Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q1 2015 Earnings Presentation
39 slides from Pareto Bank Asa's earnings presentation, 2015
Slide 1: Pareto Bank Financial Results First Quarter 2015
PARETO BANK Financial Results First Quarter 2015 SIDE 1
Slide 2: Financial Statement, Lending and Credit Risk, Funding and Liquidity Risk
1 FINANCIAL STATEMENT 2 LENDING AND CREDIT RISK 3 FUNDING AND LIQUIDITY RISK SIDE 2
Slide 3: First Quarter 2015
FIRST QUARTER 2015 Profit after write-downs and tax MNOK 37.4 (MNOK 42.8) Return on equity after tax 14.0% (18.2%) Cost/income ratio 25.2% (20.6%) Common Equity Tier 1 ratio (standard method) 12.31% (11.45%) SIDE 3
Slide 4: Highlights First Quarter 2015
HIGHLIGHTS FIRST QUARTER 2015 STABLE NET INTEREST INCOME Net interest margin improved as a result of lower interest rates on deposits and a reduced credit premium on issued securities. Lending volumes decreased as a result of a high natural redemption rate in the real estate financing portfolio. Len
Slide 5: Historical Development of Key Figures
HISTORICAL DEVELOPMENT OF KEY FIGURES Post-tax operating profit (NOK million) Core capital ratio ,47,2 12,3 % ,42,8 ,39,6 ,37,4 12,1 % 11,5 % 11,4 % 11,4 % ,24,7 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Return on equity (after tax) Cost/income ratio (%) 18,8 %
Slide 6: Key Stock Ratios
KEY STOCK RATIOS Earnings per share (NOK) 181,4 (NOK) Q1 2015 2014 2013 2012 2011 2010 129,3 Earnings per share after tax 44.0 181.4 129.3 79.6 56.1 26.5 Dividend per share 0.0 30.0 30.0 30.0 30.0 25.0 Dividend Payout ratio 0.0 16.8% 23.2% 37.7% 53.5% 94.3% 79,6 Dividend yield 0.0 2.4% 3.1% 4.2% 56,
Slide 7: Largest Shareholders 31.03.2015
LARGEST SHAREHOLDERS 31.03.2015 Name Holding Share • A total of 322 shareholders. Pareto AS 127,500 15.00% • Top level managers in the Pareto group own Swedbank AS (nom.) 74,000 8.71% 34,552 shares or 4.07% of the bank shares. Perestroika AS 71,628 8.43% Geveran Trading Co Ltd. 68,200 8.02% • 850,00
Slide 8: Income Statement
INCOME STATEMENT Q1 Q1 (NOK 1,000) 2015 2014 2014 Net interest income 75,381 62,892 277,117 Net gain/(losses) on financial instruments -7,411 10,371 9,840 Net other operating income 3,379 2,522 10,193 Total net income 71,349 75,786 297,150 Total operating expenses 17,990 15,617 79,818 Operating prof
Slide 9: Change in Net Interest Income First Quarter
CHANGE IN NET INTEREST INCOME FIRST QUARTER Q1 2015 +2,187 + 1,485 +12,277 75,381 Q1 2014 -908 -2,552 62,892 (NOK 1,000) Lending & Lending & Amortization Invested Long-term deposit deposit & commission surplus liquidity funding costs margin volume income SIDE 9
Slide 10: Repricing of Loans and Deposits Improves Net Interest Margins
REPRICING OF LOANS AND DEPOSITS IMPROVES NET INTEREST MARGINS 6,0 % Net interest margin between deposits and loans Q1 2015 increased by 0.90 percentage points over the last 12 4,0 % months due to: Q1 2014 2,0 % • Higher margins on new credits and changes in the composition of the loan portfolio 0,0
Slide 11: Historical Trend Net Interest Income
HISTORICAL TREND NET INTEREST INCOME 76,413 75,381 72,215 +5,81 % -1.35 % +10,09 % 65,596 62,892 +4,30 % 61,524 +2,22 % Flattening net interest +8,66 % 56,623 income levels due to 53,426 +5,98 % reduction in lending in the +15,54 % first quarter 45,076 46,240 +28,55 % +2,58 % 35,756 35,066 +6,79 % 3
Slide 12: High Repayment Rate in the Lending Portfolio
HIGH REPAYMENT RATE IN THE LENDING PORTFOLIO Ratio between granted loans and redemptions (NOK million) • A high share of short project financing credits result in a high natural redemption rate in the lending portfolio. 7,043 6,573 6,076 • Loans amounting to more than NOK 2.0 billion were 5,516 gran
Slide 13: Historical Trend Margins
HISTORICAL TREND MARGINS Margins over 3 month NIBOR 5,54% 5,60% Lending margin 5,11% 5,15% 4,91% 4,98% 4,68% 4,71% 4,75% Net margin 4,57% 4,33% 4,25% 4,20% 4,15% 3,97% 3,85% 3,73% 3,65% 3,58% 3,17% 3,31% 2,82% 2,82% 2,61% 2,48% 2,40% -0,97% -0,96% -0,95% -0,97% -0,85% Deposit margin -1,26% -1,13% -1
Slide 14: Non-Performing and Impaired Commitments
NON-PERFORMING AND IMPAIRED COMMITMENTS Non-performing commitments (NOK 1,000) 31.03.2015 31.03.2014 31.12.2014 • The bank's current portfolio of non-performing Gross non-performing commitments 4,536 9,078 0 loans are sufficiently secured and there not Individual write-downs considered impaired. 0 0
Slide 15: Quarterly Profit Trends
QUARTERLY PROFIT TRENDS 1st quarter 4th quarter 3rd quarter 2nd quarter 1st quarter (NOK 1,000) 2015 2014 2014 2014 2014 Net interest income 75,381 76,413 72,215 65,596 62,892 Net other operating income -4,032 -9,116 10,099 6,157 12,893 Total net income 71,349 67,297 82,313 71,754 75,786 Total opera
Slide 16: Historical Trend Loans and Deposits
HISTORICAL TREND LOANS AND DEPOSITS 7,347 7,171 7,162 7,246 7,207 6,867 6,734 7,039 6,843 6,902 7,348 5,505 6,702 5,473 6,308 6,242 5,234 6,110 4,460 5,589 5,371 Deposit-to-loan ratio target of approx. 80% at 4,942 year end. 3,435 4,506 3,843 Endeavor to reduce suplus liquidity and 2,348 increase ma
Slide 17: Assets
ASSETS (NOK 1,000) 31.03.2015 31.12.2014 30.09.2014 30.06.2014 31.03.2014 Cash and deposits with central banks 60,688 215,522 50,366 200,097 67 Lending to and deposits with credit institutions 406,934 232,981 617,748 185,905 896,896 Net lending to customers 6,842,504 7,206,847 7,346,889 7,245,771 6,
Slide 18: Liabilities and Equity
LIABILITIES AND EQUITY (NOK 1 000) 31.03.2015 31.12.2014 30.09.2014 30.06.2014 31.03.2014 Deposits from credit institutions 169 1,577 153 89 26,646 Deposits from customers 6,702,173 7,347,522 7,038,601 6,902,028 6,241,989 Senior securities issued 2,378,942 2,351,022 2,412,371 1,856,752 1,974,196 Fin
Slide 19: Adapting to New Capital Requirements
ADAPTING TO NEW CAPITAL REQUIREMENTS 16.1% 16.0% 1.8% 2.0% 14.5% 13.5% As of 31.12.15, the Bank has a target core capital ratio of 2.0% 1.5% 2.0% 12.5%. 2.0% 1.5% 1.5% The bank has met the increased capital requirements by making conservative dividend payments and by moderating lending growth. 12.3%
Slide 20: Financial Statement, Lending and Credit Risk, Funding and Liquidity
1 FINANCIAL STATEMENT 2 LENDING AND CREDIT RISK 3 FUNDING AND LIQUIDITY SIDE 20
Slide 21: A Niche Player with Focus on Real Estate, Securities, Shipping and Offshore
A NICHE PLAYER WITH FOCUS ON REAL ESTATE FINANCING, SECURITIES FINANCING, SHIPPING AND OFFSHORE FINANCING Total credit exposure NOK 9,043 million 1. Real estate financing focused on residential property construction in 0.4 bill. the Oslo region 4.2 % Property 2. A full scale provider of securities M
Slide 22: A Strong Market Position Within Residential Property Construction in Oslo
A STRONG MARKET POSITION WITHIN RESIDENTIAL PROPERTY CONSTRUCTION IN THE OSLO REGION Property credit exposure NOK 5,154 million • Primarily financing of regulated lots with a potential for property development 5,1 % Residential property 4,7 % • Financing of residential and commercial property constr
Slide 23: Terms of Real Estate Financing
TERMS OF REAL ESTATE FINANCING FINANCING OF RESIDENTIAL DEVELOPMENT • The bank requires on average 20% to 40% equity to finance a property lot purchase. • Primarily financing of regulated lots purchased for development with a clear exit strategy. • The developer must demonstrate the ability to succe
Slide 24: A Full Scale Provider of Securities Financing
A FULL SCALE PROVIDER OF SECURITIES FINANCING STANDARD PRODUCTS • Financing of stocks on Oslo Stock Exchange with a LTV/leverage of 0% to 80% • Financing of short trades on Oslo Stock Exchange • Financing of high yield bonds mainly arranged by Pareto Securities with a LTV/leverage of around 50% • Fi
Slide 25: Building a Well-Diversified Portfolio in Shipping and Offshore
BUILDING A WELL-DIVERSIFIED PORTFOLIO IN SHIPPING AND OFFSHORE Credit exposure NOK 1,112 million • 18 loans financing a total of 27 vessels • Pareto Bank is the direct lender in all but 3 loans. These are 8,3 % Offshore syndicates or club deals 0,2 bill. 17.6 % Ro-ro 11,0 % • 17 loans with 1st prior
Slide 26: Terms of Shipping & Offshore Financing
TERMS OF SHIPPING & OFFSHORE FINANCING • Our clients are long-term owners with extensive experience and expertise in operations and maintenance. • The project should as a rule have Norwegian ownership or Norwegian management • The client should be a high quality charterer with transparent books and
Slide 27: More on the Shipping & Offshore Portfolio
MORE ON THE SHIPPING & OFFSHORE PORTFOLIO • The portfolio is diversified, and a single segment will not normally exceed 25% of the total exposure. • The number of engagements is currently relatively modest, and all commitments are followed up individually in lieu of an aggregated stress test. Each e
Slide 28: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Credit exposure (NOK million) 31.03.2015 31.03.2014 31.12.2014 None/very low risk 4,503 4,260 4,448 None/very low risk Low risk 3,318 3,517 3,371 50 % Low risk 37 Moderate risk 875 913 871 % Some risk 344 207 296 High risk 5 0 0 Very high risk 3 0 3 Impaired loans
Slide 29: Commitments by Size
COMMITMENTS BY SIZE Credit exposure (NOK million) 31.03.2015 31.03.2014 31.12.2014 > 50 4,233 3,631 4,007 >20 <50 2,506 2,932 2,676 >10 <20 945 1,070 990 >5 <10 803 691 751 >2 <5 395 426 406 >1 <2 125 113 120 <1 39 35 40 Accrued interest and amortisation -4 2 -3 Total exposure 9,043 8,898 8,986 - ,5
Slide 30: Total Credit Exposure
TOTAL CREDIT EXPOSURE Total credit exposure Undrawn credit Lending Guarantees 31.03.2015 31.03.2014 31.12.2014 (NOK million) lines Real estate financing long-term 1,344.9 39.4 53.0 1,437.3 1,875.2 1,520.4 Real estate project financing 2,630.5 260.5 700.5 3,591.5 3,445.6 3,531.6 Securities financing
Slide 31: Interest Margin by Segment 31.03.2015
INTEREST MARGIN BY SEGMENT 31.03.2015 Allocation / Unused Interest No. of clients Lending guarantee Interest margin guarantees contribution Segment (NOK million) amount Securities financing 347 740.5 1,798.9 1,058.4 29.4 3.97% Corporate financing 23 629.5 664.8 35.3 27.5 4.37% Real estate project fi
Slide 32: Goals for 2015
GOALS FOR 2015 Signs of margin High natural repayment Net growth DNB, Nordea, pressure and increased rate on project lending. approx. NOK 60 % Handelsbanken. risk-taking, but still 200 million good deal flow. Potential for Stronger focus on Net growth Brokers, DNB, 21 % Nordea and SEB. customized co
Slide 33: Finansiell Informasjon, Utlån og Kredittrisiko, Funding and Liquidity Risk
1 FINANSIELL INFORMASJON 2 UTLÅN OG KREDITTRISIKO 3 FUNDING AND LIQUIDITY RISK SIDE 33
Slide 34: Funding Sources
FUNDING SOURCES Funding sources NOK 10,678 million Deposits Time deposits 39% 6,702 Corporate deposits 66% Senior debt 2,379 Deposit-to-loan ratio 98% Long term liquidity ratio 144% Other debt 200 Subordinated 119% LCR debt Core capital 309 1,088 SIDE 34
Slide 35: Customer Deposits
CUSTOMER DEPOSITS Deposit allocation Fixed rate deposits – time to maturity >25 mths. Depositors 3,387 1,966 15 - 25 mths. 8 - 14 mths. NOK million 2,296 4,395 5 - 7 mths. 0% 20 % 40 % 60 % 80 % 100 % 3 - 4 mths. Retail Corporate ,0 ,500 NOK million Deposits by size Average deposit per customer (NOK
Slide 36: Market Funding
MARKET FUNDING 800 180 718 700 160 621 140 600 120 500 390 384 100 PARB 5Y 400 310 80 PARB 3Y 300 245 Bank 5 3Y 60 200 40 100 20 0 0 2015 2016 2017 2018 2019 >2019 des. 13 feb. 14 apr. 14 jun. 14 aug. 14 okt. 14 des. 14 feb. 15 Market funding maturity profile (NOK million) Lower credit margins Paret
Slide 37: Surplus Liquidity
SURPLUS LIQUIDITY 4,500 4,000 Drawing facility 3,500 Government Investments & PSEs 3,000 Financial & 22% unrated Covered 2,500 covered bonds Investment Liquidity Level 2 assets portfolio 49% 2,000 portfolio 8% Level 1 OMF Drawdown on credits Industrials 1,500 o/ cap 2% Level 1 assets Bank/finance 1,
Slide 38: Investment Portfolio
INVESTMENT PORTFOLIO Market value NOK 274 million • Investment mandate set by the bank's board • Composed of investments in bonds and bond funds • Portfolio size limited to NOK 500 million • The overall portfolio size NOK 274 million • Short-term investments with minimum rating BB- make Eksport- fin
Slide 39: SIDE 39
(Pareto bank