Sparebanken Møre

Quarterly Report • Oct 27, 2022

Presentation Sparebanken Møre Group

3rd quarter 2022

Trond Lars Nydal CEO

John Arne Winsnes CFO

Oslo, 27. October 2022

Highlights by quarter end

• Third quarter was characterised by high activity and good growth
• The good growth in recent quarters and rising interest rates are strengthening net interest income
• Profitability is increasing and there is a positive development in cost efficiency
• Liquidity and solvency are strong and the bank is well equipped for further growth and development

Increased activity and growth

Lending growth: 6.1 % Deposit growth: 9.6 % (last 12 months)

Stronger Net Interest Income

In NOK: 1,085 million In per cent: 1.72

Recoveries on losses

In NOK: - 6 million In % of Average Assets: -0.01 (losses on loans and guarantees)

Profitability Strong liquidity and solidity

Deposit -to -loan ratio: 60.4% LCR: 152 NSFR: 125 CET1: 18.2 % Leverage Ratio: 7.6 %

Strong results Profit after tax

• The Bank delivers a good result per Q3
• The Profitability is rising and ROE ended at 10.1 per cent
• Profit per Equity Certificate in the first three quarters of 2022 is NOK 5.17 (Group) against 4.74 (Group) in the corresponding period in 2021

- NOK million

Results compared Profit after tax 30.09.2022 compared with 30.09.2021

• We are experiencing good activity and the customer growth has contributed to increased net interest income and an increase in other customer-related income during the period
• Changes in value of financial instruments, however, reduce total income
• Investment in increased activity and digitization result in higher costs compared to the same period last year
• The bank has net reversal of losses per 3rd quarter and we expect low losses in 2022

3rd quarter 2022

Stronger profitability Profit after tax

• The result for the third quarter was NOK 189 million, corresponding to a Return on Equity of 10.5 per cent

• Profit per Equity Certificate in the third quarter of 2022 is NOK 1.82 (Group) compared with 1.72 (Group) in the third quarter of 2021

• NOK million

Return on Equity - in per cent

in 2022

Total income Total Income in the quarter - NOK million

Total Income in the quarter

• in per cent of Average Assets

Q3-21 Q4-21 Q1-22 Q2-22 Q3-22

Net Interest Income Other Income

Q3-21 Q4-21 Q1-22 Q2-22 Q3-22

development in the value of financial instruments

• Increasing quarterly revenues

• Net interest income MNOK 45

• Customer-related other income shows a good development, 16 per cent higher compared with the level in Q3 2021

Net Interest Income rebounds

• The interest rates on loans and deposits were changed in August
• Good growth, good deposit coverage and relatively high leverage contribute positively
• New interest rate adjustments in the coming quarter with effect from 3 October and 8 November on lending and 22 October and 27 November on deposit
• We expect that net interest income will develop positively also in current quarter

Net Interest Income in the quarter -NOK million

335 334

320

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

Good activity and growth

• Over the last 12 months, there has been an increase in lending to customers of a total of NOK 4,266 million, corresponding to 6.1 per cent
• Deposit growth has continued in 2022 and annual growth ends at 9.6 per cent by quarter end
• We have increased lending rate growth in the third quarter

Loans

• NOK billion and per cent (y/y)

• Customer lending over the last 12 months: 6.1 %

• Deposit growth of 9.6 % over the last 12 months
• High deposit-to-loan ratio of 60.4 %

Lending

• We see growth, both in the retail and in the corporate markets
• Retail lending has increased by MNOK 973 in Q3 and will soon pass NOK 50 billion
• Lending growth to the corporate market of MNOK 420 in the quarter. Good speed towards NOK 25 billion

Retail market

• NOK billion and per cent (y/y)

Corporate market

• NOK billion and per cent y/y

• Retail lending has increased by 5.8 % over the last 12 months

• Loans to the retail market amount to 67.3 % of total loans
• Corporate lending has increased by 6.8 % over the last 12 months
• Loans to the corporate market amount to 32.7 % of total loans

Good growth in Deposits

• The deposits have increased by NOK 3,906 million y/y, corresponding to 9.6 per cent
• In spite of a y/y reduction in deposits from the public sector of 19.7 per cent, total deposits from corporates and the public sector increased by 16,7 per cent over the last twelve months

Retail market

• NOK billion and per cent y/y

Corporate and public

-NOK billion and per cent y/y

• Retail deposits have increased by 6.3 % over the last 12 months

• Deposits from the retail market amount to 58.3 % of total deposits

• Corporate deposits have increased by 16.7 % y/y to NOK 17.8 billion

• Public deposits are reduced by 19.7 % to NOK 0.8 billion

14,6 %

• Customer-related other income shows a good development with an increase of 15 per cent compared with the same period in 2021
• Other Income is significantly affected by the negative development in the value of the LCR bond portfolio (-MNOK 93 at quarter end) ⁵⁶

Other Income Other Income in the quarter - NOK million

Financial instruments

Commissions and other operating income

Other Income in the quarter

• in per cent of Average Assets

Costs

Cost/Income ratio

Cost/income ratio - Quarterly

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

Operating costs in the quarter - NOK million

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

Q3-21 Q4-21 Q1-22 Q2-22 Q3-22

Losses and portfolio quality

• Total losses ended at MNOK 2 in Q3
• Reduced portion of net credit-impaired commitments compared to the last three years

Losses on loans and guarantees - NOK million

Losses on loans and guarantees

• in per cent of Average Assets

Credit-impaired commitments (net)

1,12 1,22 1,16

2018 2019 2020 2021 Q3-22

0,73

• in per cent of loans and guarantees

0,46

Impairments

• NOK million

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

ECL on loans and guarantees

Diversified loan book

Loans by sector

• 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
• Low exposure to CRE

Low exposure to Commercial Real Estate (CRE)

• Well-diversified property portfolio
• 80 per cent of the portfolio within our county Møre and Romsdal, central office and hotel properties in Oslo make up 14 per cent
• 91 per cent of the portfolio is in the low and medium risk category

Geographical distribution

Oslo 14 %

Risk classification

Low exposure to Oil Services

2,0 %

Loans to Oil Services EAD by type of vessel

• in per cent of total loans (Loans, guarantees) - NOK million

					Expected	Credit Losses
(EAD in NOK million)	Loans	Guarantees	Total EAD	Individual	ECL-IFRS 9	Total	Per cent of EAD
Low Risk (Risk Class A-C)	129	0	129	0	0,0	0,0	0,0 %
Medium Risk (Risk Class D-G)	369	181	550	0	8,1	8,1	1,5 %
High Risk (Risk Class H-M)	0	175	175	0	0,3	0,3	0,1 %
Loans and guarantees with individually assessed impairments	969	94	1.063	185	7,9	192,9	18,1 %
Total Sparebanken Møre	1.467	450	1.917	185	16,2	201,2	10,5 %

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 Q3-2022:
• o 7,4 % outside Oslo (flexibility quota 10 %)
• o 6,6 % in Oslo (flexibility quota 8 %)

House prices Price per square meter

Based on pre-owned dwellings sold, Norwegian seasonal adjusted house prices fell by 0.6 per cent in September 2022.

Last twelve months Norwegian house prices have increased in average by 4.3 per cent.

Housing prices in our region have had a flat price trend in the last month and a y/y growth of 6.3 per cent. Measured per square metre, the price level in our region is 30 per cent lower than the national average.

Indexed development

• January 2015 = 100

• January 2015 – September 2022

Key information on pre-owned dwellings sold in September 2022	Norway	Mid-Norway	Greater Ålesund	City of Oslo
Seasonal adj. development last month	-0.6 %	-0.2 %	0.0 %	-0.8 %
Development last 12 months	+4.3 %	+4.6 %	+6.3 %	+5.5 %
Development last 10 years	+61.1 %	+43.9 %	+41.4 %	+87.9 %
Per square meter (NOK)	51,548	41,281	36,470	91,013
Average number of days on market	29 days	37 days	32 days	19 days
Price median dwelling (NOK)	3,850,000	3,225,000	3,100,000	5,139,939

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 60.4 per cent by quarter end
• Total net market funding ended at NOK 32.2 billion by end of Q3 more than 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 2.42 years, while the financing through Møre Boligkreditt AS has a correspondingly weighted remaining maturity of 3.17 years - in total for market financing in the Group the remaining maturity is 3.15 years
• In July this year, Moody's confirmed the bank's A1 rating with stable outlook. All issues from Møre Boligkreditt AS are rated Aaa
• The Group's first green financing in the market was established when Møre Boligkreditt AS entered the euro market on 21 September last year with a 5-year semi benchmark (EUR 250 million inaugural green covered bond). The issue was very well received
• In January, Sparebanken Møre further issued its first green Senior Non-Preferred 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 has no market financing maturing until June 2023

CET1-target of 16.95 per cent

• The bank's target for CET1 capital will be 16.95 per cent at the end of March 2023
• With a CET1 capital ratio of 18.2 per cent at the end of the quarter, the bank is well equipped for further growth

CET1

Leverage Ratio

Weak performance in financials

• Total Return on MORG was 2.9 per cent in Q1
• The equity market for the financial sector fell markedly especially through Q2 but also in Q3
• MORG has so far this year had a decrease in Total Return of 18.3 percent while the EC index (OSEEX) in the same period fell by 17.1 percent

Development at Oslo Stock Exchange YTD (MORG vs 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

Outlook for the region and the bank

• The outlook for the international economy weakened further through the 3rd quarter. This is due to the continuation of the war between Russia and Ukraine, higher inflation and the fact that several central banks raised interest rates sharply in order to reduce inflationary pressure. The central banks' forecasts indicate that the rise in interest rates will continue. The growth prospects for 2023, both abroad and at home, are weak
• As a result of the prospect of higher interest rates i.a. in the US, global long -term interest rates have risen. During the 3rd quarter, the 10 -year government bond yield in the US, which is referred to as the world's most important interest rate, rose from 3.0 to 3.7 per cent. The long -term interest rates are based on expectations about the development of the key interest rate
• Norges Bank increased the key interest rate by 0.50 percentage points to 2.25 per cent in connection with the interest rate decision on 22 September. At the same time as the interest rate decision, the bank presented a new interest rate path, indicating interest rate hikes of 0.25 percentage points in November, December and March 2023. Furthermore, there was a certain probability of a final interest rate hike in June next year
• However, the inflation trend since the interest rate path was published means that the probability of an interest rate increase of 0.50 percentage points in November has increased. In September, the y/y overall consumer price growth was 6.9 per cent. Core inflation (consumer price growth excl.taxes and energy) was 5.3 per cent, both figures were clearly higher than Norges Bank had assumed
• It currently appears that the rise in interest rates and the high energy prices have not affected the development of production in Norway to a particular extent. GDP in mainland Norway increased by 0.4 per cent from July to August, adjusted for seasonal and calendar effects. In addition, the figures for June and July were adjusted upwards
• As a result of the fact that the demand for Norwegian -produced goods and services is still at a high level, unemployment remains low. At the end of September, the number of completely unemployed in Møre and Romsdal was 1.4 per cent of the workforce. On a national basis, the unemployment rate was 1.6 per cent
• Based on feedback the bank has received from customers, business - and industry associations and signals from the market following the presentation of the proposed State budget, proposed activity dampening measures will have negative impact on investments and consumption. This is expected to have significant consequences for the growth rate going forward. In particular, stricter taxation of the hydro power -, wind - and aquaculture industries, stricter taxation of owner's capital, as well as the tightening of the regulations on temporary employment, will have negative consequences in our region.
• 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

Strong and increasing market share

• We experience increasing growth, both in the retail and the corporate markets
• Surveys show that the bank gains market shares in our market area, Nordvestlandet
• Customer surveys (EPSI) confirms our business model and the good work carried out by our employees every day
• The bank is also receiving positive feed-back on our sustainability work

Sustainability

Increased demands on companies

Sustainability New business opportunities

The green transition gives companies new market opportunities

The market demand for sustainable products is increasing

The EU's taxonomy provides guidelines for green activities

The bank shall be a contributor to sustainable transition

What we offer our customers

• Advisory and industry -specific expertise, nearby and with strong local knowledge
• Sustainability is a natural part of our consultancy
• SBM has launched green products for retail customers and are working on green products for the corporate market
• A new round of the «Næringsteft» entrepreneur concept has started
• The Sustainability Portal was developed in 2022 to help businesses with their sustainability work

Proximity, availability and local knowledge

• All communities in the county contribute to the value creation in the region

• Local banks are important for the funding of local businesses
• Local expertise og local decisions

Local branches

Industry teams

Advisors passionate about the industry

Customer Service

Quick response and solves the problem

28

A good basis for further growth A fully-fledged consulting environment for customers

Retail Market advisors

Corporate Market advisors

Møremegling Markets (real estate brokerage)

Customer Centre/ «Næringsbasen»

Investment advisors / Private Banking

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 john.winsnes@sbm.no

Runar Sandanger Senior Economist SVP

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

Attachments

Results in Q3 Key figures in Q3 2022 and Q3 2021

	Q3 2022		Q3 2021		Changes
Results (NOK million and %)	NOK	%	NOK	%	NOK	p.p.	%
Net Interest Income	398	1.87	320	1.58	78	0,29	24.4
Net Income Financial Investments	-27	-0.13	-3	-0.01	-24	-0.11	-
Gains/losses liquidity portfolio	-13	-0.06	-1	0.00	-12	-0.06	-
Gains/losses on shares	10	0.05	17	0.08	-7	-0.03	-41.2
Other Income	65	0.30	56	0.28	9	0.02	16.1
Total Other Income	35	0.16	69	0.34	-34	-0.18	-49.3
Total Income	433	2.03	389	1.92	44	0.11	11.3
Salaries and wages	103	0.48	88	0.43	15	0.05	17.0
Other costs	76	0.36	70	0.34	6	0.02	8.6
Total operating costs	179	0.84	158	0.77	21	0.07	13.3
Profit before losses	254	1.19	231	1.15	23	0.04	10.0
Losses on loans, guarantees etc	2	0.01	2	0.01	0	0.00	0.0
Pre-tax profit	252	1.18	229	1.14	23	0.04	10.0
Taxes	63	0.29	53	0.27	10	0.02	18.9
Profit after tax	189	0.89	176	0.87	13	0.02	7.4
Return on equity (ROE) %	10.5		10.5			0.0
Cost/Income ratio	41.4		40.4			1.0
Profit per EC (NOK)	1.82		1.72			0.10

Result per Q3 Key figures per Q3 2022 and Q3 2021

	Per Q3 2022		Per Q3 2021		Changes
Results (NOK million and %)	NOK	%	NOK	%	NOK	p.p.	%
Net Interest Income	1,085	1.72	931	1.54	154	0.18	16.5
Net Income Financial Investments	-93	-0.16	0	0.00	-93	-0.16	-
Gains/losses liquidity portfolio	12	0.02	11	0.02	1	0.00	9.1
Gains/losses on shares	39	0.07	48	0.08	-9	-0.02	-18.8
Other Income	179	0.28	157	0.26	22	0.02	14.0
Total Other Income	137	0.21	216	0.36	-79	-0.15	-36.6
Total Income	1,222	1.93	1.147	1.90	75	0.03	6.5
Salaries and wages	308	0.49	263	0.44	45	0.05	17.1
Other costs	223	0.35	208	0.34	15	0.01	7.2
Total operating costs	531	0.84	471	0.78	60	0.06	12.7
Profit before losses	691	1.09	676	1.12	15	-0.03	2.2
Losses on loans, guarantees etc	-6	-0.01	44	0.07	-50	-0.08	-
Pre-tax profit	697	1.10	632	1.05	65	0.05	10.3
Taxes	162	0.25	143	0.24	19	0.01	13.3
Profit after tax	535	0.85	489	0.81	46	0.04	9.4
Return on equity (ROE) %	10.1		9.7			0.4
Cost/Income ratio	43.5		41.0			2.5
Profit per EC (NOK)	5.17		4.74			0.43

Balance sheet and key figures

Key figures per Q3 2022 and Q3 2021

	30.09.22	30.09.21	Changes
Balance in NOK million			NOK mill	%
Total Assets	87 634	84 262	3 372	4.0
Loans to customers	73 689	69 423	4 266	6.1
Deposits from customers	44 686	40 780	3 906	9.6
Net Equity and Subordinated Loans	7 476	7 050	426	6.0

Key Figures	30.09.22	30.09.21	Changes p.p.
Return on Equity	10.1	9.7	0.4
Cost/Income ratio	43.5	41.0	2.5
Total Capital	22.5	20.8	1.7
Tier 1 Capital	20.1	18.8	1.3
CET1	18.2	17.1	1.1
Leverage Ratio	7.6	7.6	0.0
Profit per EC (NOK, the Group)	5.17	4.74	0.43
Profit per EC (NOK, the bank)	6.31	5.20	1.11

Specification of other income

Per Q3 2022 and 2021

(NOK million)	Per Q3 2022	Per Q3 2021	Changes y/y
Guarantee commission	30	29	1
Income from the sale of insurance services (non-life/personal)	18	18	0
Income from the sale of shares in unit trusts/securities	12	11	1
Income from Discretionary Portfolio Management	33	31	2
Income from payment transfers	66	59	7
Other fees and commission income	21	18	3
Commission income and income from banking services	180	166	14
Commission expenses and expenses from banking services	25	28	-3
Income from real estate brokerage	24	18	6
Other operating income	0	1	-1
Total other operating income	24	19	5
Net commission and other operating income	179	157	22
Interest hedging (for customers)	14	9	5
Currency hedging (for customers)	27	26	1
Dividend received	1	2	-1
Net gains/losses on shares	12	11	1
Net gains/losses on bonds	-93	0	-93
Change in value of fixed-rate loans	3	12	-9
Change in value of issued bonds	-5	0	-5
Net gains/losses related to buy back of outstanding bonds	-1	-1	0
Net result from financial instruments	-42	59	-101
Total other income	137	216	-79

Specification of costs Per Q3 2022 and 2021

(NOK million)	Per Q3 2022	Per Q3 2021	Changes y/y
Wages	229	191	38
Pension expenses	18	16	2
Employers' social security contribution and Financial activity tax	45	39	6
Other personnel expenses	16	17	-1
Wages, salaries, etc.	308	263	45
Depreciations	34	34	0
Operating expenses own and rented premises	11	12	-1
Maintenance of fixed assets	5	6	-1
IT-expenses	109	98	11
Marketing expenses	24	21	3
Purchase of external services	17	17	0
Expenses related to postage, telephone, newspapers etc.	6	5	1
Travel expenses	3	0	3
Capital tax	5	4	1
Other operating expenses	9	11	-2
Total other operating expenses	189	174	15
Total operating expenses	531	471	60

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

239

99

338

• 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

EC holder	Number	of ECs
	30.09.22	30.06.22
Sparebankstiftelsen Tingvoll	4.983.271	4.977.850
Cape Invest AS	4.913.706	4.927.345
Spesialfondet Borea Utbytte	2.447.205	2.205.437
Verdipapirfondet Eika egenkapital	2.182.751	2.176.585
Wenaasgruppen	1.900.000	1.900.000
MP Pensjon	1.698.905	1.698.905
Pareto Aksje Norge	1.354.568	1.308.985
Verdipapirfond Nordea Norge Verdi	1.265.060	1.265.060
Kommunal Landspensjonskasse	1.148.104	1.098.104
Wenaas EFTF AS	1.000.000	1.000.000
Total 10 largest EC holders	22.893.570	22.558.271
Of which Møre & Romsdal	12.796.977	12.805.195
Of which Møre & Romsdal in %	55.9	56.8

EC capital in Sparebanken Møre

The largest owners (11-20) of EC capital

EC holder	Number of ECs
	30.09.22	30.06.22
Beka Holding AS	750.500	750.500
Lapas AS (Leif-Arne Langøy)	617.500	617.500
Pareto Invest Norge AS/Pareto AS	565.753	729.780
Forsvarets personellservice	459.000	459.000
Stiftelsen Kjell Holm	419.750	419.750
BKK Pensjonskasse	378.350	353.350
U. Aandals EFTF AS	250.000	250.000
PIBCO AS	229.500	229.500
Morgan Stanley & Co. International	204.198	212.568
Borghild Hanna Møller	201.220	201.220
Total 20 largest EC holders	26.969.341	26.781.439
Of which Møre & Romsdal	14.514.947	14.523.165
Of which Møre & Romsdal in %	53.8	52.2