Maritime & Merchant Bank : Financial Report 31.06.2021

Maritime & Merchant Bank ASA

Financial Report

30.06.2021

Financial Report 30.06.2021

Table of Contents

FINANCIAL REPORT 30.06.2021____________________________________________________________ 2

STATEMENT OF PROFIT & LOSS___________________________________________________________ 11

BALANCE SHEET _______________________________________________________________________ 12

STATEMENT OF EQUITY _________________________________________________________________ 13

STATEMENT OF CASH FLOWS ____________________________________________________________ 14

NOTES 30.06.2021._____________________________________________________________________ 15

NOTE 1, REPORTING ENTITY _______________________________________________________________ 15

NOTE 2, GENERAL ACCOUNTING PRINCIPLES ____________________________________________________ 15

NOTE 3, FUNCTIONAL AND PRESENTATION CURRENCY ______________________________________________ 15

RISK_______________________________________________________________________________ 15

NOTE 4, RISK _________________________________________________________________________ 15

Risk Management and Capital Adequacy________________________________________________ 15

Capital Adequacy __________________________________________________________________ 16

Credit Risk ________________________________________________________________________ 16

Loss allowance ____________________________________________________________________ 18

Interest Rate Risk __________________________________________________________________ 23

Currency Risk _____________________________________________________________________ 24

Liquidity Risk ______________________________________________________________________ 24

Operational Risk ___________________________________________________________________ 24

INCOME AND COST __________________________________________________________________ 25

NOTE 5, TAXATION OF PROFIT ______________________________________________________________ 25

ASSETS ____________________________________________________________________________ 25

NOTE 6, FINANCIAL INSTRUMENTS AT FAIR VALUE. ________________________________________________ 25

NOTE 7, FINANCIAL PLEDGES ______________________________________________________________ 26

NOTE 8, OTHER INTANGIBLE ASSETS AND FIXED ASSETS _____________________________________________ 26

LIABILITIES _________________________________________________________________________ 27

NOTE 9, OTHER ASSETS AND FINANCIAL DERIVATIVES.______________________________________________ 27

NOTE 10, OTHER LIABILITIES AND ACCRUED COST_________________________________________________ 27

NOTE 11, SHARE CAPITAL AND SHAREHOLDER INFORMATION _________________________________________ 28

APPENDIX 1, ALTERNATIVE PERFORMANCE MEASURES _______________________________________ 28

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Financial Report 30.06.2021

Financial Report 30.06.2021

The profit for the period 01.01.21 - 30.6.2021 (H1 2021) before tax was USD 3 886 299 (USD 2 279 981 in H1 2020) and profit after tax is USD 2 914 724 in H1 2021 (USD 1 709 986 in H1 2020). The amount of disbursed loans increased with 20.5% during the period 01.01.21 - 30.6.2021 from USD 268 mill to USD 324 mill. The bank has in addition a considerable amount of loans in process which will be disbursed during the first part of 3rd quarter. There has been no credit losses and the bank have no non-performing loans.

The headlines from the shipping scene during Q2 has continued to be marked by the historical development in the container market. The freight rates have risen to record levels in all size segments and there are no clear signs the situation will ease down within the short-term horizon which is a result of a series of specific events. The pandemic has caused a comprehensive unbalance in the global manufacturing and distribution which is deeply reflected in seaborne trade. The various setbacks in the fight against Covid- 19 has led to new temporary lock-down of production plants, ports, terminals and distribution channels, especially in Asia which again has resulted in sharp increase in handling time of each container due to the congestion. The final result of this is an extraordinarily high utilization rate in the segment and corresponding increase in freight rates and asset values.

The dry-bulk sector has as well, continued its very positive development during Q2 driven by a general increase in demand for raw materials and a modest increase in the tonnage supply. The prospects for the remaining part of the year is generally being commented as most positive - in particular for the smaller and medium sized segments.

The tanker segment is still hampered by low utilization and freight rates below operational costs for the larger ship types, and we have to go back many decades to find a market with the same poor characteristics. Hopefully the second half of 2021 will show improvements, while the prevailing forecasts and analysis points in different directions.

For a project-oriented bank like ourselves, the general current sentiment is favourable as the interest for investing in shipping projects is high and leads to an increase in opportunistic sale and purchase activity. With the general background picture of the shipping industry at present we are looking into the next two quarters with a great deal of excitement and ambitions for our lending activities.

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Financial Report 30.06.2021

Profit for the period (01.01-30.06)

The profit for the period before tax is USD 3 886 299 (USD 2 279 981 in 30.06.2020) and profit after tax is USD 2 914 724 (USD 1 709 986 30.06.2020).

Net interest income and related income totalled USD 7 064 141 (USD 8 275 518), and other Income (including financial derivatives and fixed income instruments) was USD 685 055 (USD - 566 723).

Operating expenses before impairments and losses totalled USD 4 072 722 (USD 3 607 351). The Cost/Income ratio came in at 52,6% (46,8%).

Loss allowance (Expected Loss) fell USD 209 824 (increased USD 1 821 463). Credit Loss (Write Offs) was USD 0 (USD 0).

	2021	2020		2021	2020	2020
	01.04 - 30.06	01.04 - 30.06	01.01- 30.06	01.01 - 30.06		01.01 - 31.12
Interest Income	4 820 682	5 409 279		9 072 188	12 652 906	21 256 031
Interest Expense	-1 072 094		-2 010 200		-2 008 047		-4 377 389		-7 655 858
Net Interest Income	3 748 589		3 399 078		7 064 141		8 275 518		13 600 173
Other Income	163 183		651 879		685 055		-566 723		865 992
Total Income	3 911 772		4 050 957		7 749 196		7 708 795		14 466 165
Operating Expense	-2 087 155		-1 796 141		-4 072 722		-3 607 351		-7 531 828
Operating Result	1 824 617		2 254 816		3 676 475		4 101 444		6 934 337
Loss Allowance	18 557	-1 203 113		209 824	-1 821 463	-616 193
Write Off (Credit Loss)									-386 435
Sum Impairment	18 557		-1 203 113		209 824		-1 821 463		-1 002 628
Profit Before Tax	1 843 173		1 051 703		3 886 298		2 279 981		5 931 709
Tax	-460 793		-262 926		-971 575		-569 996		-698 996
Profit After Tax	1 382 380		788 777		2 914 723		1 709 986		5 232 713

Net interest income and related income

Net interest income and related income totalled USD 3 748 589 in Q2 (USD 3 399 078 in Q2 2020). This correspond to an increase from USD 2 912 527 in Q4 2020.

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Financial Report 30.06.2021

Net interest margin increased from to 2.5% in Q1-2021 to 2.8% in Q2-2021 (2.4% in Q2-2020). Increased lending improved Net Interest Margin.

Money market rates (daily average) in USD and NOK seems to have stabilized at a low level.

(Source: Infront, Maritime & Merchant Bank ASA)

Net other Income

Net other income amounted to USD 163 183 in Q2 2021 (USD 651 879 in Q2-2020 ).

Value adjustments on derivatives and hedging instrument in Q2 was USD 26 171 due to an depreciation of the USD against NOK (USD 565 814 in Q2-2020, caused by an USD depreciation against NOK).

The principle of assessing financial instruments measured at fair value may lead to significant variation of the Bank's result between quarters.

Net commissions amounted to USD 117 591 in Q2 (USD 134 581 in Q2-2020).

Total operating expenses before impairments and losses

Operating expenses before impairments and losses totalled USD 2 087 155 in Q2 (USD 1 796 141 in Q2-2020). Salaries and personnel expenses, including social costs, amounted to USD 1 280 112 (USD 1 170 405 in Q2- 2020) and account for the largest proportion of the overall operating expenses.

Total depreciation and impairment of fixed and intangible assets amounted to USD 299 379 (USD 265 408 in Q2-2020). The Cost/Income ratio came in at 53.4% in Q2 (44.3% in Q2-2020).

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