President and CEO, Resurs Holding
Resurs Holding | VD Magnus Fredin intervjuas om 2023 och planerna framåt
00:00 Intro 00:27 Magnus Fredin, VD Resurs Holding och Resurs Bank 00:32 Bokslutskommuniké 00:50 Ökade kreditförluster ...
About Magnus Fredin
In a February 2024 interview, Magnus Fredin, President and CEO of Resurs Holding, discussed the company's 2023 financial results and future plans. He stated that the company had seen increased credit provisions due to a tough economy for households, with more customers unable to pay their invoices in the fourth quarter. Fredin described the company as a "strong stable financial actor" with 8 billion in cash and noted that it had extended and expanded its collaboration with JP Morgan and sold off parts of its MPL portfolios as required by regulations. He said his focus is on building the "next generation" of products and that he is working on detailing a strategic plan, which he said the company would communicate to the market going forward. In a 2015 appearance at the Nordic eCommerce Summit, Fredin, then CEO of CDON.COM, described the company as a "unique opportunity" to launch a marketplace in the Nordics, which he said lacked a clear market leader in that niche. He stated that for a public company, "you need to do what your customers want you to do because I think that's what gives value to the shareholders anyway in the long run."
Transcript (35 segments)
I
Interviewer0:11
Hi and welcome. Today we have Magnus Fredin, who is the CEO of Resurs Holding, and Resurs Holding is listed on the Stockholm Stock Exchange's mid-cap list, and you are also the CEO of Resurs Bank, right? Welcome.
M
Magnus Fredin0:26
Thank you very much. Great to be here.
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Interviewer0:28
Yes, great to have you here. So, you released your year-end report for 2023. It has been a somewhat turbulent start to the year for you in 2024. You went out a few weeks ago and issued a profit warning for credit losses, and the market reaction was strong. Could you tell us in your own words what happened?
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Magnus Fredin0:50
Well, we have seen over a longer period that the household economy has been tough. People have had less money left in their wallets, and now during the fourth quarter, especially at the end of the quarter, we see that more customers simply cannot pay their invoices. That has meant that we have had to, even though it is not a confirmed credit loss, we have had to make provisions because it could become a credit loss later. So that is what happened.
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Interviewer1:19
Could you have done anything differently to prepare the market for the fact that this was something that there was a risk could happen?
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Magnus Fredin1:28
But as a listed company, as soon as we had the figures that we analyzed in connection with the year-end report in January, we went out and communicated to the market as we should. So no, we could not have done it differently.
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Interviewer1:37
Is there anything you could have done differently to prevent the credit losses from becoming as large as they were in Q4?
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Magnus Fredin1:47
We have been working continuously for a long time to tighten credit granting, to ensure that we also closely follow the macroeconomic situation. And we can see that it has had effects. We look at the loans that came in much earlier in the bank, we see that particularly there is a certain increase in credit loss levels.
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Interviewer2:13
Model drawing to Resurs Holding and Resurs Bank. How do you make money? Who are your customers?
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Magnus Fredin2:21
Well, we work with financing solutions for both private customers, consumers, but above all, what we are grown up with and our DNA is that we have worked with sales financing for larger retail actors in physical and online stores. So we simply help customers to be able to pay in installments for their capital goods. Then we also do some credit cards and a few other things in the form of invoicing for companies and so on.
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Interviewer2:46
How big is the bank? What is your revenue and how many employees do you have?
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Magnus Fredin2:50
Yes, the bank has about 650 full-time employees and has a revenue of approximately 3.5 billion kronor. So it is a larger niche bank, but still a niche bank.
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Interviewer2:59
You have also mentioned earlier, in connection with the profit warning, that you have quite large costs for a bank system change and you are making write-downs in connection with that. Can you explain a little why these measures were necessary?
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Magnus Fredin3:16
Yes, there are mainly two reasons. One is that I have come in as a new CEO, and in connection with that, I naturally look over the strategy going forward. What should we build on? It is clear to me that the direction taken a number of years ago will probably look a bit different going forward, and above all, it is important for us to own our technical destiny in the future-oriented strategy. So that is one. The other is that the bank change that we have been working on, or the core bank change, over a longer period has now entered a phase in Q4 where we are going to production-set it, and then we have seen some delivery problems and some quality deficiencies. So the two together lead me to believe that this is the best way forward for the bank, both in the short and long term.
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Interviewer3:59
It really seems like you have come in like a storm and taken hold of things. So let's go into a little bit about what measures you have taken so far. I have noticed, for example, that you have replaced some people in the group management.
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Magnus Fredin4:12
Yes, that is correct. And it is in connection with us now reviewing the strategy and starting to detail it, it has been important for me to bring in competence that can carry out the strategy going forward and live up to the vision. So I have strengthened the bank's management group quite heavily recently. For example, I have brought in Per Isaksson as new CTO, who has long experience in building financial systems, both from Klarna and also running his own companies. Then we have Joseph H as new operations chief or COO, who will have the task of strengthening our efficiency in operations, but has experience from the financial sector, for example, he was strategy chief at Swish. And then we have Johan Rönneman as new commercial chief, who has both worked with selling things digitally and has good experience of that, but also from what we work with today, he comes from experience from BT and Manpower and so on, so it is very close to what we do. So it is a strong strengthening of the management group to be able to execute on the future strategy and above all to become a more product and digitalized bank.
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Interviewer5:17
Exactly, yes. Banks are perhaps not always known for being particularly innovation-friendly. But you mention that technology is an important part of the vision you have for Resurs Bank. Do you want to go into more detail about what role technology plays in the bank's development going forward?
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Magnus Fredin5:37
Well, it is absolutely central. Almost existentially, I would like to say. It takes several things in the soup to get a good recipe, but I think if you look at what technology can do in terms of operational efficiency and also enable how quickly you can take a product from the drawing board, from customer demand, and get it to market, and continue to build profitable products going forward, it is extremely central. But it is also important from the classic discipline of what it means to be a bank in terms of credit risk, how you can do that in a smarter way, also governance, information security, and security in general. So all these things are based on having a strong technical capability, and that is what is central here with bringing in this new management group to execute on that going forward.
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Interviewer6:27
So technology is part of the product itself, and the brand is another part. I understand that you come from quite product-strong or product-heavy environments like Volvo Cars and Klarna, and you also mention in your CEO message a commercialization focus going forward. Do you want to tell us more about that?
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Magnus Fredin6:51
Well, Resurs Bank comes from being strong on sales financing to consumers. We have also built on with other financing solutions for consumers over the years. But we have an incredibly good customer list. We work with some of the Nordic's largest retailers, for example Bauhaus, we work with Elgiganten in Finland, Gigant, Webbhallen, and many others. So I am quite impressed and proud of that list. But with that said, we see more and more requests from our customers on how we can broaden this. We have focused perhaps on the consumer part together with them historically, but now we also get a lot of inquiries about what we can do on the business side, that is, we can help with invoicing to companies and that type of services. I think Komplett is a good example of that, where we help them with invoicing their corporate customers. So that is a clear important vein in this, to be even better from the commercial perspective with new products, and also generally I think we can do even better things when it comes to how we distribute them.
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Interviewer7:51
Exactly. You are quite new as CEO, you came into the company in November, so I realize that you may not have come very far in your long-term vision for what the company should do yet. But you mentioned the broadening of the business as a key going forward. Have you already decided that this is something we should invest in?
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Magnus Fredin8:16
Yes, absolutely. We have had a first album, so to speak, that we have released, and we have made a lot of money over many years. We have been a strong profitable player. Now we have to release our next album. What are the next generation products that we will build our growth and profitability on? And I think it is important both from the perspective of being able to sell to our existing customer base, which has a need for more and other types of solutions going forward that we can make money on, but also to make sure we can address a larger market. So both of those are quite central in our journey going forward, to release the next reaction. But then again, that builds on us having a technical understanding and that we have competence in the company that allows us to execute on that journey.
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Interviewer9:01
And one also wants to say that based on the quarter we have been through, it is also extremely important to strengthen confidence again, show that we are a long-term, sorry, a profitable player going forward and build on that.
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Magnus Fredin9:14
Mm, and how does the geographical development look for you going forward? You are active in several Nordic markets today. Are there certain markets where you see greater potential or less potential going forward?
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Interviewer9:31
But we are a Nordic bank and we remain a Nordic bank. Many of our partners sell in at least two countries, at least Nordic countries, and we must continue to serve them. Then we have also announced in the report that we will review how we can streamline, how we can centralize, to actually free up money to invest in future products and build on that. So that is also an important part of it.
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Magnus Fredin9:59
Mm, exciting. You mention investments, you mention that you have taken certain provisions for potential credit losses, and you have sold some loans further and taken a cost for that. How does the balance sheet and finances of the company look after this? Will you be able to afford if there are further credit losses going forward, for example?
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Interviewer10:21
Yes, we are a strong stable financial player, and we had 8 billion in cash when we exited the quarter. And we have a long conservative approach to financing and have been good at that historically. Then we have also done additional activities during the quarter, for example, we have extended and expanded our cooperation with JP Morgan and improved liquidity through that. We have sold off some of our so-called MPL portfolios as a step because the regulations require it, so we have actually freed up capital of about 900 million kronor. So we have done things that have further strengthened that position. But I also think it is important that we are absolutely not satisfied with this quarter. It is something we must be able to do better going forward, but there are also positive things. We are growing, and before credit losses, we are growing in Retail Finance, where we will focus even more and expand, so we grew 14% in the quarter.
Yes, it is starting to get towards the end of the time we have for this interview, but we would have time for a few questions that have come in to the IR mailbox. Let's start with a question about the interest deduction and the government's proposal to remove the interest deduction for private loans and but like strengthen or at least raise the cap on, what do you call it, the loan ceiling on mortgages or how it should be raised from 85 to 90%. How does this affect Resurs Bank? I assume that was the question.
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Magnus Fredin11:59
Yes, well, first of all, when it comes to over-indebtedness, we are of course completely in favor of trying to reduce it. It is not good for anyone that a customer cannot pay, and we also see that in the quarter. Then when it comes to the interest deduction linked to that and what has been communicated regarding the mortgage from 85 to 90%, it is difficult for us to assess how it will look going forward, but I can note that it is an increased cost for our customers and we do not think that is positive. But we will analyze it more when we conclude what it means for us as a bank.
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Interviewer12:33
Another question I have received. Newspapers have called you a cleaner. Is it in fact a cleanup that is going on?
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Magnus Fredin12:42
No, I don't think so. I am here to build the next generation of products, and I want to do that by being a product and technology-driven organization. So for me, this is about daring to make tough decisions. I am not afraid of them. And by doing this, I believe it is the best for both shareholders and our customers, both in the short and long term. So this is about taking the bank into the future.
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Interviewer13:04
One last question I think we have time for. You end your CEO message with the coming strategic direction, that you will return to it, that there are several things in the works, a bit of a cliffhanger. When will we find out more about this?
M
Magnus Fredin13:20
Yes, well, I am now detailing a plan more in detail on how this will look and how we will develop this strategy. Then we will continuously communicate going forward, and we really look forward to sharing it with the market.
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Interviewer13:31
Exciting. Thank you very much for being with us today.
M
Magnus Fredin13:33
Thank you very much.