Investor presentation INAUGURAL GREEN COVERED BOND SPAREBANKEN VEST BOLIGKREDITT AS JUNE 2020
Why invest in Sparebanken Vest Low risk and complexity At the forefront of digital developments Attractive customer dividend for investors Strong ESG focus Strong performance culture Leading in terms of ROE – target 12% 2 SPAREBANKEN VEST C1 - Public Natixis
Spa pare rebank banken n Vest 3
Sparebanken Vest and the region Third d biggest st savings ngs bank in Norwa way • Established in 1823 and listed on Oslo Stock Exchange since 1995 • Head office in Bergen. 33 branch offices and 722 full-time equivalents Market areas Diversified product portfolio. Biggest shareholder in Frende Forsikring and Brage Finans • Market shares 1 (leasing) • Several digital initiatives, like the first Norwegian mobile-only banking concept, Bulder Bank • More than NOK 219 bill. in assets under management, approx. 283,000 retail customers and 13,000 corporate customers Strong asset quality – 74% of lending to retail customers, of which 99% is residential • mortgages • Long-term ROE target of 12% Vestland 28.3% Home mark rket • Approx. 1.1 million inhabitants, corresponding to 21% of the Norwegian population Rogaland • Bergen and Stavanger are among the three biggest regions in Norway 6.7% The most diversified business region in Norway with industrial structure including engineering, • fisheries, fish farming, shipping, ship building, tourism, as well as oil and gas industry • Bulder Bank signals the launch of Norway’s first mobile -only banking concept 4 SPAREBANKEN VEST 1) Market share (capital) in the retail market Source: Statistics Norway C1 - Public Natixis
OUR VALUE PROPOSITION A PERSONAL SIMPLE DIGITAL A COMMITMENT TO A «SIGNATURE» SERVICES STRONG AND SUSTAINABLE WESTERN NORWAY 5 SPAREBANKEN VEST C1 - Public Natixis
A bank with low complexity Corporate market Retail market • 26% of total lending • 74% of total lending • NOK 44.4 bill. in loans • NOK 129.6 bill. in loans • 12,600 customers • 282,750 customers • Diversified portfolio • Includes Bulder Bank • 39.7% holding • Market share of 3.5% • 49.99% holding • 23.2% ROE in 2019 • Leasing and financing • Mainly general insurance • Balance sheet, NOK 13.0 bill. • 100% holding • Estate agency • 119 employees • Important for loans 6 SPAREBANKEN VEST C1 - Public Natixis
Norway’s best mobile banking solution since 2016 – Rating strengthened through first quarter (record score of 4.7) Sparebanken Vest 4,7 SpareBank 1 4,6 DNB 4,5 Danske Bank 4,0 Nordea 3,7 SPBK Sogn og Fjordane 3,6 Sbanken 3,4 Handelsbanken 3,0 2,0 3,0 4,0 5,0 Average customer rating in App Store (iPhone) and Google Play (Android). Figures from 24 April 2020. 7 SPAREBANKEN VEST C1 - Public Natixis
We are redefining banking – and beginning with mortgages Fra Sparebanken Vest Significant development synergies Upscale nationally to an attractive Potential for significant value mobile phone platform creation C1 - Public Natixis
Q1 7,7% ROE and a sound capital adequacy despite market unrest • Increased net interest income, NOK 838 (724) mill. despite challenging end to the quarter Income • Reduction in commission income from savings in funds and in volume of card transactions • Net loss on financial instruments as a result of market unrest, NOK -120 (+3) mill. • Low costs; NOK 384 (371) mill. Costs • Minimal impact from the situation in the market Increased model-based provision as a result of COVID-19 and the fall in oil prices • Write-downs • Effect estimated to be NOK 85 – 100 mill. • Total recognised write-downs of NOK 125 million (NOK 1 mill. taken to income) in the quarter • Q1 pre-tax profit NOK 328 (531) mill. Profit • Return on equity 7.7 (11.3) % • Profit per equity certificate NOK 1.12 (1.48) • CET1 ratio of 17.3% and Capital ratio of 21.0% Capital adequacy The change from fourth quarter 2019 is mainly due to currency effects • • Regulatory capital requirements met by a very good margin 9 C1 - Public Natixis
The bank has good liquidity and well-diversified maturity structure Maturity structure senior and covered bonds (NOK bill.)* • Liqui quidi dity portf tfoli olio: : Large and liqui quid – Approx. NOK 30 billion 14,7 14,4 14,3 LCR well above requ quireme ments nts at 143% % as of • 12,7 Q1’2020 11,5 • No need for external financing until autumn 2020 – Diversified maturity structure 7,9 6,9 • Sparebanken Vest has not substantially utilized the Norwegian Central bank’s lending facility (F - 2,8 2,5 loans) due to a robust liquidity position, even 1,2 1,2 1,2 during Covid-19 pandemic – However, usage of F-loans important to 2020 2021 2022 2023 2024 2025 stabilise the Norwegian market Senior Covered bonds *As of 31.03.2020 10 SPAREBANKEN VEST C1 - Public Natixis
Regulatory capital requirements met by very good margin CET1 ratio Leverage ratio 17,5 % 17,3 % 17,0 % 17,0 % 17,0 % Requirement 14.2% (Q4’20)** Requirement 12.7% (Q1’20)* 7,3 7,1 7,0 7,0 7,0 Requirement 5% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 *The bank’s applicable CET1 requirement is 12.7% (combined minimum and buffer requirement of 11.0% and Pillar 2 of 1.7%. 11 SPAREBANKEN VEST **The systemic risk buffer requirement is set to increase from 3 to 4.5 percentage points at the end of 2020. C1 - Public Natixis
Low risk in the retail market portfolio - 99 % of the lending portfolio secured by residential collateral Lending broken down by LTV ratio* Lending broken down by region *Only the part of a loan that exceeds the LTV threshold is shown in a higher LTV interval 12 SPAREBANKEN VEST C1 - Public Natixis
90 % of retail customers serving loans without need for installment relief - limited impact of Covid-19 on retail portfolio Retail portfolio (NOK 130 bill. in gross loans) With installment relief Granted installment relief for approximately 8500 • 12 bn customers totalling NOK 12 billion in commitments • Satisfactory servicing of loan, also for commitments with loan relief Without installment relief Approx. 50 % of granted loan relief with short • 118 bn period (max one month) • LTV on payment holiday mortgages on average with total portfolio 13 SPAREBANKEN VEST C1 - Public Natixis
Conservative risk selection in corporate portfolio - limits impact of Covid-19 and oil price reduction Consid sider erab ably ly imp mpac acted ed by Covi vid-19 19 Comm mmitme itments ts Corpor orat ate, e, NOK 52 bill ll. • Approx NOK 1 billion. Primarily retail trade, hotel/tourism, restaurants and certain companies within real estate • Engagements that could enter challenges with fulfilling loan agreement due to Covid 19 Covid-19: Considerably impacted 2% • Liquidity main challenge, customers in this category mainly helped through government schemes Covid-19: Medium Other part of Corporate impact 90% Medium dium impa mpact of of Covi vid-19 19 6% Impact by oil price • Approx NOK 3 billion, mainly small and medium sized companies reduction 2% More opportunities due to liquidity buffers or lower loan leverage ratio • • Typically good owners with will and ability to provide new capital Impa mpacted ed by oil oil pric ice redu ductio ion • Approx NOK 1.4 billion • Primarily offshore 14 SPAREBANKEN VEST C1 - Public Natixis
Sparebanken Vest ESG Ratings Rating ng agencies es MSCI CI ✓ ESG rating ng: : AA ISS ESG ✓ Prime Sustaina inalytics ics ✓ ESG risk rating ng: : 22.0 .0 Mediu ium risk ✓ Momentum ntum score -16.5 .5, , signif ific icantly antly improved ed th perc ✓ 8 th rcen enti tile le of comparab arable le banks 15 SPAREBANKEN VEST C1 - Public Natixis
Offensive targets for climate risk and sustainability In 2019, Sparebanken Vest adopted a sustainability • strategy that affects all areas of the bank • Cut own climate footprint in half by 2025 from 2018 • Requirements for climate neutrality at all our suppliers and major sponsorship • Framework for green bonds • Measurement of the carbon footprint in the portfolio within shipping /marine sector, small power plants and construction/real estate. This represents almost 70% of the bank's corporate portfolio • NOK 200 million in social dividend for projects that promote sustainability, a clean ocean, new green technology and green restructuring 16 SPAREBANKEN VEST C1 - Public Natixis
We start with ourselves and our suppliers Cut ut own wn emiss ssion ions s in half by 2025 25 Our ur own wn emis issi sion ons • Our goal is to cut our own emissions in half from -147 2018 to 2025 (147 tonnes of CO2) tonn CO 2 • We are on track – 24 tonnes CO2 was reduced in 2019 due to a range of initiatives within transport, waste and energy. 2025 Clima mate e neutra utrality lity requi uirem remen ents ts for all sup upplier iers • In the fall of 2019, more than 100 suppliers received the requirement to be climate neutral by the end of 2020 • By now 74% have replied that they are ,or commited to become , climate neutral within Transport Waste Energy 2020. 17 SPAREBANKEN VEST C1 - Public Natixis
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