Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q4 2021 Earnings Presentation
53 slides from Sparebank 1 Ostlandet's earnings presentation, February 2022
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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: Finance group for South of Norway
Finance group for South of Norway Åsane Bergen Sotra Fana Nydalen 0% Oslo Skøyen Ensjø 134 134 134 Stord Husnes Ølen +18% Aksdal 38 Haugesund 35 32 +48% Åkra Kopervik +12% 27 Finnøy 21 22 22 20 18 Randaberg Jørpeland Stavanger* Sola +24% Sandnes 9 Ålgård 8 7 Bryne Varhaug Egersund Grimstad Rogaland
Slide 4: Strong results characterised by good underlying operations and significantly lower impairment provisions
Strong results characterised by good underlying operations and significantly lower impairment provisions Result 4. quarter 2021 Result 31 December 2021 14.0% 12.6% 5.1% 17.4%* Return on equity after tax Return on equity after tax 12 months lending growth CET 1 capital ratio Pre-tax profit NOK 1,073
Slide 5: Key figures and financial targets
Key figures and financial targets Return on equity CET 1* 18.3% 17.4% 16.7% 12.6% > 12.0% 6.4% 2020 2021 Target 2020 2021 Target Cost to income ratio Dividend share* 38.3% 40.2% < 40.0% 50.0% 49.8% 49.7% 2020 2021 Target 2020 2021 Estimate *The board exercised its special authorisation from April 20
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1* 18.3% 18.1% 17.9% 17.6% 17.4% 13.2% 14.0% 11.6% 11.7% 9.7% Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Cost to income ratio Earnings per share (NOK) 40.1% 40.9% 41.9% 3.13 3.41 39.2% 37.9% 2.74 2.80 2.30 Q4 20 Q1 21 Q2 21 Q3
Slide 7: Key figures – annual development
Key figures – annual development Return on equity CET 1* 14.0% 18.3% 17.4% 12.6% 17.0% 11.3% 15.1% 14.7% 11.0% 6.4% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Cost to income ratio Earnings per share (NOK) 40.7% 40.9% 40.2% 37.9% 38.3% 12.1 12.1 8.2 9.0 5.9 2017 2018 2019 2020 2021 2017 2018 2
Slide 8: Income statement
Income statement Group Income Statement (MNOK) 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Net interest income 3,990 4,142 1,005 989 1,001 995 994 Net commission and other income 1,717 1,396 455 406 454 402 370 Net income on investment securities 1,037 699 344 234 243 216 240 Total
Slide 9: Change in profit 31 December 2020 – 31 December 2021
Change in profit 31 December 2020 – 31 December 2021 1,838 3,838 338 321 1,821 -328 -152 31.12.2020 Net interest income Other income Net income on Total operating Impairments on 31.12.2021 investment securities expenses loans and financial commitments 9
Slide 10: Key figures
Key figures 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Return on equity after tax (%) 12.6 6.4 14.0 11.7 13.2 11.6 9.7 Net interest margin (%) 1.35 1.50 1.32 1.31 1.36 1.40 1.40 Impairments on loans in % of gross loans 0.09 0.95 -0.04 0.07 0.10 0.22 0.50 Loans and financial commit
Slide 11: Lending and deposit margins
Lending and deposit margins Corporate market SME and Agriculture Retail market Lending margins Deposit margins 1.12% 3.23% 3.07% 0.94% 2.98% 3.10% 2.99% 2.92% 2.94% 0.66% 2.83% 0.54% 2.93% 2.77% 2.74% 2.86% 2.72% 0.42% 2.84% 0.30% 2.62% 0.19% 0.20% 0.26% 0.21% 0.10% 0.11% 2.65% 2.66% -0.05% -0.07% -
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth 12 months growth % Volume in NOK billion Retail market SME and Agriculture Corporate market 8.2% 6.8% 6.3% 6.4%* 6.6% 5.9% 5.2% 6.0% 5.9% 4.5% 4.5% 5.8% 5.4% 3.6% 3.1% 4.9% 2.2% 4.7% 4.6% 1.7% 1.6% 0.5% -0.2% 0.1% -0.7% 144.0 145.6 -1.3% 137.6 139.2 140.3 142.7 13
Slide 13: Loan portfolio as at 31 December 2021
Loan portfolio as at 31 December 2021 • Gross loans increased to NOK 230.3 billion as Agriculture / forestry / fishing 4.0% 3.8% at 31 December 2021 from NOK 219.2 billion 1.8% at the same time the year before. Supply and construction 2.0% • 12-month growth in loans of 5.1%. Renewable / Green engage
Slide 14: 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 RWA home mortgages • Increased share of volume with LTV below 70 per cent is due to increased • RWA on home mortgages reflects a solid portfolio with a moderate loan-to- market values of collateral (housing
Slide 15: Deposit volume and 12 months growth
Deposit volume and 12 months growth 12 months growth % Volume in NOK Billion Retail market SME and Agriculture Corporate market 46.6% 43.2% 9.1% 9.4% 9.6% 8.9% 8.4% 21.4% 21.8% 20.4% 7.3% 7.5% 7.4% 19.5% 20.0% 28.2% 26.7% 6.0% 21.1% 14.4% 14.1% 10.1% 10.7% 12.0% 5.5% 55.0 59.0 58.0 58.2 59.0 63.4 62
Slide 16: Net commission and other income
Net commission and other income MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Payment facilities 245 248 70 64 56 55 64 Savings/placements 216 195 52 50 61 53 51 Insurance products 233 208 61 60 56 56 54 Commission income EiendomsMegler 1 439 396 96 101 132 110 100 Guarantee com
Slide 17: Net income on investment securities
Net income on investment securities MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Dividends 30 57 21 0 9 0 39 Investment income, associates 676 663 223 151 193 109 129 Securities gains/losses 192 -141 56 4 26 106 -1 - of which capital change in shares and certificates* 296 -49 9
Slide 18: Subsidiaries
Subsidiaries MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 EiendomsMegler 1 SR- Number of sales 7,367 6,707 1,558 1,713 2,185 1,911 1,633 Eiendom AS Operating profit before tax 60 50 9 5 30 16 9 SR-Forvaltning AS Capital under management (BNOK) 16 14 16 16 15 15 14 Operating pro
Slide 19: Ownership interests
Ownership interests Companies MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 SpareBank 1 Gruppen AS Interest ownership (%) 19.5 19.5 19.5 19.5 19.5 19.5 19.5 Profitshare after tax 471 194 173 83 148 67 87 Profit effect merger 0 340 0 0 0 0 0 BN Bank ASA Interest ownership (%) 35.
Slide 20: Operating expenses
Operating expenses MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Payroll and pensions 1,311 1,184 371 330 326 284 332 Other staff expenses 411 252 114 102 97 98 69 Total personnel expenses 1,722 1,436 485 432 423 382 401 IT expenses 381 373 99 93 97 92 88 Marketing 81 73 26 18 1
Slide 21: Changes in operating expenses 2020-2021
Changes in operating expenses 2020-2021 +13.7% 1.6% -18 2,714 4.2% 39 -0.7% 100 1.2% 1.4% 29 6.0% 34 143 2,386 Operating ForretningsPartner EiendomsMegler 1 Distribution and Bonus provision Personnel Other expenses/ Operating expenses 2020 digitalisation expenses Effectivisation expenses 2021 21
Slide 22: Impairments per quarter
Impairments per quarter • The group’s net impairments on loans and financial liabilities were reduced from NOK 2,030 million as at 31 December 2020 831 to NOK 192 million as at 31 December 2021 • Of gross loans the impairment provisions were reduced from 0.95% as at 31 December 2020 to 0.09% as at 3
Slide 23: Impairments on loans and financial commitments / Loans defined as Stage 3
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Impairments on loans and financial commitments Changes in gross loans and financial commitments defined as Stage 3 1.9% 1.9% 1.8% 1.8% 1.5% 4,991 5,109 4,943 4,905 0.49% 0.22% 1,261 0.10% 0.07% 1,252
Slide 24: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Corporate market 228 1,854 26 35 52 115 248 SME and Agriculture 3 87 -21 11 7 6 18 Retail market -39 89 -29 -9 -1
Slide 25: Reduced exposure to the offshore sector
Reduced exposure to the offshore sector Total EAD related to offshore is reduced to 2.3% in 4. quarter 2021 from 5.0% in 4. quarter 2015 • Offshore ‐ EAD NOK 5.9 billion (NOK 10.4 billion), 2.3% of the bank’s total EAD ‐ Exposure primarily to industrial oriented shipping companies with integrated or
Slide 26: Funding
Funding • NSFR* 124% • LCR** 168% • NOK 20.4 billion net refinancing need over the next 12 months • Deposit to loans ratio 59.8% • MREL requirement 34.4% Annual funding maturity *The net stable funding ratio (NSFR) is defined as available stable funding relative to necessary stable funding. NSFR is
Slide 27: Solid capital ratio
Solid capital ratio ROE ROE ROE • The authorities’ minimum requirement for the CET 1 capital 14.0% 6.4% 12.6% ratio is 15.2%, incl. 1.0% management buffer as at 31 December 2021 21.7% 20.4% 20.5% CET 1 19.9% 16.2% • The group’s CET 1 capital ratio target is 16.7% incl. 1.0% in 18.6% 18.9% management
Slide 28: Around 20% of gross lending growth in Corporate market to sustainable activities
Around 20% of gross lending growth in Corporate market to sustainable activities NOK 50 billion Goal: Finance and facilitate NOK 50 billion 10.9%* in sustainable activities by the end of 2030 *Financing of sustainable activities in the corporate market and facilitation in SR-Markets in 2021 Sustaina
Slide 29: Outlook
Outlook • Significantly reduced impairment provisions from 2020 levels • Optimism and positive expectations for 2022 • The group’s long-term return on equity target is at a minimum of 12% • Geographic expansion and growth in the priority areas will provide a basis for developing into a financial ser
Slide 30: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 30
Slide 31: Lower unemployment due to reopening of the economy
Lower unemployment due to reopening of the economy Unemployed down to the level in February 2020. Slightly higher recently due to omicron Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 10 9 8 7 6 5 4 3 2 1 0 2009 2011 2013 2015 2017 2019 2021 Oslo Rogaland Vestland Agder No
Slide 32: Norwegian house prices have increased by 5% last 12 months
Norwegian house prices have increased by 5% last 12 months Growth in sales and prices since summer 2020, but somewhat less price pressure since spring 2021 esp in Oslo House prices. NOK per sqm. Average all homes. Monthly 90.000 120% 80.000 100% 70.000 60.000 80% 50.000 60% 40.000 30.000 40% 20.000
Slide 33: Fairly stable petroleum activity in Norway – somewhat higher towards 2025
Fairly stable petroleum activity in Norway – somewhat higher towards 2025 The tax package (June 2020) and higher prices support the outlook • There have been large fluctuations in activity on Petroleum activity on Norwegian Continental Shelf. BNOK (2022 the Norwegian shelf. Activity increased by 60%
Slide 34: High growth in retail trade in Norway during the pandemic, but has slowed
High growth in retail trade in Norway during the pandemic, but has slowed Covid-19 has had a big impact. High growth in groceries have turned to negative growth Retail sales (excl. auto), change in turn-over from same 2-month period previous year. Last obs: july-aug 2021 20,0 % 16,0 % 12,0 % 8,0 % 4
Slide 35: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 35
Slide 36: Lending to commercial real estate
Lending to commercial real estate 13.1% (NOK 33.6 billion) of total EAD* is related to commercial real estate • Commercial real estate for lease Real estate management ‐ EAD NOK 22.5 billion, 8.8% of the bank’s total EAD and housing Development projects for ‐ The portfolio is characterised by lendin
Slide 37: Lending to retail trade, hotels and restaurants
Lending to retail trade, hotels and restaurants 1.5% (NOK 3.9 billion) of total EAD* is related to retail trade, hotels and restaurants • Retail trade ‐ EAD NOK 2.9 billion, 1.1% of the bank's total EAD Tourism; MNOK 61 Operation of • Operation of hotels and restaurants hotels and restaurants; ‐ EAD
Slide 38: Lending to shipping
Lending to shipping 2.2% (NOK 5.7 billion) of total EAD* is related to shipping • Product tank Other shipping; ‐ EAD NOK 1.1 billion, 0.4% of the bank's total EAD MNOK 597 Product tank; • Chemical tank MNOK 1.086 ‐ EAD NOK 1.5 billion, 0.6% of the bank's total EAD Gas; MNOK 753 • Dry-bulk ‐ EAD NOK
Slide 39: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 39
Slide 40: Moderate risk profile
SpareBank 1 SR-Bank has a moderate risk profile in which no single event should be capable of seriously harming the bank's financial position 40
Slide 41: Core purpose, market areas and requirements for corporate lending
• The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk ‐ SpareBank 1 SR-Bank therefore invests significant resources in developing risk management systems, processes and expertise that are in line with leading international practice • The bank's prim
Slide 42: Commitment limits, industry diversification and property financing requirements
• The bank sets specific limits for the size of commitments as well as requirements concerning industry diversification ‐ The maximum total exposure to an individual customer must be significantly lower than the regulatory requirements ‐ The maximum unsecured exposure to an individual customer must
Slide 43: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • SpareBank 1 SR-Bank has a solid loan portfolio. 64.5 % 65.5 % Portfolio quality improved last year. 27.7 % 28.1 % • The loan portfolio consists mainly of small and 7.8 % 6.4 % medium-sized loans. 0.00 - 0.50 0.50 - 2.50 2.50 - 99.9 Proba
Slide 44: Risk profile – Lending in Retail, SME and Agriculture and Corporate market
Risk profile – Lending in Retail, SME and Agriculture and Corporate market - Portfolio distributed by risk class Retail market SME and Agriculture Corporate market 2.4 % 1.6 % 1.8 % 16.4 % 13.6 % 14.0 % 17.7 % 12.8 % 14.7 % 13.7 % 14.0 % 14.4 % 41.3 % 41.4 % 40.9 % 56.2 % 59.2 % 54.9 % 83.9 % 84.4 %
Slide 45: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 45
Slide 46: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Business divisions Fully owned companies Partly owned companies Retail market EiendomsMegler 1 SR-Boligkreditt BN Bank SpareBank 1 Gruppen Number of man-years: 469 (35.0%) (19.5%) Leading real estate broker Covered Bond Funding Commercial bank located in Holding company for t
Slide 47: New organisational structure
New organisational structure CEO Benedicte Schilbred Fasmer Group strategy and CFO projects Inge Reinertsen Jan Friestad HR, Sustainability Compliance and Communications Signe Helliesen Nina Moi Edvardsen Risk Management Frode Bø Retail market (incl. SME and Agriculture Corporate market Capital mark
Slide 48: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 Samarbeidende SpareBank 1 Sparebanker AS LO SR-Bank SMN Nord Norge Østlandet 9.6% 19.5% 19.5% 19.5% 19.5% 12.4% Products, commissions, dividends Sales, loan portfolios, capital Companies where SR-Bank has direct ownership SpareBank 1 Gruppen A
Slide 49: Balance sheet
Balance sheet Balance sheet (MNOK) 31.12.2021 31.12.2020 Cash and balances with central banks 78 68 Balances with credit institutions 5,366 12,589 Net loans to customers 228,578 216,966 Certificates, bonds and other fixed-income securities 56,266 39,921 Financial derivatives 5,053 8,672 Shares, owne
Slide 50: SRBNK share
SRBNK share Development in Price/Book Relativ share price development • International ownership is 22.2% 140 1,5 200 Price Index 100 = dec 31st 2020 per 4. quarter 2021. 130 P/B 1,4 180 120 1,3 160 110 1,2 140 • Total market value at 4. quarter 100 1,1 NOK 120 p/B 90 1,0 2021 is NOK 34.1 billion. 80
Slide 51: 20 largest shareholders as at 31 December 2021
20 largest shareholders as at 31 December 2021 Investor Number Stake Sparebankstiftelsen SR-Bank 72,419,305 28.3% • Ownership interests as at 31 December 2021: Folketrygdfondet 19,495,629 7.6% • From Rogaland, Agder, Vestland, Oslo and SpareBank 1-stiftinga Kvinnherad 6,226,583 2.4% Viken: 65.7% (66
Slide 52: SR-Bank as at 31 December 2021
SR-Bank as at 31 December 2021 SpareBank 1 SR-Bank share 2021 2020 2019 2018 2017 • Number of shares issued 255.75 million Share price 133.20 91.00 100.00 89.20 87.00 Stock value (MNOK) 34,066 23,273 25,575 22,813 22,250 • Trading volume in Q4 2021: 5.0% (5.3%) Book value per share, NOK (group) 99.0
Slide 53: Contact Details
Contact Details Address Christen Tranes Gate 35 Tel: +47 915 02002 Postboks 250 www.sr-bank.no 4068 Stavanger Management Benedicte Schilbred Fasmer CEO Tel.: +47 950 60 034 E-post: benedicte.fasmer@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 E-post: inge.reinertsen@sr-bank.no Investor Relati