Hello everybody, I'm Halvor Lande, CEO of Aprila Bank. I'm Kjetil Barli, CFO of Aprila Bank. Welcome to Aprila Bank's Q4 presentation. We will present some forward-looking statements today. They are based on what we have seen so far and what we are aware of as of today. Based on that information, we are still very bullish about our business going forward. I'll start by giving the highlight of the quarter. Kjetil here will go through the financials in more detail, and I'll end with presenting our priorities for 2023 and also our guiding for 2023. If you have any questions during the presentation, please send them to the email address on the screen, ir@aprila.no, and we'll address them in the Q&A session at the end. As usual, a quick recap of Aprila Bank. We're a digital bank providing credit to a large and underserved market of small and medium-sized businesses. What makes us distinctive is aggressive investments in automation to continuously drive down cost to serve and increase scalability of our business model. Secondly, ever-improving machine learning algorithms that allows us to predict increasingly more accurately the risk of individual businesses so we can offer loans in real-time. Over the last few months, we even started dispersing loans in real-time. We're currently automatically dispersing 5% of the loans that are being approved and aim to increase this going forward. This is of course only for the customer with the lowest risk, both from an AML perspective and credit perspective. As of the end of the year, we had 6,171 business customers. Our total income run rate was NOK 128 million. Historically, we have reported gross income run rate. We are changing to total income because it's a more important number. Total income is what we actually live off. It's gross income minus direct variable costs, such as interest payments to our deposit customers and commissions to our partners. Our gross income run rate right now, by the way, is around NOK 160 million. Our cost/income for 2022, last 12 months, is 72%. Historically here, we also used a different metric, gross margin before loan losses. Now that our fixed costs are less than 60% of our income, we believe that it's more relevant to use cost/income. This is also what other banks are using. The cost in this ratio includes all costs such as salaries, marketing, vendors, and even depreciations. In 2022, our total cost was NOK 69 million. Our total income was NOK 96 million, and 72% is just the ratio between those two numbers. Last but not least, according to our customers, so far, we have contributed to creating or preserving more than 3,000 jobs among our 6,000 business customers. There is a lot of talk about the challenging business environment both in Norway and globally right now. We also see that among our customers, they were able to grow their average revenues by 3% from Q4 2021 to Q4 2022. 3% is actually less than the inflation for the same period, which was 6%. There is a small contraction. However, the good news is that the our customers, these small businesses, are incredibly adaptable. They're managing to control their costs, and they've actually succeeded in improving their margins, from an average 6% to an average 7% in this challenging business environment. They're doing still well. The two industries that have not been able to improve their margins is construction and IT and communication. Construction still have okay margin and are still growing. ICT, IT and communication is the one that's struggling the most with slight negative margins and slight negative growth. They have been able to significantly improve their capitalization in the period. All in all, due to the adaptability and robustness of our business customers, we don't expect a large wave of bankruptcies going forward. Our operating profit for Q4 was negative NOK 1.4 million, and this was primarily due to the fact that we spent almost NOK 5 million on marketing in general and brand building in particular. The reason we spent so much on brand building was that we found out that only 5% of small businesses had heard about Aprila Bank. Unlike personal customers, business customers, many business customers are skeptical about entering into a customer relationship with a bank that they have never heard about. We are very happy with the result from this marketing push. We have the record of 525 new Credit Line customers onboarded in the quarter, versus our previous record of 489. Our gross lending grew 13% in the quarter to NOK 673 million, and our total income grew 18% in the quarter to approximately NOK 30 million. We have also completed the capital raise with Visma and our two largest shareholders, meaning that we are well capitalized for future strong growth. As I mentioned, we spent NOK 4.8 million on marketing in Q4. This, of the 525 new customers, 371 of them were through our own channels, aprila.no. Of those 371, 333 we believe came as a direct result of our marketing activities. We estimate the customer lifetime value of these 333 customers to NOK 12.9 million, meaning that marketing generated over NOK 8 million in net value and had the return on marketing investment of 168% in the quarter. We believe that the marketing money were well spent. Our total income grew by 81% over the last 12 months. Spot factoring, or invoice sales has been a run-off product ever since Visma gave the original announcement that they were going to do it themselves. We are currently working closely together with Visma to decide if we're going to start reinvesting in spot factoring or if we're going to focus on another working capital product for distribution within ERP systems. We'll make the final decision on this during Q2. So far, our current top priority product is still Credit Line, and Credit Line is still growing at more than 100% on an annual basis. The growth in Credit Line is now primarily driven by customer growth, which sees no signs of slowing down. Our costs in Q4 did grow faster than income in Q4, but as I said, this is because of the big marketing push that we did in Q4, and that is continuing into Q1. As I mentioned earlier, this marketing spend created NOK 13 million in new value, so I'm comfortable with our spend development. That being said, cost/income will go dramatically down from current levels. Cost income measured on a quarterly basis, as we saw on the last page, is volatile, because Q1 and Q4 are typically big marketing quarters for us, and in Q2, we only pay two months of salary. If we look at cost income on a trailing 12-month basis, this will continuously decline. We expect the cost income for 2023 to be around 60%, meaning that this graph will continue and show around 60% cost income trailing at the Q4 presentation for 2023. We realized NOK 600,000 in losses in Q4, and we increased our loan loss provisions with NOK 9.1 million, so we have NOK 9.6 million in booked losses, which corresponds to 27% of gross revenues in the quarter. This brings our net interest margin after losses back up to 13.1% in Q4 and 13.3% in 2022 overall. The 15% net interest margin after losses is a stretch goal, I agree. Even if we're only able to keep delivering 13%, we have a marginal return on equity contribution of 65%, which is incredible capital economics. This page nicely illustrates our strategy and business model. We're spending approximately 12% of our total income on marketing, including brand building. Since our total income then grows, this means that we have accelerating growth in total income, at least in nominal terms. We are investing continuously and aggressively in automation and self-service, driving down variable costs. The combination of rapidly growing income and declining variable costs means that our cost income is falling continuously, as I explained. The fact that our machine learning models are continuously improving and getting more and more data to learn from means that our losses as share of income is also declining continuously. Of course, there will be quarter-to-quarter variations, but they will be falling on an annual basis. For 2022, our losses were 37% of total income, not to be confused with 31% of gross income, as I showed on the previous page. The combination of nominally accelerating growth, continuously improving cost and loss ratio means that our bottom line will also continuously accelerate on a nominal basis. Just to illustrate where this is going, in two years' time, 2025, I expect our total income to be well over 300%. I expect our cost/income ratio to be around 30%, same with the losses to income ratio, giving a net margin of around 40% and net profit of well over NOK 120 million. How are you doing on capitalization, Kjetil Barli? Well, at the end of 2022, our CET1 ratio was 36.3%, which is well above the current capital requirement of 19.5%. We expect the Norwegian FSA to determine a revised Pillar 2 buffer for Aprila during 2023. As mentioned, when we presented the financial results for the 3rd quarter, we have been informed by the FSA, through their final report from the on-site inspection held in 2022, that they will get back to us, with a letter on retail classification. We have not received this letter yet, and we have decided to apply retail classification at year-end 2022. Without retail classification, our capital ratio would have been six percentage points, lower. Now, let's move on to the key figures for the 3rd quarter. At the end of the quarter, we had 6,190 unique customers and the gross lending balance of NOK 673 million. In the upper right chart, we see that total income has amounted to NOK 29.7 million in the quarter, which implies the year-over-year growth of more than 80%, 81%, as Halvor mentioned. cost/income in the lower left chart came in at 72%. cost/income was high in Q4 and will be high in Q1 due to the high marketing spend. As Halvor mentioned, we spent NOK 4.8 million on marketing in Q4 and plan to spend even more in Q1. Next chart, loan losses came in as expected at 6.1% of gross loans. Finally, profit after tax came in at NOK -1.4 million, which was in line with our expectations. In 2022, we added more than 1,400 new Credit Line customers, ending the year with 3,660 accounts. 86% of the customer accounts had a drawdown at the end of the quarter. The average balance per account reached NOK 167,000, and the average drawdown reached NOK 195,000. spot factoring, we stopped onboarding all new spot factoring accounts from Visma one year ago in February last year. The churn has now resulted in a negative growth in new accounts over the past year. We purchased invoices with a total nominal value of NOK 157 million in the quarter compared to NOK 139 million in the third quarter. Spot factoring accounted for 16% of gross income in the quarter. Although volumes are declining on this product, the product profitability is very strong with a gross margin close to 50%. We have a close and ongoing dialogue with Visma on the future of this product, and we'll decide what to do by June this year. Loan losses. We booked loan losses over NOK 9.6 million in the quarter, which NOK 9.1 million were loan loss provisions and NOK 0.6 million were net realized losses. In the upper right chart, we see a seemingly negative development in days past due. However, the 1-30-day bucket, which is not included in the chart, has improved. If you look at the performing part of the loan book, it has been very stable at 88% over the past year, and 12% done in DPD 1+. Loan losses measured in percent of gross income were 27% in the quarter, and at the end of the quarter, the ratio of loan loss allowances to gross loans was 9%. I think that was the most important figures for the 4th quarter, Halvor, I'll yield the stage back to you now. Thank you. We have not yet seen any increase in competition in our segment, but we are pretty sure it will come sooner or later, especially once we start to deliver solid and accelerating profits. Therefore, our top priority for the first half of 2023 is to widen our competitive advantage with full focus on automation, streamlining, and simplification, and continued improvements in our machine learning models. This will also improve our scalability so that we're ready to take on more growth while keeping costs under control. Even given the two priorities above, I'm still confident that we'll deliver a decent profit for 2023 and be in position for accelerating profit margins going forward. In terms of our guiding, we expect our total income run rate to be over NOK 170 million at the end of the year and above NOK 135 million at the end of this quarter. As I mentioned earlier, we expect our cost/income for 2023 to be around 60% and falling down to 70% trailing last twelve months by the end of this quarter. And we expect to have around 5,000 Credit Line customers, which Credit Line is still our top priority product. 5,000 by the end of the year and around 4,000 by the end of this quarter. Again, we're ready to take your questions. Send them on the email address shown on the screen. Let's move over to Pakistan for the Q&A. Yes. Welcome. Thank you. Thank you. Halvor, DNB has discontinued the distribution agreement, where DNB distributes a Aprila Credit Line to DNB customers. How important was this agreement for the growth in Aprila? I will start by saying we're very happy about the partnership that we have with DNB. We believe that it was extremely beneficial from a brand building and reputation, point of view. Mm. To your question, in terms of function, it was quite marginal. About 2% of our lending balance is DNB and customers that we got through the DNB collaboration. You will continue to serve those customers? Yes. Yeah. Absolutely. DNB says the intention was to learn. They're very clear about that. Now that they have learned enough, is it likely that they can become a competitor over time? When we entered into the agreement, both DNB conscious about DNB not getting the opportunity to learn anything about our technology or machine learning models, anything like that. We obviously kept that at the forefront, the partnership. I'm not concerned that they'll copy our technology and start offering lots of loans to small businesses. I think the main learning for DNB was that if you offer loan to really small businesses, you actually have to do pretty intensive marketing in order to sell it, and it's not according to DNB policy to market loans. I'm not too concerned about competition from DNB going forward. We have a question here from Herman Saul, equity research at Pareto Securities. You probably Kjetil. Could you please shed some light on your staffing plans going forward and repeat the number of employees at Q3 end and Q4 end? Yes. And- Of course. End of Q3 last year, we were at 26 FTEs. End of Q4 last year, we were at 29 FTEs, so we added three FTEs in the quarter. Any newly hired so far this year? That was the next question. During 2023, we expect to add seven new FTEs, we'll end 2023 with 36 FTEs. Mm. Four of these new FTEs join this quarter. Mm. In Q1, we add, four new FTEs, so we'll be at 33, at the end of the quarter. Then we'll add three more, over the next three quarters. These are, developers? Data science- Yes, it's product and tech is the department where most of these new headcounts or employees have started. We will also add one resource on credit, one resource on decision science. We also got two FTEs from Visma Finance, one head of legal... Mm and business developer in the product and tech team. Product and technology management. Mm. That's good. Very, very good addition. The next question is, how should we think about the necessary marketing spend to maintain your growth rate in 2023, given that you can? As I mentioned in the presentation, our growth will be relatively stable here, probably declining a little bit of our total income. Our marketing spend will be a relatively stable share of our. Mm. Total income, but in relative terms, the total income slowly declining. Mm. All in all, that means that we're going to spend a little bit more probably on marketing in 2023, lower as total income, which should lead to increased or accelerated nominal growth of new paid customers. I think it's fair to add, Halvor that, the marketing spend in Q4 and Q1 is, mainly on brand building, so longer- term, not necessarily all attributable directly to number of customers onboarded in Q4. It will have an effect going forward and also affect, money spent on conversions, on digital marketing, very positively, as we go forward. This is a longer investment. It will lead to lower customer acquisition cost in the long- term. Yeah. Thank you. Also worth mentioning that, it's actually a very good environment to do marketing right now because, we get very good prices. Yes. A lot of sponsoring on NRK for a very good price. Yes. How do you see product yields going forward? How are you adjusting to the increasing competition for deposit funding? What were you paying on average for deposits at Q4 end? Okay, I can answer that. How are we adjusting? We have increased our yield, in, you know, proportionately according to the interest rate hikes that we have seen in 2022. We expect the yield on our net lending to increase around three percentage points during 2023, to sort of catch up on the past interest rates, rate increases. That's on that term. In terms of our funding cost, that was the question, the funding cost in Q4? Yeah. What were you paying on average for deposits at Q4 end? Yeah. We're paying 3.08% on deposits now to all customers. Mm. We have the same deposit rate for all customers. 3.08%. Mm ...%. The last question was, if we have done something, for the. How are you adjusting to the increase in competition for deposit funding? That's just by raising the rate, right? Yeah. We have. Interesting. We haven't, to be fair, we haven't done too much there. We're currently offering, I think the second-best interest rates on accounts that you can use freely. That's how we did. We're fortunate enough to have quite high yielding lending. As of now, we just keep our interest rate at a competitive level. Mm. We're- Saving accounts. We're basically a big competition for deposits. Well, we try not to be at the price leader. Sometimes we have to be. With our rather high lending rates, it does not lead to an immediate, margin squeeze, just increasing the deposit rate. No, no. We have, you know, we have increased our price list, now. It's going quite well, actually, I would say. We're quite confident... Mm that we can catch up, with the interest level, increases that have been, that we have seen through 2022, Mm ... Then probably will see during the first half of 2023. One more question from Pareto Equity Research from Vegard Toverud. Costs seem to be guided at NOK 100 million by year-end 2023. What drives the increase from the current level of NOK 85 million? Well, marketing is one. We also have added STDs, seven new STDs during 2023. We also have adjusted the salaries somewhat for existing employees. Mm. That are the three main drivers of the cost in 2023. next question from Eric Jacobson. who do you consider your largest competitors? yeah, there's more questions, but start with that one. We consider our largest competitor non-consumption because most small businesses don't use loans or apply for loans because they are not aware that it's possible to get loans. Mm ... as a small business, and therefore they are instead living hand to mouth. That's exactly one of the big reasons we're spending so much on brand building and marketing to basically educate the market that now it is possible. Mm ... in most cases is actually a very good idea to increase your working capital- Mm because it allows you to take opportunities, handle liquidity issues, and basically grow faster and be more competitive. His next question is how are the increased rates affecting the net interest margin going forward? I guess you already answered that, Kjetil. That that's been accounted for. How are your customers handling higher interest rates? The good news on that is that even though we have high interest rates, our typical loans are a much smaller share of the income of a small business customer than the loans of large companies relative to their revenues or the loans of consumers relative to their income. Mm-hmm. It's not a major. That's not a major contribution. Mm. On average. On average. Mm. Yeah. Eric had a final question. Any plans for issuing new equity again? We have no plans at the moment. Whether we will raise additional capital depends on our growth pace, of course, as it does for all banks. We currently have a very good headroom for further growth with a 36.3% in CET1 ratio versus the current regulatory requirement of 19.5%. I'll take some of my questions while I'm waiting for more questions to come in. Halvor, Visma invested in Aprila in December. How is this cooperation proceeding? It's going, very well. We're still in love. Thank you. As I mentioned in the presentation, working very closely together with customer research service interviews to really find out what type of working capital product would be most attractive for distribution and use inside online accounting systems. That's still ongoing. We're expecting to decide on that during the second quarter. Very good. I'll add a couple of questions that I know that Vegard, Toverud, and Pareto will send us later. If they haven't yet. Kjetil, what's the status on retail classification of the portfolio? The latest. Latest status on the retail classification. Well, as I mentioned in the presentation, we used retail classification at the year end 2022. We will consider to change in 2023. At the moment, we have decided to continue to use it. The second question, you have previously mentioned an NPL portfolio, a non-performing loan portfolio that you were considering divesting. Yes. What's the status on that? It hasn't been sold yet. It has taken longer than anticipated. We still expect to sell a portfolio of non-performing loans. I do hope and think that we will close the transaction during this quarter. Halvor, how are the application volumes looking so far this year? I'm glad you're asking, Fiso. Thank you. Oh, they are basically all-time high. Perfect. Looking very good coming into 2023. With all that marketing spend and that, very good, tailwind. It's paying off. Yeah. ... it's looking good. Mm. Okay. We haven't received any more questions now. Should we call it a day, or should I have a few more questions? No, let's call it a day. It's already 10:50 A.M. Okay. First lunch. Thank you very much. Thank you.