Sparebank 1 Smn · OSL:MING
Sparebank 1 Smn — Q4 2015 Earnings Presentation
56 slides from Sparebank 1 Smn's earnings presentation, Feb 2, 2016
Slide 1: Preliminary accounts 2015, 4th quarter 2015
Preliminary accounts 2015 4th quarter 2015 2. February 2016
Slide 2: SpareBank1 SMN, the region’s most important finance institution
SpareBank1 SMN, the region’s most important finance institution Core market Overview • 200.000 retail customers and 14.000 corporates in Trondelag and North-West Norway. Market leader in Trondelag and Romsdal • Norway’s second largest savings bank with total assets of billion including SpareBank 1 B
Slide 3: In good shape
In good shape The bank is prospering The bank is growing in terms of lending, deposits, insurance, savings, estate agency and accounting services The bank is becoming financially stronger and is reaching its capital targets The bank is increasing its efficiency: 10% fewer FTEs at the parent bank The
Slide 4: Midt-Norge: growth in house prices below average, unemployment below average
Midt-Norge : Growth in house prices below average. Unemployment rate below average, except Møre og Romsdal 12-month growth in house prices . Per cent. Unemployment rate (NAV). Monthly figures. Dec13 – Dec15 Jan14 - Jan16 Sources: Eiendom Norge, FINN og Eiendomsverdi AS Source: NAV (Norwegian Labour
Slide 5: Status of the business sector in the bank’s market area
Status of the business sector in the bank’s market area Area Status Outlook Commentary Macro • Weaker Norwegian growth due to reduced oil investments and lower oil price – some improvement in European and American growth estimates • Norwegian interest rates down in September, and continued low long
Slide 6: Strengthened capitalization, good profits and low risk
Strengthened capitalization, good profits and low risk Return on equity CET 1 15,1% 13,6% 13,3% 11,7% 11,1% 11,2% 10,7% 10,0% 2012 2013 2014 2015 2012 2013 2014 2015 Earnings per ECC Loans in default and other problem loans as a percentage of total loans 8,82 6,92 7,02 5,21 0,49% 0,48% 0,47% 0,40% 2
Slide 7: Capital plan
Capital plan CETI ratio 13.6%, an increase of 2.4 percentage points in 2105 • As at 30 December 2015 the CET1 regulatory requirement is 11.0 per cent, including combined buffer requirements. The CET1 requirement will rise to 11.5 per cent as from 30 June Profit 2016 • The bank has not received any i
Slide 8: Winding down the corporate portfolio in BN Bank
Winding down the corporate portfolio in BN Bank • The process of winding down the corporate banking business will be carried out in a controlled manner over time. • For SpareBank 1 SMN this will in isolation reduce consolidated risk weighted assets, thereby improving capital adequacy. • Of SpareBank
Slide 9: FTEs crucial to achieving costs goal
FTEs crucial to achieving costs goal Considerable reduction in 2015 FTEs at parent bank • At end-December there were 76 fewer FTEs at the parent bank than at year- 763 end 730 721 • This is mainly natural wastage 645 • A further reduction of about 45 FTEs is aimed for by the end of 2016 In this set-
Slide 10: An excellent effort across the organisation to develop tomorrow’s bank
An excellent effort across the organisation to develop tomorrow’s bank New distribution model Technological developments provide new opportunities • SMN working on a new • New webpages will create better distribution model interplay between the channels • Changing customer behaviour • We are further
Slide 11: The subsidiaries predominate in their markets
The subsidiaries predominate in their markets and contribute to diversified and robust value creation SpareBank 1 Finans EiendomsMegler 1 • Solid market position • 40% market share, strong synergy with the • Leasing NOK 2.1bn, car loans 2.3bn bank • Pre-tax profit of NOK 83.1m (67.9m) • Pre-tax prof
Slide 12: The Offshore Segment in SpareBank1 SMN
The Offshore Segment in SpareBank1 SMN Share of gross lendings Number of vessels* Exposure Risk and return Oil and Offshore 4,8% • 86% to PSV, • Rorac: 55% vs 68 AHTS, subsea and 18% for standby corporate • PD: 1,0% vs • 14% to seismic, 1,5% for barges and tugs corporate Opex not included *) Excludi
Slide 13: The Offshore Segment in SpareBank 1 SMN – further details
The Offshore Segment i SpareBank 1 SMN – further details • Exposure to the Offshore Service Vessel segment (OSV) – capital intensive industry • Shipyards - OSV, fishing vessels, wellboats and RoRo • Exposure to other maritime industries – mainly producers of maritime equipment and engineering compan
Slide 14: Standard financing of vessels
Standard financing of vessels - GIEK and syndication enable portfolio diversification Contract amount / Financing basis Construction cost 30% 70% Equity Debt 30% 70% SMN GIEK 14
Slide 15: Conclusion
Conclusion • SMN’s corporate portfolio shows excellent diversification. About 5% of the bank’s total lending exposure is to petroleum-related activities. This is primarily financing of OSV vessels. • Portfolio quality is broadly high – however the risk inherent in the OSV segment is also high. • As
Slide 16: Board recommends dividend of NOK 2.25 per ECC
Board of directors recommends dividend of NOK 2.25 per ECC, a pay out ratio of 32 % (25 %) Profit of 1,406m distributed Dividend in line with capitalplan • I line with capital plan the Board 1.406 40 292 recommends a total payout ratio of 24 % of the group’s profit. In the capital build-up period, d
Slide 17: OCI strengthens the Group’s equity
OCI (other comprehensive income) strenghtens the Groups’s equity OCI, NOKm Comments 2015 2014 • Items not reclassified to Items that will not be reclassified to profit/loss profit/loss relate to Actuarial gains and losses pensions 115 -117 pensions Tax -28 31 Share of other comprehensive income of a
Slide 18: SpareBank 1 SMN intends to be among the best performing banks
SpareBank 1 SMN intends to be among the best performing banks Customer Best on customer experience orientation Will continue to strengthen market position Profitable Among the best performing banks, ROE 12 % annually Solid CET1 14.5% by the end of 2016 Efficient Zero cost growth in parent bank 2014
Slide 19: Financial results 4th quarter 2015
Financial results 4th quarter 2015
Slide 20: 2015 net profit NOK 1,406m, return on equity 10.7%
2015 Net profit NOK 1,406m (1,782m, including gains Nets 156m) Return on equity 10.7 % (15.1 %) Result of core business NOK 1,318m (1,424m) Cost growth parent bank 0.8 % (3.1%) CET 1 13.6 % (11.2 %) Growth in lending RM 9.0 % (7.6%) and CM 0.7 % (6.1%), deposits CET1 capital at 11.4% (10.3%) 5.6 % (
Slide 21: Q4 2015
Q4 2015 Profit NOK 287m (375m) ROE 8.4 % (12.1 %) Result of core business NOK 279m (343m) Growth in lending RM 2.4 % (2.1 %) and CM -1.4 % (5.6 %) in Q4 2015 Earnings per ECC NOK 1.45 (1.85) Q4 2015
Slide 22: Key figures, quarterly
Key figures, quarterly Return on equity CET 1 14,1% 13,2% 13,6% 13,4% 12,3% 12,7% 12,1% 11,2% 8,4% 7,4% Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Earnings per ECC FTEs parent bank 2,18 2,13 721 686 672 660 645 1,85 1,45 1,26 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4
Slide 23: Earnings per ECC
Earnings per ECC Last two years per quarter 2,48 2,29 2,19 2,18 2,13 1,79 1,85 1,45 1,26 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 2015
Slide 24: Profit trend in core business
Profit trend in core business Per quarter last 2 years Commentary 398 391 • Good income trend, both 382 377 384 377 352 356 net interest income and 335 commission income • Q4 2015 marked by one- time costs and collectively assessed write-downs Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 4.
Slide 25: Positive development in profits
Positive development in profits Profit To date per quarter 30 Dec. 30 Dec. NOK mill 2015 2014 Change Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 Net interest 1.872 1.790 82 473 466 467 467 485 Commission income and other income 1.545 1.512 34 378 378 413 377 371 Operating income 3.417 3.302 116 850 843 880 844 85
Slide 26: Operating income
Commission income Operating income Commission income Boligkreditt - Næringskreditt Net interest income Last two years per quarter 856 880 825 823 844 843 850 818 798 273 286 330 299 296 263 262 285 265 96 98 91 83 79 81 119 123 110 436 430 463 485 467 467 466 473 412 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1
Slide 27: Change in net interest income
Change in net interest income From 2014 - 2015 Comments Net interest 2014 1.790 Net interest 2015 1.872 • Increased lending volume and deposit margins Change 82 strengthens net interest income Obtained as follows: • Lower lending margins weaken net interest Fees on lending -7 income Lending volume 2
Slide 28: Lending margins Retail and Corporate
Lending margins Retail and Corporate Per quarter from Q4 2011 Comments Percent • Strong competition 3,00 3,05 3,05 3,00 2,93 2,86 2,81 2,75 2,64 2,65 2,67 2,62 2,66 • Interest rate changed five times on best 2,47 2,44 2,45 2,47 2,52 2,40 home loans since June 2014 2,27 2,28 2,31 2,33 2,28 2,07 2,14
Slide 29: Total growth lending 5.8% last 12 months
Total growth lending 5.8 % last 12 months Lending RM +9.0 % last 12 months, 2.4 % in Q4 15 9,0% 8,2% Loans 68,5 74,1 80,7 Boligkr. 25 % 31.12.13 31.12.14 31.12.15 RM CM 38% 38% Lending CM +0.7 % in last 12 months, -1.4 % in Q4 15 +6,5% +0,7% 43,5 46,3 46,7 31.12.13 31.12.14 31.12.15 Q4 2015
Slide 30: Deposit margins Retail and Corporate
Deposit margins Retail and Corporate Per quarter from Q4 2011 Comments Per cent • Margin increased due to repricing Deposits RM Deposits CM • Further repricing to be considered 0,83 0,09 0,11 0,05 -0,10 0,21 -0,26 -0,39 -0,33 -0,35 -0,08 -0,53 -0,19 -0,25 -0,35 -0,41 -0,56 -0,48 -0,64 Q4 11 Q2 12 Q4
Slide 31: Total growth deposits 5.6% in 2015
Total growth deposits 5.6 % in 2015 Deposits RM + 6.9 % +10,9% +6,9% Deposits 23,9 26,5 28,3 CM 31.12.13 31.12.14 31.12.15 56% Deposits CM + 4.6 % RM 44% +6,7% +4,6% 32,1 34,2 35,8 31.12.13 31.12.14 31.12.15 Q4 2015
Slide 32: Robust income platform and increased commission income
Robust income platform and increased commission income Net interest and other income Commission 2014 and 2015 NOKm 30 Dec. 30 Dec. mill kr 2015 2014 Change 3.302 3.417 Payment transmission income 188 188 -1 3.079 Creditcards 56 50 6 Commissions savings 61 48 13 1.084 1.211 Commissions insurance 156
Slide 33: Return on financial investments
Return on financial investments To date Per quarter NOKm 2015 2014 Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 Net gain and dividends on securities 62 202 -17 9 61 10 -15 Net gain on bonds and derivatives -90 -66 -16 -116 32 11 -48 Change in discount factor in fair value model for fixed interest loans -64 0 0 -64
Slide 34: Subsidiaries
Subsidiaries Profit subsidiaries pre tax to date per quarter 30 Dec. 30 Dec. 2015 2014 Change Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 EiendomsMegler 1 Midt-Norge (87 %) 47,0 50,9 -3,9 7,5 10,3 21,3 7,8 8,7 SpareBank 1 Regnskapshuset SMN 34,8 40,5 -5,7 8,8 5,7 12,4 7,9 16,4 SpareBank 1 Finans Midt-Norge (90 %)
Slide 35: Associated companies
Associated companies Profit shares after tax To date per quarter 30 Dec. 30 Dec. 2015 2014 Change Q4 15 Q3 15 Q2 15 Q1 15 Q4 14 SpareBank 1 Gruppen (19,5 %) 251,4 358,0 -106,6 68,0 55,8 68,2 59,4 98,5 SpareBank 1 Boligkreditt (18,4 %) 79,7 37,5 42,1 15,1 14,5 9,1 41,0 14,8 SpareBank 1 Næringskreditt
Slide 36: Costs, parent bank and subsidiaries
Costs, parent bank and subsidiaries Costs 2014 and 2015 Comments 1.931 1.789 • Group costs have risen due to the consolidation of SpareBank 1 Markets Subsidiaries 524 714 as a subsidiary • At the same time a cost reduction at the parent bank for the same reason Parent bank 1.265 1.217 • When this, a
Slide 37: Cost development
Cost development Total costs per quarter last 2 years Comments • Stable costs quarter by 515 quarter 496 465 454 466 441 443 449 425 • High costs in Q4 15, but largely of a one-time nature • Employee get-together • Write-downs • Banking collaboration • Sponsor • Capital tax Q4 13 Q1 14 Q2 14 Q3 14 Q
Slide 38: Low losses
Low losses , 169 mNOK, 0.14 % of total gross lending, including 82 mNOK, 0.07 %, collective losses provisions Losses per quarter Distribution as of 31.12.2015 NOK mill (ex. collective losses) 57 56 RM 11 35 31 32 34 SMN Finans 5 24 51 22 17 15 26 CM 66 5 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3
Slide 39: Collectively assessed write-downs
Collectively assesses write-downs Last 10 years, NOKm and as a percentage og gross lending 376 289 290 290 295 295 295 0,37% 245 0,35% 0,34% 0,33% 0,30% 0,30% 0,30% 185 0,28% 184 0,26% 0,25% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 4. kvarta
Slide 40: Defaults and other problem loans
Defaults and other problem loans Low levels Last two years, per quarter 1.400 1,50 1.200 1,30 Problem loans 1.000 1,10 Loans in default Loans in default % of total loans 800 0,90 600 368 448 0,70 399 157 206 206 231 216 400 226 0,50 386 334 338 270 287 200 263 0,30 0,34 237 218 205 0,29 0,29 0,24 0,
Slide 41: High share mortgages and diversified portfolio SMEs
High share mortgages and diversified portfolio SMEs Lending and change last 12 months by sector in mNOK Wage earners 47,3 3,1 SB1 Boligkreditt 33,4 3,5 Commercial real estate 14,3 0,3 Agriculture/forestry/fisheries 8,7 1,5 Transport and other services 5,0 0,4 Maritime sector and offshore 6,1 -0,7 Co
Slide 42: Balance sheet
Balance sheet Last three years 30 Dec. 2015 30 Dec. 2014 30. Dec 2014 Funds available 21,4 20,1 20,1 Net loans 93,4 90,1 90,1 Securities 1,5 0,7 0,7 Investment in related companies 5,5 5,2 5,2 Goodwill 0,5 0,5 0,5 Other assets 9,5 9,4 9,4 TOTAL ASSETS 131,9 126,0 126,0 Capital market funding 43,3 42
Slide 43: Development in common equity Tier 1 and ROE 2009 to 2015
Development in common equity Tier 1 (capital and ratio), and ROE from 2009 to 2015 CET 1 Ratio 14,5% 13,6% 1,0% Other buffers +9% 1,5% Countercyclical 11,1% 11,2% 2,0% SIFI Buffer 10,0% 9,5% 9,0% 8,0% 2,5% Conservation Buffer 3,0% Systemic Risk 4,5% Equity Capital 2009 2010 2011 2012 2013 2014 2015
Slide 44: Strengthened capital
Strenghtened capital Development CET1 Development CET 1 without transitional arrangements (Basel III) 15,0% 13,6% 11,1% 11,2% 11,6% 11,2% 10,0% 10,4% 2012 2013 2014 2015 2012 2013 2014 2015 Q4 2015
Slide 45: Group strengthened CET1 ratio by 240 points in 2015
Group strengthened CET1 ratio by 240 points in 2015 1,8 0,4 0,3 13,6 0,8 1,2 1,3 0,3 12,2 0,1 11,9 11,2 Q4 14 A IRB New Model IRB Standard Floor Volume Profit Payout Reg filter Q4 15 mortgage change portfolios approach changes incl. OCI weights • AIRB has had a substantial positive effect on IRB cap
Slide 46: Satisfying access to capital market funding
Satisfying access to capital market funding Funding maturity 31. December 2015 Comments In NOK bn 10,1 10,5 • SpareBank 1 Boligkreditt is the main 6,3 funding source through covered 5,1 5,5 bonds. NOK 32 billion transferred as of 31. December 2015 2016 2017 2018 2019 2020 -> • Maturities next two ye
Slide 47: SpareBank 1 SMN contact details
SpareBank 1 SMN 7467 TRONDHEIM CEO Switchboard Finn Haugan Tel +47 900 41 002 Tel +47 07300 E-mail: finn.haugan@smn.no CFO Kjell Fordal Tel +47 905 41 672 E-mail: kjell.fordal@smn.no Internett adresses: Financial calender 2016 SMN home page and internet bank: www.smn.no 1. Quarter: 29. April 2015 Hu
Slide 48: Appendix
Appendix 04 2015 SpareBank @)
Slide 49: Cost growth in parent bank 0.8%
Cost growth in parent bank 0.8 %, SB1 Markets transaction taken into account Change in costs 2014 – 2015 Modest cost growth NOK mill 2015 Expenses 1.931,0 Expenses 2014 1.789,0 Change 142,0 • Fewer FTEs reduces personnel Obtained as follows: costs Parent bank -48,1 Provision for reorganisation 2014
Slide 50: SpareBank 1 SMN will come across as cost-efficient also 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 Regnskapshuset SMN Profitable and non-capital- intensive subsidiaries: 0,88 1 Both EM1 and Regnskapshuset 0,82 SMN are companies making a sound profit – and requir
Slide 51: Loan to value mortgages
Loan to value mortgages Last two years Comments Q4 15 Q4 14 93,1 % 93,4 % • 98.5 % of the exposure has an LTV of less than 85 % • Exposure with LTV higher than 85 points 1.5 % 5,4 % 5,5 % 0,9 % 0,7 % 0,7 % 0,4 % Under 70 % 70 - 85 % 85 - 100 % Over 100 % Q4 2015
Slide 52: Stable credit risk
Stable credit risk SpareBank 1 SMN’s loans distributed on SpareBank 1 SMN’s loans distributed on size of risk class and share of Exposure At Default customer engagement and share of Exposure At Default Share of EAD December 2015 Share of EAD December 2014 Share of EAD December 2015 Share of EAD Dece
Slide 53: The Group strengthened CET1 ratio by 40 points in Q4 2015
The Group strengthened CET1 ratio by 40 points in Q4 2015 CET1 ratio Changes in Q4 15 0,1 13,6 0,1 0,1 0,4 40 points in strengthened 13,2 0,0 0,0 CET1 capital influenced by one-time events. • Little change in capital requirements from operations • Increased floor • Adjustment of calculation of quali
Slide 54: Capital adequacy
Capital adequacy Last two years NOKm 31.12.15 31.12.14 Core capital exclusive hybrid capital 12.192 10.674 Hybrid capital 1.796 1.707 Core capital 13.988 12.382 Supplementary capital 2.390 2.555 Total capital 16.378 14.937 Total credit risk IRB 4.082 4.748 Debt risk, Equity risk 74 398 Operational r
Slide 55: Key figures
Key figures Last three years 30 Dec. 2015 30 Dec. 2014 30 Dec. 2013 Net interest 1,46 1,52 1,40 Comm. income and net retur on fin. inv. 1,56 1,89 1,51 Operating expenses 1,50 1,52 1,57 Net profit as a percentage of ATA 1,52 1,89 1,34 CET 1 ratio 13,6 % 11,2 % 10,0 % Core capital ratio 15,6 % 13,0 %
Slide 56: Key figures ECC
Key figures ECC Including effects of issues Last five years 2015 2014 2013 2012 2011 ECC ratio 64,0 % 64,6 % 64,6 % 64,6 % 60,6 % Total issued ECCs (mill) 129,83 129,83 129,83 129,83 102,76 ECC price 50,50 58,50 55,00 34,80 36,31 Market value (NOKm) 6.556 7.595 7.141 4.518 3.731 Booked equity capita