Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q1 2020 Earnings Presentation
51 slides from Sparebank 1 Nord-norge's earnings presentation, May 13, 2020
Slide 1: Quarterly accounts Q1 2020
Quarterly accounts Q1 2020 Tromsø/Oslo 13 May 2020
Slide 2: Quarterly accounts Q1 2020
Quarterly accounts Q1 2020 CET-1 ratio 16.7 % (14.6 %) Pre-tax profit 448 MNOK (973) C/I-ratio 41.6 % (27.5 %) ROE 11.4 % (28.1 %) Losses 119 MNOK (-17) 2
Slide 3: Strong number 1 position in the North
Strong number 1 position in the North Main bank retail Main bank SME 1) SNN 1) SNN 2) DNB 2) DNB 3) Other savings bank 35% 3) Other savings bank 36% Accounting Real estate Secured financing 1) Regnkapshuset 1) EM1 1) Santander 2) Azets 2) DNB 2) DNB 3) Intu Nord 20% 3) Rede 38% 3) SNN Finans 19% 3 S
Slide 4: The most important industries in the north
The most important industries in the north Percentage of total value creation 2018 12% 10% 8% 6% 4% 2% 0% Offentlig public Elektrisitets-, gass- electricity, gas andog Bygge- og and construction Varehandel og wholesale and Undervisning schooling Helsetjenester healthcare Akvakultur aquaculture fishi
Slide 5: The seafood industry has so far been less exposed
The seafood industry has so far been less exposed Export value of fish from Northern Export value of fish from Norway Norway per month March 2020 12 5.000 10 4.500 4.000 billions NOK 8 3.500 Verdi i milliarder 3.000 6 MNOK 2.500 2.000 4 1.500 1.000 2 500 0 0 2013 2014 2015 2016 2017 2018 2019 2020 J
Slide 6: Abrupt halt for the tourism industri in March
Abrupt halt for the tourism industri in March Unemployment Benefits in Overnight stays - foreign nationals, and share of total overnight stays in Northern Norway Number of persons who had applied by industry Norway (per 29/4-2020) 1.700.000 16% 1.600.000 15% Uoppgitt Unknown 1.500.000 Finansierings-
Slide 7: Uncertain development in the housing market?
Uncertain development in the housing market? House prices, March 2020 Housing starts in Northern Norway 80.000 73.488 15% 3.750 3.459 3.500 70.000 13% 3.250 60.000 11% 3.000 47.735 9% 2.750 50.000 42.319 38.750 7% 2.500 2.359 40.000 31.852 2.250 Number of units 5% 30.000 3,3 % 2,9 % 2.000 2,9 % 3% 2
Slide 8: High unemployment due to Covid-19, but lower than the national average
High unemployment due to Covid-19, but lower than the national average Registered unemployment 10,7 % 11% 10% 9% 9,07 % 8% 7% 6% 5% 4% 3% 2% 1% jan.12 jan.13 jan.14 jan.15 jan.16 jan.17 jan.18 jan.19 jan.20 jul.12 jul.13 jul.14 jul.15 jul.16 jul.17 jul.18 jul.19 Unemployment Northern Norway (%) Unem
Slide 9: CSR is even more important under the Covid-19 outbreak
CSR is even more important under the Covid-19 outbreak 9
Slide 10: Impact due to Covid-19 and drop in oilprice
Impact due to Covid-19 and drop in oilprice Affected by drop in oilprice Loan portfolio • Oilrelated sector 0,8 % Affected by Covid-19: • Commercial property related to shopping 6,2 % mall, retail and hotel • Service industries • Industyr, excl fishing industry • Tourism • Passenger transport Limite
Slide 11: Well diversified loan portfolio
Well diversified loan portfolio Power- , wa ter supply and cons truction 2% Real Industries 2% Estate Commision loans 11 % 30 % Agriculture and fisheries 6% Other 19 % Transport and service industries Retail banking 4% market 40 % Other 5% 11
Slide 12: Diversified portfolio in commercial real estate
Diversified portfolio in commercial real estate Plot Residential 1,9 % Development 10,3 % Above 250 0 - 5 mnok Housing Ass. Offices mnok 9,8 % 6,0 % 18,9 % 11,1 % Residential Investment 4,7 % 100 - 250 5 - 30 mnok Others mnok Industry 23,3 % 5,8 % (small 28,5 % commitment Combination- s) buildings 1
Slide 13: Low oil related exposure
Low oil related exposure Other 0,5 % Industry 5,1 % • Oil related exposure amounts to NOK 1 012 mill • The exposure represents 0.76 % of total lending Supply base 28,1 % incl. Næring- and Boligkreditt • Average weighted probability of default 0.77 % • A total of NOK 42 mill are non-performing or imp
Slide 14: Increased need for interest-only mortgage
Increased need for interest-only mortgage Interest-only mortgage 3,5 % • Significant increase in interest-only applications – 10,7 % some refusal due to granting must be Covid-19- related. Decrease in applications. • Over 6 000 loans granted interest-only in March 10,9 % and April due to Covid-19. •
Slide 15: Ambitions for growth and increased market share
Ambitions for growth and increased market share Expected growth for SpareBank 1 Nord-Norge in 2020: Retail market: 2-5 % Corporate market: 4-7 % Expanded and somewhat reduced growth intervals due to increased uncertainty 15
Slide 16: Why invest in SpareBank Nord-Norge
Why invest in SpareBank 1 Nord-Norge #1 Market leader in a ROE Ambitious, top class resourceful region financial targets High relative Implements new KPI Owner friendly ownership in measures to maintain dividend policy and SpareBank 1 Group, top class ROE strong capitalization other alliance compani
Slide 17: A good first quarter despite the negative corona effect
A good first quarter despite the negative corona effect CET 1 incl floor Return on equity capital Cost/income Group 64,0% ** 17,2 % 16,7 % 41,2 % 43,1 % 14,9 % 14,5 % 15,9 % 39,8 % 12,9 % 13,0 % 11,4 % 41,6 % 1,1 % * 2017 2018 2019 31.03.20 2017 2018 2019 31.03.20 2017 2018 2019 31.03.20 *Return on
Slide 18: Changes in profit and loss over the last quarter
Changes in profit and loss over the last quarter 18
Slide 19: Low individual losses but increase in expected credit losses in Q1
Low individual losses but increase in expected credit losses in Q1 0,10 % 0,01 % 0,01 % 0,00 % 119 -0,01 % 13 11 -17 -2 31.03.19 30.06.19 30.09.19 31.12.19 31.03.20 Net losses Net losses in % of gross lending incl. intermediary loans 19
Slide 20: Good growth first quarter
Good growth first quarter Personmarked inkl formidlingslån 5,1 % 7,0 % Retail incl. 29 % commission loans Corporate incl. 71 % commission 86 697 77 140 82 530 loans 31.03.18 31.03.19 31.03.20 Retail excl. commission BM inkl. formidlingslån loans 42 % 58 % Corporate 9,8 % 9,1 % excl. commission loans
Slide 21: Positive development in lending margins
Positive development in lending margins 2,51 % 2,51 % 2,48 % 2,45 % 2,35 % 2,40 % 2,35 % 2,35 % 2,30 % 1,64 % 1,52 % 1,48 % 1,53 % 1,44 % 1,44 % 1,36 % 1,35 % 1,32 % 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Lending margin corporate Lending margin retail 21
Slide 22: Still strong deposit growth
Still strong deposit growth Personmarked OM 8,2 % 6,9 % 13 % BM PM 53 % 34 836 37 694 34 % 32 589 31.03.18 31.03.19 31.03.20 Offentlig marked Bedriftsmarked 19,6 % 8,4 % 16,7 % -3,1 % 19 737 23 605 18 212 8 238 9 610 9 310 31.03.18 31.03.19 31.03.20 31.03.18 31.03.19 31.03.20 22
Slide 23: Weaker development in deposit margins
Weaker development in deposit margins 1,00 % 0,84 % 0,78 % 0,70 % 0,46 % 0,52 % 0,53 % 0,48 % 0,69 % 0,64 % 0,36 % 0,52 % 0,48 % 0,38 % 0,45 % 0,30 % 0,36 % 0,29 % 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 -0,31 % -0,28 % -0,29 % -0,28 % -0,27 % -0,28 % -0,29 % -0,31 % -0,37 % Deposit margin corp
Slide 24: The profitability measures goal remains, but the 2020 effect is more uncertain
The profitability measures goal remains, but the 2020 effect is more uncertain due to Corona ROE 200 MNOK Effect of profitability 12 % measures year end 2021: C/I ratio < 40 % Maximum cost 2020: 2% increase*: 2021: 0% 24 *) Ex. new business areas
Slide 25: Long term financial targets
Long term financial targets > 12 % ROE Main target > 50 % < 40 % 15,0 % Dividend payout C/I-ratio Tier 1 Capital ratio 25
Slide 26: Financial Outlook
Financial Outlook The Q1 figures are positively affected by the interest changes in late 2019. However the latest cuts from the central bank might have a negative effect on NRI the NRI going forward. ROE target: Top-level profitability among comparable banks, currently ROE > 12 % > 12 %. As a conseq
Slide 27: SpareBank 1 Nord-Norge
SpareBank 1 Nord-Norge CEO Liv B. Ulriksen CFO for finans Bengt Olsen E-mail: liv.bortne.ulriksen@snn.no E-mail: bengt.olsen@snn.no Tel. + 47 957 31 130 Tel. + 47 975 89 560 URLs Website and internet bank: www.snn.no Equity certificate in general: www.egenkapitalbevis.no Financial calendar: Prelimin
Slide 28: Appendix
Appendix NORD-NORGE
Slide 29: Company structure
Company structure Subsidiaries and second tier Associated companies and joint ventures subsidiaries SpareBank 1 SpareBank 1 SpareBank 1 Finans Eiendomsmegler 1 SpareBank 1 Gruppen AS Boligkreditt AS Næringskreditt AS Nord-Norge AS Nord-Norge AS 19,5 % | Financial services 18,65 % | Covered Bond comp
Slide 30: Geographical distribution of ownership
Geographical distribution of ownership 13,8 20,3 28,6 35,7 37,5 37,7 35,5 35,8 33,4 38,3 65,5 61,1 53,2 46,7 45,6 43,4 42,4 43,4 45,7 45,7 20,7 18,6 18,2 18,7 19,1 19,3 19,0 18,8 18,6 20,0 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 Holders residing in North Norway Other Norwegian holders Fore
Slide 31: The 20 largest EC holders
The 20 largest EC holders Number Share of EC Holders of ECs EC Capital State Street Bank and Trust Comp 3.415.002 3,40% PARETO INVEST AS 3.161.748 3,15% PARETO AKSJE NORGE VERDIPAPIRFOND 3.091.505 3,08% GEVERAN TRADING CO LTD 2.790.356 2,78% The Northern Trust Comp, London Br 2.504.703 2,49% MP PENS
Slide 32: Net interest income - Group
Net interest income - Group Measured against funding cost 32
Slide 33: Cost development – Group
Cost development – Group 41,2 % 43,1 % 39,8 % 41,6 % 1.474 1.640 1.366 404 2017 2018 2019 31.03.20 Group operating costs Cost/income Group 33
Slide 34: Operating expenses - Group
Operating expenses - Group 34
Slide 35: Net fee- and other operating income - Group
Net fee- and other operating income - Group (Amounts in NOK million) 1Q20 4Q19 3Q19 2Q19 1Q19 Payment facilities 73 76 89 79 68 Insurance products 43 42 42 42 40 Guarantee commissions 7 7 7 9 4 Real estate broking 30 32 29 49 31 Portfolio commissions 12 9 11 8 8 Other commisions 22 26 34 11 18 Commi
Slide 36: Group companies result before tax
Group companies result before tax 31.03.20 31.03.19 SpareBank 1 Finans Nord-Norge AS 21 751 36 675 SpareBank 1 Regnskapshuset Nord-Norge AS 12 427 14 444 EiendomsMegler 1 Nord-Norge AS 3 074 1 484 Subsidiaries core operations 37 252 52 603 Other subsidaries 2 072 428 Total 39 324 53 031 36
Slide 37: Lending portfolio - comments
Lending portfolio - comments • Good growth in retail lending last 12 months, with focus on commitments qualifying for SpareBank 1 Boligkreditt (covered bond company) • Good growth in corporate market lending last 12 months • The portfolio and new commitments in corporate sector lending are diversifi
Slide 38: Portfolio - exposure as of 31.03.20, group
Portfolio - exposure as of 31.03.20, group 0,3 % 0,5 % 1,7 % 1,6 % 3,6 % 2,6 % 4,3 % 22,4 % 22,9 % 95,6 % 96,8 % 100,0 % 73,5 % 71,1 % Retail market Corporate market SB1 Boligkreditt SB1 Næringskreditt SNN Finans Low risk Medium risk High risk Non-performing/impaired 38
Slide 39: Portfolio – changes last 12 months, group
Portfolio – changes last 12 months, group 7.311 5.000 4.000 3.000 2.000 1.000 0 Retail market Corporate market SB1 Boligkreditt SB1 Næringskreditt SNN Finans Group -1.000 Low risk Medium risk High risk Non-performing/impaired 39
Slide 40: Portfolio - exposure distributed by size
Portfolio - exposure distributed by size 76,3 % 79,0 % 11,4 % 10,3 % 6,4 % 4,9 % 6,0 % 5,9 % Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Share of loanexposure Mar 2020 Share of loanexposure Mar 2020 Loans distributed by size of exposure and share of total exposure Numbers include SB 1
Slide 41: Portfolio – LTV mortgage loans
Portfolio – LTV mortgage loans 91,5 % 91,6 % • 97.4 % of exposures are within 85 % of the collaterals market value • Exposures above 85 % are 2.6 % • Each loan is distributed in the different intervals. The numbers include the Group's share of SB1 5,9 % 5,8 % Boligkreditt portfolio. 1,3 % 1,4 % 1,2
Slide 42: Largest single-customers within segments
Largest single-customers within segments 5 largest tourism/hotels 5 largest passenger transportation Type Volume (mill.) Risk-group Type Volume (mill.) Risk-group Hotel 209.2 MEDIUM Transport 350.0 MEDIUM Hotel 169.0 MEDIUM Transport 250.0 VERY LOW Hotel 141.5 MEDIUM Transport 65.9 VERY LOW Hotel 11
Slide 43: Portfolio – Offshore Supply Vessels (OSV)
Portfolio – Offshore Supply Vessels (OSV) AHTS 6% • OSV amounts to NOK 671 mill • Average weighted probability of default 0.80 % Standby/Area • Total amount of 7 vessels* contingency • Weighted age 8.5 years* 41 % • Average weighted contract length 3.6 years • SNN is participant in syndicates on 6 v
Slide 44: Portfolio – Supply bases
Portfolio – Supply bases Other 0,5 % Industry 5,1 % • Supply base exposure amounts to NOK 284 mill Supply base • Average weighted probability of default 0.32 % 28,1 % • Customers with long term contracts with solid and strong partners gives good cash flows in the short and long term Offshore supply
Slide 45: Portfolio – Industry and Other
Portfolio – Industry and Other Industry Other 5,1 % 0,5 % • The sector “Industry and Other” amounts to NOK 56 mill, divided into Industry NOK 51 mill and Other NOK 5 mill Supply base • Average weighted probability of default: Industry 28,1 % 2.66 % and Other 1.84 % • A total of NOK 42.2 mill non-per
Slide 46: The Group's loan losses
The Group's loan losses Losses Q1 20 2019 Q4 19 Q3 19 Q2 19 Q1 19 2018 Individual losses Corporate market 4.5 17.5 4.2 9.3 5.4 -1.4 40.4 Individual losses Retail market 3.3 10.0 6.7 -0.8 4.4 -0.4 14.3 Collective losses and other value change items 111.1 -16.1 -12.7 6.2 5.8 -15.5 -32.4 Total losses o
Slide 47: Funding instruments 31.03.2020
Funding instruments 31.03.2020 Currency Bonds 41 % NOK Bonds 52 % Subordinated Loan Capital 4% T1 Hybrid 3% 47
Slide 48: Maturity profile 31.03.2020
Maturity profile 31.03.2020 Capital markets funding (excl. SPABOL/SPACOM) 7.000 6.000 5.000 NOK 26 287 mill in capital market funding exclusive of SpareBank 1 Boligkreditt and 4.000 SpareBank 1 Næringskreditt Mill NOK 3.000 SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt is important funding
Slide 49: Ambitious targets for climate risk and sustainability
Ambitious targets for climate risk and sustainability • Climate risk is part of the Group’s risk strategy. • Sustainability is a part of all core processes through its own policy on sustainability and corporate social responsibility. These include goals to contribute to a greener securities market a
Slide 50: 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 their region. Decisions are made close to the SpareBank 1 Nord-Norge (Tromsø) customer, and each bank continues to develop its link with its local community • Operate exclusiv
Slide 51: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 LO Nord-Norge SMN SR-Bank Østlandet SamSpar 9,6 % 19,5 % 19,5 % 19,5 % 12,4 % 19,5 % Products, commisions, dividends Sale, loan portfolie, capital SpareBank 1 Nord-Norges, direct ownership SpareBank 1 Gruppen AS SpareBa
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