Maritime & Merchant Bank : Financial Report 30.09.2022

Maritime & Merchant Bank ASA

Financial Report

30.09.2022

Financial Report 30.09.2022

Table of Contents

FINANCIAL REPORT 30.09.2022____________________________________________________________ 2

STATEMENT OF PROFIT & LOSS___________________________________________________________ 12

BALANCE SHEET _______________________________________________________________________ 13

STATEMENT OF EQUITY _________________________________________________________________ 14

STATEMENT OF CASH FLOWS ____________________________________________________________ 15

NOTES 30.09.2022._____________________________________________________________________ 16

NOTE 1, REPORTING ENTITY _______________________________________________________________ 16

NOTE 2, GENERAL ACCOUNTING PRINCIPLES ____________________________________________________ 16

NOTE 3, FUNCTIONAL AND PRESENTATION CURRENCY ______________________________________________ 16

RISK_______________________________________________________________________________ 16

NOTE 4, RISK _________________________________________________________________________ 16

Risk Management and Capital Adequacy________________________________________________ 16

Capital Adequacy __________________________________________________________________ 17

Credit Risk ________________________________________________________________________ 17

Loss allowance ____________________________________________________________________ 18

Interest Rate Risk __________________________________________________________________ 24

Reference rates____________________________________________________________________ 24

Currency Risk _____________________________________________________________________ 24

Liquidity Risk ______________________________________________________________________ 25

Operational Risk ___________________________________________________________________ 25

INCOME AND COST __________________________________________________________________ 25

NOTE 5, TAXATION OF PROFIT ______________________________________________________________ 25

ASSETS ____________________________________________________________________________ 26

NOTE 6, FINANCIAL INSTRUMENTS AT FAIR VALUE. ________________________________________________ 26

NOTE 7, FINANCIAL PLEDGES ______________________________________________________________ 27

NOTE 8, OTHER INTANGIBLE ASSETS AND FIXED ASSETS _____________________________________________ 27

LIABILITIES _________________________________________________________________________ 28

NOTE 9, OTHER ASSETS AND FINANCIAL DERIVATIVES.______________________________________________ 28

NOTE 10, OTHER LIABILITIES AND ACCRUED COST_________________________________________________ 28

NOTE 11, SHARE CAPITAL AND SHAREHOLDER INFORMATION _________________________________________ 29

APPENDIX 1, ALTERNATIVE PERFORMANCE MEASURES _______________________________________ 30

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Financial Report 30.09.2022

Financial Report 30.09.2022

The profit for the period 01.01.2022 - 30.9.2022 before tax was USD 9 389 448 (USD 6 066 875 01.01.2021 - 30.9.2021) and profit after tax1 is USD 7 042 086 (USD 4 550 156 as of 30.9.2021). The bank has no credit losses or distressed loans. Net interest margin increased to 4.2% in Q3-2022 from 3.1% in Q3-2021. ROE before tax was 11.8% in Q3-2022, up from 7.2% in Q3-2021. The cost/income ratio came in at 39% in Q3- 2022, down from 46% in Q3-2021.

Yet another quarter has passed with severe geopolitical disturbances and unrest in the financial markets while the general energy crisis in Europe is taking its toll in the industry production with costs for power supply climbing to record high levels. There is no prospect of a quick resolution to the tragic war between Russia and Ukraine, leaving many unanswered questions about what effects the war will have on economic development in Europe and otherwise impact on global economy. The forecast for GDP growth in Europe is 3.1% according to figures from OECD/IMF for 2022, 3.2% for the world. So far, the forecast for 2023 for GDP growth in Europe is 0.5% based on the same sources and 2.3% for the world. The geopolitical situation with origins from the Russia/Ukraine conflict means that the estimates are highly uncertain.

World seaborne trade currently shows a flat to slightly rising trend if you look at the development over the last 12 months; the forecast (Clarksons Research) is approximately 1% growth in 2022. But again, this estimate will probably be characterized by unpredictable elements in view of a heated geopolitical situation that could have an impact on cargo volumes. New building order books for tank and bulk give reason for conditional optimism that the freight markets for dry cargo and in particular tank can be maintained at attractive levels in the short and medium term. Order books for tank and dry cargo of around 5% and 7% of the sailing fleet is historically on the low side and gives reason to hope for a reasonable market balance in the next 2-3 years.

Time is running fast towards the turn of the year and the introduction of International Maritime Organization's (IMO) regulation aimed at emissions from ships. The Carbon Intensity Indicator (CII) is the tool that measures how much CO2 each ship emits. The new regulations are introduced on the 1st of January 2023, but the rating will be given based on data collected throughout 2023 thus the individual ratings will be assigned at the start of 2024. The ships will be rated from A to E, where A is the highest rating. As always with the introduction of new regulations, there are many different opinions about how the rules should be understood - and CII is no exception. As an example, CII is calculated based on Annual Efficiency Ratio (AER) and many debates take place in this area. Some argue that the principles that form the basis of the calculation - maximum load capacity and not the actual transported cargo load- lead to inefficient transport and thus works against its purpose. However, the international shipping industry is investing enormous resources to adapt operations, ships and equipment to comply with the new regulations.

This ability to adapt to new rules, which has characterized the international shipping industry for years, never ceases to impress and we feel privileged to work closely with the shipowners and to follow this work. With the growing pressure on the shipping industry to reduce CO2 emissions, the collective innovative power and ability to implement that will be the decisive factors in reaching ambitious goals for the good of all.

1 See "Deferred Taxes and payable tax" at page 8

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Financial Report 30.09.2022

Profit for the period (01.01-30.09)

The profit for the period before tax is USD 9 389 448 (USD 6 066 875 in 30.09.2021) and profit after tax1 is USD 7 042 086 (USD 4 550 156 30.09.2021).

Net interest income and related income totalled USD 15 681 554 (USD 11 372 958), and other Income (including financial derivatives and fixed income instruments) was USD -97 825 (USD 769 437).

Operating expenses before impairments and losses totalled USD 6 124 195 (USD 6 074 866). The Cost/Income ratio came in at 39.3% (50%).

Loss allowance (Expected Loss) increased USD 70 085 (increased USD 656). Credit Loss (Write Offs) was USD 0 (USD 0).

	2022	2021		2022	2021	2021
	01.07 - 30.09	01.07 - 30.09	01.01 - 30.09	01.01 - 30.09		01.01 - 31.12
Interest Income	8 277 745	5 437 796		20 909 393	14 509 985	19 847 004
Interest Expense	-2 491 184		-1 128 979		-5 227 839		-3 137 026		-3 907 611
Net Interest Income	5 786 562		4 308 817		15 681 554		11 372 958		15 939 393
Other Income	-230 470		84 382		-97 825		769 437		333 203
Total Income	5 556 092		4 393 200		15 583 729		12 142 396		16 272 596
Operating Expense	-2 187 795		-2 002 144		-6 124 195		-6 074 866		-8 305 519
Operating Result	3 368 297		2 391 055		9 459 534		6 067 530		7 967 077
Loss Allowance	160 250	-210 479		-70 085	-656	-16 682
Write Off (Credit Loss)								0
Sum Impairment	160 250	-210 479		-70 085	-656	-16 682
Profit Before Tax	3 528 548		2 180 576		9 389 448		6 066 875		7 950 395
Tax*	-882 137		-545 144		-2 347 362		-1 516 719		-2 857 044
Profit After Tax	2 646 411	1 635 432		7 042 086	4 550 156	5 093 351

• See "Deferred Taxes and payable tax" at page 8

Profit for the period (01.07-30.09)

The profit for the period before tax is USD 3 528 548 (USD 2 180 576 in Q3 2021) and profit after tax is USD2 2 646 411 (USD 1 635 432 Q3 2021).

Net interest income and related income totalled USD 5 786 562 (USD 4 308 817), and other Income (including financial derivatives and fixed income instruments) was USD -230 470 (USD 84 382).

Operating expenses before impairments and losses totalled USD 2 187 795 (USD 2 002 144). The Cost/Income ratio came in at 39.4% (45.6%).

Loss allowance (Expected Loss) decreased USD 160 250 (increased USD 210 479). Credit Loss (Impairments) was USD 0 (USD 0)

1. See "Deferred Taxes and payable tax" at page 8
2. See "Deferred Taxes and payable tax" at page 8

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Financial Report 30.09.2022

Net interest income and related income

Net interest income and related income totalled USD 5 786 562 in Q3 (USD 4 308 817 in Q3 2021).

Net interest margin increased to 4.2% in Q3-2022 from 3.1% in Q3-2021. Higher marked rates improved the Net Interest Margin.

Money market rates (daily average) in USD and NOK are on an upward trend caused by Central Banks hiking rates.

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