Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q2 2017 Earnings Presentation
35 slides from Pareto Bank Asa's earnings presentation, 2017
Slide 1: Pareto Bank Financial Results Second Quarter 2017
PARETO BANK Financial Results Second Quarter 2017
Slide 2: Table of Contents
TABLE OF CONTENTS 1 SECOND QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 3: Second Quarter Highlights
SECOND QUARTER HIGHLIGHTS Key figures Q2-17 Key Value Drivers PROFIT NOK 75.0m High lending growth on a strong net interest margin. I AFTER TAX (NOK 63.7m) Continued high level of building activity in Oslo and its surroundings, but a more cautious outlook. RETURN ON 15.9 % II EQUITY * (17.4 %) High
Slide 4: Solid Foundation and Strong Performance
SOLID FOUNDATION AND STRONG PERFORMANCE Result after tax (NOKm) Return on Equity * CET1 ratio ** 16.5% 15.9% 16.2% 17.2 % 247.3 15.6% 16.0 % 13.3% 13.2 % 174.6 11.5 % 12.1 % 165.8 153.3 122.4 2013 2014 2015 2016 30.06.2017 2013 2014 2015 2016 30.06.2017 2013 2014 2015 2016 30.06.2017 Net interest in
Slide 5: The Share
THE SHARE Share price development since March 2014** EPS, DPS (NOK) & Dividend Yield * Book equity per share (NOK) * 32.71 31.14 4.08 28.01 3.81 3.91 24.68 2.6 % 2.57 2.4 % Price as of 30.06: NOK 35.80 1.00 0.60 0.0- % - 2014 2015 2016 30.06.2017 DPS EPS Dividend yield 2014 2015 2016 30.06.2017 Pric
Slide 6: Largest Shareholders as of 11.07.2017
LARGEST SHAREHOLDERS AS OF 11.07.2017 # Investor 11 July 2017 # of shares % total • The Company has 58,619,688 shares 1 Pareto AS 8,921,873 15.22 % outstanding 2 Pecunia Forvaltning AS 5,861,859 10.00 % • One class of shares where each share 3 Saga Tankers ASA 5,052,547 8.62 % 4 Apollo Capital Manag
Slide 7: Table of Contents
TABLE OF CONTENTS 1 SECOND QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 8: Norway's Leading Project Bank
NORWAY’S LEADING PROJECT BANK BUSINESS AREAS PROJECTS / CREDITS AREA EXPOSURE AVG. PRINCIPAL Property lot financing Real NOKm estate Building construction facilities 66 % 25-50 Commercial property financing M&A loans Corporate & Bridge loans NOKm Securities Investment loans 22 % 5-30 Securities fina
Slide 9: Portfolio Composition Overview
PORTFOLIO COMPOSITION | OVERVIEW * Gross credit exposure (NOKm) Σ = NOK 12,428m Gross total lending (NOKm) Σ = NOK 9,597m MAIN BUSINESS AREAS Real Estate 8,204 66% Real Estate 6,503 68% Corporates 1,195 10% Corporates 941 10% Real estate financing Real focused on residential Securities 1,498 12% Sec
Slide 10: Real Estate | Strong Market Position
REAL ESTATE | STRONG MARKET POSITION 66% Real Estate credit exposure (NOKm) * Σ = NOK 8,204m Geographical residential property exposure (NOKm) ** 1% 1% 2% Residential property 4,234 52% 3% Oslo West Oslo North 15% Oslo East 22% Lots 1,741 21% Oslo Nordstrand Akershus South Akershus North Offices 692
Slide 11: Real Estate | Policy
REAL ESTATE | POLICY 66% Real Estate portfolio policy Real Estate portfolio management • On average 20 % to 40 % equity to • In-house regulatory skills of the finance a property lot purchase housing market is essential for a good credit decision process • Primarily financing of regulated lots in Osl
Slide 12: Securities | Focus on Customized Solutions
12% SECURITIES | FOCUS ON CUSTOMIZED SOLUTIONS Total securities exposure (NOKm) * Σ = NOK 1,498m Status and policy • Pareto Securities’ expansion into standardised securities financing Primarily listed stocks** 1,190 79% in the Norwegian retail market will have an impact on the bank’s exposure, and
Slide 13: Corporates | A Market with Opportunities
10% CORPORATES | A MARKET WITH OPPORTUNITIES 9% Ambition Products Pareto Bank will become a leading provider of tailor-made, M&A FINANCING transaction-based financing solutions to investors, owners, family offices and small and medium-sized enterprises Traditional M&A and LBO financing to Norwegian
Slide 14: Shipping & Offshore | Diversified Portfolio
SHIPPING & OFFSHORE | DIVERSIFIED PORTFOLIO 10% Status Total S&O credit exposure & Loan to value (NOKm) * Σ = NOK 1,201m LTV * Share • A diversified portfolio where a single segment will Product 238 53% 20% normally not exceed 25% of the total S&O exposure Bulk • The bank has a strong competitive po
Slide 15: Shipping & Offshore | Policy
SHIPPING & OFFSHORE | POLICY 10% 13% S&O portfolio policy S&O portfolio management • Careful growth within the strong • Equity analysts and specialists in the Norwegian shipping and offshore Pareto Group are information sources sector • Use of expertise regarding valuations, • Clients should be base
Slide 16: Table of Contents
TABLE OF CONTENTS 1 SECOND QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 17: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Key comments • High lending margins and fee income, lower funding costs and low losses were key drivers Q2-17 Q1-17 Q4-16 Q3-16 Q2-16 for profits in Q2-17 Net Interest income 124.6 115.4 117.3 108.0 101.3 Total other operating income 7.8 18.9 9.0 13.3 13.0 • The
Slide 18: Growing Net Interest Income
GROWING NET INTEREST INCOME Net interest income (NOK 1,000) Net interest margins (vs. 3M NIBOR) * Q2-17 4,785 124,624 1,686 Q2-16 Q2-17 264 5.86% 5.62% 5.58% 8,756 - 461 5.06% 8,308 Q2-16 101,287 -0.29% -0.56% Lending margin Deposit margin Net margin Lending & Lending & Amorti- Invested Long-term Lo
Slide 19: Strong Margins
STRONG MARGINS Continuously improving net interest margins (vs. 3M NIBOR) * Key comments • Strong growth on an strong net margin 6.0 % 5.5 % 5.6 % 5.6 % 5.6 % 5.6 % 5.7 % 5.7 % 5.6 % 5.9 % 5.6 % • High fee income driven by high activity in 5.4 % 5.5 % 5.4 % 5.1 % 5.2 % 5.0 % 5.1 % 5.0 % 5.1 % 5.3 %
Slide 20: Strong Balance Sheet
STRONG BALANCE SHEET BS (NOKm) Key comments Q2-17 Q1-17 Q4-16 Q3-16 Q2-16 • High turnover rate: approximately 30% of the loan portfolio matures within a year Deposits with credit institutions 350.2 884.5 804.3 1,093.5 954.5 Loans to customers 9,544.0 8,973.4 8,753.8 8,907.5 8,325.5 • Surplus liquidi
Slide 21: Table of Contents
TABLE OF CONTENTS 1 SECOND QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 22: Loan Portfolio Quality
LOAN PORTFOLIO QUALITY Net non-performing and impaired loans * % of gross lending 1.58% 1.44% 1.23% 1.31% 1.15% 0.96% 0.94% Non-performing 0.71% 0.57% Impaired 0.37% 0.47% 0.29% 0.14% 0.18% 0.13% 0.00% 0.07% 0.07% 0.03% Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 No
Slide 23: Group Provisions
GROUP PROVISIONS Cumulative group provisions % of gross lending 0.51% 0.52% 0.51% 0.51% 0.50% 0.48% 0.50% 0.42% 0.40% 0.41% 0.37% 0.34% 0.31% Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Group provisions (NOKm) 22.7 24.7 26.7 28.7 30.7 30.7 40.7 40.7 43.7 45.7 45.7 4
Slide 24: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Q2-17 Σ = NOK 12,428m Q2-16 Σ = NOK 10,714m Key comments • 87 % of the portfolio is considered to None / very low risk 45% None / very low risk 4,992 47% 5,558 have low to none/very low risk risk Low risk 5,268 42% Low risk 4,127 39% • NOK 148m or 1 % classified as
Slide 25: Commitments by Size
COMMITMENTS BY SIZE Q2-17 Σ = NOK 12,428m Q2-16 Σ = NOK 10,714m Key comments • A conservative policy with respect to size <5 535 4% <5 533 5% • Maximum size on a single customer 10 % of total capital (NOK 216m) 5 - 10 652 5% 5 - 10 671 6% • Maximum size on group / consolidated basis 15 % of total ca
Slide 26: Table of Contents
TABLE OF CONTENTS 1 SECOND QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 27: Funding | Overview
FUNDING | OVERVIEW * Sources (NOKm) Σ = NOK 13,310m Historical development in deposits vs. lending (NOKm) Deposits 102% 8,163 61% 98% 95% 96% 95% 90% 89% 86% 86% 87% 86% Senior debt 2,796 21% 83% 81% 9,544 T1 & T2 debt 320 2% 8,908 8,973 8,754 8,368 8,326 7,931 8,525 Other debt 113 1% 7,596 7,487 8,
Slide 28: Funding | Customer Deposits
FUNDING | CUSTOMER DEPOSITS * Deposits by product Σ = NOK 8,151m Deposits by type Σ = NOK 8,151m 980 Depositors (#) 3,974 2,371 Floating rate retail 923 2,573 Floating rate corporate Amount (NOKm) 2,293 5,858 2,757 0% 20% 40% 60% 80% 100% 1,684 Savings with restrictions 1,792 Retail Corporate 1,766
Slide 29: Funding | Market Funding
FUNDING | MARKET FUNDING Market funding maturities - net of own holdings (NOKm) * Credit spreads (bps) 200 180 160 200 140 120 100 80 1,000 843 60 40 445 500 20 120 0 2017 2018 2019 2020 2021 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sen
Slide 30: Surplus Liquidity
SURPLUS LIQUIDITY Comfortable liquidity buffer (NOKm) * Bond portfolio (NOKm) Σ = NOK 3,332m 4,500 1% 4,000 Drawing facility Fixed income fund 10% 3,500 Financials & unrated covered 3,000 LCR 153 % Level 2A+B assets 2,500 Government & PSEs 42% Covered bonds 2,000 Liquidity portfolio Level 1 covered
Slide 31: Strong Capital Ratios
STRONG CAPITAL RATIOS Capital ratios Key comments on capital • The NFSA requires that Pareto Bank targets a minimum of 15.5 % CET1 by the end of 2017, including the increase in the countercyclical capital 18.8 % 19.0 % buffer to 2.0 % 16.5 % 17.0 % • The bank’s Pillar 2 and total capital requirement
Slide 32: Table of Contents
TABLE OF CONTENTS 1 SECOND QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 33: Status Financial Targets 2017
STATUS FINANCIAL TARGETS 2017 30.06.2017 STATUS 31.12.2017 TARGET GROWTH LENDING NOK 790m ~NOK 1,000m Continued growth in residential property development Lending growth on high margins 15.9 % > 13.0 % * ROE and cost efficiency yield high returns ADEQUACY High earnings, balance sheet CAPITAL 16.0 %
Slide 34: Status Portfolio Goals 2017
STATUS PORTFOLIO GOALS 2017 BUSINESS AREAS MARKET STATUS 30.06.2017 GROWTH TARGETS 2017 More cautious outlook Net growth of Net growth of Real due to recent regulation approximately approximately estate of mortgage lending NOK 1,017m NOK 600m A market with Net growth of Net growth of Securities & op
Slide 35: PAGE 35
(Pareto bank