Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q2 2016 Earnings Presentation
71 slides from Sparebank 1 Nord-norge's earnings presentation, Aug 11, 2016
Slide 1: Quarterly presentation Q2 2016
Quarterly presentation Q2 2016 Tromsø/Oslo 11. August 2016
Slide 2: Interim report for Q2 - Group
Interim report for Q2 - Group PROFIT BEFORE TAX: NOK 768 mill (NOK 684 mill) RETURN ON EQUITY: 12.4 % (11.7 %) REDUCED COSTS: (- 3.8 %) compared with first half of 2015 (excl. restructuring costs) MODERATE LOAN LOSSES: NOK 88 mill (NOK 68 mill) CET-1 RATIO: 14.2 % (13.4 %) CORE BUSINESS Cultivation
Slide 3: Few signs of weakening in northern Norwegian economy
Few signs of weakening in northern Norwegian economy GROWTH Continued export growth in the north SEAFOOD Seafood exports grew by 27% in the first half of the year. Increase for both salmon and white fish. TOURISM Growth continues, 25% growth in foreign overnight stays increased earnings OIL Relative
Slide 4: Strategy: Significant measures implemented
Strategy: Significant measures implemented o Near doubled equity during last 6 years o Capital ratio well above regulatory minimum requirement o No need for equity issue o Cultivation of core business almost complete: o SNN Invest wound up o Nord II investment fund sold o Phasing out of business mar
Slide 5: Common Equity Tier 1 capital adequacy ratio
Common Equity Tier 1 capital adequacy ratio* CET 1 incl floor CET 1 excl floor 13,9 % 13,8 % 14,2 % 13,1 % 13,4 % 13,5 % 16,3 % 14,9 % 15,2 % 14,2 % 14,2 % 13,2 % 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 Expected minimum regulatory CET 1 level 31.12.16 Leverage ratio -
Slide 6: Quarterly summary – Profit and loss account figures
Quarterly summary – Profit and loss account figures (Amounts in NOK million) 2Q16 1Q16 4Q15 3Q15 2Q15 Net interest income 401 386 390 385 368 Net fee-, commision and other operating income 249 213 222 233 239 Net income from financial investments 156 80 46 -8 93 Total net income 806 679 658 610 700
Slide 7: Changes in net interest income
Changes in net interest income 450 5 -5 3 -1 9 0 3 400 350 434 448 300 250 200 Net Deposits Deposits Lending Lending Volume Days Other Net interest margin margin margin margin interest income corporate retail corporate retail income 1Q16 2Q16 Including commisions from Boligkreditt. Measured against
Slide 8: Net fee-, commission- and other operating income
Net fee-, commission- and other operating income Mill NOK 202 172 174 165 165 161 158 156 163 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Net fee-, commision and other operating income excl commission from Boligkreditt
Slide 9: Income from financial investments
Income from financial investments Group (Amounts in NOK million) 2Q16 1Q16 4Q15 3Q15 30.06.16 Dividends 73 0 0 1 73 Income from joint ventures 109 87 98 75 196 Gains/losses and net value changes on shares -41 -14 -16 -6 -55 Net value changes on bonds, foreign exchange and fin.derivatives 18 6 -35 -7
Slide 10: Group operating costs
Group operating costs NOK mill. 475 3,50 % 450 425 451 400 3,00 % 375 350 2,50 % 325 354 333 338 336 336 300 325 318 275 311 2,00 % 250 225 1,74 % 1,50 % 200 1,64 % 1,63 % 1,66 % 1,64 % 1,62 % 1,61 % 175 1,43 % 1,42 % 150 1,00 % 125 100 75 0,50 % 50 25 0 0,00 % 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q1
Slide 11: Losses and non-performing commitments
Losses and non-performing commitments Net losses on loans and guarantees Non-performing- and other problem commitments 0,59% 321 0,81% 0,74% 0,64% 0,58% 0,49% 358 271 195 200 0,26% 172 270 499 0,21% 0,22% 256 0,19% 0,19% 101 88 345 377 245 184 95 2011 2012 2013 2014 201530.06.16 2Q 15 3Q 15 4Q 15 1Q
Slide 12: Group companies result before tax
Group companies result before tax (Amounts in NOK 1000) 30.06.16 30.06.15 SpareBank 1 Finans Nord-Norge AS 39 369 60 428 SpareBank 1 Regnskapshuset Nord-Norge AS 9 834 7 143 EiendomsMegler 1 Nord-Norge AS 16 502 18 249 Subsidiaries core operations 65 705 85 820 Other subsidaries -42 082 -50 974 Tota
Slide 13: Lending volume
Lending volume Retail incl. SpareBank 1 Boligkreditt 38 % 7,6 % 28 % 6,8 % 72 % 62 % 66 483 61 760 Retail incl. SpareBank 1 57 802 Retail excl. SpareBank Boligkreditt 1 Boligkreditt Business/ Public Business/ Public 30.06.14 30.06.15 30.06.16 Business/public market Annualised lending growth first ha
Slide 14: Deposit volume
Deposit volume Retail banking market Business 6,5 % 8,0 % 30 985 7,5 % 29 101 1,8 % 26 955 13 184 14 177 14 427 30.06.14 30.06.15 30.06.16 30.06.14 30.06.15 30.06.16 Public Business 47,2 % 25,9 % 2,3 % Retail 10 254 55,7 % Public 6 810 6 968 18,4 % 30.06.14 30.06.15 30.06.16
Slide 15: Future outlook
Future outlook Continued strong competition. Slightly higher funding costs in Q3 and Q4 (assuming NRI constant conditions in the capital market) Average targeted cost increase 0 %. Reduced costs compared with 2015 expected in COSTS 2016 and 2017 (excl. restructuring costs) LOSSES Lending losses expe
Slide 16: Why invest in SpareBank 1 Nord-Norge?
Why invest in SpareBank 1 Nord-Norge? o The northern Norwegian macroeconomy is showing few signs of weakening o Focus on core business is reducing volatility in the results o Strong regional base and community part-ownership providing a very good competitive position o The SpareBank 1 Alliance is co
Slide 17: Contact information
Contact information: SpareBank 1 Nord-Norge P o Box 6800 N-9298 Tromsø CEO Jan-Frode Janson CFO Rolf Eigil Bygdnes Tel + 47 909 75 183 Tel +47 905 19 774 Homepage and internet bank: www.snn.no Equity capital certificates in general: www.egenkapitalbevis.no
Slide 18: Enclosures
Enclosures 18 10.08.2016 Presentasjon text
Slide 19: Organisation of the financial services Group
Organisation of the financial services Group SpareBank 1 Nord-Norge Financial Services Group SpareBank 1 Finans Nord-Norge AS SpareBank 1 Gruppen AS Equity stake 100 % Equity stake 19.50 % SpareBank 1 Boligkreditt AS Equity stake 14.45 % EiendomsMegler 1 Nord-Norge AS Equity stake 100 % SpareBank 1
Slide 20: Macro and Economic trends
20 Macro and Economic trends SpareBank NORD-NORGE
Slide 21: Seafood – strong export growth
Seafood – strong export growth • 27% growth in seafood export from Northern Norway, 1. Export price for fresh or frozen farmed salmon quarter 2016 vs. 1. quarter 2015 • Seafood export from Northern Norway is more than 2 billion per month • Salmon prices are peaking in 2016 • God development for whit
Slide 22: Tourism – strong growth for foreign overnight stays
Tourism – strong growth for foreign overnight stays • Foreign overnight stays takes an increasing portion of the tourism industry in Northern Norway • Strong contribution from winter tourism • Weak norwegian kroner is positive for the tourism industry 22 Source: Statistisk Sentralbyrå, «Overnattinge
Slide 23: Oil and gas – new fields increase demand
Oil and gas – new fields increase demand • Norne, Snøhvit and Skarv in production ‒ 10% of Norwegian gas production Demand from oil companies ‒ 7% of Norwegian oil production Repurchases will further ‒ Goliat, first oil field in the Barents Sea had increase the total demand ‒ production start-up Mar
Slide 24: Good growth for construction and infrastructure investments
Good growth for construction and infrastructure investments Turnover Northern Norway, mill kr 50.000 15,0 % 40.000 12,0 % 30.000 9,0 % 20.000 6,0 % 10.000 3,0 % 0 0,0 % 2010 2011 2012 2013 2014 Last 12 mths/T5 Turnover Omsetn 2010 (mill kr)- 2014 Growth (%) Vekst/år /year (%) Norway 24 Source: Stati
Slide 25: Residential construction is peaking
Residential construction is peaking 25 Source: Statistisk Sentralbyrå, «Byggeareal»
Slide 26: Regional house prices lower than the Norwegian average
Regional house prices lower than the Norwegian average 26 Source: Eiendom Norge, Finn.no and Eiendomsverdi AS, «Boligprisstatistikk»
Slide 27: Considerable regional differences in unemployment change
Considerable regional differences in unemployment change 27 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 28: Stable, low unemployment
Stable, low unemployment 28 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 29: Credit growth corporates
Credit growth corporates Credit growth corporates. 12 mth growth 12 10 8 6 Ry 2 2,6 a 18 () 5 bl 4 201302 201304 201402 201404 201502 201504 2016K2 ——SNN, Corporate clients ——Norway, Corporates SpareBank @) NORD-NORGE
Slide 30: Credit growth households
30 Credit growth households be i=} % OCFRNWAUDND LW Credit growth households. 12 mth growth | | 7.6 ——————— | | | | | | | 5,8 2013Q2 201304 2014Q2 201404 2015Q2 201504 ——SNN, Retail clients —— Norway, Households 2016K2 SpareBank NORD-NORGE O
Slide 31: Deposit growth corporates
Deposit growth corporates 31
Slide 32: Deposit growth households
Deposit growth households 32
Slide 33: Main financial figures
33 Main financial figures SpareBank NORD-NORGE
Slide 34: Key figures
Key figures Net non-performingCommon and impaired commitments Equity Tier I % incl(Group) share of result Returnon Return onequity equity 13,9 % 14,2 % 13,1 % 12,2 % 12,4 % 12,3 % 12,5 % 9,9 % 10,3 % 9,0 % 9,1 % 8,5 % 2011 2012 2013 2014 2015 2Q16 2011 2012 2013 2014 2015 2Q16 Cost/income ratio (Gro
Slide 35: Main financial targets as at 30.06.16
Main financial targets as at 30.06.16 Return on equity at top international ROE 1H 2016: 12.4 % level, at present ROE 10 – 11 % Solidity: CET-1 14.5 % As at 30.06.16: 14.2 % Yearly cost growth: 1H 2016 vs 1H 2015: - 3.9 % Maximum 0 % 35
Slide 36: Profit development
Profit development Total income Net interest income Pre-tax operating profit Cost/income ratio NOK mill NOK mill NOK mill Per cent 806 700 679 658 610 68,5 % 424 401 55,1 % 344 328 48,0 % 45,8 % 390 39,5 % 386 385 234 368 115 36
Slide 37: Profit and loss account - Group
Profit and loss account - Group (Amounts in NOK million) 30.06.16 30.06.15 31.12.15 Net interest income 787 737 1 512 Net fee-, commision and other operating income 462 478 933 Net income from financial investments 236 211 249 Total net income 1 485 1 426 2 694 Total costs 629 674 1 461 Result befor
Slide 38: Quarterly results – net interest income
Quarterly results – net interest income (Amounts in NOK million) 2Q16 1Q16 4Q15 3Q15 2Q15 Interest and similar income from loans to and claims on credit institutions 2 2 6 6 5 Interest and similar income from loans to and claims on customers 584 578 597 618 630 Interest and similar income from certi
Slide 39: Net interest income - Group
Net interest income - Group Mill NOK 500 456 460 445 434 446 447 448 450 446 423 431 434 431 82 57 47 78 76 61 48 400 393 91 89 66 90 95 350 84 300 250 200 378 378 385 390 386 401 341 355 342 369 368 150 309 328 100 50 0 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Net interest i
Slide 40: Lending margin, Parent bank
Lending margin, Parent bank The interest margin is defined as the difference between the customer lending interest rate and average 3 month NIBOR
Slide 41: Customer deposit, Parent bank
Customer deposit, Parent bank The interest margin is defined as the difference between average 3 month NIBOR and the customer deposit interest rate
Slide 42: Total commission and other income
Total commission and other income 2Q16 1Q16 4Q15 3Q15 2Q15 (Amounts in NOK million) Payment transmission income 63 61 60 69 62 Commissions insurance 37 39 37 36 35 Guarantee commissions 5 5 5 5 5 Estate agency 39 26 27 29 36 Assets management 11 11 11 12 13 Other commissions 24 14 19 20 16 Commissio
Slide 43: Group operating costs
Group operating costs (Amounts in NOK million) 30.06.16 30.06.15 Change Wages and salaries 265 306 - 41 Pension costs 17 21 -4 Social costs 42 44 -2 Total personnel costs 324 371 - 47 Administration costs 186 180 6 Total personnel- and general administration costs 510 551 - 41 Depreciation and write
Slide 44: Operating expenses
Operating expenses (in NOK million) 2Q16 1Q16 4Q15 3Q15 2Q15 Wages and salaries 133 132 249 158 147 Pension costs 9 8 4 11 12 Social costs 19 23 35 22 23 Total personnel costs 161 163 289 190 182 Development costs 28 30 34 28 28 Electronic data processing costs 19 18 16 14 18 Marketing costs 19 15 1
Slide 45: Core banking operations
Core banking operations- (excl. income from financial investments) (Amounts in NOK million) 2Q16 1Q16 4Q15 3Q15 2Q15 Net interest income 401 386 390 385 368 Net fee- and commission income 204 185 198 210 215 Other operating income 45 28 24 23 24 Total costs excl restructuring costs 318 311 346 326 3
Slide 46: Key figures balance sheet
Key figures balance sheet 30.06.16 30.06.15 Change Change % Total assets 92 038 84 981 7 057 8,3% Gross lending 67 861 63 073 4 788 7,6% Loans and advances to customers incl 92 249 87 076 5 173 5,9% SpareBank 1 Boligkreditt and Næringskreditt Deposits from customers 55 666 49 977 5 689 11,4%
Slide 47: Credit area
Credit area o Portfolio o Commitments in default and losses 47
Slide 48: Lending portfolio - comments
Lending portfolio - comments o Good increase in retail lending, with focus on commitments qualifying for SpareBank 1 Boligkreditt (covered bond company) o Low growth in corporate market lending last 12 months, increased growth last 6 months o The portfolio and new commitments in corporate sector len
Slide 49: Portfolio - exposure as of 30.06.16, parent bank
Portfolio - exposure as of 30.06.16, parent bank 45.000 40.044 40.000 35.000 30.000 25.973 25.000 22.234 NOK mill 20.000 15.000 10.000 7.885 5.000 2.015 1.298 744 132 500 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired Retail market Corporate market 49
Slide 50: Portfolio – changes last 12 months, parent bank
Portfolio – changes last 12 months, parent bank 7.000 6.115 6.000 5.000 4.000 NOK mill 3.000 2.594 2.000 1.000 548 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired -304 (11) -1.000 (234) -734 -1.241 -1.091 -2.000 SB1 Boligkreditt Retail market Corporate market SB1 Næring
Slide 51: Portfolio - exposure as of 30.06.16
Portfolio - exposure as of 30.06.16 Loans distributed by size of exposure and share of total exposure Share of loanexposure Jun 2016 Share of loanexposure Jum 2015 78% 77% 11% 10% 7% 6% 5% 6% Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Numbers includes SB 1 Bolig- and Næringskreditt 51
Slide 52: Portfolio – LTV mortgage loans as of 30.06.16
Portfolio – LTV mortgage loans as of 30.06.16 100,0 % • 97.1 % of exposures are 90,0 % 92,0 % 92,3 % within 85 % of the 80,0 % collaterals market value 70,0 % 60,0 % 50,0 % • Exposures above 85 % are 40,0 % 2.9 % 30,0 % 20,0 % 10,0 % 5,1 % 5,0 % 1,4 % 1,3 % 1,5 % 1,4 % 0,0 % Below 70 % 70 - 85% 85 -
Slide 53: Portfolio – Commercial Real Estate
Portfolio – Commercial Real Estate Housing Ass.; 5,2 % Above 250 MNOK; 5,23% 0 - 5 MNOK; Others (small commitments); 15,37% 26,5 % Residential Development / Investment; 14,5 % 100 - 250 MNOK; 23,45% Shops / Combination- shopping buildings; 8,0 % centres; 21,5 % 5 - 30 MNOK; 30 - 100 MNOK; 32,91% 23,
Slide 54: Portfolio – Oil related exposure as of 30.06.16
Portfolio – Oil related exposure as of 30.06.16 • Oil related exposure amounts to NOK 2,035 Other; 9,8 % mill Industry; 8,3 % Supply base; • The exposure represents 2.2 % of total lending 38,0 % incl. Næring- and Boligkreditt • Average weighted probability of default 1.07 % • A total of NOK 201.7 mi
Slide 55: Portfolio – Offshore Supply Vessels (OSV)
Portfolio – Offshore Supply Vessels (OSV) • OSV amounts to NOK 893 mill AHTS; 5,8 % • Average weighted probability of default 0.49 % • Total amount of 8 vessels* • Weighted age 5.5 years* PSV; 51,8 % • Average weighted contract length 3.3 years* incl. one vessel laid up Standby/area contingency; • S
Slide 56: Portfolio – Supply bases
Portfolio – Supply bases • Supply base exposure amounts to NOK 773 Other; 9,8 % mill Industry; 8,3 % Supply base; 38,0 % • Average weighted probability of default 1.54 % • Customers with long term contracts with solid and strong partners gives good cash flows in the short and long term Offshore supp
Slide 57: Portfolio – Industry and Other
Portfolio – Industry and Other Other; 9,8 % • The sector “Industry and Other” amounts to NOK 369 mill, divided into Industry NOK 169 Industry; 8,3 % mill and Other NOK 200 mill Supply base; 38,0 % • Average weighted probability of default: Industry 2.13 % and Other 0.59 % • A total of NOK 201.7 mill
Slide 58: Loan losses: The Group's write-downs as of Q2 2016
Loan losses: The Group's write-downs as of Q2 2016 Write-downs 1st half 1st half 2nd quarter 2015 2016 2015 2015 (iso) Individual write-downs Retail market 2 1 0 0 Corporate market 13 63 13 165 SpareBank 1 Finans Nord-Norge 34 3 33 8 Other group units - 9 - -19 Total individual write-downs 48 76 45
Slide 59: Liquidity
59 Liquidity SpareBank NORD-NORGE
Slide 60: Funding instruments 30.06.2016
Funding instruments 30.06.2016 CHF BOND 10% EMTN, EUR 13% EMTN, SEK 6% T1 HYBRID, NOK 2% SUBORDINATED LOAN CAPITAL 4% OTHER LIABILITIES, NOK 0% BONDS, NOK 65% 60
Slide 61: Maturity profile 30.06.2016
Maturity profile 30.06.2016 Capital markets funding (excl. SPABOL) • Good diversification in terms of maturities • NOK 21.979 mill in capital market funding exclusive of SB1 Boligkreditt • SpareBank 1 Boligkreditt is an important funding source. Mortgage loans of NOK 24.387 mill transferred as at 30
Slide 62: Ownership
62 SpareBank NORD-NORGE
Slide 63: Equity Certificates (EC) - holder structure
Equity Certificates (EC) - holder structure 100,00 7,7 7,7 8,7 10,0 10,3 10,2 11,3 13,8 14,8 15,5 13,8 16,2 16,6 18,7 19,3 20,3 20,6 21,9 80,00 60,00 67,2 66,8 65,7 64,1 64,4 64,1 65,8 65,6 64,2 65,5 63,9 63,1 65,1 62,8 63,3 61,1 60,6 59,1 40,00 20,00 25,1 25,5 25,6 25,5 25,4 24,6 20,6 24,2 21,0 20,
Slide 64: The 20 largest EC holders
The 20 largest EC holders Number of Share Equity of total Certificate Equity Certificate holders Equity Certificates capital PARETO AKSJE NORGE 3.648.290 3,63 % VERDIPAPIRFONDET DNB NORGE (IV) 3.301.779 3,29 % THE NORTHERN TRUST 3.036.406 3,02 % MP PENSJON PK 2.720.503 2,71 % FLPS - PRINC ALL SEC ST
Slide 65: The 20 largest EC holders residing in Northern Norway
The 20 largest EC holders residing in Northern Norway Number of Share of total Equity Certificate holders Equity Certificates Equity Certificate capital SPAREBANKSTIFTELSEN SPAREBANK 1 NORD-NORGE 1.411.606 1,41 % KARL DITLEFSEN 547.543 0,55 % NORGES RÅFISKLAG 437.490 0,44 % HANSEN DAHL FISKERI AS 37
Slide 66: SpareBank 1 Group and Alliance
SpareBank 1 Group and Alliance 66
Slide 67: The SpareBank 1 Alliance
The SpareBank 1 Alliance SAM-SPAR SpareBank 1 Mobilbetaling AS SpareBank 1 Gruppen AS (SB1G) Banksamarbeidet DA (BS) (mCASH) SpareBank 1 Forsikring AS EiendomsMegler 1 SpareBank 1 Kredittkort AS (Life insurance) Norge AS (Credit card) SpareBank 1 Skadeforsikring AS SpareBank 1 SpareBank 1 Boligkredi
Slide 68: The idea behind the SpareBank 1 Alliance
The idea behind the SpareBank 1 Alliance The banks in the alliance want to: Achieve Share Achieve Retain their own Still be able to exploit critical level development economies name and continue each bank’s proximity to of costs of scale as independent their local market competence legal entities 68
Slide 69: The SpareBank 1 Alliance – lending composition
The SpareBank 1 Alliance – lending composition As per 1st quarter 2016 % Deposit and lending growth – four largest SB1-banks 15 10 5 5% 0 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 Lending growth Deposit growth • Total lending: approx. NOK 715 bn. • Mortgages: approx. NOK 480 bn. • Share of mortgages b
Slide 70: The SpareBank 1 Alliance – market position
The SpareBank 1 Alliance – market position As per 1st quarter 2016 Market share loans (%) SB1 Alliance, Norway • 2nd largest banking group in the market 22 % • 20.7 More than 20 % national market share in 20 18 residential mortgages 16 16.2 • Regional market leader in large parts of the 14 12 countr
Slide 71: Pre-tax operating profit. SpareBank 1 Gruppen
Pre-tax operating profit. SpareBank 1 Gruppen As per 2nd quarter (MNOK) 1.009 845 912 • Return on equity as per 2nd quarter: 687 2016 18.1 % 2015 17.6 % 2013 2014 2015 2016 For the full year (MNOK) 2.406 • Return on equity for the full year: 1.659 1.617 2015 17.2 % 2014 28.0 % 787 2013 20.3 % 2012 8
SpareBank 1 Nord-Norge — Q2 2016 Earnings Presentation on 6ix