Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — FY2013 Earnings Presentation
40 slides from Pareto Bank Asa's earnings presentation, 2014
Slide 1: Pareto Bank Financial results 2013
PARETO BANK Financial results 2013 SIDE 1
Slide 2: Financial statement, lending and credit risk, funding and liquidity, outlook
1 FINANCIAL STATEMENT 2 LENDING AND CREDIT RISK 3 FUNDING AND LIQUIDITY 4 OUTLOOK SIDE 2
Slide 3: Financial Highlights 2013
FINANCIAL HIGHLIGHTS 2013 Profit after write-downs and tax NOK 109.9 milllion (NOK 67.7 million) Return on equity after tax 12.7% (8.6%) Proposed dividend in NOK 30.0 (30.0) Cost/income ratio 31.5% (37.6%) Common Equity Tier 1 ratio (standard method) 11.5% (11.1%) SIDE 3
Slide 4: Historical Development of Key Figures
HISTORICAL DEVELOPMENT OF KEY FIGURES Post-tax operating profit (NOK million) Cost/income ratio (%) 109.9 73.8 63.8 67.7 45.2 47.6 37.6 31.5 22.5 12.6 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on equity (after tax) Deposit-to-loan ratio (%) 12.7% 103.1 86.2 90.3 85.3 8.6% 79.8 6.1% 3.
Slide 5: Key Market Ratios
KEY MARKET RATIOS (NOK) 2013 2012 2011 2010 Earnings per share (NOK) 129.3 Earnings per share after tax 129.3 79.6 56.1 26.5 Dividend per share 30.0 30.0 30.0 25.0 Dividend Payout ratio 0.23 0.38 0.53 0.94 79.6 Dividend yield 3.1% 4.2% 56.1 Book equity per share 1081.1 985.1 935.5 904.5 26.5 P/E 7.5
Slide 6: Income Statement 2013
INCOME STATEMENT 2013 (NOK 1,000) 2013 2012 Change NOK Change % Total interest income etc. 490,571 422,889 67,681 16.0% Total interest expenses etc. 272,728 273,756 -1,028 -0.4% Net interest income 217,842 149,133 68,709 46.1% Commissions and fees receivable etc. 10,608 12,021 -1,413 -11.8% Commissi
Slide 7: Change in Net Interest Income 2013
CHANGE IN NET INTEREST INCOME 2013 +12,844 2013 +2,730 +35,943 217,842 +34,927 -12,908 -4,827 2012 149,133 Lending Lending Amortization Invested Long-term Fee to & deposit & deposit & commission surplus funding costs Guarantee margin volume income liquidity Fund SIDE 7
Slide 8: Non-Performing and Impaired Commitments
NON-PERFORMING AND IMPAIRED COMMITMENTS (NOK 1,000) 31.12.2013 31.12.2012 Gross non-performing commitments 19,211 60,322 Individual write-downs 800 23,350 Net non-performing commitments 18,411 36,972 Write-down degree 4.16% 38.71% Non-performing commitments as % of total lending 0.26% 0.55% • One no
Slide 9: Write-downs on Lending
WRITE-DOWNS ON LENDING Losses in the period (NOK 1,000) 31.12.2013 31.12.2012 • Group write-downs increased by Change in individual write-downs -22,550 9,750 NOK 4.8 million due to increased Change in group write-downs 12,800 5,900 Actual losses against previous write-downs 20,000 0 downside risk in
Slide 10: Fourth Quarter 2013
FOURTH QUARTER 2013 Profit for the period Profit (MNOK) 30.6 33.5 MNOK 33.5 (MNOK 21.2) 27.0 21.2 Return on equity (after tax) 18.7 14.8% (10.3%) Cost/income ratio) Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 35.1% (34.1%) Return on Equity (after tax) 14.0% 14.8% 12.6% 10.3% 9.0% Q4 2012 Q1 2013 Q2 2013
Slide 11: Historical Trend Net Interest Income
HISTORICAL TREND NET INTEREST INCOME 61 524 + 8,7 % 56.623 53.426 + 6,0 % +15,5 % 45.076 46.240 +28,6 % +2,6 % 35.066 35,756 +5,5 % 34,432 33,484 25,860 24,614 32,945 33.237 32,251 20,116 17,319 14,671 SIDE 11
Slide 12: Repricing of Loans and Deposits Improves Net Interest Margins
REPRICING OF LOANS AND DEPOSITS IMPROVES NET INTEREST MARGINS 6.0% Q4 2013 4.0% Q4 2012 2.0% Net margin between deposits and loans 0.0% increased by 0.8 percentage points over the last 12 months: -2.0% Lending margin Deposit margin Net margin • Repricing of real estate and securities loans • Higher
Slide 13: Historical Trend Margins
HISTORICAL TREND MARGINS Margins over 3M NIBOR 4.91% 4.68% 4.71% 4.33% Lending margin 4.25% 3.97% 3.73% 3.65% 3.58% 3.23% 3.31% 2.95% 2.97% 3.17% Net margin 2.87% 2.82% 2.82% 2.50% 2.61% 2.48% 2.40% 2.14% 2.15% 2.23% -0.74% -0.81% -0.72% -0.74% -0.97% -1.34% -1.26% -1.50% -1.52% -1.43% -1.51% -1.40%
Slide 14: Fourth Quarter Profits
FOURTH QUARTER PROFITS (NOK 1,000) Q4 2013 Q4 2012 Change NOK Change % Total interest income etc. 125,710 111,313 14,396 13% Total interest expenses etc. 64,185 66,238 -2,052 -3% Net interest income 61,524 45,076 16,449 36% Commissions and fees receivable etc. 4,555 2,388 2,167 91% Commissions and f
Slide 15: Change in Net Interest Income Fourth Quarter
CHANGE IN NET INTEREST INCOME FOURTH QUARTER +2.471 Q4 2013 +4.366 +357 61.524 +12.001 -1.540 -1.207 Q4 2012 45.076 Lending Lending Amortization Invested Long-term Fee to & deposit & deposit & commission surplus funding costs Guarantee margin volume income liquidity Fund SIDE 15
Slide 16: Quarterly Profit Trends
QUARTERLY PROFIT TRENDS 4th quarter 3rd quarter 2nd quarter 1st quarter 4th quarter (NOK 1,000) 2013 2013 2013 2013 2012 Total interest income etc. 125,710 123,603 124,185 117,074 111,313 Total interest expenses etc. 64,185 66,980 70,729 70,834 66,238 Net interest income 61,524 56,623 53,456 46,240
Slide 17: Historical Trend Loans and Deposits
HISTORICAL TREND LOANS AND DEPOSITS 7.171 7,162 6.734 5.505 5.473 6.308 5.234 6.110 5.589 4.460 5.371 4.942 3.435 4.506 3.843 3.511 2.348 2.421 Loans Deposits SIDE 17
Slide 18: Assets
ASSETS (NOK 1,000) 31.12.2013 30.09.2013 30.06.2013 31.03.2013 31.12.2012 Cash and deposits with central banks 100,082 85 300,089 63 100,075 Lending to and deposits with credit institutions 451,439 398,194 74,354 226,495 164,003 Net lending to customers 7,161,938 7,046,044 7,183,632 6,796,990 6,734,
Slide 19: Liabilities and Equity
LIABILITIES AND EQUITY (NOK 1,000) 31.12.2013 30.09.2013 30.06.2013 31.03.2013 31.12.2012 Deposits from credit institutions 13,146 19,811 69,163 146,117 200,663 Deposits from customers 6,110,121 5,894,413 6,307,737 5,860,903 5,371,143 Senior securities issued 1,513,406 1,492,415 1,542,350 1,603,589
Slide 20: Capital Adequacy Requirements
CAPITAL ADEQUACY REQUIREMENTS • Pareto Bank operates at target levels 0.5 to 15.5% 1.0 percentage points above the current 14.7% 14.5% regulatory requirements for Common Equity Tier 1 (CET1) and Total Capital ratios 12.5% 3.50% 3.13% 3.50% • By the end of 2014, target operating levels for 3.50% the
Slide 21: New Requirements for Common Equity Tier 1
NEW REQUIREMENTS FOR COMMON EQUITY TIER 1 14.0% 12.0% 11.5 % Improved net margin 11.1 % 11.0 % 1,0 % Countercyclical buffer 10.0% 8.0% 3,0 % Systemic risk buffer Low operating costs 6.0% 2,5 % Conservation buffer 4.0% Allocation of loans 2.0% Minimum requirements 4,5 % for CET1 0.0% Total lending NO
Slide 22: Capital Adequacy
CAPITAL ADEQUACY • The bank has two perpetual (NOK 1,000) 31.12.2013 31.12.2012 01.01.2012 subordinated bonds callable after Equity 918,761 837,304 795,147 five years and with no incentive of Dividend -25,500 -25,500 -25,500 repayment Deduction of intangible assets -23,774 -26,290 -26,226 Total Comm
Slide 23: Historical Trend Capital Ratios
HISTORICAL TREND CAPITAL RATIOS “Leverage ratio” Common Equity Tier 1 ratio (%) Core capital/Total assets (%) 23.8% 18.5% 12.1% 15.4% 9.7% 9.5% 9.8% 12.4% 11.5% 11.1% 11,0% 4,9% SIDE 23
Slide 24: Largest Shareholders 31.12.2013
LARGEST SHAREHOLDERS 31.12.2013 Name Holding Share • A total of 225 shareholders. Pareto AS 127,500 15.00% • Top-level managers in the Pareto group Geveran Trading Co Ltd. 68,200 8.02% Indigo Invest AS 66,560 7.83% own 31,696 shares, or 3.73% of bank Rasmussengruppen AS 55,250 6.50% shares. Centenni
Slide 25: Agenda: Lending and credit risk
1 FINANCIAL STATEMENT 2 LENDING AND CREDIT RISK 3 FUNDING AND LIQUIDITY 4 OUTLOOK SIDE 25
Slide 26: A Niche Player with Focus on Real Estate, Securities, Shipping and Offshore
A NICHE PLAYER WITH FOCUS ON REAL ESTATE FINANCING, SECURITIES FINANCING, AND SHIPPING AND OFFSHORE FINANCING Total credit exposure NOK 8,916 million 1. Real estate financing focused on residential property construction in Bonds the Oslo region Stocks and shares 2. A full scale provider of securitie
Slide 27: Strong Market Position in Residential Property Construction in Oslo
A STRONG MARKET POSITION WITHIN RESIDENTIAL PROPERTY CONSTRUCTION IN THE OSLO REGION • Financing of primarily regulated lots with a Property credit exposure NOK 5,641 million potential for property development 20.6% • Financing of residential and commercial Offices property construction 6.2% Combina
Slide 28: A Full Scale Provider of Securities Financing
A FULL SCALE PROVIDER OF SECURITIES FINANCING STANDARD PRODUCTS • Financing of stocks on Oslo Stock Exchange with a LTV/leverage of 0% to 80% • Financing of short trades on Oslo Stock Exchange • Financing of high yield bonds typically with Pareto Securities as manager with a LTV/leverage of around 5
Slide 29: Building a Well-Diversified Portfolio in Shipping and Offshore
BUILDING A WELL-DIVERSIFIED PORTFOLIO IN SHIPPING AND OFFSHORE Shipping & Offshore credit exposure of NOK 756 million • The project should as a rule have Norwegian ownership 3.8 % Offshore • A high quality charterer with transparent books 22.5 % Rig and a diversified cash flow 21.7 % Ro-ro Container
Slide 30: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Credit exposure (NOK million) 31.12.2013 31.12.2012 None/very None/very low risk 4,256 3,495 low risk Low risk 48% Low risk 3,572 3,295 40% Moderate risk 895 1,233 Some risk 186 354 Very high risk 0 0 Non-performing loans 1 40 Non- Accrued interest and amortisation
Slide 31: Commitments by Size
COMMITMENTS BY SIZE Credit exposure (NOK million) 31.12.2013 31.12.2012 > 50 4,185 4,006 >20 <50 2,284 2,340 >10 <20 1,196 880 >5 <10 685 649 >2 <5 412 416 >1 <2 111 91 <1 36 35 Accrued interest and amortisation 6 35 Sum 8,916 8,452 0 1000 2000 3000 4000 5000 > 50 > 20 < 50 > 10 < 20 > 5 < 10 >2<5 >
Slide 32: Agenda: Funding and liquidity
1 FINANCIAL STATEMENT 2 LENDING AND CREDIT RISK 3 FUNDING AND LIQUIDITY 4 OUTLOOK SIDE 32
Slide 33: Funding Sources
FUNDING SOURCES Deposits 6,110 50% Fixed rate deposits Corporate deposits 61% Senior dept Deposit-to-loan ratio 85% 1,513 Long term liquidity ratio 118% Other dept 90 Subordinated 123% Liquidity buffer index dept Core capital 234 919 SIDE 33
Slide 34: Liquidity
LIQUIDITY 1,800.0 Drawing rights 1,600.0 2,000 Mill. Invest. pf. 1,400.0 1,200.0 1,500 1,000.0 Liquidity Drawdowns portfolio on credits 1,000 800.0 600.0 Buffer for 500 loss of 400.0 deposits Cash 200.0 - Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 0.0 Excess liquidity after Liquidity re
Slide 35: Customer Deposits
CUSTOMER DEPOSITS Deposit allocation Fixed rate deposits – time to maturity > 25 months Depositors 3,373 1,720 15 - 25 months 8 - 14 months NOK million 2,378 3,663 5 - 7 months 3 - 4 months 0% 20% 40% 60% 80% 100% 0 500 1,000 Retail Corporate NOK million Deposits by size > 20 mill Average deposits p
Slide 36: Issued Senior Debt Credit Spreads 31.12.2013
ISSUED SENIOR DEBT CREDIT SPREADS 31.12.2013 200 Pareto Bank senior debt (Spread over 3M NIBOR) 150 Credit spread (bps) PARB10 PARB13 100 PARB09 PARB08 50 PARB07 PARB05 0 0 1 2 3 4 5 6 Time to maturity SIDE 36
Slide 37: Securities Portfolio
SECURITIES PORTFOLIO Government Covered bonds & PSEs LIQUIDITY PORTFOLIO • Investment grade portfolio with a high percentage of covered bonds and AAA bonds Underwriting of new issues Bank/finance • Size approx. NOK 1,447 million including cash and cash equivalents (NOK 895 million in Investment secu
Slide 38: Agenda: Outlook
1 FINANCIAL STATEMENT 2 LENDING AND CREDIT RISK 3 FUNDING AND LIQUIDITY 4 OUTLOOK SIDE 38
Slide 39: The Way Ahead for Pareto Bank
THE WAY AHEAD FOR PARETO BANK REAL ESTATE: SPECIALIZATION IN PROJECT FINANCING Credit exposure NOK 8,916 million • Uncertain market prospects for residential development and a high redemption rate means the bank will see a virtually unchanged net exposure in 2014 • The bank plans to further develop
Slide 40: SIDE 40
(Pareto bank