Sparebank 1 Ostlandet · OSL:SPOL

Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q3 2020 Earnings Presentation

43 slides from Sparebank 1 Ostlandet's earnings presentation, 2020

  1. Slide 1: Company presentation

    Sony : . ~ at PANY PRESENTATION © ere 5%

  2. Slide 2: Highlights 3Q-2020

    Highlights 3Q-2020 Summary • Strengthened market position and increasing customer growth. • Improved net interest income from previous quarter, but continued margin pressure. • Strong cost control and reduced cost both at group level and in parent bank year to date. • Strong growth in commissions fr

  3. Slide 3: Strong financial performance despite COVID-19

    Strong financial performance despite COVID-19 Long term financial targets and actual performance as of 3Q-2020 Profitability Return on equity at least 11 % 9.7 % ! Dividends 50 % pay-out ratio1 TBD ! Solidity Regulatory requirement + 100 bps2 17.3 % √ Costs Zero cost growth in parent bank3 -1.6 % √

  4. Slide 4: Norwegian economy with a faster rebound than expected

    Norwegian economy with a faster rebound than expected Key macroeconomic variables Low levels of reported COVID-19 cases in Norway The Norwegian Central Bank expects faster rebound in activity in 2021 (As per 28 October 2020) 120 5.5% 8% 600 25,000 110 Reported cases 19,066 3% 20,000 Hospitalised 47

  5. Slide 5: A very strong housing market in 3Q 2020

    A very strong housing market in 3Q 2020 Housing price development by market area • Continued price growth and record high transaction volume Housing prices - indexed 160.00 160.00 in the market for used homes 150.00 150.00 ‒ Spillover effects from the used homes to the new 140.00 140.00 homes market

  6. Slide 6: Customer activity normalising – reduced demand for instalment deferrals

    Customer activity normalising – reduced demand for instalment deferrals COVID-19 – Customer activity • After strong increase in applications for instalment deferrals in Retail customers – strong decrease in application for instalment deferrals March, the demand has slowed significantly. (7 days movi

  7. Slide 7: SpareBank 1 Østlandet exports AR technology to Japan

    SpareBank 1 Østlandet exports AR technology to Japan Cutting edge innovation and technology development • In 2018 SpareBank 1 Østlandet launched an AR app to boost the Bank’s personal finance educational program for young people. • The app has been developed by the Bank in close collaboration with l

  8. Slide 8: Payment transaction levels back to pre COVID-19 levels

    Payment transaction levels back to pre COVID-19 levels Transaction activity own customers 2020 • Average card transactions was reduced by 20-25 per cent Average card transactions per week* – significant effects during the lockdown the first weeks after the COVID-19 lockdown, compared 4,000 with prev

  9. Slide 9: Better than expected development within commercial real estate (1)

    Better than expected development within commercial real estate (1) Market trends commercial real estate General • Low interest rates, currency depreciation and strong public finances, have contributed to a more positive economic development than expected early in the coronavirus pandemic. ‒ Low inte

  10. Slide 10: Better than expected development within commercial real estate (2)

    Better than expected development within commercial real estate (2) Market trends commercial real estate Office • Only marginally affected by the coronavirus pandemic and the government measures. ‒ Possible reduction in rental prices due to expected increase in supply of new and renovated office spac

  11. Slide 11: Positive effects from COVID-19 on demand for Norwegian agricultural goods

    Positive effects from COVID-19 on demand for Norwegian agricultural goods Development in Norwegian agriculture • Domestic demand for food has increased – supported by cross-border restrictions. Increased support for Norwegian • In parallel: Reduction in major cost components as interest rates and en

  12. Slide 12: Top marks in sustainability reporting

    Top marks in sustainability reporting «ESG 100 – The Oslo Stock Exchange» • In September The Governance Group published the report «ESG 100 – The Oslo Stock Exchange». The report rated the sustainability reporting of the 100 largest companies listed on the Oslo Stock Exchange. • SpareBank 1 Østlande

  13. Slide 13: Accelerating customer growth

    Accelerating customer growth Numbers of customers in parent bank (in 1,000x) 370 363 40 357 360 354 352 38 • Increasing trend in customer growth 348 after 1Q-2020. 350 36 343 340 338 340 337 34 • Off-boarding of customers with low 332 332 327 329 327 account activity in 1Q-2020 as part 330 322 324 3

  14. Slide 14: Financial accounts

    FINANCIAL ACCOUNTS

  15. Slide 15: Stable performance despite unstable times

    Stable performance despite unstable times Financial accounts 3Q 2020 (last year’s figures in brackets) • Profit after tax in 3Q-20 NOK 438 (NOK 409 million). Stable profits • Profit after tax YTD NOK 1,142 million (NOK 1,637 million). • ROE in 3Q-20 10.9 % (10.7 %). Good return on equity • ROE YTD 9

  16. Slide 16: Income statement 3Q-2020 and YTD-2020 (2019)

    Income statement 3Q-2020 and YTD-2020 (2019) Group 01.01.2020- 01.01.2019- 3Q-2020 3Q-2019 30.09.2020 30.09.2019 2019 Net interest income 536 554 1,628 1,582 2,166 Net commission income 343 296 866 856 1,152 Other income 49 54 169 199 236 Dividends 1 0 13 19 19 Net profit from ownership interest 88

  17. Slide 17: Key financials - quarterly

    Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from 535 549 covered bond companies (NOK million) 526 406 639 666 673 652 540 251 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 Impairments on loans and guarantees (NOK million) Total op

  18. Slide 18: Key financials - quarterly

    Key financials - quarterly (2) Return on equity CET 1 ratio 10.7% 11.3% 10.9% 16.7 % 17.2 % 17.0 % 17.1 % 17.3 % 7.3% 6.9% 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 Lending growth last 12 months Deposit growth last 12 months 9.0 % 9.4 % 9.3 % 11.2 % 9.8 % 10.4 % 10.5 % 7.5 % 9.4 %

  19. Slide 19: Profit contributions from subsidiaries

    Profit contributions from subsidiaries Profit contribution YTD-2020 (YTD-2019) NOK 95 million (NOK 93 million) NOK 2 million (NOK -4 million) SpareBank 1 Finans Østlandet AS SpareBank 1 Østlandet VIT AS - group • Profit after tax NOK 95 NOK (NOK 92 million). • Profit after tax NOK 2 million (NOK -4

  20. Slide 20: Profits in joint ventures

    Profits in joint ventures Profits YTD 2020 (2019) NOK 799 million* NOK (1,515 million) NOK 9 million (NOK 73 million) SpareBank 1 Gruppen AS • Profit after tax NOK 799 million (NOK 1,515 million). SpareBank 1 Kreditt AS • The controlling interest’s share of profit 549 million • Profit after tax NOK

  21. Slide 21: Increased net interest income

    Increased net interest income Net interest income incl. commissions from covered bond companies 1600 1.80% 1.71% 1.72% 1400 1.64% 1.70% • Increase in net interest income in 3Q-20. 1200 1.60% • The increase in net interest income was 1000 1.44% 1.50% due to a combination of lending growth 1.38% 800 1

  22. Slide 22: Continued strong lending growth

    Continued strong lending growth Lending volume (Group, NOK billion) 158 161 • Total lending in the Group, including mortgages transferred to 147 151 154 covered bond companies, increased by NOK 3.0 billion in 3Q-20. 44 45 46 47 43 • This is equivalent to a 1.9 % lending growth in the quarter. 104 10

  23. Slide 23: The Bank's lending growth is geographically diverse

    The Bank’s lending growth is geographically diverse Lending to customers per geographic area and change last 12 months (% and NOK million) Lending to customers per county (volume/share in %)* Change last 12 months Former 34.5 %/55,478 6.7 % Hedmark Oslo 26.6 %/42,780 8.9 % Former 25.0 %/40,297 11.4

  24. Slide 24: Low risk lending portfolio with broad based growth

    Low risk lending portfolio with broad based growth Lending to customers per sector (% and NOK million) Lending to customers per sector (share in %/volume NOK)* Change last 12 months Retail market Private customers 45.3 %/72,877 10.2 % 119,030/73.9% SB1 Boligkreditt 28.7 %/46,153 9.3 % Real estate (i

  25. Slide 25: Stable deposits and increased deposit margins

    Stable deposits and increased deposit margins Deposit volume and deposit growth (Group – NOK billion) • Deposits growth of 0.0 % (-0.6 %) in 3Q-20. Deposits from customers 85 85 77 78 80 • Deposit growth last 12 months: 11.2 % (9.4 %). ‒ Retail deposit growth 11.5 %. ‒ Corporate deposit growth 10.9

  26. Slide 26: Positive contribution from financial items in 3Q 2020

    Positive contribution from financial items in 3Q 2020 Net income from financial assets and liabilities (NOK millions) • Net income from financial assets and liabilities was NOK 133 million (NOK 314 in 2Q-20). 314 ‒ Net profit from ownership interests amounted to NOK 88 million (NOK 128 million in 2Q

  27. Slide 27: Increased commissions fees real estate brokerage, savings and insurance

    Increased commissions fees real estate brokerage, savings and insurance Net commissions and other income (NOK million) 276 • Commissions from real estate brokerage was at a historically 266 264 high level as a consequence of high activity in the housing 259 14 251 market and increased market shares

  28. Slide 28: Lower operating costs at group and parent bank level YTD

    Lower operating costs at group and parent bank level YTD Operating costs per quarter (NOK million) 600 487 490 490 487 457 447 465 457 465 500 447 45 45 39 28 34 32 34 33 400 151 151 31 32 138 120 137 137 132 129 300 121 132 50 49 44 200 52 41 18 23 18 17 19 100 320 339 336 327 328 197 202 207 197 2

  29. Slide 29: Significantly lower credit losses in 3Q-20

    Significantly lower credit losses in 3Q-20 Impairments on loans and guarantees (NOK million) Impairments on loans and guarantees (NOK million) 151 130 • Total credit losses in 3Q-20 were NOK 47 million. • Parent bank 35 MNOK • SB1 Finans Østlandet 12 MNOK 47 33 • Model based provisions were increase

  30. Slide 30: Defaulted and doubtful commitments stable since last quarter

    Defaulted and doubtful commitments stable since last quarter 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-2020. 92.5 % 92.2 % 93.1 % 93.6 % 93.5 % 95.0 % 15.0 % • Loans defined as St

  31. Slide 31: Further strengthened CET 1 ratio

    Further strengthened CET 1 ratio 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. 17.2 % 17.3 % 16.9 % 16.8 % 16.8 % ‒ The regulatory requirement, incl. the 1.8 %-point Pilar 2 requirement, is currently

  32. Slide 32: Appendix

    APPENDIX Macro/Financials/ECC

  33. Slide 33: A very solid 3Q 2020 for SpareBank 1 Gruppen

    A very solid 3Q 2020 for SpareBank 1 Gruppen SpareBank 1 Gruppen SpareBank 1 Gruppen – Pre-tax operating profit (NOK million) SpareBank 1 Forsikring – Pre-tax operating profit (NOK million) 262 228 974 1,024 116 287 -140 -80 -942 -252 1Q-19 2Q-19 1Q-20 2Q-20 3Q-20 1Q-19 2Q-19 1Q-20 2Q-20 3Q-20 Fremt

  34. Slide 34: Diversified corporate lending growth

    Diversified corporate lending growth Corporate lending growth YoY – sector (NOK million) 73 62 -146 102 -19 126 262 353 385 3.018 845 975 *Included SB1 Næringskreditt (SPACOM) 34

  35. Slide 35: Continued stable and low LTV in new mortgage approvals

    Continued stable and low LTV in new mortgage approvals Percentage of new mortgage approvals and average LTV per period and county Percentage of new mortgage appovals (volume) Average LTV at the time of approval 78% 73% 72% 70% 70% 69% 69% 70% 68% 68% 66% 66% 67% 66% 65% 66% 65% 62% 63% 64% 61% 62% 6

  36. Slide 36: Broad based retail lending growth

    Broad based retail lending growth Lending to retail customers per geographic area and change last 12 months (% and NOK million) Lending to retail customers by county (volume/share in %) Change last 12 months Former 32,3 %/38,425 5.9 % Hedmark Former 29,0 %/34,535 12.0 % Akershus Oslo 27,0 %/32,206 1

  37. Slide 37: The corporate lending growth is strongest in the outer Capital region

    The corporate lending growth is strongest in the outer Capital region Lending to corporate customers per geographic area and change last 12 months (% and NOK million) Lending to corporate customers by county (volume/share in %) Change last 12 months Former 40.7 %/17,053 7.9 % Hedmark Oslo 25.0 %/10,

  38. Slide 38: 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 37.6 % 35.5 % 28.3 % 23.8 % 14.4 % 16.4 % 11.2 % 11.5 % 7.8 % 8.8 % 4.8 % * Inkludert lån overført til kredittforetakene 38

  39. Slide 39: The use of the flexibility quota are targeted at priority customers

    The use of the flexibility quota are targeted at priority customers Exposure per LTV bucket in the residential mortgage portfolio Mortgages – Utilisation of flexibility quota in 3Q-20: 94.6 % City of Oslo Other areas 8.3 % (20 % quota) 6.6 % (20 % quota) The mortgage regulation* constrains housing m

  40. Slide 40: Headcount development

    Headcount development Headcount (FTE) • Increased headcount at group level of 17 FTEs last 12 months. A reduction of 3 FTEs in 3Q-20. • A net increase of 3 FTEs in subsidiaries last 12 months, 1,119 1,127 1,148 1,139 1,136 and a reduction of 13 FTEs during 3Q-20. • Increase of 14 FTEs in parent bank

  41. Slide 41: SPOL

    SPOL Equity Capital Certificate performance 30.09.2020 • SPOL rate of return: • Return 3Q-205 + 0.3 % Market price (NOK) 87.60 • Return YTD5 + 0.9 % • Return 12 months5 +11.8% Market capitalisation (NOK million ) 10,174 Book equity per ECC 1) 93.51 • Positive liquidity development in 2020. • Last ye

  42. 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

  43. 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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