Defaulted loans at the end of 2021 amounted to NOK 809 million, equivalent to 10.0% of gross lending to customers. At the end of 2020, defaulted loans were NOK 2,039 million, corresponding to 21.5% of gross lending. The sale of the NPL-portfolios reduced the loan balance, which impacted the ratio of impaired loans to gross loans. Accumulated impairments of loans as at 31 December 2021 amounted to NOK 822 million, down from NOK 1,146 million at December 2020. Losses on loans for the 2020 financial year were NOK 739 million, an increase from NOK 364 million in 2020. Adjusted for the disposal of the NPL-portfolios loan losses were NOK 483 million. Deposits from customers declined from NOK 8,992 million in 2020 to NOK 7,934 million at the end of 2021. The Bank’s liquid assets, comprising of deposits with credit institutions and liquid securities, totalled NOK 2,185 million, which is equivalent to 21.6% of the Bank’s total assets. Total equity was NOK 1,964 million, down from NOK 2,304 million at the end of 2020. TABLE 5: BALANCE SHEET NOK million 2021 2020 Change Total assets 10,105 11,586 -13 % Total liabilities 8,141 9,283 -12 % Total equity 1,964 2,304 -15 % Total equity & liabilities 10,105 11,586 -13 % Capital adequacy EU endorsed new regulations in connection with Capital Requirements Regulation (CRR) to tightening capital requirements related to non-performing loans (the so-called backstop-regulation) in April 2019. The aim is to secure sufficient capital to meet future expected losses. In Norway the hearing process ended in February 2020 and the Norwegian FSA proposed on 30 September 2020 to include the recommendation into Norwegian law. Komplett Bank does not expect the backstop rule to have material impact in 2022 as the Bank has a forward flow contract in place and new sales in Norway have been relatively low frommid-2019. The Norwegian Ministry of Finance made the decision on 17 June 2021 and 10 December 2021 to increase the countercyclical capital buffer to 1.5% and 2.0%, respectively, being effective from 30 June 2022 (1.5%) and 31 December 2022 (2.0%). As of 31 December 2021, the countercyclical capital buffer is 1.0%. As a consequence of this, the Bank’s overall capital requirement is expected to increase by 0.5%-point towards the end of 2022. As of 31 December 2021, the minimum requirement for CET1 for Komplett Bank was 17.1% and the total capital requirement was 20.5%. Komplett Bank has set a CET1 ratio target of 18.1%, which includes a 1.0% management buffer. The Bank thus targets a total capital ratio of 21.5%. At the end of 2021, Komplett Bank remained well capitalised with a CET1 ratio of 20.7%, significantly above the minimum regulatory requirement. The total capital adequacy ratio was 24.0%, down from 26.3% at the end of 2020. Perpetual Tier 1 (AT1) and additional Tier 2 (T2) capital made up 2.5% and 0.8% of the Bank’s capital adequacy, respectively. For additional information on capital adequacy, please refer to Note 14. Allocation of profit for the year Komplett Bank’s dividend policy is to pay out excess capital which is not deployed for growth purposes. Komplett Bank reports a negative profit after tax of NOK 209 million for the fiscal year 2021. Consequently, the Bank is not in a position to pay any dividend for the year. Given the current capital position and improved operations going forward, the Bank considers its dividend capacity to be 30-50% of annual profit after tax while maintaining ample capacity for growth in the medium term. The annual total deficit of NOK 209 million has been proposed allocated to retained earnings. Outlook As a consequence of Komplett Banks’s performance over the last quarters, the Board of Directors has during 2021 implemented a set of measures to improve the Bank’s operations. Several cost measures have been introduced in addition to a more restrictive pricing policy. Based on these initiatives, total costs have been reduced by 5% over the last three quarters. Yields on both credit cards and loans have also increased during the fourth quarter. 34 Board of Directors’ Report
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