Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q2 2014 Earnings Presentation
41 slides from Sparebank 1 Ostlandet's earnings presentation, 2014
Slide 1: SpareBank 1 SR-Bank ASA 2nd quarter 2014
SpareBank 1 SR-Bank ASA 2nd quarter 2014 Page 1
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: A solid market position in a region enjoying growth
A solid market position in a region enjoying growth 1 Rogaland Population 452,000 Market share 35% Year of establishment 1839 Market strategy Market leader 2 Oil & Gas, Oil service, Important business segments Supply Unemployment rate 2.0% 2 Hordaland Population 498,000 Market share 4% Year of estab
Slide 4: Greater efficiency, low losses and moderate growth produce a good result
Greater efficiency, low losses and moderate growth produce a good result Pre-tax profit for 2Q increased to NOK 684 million from NOK 511 million last year - Return on equity after tax 14.5% (11.8%) Pre-tax profit year-to-date increased to NOK 1.471 million from NOK 1.012 million last year - Retu
Slide 5: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 18,4 % 15,6 % 16,2 % 14,5 % 11,1 % 11,2 % 11,4 % 10,3 % 10,5 % 11,8 % Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Cost/income ratio Earnings per share (NOK) 2,58 49,1 % 2,22 2,02 2,09 42,4 % 40,8 % 40,9 % 1,50 3
Slide 6: Income statement
Income statement 30.06 30.06 Group Income Statement (MNOK) 14 13 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Net interest income 1.128 977 581 547 574 568 526 Net commission and other income 924 869 444 480 489 466 465 Net income on investment securities 520 223 201 319 195 137 62 Total income 2.572 2.069 1.226 1
Slide 7: Change in profit 30.06.2013 – 30.06.2014
Page 7 200 400 800 600 0 1.000 1.200 1.400 1.600 30.06.2013 1.012 Net interest income incl. commission from covered 151 159 bond companies 8 47 Other income Change in profit 30.06.2013 – 30.06.2014 Net income on investment 297 securities 1 Total operating expenses Impairment losses on - 45 loans and
Slide 8: Key figures
Key figures 30.06 30.06 14 13 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Return on equity after tax (%) 16,5 12,1 14,5 18,4 16,2 15,6 11,8 Net interest margin (%) 1,40 1,35 1,41 1,40 1,46 1,49 1,43 Impairment losses on loans and guarantees in % of gross loans 0,15 0,09 0,13 0,18 0,17 0,11 0,09 - incl. covered bo
Slide 9: Consolidated income profile
Consolidated income profile 1200 1000 322 299 315 324 314 800 34 37 29 20 2 167 167 120 165 MNOK 600 151 400 568 574 547 581 526 200 0 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Net interest income Commission income from covered bond companies Profit before tax from covered bond companies Net commission and othe
Slide 10: Change in net interest income and commission income from covered bond companies
Change in net interest income and commission income from covered bond companies; 30.06.2013 – 30.06.2014 1.742 1.600 89 - 20 - 47 167 - 40 1.413 2 8 1.400 1.254 285 1.200 277 1.000 1.128 977 800 600 400 Commission income from covered bond Other Net fundingcost Lending volume Lending margin 30.06.201
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins 2,88% 2,99% 2,93% 2,92% 2,90% 2,57% 2,64% 2,28% 2,33% 2,21% 2,21% 2,20% 2,06% 2,08% 1,85% 1,88% 1,61% 1,63% Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Corporate market Retail market Deposit margins -0,03% -0,04% -0,27% -0,15% -0,15% -0,40% -0,43
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market 60 000 50 000 15 % 15% 40 000 10 % MNOK 7,6% 10% 30 000 6,0% 5,5% 5,0% 4,5% 4,6% 20 000 4,0% 5% 5% 10 000 0,7% 1,4% 0 0% 0% Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Volume Growth % Retail Market 120 000 100 000 15 % 15% 80 000 10,0% 9
Slide 13: Loan portfolio as at 30.06.2014
Loan portfolio as at 30.06.2014 • Gross loans as at 30 June 2014 amount to 3,0% NOK 168.6 billion compared with NOK Agriculture / forestry / fishing 2,9% 162.7 billion at the same time last year. Industry, Power/water supply and construction 3,9% 3,6% 1,9% Retail trade, hotels and restaurants • 12-m
Slide 14: 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- 100% value ratio of less than 85% is very high and stable at 91.5%. 80% 71,5% 67,8% 60% • 98.1% of gross exposure is within 85% of the assessed value of collateral. This 40% 23,7% 20,0% means that
Slide 15: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months the volume of deposits increased by NOK 8.4 billion to 81.7 billion. 40000 18,9% 20% 20% – Corresponds to an increase in the period 12,6% 15% 15% 30000 MNOK of 11.5%. 7,3% 6,6% 10% 10% 20000 4,9% 2,8% 1,7% 5% 5% 10000 -2,2% -2,1%
Slide 16: Net commission and other income
Net commission and other income 30.06 30.06 MNOK 14 13 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Payment facilities 113 108 56 57 59 66 56 Savings/placements 85 72 40 45 39 40 37 Insurance products 86 82 44 42 41 41 42 Commission income from real estate broking 228 224 128 100 108 101 127 Guarantee commission 5
Slide 17: Net income on investment securities
Net income on investment securities 30.06 30.06 MNOK 14 13 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Dividends 25 32 7 18 -2 3 32 Investment income, associates 218 130 137 81 95 130 31 Securities gains/losses 229 -56 24 205 13 -38 -55 - of which capital change in shares and certificates* 230 -7 10 220 42 11 -28
Slide 18: Subsidiaries
Subsidiaries MNOK 30.06.14 30.06.13 EiendomsMegler 1 SR-Eiendom AS Number of sales 3.976 3.863 Operating profit before tax 36,1 30,9 SpareBank 1 SR-Finans AS Total assets (BNOK) 6,4 6,2 Operating profit before tax 74,0 81,7 SR-Forvaltning AS Portfolio (BNOK) 7,1 6,8 Operating profit before tax 14,1
Slide 19: Ownership interests
Ownership interests MNOK 30.06.14 30.06.13 SpareBank 1 Gruppen AS (19,5 % interest ownership) Profit after tax 153,0 78,4 Adjusted profit previous years -4,2 -1,6 SpareBank 1 Boligkreditt AS (20,4 % interest ownership) Profit after tax 18,0 20,7 Adjusted profit previous years 1,9 0,0 SpareBank 1 Nær
Slide 20: Operating expenses
Operating expenses 30.06 30.06 MNOK 14 13 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Personnel expenses 580 579 293 287 297 283 294 Restructuring costs 0 10 0 0 26 1 3 Non-recurring effect, pension-related items 7 0 0 7 0 0 0 Total personnel expenses 587 589 293 294 323 284 297 IT expenses 133 122 67 66 65 63 63
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 0,17% 0,18% 0,11% 0,13% 0,09% 1,09% 1,06% 0,12% 0,13% 0,87% 0,90% 0,08% 0,10% 0,81% 0,06% 0,77% 0,76% 0,66% 0,65% 0,62% 439 2 807 462 552 579 80 52 51 830 32 630 25 4
Slide 22: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 30.06 30.06 Losses on loans in income statement (MNOK) 14 13 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Corporate customers 101 49 48 53 87 9 22 Retail customers 2 1 3 -1 -7 23 3 Change in collective impairment losses on loans -8 0 -10 2 -30 0 0 Net impairment losses on
Slide 23: Deposits to loans ratio and market funding
Deposits to loans ratio and market funding • Development in deposits to loans ratio Deposits to loans ratio reflects our funding strategy with a greater 100,0 % share of senior funding and the reduced use of covered bond funding. 80,0 % 67,6% 66,2% 63,6% 61,7% 61,1% 60,6% 59,6% 61,2% 60,4% – Seven o
Slide 24: Stronger capital ratio - Basel I floor taken into account
Stronger capital ratio - Basel I floor taken into account • SpareBank 1 SR-Bank meets all capital 16% requirement with good margin per 30.06.2014. 14% 14,6% 12,9% 13,2% • The use of different risk weights in the 12% 11,9% Nordic countries makes comparisons of 12,0% 11,4% actual financial strength di
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 • New capital requirements entail a need to continue increasing common equity tier 1 16,00% 16,00% capital going forward. 10,0 -13,0% 14,00% 14,00% ROE ROE 16,5% 14,0% • SpareBank 1 SR-Bank is not defined as 12,00%
Slide 26: Core equity tier 1 capital ratio calculated on basis of total assets
Core equity tier 1 capital ratio calculated on basis of total assets 9% • Core equity tier 1 capital ratio calculated on 8% 7,8% 7,7% basis of total assets as at 30 June 2014 was 7,2% 7.7%. 7% 6,5% 5,9% • Measured according to this expression of 6% 5,4% financial strength, SpareBank SR-Bank is very
Slide 27: Outlook
Outlook Norwegian economic growth has slowed somewhat in the last year and a half, but is expected to still be moderate going forward. Expect some reduction in oil investments in 2015, but still a very high level involves strong activity in the petroleum sector. Major infrastructure projects and
Slide 28: APPENDIX
APPENDIX SpareBank 4 SR-BANK
Slide 29: SRBANK's activities
SRBANK’s activities Divisions of SpareBank 1 SR- Capital Markets Retail Market Corporate Market Administration & Support Bank ASA Number of man-years: 36 Number of man-years : 457 Number of man-years : 162 Number of man-years : 214 Fully owned companies Number of man-years : 213 Number of man-years
Slide 30: SpareBank 1 Alliance
SpareBank 1 Alliance Owners of the Sparebanken alliance Samspar Hedmark • All credit decisions are made at the 19,5 % 19,5 % 19,5 % 19,5 % 11,0 % 9,6 % 1,4 % local banks • Economies of scale related to expenses, Products, commissions, dividends IT solutions, marketing and branding Sales, loan portfo
Slide 31: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is commited to value • ROE above 13% at a normalised level of interest rates creation in the bank`s core market area • Sustainable contribution to the value creation process • Top 50% ROE and cost/inco
Slide 32: Balance sheet
Balance sheet Balance sheet (MNOK) 30.06.2014 30.06.2013 Cash and balances with central banks 1.985 1.762 Balances with credit institutions 2.333 2.612 Net loans to customers 134.680 114.493 Certificates, bonds and other fixed-income securities 16.610 19.852 Financial derivatives 4.653 4.936 Shares,
Slide 33: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • 57% of the loan portfolio has a probability 100% of default (PD)* below 0.5%, which is an 80% increase from last year. 57,0% 56,2% 60% 40% 31,9% 31,4% • The proportion of loans with a PD above 20% 11,1% 12,4% 2.5% has been reduced to 11.
Slide 34: Lending to the retail market – risk profile
Lending to the retail market – risk profile Retail market portfolio distributed by risk class • The quality of the retail market portfolio is considered very good and with low 100% 3,0% 3,2% 3,4% 3,4% 3,2% potential losses. 80% 21,3% 20,9% 21,6% 21,6% 20,5% 60% • The proportion of loans with a PD be
Slide 35: Lending to the corporate market – risk profile
Lending to the corporate market – risk profile Development in corporate market’s portfolio distributed by risk class • The quality of the corporate market 100% portfolio is good. 29,5% 26,8% 24,4% 25,1% 26,4% 80% • PD has improved since Q2 2013. This 60% 54,5% trend is particularly driven by an 40%
Slide 36: Low exposure to the shipping segment
Low exposure to the shipping segment Product- Dry cargo; • Lending to conventional shipping is low /chemicaltanks; 5,8% (4,6%) Gas; 2,8% (3,3%) and represents 1.2% of total loans 8,7% (8,5%) Seismic; Other; 5,9% (6,9%) 1,2% (3,5%) • Lending to the offshore sector represents 5.4% of total loans • Len
Slide 37: Lending to commercial property
Lending to commercial property • Lending to commercial property Housing cooperative; constitutes 15.8% of total loans, which is 4,6% (4,9%) Real estate an increase of 0.2% compared with the management; 4,1% (4,0%) same time last year. • The portfolio is characterised by lending to commercial propert
Slide 38: Increased international interest in SRBANK
Increased international interest in SRBANK Development in Price/Book Relative share price development • International 180 ownership increased 70 1,2 170 from 14.1% at the 65 160 OSEBX 1,1 Indeks 100 = 1. jan 60 SRBANK end of 2013 to 21.7% 1 150 55 at the end of 2nd 50 0,9 140 quarter 2014. 130 NOK p
Slide 39: 20 largest shareholders as at June 2014
20 largest shareholders as at June 2014 • International Investor Number Stake ownership Sparebankstiftelsen SR-Bank 72.419.305 28,3% Gjensidige Forsikring ASA 26.483.470 10,4% increased from Folketrygdfondet 9.895.706 3,9% 14.1% at the Morgan Stanley & Co, U.S.A. Nominee 9.562.005 3,7% end of 2013 t
Slide 40: SRBANK as at 30 June 2014
SRBANK as at 30 June 2014 30.06.2014 2013 2012 2011 2010 • Ownership interests: –From Rogaland, Agder-counties and Hordaland: 49.0% Share price 59,75 60,25 37,20 40,70 57,00 –International: 21.7% –10 largest: 57.9% –20 largest: 64.9% Stock value (MNOK) 15.281 15.409 9.514 5.182 7.257 • Number of sha
Slide 41: Contact Details
Contact Details Address Management Investor Relations Arne Austreid Vidar Torsøe Bjergsted Terrasse 1 CEO Investor Relations Postboks 250 4066 Stavanger Tel. Tel. +47 900 77 334 +47 970 80 656 Tel. E-mail. E-mail. arne.austreid@sr-bank,no vidar.torsoe@sr-bank.no +47 915 02002 Inge Reinertsen www.sr-