Sparebank 1 Sor Norge Asa

Good morning everyone, and a warm welcome to this third quarter's presentation for Sparbank 1 Sør-Norge and Sparbank 1 Essabak. My name is Inge Reynersen. I am the head of the bank and I will give you an overview of the numbers today. And I have with me good colleagues, the CEO Roar Snippen, who will give you an overview of the performance numbers for the new bank and Morten Folger, who is responsible for you. It is an exciting period that we both have behind us and in front of us. We have for a long time planned for a merger that took place on October 1st. During this period, we have been very concerned about keeping business as usual, providing those who work in the customer base as much as possible, so that they can give our customers what they need every day. And then we have worked hard in the background. with preparing the fusion. It was carried out on the 1st of October, the legal fusion, and I must be able to dare to say with praise, things went incredibly well. It went so well that the two preparation teams, which were rigged in Henholdsvis, Stavanger and Sandefjord, they could be rigged down already the day after. So good planning is important, and it was a good start. through the fusion. We enter the period as a new bank with very good speed. There are two organizations that fit very well together, culturally, systemically, strategically, and in all ways are very well equipped to really skaper resultater i eit bankmarked som er i stor endring. Det er ein fase igjen i denne fusjonen, og det er den tekniske fusjonen, der vi blir fullintegrert på systemsiden. I en periode nå driver vi på mange måtar på bakgrunnen, fremdeles litt, to riggar. Men det siste steget vil då bli tatt høsten 2025, og planleggingen på det er godt i ruta. This map, as you can see here, I am very proud of, very pleased with, and there are many reasons for that. In 2015, when the oil downturn started in what we can call phase 1, we saw in SR Bank that we were a little more vulnerable to what was happening in Sør- and Vestlandet. There was a little increased need for downloads, and we also saw that there was a implication on growth. We took a strategic review. We identified that we must become more diversified. We must take down the largest exposures. We must take down the offshore and oil exposure. We must think a little broader geographically. Not because we don't want to be in Rogaland and Vestland, but to make an even more effective bank that is even more supportive. Instead, an investment came in Oslo in 2018, an office that has really shown the way and built good volumes in the East. And the fusion now with Sparbank 1 Sør-Øst-Norge has completed this map. As we are standing today, on the 1st of October, because this is a pro forma picture where we have put the two banks together, it shows a very, very diversified bank with a very strong distribution apparatus in combination with the physical location of the offices and top digital offers to both the business market and personal customers. And it also shows that if it takes the western part of this bank and sums up Rogaland and Vestland, it is approximately 50% of the collected bank. This means that this foundation that we have as Sparbank 1 Sør-Norge is very diversified, with good strength, and as the numbers show, good speed in the market, good solidity, and is in general, as I see it, a very good foundation for being able to drive a profitable business. and good bank in the future. So I am both proud and happy to be here, and at the same time I am proud of the fact that I have a job in front of me. We have created new organizational maps and new leaders in place, and we are going to build this into one organization, where we of course are going to take out synergies, both on the capital side, and on the funding side, and on the business side in the future. But the starting point is very good. Now it's just the power of implementation. This is what it's all about. Now I will show you the figures for Esabank for the third quarter, and then Roar will take over the tripod and show you some combinations of figures. As if the new bank had also been one bank in the third quarter, because it is of course interesting in relation to the PKP about what is in front of us. We deliver a third quarter that is a good quarter. We have good growth, we have good operations, we deliver a good capital release. And this quarter is for us, like the other savings banks, also affected by a positive one-off with an income of 452 million on the Fremtin transaction, where Fremtin has now merged with EICA, its insurance company. That means that the 17.5% that we report, if we pull out the input effects, and that was a big positive input effect, and a negative input effect, where we have written down our investment in Folkinvest, which is the old Monio, is in with 105 million, simply put, there is a lot of goodwill there, which we do not see that the conditions are in place for in relation to future income, so there we have taken a writing down. In a fusion, where we are very concerned about taking out synergies, before it comes that far, there are a lot of costs to fusion. And as you can see, when we have shown the underlying capital transfer, we have corrected for those three input effects. And this quarter, the input effect on fusion is relatively large, because we have also paid our eminent lawyers in this quarter, who have helped us in these processes, because in reality we have not the main part of the cost before all preparations were made. But that of course happened in the third quarter, in preparation for the fusion. So this quarter there are 160 million in net writing, which is a lot higher than we have been used to. Det er på 22 basispunkter av bruttoutlån. 39 av de millionene er på IFRS 9, altså de gamle gruppevise nedskrivningene. Vi ser en liten negativ migrasjon i underliggende portefølje når regnskapstallene for 2023 kom inn hos de siste, og de som var fra 2020 falt ut. Men det er også litt mer... individuelle nedskriving av dette kvartalet ser at delar av det næringslivet som er kanskje nærmast inn mot å bli berørt av at privatpersoner omfordeler sin But as I will show you later, I am very comfortable with the underlying quality in the portfolio. But as I said, this quarter is a slightly larger number of downloads than we have had in the last quarter. The foreign exchange growth is good, both in the personal market and in the two business market segments. 1.7% for the quarter. This shows, as I have been saying, that we are entering the new fusion bank with very good speed in each area. A 12-month loan growth of 7.3%. If we look at the personal market alone, we are at almost 8%. And everyone knows that this is far, far above the general credit growth in society. So that also shows a distribution apparatus that works very well in the customer base. And I am glad for that growth. On the capital side, we are well capitalized. We have now... per 30th of the 9th, and that is before some of the fusion effects that occurred on the 1st of October, then we have a pure core capital coverage of 17.8%. It is such that per 30th of the 9th, we should be in place with 100 basis points extra on SIFI, and we have done that with good margin, with the adjustment of salary growth and the results we have had. And as you can see, in terms of the goal of net capital coverage at 17.4 per 39, it is 0.4 percent over. And we are well over, of course, in this quarter and in terms of the goal of 13 percent of our own capital. And we are far below the goal of less than 40 percent cost income. And it is extremely important to... takes with it that it is a break with both costs and income, and that is no excuse for us in relation to working with the cost side in an isolated way. This gives a profit per share or result per share of 5.2 kroner, and is in that sense well above what the two previous quarters were. If we look at the main figures, we are increasing net income by 42 million this quarter. There is one more day of interest, and as a bank manager I definitely like more months with 31 days than 30. But that means that there is an underlying increase of 2.4 percent, quarter by quarter, which I am pleased that we have achieved. And that of course also includes a good underlying growth. On net provision and other income, there are season variations. There is traditionally always the second quarter the best, and the third quarter you send more income and people on vacation, and it is a little different than to run a balance shop. So there is a decline in net provision and other income, but mainly solid deliveries from all areas. I can show you a little more information about the financial index. It will of course be very good due to this large input effect from the future fusion. The operating costs are of course also affected by the fusion costs, but otherwise underlying a tight cost development. The two banks have been very careful when it comes to the manpower side in the course of 2024 to be as well as possible ready to take out synergies when we became a bank first. This gives us a result after tax for old SR Bank of 1,450,000,000. If we look at the growth, you can see that we have a very strong growth. It looks a little different on the investment side. We have deliberately dropped some larger investments of low quality. Every time there is a municipal offer, we calculate carefully how much we have to pay for that money. Excluding these two factors, you can see that there is still a good positive impact on growth, with 4.2%. The margin picture is in sum quite constant for the quarter, up one or two basis points in sum on the margin. Bredden er viktig. Andre inntekter er ekstremt viktig for den samle lønnsomheten til konsernet. Det er som sagt noen kvartalssvingninger. En ser at linjer på tilrettelegging, kunde, honorarer, den gir noe et... Stabilt, godt bidrag, og det er inntekter som i hovedsak kommer fra bedriftsmarkedsområdet. Samarbeidet mellom å være en sterk bank på bedriftsmarkedssiden og det å jobbe godt sammen med Sparbank 1 Marked, det gir ekstra inntekt til å on the business market. That is part of our strategy for Southern Norway, that we will have two solid legs to stand on, both the personal market and the business market. I am very happy that we have built such a strong position on the business market. For many years, the personal market has been very invigorating for the rejection of all banks. We are of course happy that it can be so, even if the competition is But we are very aware that the bank will have two legs to stand on, but that the growth will definitely be profitable and at a careful credit risk in both segments. The income earners and business partners are a little lower this quarter, but as I said, still with a solid contribution. If we look at the financial line, it is influenced by these two one-time effects, the 452 million in the future and the decline we have in the people. There are also some negative elements this quarter on certificates, obligations and basis swaps, which are effects that go to zero over time. So underlying, this is not a particularly good quarter on finance if we take away those input effects. And therefore I am of course very concerned with the underlying combination of growth, net income and other income, and see that the machinery in bond delivers support and well, and that is very important in the work now with synergies in fusion. On the cost side, the series is affected by the activity in general, and not least the fusion costs. There is a cost of 64 million on fusion costs, which we show in our own line. You can see a significant increase from the previous quarter. Otherwise, the cost development is quite stable, and we are of course driving with strict cost control. over the entire Fjøla in the group. And now we are really starting to work on taking out synergies, both where it is possible on the manpower side, but also on other payable costs, which are called duplicated, when two banks become one, and which we will of course mass and take out as much as possible. We look at... In London, you can see a very positive development in what is in the third tier. That is why, even if the declines are a little higher this quarter, I am not more worried about the credit quality than I have been in the previous quarters. It is for all parts an uneasy geopolitical picture. But with low unemployment, we have just released a new consumption barometer now, which gives a clear language of expectations for increasing activity in our area. My perception is definitely that our customer base works well with the changes, works well with adapting to a world where inflation has affected the cost performance of all our customers, and that the underlying quality is very good. And that is clearly seen on the right side in relation to the development of the total stock on Tren 3. It is also supported by early indicators, where we measure both on the personal market and the business market, both questions about day-to-day freedom, withdrawal on flexible loans, and so on. And as you can see, the picture is very clear. And as I said, in a setting where our companies report positive expectations both on the manpower side and in relation to the general activity of our customers. So with the last report for Sbarbank 1, S-A-Bank, we go out of a 185-year history as S-A-Bank and into the new Sør-Norge in very good writing and with very good speed. And then we have worked with to put together a number of numbers to be able to shed light on how this would look. If we had been fusion already this quarter, and then give the pointer over to Roar Snippen, who will take you through that. And then I'll talk a little bit about the views, and then I'll answer the questions after that.

Are you with me now? Yes, I would like to come here and present the performance for Sjølorge and The message is actually that when we look at the two banks together, it confirms that we are actually quite equal in the numbers we are going to deliver. This is the message. The other thing we came up with is where we actually match, as Inge said, in relation to overlapping regions, complementary, and solidity is also strengthened here in the first part. This is the performance chart, just like Sør-Norge had a drift 5-3-9, while the fusion actually happens 1-10. And then the calculation is done in Sør-Norge and the balance is laid to SR and Sør-Norge. So this is the pro-forma data, and you can see from the information that is out there, that it is possible to calculate in time how the pro-forma is set out per quarter. You can see trends and developments there. We deliver... 14% of the investment capital per third of the life. That's about 5 billion kroner for the effects. There are a couple of interesting elements to take with you on this investment. The first is that here is the portfolio for Sør-Østlandet on the standard method. If you had the SRV-method in the portfolio for Sør-Østlandet, then the investment capital would be lifted by Sør-Østlandet. The second is that since we first signed the trade agreement on October 26th in Pjord, up until the 3rd of July, the exchange rate has been quite significant. And apart from the exchange rate on the 111 million shares that have been issued, there will be a goodwill of about 3 billion kroner. It goes into the single capital, but it does not go into the solidity of the pure core capital. This means that it weakens the balance on a 30-year basis with about 0.6% or 0.8% on a year basis. So this must be added in the future, but if we look at the totals, then Sør-Norge is quite identical on the balance on the single capital with SR Bank. The external growth is at 6.1 percent, an analyzed effect. We have, SR had it at 7.1 percent. There has been some weaker growth in the region of Busket, Tørremarkt and Vestfold, with regard to the price market. But we see that the personal credit market grows strongly also in that region, in the region of Tørremarkt. So we get, there is an analyzed growth at the lower edge of 8 percent, 1.8 percent in the quarter on B. Strong growth. And in relation to the first presentation that was submitted in relation to the region and the affiliates, there is about 50-50, as I said, distribution of education volumes in Østland and Vestland. And there is about 4 billion kroner in growth per single region. They grow all over the market. There is no strength in Oslo, but then again, there is about 4 billion kroner, which is very good. Pure core capital growth strengthens from 17.8% to 18.3%, also because there are two effects. One is that we get more responsible capital, we can have lower sales, and we also have a high pure core capital strength in Sør-Øst-Norge. And the cost of income for new companies is at 33.8%, marginally higher than SRLN. The loss rate is 166 million kroner. Søverstaden worked hard to prepare for the IRB process. And this has probably shown itself again in Oslo, where it is only 6 million kroner loss rate. And Søverstaden, if you feel like it, is only 36 million kroner. Dette viser jo måltallene som ligger fast, og det er gamle SR Bank sine måltall som videreføres, og som overtakende bank, både på avkastning på egenkapital, så det snart løftes jo fra 11 til 13 på egenporteføljen. Det er en kjærkantdekning på 17,6%, det ligger en filar 2 på 1,9%, som man forventer skal bli korrigert i høsten 2025 med en ny SMP-prosess. The cost percentage, as we say, has good development in cost income. And as Inge says, this is something we have to work with and have control over a cost increase when we see that the interest rate may fall and we get less pressure from both the interest rate and the cost increase in society. The exchange rate has a policy of 50%. Det er jo slik at det gjøres resultatedelskapet til Størst Norge opp, per 39, ingår i balansen til SFA, og Størst Norge har en annen drift i 12-12-deler, slik at med alt annet like, så må man kunne forvente at den utbyttegrad ligger over 50%, for å ha 50% på 12-måneders drift. Det er det samme som Størst Norge har også praktisert tidligere med bygdsmiljøfunksjoner vi har hatt gjennom. Here you can see on the left that the exchange rate has gone down to 6% and has strengthened in the last few quarters. This has also led to better positive outlooks in our region. It is now possible that as the banks get bigger and bigger, you get a bigger and bigger volume, that the exchange rate approaches the exchange rate in a bank over time. But we focus in the future on very profitable growth, because it looks like we can have an increase of 13%. The investment volume is, as I said, half. There are two positions. There is an investment competition on municipal investment, about 4 billion, and we have also had an investment in terrestrial, and about 3.5 billion that has fallen. But it has also been seen earlier that in other competitions in the community sector, there are small margins, especially. But it will be very important for us in the future to try to balance the economic growth. To the right are the margins, quite stable margins. In comparison to the margins here, the total margin with Maestrad, there are about 12 basis points lower. It is clear that Eastern Norway has 80% of the output in the pension fund margins, which is a low margin. There have been stable margins. This has given us an increase in the volume, of course, due to the growth in the output, and a strong increase in net and interest rates. This is an optimization of what Inge mentioned, namely that for a more diversified portfolio, in a larger proportion of Norway, which has a relatively lower volatility in cash flows over time, the higher the PMA ratio increases by 64%, where the largest shareholder has 80% in PMA. So this is a good match for both banks, which makes it more diversified, more stable, in a way. The next slide is probably very interesting. These are some walls that we have been looking at. We confirm that we still have about 150 million in cost energies. The volume was obviously commensurate because we did not have an overlap with the subsidiary network. But we are now working through the fourth quarter to look closer at the synergy picture to see if there is additional effectiveness we can look at. So not least the capital synergies. We have guided at 2.5 billion kroner. The good side is that when we brought in the Sørøsternaget portfolio over to the FSDI methodology to SS, there was no change in the values. The portfolios matched each other. So the capital structure we have guided on is in good condition. And we have already started to take out some. As I said, the solitude increased from 1780 to 1830. There are about 100 million kroner in synergies related to that we have sold some shares to Sogne Florane and that we have a greater responsibility in capital and less deductions. Then there is a process with the US banks, and there is a purchase right for the US banks to buy our shares directly in the group. The purchase right will be extended, and we expect to sell our shares in the course of the fourth quarter, in a margin of about 1 billion kroner, and the capital that we are investing in is about 200 million kroner. And then it is a bit uncertain, of course, what will happen on 1.1.2025, about series 3, the introduction of it, what the department decides, based on what Tilsund has suggested, and what Norges Bank has said in its report. But given the proposals that are in place now, we expect that in the first quarter, about 700 million kroner in capital and goods will be allocated to the company. And then the rest, or the last, is actually... the transfer of the Svarebank 1 Sør-Øst-Norge Symbolic Portfolio to the methodology of S-Bank when we approve it. We guide from around 2025, but there is uncertainty about that, but that will result in about 1.5 billion kroner, and then we have summed up that the synergies we communicated with can be confirmed at 2.5 billion kroner. That's what I was going to have a building on. Now it's just one building. technical problems.

Thank you very much. All areas, both in terms of activity and employment, are still challenging for construction and facilities. Most of all, the construction part. There is a lot happening in the infrastructure part, which makes it much more difficult in facilities than it is in construction. Of course, the interest rate level will have something to do with the price increase in housing. In large parts of our market area, there is a square meter price, which is partly well below the national average. There we have from 2013, where it was on the level with Oslo in Norway, some housing prices that are about half the part, a very healthy starting point. Even if interest rates will probably drag the housing market, we are optimists in relation to an underlying good market. We are not interested in taking market shares for market shares. We are interested in profitable growth, but I am very happy to note that we have such good distribution power that when we have put profitability first, we still have a good growth over the market, and that means that it is a bank, it is an organization that is well positioned in the customer border area, and then we are of course offensive and look forward to being able to lead it here in the future. And then I have been talking about full integration. If we get a full harmonization of the systems, it will also be a point that makes it possible to take out even more on the manpower side, because it requires a little operation to line up two banks and at the same time put top teams at the top to sew this together. But in summary, we are very positive in relation to the macro environment we have around us. And we have a predominantly self-reliance in relation to delivering good results for the new bank. We have set up short terms and we are really working now to bring out synergies in all areas. We want to come up with a new approach. in the course of the fourth quarter. After the first of October, we have fully been able to work as a single bank. Prior to that, there was competition law, which meant that we could not show everything to each other. But now we work hard, we call it fully open, and collect books to make this as optimally as possible in relation to underlying operations. Så med det som var med gjennom presentasjonen, då er det åpent for spørsmål, og då inviterer jeg Roar opp, og jeg inviterer også Morten. Hvis det er spørsmål, så skal vi prøve å svare etter bestemmende.

Then we can start with some of those who have asked questions and who have followed our webcast. There have been two questions from Alexander Lager. The first question we have answered is about capital synergies and how soon they will be realized, these 2.5 billion. So let's jump over to the second question, which is if we can repeat the opposite of Proforma's combined peace from the use of the standard method for North-East Norway's Volum. So can we say more about that?

Yes, there is a lot of volume in Sør-Øst Norway that is on full IRB and that is in the east of Sør-Øst Norway in its MoBank balance sheet. And that is the same effect that Roar showed, that the implementation of CRR3 will get, as much as it is now, expected to happen in the first quarter of 2025. So that was the only green pole that was shown on the foil down there instead.

Good. Are there any questions in the room? Then I'll come around.

Just tell me who you are and where you're from. Thomas Svensson from SEB. A question about the change in 2024.

If we don't have a resolution here, we'll have a formal P-autorization that will be significantly higher.

Most likely. Then it's difficult to...

Then we don't have any anchor fest here, but is it wrong to think that the exchange rate for SR Bank in 2023 is a kind of starting point?

It's natural that the old SR Bank shareholders who have been sitting in peace, who are probably two-thirds of the new bank, they should also be able to recognize themselves again in the exchange rate that we set for 2024. And then it's like the equation is done in a special way, because it's actually... 9 months as SR Bank and 3 months as Sør-Norge. This means that we will evaluate the exchange rate based on pro forma figures. The goal is to deliver a stable and increasing exchange rate over time. But of course we have a history of how old SR Bank shareholders have been when we are doing this. Isolated, even though this gives a profit and loss effect, it also means that it binds more capital. So that gain is not capital-free. But that's why we're very pleased with both the fact that SABank was well in place per 30 years, which we showed to be 0.4% above the requirement. And then the performance figures showed that we were at 18.3%. So that means that the solidity is well in place in relation to the requirement that will be for us per year. And that is without the capital synergies in themselves. on 2.5 billion. This is a direct consequence of the fact that North-East Norway had a higher core capital coverage at the time of the merger than the SAB Bank had. So the position on capital should be one to reassure everyone, and certainly those who are very concerned about getting a good development.

Thank you. Were there any more who had any questions? Det så ut som det var stille og rolig.

Det så ut som salen er stille og rolig. Då tackar vi alle på fremmøte både fysisk og på nett, og ønsker en god dag videre. Tack for oss!