Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q3 2021 Earnings Presentation
47 slides from Sparebank 1 Ostlandet's earnings presentation, 2021
Slide 1: Company presentation
SpareBank 1) @STLANDET NTATION
Slide 2: Highlights in Q3 2021
Highlights in Q3 2021 Summary • Another strong quarter with a high return on equity. • Decision made regarding payment of remaining owner and customer dividends for 2020. • All major income items contributed positively compared to last year: ‒ Higher NII due to volume growth. Higher deposit margins
Slide 3: Strong financial performance so far in 2021
Strong financial performance so far in 2021 Long term financial targets and actual performance as of Q3 2021 Profitability Return on equity at least 11 % 11.8 % Dividends 50 % pay-out ratio1 50 % Solidity Regulatory requirement + 100 bps 2 18.0 % Costs Max 2 % cost increase in parent bank 3 2.6 % 1.
Slide 4: Solid labour market improvements, but somewhat slower housing market
Solid labour market improvements, but somewhat slower housing market Signs of more normal economy. Largest fluctuations in Oslo, both for labour and housing markets Per sep/21 Norge Oslo Romerike Innlandet å/å 8,0% 7,2% 8,9% 7,1% HiÅ 5,0% 2,9% 5,8% 6,1% 5 år 22,7% 22,6% 23,5% 25,7% Sources: Macrobon
Slide 5: Strong production growth, higher business investments
Strong production growth, higher business investments Strong improvement in East. Lower production growth in Inland, but high investment growth Regional network: Production* Regional network: Investments* 3 30 3 30 2 20 2 20 1 10 1 10 0 0 0 0 -1 -10 -1 -10 -2 -20 -2 -20 -3 -30 -3 -30 -4 -40 -4 -40 2
Slide 6: Creating together: Customer dividends for 2020
Creating together: Customer dividends for 2020 Payment around 19 November. Up to NOK 231 mill.* * For retail and corporate customers with up to NOK 2 mill. in loans and deposits, respectively. 6
Slide 7: ESG: Holistic approach and encouraging feedback
ESG: Holistic approach and encouraging feedback A broad framework for ESG, providing external stakeholders with insight into the bank’s work with ESG ESG ratings Sustainability Reporting Green Bond Framework External Sustainability Initiatives ESG risk implementation at loan origination Internal Sus
Slide 8: ESG: Going forward we aim to support customers in their green transition
ESG: Going forward we aim to support customers in their green transition Green products and working together with our customers https://www.sparebank1.no/nb/ostlandet/bedrift/tips-og-rad/barekraftsveileder.html 8
Slide 9: Financial accounts
2021 FINANCIAL ACCOUNTS
Slide 10: Another strong quarter
Another strong quarter Financial accounts Q3 2021 (same quarter last year in brackets) Strong profit after tax • Profit after tax in Q3-21 NOK 561 million (NOK 438 million) High return on equity • ROE in Q3-21 of 12.6 % (10.9 %) Solid capitalization • CET 1 ratio 18.0 % (17.3%) • Lending growth 1.8
Slide 11: Higher net interest income
Higher net interest income Largely due to growth in volumes Net 1600 interest income incl. commissions from covered bond companies (MNOK and %) 1.60% 1400 1.48% 1.50% 1.46% 1.44% 1.44% 1200 1.41% Net interest income included 1.40% commission fees from covered bond 1000 companies (MNOK) Commission fe
Slide 12: Healthy lending growth in both retail and corporate segments
Healthy lending growth in both retail and corporate segments Increasing corporate growth. Slower activity in retail, from very high growth in previous quarters Gross lending (NOK billion)* Lending growth (12 months, %)* Last national 2.9 % 167.29 1.8 % 170.37 13.0 % Households: 5.2% 160.99 0.2 % 161
Slide 13: Lower lending margins in third quarter
Lower lending margins in third quarter Primarily due to higher money market (Nibor) interest rates through the quarter Lending margins, parent bank (%)* 3.06% 2.79% 2.69% 2.67% 2.64% 2.61% 2.50% 2.55% 2.53% 2.52% 2.50% 2.51% 2.46% 2.45% 2.42% 1.77% 1.81% 1.74% 1.69% 1.61% 1.61% 1.66% 1.58% 1.55% 1.5
Slide 14: Lower deposit volumes in third quarter, following strong growth in 2Q
Lower deposit volumes in third quarter, following strong growth in 2Q Still healthy growth on an annual basis Deposits (NOK billion)* Deposit growth 12 months (%)* 5.8 % 92.55 -1.4 % 91.27 14.5 % 85.50 0.1 % 85.61 2.2 % 87.48 13.7 % 13.6 % 12.7 % 12.3 % 12.1 %11.9 % 11.5 % 11.8 % 11.0 % 40.06 39.31
Slide 15: Higher deposit margins
Higher deposit margins Deposit margins rise when money market rates (Nibor) increase Deposit margins, parent bank (%)* 0.63% 0.50% 0.43% 0.40% 0.31% 0.30% 0.51% 0.29% 0.26% 0.22% 0.40% 0.40% 0.26% 0.27% 0.34% 0.09% 0.06% 0.21% 0.20% 0.03% -0.04% -0.02% -0.06% 0.11% 0.07% 0.07% 0.00% -0.05% -0.24% -0
Slide 16: High commission income
High commission income Commission income from real estate brokerage more normal compared to previous quarter Commision income and other income, excluding covered bond companies (NOK million) 302 285 276 275 271 11 37 14 14 14 15 35 35 37 33 51 Commission income from credit cards 40 40 44 Other incom
Slide 17: Profits in subsidiaries
Profits in subsidiaries Profit Q3-2021 (same quarter last year in brackets) NOK 47 million (NOK 39 million) NOK 0 million (NOK 1 million) SpareBank 1 Finans Østlandet AS SpareBank 1 Østlandet VIT AS - Group • Low loan losses and healthy margins. • Profit after taxes of 0 MNOK (1 MNOK). • Lending gro
Slide 18: A good third quarter for SpareBank 1 Gruppen
A good third quarter for SpareBank 1 Gruppen Quarterly pre-tax profits (NOK million). SpareBank 1 Gruppen and selected subsidiaries SpareBank 1 Gruppen SpareBank 1 Forsikring 1,317 1,024 262 230 974 171 764 683 816 116 89 -26 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Mo
Slide 19: Profits in joint ventures
Profits in joint ventures Profit Q3-2021 (same quarter last year in brackets) NOK 87 million NOK 53 million (NOK -2 million) SpareBank 1 Forvaltning AS SpareBank 1 Kreditt AS • Founded on 1 May 2021 • Reduced loan loss provisions. • Ownership 6.37 %. • Ownership 19.09 %. NOK 58 million (NOK 67 milli
Slide 20: Solid contributions from financial items
Solid contributions from financial items Healthy profits in joint ventures Net income from financial assets and liabilities, NOK million 198 181 0.3 Dividends from shares and other equity 9 instruments 146 88 133 Net profit from other financial assets and 62 1 29 liabilities 108 45 11 Share of profi
Slide 21: Lower cost growth
Lower cost growth Seasonally lower costs and staffing Operating costs by item (NOK million) Operating costs, parent and subsidiaries (NOK mill.) 600 465 504 492 485 473 500 504 492 485 473 72 465 54 65 55 58 14 15 14 400 13 13 26 23 21 16 154 15 143 153 136 137 79 73 78 77 77 300 33 31 30 31 33 200
Slide 22: Increasing economies of scale
Increasing economies of scale Significant asset growth, stable costs over time Operating costs, parent bank, contributions to changes (NOK million) 1,500 Growth in total assets including loans transferred to covered bond companies: 39 % 250,000 205,174 1,450 200,000 147,396 1,400 150,000 -8 10 -17 1
Slide 23: Net reversals of loan loss provisions
Net reversals of loan loss provisions Improved macro outlook warrants lower need for model-based loss provisions Loan loss provisions (NOK million) Loan loss provisions (NOK million) 50 47 0.05% 1 11 40 12 0.04% 0.04% 90 47 5 30 0.03% 96 11 38 -18 -16 40 20 1 0.02% 2 0 35 19 5 17 11 11 12 -15 -20 -7
Slide 24: Payment of remaining dividend for 2020
Payment of remaining dividend for 2020 Total dividends for 2020 financial year will be in line with the bank’s dividend policy • On 28 Oct, Board approved payment of Dividend (NOK/ECC) and dividend share (%) remaining 2020 dividends to ECC-holders. 6 0.60 • NOK 3.04 per ECC to be paid appr. 9 Nov. 5
Slide 25: High CET-1 capital ratio
High CET-1 capital ratio Well above regulatory requirements now and longer term CET-1 capital ratio (actual and required), Group • In Q3, the Group’s CET-1 capital ratio was 18.0 %. 16.8 % 16.8 % 17.2 % 17.8 % 18.0 % • The Group’s long-term CET 1-target is the 15.7% regulatory requirement with an ad
Slide 26: Highlights in Q3 2021
Highlights in Q3 2021 Summary • Another strong quarter with a high return on equity. • Decision made regarding payment of remaining owner and customer dividends for 2020. • All major income items contributed positively compared to last year: ‒ Higher NII due to volume growth. Higher deposit margins
Slide 27: Appendix: Macro/Financials/ECC
2021 APPENDIX Macro/Financials/ECC
Slide 28: Norges Bank forecasts a continued economic upswing
Norges Bank forecasts a continued economic upswing With gradual increases in the policy rate Sources: Macrobond, Norges Bank and SpareBank 1 Østlandet.. 28
Slide 29: More balanced housing market, with gradually lower activity in 2021
More balanced housing market, with gradually lower activity in 2021 House prices in bank’s market areas vs Norway as a whole • Continued flattening of house prices in Q3 2021, in Norway and market areas. • Rate hikes from Norges Bank weigh on house prices, but lower unemployment and relatively low s
Slide 30: Income statement
Income statement Group 01.01.2021- 01.01.2020- 3Q- 2021 3Q- 2020 30.09.2021 30.09.2020 2020 Net interest income 552 536 1,628 1,628 2,177 Net commission income 364 343 1,034 866 1,215 Other income 50 49 174 169 226 Dividends 0 1 21 13 41 Net profit from ownership interest 109 88 278 331 394 Net inco
Slide 31: Higher profits
Higher profits Pre-tax profits (NOK mill.) Return on equity (%) 706 637 12.6% 597 549 554 12.1% 11.3% 10.9% 10.6% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 31
Slide 32: Key financials - quarterly
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from covered bond companies (NOK million) 706 597 637 549 554 652 680 643 655 681 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Impairments on loans and guarantees (NOK million Driftskos
Slide 33: Key financials - quarterly
Key financials - quarterly (2) Return on equity CET-1 ratio 12.6% 17.3 % 17.8 % 17.8 % 17.8 % 18.0 % 12.1% 10.9% 11.3% 10.6% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Lending growth last 12 months, inc. transferred loans Deposit growth last 12 months 9.3 % 11.2 % 9.1 % 9.5 % 7.0 %
Slide 34: Customer growth continues
Customer growth continues Numbers of customers in parent bank (in 1,000x)1 390 40 371 38 • Strong customer growth in Q3- 370 361 366 21, with 4,875 new customers. 36 354 356 350 348 345 34 • Net customer growth in the 343 341 339 336 32 bank was 4.7 % y/y. 333 328 330 331 • Retail: 4.8 % 330 324 30
Slide 35: 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 39.0 %/ Innlandet 1.4 % 66,421 29.3 %/ Viken 6.1 % 49,871 28.2 %/ Oslo 12.1 % 47,975 Other areas 3.6
Slide 36: Mortgage loan growth by geography
Mortgage loan growth by geography 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 35.5 %/ 44,752 3.3 % Viken 33.5 %/ 42,243 6.9 % Oslo 27.3 %/ 34,446 7.0 % Other areas 3.6 %/ 4,598 13.8
Slide 37: Large single exposures driving geographic allocation of CM growth
Large single exposures driving geographic allocation of CM growth 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 48.9 %/ Innlandet -2.5 % 21,669 30.5 %/ Oslo 27.9 % 13,529 Viken 17.2 %/ 7,
Slide 38: 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 44.7 %/76,136 Retail market 74.0 %/126,039 SB1 Boligkreditt 29.3 %/49,904 Real estate (incl. SB1 Næringskreditt) 12.1 %/20,621 Primary industries 4.3 %
Slide 39: 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.) 800 751 742 35.0 % 724 703 95.0 % 93.0 % 15.0 % 92.2 % 92.1 % 92.1 % 700 30.0 % 91.3 % 29.4 % 13.0 % 600 26.6 % 90.0 % 25.0 % 11.0 % 488 500 8.3 % 2
Slide 40: 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) Average LTV at the time of approval 73% 72% 70% 69% 69% 67% 67% 66% 66% 65% 65% 66% 64% 63% 63% 64% 62% 62% 62% 61% 62% 61% 61% 61% 61% 60% 61%
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 market 45.0% Corporate 50.0% market 45.0% 40.0% 38.1 % 40.0% 35.0% 33.3 % 35.0% 30.0% 30.0% 27.4 % 25.0% 25.0% 22.1 % 20.5 % 20.0% 20.0% 15.7 % 15.0% 15.0% 11.5 % 10.1 % 10.0% 8.4 % 10.0% 7.1 % 5.
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 Q3-21: LTV by exposure** 95.3 % City of Oslo Other areas 7.8 % (8 % quota) 8.3 % (10 % quota) The mortgage regulation* cons
Slide 43: Headcount
Headcount Parent bank and Group Full-time equivalents in parent bank and subsidiaries 1,136 1,142 1,143 1,137 1,135 171 167 170 168 169 The VIT AS 56 52 51 53 54 75 75 76 76 79 SpareBank 1 Finans Østlandet AS 141 146 145 140 146 EiendomsMegler 1 Innlandet AS EiendomsMegler 1 Oslo Akershus AS-konsern
Slide 44: Capital structure and allocation of 2020 profit
Capital structure and allocation of 2020 profit In line with target of 50 % dividend share, for owners and society (through primary capital) • NOK 1.75 per equity certificate and MNOK 6 gifts was paid in April, based on the MoF’s recommendation . • In November 2021, the bank will pay NOK 3.04 per EC
Slide 45: SPOL
SPOL Metrics and performance 30.09.2021 30.09.2020 • SPOL return: Market price (NOK) 129.60 87.70 • Return Q3-215 + 8.9 % Market capitalisation (NOK million ) 15,012 10,158 • Return y/y5 + 50.2 % Book equity per ECC 1) 105.82 96.00 • Higher liquidity in Q3-21 than in same period in 2020. Earnings pe
Slide 46: 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 Bjørn-Erik R. Orskaug Investor Relations +47 922 39 185 bjorn-erik.orskaug@sb1ostlandet.no 46
Slide 47: 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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