Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q2 2021 Earnings Presentation
43 slides from Sparebank 1 Ostlandet's earnings presentation, 2021
Slide 1: 2021 Company Presentation
2021 COMPANY PRESENTATION
Slide 2: Highlights in 2Q 2021
Highlights in 2Q 2021 Summary • A strong quarter with broad based income growth. • High lending growth, especially in the Corporate Division. • Solid profit contributions from the real estate brokers and SpareBank 1 Finans Østlandet. • Good contributions from ownership interests and financial items.
Slide 3: Strong financial performance in 1H 2021
Strong financial performance in 1H 2021 Long term financial targets and actual performance as of 2Q 2021 Profitability Return on equity at least 11 % 11.3% Dividends 50 % pay-out ratio1 50 % Solidity Regulatory requirement + 100 bps 2 17.8 % Costs Max 2 % cost increase in parent bank 3 +2.8 % 1. The
Slide 4: High business confidence in Eastern Norway
High business confidence in Eastern Norway Business confidence Eastern Norway 2Q 2021 • Strong business confidence and all indicators on Business Confidence higher levels than pre Covid. 31 29 31 29 29 28 17 30 • The companies have high expectations to economic 23 25 21 16 24 growth also relative to
Slide 5: Consumer confidence back to normal
Consumer confidence back to normal Consumer confidence in Eastern Norway 2Q 2021 • Consumer confidence approaching pre Covid levels. Consumer Confidence Eastern Norway ‒ Higher for the Capital Area than for the 15 16 12 9 Innlandet region. 13 13 10 7 6 4 4 0 • More muted future expectations among 20
Slide 6: Continued customer growth
Continued customer growth Numbers of customers in parent bank (in 1,000x) 390 40 • Continued strong retail 38 customer growth with 4,300 370 366 new customers in 2Q 2021. 361 36 354 356 350 348 34 • Net customer growth in the 343 339 341 Bank YoY was 5.3 %. 336 32 333 328 330 331 • Retail customers:
Slide 7: NOK 10 million to voluntary work and free finance app for schools
NOK 10 million to voluntary work and free finance app for schools SpareBank 1 Østlandet during the pandemic Record high response to crowdfunding for voluntary organizations Economics app for schools • The COVID-19 pandemic hit volunteering hard – activity levels and • The app is free and available i
Slide 8: ESG - Ensuring long term relevance and viability
ESG - Ensuring long term relevance and viability Class leading sustainability work ESG ratings Sustainability Reporting Green Bond Framework External Sustainability Initiatives ESG risk implementation at loan origination Internal Sustainability • A- Mission Carbon ESG 100 – Oslo Stock Exchange asses
Slide 9: 2021 Financial Accounts
2021 FINANCIAL ACCOUNTS
Slide 10: A strong quarter
A strong quarter Financial accounts 2Q 2021 (2Q 2020) • Profit after tax in 2Q-21 NOK 516 million (NOK 438 million). Strong profit after tax • Profit after YTD NOK 955 million (NOK 704 million). • ROE in 2Q-21 12.1 % (11.3 %). High ROE • ROE YTD 11.3 % (9.1 %). • CET 1 ratio 17.8 % (17.1%). Solid ca
Slide 11: Income statement 2Q 2021 (2Q 2020) and 2020
Income statement 2Q 2021 (2Q 2020) and 2020 Group 2Q- 2021 2Q- 2020 1H 2021 1H 2020 2020 Net interest income 542 498 1,077 1,093 2,177 Net commission income 354 245 670 523 1,215 Other income 62 56 124 120 226 Dividends 9 0 20 12 41 Net profit from ownership interest 111 128 169 243 394 Net income f
Slide 12: Key financials - quarterly (1)
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from 637 covered bond companies (NOK million) 597 680 652 643 655 549 554 540 535 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 Impairments on loans and guarantees (NOK million) Total op
Slide 13: Key financials - quarterly (2)
Key financials - quarterly (2) Return on equity CET 1 ratio 12.1% 17.1 % 17.3 % 17.8 % 17.8 % 17.8 % 11.3% 11.3% 10.9% 10.6% 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 Lending growth last 12 months Deposit growth last 12 months 9.4 % 9.3 % 11.2 % 10.5 % 9.1 % 9.5 % 7.0 % 8.3 % 5.7 %
Slide 14: Profit contributions from subsidiaries
Profit contributions from subsidiaries Profit contribution 1st half year 2021 (2020) NOK 95 million (NOK 58 million) NOK 2 million (NOK 2 million) SpareBank 1 Finans Østlandet AS SpareBank 1 Østlandet VIT AS - group • Profit after tax NOK 95 NOK (NOK 58 million). • Profit after tax NOK 2 million (NO
Slide 15: Profits in joint ventures
Profits in joint ventures Profits 1st half year 2021 (2020) NOK 1,549 million* NOK (21 million) NOK 6 million (NOK 11 million) SpareBank 1 Gruppen AS • Profit after tax NOK 1,549 million (NOK 21 million). SpareBank 1 Kreditt AS • The controlling interest’s share of profit NOK 1,102 million • Profit
Slide 16: Very good second quarter for SpareBank 1 Gruppen
Very good second quarter for SpareBank 1 Gruppen SpareBank 1 Gruppen SpareBank 1 Gruppen – Pre-tax profit (NOK million) SpareBank 1 Forsikring – Pre-tax profit (NOK million) 262 230 171 116 -26 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 1,317 Fremtind Forsikring – Pre-tax profit (NOK million) 974 1,024 764 683 1
Slide 17: Net interest income
Net interest income Net interest income incl. commissions from covered bond companies 1600 1.60% 1400 1.48% 1.44% 1.46% 1.44% 1.50% • Increased net interest income 1200 1.38% 1.40% and commissions from covered 1000 bond companies in 2Q-21 from 800 652 680 643 655 1.30% previous quarter and compared
Slide 18: High lending growth in 2Q-21
High lending growth in 2Q-21 Lending volume (Group, NOK billion) and lending margins (Parent Bank, percent) 158 161 161 163 167 • Total lending in the Group, including mortgages 49 49 transferred to covered bond companies, increased by NOK 46 47 48 4.7 billion in 2Q-21 equivalent to 2.9 %. 112 114 1
Slide 19: 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 39.2 %/ 65,644 1.8 % Viken 29.4 %/ 49,192 6.7 % Oslo 27.8 %/ 46,550 11.3 % Other 3.5 %/ 5,
Slide 20: Broad based retail lending growth
Broad based retail lending growth 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 35.6 %/ 44,167 4.3 % Viken 33.6 %/ 41,642 8.6 % Oslo 27.2 %/ 33,669 7.2 % Other areas 3.6 %/ 4,423 Trøn
Slide 21: More uneven lending growth within CM due to some larger redemptions
More uneven lending growth within CM due to some larger redemptions 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 49.5 %/ 21,476 -3.0 % Oslo 29.7 %/ 12,882 19.1 % Viken 17.4 %/
Slide 22: Low risk and diverse lending portfolio
Low risk and diverse lending portfolio Lending to customers per sector (% and NOK million) Private customers 45.2 %/75,696 Retail lending SB1 Boligkreditt 29.2 %/48,163 74.1 %/123,901 Real estate (incl. SB1 Næringskreditt) 10.9 %/19,291 Primary industries 4.3 %/7,086 Commercial services/Public secto
Slide 23: Solid deposit growth in 2Q 2021
Solid deposit growth in 2Q 2021 Deposit volume and margins (Group – NOK billion and percent) Deposits from customers 93 • Deposit growth of 5.8 % (7.0 %) in 2Q-21. 85 85 86 87 • Deposit growth last 12 months was 8.3 % (10.5 %). ‒ Retail deposit growth 5.6 %. 0.0 % 0.1 % 2.2 % 5.8 % ‒ Corporate depos
Slide 24: Solid contribution from financial items
Solid contribution from financial items Net income from financial assets and liabilities (NOK millions) • Net income from financial assets and liabilities was NOK 181 million in 2Q-21 (NOK 314 million). 314 ‒ Net profit from ownership interests amounted to NOK 111 million (NOK 128 million). ‒ Net in
Slide 25: Strong trend in commission fees and other income
Strong trend in commission fees and other income Net commissions and other income (NOK million) • Commission fees and other income were NOK 302 302 million in 2Q-21 (NOK 259 million) 276 275 11 271 259 14 14 15 37 • Commission fees from real estate brokerage were 14 35 37 33 NOK 106 million in 2Q-21
Slide 26: Somewhat higher cost growth than targeted
Somewhat higher cost growth than targeted Operating costs per quarter (NOK million) 504 600 485 492 504 485 492 447 465 447 465 500 46 36 42 34 33 30 154 28 33 31 400 137 143 153 32 120 140 134 136 300 132 129 44 54 49 53 200 41 20 20 19 17 19 100 327 328 350 341 339 197 207 211 216 211 0 -100 2Q-20
Slide 27: Low loan losses in 2Q and net reversals 1H 2021
Low loan losses in 2Q and net reversals 1H 2021 Impairment losses on loans and guarantees (NOK million) • Credit losses in 2Q-21 were NOK 11 Impairment losses on loans and guarantees (NOK million) 130 million (NOK 130 million). • Parent bank NOK 8 million • SB1 Finans Østlandet NOK 2 million 47 • Mo
Slide 28: Stable levels of non-performing loans
Stable levels of non-performing loans Specification of impairments and net exposure (NOK million) Exposure in stages, percentage of gross loans • The proportion of loans in Stage 3 at same level as 2Q-21. 95.0 % 93.6 % 93.0 % 91.3 % 92.2 % 92.1 % 15.0 % ‒ The increase from the beginning of the year
Slide 29: Stable CET 1
Stable CET 1 Common Equity Tier 1 ratio (Group) • The Group’s long-term CET 1-target is the regulatory requirement with an added management buffer of 100 bps. 17.8 % 17.8 % 16.8 % 16.8 % 17.2 % ‒ The regulatory requirement, incl. the 1.8 %-point Pilar 2 requirement, is currently 14.2 %. 1.0 % • The
Slide 30: Solid performance and improved economic expectations going forward
Solid performance and improved economic expectations going forward Summary 2Q 2021 • Strong performance quarterly performance with increased and diverse income growth. • Cost growth marginally above target. Measures ongoing. • Record high PMI in the manufacturing industry and improved future expecta
Slide 31: Appendix
2021 APPENDIX Economics/Financials/ECC
Slide 32: Good prospects for continued strong recovery in 2H 2021
Good prospects for continued strong recovery in 2H 2021 Key macroeconomic variables Low levels of reported COVID-19 cases in Norway Expected significant rebound in activity in 2H 2021 120 10% 1,200 Reported cases 140,830 150,000 6.6% Hospitalised 25 1,000 Deaths 804 5% 800 Vaccinated (full) 45.7 % 1
Slide 33: A more balanced housing market
A more balanced housing market Housing price development by market area • Flattening housing prices in 2Q 2021, but growth Housing prices - indexed 170.00 170.00 above long term trend. 160.00 160.00 150.00 150.00 • Low supply has been a price driver but expected 140.00 140.00 130.00 130.00 interest
Slide 34: Stable low LTV in new mortgage approvals
Stable low LTV in new mortgage approvals Percentage of new mortgage approvals and average LTV per period and county Percentage of new mortgage appovals (volume) 78% 73% 72% 69% 70% 69% 69% 70% 66% 67% 67% 66% 66% 65% 66% 64% 62% 63% 63% 64% 61% 60% 60% 62% 62% 61% 62% 61% 61% 61% 60% 60% 60% 59% 60%
Slide 35: 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 % 33.8 % 27.8 % 22.4 % 21.1 % 15.7 % 9.4 % 9.1 % 10.1 % 7.3 % 5.6 % * Included loans transferred to covered bond companies 35
Slide 36: 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 2Q-21: 95.1 % City of Oslo Other areas 7.5 % (8 % quota) 7.1 % (10 % quota) The mortgage regulation* constrains housing mor
Slide 37: Profit contributions from subsidiaries
Profit contributions from subsidiaries Profit contribution 2Q-2021 (2020) NOK 47 million (NOK 28 million) NOK 2 million (NOK 2 million) SpareBank 1 Finans Østlandet AS SpareBank 1 Østlandet VIT AS - group • Profit after tax NOK 47 NOK (NOK 28 million). • Profit after tax NOK 2 million (NOK 2 million
Slide 38: Profits in joint ventures
Profits in joint ventures Profit contribution 2Q-2021 (2020) NOK 1,042 million* NOK (801 million) NOK 4 million (NOK 9 million) SpareBank 1 Gruppen AS • Profit after tax NOK 1,042 million (NOK 801 million). SpareBank 1 Kreditt AS • The controlling interest’s share of profit NOK 758 million • Profit
Slide 39: Headcount
Headcount Headcount (FTE) • Reduced Group headcount of 2 FTEs in last 12 months. 1,139 1,136 1,142 1,143 1,137 • Reduction of 19 FTEs in subsidiaries from 2Q-20. 456 443 440 442 438 • The staffing in the parent bank has increased by 17 FTEs. 682 694 702 701 700 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 Parent b
Slide 40: SPOL
SPOL Metrics and performance 30.06.2021 • SPOL return: • Return 2Q-215 + 6.8 % Market price (NOK) 119.00 • Return YoY5 + 38.0 % Market capitalisation (NOK million ) 13,784 • Marginally lower liquidity in 2Q-21 than Book equity per ECC 1) 102.22 in corresponding quarter last year. Earnings per ECC, N
Slide 41: Dividend for owners and customers
Dividend for owners and customers The Board of Directors’ proposed allocation of profit (italic: paid out in April) • NOK 1.75 per equity certificate and MNOK 6 gifts was paid in April, based on the MoF’s recommendation • The Board of Directors got authorization to pay an additional NOK 3.04 per equ
Slide 42: 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 42
Slide 43: 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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