Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q2 2024 Earnings Presentation
58 slides from Sparebank 1 Sor-norge Asa's earnings presentation, 2024
Slide 1: Quarterly presentation Q2 2024
Quarterly presentation 2024 Q2 SR-Bank SR-Boligkreditt
Slide 2: 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 SR-Bank believes that the expectations reflected in such forward looking statements are reasonable,
Slide 3: SR-Bank
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 4: SpareBank 1 SR-Bank at a glance
SpareBank 1 SR-Bank at a glance SpareBank 1 SR-Bank was established in 1839 SR-Bank’s market area Second largest Norwegian owned bank One of two SIFI-banks in Norway A solid public limited company with high returns over time Moody’s rating Aa3 (outlook stable) SR-Bank merging with 7th largest SpareB
Slide 5: We come together to create SpareBank 1 Sør-Norge
We come together to create SpareBank 1 Sør-Norge SpareBank 1 Sør-Norge the second Lending volume per customer Norway’s largest savings bank largest Norwegian owned bank Segment* (BNOK) covering the south of Norway A solid platform for further growth The bank expects to realize capital synergies of N
Slide 6: Market overview
Market overview Banks in Norway Alliances Largest banks by lending volume (2023) Savings bank • All credit decisions are made at the local banks, no cross • Multiple alliances and Market share (lending volume) independent banks guarantees SpareBank 1 Alliance, • Economies of scale related 12 indepen
Slide 7: Good underlying operations, increased income and high lending growth in Q2
Good underlying operations, increased income and high lending growth in Q2 Result 2. quarter 2024 Result 30 June 2024 14.7% 7.5% 17.7% 14.6% Return on equity after tax Return on equity after tax Pre-tax profit MNOK 2,971 12 months lending growth Retail market Corporate market 7.1% 7.6% CET 1 capital
Slide 8: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio Cost to income ratio Earnings per share (NOK) Target: 50% dividend share 16.40% Target < 40% Target 13% Target 8 SR-Bank SR-Boligkreditt
Slide 9: Key figures – yearly development
Key figures – yearly development Return on equity Cost to income ratio Earnings per share (NOK) CET 1 Capital Lending growth Net interest margin CET 1 capital 9 SR-Bank SR-Boligkreditt
Slide 10: Good underlying operations, increased income and high lending growth
Good underlying operations, increased income and high lending growth Group Income statement Change from last quarter (MNOK) Change from Q2 2023 (MNOK) 10 SR-Bank SR-Boligkreditt
Slide 11: Operating expenses
Operating expenses Operating expenses Change from previous quarter (MNOK) • Cost increase driven by inflation, wage growth and higher activity as a result of growth strategy ersonne e penses Mar eting ther Merger e penses operating e penses e penses Change from previous quarter last year (MNOK) erso
Slide 12: Group
Group Lending volume Deposit volume Margins in customer- segments Definition margins: Average customer rate measured against money market rates. *The 12 months deposit growth excluding deposits from customers in the public sector is 5.1%. 12 SR-Bank SR-Boligkreditt
Slide 13: Well-diversified lending portfolio
Well-diversified lending portfolio • Gross loans increased to NOK 285 billion from NOK 265 billion year over year • Low offshore, oil and gas exposure • Commercial real estate – low concentration risk and good credit quality 12% 11% 23% 22% Share of green loans Loans before impairments, nominal amou
Slide 14: Early warning indicators: Our customers are doing well
Early warning indicators: Our customers are doing well Corporate market - Drawn amount on credit facilities Retail market – Avg. number of applications for interest-only per month Retail market – Drawn amount on interest only loans Retail market – Share of exposure (EAD)* with payment remarks *Propo
Slide 15: Market – Commercial real estate
Market – Commercial real estate Office vacancy Prime yield Rental prices Transaction volume (TNOK per sq.m) (NOK billion) Source: Entra, WPS, og EM1 SR-Bank 15 SR-Bank SR-Boligkreditt
Slide 16: Lending to commercial real estate
Lending to commercial real estate 12.8% (NOK 36 billion) of total lending volum is related to commercial real estate Commercial real estate portfolio Commercial real estate for lease (NOK billion) Well differentiated across regions Low concentration risk Commercial real estate Commercial real estate
Slide 17: Loan to value ratio and RWA on home mortgage loans
Loan to value ratio and RWA on home mortgage loans Loan to value ratio on home mortgage loans Risk weight home mortgages • 94.3% of the exposure is within 85% of the assessed value of • RWA on home mortgages reflects a solid portfolio with a collateral. moderate loan-to-value ratio and low potential
Slide 18: Loans and financial commitments
Loans and financial commitments Change in gross loans and financial Impairments on loans and Changes in gross loans and commitments financial commitments financial commitments defined as Stage 3 *An upgraded model for calculating the provisions for expected losses on engagements that are not individ
Slide 19: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the Impairments on loans and financial income statement (MNOK) commitments in the income statement (MNOK) Impairments on loans and financial commitments in the balance sheet (MNOK) orporate mar et M and
Slide 20: Solid capital ratio
Solid capital ratio • The minimum requirement for the CET 1 capital ratio is CET 1 Capital ratio Leverage ratio 16.40% including a temporary Pillar 2 requirement of 0.28% and a Pillar 2 guidance requirement of 1.25% • The leverage ratio is 7.33% as at 30 June 2024, well above 20,48 % 20,31 % 21,05 %
Slide 21: Funding
Funding • LCR 204%, NSFR 136% EUR Benchmarks • NOK 19.1 billion net refinancing need over the next 12 months • Deposit to loan ratio 54.4% N o o ss a a r y a r ref ep ep a • MREL-requirement 36.6%, MREL-subordination requirement 29.7% r ref ov ov a • As of 30 June 2024, SR-Bank has issued NOK 17,1 b
Slide 22: SR-Boligkreditt
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 23: Overview SR-Boligkreditt
Overview SR-Boligkreditt • SR-Boligkreditt is a wholly owned subsidiary of SR-Bank and a dedicated covered bond company. Its objective is to purchase mortgages and to finance these by issuing covered bonds (European Covered Bond Premium). • Loans are transferred to SR-Boligkreditt as true sale on a
Slide 24: Eligibility criteria
Eligibility criteria Type of properties • Primary residential property in Norway (including detached houses, terraced houses, apartments and cooperative housing units) • The mortgage property shall not be "buy-to- et“ (mortgages to individuals owning more than 3 properties) Collateral • LTV-limits a
Slide 25: Cover pool characteristics
Cover pool characteristics Assets/status • 100 % mortgages on Norwegian private residential properties • 100 % performing loans Cover pool • NOK 110.5 bn: Residential mortgages 108,0 (97.8%), Substitute assets 2.5 bn (2.2%) Mortgages and rate • 52,430 loans at a weighted average interest rate of 5.7
Slide 26: Cover pool characteristics
Cover pool characteristics Current LTV Loan performance 22,6 % 0% 0% 21,0 % 19,6 % 17,9 % Performing loans 14,4 % 100 % Delinquent loans (arrears 31 to 90 days) 4,1 % Gross non performing loans 0,4 % (arrears 90 days +) 0-40 % 40-50 % 50-60 % 60-70 % 70-80 % 80-100 % 100 % + Geography Property type
Slide 27: Norwegian economy
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 28: Key economic indicators
Key economic indicators Sources: Statistics Norway and Norges Bank Norges Bank 14 June 2024 & Statistics Norway 20 June 2024. 28 SR-Bank SR-Boligkreditt
Slide 29: Macro in Southern Norway
Macro in Southern Norway SpareBank 1 SR-Ba k’s business survey Unemployment rate Number of bankruptcies Main index of 54 per cent as of the 2 quarter of 2024 un un un gder oga and est and so ota eutra oga and est and gder s o and i en House price development Index change 12 month (%) Prices by city
Slide 30: Sustainability and Green Bond framework
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 31: Sustainability goals for SpareBank 1 SR-Bank
Sustainability goals for SpareBank 1 SR-Bank – a proactive ally for our customers in the transition to a sustainable society. Equality Combat Emission Transition and economic reduction diversity crime • Climate-neutral • Financing and • Gender balance (40/60) • Have zero tolerance for group from 202
Slide 32: Climate Transition Plan
Climate Transition Plan The first climate transition plan of SpareBank 1 SR-Bank launched in Q1-2024 (link) The plan includes industry targets and trajectories for commercial real estate, shipping, oil and gas and agriculture 32 SR-Bank SR-Boligkreditt
Slide 33: Lending volume and financing sustainable activities
Lending volume and financing sustainable activities Sustainable lending volume is 18.2% of total Target: Finance NOK 50 billion in sustainable activities lending volume by the end of 2030 Lending volume 30.06.24 2021 2030 18,2 % 64,8 % 0 bill 25 bill 50 bill 75 bill 100 bill 125 bill 150 bill 175 bi
Slide 34: Green Bond Framework Highlights
Green Bond Framework Highlights Projects Manage- Use of Evaluation External ment of Reporting Proceeds and Review Proceeds Selection Green Bond committee SR-Bank intends to make and The Green Bonds proceeds will ISS has issued a Second Party Green buildings, renewable established. Evaluation and kee
Slide 35: Appendix
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 36: Finance group for South of Norway
Finance group for South of Norway Knarvik Åsane Lending volume in NOK billion Askøy Bergen Sotra Fana Nydalen Oslo Skøyen Ensjø Husnes Stord Ølen Tysvær Haugesund Bygenes Jørpeland Randaberg Stavanger Sola Sandnes Gjesdal Bryne Varhaug Arendal Egersund Grimstad Flekkefjord Kristiansand Lyngdal Farsu
Slide 37: SpareBank 1 Sør-Norge
SpareBank 1 Sør-Norge Norway’s largest savings bank Covering the south of Norway We solidify our position as Norway's largest savings ross ending, bank and the second- bi ion largest Norwegian owned bank. d We become a powerful player with our headquarters located outside the capital. pb est M r org
Slide 38: A strong challenger in the Norwegian banking market
A strong challenger in the Norwegian banking market The integration of SpareBank 1 Sør-Norge is proceeding as planned Planning the Approval received from Approval received from Day 1 of the Fully integrated integration The Norwegian The Norwegian FSA and merger Competition Authority Ministry of Fina
Slide 39: The Executive Management Team of SpareBank 1 Sør-Norge
The Executive Management Team of SpareBank 1 Sør-Norge The Board of Directors CEO Benedicte Schilbred Fasmer* Deputy CEO and People & Integration Strategy & Corporate Services Per Halvorsen Jan Friestad CFO – Economy, Finance & Sustainability Risk Management Inge Reinertsen Frode Bø Compliance Signe
Slide 40: Good underlying operations, increased income and high lending growth in Q2
Good underlying operations, increased income and high lending growth in Q2 • ROE well above financial target of 13 % ROE 14.6% • Stable high net interest income as a result of strong lending growth • Low losses of 0,15 % of gross lending 12 mth lending growth • High lending growth despite moderate c
Slide 41: Retail market
Retail market Lending volume* Deposit volume Margins Definition margins: Average customer rate measured against money market rates. *Including loans to employees. 41 SR-Bank SR-Boligkreditt
Slide 42: Corporate market
Corporate market Lending volume Deposit volume Margins v Definition margins: Average customer rate measured against money market rates. *12 months lending growth in Corporate market excluding currency effect is 7.7%. 42 SR-Bank SR-Boligkreditt
Slide 43: SME and Agriculture
SME and Agriculture Lending volume Deposit volume Margins Definition margins: Average customer rate measured against money market rates. . 43 SR-Bank SR-Boligkreditt
Slide 44: Net commission and other income
Net commission and other income Net commission and other income Change from previous quarter (MNOK) 74 74 Change from Q1 2023 (MNOK) 44 SR-Bank SR-Boligkreditt
Slide 45: Net income on financial investments
Net income on financial investments Net income on financial investments Change from previous quarter (MNOK) 74 74 Change from previous quarter last year (MNOK) When a basisswap is defined as a hedging instrument, changes in “basis spread” is recognized through other comprehensive income. 45 SR-Bank
Slide 46: Ownership interests
Ownership interests Ownership interests MARKETS FORSIKRING KREDITT FACTORING FORVALTNING *Companies in which FinStart Nordic AS owns stakes of between 20-50% must, because of accounting rules, be measured as associated companies in the consolidated financial statements. The profit contribution here
Slide 47: Funding
Funding Annual funding maturity Strong liquidity • LCR 204% • NSFR 136% • NOK 19.1 billion net refinancing need over the next 12 months • Deposit to loan ratio 54.4% • MREL-requirement 36.6%, MREL-subordination requirement 29.7% • As of 30 June 2024, SR-Bank has issued NOK 17.1 billion in senior non
Slide 48: Outlook
Outlook • Increasing optimism among businesses • Expect subdued housing price growth in the autumn • SR-Bank has strong growth and is increasing its markets share • Integration of SpareBank 1 Sør-Norge is going as planned SR-Bank SR-Boligkreditt
Slide 49: Lending to oil and offshore
Lending to oil and offshore 3.0% (NOK 8.6 billion) of total lending volume is related to oil operations Offshore ‐ Lending volume NOK 4.3 billion, 1.5% of the bank's total lending (NOK billion) ‐ Exposure primarily to industrial-oriented shipping companies with integrated organization (Offshore serv
Slide 50: Risk Profile - loan portfolio
Risk Profile - loan portfolio • SpareBank 1 SR-Bank has a solid loan portfolio. Loan portfolio distributed Loan portfolio distributed by risk class by size of loan • The loan portfolio consists mainly of small and medium- sized loans. Probability of Default (PD) % Probability of default (PD) through
Slide 51: Risk Profile - loan portfolio
Risk Profile - loan portfolio - Portfolio distributed by risk class Retail SME & Agriculture Corporate 14.6% 14.1% 15.2% 14.1% 15.0% 14.0% 14.6% 16.5% 14.0% 13,8 % 14,4 % 14,8 % 43.1% 44.7% 46.5% 54.9% 52.9% 57.5% PD 0.00-0.50 PD 0.50-2.50 PD 2.50-99.9 PD 0.00-0.50 PD 0.50-2.50 PD 2.50-99.9 PD 0.00-
Slide 52: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 Samarbeidende SpareBank 1 LO SR-Bank SMN Nord Norge Sparebanker AS Østlandet 19.5% 19.5% 19.5% 19.5% 12.4% 9.6% Products, commissions, dividends Sales, loan portfolios, capital Companies where SR-Bank has direct ownership SpareBank 1 Gruppen A
Slide 53: Key figures
Key figures 53 SR-Bank SR-Boligkreditt
Slide 54: Balance sheet
Balance sheet 54 SR-Bank SR-Boligkreditt
Slide 55: SRBNK share
SRBNK share • International ownership Development in Price/Book Relative share price development is 20.7% per 140 1,5 2. quarter 2024 130 1,4 200 120 1,3 180 • Total market value at Index 100 = jun 30th 2023 110 1,2 160 2. quarter 2024 is NOK 100 1,1 140 NOK p/B 90 1,0 120 34.5 billion 80 0,9 100 70
Slide 56: SR-Bank as at 30 June 2024
SR-Bank as at 30 June 2024 • Number of shares issued 264.27 million • Trading volume in Q2 2024: 4.0% (4.0%) Figures in parentheses as at 30 June 2023. 56 SR-Bank SR-Boligkreditt
Slide 57: 20 largest shareholders as at 30 June 2024
20 largest shareholders as at 30 June 2024 • Ownership interests: • From Rogaland, Agder, Vestland, Oslo and Akershus: 63.3% (65.0%) • International: 20.7% (21.2%) • 10 largest: 50.2% (49.2%) • 20 largest: 58.4% (57.5%) • Number of shareholders: 18.943 (18.526) • Employees owning 1.8% (1.8%) as at 3
Slide 58: Contact Details
Contact Details Management Christen Tranes Gate 35 Tel: +47 915 02002 Benedicte Schilbred Fasmer Postboks 250 www.sr-bank.no CEO 4068 Stavanger +47 950 60 034 benedicte.fasmer@sr-bank.no Inge Reinertsen CFO +47 909 95 033 inge.reinertsen@sr-bank.no Investor Relations Morten Forgaard Investor Relatio