Annual Report 2020 Content Banking is changing 3 Komplett Bank in brief 4 2020 in numbers 6 Letter from the CEO 8 Shareholder information 10 Board of Directors 12 Management 14 Corporate governance 16 ESG/Sustainability/CSR report 2020 22 Board of Directors’ Report 30 ConfirmationonAnnualReport and Board of Directors’ Report 38 Financial statements 41 Notestothefinancialstatements 46 Auditor’sreport 114 Komplett Bank Annual Report 2020 3 Banking is changing In an increasingly digital society, with a multitude of available options, we understandtheimportanceofflexibility.Wethereforeworkhardtoprovidea high-quality,convenientandflexiblecustomerexperience. 4 Komplett Bank in brief Komplett Bank in brief KomplettBankisaspecialisedconsumerfinancecompanywithanambition forlong-termvaluecreation,offeringavarietyoffinancingsolutionsto creditworthycustomersintheNordicregion.Inanincreasinglydigital market, Komplett Bank is focused on creating value for its customers by offeringflexible,convenientfinancingsolutions,andefficient,customer friendlyprocesses.KomplettBankispursuingagrowthstrategybasedon geographicalandproduct-wisediversificationandexpansion.Itsproduct portfoliocomprisesconsumerloans,creditcards,point-of-salesfinance solutionsandhigh-yielddepositaccounts. Consumer loans Credit cards 70,000 customers 62,000 customers NOK 7,055 million net loans NOK 729 million net loans Point-of-sales finance Deposit accounts 156,000 customers 37,000 customers NOK 577 million net loans NOK 8,992 million deposits Komplett Bank Annual Report 2020 5 Digital and scalable organisation headquartered Sverige in Lysaker, outside Oslo Finland Norge Komplett Bank‘s strategy is founded on a digital, scalable,efficientandlow-costoperatingmodel combinedwithstrongriskcontrol.Thisstrategy Lysaker is enabled by maintaining a centralised corporate structure and fully digital operations utilizing modern technology.KomplettBank’sconsumerfinancing productsareofferedtocustomersinNorway, SwedenandFinland.Inaddition,theBankoffers high-yield deposits accounts in Norway, Sweden andGermany. Tyskland Komplett Bank’s strategic roadmap for geographical and product-wise expansion Consumer loans Credit cards Point-of-sales finance Deposit accounts Q1 Q4 Q3 Q1 Norway 2014 2015 2017 2014 Q1 Q2 Finland TBD TBD 2017 2019 Q1 Q1 Q2 Q1 Sweden 2018 2019 2018 2020 EU TBD TBD TBD Q4 2018 6 2020 in numbers 2020 in numbers Attheendof2020,KomplettBankhadnetloansofNOK8.4billion andapproximately288,000customersspreadacrossitsproducts andmarkets.KomplettBankiswellcapitalisedwithaCET1ratioof 22.7percentasof31December2020. Net loans (NOK million) 9,000 - 8,000 Loans -Sweden ,000 6,000 Point-of-sales - finance ,000 - ,000 Loans Finland 3,000 Credit cards 2,000 1,000 Loans Norway 0 201 2016 201 2018 2019 2020 Net loan distribution Customer distribution by product by product Loans Norway 38% Loans Norway 12% NOK Loans Finland 30% Loans Finland 9% Loans Sweden 17% 288,000 Loans Sweden 3% 8.4billion Credit cards 9% Credit cards 21% Point-of-sales finance 7% Point-of-sales finance 54% Komplett Bank Annual Report 2020 7 Net loan growth Net loan (NOK) -1.6% 8.4 bn Return on equity CET1 ratio 13.6% 22.7% Key figures Figures in NOK million 2020 2019 2018 2017 2016 P&L items Net interest income 1,027 1,087 959 670 371 Total income 1,100 1,176 1,031 709 391 Operational expenses -388 -442 -339 -222 -129 Losses on loans -364 -454 -249 -119 -86 Profit after tax 263 203 331 274 128 Earnings per share (NOK) 1.36 1.11 1.91 1.60 0.87 Balance sheet items Net loans to customers 8,361 8,496 7,844 5,461 3,322 Deposits from customers 8,992 8,520 7,366 4,330 3,313 Total equity 2,304 1,850 1,620 1,402 718 Other key figures CET1 ratio 22.7% 21.2% 20.0% 25.7% 20.2% Total capital ratio 26.3% 22.5% 21.4% 27.8% 23.6% Cost/income ratio 33.5% 30.5% 22.5% 20.1% 20.4% Loan loss ratio 4.3% 5.6% 3.7% 2.7% 3.5% Return on equity (ROE) 13.6% 12.0% 22.6% 27.0% 25.5% Price per share (NOK) 9.0 12.5 12.6 19.0 16.0 Number of shares 187 184 173 171 148 Market cap 1,680 2,298 2,176 3,256 2,374 8 Letter from the CEO Letter from the CEO 2020wastheyearwhenKomplettBanktrulybenefittedfromthe organisation’s ability to adapt, and in the fourth quarter of the year the Bank resumednetlendinggrowth.Withattractiveproducts,goodprofitabilityanda solid balance sheet, Komplett Bank is now positioned to deliver good growth andsustainablevaluecreationforitsstakeholdersintheyearstocome. Since 2014, Komplett Bank has been offering simple and intuitive Earnings financing services to creditworthy private individuals, creating In June, Komplett Bank resumed its lending activity to new cus- financial flexibility for each customer. By being a responsible tomers, and after gradually increasing its level of activity, the Bank lender and offering liquidity to the private market, Komplett Bank returned to net lending growth in the fourth quarter. At the same also contributes to generating economic activity and growth, time, loan losses were stable at a satisfactory level throughout all creating value for society. four quarters, which is important for the Bank’s profitability and ability to contribute to society. The customers At the end of 2020, Komplett Bank had more than 320,000 Although revenues declined last year due to our controlled customers in Norway, Sweden, Finland and Germany, up by more slowdown in new lending, lower costs, helped by the Bank’s flexible than 50,000 from the previous year. We are proud of the trust our business model, and lower loan losses contributed to the net profit customers place in us, but first let’s return to the very beginning of in 2020 ending at NOK 263 million, up 30 percent from 2019. This this special year we have put behind us. is a result that I am very proud of, and it comes from dedicated and targeted work from all the Bank’s employees who have quickly Komplett Bank entered 2020 with increased uncertainty about adapted to their new everyday life working from home offices. loan losses after the fourth quarter of 2019. This uncertainty increased further towards the end of the first quarter of 2020, Based on the Bank’s target for core Tier 1 capital adequacy, the when the acceleration of Covid-19 cases brought with it the return on equity would have been 18% for the year adjusted for increased risk of an economic downturn. As a responsible the negative macroeconomic provisions related to Covid-19. In employer and lender, the Bank’s response was first and foremost comparison, our goal is a long-term return on equity of 20%. to ensure that employees and their families were taken care of, while at the same time helping existing customers who had ESG temporary problems servicing their loans. This was part of the In the annual report, we have included an extended section on joint effort volunteer work the authorities strongly encouraged Komplett Bank’s social responsibility. New this year is that we have during these special times. carried out a materiality analysis in which the Bank’s most impor- tant stakeholders have contributed with views about which factors We then decided to temporarily reduce our risk appetite, and we should prioritise within the environment, social conditions effectively put the brakes on issuing loans to new customers. This and corporate governance (ESG) areas. The most material topics meant that Komplett Bank’s net lending growth was negative in that were highlighted were anti-corruption and money laundering, the first two quarters of the year. responsible lending, as well as data security and privacy – which is in line with leading ESG framework assessments of our industry. Despite rapidly rising unemployment in the Nordic countries, and an economic slowdown as society was partially shut down, As a result of the work with ESG, we have set important key figures we experienced that our customers prioritised servicing their and targets in 2020, at the same time as the Bank’s Board and loans. Only a few customers asked for temporary relief, which we management agree that we will increase the level of ambition in continuously assessed and granted. the ESG areas in the years to come. Komplett Bank Annual Report 2020 9 Komplett Bank is well capitalised, highlydiversified and in a strong competitive position in the attractive Nordic markets. The organisation digitalisation of society, as well as persistently high demand for our Throughout 2020, Komplett Bank’s 157 dedicated employees have products. With this backdrop, we expect to deliver lending growth shown a great ability to adapt to change, and we believe our corpo- of 5-10 percent in 2021. At the same time, we aim to have a long- rate culture gives us a comparative advantage. Drive and willingness term dividend capacity of 30-50% of the annual result. to take responsibility and ownership sum it up well. Throughout 2020, employees have also been engaged in defining the purpose However, to deliver annual lending growth of 10% or more over and values of the Bank. The result of this work is that the Bank has time at target returns, the Bank must expand by offering more been able to strengthen its culture and the employees’ commitment products or by entering new geographical areas. Both these even with the challenges Covid-19 has brought. strategic alternatives are now being evaluated with the attractive- ness of each market and synergies with current operations as the During 2020, the Bank has proven to be very competitive in terms two key criteria. of our cost and profitability compared to financial enterprises as a whole, according to our analysis. In addition, Komplett Bank is one In 2022, we expect to take the next step in our strategic roadmap, of the most well-capitalised consumer banks in the Nordic region. and with it strengthen our ability to offer even more private individuals financial flexibility. To further strengthen Komplett Bank’s competitiveness, we have prioritised the following areas: This is the last annual report I will present as CEO of Komplett Ǵ Increase customer satisfaction by improving the understanding Bank.