Norwegian Finans Holding ASA Third quarter 2014 results
Third quarter 2014 earnings were 94.1 MNOK, compared with 82.1 MNOK in the second quarter Norwegian Finans Holding Group MNOK Q3 2014 Q2 2014 Change Interest income 336.2 304.7 31.4 10 % Interest expenses 82.0 77.4 4.6 6 % Net interest income 254.1 227.3 26.8 12 % Commission and bank services income 33.3 30.3 3.0 10 % Commission and bank services expenses 16.1 13.9 2.2 15 % Net change in value on securities and currency -2.3 1.0-3.3 n/m Net other operating income 15.3 17.3-2.0-11 % Total income 269.5 244.6 24.9 10 % Personnel expenses 13.9 9.4 4.4 47 % General administrative expenses 85.9 83.1 2.9 3 % Ordinary depreciation 2.7 2.6 0.2 6 % Other operating expenses 2.6 3.5-0.9-25 % Total operating expenses 105.2 98.6 6.6 7 % Provision for loan losses 35.4 33.6 1.7 5 % Profit before tax 128.9 112.4 16.5 15 % Tax charge 34.8 30.3 4.5 15 % Profit after tax 94.1 82.1 12.1 15 % Net interest income driven by strong loan growth. Net loss on securities in the Swedish portfolio. Improved operating efficiency. Stable provisioning. ROE 38.6 %, up from 37.2 %*. Earnings per share NOK (annualized) 2.18 1.90 * Bank Norwegian AS 2
Earnings in Norway were 100.2 MNOK, a gain of 9.8 MNOK from the second quarter Norwegian Finans Holding Group Key figures Norway Sweden* MNOK Q3 14 Q2 14 Q3 14 Q2 14 Total income 241.0 221.1 19.9 28.5 23.5 4.9 Total operating expenses 76.3 70.9 5.4 28.9 27.7 1.1 Provision for loan losses 27.5 26.4 1.1 7.9 7.3 0.6 Profit after tax 100.2 90.4 9.8-6.1-8.4 2.3 Liquid assets 3,042 2,520 522 779 881-102 Net loans to customers 7,491 7,066 424 1,311 1,014 298 Intangible assets 18 18 1 15 13 1 Deposits from customers 7,446 7,157 289 2,054 1,883 171 Swedish operations impacted by nonrecurring items in the third quarter and is expected to turn profitable in the fourth quarter. Mainly group provisions in Sweden. * No allocation of overhead expenses. 3
Solid loan and earnings growth Quarterly loan growth Quarterly earnings MNOK MNOK 1.000 100 900 90 800 80 700 70 600 60 500 50 400 40 300 30 200 20 100 10 0 0 4
Rising market share in Norway Total unsecured loans Market growth and market share BNOK BNOK Source: The financial supervisory authority of Norway, adjusted for Bank Norwegian s Swedish loan portfolio. First half 2014 annualized growth figures. 5
High loan and deposit growth MNOK 14,000 12,000 10,000 8,000 6,000 4,000 2,000 178 1,771 1,632 4,203 151 1,694 1,751 4,734 Assets 297 2,747 1,944 5,449 483 2,919 2,215 6,024 450 3,371 2,408 6,571 Cash & cash equivalents Securities Credit card 1 Consumer loans 2 Total gross loans increased 740 MNOK, compared with 846 MNOK in the second quarter. Installment loans rose 547 MNOK and credit card loans grew 193 MNOK. Installment loan run-off 395 MNOK, compared with 323 MNOK in the second quarter. 0 MNOK 14,000 81 99 124 140 154 Liabilities & equity Intangibles Other assets Liquid assets comprise 30 % of total assets. Deposits up 460 MNOK. 12,000 10,000 Issuance of 500 MNOK in senior debt securities. 8,000 9,040 9,500 Deposits Deposits to loans ratio 1.06. 6,000 4,000 6,243 6,592 8,496 LCR 326% NSFR 115% 1,602 2,000 500 556 1,100 166 256 284 385 500 299 299 299 299 296 716 782 847 930 1,024 0 6 Bank Norwegian AS Debt securities issued Other liabilities Sub debt & hybrids Equity 1 Includes sales financing 2 Includes personal lines of credit
Strong loan growth MNOK 350 300 309 311 Quarterly loan growth 265 250 236 200 Loan growth in line with expectations. 150 100 148 123 123 69 Credit card growth in Sweden impacted by down payments after expiry of interest free period. 50 0 Norway Sweden Norway Sweden Installment loans Credit card Q2 14 Q3 14 7
Rapid customer growth Number of customers 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 297,600 273,000 242,100 208,500 184,000 43,000 48,100 52,900 32,800 37,700 53,700 56,900 66,200 69,200 71,900 Deposit Consumer loan Credit card Number of customers total 422,400 32,100 net new customers in the third quarter. Swedish card customers total 79,300. 8
Quarterly balance sheet Norwegian Finans Holding Group MNOK Assets 30.9.14 30.6.14 Change Deposits with Norges Bank 57 0 % 107 1 % -50-47 % Loans and deposits with credit institutions 407 3 % 389 3 % 17 4 % Loans to customers 8,802 69 % 8,080 69 % 722 9 % Certificates and bonds 3,371 26 % 2,919 25 % 452 15 % Shares and other securities 0 0 % 0 0 % 0 0 % Other intangible assets 33 0 % 31 0 % 2 6 % Deferred tax asset 2 0 % 2 0 % 0 6 % Fixed assets 1 0 % 1 0 % -0-9 % Other assets 153 1 % 139 1 % 14 10 % Total assets 12,825 100 % 11,667 100 % 1,158 10 % Liabilities and equity Deposits from customers 9,500 74 % 9,040 77 % 460 5 % Debt securities issued 1,602 12 % 1,100 9 % 502 46 % Taxes payable 90 1 % 55 0 % 35 64 % Other liabilities 16 0 % 31 0 % -15-49 % Accrued expenses and unearned income received 281 2 % 200 2 % 81 41 % Subordinated debt 299 2 % 299 3 % 0 0 % Total liabilities 11,788 92 % 10,724 92 % 1,064 10 % Share capital 173 1 % 173 1 % - 0 % Share premium 145 1 % 145 1 % - 0 % Retained earnings 719 6 % 625 5 % 94 15 % Total equity 1,037 8 % 943 8 % 94 10 % Total liabilities and equity 12,825 100 % 11,667 100 % 1,158 10 % 9
Stable yields and margins 14% Margins as a % of average assets 12% 11.5 % 12.1 % 11.9 % 11.9 % 11.6 % Interest income 10% 8% 8.4 % 7.4 % 9.0 % 9.1 % 9.0 % 7.9 % 7.9 % 7.9 % 8.7 % 7.6 % Net interest margin Risk-adjusted margin 6% 4% 2% 3.0 % 3.0 % 3.0 % 3.0 % 2.8 % Interest expenses Deposit rates lowered in the third quarter. 0% 18% Asset yield and cost of deposits 16% 14% 12% 15.3 % 15.6 % 15.8 % 15.8 % 15.4 % 15.4 % 15.5 % 15.4 % 15.3 % 15.4 % 13.8 % 13.9 % 13.8 % 13.7 % 13.8 % Credit card loan yield Installment loan yield Risk-adjusted total loan yield 10% 8% 6% 4% 3.3 % 3.3 % 3.3 % 3.3 % 3.2 % Deposit costs 2% 2.4 % 2.4 % 2.3 % 2.2 % 2.3 % Liquidity yield 0% 10 Bank Norwegian AS - Norwegian operations
Improved operating efficiency Quarterly operating expenses MNOK 120 100 80 0.50 0.45 0.40 0.35 Increased marketing expenses in Sweden. Higher personnel expenses related to seasonal accrual effect in the previous quarter. 60 44.3 52.0 62.7 64.3 66.8 0.30 0.25 0.20 Nine out of 55.5 FTE s allocated to Swedish operations. 40 20-12.4 12.7 8.7 9.6 14.1 12.1 11.2 10.5 7.6 8.8 10.1 11.0 11.3 2.4 2.5 2.5 2.6 2.7 9.1 13.5 0.15 0.10 0.05 0.00 Cost/income ratio in Norwegian operations was 0,32. Depreciation IT Other Personnel Marketing Cost/income 11 Bank Norwegian AS
Stable credit metrics Consumer loans Non-performing loans to loans Loan loss provisions to average loans 12% 3.0 % 10% 2.5 % 8% 2.0 % 6% 5.0 % 5.0 % 5.0 % 5.1 % 4.8 % 1.5 % 1.4 % 1.5 % 1.5 % 1.5 % 1.5 % 4% 1.0 % 2% 0.5 % 0% 0.0 % 3.0 % Loan loss allowance to loans 140% Loan loss allowance to non-performing loans 2.5 % 120% 2.0 % 1.5 % 1.8 % 1.8 % 1.9 % 2.0 % 2.0 % 100% 80% 67.2 % 67.6 % 68.8 % 69.4 % 82.6 % 60% 1.0 % 40% 0.5 % 20% 0.0 % 0% 12 Norwegian operations
Stable credit metrics Credit card loans Non-performing loans to loans Loan loss provisions to average loans 7% 3.0 % 6% 2.5 % 5% 4% 3.9 % 4.2 % 4.2 % 4.2 % 4.0 % 2.0 % 1.5 % 1.6 % 1.5 % 1.6 % 1.5 % 1.4 % 3% 2% 1.0 % 1% 0.5 % 0% 0.0 % 3.0 % Loan loss allowance to loans 140% Loan loss allowance to non-performing loans 2.5 % 120% 2.0 % 1.5 % 1.9 % 2.0 % 2.0 % 2.0 % 2.0 % 100% 80% 60% 70.2 % 68.0 % 69.5 % 73.0 % 81.8 % 1.0 % 40% 0.5 % 20% 0.0 % 0% 13 Norwegian operations
High profitability 45% 3.5 % 40% 3.0 % 35% 30% 2.5 % 25% 2.0 % 20% 15% 10% 35.8 % 35.0 % 32.2 % 37.2 % 38.6 % 1.5 % 1.0 % 5% 0.5 % 0% ROE ROA 0.0 % 14 Bank Norwegian AS
High risk absorption capacity 20% Capital ratios 18% 17.7 % 16% 14.8 % 15.7 % 15.3 % 15.3 % 14% 12% 13.2 % 12.7 % 12.7 % 13.2 % 13.1 % 13.2 % 11.5 % 11.5 % 11.7 % Strong capital ratios despite strong loan growth. 10% Adequate capital for growth. 8% 6% Common equity tier 1 ratio of 11.7 %. 4% 2% Leverage ratio equals 8.0 % 0% Common equity tier 1 Tier 1 capital Total capital 15 Bank Norwegian AS
Well positioned for continued earnings growth Earnings growth and strong returns Continued strong loan growth Stable margins Cost-efficient operations Stable provisions Swedish operations expected to turn profitable in the fourth quarter Preparing further geographical expansion Stable credit quality Resilient economies in Norway and Sweden Enhanced credit models Stable portfolio risk Strong and resilient balance sheet Strong liquidity position Continued diversification of funding base Strong capital generation and capital ratios Adequate capital for growth 16
Top 20 shareholders SHAREHOLDER # OF SHARES 1 NORWEGIAN AIR SHUTTLE 34,600,040 20.00 % 2 GOLDMAN SACHS & CO 14,999,999 8.67 % 3 SOCIETE GENERALE 14,700,000 8.50 % 4 LAGUAN AS 12,871,013 7.44 % 5 BORAK AS 8,580,454 4.96 % 6 MP PENSJON PK 7,500,000 4.34 % 7 SPENCER TRADING INC 7,138,450 4.13 % 8 STENSHAGEN INVEST AS 6,170,379 3.57 % 9 TVENGE TORSTEIN 4,000,000 2.31 % 10 SNEISUNGEN AS 3,720,333 2.15 % 11 SKAGEN VEKST 3,555,184 2.06 % 12 BLYSTAD ARNE 2,000,000 1.16 % 13 KLP AKSJE NORGE VPF 1,960,000 1.13 % 14 JENSEN ERIK 1,617,888 0.94 % 15 DIRECTMARKETING INVEST 1,500,000 0.87 % 16 GJERSVIK KARSTEIN 1,408,000 0.81 % 17 LITHINON AS 1,282,000 0.74 % 18 AWILCO INVEST AS 1,258,100 0.73 % 19 VERDIPAPIRFONDET OMEGA 1,242,000 0.72 % 20 SVENKERUD PÅL 1,199,797 0.69 % Top 20 131,303,637 75.90 % Total 173,000,202 17
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