Lea Bank ASA

Earnings Release • Nov 1, 2018

3 rd quarter result presentation

Oddbjørn Berentsen (CEO) – Gard Haugen (CFO) - Christian Svendsen (COO)

| 1 November 2018 |

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 forward-looking 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 1 November 2018. 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

Easybank - Highlights Q3 2018

Key highlights and developments

Key figures
	Q3	YTD
NII	61,2 MNOK	162,8 MNOK
PBT	19,4 MNOK	51,7 MNOK
ROE	12,5 %	12,7 %

Gross lending & number of customers

Growth in volume and customers continues

Total income & profit before tax

Increasing total income and solid profit in Q3

Net interest income & yields

Increasing interest income and favorable margins

Yields (end of quarter)

• Net interest margin up due to lower NPL ratio

• Good margins and ROE from SME & mortgage loans

• Increased consumer loan volume without compromising on margin

• Attractive funding rate due to multiple deposit products

7

Credit quality - Consumer loans

Satisfactory risk reward and forward flow agreement reduces downside risk

Coverage¹ and loan loss ratio² Comments

• Satisfactory risk-reward taken into account margin level on consumer loans.
• Sale of part of NPL portfolio as a result of the Forward-flow agreement with Kredinor in Q3 2018 contributes to decreased NPL ratio.
• The forward-flow agreement, entered into with Kredinor July 2017, reduces downside risk for Easybank as it transfers risk to Kredinor. The agreement is not one-time transaction, but ongoing sales of loans and receivables.
• The forward flow agreement is fully operational and long term coverage rate decreases as a result of improvement of LGD values in Loss-model. However, coverage ratio increases slightly from Q2 2018 to Q3 2018 due to increased arrears.
• Option to extend the forward flow agreement with Kredinor throughout 2023 with same (favorable) conditions as the initial agreement from July 2017.

Overview

Good profitability and improved cost/ income ratio

Gross lending Income and interest margin OPEX and C/I ratio

Profit after tax and ROE Losses and loss ratio consumer loans Equity and CET-1 ratio *

Table of contents

			YTD Q3	YTD Q3	Full year
(Amounts in thousands)	Q3 2018	Q3 2017	2018	2017	2017
Interest income	73 862	41 592	198 019	104 012	155 427
Interest expense	-12 656	-7 583	-35 173	-19 599	-29 085
Net interest income	61 206	34 009	162 846	84 413	126 342
Comission and fee income	11 469	4 733	35 759	11 371	21 692
Comission and fee expenses	-12 297	-6 158	-31 321	-14 739	-22 398
Net change in value on securities and currency	182	218	697	878	1 131
Other income	0	30	35	54	88
Net other income	-646	-1 178	5 170	-2 436	513
Total income	60 560	32 831	168 016	81 977	126 855
Salary and other personell expenses	-7 875	-7 720	-22 205	-21 922	-30 641
Other administrative expenses	-7 763	-7 893	-24 487	-19 629	-27 283
- of which marketing expences	-3 458	-4 267	-11 179	-8 442	-11 465
Depreciation	-1 236	-1 032	-3 605	-2 887	-4 051
Other expenses	-2 112	-2 367	-6 485	-7 396	-9 728
Total operating expenses	-18 985	-19 012	-56 782	-51 835	-71 704
Profit before loan losses	41 575	13 819	111 233	30 142	55 151
Loan losses	-22 135	-9 710	-59 516	-23 969	-39 512
Profit before tax	19 440	4 109	51 718	6 172	15 639
Tax	-4 958	-1 027	-13 224	-1 543	-4 533
Profit after tax	14 482	3 082	38 494	4 629	11 106

Balance sheet

(Amounts in thousands)	30.09.2018	30.09.2017	31.12.2017
Assets
Cash and deposits with the central bank	53 794	53 643	53 680
Loans and deposits with credit institutions	128 951	183 039	280 309
Loans to customers	2 388 346	1 583 576	1 780 862
- Loan impairment	-62 530	-33 737	-42 851
Certificates and bonds	374 069	55 021	152 017
Shares and other securities	54 413	53 637	53 869
Shareholding in group companies	192	192	192
Deferred tax asset	6 772	22 986	19 996
Other intangible assets	19 910	20 176	20 398
Fixed assets	1 201	1 344	1 191
Other assets	125	1 049	1 576
Other receivables	118 640	70 234	86 022
- of which agent commisions	67 582	43 954	50 475
Total assets	3 083 883	2 011 162	2 407 262
Equity and liabilities
Deposits from customers	2 488 322	1 629 868	1 967 508
Other liabilities	28 739	19 391	18 508
Accrued expenses and deferred revenue	19 453	25 386	10 015
Tier 1 and tier 2 capital bond	75 000	10 000	75 000
Total liabilities	2 611 514	1 684 645	2 071 031
Share capital	324 326	259 990	260 690
Share premium reserve	124 510	91 481	91 681
Other paid-in equity	6 418	2 900	5 238
Other equity	17 116	-27 854	-21 378
Total equity	472 369	326 516	336 231
Total equity and liabilities	3 083 883	2 011 162	2 407 262

Balance sheet structure

Strong funding and liquidity position

• Deposit ratio: 104 %
• Liquidity Coverage Ratio: 982 %
• Net Stable Funding Ratio: 170 %

Total assets Equity and liabilities

• Diversified customers deposits. 60 % of deposits with 35 days+ notice period
• MNOK 611 in surplus liquidity placed in Norges Bank, other banks and positions with short duration and low risk

Table of contents

Outlook

Secure profitability before expansion to match capital and ROE targets

• ✓ Turnaround existing portfolio
• ✓ Develop technical platform and internal & external capabilities

• ✓ Launch consumer loans and car loans

• Growth with scalable cost base

• Continue build on underlying run rate to deliver ROE growth

• Initiatives taken towards potential partners to broaden product mix and distribution

• Improved customer acquisition cost ratio

• Evaluate geographical expansion depending on growth possibilities in home market

• Geographical expansion preferably together with partners that can create competitive advantage

Continue building on underlying run rate and secure competitive ROE

Shareholders & share price

Strong shareholder base

Top 30 shareholders as of 18 October 2018

# Investor	Shares	Shares %
1 Skagerrak Sparebank	4 311 980	9,3%
2 Verdipapirfondet Alfred Berg	3 344 349	7,2%
3 Fondsavanse AS	2 773 330	6,0%
4 Umico - Gruppen AS	2 618 779	5,6%
5 Ladegaard AS	2 325 032	5,0%
6 Nordic Private Equity	1 669 205	3,6%
7 Lindbank AS	1 655 985	3,6%
8 MP Pensjon PK	1 458 738	3,1%
9 Shelter AS	1 392 727	3,0%
10 Jenssen & Co A/S	1 287 879	2,8%
11 Krogsrud Invest AS	1 250 000	2,7%
12 Jolly Roger AS	1 145 630	2,5%
13 Hjellegjerde Invest	1 000 000	2,2%
14 GH Holding AS	909 090	2,0%
15 Independent Oil & Re	900 000	1,9%
16 Byholt AS	787 159	1,7%
17 Whitetail Webservice	705 009	1,5%
18 Jaras Invest AS	440 909	1,0%
19 Ulltveit-Moe Hildegunn	400 222	0,9%
20 B Finans AS	400 000	0,9%
21 Juul-Vadem Holding AS	400 000	0,9%
22 HHG Invest AS	400 000	0,9%
23 Trippel-L AS	387 225	0,8%
24 Motor-Trade Eiendom	365 878	0,8%
25 Lindbak Gruppen AS	364 045	0,8%
26 Wist Holding AS	338 000	0,7%
27 Truls AS	310 000	0,7%
28 Arild Hest?S Invest	301 250	0,6%
29 Autobahn AS	287 584	0,6%
30 Haukvik Svein Ola	260 000	0,6%
Total top 20	34 190 005	73,7%
Other	12 200 834	26,3%
Grand total	46 390 839	100,0%

• 442 shareholders as of 18 October 2018
• The EASY share was registered on NOTC on 15 November 2016.
• Management holds a total of 2,477,623 shares, corresponding to 5.3% of shares outstanding
• Members of the board represents a total of 2,558,607 shares, corresponding to 5.5% of shares outstanding
• Current market capitalization of approx. NOK 450