Corporate market 2020

Ragnhild Janbu Fresvik Executive Vice President SPAREBANKEN VEST • Companies in Western hit broadly – different recoveries

• Investment in credit culture over several years increases robustness

• An offensive bank seeing growth opportunities out of the crisis

2 SPAREBANKEN VEST «Western Norway Index measuring quarterly status of companies in Western Norway»

Resultat- og forventningsindeks

68,6 68,8 68,9 68,2 68,5 67,7 67,9 67,5 67,1 66,6 66,9 66,1 66,1 65,7 65,9 65,4 65,6 65,3 64,8 64,3 64,5 64,5 65,9 63,8 63,6 65,4 63,2 63,3 63,0 64,7 64,8 64,9 65,0 62,0 62,3 64,0 63,7 63,2 62,8 62,8 60,6 62,6 62,8 62,5 62,2 62,3 59,8 61,8 61,7 61,6 59,1 61,5 61,0 60,7 60,5 60,9 57,9 60,3 59,8 60,0 59,4 58,7 57,8 57,9 57,3 56,4

52,2

ResultatindeksResult index ForventningsindeksExpectation index 43,3

2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 Different expectations for recovery among companies

Dagens Næringsliv (Norway’s leading financial daily), 27th of May Companies’ expected recovery revenue *

-30%

-25% Oil driven companies**

-15%

-10%

-10% No Oil & Gas

-5%

«The downturn that disappeared» Whilst the economy is returning, May is yet another crisis month for Norwegian industry: We stand the risk of being a supplier to unemployment 3 months 6 months 1 year SPAREBANKEN VEST *) 700 companies in “Vestlandsindeks” May 2020 – pre-corona revenue

**) More than 50% revenue related to oil & gas Faster observed recovery in several industries - the challenges in the short term primarily in offshore

Corporate real estate Construction Retail Tourism

Shipping Offshore Fishery and Aquaculture Power Industry

SPAREBANKEN VEST No increase in bankruptcies in the bank's market area so far in 2020

1079 • No increase in bankruptcies Q2 993 987 1013 20 vs Q2 19, neither among the bank's customers nor in the market area*

• A lower share of bankruptcies among the bank's customers than a market share should indicate over time 6% 6% 5% 4% 4% 171 • Order reserves over the autumn 50 57 45 41 10 for the supplier industry and export industry followed closely 2016 2017 2018 2019 2020 Q2

Bankruptcies market area* Bankruptcies bank’s SPV share bankruptcies customers

SPAREBANKEN VEST * Markedsområdet : Vestland og fylke. Kilde SSB • Companies in Western Norway hit broadly – different recoveries

• Investment in credit culture over several years increases robustness

• An offensive bank seeing growth opportunities out of the crisis

7 SPAREBANKEN VEST Systematic work with credit culture in recent years increases resilience facing the crisis

New differentiated customer strategy, new competence requirements and "the right person for the right customer"

"Best at credit culture" clearly pri 1 - decentralized decisions, closer cooperation with credit

Scale and share learning quickly - accountability Q220 (annaulised) strengthens decentralised model

Gr. loans Losses in % of gr. loans

8 SPAREBANKEN VEST Solid growth over the past 5 years has not resulted in corresponding growth in defaults - Good risk selection and a tighter credit culture

Default portfolio by grant date Declining share of corporate portfolio in default 900 4,0 % over time - increase in Q2 is due to offshore 70% 800 3,5 % 3,6 % 700 3,1 % 3,0 % 3,0 % 2,9 % 2,9 % 600 2,5 % 500 2,3 % 2,3 % 400 2,0 % 1,5 % 300 1,4 % 16% 200 1,0 % 8% 100 3% 2% 1% 0% 0,5 % - 2014 and 2015 2016 2017 2018 2019 2020 0,0 % prior 2013 2014 2015 2016 2017 2018 2019 2020

SPAREBANKEN VEST Working to support customers and protect the bank during the crisis

• Granted 850 MNOK in government-guaranteed loans to viable companies of which 500 MNOK have been paid out

Secure customer • Government-guaranteed loans are monitored on an ongoing basis - the large customers are on / in liquidity front of the liquidity budget as of Q2 • Only granted to existing customers - strong SME profile and good spread

• Monthly follow-up of developments in liquidity in relation to forecasts for customers over NOK 10 million • Follow-up of the government cash support scheme for the bank's customers, as well as its application Close monitoring • Customers on the watchlist are followed up by a task force + advisor on development

• Growth targets unchaged - good pipeline into the second half of the year for both existing and new customers Focus on healthy • Clear and concentrated exposed portfolio frees up time for growth customers and top line • In parallel; strengthened margin continuously due to tighter banking market

SPAREBANKEN VEST Installment exemptions back to normalized level

6000 • Short periods: Primarily 1-3 455 months 5000 • 80% of the granted post-corona 4878 installment exemptions have 4000 already expired - only 5% have a duration beyond 2020 3000 • Balanced solutions: owner participation and / or 2000 2308 158 strengthening of security where possible 1000 33 1120 85 887 • Commercial terms that reflect 42 675 444 41 customer value 0 January February March April May June Volume (MNOK) Number of customers

SPAREBANKEN VEST Good diversification in commercial real estate - somewhat reduced risk in Q2

Commercial real estate portfolio Q2 2020

• Volume affected by Covid-19 amounts to approximately 1.1 Other; 15% billion (down from 1.3 billion in Q1) • No noticeable increase in unemployment or tenant Combination; 19% bankruptcies Hotel; 6% • Need for installment exemption period back to normalized level Under construction; • Moderate loan-to-value ratio on the portfolio: 5%

Retail property; 9% Office; 19% • About 90% of the lending volume has below 70% loan-to-value ratio

Housing for • Office property primarily with long leases and a reasonable rental; 13% loan-to-value ratio Land: 14%

SPAREBANKEN VEST

* Other consists mainly of warehouses, agricultural property and industrial buildings Conservative approach to the offshore portfolio

Clear portfolio facilitates restructuring work • Low share of total portfolio (0.8%) and only 9 customers, • The interdisciplinary core group works on all engagements, closely with decision-makers • Few complex structures provide greater pace in negotiations

Conservative approach to strategy and loss assessments • The market for buying / selling is illiquid - reduction vs valuation • The bank's strategy and loss assessments related to the weighting of different scenarios based on the company's position: • Scenarios takes into account a bad market until 2021-2022, i.e. oil prices and low activity as today

SPAREBANKEN VEST • Companies in Western Norway hit broadly – different recoveries

• Investment in credit culture over several years increases robustness

• An offensive bank seeing growth opportunities out of the crisis

14 SPAREBANKEN VEST Strengthened market position in recent years - growth target of 6 - 8% in 2020 remains unchanged

Lending growth corporates Market shares lending *

7,7 %

5,6 % 4,8 % 3,5 % 15 % (+1 %)

Average 16 - 19 Last 12 months SPV K2 ** 13 % (+2 %)

Rogaland 7 % (+2 %)

SPAREBANKEN VEST *) Source: Statistics Norway capital as of 31.12.2019 (changes 16 – 19)

15 **) K2 growth non-financial institutions – updated as of June 2020 A value proposition that is strong even in times of recession

Positive development in customer satisfaction Corporate market • Fast response time • Clear advice - flexibility in solutions

72 72 • Proximity to customer extra important in crises

70 70 • Quick turn around to establish new help

68 68 tools for SMEs

• Long-term and predictable credit practices 2015 2016 2017 2018 2019 Q2 20 • Non-profit projects give impetus to the business community of the future

SPAREBANKEN VEST A region with growth opportunities going out of the crisis

Source: https://www.vestlandskonferansen.no/vestlandsmeldinga/ SPAREBANKEN VEST • Companies in Western Norway hit broadly – different recoveries

• Investment in credit culture over several years increases robustness

• An offensive bank seeing growth opportunities out of the crisis

18 SPAREBANKEN VEST SPAREBANKEN VEST