Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q3 2014 Earnings Presentation
42 slides from Sparebank 1 Ostlandet's earnings presentation, 2014
Slide 1: SpareBank 1 SR-Bank ASA 3rd quarter 2014
SpareBank 1 SR-Bank ASA 3rd quarter 2014 Page 1
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: The leading financial group in the southwest of Norway
The leading financialgroup in the southwest of Norway 1 Rogaland Population 452,000 Market share 37% Year of establishment 1839 Market strategy Market leader 2 Oil & Gas, Oil service, Important business segments Supply Unemployment rate 2.0% 2 Hordaland Population 498,000 Market share 6% Year of est
Slide 4: A good result and a stable continuous growth
A good result and a stable continuous growth Pre-tax profit for 3Q is NOK 577 million compared to NOK 661 million last year - Return on equity after tax 12.2% (15.6%) Pre-tax profit year-to-date increased to NOK 2.048 million from NOK 1.673 million last year - Return on equity after tax 15.0% (13.2%
Slide 5: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 18,4% 15,6% 16,2% 11,1% 11,2% 11,4% 11,3% 14,5% 10,5% 12,2% Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Cost/income ratio Earnings per share (NOK) 2,58 2,22 44,6% 2,02 2,09 42,4% 1,78 40,8% 40,9% 37,5% Q3 13 Q4
Slide 6: Income statement
Income statement 30.09 30.09 Group Income Statement (MNOK) 14 13 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Net interest income 1.749 1.545 621 581 547 574 568 Net commission and other income 1.327 1.335 403 444 480 489 466 Net income on investment securities 662 360 142 201 319 195 137 Total income 3.738 3.240
Slide 7: Change in profit 30.09.2013 – 30.09.2014
Page 7 500 1.000 1.500 2.000 2.500 0 30.09.2013 1.673 Net interest income incl. commission from covered 138 bond companies 58 Other income Change in profit 30.09.2013 – 30.09.2014 Net income on investment 302 securities Total operating expenses -41 Impairment losses on - 82 loans and guarantees 30.0
Slide 8: Key figures
Key figures 30.09 30.09 14 13 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Return on equity after tax (%) 15,0 13,2 12,2 14,5 18,4 16,2 15,6 Net interest margin (%) 1,43 1,40 1,48 1,41 1,40 1,46 1,49 Impairment losses on loans and guarantees in % of gross loans 0,17 0,10 0,20 0,13 0,18 0,17 0,11 -incl. covered bon
Slide 9: Consolidated income profile
Consolidated income profile 1200 1000 322 299 315 324 310 800 34 37 29 20 28 167 167 93 120 MNOK 165 600 400 621 568 574 547 581 200 0 3. kv. 13 4. kv. 13 1. kv. 14 2. kv. 14 3. kv. 14 Net interest income Commission income from covered bond companies Profit before tax from covered bond companies Net
Slide 10: Change in net interest income and commission income from covered bond companies
Change in net interest income and commission income from covered bond companies; 30.09.2013 – 30.09.2014 1.742 2.400 48 - 58 249 - 35 - 66 2.127 2.200 1.989 2.000 378 1.800 444 1.600 1.400 1.545 1.749 1.200 1.000 800 600 400 Other Volume effect Net fundingcost Commission income from covered bond 30.
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins 2,88% 2,99% 2,93% 2,92% 2,90% 2,89% 2,57% 2,64% 2,33% 2,21% 2,21% 2,20% 2,06% 2,08% 1,97% 1,85% 1,88% 1,63% Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Corporate market Retail market Deposit margins -0,04% -0,15% -0,27% -0,32% -0,40% -0,43% -0,45
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market 60 000 50 000 15 % 15% 40 000 MNOK 10 % 10% 30 000 6,0% 5,5% 20 000 5,0% 4,5% 4,6% 4,0% 5%5 % 2,5% 10 000 1,4% 0,7% 0 0%0 % Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Volume Growth % Retail Market 120 000 100 000 15 % 15% 80 000 MNOK 9,
Slide 13: Loan portfolio as at 30.09.2014
Loan portfolio as at 30.09.2014 • Gross loans as at 30 September 2014 amount to NOK 170.3 billion compared 2,9% Agriculture / forestry / fishing 2,9% with NOK 164.5 billion at the same time last year. Industry, Power/water supply and construction 3,8% 3,5% Retail trade, hotels and restaurants 1,8% 1
Slide 14: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans Total-distributed • The proportion of loans with a loan-to- 100% value ratio of less than 85% is very high and stable at 91.5%. 80% 71,8% 67,6% 60% 40% • 98.2% of gross exposure is within 85% of 23,9% 20,1% the assessed value of collateral. This 20% 5,3% 4,
Slide 15: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by 50000 24,1% 25% 25% NOK 10.5 billion to 81.2 billion. 18,9% 20% 40000 20% – Corresponds to an increase in the period 12,6% 15% 15% of 14.9%. 30000 MNOK 10% 10% 6,6% 20000 4,9% 2,8% 1,7% 5%5 % • Deposits from
Slide 16: Net commission and other income
Net commission and other income 30.09 30.09 MNOK 14 13 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Payment facilities 179 174 66 56 57 59 66 Savings/placements 130 112 45 40 45 39 40 Insurance products 131 45 44 42 41 41 123 Commission income real estate broking 333 325 105 128 100 108 101 Guarantee commission 77
Slide 17: Net income on investment securities
Net income on investment securities 30.09 30.09 MNOK 14 13 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Dividends 35 35 10 7 18 -2 3 Investment income, associates 368 260 150 137 81 95 130 Securities gains/losses 177 -94 -52 24 205 13 -38 - of which capital change in shares and certificates* 208 4 -22 10 220 42 11
Slide 18: Subsidiaries
Subsidiaries MNOK 30.09.14 30.09.13 EiendomsMegler 1 SR-Eiendom AS Number of sales 5.793 5.618 Operating profit before tax 46,6 37,8 SpareBank 1 SR-Finans AS Total assets (BNOK) 6,7 6,3 Operating profit before tax 110,2 120,7 SR-Forvaltning AS Total assets under management (BNOK) 9,0 7,2 Operating p
Slide 19: Ownership interests
Ownership interests MNOK 30.09.14 30.09.13 SpareBank 1 Gruppen AS (19,5 % interest ownership) Profit after tax 261,9 159,7 Adjusted profit previous years -4,2 -1,6 SpareBank 1 Boligkreditt AS (20,4 % interest ownership) Profit after tax 29,9 40,6 Adjusted profit previous years 1,9 1,8 SpareBank 1 Næ
Slide 20: Operating expenses
Operating expenses 30.09 30.09 MNOK 14 13 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Personnel expenses 884 862 304 293 287 297 283 Restructuring costs 3 11 3 0 0 26 1 Non-recurring effect, pension-related items 7 0 0 0 7 0 0 Total personnel expenses 894 873 307 293 294 323 284 IT expenses 202 185 69 67 66 65 63
Slide 21: Impairment losses on loans / Non-performing and doubtful commitments
Impairment losses on loans/Non-performing and doubtful commitments Impairment losses on loans Non-performing and doubtful commitments 0,18% 0,20% 0,17% 0,11% 0,13% 0,16% 1,09% 1,06% 0,12% 0,13% 0,90% 0,08% 0,10% 0,77% 0,81% 0,77% 0,76% 0,66% 0,65% 0,62% 439 21 2 807 462 552 533 80 52 51 48 830 32 63
Slide 22: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 30.09 30.09 Losses on loans in income statement (MNOK) 14 13 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Corporate customers 140 58 39 48 53 87 9 Retail customers 11 24 9 3 -1 -7 23 Change in collective impairment losses on loans 13 0 21 -10 2 -30 0 Net impairment losses
Slide 23: Deposits to loans ratio and market funding
Deposits to loans ratio and market funding • Development in deposits to loans ratio reflects our funding strategy with a greater Deposits to loans ratio share of senior funding and the reduced use of 100,0 % covered bond funding. – Seven outstanding euro-benchmarks (EUR 500 80,0 % 66,2% 61,7% 63,6%
Slide 24: Stronger capital ratio
Stronger capital ratio 18% • SpareBank 1 SR-Bank is compliant with all capital requirements per 30.09.2014. 16% • The use of different risk weights in the 14% 15,4% Nordic countries makes comparisons of 13,1% actual financial strength difficult. 13,1% 12% 12,0% – The Basel I floor is also practised
Slide 25: RWA home mortgages (incl. SpareBank 1 Boligkreditt)
RWA home mortgages (incl. SpareBank 1 Boligkreditt) • The shift that occurs from Q1 2014 is due 25,0 % to increased regulatory LGD from 10% to 20%. 20,0 % • FSA informed 1st July 2014 a further 17,0% 16,4% 16,2% tightening of risk weights for mortgages. This in combination with the so-called 15,0 %
Slide 26: Common equity tier 1 being strengthened in line with stricter regulatory requirements
Common equity tier 1 being strengthened in line with stricter regulatory requirements • New capital requirements entail a need to continue increasing common equity tier 1 16,00% 16,00% capital going forward. 10,0 -13,0% 14,00% ROE ROE 14,00% 15,0% 14,0% • SpareBank 1 SR-Bank is not defined as ROE sy
Slide 27: Strengthened CET1 capital ratio calculated on basis of total assets
Strengthened core equity tier 1 capital ratio calculated on basis of total assets 9% • Core equity tier 1 capital ratio calculated on 7,8% 7,9% basis of total assets as at 30 September 2014 8% 7,5% was 7.9%. 7% 6,6% • Measured according to this expression of 6,0% 6% financial strength, SpareBank SR-
Slide 28: Outlook
Outlook From record high levels, oil investments are expected to fall in 2015. A continued high level of investment involves strong activity in the petroleum sector, but uncertainty has increased somewhat due to lower oil prices. Major infrastructure projects and high activity in house building are
Slide 29: Appendix
APPENDIX SpareBank 4 SR-BANK
Slide 30: SR-Bank's activities
SRBANK’s activities Divisions of SpareBank 1 SR- Capital Markets Retail Market Corporate Market Administration & Support Bank ASA Number of man-years: 33 Number of man-years : 457 Number of man-years : 160 Number of man-years : 211 Fully owned companies Number of man-years : 212 Number of man-years
Slide 31: SpareBank 1 Alliance
SpareBank 1 Alliance Owners of the Sparebanken alliance Samspar Hedmark • All credit decisions are made at the 19,5% 19,5% 19,5% 19,5% 11,0% 9,6% 1,4% local banks • Economies of scale related to expenses, Products, commissions, dividends IT solutions, marketing and branding Sales, loan portfolios, c
Slide 32: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is commited to value • ROE above 13% at a normalised level of interest rates creation in the bank`s core market area • Sustainable contribution to the value creation process • Top 50% ROE and cost/inco
Slide 33: Balance sheet
Balance sheet Balance sheet (MNOK) 30.09.2014 30.09.2013 Cash and balances with central banks 336 588 Balances with credit institutions 2.216 1.732 Net loans to customers 136.685 115.992 Certificates, bonds and other fixed-income securities 16.802 22.408 Financial derivatives 4.023 4.887 Shares, own
Slide 34: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • 56.1% of the loan portfolio has a 100% probability of default (PD)* below 0.5%. 80% 56,1% 56,5% 60% • The proportion of loans with a PD above 40% 33,2% 32,1% 2.5% has been reduced to 10.7% of the 20% 10,7% 11,5% total portfolio. 0% 0.00
Slide 35: Lending to the retail market – risk profile
Lending to the retail market – risk profile Retail market portfolio distributed by risk class • The quality of the retail market portfolio is considered very good and 100% 3,2% 3,4% 3,4% 3,2% 3,1% with low potential losses. 80% 20,9% 21,6% 21,6% 20,5% 20,1% 60% • The proportion of loans with a PD be
Slide 36: Lending to the corporate market – risk profile
Lending to the corporate market – risk profile Development in corporate market’s portfolio distributed by risk class • The quality of the corporate market portfolio is good. 100% 26,8% 24,4% 25,1% 26,4% 24,9% 80% • The average PD has improved. This trend 60% is particularly driven by an strengthened
Slide 37: Low exposure to the shipping segment
Low exposure to the shipping segment • Lending to conventional shipping is low Product- Dry cargo and represents 1.4% of total loans /chemicaltanks 5,4% (7,1%) 9,8% (8,3%) Gas 2,6% (3,1%) • Lending to the offshore sector Seismic Other represents 5.9% of total loans 5,4% (6,7%) 1,2% (2,8%) • Lending,
Slide 38: Lending to commercial property
Lending to commercial property • Lending to commercial property Housing constitutes 15.9% of total loans, which is cooperative Real estate 4,5% (4,9%) an increase of 0.4% compared with the management 4,1% (4,2%) same time last year. • The portfolio is characterised by lending to commercial propertie
Slide 39: Increased international interest in SR-Bank
Increased international interest in SRBANK Development in Price/Book Relative share price development • International ownership increased 65 1,2 120 from 14.1% at the OSEBX 1,1 115 60 SRBANK end of 2013 to 23.1% Index 100 = Jan. 1st 1 110 at the end of 3rd 0,9 105 55 NOK quarter 2014. p/B 0,8 100 50
Slide 40: 20 largest shareholders as at September 2014
20 largest shareholders as at September 2014 Investor Number Stake • International Sparebankstiftelsen SR-Bank 72.419.305 28,3% ownership Gjensidige Forsikring ASA 26.483.470 10,4% increased from Folketrygdfondet 9.895.706 3,9% 14.1% at the State Street Bank and Trust, U.S.A. 8.816.417 3,4% Nominee
Slide 41: SR-Bank as at 30 September 2014
SRBANK as at 30 September 2014 • Ownership interests: 30.09.14 2013 2012 2011 2010 –From Rogaland, Agder-counties and Hordaland: 48.6% –International: 23.1% Share price 61,00 60,25 37,20 40,70 57,00 –10 largest: 57.7% –20 largest: 64.7% Stock value (MNOK) 15.601 15.409 9.514 5.182 7.257 • Number of
Slide 42: Contact Details
Contact Details Address Management Investor Relations Arne Austreid Vidar Torsøe Bjergsted Terrasse 1 CEO Investor Relations Postboks 250 4066 Stavanger Tel. Tel. +47 900 77 334 +47 970 80 656 Tel. E-mail. E-mail. arne.austreid@sr-bank,no vidar.torsoe@sr-bank.no +47 915 02002 Inge Reinertsen www.sr-