In addition, through the sales of the nonperforming loans portfolios in Q4, the credit risk in the balance sheet has been significantly reduced. Komplett Bank has also entered into forward flow agreements for its loan portfolios in Sweden and Finland, which will reduce the credit risk even further. Furthermore, the Board of Directors have together with the Bank’s management, conducted an extensive business review during the fourth quarter for repositioning the Bank and restore satisfactory profitable growth. Through a broad analysis, the Bank has identified several key challenges and established a clear action plan which it will implement in 2022. The Bank undergoes and will conclude a review of the product portfolio during the first quarter of 2022 and implement commercial actions, process automation and improvement of IT efficiency throughout 2022. The objective is to reposition the Bank for profitable growth focusing on improving risk adjusted margins and significantly enhancing efficiency and scalability. The Bank has already taken the first important step of repositioning itself through the establishment of the new more effective management team with increased focus on critical parts of the operation. Komplett Bank is also well capitalised with both a CET1 ratio and a total capital ratio well above its minimum capital requirements. The solid position will provide the Bank the necessary flexibility when implementing the new roadmap to improve profitability. At the end of September, the Finnish authorities decided to end the temporary interest cap on 10%, and the demand for consumer finance is solid. In Sweden, the underlying market is still growing, albeit at a moderate pace and most risk parameters are improving. Like in Norway, the niche banks are still dominating the market for consumer financing and Komplett Bank is mainly distributing its loans through brokers. The market for consumer finance in Norway is also solid, but lower demand and prudent lending have driven volumes down. However, the market for refinancing, debt consolidation and secured lending are growing and the outlook for overall consumption in 2022 is positive. Rising energy prices, higher interest rates and the ongoing war in Ukraine contribute to increased uncertainty in the macroeconomic environment. In addition, price levels for groceries and other goods are expected to increase. In total, these are elements which are expected to affect disposable income and consumption in 2022. Komplett Bank continuously monitor the risk development in the loan portfolio and will implement adequate measures if necessary. In addition, as part of the credit routines, the Bank applies stress testing when granting credits and established forward flow agreements limit the credit risk in the loan book. Risk and uncertainties Komplett Bank’s operations and results are subject to a range of risks and uncertainties. Credit risk The board has adopted a credit policy with guidelines for granting credit, risk limits, monitoring and reporting. The Board is regularly updated on important credit risk processes and key indicators. The credit risk appetite stipulated in the Bank’s policy for credit risk is enforced by the Bank. The Bank only offers loans to private individuals after a credit assessment that considers the borrower’s willingness and ability to pay. The credit decision for the individual loan application is based on an assessment of available external and internal information about the applicant. A combined process is carried out using an application score and specific credit rules. The Bank applies risk-based pricing in accordance with the assessment carried out in connection with the establishment of each loan. Efforts are continuously beingmade to improve the Bank’s invoicing and collection processes, including the functionality for paying bills (e-invoices and direct debit agreements). Operational risk The Board has adopted policies that include guidelines for operational risk, risk limits, monitoring and reporting. The policies are discussed by the Board at least once a year. The Board receives regular updates and reports on operational matters and any planned or possible measures. Services from external service providers are used extensively in the Bank’s operations. These services are monitored in line with established guidelines for outsourcing. The Bank strives for a high degree of automated, effective and scalable processes that Komplett Bank / Annual Report 2021 35
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