Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q1 2018 Earnings Presentation
57 slides from Sparebank 1 Ostlandet's earnings presentation, 2018
Slide 1: First Quarter 2018
FIRST QUARTER 2018 Together we achieve the impossible SpareBank HAND IN HAND WITH THE INCREDIBLE Bank @
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: The leading financial group in the southwest of Norway
Rogaland The leading Population 472.000 financial group Market share 36% Year of establishment 1839 in the Market strategy Market leader southwest of Unemployment rate 3.1% Norway Hordaland Population 520.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment rate 2
Slide 4: A good result characterised by solid operations and lower losses
A good result characterised by solid operations and lower losses • Pre-tax profit for the quarter is NOK 668 million compared to NOK 512 million last year ‐ Return on equity after tax 10.3% • Impairment losses on loans is NOK 74 million compared to NOK 168 million last year ‐ 0.16% of gross lending
Slide 5: Financial targets and estimates for 2018
Financial targets and estimates for 2018 Return on equity CET 1 Growth in loans 11,0% 11,0% 10,3% 4,0% - 6,0% 15,1% 15,0% 15,0% 2,6% 1,0% (YTD) 2017 31.03.2018 Target 2018 2017 31.03.2018 Target 2018 2017 31.03.2018 Target 2018 Growth in costs* NOK 543 Impairment losses Dividend share 6,6 % million
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 12,9% 14,7% 14,7% 14,8% 15,1% 15,0% 11,0% 11,4% 10,3% 8,7% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Cost ratio Earnings per share 43,3% 41,3% 41,0% 42,1% 37,7% 2,39 2,18 2,01 2,03 1,58 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q
Slide 7: Income statement
Income statement Group Income Statement (MNOK) Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Net interest income 800 819 820 784 739 Net commission and other income 368 367 386 400 371 Net income on investment securities 113 204 198 143 89 Total income 1.281 1.390 1.404 1.327 1.199 Total operating expenses 539 570
Slide 8: Change in profit 31.03.2017 – 31.03.2018
Change in profit 31.03.2017 – 31.03.2018 94 668 24 -20 55 3 512 31.03.2017 Net interest income incl. Other income Net income on Total operating expenses Impairment losses on 31.03.2018 commission from investment securities loans and guarantees covered bond companies 8
Slide 9: Key figures
Key figures Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Return on equity after tax (%) 10,3 11,4 12,9 11,0 8,7 Net interest margin (%) 1,50 1,50 1,54 1,52 1,53 Impairment losses on loans and guarantees in % of gross loans incl. covered bond 0,16 0,26 0,27 0,29 0,37 companies Non-performing and other problem commi
Slide 10: Consolidated income profile
Consolidated income profile 1.110 1.184 1.206 1.186 1.168 347 331 361 338 335 39 36 39 30 36 784 820 819 800 739 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Net interest income Commission income from covered bond companies Net commission and other income 10
Slide 11: Lending and deposit margins
Lending and deposit margins Lending margins* Deposit margins 2,76% 2,74% 2,78% 2,74% 2,68% 2,75% 2,73% 2,71% 2,71% 0,29% 0,34% 0,24% 0,12% 0,13% 0,11% 0,03% 0,04% 1,78% 1,79% -0,01% 1,69% 1,69% 1,55% 1,59% 1,48% 1,45% 0,04% 1,38% -0,03% -0,05% -0,08% -0,09% -0,12% -0,12% -0,15% -0,18% Q1 16 Q2 16 Q3
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 50 000 15% 40 000 10% MNOK 30 000 3,0% 3,8% 2,4% 5% 20 000 -0,5% -0,7% 10 000 -2,3% -3,5% -2,8% -1,9% 0% 0 -5% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Volume Growth % Retail Market 120 000 100 000 15% 8
Slide 13: Loan portfolio as at 31.03.2018
Loan portfolio as at 31.03.2018 • Gross loans (incl. covered bond companies) as at 2,9% 31 March 2018 amount to NOK 188.9 billion Agriculture / forestry / fishing 3,0% compared with NOK 183.2 billion at the same Industry, Power/water supply and construction 3,5% time the year before. 4,0% 1,6% • 12-
Slide 14: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans • The proportion of loans with a loan-to- value ratio 100% of less than 85% is high. ‐ 88.8% of the exposure is within 85% of the assessed value of collateral. 80% 64,6% 59,8% 60% 40% 29,0% 26,0% 20% 5,9% 7,3% 3,5% 3,9% 0% Below 70 % 70 - 85 % 85 - 100 % Ab
Slide 15: Deposits volume and 12 month growth
Deposits volume and 12 month growth • Last 12 months deposits increased by NOK 6.5 Corporate Market* billion to 99.6 billion. 50.000 22,7% 24,7% 20,7% 25% ‐ Corresponds to an increase in the period of 40.000 14,0% 7.0%. 10,0% 15% 30.000 MNOK 20.000 5% • Increased deposit growth in the corporate mark
Slide 16: Net commission and other income
Net commission and other income MNOK Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Payment facilities 63 65 71 63 63 Savings/placements 52 47 51 49 51 Insurance products 49 52 52 52 52 Commission income real estate broking 81 94 90 112 93 Guarantee commission 34 27 29 26 25 Arrangement- and customer fees 28 28 28 2
Slide 17: Net income on investment securities
Net income on investment securities MNOK Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Dividends 11 0 2 4 5 Investment income, associates 57 154 127 81 63 Securities gains/losses 5 24 46 32 25 - of which capital change in shares and certificates 6 44 57 28 7 - of which capital change in certificates and bonds -72 -
Slide 18: Subsidiaries
Subsidiaries Subsidiaries MNOK 31.03.2018 31.03.2017 EiendomsMegler 1 SR-Eiendom AS Number of sales 1.466 1.611 Operating profit before tax 0 5 SR-Forvaltning AS Capital under management (BNOK) 11 10 Operating profit before tax 9 8 FinStart Nordic AS* Operating profit before tax 23 0 SpareBank 1 Reg
Slide 19: Ownership interests
Ownership interests Ownership interests MNOK 31.03.2018 31.03.2017 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 36 71 Adjusted profit previous years 0 -4 SpareBank 1 Boligkreditt AS* Interest ownership 8,0 % 13,9 % Profit after tax 1 -18 Adjusted profit previous years 0 0
Slide 20: Operating expenses
Operating expenses MNOK Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Personnel expenses 319 323 312 312 306 Restructuringcosts 0 10 0 0 0 Total personnel expenses 319 333 312 312 306 IT expenses 83 82 74 86 75 Marketing 16 20 16 21 16 Other administrative expenses 24 26 21 20 21 Total administrative expenses 123 1
Slide 21: 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 1,23% 1,21% 1,18% 1,13% 1,14% 0,37% 0,29% 0,27% 0,26% 0,16% 1.514 1.393 1.352 1 1.562 1 1.723 2 167 130 126 118 739 830 824 74 555 438 -2 Q1 17 Q2 17 Q3 17 Q4 17 Q1
Slide 22: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees Losses on loans in income statement (MNOK) Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Corporate customers 76 89 116 115 162 Retail customers -2 29 10 15 5 Change in collective impairment losses on loans 2 -2 1 1 Total impairment IFRS 9 loans and guarantees* - Net impairm
Slide 23: Funding
Funding • Well diversified funding. Deposits to loans ratio • Net Stable Funding Ratio* is 118% on consolidated basis. 56,1% 58,3% 60,5% 59,0% 57,2% 57,2% 55,4% • Good liquidity 54,5% 55,3% – Net refinancing need over the next 12 months is NOK 15.0 billion. – Liquidity buffer is NOK 32.7 billion for
Slide 24: Solid capital ratio
Solid capital ratio ROE ROE ROE • SpareBank 1 SR-Bank is compliant with capital 10,0 % 11,0 % 10,3 % requirements as at 31.03.2018. • The Pillar 2 requirement for SpareBank 1 SR-Bank CET 1 17,9% 18,1% 17,5% 15,0 % is 2.0%. 16,0% 16,0% 15,6% • SpareBank 1 SR-Bank is not defined as a 1,0 % Management
Slide 25: Outlook
Outlook • The market is expected to grow. The development in the group's market area was positively affected by the adaptability of companies and higher oil prices. • Oil investments on the Norwegian continental shelf are expected rise by up to 15% in 2019. • Declining unemployment in the group's ma
Slide 26: Important new steps to increase our strength – geographically
We are taking important new steps to increase our strength – geographically • In March, we opened a branch in Oslo. A manager and three advisers are now in place. Within the year, we will have an organisation of around 10 full-time equivalents who will handle both new corporate customers and retail
Slide 27: Important new steps to increase our strength – technologically
We are taking important new steps to increase our strength – technologically • A fully automated financing process was launched for SME customers in March. Credit and loans are granted and paid out in the space of just a few hours. This means a significantly better service for customers and big futu
Slide 28: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 28
Slide 29: Lower unemployment rate
Lower unemployment rate Marked reduction in Rogaland in 2017 and the trend has continued in 2018 Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 6 5 4 3 2 1 0 Norway Rogaland Hordaland Vest-Agder Norway, SSB AKU-unempl. rate 29 Source: NAV og SSB
Slide 30: Housing prices in Norway approx. unchanged last 12 months
Housing prices in Norway approx. unchanged last 12 months Prices in Oslo have turned from down to the upturn in recent months House prices. NOK per sqm. Average all homes. Monthly 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 Stavanger region Bergen Kristansand Oslo Norway 30 Source: Fin
Slide 31: Petroleum activity slowed down in 2017 and is expected to increase
Petroleum activity slowed down in 2017 and is expected to increase coming years Activity down 35% from top to bottom, but is expected to increase by 15% towards 2020 • After reaching record levels in 2013 and 2014, Petroleum activity on Norwegian Continental Shelf. BNOK (2018 NOK). Source: NPD petro
Slide 32: Retail trade increasing in Norway by 2-4%
Retail trade increasing in Norway by 2-4% Growth in Rogaland, but somewhat lower than other counties and the country Retail sales (excl. auto), annual change in turn-over from same 2-month period previous year. 12% 10% 8% 6% 4% 2% 0% -2% -4% Norway Rogaland Hordaland Agder Oslo 32 Source: SSB
Slide 33: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 33
Slide 34: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 6.5% (7.1%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 211.2 (209.3) EAD per 31.03.2018 BNOK 13.7 (14.8) EAD is related to oil operations Corporate market excl. oil Oil service; 1,9% (2,1%) operations; 27,5% (26,
Slide 35: Oil services - total NOK 4.0 billion
Oil services - total NOK 4.0 billion (NOK 4.3 billion as at 31.12.2017) • Exploration and concept studies Oil services ‐ EAD NOK 0.3 billion ‐ EAD NOK 4.0 billion, 1.9% of the bank's total EAD ‐ Average weighted probability of default 2.7% ‐ Average weighted probability of default for the oil servic
Slide 36: Oil and gas - total NOK 1.5 billion
Oil and gas - total NOK 1.5 billion (NOK 1.7 billion as at 31.12.2017) • Exploration financing Exploration and production companies ‐ EAD NOK 0.2 billion ‐ EAD NOK 1.5 billion, 0.7% of the bank's total EAD ‐ Average weighted probability of default 1.2% ‐ Average weighted probability of default for t
Slide 37: Offshore - total NOK 8.2 billion
Offshore - total NOK 8.2 billion (NOK 8.7 billion as at 31.12.2017) • Offshore Service Vessels Offshore ‐ EAD NOK 5.7 billion, average weighted probability of default is 3.1%, ‐ EAD NOK 8.2 billion, 3.9% of the bank's total EAD weighted average age is 8.7 years, average weighted contract ‐ Average w
Slide 38: Offshore Service Vessels – total NOK 5.7 billion
Offshore Service Vessels – total NOK 5.7 billion (NOK 6.3 billion as at 31.12.2017) Offshore Service Vessels • Most customers with long history as a borrower EAD per age of OSV excl. accomodation in SpareBank 1 SR-Bank 2.500 • Most of the companies are listed on stock exchange or family owned 2.000
Slide 39: Offshore Service Vessels – largest customer group
Offshore Service Vessels – largest customer group Number of vessels • Well diversified portfolio. One commitment of NOK 1 9 1.0 billion, rest of NOK 750 or lower. 2 8 • Total EAD for the portfolio is NOK 5.7 billion of 3 8 which; 4 2 • NOK 5.3 billion consists of 13 restructured 5 11 commitments 6 2
Slide 40: Lending to commercial property
Lending to commercial property Lending to commercial property Housing cooperative; 3,3% (4,7%) • NOK 27.7 billion, 14.6% of the bank’s total loans. Real estate management; 3,0% (1,7%) • The portfolio is characterised by lending to commercial properties for leasing with long-term contracts and financ
Slide 41: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 41
Slide 42: SpareBank 1 SR-Bank has a moderate risk profile
SpareBank 1 SR-Bank has a moderate risk profile in which no single event should be capable of seriously harming the bank's financial position 42
Slide 43: Risk management principles
• The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk ‐ SpareBank 1 SR-Bank therefore invests significant resources in developing risk management systems, processes and expertise that are in line with leading international practice • The bank's prim
Slide 44: Exposure limits and property financing requirements
• The bank sets specific limits for the size of commitments as well as requirements concerning industry diversification ‐ The maximum total exposure to an individual customer must be significantly lower than the regulatory requirements ‐ The maximum unsecured exposure to an individual customer must
Slide 45: Risk profile of the loan portfolio
Risk profile of the loan portfolio • SpareBank 1 SR-Bank has a solid loan portfolio. Distributed by risk class 100% • 60.3% of the bank’s loan exposure has a PD* 80% 59,3% 60,3 % below 0.5%. 60% 40% 31,0% 29,6 % • Single loan exposures less than NOK 10 million 20% 9,7% 10,1 % aggregates 68.5% of tot
Slide 46: Risk profile – Lending to the retail market
Risk profile – Lending to the retail market • The quality of the retail market portfolio is considered to be good and has low potential Retail market portfolio distributed by risk class losses. 100% 2,9% 2,6% 2,6% 2,7% 2,6% 18,8% 16,3% 16,4% 16,6% 16,7% 80% • The proportion of loans with a PD* below
Slide 47: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and RWA home mortgages stable portfolio. 22,5 % 21,7 % 21,6 % 21,7 % 21,3 % 20,0 % 15,0 % 10,0 % 5,0 % 0,0 % Home mortgages as defined in the Norwegian IRB framework; residential 31.03.17 30.06.17 30.09.17 31.12.17 31.03.18 property must ma
Slide 48: Risk profile – Corporate lending
Risk profile – Corporate lending • The quality of the corporate market portfolio is good. There is a clearly defined framework that Bedriftsmarkedsporteføljen fordelt på misligholdsklasser 100% sets limit on what is funded and conditions for 23,3% 22,3% 24,4% 27,6% 25,0% particular funding purposes.
Slide 49: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 49
Slide 50: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Divisions of SpareBank 1 SR-Bank ASA Fully owned companies Partly owned companies BN Bank SpareBank 1 Gruppen EiendomsMegler 1 SR-Boligkreditt Capital Markets (23.5%) (19.5%) Leading real estate broker Covered Bond Funding Number of man-years: 26 Commercial bank located in Ho
Slide 51: SpareBank 1 Alliance
SpareBank 1 Alliansen SpareBank 1 SpareBank 1 SpareBank 1 LO SpareBank 1 SMN Samspar SR-Bank Nord Norge Østlandet 19.5% 19.5% 9.6% 19.5% 19.5% 12.4% Products, commissions, dividends Sales, loan portfolios, capital Companies directly owned by SR-Bank SpareBank 1 Gruppen AS Selskaper hvor SR-Bank har
Slide 52: Our vision: the customer's first choice
Our vision: the customer's first choice Objectives Financial goals • SpareBank 1 SR-Bank's objectives are to stimulate growth • Return on equity of 11% after tax in 2018. The longer term and development (2020) target is a minimum of 12%. • To provide a sustainable contribution to the wealth creation
Slide 53: Balance sheet
Balance sheet Balance sheet (MNOK) 31.03.2018 31.03.2017 Cash and balances with central banks 217 965 Balances with credit institutions 5.060 7.148 Net loans to customers 173.008 158.628 Certificates, bonds and other fixed-income securities 28.876 22.078 Financial derivatives 3.870 4.329 Shares, own
Slide 54: SRBANK share
SRBANK share • International ownership is Development in Price/Book Relativ share price development 23.8 % per 1. quarter 2018. 170 Index 100= mar.31th 2017 100 1,4 Price 90 P/B 150 • Total market value at 1. 80 1,2 130 quarter 2018 is NOK 22.0 70 1,0 NOK 110 billion. p/B 60 0,8 90 50 OSEBX 0,6 70 4
Slide 55: 20 largest shareholders as at March 2018
20 largest shareholders as at March 2018 • Ownership interests: Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • From Rogaland, Agder-counties and Hordaland: 44.6% Folketrygdfondet 17.062.715 6,7% (46.7%) State Street Bank and Trust Co, U.S.A. Nominee 9.087.253 3,6% • Internation
Slide 56: SR-Bank pr 31.03.2018
SR-Bank pr 31.03.2018 31.03.2018 2017 2016 2015 2014 2013 Share price 86,20 87,00 60,75 39,30 52,50 60,25 Stock value (MNOK) 22.046 22.250 15.537 10.051 13.427 15.409 Book value per share, NOK (group) 79,24 77,24 71,54 66,14 60,28 55,00 Earnings per share 2,03 8,16 6,87 6,83 8,20 7,28 Dividend per s
Slide 57: Contact Details
Contact Details Adress Bjergsted Terrasse 1 Tel: +47 915 02002 Postboks 250 www.sr-bank.no 4066 Stavanger Management Arne Austreid CEO Tel.: +47 900 77 334 E-post: arne.austreid@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 E-post: inge.reinertsen@sr-bank.no Investor Relations Stian Helgøy Inv