Sparebank 1 Smn Prim Cap

Welcome to this presentation of the financial results for Sparerbank 1 SMN for the first quarter of 2025. My name is Trond Søroes and I'm the CFO here at Sparerbank 1 SMN. My presentation will be followed by several posts from other members of the management group who will elaborate and speak more about the strategic initiatives within their areas. Those posts will be spoken in Norwegian, but come with an English subtitle. With a result that once again exceeds 1 billion, Spirebank NSMN has completed yet another strong financial quarter. The result for the first quarter was 1 billion and 4 million, which corresponds to a return on equity of 14%. The result is characterized by a strong net interest income, good contribution from ownership interest, both from subsidiaries and associated companies, lower cost than the previous quarter, and low loan losses. In summary, this contributes to a strong 14% return on equity, and with equity that ensures that the group also exits this quarter with a strong CET1 of 18.1%. Looking at the overall loan growth for the bank, it was 5.3% over the last 12 months. It was, however, somewhat reduced in this quarter, where the overall growth was 0.2%, mainly due to a reduced volume in the corporate loan book, where we have experienced the repayment of some larger loans. At the same time, the quarter is characterized by a very good deposit development, contributing to a total 12-month growth within the deposit of 11.6%. Our subsidiaries have also had a strong quarter. The first quarter is seasonally strong for Sparerbanket and Regnskapshuset, our accountancy firm. This quarter was no exception, with the company achieving a result margin of 21.3%, mainly driven by a strong top-line growth. Eendomsmark.dn, our real estate broker, has had a solid quarter with a strong underlying operation, selling more homes and increasing the price per sale compared to the same quarter last year. But the result and the result margin are pulled down by one of the effects related to how we book commission salary. Sparebank Enfinans Midt-Norge, our leasing and car loan company, also performed well, with a good result, giving a return on equity of 13.3%. Overall, the result in the first quarter of 2025 contributes so that we meet all of the long-term financial goals, primarily in terms of profitability, but also in terms of efficiency and solvency. Twelve-month growth in the retail market was 4.8% at the end of the first quarter. In this market, the first quarter is traditionally a somewhat weaker quarter in terms of growth. So also this year, with a growth in the quarter at 0.7%, which is in line with the same quarter last year. A growth we are reasonably satisfied with, given the balance between growth and margin. On the other side of the balance sheet, it has been a very solid quarter with deposit growth of 3.4% in the quarter, partly driven by some moving funds from asset and management to deposits, but primarily as a consequence of a persistent effort over time working with deposits. When it comes to margins, we saw that the average NIBR, the reference rate in Norway, was down 15 basis points in the quarter. This gives higher loan margins, where we are up 13 basis points, indicating relatively low margin erosion in the loan book this quarter. And a somewhat larger margin drop when it comes to deposits, where both lower volume on current funds compared to last quarter and strong growth on saving funds explain the drop. In the corporate market, in the corporate loan book, the 12-month growth is now at 6.4%. We are very satisfied with this, even though there have been two consecutive quarters now with low and in this quarter even negative loan growth. As mentioned initially, the decline this quarter is due to the repayment of some larger syndicated loans, where we have not found it profitable to continue participating. Also here, a very good deposit quarter, where deposits increased with 5.5% in the quarter. In the corporate loan book, the margin picture is more stable due to a larger proportion of reference rate and NIBOR pricing. Looking at the main lines in the income statement and comparing them with the previous quarter, we see that the net interest income is down mainly due to a quarter with fewer interest days, but also due to an increased volume of loans transferred to Sparerbanken Boligkredit, the Alliance covered bond company. Real net interest income, where we take into account received commissions from loans transferred to the covered bond companies, is down 2.2% quarter on quarter. Taking into account the effect of fewer days in the quarter, real net interest income is sideways from the previous quarter, which we are satisfied with. Commissions significantly up, seasonally strong income from accounting services and brokerage, which mainly contributes to this. Overall, this gives a strong total income of nearly 2 billion in the quarter. Operating costs significantly down from the previous quarter, mainly related to effects of wealth tax and employers' tax in the fourth quarter last year. Losses came in at low 21 million kroner. This constitutes three basis points reflecting the good quality in our loan book. Good contributions from ownership interest also this quarter of 191 million, underlying more or less on par with the previous quarter. I will return to this later in the presentation. So overall, this gives a profit in the quarter of 1 billion and 4 million, as I said, and a return on equity of 14% in the quarter. More than 30% of our total income consists of something other than the net interest income, which is a good picture of SpiderBank ESMN's broad and well-distributed business model. And there has been a strong increase in other income from the previous quarter, driven by seasonally strong contributions from accounting and brokerage, but also seasonally good commission from product companies. And from this quarter, we have two companies that have made some changes to the commission model. And they are more or less smoothing each. The effect of this is more or less smoothing each other out in the quarter. We see that Sparebank and Boligredit, the covered bond company in the alliance, lets a little more of its profit go to commissions and Kreditbanken over credit card and consumer finance company goes the other way. When it comes to cost, we see that the cost for the quarter is reduced by 42 million when we look at the group's figures. And for the bank loan, the corresponding figure is 54 million. We see that the last quarter included quarterly effects of around 60 million related to wealth tax and employer tax. Costs are somewhat increased, but changed accounting for commissions pay in our real estate broker, as I mentioned, which is a one-off effect in this quarter. For the bank itself, costs are up 2% over the last 12 months, if we adjust for the insurance settlement we entered into in the corresponding quarter last year. And as such, in line what we have said, that the cost growth in the bank will be moderate in 2025. As mentioned, very good contributions for ownership interest also in this quarter, but particularly a very good insurance result in Framtiden Forsikring and a better result in Kredi Nord contributed well to the Sparebank 1 Gruppens result. which is more or less on par with the previous quarter if we take into account the correction from last year's result of 21 million kroner related to tax effect in Framtiden and affecting the group results for Sparebank 1-gruppen in the fourth quarter. Otherwise, we see consistently good results from other ownership interests. When it comes to losses, we see a picture with low losses continuous. 21 million kroner in loan losses in this quarter. This corresponds to three basis points of the portfolio. Lower than the last quarter and somewhat dampened by lower model loss write-downs due to better portfolio quality and somewhat lower volume in the agricultural portfolio. Lately, we have experienced turbulent financial markets, which at times have fluctuated violently. Very comfortable entering and standing in such periods with a very reassuring liquidity situation. Good key figures, a solid liquidity portfolio, and a conservative maturity profile means that we neither need nor want to go to the market under these turbulent conditions. Also, as mentioned, a very strong solvency situation at the end of this quarter. Due to the record high dividend for last year, we are only allowed to count in around 40% of the result throughout the year. Despite this, CET1 came in at the end of the quarter as of strong 18.1%, well above our own target and the regulatory requirements. So to summarize, SpiderMonkey and SMN has completed a strong financial first quarter in 2025 with a return of equity of 14%, which is well above our targeted level. In addition to a strong net interest income and low losses, which reflects the quality of our loan book, we also see good contributions from ownership interest this quarter, both from subsidiaries and our associated companies. Through further investments in the Finanshusmodell, which is finance centers where all of our four business lines are present in the middle part of Norway, we strengthen the synergy work in the group further, which also contributes well to the broad and well-diversified income platform that we have in Sparebank and SMN, ensuring both commission income and return on invested capital. The group is very solid and have a strong liquidity situation, making the group well equipped to continue growing even in the face of turbulent markets. And we have always talked about the value and the opportunities that we see in our ownership. We saw another example of this in this quarter, where we joined forces with Swedbank to form a Nordic investment bank called SB1 Markets. Thank you.

Then we move on to the more extended part of today's broadcast, where we will get four short entries from members of the board of directors of Sparebank 1 SMN. Board of directors for business, Vegard Helland, will talk a little about development in mid-Norwegian business. Administrative director in the accounting office will give a status on the change journey they are on. And the CEO of Privatmarked, Monika Haftorn Iversen, will give us a status on strategic investments and priorities within the personal market. Finally, we will have an introduction from our CEO of Technology and Development, Astrid Unheim, who will tell us about our ambitions for digitalization and the use of artificial intelligence. But first, Vegard, please.

Thank you for that, Eirin. Now we will take a closer look at the position of the bank and the corporation in the business market, and we will also take a look at the status of the business in our region. First of all, we have a good development in market share, both in banks and accounts. We have an increase of roughly 1% in all areas. We also see that we have an increasing market share among newly established companies. This despite the fact that we operate in a market with a very well-functioning competition. There are hardly any regions in Norway that have the same density of banks as we find here in central Norway. Despite that, we still have nearly 70% of the cash to other actors, so there is a lot of work to do to build more volume in SMN. I would also like to add that we find great joy in working with active customer recruitment. We have measurements and follow-up from advisors and departments, both in the company and the bank. We experience great enthusiasm among employees when we increase our market share, so this is an important milestone for us to follow. When it comes to the status and outlook for the mid-Norwegian business world, we use both our own analyses and, not least, we also relate ourselves to analyses from, for example, Norges Bank and Regionalt Nettverk. The revenue report from Regionalt Nettverk shows that Norwegian business life has actually gone better earlier in the meeting, through 2024, and we also see at the entrance to 2025 that the situation is a little better than it was the previous year. We are also entering a period of good economic development for many companies. This is probably due to the oil tax package, which has had a good effect on the west coast. But we also see that weak Norwegian kroner has given good help to both fisheries and fisheries, and not least to tourist businesses, which has made these businesses have delivered well in recent years. In central Norway, we have a marginally weaker development than what we see nationally. We think it's because the activity within buildings and facilities has been quite low for a period. Especially on the construction side, we have seen reduced activity in recent months. This is something that comes back, but which probably gives a medium-term impact on the sales report for the first quarter. When we look at the different industries in Central Norway, we have a very diversified business structure and a business life that is represented in many different industries. In this way, we are a small Norway in miniature, where we find important industries for the nation, both in terms of export, but also in terms of domestic production. We have industries that are responsible for producing a lot of food, with a strong marine industry. We also have fisheries, especially on the coast of Møre-Romsdal, which is among the strongest environments in Norway. And we have a fairly strong concentrated agriculture that produces a lot of food. We see that it is the construction industry, which in our own analysis has been a little negative over the past six months. We expect that the activity will be low in the first six months of 2025, and then we think that it might go up. Når det er sagt, så har det gitt lite utslag i bankens bøker at man har hatt lav aktivitet i bygg og anlegg. Det skyldes selv at vi har relativt liten eksponering mot reine entreprenører. Når vi finansierer bygg- og anleggsvirksomhet, så er det gjerne relatert til bygging av boligbygg eller næringsbygg, hvor arealerne gjerne er solgt eller utleid før det igangsettes. Da har man sikkerhet for at man får betjent og innflytt lånene når de her prosjektene er ferdige. In the credit practice for the bank, we are concerned with broad diversification, both at the industry level and at the customer level. We mean that low concentrations, both at the customer level and at the industry level, is an important condition to be able to deliver good numbers on the loss side, as we are doing now in the first quarter. When we talk about business structure, I think it's very natural to note that in the middle of Norway we have a very high percentage of employees against the public sector. And this seems very stabilizing both on the private market side of the bank, but also on the business side. Så vi opplever kanskje sjeldent de helt store oppsvingene, og vi har heller ikke de helt store nedturene når det kriser. Og det har vi sett godt gjennom finanskrisen, vi har sett det gjennom oljeprisfallet, og ikke minst så så vi også gjennom pandemien. Det norske næringslivet, det klarer seg relativt godt. Da skal jeg takke for meg, og så skal jeg gi ordet tilbake til Eirin.

Takk skal du ha, Vegard. Da har jeg fått Arne Nypan, administrerende direktør i Regnskapshuset, inn i studio. Velkommen til deg, Arne.

Takk, takk.

The accounting industry is in great change. This applies to technology, but also to the role of advisor. Can you tell us what the status is on this change in the accounting department?

The status is that it is going very well. We are taking big steps to become an advisor, a role that we know our customers are asking for. We contribute significantly with technology, and we have to contribute to digitizing and creating flow in the administrative routines for our customers. So one thing is to contribute with technical competence. We deliver an effective forecast, but the most important thing we do is that we revitalize the entire economy and business management function for our customers. And that is central, because the feedback we get from customers is that they want even more advice. They want a savings partner who follows them even more closely in the business they run every day. And that is the role we want to fulfill.

And you say you already get feedback from customers on this. Can you say anything about the effect you see so far?

The effects are very good over the last five years, as this foil shows. You can see that we have increased the council income by over 25% every year. We also see that the percentage of council income, of the total income, is significantly higher than before. This is proof that we are moving in the direction we have set out.

And Arne, banks and accounting have become a central theme in the industry. But for us, we say banks in accounting. There is a difference in nuance there, but it is not without meaning. No. What is it that we put in it, and what is it that we think will be groundbreaking for customers to think that way?

We want to take the customer's point of view and the customer's needs. And we have asked ourselves the question, how can we make our everyday life easier for our customers? That means that we want to put all the services that customers need behind one person. It can of course be the accounting service, which is our basic supply, but it can also be tax and benefits, it can be HR services, it can be a maintenance. But it can also be banking services. For example, a career-scale insurance, or a service pension solution, or a leasing agreement, which the customer can get through their accounting advisor, who despite everything is a customer, sorry, an advisor, who the customers have good knowledge of and who they have trust in. Because we are in daily contact with them, either physically via the financial system or via the accounting system. So we want to use the position we have for the customers to sell an even broader spectrum of services that we know the customers are asking for.

And are we seeing any development already on this?

We see great development. Here is an example from Molde, which is a pilot area, where we test this recognition model. And here we see that the number of joint customers is increasing strongly. But the best of all is that we also see that the customer satisfaction of these customers, who are part of this pilot and are recognized in this way, is higher than what we have elsewhere in the company.

Exciting, Arne. I think we'll stop there, but I don't think it's the last thing we'll hear from you about these two important strategic investments. No. Thank you. Thank you. Now we're going to switch focus from the business market to the personal market. And then Monika Haftorn Iversen, CEO of Privatmarked in Sparbank 1 SMN, will give us a status on some important strategic investments within Privatmarked. Please, Monika.

Tusen takk for det, Erin. Jeg har ledet Privatmarkedet siden november i fjor, men jeg har jobbet i bank siden 2002, og er det en ting som jeg brinner for, så er det rådgiverrollen. Og det at vi i Privatmarkedet, med våre 400 dyktige og fremoverlente ansatte, fra Rørvik i nord til Førde i vest og til Oslo i sør, at vi er for å hjelpe kunderne med å få mest mulig ut av privatøkonomien sin. Og vi har en sterk faglig kompetanse, og vi har et bredt utvalg av produkter og tjenester for å gjøre det her. Målgruppa våres er personkunder som ønsker seg en folkelig og inkluderende bank, og hvor en føler seg trygg og ivaretatt. Dette får kunder i Sparebank 1SMN gjennom at vi er lokal og nær gjennom våre spreie fysiske tilstedevelse. Samtidig har vi Norges beste mobilbank, og med et kundesenter som svarer hurtigt og som har høy løsningsgrad i førstekontakten. Vi er der for kunderne våre i alle livsfaser og i alle kanaler. In central Norway, we are market leaders with 32% of the market within housing loans. And we have ambitions to continue to take market shares, both in our core area, central Norway, and nationally. And over several years, we have developed a close collaboration with property investors in central Norway, who have a strong position and are clear market leaders in our region. And we had good synergy effects between banks and investors, also in the first quarter. Buying and selling houses is one of the big events in life where you need a good bank and a real estate agent. A bank that can provide good financing solutions, but also with a quick response time, important for customers. With a real estate agent who has area specialists and who knows the market, we can see that many customers value and are looking for. In Trondheim, there are the most housing investments in our core area, and here the type activity has increased from real estate agents to bank advisors, with 24% in the first quarter of the year, compared to the same period last year. And we also have a good effect on the synergy when we look at the development in market share for customers in Trondheim. We had a 41% market share for housing loans that were repaid by single-family loans in mid-Norway in the first quarter of this year, in comparison with 33% in the same period last year. In the private market, we will be happy with a profitable growth through advisory power. And a focus area this year is to take customer meetings back. And then it's both on video and it's physical. And this is so that customers will experience good and broad private economic advisory power. And so that customers will collect everything within their private economy to us. And we have succeeded. The number of customer meetings has increased by 135% in the first quarter of the year, compared to the same period last year. And our focus on advisory power means that we have managed to maintain a high product range on all eight bank products per customer on average, while we have grown. And then our growth will be profitable, and it will be balanced, and we will work actively with the fact that personal customers will have their investments and the long-term savings in Sparebanken SMN. And this also gives satisfied customers a robust business. And in terms of profitability, we will be less vulnerable to fluctuations in the interest market through this. And we are proud that the income continues to grow, also in the first quarter, and income cuts for personal customers in recent years have increased from 40.2 to 42.3%. And we will take a strong position on the investment side, including through private banking and where the investments continue into 2025. And we recruit more private banking customers and get good feedback on the advice and solutions we offer. And we also have a daily synergy between private banking, the accounting department and the business community. Og så utmerker vi oss i Sparebank 1 Alliansen innenfor investeringsområdet, hvor vi i første kvartal stod for 40% av nettotegning porteføljeforvaltning blant Alliansebankene. It is also an unsettling market, and a short-term effect for everyone who saves in the stock market is that they see that the value of savings has fallen. We have experienced that the customers in Pride Banking have remained calm. Among other personal customers, we experienced that several sold out of funds, while most had ice in their stomachs and held on to their savings plan. And that is also our recommendation. We experience that they have a good sparring partner when the market is restless and has a value for customers. And we see that development also in the net drawing of funds in the channel. A lot of young people are changing funds, and at the same time, there are Norwegians who don't save, and where a fresh investigation by Sparebanken shows that one in five plans to start saving in the short term. And we think it's great that many of us are going to start saving, because most of us have a pension that we should take through our own savings, and the earlier we start, the less we need to spend every month. So pension is one of the important themes that we use time on in our consultations, both in one-to-one and on customer arrangements around MidtNorge. And this is consultative power in practice, and which supports our ambition to succeed with the balanced and profitable growth in the private market also in the future.

Thank you. Thank you, Monika. Then we will move on to the last article in today's extended presentation, before we completely conclude with a question and answer sequence. And this last article we will get from our Group Director for Technology and Development, Astrid Unheim. She will tell us more about the ambitions we as a group have for both digitalization and the use of artificial intelligence. Here you go, Astrid.

In SMN, we use digitalization and artificial intelligence to support existing strategies, but also to renew them. Because when more of the customer's needs can be solved digitally, we must focus on strengthening the value proposition also in the physical offices. And that's what we focus on through our physical financial institutions. And we believe that digitalization and the use of AI will also be important to be able to understand and meet customer needs when we meet the customer in the physical financial institution. And to strengthen our value proposition as a regional relationship bank that is digitally leading and with a strong financial institution, we have three important focus areas when we work with digitalization and AI. First, By being digital leaders and providing Norway's best mobile bank, it will be easy for the customer to solve their digital needs. Either in the mobile bank for private and business customers or through the accounting system. At the same time, customers will get quick and good help when they need to contact us in other channels. From employees who have good tools to help the customer in a good and effective way. And then we will have the best advisors, and we believe that the best advisors will be those who are good at taking into account data, taking into account artificial intelligence as a tool to give the best advice across corporate and business areas. As we have seen examples of, both on banks and accounts, but also between private markets and individuals. Our work with Kunstintelligenz has been organized in a KI program across the board. Here we focus on delivering business value, building competence, handling risks and regulatory assessments, and building long-term solutions. When it comes to actual use today, it is in our chatbot. We have worked the longest with artificial intelligence. Our chatbot solves 60% of the issues today. We are now working on introducing more use of artificial intelligence in the chatbot, and we see that the degree of solution increases significantly. We have also used generative artificial intelligence for all employees in the company to ensure faster storage in internal routines and knowledge. We see that employees find out faster and they also get better answers when they need it. This means that we are able to answer the customer faster and better. We have calculated an annual efficiency profit of between 4 and 5 million kroner across bank, brokerage and accounting. I kundesenterne har vi rullet ut transkribering og oppsummering av alle innkomne samtaler. Målingene viser at det gir en bedre effektivitet for kunden, det gir en bedre effektivitet for oss, det gir en bedre kund...