Sparebank 1 Smn · OSL:MING
Sparebank 1 Smn — Sparebank 1 Smn Prim Cap — Q2 2024 Earnings Presentation
40 slides from Sparebank 1 Smn's earnings presentation, Aug 7, 2024
Slide 1: Second quarter 2024
Second quarter 2024 August 8th , 2024 Photo: Trondheim
Slide 2: Q2 2024 Profitable and solid
Q2 2024 Profitable and solid • Return on equity 15.4% in Q2 and 15.6% first half 2024 Strong net interest income, increased commission income and solid results from ownership interests. Stable cost development and moderate loan losses • Strong results across the group Satisfactory profitability in a
Slide 3: SpareBank 1 SMN is well equipped to handle volatile markets
SpareBank 1 SMN is well equipped to handle volatile markets • Robust and diversified lending book • High share of mortgages • Relatively high share of government employees in the region • Conservative loan loss provisions • Strong liquidity and good access to funding • Diversified deposit portfolio
Slide 4: Market capitalisation largest savings banks
Market capitalisation largest savings banks Implicit market value 2022 - 30.06.2024 (NOKbn) 36 SpareBank 1 SR-Bank 34 Sparebanken Vest Market value as at 30.06.2024 SpareBank 1 SMN 32 SpareBank 1 SR-Bank 34.5 NOKbn Sparebanken Vest 33.8 NOKbn 30 SpareBank 1 SMN 32.5 NOKbn SpareBank 1 Østlandet 22.5
Slide 5: Collaboration in the SB1-Alliance and associated companies
Collaboration in the SB1-Alliance and associated companies SpareBank 1 has leading digital solutions Broad and profitable product range Associated companies that succeed and the online bank has high customer against international competition satisfaction Share of net commission and other income Q124
Slide 6: Norway’s most complete finance centre
Norway’s most complete finance centre Local presence, digital solutions and regional knowledge Market share per business area* 30.06.22 30.06.23 30.06.24 Share of Share of newly Share of house Share of mortgages established sales businesses businesses +2.1% 37 38 +2.7% 36 +0.7% 31 31 29 27 28 26 +4.
Slide 7: Strong results across the group
Strong results across the group Personal market Corporate market Profit before tax (NOKm) Profit before tax (NOKm) Real Estate agency Regnskapshuset SMN Retail Banking SB1 Finans Midt-Norge Corporate Banking 626 623 12 8 584 54 574 35 524 519 43 488 66 76 31 480 20 465 45 3 11 416 43 606 493 499 531
Slide 8: Historical AI co-operation
Historical AI co-operation • SMN and NTNU have entered collaboration to strenghten the University’s work with AI, where SMN will be a partner in the AI-lab • 40 NOKm of the community dividend will go to AI research over the next five years • The collaboration will create value for Mid-Norway, increa
Slide 9: Group strategy ‘One SMN’ stands firm
Group strategy ‘One SMN’ stands firm Increase digitalisation and Head up development of Integrate sustainability Exploit the power in our Create One SMN use of insights Norway’s savings banks into the business ownership model 9
Slide 10: Financial Information
Financial Information Second quarter 2024 Trond Søraas, CFO Photo: Trondheim
Slide 11: Q2 2024 First half 2024 key figures
Q2 2024 First half 2024 15.4 % Lending growth Retail banking 1.5 % 1.6 % 15.6 % Return on Equity Corporate banking 1.6 % Egenkapitalavkastning 1,015 NOKm Deposit growth Retail banking 3.9 % 5.4 % 2,098 NOKm Profit after tax Corporate banking 6.3 % Profit after tax Operating margin subsidiaries 18.5
Slide 12: Financial targets
Financial targets Profitable Solid Efficient Responsible 16.3 % < 40 % CET1 ratio Cost/income in parent bank ex. finance Net zero 13 % < 85 % Climate footprint by 2050 ROE ~ 50 % Payout ratio Cost/income subsidiaries 12
Slide 13: High value creation over time
High value creation over time 15.6 16 15.1 42 15 14.4 40 14 13.7 13.5 38 13 12.2 12.3 36 12 11.3 11.5 33 34 10.7 31 11 10.0 30 32 30 10 28 9 26 26 8 24 7 6 20 20 22 20 5 17 17 18 4 16 3 13 14 2 12 1 10 12 10 0 8 -1 6 -2 4 -3 2 -4 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q2 24 Return on eq
Slide 14: Growth and margins in Retail Banking - quarterly
Growth and margins in Retail Banking - quarterly Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M m m 14
Slide 15: Growth and margins in Corporate Banking - quarterly
Growth and margins in Corporate Banking - quarterly Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M m m * Lending margin for Q4 23 is adjusted for previously unrecognised interest due to redemption of an exposure previously acquired at a discount 15
Slide 16: Results
Results Change Change from NOK mill Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 from Q1 24 Q2 23 Net interest income 1,310 1,336 1,345 1,226 1,110 -26 199 Commission income and other income 698 572 498 484 561 126 138 Operating Income 2,008 1,908 1,844 1,710 1,671 100 337 Total operating expenses 818 782 866 741
Slide 17: Income
Income Net interest income and other income (NOKm) Commission income NOK mill Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 C ha nge f ro m Q 1 2 4 C ha nge f ro m Q 2 2 3 Payment transmission income 91 77 101 79 77 15 14 Credit cards 17 18 14 16 15 -1 2 Commissions savings and asset mgmt 12 11 11 10 12 1 0 Commiss
Slide 18: Costs
Costs Total operating expenses per quarter (NOKm) Costs per category • Staff costs flat from previous quarter in the group. Reduction in the bank and higher in subsidiaries due to high activity levels • Consolidation of Fleks Green Fleet 01 AS leads to increase in other operating expenses • First qu
Slide 19: Broad product range and diversified income platform
Broad product range and diversified income platform Ownership interests Profit after tax (NOKm) 19
Slide 20: Losses
Losses Loan losses (NOKm) Distribution of losses Q2 (NOKm) 20
Slide 21: Solidity
Solidity CET 1 Leverage ratio T ’ q m c m c ET -capital. The bank is subject to a provisional add-on of 0.7 per cent to its Pillar 2 requirement. Until the application for adjustment of IRB models has been processed the CET1 requirement is 16.95% 21
Slide 22: SpareBank 1 SMN
SpareBank 1 MING Focus on long-term profitability 1 efficient operations with synergies in the group, solidly capitalized and shareholder-friendly dividend policy 2 Leading finance centre in Mid-Norway sustainable growth in an attractive region, diversified customer portfolio and income platform Str
Slide 23: Disclaimer
Disclaimer This presentation contains certain forward-looking statements relating to the business, financial performance and results of SpareBank 1 SMN and/or the industry in which it operates. Forward- looking statements concern future circumstances and results and other statements that are not his
Slide 24: Appendix
Bank Eiendom Regnskap SpareBank 4d SMN Appendix
Slide 25: Macro in Mid-Norway
Macro in Mid-Norway Unemployment Housing market dynamics Wholly unemployed as a percentage of the labor force Norway Mid-Norway Møre & Romsdal Development in housing prices Number of bankruptcies in Trøndelag, Møre & Romsdal Norway Trondheim 148 139 Mid-Norway ex. Trondheim 138 134 Møre & Romsdal 12
Slide 26: Profitable and solid
Profitable and solid Return on equity CET1 ratio Result per ECC Loan losses in per cent of total lending 26
Slide 27: Growth and margins in Retail Banking - Yearly
Growth and margins in Retail Banking - Yearly Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M 27
Slide 28: Growth and margins in Corporate Banking - Yearly
Growth and margins in Corporate Banking - Yearly Lending volume (NOKbn) Deposit volume Margins vs NIBOR3M 28
Slide 29: Diversified deposit portfolio
Diversified deposit portfolio Deposits by sector (NOKbn) Deposits covered by the deposit LCR guarantee scheme (NOKbn) as at 30.06.24 (per cent) c c Public deposits are not covered by the guarantee scheme, but are mostly LCR: Liquidity Coverage Ratio bound by contractual obligations 29
Slide 30: Well diversified lending portfolio dominated by mortgages
Well diversified lending portfolio dominated by mortgages Loans per sector as at 30 june 2024 and change last 12 months (NOKbn) c mm c c c m c T c m c c c q c 30
Slide 31: Commercial property, construction, building
Commercial property, construction, building Share of commercial real estate exposure Rental properties make up 71 % of the banks CRE exposure, in the corporate lending book* mainly to retail trade, industry/storage and offices Distribution of Distribution of area property per Q224 per 2023 E m *Gros
Slide 32: Robust mortgage portfolio
Robust mortgage portfolio Loan-to-value ratio in the mortgage portfolio Granted interest-only periods Share of mortgages by LTV Number of loans granted interest-only periods in the Retail Banking portfolio T 32
Slide 33: Problem loans
Problem loans I Lending to customers in stage 3 = + % of gross lending 1.08% tee 1.02% ae 0.97% 096% 0.99% 0.98% Torte sees eee es eee ees “7S L 088% re 0.82% tree 0.78% 2291 2,289 2,229 2,139 2044 2,065 2,085 1964 tess Q222 Q3 22 422 Q123 223 Q3 23 Q4 23 Q124 224 Bank SpareBank 4) Eienclom 33 sMN R
Slide 34: Subsidiaries
Subsidiaries Change Change NOK mill, SMN's share in parentheses Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 from Q1 24 from Q2 23 EiendomsMegler 1 Midt-Norge (92.4%) 43 20 -7 -1 31 24 13 SpareBank 1 Regnskapshuset SMN (93.3%) 54 35 8 11 45 18 9 SpareBank 1 Finans Midt-Norge (56.5%) 76 66 12 3 43 10 34 SpareBank 1
Slide 35: Product companies
Product companies Change Change NOK mill, SMN's share in parentheses Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 from Q1 24 from Q2 23 SpareBank 1 Gruppen (19.5%) 1 40 -51 -13 -5 -39 6 SpareBank 1 Boligkreditt (23.7%) 35 33 30 5 29 2 6 SpareBank 1 Næringskreditt (14.8%) 3 4 1 4 3 -1 1 BN Bank (35.0%) 73 84 73 64
Slide 36: Return on financial investments
Return on financial investments Change from Change from NOK mill Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 0 Q1 24 Q2 23 Net gain/(loss) on stocks 4 42 472 17 -7 0 -38 11 Net gain/(loss) on financial instruments -17 -11 -41 12 -46 0 -6 30 Net gain/(loss) on forex 11 22 27 20 38 0 -11 -26 Net return on financial
Slide 37: Equity certificate, key figures
Equity certificate, key figures Key figures Q2 24 2023 2022 2021 2020 ECC ratio 66.8 % 66.8 % 64.0 % 64.0 % 64.0 % Total issued ECCs (mill) 144.19 144.20 129.29 129.39 129.39 ECC price 151.12 141.80 127.40 149.00 97.60 Market value (NOKm) 21,790 20,448 16,471 19,279 12,629 Booked equity capital per
Slide 38: Balance sheet
Balance sheet NOKbn 30.6.24 30.6.23 Cash and receivables from central banks 1.5 0.6 Deposits with and loans to credit institutions 12.0 20.4 Net loans to and receivables from customers 172.5 165.8 Fixed-income CDs and bonds 36.2 38.1 Shares, units and other equity interests 1.1 1.1 Investment in rel
Slide 39: Maturity structure
Maturity structure NOKbn 251 2024 2025 2026 2027 2028 6.6 15 1.0 0.9 09 — oo _ -_ = oo Q3 24 Q424 Q125 Q225 Q3 25 Q425 Q126 Q226 39 SpareBank SMN oO Bank Eiendom Regnskap
Slide 40: Development in CET1 capital and capital adequacy
Development in CET1 capital and capital adequacy CET1 ratio in per cent 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q2 2024 CET1 8.254 9.374 10.679 12.192 13.223 13.820 14.727 15.830 17.041 17.790 19.776 21.589 21.951 ROE 11
Sparebank 1 Smn Prim Cap — Q2 2024 Earnings Presentation on 6ix