P/F BankNordik : Investor Presentation of Interim Report H1 2021

Positive developments in H1 2021

- Sale of Danish business executed as planned

Investor presentation 4 August 2021

Árni Ellefsen, CEO

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Disclaimer

• This presentation contains statements regarding future results, which are subject to risks and uncertainties. Consequently, actual results may differ significantly from the results indicated or implied in these statements.
• No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly, none of BankNordik, or any of its principal shareholders or subsidiary undertakings or any of such person's officers or employees or advisers accept any liability whatsoever arising directly or indirectly from the use of this document.

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Overview

• Overview
• Highlights
• Financials
• • Operating income
  • Insurance
  • Expenditures
  • Impairment charges
  • Capital ratios
• Increased profitability going forward
• Appendices

Retail banking

Corporate banking Insurance

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Highlights in Q2 2021

• Capital structure adjusted for dividend payout

Operational highlights

• Sale of Danish business finalised and executed as planned
• Capital structure optimised as Tier 2 capital reduced from DKK 225m to DKK 100m and DKK 150m MREL capital issued
• Changes in customer concepts and prices expected to increase interest and fee income from mid-August

Financial highlights

• Profit before impairment charges up 31%
• Profit before tax from continuing operations of DKK 74m
• Non-recurringitems before tax of DKK 4m:
• • Net profit from sale of Danish business (DKK 19m)
  • Clients compensated for return shortfall (DKK 15m)
• CET1 capital ratio of 25.7% and total capital ratio (MREL) of 31.3%

Profit & Loss
DKKm	H1 2021	Q2 2021	Q2 2020	Index
Net interest income	129	66	65	101
Net fee and commission income	38	20	13	152
Net insurance income	21	14	12	119
Other operating income	18	9	5	169
Operating income	206	109	95	114
Operating costs	-121	-62	-59	104
Profit before impairment charges	85	47	36	131
Net impairment charges on loans	23	27	16	171
Operating profit	109	74	52	143
Non-recurring items	81	4	0
Investment portfolio earnings	-7	-4	15	-28
Profit before tax, continuing operations	182	74	66	111
Profit before tax, discontinued operations	9	0	37
Profit before tax	192	74	103	72
Key Metrics
DKKbn	H1 2021	Q2 2021	Q2 2020	Index
Loans and advances	7.6	7.6	7.5	101
Deposits and other debt	7.7	7.7	7.6	101
Mortgage credit	2.5	2.5	2.1	118
				Target
Operating cost / income, %	58.5	56.3	62.1	55.0
CET1 capital ratio, %	25.7	25.7	20.3	23.0
Total capital ratio (MREL), %	31.3	31.3	24.0	33.0
RoE, % (annualised)	10.1	9.7	11.4	8.0
RoE, excl. one-offs, % (annualised)	7.0	9.5	10.0	8.0

Divested activities eliminated from the figures above

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Net interest income

- Slight improvement, will continue in coming quarters

Comments

• Net interest income up DKK 1.8m QoQ and up DKK 1.5m YoY mainly due to negative interest rates on deposits
• Changes in negative interest rate brackets expected to increase net interest income from mid-August
• Optimisation of capital funding in June with an annual reduction in interest expenses of approx. DKK 5m
• Lending volumes up by DKK 136m QoQ (DKK 107m YoY)

QoQ changes in net interest income

DKKm

66							65.5
65					0.3	0.8
	63.7	0.1	0.1	0.1	0.4
64
63
62
61
60
	Q1 2021 Lending	Lending	Deposit	Deposit Sub. debt	Other	Q2 2021
		volume	interest	volume	interest

Loans and deposits					Loans	Deposits
DKKbn
9
8	7.4	7.5	7.5	7.6	7.5	7.5	7.6	7.8	7.4	7.5	7.6	7.7
7
6
5
4
3
	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021

YoY changes in net interest income

DKKm

135
130		1.1	0.9	2.9	1.5	129.3
127.8	0.1
125

120

115

110

H1 2020 Lending	Lending	Deposit	Deposit	Other	H1 2021
volume	interest	volume	interest

Divested activities eliminated from the figures above

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