Sparebanken Møre

Quarterly Report • Jan 26, 2023

Presentation Sparebanken Møre Group

4th quarter 2022 Prelimenary full year results for 2022

Trond Lars Nydal CEO

John Arne Winsnes CFO

Oslo, 26.January 2023

Highlights 2022

• The year has been characterized by high activity and good growth
• We have positive development in all customer -related areas and have strengthened our market position
• Many new customers and good lending and deposit growth have contributed to a strong Net Interest Income
• Strengthened profitability and improved efficiency throughout the year
• Liquidity and solidity are strong and the bank is well equipped for further growth and development

Increased activity and growth

Lending growth: 8.8 % Deposit growth: 4.8 % (last 12 months)

Efficiency C/I: 42.5 %

Stronger Net Interest Income

In NOK: 1,517 million In per cent: 1.78

Recoveries on losses

In NOK: - 4 million In % of Average Assets: -0.00 (losses on loans and guarantees)

Profitability Strong liquidity and solidity

Deposit -to -loan ratio: 57.4% LCR: 185 NSFR: 123 CET1: 17.9 % Leverage Ratio: 7.6 %

Strong results Profit after tax

• The bank had an improved last quarter of the year and delivers a strong result for 2022
• The Profitability is raising and ROE ended at 10.9 per cent
• Profit per Equity Certificate is NOK 7.50 (Group) against 6.22 (Group) in 2021

- NOK million

601

Results compared Profit after tax for 2022 compared with 2021

• High activity and growth have resulted in an increase in Net Interest Income and other customer-related income
• Improvement in profit from financial instruments in Q4 compared with the previous quarter
• Investment in resources, activity and digital solutions have resulted in an increase in costs compared with last year
• Low losses in 2022 contribute to the positive earnings development

Dividend– fiscal year 2022

Allocation of results for 2022 (Parent bank)

• According to the bank's dividend policy, the preliminary annual result for 2022 and the bank`s strong capital, the Board is planning to propose to the General Meeting a cash dividend of NOK 4.00 per equity certificate, a total of NOK 198 million. The corresponding provision for dividend funds for local communities will amount to NOK 200 million

• The dividend corresponds to 53.4 per cent of the Group's result

4th quarter 2022

Stronger profitability Profit after tax

• The result for the fourth quarter was NOK 242 million, corresponding to a Return on Equity of 13.2 per cent
• Profit per Equity Certificate in the fourth quarter of 2022 is NOK 2.33 (Group) compared with 1.40 (Group) in the fourth quarter of 2021

- NOK million

Return on Equity

• in per cent

Total income Total Income in the quarter - NOK million

Total Income in the quarter

• in per cent of Average Assets

• Increasing quarterly revenues in 2022, total income in Q4 was 23 per cent higher than in Q3, 40 per cent higher compared with the corresponding period in 2021
• Net interest income MNOK 34 higher than in Q3
• Increased commissions and banking services revenue and effects from financial instruments result in a 67 million improvement of other revenues in Q4

Net Interest Income rebounds

• Good growth, high deposit to loan ratio and relatively high equity contribute to an over 8 per cent increase in Net Interest Income compared with Q3
• Interest rate changes on loans and deposits will come into force from 20 December
• We have good speed into the new year

Net Interest Income in the quarter -NOK million

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

Gaining market shares

• Over the last 12 months, there has been an increase in lending to customers of a total of NOK 6.153 million, corresponding to 8.8 per cent
• The deposit growth was NOK 2 billion in 2022
• Albeit lower growth in deposits compared to growth in lending in 2022, the bank`s deposit to loan ration is still high

Loans

• NOK billion and per cent (y/y)

Deposits

• NOK billion and per cent (y/y)

• Customer lending over the last 12 months: 8.8 %

• Deposit growth of 4.8 % over the last 12 months
• High deposit-to-loan ratio of 57.4 %

Lending

• We see growth, both in the retail and in the corporate markets
• New quarter with NOK 1 billion increase in lending to the retail market
• Growth in lending to the corporate market of NOK 1.4 billion i. a. as a result of draw down of several larger commitments in the Q4

Retail market

• NOK billion and per cent (y/y)

Corporate market

• NOK billion and per cent y/y

• Retail lending has increased by 6.9 % over the last 12 months
• Loans to the retail market amount to 66.5 % of total loans

• Corporate lending has increased by 12.7 % over the last 12 months
• Loans to the corporate market amount to 33.5 % of total loans

Good growth in Deposits

• The deposits from the retail market have increased by 6,8 per cent Y/Y
• The deposits from the corporate market have increased by 3,9 per cent Y/Y, whereas public deposits have decreased, resulting in a total deposit growth of 2 per cent

Retail market

• NOK billion and per cent y/y

Corporate and public

-NOK billion and per cent y/y

2018 2019 2020 2021 2022

• Retail deposits have increased by 6.8 % over the last 12 months
• Deposits from the retail market amount to 60.0 % of total deposits

2018 2019 2020 2021 2022

• Corporate deposits have increased by 3.9 % y/y to NOK 16.8 billion

• Public deposits are reduced by 29.3 % to NOK 0.7 billion

• Other operating income was MNOK 67 higher than in Q3

• Income from financial instruments is MNOK 65 higher than in the previous quarter

Other Income Other Income in the quarter - NOK million

Financial instruments

Other Income in the quarter

• in per cent of Average Assets

Costs

Cost/Income ratio

• The cost income ratio in Q4 (40.3 per cent) is reduced compared with previous quarters in 2022

• The target of a cost income ratio below 40 per cent remains unchanged

Cost/Income ratio

• Quarterly

Operating costs in the quarter - NOK million

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

Losses and portfolio quality

• Total losses ended at MNOK 2 in Q4
• Credit-impaired commitments as of 2022 also include commitments with probation periods. The comparable figure for 2022 according to the old definition would be 0.79 per cent

Losses on loans and guarantees

• NOK million

Losses on loans and guarantees

• in per cent of Average Assets

Credit-impaired commitments (net)

• in per cent of loans and guarantees

• NOK million

Ind. impairments on comm. in default>90 days Ind.impairments on other credit-impaired ECL on loans and guarantees 15

Diversified loan book

• The bank has a stable share of commitments to the corporate sector
• There is good industry risk diversification and a persistently low level of risk in the portfolio
• The lending growth in Q4 is related to fisheries and CRE

Loans by sector

Low exposure to Commercial Real Estate (CRE)

• Stable and well-diversified property portfolio
• 74 per cent of the portfolio within our county Møre and Romsdal, central office and hotel properties in Oslo make up 20 per cent
• 94 per cent of the portfolio is in the low and medium risk category

Low exposure to Oil Services

- in per cent of total loans	(Loans, guarantees) - NOK million
	1,8 %			Subsea 464 Renewable 113 AHTS 301 Seismic 592 PSV 392
(EAD in NOK million)	Loans	Guarantees	Total EAD	Individual	Expected ECL-IFRS 9	Credit Losses Total	Per cent of EAD
Low Risk (Risk Class A-C)	117	0	117	0	0,0	0,0	0,0 %
Medium Risk (Risk Class D-G)	407	173	581	0	3,9	3,9	0,7 %
High Risk (Risk Class H-M)	241	58	299	0	1,4	1,4	0,5 %
Loans and guarantees with individually assessed impairments	825	39	864	145	3,4	148,4	17,2 %
Total Sparebanken Møre	1.591	270	1.861	145	8,7	153,7	8,3 %

Loans to Oil Services EAD by type of vessel

18

Good quality in our retail portfolio

• Low risk in the portfolio, 97 per cent of loans below 85 per cent loan-to-value ratio

• The level of credit-impaired commitments is low

• In per cent of total loans (LTV)

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

• 97 % of mortgages are within 85 % of LTV

• Deviation from Boliglånsforskriften reported in Q4-2022:
  • o 9.7 % outside Oslo (flexibility quota 10 %)
  • o 4.8 % in Oslo (flexibility quota 8 %)

House prices Price per square meter

Based on pre-owned dwellings sold in December 2022, Norwegian seasonal adjusted house prices increased by 0.2 per cent last month.

Last twelve months Norwegian house prices have increased in average by 1.5 per cent.

The City of Ålesund and the Mid-Norway region has over time experienced moderate growth in house prices compared to the national average, both indexed development and in price per square meter

Indexed development

• January 2015 = 100

• January 2015 – December 2022

Key information on pre-owned dwellings sold in December 2022	Norway	Mid-Norway	Greater Ålesund	City of Oslo
Seasonal adj. development last month	+0.2 %	+1.6 %	+1.6 %	-0.3 %
Development last 12 months	+1.5 %	+2.4 %	+4.4 %	+1.8%
Development last 10 years	+53.7 %	+39.4 %	+37.5 %	+74.8 %
Per square meter (NOK)	49 937	39 167	35 498	89 051
Average number of days on market	47 days	50 days	47 days	32 days
Price median dwelling (NOK)	3 700 000	3 125 024	2 992 371	4 962 119

Strong Capital gives competitive financing

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

Sparebanken Møre with good access to the market

• Our deposit-to-loan ratio stood at 57.4 per cent by year end
• Total net market funding ended at NOK 32.2 billion by end of Q4 2022 – almost 85 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 2.17 years, while the financing through Møre Boligkreditt AS has a correspondingly weighted remaining maturity of 3.13 years - in total for market financing in the Group the remaining maturity is 3.11 years
• In July 2022, Moody's confirmed the bank's A1 rating with a stable outlook. All issues from Møre Boligkreditt AS are rated Aaa
• Møre Boligkreditt AS has outstanding bonds for NOK 26.8 billion at the end of 2022, of which just under 40 percent are issued in currencies other than NOK. Two of the company's euro issues are green
• In early 2022, Sparebanken Møre issued its first green senior subordinated bond (SNP with a first tranche of NOK 1.0 billion). With a total of NOK 2.0 billion issued, the bank is well on track with the minimum linear phase-in of the new capital class
• The Group does not have market financing due until June 2023

Strong solidity

• Sparebanken Møre has a longterm target for Common Equity Tier 1 capital (CET1) which must be the sum of pillar 1, pillar 2 (P2R) and P2G
• Both the Countercyclical Buffer and the Systemic Risk Buffer will be increased in 2023
• The Norwegian Financial Supervisory Authority (FSA) has notified the bank that it plans to carry out SREP in 2023. This will affect the capital composition
• The bank has applied to the FSA for model and calibration changes and is awaiting a response

CET1

Leverage Ratio

MORG: Recovery towards the end of the year

• After a weak price development in the second and third quarters, the MORG price developed strongly towards the end of 2022
• MORG finished at the top of the podium among the regional banks with a share price decline of 1.50 per cent throughout the year (Total Return)
• On average, the equity certificates (OSEEX) fell by 6.69 per cent in 2022

Development at Oslo Stock Exchange (MORG vs peers and EC-index)

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 2018-2021 stated before the split in 2022

0

1

2

1,2 1,4 1,6 1,8

0,2 0,4 0,6 0,8

Outlook for the region and the bank

• High inflation, increased policy rates and geopolitical uncertainty characterized the economic outlook abroad and at home also through the 4th quarter of 2022. In addition, parts of the proposal for the state budget brought further uncertainty both nationally and in our region. Growth prospects are weak. The Federal Reserve, the European Central Bank (ESB) and Norges Bank raised interest rates twice to curb inflationary pressure
• At their meeting on 14 December, the US central bank raised the target zone for Fed funds by 0.50 percentage points to 4.25 - 4.50 per cent, with a midpoint of 4.375 per cent. Furthermore, the Fed envisioned a mid -value for the interest rate of 5.1 percent at the end of 2023. The bank was clear that the main goal going forward will be to bring down inflation even if this could lead to higher unemployment
• At the same time, the New York Fed's indicator for the global price pressure in the supply chains shows that inflation may fall further in the future. This is due to, among other things, lower energy prices and transport costs, as well as shorter delivery times for input factors within the industry
• Furthermore, the ECB signaled significant interest rate increases in 2023 at its last rate meeting in the 4th quarter. The central bank then expected that the interest rate would be increased by 0.50 percentage points in the period ahead. The bank stated that inflation is far too high and is expected to remain above target for a long time
• Norges Bank increased the key interest rate by 0.25 percentage points to 2.75 per cent 15 December. There were only marginal changes in the current year's interest rate path. Norges Bank stated that the key interest rate will most likely be raised further in the first quarter of 2023. The interest rate path indicates that the key interest rate will then most likely have reached its peak of 3.0 percent
• There is a high level of activity in the Norwegian economy. As production can fluctuate somewhat from month to month, it may be useful to look at the development over a three -month period. In that case, there was a growth of 1.0 per cent in mainland Norway's GDP from June -August to September - November 2022
• As a result of continued high demand for goods and services, unemployment in the county is still at a low level. At the end of 2022, the number of completely unemployed in Møre and Romsdal was 1.5 per cent. On a national basis, the unemployment rate was 1.6 per cent
• The bank has a solid capital base and strong liquidity and will continue to be a strong and committed supporter for our customers. The focus is always on having good operations and profitability

VISION

The leading contributor to creative enthusiasm in Nordvestlandet. Every day.

CORE VALUES

Close Committed Capable

Our social commitment

• Sparebanken Møre is a significant financial and professional contributor to the development of our region
• Our social commitment is structured through TEFTfunds, TEFT-scholarships, «NÆRINGSTEFT» and TEFT-lab
• Our main focus areas are culture, sports, local communities, competence and business development

TEFT-scholarship Talent grants within culture and sports

NÆRINGSTEFT

Competence journey and innovation grants

TEFT-lab Research collaboration SBM and NTNU

Sustainability in Sparebanken Møre

Sparebanken Møre will be a contributor for sustainability in our region. We will also see the bank's sustainability work in a national and global perspective.

Sustainability is an integral part of the bank's strategy and is rooted in and part of the bank's operations and processes.

Ourselves internally

Customers and partners

Carbon footprint, equality, diversity Good advice

for wise decisions

The Community

Promote and contribute to sustainable initiatives

28

A usefull tool

The Sustainability Portal

• The Sustainability Portal, launched in January 2022, is getting a lot of positive feedback from our customers.
• ESG is discussed in meetings with corporate customers, and the portal is also used as a wizard in the customer meetings.
• The portal was expanded during the year, and now contains specific information for seven industry specific branches in addition to a general section. It also contains a basis for content in sustainability strategy.
• The use of the portal has increased during the year, especially in the last quarter we have seen a substantial increase.

Eco -Lighthouse certified

Sparebanken Møre was Eco -Lighthouse certified (Miljøfyrtårn -certified) in December 2022 in line with the new banking - and financial services criteria.

During the certification process, the Eco - Lighthouse Foundation expressed that the bank's environmental and sustainability work is of a high standard

An organisation equipped for the future

• The bank's current organisation has worked well and has been a good framework for our development
• Our environment is changing and our organisation must adjust to the possibilities and challenges ahead
  • ✓ Market driven
  • ✓ Future oriented
  • ✓ Development oriented
  • ✓ Efficient
• A new organisation has been adopted and will be effective from 1 February this year

Fre

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

R

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 in Q4 Key figures in Q4 2022 and Q4 2021

	Q4 2022		Q4 2021		Changes
Results (NOK million and %)	NOK	%	NOK	%	NOK	p.p.	%
Net Interest Income	432	1.95	335	1.62	97	0.33	29.0
Gains/losses liquidity portfolio	18	0.08	-23	-0.10	41	0.18	-178.3
Gains/losses on shares	12	0.05	7	0.03	5	0.02	71.4
Net income Financial Instruments	5	0.02	0	0.00	5	0.02	-
Other Income	67	0.30	61	0.29	6	0.01	9.8
Total Other Income	102	0.46	45	0.22	57	0.24	126.7
Total Income	534	2.41	380	1.84	154	0.57	40.5
Salaries and wages	122	0.55	97	0.47	25	0.08	25.8
Other costs	94	0.42	77	0.37	17	0.05	22.1
Total operating costs	216	0.97	174	0.84	42	0.13	24.1
Profit before losses	318	1.44	206	1.00	112	0.44	54.4
Losses on loans, guarantees	2	0.01	5	0.03	-3	-0.02	-60.0
Pre-tax profit	316	1.43	201	0.97	115	0.46	57.2
Taxes	74	0.34	48	0.23	26	0.11	54.2
Profit after tax	242	1.09	153	0.74	89	0.35	58.2
Return on equity (ROE) %	13.2		8.9			4.3
Cost/Income ratio	40.3		45.9			-5.6
Profit per EC (NOK)	2.3		1.40			0.93

Result per Q4 Key figures per Q4 2022 and Q4 2021

	Per Q4 2022		Per Q4 2021		Changes
Results (NOK million and %)	NOK	%	NOK	%	NOK	p.p.	%
Net Interest Income	1,517	1.78	1,266	1.57	251	0.21	19.8
Gains/losses liquidity portfolio	-75	-0.11	-23	-0.03	-52	-0.08	226.1
Gains/losses on shares	24	0.03	18	0.02	6	0.01	33.3
Net income Financial Instruments	44	0.06	48	0.06	-4	0.01	-8.3
Other Income	246	0.29	218	0.27	28	0.02	12.8
Total Other Income	239	0.28	261	0.32	-22	-0.04	-8.4
Total Income	1,756	2.06	1.527	1.89	229	0.17	15.0
Salaries and wages	430	0.50	360	0.45	70	0.05	19.4
Other costs	317	0.37	285	0.35	32	0.02	11.2
Total operating costs	747	0.87	645	0.80	102	0.07	15.8
Profit before losses	1,009	1.19	882	1.09	127	0.10	14.4
Losses on loans, guarantees	-4	0.00	49	0.06	-53	-0.06	-108.2
Pre-tax profit	1,013	1.19	833	1.03	180	0.16	21.6
Taxes	236	0.28	191	0.24	45	0.04	23.6
Profit after tax	777	0.91	642	0.79	135	0.12	21.0
Return on Equity (ROE) %	10.9		9.5			1.4
Cost/Income ratio	42.5		42.2			0.3
Profit per EC (NOK)	7.50		6.22			1.28

Balance sheet and key figures

Key figures 2022 and 2021

	30.12.22	30.12.21		Changes
Balance in NOK million			MNOK	%
Total Assets	89 501	82 797	6 704	8.1
Loans to customers	76 078	69 925	6 153	8.8
Deposits from customers	43 881	41 853	2 028	4.8
Net Equity and Subordinated Loans	7 935	7 390	545	7.4

Key Figures	30.12.22	30.12.21	Changes p.p.
Return on Equity	10.9	9.5	1.4
Cost/Income ratio	42.5	42.2	0.3
Total Capital	22.1	20.9	1.2
Tier 1 Capital	19.7	18.9	0.8
CET1	17.9	17.2	0.7
Leverage Ratio	7.6	7.7	-0.1
Profit per EC (NOK, the Group)	7.5	6.22	1.28
Profit per EC (NOK, the bank)	8.48	6.20	2.28

Specification of other income

2022 and 2021

(NOK million)	2022	2021	Changes y/y
Guarantee commission	44	39	5
Income from the sale of insurance services (non-life/personal)	27	26	1
Income from the sale of shares in unit trusts/securities	15	15	0
Income from Discretionary Portfolio Management	43	42	1
Income from payment transfers	90	79	11
Other fees and commission income	29	25	4
Commission income and income from banking services	248	226	22
Commission expenses and expenses from banking services	34	34	0
Income from real estate brokerage	31	25	6
Other operating income	1	1	0
Total other operating income	32	26	6
Net commission and other operating income	246	218	28
Interest rate hedging (for customers)	15	12	3
Currency hedging (for customers)	42	35	7
Dividend received	11	3	8
Net gains/losses on shares	24	18	6
Net gains/losses on bonds	-75	-23	-52
Change in value of fixed-rate loans	-14	6	-20
Change in value of issued bonds	-9	-6	-3
Net gains/losses related to buy back of outstanding bonds	-1	-2	1
Net result from financial instruments	-7	43	-50
Total other income	239	261	-22

Specification of costs 2022 and 2021

(NOK million)	2022	2021	Changes y/y
Wages	314	262	52
Pension expenses	23	21	2
Employers' social security contribution and Financial activity tax	67	57	10
Other personnel expenses	26	20	6
Wages, salaries, etc.	430	360	70
Depreciations	46	45	1
Operating expenses own and rented premises	15	19	-4
Maintenance of fixed assets	7	7	0
IT-expenses	150	128	22
Marketing expenses	37	28	9
Purchase of external services	25	22	3
Expenses related to postage, telephone, newspapers etc.	8	7	1
Travel expenses	5	2	3
Capital tax	8	5	3
Other operating expenses	16	22	-6
Total other operating expenses	271	240	31
Total operating expenses	747	645	102

Efficient operations

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. offshore/supply) - in % of corporate commitments

Credit-impaired commitments

• The overview shows nonperforming commitments in default above 90 days and other credit-impaired commitments in stage 3

• 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

ECL Individually assessed impairments

• 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 31.12.2021

EC capital in Sparebanken Møre

The largest owners (1-10) of EC capital

31.12.2022

EC holder	Number of ECs
	31.12.22	30.09.22
Sparebankstiftelsen Tingvoll	4.913.706	4.983.271
Cape Invest AS	4.910.776	4.913.706
Spesialfondet Borea Utbytte	2.455.103	2.447.205
Verdipapirfondet Eika egenkapital	2.081.419	2.182.751
Wenaasgruppen	1.900.000	1.900.000
MP Pensjon	1.698.905	1.698.905
Pareto Aksje Norge	1.369.168	1.354.568
Verdipapirfond Nordea Norge Verdi	1.211.011	1.265.060
Kommunal Landspensjonskasse	1.148.104	1.148.104
Wenaas EFTF AS	1.000.000	1.000.000
Total 10 largest	22.688.192	22.893.570
Of which Møre og Romsdal	12.724.482	12.796.977
Of which Møre og Romsdal (in per cent)	56,1	55,9

EC capital in Sparebanken Møre

The largest owners (11-20) of EC capital

31.12.2022

EC holder	Number of ECs
	31.12.22	30.09.22
Beka Holding AS	750.500	750.500
Lapas AS (Leif-Arne Langøy)	617.500	617.500
Pareto Invest Norge AS/Pareto AS	565.753	565.753
Forsvarets personellservice	459.000	459.000
Stiftelsen Kjell Holm	419.750	419.750
BKK Pensjonskasse	378.350	378.350
U. Aandals EFTF AS	250.000	250.000
PIBCO AS	229.500	229.500
Morgan Stanley & Co. International	201.456	204.198
Borghild Hanna Møller	201.363	201.220
Total 20 largest	26.761.364	26.969.341
Of which Møre og Romsdal	14.213.095	14.514.947
Of which Møre og Romsdal (in per cent)	53.1	53.8