million from NOK 141 million in 2021. The increase was due to higher marketing expenses and restructuring costs, particularly related to the IT platform. Marketing expenses in 2022 were NOK 36 million, up from NOK 32 million in 2021. The cost-income ratio was 63% in 2022, up from 47% in 2021. The increase is mainly driven by a lower revenue base and depreciation. Adjusted for depreciation and other one-off costs related to restructuring, the cost ratio increased from 47% to 50%. Komplett Bank has an ambition to significantly improve the cost ratio going forward, driven by efficiency measures already implemented and new efficiency programs currently being implemented. TABLE 3: OPERATING EXPENSES NOK million 2022 2021 Endring Personnel expenses 133 162 -18 % General and administrative expenses, which of: 159 141 13 % Direct marketing expenses 36 32 12 % Depreciation 172 77 122 % Other expenses 43 35 24 % Total operating expenses 507 415 22 % Losses on loans Loan losses were NOK 292 million in 2022, down from NOK 739 million in 2021. The loan losses in 2021 were impacted by a review of the loan portfolio, after a one-off sale of portfolios of non-performing loans totaling NOK 1.4 billion in the 3rd quarter of 2021, resulting in further loan losses of NOK 256 million. As a result of high growth in the second half of 2022, the Bank has also increased provisions for loan losses in 2022, as the IFRS 9 standard requires that 12-month expected credit losses are booked upon initial recognition of a new loan. During 2021 and 2022, the Bank has implemented a set of measures to reduce balance sheet risk through the disposal of non-performing loan portfolios, ongoing transfer agreements of non-performing loans (“forward flow”), and the implementation of improved credit procedures. As a result of these measures and positive developments in underlying credit quality, the proportion of non-performing loans of total loans decreased from 9.8% in 2021 to 2.7% in 2022 After low loan losses in the first half of 2022 due to a shrinking loan book, and increased losses due to strong growth in the second half of the year, the Bank expects loan losses to normalize to levels between 4.0% and 4.5% in 2023. Profits and taxes The pre-tax operating profit was NOK 2 million in 2022, an improvement compared to the loss of NOK 278 million kroner in 2021, which was affected by the previously mentioned extraordinary loan losses. The tax expense for the year was NOK 1 million, compared to a positive contribution of NOK 69 million in 2021.. Cash flow In 2022, the cash flow from operating activities was NOK -408 million, compared to NOK 347 million in 2021. Net income after tax contributed NOK 1 million. An increase in gross loans to customers and net purchases of certificates and bonds also negatively impacted the cash flow from operating activities. The cash flow from investment activities was negative at NOK 58 million, up from minus NOK 73 million in 2021, driven by lower levels of investments in 2022. The cash flow from financing activities was NOK -24 million, up from NOK -145 million in 2021. The negative cash flow from financing activities relates to the payment of interest on perpetual bonds. In addition, a dividend of approximately NOK 78 million was paid out in 2021. At the end of 2022, the total cash and cash equivalents were NOK 808 million, down from NOK 1,302 million at the end of 2021. TABLE 4: CASH FLOW NOK million 2022 2021 Cash flow from operations -408 347 Cash flow from investments -58 -73 Cash flow from financing -23 -145 Net cash flow -490 130 Cash at the end of the period 808 1 302 Financial position As of December 31, 2022, the Bank had total assets under management of NOK 11,528 million, up from NOK 10,105 million at the end of 2021. The increase is mainly due to an increase in net loans to customers during 2022. At the end of 2022, non-performing loans amounted to NOK 257 million, equivalent to 3% of gross loans to customers. At the end of 2021, non-performing loans amounted to NOK 809 Komplett Bank / Annual Report 2022 33
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