Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q4 2021 Earnings Presentation
71 slides from Sparebank 1 Ostlandet's earnings presentation, February 2022
Slide 1: 2021 Company Presentation
2021 COMPANY PRESENTATION Photo: Ola Matsson/Trysil
Slide 2: Highlights in 2021 and in 4Q 2021
Highlights in 2021 and in 4Q 2021 Summary • Return on equity in 2021 was 11.6% - above the bank’s financial target. • Board proposes dividend for 2021 of NOK 6.00 per ECC and a customer dividend of NOK 295 mill. – equivalent to a dividend share of 50%, in line with the bank’s dividend policy. • The
Slide 3: Status update heading into 2022
2021 STATUS UPDATE HEADING INTO 2022
Slide 4: Somewhat higher unemployment and lower house price inflation recently
Somewhat higher unemployment and lower house price inflation recently Temporary increase in unemployment. House prices rose sharply in January Jan-22 Norway Oslo Asker/Bærum Follo Romerike Inland y/y 6.8% 4.3% 8.0% 7.7% 7.2% 6.6% ytd 2.1% 2.4% 2.3% 2.9% 2.2% 2.2% 5 years 21.2% 18.7% 25.9% 22.7% 19.6
Slide 5: Record-high existing home sales in the bank's market area
Record-high existing home sales in the bank’s market area First half of 2021 was particularly strong. Seasonal fall in 4Q. Bottle necks during start of 2022. Capital region*, number of existing homes sold Inland region, number of existing homes sold 5000 5000 800 800 4000 4000 600 600 3000 3000 400
Slide 6: Strong production growth, expected growth in business investments
Strong production growth, expected growth in business investments Strong improvement in East. Lower production growth in Inland, but high expected investment growth Regional network: Production* Regional network: Business investments** 5 10 4 40 4 8 3 30 3 6 2 20 2 4 1 2 1 10 0 0 0 0 -1 -2 -1 -10 -2
Slide 7: Optimistic expectations among businesses in the market area
Optimistic expectations among businesses in the market area Improvement for investments and employment, challenging profitability, due to cost concerns Business expectations index* Business expectations survey, Eastern Norway* 40 60 20 50 0 40 -20 30 2017 2018 2019 Q2 2020 Q4 2020 Q2 2021 Q4 2021 Ea
Slide 8: Very strong growth in lending
Very strong growth in lending Increasing through the year and into 2022, both for retail and corporate (SME) market Lending growth (12 months, %) Lending growth (12 months, %) Last national* Households: 5.0% 12.1 % Non-fin corp.: 4.9% 11.1 % 7.7 % 10.9 % 10.3 % 9.9 % 7.0 % 9.3 % 8.6 % 8.0 % 9.9 % 7.
Slide 9: Customer growth continues
Customer growth continues Numbers of customers in parent bank (in 1,000x)1 390 40 378 38 • Strong customer growth in 4Q-21, 371 370 366 with 6,091 new customers. 361 36 354 356 351 • Net customer growth in the bank 348 34 350 343 345 over the past 12 months was 6.1 % 339 341 336 32 y/y. 333 328 330
Slide 10: Trade union (LO) agreement as an important driver of growth
Trade union (LO) agreement as an important driver of growth Leads to more customers, contributes strongly to lending growth and to increased cross sales Lending through LO-favør (NOK bn) 46.7 15.3% 40.5 4Q-2020 4Q-2021
Slide 11: Our ambition is to be the best at cross sales
Our ambition is to be the best at cross sales LO-agreement contributes strongly to increase the product range of our customers Commission fee, Fremtind Forsikring, in 2021* Bank 1 Bank 2 Bank 3 SB1 Østlandet Bank 4 Commission fee, SpareBank 1 Forsikring, in 2021* Bank 1 Bank 2 Bank 3 SB1 Østlandet B
Slide 12: Innovation through partnership
Innovation through partnership Mobai: Face recognition Fleks: Car subscription service Source: Finansavisen.
Slide 13: Solid development in customer satisfaction
Solid development in customer satisfaction Development in customer relations (TRIM) for retail customers in SpareBank 1 Østlandet* 75 69 68 65 2015 2017 2019 2021 Source: Kantar, SpareBank 1 Østlandet.
Slide 14: Customer dividends: Unique for our market area
Customer dividends: Unique for our market area Contributes to customer growth and satisfaction, and ensures stable ECC ratio Knowledge and liking of customer dividends, % 53 46 2018 27 2019 22 2020 2021 Knows of customer dividend Likes customer dividends Liking of customer dividends, % 71 62 49 41 A
Slide 15: More than NOK 1 billion paid during past 5 years
More than NOK 1 billion paid during past 5 years* In 2022, we will pay NOK 295 mill. in customer dividends* Customer dividends paid, NOK mill. 1,149 400 1,200 800 200 295 202 220 206 227 400 0 0 2018 2019 2020 2021 2022 (provisioned) Annual payments Accumulated payments (r.a.) Payments, % of qualifi
Slide 16: Sparebankstiftelsen Hedmark has donated more than NOK 400 mill.
Sparebankstiftelsen Hedmark has donated more than NOK 400 mill. Foundation uses dividends from the bank for many and large donations in the local community Annual donations (mill. NOK) and fund distribution 403 2021 2020 Business/Entrepreneurs 2019 13% Sports 2018 and outdoor 2017 activities 25% Cul
Slide 17: We have strengthened our sustainability efforts
We have strengthened our sustainability efforts Green products and advice https://www.sparebank1.no/nb/ostlandet/bedrift/tips-og-rad/barekraftsveileder.html
Slide 18: Financial accounts
2021 FINANCIAL ACCOUNTS Photo: Ola Matsson/Trysil
Slide 19: Strong quarter with strong growth
Strong quarter with strong growth Financial accounts 4Q 2021 (same quarter last year in brackets) Good results • Profit after tax in 4Q-21 of NOK 505 million (NOK 466 million) High return on equity • ROE in 4Q-21 of 11.1 % (11.3 %) High capitalization • CET 1 ratio 18.0 % (17.8%) • Lending growth 2.
Slide 20: Financial targets and achievements in 2021
Financial targets and achievements in 2021 Profitability Return on equity at least 11 % 11.6 % Dividends 50 % pay-out ratio1 50 % Solidity Regulatory requirement + 100 bps2 18.0 % Costs Max 2 % cost increase in parent bank3 4.3 % 1. Out of profits after taxes taking into account non-controlling owne
Slide 21: Income statement
Income statement Group 4Q- 2021 4Q- 2020 2021 2020 Net interest income 573 549 2,202 2,177 Net commission income 355 349 1,389 1,215 Other income 59 57 233 226 Dividends 0 29 21 41 Net profit from ownership interest 126 63 405 394 Net income from financial assets/liabilities -14 55 174 109 Total ope
Slide 22: Higher net interest income, due to volume growth
Higher net interest income, due to volume growth Commission fees from covered bond companies strongly affected by higher money market rates Net 1600 interest income incl. commissions from covered bond companies (MNOK and %) 1.60% 1400 1.48% 1.47% 1.46% 1.50% 1.44% 1200 1.41% 1.40% 1000 Commission fe
Slide 23: Strong lending growth
Strong lending growth Very strong growth in corporate market. Good and increasing activity in retail market Gross lending (NOK billion) Lending growth (12 months, %) Last national* Households: 5.0% 2.0 % 173.7 12.1 % Non-fin corp.: 4.9% 2.9 % 167.3 1.8 % 170.4 161.3 0.8 % 162.6 1.0 10.9 % 11.1 % 1.0
Slide 24: Reduced lending margins
Reduced lending margins Money market rates have increased significantly during the autumn of 2021 Lending margins, parent bank (%)* 3.06% 2.79% 2.69% 2.67% 2.64% 2.55% 2.61% 2.50% 2.53% 2.52% 2.50% 2.46% 2.51% 2.45% 2.42% 2.33% 1.77% 1.81% 1.74% 1.66% 1.69% 1.61% 1.61% 1.58% 1.55% 1.55% 1.52% 1.53%
Slide 25: Healthy growth in deposits
Healthy growth in deposits High corporate deposit growth partly mirrors growth in corporate lending Deposits (NOK billion) Deposit growth 12 months (%)* 92.6 91.3 92.2 85.6 87.5 5.8 % -1.4 % 1.0 % 15.5 % 2.2 % 14.1 % 13.8 % 13.1 % 12.1 % 12.1 % 41.0 40.3 40.9 11.7 % 11.5 %11.0 % 11.8 % 36.9 38.4 10.
Slide 26: Strong increase in deposit margins
Strong increase in deposit margins In line with higher money market rates (Nibor) Deposit margins, parent bank (%)* 0.63% 0.50% 0.43% 0.43% 0.40% 0.31% 0.51% 0.29% 0.30% 0.26% 0.22% 0.40% 0.40% 0.26% 0.27% 0.34% 0.09% 0.28% 0.21% 0.20% 0.03% -0.02% 0.07% -0.06% -0.04% 0.11% 0.07% 0.06% 0.00% -0.05%
Slide 27: Higher commission income
Higher commission income Seasonal fall in real estate brokerage income, growth for other segments Commision income and other income, excluding covered bond companies (NOK million) 302 306 285 17 275 271 11 37 14 14 15 40 35 37 33 51 43 Commission income from credit cards 40 44 52 Other income Income
Slide 28: Profits in subsidiaries
Profits in subsidiaries Profit after taxes in 4Q-2021 (same period last year in brackets) NOK 41 million (NOK 32 million) NOK -4 million (NOK -2 million) SpareBank 1 Finans Østlandet AS - Group SpareBank 1 Østlandet VIT AS - Group • Low loan losses, healthy margins, increased other income. • Decline
Slide 29: Profits in joint ventures
Profits in joint ventures Profit after taxes in 4Q-2021 (same period last year in brackets) NOK 75 million NOK 8 million (NOK 3 million) SpareBank 1 Forvaltning AS - Founded on 1 May 2021 SpareBank 1 Kreditt AS • Good net sales gave increase in management fees • Reduced loan loss provisions. • Owner
Slide 30: SpareBank 1 Gruppen: Record profits in 2021
SpareBank 1 Gruppen: Record profits in 2021 Quarterly pre-tax profits (NOK million). SpareBank 1 Gruppen and selected subsidiaries SpareBank 1 Gruppen Fremtind Forsikring 1,317 1,337 1,043 764 683 816 624 740 678 583 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 SpareBank 1 Forsikring
Slide 31: Solid contributions from joint ventures
Solid contributions from joint ventures Small net negative contributions from other financial items Net income from financial assets and liabilities, NOK million 198 181 0 9 146 Dividends from shares and other equity 88 instruments 62 113 29 108 0.3 Net profit from other financial assets and 11 liab
Slide 32: Higher costs in 4Q
Higher costs in 4Q Underlying cost growth but also temporary effects Operating costs by item (NOK million) Operating costs, by unit (NOK mill.) 600 504 531 492 531 485 473 504 500 485 492 87 473 72 54 65 58 20400 150 14 15 14 26 23 21 13 27 154 16 143 153 136 73 78 77 77 86 300 33 31 30 31 30 200 10
Slide 33: Reduced headcount through the year
Reduced headcount through the year Particularly due to lower FTEs in the parent bank Full-time equivalents in parent bank and subsidiaries 1,149 1,143 1,137 1,135 1,137 167 170 168 169 174 The VIT AS 52 51 53 54 54 75 76 76 79 79 SpareBank 1 Finans Østlandet AS 153 145 140 146 143 EiendomsMegler 1 I
Slide 34: Increased loan loss provisions
Increased loan loss provisions Primarily due to growth and migration Loan loss provisions (NOK million) Loan loss provisions (NOK million) 28 30 0.03% 3 1 1 20 0.02% 0.02% 11 11 24 10 19 2 0.01% 0.01% 96 28 2 11 1 8 1 5 24 0 0.00% 0.00% 11 12 17 8 -20 -7 -14 -4 -10 -14 -5 -10 -18 -19 -17 -0.01% -90
Slide 35: High CET-1 capital ratio
High CET-1 capital ratio Well above regulatory requirements now and longer term • In 4Q, the Group’s CET-1 capital ratio was 18.0 %. CET-1 capital ratio (actual and required), Group 17.8 % 18.0 % • The Group’s long-term CET 1-target is the 16.8 % 16.8 % 17.2 % 15.8% regulatory requirement with an ad
Slide 36: Capital structure and allocation of 2021 profit
Capital structure and allocation of 2021 profit In line with target of 50 % dividend share, for owners and society (through primary capital) ILLUSTRATION Profit after controlling Gifts and interest donations NOK 1,985 million 69.8% 30.2% Foundation Owners Primary capital NOK 362 million 52.1% Divide
Slide 37: Highlights in 2021 and in 4Q 2021
Highlights in 2021 and in 4Q 2021 Summary • Return on equity in 2021 was 11.6% - above the bank’s financial target. • Board proposes dividend for 2021 of NOK 6.00 per ECC and a customer dividend of NOK 295 mill. – equivalent to a dividend share of 50%, in line with the bank’s dividend policy. • The
Slide 38: Financial targets for 2022
2021 FINANCIAL TARGETS FOR 2022
Slide 39: Bank has delivered on targets for profitability, dividends, and solidity
Bank has delivered on targets for profitability, dividends, and solidity Delivering on cost target for 2021 has been more challenging Return on equity, actual and target, % Dividend (NOK/ECC) and dividend share (%) 12.8 % 11.6 % 10 50.7 % 48.7 % 50.1 % 50.2 % 0.60 10.2 % 10.5 % 10.1 % 39.7 % 0.40 5
Slide 40: Bank has achieved significant economies of scale following 2017-merger
Bank has achieved significant economies of scale following 2017-merger Significant asset growth, stable costs over time Operating costs, parent bank, contributions to changes (NOK million) 1,500 Growth in total assets including loans transferred to covered bond companies: 41 % 250,000 207,875 1,450
Slide 41: Target for cost growth in parent bank in 2022 of below 4%
Target for cost growth in parent bank in 2022 of «below 4%» Ambition for the bank remains increased scale, cost efficiency and profitability Cost/income ratio, annual Cost target for 2022 reflects: • High underlying wage inflation 54.3 % 51.5 % • Strategic initiatives 48.2 % 45.0 % 45.7 % 44.8 % Ach
Slide 42: Revised financial targets
Revised financial targets Aligned with planned strategic initiatives and increased cost inflation Profitability Return on equity at least 11 % Dividends 50 % pay-out ratio1 Solidity Regulatory requirement + 100 bps2 Costs 2022: Cost increase in parent bank below 4% 1. Out of profits after taxes taki
Slide 43: Strategy plan 2022-25
2021 STRATEGY PLAN 2022-25
Slide 44: Strategic destination 2025: Norway's best relationship bank
Strategic destination 2025: Norway’s best relationship bank
Slide 45: Business idea, vision, targets and focus areas
Business idea We exist so that people and businesses can succeed Together we create sustainable growth and development in Eastern Norway Vision Creating together Targets 2025 We know our customers We create tomorrow’s We are a clear driver of We have one of the most and we create the best relationsh
Slide 46: The relationship bank
The relationship bank Delivering service and distribution solutions of the future We stand firm in our belief in a phygital business modell where we deliver relevant solutions independent of distribution channels. Projects and actions include: • Define and implement customer concepts and segmentatio
Slide 47: Data and insights
Data and insights Smarter use of data We will improve competitiveness by better utilisation of our CRM-system, the marketing platform and customer interfaces to deliver value added to customers and the bank: • Identify, streamline and automate prioritised customer and work processes • Modernise the
Slide 48: Sustainable operations and development
Sustainable operations and development Extend and develop a running theme through our history of more than 175 years Bank will take a leading role in the green transition, both as a facilitator and a driver for sustainable solutions: • Green lending and funding • Advice • Responsible consumption • M
Slide 49: Cooperation and partnership
Cooperation and partnership Utilise the potential for cooperation internally and externally Increase the value of existing products and solutions and create new business opportunities by better cooperation and partnership: • Partnership for innovation • Joint strategies for cooperation and concepts
Slide 50: Leadership, competence and organisation
Leadership, competence and organisation Ensure an organisation with competence and capacity to fulfil the strategy The bank needs to be an attractive employer for a diverse set of future and current employees, with relevant and strong competence: • Action plan to stand out as an attractive employer
Slide 51: Profitable growth
Profitable growth Ensure competitive returns Profitable growth is the foundation for providing value added for owners and the local community: • Strengthen efforts in growth segments and geographic areas • Continued focus on capital-light cross sales • Strengthen measures and resources for customer
Slide 52: Creating together
Creating together Proficient Nearby Engaged We have worked for more than 175 years for people and businesses to succeed Our work continues
Slide 53: Appendix Financials/ECC
2021 APPENDIX Financials/ECC
Slide 54: Solid profits
Solid profits Profit after taxes and return on equity Profit after tax (NOK mill.) Return on equity (%) 561 516 505 12.6% 466 439 12.1% 11.3% 11.1% 10.6% 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21
Slide 55: Key financials - quarterly (1)
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from covered bond companies (NOK million) 706 597 637 554 542 680 643 655 681 681 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 Netto commision income ekskl. covered bond Operating expen
Slide 56: Key financials - quarterly (2)
Key financials - quarterly (2) Impairments on loans and guarantees (NOK million CET-1 ratio 28 17.8 % 17.8 % 17.8 % 18.0 % 18.0 % 11 1 -18 -16 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 Lending growth last 12 months, inc. transferred loans Deposit growth last 12 months 7.7 % 9.1 % 9
Slide 57: The Group's lending by geography
The Group’s lending by geography Lending to customers per geographic area and change last 12 months (% and NOK million) Lending to customers per county (share in %/NOK million) Change last 12 months 38.9 %/ Innlandet 3.7 % 67,535 29.3 %/ Viken 6.6 % 50,896 28.2 %/ Oslo 14.4 % 48,935 Other areas 3.6
Slide 58: Mortgage loan growth by geography
Mortgage loan growth by geography Retail lending per geographic area and change last 12 months (% and NOK million) Retail lending by county (share in %/NOK million) Change last 12 months Innlandet 35.2 %/ 45,107 3.8 % Viken 33.9 %/ 43,429 8.5 % Oslo 27.2 %/ 34,828 7.0 % Other areas 3.7 %/ 4,789 13.8
Slide 59: Large single exposures driving geographic allocation of CM growth
Large single exposures driving geographic allocation of CM growth Corporate lending per geographic area and change last 12 months (% and NOK million) Corporate lending by county (share in %/NOK million) Change last 12 months 49.2 %/ Innlandet 3.4 % 22,428 31.0 %/ Oslo 38.0 % 14,107 Viken 16.4 %/ 7,4
Slide 60: Cyclically stable loan portfolio, limited exposures to sectors hit by pandemic
Cyclically stable loan portfolio, limited exposures to sectors hit by pandemic Lending to customers per sector (% and NOK million) Private customers 44.1 %/76,600 Retail market 73.8 %/128,152 SB1 Boligkreditt 29.7 %/51,552 Real estate (incl. SB1 Næringskreditt) 11.8 %/20,552 Primary industries 4.4 %
Slide 61: Lower levels of non-performing loans
Lower levels of non-performing loans Reduced credit loss provision ratio in Stage 3 Exposure by stages, (% of gross loans) Loans in Stage 3 (NOK mill.) 800 742 30.0 % 724 703 95.0 % 15.0 % 700 26.6 % 660 92.2 % 92.1 % 92.2 % 25.0 % 91.3 % 90.9 % 13.0 % 600 90.0 % 11.0 % 488 20.0 % 500 18.3 % 8.3 % 8
Slide 62: Stable low LTV in new mortgage approvals
Stable low LTV in new mortgage approvals Share of new mortgage approvals and average LTV per period and county Percentage of new mortgage appovals (volume) 73% 72% Average LTV at the time of approval 70% 69% 69% 67% 67% 66% 66% 65% 65% 65% 66% 64% 63% 63% 64% 63% 62% 62% 62% 61% 62% 61% 61% 61% 61%
Slide 63: Size concentration risk in the lending book is low
Size concentration risk in the lending book is low Retail and corporate loans by size (% share)* Retail market 45.0% Corporate 50.0% market 38.6 % 45.0% 40.0% 40.0% 35.0% 32.8 % 35.0% 30.0% 30.0% 26.8 % 25.0% 25.0% 22.4 % 20.7 % 20.0% 20.0% 15.9 % 15.0% 11.9 % 15.0% 9.4 % 8.9 % 10.0% 10.0% 6.9 % 5.0
Slide 64: The use of the flexibility quota is targeted at priority customers
The use of the flexibility quota is targeted at priority customers Exposure per LTV bucket in the residential mortgage portfolio Mortgages – Utilisation of flexibility quota in 3Q-21: LTV by exposure** 96.7 % City of Oslo Other areas 7.9 % (8 % quota) 8.0 % (10 % quota) Bank uses the flexibility quo
Slide 65: SpareBank 1 Finans Østlandet AS - Group
SpareBank 1 Finans Østlandet AS - Group Low losses, healthy margins, increasing loan growth Return on equity capital (pre tax profit) • Financing company that offers leasing and loans for retail and corporate customers. 11.3 % 11.4 % 11.2 % • Strong return on equity in 2021, due to 8.4 % 7.9 % lower
Slide 66: EiendomsMegler 1 Oslo Akershus AS - Group
EiendomsMegler 1 Oslo Akershus AS - Group Strong result due to market volume growth and higher market shares Operating margins* • Real estate agent in capital region. Includes 8.3 % 8.9 % one of the region’s largest newbuild departments. 1.2 % 2.0 % • Strong result in 2021, due to solid volume -6.6
Slide 67: EiendomsMegler 1 Innlandet AS
EiendomsMegler 1 Innlandet AS Loss of market share in 2021 due to capacity challenges (too few brokers) Operating margins* • Real estate agent in Inland region. Own departments for commercial property, newbuilds, and agriculture. 12.3 % 9.0 % 9.9 % • Weaker sales and profits in 2021, due to 6.5 % 4.
Slide 68: SpareBank 1 Østlandet VIT AS - Group
SpareBank 1 Østlandet VIT AS - Group Restructuring costs weakened 2021 results, higher demand towards the end of the year Operating margins* • Provides services within finance, accounting/payroll, HR, and business 1.3 % -1.7 % intelligence. -0.1 % -3.8 % • Results for 2021 weaker than budget, mainly
Slide 69: SPOL
SPOL Metrics and performance ytd 2021 2020 • SPOL return: Market price (NOK) 145.60 97.80 • Return 4Q-215 + 14.8 % Market capitalisation (NOK million ) 16,865 11,328 • Return y/y5 + 54.6 % Book equity per ECC 1) 106.31 98.76 • Higher liquidity in 4Q-21 than in same period in 2020. Earnings per ECC,
Slide 70: Contact details
Richard Heiberg CEO +47 902 06 018 richard.heiberg@sb1ostlandet.no Contact details Geir-Egil Bolstad CFO +47 918 82 071 geir-egil.bolstad@sb1ostlandet.no Bjørn-Erik R. Orskaug Investor Relations +47 922 39 185 bjorn-erik.orskaug@sb1ostlandet.no
Slide 71: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although SpareBank 1 Østlandet believes that the expectations reflected in such forward-looking statements are reasonabl
SpareBank 1 Østlandet — Q4 2021 Earnings Presentation on 6ix