Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q2 2014 Earnings Presentation
76 slides from Sparebank 1 Nord-norge's earnings presentation, Aug 13, 2014
Slide 1: Presentation of 2nd Quarter Report 2014
SpareBank 1 Nord-Norge Presentation of 2nd Quarter Report 2014 Unaudited 13 August 2014 • Main financial headlines • Northern-Norway – macroeconomics • Financial performance • Strategy • Summary
Slide 2: Financial performance
Financial performance > SpareBank .o NORD-NORGE ~
Slide 3: 1. half 2014 – financial performance
1. half 2014 – financial performance • Result before tax: NOK 897 mill (497 mill) • ROE: 17.2% (11.4%). Long term ROE target: Banking operations at top international level: Currently: Min. 12% ROE • Loan losses NOK 47 mill (87 mill) • Good solidity: Group CET 1 (transitional rules, incl 65% of resul
Slide 4: Northern-Norway - macroeconomics
Northern-Norway - macroeconomics
Slide 5: Macroeconomic indicators
Macroeconomic indicators Macroeconomic indicators, Northern Norway % annual real change unless otherwise noted Northern Norway Norway 2014 2015 2014 2015 Private consumption 2.0 3.0 2.0 3.0 Public consumption 4.0 3.0 2.0 2.0 Fixed investments 4.0 5.0 3.0 2.0 Exports 3.0 6.0 3.0 4.0 Imports 2.0 3.0 3
Slide 6: Northern-Norway - value added
Northern-Norway - value added
Slide 7: Strong regional housing market
Strong regional housing market House prices Price level and Growth y/y, June 2014 60.000 11,0 % 10,5 % 50.000 9,0 % 40.000 36.650 7,0 % 32.140 30.011 4,4 % 30.000 4,4 % 5,0 % 4,9 % 20.820 20.000 17.380 18.176 3,0 % 1,1 % 10.000 1,0 % -0,6 % 0 -1,0 % Tromsø Bodø Finnmark Norway Troms ex Nordland ex T
Slide 8: Significant growth in housing starts
Significant growth in housing starts Housing starts Number of units 2.500 2.164 2.000 1.500 1.396 1.000 500 0 2006 2007 2008 2009 2010 2011 2012 2013 Siste 12 mnd Nordland Troms Finnmark Nord-Norge Prognose behov
Slide 9: Financial performance
Financial performance > SpareBank .o NORD-NORGE ~
Slide 10: Profit and loss account - Group
Profit and loss account - Group (Amounts in NOK million) 30.06.14 30.06.13 Net interest income 670 589 Net fee-, commision and other operating income 491 436 Net income from financial investments 432 155 Total net income 1 593 1 180 Total costs 649 596 Result before losses and write-downs 944 584 Ne
Slide 11: Quarterly summary – Profit and loss account figures
Quarterly summary – Profit and loss account figures (Amounts in NOK million) 2Q14 1Q14 4Q13 3Q13 2Q13 Net interest income 342 328 355 341 309 Net fee-, commision and other operating income 248 243 262 233 238 Net income from financial investments 189 243 85 106 64 Total net income 779 814 702 680 61
Slide 12: Net interest income - Group
Net interest income - Group (Amounts in NOK million) 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Net interest income 285 293 307 280 309 341 355 328 342 SpareBank 1 Boligkreditt and 42 48 62 67 84 90 91 95 89 Næringskreditt TOTAL incl. SpareBank 1 327 341 369 347 393 431 446 423 431 Boligkreditt an
Slide 13: Changes in net interest income last quarter
Changes in net interest income last quarter 500 20 450 9 4 4 6 400 24 350 300 250 423 431 200 150 100 50 0 Net interest Deposits margin Lending margin Lendring margin Volume Days Other Net interest income 1Q14 corporate private income 2Q14 Measured against average funding cost 13
Slide 14: Total commission and other income
Total commission and other income 1.200 40% 36,3 % 35% 1.000 31,5 % 30,8 % 114 27,8 % 30% 800 25,1 % 25% 44 21,4 % 600 8 19 20% 24 56 892 15% 400 686 590 567 10% 526 470 200 5% 0 0% 2009 2010 2011 2012 2013 30.06.14 Total other operating income Net commision income Net fee-, commission and other inc
Slide 15: Quarterly summary – Profit and loss account figures
Quarterly summary – Profit and loss account figures (Amounts in NOK million) 2Q14 1Q14 4Q13 3Q13 2Q13 Net interest income 342 328 355 341 309 Net fee-, commision and other operating income 248 243 262 233 238 Net income from financial investments 189 243 85 106 64 Total net income 779 814 702 680 61
Slide 16: Cost/income
Cost/income 70% 65% 60% 57,58 % 55% 53,79 % 56,95 % 50,15 % 50% 51,85 % 46,80 % 47,19 % 45% 46,77 % 45,02 % 40,74 % 43,97 % 40% 35% 35,91 % 30% 2009 2010 2011 2012 2013 30.06.14 Cost/income group Cost/income parent bank 16
Slide 17: Total costs - cost/income 1st half year
Total costs - cost/income 1st half year Different business activities - different cost/income in 90,0 % 85,1 % 83,7 % 80,0 % 70,0 % 65,8 % 60,0 % 50,0 % 40,0 % 40,7 % 35,9 % 30,0 % 24,4 % 20,0 % 10,0 % 5,3 % 0,0 % Group Parent bank SB1 Finans Regnskapshus NWA1 EM1 Portefølje 17
Slide 18: Core banking operations
Core banking operations- (excl. income from financial investments) (Amounts in NOK million) 2Q14 1Q14 4Q13 3Q13 2Q13 Net interest income 342 328 355 341 309 Net fee- and commission income 221 214 210 219 207 Other operating income 27 29 52 14 31 Total costs 333 316 327 286 302 Underlying banking ope
Slide 19: Losses on loans and guarantees
Losses on loans and guarantees 250 1,40 % 1,20 % 200 1,00 % 150 0,80 % NOK mill 0,60 % 100 0,40 % 50 0,20 % 0 0,00 % 2010 2010 2011 2012 2013 30.06.14 Net losses Net losses in % of gross lending incl. SpareBank 1 Boligkreditt and Næringskreditt 2010 2010 2011 2012 2013 30.06.14 Individual write-down
Slide 20: The Group's non-performing, impaired and other problem commitments
The Group's non-performing, impaired and other problem commitments 1.100 3,00% 1.000 900 2,50% 800 700 2,00% MNOK 600 1,50% 500 400 1,00% 300 200 0,50% 100 0 31.12.09 31.12.10 31.12.11 31.12.12 31.03.13 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 0,00% Non-performing commitments 575 492 471 397 598
Slide 21: Deposit volume
Deposit volume 50 000 100% 46 949 46 006 44 940 45 000 43 745 43 266 43 588 43 232 43 938 43 635 41 952 41 765 41 284 90% 39 675 40 000 Corp 28% 84,32 % 80% 35 000 82,9 % 80,90 % 80,3 % 80,0 % 80,9 % 79,86 % Retail 77,9 % 77,62 %78,45 % Public 57% 76,5 %75,56 % 75,71 % 15% 30 000 70% 25 000 60% 20 0
Slide 22: Lending volume
Lending volume 90 000 82.452 80.581 81.511 80 000 79.083 77.279 75.914 75.956 74.665 72.331 30 % 69.978 70 000 66.722 68.033 64.876 60 000 70 % 50 000 Retail incl. SpareBank 1 40 000 Boligkreditt Corp/ Public 30 000 20 000 10 000 42 % 58 % 0 jun. 11 sep. 11 des. 11 mar. 12 jun. 12 sep. 12 des. 12 ma
Slide 23: Capital adequacy ratio – Group
Capital adequacy ratio – Group 14% 12,86 % 12,98 % 13% 12,30 % 12% 10,84 % 10,73 % 10,72 % 11% 10,62 % 10,67 % 10,79 % 10,23 % 10,31 % 10,29 % 10% 9,66 % 9% 8% 7% 6% 5% 03.11 06.11 09.11 12.11 03.12 06.12 09.12 12.12 03.13 06.13 09.13 12.13 03.14 06.14 Common Equity Tier I % incl result Lower limit
Slide 24: Strategy
Strategy > SpareBank .o NORD-NORGE ~
Slide 25: Strategic focus 2014-2016
Strategic focus 2014-2016 Number 1 in North-Norway Concentration on core banking and being a united banking group Develop and utilize the SpareBank 1 Alliance Ensure continued presence and increase distribution efficiency
Slide 26: Number 1 in North Norway - market share
Number 1 in North Norway - market share Market share Ambition Finnmark 60% Troms 59% Retail Hålogaland 44% Salten 45% Helgeland 21% SUM 47% Market share Ambition Corporate Small 40% Medium 35% Large 30% SUM 34% Market sharel: Number of customers with account in SNN 26
Slide 27: Number 1 in Northern Norway - Brand
Number 1 in Northern Norway - Brand Share Ambition Knowledge of 97 Preference 56 (retail) Preference 57 (SME) 27
Slide 28: Concentration on core banking
Concentration on core banking Booked value of important ownership outside core business (business operations and geography) Mill NOK 300 250 200 150 100 50 0 SNN Portefølje Bank 1 Oslo Russland 2011 Q214
Slide 29: Being a united banking group
Being a united banking group Regional coordinating responsibility for the Group operations CEO Jan-Frode Janson Finance Group functions Rolf E. Bygdnes (CFO) Petter Høiseth (COS) Risk Management Operations Geir Andreassen (CRO) Liv B. Ulriksen (COO) Region Region Region Region Region Helgeland Salte
Slide 30: Develop and utilize the SpareBank 1 Alliance
Develop and utilize the SpareBank 1 Alliance • The SpareBank 1 Alliance and the result contribution from SpareBank 1 Gruppen is of considerable importance for SpareBank 1 Nord-Norge • All banking services available through mobile and internet banking – joint development project in the SpareBank 1 Al
Slide 31: Ensure continued presence and increase distribution efficiency – customer behavior
Ensure continued presence and increase distribution efficiency – customer behavior Retail customers 2008 2010 Change in use of branch office 70 % - 70 % reduction since 2008 2012 - Considerable decrease in frequent visits 2014 - Advisory meetings increase Weekly Monthly Quarterly Half-year Yearly Ne
Slide 32: Adjustments in branch network
Ensure continued presence and increase distribution efficiency – adjustments in branch network 100 95 90 Number of branches 90 85 85 82 81 80 76 76 76 75 74 75 70 67 65 60 55 50
Slide 33: Summary
Summary > SpareBank .o NORD-NORGE ~
Slide 34: 1. half of 2014 - Summary
1. half of 2014 - Summary • Good regional economy – expected GDP-growth above the national average • Good result. ROE as of 30.6.14; 17.2 % • God solidity: CET-1 13.0 % • Strategic focus 2014 - 2016: • Number 1 in Nord-Norge • Concentration on core banking. • Focus on relevant adjustments to the ban
Slide 35: Enclosures
Enclosures > SpareBank .o NORD-NORGE ~
Slide 36: Northern Norway – current economic status
Northern Norway – current economic status • Continual strong growth in regional GDP since 2010 • High economic activity in first half of 2014 – Good export growth, 20% growth in seafood export – New strong winter season for the tourism industry – High activity level in construction • Housing market
Slide 37: The most important industries
The most important industries • Seafood – Salmon: Volume growth and high Salmon – Norwegian export first half of prices 500 2014 24.000 – Price decreases towards summer 475 22.000 – Nord-Norge represents 40% of 450 20.000 Mill NOK Mill ton Norwegian salmon production 425 18.000 – Cod fisheries: Reco
Slide 38: The most important industries
The most important industries • Petroleum sector; supplier industry – 20% growth in 2012 – The supplier industry is mainly localised around Helgeland and Hammerfest – New fields are key for future development • Petroleum sector – Fields in production: Norne, Snøhvit, Skarv – Goliat: Start-up of prod
Slide 39: Household finances are healthy – increasing consumption
Household finances are healthy – increasing consumption Retail sales • Growth in real income Growth y/y, 12 mths – High wage growth, 3¼% (2014 estimate) 6% – Low inflation, KPI-JAE 2.4 % – Low interest rate level expected 5% towards 2015 4% • Low debt ratio – high savings – 12% below average (Norway
Slide 40: SpareBank 1 Nord-Norge
SpareBank 1 Nord-Norge Vision: For Nord-Norge! Head office Tromsø Organisation: 5 regions Regional offices : Hammerfest Tromsø Harstad Bodø Mo i Rana Branches: 74 40
Slide 41: Organisation of the financial services Group
Organisation of the financial services Group SpareBank 1 Nord‐Norge Financial Services Group SpareBank 1 Gruppen AS SpareBank 1 Finans Nord‐Norge AS Equity stake 19,5 % Equity stake 100 % SpareBank 1 Boligkreditt AS Equity stake 14,80 % EiendomsMegler 1 EiendomsMegler 1 Nord‐Norge AS Lofoten AS Equi
Slide 42: Main financial targets
Main financial targets • Banking operations at top international level: Minimum 12% ROE • Undisputable solid: 14.5% Core Tier 1 in 2016
Slide 43: Quarterly results – net interest income
Quarterly results – net interest income (Amounts in NOK million) 2Q14 1Q14 4Q13 3Q13 2Q13 Interest and similar income from loans to and claims on credit institutions 3 1 1 7 5 Interest and similar income from loans to and claims on customers 658 686 773 664 634 Interest and similar income from certi
Slide 44: Lending margin, Parent bank
Lending margin, Parent bank 3,50 % 3,00 % 2,85 % 2,57 % 2,91 % 2,90 % 2,84 % 2,50 % 2,35 % 2,73 % 2,42 % 2,48 % 2,47 % 2,43 % 2,35 % 2,35 % 2,28 % 2,00 % 2,15 % 2,18 % 2,16 % 2,03 % 1,89 % 1,50 % 1,71 % 1,00 % 0,50 % 0,00 % 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Interest margin corporate
Slide 45: Customer deposit, Parent bank
Customer deposit, Parent bank 0,40 % 0,31 % 0,20 % 0,14 % 0,20 % 0,06 % 0,17 % 0,01 % 0,11 % ‐0,02 % ‐0,03 % 0,00 % 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 ‐0,10 % ‐0,05 % ‐0,04 % ‐0,10 % ‐0,08 % ‐0,20 % ‐0,26 % ‐0,13 % ‐0,17 % ‐0,16 % ‐0,35 % ‐0,36 % ‐0,40 % ‐0,41 % ‐0,40 % ‐0,32 % ‐0,44
Slide 46: Total commission and other income
Total commission and other income (Amounts in NOK million) 2Q14 1Q14 4Q13 3Q13 2Q13 Guarantee commissions 9 8 9 9 10 Interbank commissions 5 4 5 5 5 Credit arrangement fee 2 2 3 3 3 Arrangement fee from SpareBank 1 Boligkreditt 87 95 91 90 84 Arrangement fee from SpareBank 1 NN Finans 0 1 0 0 2 Secu
Slide 47: Income from financial investments
Income from financial investments (Amounts in NOK million) 2Q14 1Q14 4Q13 3Q13 2Q13 Dividends 5 11 0 4 23 Income from joint ventures 119 71 78 109 116 Gains/losses and net value changes on shares 44 144 23 5 29 Gains/losses and net value changes on certificates and bonds 26 21 -6 -8 -16 Gains/losses
Slide 48: Group operating costs
Group operating costs (Amounts in NOK million) 30.06.14 30.06.13 Change Wages and salaries 276 267 9 Pension costs 21 20 1 Social costs 24 26 - 2 Total personnel costs 321 313 8 Administration costs 176 167 9 Total personnel- and general administration costs 497 480 17 Depreciation and write-downs o
Slide 49: Group operating costs
Group operating costs 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Total costs 277 266 295 294 302 286 327 316 333 Perc.of aver.tot.ass. 1,56 % 1,52 % 1,54 % 1,57 % 1,58 % 1,56 % 1,59 % 1,63 % 1,64 % 49
Slide 50: Operating expenses
Operating expenses (in NOK million) 2Q14 1Q14 4Q13 3Q13 2Q13 Wages and salaries 134 142 154 131 138 Pension costs 13 8 3 9 11 Social costs 12 12 17 11 13 Sum personalkostnader 159 162 174 151 162 Development costs 26 26 29 27 28 Electronic data processing costs 17 15 14 15 11 Marketing costs 19 21 1
Slide 51: Group companies result before tax
Group companies result before tax (Amounts in NOK million) 30.06.14 30.06.13 SpareBank 1 Finans Nord-Norge AS 58 645 44 986 SpareBank 1 Nord-Norge Portefølje AS 33 155 -21 653 SpareBank 1 Regnskapshuset Nord-Norge AS 6 579 6 685 EiendomsMegler 1 Nord-Norge AS 9 087 13 254 SpareBank 1 Nord-Norge Forv
Slide 52: Capital adequacy – Group
Capital adequacy – Group • SpareBank 1 Nord-Norge has not been defined as a Systemically Important Financial Institution (SIFI) • The FSAN «expect the banks to follow up their ambitions with regard to a considerable increase in core capital ratio, without regard to SIFI related decisions from the Mi
Slide 53: Key figures balance sheet
Key figures balance sheet (Amounts in NOK million) 30.06.14 30.06.13 Change Change % Total assets 81 983 76 759 5 224 6,8% Gross lending 58 791 54 561 4 230 7,8% Loans and advances to customers incl SpareBank 1 82 452 77 282 5 170 6,7% Boligkreditt and Næringskreditt Deposits from customers 46 949 4
Slide 54: Deposit growth corporate
Deposit growth corporate Deposit growth corporates. 12 mth. growth 20 15 10 9,0 5 % 0 ‐5 ‐10 2011M06 2012M06 2013M06 2014M06 SNN, Corporate clients Norway, Corporates Source: Statistics Norway, The money supply M2, June 2014 & SNN Bare, June 2014
Slide 55: Deposit growth households
Deposit growth households Deposit growth households. 12 mth. growth 12 10 8 8,0 % 6 4 2 0 2011M06 2012M06 2013M06 2014M06 SNN, Retail clients Norway, Households Source: Statistics Norway, The money supply M2, June 2014 & SNN Bare, June 2014
Slide 56: Credit growth corporates
Credit growth corporates Credit growth corporates. 12 mth growth 16 14 12 10 8 6,5 % 6 4 2 0 ‐2 ‐4 2011M06 2012M06 2013M06 2014M06 SNN, Corporate clients Norway, Corporates Source: Statistics Norway, The credit indicator C2, June 2014 & SNN Bare, June 2014
Slide 57: Credit growth households
Credit growth households Credit growth households. 12 mth growth 14 12 10 8 7,0 % 6 4 2 0 2011M06 2012M06 2013M06 2014M06 SNN, Retail clients Norway, Households Source: Statistics Norway, The credit indicator C2, June 2014 & SNN Bare, June 2014
Slide 58: Credit area
Credit area • Quality • Portfolio • Migration, commitments in default and losses
Slide 59: Lending portfolio – comments
Lending portfolio – comments • Good growth in retail lending. Continued focus on lending qualifying for SpareBank 1 Boligkreditt (covered bond company). • Somewhat higher growth in corporate market lending last 12 months (6.0 %) compared to targeted maximum growth for 2014 (3 – 5 %). Corporate lendi
Slide 60: Distribution on segments shows good diversification
Distribution on segments shows good diversification Loan portfolio including Boligkreditt SPB1 Boligkreditt 28,4 % Construction building 2,4 % Other service industry 2,1 % Agriculture, fisheries, fish farming 4 % 19,6 % Transport and wholsesale Wage-earners 41,9 % 6,4 % Maritime sector 0,8 % Propert
Slide 61: Group lending by sector
Group lending by sector Portfolio SB1 Crop Manufacturing, electricity Wholesale and retail Næringskreditt production, and water supply, trade, accomodation and 0,4 % Forestry and construction food service fishing 4,4 % 1,8 % 4,3 % Shipping, offshore/oil and gas Real estate activities 0,8 % 10,0 % Po
Slide 62: Portfolio - exposure as of 30.06.14, parent bank
Portfolio - exposure as of 30.06.14, parent bank 35.000 30.000 25.000 20.000 NOK mill 15.000 10.000 5.000 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired Retail market Corporate market SB1 Boligkreditt SB1 Næringskreditt
Slide 63: Portfolio - exposure as of 30.06.14
Portfolio - exposure as of 30.06.14 Loans distributed by exposure and share of EAD Share of loanexposure (EAD) Jun 2014 Share of loanexposure (EAD) Jun 2013 71% 70% 16% 18% 8% 8% 5% 4% Below 10 mnok 10 ‐ 100 mnok 100 ‐ 250 mnok Above 250 mnok
Slide 64: Liquidity/funding
Liquidity/ funding SpareBank 4
Slide 65: Funding instruments /diversification, 30.06.14
Funding instruments /diversification, 30.06.14
Slide 66: Maturity profile of capital markets funding, 30.06.14
Maturity profile of capital markets funding, 30.06.14 (excl. SB1 Boligkreditt and SB1 Næringskreditt) • Good diversification in terms of maturities • NOK 20,356 mill in capital markets funding exclusive of SB1 Boligkreditt and SB Næringskreditt • SpareBank 1 Boligkreditt is an important funding sour
Slide 67: Moody’s changes outlook on long term rating to negative
Moody’s changes outlook on long term rating to negative • The outlooks on the bank’s long-term rating was changed to negative during second quarter by Moody’s. A similar change was made to the rating outlooks on a number of Norwegian and other European banks • The change in rating outlooks has not –
Slide 68: Equity certificate holders
Equity certificate holders 68
Slide 69: Equity Certificates (EC) - holder structure
Equity Certificates (EC) - holder structure 69
Slide 70: The largest EC holders
The 20 largest EC holders Number of Share of total Equity Certificate holders Equity Certificates capital Pareto Aksje Norge 5.230.172 5,21 % MP Pensjon PK 2.720.503 2,71 % Citibank, N.A. 2.400.518 2,39 % FLPS - Princ All Sec Stock Sub 2.142.947 2,13 % Pareto Aktiv 2.131.069 2,12 % State Street Bank
Slide 71: The largest EC holders residing in Northern Norway
The 20 largest EC holders residing in Northern Norway Number of Share of total Equity Certificate holders Equity Certificates Equity Certificate capital Sparebankstiftelsen Sparebank 1 Nord-Norge 1.411.606 1,41 % Sparebankstiftelsen Helgeland 1.030.000 1,03 % Consept Eiendom AS 738.306 0,74 % Karl D
Slide 72: SpareBank 1 Group and Alliance
SpareBank 1 Group and Alliance
Slide 73: SpareBank 1 - Alliance: Strong alliance of Norwegian retail banks
SpareBank 1 - Alliance Strong alliance of Norwegian retail banks • Founded 1996 - Economies of Scale - key banks in the Alliance trace their history back to the 1820’s • Local presence – Norway’s most extensive Tromsø branch network with 350 branches • 2nd largest mortgage lender in the Norwegian Re
Slide 74: SpareBank 1 Alliance Structure
SpareBank 1 Alliance Structure SpareBank 1 SpareBank 1 SpareBank 1 Sparebank 1 11 Smaller All banking and SpareBank 1 ancillary SR-Bank SMN Nord-Norge Hedmark products customers Banks The banks issue senior unsecured, subordinated and capital instruments individually Equity and credit investors Serv
Slide 75: SpareBank 1 - Alliance: Second largest lender in Norway
SpareBank 1 - Alliance Second largest lender in Norway Source: Banks‘ annual reports and own estimates, NBIM, Statistics Norway
Slide 76: Contact information
Contact information SpareBank 1 Nord-Norge P O Box 6800 N-9298 Tromsø CEO CFO Jan-Frode Janson Rolf Eigil Bygdnes Tel +47 909 75 183 Tel +47 905 19 774 Internet: Financial calendar 2014 Q1 6 May SNN home page and internet bank: www.snn.no Q2 13 August Q3 29 October Equity capital certificates in gen
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