Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Debt Investor Presentation (December 2021)
61 slides from Sparebank 1 Sor-norge Asa's debt investor presentation, December 2021
Slide 1: SR-Bank SR-Boligkreditt
SR-Bank SR-Boligkreditt • SR-Bank SR-Boligkreditt
Slide 2: Agenda
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 Banks Market share • Market cap: NOK 34.1 Billion 1 DnB Bank 27.2 • Total assets: NOK 304.4 Billion 2 Nordea Bank Norge (Swedish) 12.6 • Credit rating: 3 Danske Bank (Danish) 6.4 ‐ Moody’s A1 (stable) • Sustainability rating 4 Handelsbanken (Swedis
Slide 5: Finance group for South of Norway
Finance group for South of Norway Åsane Bergen Sotra Fana Nydalen 0% Oslo Skøyen Ensjø 134 134 134 Stord Husnes Ølen +18% Aksdal 38 Haugesund 35 32 +48% Åkra Kopervik +12% 27 Finnøy 21 22 22 20 18 Randaberg Jørpeland Stavanger* Sola +24% Sandnes 9 Ålgård 8 7 Bryne Varhaug Egersund Grimstad Rogaland
Slide 6: SRBNK share
SRBNK share Development in Price/Book Relativ share price development • International ownership is 22.2% 140 1,5 200 Price Index 100 = dec 31st 2020 per 4. quarter 2021. 130 P/B 1,4 180 120 1,3 160 110 1,2 140 • Total market value at 4. quarter 100 1,1 NOK 120 p/B 90 1,0 2021 is NOK 34.1 billion. 80
Slide 7: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1* 18.3% 18.1% 17.9% 17.6% 17.4% 13.2% 14.0% 11.6% 11.7% 9.7% Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Cost to income ratio Earnings per share (NOK) 40.1% 40.9% 41.9% 3.13 3.41 39.2% 37.9% 2.74 2.80 2.30 Q4 20 Q1 21 Q2 21 Q3
Slide 8: Key figures – annual development
Key figures – annual development Return on equity CET 1* 14.0% 18.3% 17.4% 12.6% 17.0% 11.3% 15.1% 14.7% 11.0% 6.4% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Cost to income ratio Earnings per share (NOK) 40.7% 40.9% 40.2% 12.1 12.1 37.9% 38.3% 9.0 8.2 5.9 2017 2018 2019 2020 2021 2017 2018 2
Slide 9: Key figures and financial targets
Key figures and financial targets Return on equity CET 1* 18.3% 17.4% 16.7% 12.6% > 12.0% 6.4% 2020 2021 Target 2020 2021 Target Cost to income ratio Dividend share* 38.3% 40.2% < 40.0% 50.0% 49.8% 49.7% 2020 2021 Target 2020 2021 Estimate *The board exercised its special authorisation from April 20
Slide 10: Key figures
Key figures 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Return on equity after tax (%) 12.6 6.4 14.0 11.7 13.2 11.6 9.7 Net interest margin (%) 1.35 1.50 1.32 1.31 1.36 1.40 1.40 Impairments on loans in % of gross loans 0.09 0.95 -0.04 0.07 0.10 0.22 0.50 Loans and financial commit
Slide 11: Income statement
Income statement Group Income Statement (MNOK) 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Net interest income 3,990 4,142 1,005 989 1,001 995 994 Net commission and other income 1,717 1,396 455 406 454 402 370 Net income on investment securities 1,037 699 344 234 243 216 240 Total
Slide 12: Loan portfolio as at 31 December 2021
Loan portfolio as at 31 December 2021 • Gross loans increased to NOK 230.3 billion as Agriculture / forestry / fishing 4.0% 3.8% at 31 December 2021 from NOK 219.2 billion 1.8% at the same time the year before. Supply and construction 2.0% • 12-month growth in loans of 5.1%. Renewable / Green engage
Slide 13: Lending volume and 12 months growth
Lending volume and 12 months growth 12 months growth % Volume in NOK billion Retail market SME and Agriculture Corporate market 8.2% 6.8% 6.3% 6.4%* 6.6% 5.9% 5.2% 6.0% 5.9% 4.5% 4.5% 5.8% 5.4% 3.6% 3.1% 4.9% 2.2% 4.7% 4.6% 1.7% 1.6% 0.5% -0.2% 0.1% -0.7% 144.0 145.6 -1.3% 137.6 139.2 140.3 142.7 13
Slide 14: Deposit volume and 12 months growth
Deposit volume and 12 months growth 12 months growth % Volume in NOK Billion Retail market SME and Agriculture Corporate market 46.6% 43.2% 9.1% 9.4% 9.6% 8.9% 8.4% 21.4% 21.8% 20.4% 7.3% 7.5% 7.4% 19.5% 20.0% 28.2% 26.7% 6.0% 21.1% 14.4% 14.1% 10.1% 10.7% 12.0% 5.5% 55.0 59.0 58.0 58.2 59.0 63.4 62
Slide 15: Lending and deposit margins
Lending and deposit margins Corporate market SME and Agriculture Retail market Lending margins Deposit margins 1.12% 3.23% 3.07% 0.94% 2.98% 3.10% 2.99% 2.92% 2.94% 0.66% 2.83% 0.54% 2.93% 2.77% 2.74% 2.86% 2.72% 0.42% 2.84% 0.30% 2.62% 0.19% 0.20% 0.26% 0.21% 0.10% 0.11% 2.65% 2.66% -0.05% -0.07% -
Slide 16: 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 financial commitments Changes in gross loans and financial commitments defined as Stage 3 1.9% 1.9% 1.8% 1.8% 1.5% 4,991 5,109 4,943 4,905 0.49% 0.22% 1,261 0.10% 0.07% 1,252
Slide 17: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Corporate market 228 1,854 26 35 52 115 248 SME and Agriculture 3 87 -21 11 7 6 18 Retail market -39 89 -29 -9 -1
Slide 18: Solid capital ratio
Solid capital ratio ROE ROE ROE • The authorities’ minimum requirement for the CET 1 capital 14.0% 6.4% 12.6% ratio is 15.2%, including a 1.0% management buffer as at 31 December 2021 21.7% 20.4% 20.5% CET 1 19.9% 16.2% • The group’s internal target CET 1 capital ratio target is 16.7% 18.6% 18.9% in
Slide 19: Solid capital
Solid capital Leverage ratio Risk weighted density 42,6 % 7,3 % 6,8 % 31,7 % 5,0 % 4,9 % 4,8 % 4,6 % 24,8 % 21,9 % 20,5 % 21,0 % SR-Bank DnB Nordea SHB Swedbank SEB SR-Bank DnB Nordea Swedbank SEB SHB Peer figures as of 30 September 2021 SR-Bank 19 SR-Boligkreditt
Slide 20: Funding
Funding • NSFR* 124% • LCR** 168% • NOK 20.4 billion net refinancing need over the next 12 months • Deposit to loans ratio 59.8% • MREL requirement 34.4% Annual funding maturity *The net stable funding ratio (NSFR) is defined as available stable funding relative to necessary stable funding. NSFR is
Slide 21: Agenda
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 22: 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. • Loans are transferred to SR-Boligkreditt as true sale on a non-recourse basis. • Rated Aaa
Slide 23: 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 • Max 75% LTV
Slide 24: Cover pool characteristics (nominal values)
Cover pool characteristics (nominal values) Assets/status • 100 % mortgages on Norwegian private residential properties • 100 % performing loans Cover pool • NOK 91.4 bn: Residential mortgages 89.4 (97.9%), Substitute assets 1.9 bn (2.1%) Mortgages and rate • 47,965 loans at a weighted average inter
Slide 25: Cover pool characteristics
Cover pool characteristics Current LTV Loan performance 28,3 % 0% 20,4 % Performing loans 18,4 % 17,1 % 14,3 % Delinquent loans (arrears 31 to 90 days) Gross non performing loans 100 % (arrears 90 days +) 0,7 % 0,8 % 0-40 % 40-50 % 50-60 % 60-70 % 70-80 % 80-100 % 100 % + By geography By property ty
Slide 26: Agenda
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 27: Key economic indicators
Key economic indicators Economic Indicators (%) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021P 2022P 2023P 2024P GDP mainland, annual change (%) 1,9 3,7 2,3 2,2 1,4 0,9 2,0 2,2 2,0 -2,3 4,1 4,1 2,4 1,9 Household consumption, annual change (%) 2,4 3,5 2,8 2,1 2,7 1,1 2,2 1,6 1,1 -6,6 4,2 8,5
Slide 28: PMI
PMI Business survey per county. Main index. 75 70 65 60 55 50 45 40 Q4 14 Q3 15 Q4 2015Q1 2016Q3 2016Q4 2016Q2 2017Q3 2017Q4 2017Q2 2018Q3 2018Q4 2018Q2 2019Q3 2019Q4 2019Q2 2020Q3 2020Q4 2020Q2 2021Q3 2021Q4 2021 Total Rogaland Agder Vestland Oslo Neutral SR-Bank 28 SR-Boligkreditt
Slide 29: Housing market
Housing market House prices (Index des 2013=100) Index change 12 month (%) Prices by City per Square Meter 205 130 (EUR) 125 8.335 185 120 165 115 110 145 105 4.931 4.637 100 4.168 125 3.671 95 105 90 85 85 jun.15 jun.16 jun.17 jun.18 jun.19 jun.20 jun.21 des.14 des.15 des.16 des.17 des.18 des.19 de
Slide 30: High growth in retail trade in Norway during the pandemic, but has slowed
High growth in retail trade in Norway during the pandemic, but has slowed Covid-19 has had a big impact. High growth in groceries have turned to negative growth Retail sales (excl. auto), change in turn-over from same 2-month period previous year. Last obs: july-aug 2021 20,0 % 16,0 % 12,0 % 8,0 % 4
Slide 31: Petroleum activity in Norway
Petroleum activity in Norway Petroleum activity on Norwegian Continental Break-even Global primary energy consumption 140 Shelf. BNOK (2022 NOK) 31% 400 120 362 27% 350 323 25% 100 300 263 269 260 259 258 250 255 242 244 250 233 239 80 BNOK 200 60 150 40 100 7% 6% 50 4% 20 0 2014 2015 2016 2017 2018
Slide 32: Lower unemployment due to reopening of the economy
Lower unemployment due to reopening of the economy Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 12 10 8 6 4 2 0 2009 2011 2013 2015 2017 2019 2021 Oslo Rogaland Vestland Agder Norway Source: NAV og SSB. SR-Bank 32 SR-Boligkreditt
Slide 33: Employment and GDP by sector
Employment and GDP by sector 30% 45% 40% 25% Norway employment Norway GDP per sector 35% 20% 30% 25% 15% 20% 10% 15% 10% 5% 5% 0% 0% Public sector (incl Other service Retail inc auto Construction Manufactuering Transportation and Information and Accomodation and Primary industries Oil, gas and minin
Slide 34: Norwegian exports
Norwegian exports Norwegian exports (Aug 2021) 29% 25% 9% 8% 8% 7% 6% Oil Gas Fish Fuels and electricity Machinery and Metals Chemical products transportation Source: Statistics Norway SR-Bank 34 SR-Boligkreditt
Slide 35: Hydro dominates power generation in Norway, but wind is increasing
Hydro dominates power generation in Norway, but wind is increasing Electricity production (GWh) dominated by hydro and increasing wind power share 180.000 8% 160.000 7% 140.000 6% 120.000 5% 100.000 4% 80.000 3% 60.000 2% 40.000 1% 20.000 0 0% -20.000 -1% 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 36: Government finances and the sovereign wealth fund
Government finances and the sovereign wealth fund • Cash flow from the petroleum sector (taxes, ownership) is channeled into the Norwegian oil fund and GDP (BNOK), quarterly figures sovereign wealth fund 14.000.000 400% • Fiscal spending rule is 3 % of the fund. 350% 12.000.000 Norwegian current acc
Slide 37: Agenda
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 38: SpareBank 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 Emission reductions Climate neutrality in own operations by the end of 2022 Net zero emissions in our financing and investment activities by 2050 Transition diversity Financi
Slide 39: ESG ratings
ESG ratings CDP B Sustainalytics 16.1 (low risk) ISS C- (2nd decile) MSCI AA In ISS’s latest ESG assessment of SR-Bank they awarded a score of C- In July 2021, Sustainalytics rated SR-Bank's Overall ESG Score at 16.1 In December 2021, MSCI rated SR-Bank's Overall ESG Score at AA an improvement from
Slide 40: 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 new or • Loans to finance or refinance new or e
Slide 41: Sector specific ESG Due Diligence at loan origination
Sector specific ESG Due Diligence at loan origination • For corporate clients with an exposure larger than NOK 50 million, we have developed an ESG due diligence questionnaire, which must be completed prior to any credit being granted • The assessment includes questions that directly target a custom
Slide 42: Translating climate risk into financial risk – FY20
Translating climate risk into financial risk – FY20 Emissions Analysis Corporate Market Portfolio Analysis SR-Bank reports greenhouse gas emissions in line with the GHG Protocol. The corporate portfolio’s climate risk (physical, transitional and liability risk) was ➢ In 2020, the group conducted an
Slide 43: Green product offerings
Green product offerings Green Mortgage Product & Renovation Product • 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 • With a green mortgage, customers typically get lower in
Slide 44: EU Taxonomy: TSC, DNSH & MS – high level assessment
EU Taxonomy: TSC, DNSH & MS – high level assessment Green Buildings Eligible green asset category Wind Power Hydro Power Clean Transportation (Residential & Commercial) Geography Norway Acquisition & ownership of buildings: Electricity generation from wind Electricity generation from hydro Transport
Slide 45: Allocation Report – Q1 2021
Allocation Report – Q1 2021 Eligible Green Loan Portfolio Green Funding Amount Instrument Issuance Due Amount (NOK m) (ISIN) Date Date (NOK m)*** Green Residential Buidlings 32.496 XS2063288190 okt.19 okt.26 4.992 SR Bank 12.287 XS2363982344* jul.21 jul.26 4.992 SR Boligkreditt 20.209 XS2406010285**
Slide 46: Impact Report – Q1 2021
Impact Report – Q1 2021 Direct Indirect Share of Share of Total Estimated emissions emissions Expected Total Total annual Eligible Eligibility reduced avoided vs avoided vs power Eligible Project Green Green reduced portfolio for Green energy baseline in baseline in production Category Covered Senio
Slide 47: Agenda
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 48: Mortgage market – characteristics
Mortgage market – characteristics Mortgage market • Scheduled repayment mortgages: 83.4%, flexible: 16.6% Household credit growth (12 months growth rate) • Typical maturity: 25-30 years • First priority security market with high doc. standard 16 Home ownership • Approx. 80% of households owner occup
Slide 49: Net commission and other income
Net commission and other income MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Payment facilities 245 248 70 64 56 55 64 Savings/placements 216 195 52 50 61 53 51 Insurance products 233 208 61 60 56 56 54 Commission income EiendomsMegler 1 439 396 96 101 132 110 100 Guarantee com
Slide 50: Net income on investment securities
Net income on investment securities MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Dividends 30 57 21 0 9 0 39 Investment income, associates 676 663 223 151 193 109 129 Securities gains/losses 192 -141 56 4 26 106 -1 - of which capital change in shares and certificates* 296 -49 9
Slide 51: Subsidiaries
Subsidiaries MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 EiendomsMegler 1 SR- Number of sales 7,367 6,707 1,558 1,713 2,185 1,911 1,633 Eiendom AS Operating profit before tax 60 50 30 16 9 5 9 SR-Forvaltning AS Capital under management (BNOK) 16 14 16 16 15 15 14 Operating pro
Slide 52: Ownership interests
Ownership interests Companies MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 SpareBank 1 Gruppen AS Interest ownership (%) 19.5 19.5 19.5 19.5 19.5 19.5 19.5 Profitshare after tax 471 194 173 83 148 67 87 Profit effect merger 0 340 0 0 0 0 0 BN Bank ASA Interest ownership (%) 35.
Slide 53: Operating expenses
Operating expenses MNOK 31.12.2021 31.12.2020 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Payroll and pensions 1,311 1,184 371 330 326 284 332 Other staff expenses 411 252 114 102 97 98 69 Total personnel expenses 1,722 1,436 485 432 423 382 401 IT expenses 381 373 99 93 97 92 88 Marketing 81 73 26 18 1
Slide 54: Reduced exposure against offshore sector
Reduced exposure against offshore sector Total EAD related to offshore is reduced to 2.3% in 4. quarter 2021 from 5.0% in 4. quarter 2015 • Offshore ‐ EAD NOK 5.9 billion (NOK 10.4 billion), 2.3% of the bank’s total EAD ‐ Exposure primarily to industrial oriented shipping companies with integrated o
Slide 55: 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 RWA home mortgages • Increased share of volume with LTV below 70 per cent is mainly due to • RWA on home mortgages reflects a solid portfolio with a moderate loan-to- increased market values of collateral (
Slide 56: Lending to commercial real estate
Lending to commercial real estate 13.1% (NOK 33.6 billion) of total EAD* is related to commercial real estate • Commercial real estate for lease Real estate management ‐ EAD NOK 22.5 billion, 8.8% of the bank’s total EAD and housing Development projects for ‐ The portfolio is characterised by lendin
Slide 57: Lending to retail trade, hotels and restaurants
Lending to retail trade, hotels and restaurants 1.5% (NOK 3.9 billion) of total EAD* is related to retail trade, hotels and restaurants • Retail trade ‐ EAD NOK 2.9 billion, 1.1% of the bank's total EAD Tourism; MNOK 61 Operation of • Operation of hotels and restaurants hotels and restaurants; ‐ EAD
Slide 58: Lending to shipping
Lending to shipping 2.2% (NOK 5.7 billion) of total EAD* is related to shipping • Product tank Other shipping; ‐ EAD NOK 1.1 billion, 0.4% of the bank's total EAD MNOK 597 Product tank; • Chemical tank MNOK 1.086 ‐ EAD NOK 1.5 billion, 0.6% of the bank's total EAD Gas; MNOK 753 • Dry-bulk ‐ EAD NOK
Slide 59: Balance sheet
Balance sheet Balance sheet (MNOK) 31.12.2021 31.12.2020 Cash and balances with central banks 78 68 Balances with credit institutions 5,366 12,589 Net loans to customers 228,578 216,966 Certificates, bonds and other fixed-income securities 56,266 39,921 Financial derivatives 5,053 8,672 Shares, owne
Slide 60: 20 largest shareholders as at 31 December 2021
20 largest shareholders as at 31 December 2021 Investor Number Stake Sparebankstiftelsen SR-Bank 72,419,305 28.3% • Ownership interests as at 31 December 2021: Folketrygdfondet 19,495,629 7.6% • From Rogaland, Agder, Vestland, Oslo and SpareBank 1-stiftinga Kvinnherad 6,226,583 2.4% Viken: 65.7% (66
Slide 61: Contact details and financial calendar
Contact details and financial calendar For further information, please contact: Financial calendar Dag Hjelle Bjørn Endre Oftedal General assembly 28 April 2022 Direct line: +47 51 50 94 37 +47 51 50 94 50 Q1 21 Interim report 5 May 2022 Mobile: +47 90 95 00 88 +47 45 24 60 03 E-mail: dag.hjelle@sr-
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