Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q2 2023 Earnings Presentation
49 slides from Sparebank 1 Ostlandet's earnings presentation, 2023
Slide 1: 2023 Company Presentation
2023 COMPANY PRESENTATION
Slide 2: A challenging macroeconomic background
A challenging macroeconomic background Negative business expectations. Sustained low unemployment is important. Stable housing market Norges Bank’s regional indicators Source: Norges Bank’s Regional Network report, no. 2 2023 2
Slide 3: Another strong quarter, with high profitability
Another strong quarter, with high profitability Financial accounts 2Q 2023 (same period last year in brackets) 4
Slide 4: Financial targets and achievements per 2Q-23
Financial targets and achievements per 2Q-23 Long-term goals versus actual results Profitability Return on equity at least 12 % 12.9 % Dividends 50 % pay-out ratio1 50 % Solidity Regulatory requirement + 100 bps2 17.9 % Costs Max 5 % cost increase in parent bank 9.2 % 1. Out of profits after taxes t
Slide 5: Strong development for core operations
Strong development for core operations But a sharp rise in money market rates slows the improvement in net interest income Net interest income, net commission income and operating expenses (NOK mill.) 693 730 1400 642 16% 540 583 1200 452 466 494 456 478 463 429 295 348 15% 1000 352 324 342 324 800
Slide 6: Healthy volume growth
Healthy volume growth Lending growth remains good. In 2Q23, 18.5 % of loans were green. Strong growth in deposits Gross lending (NOK billion) Deposits (NOK billion) 5.5 % 105.9 100.0 -1.1 % 1.6 % 100.4 2.0 % 194.1 98.9 -0.1 % 98.8 1.8 % 186.7 1.1 % 188.7 0.8 % 190.3 183.3 46.0 1.1 % 45.9 4.5 % 48.3
Slide 7: Our growth strategy implies increasing market shares over time
Our growth strategy implies increasing market shares over time A difficult macroeconomic background does not exclude interesting market opportunities Inland region Bank’s original home market Market leader Capital region Presence for over 125 years Growth opportunities 8
Slide 8: Physical presence with a heavy emphasis on customer advice
Physical presence with a heavy emphasis on customer advice Strong distribution in Norway’s most interesting market area Økern Portal – New branch opened in June 2023
Slide 9: Solid customer relations through difficult times
Solid customer relations through difficult times Strong basis for future growth Customer relations (TRIM), Eastern Norway (retail)* 91 90 90 88 87 75 76 68 69 68 65 67 65 61 59 58 57 58 55 52 51 DNB Danske Bank Nordea Sbanken SpareBank 1 Other savings banks Other banks 2015 2017 2019 2021 2023 Sourc
Slide 10: 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 support a solid lending portfolio. • We will contribute with good solutions for existing customers, also for those that face
Slide 11: Financial accounts
2023 FINANCIAL ACCOUNTS
Slide 12: Income statement
Income statement Group 2Q23 1Q23 2Q22 Y TD 2023 Y TD 2022 2022 Net interest income 852 857 634 1 710 1 219 2 693 Net commission income 363 315 367 678 697 1 375 Other income 49 50 60 99 126 213 Dividends 10 17 14 28 29 43 Net profit from ownership interest 22 59 20 82 36 186 Net income from financia
Slide 13: Net interest income
Net interest income Almost stable net interest income from the previous quarter due to rising money market rates Net interest income incl. commissions from covered bond companies (MNOK and %) 1300 2.04% 1.98% 2.00% 1.83% 1100 1.55% 1.60% 927 -1.2 % 917 900 835 70 64 1.50% 756 46 718 71 Commission fe
Slide 14: Commission income
Commission income Higher income from payment services. Other commission income steady at high levels Commision income and other income, excluding covered bond companies (NOK million) 342 348 324 324 16 16 18 18 295 37 35 35 38 18 34 49 Commission income from credit cards 31 28 40 36 76 Other operati
Slide 15: Profits in subsidiaries
Profits in subsidiaries Profit after taxes (NOK million) 2Q23 2Q22 Sparebank 1 Finans Østlandet AS - Group 32.6 31.6 EiendomsMegler 1 Innlandet AS 1.2 2.7 EiendomsMegler 1 Oslo Akershus AS - Group 4.2 6.8 SpareBank 1 ForretningsPartner Østlandet AS - Group * 2.8 - 5.9 Subsidiaries 40.7 35.3 * SpareB
Slide 16: Net income from financial assets and liabilities
Net income from financial assets and liabilities Result in SB1 Group weakens contribution from associates and JVs Net income from financial assets and liabilities, NOK million Selected valuation changes: 172 • Fixed rate lending incl. 14 hedges: 117 102 Dividends from shares and NOK 29 mill. 10 othe
Slide 17: Operating expenses
Operating expenses Increased costs, due to underlying inflation, wage growth and more FTEs in the parent bank Operating expenses by item (NOK million) Operating expenses, by unit (NOK mill.) 600 529 534 520 517 534 496 520 517 529 500 496 65 65 74 66 85 15 22 19 135 140 26 25 27 400 119 15 18 158 17
Slide 18: Loan loss provisions
Loan loss provisions Increased model-based and individual provisions. Low net write-offs 2Q22 3Q22 4Q22 1Q23 2Q23 Parent bank -61 16 58 42 77 SB1FØ 2 3 6 7 9 Group -59 19 63 49 86 Losses as a percentage of total lending -0.2 % 0.1 % 0.2 % 0.2 % 0.3 % Loan loss provisions (NOK million) 2Q22 3Q22 4Q22
Slide 19: CET-1 ratio
CET-1 ratio Well above regulatory requirements 16,8 % 17.8 % 18.0 % 17.7 % 17.9 % 16.8 % 17.2 % 1.0 % 9.5 % 1.8 % 4.5 % 2018 2019 2020 2021 2022 2Q23 Requirement per 2Q23 Common equity Tier 1 capital ratio Pilar 1 Pilar 2 Buffer requirements Management buffer 20
Slide 20: Why invest in SpareBank 1 Østlandet (SPOL)?
Why invest in SpareBank 1 Østlandet (SPOL)? 21
Slide 21: 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 22: Appendix Financials/ECC
2023 APPENDIX Financials/ECC
Slide 23: 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 12.2% 441 9.4% 7.7% 350 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 25
Slide 24: Key financials - quarterly
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from covered 751 747 760 bond companies (NOK million) 575 927 917 756 835 480 718 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Net commission income excl. covered bond companies Operating expense
Slide 25: Key financials - quarterly
Key financials - quarterly (2) Impairments on loans and guarantees (NOK million) CET-1 ratio 86 18.0 % 18.2 % 17.9 % 17.7 % 17.7 % 63 49 19 -59 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Lending growth last 12 months, inc. transferred loans Deposit growth last 12 months 8.1 % 8.4 % 9.6 % 9.6
Slide 26: Loan volumes and growth
Loan volumes and growth Gross lending (NOK billion) Lending growth (12 months, %) Last national* Households: 3.7% 0.8 % 190.3 2.0 % 194.1 Non-fin corp.: 5.2% 1.8 % 186.7 1.1 % 188.7 183.3 2Q22; 15.3 % 2.3 % 52.9 1.1 % 53.5 4.5 % 55.9 50.0 3.4 % 51.7 11.7 % 1Q23; 12.5 % 2Q22; 7.6 % 1Q23; 5.0 % 1.2 %
Slide 27: Lending margins
Lending margins Lending margins, parent bank (%)* 2.49% 2.33% 2.39% 2.37% 2.22% 2.09% 2.00% 1.88% 1.76% 1.21% 1.03% 1.09% 0.88% 0.50% 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 2Q23 Lending margin RM, incl. covered bond compan
Slide 28: Deposit volume and growth
Deposit volume and growth Deposits (NOK billion) Deposit growth (12 months, %) 5.5 % 105.9 100.0 98.9 98.8 100.4 -1.1 % -0.1 % 1.6 % 46.4 44.6 44.4 2Q22; 9.0 % 44.5 -1.0 % 44.1 4.4 % -0.3 % 0.8 % 1Q23; 7.1 % 7.5 % 1Q23; 6.6 % 59.5 2Q22; 7.3 % 55.4 -1.8 % 54.4 0.7 % 54.7 2.3 % 56.0 6.3 % 3.9 % 2Q22 3
Slide 29: Deposit margins
Deposit margins Deposit margins, parent bank (%)* 1.95% 1.87% 1.65% 1.52% 0.81% 1.20% 0.73% 1.13% 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 2Q23 Deposit margin Retail customers Deposit marg
Slide 30: Profits in joint ventures
Profits in joint ventures Profit after taxes (NOK million) 2Q23 Ownership 2Q22 Ownership SpareBank 1 Gruppen AS - Group* - 21.4 12.40 % 177.1 12.40 % SpareBank 1 Forvaltning AS 39.2 6.26 % 54.4 5.24 % SpareBank 1 Boligkreditt AS 108.4 22.42 % - 8.0 23.15 % SpareBank 1 Næringskreditt AS 15.6 15.66 %
Slide 31: 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 15 Dec-22 23 mar-23 4. mai-23 22. juni-23 Bank (0.25 %) (0.25 %) (0.25%) (0.50%) 11 11 12 Effective dates 30 30 31 Loans in subsidiaries new loans and 21 Dec-22 30 mar-23 15 May-23 10 Aug-23 depo
Slide 32: 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 occured early in 2Q23. Covered bond funding lags Nibor Net rate fixings per month, share of quarter, %** Securities, NOK bill.* 66% 59.0 % 4.5 52% 46.8 % 41% 34% 7% 4.0 28 30 3.5 26 0% -5.8 % 3.0 jan.23
Slide 33: Headcount
Headcount Increased staffing in parent bank Full-time equivalents in parent bank and subsidiaries 1 130 1 120 1 121 1 142 1 147 115 120 114 SpareBank 1 ForretningsPartner 162 123 55 59 Østlandet * 58 57 54 84 82 82 83 84 SpareBank 1 Finans Østlandet AS 138 143 138 132 140 EiendomsMegler 1 Innlandet
Slide 34: 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 % 1 600 18.0 % 86.3 % 1 470 85.8 % 85.7 % 85.2 % 1 400 15.8 % 16.0 % 15.5 % 15.2 % 13.7 % 14.0 % 1 200 9.0 % 9.0 % 9.0 % 8.5 % 12.0 % 8.0 % 1 000 11.3 % 812 10.0 %
Slide 35: Diverse loan portfolio
Diverse loan portfolio Lending to customers per sector (% and NOK million) Private customers 39,2 %/76 021 Retail market 71.2 %/138 227 SB1 Boligkreditt 32,0 %/62 207 Real estate (incl. SB1 Næringskreditt) 14,0 %/27 222 Primary industries 4,0 %/7 743 Commercial services/Public sector 3,4 %/6 524 Bui
Slide 36: Green lending
Green lending Actual lending and targets for green ratio (KPI path) Green loans per 30 June 2023, MNOK Share of green lending, % Residential mortages Commercial real estate 20.0% 27 357 Residential mortgages 40.0% 19.1% 5 322 Commerical real estate 19.0% 36.5% 33.7 % 1 011 Reneweable energy 18.0% 32
Slide 37: 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 36,3 %/ 70 550 3.8 % Viken 30,2 %/ 58 591 8.9 % Oslo 29,0 %/ 56 270 5.2 % Other areas 4,5 %
Slide 38: 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 34,1 %/ 47 154 2.2 % Viken 35,3 %/ 48 839 6.1 % Oslo 26,5 %/ 36 624 1.9 % Other areas 4,1 %/ 5 611 8.2 % Trøn
Slide 39: 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 41,9 %/ 23 396 7.3 % Viken 17,5 %/ 9 752 25.4 % Oslo 35,2 %/ 19 646 11.9 % Øvrige 5,5 %/ 3 08
Slide 40: Highly collateralised mortgages, stable mortgage deferral applications
Highly collateralised mortgages, stable 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, % 95.9 % 12 12 10 10 8 8 6 6 4 4 2 2 3.4 % 0.4 % 0.3 % 0 0 Under
Slide 41: 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 Housing Construction; 2% market
Slide 42: 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* 0.3 % Hotel, Residential; Normal; 8% tourism; 8% 0.5 % Office; 34% Industry, Best; 38% storage; 27% Central; 53% Reta
Slide 43: 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 61.7 % 400 300 27.9 % 200 100 6.1 % 3.2 % 1.1 % 0 Jun-22 Aug-22 O
Slide 44: 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 %* 35% 22% 22%
Slide 45: 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 64.7 % 63.1 % 58.5 % 59.4 % 57.4 % Former Former Former Oslo Other Akershus Hedmark Oppland 32% 28% 27% 9.3
Slide 46: 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 % 29.7 % 23.4 % 24.1 % 20.5 % 18.3 % 13.0 % 10.3 % 8.7 % 6.1 % 6.6 % < 1 MNOK 1 - 2,5 MNOK 2,5-5 MNOK 5 - 10 MNOK > 10 MNOK * Including loans transferred to the covere
Slide 47: SPOL
SPOL Metrics for the equity capital certificate 31.06.2023 31.06.2022 • SPOL return: Market price (NOK) 130.00 117.20 • Return 2Q235 14.2 % • Return y/y5 17.6 % Market capitalisation (NOK million ) 15 058 13 575 Book equity per ECC 1) 112.23 106.42 • Liquidity in 2Q23 compared to same period in 2022
Slide 48: 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 54
Slide 49: 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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