Q4 2021 Interim financial statements

SpareBank 1 Sørøst-Norge | Interim Financial Statements 1

	Main figures	p. 4
	Vision, values and goals	p. 8
	About SpareBank 1 Sørøst-Norge	p. 10
	Board of Directors' Interim Report	p. 12
	Income statement	p. 23
	Statement of financial position	p. 24
	Results from quarterly financial statements	p. 25
	Change in equity	p. 26
	Cash flow statement	p. 28
	Notes to the financial statements
1.	Accounting policies	p. 31
2.	Critical accounting estimates and discretionary valuations	p. 31
3.	Merger of SpareBank 1 BV and Sparebanken Telemark on 01.06.2021	p. 32
4.	Capital adequacy	p. 36
5.	Segment information	p. 39
6.	Losses on loans and guarantees	p. 41
7.	Impairment provisions for loans and guarantees	p. 42
8.	Loans to customers by Stages 1, 2 and 3	p. 44
9.	Lending to customers by sector and industry	p. 45
	10. Transfer of financial assets	p. 45
	11. Financial derivatives	p. 46
	12. Liquidity risk	p. 46
	13. Net commission and other income	p. 47
	14. Net result from financial investments	p. 48
	15. Measuring fair value of financial instruments	p. 49
	16. Other assets	p. 51
	17. Deposits from customers by sector and industry	p. 52
	18. Securities issued	p. 52
	19. Subordinated loan capital	p. 53
	20. Other liabilities	p. 53
	21. Equity certificate holders and distribution of equity certificates	p. 54
	22. Equity certificates and ownership fractions	p. 56
	23. Pro forma results from the quarterly financial statements	p. 57
	24. Pro forma statement of financial position figures from the quarterly
	financial statements	p. 58
	25. Events after the statement of financial position date	p. 58
	Declaration from the Board of Directors and the CEO	p. 59
	Statements concerning future events	p. 60

Main figures

NOK 869 million

Profit after tax

11.4%

Return on equity

18.3% Common Equity Tier 1 capital ratio

Main figures

Group (amounts in NOK millions/% of avg. total assets)	01.01-31.12.2021	%	01.01-31.12.2021	%
Net interest income	920	1.53	649	1.63
Net commission and other income	716	1.19	477	1.20
Net income from financial assets	360	0.60	134	0.34
Total net income	1,995	3.31	1,260	3.17
Total operating expenses	886	1.47	599	1.51
Operating profit before losses/profit before losses and tax	1,109	1.84	661	1.66
Losses on loans and guarantees	79	0.13	31	0.08
Profit before tax	1,030	1.71	630	1.59
Tax expense	161	0.27	125	0.32
Profit after tax	869	1.44	505	1.27
Total other comprehensive income recognised as equity	(14)	(0.02)	2	0.00
Total comprehensive income	855	1.42	507	1.28

Key figures

Group (amounts in NOK millions)	31.12.2021	31.12.2021 with pro forma figures for 2020 31.12.2020
Profitability
Return on equity, profit before other comprehensive income 1)	11.4%	9.7%
Return on equity, comprehensive income 1)	11.2%	9.7%
Cost-income ratio 1)	44.4%	47.6%
Cost-income ratio excl. financial investments 1)	54.2%	53.2%
Statement of financial position figures
Gross lending to customers	62,771	32,586
Gross lending to customers incl. SpareBank 1 Boligkreditt/Næringskreditt 1)	88,105	45,999
Deposits from customers	46,212	25,864
Deposit coverage 1)	73.6%	79.4%
Liquidity coverage ratio (LCR), liquidity reserve	175.0%	189.0%
Lending growth incl. SpareBank 1 Boligkreditt/Næringskreditt in the past 12 months 1)		6.2% 3.9%
Deposit growth in the past 12 months 1)		6.0% 5.8%
Total assets	74,911	40,455
Total assets, incl. SpareBank 1 Boligkreditt/Næringskreditt 1)	100,245	53,868
Losses
Loss rate on lending 1)	0.17%	0.10%
Loans in Stage 3 as % of gross lending 1)	0.54%	0.61%
Losses (incl. SpareBank 1 Boligkreditt/Næringskreditt)
Loss rate on lending (incl. SpareBank 1 Boligkreditt/Næringskreditt) 1)	0.12%	0.07%
Loans in group 3 as % of gross lending (incl. SpareBank 1 Boligkreditt/Næringskreditt) 1)	0.38%	0.43%
Financial strength in terms of proportional consolidation
Capital adequacy ratio	21.0%	22.0%
Tier 1 capital ratio	19.3%	20.0%
Common Equity Tier 1 capital ratio	18.3%	18.8%
Net primary capital	10,124	5,744
Tier 1 capital	9,293	5,233
Common Equity Tier 1 capital	8,817	4,907
Basis for calculation	48,269	26,156
Leverage ratio, proportional consolidation	8.4%	8.6%
Offices and staffing
Number of bank branches	17	10
Number of brokerage offices	16	10
Number of accounting offices	5	5
Number of FTEs, parent bank (avg. YTD)	320	235
Number of FTEs, group (avg. YTD)	463	345
Number of FTEs, parent bank (at end of period)	378	236
Number of FTEs, Group (at end of period)	533	524

Group (amounts in NOK millions)	31.12.2021	31.12.2020	31.12.2019
Equity certificates
Equity certificate fractions	60.27%	54.69%	56.15%
Market price (NOK)	65.40	41.30	39.60
Market value (NOK millions)	7,762	2,606	2,499
Book equity per equity certificate (parent bank, NOK)	47.71	43.39	42.19
Book equity per equity certificate (Group, NOK) 1)	49.32	45.62	43.71
Earnings per equity certificate (parent bank, NOK) 1)	4.94	3.62	4.43
Earnings per equity certificate (Group, NOK) 1)	5.37	4.34	4.63
Dividend per equity certificate (NOK)	2.50	1.90	2.42
Price/earnings per equity certificate (parent bank)	13.25	11.42	8.94
Price/earnings per equity certificate (Group) 1)	12.18	9.52	8.56
Price/book equity (parent bank)	1.37	0.95	0.94
Price/book equity (Group) 1)	1.33	0.91	0.91

1) Alternative performance measures are defined in a separate appendix to the quarterly report

Business concept, vision, values and goals

On 01.06.2021, SpareBank 1 BV and Sparebanken Telemark merged with SpareBank 1 BV as the takeover bank. At the same time, the merged bank changed its name to SpareBank 1 Sørøst-Norge. At year end 2021, the Group had 533 FTEs. The Board of Directors adopted a new corporate strategy in November.

Our unique mission/brand

SpareBank 1 Sørøst-Norge aims to contribute to sustainable development in local communities by providing a wide range of financial services, as well as relevant advice to individuals and businesses.

SpareBank 1 Sørøst-Norge wants to be seen as the personal regional bank that provides value for local businesses, people and communities.

We aim to offer a broad range of high-quality, competitive products in all of our business areas. Each business area must provide good advice and maintain an active focus on sales. Our sales and advice must be based on expertise, quality and ethical standards in line with the best traditions of the savings bank industry.

Vision and values

Vision Together we create value.

Our values Present, power and movement

Market area

SpareBank 1 Sørøst-Norge's geographical market area includes Vestfold og Telemark County, as well as Viken with centres of gravity around Kongsberg and Drammen.

SpareBank 1 Sørøst-Norge's registered business address is in Sandefjord, and it has local branches offering advice in Kongsberg, Nedre Eiker, Drammen, Lier, Holmestrand, Horten, Tønsberg, Færder, Sandefjord, Larvik, Bamble, Porsgrunn, Skien, Ulefoss, Lunde, Bø and Notodden.

Corporate Strategy 2022-2025

Four overarching ambitions

Strengthen customer relationships and become the preferred bank for the retail and SME segment in our market area
Be an attractive, sound regional bank for Southeast Norway
Be one of the most attractive places to work in banking/finance in Southeast Norway
Profitable growth provides a basis for greater value creation for all of our stakeholders

Seven strategic focus areas

Stronger top line
Customer oriented
Sustainability
Data and insight driven
Attractive place to work
Quality
Ambition to be an IRBa bank

Resource management

Within the priority areas described in the strategy, our resources must be employed to yield the best return on capital for the benefit of our equity certificate holders, customers, employees and region.

About SpareBank 1 Sørøst-Norge

SpareBank 1 Sørøst-Norge is a proactive financial services group whose market area covers Vestfold og Telemark County, as well as the lower portion of the former Buskerud County. Its head office is Sandefjord. The numbers of FTEs in the parent bank and the Group at the end of the year were 377.8 and 533.2, respectively.

The Group's main activity consists of the parent bank, as well as the wholly owned subsidiaries EiendomsMegler 1 BV AS and SpareBank 1 Regnskapshuset Sørøst-Norge AS. In addition, the Bank owns 55 % of Z-Eiendom AS and 51 % of EiendomsMegler 1 Telemark. The Groups has branches in Kongsberg, Nedre Eiker, Drammen, Lier, Holmestrand, Horten, Tønsberg, Færder, Sandefjord, Larvik, Bamble, Porsgrunn, Skien, Ulefoss, Lunde, Bø and Notodden.

The region has a diverse business sector. SpareBank 1 Sørøst-Norge has a total of 17 branches spread across cities and towns in areas seeing economic growth. The business sector in the Bank's market areas is well diversified with the varied composition of the sectors represented by the public sector, industry, power, technology, research and trade.

Important financial events in the quarter

On 16.12.2021, the supervisory boards and general meetings of both SpareBank 1 Sørøst-Norge and SpareBank 1 Modum unanimously backed a merger of the banks. SpareBank 1 Sørøst-Norge is the takeover bank. The boards of directors considered the letters of intent on 10.11.2021. The plan is for the banks to complete their legal merger on 01.04.2022, while their technical merger will take place between 07.10.2022 and 09.10.2022.

In the fourth quarter, the Bank completed a green framework that will serve as a basis for the issuing of green bonds. Based on the framework, the Bank issued its first green bond on 14.12.2021 worth NOK 400 million.

On 14.12.2021, the Financial Supervisory Authority of Norway informed SpareBank 1 Sørøst-Norge that its minimum requirement for own funds and eligible liabilities (MREL) was 26.1% of the adjusted basis for calculation at any given time. The total subordination requirement amounts to 27.1% of the adjusted basis for calculation, with a requirement that 20 % must be met from 01.01.2022. The requirement must be fully met from 01.01.2024. Announced and future changes to buffer and Pillar 2 requirements will result in corresponding adjustments to the MREL requirement.

Interim report from the Board of Directors for Q4

The SpareBank 1 Sørøst-Norge Group

On 01.06.2021, SpareBank 1 BV and Sparebanken Telemark merged with SpareBank 1 BV as the takeover bank. At the same time, the merged bank changed its name to SpareBank 1 Sørøst-Norge.

On 16.12.2021, the supervisory boards and general meetings of both SpareBank 1 Sørøst-Norge and Spare-Bank 1 Modum unanimously backed a merger of the banks. The goal is to create a powerful bank in the banks' market areas and be well-positioned for the future. The legal merger is scheduled to be completed on 01.04.2022, assuming it is approved by the Financial Supervisory Authority of Norway. Approval from the Norwegian Competition Authority was granted on 04.01.2022. Annual synergies in the range of NOK 20 million have been defined in relation to the planned merger. These will be fully phased in 2024. Approximately NOK 50 million will be incurred in costs in 2022 related to the merger transaction, technical merger and restructuring packages.

The interim financial statements have been prepared in accordance with IAS 34 Interim reporting.

The comments and figures below refer to the Group unless explicitly stated otherwise. Figures in brackets relate to the corresponding period last year.

Figures from the transferring bank (Sparebanken Telemark) are included in the official accounts with effect from 01.06.2021. Pro forma financial statements have been prepared for 2021 and 2020 to improve comparability 1 . Added/less value has been incorporated into the pro forma figures from 2021. Please refer to Note 3 concerning the merger of SpareBank 1 BV and Sparebanken Telemark, as well as to the separate pro forma income statements and statements of financial position in Notes 23 and 24.

Highlights from the pro forma financial performance and balance sheet performance as at 31.12.2021 are shown below, with the pro forma figures as at 31.12.2020 in brackets.

1) The pro forma figures for 2020 represent the combined income statement and statement of financial position without calculation of added/less value

Highlights (pro forma) for the period 01.01.2021 to 31.12.2021

• Ordinary profit after tax of NOK 1,004 million (NOK 839 million)
• Net interest income of NOK 1,117 million (NOK 1,102 million)
• Profit contributions from SpareBank 1 Gruppen and BN Bank ASA of NOK 133 million and NOK 36 million, respectively
° Of which, the gain from the spinoff of SpareBank 1 Forvaltning AS amounted to NOK 27 million
• Higher operating expenses were mainly due to merger-related one-time costs of NOK 69 million
• Losses on loans and guarantees of NOK 86 million (NOK 66 million)
° Of which the accounting effect of the merger was NOK 89 million
• Negative goodwill recognised through profit or loss of NOK 151 million
• Return on equity of 10.6 % (9.5 %)
• Lending and deposit growth in the past 12 months of 6.2 % (7.9 %) and 6.0 % (7.5 %), respectively

Some of the highlights and figures that refer to the official accounting and consolidated figures are shown below. Figures in brackets relate to the corresponding period last year for the takeover bank.

Highlights for the period 01.01.2021 to 31.12.2021

• Merger completed on 01.06.2021
• Ordinary profit after tax of NOK 869 million (NOK 505 million)
• Negative goodwill recognised through profit or loss of NOK 151 million
• Net interest income of NOK 920 million (NOK 649 million)
• Losses on loans and guarantees of NOK 79 million (NOK 31 million)
° Of which the accounting effect of the merger was NOK 89 million
• Profit contributions from SpareBank 1 Gruppen and BN Bank ASA of NOK 120 million and NOK 31 million, respectively
• Return on equity of 11.4 % (9.7 %)
• Common Equity Tier 1 capital ratio, proportional consolidation, 18.3 % (18.8 %)

Fourth quarter highlights

• Ordinary profit after tax of NOK 225 million (NOK 108 million)
• Net interest income of NOK 300 million (NOK 157 million)
• Losses on loans and guarantees of NOK 2 million (NOK -3 million)
• Profit contributions from SpareBank 1 Gruppen and BN Bank ASA in the fourth quarter of NOK 39 million and NOK 9 million, respectively
• Return on equity of 9.1 % (8.2 %)

Financial performance

Cumulative figures as at 31.12.2021 unless explicitly stated otherwise.

Income statement

The SpareBank 1 Sørøst-Norge Group posted a profit from ordinary operations before losses of NOK 1,109 million (NOK 661 million). Profit after tax was NOK 869 million (NOK 505 million), which represents 1.44 % (1.27 %) of average total assets. The Group's annualised return on equity was 11.4 % (9.7 %).

Earnings per equity certificate (weighted average as at 31.12.2021) in the parent bank were NOK 4.94 (3.62) and in the Group NOK 5.37 (4.34).

The Bank's dividend policy is that around 50 % of the equity certificate holders' share of the profit for the year shall be paid out as cash dividends. The basis for calculating this for 2021 is the Group's pro forma profit, where the profit from the first 5 months from Sparebanken Telemark is also included in the basis for the payout. The Group's pro forma earnings per equity certificate were NOK 5.03. The Board of Directors is proposing a dividend of NOK 2.50 per equity certificate, which corresponds to 50 % of the Group's pro forma profit and 62 % of the official profit for the parent bank.

Quarterly performance of profit after tax and return on equity:

Net interest income

Net interest income amounted to NOK 920 million (NOK 649 million). Net interest income annualised as a percentage of average total assets was 1.53 % (1.63 %).

The reduction in net interest income is mainly attributable to Norges Bank lowering its policy rate to 0.0 % in the second quarter of 2020, which in turn resulted in substantially weakened margins and greater competition for mortgages. In September 2021, Norges Bank decided to raise the policy rate to 0.25 %. As a result, the Bank decided to increase lending rates by up to 0.25 percentage points. The changes to lending rates first took effect from 12.11.2021 for existing loans to retail customers and from 15.10.2021 for existing loans

to corporate customers, while NIBOR loans will be adjusted on an ongoing basis during the period. At the same time, the interest rate for some deposit products was increased by 0.20-0.25 percentage points. In December, Norges Bank again decided to raise the policy rate, this time from 0.25% to 0.50%. Based on the rising money market rates and policy rate, the Bank raised lending and deposit rates for existing customers by up to 0.25 percentage points on 20.12.2021. The new terms came into effect from 21.12.2021 for new loans and from 01.02.2022 for existing loans to retail customers.

At the end of the quarter, the Bank had transferred mortgages worth NOK 23,769 million (NOK 12,660 million) to SpareBank 1 Boligkreditt AS, and NOK 1,565 million (NOK 752 million) to SpareBank 1 Næringskreditt AS. Earnings from these loan portfolios are shown under net commission income and amounted to NOK 209 million (NOK 133 million).

Quarterly change in net interest income:

Net interest income Net interest income incl. mortgage companies Policy rate Norges Bank

Net commission and other income:

Net commission and other income totalled NOK 716 million (NOK 477 million).

Net commission income

Net commission income amounted to NOK 483 million (NOK 312 million). The commissions from SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS accounted for NOK 209 million (NOK 133 million) of this.

Other operating income

Other operating income amounted to NOK 233 million (NOK 165 million).

Net income from financial assets

Net income from financial assets amounted to NOK 360 million (NOK 134 million). As at 31.12.2021, the main items consist of NOK 33 million (NOK 31 million) in dividends received, NOK 153 million (NOK 101 million) in net profit from ownership interests, and net profit from other financial investments of NOK 174 million (NOK 2 million). The latter item includes NOK 151 million in recognised negative goodwill related to the merger with Sparebanken Telemark.

The net result from ownership interests includes the results from SpareBank 1 Gruppen AS and BN Bank ASA of NOK 120.0 million (NOK 83.0 million) and NOK 31.1 million (NOK 18.0 million), respectively. The indirect stake in SpareBank 1 Gruppen AS and direct stake in BN Bank ASA were increased from 3.0 and 5.0 per cent to 4.4 and 7.5 per cent, respectively, in connection with the merger.

Quarterly change in income (NOK millions):

Net interest income

Commission income from SB 1 Boligkreditt/Næringskreditt

Net commission and other income
Net income from financial assets
Profit in the future

Income from ownership interests, SpareBank 1 Gruppen

SpareBank 1 Gruppen ASA posted another record profit of NOK 1,079 million (NOK 594 million) for the fourth quarter and NOK 3,249 million (NOK 1,393 million) for 2021. The controlling interest's share amounted to NOK 2,414 million (NOK 988 million). The return on equity for the year was 21.9 %. SpareBank 1 Sørøst-Norge recognised NOK 121.0 million in income from SpareBank 1 Gruppen. This includes income recognition related to SpareBank 1 Forvaltning of NOK 26.6 million. In addition, NOK 8.3 million was recognised as income in connection with the Bank's sale of part of its shares in Samarbeidende Sparebanker AS and stake in Samarbeidende Sparebanker Utvikling DA to SpareBank 1 Helgeland.

The Fremtind Forsikring Group posted a profit of NOK 2,386 million (NOK 1,168 million). The improved profit was mainly attributable to a significantly improved insurance result, although the financial result was also better than last year. The insurance result amounted to NOK 2,457 million (NOK 1,091 million). This represents an improvement of no less than NOK 1,365 million compared with last year, which was impacted by a high claims ratio within travel insurance and major provisions in Fremtind Livsforsikring in connection with the portfolios taken over from DNB Forsikring AS and SpareBank 1 Forsikring AS.

The insurance result also includes income recognition of reserves of NOK 160 million linked to the portfolio transferred from DNB Liv. Net financial income amounted to NOK 618 million (NOK 417 million), which is NOK 201 million higher than last year. The return on equities for the year was 26.4 % (11.8 %) and this was the largest contributor to financial income. Premiums increased by NOK 769 million in the year, which represents annualised growth of 6 %.

SpareBank 1 Forsikring AS posted a profit of NOK 778 million (NOK 234 million). The change in the value of properties and the dissolution of reserves were important factors behind the significant improvement in profit in 2021. All profit components saw improvements. The risk result amounted to NOK 143 million (NOK 71 million). An improvement of NOK 72 million from last year, where the administration result improved by NOK 188 million compared with last year. The interest result amounted to NOK 1,562 million (NOK 5 million). The value of properties in the collective portfolio was adjusted by NOK 925 million in 2021. At the same time last year, the value of properties in the collective portfolio was adjusted by NOK -289 million.

Income from ownership interests, BN Bank ASA

BN Bank ASA's profit for 2021 amounted to NOK 478 million (NOK 354 million). SpareBank 1 Sørøst-Norge owns 7.5 % of BN Bank ASA. SpareBank 1 Sørøst-Norge's recognised income from BN Bank's profit amounted to NOK 31.2 million.

Distribution of shares in connection with SpareBank 1 Forvaltning AS

The SpareBank 1 Forvaltning Group was established on 01.05.2021. At the same time, ODIN Forvaltning AS was demerged from SpareBank 1 Gruppen AS and incorporated into SpareBank 1 Forvaltning AS. On 01.07.2021, the company acquired SpareBank 1 Kapitalforvaltning AS and SpareBank 1 Verdipapirservice AS, and the SpareBank 1 Alliance 'savings group' was formed. On 15.09.2021, an agreement was signed to acquire Spare-Bank 1 SR Forvaltning. The acquisition was approved by the Financial Supervisory Authority of Norway on 29.12.2021.

Ownership of SpareBank 1 Forvaltning AS was transferred to the owner banks via a distribution of shares from Samarbeidende Sparebanker AS. The transactions were recognised through profit or loss in the third quarter and amounted to NOK 26.6 million in the Group and NOK 38.2 million in the parent bank. SpareBank 1 Sørøst-Norge owns 6.0 % of SpareBank 1 Forvaltning AS.

Operating expenses

Total operating expenses were NOK 886 million (NOK 599 million). Operating expenses as a percentage of total operating income for the Group came to 44.4 % (47.6 %). The corresponding cost-income ratio for the parent bank was 40.2 % (44.5 %).

Total	48	69
Other operating expenses	29	50
Personnel expenses	19	19
(NOK millions)	Official	Pro forma
Merger-related one-time costs 2021	As at 31.12	As at 31.12

Personnel expenses

Personnel expenses amounted to NOK 529 million (NOK 359 million). Of which, merger-related one-time costs amounted to approximately NOK 19 million. This mainly consisted of a change in the pension provisions for the newly appointed CEO and severance pay for the former CEO.

The number of FTEs at the end of the quarter was 534.8 (345.5), of which the parent bank employs 377.8 (236.0). The increase is related to the merger with Sparebanken Telemark with effect from 01.06.2021, as well as the acquisition of Regnskapsdata Kongsberg AS on 01.01.2021.

Other operating expenses

Other operating expenses were NOK 357 million (NOK 240 million). Of which, merger-related one-off costs amounted to NOK 29 million, of which NOK 4 million was related to the planned merger with Modum. The merger-related costs were mainly related to transaction costs/legal fees.

Losses and impairment provisions

Losses charged as costs amounted to NOK 79 million (NOK 31 million) and NOK 2 million (NOK -3 million) for the quarter. No changes were made to scenario weights this quarter. Loss provisions for loans and guarantees amounted to NOK 264 million (NOK 172 million), which is equivalent to 0.42% (0.53%) of gross lending on the balance sheet.

In connection with the opening balance as at 01.06.2021, loans in Stage 1 were measured at fair value, which was equivalent to their nominal value, in line with IFRS 9.

When calculating lending in SpareBank 1 Sørøst-Norge, IFRS 9 requires that an impairment provision be made amounting to 12 months' expected credit losses, which amounted to NOK 89 million. This corresponds to Sparebanken Telemark's impairment provision as at 31.05.2021 (prior to the merger).

Mortgages for retail customers account for around 77% (82%) of the Bank's total lending.

The Bank's credit risk increased as a result of the Covid-19 outbreak and abrupt shutdown of the Norwegian

economy from 12.03.2020. The Bank's model for calculating expected credit losses was not designed to be able to estimate on the basis of a sharp negative shift in general conditions since the model is largely based on historical data. Given this, the Bank has since the start of the Covid-19 pandemic conducted comprehensive quarterly reviews of the retail and corporate market portfolios with an emphasis on the most vulnerable industries. Customers with weak operations and liquidity have been identified and individual impairment provisions have been made. Few exposures requiring individual impairment provisions were identified in 2021.

In addition to expanded individual loss assessments, the Bank assessed the model's scenario weights in this quarter as well. Given the increased infection pressure towards the end of the year and partial shutdown of society, the risk picture is regarded as relatively unchanged compared with the third quarter. No material changes have been identified in the risk picture within the Bank's portfolios. The scenario weights for both the retail market and the corporate market have consequently been kept unchanged at 80/15/5 (likelihood of normal/worst/best scenario, respectively) at the end of the fourth quarter. Please see the more detailed comments in Notes 2 and 7.

Lending and deposit performance

Gross lending (including the volume transferred to SpareBank 1 Boligkreditt AS/SpareBank 1 Næringskreditt AS) amounted to NOK 88,105 million. The past 12 months have seen lending growth of 6.2 % (pro forma). Some NOK 3,923 million, equivalent to 6.1 %, of the growth came in the retail market and NOK 1,255 million, equivalent to 6.8 %, in the corporate market. The retail market's share of lending (including SpareBank 1 Boligkreditt AS) at the end of the quarter was 78 % (82 %).

At the end of the quarter, the Group had a deposit volume of NOK 46,212 million (25,864 million) with deposit growth of 6.0 % (pro forma) in the past 12 months. Some NOK 1,441 million, equivalent to 5.0 %, of the growth came in the retail market and NOK 1,192 million, equivalent to 8.1 %, in the corporate market. The Group had a deposit coverage ratio of 73.6 %, compared with 79.4 % at the same time last year. Including the volume transferred to SpareBank 1 Boligkreditt AS/SpareBank 1 Næringskreditt AS, the deposit coverage ratio amounted to 52.5 % (52.6 %). The retail market's share of deposits at the end of the quarter was 65 % (66 %).

Quarterly change in loans and deposits:

Quarterly change in impairment provisions:

The Group's total assets amounted to NOK 74,911 million (NOK 40,455 million). The Group's business capital (total assets including loans transferred to SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS) amounted to NOK 100,245 million (53,868 million).

Deposit coverage (excl. mortgage company)

Liquidity

The Bank's liquidity situation at the end of the quarter was very good. The Bank's liquidity portfolio was valued at NOK 6,118 million and its LCR at 175 % (189 %) as at 31.12.2021. The Bank aims to keep its liquidity risk low. SpareBank 1 Sørøst-Norge's goal is to be able to maintain ordinary operations for a minimum of 12 months in a normal market without access to new external financing. As at 31.12.2021, the Bank was well above this target.

At the end of the quarter, mortgages totalling NOK 23,769 million had been transferred to SpareBank 1 Boligkreditt AS. As at As at 31.12.2021, the Bank had a portfolio of loans approved for transfer to SpareBank 1 Boligkreditt AS worth NOK 24.5 billion. In addition, the Bank had transferred loans to SpareBank 1 Næringskreditt AS worth NOK 1,565 million as at 31.12.2021.

In 2021, the Group's target is to increase the average time to maturity of its bond debt to a minimum of 3.0 years. At the end of the quarter, the average term to maturity was 3.1 (3.1) years.

On 14.12.2021, pursuant to the Financial Institutions Act, section 20-9, ref. section 20-25, the Financial Supervisory Authority of Norway resolved that SpareBank 1 Sørøst-Norge would be subject to a risk-weighted MREL requirement of 26.1 % of the adjusted basis for calculation at any given time.

Pursuant to BRRD2, the primary capital used to meet the combined buffer requirement cannot simultaneously be used to cover the risk-weighted MREL. Therefore, the effective need for instruments that can meet the effective MREL requirement will be the sum of the risk-weighted MREL requirement plus the combined buffer requirement. Given that the combined buffer requirement currently amounts to 6.5 %, the effective MREL requirement will be 32.6 %.

The effective MREL requirement must not be met using subordinated instruments. The total subordination requirement must be calculated using the formula in BRRD2 article 45b(7)(b) and for SpareBank 1 Sørøst-Norge amounts to 27.1 % of the adjusted basis for calculation.

The total subordination requirement of 27.1 % must be met in full as at 01.01.2024. Furthermore, a minimum requirement for total subordination of 20% must be met by 01.01.2022. The difference between the institution's subordinated instruments and effective MREL requirement can be covered by unsecured senior bond debt issued by the parent bank. From 01.01.2024, this debt must satisfy the criteria set out in BRRD2, article 45b.

The minimum requirement for the total subordination that must be met on 01.01.2022 (20 %) amounted to NOK 8,110 million based on the current capital requirement and capital adequacy as at 30.06.2021. The primary capital available to meet the effective MREL requirement and minimum requirement for total subordination was at the same time NOK 8,293 million. During 2021, SpareBank 1 Sørøst-Norge also issued NOK 1,550 in senior subordinated debt.

SpareBank 1 Sørøst-Norge has an issuer rating from Moody's of A2 with a positive outlook; see Moody's latest credit analysis dated 03.06.2021. The positive outlook reflects Moody's view of the merger between SpareBank 1 BV and Sparebanken Telemark and further issuance of senior non-preferred bonds, which will provide better protection for depositors and other senior debt.

Equity Capital adequacy

When calculating capital adequacy, SpareBank 1 Sørøst-Norge uses the standard method for calculating credit risk and the basic method for operational risk.

In light of the Covid-19 pandemic, the Ministry of Finance decided on 13.03.2020 to reduce the countercyclical buffer from 2.5% to 1% with immediate effect. Based on this, the regulatory requirement for Common Equity Tier 1 capital in Pillar 1 is 11%. In connection with the merger, the Financial Supervisory Authority of Norway set a Pillar 2 requirement for the Bank of 2.3%, applicable from 01.06.2021. This requirement will apply until the Financial Supervisory Authority of Norway sets a new Pillar 2 requirement. The Board of Directors is going to start work on a new internal capital adequacy assessment process (ICAAP). The assessment must be submitted to the Financial Supervisory Authority of Norway by no later than 12 months after the merger has been completed. The total regulatory requirement for the Common Equity Tier 1 capital ratio before the management buffer is 13.3%. The Group's Common Equity Tier 1 capital ratio target is a minimum of 16.0%. However, this will increase to 17.0% due to the required net increase in the systemic risk buffer and countercyclical buffer totalling 1.0 percentage point in 2022.

At the end of the quarter, the Common Equity Tier 1 capital ratio was 18.3% (18.8%). The leverage ratio was 8.4% (8.6%) at the end of the quarter. The regulatory requirement for the leverage ratio is 5.0%.

The Board of Directors' proposed cash dividend and grants for community capital take into account the capital adequacy calculations in the quarterly report. See the next section.

An expanded SME discount will be introduced in connection with the approved banking package in CRR 2/CRD V. Preliminary calculations estimate the effect will be an increase in the Common Equity Tier 1 capital ratio of 0.6 percentage points. There remains some uncertainty about when the rules in the banking package will be enacted in the EEA agreement and come into force in Norway.

Equity certificates – dividend

The Bank's normal policy is that about 50% of the equity certificate holders' share of each year's profit should be paid out as a cash dividend.

The Bank's Board of Directors is, due to the good results in 2021 and the Bank's very good financial strength as at 31.12.2021, recommending a cash dividend for 2021 of NOK 2.50 per equity certificate, totalling NOK 296.7 million, and dividends/grants for community capital totalling NOK 195.6 million. The proposed dividend entails total distribution of around 62% of the parent bank's official profit and 50% of the Group's pro forma profit. The Financial Supervisory Authority of Norway has been informed of the proposed level of the cash dividend and grants for community capital.

Quarterly change in capital adequacy (proportional consolidation):

Transactions with close associates

Apart from the completed merger between SpareBank 1 BV and Sparebanken Telemark, the Group has not carried out any transactions with close associates that had a significant impact on the company's position or results during the reporting period.

Merger synergies

On 04.01.2022, the Norwegian Competition Authority announced that it had no comments regarding the merger with SpareBank 1 Modum. The Bank is waiting for the approval of the Financial Supervisory Authority of Norway and has announced that the planned legal merger date would be 01.04.2022. A merger with Spare-Bank 1 Modum will strengthen the Bank's position in the Drammen region, while supporting the Bank's ambition to become an IRBa bank. Thanks to a number of mergers in recent years, the Bank has good experience and expertise in implementing mergers in the savings bank sector. The Board of Directors wants to play an active role in any future structural changes in the region.

The Bank has previously communicated synergies of around NOK 80-90 million per year, fully phased in by the end of 2024. These are mainly cost synergies within funding, staffing, IT, marketing and space costs. Since 30.11.2020, the number of FTEs in the parent bank has been reduced by around 14 FTEs to 377.8 FTEs as at the end of 2021. As part of the work on realising synergies, the Board of Directors has decided to offer redundancy packages to employees of the Bank older than 62. The offer applies to just under 50 FTEs. An estimated NOK 80 million in outstanding one-off costs will be incurred in full in 2022.

Future outlook

The Norwegian economy continued to develop positively in the fourth quarter. Norges Banks regional survey shows that business in our region is optimistic about the future and planning for increased investment and employment. Unemployment in our market area, measured as the proportion of fully unemployed people registered

with NAV, fell in the quarter was 2.4 % at the end of December. The growth in house prices was high in 2021 and they rose by an estimated 10 per cent for the year as a whole in our market areas.

The number of bankruptcies in the business sector remains low. Thanks to extensive government economic measures, the business sector received help to get through the pandemic. Growth in 2022 could be more difficult since a decision has been made to discontinue the support packages. The credit quality in the Bank's lending portfolio has been stable. The Bank has little exposure to the industries and sectors that have been hardest hit in the pandemic.

The policy rate is expected to rise, which could result in more moderate house price growth going forward. Even after a period of strong growth in house prices, house prices in our market area remain at a proportionally lower level than in, for example, Oslo. Therefore, the Board of Directors expects continued positive growth in house prices in our market area. The Bank has a sound lending portfolio in the retail market, with a high percentage of low risk mortgages.

A general rise in market rates is expected to improve the Group's interest rate margin and earnings. The Group's target for its return on equity is 11% in the period up to 2024. The aim is to achieve the goal through profitable growth, efficient operations and good cost control, including efficient capital utilisation, where the ambition to eventually apply for IRBa approval is an important strategic initiative. As far as results are concerned, 2022 and 2023 will be affected by a somewhat higher level of costs due to the need for investment in various strategic initiatives, restructuring and realising synergies.

Sandefjord, 9 February 2022 The Board of Directors of SpareBank 1 Sørøst-Norge

Finn Haugan Chair of the Board Anne Berg Behring Deputy Chair

Elisabeth Haug

Heine Wang Jan Erling Nilsen

Hanne Myhre Gravdal Employee representative Frede Christensen Employee representative Per Halvorsen CEO

Interim financial statements

Consolidated Income Statement IFRS

		Parent bank				Group
Q4 2020	Q4 2021	31.12. 2020	31.12. 2021	(Amounts in NOK millions) Note	31.12. 2021	31.12. 2020	Q4 2021	Q4 2020
18	32	96	96	Interest income - assets measured at fair value	96	96	32	18
191	381	883	1,158	Interest income - assets measured at amortised cost	1,157	884	381	192
53	113	331	334	Interest expenses	333	331	113	53
156	300	648	920	Net interest income	920	649	300	157
94	158	331	513	Commission income	513	331	158	94
5	10	19	30	Commission expenses	30	19	10	5
-	3	9	7	Other operating income	233	165	64	34
89	150	320	489	Net commission and other income	13 716	477	212	123
9	1	67	129	Dividends	33	31	1	9
-	1	2	12	Net result from ownership interests	153	101	48	18
(6)	-	2	170	Net result from other financial investments 1)	174	2	0	(6)
3	1	70	311	Net income from financial assets 3, 14	360	134	50	22
248	452	1,039	1,721	Total net income	1,995	1,260	561	302
80	130	250	365	Personnel expenses	529	359	177	107
54	99	213	326	Other operating expenses	357	240	108	62
134	228	463	691	Total operating expenses	886	599	285	170
115	223	576	1,030	Profit before losses and tax	1,109	661	276	133
(1)	1	35	79	Losses on loans and guarantees 6, 7	79	31	2	(3)
115	222	541	951	Profit before tax	1,030	630	274	135
28	48	121	154	Tax expense	161	125	49	28
88	174	420	796	Profit before other comprehensive income	869	505	225	108
-	-	-	-	Controlling interest's share of profit	865	503	224	108
-	-	-	-	Non-controlling interest's share of profit	4	1	-	1
				Items reversed through profit or loss, net after tax
-	(1)	3	1	Change in value of loans classified at fair value	1	3	(1)	-
				Items not reversed through profit or loss, net after tax
(1)	(14)	(1)	(14)	Estimation difference, IAS 19 Pensions	(15)	(1)	(15)	(1)
-
	(15)	2	(13)	Total other comprehensive income recognised as equity	(14)	2	(16)	-

87	159	422	783	Total comprehensive income	855	507	209	107
-	-	-	-	Controlling interest's share of total comprehensive income	851	505	209	107
-	-	-	-	Non-controlling interest's share of total comprehensive income	4	1	-	1
				Earnings and diluted result per equity certificate

1) Of which, recognised negative goodwill related to the merger amounted to NOK 151 million in the second quarter of 2021.

Consolidated Statement of Financial Position

Parent bank Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	Note	31.12.2021	31.12.2020
101	114	Cash and receivables from central banks		114	101
1,035	2,153	Loans to and receivables from financial institutions		2,153	1,074
32,464	62,571	Net lending to customers	5. 8. 9	62,542	32,444
4,433	6,146	Certificates, bonds and other securities at fair value		6,146	4,433
1,372	2,203	Shareholdings and other equity interests		2,203	1,372
37	69	Ownership interests in Group companies		-	-
485	862	Interests in joint ventures and associated companies		1,141	713
74	239	Tangible assets		277	102
-	-	Goodwill		34	25
11	23	Deferred tax assets		23	12
169	193	Other assets	16	279	180
40,182	74,573	Total assets		74,911	40,455
200	150	Deposits from and liabilities to financial institutions	18	150	200
25,903	46,264	Deposits from customers	17	46,212	25,864
7,909	16,913	Liabilities from the issuance of securities	18	16,913	7,909
121	212	Tax payable		220	125
372	609	Other liabilities	20	664	421
401	651	Subordinated loan capital	19	651	401
34,905	64,801	Total liabilities		64,811	34,919
947	1,778	Equity share capital		1,778	947
1,026	2,777	Share premium fund		2,777	1,026
645	637	Risk equalisation fund		637	645
7	7	Endowment fund		7	7
2,261	3,417	Sparebankens Fond		3,417	2,261
22	22	Fund for unrealised gains		22	22
250	350	Hybrid capital		350	250
120	-	Other equity		249	378
-	785	Unallocated		854	-
-	-	Non-controlling interest's share		10	2
5,277	9,617	Total equity		9,895	5,537
40,182	74,137	Liabilities and equity		74,432	40,455

Consolidated results from the quarterly financial statements

Group
(Amounts in NOK millions)	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020
Interest income	413	373	262	205	210	215	247	308
Interest expenses	113	96	68	56	53	55	95	129
Net interest income	300	277	194	149	157	161	152	180
Commission income	158	161	109	85	94	91	70	76
Commission expenses	10	10	6	4	5	6	4	4
Other operating income	64	63	62	44	34	47	45	39
Net commission and other income	212	214	164	125	123	133	111	110
Dividends	1	-	22	10	9	-	7	15
Net result from ownership interests	48	54	34	17	18	23	21	38
Net result from other financial investments	-	7	150	16	(6)	4	50	(47)
Net income from financial assets	50	61	206	42	22	27	78	7
Total net income	561	553	565	317	302	320	341	297
Personnel expenses	177	150	105	97	107	81	81	90
Other operating expenses	108	99	92	58	62	55	59	63
Total operating expenses	285	249	198	154	170	136	140	154
Profit before losses and tax	276	303	368	162	133	184	201	143
Losses on loans and guarantees	2	(35)	111	2	(3)	(11)	17	27
Profit before tax	274	339	256	160	135	194	185	116
Tax expense	49	70	13	29	28	41	35	22
Profit before other comprehensive income	225	269	244	131	108	153	150	94

Parent bank
Earnings per equity certificate (quarter in isolation)	0.87	1.03	2.24	0.91	0.84	1.01	1.23	0.55

Change in equity as at Q4 2021

Group

(Amounts in NOK millions)	Owner ship interest 1	Share premium fund	Risk equali sation fund	Endow ment fund	Spare bankens Fond	Fund for unrealised gains	Hybrid capital	Other equity	Not distri buted	Non controlling interest's share	Total equity
Equity as at 31.12.2019	947	1,026	537	7	2,072	25	250	328	-	1	5,193
Interest expenses on subordinated bonds reclassified as equity	-	-	-	-	-	-	-	(9)	-	-	(9)
Additional Tier 1 capital issued	-	-	-	-	-	-	100	-	-	-	100
Buy-back and maturity of additional Tier 1 capital	-	-	-	-	-	-	(100)	-	-	-	(100)
Dividend from 2019, for payment in 2020	-	-	-	-	-	-	-	(153)	-	(1)	(153)
Change in carrying amount of joint ventures and associated companies	-	-	-	-	-	-	-	(1)	-	-	(1)
Profit before other comprehensive income	-	-	109	-	189	(6)	-	212	-	1	505
Items reversed through profit or loss:
Change in value of loans classified at fair value	-	-	-	-	-	3	-	-	-	-	3
Items not reversed through profit/loss:
Estimation difference, IAS 19 Pensions	-	-	(0.4)		(0.3)	-	-	-	-	-	(1)
Equity as at 31.12.2020	947	1,026	645	7	2,261	22	250	378	-	2	5,537
Equity as at 31.12.2020	947	1,026	645	7	2,261	22	250	378		2	5,537
Equity added from the merger with Sparebanken Telemark, as well as bond issue SpareBank 1 BV.	831	1,751	-	-	1,162	-	100	-	-	5	3,849
Interest expenses on subordinated bonds reclassified as equity	-	-	-	-	-	-	-	-	(11)	-	(11)
Dividend for 2020 for payment in 2021	-	-	-	-	-	-	-	(120)	-	(1)	(121)
Change in carrying amount of subsidiaries, joint ventures and associated companies	-	-	-	-	-	-	-	(8)	-	-	(8)
Profit before other comprehensive income	-	-	-	-	-	-	-	-	865	4	869
Items reversed through profit or loss:
Change in value of loans classified at fair value	-	-	-	-	-	1	-	-	-	-	1
Items not reversed through profit/loss:
Estimation difference, IAS 19 Pensions	-	-	(8)	-	(6)	-	-	(1)	-	-	(15)
Equity as at 31.12.2021	1,778	2,777	637	7	3,417	22	350	249	854	10	10,100

The equity share capital has been deducted 3,000 in own holdings

Parent bank

(Amounts in NOK millions)	Owner ship interest 1	Share premium fund	Risk equali sation fund	Endow ment fund	Spare bankens Fond	Fund for unrealised gains	Hybrid capital	Other equity	Not distri buted	Total equity
Equity as at 31.12.2019	947	1,026	537	7	2,072	25	250	153	-	5,017
Interest expenses on subordinated bonds reclassified as equity	-	-	-	-	-	-	-	(9)	-	(9)
Additional Tier 1 capital issued	-	-	-	-	-	-	100	-	-	100
Buy-back and maturity of additional Tier 1 capital	-	-	-	-	-	-	(100)	-	-	(100)
Dividend for 2019 for payment in 2020	-	-	-	-	-	-	-	(153)	-	(153)
Profit before other comprehensive income	-	-	109	-	189	(6)	-	129	-	420
Items reversed through profit or loss:
Change in value of loans classified at fair value	-	-	-	-	-	3	-	-	-	3
Items not reversed through profit/loss:
Estimation difference, IAS 19 Pension adjustment	-	-	(0.4)		(0.3)	-	-	-	-	(1)
Equity as at 31.12.2020	947	1,026	645	7	2,261	22	250	120	-	5,277
Equity as at 31.12.2020	947	1,026	645	7	2,261	22	250	120	-	5,277
Equity added from the merger with Sparebanken Telemark, as well as bond issue SpareBank 1 BV.	831	1,751	-	-	1,162	-	100	-	-	3,844
Interest expenses on subordinated bonds reclassified as equity	-	-	-	-	-	-	-	-	(11)	(11)
Dividend for 2020 for payment in 2021	-	-	-	-	-	-	-	(120)	-	(120)
Profit before other comprehensive income	-	-	-	-	-	-	-	-	796	796
Items reversed through profit or loss:
Change in value of loans classified at fair value	-	-	-	-	-	1	-	-	-	1
Items not reversed through profit/loss:
Estimation difference, IAS 19 Pension adjustment	-	-	(8)	-	(6)	-	-	-	-	(14)
Equity as at 31.12.2021	1,778	2,777	637	7	3,417	22	350	-	785	9,773

The equity share capital has been deducted 3,000 in own holdings

Cash flow statement

The direct method is no longer used for the cash flow statement, the indirect method is now used. OB liquidity holdings at as 01.06.2021 from the former Telemark and as at 01.01.2021 from the former BV.

Parent bank			Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
		Cash flow from operating activities
541	951	Period's profit before tax	1,030	630
-	-	Net profit from joint ventures	(153)	(101)
-	(151)	Negative goodwill through profit or loss	(151)	-
(4)	-	Loss/gain from fixed assets	6	(4)
2	31	Depreciation and impairments	36	9
35	79	Impairment of loans	79	31
(119)	(117)	Tax payable	(123)	(115)
(1,085)	(3,944)	Change in lending and other assets	(3,959)	(1,056)
1,439	1,646	Change in deposits from customers	1,683	1,439
-	59	Change in loans to and receivables from financial institutions	59	-
(304)	(293)	Change in certificates and bonds	(293)	(304)
51	(19)	Change in other receivables	(46)	10
(73)	20	Change in other current liabilities	(19)	(14)
483	(1,738)	Net cash flow from operating activities	(1,850)	526
		Cash flow from investing activities
(6)	(22)	Investments in property, plant and equipment	(29)	(48)
8	-	Sales of property, plant and equipment	23	8
(67)	(177)	Investments in shares, equity certificates and units	(81)	(68)
79	223	Sales of shares, equity certificates and units	223	78
14	23	Net cash flow from investing activities	136	(30)
		Cash flow from financing activities
1,675	4,450	Increase in financial borrowing	4,450	1,677
(1,971)	(2,817)	Repayment of financial borrowing	(2,817)	(1,971)
-	150	Borrowing, subordinated loans	150	-
(40)	(150)	Repayment, subordinated loans	(150)	(40)
(154)	(124)	Dividends/endowments paid	(125)	(153)
(490)	1,509	Net cash flow from financing activities	1,508	(487)
7	(206)	Total change in cash and cash equivalents in the year	(206)	9
824	2,018	Cash and cash equivalents OB	2,018	861
832	1,812	Cash balance at end of the period	1,812	870
7	(206)	Net change in cash and cash equivalents in the year	(206)	9
		Cash and cash equivalents, specified
101	114	Cash and receivables from central banks	114	101
731	1,698	Current receivables from financial institutions	1,698	769
832	1,812	Cash and cash equivalents	1,812	870

Cash flow from interest received, interest payments and dividends received

31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
914	1,192	Interest received on loans to customers	1,191	913
(176)	(151)	Interest paid on deposits from customers	(150)	(177)
12	10	Interest received on loans to and receivables from financial institutions	10	12
(1)	(1)	Interest paid on loans to and receivables from financial institutions	(1)	(1)
58	57	Interest received on certificates and bonds	57	58
(134)	(154)	Interest paid on certificates and bonds	(154)	(134)
69	129	Dividends from investments	33	31
742	1,083	Net cash flow from interest received, interest payments and dividends received	988	703

Notes to the financial statements

Note 1 – Accounting policies

The interim report for SpareBank 1 Sørøst-Norge covers the period 01.01.-31.12.2021. The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, and in line with the same accounting policies and calculation methods applied in the annual financial statements for 2020.

For a detailed description of the accounting policies that have been applied, please see Note 2 in the Bank's official annual financial statements for 2020.

Note 2 – Critical accounting estimates and discretionary valuations

In preparing consolidated financial statements, the management makes estimates and discretionary assessments, as well as assumptions that affect the impact of applying the accounting policies.

This will therefore affect the reported amounts for assets, liabilities, income and expenses.

In the financial statements for 2020, Note 3 'Critical estimates and assessments regarding the use of accounting policies', gives more details of significant estimates and assumptions.

The IFRS 9 loss model is based on multiple input factors from the portfolios, where the events have incurred as of the statement of financial position date but where there is some natural delay before updated information

is entered into the model. Because of this delay factor, the Bank has conducted detailed, quarterly reviews of the corporate market portfolio in order to identify and make loss provisions for individual exposures. PD/LGD levels have not been recalibrated in the model as at 31.12.2021.

In addition to expanded individual loss assessments, the Bank conducted a subjective assessment of the model's scenario weights in this quarter as at 31.12.2021. Given the relatively stable risk picture, with the delayed reopening due to the high infection pressure, the weights from the third quarter were kept unchanged at 80/15/5 in both the retail market and the corporate market. Please see the more detailed comments in Note 7 and the Board of Directors' Interim Report.

Note 3 – Merger of SpareBank 1 BV and Sparebanken Telemark on 01.06.2021

The merger of SpareBank 1 BV and Sparebanken Telemark was completed on 01.06.2021, with accounting effect from the same date. SpareBank 1 BV is the takeover bank and has changed its name to SpareBank 1 Sørøst-Norge. The merger was treated in line with the acquisition method in line with IFRS 3. The Bank's head office is currently in Tønsberg, although it will move to Fokserød in Sandefjord during the second quarter of 2022.

On 30 November 2020, the boards of the banks adopted an internal agreement on a possible merger between SpareBank 1 BV and Sparebanken Telemark. The merger was based on two solid and well-run banks being seen as having potential that could exploited to further optimise their comparative advantages by forming SpareBank 1 Sørøst-Norge. This region (the former counties of Buskerud, Vestfold and Telemark) has a population of 750,000 and a very dynamic and expansive business sector. The intention behind the merger is to form a powerful bank that will strengthen the banks' positions with customers, produce greater returns for the owners, and, not least, create secure and attractive jobs within banking and finance in the region. The new bank also wants to strengthen and secure the banks' positions in the respective local communities via a decentralised organisational model, which together with the four strong and important local savings bank foundations is intended underpin the Bank's identity.

The merger plan was approved by the boards of directors of both banks on 22.02.2021. The merger plan received the final approval of the banks' supervisory boards on 25.03.2021, and on 21.05.2021, the Financial Supervisory Authority of Norway granted the necessary permissions for the merger. Completion of the merger was approved for 01.06.2021.

The final merger plan set the exchange ratio at 60 % for SpareBank 1 BV and 40 % for Sparebanken Telemark, equivalent to an exchange ratio of 3.41 per equity certificate. The remuneration for the takeover of Sparebanken Telemark's business was settled in the form of new equity certificates in SpareBank 1

Sørøst-Norge. In connection with the merger, the equity capital was increased by NOK 676.3 million through the issuance of 45,089,995 new equity certificates, of which 37,116,986 equity certificates were for the former equity certificate holders of Sparebanken Telemark and 7,973,009 equity certificates were for Sparebankstiftelsen Telemark – Grenland as remuneration for the business taken over from Sparebanken Telemark. These equity certificates were issued with a nominal value of NOK 15 per equity certificate and at a price of NOK 39.31 per equity certificate. The price corresponded to the 3-month volume weighted price as at 17.02.2021 less the proposed dividend of NOK 1.90 per equity certificate in SpareBank 1 BV.

A NOK 157.5 million increase in equity was also registered by converting primary capital to equity capital through the issuance of 10,498,569 new equity certificates for SpareBank 1 Stiftelsen BV at a price of NOK 41.49 per equity certificate.

The fair value of the 45,089,995 equity certificates that were issued as remuneration for the equity certificate holders in Sparebanken Telemark and Sparebankstiftelsen Telemark – Grenland amounts to NOK 47.80 per equity certificate, which corresponds to the selling price on 31.05.2021. The difference between the fair value of the remuneration for the equity certificate holders in Telemark before the merger and their share of net equity pursuant to the acquisition analysis amounts to negative goodwill ('badwill') and was recognised through profit or loss at the time of completion (01.06.2021) in line with IFRS 3.

The table on the next page shows the remuneration, fair value of assets and liabilities from Sparebanken Telemark, as well as the calculation of negative goodwill as at 01.06.2021 (completion date).

Remuneration	Quantity	Price (NOK)	Remuneration (NOK millions)
Ownership interest – Sparebanken Telemark	37,116,986	39.31	1,459.1
Ownership interest – Sparebankstiftelsen Telemark – Grenland	7,973,009	39.31	313.4
Total remuneration	45,089,995	-	1,772.5

Amounts in NOK millions		PARENT BANK Telemark			GROUP Telemark
		Added/	Fair value as at		Added/	Fair value as at
Fair value of identifiable assets and liabilities	31.05.2021	less value	01.06.2021	31.05.2021	less value	01.06.2021
Cash and receivables from central banks	13	-	13	13	-	13
Loans to and receivables from financial institutions	1,382	-	1,382	1,382	-	1,382
Net lending to and receivables from customers	26,241	46	26,287	26,225	46	26,271
Interest-bearing securities	1,420	-	1,420	1,420	-	1,420
Financial derivatives	64	-	64	64	-	64
Shares, equity certificates and units	880	-	880	880	-	880
Interests in group companies	29	4	32	-	-	-
Ownership interests in joint ventures and associated companies	108	279	387	272	115	387
Tangible assets	131	42	173	144	44	188
Goodwill	-	-	-	-	-	-
Deferred tax assets	17	(22)	(5)	23	(23)	-
Other assets	40	-	40	61	-	61
Total assets	30,327	349	30,675	30,484	183	30,667
Deposits from financial institutions	147	-	147	147	-	147
Deposits from customers	18,715	-	18,715	18,707	-	18,707
Liabilities from the issuance of securities	7,291	-	7,291	7,291	-	7,291
Financial derivatives	30	-	30	30	-	30
Subordinated loan capital	250	-	250	250	-	250
Other liabilities	239	-	239	234	-	234
Total liabilities	26,672	-	26,672	26,659	-	26,659
Net assets	3,654	349	4,003	3,825	183	4,008
Hybrid capital (additional Tier 1 capital)	100	-	100	100	-	100
Minority	-	-	-	5	-	5
Net equity for distribution to equity certificate holders and
community capital	3,554	349	3,903	3,720	183	3,903
The calculated equity based on a closing price as at 31.05.2021 of NOK 47.80 and an
exchange ratio of 40 TM/60 BV.			3,752			3,752
Calculated negative goodwill			151			151

The fact that the remuneration for the equity certificate holders was lower than the value-adjusted equity capital gave rise to negative goodwill that was recognised through profit or loss on the date of the merger, 01.06.2021.

Amounts in NOK millions	Parent bank			Group
Opening balance 01.06.2021	Sparebanken Telemark	SpareBank 1 BV	SpareBank 1 Sørøst Norge	Sparebanken Telemark	SpareBank 1 BV	SpareBank 1 Sørøst Norge
Assets
Cash and receivables from central banks	13	96	109	13	96	109
Loans to and receivables from financial institutions	1,382	1,195	2,577	1,382	1,243	2,625
Net lending to and receivables from customers	26,287	34,059	60,346	26,271	34,032	60,304
Interest-bearing securities	1,420	4,255	5,675	1,420	4,255	5,675
Financial derivatives	64	79	143	64	79	143
Shares, equity certificates and units	880	1,332	2,203	880	1,332	2,203
Interests in group companies	32	37	69	-	-	-
Ownership interests in joint ventures and associated companies	387	477	865	387	735	1,123
Tangible assets	173	70	243	188	87	275
Goodwill	-	-	-	-	34	34
Deferred tax assets	(5)	11	7	-	12	12
Other assets	40	99	140	61	124	185
Total assets	30,675	41,710	72,376	30,667	42,030	72,688
Liabilities
Deposits from financial institutions	147	-	147	147	-	147
Deposits from customers	18,715	27,051	45,767	18,707	27,015	45,722
Liabilities from the issuance of securities	7,291	8,409	15,699	7,291	8,409	15,699
Financial derivatives	30	85	115	30	85	115
Subordinated loan capital	250	401	651	250	401	651
Other liabilities	239	380	619	234	443	677
Total liabilities	26,672	36,326	62,998	26,659	36,352	63,011
Equity
Equity share capital	1,090	947	1,780	1,090	947	1,780
Own holding	-	-	(3)	-	-	(3)
Share premium fund	98	1,026	2,777	98	1,026	2,777
Risk equalisation fund	489	645	645	489	645	645
Endowment fund	-	7	7	-	7	7
Fund for unrealised gains	4	21	21	4	21	21
Hybrid capital (additional Tier 1 capital)	100	250	350	100	250	350
Sparebankens Fond	1,873	2,261	3,423	1,873	2,261	3,423
Other equity	349	227	227	349	520	520
Negative goodwill	-	-	151	-	-	151
Minority interests	-	-	-	5	1	7
Total equity	4,003	5,384	9,378	4,008	5,678	9,677
Total liabilities and equity	30,675	41,710	72,376	30,667	42,030	72,688
Off-balance sheet items:
Portfolio transferred to mortgage companies	11,853	13,232	25,086	11,853	13,232	25,086

The pro forma results for the period 01.01.2021-31.12.2021 represent the results of both banks consolidated as if the merger had occurred with accounting effect from 01.01.2021.

Negative goodwill was recognised in the pro forma results from 01.01.2021 and the added value on buildings was written off for the entire period.

There were no significant eliminations between the banks during this period meaning that the results for the period was just consolidated.

Amounts in NOK millions
Pro forma results 01.01-31.12.2021	Parent bank	Group
Interest income	1,525	1,525
Interest expenses	410	408
Net interest income	1,116	1,117
Commission income	610	612
Commission expenses	39	37
Other operating income	9	257
Net commission and other income	580	831
Dividends	179	41
Net result from ownership interests in joint ventures and associated companies	1	168
Net result from other financial investments	178	179
Net result from financial investments	357	388
Total net income	2,053	2,336
Personnel expenses	427	605
Other operating expenses	408	444
Total expenses	835	1,050
Profit before losses and tax	1,219	1,286
Losses on loans and guarantees	86	86
Profit before tax	1,133	1,200
Tax expense	189	197
Ordinary profit	944	1,004

Note 4 – Capital adequacy

When calculating capital adequacy, SpareBank 1 Sørøst-Norge uses the standard method for calculating credit risk and the basic method for operational risk.

On 13.03.2020, the Ministry of Finance decided to reduce the countercyclical buffer from 2.5 % to 1 % with immediate effect. Based on this, the regulatory requirement for Common Equity Tier 1 capital is a minimum of 11 %. In connection with the merger, the Financial Supervisory Authority of Norway set a Pillar 2 requirement for the Bank of 2.3 %, applicable from 01.06.2021. This requirement will apply until the Financial Supervisory Authority of Norway sets a new Pillar 2 requirement. The Board of Directors will start work on a new internal capital adequacy assessment process (ICAAP) as soon as possible. The assessment must be submitted to the Financial Supervisory Authority of Norway by no later than 12 months after the merger has been completed. The current total requirement for Common Equity Tier 1 capital is thus 13.3 %. The Group's target for the Common Equity Tier 1 capital ratio is a minimum of 16.0 %.

At the end of the year, the Common Equity Tier 1 capital ratio was 18.3 % (18.8 %, incl. 39.1% of the profit as at 31.12.2021. The leverage ratio was 8.4 % (8.6 %) at the end of the quarter. The regulatory requirement for the leverage ratio is 5.0 %.

On 10.12.2020, the Financial Supervisory Authority of Norway published a circular on assessing exposures that should be considered high risk. The Financial Supervisory Authority of Norway's interpretation of the current CRR rules indicates that property development projects constructed for the purpose of resale at a profit should be regarded as speculative investments and be risk weighted at 150 %. These regulations were implemented by both banks in the previous three quarters. In the current quarter, construction projects with documented binding pre-sales of at least 50 % of the exposure are risk-weighted by 100 %, ref. Circular 2/2021 from the Financial Supervisory Authority of Norway.

Extended consolidation for owner companies in the Samarbeidende Sparebanker grouping

Under the CRD IV rules, SpareBank 1 Sørøst-Norge is currently below the materiality threshold for reporting fully consolidated capital adequacy. Consequently, capital adequacy is not worked out at a consolidated level. The Bank has carried out proportional consolidation of interests in the cooperative group since 2018.

The following companies are included in proportional consolidation:

SpareBank 1 Boligkreditt AS (10.7%) SpareBank 1 Næringskreditt AS (12.3%) SpareBank 1 Kreditt AS (9.5%) SpareBank 1 SMN Finans AS (11.5%) BN Bank ASA (7.5%)

The provision applies to interests in other financial institutions engaged in the activities to which the cooperation relates; see Financial Institutions Act, section 17-13.

Proportional consolidation

Amounts in NOK millions	31.12.2021	31.12.2020
Primary capital
Common Equity Tier 1 capital	8,817	4,907
Tier 1 capital	9,293	5,233
Primary capital	10,124	5,744
Basis for calculation	48,269	26,156
Capital adequacy
Common Equity Tier 1 capital ratio	18.3%	18.8%
Tier 1 capital ratio	19.3%	20.0%
Capital adequacy	21.0%	22.0%
Leverage ratio	8.4%	8.6%

Parent bank

Primary capital	31.12.2021	31.12.2020
Equity share capital	1,778	947
Share premium fund	2,777	1,026
Risk equalisation fund	637	645
Sparebankens Fond	3,417	2,261
Fund for unrealised gains/losses	22	22
Endowment fund	7	7
Allocated dividend classified as equity	-	120
Other equity (IAS pensions and interest paid on hybrid capital)	(11)	-
Profit for the period	796	-
Total capitalised equity (excluding hybrid capital)	9,423	5,027
Value adjustments on shares and bonds measured at fair value (AVA)	(11)	(8)
Deduction for non-material interests in the financial sector	(122)	(956)
Deduction for material interests in the financial sector	(749)	-
Dividends allocated for distribution, classified as equity	-	(120)
Profit for the period	(796)	-
Interim profit included in Tier 1 capital	304	-
Total Common Equity Tier 1 capital	8,048	3,944
Hybrid capital	350	250
Total Tier 1 capital	8,398	4,194
Supplementary capital in excess of Tier 1 capital
Time-limited primary capital	650	400
Deduction for non-material interests in the financial sector	-	(5)
Net primary capital	9,047	4,589

Risk-weighted basis for calculation
Assets not included in the trading portfolio	36,532	18,734
Operational risk	3,066	1,945
CVA surcharge (counterparty risk on derivatives)	74	79
Total basis for calculation	39,672	20,758
Common Equity Tier 1 capital	20.3%	19.0%
Tier 1 capital	21.2%	20.2%
Capital adequacy	22.8%	22.1%
Leverage ratio	11.0%	10.2%
Buffer requirements
Capital conservation buffer (2.50%)	992	519
Countercyclical buffer (1.0%)	397	208
Systemic risk buffer (3.00%)	1,190	623
Total buffer requirement for Common Equity Tier 1 capital	2,579	1,349
Minimum requirement for Common Equity Tier 1 capital (4.50%)	1,785	934
Available Common Equity Tier 1 capital in excess of minimum requirement	3,684	1,659

	31.12.2021	31.12.2020
Governments and central banks	27	-
Local and regional authorities	63	59
Publicly owned companies	10	10
Institutions	159	164
Companies	4,280	2,118
Mass market	4,600	2,760
Mortgaged against residential and holiday property	16,456	8,240
Mortgaged against commercial property	5,589	2,252
Exposures past due	326	75
High-risk exposures	1,646	1,280
Covered bonds	497	296
Receivables from institutions and companies with short-term ratings	340	146
Shares in mutual funds	48	43
Equity items	2,135	1,160
Other exposures	356	133
Total credit risk	36,532	18,734

Note 5 – Segment information

The segment information is related to the way in which the Group is managed and followed up internally by the business through performance and capital reporting, proxies and procedures.

The reporting of segments is divided into the following areas: Retail market (RM) and corporate market (CM)

customers, which include the parent bank and subsidiaries related to real estate and accounting services. Other operations mainly include subsidiaries that manage properties.

Group 31.12.2021

(Amounts in NOK millions)	RM	CM	Other operations	Group eliminations	Total
Profit
Net interest income	550	370	0.1	-	920
Net commission and other income	796	240	-	40	1,075
Operating expenses	653	242	7	(15)	886
Profit before losses	693	368	(6)	54	1,109
Losses on loans and guarantees	8	71	-	0.5	79
Profit before tax	685	297	(6)	54	1,030

			Other	Group
(Amounts in NOK millions)	RM	CM	operations	eliminations	Total
Statement of financial position
Net lending to customers	44,609	17,963	-	(29)	62,542
Other assets	-	-	12,209	161	12,371
Total assets per segment	44,609	17,963	12,209	132	74,912
Deposits from and liabilities to customers	31,098	15,166	-	(52)	46,212
Other equity and liabilities	-	-	28,516	184	28,700
Total equity and liabilities per segment	31,098	15,166	28,516	132	74,912

Group 31.12.2020

			Other	Group
(Amounts in NOK millions)	RM	CM	operations	eliminations	Total
Profit
Net interest income	402	247	1	-	649
Net commission and other income	462	149	-	-	611
Operating expenses	427	171	4	(3)	599
Profit before losses	436	225	(3)	3	660
Losses on loans and guarantees	7	28	-	(4)	31
Profit before tax	429	197	(3)	7	630

		Non-reportable
(Amounts in NOK millions)	RM	CM	Other subsidiaries	segments	Total
Statement of financial position
Net lending to customers	25,024	7,440	-	(21)	32,444
Other assets	-	-	7,846	166	8,012
Total assets per segment	25,024	7,440	7,846	145	40,455
Deposits from and liabilities to customers	16,488	9,414	-	(39)	25,864
Other equity and liabilities	-	-	14,408	184	14,592
Total equity and liabilities per segment	16,488	9,414	14,408	145	40,455

Note 6 – Losses on loans and guarantees

Parent bank			Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
-	89	Effects of merger with Sparebanken Telemark 1)	89	-
11	(21)	Change in impairment provisions in the period, Stage 1	(21)	11
8	(15)	Change in impairment provisions in the period, Stage 2	(15)	8
(9)	9	Change in impairment provisions in the period, Stage 3	17	(13)
25	17	Losses for the period with previous impairments	9	24
2	8	Losses for the period without previous impairments	8	2
-	(3)	Previously recognised impairments at start of period	(3)	-
(1)	(5)	Other corrections/amortisation of impairments	(5)	(1)
35	79	Losses on loans and guarantees in the period	79	31

1) The loss cost at the end of the quarter amounted to NOK 79 million. In connection with the opening balance as at 01.06.2021 (see Note 3), loans and guarantees in Stage 1 were measured at fair value, equivalent to amortised cost. Upon initial recognition in the merged bank, the loans were reassessed and loss provisions of NOK 89 million were made in Stage 1. This corresponds to Sparebanken Telemark's impairment provision as at 31.05.2021 (prior to the merger).

Note 7 – Impairment provisions for loans and guarantees

Only the Group is shown since the parent bank's figures are virtually identical to the consolidated figures.

(Amounts in NOK millions)	Group
Impairment provisions for loans and guarantees	Stage 1	Stage 2	Stage 3	Total
31.12.2020	52	50	69	172
Recognised through profit or loss in connection with the recognition of loans in Stage 1 upon the merger	89	-	-	89
Recognised gross on the balance sheet in connection with the recognition of loans in Stage 2 upon the merger	-	38	-	38
Change in recognised gross on the balance sheet in connection with the recognition of loans in Stage 3 upon the merger	-	-	9	9
Impairment provisions transferred to Stage 1	32	(22)	(10)	-
Impairment provisions transferred to Stage 2	(5)	6	-	-
Impairment provisions transferred to Stage 3	(2)	(3)	5	-
New financial assets issued or purchased	53	16	2	72
Increase in existing loans	(16)	21	57	63
Reduction in existing loans	(47)	(12)	(10)	(69)
Financial assets that have been deducted	(38)	(22)	(17)	(77)
Changes due to recognised impairments (recognised losses)	-	-	(9)	(9)
31.12.2021	120	72	95	287
- reversal of impairment provisions related to fair value through OCI	(24)	-	-	(24)
Capitalised impairment provisions as at 31.12.2021	96	72	95	264
Of which, impairment provisions for capitalised loans	70	68	91	229
Of which, impairment provisions for unused credits and guarantees	26	4	4	34
Of which: impairment provisions, retail market - amortised cost	4	28	30	62
Of which: impairment provisions, corporate market - amortised cost	92	44	65	201

Sensitivity analysis – loss model

The model calculates impairments on exposures in three different scenarios where the probability of the individual scenario occurring is weighted. The base scenario for the IFRS 9 calculations is mainly based on the benchmark trajectory of the Monetary Policy Report from Norges Bank and contains expectations regarding macroeconomic factors such as unemployment, GDP growth, interest rates, house prices, etc.

At the same time, the loss model is based on multiple input factors from the portfolios, where the events have incurred as of the statement of financial position date but where there is some natural delay before updated information is entered into the model. Because of this delay factor, the Bank has conducted an expanded review of our CM portfolio in order to identify and make provisions for individual commitments and industries that we believe will experience specific problems making it through the crisis. PD/LGD levels have not been recalibrated in the model as at 31.12.2021.

In addition to expanded individual loss assessments, the Bank changed the model's scenario weighting based on an assessment. The scenario weights are based on an almost unchanged risk picture and are unchanged from the third quarter.

Below, the impairment provisions are shown at full (100%) weighting of the various scenarios in order to illustrate the span in the model.

At the turn of the year, internal simulations were carried out for changes to weighted PD. The simulation shows that, given the Bank's scenario weighting as at 31.12.2021, impairment provisions increase by around NOK 10 million for every 10% increase in weighted PD. These indicate that adjustments to the scenarios have about the same effect as similar adjustments to PD levels.

Scenario weights used as at 31.12.2021
(Amounts in NOK millions)	Weight RM/CM	RM	CM	Total
Scenario 1 (normal case)	80 %/80 %	42	117	160
Scenario 2 (worst case)	15 %/15 %	42	80	122
Scenario 3 (best case)	5 %/5 %	1	4	6
Total estimated IFRS 9 provisions		86	201	287
- reversal of impairment provisions related to fair value through OCI		(24)	-	(24)
Capitalised impairment provisions for the parent bank as at 31.12.2021		62	201	264

Change in IFRS 9 impairment provisions in the

event of a change in weight: (Amounts in NOK millions)	Weight RM/CM	RM	CM	Total
Scenario 1 (Normal case)	100 %/100 %	53	147	200
Scenario 2 (worst case)	100 %/100 %	282	530	812
Scenario 3 (best case)	100 %/100 %	28	89	117

Scenario weighting used during the year	31.12.2021 Weight RM/CM	31.12.2020 Weight RM/CM	31.12.2019 Weight RM/CM
Scenario 1 (Normal case)	80 %/80 %	80 %/80 %	80 %/80 %
Scenario 2 (worst case)	15 %/15 %	15 %/20 %	10 %/10 %
Scenario 3 (best case)	5 %/5 %	5 %/0 %	10 %/10 %

	Group
Impairment provisions for loans and guarantees	Stage 1	Stage 2	Stage 3	Total
01.01.2020	42	42	82	165
Impairment provisions transferred to Stage 1	7	(7)	-	-
Impairment provisions transferred to Stage 2	(4)	4	-	-
Impairment provisions transferred to Stage 3	-	(2)	3	-
New financial assets issued or purchased	25	13	2	40
Increase existing loans	10	22	33	64
Reduction existing loans	(11)	(8)	(17)	(36)
Financial assets that have been deducted	(16)	(14)	(8)	(39)
Changes due to recognised impairments (recognised losses)	-	-	(24)	(24)
31.12.2020	52	50	69	172
- reversal of impairment provisions related to fair value through OCI	(15)	-	-	(15)
Capitalised impairment provisions as at 31.12.2020	38	50	69	157
Of which, impairment provisions for capitalised loans	28	46	69	143
Of which, impairment provisions for unused credits and guarantees	10	4	-	14
Of which: impairment provisions, retail market - amortised cost	1	21	25	48
Of which: impairment provisions, corporate market - amortised cost	36	29	44	109

Note 8 – Loans to customers by Stages 1, 2 and 3

(Amounts in NOK millions)		Group
Loans to customers by Stages 1, 2 and 3	Stage 1	Stage 2	Stage 3	Total
01.01.2021	28,478	2,246	198	30,922
Effects of merger with Sparebanken Telemark	23,696	1,061	102	24,859
Loans transferred to Stage 1	955	(932)	(23)	-
Loans transferred to Stage 2	(1,926)	1,933	(8)	-
Loans transferred to Stage 3	(132)	(62)	194	-
New financial assets issued or purchased	26,696	883	18	27,597
Increase in existing loans	819	121	7	948
Reduction in existing loans	(3,213)	(204)	(31)	(3,448)
Financial assets that have been deducted	(19,726)	(1,095)	(104)	(20,925)
Changes due to recognised impairments (recognised losses)	-	(1)	(7)	(8)
Changes due to receipts for previous impairments (recognised)	-	-	(9)	(9)
31.12.2021	55,647	3,950	339	59,936
Impairment provisions as % of gross lending	0.21%	1.83%	28.15%	0.48%

	Group
Loans to customers by Stages 1, 2 and 3	Stage 1	Stage 2	Stage 3	Total
01.01.2020	27,431	1,947	258	29,636
Loans transferred to Stage 1	583	(581)	(2)	-
Loans transferred to Stage 2	(1,058)	1,074	(16)	-
Loans transferred to Stage 3	(20)	(45)	65	-
New financial assets issued or purchased	14,485	616	23	15,125
Increase existing loans	305	41	1	347
Reduction existing loans	(1,120)	(142)	(54)	(1,316)
Financial assets that have been deducted	(12,128)	(665)	(40)	(12,832)
Changes due to recognised impairments (recognised losses)	-	-	(37)	(37)
31.12.2020	28,478	2,246	198	30,922
Impairment provisions as % of gross lending	0.18%	2.22%	34.91%	0.55%

Note 9 – Loan to customers by sector and industry

Parent bank			Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
24,967	44,736	Employees, etc.	44,736	24,967
5,170	11,201	Property management/business services, etc.	11,172	5,141
619	2,853	Property management housing cooperatives	2,853	619
383	768	Wholesale and retail trade/hotels and restaurants	768	383
215	590	Agriculture/forestry	590	215
278	571	Building and construction	571	278
370	714	Transport and service Industries	714	370
327	759	Production (manufacturing)	759	327
1	10	Public administration	10	1
286	598	Abroad and others	598	286
32,616	62,801	Gross lending	62,771	32,586
8,252	19,814	- Of which, measured at amortised cost	19,784	8,223
22,700	40,143	- Of which, measured at fair value through OCI	40,143	22,700
1,664	2,844	- Of which, measured at fair value	2,844	1,664
(151)	(229)	- Impairment provisions for loans	(229)	(143)
32,464	62,571	Net lending	62,542	32,444

32,616	62,801	Gross lending	62,771	32,586
12,660	23,769	Gross lending transferred to SB1 Boligkreditt	23,769	12,660

752 1,565 Gross lending transferred to SB1 Næringskreditt 1,565 752 46,028 88,135 Gross lending including SB1 Boligkreditt and Næringskreditt 88,105 45,999

Note 10 – Transfer of financial assets

SpareBank 1 Sørøst-Norge and other owners have agreed to establish a liquidity facility for SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS. This means that the banks commit to buy bonds issued by the company up to a total value of 12 months' term to maturity. Each owner is principally liable for its share of the requirement, and secondarily for twice the primary liability under the same agreement.

The bonds can be deposited with Norges Bank, so carry no significant added risk for SpareBank 1 Sørøst-Norge. The Bank has signed an agreement for the legal sale of loans with high security and collateral in real estate to SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS. For more information on the accounting treatment of the agreements, see Note 2 and Note 9 to the annual financial statements for 2020.

Note 11 – Financial derivatives

Group

	31.12.2021			31.12.2020
(Amounts in NOK millions)	Contract sum		Fair value	Contract sum	Fair value
		Assets	Liabilities		Assets	Liabilities
Derivatives - hedging
Received/paid in collateral	-	3	43	-	-	62
Hedging of customer-related assets at fair value through profit or loss	2,882	18	15	1,560	4	36
Hedging of fixed income securities	355	14	20	365	10	25
Hedging fixed-rate borrowing	5,600	66	28	3,050	111	-
Total derivatives at fair value hedging	8,837	101	107	4,975	125	123

Note 12 – Liquidity risk

Liquidity risk is the risk that the Bank may be unable to meet its payment obligations, and/or the risk of not being able to finance the desired growth in assets. SpareBank 1 Sørøst-Norge draws up an annual liquidity strategy which addresses the Bank's liquidity risk, among other things.

The Bank's liquidity risk is covered by the Bank's liquidity reserve/buffer. The main objective of SpareBank 1 Sørøst-Norge is to maintain the viability of the Bank in a normal situation, without external funding, for 12 months. The Bank should also be able to survive a minimum of 150 days in a 'highly stressed' situation where

there is no access to funding from the capital markets. The Bank exercises daily governance according to the above goals. A contingency plan for dealing with liquidity crises has also been established.

The remaining time to maturity for the Bank's unsecured bond debt including SNP was 3.1 (3.1) years at the end of the quarter.

The liquidity coverage ratio (LCR) was 175 % (189 %) at the end of the year and the average LCR was 166 % (189 %) in 2021.

Note 13 – Net commission income and other income

Parent bank			Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
		Commission income
7	9	Guarantee commission	9	7
1	1	Interbank commission	1	1
8	10	Credit brokerage	10	8
20	33	Securities trading and management	33	20
100	151	Payment services	151	100
55	90	Insurance services	90	55
6	11	Other commission income	11	6
133	209	Commission from Boligkreditt and Næringskreditt	209	133
331	513	Total commission income	513	331
		Commission expenses
1	1	Interbank fees	1	1
12	19	Payment services	19	12
7	10	Other commission expenses	10	7
19	30	Total commission expenses	30	19

312	483	Net commission income	483	312
		Other operating income
-	3	Operating income from real estate	4	-
4	-	Profit from the sale of fixed assets	-	8
5	5	Other operating income	4	3
-	-	Operating income from estate agency business	176	115
-	-	Operating income from accounting firms	50	38
9	7	Total other operating income	233	165

320	489	Net commission and other income	716	477

Note 14 – Net result from other financial investments

Parent bank			Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
(1)	27	Net change in value of stocks, shares, etc. measured at fair value	30	(1)
8	(31)	Net change in value of bonds/certificates measured at fair value	(31)	8
(19)	12	Net change in value of financial derivatives measured at fair value	12	(19)
13	12	Exchange rate gains/losses on currency	12	13
-	151	Negative goodwill recognised through profit or loss upon the merger with Sparebanken Telemark	151	-
2	170	Net result from other financial investments	174	2

Note 15 – Measuring fair value of financial instruments

Financial instruments at fair value are classified at different levels.

Level 1: Valuation based on quoted prices on an active market. The fair value of financial instruments traded on active markets is based on the market price at the statement of financial position date. A market is considered to be active if the market prices are easily and regularly available from a stock exchange, dealer, broker, economic grouping, pricing service or regulatory authority, and these prices represent actual and regularly occurring market transactions at arm's length. The category includes listed shares and units in mutual funds, treasury bills, government bonds and certificates that are traded in active markets.

Level 2: Valuation based on observable market data. Level 2 consists of instruments which are valued using information other than quoted prices, but where prices are directly or indirectly observable for the assets or liabilities, and also include

listed prices in inactive markets.

These valuation methods maximise the use of observable data where it is available and rely as little as possible on the Bank's own estimates.
The fair value of interest rate swaps is calculated as the present value of estimated future cash flows based on the observable rate curve.
The fair value of bonds and certificates (assets and liabilities) is calculated as the present value of the estimated cash flow based on the observable yield curve, including an indicated credit spread on the issuer from a reputable brokerage firm or Reuters/ Bloomberg pricing services.
This category includes bonds, certificates, equity instruments, own securities issued measured at fair value, and derivatives.

Level 3: Valuation based on other than observable data. If no valuation is available in relation to level 1 and 2, valuation methods based on non-observable information are used.

Fair value of fixed rate loans: The Bank uses the base rate/reference rate on the loans, and discounts using its own swap curve to calculate the funding margin. The Bank has no 'day 1 profit'. For valuations at later dates, the Bank reads in reads customer interest and adjusts for funding and customer margins. Swap interest will be charged on the discount date. This is then compared with the swap rate on the calculation date taking account of the remaining term to maturity. Changes to the customer margin (administrative mark-up, mark-up for anticipated losses and return on equity) in the term of the loan are not assessed/ taken into account.
Equity investments are valued at fair value under the following conditions:
1. Price at the time of the last capital increase or last sale between independent parties, adjusted for changes in market conditions since the capital increase/sale.
1. Fair value based on expected future cash flows for the investment.
On the remaining financial instruments, fair value is determined on the basis of value estimates obtained from external parties.
This category includes other equity instruments, loans at fair value over extended profit and the Bank's own fixed rate loans.
The fair value of mortgages is understood to be: Loans in loss category 1 - the nominal value of the loan (not equal to amortised cost). Loan in loss category 2, and 3 - the loan's nominal value decreases by the expected losses (= amortised cost). Loans in loss category 3K - the loan's nominal value decreases by individual impairment provisions (= amortised cost)

The Group's assets and liabilities measured at fair value as at 31.12.2021

Assets (Amounts in NOK millions)	Level 1	Level 2	Level 3	Total
Financial assets at fair value
- Fixed-rate loans	-	-	2,844	2,844
- Loans at fair value through OCI	-	-	40,143	40,143
- Bonds and certificates	252	5,894	-	6,146
- Equity Instruments	199	-	2,004	2,203
- Derivatives	-	101	-	101
Total assets	451	5,995	44,991	51,437
Liabilities	Level 1	Level 2	Level 3	Total
Financial liabilities at fair value
- Securities issued at fair value	-	5,597	-	5,597
- Derivatives	-	107	-	107
Total liabilities	-	5,704	-	5,704

The Group's assets and liabilities measured at fair value as at 31.12.2020

Assets (Amounts in NOK millions)	Level 1	Level 2	Level 3	Total
Financial assets at fair value
- Fixed-rate loans	-	-	1,664	1,664
- Loans at fair value through OCI	-	-	22,700	22,700
- Bonds and certificates	208	4,218	-	4,425
- Equity Instruments	214	-	1,158	1,372
- Derivatives	-	125	-	125
Total assets	421	4,343	25,522	30,286
Liabilities	Level 1	Level 2	Level 3	Total
Financial liabilities at fair value
- Securities issued at fair value	-	2,825	-	2,825
- Derivatives	-	123	-	123
Total liabilities	-	2,947	-	2,947

Changes in instruments classified as Level 3 as at 31.12.2021

(Amounts in NOK millions)	Fixed-rate loans	Shares at fair value through profit or loss	Lending at fair value through OCI
Opening balance 01.01.2021	1,664	1,158	22,700
Supply from merger with Sparebanken Telemark	1,444	866	14,852
Additions	694	134	21,864
Disposals	(958)	(153)	(19,273)
Net gain/loss on financial instruments	-	(1)	-
Closing balance 31.12.2021	2,844	2,004	40,143

Changes in instruments classified as Level 3 as at 31.12.2020

(Amounts in NOK millions)	Fixed-rate loans	Shares at fair value through profit or loss	Lending at fair value through OCI
Opening balance 01.01.2020	1,774	1,178	21,307
Additions	297	-	12,662
Disposals	(408)	(8)	(11,269)
Net gain/loss on financial instruments	-	(12)	-
Closing balance 31.12.2020	1,664	1,158	22,700

Note 16 – Other assets

Parent bank				Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
23	42	Prepaid, unaccrued costs, and accrued income not yet received	125	31
20	50	Other assets	53	24
125	101	Derivatives and other financial instruments at fair value	101	125
169	193	Total other assets	279	180

Note 17 – Deposits from customers by sector and industry

Parent bank			Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
15,885	30,255	Employees, etc.	30,255	15,885
3,269	6,149	Property management/business services, etc.	6,098	3,230
22	296	Property management housing cooperatives	296	22
1,073	1,611	Wholesale and retail trade/hotels and restaurants	1,611	1,073
223	421	Agriculture/forestry	421	223
716	1,232	Building and construction	1,232	716
1,673	2,725	Transport and service Industries	2,725	1,673
385	658	Production (manufacturing)	658	385
1,858	1,684	Public administration	1,684	1,858
799	1,234	Abroad and others	1,234	799
25,903	46,264	Total deposits	46,212	25,864

Note 18 – Securities debt

SpareBank 1 Sørøst-Norge issues and redeems securities issued as part of its liquidity management. The refinancing requirement has also been partly funded by the transfer of the loan portfolio to SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS.

Only figures for the Group are shown as the parent bank's figures are identical.

15,293 7,794 1,550 - 70 115



150 200
31.12.2021 31.12.2020

Change in financial borrowing

(Amounts in NOK millions)	31.12.2021	Merger 01.06.2021 portfolio Sparebanken Telemark	Issued	Due/ redeemed	31.12.2020
Loans from financial institutions, nominal value	150	150	-	(200)	200
Bond debt, senior unsecured, nominal value	15,293	7,216	3,050	(2,767)	7,794
Bond debt, SNP, nominal value	1,550	-	1,550	-	-
Value adjustments and accrued interest	70	75	-	-	115
Total interest-bearing securities	17,063	7,441	4,600	(2,967)	8,109

Note 19 – Subordinated loan capital

Only figures for the Group are shown as the parent bank's figures are identical.

Time-limited subordinated bonds loans

Total subordinated loan capital	651	401
Value adjustments and accrued interest	1	1
Subordinated loan capital	650	400
Group (amounts in NOK millions)	31.12.2021	31.12.2020

Change in subordinated loan capital

(Amounts in NOK millions)	31.12.2021	Merger 01.06.2021 portfolio Sparebanken Telemark	Issued	Due/ redeemed	31.12.2020
Subordinated loan capital	650	250	150	(150)	400
Value adjustments and accrued interest	1	-	-	-	1
Total subordinated loan capital	651	250	150	(150)	401

Note 20 – Other liabilities

Parent bank			Group
31.12.2020	31.12.2021	(Amounts in NOK millions)	31.12.2021	31.12.2020
41	101	Accrued expenses and unaccrued income received	128	59
14	34	Provisions for guarantees	34	14
75	139	Pension liabilities	140	75
119	228	Other liabilities	255	150
123	107	Derivatives and other financial instruments at fair value	107	123
372	609	Total other liabilities	664	421

Note 21 – Equity certificate holders and distribution of equity certificates

In connection with the merger between SpareBank 1 BV and Sparebanken Telemark, the equity capital was increased by NOK 676.3 million through the issuance of 45,089,995 new equity certificates, of which 37,116,986 equity certificates were for the former equity certificate holders of Sparebanken Telemark and 7,973,009 equity certificates were for Sparebankstiftelsen Telemark – Grenland as remuneration for the business taken over from Sparebanken Telemark. A NOK 157.5 million increase in equity was also registered by converting primary capital to equity capital through the issuance of 10,498,569 new equity certificates for SpareBank 1 Stiftelsen BV, see Note 3 for further details.

Following the issuance of new equity certificates, total equity share capital will amount to NOK 1,780.3 million divided into NOK 118,689,917 equity certificates with a nominal value of NOK 15 per equity certificate. Spare-Bank 1 Sørøst-Norge owned 188,826 equity certificates at the end of the quarter. The equity certificates are evidence of all the equity certificates that SpareBank 1 BV owned in Sparebanken Telemark and vice versa prior to the merger.

There were 5,929 equity certificate holders as at 31.12.2021.

20 largest equity certificate holders

	Quantity	Share
SpareBank 1 Stiftelsen BV	24,141,356	20.3%
Sparebankstiftelsen Telemark-Grenland	18,910,174	15.9%
Sparebankstiftelsen Nøtterøy-Tønsberg	10,925,503	9.2%
Sparebankstiftelsen Telemark-Holla og Lunde	10,273,723	8.7%
VPF Eika Egenkapitalbevis	3,838,504	3.2%
Spesialfondet Borea utbytte	2,456,235	2.1%
Pareto Invest AS	1,771,308	1.5%
Landkreditt Utbytte	1,100,000	0.9%
Melesio Invest AS	928,150	0.8%
Catilina Invest AS	912,032	0.8%
Wenaasgruppen AS	907,432	0.8%
Sanden AS	707,494	0.6%
Foretakskonsulenter AS	621,230	0.5%
Kommunal Landspensjonskasse Gjensidige	582,614	0.5%
Aars AS	534,737	0.5%
Skogen Investering AS	520,000	0.4%
Salt Value AS	497,211	0.4%
Elgar Kapital AS	468,000	0.4%
Babord AS	421,266	0.4%
Hausta Investor AS	420,000	0.4%
Total for 20 largest shareholders	80,936,969	68.2%
SpareBank 1 Sørøst-Norge (own equity certificates)	188,826	0.2%
Other owners	37,564,122	31.6%
Issued equity certificates	118,689,917	100.0%

Price development December 2020 - December 2021

Dividend policy

SpareBank 1 Sørøst-Norge's goal is to achieve financial results that provide equity certificate holders with a good, stable and competitive return in the form of dividends and increases in the price of the equity certificate.

The annual profit will be distributed between the equity capital and community capital in line with their proportion of the Bank's equity.

SpareBank 1 Sørøst-Norge assumes that around 50% of the owner capital's share of the annual profit will be paid out as cash dividends.

In order to maintain stable ownership fractions over time, as a general rule, dividend funds amounting to around 50% of the primary capital's share of the profit will be transferred to SpareBank 1 Stiftelsen BV and Sparebankstiftelsen Telemark-Grenland.

When determining the level of dividends, the Group's financial strength must be taken into account, including its expected financial performance in a normalised market situation, future capital requirements, external framework conditions, the Group's goals and strategic plans.

Note 22 – Equity certificates and ownership fractions

Earnings per equity certificate

Earnings per equity certificate are calculated by dividing the portion of the profit/loss assigned to the company's equity certificate holders (minus own equity certificates) by a weighted average of the number of equity certificates over the year.

Diluted earnings per equity certificate

In the calculation of diluted earnings per equity certificate, the weighted average number of issued ordinary equity certificates in circulation is adjusted for the effect of converting potential equity certificates which could lead to dilution. The Bank has no potential equity certificates that could cause dilution as at 31.12.2021. Diluted earnings per equity certificate is therefore equal to earnings per equity certificate.

Parent bank

Equity certificate fraction
Amounts in NOK millions	31.12.2021

Equity share capital	1,780
Share premium fund	2,777
Risk equalisation fund, excl. other equity	645
Total equity certificate holders' capital	5,203
Sparebankens Fond, excl. other equity	3,423
Endowment fund	7
Total community-owned capital	3,429
Equity excl. dividends, gifts, hybrid capital and other equity	8,632
Ownership fraction	60.3%
Community capital	39.7%

Parent bank (amounts in NOK millions)	31.12.2021
Based on profit divided between equity certificate holders and community capital	782
Number of equity certificates issued (weighted average 01.01.-31.12.2021)	95,417,844
Earnings per equity certificate (NOK)	4.94
Market price (NOK)	65.40
Nominal Value (NOK)	15.00
Adjusted profit
Income statement	796
- corrected for interest on additional Tier 1 capital recognised directly against equity	(11)
- corrected for FUG	(3)
Adjusted profit	782

Note 23 – Pro forma results from the quarterly financial statements

Group
(Amounts in NOK millions)	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020
Interest income	413	373	372	367	373	378	430	532
Interest expenses	113	96	98	101	96	97	179	239
Net interest income	300	277	274	265	277	281	251	293
Commission income	158	161	149	144	159	152	117	127
Commission expenses	10	10	9	9	10	10	8	9
Other operating income	64	63	73	57	51	63	71	51
Net commission and other income	212	214	213	193	200	204	179	169
Dividends	1	-	24	16	16	-	12	24
Net result from ownership interests	48	54	41	25	28	34	32	58
Net result from other financial investments	-	7	149	22	(13)	4	63	(59)
Net income from financial assets	50	61	214	63	31	39	107	23
Total net income	561	553	701	521	509	524	536	485
Personnel expenses	177	150	136	142	159	121	122	135
Other operating expenses	108	99	138	98	106	95	97	104
Total operating expenses	285	249	275	241	265	216	218	239
Profit before losses and tax	276	303	427	280	244	308	318	247
Losses on loans and guarantees	2	(35)	107	13	(15)	(2)	30	52
Profit before tax	274	339	320	268	259	310	287	194
Tax expense	49	70	27	50	55	66	55	35
Profit before other comprehensive income	225	269	293	217	204	244	232	159

1) Defined as alternative performance measure (APM pro forma) – see the appendix to the interim financial statements

Note 24 – Consolidated statement of financial position figures from the quarterly financial statements (pro forma)

Group
(Amounts in NOK millions)	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020
Profitability
Return on equity 1)	9.1%	11.2%	12.7%	9.6%	9.1%	11.1%	10.9%	7.5%
Net interest income, excl. interest on subordinated bonds 1)	1.59%	1.48%	1.52%	1.53%	1.58%	1.61%	1.49%	1.79%
Cost-income ratio 1)	50.8%	45.1%	39.1%	46.2%	52.0%	41.2%	40.7%	49.2%
Statement of financial position figures
Gross lending to customers incl. transfers to mortgage companies 1)	88,105	87,383	86,174	84,428	82,927	82,267	80,786	79,017
Gross lending to customers on the balance sheet	62,771	62,171	61,051	59,359	58,128	58,289	56,909	55,420
Loans transferred to mortgage companies	25,334	25,212	25,123	25,068	24,799	23,978	23,877	23,598
Lending growth in the past 12 months 1)	6.2%	6.2%	6.7%	6.8%	7.9%	9.0%	8.7%	8.5%
Deposits from customers	46,212	46,888	46,872	43,675	43,579	43,662	43,962	40,999
Deposit coverage on the balance sheet 1)	73.6%	75.4%	76.8%	73.6%	75.0%	74.9%	77.3%	74.0%
Deposit coverage, incl. mortgage companies1)	52.5%	53.7%	54.4%	51.7%	52.6%	53.1%	54.4%	51.9%
Deposit growth in the past 12 months 1)	6.0%	7.4%	6.6%	6.5%	7.5%	7.5%	8.5%	5.9%
Total assets	74,911	74,432	73,765	70,680	70,155	69,160	69,181	66,460
Total assets, incl. mortgage companies 1)	100,245	99,645	98,888	95,749	94,954	93,138	93,058	90,058
Equity excl. hybrid capital	9,750	9,545	9,287	9,092	8,947	8,742	8,508	8,274
Staffing
Number of FTEs	533.2	539.1	529.5	533.5	523.9	519.9	516.5	516.9
of which parent bank	377.8	380.4	385.4	384.5	385.9	383.9	381.8	382.6

1) Alternative performance measures are defined in a separate appendix to the quarterly report

Note 25 – Events after the statement of financial position date

In January 2022, the Board of Directors decided to offer redundancy packages to all of the Bank's employees who were born in 1960 or earlier.

This is part of the process of realising expected synergies in connection with the merger between SpareBank 1 BV and Sparebanken Telemark.

Declaration from the Board of Directors and the CEO

We declare that, to the best of our knowledge and belief, the interim accounts for the period 1 January to 31 December 2021 have been prepared in accordance with IAS 34 'Interim reporting', and that the information in the financial statements gives a true picture of the bank's and the group's assets, liabilities, financial position and results as a whole.

We also declare that, to the best of our knowledge and belief, the interim report provides an accurate summary of key events in the accounting period and their influence on preliminary annual financial statements, the major risk and uncertainty factors facing the business in the coming accounting period, and significant transactions with close associates.

Sandefjord, 9 February 2022 The Board of Directors of SpareBank 1 Sørøst-Norge

Finn Haugan Chair of the Board Anne Berg Behring Deputy Chair

Elisabeth Haug

Heine Wang Jan Erling Nilsen

Hanne Myhre Gravdal Employee representative Frede Christensen Employee representative Per Halvorsen CEO

Statements concerning future events

The report contains statements about future circumstances that reflect the executive management team's current view of certain future events and potential financial performance.

Although SpareBank 1 Sørøst-Norge believes that the expectations expressed in such statements about the future are reasonable, there can be no guarantee that the expectations will prove to have been correct. Results could therefore vary greatly from those assumed in the statements regarding future circumstances. Important factors that can cause such differences for SpareBank 1 Sørøst-Norge include, but are not limited to: (i) macroeconomic developments, (ii) changes in the market, and (iii) changes in interest rates.

This report does not mean that SpareBank 1 Sørøst-Norge undertakes to revise these statements on future matters beyond that which is required by applicable law or applicable stock exchange rules if and when circumstances arise that will cause changes compared with the situation on the date when the statements were made.

AI Terminal

SpareBank 1 Sørøst-Norge

3753_rns_2022-02-11_3978de35-cf87-4482-bd45-78d26f06b651.pdf

Q4 2021 Interim financial statements

Contents

Main figures

NOK 869 million

Main figures

Key figures

Business concept, vision, values and goals

Our unique mission/brand

Vision and values

Market area

Corporate Strategy 2022-2025

Four overarching ambitions

Seven strategic focus areas

Resource management

About SpareBank 1 Sørøst-Norge

Important financial events in the quarter

Interim report from the Board of Directors for Q4

The SpareBank 1 Sørøst-Norge Group

Highlights (pro forma) for the period 01.01.2021 to 31.12.2021

Highlights for the period 01.01.2021 to 31.12.2021

Fourth quarter highlights

Financial performance

Income statement

Net interest income

Quarterly change in net interest income:

Net commission and other income:

Net commission income

Other operating income

Net income from financial assets

Income from ownership interests, SpareBank 1 Gruppen

Income from ownership interests, BN Bank ASA

Distribution of shares in connection with SpareBank 1 Forvaltning AS

Operating expenses

Personnel expenses

Other operating expenses

Losses and impairment provisions

Lending and deposit performance

Liquidity

Equity Capital adequacy

Equity certificates – dividend

Transactions with close associates

Merger synergies

Future outlook

Interim financial statements

Consolidated Income Statement IFRS

Consolidated Statement of Financial Position

Consolidated results from the quarterly financial statements

Change in equity as at Q4 2021

Group

Parent bank

Cash flow statement

Cash flow from interest received, interest payments and dividends received

Notes to the financial statements

Note 1 – Accounting policies

Note 2 – Critical accounting estimates and discretionary valuations

Note 3 – Merger of SpareBank 1 BV and Sparebanken Telemark on 01.06.2021

Note 4 – Capital adequacy

Extended consolidation for owner companies in the Samarbeidende Sparebanker grouping

Proportional consolidation

Parent bank

Note 5 – Segment information

Group 31.12.2021

Group 31.12.2020

Note 6 – Losses on loans and guarantees

Note 7 – Impairment provisions for loans and guarantees

Sensitivity analysis – loss model

Change in IFRS 9 impairment provisions in the

Note 8 – Loans to customers by Stages 1, 2 and 3

Note 9 – Loan to customers by sector and industry

Note 10 – Transfer of financial assets

Note 11 – Financial derivatives

Note 12 – Liquidity risk

Note 13 – Net commission income and other income

Note 14 – Net result from other financial investments

Note 15 – Measuring fair value of financial instruments

The Group's assets and liabilities measured at fair value as at 31.12.2021

The Group's assets and liabilities measured at fair value as at 31.12.2020