Operating expenses Operating expenses increased by 7% to NOK 415 million compared to 2020. Marketing costs in 2021 were NOK 32.1 million, up from NOK 22.7 million in 2020. Personnel expenses increased to NOK 162 million in 2021 from NOK 144 million in 2020, driven by the general salary adjustments, investments in solidity and growth and an extraordinary contractual payment. General and administrative expenses increased to NOK 141 million, up from NOK 129 million in 2020. The increase was caused by higher marketing expenses and an ongoing data analytics project to improve processes and profitability. The cost-income ratio was 47.4% in 2021 compared to 35.2% in 2020. The increase is chiefly driven by a lower income base, and not by a cost increase. Komplett Bank has the ambition to improve the cost-income ratio significantly going forward, driven by efficiency measures already implemented and new efficiency programs under implementation. Based on already implemented cost measures, total costs were reduced by 5% over the last three quarters of 2021. TABLE 3: OPERATING EXPENSES NOK million 2021 2020 Change Personnel expenses 162 144 13 % General and administrative expenses, which of: 141 128 10 % Direct marketing expenses 32 23 41 % Depreciation 77 72 7 % Other expenses 35 43 -19 % Total operating expenses 415 388 7 % Losses on loans Loan losses were NOK 739 million in 2021, up from NOK 364 million in 2020. As part of the sales process when the Bank sold NPL portfolios totalling NOK 1.4 billion, Komplett Bank performed a review of its entire loan book. This review resulted in additional loan losses of NOK 482.5 million. During 2021, the Bank has completed a set of actions to de-risk the balance sheet through the disposal of NPL portfolios and implementation of stricter credit routines. Trough the transactions, the NPL ratio has been reduced from 21.5% to 10.0 % of total loans. Komplett Bank has also entered into forward flow agreements for its loan portfolios in both Sweden and Finland, which will reduce the credit risk even further. Consequently, the Bank expects loan losses in the coming quarters to be largely comparable to the levels seen in 2020 and 2021. The improvement in underlying credit quality confirms the de-risked balance sheet. In the fourth quarter, the amount of loans sent to collection was 37% lower than in Q4 2020. Profits and taxes Pre-tax operating profit ended with a deficit of NOK 278 million, down from NOK 349 million in 2020. Tax expenses for the full year were positive by NOK 69 million, up from a negative tax expense of NOK 86 million in 2020. Cash flow In 2021, cash flow from operating activities was NOK 347 million, compared to NOK 559 million in 2020. Profits after tax contributed negatively by NOK 361 million. A reduction in in gross loans to customers and decreased deposits also affected the cash flow from operating activities. The cash flow from financing activities was negative by NOK 145 million, down from NOK 182 million in 2020. The negative cash flow from financing activities corresponded to the payment of dividend totalling 79 million and re-payment of a perpetual Tier 1 bond of NOK 63 million. At the end of the period, total cash and cash equivalents were NOK 1,301 million, up from NOK 1,204 million at the end of 2020. TABLE 4: CASH FLOW NOK million 2021 2020 Cash flow from operations 347 559 Cash flow from investments -73 -80 Cash flow from financing 145 182 Net cash flow 130 662 Cash at the end of the period 1,302 1,204 Financial position As at 31 December 2021, total assets were NOK 10,105 million, a decrease from NOK 11,586 million at the end of 2020. The decrease is mainly driven by a reduction in net loans to customers during 2021 and a reduction in certificates and bonds. Komplett Bank / Annual Report 2021 33
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