SpareBank 1 Østlandet (SPOL): Strong performance and improving customer relations

10 Aug 2023 09:15 CEST

SpareBank 1 Østlandet's profit after tax was NOK 579 (350) million for the
second quarter of 2023. The return on equity was 12.2 (7.7) per cent.

The year-on-year improvement in profit was mainly due to increased net interest
income from higher loan and deposit volumes, improved deposit margins and
increased income from payment services. Results from financial holdings also
improved compared with the same period last year. At the same time, a sharp rise
in money market rates curbed the rise in net interest income this quarter.

Strong development in core operations
“We are very pleased with the results. Despite a weak macroeconomic backdrop, we
have seen our core operations continue to develop strongly, with good growth in
both the retail and corporate markets", says Richard Heiberg, CEO of SpareBank 1
Østlandet.

Good growth for lending and deposits
Current social trends are full of contrasts, unpredictable and challenging. In
Eastern Norway, businesses and households are less optimistic than they have
been for a long time. However, unemployment remains low and the housing market
is stable, which is underpinning economic activity. The Bank is seeing good
demand for financing, advice and expertise. The Group's total lending growth in
the quarter was 2.0 (3.1) per cent, while deposit volumes increased by 5.5 (6.5)
per cent.

Stronger customer relationships – a good starting point for further growth
"Customer satisfaction is very high, even during a more challenging period. This
is backed up by the Bank's customer surveys (TRIM), where the results have
improved still further since the previous survey. We believe in the importance
of supporting local people and businesses, we share our profits with our
customers and we are there when they need good advice. The Bank wants to help
its customers with good solutions, including those experiencing tougher times.

New branched opened in Økern
At the beginning of June, the Bank opened its new branch office in Økern based
on the ambition of increasing our focus on the Oslo region. The branch in Økern
Portal is located in a growth area for both business and retail customers. The
aim is for this initiative to provide us with good opportunities to take
additional market shares in Oslo. Good interactions with advisers at our
branches help build strong customer relationships.

Good, stable risk development, although loss provisions are somewhat higher
We are not seeing any systematic increase in defaults or need for instalment
deferrals among customers. The Bank’s actual losses remain very low, but we are
further strengthening model-based provisions and increasing individual
provisions for a small number of customers. The total loss cost in the quarter
amounted to NOK 86 million (net receipts on losses of NOK 59 million). Looking
ahead, macroeconomic conditions are likely to contribute to more customers
experiencing financial challenges, which is reflected in the Bank's
strengthening of model-based loss provisions in the last few quarters.

Lower CO2 emissions in the loan portfolio
The Group has intensified its efforts to reduce emissions in its loan portfolio
with a target of achieving net zero emissions from 2050. At the end of the
quarter, the Bank's green loans amounted to NOK 36.1 (29.7) billion. Green
lending now accounts for 18.5 (16.2) per cent of the Bank’s total lending.

Outlook
“The Bank’s overall opportunities for growth are considered good. We have a
well-established market position in the country's most attractive market area.
The Bank's capital situation is solid. Customer satisfaction is high, and we
have a competent organisation based where customers want to meet us. The
Norwegian savings bank model has proved to be solid in challenging times,” says
Heiberg.

Second quarter of 2023 (Consolidated figures.* Figures in brackets concern the
corresponding period in 2022)
• Profit after tax: NOK 579 (350) million
• Return on equity: 12.2 (7.7) per cent
• Earnings per equity capital certificate: NOK 3.37 (2.02)
• Net interest income: NOK 852 (634) million
• Net commissions and other operating income: NOK 412 (426) million
• Net result from financial assets and liabilities: NOK 117 (-120) million
• Total operating expenses: NOK 534 (520) million
• Impairment losses on loans and guarantees: NOK 86 million (net reversal of NOK
59 million)
• Lending growth in the last quarter, including mortgages transferred to the
covered bond companies: 2.0 (3.1) per cent
• Deposit growth in the last quarter: 5.5 (6.5) per cent
• Lending growth in the past 12 months, including mortgages transferred to the
covered bond companies: 5.9 (9.6) per cent
• Deposit growth in the past 12 months: 5.9 (8.1) per cent
• Common Equity Tier 1 capital ratio: 17.9 (18.0) per cent
• The Bank’s green lending (including lending transferred to credit
institutions) amounted to NOK 36.1 billion
(NOK 29.7 billion)

Contact information:
Richard Heiberg, Group CEO, Tel.: +47 902 06 018
Geir-Egil Bolstad, CFO, Tel.: +47 918 82 071
Bjørn-Erik Orskaug, Head of Investor Relations, Tel.: +47 922 39 185
Siv Stenseth, EVP Communication and Social Affairs, Tel.: +47 958 46 991

This information must be disclosed pursuant to section 5-12 of the Securities
Trading Act.

More information:
Access the news on Oslo Bors NewsWeb site

596462_SPOL_20232Q_ENG_Quarterly presentation.pdf
596462_SPOL_2023Q2_ENG_quarterly report.pdf