optin bank asa · about optin ank asa optin bank asa is a fintech scale-up in the ecommerce space,...

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Interim report as of 31 December 2019

Optin Bank ASA

Interim report

as of 31 December 2019

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THE BOARD'S REPORT

Optin Bank ASA

Q4 2019

Letter from the CEO

Another major milestone has been reached for Optin in Q4 when hard work materialized in commercial

agreements with very high potential. In addition, we are so fortunate to partner with start- and scale-ups with

disruptive products and high level of competence. We have further developed our technical platform, and our

product offering can now compete with the best in the market. The platform has been built for scalability in terms

of partner and transaction volumes, to support new functionality, as well as scale to new regions.

The developments in Q4 makes me optimistic that we will deliver 2020 with solid financial results. We continue

to build a solid foundation for Optin Bank to address the opportunities generated in 2019 and the team did an

amazing job landing clients and delivery of outstanding technical functionality, combined with massive

progression operationally and in back-office.

We strengthened the capital in the bank in Q4 and our current shareholders has the same belief in Optin as

myself and the rest of the Optin team.

As we are heading into 2020, I am confident that we have built a solid platform and foundation with our team,

processes, and tech base. All in all, the bank is geared for profitable growth, and I believe that when we look

back in time a couple of years from now we will look back at 2020 as a key year on our path to success.

Harald Dahl Pedersen

CEO

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THE BOARD'S REPORT

Key developments

Successful capital raise of NOK 36.75 million

We landed on target with the funding round, securing that the

bank can deliver on its commitment while also building a

platform for growth in 2020

Signing of commercial agreement with Opus Dental

Opus Dental is a provider of Dental Heath Record systems to

+1500 dental clinics in Norway. In total these clinics generate

revenues in the range of NOK 20 billion every year. We have

tailored our product OptinPay Dental with a close integration

with Opus Dental in order to offer the best solution possible in

the dental care sector.

Partnerships to pave the way for international

expansion

The bank signed several commercial and technical agreements

to support growth in Norway, The Nordics and Europe. Adding

Bambora for card payments in OptinPay strengthens the

overall product offering and offers a stronger platform for

growth in, as well as outside, the Nordics. A new agreement

with Hudya/Payr combined with our agreement with Fair paves

the way for a Nordic rollout to take place in 2020.

Operational developments

The bank continues to strengthen its client base with

several signings in the service sector. The most

significant contract signed in Q3 was the agreement to

deliver OptinPay to the dental health sector (Branded

as OptinPay Dental) through a partnership with dental

health records provider Opus Dental. The agreement

is significant from a volume perspective as well as a

strategic perspective due to the sheer number of

clinics/dentists (merchants) and patients

(transactions), target market potential, and the level of

integration.

Volume wise, Opus Dental aggregates a total of

+1500 dental clinics in Norway alone, and taps into a

transaction volume of approximately NOK 20 billion.

While the competition in this sector is fierce with

players such as Swedbank and Svea Finance having

a strong foothold, the integration with Opus Dental

offers functionality unique to OptinPay Dental.

The Opus agreement marked a milestone in

integration as solutions on both sides are developed

with new functionality to provide a better and more

competitive offering for the operations of the dental

health clinics.

To strengthen the product portfolio, the bank reached

an agreement with Bambora to integrate Credit and

Debit card payments into the check-out solution. With

Bambora onboard, OptinPay now offers full spectrum

payment options with invoice (Paper, eFaktura, PDF

over e-mail, and Digipost), deferred invoice/pay later,

accounts, and card payments. Check-out options

include plugins for web shopping platforms, combined

with a strong, open and flexible API which allows the

bank to tap into literally any kind of payment

transaction in existence. Q4 also saw the birth of a

mobile check-out solution capable of supporting Level

3 security for sensitive data distribution.

Besides Opus Dental, the bank showed strong

commercial traction with signed agreements with 10

new merchants, representing an addressable

business volume in the upper range of NOK 200

Million. The partner mix is showing success in three

key markets: a) services, b) product sales with

medium ticket sizes, and c) system providers / re-

sellers delivering solutions to the eCommerce space,

bundling OptinPay with the delivery.

The Bank also took a first step towards by

internationalization of its product portfolio by issuing

passport applications for operations in Poland, UK,

and Sweden.

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THE BOARD'S REPORT

The first international commercial activity was the

signing of an agreement with a Norwegian company

with subsidiaries in 13 European countries to offer

OptinPay for international deployment, starting with

Poland, with UK as a second target market.

Operations commenced to include back-office

developments and partner developments to support a

full ecommerce value-chain for B2B clients.

The bank has strengthened its relationship with Payr

and will together with the new owner, Hudya, launch

the Payr platform under the governance of Optin Bank

in Q1 2020.

The capital base of the bank was strengthened through

a share issue aimed at existing shareholders. The

capital increase was completed in December 2019 with

a price of NOK 11 per share and a total amount of NOK

36.75 million.

Optin Bank was de-listed from the NOTC in order to

secure that the bank can operate more freely,

strengthen its communication efforts toward all

stakeholders, and better address new business

opportunities .

Financial information

The loan portfolio at the end of Q4 2019 was NOK

205.8 million. A total of NOK 39.2 million was paid for

new loans in the fourth quarter of 2019 and NOK 150.9

million for the year. Net lending growth in the quarter

has been adjusted for redemptions and sales of non-

performing loans in the forward-flow agreement by

NOK -62.7 million. Deposits from customers amounted

to NOK 350,5 million at the end of Q4 2019.

The total assets amounted to NOK 482.7 million, and

cash equivalents in the form of bank deposits and the

interest-bearing securities amounted to NOK 209,1

million.

Optin Bank had a core capital adequacy ratio of

30.8 per cent at the end of Q4 2019.

Profit after tax for the fourth quarter of 2019 is NOK

–10.7 million and NOK -36.5 million for the year.

Net interest income amounted to NOK 4.1 million in

the fourth quarter of 2019 and NOK 20.0 million for

the year.

Net commission costs in the fourth quarter

amounted to NOK 1.3 million and NOK 4,8 million

for the year and are mainly related to agent

commissions for loan brokerage.

Operating expenses in Q4 2019 were NOK 11,9

million and NOK 45.2 million for the year. Rental

costs are booked as depreciation an accordance

with IFRS 16 for 2019.

Optin Bank ASA had NOK 3.0 million in overdue

commitments over 90 days as of December 31,

2019.

We have since inception had a conservative Credit

policy and have constantly tuned the policy to

ensure good credit quality customers.

With an exception of a few loans, new business

volume outside the ecommerce platform has not

been booked since H1 2019.

A major part of the loan loss reserves is originating

from the start up and the first- and second-

generation scorecard. The proportion of non-

performing loans in the portfolio has been reduced

as credit quality in the portfolio have increased and

we have performed a sale of a non-performing loan

portfolio Loans. We have had a Forward Flow

agreement with Axactor to sell our non-performing

loans.

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THE BOARD'S REPORT

This agreement was terminated per the end Q4 2019.

The pre- and legal collection will in the future be

performed by Fair Group.

Our loans loss reserves are assessed for write-down

adjustments in accordance with IFRS 9 and provision is

made for expected losses from the date of payment.

The bank has a conservative approach to expected

cash flow from commitments maturing over 90 days

and offsetting between 60 and 100 percent of principal

for anticipated losses. Loss provisions in Q4 2019

amounted to NOK 5.7 million and NOK 19.8 million for

the whole year.

Future development

2020 for the bank is all about building an solid engine

for scaling; increasing our partner base and continue

developing our sales pipeline, rapid partner

onboarding, re-seller development, and an international

expansion with a strong focus on the Nordic region

together with our partners Fair Group, Hudya and

Bambora.

To support this, we will continue to strengthen our

commercial team as well as increasing our technical

baseline to fully automate every part of the value-chain.

In addition, the bank will continue to position ourselves

as a FinTech scale-up with high ambitions.

About Optin Bank ASA

Optin Bank ASA is a FinTech scale-up in the

eCommerce space, offering services in the payments

and financial transactions segment, combined with a

savings accounts product at very competitive interest

rates .

Optin Bank ASA was converted from Optin Prosjekt AS

August 22nd, 2017.

The company was granted a banking license by the

Norwegian Financial Supervisory Authority on Sep-

tember 8th, 2017. Optin Bank ASA is mainly owned

by Norwegian investors. The bank has a business

office in Munkedamsveien 53B in Oslo. Optin Bank

is a member of the Banks' Guarantee Fund and all

customers` deposits up to NOK 2 million are se-

cured with a deposit guarantee.

Our eCommerce platform has been developed in

partnership with market leading players such as Ap-

tic, Flowize, Fair Group, Bambora, Payr and Hudya.

Together with these partners we offer an end to end

solution for payments ranging from checkout to col-

lections. Payment options online and mobile check-

out includes Invoices, Deferred invoices, Accounts,

Cards, and VIPPS. The Card and VIPPS settle-

ments are executed through the partnership with

Bambora.

Our savings account offers very competitive terms

for the consumer, including low risk, higher interest

rates compared to a traditional payroll or utility ac-

count, without any additional fees or withdrawal re-

strictions. The savings account product is consist-

ently ranked amongst the top 10 best savings ac-

counts in Norway, and we experience a good re-

cruitment of new deposit customers. The interest

rate of the savings account is aligned with the devel-

opment of the market and our liquidity and capital

requirements.

Oslo, 31 January 2020

The Board of Optin Bank ASA

https://www.norskfamilie.no/barometre/innskuddsrente/

https://www.norskfamilie.no/barometre/innskuddsrente/

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INCOME STATEMENT

Amounts in NOK 1 000 Note 4Q 2019 Jan-Dec

2019

4Q 2018 Jan-Dec

2018

2018

Interest income, amortised cost 5 715 25 249 5 140 8 792 8 792

Other interest income 133 625 1 763 3 146 3 146

Interest income 5 848 25 874 6 904 11 939 11 939

Interest expense, amortised cost -1 678 -5 838 -2 190 -3 261 -3 261

Other interest expense -47 -47 -40 -132 -132

Interest expense -1 726 -5 885 -2 230 -3 394 -3 394

Net interest income 6 4 122 19 989 4 674 8 545 8 545

Commission and fee income 78 354 30 52 52

Commission and fee expense -1 424 -5 187 -794 -1 285 -1 285

Net commission and fee expense 7 -1 347 -4 834 -765 -1 233 -1 233

Net gain/(loss) on financial instruments at fair value 488 1 175 -1 477 - 2 434 -2 434

Total income 3 264 16 330 2 432 4 878 4 878

Salaries and administrative expenses 8 -4 866 -19 749 -5 277 -16 770 -16 770

Depreciation on fixed and intangible assets -2 707 -6 407 -952 -2 259 -2 259

Other operating expenses 9 -4 334 -19 075 -5 296 -15 504 -15 504

Total operating expenses before impairment losses -11 908 -45 231 -11 524 -34 533 -34 533

Impairment losses on loans to customers -5 675 -19 794 -5 483 -8 014 -8 014

Profit before tax -14 319 -48 695 -14 575 -37 669 -37 669

Income tax expense 3 580 12 174 3 573 9 347 9 347

Profit for the period -10 739 -36 521 -11 001 -28 322 -28 322

STATEMENT OF COMPREHENSIVE INCOME

Amounts in NOK 1 000 Note 4Q 2019 Jan-Dec

2019

4Q 2018 Jan-Dec

2018

2018

Profit for the period -10 739 -36 521 -11 001 -28 322 -28 322

Other comprehensive income 0

Total comprehensive income -10 739 -36 521 -11 001 -28 322 -28 322

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STATEMENT OF FINANCIAL POSITION

Amounts in NOK 1 000 Note 31 December 2019 31 December 2018 31 December 2018

ASSETS

Loans and advances to credit institutions 2,4 64 208 75 780 75 780

Loans and advances to customers 3,4 205 773 192 788 192 788

Debt instruments 4 144 942 159 141 159 141

Intangible assets 19 511 17 614 17 614

Deferred tax assets 27 575 15 401 15 401

Fixed assets 7 053 367 367

Other assets 13 673 12 203 12 203

TOTAL ASSETS 482 735 473 295 473 295

LIABILITIES

Deposits from customers 350 508 381 374 381 374

Other liabilities 11 054 5 510 5 510

TOTAL LIABILITIES 361 561 386 884 386 884

EQUITY

Share capital 8 093 5 672 5 672

Share premium 183 174 115 179 115 179

Total paid-in equity capital 191 267 120 851 120 851

Other equity -33 572 -6 119 -6 119

Total comprehensive income -36 521 -28 322 -28 322

Total other equity -70 093 -34 441 -34 440

TOTAL EQUITY 121 173 86 411 86 411

TOTAL LIABILITIES AND EQUITY 482 735 473 295 473 295

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STATEMENT OF CHANGES IN EQUITY

1 January - 31 December 2019

Amounts in NOK 1 000 Share capital Share premium Other equity Total equity

Equity at 01.01.2019 5 672 115 179 -34 440 86 411

Issue of share capital (net of transaction costs) 868 868

Employee stock options 2 421 67 994 70 415

Total comprehensive income -36 521 -36 521

Equity at 31.12.2019 8 093 183 174 -70 093 121 173



Equity at 01.01.2018 5 672 114 900 -6 685 113 888

Employee stock options 566 566

Share issuance transaction costs 279 279


Equity at 31.12.2018 5 672 115 179 -34 440 86 411



Equity at 01.01.2018 5 672 114 900 -6 685 113 888

Employee stock options 566 566

Share issuance transaction costs 279 279


Equity at 31.12.2018 5 672 115 179 -34 440 86 411

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STATEMENT OF CASH FLOWS

Amounts in NOK 1 000 31 December 2019 31 December 2018 31 December 2018

Net payments on loans to customers -33 873 -199 805 -199 805

Net receipts/(payments) on deposits from customers -32 866 381 371 381 371

Interest received 25 369 8 302 8 302

Interest paid -5 885 -3 391 -3 391

Net (increase)/decrease in debt securities -5 356 -158 946 -158 946

Net payments on commissions and fees 17 068 -10 402 -10 402

Payments to operations -31 526 -33 391 -33 391

Net cash flows from operating activities -67 070 -16 262 -16 262

Purchase of fixed and intangible assets -14 990 -16 054 -16 054

Net cash flows from investing activities -14 990 -16 054 -16 054

Proceeds from issuance of share capital 70 415 0 0

Net cash flows from financing activities 70 415 0 0

Net cash flows -11 644 -32 316 -32 316

Cash and cash equivalents at 1 January 74 309 106 625 106 625

Net increase/(decrease) in cash and cash equivalents -11 644 -32 216 -32 216

Cash and cash equivalents at end of period 62 664 74 309 74 309

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NOTES TO THE FINANCIAL STATEMENTS Note 1 Accounting principles

The financial statements for Optin Bank ASA are prepared in accordance with the International Financial Reporting standards (IFRS) as

adopted by EU. The financial statements as of 31 December 2019 follow IAS 34 Interim reporting and the same accounting principles as

Note 2 Loans and advances to credit institutions

Amounts in NOK 1 000

31 December 2019 31 December 2018 31 December 2018

Loans and advances to credit institutions without agreed period of notice 64 208 75 780 75 780

Total loans and advances to credit institutions 64 208 75 780 75 780

Note 3 Loans to customers



Gross loans to customers 213 482 200 512 200 512

Loan loss allowances Stage 1 -1 637 -1 146 -1 146



Net loans to customers 205 773 192 788 192 788

Reconciliation of gross loans to customers

Stage 1 Stage 2 Stage 3 Total

Gross loans to customers at 01.01.19 175 875 18 881 5 756 200 512

Transfers between Stage 1 and Stage 2 -11 784 10 305 - -1 479

Transfers between Stage 1 and Stage 3 -144 - 140 -4

Transfers between Stage 2 and Stage 3 - -466 467 1

Derecognised in the period -79 789 -18 368 -3 882 -102 039

Originated during the period 105 647 10 278 566 116 491

Gross loans to customers at 31.12.19 189 804 20 631 3 047 213 482

Reconciliation of loan loss allowances

Stage 1 Stage 2 Stage 3 Total

Loan loss allowances at 01.01.19 -1 146 -2 000 -4 579 -7 725

Transfers between Stage 1 and Stage 2 84 - 2 134 - - 2 050

Transfers between Stage 1 and Stage 3 1 - - 28 - 27

Transfers between Stage 2 and Stage 3 - 55 -413 -359

Derecognised in the period 151 1 940 2 979 5 069

Originated during the period -727 -1 555 -336 -2 618

Loan loss allowances at 31.12.19 -1 637 -3 694 -2 378 -7 709

Gross loans to customers by past due status


Not past due 158 300 154 479 154 479

Past due 1-30 days 31 549 21 280 21 280

Past due 31-60 days 13 715 5 064 5 064

Past due 61-90 days 6 916 4 015 4 015

Past due over 90 days 3 003 15 675 15 675


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Note 3 Loans to customers (cont.)


Geographic distribution of loans to customers 31 December 2019 31 December 2018 31 December 2018

Oslo 33 087 27 631 27 631

Akershus 45 886 25 390 25 390

Østfold 14 880 17 517 17 517

Hedmark 6 878 5 363 5 363

Oppland 4 881 6 539 6 539

Buskerud 9 379 12 406 12 406

Vestfold 12 315 9 803 9 803

Telemark 6 246 7 255 7 255

Rogaland 11 364 10 980 10 980

Vest-Agder 5 824 6 381 6 381

Aust-Agder 3 781 3 595 3 595

Hordaland 18 108 17 460 17 460

Sogn og Fjordane 1 726 1 922 1 922

Møre og Romsdal 9 087 8 940 8 940

Trøndelag 13 055 16 652 16 652

Nordland 7 184 11 459 11 459

Troms 6 132 6 582 6 582

Finnmark 3 669 4 639 4 639


Note 4 Classification of financial instruments


At 31 December 2019 Amortised cost FVTPL Total

Loans and advances to credit institutions 64 208 64 208

Loans to customers 205 773 205 773

Debt instruments 144 942 144 942

Total financial assets 205 773 209 150 414 923

Deposits from customers 350 508 350 508

Total financial liabilities 350 508 - 350 508




Certificates and obligations 159 141 159 141



Total financial liabilities 381 374 381 374




Debt instruments 159 141 159 141



Total financial liabilities 381 374 381 374

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Note 5 Regulatory capital


31 December 2019

Share capital 8 093

Share premium 183 174

Other equity - 70 093

(-) Intangible assets -19 511

(-) Deferred tax assets -27 784

Common Equity Tier 1 capital 73 879

Total regulatory capital 73 879

Credit risk

Institutions 13 843

Retail 185 672

Other 20 726

Total credit risk 220 241

Market risk 3

Operational risk 19 883

Total risk-weighted assets 240 124

Common Equity Tier 1 capital ratio 30,77 %

Tier 1 capital ratio 30,77 %

Total capital ratio 30,77 %

Liquidity Coverage Ratio - LCR 1 854,64 %

Leverage Ratio - LR 2 17,0 %

1 The Liquidity Coverage Ratio (LCR) measures high-quality liquid assets held by Optin Bank to meet its short-term obligations. The CRD IV-regulation § 8 requires a 100 per cent

LCR, which means an amount of highly liquid assets that is equal or greater than the net cash outflow over a 30-day stress period.

2 The Leverage Ratio (LR) measures Optin Bank’s Tier 1 capital relative to the non-risk-weighted exposure of all assets and off-balance sheet items. The CRD IV-regulation §5

requires a 3 per cent leverage ratio, and an additional buffer of 2 per cent.

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Note 6 Net interest income


4Q 2019 4Q 2018 2018 Jan-Dec 2019 Jan-Dec2018

Interest income from loans and advances to credit

institutions 133 165 524 332 524

Interest income from loans to customers 5 715 5 140 8 792 25 249 8 792

Interest income from debt instruments - 599 2 623 293 2 623

Total interest income 5 848 6 904 11 939 25 874 11 939

Interest expense on deposits to customers -1 678 -2 190 -3 261 -5 838 -3 261

Deposit Guarantee Fund levy -47 -40 -132 -47 -132

Total interest expenses -1 726 - 2 230 -3 394 - 5 885 -3 394

Net interest income 4 122 4 674 8 545 19 989 8 545

Note 7 Net commission and fee expense


4Q 2019 4Q 2018 2018 Jan-Dec2019 Jan-Dec2018

Commission and fee income 78 30 52 354 52

Commission to loan agents -1 325 -775 -1 204 -4 758 -1 204

Fees on banking services -99 -20 -80 -429 -80

Net commission and fee expenses - 1 347 -765 -1 233 -4 834 -1 233

Note 8 Salaries and administrative expenses


4Q 2019 4Q 2018 2018 Jan-Dec 2019 Jan-Dec 2018

Salaries -3 407 -3 771 -11 329 -13 882 -11 329

Employer contribution -825 -808 -2 296 -3 000 -2 296

Pension costs -316 -308 -1 072 -123 -1 072

Other personnel expenses -318 -389 -2 072 -1 745 -2 072

Total salaries and administrative expenses -4 866 -5 277 -16 770 -19 749 -16 770

Note 9 Other operating costs


4Q 2019 4Q 2018 2018 Jan-Dec 2019 Jan-Dec 2018

IT-expenses -3 767 -3 926 -10 602 -14 286 -10 602

Property rental 704 -468 -1 638 -858 -1 638

Marketing expenses -101 -309 -882 -163 -882

Other operating expenses -171 -593 -2 381 -3 767 -2 381

Total other operating expenses -4 334 - 5 296 -15 504 -19 075 -15 504

optin bank asa · about optin ank asa optin bank asa is a fintech scale-up in the ecommerce space,...

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