Investor Presentation

INVESTOR PRESENTATION

SPAREBANKEN VEST BOLIGKREDITT AS BERGEN, NORWAY FEBRUARY 2018 EGIL MOKLEIV, CEO EXECUTIVE SUMMARY . The third largest savings bank in Norway with a strong market position in Western Norway . Capital ratio 18.7 %* - Core Tier 1 ratio 15.0 %* - Leverage ratio 7.3 % at 31st December 2017 Sparebanken Vest . Rated A1 (negative outlook) by Moody’s . Strong asset quality – 76 % total lending to retail customers, of which 96% is residential mortgages . 100% owned and dedicated covered bond subsidiary of Sparebanken Vest . Cover pool consisting of 100 % prime Norwegian prime residential mortgages . High quality cover pool reflected by the weighted average LTV of 55.4 % at 30 December 2017 Sparebanken Vest . Covered bonds rated Aaa by Moody’s with five notches “leeway” Boligkreditt AS . Strong legal framework for covered bonds in Norway . Good position in the well-functioning domestic covered bond market which mitigates refinancing risk . Besides domestic issuances, regular benchmark covered bonds issues in EUR-market . Higher growth ahead. Growth in business and petroleum investments and exports expected to increase GDP-growth in 2018 . Improved cost competitiveness and increasing mainland export helped by NOK depreciation Norwegian . Low unemployment economy . House-prices expected to decline in first half of 2018, before stabilising. Still major regional differences . Excellent financial position of the Norwegian government with large budget surplus and the government pension fund accounting for over 300 % of GDP

. The most diversified business region in Norway with industrial structure including oil and gas industry, Western Norwegian metal industry, engineering, fisheries, fish farming, shipping, ship building and tourist industry economy . Unemployment in Western Norway is falling rapidly . Housing market expected to regain positive growth in second half of 2018.

* With Basel I – floor under transitional scheme 2 SPAREBANKEN VEST SPAREBANKEN VEST

Market Area Brief Information about Sparebanken Vest

. Established in 1823 and listed on Oslo Stock Exchange since 1995

. Norway’s second oldest savings bank

. Third biggest Norwegian-owned bank

. Head office in Bergen, Hordaland

. Thirty-four branch offices in Hordaland, Sogn og Fjordane and Rogaland Sogn og Fjordane Market share*: 16,9% . The Group offers a wide range of services, incl. Hordaland insurance, stockbroking and estate agency activities Market share*: 26.8% . Over NOK 175 billion in assets under management, and Rogaland approximately 273,000 retail customers and 11,900 Market share*: 5.6% corporate customers

. Return on equity target: > 11%

* Market share in retail market 4 KEY DEVELOPMENTS

Return on equity as a percentage* Profit per equity certificate** Dividend per equity certificate**

Core Tier 1 capital as a percentage Write-downs in NOK millions* Donations in NOK millions

*) For 2016, corrections have been made for the winding up of the pension scheme in the amount of NOK 243 million, the sale of a monitored portfolio of NOK 58 million, the taking to income of NOK 108 mill. in dividend from VISA and NOK 68 mill. in restructuring costs. **) An equity certificate issue whereby 27.3 million new equity certificates were issued was carried out in 2015. 5 STRONG POSITION IN THE RETAIL MARKET - WELL-DIVERSIFIED IN THE CORPORATE MARKET

Loan portfolio NOK 148.1 bill. Breakdown by sector in the corporate market, NOK 35.9 bill.

24 %

76 %

Corporate Retail

6 SOLID GROWTH -IN BOTH RETAIL AND CORPORATE MARKETS

Retail market Corporate market Lending NOK 112.2 billion Lending NOK 35.9 billion

7 A MORE PERFORMANCE-ORIENTED BANK -SOUND OPERATIONS RESULT IN STRONG PROFIT PERFORMANCE

Return on equity as a percentage Costs as % of average assets under management

8 STABLE DEFAULTS AND POTENTIAL BAD DEBT*

1 600 5%

1 400 4% 1 200

1 000 3% 1 274 1 321 1 326 1 261 800 1 218 2%

NOK million NOK 600

400 0,92% 0,96% 0,97% 0,96% 0,92% 1% 200 223 247 243 253 280 - 0% Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

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. 9 STABLE LEVELS OF PROVISIONS

0,9 % 1200 0,77% 0,75% 0,8 % 0,77% 0,77% 0,70% 1000 0,7 %

506 506 0,6 % 499 503 445 800

0,5 % 600 0,4 %

0,3 % 400

0,2 % 547 565 589 579 588 (MNOK) write-downs Capitalised Write-downs as % lending gross of as % Write-downs 200 0,1 %

0,0 % 0 Q416 Q117 Q217 Q317 Q417

Individual write-downs Group write-downs Write-downs as % of gross lendings

10 MOODY’S RATING - SENIOR UNSECURED DEBT RATING: A1 (NEGATIVE OUTLOOK)

Main takeaways Recent developments

• On the 10th of July 2017, Moody’s changed the outlook for . Moody`s emphasises the bank’s strong regional retail Sparebanken Vest’s rating to ‘A1 Negative’ from ‘A1 Stable’. franchise, good capital metrics, strong asset quality The reason given by Moody’s for the change in outlook is the and resilient earnings performance in 2016. implementation of the Bank Bank Recovery and Resolution Directive in Norwegian law. . Emphasis has also been placed on the bank’s strong financial fundamentals and low Loss Given Failure • The rating decision affected all Norwegian banks who already score (LGF). had an expectation of government support in times of distress implemented into their ratings.

• Bonds issued by Sparebanken Vest Boligkreditt AS are rated Ratings by Moody’s and have an Aaa rating with stable outlook.

Senior Unsecured Debt A1/P-1 Negative

LT Bank Deposits A1/P-1 Negative

Baseline credit assessment baa1 (BCA)

Source: Moody’s, Sparebanken Vest, Cicero Consulting 11 REGULATORY CAPITAL -REQUIREMENTS MET BY A GOOD MARGIN

Core Tier 1 capital. Percent Leverage ratio. Percent

7,3 7,1 7,2 7,3 7,3

Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

The dotted line shows regulatory capital requirements. 12 GROWTH AMBITIONS IN 2018

Expected credit growth in Expected credit growth in the retail market (C2) the corporate market (C2) 5.3% 4.0% Our growth target Our growth target 9.0% 6.0%

13 SPAREBANKEN VEST BOLIGKREDITT AS SPAREBANKEN VEST BOLIGKREDITT AS

Market Area Brief Information about 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 covered bonds 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

. Covered bonds rated Aaa by Moody’s – five notches “leeway”

. Approval from the Norwegian FSA to report capital according to AIRB methods

15 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 (less than 3 months) . 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

Source: Sparebanken Vest Boligkreditt 16 COVER POOL (1/2)

Cover pool as of 31.12.2017 Distribution according to LTV (indexed) Total cover pool NOK 78,7 bn Total loan balance (mortgages) NOK 76.2 bn Average loan balance NOK 1,333,010 40 % 37,33% No. of loans 57,142 35 %

No of properties 48,403 30 %

WA seasoning (in months) 43 25 % WA remaining terms (in months) 281 20 % 18,10% 17,83% WA indexed LTV (based on limits) 55.40% 13,99% 15 % WA indexed LTV (on drawn amounts) 53.54% 10,90% Variable rates 83.00% 10 %

5 % Defaults (Basel) NOK 64.6 m 1,85% OC level (eligible)* 29.0% 0 % OC level if house prices drop 20% 21.7% 0‐40% 40‐50% 50‐60% 60‐70% 70‐80% >80% OC if house prices drop 30% 13.9%

. 100% prime Norwegian residential mortgages . Moody’s TPI of “High” . 3.2% substitute assets in the cover pool . CB rated Aaa with “leeway” of five notches** . 99.92% performing loans . Regulatory minimum OC-requirement: 2.0% . Cover Pool Collateral Score: 5.0%

* Based on hedged value of bonds 17 ** Sparebanken Vest is rated A1 by Moody’s (negative outlook) COVER POOL (2/2)

Geographic Distribution Development in Arrears and Indexed LTV

1,0 % 75%

70% 0,8 % Rest of Norway (5.3%) 65% 60% 0,6 % 55% 30-60 60-90 50% 0,4 % 90 45% LTV (RA) 0,2 % 40% Sogn & Fjordane (6.0%) 35% 0,0 % 30% Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Hordaland (74.6%) 08 09 09 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17

Rogaland (14.1%)

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

18 MATURITY PROFILE - AMORTISATION OF MORTGAGES VS. COVERED BOND MATURITIES

8 EUR EUR bn 7

- apr. 18 apr. apr. 19 apr. apr. 20 apr. apr. 21 apr. apr. 22 apr. apr. 23 apr. des. 17 des. des. 18 des. des. 19 des. des. 20 des. des. 21 des. des. 22 des. des. 23 des. aug. 18 aug. aug. 19 aug. aug. 20 aug. aug. 21 aug. aug. 22 aug. aug. 23 aug.

Covered Bonds Planned amortisation cover pool Real amortisation cover pool (2,5% Prepayments)*

. Equivalent of EUR 1 bn mature in the remainder of 2018 . 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 19 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 Credit risk . Framework requirements: maximum risk level (PD), type of property, objective documented LTV threshold and customer requirements . Credit risk managed by IRB standards

. Currency risk – 100 % hedged by swaps, open limit of MNOK 10 . Interest rate risk – hedged by swaps if any, limit of MNOK 40 (based on 1 % parallel shift in yield curves) Market risk . 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

20 NORWEGIAN ECONOMY KEY INDICATORS OF THE NORWEGIAN ECONOMY

2016 2017 2018E 2019E 2020E

Mainland GDP 1.1 % 1.8 % 2.3 % 2.2 % 1.9 %

Private Consumption 1.5 % 2,4 % 2.3 % 2.2 % 2.2 %

Real business investments * 4.1 % 5.4 % 6.2 % 3.0 % 0.9 %

Oil investments * -16.9 % -4.0 % 6.0 % 6.0 % 3.0 %

Exports Mainland * -6.0 % 2.2 % 3.8 % 3.6 % -6.0 %

Core inflation * 3.0 % 1.4 % 1.7 % 1.9 % 2.1 %

NIBOR (Level) * 1.0 % 1.0 % 1.0 % 1.2 % 1.7 %

Unemployment, LFS (Level) * 4.7 % 4.2 % 3.7 % 3.4 % 3.3 %

Source: Norges Bank, Statistics Norway and Sparebanken Vest. *Mainland non-financials 22 VARIETY OF EMPLOYMENT IN WESTERN NORWAY - JOBS ARE SPREAD ACROSS A WIDE RANGE OF INDUSTRIES

120000

100000

80000

60000 No. jobs 40000

20000

Rogaland Hordaland Sogn & Fjordane

Source: Statistics Norway 23 UNEMPLOYMENT - FALLING IN WESTERN NORWAY

Norway, Unemployment Labour Force Growth in Western Norway

5,0 625000

4,5 600000

4,0 575000

3,5 550000

3,0 525000

Prosent 2,5 500000 No. of Persons 2,0 475000 1,5

450000 1,0

0,5 425000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Norway Sogn & Fjordane Hordaland Rogaland Western Norway, Employed Persons Western Norway, Labour Force

Sources: Statistics Norway, NAV, Macrobond/Sparebanken Vest 24 HOUSING MARKET COOLING DOWN - RECORD-HIGH HOUSE-BUILDING AND MORE STRINGENT REQUIREMENTS

Year-on-year growth Comments

35 . House prices peaked in March last year. Demand is slowly

30 picking up, and prices are levelling. Since the peak, house

25 prices have fallen by 4%, but with large regional differences:

15 - Fall of 9% in Oslo

% 10 - Fall of 5.5% in Bergen 5 - Flat in Stavanger

-5

-10 . Record-high house-building is an important driver of the fall in prices in Oslo and Bergen, but more stringent -15 2004 2006 2008 2010 2012 2014 2016 2018 requirements in the housing loan regulations has also

Stavanger and surrounding area Bergen Oslo Total affected developments, particularly in Oslo.

Source: Eiendom Norge, FINN and Eiendomsverdi AS. 25 WESTERN NORWAY INDEX

. The index is created from a survey of 700 businesses in 70 Norway’s western counties. They are asked about their 65,9 results the last three months 65 and their expectations for the next six months.

61,0 60 . The index can vary between 0 and 100, where a number above 50 indicates a positive 55 view of the economic situation Q112 Q312 Q113 Q313 Q114 Q314 Q115 Q315 Q116 Q316 Q117 Q317 Q1 18 and development, while a figure Quarterly index Expectation index below 50 indicates pessimism.

Source: Respons Analyse and Sparebanken Vest – December 2017 26 OIL, GAS, OFFSHORE AQUACULTURE AND FISHING RENEWABLE ENERGY - NORWAY’S MOST IMPORTANT INDUSTRY THE - LONG TRADITIONS ON THE WEST COAST - THE GEOGRAPHY OF WESTERN NORWAY IS IDEAL LAST 40 YEARS OF NORWAY FOR PRODUCING GREEN ENERGY

• Nearly all power production in Norway • The largest contributor to wealth comes from hydroelectric power creation, government income, • Norway is one of the world’s largest • Approx. 1,500 existing hydroelectric investments and export producers and exporters of fish facilities • Estimated that over 50% of our • Mostly salmon and cod • 36% located in the three western total petroleum resources are left • Approx. 5,900 people are directly counties as reserves, contingent employed in aquaculture • Potential for upgrades and resources, and undiscovered production in Norway extensions resources • Including spin-off effects like • In 2016, 1.4 % of Norwegian power • Over 185,000 employed directly or transportation and commerce, it is production came from wind power indirectly by the petroleum industry estimated that about 21,000 • Norway has some of Europe’s • Declining since 2014 people are employed in best conditions for harvesting • An important source of revenues for the aquaculture related activities wind power government through various channels • Power cables under construction to Germany and27 UK

Source: Norsk olje og gass, Norwegian Petroleum Directorate, The Norwegian Government, Norwegian Petroleum, Statistics Norway, SNL, FAO, Norwegian Seafood Counsil, fisheries.no, European Commission, 27 Statnett, The Norwegian Water Resources and Energy Directorate ECONOMIC CONDITIONS

GDP growth Oil price and fx rate

Salmon price Investments (as share of GDP-mainland)

Source: Sparebanken Vest / Macrobond 28 HOUSEHOLDS

Real disposable income growth Credit growth

Retail sales index Consumption growth

Source: Sparebanken Vest / Macrobond 29 HOUSE PRICES -RECORD-HIGH HOUSE-BUILDING AND MORE STRINGENT REQUIREMENTS

Introduction Nominal house prices, 2003 = 100

. Average price increases in 2017: +5.7% . YTD in 2018: - 0,4% . Large regional differences . Average yearly growth rate of 6.9 percent in period 2003-2016 . The last year the growth has stagnated in Oslo

Real estate transactions and volume available for House prices deflated w. GNDI per capita, sale 2000 = 100

Source: NEF Price Statistics, Macrobond, Sparebanken Vest 30 NORWAY’S NATIONAL WEALTH - MORE THAN OIL WEALTH

. Oil revenue flows into the fund . The future wealth from Oil and Gas reserves makes up only about 2.6% of Norway’s national wealth. . A limited amount is withdrawn every year and channelled into government outlays . The Norwegian government estimate that 75% of Norway’s national - Public use of oil revenues is limited by a fiscal rule to 3% wealth stems from the present value of future human capital. - In other words, the majority of Norway’s wealth stems from the . The fund can also be used as a counter-cyclical buffer country’s highly educated, competent working force . The fund cannot invest in Norway nor Norwegian assets . When the NOK depreciates towards USD and EUR, the fund’s value in NOK increase 2.6% 8.6%

13.7%

75.0%

Human capital31 Real capital

Source: Macrobond/Sparebanken Vest, Finance Norway, NBIM 31 NORWEGIAN ECONOMY - INTERNATIONAL CONTEXT

GDP Growth, 2000=100 Unemployment Index

32 NORWEGIAN GOVERNMENT FINANCIALS

Government Net Debt, Estimate IMF Government Pension Fund

33 THE NORWEGIAN MORTGAGE MARKET NORWEGIAN HOUSING MARKET – KEY FEATURES

. Among the highest in the world - around 80% of households own their own home Home ownership . Buy-to-let market is limited in Norway . Best social security benefits for unemployed people in the world (according to OECD) Social benefit . On average unemployment benefit approx. 62% of previous salary system . Unemployment benefits paid for minimum of 104 weeks . All interest expenses are tax deductible in Norway Tax incentives . Low effective real estate tax - i.e. approx. 40 pct. of market value . Capital gain on a dwelling is tax-free after one year of occupancy by the owner . Borrowers personally liable for their debt - also after foreclosure/forced sale Personal liability . Strong incentive to service debt reflected in low arrears . Transparent and reliable information about borrowers available to the lenders . 95% of residential mortgage loans granted by banks . Typical maturity 25-30 years Mortgage lending in . Around 90% of residential mortgages variable rate loans Norway . Banks allowed to increase interest rates with a six weeks notice to the borrower . No “sub-prime” market in Norway

35 HOUSE PRICES - LARGE REGIONAL DIFFERENCES IN NORWEGIAN HOUSE PRICES

Bergen Stavanger Oslo Norway

Price change 3.9 % 1.0 % 2.7 % 2.0 % past month

Price change -2.5 % -0.9 % -9.4 % -2.2 % past 12 months

Price change 15.5 % -12.3 % 35.1 % 24.0 % past 5 years

Time on market 45 84 41 58 (no of days)

Figures as of September 2016

36 CONTACT DETAILS / MORE INFORMATION

Egil Mokleiv, Managing Director/CEO, Sparebanken Vest Boligkreditt AS . Mobile: +4795265976 . E-mail: [email protected]

Fredrik Skarsvåg, COO, Sparebanken Vest Boligkreditt AS . Mobile: +4798857275 . E-mail: [email protected]

Websites for more information

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

Sparebanken Vest www.spv.no

Web-site for the Norwegian Covered https://www.finansnorge.no/en/covered-bonds/ Bonds Market

37 DISCLAIMER

This material does not constitute an offering circular in whole or part and you must read the actual offering circular related to the Covered Bond program and the notes which may be

issued from time to time thereunder as referred to in this material (respectively the"Program" and the “Notes”) before making an investment decision. The offering circular for the

Program is available from the Arrangers. You should consult the offering circular for more complete information about Sparebanken Vest Boligkreditt and the Program. The Notes

are not to be offered or sold in any jurisdiction in circumstances in which the distribution of this document or the Notes would be prohibited in such jurisdiction. This document must

not be acted on or relied on by persons who are not eligible to invest in the Notes. Any investment or investment activity to which this communication relates is available only to

person's eligible to invest in the Notes and will be engaged in only with such persons. By electing to receive this transmission, you represent, warrant and agree that you will not

attempt to reproduce or re-transmit the contents of this presentation by any means. By receiving this presentation, each recipient (i) acknowledges that the offering is being made

only outside the United States to non-U.S. persons in reliance upon Regulation S under the U.S. Securities Act Of 1933 and (ii) is deemed to represent that it is not a U.S. person

within the meaning of Regulation S and is not accessing the presentation from a location within the United States.

In addition, institutions mentioned in this material, affiliates, agents, directors, partners and employees may make purchases and/or sales of the Notes as principal or agent or may

act as market maker or provide investment banking or other services in respect of the Program or the Notes which may be issued from time to time thereunder. Sparebanken Vest

Boligkreditt, Sparebanken Vest, the Arrangers and the Dealers and their respective affiliates, agents, directors, partners and employees accept no liability whatsoever for any loss

or damage of any kind arising out of the use of all or any part of this material. Although the statements of fact in this presentation have been obtained from and are based upon

sources that Sparebanken Vest Boligkreditt believes to be reliable, no representation or warranty, either expressed or implied, is provided in relation to the accuracy,completeness

or reliability of the information contained herein. All opinions and estimates included in this presentation constitute Sparebanken Vest Boligkreditt’s judgement, as of the date of this

presentation and are subject to change without notice and Sparebanken Vest Boligkreditt is not under any obligation to update or keep current the information contained herein. This

presentation is the property of Sparebanken Vest Boligkreditt.