This is the annual report Sandnes Sparebank 2020 TRANSLATED VERSION 3 Managing director 5 Key financial figures Content 7 Governing bodies and officers 8 The board of directors 10 The management group 11 Sustainability and corporate responsibility at Sandnes Sparebank 2020 21 Corporate governance 26 Investor Information 32 Directors report 42 Annual accounts – Statement of income and comprehensive income – Balance sheet – Statment of equity – Cash flow statement – Notes 132 APM 135 Appendix: Sustainability and social responsibility 141 Statement pursuant to § 5-5 of the Norwegian Securities Trading Act 142 Auditor’s report 147 Certification of 2020 sustainability report The year 2020 2020 has been a demanding and peculiar – but also delivered its all-time best result, and 2020 earnings, despite a good year for Sandnes Sparebank. Since March, Corona, are not far behind. And that is something we are the Corona pandemic has put its stamp on the very satisfied with. operation of the Bank and many of the Bank’s We are now looking ahead, and a new strategy for the customers. It has been particularly important 2021–2024 period was adopted in the autumn of 2020. for the Bank to be visible and show that we are The new strategic objectives are ambitious both with respect a Bank for both good and challenging times. to growth, efficiency, reputation building, competency development and culture. In the coming strategy period, sustainability and technology development will take up more space than in the previous one. At the core of this, Many customers wanted to get in touch with their personal is that we shall develop the Bank further to enable us advisor at the start of the pandemic. Some wanted economic to continuously providing better customer experiences. advice, while others were offered instalment relief and/or We are the customer dividend bank, and in the fourth quarter government guaranteed loans. Never before have we been in of 2021 we will pay out dividend to owners and customers contact with so many customers within a similar period of time. for 2020, if conditions allow. Customer dividend will then In the spring, Norges Bank reduced its policy rate in three stages, be disbursed for the fourth time. The time of disbursement down to zero. During this period, the Bank was committed has been postponed due to governmental limitations. to show corporate responsibility, and reduced its interest We are the yellow bank. The bank that provide its customers rates both faster and by more than most competitors. with their own, personal advisor, who is closely involved, This contributed to keeping the wheels rolling, and many close by and available. We are a bank for retail customers customers were added, as they found us to be proactive. and small and medium sized companies that want a little In 2020 we put behind us a strategy period lasting from more. We are a strong contributor to the local community, 2017 to 2020. It is edifying to see that clear goals and hard both by distributing gifts for purposes of public utility, and work do indeed give results. The reputation of the Bank has by sharing some of the profits with our customers. been strengthened, the customers are more loyal and satisfied, and costs have been stable. Simultaneously, the Bank has experienced growth since 2018, and risk has been reduced. In 2020, the Bank has had the pleasure to welcome many new customers, in the retail market in particular. In this segment, lending growth has been 2.5 times the general Trine Karin Stangeland market growth in the Bank’s market area. In 2019, the Bank CEO Sandnes Sparebank Annual Report 2020 3 Key figures Key figures as of 12/31/2020 ANNUAL FINANCIAL STATEMENTS Group Parent Bank The year 2020 The year 2019 Profit summary (NOK ‘000) The year 2020 The year 2019 469 582 475 841 Net interest income 394 187 412 844 135 027 140 559 Other operating income 118 324 136 486 268 988 269 496 Other operating cost 238 316 240 903 24 689 13 471 Net loss/writedowns 23 415 14 360 310 932 333 433 Operating profit before taxes 250 780 294 067 50 160 56 361 Tax cost 37 173 47 391 260 772 277 072 Operating profit after taxes 213 608 246 676 -353 -13 799 Other income and cost (after taxes) -706 -13 554 260 419 263 272 Total profits 212 902 233 121 259 285 263 112 Majority share of profits 1 134 160 Minority share of profits 12/31/2020 12/31/2019 Balance sheet excerpts (NOK millions) 12/31/2020 12/31/2019 29 235 28 158 Total assets 21 086 20 693 28 697 27 684 Average total assets 20 889 20 431 24 000 22 878 Loans to customers 15 080 14 981 11 926 11 833 Deposits from customers 11 931 11 835 3 879 3 858 Notes and bonds 3 406 3 062 326 113 Financial derivatives 184 64 2 952 3 019 Equity capital 2 680 2 796 12/31/2020 12/31/2019 Key figures 12/31/2020 12/31/2019 Performance past 12 months 3.8 % 3.5 % - Asset management 1.9 % 2.6 % 4.9 % 2.5 % - Lending 0.7 % 0.6 % 0.8 % 5.2 % - Deposits 0.8 % 5.2 % 49.7 % 51.7 % Deposit to loan ratio 79.1 % 79.0 % 246.6 % 209.0 % Liquidity indicator (LCR) 251.2 % 212.0 % Profitability 1.64 % 1.72 % Net interest income in % of avg. total assets 1.89 % 2.02 % 44.5 % 43.7 % Cost to income ratio 46.5 % 43.9 % 0.9 % 1.0 % Total cost in % of avg. total assets 1.1 % 1.2 % 10.8 % 11.5 % Return on equity before taxes 9.5 % 11.0 % 9.0 % 9.6 % Return on equity after taxes 8.1 % 9.2 % 8.9 % 9.4 % Return on equity after taxes, incl. interest on hybrid capital 7.9 % 9.0 % Solvency 1 19.8 % 19.6 % Capital ratio 21.9 % 21.7 % 18.5 % 18.2 % Tier-1 capital ratio 20.3 % 20.1 % 17.8 % 17.5 % Core Tier-1 capital ratio 19.5 % 19.2 % 15 982 15 354 Risk-weighted capital 12 722 12 381 Human Resources 132 133 Number of full-time equivalents as of date of balance sheet 111 115 Equity capital certificates 74.4 67.0 Quoted price 74.4 67.0 63.6 % 65.4 % Equity capital certificate return 63.6 % 65.4 % 7.9 7.9 Earnings per equity capital certificate 6.5 7.0 7.9 7.9 Diluted earnings per equity capital certificate 6.5 7.0 86.8 83.0 Book equity per equity capital certificate 78.5 76.6 0.86 0.81 Price/book equity (P/B) 0.95 0.87 1 Solvency key figures (capital adequacy) for the Group include the consolidated share of capital for owner companies in cooperating group. Sandnes Sparebank Annual Report 2020 5 Organization and management 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 Stein Haga Ingrid O. Fure Schøpp Director HR Director Communications Sandnes Sparebank Annual Report 2020 7 The board of directors (1) (2) (3) (4) (5) (6) (7) Harald Espedal (1) Sven Chr Ulvatne (3) Astrid Rebekka Norheim (5) Chairman Director Director Mr. Espedal has a Bachelor of Economics degree Mr. Ulvatne has an engineering degree from Ms. Norheim has been the Managing Director from the Norwegian School of Economics and NTNU and is currently regional manager for Backe of Lyse Dialog since 2018. She has a Bachelor Business Administration and is a graduate of the Prosjekt AS. Previously, Mr. Ulvatne was a Managing of Business Administration from the BI Norwegian top level audit course at the same institution. He Director for companies such as Backe Entreprenør, School of Management, supplemented with several is Chairman of the Board of Espedal & Co AS, an Backe Bygg, NCC Construction, Sandnes Eiendom management development programs from the same investment company. Previously, Mr. Espedal was and AS Betong, in addition to leading positions institution. She has 21 years of experience from Managing Director and Investment Director at with Block Watne and Aadnøy Entreprenør. He is various roles at SpareBank 1 SR-Bank, among others SKAGEN, and has additional experience as a director of various companies, and is Chairman Director of High Net Worth Individuals and Agri- Investment Director at Vesta, Investment Manager of the Board of his own investment company. culture, and Director of Saving, Investment and for European stocks at Skandia, Finance and Mr. Ulvatne also holds a number of elected offices Pension. Director since 2020. Research Manager at Sparebank 1 SR-Bank, and in industry associations such as NHO, BNL, Ms. Norheim owns 5,186 equity capital as a Manager of Arthur Andersen, a consulting EBA and Standard Norge. certificates. and audit company, in Stavanger. He has chaired He owns 1,442 equity capital certificates the Board of Directors since 2015. and 9,300 equity capital certificates via Mr. Espedal owns 886,861 equity capital certifi- his investment company, Ulvatne AS. Jan Inge Aarreberg (6) cates via his investment company, Espedal & Co AS. x Employee representative In addition, Mr. Espedal manages 680.000 equity capital certificates through the company Bjørg Tomlin (4) Salt Value AS. Director Mr. Aarreberg has a Bachelor degree from the BI Norwegian School of Management and is working x as an authorized financial advisor.