Sparebanken Sør — Earnings Release 2021

Oct 28, 2021

Solid result and good growth

Solid result and good growth

- It has been a good third quarter for Sparebanken Sør, with solid results, good growth and a large increase in the number of new customers with saving agreements. For a bank working hard and purposefully with sustainability, we have received important confirmation through a new ESG rating.

This is what the CEO, Geir Bergskaug says. A profit before tax of NOK 407 million, which is an increase from NOK 384 million in the same period in 2020.

– A solid result that verifies that we are maintaining a steady course. During the pandemic, low interest rates have affected the bank's interest margin, but in the last two quarters we have seen an improvement in the net interest income, which is due to both solid growth and lower funding costs.

Customers are saving more than before

– Increasingly more people are starting to save in funds. Compared with the same time in 2020, we see a 42 percent increase in the number of new customers with savings agreements at the end of September 2021. In addition to the fact that the number of savings agreements has highly increased, we notice that the average savings amount has increased significantly in the last couple of years, says Bergskaug.

Best Norwegian bank in ESG rating

Sparebanken Sør is ESG-rated by the renowned Sustainalytics for the first time.

– As the best Norwegian bank, and the fourth best regional bank worldwide, we have good reason to be proud of the result. This shows that our investments in sustainability are yielding results, and our risk of having a negative impact on the environment is low.

Good cost control

Higher activity results in somewhat higher operating costs, but a cost income ratio of 35.5 percent in the banking business means that Sparebanken Sør is still one of the most cost-effective banks in the country.

- We will provide customers with good digital solutions. That is why we continue to invest in high technological competence and systems that provide improved customer experiences, says Bergskaug.

Solid growth and low losses on loans in the customer portfolio

Bergskaug also talks about good customer growth - both in the retail market and the corporate market.

- We have a gross lending and deposit growth of 5.4 percent and 7.8 percent respectively in the last 12 months. If we look at deposits in relation to net loans in the third quarter, we see a deposit coverage of a solid 55.9 percent. In addition, we have very low losses on loans.

The associated companies Frende and Brage give positive contributions to the bank's accounts, while the subsidiary Sørmegleren delivers a strong result after a period of high activity in the housing market.

- We have every reason to be satisfied with the results for the third quarter. This puts us in a good position for further growth and development in line with the strategy, Bergskaug concludes.

Highlights in Q3 2021 (Q3 2020 in parentheses):

• Profit before taxes: NOK 407 million (NOK 384 mill. kr)

• Return on equity: 9,2 percent (9,6 percent)

• Net interest income: NOK 493 million (NOK 472 million)

• Net income from financial instruments: NOK 29 million (NOK 14 million)

• Income from associated companies: NOK 34 million (NOK 40 million)

• Operating expenses: NOK 249 million (NOK 226 million)

• Losses on loans. guarantees and undrawn credit: NOK 2 million (NOK 6 million)

Investor presentation:

Sparebanken Sør will present the accounts for the third quarter 2021, tomorrow at 10.00 am (in Norwegian).

Please join the presentation on Microsoft Teams, and register by mail to: okonomi@sor.no.

For further information, please contact:

Geir Bergskaug, CEO, tel: (+47) 901 27 206

Steinar Vigsnes, Head of Finance, tel: (+47) 906 13 135

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act).