Sparebank 1 Smn · OSL:MING
Sparebank 1 Smn — Q3 2015 Earnings Presentation
47 slides from Sparebank 1 Smn's earnings presentation, Oct 30, 2015
Slide 1: 3rd quarter 2015
3rd quarter 2015 October 30th 2015
Slide 2: Economic Barometer 2015
Economic Barometer 2015 Here are some of the topics you can read more about in this year’s Economic Barometer: • According to Sentio’s corporate expectations barometer, optimism among business leaders in Trøndelag and in Møre and Romsdal is at its lowest ebb since the financial crisis, and at its ne
Slide 3: Moderate GDP growth in Trøndelag, zero growth in Møre og Romsdal
Moderate GDP growth. Down, however, to 1 per cent in Sør Trøndelag next year, before more normal growth is resumed the following year. Nord Trøndelag will manage surprisingly well, largely thanks to Kværner Verdal’s Johan Sverdrup contract. On the other hand, Menon predicts zero growth in Møre og Ro
Slide 4: Possible effects for SMNs exposure related to reduced activity in oil and gas
Possible effects for SMNs exposure related to reduced activity in the oil and gas industries • SpareBank 1 SMNs exposure to oil and gas related activity is mainly; 1. Exposure to the Offshore Service Vessel segment (OSV) – capital intensive industry 2. Shipyards - OSV, fishing vessels, wellboats and
Slide 5: Exposure and portfolio quality offshore service vessels
5 Exposure and portfolio quality offshore service vessels 30. Sept. 2015 KEY FIGURES OSV VS. TOTAL CORPORATE PORTFOLIO AS OF 30.09.15 OSV Corp Distribution Risk Groups (PD) • Exposure to Offshore Service Vessels is Loan MNOK 5.227 42.731 60% Share 12,2 % 53% OSV Corp 14% of total corporate exposure
Slide 6: Strong capitalization, good profits and low risk
Strong capitalization, good profits and low risk Return on equity CET 1 16,1% 13,2% 15,1% 11,1% 11,2% 11,5% 13,3% 11,7% 11,5% 10,0% 2012 2013 2014 Q3 14 Q3 15 2012 2013 2014 Q3 14 Q3 15 Earnings per ECC Loans in default and other problem loans as a percentage of total loans 8,82 6,92 6,97 5,21 5,57
Slide 7: Earnings per ECC
Earnings per ECC Last two years per quarter 2,48 2,29 2,14 2,19 2,18 2,13 1,79 1,85 1,26 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 7 Q3 2015
Slide 8: Good result for core business and stronger financial position as of Q3 2015
Good result for core business and stronger financial position as of Q3 2015 Good earnings, 11.5% return on equity first nine months 2015 Core business remains on a positive trend with increased incomes and no cost growth. Market position strengthened in Trøndelag and in Møre and Romsdal Turbulent ma
Slide 9: Profit core business
Profit core business Last two years per quarter Comments 395 398 • Positive development, both 391 384 382 377 377 net interest and 352 356 commission income • Moderate cost growth Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 9 Q3 2015
Slide 10: Capital planning
Capital planning • As of 30 September 2015 the regulatory requirement on CET1 capital is 11.0 per cent, including combined buffer requirements. This will rise to 11.5 per cent as from 30 June 2016 Profit • The bank has not received any individual Pillar 2 add-on, but Finanstilsynet (Norway’s FSA) ha
Slide 11: SpareBank 1 SMN intends to be among the best performing banks
SpareBank 1 SMN intends to be among the best performing banks Customer Best on customer experience orientation Will continue to strengthen market position Profitable Among the best performing banks, ROE 12 % annually 13.5% by the end of 1. half 2016 and at least 14.0% by the end Solid of 2016 Effici
Slide 12: Financial results 3rd quarter
Financial results 3rd quarter 2015
Slide 13: 30. September 2015
30. September 2015 Net profit NOK 1,119m (1,407m, including gains Nets 156m) Return on equity 11.5 % (16.1 %) Result of core business NOK 1,039m (1,081m) Cost growth parent bank 0.2 % (3.4%) CET 1 13.2 % (11.5 %) Growth in lending RM 8.7 % (7.6%) and CM 7.8 % (2.0%), deposits CET1 capital at 11.4% (
Slide 14: Q3 2015
Q3 2015 Profit NOK 248m (464m) ROE 7.3 % (14.8 %) Result of core business NOK 321m (374m) Capital loss on bonds of NOK 116m (15m) Growth in lending RM 2.0 % (1.7 %) and CM 0.2 % (1.0 %) in Q3 2015 Earnings per ECC NOK 1.26 (2.19) 14 Q3 2015
Slide 15: Key figures, quarterly
Key figures, quarterly Return on equity CET 1 14,8% 14,1% 12,7% 13,2% 13,4% 12,3% 12,1% 11,5% 11,2% 7,4% Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Earnings per ECC Cost / Income 2,19 2,18 2,13 56% 51% 47% 1,85 43% 44% 1,26 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15
Slide 16: Positive development in profits
Positive development in profits Profit To date per quarter 30 Sept. 30 Sept. NOK mill 2015 2014 Change Q3 15 Q2 15 Q1 15 Q4 14 Q3 14 Net interest 1.399 1.305 94 466 467 467 485 463 Commission income and other income 1.168 1.140 27 378 413 377 371 361 Operating income 2.567 2.446 121 843 880 844 856
Slide 17: Operating income
Commission income Operating income Commission income Boligkreditt - Næringskreditt Net interest income Last two years per quarter 856 880 818 825 823 844 843 801 798 273 286 330 299 253 263 262 285 265 96 98 91 83 79 114 119 123 110 434 436 430 463 485 467 467 466 412 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q
Slide 18: Lending margins Retail and Corporate
Lending margins Retail and Corporate Per quarter from Q3 2011 Comments Percent • Strong competition 3,00 3,05 3,05 3,00 2,93 2,86 2,81 2,75 2,64 2,65 2,67 2,62 • Interest rate changed four times on best 2,47 2,44 2,45 2,47 2,52 2,40 home loans since June 2014 2,27 2,28 2,31 2,33 2,28 2,13 2,07 2,14
Slide 19: Total growth lending 8.3 % last 12 months
Total growth lending 8.3 % last 12 months Lending RM +8.7 % last 12 months, 2.0 % in Q3 15 +11,3% +8,7% 7,7% 12,7% 10,3% Loans 67,3 72,6 78,9 48,7 53,7 60,5 Boligkr. 25 % 30.9.10 30.9.11 30.9.12 30.9.13 30.9.14 30.9.15 RM CM 38% 38% Lending CM +7.8 % in last 12 months, 0.2 % in Q3 15 +2,4% +7,8% +4,
Slide 20: Deposit margins Retail and Corporate
Deposit margins Retail and Corporate Per quarter from Q3 2011 Comments Per cent • Margin increased due to repricing Deposits RM Deposits CM • Further repricing to be carried out, 0,87 both of corporate and retail deposits 0,41 0,09 -0,18 -0,15 -0,10 0,19 0,18 -0,33 -0,34 -0,48 -0,46 -0,1333 -0,19 -0
Slide 21: Total growth deposits 9.5 % last 12 months
Total growth deposits 9.5 % last 12 months Deposits RM + 8.2 % +9,4% +8,2% +8,3% +7,2% +7,9% Deposits 22,2 23,8 26,0 28,2 19,0 20,5 CM 30.9.10 30.9.11 30.9.12 30.9.13 30.9.14 30.9.15 56% Deposits CM + 10.6 % RM 44% +10,6% +12,2% +7,9% +29,4% +3,8% 32,1 35,4 25,5 28,6 29,7 19,7 30.9.10 30.9.11 30.9.1
Slide 22: Robust income platform and increased commission income
Robust income platform and increased commission income Net interest and other income Commission income 30. Sept 2014 and 2015 NOKm 30 Sept. 30 Sept. mill kr 2015 2014 Change 2.446 2.567 Payment transmission income 143 141 3 2.261 Creditcards 42 38 4 Commissions savings 43 34 9 811 914 Commissions in
Slide 23: Return on financial investments
Return on financial investments To date Per quarter NOKm 2015 2014 Q3 15 Q2 15 Q1 15 Q4 14 Q3 14 Net gain and dividends on securities 79 216 9 61 10 -15 2 Net gain on bonds and derivatives -73 -18 -116 32 11 -48 -15 Change in discount factor in fair value model for fixed interest loans -64 -64 Net g
Slide 24: Subsidiaries
Subsidiaries Profit subsidiaries To date per quarter 30 Sept. 30 Sept. 2015 2014 Change Q3 15 Q2 15 Q1 15 Q4 14 Q3 14 EiendomsMegler 1 Midt-Norge (87 %) 39,5 42,2 -2,7 10,3 21,3 7,8 8,7 16,6 SpareBank 1 Regnskapshuset SMN 26,0 24,1 1,9 5,7 12,4 7,9 16,4 5,0 SpareBank 1 Finans Midt-Norge (90 %) 63,6
Slide 25: SpareBank 1 Markets: accounts 30. Sept. 2015 and proforma accounts
SpareBank 1 Markets: accounts 30. Sept. 2015 and proforma accounts SpareBank 1 Markets Proforma SMN Markets Sb1 Markets NOK mill Per Q3 15 Q1 15 Per Q3 15 Q3 15 Q2 15 Q1 15 Equities / High Yield 50 2 49 14 17 18 Fixed income -1 0 -1 1 -3 2 Corporate 27 0 27 10 8 9 Foreign exchange/interest rate deri
Slide 26: Costs, parent bank and subsidiaries
Costs, parent bank and subsidiaries Costs at Q3 14 vs. Q3 15 Comments 1.416 • Of the increase at group level, NOK 1.310 90m relates to the consolidation of SpareBank 1 Markets as a subsidiary as Subsidiaries 394 526 from Q2 2015 • The effect of the transfer of markets activities to SB1 Markets in Q2
Slide 27: FTEs crucial to achieving costs goal
FTEs crucial to achieving costs goal FTEs at parent bank • At end-March there were 60 fewer FTEs 763 at the parent bank than at year-end 730 721 • This is mainly natural wastage 660 • A further reduction of about 60 FTEs is aimed for by the end of 2016 In this set-up 32 FTEs in the capital markets a
Slide 28: Low losses, 0.12 % of total gross lending
Low losses , 0.12 % of total gross lending, including 30 mNOK in collective losses provisions Losses per quarter Distribution as of 30.9.2015 NOK mill 56 RM 11 35 30 32 34 SMN Finans 5 30 24 22 17 15 26 CM 66 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 • Loan losses 0.12 % (0.06 %) of gros
Slide 29: Defaults and other problem loans
Defaults and other problem loans Low levels Last two years, per quarter 1.400 1,50 1.200 1,30 Problem loans 1.000 1,10 Loans in default Loans in default % of total loans 800 0,90 600 368 448 0,70 209 157 206 206 231 216 400 226 0,50 391 386 334 338 270 287 200 263 0,30 0,35 0,34 237 218 0,29 0,29 0,
Slide 30: High share mortgages and diversified portfolio SMEs
High share mortgages and diversified portfolio SMEs Lending and change last 12 months by sector in mNOK Wage earners 49,0 4,9 SB1 Boligkreditt 29,9 1,4 Commercial real estate 14,1 1,4 Agriculture/forestry/fisheries 8,3 1,5 Transport and other services 6,3 0,1 Maritime sector and offshore 6,1 1,3 Con
Slide 31: Balance sheet
Balance sheet Last three years 30 Sept. 2015 30 Sept. 2014 30. Dec 2014 Funds available 18,5 17,3 20,1 Net loans 94,4 86,2 90,1 Securities 1,2 0,7 0,7 Investment in related companies 5,2 5,1 5,2 Goodwill 0,5 0,5 0,5 Other assets 9,4 7,4 9,4 TOTAL ASSETS 129,2 117,2 126,0 Capital market funding 41,9
Slide 32: Satisfying access to capital market funding
Satisfying access to capital market funding Funding maturity 30. September 2015 Comments In NOK bn 16,0 • SpareBank 1 Boligkreditt is the main 9,6 funding source through covered 6,2 bonds. NOK 30 billion transferred as 5,0 of 30. September 2015 0,3 2015 2016 2017 2018 > 2019 • Maturities next two ye
Slide 33: SpareBank 1 SMN will attain its goal of a CET1 ratio of 13.5%
SpareBank 1 SMN will attain its goal of a CET1 ratio of 13.5% per 30. June 2016. New goal at least 14,0 % per 31. december 2016 Development CET 1 Q2 15 – Q3 15 Changes Q3 15 13,5 50 points stronger Tier 1 capital adequacy as a result 0,3 of one-time events: 13,2 • Reduced bond portfolio at SpareBank
Slide 34: Development in common equity Tier 1 and ROE from 2009 to Q3 2015
Development in common equity Tier 1 (capital and ratio), and ROE from 2009 to Q3 2015 CET 1 Ratio 13,5% 13,2% 1,5% Countercyclical +9% 11,1% 11,2% 2,0% SIFI Buffer 10,0% 9,5% 9,0% 2,5% Conservation Buffer 8,0% 3,0% Systemic Risk 4,5% Equity Capital 2009 2010 2011 2012 2013 2014 2015 Goal 1st half 20
Slide 35: Appendix
Appendix 35 Q3 2015 SpareBank @)
Slide 36: Change in net interest income
Change in net interest income From 30. Sept. 2014 to 30. Sept. 2015 Comments Net interest at 30. Sept. 2014 1.305 Net interest at 30. Sept. 2015 1.399 • Increased lending volume and deposit margins Change 94 strengthens net interest income Obtained as follows: • Lower lending margins weaken net inte
Slide 37: Associated companies
Associated companies Profit shares after tax To date per quarter 30 Sept. 30 Sept. 2015 2014 Change Q3 15 Q2 15 Q1 15 Q4 14 Q3 14 SpareBank 1 Gruppen (19,5 %) 183,4 259,5 -76,0 55,8 68,2 59,4 98,5 109,0 SpareBank 1 Boligkreditt (18,4 %) 64,6 22,8 41,9 14,5 9,1 41,0 14,8 10,3 SpareBank 1 Næringskredi
Slide 38: Cost growth in parent bank 0.2 %
Cost growth in parent bank 0.2 %, SB1 Markets transaction taken into account Change in costs 30. Sept 14 – 30. Sept. 2015 Modest cost growth NOK mill at 30. Sept. 2015 Expenses 1.415,9 Expenses at 30. Sept. 2014 1.309,7 Change 106,2 • Fewer FTEs reduces personnel Obtained as follows: costs Parent ba
Slide 39: SpareBank 1 SMN will come across as cost-efficient 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 Regnskapshuset SMN Profitable and non-capital- intensive subsidiaries: 0,87 1 Both EM1 and Regnskapshuset 0,83 SMN are companies making a sound profit – and requir
Slide 40: Loan to value mortgages
Loan to value mortgages Last two years Comments Q3 15 Q3 14 93,5 % 93,4 % • 98.8 % of the exposure has an LTV of less than 85 % • Exposure with LTV higher than 85 points 1.2 % 5,3 % 5,5 % 0,7 % 0,7 % 0,5 % 0,4 % Under 70 % 70 - 85 % 85 - 100 % Over 100 % 40 Q3 2015
Slide 41: Stable credit risk
Stable credit risk SpareBank 1 SMN’s loans distributed on SpareBank 1 SMN’s loans distributed on size of risk class and share of Exposure At Default customer engagement and share of Exposure At Default Share of EAD September 2015 Share of EAD September 2014 Share of EAD September 2015 Share of EAD S
Slide 42: Capital adequacy
Capital adequacy Last two years NOKm 30.9.15 30.9.14 Core capital exclusive hybrid capital 11.652 10.605 Hybrid capital 1.798 1.698 Core capital 13.451 12.302 Supplementary capital 2.435 2.523 Total capital 15.886 14.826 Total credit risk IRB 4.073 4.529 Debt risk, Equity risk 104 442 Operational ri
Slide 43: Strenghtened capital
Strenghtened capital Development CET1 Development CET 1 without transitional arrangements (Basel III) 14,2% 13,2% 11,1% 11,2% 11,6% 11,2% 10,0% 10,4% 2012 2013 2014 Q3 15 2012 2013 2014 Q3 15 43 Q3 2015
Slide 44: Change in CET 1 capital and capital requirements in Q3 2015
Change in CET 1 capital and capital requirements (rwa) in Q3 2015 Increased CET1 capital Reduced capital requirements (rwa) • A somewhat weaker profit performance means the • The group has downscaled its bond portfolio, thereby Group builds less capital from operations reducing debt risk • EL deduct
Slide 45: Key figures
Key figures Last three years 30 Sept. 2015 30 Sept. 2014 30 Sept. 2013 Net interest 1,46 1,50 1,42 Comm. income and net retur on fin. inv. 1,59 2,04 1,71 Operating expenses 1,48 1,51 1,51 Net profit as a percentage of ATA 1,57 2,03 1,62 CET 1 ratio 13,2 % 11,5 % 10,7 % Core capital ratio 15,2 % 13,4
Slide 46: Key figures ECC
Key figures ECC Including effects of issues Last five years Q3 15 Q3 14 2014 2013 2012 2011 ECC ratio 64,6 % 64,6 % 64,6 % 64,6 % 64,6 % 60,6 % Total issued ECCs (mill) 129,83 129,83 129,83 129,83 129,83 102,76 ECC price 54,00 59,25 58,50 55,00 34,80 36,31 Market value (NOKm) 7.011 7.692 7.595 7.141
Slide 47: SpareBank 1 SMN CEO Finn Haugan
SpareBank 1 SMN 7467 TRONDHEIM CEO Switchboard Finn Haugan Tel +47 900 41 002 Tel +47 07300 E-mail: finn.haugan@smn.no CFO Kjell Fordal Tel +47 905 41 672 E-mail: kjell.fordal@smn.no Internett adresses: Financial calender 2015 SMN home page and internet bank: www.smn.no 3. Quarter: 30. October 2015