Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q1 2016 Earnings Presentation
40 slides from Pareto Bank Asa's earnings presentation, April 2016
Slide 1: Pareto Bank Financial Results First Quarter 2016
PARETO BANK Financial Results First Quarter 2016
Slide 2: Table of Contents
TABLE OF CONTENTS 1 PARETO BANK AT A GLANCE 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2016
Slide 3: Pareto Bank at a Glance
PARETO BANK AT A GLANCE 1 A leading niche player within project financing: fast, flexible and professional 2 Focus on financing of real estate, securities & corporates as well as shipping & offshore 3 Return on Equity 15.1% at the end of Q1-16 4 Lending growth NOK 437m and total assets of NOK 12,876
Slide 4: Norway's Leading Project Bank
NORWAY’S LEADING PROJECT BANK BUSINESS AREAS PROJECTS / CREDITS AREA EXPOSURE AVG. PRINCIPAL 1. Construction financing Real NOKm estate 2. Project financing 57 % 25-50 3. Commercial property financing 1. Securities financing Securities & NOKm Corporates 2. Bridge financing 27 % 5-30 3. M&A financing
Slide 5: Solid Foundation and Strong Performance
SOLID FOUNDATION AND STRONG PERFORMANCE Result after tax (NOKm) Return on Equity (after tax) CET1 ratio ** 16.5% 15.6% 174.6 15.1% 14.3 % 165.8 13.2 % 13.3% 12.1 % 11.1 % 11.5 % 122.4 8.9% 79.7 48.2 2012 2013 2014 2015 Q1-16 2012 2013 2014 2015 Q1-16 2012 2013 2014 2015 Q1-16 Net interest income (NO
Slide 6: A Different Bank
A DIFFERENT BANK • Compact organization with 33 employees • Short decision lines, no bureaucracy and an efficient I FAST MOVER credit decision process • Frequent credit committee meetings facilitates fast time to market • Solution oriented II FLEXIBLE • 80% of the employees work with customers on a
Slide 7: Successful Equity Issues
SUCCESSFUL EQUITY ISSUES 1 2 • The bank has successfully raised in total NOK 203m in equity capital through four issues. PRIVATE REPAIR • The objective of the planned capital PLACEMENT OFFERING increase was to strengthen the bank’s CET1 capital in line with the Norwegian NOK 150m NOK 47m FSA require
Slide 8: The Share
THE SHARE * Share price development since registration on NOTC in March 2014 EPS, DPS (NOK) & Dividend Yield Book equity per share (NOK) Share Price (NOK) Volume (#) 28.01 27.62 34 800,000 24.68 4.11 3.81 21.58 Current price: ~NOK 30 3.1 % 32 700,000 2.73 2.4 % 30 600,000 0.93 28 0.60 0.60 500,000 0
Slide 9: Largest Shareholders as of 20.04.2016
LARGEST SHAREHOLDERS AS OF 20.04.2016 # Investor Country Type 20.04.2016 # of shares % total • As of 18 January 2016, the Company 1 Pareto AS NOR Company 7,886,940 15.18% had 51,953,022 shares outstanding 2 Arne Helge Fredly LUX Private Investor 5,069,818 9.76% 3 Pecunia Forvaltning AS NOR Company 4
Slide 10: Table of Contents
TABLE OF CONTENTS 1 PARETO BANK AT A GLANCE 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2016
Slide 11: Portfolio Composition | Overview
PORTFOLIO COMPOSITION | OVERVIEW * Gross credit exposure (NOKm) Σ = NOK 10,801m Gross total lending (NOKm) Σ = NOK 8,415m MAIN BUSINESS AREAS Real Estate 6,110 57% Real Estate 5,095 61% Corporate 1,125 10% Corporate 876 10% Real estate financing Real focused on residential Securities 1,865 17% Secur
Slide 12: Real Estate (I) | Strong Market Position
REAL ESTATE (I) | STRONG MARKET POSITION 57% Real Estate credit exposure by collateral (NOKm) * Σ = NOK 6,343m Geographical Real Estate exposure (NOKm) ** Residential property 3,145 50% 1% Oslo Sentrum Oslo Vest Lots 23% 21% 1,288 20% Oslo Nord Oslo Øst Offices 719 11% Nordstrand 1% Akershus Syd 8%
Slide 13: Real Estate (II) | Terms
REAL ESTATE (II) | TERMS 57% Real Estate portfolio policy Real Estate portfolio management • The bank requires on average 20% • In-house regulatory skills of the to 40% equity to finance a property housing market is essential for a lot purchase good credit decision process • Primarily financing of r
Slide 14: Securities & Corporates (I) | Transactions
SECURITIES & CORPORATES (I) | TRANSACTIONS * 27% Total securities exposure (NOKm) Σ = NOK 1,865m Total corporate finance exposure by industry (NOKm) Σ = NOK 1,125m Primarily listed stocks 1,448 78% 5% 2% 6% Bonds 395 21% 7% Real estate Technology Other 22 1% S&O 7% Oil Cruise 53% Key comments Servic
Slide 15: Securities & Corporates (II) | Terms
SECURITIES & CORPORATES (II) | TERMS * 27% Securities financing Corporate financing Overview Overview • Total exposure of NOK 1,865m • Total exposure of NOK 1,125m • 362 customers of which only 45 have a credit facility of • 33 customers with credit facilities/guarantees in the range of above NOK 10
Slide 16: Shipping & Offshore (I) | Diversified Loans
13% SHIPPING & OFFSHORE (I) | DIVERSIFIED LOANS * Key comments Total S&O credit exposure (NOKm) Σ = NOK 1,383m • 23 loans financing a total of 34 vessels Product 298 21% • Largest exposure is USD 13.1m; average size USD 7.0m Bulk 216 14% • Weighted average loan to value (LTV) is 65 % Chemical 166 12
Slide 17: Shipping & Offshore (II) | Terms
13% SHIPPING & OFFSHORE (II) | TERMS S&O portfolio policy S&O portfolio management • Minimum equity of 30%, • Thorough decision making process: but normally in the range All loans approved by the BoD of 40% to 50% • External specialists used as • Clients should be based in consultants for credit ana
Slide 18: Table of Contents
TABLE OF CONTENTS 1 PARETO BANK AT A GLANCE 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2016
Slide 19: First Quarter Highlights
FIRST QUARTER HIGHLIGHTS Key figures 31.03.2016 Profit after tax (NOKm) 60.0 PROFIT NOK 48.2m I AFTER TAX (NOK 36.5m) 50.7 48.2 36.5 27.4 NET NOK 89.3m II INCOME (NOK 74.2m) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 RETURN ON 15.1% III EQUITY (13.5%) Return on Equity 21.8 % 17.8 % COST / INCOME 23.2% IV RATIO (
Slide 20: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Key comments • Change in accounting principles in Q1-16: Q1-16 Q1-15 2015 2014 – Fee to Norwegian Banks’ Guarantee Net Interest income 89.3 74.2 344.3 287.9 Fund for 2016 of NOK 5.7m was Total other operating income 6.7 -4.0 12.4 20.0 charged in Q1-16 Total net
Slide 21: Growing Net Interest Income
GROWING NET INTEREST INCOME Net interest income (NOKm) Net interest margins 2,988 14,578 Q1-16 6,651 89,259 5.91% 5.48% 4.97% 4,581 4.75% Q1-16 Q1-15 1,673 6,218 Q1-15 74,168 -0.50% -1.16% Lending margin Deposit margin Net margin Lending & Lending & Ammorti- Invested Long-term Long-term deposit depo
Slide 22: Continuously Improving Operational Figures
CONTINUOUSLY IMPROVING OPERATIONAL FIGURES Active repricing: Improving net interest margins (vs. 3M NIBOR) Key comments 5.5 % 5.6 % 5.6 % 5.6 % • Increased lending volume 5.4 % 5.5 % 5.1 % 5.2 % 4.7 % 4.7 % 4.9 % 5.0 % 4.8 % 4.9 % 5.0 % 5.1 % 5.0 % • Gradual shift in underlying loan portfolio 4.6 %
Slide 23: Strong Balance Sheet
STRONG BALANCE SHEET BS (NOKm) Key comments (NOK 1,000) Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 • High turnover rate: approximately 30% of the loan portfolio matures within a year Cash and deposits with central banks 57.0 459.2 228.3 544.2 60.7 Lending to and deposits with credit institutions 796.0 362.5 298.
Slide 24: Table of Contents
TABLE OF CONTENTS 1 PARETO BANK AT A GLANCE 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2016
Slide 25: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION * Q1-16 Σ = NOK 10,754m Q1-15 Σ = NOK 9,043m Key comments None / very low risk 4,940 46% None / very low risk 4,503 50% • 85% of the portfolio is considered to Low risk 4,248 Low risk 39% 3,318 37% have low to moderate risk Moderate risk 1,209 Moderate risk 11% 875
Slide 26: Commitments by Size
COMMITMENTS BY SIZE * Q1-16 Σ = NOK 10,754m Q-15 Σ = NOK 9,043m Key comments <5 535 5% <5 559 6% • A conservative policy with respect to size • Maximum size on a single customer 10% 5 - 10 679 6% 5 - 10 803 9% of total capital (NOK 170m) • Maximum size on group / consolidated 10 - 20 1,766 16% 10 -
Slide 27: Loan Portfolio Quality
LOAN PORTFOLIO QUALITY Net non-performing and impaired loans * Group provisions % of gross lending Nominal (NOKm) and % of gross lending 0,51% 0,48% 40.7 40.7 0.44% 0.42% 0.41% 0.40% 0.37% 0.98% 0.34% 30.7 30.7 1,14% 0.30% 0.31% 28.7 26.7 0.26% 24.7 0.00% 0.57% 22.7 0.96% 0.20% 20.7 0.47% 18.7 0.37%
Slide 28: Comments on Impaired Loans
COMMENTS ON IMPAIRED LOANS “Impaired loans” are performing loans with write-downs. Shipping Loan 1 (Supramax bulkship) Shipping Loan 2 (Panamax bulkship) Write-down of MUSD 2 in Q4-15 Write-down of MUSD 1 in Q1-16 • During Q1 -16 the bank initiated a process to find new owners as • During Q1 -16 the
Slide 29: Table of Contents
TABLE OF CONTENTS 1 PARETO BANK AT A GLANCE 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2016
Slide 30: Funding (I) | Overview
FUNDING (I) | OVERVIEW * Sources (NOKm) Σ = NOK 12,876m Historical development in deposits vs. lending (NOKm) Deposits 6,984 54% 102% 98% 95% 96% Senior debt 4,004 31% 91% 90% 88% 86% 85% 86% 84% 83% T1 & T2 debt 310 2% 81% 8,368 7,931 Other debt 143 1% 7,596 7,347 7,487 7,171 7,162 7,246 7,207 7,04
Slide 31: Funding (II) | Customer Deposits
FUNDING (II) | CUSTOMER DEPOSITS * Deposit allocation Fixed rate deposits (NOKm) - time to maturity (months) Σ = NOK 1,908m >25 276 mths. Depositors (#) 4,825 2,698 15 - 25 271 mths. 8 - 14 987 mths. 5-7 Amount (NOKm) 2,577 4,350 155 mths. 3-4 33 mths. 0% 20% 40% 60% 80% 100% 0-2 186 Retail Corporat
Slide 32: Funding (III) | Market Funding
FUNDING (III) | MARKET FUNDING * Market funding maturities - net of own holdings (NOKm) Credit spreads (bps) 200 1,365 180 110 160 1,150 140 200 120 699 713 100 1,255 80 950 60 699 713 40 20 0 2016 2017 2018 2019 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec
Slide 33: Surplus Liquidity
SURPLUS LIQUIDITY * Comfortable liquidity buffer (NOKm) Bond portfolio (NOKm) Σ = NOK 3,516m 5,000 1% 4,500 Drawing facility Inv Grade Industry 4,000 Financials & 15% 3,500 unrated covered 3,000 Level 2 assets Covered bonds Liquidity portfolio Government & PSEs 2,500 Senior financials Level 1 covere
Slide 34: A High Redemption Rate Gives Flexibility
A HIGH REDEMPTION RATE GIVES FLEXIBILITY Loans (drawn amount) and redemptions per year (NOKm) Key comments 53.4 % 49.2 % A high share of project loans with relatively short 41.9 % maturity results in a high natural redemption rate 7,987 which again grants the bank the following abilities: 29.5 % 7,1
Slide 35: Financial Strength and Capital Targets
FINANCIAL STRENGTH AND CAPITAL TARGETS Pareto Bank capital ratios, requirements and targets * Key comments LEVERAGE RATIO REQUIREMENTS ACTUAL TARGET • The bank's capital target for CET1 is 15 % by end-of-year 2016 18.5 % 17.54 % 2.0 % • This includes fulfilment of Pillar 2 and an 1.6 % increased cou
Slide 36: Pillar II Leads to Increased CET1 Target
PILAR II LEADS TO INCREASED CET1 TARGET Pareto Bank CET1 ratios * Key comments 15.0 % • Pareto Bank has carried out and 14.3 % 13.9 % Mgmt Buffers reviewed its ICAAP analysis for 2016 • The analysis has been carried out in cooperation with the FSA • The analysis concluded a capital requirement of 13
Slide 37: Table of Contents
TABLE OF CONTENTS 1 PARETO BANK AT A GLANCE 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2016
Slide 38: Financial Targets and Dividend Policy
FINANCIAL TARGETS AND DIVIDEND POLICY 31.03.2016 STATUS 31.12.2016 TARGET Cost effective 15.1% > 15.0% ROE and commercially oriented bank ADEQUACY CET1 capital in CAPITAL 14.3% 15.0% * line with NFSA requirements The actual payout ratio DIVIDEND POLICY 30-50% ** 30-50% ** will depend on the growth p
Slide 39: Portfolio Goals for 2016
PORTFOLIO GOALS FOR 2016 BUSINESS AREAS MARKET STATUS GROWTH TARGETS Signs of margin High natural repayment Net growth of Real pressure and increased rate on loans gives approximately estate risk-taking, but still moderate growth NOK 300-400m good deal flow Net growth of Securities & Potential custo
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