Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q2 2017 Earnings Presentation
51 slides from Sparebank 1 Ostlandet's earnings presentation, 2017
Slide 1: Second Quarter 2017
SECOND QUARTER 2017 The impossible is solved by incredible people Rogfast — the world’s longest and deepest sub-sea road-tunnel HAND IN HAND WITH THE INCREDIBLE SpareBank 4) SR-BANK
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: The leading financial group in the southwest of Norway
The leading financial group in the southwest of Norway 1 Rogaland Population 470.000 2 Market share 36% Year of establishment 1839 Market strategy Market leader Unemployment rate 4.0% 2 Hordaland Population 516.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment
Slide 4: A good result characterised by greater activity and lower losses
A good result characterised by greater activity and lower losses Pre-tax profit for the quarter is NOK 648 million compared to NOK 486 million last year - Return on equity after tax 11.0% Pre-tax profit year-to-date is NOK 1.160 million compared to NOK 973 million last year - Return on equity af
Slide 5: Financial targets and estimates for 2017
Financial targets and estimates for 2017 - estimate of impairment losses are adjusted downward Return on equity CET 1 capital ratio Growth in loans 14,7% 14,7% 15,0% 11,0% 10,0% 9,9% 5,0 % 2,0% - 4,0% 4,0 % 3,0 % 2,0 % 1,1% 1,0 % 0,0 % -1,0 % 2016 30.06.2017 Target 2017 2016 30.06.2017 Target 2017 2
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 14,7% 14,7% 14,7% 12,2% 13,5% 13,8% 11,0% 9,4% 9,5% 8,7% Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Cost/income ratio Earnings per share (NOK) 2,09 2,01 1,59 1,68 1,58 44,0% 43,3% 41,3% 39,4% 37,2% Q2 16 Q3 16
Slide 7: Income statement
Income statement 30.06 30.06 Group Income Statement (MNOK) 17 16 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Net interest income 1.523 1.409 784 739 733 729 711 Net commission and other income 771 741 400 371 355 347 389 Net income on investment securities 232 284 143 89 139 231 205 Total income 2.526 2.434 1.327
Slide 8: Change in profit 30.06.2016 – 30.06.2017
8 1.000 1.200 1.400 0 200 400 600 800 30.06.2016 973 Net interest income incl. commission 105 from covered bond companies 39 Other income Net income on investment securities - 52 Change in profit 30.06.2016 – 30.06.2017 Total operating expenses - 61 Impairment losses on loans and 156 guarantees 30.0
Slide 9: Key figures
Key figures 30.06 30.06 17 16 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Return on equity after tax (%) 9,9 9,3 11,0 8,7 9,5 12,2 9,4 Net interest margin (%) 1,52 1,47 1,52 1,53 1,50 1,48 1,48 Impairment losses on loans and guarantees in % of gross loans incl. 0,33 0,50 0,29 0,37 0,35 0,35 0,66 covered bond comp
Slide 10: Consolidated income profile
Consolidated income profile 1.105 1.067 1.065 1.093 1.176 1200 1000 361 346 312 325 335 800 39 5 35 30 36 43 600 MNOK 400 784 711 729 733 739 200 0 -9 -17 -8 -23 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 -200 Net interest income Commission income from covered bond companies Profit before tax from covered bond c
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins* 2,59% 2,68% 2,75% 2,73% 2,76% 2,72% 2,77% 2,59% 2,58% 1,64% 1,61% 1,56% 1,55% 1,58% 1,69% 1,48% 1,45% 1,38% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Corporate market Retail market Deposit margins 0,29% 0,34% 0,24% 0,11% 0,12% 0,13% -0,06% -0,
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 13,8 % 15% 50 000 12,5 % 40 000 10% 7,1 % MNOK 5,3 % 6,4 % 30 000 3,0 % 5% 20 000 -0,5 % -1,9 % 0% 10 000 -2,3 % -3,5 % -2,8 % 0 -5% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Volume Growth % Growth % excl
Slide 13: Loan portfolio as at 30.06.2017
Loan portfolio as at 30.06.2017 • Gross loans (incl. covered bond companies) as at 30 June 2017 amount Agriculture / forestry / fishing 2,8% 2,9% to NOK 184.3 billion compared with NOK Industry, Power/water supply and 3,7% 183.4 billion at the same time the year construction 3,7% before. 1,6% Retail
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 of less than 85% is high. 100% 90% • 90.2% of the exposure is within 85% of 80% the assessed value of collateral, same 70% 65,5% 64,9% as last year. 60% 50% 40% 30% 24,7% 25,3% 20% 10% 6,2% 6,2% 3,6% 3,6
Slide 15: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by NOK 10.1 billion to 99.8 billion. 50.000 22,7% 25% 40.000 17,7% • Corresponds to an increase in the period 13,9% 15,4% 14,0% 30.000 MNOK of 11.3%. 5% 20.000 -2,4% -6,5% -6,8% -10,0% 10.000 • Increased deposi
Slide 16: Net commission and other income
Net commission and other income 30.06 30.06 MNOK 17 16 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Payment facilities 126 117 63 63 60 75 63 Savings/placements 100 95 49 51 45 45 44 Insurance products 104 100 52 52 50 48 50 Commission income real estate broking 205 176 112 93 85 87 107 Guarantee commission 51 59
Slide 17: Net income on investment securities
Net income on investment securities 30.06 30.06 MNOK 17 16 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Dividends* 9 105 4 5 5 0 97 Investment income, associates 144 216 81 63 78 90 112 Securities gains/losses 57 -102 32 25 50 105 -36 - of which capital change in shares and certificates 35 -54 28 7 42 63 -33 - of
Slide 18: Subsidiaries
Subsidiaries MNOK 30.06.17 30.06.16 EiendomsMegler 1 SR-Eiendom AS Number of sales 3.519 3.060 Operating profit before tax 21 13 SpareBank 1 SR-Finans AS* Total assets (BNOK) - 7 Operating profit before tax - 45 SR-Forvaltning AS Total assets under management (BNOK) 11 9 Operating profit before tax
Slide 19: Ownership interests
Ownership interests MNOK 30.06.17 30.06.16 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 139 135 Adjusted profit previous years -5 6 SpareBank 1 Boligkreditt AS Interest ownership 13,9 % 16,7 % Profit after tax -27 16 Adjusted profit previous years - 4 SpareBank 1 Næringsk
Slide 20: Operating expenses
Operating expenses 30.06 30.06 MNOK 17 16 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Personnel expenses 597 591 302 295 293 282 296 Financial activity tax 21 0 10 11 0 0 0 Total personnel expenses 618 591 312 306 293 282 296 IT expenses 161 151 86 75 87 83 78 Marketing 37 34 21 16 23 17 20 Other administrative e
Slide 21: Impairment losses on loans / Non-performing and doubtful commitments
Impairment losses on loans/ Non-performing and doubtful commitments Impairment losses on loans Non-performing and doubtful commitments 0,66% 1,15% 1,18% 1,21% 1,23% 1,21% 33 0,35% 0,35% 0,37% 0,29% 1.007 1.141 1.235 1.514 1.393 1 20 272 45 1 167 1.154 142 130 1.070 116 872 830 739 Q2 16 Q3 16 Q4 16
Slide 22: Impairment losses on loans
Impairment losses on loans 30.06 30.06 Losses on loans in income statement (MNOK) 17 16 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Corporate customers 277 340 115 162 131 109 258 Retail customers 20 22 15 5 11 7 14 Change in collective impairment losses on loans 2 93 1 1 20 45 33 Net impairment losses on loans 2
Slide 23: Funding
Funding Deposits to loans ratio • Well diversified funding. 100,0% • Funding indicator 1* is 116.0% on 80,0% consolidated basis. 60,4% 58,6% 57,6% 56,1% 57,2% 55,4% 58,3% 60,5% 60,0% 54,5% 40,0% • Good liquidity 20,0% 0,0% – Net refinancing need over the next 12 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q
Slide 24: Stronger capital ratio
Stronger capital ratio • SpareBank 1 SR-Bank is compliant with capital requirements as at 30.06.2017. 20% 18% • SpareBank 1 SR-Bank owned a 13.9% stake in 17,9% SpareBank 1 Boligkreditt per 30.06.2017, while the 16% 16,8% 15,7% share of mortgages sold to the company amounted 14% 15,3% 14,4% to 10.9%
Slide 25: Common Equity Tier 1 being strengthened in line with stricter regulatory requirements
Common Equity Tier 1 being strengthened in line with stricter regulatory requirements • The target CET 1 level is 15.0% in 2017. The target expected to be reached through good ROE ROE ROE profitability. ROE 10,8% 10,0% 9,9% 16,00% ROE 14,2% 16,00% 14,0% 14,0% • Countercyclical buffer is 1.5% and wil
Slide 26: Outlook
Outlook Major infrastructure projects helps to ensure good conditions for the region's business and population growth, with moderate unemployment. Expectations concerning future market performance improved somewhat in the last months, but some uncertainty still exists about the group's market ar
Slide 27: Appendix
39 APPENDIX SpareBank SR-BANK
Slide 28: The unemployment rate has been reduced
The unemployment rate has been reduced Rogaland still somewhat above the national average Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 6 5 4 Norway Rogaland Hordaland 3 Vest-Agder Norway, SSB AKU-unempl. rate 2 1 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20
Slide 29: Housing prices in Norway flatten out
Housing prices in Norway flatten out House prices. NOK per sqm. Average all. Monthly 80.000 70.000 60.000 50.000 Rogaland Hordaland 40.000 Vest-Agder Oslo 30.000 Norway 20.000 10.000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Finn.no, Eiendom Norge and Eiend
Slide 30: Oil activity in Norway near the bottom
Oil activity in Norway near the bottom Marked downturn in 2015 and 2016, expected to flatten in 2017 • Petroleum activity fell in 2015 and 2016 Petroleum activity on Norwegian Continental Shelf. BNOK (2016 NOK) after reaching record levels in 2014. Total activity has fallen by close to 30% from 350
Slide 31: Retail trade increasing in Norway
Retail trade increasing in Norway In Rogaland, the level is approx. the same as a year ago Retail sales (excl. auto), annual change from same 2-month period previous year 12% 10% 8% 6% Norge Rogaland 4% Hordaland Agder 2% Oslo 0% -2% -4% 2009 2010 2011 2012 2013 2014 2015 2016 2017 Kilde: Statistics
Slide 32: 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 • The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk • SpareBank 1 SR-Bank therefore invests significant r
Slide 33: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 7.5% (8.1%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 206.0 (200.1) EAD per 30.06.2017 BNOK 15.5 (16.2) EAD is related to oil operations Corporate market excl. oil Oil service; 2,2% (2,4%) operations; 25,9% (25,
Slide 34: Oil services - total NOK 4.5 billion
Oil services - total NOK 4.5 billion (NOK 4.8 billion as at 31.12.2016) Exploration and concept studies Oil services • EAD NOK 0.3 billion • EAD NOK 4.5 billion, 2.2% of the bank's total EAD • Average weighted probability of default 2.4% • Average weighted probability of default for the oil services
Slide 35: Oil and gas - total NOK 1.7 billion
Oil and gas - total NOK 1.7 billion (NOK 1.6 billion as at 31.12.2016) Exploration financing Exploration and production companies • EAD NOK 0,3 billion • EAD NOK 1.7 billion, 0.8% of the bank's total EAD • Average weighted probability of default 0.8% • Average weighted probability of default for the
Slide 36: Offshore - total NOK 9.3 billion
Offshore - total NOK 9.3 billion (NOK 9.8 billion as at 31.12.2016) Offshore Service Vessels Offshore • EAD NOK 6.7 billion, average weighted • EAD NOK 9.3 billion, 4.5% of the bank's total EAD probability of default is 2.3%, weighted average • Average weighted probability of default for the offshor
Slide 37: Offshore Service Vessels - total NOK 6.7 billion
Offshore Service Vessels - total NOK 6.7 billion (NOK 6.9 billion as at 31.12.2016) Offshore Service Vessels • Most customers with long history as a borrower in SpareBank 1 SR-Bank 3.000 EAD per age of OSV excl. accomodation • Most of the companies are listed on stock exchange or family owned 2.500
Slide 38: Offshore Service Vessels – largest customer group
Offshore Service Vessels – largest customer group Number of vessels • Well diversified portfolio. One commitment of 1 10 NOK 1.2 billion, rest of NOK 800 million or lower 2 8 3 8 • Total EAD for the portfolio is NOK 6.7 billion of 4 11 which; 5 30 • NOK 5.2 billion consists of 10 6 2 restructured co
Slide 39: Lending to commercial property
Lending to commercial property Housing Lending to commercial property cooperative; • NOK 27.6 billion, 15 % of the bank’s total 4,7% (5,2%) loans. Real estate management; 1,9% (2,0%) • The portfolio is characterised by lending to commercial properties for leasing with long- term contracts and financ
Slide 40: SR-Bank's activities
SRBANK’s activities Divisions of Capital Markets Retail Market Corporate Market Administration & Support SpareBank 1 SR-Bank ASA Number of man-years : 29 Number of man-years : 482 Number of man-years : 164 Number of man-years : 215 Fully owned companies Number of man-years : 195 Number of man-years
Slide 41: SpareBank 1 Alliance Banking Cooperation
SpareBank 1 Alliance Owners of the alliance • All credit decisions are made at the local banks • Economies of scale related to expenses, IT solutions, marketing and branding Samspar 19,5% 19,5% 19,5% 19,5% 11,0% 9,6% 1,4% Products, commissions, dividends Sales, loan portfolios, capital Companies dir
Slide 42: Our vision: the customer's first choice in Southern and Western Norway
Our vision: the customer's first choice in Southern and Western Norway Objectives Financial goals • SpareBank 1 SR-Bank's objectives are to stimulate growth • Return on equity of 11% after tax in 2017. The longer term and development in the region target is a minimum of 12%. • Top 50% return on equi
Slide 43: Balance sheet
Balance sheet Balance sheet (MNOK) 30.06.2017 30.06.2016 Cash and balances with central banks 747 910 Balances with credit institutions 8.335 2.188 Net loans to customers 163.703 155.612 Certificates, bonds and other fixed-income securities 28.451 24.814 Financial derivatives 5.354 5.056 Shares, own
Slide 44: Risk profile of the loan portfolio
Risk profile of the loan portfolio • SpareBank 1 SR-Bank has a solid loan portfolio. Distributed by risk class 100% • 61.3% of the bank’s loan exposure has a PD* 80% 60,6% 61,3 % 60% below 0.5%. 40% 29,4% 29,6 % 20% 10,0% 9,1 % • Single loan exposures less than NOK 10 million 0% 0.00 - 0.50 0.50 - 2
Slide 45: Risk profile – Lending to the retail market
Risk profile – Lending to the retail market Retail market portfolio distributed by risk class • The quality of the retail market portfolio is considered to be good and has low 100% 2,5% 2,3% 2,4% 2,9% 2,6% 16,1% 15,8% 15,7% 18,8% 16,3% 80% potential losses. 60% • The proportion of loans with a PD* b
Slide 46: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and stable portfolio. 23,0 % 22,5 % 22,5 % 22,5 % 22,3 % 22,0 % 22,0 % 21,7 % RWA 21,5 % 21,0 % 20,5 % 20,0 % 30.06.16 30.09.16 31.12.16 31.03.17 30.06.17 Home mortgages as defined in the Norwegian IRB framework; residential property must m
Slide 47: Risk profile - Corporate lending
Risk profile - Corporate lending • The quality of the corporate market Corporate lending portfolio distributed by risk class portfolio is good. There is a clearly defined 100% 23,5% 26,5% 24,8% 23,3% 22,3% framework that sets limits on what is 80% funded and conditions for particular 60% 53,2% 56,6%
Slide 48: SRBANK share price and trading
SRBANK Development in Price/Book Relative share price development • International ownership is 20.7% 75 1,2 190 Price per 2. quarter 2017. 70 1,1 170 P/B 65 1,0 150 Index 100 = jun. 30th 2016 60 0,9 130 • Total market value at 55 p/B NOK 0,8 2. quarter 2017 is 50 110 0,7 45 NOK 18,3 billion. 0,6 90
Slide 49: 20 largest shareholders as at June 2017
20 largest shareholders as at June 2017 • Ownership interests: Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • From Rogaland, Agder-counties and Folketrygdfondet 12.977.715 5,1% Hordaland: 46.2% (50.0%) State Street Bank and Trust Co, U.S.A. Nominee 7.738.480 3,0% • Internationa
Slide 50: SRBANK as at June 2017
SRBANK as at June 2017 • Trading volume in Q2 2017: 8.6% (2.5%) 30.06.2017 2016 2015 2014 2013 2012 • On 1 June 2017, the SR-Bank share was Share price 71,50 60,75 39,30 52,50 60,25 37,20 included in the Oslo Stock Exchange's main index and this may result in Stock value (MNOK) 18.286 15.537 10.051
Slide 51: Contact Details
Contact Details Management Arne Austreid CEO Tel.: +47 900 77 334 E-mail: arne.austreid@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 Adress E-mail: inge.reinertsen@sr-bank.no Bjergsted Terrasse 1 Postboks 250 Investor Relations 4066 Stavanger Stian Helgøy Investor Relations Tlf: +47 915 02002