Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q3 2017 Earnings Presentation
62 slides from Sparebank 1 Ostlandet's earnings presentation, 2017
Slide 1: The impossible is solved by incredible people
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 Rogaland financial group Population 470.000 Market share 36 % in the Year of establishment 1839 southwest of Market strategy Unemployment rate Market leader 3.4% Norway Hordaland Population 516.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment rate
Slide 4: A very good result characterised by strong underlying operations
A very good result characterised by strong underlying operations • Pre-tax profit for the quarter is NOK 750 million compared to NOK 660 million last year ‐ Return on equity after tax 12.9 % • Pre-tax profit year-to-date is NOK 1.910 million compared to NOK 1.633 million last year ‐ Return on equity
Slide 5: Financial targets and estimates for 2017
Financial targets and estimates for 2017 Return on equity CET 1 Growth in loans 10,9% 11,0% 10,0% 2,0% - 4,0% 14,7% 14,8% 15,0% 1,5% 2016 30.09.2017 Target 2017 -0,9% 2016 30.09.2017 Target 2017 2016 30.09.2017 Target 2017 Normalised growth in costs Impairment losses Dividend share NOK 778 NOK 500 -
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 12,9% 14,7% 14,7% 14,7% 14,8% 12,2% 13,8% 11,0% 9,5% 8,7% Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Cost ratio Earnings per share 44,0% 43,3% 41,3% 2,39 37,2% 37,7% 2,09 2,01 1,68 1,58 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4
Slide 7: Income statement
Income statement Group Income Statement (MNOK) 30.09.2017 30.09.2016 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Net interest income 2.343 2.138 820 784 739 733 729 Net commission and other income 1.157 1.088 386 400 371 355 347 Net income on investment securities 430 515 198 143 89 139 231 Total income 3.930 3.7
Slide 8: Change in profit 30.09.2016 – 30.09.2017
Change in profit 30.09.2016 – 30.09.2017 2.500 74 -85 193 1.910 2.000 200 -105 1.633 1.500 1.000 500 0 30.09.2016 Net interest income incl. Other income Net income on investment Total operating expenses Impairment losses on 30.09.2017 commission from covered securities loans and guarantees bond comp
Slide 9: Key figures
Key figures 30.09.2017 30.09.2016 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Return on equity after tax (%) 10,9 10,2 12,9 11,0 8,7 9,5 12,2 Net interest margin (%) 1,53 1,47 1,54 1,52 1,53 1,50 1,48 Impairment losses on loans and guarantees in % of gross loans incl. 0,31 0,45 0,27 0,29 0,37 0,35 0,35 covered bo
Slide 10: Consolidated income profile
Consolidated income profile 1.067 1.065 1.093 1.176 1.221 347 361 312 325 335 15 39 39 35 30 36 784 820 729 733 739 -9 -23 -17 -8 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Net interest income Commission income from covered bond companies Profit before tax from covered bond companies Net commission and other inc
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins* Deposit margins 2,59% 2,68% 2,75% 2,73% 2,76% 2,72% 2,77% 2,78% 2,58% 0,34% 0,29% 0,24% 1,77% 0,12% 1,69% 0,11% 0,13% 1,61% 1,56% 1,55% 1,58% 1,48% 1,45% -0,06% 1,38% -0,18% 0,04% 0,03% -0,03% -0,08% -0,09% -0,05% -0,12% -0,12% -0,25% -0,21% Q3 15 Q4 15 Q
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 50 000 12,5% 15% 40 000 7,1% 7,8% 10% MNOK 5,3% 6,4% 30 000 3,0% 5% 20 000 -0,5% -2,3% -1,9% -0,7% 0% 10 000 -3,5% -2,8% 0 -5% Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Volume Growth % Growth % excl. SR-F
Slide 13: Loan portfolio as at 30.09.2017
Loan portfolio as at 30.09.2017 • Gross loans (incl. covered bond companies) as at Agriculture / forestry / fishing 2,8% 30 September 2017 amount to NOK 185.2 billion 3,0% compared with NOK 183.0 billion at the same Industry, Power/water supply and construction 3,6% time the year before. 3,8% 1,6% •
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 100% of less than 85% is high. ‐ 90.2% of the exposure is within 85% of the assessed value of collateral, same as last year. 80% 65,5% 64,9% 60% 40% 24,7% 25,3% 20% 6,2% 6,2% 3,6% 3,6% 0% Below 70 % 70 -
Slide 15: Deposits volume and 12 month growth
Deposits volume and 12 month growth • Last 12 months deposits increased by NOK 11.4 Corporate Market* billion to 98.6 billion. 50.000 22,7% 24,7% 25% ‐ Corresponds to an increase in the period of 40.000 13,9% 15,4% 14,0% 13.0%. 15% MNOK 30.000 20.000 5% • Increased deposit growth in the corporate ma
Slide 16: Net commission and other income
Net commission and other income MNOK 30.09.2017 30.09.2016 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Payment facilities 197 192 71 63 63 60 75 Savings/placements 151 140 51 49 51 45 45 Insurance products 156 148 52 52 52 50 48 Commission income real estate broking 295 263 90 112 93 85 87 Guarantee commission 80
Slide 17: Net income on investment securities
Net income on investment securities MNOK 30.09.2017 30.09.2016 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Dividends* 11 105 2 4 5 5 0 Investment income, associates 271 306 127 81 63 78 90 Securities gains/losses 103 3 46 32 25 50 105 - of which capital change in shares and certificates 92 9 57 28 7 42 63 - of wh
Slide 18: Subsidiaries
Subsidiaries Subsidiaries MNOK 30.09.2017 30.09.2016 EiendomsMegler 1 SR-Eiendom AS Number of sales 5.074 4.617 Operating profit before tax 23 16 SpareBank 1 SR-Finans AS* Total assets (BNOK) - 7 Operating profit before tax - 78 SR-Forvaltning AS Total assets (BNOK) 11 9 Operating profit before tax
Slide 19: Ownership interests
Ownership interests Ownership interests MNOK 30.09.2017 30.09.2016 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 219 215 Adjusted profit previous years -4 5 SpareBank 1 Boligkreditt AS Interest ownership 13,9 % 16,7 % Profit after tax -19 5 Adjusted profit previous years -
Slide 20: Operating expenses
Operating expenses MNOK 30.09.2017 30.09.2016 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Personnel expenses 900 873 303 302 295 293 282 Financial activity tax 30 0 9 10 11 0 0 Total personnel expenses 930 873 312 312 306 293 282 IT expenses 235 234 74 86 75 87 83 Marketing 53 51 16 21 16 23 17 Other administrati
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 1,18% 1,21% 1,23% 1,21% 1,18% 0,35% 0,35% 0,37% 0,29% 0,27% 1.007 1.141 1.514 1.393 1 20 1.352 45 1 167 142 130 126 116 1.154 1.070 739 830 824 -2 Q3 16 Q4 16 Q1 17
Slide 22: Impairment losses on loans
Impairment losses on loans Losses on loans in income statement (MNOK) 30.09.2017 30.09.2016 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Corporate customers 393 449 116 115 162 131 109 Retail customers 30 29 10 15 5 11 7 Change in collective impairment losses on loans 0 138 -2 1 1 20 45 Net impairment losses on lo
Slide 23: Funding
Funding • Well diversified funding. Deposits to loans ratio • Funding indicator 1* is 115,9% on consolidated 100% basis. 80% 58,6% 57,6% 57,2% 58,3% 60,5% 59,0% • Good liquidity 56,1% 55,4% 54,5% 60% – Net refinancing need over the next 12 months is 40% NOK 6.6 billion. 20% – Liquidity buffer is NOK
Slide 24: Stronger capital ratio
Stronger capital ratio • SpareBank 1 SR-Bank is compliant with capital requirements as at 30.09.2017. 20% • SpareBank 1 SR-Bank owned a 13.9% stake in 18% SpareBank 1 Boligkreditt per 30.09.2017, while 17,7% the share of mortgages sold to the company 16% 17,1% 15,8% amounted to 10.1%. The stake is n
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 • The target CET 1 level is 15.0% in 2017. The target ROE ROE ROE ROE ROE ROE CET 1 expected to be reached through good 12,4% 14,0% 14,2% 10,8% 10,0% 10,9% 15,0% profitability. • Countercyclical buffer is 1.5% and
Slide 26: Outlook
Outlook • Major infrastructure projects helps to ensure good conditions for the region's business and population growth, with moderate unemployment. • Expectations concerning future market performance improved somewhat in the last months, but some uncertainty still exists about the group's market ar
Slide 27: New ventures in the group
• New ventures Gründerhub established in Stavanger, Bergen and Kristiansand. The group continues to support entrepreneurs by offering free entrepreneur in the group programmes and free office space. The goal is to create an exciting environment and processes where people with good ideas can get help
Slide 28: Start-up factory for new ideas
Start-up factory for new ideas NOK 50 million for the establishment and operation of FinStart Nordic, and NOK 250 million for investments in new ideas and start-up companies within fintech. The venture is intended to help develop even better customer services through the development of financial ser
Slide 29: If Silicon Valley can do it, so can Stavanger
If Silicon Valley can do it, so can Stavanger. Our virtual robot Banki was developed by Boost AI, which was part of the entrepreneurial hub we support. That makes us very proud! Since then, Boost AI has experienced major growth and hired a number of developers. Boost AI is part of the portfolio of f
Slide 30: Monner – future opportunities for investing and funding
Monner – future opportunities for investing and funding Monner is a platform for loan-based crowdfunding. The company will offer loans to smaller companies that require funding by connecting individuals who want alternative forms of investment to the company's lending needs. Crowdfunding loans gives
Slide 31: We are opening a branch in Oslo
We are opening a branch in Oslo SpareBank 1 SR-Bank wants to be a long-term and predictable source of support for its customers. We are opening a new branch to ensure that we are closer to more of our major corporate customers in Oslo. The new branch in Oslo will primarily focus on corporate custome
Slide 32: Banking and accounting via a single service
Banking and accounting via a single service DRIV is a portal for SME customers in which we provide a simple overview of their banking and accounting. DRIV is a customer-oriented system that is intended to provide a company's management team with a better overview of the company's various bank accoun
Slide 33: APPENDIX
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 33
Slide 34: The unemployment rate has been reduced
The unemployment rate has been reduced Marked reduction in Rogaland in 2017 Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 6 5 4 3 2 1 0 Norway Rogaland Hordaland Vest-Agder Norway, SSB AKU-unempl. rate 34 Source: NAV og SSB
Slide 35: Housing prices in Norway slightly down nationally due to lower prices in Oslo
Housing prices in Norway slightly down nationally due to lower prices in Oslo. In many counties prices are close to unchanged from last year House prices. NOK per sqm. Average all. Monthly 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 Rogaland Hordaland Vest-Agder Oslo Norway 35 Source:
Slide 36: Oil activity in Norway near the bottom
Oil activity in Norway near the bottom Activity has been reduced by approx. 30%, but is now stabilizing • Following record-high activity in 2013 and 2014, it Petroleum activity on Norwegian Continental Shelf. BNOK (2016 NOK). Source: NPD fell in 2015 and 2017. Activity has also been reduced in 2017,
Slide 37: Retail trade increasing in Norway
Retail trade increasing in Norway In Rogaland, the level is slightly higher than last year Retail sales (excl. auto), annual change from same 2-month period previous year 12% 10% 8% 6% 4% 2% 0% -2% -4% Norway Rogaland Hordaland Agder Oslo 37 Source: SSB
Slide 38: APPENDIX
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 38
Slide 39: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 7.3% (8.1%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 206.5 (200.1) EAD per 30.09.2017 BNOK 14.9 (16.2) EAD is related to oil operations Corporate market excl. oil operations; 26.0% (25.2%) Oil service; 2.2% (2.
Slide 40: Oil services - total NOK 4.5 billion
Oil services - total NOK 4.5 billion (NOK 4.8 billion as at 31.12.2016) • Exploration and concept studies Oil services ‐ EAD NOK 4.5 billion, 2.2% of the bank's total EAD ‐ EAD NOK 0.3 billion ‐ Average weighted probability of default 2.8% ‐ Average weighted probability of default for the oil servic
Slide 41: Oil and gas - total NOK 1.6 billion
Oil and gas - total NOK 1.6 billion (NOK 1.6 billion as at 31.12.2016) • Exploration financing Exploration and production companies ‐ EAD NOK 1.6 billion, 0.8% of the bank's total EAD ‐ EAD NOK 0.3 billion ‐ Average weighted probability of default for the oil and gas portfolio is 1.4% ‐ Average weig
Slide 42: Offshore - total NOK 8.8 billion
Offshore - total NOK 8.8 billion (NOK 9.8 billion as at 31.12.2016) • Offshore Service Vessels Offshore ‐ EAD NOK 8.8 billion, 4.3% of the bank's total EAD ‐ EAD NOK 6.4 billion, average weighted probability of default is 2.6%, weighted average age is 8.5 years, average weighted contract ‐ Average w
Slide 43: Offshore Service Vessels – total NOK 6.4 billion
Offshore Service Vessels – total NOK 6.4 billion (NOK 6.9 billion as at 31.12.2016) Offshore Service Vessels EAD per age of OSV excl. accomodation • Most customers with long history as a borrower in SpareBank 1 SR-Bank 2.500 • Most of the companies are listed on stock exchange or family owned 2.000
Slide 44: Offshore Service Vessels – largest customer group
Offshore Service Vessels – largest customer group Number of vessels • Well diversified portfolio. One commitment of NOK 1 10 1.1 billion, rest of NOK 750 or lower. 2 8 • Total EAD for the portfolio is NOK 6.4 billion of 3 8 which; 4 11 5 2 • NOK 5.5 billion consists of 11 restructured 6 30 commitmen
Slide 45: Lending to commercial property
Lending to commercial property Lending to commercial property Housing cooperative; 4,7% (5,2%) • NOK 27.7 billion, 15% of the bank’s total loans. Real estate management; 1,9% (2,0%) • The portfolio is characterised by lending to commercial properties for leasing with long-term contracts and financia
Slide 46: APPENDIX
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 46
Slide 47: 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 47
Slide 48: Risk management principles
• The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk ‐ SpareBank 1 SR-Bank therefore invests significant resources in developing risk management systems, processes and expertise that are in line with leading international practice • The bank's prim
Slide 49: Exposure limits and property financing requirements
• The bank sets specific limits for the size of commitments as well as requirements concerning industry diversification ‐ The maximum total exposure to an individual customer must be significantly lower than the regulatory requirements ‐ The maximum unsecured exposure to an individual customer must
Slide 50: Risk profile of the loan portfolio
Risk profile of the loan portfolio • SpareBank 1 SR-Bank has a solid loan portfolio. Distributed by risk class 100% • 61.2% of the bank’s loan exposure has a PD* 80% 60,3% 61,2 % below 0.5%. 60% 40% 28,7% 29,0 % • Single loan exposures less than NOK 10 million 20% 11,0% 9,8 % aggregates 69.3% of tot
Slide 51: Risk profile – Lending to the retail market
Risk profile – Lending to the retail market • The quality of the retail market portfolio is Retail market portfolio distributed by risk class considered to be good and has low potential 100% 2,3% 2,4% 2,9% 2,6% 2,6% losses. 15,8% 15,7% 18,8% 16,3% 16,4% 80% • The proportion of loans with a PD* below
Slide 52: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and 22,0 % 22,3 % 22,5 % 21,7 % stable portfolio. 21,3 % 20,0 % 15,0 % RWA 10,0 % 5,0 % 0,0 % Home mortgages as defined in the Norwegian IRB framework; residential 30.09.16 31.12.16 31.03.17 30.06.17 30.09.17 property must make up at least
Slide 53: Risk profile – Corporate lending
Risk profile – Corporate lending • The quality of the corporate market portfolio is Corporate lending portfolio distributed by risk class good. There is a clearly defined framework that 100% sets limit on what is funded and conditions for 80% 26,5% 24,8% 23,3% 22,3% 24,4% particular funding purposes
Slide 54: APPENDIX
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 54
Slide 55: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Divisions of SpareBank 1 SR-Bank ASA Fully owned companies Partly owned companies BN Bank SpareBank 1 Gruppen EiendomsMegler 1 SR-Boligkreditt Capital Markets (23.5%) (19.5%) Leading real estate broker Covered Bond Funding Number of man-years: 31 Commercial bank located in Ho
Slide 56: SpareBank 1 Alliansen
SpareBank 1 Alliansen SpareBank 1 SpareBank 1 SpareBank 1 LO SpareBank 1 SMN Samspar SR-Bank Nord Norge Østlandet 19.5% 19.5% 9.6% 19.5% 19.5% 12.4% Products, commissions, dividends Sales, loan portfolios, capital Companies directly owned by SR-Bank SpareBank 1 Gruppen AS Selskaper hvor SR-Bank har
Slide 57: 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 2017. The longer term and development in the region target is a minimum of 12%. • To provide a sustainab
Slide 58: Balance sheet
Balance sheet Balance sheet (MNOK) 30.09.2017 30.09.2016 Cash and balances with central banks 271 172 Balances with credit institutions 4.135 1.073 Net loans to customers 165.787 156.153 Certificates, bonds and other fixed-income securities 29.579 21.737 Financial derivatives 3.960 4.653 Shares, own
Slide 59: SRBANK share
SRBANK share • International ownership is Development in Price/Book Relativ share price development 22.0% per 3. quarter 2017. 100 1,4 210 Price Index 100 = sep. 30th 2016 190 90 1,2 • Total market value at 3. 80 P/B 170 quarter 2017 is NOK 21.9 1,0 150 70 NOK 130 p/B billion. 60 0,8 110 50 90 0,6 O
Slide 60: 20 largest shareholders as at September 2017
20 largest shareholders as at September 2017 • Ownership interests: Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • From Rogaland, Agder-counties and Hordaland: 45.7 % Folketrygdfondet 14.627.715 5,7% (49.7 %) State Street Bank and Trust Co, U.S.A. Nominee 8.345.484 3,3% • Inter
Slide 61: SR-Bank pr 30.09.2017
SR-Bank pr 30.09.2017 30.09.2017 2016 2015 2014 2013 2012 Share price 85,75 60,75 39,30 52,50 60,25 37,20 Stock value (MNOK) 21.931 15.537 10.051 13.427 15.409 9.514 Book value per share, NOK (group) 75,07 71,54 66,14 60,28 55,00 49,48 Earnings per share 5,98 6,87 6,83 8,20 7,28 5,33 Dividend per sh
Slide 62: Contact Details
Contact Details Adress Bjergsted Terrasse 1 Tel: +47 915 02002 Postboks 250 www.sr-bank.no 4066 Stavanger Management Arne Austreid CEO Tel.: +47 900 77 334 E-post: arne.austreid@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 E-post: inge.reinertsen@sr-bank.no Investor Relations Stian Helgøy Inv