08 % 5 FOLKETRYGDFONDET 6,355,729 3.41 % 6 GREEN 91 AS 6,313,434 3.38 % 7 PROTECTOR FORSIKRING 5,168,564 2.77 % 8 JPMORGAN CHASE BANK 4,290,350 2.30 % 9 SWEDBANK ROBUR SMABO 4,098,094 2.20 % 10 SNEISUNGEN AS 4,076,841 2.18 % 11 TVENGE TORSTEIN I. 3,600,000 1.93 % 12 MP PENSJON PK 3,285,300 1.76 % 13 GKB INVEST AS 2,790,635 1.50 % 14 KM AVIATRIX INVEST 2,790,635 1.50 % 15 DANSKE BANK AS 2,749,616 1.47 % 16 SWEDBANK ROBUR NORDEN 2,500,000 1.34 % 17 SONGA AS 2,083,120 1.12 % 18 VERDIPAPIRFONDET PARETO 1,712,887 0.92 % 19 DIRECTMARKETING INVEST 1,500,000 0.80 % 20 ALTITUDE CAPITAL AS 1,452,851 0.78 % Top 20 123,959,916 66.42 % Total 186,618,704 Management holds 1.8 % of shares outstanding. As of May 2, 2017 17
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