Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q3 2020 Earnings Presentation
52 slides from Sparebank 1 Nord-norge's earnings presentation, October 2020
Slide 1: Quarterly accounts 3Q 2020
ail , SpareBank @) Quarterly accounts 3Q 2020
Slide 2: Quarterly accounts Q3 2020
Quarterly accounts Q3 2020 New local presence Nr. 1 position 15 branches Pre-tax profit CET-1 ratio +0% Main bank retail 35 % 1 649 MNOK (2 133) 17,2 % (15,5 %) Main bank SME 36 % ROE C/I-ratio Real estate agency 36 % 13,4 % (18,9 %) 38,5 % (34,7 %) Accounting 20 % Losses Secured financing 21,5 % 25
Slide 3: Group companies - result before tax
Group companies - result before tax 30.09.20 30.09.19 SpareBank 1 Finans Nord-Norge AS 103 963 114 804 SpareBank 1 Regnskapshuset Nord-Norge AS 31 061 29 937 EiendomsMegler 1 Nord-Norge AS 34 178 15 954 Subsidiaries core operations 169 202 160 695 Other subsidaries 2 025 - 758 Total 171 227 159 937
Slide 4: Taking control of the future
Taking control of the future • New divisional organization • 16 branches will be closed • The remaining 15 offices will be strengthened • Target downsizing by 100 employees by the end of 2021 • Implementation of Performance Management • Enhance our strong customer focus with a new CRM-system 4
Slide 5: Strategic initiatives
Strategic initiatives New distribution and operating model CSR commitment 2.0 Implementation of Performance Management 5
Slide 6: snaieBonk
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Slide 7: Green product framework
Green product framework SECTORS Aquaculture Fisheries Agriculture Forestry Real estate Transport by land Transport by sea Renewable energy • Sustainability as a part of our new business strategy • Including climate risk – strengthening our balance • Adapting to new regulations • In accordance with c
Slide 8: Vacancy is falling
Vacancy is falling - Long-term unemployment is rising • There are 12 643 unemployed in Northern Norway, where 3 893 are temporarily lay-offs • The number of unemployed went down with 1 200 during September • The biggest positive change occurred within tourism and transport, but still it is within th
Slide 9: Tourism still struggles
Tourism still struggles • The tourism sector is an important employer in Northern Norway • Tourism has been a growth industry in the region for the latest 5-10 years • Without any new stimulus packages for the industry the number of bankruptcies are expected to rise • The direct impact of this for t
Slide 10: Northern Norway
Northern Norway A quick view • Seafood export is on record levels • Large importers like Spain, Portugal, Italy and France are however heavily affected by the virus • The housing market seems to be well balanced • Consumption is still rising after the March dip both in terms of retail sales and dura
Slide 11: Ambitions for growth and increased market share
Ambitions for growth and increased market share Expected growth for SpareBank 1 Nord-Norge in 2020: Retail market: 2-5 % Corporate market: 5-8 % Corporate growth within companies and industries with low exposure to Corona 11
Slide 12: Why invest in SpareBank Nord-Norge?
Why invest in SpareBank 1 Nord-Norge? #1 Market leader in a ROE Ambitious, top class resourceful region financial targets High relative Implements new KPI Owner friendly ownership in measures to maintain dividend policy and SpareBank 1 Group, top class ROE strong capitalization other alliance compan
Slide 13: Group financial highlights and key figures
Group financial highlights and key figures (Amounts i n NOK mi l l i on a nd i n % of a vera ge a s s ets ) 30.09.20 % 30.09.19 % 31.12.19 % From the profit and loss account Net interest income 1 570 1,79 % 1 519 1,87 % 2 097 1,92 % Net fee- and other operating income 951 1,09 % 838 1,03 % 1 116 1,0
Slide 14: A good third quarter in a demanding year
A good third quarter in a demanding year Cost/income Group CET 1 Return on equity capital 17,2 % 16,7 % 16,9 % 17,2 % 14,5 % 15,9 % 43,1 % 39,8 % 41,6 % 14,5 % 36,9 % 37,2 % 11,4 % 14,6 % 13,0 % 2018 2019 1Q20 2Q20 3Q20 2018 2019 1Q20 2Q20 3Q20 2018 2019 1Q20 2Q20 3Q20 14
Slide 15: Improvement in result before tax last quarter
Improvement in result before tax last quarter 15
Slide 16: Low individual losses – increased ECL provisions
Low individual losses – increased ECL provisions 0,20 % 259 0,16 % 201 0,10 % 119 0,01 % 0,01 % 13 11 30.09.19 31.12.19 31.03.20 30.06.20 30.09.20 Net losses Net losses in % of gross lending incl. intermediary loans 16
Slide 17: Lending growth in both retail and corporate market
Lending growth in both retail and corporate market Retail market incl. commission loans 5,6 % 3,3 % Retail incl. 30 % commission loans Corporate incl. 70 % commission loans 81 052 85 592 88 413 30.09.18 30.09.19 30.09.20 Corporate incl. commission loans Retail excl. 42 % commission 10,9 % 58 % loans
Slide 18: Development in lending margins
Development in lending margins 2,68 % 2,48 % 2,45 % 2,35 % 2,40 % 2,35 % 2,35 % 2,38 % 2,30 % 2,04 % 1,94 % 1,48 % 1,53 % 1,44 % 1,44 % 1,36 % 1,35 % 1,32 % 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Lending margin corporate Lending margin retail 18
Slide 19: Deposit growth
Deposit growth Retail banking market 10,5 % 6,3 % Public 9% Corporate 35 % Retail 36 348 40 163 34 188 56 % 30.09.18 30.09.19 30.09.20 Public market Corporate market 23,1 % 7,7 % 2,0 % -24,0 % 24 982 18 841 20 297 8 445 8 612 6 542 30.09.18 30.09.19 30.09.20 30.09.18 30.09.19 30.09.20 19
Slide 20: Development in deposit margins
Development in deposit margins 1,00 % 0,84 % 0,78 % 0,70 % 0,52 % 0,53 % 0,69 % 0,48 % 0,64 % 0,52 % 0,45 % 0,48 % 0,36 % 0,38 % 0,04 % 0,01 % -0,07 % -0,26 % -0,28 % -0,29 % -0,28 % -0,27 % -0,28 % -0,29 % -0,28 % -0,31 % -0,32 % 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Deposit margin corporate
Slide 21: The profitability measures goal stands
The profitability measures goal stands ROE Effect of profitability 12 % measures year 200 MNOK end 2021: C/I ratio < 40 % Maximum cost 2020: 2% increase*: 2021: 0% 21 *) Ex. new business areas
Slide 22: Long term financial targets
Long term financial targets > 12 % ROE Main target > 50 % < 40 % 15,0 % Dividend payout C/I-ratio Tier 1 Capital ratio 22
Slide 23: Financial outlook
Financial outlook Increased net interest income in Q3, mainly due to increased margins and reversal of one-offs from Q2. Tough price competition in retail market and low NRI policy interest rates will put pressure on net interest income. ROE target: Top-level profitability among comparable banks, cu
Slide 24: SpareBank 1 Nord-Norge
SpareBank 1 Nord-Norge CEO Liv B. Ulriksen CFO for finans Bengt Olsen E-mail: liv.bortne.ulriksen@snn.no E-mail: bengt.olsen@snn.no Tel. + 47 957 31 130 Tel. + 47 975 89 560 URLs Website and internet bank: www.snn.no Equity certificate in general: www.egenkapitalbevis.no Financial calendar: Q3 2020
Slide 25: Appendix
Appendix NORD-NORGE
Slide 26: Company structure
Company structure Subsidiaries and second tier Associated companies and joint ventures subsidiaries SpareBank 1 SpareBank 1 SpareBank 1 Finans Eiendomsmegler 1 SpareBank 1 Gruppen AS Boligkreditt AS Næringskreditt AS Nord-Norge AS Nord-Norge AS 19,5 % | Financial services 18,65 % | Covered Bond comp
Slide 27: Geographical distribution of ownership
Geographical distribution of ownership 28,6 32,0 31,6 35,7 37,5 37,7 35,5 35,8 33,4 38,3 53,2 46,7 48,4 48,8 45,6 43,4 42,4 43,4 45,7 45,7 18,2 18,7 19,1 19,3 19,0 18,8 18,6 20,0 19,6 19,7 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Holders residing in North Norway Other Norwegian holders Fore
Slide 28: The 20 largest EC holders
The 20 largest EC holders Number Share of EC Holders of ECs EC Capital PARETO AKSJE NORGE VERDIPAPIRFOND 3.389.231 3,38% PARETO INVEST AS 3.145.133 3,13% State Street Bank and Trust Comp 2.878.282 2,87% The Northern Trust Comp, London Br 2.863.162 2,85% GEVERAN TRADING CO LTD 2.790.356 2,78% VPF EIK
Slide 29: Net interest income - Group
Net interest income - Group Measured against funding cost 29
Slide 30: Cost development – Group
Cost development – Group 41,2 % 43,1 % 39,8 % 38,5 % 1.474 1.640 1.366 1.194 2017 2018 2019 30.09.20 Group operating costs Cost/income Group 30
Slide 31: Operating expenses - Group
Operating expenses - Group 31
Slide 32: Net fee- and other operating income - Group
Net fee- and other operating income - Group (Amounts in NOK million) 3Q20 2Q20 1Q20 4Q19 3Q19 Payment facilities 74 68 73 76 89 Insurance products 47 44 43 42 42 Guarantee commissions 9 8 7 7 7 Real estate broking 49 40 30 32 29 Portfolio commissions 14 11 12 9 11 Other commisions 27 27 22 26 34 Com
Slide 33: Lending portfolio: Key points
Lending portfolio: Key points Growth • Moderate growth within retail lending last 12 months, with focus on commitments qualifying for SpareBank 1 Boligkreditt (covered bond company) • Good growth in corporate market lending last 12 months, within the group’s risk appetite Portfolio quality • Decreas
Slide 34: Economy in Northern Norway and loan portfolio
Economy in Northern Norway and loan portfolio Segments Status Outlook Macro Seafood Construction UNCERTAINTY Retail shops, including CRE RELATED TO shopping centres OUTLOOK Other CRE (offices +++) Tourism, including hotels and passenger transport 34
Slide 35: No significant increase in bankruptcies so far
No significant increase in bankruptcies so far • Number of bankruptcies* in Northern Norway are still at low levels • A small increased number of bankruptcies in Northern Norway so far in 2020 • The industries construction, accommodation and catering and retail trade make up a significant proportion
Slide 36: Portfolio: Exposure as of 30.09.2020 (Group level)
Portfolio: Exposure as of 30.09.2020 (Group level) 100,00% 0,27% 1,31% 1,36% 2,98% 1,86% 4,79% 90,00% 22,81% 19,12% 80,00% 70,00% 60,00% 50,00% 100% 100,00% 96,51% 40,00% 73,70% 74,78% 30,00% 20,00% 10,00% 0,00% Personmarked SB1 Boligkreditt Næringsliv SB1 Næringskreditt SNN Finans Lav Middels Høy M
Slide 37: Portfolio: Changes last 12 months (Group level)
Portfolio: Changes last 12 months (Group level) 2.793 4.293 7.292 1.500 1.300 1.100 900 700 500 300 100 -100 Retail market SB1 Boligkreditt Corporate market SB1 Næringskreditt SNN Finans Group -300 -500 Low risk Medium risk High risk Non-performing/impaired 37
Slide 38: Portfolio: Exposure distributed by size
Portfolio: Exposure distributed by size Share of loanexposure Sept 2020 Share of loan exposure Sept 2019 78,8 % 75,2 % 10,7 % 9,8 % 7,8 % 5,8 % 6,2 % 5,7 % Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Numbers include parent bank, SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt 3
Slide 39: Portfolio: LTV mortgage loans
Portfolio: LTV mortgage loans LTV is distributed by balance and is based on the market value of the 100,0 % 91,7 % 91,8 % collateral: 80,0 % • 97.5% of the gross exposure is within 85% of the collateral 60,0 % market value 40,0 % • Only 1.2% of the gross exposure is higher than 100% of the 20,0 % 5,
Slide 40: Reduced need for interest-only loans
Reduced need for interest-only loans Share of interest-only loans due to Covid-19 16,0 % 14,0 % 14,0 % 12,0 % 12,0 % 10,0 % 10,0 % 8,0 % 8,0 % 6,0 % 6,0 % 4,0 % 4,0 % 2,0 % 2,0 % 0,0 % 0,0 % 30.04.2020 31.05.2020 31.07.2020 31.08.2020 30.09.2020 30.04.2020 31.05.2020 31.07.2020 31.08.2020 30.09.2020
Slide 41: Reduced demand for liquidity loans with state guarantee
Reduced demand for liquidity loans with state guarantee 30% 160 140 25% 120 20% 100 15% 80 60 10% 40 5% 20 0% 0 30.04.2020 31.05.2020 30.06.2020 31.07.2020 31.08.2020 30.09.2020 Number of loans Liquidityloans % of max state guarantee 41
Slide 42: Diversified portfolio in commercial real estate
Diversified portfolio in commercial real estate Plot 3,8 % Above 250 0 - 5 mnok Offices mnok 9,8 % Residential 18,4 % Development 11,2 % 14,4 % Housing Ass. 6,1 % 5 - 30 100 - 250 Residential mnok Others (small mnok Investment 26,9 % commitments) 26,1 % 4,3 % 19,2 % Industry 3,9 % Shops / shopping C
Slide 43: Still low oil related exposure
Still low oil related exposure Other 0,4 % Industry 5,2 % • Oil related exposure amounts to NOK 955 mill • The exposure represents 0.69 % of total Supply base exposure including covered bond companies 28,8 % • Average weighted probability of default 0.98 % • A total of NOK 43 mill are non-performing
Slide 44: Oil related portfolio: Offshore Supply Vessels (OSV)
Oil related portfolio: Offshore Supply Vessels (OSV) AHTS 6% • OSV exposure amounts to NOK 627 mill • Average weighted probability of default 1.14 % Standby/Area • Total amount of 7 vessels* contingency 41 % • Weighted age 8.5 years* • Average weighted contract length 3.2 years* PSV • SNN is partici
Slide 45: Oil related portfolio: Supply bases
Oil related portfolio: Supply bases Other 0,4 % Industry 5,2 % Supply base • Supply base exposure amounts to NOK 275 mill 28,8 % • Average weighted probability of default 0.28 % • Customers with long term contracts with solid and strong partners gives good cash flows in the short and long term Offsh
Slide 46: Oil related portfolio: Industry and Other
Oil related portfolio: Industry and Other Other 0,4 % Industry 5,2 % Supply base • The sector “Industry and Other” amounts to 28,8 % NOK 53 mill. including Industry NOK 49 mill and Other NOK 4 mill • Average weighted probability of default: ‒ “Industry” 2.48 % ‒ “Other” 0.90 % • A total of NOK 43.3
Slide 47: Loan losses (Group level)
Loan losses (Group level) Losses 2020 Q3 20 Q2 20 Q1 20 2019 Q4 19 Q3 19 Individual losses Corporate market 24.8 9.9 10.5 4.5 17.5 4.2 9.3 Individual losses Retail market 5.6 0.7 1.5 3.3 10.0 6.7 -0.8 Collective losses and other value change items 228.4 47.1 70.1 111.1 -16.1 -12.7 6.2 Total losses o
Slide 48: Funding instruments 30.09.2020
Funding instruments 30.09.2020 Currency Bonds 35 % NOK Bonds Other Liabilities 52 % 2% Subordinated Loan Capital 4% SNP T1 Hybrid 4% 3% 48
Slide 49: Maturity profile 30.09.2020
Maturity profile 30.09.2020 Capital markets funding (excl. SPABOL/SPACOM) • NOK 26 960 mill in capital market funding exclusive of 7.000 SpareBank 1 Boligkreditt and 6.000 SpareBank 1 Næringskreditt 5.000 • SpareBank 1 Boligkreditt and 4.000 SpareBank 1 Næringskreditt Mill NOK is important funding 3
Slide 50: Ambitious targets for climate risk and sustainability
Ambitious targets for climate risk and sustainability • Climate risk is part of the Group’s risk strategy. • Sustainability is a part of all core processes through its own policy on sustainability and corporate social responsibility. These include goals to contribute to a greener securities market a
Slide 51: SpareBank 1 Alliance: National champion, regional focus
SpareBank 1 Alliance: National champion, regional focus • The SpareBank 1 alliance consists of 14 banks; independent in each their region. Decisions are made close to the SpareBank 1 Nord-Norge (Tromsø) customer, and each bank continues to develop its link with its local community • Operate exclusiv
Slide 52: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 LO Nord-Norge SMN SR-Bank Østlandet SamSpar 9,6 % 19,5 % 19,5 % 19,5 % 12,4 % 19,5 % Products, commisions, dividends Sale, loan portfolie, capital SpareBank 1 Nord-Norges, direct ownership SpareBank 1 Gruppen AS SpareBa
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