Interim Presentation | 3rd quarter 2018 | 17 October 2018 - PowerPoint PPT Presentation

Interim Presentation | 3rd quarter 2018 | 17 October 2018

Continued growth and improved profitability Q3 2018 highlights Growth driven by geographical expansion Net loans • Net loan balance up 7.4% including NOK 86 million NOK million 3,449 effect from forward flow agreement Loan growth of 24% in Finland vs. Q2, • 1,867 corresponding to NOK 186 million in loans • Growth of 5 % vs. Q2 reflects reduced marketing 624 spending – more conservative approach in Norway due to regulatory environment Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 2018 Net interest income NOK 86.1 million, • Forward flow up 5 % vs Q2’18 and up 112 % vs. Q3’17 Profit after tax Improved profitability driven by increasing economies of scale NOK million 15.5 Net profit after tax up 12% vs. Q2 • 13.8 10.1 Net profit YTD Q3’18 of NOK 39.3 million, • 7.4 up 372.4% vs YTD Q3’17 5.7 3.0 1.8 1.7 0.5 • Investments in emerging fintech business reduce short term company profitability Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 2018 ROE 11.2%* 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) 86 82 14.9 % 14.8 % 14.6 % 76 14.4 % 14.4 % 14.4 % 75 14.3 % 14.2 % 14.3 % 69 64 12.8 % 12.8 % 12.8 % 12.7 % 12.7 % 12.3 % 56 53 45 41 8.8 % 8.7 % 8.7 % 8.3 % 37 8.1 % 8.0 % 7.8 % 35 7.7 % 7.6 % 30 28 23 22 15 14 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Net interest income Total income Net profit after tax Annualized loan yield (Norway) * Annualized loan yield (Finland) * 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 Temporary dip in administrative costs in the quarter Cost / Income ratio * Operational expenses NOK (million) Per cent (%) 36.7 34.2 120% 2.4 2.1 30.9 29.2 100% 2.5 1.4 12.0 14.6 22.7 80% 21.9 9.9 20.3 11.3 2.0 1.5 73% 72% 1.1 67% 60% 15.8 9.6 64% 7.7 8.0 0.3 8.1 55% 55% 7.9 53% 51% 4.6 49% 9.6 8.6 40% 9.7 43% 42% 40% 40% 6.1 0.5 6.3 36% 4.3 34% 5.6 33% 3.6 30% 27% 12.7 20% 10.6 8.0 8.0 3.4 6.9 6.5 6.2 5.5 2.2 0% Q2 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18 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 86.4 91.9 NOK (million) NOK (million) NOK (million) 24.5 356.6 69.5 251.7 332.5 19.1 18.8 50.7 13.8 189.1 10.9 135.7 37.3 40.7 8.3 58.7 94.7 26.3 23.5 3.1 4.2 3.7 4.9 13.5 18.4 9.9 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 16 16 16 17 17 17 18 18 18 18 16 16 16 17 17 17 18 18 18 18 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 16 16 17 17 17 18 18 18 18 31-60 PD 61-90 PD > 90 PD Loan loss ratio * Non-performing loan ratio ** Total provision ratio *** Per cent (%) Per cent (%) Per cent (%) 10.1 %10.1 % 6.4 %7.1 %7.9 % 8.5 % n.a. n.a. 31.4 % 27.6 % 27.8 % 27.5 % 26.8 % 25.9 %25.8 % 2.9 % 2.9 % n.a. 4.9 % 2.6 % 2.7 % n.a. 3.2 % 2.2 %2.2 %2.4 % 2.2 % Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 16 16 17 17 17 18 18 18 18 16 16 17 17 17 18 18 18 18 16 16 17 17 17 18 18 18 18 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 / 2) || 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 4,901 563 4,081 3,689 548 814 3,272 737 534 56 691 50 522 65 1,229 2,487 552 345 64 4,239 1,895 377 3,434 352 339 1,472 758 3,057 52 687 1,235 159% 168% 153% 158% 153% 167% 160% 163% 181% 2,652 51 255 625 335 2,043 331 489 794 35 1,556 138 157 325 1,138 301 28 220 903 102% 108% 98% 108% 109% 113% 106% 107% 123% 638 110 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2018 2016 2017 2018 2017 2018 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 3,088 615 per cent (%) NOK (million) NOK (million) 604 2,940 592 583 2,765 2,333 401 1,819 27.8 % 309 306 25.0 % 1,423 302 1,401 22.0 % 21.5 % 21.6 % 21.4 % 20.6 % 19.9 % 1,107 17.7 % Total Capital Req. = 17.0 % 785 139 CET1 Capital Req. = 13.5% 16.7 % Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 2018 2017 2018 2016 2017 2018 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 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 8

Strategy and operations 9

Building a digital bank focused on consumer loans independently from scratch Diverse product portfolio in three phases PHASE 2 PHASE 3 PHASE 1 CREDIT CARD “BANKING -AS-A LOAN PLATFORM PLATFORM SERVICE” 2015-2017 2018 2019 - 1 Unsecured consumer loans || Deposit & saving accounts 2 Credit cards 3 Banking-as-a-service* UNSECURED CONSUMER LOANS CREDIT CARDS NORWAY AND FINLAND BUSINESS SOLUTIONS • Fee based business solution with banks • Cooperation with partners SAVING ACCOUNTS NORWAY AND APP DEVELOPMENT EUROPE P2P AND POS SOLUTIONS *optional 10

A scalable business model enabling both geographical and product expansion Core banking platform 24/7 customer experience platform Consumer credit and Credit cards New “fintech” products deposit accounts within consumer credit 150 000 11

Combining people, technology and systems to deliver superior performance LEAN SCALABLE COMPETENT DILLIGENT Only 46 full-time employees Organization scaled for considerable Experienced staff with long track- Organization with efficient and and 5 part-time employees growth in the Nordic markets record within the financial sector, hands-on execution approach technology and analytics Bent H. Gjendem CEO COO CTO CFO CRO CPO Head of Marketing (FI) Head of Customers Product Consultant IT Architect Controller Head of Compliance Senior Analyst/Data Scientist Head of Analytics Performance Specialist IT Architect Controller Customer Support Legal Counsel Head of Sales Office manager Creditcard On leave IT Architect + 13 employees Head of Marketing (NO) Product Consultant Accountant IT Architect Head of Credit (FI) Operations consultant Kitchen IT Architect Product Consultant + 4 employees Product manager Creditcard Treasury IT Architect IT Architect 12

Our ambition is to deliver the best customer experience in our segment Consumer everyday Utilities life and goals Home Consumer financial services needs Shopping Consumer loans Credit card Monobank payment Car digital consumer banking platform Deposit Purchase insurance Entertainment Wedding Travel Health 13

Consumers increasingly expect simplicity and flexibility Free and instant person-to-person payments The best customer experience on core banking services Instant access to Instant access to all your funds in a customer service mobile app when you need it Source: Brett King with adjustments 14

Established position in digital consumer banking Ambition of NOK 10 bn in net loans within 3-4 years Number of customers Net loans NOK (million) Number 3 449* 30,000 3,500 24 781 25,000 3,000 2,500 20,000 2,000 15,000 1,500 10,000 1,000 624 5,000 3 671 500 - 0 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Deposit customers, Norway Loan customers, Norway Loan customers, Finland Norway Finland Deposits customers, Euro Credit card customers, Norway * Net of NOK 86 million transferred in a forward flow agreement 15

Monobank’s strategy is to develop tomorrow’s solutions Plastic cards Hybrid solutions Only digital solutions Yesterday Today Tomorrow 16