Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q4 2022 Earnings Presentation
54 slides from Sparebank 1 Ostlandet's earnings presentation, 2023
Slide 1: Quarterly presentation Q4 2022
Quarterly presentation 2022 Q4
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: 2022: a year of strategic initiatives and growth
2022: a year of strategic initiatives and growth H1 H2 Our corporate and Our presence in Vestland retail customers are is strengthened with the doing well despite high Solid overall lending opening of a new branch inflation and rising growth of 9.8% in on Askøy interest rates the past 12 months in S
Slide 4: Finance group for South of Norway
Finance group for South of Norway Åsane Lending volume in NOK billion. Askøy Bergen Sotra Fana +4% 140 Nydalen Oslo Skøyen Ensjø 134 134 Husnes Stord +19% 41 Ølen 38 +67% 37 Tysvær 35 Haugesund Kopervik Åkrehamn +13% 27 24 Jørpeland 22 22 Randaberg Stavanger* 21 Sola Sandnes Gjesdal +54% Bryne 11 Va
Slide 5: Macro in Southern Norway
Macro in Southern Norway House price development Unemployment rate (SSB AKU) • Norwegian house prices have increased by 1,5% as at 31 December 2022 Dec-20 Dec-21 Dec-22 6.8 59% 39% 4.5 4.2 4.2 3.9 28% 3.3 20% 2.6 2.4 2.4 2.5 2.4 1.9 1.9 2.2 1.9 1% 2015 2022 Stavanger region Bergen Kristiansand Oslo
Slide 6: Increase in profit driven by growth and solid underlying operations
Increase in profit driven by growth and solid underlying operations Result 4. quarter 2022 Result 31 December 2022 12.6% 9.8% 17.4% 14.6% Return on equity after tax Return on equity after tax Pre-tax profit MNOK 4,211 12 months lending growth Retail market Corporate market 7.4% 14.3% CET 1 capital r
Slide 7: Key figures and financial targets
Key figures and financial targets Return on equity CET 1 capital ratio Cost to income ratio Dividend share 17.39% 17.42% 12.6% 12.6% > 16.85% > 12.0% 54.4% 49.7% 50.0% 40.2% 40.1% < 40.0% 2021 2022 Target 2021 2022 Target 2021 2022 Target 2021 2022 Estimate 7
Slide 8: Financial targets
Financial targets The long-term target for return on equity is raised > 13 % Return on equity Customer growth in southern Norway Growth in other income Joint effort in the SpareBank 1 Alliance Diversified portfolio > 16.85 % < 40 % ~ 50 % CET 1 Cost to income Dividend share Capital ratio 8
Slide 9: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio Cost to income ratio Earnings per share (NOK) 14.6% 42.6% 14.0% 17.90% 17.82% 41.9% 42.0% 17.60% 3.81 12.5% 17.39% 17.42% 12.0% 3.41 11.4% 3.16 3.03 39.2% 2.87 37.3% Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q
Slide 10: Key figures – yearly development
Key figures – yearly development Return on equity CET 1 capital ratio Cost to income ratio Earnings per share (NOK) 14.0% 18.30% 12.9 17.39% 17.42% 40.9% 12.1 12.1 16.96% 12.6% 12.6% 40.2% 40.1% 11.3% 14.70% 9.0 38.3% 6.4% 37.9% 5.9 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 20
Slide 11: Income statement
Income statement Group Income Statement (MNOK) 31.12.2022 31.12.2021 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Net interest income 4,516 4,001 1,286 1,115 1,101 1,014 1,007 Net commission and other income 1,770 1,717 453 421 466 430 455 Net income on financial investments 756 1,026 274 191 104 187 342
Slide 12: Change in profit 31.12.2021 - 31.12.2022
Change in profit 31.12.2021 - 31.12.2022 (MNOK) 53 515 187 4,211 -270 -111 3,838 31.12.2021 Net interest income Net commission Net income on Total operating Impairments on loans and 31.12.2022 and other income financial investments expenses financial commitments 12
Slide 13: Group
Group Lending volume Volume in NOK billion Deposit volume Volume in NOK billion Margins in customer- Lending margin 12 months growth % 12 months growth % Deposit margin segments Combined 22.5 % 21.4 % 9.8 % 9.4 % 16.8 % 14.6 % 16.5 % 7.6 % 10.8 % 1.98% 1.98% 2.03% 5.6 % 1.89% 8.8 % 5.1 % 6.9 % 7.6 %
Slide 14: Retail market
Retail market Lending volume* Volume in NOK billion 12 months growth % Deposit volume Volume in NOK billion Margins Lending margin Deposit margin 12 months growth % Combined 10.5 % 1.79% 9.6 % 8.9 % 9.0 % 1.52% 1.58% 1.44% 1.44% 8.2 % 7.3 % 7.5 % 7.4 % 1.42% 6.6 % 6.9 % 7.4 % 1.14% 5.9 % 5.8 % 6.1 %
Slide 15: Corporate market
Corporate market Volume in NOK billion Volume in NOK billion Lending volume 12 months growth % Deposit volume 12 months growth % Margins Lending margin Deposit margin Combined 14.8 % 46.6 % 14.3 %* 43.2 % 10.7 % 28.2 % 2.94% 21.1 % 26.7 % 2.72% 2.77% 2.66% 2.70% 2.62% 2.60% 2.37% 2.47% 6.4 % 9.2 % 5
Slide 16: SME and Agriculture
SME and Agriculture Lending volume Volume in NOK billion Deposit volume Volume in NOK billion Margins Lending margin 12 months growth % 12 months growth % Deposit margin Combined 26.1 %* 15.8 % 11.4 % 2.92% 2.99% 20.4 % 19.5 % 20.0 % 2.84% 2.83% 8.5 % 2.66% 2.67% 2.60% 15.4 % 5.0 % 2.27% 2.19% 2.25%
Slide 17: Loan portfolio as at 31 December 2022
Loan portfolio as at 31 December 2022 • Gross loans increased to NOK 253.0 billion Agriculture / forestry / aquaculture 3.9% 4.0% from NOK 230.3 billion 2.1% Supply and construction year over year 1.8% 2.3% Industry, Power-/water supply 2.2% • 12-month growth in Retail trade, hotels and restaurants
Slide 18: Lending to commercial real estate
Lending to commercial real estate 14.1% (NOK 39.7 billion) of total EAD* is related to commercial real estate • Commercial real estate for lease Real estate management and ‐ EAD NOK 30.2 billion, 10.8% of the bank’s total EAD housing cooperatives; MNOK ‐ The portfolio is characterised by lending to
Slide 19: Commercial real estate for lease
Commercial real estate for lease (Exposures larger than NOK 0.60 billion ~ 2/3 of total EAD) Loan portfolio distributed by region Loan portfolio distributed by size of loan 8.3 8.5 EAD NOK billion EAD NOK billion 5.5 5.3 6.3 3.0 2.5 1.1 Rogaland Vestland Oslo and Viken Agder < 250 mnok 250-500 mnok
Slide 20: 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 • Stable volume with LTV below 70%, • RWA on home mortgages reflects a solid portfolio with a moderate loan-to-value ratio and low potential loss. • 94.7% of the exposure is withi
Slide 21: Development in credits and applications for interest-only
Development in credits and applications for interest- only Corporate market – Drawn amount on credit facilities Avg. 2019 42,8 % Avg. 2022 37,6 % Avg. 2020 33,8 % Avg. 2021 32,3 % Retail market – Number of applications for interest-only Avg. 2020 (1.194) Avg. 2019 (739) Avg. 2022 (775) Avg. 2021 (66
Slide 22: Net commission and other income
Net commission and other income MNOK 31.12.2022 31.12.2021 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Payment facilities 324 245 93 88 73 70 70 Savings/placements 126 219 27 28 40 31 53 Insurance products 271 231 72 68 68 63 61 Commission income EiendomsMegler 1 383 439 83 92 120 88 96 74 Guarantee com
Slide 23: Change in net commission and other income
Change in net commission and other income 31.12.2021 - 31.12.2022 (MNOK) 148 74 54 1,770 -93 1,717 -56 Net commission and Provision and Savings/ Commission income Commission income Net commission and other income 31.12.2021 other income placements EiendomsMegler 1 ForretningsPartner other income 31.
Slide 24: Net income on financial investments
Net income on financial investments MNOK 31.12.2022 31.12.2021 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Dividends 70 30 26 9 16 19 21 Investment income, associates 453 676 211 85 82 74 223 Securities gains/losses -14 192 129 -61 -91 10 56 • of which capital change in shares and 156 296 125 5 -21 47 9
Slide 25: Subsidiaries
Subsidiaries Company MNOK 31.12.2022 31.12.2021 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 SR-Boligkreditt AS Operating profit before tax 900 839 -326 562 210 453 274 SpareBank 1 SR-Bank Operating profit before tax 17 35 2 1 11 3 4 Forretningspartner AS* Number of sales 6,233 7,367 1,271 1,485 1,972 1,
Slide 26: Ownership interests
Ownership interests Company MNOK 31.12.2022 31.12.2021 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 SpareBank 1 Gruppen AS Interest ownership (%) 19.5 19.5 19.5 19.5 19.5 19.5 19.5 Profitshare after tax 175 471 128 17 17 13 173 BN Bank ASA Interest ownership (%) 35.0 35.0 35.0 35.0 35.0 35.0 35.0 Profits
Slide 27: Broad product range in the SpareBank 1 alliance
Broad product range in the SpareBank 1 alliance Ownership interests Profitshare after tax from ownership interests MARKETS 676 667 FORSIKRING KREDITT 453 FACTORING FORVALTNING 2020 2021 2022 27
Slide 28: Operating expenses
Operating expenses MNOK 31.12.2022 31.12.2021 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Total personnel expenses 1,788 1,722 477 429 438 444 484 IT expenses 395 381 102 99 96 97 99 Marketing 87 81 22 18 25 21 27 Administrative expenses 101 65 30 25 27 18 20 Operating expenses from real estate 54 37 18
Slide 29: Changes in operating expenses 31.12.2021 - 31.12.2022
Changes in operating expenses 31.12.2021 - 31.12.2022 (MNOK) 1.2% 2,825 34 3.1% 1.7% -43 46 84 -1.6% -10 -0.4% 2,714 Operating expenses ForretningsPartner SR-Forvaltning* EiendomsMegler 1 Personnel Other expenses Operating expenses 31.12.2021 expenses 31.12.2022 *SR-Forvaltning AS was acquired by Sp
Slide 30: Impairments on loans and financial commitments / Stage 3
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Impairment in % of average Stage 3 in % of gross loans and Impairments on loans and gross loans Changes in gross loans financial commitments financial commitments Impairments on loans and and financia
Slide 31: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) 31.12.2022 31.12.2021 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Corporate market -50 228 10 -13 -74 27 26 SME and Agriculture 59 3 35 27 8 -11 -21 Retail market -4 -39 -9 -8 14
Slide 32: Impairments per quarter
Impairments per quarter SR-Bank’s net impairments on loans and financial liabilities are reduced with 831 NOK 187 million from 31 December 2021 to 31 December 2022 Following a thorough assessment of the current macro situation, SR-Bank has taken sound steps to ensure resilience at a volatile time: 5
Slide 33: Funding
Funding • NSFR* 130% • LCR** 176% • NOK 19.7 billion net refinancing need over the next 12 months • Deposit to loan ratio 58.5% • MREL requirement 35.2%, MREL-subordination requirement 26,2% Annual funding maturity 28 26 24 22 20 18 16 14 NOK Billion 12 10 8 6 4 2 0 2023 2024 2025 2026 2027 2028 202
Slide 34: Solid capital ratio
Solid capital ratio • The authorities’ minimum requirement for the CET 1 capital ROE ROE ROE ratio is 16.85% at the end of fourth quarter of 2022 6.4% 12.6% 12.6% CET 1 CET 1 • The group’s CET 1 capital ratio target is minimum 16.85% incl. 21.72% 16.85% 16.85% 1.25% in management buffer and maximum
Slide 35: Lending volume and financing sustainable activities
Lending volume and financing sustainable activities Goal: Finance and facilitate NOK 50 billion in Sustainable lending volume is 16.7% of total sustainable activities by the end of 2030 lending volume Goal: NOK 50 billion Sustainable loans* 31 % 42 bill 0 5 10 15 20 25 30 35 40 45 50 bill bill bill
Slide 36: Sustainability means better services for our customers
Sustainability means better services for our customers ESG risk-model for Maintenance First sustainability- Adaptations and corporate market – calendar linked loan paid out follow-up – The EAD>50 million in CM Transparency Act Funds with a focus Legal services on sustainability New ESG risk-model EU
Slide 37: NOK 179 million for our local communities in 2022
COMMUNITY DIVIDENDS NOK 179 million for our local communities in 2022 • The savings bank model ensures that the value created benefits local communities • The green transition is increasing the need for attractive, sustainable and adaptable regions • The proposed dividend for 2022 will give NOK 525
Slide 38: Outlook
Outlook • Business trending from growth to downturn • Higher prices and interest rates are impacting people and business • Positive outlook for the energy sector • 13 percent is SR-Bank’s new target for return on equity 38
Slide 39: Appendix
APPENDIX 1) Loan portfolio 2) Risk 3) SpareBank 1 SR-Bank 39
Slide 40: Reduced exposure to the offshore sector
Reduced exposure to the offshore sector Offshore • EAD NOK 5.8 billion, 2.0% of the bank’s total EAD* • Exposure primarily to industrial oriented shipping companies with integrated organization (Offshore service vessels, Rig and Seismic vessels) Offshore NOK billion 5.0% 4.7% Share of EAD 4.1% 3.5%
Slide 41: Lending to oil and offshore
Lending to oil and offshore 3.5% (NOK 9.7 billion) of total EAD* is related to oil operations • Oil services ‐ EAD NOK 2.8 billion, 1.0% of the bank's total EAD Oil and gas; MNOK 1,156 ‐ Funding of operating capital through current and fixed assets, as well as guarantees Oil services; MNOK 2,816 • E
Slide 42: Lending to shipping
Lending to shipping 2.5% (NOK 7.1 billion) of total EAD* is related to shipping • Product tank ‐ EAD NOK 1.0 billion, 0.4% of the bank's total EAD Product tank; MNOK 1,024 • Chemical tank Other shipping; MNOK 1,830 ‐ EAD NOK 1.7 billion, 0.6% of the bank's total EAD • Dry-bulk ‐ EAD NOK 1.9 billion,
Slide 43: Appendix
APPENDIX 1) Loan portfolio 2) Risk 3) SpareBank 1 SR-Bank 43
Slide 44: Profile of the loan portfolio
Profile of the 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- 65.4% 63.6% sized loans. Probability of Default (PD) % 67.2% 64.4% 30.1% 28.1
Slide 45: Risk profile – Lending in Retail, SME & Agriculture and Corporate
Risk profile – Lending in Retail, SME & Agriculture and Corporate Customers - Portfolio distributed by risk class* Retail SME & Agriculture Corporate 1.8% 1.5% 1.8% 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% 83.6% 84.4% 83.0% 42.7%
Slide 46: Appendix
APPENDIX 1) Loan portfolio 2) Risk 3) SpareBank 1 SR-Bank 46
Slide 47: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Business divisions Fully owned companies Partly owned companies Retail market 479 EiendomsMegler 1 SR-Boligkreditt BN Bank SpareBank 1 Leading real estate Covered Bond Funding Commercial Gruppen broker bank located in Holding company 35.0% 19.5% Corporate market Oslo and for
Slide 48: 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 49: Balance sheet
Balance sheet Balance sheet (MNOK) 31.12.2022 31.12.2021 Cash and balances with central banks 76 78 Balances with credit institutions 11,939 5,366 Loans to customers 251,272 228,578 Certificates and bonds 53,989 56,266 Financial derivatives 18,612 5,053 Shares, ownership stakes and other securities
Slide 50: Key figures
Key figures 31.12.2022 31.12.2021 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Return on equity after tax (%) 12.6 12.6 14.6 12.5 12.0 11.4 14.0 Net interest margin (%) 1.41 1.35 1.51 1.37 1.40 1.33 1.32 Impairments on loans in % of gross loans 0.00 0.09 0.06 0.01 -0.09 0.03 -0.04 Loans and financial com
Slide 51: SRBNK share
SRBNK share • International ownership Development in Price/Book Relative share price development is 22.8% per 140 1,5 4. quarter 2022 200 Index 100 = dec 31st 2021 130 1,4 180 120 1,3 • Total market value at 110 1,2 160 140 4. quarter 2022 is NOK 100 1,1 NOK p/B 90 1,0 120 30.9 billion 80 0,9 100 70
Slide 52: 20 largest shareholders as at 31 December 2022
20 largest shareholders as at 31 December 2022 Investor Number Stake • Ownership interests: Sparebankstiftelsen SR-Bank 72.976,815 29.3% • From Rogaland, Agder, Vestland, Folketrygdfondet 17,532,719 6.9% Oslo and Viken: 63.7% (65.7%) SpareBank 1-stiftinga Kvinnherad 6,226,583 2.4% • International: 2
Slide 53: SR-Bank as at 31 December 2022
SR-Bank as at 31 December 2022 • Number of shares SpareBank 1 SR-Bank share 2022 2021 2020 2019 2018 2017 issued 255.75 million • Trading volume in Q4 Share price 120.7 133.20 91.00 100.00 89.20 87.00 2022: 5.5% (5.0%) • On 1 June 2017, the SR- Stock value (MNOK) 30,869 34,066 23,273 25,575 22,813 2
Slide 54: 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