Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q1 2018 Earnings Presentation
44 slides from Sparebank 1 Ostlandet's earnings presentation, Apr 27, 2018
Slide 1: Financial results First Quarter 2018
Financial results First Quarter 2018 27 April 2018
Slide 2: Solid performance in first quarter 2018
Solid performance in first quarter 2018 • First customer dividend has been paid • We teach parents and children digital economy • Innovative focus on digital education for young people • Increasing economic activity in the region • Housing prices rebounding with high activity • Meets financial targe
Slide 3: Strategy and ambitions
Strategy and ambitions SpareBank 4 @STLANDET
Slide 4: A long and profitable history
A long and profitable history Norway's fourth largest savings bank * with a broad, established customer base History from 1845 – known as Sparebanken Hedmark ("SBHE") until 1 April 2017. Norway's fourth largest savings bank * with total adjusted assets (incl. covered bonds) of NOK 154 billion. Opera
Slide 5: Solid position and growth opportunities
Solid position and growth opportunities Market leader in Hedmark, market challenger in other counties Hedmark Oslo Population 197,000 Population 669,000 Market share* RM 49 % Market share RM 11 % Market share CM 45 % Market share CM 2% Position market leader Position growth market Unemployment 1.9 %
Slide 6: A market area with long term growth potential
A market area with long term growth potential Considerable population growth in the Greater Capital Area Population projection 2016-2040 Population projection, municipalities 2016-2040 2,250,000 2,000,000 +26% (0.9% yearly) 1,750,000 Oppland 1,500,000 Hedmark 1,250,000 1,000,000 Oslo 750,000 500,000
Slide 7: Increasing economic activity in the region
Increasing economic activity in the region Stable production growth and low unemployment Growth in production, last 3 months and forecast for 6 months Registered unemployment rate, NAV 5.00 5.00 4 4 4.50 4.50 3 3 4.00 4.00 2 2 3.50 3.50 3.00 3.00 1 1 2.50 2.50 0 0 2.00 2.00 2010 2002 2003 2004 2005
Slide 8: Housing prices rebounding with high activity
Housing prices rebounding with high activity House price developments for relevant areas compared with Norway House prices by area, 12-month growth House prices, indexed** 30.0% 30.0% 150.00 150.00 MARCH 2018 • Nominal + 0,5 %/seasonally adjusted +0,2 % 25.0% • 25.0% Highest growth140.00 in Oslo +1,
Slide 9: Strategic destination
Strategic destination By the end of 2021 Are we the third largest savings bank in Norway We have one of the most attractive equity certificates on Oslo Stock Exchange We have differentiated ourselves from the main competition and have increased our market share We have made banking easy for our cust
Slide 10: First customer dividend paid out
First customer dividend paid out Our customers received NOK 204 million in customer dividend 20 April 2018 • SpareBank 1 Østlandet is the first bank that introduced customer dividend • Both retail and commercial customers receive dividend • Based on the daily balance for loans and deposits ‒ Loans u
Slide 11: Digital campaign for customer dividends
Digital campaign for customer dividends Over 4 million views in digital channels • Facebook ‒ Range: 550,000 ‒ Over 2 million views ‒ Involvements 54,677 (likes, share, comments) ‒ 1,000 more followers after the campaign • Display/ Banners ‒ Views: 4,329,414 ‒ Click: 31,690 ‒ CTR, the share clicking
Slide 12: SPINK – increased focus on family
SPINK – increased focus on family New mobile banking app for children and young people under 15 years • Spink is a contribution to improve children’s and young people’s economics understanding ‒ Spink gives the child an overview on how the money is spent and what the account balance is ‒ With their
Slide 13: SPINK – the campaign
SPINK – the campaign Good response in all channels • Television, internet and direct channels used for marketing • E-mail used as activating channel ‒ High opening and click rate • In total 4,322 downloads ‒ 3,156 on IOS and 1,166 on Android ‒ 2,321 onboardings since 23rd of March ‒ 5,465 have reque
Slide 14: Jesper on wheels 2.0 makes economics education digital
Jesper on wheels 2.0 makes economics education digital Economics made fun and interactive with VR • Jesper on wheels ‒ The Bank’s contribution to improve young people’s understanding for economics. ‒ Our youth advisor, Jesper Foss, is touring the secondary schools in the region teaching economics. ‒
Slide 15: Financial results First Quarter 2018
Financial results First Quarter 2018 15
Slide 16: Financial results for the first quarter of 2018
Financial results for the first quarter of 2018 (Last year's figures in brackets) Profitable After-tax profit in Q1-18 at NOK 314 million (NOK 274 million). Good return on equity ROE in Q1-18 at 9.9 % (9.3 %). CET 1 ratio 16.2 % (16.7 %). Solid capitalization Leverage ratio at 7.3 % (7.5 %). Lending
Slide 17: Financial targets 2018
Financial targets 2018 Financial targets 2018 and performance 1Q 2018 Profitability Return on equity at least 10 % 9.9 % Dividends 50 % pay-out ratio after tax* 50 % Solidity CET1 at 16 % 16.2 % Costs 5 % cost reduction** +4.3 % 17 * Profit after tax before minority interests ** Nominal costs parent
Slide 18: Key financials – quarterly
Key financials – quarterly (1) Pre-tax profit (NOK millions) Net interest income and commission fees from the 476 covered bond companies 422 409 (NOK millions) 611 598 602 361 358 573 540 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Losses on loans and guarantees (NOK millions) Total
Slide 19: Key financials – quarterly
Key financials – quarterly (2) Return on equity capital Common equity Tier 1 capital ratio 12 % 16.9 % 10 % 16.7 % 16.7 % 16.8 % 09 % 10 % 16.2 % 09 % Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Growth in loans including loans transferred to covered bond companies in the last 12 mont
Slide 20: Profit contributions from subsidiaries
Profit contributions from subsidiaries 1Q 2018 (1Q 2017) SpareBank 1 Finans Østlandet - Profit before tax NOK 44.6 million (NOK 36.9 million) - Solid growth and increasing profitability EiendomsMegler 1 Hedmark - Profit before tax NOK -2.1 million (NOK 3.1 million) - Solid market position, increased
Slide 21: Contribution from joint ventures
Contribution from joint ventures 2017 (2016) SpareBank 1 Gruppen - Profit before tax NOK 278 million (NOK 447 million) - Ownership 12.4 % SpareBank 1 Boligkreditt AS - Profit before tax NOK 34.7 million (NOK -169.2 million) - Ownership 21.1 % SpareBank 1 Næringskreditt - Profit before tax NOK 18.5 m
Slide 22: Income statement Q1-2018
Income statement Q1-2018 Group 01.01.2018- 01.01.2017- 31.03.2018 31.03.2017 2017 Net interest income 495 464 1,956 Net commission income 282 255 1,095 Other income 42 53 168 Total operating expenses 449 437 1,898 Result bank operation before losses 369 335 1,321 Losses on loans and guarantees 5 -26
Slide 23: Net interest income
Net interest income Net interest income incl. commissions from covered bond companies 1400 2.00% 1.85% 1.84% 1.86% 1.86% 1200 1.81% 1.90% 1.80% • Minor reduction in net interest 1000 1.70% income last quarter 1.60% 800 540 573 598 611 602 1.50% • Still strong growth compared 600 76 91 100 109 107 1.
Slide 24: Still solid lending growth
Still solid lending growth Lending volume, Group, incl. transferred to the covered bond companies (NOK billions) 160.0 129 132 140.0 124 127 • Total lending in the Group, including 122 120.0 loans transferred to covered bond 39 39 companies, increased last quarter with 37 38 37 100.0 NOK 2.9 bn • Th
Slide 25: Lending margins
Lending margins Retail market and corporate market (parent bank) over Nibor 3M 2.68% 2.76% 2.68% • Decreasing lending margins in the 2.66% parent bank last quarter 2.49% • The lower margins is partly due to the increase in Nibor, and partly a 1.92% 1.93% more competitive environment for 1.85% high q
Slide 26: Good utilisation of quotas in the mortgage regulation
Good utilisation of quotas in the mortgage regulation* Daily follow-up ensures that utilisation remain within the permitted quota Utilisation of flexibility quota in 1Q 2018: • Loan to Value (LTV): 85 % ‐ 75 % legal limit for cover pool City of Oslo • Secondary housing and flexible repayment mortgag
Slide 27: High quality credit process – falling LTV in all counties
High quality credit process – falling LTV in all counties Percentage of granted mortgages and average LTV per county Percentage of granted volume Average LTV at the time of grant 81% 72% 78% 71% 72% 73% 74% 69% 70% 70% 66% 66% 66% 67% 62% 66% 67% 60% 61% 61% 33% 33% 32% 31% 29% 30% 29% 30% 30% 30% 2
Slide 28: High quality retail portfolio
High quality retail portfolio Loan to Value by exposure in the mortgage portfolio 100% 95.2 % 80% 60% 40% 20% 3.9 % 0.4 % 0.4 % 0% <70% 70-85% 85-100% >100% 28
Slide 29: Loan portfolio with a high proportion of retail market customers and SMEs
Loan portfolio with a high proportion of retail market customers and SMEs Lending to customers per sector (% and NOK millions) Business services Primary 4,371 industries 4,123 Others Wholesale and retail 5,032 trade 1,364 Corporate lending Property management 13,806 26% Building and construction 4,1
Slide 30: Diversified portfolio
Diversified portfolio Retail and corporate loans by size (% share)* Retail market Corporate market 23.2% 40.3% 22.2% 19.3% 33.1% 12.6% 11.7% 10.9% 12.5% 10.3% 3.8% <1 M 1-2.5 M 2.5-5 M 5-10 M >10 M <5M 5-10 M 10-50 M 50-100 M 100-200 M >200 M 30 * Including loans transferred to the covered bond comp
Slide 31: Satisfactory deposit coverage
Satisfactory deposit coverage Deposit volume, Group (NOK billions) • Deposit growth last 12 months 5.3 % • Deposit growth - retail 7.3 % • Deposit growth - corporates 2.6 % 67 • Deposit coverage ratio 71.2 % 66 66 65 • Deposit coverage ratio - including mortgages transferred to the covered bond comp
Slide 32: Deposit margins
Deposit margins Retail market and corporate market (parent bank) 0.2 5% 0.23% 0.23% • Increasing deposits margins in 0.2 0% parent bank last quarter 0.16% 0.1 5% 0.13% • The higher margins is mainly due to 0.11% 0.09% higher Nibor last quarter 0.1 0% 0.08% 0.06% 0.0 5% • Average Nibor 3M 1Q 18 0.95
Slide 33: Net commissions and other income
Net commissions and other income Commissions and other operating income by type (NOK millions) 300 232 233 250 • Marginal increase in commissions 225 from last quarter 15 15 217 16 207 Commission income from credit 16 10 16 cards 17 15 0 9 200 Other income • Revenues from accounting services 41 46 2
Slide 34: Group operating costs
Group operating costs Operating costs per quarter (NOK millions) 700 600 550 550 600 • The cost development in the Group was 478 88 positive last quarter, as the previous 437 478 88 449 500 437 433 449 500 Other operating expenses quarter was characterized by significant 433 22 Other operating expen
Slide 35: Number of fulltime equivalents
Number of fulltime equivalents Parent Bank and Group 1400 1400 • 23 employees in the Parent Bank 1,146 1200 1,114 1,102 1,109 1,111 1200 have accepted severance pay in 4Q 17. These employees have all been 1000 412 1000 on the payroll list in 1Q 18. Most 400 397 404 418 resigned at the end of the qua
Slide 36: Expenses Parent Bank (adjusted)
Expenses Parent Bank (adjusted) Operating Costs per quarter (NOK million) • The operating costs in 1Q 18 are NOK 13 million higher than in 1Q 17 - equivalent to 4.3 % • The former Bank 1 Oslo Akershus closed its defined benefit pension scheme in 1Q 17, resulting in an adjusted gain in the Parent Ban
Slide 37: The contribution from financial items has increased
The contribution from financial items has increased Net income from financial assets and liabilities (NOK millions) • Securities issued as of 1Q 17 were 3 substantially classified at fair value through P/L (IAS 39). Due to lower credit 24 spreads in the quarter, the portfolio -59 showed a loss of NO
Slide 38: Still low losses on loans
Still low losses on loans Net loan loss provisions (NOK million) 66 75 56 5 • Losses on loans were NOK 5 million in the first quarter -20 • Equal to 0.02% of gross lending*. 2014 2015 2016 2017 Q1-2018 14 5 5 -13 -26 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 38 * Annualised loss rate.
Slide 39: Low levels of problem loans
Low levels of problem loans Non-performing and other doubtful commitments* 600 1.60% 1.37% 1.40% • The proportion of problem 500 209 1.12% 1.20% loans is further reduced 400 257 272 254 253 1.00% 300 0.98% 0.80% 0.61% 0.59% 0.80% 0.52% 0.60% 200 0.40% 0.42% 100 0.41% 0.37% 0.20% 339 234 234 233 232
Slide 40: Solidity and capital adequacy
Solidity and capital adequacy Core equity tier 1 ratio, Group (%) • The Bank’s core equity tier 1 ratio in 1Q 18 was 16.2 % vs a target of 16.0 %. • The reduction in CET1 from 4Q 17 is due to • Lending growth increasing the calculation basis • Higher calculation basis due to an increase in the liqui
Slide 41: SpareBank 1 Østlandet with inaugural EUR benchmark
SpareBank 1 Østlandet with inaugural EUR benchmark The Bank issued EUR 500 million 5-year senior unsecured with a high quality orderbook Others France • After the merger, SpareBank 1 Østlandet is the largest issuer of 1% 3% bonds in the Norwegian market among the savings banks. • This, together with
Slide 42: Contact details
Richard Heiberg CEO Tel.: +47 902 06 018 richard.heiberg@sb1ostlandet.no Geir-Egil Bolstad Contact details CFO Tel.: +47 918 82 071 geir-egil.bolstad@sb1ostlandet.no Runar Hauge Investor relations Tel.: +47 482 95 659 runar.hauge@sb1ostlandet.no 42
Slide 43: 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 Østlandet believes that the expectations reflected in such forward-looking statements are reasonable, no a
Slide 44: Together – to create
Together – to create Proficient | Nearby | Engaged
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