Komplett Bank annual report 2019

Cash flow from investments was NOK -99 million, down from NOK -69 million. The increased investments were linked to the develop- ment of tools that will contribute to the Bank’s present operations and future-oriented projects. The cash flow from financing activities was NOK -378 million, down from NOK -2 million in 2018. The negative cash flow from financing activities was due to the repayment of a NOK 400 million unsecured bond. At the end of the period, total cash and cash equivalents were NOK 615 million, down from NOK 1,232 million at the end of 2018. TABLE 4: CASH FLOW NOK million 2019 2018 Cash flow from operations -197 929 Cash flow from investments -99 69 Cash flow from financing -378 -2 Net cash flow -674 858 Cash at the end of the period 615 1,232 Financial position At 31 December 2019, total assets were NOK 10,620 million, an increase from NOK 9,661 million at the end of 2018. The increase is mainly driven by growth in lending portfolio during 2019. Defaulted loans at the end of 2019 amounted to NOK 1,285 million, equivalent to 13.8% of gross lending to customers. At the end of 2018 defaulted loans were NOK 840 million, corresponding to 10.1% of gross lending. Accumulated impairments of loans at 31 December 2019 amounted to NOK 810 million, up fromNOK 472 million at December 2018. Losses on loans for the 2019 financial year were NOK 454 million, an increase fromNOK 249 million in 2018. Deposits from customers totalled NOK 8,520 million at the end of 2019, an increase from NOK 7,366 million at 31. December 2018 mainly driven by the launch of German deposit products in late 2018. In 2017, the Bank issued a senior unsecured bond of NOK 400 million, with maturity in July 2019, which was fully repaid to the bond holders. The Bank’s liquid assets, comprising of deposits with credit institu- tions and liquid securities totalled NOK 1,944.4 million, which is equivalent to 18.3% of the Bank’s total assets. Total equity was NOK 1,850 million, up fromNOK 1,620 million at the end of 2018. TABLE 5: BALANCE SHEET NOK million 2019 2018 Change Total assets 10,620 9,661 10% Total liabilities 8,771 8,041 9% Total equity 1,850 1,620 14% Total equity & liabilities 10,620 9,661 10% Capital adequacy In May 2019, The Financial Supervisory Authority of Norway completed its Supervisory Review and Evaluation Process (SREP) of Komplett Bank and set the Bank’s Pillar 2 common equity tier 1 (CET1) buffer requirement to 6.5% of risk-weighted assets. On 30 September 2019, the Swedish FSA increased the coun- tercyclical capital buffer requirement from 2.0% to 2.5%, while the Norwegian Ministry of Finance increased the countercyclical capital buffer requirement to 2.5% from 31 December 2019. As of 31 December 2019, the Bank’s weighted countercyclical capital buffer requirement was 1.8%. As of 31 December 2019, the minimum requirement for CET1 for Komplett Bank was 18.3% and the total capital requirement was 21.8%. Komplett Bank has set a CET1 ratio target of 19.3%, which includes a 1.0% management buffer. The Bank targets a total capital ratio of 22.8%. At the end of 2019, Komplett Bank remained well capitalised with a CET1 ratio of 21.2%, well above the minimum regulatory requirement. The total capital adequacy ratio was 22.5%, up from 21.4% at the end of 2018, which is above the minimum capital requirement, but below the Bank’s targeted capital ratio. Additional tier 1 (AT1) and tier 2 (T2) capital made up 0.5% and 0.7% of the Bank’s capital adequacy, respectively. Going forward, Komplett Bank expects to continue building capital organically, and will consider the issuance of new AT1 or T2 capital. For additional information on capital adequacy, please refer to Note 9. Allocation of profit for the year Komplett Bank’s dividend policy is to pay out excess capital which is not deployed for growth purposes. Given the capital situation as at 31 December 2019, it is the assessment of the Board of Directors that Komplett Bank is not yet in a position to distribute dividends. It is therefore proposed that the profit after tax for 2019 be transferred to retained 26 Board of Directors’ Report