Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q1 2015 Earnings Presentation
65 slides from Sparebank 1 Sor-norge Asa's earnings presentation, 2015
Slide 1: Investor Update First Quarter 2015
INVESTOR UPDATE FIRST QUARTER 2015
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: Agenda
Agenda Presentation of SpareBank 1 SR-Bank ASA Introduction to SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Appendix 3
Slide 4: A unique situation with a continuing budget surplus
A unique situation with a continuing budget surplus… Economic Indicators (%) 2010 2011 2012 2013 2014 2015P GDP growth - mainland 1.7 2.6 3.4 2.0 2.3 1.5 Household consumption growth 3.8 2.6 3.0 2.1 2.1 1.8 Investment growth – mainland* -4.5 6.3 4.5 4.7 1.8 1.0 Investment growth oil & gas -9.5 11.3
Slide 5: One of Norway's most prosperous regions
One of Norway’s most prosperous regions The third largest discovery ever on the NCS was made 140 km …and activity is expected to continue at high levels from our headquarter in 2011 4000 250 Investments on NCS “Johan Sverdrup” compared to existing 3000 oil fields on the Norwegian 200 continental she
Slide 6: The leading financial group in the southwest of Norway
The leading financial group in the southwest of Norway 1 Rogaland Population 452.000 Market share 37 % Year of establishment 1839 2 Market strategy Market leader 2 Unemployment rate 2,9 % 2 Hordaland Population 498.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemploym
Slide 7: The SpareBank 1 Alliance – 2nd largest mortgage lender in Norway
The SpareBank 1 Alliance – 2nd largest mortgage lender in Norway Founded in 1996 based on efficiency and local market focus Geographic overview Ensure the independence and regional foothold of the individual member banks by maximizing their: - Purpose Competitiveness - Profitability - Capital streng
Slide 8: SR-Bank's activities
SRBANK’s activities Divisions of SpareBank 1 SR-Bank Capital Markets Retail Market Corporate Market Administration & Support ASA Number of man-years: 38 Number of man-years: 447 Number of man-years: 166 Number of man-years: 210 Fully owned companies Number of man-years: 202 Number of man-years: 13 N
Slide 9: SRBANK share price and trading volume
SRBANK Development in Price/Book Relative share price development • Converted from 120 equity certificates 65 1,2 OSEBX 115 SRBANK to shares in 2012. 1,1 Index 100 = Jan. 1st 2014 60 110 1,0 0,9 105 55 NOK p/B • Total market value 0,8 100 50 0,7 95 at 1. quarter 2015 0,6 90 is NOK 14,4 billion. 45 P
Slide 10: 20 largest shareholders as at March 2015
20 largest shareholders as at March 2015 • International ownership increased from Investor Number Stake 18.9% per 1. quarter 2014 to 20.6% per Sparebankstiftelsen SR-Bank 72.419.305 28,3% Gjensidige Forsikring ASA 26.748.416 10,5% 1. quarter 2015 State Street Bank and Trust, U.S.A Nominee 8.757.314
Slide 11: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Financials Solvency and liquidity position Appendix 11
Slide 12: A good result with good underlying operations and continued moderate losses
A good result with good underlying operations and continued moderate losses Pre-tax profit for the quarter is NOK 628 million compared to NOK 787 million last year - Return on equity after tax 12.7% 12 months lending growth of 7.3%* 12 months deposits growth of 15.5% - Growth of 14% in other c
Slide 13: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 18,4% 11,4% 11,5% 12,1% 14,5% 11,2% 11,3% 12,2% 12,7% 11,7% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Cost/income ratio Earnings per share (NOK) 2,58 2,09 44,6% 45,1% 1,94 42,5% 1,78 1,75 40,9% 37,5% Q1 14 Q2
Slide 14: Key figures
Key figures Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Return on equity after tax (%) 12,7 11,7 12,2 14,5 18,4 Net interest margin (%) 1,45 1,51 1,48 1,41 1,40 Impairment losses on loans and guarantees in % of gross loans 0,25 0,27 0,20 0,13 0,18 -incl. covered bond companies 0,20 0,22 0,16 0,10 0,13 Non-perform
Slide 15: Income statement
Income statement Group Income Statement (MNOK) Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Net interest income 627 655 621 581 547 Net commission and other income 408 405 403 444 480 Net income on investment securities 211 116 142 201 319 Total income 1.246 1.176 1.166 1.226 1.346 Total operating expenses 530 530
Slide 16: Change in profit 31.03.2014 – 31.03.2015
16 0 100 200 300 400 500 600 700 800 900 31.03.2014 787 Net interest income incl. -2 commission from covered bond companies 10 Other income Net income on investment - 108 securities Total operating expenses -25 Change in profit 31.03.2014 – 31.03.2015 Impairment losses on loans - 34 and guarantees 3
Slide 17: Consolidated income profile
Consolidated income profile 1200 1.108 1.094 1.056 1.045 1.052 1000 315 324 315 324 310 800 28 34 73 29 20 90 93 84 165 120 MNOK 600 400 621 655 627 547 581 200 0 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Net interest income Commission income from covered bond companies Profit before tax from covered bond compa
Slide 18: Lending and deposit margins
Lending and deposit margins Lending margins 2,88% 2,99% 2,93% 2,92% 2,90% 2,89% 2,80% 2,64% 2,66% 2,06% 2,21% 2,21% 2,20% 2,08% 1,88% 1,97% 1,95% 1,95% Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Corporate market Retail market Deposit margins -0,40% -0,43% -0,45% -0,44% -0,45% -0,47% -0,46
Slide 19: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 12,8%* 15% 40 000 MNOK 10% 5,5% 5,6% 20 000 4,0% 4,5% 4,6% 2,5% 5% 0,7% 1,4% 0 0% Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Volume Growth % Retail Market 140 000 120 000 15% 100 000 MNOK 80 000 7,8% 10% 6
Slide 20: Loan portfolio as at 31.03.2015
Loan portfolio as at 31.03.2015 • Gross loans as at 31 March 2015 amount 2,9% to NOK 178.8 billion compared with NOK Agriculture / forestry / fishing 2,8% 166.6 billion at the same time last year. Industry, Power/water supply and 3,7% construction 3,7% • 12-month growth in loans of 7.3%. Retail trad
Slide 21: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans Total-distributed • The proportion of loans with a loan- to- value ratio of less than 85% is high and stable. 100% 90% • 90.7% of the exposure is within 85% of 80% the assessed value of collateral.. 70% 66,5% 66,6% 60% 50% 40% 30% 24,2% 24,8% 20% 10% 5,9% 5
Slide 22: Lending to the corporate market – risk profile
Lending to the corporate market – risk profile • The quality of the corporate market Corporate lending portfolio distributed by risk class portfolio is good. 100% 25,1% 26,4% 24,9% 26,7% 24,9% 80% 60% • The share of customers with PD* 54,0% 52,8% 56,8% 56,0% 55,8% 40% below 2.5 % has increased, main
Slide 23: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by 50000 NOK 11.5 billion to 86.0 billion. 24,1 % 26,1 % 25% 40000 18,9 % 20,3 % • Corresponds to an increase in MNOK 30000 12,6 % 15% the period of 15.5%. 6,6 % 20000 1,7 % 5% 10000 -2,2 % -2,1 % 0 -5% Q1 13 Q
Slide 24: Operating expenses
Operating expenses MNOK Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Personnel expenses 303 303 304 293 287 Restructuring- and non-recurring costs 7 5 3 0 7 Total personnel expenses 310 308 307 293 294 IT expenses 72 75 69 67 66 Marketing 21 29 21 29 17 Other administrative expenses 26 24 24 24 23 Total administra
Slide 25: 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 0,18% 0,20% 0,27% 0,25% 0,13% 0,22% 0,90% 0,20% 0,81% 0,13% 0,16% 0,77% 0,66% 0,81% 0,10% 20 0,66% 0,66% 0,65% 0,62% 0,54% 2 21 62 462 552 729 533 513 68 52 51 48 31
Slide 26: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Financials liquidity position Solvency and liquidity position Appendix 26
Slide 27: Deposits to loans ratio and market funding
Deposits to loans ratio and market funding • Development in deposits to loans ratio reflects our funding strategy with a greater share of Deposits to loans ratio senior funding and the reduced use of covered 100,0 % bond funding. ‒ 6 outstanding euro-benchmarks (EUR 500 80,0 % 61,1% 63,6% 60,6% 59,6
Slide 28: An established borrower in the Euromarket
An established borrower in the Euromarket SEB 2 02/19/2021 Corp DNBNO 3⅞ 06/29/2020 Corp 120 120 120 POHBK 2 03/03/2021 Corp 120 NDASS 4 06/29/2020 Corp 100 100 100 SPAROG 2⅛ 04/21 Corp 100 SPAROG 2⅛ 02/20 Corp NDASS 2 02/17/2021 Corp 80 80 80 80 Bps. Bps. Bps. Bps. 60 60 60 60 40 40 40 40 20 20 20
Slide 29: Funding structure and maturity
Funding structure Average maturity of long term funding (excl. covered bonds) • LCR of 113% at the end of March 2015. Average LCR during Q1 2015 was 107%. 4,5 70,0 4,0 60,0 3,5 50,0 Volume NOK Billion 3,0 Maturity 2,5 40,0 2,0 30,0 1,5 20,0 1,0 10,0 0,5 0,0 0,0 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1
Slide 30: Stronger capital ratio
Stronger capital ratio • SpareBank 1 SR-Bank is compliant with 16% capital requirements per 31.03.2015. 14% 15,2 % 14,5 % 12,9 % 12,9 % • SpareBank 1 SR-Bank received IRB 12% 13,0 % Advanced approval for the corporate 12,2 % market portfolio in the first quarter of 10% 2015. 8% • The use of differen
Slide 31: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid og stable portfolio. • The shift that occurs from Q1 2015 is 22,1 % due to restrictions imposed by the Norwegian FSA. The restrictions 17,0 % 16,4 % 16,2 % 16,3 % implies new requirements on how to calculate PD and LGD. 31.03.2014 30.06.201
Slide 32: Strengthened common equity tier 1
Strengthened common equity tier 1 • New capital requirements entail a need to 16,00% 16,00% continue increasing common equity tier 1 10,0 -13,0 % ROE ROE capital going forward. 14,00% ROE 12,7 % 14,00% 14,2 % 14,0 % • SpareBank 1 SR-Bank is not defined as 12,00% ROE 2,0% SIFI 12,00% 12,4% systemical
Slide 33: 2015 - Outlook
2015 - Outlook Uncertainty, especially in the petroleum sector, has increased due to lower oil prices. From record high levels, oil investments are expected to be reduced with 15-20% in 2015. Major infrastructure projects and high activity in house building are helping to ensure good conditions
Slide 34: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Appendix 34
Slide 35: 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 36: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 8,6 % of total EAD is related to oil operations (as at 31.12.2014) SpareBank 1 SR-Bank* has total BNOK 201,4 (EAD) per 31.12.2014 BNOK 17,6 (EAD) is related to oil operations Oil service; 2,6% Corporate market excl. oil operations; 24,6% Explorati
Slide 37: Oil services - total NOK 5.2 billion
Oil services - total NOK 5.2 billion (as at 31.12.2014) Exploration and concept studies Oil services • EAD NOK 0,6 billion • EAD NOK 5.2 billion, 2.6% of the bank's total EAD • Average weighted probability of default 2.63% • Average weighted probability of default for the oil services portfolio is 1
Slide 38: Offshore - total NOK 9.9 billion
Offshore - total NOK 9.9 billion (as at 31.12.2014) Offshore Service Vessels Offshore • EAD NOK 6.8 billion, average weighted • EAD NOK 9.9 billion, 4.9% of the bank's total EAD probability of default is 1.28%, weighted • Average weighted probability of default for the offshore portfolio is 1.35% av
Slide 39: Exploration and production companies - total NOK 2.2 billion
Exploration and production companies - total NOK 2.2 billion (as at 31.12.2014) Exploration financing Exploration and production companies • EAD NOK 645 million • EAD NOK 2.2 billion, 1.1% of the bank's total EAD • Average weighted probability of default • Average weighted probability of default for
Slide 40: Lending to commercial property
Lending to commercial property (as at 31.12.2014) Letting of real estate - oil operations Lending to commercial property • EAD NOK 3,4 billion 1,7% of total EAD, • EAD NOK 27,2 billion 13,5% of the bank’s total EAD which of; • The portfolio is characterised by lending to commercial properties for •
Slide 41: SpareBank 1 SR-Bank monitors and follows up pro-actively
SpareBank 1 SR-Bank monitors and follows up pro- actively • The bank continuously monitors portfolios • If special incidents occur, special portfolio reviews are conducted • The customer units continuously and pro-actively follow up the bank's credit customers • Commitments where the risk of poorer
Slide 42: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is commited to value • Return on equity of 12% after tax in 2015. In the creation in the bank`s core market area long-term, under prevailing market conditions, the target is a minimum of 12%. • Sustain
Slide 43: SpareBank 1 Alliance
SpareBank 1 Alliance Owners of the alliance Samspar • All credit decisions are made at the local banks 19,5 % 19,5 % 19,5 % 19,5 % 11,0 % 9,6 % 1,4 % • Economies of scale related to expenses, IT solutions, marketing and branding Products, commissions, dividends Sales, loan portfolios, capital Compan
Slide 44: Norwegian Economy - A unique situation with a continuing budget surplus
Norwegian Economy - A unique situation with a continuing budget surplus… GDP per capita, index, EU 27 = 100 2015 governments financial liabilities (in per cent of GDP) 150 100 50 0 -50 -100 -150 -200 -250 Gross Debt Net Debt 2014 expected government deficit/surplus (in per cent of GDP) The market vi
Slide 45: Norwegian Economy – international context
Norwegian Economy – international context Unemployment rates 15% 10% 5% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Denmark Norway Sweden United States Euro area GDP growth rates 10% 5% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -5% -10% Denmark Norway (mainland) Sweden
Slide 46: Norwegian Housing and Mortgage Market Key Characteristics
Norwegian Housing and Mortgage Market Key Characteristics Market • Total mortgage market approx NOK 2,300 billion (approx USD 290bn, Household Credit Growth Rate €265bn) (12 month growth rate) • Banks and credit institutions are the dominant supplier of mortgages with over 90% market share 8,0 % • T
Slide 47: Norwegian Housing and Mortgage Market
Norwegian Housing and Mortgage Market Population Change and Completed Housing Units Source: Statistics Norway 47
Slide 48: Nominal and real house price development
Norwegian Housing and Mortgage Market - Nominal and real house price development Index of House Prices, Norway, Monthly (Jan 2005 = 100) 200 187 180 160 140 124 120 100 80 jan.12 jan.05 jan.06 jan.07 jan.08 jan.09 jan.10 jan.11 jan.13 jan.14 jan.15 sep.05 sep.06 sep.07 sep.08 sep.09 sep.10 sep.11 se
Slide 49: Aggregate Household Debt Burden
Aggregate Household Debt Burden Total Debt burden in per cent of household income (after tax) Norway: • All HH debts included in the statistic, question of int’l comparability • High home ownership (mortgage debt rather than rent commitments) • Generous benefits (pensions, healthcare, education, chi
Slide 50: Balance sheet
Balance sheet Balance sheet (MNOK) 31.03.2015 31.03.2014 Cash and balances with central banks 2.400 770 Balances with credit institutions 2.533 1.092 Net loans to customers 143.937 121.037 Certificates, bonds and other fixed-income securities 14.789 20.868 Financial derivatives 5.760 4.339 Shares, o
Slide 51: Net commission and other income
Net commission and other income MNOK Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Payment facilities 58 57 66 56 57 Savings/placements 44 42 45 40 45 Insurance products 47 46 45 44 42 Commission income real estate broking 104 101 105 128 100 Guarantee commission 34 26 24 26 27 Arrangement- and customer fees 26 40
Slide 52: Net income on investment securities
Net income on investment securities MNOK Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Dividends 7 1 10 7 18 Investment income, associates 133 138 150 137 81 Securities gains/losses -45 -37 -52 24 205 - of which capital change in shares and certificates 4 24 -22 10 220 - of which capital change in certificates and
Slide 53: Subsidiaries
Subsidiaries MNOK 31.03.15 31.03.14 EiendomsMegler 1 SR-Eiendom AS Number of sales 1.785 1.772 Operating profit before tax 12 9 SpareBank 1 SR-Finans AS Total assets (BNOK) 7 7 Operating profit before tax 36 36 SR-Forvaltning AS Total assets under management (BNOK) 9 7 Operating profit before tax 8
Slide 54: Ownership interests
Ownership interests MNOK 31.03.15 31.03.14 SpareBank 1 Gruppen AS Interest ownership 19,5% 19,5% Profit after tax 59 48 Adjusted profit previous years 0 -4 SpareBank 1 Boligkreditt AS Interest ownership 20,1% 26,2% Profit after tax 47 10 Adjusted profit previous years 0 2 SpareBank 1 Næringskreditt
Slide 55: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees Losses on loans in income statement (MNOK) Q1 15 Q4 14 Q3 14 Q2 14 Q1 14 Corporate customers 62 27 39 48 53 Retail customers 6 4 9 3 -1 Change in collective impairment losses on loans 20 62 21 -10 2 Net impairment losses on loans 88 93 69 41 54 31.03 31.12 3
Slide 56: Risk profile of the loan portfolio
Risk profile of the loan portfolio • SpareBank 1 SR-Bank has a stable and Distributed by risk class low risk portfolio. 100% 80% 56,4% 55,8% • More than half of the bank’s loan 60% 40% 32,4% 32,9% exposure has a PD* below 0.5%. 11,2% 11,3% 20% 0% • Single loan exposures less than NOK 0.00 - 0.50 0.5
Slide 57: Low concentration of individual LGRs in the lending portfolio
Low concentration of individual LGRs in the lending portfolio • At the end of Q1 2015, SpareBank 1 Distributed by loss given realisation (LGR) SR-Bank had a total of 31 commitments 100% with a loss potential exceeding NOK 100 million. 83,5% 81,4% 80% • These commitments represent 6.2% of the loan ex
Slide 58: 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 100% 3,4% 3,2% 3,1% 3,2% 2,9% 21,6% 20,5% 20,1% 20,2% 18,6% 80% has low potential losses. 60% 40% 75,1% 76,4% 76,8% 76,6% 78,5% • Th
Slide 59: Historical LTV development for home mortgage loans
Historical LTV development for home mortgage loans Total home mortgages incl. loans in cover pool SpareBank 1 SR-Bank ASA 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 31.03.2013 30.09.2013 31.03.2014 30.09.2014 31.03.2015 31.03.2013 30.09.2013 31.03.2014 30
Slide 60: Liquidity portfolio
Liquidity portfolio Liquidity buffer – survival period Liquidity portfolio Of which, securities 18 Market classified to 16 value, amortised 14 Category MNOK Share % cost, MNOK BNOK 12 10 Norwegian government/municipal 399 0% 0 8 SSA/Foreign guaranteed 3.758 27 % 0 6 Covered bonds (Norwegian/foreign)
Slide 61: Investments in bonds and certificates
Investments in bonds and certificates Risk category Rating Market value Share Very low risk AAA, AA+, AA og AA- 13.523 92,2 % Low risk A+, A og A- 111 0,8 % Moderate risk BBB+, BBB og BBB- 599 4,1 % High risk BB+, BB og BB- 115 0,8 % Very high risk B+ and lower 320 2,2 % Total portfolio 14.667 100,0
Slide 62: Rating
Rating Moody’s Fitch Long-term debt A2 Long-term IDR A- Outlook Review for possible upgrade Outlook Stable Updated 27 March 2015 Updated 19 November 2014 Ratinghistory AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 Moody's A-/A3 Fitch BBB/Baa BB/Ba B 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 63: SRBANK as at March 2015
SRBANK as at March 2015 • Ownership interests: 31.03.2015 2014 2013 2012 2011 – From Rogaland, Agder-counties and Hordaland: 49,3 % Share price 56,25 52,50 60,25 37,20 40,70 – International: 20,6 % – 10 largest: 55,1 % Stock value (MNOK) 14.386 13.427 15.409 9.514 5.182 – 20 largest: 62,9 % Book val
Slide 64: Dividend policy
Dividend policy “The financial objective of SpareBank 1 SR-Bank ASA is to achieve earnings that yield adequate, stable returns on the bank’s equity, thereby creating value for owners through competitive returns in the form of dividends and share appreciation. In determining the level of the annual d
Slide 65: Contact Details
Contact Details Address Management Investor Relations Bjergsted Terrasse 1 Arne Austreid Stian Helgøy CEO Investor Relations Postboks 250 4066 Stavanger Tel. Tel. +47 900 77 334 +47 906 52 173 Tel. E-mail. E-mail. arne.austreid@sr-bank.no +47 915 02002 stian.helgoy@sr-bank.no Short- /long-term fundi