Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q1 2023 Earnings Presentation
71 slides from Sparebank 1 Sor-norge Asa's earnings presentation, 2023
Slide 1: Quarterly presentation Q1 2023
Quarterly presentation 2023 Q1 SR-Bank SR-Boligkreditt
Slide 2: SR-Bank
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 3: 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 4: SR-Bank at a glance
SR-Bank at a glance • Second largest Norwegian bank SR-Bank’s market area • Public Limited company (“limited liability savings bank”) ‐ Savingsbank, but not with the constraints of equity certificates • Rating: A1 with a positive outlook • Market cap: NOK 30.9 Billion • Total assets: NOK 364.6 Billi
Slide 5: Finance group for South of Norway
Finance group for South of Norway Åsane Lending volume in NOK billion. Askøy Bergen Sotra Fana Nydalen Oslo Skøyen Ensjø Husnes Stord Ølen Tysvær Haugesund Kopervik Åkrehamn Jørpeland Randaberg Stavanger* Sola Sandnes Gjesdal Bryne Varhaug Arendal Egersund Grimstad Flekkefjord Kristiansand Lyngdal F
Slide 6: Strong result driven by growth, solid underlying operations
Strong result driven by growth, solid underlying operations and low impairment losses Result 1. quarter 2023 Result 31 March 2023 MNOK 35 39.5% 17.42% 12.3% Return on equity after tax Impairments on lending and financial commitments 0.05% of gross lending Cost to income ratio CET 1 capital ratio 10.
Slide 7: Key figures and financial targets
Key figures and financial targets Return on equity CET 1 capital ratio Cost to income ratio Dividend share * In connection with the bank’s SREP process, the Financial Supervisory Authority added a temporary Pilar 2 premium of 0.5% and CET 1 capital ratio minimum is 17.35%. 7 SR-Bank SR-Boligkreditt
Slide 8: Key figures – annual development
Key figures – annual development Return on equity CET 1 capital ratio Cost to income ratio Earnings per share (NOK) 8 SR-Bank SR-Boligkreditt
Slide 9: Income statement
Income statement 9 SR-Bank SR-Boligkreditt
Slide 10: Change in profit 31.03.2022 - 31.03.2023
Change in profit 31.03.2022 - 31.03.2023 (MNOK) 10 SR-Bank SR-Boligkreditt
Slide 11: Operating expenses
Operating expenses 11 SR-Bank SR-Boligkreditt
Slide 12: Changes in operating expenses 31.03.2022 - 31.03.2023
Changes in operating expenses 31.03.2022 - 31.03.2023 (MNOK) 4.1 % 4.5 % 0.6 % 0.4 % 12 SR-Bank SR-Boligkreditt
Slide 13: Group
Group Lending volume Deposit volume Margins in customer segments 1 3 SR-Bank SR-Boligkreditt
Slide 14: Loan portfolio as at 31 March 2023
Loan portfolio as at 31 March 2023 • Gross loans increased to NOK 258.2 billion from NOK 233.6 billion year over year • 12-month growth in loans of 10.5% • Loans to retail customers account for 60.0% of total loans 9.2% 5.9 % 22.7% 22.4% Share of green loans Loans before impairments, nominal amounts
Slide 15: Reduced exposure to the offshore sector
Reduced exposure to the offshore sector Offshore • EAD NOK 5.6 billion, 1.9% of the bank’s total EAD* • Exposure primarily to industrial oriented shipping companies with integrated organization (Offshore service vessels, Rig and Seismic vessels) *EAD: Exposure at default. 15 SR-Bank SR-Boligkreditt
Slide 16: Development in early warning indicators
Development in early warning indicators Corporate market - Drawn amount on credit facilities Retail market – Number of applications for interest-only Retail market – Drawn amount on interest only loans Retail market – Share of exposure (EAD)* with payment remarks *Proportion of EAD that has payment
Slide 17: Lending to commercial real estate
Lending to commercial real estate 14.2% (NOK 40.7 billion) of total EAD* is related to commercial real estate • Commercial real estate for lease ‐ EAD NOK 30.9 billion, 10.8% of the bank’s total EAD ‐ The portfolio is characterised by lending to commercial properties for lease with long-term contrac
Slide 18: Commercial real estate for lease
Commercial real estate for lease (Exposures larger than NOK 0.60 billion ~ 2/3 of total EAD) Loan portfolio distributed by region Loan portfolio distributed by size of loan EAD NOK billion EAD NOK billion Loan portfolio distributed by customer group Distribution of loan portfolio based on default cl
Slide 19: Loan to value ratio and RWA on home mortgage loans
Loan to value ratio and RWA on home mortgage loans Loan to value ratio on home mortgage loans Risk weight home mortgages • Decreased share of volume with LTV below 70% is due to • RWA on home mortgages reflects a solid portfolio with a somewhat decreased market values of collateral (housing). modera
Slide 20: Impairments on loans and Stage 3 commitments
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Stage 3 in % of gross loans and Impairments on loans and Changes in gross loans financial commitments financial commitments and financial commitments Loans in Stage 3, MNOK defined as Stage 3 Financia
Slide 21: Market risk
Market risk Bonds and certificates Interest rate risk The average duration of the portfolio is 2 years Economic effect from a parallel shift of the yield curve of 2 percentage points Classification of bonds and certificates Currency risk Limit per currency is 100 MNOK Market value of HTM is 9,502 MN
Slide 22: Solid capital ratio
Solid capital ratio • The authorities’ minimum requirement for the CET 1 capital ROE ROE ROE ratio is 17.35% including a temporary pilar 2 premium of 0,5% 12.6% 12.6% 12.3% • The group’s CET 1 capital ratio target is minimum 16.85% CET 1 • In March 2022 it was decided to increase the countercyclical
Slide 23: Funding
Funding • Moody’s rating A1 (positive outlook) • NSFR* 134% • LCR** 244% • NOK 26.0 billion net refinancing need over the next 12 months • Deposit to loan ratio 58.9% • MREL requirement 35.2%, MREL-subordination requirement 26,2% • SIFI-status to be decided by MoF by year-end 2023 Annual funding mat
Slide 24: Key figures
Key figures *The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17 / IFRS 9 24 SR-Bank SR-Boligkreditt
Slide 25: SR-Boligkreditt
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 26: Overview SR-Boligkreditt
Overview SR-Boligkreditt • SR-Boligkreditt is a wholly owned subsidiary of SR-Bank and a dedicated covered bond company. Its objective is to purchase mortgages and to finance these by issuing covered bonds (European Covered Bond Premium). • Loans are transferred to SR-Boligkreditt as true sale on a
Slide 27: Eligibility criteria
Eligibility criteria Type of properties • Primary residential property in Norway (including detached houses, terraced houses, apartments and cooperative housing units) • The mortgage property shall not be "buy-to-let“ (mortgages to individuals owning more than 3 properties) Collateral • LTV-limits a
Slide 28: Cover pool characteristics
Cover pool characteristics Assets/status • 100 % mortgages on Norwegian private residential properties • 100 % performing loans Cover pool • NOK 103.0 bn: Residential mortgages 100.3 (97.4%), Substitute assets 2.7 bn (2.6%) Mortgages and rate • 51,599 loans at a weighted average interest rate of 4.3
Slide 29: Cover pool characteristics
Cover pool characteristics Current LTV Loan performance 22,5 % 0% 20,1 % 18,7 % 19,0 % Performing loans 14,9 % 100 % Delinquent loans (arrears 31 to 90 days) 4,5 % Gross non performing loans 0,4 % (arrears 90 days +) 0-40 % 40-50 % 50-60 % 60-70 % 70-80 % 80-100 % 100 % + Geography Property type 1%
Slide 30: Norwegian economy
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 31: Key economic indicators
Key economic indicators Sources: Statistics Norway, Thomson Reuters Datastream and *Central Bank of Norway. Norges Bank 23 March 2023 & Statistics Norway 10 March 2023 31 SR-Bank SR-Boligkreditt
Slide 32: Macro in Southern Norway
Macro in Southern Norway House price development Unemployment rate • Norwegian house prices have increased by 5,8% as at 31 March 2023 1.9 House prices. NOK per sqm. Average all homes. Indexed Not seasonally adjusted Investments on the Norwegian continental shelf Number of bankruptcies • The tax pac
Slide 33: Housing market
Housing market - house prices -0.2% YOY, 5.8% YTD House prices (Index des 2013=100) Index change 12 month (%) Prices by City per Square Meter (EUR) 210 130 7,953 200 125 190 180 120 170 115 160 110 4,652 4,621 150 140 3,801 105 3,523 130 100 120 110 95 100 90 90 2014 2015 2016 2017 2018 2019 2020 20
Slide 34: Government finances and the sovereign wealth fund
Government finances and the sovereign wealth fund Norwegian current account and gov't budget (BNOK), Norwegian oil fund and GDP (BNOK), quarterly figures quarterly figures 600,000 12,500,000 400% 500,000 10,000,000 400,000 300% 300,000 7,500,000 200,000 200% 100,000 5,000,000 0 100% 2,500,000 -100,0
Slide 35: Sustainability and Green Bond framework
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 36: SpareBank 1 SR-Bank's sustainability targets
SpareBank 1 SR-Bank’s sustainability targets A pro-active ally to our clients in the transition to a more sustainable society 4 f Combat Emission 5 Equality and 3 i Transition financia reductions diversity crime Financing and facilitation * Gender balance (40/60) on all of NOK 50 billion in ender ba
Slide 37: Lending volume and financing sustainable activities
Lending volume and financing sustainable activities Sustainable lending volume is 17.3% of total Goal: Finance NOK 50 billion in sustainable activities Lending lending volume volume by the end of 2030 31.03.23 2021 2030 17,3 % 35 % 0 bill 25 bill 50 bill 75 bill 100 bill 125 bill 150 bill 175 bill 2
Slide 38: Sustainability means better services for our customers
Sustainability means better services for our customers ESG risk-model for Maintenance First sustainability- Adaptations and corporate market – calendar linked loan paid out follow-up – The EAD>50 million in CM Transparency Act Funds with a focus Legal services on sustainability New ESG risk-model EU
Slide 39: Green product offerings & initiatives
Green product offerings & initiatives Green Mortgage Product & Renovation Product Launch of “My carbon footprint” •The Green mortgage product was launched in 2021. A Green mortgage is secured by energy efficient housing with favorable loan interest rates. Loan criteria: EPC A or B label • The bank r
Slide 40: One of the Nordic region's best banks
ESG100 One of the Nordic region’s best banks • Best practice reporting on sustainability • Clear strategy and measurable ambitions • Good corporate sustainability structure A 40 SR-Bank SR-Boligkreditt
Slide 41: ESG ratings, rankings and indices
ESG ratings, rankings and indices • "Prime status" and rating C by ISS-ESG (January 2023) • Sustainalytics: "Low risk "; low risk experiencing material financial impact from ESG factors; 18 out of 414 regional banks by Sustainalytics (August 2022) • MSCI ESG Rating: "Level AA" (January 2023) • CDP:
Slide 42: Initiatives and frameworks SR-Bank is affiliated with
Initiatives and frameworks that SpareBank 1 SR-Bank is affiliated with Norwegian State Pension Fund SpareBank 1 SR-Bank’s initiatives, frameworks and guidelines, including the newly published ESG Factbook, can be found in our Sustainability Library 42 SR-Bank SR-Boligkreditt
Slide 43: Sustainability within SR-Bank
Sustainability within SR-Bank Sustainability incorporated into the group’s strategy Sustainability strategy General guidelines for sustainability Guidelines for Guidelines for sustainability responsible Guidelines for Guidelines for Other in the investments Code of products and suppliers and strateg
Slide 44: Green Bond Framework Highlights
Green Bond Framework Highlights Projects Manage- Use of Evaluation External ment of Reporting Proceeds and Review Proceeds Selection The Green Bonds proceeds Green Bond committee established. SR-Bank intends to make and keep Sustainalytics has issued a Green buildings, renewable Evaluation and selec
Slide 45: Use of Proceeds overview
Use of Proceeds overview SR-Boligkreditt SR-Bank Green Covered Bonds Green Senior Bonds Green buildings Green buildings Renewable Energy Clean Transportation • Loans aiming at financing the • Loans aiming at financing or • Loans to finance or refinance • Loans to finance or refinance equipment, deve
Slide 46: Management of Proceeds
Management of Proceeds • The Green Bond Proceeds will be managed in a portfolio approach • SR-Bank intends to allocate the proceeds from the Green Bonds to a portfolio of loans that meet the use of proceeds eligibility criteria • SR-Bank will strive, over time, to achieve a level of allocation for t
Slide 47: Sustainalytics' second party opinion
Sustainalytics’ second party opinion Sustainalytics has issued a Second Party Opinion on SR-Bank Green Bond Framework Use of Proceeds: The eligible categories – residential green buildings, commercial green buildings, renewable energy, and clean transportation – are aligned with those recognized by
Slide 48: EU Taxonomy: TSC, DNSH & MS – high level assessment
EU Taxonomy: TSC, DNSH & MS – high level assessment ➢ High-level (non-accredited) EU Taxonomy alignment assessment: 96.3% aligned (NOK 38.3bn aligned out of NOK 39.8bn total portfolio1) 48 SR-Bank SR-Boligkreditt
Slide 49: Allocation Report
Allocation Report Portfolio date: 31 March 2023 Eligible Green Loan Portfolio Green Funding* Amount Instument Instrument Issuance Due Amount (NOK m) (Type / Crncy) (ISIN) Date Date (NOK m) Green Residential Buidlings 34.249 € Covered XS2063288190 okt.19 okt.26 5.682 SR Bank 12.287 € Senior Non‐Prefe
Slide 50: Impact Report – Q1 2022
Impact Report – Q1 2022 50 SR-Bank SR-Boligkreditt
Slide 51: Appendix
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 52: Moody's affirms SR-Bank's A1 deposit ratings; outlook positive
Moody's affirms SpareBank 1 SR-Bank's A1 deposit ratings; outlook changed to positive Stockholm, September 26, 2022 Moody's Investors Service ("Moody's) has today affirmed SpareBank 1 SR-BanK ASA's (SR-Bank) A1/Prime- 1 (P-1) deposit and A1 senior unsecured debt ratings. Furthermore, the rating agen
Slide 53: Retail market
Retail market Lending volume* Deposit volume Margins Definition margins: Average customer rate measured against 3-months NIBOR. *Including employee loans. 5 3 SR-Bank SR-Boligkreditt
Slide 54: Corporate market
Corporate market Lending volume Deposit volume Margins Definition margins: Average customer rate measured against 3-months NIBOR. *12 months lending growth in Corporate market excluding currency effect is 15.4 %. 54 SR-Bank SR-Boligkreditt
Slide 55: SME and Agriculture
SME and Agriculture Lending volume Deposit volume Margins Definition margins: Average customer rate measured against 3-months NIBOR. 55 SR-Bank SR-Boligkreditt
Slide 56: Profile of the loan portfolio
Profile of the loan portfolio • SpareBank 1 SR-Bank has a solid loan portfolio. Loan portfolio distributed Loan portfolio distributed by risk class by size of loan • The loan portfolio consists mainly of small and medium- 65.8% 63.1% sized loans. Probability of Default (PD) % 66.9% 63.6% 30.2% 27.8%
Slide 57: Risk profile – Lending in Retail, SME & Agriculture and Corporate
Risk profile – Lending in Retail, SME & Agriculture and Corporate Customers - Portfolio distributed by risk class Retail SME & Agriculture Corporate 1.6% 1.8% 1.7% 15.0% 15.2% 15.8% 13.1% 14.0% 13.3% 15.6% 14.0% 15.4% 13,8 % 14,4 % 14,8 % 43.5% 46.5% 46.0% 52.6% 57.5% 56.2% 83.4% 83.0% 82.5% 43.3% 3
Slide 58: Lending to shipping
Lending to shipping 2.6% (NOK 7.4 billion) of total EAD* is related to shipping • Product tank ‐ EAD NOK 1.2 billion, 0.4% of the bank's total EAD • Chemical tank ‐ EAD NOK 1.8 billion, 0.6% of the bank's total EAD • Dry-bulk ‐ EAD NOK 1.9 billion, 0.7% of the bank's total EAD • Gas ‐ EAD NOK 0.7 bi
Slide 59: Lending to oil and offshore
Lending to oil and offshore 3.7% (NOK 10.5 billion) of total EAD* is related to oil operations • Oil services ‐ EAD NOK 3.8 billion, 1.3% of the bank's total EAD ‐ Funding of operating capital through current and fixed assets, as well as guarantees • Exploration and production companies ‐ EAD NOK 1.
Slide 60: Net commission and other income
Net commission and other income 74 60 SR-Bank SR-Boligkreditt
Slide 61: Change in net commission and other income
Change in net commission and other income 31.03.2022 - 31.03.2023 (MNOK) 74 61 SR-Bank SR-Boligkreditt
Slide 62: Net income on financial investments
Net income on financial investments When a basisswap is defined as a hedging instrument, changes in “basis spread” is recognized through other comprehensive income. 62 SR-Bank SR-Boligkreditt
Slide 63: Subsidiaries
Subsidiaries *The result in ForretningsPartner includes amortisation of intangible assets of NOK 1.3 million (NOK 1.6 million as at 31 March 2022). 63 SR-Bank SR-Boligkreditt
Slide 64: Ownership interests
Ownership interests *Companies in which FinStart Nordic AS owns stakes of between 20-50% must, because of accounting rules, be measured as associated companies in the consolidated financial statements. The profit contribution here is included in the company’s results on the previous page. 64 SR-Bank
Slide 65: Balance sheet
Balance sheet The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17 / IFRS 9 65 SR-Bank SR-Boligkreditt
Slide 66: Broad product range in the SpareBank 1 alliance
Broad product range in the SpareBank 1 alliance Ownership interests Profitshare after tax from ownership interests MARKETS FORSIKRING KREDITT FACTORING FORVALTNING 66 SR-Bank SR-Boligkreditt
Slide 67: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Business divisions Fully owned companies Partly owned companies Retail market 489 EiendomsMegler 1 SR-Boligkreditt BN Bank SpareBank 1 Leading real estate Covered Bond Funding Commercial Gruppen broker bank located in Holding company 35.0% 19.5% Corporate market Oslo and for
Slide 68: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 Samarbeidende SpareBank 1 LO SR-Bank SMN Nord Norge Sparebanker AS Østlandet 19.5% 19.5% 19.5% 19.5% 12.4% 9.6% Products, commissions, dividends Sales, loan portfolios, capital Companies where SR-Bank has direct ownership SpareBank 1 Gruppen A
Slide 69: SRBNK share
SRBNK share • International ownership Development in Price/Book Relative share price development is 22.0% per 140 1,5 200 1. quarter 2023 Index 100 = dec 31st 2021 130 1,4 180 OSEBX 120 1,3 SRBNK • Total market value at 110 1,2 160 140 1. quarter 2023 is NOK 100 1,1 NOK 120 p/B 30.9 billion 90 1,0 1
Slide 70: 20 largest shareholders as at 31 March 2023
20 largest shareholders as at 31 March 2023 • Ownership interests: • From Rogaland, Agder, Vestland, Oslo and Viken: 64.4% (65.4%) • International: 22.0% (22.8%) • 10 largest: 48.5% (48.1%) • 20 largest: 56.7% (55.9%) • Number of shareholders: 18.185 (17.714) • Employees owning 1.8% (1.7%) as at 31
Slide 71: SR-Bank as at 31 March 2023
SR-Bank as at 31 March 2023 • Number of shares issued 255.75 million • Trading volume in Q1 2023: 4.7% (5.9%) • On 1 June 2017, the SR- Bank share was included in the Oslo Stock Exchange's main index Figures in parentheses as at 31 March 2022. 71 SR-Bank SR-Boligkreditt