Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q3 2018 Earnings Presentation
61 slides from Sparebank 1 Ostlandet's earnings presentation, 2018
Slide 1: Third Quarter 2018
THIRD QUARTER 2018 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 475.000 financial group Market share 35% Year of establishment 1839 in the Market strategy Market leader southwest of Unemployment rate 2.6% Norway Hordaland Population 524.000 Market share 6% Year of establishment 2006 Market strategy Growth Unemployment rate 2.6% Ag
Slide 4: A strong result marked by good operations, increased activity and lower losses
A strong result marked by good operations, increased activity and lower losses • Pre-tax profit for the quarter is NOK 794 million compared to NOK 750 million last year ‐ Return on equity after tax 12.6% • Pre-tax profit year-to-date is NOK 2.216 million compared to NOK 1.910 million last year ‐ Ret
Slide 5: Financial targets and estimates for 2018
Financial targets and estimates for 2018 Return on equity CET 1 Growth in loans 11,7% 6,1% 4,0 % - 6,0 % 11,0% 11,0% 15,1% 15,0% 14,7% 2,6% 2017 30.09.2018 Target 2018 2017 30.09.2018 Target 2018 2017 30.09.2018 Target 2018 Growth in costs* NOK 543 Impairment losses** Dividend share 6,6% million 52%
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 12,9% 12,6% 14,8% 15,1% 15,0% 14,8% 14,7% 12,3% 11,4% 10,3% Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Cost ratio Earnings per share 41,0% 42,1% 40,1% 2,39 2,41 2,48 37,7% 38,9% 2,18 2,03 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17
Slide 7: Income statement
Income statement Group Income Statement (MNOK) 30.09.2018 30.09.2017 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Net interest income 2.513 2.343 871 842 800 819 820 Net commission and other income 1.087 1.157 349 370 368 367 386 Net income on investment securities 501 430 175 213 113 204 198 Total income 4.101 3.
Slide 8: Change in profit 30.09.2017 – 30.09.2018
Change in profit 30.09.2017 – 30.09.2018 2.500 191 2.216 128 - 56 - 28 71 2.000 1.910 1.500 1.000 500 0 30.09.2017 Net interest income incl. Other income Net income on Total operating expenses Impairment losses on 30.09.2018 commission from investment securities loans and guarantees covered bond com
Slide 9: Key figures
Key figures 30.09.2018 30.09.2017 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Return on equity after tax (%) 11,7 10,9 12,6 12,3 10,3 11,4 12,9 Net interest margin (%) 1,52 1,53 1,53 1,52 1,50 1,50 1,54 Impairment losses on loans and guarantees in % of gross loans incl. 0,16 0,31 0,12 0,21 0,16 0,26 0,27 covered
Slide 10: Consolidated income profile
Consolidated income profile 1.206 1.212 1.220 1.186 1.168 347 347 330 331 338 19 39 36 23 30 820 819 842 871 800 Q3 17 Q4 17 Q1 18 Q2 18 Q3 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% 2,78% 0,34% 2,73% 2,71% 2,71% 2,74% 2,74% 2,73% 2,72% 0,29% 0,24% 0,24% 0,22% 0,13% 0,03% 0,04% -0,01% 0,04% 1,78% 1,79% -0,03% 1,69% 1,69% -0,08% -0,09% -0,06% 1,59% -0,12% -0,15% -0,09% 1,45% 1,50% 1,51% 1,38% -0,18% Q3 16 Q4 16 Q1
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 50 000 12,2 % 15% 9,6 % 40 000 10% MNOK 30 000 3,8 % 2,4 % 5% 20 000 -1,9 % -0,7 % 10 000 -2,3 % -2,8 % 0% -3,5 % 0 -5% Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Volume Growth % Retail Market 15% 100 000
Slide 13: Loan portfolio as at 30.09.2018
Loan portfolio as at 30.09.2018 • Gross loans (incl. covered bond companies) as at 3,0% Agriculture / forestry / fishing 30 September 2018 amount to NOK 196.4 billion 3,1% compared with NOK 185.2 billion at the same Industry, Power/water supply 3,8% time the year before. and construction 3,8% Retail
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. ‐ 89.8% of the exposure is within 85% of the assessed value of collateral. 80% 62,6% 60,3% 60% 40% 29,5% 27,1% 20% 6,6% 6,4% 3,7% 3,8% 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 1.7 Corporate Market* billion to NOK 100.3 billion. 22,7% 24,7% 50.000 20,7% 25% ‐ Corresponds to an increase in the period of 40.000 14,0% 1.7%. 10,0% 8,3% 15% MNOK 30.000 ‐ Reduced growth in 3. quarter 2018 is due to 5%
Slide 16: Net commission and other income
Net commission and other income MNOK 30.09.2018 30.09.2017 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Payment facilities 194 197 72 59 63 65 71 Savings/placements 149 151 49 48 52 47 51 Insurance products 143 156 47 47 49 52 52 Commission income real estate broking 284 295 94 109 81 94 90 Guarantee commission 83
Slide 17: Net income on investment securities
Net income on investment securities MNOK 30.09.2018 30.09.2017 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Dividends 12 11 0 1 11 0 2 Investment income, associates 253 271 94 102 57 154 127 Securities gains/losses 116 103 42 69 5 24 46 - of which capital change in shares and certificates 152 92 56 90 6 44 57 - of
Slide 18: Subsidiaries
Subsidiaries Subsidiaries MNOK 30.09.2018 30.09.2017 EiendomsMegler 1 SR-Eiendom AS Number of sales 4.898 5.074 Operating profit before tax 7 23 SR-Forvaltning AS Capital under management (BNOK) 11 11 Operating profit before tax 25 25 FinStart Nordic AS* Operating profit before tax 39 10 SpareBank 1
Slide 19: Ownership interests
Ownership interests Ownership interests MNOK 30.09.2018 30.09.2017 SpareBank 1 Gruppen AS Interest ownership 19,5% 19,5% Profit after tax 189 219 Adjusted profit previous years 0 -4 SpareBank 1 Boligkreditt AS* Interest ownership 8,0% 13,9% Profit after tax 1 -19 SpareBank 1 Næringskreditt AS Intere
Slide 20: Operating expenses
Operating expenses MNOK 30.09.2018 30.09.2017 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Personnel expenses 967 930 322 326 319 323 312 Restructuringcosts 0 0 0 0 0 10 0 Total personnel expenses 967 930 322 326 319 333 312 IT expenses 246 235 80 83 83 82 74 Marketing 62 53 22 24 16 20 16 Other administrative exp
Slide 21: Impairment losses on loans / Loans defined as Stage 3
Impairment losses on loans / Loans defined as Stage 3* Impairment losses on loans Changes in gross loans defined as Stage 3 IAS 39 IFRS 9 IAS IFRS 1,40% 1,30% 1,18% 0,95% 1,13% 0,27% 0,26% 0,21% 0,16% 0,12% 1.352 1.562 2.715 2.562 1.790 126 118 118 74 59 824 555 -2 2 -19 Q3 17 Q4 17 Q1 18 Q2 18 Q3 1
Slide 22: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees Losses on loans in income statement (MNOK) 30.09.2018 30.09.2017 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Corporate customers 228 393 62 100 66 89 116 Retail customers 23 30 -3 18 8 29 10 Total impairment IFRS 9 loans and guarantees* -19 0 -19 0 Change in collective im
Slide 23: Funding
Funding • Well diversified funding. Deposits to loans ratio • Net Stable Funding Ratio* is 120 % on 100,0% consolidated basis. 80,0% 55,4% 58,3% 60,5% 59,0% 55,3% 57,2% 59,1% • Good liquidity 54,5% 54,8% 60,0% ‐ Net refinancing need over the next 12 months is NOK 40,0% 9.9 billion. 20,0% ‐ Liquidity
Slide 24: Solid capital ratio
Solid capital ratio ROE ROE ROE • SpareBank 1 SR-Bank is compliant with regulatory 10,0 % 11,0 % 11,7 % capital requirements as at 30.09.2018. • The Pillar 2 requirement for SpareBank 1 SR-Bank CET 1 17,5% 17,9% 17,8% 15,0 % is 2.0%. 15,6% 16,0% 16,0% 1,0 % Management buffer • SpareBank 1 SR-Bank is
Slide 25: MREL – FSA consultation paper
MREL – FSA consultation paper Main features: MREL SpareBank 1 SR-Bank 33% • New requirements will enter into force 1 January 2019. • Issuers are expected to be fully MREL compliant by 31 December 7,5 % 2022. • The FSA will set requirements individually for each bank. • Covered bonds issuers are exem
Slide 26: Outlook - The market is expected to grow
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 10% in 2019. • Declining unemployment in the group's m
Slide 27: Establishing one of Norway largest insurance companies
Establishing one of Norway largest insurance companies
Slide 28: A merger that will have a positive effect in 2019
A merger that will have a positive effect in 2019 • The merger is expected to be completed on 1 January 2019 • The effect on the result or the equity for SpareBank 1 SR-Bank has been calculated to be around NOK 831 million • Increased common equity tier 1 capital ratio, with a possible dividend paym
Slide 29: High expectations for the oil companies
High expectations for the oil companies
Slide 30: The majority of companies are optimistic in Southern and Western Norway
The majority of companies are optimistic in Southern and Western Norway • Optimism in all of the counties: County. Main index and sub-indices as at last measurement Oslo, Hordaland, the Agder counties and Rogaland • More jobs, lower unemployment and competition for labour • Significant upswing – hig
Slide 31: Proposal from the FSA concerning new systemically important banks
Proposal from the Financial Supervisory Authority of Norway concerning new systemically important banks • The proposal means that banks can be defined as systematically important based on regional market shares in the corporate market. • The proposed SIFI buffer has been set at 2% of the risk- weigh
Slide 32: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 32
Slide 33: Lower unemployment rate in Norway
Lower unemployment rate in Norway 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 2003 2005 2007 2009 2011 2013 2015 2017 Norge Rogaland Hordaland Vest-Agder Norge, SSB AKU-arbeidsledighet
Slide 34: Housing prices in Norway approx. unchanged last 12 months
Housing prices in Norway approx. unchanged last 12 months Fairly stable in most counties, but somewhat more volatile in Oslo 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 2003 2005 2007 2009 2011 2013 2015 2017 Stavanger region Bergen
Slide 35: Increasing petroleum activity on the NCS
Increasing petroleum activity on the NCS Activity down 35% from 2014 to 2017, but is expected to increase coming years • Total activity on the Norwegian Continental Shelf Petroleum activity on Norwegian Continental Shelf. BNOK (2018 NOK). Source: NPD (NCS) increased by over 60% from 2007 to 2014. Su
Slide 36: Retail trade increasing in Norway by 2-4%
Retail trade increasing in Norway by 2-4% Growth has been highest in Oslo, but has increased in Rogaland recently 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% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Norge Rogala
Slide 37: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 37
Slide 38: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 6.1% (7.1%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 218.0 (209.3) EAD per 30.09.2018 BNOK 13.3 (14.8) EAD is related to oil operations Oil service; 1,6% (2.1%) Corporate market excl. oil Exploration and operat
Slide 39: Oil services - total NOK 3.4 billion
Oil services - total NOK 3.4 billion (NOK 4.3 billion as at 31.12.2017) • Exploration and concept studies Oil services ‐ EAD NOK 0.1 billion ‐ EAD NOK 3.4 billion, 1.6% of the bank's total EAD ‐ Average weighted probability of default 3.5% ‐ Average weighted probability of default for the oil servic
Slide 40: Oil and gas - total NOK 1.8 billion
Oil and gas - total NOK 1.8 billion (NOK 1.7 billion as at 31.12.2017) • Exploration financing Exploration and production companies ‐ EAD NOK 0.5 billion ‐ EAD NOK 1.8 billion, 0.8% of the bank's total EAD ‐ Average weighted probability of default 0.7% ‐ Average weighted probability of default for t
Slide 41: Offshore - total NOK 8.1 billion
Offshore - total NOK 8.1 billion (NOK 8.7 billion as at 31.12.2017) • Offshore Service Vessels Offshore ‐ EAD NOK 5.9 billion, average weighted probability of default is 2.9%, ‐ EAD NOK 8.1 billion, 3.7% of the bank's total EAD weighted average age is 8.6 years, average weighted contract ‐ Average w
Slide 42: Offshore Service Vessels – total NOK 5.9 billion
Offshore Service Vessels – total NOK 5.9 billion (NOK 6.3 billion as at 31.12.2017) Offshore Service Vessels EAD per age of OSV excl. accomodation • Most customers with long history as a borrower 2.500 in SpareBank 1 SR-Bank • Most of the companies are listed on stock 2.000 exchange or family owned
Slide 43: 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 770 or lower. 2 8 • Total EAD for the portfolio is NOK 5.9 billion of 3 30 which; 4 8 • NOK 5.3 billion consists of 11 restructured 5 11 commitments 6
Slide 44: Lending to commercial property
Lending to commercial property Lending to commercial property Housing cooperative; 1.8% (4,7%) • NOK 30.3 billion, 15.4% of the bank’s total loans. Real estate management; 3.0% (1,9%) • The portfolio is characterised by lending to commercial properties for leasing with long-term contracts and financ
Slide 45: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 45
Slide 46: 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 46
Slide 47: 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 48: Limits on commitments 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 49: 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% • 61.0% of the bank’s loan exposure has a PD* 80% 61,2% 61,0 % below 0.5%. 60% 40% 29,0% 28,6 % • Single loan exposures less than NOK 10 million 20% 9,8% 10,4 % aggregates 67.4% of tot
Slide 50: Risk profile – Lending to the retail market
Risk profile – Lending to the retail market • The quality of the retail market portfolio is Retail market portfolio distributed by risk class considered to be good and has low potential 100% 2,6% 2,7% 2,6% 2,5% 2,6% 16,4% 16,6% 16,7% 16,3% 16,1% losses. 80% 60% • The proportion of loans with a PD* b
Slide 51: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and RWA home mortgages stable portfolio. 21,6 % 21,7 % 21,5 % 21,5 % 21,3 % 20,0 % 15,0 % 10,0 % 5,0 % 0,0 % 30.09.17 31.12.17 31.03.18 30.06.18 30.09.18 Home mortgages as defined in the Norwegian IRB framework; residential property must ma
Slide 52: Risk profile – Corporate lending
Risk profile – Corporate lending Corporate lending portfolio distributed by risk class • The quality of the corporate market portfolio is 100% good. There is a clearly defined framework that 24,4% 27,6% 25,0% 23,5% 25,1% 80% sets limit on what is funded and conditions for 60% particular funding purp
Slide 53: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 53
Slide 54: 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: 25 Commercial bank located in Ho
Slide 55: SpareBank 1 Alliansen
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 Selskaper hvor SR-Bank har direkte eierskap SpareBank 1 Gruppen AS Selskaper hvor SR-B
Slide 56: 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 57: Balance sheet
Balance sheet Balance sheet (MNOK) 30.09.2018 30.09.2017 Cash and balances with central banks 213 271 Balances with credit institutions 3.600 4.135 Net loans to customers 181.676 165.787 Certificates, bonds and other fixed-income securities 29.423 29.579 Financial derivatives 3.746 3.960 Shares, own
Slide 58: SRBANK share
SRBANK share • International ownership is Development in Price/Book Relativ share price development 25.3% per 3. quarter 2018. 130 110 1,4 Index 100 = sept 30th 2017 120 100 • Total market value at 3. 1,2 110 90 quarter 2018 is NOK 25.3 80 100 1,0 NOK billion. 70 90 p/B 60 0,8 80 50 Price OSEBX P/B
Slide 59: 20 largest shareholders as at September 2018
20 largest shareholders as at September 2018 • Ownership interests: Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • From Rogaland, Agder-counties and Hordaland: 43.3% Folketrygdfondet 18.930.821 7,4% (45.7%) State Street Bank and Trust Co, U.S.A. Nominee 10.479.273 4,1% • Intern
Slide 60: SR-Bank pr 30.09.2018
SR-Bank pr 30.09.2018 30.09.2018 2017 2016 2015 2014 2013 2012 Share price 99,00 87,00 60,75 39,30 52,50 60,25 37,20 Stock value (MNOK) 25.319 22.250 15.537 10.051 13.427 15.409 9.514 Book value per share, NOK (group) 80,02 77,24 71,54 66,14 60,28 55,00 49,48 Earnings per share 6,92 8,16 6,87 6,83 8
Slide 61: 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