BRAbank ASA: Capital restraints limits growth opportunities

Highlights:

• Net loans at NOK 4 494 million, down from NOK 4 537 million in Q2’19
  • Shifting the loan book from Norway to Finland
• Net profit affected by significant one-offs
  • Restructuring costs (NOK 12 million)
  • Sale of Finnish non-performing portfolio (NOK 5 million loss)
  • IFRS 9 adjustments (NOK 15 million)
• Loan losses affected by high losses in the former BRAbank’s Norwegian portfolio
  • NOK 10 million
• Integration process progressing according to budget
• Equity issue of NOK 35 million successfully completed
• Extensive cost-efficiency program launched
  • NOK 10-12 million annual improved cost base

BRAbank’s operations and growth was affected by capital restraints in the third quarter 2019 and several measures have been taken to counteract the development.  In September, BRAbank successfully completed an equity issue of NOK 35 million and in October BRAbank sold a portfolio of non-performing loans in Finland which will free up capital.

After the third quarter, to align the organisation to new market conditions, BRAbank has launched a cost-efficiency program to improve the cost base and profitability. The bank will reduce its staff by approximately 8 full-time employees and approximately 5 external consultants, which will improve the annual cost base by NOK 10-12 million when fully implemented

Net interest income for the quarter was NOK 95.7 million, an increase of 37.3 percent compared to the third quarter of last year (NOK 69.7 million). Net interest income for the first nine months was NOK 264.0 million, an increase of 33.5 per cent compared to the first nine months of 2018 (NOK 197.8 million).

Loan losses was NOK 77.7 million in the quarter compared to NOK 44.7 million in the third quarter 2018. The main driver for the increased loan losses were higher losses in the former BRAbank’s Norwegian portfolio of NOK 10 million, IFRS 9 adjustments of NOK 15 million and a loss of NOK 5 million after disposal of a non-performing loan portfolio in Finland.

The result in the third quarter of 2019 was a deficit of NOK 35.3 million before taxes in the period, while the after-tax results ended at a deficit of NOK 26.5 million.

Going forward, BRAbank will prioritise loan growth in less capital-intensive markets. Consequently, BRAbank will continue to increase the exposure in Finland relative to Norway. Operational focus will be the ongoing technical integration between former Monobank and BRAbank and a successful completion of the newly launched efficiency program.

“BRAbank’s operations in the third quarter was influenced by capital restraints and extraordinary loan losses. Appropriate measures have been taken to adjust the organisation and to ensure that we restore a platform for profitable growth. The integration process is progressing according to budget and I am proud of how the organisation has adapted to these changes”, says Bent Gjendem, CEO of BRAbank ASA.

Presentation in Oslo and webcast today Tuesday 29 October at 11:00 AM CEST

The company will host a presentation of third quarter 2019 results in Oslo Tuesday 29 October at 11:00 AM CET at Felix Conference Center, Bryggetorget 3, 0250 Oslo.

The presentation can be followed through live webcast here: www.brabank.no/

Material

The report and presentation will also be made available on www.brabank.no/ and www.newsweb.no.

For further information contact:

Bent H. Gjendem, Chief Executive Officer at BRAbank, phone: +47 996 11 996

Hans Ljøen, Chief Financial Officer at BRAbank, phone: +47 481 87 750

About BRAbank

BRAbank ASA is a digital bank focused on consumer finance in the Nordics. BRAbank is a cloud-based bank with strong focus on customer experience and fintech solutions. BRAbank is based in Bergen, Norway and started operation as Monobank in November 2015 and merged with BRAbank in June 2019. The bank has experienced strong growth.

The bank offers unsecured lending to qualified private individuals in Norway, Finland and Sweden. The screening process is based on an automated evaluation system, developed using the latest technology and advanced analytics. The bank also offers attractive deposit rates on its savings accounts. Deposits up to NOK 2 million are guaranteed by the Norwegian Banks' Guarantee fund, of which BRAbank is a member.

BRAbank is an independent bank with approximately 1,300 shareholders and is listed on the Oslo Stock Exchange's Merkur Market with ticker symbol BRA-ME. BRAbank has been awarded with "Great Place to Work" three times since the start.

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

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