SpareBank 1 Sørøst-Norge

Quarterly Report • Aug 10, 2023

Investor presentation Second quarter 2023

Per Halvorsen (CEO) Roar Snippen (CFO)

10 AUGUST 2023

Agenda

Financial targets and ambitions

Results Q2 2023

Profitable growth

Summary

SpareBank 1 Sørøst-Norge is one of 12 independent, local, and regional savings banks that are partners in the SpareBank 1 alliance. The alliance is established and organized to provide the banks with strength and power to engage in progressive banking operations at a local level.

1 million members milestone achieved by LO – significant number of LO members in our region

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Norway's top relationship banks locally and digitally!

Our financial targets remain unchanged

Extra dividend

The board utilized the authorization from the General Assembly meeting March 30th to pay extra dividend¹

Good results

High solidity

Satisfactory risk profile

Dates related to the extra dividend

•	Decision Date:	9. august 2023
•	Last day including right	11. august 2023
•	Ex-date:	14. august 2023
•	Record date:	15. august 2023
•	Payment date:	24. august 2023

1) Equal distribution – dividends to both equity certificate holders and social capital. No change in ownership fraction – still 60.7/39.3

5 2) Share price 50,40 NOK

Profit growth driven by robust underlying operations and increased revenues

Reduced cost ratio, high capital ratio and solid return on equity

1) Starting from Q4.22 the capital ratio is at the group level, meaning subsidiaries and joint ventures are consolidated. Comparable figures have not been restated. Calculating the year-end capital ratio, the expected dividends are considered, including both regular and extra dividends

Structural growth has been important in increasing profitability¹

Increasing Revenue-Expense Gap due to structural measures and streamlining efforts

We are rigged for further profitable growth

Growth is important, but must be quality-driven

New growth momentum through renewal of competence

Workforce rejuvenation

40 new hires with average age of 32 years 80 departures with average age of 48 years

Renewal of competence

Higher education and new competence among our new hires

Enhanced collaboration

Increased growth momentum through collaboration between bank, real estate agent and accounting company

Growth in digital and data driven sales

Positive trend in digital sales and digital loan processing in retail and corporate market

Growth in other income

Strengthening of SpareBank 1 accounting house through the acquisition of Grenlandgruppen

Merger EM1 Sørøst-Norge with EM1 Modum and complete acquisition of Z-eiendom

Close collaboration with Fremtind and SB1 Forvaltning to strengthen insurance sales and investment advisory

Synergy realization to date 85 mNOK, additional 25 mNOK are to be realized in 2023-2024

Synergy realization to date 85 mNOK

Additional 25 mNOK to be realized 23-24

Increased portfolio quality leads to reduced loss provisions

Risk reduction and repricing reduce capital requirements

14 1) Tier 1 in included reversal of loss provisions related to fair value through comprehensive income

Well positioned in an attractive region

1) Source: Telemarksforskning, K. Vareide. Regional analysis Sørøst-Norge. Buskerud, Telemark, Vestfold. Percentage growth 2012-21

2) Source: NAV. Fully unemployed as a percentage of the workforce

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3) Source: Konjunktur Sørøst, Kantar "Forventningsundersøkelse" per May 2023

We are rigged for growth and have a strong dividend capacity

We deliver strong results We are rigged for profitable growth ahead

We are well positioned in an attractive region

Our targets and ambitions remain

Together we create value

Appendix

Profit growth driven by robust underlying operations and increased revenues Key figures second quarter 2023 compared to second quarter 2022

Enhanced Underlying Operations

Increased net interest income by 104 mnok (25 %), but marginal change in commission income

Good profit from BN Bank, but SB1 Gruppen reported a negative result for the quarter

Income from other financial investments has increased by 37 mnok

Increased operating costs – acquisition of accounting house in Q4 2022, increased development costs in SB1 Alliansen and price inflation

Cost ratio 39.8 (46.2) % compared to 44.6 % ex. one-time costs in 2022. Parent bank 27.4 (38.6) % compared to 37.0 % ex. one-time costs in 2022

Recovered 34 mnok on losses

Good return on equity

Ordinary profit after tax of 387 (271) mnok

Return on equity 12.4 (9.4) % in the quarter compared to 10.0 % ex. onetime costs in 2022

EPS group 1.65 (1.15) nok

Extra dividend 1.50 nok. Div. yield 3.0 %

Poor growth in lending and deposits

Lending growth in the current quarter of 0.2 (1.6) %, and deposits 3.5 (2.8) %

Lending growth in corporate market the current quarter of 0.0 (3.6) %, and retail market 0.3 (1.0) %. However, a positive deposit growth of 2.1 (-1.0) % and 4.2 (5.0) % respectively

En godt halvår med økte inntekter og god underliggende drift Key figures first half of 2023 compared to first half of 2022

Enhanced Underlying Operations

Increased net interest income by 217 mnok (26.0 %), increased commission and other income by 9 mnok

Good profit from BN Bank, weakened results from SB1 Gruppen

Income from other financial investments inc. dividend has increased by 31.6 mnok

Increased operating costs ex. one-time costs - acquisition of accounting house in Q4 2022 with full effect in the first half-year, increased development costs in SB1 Alliansen and price inflation

Cost ratio 41.5 (53.2) % compared to 46.4 % ex. one-time costs in 2022. Parent bank 32.2 (47.8) % compared to 40.2 % ex. one-time costs in 2022.

Recovered 34.5 mnok on losses H1 2023

Good return on equity

Ordinary profit after tax of 707 (441) mnok

Return on equity 11.3 (8.1) % compared to 9.7 % ex. one-time costs in 2022

EPS group 3.01 (2.00) nok

Poor growth in lending and deposits

Good growth in deposits, moderate growth in lending

12-month growth in lending of -0.6 (5.1) % and deposits 0.02 (4.3) %. Year-to-date lending growth -0.5 (2.6) % and deposits 3.5 (4.7) %

12-month lending growth in corporate market of -3.5 (7.5) % and retail market 0.2 (4.4) %. Deposit growth of -2.0 (1.0) % and 1.1 (6.2) % respectively

Year-to-date lending growth in corporate market of -1.0 (7.0) % and retail -0.3 (1.4) %. Deposit growth of 2.3 (1.2) % and 4.2 (6.7) % respectively

Strengthened net interest compared to 2022

The bank has adjusted customer rates following changes in the Central Bank's interest rates

Norges Bank	22. sept. 22	3. nov. 22	15. des. 22	23. mar. 23	4. may 23	22. jun
Effect new loans	28. sept. 22	8. nov. 22	20. des. 22	29. mar. 23	10. may 23	27. jun. 23
Existing corporate loans and deposits	12. oct. 22	23. nov. 22	3. jan. 23	13. apr. 23	25. may 23	12. jul. 23
Existing retail loans and deposits	9. nov. 22	21. des. 22	31. jan. 23	11. may 23	22. jun. 23	9. aug. 23

Note: from second half of 2022

Solid income growth in both corporate and retail market

Stable net interest and growth in other income

Reduced margins in the quarter because of high NIBOR

25 1) Interest on lending includes loans transferred to mortgage co 2) 3M NIBOR is calculated as average 3M NIBOR in the quarter

Improved deposit margins, but reduced loan margins against NIBOR¹ for the quarter

Stable operating costs

Operating costs ex. one-off cost (mNOK)

Increased operating costs in second quarter compared to same period last year of 19 mnok of which 14 mnok in parent bank and 5 mnok in subsidiaries

Increased operating costs at the parent bank are attributed to development expenses in SB1 Alliansen and price inflation

The increase in the subsidiaries are mainly tied to new accounting house in Telemark with full effect from 2023 in addition to price and income growth

High equity ratio

Weak growth in lending in the second quarter

Our growth ambitions remain, but growth must be profitable and the risk in line with the bank's profile

Growth in deposits in the second quarter

72 percent of the bank's deposits are within the Deposit Guarantee Scheme

Lending and deposit volumes with pt-, fixed and NIBOR rates

Big proportion of loans to the retail market

No material changes in the composition of the corporate market portfolio

• Reduction in the portfolio compared to the previous quarter from 25.3 BNOK to 25.2 BNOK
• Marginal changes within the various industry sectors
• Continued limited number of new construction projects
• Certain completed construction projects are facing challenges in selling unsold apartments. The bank has in total a low LTV on unsold units in real estate projects (60 percent or lower)
• No significant increase in deferred payments due to liquidity challenges
• Reduction in defaulted and depreciated engagements of approx. 20 percent compared to previous quarter
• Proportion of customers within high and highest risk is reduced with approx. 15 percent since last quarter
• Weighted PD on fresh engagements is on same level as in the previous quarter

No major change from Q1 in the distribution of the corporate market looking at sector and geography

The bank has a solid overweight position in favorable risk class within the corporate market portfolio

Low leverage on commercial loans secured on property (total-distributed)

• The average LTV on commercial loans secured on property including loans transferred to SB1 Næringskreditt and housing cooperatives is 39.5 %, while LTV on own balance sheet is 40.2 %. LTV ex. Housing cooperatives is 50.2 %
• Commercial loans secured on property inc. housing cooperatives is approx. 17 BNOK and 12 BNOK ex. housing cooperatives

1) The calculation of LTV is based on the market value of the collateral. With total-distributed LTV, the whole of the loan is assigned to the same interval. The figures include portfolio transferred to SpareBank 1 Næringskreditt AS.

Low leverage on commercial loans secured on property (interval-distributed)

1) LTV interval-distributed: The calculation of LTV is based on the market value of the collateral. In the case of interval-distributed LTV, the loan will be distributed / split within the specific intervals in the graph interval. The figures include portfolio transferred to SpareBank 1 Næringskreditt AS

Retail market portfolio is stable over time, has a solid overweighting and positive trend in good risk classes

Low risk in the mortgage portfolio (total-distributed)

• The average LTV on the mortgage portfolio incl. loans transferred to SB1 Boligkreditt is 47.2 % which is a reduction right below 0.6 percentage point compared to the previous quarter (47.8 %)
• Similarly, LTV on own balance sheet has decreased from 52.5 % at the end of last quarter to 51.9 % at the end of this quarter

1) Loan-to-value ratio for mortgages incl. BK – LTV total-distributed: The calculation of LTV is based on the market value of the collateral. With total-distributed LTV, the whole of the loan is assigned to the same interval. The figures include portfolio transferred to SpareBank 1 Boligkreditt AS

Low risk in the mortgage portfolio (interval-distributed)

1) Loan-to-value ratio for mortgages incl. BK – LTV interval-distributed. Retail customers with a mortgage on property; lending volume as a percentage of total collateral. LTV is interval-distributed by distributing/splitting individual loans within the specific intervals in the graph

Good quarter for BN Bank with increased net interest and solid growth. Negative results from SB1 Gruppen

LCR portfolio 30.06.2023

• The LCR portfolio end of quarter was of 10.4 BNOK, of which short term placement on 1.5 BNOK. Credit duration of 2.6 years and 1.5 month respectively
• LCR of 295 (152) % and 237 (165) % average year-to-date 2023.
• The bank's liquidity position at the end of the first half is very strong

Good spread in the banks funding

Development in Equity Certificates of SOON

20 Biggest owners of equity certificates

20 Biggest owners of equity certificates

		% av totalt antall EK
	Antall	bevis
SPAREBANK 1 STIFTELSEN BV	24.141.356	17,2 %
SPAREBANKSTIFTELSEN TELEMARK	18.910.174	13,5 %
SPAREBANKSTIFTELSEN SPAREBANK 1 MODUM	18.444.646	13,2 %
NØTTERØY-TØNSBERG SPAREBANKSTIFTELSEN	10.925.503	7,8 %
SPAREBANKSTIFTELSEN HOLLA OG LUNDE	10.273.723	7,3 %
VPF EIKA EGENKAPITALBEVIS	4.169.991	3,0 %
SPESIALFONDET BOREA UTBYTTE	3.647.442	2,6 %
PARETO INVEST NORGE AS	2.757.852	2,0 %
BRANNKASSESTIFTELSEN MIDT-BUSKERUD	2.659.369	1,9 %
KOMMUNAL LANDSPENSJONSKASSE GJENSI	1.580.645	1,1 %
Landkreditt Utbytte	950.000	0,7 %
CATILINA INVEST AS	912.032	0,7 %
WENAASGRUPPEN AS	907.432	0,6 %
MELESIO INVEST AS	886.937	0,6 %
SANDEN EQUITY AS	707.494	0,5 %
AARS AS	684.737	0,5 %
FORETAKSKONSULENTER AS	621.230	0,4 %
SKOGEN INVESTERING AS	605.000	0,4 %
HAUSTA INVESTOR AS	420.000	0,3 %
TROVÅG AS	418.792	0,3 %
av egenkapitalbevis Sum 20 største eiere	104.624.355	74,7 %

• At the end of the quarter, the number of quity certificate holders is 5,814 (6,117).
• The 20 largest owners are listed with 74.7 % of the ownership capital. Of this, the five savings bank foundations own 59.0 %
• At the end of the quarter, the price of the bank's equity certificate was 50.60 nok

Corporate social responsibility and sustainability

SpareBank 1 Sørøst-Norge will be responsible by preventing and detecting financial crime, be climate proactive and help customers be the same and be socially engaged

Monthly meetings in the sustainability council Updates and next steps per department

Green portfolio Green bonds of 3.6 BNOK¹ Green investments of 0.9 BNOK² Green mortgages of 2.7 BNOK³

Responsible business

Preventing financial crime All employees are involved in the group ESG effort and takes actions for sustainability in own house Competence enhancement The Group's property strategy takes sustainability into account

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Equality, diversity and inclusion The Equality, Diversity and Inclusion policy was adopted in the first quarter

• 1) Per end of quarter (17 % of the bank's external funding 2) 8.6 % of total liquidity portfolio
• 3) Of total lending portfolio on own balance sheet

Contact details

Address Fokserødveien 12 Postboks 216 3201 Sandefjord

sb1sorost.no

Per Halvorsen CEO

Tel +47 934 07 441 E-mail; Per.Halvorsen@sb1sorost.no

Roar Snippen CFO/IR

Tel +47 976 10 360 E-mail; Roar.Snippen@sb1sorost.no

Mona Storbrua Head of treasury (IR)

Tel +47 916 39 833 E-mail; Mona.Storbrua@sb1sorost.no