Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q2 2016 Earnings Presentation
53 slides from Sparebank 1 Ostlandet's earnings presentation, 2016
Slide 1: Second Quarter 2016
SECOND QUARTER 2016 SpareBank 4)
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 Market share 36% 2 Year of establishment 1839 Market strategy Market leader Unemployment rate 4.6%* 2 Hordaland Population 516.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment
Slide 4: Good underlying operations, but weaker result due to increased losses
Good underlying operations, but weaker result due to increased losses Pre-tax profit for the quarter is NOK 486 million compared to NOK 552 million last year - Return on equity after tax 9.4% Pre-tax profit year-to-date is NOK 973 million compared to NOK 1.180 million last year - Return on equit
Slide 5: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 13,3% 13,4% 13,5% 12,3% 12,2% 10,8% 10,6% 9,3% 9,0% 9,4% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Cost/income ratio Earnings per share (NOK) 47,3% 1,73 1,69 43,6% 42,3% 39,4% 1,59 35,5% 1,51 1,47 Q2 15 Q3 15
Slide 6: Income statement
Income statement 30.06 30.06 Group Income Statement (MNOK) 16 15 Q2 16 Q1 16 Q4 15 Q3 15 Q2 15 Net interest income 1.409 1.266 711 698 678 649 639 Net commission and other income 741 807 389 352 372 353 399 Net income on investment securities 284 305 205 79 -13 12 94 Total income 2.434 2.378 1.305 1
Slide 7: Change in profit 30.06.2015 – 30.06.2016
7 1.000 1.200 1.400 0 200 400 600 800 30.06.2015 1.180 Net interest income incl. commission from 77 covered bond companies 0 Other income Net income on - 21 investment securities Total operating 60 Change in profit 30.06.2015 – 30.06.2016 expenses Impairment losses on - 323 loans and guarantees 30.0
Slide 8: Key figures
Key figures 30.06 30.06 16 15 Q2 16 Q1 16 Q4 15 Q3 15 Q2 15 Return on equity after tax (%) 9,3 11,7 9,4 9,0 10,6 9,3 10,8 Net interest margin (%) 1,47 1,44 1,48 1,44 1,40 1,39 1,44 Impairment losses on loans and guarantees in % of gross loans 0,58 0,18 0,78 0,39 0,50 0,25 0,12 -incl. covered bond co
Slide 9: Consolidated income profile
Consolidated income profile 1200 1.060 1.027 1.087 1.087 1.105 1000 319 311 346 333 298 800 37 37 5 22 25 41 43 53 66 55 MNOK 600 400 678 698 711 639 649 200 0 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Net interest income Commission income from covered bond companies Profit before tax from covered bond companie
Slide 10: Lending and deposit margins
Lending and deposit margins Lending margins 2,90% 2,89% 2,80% 2,66% 2,59% 2,59% 2,58% 2,68% 2,75% 2,08% 1,97% 1,95% 1,95% 1,64% 1,61% 1,56% 1,48% 1,55% Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Corporate market Retail market Deposit margins 0,11% 0,12% -0,06% -0,18% -0,12% -0,05% -0,45%
Slide 11: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 12,8% 13,8% 15% 50 000 12,5% 40 000 10% 7,1% MNOK 30 000 5,6% 2,5% 3,0% 5% 20 000 1,4% -0,5% 0% 10 000 0 -5% Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Volume Growth % Retail Market 120 000 100 000 15% 80
Slide 12: Loan portfolio as at 30.06.2016
Loan portfolio as at 30.06.2016 • Gross loans as at 30 June 2016 amount Agriculture / forestry / fishing 2,8 % to NOK 183.4 billion compared with NOK 2,8 % 181.4 billion at the same time the year Industry, Power/water supply and 3,6 % construction 3,7 % before. Retail trade, hotels and restaurants 1
Slide 13: 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 of less than 85% is high. 100% • 90.2% of the exposure is within 85% of 90% 80% the assessed value of collateral. 70% 67,2% 65,5% 60% • Market value on real estate is slightly 50% declining in SpareBank
Slide 14: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits decreased by NOK 1.2 billion to 89.6 billion. 50.000 24,1% 20,3% 26,1% 30% • Corresponds to an decrease in the period 40.000 18,9% 17,7% 13,9% 15,4% 20% MNOK 30.000 of -1.3%. 10% 20.000 -2,4% 10.000 0% -6,5% • Lower depo
Slide 15: Net commission and other income
Net commission and other income 30.06 30.06 MNOK 16 15 Q2 16 Q1 16 Q4 15 Q3 15 Q2 15 Payment facilities 117 114 63 54 56 66 56 Savings/placements 95 97 44 51 48 45 48 Insurance products 100 94 50 50 48 48 47 Commission income real estate broking 176 217 107 69 82 84 113 Guarantee commission 59 67 31
Slide 16: Net income on investment securities
Net income on investment securities 30.06 30.06 MNOK 16 15 Q2 16 Q1 16 Q4 15 Q3 15 Q2 15 Dividends* 105 15 97 8 1 1 8 Investment income, associates 216 234 112 104 110 78 101 Securities gains/losses -102 -38 -36 -66 -87 -100 -14 - of which capital change in shares and certificates -54 -1 -33 -21 -34
Slide 17: Subsidiaries
Subsidiaries MNOK 30.06.16 30.06.15 EiendomsMegler 1 SR-Eiendom AS Number of sales 3.060 3.723 Operating profit before tax 13 30 SpareBank 1 SR-Finans AS Total assets (BNOK) 7 7 Operating profit before tax 45 75 SR-Forvaltning AS Total assets under management (BNOK) 9 9 Operating profit before tax 1
Slide 18: Ownership interests
Ownership interests MNOK 30.06.16 30.06.15 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 135 128 Adjusted profit previous years 6 0 SpareBank 1 Boligkreditt AS Interest ownership 16,7 % 20,1 % Profit after tax 16 57 Adjusted profit previous years 4 0 SpareBank 1 Næringskre
Slide 19: Operating expenses
Operating expenses 30.06 30.06 MNOK 16 15 Q2 16 Q1 16 Q4 15 Q3 15 Q2 15 Personnel expenses 592 603 296 296 255 284 300 Restructuring- and non-recurring costs, pensions -1 7 0 -1 -141 -63 0 Total personnel expenses 591 610 296 295 114 221 300 IT expenses 151 145 78 73 86 70 73 Marketing 34 47 20 14 1
Slide 20: 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 0,78% 1,34% 0,50% 0,66% 1,10% 0,90% 1,15% 0,39% 33 0,75% 0,68% 0,92% 0,25% 0,76% 0,42% 0,62% 0,56% 0,12% 0,33% 0,21% 1235 0,10% 51 943 548 272 60 716 683 50 141 853
Slide 21: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 30.06 30.06 Losses on loans in income statement (MNOK) 16 15 Q2 16 Q1 16 Q4 15 Q3 15 Q2 15 Corporate customers 340 81 258 82 145 40 18 Retail customers 22 12 14 8 -4 6 7 Change in collective impairment losses on loans 93 39 33 60 51 50 19 Net impairment loss
Slide 22: Funding
Funding • Well diversified funding. Deposits to loans ratio 100,0 % • Greater share of senior and OMF funding 80,0 % last year. 60,4% 59,1% 57,5% 59,4% 60,4% 58,6% 57,6% 56,1% 57,2% 60,0 % ‒ Euro-benchmarks with due dates in each of 40,0 % the years 2017- 2021. 20,0 % ‒ 3 outstanding euro covered bo
Slide 23: Stronger capital ratio
Stronger capital ratio • SpareBank 1 SR-Bank is compliant with 18% capital requirements as at 30.06.2016. 16% 16,8% 14% 14,6% 15,3% 14,4% • SpareBank 1 SR-Bank received IRB Advanced 13,1% approval for the corporate market portfolio 12% 13,2% in the first quarter of 2015. 10% 8% • The use of differen
Slide 24: Common Equity Tier 1 being strengthened in line with stricter regulatory requirements
Common Equity Tier 1 being strengthened in line with stricter regulatory requirements • New capital requirements entail a need to continue increasing common equity tier 1 ROE ROE 16,00% ROE 10,8% 9,3% 16,00% 11,5 -13,5% capital going forward. ROE 14,2% 14,0% 14,00% ROE 14,00% 12,4% • In addition, th
Slide 25: Increasing CET1 – well prepared to reach capital requirements
Increasing CET 1 – well prepered to reach capital requirements Stronger common equity tier 1 in 2015 Guiding 2016 • IRB Advanced approval for the corporate market portfolio 16% • Changed pension scheme 0,1% 0,2% 13,8% 0,7% 14,5% 14% 13,3% 13,5% • Good profitability 12% • Moderate growth 10% • Capita
Slide 26: Outlook
Outlook Norwegian exports more competitive due to a weaker exchange rate and interest rates stimulate business and household spending. Major infrastructure projects helps to ensure good conditions for the region's business and population growth, with moderate unemployment. Uncertainty, especia
Slide 27: Financial targets and estimates for 2016
Financial targets and estimates for 2016 Return on equity CET 1 capital ratio Growth in loans 11,0% 13,3% 13,5% 14,0% 6,0 % 5,4% 10,8% 9,3% 5,0 % 4,0 % 3,0 % 2,0 % 1,0 % -0,2% 0,0% -1,0% 0,0 % -1,0 % 2015 30.06.16 Target 2016 Revised 2015 30.06.16 Target 2016 2015 30.06.16 Target 2016 estimate -2,0
Slide 28: Appendix
39 APPENDIX SpareBank SR-BANK
Slide 29: Unemployment rate trending down last months
29 0 1 2 3 4 5 6 jun. 01 des. 01 Source: NAV jun. 02 des. 02 jun. 03 des. 03 jun. 04 des. 04 jun. 05 des. 05 jun. 06 des. 06 jun. 07 des. 07 jun. 08 des. 08 jun. 09 Rogaland above the national average des. 09 jun. 10 des. 10 jun. 11 Unemployment rate (registrered, percent) des. 11 jun. 12 des. 12 ju
Slide 30: House prices increasing in Norway. Flattening out in Rogaland
House prices increasing in Norway. Flattening out in Rogaland House prices, NOK per square meter, average 70.000 60.000 50.000 Vest-Agder 40.000 Rogaland Hordaland 30.000 Norway Oslo 20.000 10.000 - jun.03 jun.04 jun.05 jun.06 des.06 jun.07 jun.08 jun.09 jun.10 jun.11 jun.12 jun.13 jun.14 jun.15 jun
Slide 31: Reduced petroleum activity in 2016
Reduced petroleum activity in 2016 The major part of the decline is done during 2016 • Petroleum activity fell in 2015 after reaching 350 record levels in 2013 and 2014. The Petroleum Directorate expects decrease of 300 11% in 2016 for activity overall after reduction of 13% in 2015. Activity in 201
Slide 32: Retail trade increasing in Norway
Retail trade increasing in Norway In Rogaland growth has slowed towards zero Retail trade, except sales of motor vehicles. Change from the same two-month period a year earlier 12% 10% 8% Vest-Agder 6% Rogaland Hordaland Norway 4% 2% 0% -2% jan.09 jul.09 jan.10 jul.10 jan.11 jul.11 jan.12 jul.12 jan.
Slide 33: 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 34: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 8.6% (8.7%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 202.9 (202.5) EAD per 30.06.2016 BNOK 17.4 (17.6) EAD is related to oil operations Oil service; 2.5% Corporate market excl. oil (2.5%) operations; 24.8% (25.
Slide 35: Oil services - total NOK 5.0 billion
Oil services - total NOK 5.0 billion (NOK 5.0 billion as at 31.12.2015) Exploration and concept studies Oil services • EAD NOK 0.7 billion • EAD NOK 5.0 billion, 2.5% of the bank's total EAD • Average weighted probability of default 1.0% • Average weighted probability of default for the oil services
Slide 36: Oil and gas - total NOK 2.2 billion
Oil and gas - total NOK 2.2 billion (NOK 2.2 billion as at 31.12.2015) Exploration financing Exploration and production companies • EAD NOK 0,5 billion • EAD NOK 2.2 billion, 1.1% of the bank's total EAD • Average weighted probability of default 1.2% • Average weighted probability of default for the
Slide 37: Offshore - total NOK 10.2 billion
Offshore - total NOK 10.2 billion (NOK 10.4 billion as at 31.12.2015) Offshore Service Vessels Offshore • EAD NOK 7.2 billion, average weighted • EAD NOK 10.2 billion, 5.0% of the bank's total EAD probability of default is 1.4%, weighted average • Average weighted probability of default for the offs
Slide 38: Offshore Service Vessels - total NOK 7.2 billion
Offshore Service Vessels - total NOK 7.2 billion (NOK 7.3 billion as at 31.12.2015) PSV Offshore Service Vessels • EAD NOK 2.6 billion, weighted average age is 4.9 • Most customers with long history as a borrower in SpareBank 1 SR-Bank years • Most of the companies are listed on stock exchange or fa
Slide 39: Offshore Service Vessels – largest customer group
Offshore Service Vessels – largest customer group Number of LTV vessels • Well diversified portfolio. One commitment of NOK 1.2 billion, rest of NOK 800 million or lower 1 9 70 % 2 8 66 % • Total EAD for the portfolio is NOK 7.2 billion of 3 8 68 % which; 4 4 66 % • NOK 5.7 billion consists of 9 res
Slide 40: Lending to commercial property
Lending to commercial property Lending to commercial property Housing cooperative; • NOK 27.1 billion, 14.8% of the bank’s total 5,2 % (4,6%) loans. Real estate management; 2,0 % (1,6%) • The portfolio is characterised by lending to commercial properties for leasing with long- term contracts and fin
Slide 41: 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 : 460 Number of man-years : 158 Number of man-years : 209 Fully owned companies Number of man-years : 200 Number of man-years
Slide 42: 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 43: 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 2016. The longer term and development in the region target is a minimum of 11%. • Top 50% return on equi
Slide 44: Balance sheet
Balance sheet Balance sheet (MNOK) 30.06.2016 30.06.2015 Cash and balances with central banks 910 2.841 Balances with credit institutions 2.188 2.224 Net loans to customers 155.612 149.472 Certificates, bonds and other fixed-income securities 24.814 16.116 Financial derivatives 5.056 4.878 Shares, o
Slide 45: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • SpareBank 1 SR-Bank has a solid loan portfolio with positive development in risk 100% 80% profile. 58,0% 61,0% 60% 40% 31,7% 29,1% 20% 10,3% 9,9% • 61.0% of the bank’s loan exposure has a 0% PD* below 0.5%. 0.00 - 0.50 0.50 - 2.50 2.50 -
Slide 46: 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% 2,6% 2,5% 2,6% 2,6% 2,5% 17,2% 17,2% 17,1% 16,9% 16,1% potential losses. 80% 60% 40% 80,2% 80,3% 80,3% 80,5% 81,4% • Th
Slide 47: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and stable portfolio. 22,8 % 22,8 % 22,4 % 22,5 % • The Norwegian FSA tightened the 22,3 % requirements for morgtage models in 2015 imposed by restrictions on PD and LGD. Probability of default (PD) through a full cycle of loss. 30.06.15 30
Slide 48: Risk profile - Corporate lending
Risk profile - Corporate lending • The quality of the corporate market Corporate lending portfolio distributed by risk class portfolio is good. 100% 22,7% 21,8% 24,0% 24,0% 23,5% 80% 60% • The share of customers with PD* below 56,5% 57,5% 54,3% 51,8% 53,3% 40% 0.5% is increasing and is now at 23.2 %
Slide 49: A strengthened framework to meet increased economic uncertainty
A strengthened framework to meet increased economic uncertainty Uncertainty regarding the outlook for the Norwegian economy has increased due to lower oil prices. SpareBank 1 SR-Bank faces this uncertainty with a solid portfolio, a solid framework for lending and continuous focus on managing and con
Slide 50: SRBANK share price development
SRBANK Development in Price/Book Relative share price development • International ownership is 16.5% 55 1,2 110 per 2. quarter 2016. 1,1 100 50 1,0 Index 100 = Jun. 30th 2015 90 0,9 • Total market value at 45 p/B NOK 0,8 80 2. quarter 2016 is 40 0,7 70 NOK 10.5 billion. 0,6 35 60 Price 0,5 OSEBX P/B
Slide 51: 20 largest shareholders as at June 2016
20 largest shareholders as at June 2016 • Ownership interests: Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • From Rogaland, Agder-counties and Gjensidige Forsikring ASA 26.808.416 10,5% Hordaland: 50.0% Vpf Nordea Norge Verdi 7.982.657 3,1% • International: 16.5% State Street
Slide 52: SRBANK as at June 2016
SRBANK as at June 2016 • Trading volume in Q2 2016: 2.5% (5.6%) 30.06.2016 2015 2014 2013 2012 2011 Share price 41,20 39,30 52,50 60,25 37,20 40,70 Stock value (MNOK) 10.537 10.051 13.427 15.409 9.514 5.182 Book value per share, NOK (group) 67,16 66,14 60,28 55,00 49,48 48,75 Earnings per share 3,10
Slide 53: 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