Sparekassen Sjælland Fyn A/S : Interim Report Q1-2022

Q1 2022

Interim Report

Q1 2022 highlights

PROFIT BEFORE TAX

Totals DKK 100.8m

Pre-tax profit provides a 10.6% return on opening equity.

NET PROFIT

Totals DKK 82.3m

Net profit provides a 8.7% return on opening equity.

CORE EARNINGS

Total DKK 128.8m

Core earnings remain at the same high as in Q1 2021.

NET INTEREST AND FEE INCOME

Up 5%

Net interest and fee income is up by a satisfactory DKK 14.3m to stand at DKK 324.4m.

Sparekassen Sjælland-Fyn

LEVEL OF COSTS

Up DKK 11.9m

Staff costs and administrative expenses and amortisation, depreciation and impairment losses on assets have gone up by 7% to total DKK 194.2m. Adjusted for non-recurring matters, the increase is 3%. This development is in line with the budgets drawn up.

NEGATIVE MARKET VALUE

ADJUSTMENTS

Total DKK 35.7m

Market value adjustments are down DKK 48.6m, which is primarily attributable to surging interest rates on mortgage credit bonds.

IMPAIRMENT LOSSES ON LOANS AND ADVANCES ETC

Reversal of

DKK 3.0m

The stable development in the credit quality of Sparekassen's customers continues.

Contents

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.

TOTAL CREDITS ARRANGED

Increasing to over DKK 60bn

Total credits arranged in the form of loans and advances and mortgage loans arranged for private and corporate customers have increased by 4% to stand at DKK 60.2bn.

CAPITAL RATIO

Is 21.9%

Sparekassen's capital position remains robust.

Q1 2022 Interim Report | Management commentary

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Contents

2	Management
	commentary
	Q1 2022 highlights	page	2
	Management commentary	page	4
	Outlook for 2022	page	4
	Financial highlights	page	6
	Financial ratios	page	7
	Core earnings	page	8
	The Supervisory Diamond	page	9
	Financial review of the Group	page	10
	Capital structure and liquidity of the Group	page	14
	Credit quality categories	page	16
	Financial review of the Parent	page	17

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

Sparekassen Sjælland-Fyn

Contents

19 Interim financial statements

Statement by Management on
the Interim Report	page	20
Income statement	page	21
Statement of comprehensive income	page	21
Balance sheet	page	22
Statement of changes in equity	page	23
Cash flow statement	page	25
Notes	page	26
Parent	page	40
Definitions of official key ratios etc	page	50

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]

Q1 2022 Interim Report | Management commentary

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Contents

Management commentary

With a pre-tax profit of	DKK 100.8m for Q1 2022, Sparekassen Sjælland-Fyn has been off to a good start this year.
Net of tax, profit stands	at DKK 82.3m, providing an 8.7 % return on opening equity.

These results reflect continuously strong core earnings, which should be viewed in the light of, for example, generally lower activity in the housing market compared to Q1 2021 and of Sparekassen's customer base continuing to develop positively.

Continuously strong core earnings Although the housing market has seen a slight slow-downin the new year, Sparekassen's core earnings of DKK 128.8m in Q1 2022 remain

at the same high as in Q1 2021. These figures bear witness of the success in ensuring - and maintaining - a permanent boost in Spare- kassen's earnings. This has been done, for example, by increasing business with current private and corporate customers and by gaining new market shares. Sparekassen is currently experiencing fine activity in the corporate segment, so lending is expected to increase in 2022. This, combined with the generally inherent expectations of an increasing interest rate level, will probably support a positive development in both interest income and net interest income in the long term.

Total credits arranged by Sparekassen - in the form of loans and advances and mortgage loans arranged to Totalkredit to buy housing and to DLR Kredit to buy commercial properties - have increased by 4 % over the past 12 months. So, total credits arranged by Sparekassen have now passed the DKK 60bn mark and amount to DKK 60.2bn.

Also, net interest and fee income has increased by DKK 14.3m, or 5 %, to total DKK 324.4m.

With respect to costs, staff costs and administrative expenses and amortisation, depreciation and impairment losses on assets have gone up by DKK 11.9m in total. This line item is affected by multiple non-recurring matters and investments

• resulting from Sparekassen's new strategy "To- wards New Goals" - that are to strengthen the future earnings capacity. Adjusted for non-recur- ring matters, the increase is 3 %. This develop- ment is in line with the budgets drawn up.

Finally, performance for Q1 2022 should be viewed in the light of negative market value adjustments of DKK 35.7m having been realised that have primarily been caused by the surging interest rates on mortgage credit bonds.

Impairments

Credit quality of Sparekassen's customers remains fine, for which reason DKK 3.0m has been reversed in Q1 2022 from impairment losses for loans and advances etc, whereas total management add-ons for possible losses etc have been reduced by DKK 14.8m compared to the balance at year-end 2021.

However, with DKK 204.5m, total management add-ons remain at a relatively high level, one of the reasons being the situation in Ukraine that has pushed increasing food and gas prices etc further and generally created uncertainty about

the economic forecasts. Also, repayment of the government loans granted as part of the COV- ID-19 aid packages has started, which may also affect liquidity and hence also the robustness of business operators, among others.

Launching of the strategy "Towards New Goals"

After the successful execution of the "New Ways" strategy that Sparekassen has applied determinedly over the past four years, we have set some new ambitious goals and financial targets for the next four years.

The strategic priority areas and financial targets are anchored in a new ambitious four-year strategy, "Towards New Goals", that is to ensure the ongoing development and strengthening of Sparekassen up to the end of 2025 when Sparekassen will be celebrating its 200th anniversary and yet another important milestone.

The strategic priority areas, including the financial targets for "Towards New Goals", were published in company announcement no 8/2022 issued on 27 April 2022.

The financial targets are:

• The rate of cost must be reduced and be less than 50 % from the financial year 2026.
• The return on equity after tax must annually be over 10 % on average throughout the strategy period.

• Minimum cash dividend distribution of 25 % of net profit for the year and payment of inter- est on hybrid core capital. Another objective is to increase total distribution by means of share buy-backs.
• Maintaining the solid capital base with a minimum capital ratio of 20 %.
• Solid and controlled growth by increasing the total business volume by 4-8 % a year.

Furthermore, major internal activities are currently in process to embed the new strategy with Sparekassen's employees who play a vital role in the efforts to demonstrate and execute the strategy - for the benefit of both the employees and Sparekassen's customers and shareholders.

Outlook for 2022

Based on the strong core earnings in Q1, increasing economic uncertainty due to the situation in Ukraine, and volatile mortgage credit bond prices, the pre-tax earnings expectations ranging from DKK 385m to DKK 510m are maintained.

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

Sparekassen Sjælland-Fyn

Q1 2022 Interim Report | Management commentary

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Indhold

	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
									5
Sparekassen Sjælland-Fyn				Q1 2022 Interim Report | Management commentary