Sparebank 1 Smn Prim Cap

Hello and a warm welcome to Sparerbanken SMN's presentation of the fourth quarter and preliminary annual accounts for 2025. My name is Trond Søros, I'm the CFO here at Sparerbanken SMN and I will guide you through this presentation. Spiderbank and SMN ended the year on a strong note with a fourth quarter net profit of 1 billion and 61 million and a return on equity of 13.7%. So we now closed out four solid quarters in 2025 and with that a very strong year overall. The net profit for the full year came in at 4 billion 367 million, giving us a strong return on equity of 14.8% for the full year. Adjusted for nearly half a billion in gains from the Fremtin-EIKA merger in 2024, the results of 2025 are right on par with or even above last year's record performance. Strong underlying operations, synergies across the group, and solid contributions from associated companies have delivered impressive results for our owners. We've also come through a year characterized by strong competition in both of the bank's business areas. Balancing growth against acceptable margins is an ongoing focus area. Both retail banking and corporate banking ended the year with a solid growth in the fourth quarter. We are pleased to report balanced growth with an annual growth of 3.8% when it comes to lending and 3.7% when it comes to deposit growth for the group over the past year. We have of course the capacity and the solidity for higher growth, but our position is that we only accept profitable growth. Our subsidiaries also contribute strongly and remain among the most profitable in the industry. This year, Regnskapshuset SMN, the accountancy arm, which is key in driving synergies with corporate banking, increased profit before tax by more than 50% in 2025, grew revenues per employee and delivered an operating margin of over 12%. The real estate brokerage firm with a market share near 38% in the region and above 40% in Trondheim. works closely with the retail banking and achieved an operating margin of 13.4% in 2025. And finally, Sparerbanken Finans MidtNorge, the leasing and car loan company, which recently celebrated its 40-year anniversary, continues to deliver stable results and had 13.9% return on equity in 2025. The group maintains a well-diversified and solid lending portfolio dominated by residential mortgages. 68% of the portfolio is to retail customers, mostly secured by Hosi. Credit losses increased somewhat in the fourth quarter, mainly driven by challenges related to a single large corporate exposure. However, total credit losses for 2025 decreased from the last year and ended at 140 million, equivalent to a low six basis points. And we also ended this year with a continued strong capital position, a CET1 ratio of 16.8%, well above both regulatory requirements and our new capital target of 15.9%. Despite growth in risk-weighted assets and therefore higher capital requirements, partly due to a somewhat unexpected increase in the mortgage risk-weight floor this year, the board has found room to propose a payout ratio of 69%, and we are very pleased to increase the dividend per equity certificate from 12 kroner last year to 13 kroner and 50 øre for 2025. The profit is distributed between the community capital and the equity certificate holders according to the ownership fraction, and we apply the same payout ratio to maintain that balance. When we combine the community dividend with the distribution received by our two foundations, more than 1.2 billion will go to community benefiting purposes in 2025. The group concludes 2025 having delivered on most of its financial targets and we are particularly pleased with how strongly we have performed on return on equity and payout ratio. After a somewhat slow start to the year, retail banking saw steady, solid growth throughout the rest of 2025 and ended the year with a quarterly lending growth of 1.2%, fully in line with market growth at around 4.8%. We are also very pleased with continued strong deposit growth, above 8% for the year, which has improved deposit coverage within retail. The September rate cut from the central bank, Norges Bank, had full effect from December, resulting in lower lending margins and slightly higher deposit margins. The total weighted margin is down 11 basis points in the quarter for the retail banking operation. After the start to 2025, marked by larger repayments, corporate banking ended the year strongly with quarterly loan growth of 2.4%. The underlying deposit growth has been good across the market area, but because we have chosen to let some large, high-priced deposits run off, total deposit growth comes in at 1.8% for the year. Margin declined relatively sharply. We were somewhat high in the third quarter due to the June rate cut and a small increase in stage three loans have had the negative effect this quarter. Overall, the total margin is down four basis points, taking us back to the levels that we saw in the second quarter. Looking more closely at the income statement and looking at the lines in the income statement for the quarter, we saw that net interest income is up 0.9% from the last quarter. Adjusting for somewhat lower commissions from the covered bond companies, the underlying net interest income is up 0.2%, essentially flat quarter versus quarter. That is a development that we are very pleased with. The development is driven by several factors. Good lending growth, a lower liquidity portfolio, and higher lending fees, all contributing positively. Offsetting this, as mentioned, are lower margins in both business areas. The fourth quarter also saw a strong quarter for commissions. Seasonal effects reduced real estate brokerage commissions somewhat, but otherwise commissions were on par with the third quarter at NOK 518 million kroners, excluding covered bond commissions. Very pleased with the development in operating expenses, down from the same quarter last year, ending at 870 million kroner in the fourth quarter. Credit losses for the quarter were 61 million, equivalent to nine basis points. And with yet another strong quarter from associated companies, particularly Sparobanke and Gruppen, contributions totaled 278 million in the fourth quarter. All in all, this gives us a quarterly profit of 1 billion and 61 million and a return on equity in the quarter of 13.7%. SpareBank in SMN has a robust and well-diversified income base and is known to be among the banks with the highest share of income coming from sources other than the net interest. Commissions excluding covered bond-related commissions are up almost 6% from 2024 to 2025. We are very satisfied with that, driven, of course, by strong contribution from both real estate brokerage and accounting services, which together increased commissions income by over 100 million from last year. In addition, insurance commissions also contributed well in 2025. Throughout the year, we have guided that cost growth in the bank would come down from 2024 and land around the inflation rate. Adjusted for the Tieto every case, cost growth is 3.3%, fully in line with plan and our guidance. The increase in costs from the third quarter to the last quarter of the year, fourth quarter, is mainly due to wealth tax of 36 million Norwegian kroners. We are, as I said, very satisfied with the cost development over the past year, but we see a need to tighten further and we are planning for flat cost development going forward in the bank. Several measures will support this, but the main lever will be replacing only half of departing employees during this year. Fully implemented from 2027, this corresponds to around 45 full-time equivalents and approximately 55 million in annual effect. In addition, efficiency initiatives across the group are expected to further reduce headcount. Contributions from associated companies came in at the same level as last quarter, 278 million. Again, Sparebankengruppen delivered particularly strong results, with of course Fremtin posting another solid quarter. And we're also very pleased to see that SB1 markets, the new SB1 markets, reporting record high income and a good start for that company. Credit losses for the quarter consist of 52 million in net reversal in stages one and two and losses of 112 million in stage three. The losses of NOC 61 million corresponds to nine basis points. And finally, a brief update on capital and solidity, where we see some changes this quarter. Following the Financial Supervisory Authority's decision on a new Pillar 2 requirement, the board has approved a new long-term CT1 target of a minimum of 15.9%. SpiderBank and SMN has also had a temporary Pillar 2 add-on of 0.7 percentage points while awaiting approval of new IRB models for the corporate exposures. These models were approved and implemented in the fourth quarter. The temporary add-on has therefore been removed and the new models increases risk rates for corporate exposures and thereby increases the risk-weight assets. The net effect of the removal of the temporary requirement and the increase in risk-weighted assets is roughly neutral. What has not changed is that the group remains very well capitalized with a CET1 ratio of 16.8%, still comfortably above both regulatory requirements and our own target. Together with a leverage ratio of 7% and a strong earnings capacity, this gives the group a very solid position going into 2026. Thank you so much.