Quarterly accounts Q1 2019 Troms/Oslo 8. mai 2019 Quarterly - PowerPoint PPT Presentation

Quarterly accounts Q1 2019 Tromsø/Oslo 8. mai 2019

Quarterly accounts Q1 2019 Pre-tax profit ROE 28.1 % 973 MNOK C/I-ratio CET-1 ratio Losses 14.6 % 27.5 % -17 MNOK 2

Northern Norwegian economy: – low unemployment and steady growth Sector Status Outlook Macro Seafood Tourism Construction Retail Oil and gas 3

Tourism – growth in foregin overnight stays Foreign overnight stays 700.000 600.000 500.000 400.000 300.000 200.000 100.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Siste 12 mnd Nordland Troms Finnmark 02 Foreign overnight stays continues to grow. Winter turism plays a more important role, but the growth is now slowing down. 4

1st quarter 2019 - the best ever for export of seafood from Norway Export value of fish from Northern Norway Nordland Troms Finnmark Growth in seafood export value from Northern Norway of 14 % per February. Good prices and weak norwegian kroner contribute. 5

Further growth is hampered by infrastructure 6

SpareBank 1 Nord-Norge – number 1 in the north 1 PM Bank •Main bank: 35 % 1 SME Bank •Main bank: 41 % 2 Large corporates - Bank Real estate 1 •Market share: 37 % Accounting services 1 •Market share: 16 % Secured financing 2 •Market share: 22 % 7 Source: Kantar TNS (posisjonsundersøkelsen), Eiendomsverdi

Business strategy: Regional knowledge – national strength Regional knowledge National strength Cooperation 4,6 120K vurderinger 8

Quarterly accounts Q1 2019 NOK 973 mill. (NOK 414 mill.) PRE-TAX PROFIT RETURN ON EQUITY 28.1 % (11.2 %) | 13.1 % adjusted for insurance merger gain 27.5 % (44.4 %) | 42.2 % adjusted for insurance merger gain C/I-RATIO NOK -17 mill, return (NOK 16 mill) LOAN LOSSES 14.6 % (14.8 %) CET-1 RATIO 9

Key financial figures - development Return on equity capital Cost/income Group CET 1 incl floor 28,1 % 42,9 % 43,1 % 42,2 % 41,2 % 15,0 % 27,5 % 14,9 % 13,1 % 14,6 % 13,1 % 12,9 % 12,0 % 14,5 % Target Target Target > 12 % 14,5 % < 40 % 2016 2017 2018 31.03.19 2016 2017 2018 31.03.19 2016 2017 2018 31.03.19 Return on equity capital Cost/income Group ex. gain Sp1 Gruppen Kostnadsprosent konsern eks. gevinst fra Sp1 Gruppen Return on equity capital ex. gain Sp1 Gruppen Cost/income Group 10

Quarterly summary: Profit and loss account figures (Amounts in NOK million) 1Q19 4Q18 3Q18 2Q18 1Q18 Net interest income 473 496 484 467 449 Net fee-, commision and other operating income 256 278 254 275 250 Net income from financial investments 589 80 121 188 74 Total net income 1.318 854 859 930 773 Total costs 362 387 373 371 343 Result before losses and write-downs 956 467 486 559 430 Net losses and write-downs -17 -6 -8 20 16 Result before tax 973 473 494 539 414 Return on equity capital 28,1 % 12,0 % 13,3 % 15,6 % 11,2 % EK-avkastning ekskl. gevinst Sp 1 Gruppen 13,1 % Cost/income 27,5 % 45,3 % 43,4 % 39,9 % 44,4 % 11 Cost/income Group ex. gain Sp1 Gruppen Kostnadsprosent ekskl. gevinst Sp 1 Gruppen 42,2 %

Changes profit and loss last quartal 11 25 509 (Amounts in NOK million) 973 - 27 - 18 473 4Q18 NII incl provision NCI excl provision Investment income Costs Losses 1Q19 commission loans from commission loans 12

Ambitious long-term cost target: C/I < 40 % NOK mill. 387 373 371 373 362 343 45,3 % 44,4 % 43,4 % 42,2 % 40,5 % 39,9 % 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 Total costs Cost/income Group 13

Very low losses on loans and guarantees Mill kr 0,22 % 0,17 % 0,02 % -0,06 % 213 184 22 -17 2016 2017 2018 31.03.19 14 Net losses Net losses in % of gross lending incl Boligkreditt

Lending margin, parent bank The interest margin is defined as the difference between the customer lending interest rate and average 15 3 month NIBOR

Customer deposit, parent bank The interest margin is defined as the difference between average 3 month NIBOR and the customer 16 deposit interest rate

Distribution on segments shows good diversification A high share of retail- and primary industry lending represent a risk Real Power- , water supply mitigating factor. and construction3 % Estate10 % Commision loans 29 Industries 2 % % The Group has a well diversified Agriculture and fisheries 5 % corporate market lending portfolio. Annet 19 % Transport and service No specific concerns related to the industries 5 % bank's loans to commercial property due to low interest rates Retail banking Other 4 % market 42 % and good occupancy rates in the bank's market area. 17

Lending volume Retail incl. commission loans Retail incl. 29 % 82 658 commission 77 140 loans 70 887 Business/ incl. 71 % 8,8 % 7,2 % commission loans 31.03.17 31.03.18 31.03.19 Corporate/public market Retail excl. commission 41 % loans 59 % Business excl. 34 406 32 516 commission 26 393 5,8 % 23,2 % loans 31.03.17 31.03.18 31.03.19 18

Deposit volume Business Retail banking market 34 836 32 589 30 699 19 737 18 212 15 395 6,2 % 6,9 % 18,3 % 8,4 % 31.03.17 31.03.18 31.03.19 31.03.17 31.03.18 31.03.19 Public Business 30,8 % 16,7 % 0,9 % Retail 9 610 8 167 8 238 54,3 % 31.03.17 31.03.18 31.03.19 Public 15,0 % 19

Financial targets ROE CET-1 ratio > 12 % 14,5 % Dividend payout ratio C/I ratio > 50 % < 40 % 20

Financial outlook Increased deposit and lendings rates from 4Q 2018, reduced effect due to increased NIBOR. Increased interest rates in 2019 are expected to provide a NRI basis for further repricing of lending and deposit rates. Increased risk pricing of loans will be emphasized further in 2019. ROE targeted: Top-level profitability among comparable banks, ROE > 12 % currently > 12 %. Targeted core capital coverage ratio: One percentage point above regulatory minimum requirements, currently 14.5 %. Total solvency in CET-1 RATIO 14,5 % the sector is expected to be maintained after regulatory changes. Status Q1 2019: 42.2 %. Total cost increase due to expences with automation and digitalization, and due to growth in Groups companies. Investments in IT are in the long run expected to contribute to reduced C/I-RATIO < 40 % costs and increased profits. Cash dividend for 2018 is considered very high. Extraordinary dividend from SpareBank 1 Group may provide basis for increased dividend at year end, CASH DIVIDEND > 50 % but this must be considered when new regulatory requirements are known. 21

SpareBank 1 Nord-Norge CEO Petter Høiseth CFO Bengt Olsen E-mail: petter.hoiseth@snn.no E-mail: bengt.olsen@snn.no Tel. + 47 415 05 036 Tel. + 47 975 89 560 URLs Website and internet bank: www.snn.no Equity certificate in general: www.egenkapitalbevis.no Financial calendar: Q1 2019: 8. Mai 2019 Q2 2019: 7. August 2019 Q3 2019: 24. October 2019 Preliminary results 2019: 12. February 2020 Quarterly reports are published after the meeting of the board, normally after closing time of the Oslo Stock Exchange. The investor presentation will normally follow the next business day.

Appendix 1. About SpareBank 1 Nord-Norge 2. Financial figures – additional information 3. Credit area 4. Liquidity 5. Northern Norway: Macro and economic trends 6. SpareBank 1 Group and alliance 23

Company structure Subsidiaries and second tier Associated companies and jointed ventures subsidiaries SpareBank 1 SpareBank 1 SpareBank 1 Finans Eiendomsmegler 1 SpareBank 1 Gruppen AS Næringskreditt AS Boligkreditt AS Nord-Norge AS Nord-Norge AS 19,5 % | Financial services 17,82 % | Covered Bond company Loan/consumer finance/ leasing 13,97 % | Funding/ property Real estate brokerage SpareBank 1 Regnskaps- Fredrik Langesg 20 AS huset Nord-Norge AS BN Bank ASA SpareBank 1 Kredittkort AS SpareBank 1 Betaling AS Commersial building Accounting 23,5 % | Bank 16,89 % | Credit card 18,57 % | Vipps/ mobile payment SpareBank 1 Nord-Norge Rødbanken Holding AS* Portefølje AS SpareBank 1 Investment company SMB Lab AS Betr AS Banksamarbeidet DA Investment company 20 % | Innovation 20 % | System development 17,74 % | System development Rødbanken AS* Commercial building *Not consolidated 24

Equity Certificates (EC) – geographic holder structure 10,3 13,8 13,8 20,3 28,6 32,0 33,0 34,6 35,7 36,5 37,0 37,5 37,5 38,3 64,1 65,6 65,5 61,1 53,2 49,1 48,1 46,8 45,6 42,9 44,7 44,2 43,4 42,4 25,5 19,0 20,6 20,7 18,6 19,6 19,3 18,6 18,9 19,1 18,2 18,7 18,9 18,8 2012 2013 2014 2015 2016 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 25 Holders residing in Northern Norway Other Norwegian holders Foreign holders