Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q2 2022 Earnings Presentation
55 slides from Sparebank 1 Ostlandet's earnings presentation, 2022
Slide 1: Company Presentation
SpareBank @) @STLANDET eitvet idrettsanlegg 3,1 km | via Okernbraten og Linderud Avollsen 2 in & | — Sinsen_ 334m eal Ba) — 8 ATION
Slide 2: Highlights in 2nd quarter of 2022
Highlights in 2nd quarter of 2022 Summary • Solid lending growth, both for the retail (7.6 % y/y) and corporate (15.3 % y/y) markets. Important driver of strong growth in net interest income (of 11.1 % y/y, including commission income from transferred loans) • Net commission income (excl. transferre
Slide 3: Financial targets and achievements in first half of 2022
Financial targets and achievements in first half of 2022 Long-term goals versus actual results Profitability Return on equity at least 11 % 9.9 % Dividends 50 % pay-out ratio1 50 % Solidity Regulatory requirement + 100 bps2 18.0 % Costs Max 4 % cost increase in parent bank3 6.1 % 1. Out of profits a
Slide 4: Companies in the market area remain optimistic
Companies in the market area remain optimistic Good growth expected for sales, demand and employment. Households are more pessimistic Business expectations index* Business expectations survey, Eastern Norway* 40 60 60 20 50 50 0 40 40 -20 30 30 2017 2018 2019 2Q20 4Q20 2Q21 4Q21 2Q22 Eastern Norway
Slide 5: Still solid lending growth and good growth in net interest income
Still solid lending growth and good growth in net interest income Volume growth of 3.1 % q/q Lending growth last 12 months, inc. transferred loans Lending growth (12 months, %) Last national* Households: 4.5% 9.6 % Non-fin corp.: 6.6% 9.4 % 15.3 % 7.7 % 5.9 % 5.8 % 1Q22; 14.6 % 2Q21 3Q21 4Q21 1Q22 2
Slide 6: Good growth in deposits
Good growth in deposits Deposit growth of 6.5 % q/q Deposit growth (12 months, %) Deposit growth (12 months, %) 8.3 % 8.1 % 7.7 % 7.4 % 6.7 % 2Q21; 11.8 % 1Q22; 8.4 % 9.0 % 7.3 % 1Q22; 6.6 % 2Q21; 5.6 % 1Q18 1Q19 1Q20 1Q21 1Q22 Retail customers, 12 month growth 2Q21 3Q21 4Q21 1Q22 2Q22 Corporate cus
Slide 7: Ambition: Norway’s best relationship bank
Strategic objectives towards 2025 We know our We create We have one of the We are a clear driver customers and create tomorrow’s most attractive equity of the sustainable the best customer relationship bank in capital certificates on transition experience an open and Oslo Stock Exchange engaging wor
Slide 8: All-time high customer satisfaction index
All-time high customer satisfaction index Important factor in achieving our strategic objectives Customer relationship index (TRIM*) for SpareBank 1 Østlandet’s customers 70 69 67 67 66 66 66 64 63 2014 2016 2018 2020 2022 Retail market Corporate market Sources: Kantar, SpareBank 1 Østlandet. 8 * La
Slide 9: Strengthening of operations in Oslo
Strengthening of operations in Oslo Recruitment of up to 10 new financial advisors and planned establishment of new branch RM-loans by county 4% • Oslo and surrounding areas is a prioritised growth market for the bank 27 % 35 % • Local presence and competent financial advice is important in order to
Slide 10: LO-agreement: Important for growth, retention and cross sales
LO-agreement: Important for growth, retention and cross sales Very good cooperation with trade union (LO) and Lofavør extended with agreement until autumn 2024 Loans through LO-favør (NOK bill.) 49.3 43.4 13.6% 2Q21 2Q22 10
Slide 11: New and very strong ESG-rating from Sustainalytics: «Negligible risk»
New and very strong ESG-rating from Sustainalytics: «Negligible risk» Ranked 20 out of 1 003 rated banks. Reflection of bank’s longtime and strategic emphasis on sustainability Sustainalytics-rating for SB1Ø 21.3 20.0 Medium risk Low risk 12.3 Low risk 8.5 • A ESG 100 – The Governance Group • #1 amo
Slide 12: Further development of the bank’s green loan product portfolio
Further development of the bank’s green loan product portfolio Decisive factor for achieving the bank’s net zero target within 2050 Relaunch of green energy mortgage loan. Offered in the event of an upgrade of energy efficiency by min. 30 % Energy loan calculator developed in cooperation with Multic
Slide 13: Financial Accounts
2022 FINANCIAL ACCOUNTS
Slide 14: Lower ROE, but another quarter with strong lending growth
Lower ROE, but another quarter with strong lending growth Financial accounts 2Q 2022 and year to date (same period last year in brackets) • Profit after tax in 2Q22 of NOK 350 million (NOK 516 million) Good results • Profit after tax ytd. of NOK 885 million (NOK 955 million). • ROE in 2Q22 of 7.7 %
Slide 15: Strong growth in NII
Strong growth in NII Due both to volume growth and improved interest rate margins Net interest income incl. commissions from covered bond companies (MNOK and %) 1200 1.57% 1.60% 1.53% 1000 1.47% 1.50% 1.44% 1.41% 800 728 1.40% 681 681 686 655 Commission fees from covered bond 84 93 companies 600 113
Slide 16: Commission income at all time high
Commission income at all time high Strong y/y growth in payment services and commission income from mutual funds and insurance Commision income and other income, excluding covered bond companies (NOK million) 332 302 306 16 295 285 17 38 11 15 39 14 40 35 38 49 49 43 Commission income from credit ca
Slide 17: Net negative contribution from financial items
Net negative contribution from financial items Weaker results from SB1 Group, value decline for own equity instruments, liquidity portfolio and fixed-rate lending Net income from financial assets and liabilities, NOK million 198 181 0 9 109 113 100 0 Dividends from shares and other equity 111 instru
Slide 18: Higher costs
Higher costs Cost growth in parent bank of 6.1 % ytd. Operating costs by item (NOK million) Operating costs, by unit (NOK mill.) 600 492 531 520 504 531 520 473 504 500 492 87 65 473 62 65 16 58 20 20 150 14 26 400 158 21 13 27 22 143 16 153 136 80 77 77 86 82 300 36 30 31 30 31 200 100 297 381 361
Slide 19: Net reversal of loan loss provisions
Net reversal of loan loss provisions Reduced model-generated loss provisions and low realized losses Loan loss provisions (NOK million) 151 130 47 33 28 24 8 1 11 4 -18 -16 -33 -59 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 19
Slide 20: Net reversal of loan loss provisions
Net reversal of loan loss provisions Due primarily to change of scenario weighting towards normality 2Q21 3Q21 4Q21 1Q22 2Q22 Parent bank 8 -17 24 6 -61 SB1FØ 2 1 3 -2 2 Group 11 -16 28 4 -59 Losses as a percentage of total lending 0.04 % -0.05 % 0.09 % 0.01 % -0.19 % Loan loss provisions (NOK milli
Slide 21: Stable and high CET-1 ratio, well above regulatory requirements
Stable and high CET-1 ratio, well above regulatory requirements Includes effects of extended SME-discount (which added 40 basis points to the CET-1 ratio) Requirements 16.8 % 17.8 % 18.0 % 18.0 % 15.8 % 17.2 % 1.0 % 16.8 % 1.0 % 9.5 % 8.5 % 1.8 % 1.8 % 4.5 % 4.5 % 2018 2019 2020 2021 2Q22 Current Lo
Slide 22: Why invest in SpareBank 1 Østlandet (SPOL)?
Why invest in SpareBank 1 Østlandet (SPOL)? 22
Slide 23: Creating together
Creating together Proficient Near Engaged We have worked for more than 175 years for people and businesses to succeed Our work continues
Slide 24: Appendix
2022 APPENDIX Financials/ECC
Slide 25: Income statement
Income statement Group 2Q22 1Q22 2Q21 2021 Net interest income 644 594 542 2 202 Net commission income 357 322 354 1 389 Other income 60 66 62 233 Dividends 14 16 9 21 Net profit from ownership interest 20 16 111 405 Net income from financial assets/liabilities -153 68 62 174 Total operating expense
Slide 26: Profit after tax and return on equity
Profit after tax and return on equity Profit after tax (NOK mill.) Return on equity (%) 561 536 516 505 12.6% 12.1% 12.2% 11.1% 350 7.7% 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 26
Slide 27: Key financials - quarterly
Key financials - quarterly (1) Pre-tax profit (NOK million) Net interest income and commission fees from covered bond companies (NOK million) 706 637 728 542 573 655 681 681 686 480 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Net commission income excl. covered bond companies Operating expense
Slide 28: Key financials - quarterly
Key financials - quarterly (2) Impairments on loans and guarantees (NOK million) CET-1 ratio 28 11 17.8 % 18.0 % 18.0 % 18.0 % 18.0 % 4 -16 -59 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Lending growth last 12 months, inc. transferred loans Deposit growth last 12 months 9.6 % 8.3 % 7.7 % 8.1
Slide 29: Still high lending growth
Still high lending growth Very high corporate market growth, but also good in retail market Gross lending (NOK billion) Lending growth (12 months, %) Last national* Households: 4.5% 3.1 % 183.3 2.4 % 177.8 Non-fin corp.: 6.6% 2.0 % 173.7 167.3 1.8 % 170.4 15.3 % 1Q22; 14.6 % 47.5 50.0 44.3 45.5 43.4
Slide 30: Higher lending margins
Higher lending margins Interest rate increases are beginning to catch up with the increase in money market interest rates Lending margins, parent bank (%)* 3.06% 2.79% 2.69% 2.67% 2.61% 2.64% 2.49% 2.53% 2.51% 2.50% 2.48% 2.46% 2.45% 2.42% 2.51% 2.33% 2.39% 2.22% 1.76% 1.81% 1.74% 1.66% 1.69% 1.59%
Slide 31: Good growth in deposits
Good growth in deposits Deposit growth of 8.1 % y/y, highest for corporate customers Deposits (NOK billion) Deposit growth 12 months (%)* 6.5 % 100.0 92.6 -1.4 % 91.3 1.0 % 92.2 1.9 % 93.9 2Q21; 11.8 % 44.6 1Q22; 8.4 % 41.0 40.3 40.9 41.6 9.0 % 7.3 % 1Q22; 6.6 % 2Q21; 5.6 % 51.6 51.0 51.3 52.3 55.4
Slide 32: Continued increase in deposit margins
Continued increase in deposit margins In line with higher money market rates Deposit margins, parent bank (%)* 0.63% 0.81% 0.52% 0.73% 0.42% 0.43% 0.43% 0.30% 0.28% 0.33% 0.32% 0.51% 0.50% 0.23% 0.44% 0.42% 0.40% 0.07% 0.28% 0.29% 0.36% 0.09% 0.28% 0.22% 0.22% 0.03% -0.02% -0.06% -0.04% 0.08% 0.06%
Slide 33: Bank has adjusted interest rates following Norges Bank’s rate hikes
Bank has adjusted interest rates following Norges Bank’s rate hikes Norges Bank 16 Dec-21 24 Mar-22 23 Jun-22 Loans and deposits, NOK bill. Effective dates new loans and deposits, excl. loans 5 Jan-22 1 Apr-22 30 Jun-22 with LO-terms Gross loans excl Nibor- 98 100 97 linked New LO-loans 5 Jan-22 1 A
Slide 34: Structure on funding and security holdings also affect NII
Structure on funding and security holdings also affect NII Most rate fixings of own balance sheet occur towards end of the quarter. Covered bond funding lags Nibor. Net rate fixings per month, share of quarter, %** Securities, NOK bill.* 89% 1.6 51% 1.4 68% 30% 19% 28 12% 11% 21% 1.2 24 24 1 -1% 0.8
Slide 35: Somewhat lower headcount compared to last year
Somewhat lower headcount compared to last year Some fewer FTEs for real estate broker in Oslo, stable in the parent bank Full-time equivalents in parent bank and subsidiaries 1 137 1 135 1 137 1 131 1 130 168 169 174 170 162 The VIT AS 53 54 54 54 54 76 79 79 81 83 SpareBank 1 Finans Østlandet AS 14
Slide 36: Profits in subsidiaries
Profits in subsidiaries Profit after taxes (NOK million) 2Q22 2Q21 Sparebank 1 Finans Østlandet AS - Group 31.6 46.8 EiendomsMegler 1 Innlandet AS 2.7 6.1 SpareBank 1 Østlandet VIT AS - 5.9 2.0 EiendomsMegler 1 Oslo Akershus AS - Group 6.8 8.2 Subsidiaries 35.3 63.0 36
Slide 37: Profits in joint ventures
Profits in joint ventures Profit after taxes (NOK million) 2Q22 Ownership 2Q21 Ownership SpareBank 1 Gruppen AS - Group 142.0 12.40 % 1 042.0 12.40 % SpareBank 1 Forvaltning AS 54.4 6.26 % 33.0 12.40 % SpareBank 1 Boligkreditt AS - 8.0 23.15 % 23.4 22.45 % SpareBank 1 Næringskreditt AS 11.2 14.35 %
Slide 38: SpareBank 1 Gruppen: Reduced financials impact negatively
SpareBank 1 Gruppen: Reduced financials impact negatively Quarterly post-tax profits (NOK million). SpareBank 1 Gruppen and selected subsidiaries SpareBank 1 Gruppen Fremtind Forsikring 1042 1080 811 559 549 621 142 170 94 79 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 SpareBank 1 Fo
Slide 39: Exposures per stage and credit loss provision ratio in stage 3
Exposures per stage and credit loss provision ratio in stage 3 Exposure by stages (% of gross loans) Loans in Stage 3 (NOK mill.) 800 17.5 % 736 699 17.3 % 90 % 15 % 700 657 17.1 % 17.0 % 87.0 % 87.2 % 86.8 % 623 88 % 86.1 % 13 % 587 86.0 % 600 86 % 11 % 16.5 % 84 % 500 16.3 % 8.3 % 8.4 % 8.0 % 09 %
Slide 40: Cyclically stable loan portfolio
Cyclically stable loan portfolio Lending to customers per sector (% and NOK million) Private customers 43.8 %/80 220 Retail market 72.7 %/133 324 SB1 Boligkreditt 29.0 %/53 104 Real estate (incl. SB1 Næringskreditt) 12.6 %/23 118 Commercial services/Public sector 4.1 %/7 500 Primary industries 4.0 %
Slide 41: 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 37.6 %/ 68 950 5.0 % Viken 29.4 %/ 53 988 9.8 % Oslo 29.2 %/ 53 510 14.9 % Other areas 3.8
Slide 42: Mortgage loans by geography
Mortgage loans 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 34.6 %/ 46 149 4.5 % Viken 34.5 %/ 46 036 10.6 % Oslo 27.0 %/ 35 954 6.8 % Other areas 3.9 %/ 5 185 17.2 % Tr
Slide 43: Corporate market lending by geography
Corporate market lending by geography 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 45.6 %/ 22 801 6.1 % Viken 15.9 %/ 7 952 5.3 % Oslo 35.1 %/ 17 556 36.3 % Øvrige 3.4 %/ 1 712
Slide 44: Customer growth continues
Customer growth continues Numbers of customers in parent bank (in 1,000x) • Strong customer growth in 2Q22, 391 384 with 7 160 new customers. 378 371 361 366 357 364 • Net customer growth in the bank 354 356 348 345 351 over the past 12 months was 6.9 % 343 339 336 341 y/y. 333 328 330 331 • Retail:
Slide 45: No signs of debt servicing problems
No signs of debt servicing problems Number of digital applications for mortgage deferrals have been stable over a long time period Weekly digital applications for mortgage deferrals des. 19 jun. 20 des. 20 jun. 21 des. 21 45
Slide 46: Commercial real estate is the bank’s 2nd largest customer segment
Commercial real estate is the bank’s 2nd largest customer segment NOK 28.0 bn. in gross loans to commercially-related real estate, including building and construction • Financing of commercially related real CRE-related, share of gross lending* estate is the bank’s largest corporate Building and Hou
Slide 47: CRE for lease: Attractive location, good collateral, diversified rental type
CRE for lease: Attractive location, good collateral, diversified rental type 96 % of tenants have contracts that are 100 % indexed (to CPI) * Location* Normal : 9% Acceptable: Share of lending according to LTV* 1% 60.3 % Best: 40% Central: 50% 15.4 % 17.4 % 1.4 % 5.4 % 0.0 % 0.1 % < 30% 30 - 50% 50
Slide 48: Projects & building: Good growth, evenly distributed over building process
Projects & building: Good growth, evenly distributed over building process Requirement of pre-sales normally of at least 60 %, depending for example on EQ and complexity Loans to real estate projects, building and Draw on construction loans, volume-weighted, construction, NOK bn* share in %* 5 600 2
Slide 49: 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 73% 72% Percentage of new mortgage appovals (volume) Average LTV at the time of approval 70% 69% 69% 68% 67% 67% 66% 66% 66% 66% 65% 65% 65% 63% 63% 64% 64% 63% 63% 62% 62% 62% 62% 61% 61%
Slide 50: 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 Corporate 50.0% market 38.9 % 45.0% 40.0% 31.4 % 35.0% 30.0% 25.0 % 25.0% 22.8 % 21.4 % 20.0% 16.8 % 15.0% 9.9 % 10.0 % 10.8 % 10.0% 6.5 % 6.3 % 5.0% 0.0% < NOK 1 NOK 1-2.5 NOK 2.5-5 NOK 5-
Slide 51: 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 LTV by exposure** Mortgages – Utilisation of flexibility quota in 2Q22: 97.1 % City of Oslo Other areas 7.8 % (8 % quota) 8.2 % (10 % quota) Bank uses the flexibility quot
Slide 52: Capital structure and allocation of 2021 profit
Capital structure and allocation of 2021 profit In line with target of 50 % dividend share, for owners and society (through primary capital) ILLUSTRATION Profit after controlling Gifts and interest donations NOK 1 985 million 69.8% 30.2% Foundation Owners Primary capital NOK 362 million 52.1% Divide
Slide 53: SPOL
SPOL Metrics for the equity capital certificate 30.06.2022 30.06.2021 • SPOL return: Market price (NOK) 117.20 119.00 • Return 2Q225 - 16.3 % Market capitalisation (NOK million ) 13 575 13 784 • Return y/y5 + 5.0 % Book equity per ECC 1) 106.42 102.22 • Liquidity in 2Q22 compared to same period in 2
Slide 54: 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 investor@sb1ostlandet.no Bjørn-Erik R. Orskaug Head of Investor Relations +47 922 39 185 bjorn-erik.orskaug@sb1ostlandet.no 54
Slide 55: 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
SpareBank 1 Østlandet — Q2 2022 Earnings Presentation on 6ix