Sparebank 1 Smn · OSL:MING
Sparebank 1 Smn — Q2 2023 Earnings Presentation
39 slides from Sparebank 1 Smn's earnings presentation, Aug 10, 2023
Slide 1: Second quarter 2023
Second quarter 2023 August 10th 2023 Jan-Frode Janson CEO Trond Søraas CFO
Slide 2: Q2 2023 Solid results
Q2 2023 Solid results • Return on equity of 15.1 % • Merger with SpareBank 1 Søre Sunnmøre Positive effects on growth, income and solidity. The Q2 result is also impacted by costs related to the merger • Solid income development High interest income following growth and repricing. Strong results fro
Slide 3: The Mid-Norwegian economy
The Mid-Norwegian economy Unemployment Electricity prices Wholly unemployed as a percentage of the labour force Oslo og Bergen 4,00 June 21 June 22 June 23 Trondheim 3,00 2.9% 2.2% 2.4% 2,00 1.6% 1.7% 1.5% 1.5% 1.3% 1.2% 1,00 0,00 jun- des- jun- des- jun- Norge Trøndelag Møre og Romsdal 21 21 22 22
Slide 4: High value creation over time
High value creation over time Return on equity (%) Implicit market value (NOKbn) 16 15,1 15,1 36 13,3 13,7 13,5 34 14 13,0 12,2 12,3 32 11,3 11,5 12 10.7 30 10.0 10 28 26 8 24 6 22 4 20 30 30 18 2 26 25 16 0 14 20 20 12 -2 17 17 10 12 13 -4 11 10 8 -6 6 2013 2014 2015 2016 2017 2018 2019 2020 2021 2
Slide 5: Strong development in subsidiaries
Strong development in subsidiaries Accountancy services Real Estate Car financing Profit margin (%) Operating margin (%) Number of collaterals Regnskapshuset SMN EiendomsMegler 1 Midt-Norge SpareBank 1 Finans Midt-Norge Peer 1 - 3 Peer 1 - 4 Peer 1 - 4 22,0 17,0 17 233 20,8 12,3 15 329 11,6 13 839 1
Slide 6: Ambition to be number 1 among Norwegian savings banks
Ambition to be number 1 among Norwegian savings banks Implicit market value Gross lending to customers Number of employees in the group Norwegian savings banks, Norwegian savings banks, Norwegian savings banks, per Q123 per Q123 per Q123 SMN SMN SMN Source: Public Quarterly Report Peers: SB1 SR-Bank
Slide 7: Leading regional bank
Lending Deposits Q223 (NOKbn) Q223 (NOKbn) 6.5% 7.9% 218 232 140 14 130 10 SMN before SB1 Søre SMN after SMN before SB1 Søre SMN after merger Sunnmøre merger merger Sunnmøre merger Leading regional bank Legal merger with SpareBank 1 Søre Sunnmøre completed in May 2023 7
Slide 8: Large movement amongst customers and employees from Danske Bank
SpareBank 1 SMN expressed interest in acquiring Danske Bank portfolio Large movement amongst Group CEO Jan-Frode Janson relates that they were not invited to talks: - customers and employees we were politely received, but that’s as far as we got. from Danske Bank • Increased customer influx from Dan
Slide 9: Såkorn 1 Midt
Såkorn 1 Midt We are establishing a seed fund SpareBank 1 SMN has established a seed fund named 'Såkorn 1 Midt'. With NOK 150 million at the fund's disposal, this is the From left:: Board Director in Såkortn 1 Midt Trond Mellingsæter, CEO SpareBank 1 SMN Jan-Frode Janson, Jan Biti and Cristina Santo
Slide 10: Join us as we mark our 200th anniversary
Join us as we mark our 200th anniversary with many small and large events all over Mid- Norway 10
Slide 11: Strategic priorities unchanged – focus on execution
Strategic priorities unchanged – focus on execution Greater Head up the Integrating Exploiting the power Creating One SMN digitalization and development of sustainability into in SMN’s ownership use of insight Norway’s savings the business model banks system Ambition Ambition Ambition Ambition Compl
Slide 12: Financial information
Regnskap Financial information
Slide 13: Financial targets
Financial targets Profitable Solid Efficient Responsible 17.2 % < 40 % 13 % CET1 ratio Cost/income in parent bank ex. finance Net zero Return on equity ~ 50 % < 85 % Climate footprint by 2050 Payout ratio Cost/income subsidiaries 18,9 18,8 19,1 Q223 2022 (mill tCo2e) 15,1 75 78 12,9 13,0 1,10 35 0,0
Slide 14: Profitable and solid
Profitable and solid Return on equity CET1 ratio 18.8% 19.2% 18.9% 18.2% 19.1% 15.1% 12.9% 13.1% 13.0% 10.9% Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Earnings per equity certificate Loan losses in per cent of total lending 4,21 0.04% 0.05% 0.04% 3,53 3,51 3,20 2,89 -0.09% Q2 22 Q3
Slide 15: Corporate market
Corporate market Bank and Accountancy services in place in Oslo • Team with years of experience from credit work Pre-tax profit • Relationship concept with permanent (NOKm) advisor • Moderate growth ambitions Regnskapshuset SMN • Industries where SMN has solid SB1 Finans Midt-Norge competence and ex
Slide 16: Personal market
Personal market Pre-tax profit Growth in focal areas NOKm • Merger makes for high growth in Sunnmøre and Fjordane EiendomsMegler 1 Midt-Norge • Growth in Trondheim, especially from Danske Bank Retail Banking Lower credit growth and increased inflation 524 • Credit growth to households below 4 per ce
Slide 17: Broad product range and diversified income platform
Broad product range and diversified income platform Ownership interests Strong brands Profit after tax (NOKm) Other associated companies BN Bank SpareBank 1 Forvaltning SpareBank 1 Gruppen 195 7 SpareBank 1 Gruppen 54 Alliance collaboration under a joint brand, including Fremtind and SpareBank 1 For
Slide 18: A strong result
A strong result Change Change Mill kr Q2 23 Q1 23 Q4 22 Q3 22 Q2 22 from Q1 23 from Q2 22 Net interest income 1,094 1,035 961 814 803 59 291 Commission income and other income 561 541 473 491 555 20 5 Operating Income 1,655 1,576 1,435 1,305 1,359 79 296 Total operating expenses 683 728 646 583 585
Slide 19: Growth and margins in Retail Banking – YoY
Growth and margins in Retail Banking – YoY Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M YoY growth ex. merger: 4.9 % YoY growth ex. merger: 4.8 % Lending margin Deposit margin Lending Merger 15.4% 2.20 13.4% 20 12.4% 15 1.99 7.9% 2.0 1.73 6.1% 7.7% 7.1% 10 8.8% 1.50 163 6.0% 6.7%
Slide 20: Growth and margins in Corporate Banking - YoY
Growth and margins in Corporate Banking - YoY Lending volume (NOKbn) Deposit volume Margins vs NIBOR3M YoY growth ex. merger: 7.5 % YoY growth ex. merger: 6.8 % Lending margin Deposit margin Deposit margin ex. Public sector Lending Merger 70 20 10.3% 10.8% 11.0% 3.5 9.0% 3.10 65 10 2.80 3.0 -2.6% 2.
Slide 21: Loan portfolio
Loan portfolio Lending as at 30.06.23 and change YoY (NOKbn) Mortgages 93,1 9,7 Mortgages funded by cov. bonds 63,5 8,3 Commercial real estate 20,7 3,1 Agriculture and forestry 11,8 1,7 Transport and other services 8,1 -0,1 67.5% 8.9 % 2.6 % Construction, building 7,5 2,7 Fisheries 6,4 -0,5 Wage ear
Slide 22: Losses
Losses Loan losses (NOKm) Distribution of losses Q2 (NOKm) 39 Retail area (bank) -14 31 32 29 22 19 Corporate area (bank) 18 0 SpareBank 1 finans 25 -48 -71 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 22
Slide 23: Financial solidity
Financial solidity CET1* Leverage ratio 18.9% 19.1% 18.3% 18.0% 17.2 1,25 Pillar 2 guidance 7.1% 7.1% 7.2% 6.9% 2,50 Countercyclical buffer 1,90 Pillar 2 requirement 2,50 Capital conservation buffer 4,50 Systemic risk requirement 4,50 Pillar 1 min. requirement 2020 2021 2022 Q2 23 Target 2020 2021 2
Slide 24: SpareBank 1 SMN
SpareBank 1 MING High return over time 1 efficient operations with synergies in the group, well capitalised and shareholder-friendly dividend policy 2 Strong position and with growth ambitions sustainable growth in an attractive region, diversified customer portfolio and income platform 3 Strong bra
Slide 25: Appendix
Regnskap Appendix
Slide 26: Increased costs and lower activity
Increased costs and lower activity Retail trade Construction Fisheries Status Outlook Status Outlook Status Outlook Industry indicator Offshore Agriculture Aquaculture Commercial property Status Outlook Status Outlook Status Outlook Status Outlook Sources: SpareBank 1 SMNs bransjeindikator per 1. ha
Slide 27: Income
Income Net interest income and other income Commission income Commission income Bolig- og Næringskred. Net interest income 1,655 1,576 Change from Change from NOKm Q2 23 Q1 23 Q4 22 Q3 22 Q2 22 1,435 Q1 23 Q2 22 1,359 504 1,305 480 Payment transmission income 77 72 91 91 79 6 -2 Credit cards 15 17 1
Slide 28: Costs
Costs Total operating expenses per quarter (NOKm) Costs per category Embezzlement Merger Subsidiaries Parent bank 728 683 646 51 Change Change 15 13 NOKm Q2 23 Q1 23 Q4 22 Q3 22 Q2 22 from Q1 23 from Q2 22 585 583 22 Staff costs 383 398 333 348 350 -15 33 259 253 230 IT costs 105 106 100 84 82 -1 23
Slide 29: Growth and margins in Retail Banking - quarterly
Growth and margins in Retail Banking - quarterly Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M Quarterly growth ex. merger: 1.5 % Quarterly growth ex. merger: 4.6% Lending margins Deposit margins Lending Merger 300 40 9.8% 350 10 35 250 30 300 25 2.5 5200 20 2.19 2.20 250 2.7% 15.
Slide 30: Growth and margins in Corporate Banking - quarterly
Growth and margins in Corporate Banking - quarterly Lending volume (NOKbn) Deposit volume (NOKbn) Margins vs NIBOR3M Quarterly growth ex. merger: 3.3 % Quarterly growth ex. merger: 6.5% Lending margin Deposit margin Lending Merger Deposit margin ex. Public sector 75 6.8% 8 70 6 65 2.9% 2.7% 4 85 13.
Slide 31: Diversified deposit base
Diversified deposit base Deposits by sector (NOKbn) Deposits covered by the deposit LCR guarantee scheme (NOKbn) as at 30.06.23 (per cent) Wage earners Not covered Public sector Covered by the guarantee scheme Corporate 140 124 57 188% 54 110 4 57 94 49 87 44 41 40 36 28 28 25 18 53 12 13 28 48 51 5
Slide 32: Product companies
Product companies Change Change NOKm (SMNs share in parentheses) Q2 23 Q1 23 Q4 22 Q3 22 Q2 22 from Q1 23 from Q2 22 SpareBank 1 Gruppen (19.5 %) -5 34 128 17 16 -39 -21 SpareBank 1 Boligkreditt (24.1 %) 29 33 -1 10 -4 -4 33 SpareBank 1 Næringskreditt (17.8 %) 3 2 2 0 2 0 1 BN Bank (35.0 %) 58 62 54
Slide 33: Subsidiaries
Subsidiaries Change Change NOKm Q2 23 Q1 23 Q4 22 Q3 22 Q2 22 from Q1 23 from Q2 22 EiendomsMegler 1 Midt-Norge (92.4 %) 31 18 -6 12 38 13 -8 SpareBank 1 Regnskapshuset SMN (93.3 %) 45 44 20 22 30 0 14 SpareBank 1 Finans Midt-Norge (58.0 %) 43 53 51 44 50 -10 -7 SpareBank 1 SMN Invest (100 %) -4 -31
Slide 34: Return on financial investments
Return on financial investments Change from Change from NOKm Q2 23 Q1 23 Q4 22 Q3 22 Q2 22 Q1 23 Q2 22 Net gain/(loss) on stocks -7 -17 -23 -67 -35 10 28 Net gain/(loss) on financial instruments -30 -105 -55 6 -117 76 87 Net gain/(loss) on forex 38 23 25 30 29 14 9 Net return on financial instrument
Slide 35: Equity certificate, key figures
Equity certificate, key figures Key figures 30.06.2023 30.06.2022 2022 2021 2020 2019 ECC ratio 66.8 % 64.0 % 64.0 % 64.0 % 64.0 % 64.0 % Total issued ECCs (mill) 143.80 129.31 129.29 129.39 129.39 129.30 ECC price 141.0 115.8 127.4 149.0 97.6 100.2 Market value (NOKm) 20,275 14,974 16,471 19,279 12
Slide 36: Balance sheet
Balance sheet NOKbn 30.6.23 30.6.22 31.12.22 Cash and receivables from central banks 0.6 5.7 1.2 Deposits with and loans to credit institutions 20.4 11.1 11.7 Net loans to and receivables from customers 165.8 147.6 151.5 Fixed-income CDs and bonds 38.1 32.9 38.1 Shares, units and other equity intere
Slide 37: Problem loans
Problem loans Lending to customers in stage 3 % of gross lending 5 000 1,87 1,80 2,0 1,68 1,62 4 500 1,5 4 000 1,08 1,02 0,97 0,96 0,99 3 500 1,0 3 000 0,5 2 500 2 000 0,0 3 537 3 448 3 290 3 243 1 500 -0,5 2 229 2 291 1 000 2 139 2 044 2 065 -1,0 500 0 -1,5 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22
Slide 38: Maturity structure
Maturity structure NOKbn 23,7 9,2 10,4 6,2 4,4 2023 2024 2025 2026 2027-> 6.0 3.6 1.6 0.2 0.5 0.4 0.0 0.0 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 38
Slide 39: Development in CET1 capital and capital adequacy
Development in CET1 capital and capital adequacy CET1 ratio in per cent 18.9% 19.1% 18.3% 18.0% 17.2% 17.2 1,25 Pillar 2 guidance 14.9% 14.6% 14.6% 13.6% 2,50 Countercyclical buffer 1,90 Pillar 2 requirement 11.1% 11.2% 10.0% 2,50 Capital conservation buffer 4,50 Systemic risk requirement 4,50 Pilla