Gjensidige Bank Investor Presentation Q2 2017 14. July 2017
Disclaimer This presentation and the information contained herein have been prepared by and is the sole responsibility of Gjensidige Bank ASA and Gjensidige Bank Boligkreditt AS (the "Company ). Such information is being provided to you solely for your information and may not be reproduced, retransmitted, further distributed to any other person or published, in whole or in part, for any purpose. Failure to comply with this restriction may constitute a violation of applicable securities laws. The information and opinions presented herein are based on general information gathered at the time of writing and are therefore subject to change without notice. The Company assumes no obligations to update or correct any of the information set out herein. These materials may contain statements about future events and expectations that are forward-looking statements. Any statement in these materials that is not a statement of historical fact including, without limitation, those regarding the Company s financial position, business strategy, plans and objectives of management for future operations is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company will operate in the future. The Company assumes no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This presentation does not constitute or form part of, and is not prepared or made in connection with, an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. The information in this presentation is subject to verification, completion and change. The contents of this presentation have not been independently verified. While the Company relies on information obtained from sources believed to be reliable, it does not guarantee its accuracy or completeness. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its owners, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of the Company, its affiliates or any of their respective advisors or representatives or any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. The Company's securities have not been and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act ), and are offered and sold only outside the United States in accordance with an exemption from registration provided by Regulation S of the US Securities Act. This presentation should not form the basis of any investment decision. Investors and prospective investors in securities of any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such company and the nature of the securities. Any decision to purchase securities in the context of a proposed offering of securities, if any, should be made solely on the basis of information contained in any offering documents published in relation to such an offering. For further information about the Company, reference is made public disclosures made by the Company, such as filings made with the Oslo Stock Exchange, periodic reports and other materials available on the Company's web pages. In addition to the financial statements according to IFRS, Gjensidige uses different alternative performance measures (APM) to present the business in a more relevant way for its different stakeholders. The alternative performance measures have been used consistent over time, and relevant definitions have been disclosed in the quarterly reports. Comparable figures are provided for all alternative performance measures in the quarterly reports. 2
GB strategically important for Gjensidige Insurance Group - strengthen position in the Norwegian household market Gjensidige Insurance Group Norway Nordic Baltics General Insurance General Insurance General Insurance Retail Bank Pension Gjensidige Insurance Group - Leading Nordic general insurance company with 200 years history - S&P A rating with strong enterprise risk management - Market leader in Norway with 25.4% market share 1) - Earned premiums ~ NOK 22bn in 2016 - Pre-tax profit NOK 6.1bn in 2016 - Market Capitalization ~ NOK 70bn 2) Gjensidige Bank - Established in 2007 - Fully owned by Gjensidige Forsikring ASA - Online retail bank with Norwegian presence only - Day-to-day banking services, mortgages, savings & investments products and car and consumer financing - Distribution via call center, mobile, tablet, group portal, and the Group s 20 financial offices - Approximately 165,000 customers 3) - Customer Assets ~ NOK 44.3bn (Total Assets ~ NOK 49.5bn) 3) 1) Source: Finance Norway, 3rd quarter 2016 2) as of 30.6.2017 3) as of June 2017 3
Financials targets and outcome TARGET FY 2015 FY 2016 YTD 16 4) YTD 17 4) Pre-Tax Earnings & After-Tax ROE Support the Groups target for return on equity NOK 304m 10.3% NOK 428m 11.7% NOK 195m 11.7% NOK 224m 11.1% C/I Ratio YoY Improvement 50% 43% 47% 42% YoY Customer Footings Growth 1) Above average market growth Assets 33% Deposits 16% Assets 12% Deposits 10% Assets 24% Deposits 18% Assets 14% Deposits 7% Capital Adequacy Ratio 3) >16.0% (CET 12.5%) 16.1% (CET1 12.6%) 17.1% (CET1 13.5%) 16.3% 2) (CET1 12.6%) 17.1% 2) (CET1 13.5%) Standard & Poor's Rating >A (Covered Bond Program AAA) A- (Covered Bond Program AAA) A (Covered Bond Program AAA) A (Covered Bond Program AAA) A (Covered Bond Program AAA) 1) Customer Footings = Total of Customer Assets and Customer Deposits. 2) Excluding retained earnings 3) Year end 2017 target for capital adequacy ratio is 17.5% and CET 1 14.0% 4) YTD = as of June 2016 & 2017 4
Customer assets 14 per cent growth in customer asset YoY Customer assets (NOKbn) Household lending growth (%) Market Growth (household) Gjensidige Bank 36,7 41,2 44,3 45 40 35 42 34 27,5 14% 30 24,2 12% 25 6,7 11,6 14,1 15,0 17,3 40% 14% 33% 20 15 10 5 14 7-2008 2009 2010 2011 2012 2013 2014 2015 2016 Jun'17 J-11 A-11 J-11 O-11 J-12 A-12 J-12 O-12 J-13 A-13 J-13 O-13 J-14 A-14 J-14 O-14 J-15 A-15 J-15 O-15 J-16 A-16 J-16 O-16 J-17 LTV 60% for the Mortgage portfolio Source: Statistics Norway, Household 12 months percentage growth 91% of the portfolio is secured lending primarily sourced from members of Tekna, NITO & YS 5
Total income YTD 2017 income up by NOK 89m or 22 per cent from prior year Total income (NOKm) YTD 2017 total income by type NII Fees Other Income Financial Instruments 19 18 42 29 3 Net Interest Income 93 % (ex MtM 96%) 3 21 29 9 12 23 11% 23% 546 443 22 29 20% 9% 14 797 721 614 5 464 380 2012 2013 2014 2015 2016 YTD-16 YTD-17 NOK 498m Fees 3 % Other Income 1 % Financial Instruments 3 % YTD figures are as of June 2016 & 2017 6
Development in net interest income and interest rate spreads Average interest rate spreads (%) Net interest income (NOKm) 3,4 3,4 2,4 2,3 2,9 2,2 2,7 2,6 2,0 2,0 2,6 2,7 2,5 2,4 Lending 1,9 1,9 1,9 1,7 2,6 2,8 2,0 2,0 173 174 181 175 191 179 201 207 211 222 242 NIM 1) (0,5) (0,5) (0,4) (0,4) (0,4) (0,1) (0,0) (0,2) (0,3) (1,1) (0,9) Deposit Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Lending & Deposit Spread Definition: Average customer interest rate against 3-month moving average for 3-month NIBOR. 1) NIM = Total net interest income in per cent of average total asset 7
Total expenses YTD 2017 expenses NOK 16m or 9 per cent higher than prior year Total expenses (NOKm) Cost/Income ratio (%) 306 341 358 359 374 68 66 63 57 54 50 191 207 43 42 2012 2013 2014 2015 2016 YTD 2016 YTD figures are as of June 2016 & 2017 YTD 2017 2010 2011 2012 2013 2014 2015 2016 YTD 2017 8
Gross outstanding loans & loan loss development per 30.6.2017 Gross outstanding by product Loan losses (%) 76% of the gross lending are with shared customers from Gjensidige Insurance Secured (car finance) 11 % 0,84 0,65 Unsecured 9 % NOK 44.3bn S&P Rating A (covered bond program AAA) 0,43 0,32 0,32 0,20 0,20 0,18 Secured (mortgage) 80 % In the first quarter of 2016, the bank sold NOK 14.6 million of impaired customer loans, which led to the release of the provisions for this group of loans. Total write-downs and losses increased compared to the previous year as a result of portfolio growth and changes in credit policy, driving decreased expectations of repayments from delinquent customers. 2010 2011 2012 2013 2014 2015 2016 YTD 2017 YTD 2017 ratio as of June 2017 Unsecured: Consumer Loans, Credit Cards and Overdraft facility, Secured: Mortgage, Auto and Stock Finance 10
Earnings performance YTD earnings of NOK 224m, NOK 30m or 15 per cent higher than prior year Full year earnings and ROE YoY earnings change 480 380 280 180 2,0 3,8 Pre-Tax Earnings 9,6 8,6 6,2 254 191 After-Tax ROE 11,7 11,7 10,3 428 304 195 11,1 224 8 3 195 92 As reported: NOK 30m or 15% Normalised for MtM: NOK 32m or 18% 3 16 43 224-2 80 113 (20) (120) 33 67 2010 2011 2012 2013 2014 2015 2016 YTD 2016 YTD 2017-7 -12 YTD 2016 In the first quarter of 2016, the bank sold NOK 14.6 million of impaired customer loans, which led to the release of the provisions for this group of loans. Total write-downs and losses increased compared to the previous year as a result of portfolio growth and changes in credit policy, driving decreased expectations of repayments from delinquent customers. PRODUCT INCOME MtM EXPENSES LOSS & PROVISIONS YTD 2017 YTD figures are as of June 2016 & 2017 DECREASE EARNINGS INCREASE EARNINGS 11
Quarterly earnings and returns development Pre-tax earnings (NOKm) Rolling 12 months - ROE (%) Pre-Tax Earnings - As Reported Pre-Tax Earnings - Excluding MtM Gain / (Loss) Afte-Tax ROE - As Reported Afte-Tax ROE - Excluding MtM Gain / (Loss) 139 12,0 11,3 38 48 43 50 50 62 72 71 49 78 86 57 83 79 116 94 103 122 10,0 8,0 6,0 4,0 10,3 27 2,0 - D-11 M-12 J-12 S-12 D-12 M-13 J-13 S-13 D-13 M-14 J-14 S-14 D-14 M-15 J-15 S-15 D-15 M-16 J-16 S-16 D-16 M-17 J-17 12
Capital development Strong and committed owner to support bank s growth ambitions 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 - Equity T1 Capital T2 Capital Total Capital Ratio CET1 Ratio 17,1 17,1 16,1 15,0 14,6 13,6 13,9 13,5 13,5 15,0 12,6 0,45 0,45 0,37 0,35 0,30 0,29 0,25 2,8 3,1 2,4 1,8 2,0 1,3 1,4 2011 2012 2013 2014 2015 2016 Jun'17 10,0 5,0 - -5,0 CET 1 Ratio 13.5 per cent - Including retained earnings 14.2 per cent - S&P RAC Ratio 20.7 per cent (as of December 2016) - Pillar II requirement set at 1.5 per cent by the Financial Supervisory Authority of Norway from 30 June 2017. Core Tier 1 requirement increased to 13 per cent as a result. The bank is using the standardized approach for calculating risk weighted assets: - Mortgage book 35%, Unsecured loans 75%, Car Finance 75%, Commercial 100% Leverage Ratio 6.6% (CRD IV) Strong and committed owner to support bank s growth ambitions. - 2013 Equity Injection NOK 341m (growth & regulatory change) - 2015 Equity Injection NOK 120m (growth & regulatory change) - 2016 Equity Injection NOK 200m (growth & regulatory change) - 2017 Equity Injection NOK 195m (regulatory change) - Retained earnings since start-up has been kept in the bank (no dividend payment) 13
Loans and funding structure per 30.6.2017 LCR 208 % (Jun 2017) NSFR 109% (Jun 2017) Balance sheet NOK 49.5bn Liquidity indicators and funding maturity Deposit / Loan Ratio L1 LCR AVG Funding Maturity Net Bond Portfolio 250 9,0 Commercial lending 2.1% Cash & Other Other Money Market Funding 47% 23.5 bn Net Household Lending 86% 42.8 bn Customer Deposit 45% 22.2 bn Equity & T1 Deposit / Loan Ratio & Liquidity Indicator 1 % & LCR 200 150 100 50-99 65 1,9 79 208 109 3,6 50 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 Average maturity funding (years) Assets Equity & Liabilities 2011 2012 2013 2014 2015 2016 Jun'17 14
Development in liquidity reserve per 30.6.2017 8,0 7,0 6,0 5,0 16 12 Liquidity Reserve (BNOK) 11 12 10 11 11 % of Total Assets 13 13 13 12 10 15 20 15 10 Large liquidity buffer amounting to NOK 7.5 bn and representing 15% of total assets. Covers debt payments the next 32 months. 4,0 5 Liquidity reserve placements are managed through: Liquidity Portfolio BNOK 3,0 2,0 1,0-4,5 3,4 3,1 3,3 3,9 4,1 4,7 5,6 5,8 5,9 4,3 5,8 7,4 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 - -5-10 % of Total Assets - SLA with Gjensidige Forsikring - LCR focused investment mandate - NOK limits per counterpart - Max 3.5 year average maturity on bond portfolio 15
High quality liquidity reserve per 30.6.2017 Liquidity portfolio by asset type Liquidity portfolio distribution Bank Deposits 10 % Money Market Fund 5 % 83% Treasury Bills 10 % Muni 6 % NOK 7.5 bn Covered Bond (GBB) 28 % Covered Bond 41 % 0% 1% 5% 10% AAA AA Not rated MM Fund Bank 16
Development in deposits per 30.6.2017 Deposit development (NOKbn) Deposit mix Deposit Balance - BNOK Deposit to Loan Ratio% 25,0 70 Deposit Balance BNOK 20,0 15,0 10,0 5,0-21,3 22,2 19,4 16,7 14,9 11,6 9,1 9,8 6,6 2009 2010 2011 2012 2013 2014 2015 2016 Q2'17 60 50 40 30 20 10 - Deposit to Loan Ratio% Below 2 MNOK 71 % NOK 22.2bn Above 2 MNOK 29 % 17
Money market funding and maturity profile per 30.6.2017 Development in market liabilities NOK 21.9bn Maturity profile (NOKm) Covered Senior T2 & T1 Senior Bond Covered Bond T2 & T1 3% 2% 2% 4% 4% 4% 3% 4% 4% 4% 3% 3% 27% 22% 22% 26% 29% 32% 29% 28% 26% 27% 24% 25% 250 400 100 Average Maturity 3.6 Years! 70% 75% 76% 70% 67% 64% 67% 68% 70% 70% 72% 71% 845 764 885 1.627 1.000 1.000 1.850 250 500 3.200 600 2.700 3.700 4.000 70 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Currency exposure SEK 294m, 100% of the exposure is hedged. 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Tier 1 and Tier 2 capital presented at first call date. 18
Gjensidige Bank Group Full year and YTD financials Million NOK YTD 16 2) YTD 17 2) B/(W) B/(W) % Full Year 2015 Full Year 2016 B/(W) B/(W) % Net Interest Income 380 464 84.8 22% 721 797 76 11% Total Income 409 498 89.0 22% 725 872 146 20% Expenses 191 207 (16) (9%) 359 374 (14) (4%) Provisioning & Losses 24 67 (43) (182%) 62 69 (7) (11%) Pre-Tax Earnings 195 224 30 15% 304 328 125 41% Pre-Tax Earnings (excl. MtM) 179 212 32 18% 337 386 49 15% Customer Assets 38,959 44,264 5,305 14% 36,735 41,250 4,514 12% Customer Deposits 20,682 22,154 1,472 7% 19,357 21,270 1,913 10% Net Interest Margin 1) 1.8% 2.0% 18 bps 2.1% 1.9% (27 bps) After-Tax ROE 11.7% 11.1% (62) bps 10.3% 11.7% 138 bps Cost / Income Ratio 53% 42% 505 bps 50% 43% 667 bps 1) Net interest margin = net interest income/average total assets 2) YTD = as of June 2016 & 2017 19