Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Debt Investor Presentation (August 2022)
41 slides from Sparebank 1 Ostlandet's debt investor presentation, August 2022
Slide 1: Company presentation
Company presentation August 2022 1
Slide 2: Introduction
01 Introduction Long-term financials and 02 macroeconomic backdrop 03 Asset quality and funding plans Highlights from 2Q 2022 04 Financial Accounts
Slide 3: The bank in brief
The bank in brief • Norway’s fourth largest savings bank • One of the best capitalised regional savings bank in Norway - CET1 18.0 %, capital adequacy ratio of 21.0 %, leverage ratio 7.1 % • Low risk bank book with a 72.7 % retail share • Diversified income stream • Long history of solid returns and
Slide 4: Where we are
Where we are SpareBank 1 Østlandet’s home market: Inland and Capital regions • Population 1.7 million • The fastest growing region of Norway for both population and job creation • Low unemployment, high economic activity, cyclically stable • Market leader in the Inland region, challenger in the Capi
Slide 5: Portfolio overview: Cyclically stable loan portfolio
Portfolio overview: Cyclically stable loan portfolio Lending to customers per sector (% and NOK million) Private customers 43.8 %/80.220 Retail market 72.7 %/133,324 SB1 Boligkreditt 29.0 %/53.104 Real estate (incl. SB1 Næringskreditt) 12.6 %/23.118 Commercial services/Public sector 4.1 %/7.500 Prim
Slide 6: Diversified main activities
Diversified main activities Several sources of income - parent bank, subsidiaries and other ownership interests Operational divisions Selected key subsidiaries Selected other ownership interests EiendomsMegler 1 Totens Sparebank Retail Innlandet AS ~25% 100% Savings bank Segment Real estate agent KO
Slide 7: Part of the SpareBank 1 Alliance
Part of the SpareBank 1 Alliance Provides operational and financial economies of scale as well as diversified product offering Other SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 SR SpareBank 1 SMN SNN Østlandet Sør-Øst Banks Retail and corporate banking in Norway – second largest fina
Slide 8: Introduction
01 Introduction Long-term financials and 02 macroeconomic backdrop 03 Asset quality and funding plans Highlights from 1Q 2022 04 Financial Accounts
Slide 9: The Bank has a history of growth and increasing profits
The Bank has a history of growth and increasing profits Profit after tax and total assets*(NOK million) 2021 RoE above target, higher NII and strong 2.250 volume growth 225.000 2.000 200.000 2016 Acquisition of 1.750 175.000 Bank 1 Oslo Akershus. 1.500 150.000 1.250 Nov 2018 125.000 2010 Private Fin
Slide 10: Long history of low loan losses
Long history of low loan losses Impairments on loans as a percentage of gross loans* 3,0 % 2,5 % 2,0 % 1,5 % 1,0 % 0,5 % -0,03% 0,0 % -0,5 % -1,0 % Peers SpareBank 1 Østlandet Source: Bank reports and SpareBank 1 Markets 2Q 2022. Peers: NONG, SRBANK, MING, MORG, SVEG 10 (*) Included loans transferre
Slide 11: High and stable capitalisation
High and stable capitalisation Common Equity Tier 1 ratio and Leverage Ratio (Group) 17,8% 18,0% 18,0% 16,9% 17,2% 16,9% 16,8% 16,8% 17,2% 16,2% 15,1% 14,8% 14,8% 14,1% 9,2% 8,2% 7,4% 7,1% 7,5% 7,2% 7,2% 7,3% 7,1% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022YTD CET 1 ratio L
Slide 12: Low unemployment, moderate house price inflation
Low unemployment, moderate house price inflation Lack of labour, not jobs. House price inflation partly explained by supply side effects, esp. in Oslo July-22 Norway Oslo Asker/Bærum Follo Romerike Inland y/y 5.8% 7.2% 3.5% 2.8% 3.1% 5.3% ytd 4.3% 6.7% 2.7% 2.7% 2.9% 4.6% 5 years 25.0% 32.5% 28.5% 2
Slide 13: Home sales so far in 2022 negatively affected by regulatory changes
Home sales so far in 2022 negatively affected by regulatory changes
Slide 14: Price and cost pressures
Price and cost pressures Reflects a strong economy, with high wage growth but also capacity pressures Wage growth, % change y/y 5,50 4,5 4,50 3,5 3,50 2,5 2,50 1,5 1,50 0,5 0,50 -0,5 -0,50 -1,50 -1,5 -2,50 -2,5 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Nominal wages Real wages
Slide 15: Norges Bank signals higher policy rates
Norges Bank signals higher policy rates
Slide 16: Introduction
01 Introduction Long-term financials and 02 macroeconomic backdrop 03 Asset quality and funding plans Highlights from 2Q 2022 04 Financial Accounts
Slide 17: Portfolio overview: Cyclically stable loan portfolio
Portfolio overview: Cyclically stable loan portfolio Lending to customers per sector (% and NOK million) Private customers 43.8 %/80.220 Retail market 72.7 %/133,324 SB1 Boligkreditt 29.0 %/53.104 Real estate (incl. SB1 Næringskreditt) 12.6 %/23.118 Commercial services/Public sector 4.1 %/7.500 Prim
Slide 18: 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) 73% 72% Average LTV at the time of approval 69% 69% 70% 68% 67% 67% 66% 66% 66% 66% 65% 65% 65% 63% 63% 64% 64% 63% 63% 62% 62% 62% 62% 62% 61%
Slide 19: 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 50,0% market 38,9 % 45,0% 40,0% 31,4 % 35,0% 30,0% 25,0 % 25,0% 22,8 % 21,4 % 20,0% 16,8 % 15,0% 10,0 % 10,8 % 9,9 % 10,0% 6,5 % 6,3 % 5,0% 0,0% *Inclusive of loans transferred to
Slide 20: 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 2Q22: LTV by Exposure** 120,00% City of Oslo Other areas 7.8 % (8 % quota) 8.2 % (10 % quota) 100,00% 97,1 % Bank uses the
Slide 21: Aa3 Moody's Senior Unsecured rating with stable outlook
Aa3 Moody’s Senior Unsecured rating with stable outlook Based on Rating Action as of 5 March 2020 and 13 July 2021 Main takeaways ‒ “Consistently stronger financial performance compared to peers” ‒ “Particularly resilient asset quality and strong capital metrics throughout the credit cycle” ‒ “Despi
Slide 22: The bank's funding ambitions
The bank’s funding ambitions Today’s funding mix and thoughts on funding going forward 1.200 1.000 Loans from Covered banks bonds 1% 800 25 % SP NOK 6% 600 EUR million SP EUR 400 11 % Deposits SP SEK 200 44 % 0,2% Equity 9% SNP NOK 2,6% - 2022 2023 2024 2025 2026 2027 2028 2029 2030 >2030 AT1 & T2 1
Slide 23: SpareBank 1 Østlandet's sustainability overview
SpareBank 1 Østlandet’s sustainability overview ESG ratings Sustainability Reporting Green Bond Framework External Sustainability Initiatives Sustainable Edge: ESG risk Climate risk assessment implementation at loan for companies Global origination Sustainability Strategy Internal Sustainability Mis
Slide 24: Sustainability Ratings
Sustainability Ratings • 8.5 ESG Risk Rating (“Negligible Risk”) Sustainalytics • Best score among Norwegian banks • Subindustry (3|365 – second percentile) • A ESG 100 – Oslo Stock Exchange • #1 among savings banks • A- CDP – Carbon disclosure project • 1 of 9 Norwegian companies MSCI • AA • #3 Ove
Slide 25: Sustainable Products and ESG Advisory Service
Sustainable Products and ESG Advisory Service Green mortgage Do you own, or are considering buying a home with EPC level A or B? You get lower interest rates with a green mortgage. Green car loan Green agricultural loan How to have the right focus Are you buying an electrical car? We give you Instal
Slide 26: The Path to Net Zero
The Path to Net Zero Energy and Climate in our business operations Specific ESG and climate targets 1.000 691,3 750 tCO2e Retail Division 500 • By 2050, 40 % of residential buildings built before 2012 (TEK 10) has been upgraded and has 250 improved their energy efficiency by 30 %. • By 2050, 80 % of
Slide 27: Green Bond Framework - Highlights
Green Bond Framework - Highlights • Follows best market practice and in line with the ICMA • Pre-issuance impact reporting calculated by specialist Green Bond Principles (GBP) consultant Multiconsult • Prepared by the Green Bond Committee, including • Cicero second party opinion: Medium Green repres
Slide 28: Eligible Green Asset Allocation
Eligible Green Asset Allocation • Senior Bond Eligible Assets • NOK 18,206 million • 14.1 % of Gross Lending to Customers NOK 28,054 million NOK 28,054 million • Covered bond eligible green assets 4% transferred to SB1 Boligkreditt Clean Transportation 2% • NOK 9,848 million Renewable Energy 3% Fore
Slide 29: Allocation Report 2Q2022
Allocation Report 2Q2022 Included eligible green loans transferred to SpareBank 1 Boligkreditt 1The EU Taxonomy definition of energy performance of at least 10 % lower than NZEB is currently not defined in Norwegian building standards. Residential buildings built after 2021 are therefore not include
Slide 30: Subordination cap also in Norway – more Senior Preferred
Subordination cap also in Norway – more Senior Preferred MREL and Subordination Requirement 16,8 % 9,5 % 36,1 % 3,6 % 29,1 % 19,3 % 16,0 % Loss Absorbing Recapitalisation Total MREL Pilar 1*2 Pilar 2*2 Combined buffer Total amount amount requirement recuirement Subordination requirement MREL Require
Slide 31: Introduction
01 Introduction Long-term financials and 02 macroeconomic backdrop 03 Asset quality and funding plans Highlights from 2Q 2022 04 Financial Accounts
Slide 32: Profit after taxes and return on equity
Profit after taxes and return on equity Profit after tax (NOK mill.) Return on equity (%) 561 536 516 505 12,6% 12,1% 12,2% 11,1% 350 7,7% 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22
Slide 33: Key financials - quarterly
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from covered bond companies (NOK million) 706 637 728 542 573 655 681 681 686 480 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Net commission income excl. covered bond Operating expenses (NOK mil
Slide 34: Key financials - quarterly
Key financials - quarterly (2) Impairments on loans and guarantees (NOK CET-1 ratio million) 28 11 17,8 % 18,0 % 18,0 % 18,0 % 18,0 % 4 -16 -59 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Lending growth last 12 months, inc. Deposit growth last 12 months transferred loans 8,3 % 8,1 % 9,4 % 9,6
Slide 35: Still solid lending growth
Still solid lending growth Very high corporate market growth, but also good in retail market Gross lending (NOK billion) Lending growth (12 months, %) Last national* Households: 4.5% 3,1 % 183,3 Non-fin corp.: 6.6% 2,4 % 177,8 170,4 2,0 % 173,7 167,3 1,8 % 15,3 % 1Q22; 14,6 % 50,0 45,5 47,5 43,4 44,
Slide 36: Good growth in deposits
Good growth in deposits Deposit growth of 8.1 % y/y, highest for corporate customers Deposits (NOK billion) Deposit growth 12 months (%)* 6,5 % 100,0 92,6 -1,4 % 1,0 % 92,2 1,9 % 93,9 91,3 2Q21; 11,8 % 44,6 1Q22; 8,4 % 41,0 40,3 40,9 41,6 9,0 % 7,3 % 1Q22; 6,6 % 51,6 51,0 51,3 52,3 55,4 2Q21; 5,6 %
Slide 37: Net reversal of loan loss provisions
Net reversal of loan loss provisions Lower model-generated loss provisions due to changed scenario weighting and adjusted key assumptions Loan loss provisions (NOK million) 151 130 47 33 24 28 8 1 11 4 -18 -16 -33 -59 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
Slide 38: 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.) 800 17,5 % 736 699 17,3 % 90 % 15 % 700 17,1 % 657 87,0 % 87,2 % 623 17,0 % 88 % 86,8 % 86,0 % 86,1 % 13 % 587 600 86 % 11 % 16,5 % 84 % 500 16,3 % 8,3 % 8,4 % 8,0 % 09
Slide 39: Summary
Summary • Norway’s fourth largest savings bank • One of the best capitalised regional savings bank in Norway - CET1 18.0 %, Capital adequacy ratio of 21.0 %, Leverage ratio 7.1 % SpareBank 1 Østlandet • Low risk bank book with a 72.7 % retail share • Diversified income stream • Long history of solid
Slide 40: Contact details
Bjørn-Erik R. Orskaug Investor Relations +47 922 39 185 bjorn-erik.orskaug@sb1ostlandet.no Cathrine Mordal Head of Treasury +47 480 02 537 Contact details cathrine.mordal@sb1ostlandet.no Karoline Bakka Hjertø Head of Sustainability +47 992 27 303 karoline.hjerto@sb1ostlandet.no Runar Hauge Portfolio
Slide 41: 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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