179th year
QUARTERLY REPORT
Q3 2021
Sparebanken Øst Q3 2021
Interim financial statements, Q3 2021
Key Figures ‐ Group………………………………………………………………………………………………………………… | 3 | |
Board of Directors' Report……………………………………………………………………………………………………… | 4 | |
Financial statements for the Sparebanken Øst Group | ||
Income Statement ………………………………………………….…………………………….. | 17 | |
Balance Sheet ………………………………..................................................................................................................... | 18 | |
Changes in Equity ........................................................................................................................ | 19 | |
Cash Flow Statement ……………............................................................................................................................ 20 | ||
Note 1 | Basis for preparation of the financial statements ........................................................................ | 21 |
Note 2 | Operating segments ………………………............................................................................................. | 22 |
Note 3 | Capital adequacy ……………………………….......................................................................................... | 23 |
Note 4 | Losses on loans, unused credit and guarantees ........................................................................... | 25 |
Note 5 | Non‐performing commitments, customers .................................................................................. | 29 |
Note 6 | Deposits from customers by sector and industry ……………………………………………………………………… | 30 |
Note 7 | Loans to customers by sector and industry ………………………...…………………………………………………… | 30 |
Note 8 | Geographical distribution of lending, customers ……………………………………………………………………… | 30 |
Note 9 | Credit risk ……………………………………………………….………………………………………………………………………… | 31 |
Note 10 | Classification of financial instruments .......................................................................................... | 33 |
Note 11 | Financial instruments at fair value …………………………………………………………………………………………… | 35 |
Note 12 | Securities issued and subordinated loan capital ……………………………………………………………………… | 37 |
Note 13 | Financial derivatives ..................................................................................................................... | 38 |
Note 14 | Financial derivatives ‐ offsetting ................................................................................................... | 39 |
Note 15 | Net interest income ………………………………………………………………………………………………………………… | 40 |
Note 16 | Net changes in value and gains/losses on financial instruments ……………………..………………………… | 40 |
Note 17 | Operating costs ………………………………………………………………………………………………………………………… | 40 |
Note 18 | Guarantee liability and other off‐balance sheet items ……………………………………………………………… | 41 |
Note 19 | Equity certificates ……………………………………………………………………………………………………………………… | 41 |
Financial Statements for Sparebanken Øst Parent Bank | ||
Income Statement ………………………………………………….……………………………………………………………………………………… | 43 | |
Balance Sheet ………………………………..................................................................................................................... | 44 | |
Changes in Equity ................................................................................................................................................ | 45 | |
Cash Flow Statement .......................................................................................................................................... | 46 | |
Additional Information ‐ Sparebanken Øst Group | ||
Key figures ……………………………………………………………………………………………………………………………………………………… | 47 | |
Definition of key figures and alternative performance indicators …………………………………………………………………… | 48 | |
Financial performance ………...………………………………………………………………………………………………………………………… | 49 | |
Balance sheet performance ……...…………………………………………………………………………………………………………………… | 50 |
Page 2 of 51
Sparebanken Øst Q3 2021
Key figures ‐ Group
Income Statement (Amounts in NOK millions) | 3. kvartal 2021 | 3. kvartal 2020 | 1.1.‐30.9.2021 | 1.1.‐30.9.2020 | Full year 2020 |
Net interest income | 165,5 | 166,3 | 468,5 | 468,1 | 632,1 |
Net commission income | 6,6 | 8,7 | 21,3 | 27,0 | 35,1 |
Net result from financial assets | ‐2,6 | ‐4,8 | 70,7 | 145,3 | 148,1 |
Other operating income | 0,2 | 1,9 | 5,9 | 26,0 | 29,3 |
Total net income | 169,8 | 172,1 | 566,4 | 666,5 | 844,7 |
Total operating costs | 79,5 | 72,1 | 226,6 | 214,1 | 296,0 |
Profit/loss before losses | 90,2 | 100,0 | 339,8 | 452,4 | 548,7 |
Losses on loans, unused credit and guarantees | ‐1,7 | 2,0 | 1,5 | 11,4 | 15,1 |
Profit/loss before tax costs | 91,9 | 98,1 | 338,3 | 441,0 | 533,6 |
Tax costs | 20,2 | 22,1 | 60,6 | 59,8 | 80,4 |
Profit/loss after tax | 71,7 | 75,9 | 277,7 | 381,2 | 453,1 |
Key figures | 3. kvartal 2021 | 3. kvartal 2020 | 1.1.‐30.9.2021 | 1.1.‐30.9.2020 | Full year 2020 |
Profitability | |||||
Return on equity* | 6,44 | 7,23 | 8,71 | 12,83 | 11,47 |
Net interest income as a percentage of average total assets | 1,35 | 1,53 | 1,33 | 1,45 | 1,46 |
Profit after tax as a percentage of average total assets | 0,58 | 0,70 | 0,79 | 1,18 | 1,05 |
Costs as a percentage of average total assets | 0,65 | 0,66 | 0,64 | 0,66 | 0,68 |
Costs as a % of income (before losses on loans/guarantees)* | 46,85 | 41,88 | 40,01 | 32,13 | 35,04 |
Costs as a % of income (excl. return on financial investments)* | 46,14 | 40,75 | 45,72 | 41,08 | 42,50 |
Balance sheet figures | |||||
Net lending to customers | 40.093,4 | 31.366,3 | 40.093,4 | 31.366,3 | 35.443,8 |
Lending growth (quarter/12 months) | ‐0,82 | ‐2,02 | 27,82 | ‐9,69 | 3,56 |
Deposits | 17.852,6 | 14.542,0 | 17.852,6 | 14.542,0 | 14.845,1 |
Deposit growth (quarter/12 months) | 3,09 | ‐2,08 | 22,77 | ‐3,52 | 0,36 |
Average equity | 4.204,2 | 3.987,3 | 4.104,7 | 3.839,1 | 3.812,9 |
Average total assets | 48.805,3 | 43.219,6 | 47.020,8 | 43.106,3 | 43.299,0 |
Loss provisions on impaired and non‐performing commitments | |||||
Losses as a % of net lending to customers (OB)* | ‐0,02 | 0,02 | 0,01 | 0,04 | 0,04 |
Loan loss provisions as a percentage of gross lending to customers* | 0,32 | 0,39 | 0,32 | 0,39 | 0,35 |
Net payments over 90 days past due as a percentage of net lending* | 0,20 | 0,35 | 0,20 | 0,35 | 0,29 |
Other net non‐performing commitments (Stage 3) as a percentage of net lending* | 0,13 | 0,02 | 0,13 | 0,02 | 0,02 |
Financial strength | |||||
CET1 capital ratio incl. 50% of retained earnings (%) | 17,62 | 18,51 | 17,62 | 18,51 | 17,96 |
CET1 capital ratio (%) | 17,00 | 17,53 | 17,00 | 17,53 | 17,96 |
Tier 1 capital ratio (%) | 18,62 | 19,39 | 18,62 | 19,39 | 19,67 |
Capital adequacy ratio (%) | 20,48 | 21,22 | 20,48 | 21,22 | 21,34 |
Risk‐weighted volume (calculation basis) | 21.490,8 | 18.818,0 | 21.490,8 | 18.818,0 | 20.471,4 |
Tier 1 leverage ratio incl. 50% of retained earnings (%) | 8,34 | 8,93 | 8,34 | 8,93 | 9,03 |
Tier 1 leverage ratio (%) | 8,07 | 8,50 | 8,07 | 8,50 | 9,03 |
Liquidity | |||||
Deposit coverage ratio | 44,53 | 46,36 | 44,53 | 46,36 | 41,88 |
LCR (%) | 193,19 | 337,87 | 193,19 | 337,87 | 266,93 |
Branches and FTEs | |||||
No. of branches | 29 | 29 | 29 | 29 | 29 |
FTEs | 184 | 188 | 184 | 188 | 184 |
Equity certificates | |||||
Ownership fraction (parent bank) (%)** | 29,59 | 31,40 | 29,59 | 31,40 | 31,40 |
No. of equity certificates | 20.731.183 | 20.731.183 | 20.731.183 | 20.731.183 | 20.731.183 |
Book equity per equity certificate* | 61,49 | 64,53 | 61,49 | 64,53 | 61,18 |
Earnings per equity certificate* | 0,97 | 1,10 | 3,82 | 5,58 | 6,62 |
Dividend per equity certificate | 0,00 | 0,00 | 0,00 | 0,00 | 4,50 |
Turnover rate | 24,17 | 11,83 | 23,82 | 19,12 | 20,64 |
Price | 52,80 | 44,70 | 52,80 | 44,70 | 51,40 |
- Defined as alternate performance target
- For ownership fraction at 01.01.2021, see Note 19
For definisjon av nøkkeltall og omtale av alternative resultatmål, se side 48
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Sparebanken Øst, Q3 2021
Board of Directors' Report
Sparebanken Øst has seen a significant influx of customers which has resulted in high rates of growth across both lending and deposits. Lending growth in the last 12 months has amounted to NOK 8.7 billion, or 27.82 per cent, and deposit growth has totalled NOK 3.3 billion, or 22.77 per cent. High growth in terms of both lending and deposits in a market that is characterised by strong competition has had an impact on net interest income to date in 2021. During the quarter, interest increases were adopted across much of the bank's lending portfolios and these took effect in mid‐ November. The bank's deposit margins are expected to increase in future as a result of anticipated increases in money market rates.
Sparebanken Øst calculates its capital adequacy using the standard method and therefore uses very high capital weights for its lending to retail and business customers when compared with banks that use IRB models. The differential treatment of equal risk shows that capital weights according to IRB models provide the possibility for significantly higher lending volumes relative to equity levels, which makes a higher return on equity possible. With equal treatment of risk, the bank's calculations show that Sparebanken Øst could have increased its lending portfolio by around 70 per cent without any extraordinary supply of new equity.
Sparebanken Øst achieved a profit after tax of NOK 71.7 million in the third quarter of 2021, which represents a return on equity of 6.44 per cent. Earnings per equity certificate in the quarter were NOK 0.97. Net interest income amounted to NOK 165.5 million, compared with NOK 166.3 million in the same quarter last year. Costs as a percentage of average total assets have reduced and stand at 0.65 per cent compared with 0.66 per cent in the same period last year. Losses on loans were very low and amounted to income of NOK 1.7 million, compared with a cost of NOK 2.0 million in the same quarter last year.
The profit after tax as at 30 September 2021 amounted to NOK 277.7 million, which represents a return on equity of 8.71 per cent. Earnings per equity certificate are NOK 3.82 to date this year. Net interest income to date this year amounted to NOK 468.5 million, compared with NOK 468.1 million in the same period last year. The profit/loss effect from equity investments amounted to NOK 79.7 million, down NOK 91.2 million compared with the same period last year. Costs as a percentage of average total assets have reduced and stand at 0.64 per cent compared with 0.66 per cent in the same period last year. Losses on loans were very low and amounted to NOK 1.5 million, compared with NOK 11.4 million in the same period last year.
The Bank is very sound with a leverage ratio of 8.34 per cent and a CET1 capital ratio of 17.62 per cent calculated according to the standard model, both of which include 50 per cent of the equity certificate holders' and primary capital's shares of the profit for the year to date.
Quarterly profit
Sparebanken Øst achieved a profit after tax of NOK 71.7 million for Q3 2021. The corresponding profit after tax for Q3 2020 was NOK 75.9 million.
The return on equity for the quarter was 6.44 per cent, compared with 7.23 per cent for the same quarter in 2020.
The table below presents the return on equity over the past nine quarters.
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Sparebanken Øst, Q3 2021
28%
24%
20%
16%
12%
8%
4%
0%
Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2019 2019 | 2020 | 2020 | 2020 2020 | 2021 | 2021 | 2021 |
Net interest income
Net interest income amounted to NOK 165.5 million in Q3 2021, compared with NOK 166.3 million in the same quarter in 2020. Net interest income amounted to 1.35 per cent of average total assets in the quarter. Developments in terms of net interest income are affected by high rates of lending and deposit growth over the last 12 months in a market characterised by strong competition for the best customers. Deposit margins remain low as a result of low interest rates.
The figure below shows net interest income in per cent and NOK in the last nine quarters.
200 | 2,00% | |||||||
150 | 1,75% | |||||||
1,50% | ||||||||
100 | 1,25% | |||||||
1,00% | ||||||||
50 | 0,75% | |||||||
0,50% | ||||||||
0 | 0,25% | |||||||
0,00% | ||||||||
Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2019 2019 2020 2020 2020 2020 2021 2021 2021 |
Mill. kroner | Prosent GFK |
increase of NOK 0.1 million compared with the same quarter last year.
-
Net changes in value and gains/losses on financial instruments were negative in the amount of NOK 2.8 million for Q3 2021, compared with a loss of NOK 4.9 million in the same quarter last year. The value of the liquidity portfolio dropped by NOK 4.5 million during the quarter, compared to a drop of NOK 3.6 million in the same quarter last year. Value changes related to shares and equity rights in Visa Inc. were negative in the amount of NOK 1.3 million for the quarter, compared to a positive change in value worth NOK 3.8 million in the same quarter last year. During the quarter there was a positive change in the value of the bank's shares in Kraft Bank ASA amounting to NOK 1.8
.million, and the bank's shares in Balder Betaling AS (owner of Vipps AS) also increased by NOK 1.8 million. The financial impact of currency, derivatives and fixed‐rate lending at fair value was negative in the amount of NOK 0.5 million in the quarter, compared with a positive impact of NOK 1.5 million in the same quarter last year. The cost of buying back the bank's own issued debt amounted to NOK 0.1 million during the quarter, compared with NOK 6.6 million in the same quarter last year. - Other operating income reduced by NOK 1.7 million, amounting to NOK 0.2 million during Q3 2021 compared with the same quarter last year.
Net other operating income
Net operating income comprises commission income and costs, dividends, net changes in value and gains/losses on financial instruments and other operating income. Net other operating income amounted to NOK 4.2 million in Q3 2021, compared with NOK 5.9 million in the same quarter of last year.
- Net commission income amounted to NOK
- million and reduced by NOK 2.0 million as a result of increased commission costs incurred by AS Financiering.
- The recognised dividend amounted to NOK
- million for the quarter, representing an
Operating costs
Total operating costs as a percentage of average total assets have reduced and stand at 0.65 per cent compared with 0.66 per cent in the same quarter last year. In Q3 2021, operating costs increased by NOK 7.4 million compared to the same quarter last year and amounted to NOK
79.5 million in the quarter. The changes concern the following:
- Payroll costs amounted to NOK 47.5 million compared with NOK 43.8 million in the same quarter last year. Increasing regulatory requirements and expectations entail a need for significant additional effort from the
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Sparebanken Øst published this content on 30 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 November 2021 15:10:06 UTC.