Sparebanken Sør

Earnings Release • Feb 7, 2025

Sparebanken Sør

Investor presentation Q4 2024

1

Agenda

Q4 2024

Allocation 2024

The Savings Bank Committee (Sparebankutvalget)

Sparebanken Norge

Highlights in Q4 2024

• Solid development in net interest income
• Good growth in net commission income
• Good profit contribution from associated companies
• Low cost-income ratio of 38.6 percent
• One-time costs in the quarter
• Continued low losses on loans
• Profit per equity certificate at NOK 3.8 (NOK 3.9)
• Return on equity at 9.8 percent (10.5 percent)

NOK million	2024 Q4	2023 Q4	Change
Net interest income	829	815	14
Net commission income	118	105	13
Net income from financial instruments	-41	-13	-28
Associated companies	36	33	3
Other operating income	11	3	8
Total income	953	943	10
Total expenses	368	370	-2
Profit before losses on loans	585	573	12
Losses on loans, guarantees	33	31	2
Profit before tax	552	543	9
Tax expenses	127	116	9
Profit for the period	425	426	-1

Very strong annual result

• Strong growth in net interest income
• Low cost-income ratio of 35.3 percent
• Low losses, and defaults still at a historically low level
• Result per equity certificate (EC) of NOK 18.2 (NOK 16.4 kroner)
• Return on equity of 12.1 percent (11.3 percent)
• Growth in loans last 12 months at 4.6 percent
• Growth in deposits last 12 months at 7.1 percent
• The Board will propose to distribute a dividend of NOK 12.21 per equity certificate, NOK 416 million in customer dividends and NOK 348 million in gifts.

NOK million	31.12.2024	31.12.2023
Net interest income	3 315	3 043	272
Net commission income	424	400	24
Net income from financial instruments	28	3	25
Associated companies	128	99	29
Other operating income	18	29	-11
Total income	3 913	3 573	339
Total expenses	1 380	1 297	83
Profit before losses on loans	2 532	2 276	256
Losses on loans, guarantees	75	49	26
Profit before tax	2 457	2 227	130
Tax expenses	465	454	11
Profit for the period	1 991	1 773	218

Decomposition of changes in profit before tax

Profit before tax

Profit before tax

Stabile development in net interest income

• NOK million Good deposit and lending growth in the last 12 months
• Pressure on deposit margins in RM

Net interest income

7

Stable development in margins

Loan margins (%)
2,47	2,53	2,47	2,42	2,44
0,76	0,97	1,00	0,96	0,97
Q4 2023	Q1 2024	Q2 2024	Q3 2024	Q4 2024
	Retail Market (RM)		Corporate Market (CM)

NIBOR 3M development

1) Interest margin is the average lending rate minus the average deposit rate

Interest margin (%) 1)
3,44	3,38	3,18	3,22	3,24
3,01	2,82	2,81	2,79	2,69

Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Retail Market (RM) Corporate Market (CM)

Good profit contributions from associated companies

• Brage Finans delivered a ROE of 8.6 percent in 2024.
• Sparebanken Sør has in 2024 increased its ownership stakes in Frende Holding AS, Brage Finans AS and Balder Betaling AS by 2.6 percentage points, 1.9 percentage points and 3.8 percentage points
• Frende Kapitalforvaltning AS owns 70 percent of the shares in the asset management company Borea.
• Sørmegleren has increased its result from NOK 0 million in 2023, to NOK 10 million in 2024

9

• Frende Holding delivered a ROE of 17.7percent in 2024 Effect on results after consolidation

NOK million		Q4 2024	Q4 2023	31.12.2024	31.12.2023
Frende Forsikring (22.5 %)	Share of profit	21	16	68	27
	Amort.	-7	-6	-24	-22
Brage Finans (26.8 %)	Share of profit	23	22	86	83
Balder Betaling (26.8 %)	Share of profit	0	0	0	11
Frende Kapitalforvaltning (35.0 %)	Share of profit	-2	0	-2	0
TOTAL		36	33	128	99

Solide return on equity and low cost to income ratio

NOK million

Profit from ordinary operations1)

1) Net interest income + Net commission income + Other operating income – Operating expenses +/- One-off items

2) Return on equity excl. accounting effects from financial instruments and one-off items and incl. interest on hybrid capital

Good growth in 2024

• 12 month growth of 4.6 %
  • 12 month growth in gross loans of 4.9 % % for retail customers and 4.2 % from corporate customers
• Annualised quarterly growth in Q4 of 3.6 %
  • 5.9 % for retail customers and -0.8 % from corporate customers

• 12 month growth of 7.1 %
  • 12 month growth in deposits on 5.8 % for retail customers and 8.3 % from corporate customers
• Deposits coverage of 55.6 % (54.3 %)

Continued low losses on loans

Development in losses in NOK million and as a percentage of gross loans (annualised)

Development in non-performing loans (IFRS 9, step 3) in NOK million And as a percentage of gross loans

Development in loss provisions in NOK million and as a percentage of gross loans

Diversified loan portfolio with low risk

Total Geographical distribution of the overall lending portfolio Vestfold og Telemark 15 % Others 10 % Agder 62 % Rogaland 4 % Oslo 9 %

Corporate Market

36 % of the loan portfolio

Distribution of loans by size

Sector distribution

Retail loan book – 96% mortgages and good security (low LTV)

14 Average loan-to-value of approx. 53 percent for mortgages (Group)

Solid asset backing in commercial real estate portfolio (property management)*

* Additional collateral for all above 80 %. Collateral in other types of pledged assets than real estate not taken into account (guarantees, equipment, receivables etc.)

15 ** Only the part of a loan exceeding a certain threshold of LTV is included in the next bracket of higher LTV ratio

LTV distribution – «whole-loan approach» LTV distribution – "loan-splitting approach"**

Capital requirements og implementing CRR3

Capital requirements

Kapitalkrav ren kjernekapital	Requirement 31.12.24
Minimum Tier 1 Capital Requirements	4.5 %
Conservation buffer	2.5 %
Systemic Risk Buffer	4.5 %
Countercyclical Buffer	2.5 %
Pillar-2 requirements	0.9 %
CET1 requirements	14.9 %
Pillar-2 Guidance 1)	1.0 %
CET1 requirements Incl. P2G	15.9 %

1) The bank received final feedback on the SREP on April 30, 2024.

16,4 16,4 15,90 CET1, 31.12.2024 CRR3 implement Estimate 31.12.2025 Requirement 31.12.2025 incl. P2G

Capital adequacy (CET1)

Capital effects from CRR3 ("Basel IV")

Capital release from CRR3* (NOK million)

Higher ROE due to new capital regulations**

*Expected capital effects of approx. 2.8 percentage points on CET-1 with CRR3 ** Assumes the same profit after tax and reduced equity as a result of CRR3 ***ROE adjusted for financial income and normalized tax rate

• 2.00 0 4.00 0 6.00 0 8.00 0 10.0 00 12.0 00 14.0 00 16.0 00 18.0 00 20.0 00

17

Diversified financing

Deposits split

Capital market funding split

bonds SNP

loans

Capital market maturity profile*

Covered bonds Senior unsecured bonds SNP Subordinated loans TOTAL

Key comments

• Predominantly funded with customer deposits and covered bonds (OMF)
• NOK 74.2 bn in customer deposits 47 % retail customers
• NOK 72.9 bn in capital market funding ~40% maturing in 2028 and later
• Sparebanken Sør has an A1 rating, «positive outlook»
• Sparebanken Sør Boligkreditt AS has an A1 rating, , in line with the bank
• Bonds issued by Sparebanken Sør Boligkreditt AS is rated AAA

Strong liquidity position

Sources of liquidity Main features

Liquidity ratios

• Bonds and certificates constitute the majority of the liquidity portefolio
• Covered bonds make up for (OMF) 61 % of all bonds and certificates
• Satisfying liquidity ratios LCR ratio of 199 % and NSFR ratio of 123 %

Bonds and certificates split Other liquid assets split

Allocation 2024

Allocation 2024 – 12,21 per Equity Certificate

Group profit 2024 – NOK 1 901 mill.

(Group Profit after tax NOK 1 988 mill. – AT-1 capital NOK 87 mill.)

✓ Customer dividends and contributions to the local community

• ✓ Proposed dividend represent 67 percent of the Group profit for 2024
• ✓ Profit per equity certificate (Group) amounted to NOK 18.2.
• ✓ Proposed dividend of NOK 12.21 per equity certificate correspond to 67 percent of result per equity certificate (Group)

Delivers on the financial targets

The Savings Bank Committee (Sparebankutvalget)

The Savings Bank Committee puts the savings bank model at risk

The outcome of the Savings Bank Committee's report will lead to a stronger concentration of power in the banking sector, reduced local ownership, and diminished value creation in rural areas. This would be a loss, both for customers and for the diversity of the Norwegian

banking sector.

The Savings Bank Committee's mandate and background

• The Savings Bank Committee has been tasked reviewing the capital structure in relation to the ability to preserve the unique characteristics and societal role of savings banks.
• The government's objective is for the committee's report to contribute to solutions that ensure strong and profitable savings banks in the future while safeguarding their distinct characteristics and vital societal function.

Trygve Vedum to the Norwegian Parliament, March 2024 (Minister of Finance)

The Saving Banks Association clearly states that the proposals must be rejected

– There is no reason to change the equity certificate or the capital structure of savings banks. We firmly believe that the current framework is fully compliant with EU capital requirements regulations. Unnecessary changes could create uncertainty and weaken a model that has functioned excellently for a long time.

Therese Riiser, CEO of Sparebankforeningen

The Banking Law Commission recommended strengthening the savings bank model and the distinct characteristics of savings banks

• Introduction of the option for customer dividends

«If dilution effects are to be eliminated or at least kept at a relatively modest level, savings banks must be ensured a relatively high degree of flexibility in allocating the portion of the designated dividend funds assigned to the primary capital.»

(NOU 2009: 2)

Distributions to charitable purposes have increased significantly in the period since customer dividends were introduced

Development in Sparebanken Sør

Gifts Dividend Foundation

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2022 2023 1 000 2 000 3 000 4 000

Charitable donations 2009 – 2023

Source: Sparebankforeningen

Experiences from Europe

The dismantling of the traditional ownership structure of savings banks has weakened the savings bank sector

• In several countries (especially Spain and Italy), savings banks have been forced to convert into commercial banks
• The result has been significant pressure for structural changes, a weakening of local affiliation, and considerably greater banking concentration
• Our European colleagues find it a mystery that Norwegian politicians have been so passive on such a crucial issue for savings banks, given the consequences seen in other countries

The proposals from the Savings Bank Committee must be rejected

• The Savings Bank Committee has not delivered a report that aligns with the mandate set by the government
• The committee demonstrates a lack of understanding of the unique role of Norwegian savings banks
• The committee has put forward proposals that no political parties in the Norwegian Parliament have advocated for
• Norway cannot pave the way for large international commercial banks to gradually acquire Norwegian savings banks

Sparebanken Norge

Sparebanken Norge

Customers FTEs

786 000 444bn.

1 614

Gross loans

National ambitions for Sparebanken Norge

We will become the first savings bank to take a nationwide position, with the aim of being present in the largest Norwegian city centers within 5-10 years.

This will happen through both structural and organic growth, with the Oslo area being an important market area.

Bigger and stronger – but still local and close

For 2025, we are allocating NOK 348 million to charitable donations in our local communities.

Significant cost and capital synergies

Cost synergies

Estimated to NOK 350-400 million annually from 2027-2028

Capital synergies

Estimated at net NOK 2 billions. In addition, there is the effect of Basel IV of NOK 2.1 billion.

Increased risk weight floor on mortgages reduces the estimate by NOK 0.7 billion.

Transaction and integration costs

NOK 250-300 million

The process towards the legal merger on May 2, 2025

Together we will build Norway's best savings bank

Low complexity

Low risk in the loan portfolio

Proud performance culture and two strong headquarters

New strong brand built on savings bank values

Significant gifts and high customer yields

Among the best in terms of return on equity

Equity certificate owners

20 largest equity certificate (EC) owners as of 31.12.2024

	Name	Amount EC	Share of EC %		Name	Amount EC	Share of EC %
1	Sparebankstiftelsen Sparebanken Sør	10.849.009	26,01	11	J.P. Morgan SE	445.979	1,07
2	Sparebankenstiftelsen Sparebanken Vest	2.400.000	5,75	12	AF Capital AS	400.200	0,96
3	J.P. Morgan Securities LLC	2.337.641	5,61	13	Vpf Fondsfinans Utbytte	398.248	0,95
4	Geveran Trading Company LTd	1.940.000	4,65	14	U.S. Bank National Association	324.600	0,78
5	Spesialfondet Borea Utbytte	1.725.809	4,14	15	Verdipapirfondet Fondsfinans Norge	299.585	0,72
6	EIKA utbytte VPF c/o Eika kapitalforv.	1.391.826	3,34	16	Bergen Kom. Pensjonskasse	277.365	0,67
7	KLP Gjensidige Forsikring	1.127.403	2,70	17	State Street Bank and Trust Comp	266.695	0,64
8	Skandinaviska Enskilda Banken AB	1.113.994	2,67	18	J.P. Morgan SE	246.663	0,59
9	Pershing LLC	1.020.000	2,45	19	Hjellegjerde Invest AS	243.507	0,58
10	J.P. Morgan SE	763.795	1,83	20	Verdipapirfondet Klp Aksjenorge	241.446	0,58
	Total 10 largest owners	24.669.477	59,16		Total 20 largest owners	27.813.765	66,69

• 41.703.057 equity certificates with a face value of NOK 50 each have been issued
• The profit (Group) for Q4 2024 amounted to NOK 3.8 per EC, NOK 18.2 per EC for 2024 and NOK 16,4 per EC for 2023
• The ownership fraction was 40.0 percent at December 31, 2024

SOR – share price and liquidity

Share price development as of 31.12.2024

• The share price for SOR was NOK 197.9, and book value was NOK 157.8, equivalent to a P/B of 1.25
• The equity certificates gave a return of 44.4 % last 12 months
• Profit per equity certificates at31.12.2024 was NOK 18.2 kroner, representing a P/E at 10.9.

Liquidity

• Significantly improved liquidity after the sale of equity certificates
• NOK 30.6 mill. turnover of equity certificates last 12 months
• 41 703 057 total issued, and an EQ rate of 40.0 %

Dividend

• A dividend of NOK 10 per equity certificate has been distributed for 2023
• The Board will propose to distribute a dividend of NOK 12.21 per equity certificate for 2024
• Goal to have ~ 50 % of the EC owners' share of the result should be paid out.
• The banks capital requirements will be taken into consideration when determining the annual dividend

1) Selected banks: SVEG, SB1NO, MING, SPOL and NONG.