Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q3 2017 Earnings Presentation
43 slides from Sparebank 1 Ostlandet's earnings presentation, 2017
Slide 1: Company presentation, Q3 2017
Company presentation, Q3 2017
Slide 2: Financial targets
Financial targets Solid and profitable Profitability Return on equity 10 % p.a. Dividends 50 % pay-out ratio Solidity CET1 minimum 16 % 2
Slide 3: Summary of financials – Q3 2017
Summary of financials – Q3 2017 Profit before tax in Q3-17 at 476 MNOK (587 MNOK). Increased profitability Profit before tax YTD 2017 at 1,196 MNOK (1,077 MNOK). ROE in Q3-17 at 12.0 % (15.0 %). Return on equity ROE YTD 2017 at 10.1 % (10.7 %). CET 1 ratio at 16.9 % (17.5%). Well capitalized Leverag
Slide 4: Merger update
Merger update Successful merger and positive equity certificate performance • Acquisition of Bank1 Oslo Akershus – Completed H1 2016 • Legal merger – Successful legal merger 1st April 2017 – The merged bank changed name to SpareBank 1 Østlandet from the same date • IPO – The bank was listed on Oslo
Slide 5: Continuous development of the bank
Continuous development of the bank Merger and IPO foundation for future growth 2014 2015 2016 2017 2017 2017-> Decision to Evaluation, Equity issue to Merger of B1OA IPO Revised evaluate decision to B1OA owners and SH into strategy convert, SpareBank 1 Deliver on implementation Østlandet ambitions a
Slide 6: Attractive Market
Attractive Market Major player in Eastern Norway with main focus in Hedmark, Oppland, Oslo and Akershus #1: INLAND REGION – Hedmark and Oppland #2: CAPITAL REGION – Oslo and Akershus • Approx. 8 % of national • Approx. 25 % of national population (0.39m inhabitants). population (1.26m inhabitants).
Slide 7: Value Proposition
Value Proposition SpareBank 1 Østlandet is one of Norway’s most well-run and solid banks 1 Norway’s 4th largest savings bank * – based in Eastern Norway 2 The most solid regional savings bank in Norway ** 3 Low credit risk in loan portfolio – limited loan losses 4 Profitable operations with go
Slide 8: Long and Profitable Operational History
Long and Profitable Operational History 4th largest savings bank * in Norway with established client base and diversified offering History from 1845 – known as Sparebanken Hedmark (“SBHE”) until 1 April 2017. Norway’s fourth largest savings bank * – total adjusted assets (incl. cov. bonds) of approx
Slide 9: Macroeconomic Environment
Macroeconomic Environment Diverse home market with low unemployment and good economic activity Productivity above trend Low and falling unemployment Growth in production past 3 months – seasonally adj. index Unemployment Rate 4 5.0 4.5 3 4.0 2 3.5 3.0 1 2.5 0 2.0 -1 1.5 1.0 -2 0.5 HEDMARK OPPLAND AK
Slide 10: Macroeconomic Environment
Macroeconomic Environment Diversification in housing markets as well Stagnation in housing price growth ….but more in some areas than other Housing prices per county, YoY Housing prices per county, Indexed* 25 25 170.00 20 20 160.00 15 15 150.00 10 10 140.00 5 5 130.00 120.00 0 0 110.00 -5 -5 100.00
Slide 11: High quality credit process
High quality credit process New loans with average LTV per quarter in 2017 Others: Buskerud, Østfold and Vestfold 11
Slide 12: High quality credit process
High quality credit process New loans with average LTV per county in 2015 and 2016 12
Slide 13: Norwegian mortgage regulations
Norwegian mortgage regulations Good clearance to exceptions quota • Loan to value: 85% (75% legal limit for Use of exceptions quota in Q3 2017 cover pool). • Flexible repayment mortgages and secondary housing in Oslo: Max 60% LTV New mortgages in Oslo “Considerable headroom” • 5% mortgage interest r
Slide 14: Key financials - quarterly
Key financials - quarterly (1) Profit/loss before tax (MNOK) Net interest income and commission fees from covered bond companies (MNOK) 587 596 476 582 361 358 294 540 517 521 Q3-16* Q4-16* Q1-17* Q2-17* Q3-17* Q3-16* Q4-16* Q1-17* Q2-17* Q3-17* Losses on loans and guarantees (MNOK) Total operating
Slide 15: Key financials - quarterly
Key financials - quarterly (2) Return on equity after tax (%) Common equity Tier 1 capital ratio (%) 15.0 17.5 12.0 9.4 9.2 9.0 16.9 16.9 16.7 16.7 Q3-16* Q4-16* Q1-17* Q2-17* Q3-17* Q3-16 Q4-16 Q1-17 Q2-17 Q3-17* Growth in loans during the last 12 months Growth in deposits during the last 12 months
Slide 16: Income statement 3rd quarter 2017
Income statement 3rd quarter 2017 Group Q3-2017 Q3-2016 30.09.2017 30.09.2016 Net interest income 498 442 1,454 1,038 Net commission income 283 272 809 507 Other income 42 37 140 137 Total operating expenses 433 214 1,348 727 Result bank operation before losses 390 537 1,055 955 Losses on loans and
Slide 17: Income statement 2017 vs pro forma income statement 2016
Income statement 2017 vs pro forma income statement 2016 Adjusted Q3-2017 Q3-2016 30.09.2017 30.09.2016 Net interest income 498 442 1,454 1,286 Net commission income 283 272 809 788 Other income 42 37 140 146 Total operating expenses 433 214 1,348 1,096 Result bank operation before losses 390 537 1,
Slide 18: Profit contribution from subsidiaries
Profit contribution from subsidiaries SpareBank 1 Finans Østlandet - Profit before tax 121 MNOK - Growth and increasing profitability EiendomsMegler 1 Hedmark - Profit before tax 20 MNOK - Central market player and increasing profitability EiendomsMegler 1 Oslo Akershus - Profit before tax – 1 MNOK
Slide 19: Profit contribution from joint ventures
Profit contribution from joint ventures SpareBank 1 Gruppen - Profit before tax 1 437 MNOK - ROE after tax 19.4 % - Ownership 12.4 % SpareBank 1 Boligkreditt AS - Profit before tax – 183 MNOK - Ownership 20.3 % SpareBank 1 Næringskreditt - Profit before tax 67 MNOK - Ownership 9.2 % SpareBank 1 Kred
Slide 20: Net interest income
Net interest income Net interest income group incl. Commission from covered bond companies (MNOK) 1400 1.88% 1.86% 1.86% 1200 1.85% 1.84% 1.84% 1000 1.82% 800 1.79% 1.80% 596 600 573 521 540 517 1.78% 1.77% 400 1.76% 200 1.74% 0 1.72% Q3-16* Q4-16* Q1-17* Q2-17* Q3-17* Commission fees from covered b
Slide 21: Loan volumes
Loan volumes Total loans incl loans transferred to covered bond companies, NOK bn. 127 124 122 118 119 • Lending growth last 37 37 37 38 36 12 months 7.9 % ‐ Retail 8.3 % ‐ Corporate 6.5 % 88 89 81 83 85 Q3-16* Q4-16* Q1-17* Q2-17* Q3-17* Gross loans own balance Loans transferred to coverd bond comp
Slide 22: Deposits volume
Deposits volume Deposits NOK bn. 67 65 63 63 • Deposit growth last 62 12 months 5.1 % ‐ Retail 9.1 % ‐ Corporate -3.2 % • Deposit to loan ratio 73.4 % • Deposit to loan ratio including transferred loans 51.4 % Q3-16* Q4-16* Q1-17* Q2-17* Q3-17* *) Includes 100 % ownership of Bank 1 Oslo Akershus 22
Slide 23: Lending margins (parent bank)
Lending margins (parent bank) Retail and corporate lending margins, incl transferred loans * 2.76% 2.68% 2.66% 2.62% 2.56% 1.92% 1.85% 1.71% 1.64% 1.58% Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Retail lending margins, incl transferred loans Corporate lending margins, incl transferred loans Proforma i
Slide 24: Deposit margins (parent bank)
Deposit margins (parent bank) Retail and corporate deposits margins % * 0.30% 0.27% 0.24% 0.23% 0.19% 0.16% 0.13% 0.09% 0.06% Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 -0.05% Retail deposit margins Corporate deposit magins * Proforma includes 100 % ownership of Bank 1 Oslo Akershus for the period Q3-1
Slide 25: Net commission and other income
Net commission and other income Commission and other income, by type. MNOK * 235 232 234 234 226 8 15 15 16 13 17 10 16 17 14 31 41 29 36 46 Commission income from credit cards Other income 79 Income from accounting services 73 70 83 Income from real estate brokerage 71 Mutual fund and insurance com
Slide 26: Operating expenses
Operating expenses Operating expenses, by type. MNOK *) 477 437 478 214 433 85 63 80 69 27 21 21 20 19 22 99 122 116 141 153 Sum Other operating expenses 49 50 47 Depreciation 11 65 51 16 Admin. and other operating costs 11 Social security 223 209 195 Pensions 161 166 Payrolls -26 Dividends from equ
Slide 27: Costs
Costs In-depth information • The costs this year are characterized by special circumstances – MNOK 31 has been expensed in connection with the listing of the company, of which MNOK 14 relates to a private placement on new ECCs towards the employees of the bank. – MNOK 34 are expenses connected to th
Slide 28: Merger and integration
Merger and integration Synergies are realized according to plan Status • Technical merger completed successfully Synergies • Target of at least 75 MNOKs annually maintained • Identified merger synergies increased • Targeted head count reduction following the technical merger of 20 FTEs (“identified”
Slide 29: Financial assets and liabilities
Financial assets and liabilities Net income from financial assets and liabilities, by types. MNOK * 53 100 13 66 5 0 37 82 34 Sum 82 Net result from financial assets and liabilites ex valuation of own 52 18 debt Valuation of own debt 49 30 21 6 Net result from ownership interests 9 1 2 2 Dividends f
Slide 30: Losses
Losses Losses on loans and guarantees. Quarterly. MNOK. * 43 14 5 3 -26 Q3-16* Q4-16* Q1-17* Q2-17* Q3-17* *) Includes 100 % ownership of Bank 1 Oslo Akershus 30
Slide 31: Losses
Losses Losses on loans and guarantees. Annual. MNOK* 75 72 66 56 42 2012 2013 2014 2015 2016* Q3-2017 -7 ) Includes 100 % ownership of Bank 1 Oslo Akershus 31
Slide 32: Problem loans
Problem loans Defaulted and other doubtful commitments* (MNOK) Defaulted commitments 700 Other doubtful commitments 1.8% 1.64% Gross defaulted and doubtful in % of gross commitments 1.6% 600 1.37% Gross defaulted and doubtful in % of gross comm. inc. transferred loans 1.4% 500 1.17% 1.12% 1.2% 0.98%
Slide 33: Financial strength and capital adequacy
Financial strength and capital adequacy SpareBank 1 Østlandet (Group) i % Leverage ratio as at 30.09.17: 7.3 % 15.3 % 15.6 % 14.2 % 13.7 % 12.0 % 12.2 % 16.9 % 17.2 % 16.9 % 16.9 % 16.2 % 14.8 % 2012 2013 2014 2015 2016* Q3-17 CET-1 Equity ratio *) Includes 100 % ownership of Bank 1 Oslo Akershus 33
Slide 34: Attachments
34 Attachments SpareBank OSTLANDET
Slide 35: Financial reporting and the Bank 1-acquisition
Financial reporting and the Bank 1-acquisition • Due to the acquisition, comparisons between previous years’ income statements and balance sheets are less informative. • The income statement of Bank 1 Oslo Akershus AS for H1-16 has been included in the Group’s income statement in accordance with the
Slide 36: Key figures Equity Certificates
Key figures Equity Certificates 30.09.2017 EC's Market price (NOK) 85.50 Market capitalisation (NOK million ) 9,164 Book equity per EC 1) 79.29 Earnings per EC, NOK 2) 5.83 Price/Earnings per EC 3) 10.97 Price/book equity 4) 1.11 1) Group book equity without hybrid capital with interest paid, minori
Slide 37: Profits from subsidiaries and joint ventures
Profits from subsidiaries and joint ventures (Nok million) 30.09.2017 Q3-2017 30.09.2016 Q3-2016 2016 Parent Bank's profit after tax 826 263 685 252 964 Dividends received from subsidiaries and joint ventures -243 0 -263 -7 -389 Profit /loss attributable to: SpareBank 1 Gruppen AS 137 51 130 50 192
Slide 38: Group income profile
Group income profile Income by types. Group 16.2 % 14.9 % 13.4 % 14.9 % 16.6 % 5.0 % 3.5 % 4.1 % 4.8 % 5.9 % 10.2 % 8.9 % 10.5 % 9.3 % 9.2 % Other commission and other income 11.1 % 12.2 % 10.0 % 9.2 % 9.8 % Income from accounting services Income from real estate brokerage Commission income from cov
Slide 39: Composition of loans and receivables
Composition of loans and receivables Included covered bond companies Composition of loans Composition of loans % MNOK Commercial services 3,773 Primary Other 3,987 industries 4,793 Wholesale and retail trade 1,377 Corporate 26% Building and Real estate construction 14,439 Private 3,066 customers Tra
Slide 40: Equity capital
Equity capital End-of-year balances. MNOK 12,991 12,107 8,718 7,624 6,718 6,044 2012 2013 2014 2015 2016* Q3-17 *) Includes 100 % ownership of Bank 1 Oslo Akershus 40
Slide 41: Size of balance sheet
Size of balance sheet Total assets and total adjusted assets included loans transferred to covered bond companies End-of year balance NOK bn. 144 138 38 37 73 66 63 57 17 16 15 106 13 102 56 47 50 44 2012 2013 2014 2015 2016* Q3-17 Total assets Transferred to covered bond companies *) Includes 100 %
Slide 42: Housing prices
Housing prices Growth in real income counterweights housing prices 200.00 175.00 150.00 125.00 100.00 House prices/disposable income per capita (aged 15-74) House prices/disposable income 75.00 50.00 1983 1987 1991 1995 1999 2003 2007 2011 2015 Source: Norges Bank Pengepolitisk Rapport 3/17 || Index
Slide 43: Contact details
Richard Heiberg CEO Phone: +47 902 06 018 richard.heiberg@sb1ostlandet.no Geir-Egil Bolstad Contact details CFO Phone: +47 918 82 071 geir-egil.bolstad@sb1ostlandet.no Runar Hauge Investor Relations Phone: +47 482 95 659 runar.hauge@sb1ostlandet.no
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