Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q1 2019 Earnings Presentation
38 slides from Pareto Bank Asa's earnings presentation, 2019
Slide 1: Pareto Bank Financial Results First Quarter 2019
PARETO BANK Financial Results First Quarter 2019
Slide 2: Table of Contents
TABLE OF CONTENTS 1 AMBITIONS & HIGHLIGHTS 2 FINANCIALS 3 BUSINESS AREAS 4 PROFITABLE GROWTH
Slide 3: First Quarter 2019 Highlights
FIRST QUARTER 2019 HIGHLIGHTS 1 Profit after tax NOK 99.7m (NOK 79.2m). 2 Return on equity after tax 16.6 % (15.2 %). 3 Strong net interest income of NOK 162.6m (NOK 129.1m). Diversified net lending growth of NOK 412m (NOK 618m) and 4 continued strong activity in Q2-19. PAGE 3
Slide 4: Key Figures
KEY FIGURES Profit after tax Return on Equity CET1 ratio NOKm Excluding AT1 capital and interest Standard model 99.7 17.0 % 79.2 81.6 16.6% 16.1 % 15.9 % 15.2% 14.0% Q1-18 Q4-18 Q1-19 Q1-18 Q4-18 Q1-19 31.03.2018 31.12.2018 31.03.2019 Net interest income (NOKm) Cost/income ratio Loss ratio NOKm Quar
Slide 5: Status Financial Ambitions
STATUS FINANCIAL AMBITIONS Q1-19 STATUS 2019 AMBITION Profitability comes first! 16.6 % 15.0 % ROE Cost-effective and commercially- oriented bank. NOK 1,000m - Diversified growth. GROWTH LENDING NOK 412m A highly skilled team and 2,000m a strong market position. ADEQUACY CAPITAL Combining solidity w
Slide 6: Table of Contents
TABLE OF CONTENTS 1 AMBITIONS & HIGHLIGHTS 2 FINANCIALS 3 BUSINESS AREAS 4 PROFITABLE GROWTH
Slide 7: Income Statement
INCOME STATEMENT P&L (NOKm) Q1-19 Q1-18 2018 Increased average lending volume throughout Net Interest income 162.6 129.1 554.4 the quarter, full effect of repricing in previous quarter and fee income resulted in record net Total other operating income 6.2 4.9 8.8 interest income. Total net income 16
Slide 8: Development in Margins
DEVELOPMENT IN MARGINS Net interest margins Percent interest income including amortizations and fees over 3M Nibor; Cost of deposits of average volumes over 3M Nibor (average of end-of-month fixings) 5.8 % 5.7 % 5.9 % 6.1 % 5.7 % 6.0 % 5.9 % 5.4 % 5.9 5.6 % 5.7 % 5.7 % 5.6 % 5.9 % 5.6 % 5.9 % 5.7 5.
Slide 9: Change in Net Interest Income
CHANGE IN NET INTEREST INCOME Net interest income Changes in net interest income over 3M Nibor NOK 1,000 180,000 Q1-19 170,000 706 1,099 24,513 162,596 160,000 3,095 150,000 Q1-18 12,941 140,000 129,092 130,000 120,000 2,660 110,000 100,000 90,000 80,000 Lending & Provisions Lending & Invested Marke
Slide 10: Quality of Loan Portfolio
QUALITY OF LOAN PORTFOLIO Write-downs & losses according to IFRS 9 Write-downs, losses & reversals on loans & guarantees NOKm NOKm Write-downs IAS 39 IFRS 9 Write-downs & losses: 59.7 & losses: 60.7 25.0 24.9 9.4 Stage 3 5.8 8.5 Stage 2 4.4 4.0 2.3 1.0 1.0 Stage 1 -2.7 -5.9 28.9 27.3 31.12.2018 31.0
Slide 11: Funding
FUNDING Sources Deposits & senior debt NOKm, NOKm Percent customer deposits of net lending to customers Deposits 8,599 78% 75% 77% 77% 71% Senior debt 5,279 65% 63% T1 & T2 debt 470 Other debt 164 5,279 5,207 5,011 Equity capital 2,406 3,280 4,915 3,250 4,008 Key ratios Deposits with liquidity restr
Slide 12: Capital
CAPITAL Core equity tier 1 ratio (CET1 ratio) Key comments on capital CET1 • CET1 target increasing from 15.7 % in 2018 to 16.2 % 17.2 % 17.7 % Target 16.1 % 15.9 % 16.2 % as of the end of 2019. Pillar 2 • The bank's management buffer is 0.5 %. The bank will 3.2 % evaluate this level if there are ch
Slide 13: Table of Contents
TABLE OF CONTENTS 1 AMBITIONS & HIGHLIGHTS 2 FINANCIALS 3 BUSINESS AREAS 4 PROFITABLE GROWTH
Slide 14: Niche Player
NICHE PLAYER • Reliably indicate how we can meet customer needs EFFICIENT AND I RELIABLE • An efficient credit process • Decision-making without uneccessary bureaucracy • We understand our customers' businesses and provide tailor-made solutions HANDS-ON AND II PERSONAL • Always available with a fixe
Slide 15: Financing for Medium-Sized Enterprises
FINANCING FOR MEDIUM-SIZED ENTERPRISES BUSINESS AREAS FOCUS CREDITS EXPOSURE SWEET SPOT The specialized real Land acquisition financing Real estate developer bank NOKm 10,281 NOKm Building construction facilities estate for Eastern Norway and larger Norwegian cities. Commercial property financing 71
Slide 16: Lending per Business Area
LENDING PER BUSINESS AREA NOKm gross exposure 6,519 5,750 5,811 5,847 5,014 4,004 3,762 3,271 3,157 3,247 2,132 1,895 2,016 1,781 1,949 Residential property Commercial property Corporate Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 PAGE 16
Slide 17: Real Estate | Continued High Activity
REAL ESTATE | CONTINUED HIGH ACTIVITY 67% 71% Real estate credit exposure Σ = NOK 10,281m Key comments NOKm of gross exposure • Growth in credit exposure of NOK 430m in Q1-19. Land without houses 1,479 • The specialized real estate developer bank for Eastern Norway and larger Norwegian cities. • Inc
Slide 18: Real Estate | Residential Property Exposure
REAL ESTATE | RESIDENTIAL PROPERTY EXPOSURE 67% 71% Geographical residential property exposure (NOKm) Σ = NOK 6,519m Policy NOKm of gross exposure • Presale requirement: if the price of unsold units falls by 50 % compared to the price of presold units, the 9% remaining sales must still be sufficient
Slide 19: Real Estate | Commercial Property Exposure
REAL ESTATE | COMMERCIAL PROPERTY EXPOSURE 19% 67% Geographical commercial property exposure (NOKm) Σ = NOK 2,717m Key comments NOKm of gross exposure • Average commitment size NOK 37m, average maturity 2 years, average loan to value (LTV) 70 %. 2% • Attractive model: Eiendomskreditt first priority
Slide 20: Corporate | Increasing Deal Flow
10% CORPORATE | INCREASING DEAL FLOW 15% 9% Corporate financing exposure (NOKm) Σ = NOK 2,112m Key comments • Positioning Pareto Bank as a provider of tailor-made 1% financing solutions to medium-sized enterprises. 6% • Deal flow increasing as awareness of Pareto Bank as a financial solution provide
Slide 21: Corporates | Receivables Financing
CORPORATES | RECEIVABLES FINANCING Fleksibel driftskreditt is a credit facility based on receivables as collateral with a 100 % digital web-based platform and on-boarding process. Pilot testing continues: Full integration with all leading cloud based accounting systems and full integration of the ba
Slide 22: Shipping & Offshore | Careful Growth
SHIPPING & OFFSHORE | CAREFUL GROWTH 5% 8% Status Shipping & Offshore credit exposure & loan to value Σ = NOK 736m LTV * Share • 16 customers and a total of 24 vessels NOKm • Largest exposure is USD 11.7m and average Product 201 66% 27% commitment size is USD 5.1m Chemical 129 46% 17% Policy Industr
Slide 23: Table of Contents
TABLE OF CONTENTS 1 AMBITIONS & HIGHLIGHTS 2 FINANCIALS 3 BUSINESS AREAS 4 PROFITABLE GROWTH
Slide 24: Long-Term Growth and Profitability
LONG-TERM GROWTH AND PROFITABILITY Return on Equity NOKm Average Equity not including outstanding AT1 capital 2,500.0 2,357 30.00% 2,192 1,951 25.00% 2,000.0 1,508 20.00% 1,500.0 16.6 % 15.6 % 15.9 % 16.0 % 15.0 % Target ROE 15.00% 14.8 % 1,040 15,0 % 12.7 % 1,000.0 786 10.00% 610% 8.6 629 500.0 5.0
Slide 25: Consistent Value Creation
CONSISTENT VALUE CREATION NOK 41.0 39.4 39.50 38.10 35.4 36.00 31.1 34.60 28.0 24.7 26.50 21.6 24.70 19.7 19.50 14.20 2012 2013 2014 2015 2016 2017 2018 Q1-19 Column1 Book equity incl. Earnings per share (NOK) Share price (NOK) PAGE 25
Slide 26: Appendix
(Pareto bank
Slide 27: Largest Shareholders as of March 2019
LARGEST SHAREHOLDERS AS OF 31 MARCH 2019 # Investor 31 March 2019 # of shares % total • The Company has 58,619,688 shares 1 Pareto AS 9,675,873 16.51 % outstanding 2 Pecunia Forvaltning AS 5,900,000 10.06 % 3 AF Capital Management AS 5,861,968 10.00 % • One class of shares where each share 4 K11 Inv
Slide 28: The Share
THE SHARE Earnings per share Book equity per share NOK NOK 41.04 1.67 39.37 1.34 1.36 35.16 Q1-18 Q4-18 Q1-19 Q1-18 Q4-18 Q1-19 Price / Earnings Price / Book NOK, Share price 36.00 NOK, Share price 36.00 6.90x 6.22x 5.39x 1.05x 0.86x 0.88x Q1-18 Q4-18 Q1-19 Q1-18 Q4-18 Q1-19 PAGE 28
Slide 29: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Q1-19 Q4-18 Q3-18 Q2-18 Q1-18 Net Interest income 162.6 147.0 138.8 139.4 129.1 Total other operating income 6.2 -3.3 -1.4 8.6 4.9 Total net income 168.8 143.7 137.5 148.0 134.0 Total other operating expenses 35.0 28.2 31.1 29.6 31.0 Operating result before loss
Slide 30: Quarterly Balance Sheet
QUARTERLY BALANCE SHEET BS (NOKm) Q1-19 Q4-18 Q3-18 Q2-18 Q1-18 Loans to credit institutions 951 320 1,295 1,136 405 Loans to customers 12,065 11,653 10,690 10,489 10,066 Bonds and other securities 3,797 3,537 4,220 4,031 2,844 Shareholdings in associated companies 37 37 35 35 37 Other assets 69 60
Slide 31: Margins and Interest Contribution
MARGINS AND INTEREST CONTRIBUTION Margins per business area Interest contribution per business area Estimated annualized margins including commissions, excluding font NOKm, estimated interest contribution including commissions, excluding font and back-end fees over 3M Nibor or similar rate and back-
Slide 32: Number of Customers
NUMBER OF CUSTOMERS Number of customers per business area Real Estate 282 Corporate 84 Securities 188 Shipping 18 & Offshore Retail 28 (Mortgages) PAGE 32
Slide 33: Customer Deposits
CUSTOMER DEPOSITS Deposits by product Deposits by type NOKm NOKm 765 Floating rate retail Depositors (#) 1,774 620 588 2,272 Amount (NOKm) 3,013 5,559 Floating rate corporate 2,641 Retail Corporate 1,495 Savings with restrictions 1,285 1,032 Deposits by size Fixed rate 2,933 NOKm 765 > NOK 20m 2,067
Slide 34: Market Funding
MARKET FUNDING Market funding maturities Credit spreads NOKm, net of own holdings Basis points over 3M Nibor 101 72 150 1620 53 1237 1300 200 32 800 22 18 434 2019 2020 2021 2022 2023 0,25 0,5 1 2 3 5 Senior Call on Subordinated Capital Years to Maturity Source: Nordic Bond Pricing PAGE 34
Slide 35: Surplus Liquidity
SURPLUS LIQUIDITY Bond portfolio Key comments Market value of bonds and funds comprising suprplus liquidity • The bank’s liquidity is comprised of cash and highly liquid bonds • High share of government & PSEs to 5% reduce credit spread risk and increase short-term liquidity • Large share of covered
Slide 36: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Risk classification Historical risk classification NOKm NOKm None / very low 5,713 48% 46% 45% 45% 45% risk 6,067 44% 43% 42% 42% 42% 5,438 Low risk 6,517 1,185 Moderate risk 1,683 254 Some risk 57 12% 18 9% 10% High risk 7% 8% 152 40 Very high risk Q1-18 Q2-18 Q3-
Slide 37: Commitments by Size
COMMITMENTS BY SIZE Commitment size per customer Distribution of commitments by size NOKm Percent of NOKm 948 < 10 6% 869 14% 2% < 10 4,173 10 - 50 4,797 4% 10 - 50 3,945 32% 50 - 100 50 - 100 3,979 100 - 150 15% 712 150 - 200 100 - 150 2,120 200 - 250 864 > 250 150 - 200 651 27% 452 200 - 250 224 1
Slide 38: PAGE 38
(Pareto bank