Bluestep Bank AB (publ) Year-End Report 2020

The year in brief

Performance and financial position

• Lending to the public amounted to SEK 16 116m (SEK 16 150m). Growth was reduced by both the sale of the personal loan portfolio and weakening of the Norwegian krone (NOK). Adjusted for personal loans and currency effects, lending rose by 12%.
• New lending for the year increased by 7% to SEK 6 197m (SEK 5 805m). Adjusted for personal loans and currency effects, the increase was 22%.
• Full year operating profit amounted to SEK 215m (SEK 275m). The decrease is attributable to one-off costs resulting from restructuring and streamlining of the Bank’s processes, as well as depreciation and write-offs of fixed assets. Profit was also affected by the strategic initiatives relating to mortgages in Finland and the new 60plusbanken brand, as well as the weaker NOK compared to the previous year. For the full year, net interest income was relatively unchanged and loan losses decreased.
• Net credit losses were positively affected by the sale of the personal loan portfolio and amounted to SEK 40m (SEK 60m) This corresponds to a credit loss level of 0.25% (0.37%), of which 0.17% (0.11%) is attributable to mortgages.
• The Common Equity Tier 1 (CET1) ratio was 19.7% (17.9%). Bluestep has a long-term target of a CET1 ratio of at least 16%.

Financing

• In April 2020, the Bank issued its first covered bonds in accordance with the Covered Bonds Issuance Act (2003:1223). A total volume of SEK 2 900m was issued during the year. The bonds were assigned a credit rating of Aa1 by Moody’s.
• Deposits from the public amounted to SEK 12 613m (SEK 11 421m).
• During the year, a RMBS transaction (Step 3) was repaid, along with outstanding credit facilities. The  outstanding amount for the RMBS transaction was SEK 787m at the beginning of the year.

Strategic development and key events

• In February, Bluestep decided to discontinue the personal loan business area and therefore stopped offering new personal loans in order to focus the Bank’s strategic direction entirely on mortgage products. In November, an agreement was signed concerning the sale of the personal loan portfolio.
• Bluestep has successfully established a new branch in Finland and launched its’ mortgage offerings.
• 60plusbanken was launched as a new brand in Sweden.
• Improvements to processes have been made, including the digital signing of mortgage documents, which simplifies the process for our customers and reduces both administration and the Bank’s climate footprint.
• Bluestep’s credit rating was upgraded to A3 with a stable outlook by Moody’s.

Covid-19 impact on financials

• Reduced global demand and the drop in oil prices affected NOK negatively. The weaker NOK translates to lower reported profits in SEK.
• The increased uncertainty brought on by the pandemic led to a decision to tighten the Bank’s underwriting criteria in the second quarter, resulting in reduced lending for the year. 
• Loan loss provisions were increased through a covid-19 overlay and more conservative assumptions in the provisioning model for Norwegian mortgages.
• The Bank also decided to increase its liquidity reserve, with associated additional funding cost. Liquidity was still slightly elevated at year-end. 
• The proposed dividend was withdrawn due to guidelines from the Swedish Financial Supervisory Authority resulting in a CET1 ratio substantially higher than the long-term target. 
• The above factors have increased the resilience of the Bank during the pandemic, but combined they also had a significant negative impact on return on equity.

The Year-End report 2020 can be downloaded from: https://www.bluestepbank.com/investor-relations/financial-reports/

For further information, please contact:

Johanna Clason, CFO
+46 701 48 33 85
Johanna.clason@bluestep.se

Bluestep Bank AB (publ) is publishing this information which is obliged to be publicly available pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above at 08:00 CET on 26 February 2021.