Sparebank 1 Smn Prim Cap

Greetings and welcome to this English version of Sparabank 1 SMN's presentation of the results for the first quarter of 2024. My name is Trond Søros, I'm the CFO here at SMN, and I will take you through the main figures for the first quarter. Sparabank 1 SMN have just left behind a very strong first quarter, which gave us a very positive start to 2024. First quarter of 24 is characterized by good results throughout the group, strong net interest income, good contribution from subsidiaries and other ownership interests, and continued moderate net losses that contributed to a profit of close to 1.1 billion Norwegian kroners and a return of equity of 16%. And it goes without saying that this is a result that we are very pleased with. Particularly satisfied with the results since this is measured against a still very high equity capital. Solvency measured as CET1, slightly down from the previous quarter, but still very strong at 18.5%. Overall, lending growth in the quarter is roughly at market growth. but with somewhat higher growth within the corporate portfolio this quarter. Also very satisfied that the focus we have had on deposits and growing deposits is helping and that there is yet another quarter with good deposit growth in the various market areas. In SpiderBank and SMN, we are fortunate to have large and market-leading subsidiaries who all deliver well in this quarter and contribute to the good result. No changes in our financial targets. The targets stay fixed, and this quarter we are meeting all targets and doing so by a good margin. In that sense, This quarter joins a long series of good results over time now, both in terms of return on equity, solidity, and quality in the loan book. The strategy of increasing interaction across the businesses is very important to us in Sparabank NSMN. In this quarter, both business areas make good contributions to the quarter's result, And we believe that the synergy pairs within both business areas continue to strengthen. When it comes to growth and margins, we see that the lending growth within the personal market, the retail market, is in line with the corresponding quarter last year in terms of percentage growth of 0.6%. but the growth is affected by lower credit growth in the market, and with that, a tougher competitive environment. If we adjust for the merger, the loan growth within the retail book in the last 12 months is 4.1%, which we are satisfied with, and with a view to combining our ambition to grow more than the market growth, and also that the growth should be profitable, we are pleased with that number. The deposit growth within the retail market in this quarter is influenced by the payment of agricultural support payments from the government, but also very pleased to see good growth within deposits across market areas as well. Very strong lending growth within the corporate loan book in this quarter of 1.5% spread over various industries and also here good growth in deposits, largely driven by the fact that some of the strong outflow of deposits from the public sector that we experienced the last quarter has returned. A general change in interest rates that has contributed to raising the lending margin within the corporate loan book as well. The first quarter saw very good contribution from ownership interests, where in particular the insurance companies in Sparerbank 1 Gruppen contributed to raising the profit contribution from that company, but also good figures from Sparerbank 1 Markets, where the banking model contributes so that they deliver very well in their first full quarter as an affiliated company. And we also see that BM Bank has an all-time high quarter driven by loss reversals and a very strong financials. If we look at the results, as mentioned, it ended with a profit of 1 billion and 84 million in the first quarter and a return of equity of 16%. But the main lines compared to the previous quarter show that the growth in net interest income is very strong. If we correct for a one-off in the last quarter, the net interest income quarter on quarter is up 4.2%, which we are very pleased with. Provisioning income both without and with the commission from the covered bond companies is also up. There is a significant reduction in costs and still moderate loan losses. All of these figures I will come back to. An improvement in the group results helps to increase the contribution from affiliated companies. Security significantly down from previous quarter, a quarter characterized by a gain from the transaction in SPBEN markets, but where value changes in both SMN Invest and the bank's own liquidity portfolio positively affect this quarter. If we look more closely at the income side, we have already mentioned the strengthening in net interest income, but commissioning income is well up. much driven by a seasonally strong top-line growth in the aforementioned subsidiaries of a real estate broker and an accountancy firm, but also significantly increased commission from Sparbank and Boligkredit, the Alliance's own covered bank company, as a result of increased transferred volume and interest rate increases. Cost down a lot, both as a result of a more normalized cost picture in general, but also influenced by the fact that in this quarter we have reached a settlement with the group's insurance company regarding the settlement of claims following the fraud case in first quarter last year. And the settlement was 30 million Norwegian kroners. Mergers and growth initiatives have increased costs in the past year, but we expect a normalization of cost growth in 2024. The Group has a well-diversified lending portfolio that is dominated by mortgages. Over the end of the first quarter, 68% of the lending book is still two-way journeys and the vast majority of whom live in our region. Within the corporate lending and the corporate loan book, lending growth over the past 12 months is well spread according to the industry structure in the region, but with a decline in fisheries and offshore. As mentioned, the largest part of our lending book is towards a robust mortgage portfolio where 93% are within 85% loan-to-value. We are experiencing some increasing defaults, but still at a very low level. And we cannot see any major movements in early indicators either. Here, represented by interest-only requests, which show a decline from the last quarter. We also have the largest exposure within our corporate loan book towards commercial real estate. But we are underweight compared to the Norwegian portfolio in large and relatively when we compare to other savings banks and have less exposure towards this segment than others, which reflects that our business portfolio is well distributed and closely follows the industry structure in our region. Loss and losses at the moderate of 24 million in this quarter. Yet another quarter characterized by reversals within offshore and increased losses when it comes to other industries. We still have our entire construction portfolio in stage two. But in this quarter, we have also brought the entire whitefish segment within our fisheries lending into stage two as a result of persistently high interest rates, inflation, and also reduced quotas. Disregarding offshore and agriculture, the provisions are now 0.82% of the other part of the corporate loan book, which is the highest that we ever had. And the lion's share of the losses within the retail loan book are against the agriculture segment. When it comes to solidity, as mentioned, still very solid with a CET 1 or 18.5% at the end of the quarter. And note that we have only factored in 26% of the quarter's result this time. So together with the leverage rate of 7.1% and the high earnings, there's no doubt that the group is very, very solid. We in the management group have noticed that the share price of our equity certificates has had good development in the last quarter. We still believe that an investment in these equity certificates in Ming is a good investment. You invest in a group that has focus on long-term profitability. with efficient operations and still synergies in the group, very well capitalized and has a shareholder-friendly dividend policy. We are the leading finance institution in the mid-Norway area. We are seeking sustainable growth in this very attractive region of Norway. has a diversified customer portfolio and also a very robust and well diversified income platform. Our brand is strong but still have development potential and the ownership model and the local presence contributes strongly to customer loyalty. We also believe that we have shown and that there is still substantial underlying value through ownership positions in and outside the Sparbank Alliance. And at the end, we believe that we are well positioned when it comes to consolidations amongst Norwegian Savings Bank and through the Sparbank Alliance.