Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q1 2017 Earnings Presentation
74 slides from Sparebank 1 Nord-norge's earnings presentation, May 5, 2017
Slide 1: Quarterly presentation Q1 2017
Quarterly presentation Q1 2017 Tromsø/Oslo 5. mai 2017
Slide 2: Very good result
Very good result PRE-TAX PROFIT NOK 391 mill (NOK 344 mill) RETURN ON EQUITY 11.6 % (11.0 %) REDUCED COSTS -1.2 % compared with average quarterly costs 2016 exclusive of restructuring costs, business expansions and financial activity tax ) MODERATE LOAN LOSSES NOK 44 mill (NOK 24 mill), NOK 64 mill
Slide 3: Very good profitability and financial strength
Very good profitability and financial strength Return on Return on equity / Common equity Equity Tier I % incl share of result 15,0 % 15,3 % 13,9 % 12,5 % 12,3 % 13,1 % 10,3 % 12,2 % 12,0 % 11,6 % 9,0 % 9,1 % 2012 2013 2014 2015 2016 2017 3 Common Equity Tier I % incl share of result Return on equit
Slide 4: Quarterly summary - profit and loss account
Quarterly summary - profit and loss account (Amounts in NOK million) 1Q17 4Q16 3Q16 2Q16 1Q16 Net interest income 422 434 423 401 386 Net fee-, commision and other operating income 224 234 228 249 213 Net income from financial investments 115 116 157 156 80 Total net income 761 784 808 806 679 Total
Slide 5: Improved profitability
Improved profitability 20 49 -5 -8 -1 -9 (Amounts in NOK million) 391 345 4Q16 NII incl provision from NCI ekscl provision Investment income Other operating Costs Losses 1Q17 Boligkreditt from Boligkreditt income 5
Slide 6: Good results from subsidiaries within the core business
Good results from subsidaries within the core business SpareBank 1 Finans Nord-Norge EiendomsMegler 1 Nord-Norge • Pre-tax profit NOK 34 mill (NOK 33 mill) • Pre-tax profit NOK 1,4 mill (NOK 1,7 • Good growth and increased profitability mill) • Total assets: NOK 4 863 mill kr (4 542 mill) • Market l
Slide 7: Strategic measures have been effective…
Strategic measures have been effective… Core business cultivated: Exit from Russia, Nord Kapital- Physical presences reduces forvaltning and Bank 1 Oslo. SNN from 71 branches in 2012 to Invest wound up and downsizing 38 in 2016 of corporate lending in BN Bank. Improved SME service Cost reduction thr
Slide 8: …and more have been initiated
…and more have been initiated Redesign of work procedures Growth measures for the (LEAN) with the use of digital Group, including subsidiaries, assistants (robots) and the SpareBank 1 Group Development of a Norwegian Competence, capacity and digital wallet through the tools for digital sales and mer
Slide 9: Profitable lending growth…
Profitable lending growth… Retail incl. SpareBank 1 Boligkreditt 27 % 73 % 70 887 64 690 60 243 7,4 % 9,6 % Retail incl. SpareBank 1 Boligkreditt 31.03.15 31.03.16 31.03.17 Business/ Public Business/public market 37 % 63 % 26 393 25 168 25 017 -0,6 % 5,5 % Retail excl. SpareBank 1 Boligkreditt 31.03
Slide 10: …and good deposit growth
…and good deposit growth Business Retail banking market 30 699 28 739 27 110 6,0 % 6,8 % 15 395 13 752 -1,5 %13 546 13,6 % 31.03.15 31.03.16 31.03.17 31.03.15 31.03.16 31.03.17 Public Business 28,4 % 8 238 -0,9 % 8 167 49,9 % Retail 5 494 56,6 % Public 15,1 % 31.03.15 31.03.16 31.03.17
Slide 11: Strengthened position in a growth region
Strengthened position in a growth region Relatively small oil sector (approx. 2 Higher GDP-growth compared to % of the economy). Increased Norway as a whole estimates for oil and gas resources in the Barents sea Seafood export is a increasingly Regional house prices lower than important part of the
Slide 12: Financial targets and future outlook
Financial targets and future outlook Continued strong competition. Decreased funding cost is expected to contrbute NRI positively in 2017 (assuming stable capital market rates) Average targeted cost increase 0 %. Reduced costs compared with 2015 expected in COSTS 2017 (excl. restructuring costs, bus
Slide 13: Contact information
Contact information: SpareBank 1 Nord-Norge P o Box 6800 N-9298 Tromsø CEO Jan-Frode Janson CFO Rolf Eigil Bygdnes Tel + 47 909 75 183 Tel +47 905 19 774 Homepage and internet bank: www.snn.no Equity capital certificates in general: www.egenkapitalbevis.no
Slide 14: Appendix
Appendix 1. About SpareBank 1 Nord-Norge 2. Main financial figures 3. Credit area 4. Liquidity 5. Macro and economic trends 6. SpareBank 1 Group and Alliance 14
Slide 15: SpareBank Nord-Norge
SpareBank 1 Nord-Norge 354 900 retail customers Established in 1836 25 336 corporate customers Sparebanken Nord-Norge since 1989 14 844 Clubs and associations Listed on Oslo Stock Exchange since 1994 Lending volume NOK 96,3 bill Financial group offering a complete SpareBank 1 Alliance since 1996 pro
Slide 16: Organisation of the financial services Group
Organisation of the financial services Group SpareBank 1 Nord-Norge Tilknyttede og felleskontrollerte selskaper Datter- og datterselskaper SpareBank 1 Gruppen AS SpareBank 1 Finans Nord-Norge AS 19,5 % | Finanskonsern 100 % | Lån/forbruksfinansiering/leasing SpareBank 1 Boligkreditt AS Eiendomsmegle
Slide 17: Equity Certificates (EC) – geographic holder structure
Equity Certificates (EC) – geographic holder structure 10,3 13,8 13,8 20,3 28,6 32,0 64,1 65,6 65,5 61,1 53,2 50,0 25,5 19,0 20,6 20,7 18,6 18,2 2012 2013 2014 2015 2016 1Q17 Holders residing in Northern Norway Other Norwegian holders Foreign holders 17
Slide 18: The largest EC holders
The 20 largest EC holders Number of Share of total Change in Equity Certificate holders Equity Certificates Equity Certificate capital number of ECs PARETO AKSJE NORGE 3.095.780 3,08 % -746.547 VERDIPAPIRFONDET DNB NORGE (IV) 2.875.237 2,86 % -412.877 MP PENSJON PK 2.690.503 2,68 % -30.000 THE NORTH
Slide 19: The largest EC holders residing in Northern Norway
The 20 largest EC holders residing in Northern Norway Number of Share of total Equity Certificate holders Equity Certificates Equity Certificate capital SPAREBANKSTIFTELSEN SPAREBANK 1 NORD-NORGE 1.411.606 1,41 % KARL DITLEFSEN 547.543 0,55 % NORGES RÅFISKLAG 423.175 0,42 % DAHL FISKERI AS 374.883 0
Slide 20: Why invest in SpareBank 1 Nord-Norge?
Why invest in SpareBank 1 Nord-Norge? o The Northern Norwegian macroeconomy is showing few signs of weakening o Focus on core business is reducing volatility in the results o Strong regional base and community part-ownership providing a very good competitive position o The SpareBank 1 Alliance is co
Slide 21: Financial figures – additional information
Financial figures – additional information 21
Slide 22: Key figures
Key figures Cost/income ratioCost/income (Group) ratio 54,23 % Return on equity 47,19 % Return on equity / Common Equity Tier I % incl share of result 44,36 % 42,90 % 42,84 % 15,0 % 15,3 % 13,9 % 12,5 % 12,3 % 13,1 % 10,3 % 12,2 % 12,0 % 11,6 % 2013 2014 2015 2016 2017 9,0 % 9,1 % Loans in default a
Slide 23: Capital adequacy ratio – Group
Capital adequacy ratio – Group CET 1 incl floor Minimum regulatory CET 1 level 15,1 % 15,0 % 15,3 % 31.12.17 13,9 % 13,8 % 14,2 % 13,5 % 1,5 % Lower limit Pillar 2 2,5 % Capital conservation buffer 2,0 % Counter cyclical buffer 3,0 % Systemic risk buffer 4,5 % 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 23
Slide 24: Profit and loss account - Group
Profit and loss account - Group (Amounts i n NOK mi l l i on) 31.03.17 31.03.16 31.12.16 Net interest income 422 386 1 644 Net fee-, commision and other operating income 224 213 924 Net income from financial investments 115 80 509 Total net income 761 679 3 077 Total costs 326 311 1 320 Result befor
Slide 25: CET1-minimum regulatory capital and management buffer
CET1-minimum regulatory capital and management buffer 25 04.05.2017
Slide 26: Net interest income - Group
Net interest income - Group NOK mill 474 469 465 447 448 40 434 42 47 57 47 48 423 434 422 390 386 401 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Net interest income Commissions from Boligkreditt 26
Slide 27: Quarterly results – net interest income
Quarterly results – net interest income (Amounts i n NOK mi l l i on) 1Q17 4Q16 3Q16 2Q16 1Q16 Interest and similar income from loans to and claims on credit institutions 2 -2 4 2 2 Interest and similar income from loans to and claims on customers 600 616 593 584 578 Interest and similar income from
Slide 28: Changes in net interest income
Changes in net interest income 17 3 -8 4 -6 -13 -1 Mill NOK 474 469 NII 4Q16 Deposits margin Deposits margin Lending margin Lending margin Volume Days Other NII 1Q17 corporate retail corporate retail Including commisions from Boligkreditt. Measured against average funding cost
Slide 29: Lending margin, Parent bank
Lending margin, Parent bank The interest margin is defined as the difference between the customer lending interest rate and average 3 month NIBOR
Slide 30: Customer deposit, Parent bank
Customer deposit, Parent bank The interest margin is defined as the difference between average 3 month NIBOR and the customer deposit interest rate
Slide 31: Net fee-, commission- and other operating income
Net fee-, commission- and other operating income Excl. commisions from Boligkreditt NOK mill 202 194 186 177 165 165 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Slide 32: Net fee- and other operating income
Net fee- and other operating income 1Q17 4Q16 3Q16 2Q16 1Q16 (Amounts i n NOK mi l l i on) Payment facilities 63 63 76 63 61 Insurance products 41 44 37 37 39 Guarantee commissions 4 4 5 5 5 Real estate broking 26 33 35 39 26 Portefolio commission 14 13 12 11 11 Other commissions 16 16 21 24 14 Comm
Slide 33: Income from financial investments
Income from financial investments Group (Amounts in NOK million) 1Q17 4Q16 3Q16 2Q16 Dividends 0 1 0 73 Income from joint ventures 65 76 94 109 Gains/losses and net value changes on shares 13 14 20 -41 Net value changes on bonds, foreign exchange and fin.derivatives 35 26 46 18 Gains/losses and net
Slide 34: Record high 1Q result for SpareBank 1 Gruppen
Record high 1Q result for SpareBank 1 Gruppen Pre-tax profit Q1 2017 (MNOK) • Improved profitability in all Group companies • Highest growth in SpareBank 1 Skadeforsikring (non-life insurance). Pre-tax profit of NOK 282 mill. kr. (207 mill. ) • Fully digitalized sales concepts within insurance Retur
Slide 35: Group operating costs
Group operating costs NOK mill. Total costs 451 375 318 316 326 311 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Slide 36: Group operating costs
Group operating costs (Amounts i n NOK mi l l i on) 31.03.17 31.03.16 Change Wages and salaries 133 132 1 Pension costs 12 8 4 Social costs 27 23 4 Total personnel costs 172 163 9 Administration costs 96 95 1 Total personnel- and general administration costs 268 258 10 Depreciation and write-downs o
Slide 37: Operating expenses
Operating expenses (Amounts in NOK million) 1Q17 4Q16 3Q16 2Q16 1Q16 Wages and salaries 133 136 139 133 132 Pension costs 12 24 12 10 8 Social costs 27 35 19 19 23 Total personnel costs 172 195 170 161 163 Development costs 32 25 31 31 32 Electronic data processing costs 19 18 19 19 18 Marketing cos
Slide 38: Moderate losses on loans and guarantees
Moderate losses on loans and guarantees Mill kr 0,22 % 321 0,23 % 0,19 % 0,18 % 213 200 44 2014 2015 2016 31.03.17 Net losses Net losses in % of gross lending incl Boligkreditt
Slide 39: Core banking operations
Core banking operations- (excl. income from financial investments) Group (Amounts i n NOK mi l l i on) 1Q17 4Q16 3Q16 2Q16 1Q16 Net interest income 422 434 423 401 386 Net fee- and commission income 190 191 206 204 185 Other operating income 34 43 22 45 28 Total costs excl restructuring costs 326 34
Slide 40: Group companies result before tax
Group companies result before tax (Amounts i n NOK 1000) 31.03.17 31.03.16 SpareBank 1 Finans Nord-Norge AS 34 180 33 386 SpareBank 1 Regnskapshuset Nord-Norge AS 6 618 3 622 EiendomsMegler 1 Nord-Norge AS 1 359 1 685 SpareBank 1 Nord-Norge Forvaltning ASA 598 601 Subsidiaries core operations 42 755
Slide 41: Key figures balance sheet
Key figures balance sheet (Amounts in NOK million) 31.03.17 31.03.16 Change Change % Total assets 92 476 88 688 3 788 4,3% Gross lending 71 294 65 357 5 937 9,1% Loans and advances to 97 280 89 707 7 573 8,4% customers incl SpareBank 1 Deposits from customers 54 261 50 523 3 738 7,4%
Slide 42: Credit area
42 Credit area SpareBank NORD-NORGE
Slide 43: Lending portfolio - comments
Lending portfolio - comments o Good growth in retail lending, with focus on commitments qualifying for SpareBank 1 Boligkreditt (covered bond company) o Moderate growth in corporate market lending last 12 months o The portfolio and new commitments in corporate sector lending are diversified o Unchan
Slide 44: Distribution on segments shows good diversification
Distribution on segments shows good diversification Loan portfolio including Boligkreditt SPB1 Boligkreditt 27 % Construction building 2 % Other service industry 2 % Agriculture, fisheries, fish farming 5 % Other 18 % Wage-earners 46 % Transport and wholsesale 6 % Property Maritime sector 0 % manage
Slide 45: Portfolio - exposure as of 31.03.17, parent bank
Portfolio - exposure as of 31.03.17, parent bank 50.000 45.000 42.866 40.000 35.000 30.000 27.654 NOK mill 25.000 22.492 20.000 15.000 10.000 7.642 5.000 1.171 1.781 647 124 428 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired 45 Retail market Corporate market SB1 Boligk
Slide 46: Portfolio – changes last 12 months, parent bank
Portfolio – changes last 12 months, parent bank 6.000 5.174 5.000 4.000 3.000 NOK mill 2.000 1.508 967 1.000 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired -175 -6 -97 -109 -499 -638 46-1.000 SB1 Boligkreditt Retail market Corporate market SB1 Næringskreditt
Slide 47: Portfolio - exposure distributed by size
Portfolio - exposure distributed by size Loans distributed by size of exposure and share of total exposure Share of loanexposure Mar 2017 Share of loanexposure Mar 2016 80,0 % 77,9 % 10,3 % 10,3 % 5,5 % 6,6 % 4,3 % 5,2 % Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Numbers includes SB 1
Slide 48: Portfolio – LTV mortgage loans
Portfolio – LTV mortgage loans 100,0 % 92,6 % 91,6 % • 97.5 % of exposures are 90,0 % within 85 % of the 80,0 % collaterals market value 70,0 % 60,0 % 50,0 % • Exposures above 85 % are 40,0 % 2.5 % 30,0 % 20,0 % 10,0 % 4,9 % 5,3 % 1,2 % 1,5 % 1,3 % 1,6 % 0,0 % Below 70 % 70 - 85% 85 - 100 % Above 10
Slide 49: Loan approvals – Mortgage regulation
Loan approvals – Mortgage regulation 10,0 % 9,3 % • The Bank is within the 9,0 % 9,2 % mortgage regulation 8,0 % 8,0 % deviation limit: 6,8 % 7,3 % 7,0 % ‒ Maximum 10 % for Norway 6,0 % excl. Oslo ‒ Maximum 8 % for Oslo in 5,0 % isolation 4,0 % 3,0 % • New regulations effective 2,0 % from 01.01.2017
Slide 50: Portfolio – Commercial Real Estate
Portfolio – Commercial Real Estate Housing Ass.; 5,2 % Above 250 MNOK; 5,09% 0 - 5 MNOK; Residential 13,93% Others (small commitments); Development / 100 - 250 MNOK; 28,4 % Investment; 15,6 % 15,26% Shops / 5 - 30 MNOK; shopping 34,45% centres; 15,0 % Combination- buildings; 10,0 % 30 - 100 MNOK; 31
Slide 51: Portfolio – Oil related exposure
Portfolio – Oil related exposure • Oil related exposure amounts to NOK 1,385 Industry; 9,9 % Other; 3,6 % Supply base; 25,6 % mill • The exposure represents 1.4 % of total lending incl. Næring- and Boligkreditt • Average weighted probability of default 1.27 % • A total of NOK 81.3 mill are non-perfo
Slide 52: Portfolio – Offshore Supply Vessels (OSV)
Portfolio – Offshore Supply Vessels (OSV) • OSV amounts to NOK 844 mill AHTS; 5,5 % • Average weighted probability of default Standby/area contingency; 42,5 % 1.37 % • 8 vessels in total* • Weighted age 6.4 years* • Average weighted contract length 5.7 PSV; 52,0 % years* incl. one vessel laid up • S
Slide 53: Portfolio – Supply bases
Portfolio – Supply bases Other; 3,6 % • Supply base exposure amounts to NOK 354 Industry; 9,9 % Supply base; 25,6 % mill • Average weighted probability of default 2.05 % • Customers with long term contracts with solid and strong partners gives good cash flows in the short and long term Offshore supp
Slide 54: Portfolio – Industry and Other
Portfolio – Industry and Other Other; 3,6 % Industry; 9,9 % • The sector “Industry and Other” amounts Supply base; 25,6 % to NOK 187 mill, divided into Industry NOK 137 mill and Other NOK 50 mill • Average weighted probability of default: Industry 1.37 % and Other 3.66 % • A total of NOK 81.3 mill n
Slide 55: Loan losses: The Group's write-downs
Loan losses: The Group's write-downs Write-downs 1st quarter 1st quarter 2016 2015 2017 2016 Individual write-downs Retail market -1 2 4 0 Corporate market 14 -3 32 165 SpareBank 1 Finans Nord-Norge 3 1 53 8 Other group units - - 0 -19 Total individual write-downs 16 0 89 154 Collective write downs
Slide 56: Liquidity
56 Liquidity SpareBank NORD-NORGE
Slide 57: Funding instruments 31.03.2017
Funding instruments 31.03.2017 T1 HYBRID, NOK 3% OTHER LIABILITIES, NOK BONDS NOK 62 % 0% SUBORDINATED LOAN CAPITAL, NOK 4% SEK BONDS 4% USD BONDS 2% CHF BONDS 9% EUR BONDS 16 % 57
Slide 58: Maturity profile 31.03.2017
Maturity profile 31.03.2017 Capital markets funding (excl. SPABOL) • Good diversification in terms of maturities 5.000 4.500 • NOK 23 713 mill in capital 4.000 market funding exclusive of SB1 Boligkreditt 3.500 3.000 • SpareBank 1 Boligkreditt is an Mill NOK 2.500 important funding source. 2.000 Mor
Slide 59: Liquidity portfolio 31.03.2017
Liquidity portfolio 31.03.2017 59
Slide 60: Macro and Economic trends
60 Macro and Economic trends SpareBank NORD-NORGE
Slide 61: Stable, low unemployment
Stable, low unemployment 61 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 62: Seafood – strong export growth
Seafood – strong export growth • 2.5 % growth in seafood export Export value of fish from Northern-Norway value from Northern Norway NOK Mill during 1st quarter 2017 vs. 1st quarter 2016. • Increased prices is the contribution to the growth, not volume. • More than 70 % of total export of seafood ar
Slide 63: Tourism – growth in overnight stays
Tourism – growth in overnight stays • Total number of overnight stays is increasing, and Northern Norway take anm increasing part of the total overnight stays in Norway. • Firm growth in foreign overnight stays, and strong contribution from winter tourism. Growth has been specially strong in Troms c
Slide 64: Oil and gas – new fields increase activity
Oil and gas – new fields increase activity • Four fields in production: Norne, Snøhvit, Skarv and Goliat Demand from oil companies ‒ First oil field opened in Barents Sea. Repurchases will further • Aasta Hansteen og Polarled increase the total demand ‒ Polarled – pipeline completed in 2015 ‒ Produc
Slide 65: The activity in construction is good
The activity in construction is good 65 Source: Statistics Norway, «Omsetning i bygge- og anleggsvirksomhet og Ordreindeks for bygge- og anleggsvirksomhet»
Slide 66: Retail sales grow more in Northern Norway
Retail sales grow more in Northern Norway Kilde: SSB, retail sales 66 04.05.2017
Slide 67: Regional house prices and price growth lower than the Norwegian average
Regional house prices and price growth lower than the Norwegian average, but still high House prices (March 2017) Average price, NOK per m2, all units 67 Source: Eiendom Norge, Finn.no and Eiendomsverdi AS, «Boligprisstatistikk»
Slide 68: Credit growth corporates
Credit growth corporates 68 04.05.2017
Slide 69: Credit growth households
Credit growth households 69 04.05.2017
Slide 70: Deposit growth corporates
Deposit growth corporates 70 04.05.2017
Slide 71: Deposit growth households
Deposit growth households 71 04.05.2017
Slide 72: SpareBank 1 Group and Alliance
SpareBank 1 Group and Alliance 72
Slide 73: The idea behind the SpareBank 1 Alliance
The idea behind the SpareBank 1 Alliance The banks in the alliance want to: Achieve Share Achieve Retain their own Still be able to exploit critical level development economies name and continue each bank’s proximity to of costs of scale as independent their local market competence legal entities 73
Slide 74: The SpareBank 1 Alliance
The SpareBank 1 Alliance SAM-SPAR SpareBank 1 Mobilbetaling AS SpareBank 1 Gruppen AS (SB1G) Banksamarbeidet DA (BS) (mCASH) SpareBank 1 Forsikring AS EiendomsMegler 1 SpareBank 1 Kredittkort AS (Life insurance) Norge AS (Credit card) SpareBank 1 Skadeforsikring AS SpareBank 1 SpareBank 1 Boligkredi
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