Instabank

Investor Presentation • Apr 27, 2023

Instabank

Interim Presentation Q1 – 2023 April 27th, 2023

www.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 Q1-23

Profit before tax increased 25 % to 31.6 MNOK from Q1-22 Strong growth in Total income Cost to income ratio decreased to 38 % from 46 % in Q1-22

Record-high growth in net loans of 438 MNOK Net lending exceeds 5 billion NOK

Strong mortgages volume growth of 207 MNOK Mortgages represents 39 % of total net loans and 61 % of net loans in Norway

Instabank to offer lending to small and medium sized businesses Further strengthening the position as a Nordic challenger bank

Net loan development

Net loan balance growth

Key comments

• Record-high growth in net loans of 438 MNOK in Q1-23
• 145 MNOK came from changes in currency exchange rate
• Growth in mortgage lending of 207 MNOK, up 116 MNOK in Q4-22

Net loans to customers

• Well diversified loan book across products and markets
• Mortgages represents 61% of net loans in Norway and 39 % of total net loans

Development in yields and funding cost

Development in yields and funding cost Key comments

• Increased interest rates for existing and new lending customers resulted in increased loan yield for both consumer loans and mortgages
• The increase in market rates has resulted in increased funding costs. While the Norwegian market had the most significant increase in deposit rates during H2-22, The Euro deposit rates rose during Q1- 23 from a very low level.
• The liquidity yield was for the second consecutive quarter higher than the funding cost and came in at 2.8 %

Diversified loan portfolio

Diversified funding volume

*) Includes partner margin

Total income

• Strong increase of 30 MNOK in Total interest income from same quarter last year following a 12 months net lending growth of 1,120 MNOK and increased yield despite a higher share of mortgages
• Interest expenses increased 9.1 MNOK from the previous quarter as deposits volume and rates were up.
• Net other income more than doubled from same quarter last year 8

Operating expenses

Operating expenses breakdown Cost/income ratio

• Despite high growth in net loans over the last year, the operating expenses were 1.4 MNOK below the same quarter the previous year, demonstrating economy of scale
• Cost-to-income came in strong at 38 %, the second consecutive quarter below the 40 % mark and target for 2023 9

Credit risk

0.5 % 1.5 % 2.5 % 3.5 % 4.5 %

-30.0 %

-20.0 %

-10.0 %

0.0 %

Impairment losses

Loans past due

% of gross lending

0.0 10.0 20.0 30.0 40.0

0.0 %

10.0 %

20.0 %

30.0 %

Losses per type of loan

• Losses on loans decreased for both consumer loans and mortgages from the previous quarter despite the high growth in net loans.
• The rise we observed in the share of loans past due 1-30 days at the end of Q4-22 came down to 10.6 % at the end of Q1-23 from 13.8 %
• Changes in the IFRS 9 model in Q1-23 had a positive impact on impairment for mortgages, offset by a negative impact for consumer loans

Profit development

Profit before tax & Return on Equity after tax

Capital adequacy

Developments in capital adequacy ratios

CET1 requirement per country and total

• Instabank called subordinated Tier 1 and Tier 2 bonds of 25 MNOK and 40 MNOK in March and issued new Tier 1 and Tier 2 bonds at the same amount, maintaining a solid capital structure.
• Common equity Tier 1 Capital (CET1) ratio was 18.6 %, and the total capital ratio was 23.3 %.
• The countercyclical buffer requirement increased by 0.5 percentage points for exposures in Norway at the end of the quarter and the regulatory CET1 requirement increased from 17,4 % at the end of Q4-22 to 17.6 % at the end of Q1-23.

Product Strategy

• On track to launch SME credit line product in H2-23 key management hired, systems being implemented
• Launch of credit cards in Finland and multi product accounts in Norway during H2-23 will further diversify Instabank's retail offering
• Ambitions to expand internationally in the 2024-2025 period

13

Financials

Profit after tax Strong improvement in profits

ROE Strong improvement in performance

Gross loans Growth is necessary to improve profits

Cost to income

Share price and ownership

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

Top 20 shareholders as of April 24 Share price development last 12 months th, 2023

# Shareholders # of shares % 1 KISTEFOS AS 83,126,568 24.99% 2 HODNE INVEST AS 33,088,311 9.95% 3 VELDE HOLDING AS 29,291,116 8.81% 4 BIRKELUNDEN INVESTERINGSSELSKAP AS 18,305,911 5.50% 5 GOLDMAN SACHS BANK EUROPE SE 13,447,151 4.04% 6 BJELLA INVESTMENTS AS 13,112,021 3.94% 7 TORSTEIN TVENGE 10,000,000 3.01% 7 HJELLEGJERDE INVEST AS 9,161,000 2.75% 9 KRISTIAN FALNES AS 8,900,000 2.68% 10 LEIKVOLLBAKKEN AS 8,500,000 2.56% 11 MOROAND AS 8,500,000 2.56% 12 Apollo Asset Limited 5,742,888 1.73% 13 SONSINVEST AS 5,108,195 1.54% 14 ALTO HOLDING AS 5,000,000 1.50% 15 LEIRIN HOLDING AS 4,333,333 1.30% 16 CAHE FINANS AS 3,501,000 1.05% 17 Skandinaviska Enskilda Banken AB 3,000,000 0.90% 18 BNP Paribas 2,302,489 0.69% 19 BNP Paribas 2,196,182 0.66% ²⁰ LILL ANITA SKÅLBONES GRIMSTAD 2,070,000 0.62% Sum Top 20 268,686,165 80.77% Other shareholders 63,955,874 19.23% Total 332,642,039 100.00%

Position	Name	# of shares	% of total
CEO	Robert Berg (Sonsinvest AS)	5,841,195	1.8 %
CCO	Eivind Sverdrup (Leirin Holding AS)	4,448,833	1.3 %
CTO	Jørgen Rui	1,407,864	0.4 %
CMO	Farzad Jalily	814,417	0.2 %
CFO	Per Kristian Haug	154,935	0.0 %
CRO	Kjetil Andre Welde Knudsen	123,028	0.0 %
COO	Anne Jørgensen	99,625	0.0 %
	Sum management	12,889,897	3.9 %
	Other employees	1,599,433	0.5 %
	Board members	2,150,000	0.6 %
	Total	16,639,330	5.0 %

Share price (NOK) and volume

Financial summary

P&L	Q1-23	FY 2022	Q4-22	Q3-22	Q2-22	Q1-22
Total income:
Interest Income using the effective interest method			120 926 393 623 109 328	98 946	94 818	90 492
Interest expenses	37 130	73 890	27 952	18 456	15 234	12 248
Net interest income		83 796 319 734	81 376	80 490	79 584	78 244
Net other income	16 967	37 850	16 619	5 737	8 395	7 138
Total income		100 763 357 584	97 995	86 227	87 979	85 382
Operating expenses:
Salary and other personnel expenses	15 199	55 498	11 592	14 048	12 567	17 291
Other administrative expenses, of which	18 406	77 690	19 293	18 658	21 965	17 775
- direct marketing cost	2 716	17 843	2 962	3 596	8 057	3 228
Other expenses	1 797	13 045	1 915	1 966	2 347	1 562
Depreciation and amortisation	2 947	7 789	3 260	3 338	3 366	3 082
Total operating expenses		38 350 154 023	36 059	38 009	40 244	39 711
Losses on loans		30 849 100 230	32 053	23 658	24 043	20 476
Operating profit before tax		31 564 103 331	29 884	24 560	23 692	25 195
Tax	7 891	21 091	4 480	6 140	5 923	4 548
Profit and other comprehensive income	23 673	82 240	25 403	18 420	17 769	20 647

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

Balance Sheet	31.03.23	31.12.22	30.09.22	30.06.22	31.03.22
Assets
Loans and deposits with credit institutions			174 078 191 254 265 388 288 835 191 450
Loans to customers			5 115 359 4 674 030 4 479 970 4 389 273 3 988 389
Certificates and bonds			848 185 867 806 755 391 842 237 933 611
Other intangible assets	22 756	21 197	21 567	22 904	25 064
Fixed assets	3 623	3 645	4 247	4 791	5 390
Derivatives	4 002	1 773	19 158	1 644	4 105
Other receivables	36 735	39 527	889	16 030	7 793
Total assets			6 204 739 5 799 233 5 546 610 5 565 713 5 155 801
Liabilities
Deposits from and debt to customers			5 234 665 4 852 281 4 702 782 4 741 687 4 344 527
Other debts	15 145	20 491	24 584	1 706	11 123
Accrued expenses and liabilities	13 461	17 844	17 979	16 154	18 729
Derivatives	3 361	543	2 188	2 643	1 231
Deferred tax	734	734	2 957	2 957	2 957
Tax payable	32 956	25 065	18 362	40 712	34 789
Subordinated loan capital	96 000	96 000	56 000	56 000	56 000
Total liabilities			5 396 323 5 012 958 4 824 853 4 861 859 4 469 356
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	216 682	194 541	170 022	152 120	134 710
Additional tier 1 capital	80 900	80 900	40 900	40 900	40 900
Total equity			808 417 786 275 721 757 703 854 686 445
Total liabilities and equity			6 204 739 5 799 233 5 546 610 5 565 713 5 155 801

Thank You

www.instabank.no instabank.no