Norion Bank - Aktiedagarna Stockholm 11 juni 2025

Thank you very much. Thank you for the opportunity to be here and present Norion Bank. Extra fun because we actually yesterday celebrated exactly 10 years as a listed company. I will go through a bit about the bank, how we look, and what sets us apart. We are a Nordic bank. As you see on the map to the upper right, Sweden accounts for almost 60% of our operations, fully Finland and Norway. The German operations are actually only related to the real estate business. And the other part is also a Nordic operation. We have basically followed our Nordic customers abroad. But today we have a loan portfolio of about 50 billion kronor. And what makes us unique is actually what you see at the bottom right when you see the split between our different segments. Many of our colleagues out there, challenger banks, niche banks, other types of players, have a much more pure business towards consumer credits, individuals. But if you add up what we call the corporate segment and the real estate division, it accounts for almost 70% of what we do. So we are to a very large extent a financing bank for medium-sized companies today. And in addition to that corporate business, we also exist in what we call consumer or the private segment. It's personal loans and credit cards. And we also have what we call payments, payment solutions. We are actually Klarna's biggest competitor in this part of the world on a Nordic basis. Our head office is in Gothenburg, but we have offices spread around the Nordics. We are about 400 employees today. And as mentioned, we have been on the stock exchange for ten years now.

We have not always looked like this. The mix I described earlier we think is a good blend of diversification without being too scattered, one could say. Until around mid-2019, it looked quite different. We had become too scattered, I would say. We had started a number of operations with a fairly clear fintech focus and other parts. And those you see in the box at the top left are simply operations that have either been sold or closed down, that we no longer deal with. So we were doing debt collection assignments, that business was sold. We bought portfolios of defaulted claims from other banking players. We have not bought any portfolios since 2018. We had something called Collective Ventures earlier. Had invested somewhere around 300 million kronor in a number of startup companies. That business was sold. And we had a mortgage business that we have simply closed down and some smaller consumer-oriented apps that have also been shut down. So what remains are essentially the six product areas you see at the bottom left, which are organized in the four segments we operate in today: Real estate, Corporate credits, Payments, and the Private side.

Now I will talk a bit about each of the segments. We start with the corporate segment. It accounts for about 11.5 billion in loan volume out of the total roughly 50 billion we have. Here we have a clear focus on medium-sized companies. What do we mean by that? Somewhere a company that typically perhaps turns over between 100 and 500 million kronor. And here we believe that a large part of the economic growth also exists in the economy as a whole. So this is definitely a strategic focus area, something we are investing a lot in. And as you can see from the figures, we have grown this business very nicely in recent years. To illustrate our positioning, our place in the market: if you start at the bottom part you see, there is a plethora of players that are doing corporate credits. But it's often very small amounts, fairly standardized products, standardized documentation offers. And at the other end of the spectrum, we have the major banks and their branch networks, which are definitely a big competitor to us. But we feel that, due to various factors, they tend to want to do gradually larger and larger deals all the time. So somewhere in this middle ground, we think there is a very good market potential, and it is this position that we have established and that we will continue to strengthen further. Everything we do in the corporate segment is secured lending. So we always take pledges, collateral in some form, whether it's corporate credits or different types of factoring arrangements. And there we mainly deal with invoice purchasing and not so much invoice lending.

Briefly about the real estate segment then. It is our largest segment. Accounts for about 23 billion of the 50. Same here. Everything is about secured lending. We always have either property mortgages or other types of secured arrangements. It can be both junior and senior real estate credits. Most of what we do is senior, and the real estate market in Sweden and other parts of the Nordics is enormous. And despite this being our largest operation, we are a fairly small player in a very large market, and we believe the market potential is extremely attractive as we look ahead. One could say we act as a complement to other financing sources. We are rarely the sole lender to our customers. And it's the same here: it's the medium-sized to slightly larger companies, not the absolute largest real estate companies. There it's difficult for us to be really relevant. But this is also an extremely interesting strategic focus area for us, and we believe that here there are good growth opportunities going forward, as history shows when you see how we have gone from 10 to over 20 billion here during the last five-year period.

The private segment, yes, it's actually two product areas, or three if you will. Firstly, personal loans, unsecured loans. We are in a part of the market where our average loan today is somewhere around 170-180,000 kronor. We don't like to do the very smallest mini-credits, so it's absolutely not SMS loans or anything else that is under close scrutiny. In addition, we do credit cards. We made an interesting acquisition recently where we bought DNB's Swedish credit card business to strengthen our positioning in this market, and we also offer savings accounts to individuals. Also to companies, but mainly to individuals. This segment has changed quite a bit. As you can see, volumes shrank somewhere after 2020. We quite significantly restructured the business. Focused a lot on redesigning credit lending, improving distribution, focusing much more on our own distribution power instead of going through loan brokers. And that has meant that we now feel we can grow again, and we can do so with much better quality in the portfolio.

Last but not least, payments, which goes under the brand Wally for our part. As said, we are Klarna's biggest competitor in this part of the world. It's payment solutions. We help mainly e-commerce merchants, but can also be in physical stores, to accept payments from their customers through various checkout solutions. And we also offer our financing products in connection with this. We focus on slightly larger merchants. You see some examples down there on the slide: Apoteket, XXL, Stadium, signed quite recently Lager 157. So we have a very good product, a good offering towards the slightly larger merchants. There we feel we come into our own. And also here, we made an acquisition quite recently. We bought a business for a company in Finland called Verk Kaupa. It's one of Finland's absolutely largest e-commerce players, to strengthen our position further in this segment.

If we look at the history, we have had good growth as you see. It's the growth in the loan book that you see here, which has grown somewhere between about 10-15% per year. That's a level we like. It's a good growth figure. But we feel that it's under control, that it's not going too fast, that it doesn't run away. So it's exactly this level that we strive to maintain. However, when we talk about our financial targets, we will always prioritize profitability. It is the most important thing for us. And there we have a goal to maintain a return on equity that over time exceeds 15%. In addition, we shall maintain a good capital structure. We shall have buffers on our capital adequacy targets as a bank, where we have between two to four percentage points buffer in relation to the regulatory requirements we have. And as dividend policy, or policy, the excess capital relative to the capital adequacy target shall then be returned to our shareholders. And we are doing that right now, where we have initiated a share buyback program of up to 500 million kronor, which we are in the market with right now.

If we look at our revenues, they have also grown. They have grown well. If we look at 2024, they amounted to around 3.7 billion. That it slowed down a bit during 2024 compared to 2023 is not surprising given how the interest rate path has gone, and we, like all other banks, benefited positively when interest rates were on an upward trend. And I think we have held up well, and you can see that on the right side if you look at the net interest margin, that it peaked during 2022-2023, and it's not surprising that it has come down a bit after that. But also interesting, if you see the line on that side, our credit losses have also come down. And they have come down successively over these years, despite there being a lot of turmoil in the world. So I think that's a strong testament that we have good risk control and we have good credit quality in our portfolios. This has generated an operating profit of about 1.6 billion. And one of the things we are most proud of is also our C/I ratio, that is our costs relative to our revenues. For a bank, it's some form of efficiency measure. How much does it cost us to generate a revenue krona? And the level we have landed at, how we have brought it down consistently since 2020, and then it goes up a bit during 2024, that has more to do with the revenue development and the interest rate path than anything else. But that we are below 30%, it's hard to see that many other banks can match that. It's a level we are very, very satisfied with. And we have also generated a return on equity that peaked during 2022-2023 but which during 2024 is very close to the financial target, at 14.8%, and earnings per share just over 6 kronor.

I mentioned briefly that we have an incredibly strong balance sheet. A total capital adequacy level of 17.2% in relation to the requirements we have, which as of the latest quarter now amount to 13.3%. That gives us room to, as I said, relative to our financial target, return money to shareholders. And therefore we have received authorization from the AGM and the board has decided to simply initiate the share buyback program of up to 500 million, and we started that during May, so it's still relatively fresh out there. As I said, I think we have a unique mix. I think we have an incredibly strong market potential, a good outlook in terms of growth opportunities going forward. But as said, profitability will always be in focus for us. Growth is good, we like growth, but above all we like profitability. And we have a strong balance sheet, which gives us opportunities to both take advantage of the growth opportunities that exist in the market and to be shareholder-friendly and return money to create additional value. That was what I intended to say.

Yes, exactly. As I mentioned, we have a focus on, yes, slightly larger merchants. More tailored solutions. Our product performs best there. We can integrate our payment solutions with loyalty programs, customer clubs, that type of business. We can absolutely have an offering towards smaller merchants as well, but we will definitely be best at the slightly larger merchants, and thus it will be the more well-known names. I unfortunately cannot go into how the pipeline looks, but we hope to be able to deliver. But these are names we will recognize. That I hope you will do.

Yes, I think so. And the cleaning I talked about was actually operational and a streamlining of the company. As I said, we went from a slightly too scattered, unfocused situation to having this balance between being well-diversified but not too scattered. And I think we are there right now. Nothing is set in stone forever that it will look exactly like that, but we like the mix we have today of the different businesses.

No, but we have a strong balance sheet here. I think we have the potential to do both over time. But of course, our starting point is organic growth, but at the same time, there are very interesting opportunities being created in the market. Not least during the last couple of years here, where a lot has happened in the interest rate environment and other things, causing some players to want to withdraw from certain product areas or other. Take DNB as an example. And we are absolutely interested in that type of acquisition to take advantage of them and create additional value. Yes, if opportunities arise, short. It's our job to look at opportunities that arise. We are very interested in that.

Yes, I think so. I think that the challenges we had during a period, we should remember that the interest rate level went from zero or even negative to just north of 4% in a very short time. And then there were some customers who had some challenges with that, but both as interest rates have come down and they have been at a slightly lower level, not down to zero or negative again, somewhere time is our friend. And I think that last quarter, in Q1, that was when we started to see the result of some of those customers, especially in the real estate segment, who were behind with their payments started to catch up. And that gave a very nice development, especially for the result for the first quarter, where we, out of caution, have not recognized the revenue when people are behind. So we get a very nice positive effect when such things happen and customers actually catch up.

As said, it's our largest segment. Yes. 23 billion out of about 50. As said, we see positively on that segment. We see positively on all our segments actually. But somewhere we have a quite unique positioning. And that applies to the real estate segment, it applies to the corporate segment as well. Where we have this focus on medium-sized companies. We are a complement to the classic major banks.

Well, we have it where it sits today. So far we have made the assessment that there are synergies to keep it. But it's of course something we can evaluate continuously. Just because it looks like it does today doesn't mean it will look like that forever. We are quite agnostic. We have no sentimental attachments to our different parts of the business. We always want to do what we believe will create the most value for shareholders.

Yes, but it's clear that there are certain synergies, especially on the cost side and shared functions and other things. So it does.

We see very few direct risks in our portfolios. I think we have, I won't say zero, but extremely few customers that have a significant dependence on the US market directly or indirectly where the tariffs create challenges. So I think the effect we see, and it's quite natural, it's like always in a turbulent environment, it creates a more cautious customer behavior. There is uncertainty. You might think twice before you make that investment or decide to buy that company, which creates the loan need that generates business for us in the end. So it's not that strange. We talked about it quite a lot in connection with Q1 that we released, that we hadn't seen anything then, and we hadn't. But it wouldn't be that strange if it became this more cautious behavior, and we have seen that.