Oma Savings Bank Credit Investor Presentation March 2019 0 - PowerPoint PPT Presentation

Oma Savings Bank Credit Investor Presentation March 2019 0

Executive summary • Oma Savings Bank (OmaSp) is the largest savings bank in Finland according to the balance sheet. Total assets stood at in excess of EUR 2.9bn at the end of 2018. • The bank has over 136,000 active customers consisting mostly of private customers (59% of lending), corporate customers (21%), housing cooperatives (10%) and agriculture and forestry (9%). Oma • OmaSp operates mostly outside of the Helsinki capital region around the main cities in the Western and Eastern parts of Savings Finland with its total of 40 branches. In 2018 OmaSP expanded with a new branch to Helsinki. Bank • The growth in business volumes continued to be brisk in Q4. Net interest income grew 27%, totaling EUR 13.4 (10.6) million. • The bank is well capitalised with a CET1 ratio of 18.4% and a total capital ratio of 19.3% at year-end 2018. For the same period the bank reported a robust equity to assets ratio of 9.96%. • S&P has assigned a BBB+ long-term issuer rating to OmaSp. • In October 2017, the Finnish FSA granted OmaSp a licence to act as a mortgage credit bank and the inaugural EUR 250 million covered bond issue was launched in December 2017. In June 2018 the bond was further tapped with EUR 100m subsequent issue. • The cover pool consists of 100% Finnish collateral including 100% residential mortgages. Covered Bonds • Geographically the pool is well diversified and located across Western and Eastern parts of the country. • The weighted average LTV simulated after the contemplated covered bond issue is 64.6% and there are no non- performing loans in the pool. • S&P has assigned a AAA rating to OmaSp covered bonds. • The outlook for the Finnish economy continues to be positive and the GDP is forecasted to grow around 1.9% in 2019. Finnish economy • House prices in Finland have appreciated at a slower pace than in the other Nordic countries and price development has & housing market been more contained outside of the Helsinki capital region where OmaSp mainly operates. • Loan costs and indebtedness are low in the Finnish housing market in comparison with other Nordic countries. 1 Source: OmaSP

Content overview Introduction to Oma Savings Bank Key Financials Cover Pool Operating Environment Planned Transaction & Contact Details 2

History and balance sheet development Before year 2009 2013-2016 2017- Savings Bank operations commenced 1875 Expansion into a nationwide bank in Finland 2017 Public credit rating from S&P • • • through mergers and acquisitions • 2017 Licence granted for Mortgage credit bank operations OmaMobiili-mobile bank • 2009-2012 2017 First senior bond listed on the Helsinki Stock Exchange • • Strong development of digital customer services • Operations continued under the Oma • 2017 Bond programme established and first Covered Bond issue Säästöpankki brand 2018 Shares listed on the main list of Helsinki Stock Exchange • Balance sheet total, EUR billion S- Pankki’s SME, agriculture and Expansion to Greater Helsinki, Turku forestry business and Oulu, IPO Joroisten Osuuspankki Pyhäselän Osuuspankki 2.915 Suodenniemen Säästöpankki SAV-rahoitus 2.727 Etelä-Karjalan Säästöpankki Kantasäästöpankki 2.151 1.935 Parkanon Säästöpankki 1.618 Merger of Töysän Säästöpankki and Kuortaneen Säästöpankki + 11,3% +26,8% +6,9% 0.745 0.393 0.361 0.333 2010 2011 2012 2013 2014 2015 2016 2017 2018 Formation of OmaSp Building nationwide operations Business development, IPO 4 Source: OmaSP

OmaSp today – profitable growth OmaSp key highlights Strong financial profile Equity 2018, EUR million 290.3 • More than 140 years of history • Provides comprehensive banking services across 40 Balance sheet total, branches and through digital service channels 15% average yearly growth 2015-2018 • About 136,000 private and business customers Balance sheet total, EUR billion 2.9 • About 290 motivated and entrepreneurial experts • Over 1,700 shareholders Cost-income ratio 2018 62.2% • 60% of the employees are shareholders ROE 2018 7.6% OmaSp S&P credit rating Covered bond rating Core capital ratio (CET1) 2018 18.4% AAA BBB+ / Stable / A-2 5 Source: OmaSP

Operating area & branch network 1 Largest Finnish cities Population Presence • The bank’s operations are concentrated to the regions around 2 Capital region 1,171,744 larger cities in Western and Eastern Tampere 235,487 Finland. Oulu 203,623 • Long-term local presence and Turku 191,664 customer knowledge are key differentiators amongst the Jyväskylä 141,414 competition. Lahti 120,002 • A wide branch network consisting of Kuopio 118,727 40 full service branches supports Pori 84,391 competitiveness in the bank’s operating areas. Kouvola 83,231 Joensuu 76,577 • In 2017 two new branches were opened in Jyväskylä and Lahti. Lappeenranta 72,705 • Through the S-Bank acquisition Hämeenlinna 67,558 OmaSp has opened branch offices in Vaasa 67,596 Turku and Kajaani. A new branch in Seinäjoki 63,296 Helsinki opened in 2018. Rovaniemi 62,963 Mikkeli 53,843 Kotka 52,930 1 Source: Statistics Finland, data of 31.12.2018 2 Capital region includes Helsinki, Espoo, Vantaa and Kauniainen 6 Source: OmaSP

Strategy The strategy of Oma Savings Bank is based on the following pillars: Cost efficiency 1. The main driver of a profitable and healthy bank – guides the bank’s business – Proactive customer relationships and sales 2. Differentiation from the competitors – Excellent customer experiences and superior local knowledge are our advantages in the markets we – operate in Financial performance is based on the growth of profitable and long-lasting customer relationships – Risk management 3. Strict governance on lending policy and liquidity management – Clear areas of responsibility, systematic monitoring of risks, a motivating compensation system and – corporate culture 7

Financial goals, dividend policy and guidance for 2019 Board of Directors approved the following financial goals in September 2018: Growth 10 – 15% annual growth in total operating income under the current market conditions • Profitability Cost/income ratio less than 55% • Return on equity Long-term return on equity (ROE) over 10% • Solvency Core capital ratio (CET1) at least 16% • Dividend policy The company's goal is to pay a steady and growing dividend of at least 20 percent of net profit. • The Board of Directors proposes that, based on the financial statements to be approved for 2018, a dividend of EUR 0.14 • be paid from the parent company’s distributable profits for each share entitling the shareholder to dividend for 2018. Guidance for the 2019 accounting period Provided that profitable growth continues, the company estimates that the Group’s comparable profit before taxes for • 2019 will grow compared to the previous accounting period. At the same time, the profit before taxes for 2019 is estimated to grow compared to the previous accounting period. 8 Source: OmaSP

S&P’s current view on OmaSP Rating criteria and impacts Quoted from S&P: Strengths and weaknesses “We believe that the risk of a house price • Anchor a- correction is becoming more remote as economic (Finnish banks) Concentrated prospects and consumer confidence improve ” business Business Position Weak -2 • “We consider positive that the bank's owners -- operations savings banks' foundations and cooperatives--will Very strong focused on Capital and likely remain committed to the bank by maintaining Very Strong +2 projected lending to Earnings a sound financial position and high capitalization capitalisation individuals, over the long term ” agricultural clients, Risk Position Moderate -1 “We assess Oma Savings Bank's capital and • and small and earnings as very strong. This is mainly based on our midsize enterprises Funding Average projection of Oma Savings Bank's RAC ratio 0 reaching 16%-17% by year-end 2018 ” Liquidity Adequate “This concentration (of lending portfolio) is partly • Dependence on mitigated by the loan book's high granularity and A solid and partners on adequate collateralization, and residential real mutual business product and estate lending in less urbanized areas results in model moderate loan sizes in the retail portfolio. In service offering addition, the group's SME lending shows a Issuer credit ratings conservative approach to loan sizes and collateralization ” BBB+ / Stable / A-2 Sound regional • “The share of non -collateralized loans is marginal ” franchise in Some reliance on “We believe that asset quality will remain sound • selected smaller wholesale funding Covered bond rating over the coming years on the back of prudent cities underwriting standards” AAA/Stable 9 Source: Based on covered bond report dated 21 December 2018 & general rating report dated 19 September 2018