Morrow Bank : Q1 Presentation 2024

morrowbank.com

First quarter results 2024

Morrow Bank ASA

Q1 2024 highlights: income growth, cost efficiency and

improving loan loss ratio yield higher returns	morrowbank.com

Solid income growth

Improved cost efficiency

Credit risk control

Higher returns

• Continued strong demand across the Nordics, loan book surpassed NOK 12 billion
• Total income of NOK 296 million, up 3.4% vs. Q4 2023
• • Operating expenses remain stable at NOK 80 million. Proving scalable platform
  • Cost/income ratio at industry-leading 27% (28% in Q4 2023) driven by continued cost focus
  • • Loan loss ratio at 5.2% (5.4%), tightened credit policies and stabilising growth
    • Initiatives to strengthen collection processes have yielded early positive results
    • • Profit after tax of NOK 44 million (NOK 35 million)
      • Improved ROE of 7.4% (6.1%)

Profit before tax of NOK 58 million in Q1 2024, up 15% from previous quarter

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Operational highlights and outlook

Photo: craftedbygc

Exceeded growth and

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cost efficiency targets, positive development

Target of >50% loan balance growth achieved

BNOK 11.8

BNOK 12.2

continuing in Q1

2024…

Q1'22
Stated ambition to
grow loan balance	Q4'23	Q1'24
By more than 50% by	Stated ambition	Positive trend
year-end 2024
achieved	continuing

BNOK 8.0

Achieved cost/income ratio below 35% in Q1 last year

Q1'22	Q1'23	Q1'24
Stated ambition to	Stated ambition	Positive trend
reduce C/I ratio	achieved	continuing
Below 35% in Q4 2024

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…and confirming our outlook for Q4 2025

morrowbank.com

Stable gross loan balance growth

BNOK

Cost/income ratio improving

%

Loan loss ratio starting to decline

%
oan lo	ratio

Return on Target Equity improving

%

0 2

4

• On track to deliver on growth target of ~10% per year
• Continued robust demand for consumer financing products

• Continued focus on cost efficiency and optimization
• C/I ratio trending downwards driven by scalability of platform

• Tightened credit policy starting to weigh in on loan losses in Q1
• Lower loan losses to improve risk- adjusted margin going forward

• Loan growth, improved scalability and higher risk-adjusted margin set to improve returns over time

5

morrowbank.com

First quarter financial review

Photo: craftedbygc

Allocating growth capacity to most profitable markets

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Total gross loans

MNOK

0	0	4
2
2		2

4

2	2
2 Q	2 Q2
oint of al financ	r dit card

2 24

0 2

2	2

22

4	44	4

2		2	22
2 Q		2 Q4	24Q
oan	d n	oan inland	oan or a

Gross loan balance growth of 13% year-on-year and

3.9% in Q1 2024:

Finland

• Underlying Q1 development: MNOK 214 (+4.1%)
• Focus on profitable growth and market share
• Attractive margins and lowest capital requirements

Sweden

• Underlying Q1 development: MNOK 96 (+3.6%)
• Focus on continued controlled growth

Norway

• Underlying Q1 development: MNOK -240(-8.0%)
• Focus on maintaining margins
• High regulatory capital requirements

Credit Cards

• Loan balance growth of 5.5% in Q1 to MNOK 945

7

Successful loan repricing supporting solid margins

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Yields, performing loans and deposits

%

		0	5
	2
0
	4		4

2

	2	2
2 2
2 Q	2 Q2	2 Q	2 Q4	24Q
	o it	oan	r dit card

Increased interest rates across loan book

• Strengthened pricing capabilities for loans and deposits
• Repriced loan rates on new and existing customers
• Credit card rates inching upwards as more clients revolve
• Deposit yields now peaking

Note: Methodology for yield calculation for credit cards updated as of Q4-2023. Prior quarters not adjusted.

8

Total income continues to grow

Total income

MNOK

morrowbank.com

Total income up 3.4% vs Q4 2023

• Driven by loan growth and repricing
• Net commissions and fees and capital gains up NOK 1.5 million vs. the previous quarter
• Year-on-yeartotal income growth of 26% - double the loan balance growth of 13%
• Av rag quart rl gro th Q '2 -24 of 4.7%

Expect continued total income growth

• Loan growth to continue to be key driver of total income with a stable yield outlook for performing loans
• Net interest margin to be slightly lower with no NPL sales, and slightly higher if NPL sales are re-started

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Cost/income demonstrating scalability

Cost/income picture

35%

31%

29%

morrowbank.com

Cost/income ratio improved for five consecutive quarters

▪ Cost/income ratio of 27% in Q1 2024, down

from 28% in Q4; halved since Q1-2022

▪ Continued growth at stable cost levels,

demonstrating scalability

▪ Income increased by 26% year-on-year

while costs decreased by 1%; despite

28%

27%

growth and price inflation

Nearing target cost efficiency

• Well on track for targeted cost-income ratio of 26% by Q4 2025
• ~4% increase in total income from the Q1 level required to deliver target cost/income ratio of 26% given stable total operating expenses

otal incom				o t incom ratio

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