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Strong return on equity and result growth in first quarter

05/05/2022 | 01:01am

Sparebanken Vest recorded a pre-tax profit of NOK 849 (613) million in the first
quarter 2022, and a return on equity of 16,5 (13,1) per cent. In the quarter
both retail and corporate customers reported record high customer satisfaction.

The result is positively impacted by solid operations, a good financial result
and low loan losses. Increased costs on financing somewhat reduces the positive
developments in operations.

Net commission income amounted to NOK 137 (112) million in the first quarter,
and the increase is due to increased income from payment transfers, and savings
and investments. The net contribution from financial instruments amounted to NOK
(-9) million for the quarter. The strong financial result is due to sale of
shares in Frende Holding AS to the Lokalbank alliance, and net positive effects
of value adjustments as a consequence of increased basis swap spreads and credit
spreads. The profit contribution from associated companies amounted to NOK 28
(46) million.

The bank's operating expenses in the first quarter amounted to NOK 405 (354)
million, which gives a ratio of operating cost-to-income of 32.4 (36.5) per
cent. The nominal cost increase from 2021 is partially due to costs in the first
quarter of 2021 being abnormally low due to lower activity following Covid-19.
The increase in costs must further be seen in connection with the upscaling of
Eiendomsmegler Vest, increased investments in the Bulder concept, opening of the
office in Ålesund and costs related to the merger with Etne Sparebank.

At quarter end the bank's CET1 ratio was 17.5 (18.5) per cent. The reduction
from the corresponding quarter of 2021 is partially due to increased average
risk weight in the retail market in line with the Financial Supervisory
IRB guideline. In line with the amended Pillar 2 decision from the
Financial Supervisory Authority, the requirement for CET1 ratio has been reduced
from 14.2 to 14.0 per cent from 30 April.

"Through growth, record-high customer satisfaction and strong results, we
continue to strengthen our position as Western Norway's leading bank. The bank's
value proposition with a personal signature, simple digital services and a
burning commitment to Western Norway's society proves strong in the market. In
line with the good economic development in the region, we deliver a first
quarter with a strong return on equity driven by increased income, low losses
and an increase in net commission and financial income. Despite nominal cost
increases as a result of strategic investments, the cost-to-income ratio has
decreased compared with the first quarter of 2021, and is among the lowest in
the industry", says Jan Erik Kjerpeseth, CEO of Sparebanken Vest.

Record high customer satisfaction
Last twelve months gross lending increased by NOK 23.4 (9.6) billion,
corresponding to a growth of 12.7 per cent. The growth in the retail market is
NOK 18.8 billion, whereof NOK 11.7 billion was in the Bulder Bank concept.
Corporate lending grew by NOK 4.2 billion in the period. Total deposits from
customers increased by NOK 12.9 billion last twelve months, corresponding to a
growth of 15.2 per cent.

"We have had good growth in both lending and deposits, and in the first quarter
both retail and corporate customers give us record high scores in customer
satisfaction. Retail customers give us a total score of 77 and corporate
customers 73, and this is the highest satisfaction we have had in both segments
since the surveys began in 1997. Customer dividends, which were announced and
approved in the quarter, and paid in April, have received a very good response
from customers and is an increasingly important part of our value proposition",
says Kjerpeseth.

"Every third Norwegian now state that they know of the Bulder Bank concept, an
increase from every fourth in the previous survey. We are constantly working to
expand the product range in Bulder. We have a zero vision for manual work in
loan cases, and in the first quarter we more than doubled the proportion of
loans that were processed completely automatically", says Kjerpeseth.

Low losses, and reduction in commitments in default and potential bad debt
In the first quarter total losses on loans and guarantees amounted to NOK 6 (17)
million. 73 per cent of the bank's provisions are model based and have only to a
small extent been reversed as Covid-19 has subsided.

Commitments in default and potential bad debt in the retail market amounted to a
total of NOK 283 (435) million, which corresponds to 0.18% (0.31%) of gross
lending in the retail market. In the corporate market it amounted to NOK 1,133
(1,333) million, corresponding to 2.27% (2.95%) of gross lending in the
corporate market.

"The development with stable low losses is also continued in the first quarter
with total loss costs of NOK 6 million. Commitments in default and potential bad
debt have been reduced compared with the corresponding quarter last year and
have been stable in recent quarters. Moderate credit risk with a high proportion
of retail market exposure with a low loan-to-value ratio, good credit work and a
diversified corporate market portfolio, results in low losses", says Kjerpeseth.

Well positioned for growth
In February, Sparebanken Vest announced that the bank would merge with Etne
. Sparebanken Vest is the acquiring bank, and the merged bank will be
named Sparebanken Vest.

"Last autumn, we opened an office in Ålesund where we see that our value
proposition is attractive in both the retail and corporate markets. According to
plan, from autumn this year we will be merged with Etne Sparebank. Etne
and Sparebanken Vest are today two strong and locally based savings
banks with many similarities in profile, and a merger will provide better
services to both retail and corporate customers, and not least support the local
community in Etne with socially beneficial funds. We see an exciting retail and
corporate market in Etne and Vindafjord with significant potential to grow.
Sparebanken Vest is well positioned for further growth and consolidation", says

Key figures first quarter 2022 (Q1 2022 in brackets)
o Excellent return on equity: 16.5% (13.1%)
o Significantly improved pre-tax profit: NOK 849 (613) million
o Higher net interest income: NOK 887 (779) million
o Higher contribution from finance: NOK 146 (-9) million
o Positive development in commission income: NOK 137 (112) million
o Weaker financial result for Frende reduces contribution from associates: NOK
(46) million
o Strategic initiatives increase costs: NOK 405 (354) million
o Low write-downs on loans and guarantees: NOK 6 (17) million
o Sound CET1 ratio: 17.5% (18.5%)
o Profit per equity certificate: NOK 2.77 (2.05)

Sparebanken Vest will present the accounts for the first quarter at 10.00 on 5
May. The presentation will be available here: Questions concerning the
presentation will be addressed after the presentation. Questions may be sent to:

For further information, please contact:
Jan Erik Kjerpeseth, CEO, tel.: (+47) 951 98 430
Frank Johannesen, EVP CFO, tel.: (+47) 952 65 971
Brede Borgen Kristiansen, Director Finance and Investor Relations, tel.: (+47)
479 06 402
Hanne Dankertsen, Communications Director, tel.: (+47) 994 49 173

Sparebanken Vest is the second largest savings bank in Norway, with more than
700 committed and highly skilled employees. Since the start in 1823, we have
gained a position of trust among customers in Western Norway that has resulted
in a solid market position and 35 branch offices in the counties of Vestland,
Rogaland and Møre og Romsdal. Through our associated companies and subsidiaries,
we are able to provide a complete range of financial services to all our retail
and corporate customers. We are proud to be an independent financial services
group with our head office in Bergen, allowing us to play a key role in much of
the value creation that takes place in Western Norway.

This information is subject to a duty of disclosure pursuant to the Securities
Trading Act Section 5-12.

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