Q2 2019 Presentation Avida Holding AB
Disclaimer This Presentation has been produced by Avida Holding AB (the “Company”, “Avida” or “Avida Holding”), solely for use at the presentation to investors and is strictly confidential and may not be reproduced or redistributed, in whole or in part, to any other person. To the best of the knowledge of the Company and its board of directors, the information contained in this Presentation is in all material respect in accordance with the facts as of the date hereof, and contains no material omissions likely to affect its import. This Presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading. This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any of their parent or subsidiary undertakings or any such person’s officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results. An investment in the company involves risk, and several factors could cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements that may be expressed or implied by statements and information in this presentation, including, among others, risks or uncertainties associated with the company’s business, segments, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation. The company does not intend, and does not assume any obligation, to update or correct the information included in this presentation. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company or any of their parent or subsidiary undertakings or any such person’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. By attending or receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company’s business. This Presentation speaks as of 30 st June. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. All figures presented in this Presentation are unaudited at the time of edit. 2
Second quarter highlights Avida Group Consumer Finance Business Finance • Avida had continued strong growth in both Consumer and Business • Avida’s strong growth continues with YoY growth of 71% and total • Avida recorded its best quarter in Business Finance with a Finance in Q1 with a volume growth of SEK 955m (15% QoQ). In loans of SEK5,154m significant SEK579m volume growth QoQ leaving a total particular Business Finance saw a very high growth of SEK579m (37% Business Finance book of SEK2,160m QoQ) • The tightened regulations in Norway led to limited new growth in the quarter. Avida is fully compliant with current regulations and • The shift from high risk segment volumes to lower risk and • Q2 reported profit before tax of SEK26m which was an improvement by expect to see a ramp up of credit origination in the second half of more scalable volumes continues, reducing credit losses SEK8m QoQ. The industry is ripe for consolidation and Avida booked the year and net interest margin. The last legacy B2C clients were SEK8m in one-off costs related to strategic evaluations phased out during the quarter and margins and credit losses • On the back of improved margins and volume growth, net interest should stabilize at current level in H2 • During the past year, Avida has focused its growth on low risk customers income increased by SEK 12 m in the quarter. Avida’s back book in both Consumer and Business Finance. Consequently, volume growth margin increased QoQ, which is the first time in the past five • Volumes in the quarter increased due to strong growth in has been higher than revenue growth. This transition phase was fully quarters it occurs. After a longer period of de-risking the portfolio new customers and positive seasonal effects, factoring completed in the first half of the year and Avida now expects APRs to the erosion of margins have come to an end. This is particularly volumes was the main driver of the growth stabilize at current levels. We should see full leverage of volume growth supported by higher margins on new volumes in Sweden in the second half of the year • Net interest income was SEK35m in Q1 a QoQ growth of • Avida introduced a new scorecard in Sweden during Q4 which SEK5.4m. This is mainly driven by the significant volume • In Norway, the regulations for consumer lending was further tightened at have initially enabled us to maintain higher margins at appropriate growth in the factoring portfolio at expected margins the beginning of the year, which resulted in sharply lower volume growth risk levels. New scorecards will be applied in the other markets in the entire Norwegian market. In addition to the tightened regulation during the second part of the year • Credit losses remained flat in the quarter at very low levels the Norwegian niche banks are facing significantly higher capital requirements which will strengthen Avida’s position in the Norwegian • Funding costs have increased during the quarter following • Avida has continued to build a solid and diversified loan market increased interbank rates, higher deposit volumes and full portfolio during the quarter. The organization is scaled to financial effect of the Tier 2 bond issued in Q4 2018 handle larger volumes at the current cost base • Net interest income increased 15% QoQ, despite higher funding costs in the quarter. This is however expected to improve in 2H as Avida • The credit quality remains stable and credit losses increased in • Despite margin compression the profitability has improved introduced Euro term deposits in Q2 the quarter in line with the volume growth in Sweden and Finland during the quarter as we have been able to optimize risk exposure, risk weights and pricing to maximize profitability • The cost control has been strong in the quarter and excluding non- • We stopped our forward flow debt sale in Norway in June and as a recurring costs operational costs have decreased QoQ consequence stage 3 balances and provision increased in the • Business Finance remains a strategic focus area going quarter. Total credit losses will not be impacted forward as there is clearly a large market potential with • Credit losses including IFRS effects increased slightly on the quarter significant entry barriers for competitors from SEK37.0m in Q1 to SEK43.7m in Q2. The growth is mainly driven by consumer finance volume growth. Credit loss ratio remains stable • Avida issued a SEK200m AT1 bond in the quarter further improving its capitalization 3
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