Lea Bank ASA

Investor Presentation • Apr 27, 2023

1st quarter 2023 results presentation

Disclaimer

This Presentation from Lea bank ASA ("Lea bank" or the "Company") includes among other things forward-looking statements. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as "believe", "may", "will", "should", "would be", "expect" or "anticipate" or similar expressions, or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans or intentions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources, reflect the current views with respect to future events and are subject to material risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. Neither Lea bank nor any of its officers or employees provides any assurance as to the correctness of such forward-looking information and statements. The Company does not intend, and assumes no obligation, except as required by law, to update any forwardlooking statements or to conform these forward-looking statements to its actual results.

By attending or receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of Lea bank and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of Lea bank's business and the securities issued by Lea bank.

This Presentation speaks as of the date of the presentation. Neither the delivery of this Presentation nor any further discussions of Lea bank with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of Lea bank since such date.

Table of contents

Highlights and development Q1

2 Financial results Q1

3 Outlook

1

Lea bank ASA at a glance

Digital niche bank with an international footprint

Consumer finance bank with a strong presence in the Nordic market…

• Lea bank has a fully digital bank offering focusing on consumer loans and deposits
• Focus on creating shareholder value through continuous profit generation, optimizing capital allocation and evaluation of growth versus dividends
• Listed on Euronext Growth at Oslo Børs, ~1,300 shareholders. Braganza AB largest shareholder. Other large shareholders include Alfred Berg Norge/Aktiv, Hjellegjerde Invest, Skagerrak Sparebank and Fondsavanse

…leveraged by a scalable digital platform

• Scalable operation model on the back of leading technological solutions, cost efficient value chain and cross-border operations
• Proven value chain with inhouse credit analysis and operations, broad distribution network and forward flow agreements for defaulted loans
• Focus on core markets in the Nordics utilize our digital advantage in other European markets in the future

Gross loans 6,677 MNOK – geographical mix Q1 2023

Product portfolio

Consumer loans		Deposits
Short term financing	Debt consolidation		Savings accounts with attractive terms in NOK and EUR

Q1 2023 highlights

			Key financial figures, MNOK
		• Profit before tax 36.4 MNOK (profit after tax 27.6 MNOK)		Q1-23	Q1-22	2022
Q1 financials	• Positive trend in gross loans - growth of 390 MNOK • CET1 Capital ratio 20.6% (post dividend accrual)	Interest income	160.7	128.1	554.3
		PBT	36.4	34.3	186.4
			- Dividend			70.2
	• One-off sale of NPL stock in Norway in early Q2 reduces uncertainty around stage 3 going forward Credit quality • contributes to higher loan loss in Q1	ROE, Annualized	8.4%	8.3%	11.1%
		More challenging credit performance in Sweden and Finland. Higher amount sold on the forward flow agreement in Finland	ROE adj.1 , annualized	9.2%	10.7%	13.5%
			EPS, annualized	1.16	1.09	1.48
			EPS pre tax, annu.	1.53	1.45	1.96
			C / I	30.3%	33.3%	30.7%
	Capital	• European systemic risk board recommended to lower threshold from 32 BNOK to 5 BNOK for applying the Norwegian systemic risk buffer – applicable from 31.12.23	Gross loans	6,677	5,486	6,287
		Equity2 • Finland decided to implement systemic risk buffer of 1% from April 2024 1,327			# of shares	BVPS
			95,174,187	13.94

Note on key figures: PBT: Profit before tax, ROE: Annualized Return On Equity (excluding tier-1 capital), EPS: Annualized Earnings per share, C/I: Cost to income

1) ROE adjusted subtracts excess capital from the calculation (capital req. + mgmt. buffer)

2) Equity excluding tier 1 capital and reduced by proposed dividend

Table of contents

1 Highlights and development Q1

2 Financial results Q1

3 Outlook

| 6

Solid Q1 profits and capitalization

Well above CET1 requirement

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0

0

0

0

0

0

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0

Equity and CET1 ratio1, 2, MNOK Profit after tax and Return on Equity, ROE adj³ MNOK

1) CET1 ratios for Q1, Q2 and Q3 include YTD unaudited profit

2) Equity reduced by annual dividend accrual in Q4-2022

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

1,500

3) ROE adjusted subtracts excess capital from the calculation (capital req. + mgmt. buffer)

Increased gross loans

Share of volumes outside of Norway continue to increase

Gross lending, MNOK

Geographical mix, gross loans

Comments

• Gross loans increased by 390 MNOK from last quarter
• Volumes outside of Norway represent 58.2% following strategic focus on international markets

Stable margin development

Increased funding cost partly offset by increased lending margins

1) All figures are end of quarter and nominal

Credit quality development

Increased uncertainty driven by macro conditions

1) From Q4 2022, stage 3 volumes also include volumes where the claim against the customer has not necessarily entered debt collection

Credit quality overview

Stage allocation

Provisions, MNOK

Loan loss ratio¹

Loan losses, MNOK

Total provision ratio³

1) Loan loss ratio = monthly loan losses p.a / monthly avg. gross loans 2) Non-performing loan ratio = stage 3 ratio

3) Total = Total provision / Gross loans

Income statement

NGAAP
Income Statement (Amounts in thousands)	Q1-2023	Q1-2022	2022
Interest income	160,705	128,148	554,259
Interest expense	-29,193	-14,017	-61,123
Net interest income	131,512	114,131	493,136
Commission and fee income	8,726	5,587	28,766
Commission and fee expenses	-1,080	-871	-4,740
Net change in value on securities and currency	-763	-569	5,594
Other income	12	13	220
Net other income	6,894	4,160	29,841
Total income	138,406	118,291	522,977
Salary and other personnel expenses	-14,934	-15,923	-62,600
Other administrative expenses	-20,421	-19,143	-79,170
- of which marketing expenses	-912	-824	-3,883
Depreciation	-3,465	-2,450	-10,833
Other expenses	-3,131	-1,874	-8,046
Total operating expenses	-41,952	-39,390	-160,649
Profit before loan losses	96,454	78,901	362,327
Loan losses	-60,073	-44,556	-175,968
Profit before tax	36,381	34,345	186,359
Tax	-8,819	-8,398	-45,782
Profit after tax	27,563	25,947	140,577

Comments on income statement

• Profit before tax Q1-23 of 36.4 MNOK, compared to 34.3 MNOK last year
• Interest income in Q1-23 of 160.7 MNOK, compared to 128.1 MNOK last year – driven by higher volumes and interest rate
• Interest expense in Q1-23 of 29.2 MNOK, compared to 14.0 MNOK last year – driven by higher volumes and interest
• Weaker yield on liquidity portfolio in Q1 driven by increased credit spreads resulting from uncertainty in banking industry, and weaker results driven by currency effects
• OPEX in Q1-23 of 42.0 MNOK, compared to 39.4 MNOK last year – demonstrating strong focus on cost control
• C/I improved to 30.3% compared to last year of 33.3%
• Loan losses in Q1-23 of 60.1 MNOK compared to 44.6 MNOK last year, reflecting annual loss ratio of 3.7% compared to 3.2% last year

Balance sheet

NGAAP
Balance sheet (Amounts in thousands)	31.03.2023	31.03.2022	31.12.2022
Assets
Cash and deposits with the central bank	50,685	49,988	50,402
Loans and deposits with credit institutions	496,705	289,262	322,201
Gross loans to customers	6,676,559	5,486,168	6,286,924
Loan loss provisions	-445,922	-412,773	-403,373
Certificates, bonds and other securities	989,545	1,300,676	961,163
Deferred tax asset	82,937	129,140	91,756
Other intangible assets	28,730	16,936	29,380
Fixed assets	8,051	9,468	8,775
Other assets	32,270	22,079	20,256
Total assets	7,919,560	6,890,945	7,367,484
Equity and liabilities
Loan from central bank	0	0	0
Deposits from customers	6,325,948	5,316,978	5,791,333
Other liabilities	130,473	136,579	142,315
Tier 2 capital	81,830	104,311	81,746
Total liabilities	6,538,251	5,557,867	6,015,394
Share capital	190,348	189,681	189,681
Share premium reserve	662,360	660,322	660,322
Tier 1 capital	54,165	75,875	54,114
Other paid-in equity	13,750	11,929	13,405
Other equity	460,684	395,270	434,568
Total equity	1,381,309	1,333,077	1,352,089
Total equity and liabilities	7,919,560	6,890,945	7,367,484

Comments on balance sheet

70.2 MNOK

• Gross loans of 6,677 MNOK at 31.03.2023 compared to 5,486 MNOK 31.03.2022 and 6,287 MNOK 31.12.2022 driven by underlaying growth and currency effects • Liquidity balance of 1,537 MNOK at 31.03.2023 compared to 1,640 at 31.03.2022, and 1,334 at 31.12.2022 • Deferred tax assets of 82.9 MNOK (originated from tax losses carried forward prior to the merger in Q4 2020) • Solid capital base - CET1 of 20.55 % (incl. 2023 profit and dividend accrual), compared to 31.03.2022 of 23.48 %, however weak Norwegian currency impact capitalization • Total equity of 1,381 MNOK, BVPS of 13.94 NOK. Equity as of 31.12.22 and 31.03.2023 has been reduced by dividend accrual of

Table of contents

1 Highlights and development Q1

2 Financial results Q1

| 14

Positive changes in Pilar 1 capital requirements

Pilar 2

Counter-cyclical buffer Systemic risk buffer Capital conservation buffer

Base capital req.

Geographical differences emphasize effective capital allocation

Comments

• 17.2% • Ongoing harmonization of capital requirements within the EU – will provide more equal competitive terms for Norwegian banks operating in foreign markets
• Systemic risk buffer increased to 4.5% in Norway from Q1 2024 and reciprocity on systemic risk buffer delayed with one year - to be implemented from Q1 2024
• European Systemic Risk Board has recommended to other EEA states to reduce threshold from 32 BNOK to 5 BNOK for applying the Norwegian systemic risk buffer – applicable from 31.12.23
• Finland implementing systemic risk buffer of 1% from April 2024
• Lea bank is expecting to receive new Pillar 2 in H2 2023

Base capital req. Capital conservation buffer Systemic risk buffer Counter-cyclical buffer Pilar 2

Note: All capital requirements in the right-hand graph subject to changes from local governments

Lea bank ASA

	Focus areas	Summary of the quarter
1 Core markets	• Aim to maintain interest margins despite increasing funding costs • Navigate through an uncertain macroeconomic environment	✓ Solid profitability ✓ Gross loans growth of ~ 390 MNOK ✓ Industry leading cost / income of 30.3%
2 Funding structure	• Diversify funding sources to mitigate currency risk and increase funding capabilities • Launch deposit products in Sweden early Q2 2023 and Finland thereafter	✓ Well capitalized – CET1 of 20.6%
3 Capital	• Changes in systemic risk buffer may influence market dynamics in the Norwegian market • Expecting new Pillar 2 requirement from the FSA in H2 2023 • Ongoing project for redomicilation	Key figures, Q1 2023 Interest Profit before Equity income tax 160.7 MNOK 36.4 MNOK 1,381 MNOK

Financial overview Figures in MNOK

Gross lending

Net income and margin of total margin

Loan losses

Opex and Cost / Income

Equity and CET1 ratio²

Profit after tax and ROE¹

1) ROE adjusted subtracts excess capital from the calculation (capital req. + mgmt. buffer) 2) CET1 ratio includes YTD unaudited profit

Balance sheet structure

Strong funding and liquidity position

• Deposit ratio: 102%
• Liquidity coverage ratio: 682% total (549% NOK, 488% EUR, 702% SEK)
• Net stable funding ratio: 153% total

Total assets, MNOK Equity and liabilities, MNOK

Lea bank ASA shareholders

Top 20 shareholder list as of April 18th 2023 Comments

	Investor	Shares	Ownership
1	Braganza AB	10,383,899	10.9 %
2	Hjellegjerde Invest AS	7,600,000	8.0 %
3	DNB Bank ASA1	5,473,852	5.8 %
4	Skagerrak Sparebank	4,409,380	4.6 %
5	Fondsavanse AS	3,371,048	3.5 %
6	Altitude Capital AS	3,127,380	3.3 %
7	Verdipapirfondet Alfred Berg Norge	3,088,045	3.2 %
8	Verdipapirfondet Alfred Berg Aktiv	2,719,589	2.9 %
9	Vida AS	2,581,654	2.7 %
10	Umico - Gruppen AS	2,143,779	2.3 %
11	Shelter AS	1,945,486	2.0 %
12	Jolly Roger AS	1,885,482	2.0 %
13	Jenssen & Co AS	1,845,879	1.9 %
14	Lindbank AS	1,838,007	1.9 %
15	Verdipapirfondet Alfred Berg Norge	1,700,000	1.8 %
16	MP Pensjon Pk	1,632,767	1.7 %
17	Krogsrud Invest AS	1,125,000	1.2 %
18	Thon Holding AS	1,081,211	1.1 %
19	Varde Norge AS	1,050,000	1.1 %
20	Nordic Private Equity AS	1,000,000	1.1 %
	Top 20 shareholders	60,002,458	63.0 %
	Other shareholders	35,171,729	37.0 %
	Total shares	95,174,187	100.0 %

• ~1,300 shareholders as of April 18th 2023
• The Lea bank share (ticker LEA) was registered on Euronext Growth (former Merkur Market) on 2 October 2020
• Management holds a total of 1,362,740 shares, corresponding to 1.4% of shares
• Members of the board holds a total of 493,537 shares, corresponding to 0.5%
• Current market capitalization of ~820 MNOK, trading after dividend

1) Nominee account

Lea bank ASA