Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q2 2011 Earnings Presentation
71 slides from Sparebank 1 Nord-norge's earnings presentation, Aug 10, 2011
Slide 1: Presentation of 2nd Quarter Report 2011
SpareBank 1 Nord-Norge Presentation of 2nd Quarter Report 2011 Oslo, 10 August 2011 1 1
Slide 2: SpareBank 1 Nord-Norge Group
SpareBank 1 Nord-Norge Group Headoffice: Tromsø Organization: 5 regions Regional branches: Hammerfest Tromsø Harstad Bodø Mo i Rana Local branches: 76 Number of man-years Group: 786 2 2
Slide 3: Organisation of the financial services Group
Organisation of the financial services Group SpareBank 1 Nord-Norge Financial Services Group SpareBank 1 Gruppen AS Financial Services Group Equity stake 19.5 % SpareBank 1 Nord-Norge SpareBank 1 Utvikling DA Invest ASA Systems development Investment company Equity stake 17.74 % Equity stake 100 % -
Slide 4: Macro economy in North Norway: Status and possibilities
Macro economy in North Norway: Status and possibilities 4 4
Slide 5: Northern Norwegian trade and industry on the right track
Northern Norwegian trade and industry on the right track • Growth in production in Northern Norwegian trade and industry – Production from existing oil and gas resources – Export records in the marine sector – Moderate growth in building and construction – Major increase in number of foreign tourist
Slide 6: Northern Norway - ready for growth?
Northern Norway - ready for growth? • Abundant natural resources and Expectations indicator, northern Norwegian companies increased tourism create faith in future growth • Continued high optimism creates faith in sales growth – Indicates higher rate of activity – Finnmark most optimistic – Industry
Slide 7: Lack of skilled labour creates challenges
Lack of skilled labour creates challenges • Stable low unemployment • Major investments are dependent on comprehensive commuting • Trade and industry need to reach out to obtain required expertise • Both the private and public sectors need to get a grip on their recruitment strategies • Big differen
Slide 8: Low unemployment – a challenge to the region
Low unemployment in Northern Norway Low unemployment – Northern Norway Norway a challenge to the region Number % Number % • Unemployment in Northern Norway Completely lower than the country average 6,827 2.8 74,190 2.9 unemployed • Aging population reduces the In schemes 1,527 0.6 18,022 0.7 working
Slide 9: Unrest in the global economy
Unrest in the global economy • Norway and North Norway are well-equipped to meet a possible global recession. • The export industry in North Norway can be impacted primarily by – Lower demand – Strong Norwegian krone • Psychological factors • Higher money market rates and higher funding costs for th
Slide 10: Financial goals
Financial goals • Solidity • Profitability • Top line growth • Effectivenss • Market shares 10 10
Slide 11: Financial targets
Financial targets • Capital adequacy ratio • Effectiveness – Core-capital coverage: – The targeted cost ratio is 11 % or higher maximum 50 % of income and shall be comparable to the level of competing banks in Norway • Profitability – ROE shall be comparable • Top-line growth to the performance of c
Slide 12: Financial goals: Goal for capital adequacy ratio
Financial goals: Goal for capital adequacy ratio • Core capital ratio: 11 per cent or higher • SpareBank 1 Nord-Norge aims to emerge as an undisputedly solid bank. • The capital adequacy goal is based on the Group's internal capital adequacy assessment process (ICAAP). The capital goal is expressed
Slide 13: Capital adequacy ratio - Group
Capital adequacy ratio - Group Parent bank Group (Amounts in NOK million) 31.12.10 30.06.10 30.06.11 30.06.11 30.06.10 31.12.10 4 351 4 259 4 722 Core capital 5 831 4 682 5 334 549 910 520 Supplementary capital 499 640 515 4 900 5 169 5 242 Equity and related capital resources 6 330 5 322 5 849 Mini
Slide 14: Equity matters - completed transactions 1st half of 2011
Equity matters - completed transactions 1st half of 2011 Equity issues • Bonus issue and split were carried out in the 1st quarter • Equity issues totalling 601,4 mill carried out in the 2nd quarter: – Rights issue NOK 451.4 mill – Private placement • Institutional investors: NOK 100.0 mill • Employ
Slide 15: Equity matters - completed transactions (1)
Equity matters - completed transactions (1) • The bank's equity transactions are considered to have been highly successful - despite a turbulent market. • The equity issues, bonus issue and split are expected to contribute towards increasing NONG's liquidity. • NOK 451.4 million rights issue: • Subs
Slide 16: Equity matters - completed transactions (2)
Equity matters - completed transactions (2) • NOK 150 million private placement issue: • Considerable interest displayed by major Norwegian and international investors • Over-subscription also for the private placement • Successful employee rights issue of NOK 16.3 million. • The Savings Bank Founda
Slide 17: Savings Bank Foundation SpareBank 1 Nord-Norge
Savings Bank Foundation SpareBank 1 Nord-Norge • The Foundation has been formally established • The Foundation's main objective is to exercise a long-term, stable ownership of SpareBank 1 Nord-Norge, including participating in future new issues by the bank • The Foundation has been allocated NOK 154
Slide 18: New Equity Capital (EC) fraction following the rights issue and private placements
Ny Equity Capital (EC) fraction following the rights issue and private placements • The new EC fraction effective from 01.01.12 is calculated to be 42.43 % • When distributing the parent bank result for the financial year 2011, 6/12 of the net proceeds from the rights issue and private placements ar
Slide 19: Financial targets
Financial targets • Capital adequacy ratio • Effectiveness – Core-capital coverage: – The targeted cost ratio is 11 % or higher maximum 50 % of income and shall be comparable to the level of competing banks in Norway • Profitability – ROE shall be comparable • Top-line growth to the performance of c
Slide 20: Profit and loss account - Group
Profit and loss account - Group (Amounts in NOK million) 30.06.11 30.06.10 Net interest income 551 553 Net fee-, commision and other operating income 254 254 Net income from financial investments 300 180 Total net income 1 105 987 Total costs 507 444 Result before losses and write-downs 598 543 Net
Slide 21: Quarterly Summary – Profit and loss account figures
Quarterly Summary – Profit and loss account figures (Amounts in NOK million) 2Q11 1Q11 4Q10 3Q10 2Q10 Net interest income 276 275 285 291 281 Net fee-, commision and other operating income 134 120 128 131 133 Net income from financial investments 58 242 148 76 104 Total net income 468 637 561 498 51
Slide 22: Quarterly Summary – income from financial investments
Quarterly Summary – income from financial investments (Amounts in NOK million) 2Q11 1Q11 4Q10 3Q10 2Q10 Dividends 9 1 0 1 33 Income from joint ventures 53 49 87 64 59 Gains/losses and net value changes on certificates and bonds -1 7 -24 39 -23 Gains/losses and net value changes on shares -14 176 58
Slide 23: Result before tax - Group companies
Group companies Result before tax 30.06.11 30.06.10 SpareBank 1 Finans Nord-Norge AS 34 935 35 018 SpareBank 1 Nord-Norge Invest AS 174 553 -2 539 Eiendomsdrift AS 0 1 707 EiendomsMegler 1 Nord-Norge AS 1 601 4 046 SpareBank 1 Nord-Norge Forvaltning ASA 1 030 3 437 North-West 1 Alliance Bank -1 201
Slide 24: Core banking activities
Core banking activities (Amounts in NOK million) 30.06.11 30.06.10 Change Earnings before losses 298 363 -65 Net losses 25 43 18 A non-recurring effect of recognising income from reduced pension commitments 60 0 60 Core banking activities after 273 260 13 losses 24 24
Slide 25: Results – the Group
Results – the Group In comparison with 2010, the reasons for the change in the pre-tax result are as follows: • Reduction in net interest income - NOK 2 mill. • Reduction in net commission income - NOK 11 mill. • Increase in income from financial investments + NOK 120 mill. • Increase other operatin
Slide 26: Very good underlying banking operations
Very good underlying banking operations - (excl. income from financial investments) Group (Amounts in NOK million) 2Q11 1Q11 4Q10 3Q10 2Q10 Net interest income 276 275 285 291 281 Net fee- and commission income 122 119 125 128 132 Other operating income 12 1 3 3 1 Total costs 261 246 276 237 256 Inc
Slide 27: Net interest income - Group
Net interest income - Group 4.00 % 350 300 3.00 % 250 200 2.00 % 150 100 1.00 % 50 0 0.00 % 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 NOK Million - Boligkreditt Perc.of aver.tot.ass. Perc. incl. Boligkreditt 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 NOK Million 279 294 298 272 281 291 285 275
Slide 28: Interest contribution: corporate lending
Lending, Parent bank – corporate market Loan volum corporate Interest margin corporate 23 000 2.50 22 000 2.00 21 000 Interest contribution 20 000 1.50 The interest 19 000 margin is NOK defined as the difference 18 000 between the 1.00 customer 17 000 lending (deposit) interest rate 16 000 0.50 and
Slide 29: Interest contribution: retail lending
Lending, Parent bank – retail market Loan volum retail banking Interest margin retail banking 45 000 1.80 44 000 1.60 43 000 1.40 Interest contribution 42 000 1.20 The interest margin is 41 000 1.00 defined as the difference NOK between the 40 000 0.80 customer lending 39 000 0.60 (deposit) interest
Slide 30: Interest contribution: corporate deposits
Customer deposits, Parent bank – corporate market Deposit volum corporate Interest margin corporate 23 000 2.00 22 000 1.80 1.60 21 000 Interest contribution 1.40 20 000 The interest 1.20 margin is 19 000 defined as the NOK 1.00 difference 18 000 between the 0.80 customer lending 17 000 (deposit) 0.
Slide 31: Interest contribution: retail deposits
Customer deposits, Parent bank – retail market Deposit volum retail banking Interest margin retail banking 23 000 2.90 2.70 22 000 2.50 21 000 2.30 Interest contribution 20 000 2.10 The interest 1.90 margin is 19 000 defined as the NOK 1.70 difference 18 000 between the 1.50 customer lending 17 000
Slide 32: Financial targets
Financial targets • Capital adequacy ratio • Effectiveness – Core-capital coverage: – The targeted cost ratio is 11 % or higher maximum 50 % of income and shall be comparable to the level of competing banks in Norway • Profitability – ROE shall be comparable • Top-line growth to the performance of c
Slide 33: Group operating costs
Group operating costs (NOK Million) 30.06.11 30.06.10 Change Wages and salaries 205 202 3 Pension costs 15 -33 48 Social costs 22 25 -3 Total personnel costs 242 194 48 Administration c osts 153 142 11 Total personnel- and general administration c osts 395 336 59 Deprec iation and write-downs of fix
Slide 34: Group operating costs and cost/income
Group operating costs 300 60 % 250 55 % 200 50 % NOK mill. 150 45 % 100 40 % 50 0 35 % 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Group operating costs Cost/income 2Q11 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Group operating costs 226 227 276 188 256 237 276 246 261 Cost/income 50.8 % 39.3 % 42.4
Slide 35: Key figures balance sheet
Key figures balance sheet (Amounts in NOK million) STATEMENT OF 30.06.11 30.06.10 Change Change % Total assets 71 033 65 859 5 174 7.9% Gross lending 51 442 48 329 3 113 6.4% Loans and advances to customers including agency 64 876 61 022 3 854 6.3% loans Deposits from customers 41 284 37 851 3 433 9
Slide 36: Good development of customer deposits
Good development of customer deposits Deposits from customers 45 000 40 000 Volume according to 35 000 markets 30.06.11 30 000 25 000 20 000 Corp. 15 000 26 % Retail 10 000 52 % 5 000 Public 0 22 % 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 36 36
Slide 37: Deposit growth households
Deposit growth households Deposit growth households. 12 mth. growth 12 10 8 % 6 4 2 0 01 07 01 07 01 07 01 07 01 07 01 M M M M M M M M M M M 06 06 07 07 08 08 09 09 10 10 11 20 20 20 20 20 20 20 20 20 20 20 SNN, Retail clients Households Source: Statistisk Sentralbyrå, The money supply M2, June 2011
Slide 38: Deposit growth corporates
Deposit growth corporates Deposit growth corporates. 12 mth. growth 40 35 30 25 20 % 15 10 5 0 -5 -10 01 07 01 07 01 07 01 07 01 07 01 M M M M M M M M M M M 06 06 07 07 08 08 09 09 10 10 11 20 20 20 20 20 20 20 20 20 20 20 SNN, Corporate clients Corporates Source: Statistisk Sentralbyrå, The money s
Slide 39: Group lending portfolio according to markets
Group lending portfolio according to markets Volume according to markets 30.06.11 70 000 Boligkreditt Loans and advances to customers Corp/ Pub 60 000 31 % Retail incl. Bolig- kreditt 69 % 50 000 40 000 Volume incl. Boligkreditt 30 000 20 000 Corp/ Pub Retail 39 % excl. Bolig- kreditt 10 000 61 % 0
Slide 40: Credit growth households
Credit growth households Credit growth households. 12 mth. growth 18 16 14 12 10 % 8 6 4 2 0 01 07 01 07 01 07 01 07 01 07 01 M M M M M M M M M M M 06 06 07 07 08 08 09 09 10 10 11 20 20 20 20 20 20 20 20 20 20 20 SNN, Retail clients Households Source: Statistisk Sentralbyrå, The credit indicator C2
Slide 41: Credit growth corporates
Credit growth corporates Credit growth corporates. 12 mth. growth 24 22 20 18 16 14 12 % 10 8 6 4 2 0 -2 01 07 01 07 01 07 01 07 01 07 01 M M M M M M M M M M M 06 06 07 07 08 08 09 09 10 10 11 20 20 20 20 20 20 20 20 20 20 20 SNN, Corporate clients Corporates Source: Statistisk Sentralbyrå, The cred
Slide 42: Credit area
Credit area • Quality • Portfolio • Migration, commitments in default and losses 42 42
Slide 43: Portfolio quality
Portfolio • High quality in the lending portfolio. Steady level of commitments in default - still at low levels. • Few large corporate exposures and few corporate exposures in high risk industries has contributed to an overall low portfolio risk. • The Group's total write-downs in Q2 2011 is lower t
Slide 44: Portfolio exposure as of 30.06.11
Portfolio - exposure as of 30.06.11 30.000 25.000 20.000 NOK mill 15.000 10.000 5.000 0 Low risk Medium risk High risk Default/impaired Retail market Corporate market SB1 Boligkreditt 44 44
Slide 45: Risk change - portfolio change Q2/10 – Q2/11
Risk change - portfolio change Q2/10 – Q2/11 4.000 3.000 2.000 NOK mill 1.000 0 -1.000 Low risk Medium risk High risk Default & impaired -2.000 SB1 Boligkreditt Retail market Corporate market 45 45
Slide 46: Group lending by sector
Group lending by sector (NOK million) 30.06.11 Share 30.06.10 Share Change Change in % Mining and quarrying 78 0,2 % 79 0 % -1 -1 % Construction 844 1,6 % 697 1 % 147 21 % Building of ships and boats 30 0,1 % 22 0 % 8 36 % El ectrici ty, gas, steam an air conditioning supply 822 1,6 % 1 026 2 % - 20
Slide 47: Portfolio of corporate property lending
Portfolio of corporate property lending 100,0 % 90,0 % 85,9 % 80,0 % 70,0 % 60,0 % • Lowest – Low risk, expected loss 0 %-0,50 % 50,0 % 40,0 % • Medium risk,expected loss 0,50 - 2,00 % 30,0 % • High - Highest risk, 20,0 % 8,3 % expected loss over 2,00 % 10,0 % 5,8 % 0,0 % Lowest - Low Medium High -
Slide 48: Losses and commitments in default
Losses and commitments in default • Positive loss development. No new losses of essential character. • Commitments in default and commitments in certain sectors are monitored closely. – Property projects – Housing co-operatives • Small losses in the retail market 48 48
Slide 49: Non-performing and impaired commitments
Non-performing and impaired commitments 1.100 3,0 % 1.000 900 2,5 % 800 700 2,0 % MNOK 600 1,5 % 500 400 1,0 % 300 200 0,5 % 100 0 0,0 % 31.12.04 31.12.05 31.12.06 31.12.07 31.12.08 31.12.09 31.12.10 30.06.11 Non-performing commitments 232 251 241 216 307 386 219 254 Non-performing commitments, 773
Slide 50: Losses on loans and guarantees - Group
Losses on loans and guarantees - Group 350 1.40 % 300 1.20 % 250 1.00 % NOK mill 200 0.80 % 150 0.60 % 100 0.40 % 50 0.20 % 0 0.00 % -50 -0.20 % 2006 2007 2008 2009 2010 30.06.11 Net losses Net losses in % of gross lending incl.agency loans 2006 2007 2008 2009 2010 30.06.11 Individual write-downs fo
Slide 51: Loss on lending: The Group's write-downs in 2011
Loss on lending: The Group's write-downs in 2011 Write-downs 2nd 2nd 2nd quarter quarter quarter 2010 2011 2011 (iso) 2010 Individual write-downs Retail market 5 1 7 16 Corporate market 19 11 33 100 SpareBank 1 Finans Nord-Norge 1 0 4 7 Other group units 2 2 0 4 Total individual write-downs 27 14 45
Slide 52: Securities
Securities For Nord-Norge i 175 ar SpareBank 1 NORD-NORGE
Slide 53: Income from financial investments
Income from financial investments (Amounts in NOK million) 30.06.11 30.06.10 Dividends 10 42 Income from joint ventures 102 100 Gains/losses and net value changes on shares 162 33 Gains/losses and net value changes on foreign exchange 20 17 Gains/losses and net value changes on certificates and bond
Slide 54: Interest-bearing portfolio
Interest-bearing portfolio ABS Industry, 0,1 % CDO Norway 0,9 % 4,3 % Subord. debt, Norway Fin. sector, 1,7 % Gov. cert. abroad 21,1 % 5,0 % Fin. sector, Norway 10,7 % Cert. 10,1 % Gov. guar. bonds Public bond3,8 % Covered bonds 0,8 % 41,5 % 54 54
Slide 55: Equity certificate holders
Equity certificate holders 55 55
Slide 56: Equity Certificates (EC) - holder structure
Equity Certificates (EC) - holder structure 35 30.06.10 30.06.11 30 25 20 % 30.4 15 28.1 24.6 21.5 25.6 20.6 10 5 8.2 6.1 0 10 largest Equity 20 largest Equity Holders residing in Foreign Holders Certificate holders Certificate holders North Norway 56 56
Slide 57: The 20 largest EC holders as at 30.06.11
The 20 largest EC holders as at 30.06.11 Number of Share of total Equity Certificate holders Equity Certificates Equity Certificate capital Pareto Aksjer Norge 3 278 879 4.95 % MP Pensjon 1 622 879 2.45 % Pareto Aktiv 1 498 112 2.26 % Protector Eiendom AS 1 482 414 2.24 % Frank Mohn AS 1 355 745 2.0
Slide 58: Liquidity/funding
Liquidity /funding For Nord-Norge i 175 ar SpareBank 1 NORD-NORGE
Slide 59: Liquidity buffer as per 30.06.11
Liquidity buffer as per 30.06.11 Liquidity buffer 10 9 8 7 Billion NOK 6 5 4 3 2 1 0 de 1 de 2 m 2 m 3 se 1 m 2 2 se 2 m 3 3 13 2 11 au 1 1 12 12 au 2 no 2 13 13 au 3 11 11 12 12 3 1 1 1 r.1 1 r.1 .1 .1 l.1 .1 l.1 l.1 1 t.1 1 t.1 .1 v. v. b. b. g. g. g. n. p. c. n. n. p. c. n. n. ar ar ay ai ju ju j
Slide 60: Summary – key figures
Summary – key figures Group Amounts in NOK million 30.06.11 30.06.10 Change Change % RESULT Result before tax 573 500 73 14.6% STATEMENT OF FINANCIAL POSITION Total assets 71 033 65 859 5 174 7.9% Gross lending 51 442 48 329 3 113 6.4% Deposits from customers 41 284 37 851 3 433 9.1% KEY FIGURES 30.
Slide 61: SpareBank 1 Nord-Norge 2nd quarter report 2011
SpareBank 1 Nord-Norge 2nd quarter report 2011 Good result. The Bank’s financial strength remains strong . Main features (figures and percentages in brackets refer to the same interim period in 2010): • Operating result before tax NOK 573 million • Lending growth during the last 12 months (including
Slide 62: Contact information
Contact information SpareBank 1 Nord-Norge P O Box 6800 9298 Tromsø CEO Deputy CEO CFO Hans Olav Karde Oddmund Åsen Rolf Eigil Bygdnes Tlph 901 51 981 Tlph 906 72 757 Tlph 905 19 774 Financial calendar Internet: 2011 SNN home page and internet bank: www.snn.no Q1 28. April Hugin Online: www.huginonl
Slide 63: Strategy
Strategy For Nord-Norge i 175 ar SpareBank 1 NORD-NORGE
Slide 64: Strategy 2012 – Market forces
Strategy 2012 – Market forces The strongest market forces: • More stringent regulations and public control • Higher capital requirements, the banks are building capacity for growth • Increased funding costs • Increased pressure on margins • Increased customer power • Focus on profitable customers •
Slide 65: Strategy 2012 – Customer-oriented distribution
Strategy 2012 – Customer-oriented distribution Target • Clear differentiation and increased interaction between distribution channels Process and measures • Local bank– cultivate advisory services – Financing, savings, insurance – All advisers are to be authorised – Cashier desks to be phased out in
Slide 66: Enhancing the efficiency of staff processes
Enhancing the efficiency of staff processes • Start-up of “Lean” project 2011 Lean: Create more with less • Project mandate – Purpose Flow in processes: Waste: Continual flow that Activities that do not • Simplify processes creates values for create values for • Incorporate Lean as practice customer
Slide 67: SpareBank 1 Nord-Norge and the stock savings bank model
SpareBank 1 Nord-Norge and the stock savings bank model 67 67
Slide 68: SpareBank 1 Nord-Norge and the stock savings bank model
SpareBank 1 Nord-Norge and the stock savings bank model Current conclusion: • SpareBank 1 Nord-Norge is not currently considering conversion to a stock savings bank. • One of SpareBank 1 Nord-Norge's objectives is to ensure that the bank shall continue to be a savings bank with a high degree of comm
Slide 69: Funding instruments/diversification, 30.06.2011
Funding instruments/diversification, 30.06.2011 69 69
Slide 70: Funding and liquidity management
Funding and liquidity management Maturity profile of capital markets funding, 30.06.2011 • Good liquidity • Liquidity buffer 9,2 billion NOK as at 30.06.2011 • Net refinancing need next 12 months 5,137 billion NOK 70 70
Slide 71: Interest-bearing portfolio – PIIGS exposure
Interest-bearing portfolio – PIIGS exposure Country Instr type Issuer name Currency Clean value NOK Nominal Final maturity date Rating ES Bond Caja de Ahorros y Pensiones de Barcelona EUR 39.085.844,87 5.000.000 06.07.2012 A- IT Bond BANCA NATIONALE del LAVORO EUR 63.260.202,64 8.000.000 06.03.2013
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