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Qliro
Annual / Quarterly Financial Statement • Feb 16, 2021
3192_10-k_2021-02-16_7d86f14c-08b5-4651-9ca6-50b6d3d1bbee.pdf
Annual / Quarterly Financial Statement
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Year-end report 2020
Strong volume development
Important events during the fourth quarter
- Number of active customers increased to 2.5 million (2.1 million Q4 2019 and 2.3 million Q3 2020)
- New agreements with Biltema and Scandinavian Luxury regarding payment solutions
- Pay-after-delivery volumes grew with 26 percent, excluding former Qliro Group merchants the growth in volumes was 59 percent
- Capital ratios strengthened and the total capital ratio was 26.8% (17.8% as of Q4 2019) compared to the regulatory requirement of 11.7%
October-December 2020 (October-December 2019)
- Total operating income increased by 14 percent to 99.8 MSEK (87.5)
- Total expenses increased with 1 percent to 90.7 MSEK (89.9)
- Net credit losses amounted to 26.3 MSEK (31.8)
- Operating profit improved to -17.2 MSEK (-34.2)
- Net profit for the period was -15.5 MSEK (-26.8) earnings per share was -0.86 SEK (-1.49)
January-December 2020 (January-December 2019)
- Total operating income increased by 10 percent to 379.7 MSEK (345.2) and total operating income adjusted for items affecting comparability increased by 12 per cent to 388.1 MSEK (345.2)
- Net credit losses was 102.5 MSEK (73.4)
- Operating profit decreased to -81.1 MSEK (-30.0), operating profit adjusted for items affecting comparability decreased to -57.1 MSEK (-30.0)
- Net profit for the period was -67.0 MSEK (-23.8), net profit adjusted for items affecting comparability was -48.1 MSEK (-23.8).
- Earnings per share was -3.73 SEK (-1.32).
1) Fourth quarter 2020 in comparison with fourth quarter 2019 2) Unique customers that have used Qliro's services during last 12 months
+37% No of transactions with Qliro products1)
» Number of active customers grew with 0.4 million during the year reaching 2.5 million
NOTER
CEO Comment
New partnerships result from the development of our digital platforms and our checkout
We continue to grow together with our existing merchants and by adding new partnerships in the fast-growing e-commerce market. We are seeing great interest from medium-sized and large merchants looking to change payment partners. During the quarter, we signed new agreements with among others Biltema, one of the largest Nordic home and leisure brands and retailers. Biltema launched its current "Pay & Collect" e-commerce service in early 2020 and by November had exceeded 500,000 purchases. We look forward to support Biltema in further broadening its e-commerce business, with the potential for it to become one of Qliro's largest partnerships so far.
Our modern and secure checkout solution and the improvements we made in the year to the customer experience in our digital platforms have been critical to winning new partnerships. During the quarter and at the start of 2021, we completed the rollout of our new consumer app and websites in Denmark, Finland and Norway, so customers now interact with a new, modern Qliro in all our markets. We can now update our digital channels at a much faster speed, and the customer experience has been significantly improved by integrating, presenting and making accessible more of our services, thereby tying us closer to customers through more digital interactions.
A convenient payment experience is crucial in e-commerce, and for us this means continuously developing new technology and investing in our checkout solution. We were the first company in the Nordic region to offer integrated shipping solutions in the checkout, and in the fourth quarter we further improved our offer together with the logistics partner Unifaun. The collaboration means that Qliro can now offer all merchants simplified access to 150 carriers with the market's most popular delivery options integrated in our checkout. During the year, we also developed the solution to offer it in non-Nordic countries to support partners with international growth ambitions, but at this point without our own payment products at checkout.
Sustainability is an integral part of Qliro's strategy and our digital platform
Sustainability ranks high on the agenda for Qliro, our merchants and consumers, and is an integral part of our strategy. We are convinced that we as a company can contribute to a sustainable future through the choices we make in how we conduct our business, but not least through our business model, where we via our partners, our platforms and our large customer base have the opportunity to impact behaviors and reach many consumers. Our sustainability work is focused on three main areas: sustainable e-commerce, responsible lending, and being an employer of choice.
In collaboration with Deedster, we have added functionality in our app to spread knowledge about sustainability and the environmental impact of e-commerce and launched the "Retursmart" service, which shows consumers how their returns impact the environment in order to improve awareness of sustainable consumption. The aim in long term is to lower the enviromental impact through reducing the number of returns.
Comment on the fourth quarter result
On a seasonal basis, the fourth quarter is our strongest, with payment volumes driven by Black Week and christmas shopping, among other things. In 2020, the COVID-19 pandemic also sped up the transition from brick-and-mortar to e-commerce. More consumers chose this year to do their Christmas shopping early, and we saw strong growth in transaction volumes especially in November. This had a positive effect on revenues during the quarter compared with the fourth quarter of 2019 where a larger share of the revenue linked to Christmasshopping and Black Week was recognized as revenues during the first quarter of 2020.
In the quarter, the number of transactions with our payment methods increased by 37 percent and transaction volume by 26 percent. Volume from merchants outside the former Qliro Group greatly contributed to the increase with growth of 59 percent, and in the quarter they accounted for 57 percent of the total volume (45 percent in 2019).
Income increased by 14 percent, rising in both Payment Solutions and Digital Banking Services, while expenses were stable and credit losses decreased compared with the fourth quarter 2019.
Our capital position was further strengthened during the quarter and by the end of the year we had approximately SEK 340 million in excess capital over the total regulatory capital requirement. This gives us a strong position for further growth.
Well positioned for future growth
2020 was an eventful year impacted by the global pandemic. I am proud of how our employees and organization handled what many times was a challenging situation and adjusted to the new reality. We took major steps forward during the year by listing separately on the stock market and adding new, long-term, active shareholders with great confidence in our business and future potential. We have strengthened our position as the biggest challenger in payment solutions for large Nordic e-merchants and improved the consumer experience.
Our partnership strategy, large and growing customer base, modern checkout solution and digital consumer platforms give us a solid foundation to continue to gain market share in the fast-growing e-commerce market. I see good growth opportunities in the coming years as a payment partner to e-merchants as well as a platform for digital financial services for Nordic consumers.
Carolina Brandtman CEO Qliro AB
Stockholm, February 16, 2021
Qliro in brief
Qliro AB (Qliro), founded in 2014, is a tech company, offering payment solutions for larger e-merchants and their customers in the Nordics and digital financial services to consumers in Sweden. Since 2017 Qliro is a licensed credit market company under the supervision of the Swedish Financial Supervisory Authority (SFSA). The entire operations are managed from the Head Office in Stockholm
In total Qliro has 2.5 milllion active customers and 46
connected larger e-merchants that uses Qliro's payment solutions. During 2020 more than 7 million purchases were done with Qliros payment products reaching a volume of more than 6.2bn SEK.
On October 2nd Qliro was listed at Nasdaq Stockholm with the ticker "QLIRO". The largest owners ahead of the dividend was Rite Ventures with a 25.8% ownership and Mandatum Life (Sampo) with 9.8% ownership.
Qliro's business segments in brief
Payment solutions
Payment solutions consists of payment solutions offered to larger e-merchants in the Nordics. The solutions contain Qliro's pay-after-delivery (PAD) products for consumers who buy goods and services online. The offering includes invoices, "Buy Now Pay Later"-products ("BNPL") and various types of part payments. Qliro's payment solution also contains other payment methods offered through partnerships, such as card payments, direct payments from bank accounts or PayPal payments. Qliro's income is mainly generated through interest and fees associated with PAD products. The average credit is low and the maturity is short. Through the payment solutions, Qliro has since the start interacted with more than 4.8 million unique customers, and the number of active customers in the last 12 months is just over 2.5 million.
Digital banking services
Digital banking services consists of services offered in Qliro's digital platforms beyond the payment products offered in Payment solutions. Today the segment mainly consist of personal loans in Sweden, which were launched at the end of 2017. The large database of payment solution customers is a competitive advantage that enables Qliro to offer other attractive products, such as personal loans and savings accounts, at a low cost. The products are marketed in Qliro's own channels, including the app, website and by email to existing customers. Qliro also has a strategy to add more financial services to the digital platform through outside collaborations. In 2020, Qliro added its first partnership offerings in insurance together with the insuretech company Insurely.
Share of total income Share of lending to the public
Key performance measures
On December 31, 2019, Qliro acquired a subsidiary and formed a Group. Since the Group was established in December 2019 and the differences in the income statement and balance sheet are minor, the financial performance measures and line items for the year 2020 in the year-end report relates to the Group and comparative amounts for 2019 relate to the parent company (see page 18 for more information).
| SEK million except where otherwise stated | Q4 2020 |
Q4 2019 |
% ∆ | Jan – dec 2020 |
Jan – dec 2019 |
% ∆ |
|---|---|---|---|---|---|---|
| Income statement | ||||||
| Total operating income 1 | 99.8 | 87.5 | 14% | 379.7 | 345.2 | 10% |
| Total operating income adjusted for items affecting comparability 1 |
99.8 | 87.5 | 14% | 388.1 | 345.2 | 12% |
| Total expenses before credit losses | -90.7 | -89.9 | 1% | -358.3 | -301.8 | 19% |
| of which depreciation | -21.7 | -19.9 | 9% | -101.4 | -63.2 | 61% |
| Net credit losses | -26.3 | -31.8 | -17% | -102.5 | -73.5 | 40% |
| Operating profit/loss 1 | -17.2 | -34.2 | - | -81.1 | -30.0 | - |
| Operating profit/loss adjusted for items affecting comparability 1 |
-17.2 | -34.2 | - | -57.1 | -30.0 | - |
| Profit/loss for the period | -15.5 | -26.8 | - | -67.0 | -23.8 | - |
| Profit/loss for the period adjusted for items affecting comparability |
-15.5 | -26.8 | - | -48.1 | -23.8 | - |
| Earnings per share before and after dilution SEK 4 | -0.86 | -1.49 | - | -3.73 | -1.32 | - |
| Balance sheet | ||||||
| Lending to the public 1 | 2,460 | 2,070 | 19% | 2,460 | 2,070 | 19% |
| of which Payment solutions | 1,524 | 1,343 | 13% | 1,524 | 1,343 | 13% |
| of which Digital banking services | 937 | 727 | 29% | 937 | 727 | 29% |
| Deposits and borrowings from the public | 2,133 | 1,819 | 17% | 2,133 | 1,819 | 17% |
| Key figures | ||||||
| Operating margin, % 1 | 17.1% | 18.0% | - | 16.8% | 19.4% | - |
| Credit loss level, (%) 1 | 4.5% | 6.5% | - | 6.0% | 4.1% | - |
| Cost/income ratio, % 1 | 90.9% | 102.8% | - | 94.4% | 87.4% | - |
| Return on equity, (%) 1 | neg. | neg. | - | neg. | neg. | - |
| CET 1 capital ratio, % 3 | 22.4% | 15.5% | - | 22.4% | 15.5% | - |
| Total capital Ratio, % 3 | 26.8% | 17.8% | - | 26.8% | 17.8% | - |
| Liquidity coverage ratio (LCR), % 3 | 448% | 374% | - | 448% | 374% | - |
| Pay-after-delivery volume 2 | 2,061 | 1,633 | 26% | 6,221 | 5,325 | 17% |
| Number of connected merchants 2 | 46 | 38 | 21% | 46 | 38 | 21% |
| Average number of employees 2 | 198 | 202 | -2% | 198 | 199 | -1% |
1) Alternative performance measures that management and analysts use to evaluate the company's development, which are not specified
or defined in IFRS or other applicable regulations. For definition and reconciliation tables see pages 28-31. 2) Operating performance measures. For definitions see page 29.
3) Other key performance measures. For definitions see page 29.
4) Retroactive adjustments has been made for historical periods for the change in number of shares that took place on September 2nd 2020.
Financial performance
THE FOURTH QUARTER 2020 COMPARED WITH THE FOURTH QUARTER 2019
Qliro's income primarily consists of interest income from pay-after-delivery products charged when customers choose Qliro's payment methods, where payment is made after the customer has received their goods.
More merchants and higher customer activity increased income
Total operating income increased by 14 percent to SEK 99.8 million (87.5). In comparison to the previous year a larger share of the fourth quarter's volumes was attributable to November due to a earlier Black Week and as a result of earlier christmas shopping than historical patterns. This had a positive impact compared with the fourth quarter of 2019, where a larger share of revenues connected to volumes from Christmas shopping and Black Week was recognized as income during the first quarter of 2020.
Net interest income increased by 16 percent to SEK 56.2 million (48.3), where interest income amounted to SEK 65.3 million (56.7) and interest expenses to SEK 9.1 million (8.5). The increase in net interest income is slightly lower than lending growth, which was 19 percent. The increase in interest income was a result of growing business volumes and lending within both Payment solutions and Digital banking services. Interest expenses increased by 8 percent, which was lower than lending growth.
Net commission income increased by 7 percent to SEK 41.1 million (38.2). Increased business volumes positively contributed, while regulatory changes in Norway had a negative effect.
Net gains and losses on financial transactions amounted to SEK -0.3 million (0.0).
Other income increased to SEK 2.9 million (1.0), where income from payment methods offered through partners in Qliro's checkout solution increased due to higher volumes and more merchants who signed up for Qliro's comprehensive solution.
Stable expenses despite increased volumes
Total expenses increased by 1 percent to SEK 90.7 million (89.9). Administrative expenses, primarily consisting of employee benefits and IT expenses, decreased by 4 percent to SEK 59.1 million (61.8). The decrease was mainly due to lower other administrative expenses.
Other expenses increased by 22 percent and amounted to SEK 10.0 million (8.2). Other expenses, which to a large extent are variable, fluctuate with business volume, e.g. credit inquiry expenses.
Depreciation, amortization and impairment increased by 9 percent to SEK 21.7 million (19.9) and mainly consisted of amortization of previously capitalized development expenses for e-merchant payment solutions, but also consumer products, the website and app solutions.
Lower credit losses
Total credit losses decreased to SEK 26.3 million (31.8) despite growing volumes and lending. Underlying credit quality remained stable and no negative effects on customer solvency were noted from COVID-19 in the quarter. In the comparative period, credit losses of SEK 6 million were reported in the segment Payment Solutions related to the sale of a Finnish portfolio of past due receivables. During the year, credit provisions increased in total by SEK 8.9 million due to the deteriorating macroeconomic situation caused by COVID-19, but the increased provisions tied to COVID-19 had no negative impact in the quarter.
Within the segment Payment solutions, credit losses in relation to PAD volume decreased to 1.0 percent (1.6) due to improved credit quality and the negative effect that a portfolio of past due receivables had in the comparative period. Within the segment Digital banking services, credit quality remained stable and the net loan loss level in relation to average lending decreased to 2.6 percent (3.7 percent).
Higher income and lower credit losses led to an earnings improvement
Higher income and lower credit losses led to an improvement in operating income to SEK -17.2 million (-34.2), while net profit for the period improved to SEK -15.8 million (-26.8).
FULL-YEAR 2020 COMPARED WITH FULL-YEAR 2019
Items affecting comparability
In the second quarter 2020, two types of affecting comparability were reported. Items affecting comparability within the segment Payment solutions amounted to SEK 8.4 million and arose since Qliro brought forward the date for recognizing commissions to merchants so that it coincides with the date for recognizing income from the consumers. This affected net interest income negatively by SEK 3.4 million and net commission income negatively by SEK 5.0 million. The effect comes from a delay in accrual, making the second quarter incomparable with other periods, whereas previous and future quarters will remain comparable over time (for more information, see Note 1 on page 18). Additionally, assets worth SEK 15.6 million were impaired, since they are no longer in use in the business. The impairments comprised, among other things, technology development for the loan product, infrastructure for data storage and app solutions. In total, the items affecting comparability reduced operating income by SEK 24 million and net income for the period by SEK 18.9 million.
Good underlying income growth thanks to increased payment volumes and lending
Total operating income increased by 10 percent to SEK 379.7 million (345.2). Total operating income adjusted for items affecting comparability (described above) increased by 12 percent to SEK 388.1 million (345.2).
Net interest income increased by 20 percent to SEK 205 million (170.2), where interest income increased by 21 percent to SEK 240.6 million (198.9) and interest expenses by 24 percent to SEK 35.6 million (28.6). Adjusted for items affecting comparability, net interest income increased by 22 percent to SEK 208.4 million (170.2), which was slightly higher than lending growth of 19 percent. The increase in interest income was a result of growing business volumes and lending in both Payment solutions and Digital banking services. Interest expenses also increased, due to growing lending and the subordinated Tier 2 capital issued in the third quarter 2019.
Net commission income decreased by 3 percent to SEK 167.5 million (172.1). Adjusted for items affecting comparability, net commission income was stable. The fee restriction introduced in Finland in the third quarter 2019 and in Norway in the fourth quarter 2020 had a negative impact, while the increased business volumes had a positive impact.
Net gains and losses on financial transactions amounted to SEK -0.2 million (-0.1) and other income increased to SEK 7.5 million (2.9), where income from other payment methods in Qliro's checkout solution increased driven by higher volumes and more merchants who signed up for Qliro's comprehensive solution, where all payment methods are integrated.
Increased depreciation is the main reason for increased expenses
Total expenses increased by 19 percent to SEK 358.3 million (301.8) partly due to the SEK 15.6 million impairment in the second quarter 2020, but also because of investments in growth-related initiatives and generally higher depreciation.
Administrative expenses, primarily consisting of employee benefits and IT expenses, increased by 6 percent to SEK 222.5 million (210.0). Other expenses, largely consisting of variable expenses, amounted to SEK 34.4 million (28.6).
Depreciation, amortization and impairment increased to SEK 101.4 million (63.2) and mainly consisted of amortization of previously capitalized development expenses related to payment solutions, consumer products, the website and app solutions. In the second quarter 2020, assets worth SEK 15.6 million were written down, as described above. The increases other than the impairment charge were mainly due to the completion of more projects in 2019 and were therefore subject to depreciation
Stable credit quality but increased provisions due to COVID-19
Total credit losses amounted to SEK 102.5 million (73.4) and the net loan loss level was 4.5 percent (4.1) of average lending. Underlying credit quality remained stable and no negative effects on customer solvency were noted in 2020.
In accordance with the IFRS 9, the provisions for expected credit losses increased by SEK 8.9 million due to the deteriorating macroeconomic situation caused by COVID-19. Excluding these increased provisions, the net loan loss level was stable.
Within the segment Payment solutions, credit losses in relation to PAD volume increased to 1.3 percent (1.1), a large part of which is related to the increased provisions of SEK 5.3 million related to COVID-19. Within the segment Digital banking services, the net loan loss level in relation to average lending decreased to 2.7 percent (3.1) despite increased provisions of SEK 3.6 million due to COVID-19.
Profit decreased due to items affecting comparability, increased depreciation and higher credit losses
Operating income decreased to SEK -81.1 million (-30). Operating income adjusted for items affecting comparability amounted to SEK -57.1 million (-30 million).
Net profit for the period amounted to SEK -67.0 million (-23.8), while net profit for the period adjusted for items affecting comparability amounted to SEK -48.1 million (-23.8).
Business segments
PAYMENT SOLUTIONS - STRONG GROWTH IN PAYMENT VOLUMES
Comparisons with the fourth quarter 2019 unless otherwise indicated. Since the Group was established in December 2019, the financial performance measures for 2020 relate to the Group and comparative amounts for 2019 refer to the parent company.
Growth in number of merchants and agreements with new merchants in the quarter
Qliro offers digital payment solutions to large e-merchants in the Nordics. Growth in Payment solutions is driven by offering deferred payment for purchases (pay-after-delivery PAD). This grows the loan book, which generates income that is shared with the merchants. As new merchants connect to the platform, business volumes rise, gradually driving growth in the loan book and generating interest income over time. It is not uncommon for it to take several quarters from the time a merchant signs a contract and becomes connected until it generates substantial income.
The number of connected merchants increased in the year to 46 (38). In the fourth quarter, 84 percent (78) of business volume was related to Sweden.
In the quarter, new agreements were signed with Biltema and Scandinavian Luxury for e-commerce payment solutions. The new partnerships are expected to launch in the first quarter 2021.
Payment solutions are gradually adapted to consumer and merchant demand. In the fourth quarter, Qliro's completely flexible shipping solution was enhanced through a partnership with Unifaun that gives e-merchants the opportunity to tailor the shipping interface by integrating with Qliro's payment solution.
Volume and lending growth increased income
PAD volume increased by 26 percent in the fourth quarter to SEK 2,061 million and the number of transactions rose by 37 percent to 2.4 million. On a seasonal basis, the fourth quarter is Qliro's strongest, positively affected by holiday shopping and Black Week.
Growth in PAD volumes is driven by previously connected merchants that increased their sales as well as the new merchants that use Qliro as a payment partner. Volumes from merchants outside what was previously the Qliro Group (Nelly and CDON) increased by 59 percent and they represented 57 percent (45) of total business volume. Merchants that signed up in 2020 accounted for 15 percent of the total volume in the fourth quarter.
Lending, which consists of interest-bearing lending such as part payments and non-interest-bearing lending such as invoices or "Buy Now Pay Later" campaigns, increased by 13 percent to SEK 1,524 million.
Total operating income increased by 10 percent to SEK 83.4 million (75.6). Net interest income increased by 9 percent as a result of increased interest-bearing lending. Net commission income increased by 8 percent percent with increased business volume contributing positively. Other income, which consists of net gains and losses on financial transactions and other income, also increased and amounted to SEK 2.6 million (1.0), mainly due to higher income from payment methods provided through partners.
Lower credit losses
Credit losses amounted to SEK 20.3 million (25.4) in the fourth quarter 2020. In relation to PAD volume, credit losses amounted to 1.0 percent (1.6 percent). No general impact on solvency was noted in the quarter and underlying credit quality improved.
The comparative period was negatively affected by approximately SEK 6 million due to the sale a portfolio of past due receivables.
PAYMENT SOLUTIONS
| SEK million except where otherwise stated | Q4 2020 |
Q4 2019 |
% ∆ | Jan - dec 2020 |
Jan - dec 2019 |
% ∆ |
|---|---|---|---|---|---|---|
| Net interest income | 39.8 | 36.5 | 9% | 144.5 | 135.4 | 7% |
| Net commission income | 41.0 | 38.1 | 8% | 167.0 | 171.7 | -3% |
| Total operating income | 83.4 | 75.6 | 10% | 318.8 | 309.9 | 3% |
| Net credit losses | 20.3 | 25.4 | -20% | 80.3 | 57.1 | 41% |
| Totel operating income less credit losses | 63.0 | 50.3 | 25% | 238.4 | 252.8 | -6% |
| Lending to the public | 1,524 | 1,343 | 13% | 1,524 | 1,343 | 13% |
| Pay-after delivery (PAD), volume | 2,061 | 1,633 | 26% | 6,221 | 5,325 | 17% |
| Pay-after delivery (PAD), no of transactions, thousands | 2,391 | 1,746 | 37% | 7,124 | 5,462 | 30% |
| Credit loss level, %, in relation to PAD volume | 1.0% | 1.6% | -37% | 1.3% | 1.1% | 20% |
84% Share of total operating income
DIGITAL BANKING SERVICES - STRONG LENDING AND INCOME GROWTH
Comparisons with the fourth quarter 2019 unless otherwise indicated. Since the Group was established in December 2019, the financial performance measures for 2020 relate to the Group and comparative amounts for 2019 refer to the parent company.
Growth in the customer base and increased digital interactions
Qliro drives growth in Digital banking services through cost-effective marketing in its own channels to the 2.5 million consumers (of whom 1.9 million in Sweden) who in the last year have used Qliro's products. The number of active customers during the year increased from 2 million to 2.5 million. In the fourth quarter, nearly 200,000 new unique customers were added.
Qliro offers personal loans and savings accounts to consumers in Sweden, but intends to continuously broaden its offering of digital financial services, partly in partnership with other financial firms. Qliro mainly interacts with customers in its own digital platforms. In February, a new platform was launched in Sweden where Qliro can integrate partners and in that way offer a broader range of products and services to our customers, at the same time that the app and website were updated with improved services and a new design. In 2020, two new services were launched in the app in partnership with the insuretech company Insurely. In the fourth quarter, a digital service was integrated in collaboration with the partner Deedster to increase awareness of sustainability issues in e-commerce.
Qliro's app makes it easy to manage payments, loans and savings. The app was one of the most downloaded in the financial category in Sweden in 2020 with an average rating of 4.4 out of 5 in the App Store. In the fourth quarter, the app and website in Denmark were updated with similar improvements to those made in the Swedish platform
earlier in the year. In the first quarter 2021, corresponding updates are planned in Norway and Finland. The number of app logins increased by 37 percent in the year to 7.7 million and the number logins in the digital platforms totaled 12 million.
Strong growth in lending increased income
Growth in personal loans is driven through digital marketing to existing customers. More than 95 percent of borrowers had an existing relationship with Qliro and many applied through Qliro's app. The means low customer acquisition costs and good knowledge of the customers who apply for loans. Credit checks are automated and based on a combination of internal and external data that is analyzed in real time through machine learning.
Lending increased by 29 percent to SEK 937 million (727). Growth in 2020 was lower after COVID-19 outbreak due to tighter lending, lower demand and lower incoming credit quality, which reduced the approval rate. The annualized growth rate in the the fourth quarter was 18 percent. The increased lending and improved margins contributed to an increase in total operating income of 39 percent to SEK 16.5 million (11.9).
Lower net loan loss level
Underlying credit quality was stable and the net loan loss level decreased to 2.6 percent (3.7). No general negative effects on customers' ability to pay were noted due to COVID-19.
DIGITAL BANKING SERVICES
| Q4 | Q4 | Jan - dec | Jan - dec | |||
|---|---|---|---|---|---|---|
| SEK million except where otherwise stated | 2020 | 2019 | % ∆ | 2020 | 2019 | % ∆ |
| Net interest income | 16.4 | 11.7 | 39% | 60.5 | 34.9 | 74% |
| Total operating income | 16.5 | 11.9 | 39% | 61.0 | 35.3 | 73% |
| Net credit losses | 5.9 | 6.4 | -8% | 22.2 | 16.4 | 36% |
| Totel operating income less credit losses | 10.5 | 5.4 | 93% | 38.8 | 18.9 | 105% |
| Lending to the public | 937 | 727 | 29% | 937 | 727 | 29% |
| Credit loss level, %, of average lending to the public | 2.6% | 3.7% | -30% | 2.7% | 3.1% | -15% |
16% Share of total operating income
+39% Income growth
Capital, funding and liquidity
Stregthened capital base
Qliro AB's own funds (see Note 9 Capital adequacy) increased to SEK 599 million (384 as of December 31, 2019). In addition to Common Equity Tier 1 capital, own funds consist of SEK 100 million in subordinated Tier 2 capital issued in 2019.
In December 2020, a change took effect in the "Prudential treatment of software assets" in article 36 in Regulation (EU) 575/2013. According to the previous method, intangible software assets were deducted in their entirety in the calculation of regulatory capital, but in the new method only the difference between prudential amortization (three-year amortization) and the amortization period used for accounting purposes is deducted. For Qliro, this means that the deduction for intangible assets amounts to SEK 61 million, compared with SEK 163 million if the as a result of which own funds were SEK 102 million higher with the new method. The change at the same time raised the risk exposure amount by a corresponding amount. The net effect means that available capital over and above the total regulatory capital requirements increased by approximately SEK 90 million.
The risk exposure amount increased to SEK 2,231 million (2,154 as of December 31, 2019), where increased lending and the revised rules on intangible software assets raised the risk exposure amount for credit risk. A revised method to calculate the own funds requirement for operational risks, which the Swedish FSA approved in the second quarter 2020, reduced the risk exposure amount for operational risk.Qliro is well-capitalized and the total capital ratio was 26.8 percent (17.8 as of December 31, 2019), compared with the regulatory requirement of 11.7 percent, and the Common Equity Tier 1 capital ratio was 22.4 percent (15.5 as of December 31, 2019), compared with the regulatory requirement of 7.8 percent. This means that Qliro has approximately SEK 340 million in available capital over and above the total capital requirement.
Diversified funding
In addition to equity, lending to the public was funded by SEK 2,133 million (1,819 as of December 31, 2019) in deposits from the public (savings accounts) in Sweden and Germany, and SEK 215 million (292 as of December 31, 2019) through a secured loan facility. The latter enables Qliro to match currencies between the asset and liability sides of the balance sheet.
Deposits from the public are a flexible and well-functioning form of funding given Qliro's lending, which largely consists of smaller loans of short duration. Qliro offers two different savings accounts in Sweden, one with a variable interest rate that as of December 31 was 0.8 percent, and one account with a 1-year fixed interest rate that at the end of the period was 1.25 percent. Funding was diversified during the year through the launch of a deposit offering in EURO for private individuals in Germany in partnership with the platform Deposit Solutions. As of December 31, deposits in Germany amounted to SEK 222 million
Solid liquidity
Qliro has solid liquidity and as of December 31 the liquidity portfolio amounted to SEK 443 million. In addition to the financial investments, Qliro AB had SEK 585 million in back up liquidity via undrawn funding in a secured committed credit facility. The liquidity portfolio is invested in Nordic banks as well as other liquid investments such as Swedish municipal bonds and commercial paper with an average rating of AA+ and an average maturity of 65 days.
The Liquidity Coverage Ratio (LCR) was 448 percent as of December 31, compared with the legal requirement of 100 percent.
Tier 2
Other information
Important events during the quarter
On October 2, 2020, trading commenced in Qliro's shares on Nasdaq Stockholm under the ticker symbol "Qliro".
The Extraordinary General Meeting held on November 23, 2020, elected Alexander Antas as a new board member. Alexander Antas is Head of Private Equity at Mandatum Alternative Investments Funds LTD.
The meeting also resolved to introduce a warrant plan for members of the executive management team and key employees in Qliro. In total, 23 employees subscribed for 834,920 warrants, corresponding to 88 percent of the maximum number of warrants according to the Extraordinary General Meeting's resolution. Each warrant entitles the holder to subscribe for one share in Qliro in two possible periods, either in late 2023 or early 2024. The exercise price to subscribe for shares in Qliro using the warrants was set at SEK 43.27 and the value limitation per warrant at SEK 80.13
Significant events after end of the period
In January and February, new versions of the apps and website login settings were launched in Finland and Norway. As a result, the consumer platforms in all markets have been updated similar to what was done with the Swedish platform in the first quarter 2020.
In February, Health Sports Nutrition Group (HSNG) terminated its payment services agreement with Qliro, due to which the collaboration will end in the second quarter 2021. HSNG accounted for approximately 2 percent of total PAD volumes in the fourth quarter 2020.
Effects of COVID-19 pandemic
Qliro's operations have been affected in several ways by the ongoing COVID-19 pandemic.
Since the COVID-19 outbreak, the majority of Qliro's employees have worked remotely.
Due to COVID-19, Qliro has become more restrictive in its lending. Growth in Digital banking services has been limited by tighter lending and lower demand. Within Payment solutions, some e-merchants have seen lower and others higher volumes, and COVID-19 has generally accelerated the transition from brick-and-mortar to e-commerce.
During the year, the provisions for credit losses increased by SEK 8.9 million (no effect in the fourth quarter) due to the assumption of a declining future economy according to IFRS 9. Qliro's credit losses have also been negatively affected by the lower prices received on sales
of past due receivables, partly as a result of COVID-19 and its expected effects on the economy. Qliro has not seen a widespread decline in solvency among consumers due to COVID-19.
The deteriorating macroeconomic outlook has reduced the countercyclical buffer requirement in the Nordic countries, which has lowered Qliro's capital requirement by approximately SEK 48 million.
Qliro's top 10 shareholders as of December 31, 2020
-
Rite Ventures 25.8% of the total number of shares.
-
- Mandatum Life 9.8%
-
- Avanza Pension 7.1%
-
- Staffan Persson 4.7%
-
- Nordnet pensionsförsäkring 3.8%
-
- eQ Asset Management 3.7%
-
- Ulf Ragnarsson 1.7%
-
- Markus Schiller 1.2%
-
- Sune Mordenfeld 1.1%
-
- Anders Böös 1.1%
Source: Monitor by Modular Finance. Compiled and processed data from Euroclear, Morningstar and the Swedish FSA, among others.
Transactions with related parties
Transactions with related parties are of the same character as described in the annual report 2019, with the exception of transactions with the former Qliro Group that was only considered a related party until the distribution of Qliro's shares and Qliro's separate listing on Nasdaq Stockholm.
Significant risks and uncertainties
Qliro's operations entail daily risks that are measured, controlled and when needed mitigated to protect the company's capital and reputation. The most prominent risks are credit risk, business risk/strategic risk, operational risk, currency risk, interest rate risk and liquidity risk. Qliro's prospectus, dated September 28, 2020, which was released before Qliro's shares were listed for trading on Nasdaq Stockholm, includes a detailed description of the company's risk exposures and risk management. In the company's assessment, no significant risks have arisen beyond those described in the prospectus and in this report.
FINANCIAL REPORTS
Consolidated income statement
| SEK million | Note | 2020 Oct – Dec |
Oct – Dec 20191 |
2020 Jan – Dec |
Jan – Dec 20191 |
|---|---|---|---|---|---|
| Interest income | 65.3 | – | 240.6 | – | |
| Interest expenses | -9.1 | – | -35.6 | – | |
| Net interest income | 2 | 56.2 | – | 205.0 | – |
| Commission income | 3 | 42.1 | – | 171.4 | – |
| Commission expenses | 3 | -1.0 | – | -4.0 | – |
| Net profit/loss from financial transactions | -0.3 | – | -0.2 | – | |
| Other operating income | 2.9 | – | 7.5 | – | |
| Total operating income | 99.8 | – | 379.7 | – | |
| General administrative expenses | -59.1 | – | -222.5 | – | |
| Depreciation/amortization of tangible and intangible assets |
-21.7 | – | -101.4 | – | |
| Other operating expenses | -10.0 | – | -34.4 | – | |
| Total expenses before credit losses | -90.7 | – | -358.3 | – | |
| Profit/loss before credit losses | 9.1 | – | 21.4 | – | |
| Net credit losses | 4 | -26.3 | – | -102.5 | – |
| Operating profit/loss | -17.2 | – | -81.1 | – | |
| Income tax expense | 1.6 | – | 14.1 | – | |
| Profit/loss for the period | -15.5 | – | -67.0 | – | |
| Earnings per share before and after dilution | -0.86 | – | -3.73 | – |
Consolidated statement of comprehensive income
| SEK million | Note | 2020 Oct – Dec |
20191 Oct – Dec |
2020 Jan – Dec |
20191 Jan – Dec |
|---|---|---|---|---|---|
| Profit/loss for the period | -15.5 | – | -67.0 | – | |
| Other comprehensive income | |||||
| Items that will be reversed to the income statement | |||||
| Changes in value of financial assets recognized at fair value through other comprehensive income |
0.0 | – | 0.0 | – | |
| Translation differences from foreign operations | – | – | -1.1 | – | |
| Translation differences from foreign operations reclassified to the income statement |
– | – | 0.6 | – | |
| Total other comprehensive income for the period | -0.0 | – | -0.5 | – | |
| Total profit or loss and other comprehensive income | -15.6 | – | -67.5 | – |
1) As the group was formed 2019-12-31 there is no relevant information to report from the consolidated income statement 2019.
Consolidated balance sheet
| SEK million Note |
2020-12-31 | 2019-12-31 |
|---|---|---|
| Assets | ||
| Treasury bills eligible for refinancing etc | – | 25.0 |
| Lending to credit institutions | 155.1 | 240.2 |
| Lending to the public 5 |
2,460.3 | 2,070.4 |
| Bonds and other fixed-income securities | 290.1 | 230.0 |
| Intangible assets | 162.8 | 178.5 |
| Tangible assets | 31.5 | 41.0 |
| Deferred tax assets | 28.8 | 14.7 |
| Other assets | 47.0 | 43.1 |
| Prepaid expenses and accrued income | 19.8 | 35.7 |
| Total assets | 3,195.3 | 2,878.5 |
| Liabilities and Equity | ||
| Liabilities | ||
| Liabilities to credit institutions | 215.0 | 292.4 |
| Deposits and borrowings from the public 6 |
2,132.9 | 1,819.1 |
| Other liabilities | 96.8 | 103.3 |
| Accrued expenses and deferred income | 62.6 | 35.8 |
| Subordinated debt | 100.0 | 100.0 |
| Total liabilities | 2,607.3 | 2,350.6 |
| Equity | ||
| Share capital | 50.3 | 50.1 |
| Reserves | 0.0 | 0.5 |
| Retained profit or loss | 604.7 | 477.4 |
| Profit/loss for the year | -67.0 | – |
| Total equity | 588.0 | 528.0 |
| Total liabilities and equity | 3,195.3 | 2,878.5 |
Consolidated statement of changes in equity
| SEK million | 2020 Oct – Dec |
2019 Oct – Dec |
2020 Jan– Dec |
2019 Jan– Dec |
|---|---|---|---|---|
| Opening balance | 601.0 | – | 528.0 | – |
| Profit/loss for the period | -15.5 | – | -67.0 | – |
| Total other comprehensive income for the period | 0.0 | – | -0.5 | – |
| Shareholder's contribution | – | – | 125.0 | – |
| Issuance of warrants | 2.5 | – | 2.5 | – |
| Formation of the Group 2019-12-31 | – | 528.0 | – | 528.0 |
| Closing balance | 588.0 | 528.0 | 588.0 | 528.0 |
Consolidated cash flow statement
| SEK million | 2020 Oct – Dec |
2019 Oct – Dec |
2020 Jan– Dec |
2019 Jan– Dec |
|---|---|---|---|---|
| Operating activities | ||||
| Operating profit/loss | -17.2 | – | -81.1 | – |
| Adjustments | 43.3 | – | 208.6 | – |
| Changes in the assets and liabilities of operating activities | 86.3 | – | -257.6 | – |
| Cash flow from operating activities | 112.5 | – | -130.0 | – |
| Investing activities | ||||
| Purchase of tangible assets | -3.7 | – | -6.8 | – |
| Purchase of intangible assets | -15.0 | – | -67.7 | – |
| Cash flow from investing activities | -18.8 | – | -74.5 | – |
| Financing activities | ||||
| Shareholders' contributions received | – | – | 125.0 | – |
| Amortization lease | -2.0 | – | -8.2 | – |
| Issuance of warrants | 2.5 | – | 2.5 | – |
| Cash flow from financing activities | 0.5 | – | 119.3 | – |
| Cash flow for the period | 94.2 | – | -85.2 | – |
| Cash and cash equivalents at beginning of the period | 60.8 | – | 240.2 | – |
| Exchange differences in cash and cash equivalents | 0.0 | – | 0.1 | – |
| Formation of the Group | – | 240.2 | – | 240.2 |
| Cash flow for the period | 94.2 | – | -85.2 | – |
| Cash and cash equivalents at the end of the period | 155.1 | 240.2 | 155.1 | 240.2 |
Parent company's income statement
| SEK million Note |
2020 Oct – Dec |
2019 Oct – Dec |
2020 Jan– Dec |
2019 Jan– Dec |
|---|---|---|---|---|
| Interest income | 65.3 | 56.7 | 240.6 | 198.9 |
| Interest expenses | -9.1 | -8.5 | -35.3 | -28.6 |
| Net interest income 2 |
56.2 | 48.3 | 205.3 | 170.2 |
| Commission income 3 |
42.1 | 39.3 | 171.4 | 176.0 |
| Commission expenses 3 |
-1.0 | - 1.1 | -4.0 | -3.9 |
| Net profit/loss from financial transactions | -0.3 | 0.0 | -0.2 | -0.1 |
| Other operating income | 2.9 | 1.0 | 7.5 | 2.9 |
| Total operating income | 99.9 | 87.5 | 380.0 | 345.2 |
| General administrative expenses | -61.1 | -61.8 | -230.7 | -210.0 |
| Depreciation/amortization of tangible and intangible assets |
-19.6 | -19.9 | -93.1 | -63.2 |
| Other operating expenses | -10.0 | -8.2 | -34.4 | -28.6 |
| Total expenses before credit losses | -90.7 | -89.9 | -358.2 | -301.8 |
| Profit/loss before credit losses | 9.2 | -2.4 | 21.8 | 43.4 |
| Net credit losses 4 |
-26.3 | -31.8 | -102.5 | -73.4 |
| Operating profit/loss | -17.1 | -34.2 | -80.7 | -30.0 |
| Income tax expense | 1.6 | 7.3 | 14.1 | 6.2 |
| Profit/loss for the period | -15.5 | -26.8 | -66.6 | -23.8 |
| Earnings per share before and after dilution | -0.86 | -1.49 | -3.71 | -1.32 |
Parent company's statement of comprehensive income
| SEK million Note |
2020 Oct – Dec |
2019 Oct – Dec |
2020 Jan– Dec |
2019 Jan– Dec |
|---|---|---|---|---|
| Profit/loss for the period | -15.5 | -26.8 | -66.6 | -23.8 |
| Other comprehensive income | ||||
| Items that will be reversed to the income statement | ||||
| Changes in value of financial assets recognized at fair value through other comprehensive income |
0.0 | 0.0 | 0.0 | -0.1 |
| Translation differences from foreign operations | – | 0.1 | -1.1 | 0.3 |
| Translation differences from foreign operations reclassified to the income statement |
– | – | 0.6 | – |
| Total other comprehensive income for the period | 0.0 | 0.0 | -0.5 | 0.3 |
| Total profit or loss and other comprehensive income | -15.5 | -26.8 | -67.2 | -23.5 |
Parent company's balance sheet
| SEK million Note |
2020-12-31 | 2019-12-31 |
|---|---|---|
| Assets | ||
| Treasury bills eligible for refinancing etc | – | 25.0 |
| Lending to credit institutions | 152.5 | 240.2 |
| Lending to the public 5 |
2,460.3 | 2,070.4 |
| Bonds and other fixed-income securities | 290.1 | 230.0 |
| Shares and units | 0.1 | 0.1 |
| Intangible assets | 162.8 | 178.5 |
| Tangible assets | 17.0 | 19.9 |
| Deferred tax assets | 28.8 | 14.7 |
| Other assets | 49.5 | 43.0 |
| Prepaid expenses and accrued income | 19.8 | 37.7 |
| Total assets | 3,180.8 | 2,859.4 |
| Liabilities and Equity | ||
| Liabilities | ||
| Liabilities to credit institutions | 215.0 | 292.4 |
| Deposits and borrowings from the public 6 |
2,132.9 | 1,819.1 |
| Other liabilities | 82.0 | 84.2 |
| Accrued expenses and deferred income | 62.6 | 35.8 |
| Subordinated debt | 100.0 | 100.0 |
| Total liabilities | 2,592.5 | 2,331.5 |
| Equity | ||
| Restricted equity | ||
| Share capital | 50.3 | 50.1 |
| Reserve for development costs | 118.5 | 124.2 |
| Total restricted equity | 168.8 | 174.2 |
| Non-restricted equity | ||
| Reserves | 0.0 | 0.5 |
| Share premium reserve | 2.5 | – |
| Retained profit or loss | 483.7 | 377.0 |
| Profit/loss for the year | -66.6 | -23.8 |
| Total non-restricted equity | 419.5 | 353.7 |
| Total equity | 588.3 | 528.0 |
| Total liabilities and equity | 3,180.8 | 2,859.4 |
Parent company statement of changes in equity
| SEK million | 2020 Oct – Dec |
2019 Oct – Dec |
2020 Jan– Dec |
2019 Jan– Dec |
|---|---|---|---|---|
| Opening balance | 601.3 | 511.8 | 528.0 | 413.5 |
| Profit/loss for the period | -15.5 | -26.8 | -66.6 | -23.8 |
| Total other comprehensive income for the period | 0.0 | 0.0 | -0.5 | 0.3 |
| Issuance of warrants | 2.5 | – | 2.5 | – |
| Shareholder's contribution | – | 43.0 | 125.0 | 138.0 |
| Closning balance | 588.3 | 528.0 | 588.3 | 528.0 |
Parent company's cash flow statement
| SEK million | 2020 Oct – Dec |
2019 Oct – Dec |
2020 Jan– Dec |
2019 Jan– Dec |
|---|---|---|---|---|
| Operating activities | ||||
| Operating profit/loss | -17.1 | -34.2 | -80.7 | -30.0 |
| Adjustments | 41.2 | 34.7 | 200.1 | 123.6 |
| Changes in the assets and liabilities of operating activities | 83.8 | 48.8 | -260.1 | -15.5 |
| Cash flow from operating activities | 107.9 | 49.3 | -140.8 | 78.0 |
| Investing activities | ||||
| Acquisition of subsidiary | – | -0.1 | – | -0.1 |
| Purchase of tangible assets | -3.7 | -4.8 | -6.8 | -14.9 |
| Purchase of intangible assets | -15.0 | -22.5 | -67.7 | -82.7 |
| Cash flow from investing activities | -18.8 | -27.3 | -74.5 | -97.6 |
| Financing activities | ||||
| Shareholders' contributions received | – | 43.0 | 125.0 | 138.0 |
| Issuance of warrants | 2.5 | – | 2.5 | – |
| Subordinated debt | – | – | – | 100.0 |
| Cash flow from financing activities | 2.5 | 43.0 | 127.5 | 238.0 |
| Cash flow for the period | 91.7 | 65.0 | -87.8 | 218.4 |
| Cash and cash equivalents at beginning of the period | 60.8 | 175.2 | 240.2 | 21.8 |
| Exchange differences in cash and cash equivalents | 0.0 | 0.0 | 0.1 | 0.0 |
| Cash flow for the period | 91.7 | 65.0 | -87.8 | 218.4 |
| Cash and cash equivalents at the end of the period | 152.5 | 240.2 | 152.5 | 240.2 |
NOTES
Note 1
Accounting policies
The year-end report for Qliro AB covers the period January 1 to December 31, 2020. Qliro has its registered address in Stockholm and its registration number is 556962-2441.
The year-end report is prepared in accordance with IAS 34 Interim financial reporting. The consolidated accounts are prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretive statements on these standards as approved for application within the EU. The complementary rules in the Annual Accounts Act for Credit Institutions and Securities Companies (ÅRKL) and the regulations and general advice FFFS 2008:25 of the Swedish Financial Supervisory Authority regarding annual reports at credit institutions and securities companies are applied as well.
RFR 1 Complementary accounting rules for groups and the statement from the Swedish Financial Reporting Board are also applied in the consolidated accounts.
The parent company has prepared the year-end report in accordance with ÅRKL and the regulations and general advice of the Swedish Financial Supervisory Authority. The parent company also applies RFR 2 Accounting for legal entities of the Swedish Financial Reporting Board. In accordance with the Swedish Financial Supervisory Authority's general advice, the parent company applies the international financial reporting standards that have been approved by the EU in the preparation of the financial reports.
Qliro's year-end report is prepared in accordance with the same accountings policies and calculation methods applied in the annual report for 2019.
In order to more precisely account for commissions paid to mechants (interest and commissions), Qliro's model for accrual has been modified. In brief, this means that commissions are tied to recognized income in the income statement and recognized in the same period. The change negatively affected profit by SEK 8.4 million, which was recognized in its entirety in the second quarter 2020 – net interest income was negatively affected by SEK 3.4 million and net commission income negatively by SEK 5.0 million. As there is no historical data to calculate previous periods, reporting could not be modified for previous periods. If it were modified, the second quarter would not be comparable with other periods, whereas previous and future quarters have remained comparable over time.
As of December 31, 2019, Qliro AB acquired a subsidiary, QFS Incitament AB, and thereby formed a group. The difference between a parent company and a group is that IFRS 16 Leases is applied in the consolidated accounts. Qliro has chosen in its key performance measures and in earnings comparisons to compare the Group as of December 31 2020 with the parent company as of December 31, 2019, since the difference between the Group's profit and the parent company's is only SEK 0.2 million.
| Group | ||||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| SEK million | Oct – Dec | Oct– Dec | Jan – Dec | Jan– Dec |
| Interest income | ||||
| Lending to credit institutions | 0.0 | – | 0.0 | – |
| Lending to the public | 65.3 | – | 240.4 | – |
| Interest-bearing securities | – | – | 0.2 | – |
| Total interest income | 65.3 | – | 240.6 | – |
| Interest expenses | ||||
| Liabilities to credit institutions | -2.4 | – | -10.5 | – |
| Deposits to the general public | -4.9 | – | -17.8 | – |
| Interest-bearing securities | -0.1 | – | -0.1 | – |
| Subordinated debt | -1.7 | – | -6.9 | – |
| Lease liabilitities | -0.1 | – | -0.2 | – |
| Other interest expenses | – | – | – | – |
| Total interest expenses | -9.1 | – | -35.6 | – |
| Net interest income | 56.2 | – | 205.0 | – |
| Parent company | ||||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| SEK million | Oct – Dec | Oct– Dec | Jan – Dec | Jan – Dec |
| Interest income | ||||
| Lending to credit institutions | 0.0 | 0.0 | 0.0 | 0.0 |
| Lending to the public | 65.3 | 56.7 | 240.4 | 197.8 |
| Interest-bearing securities | – | 0.0 | 0.2 | 1.1 |
| Total interest income | 65.3 | 56.7 | 240.6 | 198.9 |
| Interest expenses | ||||
| Liabilities to credit institutions | -2.4 | -2.6 | -10.5 | -11.3 |
| Deposits to the general public | -4.9 | -4.0 | -17.8 | -13.2 |
| Interest-bearing securities | -0.1 | -0.1 | -0.1 | -1.4 |
| Subordinated debt | -1.7 | -1.7 | -6.9 | -2.2 |
| Other interest expenses | – | – | – | -0.5 |
| Total interest expenses | -9.1 | -8.5 | -35.3 | -28.6 |
| Net interest income | 56.2 | 48.3 | 205.3 | 170.2 |
| Group | ||||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| SEK million | Oct – Dec | Oct– Dec | Jan – Dec | Jan – Dec |
| Commission income | ||||
| Lending commissions | 34.4 | – | 143.7 | – |
| Other commission income | 7.7 | – | 27.7 | – |
| Total commission income | 42.1 | – | 171.4 | – |
| Commission expenses | ||||
| Other commission expenses | -1.0 | – | -4.0 | – |
| Total commission expenses | -1.0 | – | -4.0 | – |
| Net commission income | 41.1 | – | 167.5 | – |
| Parent company | ||||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| SEK million | Oct – Dec | Oct – Dec | Jan – Dec | Jan – Dec |
| Commission income | ||||
| Lending commissions | 34.4 | 33.3 | 143.7 | 151.2 |
| Other commission income | 7.7 | 6.0 | 27.7 | 24.9 |
| Total commission income | 42.1 | 39.5 | 171.4 | 176.0 |
| Commission expenses | ||||
| Other commission expenses | -1.0 | -1.1 | -4.0 | -3.9 |
| Total commission expenses | -1.0 | -1.1 | -4.0 | -3.9 |
| Net commission income | 41.1 | 38.2 | 167.5 | 172.1 |
Note 4. Net credit losses
| Group / Parent company | ||||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| SEK million | Oct – Dec | Oct– Dec | Jan – Dec | Jan – Dec |
| Expected credit losses on items in the balance sheet | ||||
| Net loss provision for the period, Stage 1 | -1.4 | -2.2 | -6.2 | -3.9 |
| Net loss provision for the period, Stage 2 | -3.5 | -8.0 | -12.0 | -7.5 |
| Total net credit losses non-credit-impaired lending | -4.9 | -10.2 | -18.2 | -11.4 |
| Net loss provision for the period, Stage 3 | -3.1 | 17.9 | -12.9 | 6.0 |
| Realized net credit losses for the period | -18.2 | -39.5 | -71.4 | -68.0 |
| Total net credit losses credit-impaired lending | -21.3 | -21.6 | -84.3 | -62.1 |
| Total net credit losses | -26.3 | -31.8 | -102.5 | -73.4 |
| Loss provisions on loans measured at amortized costs | -130.5 | -101.2 | -130.5 | -101.2 |
Note 5. Lending to the public
| Lending to the public 2020-12-31 | Group / Parent company | |||
|---|---|---|---|---|
| SEK million | Stage 1 | Stage 2 | Stage 3 | Total |
| Loans receivable | 1,940.9 | 477.8 | 172.1 | 2,590.8 |
| Provisions for expected credit losses | -18.5 | -45.4 | -66.6 | -130.5 |
| Net lending to the public | 1,922.4 | 432.4 | 105.5 | 2,460.3 |
| Lending to the public 2019-12-31 | Group / Parent company | |||
|---|---|---|---|---|
| SEK million | Stage 1 | Stage 2 | Stage 3 | Total |
| Loans receivable | 1,545.5 | 470.9 | 155.2 | 2,171.6 |
| Provisions for expected credit losses | -12.4 | -34.0 | -54.8 | -101.2 |
| Net lending to the public | 1,533.1 | 436.9 | 100.4 | 2,070.4 |
Loans with modified conditions, where the loan is not derecognised from the balance sheet and replaced with new loan, amounted December 31, 2020 to 17.4 SEK million (0).
Note 6. Deposits and borrowings from the public
| Group / Parent company | |
|---|---|
| 2020-12-31 | 2019-12-31 |
| 2,132.9 | 1,819.1 |
| 2,132.9 | 1,819.1 |
| – | – |
| 2,132.9 | 1,819.1 |
| 1,910.7 | 1,819.1 |
| 222.2 | – |
| 2,132.9 | 1,819.1 |
Note 7. Financial instruments
Classification of financial instruments
| Group | ||||
|---|---|---|---|---|
| 2020-12-31, SEK million | Fair value through other comprehesive income |
Fair value through income statement |
Amortized cost |
Total carrying amount |
| Assets | ||||
| Bonds and other fixed-income securities | 290.1 | – | – | 290.1 |
| Lending to credit institutions | – | – | 155.1 | 155.1 |
| Lending to the public | – | – | 2,460.3 | 2,460.3 |
| Other assets | – | – | 41.4 | 41.4 |
| Accrued income | – | – | 1.6 | 1.6 |
| Total financial instruments | 290.1 | – | 2,658.3 | 2,948.4 |
| Other non-financial instruments | 246.9 | |||
| Total assets | 3,195.3 | |||
| Liabilities | ||||
| Liabilities to credit institutions | – | – | 215.0 | 215.0 |
| Deposits and borrowings from the public | – | – | 2,132.9 | 2,132.9 |
| Derivatives | – | 1.8 | – | 1.8 |
| Other liabilities | – | – | 90.6 | 90.6 |
| Accrued expenses | – | – | 55.7 | 55.7 |
| Subordinated debt | – | – | 100.0 | 100.0 |
| Total financial instruments | – | 1.8 | 2,594.2 | 2,596.0 |
| Other non-financial instruments | 11.4 | |||
| Total liabilities | 2,607.3 | |||
Classification of financial instrument
| 2019-12-31, SEK million | Fair value through other comprehesive income |
Fair value through income statement |
Amortized cost |
Total carrying amount |
|---|---|---|---|---|
| Assets | ||||
| Treasury bills eligible for refinancing etc | 25.0 | – | – | 25.0 |
| Bonds and other fixed-income securities | 230.0 | – | – | 230.0 |
| Lending to credit institutions | – | – | 240.2 | 240.2 |
| Lending to the public | – | – | 2,070.4 | 2,070.4 |
| Other assets | – | – | 38.6 | 38.6 |
| Accrued income | – | – | 16.4 | 16.4 |
| Total financial instruments | 255.0 | – | 2,365.5 | 2,620.5 |
| Other non-financial instruments | 258.1 | |||
| Total assets | 2,878.5 | |||
| Liabilities | ||||
| Liabilities to credit institutions | – | – | 292.4 | 292.4 |
| Deposits and borrowings from the public | – | – | 1,819.1 | 1,819.1 |
| Other liabilities | – | – | 98.6 | 98.6 |
| Accrued expenses | – | – | 29.6 | 29.6 |
| Subordinated debt | – | – | 100.0 | 100.0 |
| Total financial instruments | – | – | 2,339.7 | 2,339.7 |
| Other non-financial instruments | 10.9 | |||
| Total liabilities | 2,350.6 |
Note 7. Financial instruments cont.
Classification of financial instrument
The fair value of financial instruments traded in an active markets (financial assets at fair value through other comprehensive income) is based on quoted market prices on the closing day. The quoted market price used for Qliro's financial assets is the official bid rate. A disclosure of the fair value of items measured at fair value can be found below. The levels in the disclosure according to the fair value hierarchy below are defined as follows:
- Quoted prices (unadjusted) on active markets for identical assets or liabilities (Level 1)
- Observable data for assets or liabilities other than quoted prices included in Level 1, either directly (i.e., through price quotes) or indirectly (i.e., extrapolated from price quotes) (Level 2)
- Input data for assets or liabilities that are not based on observable market data, i.e., non-observable input data (Level 3)
| 2020-12-31, SEK million | Group / Parent company | |||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | |
| Assets | ||||
| Treasury bills eligible for refinancing etc | – | – | – | – |
| Bonds and other fixed-income securities | – | 290.1 | – | 290.1 |
| Total assets | – | 290.1 | – | 290.1 |
| Liabilities | ||||
| Derivatives | – | 1,8 | – | 1,8 |
| Total liabilities | – | 1.8 | – | 1.8 |
| 2019-12-31, SEK million | Level 1 | Level 2 | Level 3 | Total |
| Assets | ||||
| Treasury bills eligible for refinancing etc | – | 25.0 | – | 25.0 |
| Bonds and other fixed-income securities | – | 230.0 | – | 230.0 |
| Total assets | – | 255.0 | – | 255.0 |
For assets or liabilities which are recognized at to amortized cost, carrying amounts are considered equivalent to fair value.
Note 8. Operating segments
The CEO of Qliro AB is the company's chief operating desicion maker. Company management has determined the segments based on the information addressed by the CEO and for the purposes of allocation resources and assessing results. The CEO assess the results for Payment Solutions and Digital Banking Services. The CEO evaluates the development of the segments based on operating income less net credit losses. Segment reporting is based on the same principles and external accounting.
| Group | |||||||
|---|---|---|---|---|---|---|---|
| SEK million | 2020 Oct – Dec | 2020 Jan – Dec | |||||
| Payment solutions |
Digital banking services |
Total | Payment solutions |
Digital banking services |
Total | ||
| Interest income | 45.4 | 19.9 | 65.3 | 166.2 | 74.4 | 240.6 | |
| Interest expenses | -5.6 | -3.6 | -9.1 | -21.7 | -13.9 | -35.6 | |
| Net commission income1 | 41.0 | 0.1 | 41.1 | 167.0 | 0.4 | 167.5 | |
| Net profit/loss from financial transactions | -0.3 | – | -0.3 | -0.2 | – | -0.2 | |
| Other operating income | 2.9 | – | 2.9 | 7.5 | – | 7.5 | |
| Total operating income | 83.4 | 16.5 | 99.8 | 318.8 | 61.0 | 379.7 | |
| Net credit losses | -20.3 | -5.9 | -26.3 | -80.3 | -22.2 | -102.5 | |
| Total operating income less credit losses | 63.0 | 10.5 | 73.6 | 238.4 | 38.8 | 277.2 |
| Parent company | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK million | 2020 Oct – Dec | 2019 Oct – Dec | ||||||
| Payment solutions |
Digital banking services |
Total | Payment solutions |
Digital banking services |
Total | |||
| Interest income | 45.4 | 19.9 | 65.3 | 41.8 | 14.9 | 56.7 | ||
| Interest expenses | -5.5 | -3.6 | -9.1 | -5.3 | -3.2 | -8.5 | ||
| Net commission income1 | 41.0 | 0.1 | 41.1 | 38.1 | 0.1 | 38.2 | ||
| Net profit/loss from financial transactions | -0.3 | – | -0.3 | 0.0 | – | 0.0 | ||
| Other operating income | 2.9 | – | 2.9 | 1.0 | – | 1.0 | ||
| Total operating income | 83.4 | 16.5 | 99.9 | 75.6 | 11.9 | 87.5 | ||
| Net credit losses | -20.3 | -5.9 | -26.3 | -25.4 | -6.4 | -31.8 | ||
| Total operating income less credit losses | 63.1 | 10.5 | 73.6 | 50.3 | 5.4 | 55.7 |
| SEK million | 2020 Jan – Dec | 2019 Jan – Dec | |||||
|---|---|---|---|---|---|---|---|
| Payment solutions |
Digital banking services |
Total | Payment solutions |
Digital banking services |
Total | ||
| Interest income | 166.2 | 74.4 | 240.6 | 154.9 | 43.9 | 198.9 | |
| Interest expenses | -21.5 | -13.9 | -35.3 | -19.6 | -9.1 | -28.6 | |
| Net commission income1 | 167.0 | 0.4 | 167.5 | 171.7 | 0.4 | 172.1 | |
| Net profit/loss from finincial transactions | -0.2 | – | -0.2 | -0.1 | – | -0.1 | |
| Other operating income | 7.5 | – | 7.5 | 2.9 | – | 2.9 | |
| Total operating income | 319.0 | 61.0 | 380.0 | 309.9 | 35.3 | 345.2 | |
| Net credit losses | -80.3 | -22.2 | -102.5 | -57.1 | -16.4 | -73.4 | |
| Total operating income less credit losses | 238.7 | 38.8 | 277.5 | 252.8 | 18.9 | 271.8 |
1) Non-recurring effects, accrual of merchant commissions, impact Payment Solution net interest by SEK -3.4 millon and net commission income by SEK -5.0 million year 2020.
Note 8. Operating segments cont.
Of the net lending to the public of SEK 2,460 million (2,070 as of December 31, 2019), SEK 1,524 million (1,343 as of December 31, 2019) refers to Payment solutions and SEK 937 million (727 per of December 31, 2019)) refers to Digital banking services.
Commission income per geographic market and segment
| Group / Parent company | Parent company | ||||
|---|---|---|---|---|---|
| SEK million | 2020 Oct – Dec |
2020 Jan – Dec |
2019 Oct – Dec |
2019 Jan – Dec |
|
| Payment solutions | |||||
| Lending commissions | |||||
| Sweden | 28.5 | 109.9 | 24.6 | 104.6 | |
| Finland | 1.5 | 7.2 | 2.0 | 16.6 | |
| Denmark | 1.1 | 6.0 | 1.6 | 7.3 | |
| Norway | 3.2 | 20.2 | 4.9 | 22.2 | |
| Total | 34.3 | 143.3 | 33.1 | 150.8 | |
| Other commission income | |||||
| Sweden | 7.4 | 26.5 | 5.5 | 23.7 | |
| Finland | 0.1 | 0.5 | 0.1 | 0.5 | |
| Denmark | 0.0 | 0.1 | 0.0 | 0.1 | |
| Norway | 0.2 | 0.7 | 0.3 | 0.5 | |
| Total | 7.7 | 27.7 | 6.0 | 24.9 | |
| Total commission income Payment Solution | 42.0 | 171.0 | 39.2 | 175.6 | |
| Digital Banking | |||||
| Lending commissions | |||||
| Sweden | 0.1 | 0.4 | 0.1 | 0.4 | |
| Total commission income Digital Banking | 0.1 | 0.4 | 0.1 | 0.4 | |
| Total commission income | 42.1 | 171.4 | 39.3 | 176.0 |
Note 9. Capital adequacy
| Capital Common equity tier 1 capital |
|---|
| Share capital 50.3 50.1 |
| Retained profit or loss 604.6 501.7 |
| Common quity tier 1 capitalprior to adjustment 654.9 551.8 |
| Adjustments |
| Intangible assets -60.7 -178.5 |
| Loss for current financial year -66.6 -23.8 |
| Deferred tax assets -28.6 -14.7 |
| Other adjustment -0.3 -0.3 |
| Total common equity tier 1 498.7 334.5 |
| Other tier 1 capital 0.0 – |
| Tier 2 capital 100.0 49.5 |
| Total capital 598.7 383.9 |
| Of which: tier 1 capital 498.7 334.5 |
| Of which: common equity tier 1 capital 498.7 334.5 |
| Risk exposure amount |
| Credit risk according to standardized approach, of which |
| exposure to households 1,780.5 1,490.2 |
| exposure to corporates 38.2 51.2 |
| exposures in default 117.5 112.7 |
| exposure to institutions 30.5 48.0 |
| exposure covered bonds 0.0 – |
| other exposures 117.0 19.9 |
| exposure equity 0.1 0.1 |
| Total credit risk 2,083.8 1,722.1 |
| Market risk according to standardized approach 0.0 – |
| Operational risk according to alternative standardised approach 146.9 431.8 |
| Credit valuation adjustment according to standardized approach 0.0 – |
| Total risk exposure amount 2,230.6 2,153.9 |
| Capital ratios, % |
| Total capital ratio 26.8% 17.8% |
| Tier 1 capital ratio 22.4% 15.5% |
| Common Equity Tier 1 capital ratio 22.4% 15.5% |
| Capital requirement |
| Pillar 1 requirement (total minimum capital requirement) 178.5 8.0% 172.3 8.0% |
| of which: credit risk 166.7 7.5% 137.8 6.4% |
| of which: operational risk 11.7 0.5% 34.5 1.6% |
| of which: market risk – – – |
| of which: credit valuation adjustment 0.0 0.0% – |
| Pillar 2 requirement, incl. capital planning buffer 24.9 1.1% 52.9 2.5% |
| of which: additional market risk 0.2 0.0% 0.2 0.0% |
| of which: concentration risk 23.2 1.0% 23.0 1.1% |
| of which: interest rate risk 1.6 0.1% 1.6 0.1% |
| of which capital planning buffer – – 19.4 0.9% |
| Combined buffer requirement 56.9 2.6% 103.2 4.8% |
| of which: countercyclical buffer requirement 1.2 0.1% 49.4 2.3% |
| of which: capital conservation buffer requirement 55.8 2.5% 53.8 2.5% |
| Total capital requirement 260.3 11.7% 328.4 15.2% |
| of which: Tier 1 capital requirement 211.0 9.5% 275.3 12.8% |
| of which: Common Equity Tier 1 capital requirement 173.9 7.8% 235.4 10.9% |
| Leverage ratio, % 16.5% 12.5% Institution specific buffer requirement1 , % 7.1% 9.3% |
| Common Equity Tier 1 available to meet buffers, % 15.3% 6.2% |
26 Qliro AB | Year-end report 2020 1) Institution specific buffer requirement (CET1 requirement in accordance with article 92(1)(a) plus capital conservation and countercyclical buffer requirements)
Note 9. Capital adequacy
Qliro AB's publication of information regarding capital adequacy and liquidity management
Qliro AB (556962-2441) is a credit market institution. All information is presented as of December 31, 2020 in accordance with Regulation (EU) 575/2013 and the Swedish Financial Supervisory Authority's (FI) regulations and general guidelines (FFFS 2019:6).
Funding Qliro AB
Qliro AB's net lending to the public amounted to SEK 2,460 (2,070 as of December 31, 2019 ) million at the end of the year. The lending was financed by the amount of SEK 215 (292 as of December 31, 2019) million via a secured contracted credit facility and SEK 2,133 (1,819 as of December 31, 2019) million through deposits from the public (savings accounts) in Sweden and Germany, of which 99,6 percent are protected by the deposit insurance scheme in Sweden. Deposits from the public were divided into 54 percent on demand with variable rate and 46 percent fixed interest rate with a duration of 185 days as of December 31, 2020 (initially 6-month fixed rate and 1-year fixed rate). 21 percent of the deposit from the public is invested in liquid financial assets and placed in Nordic banks.
Liquidity Qliro AB
Qliro AB's total liquidity as of December 31, 2020 amounted to SEK 443 million, consisting of:
- Investments in debt securities2: SEK 290 million
- Bank balances in Nordic Banks: SEK 152.5 million
In addition to the financial investments, Qliro AB had as of December 31, 2020 SEK 585million in back up liquidity via undrawn funding in a secured committed credit facility.
As of December 31, 2020, the liquidity coverage ratio amounted to 448 percent for Qliro AB, to be compared with the regulatory requirement of 100 percent. The liquidity coverage ratio measures a liquidity buffer of SEK 250 million, related to net outflows of SEK 55.8 million over a thirty-day period under stressed market conditions.
2) Investments in debt securities consist of Swedish municipal bonds. Average rating of debt securities investments was AA+ with an average maturity of 65 days.
Note 10 Event after end of period
No significant events after the year-end to report.
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures that management and analysts use to evaluate the company's development, which are not specified or defined in IFRS or other applicable regulations.
| Performance measure | Definition | Motivation |
|---|---|---|
| Return on equity, % | Net income for the year/period, restated as a full year value, as a percentage of average equity for two measurement periods (opening and closing balance for the period). |
The measure is used it to analyze profitability in relation to equity. |
| Deposits and funding from the public | The period's closing balance for deposits and funding from the public in the balance sheet. |
The purpose is to monitor the level of and growth in the deposit business and to track the scope of external funding that comes from deposits from the public. |
| Items affecting comparability | Income and expenses that affect comparability over time in a significant way because they do not by nature or size recur with the same regularity as other items. |
The company's management separates out items affecting comparability in order to explain variations over time. Separation of the items makes it easier for readers of the financial reports to understand and evaluate what management is doing when certain items, subtotals and totals from the income statement are presented or used in other performance measures. |
| C/I ratio, % | Total expenses before credit losses as a percentage of the sum of operating income. |
The purpose is to provide an indication of the company's cost-effectiveness in relation to the sum of operating income. Also used in benchmark comparisons. |
| Net credit losses | The period's expected credit losses on items in the balance sheet as well as the period's established credit losses, net. |
The purpose is to track the size of and trend in credit risks in lending and to explicitly do so for the size of the forecast-based credit loss amount that reduces net income for the period. |
| Credit loss level, % in relation to average lending |
The period's credit losses, restated as a full-year value, net in relation to average net lending to the public for two measurement periods (opening and closing balance for the period). |
The purpose is to provide a measure of credit losses in relation to net lending to the public. The measure is critical to the analysis of credit risk between various periods and versus the competition. |
| Credit loss level, % in relation to average lending Digital Banking Services |
The period's credit losses in Digital banking services, restated as a full-year value, net in relation to average net lending to the public in Digital banking services for two measurement periods (opening and closing balance for the period). |
The purpose is to provide a measure of credit losses in relation to net lending to the public. The measure is critical to the analysis of credit risk between various periods and versus the competition. |
| Credit loss level, % in relation to processed pay-after-delivery (PAD) volume |
The period's credit losses for pay-after-delivery (PAD), restated as a full-year value, net in relation to total capitalized volume. |
The purpose is to provide a measure of credit losses in relation to processed pay-after-delivery (PAD) volume. The measure is critical to the analysis of credit risk between various periods and versus the competition. |
| Net income for the period adjusted for items affecting comparability |
Net income for the period after tax adjusted for items affecting comparability. |
Net income for the period is tracked to monitor the total return, after all expenses and after tax. Adjusted for items affecting comparability improves opportunities for evaluation and comparison over time. |
| Net commission income | The sum of commission income less commission expenses. |
Net commission income is tracked to monitor develop ment in the part of the core business not related to lending and deposits. Largely reflects the scope and profitability of lending commissions related to payment solutions and other payment services. |
| Net commission income adjusted for items affecting comparability |
The sum of commission income less commission expenses adjusted for items affecting comparability. |
Net commission income adjusted for items affecting comparability improves opportunities for evaluation and comparison over time. |
| Net interest income | The sum of interest income less interest expenses. | Net interest income is monitored to track the development of the core business related to lending and deposits. |
| Net interest income adjusted for items affecting comparability |
The sum of interest income less interest expenses adjusted for items affecting comparability. |
Net interest income adjusted for items affecting comparability improves opportunities for evaluation and comparison over time. |
| Operating profit | The sum of operating income less administrative expenses, depreciation, amortization and impairment of tangible and intangible assets, other operating expenses and credit losses, net. |
Operating profit is monitored to track the profitability of the total business, taking into account credit losses and all other expenses except tax. |
| Operating profit adjusted for items affecting comparability |
The sum of operating income less administrative expenses, depreciation, amortization and impairment, other operating expenses and credit losses adjusted for items affecting comparability. |
Operating profit adjusted for items affecting comparability improves opportunities for evaluation and comparison over time. |
ALTERNATIVE PERFORMANCE MEASURES, CONT.
| Performance measure | Definition | Motivation |
|---|---|---|
| Operating profit less depreciation, amortization and impairment of intangible and tangible assets |
The sum of operating profit less depreciation, amortization and impairment of tangible and intangible assets. |
The purpose is to evaluate operating activities. |
| Total expenses before credit losses | The sum of the period's operating expenses, which for the company represents the sum of administrative expenses, depreciation, amortization and impairment of tangible and intangible assets, and other expenses. |
The purpose is to monitor the size of central expenses that are not directly related to lending and commissions. |
| Total operating income | The sum of net interest income, net commission income, net gains and losses on financial transactions, and other operating income. |
Total operating income is monitored to track the development of the core business before employee benefits, depreciation and amortization, credit losses and other central expenses. The measure depends primarily on the overall trend in net interest income and net commission income. |
| Total operating income adjusted for items affecting comparability (accrual of merchant commissions) |
The sum of net interest income, net commission income, net gains and losses on financial transactions, and other operating income adjusted for items affecting comparability. |
Total operating income adjusted for items affecting comparability provides improved opportunities for evaluation and comparison over time. |
| Total operating income margin, % | The sum of operating income restated as a full-year value, in relation to average net lending to the public for two measurement periods (opening and closing balance for the period). |
The measure is used to analyze value creation and profitability in relation to net lending to the public. |
| Net lending to the public | Loans receivable less provision for expected credit losses. |
Net lending to the public is a central driver of the sum of operating income. |
OPERATIONAL PERFORMANCE MEASURES
| Performance measure | Definition | Motivation |
|---|---|---|
| The number of connected merchants | The number of brands that use Qliro as a payment provider. |
The number of connected merchants is a central measure in the analysis of the growth forecast for pay-after-delivery volume. |
| The number of average employees | Full-time services excluding contracted consultants. | The measure indicates how well one of the Group's key processes, HR recruitment and development, develops over time. |
| Pay after delivery, volume | Total volume of Qliro's payment products (invoice, BNPL or part payment), including VAT. |
Pay-after-delivery volume is a central driver of the sum of operating income. It is used as a complement to net lending to the public to capture the high turnover of the loan book for the segment of payment solutions. |
| Pay after delivery, transactions | The number of transactions with Qliro's payment products (invoice, BNPL or part payment), including VAT. |
Pay-after-delivery transactions is a central driver of the sum of operating income. It is used as a complement to net lending to the public to capture the high turnover of the loan book for the segment of payment solutions. |
OTHER PERFORMANCE MEASURES
| Performance measure | Definition | Motivation |
|---|---|---|
| Common Equity Tier 1 capital ratio, % | Regulation (EU) No. 575/2013. The institution's Tier 1 capital level expressed as a percentage of the risk exposure amount. |
Regulatory requirement. A regulatory floor applies to total the Common Equity Tier 1 capital ratio to ensure that the institution has sufficient capital. |
| Liquidity Coverage Ratio (LCR) % | Regulation (EU) No. 575/2013 and Regulation (EU) No. 2015/61. The Liquidity Coverage Ratio is the high-quality liquid assets that the institution holds divided by net liquidity outflows during a 30 calendar day stress period. |
Regulatory requirement. Legislators require the institution to hold high-quality liquid assets to cover net liquidity outflows during a 30 calendar day stress period to ensure that the institution has sufficient capital. |
| Total capital ratio, % | Regulation (EU) No. 575/2013. The total capital ratio is the institution's own funds expressed as a percentage of the total risk amount. |
Regulatory requirement. A regulatory floor applies to total capital ratio to ensure that the institution has sufficient capital. |
RECONCILIATION TABLES
for derivation of alternative key figures
| SEK million (unless otherwise stated) | 2020 Oct – Dec |
2019 Oct – Dec |
2020 Jan – Dec |
2019 Jan – Dec |
|---|---|---|---|---|
| Business volume Pay-after-delivery volume |
2,061 | 1,633 | 6,221 | 5,325 |
| Return on equity, % | ||||
| Total equity, opening balance | 601 | 512 | 528 | 413 |
| Total equity, closing balance | 588 | 528 | 588 | 528 |
| Average equity (OB+CB)/2 | 594 | 520 | 558 | 471 |
| Profit/loss for the period | -15.5 | -26.8 | -67.0 | -23.8 |
| Average profit/loss for the period 12 month | -62.1 | -107.4 | -67.0 | -23.8 |
| Return on equity, % | -10.5% | -20.7% | -12.0% | -5.1% |
| Items affecting comparability | ||||
| Accrual merchant commissions | – | – | 8.4 | – |
| Impairment of intangible assets | – | – | 15.6 | – |
| Items affecting comparability | – | – | 24.0 | – |
| C/I ratio, % | ||||
| Total expenses before credit losses | -90.7 | -89.9 | -358.3 | -301.8 |
| Total operating income | 99.8 | 87.5 | 379.7 | 345.2 |
| C/I ratio, % | 90.9% | 102.8% | 94,4% | 87.4% |
| Credit loss level, % | ||||
| Lending to the public, opening balance | 2,201 | 1,815 | 2,070 | 1,493 |
| Lending to the public, closing balance | 2,460 | 2,070 | 2,460 | 2,070 |
| Average lending to the public (OB+CB)/2 | 2,331 | 1,942 | 2,265 | 1,782 |
| Net credit losses | -26.3 | -31.8 | -102.5 | -73.5 |
| Average net credit losses 12 month | -105.0 | -127.1 | -102.5 | -73.5 |
| Credit loss level, % | 4.5% | 6.5% | 4.5% | 4.1% |
| Credit loss level Digital banking services, % | ||||
| Lending to the public, Digital banking services, opening balance |
895 | 653 | 727 | 317 |
| Lending to the public, Digital banking services, closing balance | 937 | 727 | 937 | 727 |
| Average lending to the public Digital banking services (OB+CB)/2 | 916 | 690 | 832 | 522 |
| Net credit losses | -5.9 | -6.4 | -22.2 | -16.4 |
| Average net credit losses Digital banking services 12 month | -23.7 | -25.7 | -22.2 | -16.4 |
| Credit loss level Digital banking services, % | 2.6% | 3.7% | 2.7% | 3.1% |
| Credit loss level, % in relation to pay-after-delivery (PAD) volume |
||||
| Net credit losses, PAD | -20.3 | -25.4 | -80.3 | -57.1 |
| Pay-after-delivery (PAD) volume | 2,061 | 1,633 | 6,221 | 5,325 |
| Credit loss level, % in relation to pay-after-delivery | ||||
| (PAD) volume | 1.0% | 1.6% | 1.3% | 1.1% |
| Profit/loss for the period adjusted for Items affecting comparability |
||||
| Profit/loss for the period | -15.5 | -26.8 | -67.0 | -23.8 |
| Items adjusted for items affecting comparbility | – | – | 24.0 | – |
| Tax effect on items affecting comparability | – | – | –5.1 | – |
| Profit/loss for the period adjusted for items affecting | ||||
| comparability | -15.5 | -26.8 | -48.1 | -23.8 |
RECONCILIATION TABLES cont.
| SEK million (unless utherwise stated) | 2020 Oct – Dec |
2019 Oct – Dec |
2020 Jan – Dec |
2019 Jan – Dec |
|---|---|---|---|---|
| Net commission adjusted for items affecting comparability | ||||
| Commission income | 42.1 | 39.3 | 171.4 | 176.0 |
| Commission expenses | -1.0 | -1.1 | -4.0 | -3.9 |
| Net commission income | 41.1 | 38.2 | 167.5 | 172.1 |
| Items affecting comparability (accrual commission) | – | – | 5.0 | – |
| Net commission adjusted for items affecting comparability | 41.1 | 38.2 | 172.5 | 172.1 |
| Net interest income adjusted for items affecting comparability |
||||
| Net interest income | 56.2 | 48.3 | 205.0 | 170.2 |
| Items affecting comparability (accrual commission) | – | – | 3.4 | – |
| Net interest income adjusted for items affecting comparability |
56.2 | 48.3 | 308.4 | 170.2 |
| Operating profit/loss less depreciation/amortization of tangible and intangible assets |
||||
| Operating profit/loss | -17.2 | -34.2 | -81.1 | -30.0 |
| Depreciation/amortization of tangible and intangible assets | 21.7 | 19.9 | 101.4 | 63.2 |
| Operating profit/loss excl. depreciation/amortization of tangible and intangible assets |
4.5 | -14.3 | 20.3 | 33.1 |
| Operating profit/loss adjusted for items affecting comparability |
||||
| Operating profit/loss | -17.2 | -34.2 | -81.1 | -30.0 |
| Items affecting comparability | – | – | 24.0 | – |
| Operating profit/loss adjusted for items affecting comparability |
-17.2 | -34.2 | -57.1 | -30.0 |
| Total operating income | 99.8 | 87.5 | 379.7 | 345.2 |
| of which Payment Solutions | 83.4 | 75.6 | 318.8 | 309.9 |
| of which Digital banking services | 16.5 | 11.9 | 61.0 | 35.3 |
| Total operating income adjusted for items affecting comparability |
||||
| Total operating income | 99.8 | 87.5 | 379.7 | 345.2 |
| Items affecting comparability (accrual commission) | – | – | 8.4 | – |
| Total operating income adjusted for items affecting comparabilty |
99.8 | 87.5 | 388.1 | 345.2 |
| Total operating income margin, % | ||||
| Lending to the public, opening balance | 2,201 | 1,815 | 2,070 | 1,493 |
| Lending to the public, closing balance | 2,460 | 2,070 | 2,460 | 2,070 |
| Average lending to the public (OB+CB)/2 | 2,331 | 1,942 | 2,265 | 1,782 |
| Total operating income | 99.8 | 87.5 | 379.7 | 345.2 |
| Average profit/loss for the period 12 month | 399.3 | 349.9 | 379.7 | 345.2 |
| Total operating income margin, % | 17.1% | 18.0% | 16.8% | 19.4% |
| Lending to the public | 2,460 | 2,070 | 2,460 | 2,070 |
| of which Payment Solution | 1,524 | 1,343 | 1,524 | 1,343 |
| of which Digital banking services | 937 | 727 | 937 | 727 |
The Board's assurance
The Board of Directors and the CEO give their assurance that the interim report provides a fair summary of the operations, position, and earnings of Qliro AB and describes the material risks and uncertainties faced by the company and it's subsidiaries.
This report has not been reviewed by the Company's auditors.
Stockholm, February 16, 2021
Lennart Jacobsen Chairman of the Board Alexander Antas, Board member
Robert Burén Board member
Monica Caneman Board member
Lennart Francke Board member
Helena Nelson Board member
Carolina Brandtman CEO
This is information that Qliro AB (Publ) is obliged to make public pursant to EU Market Abuse Regulation. The information was submitted for publication, through the contact person set above, at 07.30 a.m CET on February 16th 2021 .
Webcast/Phone conference
Media, analysts and investors are invited to a conference call on the 16th of February at 10 am when CEO Carolina Brandtman and CFO Robert Stambro will present the results.
After the presentation there will be a Q&A session:
Telephone:
Sweden: +46 8 505 583 59 United Kingdom: +44 333 300 92 72 United States: +1 833 249 84 05
Link to the webcast: tv.streamfabriken.com/qliro-q4-2020
You can also follow the presentation on: qliro.com/en/investor-relations/presentations
FINANCIAL CALENDAR
| 16 April 2021 | Year-end report 2020 published |
|---|---|
| 11 May 2021, at 7.30 am | Interim report January-March 2021 |
| 19 May | Annual General Meeting |
| 20 July 2021, at 7.30 am | Interim report Janunary-June 2021 |
| 26 October 2021, at 7.30 am | Interim report January-September 2021 |
For more information please contact:
Andreas Frid, Head of Investor Relations. Phone: +46 705 29 08 00 or [email protected]
The financial reports are also published on qliro.com/en/investor-relations
Qliro AB Registered Office: Stockholm Organizational number: 556962-2441 Postal address: Box 195 25, 104 32 Stockholm Visiting address: Sveavägen 151, 113 46 Stockholm