Rapport for tredje kvartal

Q3

Third quarter 2021

(Unaudited)

Sbanken ASA

Q3	Third quarter 2021 - Highlights
Sbanken ASA

Annual lending growth Cost-to-income ratio ROE

-1.5 %	44.7 %	9.2 %
(2.4 %*)	(35.5 %*)	(12.2 %*)

Net interest margin Loan loss ratioCET1 ratio

1.50 %	0.03 %	16.3 %**
(1.66 %*)	(0.14 %*)	(16.8 %*)

• Positive lending development quarter on quarter of 0.5 per cent
• DNB voluntary offer - awaiting decision from competition authorities
• Strong capital position - NOK 4.40 per share dividend distribution
• Robust asset quality - losses remaining at low levels

Total loans to customers

NOK million

83 621	83 438	83 211	81 955	82 388
3Q20	4Q20	1Q21	2Q21	3Q21

Earnings before tax

NOK million

274 283

243 253

219

3Q20 4Q20 1Q21 2Q21 3Q21

Return on equity

Per cent

12.2 %	12.5 %
		10.7 %	11.1 %
				9.2 %
3Q20	4Q20	1Q21	2Q21	3Q21

• Comparable figure corresponding period last year.
• Including 50 per cent retained earnings for the first nine months of 2021 and 37.2 per cent retained earnings for 2020.

PAGE 2/51 THIRD QUARTER 2021 - SBANKEN GROUP - UNAUDITED

Key figures (group)

In NOK thousand	Reference	Q3 21	Q3 20	Jan-Sep 21	Jan-Sep 20	2020
Summary of income statement
Net interest income		373 381	422 199	1 150 439	1 236 827	1 644 137
Net fee and commission income		50 940	43 825	146 201	134 749	184 310
Net other income		-18 888	3 608	-35 405	1 877	22 050
Total income		405 433	469 632	1 261 235	1 373 453	1 850 497
Other operating expenses		-181 056	-166 801	-546 895	-520 589	-710 371
Operating profit before loan losses		224 377	302 832	714 340	852 864	1 140 126
Loan losses			-28 384		-128 911	-133 482
	-5 252	821
Earnings before tax		219 125	274 448	715 161	723 953	1 006 643
Calculated tax		-50 778	-62 616	-164 410	-162 273	-223 601
Net profit		168 347	211 832	550 751	561 680	783 042
Profitability
Return on equity	1	9.2 %	12.2 %	10.1 %	11.1 %	11.4 %
Net interest margin	2	1.50 %	1.66 %	1.54 %	1.68 %	1.66 %
Cost-to-income ratio	3	44.7 %	35.5 %	43.4 %	37.9 %	38.4 %
Earnings per share		1.52	1.90	4.98	5.00	7.00
Balance sheet figures (in NOK million)
Total loan volume		82 388	83 621	82 388	83 621	83 438
Customer deposits		63 845	58 064	63 845	58 064	58 644
Deposit-to-loan ratio	4	77.9 %	70.6 %	74.6 %	67.8 %	68.4 %
Lending growth (gross) previous 12 months		-1.5 %	2.4 %	-1.5 %	2.4 %	2.4 %
Average total assets	5	98 433	101 349	99 643	98 348	98 939
Total assets, end of period		101 684	98 101	101 684	98 101	100 726
Book value per share		66.54	62.80	66.54	62.80	64.72
Losses and defaults
Total loan loss (%)	6	0.03 %	0.14 %	0.00 %	0.21 %	0.16 %
Capital adequacy and leverage ratio	7
Common equity Tier 1 capital ratio		16.3 %	16.8 %	16.3 %	16.8 %	15.5 %
Tier 1 capital ratio		18.1 %	18.6 %	18.1 %	18.6 %	17.3 %
Total capital ratio		20.4 %	20.9 %	20.4 %	20.9 %	19.6 %
Leverage ratio		6.5 %	6.9 %	6.5 %	6.9 %	6.3 %
Employment
FTEs		323	333	323	333	334

References

1. Return to shareholders after tax (annualised) as a percentage of average shareholder equity in the period.
2. Net interest income (annualised) as a percentage of average total capital
3. Operating expenses before loss as a percentage of total income
4. Average deposits from customers as a percentage of average loan volume
5. Average total assets in the period
6. Loan losses as a percentage of average loan volume in the period
7. Including 50 per cent of retained earnings for the first nine months of 2021 and 37.2 per cent of retained earnings for 2020. The first nine months of 2020 includes 70 per cent of retained earnings for the first nine months of 2020 and fully retained earnings for 2019. Year-end 2020 includes 37.2 per cent of retained earnings for 2020 and 50.4 per cent of the profit for 2019.

PAGE 3/51 THIRD QUARTER 2021 - SBANKEN GROUP - UNAUDITED

Third Quarter Results

The Sbanken group recorded a profit before tax of NOK 219.1 million in the third quarter, compared with NOK 274.4 million in the third quarter of 2020. Net interest income decreased to NOK 373.4 (422.2) million, while net fee and commission income increased by

16.2 per cent to NOK 50.9 (43.8) million. Return on equity in the third quarter was 9.2 (12.2) per cent.

Total customer lending at quarter-end increased to NOK 82.4 billion. Compared to the previous quarter, mortgage lending increased 0.4 per cent, while car loans increased 14.5 per cent with the introduction of a new car loan product. Funds under management increased to NOK 30.3 billion.

Important events during the quarter

On 1 July, the Norwegian Ministry of Finance approved DNB's contemplated acquisition of Sbanken. On 26 August, the Norwegian Competition Authority (NCA) issued a reasoned statement against the transaction. The objections relate to NCA's preliminary assessments of possible negative competition effects in the market for fund distribution. On 7 October, the final deadline for the NCA's review was extended following proposal for remedies from DNB to address NCA's preliminary concerns, see "Subsequent Events".

In response to market dynamics following DNB's offer for Sbanken, the bank has made targeted product adaptations, including a 2021 mortgage rate guarantee granted in the second quarter, and targeted marketing efforts to mitigate customer churn. The initiatives have led to margin compression in the quarter.

On 23 September, Norges Bank raised the key policy rate by 25 basis points to 0.25 per cent. The average three-month Nibor rate for the third quarter was 0.38 per cent, up 12 basis points from the previous quarter.

Net fee and commission income increased to NOK 50.9 (43.8) million, partially ascribed to increased revenues from card transactions abroad as coronavirus travel restrictions were eased. Net other income decreased to minus NOK 18.9 (3.6) million, predominately related to the repurchase of own covered bonds.

Net interest and fee and commission income

NOK million

500					2.4 %
450
44	50	47		2.2 %
400		49	51
422
407	392
350
	385	373	2.0 %
300
250					1.8 %
200					1.6 %
150
1.66 %	1.60 %
100		1.58 %
	1.55 %	1.50 %	1.4 %
50
0					1.2 %

In accordance with the granting of interest rate guarantees to all mortgage	3Q20	4Q20	1Q21	2Q21	3Q21
customers, the bank did not make changes in mortgage rates.		Net interest income			Net fee and commissions

Interest margin (right axis)

In the annual ESG 100 sustainability reporting survey, Sbanken was awarded a score of B+, up from a score of D last year. The survey is conducted by independent research and advisory firm "The Governance Group", and focuses on the 100 largest companies on the Oslo Stock Exchange.

For the 13th consecutive year, Sbanken was placed number one on EPSI's annual customer satisfaction survey, being the only bank to achieve a score above 80.

Operating income

Operating income amounted to NOK 405.4 (469.6) million, following a decrease in net interest income of NOK 48.8 million, an increase in net fee and commission income of NOK 7.1 million and a decrease in net other income of NOK 22.5 million from the third quarter of 2020.

Net interest income decreased to NOK 373.4 (422.2) million. The net interest margin was 1.50 per cent, down from 1.66 per cent in the third quarter of 2020. Compared to the previous quarter, the net interest margin was down 8 basis points.

The effective lending rate decreased to 1.88 per cent, compared to 2.07 per cent in the third quarter of 2020. The lending rate decreased by 12 basis points from the previous quarter.

Average effective interest rate by product group
	3Q20	4Q20	1Q21	2Q21	3Q21
Mortgages	1.99 %	1.89 %	1.88 %	1.85 %	1.79 %
Car loans	5.46 %	5.61 %	5.46 %	5.45 %	4.97 %
Consumer loans	10.35 %	10.23 %	10.02 %	10.10 %	9.76 %
Other credit	11.58 %	11.56 %	11.43 %	11.08 %	10.53 %

The effective funding rate decreased to 0.37 per cent, compared with 0.42 per cent in the third quarter of 2020. The funding rate decreased by 5 basis points from the previous quarter.

PAGE 4/51 THIRD QUARTER 2021 - SBANKEN GROUP - UNAUDITED

Operating expenses

Operating expenses amounted to NOK 181.1 (166.8) million in the quarter, including NOK 3.8 million in non-recurring transaction costs related to the ongoing offer process. Compared to the third quarter of 2020, the main difference was higher payroll expenses and increased marketing spend. Marketing costs increased to NOK 13.3 million from NOK 8.3 million in the third quarter of 2020.

The cost-to-income ratio was 44.7 per cent in the quarter, compared to 35.5 per cent in the third quarter of 2020 and 44.9 per cent in the previous quarter. Adjusting for non-recurring costs, the ratio was 43.7 per cent.

Operating expenses

NOK million

240									80 %
200									70 %
		11	10	11	13
160		8				60 %
	48
	45	59	48
		45
120							50 %
		32	36	33	34
		34
80				45 %	45 %	40 %
			40 %	41 %
40		36 %						30 %
	79	98	84	88	85
0									20 %
3Q20	4Q20	1Q21		2Q21	3Q21
			Personnel				IT
			Other operating expenses			Marketing
			C/I (right axis)

Impairments and losses

Loan losses amounted to NOK 5.3 million (28.4) million in the quarter, corresponding to a loan loss ratio of 0.03 per cent. Losses for both secured and unsecured loans remained at historically low levels.

Total expected credit losses (ECL) amounted to NOK 356.1 million at quarter- end, of which NOK 57.0 million related to secured loans and NOK 299.1 million to unsecured loans.

Taxes

The estimated tax expense amounted to NOK 50.8 (62.6) million, corresponding to an effective tax rate of 23.2 (22.8) per cent.

Loans to and deposits from customers

At the end of the quarter, loans to customers totalled NOK 82.4 (83.6) billion. Lending growth over the past 12 months was minus 1.5 per cent, while quarterly lending growth was positive with 0.5 per cent. The volume of fixed rate mortgages amounted to NOK 8.2 billion.

Outstanding consumer loans amounted to NOK 1.4 (1.9) billion at quarter- end, a 5.3 per cent reduction from the end of the previous quarter. Following the introduction of a new car loan product in May, the volume of car loans increased to NOK 0.9 billion, up 14.5 per cent from the end of the previous quarter. The volume of other credit products (account credit, credit cards and custody account credit) was NOK 1.4 (1.4) billion.

Loans to customers

NOK billion

90									0.80 %
85									0.70 %
1.4		1.4	1.4	1.3		1.4
	1.9		1.7	1.6
80	1.0		0.9	0.8	1.5		1.4	0.60 %
	79.4		79.4	79.3	0.8		0.9
		78.3	78.6
75						0.50 %
70									0.40 %
65									0.30 %
60									0.20 %
55									0.10 %
0.14 %
50				0.02 %	0.06 %			0.03 %	0.00 %
45									-0.10 %
					-0.09 %
40									-0.20 %
	3Q20	4Q20	1Q21	2Q21	3Q21
				Home loans				Car loans
				Consumer credit				Other loans
				Loss rate (right axis)

Customer deposits increased to NOK 63.8 (58.1) billion, a 10.0 per cent increase from the third quarter of 2020. At quarter-end, the bank had 10 400 SME customers with combined deposits of NOK 2.7 billion.

Customer deposits
NOK billion
65							64.2	63.8	90 %
	58.1	58.6	60.0
60						85 %
55									80 %
50									75 %
						77.9 %
45							74.6 %		70 %
40		70.6 %	70.2 %	71.4 %			65 %
35									60 %
30									55 %
25									50 %
3Q20	4Q20	1Q21	2Q21	3Q21
			Customer deposits		Deposit-to-loan ratio AVG (right axis)

Savings

Funds under management (FuM) increased to NOK 30.3 billion, up NOK 0.9 billion from the end of the previous quarter. The increase was primarilly ascribed to inflow of customers' funds. At quarter-end, combined FuM as share of retail fund savings in Norway was 8.6 per cent, unchanged from the previous quarter.

Net client cash flow in the quarter was positive in the amount of NOK 0.8 billion. Combined inflows as share of Norwegian retail fund inflows was 9.5 per cent. Average inflow from savings agreements increased to NOK 165 million per month in the quarter.

PAGE 5/51 THIRD QUARTER 2021 - SBANKEN GROUP - UNAUDITED