Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q4 2013 Earnings Presentation
50 slides from Sparebank 1 Ostlandet's earnings presentation, February 2014
Slide 1: 4th quarter 2013 – Preliminary annual accounts 2013
4th quarter 2013 Markedsoppdatering og strategiske vurderinger Juni 2011 Preliminary annual accounts 2013 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: A strong result ensures continued good lending capacity
A strong result ensures continued good lending capacity Pre-tax profit for the quarter of NOK 674 million (NOK 458 million) – Return on equity after tax: 16.2 % (11.2 %) Pre-tax profit for 2013 of NOK 2,347 million (NOK 1,761 million) – Return on equity after tax: 14.0 % (12.4 %) The net inter
Slide 4: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 15,6 % 16,2 % 12,3 % 11,1 % 11,8 % 10,0 % 10,1 % 10,3 % 10,5 % 11,2 % Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Cost ratio Earnings per share (NOK) 51,0 % 2,22 48,2 % 49,1 % 2,02 42,4 % 1,54 1,50 40,8 % 1,35 Q
Slide 5: Key figures – annual development
Key figures – annual development Return on equity CET 1 capital ratio 14,0 % 11,1 % 12,4 % 10,0 % 11,2 % 8,3 % 2011 2012 2013 2011 2012 2013 Cost ratio Earnings per share (NOK) 7,27 50,0 % 49,9 % 44,9 % 5,42 5,32 2011 2012 2013 2011 2012 2013 Page 5
Slide 6: Increased interest and good share price development 2013
Increased interest and good share price development 2013 Development in Price/Book 2013 Relative share price development 2013 • Greater liquidity in the share in 2013, 65 1,1 170 compared with 2012 60 1 160 Index 100 = 1. jan 55 150 0,9 140 50 45 0,8 130 • International p/B 120 40 0,7 ownership incr
Slide 7: Income statement
Income statement 31.12 31.12 Group Income Statement (MNOK) 13 12 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Net interest income 2.119 1.742 574 568 526 451 480 Net commission and other income 1.824 1.466 489 466 465 404 411 Net income on investment securities 555 578 195 137 62 161 97 Total income 4.498 3.786 1.
Slide 8: Change in profit 2012 – 2013
Page 8 500 -500 0 1.000 1.500 2.000 2.500 3.000 2012 1.761 Net interest income incl. net commission income SB1 Boligkreditt and SB1 377 272 649 Næringskreditt Change in profit 2012 – 2013 86 Other income Net income on investment securities -23 Total operating expenses -131 5 Impairment losses on loa
Slide 9: Key figures
Key figures 31.12 31.12 13 12 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Return on equity after tax (%) 14,0 12,4 16,2 15,6 11,8 12,3 11,2 Net interest margin (%) 1,42 1,27 1,46 1,49 1,43 1,27 1,36 Impairment losses on loans and guarantees in % of gross loans 0,11 0,13 0,17 0,11 0,09 0,09 0,10 -incl. SB1 Boligkr
Slide 10: Consolidated income profile
Consolidated income profile 1200 1000 322 299 314 800 290 34 37 278 2 167 167 MNOK 21 30 600 151 121 126 400 568 574 526 480 451 200 0 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Net interest income Commission income SB1 Boligkreditt and SB1 Næringskreditt Profit before tax SB1 Boligkreditt and SB1 Næringskreditt
Slide 11: Change in net interest income and net commission income 2012 – 2013
Change in net interest income and net commission income BK and NK 2012 – 2013 2.900 2.730 356 -9 -277 272 143 -64 -31 260 611 2.400 2.081 1.900 339 1.400 1.742 2.119 2.119 1.742 900 400 Boligkreditt and SB1 Næringskreditt Lending volume Lending margin Guarantee fund levy Net fundingcost 2012 Other 2
Slide 12: Lending and deposit margins
Lending and deposit margins Lending margins 2,88 % 2,99 % 2,93 % 2,57 % 2,64 % 2,28 % 2,33 % 2,13 % 1,97 % 2,21 % 2,21 % 2,06 % 1,85 % 1,88 % 1,61 % 1,63 % 1,36 % 0,99 % Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Corporate market Retail market Deposit margins 0,69 % 0,25 % 0,14 % 0,07 % -
Slide 13: Lending volume and 12 months growth
Lending volum and 12 months growth Corporate Market 60 000 50 000 15% 15 % 11,4 % 10,3 % 40 000 8,6 % MNOK 10% 10 % 30 000 6,9 % 5,8 % 5,5 % 20 000 4,0 % 4,5 % 4,6 % 55% % 10 000 0 00% % Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Volume Growth % Retail Market 120 000 100 000 15 15%% 12,1
Slide 14: Loan portfolio as at 31.12.2013
Loan portfolio as at 31.12.2013 Q4 2013 Q4 2012 Industry, Retail trade, Agriculture / forestry / fishing 4.867 4.738 Power/water hotels and Agriculture/ supply and Industry, Power/water supply and construction 6.503 5.939 restaurants: forestry/ construction: Retail trade, hotels and restaurants 2.87
Slide 15: 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- 80 % 71,8 % collateral value ratio of less than 85 % is 70 % 67,8 % very high and has also increased in 2013. It 60 % currently stands at 91.4 %. 50 % 40 % 30 % 23,6 % 19,3 % • 98 % of gross exposu
Slide 16: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market • The deposits volume in the corporate market includes here institutional 40 000 20% 20 % deposits from money market funds, 30 000 15% 15 % etc. The willingness to pay is 7,9 % MNOK 10% 10 % deliberately reduced in this segment. 20 000 3,4 % 4,2 %
Slide 17: Net commission and other income
Net commission and other income 31.12 31.12 MNOK 13 12 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Payment facilities 233 205 59 66 56 52 47 Savings/placements 151 140 39 40 37 35 36 Insurance products 164 156 41 41 42 40 51 Commission income real estate (EM1) 433 427 108 101 127 97 99 Guarantee commission 104 89
Slide 18: Net income on investment securities
Net income on investment securities 31.12 31.12 MNOK 13 12 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Dividend 33 25 -2 3 32 0 0 Investment income, associates 355 265 95 130 31 99 22 Securities gains/losses -81 130 13 -38 -55 -1 23 - of which capital change in shares and certificates 46 61 42 11 -28 21 46 - of w
Slide 19: Subsidiaries
Subsidiaries MNOK 31.12.13 31.12.12 EiendomsMegler 1 SR-Eiendom AS* Number of sales 7.246 7.449 Operating profit before tax 41,9 86,4 SpareBank 1 SR-Finans AS Total assets (BNOK) 6,4 6,1 Operating profit before tax 149,0 115,2 SR-Forvaltning AS Portfolio (BNOK) 7,7 6,1 Operating profit before tax 22
Slide 20: Ownership interests
Ownership interests MNOK 31.12.13 31.12.12 SpareBank 1 Gruppen AS (19,5 % interest ownership) Profit after tax 218,1 88,0 Adjusted profit previous years -1,6 9,3 SpareBank 1 Boligkreditt AS (26,2 % interest ownership) Profit after tax 64,7 84,3 Adjusted profit previous years 1,8 SpareBank 1 Næringsk
Slide 21: Operating expenses
Operating expenses 31.12 31.12 MNOK 13 12 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Personnel expenses 1.159 1.125 297 283 294 285 295 Restructuring costs 37 2 26 1 3 7 2 Non-recurring effect, pension-related items 0 -45 0 0 0 0 -5 Total personnel expenses 1.196 1.082 323 284 297 292 292 IT expenses 250 228 65
Slide 22: 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 0,17 % 0,10 % 0,09 % 0,09 % 0,11 % 1,41% 1,14% 1,25% 1,14% 1,24% 0,12 % 0,87% 0,81% 0,88% 0,91% 0,08 % 0,79% 0,07 % 0,06 % 0,06 % 689 912 985 787 884 80 830 32 460 49
Slide 23: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 31.12 31.12 Losses on loans in income statement (MNOK) 13 12 Q4 13 Q3 13 Q2 13 Q1 13 Q4 12 Corporate customers 145 161 87 9 22 27 28 Retail customers 17 6 -7 23 3 -2 -2 Change in collective impairment losses on loans -30 -30 -30 0 0 0 0 Net impairment losses
Slide 24: Deposit coverage ratio and market funding
Deposit coverage ratio and market funding • The reduced deposit coverage ratio reflects Deposit coverage ratio our funding strategy in 2013 with a greater 100,0 % share of unsecured funding and the slightly 80,0 % 66,8 % 67,6 % reduced use of covered bond funding. 63,2 % 66,2 % 63,6 % 61,7 % 61,1 %
Slide 25: Stronger capital ratio - Basel I floor taken into account
Stronger capital ratio - Basel I floor taken into account 16% • The "transitional rule" that the minimum requirement for IRB capital ratio cannot be 14% reduced to less than 80 % in relation to the 14,1 % Basel I rules will be in force until the end of 13,1 % 2017. 12% 12,8 % 11,4 % 12,1 % 10% • The
Slide 26: Core equity tier 1 capital being strengthened in line with stricter requirements
Core equity tier 1 capital being strengthened in line with the stricter regulatory requirements • The new capital requirements entail a need to continue increasing core equity tier 1 capital 0,18 16,00% • Over the last two years the equity is 0,16 10,0 -13,0 % 14,00% strengthened by appr. NOK 4.0 bi
Slide 27: Stronger core equity tier 1 capital ratio on unweighted balance sheet
Stronger core equity tier 1 capital ratio calculated on basis of unweighted balance sheet 9% • Core equity tier 1 capital ratio calculated on 7,9 % 8,0 % basis of unweighted balance sheet as of 31 8% December 2013 was 8.0 % - 0.1 percentage points stronger than last year. 7% 6,4 % 6,2 % 5,9 % 6% • M
Slide 28: Outlook
Outlook Further reinforce our financial strength and funding in line with the new requirements. Will gradually adapt until the overall requirements have been fully clarified. Macroeconomic developments indicate moderate and subdued international growth. A somewhat higher level of uncertainty c
Slide 29: An important indicator – companies are relatively positive to 2014
An important indicator – companies are relatively positive to 2014 Expectation index1 (total) Employees Turnover Profitability Investments Development #unemployed2 • Business survey conducted November 2013 • 334 companies participated - represents approximately 40 000 employees • 4 clusters and 7 in
Slide 30: APPENDIX
APPENDIX SpareBank 4 SR-BANK
Slide 31: 2013: A solid market position in a region enjoying growth
2013: A solid market position in a region enjoying growth 1 Rogaland Population 452,000 Retail market 38 % Market share Corporate market 21 % Year of establishment 1839 Market strategy Market leader 2 Oil & Gas, Oil service, Important business segments Supply Unemployment rate 2.0 % 2 Hordaland Popu
Slide 32: 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: 37 Number of man-years : 482 Number of man-years : 168 Number of man-years : 219 Fully owned companies Number of man-years : 219 Number of man-years
Slide 33: SpareBank 1 Alliance
SpareBank 1 Alliance Owners of the Sparebanken alliance Samspar Samspar Hedmark • All credit decisions are made at the 19.5 % 19.5 % 19.5 % 19.5 % 12.0 % 10.0 % local banks • Economies of scale related to expenses, Products, commissions, dividends IT solutions, marketing and branding Sales, loan por
Slide 34: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is commited to value • ROE 13-15 % at a normalised level of interest rates creation in the bank`s core market area • Sustainable contribution to the value creation process • Top 50 % ROE and cost/incom
Slide 35: 20 largest shareholders as at December 2013
20 largest shareholders as at December 2013 • International Investor Number Stake Sparebankstiftelsen SR-Bank 76.835.551 30,0 % ownership Gjensidige Forsikring ASA 26.483.470 10,4 % increased from Folketrygdfondet 7.934.328 3,1 % 6.0 % to 14.1 % SpareBank 1-stiftinga Kvinnherad 6.226.583 2,4 % Odin
Slide 36: Rating
Rating Moody’s Fitch Long-term debt A2 Long-term IDR A- Outlook Stable Outlook Stable Updated 30 August 2013 Updated 20 December 2013 Ratinghistory AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 Moody's A-/A3 Fitch BBB/Baa BB/Ba B 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Page 36
Slide 37: Balance sheet
Balance sheet Balance sheet (MNOK) 31.12.2013 31.12.2012 Cash and balances with central banks 1.265 1.314 Balances with credit institutions 1.253 1.087 Net loans to customers 119.525 108.758 Certificates, bonds and other fixed-income securities 21.065 18.677 Financial derivatives 4.923 4.578 Shares,
Slide 38: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk group • 95.6 % of the loan portfolio satisfies the criteria for low and the lowest risk. 100 % 95,6 % 92,3 % 90 % Expected losses in this portion of the 80 % portfolio are very limited at 0.03 %. 70 % 60 % 50 % • Exposure to high or the highest
Slide 39: Low concentration of individual LGRs in the lending portfolio
Low concentration of individual LGRs in the lending portfolio Distributed by loss given realisation (LGR) • At the end of 2013, SpareBank 1 SR-Bank had a total of 23 commitments with 100 % estimated loss potential exceeding NOK 100 million. 90 % 86,7 % 83,2 % 80 % • These commitments represent appro
Slide 40: Lending to the retail market – risk profile
Lending to the retail market – risk profile Retail market portfolio distributed by risk group • The quality of the retail market 0,2 % 0,2 % 0,3 % 0,2 % 0,2 % portfolio is considered very good and 100 % 0,8 % 0,6 % 0,4 % 0,6 % 0,5 % 99 % with low potential losses. 98 % 97 % 96 % • The development is
Slide 41: Loan to value ratio on home mortgage loans (excl Boligkreditt)
Loan to value ratio on home mortgage loans (excl Boligkreditt) Total-distributed • SpareBank 1 SR-Bank has in the last 70 % year introduced restrictions to reduce 58,0 % 60 % 55,6 % the risk associated with new 50 % mortgages. These include stricter equity requirements and liquidity 40 % 28,7 % 28,6
Slide 42: Lending to the corporate market – risk profile
Lending to the corporate market – risk profile Development in corporate market’s portfolio distributed by risk group • The quality of the corporate market portfolio is considered to be good. 100 % 3,9 % 3,4 % 4,4 % 3,2 % 1,9 % 12,0 % 9,5 % 16,2 % 14,1 % 13,5 % 80 % • The risk profile has improved*.
Slide 43: Low exposure to the shipping segment
Low exposure to the shipping segment • Lending to conventional shipping is low Dry cargo; and represents 1.4 % of total loans Product- Gas; 3,0 % (3,0 %) 6,7 % (6,2 %) /chemicaltanks; 8,2 % (7,6 %) Other; • Lending to the offshore sector 2,7 % (3,0 %) Seismic; represents 5.2 % of total loans 6,2 % (
Slide 44: Lending to commercial property
Lending to commercial property Housing Real estate • Lending to commercial property cooperative; management; constitutes 15.4 % of total loans, which 4,8 % (5,6 %) 4,4 % (3,5 %) is stable compared to last year. • The portfolio is characterised by lending Development and to commercial properties for
Slide 45: Risk profile – Lending in the corporate market
Risk profile – Lending in the corporate market Lending to commercial property for rent • The portfolio of commercial property for distributed by risk group rent represents the largest concentration in a single sector and accounts for 9.2 % of the 100 % 2,8 % 1,9 % 3,4 % 1,6 % 1,2 % total exposure (E
Slide 46: Liquidity portfolio
Liquidity portfolio Liquidity buffer – survival period Liquidity portfolio 16 Of which, 14 securities 12 Market classified to value, amortised 10 Category MNOK Share % cost, MNOK 8 Norwegian government/municipal 1.010 7% 0 BNOK 6 SSA/Foreign guaranteed 2.522 18 % 0 Covered bonds (Norwegian/foreign)
Slide 47: Investments in bonds and certificates
Investments in bonds and certificates Risk category Rating Market value Share • Most of the bond portfolio is managed as Very low risk AAA, AA+, AA og AA- 13.514 64,5 % part of the liquidity management Low risk A+, A og A- 269 1,3 % activities. Bonds held for liquidity Moderat risk BBB+, BBB og BBB-
Slide 48: Savings/placements – portfolio development
Savings/placements – portfolio development 16000 • Assets under management of NOK 13.9 billion as at 31 December 2013 14000 — Increase from NOK 12.0 billion as at 31 December 2012 12000 — 52 185 active savings contracts – approximately NOK 45.0 million in 10000 monthly savings 8000 MNOK • Most of th
Slide 49: SRBANK as at 31 December 2013
SRBANK as at 31 December 2013 2013 2012 2011 2010 2009 • Ownership interests: –From Rogaland, Agder-counties and Hordaland: 53.0 % Share price 60,25 37,20 40,70 57,00 50,00 –International: 14.1 % –10 largest: 56.7 % –20 largest: 63.6 % Marketvalue (MNOK) 15.409 9.514 5.182 7.257 6.047 • Number of ow
Slide 50: Contact Details
Contact Details Address Management Investor Relations Arne Austreid Vidar Torsøe Bjergsted Terrasse 1 CEO Investor Relations Postboks 250 4066 Stavanger Tel. Tel. +47 900 77 334 +47 970 80 656 Tel. E-mail. E-mail. arne.austreid@sr-bank,no vidar.torsoe@sr-bank.no +47 915 02002 Inge Reinertsen www.sr-