Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q2 2018 Earnings Presentation
65 slides from Sparebank 1 Nord-norge's earnings presentation, Aug 8, 2018
Slide 1: Quarterly report as at 30.06.18
Er dette et bilde som er nordnorsk og med «ekte» folk? Hvis ikke, se på Quarterly report as at alternativ (ref DNA) 30.06.18 High return, clear strategy and underlying values made visible Tromsø/Oslo 8. august 2018
Slide 2: Accounts first half-year 2018
Accounts first half-year 2018 PRE-TAX PROFIT 953 mill kr (831 mill kr) RETURN ON EQUITY 13.3 % (12.3 %). 2Q ISO: 15.6% C/I-RATIO 41.9 % (41.5 %) LOAN LOSSES 36 mill kr (88 mill kr) CET-1 RATIO 14.7 % (15.4 %) 2
Slide 3: Key financial figures - development
Key financial figures - development CET 1 incl floor Return on equity capital 15,0 % 14,9 % 14,7 % 13,1 % 12,9 % 13,3 % 12,2 % 12,0 % 13,9 % 13,4 % 9,1 % Target: Target: > 12 % 12,5 % 14.5 % 2013 2014 2015 2016 2017 30.06.2018 2013 2014 2015 2016 2017 30.06.18 Payout ratio (%) 59,8 % 60,5 % Cost/inc
Slide 4: Benchmark ROE
Benchmark ROE Return on equity Q1 2018 (ROE) 11,2 % 11,2 % 11,0 % 10,3 % 10,1 % 9,9 % 9,0 % SpareBank 1 SpareBank 1 SMN DNB SpareBank 1 SR- Sparebanken SpareBank 1 Helgeland Nord-Norge Bank Møre Østlandet Sparebank 4
Slide 5: Northern Norwegian economy: Low unemployment and high growth
Northern Norwegian economy: Low unemployment and high growth Area Status Views Area Status Views Macro Construction Seafood Retail Tourism Oil and gas 5
Slide 6: Lower housing prices in northern Norway - lower downside
Lower housing prices in northern Norway - lower downside House prices (June 2018) Average price, NOK per m2, all units 69 060 44 305 40 976 36 027 31 663 2,1 % 1,5 % 1,6 % 1,5 % 0,7 % Tromsø Bodø/Fauske Nord-Norge Oslo Norge Average price Prices increase y/y, % 6 Source: Eiendom Norge, Boligprisstat
Slide 7: SpareBank 1 Nord-Norge Group – number 1 in the north
SpareBank 1 Nord-Norge Group – number 1 in the north 1 PM Bank • Main bank: 34 % 1 SMB Bank • Main bank: 41 % 2 Large corporates - Bank 1 Real estate • Market share: 36 % 1 Accounting services • Market share: 15 % 3 Secured financing/leasing • Market share: 19 % 7 Source: Kantar TNS (posisjonsunders
Slide 8: Increased markets shares, especially within the SME segment
Increased markets shares, especially within the SME segment Corporate/public market Main bank in SMB (%) 42 42 41 41 40 38 37 37 36 35 35 31 670 34 34 32 33 27 114 30 30 25 766 5,2 % 16,8 % 17 30.06.16 30.06.17 30.06.18 15 16 14 14 Retail incl. commission loans 12 12 10 10 8 8 8 8 7 7 7 6 6 7 4 4 5
Slide 9: Diversified income – less dependency on interest income
Diversified income – less dependency on interest income 2% 4% 6% 4% 4% 4% 5% 6% 9% 13% 8% 9% 20% 14% 4% 13% 25% 18% 26% 23% 33% 82% 83% 77% 67% 69% 61% 62% 52% 2017 2017 2017 2017 2017 2017 2017 2017 SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 Sparebanken Sparebanken Helgeland SNN SMN SR Østland
Slide 10: Subsidiaries – high investments and good results
Subsidiaries – high investments and good results SpareBank 1 Finans Nord-Norge Pre-tax profit 78 MNOK (51.4 MNOK) Good growth and increased profitability over time Total assets 6 000 (5 215 MNOK) SpareBank 1 Regnskapshuset Nord-Norge Pre-tax profit 16.7 MNOK (13.4 MNOK) Organic growth and acquistion
Slide 11: Jointly owned companies – underlying values made visible
Jointly owned companies – underlying values made visible SpareBank 1 Gruppen AS Pre-tax profit 1Q 18: 278 MNOK (447 MNOK) Ownership 19,5 % Underlying companies SpareBank 1 Forsikring SpareBank 1 Skadeforsikring ODIN Forvaltning SpareBank 1 Medlemskort Conecto SpareBank 1 Factoring SpareBank 1 Portef
Slide 12: Strategic measures are effective
Strategic measures are effective Promoting character Investments Innovation through and brand for the future cooperation Strengthened branding Enhanced commitment SpareBank 1 Alliance Community dividend to physical presence Norwegian banking infrastructure Digitalization of processes Self-service so
Slide 13: A local bank’s proximity – the strength of a regional bank
A local bank’s proximity – the strength of a regional bank Presence Full service branches Specialists Analysis Culture Community dividend Digital solutions Innovation 13
Slide 14: Quarterly earnings
Quarterly earnings (Amounts in NOK million) 2Q18 1Q18 4Q17 3Q17 2Q17 Net interest income 467 449 461 450 437 Net fee-, commision and other operating income 275 250 265 255 248 Net income from financial investments 188 74 194 119 124 Total net income 930 773 920 824 809 Total costs 371 343 373 342 32
Slide 15: Changes in profit and loss last quarter
Changes in profit and loss last quarter 114 - 28 -4 41 2 (Amounts in NOK million) 539 414 1Q18 NII incl provision NCI excl provision from Investment income Costs Losses 2Q18 commission loans commission loans 15
Slide 16: Ambitious long-term cost target: C/I < 40 %
Ambitious long-term cost target: C/I < 40 % NOK mill. 373 371 326 325 342 343 42,8 % 44,4 % 40,2 % 41,5 % 40,5 % 39,9 % 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Total costs Cost/income Group 16
Slide 17: Net losses on loans and guarantees
Net losses on loans and guarantees Mill kr 0,23 % 0,22 % Good quality in loan portfolio 0,17 % Positive risk migration in underlying portfolio 2Q 2018: very low loan 0,06 % losses Low loan losses expected in the near future 200 213 184 36 2015 2016 2017 30.06.18 Net losses Net losses in % of gross l
Slide 18: Lending volume
Lending volume Retail incl. commission loans Retail incl. 29 % commission loans 79 218 Business/ 72 822 71 % Public 65 731 10,8 % 8,8 % 30.06.16 30.06.17 30.06.18 Corporate/public market Retail excl. 39 % commission loans 61 % 31 670 27 114 Business/ Public 25 766 5,2 % 16,8 % 30.06.16 30.06.17 30.0
Slide 19: Distribution on segments shows good diversification
Distribution on segments shows good diversification A high share of retail- and primary industry lending represent a risk mitigating factor The Group has a well diversified corporate market lending portofolio No specific concerns related to the bank’s loans to commercial property due to low interest
Slide 20: Financial targets
Financial targets CET-1 ratio > 12 % ROE 14,5 % C/I ratio Payout ratio < 40 % > 50 % 20
Slide 21: Financial outlook
Financial outlook Higher interest rates are expected to provide the basis for re- NRI pricing deposits and loans. No significant changes in funding costs are expected during second half-year 2018. Targeted top-level profitability among comparable banks, ROE > 12 % currently > 12%. Targeted core capi
Slide 22: SpareBank 1 Nord-Norge
SpareBank 1 Nord-Norge CEO Jan-Frode Janson CFO Rolf Eigil Bygdnes E-mail: jfj@snn.no E-mail: reb@snn.no Tel. + 47 909 75 183 Tel. + 47 905 19 774 URLs Website and netbanking: www.snn.no Equity certificate in general: www.egenkapitalbevis.no Financial calendar: Q1 2018: 9. mai 2018 Q2 2018: 8. augus
Slide 23: Appendix
Appendix 1. About SpareBank 1 Nord-Norge 2. Financial figures – additional information 3. Credit area 4. Liquidity 5. Northern Norway: Macro and economic trends 6. SpareBank 1 Group and alliance 23
Slide 24: Company structure
Company structure Associated companies and Subsidiaries and second tier jointed ventures subsidiaries Sparebank 1 SpareBank 1 SpareBank 1 SpareBank 1 Finans Eiendomsmegler 1 Gruppen AS Boligkreditt AS Næringskreditt AS Nord-Norge AS Nord-Norge AS 19,5 % | Financial 14,61 % | Covered Bond 16,64 % | F
Slide 25: Equity Certificates (EC) – geographic holder structure
Equity Certificates (EC) – geographic holder structure 10,3 13,8 13,8 20,3 28,6 32,0 33,0 34,6 35,7 37,5 36,5 64,1 65,6 65,5 61,1 53,2 49,1 48,1 46,8 45,6 42,9 44,7 25,5 19,0 20,6 20,7 18,6 18,2 18,9 18,6 18,7 19,6 18,9 2012 2013 2014 2015 2016 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Holders residing in North
Slide 26: The 20 largest EC holders
The 20 largest EC holders Number Share of EC Holders of ECs EC Capital PARETO AKSJE NORGE 3.053.156 3,04% STATE STREET BANK AND TRUST COMP A/C CLIENT OMNIBUS F 2.977.898 2,97% THE NORTHERN TRUST COMP, LONDON BR NON-TREATY ACCOUNT 2.883.711 2,87% MP PENSJON PK 2.697.811 2,69% GEVERAN TRADING CO LTD 2
Slide 27: The 20 largest EC holders residing in Northern Norway
The 20 largest EC holders residing in Northern Norway Number of Share of total Equity Certificate holders Equity Certificates Equity Certificate capital SPAREBANKSTIFTELSEN SPAREBANK 1 NORD-NORGE 1.411.606 1,41 % KARL DITLEFSEN 547.543 0,55 % SJØTRANSPORT ROTSUND HOLDING AS 437.956 0,44 % ODD ERIK H
Slide 28: Why invest in SpareBank 1 Nord-Norge?
Why invest in SpareBank 1 Nord-Norge? 1 Number 1-position in an attractive growth region 2 Ambitious cost and modernization measures provide profitable operations 3 Focus on core business has implied reduced risk Considerable underlying values through high relative ownership in SpareBank 1 Gruppen,
Slide 29: Financial figures – additional information
Financial figures – additional information 29
Slide 30: Good ROE over time
Good ROE over time Return on equity 15,6 % 14,6 % 13,8 % 13,6 % 13,1 % 12,2 % 12,4 % 11,2 % 9,9 % 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 30
Slide 31: Net interest income - Group
Net interest income - Group 536 525 527 NOK mill 516 494 75 60 469 66 76 57 47 461 467 437 450 449 422 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Net interest income Commissions from Boligkreditt 31
Slide 32: Quarterly results – net interest income
Quarterly results – net interest income (Amounts i n NOK mi l l i on) 2Q18 1Q18 4Q17 3Q17 2Q17 Interest and similar income from loans to and claims on credit institutions 3 3 21 1 2 Interest and similar income from loans to and claims on customers 646 611 619 612 602 Interest and similar income from
Slide 33: Net fee-, commission- and other operating income
Net fee-, commission- and other operating income NOK mill 215 191 189 190 177 174 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
Slide 34: Net fee- and other operating income
Net fee- and other operating income 2Q18 1Q18 4Q17 3Q17 2Q17 (Amounts i n NOK mi l l i on) Payment facilities 61 60 60 74 64 Insurance products 36 40 35 41 42 Guarantee commissions 3 4 3 4 4 Real estate broking 41 26 29 32 34 Portefolio commission 11 12 11 11 12 Other commissions 26 18 21 23 22 Comm
Slide 35: Income from financial investments
Income from financial investments Group (Amounts in NOK million) 2Q18 1Q18 4Q17 3Q17 2Q17 Dividends 2 1 0 0 4 Income from joint ventures 100 63 167 109 78 Gains/losses from shares in subsidiaries 0 0 0 0 15 Gains/losses and net value changes on shares 81 -1 30 7 23 Net value changes on bonds, foreig
Slide 36: Operating expenses
Operating expenses (Amounts in NOK million) 2Q18 1Q18 4Q17 3Q17 2Q17 Wages and salaries 146 139 150 143 127 Pension costs 12 11 3 13 14 Social costs 27 28 30 28 28 Total personnel costs 185 178 183 184 169 Development costs 39 33 19 33 31 Electronic data processing costs 31 24 31 21 19 Marketing cos
Slide 37: Group companies result before tax
Group companies result before tax (Amounts i n NOK 1000) 30.06.18 30.06.17 SpareBank 1 Finans Nord-Norge AS 77 966 51 412 SpareBank 1 Regnskapshuset Nord-Norge AS 16 716 13 443 EiendomsMegler 1 Nord-Norge AS 13 775 10 819 Subsidiaries core operations 108 457 75 674 Other subsidaries - 392 562 Total
Slide 38: Key figures balance sheet
Key figures balance sheet (Amounts in NOK million) 30.06.18 30.06.17 Change Change % Total assets 103 890 95 822 8 068 8,4% Gross lending 79 588 73 471 6 117 8,3% Loans and advances to 110 888 99 936 10 952 11,0% customers incl commission Deposits from customers 63 773 58 634 5 139 8,8%
Slide 39: Deposit volume
Deposit volume Business Retail banking market 35 326 18 937 32 952 14 428 16 107 30 984 6,4 % 7,2 % 17,6 % 11,6 % 30.06.16 30.06.17 30.06.18 30.06.16 30.06.17 30.06.18 Public Business 29,7 % 10 254 9 575 9 510 Retail -6,6 % -0,7 % 55,4 % Public 30.06.16 30.06.17 30.06.18 14,9 %
Slide 40: Credit area
40 Credit area SpareBank NORD-NORGE
Slide 41: Portfolio - exposure as of 30.06.18, parent bank
Portfolio - exposure as of 30.06.18, parent bank 50.000 46.118 45.000 40.000 35.000 32.739 30.000 25.714 NOK mill 25.000 20.000 15.000 10.147 10.000 5.000 415 1.116 610 1.450 129 231 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired Retail market Corporate market SB1 Boli
Slide 42: Portfolio – changes last 12 months, parent bank
Portfolio – changes last 12 months, parent bank 6.000 5.154 5.000 4.000 3.000 NOK mill 2.263 2.000 1.821 1.785 1.000 415 40 -42 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired -400 -12 -192 SB1 Boligkreditt Retail market Corporate market SB1 Næringskreditt 42-1.000
Slide 43: Portfolio - exposure distributed by size
Portfolio - exposure distributed by size Loans distributed by size of exposure and share of total exposure Share of loanexposure June 2018 Share of loanexposure June 2017 78,4 % 80,2 % 10,2 % 10,3 % 5,3 % 4,6 % 6,1 % 4,9 % Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Numbers include SB
Slide 44: Portfolio – LTV mortgage loans
Portfolio – LTV mortgage loans • 97.6 % of exposures are 92,5 % 92,5 % within 85 % of the collaterals market value • Exposures above 85 % are 2.4 % 5,1 % 5,0 % 1,2 % 1,2 % 1,2 % 1,3 % Below 70 % 70 - 85% 85 - 100 % Above 100 % 30.06.2018 30.06.2017 Each loan is distributed in the different intervals
Slide 45: Portfolio – Commercial Real Estate
Portfolio – Commercial Real Estate Housing Ass.; 4,9 % Above 250 0 - 5 MNOK; Others (small Residential MNOK; 12,3 % 12,7 % commitments); 24,3 % Development / Investment; 6,5 % 100 - 250 MNOK; 18,9 % Shops / shopping centres; 21,2 % Combination- 5 - 30 MNOK; buildings; 10,4 % 31,0 % Hotels; 8,2 % Ind
Slide 46: Portfolio – Oil related exposure
Portfolio – Oil related exposure • Oil related exposure amounts to NOK 1,208 Industry; 7,3 % Other; 1,4 % mill Supply base; 28,3 % • The exposure represents 1.08 % of total lending incl. Næring- and Boligkreditt • Average weighted probability of default 1.09 % • A total of NOK 30 mill are non-perfor
Slide 47: Tap på utlån og misligholdte engasjement
Tap på utlån og misligholdte engasjement Mill kr Mill kr 0,23% 0,22% 0,96% 0,93% 0,17% 0,64% 0,57% 644 632 223 0,35% 0,06% 215 423 380 174 372 374 200 213 184 218 36 2015 2016 2017 30.06.18 2Q17 3Q17 4Q17 1Q18 2Q18 Netto tap Øvrig tapsutsatte engasjement Misligholdte engasjement
Slide 48: Liquidity
48 Liquidity SpareBank NORD-NORGE
Slide 49: Funding instruments 30.06.2018
Funding instruments 30.06.2018 Currency Bonds 38 % NOK Bonds 56 % Subordinated Loan Capital 4% T1 Hybrid 2% 49
Slide 50: Maturity profile 30.06.2018
Maturity profile 30.06.2018 Capital markets funding (excl. SPABOL) • Good diversification in terms of maturities 6.000 • NOK 24 465 mill in capital 5.000 market funding exclusive of SB1 Boligkreditt 4.000 • SpareBank 1 Boligkreditt is an Mill NOK 3.000 important funding source. Mortgage loans of NOK
Slide 51: Liquidity portfolio 30.06.2018
Liquidity portfolio 30.06.2018 Covered bonds 58 % Gov. 17 % Corp. 1% Public sector 24 % 51
Slide 52: Macro and Economic trends
52 Macro and Economic trends SpareBank NORD-NORGE
Slide 53: Stable low unemployment - lower than the rest of the country
Stable low unemployment - lower than the rest of the country 53 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 54: Seafood – export growth
Seafood – export growth • 1H 2018: 16 % growth in seafood export value from Northern Norway compared to 2017 • Good prices and weak Norwegian kroner contribute. • 1st half 2018 was the best ever for cod fisheries. Cod is important for northern Norway. 54 Source: Norwegian Seafood Council
Slide 55: Tourism – growth in overnight stays
Tourism – growth in overnight stays • Good development in level of overnight stays. • Foreign overnight stays play a more important role, but the growth is now slowing down in Finnmark and Nordland. Still increased growth in Troms, especially from winter tourism. • Optimistic prospects for world eco
Slide 56: Oil and gas – increased activity from new fields
Oil and gas – increased activity from new fields • Four fields in production: Norne, Snøhvit, Skarv and Goliat Demand from oil companies ‒ First oil field open in the Barents Sea. Repurchases will further increase the total demand • Aasta Hansteen ‒ Production start-up in 2018 • Alta/Gotha ‒ Test pr
Slide 57: Reduced growth in retail sales
Reduced growth in retail sales. Growth is now lower than the Norwegian average Source: SSB, retail sales 57
Slide 58: Higher credit growth than the national average
Higher credit growth than the national average Credit growth corporates. 12 mth growth 16,8 % 16,0 11,0 % 6,0 6,6 % 1,0 -4,0 2015Q2 2015Q4 2016K2 2016K4 2017K2 2017K4 2018K2 SNN, Corporate clients Norway, Corporates 58
Slide 59: Slightly higher credit growth in households
Slightly higher credit growth in households Credit growth households. 12 mth growth 12 10 8,8 % 8 6 % 5,8 % 4 2 0 2015Q2 2015Q4 2016K2 2016K4 2017K2 2017K4 2018K2 SNN, Retail clients Norway, Households 59
Slide 60: Deposit growth corporates
Deposit growth corporates Deposit growth corporates. 12 mth. growth 20 18 16 14 12 10 10,8 % 8 6,1 % % 6 4 2 0 -2 2015Q2 2015Q4 2016K2 2016K4 2017K2 2017K4 2018K2 SNN, Corporate clients Norway, Corporates 60
Slide 61: Deposit growth households
Deposit growth households Deposit growth households. 12 mth. growth 10 8 7,2 % 6 % 4 4,8 % 2 0 2015Q2 2015Q4 2016K2 2016K4 2017K2 2017K4 2018K2 SNN, Retail clients Norway, Households 61
Slide 62: SpareBank 1 Group and the alliance
SpareBank 1 Group and the alliance 62
Slide 63: SpareBank 1 Alliance: National champion, regional focus
SpareBank 1 Alliance: National champion, regional focus • The SpareBank 1 Alliance consists of 14 banks; independent in each region • Operate exclusively in Norway – with Norway’s most extensive branch network • Physical branch structure is changing and SpareBank 1 banks SpareBank 1 Nord-Norge are a
Slide 64: SpareBank 1 Alliance: Achieving benefits of scale, while being local
SpareBank 1 Alliance: Achieving benefits of scale, while being local • The saving banks are independent banks with very strong regional focus, and operate solely in the regions where they have been active for almost 200 years • The largest Norwegian Savings banks established the SpareBank 1 Alliance
Slide 65: The SpareBank 1 Alliance
The SpareBank 1 Alliance SAM-SPAR SpareBank 1 Gruppen AS (SB1G) Banksamarbeidet DA (BS) SpareBank 1Betaling AS SpareBank 1 Forsikring AS EiendomsMegler 1 (Life insurance) Norge AS SpareBank 1 Kredittkort AS (Credit card) SpareBank 1 Skadeforsikring AS SpareBank 1 (Non-life insurance) Kundesenter AS
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