Sparebank 1 Smn · OSL:MING
Sparebank 1 Smn — Q1 2017 Earnings Presentation
58 slides from Sparebank 1 Smn's earnings presentation, May 3, 2017
Slide 1: 1st quarter 2017
1st quarter 2017 3. May 2017
Slide 2: SpareBank 1 SMN, the region's most important financial institution
SpareBank 1 SMN, the region’s most important financial institution SpareBank 1 SMN History 216,000 retail customers Established in 1823 12,600 corporate customers Sparebanken Midt-Norge since 1985 Market leader in the region Listed on Oslo Børs since 1994 Loan volume NOK 140bn SpareBank 1 Alliance s
Slide 3: Continued population growth in the region
Continued population growth in the region, the towns in particular show a good trend Population growth North Trøndelag +7,6% +9,0% Population: 136,900, 127.223 136.889 149.253 Businesses: 16,199 Public sector, agriculture 2000 2016 2030 South Trøndelag +19,1% +12,7% Population : 314,000, 314.358 354
Slide 4: We expect economic growth in the international, Norwegian and regional economies
We expect economic growth in the international, Norwegian and regional economies in the next couple of years Estimated GDP growth in 2017 and 2018 Estimated regional growth in 2017 and 2018 Growth in Trøndelag 2017 3.4% – 3.7% Marked upturn in Møre and Romsdal 2018 3,3 1.5% – 1.8% 2,6 2,6 2,7 2,5 2.
Slide 5: More moderate growth in house prices; continued low unemployment
More moderate growth in house prices. Continued low unemployment rate in the region More moderate development in house prices Low unemployment in the region Unemployed in per cent of the labour force (NAV) 12-month growth in house prices March 2015 to March 2017 Monthly figures. March 2016 and March
Slide 6: Good profit performance and strong growth
Good profit performance and strong growth The bank is gaining efficiency, the Good profit in Q1 2017 target is zero cost growth also for 2017 The bank is growing in terms of lending, deposits, insurance, saving Normalized dividend and investment, estate agency and accounting services alike Good resu
Slide 7: Key figures
Key figures Return on equity CET1 15,1% 14,9% 14,8% 13,6% 13,6% 10,7% 11,3% 11,2% 8,9% 9,4% 2014 2015 2016 Q1 16 Q1 17 2014 2015 2016 Q1 16 Q1 17 Earnings per ECC Loan losses as a percentage of total loans 8,82 7,91 0,53 7,02 0,39 0,26 1,49 1,73 0,14 0,08 2014 2015 2016 Q1 16 Q1 17 2014 2015 2016 Q1
Slide 8: Strong subsidiaries, strengthening their market position
Strong subsidiaries, strengthening their market position SpareBank 1 Finans Midt-Norge EiendomsMegler 1 Midt-Norge • Pre-tax profit of NOK 28.1m (23.m) • Pre-tax profit of NOK 4.0m (10.0m). The profit performance is weakened by start- • Solid market position up costs of NOK 8.0m at BN Bolig • Leasin
Slide 9: High activity at SpareBank 1 Markets
High activity at SpareBank 1 Markets, with 22 staff taken over from Swedbank Markets and acquisition of asset management companies Allegro and SB1 Nord- Norge Forvaltning Competitive power and industrial capacity boosted by taking over 22 employees from Swedbank Markets Allegro and SpareBank 1 Nord-
Slide 10: Customer growth and market shares
SpareBank 1 SMN is strengthening its position as the leading finance house in the region, taking market shares, increasing its product breadth and strengthening its business platform The bank is taking customer and market shares and building a solid and diversified product platform. Subsidiaries and
Slide 11: Building a digital bank with a personal and local signature
From being a traditional bank with digital support processes, we are now in the process of building a digital bank with a personal and local signature Digital bank with a Traditional bank digitised personal and local signature The serviced channel will navigate on top of the digital interfaces and e
Slide 12: Distribution model allows channel interplay
The distribution model we have opted for allows us to achieve a channel interplay where we offer our entire product range in the channels that customers view as the most efficient and effective A new distribution model puts the customer at centre-stage We offer the entire product range needed by cus
Slide 13: Distribution model will ensure increased selling power and cost effectiveness
Clear planning and design of distribution model will ensure increased selling power and cost effectiveness Increased sales across all channels - from a total of 120,000 in 2016 to 170,000 to 200,000 in 2020 Increased share of digital sales plus cost efficiencies - from 20,000 in 2016 til 80,000–100,
Slide 14: The bank has continuous focus on efficiency
The bank has continuous focus on efficiency FTEs at parent bank 730 • At end 2016 there were 130 fewer FTEs at 720 the parent bank than at year-end 2012 • Target for 2017 is 590 FTEs at parent bank 645 630 623 2013 2014 2015 2016 Q1 17 1st quarter 2017 14
Slide 15: SMN launched its chatbot Anne
On Thursday 20.4 SMN launched its chatbot «Anne» Chatbot «Anne» offers a number of benefits: • On call day and night • Will handle > 600 chat calls per day, > 200,000 per year • Understands dialects and natural language, learns more in duecourse • Refers customers rapidly to what is relevant • Also
Slide 16: Smart car insurance and invoice credit
As the first bank in Norway, SpareBank 1 offers smart car insurance that combines new technology, customer behaviour and active interaction to provide customer benefits Now we are challenging the traditional models by launching smart car insurance based on technology and artificial intelligence Usin
Slide 17: Operationalising the collaboration on Vipps
The process of operationalising the collaboration on Vipps is going to plan. Positive collaboration between the banks to break rapidly into the market Work on getting the new company up and running is going to plan. Good cooperation between the banks and a positive will to find good solutions for fu
Slide 18: Offshore segment still demanding
The offshore segment is still demanding, but good working relationships with customers and other lenders are productive The offshore segment Segment and EAD Risk class (share of offshore in %) distribution 1. Offshore exposure is 5.7 bill (6.7) Subsea 2,336 (41%) • Offshore is 3.8% of total credit e
Slide 19: Impairments constitute around 9% of total offshore exposure
Impariments constitutes around 9% of total offshore exposure Risk class distribution Impairments per risk class and share of EAD 1st quarter 2016 – 1st quarter 2017 (bill NOK) 31 March 2017 Total Indi- impair- Share of mill kr EAD vidual Group ments EAD Q1 16 Q4 16 Low risk 1.098 3 3 0,3 % Medium ri
Slide 20: Offshore Service Vessels
Offshore Service Vessels • As of 1st quarter 2017 total impairments for the offshore portfolio are 8.8 percent. The offshore exposure has been reduced by 900 mill. NOK during the last 12 months. • The industry is experiencing a restructuring process as the cash flow for most shipowners is too low to
Slide 21: SpareBank 1 SMN intends to be one of the best performing banks
SpareBank 1 SMN intends to be one of the best performing banks Customer oriented Efficient Best for customer experience Nominal costs at the parent bank unchanged from 2014 to 2018 Continuing to strengthen market position Profitable Utbytte Return on equity among the best Payout ratio in the region
Slide 22: Adjustment to the dividend policy
SpareBank 1 SMN – adjustment to the dividend policy The following wording applied prior to the adjustment: • “SpareBank 1 SMN assumes and expects up to one-half of the owner capital’s share of the net profit to be paid out as dividend and the same proportion of the ownerless capital’s share of the n
Slide 23: Increased influence for equity certificate capital owners
Increased influence for equity certificate capital owners - amendment to the Articles of Association The Supervisory Board decided to amend Article 10-1 of the Articles of Association from Article 10-1 Redemption in the event of merger. Transitional provision • The Regulations on Equity Certificates
Slide 24: Financial results
Financial results 1st quarter 2017 24
Slide 25: First quarter 2017
First quarter 2017 Net profit NOK 358m (311m), CET1 14.8 % (13.6 %) . return on equity 9.4 % (8.9 %) Growth in lending RM 11.0 % (9.5 Result of core business NOK 317m %) and CM 3.1 % (decrease 1.2 %), (211m) exclusive of loan losses. deposits 9.9 % (5.4 %) last 12 Loan losses NOK 89m (NOK 170m) mont
Slide 26: Key figures, quarterly
Key figures, quarterly Return on equity CET 1 14,1% 14,3% 14,9% 14,8% 12,9% 12,2% 13,6% 11,3% 8,9% 9,4% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Earnings per ECC Loan losses 2,21 2,21 170 2,00 1,73 130 1,49 118 99 89 1st quarter 2017 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16
Slide 27: Profits
Profits Profits 2015 and 2016 and five last quarters NOK mill Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Net interest 522 493 449 472 469 Commission income and other income 455 414 412 448 401 Operating income 977 907 860 921 870 Total operating expenses 571 482 504 528 489 Pre-loss result of core business 406 4
Slide 28: Lending margins Retail and Corporate
Lending margins Retail and Corporate Per quarter from Q1 2013 Comments • Mortgage lending rates raised 3,00 3,05 3,05 3,00 2,93 2,86 by up to 20 bp as from 2,81 2,75 2,65 2,67 2,62 2,66 2,57 2,68 2,69 2,71 2,62 January 2017 2,45 2,47 2,52 2,40 2,28 2,31 2,33 2,28 2,08 2,06 2,00 1,92 1,78 1,81 1,70 1
Slide 29: Total growth lending 8.1% last 12 months
Total growth lending 8.1 % last 12 months Lending RM +11.0 % last 12 months High growth in home mortgage lending 9,5% 11,0% • Of the growth in home mortgage lending, 2/3 refers to established 82,3 91,3 customers and 1/3 to new customers 75,2 • Share of retail lending increased from 61 to 65 % last t
Slide 30: Loan to value mortgages
Loan to value mortgages Last two years LTV mortgages • 98.6 % of the exposure has an LTV of 93,9% 93,0% less than 85 % Q1 16 • Exposure with LTV higher than 85 Q1 17 points 1.4 % 5,4% 4,7% 0,9% 0,8% 0,7% 0,6% Under 70 % 70 - 85 % 85 - 100 % Over 100 % 1st quarter 2017 30
Slide 31: Deposit margins Retail and Corporate
Deposit margins Retail and Corporate Per quarter from Q1 2013 Comments Deposits RM • Margins improved due to Deposits CM repricing last two years 0,36 0,33 0,24 0,17 0,30 0,05 -0,15 -0,10 -0,26 -0,33 -0,33 -0,34 -0,35 -0,39 -0,48 -0,53 -0,46 -0,03 -0,19 -0,25 -0,15 -0,18 -0,14 -0,10 -0,40 -0,44 -0,4
Slide 32: Total growth deposits 9.9% last 12 months
Total growth deposits 9.9 % last 12 months Deposits RM + 5.0 % +6,9% +5,0% 26,5 28,3 29,8 Share of deposits 31.3.15 31.3.16 31.3.17 45% RM Deposits CM + 13.8 % CM 55% +13,8% +4,2% 40,4 34,1 35,5 31.3.15 31.3.16 31.3.17 1st quarter 2017 32
Slide 33: Robust income platform and increased commission income
Robust income platform and increased commission income Net interest and other income Commissions Q1 17 and Q1 16 mill kr 2017 2016 Change 977 Payment transmission income 50 47 3 844 870 Creditcards 15 14 0 379 Commissions savings and asset management 21 19 2 Commissions 286 327 Commissions insurance
Slide 34: Reduced use of resources in parent bank
Reduced use of resources in parent bank Cost growth in the group 571 • Cost growth in the subsidiaries 489 • SMN Regnskapshuset’s acquisition of 266 Økonomisenteret substantially increases cost base Subsidiaries 199 • Also growth at EiendomsMegler 1 og SpareBank 1 Markets, some one-time costs 306 •
Slide 35: Subsidiaries
Subsidiaries Pre tax profit subsidiaries five last quarters Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 EiendomsMegler 1 Midt-Norge (87 %) 4 7 16 33 10 SpareBank 1 Regnskapshuset SMN 15 10 7 22 4 SpareBank 1 Finans Midt-Norge (90 %) 28 29 26 25 23 Allegro Kapitalforvaltning (90 %) 1 5 1 4 1 SpareBank 1 SMN Invest
Slide 36: Associated companies
Associated companies Profit shares after tax and five last quarters Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 SpareBank 1 Gruppen (19,5 %) 66 97 79 80 61 SpareBank 1 Boligkreditt (18,4 %) -24 -26 -13 -2 24 SpareBank 1 Næringskreditt (29,3 %) 8 8 5 7 8 BN Bank (33 %) 29 7 28 31 20 SpareBank 1 Kredittkort (18,3 %
Slide 37: Return on financial investments
Return on financial investments Five last quarters NOKm Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Net gain and dividends on securities 2 39 45 62 3 Net gain on bonds and derivatives 34 78 80 53 25 Forex and fixed income business 31 37 45 28 26 Net return on financial investments 67 154 171 143 54 1st quarter 20
Slide 38: Continued relatively high losses, mainly in offshore
Continued relatively high losses, mainly in the offshore segment Losses per quarter, NOKm Distribution Q1 2017 170 130 PM 3 118 99 89 56 56 Leasing 0 35 22 NL 87 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Loan losses including collective losses provisions 0.26 % (0.53 %) of gross lending
Slide 39: Very low levels on loans in default
Very low levels on loans in default (0,15 %). Reduction in problem loans after restructuring two large offshore exposures Last two years, per quarter Problem loans Loans in default Loans in default % of total loans 1.474 1.360 1.198 1.078 368 448 399 411 0,23 0,19 0,17 0,16 0,16 0,16 0,16 0,15 287 2
Slide 40: Balance sheet
Balance sheet Last three years 31.3.17 31.3.16 31.3.15 Funds available 22,9 19,5 16,5 Net loans 103,2 94,6 91,9 Securities 1,7 1,6 0,7 Investment in related companies 6,0 6,0 5,2 Goodwill 0,7 0,6 0,5 Other assets 7,6 12,0 8,9 Total Assets 142,0 134,3 123,7 Capital market funding 46,9 44,4 39,6 Depos
Slide 41: High share mortgages and diversified portfolio SMEs
High share mortgages and diversified portfolio SMEs Lending by sector in NOK billion and change last 12 months, per cent Wage earners 57,6 16% SB1 Boligkreditt 33,8 3% Commercial real estate 14,1 -2% Agriculture/forestry/fisheries 10,7 16% Transport and other services 6,1 13% Maritime sector and off
Slide 42: Strong development in CET 1. New target 15.0%
Strong development in CET 1 (capital and ratio). New Target : 15.0 % CET 1 Ratio 15,0% +8% 14,9% 14,8% 0,9% Other buffers 13,6% 2,0% Countercyclical 11,1% 11,2% 2,1% Pilar 2 9,5% 10,0% 9,0% 8,0% 2,5% Conservation Buffer 3,0% Systemic Risk 4,5% Equity Capital 2009 2010 2011 2012 2013 2014 2015 2016 Q
Slide 43: Satisfying access to capital market funding
Satisfying access to capital market funding Funding maturity 31. March 2017 Comments 18,9 • SpareBank 1 Boligkreditt is the main funding source through covered bonds. 9,3 NOK 34 billion transferred as of 31. 6,1 6,5 March 2017 2,5 2017 2018 2019 2020 2021 -> • Maturities next two years NOK 12.4 bn:
Slide 44: Target of 12% stands firm and enhanced focus on profitability
Target of 12% stands firm and enhanced focus on profitability Return on equity 2016 Continued growth on profitable products and on capital-light product areas Volume growth Efficient allocation and use of capital in the group Growth in other incomes measured against required yield Increase capital e
Slide 45: SpareBank 1 SMN
SpareBank 1 SMN 7467 TRONDHEIM CEO Finn Haugan CFO Kjell Fordal Switchboard Tel +47 900 41 002 Tel +47 905 41 672 Tel +47 07300 E-mail finn.haugan@smn.no E-mail kjell.fordal@smn.no Internet adresses: SMN homepage og internet bank: www.smn.no HuginOnline: www.huginonline.no Equity capital certificate
Slide 46: Appendix
Appendix 1st quarter 2017 46
Slide 47: Operating income
Operating income Commission income Commission income Boligkreditt - Næringskreditt Operating income per quarter last two years Net interest income 977 922 907 880 869 860 843 850 379 330 327 374 350 299 297 342 76 83 79 81 74 75 64 70 467 473 469 472 493 522 466 449 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3
Slide 48: Change in net interest income
Change in net interest income Q1 17 compared with Q1 16 Comments • Increased lending volume the main Net interest this quarter 522 reason for higher net interest income Net interest at same period last year 469 Change 53 • Limited changes due to margin Obtained as follows: movements compared with th
Slide 49: Earnings per ECC
Earnings per ECC Last two years per quarter 2,21 2,21 2,13 2,00 1,73 1,45 1,49 1,26 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 1st quarter 2017 49
Slide 50: SpareBank 1 SMN will come across as cost-efficient as a group
SpareBank 1 SMN will come across as cost-efficient not just on an individual basis but also as a group High operating margins in EM1 and Profitable and non-capital-intensive Regnskapshuset SMN subsidiaries: • Both EM1 and Regnskapshuset SMN are 0,88 0,85 companies making a sound profit – and requiri
Slide 51: Stable credit risk
Stable credit risk SpareBank 1 SMN’s loans distributed on risk class and SpareBank 1 SMN’s loans distributed on size of customer share of Exposure At Default engagement and share of Exposure At Default 84,9% 84,5% Share of EAD Q1 2016 67,7% 68,9% Share of EAD Q1 2016 Share of EAD Q1 2017 Share of EA
Slide 52: Strengthened capital adequacy
Strengthened capital adequacy As at Q1 2017 and Q1 2016 NOKm 31.3.17 31.3.16 Core capital exclusive hybrid capital 13.437 12.440 Hybrid capital 1.817 1.797 Core capital 15.254 14.237 Supplementary capital 2.034 2.279 Total capital 17.288 16.516 Total credit risk IRB 4.173 4.135 Debt risk, Equity ris
Slide 53: Strong capitalization
Strong capitalization Development CET1 Development CET 1 without transitional arrangements (Basel III) 14,9 14,8 15,0 15,0 16,2 13,6 11,2 10,4 2014 2015 2016 Q1 17 2014 2015 2016 Q1 17 1st quarter 2017 53
Slide 54: Key figures
Key figures Last three years 31.3.17 31.3.16 31.3.15 CET 1 ratio 14,8 % 13,6 % 12,3 % Core capital ratio 16,8 % 15,6 % 14,3 % Capital adequacy 19,0 % 18,1 % 17,0 % Leverage ratio 7,4 % 6,8 % 6,3 % Growth in loans incl.Boligkreditt 8,1 % 5,4 % 10,0 % Growth in deposits 9,9 % 5,4 % 10,9 % Deposit-to-l
Slide 55: Key figures ECC
Key figures ECC Last five years (including effects of issues) Q1 17 Q1 16 2016 2015 2014 2013 ECC ratio 64,0 % 64,0 % 64,0 % 64,0 % 64,6 % 64,6 % Total issued ECCs (mill) 129,83 129,83 129,83 129,83 129,83 129,83 ECC price 66,50 52,75 64,75 50,50 58,50 55,00 Market value (NOKm) 8.634 6.849 8.407 6.5
Slide 56: SpareBank 1 Alliance companies
SpareBank 1 Alliance Members SpareBank 1 SpareBank 1 SpareBank 1 Sparebanken Samspar LO SMN SR-Bank Nord-Norge Hedmark Products, commissions, dividends Sales, loan portfolios, capital SpareBank 1 BN Bank Covered Bonds, SpareBank 1 Gruppen AS residential SpareBank 1 Alliance companies SpareBank 1 Spa
Slide 57: Organisational set-up SpareBank 1 SMN
Organisational set-up SpareBank 1 SMN Group CEO Legal Finn Haugan Risk Retail Market Organisation and Corporate Corporate Group Finance Svein Tore Development Communications Vegard Helland Kjell Fordal Rolf Jarle Brøske Samdal Nelly S Maske 1st quarter 2017 57
Slide 58: Overall organisation
Overall organisation 1st quarter 2017 58