Good morning, everyone, and welcome to the First Quarter Results Presentation of Morrow Bank. With me today is Eirik Holtedahl, the CFO, and my name is Øyvind Oanes, the CEO of the bank. As usual, we will be going through a short presentation this morning, and then we will open up for questions at the end. You can raise your hand to pose a question, or you can actually also write us an email to ir@morrowbank.com. We will do this presentation in English, but if you wanna ask your question in Norwegian, that's also obviously perfectly fine.
Moving on to the first page of the presentation, we want to just to recap a bit on the bank for those of you who are new to us, as you can probably notice as well, we're a bit new as well. We've gone from Komplett Bank to Morrow Bank. We're still a diversified Nordic consumer finance company. As you would see here, we have grown our balance now to about NOK 11 billion, more than a third or about a third now of our total lending is now in Finland. If I just look at the loan product itself is around NOK 4 billion of lending in Finland. We've grown quite nicely in Finland, and that diversifies our portfolio obviously quite nicely.
As I said, we've gone through a renaming and a rebranding of the bank in the last couple of months. We have gone from Komplett Bank to Morrow Bank. We have also changed the ticker for those of you obviously who's interested in that. We are now MOBA. You'll find us on Euronext Oslo Børs under that ticker going forward. A little bit maybe on the background for why we chose now to change the name. Although we have been very happy obviously with the partnership with Komplett Group, that partnership actually meant less and less to the overall performance of the bank. As I said, we've had a great relationship with Komplett Group over the years.
Although the products for which we have cooperated, the expectations were not necessarily met in terms of profitability and volume around those products. We agreed actually jointly with Komplett Group to terminate those products. We've gone out of the so-called POS product as of end of April. It was also then obviously natural to go out of the brand, the brand cooperation with Komplett Group. Secondly, maybe even as importantly or maybe even more importantly, we have been, as all of you know, we've been on a bit of a journey to reposition the old bank into what will now become the new bank.
We are now comfortable that we've come so far on that journey that it was also natural for us to put a new name on this new bank that we're actually, de facto building. Morrow Bank per se, Morrow, the Morrow name comes from tomorrow. We believe that obviously we're creating a bank for tomorrow, for you as shareholders, for us and all our employees. I think what Morrow also represents here is really what we, what we try and actually provide to the customers.
We provide solutions to make the day tomorrow a bit easier, whether you have an issue you wanna solve, a challenge you wanna solve, you have some dreams you want to fulfill, we can provide the right instruments on the financial side, liquidity side to meet those challenges or wishes. That is a bit sort of the context, the background for us now being called Morrow Bank. Very happy about that. We had a great launch of the new brand this week, and we'll actually bring all the 80 employees together this evening to celebrate. Moving on to the highlights for the quarter.
Let me first of all just say that we are very happy with what has become a very strong quarter for the bank and potentially the first quarter that really reflects the impact, everything that we've worked on over the last year and a half, outcome of that. If we start from the top and look at the gross balance, we talked a lot about growth over the past two quarters. We have seen good growth also in the first quarter of 2023 with a loan balance growth of 12%. If you adjust for FX, as I said, we have quite a lot of business in euros in Finland, obviously. Adjusting for that, we're still growing by about 7% in the quarter.
As importantly, maybe especially in today's environment around interest rates, going up generally in the market, we have managed to also adjust the interest rate that we charge on our loans to the customers quite nicely over the quarter. We talked about that as well previously. We continue to adjust our pricing to customers and therefore are very well able to protect the yield. We're seeing stable yields also in the first quarter of 2023. That results the growth and protecting the yield, so to speak, in a total income growth of more than 6% actually in the quarter, if we look at that versus the last quarter.
If you do a calculation of that year-over-year, we're actually seeing that we're growing our total income by 12% versus Q1 2023 to which we, you know, very happy about and we think is quite impressive in today's environment. Looking further down sort of the P&L, looking at cost. Cost has been a big topic for us as well. We did a lot throughout last year and continue to do a lot to streamline our organization and take out cost. What that has materialized into is that we've seen now the number of full-time employees gone down to below 80.
For those of you who followed us for a while, it's not so long ago since we were above 150 FTEs in the bank. Looking at year-over-year, we're actually down to 43% on FTEs. That has obviously helped us bring our cost-income ratio down. Cost-income ratio for the quarter was 35% versus 44%, adjusted for the extraordinary write-offs that we did in the fourth quarter. That is also moving absolutely in the right direction. Obviously then we should look at growth, and you look at the income growth that we've had, the cost reduction that we're now seeing materialize. We're also seeing that our ROE is moving in the right direction.
It was 8% for the quarter, which is the highest level we've seen since second quarter of 2021. All in all, that produced a pretty nice bottom line. Profit after tax came in at NOK 40 million for the quarter, which is something we are very happy about, obviously. Looking a bit sort of in the outlook, I can say that the good trend from first quarter is continuing now into both April and May. We've also in first quarter and coming into second quarter as well, you know, done some actions to create more room for us to grow. We raised NOK 100 million in equity back in February. We placed an additional NOK 100 million in Tier 2 now in early May.
Focus for us in 2023, and we'll talk more about that as we continue throughout the year, is the ongoing IT transformation. That is obviously a, you know, a huge initiative. Good news is that we are progressing very well. We've moved our first processes and products onto the new setup that we're building, which is a significantly simplified and more future-proofed, much more scalable platform than what we've had in the past. The cost out that it also brings through the efficiency that we're getting from the new platform, we'll see more towards the end of the year and into the next couple of years. All in all, a very good quarter, first quarter of 2023.
Moving on, taking maybe a little bit of the longer perspective. We have talked now for about a year and a half about our new strategy. We came into 2022 with a couple of KPIs, important KPIs that were not necessarily going in our favor. We had a balance sheet that was actually shrinking a bit. We had a fairly high cost-income ratio. We presented also a strategy we called repositioning for growth, where we actually said that we needed to make a huge effort both to bring costs down and also restart the growth engine.
I'm happy to report now, five quarters, I guess, into the execution of this strategy and the new plan that we are very well on our way to deliver on what we set out to deliver. We talked about the reorganization of the bank, and we talked about the right sizing of the organization, multiple times before. Very important as well is all the work that we've done to clean up our balance sheet. We came into sort of the period with the new strategy with an NPL ratio well above 20.
We are well below 3% now. We also made, as you would have remembered from the fourth quarter call, we also decided to write off some of the intangibles related to all IT investments. Balance sheet is very clean. We now also have continued good traction. It really sort of has saw a tipping point at the midpoint of last year where we started to grow. We saw 14% growth both in Q3 and Q4 last year. As I just said, we had a 12% growth in first quarter. The graph to the right side hand side of this page is really my favorite.
It really shows where we're coming from, where we're heading, and not just where we're heading, where we are at. We are at a place where growth is continuing. The costs are coming down. We reported a 35% cost-income ratio for the first quarter. Our target is to bring that further down towards 30 by the end of the year. Last but not least, as I already alluded to, IT is the big focus. We'll probably bring in some more detail around our progress on the IT transformation in one of the next calls. Again, to summarize on this page, we had a bit of a challenging situation about a year and a half ago. We worked very diligently.
The team has done a fantastic job to turn both growth around and cost around, and we're now tracking both on both KPIs in a very good direction. Before handing over to Eirik to take you through the financials in a bit more detail, let me just recap a bit on how we look at the market on which we operate. Talked a little bit about Finland earlier. Finland is really the market where we are seeing the most growth today, where we're also focusing and deploying most of our capital today simply because the profitability there is the best, both in terms of the yields, the net yields we're seeing, as well as the capital requirements in Finland.
Taking a step back then, I think, you know, there's a lot happening in the macro environment as we all know. Again, I think we can say that the Nordic markets are continuing to prove quite resilient during times of the global macroeconomic uncertainty that we're experiencing. We actually see increased demand for our types of products in these times, and that continues into 2023. Finland, as I said, is where we have the highest focus. If you look at sort of the key indicators that are, I guess, most relevant to our type of industry, and that would be growth, obviously GDP growth, unemployment, maybe the most important one, and inflation.
We're, you know, at a bit of a challenging time, but if you take an outlook into just sort of the next six to 12 to 18 months, we see that unemployment remains stable across these markets. Inflation is predicted to come down and stabilize, and growth is to resume. Taking that into consideration, we remain positive, prudent, but positive to the markets on which we operate. With that, I think I would hand over to Eirik, who'll walk us through the financials.
Thank you, Øyvind. I will now dive a little bit deeper into the financials, as Øyvind has already given you a little flavor of. First of all, driving our bank is obviously the loan balance, and we're happy to report that this quarter with a NOK 10.8 billion gross loan balance, that was an all-time high for the bank. We have experienced then a quarterly growth of 12%. Our loan balance in respect of loans is roughly equally divided among the three countries in which we're present. Now obviously, Finland is taking a large and larger share, and also the growth in the quarter reflects that. Norway was stable, as you can see, with just 1% increase. Finland increased with 22%, and Sweden by 7%.
Please do bear in mind that actually, the strengthening of the euro and the Swedish krona also contributed to this growth, when you measure it in Norwegian kroner. Nevertheless, there was a healthy underlying growth rate in all three, particularly in Finland and also in Sweden. The contributors to this growth have essentially been a benign market, which continues to be the case. Also we put a bit on that the efforts we've done in order to improve our processes, you know, and our throughputs, and those are now bearing fruit. For the remainder of the year, we're maintaining our target of roughly 12 billion NOK in gross loan balance at the end of the year, which means that we will not be growing as rapidly throughout the rest of the year as we have grown so far.
Jumping over to the yield picture, you can see that this is a reflection of the changing market conditions. If you start at the bottom, you will see that our deposit funding cost that we pay on client deposits is inching upwards. That is to reflect the overall market development where the rates are increasing. What we are doing to counteract that and defend our margins is that we are increasing the rates on the loan books. This is working particularly for credit cards, where we're both increasing the rates as well as that we're experiencing a shift in our client composition so that we now have a bit larger composition of revolvers, which also increase the rates.
As to the consumer loans, they are, we are also increasing the rate there, but there we're also working against the effect that older clients, which historically have had a higher yield, are now churning. Finally, there is still a bit of a present, a lag in the repricing of the loan book, and that is due to the notification requirements for the clients when increasing rates in Norway and Finland. Combining the loan balance growth and the yield development, you can see that the total income is also increasing. That is both a reflect of the interest income which in, which in the net, which increased by NOK 39 million last versus the fourth quarter, but which is also countered by an increasing deposit cost due to the higher rates.
We also had a positive gain on our placements in financial instruments, but not as large as in the fourth quarter of last year. When we take the lookout for the year, we're seeing that we're on the way to re-achieving our goal of roughly NOK 270 million in total income in the last quarter of the year. Jumping over to the cost picture, this is where it's most obvious that we have undertaken some measures which are now starting to bear fruit. The OpEx is now down at 35% for the quarter.
Last quarter, when we exclude the one-off items, such as the write-downs of one-off costs, well, the underlying cost-income ratio was 44%, and we're now experiencing the fruit of this down to 35%. This is a result of many factors, a reduction in staff, as Eirik discussed, but also the fact that we did write-downs now lead to lower depreciation costs. Also, we are trying to make our operations more efficient, and that is translating into lower general and admin cost. We expect that this trend will continue throughout the year.
We won't be reducing at the same speed, but we'll be maintaining our cost picture or reducing it slightly, despite that we're seeing an inflationary pressure both on wages as well as our the cost for our suppliers. Overall, we expect that to land the last quarter at €80 million. That's a little bit below this quarter in normal terms, the cost-income ratio should then be around 30%. Jumping over to the loan loss picture, we're now also happy to report that we're seeing a more of a normalizing level. The fourth quarter was impacted by quite strong growth, which requires us to take larger loan losses as required by IFRS accounting rules, also some write-ups.
As growth is now leveling off a little bit and we didn't have those one-offs, we're now seeing that we're at we had experienced a loan loss ratio of 3.9% in the last quarter. As you can see in the text here on the left, we also estimated that the underlying loan loss ratio in the fourth quarter was 4%. We do consider that we are now on a normalizing and stable level. For the rest of the year, we expect that this level to be in the 4%-4.5% stable level, and that is underpinned that we are not really experiencing any significant adverse behavior in our portfolio. The clients' delinquencies are coming in as we expect them to see, and we're not seeing any spike.
This is also driven by the quite resilient Nordic economies. As a final word, in terms of managing credit risk further, we are selling almost all of our delinquent loans on forward-flow contracts, and hence we're maintaining our non-performing loans at less than 3% of the loan book. Combining all these effects together, we're talking about higher balance, loan balance, stable yields, reduced operating expenses, and reduced loan losses. You can clearly see that that results in the profits. That's what we had this turnaround from the fourth quarter, which obviously was impacted by the one-offs. Also if you compare it to previous quarters in 2022, you can see that we're on a nice path.
We are investing in further scale because we believe that you need to have a certain size now in order to achieve efficient operations and to maximize the profitability, and we will continue to do so. This is also underpinned by that our return on equity is now going in the right direction. Finally, a word about our solidity and capital situation.
Our growth is obviously requiring capital because this is increasing the risk-weighted assets, and hence our capital ratio will also be impacted by that. To counteract that, we've successfully placed a NOK 100 million equity issue in the first quarter of this year. We also raised now in May a Tier 2 issue, a Tier 2 subordinate loan of additional NOK 100 million in order to optimize our capital structure. By that, we are solidifying the bank for further growth for the remainder of the year. With that, I leave the last words to Øyvind.
Thank you, Eirik. I think before we open up for questions, just to remind you can raise your hand on Teams or send us an email on ir@morrowbank.com. Let me just try and summarize what you heard from us this morning and first quarter, obviously. It's been a strong performance in the quarter across the KPIs. As we talked about, we're on a good way to meet the targets that we communicated for the rest of the year and also for the longer picture. We continue to grow. We continue to see costs come down. We have a clean balance sheet, and we're producing a strong bottom line of NOK 40 million for the quarter.
That trend is something we also see now continue into the second quarter. April's been good. The start of May is continuing to be good. We are actually quite positive that we'll be back reporting good numbers to you in the quarters to come as well. Last but not least, I started, I guess with that we've changed our name, our brand to Morrow Bank, that marks also that we are essentially now a new bank. We're very proud of our new brand, and we think that will also help us lift the perception of the bank going forward. With that, thank you, and we'll open up for questions.
We have one question. We got Vegard Toverud has raised his hand. You can now enable your microphone, Vegard, and ask your question.
Thank you. I have actually two questions. You mentioned the lag on repricing in Norway and Finland. Is it possible to say what the yields would be now with full effect? Secondly, at the revolving or interest-bearing part of the credit card loans-
Mm.
You mentioned that that has increased in the quarter. Is it possible to say what level of interest-bearing loans you have to total lending on credit cards in this quarter, in the last quarter, so in Q4, and in the first quarter of last year?
To start with your first question, regarding the repricing of the book for Norway and Finland. I haven't done the fine-tuned calculations here, but obviously it is some basis points that will be lagging. It's less than 1 percentage point, but if I may shoot from the hip, so maybe some 20, 30 basis points due to this effect of being behind for the quarter when you calculate the average rate for the quarter. I haven't done the actual calculation, so I need to have a bit of a caveat here on these numbers, but that should give you a ballpark picture.
Yeah.
As to the revolving rates on our credit cards, we are seeing a good growth in Finland, and the Finnish credit card clients tend to have a higher propensity to revolve. Hence, we are seeing that now that more than 50% of our clients are revolving, and hence the revolving portion of the loan balance is in excess of 70%-80%. I don't have the particular breakdown between the two quarters as you mentioned, but we can look into that.
Yeah. Thank you. That'd be excellent. If you have the option to send them to me on email later on, that would be great. Thank you.
Thank you, Vegard.
We have a question from Daniel Rørvik. You can now enable your microphone and ask your question.
Thank you. Your loan growth was 12% quarter-over-quarter. Would you say it's because of the macroeconomic situation that people are spending more and has less savings and thus need your services more, or do you think it's the customers are switching from competitors towards you?
Thank you, Daniel, for that question. That's a good question. As we said, we saw a growth of around 12% in the quarter. If you take out the FX effect, the growth is around 7% in the quarter. We saw 14% quarterly growth of our balances in Q3 and Q4 last year. We've toned down the growth a little bit. Really what.
I know.
... what the growth-
No, I could use some money.
Just. There was some background noise there. Sorry. Just to continue on my answering of this. You know, the effects of everything we talked about also throughout last year around us being more efficient in throughput of an application, taking an application all the way down to a payout, I think that's still the key driver of us seeing growth. We are becoming more and more efficient in our so-called funnel and driving applications through volume.
On the other side, we do see also some growth in the market. Demand has gone up, as we talked about, in Finland. The growth in the first quarter stems predominantly from the Finnish market. We're seeing some growth in the Finnish market. Demand has been growing in the Finnish market, over the, you know, the many past quarters. I think we're simply taking a larger share of the market in Finland.
Thank you so much. My apologies for the noise.
You're having fun this morning. That's good.
Okay. Thank you.
Any further questions from anyone? You can raise your hand on Teams or send us an email. No emails, Henning?
No emails.
Okay.
Ask in Norwegian if you so prefer.
Absolutely. Okay. Well, if there are no further questions, let me just say, thank you very much for calling in this morning. Have a nice day, and we'll talk soon. Thank you.