Rogaland Sparebank · OSL:ROGS
Rogaland Sparebank — Q3 2023 Earnings Presentation
75 slides from Rogaland Sparebank's earnings presentation, November 2023
Slide 1: Financial reporting 3rd quarter 2023
Financial reporting 3 rd quarter 2023
Slide 2: Agenda
Agenda • A bank with good development • Stable macro outlook in Rogaland • Good deliveries in the retail market • Good development in the corporate market • A solid bank • Status liquidity and financing
Slide 3: Good first 9 months, strong development in underlying banking operations
Den Gule Banken, Sandnes Sparebank Good first 9 months, strong development in underlying banking operations Summary 300 12,0 % • Profit after tax MNOK 261,4 (217,7) 280 11,3 % 11,0 % 260 10,7 % • ROE on equity after tax 10,7 % (9,5 %) 10,3 % 261 10,0 % 240 9,8 % 9,5 % 9,8 % 9,5 % • ROE on equity aft
Slide 4: Profit after tax - main contributors
Profit after tax - main contributors Improvement in underlying results 10 18 16 4 10 2 14 81 261 218 9M22 Net interest financial dividend Eika operating costs Cost realtor Conversion Loss provisions Tax 9M23 income instruments costs TietoEvry
Slide 5: Loan growth at 6,5 % YoY
Loan growth at 6,5 % YoY Solid growth in retail market, Improvement in corporate lending 0,09 0,15 0,08 8,0 % 7,6 % 7,6 % 0,07 12,3 % 11,7 % 11,8 % 6,5 % 0,1 10,9 % 9,9 % 0,06 6,1 % 6,2 % 8,7 % 5,5 % 7,6 % 6,8 % 0,05 5,2 % 0,05 4,6 % 5,0 % 4,1 % 0,04 4,3 % 0 0,2 % 0,6 % 0,03 -0,3 % -2,9 % -3,2 % 0,0
Slide 6: Brand awareness – strategic growth over time
Brand awareness – strategic growth over time • Strong momentum in the market • Values that should show up in the bank’s balance sheet • A different bank – playful and professional • We care about customers, the local community and colleagues • Understanding of the local market • Easy to get hold of
Slide 7: Customer experience
Customer experience • Clear strategy about satisfied and loyal customers • Good customer experiences as a basis for growth • Growth is important for increasing profitability, but also for becoming more robust • Ever-tightening regulatory requirements • Developing digital solutions • Increasing costs
Slide 8: KOI – Customer experience index
KOI – Customer experience index Annual development in the corporate and retail market
Slide 9: Improved operations
Improved operations • Strong and different culture, high engagement and ownership • Continued optimization and and adaptation of competence and roles • Great competence related to change in the organization • More customers per advisor and continued growth capacity • Increasing regulatory requiremen
Slide 10: Increasing economies of scale from Eika
Increasing economies of scale from Eika • Eika Kredittbank + Sparebank 1 Kreditt • Increasing economies of scale • Improved customer experiences • Lower costs • New IT systems • Better customer solutions • Standardized solutions tailored to the Norwegian market • Lower costs • Increased strategic fl
Slide 11: Agenda
Agenda • A bank with good development • Stable macro outlook in Rogaland • Good deliveries in the retail market • Good development in the corporate market • A solid bank • Status liquidity and financing
Slide 12: Housing prices in large Norwegian cities
Housing prices in large Norwegian cities Nominal housing prices Housing prices adjusted for inflation
Slide 13: Housing prices in large Norwegian cities
Housing prices in large Norwegian cities Number of homes for sale The number of days to sell a home
Slide 14: Just as interesting – housing prices in kroner
Just as interesting – housing prices in kroner Price per square meter Average prices of homes sold Oslo 93.276 Tromsø 56.969 Tronheim 54.116 Norge 53.542 Bergen 52.822 Stavanger m/omegn 44.203 Kristiansand 40.268 - 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000 Kilde: Krogsve
Slide 15: The nurse index 2023
The nurse index 2023 The region has a housing market most residents can parttake in What proportion of homes sold can a single nurse get financing to purchase? • Maximum mortgage 3M • Salary kr. 644 000 • 15% down payment Kilde: Eiendomsverdi (maks lån er 5X brutto inntekt, antatt 200.000 i studielå
Slide 16: The proportion of income spent on interest servicing is increasing
The proportion of income spent on interest servicing is increasing Debt ratio crucial for household finances Household debt and interest burden Interest burden Kilde: Finanstilsynet
Slide 17: Everyday life for a family in Oslo VS Stavanger
Everyday life for a family in Oslo VS Stavanger Stavanger Oslo Boligpris 3.530.000 3.529.412 7.060.000 7.060.000 Lån (85%) 3.000.000 3.000.000 6.000.000 6.000.000 2020 2023 2020 2023 Pr. måned Inntekt (inkl barnetrygd) 103.000 113.300 103.000 113.300 Disponibel inntekt etter skatt 79.400 86.489 79.4
Slide 18: Inflation varies between product groups
Inflation varies between prduct groups and has different effects on the population Inflation last five years Kilde: SSB, pr okt 2023
Slide 19: Local indicators of economic challenges in households
Local indicators of economic challenges in households Proportion of «difficult or very difficult to make Foreclosure ends meet» • Grafen viser antall begjæringer om tvangssalg av bolig i første halvår i 2023 i de tingrettskretsene der det har vært økning. Det er flere kretser som har hatt en nedgang
Slide 20: High education and wage levels in the region
High education and wage levels in the region • High and relevant education • Flexible workforce improves adaptability • Better demograpics than the country as a whole (the proportion of young vs old) • High wages are good for managing increasing interest rate, but slows down restructuring
Slide 21: Norges Bank Regional network
Norges Bank Regional network Strong growth prospects in the regional – weak growth prospects for the country as a whole Regional indicators Expected production growth. All industries, Norway as a whole High activity within energy-related industries, challenging for the construction- and retail indus
Slide 22: Oil investments are still important for the Rogaland economy
Oil investments are still important for the Rogaland economy Estimates of oil investments Growth per sector, regional network
Slide 23: Strong labor market in Rogaland
Strong labor market in Rogaland Unemployment rate at 1,7% (1,8 % nationwide) Number of vacancies in Rogaland Number of employed in Rogaland
Slide 24: Population growth
Population growth Low birth rate, but high immigration rate, mainly from Ukraine Population growth in Rogaland
Slide 25: Housing constructions, better in Rogaland than the rest of the country
Housing constructions, better in Rogaland than the rest of the country Construction of new homes DN 06.09
Slide 26: Commercial property – the local market
Commercial property – the local market Office property are the segment with the most vacant space, but the market is improving. The correction in connection with the oil downturn in 2014-2016 results in a lower drop height than other parts of the country Leiepriser største byer i Norge 13,5 % 11,2 %
Slide 27: Commercial property – the local market
Commercial property – the local market Mixed use properties and commercial buildings are the segments with the lowest vacancy rate 1,6 % 1,6 % 5,0 % 4,9 % 1,4 % 1,4 % 4,4 % 1,3 % 1,3 % 4,2 % 4,0 % 4,0 % 3,7 % 1,1 % 1,0 % 2,9 % 2,9 % 2,9 % 0,9 % 2,7 % 2,8 % 0,8 % 0,7 % 0,7 % 2012 2013 2014 2015 2016
Slide 28: Agenda
Agenda • A bank with good development • Stable macro outlook in Rogaland • Good deliveries in the retail market • Good development in the corporate market • A solid bank • Status liquidity and financing
Slide 29: Growth Retail– strategic investment has given results
Growth Retail– strategic investment has given results Strategy – new Pandemic – customer focus Growth strategy 15% organization 12,3 % 11,7 %11,8 % 10,9 % 10% 9,9 % 8,7 % 7,4 % 7,5 % 7,6 % 6,9 % 6,4 % 6,7 % 6,7 % 6,2 % 5,7 % 5,3 % 5% 5,0 % 4,5 % 3,7 % 3,9 % 3,6 % 3,5 % 3,5 % 3,5 % 3,5 % 3,4 % 3,4 %
Slide 30: Growth strategy experiences to date
Growth strategy experiences to date • Growth in lending higher than forecast • Profitability lower than forecast, mainly due to low deposit coverage on new loan customers • Steady increase in comission income • Customer satisfaction measeres within reach • Good control on default/loss
Slide 31: Margins Retail
Margins Retail 2,05% 2,00% 1,92% 1,93% 1,85% 1,77% 1,76% 1,71% 1,64% 1,57% 1,52% 1,49% 1,47% 1,46% 1,40% 1,33% 1,15% 1,17% 1,03% 0,97% 0,83% 0,81% 0,74% 0,74% 0,59% 0,56% 0,46% 0,49% 0,47% 0,42% 0,39% 0,34% - - - 0,06% - 0,04% -0,06% -0,09% -0,19% -0,39% 1K19 2K19 3K19 4K19 1K20 2K20 3K20 4K20 1K21
Slide 32: Focus ahead
Focus ahead • The art of balancing growth and profitability • Low credit growth and high competition • Focus on deposits – also when profits decreases • Continued focus on width of products! • Organization – preparing for tomorrow
Slide 33: Balansebank
© balansebank Balansebank
Slide 34: Balansebank
Balansebank Stable growth over time Lending volume MNOK Key Figures YTD: 1.400 • Net interests of MNOK 27,5 1.200 • Loan losses in % of gross lending of 1,53% 1.000 • Where individual write downs amount to 0,95% 800 • Non-performing and doubtful loans is 11,67% 600 • The average time customers stay
Slide 35: Status YTD
Status YTD • Challenges to profitability in a rapidly rising interest rate market • Strong position in the network • Control on losses and defaults • Adjusted interest rate on existing portfolio • Strong focus and good competance within AHV
Slide 36: Fokus fremover
Fokus fremover • Continue to closely monitor the portfolio with focus on defaults and losses • Steady growth and low losses is expected to increase profitablility going forward • Still assessing the potential for further interest rate adjustments in the existing portfolio • Launched deposit product
Slide 37: Questions?
Questions?
Slide 38: Agenda
Agenda • A bank with good development • Stable macro outlook in Rogaland • Good deliveries in the retail market • Good development in the corporate market • A solid bank • Status liquidity and financing
Slide 39: Outlook
Outlook • High activity in the region – largely driven by energy-related business • Still low unemplyment • Continued optimism in the corporate sector – but challenging for some branches
Slide 40: Outlook
Outlook • Commercial property • Construction • Agriculture • Industry • Retail • Service industries
Slide 41: Growth ambition
Growth ambition • New core bank system provides opportunities • Clear business profile for small and medium- sized enterprises • Local knowledge and expertise • Activity provides good growth • Strong customer satisfaction • Market-oriented organization with good expertise
Slide 42: Agenda
Agenda • A bank with good development • Stable macro outlook in Rogaland • Good deliveries in the retail market • Good development in the corporate market • A solid bank • Status liquidity and financing
Slide 43: Profitability
Profitability Improvements in underlying banking operations 140 14, 0 % 12,7 % 10,7 % 350 120 9,6 % 9,7 % 11,1 % 12, 0 % 10,0 % 300 9,0 % 8,5 % 100 10, 0 % 281 103 250 277 8,3 % 261 261 8,0 % 93 266 80 8,0 % 200 6,1 % 5,9 % 6,0 % 60 66 6,0 % 150 40 48 48 4,0 % 100 4,0 % 20 2,0 % 50 2,0 % 0 0,0 % 0 3
Slide 44: Dividend to Owners – Stable Ownership Fraction of 63,5%
Dividend to Owners – Stable Ownership Fraction of 63,5% Equity Capital Certificate Owners and 36,5 % Social Capital 9 1 8,5 8 7,9 8,1 7,9 1 7,9 1 7 1 6 1 5 1 4 75% 50-75% 1 3 5,9 6,1 69 % 5,2 1 5,0 2 1 66 % 63 % 1 1 0 1 2019 2020 2021 2022 9M23 2019 2020 2021 2022 Policy Dividend per equity capital
Slide 45: Positive development in Net Interest Margin and Loans to Customers
Positive development in Net Interes Margin and Loans to Customers Strong growth in loans to customers and effect of interest rate changes increases net interest margin Net Interest Margin, Yearly CAGR+ 5,6% 1,90% 35 1,80% 1,80% 1,72% 30 28,7 1,70% 27,0 1,64% 25,4 1,61% 25 24,0 22,9 1,60% 1,56% 1,50%
Slide 46: Margins on Loans and Deposits
Margins on Loans and Deposits Strong competion and rising NIBOR-rates affects margins 2% 2% 2,05 % 2,53 % 2,48 % 1,93 % 2,40 % 2,39 % 2% 2,30 % 1,86 % 2% 1,64 % 1,66 % 1,57 % 1,62 % 2% 1% 1,31 % 1,33 % 1% 0,97 % 1,03 % 0,81 % 1% 0,49 % 0,47 % 0,39 % 1% 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q
Slide 47: Other income
Other income Dividend from Eika Gruppen booked in the 2nd quarter 44,8 MNOK 2019 2020 2021 2022 9M23 110, 0 93 90 2 154,3 153,8 80 2 4,3 76 12 15 140,6 2,1 90,0 3 3 5 72 138,3 10 5 135,0 14,8 9 5 1 0,7 4 6 12 1,9 4 12,3 70,0 8 6 31,5 5 37 4 93,4 33 50,0 33 14,4 79,8 35 25 89,7 71,5 30,0 48,6 40 40 2
Slide 48: Operating Costs
Operating Costs Mål 2019: Some increase in costs, primarily related to the conversion of the core banking system in the 2nd quarter of 2023 120 400 1,22 98 314 350 100 89 29 82 13 85 1,02 300 79 6 2 269 269 36 242 272 80 1 0 7 10 12 11 - - 10 250 28 30 21 11 29 33 0,82 60 200 150 0,62 40 278 74 73 7
Slide 49: Historical and forecast IT-costs
Historical and forecast IT-costs 2019-2025 Konvertering fra SDC til TietoEvery sin kjerneplattform gir bedre kundeløsninger, bedre arbeidsverktøy internt og kostnadsinnsparing Year / MNOK 2019 2020 2021 2022 2023 2024 2025 IT costs 51 53 81 70 77 45 47 Conversion IT plattform 29 12 22 IT costs ex. c
Slide 50: Losses on Loans and Guarantees
Losses on Loans and Guarantees Stable low losses in spite of troubled financial markets and macroeconomic uncertainty 1% 0,64 % 0,63 % 0,10 % 0% 1% 1% 25,3 0,06 % 31,0 0% 0% 0,04 % 0,37 % 0,35 % 0,34 % 25 35,7 52,1 0% 0,02 % 13,6 17 18,7 13 11 6 0% 0% 44,2 43,2 40 0% 2019 2020 2021 2022 9M23 0% 80 7
Slide 51: Well Capitalized and Equipped for Further Growth
Well Capitalized and Equipped for Furter Growth Common equity capital ratio of 19 % including this years result. Leverage ratio 9,0 % 18% • Systemic Risk Buffer increases from 3 % to 4,5 % from 15% 31.12.2023 12% • CET1-requirement of 14,6 % pr 30.09.2023 9% 17,5 % 17,8 % 16,6 % 17,8 % 17,5 % • Expe
Slide 52: Loans to Customers by Division
Loans to Customers by Division The share of lending to the retail market has increased significantly over the past 5 years Retail services 1% Farming 3% Other* 3% Public and Buidlingprivate & services construction 1% 3% 27 % 27 % 24 % 24 % 29 % Commercial real estate 15% Retail customers 75% 73 % 73
Slide 53: Loans to Customers by Division, Credit Risk
Loans to Customers by Division, Credit Risk Risk expressed by expected credit loss (ECL, PDxLGD) 60 0,30 % 140 1,50 % 0,25 % 1,27 % 50 0,23 % 120 111 1,16 % 0,19 % 44 0,20 % 0,20 % 0,18 % 42 1,01 % 1,00 % 0,16 % 0,15 % 100 95 40 37 35 0,10 % 0,75 % 0,75 % 80 30 30 0,05 % 65 0,50 % 58 60 55 0,00 % 20
Slide 54: Retail Loan Portfolio
Retail Loan Portfolio 26% 22% 20% 15% 14% 3% <1 mill 1-2 mill 2-3 mill 3-4 mill 4-5 mill >5 mill • A limited amount of large loans reduces vulnerability in the event of a • The proportion of interest-only loans increased in Q3, but is still at low temporary loss of income levels • Average loan size
Slide 55: Retail Loan Portfolio
Retail Loan Portfolio Volume by geography 53% Landet for Oslo 6% øvrig 11% Øvrig Rogaland 2% 27% Lokalt markedsområde 82% 16% 3% 1% < 60% 60-75% 75-85% 85-100% >100% • 80 % of the portfolio has LTV below 75% • 82 % of the volume are within the bank's primary market area • Average volume weighted LTV
Slide 56: Retail - Defaulted and doubtful loans
Retail - Defaulted and doubtful loans 180 160 18% 2,00% 140 120 13% 1,50% 100 80 8% 1,00% 60 40 3% 0,50% 20 0 -2% 0,00% Balanse Ordinær PM Balanse (v.a.) Ordinær PM (h.a.) PM totalt (h.a) • Balansebank has an expected defaultrate of ca 10% Nedgang i inntekter knyttet til verdiendringer i likviditets
Slide 57: Loans to Corporate Customers by Sector
Loans to Corporate Customers by Sector-24% of total lending Largest growth in SME 35% Commercial real 30% estate 57% 25% 20% Buidling & 15% construction 10% 10% Other* 12% 5% Public and 0% private services 5% 2Q20 1Q21 4Q21 3Q22 2Q23 Farming Retail services 12% 4% • Free installments within the corp
Slide 58: Focus on reduced risk in the portfolio
Focus on reduced risk in the portfolio Growth in small businesses| Reduction in large corporates 3,0 16 2,3 14 2,2 2,5 12 2,1 2,2 11 11 12 2,0 2,1 2,1 2,0 9 10 1,5 1,7 1,6 8 1,9 1,5 1,4 1,4 8 1,0 1,8 1,8 6 1,8 1,7 0,5 4 1,6 0,0 2 1,5 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Volum > MNOK 100
Slide 59: Utlån til bedrifter med pant i eiendom
Utlån til bedrifter med pant i eiendom 69% of total exposure to companies, but many run their own business and own their own building Housing cooperative Commercial Other 4% 26% building 4% building 23% 24% projects 0% Housing building projects Land 9% 2% 15% 12% Commercial Housing rental rental 18%
Slide 60: Lending to Real Estate > MNOK 30
Lending to Real Estate > MNOK 30 32 engagements | EAD NOK 2,9 mrd | 36% of corporate loan book | ca 58% of real estate loans 45% 23% 15% 6% 5% 4% 2% Mixed use Housing Retail Parking Housing Office Agriculture rental association • 100% 1st lien • WA occupancy rate is 91 % • 100% with LTV below 80% •
Slide 61: Lending to Real Estate > MNOK 30
Lending to Real Estate > MNOK 30 32 engagements | EAD NOK 2,9 mrd | 36% of corporate loan book | ca 58% of real estate loans • Properties on Forus / Lura are mainly mixed-use, but there are also • Housing rental is dfiend with WA lease length of 0,5 elements of office, housing rental and development
Slide 62: Corporate - default rate
Corporate - default rate MNOK (over 90 days) 600 8,00% 7,00% 500 6,00% 400 5,00% 300 4,00% 3,00% 200 2,00% 100 1,00% 0 0,00% 4Q21 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
Slide 63: Sustainability Credit Portfolio
Sustainability Credit Portfolio «We are commited to contributing to a better and more sustainable future for our emplyees, our customers and our surroundings» The bank’s most important contribution to the green transition and «net zero» 2050 is via the allocation of credit Fokusområder 2023-2024 • O
Slide 64: Energy Labeling
Energy Labeling Working on collecting data Corporate • Criteria for the green loan programme • We have energy label on about 18% of the banks real estate portfolio − Mortgages with energy labeling A or B • All the corporate loans have been financed/refinanced within the last 5 − Loans built with TEK
Slide 65: Green fraction - loans
Green fraction - loans 78% 80% 86% 22% 20% 14% Retail Corporate Total Green loans Non-green loans
Slide 66: Financial Targets for 2021-2024
Financial Targets for 2021-2024 ROE CET1 Dividends 0 0 0 0 0 0 0 0 0 0 10,7 % 10,0 % 0 17,8 % 17,8 % 9,0 % 9,7 % 17,5 % 0 8,5 % 0 0 >17,1%* 0 0 16,6 % 0 0 0 2020 2021 2022 9M23 Target 2020 2021 2022 9M23 Target 2024 2024 * Internt mål om + 1 % management buffer over det til enhver tid gjeldende mynd
Slide 67: Agenda
Agenda • A bank with good development • Stable macro outlook in Rogaland • Good deliveries in the retail market • Good development in the corporate market • A solid bank • Status liquidity and financing
Slide 68: Deposits From Customers
Deposits From Customers 49% 50% 51% 50% 49% 55 % 45 % Deposits Retail Deposits Corporate 3Q22 4Q22 1Q23 2Q23 3Q23
Slide 69: Liquidity
Liquidity LCR på 297 % | NSFR at 128 % 4.000 3.680 3.499.0 00 3.530 3.034 3.225 2.902 3.500 2.999.0 00 2.752 3.000 2.900 2.499.0 00 574 2.500 2.150 1.852 2.900 1.999.0 00 2.000 2.425 2.650 750 1.499.0 00 1.500 1.931 2.700 999.000 1.000 1.400 499.000 500 289 780 800 660 - 396 289 0 - -1.000 - - - - -
Slide 70: Liquidity
Liquidity NOK 3,8 bn. ex. cash Mutual Domestic Municipalities Foreign 79% Fund… Municipalities (RW20) (RW0) Foreign 10 % 5% Covered Bonds 10 % Gov't Guaranteed Domestic 20 % 20% Covered Bonds 54 % 0% 0% 1% AAA AA A BBB BB • BB is an interest fund
Slide 71: Appendix
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Slide 72: The Equity Certificate
The Equity Certificate 20 largest owners of equity certificates as at 30.09.2023 No. of equity certificates Share 1. SPAREBANK 1 SR-BANK ASA 3.485.009 15,14 % Pris Avkastning 2. SANDNES SPAREBANK 2.016.664 8,76 % 400 300% 3. HOLMEN SPESIALFOND 1.712.323 7,44 % 380 280% 4. AS CLIPPER 1.248.389 5,42 %
Slide 73: Key Figures
Key Figures 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 9M22 9M23 Growth assets -1,1 % 5,7 % 1,1 % 2,5 % 0,2 % 2,2 % 2,0 % 1,5 % 8,3 % 5,9 % Growth lending (net) 1,4 % 1,3 % 2,0 % 2,8 % 0,0 % 2,6 % 2,4 % 1,4 % 7,6 % 6,5 % Growth deposits 0,4 % 2,7 % 5,0 % -4,0 % 0,5 % 1,5 % 6,2 % 0,3 % 4,0 % 8,5 % Net i
Slide 74: Definition of Key Figures
Definition of Key Figures Rate of deposits to loans Return on equity after tax OB net loans to customers / OB deposits from customers (Operating profit after taxes / days in the period x days in a year) / ((OB total equity + IB total equity) / 2 [excl. T1 hybrid instruments] Liquidity coverage ratio
Slide 75: Disclaimer
This presentation has been prepared solely for promotion purposes of Sandnes Sparebank. The presentation is intended as general information and should not be construed as an offer to sell or issue financial instruments. The presentation shall not be reproduced, redistributed, in whole or in part, wi