Sparebank 1 Smn Prim Cap

Good afternoon and a warm welcome to this short presentation of the results for the first quarter of 2026 for Sparebank 1 SMN. My name is Trond Søros, I'm the CFO here at SMN and I will walk you through the main characteristics of the results for the first quarter. We delivered a solid result for the first quarter of 2026, though it is a result below our ambitions. But the picture is nuanced. The quarter was a quarter where all things didn't fall our way, and several factors hit at the same time. The result ended at 849 million, with a return on equity of 11.3%. This mainly reflects lower net interest income, higher losses in the quarter and also weaker contributions from equity investments. At the same time, we are very satisfied with the underlying development. We deliver good growth in both lending and deposits. We have a strong CET1 ratio of 17.1%, which gives us significant financial flexibility going forward. The subsidiaries contributed seasonally well this quarter as well, even though the results are somewhat lower than the same quarter last year. So overall, a very solid result, though a little bit below our ambitions, but we believe we are very well positioned for improving the results in the coming quarters. Our long-term target of 13% return on equity remains unchanged, and the ambition to be among the top performers each quarter stands firm. We do not fully reach our return target or a top ranking this quarter, but has the expectations of being back on target quickly. At the same time, we deliver within our other financial targets and maintain solid control over both capital strength and cost development. Looking more closely at the retail market, we saw a quarterly lending growth of 1.1%, which corresponds to a 12-month growth of 5.1%, which means we are gaining market share. We are satisfied with this performance in a quarter marked by high competitive intensity, where we especially see the banks on the standardized approach for calculating capital has a strong capacity and also a strong willingness to grow. Deposits and growth in deposits came in at 2.3%, contributing positively to our balance sheet and liquidity. Margins in the quarter are affected by interest rate developments during the quarter and also the full effect of the rate cut that we saw in fourth quarter. This creates a temporary pressure, but historically we see that and know that a higher interest rate level that we expect coming has been positive for both the retail segment and of course the group as a whole. In the corporate market, we saw lending growth of 0.7% in the quarter and 3.9% when it comes to the overall 12 months growth. Here as well, we deliver solid deposit growth of 2.3% in a highly competitive market. When it comes to margins, we see that they are influenced by strong competition, somewhat lower fees and some fixing effects. Overall, the development is in line with expectations given the current market conditions. Looking more closely at the income statement, there are three main factors explaining the quarter. First, net interest income is down. It's down around 9.5% from the previous quarter, driven by day count effects, repricing from the fourth quarter, and also a shift towards more expensive deposits and lower fee income from lending. We also see higher losses, both individual losses and model-based. And finally, we also see somewhat lower contributions when it comes to equity investments during this quarter. In addition, we see that the financial line includes a write-down of one of the exposures in SMN Invest of 32 million Norwegian kroners. Taken together, this means a result and a profit of 849 million and a return, as I said, on equity of 11.3%. Looking more closely at the commission income, we see that it is up nearly 4% overall in the quarter. And if we exclude the provisions from the covered bond companies, the growth is around 8.5%. We are very satisfied with this development as it underlines the strength of our diversified income model. We see the strongest increase coming from the insurance sector where repricing has led to improved profitability. Moving on to costs, total cost for the quarter amounted to 916 million. The increase from the previous quarter is mainly driven by higher activity in the subsidiaries. In the bank itself, costs are reduced by 14 million compared to the previous quarter. And looking at the last year, the bank's costs are up 3.7% and only 2.9% when we adjust for operational losses, which means we are below core inflation. Our ambition of a flat cost development in the bank in 2026 remains unchanged, and the 50% rehiring principle, not showing too much effect this quarter, has had a strong start and will have effect later on in the year. As mentioned, contributions from equity investments down 66 million this quarter from previous quarter, mainly driven when it comes to the largest amount tied to the results in Sparebank 1-gruppen, which is driven by lower results in Framtiden, even though Framtiden has its best first quarter ever. and also somewhat lower results in Spiderbank and insurance. Otherwise, we see that the decline is broad-based. Losses in the quarter amounted to 15 basis points and are mainly driven by two individual exposures, one in the bank and one in the financing company. In addition, we see increased model-based provisions following updated macroeconomic assumptions, particularly related to the new interest rate path from the central bank. But overall, the loan portfolio remains very robust, and we see no signs of a broad-based deterioration. Finally, looking at the capital position, we see that the capital ratio increases slightly compared to the previous quarter, where we calculate in 31% of this year's result so far, and we have a CET1 ratio of 17.1%, which means we have a solid buffer about both regulatory requirements and our own targets. And this gives us significant flexibility both to manage uncertainty and to capture the right growth opportunities going forward. So to summarize, we have a very solid first quarter where we are on the right course operationally, but where certain factors mean that we fall below our ambitions this quarter when it comes to the result. But we have good growth, strong solidity, good cost control and a robust loan portfolio. And this provides a strong foundation for growth and for delivering on our financial targets going forward. Thank you.