Sparekassen Sjælland Fyn A/S : Interim Report H1-2022

H1 2022

Interim Report

H1 2022 highlights

Contents

PROFIT BEFORE TAX

DKK 213.3m

Pre-tax profit provides returns on the opening equity at a rate equivalent to 11.2% a year.

NET PROFIT

DKK 170.1m

Net profit provides returns on the opening equity at a rate equivalent to 9.0% a year.

NET INTEREST INCOME

Up 6%

Net interest income is up by DKK 19.2m and totals DKK 314.8m. Adjusted for non-recurring matters, the increase is DKK 3.3m.

FEE AND COMMISSION INCOME

Up 4%

Fee and commission income is up by DKK 13.4m and totals DKK 335.6m.

LEVEL OF COSTS

Up 8%

Staff costs and administrative expenses and amortisation, depreciation and impairment losses on assets stand at DKK 406.0m. Adjusted for non-recurring matters, they have increased by 2%.

CORE EARNINGS

Up 5%

Recent years' developments continued in H1 2022.

NEGATIVE MARKET VALUE

ADJUSTMENTS

DKK 95.6m

Soaring interest rates on mortgage credit bonds are the primary cause of developments.

IMPAIRMENT LOSSES ON LOANS AND ADVANCES ETC

Reversal of DKK 35.5m

The stable development in the credit quality of Sparekassen's customers has continued. Management add-ons total DKK 227.4m at 30 June 2022.

TOTAL CREDITS ARRANGED

Up 3%

Since year-end 2021, loans to corporate customers have increased by 8%.

CAPITAL RATIO

23.0%

The capital ratio includes current profits. Sparekassen's capital position continues to develop satisfactorily.

LAUNCHING OF THE STRATEGY "TOWARDS NEW GOALS"

In April 2022

As stated in company announcement no 8/2022 of 27 April 2022, Sparekassen has presented its new strategy and financial targets for the next strategy period.

RATE OF COST

61.2%

According to the "Towards New Goals" strategy, the rate of cost is to be reduced continuously to below 50% no later than from the financial year 2026.

Sparekassen Sjælland-Fyn

H1 2022 Interim Report | Management commentary

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Contents

2	Management
	commentary
	H1 2022 highlights	page	2
	Management commentary	page	4
	Outlook for 2022	page	5
	Financial highlights	page	6
	Financial ratios	page	7
	Core earnings	page	8
	The Supervisory Diamond	page	9
	Financial review of the Group	page	10
	Towards New Goals -
	Sparekassen's 2025 strategy	page	14
	Capital structure and liquidity of the Group	page	18
	Credit quality categories	page	21
	Financial review of the Parent	page	22

Cover photo: The Sparekassen Sjælland-Fyn Group's head office in Holbæk.

Contents

24 Interim financial statements

Statement by Management on
the Interim Report	page	25
Income statement	page	26
Statement of comprehensive income	page	26
Balance sheet	page	27
Statement of changes in equity	page	29
Cash flow statement	page	30
Notes	page	31
Parent	page	46
Definitions of official key ratios etc	page	56

This Interim Report has been prepared in Danish and English, with the Danish version being valid in the event of any inconsistencies.

For more information, please visit spks.dk or contact:

Lars Petersson	Lars Bolding	Morten Huse Eikrem-Jeppesen
Chief Executive Officer	Executive Officer of	Press Officer
[phone]	the Savings Bank	[phone]
[e-mail]	[phone]
	[e-mail]

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Contents

Management commentary

Sparekassen's pre-tax profit for H1 2022 totals DKK 213.3m, providing a 11.2% return on opening equity. This profit reflects both a continued positive development in Sparekassen's core earnings, which are up 5% on H1 2021, and negative market value adjustments primarily related to the significant price decreases in Danish mortgage credit bonds.

Continued improvement of core earnings Recent years' satisfactory development in core earnings has continued, and in H1 2022 Sparekassen has seen a DKK 13.4m increase in, for example, fee and commission income to stand at a total of DKK 335.6m. The high level of activity in the housing market in recent years and increased activity particularly in the corporate segment are among the drivers of this development. Total credits arranged by Sparekassen - in the form of mortgage loans arranged to Totalkredit to buy housing and to DLR Kredit to buy commercial properties - have thus increased by DKK 1.9bn, or 4%, over the past 12 months.

Even though we are seeing a slowdown in the housing market because of the soaring interest rates on mortgage loans, among other factors, many of Sparekassen's customers are deciding to refinance their mortgage loans due to the massive interest rate movements. Also, asset management earnings are growing positively, and earnings overall have been affected positively by increasing income from Sparekassen's

services because of new customers, increased customer activity, etc.

Loans and advances in Sparekassen's own books are also developing positively, and corporate loan products in particular are performing well with an 8% increase since the end of 2021.

Finally, performance for H1 2022 should be viewed in the light of total value adjustments of a negative DKK 95.6m having been realised compared to DKK 8.4m for H1 2021. The primary reason for this is the soaring interest rate level on mortgage credit bonds.

Costs marked by non-recurring expenses In the short run, for example, Sparekassen's new strategy - "Towards New Goals" - has left its mark on total costs incurred in H1 2022. Sparekassen has thus incurred some non-recurringexpenses related to the strategy launch etc and has - quite extraordinarily - decided to thank Sparekassen's employees for their huge contribution in the continued consolidation of Sparekassen by paying them a one-offamount. Furthermore, IT, heating and electricity

expenses have increased in the first six months because of a general rise in prices.

Overall, staff costs and administrative expenses and amortisation, depreciation and impairment losses on assets stand at DKK 406.0m. Adjusted for non-recurring matters, the level of costs has increased by 2%. We expect the rate of increase to go down in H2 2022.

Uncertainty about the economic forecasts Credit quality of Sparekassen's customers is still considered fine, for which reason DKK 35.5m has been reversed in H1 2022 from impairment losses for loans and advances etc. With DKK 227.4m, total management add-onsare maintained at a relatively high level because the economic forecasts remain uncertain; this includes the situation in Ukraine and the high rate of inflation which is currently at a level unseen for decades and something also affecting Sparekassen's customers.

However, we expect that Danmarks National- bank's recent interest rate increase and any

future interest rate changes will have the desired effect and reduce the rate of inflation. As a result of Danmarks Nationalbank's interest rate increase, Sparekassen has decided to discontinue negative deposit rates for private customers with a NewKonto account at Sparekassen effective from 1 September 2022. Deposit rates for corporate customers and private customers not having a NemKonto account at Spareka- ssen have been raised correspondingly, and lending rates have been increased as well. The increase in interest rate levels is expected to support a positive development in both interest income and net interest income in the long term.

Towards New Goals

In H1 2022, Sparekassen started the execution of its ambitious four-year strategy - Towards New Goals - that is intended to ensure the continued development and consolidation

of Sparekassen up to the end of 2025 when Sparekassen will be celebrating its 200th anniversary.

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Contents

Sparekassen has therefore launched some internal strategic initiatives for the purpose of improving its commercial processes, its range of products and services, unlocking much more time for customer service, etc. For example, this goes for the corporate customer area where Sparekassen has the potential and as its goal to gain market shares. The strategic initiatives are intended to improve Sparekassen's competitive power, ensure increased efficiency, etc in order to boost the earnings capacity while lowering the total rate of cost to below 50%.

Outlook for 2022

In view of the first six months' strong core earnings and increasing interest rate level - yet bearing in mind the continued economic uncertainty because of the situation in Ukraine, the insecurity of supply and increasing inflation - the pre-tax earnings expectations range for the year has been adjusted from DKK 385-510m to DKK 425-510m.

Lars Petersson	Bruno Riis-Nielsen
Chief Executive	Executive Officer
Officer	of the Savings Bank
Lars Bolding	Jan Kolbye Jensen
Executive Officer	Executive Officer
of the Savings Bank	of the Savings Bank

JAN KOLBYE JENSEN		BRUNO RIIS-NIELSEN		LARS PETERSSON		LARS BOLDING
Executive Officer		Executive Officer		Chief Executive		Executive Officer
of the Savings Bank		of the Savings Bank		Officer		of the Savings Bank

Sparekassen Sjælland-Fyn

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