Responsible lending

Responsible lending activities are business critical and contribute to low loan losses for TF Bank and a well-functioning economy in general.

Growth in a controlled manner

TF Bank prioritises organic growth in a controlled manner. With the combination of well-developed credit granting processes and relatively low credit amounts, calculated risks are taken that can be quickly adjusted when the conditions on macro level change. It is inevitable that credit losses in absolute terms increase as the loan portfolio grows, but growth must never take place at the expense of higher risk. Thus, the ambition is for the Group’s lending growth to be higher than the credit loss growth. Our goal is also to reduce the loan loss ratio annually.

Customer protection

A customer in TF Bank must not have a prior record of late payments and must have flexibility in their finances, which we ensure through our “left-to-live-on” calculation. Our customers must also not have a too high level of indebtedness. Additionally, TF Bank’s credits are characterised by relatively low loan amounts and short repayment periods, which increases the probability that our customers will be able to repay their loans, even if their financial circumstances change. In order to protect customers against changes in their finances, we also offer customers the opportunite to take out insurance against suspension of payments due to unemployment or illness. Should the customers still encounter problems in repaying their loan, we are committed to helping them. TF Bank has specifically trained employees who contact the customer at an early stage in the event of a late payment in order to jointly agree on a solution and, if possible, provide advice and support.

Financial inclusion

Responsible lending is a necessary and important product category in a functioning economy. By taking a credit, consumers can spread expenses over time. TF Bank’s products shall be characterised by easy-to-understand terms and high availability, with the ambition of meeting the needs of creditworthy people who need to take a loan. Our lending therefore combines automatic processes with manual processing. By providing local customer service, customers have the opportunity to get in touch and receive support with their matters in the local language.

How the credit assessment works

In 2021, we processed around 7.0 million loan applications (5.5), where about half were denied credit as a result of our robust credit assessment. In each case, we ensure accurate credit assessment through our established credit granting process that is continuously being tested, developed and improved. Our long experience in the industry in various geographical markets and during different economic conditions has provided us the know-how and data to be able to develop our models.

Credit assessment is performed in accordance with good lending practice and is always based on the customer’s financial position and implemented in accordance with TF Bank’s credit policy. In some countries we may be required to contact customers by telephone to ensure that the information provided by the applicant is correct. In markets where we have access to less information via credit information services companies, we ask for supplementary information, such as pay slips and tax returns, in order to ensure that our customers have the financial capacity to repay their loans.

KPIs – responsible lending 2022  2021
Loan loss ratio (%) 2.9 2.8
Income from late payments (%) 6.4  6.9
Number of loan applications 8 347 038 7,043,040
     -Of which denied 4 364 206 3,485,867
Averge loan amount (SEK) 46,628 44,635
Share of markets with local customer service (%) 82 80