Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q2 2023 Earnings Presentation
55 slides from Sparebank 1 Sor-norge Asa's earnings presentation, July 2023
Slide 1: Quarterly presentation Q2 2023
Quarterly presentation 2023 Q2
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: SR-Bank at a glance
SR-Bank at a glance Second largest Norwegian bank (SIFI) • Rating: A1 (positive outlook) SR-Bank’s market area • Market cap: NOK 33.3 Billion • Total assets: NOK 361.8 Billion • Total lending: NOK 264.9 Billion • Total deposits: NOK 150.8 Billion • No. of branches: 36 • Employees: 1,571 1839: The fi
Slide 4: Business Survey
Business Survey • A majority of the companies are planning to hire • Regional differences: Companies in Rogaland are the most optimistic • High growth expected in energy companies • Pressure on profitability and investments in other industries Main findings in SpareBank 1 SR-Bank's Business Survey f
Slide 5: High activity level in 1H-23
High activity level in 1H-23 Q1 In April, we sign "Future Q2 In May, we celebrate the Proof," committing fifth anniversary of our ourselves to address establishment in Oslo human rights challenges in and Viken. The Group is global value chains. investing and Simultaneously, we conduct experiencing s
Slide 6: Finance group for South of Norway
Finance group for South of Norway Knarvik Åsane Lending volume in NOK billion. Askøy Bergen Sotra Fana Nydalen Oslo Skøyen Ensjø Husnes Stord Ølen Tysvær Haugesund Bygenes Jørpeland Randaberg Stavanger* Sola Sandnes Gjesdal Bryne Varhaug Arendal Egersund Grimstad Flekkefjord Kristiansand Lyngdal Far
Slide 7: A good result with growth under challenging market conditions
A good result with growth under challenging market conditions Result 2. quarter 2023 Result 30 June 2023 13.5% 9.1% 17.8% 14.6% Return on equity after tax Return on equity after tax Pre-tax profit MNOK 2,467 12 months lending growth Retail market Corporate market 5.8% 14.0% CET 1 capital ratio SME a
Slide 8: Key figures and financial targets
Key figures and financial targets Return on equity CET 1 capital ratio Cost to income ratio Dividend share * In connection with the bank’s SREP process, the Financial Supervisory Authority added a temporary Pilar 2 premium of 0.5% and CET 1 capital ratio minimum is 17.35%. 8
Slide 9: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio Cost to income ratio Earnings per share (NOK) 9
Slide 10: Income statement
Income statement Group Income Statement (MNOK) Q2 2023 2023 Q4 2022 Q3 2022 Q2 2022 Net interest income 2,826 2115 1,424 1,402 1,286 415, 1,101 Net commission and other income 977 896 522 455 453 421 466 Net income on financial investments 180 291 109 71 274 191 104 Total income 3,983 3,302 2,055 1,
Slide 11: Change in profit 30.06.2022 - 30.06.2023
Change in profit 30.06.2022 - 30.06.2023 (MNOK) 11
Slide 12: Group
Group Lending volume Deposit volume Margins in customer- segments Definition margins: Average customer rate measured against 3-months NIBOR. *The 12 months deposit growth excluding deposits from customers in the public sector is 10,6 %. 12
Slide 13: Retail market
Retail market Lending volume* Deposit volume Margins Definition margins: Average customer rate measured against 3-months NIBOR. *Including employee loans. **During December 2022 customers in clubs and socities segment was transferred from the retail market portfolio to the SME and Agriculture portfo
Slide 14: Corporate market
Corporate market Lending volume Deposit volume Margins v Definition margins: Average customer rate measured against 3-months NIBOR. *12 months lending growth in Corporate market excluding currency effect is 12,8%. 14
Slide 15: SME and Agriculture
SME and Agriculture Lending volume Deposit volume Margins Definition margins: Average customer rate measured against 3-months NIBOR. *During December 2022 customers in clubs and socities segment was transferred from the retail market portfolio to the SME and Agriculture portfolio. 15
Slide 16: Development in early warning indicators
Development in early warning indicators Corporate market - Drawn amount on credit facilities Retail market – Number of applications for interest-only* Retail market – Drawn amount on interest only loans Retail market – Share of exposure (EAD)** with payment remarks *Average number of applicaton per
Slide 17: Loan portfolio as at 30 June 2023
Loan portfolio as at 30 June 2023 • Gross loans increased to NOK 264.9 billion from NOK 242.9 billion year over year • 12-month growth in loans of 9.1% • Loans to retail customers account for 59.1% of total loans 10.4% 5.0 % 21.8% 22.9% Share of green loans Loans before impairments, nominal amounts.
Slide 18: Loan to value ratio and RWA on home mortgage loans
Loan to value ratio and RWA on home mortgage loans Loan to value ratio on home mortgage loans Risk weight home mortgages • 94.8% of the exposure is within 85% of the assessed value of • RWA on home mortgages reflects a solid portfolio with a collateral. moderate loan-to-value ratio and low potential
Slide 19: Net commission and other income
Net commission and other income 74 19
Slide 20: Change in net commission and other income 30.06.2022 - 30.06.2023
Change in net commission and other income 30.06.2022 - 30.06.2023 (MNOK) 74 20
Slide 21: Net income on financial investments
Net income on financial investments When a basisswap is defined as a hedging instrument, changes in “basis spread” is recognized through other comprehensive income. 21
Slide 22: Subsidiaries
Subsidiaries *The result in ForretningsPartner includes amortisation of intangible assets of NOK 2.9 million (NOK 3.2 million as at 30 June 2022). 22
Slide 23: Ownership interests
Ownership interests *Companies in which FinStart Nordic AS owns stakes of between 20-50% must, because of accounting rules, be measured as associated companies in the consolidated financial statements. The profit contribution here is included in the company’s results on the previous page. 23
Slide 24: Operating expenses
Operating expenses MNOK 30.06.2022 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Total personnel expenses 969 883 488 482 477 429 438 IT expenses 222 193 14 108 102 99 96 Marketing 42 47 23 19 22 18 25 Administrative expenses 64 45 33 32 30 25 27 Operating expenses from real estate 23 23 1" 12 18 13 1 Oth
Slide 25: Impairments on loans and financial commitments / Stage 3
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Impairments on loans and Changes in gross loans financial commitments and financial commitments defined as Stage 3 1,131 1,110 1,060 25
Slide 26: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) Impairments on loans and financial commitments in the balance sheet (MNOK) 26
Slide 27: Impairments per quarter
Impairments per quarter SR-Bank’s revenue recognition of net impairments on loans and financial liabilities are increased with NOK 46 million isolated from Q2 2022 to Q2 2023. Following a thorough assessment of the current macro situation, SR-Bank has taken sound steps to ensure resilience at a vola
Slide 28: Solid capital ratio
Solid capital ratio • The authorities’ minimum requirement for the CET 1 capital ratio is 17.35% including a temporary Pillar 2 premium of 0.5% 21.89% • The leverage ratio is 7.00% as at 30 June 2023, well above the 21,05 % 17.35% 20,48 % 20,31 % 19.90% minimum requirement at 5.0% 18,88 % 18,76% 19,
Slide 29: Funding
Funding • Moody`s rating A1 (positive outlook) • NSFR* 135% • LCR** 215% Annual funding maturity • NOK 24.2 billion net refinancing need over the next 12 months 30 28 • Deposit to loan ratio 56.9% 26 24 • MREL-requirement 36.7%, MREL-subordination requirement 29.7% 22 20 • The MREL-requirement leads
Slide 30: Market risk
Market risk Bonds and certificates Interest rate risk The average duration of the portfolio is 2 years Economic effect from a parallel shift of the yield curve of 2 percentage points Classification of bonds and certificates Currency risk Limit per currency is 100 MNOK Market value of HTM is 9,308 MN
Slide 31: Our findings in Norway's largest sustainability survey
Our findings in Norway`s largest sustainability survey Population Businesses Municipalities Over 6000 private individuals 2100 business leaders 253/356 municipalities «8 out of 10 business «7 out of 10 business leaders believe leaders believe sustainability is sustainability does not strategically i
Slide 32: Lending volume and financing sustainable activities
Lending volume and financing sustainable activities Sustainable lending volume is 17.2% of total Goal: Finance NOK 50 billion in sustainable activities Lending lending volume volume by the end of 2030 30.06.23 2021 2030 17.2% 53.6% 0 bill 25 bill 50 bill 75 bill 100 bill 125 bill 150 bill 175 bill 2
Slide 33: Outlook
Outlook • Unemployment remains low • More positive expectations in the business sector • Expecting a key interest rate peak at 4.25 percent • Uncertainty remains high 33
Slide 34: SpareBank 1 SR-Bank
SpareBank 1 SR-Bank 1 A solid public limited company with high returns over time 2 Strong position i Southern-Norway with growth opportunities 3 Diversified portfolio 4 A pro-active ally to our clients in the sustainability transition Strong product and technology offerings through the SpareBank 1 5
Slide 35: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 35
Slide 36: Macro in Southern Norway
Macro in Southern Norway House price development Unemployment rate • Norwegian house prices have increased by 6,4% as at 30 June 2023 1.9 House prices. NOK per sqm. Average all homes. Indexed Not seasonally adjusted Number of bankruptcies SpareBank 1 SR-Bank`s business survey Main index of 48 per ce
Slide 37: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 37
Slide 38: Reduced exposure to the offshore sector
Reduced exposure to the offshore sector Offshore • EAD NOK 5.8 billion, 1.9% of the bank’s total EAD* • Exposure primarily to industrial oriented shipping companies with integrated organization (Offshore service vessels, Rig and Seismic vessels) *EAD: Exposure at default. 38
Slide 39: Market – Commercial real estate
Market – Commercial real estate Office vacancy Prime yield Rental prices Transaction volume (TNOK per sq.m) Source: Entra, WPS, EM1 MN og EM1 SR-Bank 39
Slide 40: Lending to commercial real estate
Lending to commercial real estate 13.7% (NOK 40.6 billion) of total EAD* is related to commercial real estate • Commercial real estate for lease ‐ EAD NOK 31.3 billion, 10.6% of the bank’s total EAD ‐ The portfolio is characterised by lending to commercial properties for lease with long-term contrac
Slide 41: Commercial real estate for lease
Commercial real estate for lease (Exposures larger than NOK 0.60 billion ~ 2/3 of total EAD) Loan portfolio distributed by region Loan portfolio distributed by size of loan EAD NOK billion EAD NOK billion Loan portfolio distributed by customer group Distribution of loan portfolio based on default cl
Slide 42: Lending to oil and offshore
Lending to oil and offshore 4.1% (NOK 12.1 billion) of total EAD* is related to oil operations • Oil services ‐ EAD NOK 4.9 billion, 1.7% of the bank's total EAD ‐ Funding of operating capital through current and fixed assets, as well as guarantees • Exploration and production companies ‐ EAD NOK 1.
Slide 43: Lending to shipping
Lending to shipping 2.7% (NOK 7.9 billion) of total EAD* is related to shipping • Product tank ‐ EAD NOK 1.2 billion, 0.4% of the bank's total EAD • Chemical tank ‐ EAD NOK 1.5 billion, 0.5% of the bank's total EAD • Dry-bulk ‐ EAD NOK 2.5 billion, 0.8% of the bank's total EAD • Gas ‐ EAD NOK 0.7 bi
Slide 44: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 44
Slide 45: Profile of the loan portfolio
Profile of the loan portfolio • SpareBank 1 SR-Bank has a solid loan portfolio. Loan portfolio distributed Loan portfolio distributed by risk class by size of loan • The loan portfolio consists mainly of small and medium- sized loans. Probability of Default (PD) % Probability of default (PD) through
Slide 46: Risk profile – Lending in Retail, SME & Agriculture and Corporate
Risk profile – Lending in Retail, SME & Agriculture and Corporate Customers - Portfolio distributed by risk class Retail SME & Agriculture Corporate 14.6% 14.1% 15.2% 14.1% 15.0% 14.0% 14.6% 16.5% 14.0% 13,8 % 14,4 % 14,8 % 43.1% 44.7% 46.5% 54.9% 52.9% 57.5% PD 0.00-0.50 PD 0.50-2.50 PD 2.50-99.9 P
Slide 47: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 47
Slide 48: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Business divisions Fully owned companies Partly owned companies Retail market 502 EiendomsMegler 1 SR-Boligkreditt BN Bank SpareBank 1 Leading real estate Covered Bond Funding Commercial Gruppen broker bank located in Holding company 35.0% 19.5% Corporate market Oslo and for
Slide 49: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 Samarbeidende SpareBank 1 LO SR-Bank SMN Nord Norge Sparebanker AS Østlandet 19.5% 19.5% 19.5% 19.5% 12.4% 9.6% Products, commissions, dividends Sales, loan portfolios, capital Companies where SR-Bank has direct ownership SpareBank 1 Gruppen A
Slide 50: Balance sheet
Balance sheet The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17/IFRS 9. 50
Slide 51: Key figures
Key figures The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17/IFRS 9. 51
Slide 52: SRBNK share
SRBNK share • International ownership Development in Price/Book Relative share price development is 21.2% per 140 1,5 2. quarter 2023 200 Index 100 = jun 30th 2022 130 1,4 180 120 1,3 • Total market value at 110 1,2 160 2. quarter 2023 is NOK 100 1,1 140 NOK p/B 120 33.3 billion 90 1,0 100 80 0,9 70
Slide 53: 20 largest shareholders as at 30 June 2023
20 largest shareholders as at 30 June 2023 • Ownership interests: • From Rogaland, Agder, Vestland, Oslo and Viken: 65.0% (65.7%) • International: 21.2% (22.4%) • 10 largest: 49.2% (47.9%) • 20 largest: 57.5% (55.9%) • Number of shareholders: 18.526 (18.095) • Employees owning 1.8% (1.7%) as at 30 J
Slide 54: SR-Bank as at 30 June 2023
SR-Bank as at 30 June 2023 • Number of shares issued 255.75 million • Trading volume in Q2 2023: 4.0% (5.2%) Figures in parentheses as at 30 June 2022. 54
Slide 55: Contact Details
Contact Details Management Christen Tranes Gate 35 Tel: +47 915 02002 Benedicte Schilbred Fasmer Postboks 250 www.sr-bank.no CEO 4068 Stavanger +47 950 60 034 benedicte.fasmer@sr-bank.no Inge Reinertsen CFO +47 909 95 033 inge.reinertsen@sr-bank.no Investor Relations Morten Forgaard Investor Relatio