Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q3 2023 Earnings Presentation
71 slides from Sparebank 1 Sor-norge Asa's earnings presentation, October 2023
Slide 1: Quarterly presentation Q3 2023
Quarterly presentation 2023 Q3 SR-Bank SR-Boligkreditt
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: Agenda: SR-Bank
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 4: SR-Bank at a glance
SR-Bank at a glance Second largest Norwegian bank (SIFI) • Rating: Aa3 (outlook stable) SR-Bank’s market area • Market cap: NOK 31.4 Billion • Total assets: NOK 362.8 Billion • Total lending: NOK 269.6 Billion • Total deposits: NOK 150.5 Billion • No. of branches: 36 • Employees: 1,616 1839: The fir
Slide 5: A result characterised by growth and income recognition for losses
A result characterised by growth and income recognition for losses Result 3. quarter 2023 Result 30 September 2023 13.9% 8.6% 17.9% 14.5% Return on equity after tax Return on equity after tax Pre-tax profit MNOK 3,863 12 months lending growth Retail market Corporate market 5.4% 13.1% CET 1 capital r
Slide 6: Bank #1 and Bank #7 merges to form SpareBank 1 Sør-Norge
Bank #1 and Bank #7 merges to form SpareBank 1 Sør-Norge Total assets as per 2Q23 (NOK billion). SpareBank 1 Sør-Norge will become the 486 largest savings bank in Norway with assets under management of approximately NOK 500 billion, gross loans of NOK 375 billion, 362 314 and book equity (excluding
Slide 7: Volume per customer segment SpareBank 1 Sør-Norge
Volume per customer segment SpareBank 1 Sør-Norge 82 23 (NOK billion) (NOK billion) Retail Corporate Market Market 35% 162 108 65% (NOK billion) (NOK billion) Retail Corporate Corporate Market Retail Market Market Market SME, Agriculture and Large Corporate Customers Corporate Market at SpareBank 1
Slide 8: SpareBank 1 Sør-Norge from Bergen to Oslo
You will find SpareBank 1 Sør-Norge from Bergen in the west to Oslo in the east We are a leader in digital banking services for individuals and businesses. Customers now receive an even better offer and access to strong expertise. We are local and know our customers. The largest savings bank with 65
Slide 9: Stable local ownership in the merged group
We achieve stable local ownership. Our savings bank foundations will own 44 % of the shares in the merged group. A significant portion of the annual dividend will go to the Shareholder No. Of shares Ownership share* foundations, ensuring a community return for local SR-stiftelsen 74 976 815 20,4 % d
Slide 10: Business as usual until completion
«Business as usual» until completion December 5th 2023 Meeting in the board of representatives at SpareBank 1 Sørøst-Norge and general assembly of SpareBank 1 SR-Bank & July 1st 2024 October 26th 2023 Application is sent to the Financial Authority of Execute the The merger is made public Norway to t
Slide 11: Targeted share issuance of NOK 1 billion in SR-Bank
A targeted share issuance of NOK 1 billion in SpareBank 1 SR-Bank The total market value is NOK 43 billion, with strong 60.000 16,0 % profitability before synergy realization - RoE last twelve 14,6 % months 13.5%. 13,5 % 14,0 % SpareBank 1 SR-Bank will conduct a private placement of NOK 50.000 1 bil
Slide 12: 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 Pillar 2 requirement of 0.5%, hence CET 1 capital ratio minimum is 17.35%. 12 SR-Bank SR-Boli
Slide 13: Key figures – annual development
Key figures – annual development Return on equity CET 1 capital ratio Cost to income ratio Earnings per share (NOK) 13 SR-Bank SR-Boligkreditt
Slide 14: Income statement
Income statement 14 SR-Bank SR-Boligkreditt
Slide 15: Operating expenses
Operating expenses 15 SR-Bank SR-Boligkreditt
Slide 16: Group
Group Lending volume Deposit volume Margins in customer segments Definition margins: Average customer rate measured against money market rate. 16 SR-Bank SR-Boligkreditt
Slide 17: Loan portfolio as at 30 September 2023
Loan portfolio as at 30 September 2023 • Gross loans increased to NOK 269.6 billion from NOK 248.2 billion year over year • 12-month growth in loans of 8.6% • Loans to retail customers account for 58.8% of total loans 11.1% 4.9 % 20.4% 24.5% Share of green loans Loans before impairments, nominal amo
Slide 18: Reduced exposure to the offshore sector
Reduced exposure to the offshore sector Offshore • EAD NOK 5.1 billion, 1.7% 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. 18 SR-Bank SR-Boligkreditt
Slide 19: Development in early warning indicators
Development in early warning indicators Corporate market - Drawn amount on credit facilities Retail market – Avg. number of applications for interest-only per month Retail market – Drawn amount on interest only loans Retail market – Share of exposure (EAD)* with payment remarks *Proportion of EAD th
Slide 20: Market – Commercial real estate
Market – Commercial real estate Office vacancy Prime yield Rental prices Transaction volume (TNOK per sq.m) (NOK billion) Source: Entra, WPS, EM1 MN og EM1 SR-Bank 20 SR-Bank SR-Boligkreditt
Slide 21: Lending to commercial real estate
Lending to commercial real estate 14.1% (NOK 42.8 billion) of total EAD* is related to commercial real estate • Commercial real estate for lease ‐ EAD NOK 32.5 billion, 10.7% of the bank’s total EAD ‐ The portfolio is characterised by lending to commercial properties for lease with long-term contrac
Slide 22: 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 23: 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 • 95.4% 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 24: Loans and financial commitments
Loans and financial commitments Impairments on loans and Change in gross loans and financial Changes in gross loans and financial commitments commitments financial commitments defined as Stage 3 *An upgraded model for calculating the provisions for expected losses on engagements that are not individ
Slide 25: Solid capital ratio
Solid capital ratio • The authorities’ minimum requirement for the CET 1 capital ratio is 17.35% including a temporary Pillar 2 requirement of 0.5% 22.03% 20,48 % 21,05 % 20,31 % 20.11% 17.35% • The leverage ratio is 7.12% as at 30 September 2023, well above 18,88 % 18,76% 19,05 % 0.50% the minimum
Slide 26: Funding
Funding • Moody`s rating Aa3 (outlook stable) • NSFR* 130% • LCR** 191% Annual funding maturity • NOK 20.2 billion net refinancing need over the next 12 months 32 30 • Deposit to loan ratio 55.8% 28 26 • MREL-requirement 36.7%, MREL-subordination requirement 29.7% 24 22 20 • The MREL-requirement lea
Slide 27: Moody's upgrades SR-Bank's ratings to Aa3
Moody’s upgrades SpareBank 1 SR-Bank’s deposit and senior unsecured ratings to Aa3 from A1 (outlook stable) Paris, 13 October, 2023 Moody's Investors Service ("Moody's") has today upgraded SpareBank 1 SR-Bank ASA's (SR-Bank) Baseline Credit Assessment (BCA) and Adjusted BCA to a3 from baa1, long-ter
Slide 28: Key figures
Key figures The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17/IFRS 9. 28 SR-Bank SR-Boligkreditt
Slide 29: Agenda: SR-Boligkreditt
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 30: Overview SR-Boligkreditt
Overview SR-Boligkreditt • SR-Boligkreditt is a wholly owned subsidiary of SR-Bank and a dedicated covered bond company. Its objective is to purchase mortgages and to finance these by issuing covered bonds (European Covered Bond Premium). • Loans are transferred to SR-Boligkreditt as true sale on a
Slide 31: Eligibility criteria
Eligibility criteria Type of properties • Primary residential property in Norway (including detached houses, terraced houses, apartments and cooperative housing units) • The mortgage property shall not be "buy-to-let“ (mortgages to individuals owning more than 3 properties) Collateral • LTV-limits a
Slide 32: Cover pool characteristics
Cover pool characteristics Assets/status • 100 % mortgages on Norwegian private residential properties • 100 % performing loans Cover pool • NOK 102.5 bn: Residential mortgages 99.8 (97.4%), Substitute assets 2.7 bn (2.6%) Mortgages and rate • 50,298 loans at a weighted average interest rate of 5.2%
Slide 33: Cover pool characteristics
Cover pool characteristics Current LTV Loan performance 0% 21,6 % 21,7 % 20,4 % 17,6 % Performing loans 16,3 % 100 % Delinquent loans (arrears 31 to 90 days) Gross non performing loans 1,9 % (arrears 90 days +) 0,4 % 0-40 % 40-50 % 50-60 % 60-70 % 70-80 % 80-100 % 100 % + Geography Property type 1%
Slide 34: Agenda: Norwegian economy
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 35: Key economic indicators
Key economic indicators Sources: Statistics Norway and Norges Bank*. Norges Bank 21 September 2023 & Statistics Norway 8 September 2023. 35 SR-Bank SR-Boligkreditt
Slide 36: Macro in Southern Norway
Macro in Southern Norway House price development Unemployment rate • Norwegian house prices have increased by 3.7 % as at 30 September 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
Slide 37: Housing market
Housing market - house prices -1.3% YOY, 3.7% YTD House prices (Index des 2013=100) Index change 12 month (%) Prices by City per Square Meter (EUR) Source: Eiendom Norge, Eiendomsverdi 37 SR-Bank SR-Boligkreditt
Slide 38: Agenda: Sustainability and Green Bond framework
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 39: Sustainability within SR-Bank
Sustainability within SR-Bank • The group’s sustainability principles are based on the 17 UN Sustainable Development Goals • We support the UN Global Compact’s ten principles for sustainability • We are a founding signatory of the UN Principles for Responsible Banking 39 SR-Bank SR-Boligkreditt
Slide 40: SpareBank 1 SR-Bank's sustainability targets
SpareBank 1 SR-Bank’s sustainability tragets A pro-active ally to our clients in the transition to a more sustainable society Equality Combat Emission Transition and financial reduction diversity crime • Climate neutrality in • Financing and facilitation • Gender balance • Have zero-tolerance for ow
Slide 41: Lending volume and financing sustainable activities
Lending volume and financing sustainable activities Sustainable lending volume is 16.6% of total Goal: Finance NOK 50 billion in sustainable activities Lending lending volume volume by the end of 2030 30.09.23 2021 2030 16.6% 53.6% 0 bill 25 bill 50 bill 75 bill 100 bill 125 bill 150 bill 175 bill 2
Slide 42: One of the Nordic region's best banks
One of the Nordic region’s best banks ESG100 • Maintains an A score, despite stricter requirements • A good sustainability structure makes the group equipped for future demands • Clear strategy and measurable ambitions A 42 SR-Bank SR-Boligkreditt
Slide 43: ESG ratings
ESG ratings • "Prime status" and rating C by ISS-ESG (January 2023) • Sustainalytics: "Low risk "; low risk experiencing material financial impact from ESG factors; 38 out of 460 regional banks by Sustainalytics (October 2023) • MSCI ESG Rating: "Level AA" (March 2023) • CDP: score B (December 2022)
Slide 44: Green Bond Framework Highlights
Green Bond Framework Highlights Projects Manage- Use of Evaluation External ment of Reporting Proceeds and Review Proceeds Selection Green Bond committee SR-Bank intends to make and The Green Bonds proceeds will ISS has issued a Second Party Green buildings, renewable established. Evaluation and kee
Slide 45: Use of Proceeds overview
Use of Proceeds overview SR-Boligkreditt SR-Bank Green Covered Bonds Green Senior Bonds Green buildings Green buildings Renewable Energy Clean Transportation • Loans to finance or refinance new or • Loans to finance or refinance new or • Loans, credit and investments to • Loans aiming at financing o
Slide 46: Management of Proceeds
Management of Proceeds • The Green Bond Proceeds will be managed in a portfolio approach • SR-Bank intends to allocate the proceeds from the Green Bonds to a portfolio of loans that meet the use of proceeds eligibility criteria • SR-Bank will strive, over time, to achieve a level of allocation for t
Slide 47: ISS second party opinion
ISS second party opinion ISS has issued a positive Second Party Opinion on SR-Bank Green Bond Framework 47 SR-Bank SR-Boligkreditt
Slide 48: EU Taxonomy Assessment – performed by ISS-ESG
EU Taxonomy Assessment – performed by ISS-ESG 48 SR-Bank SR-Boligkreditt
Slide 49: Allocation Report
Allocation Report SR Bank & SR-Boligkreditt Green Bond Allocation Reporting Portfolio date: 31 March 2023 Eligible Green Loan Portfolio Green Funding* Amount Instument Instrument Issuance Due Amount (NOK m) (Type / Crncy) (ISIN) Date Date (NOK m) Green Residential Buidlings 33.633 € Covered XS206328
Slide 50: Impact Report – Q1 2023
Impact Report – Q1 2023 50 SR-Bank SR-Boligkreditt
Slide 51: Appendix
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 52: 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 Farsu
Slide 53: Retail market
Retail market Lending volume* Deposit volume Margins Definition margins: Average customer rate measured against money market rate. *Including employee loans. 53 SR-Bank SR-Boligkreditt
Slide 54: Corporate market
Corporate market Lending volume Deposit volume Margins Definition margins: Average customer rate measured against money market rate. *12 months lending growth in Corporate market excluding currency effect is 13.1 %. 54 SR-Bank SR-Boligkreditt
Slide 55: SME and Agriculture
SME and Agriculture Lending volume Deposit volume Margins Definition margins: Average customer rate measured against money market rate. 55 SR-Bank SR-Boligkreditt
Slide 56: 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 57: 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 58: Lending to oil and offshore
Lending to oil and offshore 4.0% (NOK 12.1 billion) of total EAD* is related to oil operations • Oil services ‐ EAD NOK 5.4 billion, 1.8% 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 59: Lending to shipping
Lending to shipping 2.5% (NOK 7.6 billion) of total EAD* is related to shipping • Product tank ‐ EAD NOK 1.1 billion, 0.4% of the bank's total EAD • Chemical tank ‐ EAD NOK 1.3 billion, 0.4% of the bank's total EAD • Dry-bulk ‐ EAD NOK 2.3 billion, 0.7% of the bank's total EAD • Gas ‐ EAD NOK 0.7 bi
Slide 60: Change in profit 30.09.2022 - 30.09.2023
Change in profit 30.09.2022 - 30.09.2023 (MNOK) 60 SR-Bank SR-Boligkreditt
Slide 61: Change in operating expenses 30.09.2022 - 30.09.2023
Change in operating expenses 30.09.2022 - 30.09.2023 (MNOK) Group Parent bank 18,5 % 18,1 % 18,5 % 18,7 % 61 SR-Bank SR-Boligkreditt
Slide 62: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the Impairments per quarter (MNOK) income statement (MNOK) Impairments on loans and financial commitments in the balance sheet (MNOK) 62 SR-Bank SR-Boligkreditt
Slide 63: Net commission and other income
Net commission and other income 74 63 SR-Bank SR-Boligkreditt
Slide 64: Change in net commission and other income
Change in net commission and other income 30.09.2022 - 30.09.2023 (MNOK) 74 64 SR-Bank SR-Boligkreditt
Slide 65: 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. 65 SR-Bank SR-Boligkreditt
Slide 66: Subsidiaries
Subsidiaries *The result in ForretningsPartner includes amortisation of intangible assets of NOK 3.9 million (NOK 4.8 million as at 30 September 2022). 66 SR-Bank SR-Boligkreditt
Slide 67: 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. 67 SR-Bank
Slide 68: Balance sheet
Balance sheet The 2022 figures has been altered to reflect the change in principle following the implementation of IFRS 17/IFRS 9. 68 SR-Bank SR-Boligkreditt
Slide 69: SRBNK share
SRBNK share • International ownership Development in Price/Book Relative share price development is 21.2% per 140 1,5 200 3. quarter 2023 130 1,4 180 Index 100 = sep 30th 2022 120 1,3 • Total market value at 110 1,2 160 140 3. quarter 2023 is NOK 100 1,1 NOK 120 p/B 31.4 billion 90 1,0 100 80 0,9 Pr
Slide 70: 20 largest shareholders as at 30 September 2023
20 largest shareholders as at 30 September 2023 • Ownership interests: • From Rogaland, Agder, Vestland, Oslo and Viken: 64.8% (65.7%) • International: 21.2% (22.6%) • 10 largest: 49.4% (47.8%) • 20 largest: 57.7% (56.0%) • Number of shareholders: 18.810 (18.083) • Employees owning 1.8% (1.8%) as at
Slide 71: SR-Bank as at 30 September 2023
SR-Bank as at 30 September 2023 • Number of shares issued 255.75 million • Trading volume in Q3 2023: 2.7% (4.1%) Figures in parentheses as at 30 September 2022. 71 SR-Bank SR-Boligkreditt