Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q3 2017 Earnings Presentation
37 slides from Pareto Bank Asa's earnings presentation, October 2017
Slide 1: Pareto Bank Financial Results Third Quarter 2017
PARETO BANK Financial Results Third Quarter 2017
Slide 2: Table of Contents
TABLE OF CONTENTS 1 THIRD QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING 6 AMBITIONS FOR 2017
Slide 3: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS Key figures Q3-17 Highlights Q3-17 PROFIT NOK 86.0m High lending growth on a strong net interest margin. I AFTER TAX (NOK 68.4m) Continued strong growth within residential property development. RETURN ON 17.5 % II EQUITY * (17.4 %) A negative market sentiment and a large hou
Slide 4: Pillar 2 Capital Requirements
PILLAR 2 CAPITAL REQUIREMENTS Capital ratios Key comments on capital • The NFSA has given the bank a pillar 2 requirement of 3.2 % of risk weighted assets (RWA). This requirement must be fulfilled with core 19.3% 19.0 % 18.7 % Tier 2 equity (CET1) and is effective as of 31.12.2017. 17.0 % 17.0 % 16.
Slide 5: Solid Foundation and Strong Performance
SOLID FOUNDATION AND STRONG PERFORMANCE Result after tax (NOKm) Return on Equity * CET1 ratio ** 16.5% 16.6% 247.3 15.6% 15.9% 17.2 % 16.6 % 239.3 13.3% 13.2 % 174.6 11.5 % 12.1 % 165.8 122.4 2013 2014 2015 2016 30.09.2017 2013 2014 2015 2016 30.09.2017 2013 2014 2015 2016 30.09.2017 Net interest in
Slide 6: The Share
THE SHARE Share price development since March 2014** EPS, DPS (NOK) & Dividend Yield * Book equity per share (NOK) * 34.17 4.08 4.03 31.14 3.81 3.91 28.01 24.68 2.6 % 2.4 % Price as of 30.09: NOK 36.10 1.00 0.60 0.0- % - 2014 2015 2016 30.09.2017 DPS EPS Dividend yield 2014 2015 2016 30.09.2017 Pric
Slide 7: Largest Shareholders as of 11.10.2017
LARGEST SHAREHOLDERS AS OF 11.10.2017 # Investor 11 October 2017 # of shares % total 1 Pareto AS 8,921,873 15.22% • The Company has 58,619,688 shares 2 Pecunia Forvaltning AS 5,861,859 10.00% outstanding 3 Saga Tankers ASA 5,052,547 8.62% 4 Apollo Capital Management 4,875,998 8.32% • One class of sh
Slide 8: Table of Contents
TABLE OF CONTENTS 1 THIRD QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING 6 AMBITIONS FOR 2017
Slide 9: Norway's Leading Project Bank
NORWAY’S LEADING PROJECT BANK BUSINESS AREAS PROJECTS / CREDITS AREA EXPOSURE AVG. PRINCIPAL Property lot financing Real NOKm estate Building construction facilities 67 % 25-50 Commercial property financing M&A loans Corporate & Bridge loans NOKm Securities Investment loans 21 % 5-30 Securities fina
Slide 10: Portfolio Composition | Overview
PORTFOLIO COMPOSITION | OVERVIEW * Gross credit exposure (NOKm) Σ = NOK 12,618m Gross total lending (NOKm) Σ = NOK 9,914m MAIN BUSINESS AREAS Real Estate 8,488 67% Real Estate 6,907 70% Corporates 1,317 10% Corporates 983 10% Real estate financing Real focused on residential Securities 1,371 11% Sec
Slide 11: Real Estate | Strong Market Position
REAL ESTATE | STRONG MARKET POSITION 67% Real Estate credit exposure (NOKm) * Σ = NOK 8,488m * Description Real Estate credit exposure Residential 4,380 • Primarily financing of residential property development Residential property Property Lots 1,984 development • Financing of regulated lots purcha
Slide 12: Real Estate | Policy Residential Property
REAL ESTATE | POLICY RESIDENTIAL PROPERTY 67% Real Estate portfolio policy Real Estate portfolio management • On average 20 % to 40 % equity to • In-house regulatory skills of the finance a property lot purchase housing market is essential for a good credit decision process • Primarily financing of
Slide 13: Real Estate | Residential Property Exposure
REAL ESTATE | RESIDENTIAL PROPERTY EXPOSURE 67% A diversified portfolio Geographical residential property exposure (NOKm) Σ = NOK 6,364m ** • The residential property exposure is diversified according to geographic area, neighbourhood, project type, and size Oslo West • The portfolio is made up of 1
Slide 14: Real Estate | Residential Property Market
REAL ESTATE | RESIDENTIAL PROPERTY MARKET 67% Market observations Oslo • A change in market sentiment and an increasingly differentiated market in Oslo. Price growth in 2016 has largely been reversed. • Some segments are more affected than others: demand for small apartments (50 square meters or les
Slide 15: Securities | Focus on Customized Solutions
11% SECURITIES | FOCUS ON CUSTOMIZED SOLUTIONS Total securities exposure (NOKm) * Σ = NOK 1,371m Status and policy • Pareto Securities’ expansion into standardised securities financing Primarily listed stocks** 1,072 78% in the Norwegian retail market will have an impact on the bank’s exposure, and
Slide 16: Corporates | A Market with Opportunities
10% CORPORATES | A MARKET WITH OPPORTUNITIES 9% Ambition Products Pareto Bank will become a leading provider of tailor-made, M&A FINANCING transaction-based financing solutions to investors, owners, family offices and small and medium-sized enterprises Traditional M&A and LBO financing to Norwegian
Slide 17: Shipping & Offshore | Diversified Portfolio
SHIPPING & OFFSHORE | DIVERSIFIED PORTFOLIO 9% Status Total S&O credit exposure & Loan to value (NOKm) * Σ = NOK 1,163m LTV * Share • A diversified portfolio where a single segment will Product 233 54% 20% normally not exceed 25% of the total S&O exposure Bulk • The bank has a strong competitive pos
Slide 18: Shipping & Offshore | Policy
SHIPPING & OFFSHORE | POLICY 9% 13% S&O portfolio policy S&O portfolio management • Careful growth within the strong • Equity analysts and specialists in the Norwegian shipping and offshore Pareto Group are information sources sector • Use of expertise regarding valuations, • Clients should be based
Slide 19: Table of Contents
TABLE OF CONTENTS 1 THIRD QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING 6 AMBITIONS FOR 2017
Slide 20: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Key comments • Lending growth and high margins combined with a lower surplus liquidity lifted net interest Q3-17 Q2-17 Q1-17 Q4-16 Q3-16 income Net Interest income 138.7 124.6 115.4 117.3 108.0 Total other operating income 3.2 7.8 18.9 9.0 13.3 • Low costs and l
Slide 21: Growing Net Interest Income
GROWING NET INTEREST INCOME Net interest income (NOK 1,000) Net interest margins (vs. 3M NIBOR) * Q3-17 2,262 5,302 138,685 12,517 - 281 -1,795 Q3-16 Q3-17 6.12% 5.86% 5.61% 5.20% 12,665 Q3-16 108,015 -0.41% -0.26% Lending margin Deposit margin Net margin Lending & Lending & Amorti- Invested Long-te
Slide 22: Strong Margins
STRONG MARGINS Continuously improving net interest margins (vs. 3M NIBOR) * Key comments • Strong growth on an strong net margin 6.1 % 6.0 % 5.9 % 5.5 % 5.6 % 5.6 % 5.6 % 5.6 % 5.7 % 5.7 % 5.6 % 5.6 % 5.9 % • High fee income driven by high activity in 5.4 % 5.5 % 5.4 % 5.2 % 5.0 % 5.1 % 5.0 % 5.1 %
Slide 23: Strong Balance Sheet
STRONG BALANCE SHEET BS (NOKm) Key comments • Lending growth of NOK 326m in the third Q3-17 Q2-17 Q1-17 Q4-16 Q3-16 quarter Loans to credit institutions 165.4 350.2 884.5 804.3 1,093.5 • High turnover rate: approximately 30 % Loans to customers 9,869.5 9,544.0 8,973.4 8,753.8 8,907.5 of the loan por
Slide 24: Table of Contents
TABLE OF CONTENTS 1 THIRD QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING 6 AMBITIONS FOR 2017
Slide 25: Loan Portfolio Quality
LOAN PORTFOLIO QUALITY Net non-performing and impaired loans * % of gross lending 1.58% 1.44% 1.23% 1.31% 1.15% 0.96% 0.94% 0.94% Non-performing 0.71% 0.57% 0.48% Impaired 0.47% 0.29% 0.14% 0.18% 0.13% 0.00% 0.07% 0.07% 0.03% Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3
Slide 26: Group Provisions
GROUP PROVISIONS Cumulative group provisions % of gross lending 0.51% 0.52% 0.51% 0.51% 0.50% 0.48% 0.50% 0.48% 0.42% 0.40% 0.41% 0.37% 0.34% Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Group provisions (NOKm) 24.7 26.7 28.7 30.7 30.7 40.7 40.7 43.7 45.7 45.7 45.7 4
Slide 27: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Q3-17 Σ = NOK 12,618m Q3-16 Σ = NOK 11,309m Key comments None / very low risk 6,048 48% None / very low risk 5,397 48% • 85 % of the portfolio is considered to have low to none/very low risk risk Low risk 4,868 39% Low risk 4,199 37% • NOK 167m or 1 % classified as
Slide 28: Commitments by Size
COMMITMENTS BY SIZE Q3-17 Σ = NOK 12,618m Q3-16 Σ = NOK 11,309m Key comments • A conservative policy with respect to size <5 535 4% <5 559 5% • Maximum size on a single customer 10 % of total capital (NOK 222m) 5 - 10 600 5% 5 - 10 693 6% • Maximum size on group / consolidated basis 15 % of total ca
Slide 29: Table of Contents
TABLE OF CONTENTS 1 THIRD QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING 6 AMBITIONS FOR 2017
Slide 30: Funding | Overview
FUNDING | OVERVIEW * Sources (NOKm) Σ = NOK 13,310m Historical development in deposits vs. lending (NOKm) 102% Deposits 7,680 57% 98% 96% 95% 90% 89% 86% 86% 87% 86% 81% 83% Senior debt 3,280 24% 78% 9,870 9,544 T1 & T2 debt 320 2% 8,908 8,973 8,754 8,368 8,326 Other debt 192 1% 7,931 8,525 7,596 7,
Slide 31: Funding | Customer Deposits
FUNDING | CUSTOMER DEPOSITS * Deposits by product Σ = NOK 7,660m Deposits by type Σ = NOK 7,660m 980 Depositors (#) 4,030 2,385 Floating rate retail 760 2,573 Floating rate corporate Amount (NOKm) 2,203 5,457 2,800 0% 20% 40% 60% 80% 100% 1,684 Savings with restrictions 1,738 Retail Corporate 1,766
Slide 32: Funding | Market Funding
FUNDING | MARKET FUNDING Market funding maturities - net of own holdings (NOKm) * Credit spreads (bps) 200 180 160 200 140 120 100 80 950 1,000 60 710 40 460 20 153 120 0 2017 2018 2019 2020 2021 2022 Dec-13Mar-14Jun-14 Sep-14 Dec-14Mar-15Jun-15 Sep-15 Dec-15Mar-16Jun-16 Sep-16 Dec-16Mar-17Jun-17 Se
Slide 33: Surplus Liquidity
SURPLUS LIQUIDITY Bond portfolio (NOKm) Σ = NOK 3,331m Key comments 1% • The bank’s liquidity is comprised of cash and highly liquid bonds 10% • Liquidity held to meet future bond maturities and short-term lending growth • The bank has a high LCR due to a high level Government & PSEs of deposits in
Slide 34: Table of Contents
TABLE OF CONTENTS 1 THIRD QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING 6 AMBITIONS FOR 2017
Slide 35: Status Financial Targets 2017
STATUS FINANCIAL TARGETS 2017 30.09.2017 STATUS 31.12.2017 TARGET Continued growth in residential GROWTH LENDING property development. NOK 1,116m ~NOK 1,000m High sales activity within corporate financing. Lending growth on high margins 16.6 % > 13.0 % * ROE and cost efficiency yield high returns. T
Slide 36: Status Portfolio Goals 2017
STATUS PORTFOLIO GOALS 2017 BUSINESS AREAS MARKET STATUS 30.09.2017 GROWTH TARGETS 2017 A possible slowdown in presale on new projects Net growth of Net growth of Real due to a large housing approximately approximately estate stock and a negative NOK 1,421m NOK 600m market sentiment in Oslo. A marke
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