Sparebanken Norge

I would like to welcome you all to the Capital Market Day for Sparbank Invest. It's nice to see that there are so many here in the room, and I also hope that there are many who follow us on the web through this presentation and through this day. We have created a program, and the point is that we will present our second quarter talks. But we will also talk about important areas for the bank, which are in rapid development and have a significant impact on our business. Sparmark Invest has celebrated 200 years this year. We are Norway's next largest bank, and we are 200 years old, but 200 years young. Sparbankmodell lives in the best of the best, and Siren Sønderland will tell us more about the strengths of Sparbankmodell in a new time. Sustainability is extremely important. It is just to look out the window and see how it affects us, the new world phenomena. It is of course high on the agenda in Sparbank Invest. It is very nice to see that we received a brilliant third-party assessment from Moody's in the second quarter, and we have also updated our green framework in the quarter. Linn Gjesdal will tell us more about what we are doing at Bærekraft Bank today. The mobile bank concept, Buldar, goes as it pleases. The growth is remarkable. We reached our annual goal in the middle of July. Simen Eilersen is going to tell us what the background to success is. Earlier we have been focusing on culture and leadership development, and that is one of our most important competitors. That is why I am very happy today that we can present two completely new leaders for both sustainability and bulls in the bank. This is a result of the work we have done in the bank in recent years on competence, leader development and culture. We will come back to this at lunchtime. Before lunch, we will go into the quarterly presentation. In the first quarter, Jan-Erik, we delivered 17% of our income. You said that you weren't satisfied. The question for many is, what makes a man happy? We might get to answer that today. Jan-Erik, the stage is yours, the word is yours.

Thank you very much, Frank. I think I will also allow myself to warmly welcome you to Capital Market Day. Very nice to see so many here, and very nice to be able to welcome you to Capital Market Day, where we are very pleased, Frank. I think I can allow myself to say that. We are very pleased with the quarter we have put behind us, and in total what we have delivered in the first six months. And of course, we will get back to that in this presentation. If you have questions along the way that you want us to address and answer, which are not covered in the presentation, please send questions to this e-mail address, and we will, within the time frame we have, try to answer as well as possible after this interview that we now take initially, and then there will be a Q&A afterwards as usual. If I go straight to the numbers, the first half of the year, we have a net profit of 16.1. We think we have a very good track record for delivering on or over our target, which is now 13%, earlier 12% net profit. And as you know, we also have a relative target. We want to be among the two best in net profit in the Norwegian banking universe. It's because we think it gives us access to capital when we need it, it gives us space to act, and it gives us reason to think long-term, as we have done around the Bulda investment, where we experience that the capital market has strong confidence in that journey and what we have done around Bulda. So we will come back to, a little in my presentation, when it comes to the financial, and then Simen will come back to the concept and how we have worked with digital conversion and growth in the last period, where we have succeeded very well. 16-1 is a good one-capital throw. It's well over our goal, which is 13. But we have two conditions that drag a little down in this quarter, which makes it possible that the underlying trend is still a little better than what we see in 16-1. We have an effect on Buldar with a low level of financing, which means that we get financing costs on the Buldar concept before we can effectuate new interest rates to the customer. This means that our Buldar concept actually drags down our own capital issuance by 1% in the first half year. We have a lot of peace because we know that we are building substance, we are building value, and that this will change when the interest rate level stabilizes again. But it's okay for those of you who follow the bank's news to know that there is a delay effect, which means that just now it costs a little more to build that concept than it does in a stable interest rate market. We have a negative cash flow on bull there for 15 million in the first half year, and in addition to that, no interest on its own capital, a draw. But we are pretty sure that we are building substance and value here, which is very interesting from a long-term perspective, and it will eventually come to that. But a slightly atypical effect on bulls in the first half of the year. Then the Board of Directors in this part of the report, that we will evaluate the capital situation this autumn and evaluate an extraordinary exchange rate. We are quite far above our capital target, which is 1675, with a core capital gain of 18.6, as you can see in this part of the report, so we are quite far above our buffer requirements, including the magic at the top of that, which is the P2G. So in the course of the autumn, the board will judge whether or not an installation for the General Assembly is an extraordinary exchange, because we see that we have a slightly larger backpack on the capital side than what may be natural in relation to our own goals, and natural in relation to the benchmark. I will also come back to this at a separate point in my presentation afterwards. If we correct these two things where we have a clear roadmap related to doing something with it, then the underlying drift is very good. If we had set our capital goal and Bulldar would have delivered on the same capital transfer as the bank, then we would have had a underlying capital transfer of 18,500, which we think is very strong. But if you look at the one-capital issuance from 2012 to the first quarter of 2023, we also deliver on our relative goal. These are the largest Norwegian banks, including DNB. And as you can see, we have delivered a very good one-capital issuance during this period. We think we have delivered this also with moderate risk, so we think that the risk-adjusted issuance at Sparbank Invest is among the best compared to those we compare ourselves with. Why have we done this? We have done this because we have had a clear strategy, a clear value proposition for the capital market over time. We have said that we will be a bank with low complexity. We are very aware of what we do with new investments, new business areas. We do not have a fintech fund. We have very little self-trading on interest and currency. We have a portfolio of shares under development. We make very tough priorities on what we should use capital on and what we have the conditions to do best. So we are far ahead in the digital shift. We have built up an ecosystem internally, which we are very proud of, and which makes us stand at the forefront of digital services. I think we are very important in terms of having an efficient operation, but not least having customer attractiveness, which is good. You will see that this quarter we are at a cost income of 30. We are very proud of that. Maybe we are below 30 next quarter. It will be exciting to see. We have a conservative loan book. We have a loss level of 29 million in this quarter. It is low. We have a decline in loss-added and misplaced engagement. So we think we prove that we are conservative in our loan policy. And then we have, as Frank said initially, Invested significantly in a performance culture over time, which we see gives effect, whether it is new leadership talents who get new opportunities in the bank, or a strong drive to be among the best Norwegian banks. In the first half of the year, we have 70-80% internal recruitment in free leadership positions, and we are very proud of that. It is sure to build a strong culture over time and a little extra motivation. When you see that opportunities are emerging, there is a high probability that you will get the opportunity if you want, and you have invested well in your own development. In the next presentation, I will share it in four. I will talk a little about our key figures first, a little about the banking industry, then I will get a little into Bull there. We see that Bull is about to become a significant size, so therefore we will guide a little more clearly this time, both on the one-capital transfer in the concept, but also a little about what growth goals we have set ourselves. Coming back to point three, capitalization, where we see we are, and why we think it's a good starting point to evaluate an extraordinary exchange in the fall, and then a bit about credit risk in the end. Our net investment in this quarter is 15.1. In the first quarter it was 17. In comparison with the first quarter or the second quarter last year, we are 3% up from 12.1 to 15.1 in this quarter. We have a result per net investment of 2.84 kroner in the quarter. As I said, a good capital coverage of 18.6, pure core. And we have a recorded value per net investment now of 76.60 kroner. The foreign growth is good. The foreign growth here on a 12-month basis is 13.5. If we correct for bulls, there is also the underlying foreign growth in the pension market in the bank above the quota growth. And for bulls, we have a foreign growth for the pension market at 5.5%. A little lower on the operating market, it will swing a little from quarter to quarter, but we also have an underlying good exit growth on the operating market, and the 12-month growth is now at 9.4% on the operating market in the savings bank. Inspection growth is important. Inspection is important. The magic is back again. We have a good 12-month growth on Inspection, 8.1. If we look at the bull on the stock market, we see 5.2. And we have enjoyed very well in the business market, very satisfied with the work that is done on Inspection, especially on the business market, where we have a 12-month growth of 27.6, which is important in terms of delivering a good one-capital return. No doubt that when the margin is back on the income side, we see that it also gives its effect on the net income, in addition to growth, of course, which means that our net income is up, also in this quarter, 1 billion 232 million, as you see there in the second quarter, up from 1 billion 175 million in the first quarter, and we see that the net income in percentage of government capital is flat from the first quarter to the second quarter at 1%. 0.73 in this slide. We are confident that where we want to be competitive in terms of price, where we want to be among the best in one-capital-throwing, we need to have control over the costs. We have historically had a very good track record, where we have had flat cost development from 2012 to 2021. And we see that it is difficult to get further with the price and wage growth we have right now. But we are quite confident that we, after a small leap in the bank's costs, will be able to land this year at between 6 and 7 percent, that is, around the price and interest rate growth. So we work quite hard to get our costs down for the year towards price and interest rate growth. Some of the costs in IT, for example, which has a fairly steep development right now, means that we have to pick up some of that in other areas. But I am very proud that we are best in class when it comes to cost income, and have a plan to work very hard to continue that. And maybe for the first time we will see numbers below 30 in the coming quarters in this area. It is first and foremost about the fact that the income may be on the way up, but also that it is an issue to absorb what happens when it comes to cost growth, by the way, in a good way. The results from Braga and Frende, and some of you can see here, Frende is characterized by slightly higher injuries in the first two quarters. With what has happened in the last few days, there is a reason to assume that it can quickly become a challenge in the third quarter as well. But when we budget for the rest of the year, it will still be like this, that we will be on a 17% capital reduction. We hope and believe that we will manage, but the damage situation will determine this for us, as well as for the other damage companies. And if we look at Brage Finance, I would like to bring them especially forward in this quarter. It is incredibly fun to see that we, in spite of the increased financing costs, deliver 13.5 in the quarter in net profit and loss. It is very strongly delivered. elevates it with a very good growth, as you can see here. We have a growth in the last 12 months of 22%. No doubt that Brage has become a very good company, taking advantage of the opportunities that are in the market, partly worrying some of our competitors, employing good people among the competitors, and we see it again in a profitable growth. I am very proud of what this group has achieved, and the lift it has achieved in terms of results over time, and the opportunities it has taken, and not least, Bragi is about to become a national company to count on. The Nordic countries have a zero-result in this quarter. The volatile capital market affects the results there, but I am also confident that we will be able to get a lift in the second half of the year in the Nordic countries. Sparing and placement is important for us in relation to other income. There we have three quarters now with net and new drawing on the positive side. After three quarters where our customers were more disappointing as you can see. Nice and running growth and pretty sure that we will be able to increase the income over time from this area. If we sum up the development from the corresponding quarter last year to the corresponding second quarter this year, you can see that the net income is especially the one lifting the results. The provision revenues are relatively low. The associated business is slightly lower. This is a special case of damage in In finance, we have 20 million in minus due to the spread effect on our liquidity portfolio and the adjustment of fixed interest on our portfolio. Even though we have minus 20, it is an improvement compared to last year, because we had minus 68 in the same quarter. As you know, we have little own trading, so this is quick adjustments that move a little quarterly related to our business primarily. Our costs are up 28 million, 13 million is linked to a one-time cost, one-time cost linked to outsourcing of our mini-banks, so we have 4 million on our 200-year mark. As a result, the cost growth is quarter by quarter at an average of 4%. Our losses are slightly higher, from 19 million last year to 29 million this year. This means that we go from a result of 567 million to 787 million in Q2 this year. Summing up then, a one-capital loss of 15.1 for the quarter, 16.1 for the first half year, good net income, good control of the operating costs we feel we have. We will get a growth in operating costs this year, but it will be around, as I said, The price and wage growth is still at a moderate level. We are pleased with the development of the risk in our portfolio. 29 million is still at a very low level. And as I said, a good result of over 1 billion in the quarter before the tax. That was a little about our key words. Then I will come in on Bulder, who has had a formidable growth. Some of you know that we reached our goal, the year goal, already this summer. We thought we set a very hard goal of a growth of 36 billion in revenue at the beginning of this year. We reached that this summer, greatly proud of what we have achieved, largely with the same traffic, but which we then used in a much better way than we have done before in relation to digital conversion, which Simen comes back to. Still a very low risk in the bulldog segment. The average LTV is 41%. We see that we with limited marketing and smart use of press releases, contact with the media, have received very good unpaid communication, i.e. redacted interviews, which makes the knowledge of the bulldog nationally impressively good. We have almost 60,000 customers, and we have also slowly but surely lifted the insurance coverage to 16%, which is good for a pure foreign portfolio, so this is far on the way to PT. The growth has been in stages, somewhat in line with external things that have happened in the market, but the long trend is indisputable. We have succeeded in being Norway's first, and perhaps the world's first, mobile-only full-fledged bank offer, and I am greatly proud of what we have seen the beginning of here. And then we do the running and actually the evaluation and positioning of buildings. I think I have to say that in relation to the evaluations we did earlier with Nidskåp from Kantar, which was the positioning tool, and we found out that we should dare to invest in this new investment. was to try to position themselves in the red rectangle here, together with S-Banken, and try to be an actor who challenges a relatively established Norwegian banking entity. And if we look at the last Cantare study, which I won't go into too much detail on here, there is no doubt that Bulder settled in the red square, the red triangle, and that we may appear even more clearly in that position, and may own that position more than we could have hoped for when we established Bulder in his time. And as we see the banking landscape now, Bulder is quite alone in terms of being able to perhaps revolutionize the experience of having a home loan, and not least being someone who is a tough challenger for the more established banks. And what has happened with S-Banken is also with a broad reason for an even clearer position for a new bank challenger, and a new concept, all of Bulder. So that means that we have a period now where we have a unique reason to build a top line that we think will be profitable, and will win the bank's own capital release in not too long. And here we have divided two things in this slide. We have divided our target numbers forward when it comes to top line growth, i.e. loans in the bull segment. We are at 38 billion now. We have an ambition to end at 40 billion by the beginning of the year. It is a revised target, as you know it was 36 earlier. It doesn't make any sense to hold on to 36 now, so therefore the new goal is 2040. Earlier we talked about 60 billion, we still do. We believe it is possible to achieve before the beginning of 2024. And then at the beginning of 2026, we hope and believe that we have built a bank and a bank concept that is as big as the one the S-bank was when the S-bank was bought by DNB, which was 83-84 billion kroner. What we see for us to get to this top line growth is, of course, a reasonably sharp pricing still. We see for us that we are in the first half of the year about minus 2% in one capital reduction on the concept. 15 million in minus in the first half of the year. When the interest market stabilizes, we get a little more investment coverage, we get a little more scale on this, we get a little more other income, then we are quite confident that we will move up towards the one-capital target for the bank. And then we see, at least as the world looks now, that by the end of 2025 we will prioritize a little more margin, on the cost of growth, and that we will move into a terrain that is about being inclusive on a marginal basis, on the bank's one-capital transfer. The only thing that is certain is that it will not be exactly like that. That's how the journey with Bulda has been, but we think that it still has value to set goals and work hard towards those goals. We have reached our goals so far, and we will work hard to achieve These goals, this growth journey and so on. Then we are quite sure that we have built something of significant value, which over time will also be to the pleasure of the bank's one-capital issuance and the bank's one-capital owner. What does this mean for Roen, explicitly for the bank? Well, it means that during this period, we will go from an expansion of one-capital deposits to a concept that can quickly have an inflation effect of up to 1%. from 2025 onwards. So that's what we're working on after PT. And then there will be opportunities in the market, challenging markets, that could affect this along the way, but nevertheless, this is what we're working hard towards, and this is the mandate for Siemens, who will talk about the Capital Market Day later. Extremely exciting development. We are quite confident that this is also very exciting for the owners of the bank, and really proud that we are able to build a new fintech company with such a large size, while we are able to deliver well on one-capital transfer for the bank's shareholders. whether it is about new investments in banks or other places, Tibber or whatever it is. It is demanding to build top line in new concepts, but I think we can do this with a very good balance towards the bank's own capital allocation. And then the question is, will we be able to scale this up to these levels without having a significant increase in costs? Yes, we are quite confident that we will be able to break down costs per billion abroad. Quite significant in the future. It is about 2.5 million in operating costs per billion abroad now, and we are quite certain that we will be able to scale this. In the future, the only area we may need a few reasons for is advice and support. The other areas we are pretty sure we have the size and the cost base needed to get to this journey. That was a little bit about Bull there. A little bit about guiding on investment in the concept, what it means for the bank's equity investment, and not least what we see in the future as top line growth and loans in the concept in the future. A little bit about capitalization. I said that we are well above our minimum requirements at 15.5. We are also well above our minimum requirements with the P2G at the top, which is 16.75. And if you look at where we are in relation to banks, it is natural to compare. capital demand and capital demand margin in the striped line here, and then we have put together where the different banks that we compare ourselves with are per Q1. And then you will see that we, and perhaps DNB, which has this return on purchase program, are distinguished by having a significant headroom between capital requirements goals and reported core capital. This means that the board has decided that we will evaluate over the course of a few months, what is the basis for an external division, so that we come more in parity with our own goals and not least what is the benchmark when it comes to pure core capital. And just to illustrate this further, you can see that we are at 18.6 at the beginning of this quarter. The requirement is 15.5. We have a solidity measure including the P2G at 16.75. You know that there is a new SREP roundtable with a new summary of the Pillar 2 requirement. It will reduce the requirements for the different banks. For our part, with today's Pillar 2 requirement of 1.5%, it will reduce our requirement for pure core capital by around 65 basis points. We adjust for that. Then we have a demand with a buffer at the top at 16.1, and with a capital cover at 18.6 at the beginning of the quarter, we have a margin at the top of what will be our own capital demand at 2.5%, and that is quite high. We are very concerned about being capital efficient, delivering a good one-capital transfer, and then it is unnatural for us to be very atypical when it comes to The difference between our own solidity goals and the core capital coverage that we have, Pt. And then there are some moments that are down there, which of course are the basis for the board's assessment, but we hope that we will be able to assess this in the coming time, and it is natural that it will be addressed at the autumn general assembly, where the board will come to the conclusion that it is natural to adjust the capital coverage to something. That was a little about the capital situation for the bank. Last point, a little about the credit risk, where we are right now. We are concerned about being a bank with a moderate credit risk, therefore we have also been careful when it comes to geographical expansion outside our core area. We believe that we primarily should borrow money in the market area we know well and the businesses we know well, and we have been very successful with that. Here you can see our loss history. In percentage of loans since 2016 compared to the largest Norwegian savings banks and DNB, which is natural to compare with, you can see that we have managed to deliver lower loss levels over time than average of our competitors. We work hard with this and will continue to do so in the future. And the description for that, I think we are a conservative loan book dominated by housing loans. You can see here that 76% of our loans are for the personal market, 24% for the business market. And if we divide the bills and the personal market x-bills, you can see that 62% is our personal market x-bills. And then in our foreign book, 14% bills are loans with 41% LTV, as I showed you. We have a good diversification on the business market. The growth we have is well diversified. And when it comes to geography, as Vitte was talking about, you see that primarily we lend money to these three counties that we know well and that we have comparative expertise in relation to. What is in Osloviken is 66% bulldozer loan, and then we have a number of moved customers who follow us as a bank. This means that we have a good control over the risk of crisis outside these three counties, which is relatively moderate, especially if we take out Bønder, which is well-known nationally, with a low LTV. I don't think we'll be able to present this in as many quarters as we can in the future, but it's a pleasure to be able to present that there is still a decline in miscellaneous expenses. This is perhaps a bit counterintuitive, given that the interest rate is rising. It will hurt at some point. The whole point of raising interest rates is to reduce the speed and temperatures in the economy. But I am very pleased that we still see a decline in maintenance, both within 90 days and over 90 days, as you can see here on the housing loan, to the left. And the tax exemptions are also decreasing in the quarter and at a very moderate level. So we think that the fall in our housing loan portfolio is more moderate than if we had had a different geographical layout on our loans. There is no doubt that the price growth has been significantly higher in Oslo and Viken than what we have seen in Bergen and Stavanger, which are the two largest cities in our market area. We think that quickly can also be a strength as the price development would turn. The greater the increase, the greater the fall, we also think. We think we are well positioned when it comes to relatively low losses compared to many banks. We see that 96% of our loans are within 70% of LTV, which means that there will be quite large corrections in the housing market before we have a bad security coverage. We also have an advantageous development in the quarter when it comes to miscellaneous and lost out loans. You can see that we on the business market have a downturn from 11.62 to 11.35. And within the framework of what we have the opportunity to, we have been concerned about having a conservative retirement practice. So, especially within the business market, you can see that we have a percentage of misconduct and fraudulent engagement of 73%. This means that we try to be one step ahead when it comes to taking trouble and writing it down, and not pushing it. And we have done that over time, and if you look at The loss level we have had through the pandemic, you can see that we have taken quite large deposits, but little return after the pandemic, which means that we have a very robust deposit level as a bank, and it varies a little what the models are, deposits and what the individual deposits are, as you can see in the gray and blue column. This quarter, we have 42 million in individual deposits, and we have Return on model at 13, which gives a net loss rate of 29 in this quarter, which is still very low. That was a little about our loan book, a little about the credit risk. Finally, I would like to get a little into what Siren will touch on in his presentation. We are 200 years old. We are very proud to be a modern 200-year-old who performs well. We have had a significant mark in the first two quarters of this year that we are Norway's next oldest bank. We are 200 years old. I think this slide with our results for 2022, and the surplus available in 2022, is a fantastic way to illustrate the savings bank model. We have, after this down payment we made a couple of years ago, a very nice share price of 40.6 after the 1s came in, which was originally 40 after the down payment. And then we have a society ownership of 59.4%. We believe that this co-operative ownership is also of great value for the single-capital owners. It is a class of owners who use a large part of their surplus to build goodwill, and not least customer loyalty, for the joy of the entire bank. And as you saw last year, with 5.50 kroner in exchange for 2022, we divided on the other side, to have the same degree of allocation, 301 million in gift and 580 million in customer exchange. a fantastic reason to give back to our customers and the region in a time when things are going well with the bank. We are quite certain that this will build a footprint that is unique and valuable for all interest groups of the bank. We had a record customer sales last year, four years in a row. We see that this is the end of the line. Customers take it into consideration when they think about the bank, and we see that we have a favorable impact on the customer satisfaction of the bank. We do what we can, and that's what we've been doing for the first six months, to highlight this in a good way, also in a digital way, so that the customer gets to know that we are not the same as other banks. And then we have a very unique footprint when it comes to gifts in 2023. We spent 301 million, as you saw, for the results of 2022. If we had spent some extra money earlier this year, for the anniversary of 2023, we would have divided 451 million kroner in gifts to these three counties in the course of 2023. It builds position, it builds goodwill, and it builds customer loyalty. It's a good starting point for building a strong, attractive bank with strong regional anchorage in the coming years. And we are proud, and we see that this also gives great pride internally, whether it is Barnas Superfestival in Ålesund, or many of the other initiatives we do. Siren will come more into this later, but I would like to end with an initiative that I think is incredibly beautiful, a fantastic way to contribute God! No!

Go for it. Who won series gold in 2022 with a score of 0.92? Solbakken. Who scored more than one goal per match and became cup champion in 2022? It has to be Bård Finne.