Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q1 2017 Earnings Presentation
51 slides from Sparebank 1 Ostlandet's earnings presentation, 2017
Slide 1: First Quarter 2017
FIRST QUARTER 2017 q Ox. e impossible is solved : —b incredible people — _ . eo Bhw SpareBank HAND IN HAND WITH THE INCREDIBLE SR-BANK
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 financial group in the southwest of Norway 1 Rogaland Population 470.000 2 Market share 36% Year of establishment 1839 Market strategy Market leader Unemployment rate 4.4% 2 Hordaland Population 516.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment
Slide 4: A good result in a still demanding market
A good result in a still demanding market Pre-tax profit for the quarter is NOK 512 million compared to NOK 487 million last year - Return on equity after tax 8.7% Impairment losses on loans is NOK 168 million compared to 150 million last year - 0.37% of gross lending including covered bond comp
Slide 5: Financial targets and estimates for 2017
Financial targets and estimates for 2017 Return on equity CET 1 capital ratio Growth in loans 11,0% 14,7% 14,7% 15,0% 10,0% 8,7% 5,0 % 2,0% - 4,0% 4,0 % 3,0 % 2,0 % 1,0 % 0,5% 0,0 % 2016 Q1 17 Target 2017 2016 Q1 17 Target 2017 2016 Q1 17 Target 2017 -1,0 % -0,9% Normalised growth in costs Impairmen
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 14,7% 14,7% 13,4% 13,5% 13,8% 12,2% 9,0% 9,4% 9,5% 8,7% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Cost/income ratio Earnings per share (NOK) 2,09 1,59 1,68 1,58 43,6% 44,0% 43,3% 1,51 39,4% 37,2% Q1 16 Q2 16 Q
Slide 7: Income statement
Income statement Group Income Statement (MNOK) Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Net interest income 739 733 729 711 698 Net commission and other income 371 355 347 389 352 Net income on investment securities 89 139 231 205 79 Total income 1.199 1.227 1.307 1.305 1.129 Total operating expenses 519 540 4
Slide 8: Change in profit 31.03.2016 – 31.03.2017
8 0 100 200 300 400 500 600 31.03.2016 487 Net interest income incl. commission from 36 covered bond companies 24 Other income Net income on 10 investment securities Total operating - 27 expenses Change in profit 31.03.2016 – 31.03.2017 Impairment losses on -18 loans and guarantees 512 31.03.2017
Slide 9: Key figures
Key figures Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Return on equity after tax (%) 8,7 9,5 12,2 9,4 9,0 Net interest margin (%) 1,53 1,50 1,48 1,48 1,44 Impairment losses on loans and guarantees in % of gross loans incl. covered 0,37 0,35 0,35 0,66 0,33 bond companies Non-performing and other problem commitme
Slide 10: Consolidated income profile
Consolidated income profile 1200 1.087 1.105 1.067 1.065 1.093 1000 311 346 312 325 335 800 37 5 36 43 35 30 41 600 MNOK 400 698 711 729 733 739 200 0 -9 -23 -17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 -200 Net interest income Commission income from covered bond companies Profit before tax from covered bond c
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins* 2,66% 2,58% 2,68% 2,75% 2,73% 2,76% 2,72% 2,59% 2,59% 1,95% 1,64% 1,61% 1,56% 1,48% 1,55% 1,58% 1,45% 1,38% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Corporate market Retail market Deposit margins 0,34% 0,29% 0,11% 0,12% 0,24% -0,06% 0,04% -0,
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 12,8 % 13,8 % 12,5 % 15% 40 000 7,1 % 10% MNOK 5,3 % 3,0 % 5% 20 000 -0,5 % 0% -2,3 % -3,5 % 0 -5% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Volume Growth % Retail Market 120 000 100 000 15% 80 000 MNOK 6
Slide 13: Loan portfolio as at 31.03.2017
Loan portfolio as at 31.03.2017 • Gross loans (incl. covered bond companies) as at 31 March 2017 amount Agriculture / forestry / fishing 2,8% to NOK 183.2 billion compared with NOK 2,9% 183.9 billion at the same time the year Industry, Power/water supply and construction 3,6% 3,5% before. Retail tra
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- 100% value ratio of less than 85% is high. 90% 80% • 90.6% of the exposure is within 85% of 70% 64,5% 64,6% the assessed value of collateral. 60% 50% 40% 30% 25,6% 26,0% 20% 10% 6,3% 5,9% 3,6% 3,5% 0% Below 70 % 70
Slide 15: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by NOK 6.1 billion to 93.1 billion. 50.000 26,1% 25% • 40.000 17,7% Corresponds to an increase in the period 13,9% 15,4% 14,0% 30.000 MNOK of 7.0%. 5% 20.000 -2,4% -6,5% -6,8% -10,0% 10.000 • Increased deposit
Slide 16: Net commission and other income
Net commission and other income MNOK Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Payment facilities 63 60 75 63 54 Savings/placements 51 45 45 44 51 Insurance products 52 50 48 50 50 Commission income real estate broking 93 85 87 107 68 Guarantee commission 25 31 24 31 28 Arrangement- and customer fees 13 33 14 2
Slide 17: Net income on investment securities
Net income on investment securities MNOK Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Dividends* 5 5 0 97 8 Investment income, associates 63 78 90 112 104 Securities gains/losses 25 50 105 -36 -66 - of which capital change in shares and certificates 7 42 63 -33 -21 - of which capital change in certificates and bon
Slide 18: Subsidiaries
Subsidiaries MNOK 31.03.17 31.03.16 EiendomsMegler 1 SR-Eiendom AS Number of sales 1.611 1.211 Operating profit before tax 5 -6 SpareBank 1 SR-Finans AS* Total assets (BNOK) - 7 Operating profit before tax - 43 SR-Forvaltning AS Total assets under management (BNOK) 10 9 Operating profit before tax 8
Slide 19: Ownership interests
Ownership interests MNOK 31.03.17 31.03.16 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 71 55 Adjusted profit previous years -4 6 SpareBank 1 Boligkreditt AS Interest ownership 13,9 % 16,7 % Profit after tax -18 18 Adjusted profit previous years 0 4 SpareBank 1 Næringskre
Slide 20: Operating expenses
Operating expenses MNOK Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Personnel expenses 295 293 282 296 295 Financial activity tax 11 0 0 0 0 Total personnel expenses 306 293 282 296 295 IT expenses 75 87 83 78 73 Marketing 16 23 17 20 14 Other administrative expenses 21 23 15 16 15 Total administrative expenses 1
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 0,66% 1,15% 1,18% 1,21% 1,23% 0,92% 33 0,37% 0,35% 0,35% 0,33% 1.007 1.141 1.235 1.514 1 943 20 272 45 60 167 1.154 142 1.070 116 872 90 754 739 Q1 16 Q2 16 Q3 16 Q4
Slide 22: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees Losses on loans in income statement (MNOK) Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Corporate customers 162 131 109 258 82 Retail customers 5 11 7 14 8 Change in collective impairment losses on loans 1 20 45 33 60 Net impairment losses on loans 168 162 161 305 150 31.0
Slide 23: Funding
Funding Deposits to loans ratio • Well diversified funding. 100,0% • Funding indicator 1* is 113.6% on 80,0% consolidated basis. 59,4% 60,4% 58,3% 58,6% 57,6% 56,1% 57,2% 55,4% 54,5% 60,0% 40,0% • Good liquidity 20,0% – Net refinancing need over the next 12 0,0% months is NOK 2.0 billion. Q1 15 Q2 1
Slide 24: Stronger capital ratio
Stronger capital ratio • SpareBank 1 SR-Bank is compliant with 20% capital requirements as at 31.03.2017. 18% 17,5% 16% • SpareBank 1 SR-Bank received IRB Advanced 16,8% 15,6% approval for the corporate market portfolio 14% 15,2% 14,3% in 2015. 12,9% 12% 10% • The use of different risk weights in th
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 expected to be reached through good ROE ROE ROE profitability. ROE 16,00% ROE 10,8% 10,0% 8,7% 16,00% 14,2% 14,0% 14,0% 14,00% ROE 14,00% • Countercyclical buff
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: Appendix
39 APPENDIX SpareBank SR-BANK
Slide 28: The unemployment rate has been reduced
The unemployment rate has been reduced Rogaland still somewhat above the national average Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 6 5 Norway Rogaland 4 Hordaland Vest-Agder 3 Norway, SSB AKU-unempl. rate 2 1 0 mar. 02 mar. 03 mar. 04 mar. 05 mar. 06 mar. 07 mar. 08 m
Slide 29: House prices increasing in Norway. Flattening out in Rogaland
House prices increasing in Norway. Flattening out in Rogaland House prices. NOK per sqm. Average all. Monthly 80.000 70.000 Rogaland 60.000 Hordaland Vest-Agder 50.000 Oslo Norway 40.000 30.000 20.000 10.000 0 mar. 03 mar. 04 mar. 05 mar. 06 mar. 07 mar. 08 mar. 09 mar. 10 mar. 11 mar. 12 mar. 13 ma
Slide 30: The decline in oil industry abates
The decline in oil industry abates Marked downturn in 2015 and 2016, expected to flatten in 2017 • Petroleum activity fell in 2015 and 2016 Petroleum activity on Norwegian Continental Shelf. BNOK (2016 NOK) after reaching record levels in 2014. Total activity has fallen by close to 30% from 350 2014
Slide 31: Retail trade increasing in Norway
Retail trade increasing in Norway In Rogaland, the level is somewhat higher than a year ago 12% Retail sales (excl.auto), annual change from same 2-month period previous year 10% 8% Norway 6% Rogaland Hordaland 4% Agder Oslo 2% 0% -2% -4% mar.10 jun.12 mar.09 jun.09 jun.10 mar.11 jun.11 mar.12 mar.1
Slide 32: 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 • The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk • SpareBank 1 SR-Bank therefore invests significant r
Slide 33: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 7.9% (8.1%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 204.9 (200.1) EAD per 31.03.2017 BNOK 16.0 (16.2) EAD is related to oil operations Corporate market excl. oil Oil service; 2,3% operations; 25,9% (2,4%) (25,
Slide 34: Oil services - total NOK 4.7 billion
Oil services - total NOK 4.7 billion (NOK 4.8 billion as at 31.12.2016) Exploration and concept studies Oil services • EAD NOK 0.4 billion • EAD NOK 4.7 billion, 2.3% of the bank's total EAD • Average weighted probability of default 1.3% • Average weighted probability of default for the oil services
Slide 35: Oil and gas - total NOK 1.8 billion
Oil and gas - total NOK 1.8 billion (NOK 1.6 billion as at 31.12.2016) Exploration financing Exploration and production companies • EAD NOK 0,2 billion • EAD NOK 1.6 billion, 0.9% of the bank's total EAD • Average weighted probability of default 0.8% • Average weighted probability of default for the
Slide 36: Offshore - total NOK 9.5 billion
Offshore - total NOK 9.5 billion (NOK 9.8 billion as at 31.12.2016) Offshore Service Vessels Offshore • EAD NOK 6.7 billion, average weighted • EAD NOK 9.5 billion, 4.7% of the bank's total EAD probability of default is 2.1%, weighted average • Average weighted probability of default for the offshor
Slide 37: Offshore Service Vessels - total NOK 6.7 billion
Offshore Service Vessels - total NOK 6.7 billion (NOK 6.9 billion as at 31.12.2016) Offshore Service Vessels • Most customers with long history as a borrower in SpareBank 1 SR-Bank 3.000 EAD per age of OSV excl. accomodation • Most of the companies are listed on stock exchange or family owned 2.500
Slide 38: Offshore Service Vessels – largest customer group
Offshore Service Vessels – largest customer group Number of vessels • Well diversified portfolio. One commitment of 1 10 NOK 1.2 billion, rest of NOK 810 million or lower 2 8 3 8 • Total EAD for the portfolio is NOK 6.7 billion of which; 4 2 5 30 • NOK 5.9 billion consists of 12 restructured commitm
Slide 39: Lending to commercial property
Lending to commercial property Lending to commercial property Housing • NOK 27.6 billion, 15.1 % of the bank’s total cooperative; 4,7% loans. (4,9%) Real estate management; 1,7% (1,8%) • The portfolio is characterised by lending to commercial properties for leasing with long- term contracts and fina
Slide 40: SRBANK's activities
SRBANK’s activities Divisions of Capital Markets Retail Market Corporate Market Administration & Support SpareBank 1 SR-Bank ASA Number of man-years : 30 Number of man-years : 481 Number of man-years : 170 Number of man-years : 208 Fully owned companies Number of man-years : 200 Number of man-years
Slide 41: SpareBank 1 Alliance Banking Cooperation
SpareBank 1 Alliance Owners of the alliance • All credit decisions are made at the local banks • Economies of scale related to expenses, IT solutions, marketing and branding Samspar 19,5% 19,5% 19,5% 19,5% 11,0% 9,6% 1,4% Products, commissions, dividends Sales, loan portfolios, capital Companies dir
Slide 42: 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%. • Top 50% return on equi
Slide 43: Balance sheet
Balance sheet Balance sheet (MNOK) 31.03.2017 31.03.2016 Cash and balances with central banks 965 1.497 Balances with credit institutions 7.148 5.059 Net loans to customers 158.628 154.221 Certificates, bonds and other fixed-income securities 22.078 20.963 Financial derivatives 4.329 5.403 Shares, o
Slide 44: 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% 80% • 1 January 2017, SpareBank 1 SR-Bank and its 60,2% 59,3 % 60% wholly owned subsidiary, SpareBank 1 SR-Finans 40% 29,3% 30,9 % carried out a parent/subsidiary merger. Q1 2017 20% 1
Slide 45: Risk profile – Lending to the retail market
Risk profile – Lending to the retail market Retail market portfolio distributed by risk class • The quality of the retail market portfolio is considered to be good and has low 100% 2,5% 2,5% 2,3% 2,4% 2,9% 16,9% 16,1% 15,8% 15,7% 18,8% potential losses. 80% 60% 40% 80,6% 81,4% 81,9% 81,9% 78,3% • Th
Slide 46: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and stable portfolio. 23,0 % 22,8 % 22,5 % 22,5 % 22,5 % 22,3 % 22,0 % 22,0 % RWA 21,5 % 21,0 % 20,5 % 20,0 % 31.03.16 30.06.16 30.09.16 31.12.16 31.03.17 Home mortgages as defined in the Norwegian IRB framework; residential property must m
Slide 47: Risk profile - Corporate lending
Risk profile - Corporate lending • The quality of the corporate market Corporate lending portfolio distributed by risk class portfolio is good. There is a clearly defined 100% 24,3% 23,5% 26,5% 24,8% 23,3% framework that sets limits on what is 80% 60% funded and conditions for particular 51,5% 53,3%
Slide 48: SRBANK share price development
SRBANK Development in Price/Book Relative share price development • International ownership is 22.5% 75 1,2 190 Price per 1. quarter 2017. 70 1,1 170 P/B OSEBX 65 1,0 SRBANK 150 Index 100 = Mar. 31st 2016 60 0,9 130 • Total market value at 55 p/B NOK 0,8 50 110 1. quarter 2017 is 0,7 45 NOK 16,4 bil
Slide 49: 20 largest shareholders as at March 2017
20 largest shareholders as at March 2017 • Ownership interests: Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • From Rogaland, Agder-counties and State Street Bank and Trust Co, U.S.A. Nominee 7.804.809 3,1% Hordaland: 46.7% SpareBank 1-stiftinga Kvinnherad 6.226.583 2,4% • Inte
Slide 50: SRBANK as at March 2017
SRBANK as at March 2017 • Trading volume in Q1 2017: 15.1% (4.6%) 31.03.2017 2016 2015 2014 2013 2012 Share price 64,25 60,75 39,30 52,50 60,25 37,20 Stock value (MNOK) 16.432 15.537 10.051 13.427 15.409 9.514 Book value per share, NOK (group) 72,91 71,54 66,14 60,28 55,00 49,48 Earnings per share 1
Slide 51: Contact Details
Contact Details Management Arne Austreid CEO Tel.: +47 900 77 334 E-mail: arne.austreid@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 Adress E-mail: inge.reinertsen@sr-bank.no Bjergsted Terrasse 1 Postboks 250 Investor Relations 4066 Stavanger Stian Helgøy Investor Relations Tlf: +47 915 02002