MODERATOR: Ladies and gentlemen, welcome to the Nordax Q2 reports. Today I’m pleased to present CEO Morten and CFO Camilla Wirth. For the first part of this call all participants will be in listen only mode, and after it will be a question and answer session. Speakers, please begin.
MORTEN: Thank you, this is Morten, I’m the CEO of the company and Camilla is here with me as well. And I wish all of you a warm welcome to our Q2 reports, and Nordax is performing very well, and I’m pleased to say that we have a strong report. We continue to deliver solid growth of our loan portfolio and profits which grows even faster. Our presentation will follow the same format as before. I will start the presentation with some highlights and a short preview of our business model, and then Camilla will share more performance details with you, and then we sum it up and move to Q and A:s. So if you turn to page two you can see that profit growth remains very strong. When we compare first half of this year with the first half of 2015 we have improved the adjusted operating profit by 23%. And the profit growth is driven by the loan portfolio growth and improved net interest margin, and also a slight improvement in the cost to income ratio, and credit losses, they remain stable which is also very important for our financial performance. We also improved profit quarter-on-quarter and in Q2 we made 123 million versus 99 million in Q1 this year. When we look at the unadjusted or statutory numbers they are even more impressing. Net profit improved to 205 million for the first half this year, and to 112 million in this quarter. And that compares to 93 million last quarter. And of course this profit, that turns into strong capital generation. If you turn to page 3 you can see our continued robust lending resulting in a strong portfolio growth as well. So on page 3 you can see that we have grown the portfolio by 15% year-on-year, and that means that we’ve actually moved the portfolio from 10.4 billion to 11.8 billions the last twelve months. The loan portfolio growth is driven by the rebuffed new lending volume which is up 33 % year-on-year. And the new lending was stable quarter on quarter. But new lending in Q2 came in with seasonal lower marketing cost. When you look at the amount in all our northern European markets, the demand remains very strong. In Q2 we saw the loan portfolio growth of 17% or 11% in constant currencies, and this compares to last years Q2 which landed on 1% or 7% in constant currencies. With this demand growing faster right now would have been easy, but we also value credit quality since good credit quality is important to avoid too high credit losses in downturns, and in order to generate customer utility of course, and this is the foundation for a lasting banking model. Turning the page again you can see that customers are important stakeholders to us. We are here to serve them and to improve the service continuously. So on page 4 you can see that we actually have one of our Nordax values is to be customer-centric, and in order to improve our service level further we have changed our customer service operation organization from a functional structure to a country structure.. This enables us to enhance service level since the customer will interact with one team rather than several teams, and the customer service will also be enhanced as we continue developing digitalized workflow solutions, which will facilitate more automated processes and more self-service options. And this again will improve work situation for our employees and also enhance work efficiency and reduce cost. And about cost, going forward we aim to continue to reduce cost to income ratio as the lending portfolio grows. And some years from now we should theoretically be able to bring the adjusted cost to income ratio below 20%. And we’re currently at around 28%. Turning the page again you can see that return on equity remains solid and around 24%. We’re on page five now. And as you know the net profit of 205 million adds to our capital base, and our capitalization level. And this is the foundation for further loan portfolio growth, and also dividend to shareholders. And Camilla will deal with more details of numbers in her section, but before Camilla has her section I will give a quick recap of the Nordex business model which starts on page 6. On page 6 we have five circles. The first one explains what we do, the other four are about how we do things. We’re starting with the first circle, and about what we do. And what we do is to provide large personal loans and saving account to financial stable customer. That is what I and several others in our team has been doing for a quarter of a century and we’re probably one of the most experienced teams in Europe doing this. The four other circles. The first one is about our platform, and that we are operating from a central platform. We serve all five markets from one office in Stockholm, and this provides advantages in terms of economies of scales, in terms of how we govern the business, how we deal with new regulations. And also in terms of resource allocation between market and different strategy initiatives. It is a big strength to be everyone in one office and having a central platform like this. The third circle shows another competitive advantage we have, and that is that we have more than 25 years of experience in using relevant variables to build algorithms, both for supporting underwriting scorecards and for finding customer segment in our marketing programs. These core competencies facilitate low credit losses as well as cost-effective marketing. Moving to the fourth circle, that shows that we offer loans in four markets and we have 20 lending channels, and the largest and most important lending channels, they are direct market where we find the customers rather than them finding us. And the advantage of that I will elaborate on a little bit later. And finally the fifth circle shows that we have a robust funding platform. It consists of equity, bank lines, asset backed securities, senior unsecured bonds and saving products in all the countries we offer loans which is Sweden, Norway, Finland and Germany. So our operative strategy is designed to create resilient and sustainable business model and to support our vision of becoming leading niche bank in Northern Europe. Next page, we just want to remind you about the utility we provide to customers, so we’re on page seven now. The first circle, the large loans. To the 20-30% of loan application we approve, they are of really strong credit quality, and thus we typically approve larger loans than competitors to this segment. We approve up to 500000 kronors in Sweden and Norway. We approve 50000 Euro in Finland. And that is actually new from quarter two this year. And we also approve up to 40000 Euro in Germany. Average loans we approve varies between markets from 120000 Swedish kronors, equivalent to 200000 Swedish kronors. We also offer customer flexible and long payback period, which is up to 15 years, and this means that the monthly amount is fairly low and thus affordable for the customer. So what is important in the customer decision, when they take out a loan, it’s the size, that they get what they need and want, and the second thing is the monthly amount to be repaid, so taking Sweden as an example. The average loans the customers ask for is 140000, they ask for nine years down payment period which imply that they have to pay 2300 kronors per month. That is affordable, and that is the power of our product offering. And customer can of course pay back whenever they want and the average amortization per loan is actually 24% yearly. On the next page you will see that most of our marketing is about creating demand as opposed to responding to demand, which also make a big difference for our credit risk performance. So if you turn to page 8 you can see that almost 80% of new lending is solved through our direct marketing program, which also include repeat sales and in these channels we find the customer rather than they us. We wake up a dormant need, and serve people with loans that fit their needs. And in these channels you often see better credit quality since the customer is not craving for a new loan, hence the approval rates are also higher and credit performance better. Then we have the broker and online channels, which both have some disadvantages. Because you only win customers in these channel when you accept lowest interest rate or accept highest risk. And that’s why we like the direct marketing much more. But still we do source loans from these channels, but those loans are only in the large loan segment. It is in this segment that our underwriting capability stands out versus competitors. Think about the future here. We think that we will see growth in all marketing channel, but also in all markets, and you have the markets on the next page, on page nine where you can see the size of our portfolio in the different markets. We reached 4.2 billion in Sweden now. We have reached 4.7 billion in Norway and almost 2.1 billion in Finland, and almost 0.7 billion in Germany. So Nordax lending totals now 11.8 billion. And that is including Denmark and in constant currency that is 14% more than last year. We see plenty of growth opportunities in all markets and channels going forward, but of course our appetite will depend on our ability to find customer, and where we can retain the margin and the credit quality that we have today. On the next page you can see demographics of our portfolio, you can see that our customer portfolio is really strong. We’re on page ten. If you start on the top line on the demographics there you can see the monthly income for our customer. They are on normal levels, and all of them actually average incomes are actually higher than the national average. On the second line we look at age, and the big majority of all of our customer are more than 40 years. They lead a stable life and they represent good credit quality. These people, I mean, the average age in the portfolio is 49 years. These people don’t get unemployed as easily, they get sometimes underemployed and if they have a property they bought it years ago. And talking about properties, we go down to the third line. You can see that most of customers are actually home owners, and again that has always proven to be a good credit quality segment as well. So the high quality personal loan portfolio that we have, that is derived from a careful selection when we approve customers. And that is done through the underwriting process of course, but also through our direct marketing. The great portfolio performance transpose into attractive and sustainable financial numbers. And Camilla will share more on this with you now in the next section, and also on the most recent half-year and quarterly numbers. So Camilla.
CAMILLA: Yes, thank you, Morten. Yes, let’s move to page eleven and start out with the net performance of the business. Adjusted operating profit grew 23% year on year, and in the first half of year 2016 we made 222 million Swedish kronor compared to 180 million Swedish kronor in 2015. The top line delivery in combination with stable cost and credit risk numbers generates the strong operating profit performance of course. Quarterly performance is on a new and improved level which we are eager to keep and develop even further. And a vital part to achieve this is to develop and grow the lending portfolio. So let’s move to the next slide and our portfolio development, on page twelve that is. As you can see here the demand for our product is very strong and so is the portfolio development. The portfolio is up by 1 billion since year-end 2015. The development reflects improved quarterly trend, around 1.1 billion for new lending as you can see on the right hand graph. The total portfolio growth was 15% as I think Morten mentioned, year over year. Which is a healthy growth level for the business. And we will drill in to the details for each country performance later in the segment section, but firstly we will move on to the breakdown on performance. And that’s next page, page 13, and here we start out with our topline growth. And the graph shows that our income generation is very good and we are very happy with the contribution it delivers. Year over year the growth sums up to 20%. Driver of this performance is the large lending portfolio and also the widening margins that we have had. We believe that we have found an optimal NIM, Net interest margin that is, around 9-9.5% and that is what we see as a likely band going forward also. In Q2 and in Q1 we gave funding reductions back to our customers which stabilized us in the quarter on the NIM, but as we in many cases generate new lending at a higher APR than the back book, we might see slight increases in margins also going forward. Moving onto efficiency and cost in the next page, page 14. Here you can see our cost to income ratio which excludes marketing cost. It’s improving and our vision is to be more effective every day of course. Usually efficiency gains comes in steps which we will show also this year, and the Q2 improvement that you see here against a rather stable Q1 proves the point. i.e., we came down from 28.6% in Q1 to 28.2% in Q2. As Morten highlighted we have changed our customer service operation’s organization from a functional structure to a country structure which enables us to enhance service levels and work more effectively. The customer service level will be further enhanced as we continue to develop digitalized solutions which will facilitate more automation of processes and provide more self-service options. Therefore, going forward we aim to continue to reduce cost to income ratio as the lending portfolio grows. And a few years from now we should theoretically have no problem on operating on a cost to income ratio around 20%. Moving to the next slide and the credit risk performance, page 15, and as you can see here credit risk is developing well and it’s dropping from 1.6% in Q1 to 1.4% in Q2.