Quarterly accounts 2Q 2020 1 Quarterly accounts Q2 2020 CET-1 - PowerPoint PPT Presentation

Quarterly accounts 2Q 2020 1

Quarterly accounts Q2 2020 CET-1 ratio 16,9 % (15,3 %) Pre-tax profit 1 035 MNOK (1 635) C/I-ratio 39,2 % (31,5 %) ROE 12,9 % (22,7 %) Losses 201 MNOK (-2) 2

Solid number 1 position in Northern Norway Main bank retail Main bank SME 1) SNN 1) SNN 2) DNB 2) DNB 36% 35% 3) Other savings bank 3) Other savings bank Accounting Real estate Secured financing 1) Regnkapshuset 1) Santander 1) EM1 2) Azets 2) SNN Finans 2) DNB 23% 20% 36% 3) Intu Nord 3) DNB 3) Rede 3 Source: Kantar TNS, Eiendomsverdi

Group companies - result before tax 30.06.20 30.06.19 SpareBank 1 Finans Nord-Norge AS 62 505 75 769 SpareBank 1 Regnskapshuset Nord-Norge AS 19 316 26 158 EiendomsMegler 1 Nord-Norge AS 19 807 11 109 Subsidiaries core operations 101 628 113 036 Other subsidaries 1 381 - 494 Total 103 009 112 542 4

Tough year for the tourism industry • Fewer overnight stays • Lower demand for air BnB • However: travellers from Norway and Finland chosed Northern Norway this summer • Despite this, we see reduced revenue in tourism in 2020 5

No significant increase in bankruptcies so far • Number of bankruptcies* in Northern Norway are still at low levels • A small increased number of bankruptcies in Northern Norway so far in 2020 • The industries construction, accommodation and catering and retail trade make up a significant proportion of bankruptcies in 2020 • Number of bankruptcies are expected to rise going forward 350 295 287 300 250 200 150 63 100 60 55 45 46 40 42 39 36 37 36 34 29 20 50 0 January February March April May June July SUM January- July 2019 2020 * Bankruptcies, compulsory liquididation, compulsory winding up Source: Brønnøysundregistrene 6

The seafood industry less exposed from corona Export value of fish from Northern Export value of fish from Norway Norway, Mill NOK as of May 2020 per month (BNOK) 8.000 12 7.000 10 6.000 8 5.000 MNOK 4.000 6 3.000 4 2.000 1.000 2 0 2013 2014 2015 2016 2017 2018 2019 2020 0 M05 M05 M05 M05 M05 M05 M05 M05 Jan Feb Mar Apr Mai Jun Jul Aug Sep Okt Nov Des Nordland Troms and Finnmark 2018 2019 2020 7 Source: SSB (Fastlandseksport)

8 Unemployment bounce back 10% 11% 1% 2% 3% 4% 5% 6% 7% 8% 9% Source: SSB jan.15 mar.15 mai.15 jul.15 sep.15 nov.15 jan.16 mar.16 mai.16 jul.16 sep.16 Registered unemployment nov.16 jan.17 mar.17 mai.17 jul.17 sep.17 nov.17 jan.18 mar.18 mai.18 jul.18 sep.18 nov.18 jan.19 mar.19 mai.19 jul.19 sep.19 3,76 % 4,8 % nov.19 jan.20 mar.20 mai.20 0,0 1,5 3,0 4,5 6,0 7,5

Moderat growth in house prices House prices, June 2020 Average price, NOK per m2, all units Housing starts 80.000 15% 3.750 3.500 13% 70.000 3.334 3.250 11% 60.000 3.000 75.112 9% 2.750 50.000 2.625 2.500 7% 40.000 5,4 % 2.250 5% 48.839 39.539 43.407 2.000 30.000 3,9 % 33.476 3,5 % 3,2 % 3% 1.750 2,4 % 20.000 1.500 1% 1.250 10.000 -1% 1.000 Last 12… 0 -3% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tromsø Bodø/Fauske North Norway Oslo Norway Average price, NOK per m2, all units Source: Eiendom Norge, Boligprisstatistikk/byggeareal 9

Lower demand for interest-only mortgage and coronaloans Coronaloans, per week Mortgage-only, per week 35 120.000.000 600 2.000.000 30 100.000.000 500 1.500.000 25 80.000.000 400 20 60.000.000 300 1.000.000 15 40.000.000 200 10 500.000 20.000.000 100 5 0 - 0 - 1415161718192021222324252627282930 1112131415161718192021222324252627282930 Number Volume Customers Installment 10

SpareBank 1 Nord-Norge is an important CSV-player Distribution of the community dividend in 2019 • The board set aside 10 MNOK for corona measures. 228 community- 1% and sports groups have received 4% Sports 4% support under this scheme 4% Culture • Community dividend for non-profit 5% Business development 37% purposes has increased from 39 Environment and sustainability 8% MNOK in 2015 to 265 MNOK in 2020 • Other As of the first six months of 2020, NOK 129 million has been allocated Outdoors 11% • 845 different projects in Northern Urban spaces Norway has received support (as of Humanitarian the first six months of 2020) 26% Conferenes 11

Ambitions for growth and increased market share Expected growth for SpareBank 1 Nord-Norge in 2020: 2-5 % Retail market: Corporate market: 5-8 % Future growth is still highly uncertain due to the corona situation Corporate growth is from companies and industries with low exposure to corona 12

Why invest in SpareBank 1 Nord-Norge? resourceful region ROE #1 Market leader in a Ambitious, top class financial targets High relative Owner friendly Implements new KPI ownership in dividend policy and measures to maintain SpareBank 1 Group, strong capitalization top class ROE other alliance companies and Norwegian banking infrastructure 13

Group financial highlights and key figures 30.06.20 % 30.06.19 % 31.12.19 % (Amounts in NOK million and in % of average assets) From the profit and loss account Net interest income 1 067 1,84 % 979 1,81 % 2 097 1,92 % Net fee- and other operating income 576 0,99 % 548 1,02 % 1 116 1,02 % Net income from financial investments 389 0,67 % 857 1,59 % 911 0,84 % Total income 2 032 3,51 % 2 384 4,41 % 4 124 3,78 % Total costs 796 1,37 % 751 1,39 % 1 640 1,50 % Result before losses 1 236 2,13 % 1 633 3,02 % 2 484 2,28 % Losses 201 0,35 % - 2 0,00 % 11 0,01 % Result before tax 1 035 1,79 % 1 635 3,03 % 2 473 2,27 % Tax 164 0,28 % 209 0,39 % 409 0,38 % Defecit non-current assets held for sale 0 0,00 % 2 0,00 % 2 0,00 % Result after tax 871 1,50 % 1 424 2,64 % 2 062 1,89 % Interest hybrid capital 15 13 28 Result after tax ex. interest hybrid capital 856 1 411 2 034 Profitability Return on equity capital 1 12,9 % 22,7 % 15,9 % Interest margin 2 1,84 % 1,81 % 1,92 % Cost/income 3 39,2 % 31,5 % 39,8 % 14

A good second quarter in a demanding year Cost/income Group CET 1 incl floor Return on equity capital 17,2 % 16,7 % 16,9 % 43,1 % 41,6 % 15,9 % 39,8 % 14,5 % 14,6 % 36,9 % 13,0 % 11,4 % 2018 2019 1Q20 2Q20 2018 2019 1Q20 2Q20 2018 2019 1Q20 2Q20 15

Improvement in result before tax last quarter 16

Low individual losses – increased ECL provisions 0,16 % 201 0,10 % 119 0,01 % 0,01 % 0,00 % 13 11 -2 30.06.19 30.09.19 31.12.19 31.03.20 30.06.20 Net losses Net losses in % of gross lending incl. intermediary loans 17

Somewhat weaker lending growth in retail market, but strong corporate growth Retail market incl. commission loans 3,9 % 6,2 % Retail incl. commission 30 % loans Corporate incl. 70 % commission 87 417 loans 84 156 79 218 30.06.18 30.06.19 30.06.20 Corporate incl. commission loans Retail excl. 42 % commission 10,9 % 58 % 5,5 % loans 37 082 33 423 31 670 30.06.18 30.06.19 30.06.20 18

Positive development in lending margins 2,68 % 2,51 % 2,48 % 2,45 % 2,40 % 2,35 % 2,35 % 2,35 % 2,30 % 2,04 % 1,53 % 1,52 % 1,48 % 1,44 % 1,44 % 1,36 % 1,35 % 1,32 % 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Lending margin corporate Lending margin retail 19

Continued strong deposit growth Retail banking market 9,8 % 5,8 % Public 10 % Corporate 41 069 34 % 37 390 Retail 35 326 56 % 30.06.18 30.06.19 30.06.20 Public market Corporate market 22,5 % 7,6 % 4,7 % -29,2 % 24 963 20 383 18 937 9 953 9 510 7 049 30.06.18 30.06.19 30.06.20 30.06.18 30.06.19 30.06.20 20

Weaker deposit margins due to falling NIBOR 1,00 % 0,84 % 0,78 % 0,70 % 0,48 % 0,53 % 0,52 % 0,69 % 0,46 % 0,64 % 0,52 % 0,48 % 0,45 % 0,38 % 0,29 % 0,01 % 0,36 % -0,26 % -0,27 % -0,28 % -0,28 % -0,28 % -0,29 % -0,29 % -0,31 % -0,32 % -0,37 % 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Deposit margin corporate Deposit margin retail Deposit margin public 21

The profitability measures goal remains ROE Effect of profitability 200 MNOK 12 % measures year end 2021: C/I ratio 2020: 2% < 40 % Maximum cost increase*: 2021: 0% 22 *) Ex. new business areas

Long term financial targets > 12 % ROE Main target > 50 % < 40 % 15,0 % Dividend payout C/I-ratio Tier 1 Capital ratio 23