OLB continues profitable growth in the first half of 2022

• Profit after tax increased by 63 percent to EUR 99.7 million
• Return on Equity (after tax) increased to 15.3 percent
• Cost income ratio down to 42.0 percent
• Mid-term profitability targets confirmed
• OLB presents half-year figures in accordance with IFRS, as announced

Oldenburgische Landesbank AG ("OLB", or the "Bank") continued its growth trajectory in the first half of 2022. Focused on sustainable profitability and rigorous cost management, the Bank increased profit after tax by 63 percent to EUR 99.7 million (H1/2021: EUR 61.4 million). Return on Equity ("RoE", after tax) increased to 15.3 percent in the first half of 2022 (H1/2021: 10.4 percent) and the cost income ratio has been reduced to 42.0 percent (H1/2021: 59.0 percent), making OLB one of the most profitable and efficient banks in Germany on these metrics. As previously announced, OLB is presenting its H1/2022 figures in accordance with International Financial Reporting Standards ("IFRS"); all prior-year comparative figures are also presented in accordance with IFRS.

Driven by strong performance of the customer business, operating income in the first six months of 2022 increased by 16 percent to EUR 283.6 million (H1/2021: EUR 244.8 million). Both segments – Private & Business Customers and Corporates & Diversified Lending – contributed nearly equally. OLB’s completed restructuring program resulted in a significantly reduced cost base. Operating expenses across the entire Bank fell by 17.5 percent year on year to EUR 119.0 million (H1/2021: EUR 144.4 million).

Stefan Barth, Chief Executive Officer of OLB, said: "We are satisfied with our performance in the first half of the year. With our clearly defined business model, and the earnings and cost structure we have put in place, we are now one of the most profitable banks in Germany. We have created a strong basis for further growth, making OLB fit for the future."

In the first half of 2022 loan volume grew by 4.4 percent to EUR 17.7 billion (December 31, 2021: EUR 16.9 billion). Customer deposits rose even more strongly, by 6.1 percent to EUR 14.9 billion (December 31, 2021: EUR 14.1 billion). Net interest income increased significantly by nearly 20 percent to EUR 212.2 million (H1/2021: EUR 177.1 million) due to higher business volumes, combined with an improved yield curve. Net commission income fell by 4.3 percent to EUR 60.1 million (H1/2021: EUR 62.8 million), mainly due to the macroeconomic environment with volatile capital markets.

Solid capital position and continuation of conservative risk approach

OLB’s capital position continues to be solid. The increase in loan volume was offset by transitioning several of the loan portfolios to the more efficient F-IRB approach and by rigorous management of risk weighted assets ("RWA"). Despite the EUR 0.8 billion increase in loan volume, RWA remained virtually unchanged relative to year-end 2021 at EUR 9.4 billion. With common equity tier 1 ("CET1") capital of more than EUR 1.1 billion, the CET1 ratio increased to 12.2 percent as of June 30, 2022 (December 31, 2021: 12.0 percent), before taking into account the H1/2022 profit retention.

Risk provisioning in the lending business amounted to EUR 3.6 million and came in lower than budgeted (H1/2021: net reversal of EUR 0.7 million). Individual cases that would have required specific risk provisions were largely absent in the first half of 2022.

To absorb risk from the effects of the war in Ukraine, such as rising energy prices and supply chain disruption, OLB has applied a more conservative assessment to the underlying macroeconomic outlook in its measurement of general loan loss provisions than previously. The required additional risk provisioning was covered from the reclassification of the risk provisioning previously established to cushion the impacts of the COVID-19 pandemic.

OLB continues to pursue a conservative approach to risk management. In light of global developments, management is preparing for a weakening of the macroeconomic situation and potentially lower growth rates than observed in the first half of the year. Dr. Rainer Polster, Chief Financial Officer of OLB, said: "In the second half of the year, we anticipate normalized risk costs. We also expect that the effects of the macroeconomic risks will be felt in 2023."

Outlook

Despite the generally challenging economic environment, OLB continues to look ahead with confidence. The mid-term profitability targets remain unchanged. "The anticipated further rise in interest rates, our successfully completed restructuring program and our focused growth make us confident about our forecast," said Stefan Barth. The acquisition of a leveraged-loan portfolio from NIBC Bank in the diversified lending segment, and the partnership with Tulp Hypotheken for mortgage financing in the Netherlands will contribute to growth with a positive impact on earnings commencing in the second half of 2022. With inflationary pressures increasing, strict cost discipline will remain a fundamental success factor for OLB. "We are well on track to achieve our cost income ratio target of around 40 percent," Dr. Rainer Polster emphasized. "With regard to our target return on equity after tax, we expect to achieve the upper end of the guidance range of between 13 and 15 percent in the medium term."

Disclaimer

This release may contain forward looking statements, estimates, opinions and projections with respect to anticipated future performance of OLB ("forward-looking statements"). These forward-looking statements can be identified by the use of forwardlooking terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "may," "will" or "should" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. Forward-looking statements are based on the current views, expectations and assumptions of the management of OLB and involve significant known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Forward-looking statements should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Any forward-looking statements included herein only speak as at the date of this release. We undertake no obligation, and do not expect to publicly update, or publicly revise, any of the information, forward-looking statements or the conclusions contained herein or to reflect new events or circumstances or to correct any inaccuracies which may become apparent subsequent to the date hereof, whether as a result of new information, future events or otherwise. We accept no liability whatsoever in respect of the achievement of such forward-looking statements and assumptions.