Sparebank 1 Smn · OSL:MING
Sparebank 1 Smn — Q1 2015 Earnings Presentation
49 slides from Sparebank 1 Smn's earnings presentation, May 8, 2015
Slide 1: Q1 2015
Qi 2015 May 8th 2015 SpareBank 1 SMN
Slide 2: Moderate exposure to the consequences of reduced shelf activity in Mid-Norway
Moderate exposure to the consequences of reduced shelf activity in Mid-Norway North Trøndelag South Trøndelag Møre and Romsdal Modest growth In line with the national trend Lower growth ahead GDP Development GDP Development GDP Development 2% 2% 2% 2% 2% 2% 1% 1% 1% 2014 2015 2016 2014 2015 2016 201
Slide 3: Very good result in Q1 2015
Very good result in Q1 2015 Strong profit, 14.1% ROE in Q1 2015 Core business on a positive trend with increased commission income and moderate cost growth. Strengthening a very solid market position throughout Mid-Norway CET1 target shall be reached without ordinary stock issue, but steps need to b
Slide 4: Improved profits and capitalization
Improved profits and capitalization Return on equity Tier 1 capital ratio with and without hybrid capital 17,7% 14,3 13,0 13,0 12,9 15,1% 1,9 13,3% 14,1% 11,4 1,9 1,8 1,9 11,7% 1,3 11,1 11,2 11,1 12,3 10,0 2012 2013 2014 Q1 14 Q1 15 2012 2013 2014 Q1 14 Q1 15 Earnings per ECC Loans in default and ot
Slide 5: The subsidiaries predominate in their markets and contribute to diversified and robust value creation
The subsidiaries predominate in their markets and contribute to diversified and robust value creation SpareBank 1 Finans EiendomsMegler 1 • Solid market position • 40% market share, strong synergy with the • Leasing NOK 1.9bn, car loans 1.8bn bank • Pre-tax profit of NOK 21.3m (16.6m) • Pre-tax prof
Slide 6: SpareBank 1 Markets: pro forma accounts including activity in SMN Markets
SpareBank 1 Markets: pro forma accounts including activity in SMN Markets Q1 2015 – pro forma result Comments mNOK SB1M SMNM Pro forma Aksje/HY 18 4 22 • Positive operating result for first time Fremmedkapital 2 - 2 in the company’s history in a demanding market for several business Corporate 9 - 9
Slide 7: Three initiatives will help create the bank of the future
Three initiatives will help create the bank of the future, develop the organisation and enhance the bank’s efficiency 1 Create a forward-looking, offensive and sales-oriented organisation 2 Develop and renew an efficient distribution model with lower costs 3 Best for customer experience through cont
Slide 8: Zero growth in costs towards 2016
Zero growth in costs towards 2016 The bank is enhancing efficiency to maintain competitiveness Continuous cost focus will bring zero growth in costs in run-up to 2016 Industrially • Continuous focus on efficiency brings improved quality • Cost efficiencies contribute to a more efficient organisation
Slide 9: An excellent effort across the organisation to develop tomorrow's bank
An excellent effort across the organisation to develop tomorrow’s bank A New distribution model B Technological developments provide new opportunities • SMN working on a new • New webpages will create better distribution model interplay between the channels • Changing customer behaviour • We are fur
Slide 10: SpareBank 1 SMN intends to be among the best performing banks
SpareBank 1 SMN intends to be among the best performing banks Customer Best on customer experience orientation Will continue to strengthen market position Profitable Among the best performing banks, ROE 12 % annually Solid 13.5% by the end of 1. half 2016 Efficient Zero cost growth in parent bank 20
Slide 11: Financial information
Le Financial information 0 Q y SMN i »
Slide 12: Q1 2015
Q1 2015 Net profit NOK 441m (500m, including gains Nets 148m) Return on equity 14.1 % (17.7 %) Result of core business NOK 369m (343m) Cost growth parent bank 0.7 % (3.3%) CET 1 12.3 % (11.1 %) CET1 Growth capital in lending at 11.4% RM 8.0 (10.3%) % and CM 13.2 % last 12 months Booked equity capita
Slide 13: Positive development in profits
Positive development in profits Profit per quarter NOK mill Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Net interest 467 485 463 430 412 Commission income and other income 377 371 361 394 385 Operating income 844 856 823 825 798 Total operating expenses 454 479 425 443 441 Pre-loss result of core business 391 377
Slide 14: Earnings per ECC
Earnings per ECC Last two years per quarter 2,48 2,29 2,14 2,19 2,18 1,79 1,85 1,55 1,43 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 14 Q1 2015
Slide 15: Positive development operating income
Commission income Positive development Commission income Boligkreditt - Næringskreditt operating income Net interest income Last two years per quarter 856 844 800 801 818 798 825 823 660 265 273 286 253 263 262 285 293 232 98 114 119 96 91 123 110 104 85 434 436 430 463 485 467 403 412 343 Q1 13 Q2
Slide 16: Robust income platform and increased commission income
Robust income platform and increased commission income Continued potential for cross sales Net interest and other income Commission income Q1 14 and Q1 15 NOKm 30 Mar. 30 Mar. Net interest Commissions mill kr 2015 2014 Change 844 798 Payment transmission income 47 48 -1 Creditcards 13 13 1 660 Commi
Slide 17: Lending margins Retail and Corporate
Lending margins Retail and Corporate Increased capital requirements led to strengthened margins in 2013 Per quarter from Q1 2011 Comments Percent • Strong competition on lending to business 3,00 3,05 3,05 3,00 2,93 2,86 and industry 2,81 2,77 2,64 2,65 2,47 2,44 2,45 2,47 2,52 2,40 • Interest rate c
Slide 18: Total growth lending 10.0 % last 12 months
Total growth lending 10.0 % last 12 months Lending RM +8.0 % last 12 months 8,0% 8,9% Loans 63,9 69,6 75,2 Boligkr. 25 % 31.3.13 31.3.14 31.3.15 RM CM 38% 38% Lending CM +13.2 % in 2014 last 12 months +13,2% -2,2% 43,1 42,2 47,8 31.3.13 31.3.14 31.3.15 18 Q1 2015
Slide 19: High share mortgages and diversified portfolio SMEs
High share mortgages and diversified portfolio SMEs Lending and change last 12 months by sector in mNOK Wage earners 44,5 7,1 SB1 Boligkreditt 30,6 -1,6 Commercial real estate 14,4 2,3 Agriculture/forestry/fisheries 7,7 1,3 Maritime sector and offshore 6,0 0,9 Transport and other services 5,6 0,0 Co
Slide 20: Deposit margins Retail and Corporate
Deposit margins Retail and Corporate Per quarter from Q1 2011 Comments Per cent • Margin increases in second half 2014 Deposits RM due to repricing Deposits CM 0,87 0,83 • Further repricing to be carried out, 0,57 0,64 0,41 both of corporate and retail deposits 0,24 0,17 0,19 0,21 0,18 0,09 0,11 -0,
Slide 21: Total growth deposits 10.9 % last 12 months
Total growth deposits 10.9 % last 12 months Deposits RM + 9.4 % +6,0% +9,4% Deposits 22,8 24,2 26,5 31.3.13 31.3.14 31.3.15 CM 56% RM Deposits CM + 12.0 % 44% +12,0% +5,3% 28,9 30,4 34,1 31.3.13 31.3.14 31.3.15 21 Q1 2015
Slide 22: Change net interest income
Change net interest income From Q1 2014 to Q1 2015 Comments Net interest income 2013 412 Net interest income 2014 467 • Increased volume strengthens net interest Change 55 income Obtained as follows: • Lower margins weaken net interest income Fees on lending -3 Lending volume 77 Deposit volume 9 Len
Slide 23: Return on financial investments
Return on financial investments Per quarter NOKm Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Share of profit in related companies 128 144 169 132 82 Net gain and dividends on securities 10 -15 2 58 156 Net gain on bonds and derivatives 11 -48 -15 -2 -1 Net gain on trading and derivatives Markets 48 11 12 14 20 Re
Slide 24: Subsidiaries
Subsidiaries Profit subsidiaries before tax last three years 30 Mar. 2015 30 Mar. 2014 30 Mar. 2013 EiendomsMegler 1 Midt-Norge (87 %) 7,8 3,5 10,7 SpareBank 1 Regnskapshuset SMN 7,9 6,7 3,7 SpareBank 1 Finans Midt-Norge (90 %) 21,3 16,6 15,2 Allegro Kapitalforvaltning (90 %) 0,3 -0,6 -0,7 SpareBank
Slide 25: Associated companies
Associated companies Profit shares after tax last three years 30 Mar. 2015 30 Mar. 2014 30 Mar. 2013 SpareBank 1 Gruppen (19,5 %) 59,4 46,0 61,4 SpareBank 1 Boligkreditt (18,4 %) 41,0 8,0 12,2 SpareBank 1 Næringskreditt (29,3 %) 8,1 11,0 2,0 BN Bank (33 %) 18,3 24,5 26,1 SpareBank 1 Kredittkort 3,8
Slide 26: SpareBank 1 SMN will achieve zero growth in costs by means of defined measures
New distribution model: focus on increasing 1 distribution power in the channels and increasing sales at relatively low cost SpareBank 1 SMN will Organizational adjustment: planned achieve zero growth in 2 organizational adjustments to be costs by means of implemented in period to 2017 defined measu
Slide 27: Costs, parent bank and subsidiaries
Costs, parent bank and subsidiaries Costs at Q1 14 vs. Q1 15 Comments 441 454 • Growth in costs at parent bank 0.7 % Subsidiaries 137 147 • The bank’s ambition is zero growth in costs in parent bank in 2015 and 2016 Parent bank 305 307 Q1 14 Q1 15 27 Q1 2015
Slide 28: FTEs crucial to achieving costs goal
FTEs crucial to achieving costs goal FTEs at parent bank • At end-March there were 37 fewer FTEs 795 at the parent bank than at year-end 762 753 • This is mainly natural wastage 716 • A further reduction of about 60 FTEs is aimed for by the end of 2016 Q4 12 Q4 13 Q4 14 Q1 15 28 Q1 2015
Slide 29: Reduced costs in parent bank, some growth in subsidiaries
Reduced costs in parent bank, some growth in subsidiaries Change in operating expenses Q1 14 – Q1 15 NOK mill Modest cost growth Expenses Q1 15 453,8 Expenses Q1 14 441,3 • Cost growth in parent bank in line with plan Change 12,5 • Purchases of accountancy offices have caused Obtained as follows: ”n
Slide 30: Defaults and other problem loans
Defaults and other problem loans Low levels Last two years, per quarter 1.400 1,50 1.200 1,30 Problem loans 1.000 1,10 Loans in default Loans in default % of total loans 800 0,90 600 0,70 209 160 146 157 206 206 231 216 400 226 0,50 413 391 388 386 334 338 200 0,38 263 270 0,30 0,36 0,35 0,34 237 0,
Slide 31: Stable credit risk
Stable credit risk SpareBank 1 SMN’s loans distributed on SpareBank 1 SMN’s loans distributed on size of risk class and share of Exposure At Default customer engagement and share of Exposure At Default Share of EAD March 2015 Share of EAD March 2014 Share of EAD March 2015 Share of EAD March 2014 81
Slide 32: Low losses, 0.07 % of total gross lending
Low losses , 0.07 % of total gross lending Losses per quarter Distribution as of 31.3.2015 NOK mill 34 32 30 RM 4 24 22 22 17 17 SMN Finans 1 15 CM 17 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 • Loan losses 0.07 % (0.06 %) of gross lending as of 31.3.2015 32 Q1 2015
Slide 33: SpareBank 1 SMN will attain its goal of a CET1 ratio of 13.5%
SpareBank 1 SMN will attain its goal of a CET1 ratio of 13.5% Development CET 1 Q4 14 – Q1 15 1,2 13,5 Goal to be attained by • Moderate growth • Retained profit 0,4 12,3 1,2 0,2 11,2 0,3 Q4 14 Risk weight AIRB Transitional Profit q1 15 Q1 15 Remaining Goal mortgages rules 33 Q1 2015
Slide 34: Strenghtened capital. High equity ratio in relation to total assets
Strenghtened capital. High equity ratio in relation to total assets Development capital adequacy Development share of equity to total assets including loans sold to Bolig- / Næringskreditt 17,0 % 8,1 % 15,7 % 8,0 % 14,7 % 14,3 % 13,3 % 13,0 % 13,0 % 12,3 % 11,4 % 11,1 % 11,2 % 7,6 % 10,0 % 7,3 % Cap
Slide 35: Development in common equity Tier 1 and ROE from 2009 to Q1 2015
Development in common equity Tier 1 (capital and ratio), and ROE from 2009 to Q1 2015 CET 1 Ratio 13,5% 12,3% 0,5% Reserve +7% 1,0% 11,1% 11,2% Countercyclical 10,0% 2,0% SIFI Buffer 9,5% 9,0% 8,0% 2,5% Conservation Buffer 3,0% Systemic Risk 4,5% Equity Capital 2009 2010 2011 2012 2013 2014 2015 Goa
Slide 36: Balance sheet
Balance sheet Last three years 30 Mar. 2015 30 Mar. 2014 30 Mar. 2013 Funds available 16,5 20,0 22,5 Net loans 91,9 79,1 76,2 Securities 0,7 1,1 0,8 Investment in related companies 5,2 4,8 5,0 Goodwill 0,5 0,5 0,5 Other assets 8,9 6,0 5,8 TOTAL ASSETS 123,7 111,6 110,8 Capital market funding 39,6 36
Slide 37: SpareBank 1 SMN CEO Finn Haugan
SpareBank 1 SMN 7467 TRONDHEIM CEO Switchboard Finn Haugan Tel +47 900 41 002 Tel +47 07300 E-mail: finn.haugan@smn.no For further information contact: CFO Kjell Fordal Tel +47 905 41 672 E-mail: kjell.fordal@smn.no Internett adresses: Financial calender 2015 SMN home page and internet bank: www.smn
Slide 38: Appendix
Appendix 38 Qi 2015 SpareBank 1)
Slide 39: Changing customer behaviour and digitalisation provide new potentials
Changing customer behaviour and digitalisation provide new potentials for customer dialogue and good customer experience; strong growth in use of digital facilities Changing customer behaviour and Growing number of digital customers ; traffic on digitalisation gives new sales potentials and digital
Slide 40: Good profit trend for core business
Good profit trend for core business Last two years per quarter Comments 395 398 • Positive development, both 391 364 382 377 net interest and 352 356 commission income • Moderate cost growth 245 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 40 Q1 2015
Slide 41: A clear strategy brings results and contributes to diversified revenues
A clear strategy brings results and contributes to diversified revenues from a broad segment that is geographically dispersed across the region Clear strategy …… …. Strong results from subsidiaries and business areas Clear strategic direction in which the Payment services 47 finance house is further
Slide 42: SpareBank 1 SMN will come across as cost-efficient not just on an individual basis but also as a group
SpareBank 1 SMN will come across as cost-efficient not just on an individual basis but also as a group High operating margins in EM1 and Regnskapshuset SMN Profitable and non-capital- intensive subsidiaries: 0,92 1 Both EM1 and Regnskapshuset 0,86 SMN are companies making a sound profit – and requir
Slide 43: Good cost control
Good cost control Total costs per quarter last 2 years Comments 465 • Stable cost level per 449 454 435 441 443 425 quarter 414 406 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 43 Q1 2015
Slide 44: Loan to value mortgages
Loan to value mortgages Last two years Comments Q1 15 Q1 14 93,8 % 93,5 % • 98.9 % of the exposure has an LTV of less than 85 % • Exposure with LTV higher than 85 points 1.1 % 5,1 % 5,4 % 0,7 % 0,7 % 0,4 % 0,4 % Under 70 % 70 - 85 % 85 - 100 % Over 100 % 44 Q1 2015
Slide 45: Capital adequacy
Capital adequacy Last two years NOKm 31.3.15 31.3.14 Core capital exclusive hybrid capital 11.008 9.655 Hybrid capital 1.705 1.647 Core capital 12.713 11.303 Supplementary capital 2.435 1.591 Total capital 15.147 12.893 Total credit risk IRB 4.194 4.229 Debt risk, Equity risk 202 284 Operational ris
Slide 46: Change in CET 1 capital and capital requirements (rwa) in Q1 2015
Change in CET 1 capital and capital requirements (rwa) in Q1 2015 AIRB implemented from Q1 – and increased risk weights mortgages Increased CET1 capital Reduced capital need (rwa) • Good performance • AIRB reduced risk weights on corporates from approx 90% to approx 66% • AIRB has positive effect on
Slide 47: Satisfying access to capital market funding
Satisfying access to capital market funding Funding maturity 31. March 2015 Comments In NOK bn 13,2 8,8 • SpareBank 1 Boligkreditt is the main 6,8 funding source through covered bonds. NOK 29 billion transferred as 3,5 3,7 of 31. March 2015 2015 2016 2017 2018 > 2019 • Maturities next two years NOK
Slide 48: Key figures
Key figures Last three years 30 Mar. 2015 30 Mar. 2014 30 Mar. 2013 Net interest 1,50 1,45 1,25 Comm. income and net retur on fin. inv. 1,84 2,27 1,75 Operating expenses 1,45 1,56 1,52 Net profit as a percentage of ATA 1,88 2,16 1,49 CET 1 ratio 12,3 % 11,1 % 10,4 % Core capital ratio 14,3 % 12,9 %
Slide 49: Key figures ECC
Key figures ECC Including effects of issues Last five years Q1 15 Q1 14 2013 2012 2011 2010 ECC ratio 64,6 % 64,6 % 64,6 % 64,6 % 64,6 % 60,6 % Total issued ECCs (mill) 129,83 129,83 129,83 129,83 129,83 102,76 ECC price 59,50 53,75 58,50 55,00 34,80 36,31 Market value (NOKm) 7.725 6.978 7.595 7.141