Instabank — Investor Presentation 2021

Nov 4, 2021

Instabank

Interim Presentation Q3 – 2021 November 4th, 2021

www.instabank.no instabank.no instabank.no

Important information and disclaimer

THIS PRESENTATION (THE "PRESENTATION") HAS BEEN PRODUCED BY INSTABANK ASA (THE "COMPANY" OR "INSTABANK"), SOLELY FOR USE AT THE PRESENTATION TO INVESTORS AND IS STRICTLY CONFIDENTIAL AND MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. TO THE BEST OF THE KNOWLEDGE OF THE COMPANY AND ITS BOARD OF DIRECTORS, THE INFORMATION CONTAINED IN THIS PRESENTATION IS IN ALL MATERIAL RESPECT IN ACCORDANCE WITH THE FACTS AS OF THE DATE HEREOF, AND CONTAINS NO MATERIAL OMISSIONS LIKELY TO AFFECT ITS IMPORT.

THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS RELATING TO THE BUSINESS, FINANCIAL PERFORMANCE AND RESULTS OF THE COMPANY AND/OR THE INDUSTRY IN WHICH IT OPERATES. FORWARDLOOKING STATEMENTS CONCERN FUTURE CIRCUMSTANCES AND RESULTS AND OTHER STATEMENTS THAT ARE NOT HISTORICAL FACTS, SOMETIMES IDENTIFIED BY THE WORDS "BELIEVES", EXPECTS", "PREDICTS", "INTENDS", "PROJECTS", "PLANS", "ESTIMATES", "AIMS", "FORESEES", "ANTICIPATES", "TARGETS", AND SIMILAR EXPRESSIONS. THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION, INCLUDING ASSUMPTIONS, OPINIONS AND VIEWS OF THE COMPANY OR CITED FROM THIRD PARTY SOURCES ARE SOLELY OPINIONS AND FORECASTS WHICH ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL EVENTS TO DIFFER MATERIALLY FROM ANY ANTICIPATED DEVELOPMENT. NONE OF THE COMPANY OR ANY OF THEIR PARENT OR SUBSIDIARY UNDERTAKINGS OR ANY SUCH PERSON'S OFFICERS OR EMPLOYEES PROVIDES ANY ASSURANCE THAT THE ASSUMPTIONS UNDERLYING SUCH FORWARD-LOOKING STATEMENTS ARE FREE FROM ERRORS NOR DOES ANY OF THEM ACCEPT ANY RESPONSIBILITY FOR THE FUTURE ACCURACY OF THE OPINIONS EXPRESSED IN THIS PRESENTATION OR THE ACTUAL OCCURRENCE OF THE FORECASTED DEVELOPMENTS. THE COMPANY ASSUMES NO OBLIGATION, EXCEPT AS REQUIRED BY LAW, TO UPDATE ANY FORWARD-LOOKING STATEMENTS OR TO CONFORM THESE FORWARD-LOOKING STATEMENTS TO OUR ACTUAL RESULTS.

AN INVESTMENT IN THE COMPANY INVOLVES INHERENT RISKS AND IS SUITABLE ONLY FOR INVESTORS WHO UNDERSTAND THE RISKS ASSOCIATED WITH THIS TYPE OF INVESTMENT AND WHO CAN AFFORD A LOSS OF ALL OR PART OF THE INVESTMENT. SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY'S BUSINESS, ITS DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS DOCUMENT. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION.

NO REPRESENTATION OR WARRANTY (EXPRESS OR IMPLIED) IS MADE AS TO, AND NO RELIANCE SHOULD BE PLACED ON, ANY INFORMATION, INCLUDING PROJECTIONS, ESTIMATES, TARGETS AND OPINIONS, CONTAINED HEREIN, AND NO LIABILITY WHATSOEVER IS ACCEPTED AS TO ANY ERRORS, OMISSIONS OR MISSTATEMENTS CONTAINED HEREIN, AND, ACCORDINGLY, NONE OF THE COMPANY OR ANY OF THEIR PARENT OR SUBSIDIARY UNDERTAKINGS OR ANY SUCH PERSON'S OFFICERS OR EMPLOYEES ACCEPTS ANY LIABILITY WHATSOEVER ARISING DIRECTLY OR INDIRECTLY FROM THE USE OF THIS DOCUMENT.

THERE MAY HAVE BEEN CHANGES IN MATTERS WHICH AFFECT THE COMPANY SUBSEQUENT TO THE DATE OF THIS PRESENTATION. NEITHER THE ISSUE NOR DELIVERY OF THIS PRESENTATION SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE AFFAIRS OF THE COMPANY HAVE NOT SINCE CHANGED, AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT ANY INFORMATION INCLUDED IN THIS PRESENTATION. BY ATTENDING OR RECEIVING THIS PRESENTATION, YOU ACKNOWLEDGE THAT YOU WILL BE SOLELY RESPONSIBLE FOR FORMING YOUR OWN VIEW OF THE POTENTIAL FUTURE PERFORMANCE OF THE COMPANY.

THIS PRESENTATION SPEAKS AS OF 31 DECEMBER 2016. NEITHER THE DELIVERY OF THIS PRESENTATION NOR ANY FURTHER DISCUSSIONS OF THE COMPANY WITH ANY OF THE RECIPIENTS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

Key highlights Q3-21

Record high profit before tax of 32.6 MNOK, after tax 24.4 MNOK Profits up 85 % from the same quarter last year

Strong net loans growth of 298 MNOK Net loans growth year to date of 838 MNOK

Mortgages volume growth of 212 MNOK Mortgages now represents one third of total net loans in Norway

Return on Equity of 16.6 % in Q3-21 brings Instabank to the top among Norwegian Banks Return on equity year-to-date is 13.6 %, well above the target for 2021 of 13 %

Net loan development

Net loan balance growth

Key comments

• The mortgages volume grew by 212 MNOK or 36 % in the third quarter to 794 MNOK in net loans
• As in Q2-21, there were growth for unsecured loans in all three markets, mostly in Norway where Instapay credit card and Sales Finance contributed the most

Net loans to customers

Key comments

• Mortgages to total net loans grew to 22 % end of Q3- 21 from 18 % per end of Q1-21
• In Norway, mortgages are 34 % of total net loans, representing increased diversification and reduced credit risk in the Norwegian loan portfolio

Diversified loan portfolio

*) Includes accounts with zero balance with an available credit limit 5

Diversified funding volume

*) Up to NOK 500', 0,90 % for deposits between NOK 500' – 2,000'

Funding cost and yields

Development in funding cost and yields Key comments

• Yield for unsecured loans continude a decreasing path because of margin pressure in Norway and temporarily interest cap in Finland of 10 %
• Yield for mortgages remained stable during the quarter
• Interest rate for deposits were overall stable despite an increase of 0,05 % points for deposits in Norway late in the quarter. After a year with low deposit rates in Norway, we observe the offered rates are starting to move up again

Total income

• Total interest income increased by 9.8 MNOK from Q2-21 as a result of solid net loans growth
• Instabank acquired a portfolio of loans from Optin bank in June 2021 at 85 % of face value. The discount value is recognised as interest income during the expected lifetime of the loan portfolio, of which 1.5 MNOK were booked in Q3-21
• Net other income increased by 2.2 MNOK from Q2-21 to 9.9 MNOK as a result of strong insurance sales in the quarter 8

*) Previously, agent commission and establishment fees were booked against expenses commission and fees and income commission and fees. From Q2-21, both are included in the interest income and historical figures have been restated.

Operating expenses

Operating expenses breakdown MNOK 3,3 3,4 3,5 3,7 3,5 12,8 12,0 12,0 11,5 12,8 0,9 1,9 2,4 1,8 2,0 11,0 13,0 12,3 12,5 13,1 1,6 1,5 1,5 1,8 1,6 29,5 31,7 31,7 31,3 33,2 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Depreciation and amortisation Other administrative expenses Direct marketing costs Salary and other personell expenses Other expenses

Cost/income ratio

Key comments

• Cost to income improved significantly from the previous quarter by 4 % points down to 38 %, demonstrating economy of scale.
• The increase in operating expenses from Q2-21 was related to personnel expenses, marketing and other administrative expenses.

Credit risk

Impairment losses

Loans past due

% of gross lending

Key comments

• Losses on loans were 2.3 % versus 2.6 % for the same quarter last year and the share of loans past due was also considerably lower in all intervals
• The increase from the previous quarter is because of seasonal variations
• The bank has observed stable and good payment behaviour from the customers during the quarter
• Although the increasing share of mortgages has a positive impact, we also have observed improvement in credit measures for unsecured loans compared to same quarter last year
• Non-performing loans (NPL) volume was 268 MNOK at the end of the quarter, only 7.1 % of total gross loans, down from 315 MNOK/ 10.4 % one year ago. More than half of the NPL volume is less than one year old
• For mortgages, only 0.2 % of the volume are NPL

Profit development

• Profit after tax increased by 4.9 MNOK from the previous quarter to 24.4 MNOK because of the strong increase in Total Income
• Return on equity (ROE) in the quarter was 16.6 %, up from 10.1 % in Q3-20 bringing Instabank to the top among Norwegian banks
• ROE year-to-date is 13.6 %, well above target of 13.0 % for the year 2021

Capital adequacy

Developments in capital adequacy ratios

Key comments

• Common equity Tier 1 Capital ratio was 19.3 %, and the total capital ratio was 22.4 % at the end of Q3-21, 2.0 % points above the total regulatory capital requirement of 20.3 %

CET1 requirement per country and total

From startup to economies of scale

START UP 2016 | 2017

Establish core capabilities Ensure profitability Focus on loans and deposits

EXPANSION 2018 | 2020

Build and develop capabilities to enable product- and geographical expansion

ECONOMIES OF SCALE 2021 | 2023

Capitalize on strategic and operational platform; Economies of scale, profitability & solidity

Markets and products

Target growth in markets with highest ROE at any given time

Unsecured	Mortgage	Deposits	Retail	Online	Cards
Q3-2016	Q2-2020	Q3-2016	Q4-2017	Q4-2018	Q2-2019
Q4-2017	Tbd	Q3-2018	Q2-2020	Q2-2020	Tbd
Q4-2018	Tbd	Q1-2019	Tbd	Tbd	Tbd
na	na	Q3-2020	na	na	na

Our target is to achieve a more diversified portfolio by prioritising mortgage loans going forward. This will reduce risk and improve profits.

Financials

Outlook 2021

ROE Strong improvement in profits 14 % (13 %)

Net loans Growth is necessary to improve profits > 3.8 Bn (3.7 Bn.)

Cost to income Economies of scale reduce cost

Ambitions

• o Increased diversification
• - Repositioning from a typical consumer loans bank
• o Continued sound growth
• - Excess equity and generated profits enable growth
• o Profit growth

- Volume growth, economies of scale and low risk drives growth in profits

www.instabank.no instabank.no

Share price and ownership

Instabank is listed at Euronext Growth at Oslo Børs, ticker "INSTA"

Total	332 642 039	100,00%
Other shareholders	77 678 550	23,35%
Sum Top 20	254 963 489	76,65%
SENNI EIENDOM AS	2 358 564	0,71%
T SANDVIK AS	2 811 339	0,85%
VELDE EIENDOM INVEST AS	3 050 000	0,92%
TVEDT INVESTERING AS	3 138 000	0,94%
VENDETTA AS	3 262 800	0,98%
CAHE FINANS AS	3 501 000	1,05%
MAGDALENA HOLDING AS	4 080 611	1,23%
LEIRIN HOLDING AS	4 333 333	1,30%
SONSINVEST AS	5 108 195	1,54%
ALTO HOLDING AS	6 930 000	2,08%
MOROAND AS	8 500 000	2,56%
LEIKVOLLBAKKEN AS	8 500 000	2,56%
KRISTIAN FALNES AS	8 900 000	2,68%
HJELLEGJERDE INVEST AS	9 161 000	2,75%
TVENGE	10 000 000	3,01%
BJELLA INVESTMENTS AS	13 112 021	3,94%
BIRKELUNDEN INVESTERINGSSELSKAP AS	18 305 911	5,50%
VELDE HOLDING AS	26 195 836	7,88%
HODNE INVEST AS	30 588 311	9,20%
KISTEFOS AS	83 126 568	24,99%
Shareholders	# of shares	%

Name	# of shares	% of total
Robert Berg (Sonsinvest AS)	5 608 195	1,7 %
Eivind Sverdrup (Leirin Holding AS)	4 448 833	1,3 %
Jørgen Rui	1 072 292	0,3 %
Farzad Jalily	784 417	0,2 %
Per Kristian Haug	154 935	0,0 %
Kjetil Andre Welde Knudsen	123 028	0,0 %
Anne Jørgensen	99 625	0,0 %
Sum management	12 291 325	3,7 %
Other employees	2 087 388	0,6 %
Board members	2 150 000	0,6 %
Total	16 528 713	5,0 %

Top 20 shareholders as of 02.11.2021 Share price development last 12 months

Financial summary

P&L	Q3-21	Q2-21	Q1-21	FY 2020	Q4-20	Q3-20
Total income:
Interest Income using the effective interest method	85 705	75 886		67 999 272 117	70 421	68 187
Interest expenses	9 451	9 096	9 587	51 346	12 053	13 598
Net interest income	76 254	66 791		58 412 220 771	58 368	54 590
Net other income	9 933	7 695	12 233	42 356	11 750	11 339
Total income	86 187	74 486		70 646 263 127	70 118	65 929
Operating expenses:
Salary and other personnel expenses	13 136	12 516	12 327	41 666	12 976	11 019
Other administrative expenses, of which	14 848	13 371	14 360	52 920	13 885	13 644
- direct marketing cost	2 044	1 849	2 393	6 996	1 875	880
Other expenses	1 644	1 785	1 511	5 878	1 452	1 608
Depreciation and amortisation	3 545	3 662	3 490	12 742	3 385	3 271
Total operating expenses	33 174	31 335		31 687 113 206	31 698	29 542
Losses on loans	20 463	17 143	20 256	92 911	19 282	18 794
Operating profit before tax	32 551	26 009	18 702	57 010	19 138	17 593
Tax	8 147	6 502	4 676	14 331	4 863	4 398
Profit and other comprehensive income	24 404	19 507	14 027	42 679	14 275	13 195

P&L (NOK '000) Balance sheet (NOK '000)

Balance Sheet	Q3-21	Q2-21	Q1-21	Q4-20	Q3-20
Assets
Loans and deposits with credit institutions	226 519			212 392 209 131 202 601 222 177
Loans to customers		3 659 766 3 366 753 3 015 839 2 836 451 2 858 740
Certificates and bonds	682 558			632 290 754 657 889 664 1 035 261
Other intangible assets	25 848	27 441	28 752	29 478	42 356
Fixed assets	6 512	7 175	7 827	8 414	9 067
Derivatives	1 116	65	1 623	1 972	-
Other receivables	5 590	10 672	17 327	11 829	53 079
Total assets		4 607 910 4 256 788 4 035 157 3 980 409 4 220 679
Liabilities
Deposits from and debt to customers		3 852 877 3 540 343 3 340 513 3 303 998 3 548 363
Other debts	18 034	14 627	17 620	14 583	16 782
Accrued expenses and liabilities	15 817	13 754	15 087	18 457	21 863
Derivatives	483	593	233	123	6 445
Deferred tax	3 569	3 569	3 569	3 569	4 895
Tax payable	20 227	11 178	4 676	-	-
Subordinated loan capital	56 000	56 000	56 000	56 000	56 000
Total liabilities		3 967 008 3 640 064 3 437 698 3 396 730 3 654 349
Equity
Share capital	332 642		332 642 332 642	332 642	332 642
Share premium reserve	178 192		178 192 178 192	178 192	178 192
Retained earnings	89 167	64 989	45 724	31 944	18 645
Additional tier 1 capital	40 900	40 900	40 900	40 900	40 900
Total equity	640 901			616 723 597 459 583 679 570 380
Total liabilities and equity		4 607 910 4 256 788 4 035 157 3 980 409 4 224 728

Key figures Q3-21

Net profit before tax of 24.4 MNOK + 85 % vs Q3-20

Total income of 86.2 MNOK + 31 % vs Q3-20

Losses on loans 2.3 % vs 2.6 % Q3-20

Outstanding net loans of 3.609 MNOK + 822 MNOK vs Q3-20

Equity per share of 1.80 NOK vs 1.59 Q3-20

Return on Equity of 16.6 % vs 10.1 % in Q3-20

Thank You

www.instabank.no instabank.no