Norion Bank : Financial Report - Norion Bank AB Interim Report January September 2023

January - September 2023

Interim report January-September 2023

Third quarter of 2023

(compared to the third quarter of 2022)

• The loan portfolio amounted to SEK 44,139m (41,514)
• Total income amounted to SEK 906m (811)
• The C/I ratio amounted to 24.5% (24.7)
• The credit loss level amounted to 2.6% (2.3)
• Operating profit amounted to SEK 405m (373)
• Net profit amounted to SEK 321m (295) and earnings per share 1) amounted to SEK 1.49 (1.38)
• Return on equity amounted to 16.6% (18.7)
• The CET1 ratio amounted to 15.1% (13.5) and the total capital ratio amounted to 16.2% (14.6)

January-September 2023

(compared to January-September 2022)

• The loan portfolio amounted to SEK 44,139m (41,514)
• Total income amounted to SEK 2,714m (2,284)
• The C/I ratio amounted to 25.1% (26.3)
• The credit loss level amounted to 2.5% (2.3)
• Operating profit amounted to SEK 1,223m (1,005)
• Net profit amounted to SEK 968m (795) and earnings per share 1) amounted to SEK 4.50 (3.72)
• Return on equity amounted to 17.5% (17.5)
• The CET1 ratio amounted to 15.1% (13.5) and the total capital ratio amounted to 16.2% (14.6)

Significant events during the period

On 5 September 2023 Collector Bank AB formally changed its corporate name to Norion Bank AB.

The Swedish Financial Supervisory Authority ("Swedish FSA") has carried out a review and evaluation of Norion Bank AB and decided upon special capital base requirements and Pillar 2 Guidance. The bank's previous internally calculated capital requirements have been confirmed and the Swedish FSA has decided upon a Pillar 2 Guidance of 0% of the total risk exposure amount and 0.5% of the leverage ratio-based requirement.

Significant events after the period

The Swedish FSA has granted Norion Bank AB permission to use the alternative standardised approach for calculating the own funds requirement for operational risk. The permission will strengthen the bank's capital position. As per 30 September 2023, the total capital ratio would have increased by circa 0.9%. The alternative standardised approach will be applied from the fourth quarter of 2023.

1. See pages 4-5

Photo: Anna Roström

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Norion Bank AB (publ) 556597-0513

Highlights third quarter of 2023 (compared to the third quarter of 2022)

44,139 +6% 906 +12%

Loan portfolio (SEKm)

Total income (SEKm)

24.5% -0.3 321 +9%

C/I ratio

percentage points

Net profit (SEKm)

16.6% -2.0 15.1% +1.6

Return on equity

percentage points

CET1 ratio

percentage points

Loan portfolio (SEKm) and NIM (%)

		41,699	42,106	44,139
41,514	41,490
7.1%	8.1%	7.8%	7.9%	7.4%
Q3 2022	Q4 2022	Q1 2023	Q2 2023	Q3 2023

1) Earnings per share before and after dilution

EPS 1) (SEK) and adjusted RoE (%)

	1.62		1.60	1.49
1.38		1.42
18.7%	20.8%		18.7%
	17.4%	16.6%
Q3 2022	Q4 2022	Q1 2023	Q2 2023	Q3 2023

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Interim report January - September 2023

This is Norion Bank

Norion Bank Group is a business-oriented Nordic financing bank. The Group's brands - Norion Bank, Walley and Collector - offer customized financing solutions that meet distinct needs in three customer segments: medium-sized corporates and real estate companies, merchants, and private individuals. As a specialist in financing solutions, Norion Bank Group is a leading complement to traditional large banks, with a vision of being the leading Nordic financing bank in its chosen segments.

Norion Bank offers corporate and real estate loans, as well as factoring for medium-sized corporates and real estate companies. The Walley brand offers flexible payment and checkout solutions to merchants and private individuals. The Collector brand offers personal loans and credit cards to private customers, as well as savings accounts to private individuals and companies. Norion Bank Group (formerly Collector Bank) was founded in 1999 and has offices in Gothenburg, Stockholm, Helsingborg, Oslo and Helsinki. Business is conducted through Norion Bank AB (public), which is listed on Nasdaq Stockholm.

Key ratios Group

	Q3	Q2		Q3
SEKm	2023	2023	∆	2022	∆
Income statement
Net interest income	792	826	-4%	733	8%
Total income	906	926	-2%	811	12%
Net profit	321	342	-6%	295	9%
Earnings per share before dilution, SEK	1.49	1.60	-7%	1.38	8%
Earnings per share after dilution, SEK	1.49	1.60	-7%	1.38	8%
Balance sheet
Loans to the public	44,139	42,106	5%	41,514	6%
Deposits and borrowings from the public	39,870	38,753	3%	37,567	6%
Debt securities in issue	1,865	2,754	-32%	3,368	-45%
Subordinated liabilities	-	-	-	-	-
Total equity (shareholders of Norion Bank AB)	7,493	7,187	4%	6,236	20%
Key ratios1)
Net interest margin (NIM) - Period 2)	7.4%	7.9%		7.1%
Net interest margin (NIM) - LTM 2)	7.6%	7.7%		7.0%
Credit loss level - Period 2)	2.6%	2.5%		2.3%
Credit loss level - LTM 2)	2.5%	2.5%		2.3%
C/I ratio - Period 2)	24.5%	24.9%		24.7%
C/I ratio - LTM 2)	25.1%	25.1%		26.7%
Return on equity (RoE) - Period 2)	16.6%	18.7%		18.7%
Return on equity (RoE) - LTM 2)	18.3%	18.9%		17.3%
CET1 ratio 3)	15.1%	15.0%		13.5%
Tier 1 ratio 3)	16.2%	16.1%		14.6%
Total capital ratio 3)	16.2%	16.1%		14.6%
Average number of full-time employees	349	341	3%	308	14%
Adjusted key ratios 1)
Net interest margin (NIM) - Period 2)	7.4%	7.9%		7.1%
Net interest margin (NIM) - LTM 2)	7.6%	7.7%		7.0%
Credit loss level - Period 2)	2.6%	2.5%		2.3%
Credit loss level - LTM 2)	2.5%	2.5%		2.3%
C/I ratio - Period 2)	24.5%	24.9%		24.7%
C/I ratio - LTM 2)	25.1%	25.1%		26.7%
Return on equity (RoE) - Period 2)	16.6%	18.7%		18.7%
Return on equity (RoE) - LTM 2)	18.3%	18.8%		17.2%

1. See Definitions, pages 19-20, and norionbank.se/en-se/investor-relations-en/financial-information/key-financials for more information about key ratios
2. Key ratios that have not been prepared in accordance with IFRS but are deemed to facilitate the analysis of Norion Bank's development. See Definitions, pages 21-22
3. Key ratios according to capital adequacy rules (CRR). See note 12, pages 43-45

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Norion Bank AB (publ) 556597-0513

Key ratios Group, cont.

	Jan-Sep	Jan-Sep		Full year
SEKm	2023	2022	∆	2022
Income statement
Net interest income	2,427	2,060	18%	2,899
Total income	2,714	2,284	19%	3,212
Net profit	968	795	22%	1,141
Earnings per share before dilution, SEK	4.50	3.72	21%	5.34
Earnings per share after dilution, SEK	4.50	3.72	21%	5.34
Balance sheet
Loans to the public	44,139	41,514	6%	41,490
Deposits and borrowings from the public	39,870	37,567	6%	36,842
Debt securities in issue	1,865	3,368	-45%	3,337
Subordinated liabilities	-	-	-	-
Total equity (shareholders of Norion Bank AB)	7,493	6,236	20%	6,570
Key ratios1)
Net interest margin (NIM) - Period 2)	7.6%	7.1%		7.5%
Net interest margin (NIM) - LTM 2)	7.6%	7.0%		7.5%
Credit loss level - Period 2)	2.5%	2.3%		2.4%
Credit loss level - LTM 2)	2.5%	2.3%		2.4%
C/I ratio - Period 2)	25.1%	26.3%		25.9%
C/I ratio - LTM 2)	25.1%	26.7%		25.9%
Return on equity (RoE) - Period 2)	17.5%	17.5%		18.3%
Return on equity (RoE) - LTM 2)	18.3%	17.3%		18.3%
CET1 ratio 3)	15.1%	13.5%		14.3%
Tier 1 ratio 3)	16.2%	14.6%		15.4%
Total capital ratio 3)	16.2%	14.6%		15.4%
Average number of full-time employees	339	303	12%	308
Adjusted key ratios 1)
Net interest margin (NIM) - Period 2)	7.6%	7.1%		7.5%
Net interest margin (NIM) - LTM 2)	7.6%	7.0%		7.5%
Credit loss level - Period 2)	2.5%	2.3%		2.4%
Credit loss level - LTM 2)	2.5%	2.3%		2.4%
C/I ratio - Period 2)	25.1%	26.3%		25.9%
C/I ratio - LTM 2)	25.1%	26.7%		25.9%
Return on equity (RoE) - Period 2)	17.5%	17.4%		18.2%
Return on equity (RoE) - LTM 2)	18.3%	17.2%		18.2%

1. See Definitions, pages 19-20, and norionbank.se/en-se/investor-relations-en/financial-information/key-financials for more information about key ratios
2. Key ratios that have not been prepared in accordance with IFRS but are deemed to facilitate the analysis of Norion Bank's development. See Definitions, pages 21-22
3. Key ratios according to capital adequacy rules (CRR). See note 12, pages 43-45

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Interim report January - September 2023

Collector Bank has become Norion Bank -One company operating under three brands

On 5 September 2023, Collector Bank formally changed its corporate name to Norion Bank. The change of corporate name reflects the strategic transformation journey that was initiated in 2019, transforming from a digital challenger bank to a stable, Nordic financing bank. The name change also clarifies the customer offering and maximizes the growth and development opportunities for each of the bank's three brands.

• We are very pleased with the strategic transformation journey we have undergone. Norion Bank has moved from a digital challenger, characterized by high growth, to a stable and focused financing bank with solid profitability and a more balanced risk profile. The aim of the new corporate name is to both further strengthen our positioning and clarify our customer offering. With our broad product platform, we have a unique position on the market, says Martin Nossman, CEO of Norion Bank.

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Norion Bank AB (publ) 556597-0513

Norion Bank Group is a business-oriented Nordic financing bank. The Group's brands - Norion Bank, Walley and Collector - offer customized financing solutions that meet distinct needs in three customer segments: medium-sized corporates and real estate companies, merchants, and private individuals. As a specialist in financing solutions, Norion Bank Group is a leading complement to traditional large banks, with a vision of being the leading Nordic financing bank in its chosen segments. 

Corporate and real estate loans, as well as factoring solutions, for medium-sized corporates and real estate companies.

Payment and checkout solutions for merchants and private customers.

Personal loans, credit cards and savings accounts for private individuals.

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Interim report January - September 2023

A comment from our CEO

Collector Bank has become Norion Bank

In the beginning of September, we formally became Norion Bank and this is our first quarterly report under the new name. Changing the corporate name is a project that on paper essentially means a new name, a new logo and new brand colors. For me personally, this is a project that reflects the strategic transformation journey the bank has undergone during the last couple of years. Norion Bank has transformed from a digital niche bank, characterized by high growth, to a stable and focused financing bank with solid profitability and a more balanced risk profile.

I'm also looking forward to letting our three brands stand on their own feet, and I hope that our customers appreciate the clarity three brands create for our business offering. More information about the name change and our three brands is available on pages 6-7 in this interim report.

Last, but not least, I would like to thank everyone involved for their solid efforts. Parallel to a name change, you have been part of the daily operations and further developed the bank's business during the last year.

The macroeconomic environment and its effects on our customers

The Riksbank started increasing the policy rate about 1.5 years ago. The policy rate has during the same period increased from 0% to 4.00% and we have seen similar increases in many other countries. The uncertainty regarding future development has contributed to a more cautious market sentiment. The inflation rate has however been slightly lower in the past couple of months compared to the first half of 2023 and the second half of 2022. I hope we are on the right path and that we hence are not far from reaching the interest rate peak. A more stabilized interest rate level will reduce uncertainty among market participants and facilitate the making of long-term sustainable plans.

Our corporate and real estate clients have been significantly more cautious during the last year awaiting a more stabilized interest rate level. Transaction activity has hence been more muted. We have however not seen any systematic patterns in terms of payment difficulties yet. One reason could be that we, on the corporate side, do not have any significant exposure to the industries that as of today have experienced a higher bankruptcy ratio.

Fewer of our private customers are sent to debt collection, but the ones that experience difficulties in maintaining their payment plans have increased difficulties catching up with their payments. I'm happy to see that the changes we have made to our credit assessment process during the last few years are starting to show results. We however remain humble with regards to future developments both for our corporate and private customers. Sound and sustainable lending will remain of great importance for the bank.

Operating development

The loan portfolio amounted to SEK 44,139 million by the end of the third quarter. The quarterly increase has mainly been driven by the Real Estate and Consumer segment, respectively.

The Swedish real estate market has experienced turbulence during quite some time. The market is still somewhat cautious but demand for bank financing remains solid. We continue to maintain a high frequency of client interaction within our real estate business. Despite many interesting opportunities, we have been selective in terms of completed transactions.

I'm happy to see that this is the first quarter in a long time that we grow the Consumer loan book. Our efforts of increasing proprietary distribution are starting to show results. Our investments in proprietary distribution, coupled with the changes made to our credit assessment process in recent years, has yielded a risk- adjusted profitability level that we have not seen in many years. We are satisfied with the results and will continue to prioritize increased profitability as well as sound and sustainable lending.

In summary, I can conclude that we have delivered stable results yet another quarter amid a turbulent and uncertain macroeconomic environment. Total income remains stable, and we show solid cost control despite the inflationary pressure we experience and the investments we continue to make in the organization. Return

on equity remains on a solid level, amounting to 16.6% in the third quarter.

Increased clarity and strengthening of the capital situation

By the end of the quarter, the Swedish Financial Supervisory Authority decided upon special capital base requirements and Pillar 2 Guidance after having carried out a review and evaluation of Norion Bank AB. Our previous internally calculated capital requirements have been confirmed and the Swedish FSA decided upon a Pillar 2 Guidance of 0% of the total risk exposure amount and 0.5% of the leverage ratio-based requirement. The decision creates increased clarity in terms of the bank's future capital requirements.

After the end of the quarter, the Swedish FSA granted Norion Bank AB permission to use the alternative standardised approach for calculating the own funds requirement for operational risk. The permission will strengthen the bank's capital position, starting in the fourth quarter of 2023 when we will be applying the method for the first time. As an illustrative example of financial effects, the total capital ratio would have increased by circa 0.9% should the method have been applied during the third quarter. See page 11 in this interim report for more information about financial effects.

Martin Nossman

CEO

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Norion Bank AB (publ) 556597-0513

MARTIN  NOSSMAN, CEO

"Continued stable

performance."

Photo: Anna Roström

Interim report January - September 2023

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The Group's development

Total income for the third quarter of 2023

Total income amounted to SEK 906 million (811) corresponding to an increase of 12% compared to last year. Net interest income increased by 8% compared to the previous year and amounted to SEK 792 million (733). Higher market rates have, during a longer period, had a positive impact on interest income. Funding costs have also increased following higher policy rates and gradually increased competition in the deposit market. The net interest margin amounted to 7.4% (7.1). The net interest margin has been negatively affected by increased volumes in Stage 2 and Stage 3, primarily related to the Real Estate segment, as well as late inflow of new volumes during the quarter. Net commission income increased by 4% compared to last year and amounted to SEK 74 million (71). Net gains and losses on financial items amounted to SEK 30 million (-3) driven by strong revaluations of financial holdings. Other income amounted to SEK 10 million (9).

Total income for the period January-September 2023

Total income amounted to SEK 2,714 million (2,284) during the period January-September 2023, corresponding to an increase of 19% compared to last year. Net interest income amounted to SEK 2,427 million (2,060) during the period January-September 2023, corresponding to an increase of 18%. The net interest margin amounted to 7.6% (7.1) during the period January- September 2023. Net commission income amounted to SEK 222 million (226) during the period January-September 2023, corresponding to a decrease of 2% compared to last year. Net gains and losses on financial items amounted to SEK 35 million (-30). Other income amounted to SEK 30 million (29).

Credit losses

The credit loss level for the period January-September 2023 amounted to 2.5% (2.3) and to 2.6% (2.3) in the third quarter of 2023. The credit loss level for the underlying banking operations is presented on page 11.

Operating profit, net profit, EPS and RoE

Operating profit amounted to SEK 1,223 million (1,005) during the period January-September 2023 and to SEK 405 million (373) in the third quarter of 2023. Net profit amounted to SEK 968 million

1. during the period January-September 2023 and to SEK 321 million (295) in the third quarter of 2023. Earnings per share amounted to SEK 4.50 (3.72) during the period January- September 2023 and to SEK 1.49 (1.38) in the third quarter of 2023. Return on equity amounted to 17.5% (17.5) during the period January-September 2023 and to 16.6% (18.7) in the third quarter of 2023.

Non-recurring items

Non-recurring items are defined as income and expenses that are not expected to appear on a regular basis.

2023

There were no non-recurring items in the first, second or third quarter of 2023.

2022

There were no non-recurring items in the first, second, third or fourth quarter of 2022.

Total expenses

Total expenses amounted to SEK 681 million (601) during the period January-September 2023, of which SEK 222 million (201) pertain to the third quarter of 2023. Total expenses are seasonally low during the third quarter. The C/I ratio for the period January-September 2023 amounted to 25.1% (26.3) and to 24.5% (24.7) in the third quarter of 2023. Norion Bank hence continues to prove solid cost control.

Loan portfolio

The total loan portfolio amounted to SEK 44,139 million (41,514) by the end of the third quarter of 2023, corresponding to an increase of 6% compared to last year and an increase of 5% compared to the previous quarter. The Corporate loan portfolio has decreased by 11% compared to the previous year and decreased by 1% compared to the previous quarter. The Real Estate loan portfolio has increased by 20% compared to the previous year and increased by 9% compared to the previous quarter. The Consumer loan portfolio has increased by 2% compared to the previous year and increased by 4% compared to the previous quarter. The Payments loan portfolio has increased by 12% compared to the previous year and increased by 3% compared to the previous quarter. Out of the total loan portfolio, Corporate amounted to 22% (26), Real Estate amounted to 47% (41), Consumer amounted to 25% (26), Payments amounted to 6% (6) and Other amounted to 1% (2) by the end of the quarter.

Liquidity

Norion Bank's total liquidity amounted to SEK 6,260 million (6,708) as of 30 September 2023. Total liquidity consists of a liquidity portfolio (Bonds and other interest-bearing securities as well as Treasury bills and other bills eligible for refinancing with central banks, etc.) and other liquid assets (Loans to credit institutions). The liquidity portfolio consists of highly liquid assets, e.g. municipal bonds, covered bonds and government issued securities, and amounted to SEK 4,067 million (3,393) as of 30 September 2023. Other liquid assets mainly consist of deposit accounts with Nordic banks and amounted to SEK 2,193 million (3,315) as of 30 Septem- ber 2023.

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Norion Bank AB (publ) 556597-0513