Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q1 2023 Earnings Presentation
56 slides from Sparebank 1 Ostlandet's earnings presentation, 2023
Slide 1: Company presentation 2023
2023 COMPANY PRESENTATION
Slide 2: 1st quarter of 2023: Strong profitability
1st quarter of 2023: Strong profitability Summary • Very strong return on equity: 13.9 %. Strong development in core banking operations as main contributor, particularly from higher net interest income. • Solid growth in net interest income (including commission income from transferred loans): Up 36
Slide 3: Financial targets and achievements per 1Q-23
Financial targets and achievements per 1Q-23 Long-term goals versus actual results Profitability Return on equity at least 12 % 13.9 % Dividends 50 % pay-out ratio1 50 % Solidity Regulatory requirement + 100 bps2 17.7 % Costs Max 5 % cost increase in parent bank 9.3 % 1. Out of profits after taxes t
Slide 4: A challenging macroeconomic backdrop
A challenging macroeconomic backdrop Negative companies. Sustained low unemployment is important. Stable housing market Norges Bank’s regional indicators Source: Norges Bank’s Regional Network, no. 1 2023 4
Slide 5: Activity in housing market still good, but lower credit growth expected
Activity in housing market still good, but lower credit growth expected Credit demand from companies is also expected to slow 5
Slide 6: Customer dividends: More than NOK 300 mill. paid in 2023
Customer dividends: More than NOK 300 mill. paid in 2023 Almost NOK 1.5 bill. paid to customers since the customer dividend was launched Customer dividends paid, NOK mill. 380 1 455 1 700 295 306 180 220 227 700 202 206 -20 -300 2018 2019 2020 2021 2022 2023 Annual payments Accumulated payments (r.a
Slide 7: Updated MSCI ESG-rating: AAA
Updated MSCI ESG-rating: AAA Bank has taken a credible leadership role in sustainable financing 7
Slide 8: Climate report 2022 and report on the impact on nature
Climate report 2022 og report on the impact on nature Important reports giving direction for how the bank works with sustainability in practice • Climate report 2022: Details the bank’s emission targets, including for the mortgage and corporate portfolios. • Impact on nature report: Report shows wha
Slide 9: Financial accounts
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Slide 10: Another strong quarter, with high profitability
Another strong quarter, with high profitability Financial accounts 1Q 2023 (same period last year in brackets) Profit after tax • Profit after tax in 1Q23 of NOK 652 million (NOK 536 million) Return on equity • ROE in 1Q-23 of 13.9 % (12.2 %) CET-1 • CET 1 ratio of 17.7 % (18.0%) • Lending growth 0.
Slide 11: Income statement
Income statement Group 1Q23 4Q22 1Q22 2022 Net interest income 857 789 585 2 693 Net commission income 315 327 331 1 375 Other income 50 43 66 213 Dividends 17 14 16 43 Net profit from ownership interest 59 113 16 186 Net income from financial assets/liabilities 25 46 68 -67 Total operating expenses
Slide 12: Strong development for core operations
Strong development for core operations Sharp increase in NII Net interest income, net commission income and operating expenses (NOK mill.) 1400 693 16.0 % 642 540 583 1200 452 466 494 456 478 451 463 429 15.0 % 295 1000 352 324 342 324 800 264 275 313 297 316 304 14.0 % 276 281 259 600 13.0 % 835 92
Slide 13: Net interest income
Net interest income Better margins, volume growth and increased commissions from covered bond companies Net interest income incl. commissions from covered bond companies (MNOK and %) 1300 2.04% 2.00% 1.83% 1100 1.50% 1.55% 1.60% 927 11.0% 900 835 70 1.50% 756 46 718 677 71 Commission fees from cover
Slide 14: Loan volumes and growth
Loan volumes and growth Somewhat lower lending growth, in line with expectations Gross lending (NOK billion) Lending growth (12 months, %) Last national* Households: 4.1% 186.7 1.1 % 188.7 0.8 % 190.3 Non-fin corp.: 7.2% 183.3 1.8 % 177.8 3.1 % 4Q22; 16.1 % 51.7 52.9 53.5 1Q22; 14.6 % 47.5 50.0 3.4
Slide 15: Strongest lending growth in Viken, more moderate in Inland region
Strongest lending growth in Viken, more moderate in Inland region Loan volume (NOK billion), retail Loan volume (NOK billion), corporate 5.5 5.4 2.2 2.1 4.9 1.8 46.7 46.8 45.3 23.9 23.9 22.8 44.7 47.6 48.1 10.0 10.5 7.7 15.3 16.8 17.0 35.3 36.1 36.4 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Oslo Viken Inland Ot
Slide 16: Big picture: Norway's most attractive market area
Big picture: Norway’s most attractive market area Bank’s core area is expected to grow faster than the country average Population in market area, 1000’* Populaton, index = 100 in 2022* 120 140 1 757 115 Akershus CAGR: 0,77% 130 700 Oslo: 0,60% 110 National: 0,43% 120 105 Inland cities: 0,36% 313 100
Slide 17: Deposit volume and growth
Deposit volume and growth Good deposit growth, especially in the retail market Deposits (NOK billion) Deposit growth (12 months, %) 100.0 98.9 98.8 100.4 -1.1 % -0.1 % 1.6 % 93.9 6.5 % 1Q22; 8.4 % 4Q22; 7.8 % 44.6 -0.3 % 44.5 44.1 44.4 41.6 7.2 % -1.0 % 0.8 % 7.1 % 6.6 % 52.3 5.9 % 55.4 -1.8 % 54.4
Slide 18: Lending margins
Lending margins Increased lending margins Lending margins, parent bank (%)* 2.49% 2.33% 2.39% 2.37% 2.22% 2.00% 1.88% 1.76% 1.21% 1.03% 1.09% 0.88% 0.40% 0.37% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Lending margin RM, incl. covered bo
Slide 19: Deposit margins
Deposit margins Lower deposit margins Deposit margins, parent bank (%)* 1.95% 1.65% 1.52% 0.81% 1.20% 0.73% 1.02% 0.95% 0.43% 0.23% 0.50% 0.44% 0.28% 0.08% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Deposit margin Retail customers Deposit
Slide 20: Continued strong development in sales of non-mortgage products
Continued strong development in sales of non-mortgage products Strong sales force gives more products per borrower, with good profitability Number of products, per mortgage borrower Sales volumes Q1-23 vs. Q1-22, % growth 8.5 Credit cards 18 % Non-life insurance 31 % 8.3 Savings schemes 46 % 1Q20 3Q
Slide 21: Commission income
Commission income Seasonally lower income from payment services. Good development in fund and insurance commissions Commision income and other income, excluding covered bond companies (NOK million) 342 324 324 304 16 18 18 295 35 15 35 38 18 36 49 31 28 40 Commission income from credit cards 52 36 O
Slide 22: Profits in subsidiaries
Profits in subsidiaries Profit after taxes (NOK million) 1Q23 1Q22 Sparebank 1 Finans Østlandet AS - Group 47.5 43.8 EiendomsMegler 1 Innlandet AS - 3.5 - 3.0 EiendomsMegler 1 Oslo Akershus AS - Group - 2.2 1.3 SpareBank 1 ForretningsPartner Østlandet AS - Group * - 0.7 4.8 Subsidiaries 41.1 46.8 *
Slide 23: Profits in joint ventures
Profits in joint ventures Profit after taxes (NOK million) 1Q23 Ownership 1Q22 Ownership SpareBank 1 Gruppen AS - Group* 271.9 12.40 % 289.2 12.40 % SpareBank 1 Forvaltning AS 39.0 6.26 % 40.2 5.24 % SpareBank 1 Boligkreditt AS 161.8 22.42 % - 13.3 23.15 % SpareBank 1 Næringskreditt AS 15.3 15.66 %
Slide 24: Net income from financial assets and liabilities
Net income from financial assets and liabilities Good result from SB1 Group, net positive contribution from other financial items Net income from financial assets and liabilities, NOK million Selected valuation changes: 172 • Liquidity portfolio incl. 14 hedges: 102 minus NOK 21 mill. 100 16 113 Div
Slide 25: Operating expenses
Operating expenses Increased costs, due partly to wage growth and more FTEs in the parent bank Operating expenses by item (NOK million) Operating expenses, by unit (NOK mill.) 600 504 520 517 529 496 520 517 529 500 504 496 65 65 63 66 85 15 22 19 25 119 135 26 15 18 400 158 22 17 23 143 132 80 89 8
Slide 26: Very strong development in income relative to costs
Very strong development in income relative to costs Costs and income (excl. net financial items and dividends), Group 1 223 1 159 1 060 1 079 958 965 987 982 937 928 955 905 917 913 857 884 818 845 840 848 798 505 504 531 504 520 517 529 468 494 489 490 487 465 485 492 473 496 449 457 457 447 1Q18 2
Slide 27: Loan loss provisions
Loan loss provisions Increased model-based provisions, relatively low individual provisions and net write-offs 1Q22 2Q22 3Q22 4Q22 1Q23 Parent bank 6 -61 16 58 42 SB1FØ -2 2 3 6 7 Group 4 -59 19 63 49 Losses as a percentage of total lending 0.0 % -0.2 % 0.1 % 0.2 % 0.2 % Loan loss provisions (NOK mi
Slide 28: Exposures per stage and credit loss provision ratio in stage 3
Exposures per stage and credit loss provision ratio in stage 3 Exposure by stages (% of gross loans*) Loans in Stage 3 (NOK mill.) 86.8 % 900 20.0 % 86.1 % 86.3 % 85.8 % 85.7 % 812 800 18.0 % 17.3 % 727 700 15.8 % 16.0 % 15.5 % 15.2 % 623 9.0 % 9.0 % 587 588 14.0 % 8.4 % 8.5 % 600 13.7 % 8.0 % 12.0
Slide 29: High CET-1 ratio, well above regulatory requirements
High CET-1 ratio, well above regulatory requirements 16,8 % 17.8 % 18.0 % 17.7 % 17.7 % 16.8 % 17.2 % 1.0 % 9.5 % 1.8 % 4.5 % 2018 2019 2020 2021 2022 1Q23 Requirement per 1Q23 Common equity Tier 1 capital ratio Pilar 1 Pilar 2 Buffer requirements Management buffer 29
Slide 30: Challenging times are good times for the savings bank model
Challenging times are good times for the savings bank model • In challenging times, the Norwegian savings bank model has performed strongly. • Good advice and local knowledge supports a solid lending portfolio. • We will contribute with good solutions for existing customers, also those that experien
Slide 31: Why invest in SpareBank 1 Østlandet (SPOL)?
Why invest in SpareBank 1 Østlandet (SPOL)? 31
Slide 32: Creating together
Creating together Proficient Near Engaged We have worked for more than 175 years for people and businesses to succeed Our work continues
Slide 33: Appendix Financials/ECC
2023 APPENDIX Financials/ECC
Slide 34: Profit after tax and return on equity
Profit after tax and return on equity Profit after tax (NOK mill.) Return on equity (%) 652 622 536 13.9% 12.9% 12.2% 441 9.4% 350 7.7% 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q23 34
Slide 35: Key financials - quarterly (1)
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from covered 751 747 bond companies (NOK million) 573 575 927 756 835 480 677 718 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q23 Net commission income excl. covered bond companies Operating expense
Slide 36: Key financials - quarterly (2)
Key financials - quarterly (2) Impairments on loans and guarantees (NOK million) CET-1 ratio 63 49 18.0 % 18.0 % 18.2 % 17.7 % 17.7 % 19 4 -59 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q23 Lending growth last 12 months, inc. transferred loans Deposit growth last 12 months 8.1 % 8.4 % 9.4 % 9.6 %
Slide 37: Contribution to changes in net interest income
Contribution to changes in net interest income Contribution to change in NII excl. commissions from covered bond companies, MNOK ESTIMATE 158 -164 0 857 7 67 789 *Interest income and expenses from volume growth is calculated as the change in average volume per quarter using interest rates equal to t
Slide 38: Bank has adjusted interest rates following Norges Bank's rate hikes
Bank has adjusted interest rates following Norges Bank’s rate hikes Loan and deposits, NOK bill. 22 Sep-22 3 Nov-22 15 Dec-22 23 mar-23 Norges Bank 11 11 11 29 30 30 Loans in subsidiaries Effective dates new loans and 29 Sep-22 10 Nov-22 21 Dec-22 30 mar-23 50 51 51 Nibor-linked loans deposits Exist
Slide 39: Structure on funding and security holdings also affect NII
Structure on funding and security holdings also affect NII Most rate fixings of own balance sheet occur early in 2Q23. Covered bond funding lags Nibor. Net rate fixings per month, share of quarter, %** Securities, NOK bill.* 4.5 66.3 % 53% 52% 4.0 32% 41% 34.2 % 3.5 16% 7% 3.0 28 2.5 26 26 -0.5 % 2.
Slide 40: Increased headcount
Increased headcount Increased staffing in parent bank, accounting operation and real estate brokers over the quarter Full-time equivalents in parent bank and subsidiaries 1 131 1 130 1 120 1 121 1 142 123 115 120 170 162 SpareBank 1 ForretningsPartner 57 55 Østlandet * 58 82 54 54 84 84 81 83 SpareB
Slide 41: Impairment charges
Impairment charges Impairment charges (NOK million) 151 130 63 47 49 33 28 24 19 8 11 1 4 -18 -16 -33 -59 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 41
Slide 42: Cyclically stable loan portfolio
Cyclically stable loan portfolio Lending to customers per sector (% and NOK million) Private customers 39.7 %/75 629 Retail market 71.9 %/136 808 SB1 Boligkreditt 32.2 %/61 178 Real estate (incl. SB1 Næringskreditt) 13.6 %/25 846 Primary industries 4.0 %/7 546 Commercial services/Public sector 3.2 %
Slide 43: 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 Innlandet 37.2 %/ 70 765 3.9 % Viken 30.8 %/ 58 641 11.9 % Oslo 28.1 %/ 53 413 5.5 % Other areas 3.9
Slide 44: Mortgage loans by geography
Mortgage loans 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 34.2 %/ 46 839 3.3 % Viken 35.2 %/ 48 103 7.5 % Oslo 26.6 %/ 36 419 3.1 % Other areas 4.0 %/ 5 446 10.3 % Trø
Slide 45: Corporate market lending by geography
Corporate market lending by geography 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 Innlandet 44.7 %/ 23 926 5.0 % Viken 19.7 %/ 10 539 37.2 % Oslo 31.7 %/ 16 994 10.8 % Øvrige 3.9 %/ 2 0
Slide 46: Highly collateralised mortgages, some more mortgage deferral applications
Highly collateralised mortgages, some more mortgage deferral applications Bank closely follows up payment problems, but far fewer customers than expected have problems LTV by exposure Share of retail customers with interest-only mortgage, % 95.7 % 12 12 10 10 8 8 6 6 4 4 2 2 3.6 % 0.5 % 0.2 % 0 0 Un
Slide 47: Commercial real estate is the bank's 2nd largest customer segment
Commercial real estate is the bank’s 2nd largest customer segment Gross loans to commercially-related real estate, including building and construction • Financing of commercially related real CRE-related, share of gross lending* estate is the bank’s largest corporate Construction: Housing market exp
Slide 48: CRE for lease: Attractive location, diversified rental type
CRE for lease: Attractive location, diversified rental type 97 % of tenants have contracts that are 100 % indexed (to CPI) * Location* Acceptable; 1% Share of lending according to type* Normal; 8% Hotels, travel; Housing; 1% 7% Retail, Best; 41% shopping; 30% Warehouse, industrial, Central; 50% mech
Slide 49: CRE for lease: Good collateral and conservative lending practices
CRE for lease: Good collateral and conservative lending practices Loan portfolio is well positioned for higher yields in the commercial real estate market Share of lending according to LTV* Corp. arrears below 90 days (MNOK)** 600 500 60.0 % 400 300 28.1 % 200 100 6.6 % 3.5 % 1.8 % 0.0 % 0 jan.22 ma
Slide 50: Development projects: More building projects are nearing completion
Development projects: More building projects are nearing completion Required pre-sales normally 60 %, depending for example on equity, experience and complexity Loans to real estate projects, building and Draw on construction loans, volume-weighted, construction, NOK bill. * share in %* 6 000 5 800
Slide 51: 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) Average LTV at the time of approval 64.6 % 64.2 % 61.3 % 59.0 % 57.2 % Former Former Former Oslo Other Akershus Hedmark Oppland 34.3 % 27.9 % 26
Slide 52: 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 Corporate market 39.2 % 30.1 % 24.0 % 24.3 % 20.9 % 17.8 % 12.6 % 8.6 % 9.6 % 6.2 % 6.7 % < 1 MNOK 1 - 2,5 MNOK 2,5-5 MNOK 5 - 10 MNOK > 10 MNOK * Including loans transferred to the covered
Slide 53: Capital structure and allocation of 2022 profit
Capital structure and allocation of 2022 profit In line with dividend policy, for owners and society (through primary capital) ILLUSTRATION Profit after controlling Gifts and interest donations NOK 1 880 million 70.0 % 30.0 % Foundation Owners Primary capital NOK 411 million 52.1% Dividends Dividend
Slide 54: SPOL
SPOL Metrics for the equity capital certificate 31.03.2023 31.03.2022 • SPOL return: Market price (NOK) 113.80 140.00 • Return 1Q235 - 0.5 % • Return y/y5 - 13.9 % Market capitalisation (NOK million ) 13 181 16 216 Book equity per ECC 1) 108.76 104.16 • Liquidity in 1Q23 compared to same period in 2
Slide 55: 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 investor@sb1ostlandet.no Bjørn-Erik R. Orskaug Head of Investor Relations +47 922 39 185 bjorn-erik.orskaug@sb1ostlandet.no 55
Slide 56: 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 — Q1 2023 Earnings Presentation on 6ix