Sparebank 1 Smn · OSL:MING
Sparebank 1 Smn — Sparebank 1 Smn Prim Cap — Q1 2024 Earnings Presentation
44 slides from Sparebank 1 Smn's earnings presentation, May 8, 2024
Slide 1: First quarter 2024
First quarter 2024 8th of May 2024 Jan-Frode Janson CEO Photo: Bybroen, Trondheim
Slide 2: Q1 2024 Profitable and solid
Q1 2024 Profitable and solid • Return on equity of 16% High net interest income, good commission income and increased underwriting results from the SpareBank 1 Group • Efficient operations drawing on intra-group synergies Growth and good profitability in all business lines, reduced costs and low los
Slide 3: High value creation over time
High value creation over time 16.0 16 15.1 42 15 14.4 40 14 13.7 13.5 38 13 12.2 12.3 36 12 11.3 11.5 34 10.7 31 11 10.0 30 30 32 30 10 28 9 26 26 8 24 7 6 20 20 22 20 5 17 17 18 4 16 3 13 14 2 12 1 10 12 10 0 8 -1 6 -2 4 -3 2 -4 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q124 Return on Equ
Slide 4: Delivered on strategic priorities from One SMN 2020
Delivered on strategic priorities from One SMN 2020 Creating One SMN Powering up digitalisation and insights • From bank management to group management • Digital sales up from ~ 35% to 50% * • Joint group functions • Highly ranked mobile banking facility and digital customer • 17 finance centres in
Slide 5: Group strategy 'One SMN' stands firm
Group strategy ‘One SMN’ stands firm Increase digitalisation Head up the development Integrate sustainability Exploit the power in our Create One SMN and use of insights of Norway’s savings banks into the business ownership model 5
Slide 6: Norway's most complete finance centre
Norway’s most complete finance centre With physical presence, digital solutions and knowledge of Mid Norway as its foundation Foto: Finanshus i Molde 6
Slide 7: Merger with SB1 Søre Sunnmøre
Merger with SB1 1 Søre Sunnmøre a profitable investment for owners, employees, customers and the community • Increased return on equity from ~9 % in SB1 Søre Sunnmøre to target of 13 % in SMN • The savings bank foundation Søre Sunnmøre is the largest owner in SMN, dividend to the foundation of NOKM
Slide 8: Såkorn Midt has reached its first milestone
Såkorn 1 Midt has reached its first milestone – NOK 200m to green early-stage investments in Mid Norway • In the spring of 2023 SMN announced its ambition to establish the seedcorn fund Såkorn 1 Midt • Såkorn 1 Midt will translate the region’s creative power into jobs and future value creation • The
Slide 9: The value of public health
NOK 50 m to the Kavli Foundation We seek young talents Get more people The value of public health on the team! We know that investing in people and communities Allocation to non-profit causes (NOKm) helps to shape a sustainable future. We will now engage 860 even more people to take active, social a
Slide 10: Financial Information
Financial Information Trond Søraas CFO Foto Hjørundfjorden
Slide 11: Q1 2024
Q1 2024 16.0 % Lending growth Retail banking 0.8 % 0.6 % Return on Equity Corporate banking 1.5 % 1,084 NOKm Deposit growth Retail banking 1.1 % 1.6 % Profit after tax Corporate banking 2.5 % Operating margin subsidiaries 18.5 % Regnskapshuset SMN 16.1 % Eiendomsmegler 1 Midt-Norge 17.1 % CET1-ratio
Slide 12: Financial targets
Financial targets Profitable Solid Efficient Responsible 16.3 % < 40 % CET1 ratio Cost/income in parent bank ex. finance Net zero 13 % < 85 % Climate footprint by 2050 ROE ~ 50 % Payout ratio Cost/income subsidiaries 12
Slide 13: Profitable and solid
Profitable and solid Return on equity CET1 ratio 1 1 1 1 1 2 1 1 1 0 1 1 1 0 11 1 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 Result per ECC Loan losses in per cent of total lending 2 00 4 00 4 21 0 04 1 00 2 01 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 13
Slide 14: Strong results across the group
Strong results across the group Profit before tax (NOKm) Profit before tax (NOKm) Real Estate agency Regnskapshuset SMN Retail Banking SB1 Finans Midt-Norge Corporate Banking 626 597 12 8 584 524 519 44 35 31 480 20 53 488 66 465 416 45 3 11 390 43 18 606 493 481 499 500 423 451 483 372 400 -1 -7 Q1
Slide 15: Growth and margins in Retail Banking - quarterly
Growth and margins in Retail Banking - quarterly Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M 0 1 0 0 2 1 1 1 1 1 0 11 1 2 20 1 1 14 2 14 4 4 1 2 1 0 0 1 0 0 0 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 15
Slide 16: Growth and margins in Corporate Banking - quarterly
Growth and margins in Corporate Banking - quarterly Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M 1 4 2 12 0 2 2 0 10 1 10 0 2 0 2 2 2 4 4 2 40 24 2 1 40 1 12 1 22 0 1 04 0 0 0 0 04 02 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 * Lending margin for
Slide 17: Broad product range and diversified income platform
Broad product range and diversified income platform Ownership interests Profit after tax (NOKm) 1 4 2 10 0 12 1 12 4 2 21 4 4 40 24 1 1 0 2 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 17
Slide 18: Results
Results Change Change NOK mill Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 from Q4 24 from Q1 23 Net interest income 1,306 1,312 1,191 1,094 1,035 -6 271 Commission income and other income 572 498 484 561 541 74 31 Operating Income 1,878 1,811 1,675 1,655 1,576 67 302 Total operating expenses 782 866 741 683 728
Slide 19: Income
Income Net interest income and other income (NOKm) Commission income 1 Change Change 1 11 NOK mill Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 from Q4 23 from Q1 23 1 1 1 Payment transmission income 77 101 79 77 72 -25 5 10 4 Credit cards 18 14 16 15 17 4 1 04 4 Commissions savings and asset mgmt 11 11 10 12 10 0
Slide 20: Costs
Costs Total operating expenses per quarter (NOKm) Costs per category erger • Merger and growth initiatives has increased costs in the last year • The costs have decreased by NOK 84 million from the fourth quarter, mbe lement which was affected by periodic effects of IT expenses and recognition of ub
Slide 21: Well diversified lending portfolio dominated by mortgages
Well diversified lending portfolio dominated by mortgages Loans per sector as at 31st of March 2024 and change last 12 months (NOKbn) ortgages ortgages funded by cov bonds 2 2 ommercial real estate 22 2 2 griculture and forestry 12 4 12 orporate customers onstruction, building 14 2 Transport and oth
Slide 22: Robust mortgage portfolio
Robust mortgage portfolio Loan-to-value ratio in the mortgage portfolio Granted interest-only periods Share of mortgages by LTV Number of loans granted interest-only periods in the Retail Banking portfolio T 0 0 2 ,110 2, 1 2, 42 2, 1 2, 2 2, 4 2, 2,41 2,1 04 2 0 ar 2 ar 24 Q1 22 Q2 22 Q 22 Q4 22 Q1
Slide 23: Commercial property, construction, building
Commercial property, construction, building Share of commercial real estate exposure Rental properties make up 72 % of the banks CRE exposure, in the corporate lending book* mainly to retail trade, industry/storage and offices Distribution of Distribution of area property per Q124 per 2023 44 44 4 4
Slide 24: Losses
Losses Loan losses (NOKm) Distribution of losses Q1 (NOKm) 2 22 24 20 1 etail banking 11 orporate banking 10 0 4 pareBank 1 Finans idt orge 1 Q1 22 Q2 22 Q 22 Q4 22 Q1 2 Q2 2 Q 2 Q4 2 Q1 24 24
Slide 25: Problem loans
Problem loans 1 2 10 ,24 1 02 0 0 0 0 0 0 2 2,22 2,2 1 2,2 2,1 2,0 2,0 2,044 1, 4 Q1 22 Q2 22 Q 22 Q4 22 Q1 2 Q2 2 Q 2 Q42 Q124 25
Slide 26: Solidity
Solidity CET 1 Leverage ratio 1 1 1 1 0 1 2 1 2021 2022 202 Q1 24 2021 2022 202 Q1 24 The groups’ pillar 2 re uirement is 1, percentage points, whereby 1,0 pp must be covered by T1-capital. The bank is subject to a provisional add-on of 0.7 per cent to its Pillar 2 requirement. Until the application
Slide 27: SpareBank 1 MING
SpareBank 1 MING Focus on long-term profitability 1 efficient operations with synergies in the group, solidly capitalized and shareholder-friendly dividend policy 2 Leading finance centre in Mid-Norway sustainable growth in an attractive region, diversified customer portfolio and income platform Str
Slide 28: Driver of sustainable transition
Driver of sustainable transition Double materiality analysis Science-based climate targets Climate account Framework for circular economy
Slide 29: Double materiality analysis
Double materiality analysis • The updated double materiality analysis takes account of internal changes, changes in the surroundings and new Stakeholder analysis regulatory requirements (CSRD) • Identifies significant impacts, risks and opportunities related to climate, environment and the community
Slide 30: Science-based climate targets and reporting
Science-based climate targets and reporting • SMN has adopted emissions targets under the Norwegian Climate Change Act • Minimum 55% emissions reduction by 2030 and 90-95% by 2050 • SMN has committed to establishing science-based climate targets for its own operations and for financed emissions (Sci
Slide 31: Framework for circular economy
Framework for circular economy Buying second-hand makes good economic sense • Circular transition is part of the solution to emissions reduction • SMN has established a pan-group project for circular economy • Phase 1 Develop the framework and methodology “ irtually all my e uipment • Phase 2 Pilot
Slide 32: Disclaimer
Disclaimer This presentation contains certain forward-looking statements relating to the business, financial performance and results of SpareBank 1 SMN and/or the industry in which it operates. Forward- looking statements concern future circumstances and results and other statements that are not his
Slide 33: Appendix
Bank SpareBank Eiendom sMN Regnskap Appendix
Slide 34: Macro in Mid-Norway
Macro in Mid-Norway Unemployment Housing market dynamics Wholly unemployed as a percentage of the labor force 20 20 1 1 1 1 1 1 1 Norway Mid-Norway Møre & Romsdal Q1 1 Q1 1 Q1 1 Q1 1 Q1 1 Q1 20 Q1 21 Q1 22 Q1 2 Q1 24 Development in housing prices Number of bankruptcies in Trøndelag, Møre & Romsdal N
Slide 35: Growth and margins in Retail Banking - Yearly
Growth and margins in Retail Banking - Yearly Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M 12-month growth ex. merger: 4.1 % 12-month growth ex. merger: 4.6 % 1 1 4 1 1 14 140 1 0 121 Q1 20 Q1 21 Q1 22 Q1 2 Q1 24 35
Slide 36: Growth and margins in Corporate Banking - Yearly
Growth and margins in Corporate Banking - Yearly Lending volume (NOKbn) Deposit volume Margins vs NIBOR3M 12-month growth ex. merger: 2,7 % 12-month growth ex. merger: -5,5 % 2 2 2 4 2 2 2 0 1 04 04 0 02 02 0 04 00 00 02 Q1 20 Q1 21 Q1 22 Q1 2 Q1 24 36
Slide 37: Product companies
Product companies Change Change NOK mill, SMN's share in parentheses Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 from Q4 23 from Q1 23 SpareBank 1 Gruppen (19.5%) 40 -51 -13 -5 34 90 6 SpareBank 1 Boligkreditt (23.7%) 33 30 5 29 33 3 -0 SpareBank 1 Næringskreditt (14.8%) 4 1 4 3 2 3 2 BN Bank (35.0%) 84 73 64 58
Slide 38: Subsidiaries
Subsidiaries Change Change NOK mill, SMN's share in parentheses Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 from Q4 23 from Q1 23 EiendomsMegler 1 Midt-Norge (92.4%) 20 -7 -1 31 18 26 2 SpareBank 1 Regnskapshuset SMN (93.3%) 35 8 11 45 44 27 -9 SpareBank 1 Finans Midt-Norge (56.5%) 66 12 3 43 53 55 14 SpareBank 1
Slide 39: Return on financial investments
Return on financial investments Change from Change from NOK mill Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 Q4 23 Q1 23 Net gain/(loss) on stocks 42 472 17 -7 -17 -429 59 Net gain/(loss) on financial instruments 20 -8 47 -30 -105 27 125 Net gain/(loss) on forex 22 27 20 38 23 -5 -1 Net return on financial instru
Slide 40: Diversified deposit portfolio
Diversified deposit portfolio Deposits by sector (NOKbn) Deposits covered by the deposit LCR guarantee scheme (NOKbn) as at 31.03.24 (per cent) 1 4 124 1 0 114 102 4 4 41 2 21 1 41 14 12 4 21 4 4 1 14 Q1 20 Q1 21 Q1 22 Q1 2 Q1 24 age earners orporate Public sector Public deposits are not covered by
Slide 41: Maturity structure
Maturity structure NOKbn 1 4 12 2 0 2024 202 202 202 202 1 10 0 01 04 00 00 Q2 24 Q 24 Q4 24 Q1 2 Q2 2 Q 2 Q4 2 Q1 2 41
Slide 42: Development in CET1 capital and capital adequacy
Development in CET1 capital and capital adequacy CET1 ratio in per cent 1 1 1 1 1 0 1 2 14 14 14 1 11 1 11 2 10 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q1 2024 CET1 8.254 9.374 10.679 12.192 13.223 13.820 14.727 15.830
Slide 43: Equity certificate, key figures
Equity certificate, key figures Key figures Q1 24 2023 2022 2021 2020 ECC ratio 66.8 % 66.8 % 64.0 % 64.0 % 64.0 % Total issued ECCs (mill) 144.13 144.20 129.29 129.39 129.39 ECC price 137.80 141.80 127.40 149.00 97.60 Market value (NOKm) 19,861.07 20,448.11 16,470.99 19,278.78 12,628.54 Booked equi
Slide 44: Balance
Balance NOKbn 31.3.24 31.3.23 Cash and receivables from central banks 2.0 1.2 Deposits with and loans to credit institutions 8.1 8.6 Net loans to and receivables from customers 168.4 152.2 Fixed-income CDs and bonds 36.1 44.3 Shares, units and other equity interests 1.2 0.8 Investment in related com
Sparebank 1 Smn Prim Cap — Q1 2024 Earnings Presentation on 6ix