Morrow Bank (MORROW) Investor Update summary

Strategic transformation and growth

• Completed a major turnaround, building a scalable, efficient digital banking platform focused on the Nordic region, with 75% of the loan book now outside Norway, mainly in Finland and Sweden.

• Achieved over 50% loan book growth since 2022, reaching BNOK 12.2, surpassing targets ahead of schedule, with income up 30%+ and profit growth, while maintaining a stable net interest margin around 8.8–9%.

• Cost-to-income ratio reduced from over 50% to below 35%, with headcount nearly halved due to automation and process optimization.

• Core banking processes are highly automated, with 90% of onboarding and credit assessment automated, and strong partnerships for distribution and collections.

• Typical customer is a middle-aged homeowner with above-average income and strong credit profile; average loan size NOK 160,000–170,000 at 10–11% interest.

Market positioning and performance

• Holds a 2% market share in a NOK 600 billion unsecured lending market across Norway, Sweden, and Finland, with significant room for further growth.

• Finland prioritized for growth due to higher margins and lower capital requirements; Sweden also growing, while Norway's share is declining due to less attractive margins and higher churn.

• Loan book grew 13% in the past year, with income up 26% and costs held flat at NOK 80 million, supporting a falling cost/income ratio.

• Loan losses increased in 2023 due to earlier high growth, but are now stabilizing and expected to decline to 4–4.5% by end-2025 as credit policy tightens.

• Return on equity (ROE) at 8.4% in Q1 2024, targeting 10–12% by end-2025, with potential for higher returns if capital requirements align with EU peers.

Strategic outlook and capital allocation

• Aims for NOK 15 billion loan book by end-2025, with 10% annual growth as the base case, and exploring inorganic growth opportunities such as M&A or portfolio acquisitions.

• Considering relocating headquarters to Sweden or Finland to benefit from more favorable capital requirements and a more dynamic banking environment.

• Plans to maintain cost discipline and leverage the scalable platform to support growth without significant cost increases.

• Dividend policy to pay up to 50% of profits not needed for growth or security, with current focus on reinvestment until scale is sufficient.

• Management and board are aligned with shareholders through significant shareholdings and incentive programs, balancing growth ambitions with prudent risk management.