Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q2 2021 Earnings Presentation
51 slides from Sparebank 1 Ostlandet's earnings presentation, 2021
Slide 1: Quarterly presentation
SpareBank (4 SR-BANK Quarterly oresenailte:,
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 Bergen Sotra Fana 0% Nydalen Oslo 134 135 134 Ensjø Husnes Stord Ølen +21% Aksdal 36 34 Haugesund 30 Kopervik +14% +52% Åkra 25 Finnøy 20 21 19 20 Jørpeland Randaberg 16 +19% Stavanger* Sola Sandnes 10 10 9 Bryne Ålgård Varhaug Egersund Grimstad Rogaland Vestl
Slide 4: A strong result characterised by growth, increased income and significantly lower impairment provisions
A strong result characterised by growth, increased income and significantly lower impairment provisions Result 2. quarter 2021 Result 30 June 2021 13.2% 12.4% 3.3% Return on equity after tax Return on equity after tax 12 months lending growth Pre-tax profit NOK 959 million Pre-tax profit NOK 1,839 m
Slide 5: Key figures and financial targets for 2021
Key figures and financial targets for 2021 Return on equity CET 1* Impairment provisions NOK 2,030 million 18.3% 17.9% 16.7% 12.4% > 11.0% 6.4% NOK NOK 179 million 300 - 450 million 2020 30.06.2021 Target 2021 2020 30.06.2021 Target 2021 2020 30.06.2021 Estimate 2021 Growth in costs (12 months) Grow
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1* 18.3% 18.5% 18.3% 18.1% 17.9% 11.6% 13.2% 8.2% 9.7% 4.0% Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Cost to income ratio Earnings per share 3.13 2.74 38.0% 39.2% 37.9% 40.1% 2.30 34.2% 1.90 0.91 Q2 20 Q3 20 Q4 20 Q1 21 Q2 2
Slide 7: Income statement
Income statement Group Income Statement (MNOK) 30.06.2021 30.06.2020 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Net interest income 1,996 2,107 1,001 995 994 1,041 1,026 Net commission and other income 856 690 454 402 370 336 344 Net income on investment securities 459 269 243 216 240 190 297 Total inc
Slide 8: Change in profit 30 June 2020 – 30 June 2021
Change in profit 30 June 2020 – 30 June 2021 1,212 1,839 190 166 513 -131 -111 30.06.2020 Net interest income Other income Net income on Total operating Impairments on 30.06.2021 investment securities expenses loans and financial commitments 8
Slide 9: Consolidated income and cost profile
Consolidated income and cost profile Income profile Cost profile Net commission and other income Total other operating expenses Net interest income Total personnel expenses +55 +131 2,797 2,852 1,293 1,162 1,397 1,455 690 856 681 1,370 1,377 1,364 629 612 488 570 595 484 344 330 365 402 454 258 228
Slide 10: Key figures
Key figures 30.06.2021 30.06.2020 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Return on equity after tax (%) 12.4 3.7 13.2 11.6 9.7 8.2 4.0 Net interest margin (%) 1.38 1.57 1.36 1.40 1.40 1.48 1.5 Impairments on loans in % of gross loans incl. covered bond 0.16 1.29 0.10 0.22 0.49 0.67 1.5 company Loan
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins* Deposit margins 3.17% 0.67% 3.02% 3.00% 2.98% 2.82% 2.78% 2.80% 2.86% 0.56% 2.71% 0.45% 0.42% 2.81%** 1.85% 0.17% 1.73% 0.07% 0.11% 0.09% 1.59% 1.63% 1.48% 1.49% 1.32% 1.33% 1.28% -0.13% -0.05% -0.18% -0.12% -0.15% -0.19% -0.17% -0.43% -0.24% -0.25% Q2 19
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Retail Market Corporate Market 12 months growth % 11.8% 12 months growth % 6.6% 10.3% Volume in NOK billion 6.3% Volume in NOK billion 5.8% 5.6% 5.6% 5.3% 5.2% 5.6% 5.3% 4.8% 4.8% 4.5% 2.7% -0.7% -1.2%* -3.6% 132 134 136 137 140 143 144 145 148 74 75 75 78 78 77 7
Slide 13: Loan portfolio as at 30 June 2021
Loan portfolio as at 30 June 2021 • Gross loans (incl. covered bond company) Agriculture / forestry / fishing 3.9% 3.7% increased to NOK 225.8 billion as at 30 2.1% June 2021 from NOK 218.6 billion at the Supply and construction 2.0% same time the year before. 1.6% Renewable / Green engagement 1.6%
Slide 14: 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 RWA home mortgages • The reduction in LTV is due to higher market value of collateral (housing). • RWA on home mortgages reflects a solid portfolio with a moderate loan-to- value ratio and low potential los
Slide 15: Deposit volume and 12 months growth
Deposit volume and 12 months growth Retail Market Corporate Market 40.0% 12 months growth % 12 months growth % 37.1% Volume in NOK Billion 9.4% 9.6% Volume in NOK Billion 9.1% 8.4% 7.6% 19.9% 7.3% 12.3% 6.0% 7.3% 2.3% 4.5% 4.3% 4.2% -1.1% -10.2% 64 68 72 55 54 54 56 60 59 59 60 52 55 59 48 49 50 50
Slide 16: Net commission and other income
Net commission and other income MNOK 30.06.2021 30.06.2020 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Payment facilities 111 130 56 55 64 54 61 Savings/placements 114 96 61 53 51 48 48 Insurance products 112 101 56 56 54 53 50 Commission income real estate broking 242 189 132 110 100 107 104 Guarantee
Slide 17: Net income on investment securities
Net income on investment securities MNOK 30.06.2021 30.06.2020 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Dividends 9 17 9 0 39 1 17 Investment income, associates 302 387 193 109 129 147 145 Securities gains/losses 132 -176 26 106 -1 36 122 - of which capital change in shares and certificates 173 -94 6
Slide 18: Subsidiaries
Subsidiaries Subsidiaries MNOK 30.06.2021 30.06.2020 EiendomsMegler 1 SR-Eiendom AS Number of sales 4,096 3,184 Operating profit before tax 46 26 SR-Forvaltning AS Capital under management (BNOK) 15 12 Operating profit before tax 16 10 FinStart Nordic AS Operating profit before tax 69 -87 SpareBank
Slide 19: Ownership interests
Ownership interests Companies MNOK 30.06.2021 30.06.2020 SpareBank 1 Gruppen AS Interest ownership 19.5% 19.5% Profit after tax 215 -7 Profit effect merger 0 340 BN Bank ASA Interest ownership 35.0% 35.0% Profit after tax 82 50 SpareBank 1 Forvaltning* Interest ownership 19.5% - Profit after tax 6 0
Slide 20: Operating expenses
Operating expenses MNOK 30.06.2021 30.06.2020 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Payroll and pensions 610 555 326 284 332 297 277 Other staff expenses 195 123 97 98 69 60 53 Total personnel expenses 805 678 423 382 401 357 330 IT expenses 189 190 97 92 88 95 98 Marketing 37 36 19 18 19 16 17 Ad
Slide 21: Impairments per quarter
Impairments per quarter 831 • The group’s net impairments on loans and financial liabilities were reduced from NOK 1,391 million as at 30 June 2020 to NOK 179 million as at 30 June 2021. This represents a reduction of NOK 1,212 million 560 • Of gross loans the impairment provisions were reduced by 1
Slide 22: Impairments on loans and financial commitments / Stage 3
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Impairments on loans and financial commitments Changes in gross loans and financial commitments defined as Stage 3 1.8% 1.9% 1.9% 1.8% 1.53% 1.6% 0.67% 4,991 5,109 4,943 0.49% 4,836 0.22% 4,133 1,261
Slide 23: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) 30.06.2021 30.06.2020 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Corporate customers 180 1,315 59 121 266 360 771 Retail customers -1 76 -1 0 4 9 60 Total impairments 179 1,391 5
Slide 24: Reduced exposure against offshore sector
Reduced exposure against offshore sector Total EAD related to offshore is reduced to 2.6% in 2. quarter 2021 from 5.0% in 2. quarter 2015 • Offshore ‐ EAD NOK 6.6 billion (NOK 9.2 billion), 2.6% of the bank’s total EAD ‐ Exposure primarily to industrial oriented shipping companies with integrated or
Slide 25: Funding
Funding • NSFR* 122% • LCR** 167% • NOK 21.6 billion net refinancing need over the next 12 months • Deposit to loans ratio 60.3% • MREL requirement 34.4% • The Norwegian FSA recognize that there is uncertainty regarding the MREL subordination requirement, and until clarification they maintain full s
Slide 26: Solid capital ratio
Solid capital ratio • The CET 1 requirement is 15.2% incl. 1.0% in management ROE ROE ROE 14.0% 6.4% 12.4% buffer after the countercyclical buffer was reduced from 2.5% to 1.0% in March 2020 and the systemic risk buffer was 21.7% increased from 3.0% to 4.5% in December 2020. 21.2% CET 1 20.4% 19.9%
Slide 27: Collective development effort
Collective development effort SpareBank 1 Utvikling is SpareBank 1 SR-Bank’s business partner in product and service development. Together we simplify people’s everyday finances and improve customers journey through data-driven development. 14 banks pool their efforts to achieve economies of scale a
Slide 28: Named one of Norway's best mobile banks
Named one of Norway’s best mobile banks* • Best liked mobile bank in the Norwegian market (Kantar Posisjon PM 21). • Record activity in June: 28.4 million logins. • The average customer logs in 33 times a month, i.e. on average more than once a day. • Simple and secure login process and better user
Slide 29: Bank+Accounting = time to do what you do best
Bank+Accounting = time to do what you do best. Simpler workdays with banking and accounting in one place.
Slide 30: Outlook
Outlook • The Covid-19 pandemic is having significantly less economic impact in 2021 than last year. A controlled reopening of the economy has started, and the national rate of vaccination is good • A 0.25 %-point increase in the policy rate is expected from September 2021, followed by a further thr
Slide 31: Appendix
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 31
Slide 32: Lower unemployment (NAV) due to reopening of the economy
Lower unemployment (NAV) due to reopening of the economy Unemployed increased from 3% to 8% in March 2020 but has fallen to 3,1% by 2. quarter 2021. Still highest in Oslo. Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 10 9 8 7 6 5 4 3 2 1 0 2003 2005 2007 2009 2011 2013 20
Slide 33: Norwegian house prices have increased by 10% last 12 months
Norwegian house prices have increased by 10% last 12 months Sales and prices have increased from summer 2020, but somewhat less price pressure last months House prices. NOK per sqm. Average all homes. Monthly 100.000 120% 90.000 100% 80.000 70.000 80% 60.000 50.000 60% 40.000 40% 30.000 20.000 20% 1
Slide 34: Stable petroleum activity in Norway in 2020 and 2021
Stable petroleum activity in Norway in 2020 and 2021 Uncertainty was high after Covid-19, but decreased due to support package in June 2020 and higher prices • Overall activity on the Norwegian Continental Petroleum activity on Norwegian Continental Shelf. BNOK (2021 NOK). Shelf (NCS) increased by 6
Slide 35: High growth in retail trade in Norway in 2020, but lower growth in 2021
High growth in retail trade in Norway in 2020, but lower growth in 2021 Covid-19 has had a big impact, especially lifting e-commerce and groceries, but also some other goods Retail sales (excl. auto), change in turn-over from same 2-month period previous year. Last obs: jan-feb 2021 21,0 % 16,0 % 11
Slide 36: Norwegian economy impacted by Covid-19
Norwegian economy impacted by Covid-19 Norwegian business surveys Norway – consumer confidence indicator 4 25 40 20 3 30 15 2 10 20 5 1 10 0 -5 0 0 -10 -1 -15 -10 -20 -2 -20 -25 -3 -30 -30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Central Bank business survey, outlook coming 6 months (all se
Slide 37: Appendix
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 37
Slide 38: SpareBank 1 SR-Bank has a moderate risk profile
SpareBank 1 SR-Bank has a moderate risk profile in which no single event should be capable of seriously harming the bank's financial position 38
Slide 39: Risk management principles and lending requirements
• The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk ‐ SpareBank 1 SR-Bank therefore invests significant resources in developing risk management systems, processes and expertise that are in line with leading international practice • The bank's prim
Slide 40: Limits on commitments and property financing requirements
• The bank sets specific limits for the size of commitments as well as requirements concerning industry diversification ‐ The maximum total exposure to an individual customer must be significantly lower than the regulatory requirements ‐ The maximum unsecured exposure to an individual customer must
Slide 41: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • SpareBank 1 SR-Bank has a solid loan portfolio. 64,2% 65,3 % Portfolio quality improved last year. 28,7% 28,4 % 8,2% • The loan portfolio consists mainly of small and 6,3 % medium-sized loans. 0.00 - 0.50 0.50 - 2.50 2.50 - 99.9 Probabil
Slide 42: Risk profile – Lending to the retail and corporate market
Risk profile – Lending to the retail and corporate market Retail market portfolio distributed by risk class Corporate lending portfolio distributed by risk class 2,4% 2,5% 2,5% 1,9% 1,8% 13,3% 13,4% 13,9% 13,8% 13,7% 15,9% 19,3% 18,3% 17,4% 15,2% 57,5% 53,9% 55,6% 56,6% 57,5% 84,3% 84,2% 83,6% 84,2%
Slide 43: Appendix
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 43
Slide 44: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Business divisions Fully owned companies Partly owned companies EiendomsMegler 1 SR-Boligkreditt BN Bank SpareBank 1 Gruppen Capital Market (35.0%) (19.5%) Leading real estate broker Covered Bond Funding Number of man-years: 26 Commercial bank located in Holding company for t
Slide 45: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 Samarbeidende SpareBank 1 LO/fagforbund SR-Bank SMN Nord Norge Sparebanker AS Østlandet tilknyttet LO 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 owners
Slide 46: Our purpose: Strength to growth and development
Our purpose: Strength to growth and development Objectives Financial goals • The purpose for SpareBank 1 SR-Bank is to add strength to growth • The longer term target for return on equity is a minimum of 12%. and development. Our growth will give us the ability to provide • Top 50% return on equity
Slide 47: Balance sheet
Balance sheet Balance sheet (MNOK) 30.06.2021 30.06.2020 Cash and balances with central banks 137 645 Balances with credit institutions 9,588 8,752 Net loans to customers 223,457 211,779 Certificates, bonds and other fixed-income securities 50,997 38,921 Financial derivatives 5,396 10,229 Shares, ow
Slide 48: SRBNK share
SRBNK share Development in Price/Book Relativ share price development • International ownership is 22.7% 130 1,4 200 Price 180 Index 100 = jun 30th 2020 per 2. quarter 2021. 120 110 P/B 1,2 160 100 140 1,0 90 • Total market value at 2. quarter NOK 120 p/B 80 2021 is NOK 29.1 billion. 0,8 100 70 80 O
Slide 49: 20 largest shareholders as at 30 June 2021
20 largest shareholders as at 30 June 2021 Investor Number Stake Sparebankstiftelsen SR-Bank 72,419,305 28.3% • Ownership interests as at 30 June 2021: Folketrygdfondet 18,976,426 7.4% • From Rogaland, Agder, Vestland, Oslo Brown Brothers Harriman & Co, U.S.A. Nominee 6,612,187 2.6% and Viken: 65.5%
Slide 50: SR-Bank as at 30 June 2021
SR-Bank as at 30 June 2021 SpareBank 1 SR-Bank share 30.06.2021 2020 2019 2018 2017 • Number of shares issued Share price 113.70 91.00 100.00 89.20 87.00 255.7 million Stock value (MNOK) 29,079 23,273 25,575 22,813 22,250 • Trading volume in Q2 2021: Book value per share, NOK (group) 96.08 95.97 89.
Slide 51: Contact Details
Contact Details Address Christen Tranes Gate 35 Tel: +47 915 02002 Postboks 250 www.sr-bank.no 4068 Stavanger Management Benedicte Schilbred Fasmer CEO Tel.: +47 950 60 034 E-post: benedicte.fasmer@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 E-post: inge.reinertsen@sr-bank.no Investor Relati