Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Debt Investor Presentation (March 2022)
44 slides from Sparebank 1 Ostlandet's debt investor presentation, March 2022
Slide 1: Company presentation
Company presentation March 2022 1
Slide 2: Introduction
01 Introduction Long-term financials and 02 macroeconomic backdrop Highlights from 4Q-21 Financial 03 Accounts 04 Asset quality and funding plans
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 21.3 %, leverage ratio 7.3 % • Low risk bank book with a 73.8 % 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: 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 6: 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 Key comments Key joint ventures Key associated companies • Total number of branches: 207 «SpareBank 1 Alliance» = 14 cooperating independent savings banks • Total number of
Slide 7: Long-term financials and macroeconomic backdrop
01 Introduction Long-term financials and 02 macroeconomic backdrop Highlights from 4Q-21 Financial 03 Accounts 04 Asset quality and funding plans
Slide 8: 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 1,750 Acquisition of 175,000 Bank 1 Oslo Akershus. 1,500 150,000 1,250 Nov 2018 125,000 No fiscal year 2
Slide 9: 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 % 0.0 % -0.5 % -1.0 % SpareBank 1 Østlandet Peers Source: Bank reports and SpareBank 1 Markets 4Q 2021. Peers: NONG, SRBANK, MING, MORG, SVEG 9 (*) Included loans transferred to cov
Slide 10: High and stable capitalisation
High and stable capitalisation Common Equity Tier 1 ratio and Leverage Ratio (Group) 17.8% 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% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 CET 1 ratio Leverage Ratio *Spar
Slide 11: Low unemployment, house price inflation has cooled
Low unemployment, house price inflation has cooled Feb-22 Norway Oslo Asker/Bærum Follo Romerike Inland y/y 6.3% 3.3% 5.7% 5.0% 4.9% 8.2% ytd 2.8% 1.8% 1.3% 3.5% 1.5% 3.6% 5 years 21.5% 20.4% 25.0% 21.5% 18.5% 26.8% Sources: Macrobond, NAV, Eiendom Norge, FINN and Eiendomsverdi AS.
Slide 12: Norges Bank has signalled several policy rate hikes ahead
Norges Bank has signalled several policy rate hikes ahead Oil Fund provides large fiscal buffer Sources: Macrobond, Norges Bank, NBIM and Norske Finansielle Referanser AS. 12
Slide 13: Highlights from 4Q-21 Financial Accounts
01 Introduction Long-term financials and 02 macroeconomic backdrop Highlights from 4Q-21 Financial 03 Accounts 04 Asset quality and funding plans
Slide 14: Strong quarter with a high return on equity
Strong quarter with a high return on equity Dividends paid for 2020, capital ratio remains high and well above requirements Return on equity (%) CET-1 capital ratio (actual and required), Group 17.8 % 18.0 % + 100 management buffer 16.8 % 16.8 % 17.2 % 15.8% 12.6% 14.3% 12.1% 9.5 % 8.0 % 11.3% 11.1%
Slide 15: Increased loan loss provisions
Increased loan loss provisions Primarily due to growth and migration Loan loss provisions (NOK million and % of gross loans) 200 0.20% 151 150 130 0.15% 0.14% 1 0.12% 100 0.10% 47 50 33 28 0.05% 24 0.04% -33 8 0.03% -18 11 -16 0.02% 0.02% 0.01% 0.00% 0.01% 0 0.00% -0.02% -0.01% -0.03% -50 -0.05% -10
Slide 16: Lower levels of non-performing loans
Lower levels of non-performing loans Reduced credit loss provision ratio in Stage 3 Exposure by stages, (% of gross loans) Loans in Stage 3 (NOK mill.) 800 742 30.0 % 724 703 95.0 % 15.0 % 700 26.6 % 660 92.2 % 92.1 % 92.2 % 25.0 % 91.3 % 90.9 % 13.0 % 600 90.0 % 11.0 % 488 20.0 % 500 18.3 % 8.3 % 8
Slide 17: Asset quality and funding plans
01 Introduction Long-term financials and 02 macroeconomic backdrop Highlights from 3Q-21 Financial 03 Accounts 04 Asset quality and funding plans
Slide 18: Cyclically stable loan portfolio, limited exposures to sectors hit by pandemic
Cyclically stable loan portfolio, limited exposures to sectors hit by pandemic Lending to customers per sector (% and NOK million) Private customers 44.1 %/76,600 Retail market 73.8 %/128,152 SB1 Boligkreditt 29.7 %/51,552 Real estate (incl. SB1 Næringskreditt) 11.8 %/20,552 Primary industries 4.4 %
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 45.0% Corporate 50.0% market 38.6 % 45.0% 40.0% 40.0% 35.0% 32.8 % 35.0% 30.0% 30.0% 26.8 % 25.0% 25.0% 22.4 % 20.7 % 20.0% 20.0% 15.9 % 15.0% 11.9 % 15.0% 9.4 % 8.9 % 10.0% 10.0% 6.9 % 5.0
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 4Q-21: LTV by exposure** 96.7 % City of Oslo Other areas 7.9 % (8 % quota) 8.0 % (10 % quota) Bank uses the flexibility quo
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 1,000 900 800 Loans from Covered banks 700 bonds 1% 25% 600 SP NOK 7% 500 EUR million 400 SP EUR 300 9% SP SEK 200 0.2% Deposits 100 SNP NOK 45% Equity 2.7% - 9% AT1 & T2 2022 2023 2024 2025 2026 2027 2028 2029 20
Slide 23: SpareBank 1 Østlandet’s sustainability overview
SpareBank 1 Østlandet’s sustainability overview Green Asset Ratio: Introducing eligibility Assets: 19 % In scope ESG ratings reporting 81 % Out of scope Sustainability Reporting Green Bond Framework External Sustainability Initiatives Sustainable Edge: ESG risk Climate risk assessment implementation
Slide 24: Sustainability Ratings
Sustainability Ratings • A ESG 100 – Oslo Stock Exchange • #1 among savings banks • A- CDP – Carbon disclosure project • 1 of 9 Norwegian companies MSCI • AA Sustainalytics • 12.3 ESG Risk Rating (“Low Risk”) • #3 Overall Fair Finance Guide • #1 Among Norwegian listed banks For more information on o
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: Green Bond Framework - Highlights
Green Bond Framework - Highlights • Follows best market practice and in line with • Pre-issuance impact reporting calculated by the ICMA Green Bond Principles (GBP) specialist consultant Multiconsult • Prepared by the Green Bond Committee, • Cicero second party opinion: Medium Green including repres
Slide 27: Eligible Asset Allocation
Eligible Asset Allocation Eligible Assets • NOK 18,018 million • 15.3 % of Gross Lending to Customers NOK 18,018 million NOK 18,018 million Clean Transportation 6% Green eligible assets transferred to SB1 4% Renewable Energy Boligkreditt Forestry 5% • NOK 9,644 million • 18.7 % of loans transferred
Slide 28: 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 21.1 %, Leverage ratio 7.3 % SpareBank 1 Østlandet • Low risk bank book with a 74.0 % retail share • Diversified income stream • Long history of solid
Slide 29: 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 30: APPENDIX Financials/ECC
2021 APPENDIX Financials/ECC
Slide 31: Strong quarter with strong growth
Strong quarter with strong growth Financial accounts 4Q 2021 (same quarter last year in brackets) Good results • Profit after tax in 4Q-21 of NOK 505 million (NOK 466 million) High return on equity • ROE in 4Q-21 of 11.1 % (11.3 %) High capitalization • CET 1 ratio 18.0 % (17.8%) • Lending growth 2.
Slide 32: Income statement
Income statement Group 4Q- 2021 4Q- 2020 2021 2020 Net interest income 573 549 2,202 2,177 Net commission income 355 349 1,389 1,215 Other income 59 57 233 226 Dividends 0 29 21 41 Net profit from ownership interest 126 63 405 394 Net income from financial assets/liabilities -14 55 174 109 Total ope
Slide 33: Higher net interest income, due to volume growth
Higher net interest income, due to volume growth Commission fees from covered bond companies strongly affected by higher money market rates Net 1600 interest income incl. commissions from covered bond companies (MNOK and %) 1.60% 1400 1.48% 1.47% 1.50% 1.46% 1.44% 1200 1.41% 1.40% 1000 Commission fe
Slide 34: Very strong growth in lending
Very strong growth in lending Increasing through the year and into 2022, both for retail and corporate (SME) market Lending growth (12 months, %) Lending growth (12 months, %) Last national* Households: 5.0% 12.1 % Non-fin corp.: 4.9% 11.1 % 7.7 % 10.9 % 10.3 % 9.9 % 7.0 % 9.3 % 8.6 % 8.0 % 9.9 % 7.
Slide 35: Healthy growth in deposits
Healthy growth in deposits High corporate deposit growth partly mirrors growth in corporate lending Deposits (NOK billion) Deposit growth 12 months (%)* 92.6 91.3 92.2 85.6 87.5 5.8 % -1.4 % 1.0 % 15.5 % 2.2 % 14.1 % 13.8 % 13.1 % 12.1 % 12.1 % 41.0 40.3 40.9 11.7 % 11.5 %11.0 % 11.8 % 36.9 38.4 10.
Slide 36: Increased loan loss provisions
Increased loan loss provisions Primarily due to growth and migration Loan loss provisions (NOK million) Loan loss provisions (NOK million) 28 30 0.03% 3 1 1 20 0.02% 0.02% 11 11 24 10 19 2 0.01% 0.01% 96 28 2 11 1 8 1 5 24 0 0.00% 0.00% 11 12 17 8 -20 -7 -14 -4 -10 -14 -5 -10 -18 -19 -17 -0.01% -90
Slide 37: SPOL
SPOL Metrics and performance YTD 2021 2020 • SPOL return: Market price (NOK) 145.60 97.80 • Return 4Q-215 + 14.8 % Market capitalisation (NOK million ) 16,865 11,328 • Return y/y5 + 54.6 % Book equity per ECC 1) 106.31 98.76 • Higher liquidity in 4Q-21 than in same period in 2020. Earnings per ECC,
Slide 38: Record-high existing home sales in the bank’s market area
Record-high existing home sales in the bank’s market area First half of 2021 was particularly strong. Seasonal fall in 4Q. Bottle necks during start of 2022. Capital region*, number of existing homes sold Inland region, number of existing homes sold 5000 5000 800 800 4000 4000 600 600 3000 3000 400
Slide 39: Strong production growth, expected growth in business investments
Strong production growth, expected growth in business investments Strong improvement in East. Lower production growth in Inland, but high expected investment growth Regional network: Production* Regional network: Business investments** 5 10 4 40 4 8 3 30 3 6 2 20 2 4 1 2 1 10 0 0 0 0 -1 -2 -1 -10 -2
Slide 40: Optimistic expectations among businesses in the market area
Optimistic expectations among businesses in the market area Improvement for investments and employment, challenging profitability, due to cost concerns Business expectations index* Business expectations survey, Eastern Norway* 40 60 20 50 0 40 -20 30 2017 2018 2019 Q2 2020 Q4 2020 Q2 2021 Q4 2021 Ea
Slide 41: 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 70% 69% 69% 67% 67% 66% 66% 65% 65% 65% 66% 64% 63% 63% 64% 63% 62% 62% 62% 61% 62% 61%61% 61% 61% 6
Slide 42: 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 43: Less needs for SNP leads to more SP
Less needs for SNP leads to more SP Funding plans going forward 7,000 6,000 1,871 5,000 1,923 2,043 4,000 1,862 1,622 3,000 3,343 2,843 2,000 2,252 2,353 2,254 1,000 900 1,000 1,050 1,100 750 - 2022 2023 2024 2025 2026 SNP EUR senior NOK senior, AT1 and T2 43
Slide 44: 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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