Sparebank 1 Smn · OSL:MING
Sparebank 1 Smn — Q3 2016 Earnings Presentation
48 slides from Sparebank 1 Smn's earnings presentation, Oct 24, 2016
Slide 1: 3rd quarter 2016
3rd quarter 2016 24. October 2016
Slide 2: SpareBank1 SMN, the region's most important financial institution
SpareBank1 SMN, the region’s most important financial institution Overview 200,000 retail customers and 14,000 corporates in three counties in Central Norway Norway’s second largest savings bank with total loans of NOK 134 billion including loans sold to SpareBank 1 Boligkreditt and SpareBank 1
Slide 3: Trøndelag and Møre og Romsdal
Trøndelag and Møre og Romsdal High Growth in house prices and low unemployment 12-month growth in house prices Unemployment rate Per cent, July 14 – September 16 Monthly figures, September 14 – September 16 sep.14 sep.15 sep.16 2,9% 2,8% 3,0% 10,0 % Norway 2,7% 2,6% 2,6% 2,6% 2,6% 8,2 % Sør-Trøndela
Slide 4: Good profits, in spite of increase in loan losses in the offshore segment
Good profits, in spite of increase in loan losses in the offshore segment The bank is enhancing efficiency and the Good profits number of FTEs is being reduced Increased losses on oil related activity. The bank is growing in terms of lending, Previously announced loss expectation of deposits, insura
Slide 5: Strong capitalization and good profits. Increased problem loans in the offshore segment
Strong capitalization and good profits. Increased problem loans in the offshore segment Return on equity CET1 15,1% 13,3% 13,6% 14,3% 13,2% 10,7% 11,5% 11,0% 11,2% 11,1% 2013 2014 2015 Q3 15 Q3 16 2013 2014 2015 Q3 15 Q3 16 Earnings per ECC Loans in default and other problem loans as a percentage of
Slide 6: EAD Offshore: NOK 6,177m
The offshore segment is still demanding, but good collaboration with clients and other lenders is producing results Offshore segment Segment and volume No. of Distribution (share of offshore in %) vessels on risk categories 1. Loans to offshore total NOK 6.2bn Subsea 2,277 (37%) 18 • Offshore makes
Slide 7: Offshore Service Vessels
Offshore Service Vessels Risk class distribution Impairments by risk class and share of EAD Q4 2015 – Q3 2016 (NOKm) 30. September 2016 3.443 3.236 Q4 15 Share of NOKm EAD Individual Group Total EAD Q1 16 Low risk 1.433 0 3 3 0,2 % Q2 16 Medium risk 1.995 0 16 16 0,8 % 2.418 Q3 16 High risk 1.692 0
Slide 8: Offshore Service Vessels
Offshore Service Vessels Commentary • At the end of the 3rd quarter 2016 write-downs related to the offshore portfolio total 8.2 per cent. Exposure to offshore has been reduced by NOK 1.1bn over the last 12 months. • The industry is undergoing restructuring. The process is demanding since the compan
Slide 9: Strong profit growth among subsidiaries, strengthening their market position
Strong profit growth among subsidiaries, strengthening their market position SpareBank 1 Finans Midt-Norge EiendomsMegler 1 • Pre-tax profit of NOK 74.9m (63.6m) • Excellent pre-tax profit of NOK 59.5m (39.5m) • Solid market position • 40% market share, strong synergy with • Leasing NOK 2.3bn, car l
Slide 10: Tomorrow's bank being developed
Tomorrow’s bank being developed New distribution model Technology provides opportunities • SMN working on a new distribution model • New webpages will create better interplay between the channels • Changing customer behavior presents new opportunities • We are further developing the internet • Bank
Slide 11: SMN intends to be among the best performing banks
SMN intends to be among the best performing banks Customer orientation Efficient Best on customer experience Zero growth in costs parent bank 2014 - 2016 Will continue to strengthen market position Profitable Dividend Among the best performing banks, ROE Real-terms payout ratio of 25% to 35%. 12 % a
Slide 12: Financial results
Financial results 3rd quarter 2016 12
Slide 13: 3rd quarter 2016
3rd quarter 2016 Net profit NOK 1.185m (1.119m), CET 1 14.3 % (13.2 %) . return on equity 11.0 % (11.5 %) Growth in lending RM 10.8 % (8.7 Result of core business NOK 713m %) and CM decrease 0.4 % (growth (1.039m) exclusive of loan losses. 7.8 %), deposits 4.2 % (8.5 %) last Loan losses NOK 417m (NO
Slide 14: Key figures, quarterly
Key figures, quarterly Return on equity CET 1 13,6% 13,6% 14,1% 14,3% 12,9% 13,2% 11,3% 8,4% 8,9% 7,4% Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Earnings per ECC FTEs parent bank 2,21 2,00 660 1,45 1,49 1,26 645 642 637 632 3rd quarter 2016 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q3 15 Q4 15
Slide 15: Profits
Profits Profits as at 3rd quarter 2015 and 2016 and five last quarters NOK mill 2016 2015 Change Q3 16 Q2 16 Q1 16 Q4 15 Q3 15 Net interest 1.391 1.399 -9 449 472 469 473 466 Commission income and other income 1.260 1.168 93 412 448 401 378 378 Operating income 2.651 2.567 84 860 921 870 850 843 Tot
Slide 16: Lending margins Retail and Corporate
Lending margins Retail and Corporate Per quarter from Q3 2012 Comments • Strong price competition on 3,00 3,05 3,05 3,00 2,93 2,86 mortgages, margins decreased 2,81 2,75 2,64 2,65 2,67 2,62 2,66 2,57 2,68 2,69 with 80 bp last 2.5 years 2,44 2,45 2,47 2,52 2,40 2,28 2,31 2,33 2,28 2,14 2,08 2,06 2,00
Slide 17: Total growth lending 6.6 % last 12 months
Total growth lending 6.6 % last 12 months Lending RM +10.8 % last 12 months High growth in home mortgage lending 8,7% 10,8% • Of the growth in home mortgage lending, 2/3 refers to established 78,9 87,4 customers and 1/3 to new customers 72,6 • Limited growth in lending to corporates, in keeping with
Slide 18: Loan to value mortgages
Loan to value mortgages Last two years LTV mortgages • 98.5 % of the exposure has an LTV of 93,1% 93,1% less than 85 % Q3 15 • Exposure with LTV higher than 85 Q3 16 points 1.5 % 5,4% 5,4% 0,9% 0,8% 0,7% 0,7% Under 70 % 70 - 85 % 85 - 100 % Over 100 % 3rd quarter 2016 18
Slide 19: Deposit margins Retail and Corporate
Deposit margins Retail and Corporate Per quarter from Q3 2012 Comments Deposits RM • Margins increased due to Deposits CM repricing and reduced nibor in Q2 and Q3 0,24 0,17 0,30 0,11 0,05 -0,18 -0,26 -0,15 -0,10 -0,33 -0,39 -0,33 -0,34 -0,35 -0,48 -0,53 -0,46 -0,13 -0,19 -0,25 -0,15 -0,18 -0,14 -0,3
Slide 20: Total growth deposits 4.2 % last 12 months
Total growth deposits 4.2 % last 12 months Deposits RM + 5.3 % +8,4% +5,3% 26,0 28,2 29,7 Share of deposits 30.9.14 30.9.15 30.9.16 45% RM Deposits CM + 3.3 % CM 55% +10,6% +3,3% 35,4 36,6 32,1 30.9.14 30.9.15 30.9.16 3rd quarter 2016 20
Slide 21: Robust income platform and increased commission income
Robust income platform and increased commission income Net interest and other income Commissions as at Q3 2015 and Q3 2016 mill kr 2016 2015 Change 2.567 2.651 Payment transmission income 149 143 6 2.446 Creditcards 46 42 5 1.042 Commissions savings and asset management 66 58 9 Commissions 811 914 C
Slide 22: Costs, parent bank and subsidiaries
Costs, parent bank and subsidiaries Pro forma figures, Q1 15 includes costs SpareBank 1 Markets included in subsidiaries Costs as at Q3 2015 and Q3 2016 Group cost growth also low • FTEs in parent bank reduced 1.475 1.521 • Cost growth at subsidiaries at some extent due to acquisitions and high acit
Slide 23: Subsidiaries
Subsidiaries Pre tax profit subsidiaries as at 3rd quarter 2015 and 2016 and five last quarters 2016 2015 Change Q3 16 Q2 16 Q1 16 Q4 15 Q3 15 EiendomsMegler 1 Midt-Norge (87 %) 59,5 39,5 20,0 16,2 33,3 10,0 7,5 10,3 SpareBank 1 Regnskapshuset SMN 32,9 26,0 6,9 6,9 21,6 4,3 8,8 5,7 SpareBank 1 Finan
Slide 24: Associated companies
Associated companies Profit shares after tax, as at 3rd quarter 2015 and 2016 and and five last quarters 2016 2015 Change Q3 16 Q2 16 Q1 16 Q4 15 Q3 15 SpareBank 1 Gruppen (19,5 %) 220,3 183,4 36,9 79,4 79,9 61,0 68,0 55,8 SpareBank 1 Boligkreditt (18,4 %) 9,2 64,6 -55,4 -12,6 -1,9 23,7 15,1 14,5 Sp
Slide 25: Return on financial investments
Return on financial investments As at 3rd quarter 2015 and 2016 and five last quarters NOKm 2016 2015 Q3 16 Q2 16 Q1 16 Q4 15 Q3 15 Net gain and dividends on securities 110 79 45 62 3 -17 9 Net gain on bonds and derivatives 158 -137 80 53 25 -16 -116 Forex and fixed income business 99 82 45 28 26 20
Slide 26: Increased loan losses in 2016
Increased loan losses in 2016 Losses per quarter Distribution as of 30.9.2016 170 130 PM 17 118 SMN Finans 2 56 56 34 35 24 22 NL 398 Loan losses including collective losses provisions 0.42 % (0.12 %) of gross lending as of 30.9.2016 3rd quarter 2016 26
Slide 27: Offshore Service Vessels
Offshore Service Vessels Development in total impairments Q3 2015 – Q3 2016 Comments (NOKm) 509 • Constitutes 4,2% of total credit portfolio • 5,5 bill. with collateral in vessels 115 • 0,7 bill. in other financing 393 Group Individual 303 140 • Exposure reduced by 1.050 mill. (-12 %) last 12 mnths
Slide 28: Very low levels on loans in default (0,16 %), but problem loans have increased
Very low levels on loans in default (0,16 %), but problem loans have increased in the offshore segment Last two years, per quarter Problem loans Loans in default Loans in default % of total loans 1.360 1.198 206 368 448 0,29 216 234 399 411 0,22 0,22 0,23 0,19 0,17 0,16 0,16 0,16 338 287 270 262 218
Slide 29: Balance sheet
Balance sheet Last three years 30 September 30 September 30 September 2016 2015 2014 Funds available 24,6 18,5 17,3 Net loans 98,6 94,4 86,7 Securities 1,3 1,2 0,7 Investment in related companies 5,9 5,2 5,1 Goodwill 0,6 0,6 0,5 Other assets 8,8 9,4 7,4 TOTAL ASSETS 139,8 129,2 117,2 Capital market
Slide 30: High share mortgages and diversified portfolio SMEs
High share mortgages and diversified portfolio SMEs Lending by sector in NOK billion and share of total loans Wage earners 54,5 40,5 % SB1 Boligkreditt 32,9 24,5 % Commercial real estate 13,8 10,2 % Agriculture/forestry/fisheries 9,6 7,1 % Transport and other services 5,6 4,2 % Maritime sector and o
Slide 31: Strong development in CET 1 (capital and ratio). Goal 14.5 %
Strong development in CET 1 (capital and ratio). Goal 14.5 % 14,3% 14,5% CET 1 Ratio 13,6% 0,7% Other buffers +9% 1,5% Countercyclical 11,1% 11,2% 2,3% Pilar 2 10,0% 9,0% 9,5% 8,0% 2,5% Conservation Buffer 3,0% Systemic Risk 4,5% Equity Capital 2009 2010 2011 2012 2013 2014 2015 Q3 16 Ren Goal kjern
Slide 32: Strong capitalization
Strong capitalization Development CET1 Development CET 1 without transitional arrangements (Basel III) 15,9 15,0 13,6 14,3 11,1 11,2 11,6 10,4 2013 2014 2015 Q3 16 2013 2014 2015 Q3 16 3rd quarter 2016 32
Slide 33: Satisfying access to capital market funding
Satisfying access to capital market funding Funding maturity 30. September 2016 Comments 18,3 • SpareBank 1 Boligkreditt is the main funding source through covered bonds. 9,4 NOK 33 billion transferred as of 30. 4,9 5,7 September 2016 1,9 • In June the bank raised a new five-year loan in the Euro ma
Slide 34: Key figures
Key figures Last three years 30 September 30 September 30 September 2016 2015 2014 CET 1 ratio 14,3 % 13,2 % 11,5 % Core capital ratio 16,3 % 15,2 % 13,4 % Capital adequacy 18,8 % 17,9 % 16,1 % Leverage ratio 7,1 % 6,7 % Growth in loans incl.Boligkreditt 6,6 % 8,3 % 5,4 % Growth in deposits 4,2 % 9,
Slide 35: Key figures ECC
Key figures ECC Last five years (including effects of issues) Q3 16 Q3 15 2015 2014 2013 2012 ECC ratio 64,0 % 64,6 % 64,0 % 64,6 % 64,6 % 64,6 % Total issued ECCs (mill) 129,83 129,83 129,83 129,83 129,83 129,83 ECC price 55,75 54,00 50,50 58,50 55,00 34,80 Market value (NOKm) 7.238 7.011 6.556 7.5
Slide 36: SpareBank 1 SMN
SpareBank 1 SMN 7467 TRONDHEIM CEO Finn Haugan CFO Kjell Fordal Switchboard Tel +47 900 41 002 Tel +47 905 41 672 Tel +47 07300 E-mail finn.haugan@smn.no E-mail kjell.fordal@smn.no Internett adresses: SMN homepage og internet bank: www.smn.no HuginOnline: www.huginonline.no Equity capital certficate
Slide 37: Appendix
Appendix 3rd quarter 2016 37
Slide 38: Operating income
Operating income Commission income Commission income Boligkreditt - Næringskreditt Operating income per quarter last two years Net interest income 921 856 880 870 860 844 843 850 823 273 330 327 374 265 286 299 297 341 96 98 91 83 81 74 74 79 71 463 485 467 467 466 473 469 472 449 Q3 14 Q4 14 Q1 15
Slide 39: Change in net interest income
Change in net interest income At Q3 2016 compared with same period 2015 Substantial gross movements • Increased lending volume and deposit Net interest at Q3 2015 1.391 margins strengthens net interest income Net interest at Q3 2016 1.399 Change 9 • Lower lending margins weaken net interest Obtained
Slide 40: Earnings per ECC
Earnings per ECC Last two years per quarter 2,19 2,18 2,21 2,13 2,00 1,85 1,45 1,49 1,26 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 3rd quarter 2016 40
Slide 41: FTEs crucial to achieving costs goal
FTEs crucial to achieving costs goal Considerable reduction in 2015 FTEs at parent bank 763 • At end-September there were 83 fewer FTEs at the parent bank than at year-end 2014 730 720 • This is mainly natural wastage • A further decline to 600 FTEs is targeted by year-end 2016 645 637 2012 2013 201
Slide 42: SpareBank 1 SMN will come across as cost-efficient not just on an individual basis but also as a group
SpareBank 1 SMN will come across as cost-efficient not just on an individual basis but also as a group High operating margins in EM1 and Profitable and non-capital-intensive Regnskapshuset SMN subsidiaries: • Both EM1 and Regnskapshuset SMN are 0,83 0,79 companies making a sound profit – and requiri
Slide 43: Stable credit risk
Stable credit risk SpareBank 1 SMN’s loans distributed on risk class and SpareBank 1 SMN’s loans distributed on size of customer share of Exposure At Default engagement and share of Exposure At Default 83,1% 84,1% 68,5% 68,4% Share of EAD Q3 2015 Share of EAD Q3 2015 Share of EAD Q3 2016 Share of EA
Slide 44: The Group strengthened CET1 capital adequacy by 17 points in the 3rd quarter 2016
The Group strengthened CET1 capital adequacy by 17 points in the 3rd quarter 2016 0,5 0,3 • Shift from corporates to retail 0,2 0,3 14,3 gives virtually unchanged IRB 0,1 capital requirement for high retail 14,1 growth • Floor growth as a result of retail growth • Negative effect of regulatory filte
Slide 45: Strengthened capital adequacy
Strengthened capital adequacy As at Q3 2016 and Q3 2015 NOKm 30.9.16 30.9.15 Core capital exclusive hybrid capital 12.895 11.652 Hybrid capital 1.840 1.798 Core capital 14.736 13.451 Supplementary capital 2.275 2.435 Total capital 17.011 15.886 Total credit risk IRB 4.080 4.073 Debt risk, Equity ris
Slide 46: SpareBank 1 Alliance companies
SpareBank 1 Alliance Members SpareBank 1 SpareBank 1 SpareBank 1 Sparebanken Samspar LO SMN SR-Bank Nord-Norge Hedmark Products, commissions, dividends Sales, loan portfolios, capital SpareBank 1 BN Bank Covered Bonds, SpareBank 1 Gruppen AS residential SpareBank 1 Alliance companies SpareBank 1 Spa
Slide 47: Organisational set-up SpareBank 1 SMN
Organisational set-up SpareBank 1 SMN Group CEO Legal Finn Haugan Risk Retail Market Organisation and Corporate Corporate Group Finance Svein Tore Development Communications Vegard Helland Kjell Fordal Rolf Jarle Brøske Samdal Nelly S Maske 3rd quarter 2016 47
Slide 48: Overall organisation
Overall organisation 3rd quarter 2016 48