SpareBank 1 Sørøst-Norge

Earnings Release • Feb 11, 2022

Preliminary financial statements and Q4 2021

Per Halvorsen (CEO) Geir Årstein Hansen (Dept. CEO/IR) Roar Snippen (CFO)

February 22

Financial targets, dividend basis and profit and loss 2021

Merger costs and synergies

Key figures in the region

SpareBank 1 Sørøst-Norge

Attachments

Financial measures and value drivers

Good growth in solvency and returns

The dividend for 2021 is based on pro forma accounts for the Group. The ownership fraction at 31.12.21 was 60.3%, which gives a pro forma dividend basis of NOK 600 million and pro forma EPS of NOK 5.03. The number of equity certificates is 118,689,917

Strong results for 2021 Solid growth, earnings and financial strength

Solid income

Increased net interest income incl. mortgage company (NII) by 3.5% to MNOK 1,369, effect of interest rate increase decided in December - full effect from February 2022

Increased operating costs - of which just under MNOK 70 in one-time costs related to the merger

Income recognition of negative goodwill MNOK 151, contra entry for loss MNOK 89

Positive effect of approx. MNOK 24 from change in scenario weights for corporate market, IFRS stages 1 and 2.

Ordinary profit after tax of MNOK 1,004 (839)

Return on equity of 10.6% (9.5%) Note: Based on pro forma figures as at 31.12.21

Strong financial solvency

Common equity Tier 1 capital ratio of 18.3%

Leverage ratio 8.4%

Earnings per equity certificate NOK 5.03

Solid growth

Another good profit contribution from SpareBank 1 Gruppen/SamSpar of MNOK 133 (125) and from BN Bank of MNOK 36 (26) in 2021.

Increased operating income from Eiendomsmegler companies and Regnskapshuset of MNOK 30

12-month growth in lending of 6.2% (7.9%) and deposits 6.0% (7.5%).

12-month lending growth in corporate market of 6.8% (11.0%) and retail market 6.1% (7.0%), with deposit growth of 8.1% (8.2%) and 5.0% (7.2%) respectively.

Strong results in Q4

Fourth quarter in isolation

Solid income

Profit after tax of MNOK 225 (204)

Return on equity of 9.1% (9.1%)

Net interest income incl. mortgage co marginally up from the same time last year (MNOK 9). Higher money market rates through the quarter and interest rate changes on current rates in mid-November and last change not until February 2022

Increase in net other commission income of MNOK 12 due to increased activity in society and increased transaction volumes in payment services and increased income in subsidary .

Net loss costs in the quarter of MNOK 2

Strong financial solvency

Common equity Tier 1 capital ratio of 18.3% which is up 0.2% from the previous quarter.

Direct return of 3.8% (price NOK 65.40 at 31.12.21)

Dividend share approx. 62% of official parent bank profit and 50% of pro forma Group profit

Solid growth

Increased income from subsidiaries and profits from associates and joint ventures.

Growth in the quarter of 0.8% (0.8%) on loans and -1.4% (-0.2%) on deposits.

Quarterly growth on loans for corporate market -1.2% (1.2%) and retail market 1.4% (0.7%%, with deposit growth of -4.5% (-0.4%) and 0.2% (-0.1%) respectively.

Stable margin

• Net interest on the balance sheet

• Interest income incl. mortgage company

• Lending margin

• Deposit margin
• Volume-weighted interest margin

Interest on lending includes loans transferred to mortgage co Pro forma 3M NIBOR is calculated as average 3M NIBOR in the quarter.

Stable margin in corporate and retail portefolio

Lending rate corporate market vs. NIBOR

• Deposit rate corporate market vs. NIBOR
• Volume-weighted interest margin

Retail market percentage points

• Lending rate retail market vs. NIBOR
• Deposit rate retail market vs. NIBOR
• Volume-weighted interest margin

Pro forma

Note 3M NIBOR is calculated as averaging 3M NIBOR in the quarter. Interest on lending includes loans transferred to mortgage

co

Strong growth in lending

Retail market

Corporate market

High proportion of loans to the retail market

Retail market, own balance sheet Loans transferred to SB1 Boligkreditt AS Corporate market, own balance sheet Loans transferred to SB1 Næringskreditt

Other industries

Construction Other

Stable and low loss provisions

No change in scenario weighting in Q4.

Note that Q4 2020 and Q1 2021 are not completely comparable as the loss assumptions for Telemark and BV were not aligned until after the merger.

Actual losses in 2021 were NOK 28 (44) million.

Stable deposits

Corporate market

BNOK

High solvency

Change in proportionally consolidated common equity Tier 1 capital ratio.

Regulatory requirement

Percentage

Leverage ratio

Regulatory requirement

Good financial strength – buffers for future requirements

	Current requirement	Requirement 31.12.22
Minimum requirement for common equity Tier 1 capital	4.5%	4.5%
Capital conservation buffer	2.5%	2.5%
Systemic risk buffer [1]	3.0%	4.5%
Countercyclical buffer [2]	1.0%	2.0%
Pillar 2 requirement [3]	2.3%	2.3%
P2 guidance [4]	1.0%	1.0%
Requirement for common equity Tier 1 capital	14.3%	16.8%

Common equity Tier 1 capital ratio - prop. consolidated

• 1) The Ministry of Finance has laid down a transitional rule for banks which uses the standard method, increasing the systemic risk buffer requirement from 3.0 to 4.5 percentage points from 31 December 2022.
• 2) The countercyclical buffer will increase by 1.0 percentage point in 2022, and may increase by a further 0.5 percentage point in 2023.
• 3) The Bank was given a Pillar 2 requirement from the FSA of Norway of 2.3 percentage points at the time of the merger between Sparebanken Telemark and SpareBank 1 BV.
• 4) SpareBank 1 Sørøst-Norge currently has a management buffer requirement of 1 percentage point .
• 5) The SME discount part 2 is estimated at approx 0.6 percentage point. No infrastructure discount has been estimated.

Dividend ratio of 62 % based on official result parent company

Board recommendation for distribution in 2021 NOK 2.50 per equity certificate MNOK 195.5 to be allocated to social capital

Low risk mortgages incl. BK (total-distributed)

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

Average LTV on the mortgage portfolio incl. loans transferred to SB1 Boligkreditt is 48.3%, which is an improvement of 4.3 percentage points on the previous quarter (52.6%).

The improvement is mainly due to changes in the procedure for updating property value from rolling 24 months to rolling 3 months.

Similarly, LTV on own balance sheet decreased from 57.9% in the previous quarter to 53.9% at the end of the year.

Low leverage on commercial loans (total-distributed)

The average LTV on commercial loans secured on property including loans transferred to SB1 Næringskreditt is 43.2% which is slightly down from the previous quarter (43.8%).

LTV on own balance sheet is 44.0% compared to 44.6% the previous quarter

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

Strong performance in SOON last 12 months

Financial targets, dividend basis and profit and loss 2021

Merger costs and synergies

Key figures in the region

SpareBank 1 Sørøst-Norge

Attachments

Synergy and one-off costs, merger between BV and Telemark

• Synergies fully phased in by 2024:
• Estimate revised from MNOK 80 to 90 per year.
• Mainly cost synergies within funding, staffing, IT, marketing and area costs.
• Transaction and implementation costs for 2021 2022:
• Provisional estimate MNOK 110 to 130.
• Remainder estimated at approx. MNOK 80 in 2022.

Synergy from merger between BV and Telemark at end of 2021 and estimate for 2022

• As of the end of 2021, the parent bank had 378 FTEs. At the time of the merger negotiations in autumn 2020, both banks had a total of 392 FTEs. Net departures in the last year total 14 FTEs, which will have their full cost effect from 2022 – estimated at approx. MNOK 13
• Synergy effect in 2021 is an average of 3-6 months salary savings
• On 1 February, the Bank launched a cost synergy programme offering severance packages to those born in 1960 and earlier.
• Approx. 45 full- time equivalents (FTEs).
• The deadline for acceptance is 28 February 2022 and the latest end date is 31.12.2022
• One-time cost in Q1 2022 assuming 100% acceptance is just under MNOK 45
• Synergy effect of departures will only show full effect from 2023

Financial targets, dividend basis and profit and loss 2021

Merger costs and synergies

Key figures in the region

SpareBank 1 Sørøst-Norge

Attachments

Falling unemployment – rising trend in house prices

Source: NAV. Completely unemployed as a percentage of the labour force

Source: Property value. Regional report fourth quarter 4-quarter growth

Positive expectations in the business sector

Source: Norges Bank. Regional network 4/2021. South Region

Diversified business sector

Financial targets, dividend basis and profit and loss 2021

Merger costs and synergies

Key figures in the region

SpareBank 1 Sørøst-Norge

Attachments

SpareBank 1 Sørøst-Norge Group

Strong position in a growth market

Strategic focus areas

Customer orientation and top-line growth in the retail market to increase revenue and strengthen long-term profitability

We aim to strengthen our position, to be perceived as a local bank that can be trusted. Customers should notice a difference.

Sustainability

Bigger, stronger and more competitive SME bank

The investments should together contribute to increased profitability and stronger customer relationships

Sustainability

Contact details

Address Anton Jenssens gate 2 Postboks 75 N-3101 Tønsberg

kundeservice@s1bv.no post@sb1telemark.no

Group management

Per Halvorsen CEO Tel +47 934 07 441 E-mail: Per.Halvorsen@sb1telemark.no

Geir Årstein Hansen Dept. CEO/IR Tel +47 913 22 137 E-mail: geir.aarstein.hansen@sparebank1bv.no

Roar Snippen CFO Tel +47 976 10 360 E-mail: Roar.Snippen@sb1telemark.no

Financial targets, dividend basis and profit and loss 2021

Merger costs and synergies

Key figures in the region

SpareBank 1 Sørøst-Norge

Attachments

Change in ordinary profit before tax, 2020 to 2021

Pro forma

MNOK

Strong profit growth in 2021

Amounts in MNOK Per cent - annualised

Change in net interest

Net interest amount Net interest incl. mortgage co %

Per cent - annualised

Increased commission income in 2021

Revenue recognition, negative goodwill Net interest income Comm. income SB1 Boligkreditt/Næringskreditt Net profit/loss from financial assets Income from subsidiaries Net commission and other income Off balance sheet income as % of total ordinary

income

Positive contributions from SB1 Gruppen and BN Bank ASA

SB1 Forvaltning - demerger Sale of shares in SamSpar to SB1 Helgeland SamSpar AS - ordinary BN Bank ASA

Positive development in the subsidiaries

Breakdown of net commission and other income by quarter

(amount mnok)	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021	Q3 2021	Q4 2021
Commission income
Guarantee commission	2 7 ,	2 7 ,	2 6 ,	2 6 ,	2 5 ,	2 6 ,	2 8 ,	2 8 ,
Interbank commission	0 3 ,	0 3 ,	0 3 ,	0 2 ,	0 2 ,	0 3 ,	0 3 ,	0 3 ,
SB1 Kreditt AS Fee	3 5 ,	3 2 ,	3 5 ,	0 4 ,	2 9 ,	2 8 ,	2 8 ,	3 3 ,
Savings/placements	6 9 ,	7 9 ,	7 8 ,	8 7 ,	8 2 ,	10 1 ,	9 0 ,	10 6 ,
facilities Payment	43 9 ,	39 3 ,	40 2 ,	41 7 ,	39 2 ,	39 9 ,	45 4 ,	50 7 ,
products Insurance	23 5 ,	24 4 ,	24 9 ,	25 7 ,	26 2 ,	27 0 ,	27 5 ,	28 9 ,
Other	1 8 ,	6 1 ,	2 1 ,	3 1 ,	3 7 ,	3 3 ,	3 6 ,	2 8 ,
Bolig- Næringskreditt Commission SB1 og	44 3 ,	32 7 ,	70 4 ,	73 0 ,	61 0 ,	62 6 ,	69 5 ,	58 8 ,
Total commision income	127 0 ,	116 7 ,	151 9 ,	159 1 ,	144 1 ,	148 6 ,	160 8 ,	158 1 ,
Commission cost
Interbank cost	0 5 ,	0 4 ,	0 5 ,	0 4 ,	0 2 ,	0 3 ,	0 3 ,	0 3 ,
facilities Payment	7 5 ,	6 4 ,	7 1 ,	7 1 ,	6 0 ,	6 2 ,	5 9 ,	7 1 ,
Other	1 4 ,	1 7 ,	2 8 ,	2 1 ,	2 3 ,	2 1 ,	3 4 ,	3 1 ,
Total commision cost	9 4 ,	8 4 ,	10 4 ,	9 6 ,	8 5 ,	8 6 ,	9 6 ,	10 5 ,
commision income Net	6 117 ,	108 2 ,	141 5 ,	149 5 ,	135 6 ,	140 0 ,	2 151 ,	147 7 ,
Other income
fee real Custome estate	34 7 ,	52 0 ,	46 7 ,	41 5 ,	40 4 ,	9 55 ,	48 0 ,	49 7 ,
fee Custome accounting	10 7 ,	9 7 ,	8 3 ,	8 4 ,	13 7 ,	13 0 ,	11 4 ,	8 8 ,
Othter	5 7 ,	8 9 ,	7 9 ,	1 0 ,	3 2 ,	2 6 ,	2 2 ,	5 5 ,
Total other income	51 1 ,	70 6 ,	62 9 ,	50 8 ,	3 57 ,	71 5 ,	61 6 ,	64 0 ,
and other Net commission income	168 8 ,	178 8 ,	204 4 ,	200 4 ,	192 8 ,	211 5 ,	212 7 ,	211 7 ,

Operating costs

Pension and severance agreements

31.12.21

1.050

102

Other

LTV on mortgages incl. BK - LTV interval-distributed

Retail customers with a mortgage on property; lending volume as a percentage of total collateral LTV is interval-distributed by distributing/splitting individual loans within the specific intervals in the graph

Risk profile – lending in the retail market

Old BV up to Q1 21. New Sørøst-Norge from Q2 21.

The retail market portfolio is stable over time, and has strong overweighting and a positive trend in volume in good risk classes.

A new composite portfolio for SB1 Sørøst-Norge also has a solid overweighting of good risk classes.

PD < 0.5% (risk class A-C) PD > 2.5% (risk class G-K) PD 0.5 - 2.5% (risk class D-F)

LTV on commercial loans – LTV interval-distributed

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

Risk profile - corporate lending

Old BV up to Q1 21. New Sørøst-Norge from Q2 21.

Stable development in the fourth quarter.

The changes are due to the composition of the portfolio in the new SB1 Sørøst-Norge.

PD < 0.5% (risk class A-C) PD 0.5 - 2.5% (risk class D-F) PD > 2.5% (risk class G-K)

LCR portfolio 31.12.21

At the end of the quarter, the LCR portfolio was NOK 6.1 billion with an LCR of 175% (average 166% in 2021).

Good liquidity situation.

Biggest owners of equity certificates

		% av totalt antall ek
ekenkapitalbeviseierne 20 største	Antall	bevis
SPAREBANK 1 STIFTELSEN BV	24 .141.356	20 3 % ,
SPAREBANKSTIFTELSEN - GRENLAND TELEMARK	18 910 .174	15,9 %
NØTTERØY-TØNSBERG SPAREBANKSTIFTELSEN	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 AS VALUE	497 211	0 ,4 %
ELGAR KAPITAL AS	468 000	0 % ,4
BABORD AS	421 266	0 ,4 %
HAUSTAD INVESTOR AS	420 000	0 ,4 %
Sum 20 største eiere	80 936 969	68 2 % ,
SpareBank (egne bevis) 1 Sørøst-Norge	188 826	0 2 % ,
Øvrige eiere	37 .564 .122	31 6 % ,
Utstedte egenkapitalbevis	118 689 917	100 0 % ,

• At the end of the quarter, the number of equity certificate holders is 5,929.
• The 20 largest owners are listed with 68.2% of the ownership capital. Of this, the four savings bank foundations own 54.1%, which is the same as the end of the previous quarter
• At the end of the year, the price of the Bank's equity certificate was NOK 65.40