Letter from the CEO Repositioning the Bank for profitable growth Earnings In 2021, the Bank faced several challenges that led to severe profitability pressure. Most importantly, the bank decided to take extraordinary loan losses, following a sale of NPLs in Q3, which were primarily related to the 2019-vintages that were of unsatisfactory quality. Further, a challenging market and competitive environment led to low growth and margin pressure. This was compounded by the Bank’s relatively large cost base following its historical multichannel and market growth strategy. In combination, these created a challenging environment for Komplett Bank in 2021. We have, of course, responded with decisiveness to these challenges. We have implemented several cost measures throughout the year, sold portfolios of non-performing loans, entered into forward-flow agreements across all countries of operation and introduced a more dynamic pricing policy. It is therefore encouraging already to see improvements from the first actions taken. Strategy We have established a strategic roadmap to reposition the bank for profitable growth. Throughout the last quarter of 2021, an extensive analysis of all parts of the business has been conducted. Based on this, we have identified a clear set of strategic pillars and concrete action plans. With focus and hard workd, these will revitalize the bank and lay the foundation for strong growth in earnings in the years to come. The strategic pillars in our roadmap will focus on product performance, process automation and technology simplification. All three initiatives are aimed at strengthening the efficiency of our platform and form the basis for an accelerated and profitable growth in the mid-term. The organisation I am happy to say that we have designed an efficient and dedicated organization. We have introduced a new and leaner management structure, with more efficient and flexible decision-making processes and increased our focus on critical parts of the operation. This is, of course, one of the key steps to ensure the long-term success of the Bank. I am impressed with the competence and dedication I have seen in all parts of the organisation since I took over as CEO. I am proud of how my colleagues have adapted to all challenges and changes throughout the year and I truly believe Komplett Bank has the right people to execute on the action plans we have established. Outlook To address the income and yield challenges, we are concentrating our efforts on optimizing the performance of our existing products in our existing markets. On a positive note, in 2021 we saw a record high demand for our products. We actually attracted almost 50% more applications than in 2019. However, we have not been able to convert enough of these applications to actual volume. Consequently, we will simplify the loan process for our customers and implement improved strategies to reduce churn. We will also adjust our product portfolio to strengthen our competitive edge. The focus will be on maximising risk adjusted margin across our products and markets. Based on the strong credit risk and analytics capabilities that we now have in the Bank, I believe we are also well positioned to selectively target higher margin segments going forward. 2021 has been a challenging, but also a strategically important year for Komplett Bank where a solid foundation for a positive development going forward has been laid. 8 Letter from the CEO
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