Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q1 2023 Earnings Presentation
50 slides from Sparebank 1 Sor-norge Asa's earnings presentation, 2023
Slide 1: Quarterly presentation Q1 2023
Quarterly presentation 2023 Q1
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: Finance group for South of Norway
Finance group for South of Norway Åsane Lending volume in NOK billion. Askøy Bergen Sotra Fana Nydalen Oslo Skøyen Ensjø Husnes Stord Ølen Tysvær Haugesund Kopervik Åkrehamn Jørpeland Randaberg Stavanger* Sola Sandnes Gjesdal Bryne Varhaug Arendal Egersund Grimstad Flekkefjord Kristiansand Lyngdal F
Slide 4: Macro in Southern Norway
Macro in Southern Norway House price development Unemployment rate • Norwegian house prices have increased by 5,8% as at 31 March 2023 1.9 House prices. NOK per sqm. Average all homes. Indexed Not seasonally adjusted Investments on the Norwegian continental shelf Number of bankruptcies • The tax pac
Slide 5: Strong result driven by growth, solid underlying operations and low impairment losses
Strong result driven by growth, solid underlying operations and low impairment losses Result 1. quarter 2023 Result 31 March 2023 MNOK 35 39.5% 17.42% 12.3% Return on equity after tax Impairments on lending and financial commitments 0.05% of gross lending Cost to income ratio CET 1 capital ratio 10.
Slide 6: 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%. 6
Slide 7: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio Cost to income ratio Earnings per share (NOK) 7
Slide 8: Income statement
Income statement Group Income Statement (MNOK) Q12023 Q4 2022 Q3 2022 Q2 2022 2022 Net interest income 1,402 1,286 1115 1,101 1,014 Net commission and other income 455 453 421 466 430 Net income on financial investments 71 274 191 104 187 Total income 1,927 2,013 1,726 1,671 1,631 Total operating ex
Slide 9: Change in profit 31.03.2022 - 31.03.2023
Change in profit 31.03.2022 - 31.03.2023 (MNOK) 9
Slide 10: Group
Group Lending volume Deposit volume Margins in customer- segments Definition margins: Average customer rate measured against 3-months NIBOR. 10
Slide 11: 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 12: 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 15,4 %. 12
Slide 13: 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. 13
Slide 14: Loan portfolio as at 31 March 2023
Loan portfolio as at 31 March 2023 • Gross loans increased to NOK 258.2 billion from NOK 233.6 billion year over year • 12-month growth in loans of 10.5% • Loans to retail customers account for 60.0% of total loans 9.2% 5.9 % 22.7% 22.4% Share of green loans Loans before impairments, nominal amounts
Slide 15: 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 • Decreased share of volume with LTV below 70% is due to • RWA on home mortgages reflects a solid portfolio with a somewhat decreased market values of collateral (housing). modera
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 *Proportion of EAD that has payment
Slide 17: Net commission and other income
Net commission and other income 74 17
Slide 18: Change in net commission and other income 31.03.2022 - 31.03.2023
Change in net commission and other income 31.03.2022 - 31.03.2023 (MNOK) 74 18
Slide 19: 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. 19
Slide 20: Subsidiaries
Subsidiaries *The result in ForretningsPartner includes amortisation of intangible assets of NOK 1.3 million (NOK 1.6 million as at 31 March 2022). 20
Slide 21: 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. 21
Slide 22: Broad product range in the SpareBank 1 alliance
Broad product range in the SpareBank 1 alliance Ownership interests Profitshare after tax from ownership interests MARKETS FORSIKRING KREDITT FACTORING FORVALTNING 22
Slide 23: Operating expenses
Operating expenses 23 MNOK Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Total personnel expenses 482 477 429 438 444 IT expenses 108 102 99 96 97 Marketing 19 22 18 25 21 Administrative expenses 32 30 25 27 18 Operating expenses from real estate 12 18 13 1 1 Other operating expenses 68 61 51 64 52 Total
Slide 24: Changes in operating expenses 31.03.2022 - 31.03.2023
Changes in operating expenses 31.03.2022 - 31.03.2023 (MNOK) 4.1 % 4.5 % 0.6 % 0.4 % 24
Slide 25: Impairments on loans and financial commitments / Stage 3
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Stage 3 in % of gross loans and Impairments on loans and Changes in gross loans financial commitments financial commitments and financial commitments Loans in Stage 3, MNOK defined as Stage 3 Financia
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 net impairments on loans and financial liabilities are increased with NOK 20 million from 31 March 2022 to 31 March 2023 Following a thorough assessment of the current macro situation, SR-Bank has taken sound steps to ensure resilience at a volatile time: • Continuo
Slide 28: Funding
Funding • Moody`s rating A1 (positive outlook) • NSFR* 134% • LCR** 244% • NOK 26.0 billion net refinancing need over the next 12 months • Deposit to loans ratio 58.9% • MREL requirement 35.2%, MREL-subordination requirement 26,2% Annual funding maturity 30 28 26 24 22 20 18 16 NOK Billion 14 12 10
Slide 29: 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 9,502 MN
Slide 30: Solid capital ratio
Solid capital ratio • The authorities’ minimum requirement for the CET 1 capital ROE ROE ROE ratio is 17.35% including a temporary pilar 2 premium of 0,5% 12.6% 12.6% 12.3% • The group’s CET 1 capital ratio target is minimum 16.85% CET 1 • In March 2022 it was decided to increase the countercyclical
Slide 31: Lending volume and financing sustainable activities
Lending volume and financing sustainable activities Sustainable lending volume is 17.3% of total Goal: Finance NOK 50 billion in sustainable activities Lending lending volume volume by the end of 2030 31.03.23 2021 2030 17,3 % 35 % 0 bill 25 bill 50 bill 75 bill 100 bill 125 bill 150 bill 175 bill 2
Slide 32: Outlook
Outlook • Norwegian economy is faring better than feared • Business activity is leveling off, unemployment is low • Rise in housing prices • World economy: Expecting higher prices and lower growth 32
Slide 33: Appendix
APPENDIX 1) Loan portfolio 2) Risk 3) SpareBank 1 SR-Bank 33
Slide 34: Reduced exposure to the offshore sector
Reduced exposure to the offshore sector Offshore • EAD NOK 5.6 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. 34
Slide 35: Lending to commercial real estate
Lending to commercial real estate 14.2% (NOK 40.7 billion) of total EAD* is related to commercial real estate • Commercial real estate for lease ‐ EAD NOK 30.9 billion, 10.8% of the bank’s total EAD ‐ The portfolio is characterised by lending to commercial properties for lease with long-term contrac
Slide 36: 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 37: Lending to oil and offshore
Lending to oil and offshore 3.7% (NOK 10.5 billion) of total EAD* is related to oil operations • Oil services ‐ EAD NOK 3.8 billion, 1.3% 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 38: Lending to shipping
Lending to shipping 2.6% (NOK 7.4 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 1.8 billion, 0.6% of the bank's total EAD • Dry-bulk ‐ EAD NOK 1.9 billion, 0.7% of the bank's total EAD • Gas ‐ EAD NOK 0.7 bi
Slide 39: Appendix
APPENDIX 1) Loan portfolio 2) Risk 3) SpareBank 1 SR-Bank 39
Slide 40: 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- 65.8% 63.1% sized loans. Probability of Default (PD) % 66.9% 63.6% 30.2% 27.8%
Slide 41: 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 1.6% 1.8% 1.7% 15.0% 15.2% 15.8% 13.1% 14.0% 13.3% 15.6% 14.0% 15.4% 13,8 % 14,4 % 14,8 % 43.5% 46.5% 46.0% 52.6% 57.5% 56.2% 83.4% 83.0% 82.5% 43.3% 3
Slide 42: Appendix
APPENDIX 1) Loan portfolio 2) Risk 3) SpareBank 1 SR-Bank 42
Slide 43: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Business divisions Fully owned companies Partly owned companies Retail market 489 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 44: 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 45: Balance sheet
Balance sheet The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17/IFRS 9. 45
Slide 46: Key figures
Key figures The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17/IFRS 9. 46
Slide 47: SRBNK share
SRBNK share • International ownership Development in Price/Book Relative share price development is 22.0% per 140 1,5 200 1. quarter 2023 Index 100 = dec 31st 2021 130 1,4 180 OSEBX 120 1,3 SRBNK • Total market value at 110 1,2 160 140 1. quarter 2023 is NOK 100 1,1 NOK 120 p/B 30.9 billion 90 1,0 1
Slide 48: 20 largest shareholders as at 31 March 2023
20 largest shareholders as at 31 March 2023 • Ownership interests: • From Rogaland, Agder, Vestland, Oslo and Viken: 64.4% (65.4%) • International: 22.0% (22.8%) • 10 largest: 48.5% (48.1%) • 20 largest: 56.7% (55.9%) • Number of shareholders: 18.185 (17.714) • Employees owning 1.8% (1.7%) as at 31
Slide 49: SR-Bank as at 31 March 2023
SR-Bank as at 31 March 2023 • Number of shares issued 255.75 million • Trading volume in Q1 2023: 4.7% (5.9%) • On 1 June 2017, the SR- Bank share was included in the Oslo Stock Exchange's main index Figures in parentheses as at 31 March 2022. 49
Slide 50: 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