Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q3 2019 Earnings Presentation
50 slides from Sparebank 1 Ostlandet's earnings presentation, 2019
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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: Digitalization and growth makes us a finance group for the South of Norway
Digitalization and growth makes us a finance group for the South of Norway Åsane Bergen Sotra Fana +5% Oslo 134 131 Stord Husnes 128 Ølen Aksdal +23% Haugesund 31 Karmsund 28 Kopervik 25 Åkra Finnøy +19% 19 +81% Jørpeland 16 17 16 Randaberg Stavanger 13 +52% Sola Sandnes 9 10 Ålgård 6 7 Bryne Nærbø
Slide 4: A good result marked by good operations, increased market activity and growth
A good result marked by good operations, increased market activity and growth 16.0% 8.9% Return on equity after tax year-to-date (11.7%) 12 months costs growth 13.4% excluding merger effect Fremtind Forsikring AS Cost to income ratio is 35.4%, Pre-tax profit is NOK 3.191 million (NOK 2.216 million)
Slide 5: Financial targets and estimates per 31.12.2019
Financial targets and estimates per 31.12.2019 Return on equity CET 1 Impairment losses 16,0% 14,7% 14,4%** 15,1%*** NOK 324 million 11,3% 11,5% 13,4%* NOK 96 million 2018 Q3 2019 Target 2019 2018 Q3 2019 Target 2019 2018 Q3 2019 Growth in cost Growth in loan Dividend share 8,9% 7,6% 50% ~ 50% 6,8%
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 21,2% 16,2% 14,7% 14,7% 14,7% 14,4% 14,4%** 12,6% 10,1% 10,5% 12,8%* Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Cost ratio Earnings per share 38,9% 42,9% 39,0%* 42,7% 4,48 35,6% 3,52 2,48 2,06 2,32 29,8% 2,68* Q3 18 Q4 18 Q1
Slide 7: Income statement
Income statement Group Income Statement (MNOK) 30.09.2019 30.09.2018 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Net interest income 2.925 2.513 1.019 968 938 926 871 Net commission and other income 1.057 1.087 332 384 341 350 349 Net income on investment securities 1.105 501 89 340 676 68 175 Total inc
Slide 8: Change in profit 30.09.2018 – 30.09.2019
Change in profit 30.09.2018 – 30.09.2019 604 136 3.191 -147 367 15 2.216 30.09.2018 Net interest income incl. Other income Net income on Total operating expenses Impairments on loans and 30.09.2019 commission from investment securities financial commitments covered bond companies 8
Slide 9: Key figures
Key figures 30.09.2019 30.09.2018 Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Return on equity after tax (%) 16,0 11,7 10,5 16,2 21,2 10,1 12,6 Net interest margin (%) 1,60 1,52 1,61 1,58 1,60 1,59 1,53 Impairments on loans in % of gross loans incl. covered bond 0,06 0,16 0,13 -0,04 0,10 0,18 0,12 companies Loans
Slide 10: Consolidated income and cost profile
Consolidated income and cost profile Income profile Cost profile Net interest income +382 Total personnel expenses +147 Net commission and other income +10,6% Total other operating expenses +8,9% 3.982 1.800 3.600 1.653 1.352 1.351 1.276 1.279 1.029 1.220 615 724 323 1.015 576 583 602 334 333 373 54
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins* Deposit margins* 2,78% 2,77% 2,77% 2,85% 2,74% 2,74% 2,73% 2,72% 2,73% 0,53% 1,78% 1,79% 0,41% 1,69% 1,50% 1,51% 1,50% 0,30% 1,40% 1,36% 1,36% 0,24% 0,22% 0,24% 0,05% 0,08% 0,03% 0,04% 0,03% -0,01% -0,09% -0,09% -0,06% -0,15% -0,18% -0,05% Q3 17 Q4 17 Q1
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Retail Market Corporate Market (incl. Capital Market) 17,8% 15,7% 12,2% 11,8% 9,6% 10,3% 3,1% 3,0% 2,9% 3,2% 3,6% 4,0% 4,5% 4,8% 2,1% 2,4% 3,8% -0,7% 125 125 126 128 129 130 132 134 124 66 68 71 74 74 75 61 61 63 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3
Slide 13: Loan portfolio as at 30.09.2019
Loan portfolio as at 30.09.2019 • Gross loans (incl. covered bond Agriculture / forestry / fishing 3,4% 3,1% companies) as at 30 September 2019 is 2,0% increased to NOK 209.9 billion from NOK Supply and construction 2,1% 196.9 billion at the same time the year 1,1% Renewable / Green engagement 1,2%
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 proportion of loans with a loan-to- value ratio of less than 85% is high. • RWA on home mortgages reflects a solid and stable portfolio. ‐ 89% of the exposure is within 85% of the a
Slide 15: Deposit volume and 12 month growth
Deposit volume and 12 month growth Retail Market Corporate Market (incl. Capital Market) Volume in NOK Billion Volume in NOK Billion Growth % Growth % 24,7% 20,7% 10,0% 8,3% 4,4% 0,2% -1,1% 3,2% 3,1% 3,9% 3,9% 3,7% 2,9% 3,9% 4,3% 4,2% -5,0% -10,2% 53 52 51 52 55 54 50 54 50 49 50 49 46 49 48 48 48 4
Slide 16: Net commission and other income
Net commission and other income MNOK 30.09.2019 30.09.2018 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Payment facilities 205 194 77 66 62 66 72 Savings/placements 145 149 46 53 46 47 49 Insurance products 142 143 48 48 46 46 47 Commission income real estate broking 298 284 91 108 99 98 94 Guarantee com
Slide 17: Net income on investment securities
Net income on investment securities MNOK 30.09.2019 30.09.2018 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Dividends 31 12 4 8 19 0 0 Investment income, associates 860 253 98 226 536 113 94 Securities gains/losses 76 128 -24 4 96 -51 42 - of which capital change in shares and certificates 75 152 -6 19 6
Slide 18: Subsidiaries
Subsidiaries Subsidiaries MNOK 30.09.2019 30.09.2018 EiendomsMegler 1 SR-Eiendom AS Number of sales 4.919 4.898 Operating profit before tax 19 7 SR-Forvaltning AS Capital under management (BNOK) 13 11 Operating profit before tax 18 25 FinStart Nordic AS Operating profit before tax 25 39 SpareBank 1
Slide 19: Ownership interests
Ownership interests Ownership interests MNOK 30.09.2019 30.09.2018 SpareBank 1 Gruppen AS Interest ownership 19,5% 19,5% Profit after tax 264 189 Profit effect merger 460 0 SpareBank 1 Boligkreditt AS Interest ownership 4,8% 8,0% Profit after tax 6 1 SpareBank 1 Næringskreditt AS Interest ownership
Slide 20: Operating expenses
Operating expenses MNOK 30.09.2019 30.09.2018 Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Payroll and pensions 883 797 307 294 282 270 267 Other staff expenses 193 170 68 63 62 60 55 Total personnel expenses 1.076 967 375 357 344 330 322 IT expenses 272 246 91 91 90 85 80 Marketing 59 62 20 20 19 26 22 Other admi
Slide 21: Impairments on loans and financial commitments / Loans defined as Stage 3
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Impairment on loans and financial commitments Changes in gross loans and financial commitments defined as Stage 3 0,18% 1,55% 1,45% 1,46% 1,40% 1,43% 0,12% 0,13% 0,10% 3.250 92 2.856 2.935 2.874 2.961
Slide 22: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) 30.09.2019 30.09.2018 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Corporate customers 90 228 82 -33 41 96 62 Retail customers 6 4 -16 14 8 -4 -3 Total impairments 96 232 66 -19 49
Slide 23: Funding
Funding • NSFR* 115% • LCR** 153% • NOK 21.7 billion net refinancing need over the next 12 months • Deposit to loans ratio 50.2% Annual funding maturity 25 20 NOK Billion 15 10 5 0 2019 2020 2021 2022 2023 2024 2025 2026+ Funding ex CB Covered Bonds *The net stable funding ratio (NSFR) is defined as
Slide 24: Solid capital ratio
Solid capital ratio ROE ROE ROE ROE 10,0% 11,0% 11,3% 16,0%* CET 1 15,1% • All of the regulatory requirements are met as at 30 17,9% 17,5% 17,6% 0,9% Management buffer September. 17,3% 1,7% Pillar 2 16,0% • The countercyclical buffer will increase from 2.0% to 15,6% 15,9% 15,6% 2,5% Countercyclical
Slide 25: Well positioned to manage new capital requirements
Well positioned to manage new capital requirements 0,2% 16,6% 16,6% 0,2% • The Basel I-floor is expected to be 1,8% removed and a discount for small and 1,5% Increased systemic risk buffer medium-sized loans is expected to be 0,5% Increased countercyclical buffer introduced in 2019. Calculated posit
Slide 26: MREL
MREL Main features from Ministry of Finance regulation based on «BRRD»: MREL based on the regulations from Ministry of Finance • Issuers shall be fully MREL compliant by 31 December 2022. • The FSA will set requirements individually for each bank. • Covered bond issuers are exempt from MREL, also wh
Slide 27: Outlook
Outlook • Expectations of growth in the Norwegian economy in 2019 and on into 2020 will contribute to positive growth in the group’s market areas • Continued high consumption, increasing business investments and growth in exports will help the Norwegian economy grow. This could contribute to new job
Slide 28: We are investing in the future to create even better customer experiences
We are investing in the future to create even better customer experiences Company Description Initial Ownership Exit investment Virtual assistant built on the most robust NLP platform on the AI market today. Leading position in the Norwegian 02.2017 13.6% market and receiving strong recognition. Foc
Slide 29: We have become clearer about what sustainability means to us
We have become clearer about what sustainability means to us and the approach we want to take • 29
Slide 30: The group consists of enterprising employees
The group consists of enterprising employees with the ability and drive to create good customer experiences Top 3 findings from a organizational analysis completed this fall Engagement Implementation capacity Willingness to change Fall Fall Fall Norway Norway Norway 76 70 67 • 30
Slide 31: Appendix: Macro, Risk, SpareBank 1 SR-Bank
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 31
Slide 32: Solid growth in the Norwegian economy has reduced unemployment
Solid growth in the Norwegian economy has reduced unemployment (NAV*) Unemployment rate lowest in 10 years and the largest decline in Rogaland 6 Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 5 4 3 2 1 0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Aust-Agder Rogaland
Slide 33: Norwegian house prices have increased by 2,6% last 12 months
Norwegian house prices have increased by 2,6% last 12 months Prices have risen most in Oslo the last years and are now twice as high as in Stavanger 80.000 House prices. NOK per sqm. Average all homes. Monthly 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2003 2005 2007 2009 2011 2013 2015 2017
Slide 34: Petroleum activity on the NCS increasing in 2019
Petroleum activity on the NCS increasing in 2019 After unchanged from 2017 to 2018, the NPD estimates 13% growth in total activity in 2019 and stable in 2020 • After an increase of over 60% in total activity on Petroleum activity on Norwegian Continental Shelf. BNOK (2020 NOK). the Norwegian shelf f
Slide 35: Retail trade in Norway increasing
Retail trade in Norway increasing Increasing growth in Norway in 2019 - highest growth in Oslo Retail sales (excl. auto), annual change in turn-over from same 4-month period previous year 12,0 % 10,0 % 8,0 % 6,0 % 4,0 % 2,0 % 0,0 % -2,0 % -4,0 % 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 36: Appendix: Macro, Risk, SpareBank 1 SR-Bank
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 36
Slide 37: 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 37
Slide 38: Risk management principles: purpose, market areas and corporate 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 39: Limits on commitment size 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 40: 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. 61,0% 62,7% The quality of the portfolio is stable. 28,6% 28,7% 10,4% 8,6% • The loan portfolio consists mainly of small and medium-sized loans. 0.00 - 0.50 0.50 - 2.50 2.50 - 99.9 Probabil
Slide 41: 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 2,6% 2,8% 2,7% 2,4% 2,5% 16,1% 16,7% 16,9% 13,5% 13,6% 25,1% 22,5% 21,9% 19,2% 19,7% 52,5% 53,7% 53,4% 55,4% 56,7% 81,3% 80,5% 80,4% 84,1%
Slide 42: Appendix: Macro, Risk, SpareBank 1 SR-Bank
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 42
Slide 43: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Business divisions Fully owned companies Partly owned companies BN Bank* SpareBank 1 Gruppen EiendomsMegler 1 SR-Boligkreditt Capital Market (35.0%) (19.5%) Leading real estate broker Covered Bond Funding Number of man-years: 27 Commercial bank located in Holding company for
Slide 44: 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 45: 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 • Return on equity of 11.5% after tax in 2019. The longer term (2020) and development. Our growth will give us the ability to provide target is a minimum of 1
Slide 46: Balance sheet
Balance sheet Balance sheet (MNOK) 30.09.2019 30.09.2018 Cash and balances with central banks 404 213 Balances with credit institutions 1.898 3.600 Net loans to customers 202.223 181.676 Certificates, bonds and other fixed-income securities 32.327 29.423 Financial derivatives 6.765 3.746 Shares, own
Slide 47: SRBANK share
SRBANK share Development in Price/Book Relativ share price development • International ownership is 28.3% 130 1,4 130 120 Index 100 = sep 30th 2018 per 3. quarter 2019. 110 1,2 110 90 1,0 100 NOK 90 • Total market value at 3. quarter p/B 70 0,8 80 2019 is NOK 25.4 billion. Price 70 50 0,6 OSEBX P/B
Slide 48: 20 largest shareholders as at 30 September 2019
20 largest shareholders as at 30 September 2019 Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • Ownership interests as at 30 September 2019: Folketrygdfondet 19.890.845 7,8% • From Rogaland, Agder-counties and Hordaland: State Street Bank and Trust Co, U.S.A. Nominee 11.250.679
Slide 49: SR-Bank as of 30.09.2019
SR-Bank as of 30.09.2019 Sparebank 1 SR-Bank share 30.09.2019 2018 2017 2016 2015 2014 2013 • Number of shares issued Share price 99,15 89,20 87,00 60,75 39,30 52,50 60,25 255.8 million Stock value (MNOK) 25.358 22.813 22.250 15.537 10.051 13.427 15.409 Book value per share, NOK (group) 87,60 82,27
Slide 50: Contact Details
Contact Details Address Bjergsted Terrasse 1 Tel: +47 915 02002 Postboks 250 www.sr-bank.no 4066 Stavanger Management Arne Austreid CEO Tel.: +47 900 77 334 E-post: arne.austreid@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 E-post: inge.reinertsen@sr-bank.no Investor Relations Stian Helgøy In