Q2 Leading digital retail bank in Norway with 470 000 customers - PowerPoint PPT Presentation

Q2

Leading digital retail bank in Norway with 470 000 customers CAGR loan growth 9.2 % since IPO November 2015 Average ROE of 12.3 % last four years Most satisfied customers in the last 19 years Capitalising on investments made in SME offering and long-term savings 2

Gaining market share in mortgages • Return on Equity* (LTM) Quarterly growth in mortgages 2.1 % • Unsecured credit volumes slightly down 12.3 % 12.2 % Savings – record high growth 12.1 % 11.9 % 11.5 % • FuM increased to NOK 17bn • Market share increased to 7.1 % Cost level below Q4 guiding • Operation costs NOK 170m against 175m guiding Net interest margin affected by rate cuts Strong operations through COVID-19 pandemic 2Q19 3Q19 4Q19 1Q20 2Q20 Norwegian macro outlook improving – but still uncertain * Adjusted for non-recurring items • Overall loan loss ratio 0.24 %, 3 • ECL model calibrations - NOK 46.2m provision increase for unsecured credit

Product distribution Mortgage lending centred in urban areas 1.6 % 2.4 % 1.2 % Mortgages 6.9 % Car loans Other credit products Consumer loans 94.8 % 4.9 % Risk classification (bnNOK) 77.1 Eastern 43.9 % Norway ex. Oslo 22.4 % Secured Unsecured 19.8 % Oslo 3.9 1.9 0.9 2.2 % 0.3 0.3 Stage 1: Stage 2: Stage 3: performing under-performing impaired 4

12-month Q2 2020 Q2 2019 growth Net interest income (NOK million) 384.0 359.1 6.9 % Net fee and commission (NOK million) 42.5 50.5 -15.8 % Profit before loan losses (NOK million) 260.1 245.5 5.9 % Net profit (NOK million) 165.8 157.8 5.1 % Earning per share (NOK) 1.47 1.40 ROE (per cent) 9.8 10.3 Cost-to-income (per cent) 39.5 40.8 Loan-loss-ratio (per cent) 0.24 0.22 NIM (per cent) 1.51 1.57 CET1 (per cent) 15.9* 14.9 * Including 70 per cent retained earnings for first half-year of 2020and 100 per cent retained earnings for 2019 following the B oard’s revised dividend proposal 5

90 1 100 84.4 85 1 000 83.0 81.6 81.5 3.2 Earnings before tax - adjusted (LTM) * 79.9 3.5 Total loans to customers (bNOK) 79.2 78.8 80 900 78.2 3.8 3.7 76.8 3.6 3.3 3.1 3.6 2.8 75 73.6 800 72.1 2.9 2.8 70 700 81.2 79.5 77.8 77.8 76.3 75.9 75.7 65 600 74.6 74.0 70.7 69.4 60 500 55 400 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Secured lending Unsecured lending Earnings before tax - adjusted (LTM) * Earnings before tax (LTM) 6

Net interest income Net fee and commission income 216 215 211 1.85 % 210 208 1.81 % 1.77 % 1.57 % 1.51 % 1 640 1 665 1 564 1 497 1 410 63.8 53.5 50.5 48.4 42.5 429 431 421 384 359 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Net interest (LTM) Net interest income Interest margin Net fee and commission income Net fee and commission income (LTM) • NII compression with rate cuts effectuated earlier for • Reduced revenues from card transactions as customers’ lending than for deposits travel activity fell during COVID-19 pandemic • NIM expected to strengthen short term as effect of unmatched timing dissipates 7

NOK million • Cost base 170m – below Q4 2020 10 guidance 13 74 • Reduction in capitalisation of 15 12 19 development projects 42 46 42 43 • Reduced marketing towards 39 39 consumer loans and increased 29 34 mobile advertising 27 45.4 % 38.8 % 40.8 % 35.4 % 39.5 % 38.6 % 37.0 % 97 90 86 81 80 2Q19 3Q19 4Q19 1Q20 2Q20 Personnel IT Other operating expenses Marketing C/I C/I adj. 8

• Cost-income target of 34 % mid-term • Cost-to-income of 39.5 % in the 708 707 694 quarter, negatively affected by NII 668 652 compression from rate cuts 39.7 % 38.6 % 38.6 % 37.8 % 37.6 % 2Q19 3Q19 4Q19 1Q20 2Q20 Operating expenses adj. (LTM) C/I adjusted for one-offs (LTM) 9

Net loan losses and loss ratio Mortgage lending and LTV 80.0 78.3 76.4 76.4 74.8 0.24 % 0.25 % 0.24 % 0.22 % 0.18 % 170.2 188.3 60.2 % 58.6 % 59.2 % 59.2 % 58.2 % 145.0 113.6 97.5 54.0 % 53.0 % 53.1 % 53.4 % 52.9 % 17.2 15.9 8.1 11.1 -0.9 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Mortgage lending LTV (new customers) Net loan losses (LTM) - Sec. Net loan losses (LTM) - Unsec. Loss rate LTV (existing customers) • ECL for unsecured credit influence by model calibrations in light • Average LTV stable both for existing portfolio and new of new macro assumptions loans • Cost of risk is expected to trend lower in the coming quarters 10

Funding Capital 4.6 2.2 % 20.4 % 0.5 3.1 3.6 2.5 3.6 3.0 891 8 078 2.2 % 27.1 27.8 29.5 29.2 28.3 884 15.9 % 67.5 % 6303 65.8 % 64.9 % 65.1 % 64.6 % 6006 13.0 % 59.9 55.2 53.9 52.7 52.8 12.5 % 2Q19 3Q19 4Q19 1Q20 2Q20 CET1 Tier 1 Tier 2 Total Capital Customer deposits Covered Bonds MTN F-loans Deposit-to-loan ratio AVG • • Healthy liquidity position with increased deposit ratio Strong capital position - CET1 at 15.9 % • towards quarter-end MoF favourable decision on leverage ratio requirement for • F-loans used as funding for liquidity portfolio investments parent company – improves capital flexibility 11

• Strong growth in FuM – improved 17.0 market sentiment and high inflow 15.8 of customers’ funds 14.0 13.9 13.3 • 2 215 Net client cash flow record high NOK 1 318 million in the quarter • High volume of shares trading 1 433 • 1 017 Scalable low cost model 785 – gaining market share 663 2Q19 3Q19 4Q19 1Q20 2Q20 FUM (bNOK) NCCF (LTM mNOK) 12

Additional ERP 12 000 integrations • Disrupting the banking market for small SMEs – an ERP salary payment underserved customer group Shares and mutual funds trading • Cost-effective solutions on ERP integration cutting-edge technological 6 600 with Fiken platform Debit card 5 900 • Primary short-term focus on Remove/add users 5 000 launching further ERP New account features integrations 3 800 1 310 SME offering • COVID-19 increases 1 012 launched uncertainty concerning 2 300 638 reaching growth objectives 500 278 15 2Q19 3Q19 4Q19 1Q20 2Q20 2021 SME deposits (mNOK) Customers 13

• • Capitalise on strong Concrete targets • Cross-sales X-sales champion • customer portfolio Strategic pricing • • Focused cost Automation • Efficiency Reduce C/I ratio • effective bank Strong operations • • • Scalable platform at Capitalise on Strong player in big $ Savings attractive terms investment potential market • • Scalable platform at Customer acquisition • SME Disrupt banking for SMEs attractive terms with ERP integrations • Increase NIM Balance sheet • • Profitable capital Priority • Growth in capital light • optimisation allocation Strategic price models revenues Banking as a • • Disruptive and scalable Growth in capital light • Technological leader platforms platform revenues

Targets 2020 - 2022 Q2 2020 2019 12.1 % * Return on equity 14.0 % 9.8 % LTM EPS growth > 10 % 7.1 % 2.8 % * Payout ratio Up to 30 % N/A 29.9 % ** 15.9 % ** 15.6 % ** CET1 ratio 13.0 % Cost-to-income 38.6 % * < 34 % 39.5 % ratio * Excluding non-recurring items. ** 2019 is based on proposed dividend. Q2 2020 follows the revised dividend proposal to not distribute 2019 dividends at this point in time. Note: Targets are subject to the current capital requirements. Any future regulatory changes could imply a change to the target 15

• Compared to previous quarter, there are now clear signs of an Mainland GDP -3.5 % 3.7 % improved economic outlook for Norway • Uncertainty regarding economic forecasts still persists Household credit growth 4.0 % 4.3 % • Record low key policy rate puts downward pressure on interest margin Unemployment 5.0 % 3.2 % • Cost of risk expected to trend lower in coming quarters • Expects to take market share in mortgages and retail savings Housing prices 2.7 % 4.0 % Source: Norges Bank Monetary Policy Report (18 June 2020) 16

Sbanken ASA and its wholly-owned covered bond subsidiary, Sbanken Boligkreditt AS, constitute the Sbanken group. This presentation contains certain forward-looking statements relating to the business, financial performance and results of the group. No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved and any reader is cautioned not to place any undue reliance on any forward-looking statement. The information obtained from third parties has been accurately reproduced and, as far as the company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading. This presentation contains alternative performance measures, or non-IFRS financial measures. Definitions and calculations are presented in our quarterly report. 17

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