Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q1 2018 Earnings Presentation
35 slides from Pareto Bank Asa's earnings presentation, 2018
Slide 1: Pareto Bank Financial Results First Quarter 2018
PARETO BANK Financial Results First Quarter 2018
Slide 2: Table of Contents
TABLE OF CONTENTS 1 HIGHLIGHTS AND FINANCIALS 2 BUSINESS AREAS 3 AMBITIONS FOR 2018
Slide 3: First Quarter 2018 Highlights
FIRST QUARTER 2018 HIGHLIGHTS 1 Profit after tax NOK 79.2m (NOK 78.3m). 2 Return on equity 15.2 % (16.7 %). 3 Strong net interest income of NOK 129.1m (NOK 115.4m). Net lending growth of NOK 618.2m (NOK 219.7m), primarily 4 within Real Estate financing and Corporate financing. Real Estate activity h
Slide 4: Corporates | Launch of New Product for Norwegian SMEs
CORPORATES | LAUNCH OF NEW PRODUCT FOR NORWEGIAN SMEs New product New digital approach • “Fleksibel driftskreditt” is a credit facility based on • Full integration with leading cloud based accounting receivables (factoring) as collateral systems • Easy to use, flexible and with transparent pricing •
Slide 5: Income Statement
INCOME STATEMENT P&L (NOKm) Continued good net interest income due Q1-18 Q1-17 2017 to lending growth. High fee income due to Net Interest income 129.1 115.4 507.0 short loan maturity and natural turnover. Total other operating income 4.9 18.9 32.0 Other income in Q1-17 was high by Total net income
Slide 6: Growing Net Interest Income
GROWING NET INTEREST INCOME Net interest income (NOK 1,000) Q1-18 12,237 5,251 129,092 -2,345 Q1-17 -1,734 2,419 -2,117 115,381 Lending & Lending & Amorti- Invested Long-term Long-term deposit deposit zation & surplus funding costs: funding costs: margin volume commission liquidity volume margin PAG
Slide 7: Strong Margins
STRONG MARGINS Continuously improving net interest margins (vs. 3M NIBOR) * 6.1 % 5.9 % 6.0 % 5.9 % 5.9 % 5.6 % 5.6 % 5.6 % 5.6 % 5.7 % 5.7 % 5.6 % 5.6 % 5.5 % 5.6 % 5.4 % 5.5 % 5.4 % 5.1 % 5.3 % 4.9 % 5.0 % 5.0 % 5.1 % 4.8 % 0.0 % -0.4 % -0.3 % -0.4 % -0.3 % -0.3 % -0.3 % -0.5 % -0.5 % -0.5 % -0.5
Slide 8: Loan Portfolio Quality
LOAN PORTFOLIO QUALITY Loss allowances according to IFRS 9 Individual losses, write-downs and reversals on loans & guarantees Nominal (NOKm) Nominal (NOKm) 85.7 82.9 IAS 39 IFRS 9 38.5 38.6 Stage 3 19.5 Stage 2 27.9 17.6 11.8 24.9 Stage 1 5.4 19.3 4.4 1.8 2.3 1.0 -1.0 01.01.2018 31.03.2018 -2.7 Q2-1
Slide 9: Funding | Overview
FUNDING | OVERVIEW Sources (NOKm) Σ = NOK 13,434m Historical development in deposits vs. lending (NOKm) Deposits 6,334 95% Senior debt 4,008 89% 87% 83% 86% 86% 78% 75% 10,066 9,870 T1 & T2 debt 320 9,544 9,448 63% 8,908 8,973 8,754 8,368 8,326 Other debt 712 8,525 8,163 7,670 7,647 7,631 7,429 Equi
Slide 10: Capital Requirements
CAPITAL REQUIREMENTS Core equity tier 1 ratio (CET1 ratio) Key comments on capital 17.7 % • The bank’s minimum CET1 ratio requirement 17.2 % 17.0 % CET1 Target 15.7 % is 15.2 %. 13.2 % Pillar 2 • The board has set a CET1 ratio target of 15.7 % 3.2% as of 31.12.2018. • The bank has the ability to man
Slide 11: Table of Contents
TABLE OF CONTENTS 1 HIGHLIGHTS AND FINANCIALS 2 BUSINESS AREAS 3 AMBITIONS FOR 2018
Slide 12: Norway's Leading Project Bank
NORWAY’S LEADING PROJECT BANK BUSINESS AREAS PROJECTS / CREDITS EXPOSURE AVG. PRINCIPAL Property lot financing Real NOKm 8,415 NOKm Building construction facilities estate Commercial property financing 67 % 30 M&A loans Bridge loans NOKm 1,744 NOKm Corporates Investment loans 14 % 30 Working capital
Slide 13: Real Estate | Activity Is Holding Up
REAL ESTATE | ACTIVITY IS HOLDING UP 67% 67 % Real estate credit exposure (NOKm) ∑ = NOK 8,535m Key comments Property lots • Continued strong deal flow has resulted in real estate 728 without houses credit exposure growth of NOK 626m in Q1-18 Property lots with 808 • Most of the growth took place wi
Slide 14: Real Estate | Managing Credit Risk
REAL ESTATE | MANAGING CREDIT RISK 67% 67 % ✓ Focus on presale, liquidity buffers and adequate equity contribution ✓ Presale requirement: if the price of unsold units falls by 50 % compared to the price of presold units, the sales amount must still be sufficient to cover the bank credit ✓ Presale qu
Slide 15: Real Estate | Residential Property Exposure
REAL ESTATE | RESIDENTIAL PROPERTY EXPOSURE 67% 67 % ∑ = NOK 6,444m A diversified portfolio * Geographical residential property exposure (NOKm) • The residential property exposure is diversified by Oslo West geographic area, project type and size 9% Oslo North • The portfolio is made up of 150 diffe
Slide 16: Corporates | Strong Deal Flow
10%14% CORPORATES | STRONG DEAL FLOW 9% Status Products Total exposure of NOK 1,744m within a variety of industries. INVESTMENT LOANS 61 customers with credit facilities in the range of NOK 0.1m Financing of investments for a client who backs the to NOK 150m. investment with a financially solid pare
Slide 17: Corporates | Market and Strategy
10%14% CORPORATES | MARKET AND STRATEGY 9% Market observations • Limited competition within corporate financing for small and medium-sized Norwegian enterprises (SMEs) • Large banks allocate capital to private customers, large corporates and large transactions • The bond market is no real alternativ
Slide 18: Shipping & Offshore | Diversified Portfolio
SHIPPING & OFFSHORE | DIVERSIFIED PORTFOLIO 8% Status Total S&O credit exposure & Loan to value (NOKm) * Σ = NOK 1,005m LTV * Share • 21 customers and a total of 32 vessels Product 213 57% 21% • Largest exposure is USD 13.4m and average Bulk 177 49% 18% commitment size is USD 5.9m • Two commitments
Slide 19: Shipping & Offshore | Market and Strategy
SHIPPING & OFFSHORE | MARKET AND STRATEGY 8% 8% Market observations • Right time to increase profitability • Few banks are currently supporting clients and offering financing in Pareto Bank’s targeted segment • Several shipping markets look promising • Growth ambition in 2018 is subject to attractiv
Slide 20: Table of Contents
TABLE OF CONTENTS 1 HIGHLIGHTS AND FINANCIALS 2 BUSINESS AREAS 3 AMBITIONS FOR 2018
Slide 21: Solid Foundation and Strong Performance
SOLID FOUNDATION AND STRONG PERFORMANCE Result after tax (NOKm) Return on Equity * CET1 ratio ** 78.3 79.2 17.7 % 16.7 % 17.0 % 73.3 16.0 % 14.4 % 15.1 % 15.2 % 48.2 14.3 % Q1-16 Q1-17 Q4-17 Q1-18 Q1-16 Q1-17 Q4-17 Q1-18 31.03.2016 31.03.2017 31.12.2017 31.03.2018 Net interest income (NOKm) Cost/inc
Slide 22: Revised Financial Targets
REVISED FINANCIAL TARGETS 31.03.2018 STATUS 31.12.2018 TARGET Activity holding up and continued GROWTH LENDING growth in residential property. NOK 618m ~NOK 1,000m High activity materializing in increased corporate lending. Growth on high margins with cost 15.2 % > 14.0 % * ROE efficiency increases
Slide 23: Well Positioned with Growth on Stable Margins
WELL POSITIONED WITH GROWTH ON STABLE MARGINS STRONG • Net lending growth NOK 618m on a stable, high net interest margin of 5.6 % LENDING • Real estate activity holding up with net growth of NOK 626m GROWTH • Strong deal flow in corporate finance and lending growth of NOK 138m STABLE • Return on equ
Slide 24: Appendix
(Pareto bank
Slide 25: Largest Shareholders as of 09.04.2018
LARGEST SHAREHOLDERS AS OF 09.04.2018 # Investor 09 April 2018 # of shares % total • The Company has 58,619,688 shares 1 Pareto AS 8,921,873 15.22 % 2 Pecunia Forvaltning AS 8,013,650 13.67 % outstanding 3 Apollo Capital Management 5,545,998 9.46 % • One class of shares where each 4 Saga Tankers ASA
Slide 26: The Share
THE SHARE Earnings per share (NOK) Book equity per share (NOK) 1.34 35.41 35.16 1.30 1.24 31.44 27.62 0.93 Q1-16 Q1-17 Q4-17 Q1-18 Q1-16 Q1-17 Q4-17 Q1-18 Price / Earnings Price / Book 1.20x 8.1x 7.5x 1.10x 1.12x 7.2x 6.9x 1.05x Q1-16 Q1-17 Q4-17 Q1-18 Q1-16 Q1-17 Q4-17 Q1-18 PAGE 26 Key figures for
Slide 27: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Q1-18 Q4-17 Q3-17 Q2-17 Q1-17 Net Interest income 129.1 128.3 138.7 124.6 115.4 Total other operating income 4.9 2.1 3.2 7.8 18.9 Total net income 134.0 130.3 141.9 132.5 134.3 Total other operating expenses 31.0 33.5 24.2 26.8 28.0 Operating result before losse
Slide 28: Quarterly Balance Sheet
QUARTERLY BALANCE SHEET BS (NOKm) Q1-18 Q4-17 Q3-17 Q2-17 Q1-17 Loans to credit institutions 405 357 165 350 884 Loans to customers 10,066 9,448 9,870 9,544 8,973 Bonds and other securities 2,802 3,174 3,331 3,309 4,094 Shareholdings in associated companies 37 36 42 40 40 Other assets 124 90 68 67 5
Slide 29: Overview Portfolio Composition
OVERVIEW PORTFOLIO COMPOSITION Gross credit exposure (NOKm) ∑ = NOK 12,605m Number of active clients ∑ = # 610 Interest contribution (NOKm) * ∑ = NOK 506m Margin over interbank rate ** Real Estate 8,415 Real Estate 255 Real Estate 360 Corporates 1,744 Corporates 61 Corporates 69 Securities 1,254 Sec
Slide 30: Funding | Customer Deposits
FUNDING | CUSTOMER DEPOSITS Deposits by product ∑ = NOK 6,329m Deposits by type ∑ = NOK 6,329m 896 Floating rate retail 765 Depositors (#) 3,805 2,303 2,554 Floating rate corporate 2,272 Amount (NOKm) 2,011 4,319 1,929 Savings with restrictions 0% 20 % 40 % 60 % 80 % 100 % 1,495 Retail Corporate 1,4
Slide 31: Funding | Market Funding
FUNDING | MARKET FUNDING Market funding maturities - net of own holdings (NOKm) Credit spreads (bps) 200 180 200 160 120 140 120 100 80 1,000 1,000 1,000 60 500 500 40 20 0 2018 2019 2020 2021 2022 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Senior Call
Slide 32: Surplus Liquidity
SURPLUS LIQUIDITY Bond portfolio (NOKm) ∑ = NOK 2,844m Key comments • The bank’s liquidity is comprised of cash 1% and highly liquid bonds 3% • High share of government & PSEs to reduce credit spread risk and increase short-term liquidity • Large share of covered bonds, mainly short to medium maturi
Slide 33: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Q1-18 ∑ = NOK 12,648m Q1-17 ∑ = NOK 11,728m Key comments None / very low risk 5,713 None / very low risk 4,983 42 % 45 % • 88 % of the portfolio is considered to Low risk 5,438 43 % Low risk 4,638 40 % have low to none/very low risk risk Moderate risk 1,185 9% Mode
Slide 34: Commitments by Size
COMMITMENTS BY SIZE Q1-18 ∑ = NOK 12,648m Q1-17 ∑ = NOK 11,728m Key comments • Maximum size on a single customer 10 % < 5 396 3% <5 544 of total capital (NOK 232m) 5% • Maximum size on group / consolidated 5 - 10 576 5% 5 - 10 646 6% basis 15 % of total capital (NOK 348m) 10 - 25 2,004 16 % 10 - 25
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(Pareto bank