3 rd Quarter 2017 RESULT PRESENTATION January September 2017 in - PowerPoint PPT Presentation

3 rd Quarter 2017 RESULT PRESENTATION

January – September 2017 in summary LOAN BOOK � Continued organic loan book growth +19 % GROWTH OPERATING � Strong operating profit growth PROFIT +18 % 1) GROWTH � Cost efficiency C/I RATIO 37 % TOTAL CAPITAL � Strong capital base 16.7 % RATIO 30 Sept 2017 1) Attributable to the shareholders of the parent company excluding items affecting comparability 2

Worth noting January – September 2017 Continued loan book growth in both segments Avarda signed an agreement with a large Finnish retailer BB Finans received a banking license and became BB Bank Deposits launched in Norway and Germany Branch established in Estonia 3

This is TF Bank DIVERSIFIED GEOGRAPHICALLY GRANULATED DIVERSIFIED PORTFOLIO NEW OPPORTUNITIES FLEXIBLE IN SALES FINANCE IT- PLATFORM WITH AVARDA LEAN AND COST CLEAN BALANCE FOCUSED SHEET SALE OF NPL ORGANISATION 4

Long track record of profitable growth Long experience and proven business model Strong track record on growth and profitability � 30 years experience from consumer finance SEK million Loan portfolio 2,500 500 industry 2,000 400 � Highly profitable core markets with proven 1,500 300 1,000 200 model for geographical expansion into new 500 100 high-growth markets 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 � Two complementary business segments Loan portfolio Operating income Geographically well diversified Denmark 1% Latvia 1% Poland 8% Estonia 10% Finland 30% Sweden 22% Norway 28% 5

Direct to Consumer – Diversified Granulated Portfolio Product overview and use of proceeds Loan sizes and customer profile Average size (SEK) � 81 % of the loan portfolio (as at 30 Sept ’17 ) � Unsecured consumer loans ~25,000 � Marketed trough internal channels and external partners ~85,000 � Tenor of loans are typically between 12 and 60 months ~28,000 � Estimated average maturity of ~22 months ~26,000 � Average loan size on book of SEK ~32,000 ~21,000 Home Employed improvement Low-to- Home Credit- Travel middle appliances worthy income Car repair Middle-aged 6

Sales Finance – Drives new lending and builds database Product overview Key financials % of total loan portfolio Key facts � The Sales Finance segment enables merchants to offer (Q3’17) financing solutions to their customers Amount 558 SEKm 19 % outstanding (30 Sept 2017) TF Bank offers reliable and attractive white-label � solutions, enabling merchant to use branded invoices Loan portfolio +35 % � Invoice payment time of 30-50 days and instalment plans (Q3 /2017 vs Q4 2016) growth for up to 36 months Norwegian credit cards (from Q1 2017) � Growth through two different brands and organisations (51%) (100%) Subsidiary with Geographical minority expansion in interest Europe established in 2015 Strategy to become one of Long-term the leading merchant companies in relationships in the Nordic the Nordics region 7 7

Strong loan book growth TF Bank Group Direct to Consumer segment 12M growth SEK million SEK million +23.3% 2,392 2,296 2,239 2,950 12M growth 2,300 +25.2% 2,076 2,900 2,836 1,940 2,000 2,755 1,700 2,700 1,400 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 2,489 2,500 Sales Finance segment 2,357 SEK million 2,300 650 12M growth +34.1% 558 540 550 2,100 516 450 416 413 1,900 350 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 1,700 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 8

Summary: growth and diversification according to plan Loan book in SEK million and share of group in % Growth 30 Sep 2017 31 Dec 2016 Comments during 2017 847 878 Profitability and steady growth +4 % 34 % 30 % 663 644 Focus on profitability -3 % 27 % 22 % 530 818 Strong growth in both segments +54 % 21 % 28 % 249 325 Steady growth and profitability +31 % 10 % 11 % 164 247 Strong growth in both segments +50 % 7 % 8 % 9

Core/growth market Norway Developments Strong momentum continues (BB Bank) Outstanding balance NOK million Loan portfolio 774 800 672 579 � Maintaining growth and credit quality 600 467 407 334 400 277 198 Product development (SF) � 161 200 � Credit card business growing 0 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 � Higher margin than for loans � Increase in the Group’s business mix More to come – strategic roadmap in Norway � Higher average loan albeit, lower than before � Lower interest rate than in other countries Strong and steady growth � � Lower credit losses than in other countries Focus on credit quality � Growth during 2017 Growth in both segments � +54 % Strong growth in both segments 10

Growth markets Poland and the Baltics Poland The Baltics Outstanding balance Outstanding balance SEK million SEK million 325 330 330 300 282 300 280 270 270 249 247 230 227 240 240 204 210 210 164 180 180 145 150 150 120 120 90 90 60 60 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 � Changes in competition � Portfolio size affected by sale of NPLs in Q2 � Strong sales in Sales Finance � Strong growth in Estonia Focus on credit quality Great start in Latvia � � Growth Growth during 2017 during 2017 +50 % +31 % Strong growth in both segments Steady growth and focus on profitability 11

Core markets Finland and Sweden Finland Sweden Outstanding balance Outstanding balance SEK million SEK million 800 1000 912 900 688 878 663 662 847 700 830 644 640 800 600 500 600 400 400 300 200 200 100 0 0 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 � Increased competition affecting Q3 � Focus on credit quality and better use of own database � Focus on credit quality and better use of own database � Focus on costs Focus on costs and distributions channels � Focus on distributions channels � Growth Growth during 2017 during 2017 Focus on profitability -3 % Steady growth and profitability +4 % 12

Loan book growth in Sales Finance Segment Sales Finance Segment SEK million Norway – Credit Cards 9M growth: +35 % SEK million 9M growth: 150 including one-off Credit Cards movement in Q1 + 211 % 113 558 91 540 100 550 516 68 35 50 450 413 0 Q4'16 Q1'17 Q2'17 Q3'17 150 Poland 350 9M growth: + 157 % 100 67 55 250 42 Q4'16 Q1'17 Q2'17 Q3'17 50 26 0 � Strong growth of Credit Cards in Norway Q4'16 Q1'17 Q2'17 Q3'17 � Strong growth in Sales Finance Poland Avarda 150 9M growth: � Good credit quality + 3 % 100 56 59 53 55 50 0 Q4'16 Q1'17 Q2'17 Q3'17 13

Increased operating income and strong margins Operating income Operating income margin Comments SEK million 130 30% 128 � Operating income Q3 2017 vs. 125 119 Q3 2016 +14 % 118 114 Operating income margin 25% � Strong momentum in Norway, Baltics and Poland 100 20.5% 20.2% 19.4% 18.8% 18.4% 20% � Sweden and Finland lowers growth 75 15.1% 15.1% 14.6% 14.2% 13.8% 15% � Operating income margin: 18.4 % � Growth in Norway (lower 50 Risk-adjusted operating 10% margins) income margin Risk-adjusted margin: 13.8 % � 25 5% (adjusted for net loan losses) 0 0% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 14

Positive trend for Cost/Income ratio Operating expenses C/I ratio Comments SEK million Operating expenses Q3 2017 � 44% 50 48 47 46 46 vs. Q3 2016 +8 % 42% 43 � Loan book growth YoY: 25 % 40.0% 40 40% � Lean and cost efficient 38.8% organization 30 38% 37.2% 37.2% � Positive seasonal effect in Q3 (vacation period) 36% 35.2% 20 � Cost/Income ratio Q3 2017: 34% 35.2 % 10 � Q3 2016: 37.2 % 32% 0 30% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 15

Net loan loss ratio continues to decrease Net loan losses Net loan loss ratio Comments SEK million � Clean balance sheet policy 10% 40 � NPL are generally sold on 9% forward flow basis after 35 33 32 approx. 72 days 8% 30 30 28 � Net loan losses Q3 2017 vs. 27 7% Q3 2016 +21 % 25 6% 5.4% � Growing loan portfolio drives 5.1% 4.8% loan losses 4.6% 4.6% 5% 20 � Weaker credit quality in 4% 15 Sweden and Finland 3% � Net loan loss ratio is 10 decreasing, driven by: 2% 5 � Strong growth in Norway 1% Improving credit risk � 0% 0 management processes Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 16

Continued growth for operating profit Operating profit 1) Comments SEK million Quarterly 9 months � Operating profit Q3 2017 vs. Q3 2016 +11 % 180 � Loan book growth and improving C/I ratio +18 % 160 147 � Net loan losses increased 140 Liquidity reserve 35 % of deposits � 125 120 100 � Mid-term financial EPS target 20 % + 11 % 80 � Operating profit +18 % first nine months 2017 53 60 48 40 20 0 Q3'16 Q3'17 9M'16 9M'17 1) Attributable to the shareholders of the parent company excluding items affecting comparability 17