Q2 2013 August 14th 2013 Q2 2 0 1 3 Sum m ary 1 st half 2 0 1 3 - PowerPoint PPT Presentation

Q2 2013 August 14th 2013 Q2 2 0 1 3

Sum m ary 1 st half 2 0 1 3 Good profit perform ance, NOK 6 0 6 m , and 1 1 .9 % return on equity • Good performance, net profit NOK 606m and return on equity 11.9% • Strong result for core business • Growth in lending shifted from corporates towards residential borrowers • Increased lending rates substantially strengthened net interest income in the 2nd quarter • Parent bank cost growth reduced to 3% • Very low default rate, low losses and good stable credit quality • Common equity tier 1 (CET1) capital at 10.3% , up from 10.0% at year-end • SMN plans for a CET1 ratio of at least 14.5% by mid-2016. AIRB application submitted • Stronger owner focus at SpareBank 1 Markets 2 Q2 2 0 1 3

SpareBank 1 Markets – strengthened ow ner focus • SpareBank 1 Markets changes its owner structure • SpareBank 1 Gruppen is selling its stake in the company. Henceforth SpareBank 1 Markets will be owned directly by SpareBank 1 SMN (24% ), SpareBank 1 Nord Norge (24% ), SpareBanken Hedmark (15% ), Samspar (24% ), Trade Unions Confederation (12% ) and employees (2% ) • Stronger collaboration will be put in place between the bank and Sparebank 1 Markets. – Integration of the owner banks’ corporate finance and share trading business with corresponding areas at SpareBank 1 Markets – In addition the banks’ business volumes are to be internalised to a greater degree – Together with other measures, this will promote increased profits in the company and the banks alike • In connection with the change in owner structure, SpareBank 1 Gruppen has written down its owner interest in SpareBank 1 Markets by NOK 122m. SpareBank 1 SMN’s share of this write down is NOK 23.8m. 3 Q2 2 0 1 3

Good profitability Strengthened financial position and low losses Return on equity Tier 1 capital ratio w ith and w ithout hybrid capital 14,6 % 12,8 % 11,9 % 11,7 % 11,7 % 1,4 % 1,3 % 1,4 % 1,7 % 1,6 % 10,3 % 10,0 % 9,5 % 9,3 % 8,9 % 2010 2011 2012 2Q 12 2Q 13 2010 2011 2012 2Q 12 2Q 13 Loan losses % of total loans Deposit-to-loan-ratio 0,16 % 70 % 70 % 70 % 65 % 61 % 0,07 % 0,06 % 0,05 % 0,03 % 2010 2011 2012 2Q 12 2Q 13 2010 2011 2012 2Q 12 2Q 13 4 Q2 2 0 1 3

Positive profit trend and sound underlying operations Profit before tax: NOK 7 8 2 m ( NOK 6 6 1 m ) Profit: NOK 6 0 6 m ( NOK 5 1 0 ) Return on equity 1 1 .9 % ( 1 1 .7 % ) I ncom e grow th in core operations to NOK 1 ,4 5 9 m ( NOK 1 ,2 4 4 m ) Profit from related com panies NOK 1 3 7 m ( NOK 1 5 1 m ) , return on financial investm ents NOK 7 4 m ( NOK 8 7 m ) Loan losses: NOK 3 8 m ( NOK 2 5 m ) , 0 .0 7 % of total loans ( 0 .0 5 % ) . Defaults at a very low level Core capital ratio exclusive hybrid capital 1 0 .3 % ( 9 .5 % ) Profit per ECC: NOK 2 .9 9 ( NOK 2 .6 3 ) 5 Q2 2 0 1 3

Good profit trend for core business Per quarter Q2 1 1 – Q2 1 3 Com m ents NOK m ill. Improvement in Q2 13 at a high degree due to 364 • Increased lending margins in Q2, both retail and corporates 283 260 245 • Positive development 231 226 215 commission income 189 • Moderate cost growth 158 Q2 1 1 Q3 1 1 Q4 1 1 Q1 1 2 Q2 1 2 Q3 1 2 Q4 1 2 Q1 1 3 Q2 1 3 6 Q2 2 0 1 3

Operating incom e Positive developm ent operating incom e 2 Q1 1 – 2 Q1 3 NOKm 900 800 700 293 600 245 232 239 240 500 210 219 210 223 104 76 400 50 54 85 15 25 22 9 300 200 399 403 369 354 351 358 344 343 338 100 0 2 Q 1 1 3 Q 1 1 4 Q 1 1 1 Q 1 2 2 Q 1 2 3 Q 1 2 4 Q 1 2 1 Q 1 3 2 Q 1 3 Com m ission incom e 2 1 0 2 1 9 2 2 3 2 1 0 2 3 9 2 4 0 2 4 5 2 3 2 2 9 3 Boligkr editt 2 2 1 5 9 2 5 5 0 5 4 7 6 8 5 1 0 4 Net inter est 3 4 4 3 5 4 3 3 8 3 5 1 3 6 9 3 5 8 3 9 9 3 4 3 4 0 3 7 Q2 2 0 1 3

Net interest, provision com m ission and other incom e The Group’s incom e has increased and becom e m ore diversified and sustainable Net interest and other incom e Com m ission incom e Q2 1 2 and Q2 1 3 NOKm 3 0 Jun 3 0 Jun m ill kr 2 0 1 3 2 0 1 2 Commission income Payment t ransmission income 107 94 Net interest Commissions savings 21 21 Commissions insurance 60 59 713 Commissions Boligkredit t 188 75 524 453 Guarant ee commisions 30 14 Est at e agency 174 166 Account ancy services 73 52 Asset s management 6 5 746 720 700 Rent al income 22 17 Ot her commissions 32 22 30 Jun 2011 30 Jun 2012 30 Jun 2013 Total commission income 713 524 • The Group’s income platform is robust • Incomes derive from a wide range of products both from the parent bank, the subsidiaries, and the SpareBank 1 Group • Increased margins on loans 8 Q2 2 0 1 3

Lending m argins 2 Q 2 0 0 9 – 2 Q 2 0 1 3 Lending m argins Retail and Corporate Com m ents • Interest rate level remains Percent Loans RM low 3,00 Loans CM 2,64 2,65 2,62 • Increased margins despite 2,47 2,44 strong competition 2,27 2,14 2,20 2,14 2,09 2,16 2,15 2,17 2,12 2,13 2,07 2,01 1,90 1,82 1,88 1,72 • Increase in lending rates 1,65 1,64 1,47 1,47 1,43 1,33 1,47 1,42 1,45 for both retail and 1,27 corporate customers 1,15 1,07 carried out in Q2 2Q 09 4Q 09 2Q 10 4Q 10 2Q 11 4Q 11 2Q 12 4Q 12 2Q 13 9 Q2 2 0 1 3

Zero grow th in costs at parent bank com pared w ith 1 st half 2 0 1 2 . Som e grow th at subsidiaries due to m arket grow th and acquisitions Costs at Q2 2 0 1 3 vs. Q2 2 0 1 2 Zero grow th in costs at parent bank 3 percent growth in costs at parent bank 249 213 compared with 1st half 2012 Subsidiaries Cost growth at subsidiaries due to company acquisitions and offensive market growth Parent bank 601 583 2Q 12 2Q 13 10 Q2 2 0 1 3

Trend in full-tim e position equivalents ( FTEs) on schedule. SpareBank 1 SMN w ill achieve goal of elim inating 2 5 FTEs per year in the period to 2 0 1 5 FTEs at parent bank June 2 0 1 2 to June 2 0 1 3 Staffing plan communicated across, and 800 anchored in, the bank 795 775 The bank is on the right path in terms of resource use. No. of FTEs so far cut by about 20. Some variation possible from one quarter to the next; the goal stands firm and is considered realistic. Q2 12 Q4 12 Q2 13 11 Q2 2 0 1 3

Com m on equity tier 1 ( CET1 ) target of 1 4 .5 % by 3 0 .6 .2 0 1 6 CET1 target of 1 4 .5 % CET1 target of 1 4 .5 % Given a CET1 ratio of 10.4% as of Q1-2013, 1 4 ,5 we expect the plan established by the bank to Countercyclical 1 2 ,5 2,5 achieve the target in the 1st half of 2016 buffer 10,3 2,5 3,0 Systemic risk 3,0 2,0 SIFIs Conservation 2,5 2,5 buffer 4,5 4,5 Equity capital Q2 2013 Previous Target target July 2016 12 Q2 2 0 1 3

Total grow th lending 8 .4 % High grow th in lending to m ortgages Lending RM + 1 4 .0 % from 2 0 1 2 to 2 0 1 3 65,8 + 1 4 ,0 % NOKbn and per + 1 0 ,8 % 57,7 Loans 52,1 Boligkr. 28 % RM 30 Jun 2011 30 Jun 2012 30 Jun 2013 33 % Lending CM + 0 .7 % from 2 0 1 2 to 2 0 1 3 CM 40 % NOKbn and per cent + 0 ,7 % + 1 0 ,3 % - - 8,8 SME 42,8 38,8 34,3 Large corporates 30 Jun 2011 30 Jun 2012 30 Jun 2013 13 Q2 2 0 1 3

Total grow th deposits 7 .3 % Deposits RM + 8 .7 % from 2 0 1 2 to 2 0 1 3 8 ,7 % NOK bn. 8 ,4 % 24,4 and % 22,4 Deposits 20,7 CM 56 % 30 Jun 2011 30 Jun 2012 30 Jun 2013 RM Deposits CM + 6 .2 % from 2 0 1 2 to 2 0 1 3 44 % + 6 ,2 % NOK bn. + 1 4 ,9 % and % 8,6 SME 29,1 25,3 Large 22,3 corporates 30 Jun 2011 30 Jun 2012 30 Jun 2013 14 Q2 2 0 1 3

Good results at the subsidiaries • Profit: NOK 41.5m (41.9m) • 3,279 dwellings (3,232) sold with an overall sale value of NOK Eiendom sMegler 1 8.6bn (7,7), and with a market share of about 40% in the region • Focus on synergy between bank and estate agent • Profit: NOK 29.1m (30.3m) • Substantial income growth SpareBank 1 SMN • Leasing worth NOK 1.8bn and car loans worth NOK 1.3bn; growth Finans in car loans • Profit: NOK 12.1m (8.6m) • Acquisition of 5 accountancy firms over the course of 2012 SpareBank 1 SMN • Growth of 30% (3 x average growth in this industry) and market Regnskapshuset leader in mid-Norway • SpareBank 1 Regnskapshuset launched as a nationwide brand 15 Q2 2 0 1 3

Low and stable risk in the loan portfolio SpareBank 1 SMN’s loans distributed on SpareBank 1 SMN’s loans distributed on size of risk class and share of Exposure At Default custom er engagem ent and share of Exposure At Default Share of EAD June 2 0 1 3 Share of EAD June 2 0 1 2 Share of EAD June 2 0 1 3 Share of EAD June 2 0 1 2 81 % 78 % 6 7 % 6 5 % 19 % 14 % 1 3 % 1 2 % 1 2 % 1 2 % 1 0 % 9 % 5 % 3 % Low est - low Medium High - highest Under 1 0 m nok 1 0 - 1 0 0 m nok 1 0 0 - 2 5 0 m nok Over 2 5 0 m nok 16 Q2 2 0 1 3

Low loan losses Loan losses – quarterly trend Losses by business area: NOK mill NOK mill 0,0 5,0 10,0 15,0 20,0 25,0 Collective RM 4 Individual 26 21 17 17 17 SMN Finans 12 11 8 8 -1 CM 23 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 • Loan losses measure 0.07% (0.05% ) of gross lending at 30 June 2013 17 Q2 2 0 1 3