Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q4 2014 Earnings Presentation
51 slides from Sparebank 1 Ostlandet's earnings presentation, February 2015
Slide 1: SpareBank 1 SR-Bank ASA 4th quarter 2014
SpareBank 1 SR-Bank ASA 4th quarter 2014 Preliminary annual accounts Page 1
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although SpareBank 1 SR-Bank believes that the expectations reflected in such forward-looking statements are reasonable,
Slide 3: The leading financial group in the southwest of Norway
The leading financialgroup in the southwest of Norway 1 Rogaland Population 452,000 Market share 37% Year of establishment 1839 2 Market strategy Market leader Unemployment rate 2.4% 2 Hordaland Population 498,000 Market share 6% Year of establishment 2006 1 Market strategy Entry/growth Unemployment
Slide 4: Strong result with higher income, moderate losses and good cost control
Strong result with higher income, moderate losses and good cost control Pre-tax profit for 4Q is NOK 553 million compared to NOK 674 million last year - Return on equity after tax 11.7% (16.2%) Pre-tax profit year-to-date increased to NOK 2.601 million from NOK 2.347 million last year - Return o
Slide 5: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 18,4% 16,2% 11,1% 11,2% 11,4% 11,3% 11,5% 14,5% 12,2% 11,7% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Cost/income ratio Earnings per share (NOK) 2,58 2,22 2,09 44,6% 45,1% 42,4% 1,78 1,75 40,9% 37,5% Q4 13 Q1
Slide 6: Key figures – annual development
Key figures – annual development Return on equity CET 1 capital ratio 14,0% 14,2% 11,1% 11,5% 12,4% 10,0% 2012 2013 2014 2012 2013 2014 Cost ratio Earnings per share (NOK) 8,20 49,9% 7,28 44,9% 41,8% 5,33 2012 2013 2014 2012 2013 2014 Page 6
Slide 7: Income statement
Income statement 31.12 31.12 Group Income Statement (MNOK) 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Net interest income 2.404 2.119 655 621 581 547 574 Net commission and other income 1.732 1.824 405 403 444 480 489 Net income on investment securities 778 555 116 142 201 319 195 Total income 4.914 4.498
Slide 8: Change in profit 31.12.2013 – 31.12.2014
Page 8 1.000 1.500 2.000 2.500 3.000 0 500 31.12.2013 2.347 Net interest income incl. commission 142 from covered bond companies Other income 51 Net income on investment securities 223 Change in profit 31.12.2013 – 31.12.2014 Total operating expenses -37 Impairment losses on loans and guarantees - 1
Slide 9: Key figures
Key figures 31.12 31.12 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Return on equity after tax (%) 14,2 14,0 11,7 12,2 14,5 18,4 16,2 Net interest margin (%) 1,45 1,42 1,51 1,48 1,41 1,40 1,46 Impairment losses on loans and guarantees in % of gross loans 0,20 0,11 0,27 0,20 0,13 0,18 0,17 -incl. covered bon
Slide 10: Consolidated income profile
Consolidated income profile 1200 1000 322 315 315 324 310 800 37 34 29 28 20 90 167 93 165 120 MNOK 600 400 621 655 574 547 581 200 0 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Net interest income Commission income from covered bond companies Profit before tax from covered bond companies Net commission and other
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins 2,88% 2,99 % 2,92% 2,90% 2,64% 2,93% 2,89% 2,80% 2,57% 2,21% 2,21% 2,20% 2,06% 2,08% 1,97% 1,85% 1,88% 1,95% Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Corporate market Retail market Deposit margins -0,27% -0,40% -0,43% -0,32% -0,45% -0,44% -0,4
Slide 12: Lending volume and growth
Lending volume and 12 months growth Corporate Market 60 000 50 000 15% 40 000 MNOK 10% 30 000 20 000 5,0% 5,5% 5,6% 4,0% 4,5% 4,6% 5% 2,5% 10 000 1,4% 0,7% 0 0% Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Volume Growth % Retail Market 120 000 100 000 15% 80 000 MNOK 9,0% 10% 60 000 7,8% 6,
Slide 13: Loan portfolio as at 31.12.2014
Loan portfolio as at 31.12.2014 • Gross loans as at 31 December 2014 amount to NOK 174.5 billion 2,9% Agriculture / forestry / fishing 2,9% compared with NOK 166.7 billion at 3,9% the same time last year. Industry, Power/water supply and construction 3,5% Retail trade, hotels and restaurants 1,7% 1,
Slide 14: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans Total-distributed • The proportion of loans with a loan- to- value ratio of less than 85% is high and stable. 100 % • 91.3% of the exposure is within 85% of the assessed value of 90 % collateral. This means that only 80 % 8.7% of exposure exceeds 85% of 70
Slide 15: Deposits volume and growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by NOK 9.8 billion to 81.5 billion. 50000 24,1 % 20,3 % 25% 18,9 % 20% – Corresponds to an increase in the 40000 period of 13.7%. 12,6 % 15% 30000 MNOK 6,6 % 10% 20000 4,9 % 1,7 % 5% 10000 -2,2 % -2,1 % 0% 0 -5
Slide 16: Net commission and other income
Net commission and other income 31.12 31.12 MNOK 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Payment facilities 236 233 57 66 56 57 59 Savings/placements 172 151 42 45 40 45 39 Insurance products 177 164 46 45 44 42 41 Commission income real estate broking 434 433 101 105 128 100 108 Guarantee commission 10
Slide 17: Net income on investment securities
Net income on investment securities 31.12 31.12 MNOK 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Dividends 36 33 1 10 7 18 -2 Investment income, associates 506 355 138 150 137 81 95 Securities gains/losses 140 -81 -37 -52 24 205 13 - of which capital change in shares and certificates* 232 46 24 -22 10 220 4
Slide 18: Subsidiaries
Subsidiaries MNOK 31.12.14 31.12.13 EiendomsMegler 1 SR-Eiendom AS Number of sales 7.540 7.246 Operating profit before tax 55,5 41,9 SpareBank 1 SR-Finans AS Total assets (BNOK) 7,0 6,4 Operating profit before tax 145,9 149,0 SR-Forvaltning AS Total assets under management (BNOK) 9,3 7,7 Operating p
Slide 19: Ownership interests
Ownership interests MNOK 31.12.14 31.12.13 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 360,5 218,1 Adjusted profit previous years -4,2 -1,6 SpareBank 1 Boligkreditt AS Interest ownership 20,1 % 26,2 % Profit after tax 47,0 64,7 Adjusted profit previous years 1,9 1,8 Spar
Slide 20: Operating expenses
Operating expenses 31.12 31.12 MNOK 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Personnel expenses 1.187 1.159 303 304 293 287 297 Restructuring costs 13 37 10 3 0 0 26 Non-recurring effect, pension-related 2 0 -5 0 0 7 0 items Total personnel expenses 1.202 1.196 308 307 293 294 323 IT expenses 277 250 75
Slide 21: Impairment losses on loans/Non-performing and doubtful commitments
Impairment losses on loans/Non-performing and doubtful commitments Impairment losses on loans Non-performing and doubtful commitments 0,27% 0,18% 0,20% 0,17% 0,13% 0,22% 0,16% 1,06% 0,12% 0,13% 0,90% 0,10% 0,81% 0,77% 0,76% 0,66% 0,66% 0,65% 0,62% 0,54% 62 439 21 462 552 533 80 513 52 51 48 830 31 6
Slide 22: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 31.12 31.12 Losses on loans in income statement (MNOK) 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Corporate customers 167 145 27 39 48 53 87 Retail customers 15 17 4 9 3 -1 -7 Change in collective impairment losses on loans 75 -30 62 21 -10 2 -30 Net impairment los
Slide 23: Deposits to loans ratio and market funding
Deposits to loans ratio and market funding • Development in deposits to loans ratio reflects our funding strategy with a greater Deposits to loans ratio share of senior funding and the reduced 100,0 % use of covered bond funding. – Seven outstanding euro-benchmarks (EUR 500 80,0 % million) with due
Slide 24: Stronger capital ratio
Stronger capital ratio 16% • SpareBank 1 SR-Bank is compliant with all capital requirements per 31.12.2014. 14% 14,1% 14,5% • The use of different risk weights in the 13,1% Nordic countries makes comparisons of 12% 12,8% 12,3% 12,2% actual financial strength difficult. 10% – The Basel I floor is als
Slide 25: RWA home mortgages
RWA home mortgages (incl. SpareBank 1 Boligkreditt) • RWA on home mortgages is stable. The shift that occurs from Q1 2014 is 25,0 % due to increased regulatory LGD from 10% to 20%. 20,0 % • The Norwegian FSA has indicated 17,0% that there may be imposed further 16,4% 16,2% 16,3% restrictions, from 2
Slide 26: Common equity tier 1 being strengthened in line with stricter requirements
Common equity tier 1 being strengthened in line with stricter regulatory requirements • New capital requirements entail a need to continue increasing common equity 16,00% 16,00% tier 1 capital going forward. 10,0 -13,0% 14,00% ROE 14,00% ROE 14,2% 14,0% • SpareBank 1 SR-Bank is not defined as ROE 12
Slide 27: Strengthened CET1 capital ratio calculated on basis of total assets
Strengthened core equity tier 1 capital ratio calculated on basis of total assets 9% 8,0% 7,9% • Core equity tier 1 capital ratio calculated 8% 7,9% on basis of total assets as at 31 December 2014 was 7.9%. 7% 6,6% 6,2% 5,9% • Measured according to this expression 6% of financial strength, SpareBank
Slide 28: Oil investments expected to be somewhat reduced in 2015
2015 From record high levels, oil investments are expected to be somewhat reduced in 2015. A continued high level of investment involves strong activity in the petroleum sector, but uncertainty has increased due to lower oil prices. Major infrastructure projects and high activity in house buildi
Slide 29: Appendix
APPENDIX Page 29
Slide 30: Unemployment remains low in Rogaland
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 Page 30 jan.99 jun.99 nov.99 Norway apr.00 sep.00 feb.01 jul.01 des.01 mai.02 okt.02 mar.03 aug.03 jan.04 jun.04 nov.04 apr.05 sep.05 feb.06 jul.06 des.06 mai.07 okt.07 mar.08 aug.08 jan.09 jun.09 nov.09 apr.10 sep.10 feb.11 jul.11 Registered unemployment
Slide 31: House prices in Rogaland have flattened last 2 years
Page 31 - 10.000 15.000 20.000 25.000 30.000 35.000 40.000 45.000 50.000 5.000 jan.03 mai.03 sep.03 jan.04 mai.04 sep.04 jan.05 mai.05 sep.05 jan.06 mai.06 sep.06 jan.07 mai.07 sep.07 jan.08 mai.08 sep.08 jan.09 mai.09 sep.09 jan.10 mai.10 sep.10 jan.11 mai.11 sep.11 House prices in Rogaland has fla
Slide 32: Petroleum activity includes more than just investments
Petroleum activity includes more than just investments - operating costs are a significant element and are important for the activity in the region • Investments vary 200 180 • Operating costs are more stable - and are expected to remain steady 160 for the next few years 140 120 BNOK 100 80 60 40 20
Slide 33: The group has a moderate risk profile
The group has a moderate risk profile in which no single event should be capable of seriously harming the group's financial position • The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk – SpareBank 1 SR-Bank therefore invests significant resources
Slide 34: Well diversified portfolio; 8.6% of total EAD related to oil operations
SpareBank 1 SR-Bank has a well diversified portfolio 8,6 % of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 201,4 (EAD) per 31.12.2014 BNOK 17,6 (EAD) is related to oil operations Oil services; 2,6% Corporate market excl. oil operations; 24,6% Exploration and production
Slide 35: Oil services - total NOK 5.2 billion
Oil services - total NOK 5.2 billion Exploration and concept studies Oil services • EAD NOK 0,6 billion • EAD NOK 5,2 billion, 2,6% of the group's total EAD • Average weighted probability of default • Average weighted probability of default for the oil 2.63% services portfolio is 1.89% • Funding of
Slide 36: Offshore - total NOK 9.9 billion
Offshore - total NOK 9.9 billion Offshore Service Vessels Offshore • EAD NOK 6.8 billion, average weighted • EAD NOK 9.9 billion, 4.9% of the group's total EAD probability of default is 1.28%, weighted • Average weighted probability of default for the average age is 7 years, average weighted offshor
Slide 37: Exploration and production companies - total NOK 2.2 billion
Exploration and production companies - total NOK 2.2 billion Exploration financing Exploration and production companies • EAD NOK 645 million • EAD NOK 2.2 billion, 1.1% of the group's total EAD • Average weighted probability of default • Average weighted probability of default for the oil and 4.13%
Slide 38: Lending to commercial property
Lending to commercial property Letting of real estate - oil operations Lending to commercial property • EAD NOK 3,4 billion 1,7% of the • EAD NOK 27,2 billion 13,5% of the group’s total EAD group’s total EAD, which of; • The portfolio is characterised by lending to commercial • Oil operations: EAD N
Slide 39: SpareBank 1 SR-Bank monitors and follows up pro-actively
SpareBank 1 SR-Bank monitors and follows up pro-actively • The bank continuously monitors portfolios • If special incidents occur, special portfolio reviews are conducted • The customer units continuously and pro-actively follow up the bank's credit customers • Commitments where the risk of poorer d
Slide 40: SRBANK's activities
SRBANK’s activities Divisions of SpareBank 1 SR- Capital Markets Retail Market Corporate Market Administration & Support Bank ASA Number of man-years: 32 Number of man-years : 463 Number of man-years : 161 Number of man-years : 210 Fully owned companies Number of man-years : 194 Number of man-years
Slide 41: SpareBank 1 Alliance
SpareBank 1 Alliance Owners of Sparebanken the alliance Samspar Hedmark • All credit decisions are made at the 19,5% 19,5% 19,5% 19,5% 11,0% 9,6% 1,4% local banks • Economies of scale related to Products, commissions, dividends expenses, IT solutions, marketing and branding Sales, loan portfolios, c
Slide 42: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is commited to • ROE above 13% at a normalised level of value creation in the bank`s core market area interest rates • Sustainable contribution to the value creation • Top 50% ROE and cost/income in a
Slide 43: Balance sheet
Balance sheet Balance sheet (MNOK) 31.12.2014 31.12.2013 Cash and balances with central banks 1.847 1.265 Balances with credit institutions 2.222 1.253 Net loans to customers 140.920 119.525 Certificates, bonds and other fixed-income securities 15.261 21.065 Financial derivatives 7.340 4.923 Shares,
Slide 44: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • SpareBank 1 SR-Bank has a stable 100% and low risk portfolio. 80% 56,3% 56,3% 60% • More than half of the bank’s loan 40% 32,5% 33,1% exposure has a PD* below 0.5%. 11,3% 10,6% 20% 0% • 68% is loans constituting gross 0.00 - 0.50 0.50 -
Slide 45: Lending to the retail market - risk profile
Lending to the retail market - risk profile Retail market portfolio – historical PD • The quality of the retail market portfolio is considered very good and 100% 3,4% 3,4% 3,2% 3,1% 3,2% has low potential losses. 80% 21,6% 21,6% 20,5% 20,1% 20,2% 60% • The proportion of loans with a PD* 40% below 0.
Slide 46: Lending to the corporate market – risk profile
Lending to the corporate market – risk profile • The quality of the corporate market portfolio is good. Corporate lending – historical PD 100% • The share of customers with PD* 24,4% 25,1% 26,4% 24,9% 26,7% 80% above 2.5 % increased slightly during the second half of 2014, 60% 54,5% 54,0% 52,8% main
Slide 47: A strengthened framework to meet increased economic uncertainty
A strengthened framework to meet increased economic uncertainty Uncertainty regarding the outlook for the Norwegian economy has increased due to lower oil prices. SpareBank 1 SR-Bank faces this uncertainty with a solid portfolio, a solid framework for lending and continuous focus on managing and con
Slide 48: Increased international interest in SRBANK
Increased international interest in SRBANK • International Development in Price/Book Relative share price development ownership increased from 65 1,2 120 OSEBX 1,1 14.1% at 2013 to 60 115 SRBANK Index 100 = Jan. 1st 1 110 22.4% at 2014. 55 0,9 105 p/B NOK 0,8 100 50 0,7 • Total market value 95 0,6 9
Slide 49: 20 largest shareholders as at December 2014
20 largest shareholders as at December 2014 Investor Number Stake • International Sparebankstiftelsen SR-Bank 72.419.305 28,3% ownership increased Gjensidige Forsikring ASA 26.748.416 10,5% from 14.1% at 2013 State Street Bank and Trust Co, U.S.A. Nominee 8.643.971 3,4% to 22.4% at 2014 Morgan Stanl
Slide 50: SRBANK as at 31 December 2014
SRBANK as at 31 December 2014 • Ownership interests: 2014 2013 2012 2011 2010 –From Rogaland, Agder-counties and Hordaland: 48.9% –International: 22.4% Share price 52,50 60,25 37,20 40,70 57,00 –10 largest: 56.8% –20 largest: 64.4% Stock value (MNOK) 13.427 15.409 9.514 5.182 7.257 • Number of share
Slide 51: Contact Details
Contact Details Address Management Investor Relations Arne Austreid Stian Helgøy Bjergsted Terrasse 1 CEO Investor Relations Postboks 250 4066 Stavanger Tel. Tel. +47 900 77 334 +47 906 52 173 Tel. E-mail. E-mail. arne.austreid@sr-bank,no stian.helgoy@sr-bank.no +47 915 02002 Inge Reinertsen www.sr-