2 • Sandnes Sparebank towards 2020 • Summary of the 1st Quarter Results • Focus forward and estimates for 2018 Market and Customer Base Organization The Largest Bank in the Eika Alliance • Customer base of 40,000 retail customers • 140 years of banking operations • Cost efficiency and 5,000 businesses • 135 man years • Modern, safe and profitable payment • Our home market consists of nine solutions municipalities in Rogaland: Sandnes, • SSB Boligkreditt was established in 2008 • Gjesdal, Stavanger, Time, Klepp, Sola, as a wholly owned subsidiary of SADG. Asset management, insurance, credit Randaberg, Hå and Bjerkreim The goal is to secure long-term funding cards, car loans and leasing for the bank by issuing covered bonds • The home markets covers in total • IT and infrastructure 300,000 people and 26,000 businesses • Sandnes Sparebank owns 60% of AKTIV Eiendomsmegling Jæren Branches I Sandnes: Rådhusgata 3 II Stavanger: Haakon VIIs gate 7 III Oslo: Haakon VIIs gate 6 4 • • 1 Sandnes Sparebank 8,0 % 2 Obos Bbl 6,3 % 3 Totens Sparebank 5,3 % 4 Jæren Sparebank 4,6 % Sales, portfolio, know-how and Products, commissions, dividend, capital services, systems and training 5 Jernbanepersonalets Sparebank 2,9 % 6 Lillestrøm Sparebank 2,9 % 7 Aurskog Sparebank 2,7 % 8 Skue Sparebank 2,7 % 9 Skagerak Sparebank 2,6 % 10 Sparebanken Narvik 2,5 % • • 5 Customer growth Profitability Customer value Customer experience Market awareness Very satisfied customers Profitable growth and a strong reputation Competent, committed Return on equity and performance focused above average employees Trine Karin Stangeland CEO Erik Kvia Hansen Magnar Oanes Tomas Nordbø Middelthon Lene Nordahl Ingrid O. Fure Schøpp Director Retail Director Corporate CFO Director Customer Relations Head of Communication Increased net interest margin og strong cost control. Earnings in line with guiding for 2018 Non-perfoming and doubtful loans down 32% Well capitalised. Strong focus on marketing and branding. Growth in both depoits and loans last to quarters Increased customer satisfaction. Growth in volume on Eika Products. Improvement in service to certain customer groups (segmentation) Internal culture development – customers come first, always Giving back to society. Dedication to create activity and inspiration in our local market. Sponsoring «Folk» a managment focused conference for regional businesses Sponsoring play by Tore Renberg / Thomas Dybdal at Stavanger Theatre 12 115 250 95 197 200 75 169 171 63 150 129 55 47 49 38 100 35 26 50 15 0 -5 4Q16 1Q17 2Q17 3Q17 4Q17 2013 2014 2015 2016 2017 -50 -74 -100 • EPS last quarter at NOK 1.1 • EPS at NOK 5.6 YTD, up from 4.8 in 2016 13 1,84% 1,85% 1,82% 1,81% 1,78% 1,78% 1,65% 1,63% 1,64% 1,60% 1Q17 2Q17 3Q17 4Q17 1Q18 2013 2014 2015 2016 2017 14 Estimate: 80 450 406 68 70 67 68 400 65 64 350 330 60 300 287 288 50 269 250 40 200 30 150 20 100 10 50 0 0 1Q17 2Q17 3Q17 4Q17 1Q18 2013 2014 2015 2016 2017 • Cost in 2018 are expected to be equal to or lower than in 2017 15 9,5 % 0 7,3 % 7,3 % 8,6 % 0 7,3 % 7,5 % 5,6 % 6,2 % 0 4,1 % 0 0 0 4Q16 1Q17 2Q17 3Q17 4Q17 2013 2014 2015 2016 2017 0 0 -3,5 % 16 Increased net interest margin og strong cost control. Earnings in line with guiding for 2018 Non-perfoming and doubtful loans down 32% Well capitalised. Strong focus on marketing and branding. Growth in both depoits and loans last to quarters Increased customer satisfaction. Growth in volume on Eika Products. Improvement in service to certain customer groups (segmentation) Internal culture development – customers come first, always Giving back to society. Dedication to create activity and inspiration in our local market. Sponsoring «Folk» a managment focused conference for regional businesses Sponsoring play by Tore Renberg / Thomas Dybdal at Stavanger Theatre 17 Target: 18% 18% 16,6 % 16,8 % 16,6 % 16,1 % 16,2 % 15,8 % 15,6 % 15% 15% 14,5 % 12,1 % 11,6 % 12,0 % 12% 12% 9% 9% 6% 6% 3% 3% 0% 0% 1Q17 2Q17 3Q17 4Q17 1Q18 2013 2014 2015 2016 2017 CET1 FSA min. req • Regulatory minimum requirement increased from 14% til 14.5% per EOY 2017 • Growth capacity of NOK 3bn within target CET1-ratio • Assuming unchanged mix between retail and corporate lending 18 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 1,3 % 0,02 0 -0,3 % 1,3 % -1,8 % -1,7 % 5,00 % -3,1 % 0 -4,4 % -0,1 % -0,05 -4,4 % 1,4 % -6,6 % -6,5 % -7,1 % 0,00 % -0,02 0,2 % -0,1 -3,4 % -3,5 % -0,04 -4,2 % -4,2 % -4,8 % -5,00 % -4,7 % -5,2 % -5,4 % -0,15 -6,4 % -5,6 % -0,06 -5,9 % -7,5 % -7,8 % -6,5 % -8,8 % -6,9 % -10,00 % -0,2 -0,08 Group Retail Corporate -0,1 -0,25 -15,00 % • Growth in gross lending last quarter of 0.4% • Growth in gross lending of 1.3% last 12 months • Retail volume up by 60mn (0.4%) • Retail lending increased by 187mn (1.3%) • Corporate volume up by 28mn (0.4%) • Corporate lending increased by 105mn (1.4%) 25 174,4 48,1 6,9 26,8 33,1 3,5 46,7 122,9 13,3 8,0 23,2 27,1 86,7 84,7 18,5 19,6 32,5 14,9 11,5 6,0 0,7 6,2 6,6 23,0 26,2 53,9 61,9 2,0 24,5 1,0 53,9 14,0 50,9 13,5 13,1 12,0 61,1 58,7 0,0 -0,00,8 0,0 39,0 20,4 27,0 -0,3 1Q17 2Q17 3Q17 4Q17 1Q18 2013 2014 2015 2016 2017 -49,9 Other operating income Other operating income Change in value currency and securities Change in value currency and securities Net commission income Net commission income Dividend and income securities (variable yield) Dividend and income securities (variable yield) • Stable credit spreads results in lower contribution from fixed income • Pressure on transaction related fees • Increased volume related to savings and isurance, but reduced margins From 2016 forward dividend and income from securities is mainly Aktiv Eiendom (RE Agent) 26 • Sub-division within Retail, 4 financial advisors + 1 leader • A service offered by Sandnes Sparebank under a separate brand, logo and domain • A provider of financing to external customers who cannot get financing in ordinary • National provider of financing, focused on the markets in and around the larger cities, with well functioning housing markets • Restucturing of householdsw in a difficult situation, often caused by credit card debt or other consumption related debt. Financing provided secured on residential property within 85% LTV • Established with the purpose of enterering a growing and profitable segment within retail • Positive contribution to profitable growth • Started in 2015, careful growth to gain experience • Per 1Q18 NOK 500mn approx. • Target of NOK 800mn by end of 2020(max 7% of retail) • Expected loss around 1%, so far no realised losses, high loan loss provisions (2,3%) • Selective in acceptance of customers, tight follow-up process, risk-based pricing • Average lending margin is 6.8% • Default ratio, 90 days, at 8.4% Increased net interest margin og strong cost control. Earnings in line with guiding for 2018 Non-perfoming and doubtful loans down 32% Well capitalised. Strong focus on marketing and branding. Growth in both depoits and loans last to quarters Increased customer satisfaction. Growth in volume on Eika Products. Improvement in service to certain customer groups (segmentation) Internal culture development – customers come first, always Giving back to society. Dedication to create activity and inspiration in our local market. Sponsoring «Folk» a managment focused conference for regional businesses Sponsoring play by Tore Renberg / Thomas Dybdal at Stavanger Theatre 30 «Veldig fornøyd med en lokal bank med direkte kontakt hvor en har personlig oppfølging og dialog». Positivt svar fra Finanstilsynet 26.01.2018 • Sandnes Sparebank is the second bank in Norway that distributes customer dividends • Customers’ share of the distribution depends on the banks profit and on how much they have in deposits and loans • Includes all customers: retails, corporates and organizations • Customers share of distribution is in line with the core values of a savings bank • We will continue to distribute gifts to charitable purposes from Sandnes Sparebank’s Gift Fund 38 Increased net interest margin og strong cost control. Earnings in line with guiding for 2018 Non-perfoming and doubtful loans down 32% Well capitalised. Strong focus on marketing and branding. Growth in both depoits and loans last to quarters Increased customer satisfaction. Growth in volume on Eika Products. Improvement in service to certain customer groups (segmentation) Internal culture development – customers come first, always Giving back to society. Dedication to create activity and inspiration in our local market. Sponsoring «Folk» a managment focused conference for regional businesses Sponsoring play by Tore Renberg / Thomas Dybdal at Stavanger Theatre 39 42 43 • • • • • • • Estimate 2018 per 08.02.18 Estimate 2018 per 09.05.18 275 NOKm 275 NOKm 50-90 NOKm 50-80 NOKm > 15,2 % > 15,2 % ≤ 50 % ≤ 50 % 47 • • • • 30 23,9 25 23,3 22,8 21,5 21,5 20 33 % 34 % 33 % 33 % 33 % 15 10 67 % 66 % 67 % 67 % 67 % 5 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Retail Corporate 49 Kilder: Eiendomsverdi 180 170 160 150 140 130 120 110 100 90 80 sep.10 sep.11 sep.12 sep.13 sep.14 sep.07 sep.08 sep.09 sep.15 sep.16 sep.17 mar.07 mar.08 mar.09 mar.10 mar.15 mar.16 mar.17 mar.18 mar.11 mar.12 mar.13 mar.14 Vestlandet Stavanger m/omegn Norge 50 40% 80,0 % 70,0 % 65,7 % 65,0 % 64,2 % 59,6 % 60,9 % 60,0 % 23% 17% 50,0 % 15% 40,0 % 6% 0,4 % 30,0 % < 60% 60-75% 75-85% 85-100% >100% Unsecured 20,0 % 2013 2014 2015 2016 2017 • 63% with LTV below 75% • Propery prices have declined 2-3% over the last 12 months, but the decline is • 80% with