Komplett Bank annual report 2019

credit-worthiness by providing an overview of all outstanding unsecured debt. Komplett Bank also implemented consent-based loan applications (SBL) in 2019, which enables the continued automatic processing of loan applications in Norway. Debt registers are also available and utilised by Komplett Bank in its assessment of applicants in Sweden and Finland. Organisational development Changes in top management In January 2019, following the resignation of Raimond Pettersen, Jan Haglund was appointed as acting Chief Executive Officer (CEO) and in March 2019, he was named CEO on a permanent basis. Prior to his appointment, Jan Haglund had been a member of Komplett Bank’s management team for several years, first as Chief Strategy Officer and later as Chief Financial Officer (CFO). At the same time, Henning Fagerbakke was appointed as CFO of Komplett Bank. He previously held the position of Finance Manager at the Bank. Corporate governance Throughout 2019, Komplett Bank underwent significant organisa- tional development. On 10 May 2019, Komplett Bank was among several banks to receive a report from the Norwegian Financial Supervisory Authority (FSA) in which the FSA identified several operational areas of improvement and remarked on the Bank’s anti- money laundering (AML) procedures. No money laundering activi- ties or attempted money laundering activities were identified. On 1 July 2019, the FSA notified Komplett Bank of a NOK 18 million AML administrative fee. The Bank acknowledges that internal routines previously were not strong enough and remains strongly committed to ensuring compliance with all relevant rules and regulations. Following the receipt of the FSA’s report, the Bank implemented significant measures to address improvement areas marked upon by the FSA and to ensure full compliance with AML regulations. Measures to address aforementioned AML considerations included a complete restructuring of the management team and a clarifica- tion of roles and responsibilities. Organisational- and operational changes related to AML included, but were not limited to: · Established a new Board Audit & Risk committee, an Internal Audit function and a new, dedicated Compliance and Risk function · Established separate AML team, reporting to the COO and · recruited a dedicated AML officer · Enhanced whistle-blower process with anonymous external channel · Reviewed and updated the risk assessment processes and · policies and procedures relating to AML · Established a new reporting structure to management and the Board of Directors · Implemented a targeted AML training programme for all employees In Q3 2019, Komplett Bank’s Internal Auditor (EY) performed an assessment of the Bank’s AML procedures, which was submitted to the FSA together with the Bank’s final report on 1 October 2019. Review of the annual accounts The annual financial statements have been prepared in accor- dance with the International Financial Reporting Standards (IFRS). Komplett Bank has identified cost-income ratio, loan loss ratio, return on equity (ROE) and adjusted return on equity (ROE adj.) as Alternative Performance Measures in addition to the financial information prepared in accordance with IFRS as adopted by the EU. Please see note 22 for further details. 2019 financial highlights: · Total income of NOK 1,176 million · Pre-tax profit of NOK 280 million · Net lending was NOK 8,496 million as of 31 December 2019 · Cost-income ratio was 30.5% 1) · Loan loss ratio was 5.6% 2) · Return on Equity (ROE) was 12% 3) Profit and Loss Income Komplett Bank’s total income was NOK 1,176 million in 2019, an increase of NOK 144 million (14%) compared to 2018. The increased income was driven by increased net interest income, which grew by 16% to NOK 1,115 million in 2019, primarily as a result of loan portfolio growth. Income from commissions and fees increased to NOK 172 million from NOK 148 million in 2018, driven by growth in point-of-sales finance. Expenses from commissions and fees also grew in 2019 to reach NOK 114 million, up from 74 million in the previous year. This increase was largely the result of agent distribution costs in Finland and Sweden, broker costs related to the launch of EUR deposits and commission costs related to the launch of credit cards in Sweden and Finland. As a result, net commissions and fees declined by 21% year-on- year to NOK 59 million in 2019. 1) Total operating expenses, excluding marketing expense and losses on loans/net interest income and net commissions. See Note 22 of the annual financial statements for a detailed calculation. 2) Losses on loans for the year/average yearly net loans to customers as a percentage. 3) Profit for the year/average yearly equity as a %. See Note 22 of the annual financial statements for a detailed calculation. 24 Board of Directors’ Report