Dnb Bank Asa · OSL:DNB
Dnb Bank Asa — Investor Presentation (March 2012)
32 slides from Dnb Bank Asa's investor presentation, Mar 6, 2012
Slide 1: DNB Investor Meeting, London March 6, 2012
DNB Investor Meeting, London March 6, 2012 Per Sagbakken, Head of Investor Relations, Long-term Funding Harald Serck-Hanssen Global Head of Shipping, Offshore and Logistics
Slide 2: Agenda
Agenda A 2011 DNB summary DNB’s shipping activities 2
Slide 3: Full year 2011
Full year 2011 Pre-tax operating profit before write-downs in NOK billion 21.8 (21.1) Cost/income ratio in per cent 47.1 (47.6) Return on equity in per cent 11.4 (13.6) Proposed dividend in NOK 2 (4) 3
Slide 4: Key figures for the last three years
Key figures for the last three years Earnings per share Return on equity (NOK) (Per cent) Earnings per share Dividends/proposed dividend 13.6 8.66 7.98 11.4 10.6 6.43 4.00 1.75 2.00 2009 2010 2011 2009 2010 2011 Cost/income ratio Ratio of deposits to lending (Per cent) (Per cent) • 57.8 48.1 47.6 54
Slide 5: Business areas
D Business areas B Retail Banking Pre-tax operating profit after write-downs in the fourth quarter =Fourth quarter 2011 (NOK million) = Fourth quarter 2010 1833 1846 (797) Large Corporates and DNB Markets Insurance and DnB NORD International Asset Management
Slide 6: Net non-performing and net doubtful commitments
Net non-performing and net doubtful commitments 1) Per cent 1.88 1.81 1.71 1.77 1.55 1.56 1.50 1.31 1.14 0.99 1.22 1.14 1.05 1.04 1.10 0.42 0.88 0.93 0.73 0.69 0.63 21.8 21.4 0.35 20.8 19.1 18.9 19.5 18.4 16.1 14.5 NOK billion 11.9 4.2 31 Dec. 31 Dec. 31 Dec. 31 30 30 31 31 30 30 31 2007 2008 2009 M
Slide 7: Write-downs on loans and guarantees
Write-downs on loans and guarantees Full year Full year Amounts in NOK million 4Q11 3Q11 2Q11 1Q11 4Q10 2011 2010 Individual write-downs: Retail Banking - Private Customer Divisions 78 38 58 13 132 186 286 - SME Divisions 233 128 (45) 96 182 411 356 - DNB Finans 1) 29 106 97 138 49 370 582 Large Cor
Slide 8: Stable access to long-term funding
Stable access to long-term funding Spread NOK billion Maturity 3-month Euribor Covered bonds 18.5 5.5 83 Senior bonds 22.7 7.9 196 Total 41.2 6.8 146 bp 2012 Lower Tier 2 5.8 10nc5 340 Total 47.0 In addition: LTRO2 funding 9.0 3.0 n.a. Spread NOK billion Maturity 3-month Euribor Covered bonds 98.3 6
Slide 9: Equity Tier 1 Capital according to Nordic rules
Equity Tier 1 Capital according to Nordic rules Per cent Equity Tier 1 capital as at 31 December 2011 (CET 1) 14.2 Adjusted for Nordic risk weight for 10.8 credit cards 9.4 Adjusted for Nordic risk weight for corporates Adjusted for Swedish risk weight for mortgage loans Adjusted for full IRB DNB ri
Slide 10: Agenda
Agenda The shipping markets and the Norwegian DNB’s shipping activities maritime industry DNB’s strategy and position Special focus on the dry bulk, tanker and container segments The DNB shipping portfolio 10
Slide 11: The orderbook is much lower than in 2008; slippage continues
In shipping, the supply of new vessels remains a challenge in some segments. The orderbook is, however, much lower than in 2008. ”Slippage” continues. Orderbook within the major shipping segments as a % of the existing fleet % Source: Clarkson Source: Clarkson
Slide 12: Seaborne trade is expected to grow steadily within all sectors
Seaborne trade is expected to grow steadily within all sectors. Million dwt Expected Worldwide Shipping Demand 1800 1600 1400 LPG carriers 1200 Chemical tankers 1000 Product tankers Crude oil tankers 800 Dry bulk carriers 600 Containerships 400 200 2003 2005 2007 2009 2011 2013 2015 Source: Lorentze
Slide 13: Shipping consists of many segments, with different drivers
Shipping consists of many segments, with different drivers. Our largest segment is offshore, where market conditions are positive. Crude Oil/Product Liquid Natural Cruise / Gas (LNG) ULCC , VLCC, Suezmax, Passenger vessel Aframax, Panamax, Product (LR1/LR2/MR) Bulk Carrier/Dry Cargo Supply RoRo / PC
Slide 14: Norway is a major shipping nation with a unique maritime cluster
Norway is a major shipping nation with a unique maritime cluster Ship- Norway is the world’s 5th largest shipping nation Yards etc brokers Finance Legal Norwegian maritime insurance has a world market services share of 15-20% Shipowners Education Insurance Within ship classification, the marke
Slide 15: DNB is active in the maritime sector by choice, not by accident
DNB is active in the maritime sector by choice, not by accident DNB has been active within shipping for + 100 years We are a one stop bank offering a complete set of commercial and corporate finance services With + 100 professionals in our offices in Oslo, Bergen, New York, London, Athens, Singapore
Slide 16: We are long term and relationship driven
We are long term and relationship driven • Our core clients are typically leading integrated shipping companies • We prioritize clients where we have a good and close dialogue and who use a broad range of DNB products • We aim to keep a good credit quality, our credit guidelines being based upon the
Slide 17: DNB is maintaining a diversified portfolio within shipping and offshore
DNB is maintaining a diversified portfolio within shipping and offshore Offshore is the largest single segment with 27%. It is comprised of drilling rigs, support- and specialized vessels Industrial shipping, such as gas, ro/ro, chemical and cruise totals 23% Within tankers, dry bulk and conta
Slide 18: We have a conservative view when assessing risk
We have a conservative view when assessing risk Tankers (USD/day) Dry bulk (USD/day) Spot rates for VLCC tanker vessels last 10 years vs Spot rates for dry-bulk capesize vessels last 10 DNB 's assumptions years vs DNB's assumptions Spot 2011 1 yr tc 3 yr tc Base Risk Spot 2011 1 yr tc 3 yr tc Base R
Slide 19: In Offshore the activity is high, and the outlook positive
In Offshore the activity is high, and the outlook positive The sentiment is positive due to the high oil price and increasing energy demand. Especially the deep water drilling market is seeing close to 100% utilization Again, from the bank’s point of view, selecting the right clients in a grow
Slide 20: Dry bulk: Lower spot rates, as expected
Dry bulk: Lower spot rates, as expected. Some t/c activity at higher levels The cape market experienced a strong 2nd half 2011, but the spot rates are now very low. Currently, there are low spot rates in all segments. Somewhat higher forward rates. Spot 2011 1 yr tc 3 yr tc Base Risk Avg Case
Slide 21: Tanker markets are so far better than expected
Tanker markets are so far better than expected. Tanker spot rates have been increasing since September 2011 Forward rates are lower, but at fairly acceptable levels Spot 2011 1 yr tc 3 yr tc Base Risk Avg VL 23.400 16.900 20.500 26.000 15.000 10.000 Suez 21.600 19.200 16.000 20.000 15.000 10.000
Slide 22: The 2nd hand values dropped substantially and rapidly in 2009
The 2nd hand values dropped substantially and rapidly in 2009. The reduction has continued especially for older vessels, but at a slower pace. VLCC 2012 values, vs the peak in 2008 and the record low levels in 2002. USD mill. Source: Clarkson
Slide 23: Containers: Supply of new vessels expected to increase more than demand
Containers: Supply of new vessels is expected to increase more than demand in 2012 and 2013. Rates appear to have bottomed out. Rate developments 2009 - 2012 Source: Alphaliner 23
Slide 24: The shipping portfolio has been reduced since 2008
The shipping portfolio has been reduced since 2008, both in absolute numbers and as a share of DNB’s total portfolio The portfolio is around 7% of the The shipping exposure has been reduced since bank’s total portfolio vs. 10% in 2008 2008, especially within Dry Bulk. NOK bill. EaD NOK bill. Includi
Slide 25: Increasing PD levels in the division, especially within dry bulk
Increasing PD levels in the division, especially within dry bulk, as expected. The total Division The container segment NOK bill. The tanker segment The Dry Bulk segment 25
Slide 26: The internal Watch List has been reduced during the past years
The internal Watch List has been reduced during the past 2 years, but we expect an increase going forward. Number of clients on the Some examples of our bank’s internal Watch List clients on the Watch List Client Grade Perfor- Segment Issue ming Client A 7 Yes Dry bulk Breach of MVC Client B 8 Yes L
Slide 27: DNB reports the aggregate of Non-performing and Net doubtful commitments
DNB reports the aggregate of Non-performing and Net doubtful commitments. The aggregate of the Non-performing and Net doubtful commitments for the DNB group totalled NOK 19.5 billion at year end 2011. The shipping share was 22% and was more than 75% performing. 27
Slide 28: Shipping companies and banks usually find ways to solve challenging situations
The shipping companies and the banks usually find ways to solve challenging situations. In very few cases, the bank becomes a shipowner Shipowner Contribution Bank Contribution • Providing additional guarantees or • Modifying, postponing or waiving security covenants • Raising additional capital • M
Slide 29: Illustrative case: 70% financing of a USD 1 bill. acquisition
ILLUSTRATIVE CASE: 70% Financing of a USD 1 bill. acquisition. Values drop by 50% whereas the loan loss is 1% of the original loan amount. 70% financing of a USD 1.000 mill. investment 2006: Our well established client acquires a fleet of modern vessels. A bankgroup led by DNB provides 70% financi
Slide 30: Writedowns: Shipping has a good track record
Writedowns: Shipping has a good track record The accumulated specified SOL writedowns The shipping write-downs have been between 5% during the past 3 years have been NOK 850 and 9% of DNB’s total writedowns last 3 years mill, ie. 0,15% p.a. of the portfolio 30
Slide 31: DNB maintains its position as a leading shipping, offshore and logistics bank
DNB maintains its position as a leading shipping, offshore and logistics bank, delivering strong results each year Top maritime bookrunners according to Deallogic The Shipping division’s financial NOK mill. performance, 2009 - 2011 31
Slide 32: In Summary...
In Summary... 1. DNB is the leading bank in Norway with strong earnings and a sound capital base 2. DNB has a proven track record within shipping, delivering strong results each year 3. By concentrating on the larger and leading companies within each segment the risk is acceptable, and these compani