Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — IPO Roadshow (May 2017)
45 slides from Sparebank 1 Ostlandet's IPO roadshow presentation, May 29, 2017
Slide 1: Investor Presentation | IPO and Listing on Oslo Børs
STRICTLY CONFIDENTIAL Investor Presentation | IPO and Listing on Oslo Børs | 29 May 2017 Arranged by: Solely for review in connection with the IPO and Listing on Oslo Børs – not for reproduction or distribution. The info contained herein may be subject to change without prior notice. NEITHER THIS PR
Slide 2: Important Information (I)
Important Information (I) Overview ABOUT THIS PRESENTATION This document has been prepared by SpareBank 1 Østlandet (the "Bank") solely for the use at an investor presentation related to the initial public offering in connection with the Bank's listing on Oslo Børs (the "Offering"), and no copy of t
Slide 3: Important Information (II)
Important Information (II) Overview Neither the Bank nor the Managers have authorised any other person to provide investors with any other information related to the Offering or the Bank, and neither the Bank nor the Managers will assume any responsibility for any information other persons may provi
Slide 4: Restrictions and Governing Law
Restrictions and Governing Law Overview DISTRIBUTION AND SELLING RESTRICTIONS None of the Bank or the Managers, or any of their respective Representatives, has taken any actions to allow the distribution of this Presentation in any jurisdiction where action would be required for such purposes. The P
Slide 5: Table of Contents
Table of Contents 01 Transaction Summary 02 SpareBank 1 Østlandet at a Glance 03 Financial Highlights 04 Capital, Liquidity and Funding 05 Loan Portfolio Overview and Quality 06 Profitability and Growth 07 Summary and Long-Term Ambitions
Slide 6: Background and Rationale for the Offering
Background and Rationale for the Offering Key highlights Increased capital flexibility 01 – providing access to equity markets Positioned for structural changes 02 in the banking sector in Eastern Norway Securing broad ownership and 03 aligned interests among all stakeholders 6
Slide 7: Transaction Details
Transaction Details Selected Key Terms Issuer • SpareBank 1 Østlandet (ticker “SPOL”). • Sparebanken Hedmark Sparebankstiftelse (“the Foundation”), currently 75% holder of the Bank’s ECCs. Selling ECC Holders • SpareBank 1 SR-Bank, SpareBank 1 SMN, SpareBank 1 Nord-Norge, SpareBank 1 Ringerike Hadel
Slide 8: Indicative Transaction Timeline
Indicative Transaction Timeline Selected Key Milestones 04 May Publication of Q1 2017 report and Intention to Float (ITF) Publication of Research Reports by Joint Lead Managers 08 May 08 May - 19 May Pre-Marketing Period Submission of Application for Listing on Oslo Børs 22 May 26 May Publication of
Slide 9: Table of Contents
Table of Contents 01 Transaction Summary 02 SpareBank 1 Østlandet at a Glance 03 Financial Highlights 04 Capital, Liquidity and Funding 05 Loan Portfolio Overview and Quality 06 Profitability and Growth 07 Summary and Long-Term Ambitions
Slide 10: Value Propositions
Value Propositions SpareBank 1 Østlandet is one of Norway’s most well-run and solid banks 1 Norway’s 4th largest savings bank * – based in Eastern Norway 2 The most solid regional savings bank in Norway ** 3 Low credit risk in loan portfolio – limited loan losses. 4 Profitable operations with
Slide 11: Long and Profitable Operational History
Long and Profitable Operational History 4th largest savings bank * in Norway with established client base and diversified offering 01 Established in 1845 – known as Sparebanken Hedmark (“SBHE”) until 1 April 2017. 02 Norway’s fourth largest savings bank * – total adjusted assets (incl. cov. bonds) o
Slide 12: Acquisition of Bank 1 Oslo Akershus
Acquisition of Bank 1 Oslo Akershus Important part in the strategic direction of SpareBank 1 Østlandet towards 2018 Geographic footprint Transaction details Strategic rationale • Since 2013, SBHE owned 40.5% of B1OA. • Strategic positioning towards the largest region in Norway. • On 10 December 2015
Slide 13: Key Historical Milestones
Key Historical Milestones From local granaries to leading regional savings bank with attractive growth opportunities Local granaries Local savings Merger of Joins Acquisition IPO and converted – banks with central savings banks SpareBank 1 of Bank 1 Listing on becoming Hof role in local in Hedmark A
Slide 14: Attractive Home Market
Attractive Home Market Major player in Eastern Norway with main focus in Hedmark, Oppland, Oslo and Akershus #1: INLAND REGION – Hedmark and Oppland #2: CAPITAL REGION – Oslo and Akershus • Approx. 8% of national • Approx. 25% of national population (0.39m inhabitants). population (1.26m inhabitants
Slide 15: Macroeconomic Environment
Macroeconomic Environment Stable home market with limited oil & offshore exposure and low unemployment Housing prices have risen Inland region more stable than others House prices – annual %-change Growth in production past 3 months – seasonally adj. index 25 3.2 20 2.3 15 1.4 10 5 0.5 0 -0.4 -5 -1.
Slide 16: Diversified Main Activities
Diversified Main Activities Several sources of income - parent bank, subsidiaries and other ownership interests Operational divisions Selected key subsidiaries Selected other ownership interests Retail EiendomsMegler 1 Totens Sparebank ~25% Segment 100% Hedmark Eiendom AS Savings bank ~ 380 employee
Slide 17: Part of the SpareBank 1 Alliance
Part of the SpareBank 1 Alliance Provides operational and financial economies of scale as well as diversified product offering Key comments Key joint ventures Key associated companies • The SpareBank 1 «SpareBank 1 Alliance» = 14 cooperating independent savings banks SpareBank 1 Mobilbetaling AS All
Slide 18: Group Management
Group Management Experienced and competent Richard Heiberg | Chief Executive Officer (CEO) Dag-Arne Hoberg | Head of Innovation and Business Development Richard is a graduate of the BI Norwegian School of Management and has an Dag-Arne graduated in engineering from Norges Tekniske Høgskole in 1981 M
Slide 19: Board of Directors
Board of Directors Seasoned and diligent Siri J. Strømmevold | Chairwoman Morten Herud | Board Member Member of the BoD since 2006 and chairwoman since 2012. She holds a BSc Member of the BoD since 2013. He holds a MSc in Economy and Business in Engineering with Computer Science from Kongsberg Ingen
Slide 20: Transition from Self-Owned to Listed ECC Bank
Transition from Self-Owned to Listed ECC Bank The ECCs secure broad ownership and facilitate aligned interests among stakeholders The ECCs at a glance About the ECC instrument Conversion of Equity Capital #1: SBHE post Conversion 01 106,202,540 ECCs outstanding • ECC banks have 2 types of equity cap
Slide 21: Sparebanken Hedmark Sparebankstiftelse
Sparebanken Hedmark Sparebankstiftelse Professional long-term owner of SpareBank 1 Østlandet with significant capital reserve The Foundation at a glance Important local contributor Distribution of ECC dividends • Unique: 01 Culture − Largest Equity Capital Certificate ECC foundation in Norway. DIVID
Slide 22: Table of Contents
Table of Contents 01 Transaction Summary 02 SpareBank 1 Østlandet at a Glance 03 Financial Highlights 04 Capital, Liquidity and Funding 05 Loan Portfolio Overview and Quality 06 Profitability and Growth 07 Summary and Long-Term Ambitions
Slide 23: Q1 2017 Summary
Q1 2017 Summary Stable underlying performance - Expenses affected by merger integration 01 PORTFOLIO GROWTH Annual growth of 91.6% in gross loans excl. cov. bonds - NOK 84.9bn at the end of Q1 2017. 02 NET INTEREST MARGIN Net interest income in percent of average assets of 1.85% - up from 1.79% in 2
Slide 24: Key Income Statement Figures
Key Income Statement Figures Diverse source of income, stable cost base, low loan losses and solid profitability Key customer margins vs. 3m NIBOR Net interest income Other income 60.1 % 54.2 % 318 56.2 % 51.3 % 290 43.8 % 48.7 % 39.9 % 243 237 45.8 % 1,490 1,235 1,165 1,159 1,043 1,105 464 308 16 1
Slide 25: Key Balance Sheet Figures
Key Balance Sheet Figures Well managed Balance Sheet with sound credit quality Gross loans to customers Certificates and bonds Other liquid assets 89.5 % 91.6 % 9,776 2,841 8,425 82,945 84,901 2,311 7.4 % 9.6 % 6,132 1,662 1,422 43,779 4,017 39,936 2014 2015 2016 Q1-17 2014 2015 2016 Q1-17 2014 2015
Slide 26: Detailed Financial Figures
Detailed Financial Figures Income Statement and Balance Sheet Income Statement Balance Sheet NOKm Y E 2 0 16 Y E 2 0 15 Y E 2 0 14 Q 1 2 0 17 Q 1 2 0 16 NOKm Y E 2 0 16 Y E 2 0 15 Y E 2 0 14 Q 1 2 0 17 Q 1 2 0 16 A SSET S Interest inco me 2,494 1,972 2,101 787 472 Cash and depo sits with central ban
Slide 27: Table of Contents
Table of Contents 01 Transaction Summary 02 SpareBank 1 Østlandet at a Glance 03 Financial Highlights 04 Capital, Liquidity and Funding 05 Loan Portfolio Overview and Quality 06 Profitability and Growth 07 Summary and Long-Term Ambitions
Slide 28: Regulatory Capital
Regulatory Capital SPOL is Norway’s most solid regional savings bank * with a CET 1 ratio of 16.7% Capital ratios as of 31 March 2017 Key comments Internal target NFSA requirements Reported SPOL • One of very few banks that did not need support during the banking crisis 19.3 % in Norway in the early
Slide 29: Funding
Funding Well diversified composition with satisfactory maturity profile Sources of funding * Deposits from customers by type * Key comments • Deposits as key source of funding - small, DEPOSITS FROM NOK 6.9 % 01 CUSTOMERS 62.8bn stable deposits accounting for 64%. • Significant share of deposits fro
Slide 30: Liquidity
Liquidity Satisfactory long term solvency and low liquidity risk Sources of liquidity Certificates and bonds by type * Key comments • Main part of liquidity portfolio consisting CERTIFICATES NOK 11.0 % of high-quality certificates and bonds, 01 AND BONDS * 8.4bn mostly from Norwegian covered bond 16
Slide 31: Table of Contents
Table of Contents 01 Transaction Summary 02 SpareBank 1 Østlandet at a Glance 03 Financial Highlights 04 Capital, Liquidity and Funding 05 Loan Portfolio Overview and Quality 06 Profitability and Growth 07 Summary and Long-Term Ambitions
Slide 32: Diversified Loan Portfolio
Diversified Loan Portfolio High retail share and widespread geographical exposure results in a balanced portfolio Gross loans incl. cov. bonds by market * Gross loans by geography ** Gross loans by type * 5.7 % 3.5 % 0.2 % 0.2 % 2.4 % 14.4 % 26.1 % 0.1 % 0.2 % 36.4 % 31.3 % 73.8 % 6.0 % 79.6 % 20.3
Slide 33: Retail Segment
Retail Segment 73.8% of gross loans including transfers to covered bond companies On-balance vs. covered bond transfers * Retail segment incl. cov. bonds by LTV * Development in lending margins *** 89.1 % SBHE weighted LTV 58.1% 2.70% 2.50% B1OA weighted LTV 55.3% 2.30% 39.6 % 2.10% SPOL weighted LT
Slide 34: Corporate Segment
Corporate Segment * 26.1% of gross loans including transfers to covered bond companies On-balance vs. covered bond transfers ** Corporate segment incl. cov. bonds by sector ** Development in lending margins **** 3.10% 4.0 % 13.0 % 2.90% 4.3 % 2.70% NOK 9.5 % 48.7 % 2.50% 31.9bn 10.7 % 2.30% 96.0 % 1
Slide 35: Commercial Real Estate Exposure
Commercial Real Estate Exposure Overview Key comments Real estate exposure by geography * Real estate exposure by category * • Largest corporate lending exposure (48.7% ** of corporate lending including 17.0 % 10.0 % transfers to covered bond companies). 4.0 % 37.0 % 37.0 % • Well secured with satis
Slide 36: Solid Loan Portfolio Quality
Solid Loan Portfolio Quality Low loan losses, limited defaulted and other doubtful commitments and healthy provisions Long history of low loan losses Collective and individual provisions Key comments 3.0 % 82.8 % • Long history of low and stable losses. 81.0 % 2.5 % 54.5 % • Low level of defaulted a
Slide 37: Strong Credit Rating
Strong Credit Rating Low business and financial risk together with a stable outlook yields a “baa1” rating Key comments * Rating report from Moody’s Investors Service dated 12 April 2017 * Credit ratings Baseline Long-term Senior credit deposit unsecured Outlook assessment rating debt rating baa1 A1
Slide 38: Table of Contents
Table of Contents 01 Transaction Summary 02 SpareBank 1 Østlandet at a Glance 03 Financial Highlights 04 Capital, Liquidity and Funding 05 Loan Portfolio Overview and Quality 06 Profitability and Growth 07 Summary and Long-Term Ambitions
Slide 39: Profitable with High Dividend Capacity
Profitable with High Dividend Capacity Long history of consecutive profits and a competitive profitability level vs. peers Key comments Strong profitability adjusted for gearing • Profitable operations, with a ROE target Historical development in ROE 1996-2016 * Average ROE 1996-2016 * of 10% – in l
Slide 40: Dividend Policy to ECC holders and Customers
Dividend Policy to ECC holders and Customers Goal of 50% of SPOL’s annual profits to be distributed as ECC and customer dividends ECC dividends Customer dividends Distribution of profits * • SPOL puts emphasis on giving its ECC • SPOL is the first bank in owners a competitive and stable cash Norway
Slide 41: Attractive Growth Opportunities
Attractive Growth Opportunities Supported by strong home market position and balanced digital vs. local banking philosophy Strong home market position SPOL believes in digital banking … … but SPOL also believes in local banking • Strong market position in Hedmark, • Norwegian banks incl. SPOL are •
Slide 42: Table of Contents
Table of Contents 01 Transaction Summary 02 SpareBank 1 Østlandet at a Glance 03 Financial Highlights 04 Capital, Liquidity and Funding 05 Loan Portfolio Overview and Quality 06 Profitability and Growth 07 Summary and Long-Term Ambitions
Slide 43: Key Highlights
Key Highlights SpareBank 1 Østlandet – “a true savings bank” 01 Norway’s most solid regional savings bank * Low credit risk in loan portfolio 02 – very low loan losses 03 Profitable with high dividend capacity Strong home market position 04 – attractive growth opportunities Source: annual / quarterl
Slide 44: Strategy and Long-Term Ambitions
Strategy and Long-Term Ambitions Solid operations and attractive financials through stringent strategic direction The strategic direction going forward Key long-term financial targets 01 Continue to be the preferred financial partner in the Bank’s original market area (Hedmark) – while being the Ban
Slide 45: OSTLANDET
OSTLANDET SpareBank t AKERSHUS