JANUARY-JUNE 2016 Numbers compared with January-June 2015 • Loan portfolio increased by 14.8% in constant currencies • Net interest margin increased to 9.3% (8.5%) • Total operating income amounted to 570 MSEK (434). Adjusted total operating income amounted to 533 MSEK (446) • Adjusted cost to income ratio (rolling 12 months) decreased to 28.2% (28.9%) • Operating profit amounted to 265 MSEK (87). Adjusted operating profit increased by 23% to 222 MSEK (180) • Net profit increased to 205 MSEK (68) • Earnings per share were 1.85 SEK (0.61). Adjusted earnings per share were 1.56 SEK (1.26) 2nd QUARTER 2016 Numbers compared with 2nd quarter 2015 • Loan portfolio increased by 14.8% in constant currencies • Net interest margin increased to 9.2% (8.6%) • Total operating income amounted to 290 MSEK (216). Adjusted total operating income amounted to 272 MSEK (227) • Adjusted cost to income ratio (rolling 12 months) decreased to 28.2% (28.9%) • Operating profit increased to 146 MSEK (13). Adjusted operating profit amounted to 123 MSEK (100) • Net profit increased to 112 MSEK (10) • Earnings per share were 1.01 SEK (0.08). Adjusted earnings per share amounted to 0.86 SEK (0.70) CEO COMMENTS “Net profit rose to 205 MSEK and the solid return creates room for continued high growth and dividends to our shareholders” The second quarter was another quarter in the right direction for us to become one of Northern Europe’s leading niche banks for large personal loans and deposits. During the first half of 2016 our adjusted operating profit increased by 23% to 222 MSEK and our loan portfolio grew by 15% in constant currencies compared to the first half of 2015. Net profit rose to 205 (68) MSEK and the solid return we generated strengthened our capital position, which creates room for continued high growth and dividends to our shareholders. We continued to grow in all our markets in Northern Europe, where, using our many effective marketing channels, we reach financially strong customers who need to bridge the gap between income and spending with a loan when life has the most to offer. On a relative basis, the portfolio grew the most in Germany and Norway. Total new lending increased by 23% compared to the first half of 2015. Germany is our newest and fastest-growing market. Just like when we established our business in other markets, we initially want to learn and evaluate the market. Since the portfolio began to grow at the end of 2013, we have grown at a stable, controlled rate and our total lending now amounts to 672 MSEK. The quarter reaffirmed the potential we see in Germany with good margins, an effective marketing model and a sound credit assessment process. After further evaluating the process for recoveries our assessment is that we will adjust our provision level positively during the year. As part of our diversified funding strategy, we began taking deposits in Germany in March, which has received a positive response. Demand for personal loans remains high in Northern Europe, and while growing faster would be easy, we want to safeguard our credit quality. Our credit quality remained stable at a credit loss level of 1.5% for the first half of 2016. In Norway credit losses continue to trend positively and the credit loss level was 1.3% in the second quarter. Our extensive experience in the industry has taught us that thorough credit assessments translate into strong credit quality. Together with strong capitalisation and liquidity, diversified funding and good margins, credit assessment is perhaps the most important parameter to build a sustainable business model over time. A sustainable business model with responsible lending is fundamental to us. The strategic sustainability project we launched in 2015 is progressing through dialogues with employees, customers, owners and other stakeholders to understand their priorities and what they expect of our sustainability work. We will present the results in the annual report for 2016. During the quarter a mortgage amortisation requirement was introduced in Sweden. All our personal loans are being amortized and on average our customers amortise about 24% per year. It is still too early to tell how the requirement will affect loan demand for personal loans in Sweden, but there could be potential for increased growth. The British referendum to exit the EU at the end of the quarter led to increased macroeconomic uncertainty and expectations that low interest rates will continue for some time. Long before the referendum we conducted a thorough analysis of our business, which showed that a Brexit will not have a direct impact. We haven’t noticed any changes in behaviour on the part of our customers due to the referendum; demand for personal loans remains strong and our credit quality is solid, though we continue to carefully monitor developments. We are working intensely at Nordax to further improve the customer experience and their interaction with us. As part of this, we established a new country organisation during the quarter at our office in Stockholm for units that service customers. The new organisation will allow us to better interact with customers while at the same time giving employees more wide-ranging and stimulating assignments. We are also digitising and automating processes to make it easier for customers and improve our efficiency. Higher efficiency leads to stable costs and together with a growing portfolio it will further improve our adjusted cost to income ratio (excluding marketing costs). We have made progress, but there is still a lot more work to do. I am very pleased with what our employees have accomplished in the past half -year. Hard work, combined with a focus on the customer, has made possible our fine growth and strong financial results. I see many exciting opportunities ahead. Have a nice summer! Morten Falch CEO Contact For more information, please contact Morten Falch, CEO, +46 8 690 15 07, morten.falch@nordax.se Camilla Wirth, CFO, +46 8 690 15 07, camilla.wirth@nordax.se Johanna Clason, treasurer and debt investor relations, +46 8 690 15 07, johanna.clason@nordax.se Andreas Frid, Head of Investor Relations, +46 705 29 08 00, andreas.frid@nordax.se Conference call Media, analysts and investors are welcome to take part in a conference call on July 15 at 8.15am CET. CEO Morten Falch and CFO Camilla Wirth will present the results. After the presentation there will be a Q&A session. Call-in numbers: Sweden: +46 8 566 426 65 UK: +44 203 008 98 13 US: +1 855 753 22 36 Link to audiocast: https://wonderland.videosync.fi/2016-07-15-nordax-q2report You can also follow the presentation on https://www.nordaxgroup.com/en/investors/financial-reports/presentations/ This information is information that Nordax Group AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07.30 CET on July 15, 2016.
Nordax Group Interim Report January-June 2016
| Source: Nordax Group AB
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