Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q4 2015 Earnings Presentation
53 slides from Sparebank 1 Ostlandet's earnings presentation, 2016
Slide 1: From a dream to reality – Fourth Quarter 2015
Froma dream to reality FOURTH QUARTER 2015
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 467.000 Market share 37% 2 Year of establishment 1839 Market strategy Market leader Unemployment rate 4.9%* 2 Hordaland Population 512.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment
Slide 4: Good results, good cost control, moderate losses and improved financial strength
Good results, good cost control, moderate losses and improved financial strength Pre-tax profit for the quarter is NOK 477 million compared to NOK 553 million last year - Return on equity after tax 10.6% Pre-tax profit 2015 is NOK 2.146 million compared to NOK 2.601 million last year - Return on
Slide 5: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 13,3% 12,1% 12,3% 12,2% 11,5% 12,7% 11,7% 10,8% 10,6% 9,3% Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Cost/income ratio Earnings per share (NOK) 1,94 47,3% 1,75 1,69 1,73 45,1% 1,47 42,5% 42,3% 35,5% Q4 14 Q1 1
Slide 6: Key figures – annual development
Key figures – annual development Return on equity CET 1 capital ratio 13,3% 14,0% 14,2% 11,1% 11,5% 10,8% 2013 2014 2015 2013 2014 2015 Cost/income ratio Earnings per share (NOK) 44,9% 8,20 41,8% 42,1% 7,28 6,83 2013 2014 2015 2013 2014 2015 6
Slide 7: Income statement
Income statement 31.12 31.12 Group Income Statement (MNOK) 15 14 Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 Net interest income 2.593 2.404 678 649 639 627 655 Net commission and other income 1.532 1.732 372 353 399 408 405 Net income on investment securities 304 778 -13 12 94 211 116 Total income 4.429 4.914 1.
Slide 8: Change in profit 31.12.2014 – 31.12.2015
8 0 1.000 1.500 2.000 2.500 3.000 500 31.12.2014 2.601 Net interest income incl. commission from - 21 covered bond companies 10 Other income Net income on investment securities - 474 193 Total operating expenses Change in profit 31.12.2014 – 31.12.2015 Impairment losses on loans and - 163 guarantees
Slide 9: Key figures
Key figures 31.12 31.12 15 14 Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 Return on equity after tax (%) 10,8 14,2 10,6 9,3 10,8 12,7 11,7 Net interest margin (%) 1,42 1,45 1,40 1,39 1,44 1,45 1,51 Impairment losses on loans and guarantees in % of gross loans 0,28 0,20 0,50 0,25 0,12 0,25 0,27 -incl. covered bond
Slide 10: Consolidated income profile
Consolidated income profile 1200 1.094 1.108 1.060 1.027 1.087 1000 315 324 319 333 298 800 34 73 22 37 90 25 53 84 66 55 MNOK 600 400 655 639 649 678 627 200 0 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Net interest income Commission income from covered bond companies Profit before tax from covered bond compani
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins 2,93% 2,92% 2,90% 2,89% 2,80% 2,66% 2,59% 2,59% 2,58% 2,21% 2,20% 2,08% 1,97% 1,95% 1,95% 1,64% 1,61% 1,56% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Corporate market Retail market Deposit margins -0,25% -0,18% -0,06% -0,44% -0,47% -0,21% -0,50
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 50 000 13,8% 15% 12,8% 12,5% 40 000 MNOK 10% 30 000 7,1% 4,6% 5,6% 20 000 2,5% 5% 10 000 0,7% 1,4% 0 0% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Volume Growth % Retail Market 120 000 100 000 15% 80 000 M
Slide 13: Loan portfolio as at 31.12.2015
Loan portfolio as at 31.12.2015 • Gross loans as at 31 December 2015 Agriculture / forestry / fishing 2,9 % 2,9 % amount to NOK 183.9 billion compared Industry, Power/water supply and 3,5 % with NOK 174.5 billion at the same time construction 3,6 % last year. Retail trade, hotels and restaurants 1,4
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. • 89.6% of the exposure is within 85% of the assessed value of collateral. • Lending exposure increased through 2015 whereas market value on real estate is slightly declining. T
Slide 15: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by NOK 8.0 billion to 89.4 billion. 50000 26,1 % 24,1 % 40000 20,3 % 25% • Corresponds to an increase in the period 18,9 % 17,7 % MNOK 30000 12,6 % 13,9 % 15,4 % 15% of 9.8%. 20000 6,6 % 5% 10000 • The biggest
Slide 16: Net commission and other income
Net commission and other income 31.12 31.12 MNOK 15 14 Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 Payment facilities 236 236 56 66 56 58 57 Savings/placements 190 172 48 45 48 49 42 Insurance products 190 177 48 48 47 47 46 Commission income real estate broking 383 434 82 84 113 104 101 Guarantee commission 129
Slide 17: Net income on investment securities
Net income on investment securities 31.12 31.12 MNOK 15 14 Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 Dividends 17 36 1 1 8 7 1 Investment income, associates 422 506 110 78 101 133 138 Securities gains/losses -224 181 -87 -100 -14 -23 -41 - of which capital change in shares and certificates -40 232 -34 -6 -4 4 2
Slide 18: Subsidiaries
Subsidiaries MNOK 31.12.15 31.12.14 EiendomsMegler 1 SR-Eiendom AS Number of sales 6.551 7.540 Operating profit before tax 30 56 SpareBank 1 SR-Finans AS Total assets (BNOK) 7 7 Operating profit before tax 150 146 SR-Forvaltning AS Total assets under management (BNOK) 9 9 Operating profit before tax
Slide 19: Ownership interests
Ownership interests MNOK 31.12.15 31.12.14 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 251 360 Adjusted profit previous years 0 -4 SpareBank 1 Boligkreditt AS Interest ownership 16,7 % 20,1 % Profit after tax 91 47 Adjusted profit previous years 0 2 SpareBank 1 Næringskr
Slide 20: Operating expenses
Operating expenses 31.12 31.12 MNOK 15 14 Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 Personnel expenses 1.143 1.187 255 284 300 304 303 Restructuring- and non-recurring costs, pensions -198 15 -141 -63 0 6 5 Total personnel expenses 945 1.202 114 221 300 310 308 IT expenses 301 277 86 70 73 72 75 Marketing 90 96
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 0,50% 0,42% 0,27% 0,25% 0,25% 51 0,90% 0,12% 0,81% 0,78% 0,68% 0,66% 0,22% 0,20% 0,21% 0,76% 0,66% 0,64% 0,54% 0,56% 0,10% 548 20 729 50 141 716 513 683 62 853 68 19
Slide 22: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 31.12 31.12 Losses on loans in income statement (MNOK) 15 14 Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 Corporate customers 265 167 145 40 18 62 27 Retail customers 15 15 -4 6 7 6 4 Change in collective impairment losses on loans 140 75 51 50 19 20 62 Net impairment loss
Slide 23: Funding
Funding • Well diversified funding. Deposits to loans ratio 100,0 % • Greater share of senior and OMF funding last year. 80,0 % 59,6% 61,2% 60,4% 59,1% 57,5% 59,4% 60,4% 58,6% 57,6% ‒ 6 outstanding euro-benchmarks with due 60,0 % dates in each of the years 2016- 2021. 40,0 % ‒ 2 outstanding euro cov
Slide 24: Stronger capital ratio
Stronger capital ratio • SpareBank 1 SR-Bank is compliant with capital requirements per 31.12.2015. 18% 16% 16,7% • SpareBank 1 SR-Bank received IRB 14% Advanced approval for the corporate 14,1% 14,5% 14,2% market portfolio in the first quarter of 12% 12,8% 12,3% 2015. 10% 8% • The use of different
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 • New capital requirements entail a need to continue increasing common equity tier 1 capital going forward. 16,00% ROE ROE 11,5 -13,5%16,00% ROE 10,8% • Norges Bank has decided that the 14,00% 14,0% 14,2% 14,00% co
Slide 26: Increasing CET 1 – well prepared to reach capital requirements
Increasing CET 1 – well prepered to reach capital requirements Guiding 2016 Stronger common equity tier 1 in 2015 • IRB Advanced approval for the corporate market 16% 1,0% 14,6% 0,2% portfolio 14% 1,7% - 0,3% 13,3% 0,1% 0,1% • Changed pension scheme 12% 11,5% - 0,7% 0,7% 0,3% • Good profitability 10
Slide 27: Outlook
Outlook Norwegian exports more competitive due to a weaker exchange rate , while interest rates also stimulate business and household spending. Major infrastructure projects are helping to ensure good conditions for the region's business and population growth, with moderate unemployment. Uncer
Slide 28: Financial targets and estimates in 2016
Financial targets and estimates in 2016 Return on equity CET 1 capital ratio Growth in loans 5,4% 10,8% 11,0% 13,3% Minimum 14,0% 0,0% 2015 Target 2016 2015 Target 2016 2015 Target 2016 Normalised growth in costs Impairment losses Dividend share NOK 500 – 700 million 20% - 25% 0,1% 22% NOK 420 milli
Slide 29: Appendix
39 APPENDIX SpareBank SR-BANK
Slide 30: Unemployment has increased, but remains moderate
30 0 1 2 3 4 5 6 jan.99 aug.99 mar.00 Source: NAV okt.00 mai.01 des.01 jul.02 feb.03 sep.03 apr.04 nov.04 jun.05 jan.06 aug.06 mar.07 okt.07 mai.08 des.08 jul.09 feb.10 sep.10 Unemployed (registered, percent) Rogaland somewhat above the national average apr.11 nov.11 jun.12 jan.13 aug.13 mar.14 okt.
Slide 31: House prices in Rogaland flattened last 3 years
House prices in Rogaland flattened last 3 years 60.000 House prices NOK per square meter, average 50.000 40.000 Vest-Agder Rogaland 30.000 Hordaland 20.000 Norway Oslo 10.000 - jun.03 nov.03 mar.07 jun.08 nov.08 mar.12 jun.13 nov.13 jan.03 apr.04 feb.05 jul.05 mai.06 okt.06 aug.07 jan.08 apr.09 feb.
Slide 32: Somewhat reduced petroleum activity
Somewhat reduced petroleum activity Lower investments, whereas operating expenditures are more stable • Investments levelled out in 2014 350 following several years of growth. Investments expected to be reduced by 300 10% - 15% in 2016. 250 • Operating expenditures (opex), which are important for th
Slide 33: 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 34: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 8.7% (8.6%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 202.5 (201.4) EAD per 31.12.2015 BNOK 17.6 (17.3) EAD is related to oil operations Corporate market excl. oil Oil service; 2.5% (2.6%) operations; 25.2% (24.
Slide 35: Oil services - total NOK 5.0 billion
Oil services - total NOK 5.0 billion (NOK 5.2 billion as at 31.12.2014) Exploration and concept studies Oil services • EAD NOK 0.7 billion • EAD NOK 5.0 billion, 2.5% of the bank's total EAD • Average weighted probability of default 0.8% • Average weighted probability of default for the oil services
Slide 36: Oil and gas - total NOK 2.2 billion
Oil and gas - total NOK 2.2 billion (NOK 2.2 billion as at 31.12.2014) Exploration financing Exploration and production companies • EAD NOK 0,5 billion • EAD NOK 2.2 billion, 1.1% of the bank's total EAD • Average weighted probability of default 3.4% • Average weighted probability of default for the
Slide 37: Offshore - total NOK 10.4 billion
Offshore - total NOK 10.4 billion* (NOK 9.9 billion as at 31.12.2014) Offshore Service Vessels • EAD NOK 7.3 billion, average weighted Offshore probability of default is 1.2%, weighted average • EAD NOK 10.4 billion, 5.1% of the bank's total EAD age is 7.1 years, average weighted contract • Average
Slide 38: Offshore Service Vessels
Offshore Service Vessels PSV Offshore Service Vessels • EAD NOK 2.7 billion, weighted average age is 4.8 • Most customers with long history as a borrower in SpareBank 1 SR-Bank years • Most of the companies are listed on stock exchange or family owned • A major part is industrially focused companies
Slide 39: Offshore Service Vessels – largest customer group
Offshore Service Vessels – largest customer group Number of LTV vessels • Well diversified portfolio. One commitment 1 3 76 % of NOK 1.1 billion, rest of NOK 700 million or 2 8 70 % lower 3 3 80 % 4 8 70 % • Financing of 74 vessels, all with 1. priority 5 4 64 % pledge 6 8 55 % 7 10 68 % • Generally
Slide 40: Lending to commercial property
Lending to commercial property Letting of real estate - oil operations Lending to commercial property • EAD NOK 3.3 billion 1.6% of total EAD, • EAD NOK 27.6 billion 13.6% of the bank’s total EAD which of; • The portfolio is characterised by lending to commercial properties for • Oil operations: EAD
Slide 41: SRBANK's activities
SRBANK’s activities Divisions of Capital Markets Retail Market Corporate Market Administration & Support SpareBank 1 SR-Bank ASA Number of man-years : 33 Number of man-years : 460 Number of man-years : 168 Number of man-years : 208 Fully owned companies Number of man-years : 200 Number of man-years
Slide 42: 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 43: 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 2016. The longer term and development in the region target is a minimum of 11%. • Top 50% return on equi
Slide 44: Balance sheet
Balance sheet Balance sheet (MNOK) 31.12.2015 31.12.2014 Cash and balances with central banks 931 1.847 Balances with credit institutions 2.984 2.222 Net loans to customers 154.357 140.920 Certificates, bonds and other fixed-income securities 19.533 15.261 Financial derivatives 6.135 7.340 Shares, o
Slide 45: Risk profile of the loan portfolio
Risk profile of the loan portfolio • SpareBank 1 SR-Bank has a solid loan Distributed by risk class portfolio with positive development in risk 100% 80% profile. 60% 54,7% 59,0% 40% 33,3% 30,5% 20% 12,0% 10,5% • 59% of the bank’s loan exposure has a PD* 0% below 0.5%. 0.00 - 0.50 0.50 - 2.50 2.50 -
Slide 46: 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% 3,2% 2,9% 2,6% 2,5% 2,6% 20,2% 18,6% 17,2% 17,2% 17,1% potential losses. 80% 60% • The proportion of loans with a PD* b
Slide 47: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and stable portfolio. 22,4 % 22,3 % 22,8 % 22,1 % • The shift that occurs from the first quarter of 2015 is due to restrictions on PD and LGD imposed by the Norwegian 16,3 % FSA. Probability of default (PD) through a full cycle of loss. 31.
Slide 48: Risk profile - Corporate lending
Risk profile - Corporate lending • The quality of the corporate market Corporate lending portfolio distributed by risk class portfolio is good. 100% 26,7% 24,8% 22,7% 21,8% 23,9% 80% • The share of customers with PD* below 60% 56,5% 57,5% 54,4% 56,0% 55,8% 40% 2.5% has increased, mainly due to a 20%
Slide 49: A strengthened framework to meet increased economic uncertainty
A strengthened framework to meet increased economic uncertainty Uncertainty regarding the outlook for the Norwegian economy has increased due to lower oil prices. SpareBank 1 SR-Bank faces this uncertainty with a solid portfolio, a solid framework for lending and continuous focus on managing and con
Slide 50: SRBANK price/book and relative share price development
SRBANK Development in Price/Book Relative share price development • International ownership is 17.3% 65 1,2 120 per 4. quarter 2015. 60 1,1 110 1,0 55 Index 100 = Jan. 1st 2014 100 0,9 • Total market value at 50 p/B NOK 0,8 90 4. quarter 2015 is 45 0,7 80 NOK 10 billion. 40 0,6 Price 70 35 0,5 OSEBX
Slide 51: 20 largest shareholders as at December 2015
20 largest shareholders as at December 2015 • International ownership is 17.3% per 4. Investor Number Stake quarter 2015. Sparebankstiftelsen SR-Bank 72.419.305 28,3% Gjensidige Forsikring ASA 26.808.416 10,5% State Street Bank and Trust Co, U.S.A. Nominee 9.670.715 3,8% Vpf Nordea Norge Verdi 8.268
Slide 52: SRBANK as at December 2015
SRBANK as at December 2015 • Ownership interests: – From Rogaland, Agder-counties and 2015 2014 2013 2012 2011 Hordaland: 49.8% – International: 17.3% Share price 39,30 52,50 60,25 37,20 40,70 – 10 largest: 56.5% – 20 largest: 63.9% Stock value (MNOK) 10.051 13.427 15.409 9.514 5.182 • Number of sha
Slide 53: 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