Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — FY2020 Earnings Presentation
46 slides from Sparebank 1 Ostlandet's earnings presentation, 2021
Slide 1: 2020 Company Presentation
2020 COMPANY PRESENTATION
Slide 2: Highlights in 2020
Highlights in 2020 Summary • Strengthened market position and high customer growth. • High lending growth, but continued margin pressure. • Strong cost control and negative cost growth. • Strong growth in commission fees from real estate brokerage. • Solid profit contributions from ownership interes
Slide 3: Strong financial performance despite COVID-19
Strong financial performance despite COVID-19 Long term financial targets and actual performance as of 4Q-2020 Profitability Return on equity at least 11 % 10.1 % Dividends 50 % pay-out ratio1 50 % Solidity Regulatory requirement + 100 bps 2 17.8 % Costs Zero cost growth in parent bank3 -0.4 % 1. Pr
Slide 4: Norwegian economy with a faster rebound than expected
Norwegian economy with a faster rebound than expected Key macroeconomic variables Low levels of reported COVID-19 cases in Norway The Norwegian Central Bank expects faster rebound in activity in 2021 120 7.6% 10% 1000 80,000 Reported cases 65,547 115 800 5% Hospitalised 84 60,000 110 600 Deaths 592
Slide 5: A very strong housing market in 2020
A very strong housing market in 2020 Housing price development by market area • The year 2020 showed continued price growth and Housing prices - indexed record high sales of second-hand homes despite 160 160 coronavirus pandemic. 150 150 140 140 ‒ Spillover effects from the used homes market to 130
Slide 6: Customer activity normalising – reduced demand for instalment deferrals
Customer activity normalising – reduced demand for instalment deferrals COVID-19 – Customer activity • The level of instalment deferrals approaching pre-COVID levels Retail customers – strong decrease in application for instalment deferrals ‒ Retail : Total 7,744 (March – December) – 3,360 in March
Slide 7: Improved consumer and business confidence in Eastern Norway
Improved consumer and business confidence in Eastern Norway Business and consumer confidence KANTAR Business and consumer confidence Corporations 40 • Positive future expectations and rising trend in 30 29 29 28 business confidence. 20 16 13 13 ‒ Low fear for bankruptcies. 10 10 0 ‒ Lower expected n
Slide 8: Continued customer growth
Continued customer growth Numbers of customers in parent bank (in 1,000x) 370 363 365 40 360 357 38 354 348 352 • Solid customer growth despite 350 36 340 343 340 off-boarding of customers with 339 340 332 337 34 low account activity in 1Q-2020 332 330 327 329 327 32 and a year with the coronavirus
Slide 9: The agreement between the Bank and LO bears fruit
The agreement between the Bank and LO* bears fruit LOfavør mortgages • The agreement was signed 35 19 August 2019. 30 • Strong customer growth among members of LO*, 25 and a solid contribution to the Bank’s lending growth. 20 NOK bn 32.6 15 • Continued focus in cooperation with 10 LO*/LOfavør in 202
Slide 10: The Pandemic Year was demanding for all of us
The Pandemic Year was demanding for all of us Supporting customers and volunteers through a difficulties is an essential part of social responsibility • Despite lower physical attendance and fewer physical customer meetings, the Bank has been rapidly available in all distribution channels. • Through
Slide 11: New opportunity – positioning in bank and accounting
New opportunity – positioning in bank and accounting Bank + Regnskap • Innovation leads to increased competition for the External customer base and new players attack attractive parts accountant of the banks' value chain via financial systems. • The accountant is an important target group, they have
Slide 12: The SpareBank 1 alliance sponsors sports
The SpareBank 1 alliance sponsors sports SpareBank 1 and Norwegian Sports Confederation* in long-term partnership • The SpareBank 1 banks with their distribution, product offerings and community involvement are logical and Which sponsor is most often mentioned? significant partners for sports in Nor
Slide 13: Strengthened climate initiatives in 2020 and ambitions going forward
Strengthened climate initiatives in 2020 and ambitions going forward ESG – New initiatives and specific targets • The United Nations Environment Program Finance Initiative (UNEP FI) has been implemented and is followed up through specific targets within corporate and retail banking. • Strengthened d
Slide 14: High scores in national and international ESG ratings
High scores in national and international ESG ratings The Bank’s ESG efforts receive both domestic and international recognition One of 9 Norwegian companies on CDP’s A-List Best rated Norwegian savings bank on ESG reporting on Oslo Stock Echange The Governance Group The Bank’s ESG work is reflected
Slide 15: Stronger together
22 November 2020 – a special day for the Bank SpareBank 1 Østlandet’s 175 years anniversary (1845 – 2020) • Through 175 years 23 local and regional banks have merged to become «Stronger Together» and is today the fourth largest savings bank in Norway. • The anniversary was celebrated with a book abo
Slide 16: Financial Accounts
Lo i FINANCIAL ACCOUNTS
Slide 17: Strong performance despite unstable times
Strong performance despite unstable times Financial accounts 2020 (last year’s figures in brackets) • Profit after tax in 4Q-20 NOK 466 (NOK 291 million). Solid profits • Profit after tax YTD NOK 1,608 million (NOK 1,928 million). • ROE in 4Q-20 11.3 % (7.3 %). High profitability • ROE YTD 10.1 % (1
Slide 18: Income statement 4Q 2020 (4Q 2019) and 2020 (2019)
Income statement 4Q 2020 (4Q 2019) and 2020 (2019) Group 4Q-2020 4Q-2019 2020 2019 Net interest income 549 584 2,177 2,166 Net commission income 349 295 1,215 1,152 Other income 57 37 226 236 Dividends 29 0 41 19 Net profit from ownership interest 63 -1 394 519 Net income from financial assets/liabi
Slide 19: Key financials - quarterly (1)
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from covered bond companies (NOK million) 549 597 535 666 673 652 680 406 540 251 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 Impairments on loans and guarantees (NOK million) Total op
Slide 20: Key financials - quarterly (2)
Key financials - quarterly (2) Return on equity CET 1 ratio 11.3% 10.9% 11.3% 17.2 % 17.0 % 17.1 % 17.3 % 17.8 % 7.3% 6.9% 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 Lending growth last 12 months Deposit growth last 12 months 9.0 % 9.4 % 9.3 % 11.2 % 9.8 % 10.4 % 10.5 % 7.5 % 7.0 %
Slide 21: Profit contributions from subsidiaries
Profit contributions from subsidiaries Profit contribution 2020 (2019) NOK 126 million (NOK 118 million) NOK 0 million (NOK -7 million) SpareBank 1 Finans Østlandet AS SpareBank 1 Østlandet VIT AS - group • Profit after tax NOK 126 NOK (NOK 118 million). • Profit after tax NOK 0 million (NOK -7 mill
Slide 22: Profits in joint ventures
Profits in joint ventures Profits 2020 (2019) NOK 1,404 million* NOK (1,503 million) NOK 12 million (NOK 75 million) SpareBank 1 Gruppen AS • Profit after tax NOK 1,404 million (NOK 1,503 million). SpareBank 1 Kreditt AS • The controlling interest’s share of profit 995 million • Profit after tax NOK
Slide 23: A solid 4Q 2020 for SpareBank 1 Gruppen
A solid 4Q 2020 for SpareBank 1 Gruppen SpareBank 1 Gruppen SpareBank 1 Gruppen – Pre-tax profit (NOK million) SpareBank 1 Forsikring – Pre-tax profit (NOK million) 974 1.024 764 262 116 171 -140 -80 -942 -252 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 Fremtind Forsikring – Pre-tax
Slide 24: Increased net interest income
Increased net interest income Net interest income incl. commissions from covered bond companies 1600 1.80% 1.71% 1.72% 1400 1.70% • Increased net interest income in 4Q-20. 1200 1.60% 1.48% • The increase in net interest income was 1000 1.44% 1.50% 1.38% mainly due to higher deposit margins. 800 673
Slide 25: Stable lending
Stable lending Lending volume (Group, NOK billion) • Total lending in the Group, including mortgages transferred to 154 158 161 161 covered bond companies, increased by NOK 0.3 billion in 4Q-20. 151 Equivalent to a 0.2 % lending growth in the quarter. 44 45 46 47 48 107 109 112 114 113 • Lending gro
Slide 26: The Bank's lending growth is geographically diverse
The Bank’s lending growth is geographically diverse Lending to customers per geographic area and change last 12 months (% and NOK million) Lending to customers per county (share in %/volume) Change last 12 months Former Hedmark 34.5% / 55,478 3.9 % 26.6 % / Oslo 7.4 % 42,780 Former 25.0 % / Akershus
Slide 27: Low risk lending portfolio
Low risk lending portfolio Lending to customers per sector (% and NOK million) Private customers 45.5 %/73,331 Retail lending SB1 Boligkreditt 29.1 %/46.872 74.6 %/120,255 Real estate (incl. SB1 Næringskreditt) 10.8 %/17,365 Primary industries 4.6 %/7,367 Commercial services/Public sector 3.7 %/5,93
Slide 28: Stable deposits and increasing deposit margins
Stable deposits and increasing deposit margins Deposit volume and deposit growth (Group – NOK billion) Deposits from customers • Deposits growth of 0.1 % (1.8%) in 4Q-20. 80 85 85 86 ‒ After a significant increase in deposits in the second quarter, 78 the volume of deposits stabilized in the second
Slide 29: Solid contribution from financial items last three quarters of 2020
Solid contribution from financial items last three quarters of 2020 Net income from financial assets and liabilities (NOK millions) • Net income from financial assets and liabilities was NOK 545 million in 2020 (NOK 735 million). 314 • Net income from financial assets and liabilities was NOK 146 mil
Slide 30: Increased commission fees and other income from last year
Increased commission fees and other income from last year Net commissions and other income (NOK million) 276 275 • Commission fees and other income was NOK 1,441 million 264 259 in 2020 (NOK 1,388 million) 251 14 14 16 14 15 35 37 • Commission fees from real estate brokerage was NOK 78 35 33 37 mill
Slide 31: Lower operating costs at both group and parent bank level in 2020
Lower operating costs at both group and parent bank level in 2020 Operating costs per quarter (NOK million) 600 490 487 504 490 487 504 447 465 447 465 500 45 45 46 28 34 33 154 32 34 33 400 151 151 32 120 137 137 132 140 300 132 129 50 49 44 54 200 41 20 23 18 17 19 100 339 336 327 328 350 202 207
Slide 32: Significantly lower credit losses in 4Q-20
Significantly lower credit losses in 4Q-20 Impairments on loans and guarantees (NOK million) Impairments on loans and guarantees (NOK million) • Credit losses in 4Q-20 were NOK 1 million. 151 • Parent bank -18 MNOK 130 • SB1 Finans Østlandet 19 MNOK • Model based provisions were increased by NOK 11
Slide 33: Defaulted and doubtful commitments stable since last quarter
Defaulted and doubtful commitments stable since last quarter Specification of impairments and net exposure (NOK million) Exposure in stages, percentage of gross loans • The proportion of loans in Stage 3 are reduced as of 3Q-2020. 93.1 % 93.6 % 93.0 % ‒ The reduction is mainly due to established com
Slide 34: Strengthened CET 1 ratio
Strengthened CET 1 ratio Common Equity Tier 1 ratio (Group) • The Group’s long term CET 1-target is the regulatory requirement with an 17.8 % added management buffer of 100 bps. 16.9 % 16.8 % 16.8 % 17.2 % ‒ The regulatory requirement, incl. the 1.8 %-point Pilar 2 requirement, is currently 14.1 %.
Slide 35: Dividend for owners and customers
Dividend for owners and customers The Board of Directors’ proposed allocation of profit (italic: pay-out in April) • NOK 1.75 per equity certificate and MNOK 6 gifts to be paid in April, based on the MoF’s recommendation • The Board of Directors is seeking authorization to pay an additional NOK 3.04
Slide 36: Appendix
APPENDIX Financials/ECC
Slide 37: Diversified corporate lending growth
Diversified corporate lending growth Corporate lending growth YoY – sector (NOK million) 38 13 9 70 161 215 188 257 -192 -277 766 531 *Included SB1 Næringskreditt (SPACOM) 37
Slide 38: Continued stable and low LTV in new mortgage approvals
Continued stable and low LTV in new mortgage approvals Percentage of new mortgage approvals and average LTV per period and county Andel av innvilget Percentage volum of new mortgage approval (volume) 72% Gjennomsnittlig LTV på Average LTV at time of innvilgelsestidspunktet approval 69% 70% 68% 69% 6
Slide 39: Broad based retail lending growth
Broad based retail lending growth Lending to retail customers per geographic area and change last 12 months (% and NOK million) Lending to retail customers by county (share in %/volume) Change last 12 months Former Hedmark 32.0 %/38,532 5.4 % Former Akershus 29.1 %/34,982 10.9 % Oslo 27.1 %/32,543 9
Slide 40: The corporate lending growth is strongest in the outer Capital region
The corporate lending growth is strongest in the outer Capital region Lending to corporate customers per geographic area and change last 12 months (% and NOK million) Lending to corporate customers by county (share in %/volume) Change last 12 months Former 40.7 %/17,053 0.8 % Hedmark Oslo 25.0 %/10,
Slide 41: 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 lending Corporate lending 37.5 % 35.2 % 25.7 % 23.9 % 14.6 % 17.0 % 11.8 % 11.5 % 10.2 % 7.6 % 5.0 % * Included loans transferred to covered bond companies 41
Slide 42: The use of the flexibility quota is targeted at priority customers
The use of the flexibility quota is targeted at priority customers Exposure per LTV bucket in the residential mortgage portfolio Mortgages – Utilisation of flexibility quota in 4Q-20: 94.8 % City of Oslo Other areas 7.6 % (8 % quota) 7.1 % (10 % quota) The mortgage regulation* constrains housing mor
Slide 43: Headcount
Headcount Headcount (FTE) • Increased Group headcount of 22 FTEs in 2020. 1.127 1.148 1.139 1.136 1.149 • The increase in staffing in the parent bank in the last quarter is mainly due to 447 strengthening of customer units, and is due in 455 460 456 443 part to recruitment overhangs from previous pe
Slide 44: SPOL
SPOL Metrics and performance 31.12.2020 • SPOL return: • Return 4Q-205 + 11.5 % Market price (NOK) 97.80 • Return 20205 + 12.5 % Market capitalisation (NOK million ) 11,328 • Positive liquidity development in 2020. Book equity per ECC 1) 98.76 • Average daily transaction volume Earnings per ECC, NOK
Slide 45: 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 Runar Hauge Investor Relations +47 482 95 659 runar.hauge@sb1ostlandet.no 45
Slide 46: 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