Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q1 2017 Earnings Presentation
36 slides from Pareto Bank Asa's earnings presentation, 2017
Slide 1: Pareto Bank Financial Results First Quarter 2017
PARETO BANK Financial Results First Quarter 2017
Slide 2: Table of Contents
TABLE OF CONTENTS 1 FIRST QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 3: First Quarter Highlights
FIRST QUARTER HIGHLIGHTS 1 Profit after tax of NOK 78.3m (NOK 48.2m). 2 Return on Equity of 16.7 % (15.1 %).* 3 Net lending growth of NOK 220m in 2017 on a strong net interest margin. Continued high level of building activity in the Oslo region and increased activity in 4 corporate financing. 5 Depo
Slide 4: Strong Capital Ratios
STRONG CAPITAL RATIOS Capital ratios Key comments on capital • The NFSA requires that Pareto Bank targets a minimum requirement of 15.5 % CET1, including the increase in the countercyclical capital buffer to 2.0 %. 19.0 % 19.0 % 16.5 % 17.0 % • The bank’s Pillar 2 and total capital requirements are
Slide 5: Solid Foundation and Strong Performance
SOLID FOUNDATION AND STRONG PERFORMANCE Result after tax (NOKm) Return on Equity * CET1 ratio ** 16.5% 16.7% 247.3 15.6% 15.9% 17.2 % 16.0 % 13.3% 13.2 % 174.6 11.5 % 12.1 % 165.8 122.4 78.3 2013 2014 2015 2016 Q1-17 2013 2014 2015 2016 Q1-17 2013 2014 2015 2016 Q1-17 Net interest income (NOKm) Cost
Slide 6: The Share
THE SHARE * Share price development since March 2014** EPS, DPS (NOK) & Dividend Yield Book equity per share (NOK) 31.14 31.44 4.08 28.01 3.81 3.91 24.68 2.6 % Price as of 31.03: 2.4 % NOK 37.80 1.30 1.00 0.60 0.0- % - 2014 2015 2016 YTD DPS EPS Dividend yield 2014 2015 2016 YTD Price / Earnings Pri
Slide 7: Largest Shareholders as of 10.04.2017
LARGEST SHAREHOLDERS AS OF 10.04.2017 # Investor 10 April 2017 # of shares % total • The Company has 58,619,688 shares 1 Pareto AS 8,921,873 15.22 % outstanding 2 Pecunia Forvaltning AS 5,861,859 10.00 % 3 Saga Tankers ASA 5,052,547 8.62 % • One class of shares where each share 4 Apollo Capital Mana
Slide 8: Table of Contents
TABLE OF CONTENTS 1 FIRST QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 9: Norway's Leading Project Bank
NORWAY’S LEADING PROJECT BANK BUSINESS AREAS PROJECTS / CREDITS AREA EXPOSURE AVG. PRINCIPAL Property lot financing Real NOKm estate Building construction facilities 62 % 25-50 Commercial property financing Bridge loans Corporate & Investment loans NOKm Securities M&A loans 24 % 5-30 Securities fina
Slide 10: Portfolio Composition | Overview
PORTFOLIO COMPOSITION | OVERVIEW * Gross credit exposure (NOKm) Σ = NOK 11,529m Gross total lending (NOKm) Σ = NOK 9,033m MAIN BUSINESS AREAS Real Estate 7,095 62% Real Estate 5,875 65% Corporates 978 8% Corporates 742 8% Real estate financing Real focused on residential Securities 1,810 16% Securit
Slide 11: Real Estate | Strong Market Position
REAL ESTATE | STRONG MARKET POSITION * 62% Real Estate credit exposure (NOKm) Σ = NOK 7,095m Geographical residential property exposure (NOKm) ** 1% 1% 2% Residential property 3,530 50% 4% Oslo West Oslo North 21% Oslo East Lots 1,551 22% 17% Oslo Nordstrand Akershus South Akershus North Offices 638
Slide 12: Real Estate | Policy
REAL ESTATE | POLICY 62% Real Estate portfolio policy Real Estate portfolio management • The bank requires on average 20 % • In-house regulatory skills of the to 40 % equity to finance a housing market is essential for a property lot purchase good credit decision process • Primarily financing of reg
Slide 13: Securities | Focus on Customized Solutions
16% SECURITIES | FOCUS ON CUSTOMIZED SOLUTIONS * Total securities exposure (NOKm) Σ = NOK 1,810m Status • Pareto Securities’ expansion into standardised securities financing Primarily listed stocks** 1,392 77% in the Norwegian retail market will impact the bank’s exposure, and lending volume is expe
Slide 14: Corporates | A Market with Opportunities
8% CORPORATES | A MARKET WITH OPPORTUNITIES 9% Ambition Products Pareto Bank will become a leading provider of tailor-made, BRIDGE LOANS transaction-based financing solutions to Bridging of liquidity for clients who have both bought and investors/owners/family offices and small and medium- sold asse
Slide 15: Shipping & Offshore | Diversified Portfolio
SHIPPING & OFFSHORE | DIVERSIFIED PORTFOLIO * 11% Status Total S&O credit exposure & Loan to value (NOKm) * Σ = NOK 1,323m LTV * Share • The bank carefully maintains its exposure to the Product 259 56% 20% strong Norwegian shipping and offshore sector Bulk 248 59% 19% within 15 % of the bank’s total
Slide 16: Shipping & Offshore | Policy
SHIPPING & OFFSHORE | POLICY 11% 13% S&O portfolio policy S&O portfolio management • Careful growth within the strong • A diversified portfolio where a single Norwegian shipping and offshore segment will normally not exceed 25% sector of the total S&O exposure • Clients should be based in • Equity a
Slide 17: Table of Contents
TABLE OF CONTENTS 1 FIRST QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 18: First Quarter Highlights
FIRST QUARTER HIGHLIGHTS Key figures Q1-17 Profit after tax (NOKm) 78.3 PROFIT NOK 78.3m I AFTER TAX (NOK 48.2m) 63.7 68.4 67.1 48.2 NET INTEREST NOK 115.4m II INCOME (NOK 89.3m) Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 RETURN ON 16.7 % III EQUITY * (15.1%) Return on Equity * 16.8 % 17.3 % 16.7 % 15.3 % 14.4 %
Slide 19: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Key comments • The principle of assessing financial instruments at fair value may cause Q1-17 Q1-16 2016 profits to fluctuate between quarters. Net Interest income 115.4 89.3 415.9 Total other operating income 18.9 6.7 42.0 • For Q1-17 total net gains were Total
Slide 20: Growing Net Interest Income
GROWING NET INTEREST INCOME Net interest income (NOK 1,000) Net interest margins (vs. 3M NIBOR) * Q1-17 115,381 1,651 Q1-16 Q1-17 5.97% 4,562 5.62% 5.48% 8,815 4.97% - 565 5,715 5,944 Q1-16 89,259 -0.50% -0.35% Lending margin Deposit margin Net margin Lending & Lending & Amorti- Invested Long-term L
Slide 21: Strong Margins
STRONG MARGINS Continuously improving net interest margins (vs. 3M NIBOR) Key comments • Strong growth on an improved net margin 6.0 % 5.5 % 5.6 % 5.6 % 5.6 % 5.6 % 5.7 % 5.7 % 5.6 % • High fee income due to turnover 5.4 % 5.5 % 5.4 % 5.1 % 5.2 % 5.1 % 5.3 % 5.0 % 4.9 % 5.0 % 5.0 % 5.1 % 4.6 % 4.8 %
Slide 22: Strong Balance Sheet
STRONG BALANCE SHEET BS (NOKm) Key comments Q1-17 Q4-16 Q3-16 Q2-16 Q1-16 • High turnover rate: approximately 30% of Cash and deposits with central banks 57.1 57.1 57.0 752.0 57.0 Lending to and deposits with credit institutions 827.4 747.3 1,036.5 202.5 796.0 the loan portfolio matures within a yea
Slide 23: Table of Contents
TABLE OF CONTENTS 1 FIRST QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 24: Loan Portfolio Quality
LOAN PORTFOLIO QUALITY Net non-performing and impaired loans * Cumulative group provisions % of gross lending Nominal (NOKm) and % of gross lending 0.51% 0.52% 0.50% 1.58% 0.52% 1.44% 0.51% 0.48% 45.7 45.7 45.7 1.33% 43.7 1.23% 40.7 40.7 0.41% 0.96% 0.42% 0.40% 0.94% 0.37% 30.7 30.7 0.72% 0.31% 0.34
Slide 25: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Q1-17 Σ = NOK 11,529m Q1-16 Σ = NOK 10,801m Key comments None / very low risk 4,983 43% None / very low risk 4,940 44% • 83 % of the portfolio is considered to Low risk 4,638 Low risk have low to none/very low risk risk 40% 4,248 40% Moderate risk 1,524 13% Moderat
Slide 26: Commitments by Size
COMMITMENTS BY SIZE Q1-17 Σ = NOK 11,529m Q1-16 Σ = NOK 10,801m Key comments • A conservative policy with respect to size <5 535 5% <5 539 5% • Maximum size on a single customer 10 % of total capital (NOK 206m) 5 - 10 646 6% 5 - 10 679 6% • Maximum size on group / consolidated basis 15 % of total ca
Slide 27: Table of Contents
TABLE OF CONTENTS 1 FIRST QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 28: Funding | Overview
FUNDING | OVERVIEW * Sources (NOKm) Σ = NOK 14,051m Historical development in deposits vs. lending (NOKm) Deposits 8,525 61% 102% 98% 95% 96% 95% Senior debt 2,763 20% 91% 90% 89% 87% 86% 86% 83% 8,973 T1 & T2 debt 320 2% 81% 8,908 8,754 8,368 8,326 7,931 8,525 Other debt 600 4% 7,596 7,347 7,487 7,
Slide 29: Funding | Customer Deposits
FUNDING | CUSTOMER DEPOSITS * Deposit allocation Fixed rate deposits (NOKm) - time to maturity (months) Σ = NOK 1,477m >25 71 mths. Depositors (#) 3,931 2,318 15 - 25 347 mths. 8 - 14 658 mths. 5-7 Amount (NOKm) 2,446 6,067 126 mths. 3-4 121 mths. 0% 20% 40% 60% 80% 100% 0-2 155 Retail Corporate mth
Slide 30: Funding | Market Funding
FUNDING | MARKET FUNDING * Market funding maturities - net of own holdings (NOKm) Credit spreads (bps) 200 180 160 200 140 120 100 80 1,000 60 810 40 445 500 20 120 0 2017 2018 2019 2020 2021 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Senior Cal
Slide 31: Surplus Liquidity
SURPLUS LIQUIDITY * Comfortable liquidity buffer (NOKm) Bond portfolio (NOKm) Σ = NOK 4,094m 6,000 5,000 Drawing facility 7% Financials & unrated covered 4,000 Level 2A+B assets 34% Government & PSEs 3,000 Liquidity portfolio Covered bonds Level 1 covered Senior financials 2,000 Drawdown on credits
Slide 32: Capital Ratios and Requirements
CAPITAL RATIOS AND REQUIREMENTS Pareto Bank capital ratios and requirements * Key comments ACTUAL REQUIREMENT • Rights issue of MNOK 200 in December 31.03.2017 31.12.2017 2016 has strengthened the bank’s CET1 capital significantly 19.0 % 19.0 % • The bank called NOK 110m in an 2.5 % 2.0 % Additional
Slide 33: Table of Contents
TABLE OF CONTENTS 1 FIRST QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 34: Growth with High Solidity
GROWTH WITH HIGH SOLIDITY 31.03.2017 STATUS 31.12.2017 TARGET GROWTH LENDING NOK 220m ~NOK 1,000m Continued growth in residential property development Lending growth on high margins 16.7 % > 13.0 % * ROE and cost efficiency yield high returns ADEQUACY High earnings, balance sheet CAPITAL 16.0 % 15.5
Slide 35: Portfolio Goals for 2017
PORTFOLIO GOALS FOR 2017 BUSINESS AREAS MARKET STATUS GROWTH TARGETS Signs of margin Still strong deal flow Net growth of Real pressure and increased approximately High natural repayment estate risk-taking rate on loans NOK 600m Potential within Net growth of Limited competition Securities & corpora
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(Pareto bank