Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q4 2023 Earnings Presentation
59 slides from Sparebank 1 Ostlandet's earnings presentation, February 2024
Slide 1: 2023 Company Presentation
2023 COMPANY PRESENTATION
Slide 2: 4th quarter 2023: An eventful end to a challenging year
4th quarter 2023: An eventful end to a challenging year Summary • Return on equity of 11.3 %. Weaker than financial target, based on higher costs and weak ownership contributions. • Solid growth in in net interest income, increasing 5.7 % q/q, from repricing and volume growth. Healthy volume growth,
Slide 3: Healthy profitability and higher dividends
Healthy profitability and higher dividends Dividend policy provides basis for predictable dividends as well as sufficient flexibility Return on equity, % Cash dividend and dividend share, NOK and % 9 60% 60% 12.8 % 8 51% 50% 50% 11.6 % 49% 7.80 11.3 % 7 10.5 % 10.5 % 6.80 10.2 % 10.1 % 6 40% 6.00 5
Slide 4: Financial targets and achievements in 2023
Financial targets and achievements in 2023 Long-term goals versus actual results Profitability Return on equity at least 12 % 11.3 % Dividends 50 % pay-out ratio1 60 % Solidity Regulatory requirement + 100 bps2 17.0 % Costs Max 5 % cost increase in parent bank 10.5 % 1. Out of profits after taxes ta
Slide 5: Macroeconomic background is still challenging
Macroeconomic background is still challenging Low business expectations and number of bankruptcies has increased. Sustained low unemployment Norges Bank’s regional indicators Source: Norges Bank’s Regional Network report, no. 4 2023 5
Slide 6: Housing market remains relatively strong, but lower credit growth expected
Housing market remains relatively strong, but lower credit growth expected Flat house prices contribute to lower credit growth 6
Slide 7: Volume growth still good for lending and deposits
Volume growth still good for lending and deposits Targeted effort has resulted in strong deposit growth from retail and business customers Lending growth (12 months, %) Last national* Deposit growth (12 months, %) Households: 3.1% Non-fin corp.: 2.6% 4Q22; 16.1 % 3Q23; 10.8 % 4Q22; 7.8 % 9.8 % 3Q23;
Slide 8: Merger with Totens Sparebank
Merger with Totens Sparebank We build an even stronger bank for the Inland region • The region around Lake Mjøsa is the home market for both banks • Operations in the city of Gjøvik will be strengthened and the bank gains a stronger branch network west of Lake Mjøsa • A financial center for business
Slide 9: Banks are expected to merge legally on 1 October 2024
Banks are expected to merge legally on 1 October 2024 Pending decisions and approvals from the supervisory boards and authorities * Tentative dates 9
Slide 10: Acquisition of Siffer, an accounting firm
Acquisition of Siffer, an accounting firm SpareBank 1 ForretningsPartner Østlandet AS is an important part of the Group’s SME efforts Halden 10
Slide 11: We establish our presence in Drammen
We establish our presence in Drammen Plans for a new branch office in central Drammen city • Will further strengthen our position in central Eastern Norway • An area with significant commercial potential • The bank already has a customer portfolio in the area, which we wish to serve even better • Lo
Slide 12: Customer dividends: Close to NOK 400 mill. to be paid in 2024
Customer dividends: Close to NOK 400 mill. to be paid in 2024* More than NOK 1.8 bill. paid to customers since the customer dividend was launched Customer dividends paid, NOK mill. 1 837 2 200 400 381 1 200 295 306 200 220 206 227 200 202 0 -800 2018 2019 2020 2021 2022 2023 2024* Annual payments Ac
Slide 13: Our activities in the local community are widely diversified
Our activities in the local community are widely diversified 13 Bildene viser mottakere av SpareBank 1 Østlandets Talentstipend 2023.
Slide 14: Sparebankstiftelsen Hedmark has donated NOK 660 mill.
Sparebankstiftelsen Hedmark has donated NOK 660 mill. Another NOK 100 mill. shared in 2023 to large and small local projects, with dividends from the bank Annual donations (NOK mill.) and distribution in 2023 660 101 2023 2022 Sports 2021 and 2020 outdoor activities 2019 22 % 2018 2017 Knowledge 49
Slide 15: Very good feedback on our corporate social responsibility and reporting
Very good feedback on our corporate social responsibility and reporting Bank has taken a credible leadership role in sustainable financing 15
Slide 16: Efforts continue for the green transition of the mortgage portfolio
Efforts continue for the green transition of the mortgage portfolio Contributes to the sustainable transition and to reduce risks for customers and the bank
Slide 17: Financial accounts
ae YOR ani 1 : \ @STLANDET Jeg vikarierer for en hverdagshelt!
Slide 18: Income statement
Income statement Group 4Q23 3Q23 4Q22 2023 2022 Net interest income 1 005 941 789 3 655 2 693 Net commission income 276 318 327 1 273 1 375 Other income 43 40 43 182 213 Dividends 1 0 14 29 43 Net profit from ownership interest 0 -46 113 36 186 Net income from financial assets/liabilities 76 -17 46
Slide 19: Net interest income
Net interest income Increased net interest income Net interest income incl. commissions from covered bond companies (MNOK and %) 2.27% 1400 2.13% 2.04% 1.83% 1.98% 1200 2.00% 5.7 % 1035 980 31 1000 927 917 Commission fees from covered bond 39 835 70 64 1.50% companies 800 46 Net interest income 600
Slide 20: Quarterly development in lending and deposits
Quarterly development in lending and deposits Lower lending growth reflects economy-wide weakening. Strong growth in deposits Gross lending (NOK billion) Deposits (NOK billion) 105.9 103.9 106.5 2.6 % 196.9 198.6 98.8 100.4 -1.9 % 188.7 190.3 2.0 % 194.1 1.4 % 0.9 % 1.6 % 5.5 % 0.8 % 48.3 48.1 48.6
Slide 21: Lending margins
Lending margins Lending margins, parent bank (%)* 2.49% 2.32% 2.03% 1.76% 0.30% 0.64% 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 3Q21 1Q22 3Q22 1Q23 3Q23 Lending margin RM, incl. covered bond companies Lending margin CM, incl. covered bond companies * Based on allocation of customer loans between retail and
Slide 22: Deposit margins
Deposit margins Deposit margins, parent bank (%)* 2.18% 1.85% 1.34%1.32% 0.23% 0.08% 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 3Q21 1Q22 3Q22 1Q23 3Q23 Deposit margin Retail customers Deposit margin Corporate customers * Based on allocation of customer deposits between retail and corporate divisions, respe
Slide 23: Commission income
Commission income Lower real estate activity and reduced income from payment services Commision income and other income, excluding covered bond companies (NOK million) 348 324 16 320 18 295 34 15 289 28 18 26 14 Commission income from credit cards 36 28 66 95 Income from accounting services 81 64 Co
Slide 24: Profits in subsidiaries
Profits in subsidiaries Profit after taxes (NOK million) 4Q23 4Q22 Sparebank 1 Finans Østlandet AS - Group 34.5 24.1 EiendomsMegler 1 Innlandet AS - 0.4 1.7 EiendomsMegler 1 Oslo Akershus AS - Group - 8.2 0.9 SpareBank 1 ForretningsPartner Østlandet AS - Group - 2.6 - 3.1 Subsidiaries 23.2 23.6 24
Slide 25: Profits in joint ventures
Profits in joint ventures Profit after taxes 4Q23 4Q22 (NOK million) Profits Our share Ownership Profits Our share Ownership SpareBank 1 Gruppen AS - Group* 59.5 - 32.2 12.40 % 517.3 81.3 12.40 % SpareBank 1 Forvaltning AS 59.2 3.7 6.25 % 27.8 1.7 6.26 % SpareBank 1 Boligkreditt AS 143.2 28.1 23.22
Slide 26: Net income from financial assets and liabilities
Net income from financial assets and liabilities Still weak contribution from ownership interests Net income from financial assets and liabilities, NOK million Selected valuation changes: 172 • Equity instruments: 14 NOK 40 mill. Dividends from shares and 117 other equity instruments 102 10 • Liquid
Slide 27: Operating expenses
Operating expenses Increased activity levels and some one-offs Operating expenses by item (NOK million) Operating expenses, by unit (NOK mill.) 700 594 600 594 529 534 533 517 534 533 103 517 529 500 65 74 72 139 85 18 22 19 16 23 18 25 27 21 400 119 135 140 137 23 97 89 87 90 84 300 37 34 29 30 25
Slide 28: Loan loss provisions
Loan loss provisions Reduced impairment charges compared to previous quarters 4Q22 1Q23 2Q23 3Q23 4Q23 Parent bank 16 58 42 77 26 SB1FØ 47 -9 44 57 13 Group 63 49 86 134 39 Losses as a percentage of total lending 0,2 % 0,2 % 0,3 % 0,4 % 0,1 % Loan loss provisions (NOK million) 4Q22 1Q23 2Q23 3Q23 4Q
Slide 29: 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.) 15.2 % 85.8 % 85.7 % 13.7 % 13.8 % 85.2 % 15.0 % 2 500 12.5 % 83.8 % 83.7 % 11.3 % 10.0 % 2 032 1 937 10.0 % 9.0 % 9.0 % 9.0 % 2 000 10.2 % 1 470 5.0 % 1 500 1 000 0.0 %
Slide 30: CET-1 ratio
CET-1 ratio Well above regulatory requirements 18.0 % 16.1 % 17.8 % 17.7 % 16.8 % 17.2 % 17.0 % 1.0 % 9.5 % 1.1 % 4.5 % 2018 2019 2020 2021 2022 2023 Requirement per 4Q23 Common equity Tier 1 capital ratio Pilar 1 Pilar 2 Buffer requirements Management buffer 30
Slide 31: 4th quarter 2023: An eventful end to a challenging year
4th quarter 2023: An eventful end to a challenging year Summary • Return on equity of 11.3 %. Weaker than financial target, based on higher costs and weak ownership contributions. • Solid growth in in net interest income, increasing 5.7 % q/q, from repricing and volume growth. Healthy volume growth,
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 (%) 13.9% 652 622 12.9% 579 574 12.2% 11.3% 417 8.3% 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 34
Slide 35: Key financials - quarterly
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from covered bond companies (NOK million) 751 747 760 768 980 1035 927 917 835 570 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 Net commission income excl. covered bond companies Operating expens
Slide 36: Key financials - quarterly
Key financials - quarterly (2) Impairments on loans and guarantees (NOK million) CET-1 ratio 134 17.7 % 17.7 % 17.9 % 17.7 % 17.0 % 86 63 49 39 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 Lending growth last 12 months, inc. transferred loans Deposit growth last 12 months 8.7 % 7.0 % 7.8 % 5.9
Slide 37: Bank has adjusted interest rates following Norges Bank’s rate hikes
Bank has adjusted interest rates following Norges Bank’s rate hikes Loans and deposits, NOK bill. Norges 22 June-23 17 Aug-23 21 Sep-23 14 Dec-23 Bank (0.50%) (0.25%) (0.25%) (0.25%) 12 12 12 31 33 33 Effective dates Loans in subsidiaries new loans and 10 Aug-23 21 Sep-23 28 Nov-23 21 Feb-24 deposit
Slide 38: Structure and rate fixings of funding and security holdings
Structure and rate fixings of funding and security holdings Net rate fixings per month, share of quarter, %** Securities, NOK bill.* 4.8 4.7 52% 53% 4.6 30 28 29 -4% 4.5 jul.23 aug.23 sep.23 okt.23 nov.23 des.23 jan.24 feb.24 mar.24 -40 -41 -42 Per Jun-23 Per Sep-23 Per Dec-23 3m NIBOR (mth-avrg, r.
Slide 39: Headcount
Headcount Increased staffing in parent bank Full-time equivalents in parent bank and subsidiaries 1 142 1 147 1 151 1 155 1 121 120 114 114 111 115 SpareBank 1 ForretningsPartner 59 62 63 Østlandet 57 55 82 82 84 82 84 SpareBank 1 Finans Østlandet AS 143 138 138 142 138 EiendomsMegler 1 Innlandet AS
Slide 40: Impairment charges
Impairment charges Impairment charges (NOK million) 151 130 134 86 63 47 49 39 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 2Q23 3Q23 4Q23 40
Slide 41: Diversified loan portfolio
Diversified loan portfolio Lending to customers per sector (% and NOK million) Private customers 38,6 %/76 746 Retail market 70.9 %/140 655 SB1 Boligkreditt 32,2 %/63 910 Real estate (incl. SB1 Næringskreditt) 14,2 %/28 230 Primary industries 4,2 %/8 351 Commercial services/Public sector 3,4 %/6 766
Slide 42: 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 36,5 %/ 72 553 2.7 % Viken 30,3 %/ 60 107 4.3 % Oslo 29,3 %/ 58 189 10.1 % Other areas 3,9
Slide 43: 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 33,7 %/ 47 412 1.5 % Viken 35,5 %/ 49 944 4.9 % Oslo 26,7 %/ 37 490 3.9 % Other areas 4,1 %/ 5 810 Trøndelag
Slide 44: 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 43,4 %/ 25 140 5.0 % Viken 17,5 %/ 10 163 1.4 % Oslo 35,7 %/ 20 699 23.4 % Øvrige 3,4 %/ 1 98
Slide 45: Green lending
Green lending Higher green share of lending is important to reach our net zero emissions objective* Green loans per 31 December 2023, MNOK Share of green lending, % Residential mortages Commercial real estate 20.0 % 28 812 Residential mortgages 19.8 % 41.9 % 19.6 % 40.0 % 39.4 % 7 103 Commerical rea
Slide 46: Retail: Indicators of underlying credit quality
Retail: Indicators of underlying credit quality Bank closely follows up payment problems, but far fewer customers than expected have problems Retail customers with interest-only mortgage, % Arrears retail market, MNOK* 12 12 1 529 9 9 1 348 222 6 6 151 3 3 1 111 1 117 1 089 0 0 183 des.19 des.20 des
Slide 47: Retail: Mortgage collateral
Retail: Mortgage collateral Share of LTV by exposure* Share of lending according to LTV* Retail mortgages Retail mortgages 95.5 % 51.4 % 33.5 % 12.5 % 2.6 % 3.8 % 0.4 % 0.2 % < 60% 60 - 80 % 80 - 90 % > 90% Under 70% LTV 70-85% LTV 85-100% LTV Over 100% LTV * Including loans transferred to SpareBank
Slide 48: Corporate: Use of credit facilities and arrears
Corporate: Use of credit facilities and arrears Use of corporate credit facilities* Corp. arrears below 90 days (NOK mill.)** 1 062 193 44% 41% 42% 40% 687 34% 623 32% 604 159 543 108 165 142 869 515 528 400 438 2018 2018 2019 2020 2021 2021 2022 2023 4Q22 1Q23 2Q23 3Q23 4Q23 Use of operating credit
Slide 49: 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 market exposure. Construction; 2
Slide 50: 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; Share of lending according to type* Hotel, Normal; 12% 0.8 % tourism; 7% Residential; 1% Industry; 8% Best; 40% Office; 34% Central; 47% Storage; 22% Ret
Slide 51: CRE: Solid collateral
CRE: Solid collateral Loan portfolio is well positioned for higher yields in the commercial real estate market Share of LTV by exposure Share of lending according to LTV Commercial real * Commercial real estate* 95.8 % 66 % 25 % 5% 3% 3.9 % 1% 0.3 % < 70% 70% - 85% > 85% < 30% 30% - 50% 50% - 70% 70
Slide 52: 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 %* 45% 5 617 29%
Slide 53: Stable low LTVs in new mortgage approvals
Stable low LTVs in new mortgage approvals Share of new mortgage approvals and average LTV per period and county Oslo Akershus Former Hedmark Former Oppland Other 53
Slide 54: 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 39.8 % 22.8 % 23.3 % 20.5 % 29.0 % 14.8 % 18.5 % 10.6 % 8.0 % 6.8 % 5.9 % < 1 MNOK 1 - 2,5 MNOK 2,5-5 MNOK 5 - 10 MNOK > 10 MNOK * Including loans transferred to the covere
Slide 55: Capital structure and allocation of 2023 profit
Capital structure and allocation of 2023 profit In line with dividend policy, for owners and society (through primary capital) ILLUSTRATION Profit after controlling Gifts and interest donations NOK 2 149 million 70.0 % 30.0 % Foundation Owners Primary capital NOK 471 million 52.1% Dividends Dividend
Slide 56: SPOL
SPOL Metrics for the equity capital certificate 31.12.2023 31.12.2022 • SPOL return: Market price (NOK) 132.60 121.20 • Return 4Q235 -0.6 % • Return y/y5 15.9 % Market capitalisation (NOK million ) 15 359 14 029 Book equity per ECC 1) 117.12 112.71 • Liquidity in 4Q23 compared to same period in 2022
Slide 57: Why invest in SpareBank 1 Østlandet (SPOL)?
Why invest in SpareBank 1 Østlandet (SPOL)? 57
Slide 58: 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 58
Slide 59: 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
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