generally good market conditions as well as increased conversion rates. The latter factor is a result of systematic work on the Bank’s part throughout the previous year. To achieve higher conversion rates, the Bank has introduced a range of strategic initiatives related to product improvements, process automation, and simplification of technology over the last four quarters. The introduction initiatives in 2022 related to product improvements and process automation was completed towards the end of the fourth quarter and contributed to record-high new sales in the quarter. In addition to strong growth in new sales, the Bank has been working to reduce customer churn, which is a general challenge in the market. A new refinancing product was launched in the Norwegian market in June last year, which has contributed positively to reducing customer churn. Regarding the technology simplification work, it will continue in 2023 and is expected to contribute to increased scalability and reduced costs in the short and medium term. Throughout the last quarter of the previous year, Komplett Bank continued to increase deposit rates to its customers by raising loan rates on its products. Gradual repricing of loan rates is expected to contribute to an improvement in the net lending rate through 2023. Increased inflation has started to affect the Bank’s personnel costs somewhat, but the inflation effect is expected to have a moderate impact on the overall costs in the short term. In the medium term, the macroeconomic outlook for the Nordics is still robust, supporting expected growth in consumption and demand for consumer financing. At the same time, there is increased uncertainty related to the geopolitical situation with the war in Ukraine and inflationary pressures in the market.. 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 being made to improve the Bank’s invoicing and collection processes, including the functionality for paying bills (e-invoices and direct debit agreements).. Liquidity risk The Board has adopted a financial policy, which includes guidelines for liquidity management, risk limits, monitoring and reporting within this area. The guidelines are reviewed by the Board at least once a year. The Board receives regular reports on developments in the Bank’s liquidity risk. The Bank’s objective is to have a low liquidity risk. The risk is regularly monitored, and the Bank’s investments are made in such a manner that the liquidity risk is kept at a low level. The Bank’s investments principally consist of deposits in other financial institutions and interest-bearing securities with good liquidity and low counterparty risk. The liquidity risk was considered low during 2022. Loans to customers have been financed using paid-in equity, retained earnings, subordinated bonds and deposits from the Bank’s customers. The liquidity coverage ratio (LCR) requirement that entered into force on 31 December 2015 has been complied with, and with a good margin. The Bank had an LCR of 451% as at 31 December 2022, compared to a regulatory requirement of 100%. Market risk The Board approved finance policy also covers guidelines for market risk (including interest rate and currency risk), risk limits, monitoring and reporting in this area. The guidelines are approved by the Board at least once a year. The Board receives regular reports on developments in the Bank’s market risk. The Bank’s objective is to be exposed to a low market risk. Market risk is regularly monitored, and the Bank’s investments made in such a manner that a low market risk is maintained. The Bank’s Komplett Bank / Annual Report 2022 35
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