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TRANSLATED VERSION 3 Managing director 5 Key financial figures 7 Governing bodies and officers 8 The board of directors Content 10 The management group 11 Sustainability and corporate responsibility at Sandnes Sparebank 2018 19 Corporate governance 24 Investor information 30 Directors report 41 Annual accounts – Statement of income and comprehensive income – Balance sheet – Statement of equity – Cash flow statement – Notes 123 AMP 126 Statement pursuant to § 5-5 of the Norwegian Securities Trading Act 127 Auditor’s report 132 Appendix to 2019 Annual Financial Statements The year 2019 2019 has been a very good year for Sandnes Sparebank. We are committed to take our social responsibility seriously, I am both proud and humble with respect to the Bank’s and during 2019 we distributed gifts to generally beneficial progress. Most of all, I am proud that the Bank has been purposes amounting to NOK 16 million. Some gift examples: able to welcome many new customers, that the custo- a practice doll for trauma treatment to Helse Stavanger, ergometer bikes and other health promoting equipment mers are increasingly satisfied with the Bank, and the to several living and activity centers in the region, support Bank’s employees, which is really demonstrating that to several sports clubs and associations with emphasis on the Bank is to be reckoned with. children and youth, and a big gift to Sandnes Arena in order to contribute to making the area at Melsheia more attractive for more people. As we are now (March 2020) in the middle of something that The cooperative alliance with and the ownership of Eika, may become the most challenging time for many, many is providing us with a number of advantages that we would decades due to the Corona virus outbreak, it is difficult to not like to be without. We get access to good products, we imagine what 2020 will look like at year-end. We are happy get important economies of scale within e.g. joint purchases with the fact that Sandnes Sparebank is a solid bank that is and technology development – and not least; a good providing assurance for both retail and corporate customers. dividend payout last year. With an improvement of earnings after tax of NOK 33 million We work hard and purposefully every day to improve our during the past year, we may, this year as last year, rightly customers experiences, regardless of whether our customers claim the best result in the Bank’s history. The Bank has made meet us digitally or in conversations. We are committed progress on virtually all measurement parameters and is to be relevant, close and quick. In the second quarter showing profitable growth, a stable cost level, lower losses, of 2020 we will disburse customer dividend for the third more satisfied customers, and better reputation and brand year in a row. awareness. We are finding that we are an attractive place to work, the commitment of our own employee is tops, and we are able to hire the right people with the right skills when we need to. This is positioning us well for the future, and our objective is continued growth and development Trine Karin Stangeland in the years ahead. Managing Director Sandnes Sparebank Annual Report 2019 3 Key figures as of 31.12.2019 ANNUAL FINANCIAL STATEMENTS Group Parent Bank The year 2019 The year 2018 Profit summary (NOK ‘000) The year 2019 The year 2018 475 841 461 980 Net interest income 412 844 388 574 140 559 122 550 Other operating income 136 486 120 180 269 496 261 137 Other operating cost 240 903 232 112 13 471 23 729 Net loss/writedowns 14 360 24 264 333 433 299 664 Operating profit before taxes 294 067 252 378 56 361 55 284 Tax cost 47 391 44 595 277 072 244 380 Operating profit after taxes 246 676 207 783 -13 799 14 555 Other income and cost (after taxes) -13 554 14 841 263 272 258 935 Total profits 233 121 222 624 263 112 258 601 Majority share of profits 160 334 Minority share of profits 31.12.2019 31.12.2018 Balance sheet excerpts (NOK millions) 31.12.2019 31.12.2018 28 158 27 209 Total assets 20 693 20 170 27 684 26 655 Average total assets 20 431 20 040 22 878 22 214 Loans to customers 14 981 14 799 11 833 11 252 Deposits from customers 11 835 11 253 3 858 3 661 Notes and bonds 3 062 3 116 113 150 Financial derivatives 64 85 3 019 2 961 Equity capital 2 796 2 767 31.12.2019 31.12.2018 Key figures 31.12.2019 31.12.2018 Performance past 12 months 3.5 % 4.3 % - Asset management 2.6 % 1.3 % 2.5 % 2.7 % - Lending 0.6 % -1.1 % 5.2 % 3.6 % - Deposits 5.2 % 3.6 % 51.7 % 50.7 % Deposit to loan ratio 79.0 % 76.0 % 209.0 % 171.0 % Liquidity indicator (LCR) 212.0 % 184.0 % Profitability 1.72 % 1.73 % Net interest income in % of avg. total assets 2.02 % 1.94 % 43.7 % 44.7 % Cost to income ratio 43.9 % 45.6 % 1.0 % 1.0 % Total cost in % of avg. total assets 1.2 % 1.2 % 11.5 % 10.8 % Return on equity before taxes 11.0 % 9.7 % 9.6 % 8.8 % Return on equity after taxes 9.2 % 8.0 % 9.4 % 8.7 % Return on equity after taxes, incl. interest on hybrid capital 9.0 % 7.9 % Solvency 19.4 % 18.6 % Capital ratio 21.7 % 20.6 % 18.1 % 17.3 % Tier-1 capital ratio 20.1 % 19.0 % 17.4 % 16.6 % Core Tier-1 capital ratio 19.2 % 18.3 % 15 094 15 540 Risk-weighted capital 12 381 13 005 Human Resources 133 136 Number of full-time equivalents as of date of balance sheet 115 114 Equity capital certificates 67.0 55.0 Quoted price 67.0 55.0 65.4 % 65.3 % Equity capital certificate return 65.4 % 65.3 % 7.9 6.9 Earnings per equity capital certificate 7.0 5.9 7.9 6.9 Diluted earnings per equity capital certificate 7.0 5.9 83.0 81.1 Book equity per equity capital certificate 76.6 75.6 0.81 0.68 Price/book equity (P/B) 0.87 0.73 Sandnes Sparebank Annual Report 2019 5 Organization and management The Committe of Representatives External auditor The Nomination Committe Internal auditor Board of Directors Trine Karin Stangeland CEO Erik Kvia Hansen Magnar Oanes Director Retail Market Director Corporate Market Lene Nordahl Tomas Nordbø Middelthon Director Customer Experiences CFO / deputy CEO Ingrid O. Fure Schøpp Director Communications Sandnes Sparebank Annual Report 2019 7 The board of directors (1) (2) (3) (4) (5) (6) (7) (8) Harald Espedal (1) Sven Chr Ulvatne (3) Managing Director of AF Offshore AeronMollier AS, CFO of AF Gruppen ASA, Energy division and as Chairman Director assistant regional bank manager at Sparebank1 SR-Bank for the Agder corporate market. She has also Mr. Espedal has a Bachelor of Economics degree Mr. Ulvatne has an engineering degree from worked several years as an auditor. Director since 2016. from the Norwegian School of Economics and NTNU and is currently regional manager for Backe Member of the Board of Directors since 2016. Business Administration and is a graduate of the Prosjekt AS. Previously, Mr. Ulvatne was a Managing Ms. Flikka owns 1,791 equity capital certificates. top level audit course at the same institution. He Director for companies such as Backe Entreprenør, is Chairman of the Board of Espedal & Co AS, an Backe Bygg, NCC Construction, Sandnes Eiendom investment company. Previously, Mr. Espedal was and AS Betong, in addition to leading positions Birte Norheim (6) Managing Director and Investment Director at with Block Watne and Aadnøy Entreprenør. He is Director SKAGEN, and has additional experience as a director of various companies, and is Chairman Investment Director at Vesta, Investment Manager of the Board of his own investment company. Ms. Norheim has a Master of Finance degree from for European stocks at Skandia, Finance and Mr. Ulvatne also holds a number of elected offices Queensland University of Technology (Australia) and Research Manager at Sparebank 1 SR-Bank, and in industry associations such as NHO, BNL, EBA is currently the CFO of OKEA ASA. Ms. Norheim also as a Manager of Arthur Andersen, a consulting and Standard Norge. has experience as Managing Director of Njord Gas and audit company, in Stavanger. He has chaired He owns 9,300 equity capital certificates via Infrastructure AS and as Vice President Finance the Board of Directors since 2015. his investment company, Ulvatne AS. of Sevan Marine ASA. Director since 2017. Mr. Espedal owns 886,861 equity capital certifi- x Ms. Norheim owns 2,083 equity capital cates via his investment company, Espedal & Co AS. certificates. In addition, Mr. Espedal manages 605,000 equity Bjørg Tomlin (4) capital certificates through the company Director Salt Value AS. Jan Inge Aarreberg (7) x Ms. Tomlin has a Bachelor of Commerce degree Employee representative Frode Svaboe (2) from the Copenhagen Business School (CBS). She also has a Master of Telecommunications degree Deputy Chairman from the BI Norwegian School of Management. Mr. Aarreberg has a Bachelor degree from the BI She is currently the Managing Director of Upheads AS, Norwegian School of Management and is working Mr. Svaboe has a Bachelor of Commerce degree an IT company. Previously, she was Corporate as an authorized financial advisor. Employed by from the BI Norwegian School of Management, Market Director at Altibox/Lyse.