Sparebanken Vest Boligkreditt As

SPAREBANKEN VEST BOLIGKREDITT AS

Investor Presentation April 2015 SPV

EXECUTIVE SUMMARY

Norwegian . Moderate growth in Norway. There are prospects that growth in business investment and petroleum economy investment will be lower in the year ahead. A continued low oil price can enhance the downturn in petroleum investments . Capacity utilisation in the mainland economy has edged down, but is still expected to be close to normal level . Excellent financial position of the Norwegian government with large budget surplus of approx. 11.1% and the government pension fund (exceeding EUR 500bn) - accounting over 217.5% of GDP

Western Norwegian . An important business region in Norway with the most diversified industrial structure including oil and gas economy industry, metal industry, engineering, fish farming, fisheries, shipping and tourist industry . Unemployment in Western Norway is less than 2.2% and remains below the national average of 2.9%* . Good activity in the housing market

Sparebanken . The third largest savings bank in Norway with a strong position in Western Norway Vest . 76% of lending to retail customers, of which 95% in the form of residential mortgages . High capitalisation reflected by Capital Ratio of 15.6% and Core Tier 1 ratio of 14.0% at 31 Dec 2014 . Strong asset quality – lending only in Norway . Covered bonds is an important funding source for the Sparebanken Vest Group

Sparebanken . 100% owned and dedicated covered bond subsidiary of Sparebanken Vest Vest Boligkreditt . Cover pool consisting of 100% prime Norwegian residential mortgages . High quality cover pool reflected by the weighted average LTV of 56.7% . Covered bonds rated Aaa by Moody’s with three notches “leeway” . Strong legal framework for covered bonds in Norway with LTV limit of 75% for residential mortgages . Good position in the well-functioning domestic covered bond market which mitigates refinancing risk . Besides several domestic issuances, also five EUR benchmark covered bonds outstanding

2 1. NORWEGIAN ECONOMY

3 KEY INDICATORS OF THE NORWEGIAN ECONOMY 2009 2010 2011 2012 2013 2014E 2015E 2016E

GDP growth (Mainland) -1.6% 1.7% 2.5% 3.4% 2.0% 2.0% 1.8% 2.0% Inflation (CPI-ATE) 2.6% 1.4% 0.9% 1.2% 1.6% 2.3% 2.0% 2.0% Unemployment (AKU) 3.2% 3.6% 3.3% 3.2% 3.5% 3.6% 3.8% 4.0% Private consumption 0.0% 3.8% 2.5% 2.9% 2.1% 2.0% 1.8% 2.3% Interest rates (3m Nibor) 2.5% 2.5% 2.9% 2.2% 1.8% 1.7% 1.7% 1.7% Savings rate 7.1% 5.8% 7.3% 8.5% 9.0% 10.0% 10.5% 10.5% Budget surplus / GDP* 8.1% 8.9% 11.3% 11.6% 11.1% 10.8% 9.6% 8.7% Sovereign Wealth Fund / GDP* 111% 121% 122% 175% 218% 226%

GDP growth, Mainland, Norway** Investments in the petroleum sector (act/est)**

Source: Sparebanken Vest, *some estimates IMF WEO Source:** Makrobond/Sparebanken Vest 4 LOWER GROWTH - BUT STILL HIGH COMPARED TO MOST OTHER COUNTRIES

GDP rebased, 2000 = 100 GDP growth, Mainland, Norway

Source:Source: Makrobond/Sparebanken Vest Source: Makrobond/Sparebanken Vest Source: Makrobond/Sparebanken Vest

. GDP growth expected to be 2.0% in 2014 . Capacity utilization is expected to decrease somewhat this year, but remain close to a normal level ahead

5 OIL PRICE STABILIZED ON A NEW LOW LEVEL? - BELOW BREAK-EVEN FOR SOME DEEP-WATER NORTH SEA PROJECTS

6 NORWEGIAN BUDGET BREAK-EVEN OIL PRICE IS ZERO! - PETROLEUM FUND MECHANISM AND BUDGET FISCAL POLICY RULE

Petroleum revenues and return on investment

Non-oil revenues National Budget

Transfer to finance non-oil budget deficit Government Pension Fund Global NOK 7 000 billion «structural non oil deficit» Fiscal rule (real return on the fund over time, estimated at 4%)

7 ACTIVITY IN IMPORTANT INDUSTRIES DECLINES

Growth in petroleum investments %, Norway Residential investment as share of GDP, Norway

Source: Makrobond/Sparebanken Vest Source: Makrobond/Sparebanken Vest

8 FINANCIAL POSITION OF NORWEGIAN GOVERNMENT

Government primary balance % of GDP, OECD Government primary balance % of GDP, OECD estimate

Source: Makrobond/Sparebanken Vest Source: Makrobond/Sparebanken Vest . Public sector in Norway financially the most solid . Strong primary balance backed by high income among the OECD countries from the oil production . Norwegian government rated AAA/Aaa/AAA with stable outlook

9 GENUINE FINANCIAL POSITION

Net financial liabilities % of GDP (reversed) Sovereign wealth fund exceeding €500bn

Source: Makrobond/Sparebanken Vest Source: Makrobond/Sparebanken Vest . Compared with other industrial countries we have a . “Government Pension Fund Foreign”(Oil Fund) is solid “balance sheet” among the worlds largest sovereign wealth funds . Expected long-term return on the pension fund can be channelled to the government budget

EUR/NOK at 31.03.2014: 8.278 10 ECONOMY AMONG HOUSEHOLDS - HIGH SAVINGS RATE STRENGTHEN THE HOUSEHOLD BALANCE SHEET

Household savings rate Household interest and debt burden

Source: Macrobond/Sparebanken Vest Source: Macrobond/Sparebanken Vest

. Savings rate expected to be around 9% in 2014 . Best social security benefits support for unemployed people in the world - according to OECD survey

11 REGIONAL DIFFERENCES IN THE NORWEGIAN ECONOMY

. Value added per person employed was highest in Oslo and Western Norway . All counties in Western Norway above the national average

. High growth in the labour force Sparebanken Vest increases the demand for housing operating area . Unemployment in Western Norway has for many years been below the national average

LOW UNEMPLOYMENT AND LABOUR FORCE INCREASE - THE LABOUR FORCE HAS GROWN AT A HIGH RATE

Unemployment in Western Norway Labour force growth in Western Norway

Source: Makrobond/Sparebanken Vest Source: Makrobond/Sparebanken Vest

13 NORWEGIAN HOUSING MARKET – KEY FEATURES

Home ownership . Among the highest in the world - around 80% of households own their own home . Buy-to-let market is very limited in Norway

Social benefit . Best social security benefits for unemployed people in the world (according to OECD) system . On average unemployment benefit approx. 62% of previous salary . Unemployment benefits paid for minimum of 104 weeks

Tax incentives . All interest expenses are tax deductible in Norway . Low effective real estate tax - i.e. approx. 30-35 pct. of market value . Capital gain on a dwelling is tax-free after one year of occupancy by the owner

Personal liability . Borrowers personally liable for their debt - also after foreclosure/forced sale . Strong incentive to service debt reflected in low arrears . Transparent and reliable information about borrowers available to the lenders

Mortgage lending in . 95% of residential mortgage loans granted by banks Norway . Typical maturity 25-30 years . Around 90% of residential mortgages variable rate loans . Banks allowed to increase interest rates with a six weeks notice to the borrower . No “sub-prime” market in Norway

14 HOUSE PRICES - HOUSE PRICES IN NORWAY HAVE INCREASED SINCE 2008

Fundamental factors drive house prices

. Immigration and demographic changes drives up demand for housing in major cities . New dwellings too low to match the increased demand for houses . High employment, increased wages and continued low interest rates are important factors for price increases . House prices in major cities has recovered from downturn in 2013

Source: NEF Price Statistics

15 LONG TERM OVERVIEW OF HOUSE PRICES - HIGH ECONOMIC GROWTH CONDUCIVE TO RISING HOUSE PRICES

House prices deflated with CPI growth, 2000 = House prices deflated with gross national 100 disposable income per capita, 2000 = 100

Source:Source: Macrobond Makrobond/Sparebanken/Sparebanken Vest Vest Source:Source: Macrobond Makrobond/Sparebanken/Sparebanken Vest Vest . House prices in Norway correlate highly with increase in wages and disposable income

Source: OECD, Statistics Norway and Norges Bank

16 SUPPLY OF NEW HOUSING IS LIMITED

Gap between Housing units and New Population growth Western Norway Households

Source: Makrobond/Sparebanken Vest Source: Makrobond/Sparebanken Vest

Source: Statistics Norway 17 2. Sparebanken Vest

18 OVERVIEW OF SPAREBANKEN VEST

Sparebanken Vest in brief FY 2014 and FY 2013

. Established in 1823 and listed on Oslo Stock Exchange in 1995. NOK million 31.12.2014 Norway’s second oldest saving banks Total assets 147,070 Net loans 118,643 . Operating in Western Norway - the most diversified and wealthiest region in the country Deposits (retail and corporate) 66,448 Equity 10,76 . NOK 147 bn in total assets and over 250.000 retail customers Net interest margin 1.68% and 10.000 corporate customers ROE (annualised) 13.7%

Operating profit after write-downs and before tax 1,493 . The bank offers a broad spectrum of financial services incl. insurance, stock brokerage and real estate brokerage. Loan losses and write-downs on loans 410

NOK million 31.12.2013 . Focused on the retail market (76% of total lending) and small & medium sized enterprises (SME’s). Low risk profile and well Total assets 134,396 diversified corporate portfolio Net loans 112,024 Deposits (retail and corporate) 62,172 . ROE target: > 11 % Equity 9,541 Key developments in 2014: Net interest margin 1.67%

. Improved net interest income ROE (annualised) 11.7% . Growth in net commission income Operating profit after write-downs and before tax 1,221 . Increased contribution from associated companies . In line with cost reduction program Loan losses and write-downs on loans 280

Source: Sparebanken Vest 19 COMPANY STRUCTURE - SUBSIDIARIES AND ASSOCIATED COMPANIES

Sparebanken Vest Moody’s: A2 (stable)* Fitch: A- (stable)*

Fully owned Associated subsidiaries Companies

Eiendomsmegler Frende Forsikring Sparebanken Vest Brage Finans Vest AS Sparebanken Norne Securities (life and non-life Verd Boligkreditt Boligkreditt AS (leasing) (real estate Vest Eiendom AS 47.6% Insurances) 40% Aaa** 49.9% brooker) 39.7%

Other owners: 14 independent savings banks listed on slide 21

* Deposits Ratings ** Rating by Moody’s for covered bonds issued by Sparebanken Vest Boligkreditt 20 COOPERATION ON INSURANCE, LEASING AND BROKERAGE - STRONG RETAIL DISTRIBUTION PLATFORM THROUGH 14 INDEPENDENT SAVINGS BANKS

-Sparebanken Sør, Spareskillingsbanken, Flekkefjord Sparebank, Søgne & Greipstad Sparebank, Lillesand Sparebank

-Sparebanken Vest, Fana Sparebank, Haugesund Sparebank, Skudenes & Aakra Sparebank, Voss Sparebank, Luster Sparebank, Etne Sparebank, Sparebanken Sogn og Fjordane

- Sparebanken Øst

- Helgeland Sparebank

. All branches in Sparebanken Vest offer the customers personal insurance, while life insurance and compulsory occupational pension schemes are being offered to corporate clients . Frende Insurance has taken a good share of the insurance market in the market areas of the owners . Norne Securities creating platform for distribution of stock broking and corporate finance

21 GROWTH IN THE RETAIL AND CORPORATE MARKETS – RETAIL MARKET ACCOUNTS FOR 76% OF TOTAL LENDING

Retail Market Corporate Market Deposits: NOK 39.5 bill. – Lending NOK 91 bill. Deposits: NOK 26.9 bill. – Lending NOK 28.5 bill.

8,0 % 9,8 % 7%

5,2 %

2% 2,5 % 2,1 % 1,4 % -0,6 %

Goal 12 mnd 12 mn Q4 deposit Q4 lending Goal 12 growth 12 mnd Q4 deposit Q4 lending growth growth deposit growth deposit lending lending

COMMITMENTS IN DEFAULT AND POTENTIAL BAD DEBT* - RESULT OF TARGETED RESTRUCTURING WORK IN THE CORPORATE MARKET

2.500 5,00%

2.000 4,00%

1.500 3,00%

1.968

1.000 1.548 1.513 2,00% 1.351 1.119 1,64% 500 1,22% 1,34% 1,32% 1,00% 0,98%

226 233 263 251 237 - 0,00% Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

Retail Corporate % of total

*) Includes all defaults, not just defaults of payment. Includes commitments with individual write-downs, calculated as a percentage of the total lending volume. 23 CAPITAL PLANNING – LEVEL CONSIDERABLY HIGHER THAN THE MINIMUM AND BUFFER REQUIREMENTS

Core Tier 1 capital adequacy ratio taking into account Basel I floor Assumptions (ICAAP 2015–2017)

16,0 % . The bank wishes to be capitalised on a level with the biggest 13.5 % 13.5 % institutions. 14,0 % 12.9 % 12.2 % 12,0 % 11.2 % . The capital level of 13.5% ensures considerable freedom of 11% 11% 11% action even with a countercyclical capital buffer fully 10,0 % 10% implemented. 9% 8,0 % . Growth: 6,0 % . Retail market 7.0% . Corporate market 2.5% 4,0 %

2,0 % . An annual expected loss cost of 10 bp of gross lending

0,0 % . Continued capital accumulation in 2015 and 2016 with a 2013 2014 2015 2016 2017 distribution percentage at the lower end of the bank's

Core Equity Basel 1 floor dividend policy (50%/5%). An increased distribution percentage from 2017. Forecast Core Equity Basel 1 floor

Combined Pilar 1 minimum and Buffer requirements

24 STATUS FINANCIAL TARGETS 2014

Target Status

Lending growth in retail and corporate markets 6% / 2.5% 7.3% / 1.4%

Return on equity > 11% 13.7%

Cost growth 2% 0%

Capital accumulation 12.2% 12.2%

*12-month growth 30 OUTLOOK

. Digital developments, changed customer behaviour and regulatory changes are key framework conditions . Change processes and strategic measures that have been implemented make the bank better equipped to meet the future MEASURES . The future loss level will largely follow cyclical developments

. Interest margins under pressure . Goal of average cost growth of 2% in the parent bank still applies . Associated companies’ contribution to profits is expected to increase in 2014 . Distribution percentage in line with the capital plan

3. SPAREBANKEN VEST BOLIGKREDITT AS

27 EXECUTIVE SUMMARY SPAREBANKEN VEST BOLIGKREDITT . Wholly owned subsidiary of Sparebanken Vest - and a dedicated covered bond company . Revolving credit facility provided by Sparebanken Vest to cover payment obligations in the cover pool for a rolling 12 month period less amounts already disbursed under the facility . Loans transferred to Boligkreditt as true sale on a non-recourse basis . Cover pool 100% prime, Norwegian residential mortgages . FSA appointed investigator: Deloitte . Covered bonds rated Aaa by Moody’s – three notches “leeway” . Approval from the Norwegian FSA to report capital according to IRB methods . Loans transferred to the cover pool at 31.12.2015: NOK 52.2 billion (EUR 5.8 billion) . Covered bonds issued at 31.12.2015: NOK 46.7 billion (EUR 5.2 billion) . Pre-tax result for 2014: NOK 714.1 million (NOK 615.4 million for 2013) . Tier 1 capital ratio at 31.12.2014: 12.6% (30.0% IRB) . Total capital ratio at 31.12.2014 – transitional regime: 14.8% ( 35.2% IRB) . Risk weight for mortgages is 40% for Norwegian banks and covered bond companies.

EUR/NOK at 31.12.2015: 9.02 28 ELIGIBILITY CRITERIA FOR THE COVER POOL

. Employed retail clients and independent self employed individuals Customer criteria . Resident in Norway . No negative credit history

. Probability of default max 1.25% Credit criteria . Not in arrears . Not delinquent – 31 days or loss write-down

. Max LTV 75% Collateral . Recent valuations . Quarterly valuation from independent AVM provider

. Primary residences Type of properties . Cooperative housing loans . No holiday homes

. Principal repayment loans Type of products . Revolving credits (flexi-loans) . Fixed and variable rate loans (currently all loans are variable rate loans)

Source: Sparebanken Vest Boligkreditt

COVER POOL (1/2)

Cover pool as of 31.12.2014 Distribution according to LTV (indexed) Total cover pool NOK 53.5 bn Total loan balance (mortgages) NOK 52.1 bn 45% 39,1 % Average loan balance NOK 1,203,000 40% No. of loans 43,268 35% No of properties 39,129 30% WA seasoning (in months) 40 25% WA remaining terms (in months) 279 WA indexed LTV (limit) 56.7% 20% 17,1 % 17,2 %

WA indexed LTV (drawn amount) 54.9% 15% 12,0 % 12,0 % Variable rates 100% 10% Defaults (Basel) NOK 31.6 m 5% 2,5 % OC level (eligible)* 26.0% 0% OC level if house prices drop 30% 10.5 % 0-40% 40-50% 50-60% 60-70% 70-80% Over 80% . 100% prime Norwegian residential mortgages . Moody’s TPI of “High” . 2.6% substitute assets in the cover pool . Rated Aaa with “Leeway” of three notches** . 99.939% performing loans . Moody’s minimum OC-requirement: 4.5% . Cover Pool Collateral Score: 5.0%

*Based on hedged value of bonds 30 **Sparebanken Vest, the parent bank (A2), is under review for upgrade, which potentially will increase the leeway further

COVER POOL (2/2)

Geographic distribution Development in arrears and indexed LTV 1,0 % 75%

70%

0,8 % 65%

Rest of Norway (4.6%) 60% 0,6 % 55% 30-60

50% 60-90 0,4 % 90 45% LTV (RA) Sogn & Fjordane (5.4%) 0,2 % 40% 35% Hordaland (77.3%) 0,0 % 30%

Rogaland (12.7%)

Q408 Q209 Q409 Q210 Q410 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414

. Properties mainly located in the market area of . Low arrears Sparebanken Vest in Western Norway . LTVs calculated based on limit of flexible . Western Norway has the most diversified credit mortgages (i.e. undrawn portion industrial structure and features the lowest included) unemployment in Norway

AMORTISATION OF MORTGAGES VS. COVERED BOND MATURITIES

40 Covered Bonds

bn NOKbn 30 Planned amortisation cover pool 20 Real amortisation cover pool (2.5% 10 Prepayments)*

jul.19

jan.17

jun.17

okt.15 okt.20

feb.19

apr.18

des.14 sep.18 des.19

aug.16

nov.17

mai.15 mai.20 mar.16

. NOK 4.0 bn mature in 2015 ( incl. the first public EUR-transaction issued in 2010) . The maturity profile of CBs matches real amortisation in mortgage portfolio in the cover pool

* Refers to prepayment level of 2.5% per month, which is the long term average observed in the cover pool

32 RISK MANAGEMENT - LOW RISK LEVEL

. Credit risk framework is set out in separate document stating which loans can be bought . Board resolution required for any change in credit risk framework . Framework requirements: maximum risk level (PD), type of property, objective Credit risk documented LTV threshold and customer requirements . Credit risk managed by IRB standards

. Currency risk – 100% hedged by swaps, open limit of MNOK 5 . Interest rate risk – hedged by swaps if any, limit of 3% of equity (based on 1% parallel Market risk shift in yield curves* (* 2.5% in the 90 day time band) . No investments/placements in “risky” assets; Norwegian government or high quality fixed income securities (so far only rated Norwegian covered bonds investments)

. The law requires positive cash flow from the cover pool to cover bond holders . Soft bullet structure on all covered bonds issued Liquidity risk . Note Purchase Agreement with parent securing that Boligkreditt will be able to meet the next 12 months of maturities at all times

33 Transfer of mortgages to Boligkreditt

Potential Customer Customer Customer Application Payments

Approval and disbursement Underwriting

Sparebanken Vest Servicing Eligible for Boligkreditt? Boligkreditt’s Account If “Yes”, transfer Regular transfer of documents of funds Sparebanken Vest Boligkreditt Security Ownership over loan

34 SUMMARY OF SPAREBANKEN VEST BOLIGKREDITT

. Cover pool consisting of prime residential mortgages in Norway

. Strength of the cover pool reflected in the low average LTV and high granularity

. Strict underwriting and eligibility criteria for transfers to Sparebanken Vest Boligkreditt

. Covered bonds rated Aaa by Moodys - with «leeway» of three notches

. Solid financial position of Sparebanken Vest and strong market position in Western Norway

. Strong legal framework for covered bonds in Norway including strict LTV limits, supervision by the Norwegian FSA, requirement for an independent inspector, and prudent liquidity, currency and interest rate risk management

. Strong credit culture of the Norwegian households, supported by very low unemployment, sound financial position and generous social benefit system (the best in the OECD)

. Strong performance of the Norwegian economy compared to other European economies

35 CONTACT DETAILS AND WEB-SITES

Egil Mokleiv, Managing Director/CEO, Sparebanken Vest Boligkreditt AS . Direct line: +47 55217109 . Mobile: +47 95265976 . E-mail: [email protected]

Fredrik Skarsvåg, Controller, Sparebanken Vest Boligkreditt AS . Direct line: +47 55217136 . Mobile: +47 98857275 . E-mail: [email protected]

Web-site for Sparebanken Vest: www.spv.no

Web-site for Sparebanken Vest Boligkreditt AS: https://www.spv.no/om-oss/investor-relations/sparebanken-vest-boligkreditt/

Web-site for the Norwegian Covered Bonds Market: http://www.fno.no/en/main/covered-bonds