Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Debt Investor Presentation (June 2023)
66 slides from Sparebank 1 Sor-norge Asa's debt investor presentation, June 2023
Slide 1: Quarterly presentation 2023 Q2
Quarterly presentation 2023 Q2 SR-Bank SR-Boligkreditt
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: Agenda
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 4: SR-Bank at a glance
SR-Bank at a glance Second largest Norwegian bank (SIFI) • Rating: A1 (positive outlook) SR-Bank’s market area • Market cap: NOK 33.3 Billion • Total assets: NOK 361.8 Billion • Total lending: NOK 264.9 Billion • Total deposits: NOK 150.8 Billion • No. of branches: 36 • Employees: 1,571 1839: The fi
Slide 5: Finance group for South of Norway
Finance group for South of Norway Knarvik Åsane Lending volume in NOK billion. Askøy Bergen Sotra Fana Nydalen Oslo Skøyen Ensjø Husnes Stord Ølen Tysvær Haugesund Bygenes Jørpeland Randaberg Stavanger* Sola Sandnes Gjesdal Bryne Varhaug Arendal Egersund Grimstad Flekkefjord Kristiansand Lyngdal Far
Slide 6: A good result with growth under challenging market conditions
A good result with growth under challenging market conditions Result 2. quarter 2023 Result 30 June 2023 13.5% 9.1% 17.8% 14.6% Return on equity after tax Return on equity after tax Pre-tax profit MNOK 2,467 12 months lending growth Retail market Corporate market 5.8% 14.0% CET 1 capital ratio SME a
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: Operating expenses
Operating expenses 10 SR-Bank SR-Boligkreditt
Slide 11: Group
Group Lending volume Deposit volume Margins in customer segments Definition margins: Average customer rate measured against 3-months NIBOR. 11 SR-Bank SR-Boligkreditt
Slide 12: Loan portfolio as at 30 June 2023
Loan portfolio as at 30 June 2023 • Gross loans increased to NOK 264.9 billion from NOK 242.9 billion year over year • 12-month growth in loans of 9.1% • Loans to retail customers account for 59.1% of total loans 10.4% 5.0 % 21.8% 22.9% Share of green loans Loans before impairments, nominal amounts.
Slide 13: Reduced exposure to the offshore sector
Reduced exposure to the offshore sector Offshore • EAD NOK 5.8 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. 13 SR-Bank SR-Boligkreditt
Slide 14: 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 *Average number of applicaton per
Slide 15: Market – Commercial real estate
Market – Commercial real estate Office vacancy Prime yield Rental prices Transaction volume (TNOK per sq.m) Source: Entra, WPS, EM1 MN og EM1 SR-Bank 15 SR-Bank SR-Boligkreditt
Slide 16: Lending to commercial real estate
Lending to commercial real estate 13.7% (NOK 40.6 billion) of total EAD* is related to commercial real estate • Commercial real estate for lease ‐ EAD NOK 31.3 billion, 10.6% of the bank’s total EAD ‐ The portfolio is characterised by lending to commercial properties for lease with long-term contrac
Slide 17: 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 18: 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 • 94.8% of the exposure is within 85% of the assessed value of • RWA on home mortgages reflects a solid portfolio with a collateral. moderate loan-to-value ratio and low potential
Slide 19: Impairments on loans and financial commitments / Stage 3
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Impairments on loans and Changes in gross loans financial commitments and financial commitments defined as Stage 3 1,131 1,110 1,060 19 SR-Bank SR-Boligkreditt
Slide 20: 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 9,308 MN
Slide 21: Solid capital ratio
Solid capital ratio • The authorities’ minimum requirement for the CET 1 capital ratio is 17.35% including a temporary Pillar 2 premium of 0,5% 21,89% • The leverage ratio is 7.0% as at 30 June 2023, well above the 21,05 % 17,35% 20,48 % 20,31 % 19,90% minimum requirement at 5.0% 18,88 % 18,76% 19,0
Slide 22: Funding
Funding • Moody`s rating A1 (positive outlook) • NSFR* 135% • LCR** 215% Annual funding maturity • NOK 24.2 billion net refinancing need over the next 12 months 30 28 • Deposit to loan ratio 56.9% 26 24 • MREL-requirement 36.7%, MREL-subordination requirement 29.7% 22 20 • The MREL-requirement leads
Slide 23: Key figures
Key figures The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17/IFRS 9. 23 SR-Bank SR-Boligkreditt
Slide 24: SR-Boligkreditt
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 25: 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 26: 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 27: Cover pool characteristics
Cover pool characteristics Assets/status • 100 % mortgages on Norwegian private residential properties • 100 % performing loans Cover pool • NOK 96.8 bn: Residential mortgages 94.1 (97.2%), Substitute assets 2.7 bn (2.8%) Mortgages and rate • 49,052 loans at a weighted average interest rate of 4.74%
Slide 28: Cover pool characteristics
Cover pool characteristics Current LTV Loan performance 22,7 % 23,0 % 0% 18,5 % 17,1 % 15,3 % Performing loans 100 % Delinquent loans (arrears 31 to 90 days) 2,7 % Gross non performing loans 0,7 % (arrears 90 days +) 0-40 % 40-50 % 50-60 % 60-70 % 70-80 % 80-100 % 100 % + Geography Property type 1%
Slide 29: Norwegian economy
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 30: Key economic indicators
Key economic indicators Sources: Statistics Norway and Norges Bank*. Norges Bank 22 June 2023 & Statistics Norway 9 June 2023. 30 SR-Bank SR-Boligkreditt
Slide 31: Macro in Southern Norway
Macro in Southern Norway House price development Unemployment rate • Norwegian house prices have increased by 6,4% as at 30 June 2023 1.9 House prices. NOK per sqm. Average all homes. Indexed Not seasonally adjusted Number of bankruptcies SpareBank 1 SR-Bank`s business survey Main index of 48 per ce
Slide 32: Housing market
Housing market - house prices -0.7% YOY, 6.4% YTD House prices (Index des 2013=100) Index change 12 month (%) Prices by City per Square Meter (EUR) Source: Eiendom Norge, Eiendomsverdi 32 SR-Bank SR-Boligkreditt
Slide 33: 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 34: Sustainability within SR-Bank
Sustainability within SR-Bank • The group’s sustainability principles are based on the 17 UN Sustainable Development Goals • We support the UN Global Compact’s ten principles for sustainability • We are a founding signatory of the UN Principles for Responsible Banking 34 SR-Bank SR-Boligkreditt
Slide 35: SpareBank 1 SR-Bank's sustainability targets
SpareBank 1 SR-Bank’s sustainability tragets A pro-active ally to our clients in the transition to a more sustainable society Equality Combat Emission Transition and financial reduction diversity crime • Climate neutrality in • Financing and facilitation • Gender balance • Have zero-tolerance for ow
Slide 36: Lending volume and financing sustainable activities
Lending volume and financing sustainable activities Sustainable lending volume is 17.2% of total Goal: Finance NOK 50 billion in sustainable activities Lending lending volume volume by the end of 2030 30.06.23 2021 2030 17.2% 53.6% 0 bill 25 bill 50 bill 75 bill 100 bill 125 bill 150 bill 175 bill 2
Slide 37: 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 38: 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 38 SR-Bank SR-Boligkreditt
Slide 39: ESG ratings
ESG ratings • "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: score B (December 2022
Slide 40: Green Bond Framework Highlights
Green Bond Framework Highlights Projects Manage- Use of Evaluation External ment of Reporting Proceeds and Review Proceeds Selection Green Bond committee SR-Bank intends to make and The Green Bonds proceeds will ISS has issued a Second Party Green buildings, renewable established. Evaluation and kee
Slide 41: 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 to finance or refinance new or • Loans to finance or refinance new or • Loans, credit and investments to • Loans aiming at financing o
Slide 42: 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 43: ISS second party opinion
ISS second party opinion ISS has issued a positive Second Party Opinion on SR-Bank Green Bond Framework 43 SR-Bank SR-Boligkreditt
Slide 44: EU Taxonomy Assessment – performed by ISS-ESG
EU Taxonomy Assessment – performed by ISS-ESG 44 SR-Bank SR-Boligkreditt
Slide 45: Allocation Report
Allocation Report Eligible Green Loan Portfolio Green Funding* Amount Instument Instrument Issuance Due Amount (NOK m) (Type / Crncy) (ISIN) Date Date (NOK m) Green Residential Buidlings 33.633 € Covered XS2063288190 okt.19 okt.26 5.848 SR Bank 11.937 € Senior Non‐Preferred XS2363982344 jul.21 jul.2
Slide 46: Impact Report – Q1 2023
Impact Report – Q1 2023 46 SR-Bank SR-Boligkreditt
Slide 47: Appendix
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 48: Change in profit 30.06.2022 - 30.06.2023
Change in profit 30.06.2022 - 30.06.2023 (MNOK) 48 SR-Bank SR-Boligkreditt
Slide 49: Retail market
Retail market Lending volume* Deposit volume Margins Definition margins: Average customer rate measured against 3-months NIBOR. *Including employee loans. 49 SR-Bank SR-Boligkreditt
Slide 50: 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 12.8 %. 50 SR-Bank SR-Boligkreditt
Slide 51: SME and Agriculture
SME and Agriculture Lending volume Deposit volume Margins Definition margins: Average customer rate measured against 3-months NIBOR. 51 SR-Bank SR-Boligkreditt
Slide 52: 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- sized loans. Probability of Default (PD) % Probability of default (PD) through
Slide 53: 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 14.6% 14.1% 15.2% 14.1% 15.0% 14.0% 14.6% 16.5% 14.0% 13,8 % 14,4 % 14,8 % 43.1% 44.7% 46.5% 54.9% 52.9% 57.5% PD 0.00-0.50 PD 0.50-2.50 PD 2.50-99.9 P
Slide 54: Lending to oil and offshore
Lending to oil and offshore 4.1% (NOK 12.1 billion) of total EAD* is related to oil operations • Oil services ‐ EAD NOK 4.9 billion, 1.7% 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 55: Lending to shipping
Lending to shipping 2.7% (NOK 7.9 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 1.5 billion, 0.5% of the bank's total EAD • Dry-bulk ‐ EAD NOK 2.5 billion, 0.8% of the bank's total EAD • Gas ‐ EAD NOK 0.7 bi
Slide 56: Net commission and other income
Net commission and other income 74 56 SR-Bank SR-Boligkreditt
Slide 57: Change in net commission and other income
Change in net commission and other income 30.06.2022 - 30.06.2023 (MNOK) 74 57 SR-Bank SR-Boligkreditt
Slide 58: 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. 58 SR-Bank SR-Boligkreditt
Slide 59: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) Impairments on loans and financial commitments in the balance sheet (MNOK) 59 SR-Bank SR-Boligkreditt
Slide 60: Subsidiaries
Subsidiaries *The result in ForretningsPartner includes amortisation of intangible assets of NOK 2.9 million (NOK 3.2 million as at 30 June 2022). 60 SR-Bank SR-Boligkreditt
Slide 61: 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. 61 SR-Bank
Slide 62: Balance sheet
Balance sheet The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17/IFRS 9. 62 SR-Bank SR-Boligkreditt
Slide 63: Our findings in Norway's largest sustainability survey
Our findings in Norway`s largest sustainability survey Population Businesses Municipalities Over 6000 private individuals 2100 business leaders 253/356 municipalities «8 out of 10 business «7 out of 10 business leaders believe leaders believe sustainability is sustainability does not strategically i
Slide 64: SRBNK share
SRBNK share • International ownership Development in Price/Book Relative share price development is 21.2% per 140 1,5 2. quarter 2023 200 Index 100 = jun 30th 2022 130 1,4 180 120 1,3 • Total market value at 110 1,2 160 2. quarter 2023 is NOK 100 1,1 140 NOK p/B 120 33.3 billion 90 1,0 100 80 0,9 70
Slide 65: 20 largest shareholders as at 30 June 2023
20 largest shareholders as at 30 June 2023 • Ownership interests: • From Rogaland, Agder, Vestland, Oslo and Viken: 65.0% (65.7%) • International: 21.2% (22.4%) • 10 largest: 49.2% (47.9%) • 20 largest: 57.5% (55.9%) • Number of shareholders: 18.526 (18.095) • Employees owning 1.8% (1.7%) as at 30 J
Slide 66: SR-Bank as at 30 June 2023
SR-Bank as at 30 June 2023 • Number of shares issued 255.75 million • Trading volume in Q2 2023: 4.0% (5.2%) Figures in parentheses as at 30 June 2022. 66 SR-Bank SR-Boligkreditt
SpareBank 1 SR-Bank — Debt Investor Presentation (June 2023) on 6ix