Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — Sparebanken Hedmark — Merger or Acquisition (June 2016)
39 slides from Sparebank 1 Ostlandet's merger presentation, Jun 29, 2016
Slide 1: Closing of Sparebanken Hedmark's acquisition of Bank 1 Oslo Akershus AS
Closing of Sparebanken Hedmark’s acquisition of Bank 1 Oslo Akershus AS Investor information, 29 June 2016
Slide 2: Background
Background • Since 2013, Sparebanken Hedmark has owned 40.5 per cent of Bank 1 Oslo Akershus AS (Bank 1). • On 14 December 2015, Sparebanken Hedmark signed an agreement with the Norwegian Confederation of Trade Unions (LO) and the SpareBank 1 banks to buy the remaining shares in Bank 1. • The transa
Slide 3: Overview
Overview • About (the old) Sparebanken Hedmark ‒ Details on the acquisition of Bank 1 Oslo Akershus • About (the old) Bank 1 Oslo Akershus • About the new Sparebanken Hedmark • Funding 3 29 June‐16 Sparebanken Hedmark and Bank 1
Slide 4: About (old) Sparebanken Hedmark
About (old) Sparebanken Hedmark And the acquisition of Bank 1 Oslo Akershus
Slide 5: About Sparebanken Hedmark
Hedmark About Sparebanken Hedmark Hedmark‐based bank that is present in three counties Leading bank in Hedmark and growing in Oppland and Akershus • Norway’s 6th largest savings bank. • Leading provider of financial products to people, companies and the public sector in Hedmark. • 188.000 customers
Slide 6: Norway's most solid regional savings bank
Hedmark Norway’s most solid regional savings bank CET‐1 and equity ratio. Per cent. CET‐1 reported ratio, %. Includes 100 % Bank 1 in 2016 18 18 19% 19% 17,2 16,9* 17% 17% 16 16 15,6 15,7 15% 15% 15,3 14 14 13% 13% 14,2 13,7 11% 11% 12 12 9% 9% 10 10 7% 7% 5% 5% 8 8 2010 2011 2012 2013 2014 2015 201
Slide 7: Nordic CET-1 ratios are apples and oranges
Hedmark Nordic CET‐1 ratios are apples and oranges CET‐1 Basel 3 ratios without transitional rules, per 2015. Per cent of risk‐weighted assets. 24,1 2015 CET‐1 07/16 CET‐1 14.5 % 21,2 18,8 17,2 16,5 16,1 16,3 16,0 15,3 15,0 14,7 14,7 Swedbank Handelsbanken SEB Nordea Danske Bank Hedmark SamSpar wght
Slide 8: Comparison on an equal footing
Hedmark Comparison on an equal footing CET‐1 Basel 3 ratios with transitional rules, per 2015. Per cent of risk weighted assets. 17,2 16,3 2015 CET‐1 07/16 CET‐1 14.5 % 15,3 14,4 13,7 13,6 13,3 11,8 11,0 10,9 10,6 8,5 Hedmark SamSpar wght Bank 1 DNB SB1 SNN SB1 SMN SB1 SR Danske Bank Swedbank SEB No
Slide 9: Hedmark's leverage ratio well above others
Hedmark Hedmark’s leverage ratio well above others Leverage ratio (Tier 1/Total assets) per 2015. Per cent. 9,2 Q1‐16: Sparebanken Hedmark: 9.2 % 7,7 Bank 1 Oslo Akershus: 6.8 % 7,2 6,7 6,3 6,0 6,0 4,7 Sparebanken SamSpar wght av Bank 1 DNB SR‐Bank SB1 SNN SB1 SMN Swedish avrg, Hedmark unwght Source
Slide 10: Healthy returns
Hedmark Healthy returns Return on equity (recurring ROE). Per cent. ROE adjusted for CET‐1 (Peer 4 benchmark). Per cent. 19% 19% 19% 19% 17% 17% 17% 17% 15% 15% 15% 15% 13% 13% 13% 13% 11% 11% 11% 11% 9% 9% 9% 9% 7% 7% 7% 7% 5% 5% 5% 5% 2010 2011 2012 2013 2014 2015 2016E 2010 2011 2012 2013 2014 20
Slide 11: Conservative loan book
Hedmark Conservative loan book Commercial services Loan book by sector. Group, Q1‐16. % share. 3,5 % Agriculture and forestry 6,3 % Other 4,9 % Wholesale and retail trade 1,9 % Retail customers Comm. real estate 39,5 % 12,9 % Building and construction 2,3 % Loans to Næringskreditt Mortgages to Bolig
Slide 12: Why acquire Bank 1?
Acquisition Why acquire Bank 1? • Integrated region for labour and housing. Already, 20 % of Hedmark’s retail customers live in the Oslo‐region. • Strategic positioning. Oslo and Akershus is Norway’s largest and fastest growing region. • Better for our customers. Larger product areas with broader co
Slide 13: Fourth largest savings bank group
Acquisition Fourth largest savings bank group Agenda Total assets (including covered bond companies) at Q1‐16* Source: Swedbank. * SPOG and SBVG total assets as of Q4‐15 13 29 June‐16 Sparebanken Hedmark and Bank 1
Slide 14: Transaction details
Acquisition Transaction details • Sparebanken Hedmark pays NOK 1.9 bn for the remaining shares in Bank 1, with 90 % of the payment in Sparebanken Hedmark equity capital certificates. • Remaining 10 % to be paid in cash to LO and the other SpareBank 1‐banks. • Total equity in Sparebanken Hedmark incr
Slide 15: About (old) Bank 1 Oslo Akershus
About (old) Bank 1 Oslo Akershus
Slide 16: About Bank 1 Oslo Akershus AS
Bank 1 About Bank 1 Oslo Akershus AS Market area The SpareBank 1 Alliance’s bank in the Oslo‐region Bank 1 has 17 branches spread over • The group aims to be a full service supplier of financial products and Norway’s most populous region, with 1.1 services in Oslo and Akershus. million inhabitants •
Slide 17: Norway's most interesting market
Bank 1 Norway’s most interesting market • Knowledge‐intensive business environment, Europe’s highest level of education, half of Norway’s R&D spending. • Norway’s decision hub: ‒ More than half of the country’s business with over 100 employees are located in the region. ‒ Home of the central governm
Slide 18: Also a conservative loan book
Bank 1 Also a conservative loan book Wholesale and retail Other Loan book by sector. Group, Q1‐16. % share. trade Commercial services 1,8 % 0,4 % 2,8 % Building and construction 0,1 % Comm. real estate 13,1 % Loans to Næringskreditt 0,2 % Retail customers 48,0 % Mortgages to Boligkreditt 33,6 % Reta
Slide 19: No loan losses
Bank 1 No loan losses Annual losses, NOK mn Quarterly losses, NOK mn 150 113 18 18 10 12 3 0 ‐1 ‐2 ‐3 0 0 ‐7 ‐10 ‐9 ‐18 ‐18 ‐31 2012 2013 2014 2015 Q1‐16 Q4‐12 Q2‐13 Q4‐13 Q2‐14 Q4‐14 Q2‐15 Q4‐15 19 29 June‐16 Sparebanken Hedmark and Bank 1
Slide 20: Stable and low problem loans
Bank 1 Stable and low problem loans Problem loans. Per cent and NOK mn. 400 1,50% 1,34% 350 1,13% 1,25% 300 1,00% 250 200 0,89% 0,75% 0,54% 150 0,69% 0,50% 100 0,25% 0,26% 0,35% 0,25% 50 0,17% 0,17% 0 0,00% 2012 2013 2014 2015 Q1‐16 Defaulted commitments Other doubtful commitments Total in % of tota
Slide 21: Loan losses compare well with other banks
Bank 1 Loan losses compare well with other banks Loan losses, per cent of gross loans. Source: SpareBank1 Gruppen 21 29 June‐16 Sparebanken Hedmark and Bank 1
Slide 22: The same holds for problem loans
Bank 1 The same holds for problem loans Defaults and doubtful loans and commitments in % of gross/net lending. Q1‐16. Source: SpareBank1 Gruppen 22 29 June‐16 Sparebanken Hedmark and Bank 1
Slide 23: The new Sparebanken Hedmark
The new «Sparebanken Hedmark»
Slide 24: The new Sparebanken Hedmark Group
New bank The new Sparebanken Hedmark Group A bank for the Inland and Akershus‐Oslo regions The SpareBank 1 Alliance’s main bank for the Inland and capital regions • Develop further the position as the largest and preferred bank in Hedmark and the rest of the Inland region. • Strengthen efforts in th
Slide 25: Conservative + Conservative = Conservative!
New bank Conservative + Conservative = Conservative! Loan book by sector. Group, Q1‐16. % share. Agriculture Commercial services Other and 3,2 % 3,5 % forestry 3,5 % Wholesale and retail trade 1,2 % Building and construction 1,4 % Comm. real estate 13,0 % Retail customers Loans to 43,2 % Næringskred
Slide 26: Very low loan losses
New bank Very low loan losses Annual losses, NOK mn Quarterly losses, NOK mn 136 192 61 90 32 35 19 21 48 15 15 38 9 3 9 ‐2 ‐7 ‐7 ‐11 2012 2013 2014 2015 Q1‐16 Q4‐12 Q2‐13 Q4‐13 Q2‐14 Q4‐14 Q2‐15 Q4‐15 26 29 June‐16 Sparebanken Hedmark and Bank 1
Slide 27: Stable and low problem loans
New bank Stable and low problem loans Problem loans. Per cent and NOK mn. 1200 1,64% 1,75% 1000 1,50% 1,32% 1,16% 1,25% 800 0,95% 0,89% 1,00% 600 0,65% 0,69% 0,67% 0,75% 400 0,48% 0,46% 0,50% 200 0,25% 0 0,00% 2012 2013 2014 2015 Q1‐16 Defaulted commitments Other doubtful commitments Total in % of t
Slide 28: Solidity will remain in Hedmark's DNA
New bank Solidity will remain in Hedmark’s DNA • Still high capital adequacy • Even better asset quality • Higher retail share • Geographic diversification • Good and stable risk‐adjusted returns • The planned IPO will improve our recapitalization abilities 28 29 June‐16 Sparebanken Hedmark and Bank
Slide 29: Strategic goals for 2018
New bank Strategic goals for 2018 By the end of 2018 the Sparebanken Hedmark Group…: … is the fourth largest savings bank group in Norway, listed on Oslo Stock Exchange with an attractive equity certificate … is the preferred financial group in our original market area and the strongest‐ growing gro
Slide 30: IPO: Process
IPO IPO: Process • Sparebanken Hedmark plans to list its equity certificate capital on Oslo Stock Exchange (OSE). • Sep‐15: Board and General Assembly of Sparebanken Hedmark Sparebankstiftelse (the foundation) was appointed. • Nov‐15: Sixty per cent of the primary capital was converted to equity cer
Slide 31: The IPO: Motivation
IPO The IPO: Motivation • Keeping up with the regionalisation of households and businesses in the Inland region. • Positioned for structural changes in the financial sector. • Ample capital to continue serving retail and corporate customers in the region. • To be one of the largest regional savings
Slide 32: The foundation
IPO The foundation • Largest EC‐foundation in Norway, by a clear margin. Unique • Infinite time horizon. • War chest up to NOK 1.5 billion – and growing. • Will always own at least 50 per cent of the certificates. Long‐term • Contribute to improved valuation of the bank. • Foundation will be owned b
Slide 33: Funding
Funding Sparebanken P rebanken 4
Slide 34: Funding structure
Funding Funding structure Financing of the combined bank, excl. equity capital. Q1‐16. Senior debt issuance since Q1: • Bank 1: MNOK 100. Covered bonds 29,0 % • Hedmark: MNOK 750. Deposits ‒ Also: CP of MNOK 500 matured 49,2 % Deposit‐to‐loan ratio in Q1: Senior unsecured 19,1 % • Excl. covered bond
Slide 35: Funding strategy
Funding Funding strategy • The Norwegian market for senior unsecured bonds will remain a key source of financing for the new bank group. • The group will increasingly issue senior unsecured bonds in the European market, through the EMTN‐programme (http://www.newsweb.no/newsweb/search.do?messageId=40
Slide 36: Maturity structure by year and instrument
Funding Maturity structure by year and instrument 6.000 5.000 Total: MNOK 25 000 4.000 3.000 2.000 1.000 ‐ 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2099 Loan from credit institution Senior unsecured Subordinated Tier 1 36 29 June‐16 Sparebanken Hedmark and Bank 1
Slide 37: Covered bonds give diversification and size
Funding Covered bonds give diversification and size Share of mortgages financed through covered bond companies. Per Q1‐16. % of mortgages and total. • «Spabol» our preferred source of covered bond financing. • Ensures relatively cheap financing through size and standing. • Provides non‐NOK financing
Slide 38: Contact details
Richard Heiberg CEO Tel.: +47 902 06 018 richard.heiberg@sparebanken‐hedmark.no Contact details Tore Anstein Dobloug CFO Sparebanken Hedmark Tel.: +47 480 93 175 tore.anstein.dobloug@sparebanken‐hedmark.no Geir‐Egil Bolstad CFO Bank 1 Oslo Akershus Tel.: +47 918 82 071 geir‐egil.bolstad@sparebank1.n
Slide 39: 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 Sparebanken Hedmark believes that the expectations reflected in such forward‐looking statements are reasonable,
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