Resurs Bank Year-end Report January–December 2019

“Yet another successful year of stable and profitable growth.” Kenneth Nilsson, CEO, Resurs Bank AB

1 July—31 December 2019*

• Lending to the public rose 12% to SEK 31,345 million
• Operating income increased 4% to SEK 1,768 million
• Operating profit was impacted by an extra credit provision of SEK 35 million due to the to the information we received through the Norwegian Gjeldsregistret and declined 2% to SEK 728. Excluding this effect operating profit would have increased 3% to SEK 763 million.
• C/I before credit losses was 38.1% (39.6%)
• The credit loss ratio was 2.4% (2.0%). 0.2% of the credit loss ratio refers to the extra credit provision, as commented on in the statement by the CEO.

1 January—31 December 2019*

• Lending to the public rose 12% to SEK 31,345 million
• Operating income increased 6% to SEK 3,478 million
• Operating profit was impacted by an extra credit provision of SEK 35 million due to the to the information we received through the Norwegian Gjeldsregistret and increased 2% to SEK 1,463 million. Excluding the effect of the operating profit would have increased 4% to SEK 1,498 million.
• C/I before credit losses was 38.7% (40.1%)
• The credit loss ratio was 2.3% (2.1%). 0.2% of the credit loss ratio refers to the extra credit provision.

Statement by the CEO

Resurs ended 2019 with continued profitable growth and a strong trend in underlying earnings. Overall, we presented our best ever full-year earnings, despite a lower margin. Resurs continued to capture market shares in the second half of the year and delivered stable earnings with healthy growth in lending. Lending at year-end amounted to SEK 31.3 billion, corresponding to a 12 per cent increase compared with 2018. The Parent Company Resurs Holding supplemented the capital structure in the latter part of the year with an oversubscribed issue of Additional Tier 1 Capital of SEK 300 million. In December, the Board of Resurs decided to strengthen the financial capital target for the total capital ratio, raising it from 14 per cent to more than 15 per cent. All in all, these initiatives not only strengthen Resurs in meeting the higher regulatory buffer requirements, but the Additional Tier 1 Capital also means that we are well-positioned to continue to deliver profitable growth based on responsible credit lending.

Year distinguished by continued innovation and more strategic partnerships
Payment Solutions continued to report healthy and profitable growth during the year, primarily driven by increased volumes from our retail finance partners. The margin for the second half of the year was impacted by the customer mix and higher credit losses in Norway. A number of new collaborations with retail finance partners were initiated throughout the Nordic region during the year, in parallel with Resurs receiving renewed trust as a strategic partner from a large number of existing retail finance partners, such as Mio and Bauhaus.

Responsible credit lending in a challenging Norwegian market
Consumer Loans reported overall healthy lending growth for the year. The Norwegian market remains a challenge since the effect of the new statutory requirements and the implementation of the Gjeldsregistret changed the market conditions. Higher credit losses are probably to be expected, but we believe these will only affect a portion of our Norwegian credit portfolio and be of a temporary nature. Work was carried out to qualify as far as possible the over-indebtedness in the Norwegian market that was not possible to verify before Gjeldsregistret was introduced. The current IFRS 9 models are not sufficiently quick to identify future credit losses since the models are based on historical figures. In order to manage the increase in credit losses right away, an extra credit provision of SEK 35 million was made in the fourth quarter, alongside the model-based reserves that are made on an ongoing basis. I am proud of the conservative credit model that we follow for both assessment and the reserve ratio.

Looking ahead, we see many opportunities as the Norwegian market stabilises to design an offering that meets both the new rules of play and that delivers customer and business value.

Full focus on responsible business
Our dedication to Resurs’s most material sustainability topics – including responsible credit lending, anti-corrpution, equality and diversity – is not only an important prerequisite for growth and profitability but also for earning the trust of the market.

It is also gratifying that we were recognised in several different ways during the year, for example, for our work on shaping an equal opportunity workplace for which we were rewarded by holding our place on the AllBright Foundation’s green list of Swedish listed companies with gender equal management. Towards the end of the year, Resurs was named 2020 Career Company of the Year1, which recognises employers who offer development opportunities for younger employees and, not least, ranked our transparency surrounding how we combat corruption among the top2 of Swedish companies.

We can look back on another successful year in which Resurs continued to grow faster than the market and capture market shares. Our success lies in our extensive experience of retail, leading technological developments and a robust business model that combined with responsible business presents a strong combination that is difficult to beat. It is also a combination that means we are well positioned to seize all the opportunities offered by not only a new year but also a brand new decade!

Kenneth Nilsson
CEO, Resurs Bank AB

1 For more information, visit karriarforetagen.se/karriarforetag-2020/
2 “Sustainable Company” survey carried out by DI, Aktuell Hållbarhet and Lund University School of Economics and Management

For additional information:
Christina Kassberg, CFO & Head of IR, christina.kassberg@resurs.se  +46 42 38 20 00
Christina Jungvid Ohlsson, IR Officer, christina.jungvidohlsson@resurs.se  +46 70 781 65 58

ABOUT RESURS BANK

Resurs is a Nordic niche bank that offers leading payment and financing solutions for the retail industry and its customers. We help companies and private individuals with lending, saving and payments. With more than 40 years of experience in the retail sector, we make shopping online and in stores quick, easy and secure. We focus on the customer experience and make good things happen and the hard feel easier. We have a customer base about 6 million private customers and 686 employees in the Nordics. When we use the term “Group” in this report, we are referring to the Resurs Bank Group.

* Certain performance measures provided in this section have not been prepared in accordance with IFRS or the capital adequacy rules, meaning that they are alternative performance measures. Calculations and reconciliation against information in the financial statements of these performance measures are provided on the website under “Financial information.” Definitions of performance measures are provided on page 25. The figures in parentheses refer to 31 December 2018 in terms of financial position, and to the year-earlier period in terms of profit/loss items.