Financial Report 30.09.2021

Maritime & Merchant Bank ASA

Financial Report

30.09.2021

Financial Report 30.09.2021

Table of Contents

FINANCIAL REPORT 30.09.2021____________________________________________________________ 2

STATEMENT OF PROFIT & LOSS___________________________________________________________ 11

STATEMENT OF EQUITY _________________________________________________________________ 13

STATEMENT OF CASH FLOWS ____________________________________________________________ 14

NOTES 30.09.2021._____________________________________________________________________ 15

NOTE 1, REPORTING ENTITY _______________________________________________________________ 15

NOTE 2, GENERAL ACCOUNTING PRINCIPLES ____________________________________________________ 15

NOTE 3, FUNCTIONAL AND PRESENTATION CURRENCY ______________________________________________ 15

RISK_______________________________________________________________________________ 15

NOTE 4, RISK _________________________________________________________________________ 15

Risk Management and Capital Adequacy________________________________________________ 15

Capital Adequacy __________________________________________________________________ 16

Credit Risk ________________________________________________________________________ 16

Loss allowance ____________________________________________________________________ 18

Interest Rate Risk __________________________________________________________________ 23

Currency Risk _____________________________________________________________________ 24

Liquidity Risk ______________________________________________________________________ 24

Operational Risk ___________________________________________________________________ 24

INCOME AND COST __________________________________________________________________ 25

NOTE 5, TAXATION OF PROFIT ______________________________________________________________ 25

ASSETS ____________________________________________________________________________ 25

NOTE 6, FINANCIAL INSTRUMENTS AT FAIR VALUE. ________________________________________________ 25

NOTE 7, FINANCIAL PLEDGES ______________________________________________________________ 26

NOTE 8, OTHER INTANGIBLE ASSETS AND FIXED ASSETS _____________________________________________ 26

LIABILITIES _________________________________________________________________________ 27

NOTE 9, OTHER ASSETS AND FINANCIAL DERIVATIVES.______________________________________________ 27

NOTE 10, OTHER LIABILITIES AND ACCRUED COST_________________________________________________ 27

NOTE 11, SHARE CAPITAL AND SHAREHOLDER INFORMATION _________________________________________ 28

APPENDIX 1, ALTERNATIVE PERFORMANCE MEASURES _______________________________________ 28

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Financial Report 30.09.2021

Financial Report 30.09.2021

The profit for the period 01.01.21 - 30.9.21 before tax was USD 6 066 875 (USD 3 804 919 for the period

1. - 30.9.20 before tax) and profit after tax for the period 01.01.21 - 30.9.2021 is USD 4 550 156 (USD 2 853 689 for the period 01.01.20 - 30.9.20 after tax). The profit for the period before tax 01.07.21 -
2. (3q) is USD 2 180 576 (USD 1 524 937 3q 2020), and after tax USD 1 635 432 (USD 1 143 703 3q 2020). The net loan book has increased with 24.3 % during the period 01.01.21 - 30.9.2021 from USD 269 mill to USD 335 mill. The last quarter has contained considerable dynamics in the loan portfolio due to a fair amount of profit hedging among through sale of tonnage due to the strong asset value development within the container and dry bulk segments over the recent months.

There has been no credit losses and the bank have no non-performing loans.

Traffic congestion in ports and terminals across the globe continues to cause serious unbalances in the seaborne trade. The massive delays in distribution of components, semi-finished products, circuit boards and semiconductors are resulting in huge order backlogs for manufacturers and finally empty shelfs for the retailers preparing for the Christmas season. It does not seem likely that there is any ''quick fix'' in sight in order to end the logistic crisis in time of writing. The prevailing situation continues to keep the container market at record-breaking levels and there is fierce competition for vacant slots, again leading to fantastic financial results for owners and operators. The central question is certainly for how long period this extraordinary situation can last? As already mentioned, the current state is a result of major disturbances in complex industrial value chains and it is therefore hard to come up with a unified and sensible reply to this question. Some observers from the industry are commenting that might will be well into 2023 before we can talk about a normalization of the logistics and operations in ports and terminals, and among the majority of the manufacturers.

The dry bulk sector has continued its very positive trend during the third quarter with substantial increases in freight rate and asset prices, a trend that started early this year and gained strong momentum during the summer and the autumn. As always in the dry sector, there will be uncertainties where we are heading going forward, however, fundamentals on the demand and supply side with around 6% of the sailing fleet on order, which is a manageable number in a historic perspective, gives support to a general positive view on the segment in the medium term perspectives.

A new basically weak quarter for the tankers owners and the long-awaited rise is long overdue. However, there is a growing optimism and various signs towards the end of the quarter could be interpreted that the market could be about to turn positively. There is maintained interest for second-hand quality tonnage which is manifested by insignificant drop in asset values, in spite of the weak freight market.

In June 2021, the IMO adopted extensive new CO2 emission regulations applicable to existing ships. The regulations are divided into 3 different components; the Energy Efficiency Ship Index (EEXI) addressing the technical efficiency of ships, the Carbon Intensity Indicator (CII) rating scheme focusing the operational efficiency, while the Ship Energy Efficiency Management Plan (SEEMP) is concentrating on the management system. The regulations will be effective from January 2023.

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Financial Report 30.09.2021

EU, through European Commission presented in July for the European Parliament and European Council an extensive package of proposals for the intention of reducing the EU's total Green House Gas (GHG) emissions by 55% by 2030 in conjunction with EU's overall goal for full decarbonization by 2050. The package contains comprehensive regulations of both operational and fiscal character for the maritime industry which gradually be imposed from start of 2023.

IMO's and EU's proposed regulation are important steps towards radically reduced total emissions from the shipping industry. Maritime & Merchant Bank ASA will follow the thorough work for implementation of the respective regulations closely during the forthcoming years and, to our best ability and where need be, support our clients in the work for adapting to the new rules.

As a reflection of the active sale and purchase market, we have been kept busy with a steady inflow of enquiries and we are pleased to assist existing and new clients, domestically and abroad in materializing new projects within the main segments. We are looking forward to continue the cooperation with our customers during the forthcoming period in market that obviously will offer a lot of interesting opportunities.

The period - 01.01-30.09

Net interest income and related income totalled USD 11 372 958 (USD 10 687 646), and other Income (including financial derivatives and fixed income instruments) was USD 769 437 (USD 89 734).

Operating expenses before impairments and losses totalled USD 6 074 866 (USD 5 437 871). The Cost/Income ratio came in at 50% (50.5%).

Loss allowance (Expected Loss) increased USD 656 (increased USD 1 534 590).

Credit Loss (Write Offs) was USD 0 (USD 0).

The profit for the period before tax is USD 6 066 875 (USD 3 804 919 in 30.09.2020) and profit after tax is USD 4 550 156 (USD 2 853 689 in 30.09.2020).

• Q3 numbers (2021 and 2020) are not audited.
• Income tax: See page 7 "Deferred taxes and payable tax" and Note 5 "Estimated taxation of profit"
• Income tax will affect "Result after Tax", "Total Equity" and "Other Liabilities" (Tax)

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Financial Report 30.09.2021

Q3: 01.07- 30.09.2021

Net interest income and related income

Net interest income and related income totalled USD 4 308 817 in Q3 (USD 2 458 826 in Q3 2020).

Net interest margin increased to 3.1% in Q3-2021 from 2.8% in Q2-2021 (1.8% in Q3-2020). Increased lending improved Net Interest Margin.

Money market rates (daily average) higher in NOK and slightly lower in USD.

(Source: Infront, Maritime & Merchant Bank ASA)

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