Interim Presentation | 1st quarter 2019 | 11 April 2019 - PowerPoint PPT Presentation

Interim Presentation | 1st quarter 2019 | 11 April 2019

Monobank Q1 2019 highlights • Profitable growth restored in Q1’19 Net loans - Net loan balance increased 7.6 per cent vs Q4’18 NOK million 3 988 - Net interest income of NOK 100.2 million, up 5.4 per cent vs Q4’18 2 876 - Net profit after tax of NOK 16.1 million vs a deficit of NOK 8.8 million in Q4’18 1 162 • The proposed merger with BRAbank approved by general assembly Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 - Transaction expected to be completed in Q2’19 2017 2018 2019 Forward flow • Successful launch of digital consumer finance in Sweden Profit after tax • Improved risk selection in Finland to further improve profitability NOK million 16.1 15.5 13.8 10.1 • Fully funded to reach critical mass 7.4 5.7 3.0 1.8 - Private placement of NOK 58 million successfully completed -8.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 Note(*): ROE = 4x profit after t in quarter / average total equity in the quarter 2

Financials 3

Continued high and stable margins Total income impacted by forward flow agreement and conservative approach in Norway Income and profit after tax Key yields and margins Per cent (%) NOK (million) 100 95 14.6 % 14.4 % 14.4 % 14.4 % 14.3 % 14.3 % 14.2 % 14.3 % 14.1 % 88 86 82 81 76 75 12.8 % 12.8 % 12.8 % 12.7 % 12.7 % 12.6 % 12.3 % 12.3 % 69 64 56 53 8.7 % 8.7 % 8.3 % 8.0 % 7.9 % 45 7.8 % 7.7 % 7.7 % 7.6 % 41 37 35 30 28 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Annualized loan yield (Norway) * Annualized loan yield (Finland) * Net interest income Total income Net profit after tax Annualized NIM *** Note(*): yield = weighted average effective annual yield || Note(**): actual end of quarter annual rate || Note(***): NIM = 4x NII in quarter / average total assets in quarter 4

Efficient operations with economies of scale Stable opex development Q4 18 to Q1 19 Cost / Income ratio * Operational expenses NOK (million) Per cent (%) 36.7 34.8 120% 34.2 2.4 31.9 2.1 30.9 4.6 29.2 100% 3.8 2.5 1.4 12.0 6.3 4.8 14.6 22.7 80% 21.9 9.9 20.3 11.3 2.0 1.5 72% 1.1 60% 12.5 9.6 11.9 64% 7.7 8.0 8.1 55% 55% 7.9 53% 49% 40% 9.6 39% 8.6 40% 43% 40% 40% 6.1 6.3 36% 34% 5.6 33% 33% 33% 30% 27% 12.7 20% 11.4 11.4 10.6 8.0 8.0 6.9 6.2 5.5 0% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Staff costs Other administrative expenses Cost / Income Ratio Cost (excl. marketing) / Income Ratio Marketing expenses Depreciation and amortisation Note(*): cost / income ratio = operating expenses (incl. or excl. marketing) / total income 5

Satisfactory loan losses and credit quality Stabilizing effect from forward flow agreement on NPL and gross loans PD Loan losses Gross loans past due (# of days) Provisions 138.5 146.8 NOK (million) NOK (million) NOK (million) 66.0 474.7 436.1 86.4 91.9 356.6 251.7 332.5 69.5 29.1 8.3 10.9 13.8 19.1 18.8 24.5 189.1 94.7 50.7 58.7 135.7 37.3 18.4 26.3 4.9 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 17 17 17 17 18 18 18 18 19 17 17 17 17 18 18 18 18 19 17 17 17 17 18 18 18 18 19 31-60 PD 61-90 PD > 90 PD Loan loss ratio * Non-performing loan ratio ** Total provision ratio *** Per cent (%) Per cent (%) Per cent (%) 11.5 % 11.3 % 10.1 % 10.1 % 4.2 % 4.0 % 6.4 %7.1 % 7.9 % 8.5 % 32% 31% 31% 28% 27% 27% 28% 26% 26% 2.4 %2.6 %2.7 %2.9 % 4.9 % 2.2 % 2.2 % 2.2 % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 17 17 17 17 18 18 18 18 19 17 17 17 17 18 18 18 18 19 17 17 17 17 18 18 18 18 19 Note(*): loan loss ratio = LTM loan losses / average LTM net loans / 2) || Note(**): non-performing loan ratio = >PD90 / gross loans || Note(***): provision ratio = total provisions / >PD90 6 Note(*): loan loss ratio = LTM loan losses / average LTM net loans) || Note(**): non-performing loan ratio = >PD90 / gross loans || Note(***): provision ratio = total provisions / >PD90

Easy access to low-cost deposit funding Funding Liquidity Key ratios 1 313 NOK (million) NOK (million) 84 5 194 4 901 4 833 701% 717% 681 1 021 563 609 961 4 081 108 3 689 109 548 814 3 272 552% 737 534 56 691 50 522 65 1 229 2 487 552 345 4 414 64 4 239 1 895 4 125 913 377 852 3 434 339 242% 1 472 758 3 057 206% 214% 52 687 2 652 255 625 168% 172% 335 153% 158% 153% 167% 160% 163% 181% 172% 172% 2 043 489 35 133% 1 556 325 1 138 220 98% 108% 109% 113% 106% 107% 123% 111% 111% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2017 2018 2019 2017 2018 2019 Deposits by customers Subordinated loan Equity Debt securities Loans and advances to banks Deposit ratio * NSFR LCR Note(*): deposit ratio = deposits / net loans 7

Regulatory capital structure Risk-weighted assets Reported capital adequacy ** Regulatory capital 694 per cent (%) NOK (million) NOK (million) 4 000 3 636 700 641 3 356 583 592 604 615 3 500 3 088 600 2 940 2 765 3 000 25.0 % 500 2 333 22.0 % 21.6 % 21.5 % 21.4 % 2 500 20.6 % 401 19.9 % 19.1 % 19.1 % 400 1 819 2 000 306 302 Total Capital Req. = 16.8 % 1 423 1 401 300 1 500 200 CET1 Capital Req. = 13.3% 1 000 16.3 % 100 500 - - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2017 2018 2019 2017 2018 2019 CET1 T1 * T2 * 75% loans 100% loans Other RWA CET1 T1 * T2 * Note(*): As of Q3 2018 NOK 46m Tier 1 (1.5% of RWA) and NOK 50m Tier 2 (2.0% of RWA) capital counts towards MONO’s capital ad equacy ratios || Note(**): capital requirements (Pillar I) are weighted between Norway and Finland Note(*): As of Q1 2019 NOK 50m Tier 1 (1.5% of RWA) and NOK 50m Tier 2 (2.0% of RWA) capital counts towards MONO’s capital ad equacy ratios || Note(**): capital requirements (Pillar I) are weighted between Norway and Finland 8

Strategy and operations 9

New credit policies introduced in Finland to improve profitability Two years of consumer banking experience in Finland Gross loans • Improved risk selection in Finland NOK (million) - Risk reduction for new vintages is expected 4 000 • Developing Monobank’s own and improved credit 3 500 1511 score-card 1256 960 3 000 - Developing new optimised credit score card based on 774 582 increased credit database 2 500 407 - Will be implemented in Q2’19 2 000 • Finnish market increasingly important 1 500 2 624 2 581 2 589 2 524 2 363 1 996 1 000 1 719 1 435 1 181 500 854 624 451 261 - 36 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Norway Finland 10

Debt register in Norway expected to launch in Q2 19 Positive experiences from the Finnish consumer finance market Debt register New customers Existing customers • Debt register data are typically strong predictors • Uncertain short term effect - depends on many factors of credit risk • Default rates may temporarily increase as high risk • Monobank with solid experience using debt borrowers will find it increasingly difficult to refinance register data in Finland. • Otherwise limited effects on the existing loan book • Expect long term positive effects on profitability • Can collect data on existing customer for scorecard - Improved risk selection for new underwritings development, however only a snapshot of current debt (as opposed to historical records) will be available • Somewhat reduced approval rates as high risk customers are rejected 11

Customer segmentation Continuous development and tuning of scorecards to navigate the portfolio Age Income Education Housing Average customer 3% 43 years 4% 3% 15% 26% 21% 33% 31% 41% NOK 647k 28% 66% 67% Norway 28% 35% Higher education NOK 250k-349k <= 34 years 35-44 years Primary school Home owner NOK 350k-499k 45-54 years 55-64 years Secondary school NOK 500k-749k Tenant Home owner >= 65 years Higher education >= NOK 750k 3% 43 years 12% 14% 15% 23% 24% 29% 9% 28% NOK 464k 29% 71% Finland 30% 79% 34% Higher education NOK 250k-349k <= 34 years 35-44 years Primary school Home owner NOK 350k-499k 45-54 years 55-64 years Secondary school NOK 500k-749k Tenant Home owner >= 65 years Higher education >= NOK 750k 12

Monobank enters Sweden with digital consumer finance offering Swedish entry marks the third country for Monobank • Consumer loan offering launched in Sweden Inhabitants (millions) - Multi-country platform enables continued geographical expansion and diversification • Swedish population twice the size of Finland and Norway - Soft launch to reduce risk • Expansion fits well with BRAbank’s current presence in the ~5.3 Swedish consumer credits market ~5.5 ~10.0 13