Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q1 2019 Earnings Presentation
52 slides from Sparebank 1 Ostlandet's earnings presentation, 2019
Slide 1: SR-Bank
SR-BANK Ss a SpareBank D> ¥ y
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although SpareBank 1 SR-Bank believes that the expectations reflected in such forward-looking statements are reasonable,
Slide 3: Finance group for the entire South of Norway
Finance group for the entire South of Norway 127,1 128,6 133,2 Lending volume Figures in NOK billion 29,9 25,0 26,7 18,1 15,5 16,5 15,7 9,8 10,5 8,5 5,7 6,7 Rogaland Hordaland Agder Oslo and Other mar.17 mar.18 mar.19 Akershus 3
Slide 4: A good underlying result and a substantial one-off financial gain
A good underlying result and a substantial one-off financial gain • Pre-tax profit for the quarter is NOK 1.323 million compared to NOK 668 million last year ‐ Return on equity after tax 21.2% ‐ Excluding merger effect Fremtind Forsikring AS return on equity after tax is 12.8% • Impairments on loans
Slide 5: Financial target and estimate per 31.12.2019
Financial target and estimate per 31.12.2019 Return on equity CET 1 Growth in loans 21,2%* 8,7% 15,1%** 7,6% 14,7% 14,7% 4,0% - 6,0% 11,3% 11,5% 12,8% 2018 Q1 2019 Target 2019 2018 Q1 2019 Target 2019 2018 Q1 2019 Target 2019 Growth in costs* Impairments Dividend share 8,2% 50% ~ 50% 324 million NOK
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 15,0% 14,8% 14,7% 14,7% 14,7% 21,2%* 12,3% 12,6% 10,3% 10,1% 12,8% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Cost ratio Earnings per share 42,9% 4,48*** 42,1% 40,1% 38,9% 39.0%** 2,41 2,48 29,8% 2,03 2,06 2,68 Q1 18 Q2 18 Q
Slide 7: Income statement
Income statement Group Income Statement (MNOK) Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Net interest income 938 926 871 842 800 Net commission and other income 341 350 349 370 368 Net income on investment securities 676 68 175 213 113 Total income 1.955 1.344 1.395 1.425 1.281 Total operating expenses 583 576
Slide 8: Change in profit 31.03.2018 – 31.03.2019
Change in profit 31.03.2018 – 31.03.2019 1.600 563 - 44 25 1.323 1.400 1.200 1.000 116 -5 800 668 600 400 200 0 31.03.2018 Net interest income incl. Other income Net income on Total operating expenses Impairments on loans 31.03.2019 commission from investment securities and financial covered bond co
Slide 9: Key figures
Key figures Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Return on equity after tax (%) 21,2 10,1 12,6 12,3 10,3 Net interest margin (%) 1,60 1,59 1,53 1,52 1,50 Impairments on loans in % of gross loans incl. covered bond companies 0,10 0,18 0,12 0,21 0,16 Loans and financial commitments in Stage 3 in % of gross l
Slide 10: Consolidated income profile
Consolidated income profile 1.276 1.279 1.212 1.220 1.168 334 333 347 330 338 16 8 19 23 30 926 938 842 871 800 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Net interest income Commission income from covered bond companies Net commission and other income 10
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins Deposit margins 2,74% 2,78% 2,74% 2,73% 2,72% 2,77% 2,77% 2,71% 2,71% 0,30% 0,24% 0,24% 0,22% 0,24% 1,78% 1,79% 1,69% 1,69% 1,59% 0,13% 1,50% 1,51% 1,50% 1,40% 0,03% 0,04% -0,01% 0,04% 0,05% -0,06% -0,05% -0,08% -0,09% -0,09% -0,15% -0,18% Q1 17 Q2 17 Q3 1
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 17,8% 80 000 15,7% 70 000 12,2% 15% 60 000 9,6% 50 000 10% MNOK 40 000 3,8% 2,4% 5% 30 000 20 000 -0,7% -2,8% -1,9% 0% 10 000 0 -5% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Volume Growth % Retail Market 140 000
Slide 13: Loan portfolio as at 31.03.2019
Loan portfolio as at 31.03.2019 • Gross loans (incl. covered bond companies) as at 3,0% Agriculture / forestry / fishing 3,3% 31 March 2019 amount to NOK 205.4 billion compared with NOK 188.5 billion at the same Supply and construction 2,1% 2,0% time the year before. 0,4% Renewable / Green engagemen
Slide 14: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans • The proportion of loans with a loan-to- value ratio 100% of less than 85% is high. ‐ 88.4% of the exposure is within 85% of the assessed value of collateral. 80% 59,8% 57,8% 60% 40% 29,0% 30,6% 20% 7,3% 7,7% 3,9% 3,9% 0% Below 70 % 70 - 85 % 85 - 100 % Ab
Slide 15: Deposits volume and 12 month growth
Deposits volume and 12 month growth • Last 12 months deposits decreased by NOK 0.6 Corporate Market* billion to NOK 99.0 billion. 60.000 22,7% 24,7% 20,7% 25% ‐ Corresponds to an decrease in the period of 50.000 14,0% 0.6%. 40.000 10,0% 8,3% 15% MNOK 4,4% 30.000 0,2% 5% ‐ Deposit growth is 4.7% at 1
Slide 16: Net commission and other income
Net commission and other income MNOK Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Payment facilities 62 66 72 59 63 Savings/placements 46 47 49 48 52 Insurance products 46 46 47 47 49 Commission income real estate broking 99 98 94 109 81 Guarantee commission 24 25 29 20 34 Arrangement- and customer fees 26 22 17 3
Slide 17: Net income on investment securities
Net income on investment securities MNOK Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Dividends 19 0 0 1 11 Investment income, associates 536 113 94 102 57 Securities gains/losses 90 -51 42 69 5 - of which capital change in shares and certificates 62 11 56 90 6 - of which capital change in certificates and bonds -
Slide 18: Subsidiaries
Subsidiaries Subsidiaries MNOK 31.03.2019 31.03.2018 EiendomsMegler 1 SR-Eiendom AS Number of sales 1.633 1.466 Operating profit before tax 2 0 SR-Forvaltning AS Capital under management (BNOK) 12 11 Operating profit before tax 7 9 FinStart Nordic AS Operating profit before tax 9 23 SpareBank 1 Regn
Slide 19: Ownership interests
Ownership interests Ownership interests MNOK 31.03.2019 31.03.2018 SpareBank 1 Gruppen AS Interest ownership 19,5% 19,5% Profit after tax 38 36 Profit effect merger 460 0 SpareBank 1 Boligkreditt AS Interest ownership 4,8% 8,0% Profit after tax 3 1 SpareBank 1 Næringskreditt AS Interest ownership 14
Slide 20: Operating expenses
Operating expenses MNOK Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Payroll and pensions 282 270 267 270 260 Other staff costs 62 60 55 56 59 Total personnel expenses 344 330 322 326 319 IT expenses 90 85 80 83 83 Marketing 19 26 22 24 16 Other administrative expenses 25 26 24 25 24 Total administrative expenses
Slide 21: Impairments on loans and financial commitments / Stage 3 loans
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Impairment on loans and financial commitments Changes in gross loans and financial commitments defined as Stage 3 1,54% 1,45% 1,46% 1,40% 0,21% 0,18% 0,16% 0,12% 1,15% 0,10% 166 157 802 782 164 2.816
Slide 22: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments in income statement (MNOK) Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Impairments Corporate customers 41 96 62 100 66 Impairments Retail customers 8 -4 -3 -1 8 Net impairments on loans 49 92 59 99 74 Impairments on loans and financial commitments (MNOK)*
Slide 23: Funding
Funding ‐ NSFR* 124% ‐ LCR** 172% ‐ NOK 12.4 billion net refinancing need over the next 12 months ‐ Deposits to loans ratio 50,4% Annual funding maturity 22,0 20,0 18,0 16,0 14,0 12,0 NOK Billion 10,0 8,0 6,0 4,0 2,0 0,0 2019 2020 2021 2022 2023 2024 2025 2026+ Funding ex. CB Covered Bonds *The net
Slide 24: Solid capital ratio
Solid capital ratio • As of 31 March 2019, SpareBank 1 SR-Bank met all of ROE ROE ROE ROE the regulatory requirements by a good margin 10,0% 11,0% 11,3% 21,2%* • SpareBank 1 SR-Bank’s Pillar 2 requirement has been set at 1.7%, down from 2.0% (set in 2016), with 17,9% 17,6% 17,7% CET 1 17,5% effect f
Slide 25: MREL
MREL Main features from Ministry of Finance regulation based on «BRRD»: MREL based on Ministry of Finance • Issuers shall be fully MREL compliant by 31 December 2022. • The FSA will set requirements individually for each bank. • Covered bond issuers are exempt from MREL, also when the owning bank is
Slide 26: Outlook – Expectations of further growth
Outlook – Expectations of further growth • Positive growth in the Norwegian economy for 2019 will continue to produce increased growth in the group’s market areas. • Optimism in the business. Companies are reporting increased investments and improved profitability. ‐ Norwegian unemployment rate redu
Slide 27: NOK 2.9 billion of total loan portfolio is renewable projects
NOK 2.9 billion of SpareBank 1 SR-Bank’s total loan portfolio is loans to various renewable projects, including 60 small- scale power plants. GEITÅNI POWER PLANT IS OWNED BY SWISS AVENTRON, A HOLDING COMPANY THAT INVESTS IN RENEWABLE ENERGY • 27
Slide 28: More than 100 years of experience with renewable energy
More than 100 years of experience with renewable energy • In 1913, we funded the first renewable project - the ‘small power plant’ at Himsfossen in Suldal. • The bank has more than 60 different small power plants as part of its overall lending portfolio. • Number 13 of the UN’s Sustainable Developme
Slide 29: Fighting money laundering is high up on our agenda
Fighting money laundering is high up on our agenda • Significant resources are used by the group to fight financial crime, laundering the proceeds of crime and the funding of terrorist activities. • In recent years, both our general and specific expertise in AML has increased and expanded across the
Slide 30: We have invested in the future and created new jobs in communities
We have invested in the future and created new jobs in communities • 19 different classes have been conducted since autumn 2015. • More than 145 startups have taken part. • 275 entrepreneurs have acquired new knowledge. • More than 300 new jobs have been created. • Total turnover close to NOK 100 mi
Slide 31: Appendix
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 31
Slide 32: Norwegian unemployment rate reduced to lowest in 10 years
Norwegian unemployment rate (NAV*) reduced to lowest in 10 years Marked reduction in Rogaland and lower than country average Norwegian unemployment rate, %, registered unemployment (NAV), seasonal adj., monthly 6 5 4 3 2 1 0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Aust-Agder Rogaland Horda
Slide 33: House prices in Norway slightly higher last 12 months
House prices in Norway slightly higher last 12 months Stable in most counties, but somewhat more volatile in Oslo House prices. NOK per sqm. Average all homes. Monthly 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2003 2005 2007 2009 2011 2013 2015 2017 2019 Stavanger og omegn Bergen Kri
Slide 34: Petroleum activity on the NCS increasing by 10-15% in 2019
Petroleum activity on the NCS increasing by 10-15% in 2019 Following marked reduction from 2014 to 2017 the activity is now increasing in 2019 • Total activity increased by over 60% from 2007 to Petroleum activity on Norwegian Continental Shelf. BNOK (2018 NOK). Source: NPD 2014. Thereafter, total a
Slide 35: Retail trade in Norway has increased by two to four percent
Retail trade in Norway has increased by two to four percent Growth has been highest in Oslo, but growth abated and is now around 2-3% in the counties Retail sales (excl. auto), annual change in turn-over from same 2-month period previous year 12% 10% 8% 6% 4% 2% 0% -2% -4% 2009 2010 2011 2012 2013 2
Slide 36: Appendix
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 36
Slide 37: SpareBank 1 SR-Bank has a moderate risk profile
SpareBank 1 SR-Bank has a moderate risk profile in which no single event should be capable of seriously harming the bank's financial position 37
Slide 38: Risk management principles and market areas
• The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk ‐ SpareBank 1 SR-Bank therefore invests significant resources in developing risk management systems, processes and expertise that are in line with leading international practice • The bank's prim
Slide 39: Exposure limits and property financing requirements
• The bank sets specific limits for the size of commitments as well as requirements concerning industry diversification ‐ The maximum total exposure to an individual customer must be significantly lower than the regulatory requirements ‐ The maximum unsecured exposure to an individual customer must
Slide 40: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • SpareBank 1 SR-Bank has a solid loan portfolio. 100% The quality of the portfolio is stable. 80% 60,3% 60,6 % 60% • The loan portfolio consists mainly of small and 40% 29,6% 29,8 % 20% 10,1% 9,6 % medium-sized loans. 0% 0.00 - 0.50 0.50
Slide 41: Risk profile – Lending to the retail market
Risk profile – Lending to the retail market • The quality of the retail market portfolio is Retail market portfolio distributed by risk class considered to be good and has low potential 100% 2,6% 2,5% 2,6% 2,8% 2,7% losses. 16,7% 16,3% 16,1% 16,7% 16,9% 80% • The low risk profile is achieved through
Slide 42: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and RWA home mortgages stable portfolio. 21,7% 21,5% 21,7% 21,9% 21,5% 20,0% 15,0% 10,0% 5,0% 0,0% 31.03.18 30.06.18 30.09.18 31.12.18 31.03.19 Home mortgages as defined in the Norwegian IRB framework; residential property must be at least
Slide 43: Risk profile – Corporate lending
Risk profile – Corporate lending • The quality of the corporate market portfolio is Corporate lending portfolio distributed by risk class good. There is a clearly defined framework that 100% sets limit on what is funded and conditions for 80% 25,0% 23,5% 25,1% 22,5% 21,9% particular funding purposes
Slide 44: Appendix
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 44
Slide 45: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Divisions of SpareBank 1 SR-Bank ASA Fully owned companies Partly owned companies BN Bank* SpareBank 1 Gruppen EiendomsMegler 1 SR-Boligkreditt Capital Markets (23.5%) (19.5%) Leading real estate broker Covered Bond Funding Number of man-years: 26 Commercial bank located in H
Slide 46: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 LO SpareBank 1 SMN Samspar SR-Bank Nord Norge Østlandet 19,5% 19,5% 9,6% 19,5% 19,5% 12,4% Products, commissions, dividends Sales, loan portfolios, capital Companies where SR-Bank has direct ownership SpareBank 1 Gruppen AS Selskaper hvor SR-B
Slide 47: Our purpose: Strength to growth and development
Our purpose: Strength to growth and development Objectives Financial goals • The purpose for SpareBank 1 SR-Bank is to add strength to growth and development. Our growth will give us the ability • Return on equity of 11.5% after tax in 2019. The longer term to provide profitability and value to the
Slide 48: Balance sheet
Balance sheet Balance sheet (MNOK) 31.03.2019 31.03.2018 Cash and balances with central banks 468 217 Balances with credit institutions 1.750 5.060 Net loans to customers 195.229 173.008 Certificates, bonds and other fixed-income securities 32.477 28.876 Financial derivatives 4.868 3.870 Shares, own
Slide 49: SRBANK share
SRBANK share • International ownership is Development in Price/Book Relativ share price development 27.7% per 1. quarter 2019. 110 1,4 130 Index 100 = mar 31st 2018 100 120 1,2 • Total market value at 1. 90 110 quarter 2019 is NOK 25.4 80 1,0 100 NOK billion. 70 90 p/B 60 0,8 80 50 Price 70 OSEBX 0,
Slide 50: 20 largest shareholders as at 31 March 2019
20 largest shareholders as at 31 March 2019 • Ownership interests as at 31 March 2019: Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • From Rogaland, Agder-counties and Hordaland: 43.5% Folketrygdfondet 18.930.821 7,4% (44.6%) State Street Bank and Trust Co, U.S.A. Nominee 11.79
Slide 51: SR-Bank pr 31.03.2019
SR-Bank pr 31.03.2019 31.03.2019 2018 2017 2016 2015 2014 2013 Share price 99,40 89,20 87,00 60,75 39,30 52,50 60,25 Stock value (MNOK) 25.422 22.813 22.250 15.537 10.051 13.427 15.409 Book value per share, NOK (group) 86,55 82,27 77,24 71,54 66,14 60,28 55,00 Earnings per share 4,48 8,98 8,16 6,87
Slide 52: Contact Details
Contact Details Adress Bjergsted Terrasse 1 Tel: +47 915 02002 Postboks 250 www.sr-bank.no 4066 Stavanger Management Arne Austreid CEO Tel.: +47 900 77 334 E-post: arne.austreid@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 E-post: inge.reinertsen@sr-bank.no Investor Relations Stian Helgøy Inv