Lea Bank ASA

Investor Presentation • May 15, 2020

15 May 2020

1 st quarter result presentation

Disclamer

This Presentation from Easybank ASA ("Easybank" 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 Easybank 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 Easybank and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of Easybank's business and the securities issued by Easybank.

This Presentation speaks as of 15 May 2020. Neither the delivery of this Presentation nor any further discussions of Easybank with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of Easybank since such date.

Table of contents

Highlights and development Q1

Financial results Q1

Outlook

Highlights Q1 2020

Profit before tax of NOK 4,9 million

Result impacted by 1) losses on liquidity portfolio 2) lower loan volumes 3) higher loan losses and 4) investments related to SME business area.

Losses on liquidity portfolio driven by Covid-19 impact to credit markets in March. Recovery in April when markets were stabilized.

Increased sale of non-performing loans the last quarters under forward flow agreement to strengthen portfolio quality.

Annualized EPS NOK 0,31, ROE 2,9%, book value of equity per share (BVPS) NOK 9,78

Transition to IFRS9 completed

Negative equity impact of NOK 103,7 million from January 1st related to increased loss provisions under IFRS9. Agent commission and establishment fees presented as Interest Income in profit & loss statement, and as Net Loans in balance sheet from January. Historical numbers have not been restated. New principle was introduced from January for loans in debt collection, where interest is recorded as Interest Income and a corresponding amount is recorded as Loan losses, hence no impact on Net profit.

Expansion of product portfolio in SME

Products in the SME business area are live and in a controlled scale-up phase. Focus going forward is to expand products and services to existing partners and adding new partners to the scalable business platform.

Covid-19 impact

The bank has maintained effective operations where most employees have been working from home. Focus on responding to forbearance requests by customers, conservative sales practice and increasing capital buffer which has led to reduced loan volumes during Q1. Too early to assess Covid-19 impact on loan losses going forward.

Key Figures

(in MNOK)	Q1-20	Q1-19	2019
Interest income	76,7	84,1	340,7
PBT*	4,9	22,7	86,2
ROE*	2,9%	13,7%	12,3%
EPS*	0,31	1,47	1,36
Cost/Income	30,5%	28,3%	27,6%
Gross loans	2 735	2 765	2 804
Consumer loans	2 597	2 523	2 645

(PBT: Profit before tax, ROE: Return On Equity (excluding tier-1 capital), EPS: Annualized Earnings per share. IFRS9 implemented from January 2020, historical numbers have not been restated)

2

3

1

4

Shareholders

Strong and stable shareholder base

Top 30 shareholder as of 12 May 2020

# Investor	Shares	Shares %
1 Skagerrak Sparebank	4 409 380	9,30 %
2 Verdipapirfondet Alfred Berg	3 844 349	8,11 %
3 Fondsavanse AS	3 072 986	6,48 %
4 Umico - Gruppen AS	2 618 779	5,53 %
5 Hjellegjerde Invest AS	2 600 000	5,49 %
6 Ladegaard AS	2 406 032	5,08 %
7 Shelter AS	1 945 486	4,10 %
8 Lindbank AS	1 838 007	3,88 %
9 MP Pensjon PK	1 458 738	3,08 %
10 Jenssen & Co AS	1 287 879	2,72 %
11 Krogsrud Invest AS	1 250 000	2,64 %
12 Nordic Private Equity AS	1 166 668	2,46 %
13 Jolly Roger AS	1 149 074	2,42 %
14 Independent Oil & Resources Plc	890 000	1,88 %
15 Byholt AS	767 159	1,62 %
16 Whitetailwebservice Ltd	705 009	1,49 %
17 Trippel-L AS	606 118	1,28 %
18 Jaras Invest AS	440 909	0,93 %
19 Ulltveit-Moe, Hildegunn	400 222	0,84 %
20 B Finans AS	400 000	0,84 %
21 Motor Trade Eiendom og Finans AS	365 878	0,77 %
22 Conta Group AS	347 368	0,73 %
23 Wist Holding AS	338 000	0,71 %
24 Truls AS	310 000	0,65 %
25 Arild Hestås Invest AS	301 250	0,64 %
26 HHG Invest AS	300 000	0,63 %
27 Juul-Vadem Holding AS	295 000	0,62 %
28 Autobahn AS	270 364	0,57 %
29 Langsether, Skule	265 490	0,56 %
30 Haukvik, Svein Ola	260 000	0,55 %
Total top 30	36 310 145	76,61 %
Other	11 087 045	23,39 %
Total	47 397 190

• 423 shareholders as of 12 May 2020.
• The EASY share was registered on NOTC on 15 November 2016.
• Management holds a total of 2,362,676 shares, corresponding to 5.0% of shares outstanding.
• Members of the board represents a total of 2,728,305 shares, corresponding to 5.8% of shares outstanding.
• Current market capitalization of approx. MNOK 284.

Gross lending & number of customers

Gross lending per product

Volumes affected by conservative sales practice, and build up of liquidity and capital buffer

Customers per product

Credit quality - Consumer loans Increased loan loss provisions due to IFRS9 -

Forward flow agreement reduces downside risk

Coverage and loan loss ratio Comments

Loans past due

• IFRS9 was implemented January 1st 2020.
• The implementation of Debt register has increased NPL throughout 2019 and into 2020, resulting in higher losses. Too early to assess impact from Covid-19 on losses going forward
• Increased sale of non-performing loans the last quarters under forward flow agreement to strengthen portfolio quality.
• Loss ratio in Q1 2020 affected by IFRS9 treatment of loans in debt collection. Interest on those loans are recorded as interest income, and a corresponding amount is increased under loan losses. Hence no impact on net profit, but higher loan loss ratio under IFRS9.
• Easybank's forward- flow agreement reduces downside risk as non-performing loans are on an ongoing basis sold to Kredinor to a pre-defined price. Option to extend the forward flow agreement with Kredinor throughout 2023 with same conditions as the initial agreement from July 2017.

90+ PD = Loans in stage 3 less performing loans. IFRS9 implemented from January 2020, historical numbers have not been restated.

Net interest income & yields

Still attractive margins –

Net Interest margin affected by loss on liquidity portfolio in Q1

Net interest income and net interest margin of total assets Yields (end of quarter)

Overview

Satisfactory capital buffer and competitive cost/income

Income and interest margin

Gross lending Opex and Cost/ income ratio

Profit after tax and ROE

Losses and loss ratio Equity and CET1 ratio

(IFRS9 implemented from January 2020, historical numbers have not been restated.

Balance sheet structure

Strong funding and liquidity position

• Deposit Ratio: 108 %
• Liquidity Coverage Ratio 904 %
• Net Stable Funding Ratio 175 %

Total assets Equity and liabilities

• Diversified customer deposits. 49% of deposits with 35 days+ notice period
• MNOK 793 in surplus liquidity placed in Norges Bank, other banks and positions with short duration and low risk

Table of contents

Highlights and development Q1

Outlook

Income statement

			YTD Q1	YTD Q1	Full year
(Amounts in thousands)	Q1 2020	Q1 2019	2020	2019	2019
Interest income	76 746	84 062	76 746	84 062	340 690
Interest expense	-14 347	-15 420	-14 347	-15 420	-62 396
Net interest income	62 399	68 643	62 399	68 643	278 294
Comission and fee income	6 501	12 351	6 501	12 351	42 552
Comission and fee expenses	-885	-14 761	-885	-14 761	-57 035
Net change in value on securities and currency	-2 226	1 679	-2 226	1 679	7 459
Other income	0	0	0	0	111
Net other income	3 389	-731	3 389	-731	-6 913
Total income	65 788	67 912	65 788	67 912	271 381
Salary and other personell expenses	-8 743	-7 917	-8 743	-7 917	-32 284
Other administrative expenses	-6 863	-7 501	-6 863	-7 501	-27 148
- of which marketing expences	-1 111	-2 893	-1 111	-2 893	-7 578
Depreciation	-1 645	-1 397	-1 645	-1 397	-5 940
Other expenses	-2 782	-2 427	-2 782	-2 427	-9 440
Total operating expenses	-20 033	-19 242	-20 033	-19 242	-74 812
Profit before loan losses	45 755	48 669	45 755	48 669	196 569
Loan losses	-40 819	-25 930	-40 819	-25 930	-110 390
Profit before tax	4 936	22 739	4 936	22 739	86 179
Tax	-1 234	-5 685	-1 234	-5 685	-21 571
Profit after tax	3 702	17 055	3 702	17 055	64 609

Balance sheet

(Amounts in thousands)	31.03.2020	31.03.2019	31.12.2019
Assets
Cash and deposits w ith the central bank	123 492	53 935	54 351
Loans and deposits w ith credit institutions	204 431	190 080	154 717
Loans to customers	2 735 395	2 765 372	2 804 258
- Loan impairment	-222 430	-75 385	-91 746
Certificates and bonds	0	79 560	0
Shares and other securities	464 987	291 382	457 112
Shareholding in group companies	11 192	192	11 192
Deferred tax asset	33 454	0	135
Other intangible assets	21 442	20 942	20 471
Fixed assets	859	1 093	872
Other assets	7 386	885	9 451
Other receivables	5 594	78 537	73 814
Total assets	3 385 803	3 406 592	3 494 628
Equity and liabilities
Loan from central bank	95 000	0	0
Deposits from customers	2 708 272	2 778 439	2 806 011
Other liabilities	32 878	29 679	39 090
Accrued expenses and deferred revenue	11 073	16 263	10 352
Tier 2 capital	40 000	75 000	75 000
Total liabilities	2 887 223	2 899 381	2 930 452
Share capital	331 799	324 688	331 707
Share premium reserve	127 111	124 591	127 092
Tier 1 capital	35 000	0	0
Other paid-in equity	7 177	6 719	7 159
Other equity	-2 507	51 214	98 218
Total equity	498 580	507 212	564 176
	3 385 803	3 406 592	3 494 628

(IFRS9 implemented from January 2020, historical numbers have not been restated.

Table of contents

Highlights and development Q3

Financial results Q3

Outlook

Focus going forward

Deliver competitive ROE

Scale portfolio within the SME market and enter into agreements that

Handle impact from Covid -19

strengthen the bank's distribution network

Evaluate strategic opportunities

to utilize the bank's scalable operating model

Operational efficiency with low operating costs and competitive C/I

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