Komplett Bank : Q3 Report 2022

Interim report

THIRD QUARTER 2022

Q3 2022 highlights:

Investing in accelerated growth, reduced cost base

Growth engine restarted:

• Net loans of 8.0 billion, up 14.9% from Q2 adjusted for non-performing loans (NPL) sales and foreign currency effects
• Strong growth across all geographies amid continued robust demand in the Nordic consumer financing market
• Throughput significantly improved from multiple initiatives aimed at increasing conversion

Cost reductions well underway:

• Operating expenses reduced by 9.3% to NOK 94 million mainly driven by a decrease in personnel cost; personnel stock reduced by ~20% YTD and staffing level targeted to be less than 100 full-time employee equivalent at year end
• Stable loan yield; net yield declined driven by higher deposit account rates as long notice periods delay loan interest increases
• Reduced net profit compared to Q2 due to investments in strong loan growth with ensuing increased loan loss provisions

Outlook

• On track to deliver on run-rate 2024 ambitions for loan growth and efficiency
• Improved processes reduce annualised opex by NOK 20-25 million from Q1 2023
• Identified potential IT cost reductions of NOK 30-35 million annually by end 2024

Komplett Bank ASA | Pb. 448 | 1327 Lysaker | Org. nr.: 998997801 | komplettbank.no

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About Komplett Bank ASA

Komplett Bank ASA (the "Bank") started operations in March 2014 when the Bank received its banking licence from the Norwegian authorities. Komplett Bank offers convenient consumer financing to creditworthy individuals. This provides individuals with financial flexibility which in turn contributes to economic activity and growth for the society at large.

The Bank's main products are consumer loans, comprising Komplett Bank's annuity loans launched in May 2019 as well as a flexible loan product with functionality that gives the customer more flexibility in use of the credit line. In July 2022, the Bank launched a new refinancing product in Norway. In addition, the Bank offers "Komplett Bank Mastercard", a credit card with product features tailored for online shopping as well as Point of Sales (POS) finance products. Moreover, Komplett Bank offers deposit products with highly attractive interest rates in Norway, Germany and Sweden. As a member of the Norwegian Banks' Guarantee Fund, customer deposits are guaranteed up to NOK 2 million (EUR 100,000 in Germany and Sweden) per customer.

The Bank follows a strategic roadmap based on geographical and product-wise diversification and expansion. The Bank is pursuing a strategy of building a digital, scalable and efficient operating model combined with strong risk control. In the near- to medium-term, lending operations will be focused on the Nordic region. The Bank has a long-term strategic cooperation with Komplett Group.

The Bank operates on a cross-border basis from Lysaker, outside of Oslo. The Norwegian banking license provides for passporting of the Bank's offering throughout the entire European Economic Area (EEA).

Financial figures for Q3 2022

All figures are prepared and presented in accordance with the International Financial Reporting Standards (IFRS).

Net loans to customers amounted to NOK 8.0 billion at the end of Q3 2022, an increase of NOK 967.5 million (13.8%) compared to Q2 2022. Adjusted for currency effects, with a nominal growth in local currencies and NPL sales, net loans increased by 14.9%. Split on product segments, loans increased by NOK 942.9 million, credit cards increased by NOK 33.8 million and point of sales (POS) financing decreased by NOK 9.2 million.

Net interest income amounted to NOK 193.5 million in Q3 2022, compared to NOK 187.2 million in Q2 2022 as net loan growth was partly offset by higher deposit rates.

The yield was stable for loans in all markets as well as for POS finance, while there was a 1%- point increase in credit card yield driven by improved revolving through the period.

Net commissions and fees amounted to NOK 0.5 million in the quarter, down from NOK 8.5 million in the previous quarter, which was exceptionally high due to one-off items mainly relating to reversed insurance commission fees.

Komplett Bank ASA | Pb. 448 | 1327 Lysaker | Org. nr.: 998997801 | komplettbank.no

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Net gains/losses on certificates, bonds and currency were -5.4 million compared to -0.6 million in Q2 2022.

Total income was NOK 188.7 million, down 3.3% compared to NOK 195.1 million in Q2 2022, driven mainly by net commissions and fees returning to normalised levels in Q3 and mark-to- market losses on liquidity placed in market-based instruments.

Total operating expenses were NOK 94.4 million, down from NOK 104.0 million in the previous quarter. The cost/income ratio was 50.0%, down from 53.3% in Q2.

Personnel expenses decreased to NOK 27.7 million in the quarter from NOK 35.0 million in the previous quarter as improved processes have enabled a leaner organisation.

General and administrative expenses including direct market expenses was NOK 36.8 million, down from NOK 37.9 million in Q2 2022.

While further cost efficiencies are expected to materialise in the coming quarters, including front-office outsourcing which was operational from October 2022, structural changes to drive costs-outs and automation/IT enhancements will continue to require investments going forward.

Losses on loans amounted to NOK 70.2 million, up from NOK 42.7 million in Q2 2022. The loan loss ratio increased to 3.5% compared to 2.2% in the previous quarter. The increase reflects, among others, additional provisions in stage 1 for new lending.

Profit after tax was NOK 18.0 million, down from NOK 36.3 million in the previous quarter as the Q3 loan growth and ensuing interest income, of which most came in the second half of the quarter, was more than offset by higher interest expenses and loan loss provisions.

Total assets as at 30 September 2022 amounted to NOK 10,137 million (compared to NOK 8,894 million as at 30 June 2022). Net loans to customers ended at NOK 7,990 million (NOK 7,022 million). Deposits from and debt to customers amounted to NOK 7,888 million (NOK 6,691 million).

Total equity was NOK 2,046 million as at 30 September 2022 (NOK 2,032 million as at 30 June 2022). The Bank had a total capital ratio of 25.4% (27.9%) by the end of the quarter, and a CET1 ratio of 22.1% (24.3%). Loan and deposits with credit institutions and certificates and bonds amounted to NOK 1,906 million (NOK 1,607 million) corresponding to 18.8% (18.1%) of total assets.

Other

The countercyclical capital buffer increased by 20 bp in Q3 2022 and is set to increase by another 30 bp as at the end of Q4 2022, whereas the systemic risk buffer is at the same time set to be reduced by 90 bp. Overall, this will reduce the Bank's capital requirements by around 60 bp in Q4 2022.

Komplett Bank ASA | Pb. 448 | 1327 Lysaker | Org. nr.: 998997801 | komplettbank.no

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Dividend

Komplett Bank's dividend policy is to distribute excess capital not allocated to growth to its shareholders. Given the current capital position and expectations of improved operations going forward, the Bank considers its dividend capacity to be 30-50% of annual profit after tax while maintaining ample capacity for growth in the medium-term.

Significant events after balance sheet date

There have been no significant events after the balance sheet date.

Development and outlook

Komplett Bank has a positive outlook for growth and increased profitability. The outlook is founded on the Bank having a NOK 8.0 billion net loan book, a continued strong inflow of loan applications, profitable operations, and a well-capitalised balance sheet in a stable Nordic consumer financing market.

The loan loss ratio has been around 3% for six consecutive quarters, volumes sent to collection have declined while coverage ratios are stable. Most new NPL loans are sold on forward flow agreements, limiting risk in the balance sheet, and the Bank expects a stable loan loss ratio going forward.

During Q3, the Bank experienced a significant increase in new sales. This increase, appearing across all geographical markets, is driven by generally benign market conditions as well as improvement in conversion rates. The latter is a result of from systematic work by the Bank to improve conversion and throughput, and the positive development seen in Q2 further accelerated throughout Q3.

To achieve increased throughput, the Bank has over the past three quarters launched several initiatives to be implemented in 2022 - focusing on product performance, process automation and tech simplification. The 2022 initiatives on product performance were successfully implemented by end of Q3 with more to come from automation and tech initiatives in Q4.

The improvement initiatives on both customer and internal processes resulted in increased conversion rates in all markets compared to the previous quarter. In Q3, loan growth was at all- time high and conversion rates were 2-3x the level in January 2022. A new refinancing product was launched in the Norwegian market in June. The product contributed to reduced customer churn which remains a general challenge in the market.

Increased automation contributed to improved conversion rates, while also contributing to cost- savings. A project to outsource parts of the front-office function was delivered on plan and fully operational from October. As of Q1 2023, improved processes and a more streamlined organisation will reduce annualised operating expenses by NOK 20-25 million. The Bank has also identified an IT cost reduction potential with an annual run rate of another NOK 30-35 million by the end of 2024.

Near-term, increasing deposit rates will continue to put pressure on net yields due to long notice periods for loan book interest increases in Norway and Finland, while cost inflation has started

Komplett Bank ASA | Pb. 448 | 1327 Lysaker | Org. nr.: 998997801 | komplettbank.no

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