Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q4 2024 Earnings Presentation
42 slides from Pareto Bank Asa's earnings presentation, Jan 23, 2025
Slide 1: Financial Results – Fourth Quarter 2024
PARETO BANK Financial Results – Fourth Quarter 2024
Slide 2: Highlights
Highlights Financials Business Area Update & Outlook 2 EXTERNAL
Slide 3: Record Profits for 2024
RECORD PROFITS FOR 2024 Profit after tax (NOKm) * Comments 687.3 • Profit after tax of NOK 687m (NOK 606m), up 14% y/y, 605.5 555.5 driven by strong lending growth of 12% y/y. 504.5 397.6 428.4 330.8 • Return on equity after tax (ROE) 13.6 % (13.8 %), impacted by higher than normal impairments and h
Slide 4: Annual Profits
ANNUAL PROFITS Profit after tax (NOKm) * 687.3 605.5 555.5 504.5 428.4 397.6 330.8 312.6 247.3 154.2 166.4 109.7 67.7 47.6 8.6 12.4 22.5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 4 *) Profit after tax before AT1 interest costs. EXTERNAL
Slide 5: Dividend for 2024
DIVIDEND FOR 2024 Proposed dividend of NOK 4.15 per share 4.70 60.0 % 4.20 50.1 % 50.1 % 52.9 % 50.0 % 50.0 % 49.4 % 3.70 40.0 % 3.20 30.0 % 2.70 20.0 % 2.20 10.0 % 4.15 3.86 3.90 1.70 3.50 0.0 % 3.00 1.20 -10.0 % 0.70 -20.0 % 0.20 -30.0 % -0.30 2020 2021 2022 2023 2024 -40.0 % Dividend per share (N
Slide 6: Book Value and Dividend per Share
BOOK VALUE AND DIVIDEND PER SHARE Cumulative since 2008 (NOK) 86.3 78.1 74.9 22.7 66.8 22.7 59.2 18.8 14.9 52.2 11.4 45.8 8.4 41.2 6.4 35.3 5.7 31.1 27.9 4.1 63.6 24.2 3.1 56.1 59.3 21.0 3.1 51.9 17.8 18.3 19.4 2.5 47.8 17.5 43.8 1.9 39.4 35.4 28.0 31.1 21.6 24.7 17.5 17.6 17.6 18.1 19.1 2008 2009 2
Slide 7: Fourth Quarter 2024 Highlights
FOURTH QUARTER 2024 Highlights • Profit after tax NOK 159.8m (NOK 165.0m in Q4-23). • Return on equity after tax 12.2% (13.8%). • Net interest income up to NOK 311.4m (NOK 297.3m). • Lending at the end of the quarter stood at NOK 20,713m (NOK 18,518m). Average lending was up 2% q/q. • Continued focu
Slide 8: Financials
Highlights Financials Business Area Update & Outlook 8 EXTERNAL
Slide 9: Key Figures
KEY FIGURES Profit after tax (NOKm) Return on Equity * CET1 ratio 176.1 178.2 173.2 18.6% 165.0 159.8 18.2% 18.3% 17.9% 13.8% 14.3% 14.2% 13.7% 17.2% 12.2% Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Net interest income (NOKm) Cost/Income ratio Loss rati
Slide 10: Income Statement
INCOME STATEMENT P&L (NOKm) Q4-24 Q4-23 2024 2023 • Interest income relativly stable with average lending Net interest income 311.4 297.3 1,227.3 1,112.6 volumes up 2% q/q. Net other operating income 8.9 12.1 25.9 6.7 Total net income 320.4 309.4 1,253.2 1,119.4 • Lending margins relativly stable, w
Slide 11: Change in Quarterly Net Interest Income
CHANGE IN QUARTERLY NET INTEREST INCOME (NOKm) 9.3 9.7 313.1 - 4.5 311.4 - 10.1 - 3.2 - 1.4 - 1.3 220.0 Q3-24 Lending volume Lending rate Fee income Surplus liquidity Deposit volume Depost rate Market funding Interest days Q4-24 and other* 11 *) Other includes correction of high interest recognition
Slide 12: Change in Annual Net Interest Income
CHANGE IN ANNUAL NET INTEREST INCOME (NOKm) 67.4 27.9 137.9 - 26.6 2.7 1,227.3 82.4 - 107.3 1,112.6 - 69.8 - - 2023 Lending volume Lending rate Fee income Surplus liquidity Deposit volume Depost rate Market funding Interest days 2024 and other* 12 *) Other net interest income includes fee paid to No
Slide 13: Interest Margins
INTEREST MARGINS Lending* and deposit margin 5.7% 5.6% 5.5% 5.5% 5.6% 4.6% 4.7% 4.6% 4.7% 4.5% 0.8% 0.7% 0.5% 0.5% 0.4% Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Lending margin Deposit margin Net interest margin Note: Lending and deposit margins relative to average 3M NIBOR. Net interest margin is total net int
Slide 14: Quarterly Change in Stage 2, 3 and Impairments
QUARTERLY CHANGE IN STAGE 2, 3 AND IMPAIRMENTS Stage 2 and 3 and provisions for stage 3 lending (NOKm) Impairments and losses on loans and guarantees (NOKm) 55.3 42.1 1,012 626 30.9 619 734 832 26.0 1,138 15.3 1,013 853 836 713 162 195 92 108 134 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Stage 3 Stage 2 Stage 3
Slide 15: Solidity and Capital Requirements
SOLIDITY AND CAPITAL REQUIREMENTS • Long-term CET1 target 16.7%, in line with the NFSA expectation. • Pareto Bank will hold a buffer above this 17.1% 17.2% target. 16.7% NFSA expectation 16.7% • The impact of CRR3 is still uncertain: Lower capital requirements for operational risk and Minimum homes
Slide 16: ROE and Leverage Ratio
ROE AND LEVERAGE RATIO 20.0 % 18.2 % 17.1 % 17.1 % 16.3 % 16.5 % 16.0 % 14.6 % 15.7 % 16.0 % 15.9 % 15.6 % 15.0 % 14.8 % 14.3 % 15.0 % 13.7 % 14.3 % 14.6 % 14.0 % 13.8 % 13.6 % 12.4 % 13.0 % 11.7 % 12.3 % 11.9 % 11.4 % 12.7 % 10.2 % 10.0 % 8.6 % 6.3 % 5.0 % 3.0 % 1.7 % 1.2 % 0.0 % 2008 2009 2010 201
Slide 17: Business Area Update & Outlook
Highlights Financials Business Area Update & Outlook 17 EXTERNAL
Slide 18: A Niche Player Financing Medium-Sized Enterprises
A NICHE PLAYER FINANCING MEDIUM-SIZED ENTERPRISES Exposure (NOKm) SHIP FINANCING NOK 1,975m 8% RESIDENTIAL FINANCING NOK 3,322m 13% 39% COMMERCIAL PROPERTY RESIDENTIAL DEVELOPMENT FINANCING 12% FINANCING NOK 2,964m NOK 9,875m 29% CORPORATE FINANCING NOK 7,344m 18 EXTERNAL
Slide 19: Quarterly Exposure per Business Area
QUARTERLY EXPOSURE PER BUSINESS AREA (NOKbn) 9.87 9.24 8.69 8.41 8.22 7.34 6.34 6.43 6.06 6.07 3.16 3.20 3.12 3.32 3.11 3.32 3.24 3.12 2.96 2.56 1.81 1.97 1.97 1.38 1.54 Residential development financing Residential financing Commercial property financing Corporate financing Ship financing Q4-23 Q1-
Slide 20: Residential Property Financing
RESIDENTIAL PROPERTY FINANCING Residential property exposure (NOKm) Total NOK 13,197m SOME GROWTH IS EXPECTED IN Q1-25. 1,488 • Much stronger than expected growth in Q4-24 explained by Land w/ houses good deal flow throughout 2024 and a handful of large building facilities opened in Q4-24. • Variati
Slide 21: Commercial Property Financing
COMMERCIAL PROPERTY FINANCING Commercial property exposure (NOKm) Total NOK 2,964m FLAT LENDING VOLUME CONTINUED FOR Q1-25. • Prime yield is expected to remain at current level around 4,75 % as signaled interest rate cuts have already been priced in. • Transaction activity is slowly picking up given
Slide 22: Corporate Financing
CORPORATE FINANCING Corporate exposure (NOKm) Total NOK 7,344m (Q3-24: NOK 6,430m) FLAT DEVELOPMENT EXPECTED IN Q1-25. 14% Real Estate Investment Company 3% 4% IT/Telecommunications 41% • Strong and above normal growth materialized as 4% Retail expected in Q4-24. 5% Industry Logistics 7% • More nor
Slide 23: Ship Financing
SHIP FINANCING Shipping exposure (NOKm) Total NOK 1,975m (Q3-24: NOK 1,972m) FLAT LENDING VOLUME EXPECTED FOR Q1-25. Offshore Subsea 375 LTV 37% • Continued financing demand within offshore, but more appetite Offshore Accommodation 284 LTV 5%* from other banks reduces growth outlook. Subdued demand
Slide 24: Long-Term Ambitions
LONG-TERM AMBITIONS ROE Dividend 15% min. 50% 14.63% 52.9% 13.99% 49.4% 50.1% 50.0% 13.75% 13.56% 2021 2022 2023 2024 2021 2022 2023 2024 24 EXTERNAL
Slide 25: Total Return
TOTAL RETURN Price Annual Equity Total Return 450 Change Return Pareto 400 237 % 421 % 16 % Bank 350 OSEBX 169 % 169 % 10 % Index 300 DNB 110 % 255 % 12 % 250 200 150 100 50 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 -50 OSEBX DNB PARB 25 EXTERNAL
Slide 26: Appendix
APPENDIX (Pareto bank
Slide 27: Lending Growth
LENDING GROWTH Per business area (NOKm) 20,000 Ship Financing 15,000 Corporate Financing * Commercial Residential Financing ** 10,000 Commercial Property Financing 5,000 Residential Property Financing - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 *) Including
Slide 28: Largest Shareholders
LARGEST SHAREHOLDERS 31 Desember 2024 Name Shares % Total • The Company has 76,782,423 shares outstanding. One class 1 Pareto AS 15,356,484 20.00 % of shares where each share carries one voting right. 2 Société Générale 6,943,049 9.04 % • Diversified investor base with 3,630 shareholders. 3 AWC AS 5
Slide 29: The Share
THE SHARE Earnings per share (NOK) Book value per share (NOK) 2.15 2.15 2.08 63.64 2.01 1.91 61.74 61.44 59.67 59.32 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 29 EXTERNAL
Slide 30: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Q4-24 Q3-24 Q2-24 Q1-24 Q4-23 Net interest income 311.4 313.1 303.0 299.8 297.3 Net other operating income 8.9 2.1 12.5 2.4 12.1 Total net income 320.4 315.1 315.5 302.2 309.4 Total operating expenses 55.7 57.7 56.3 55.6 51.1 Operating profit before 264.6 257.4
Slide 31: Quarterly Balance Sheet
QUARTERLY BALANCE SHEET (NOKm) Q4-24 Q3-24 Q2-24 Q1-24 Q4-23 Loans to credit institutions 2,640 1,930 1,432 1,174 1,651 Loans to customers 20,713 19,419 19,585 18,928 18,518 Bonds and other securities 3,659 4,240 5,331 5,923 5,422 Shareholdings in associated companies 34 22 22 22 22 Other assets 191
Slide 32: Margins and Interest Contribution
MARGINS AND INTEREST CONTRIBUTION Margins per business area Interest contribution per business area Estimated annualized margins including commissions, excluding front and back-end fees over 3M NOKm, estimated interest contribution including commissions, excluding front and back-end fees over 3M Nib
Slide 33: Real Estate Financing Exposure
REAL ESTATE FINANCING EXPOSURE Geographical residential property exposure Total NOK 13,197m* Geographical commercial property exposure Total NOK 2,964m* 9% 10% 4% 4% 6% 35% 39% Oslo 11% Oslo Akershus Sweden 7% Vestfold Vestland Sweden Akershus Østfold Telemark Others Others 18% 36% 21% 33 *) Residen
Slide 34: Sweden
SWEDEN Exposure in Sweden (NOKm) Total NOK 2,778m Continued growth • High deal flow throughout 2024 ensured strong volume growth towards year-end. • Growth primarily within residential property development. • Continued focus on expanding network and customer base. 2,778 • Good credit quality ensures
Slide 35: Liquidity Buffer
LIQUIDITY BUFFER Low credit and market risk (NOKm) Comments • Cash on hand. 81 • Highly liquid bonds. • Low credit risk. • No interest rate or foreign 2,135 exchange risk. 2,332 Cash (Norges Bank & DNB) • Access to central bank Bonds issued by government & PSEs facilities and repo market. Covered bo
Slide 36: Funding
FUNDING Sources (NOKm) Deposits & senior debt NOKm, Deposits 13,249 Percent customer deposits of net lending to customers Senior debt 7,347 65.4% 66.4% AT1 & T2 debt 1,250 64.5% 64.0% 62.1% Other debt 504 7,366 7,347 7,570 7,756 7,284 Equity capital 4,887 Key funding and liquidity ratios • Deposits
Slide 37: Customer Deposits
CUSTOMER DEPOSITS Deposits by size (NOKm) Deposits by product (NOKm) > NOK 20m 3,613 682 NOK 10 - 20m 1,028 191 255 NOK 5 - 10m 913 299 Floating rate retail 167 NOK 2 - 5m 1,060 1,994 2,445 NOK 0 - 2m 937 2,399 Floating rate corporate 2,912 - 1,000 2,000 3,000 4,000 5,000 Floating rate Fixed rate 4,
Slide 38: Market Funding
MARKET FUNDING Market funding maturities (NOKm) * Cost of new market funding ** 250 195 575 164 120 145 300 129 122 103 2000 85 83 0 0 66 1400 1400 58 1250 45 39 765 750 3M 6M 12M 2Y 3Y 5Y 2025 2026 2027 2028 2029 2030 Senior Call on Subordinated Capital 31.12.2023 31.12.2024 *) Net of own holdings
Slide 39: Commitments by Size
COMMITMENTS BY SIZE Commitment size per customer (NOKm) Distribution of commitments by size (NOKm) 565 2% < 10 524 24% 19% 5,107 10 - 50 5,187 5,411 50 - 100 < 10 5,250 10 - 50 2,343 50 - 100 100 - 150 1,870 100 - 150 150 - 200 2,731 150 - 200 10% 200 - 250 2,810 20% > 250 1,053 200 - 250 2,388 4,48
Slide 40: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Risk classification (NOKm) Historical risk classification 7,918 None / very low risk 9,321 52% 50% 49% 47% 11,246 45% Low risk 12,431 40% 40% 37% 37% 37% 2,035 Moderate risk 3,062 289 Some risk 552 13% 2 12% 12% High risk 11% 9% 87 202 Very high risk 160 Q4-23 Q1-2
Slide 41: Proven Track Record for Credit Quality
PROVEN TRACK RECORD FOR CREDIT QUALITY • No losses from 2008 to 2012. 2008 0.00% • Total confirmed losses limited to NOK 194m during 17 years of 2009 0.00% 2010 0.00% operation. 2011 0.00% • Accumulated lending amounted to approx. NOK 173 billion during 2012 0.00% the past 17 years. Total confirmed
Slide 42: EXTERNAL
( Pareto bank