Equity Research

Banks, Denmark

Spar Nord Recommendation downgrade

A more cautious outlook for 2020

• NII margin trend weaker than expected SELL Hold Buy • Guidance for 2020 fell short of consensus Results Comment Q4 2019 February 07, 2020, 09:07 CET

• Downgrade to SELL (Hold); target price down to DKK 65 (68) Share price (DKK) Feb 06 68.10 Market cap (EURm) 1,120 Marginal improvement in NII for 2020e Market cap (DKKm) 8,373 Spar Nord has delivered strong lending growth for several quarters, partly No of shares (m) 123 Free float (%) 69.5 thanks to the bank being assigned SIFI status at the beginning of 2019. With Avg daily volume ('000) 85 tailwinds from that likely to dissipate, we expect softer lending growth in the Avg daily value (EURm) 0.8 Bloomberg SPNO DC coming quarters. Furthermore, we believe the combination of upcoming issues Reuters SPNO.CO of MREL bonds, a prolonged outlook for support from central banks’ rate rises Next event 06/05/2020: Q1 report and increasing margin pressure in Q4, in particular, implies a dovish outlook Web address: Link to company website IR web address: Link to IR website for NII for the long term. That said, we acknowledge that recent pricing initiatives for deposits should marginally improve NII during 2020, putting a veil 12m target return Target price, inc. div. (DKK) 65.0 over what we consider a troubling trend. Based on an expected payout ratio of Expected total return (%) -4.6 65%, supported by Spar Nord’s strong capital position, we estimate yields of Expected total dividend yield (%) 6.0 6.8% for 2020 and 6.9% for 2021. Balance sheet 2019 RWA (DKKm) 55,963 Guidance for 2020 fell short of consensus T1 ratio (%) 16.1 For 2020, Spar Nord guided for core earnings before impairments of DKK 900- ROE (%) 11 . 7 RoRWA (%) 1.8 1,100m (consensus: DKK 1,145m) and net profit after tax of DKK 625-825m (consensus: DKK 838m). We expect consensus to revise estimates down, but 2020-02-05 Votes (%) Capital (%) most likely not fully reflect the increased pressure on lending margins in Q4. Spar Nord Fonden 18.9 18.9 Foreningen Nykredit 11.3 11.3 Fidelity Management & Research Co. Llc 3.7 3.7 Norges Bank Investment Management 3.3 3.3 2020e-21e adjusted EPS cut by 1.1% and 2.4% Dimensional Fund Advisors Lp 2.6 2.6 We lower adjusted EPS for 2020e-21e by 1.1% and 2.4%, respectively, to Total number of shares (m) 123.0 reflect a weaker-than-expected trend for lending margins and a slightly higher Free float (%) 69.5 cost base than we modelled previously. We lower our target price to DKK 65 (68) and downgrade our recommendation to SELL (Hold), as we find no upside to the current share price over our 12-month investment horizon and expect pricing initiatives to mask lending margin pressure, leading to disappointment down the road.

Thomas Eskildsen, +45 46 791 587, thes02@handelsbanken.dk Maths Liljedahl, +46 8 701 1392, [email protected]

Company page on Handelsbanken’s REON Absolute and relative performance

DKKm 2017 2018 2019 2020e 2021e Total income 3,149 3,190 3,340 3 , 111 3,162 Total costs -1,936 -1,924 -2,014 -2,070 -2,109 Loan losses 38 -172 -22 -80 -128 EBT 1,251 1,094 1,304 961 924 EPS rep (DKK) 7.7 7.1 8.2 5.9 5.6 EPS adj (DKK) 8.0 6.8 8.1 5.9 5.6 Y-o-y growth (%) 21 -15 19 -28 -4 EPS adj revisions (%) n.m n.m n.m -1 -2 P/E adj (x) 9.0 7.7 8.4 11 . 6 12.1 P/PPP (x) 7.3 5.1 6.3 8.0 8.0 P/BV tangible (x) 1.1 0.78 0.96 0.93 0.90 ROE adj (%) 12.4 10.1 11 . 5 8.0 7.4 ROE tangible adj (%) 12.7 10.4 11 . 8 8.1 7.6 Share performance (%) -1m -3m -12m Loan loss ratio (%) -0 . 11 0.49 0.06 0.24 0.38 Absolute: 7.6 6.4 21.2 CET 1 ratio (%) 14.4 14.0 14.7 14.5 14.5 Absolute EUR: 7.6 6.4 21.0 To t D P S (DKK) 3.50 3.50 3.50 4.10 3.90 Relative DJStoxx: 5.9 3.0 4.5 Tot div yield (%) 4.9 6.7 5.1 6.0 5.7 52w range (DKK): 68.20 / 51.30 Source: Handelsbanken Capital Markets Source: FactSet

For full disclaimer and definitions, please refer to the end of this report. Results Comment, Spar Nord, February 7, 2020

P&L outcome, Q4 Growth % Deviation % DKKm Actual Y-o-y Q-o-q HCM Cons Net interest income 396.0 1.5 -1.5 -2.2 n.m NII increased by Net commission income 290.0 7.0 -7.9 1.4 n.m Tot income 778.8 11 . 9 -10.8 2.0 n.m 1.5% y-o-y Total costs -538.7 6.5 15.6 2.6 n.m Loan losses -12.0 -88.7 33.3 20.0 n.m EBT 228.1 172 -42.7 -0.33 n.m Net income 172.1 187 -46.1 0.60 n.m EPS reported (DKK) 1.40 187 -46.1 0.60 n.m EPS adj (DKK) 1.13 n.m -58.2 -0.29 -43.3 Source: Company data, Handelsbanken Capital Markets and FactSet

Trend analysis % Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20e Total income y-o-y -9.9 4.5 -8.0 13.2 11 . 9 -7.9 Total income increased EBT adj y-o-y -66.6 -13.7 -1.1 38.1 172 -22.2 Net income adj y-o-y n.m -21.1 -19.5 65.2 n.m -23.6 12.1% y-o-y EPS adj (DKK) -0.20 2.07 2.21 2.70 1.13 1.56 EPS adj y-o-y n.m -21.8 -20.2 69.2 n.m -24.7 Source: Company data, Handelsbanken Capital Markets

Business area breakdown DKKm Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20e

Sales Local banks 674.0 711.0 713.0 741.0 653.0 660.2 Trading, Markets & Internal -22.0 85.0 75.0 53.0 -180.0 -182.0 Other core 44.0 58.0 45.0 79.0 158.0 159.7 To t a l 696 854 833 873 631 638 Local banks (%) -0.19 -7.8 4.7 7.1 -3.1 -7.1 Trading, Markets & Internal (%) -189 >900 400 51.4 718 <-200 Other core (%) -39.3 38.1 -78.5 75.6 259 175 Total (%) -10.1 4.4 -8.0 13.1 -9.3 -25.3

EBT Local banks 190.0 302.0 327.0 350.0 125.0 140.1 Trading, Markets & Internal -39.0 71.0 61.0 39.0 -203.0 -227.5 Other core -69.0 -47.0 -37.0 9.0 96.0 107.6 To t a l 82.0 326 351 398 18.0 20.2

EBT margin (%) Local banks 28.2 42.5 45.9 47.2 19.1 21.2 Trading, Markets & Internal 177 83.5 81.3 73.6 11 3 125 Other core -157 -81.0 -82.2 11 . 4 60.8 67.3 To t a l 11.8 38.2 42.1 45.6 2.9 3.2 Source: Handelsbanken Capital Markets

What has changed HCM vs. consensus HCM chg HCM chg HCM chg Cons diff Cons diff Cons diff DKKm Q1 20e (%) 2020e (%) 2021e (%) DKKm Q1 20 (%) 2020 (%) 2021 (%) Net interest inc 396.4 -1 1,596 -2 1,604 -1 Net interest income - n.m 1,647 -3 - n.m Net comm inc 303.0 0 1,185 0 1,202 -1 Net comm inc - n.m 1,253 -5 - n.m Total inc 787.4 0 3 , 111 -1 3,162 0 Net fin inc - n.m 295.0 n.m - n.m Total costs -517.9 0 -2,070 0 -2,109 0 Total income - n.m 3,270 -5 - n.m Loan losses -15.0 0 -80.0 -20 -128.0 0 Total costs - n.m -2,047 -1 - n.m EBT 254.5 0 961.5 -1 924.4 -2 EBLL - n.m - n.m - n.m Net income 191.6 0 721.2 -1 691.6 -2 C/I ratio (%) n.m n.m n.m n.m n.m n.m E PS (DKK) 1.56 0 5.9 -1 5.6 -2 Loan losses - n.m -88.0 9 - n.m EPS adj (DKK) 1.56 0 5.9 -1 5.6 -2 EBT - n.m 1,155 -17 - n.m Net income - n.m 861.0 -16 - n.m Source: Handelsbanken Capital Markets E PS (DKK) - n.m 6.9 -15 - n.m EPS adj (DKK) - n.m 7.3 -19 - n.m Source: Handelsbanken Capital Markets and FactSet

2 Results Comment, Spar Nord, February 7, 2020

Q4 review

Spar Nord’s reported core income was above our and consensus estimates, thanks to stronger-than-expected market value adjustments and other income. Growth in bank lending volumes continued, albeit at a slower pace than in H1 2019. Costs were higher than expected, partly owing to extraordinary items.

Table 1: Q4 2019 outcome versus consensus Actual HCM est Consensus De v. (DKKm ) DKKm Q419 Q319 Gr. Q419 De v. Q419 De v. HCM Cons NII 396 402 -1% 405 -2.2% 405 -2.2% -9 -9 Commis s ion 290 315 -8% 286 1% 305 -5% 4 -15 Market value adj. 67 86 -22% 60 12% 57 18% 7 10 Equity method 0 0 n.m 0 n.a. - n.a. 0 n.a. Other income 25 70 -64% 13 95% 16 59% 12 9 Core income 779 873 -11% 764 2% 773 1% 15 6 Total costs -539 -466 16% -525 3% -533 1% -14 -6 Core earnings bef LL 239 407 -41% 239 0% 240 0% 0 -1 Loan losses -12 -9 33% -10 20% -11 9% -2 -1 Core earnings 227 398 -43% 228 0% 241 -6% -1 -14 EBT 227 398 -43% 228 0% 229 -1% -1 -2 Net profit 182 331 -45% 183 -1% 181 1% -1 1 EPS 1.4 2.6 -46% 1.4 1% 1.3 4% 0.0 0.1 LL ratio 0.13% 0.09% 3bp 0.10% 2bp 0.11% 1bp 2bp 1bp CET1 ratio 14.7% 13.9% 73bp 14.0% 63bp 14.0% 65bp 63bp 65bp RWA , DKKbn 56.0 57.2 -2% 57.6 -3% 57.6 -3% -2 -2 Source: Handelsbanken Capital Markets and FactSet

Lending volume – growth momentum softer Total lending volume In Q4 2019, the total lending volume, excluding guarantees and repos, increased by increased 1.6% q-o-q DKK 0.7bn (1.6% q-o-q), after an increase of DKK 0.4bn in Q3 2019. Leasing continued to grow at around DKK 200m.

Figure 1: Lending volumes (excluding repos) DKKm 50,000 48,000 46,000 44,000 43,157 42,000 40,000 38,000 36,000 34,000 32,000 30,000 Q118 Q119 Q120e Q121e Q122e

Lending+leasing, DKKm

Source: Handelsbanken Capital Markets

NII – margin pressure increased Spar Nord’s NII was Spar Nord’s NII came in at DKK 396m, down from DKK 402m in Q3, and faced above market headwind from increasing margin pressure on lending and an increasing level of expectations deposits. Thus, lending margin pressure continued at a higher level than expected. Accordingly, we lower our expectations for the NII trend.

3 Results Comment, Spar Nord, February 7, 2020

However, we note that the effects from repricing of commercial and retail deposits are expected to provide tailwind of DKK 30m and DKK 40m respectively to NII in 2020, masking what we consider to be a troubling trend.

Figure 2: Average interest rate on bank lending incl. leasing (day count adj.) Basis points Percent 60 4.20% 50 4.00% 40 30 3.80% 20 3.60% 10 0 3.40% -10 3.20% -20 -30 3.00% Q118 Q119 Q120e Q121e Q122e

Change in bp Average rate on bank lending including leasing

Source: Handelsbanken Capital Markets

Commissions – support from remortgaging activity Commission income Commission income came in at DKK 290m versus consensus of DKK 305m (our of DKK 315m estimate: DKK 286m) and DKK 313m in Q3 2019. Securities trading and custody came in at DKK 100m (DKK 93m in Q3 2019). Loan transaction fees dropped to DKK 141m (DKK 170m in Q2 2019), mainly owing to lower remortgaging activity. We expect the refinancing activity to provide less support in Q1 2020.

Distributed mortgage loans to Totalkredit increased by DKK 1.9bn q-o-q and now total DKK 77.1bn. Spar Nord increased distributed mortgage loans by DKK 5.6bn in 2019.

Commissions for 2019 were significantly impacted by high remortgaging activity of around DKK 100m, we estimate. Furthermore, changes to accounting practices in Q2 2019 will add a headwind of around DKK 10m for 2020, and lower prices for certain asset management products offer another headwind of approximately DKK 40m. However, we expect Spar Nord to offset part of the headwinds through the introduction of new price initiatives, changing customer programmes and launching new payment cards, likely in the range DKK 75-90m combined.

Figure 3: Commission income DKKm 340

320 296 299 299 300 290

280 271

260

240

220

200 Q118 Q119 Q120e Q121e Q122e

Net fee and commissions income

Source: Handelsbanken Capital Markets

4 Results Comment, Spar Nord, February 7, 2020

Costs – extraordinary items Spar Nord expected annual cost inflation to be around 4.0%, thereby indicating a 2019 level of around DKK 2,000m and reported DKK 2,014m. Q4 2019 included extraordinary costs of DKK 5-10m, but underlying cost inflation still seemed slightly higher than expected.

According to Spar Nord, we should expect a headwind of 2.5% inflation on the salary base in 2020 (salary base was DKK 1,218m in 2019) and higher IT costs related to projects running at the data centre, BEC. We expect total costs to increase to DKK 2,070m in 2020.

Figure 4: Costs

DKKm 600

500

400

300

200

100

0 Q118 Q119 Q120e Q121e Q122e Staff costs Other expenses Depreciation Non-recurring costs

Source: Handelsbanken Capital Markets

Guidance for 2020 For 2020, Spar Nord is guiding for core earnings before loan losses in the range of DKK 900-1,100m, below consensus of DKK 1,145m (our estimate: DKK 1,041m)

Profit after tax is expected to be in the range of DKK 625-825m versus consensus of DKK 838m (our estimate: DKK 769m).

Impairments are expected to be higher than the DKK 22m in 2019 but to remain low versus consensus at DKK 56m (our estimate: DKK 80m).

Estimate changes Based on the performance in Q4, especially a weaker-than-expected trend for lending margins and a slightly higher-than-expected cost base, we lower adjusted EPS by a net of 1.1% for 2020e and 2.4% for 2021e.

Recommendation change We lower our target price to DKK 65 (68) and downgrade our recommendation to SELL (Hold), as we find no upside to the current share price over our 12-month investment horizon and expect pricing initiatives to mask lending margin pressure and a lower level of lending growth, leading to disappointment down the road.

5 Results Comment, Spar Nord, February 7, 2020

Table 2: Forecast changes after Q4 New estimates Old estimates Change DKKm 19 20e 21e 22e 20e 21e 20e 21e NII 1,573 1,596 1,604 1,579 1,629 1,614 -2.0% -0.6% Commis s ion 1,226 1,185 1,202 1,202 1,185 1,212 0.0% -1% Market value adj. 379 270 300 300 270 300 0.0% 0% Equity method 0 0 0 0 0 0 n.a n.a Other income 161 60 56 56 52 52 15.4% 8% Core income 3,340 3,111 3,162 3,137 3,136 3,177 -0.8% 0% Total costs -2,014 -2,070 -2,109 -2,166 -2,064 -2,103 0.3% 0% Core earnings bef LL 1,326 1,041 1,052 971 1,072 1,074 -2.8% -2% Loan losses -22 -80 -128 -128 -100 -128 -20.0% 0% Core earnings 1,304 961 924 843 972 946 -1.1% -2% EBT 1,304 961 924 843 972 946 -1.1% -2% Net profit 1,061 769 740 675 778 757 -1.1% -2% EPS 8.2 5.9 5.6 5.1 5.9 5.8 -1.1% -2% EPS adj 8.1 5.9 5.6 5.1 5.9 5.8 -1.1% -2.4% DPS 3.5 4.1 3.9 3.6 4.1 4.0 0% -3% ROE rep, % 11.7 8.0 7.4 6.6 8.1 7.7 -0.1pp -0.2pp RoTE adj 11.8 8.1 7.6 6.7 8.2 7.8 -0.1pp -0.2pp LL ratio 0.06% 0.24% 0.38% 0.38% 0.30% 0.38% -6bp 0bp CET1 ratio 14.7% 14.5% 14.5% 14.4% 14.0% 14.0% 52bp 50bp RWA , DKKbn 56.0 57.3 58.8 60.3 59.0 60.5 -3% -3% Source: Handelsbanken Capital Markets

Table 3: HCMe versus consensus estimates HCM Consensus Deviation HCM vs cons 19 20e 21e 22e 20e 21e 20e 21e NII 1,573 1,596 1,604 1,579 1,632 1,647 -2.2% -2.6% Commis s ion 1,226 1,185 1,202 1,202 1,201 1,253 -1% -4% Market value adj. 379 270 300 300 295 295 -8% 2% Equity method 0 0 0 0 0 0 n.a n.a Other income 161 60 56 56 71 71 -15% -21% Core income 3,340 3,111 3,162 3,137 3,189 3,270 -2% -3% Total costs -2,014 -2,070 -2,109 -2,166 -2,044 -2,047 1% 3% Core earnings bef LL 1,326 1,041 1,052 971 1,145 1,223 -9% -14% Loan losses -22 -80 -128 -128 -56 -88 43% 45% EBT 1,304 961 924 843 1,113 1,155 -14% -20% Net profit 1,061 769 740 675 838 861 -8% -14% EPS 8.2 5.9 5.6 5.1 6.6 6.9 -11% -18% EPS adj 8.1 5.9 5.6 5.1 0.0 0.0 n.a n.a LL ratio 0.06% 0.24% 0.38% 0.38% 0.17% 0.26% 7bp 12bp CET1 ratio 14.7% 14.5% 14.5% 14.4% 14.2% 14.3% 30bp 19bp RWA , DKKbn 56 57 59 60 59 61 -3% -4% DPS 3.5 4.1 3.9 3.6 3.6 3.6 13% 7%

ROE rep, % 11.7 8.0 7.4 6.6 5.5 5.1 2.4pp 2.3pp RoTE adj 11.8 8.1 7.6 6.7 7.2 7.0 0.9pp 0.5pp Source: Handelsbanken Capital Markets

Consensus estimates ahead of the Q4 report.

6 Results Comment, Spar Nord, February 7, 2020

Valuation charts Current vs. high/low/median, 10 years * P/E x 21 P/BV PE adjusted 1.3 18.3 18

15

0.9 0.9 12

9 9.2 8.4 6 11 12 13 14 15 16 17 18 19 20

0.3 6.1 P/E adjusted

P/BV x and ROE % C/I ratio 71

68

65 K K D 62

59

56 14 15 16 17 18 19 20 21

C/I ratio

Dividend (ordinary) and 10-year bond yield % 11

8

5

2

-1 10 11 12 13 14 15 16 17 18 19 20 Div Yield Bond Yield

Source: Handelsbanken Capital Markets and company fundamentals Note: The median value is the figure on left-hand side and the current value is shown by the arrow on the right-hand side.

7 Results Comment, Spar Nord, February 7, 2020

Momentum

Share price and recommendation Target and share price DKK DKK 95 75

Buy

85 70

75 65 Hold 65 60

55 55

Sell 45 50 18 19 20 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Spar Nord SHB Cons. Spar Nord SHB Cons.

Revenues 2019 estimate revisions Revenues 2020 estimate revisions DKK DKK 3430 3320

3330 3250

3230 3180

3130 3110

3030 3040

2930 2970 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Revenues Cons. Revenues Cons.

EPS 2019 estimate revisions EPS 2020 estimate revisions DKK DKK 8.5 7.5

7.9 7

7.3 6.5

6.7 6

6.1 5.5

5.5 5 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Adj. EPS Cons. Adj. EPS Cons.

Source: Handelsbanken Capital Markets and FactSet

Opportunities Risks • Loan loss provisions to remain low • Weakening economic outlook for Denmark • Cost initiatives and containment • Income initiatives not paying off • Increasing payout to shareholders • Loan demand to remain subdued • Risk weight optimization (harmonisation with sector) • No successful M&A activity • M&A opportunities • Holding back on repayment of shareholders Source: Handelsbanken Capital Markets Source: Handelsbanken Capital Markets

8 Results Comment, Spar Nord, February 7, 2020

Valuation data DKK 2013 2014 2015 2016 2017 2018 2019e 2020e Share price year-end/current 49.2 58.0 61.0 81.0 72.1 52.3 68.1 68.1 Share price high 49.9 63.5 89.0 82.5 88.1 73.9 68.6 69.6 Share price low 25.5 47.9 57.0 49.1 66.3 50.7 50.2 62.8 Market cap (m) 6,165 7,271 7,655 9,959 8,864 6,430 8,373 8,373

P/E reported (x) 11 . 5 11 . 9 8.5 12.4 9.4 7.4 8.3 11 . 6 P/E adj (x) 11 . 1 14.4 11 . 4 12.2 9.0 7.7 8.4 11 . 6 P/Dividend creation (x) 6.3 n.m 6.4 14.5 13.2 20.6 11 . 5 15.6 P /BV (x) 0.94 1.03 1.02 1.28 1.09 0.77 0.94 0.91 P/BV tang. (x) 0.98 1.07 1.05 1.32 1.12 0.78 0.96 0.93 P /NAV (x) 0.98 1.07 1.05 1.32 1.12 0.78 0.96 0.93 ROE reported (%) 8.6 9.0 12.4 10.7 11 . 8 10.6 11 . 7 8.0 ROE adj (%) 8.8 7.4 9.2 11 . 1 13.0 10.7 12.1 8.5 ROE tangible (%) 8.9 9.3 12.7 11 . 0 12.1 10.8 12.0 8.1 RoRWA (%) 1.2 1.3 1.9 1.7 1.9 1.7 1.8 1.5

Tot div yield (%) 2.0 2.8 8.2 6.2 4.9 6.7 5.1 6.0 Payout ratio (%) 23.3 32.7 69.9 76.3 45.7 49.3 42.5 69.9 Total cash yield (%) n.m 1.6 2.0 6.9 9.6 5.1 5.1 5.1 Source: Handelsbanken Capital Markets Peer group valuation CCY Price (Sh. curr.) Mcap (EURm) P/E adj. (x) P/NAV (x) ROE adj, excl mino (%) Div yield - tot (%) 2020e 2020e 2020e 2020e Spar Nord DKK 68.1 1,120 11 . 6 0.9 8.0 6.0 Nordea SEK 78.3 30,009 10.6 1.1 8.8 6.1 SEB SEK 96.5 20,156 10.6 1.2 12.6 6.7 Swedbank SEK 150 15,939 9.3 1.5 12.7 5.3 Danske Bank DKK 11 5 13,189 10.6 0.8 6.3 4.8 Jyske Bank DKK 265 2,319 8.8 0.5 6.0 2.9 Ringkjobing Landbobank DKK 516 1,399 10.4 1.6 13.2 3.0 Sydbank DKK 150 1,115 9.8 0.7 7.5 4.8 BankNordik P/F DKK 11 8 151 6.4 - 7.5 6.3 Aktia Bank plc EUR 10.0 690 12.7 1.2 8.7 6.4 DNB NOK 164 24,801 9.5 1.1 12.3 5.9 SHB SEK 102 19,196 11 . 8 - 10.4 5.7

Average 10.2 1.1 9.5 5.3 Median 10.5 1.1 8.7 5.8 Average excl. Spar Nord 10.0 1.1 9.6 5.3 Median excl. Spar Nord 10.4 1.1 8.8 5.7 Source: Handelsbanken Capital Markets and FactSet

9 Results Comment, Spar Nord, February 7, 2020

P&L accounts – quarterly data DKKm Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20e Q2 20e Q3 20e

P&L Net interest income 390.0 378.0 397.0 402.0 396.0 396.4 395.7 401.5 Net commission income 271.0 317.0 304.0 315.0 290.0 303.0 294.0 292.0 Net trading income 8.0 118.0 108.0 86.0 67.4 70.0 70.0 70.0 Other income 27.0 42.0 24.0 70.0 25.4 18.0 14.0 14.0 Total income 696.0 855.0 833.0 873.0 778.8 787.4 773.7 777.5 Employee costs -311.0 -306.0 -307.0 -281.0 -323.7 -313.7 -314.7 -288.0 Other expenses -185.0 -212.0 -184.0 -185.0 -215.0 -204.2 -192.7 -208.5 Total costs -506.0 -518.0 -491.0 -466.0 -538.7 -517.9 -507.4 -496.5 Profit before loan losses 190.0 337.0 342.0 407.0 240.1 269.5 266.4 281.0 Loan losses -106.0 -10.0 9.0 -9.0 -12.0 -15.0 -18.0 -23.0 Core earnings 84.0 327.0 351.0 398.0 228.1 254.5 248.4 258.0 EBT 84.0 327.0 351.0 398.0 228.1 254.5 248.4 258.0 Reported tax -12.0 -63.0 -69.0 -67.0 -44.0 -50.9 -49.7 -51.6 tax rate (%) 14.3 19.3 19.7 16.8 19.3 20.0 20.0 20.0 Minorities -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 Net income 60.0 252.0 270.0 319.0 172.1 191.6 186.7 194.4 EPS net profit (DKK) 0.5 2.0 2.2 2.6 1.4 1.6 1.5 1.6 CET 1 ratio (%) 14.0 14.3 13.9 13.9 14.7 14.5 14.6 14.7 Risk-weighted assets (RWA) 53,858 54,543 56,152 57,158 55,963 56,323 56,689 57,010

Grow th (%) Net interest income 4.7 -2.8 3.4 4.1 1.5 4.9 -0.3 -0.1 Total income -9.9 4.5 -8.0 13.2 11 . 9 -7.9 -7.1 -10.9 Total costs -3.6 9.3 -3.9 7.7 6.5 0.0 3.3 6.6 EBT -64.2 -10.9 -1.1 38.1 171.5 -22.2 -29.2 -35.2 Net income -66.3 -15.7 -11 . 8 54.0 186.8 -24.0 -30.9 -39.1 EPS net profit -66.3 -15.7 -11 . 8 54.0 186.8 -24.0 -30.9 -39.1 EPS adj incl EV n.m -21.8 -20.2 69.2 n.m -24.7 -31.2 -41.3

Key ratios (%) Interest margin total assets 1.9 1.8 1.8 1.8 1.8 1.7 1.3 1.3 NII/RWA 0.75 0.72 0.74 0.73 0.71 0.71 0.70 0.71 C/I ratio, reported 72.7 60.6 58.9 53.4 69.2 65.8 65.6 63.9 C/I ratio, adj 72.7 60.6 58.9 53.4 69.2 65.8 65.6 63.9 C/I ratio incl loan losses 87.9 61.8 57.9 54.4 70.7 67.7 67.9 66.8 Loan loss ratio 1.2 0 . 11 -0.10 0.09 0.13 0.16 0.18 0.23 Deposit coverage 142 139 140 139 138 138 138 138

Adjusted values Total adjustments to net inc 84.6 -2.4 -1.2 -12.4 33.4 - - - Core banking income 696.0 855.0 833.0 873.0 778.8 787.4 773.7 777.5 Core earnings bef loan loss 190.0 337.0 342.0 407.0 240.1 269.5 266.4 281.0 EBT 84.0 327.0 351.0 398.0 228.1 254.5 248.4 258.0 Net income -24.6 254.4 271.2 331.4 138.7 191.6 186.7 194.4 EPS adjusted, incl. EV (DKK) -0.2 2.1 2.2 2.7 1.1 1.6 1.5 1.6 Net income, adj incl EV -24.6 254.4 271.2 331.4 138.7 191.6 186.7 194.4 Source: Handelsbanken Capital Markets

Revenues, 12m rolling EBT, 12m rolling DKKm DKKm 1370 3440 5

1300 3370

3 1230 3300

3230 1160 1

3160 1090

3090 -1 1020 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

Sales, rolling 12m y/y growth EBT adj, rolling 12m y/y growth

Source: Handelsbanken Capital Markets Source: Handelsbanken Capital Markets

10 Results Comment, Spar Nord, February 7, 2020

Business areas – quarterly data DKKm Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20e Q2 20e Q3 20e

Income Local banks 674.0 711.0 713.0 741.0 653.0 660.2 648.7 651.9 Trading, Markets & Internal -22.0 85.0 75.0 53.0 -180.0 -182.0 -178.8 -179.7 Other core 44.0 58.0 45.0 79.0 158.0 159.7 157.0 157.7 To t a l 696 854 833 873 631 638 627 630 Local banks (%) -0.19 -7.8 4.7 7.1 -3.1 -7.1 -9.0 -12.0 Trading, Markets & Internal (%) -189 >900 400 51.4 718 <-200 <-200 <-200 Other core (%) -39.3 38.1 -78.5 75.6 259 175 249 99.7 Total (%) -10.1 4.4 -8.0 13.1 -9.3 -25.3 -24.7 -27.8

EBT Local banks 190.0 302.0 327.0 350.0 125.0 140.1 136.7 142.0 Trading, Markets & Internal -39.0 71.0 61.0 39.0 -203.0 -227.5 -222.0 -230.6 Other core -69.0 -47.0 -37.0 9.0 96.0 107.6 105.0 109.1 To t a l 82.0 326 351 398 18.0 20.2 19.7 20.4

EBT margin (%) Local banks 28.2 42.5 45.9 47.2 19.1 21.2 21.1 21.8 Trading, Markets & Internal 177 83.5 81.3 73.6 11 3 125 124 128 Other core -157 -81.0 -82.2 11 . 4 60.8 67.3 66.9 69.1 To t a l 11.8 38.2 42.1 45.6 2.9 3.2 3.1 3.2 Source: Handelsbanken Capital Markets P&L accounts – annual data DKKm 2014 2015 2016 2017 2018 2019 2020e 2021e

Income statement Net interest income 1,800 1,727 1,621 1,546 1,549 1,573 1,596 1,604 Net commission income 863.3 1,030 1,053 1,116 1,127 1,226 1,185 1,202 Net trading income 201.5 286.9 433.7 404.5 268.0 379.4 270.0 300.0 Other income 49.9 38.1 29.7 50.9 218.4 161.4 60.0 56.0 Non-recurring income 178 220 ------Total income 3,202 3,331 3,167 3,149 3,190 3,340 3 , 111 3,162 Employee costs -1,053 -1,087 -1,122 -1,166 -1,153 -1,218 -1,248 -1,269 Non recurring costs -139.0 -44.0 -59.0 -42.0 -12.0 - - - Other expenses -659.0 -646.2 -641.4 -667.9 -704.0 -796.0 -821.7 -839.8 Total costs -1,922 -1,843 -1,896 -1,936 -1,924 -2,014 -2,070 -2,109 Profit before loan losses 1,280 1,488 1,271 1,213 1,266 1,326 1,041 1,052 Loan losses -493.1 -315.6 -242.4 37.9 -172.0 -22.0 -80.0 -128.0 Core earnings 786.4 1,172 1,028 1,251 1,094 1,304 961.5 924.4 Investment income 20.9 ------EBT 705 1,074 1,028 1,251 1,094 1,304 961 924

Grow th (%) Net interest income -2.7 -4.0 -6.1 -4.7 0.2 1.5 1.5 0.5 Total income 9.0 4.0 -4.9 -0.6 1.3 4.7 -6.8 1.6 Total costs 10 -4 3 2 -0.6 5 3 2 EPS net profit 14.1 46.1 -8.3 16.7 -7.3 16.2 -28.8 -4.1 EPS adj incl EV -8.8 32.5 24.3 20.8 -15.1 19.0 -27.6 -4.1

Key ratios (%) Interest margin total assets 2.3 2.2 2.1 1.9 1.9 1.8 2.0 2.0 NII/RWA 3.9 3.6 3.4 3.2 3.0 2.8 3.3 3.3 C/I ratio, reported 60.0 55.3 59.9 61.5 60.3 60.3 66.5 66.7 C/I ratio, adj 59.0 57.8 58.0 60.1 59.9 60.3 66.5 66.7 C/I ratio incl loan losses 75.4 64.8 67.5 60.3 65.7 61.0 69.1 70.8 Loan loss ratio 1.4 0.95 0.73 -0 . 11 0.49 0.06 0.24 0.38 Deposit coverage 123 137 140 141 142 138 138 138

P rofitability (%) ROE tangible 9.3 12.7 11 . 0 12.1 10.8 12.0 8.1 7.6 ROA 0.80 1.2 1.1 1.2 1.1 1.2 0.82 0.78 RoRWA 1.3 1.9 1.7 1.9 1.7 1.8 1.5 1.4

Adjusted values Core banking income 3,024 3 , 111 3,167 3,149 3,190 3,340 3 , 111 3,162 Core earnings bef loan loss 1,241 1,312 1,330 1,255 1,278 1,326 1,041 1,052 Source: Handelsbanken Capital Markets

11 Results Comment, Spar Nord, February 7, 2020

Business areas – annual data DKKm 2014 2015 2016 2017 2018 2019 2020e 2021e

Income Local banks 2,577 2,692 2,670 2,737 2,818 2,818 2,609 2,651 Trading, Markets & Internal 258 240 292 240 33 33 -719 -731 Other core 367 398 204 172 340 340 631 641 Reclassification and discountinued 125 58 50 31 - - - - To t a l 3,327 3,389 3,217 3,180 3,191 3,191 2,521 2,562

Income growth (%) Local banks 10 4 -1 3 3 0 -7 2 Trading, Markets & Internal -24 -7 22 -18 -86 0 <-999 2 Other core 230 8 -49 -16 98 0 86 2 Reclassification and discountinued -61 -54 -14 -38 n.m n.m n.m n.m To t a l 7.2 1.8 -5.1 -1.1 0.35 0 -21.0 1.6

EBT Local banks 564 834 850 1,192 1,104 1,104 529 509 Trading, Markets & Internal 207 198 239 197 -32 -32 -859 -826 Other core -87 42 -61 -138 21 21 406 391 Reclassification and discountinued 21 ------To t a l 705 1,074 1,028 1,251 1,093 1,093 76 73

EBT margin (%) Local banks 21.9 31.0 31.8 43.6 39.2 39.2 20.3 19.2 Trading, Markets & Internal 80.1 82.4 81.8 82.1 -97.0 -97.0 120 11 3 Other core -23.6 10.5 -29.9 -80.2 6.2 6.2 64.4 60.9 Reclassification and discountinued 16.7 0 0 0 n.m n.m n.m n.m To t a l 21.2 31.7 32.0 39.3 34.3 34.3 3.0 2.9 Source: Handelsbanken Capital Markets Forecast balance sheet – annual data DKKm 2015 2016 2017 2018 2019 2020e 2021e Cash and cash balances with central banks 610 595 1,298 1,029 1,152 1,182 1,213 Lending to the public 32,630 33,130 34,547 35,797 38,525 39,536 40,574 Intangible assets 215 194 184 178 174 167 161 Goodwill 792 745 740 683 788 785 782 Oth assets 42,902 44,554 44,338 45,789 53,262 52,535 54,382 Total assets 76,357 78,474 80,367 82,793 93,113 93,421 96,330 Equity 7,475 7,765 8,114 8,380 8,901 9,216 9,427 Shareholders equity 7,475 7,765 8,114 8,380 8,901 9,216 9,427 Loans & deposits from credit institutions 3,740 2,430 1,964 2,466 4,062 4,169 4,278 Deposits from customers 44,736 46,464 48,843 50,773 53,279 54,678 56,113 Oth liabilities 19,318 20,722 20,302 19,842 25,549 24,002 25,119 Subordinated loans 1,089 1,093 1,144 1,332 1,322 1,357 1,392 Total equity & liabilities 76,357 78,474 80,367 82,793 93,113 93,421 96,330

Lending (%) -5.0 1.5 4.3 3.6 7.6 2.6 2.6 Deposits (%) 5.9 3.9 5.1 4.0 4.9 2.6 2.6 Source: Handelsbanken Capital Markets Financial ratios – annual data DKKm 2014 2015 2016 2017 2018 2019 2020e 2021e

RWA 49,005 46,500 47,486 49,546 53,858 55,963 57,335 58,793 Impaired loans 4,789 3,999 4,216 3,130 3,796 2,290 2,027 1,795 Loan loss reserves -2,149 -1,998 -1,994 -1,616 -1,945 -1,503 -1,331 -1,178 Net impaired loans 2,640 2,001 2,222 1,514 1,851 787 697 617 Equity/total assets (%) 8.9 9.8 9.9 10.1 10.1 9.6 9.9 9.8 Tier 1 capital ratio (%) 13.3 14.9 15.6 16.0 15.6 16.1 16.0 15.9 CET 1 ratio (%) 13.0 14.4 14.0 14.4 14.0 14.7 14.5 14.5 Tangible equity ratio (%) 8.6 9.5 9.6 9.9 9.9 9.4 9.7 9.6 Total capital ratio (%) 15.0 17.0 17.7 18.2 18.0 18.5 18.3 18.3 Impaired loans/loans (%) 14.0 12.0 12.7 9.2 10.8 6.1 6.0 5.3 Loan loss reserve/loans (%) 6.3 6.0 6.0 4.8 5.5 4.0 4.0 3.5 Reported tax rate (%) 13.0 16.5 18.5 20.9 15.9 18.6 20.0 20.0 Source: Handelsbanken Capital Markets

12 Results Comment, Spar Nord, February 7, 2020

Per share data m 2014 2015 2016 2017 2018 2019 2020e 2021e Nr of shares, year-end 125.4 125.5 122.9 122.9 122.9 122.9 122.9 122.9 Nr of shares, average 125.4 125.5 123.9 122.9 122.9 122.9 122.9 122.9 EPS reported (DKK) 4.89 7.1 6.6 7.7 7.1 8.2 5.9 5.6 Y-o-y growth (%) 14.1 46.1 -8.3 16.7 -7.3 16.2 -28.8 -4.1 EPS adj (DKK) 4.03 5.3 6.6 8.0 6.8 8.1 5.9 5.6 Y-o-y growth (%) -8.8 32.5 24.3 20.8 -15.1 19.0 -27.6 -4.1 EPS adj incl EV (DKK) 4.03 5.3 6.6 8.0 6.8 8.1 5.9 5.6 Y-o-y growth (%) -8.8 32.5 24.3 20.8 -15.1 19.0 -27.6 -4.1 Dividend creation (DKK) -1.14 9.5 5.6 5.5 2.53 5.9 4.36 4.02 DPS - ordinary (DKK) 1.60 5.0 5.0 3.50 3.50 3.50 4.10 3.90 Payout ratio (%) 32.7 69.9 76.3 45.7 49.3 42.5 69.9 69.3 Tot cash payout ratio (%) 20.4 22.4 76.3 65.4 49.3 42.5 59.7 72.9 Book value (DKK) 56.1 59.6 63.2 66.0 68.2 72.4 75.0 76.7 Y-o-y growth (%) 7.6 6.2 6.0 4.5 3.3 6.2 3.5 2.3 NAV (DKK) 54.3 57.9 61.6 64.5 66.7 71.0 73.6 75.4 Source: Handelsbanken Capital Markets

13 Results Comment, Spar Nord, February 7, 2020

Disclaimer

Recommendation structure and allocations Handelsbanken Capital Markets Equity Research (HCM) employs a three-graded recommendation scale. The recommendations reflect the analyst’s assessment of how much the share price may appreciate or depreciate in absolute terms in a 12-month time horizon and takes into account risks related to both fundamental expectations and share performance. This assessment is not based on a proprietary HCM model and the basis for the analyst’s assessment is dependent on the characteristics of the sector and the company and a multitude of fundamental and timing factors are incorporated. For more detailed information about the recommendation structure please consult the Handelsbanken Capital Markets website: https://www.researchonline.se/desc/recstruct. Investment ratings are determined by the ranges described in the table below. The recommendations do not represent the analyst’s or the bank’s assessment of the company’s fundamental value or quality. The recommendations and absolute performance intervals, together with the allocation of the rating categories amongst companies under coverage and amongst companies under coverage for which Handelsbanken has provided investment banking services in the past 12 months are listed below:

Ratings: definitions and allocations

1 2 3 HCM rating RTP is expected to be HCM Universe IB services Buy above 10% 39% 10% Hold between 0% and +10% 41% 16% Sell below 0% 19% 26%

1 RTP is defined as the expected share price appreciation or depreciation including dividends over the next 12 months 2 Percentage of companies under coverage within each recommendation 3 Percentage of companies within each recommendation for which investment banking services have been provided in the past 12 months

Source: Handelsbanken Capital Markets, as per 7/2 2020 935 143172 UnderWork Sell DKK 68.10 Sell Downgraded

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A list of all recommendations made by investment research during the preceding 12-month period is available here: https://www.researchonline.se/desc/rechist.

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Unless otherwise specified, share prices mentioned in this report refer to the closing price of the previous day.

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Valuation and methodology Target prices, outlooks and recommendations expressed in this research report are based on a combination of valuation models, such as discounted cash flow (DCF) and relative valuation to peers using ratios such as price-to-earnings (P/E), enterprise-value-to-operating-profit (EV/EBITDA), price-to-book (P/B) and earnings models. Sales and earnings forecasts are based on historical financial data as reported by the company and the analyst's expectations for company-specific performance are derived from expectations of micro- and macroeconomic developments. The company's different business segments are modelled separately in this process and then aggregated to achieve group forecasts for sales, earnings, cash flow and the balance sheet. For more detailed information about the valuation and methodology please consult the Handelsbanken Capital Markets website: https://www.researchonline.se/desc/disclaimers.

14 Results Comment, Spar Nord, February 7, 2020

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15 Results Comment, Spar Nord, February 7, 2020

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16 Results Comment, Spar Nord, February 7, 2020

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Spar Nord This report has not been given to the subject company, or any other external party, prior to publication to approve the accuracy of the facts presented. The subject company has not been notified of the recommendation, target price or estimate changes, as stated in this report, prior to publication.

Feb 06. 2020: Spar Nord - Handelsbanken's analysts Thomas Eskildsen and Maths Liljedahl have no positions in Spar Nord or a related instrument.

Handelsbanken beneficially owns one percent or more of any class of common equity securities of the company that is the subject of this research report.

On 2020-02-07 the recommendation Hold, which was set on 2019-04-25 at the share price of DKK 57.10, was changed to the current recommendation Sell at a share price of DKK 68.10.

Share prices mentioned in this report refer to the preliminary closing price from 2020-02-06.

For more company-specific disclosure texts, please consult the Handelsbanken Capital Markets website: https://www.researchonline.se/desc/disclosure.

17

Company overview

DKKm 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

P& L Net interest income 858 862 890 1,011 1,150 1,502 1,768 1,608 1,472 1,542 1,849 1,800 1,727 1,621 1,546 1,549 1,573 1,596 1,604 Net commission income 282 299 392 470 483 402 417 506 477 557 723 863 1,030 1,053 1,116 1,127 1,226 1,185 1,202 Equity method -10 34 49 84 99 32 36 61 39 55 66 110 28 30 32 27 - - - Dividends 25 ------Other income 25 37 74 61 76 90 100 133 40 36 99 50 38 30 51 218 161 60 56 Non-recurring income ------178 220 ------Total income 1,261 1,383 1,621 1,835 1,989 1,957 2,624 2,575 2,158 2,432 2,938 3,202 3,331 3,167 3,149 3,190 3,340 3,111 3,162 Profit bef loan losses 416 477 589 673 703 577 1,003 933 698 931 1,197 1,280 1,488 1,271 1,213 1,266 1,326 1,041 1,052 EBT 313 408 614 1,033 833 124 145 133 303 253 670 705 1,074 1,028 1,251 1,094 1,304 961 924 Net income 237 324 479 829 680 95 118 105 292 234 536 614 897 812 941 872 1,013 721 692 growth ( %) 104 36.6 48.1 72.8 -17.9 -86.0 23.2 -10.6 178 -19.8 129 14.5 46.2 - 9.4 15.8 - 7.3 16.2 -28.8 - 4.1 Adj net income 164 254 432 719 625 83 325 340 208 231 552 505 669 822 985 837 996 721 692 growth ( %) 41.2 54.6 70.0 66.6 -13.1 -86.7 291 4.6 -38.8 11.1 139 - 8.5 32.6 22.8 19.9 -15.1 19.0 -27.6 - 4.1

Balance sheet 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e Lending 17,836 16,887 23,879 30,051 35,270 35,801 30,791 32,271 31,189 34,916 33,773 34,351 32,630 33,130 34,547 35,797 38,525 39,536 40,574 Intangible assets - 47 45 52 58 173 166 158 131 200 214 224 215 194 184 178 174 167 161 Total assets 32,401 36,677 45,962 58,565 63,394 69,268 64,529 67,436 70,081 79,146 74,605 78,825 76,357 78,474 80,367 82,793 93,113 93,421 96,330 Deposits 17,541 18,519 19,399 22,703 27,387 33,833 31,931 31,204 31,088 41,922 41,831 42,236 44,736 46,464 48,843 50,773 53,279 54,678 56,113 Equity 2,067 2,361 3,039 3,649 4,138 4,024 4,143 4,374 4,627 5,975 6,533 7,033 7,475 7,765 8,114 8,380 8,901 9,216 9,427 Total liabilities 32,401 36,677 45,962 58,565 63,394 69,268 64,529 67,436 70,081 79,146 74,605 78,825 76,357 78,474 80,367 82,793 93,113 93,421 96,330

R at ios ( %) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e ROE reported 12.4 14.6 17.8 24.8 17.5 2.3 2.9 2.5 5.6 3.7 8.6 9.0 12.4 10.7 11.8 10.6 11.7 8.0 7.4 ROE tangible 12.4 14.8 18.1 25.1 17.7 2.4 3.0 2.6 5.7 3.8 8.9 9.3 12.7 11.0 12.1 10.8 12.0 8.1 7.6 ROE adj 8.6 11.5 16.0 21.5 16.0 2.0 8.0 8.0 3.7 3.7 8.8 7.4 9.2 10.8 12.4 10.1 11.5 8.0 7.4 ROA 0.74 0.94 1.2 1.6 1.1 0.14 0.18 0.16 0.36 0.26 0.70 0.80 1.2 1.1 1.2 1.1 1.2 0.82 0.78 RoRWA 2.6 1.4 1.7 2.4 1.6 0.22 0.28 0.24 0.68 0.56 1.2 1.3 1.9 1.7 1.9 1.7 1.8 1.5 1.4 N II/R W A 9.6 3.6 3.1 2.9 2.8 3.5 4.3 3.7 3.4 3.7 4.2 3.9 3.6 3.4 3.2 3.0 2.8 3.3 3.3 C/I ratio, reported 67.0 65.5 63.6 63.3 64.7 70.5 61.8 63.8 67.6 61.7 59.3 60.0 55.3 59.9 61.5 60.3 60.3 66.5 66.7 Deposit sales 98.3 110 81.2 75.5 77.6 94.5 104 96.7 99.7 120 124 123 137 140 141 142 138 138 138 Equity/total assets 6.4 6.4 6.6 6.2 6.5 5.8 6.4 6.5 6.6 7.5 8.8 8.9 9.8 9.9 10.1 10.1 9.6 9.9 9.8 T1 ratio 9.0 8.5 9.9 9.7 9.4 9.7 13.2 13.2 13.3 15.1 17.4 13.3 14.9 15.6 16.0 15.6 16.1 16.0 15.9 Core T1 ratio - 8.5 8.8 8.8 8.6 8.9 9.3 9.3 10.4 12.1 14.1 13.0 14.4 14.0 14.4 14.0 14.7 14.5 14.5

Share data (DKK) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e Avg no shares (m) 57.1 51.9 55.7 57.1 57.1 57.1 57.1 57.1 57.0 57.0 125 125 125 124 123 123 123 123 123 change ( %) 0.0 -9 7 2 0.0 0.0 0.0 0.0 - 0.2 0.0 120 0.3 0.0 -1 - 0.8 0.0 0.0 0.0 0.0 Bought back shares (m) ------51.3 ------Avg diluted shares (m) 57.1 51.9 55.7 57.1 57.1 57.1 57.1 57.1 57.0 108 125 125 125 124 123 123 123 123 123 change ( %) 0.0 - 9.1 7.4 2.4 0.0 0.0 0.0 0.0 - 0.2 90.2 15.4 0.3 0.0 - 1.2 - 0.8 0.0 0.0 0.0 0.0 Share price YE 34.9 50.4 65.7 96.5 82.0 30.1 39.3 43.1 22.6 25.8 49.2 58.0 61.0 81.0 72.1 52.3 68.1 68.1 68.1 Market cap (m) 1,994 2,613 3,745 5,509 4,682 1,715 2,240 2,462 1,281 3,227 6,165 7,271 7,655 9,959 8,864 6,430 8,373 8,373 8,373 EV (m) 1,994 2,613 3,745 5,509 4,682 1,715 2,240 2,462 1,281 3,227 6,165 7,271 7,655 9,959 8,864 6,430 8,373 8,373 8,373 EPS reported 4.15 6.2 8.6 14.5 11.9 1.67 2.06 1.84 5.1 2.16 4.29 4.89 7.1 6.6 7.7 7.1 8.2 5.9 5.6 growth ( %) 104 50 38 69 -18 -86 23 -11 179 -58 98 14 46 -8 17 -7 16 -29 -4 EPS adj 2.88 4.89 7.7 12.6 10.9 1.46 5.7 6.0 3.65 2.13 4.41 4.03 5.3 6.6 8.0 6.8 8.1 5.9 5.6 growth ( %) 41 70 58 63 -13 -87 291 5 -39 -42 107 -9 33 24 21 -15 19 -28 -4 EPS adj inc l EV 2.88 4.89 7.7 12.6 10.9 1.46 5.7 6.0 2.91 1.80 4.41 4.03 5.3 6.6 8.0 6.8 8.1 5.9 5.6 growth ( %) 41.2 70.1 58.3 62.7 -13.1 -86.7 290.8 4.6 -51.1 -38.3 145.9 - 8.8 32.5 24.3 20.8 -15.1 19.0 -27.6 - 4.1 BVPS 36.2 45.5 53.3 63.9 72.5 70.5 72.6 76.6 81.7 47.8 52.1 56.1 59.6 63.2 66.0 68.2 72.4 75.0 76.7 N AV 36.2 44.6 52.5 63.0 71.5 67.5 69.7 73.9 79.4 46.2 50.4 54.3 57.9 61.6 64.5 66.7 71.0 73.6 75.4 DPS - Ordinary - 3.00 3.00 3.00 3.00 - - - - - 1.00 1.60 5.0 5.0 3.50 3.50 3.50 4.10 3.90 Total cash distr./share 0.00 0.00 3.00 3.00 3.00 3.00 0.00 0.00 0.00 0.00 0.00 1.00 1.60 5.0 5.0 3.50 3.50 3.50 4.10

V a luat ion (x) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e P/E reported 8.4 8.1 7.6 6.6 6.9 18.0 19.1 23.4 4.4 11.9 11.5 11.9 8.5 12.4 9.4 7.4 8.3 11.6 12.1 P/E adjusted 12.1 10.3 8.5 7.7 7.5 20.6 6.9 7.2 6.2 12.1 11.1 14.4 11.4 12.2 9.0 7.7 8.4 11.6 12.1 P/E adj inc l EV 12.1 10.3 8.5 7.7 7.5 20.6 6.9 7.2 7.8 14.4 11.1 14.4 11.4 12.2 9.0 7.7 8.4 11.6 12.1 P/Div creation 9.5 n.m n.m >99 >99 8.7 8.9 n.m 2.9 n.m 6.3 n.m 6.4 14.5 13.2 20.6 11.5 15.6 16.9 P/PPP 4.8 5.5 6.2 8.2 6.7 3.0 2.2 2.6 1.8 3.0 5.1 5.7 5.1 7.9 7.3 5.1 6.3 8.0 8.0 P/BV 1.0 1.1 1.2 1.5 1.1 0.4 0.5 0.6 0.3 0.5 0.9 1.0 1.0 1.3 1.1 0.8 0.9 0.9 0.9 P/BV tangible 1.0 1.1 1.3 1.5 1.1 0.4 0.6 0.6 0.3 0.6 1.0 1.1 1.1 1.3 1.1 0.8 1.0 0.9 0.9 ROE reported ( %) 12.4 14.6 17.8 24.8 17.5 2.3 2.9 2.5 5.6 3.7 8.6 9.0 12.4 10.7 11.8 10.6 11.7 8.0 7.4 Tot div yield ( %) 0 6.0 4.6 3.1 3.7 0 0 0 0 0 2.0 2.8 8.2 6.2 4.9 6.7 5.1 6.0 5.7 Total cash yield ( %) n.m n.m 3.1 3.7 10.0 7.6 n.m n.m n.m n.m n.m 1.6 2.0 6.9 9.6 5.1 5.1 5.1 6.0

Event calendar Management Company profile Mar 31, 2020 AGM CEO Lasse Nyby Spar Nord has around 40% of its lending in the Northern part of Jutland, where it is May 06, 2020 (08:30) Q1 report CFO Thorkild Mathiasen market leader. The bank has nationwide branch coverage and assumes a challenger position outside North Jutland. The strategy is to run an uncomplicated bank. Mortgage IR Ole Madsen Aug 13, 2020 (08:30) H1 report business is referred to Totalkredit and DLR Kredit while Spar Nord has shifted IT Phone number - platform to BEC. The bank is rebuilding its leasing franchise, which was sold in 2011. Oct 29, 2020 (08:30) Q3 report

Svenska Handelsbanken AB (publ) Stockholm Copenhagen Helsinki Oslo London New York Blasieholmstorg 11 Havneholmen 29 Itämerenkatu 11-13 Tjuvholmen allé 11 3 Thomas More Square Handelsbanken Markets Securities, Inc. SE-106 70 Stockholm DK-1561 Copenhagen V FI-00180 Helsinki 875 Third Avenue, 4th Floor Postboks 1249 Vika London GB-E1W 1WY Tel. +46 8 701 10 00 Tel. +45 33 41 8200 Tel. +358 10 444 11 NO-0110 Oslo New York, NY 10022-7218 Tel. +44 207 578 8668 Fax. +46 8 611 11 80 Fax. +45 33 41 85 52 Fax. +358 10 444 2578 Tel. + 47 22 39 70 00 Tel. +1 212 326 5153 Fax. +44 207 578 8090 Fax. + 47 22 39 71 60 Fax. +1 212 326 2730 FINRA, SIPC