Preliminary accounts 2019 Troms/Oslo 13 February 2020 Preliminary - PowerPoint PPT Presentation

Preliminary accounts 2019 Tromsø/Oslo 13 February 2020

Preliminary annual accounts 2019 CET-1 ratio Pre-tax profit 16.7 % (14.5 %) 2 473 MNOK (1 920) C/I ratio 39.8 % (43.1 %) ROE 15.9 % (12.9 %) Loan losses 11 MNOK (22) Proposed cash dividend Community dividend 639 MNOK (464) 5.50 NOK (4.0) 2

Strong number 1 position in the North Main bank retail Main bank SME 1) SNN 1) SNN 2) DNB 2) DNB 36% 35% 3) Other sparebank 3) Other sparebank Accounting Real estate Secured financing 1) Regnkapshuset 1) Santander 1) EM1 2) Azets 2) DNB 2) DNB 20% 20% 37% 3) Intu Nord 3) SNN Finans 3) Rede 3 Source: Kantar TNS, Eiendomsverdi

Strategic decisions in the Alliance creates value 4

International development is positive for Northern Norway 10,06 IMF estimates global 10,2 20 GDP growth of 3.4 % 9,8 40 in 2020 59,11 9,4 60 9 80 8,6 100 8,2 7,8 120 EURNOK Brent blend (h.a inv) 5

Strong demand for commodities out of Northern Norway Export value of fish from Northern Norway Overnight stays - foreign nationals, and share of December 2019 total overnight stays in Norway 18.000 16.000 1.700.000 15% 14.000 1.600.000 14% 1.500.000 12.000 13% 1.400.000 MNOK 10.000 1.300.000 12% 1.200.000 8.000 11% 1.100.000 6.000 1.000.000 10% 900.000 4.000 9% 800.000 2.000 700.000 8% 2019 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Last 12 Months 11 2013 2014 2015 2016 2017 2018 2019 M12 M12 M12 M12 M12 M12 M12 Northern Norway in total Nordland Troms Finnmark Northern Norway, share of total 6 Source: SSB (Fastlandseksport og overnattinger)

Soft landing in the housing market? House prices, December 2019 Housing starts Average price, NOK per m2, all units Number of units 3.250 3.000 2.750 73.339 2.500 2.250 2.000 47.926 42.008 37.357 1.750 31.807 0,7 % 1.500 0,0 % 0,1 % -0,2 % -0,2 % 1.250 1.000 Tromsø Bodø/Fauske North Oslo Norway 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Norway Average price, NOK per m2, all units Northern Norway 7 Source: Eiendom Norge, Boligprisstatistikk/byggeareal

A region characterized by growth… Created value per capita 500 488.6 (in NOK 1000/nom) 453.7 450 400 350 300 2008 2010 2012 2014 2016 2018 8 Finnmark Nordland Troms Nord-Norge Northern Norway Rest-Norge Rest of Norway Source: SSB, fylkesfordelt nasjonalregnskap

…with demographic challenges Population estimation towards 2040 YOUTH 16-18 years Change 2018-19: YOUNG ADULTS 19-23 years 1986 2019 2040 9 Source: SSB, befolkningsframskrivninger

Ambitions for growth and increased market share Expected growth for SpareBank 1 Nord-Norge in 2020: Personal customers: 3-5 % Corporate market: 6-8 % 10

Organizational measures for more strength CEO Compliance Chief Chief Chief People Chief Risk Communications Financial Officer Officer Officer Officer Chief Marketing Personal Corporate Officer Banking Banking 11

Financial target still valid– measurement in place to ensure long term achievement ROE Effect of profitability 200 MNOK 12 % measures Year end 2021: C/I ratio 2020: 2% < 40 % Maximum cost increase*: 2021: 0% *) Ex. new business areas 12

Ambitious targets for climate risk and sustainability • Climate risk is part of the Group’s risk strategy. • Sustainability is a part of all core processes through its own policy on sustainability and corporate social responsibility. These include goals to contribute to a greener securities market and working towards a more sustainable lending portfolio. • Commits to reduction of own greenhouse gas emissions by 40% by 2026. • As of 2020 the bank will report on all of the UN's 17 sustainability targets. In 2019 MNOK 300 of community dividend went to sustainable wealth creation and development of the region through the concept «Samfunnsløftet». 13

ESG in SpareBank 1 Nord-Norge Social Governance Environment ESG compliante products- and Corporate governance, ownership, Business- and Risk Strategy, services, «Samfunnsløftet» prevent corruption, money Policies and Code of Conduct (Corporate Social Responsibility) laundering or terrorist financing 14

Community dividend enhances the brand, creates media attention and strengthens our position 1361 different projects in Northern Norway received community dividend (numbers in MNOK) Share of voice in local media Q4 2019 5 23 23 60 MNOK 300 13,8 55% 78,2 Youth Knowledge Innovation Arena Local community Plastic 15

Why invest in SpareBank 1 Nord-Norge? #1 ROE Strong position in a Ambitious, top class growth region with financial targets strong macro High relative Implements new KPI ownership in measures to maintain Owner friendly SpareBank 1 Group, top class ROE dividend policy and other alliance strong capitalization companies and Norwegian banking infrastructure 16

Key financial figures Cost/income Group CET 1 incl floor Return on equity capital 42,9 % 43,1 % ** 42,9 % 41,2 % 16,7 % 14,9 % 15,9% 39,8 % 14,5 % 15,0 % 13,0 % 12,9 % 12,0 % * 12,3 % 2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019 *Return on equity capital ex. gain SpareBank 1 Gruppen ** Cost/income ex. gain/profit from SpareBank 1 Gruppen and cost related to downsizing 17

Changes in profit and loss last quarter 18

Very low loan losses, customer loans and guarantees 0,02 % 0,01 % 0,01 % 0,00 % -0,01 % 22 13 11 -17 -2 31.12.18 31.03.19 30.06.19 30.09.19 31.12.19 Net losses Net losses in % of gross lending incl. intermediary loans 19

Good growth, especially in the corporate market Retail market incl. commission loans 4,7 % 8,2 % Retail incl. commission 29 % loans Corporate incl. 86 287 71 % commission 82 381 loans 76 158 31.12.17 31.12.18 31.12.19 Corporate incl. commission loans Retail excl. 41 % commission 11,7 % 59 % loans 8,2 % 35 447 31 736 29 327 31.12.17 31.12.18 31.12.19 20

Strong competition in the region 3,0 % 2,57 % 2,51 % 2,51 % 2,48 % 2,45 % 2,40 % 2,35 % 2,35 % 2,5 % 2,30 % 2,0 % 1,78 % 1,64 % 1,52 % 1,48 % 1,44 % 1,44 % 1,36 % 1,35 % 1,5 % 1,32 % 1,0 % 0,5 % 0,0 % 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Lending margin corporate Lending margin retail 21

Strong deposit growth in the retail market Retail banking market Public 6,8 % 14 % 5,8 % Corporate Retail 36 489 32 % 34 179 54 % 32 304 31.12.17 31.12.18 31.12.19 Corporate market Public market 15,2 % 15,8 % 18,3 % -11,1 % 22 124 19 212 16 588 10 594 9 417 8 957 31.12.17 31.12.18 31.12.19 31.12.17 31.12.18 31.12.19 22

Strong development in deposit margins 1,2 % 1,00 % 1,0 % 0,84 % 0,8 % 0,70 % 0,53 % 0,52 % 0,6 % 0,69 % 0,48 % 0,36 % 0,64 % 0,29 % 0,52 % 0,4 % 0,45 % 0,21 % 0,36 % 0,38 % 0,46 % 0,30 % 0,2 % 0,30 % 0,0 % 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 -0,2 % -0,27 % -0,28 % -0,28 % -0,28 % -0,4 % -0,29 % -0,31 % -0,31 % -0,37 % -0,37 % -0,6 % Deposit margin corporate Deposit margin retail Deposit margin public 23

Well diversified loan portfolio Power- , water supply and construction 3 % Real Industries Estate 2 % 11 % Commision loans 29 % Agriculture and fisheries 6 % Other 19 % Transport and service industries Retail banking 4 % market 41 % Other 4 % 24

Extraordinary dividend for 2019 Excess capital will not be used for activites outside core business Extraordinary dividend of NOK 1.50 from SpareBank 1 Gruppen associated with the insurance merger 59,6 % 60,5 % 56,9 % 58,6 % 34,5 % 38,7 % 28,1 % 36,8 % 30,4 % 29,9 % 1,81 1,25 1,02 1,10 1,90 2,00 3,45 4,00 4,00 5,50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Proposed dividend (NOK) Payout ratio (%) 25

Board’s proposal for profit allocation of the Group’s result Dividend 5,50 kr: 58.6% 552 mill kr (adjusted for interest on hybrid Tier-1 capital) Equity certificate owners 1 233 mill kr Retained share of profit 41.4% 46.4% 681 mill kr 2 659 mill kr: Group profit Community dividend 53.6% 58.6% 639 mill kr Community owend capital 1 426 mill kr Retained share of profit 41.4% 787 mill kr It should be noted that the Financial Supervisory Authority of Norway (FSAN) may order the bank not to pay out dividend, or pay out less than proposed 26

Financial targets >12 % Return on equity Main target > 50 % Cost/income ratio 15.0 % < 40 % Dividend Payout Tier 1 Capital ratio 27