Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q3 2016 Earnings Presentation
72 slides from Sparebank 1 Nord-norge's earnings presentation, Oct 28, 2016
Slide 1: Quarterly presentation Q3 2016
Quarterly presentation Q3 2016 Tromsø/Oslo 28 October 2016
Slide 2: Interim report Q3 - Group
Interim report Q3 - Group PROFIT BEFORE TAX: NOK 1 199 mill (918 mill) RETURN ON EQUITY: 12.8 % (10.4 %) REDUCED COSTS: (- 3.5 %) compared with as of Q3 2015 (excl. restructuring costs) MODERATE LOAN LOSSES: NOK 149 mill (NOK 148 mill) NOK 61 mill in Q3 CET-1 RATIO: 15.1 % (13.5 %) Target of 14.5 %
Slide 3: Continued good macroeconomy in northern Norway
Continued good macroeconomy in northern Norway Continued export growth in the north. The export industries are benefitting from the GROWTH currency situation, but are vulnerable to a possible strengthened NOK. Seafood exports grew by 25% as of August. Solid growth also for white fish. The growth is
Slide 4: Strategy: Significant measures implemented
Strategy: Significant measures implemented • The 14.5 % CET-1 goal is achieved • Capital ratio well above regulatory minimum requirement • Near doubled equity during last 6 years • Cultivation of core business almost complete: • SNN Invest wound up • Nord II investment fund sold • Phasing out of bus
Slide 5: Capital adequacy ratio - Group
Capital adequacy ratio - Group The 14.5 % CET-1 goal is achieved CET 1 incl floor CET 1 excl floor 18,1 % 15,1 % 13,9 % 13,8 % 14,2 % 16,3 % 13,4 % 13,5 % 14,9 % 15,2 % 14,2 % 14,2 % Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Leverage ratio - LR incl result Expected mini
Slide 6: Quarterly summary – Profit and loss account figures
Quarterly summary – Profit and loss account figures (Amounts in NOK million) 3Q16 2Q16 1Q16 4Q15 3Q15 Net interest income 423 401 386 390 385 Net fee-, commision and other operating income 228 249 213 222 233 Net income from financial investments 157 156 80 46 -8 Total net income 808 806 679 658 610
Slide 7: Net interest income - Group
Net interest income - Group Amounts in NOK million 460 445 448 465 446 431 456 434 446 447 434 423 42 431 78 82 61 57 47 91 76 66 48 90 95 89 401 423 378 378 369 368 385 390 386 341 355 328 342 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Net interest income Commissions from Boli
Slide 8: Net fee-, commission- and other operating income
Net fee-, commission- and other operating income NOK million 202 186 172 174 165 165 158 156 163 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 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) 3Q16 2Q16 1Q16 4Q15 30.09.16 Dividends 0 73 0 0 73 Income from joint ventures 94 109 87 98 290 Gains/losses and net value changes on shares 20 -41 -14 -16 -35 Net value changes on bonds, foreign exchange and fin.derivatives 46 18 6 -35
Slide 10: Group operating costs
Group operating costs NOK mill. 451 354 338 336 336 325 318 316 311 1,74 % 1,63 % 1,66 % 1,64 % 1,62 % 1,61 % 1,43 % 1,42 % 1,42 % 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Total costs Perc.of aver.tot.ass. 10
Slide 11: Losses on loans and guarantees - customers
Losses on loans and guarantees - customers NOK mi ll 0,59 % 321 195 200 172 0,26 % 0,22 % 149 0,21 % 0,19 % 0,21 % 101 2011 2012 2013 2014 2015 30.09.16 Net losses Net losses in % of gross lending incl Boligkreditt
Slide 12: Non-performing commitments
Non-performing commitments NOK mi ll 0,73 % 0,67 % 0,64 % 0,57 % 95 222 377 0,48 % 499 245 415 184 271 270 256 3Q15 4Q15 1Q16 2Q16 3Q16 Other doubtful commitments Non-performing commitments Gross non-performing and impaired commitments in % of gross lending incl. Acency loans
Slide 13: Portfolio – Oil related exposure
Portfolio – Oil related exposure • Oil related exposure amounts to NOK 1,981 Other; 9,7 % mill Supply base; 38,5 % • The exposure represents 2.1 % of total lending Industry; 8,1 % incl. Næring- and Boligkreditt • Average weighted probability of default 1.09 % • A total of NOK 229.1 mill are non-perf
Slide 14: Group companies result before tax
Group companies result before tax (Amounts in NOK 1000) 30.09.16 30.09.15 SpareBank 1 Finans Nord-Norge AS 70 757 91 053 SpareBank 1 Regnskapshuset Nord-Norge AS 11 361 6 862 EiendomsMegler 1 Nord-Norge AS 25 301 23 874 Subsidiaries core operations 107 419 121 789 Other subsidaries -44 242 -47 590 T
Slide 15: Lending volume
Lending volume Retail incl. SpareBank 1 Boligkreditt 27 % 68 144 62 905 73 % 59 061 6,5 % 8,3 % Retail incl. SpareBank 1 30.09.14 30.09.15 30.09.16 Boligkreditt Business/ Public Business/public market 37 % 25 673 63 % 24 885 24 986 0,4 % 2,8 % 30.09.14 30.09.15 30.09.16 Retail excl. SpareBank 1 Boli
Slide 16: Deposit volume
Deposit volume Retail banking market Business 30 320 8,4 % 28 461 6,5 % 26 255 14 478 13 802 -1,2 13 632 6,2 % 30.09.14 30.09.15 30.09.16 30.09.14 30.09.15 30.09.16 Public Business 27,0 % Retail 8 839 Public 56,5 % 1,4 % 48,7 % 16,5 % 5 860 5 944 30.09.14 30.09.15 30.09.16
Slide 17: Future outlook
Future outlook Continued strong competition. Slightly higher funding costs in Q4 (assuming constant NRI conditions in the capital market). Average targeted cost increase 0 %. Reduced costs compared with 2015 expected in 2016 COSTS and 2017 (excl. restructuring costs). LOSSES Lending losses expected
Slide 18: 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 19: 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 20: Enclosures
20 Enclosures SpareBank NORD-NORGE
Slide 21: Overview of SpareBank 1 Nord-Norge
Overview of SpareBank 1 Nord-Norge: o An independent savings bank with head office in Tromsø. o 38 branches in Northern Norway o 270,000 retail customers and 33,000 corporates o A financial group offering a complete range of products History o Established in 1836 o Listed on Oslo Stock Exchange sinc
Slide 22: Organisation of the financial services Group
Organisation of the financial services Group SpareBank 1 Nord-Norge Subsidiaries Financial Services Group Joint ventures 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 Equ
Slide 23: Macro and Economic trends
23 Macro and Economic trends SpareBank NORD-NORGE
Slide 24: Stable, low unemployment is normal up north
Stable, low unemployment is normal up north 24 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 25: Seafood – strong export growth
Seafood – strong export growth Export price for different types of fish • 25% growth in seafood export from Northern Norway, figures from end of August 2016 • Seafood export from Northern Norway is more than NOK 2 billion per month • Salmon prices are peaking in 2016. • More than 70 % of total expor
Slide 26: Tourism – strong growth in foreign overnight stays
Tourism – strong growth in foreign overnight stays • Foreign overnight stays Foreign overnight stays 2007-2016 represent an increasing portion of the tourism industry in Northern Norway • Strong contribution from winter tourism • Weak norwegian kroner is positive for the tourism industry 26 Source:
Slide 27: 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 increase the total demand • Aasta Hansteen og Polarled ‒ Polarled – pipeline completed in 2015 ‒ Pro
Slide 28: Good growth for construction and infrastructure investments
Good growth for construction and infrastructure investments Construction and infrastructure Turnover in Northern Norway 28 Source: Statistics Norway, «Omsetning i bygge- og anleggsvirksomhet og Ordreindeks for bygge- og anleggsvirksomhet»
Slide 29: Consumption grows
Consumption grows Kilde: Statistics Norway, retail sales 29 27.10.2016
Slide 30: Regional house prices lower than the Norwegian average
Regional house prices lower than the Norwegian average 30 Source: Eiendom Norge, Finn.no and Eiendomsverdi AS, «Boligprisstatistikk»
Slide 31: Credit growth corporates
Credit growth corporates Credit growth corporates. 12 mth growth 12 10 8 6 % 4 3,0 2 2,8 0 -2 -4 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016K1 2016K3 SNN, Corporate clients Norway, Corporates 31
Slide 32: Credit growth households
Credit growth households Credit growth households. 12 mth growth 9 8,3 8 7 6 5 6,1 4 % 3 2 1 0 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016K1 2016K3 SNN, Retail clients Norway, Households 32
Slide 33: Deposit growth corporates
Deposit growth corporates Deposit growth corporates. 12 mth. growth 10 8 6,9 6 6,2 4 % 2 0 -2 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016K1 2016K3 SNN, Corporate clients Norway, Corporates 33
Slide 34: Deposit growth households
Deposit growth households Deposit growth households. 12 mth. growth 10 8 6,5 6 % 5,2 4 2 0 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016K1 2016K3 SNN, Retail clients Norway, Households 34
Slide 35: Main financial figures
35 Main financial figures SpareBank NORD-NORGE
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 808 806 679 658 610 68,5 % 423 431 424 55,1 % 45,8 % 344 39,5 % 39,1 % 401 234 390 386 385 115 3Q15 4Q15 1Q16 2Q16 3Q16 36
Slide 37: Key figures
Key figures Net non-performingCommon and impaired commitments Equity Tier I % incl(Group) share of result Returnon Return onequity equity 15,1 % 13,9 % 13,1 % 12,8 % 12,5 % 12,2 % 12,3 % 9,9 % 10,3 % 9,0 % 9,1 % 8,5 % 2011 2012 2013 2014 2015 3.KV.16 2011 2012 2013 2014 2015 3.KV.16 Cost/income rati
Slide 38: Profit and loss account - Group
Profit and loss account - Group (Amounts in NOK million) 30.09.16 30.09.15 31.12.15 Net interest income 1 210 1 122 1 512 Net fee-, commision and other operating income 690 711 933 Net income from financial investments 393 203 249 Total net income 2 293 2 036 2 694 Total costs 945 1 010 1 461 Result
Slide 39: Quarterly results – net interest income
Quarterly results – net interest income (Amounts in NOK million) 3Q16 2Q16 1Q16 4Q15 3Q15 Interest and similar income from loans to and claims on credit institutions 4 2 2 6 6 Interest and similar income from loans to and claims on customers 593 584 578 597 618 Interest and similar income from certi
Slide 40: Changes in net interest income, including intermediary loans
Changes in net interest income, including intermediary loans Measured against average funding cost 40
Slide 41: Lending margin, Parent bank
Lending margin, Parent bank 41 The interest margin is defined as the difference between the customer lending interest rate and average 3 month NIBOR
Slide 42: 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 43: Total commission and other income
Total commission and other income 3Q16 2Q16 1Q16 4Q15 3Q15 (Amounts in NOK million) Payment transmission income 76 63 61 60 69 Commissions insurance 37 37 39 37 36 Guarantee commissions 5 5 5 5 5 Estate agency 35 39 26 27 29 Assets management 12 11 11 11 12 Other commissions 21 24 14 19 20 Commissio
Slide 44: Group operating costs
Group operating costs (Amounts in NOK million) 30.09.16 30.09.15 Change Wages and salaries 404 464 - 60 Pension costs 29 32 -3 Social costs 61 65 -4 Total personnel costs 494 561 - 67 Administration costs 270 264 6 Total personnel- and general administration costs 764 825 - 61 Depreciation and write
Slide 45: Group operating expenses
Group operating expenses (Amounts in NOK million) 3Q16 2Q16 1Q16 4Q15 3Q15 Wages and salaries 139 133 132 248 158 Pension costs 12 10 8 4 11 Social costs 19 19 23 36 21 Total personnel costs 170 161 163 288 190 Development costs 29 29 30 34 28 Electronic data processing costs 19 19 18 16 14 Marketin
Slide 46: Core banking operations
Core banking operations- (excl. income from financial investments) (Amounts in NOK million) 3Q16 2Q16 1Q16 4Q15 3Q15 Net interest income 423 401 386 390 385 Net fee- and commission income 206 204 185 198 210 Other operating income 22 45 28 24 23 Total costs excl restructuring costs 316 318 206 441 3
Slide 47: Key figures balance sheet
Key figures balance sheet 30.09.16 30.09.15 Change Change % Total assets 89 210 84 495 4 715 5,6% Gross lending 68 905 63 143 5 762 9,1% Loans and advances to customers incl 93 817 87 891 5 926 6,7% SpareBank 1 Boligkreditt and Næringskreditt Deposits from customers 53 637 47 660 5 977 12,5%
Slide 48: Credit area
Credit area o Portfolio o Commitments in default and losses 48
Slide 49: Lending portfolio - comments
Lending portfolio - comments o Good growth 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 o The portfolio and new commitments in corporate sector lending are diversified o Slight incr
Slide 50: Portfolio - exposure as of 30.09.16, parent bank
Portfolio - exposure as of 30.09.16, parent bank 45.000 41.316 40.000 35.000 30.000 26.534 25.000 21.625 NOK mill 20.000 15.000 10.000 7.582 5.000 2.221 1.213 708 123 524 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired Retail market Corporate market SB1 Boligkreditt SB1
Slide 51: Portfolio – changes last 12 months, parent bank
Portfolio – changes last 12 months, parent bank 8.000 7.366 7.000 6.000 5.000 4.000 NOK mill 3.000 2.000 1.096 1.000 269 233 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired -425 -5 -196 -1.000 -970 -2.000 -1.514 51 SB1 Boligkreditt Retail market Corporate market SB1 Nær
Slide 52: Portfolio - exposure distributed by size
Portfolio - exposure distributed by size Loans distributed by size of exposure and share of total exposure Share of loanexposure Sept 2016 Share of loanexposure Sept 2015 79% 78% 10% 10% 7% 6% 5% 6% Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Numbers includes SB 1 Bolig- and Næringskre
Slide 53: Portfolio – LTV mortgage loans
Portfolio – LTV mortgage loans 100,0 % 92,0 % 92,3 % • 97.1 % of exposures are 90,0 % within 85 % of the 80,0 % 70,0 % collaterals market value 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 - 100 % Above 10
Slide 54: Portfolio – Commercial Real Estate
Portfolio – Commercial Real Estate Housing Ass.; 5,3 % Residential Above 250 Development MNOK; 5,18% / Investment; 0 - 5 MNOK; Others (small 14,0 % 13,96% commitments); 100 - 250 MNOK; 28,8 % 19,48% Shops / 5 - 30 shopping MNOK; centres; 32,98% Combination- 18,9 % buildings; 9,5 % Hotels; 6,1 % 30 -
Slide 55: Portfolio – Oil related exposure
Portfolio – Oil related exposure • Oil related exposure amounts to NOK 1,981 Other; 9,7 % mill Supply base; 38,5 % • The exposure represents 2.1 % of total lending Industry; 8,1 % incl. Næring- and Boligkreditt • Average weighted probability of default 1.09 % • A total of NOK 229.71 mill are non-per
Slide 56: Portfolio – Offshore Supply Vessels (OSV)
Portfolio – Offshore Supply Vessels (OSV) AHTS; 5,7 % • OSV amounts to NOK 867 mill • Average weighted probability of default 1.21 % • Total amount of 8 vessels* Standby/area contingency; 42,0 % • Weighted age 5.4 years* • Average weighted contract length 3.1 years* incl. one vessel laid up • SNN is
Slide 57: Portfolio – Supply bases
Portfolio – Supply bases • Supply base exposure amounts to NOK 762 Other; 9,7 % mill Supply base; 38,5 % Industry; 8,1 % • Average weighted probability of default 1.01 % • Customers with long term contracts with solid and strong partners gives good cash flows in the short and long term Offshore supp
Slide 58: Portfolio – Industry and Other
Portfolio – Industry and Other Other; 9,7 % • The sector “Industry and Other” amounts to NOK 351 mill, divided into Industry NOK Supply base; 38,5 % 159 mill and Other NOK 192 mill Industry; 8,1 % • Average weighted probability of default: Industry 1.41 % and Other 3.66 % • A total of NOK 229.1 mill
Slide 59: Loan losses: The Group's write-downs
Loan losses: The Group's write-downs Write-downs 3rd quarter 3rd quarter 3rd quarter 2015 2016 2015 2016 (iso) Individual write-downs Retail market 4 0 2 0 Corporate market 34 99 21 165 SpareBank 1 Finans Nord-Norge 36 6 2 8 Other group units - 22 - -19 Total individual write-downs 74 127 25 154 Col
Slide 60: Liquidity
60 Liquidity SpareBank NORD-NORGE
Slide 61: Funding instruments 30.09.2016
Funding instruments 30.09.2016 61
Slide 62: Maturity profile 30.09.2016
Maturity profile 30.09.2016 Capital markets funding (excl. SPABOL) • Good diversification in terms of maturities • NOK 20 146 mill in capital market funding exclusive of SB1 Boligkreditt • SpareBank 1 Boligkreditt is an important funding source. Mortgage loans of NOK 24 912 mill transferred as at 30
Slide 63: Ownership
63 SpareBank NORD-NORGE
Slide 64: Equity Certificates (EC) - holder structure
Equity Certificates (EC) - holder structure 10,3 13,8 13,8 20,3 20,6 21,9 23,4 64,1 65,6 65,5 61,1 60,6 59,1 57,6 25,5 20,6 20,7 18,6 18,8 19,0 19,0 2012 2013 2014 2015 1Q16 2Q16 3Q16 Holders residing in Northern Norway Other Norwegian holders Foreign holders 64
Slide 65: 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 3.550.401 3,54 % THE NORTHERN TRUST CO. 3.252.918 3,24 % MP PENSJON PK 2.720.503 2,71 % VERDIPAPIRFONDET DNB NORGE (IV) 2.610.722 2,60 % FLPS - PRINC ALL SE
Slide 66: 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 67: SpareBank 1 Group and Alliance
SpareBank 1 Group and Alliance 67
Slide 68: The SpareBank 1 Alliance
The SpareBank 1 Alliance SamSpar 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 Boligkredit
Slide 69: 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 69
Slide 70: Pre-tax operating profit. SpareBank 1 Gruppen
Pre-tax operating profit. SpareBank 1 Gruppen As per 3rd quarter (MNOK) 1,753 1,439 • Return on equity as per 3rd quarter: 1,216 1,224 2016 17.8 % 2015 16.9 % 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 %
Slide 71: SpareBank 1 Alliance – lending composition
SpareBank 1 Alliance – lending composition Per Q2 2016 % 14 12 10 8 6 4.4 4 4.2 2 0 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 2Q16 Lending growth Deposit growth • Total lending: approx. NOK 730 bn. • Mortgages: approx. NOK 500 bn. • Share of mortgages bought by Boligkreditt: approx. 35 % 71
Slide 72: SpareBank 1 Alliance – market position
SpareBank 1 Alliance – market position Per Q2 2016 % Market share SB1 Alliance, Norway 22 • 2nd largest banking group in the market 20 20.7 • More than 20 % national market share in 18 16 16.1 residential mortgages 14 • Regional market share leader with 30-50% shares 12 10 2005 2006 2007 2008 2009 2
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