Instabank : Interim Report Q1 24

INTERIM REPORT Q1 2024

Instabank ASA

Key highlights Q1-24

Profit before tax: 24.2 MNOK vs 31.6 MNOK in Q1-23

Profit after tax: 18.2 MNOK

Growth in gross loans: 321 MNOK to 6,595 MNOK

Increased growth in business lending

New Security deposit account product launched

Will contribute to lower funding costs

The Nordic challenger

About Instabank ASA

Instabank, the Nordic challenger, was established as a fully digital bank in the autumn of 2016. We are dedicated to improving the banking experience for both business and private customers. We believe in challenging established norms and finding agile solutions where others create complexity. Our goal is to make everyday life easier for our customers through better products, technology, and personal contact. In a short time, we have achieved a strong position in the Nordic market and are proud to have more than 100,000 customers who have chosen us for their lending, payment or deposit needs.

Instabank operates in Norway, Finland and Sweden, offering competitive savings, insurance, point of sales (POS) financing, credit cards, mortgages and unsecured loan products to consumers

and small and medium-sized businesses. Instabank also offers deposits in Germany through a partnership with Raisin Bank.

The bank's products and services are distributed primarily through agents, various retail partners and the bank's website and mobile app.

At the end of Q1-24, Instabank had 49 full-time and 13 part-time employees.

Instabank is listed on Euronext Growth at Oslo Børs, ticker INSTA.

Operational Developments

Instabank reports a growth in gross loans of 321 MNOK in Q1-24. The growth comes from solid organizational performance, successfully delivering on the strategy, effective operations, distribution, and product offerings meeting customer demands.

Growth in gross loans

+ 321 MNOK

Growth in gross loans Q1-24

The newly launched product for Small and Medium-Sized Enterprises (SME) performs very well, delivering a solid growth in gross loans of 65 MNOK in the quarter. Instabank considers lending to SMEs an underserved market with attractive yield and volumes. We expect lending to businesses to contribute to Instabank's growth gross loans, margins and profits.

The growth in mortgage lending experienced a dip in the quarter, falling from 174 MNOK in the previous quarter to 91 MNOK. This was primarily due to the low volume of new loans at the start of the quarter. By the end of Q1-24, mortgage lending stood at 2,615 MNOK, accounting for 40 % of total lending.

Unsecured gross loans to consumers grew 165 MNOK in the quarter, of which 79 MNOK came from changes in exchange rates.

Consistent with previous quarters, Instabank has raised the interest rates for both existing lending customers and new loans in response to the increase by the Norwegian Central Bank in December 2023, leading to increased yield.

The funding cost also continued to increase. The average deposit rate was

4.1 % in Q1-24, up from 3.9 % in the previous quarter.

In March, Instabank launched a new security deposit account product in cooperation with Husleie.no, the leading platform for managing tenancies in Norway. Instabank's funding costs are expected to decrease because of this.

At the end of Q1-24, the bank had 103,163 customers, of which 66,753 were loan customers and 36,410 were deposit customers.

Profit and Loss

Instabank reports a profit before tax of

24.2 MNOK, down 8.5 MNOK from the

previous quarter, because of decreased yield on securities and increased funding cost.

Total interest income increased by 44.9 MNOK from the same quarter last year to 164.9 MNOK in Q1-24. The increase comes from a 12-month gross lending growth of 1,300 MNOK and increased loan yield to 11.5 % from 10.4 % in the same quarter last year.

+ 35 %

Growth in Interest income

Interest expenses came in at 71.3 MNOK, up from 65.8 MNOK in the previous quarter, following an increase in deposit volume and an increase in funding cost to 4.6 % from 4.4 % the previous quarter.

Net other income was 22.9 MNOK in the quarter, down 3.1 MNOK from the previous quarter, as the yield on securities decreased from 7.3 % to 3.6 %.

Total income came in at 116.5 MNOK, up 15.8 MNOK / 16 % from the same quarter last year.

+ 16 %

Growth in Total Income

Operating expenses were 45.9 MNOK, up only 0.3 MNOK from the previous

quarter. Personnel costs decreased by

0.8 MNOK, and administrative costs were up by 1.6 MNOK, of which 1.2 MNOK came from increased marketing costs associated with the new SME lending product.

The cost-to-income ratio was 39 % versus 37 % in the previous quarter.

Loan losses came in at 46.3 MNOK or 2.9 % of average gross loans, down from

46.6 MNOK/ 3.1 % in the previous quarter. A decrease in losses on loans in Finland offset an increase in losses on loans for mortgages.

24.2 MNOK

Profit before tax Q1-24

Profit before tax was 24.2 MNOK, and profit after tax was 18.2 MNOK, representing a return on equity of 8.3 %.

Balance Sheet

Instabank achieved growth in gross loans of 321 MNOK in the quarter to 6.595 MNOK at the end of the quarter.

Deposits from customers increased by 283 MNOK to 6.410MNOK at the end of the quarter.

Total assets at the end of Q1-24 were 7.591 MNOK.

Regulatory capital

At the end of the quarter, the Common Equity Tier 1 Capital (CET1) ratio was

18.4 %, 3.8 % points above the regulatory capital requirement. The total capital ratio was 22.3 %, 1.4 %

points above the regulatory capital requirement.

The Ministry of Finance implemented a transitional rule for capital composition applicable to all banks, which came into effect on 31.12.23. The Pillar 2 requirement, currently at 6.2% for Instabank, can be met with a minimum of 56.25% Common Equity Tier 1 (CET1) capital, down from 100%

The Norwegian Financial Supervisory Authority (NFSA) is in the process of setting a new Pillar 2 requirement for Instabank.

Outlook

We expect continued high demand for Instabank 's lending products. For 2024, Instabank will prioritize growth in lending for mortgages, business lending and consumer loans in Finland. The latter as capital requirements have been reduced significantly for exposures in Finland. A new Positive Credit Register will launch in Finland in April, expected to positively impact credit risk in the long-term.

We expect the final decision for the new Pillar 2 requirement, including capital composition, in the second quarter.

Other information

Regarding capital requirement, there has been a limited review of the accounts in accordance with ISRE 2410 as of 31.03.2024 by the bank's auditors and the result after tax is added to retained earnings in full.

Oslo, April 29th, 2024

Board of Directors, Instabank ASA

Condensed statements of profit or loss and other comprehensive income:

NOK 1000	Note	Q1-2024	Q1-2023	YTD 2024	YTD 2023	Year 2023
Interest Income effective interest method		162 012	119 664	162 012	119 664	556 225
Other interest income		2 912	1 262	2 912	1 262	8 296
Interest expenses		71 314	37 130	71 314	37 130	204 694
Net interest income		93 610	83 796	93 610	83 796	359 828
Income commissions and fees		15 894	12 222	15 894	12 222	54 304
Expenses commissions and fees		1 096	2 109	1 096	2 109	10 629
Net gains/loss on foreign exchange and securities
classified as current assets		8 119	6 854	8 119	6 854	37 580
Net other income		22 918	16 967	22 918	16 967	81 256
Total income		116 528	100 763	116 528	100 763	441 083
Salary and other personnel expenses		18 807	15 199	18 807	15 199	68 644
Other administrative expenses, of which:		21 863	18 406	21 863	18 406	76 556
- direct marketing cost		4 993	2 716	4 993	2 716	13 244
Other expenses		2 146	1 797	2 146	1 797	8 475
Depreciation and amortisation		3 141	2 947	3 141	2 947	12 440
Total operating expenses		45 956	38 350	45 956	38 350	166 114
Losses on loans	2	46 332	30 849	46 332	30 849	143 740
Operating profit before tax		24 239	31 564	24 239	31 564	131 229
Tax expenses		6 060	7 891	6 060	7 891	30 357
Profit and other comprehensive income for the period		18 179	23 673	18 179	23 673	100 872
Earnings per share (NOK)		0,05	0,07	0,05	0,07	0,27
Diluted earnings per share (NOK)		0,05	0,07	0,05	0,07	0,25

Condensed statement of financial position:

NOK 1000	Note	31.03.2024	31.03.2023	31.12.2023
Loans and deposits with credit institutions	4	226,433	174,078	264,224
Loans to customers	2, 4	6,260,957	5,115,359	5,993,508
Certificates and bonds	4	1,013,267	848,185	943,254
Derivatives		13,166	4,002	1,273
Shares and other equity instruments		6,000	0	0
Other intangible assets	5	27,451	22,756	26,923
Fixed assets		14,393	3,623	15,094
Deferred tax assets		1,883	0	1,883
Other receivables	4	27,003	36,735	31,124
Total assets		7,590,552	6,204,739	7,277,283
Deposit from and debt to customers	4	6,409,638	5,234,665	6,126,572
Other debts	4	65,965	15,145	19,648
Accrued expenses and liabilities		25,947	13,461	31,127
Derivatives		2,842	3,361	22,824
Deferred tax		0	734	0
Tax payable		26,501	32,956	32,974
Subordinated loan capital	3, 4	96,000	96,000	96,000
Total liabilities		6,626,893	5,396,323	6,329,145
Share capital	3	378,262	332,642	378,262
Share premium reserve	3	200,430	178,192	200,430
Retained earnings	3	304,068	216,682	288,547
Additional Tier 1 capital	3	80,900	80,900	80,900
Total equity		963,659	808,417	948,139
Total liabilities and equity		7,590,552	6,204,739	7,277,283

Statement of changes in equity:

				Retained
				earnings
	Share	Share	Tier 1	and other	Total
NOK 1000	capital	premium	capital	reserves	equity
Equity per 01.01.2023	332 642	178 192	80 900	194 540	786 275
Capital issuanse	45 619	22 238			67 857
Profit for the period				100 872	100 872
Changes in warrants				3 182	3 182
Paid interest on Tier 1 Capital				-10 048	-10 048
Equity per 31.12.2023	378 262	200 430	80 900	288 547	948 139
Equity per 01.01.2024	378 262	200 430	80 900	288 547	948 139
Profit for the period				18 179	18 179
Changes in warrants					-
Paid interest on Tier 1 Capital				-2 659	-2 659
Equity per 31.03.2024	378 262	200 430	80 900	304 068	963 659

Notes

Note 1: General accounting principles

The interim report is prepared in accordance with chapter 8 in regulations for annual accounts of banks, credit companies and financial institutions, which means interim financial statement in accordance with IAS 34 and those exceptions included in the regulations for annual accounts of banks, credit companies and financial institutions, as presentation of statement of cashflows. For further information see note 1 accounting principles in the annual report of 2022. The interim report was approved by the board of directors on April 29th, 2024.

Note 2: Loans to customers

GROSS AND NET LENDING;

NOK 1000	31.03.2024	31.03.2023	31.12.2023
Unsecured consumer loans	3 846 357	3 329 812	3 681 338
Mortgages	2 615 233	1 965 052	2 524 139
B2B Credit Line	133 610	0	68 382
Prepaid agent commission	146 560	136 658	149 521
Establishment fees	-86 096	-77 282	-85 956
Gross lending	6 655 664	5 354 240	6 337 423
Impairment of loans	-394 707	-238 881	-343 915
Net loans to customers	6 260 957	5 115 359	5 993 508

CREDIT IMPAIRED AND LOSSES:

NOK 1000	31.03.2024	31.03.2023	31.12.2023
Gross credit impaired loans (stage 3)	794 575	443 387	663 605
Individual impairment of credit impaired loans (stage 3)	-326 710	-181 500	-277 168
Net credit impaired loans	467 865	261 887	386 437
Gross credit impaired loans are loans which are more than 90 days in arrear in relation to the agreed payment schedule.

AGEING OF LOANS:

NOK 1000	31.03.2024	31.03.2023	31.12.2023
Loans not past due	4 693 279	4 037 420	4 500 310
Past due 1-30 days	761 331	563 293	794 218
Past due 31-60 days	264 174	209 790	263 108
Past due 61-90 days	81 841	40 974	52 618
Past due 91+ days	794 575	443 387	663 605
Total	6 595 200	5 294 864	6 273 858

	31.03.2024	31.03.2023	31.12.2023
Loans not past due	71,2 %	76,3 %	71,7 %
Past due 1-30 days	11,5 %	10,6 %	12,7 %
Past due 31-60 days	4,0 %	4,0 %	4,2 %
Past due 61-90 days	1,2 %	0,8 %	0,8 %
Past due 91+ days	12,0 %	8,4 %	10,6 %
Total	100,0 %	100,0 %	100,0 %