Interim report January-March 2020 Nordax Bank AB
Highlights January-March 2020
Continued growth in new lending, including in personal loans, mortgage loans and equity release mortgages.
- Since the end of March, however, new lending has decreased significantly in all of Nordax’s markets, as Nordax, due to the Covid-19 pandemic, has taken a more cautious approach and Nordax’s expectation is that new lending in the second quarter will fall below new lending in the first quarter.
- Total lending amounted to SEK 26.3 billion (SEK 25.3 billion as of 31 December 2019). Growth was negatively affected by the significant depreciation in the value of the Norwegian krone in the quarter.
- Nordax’s savings offer continued to attract many new customers, which led to an increase in total deposits to SEK 20.5 billion (SEK 19.2 billion as of 31 December 2019).
- In January, Nordax issued SEK 200 million of senior unsecured bonds with a maturity date in January 2023. The bonds were issued as part of Nordax Bank’s MTN programme, which has a total framework of SEK 3 billion.
- In March, Nordax redeemed the subordinated Tier 2 bond issued in 2015. The bond, which had a contractual maturity of 10 years, was redeemed on the first call date, five years after issuance, after approval was received from the Swedish Financial Supervisory Authority.
- Total credit losses amounted to SEK 123 million in the quarter, of which SEK 24 million represents a management overlay related to COVID 19.
Business development personal loans
New lending for personal loans continued to grow strongly in the first quarter. Since the end of March, however, new lending has decreased significantly in all of Nordax’s markets, as Nordax, due to the Covid-19 pandemic, has taken a more cautious approach and Nordax’s expectation is that new lending in the second quarter will fall below new lending in the first quarter. The volume of personal loans in Norway decreased in the quarter as a result of the significant depreciation in the value of the Norwegian krone. Adjusted for exchange rate movements, the Norwegian portfolio volume was stable in the first quarter.
Business development mortgage loans
Nordax began offering mortgages in Sweden in 2018. The main target group is customers with some form of non-traditional employment, i.e. self-employed or temporary employees, including project, part-time or replacement workers. Thanks to thorough credit assessments and personal contacts, more loans are approved for this customer group, which is often denied by the major banks despite being financially stable. Interest in the offer has been high and new lending continues to grow. At the end of the first quarter 2019, Nordax also launched mortgage loans in the Norwegian market. As in Sweden, the target group in Norway is the non-standard segment, i.e. customers who fall outside the narrow framework of the major banks.
New lending has continued to develop well in both Sweden and Norway and the total mortgage portfolio amounted to SEK 1.9 billion as of 31 March 2020
Business development equity release mortgages
The portfolio continued to develop strongly in the first quarter with continued strength in new lending. The market for equity release mortgages continues to have good potential and SHP has a strong brand with the customer group and is seeing continued interest from them.
Total lending amounted to SEK 26.3 billion (SEK 25.3 billion as of 31 December 2019). Growth was negatively affected by the significant depreciation in the value of the Norwegian krone in the quarter.
Result January-March 2020 (compared to January-March 2019)
Operating profit for January-March 2020 amounted to SEK 137 million (60). The increase was due to better net interest income and decreased general administrative expenses.
- Net interest income for January-March 2020 amounted to SEK 436 million (352). Net interest income increased due to growing lending.
- Credit losses for January-March 2020 amounted to SEK -123 million (-100), corresponding to 2.1 percent (2.2) of average lending. Credit losses were affected by a management overlay of SEK 24 million for increased expected credit losses in IFRS 9 in light of the expected deterioration in the macro environment as a result of Covid-19. While Nordax also acknowledges that its existing customers’ ability to pay could be negatively affected by the Covid-19 pandemic, it has not to date seen a significant change in customer behaviour.
- Operating expenses for January-March 2020 amounted to SEK -182 million (-215). The decrease was in line with the company’s expectations, as expenses in 2019 were affected by extensive investments in operations.
For more information, please contact
Patrick McArthur, CFO, Nordax
Tel: +46 760 32 69 70
Nordax Bank is a leading specialist bank in Northern Europe owned by Nordic Capital Fund VIII and Sampo. We currently have 195.000 private customers in Sweden, Norway, Finland and Germany. We are a specialist bank which, through responsible lending, helps people make informed decisions for a life they can afford. We play a flexible complementary role alongside the major banks. Instead of quantity, we have specialised in a few selected products – personal loans, mortgages, equity release products and savings accounts. Since 2019, Svensk Hypotekspension, a specialist in equity release products, is a wholly owned subsidiary of Nordax. Nordax has just over 290 employees, almost all of whom work at one central office in Stockholm. The credit assessment process is one of Nordax’s core competencies. It is thorough, sound and data driven. Nordax’s customers are financially stable. As of 31 March 2020, lending to the public amounted to SEK 26.3 billion and deposits amounted to SEK 20.5 billion. Read more about Nordax on www.nordaxgroup.com.