Sparebanken Møre

Quarterly Report • Jan 25, 2024

Presentation Sparebanken Møre Group

4th quarter 2023 Preliminary Annual Accounts

Trond Lars Nydal CEO

John Arne Winsnes CFO

Oslo, 25 January 2024

Highlights 2023

Deposits: 8.0 % (Last 12 months)

Loan loss

reversals In NOK: -53 million In per cent: -0.06 (loans and guarantees)

Strong liquidity and solidity

Deposit-to-loan ratio: 57,9% LCR: 174 NSFR: 124 CET1: 18.2 % Leverage Ratio: 7.5 %

Strong results per Q4 Profit after tax

• A good result gives higher profitability

• Profit per Equity Certificate by end of 2023 is NOK 10.12 (Group) compared with NOK 7.50 (Group) in 2022

• NOK million

711

Results compared Profit after tax per 2023 compared with 2022

• We are delivering a solid annual profit for 2023
• Good income development and loan loss reversals contribute to the improvement in earnings
• The cost increase is a result of the investments in increased growth and activity
• We have implemented a number of measures to create growth, to improve the quality of the customer experience and to equip the bank for the future

Solid annual result benefits the region

• According to the bank's dividend policy, the preliminary annual result for 2023 and the bank`s strong capital, the Board is planning to propose to the General Meeting a cash dividend of NOK 7.50 per equity certificate, a total of NOK 371 million. The corresponding provision for dividend funds for local communities will amount to NOK 376 million
• The dividend corresponds to 74.1 per cent of the Group's result allocated to the equity owners

Proposal of allocation of result for 2023 (Parent bank)

Q4 2023

Stronger profitability Profit after tax

• The result for the fourth quarter is positively affected by reversals of loan losses
• Return on Equity is 4.6 per cent higher than the fourth quarter of 2022

• Profit per Equity Certificate in the fourth quarter of 2023 is NOK 3.28 (Group) compared with NOK 2.33 (Group) in the corresponding quarter of 2022

• NOK million

Return on Equity - in per cent

• Total revenues in the quarter
• are 8.1 per cent higher than in the fourth quarter in 2022 and 0.3 per cent higher than in Q3 2023
• Net Interest Income in the quarter is 17.1 per cent higher than in Q4 2022 and 3.9 per cent higher than in Q3 2023

Total income Total Income in the quarter - NOK million

Total Income in the quarter

• in per cent of Average Assets

Lending growth

Loans

• MNOK 5,494 in lending growth last 12 months (net lending)

Lending growth retail market - NOK billion and annual growth

Lending growth in the last 12 months: MNOK 2,977

Lending growth corporate market - NOK billion and annual growth

Lending growth in the last 12 months: MNOK 2,464

Deposits – retail market

• NOK billion and annual growth

Deposit growth in the last 12 months: MNOK 2,882

Deposits – corporate market

• NOK billion and annual growth

Increase in deposits in the last 12 months: MNOK 647

Deposits

Deposits

• Deposit growth in the last 12 months: MNOK 3,529

High deposit-to-loan ratio of 57.9 per cent

Other Income

Customer relateted other income - MNOK

Financial Instruments - MNOK

Expenses

Cost/Income ratio

• The long-term target is a cost income ratio below 40 per cent
• Increased activity, employer's tax and one-off costs contribute to higher expenses

in the fourth quarter Operating expenses in the quarter - NOK million

Operating expenses in the quarter - in per cent of Average Assets

Losses and portfolio quality

• Net reversal of losses amounted to MNOK 117 in the fourth quarter
• Solutions to several commitments within Oil services/Supply have improved the overall credit quality
• The proportion of credit-impaired commitments is reduced by 0.8 pp compared with the fourth quarter of 2022
• For the loan portfolio excl.Oil Services/Supply, the loss provisions have increased by MNOK 21 in the fourth quarter

Losses on loans and guarantees

• NOK million

Credit-impaired commitments (net) - in per cent of loans and guarantees

Losses on loans and guarantees

• in per cent of Average Assets

Impairments - NOK million

Ind. impairments on comm. in default>90 days Ind.impairments on other credit-impaired 14

ECL on loans and guarantees

Corporate lending

• The bank has a stable share of exposure to the corporate sector
• There is good industry risk diversification and a low level of risk in the portfolio
• Increased lending by NOK 1.1 billion in the fourth quarter

Loans by sector

Market Improvement

Increased demand for vessels within Offshore/Supply and Offshore wind

Fewer available vessels put pressure on market rates

Vessel from Green Island Shipholding/Island Condor

Good results for the seafood industry

Demand for Norwegian seafood has been good for many years and this is also expected in 2024

A weak NOK contributes to Norwegian seafood being competitive

Example: Norsk Sjømat Group, Stranda

• Established in 1996
• Operating income in 2022 approx. NOK 6.5 billion
• Annual profit 2022 before tax NOK 569 million

110 million meals per year 9 meals per second

Norsk Sjømat, Stranda

Exposure to Commercial Real Estate (CRE)

• Stable and well-diversified property portfolio
• 73 per cent of the portfolio within our county Møre and Romsdal, offices and hotel properties in Oslo make up 21 per cent
• 94 per cent of the portfolio is in the low and medium risk category

Good quality in our retail portfolio

• Risk in the portfolio is low with 96 per cent of the loans within 85 per cent LTV
• The level of default is lower than in the industry in general

- In per cent of total loans (LTV)

Loans to retail customers Loan-to-Value – retail loans

• 96 % of mortgages are within 85 % of LTV

• Deviation from Boliglånsforskriften reported in Q4-2023:
• o 9.7 % outside Oslo (flexibility quota 10 %)
• o 4.8 % in Oslo (flexibility quota 8 %)

House price development Price per square meter

• Based on pre-owned dwellings sold, Norwegian seasonal adjusted house prices increased by 0.2 per cent in December 2023.
• Last 12 months Norwegian house prices increased in average by 0.5 per cent.
• House prices in the City of Ålesund increased more than the national average last 12 months, 1.3 per cent.
• We see increase in days on market, indications of build-up in stock, and average sales prices ending slightly below asking price.

Indexed development

• January 2015 = 100

• January 2015 – December 2023

Key information on pre-owned dwellings sold in December 2023	Norway	Ålesund	City of Oslo
Seasonal adj. development last month	+0.2 %	+0.1 %	0.0 %
Development last 12 months	+0.5 %	+1.3 %	+1.8 %
Development last 10 years	+55.5 %	+41.6 %	+89.2 %
Per square meter (NOK)	50,338	34,591	90,327
Average number of days on market	62 days	81 days	43 days
Price median dwelling (NOK)	3,706,906	3,100,000	5,091,143

Strong Capital gives competitive financing

Deposits are the Group`s most important source of funding. The bank has high Deposit-to-Loan ratio.

Strong rating and long-term financing

• Our deposit-to-loan ratio stood at 57.9 per cent by year end
• Total net market funding ended at NOK 37.7 billion by end of Q4 2023 – nearly 84 per cent with remaining maturity of more than one year
• The senior bonds with a remaining term of more than one year have a weighted remaining maturity of 2.74 years while the financing through Møre Boligkreditt AS has a correspondingly weighted remaining maturity of 2.95 years - in total for market financing in the Group the remaining maturity is 3.01 years
• In a Credit Opinion published on 9 January 2024, the rating agency Moody's confirms Sparebanken Møre's counterparty deposit and issuer rating to A1 with a stable outlook. Møre Boligkreditt has the same issuer rating as the parent bank. The issues from Møre Boligkreditt AS are rated Aaa
• Møre Boligkreditt AS has issued bonds for close to NOK 28.3 billion at the end of 2023, of which around 30 per cent are issued in currencies other than NOK. Two of the company's euro issues are green
• In addition to the financing through Møre Boligkreditt AS, the bank's financing through 2023 has been characterized by adaptation to the MREL requirement

Strong capital

During 2022 and 2023, we have received clarification on several elements related to regulatory capital requirements for Sparebanken Møre:

• ✓ Introduction of P2G which must be covered by CET1 capital
• ✓ Normalisation of the Countercyclical Buffer to 2.5 per cent of RWA
• ✓ Normalisation of the Systemic Risk Buffer to 4.5 per cent
• ✓ New Pillar 2 requirement (P2R) of 1.6 per cent (1.7 per cent) and new composition of P2R with a "discount" for CET1 capital of 0.7 per cent

but we have also received significant changes in RWA, including;

• ✓ SME discount
• ✓ Approved and implemented model for calibration changes for the corporate market

The bank has a long-term target for CET1 which must at least be the sum of Pillar 1, Pillar 2 (P2R) and P2G and is thus well capitalized with solid buffers against capital requirements and capital targets

CET1- status and requirements

Leverage Ratio

MORG pricing

Development at Oslo Stock Exchange (MORG vs EC-index, Total Return)

Total Return weaker than the index in 2023 Recovery towards the end of the year

Dividend policy

• Sparebanken Møre aims to achieve financial results providing a good and stable return on the bank's equity capital
• Sparebanken Møre's profit allocation must ensure that all equity owners are guaranteed equal treatment
• If the solvency ratio does not indicate otherwise, the aim is that around 50 per cent of the year's profit overall can be distributed as dividends

MORG – price and Price/Book (P/B) value*

• Equity. price and P/B

*Equity per MORG is calulated on Group figures. Figures for 2019-2021 stated before the split in 2022.

Continued growth

Stronger presence

Economic environment

• Global inflationary pressures continued to ease throughout the fourth quarter. A further slowdown in the level of economic activity, combined with falling inflation, points to the fact that interest rates have peaked with most of our trading partners. The focus among market participants has thus gradually shifted from interest rate increase to interest rate cut
• Growing confidence that the interest rate peak has been reached contributed to a strong development in the stock market towards the end of the year. The interest rate market also seems to expect that the interest rate will fall faster than the central banks assume
• At home, a weak Norwegian krone has made it more difficult to bring down inflation. The weak NOK was therefore one of the main reasons why Norges Bank, somewhat surprisingly, increased the key interest rate to 4.5 per cent in December. In the wake of the interest rate hike, the krone strengthened markedly, to the strongest levels since August

The bank is solid and has good liquidity, and will continue to be a strong and committed supporter for our customers and our region

Production and demand in Møre and Romsdal are at a high level

With registered unemployment of 1.7 per cent of the workforce, the labour market remains tight in Møre og Romsdal. Also on a national basis, unemployment is at historically low levels, at 1.9 per cent.

Although the overall figures show a flattening in the level of activity in the Norwegian economy, the development is very different between the various industries.

Activity is particularly high in oil and gas, which supports development in parts of the industry. Other industries, such as seafood and tourism, have also benefited from a weak Norwegian krone and are experiencing high activity.

On the other side of the scale, a depressed economy among households has led to lower activity in the trade in goods. Furthermore, there has been a sharp drop in activity within construction, with many construction projects being put on hold or completely shelved.

Equipped for further growth

Long-term financial targets

Contact

sbm.no facebook.com/sbm.no @sbmno engasjert.sbm.no

CEO Trond Lars Nydal

+47 95 17 99 77 trond.nydal@sbm.no

Disclaimer

This presentation has been prepared solely for promotion purposes of Sparebanken Møre. The presentation is intended as general information and should not be construed as an offer to sell or issue financial instruments.

The presentation shall not be reproduced. redistributed. in whole or in part. without the consent and Sparebanken Møre. Sparebanken Møre assumes no liability for any direct or indirect losses or expenses arising from an understanding of and/or use of the presentation. of Sparebanken Møre.

CFO John Arne Winsnes

+47 46 28 09 99 jaw@sbm.no

Runar Sandanger Senior Economist SVP

+47 95 04 36 60 runar.sandanger@sbm.no

Attachments

Results Q4 Key figures Q4 23 and Q4 22

	In Q4 2023		In Q4 2022			Changes
Results (NOK million and %)	MNOK	%	MNOK	%	MNOK	p.p.	%
Net Interest Income	506	2.11	432	1.95	74	0.16	17.1
Gains/losses liquidity portfolio	0	0.00	18	0.08	-18	-0.07	-
Gains/losses on shares	4	0.02	12	0.05	-8	-0.03	-66.7
Net income Financial Instruments	-3	-0.02	5	0.02	-8	-0.06	-
Other Income	70	0.29	67	0.30	3	-0.01	4.5
Total Other Income	71	0.29	102	0.46	-31	-0.17	-30.4
Total Income	577	2.40	534	2.41	43	-0.01	8.1
Salaries and wages	135	0.56	122	0.55	13	0.01	10.7
Other expenses	107	0.45	94	0.42	13	0.03	13.8
Total operating expenses	242	1.01	216	0.97	26	0.04	12.0
Profit before losses	335	1.39	318	1.44	17	-0.05	5.3
Losses on loans. guarantees	-117	-0.49	2	0.01	-119	-0.50	-
Pre-tax profit	452	1.88	316	1.43	136	0.45	43.4
Taxes	112	0.46	74	0.34	38	0.12	51.4
Profit after tax	340	1.42	242	1.09	98	0.33	40.9
Return on equity (ROE) %	17.8		13.2		4.6
Cost/Income ratio	42.0		40.3		1.7
Profit per EC (NOK)	3.28		2.33		0.95		34

Results per Q4 2023 Key figures per Q4 2023 and per Q4 2022

	Per Q4 2023		Per Q4 2022			Changes
Results (NOK million and %)	MNOK	%	MNOK	%	MNOK	p.p.	%
Net Interest Income	1,900	2.02	1,517	1.78	383	0.27	25.2
Gains/losses liquidity portfolio	-2	0.00	-75	-0.11	73	0.10	-97.3
Gains/losses on shares	10	0.01	24	0.03	-14	-0.02	-58.3
Net income Financial Instruments	37	0.04	44	0.06	-7	-0.02	-15.9
Other Income	250	0.26	246	0.29	4	-0.03	1.6
Total Other Income	295	0.31	239	0.28	56	0.03	23.4
Total Income	2,195	2.33	1,756	2.06	439	0.27	25.0
Salaries and wages	482	0.51	430	0.50	52	0.01	12.1
Other expenses	377	0.40	317	0.37	60	0.03	18.9
Total operating expenses	859	0.91	747	0.87	112	0.04	15.0
Profit before losses	1,336	1.42	1,009	1.19	327	0.23	32.4
Losses on loans. guarantees	-53	-0.06	-4	0.00	-49	-0.06	-
Pre-tax profit	1,389	1.48	1,013	1.19	376	0.29	37.1
Taxes	334	0.35	236	0.28	98	0.07	41.5
Profit after tax	1,055	1.13	777	0.91	278	0.22	35.8
Return on equity (ROE) %	14.0		10.9	3.1
Cost/Income ratio	39.2		42.5	-3.3
Profit per EC (NOK)	10.12		7.50	2.62

Balance sheet and key figures

Key figures per Q4 2023 and Q4 2022

	31.12.23	31.12.22	Changes
Balance in NOK million			MNOK	%
Total Assets	96 735	89 501	7 234	8.1
Loans to customers	81 572	76 078	5 494	7.2
Deposits from customers	47 410	43 881	3 529	8.0
Net Equity and Subordinated Loans	8 363	7 935	429	5.4

Key Figures	31.12.23	31.12.22	Changes p.p.
Return on Equity	14.0	10.9	3.1
Cost/Income ratio	39.2	42.5	-2.8
Primary Capital	22.2	22.1	0.1
Tier 1 Capital	20.0	19.7	0.3
CET1	18.2	17.9	0.3
Leverage Ratio	7.5	7.6	-0.1
Profit per EC (NOK. the Group)	10.12	7.50	2.62
Profit per EC (NOK. the bank)	10.34	8.48	1.86

Specification of other income

2023 and 2022

(NOK million)	2023	2022	Changes y/y
Guarantee commission	27	44	-17
Income from the sale of insurance services (non-life/personal)	29	27	2
Income from the sale of shares in unit trusts/securities	17	15	2
Income from Discretionary Portfolio Management	47	43	4
Income from payment transfers	95	90	5
Other fees and commission income	43	29	14
Commission income and income from banking services	258	248	10
Commission expenses and expenses from banking services	42	34	8
Income from real estate brokerage	33	31	2
Other operating income	1	1	0
Total other operating income	34	32	2
Net commission and other operating income	250	246	4
Interest rate hedging (for customers)	16	15	1
Currency hedging (for customers)	31	42	-11
Dividend received	1	11	-10
Net gains/losses on shares	10	24	-14
Net gains/losses on bonds	-2	-75	73
Change in value of fixed-rate loans	-9	-14	5
Change in value of issued bonds	1	-9	10
Net gains/losses related to buy back of outstanding bonds	-3	-1	-2
Net result from financial instruments	45	-7	52
Total other income	295	239	56

Specification of expences

2023 and 2022

(NOK million)	2023	2022	Changes y/y
Wages	343	314	29
Pension expenses	25	23	2
Employers' social security contribution and Financial activity tax	82	67	15
Other personnel expenses	32	26	6
Wages. salaries. etc.	482	430	52
Depreciations	49	46	3
Operating expenses own and rented premises	19	15	4
Maintenance of fixed assets	8	7	1
IT-expenses	168	150	18
Marketing expenses	47	37	10
Purchase of external services	32	25	7
Expenses related to postage. telephone. newspapers etc.	9	8	1
Travel expenses	6	5	1
Capital tax	12	8	4
Other operating expenses	27	16	11
Total other operating expenses	328	271	57
Total operating expenses	859	747	112

Higher Net Interest Income

Net Interest Income in the quarter

• NOK million

Net Interest Income in the quarter - in per cent of Average Assets

Low level of creditimpaired commitments

Group figures

• in % of total commitments

Retail market - in % of retail commitments

Corporate market - in % of corporate commitments

Corporate market (excl. Oil services/supply) - in % of corporate commitments

Credit-impaired commitments

• The overview shows nonperforming commitments in default above 90 days and other credit-impaired commitments

• in NOK million - in % of commitments

Total credit-impaired commitments Total credit-impaired commitments

Losses by sector Losses on loans and guarantees

• NOK million

Expected credit losses Expected credit losses Expected credit losses

- in NOK million - in % of commitments

• NOK million - In % of Average Assets

Recognized losses Losses on loans and guarantees Losses on loans and guarantees

Development in CET1 Changes in CET1 from 31.12.2022

EC capital in Sparebanken Møre

The largest owners (1-10) of EC capital

EC holder	Number	of ECs
	31.12.23	30.09.23
Sparebankstiftelsen Tingvoll	4.904.584	4.905.611
Spesialfondet Borea Utbytte	2.866.229	2.903.892
Verdipapirfondet Eika egenkapital	2.334.387	2.338.895
Wenaasgruppen	2.100.000	2.100.000
Pareto Aksje Norge	1.896.676	1.813.805
MP Pensjon	1.798.905	1.798.905
Kommunal Landspensjonskasse	1.548.104	1.548.104
Verdipapirfond Nordea Norge Verdi	1.505.120	1.505.120
Wenaas EFTF AS	1.100.000	1.100.000
Beka Holding AS	750.500	750.500
Total 10 largest	20.804.505	20.764.832
Of witch Møre og Romsdal	8.104.584	8.105.611
Of witch Møre og Romsdal in per cent	40,0	39,0

EC capital in Sparebanken Møre

The largest owners (11-20) of EC capital

EC holder	Number of ECs
	31.12.23	30.09.23
Lapas AS	627.500	627.500
Forsvarets personellservice	459.000	459.000
BKK Pensjonskasse	422.600	422.600
Stiftelsen Kjell Holm	419.750	419.750
Kverva Finans AS	413.995	423.995
Pareto Invest Norge AS/Pareto AS	375.753	565.753
Hjellegjerde Invest AS	300.000	300.000
U Aandahls EFT AS	250.000	250.000
PIBCO AS	229.500	229.500
Borghild Hanna Møller	201.967	201.967
Total 20 largest	24.504.570	24.664.897
Of witch Møre og Romsdal	10.133.301	10.134.328
Of witch Møre og Romsdal in per cent	41,4	41,1