Slide 1: Investor Presentation | Issuance of up to NOK [65]m Tier 1 and Tier 2 capital
Investor Presentation | Issuance of up to NOK [65]m Tier 1 and Tier 2 capital | 19 March 2018 Joint Managers: Solely for review in connection with the proposed bond issues – not for reproduction or distribution. The information contained herein may be subject to change without prior notice. THIS DOC
Slide 2: Important information | Disclaimer (I)
Important information | Disclaimer (I) By reading this presentation (the “Presentation”), or attending any meeting or oral presentation held in relation thereto, you (the “Recipient”) agree to be bound by the following terms, conditions and limitations. This Presentation has been produced by Instaba
Slide 3: Important information | Disclaimer (II)
Important information | Disclaimer (II) NO INVESTMENT ADVICE The contents of this Presentation shall not be construed as financial, legal, business, investment, tax or other professional advice. The Recipient should consult its own professional advisers for any such matter and advice. FORWARD LOOKIN
Slide 4: Important information | Risk factors (I)
Important information | Risk factors (I) INTRODUCTION OPERATIONAL RISK Investing in Instabank involves inherent risks. Prospective investors should consider, among other things, the risk factors set out below before making an investment decision. The risks described below are not the only ones facin
Slide 5: Important information | Risk factors (II)
Important information | Risk factors (II) Risks related to cyber-attacks and security breaches that could harm the Bank’s business and standing with its customers Market and interest rate risk The protection of the Bank’s customer data, and its customers’ trust in the Bank’s ability to protect such
Slide 6: Important information | Risk factors (III)
Important information | Risk factors (III) Risks related to the future regulation of payment services The Bank is subject to Norwegian provisions on ownership control In 2015, the EU passed Directive 2015/2366 on payment services (“PSDII”) which repeals the previous payment services directive (“PSD”
Slide 7: Table of contents | Overview
Table of contents | Overview 01 Investment considerations 02 About the bank 03 Key financial figures 04 Outlook & Strategy 7
Slide 8: Business overview | Instabank at a glance
Business overview | Instabank at a glance Key comments Net loans (NOKm) Key milestones since inception 1,318 100% digital bank currently offering competitive Project Ace established 7 Mar. 2016 savings, insurance, and unsecured loan products 1,093 Q1 2016 Equity issue towards founders of NOK 2
Slide 9: Investment highlights | Key value propositions
Investment highlights | Key value propositions 01 Established platform in Norway and Finland with scalable setup and prudent credit risk management 02 Strong and experienced management team with significant track record within consumer finance 03 Lean platform and organisation with significant s
Slide 10: Transaction rationale | Optimization of capital structure
Transaction rationale | Optimization of capital structure Growth in net loans (NOKm) Capital adequacy ratios (%) Status regulatory capital structure (%) 68.3 % 25.6 % 329 CET1 T1 T2 CET1 T1 T2 23.8 % 306 3.2 % 2.0 % 20.3 % 20.5 % 19.5 % 1.5 % 2.0 % 268 2.0 % 2.0 % 1.5 % 225 1.5 % 188 32.6 % 20.3 % 2
Slide 11: Transaction description | Selected key terms
Transaction description | Selected key terms Hybrid Tier 1 capital * Subordinated Tier 2 capital * Issuer Instabank ASA Issuer Instabank ASA Type Perpetual Tier 1 capital with floating rate and redemption rights for Issuer Type Tier 2 capital with fixed maturity, floating rate and redemption rights
Slide 12: Table of contents | Overview
Table of contents | Overview 01 Investment considerations 02 About the bank 03 Key financial figures 04 Outlook & Strategy 12
Slide 13: Product portfolio | Transparent and simple
Product portfolio | Transparent and simple Unsecured consumer loans Deposit accounts Insurance products Point of sales financing Offered to private consumers older Offered to private individuals in Norway Offered to private individuals in Norway Complete offering already in place: than 23 ye
Slide 14: Geographical presence | Gradual expansion strategy
Geographical presence | Gradual expansion strategy Cross-boarder expansion strategy Illustration of geographical presence Net loans distribution (%) * Operational platform capable of fast, agile and cost-efficient cross-boarder CURRENT FOOTPRINT 2.0 % expansion already in place POTENTIAL MARKETS
Slide 15: Distribution channels | Several customer in-roads
Distribution channels | Several customer in-roads Brand distribution Agent distribution Partner distribution DETAILS REGARDING THE IMPORTANT COOPERATION AGREEMENT (JV) WITH SKEIDAR-LIVING GROUP AS Instabank has been granted exclusive rights to the distribution of financing products within Skeidar
Slide 16: Instabank as a brand | Building awareness is key
Instabank as a brand | Building awareness is key Customer acquisition strategy Brand awareness – Men 35-55y * 20% 13% 11% 8% Week 8 Week 12 Week 33 Week 49 2017 Customer satisfaction – Aug ‘17 ** 1.2 % 0.8 % 6.6 % 39.6 % 51.7 % Very satisfied Satisfied Neither / Nor Dissatisfied Very dissatisfied No
Slide 17: Loan customer segmentation | In-line with ambition
Loan customer segmentation * | In-line with ambition Average loan customer Annual gross income in NOK (%) Age (%) 8.9 % 9.8 % 5.2 % 21.4 % GROSS NOK INCOME 640k 20.9 % 31.8 % 28.6 % 13.9 % 31.7 % 27.7 % 42 AGE years 250-349 350-499 500-649 650-799 800 + 23-29 30-39 40-49 50-59 60 + Housing (%) Produ
Slide 18: Operational model & IT infrastructure | Scalable setup
Operational model & IT infrastructure | Scalable setup Illustration of operational model & IT infrastructure Key comments Proven operational model and Online banking modern underlying IT infrastructure interfaces Public sites Customer Blog APIs Transparent setup with light footprint ensures scal
Slide 19: Credit risk management | Proven methodology
Credit risk management | Proven methodology Credit risk management bodies Credit risk scoring methodology Key comments Relevant credit risk management Risk & Audit Committee Board of Directors bodies in place collectively ensuring appropriate risk appetite and handling Application Rejection Well
Slide 20: Organization | Lean structure
Organization | Lean structure Organizational chart Key comments CEO As of Q4-17 the bank has only 24 full-time and 4 part-time Robert Berg employees – all situated in one central office in Oslo, Norway ORGANIZATIONAL CHARACTERISTICS: CFO CRO CTO CMO COO Business Dev. 01 EFFICIENT / Project Mgmt. Eiv
Slide 21: Management | Experienced and competent
Management | Experienced and competent Robert Berg | CEO Egil Botnen | COO 15 years of relevant experience 20 years of relevant experience CEO in yA Bank 2011 - 2014 Head of Business Development / Core Solutions in SEB Kort 2006 - 2016 Commercial Director in Ikano Bank 2011 - 2014 Manage
Slide 22: Board of Directors | Seasoned and diligent
Board of Directors | Seasoned and diligent Hans Petter Aanby | Chairman Odd Harald Hauge | Board Member CEO / Partner OptimiseIT Investor and Consultant Former CIO (management for hire) in SAS Scandinavian Airlines, CIO in Former Founder and Chief Editor in Nettavisen, Business Editor in Nor
Slide 23: The share | Strong shareholder base and aligned incentives
The share | Strong shareholder base and aligned incentives TOP 30 shareholders * Internally owned shares and warrants ** Share performance on NOTC *** # Investors Shares # Investors Position Type Price (NOK) Volume (#) # % Shares Warrants 4.10 3.85 1 SKEIDARLIVING GROUP AS 20,000,000 9.8% 1 Robert B
Slide 24: Table of contents | Overview
Table of contents | Overview 01 Investment considerations 02 About the bank 03 Key financial figures 04 Outlook & Strategy 24
Slide 25: Summary of Q4 2017 / YE 2017 | Key highlights
Summary of Q4 2017 / YE 2017 | Key highlights * 01 Net loans Growth in net loans of NOK 225 million – total outstanding net loans of NOK 1,318 million 02 Margins and yields Net loan yield of 12.8 % in Norway vs. deposit interest rate of 2.0 % 03 Operational expenses Total cost / income ratio of 63.7
Slide 26: Profitable growth | Proven business model
Profitable growth | Proven business model Loan customers (#) Net loans (NOKm) Profit after tax (NOKm) 8,475 1,318 2.2 2.1 1.2 1,093 6,719 -3.2 -8.0 4,990 787 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Annualized Return on Equity (%) * 3,443 519 3.7 % 3.2 % 2.1 % 1,402 190 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q4-16 Q1-1
Slide 27: Income generation | Stable yields and margins
Income generation | Stable yields and margins Key yields (%) & Margins (%) Net interest income (NOKm) Other income (NOKm) 28.5 6.1 14.0 % 6.0 6.0 13.6 % 13.4 % 13.2 % 13.0 % 12.8 % 24.5 8.4 % 17.7 3.6 7.6 % 3.4 6.6 % 5.2 % 8.9 2.0 % 1.9 % 2.1 % 2.0 % 1.8 % 1.9 % 1.8 % 1.6 % 1.0 % 0.7 % 0.8 % 0.4 % 2
Slide 28: Expenses & Loan losses | Economy of scale
Expenses & Loan losses | Economy of scale Operational expenses (NOKm) Loan losses (NOKm) Cost / Income ratio (%) * 20.5 7.9 106.2 % 20.0 7.6 18.8 79.2 % 66.0 % 65.5 % 63.7 % 16.3 3.1 2.9 15.9 2.6 38.5 % 39.2 % 38.9 % 4.8 3.6 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 8.0 8.0 C / I ratio (total) C / I ratio (excl
Slide 29: Loan portfolio risk | Diligent credit risk management
Loan portfolio risk | Diligent credit risk management Past due days (%) Non-performing loans (NOKm) * Provisions (NOKm) 26% 73.3 25.8 24% 47.2 22% 15.7 20% 29.8 10.3 7.1 18% 12.9 3.9 16% Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 14% 12% NPL ratio (%) ** Coverage ratio (%) *** 10% 5
Slide 30: Regulatory capital | Satisfactory adequacy
Regulatory capital | Satisfactory adequacy Regulatory capital (NOKm) Risk-weighted assets (NOKm) Capital ratios (%) & Capital adequacy (%) 251 1,236 68.3 % 219 218 209 214 216 970 918 73 127 120 47 657 32.6 % 131 953 23.5 % NFSA TOTAL 22.4 % REQ. = 19.5% 20.3 % 798 796 320 130 526 NFSA CET1 REQ. = 1
Slide 31: Funding & Liquidity | Stable funding and strict liquidity mgmt.
Funding & Liquidity | Stable funding and strict liquidity mgmt. Funding (NOKm) Liquidity (NOKm) Deposit ratio (%) * 2,087 723 146.0 % 136.9 % 114.5 % 96.5 % 97.2 % 1,300 1,805 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 995 682 309 828 289 NFSR (%) & LCR (%) ** 1,062 633% 515 760 200 182 177 595 250 389% 278 219%
Slide 32: Income statement & Balance sheet | Overview
Income statement & Balance sheet | Overview Income statement (NOK thousand) Balance sheet (NOK thousand) 2017 2016 2017 2016 Q4 Q3 Q2 Q1 Q4 Q4 Q3 Q2 Q1 Q4 Interest income 36,416 29,074 20,939 11,107 3,018 Assets Interest expenses 7,930 4,592 3,235 2,190 495 Loans and deposits with credit institution
Slide 33: Table of contents | Overview
Table of contents | Overview 01 Investment considerations 02 About the bank 03 Key financial figures 04 Outlook & Strategy 33
Slide 34: Outlook and strategy going forward | Key highlights
Outlook and strategy going forward | Key highlights Continued strong growth will be given priority over dividend payouts and short term profitability KEY LONG-TERM FINANCIAL RATIOS 01 Continue growth story Growth is essential because solid long term profitability will be achieved through economi
Slide 35: Instabank ASA
Instabank ASA | #816914582 | Drammensveien 177 – 0277 Oslo | www.instabank.no