Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q1 2024 Earnings Presentation
53 slides from Sparebank 1 Sor-norge Asa's earnings presentation, 2024
Slide 1: Quarterly presentation 2024 Q1
Quarterly presentation 2024 Q1 SR-Bank SR-Boligkreditt
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: Agenda
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 4: SpareBank 1 SR-Bank at a glance
SpareBank 1 SR-Bank at a glance SpareBank 1 SR-Bank was established in 1839 SR-Bank’s market area Second largest Norwegian owned bank One of two SIFI-banks in Norway A solid public limited company with high returns over time Moody’s rating Aa3 (outlook stable) SR-Bank merging with 7th largest SpareB
Slide 5: We come together to create SpareBank 1 Sør-Norge
We come together to create SpareBank 1 Sør-Norge SpareBank 1 Sør-Norge the second Lending volume per customer Norway’s largest savings bank largest Norwegian owned bank segment (BNOK) covering the south of Norway A solid platform for further growth The bank expects to realize capital synergies of NO
Slide 6: Market overview
Market overview Banks in Norway Alliances Largest banks by lending volume (2022) Savings bank • All credit decisions are made at the local banks, no cross • Multiple alliances and Market share (lending volume) independent banks guarantees SpareBank 1 Alliance, • Economies of scale related 12 indepen
Slide 7: Solid first quarter with lending growth, increased income and low losses
Solid first quarter with lending growth, increased income and low losses Result 1. quarter 2024 Result 31 March 2024 MNOK 35 35.0% 17.6% 14.6% Return on equity after tax Impairments on lending and financial commitments 0.05% of gross lending Cost to income ratio CET 1 capital ratio 7.7% -0.9% MNOK 1
Slide 8: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio Cost to income ratio Earnings per share (NOK) Target: 50% dividend share 16.37% Target < 40% Target 13% Target 8 SR-Bank SR-Boligkreditt
Slide 9: Key figures – yearly development
Key figures – yearly development Return on equity Cost to income ratio Earnings per share (NOK) CET 1 Capital Lending growth Net interest margin CET 1 capital 9 SR-Bank SR-Boligkreditt
Slide 10: Increase in net interest income due to growth
Increase in net interest income due to growth Group Income statement Change in pre-tax profit (MNOK) 10 SR-Bank SR-Boligkreditt
Slide 11: Operating expenses
Operating expenses Operating expenses Change in operating expenses • Cost increase driven by increase in parent bank, as a result of growth strategy, general cost growth and one-off cost in Rygir ersone e penses ygir ther Merger e penses operating e penses e penses 11 SR-Bank SR-Boligkreditt
Slide 12: Group
Group Lending volume Deposit volume Margins in customer- segments Definition margins: Average customer rate measured against money market rates. *The 12 months deposit growth excluding deposits from customers in the public sector is 6.1%. 12 SR-Bank SR-Boligkreditt
Slide 13: Well-diversified lending portfolio
Well-diversified lending portfolio • Gross loans increased to NOK 278 billion from NOK 258 billion year over year • Low offshore, oil and gas exposure • Commercial real estate – low concentration risk and good credit quality 13% 9% 24% 22% Share of green loans Loans before impairments, nominal amoun
Slide 14: Early warning indicators: Our customers are doing well
Early warning indicators: Our customers are doing well Corporate market - Drawn amount on credit facilities Retail market – Avg. number of applications for interest-only per month Retail market – Drawn amount on interest only loans Retail market – Share of exposure (EAD)* with payment remarks *Propo
Slide 15: Market – Commercial real estate
Market – Commercial real estate Office vacancy Prime yield Rental prices Transaction volume (TNOK per sq.m) (NOK billion) Source: Entra, WPS, og EM1 SR-Bank 15 SR-Bank SR-Boligkreditt
Slide 16: Lending to commercial real estate
Lending to commercial real estate 12.9% (NOK 36 billion) of total lending volum is related to commercial real estate Commercial real estate portfolio Commercial real estate for lease (NOK billion) Well differentiated across regions Low concentration risk Commercial real estate Commercial real estate
Slide 17: Loan to value ratio and RWA on home mortgage loans
Loan to value ratio and RWA on home mortgage loans Loan to value ratio on home mortgage loans Risk weight home mortgages • 91.9% of the exposure is within 85% of the assessed value of • RWA on home mortgages reflects a solid portfolio with a collateral. moderate loan-to-value ratio and low potential
Slide 18: Loans and financial commitments
Loans and financial commitments Change in gross loans and financial Impairments on loans and Changes in gross loans and commitments financial commitments financial commitments defined as Stage 3 *An upgraded model for calculating the provisions for expected losses on engagements that are not individ
Slide 19: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the Impairments on loans and financial income statement (MNOK) commitments in the income statement (MNOK) orporate market etai market Impairments on loans and financial commitments in the balance sheet (
Slide 20: Solid capital ratio
Solid capital ratio CET 1 Capital ratio Leverage ratio • The minimum requirement for the CET 1 capital ratio is 16.37% including a temporary Pillar 2 requirement of 0.28% 20,48 % 21,05 % and a Pillar 2 guidance requirement of 1.25% 20,31 % 18,88 % 18,76% 19,05 % 1,25 % • The leverage ratio is 7.14%
Slide 21: Solid capital
Solid capital Leverage ratio Risk weighted density 18,5 % 18,1 % 18,5 % 18,7 % ank n wedbank ordea ank n ordea wedbank Sources: Financial reports (31.12.2023) 21 SR-Bank SR-Boligkreditt
Slide 22: Funding
Funding • LCR 216%, NSFR 136% EUR Benchmarks • NOK 17.7 billion net refinancing need over the next 12 months • Deposit to loan ratio 54.2% N o o ss a a r y a r ref ep ep Aa • MREL-requirement 36.6%, MREL-subordination requirement 29.6% r ref ov ov Aa • As of 31 March 2024, SR-Bank has issued NOK 17,
Slide 23: SR-Boligkreditt
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 24: Overview SR-Boligkreditt
Overview SR-Boligkreditt • SR-Boligkreditt is a wholly owned subsidiary of SR-Bank and a dedicated covered bond company. Its objective is to purchase mortgages and to finance these by issuing covered bonds (European Covered Bond Premium). • Loans are transferred to SR-Boligkreditt as true sale on a
Slide 25: Eligibility criteria
Eligibility criteria Type of properties • Primary residential property in Norway (including detached houses, terraced houses, apartments and cooperative housing units) • The mortgage property shall not be "buy-to- et“ (mortgages to individuals owning more than 3 properties) Collateral • LTV-limits a
Slide 26: Cover pool characteristics
Cover pool characteristics Assets/status • 100 % mortgages on Norwegian private residential properties • 100 % performing loans Cover pool • NOK 111.9 bn: Residential mortgages 108,9 (97.6%), Substitute assets 2.7 bn (2.4%) Mortgages and rate • 53,404 loans at a weighted average interest rate of 5.7
Slide 27: Cover pool characteristics
Cover pool characteristics Current LTV Loan performance 22,2 % 0% 20,3 % 19,3 % 17,0 % Performing loans 13,6 % 100 % Delinquent loans (arrears 31 7,1 % to 90 days) Gross non performing loans 0,4 % (arrears 90 days +) 0-40 % 40-50 % 50-60 % 60-70 % 70-80 % 80-100 % 100 % + Geography Property type 2%
Slide 28: Norwegian economy
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 29: Key economic indicators
Key economic indicators Sources: Statistics Norway and Norges Bank Norges Bank 15 March 2024 & Statistics Norway 21 March 2024. 29 SR-Bank SR-Boligkreditt
Slide 30: Macro in Southern Norway
Macro in Southern Norway SpareBank 1 SR-Ba k’s business survey Unemployment rate Number of bankruptcies Main index of 46 per cent as of the 4 quarter of 2023 Mar Mar Mar Agder oga and est and so ota eutra oga and est and Agder s o and iken House price development Index change 12 month (%) Prices by
Slide 31: Sustainability and Green Bond framework
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 32: Sustainability goals for SpareBank 1 SR-Bank
Sustainability goals for SpareBank 1 SR-Bank – a proactive ally for our customers in the transition to a sustainable society. Equality Combat Emission Transition and economic reduction diversity crime • Climate-neutral • Financing and • Gender balance (40/60) • Have zero tolerance for group from 202
Slide 33: Climate Transition Plan
Climate Transition Plan The first climate transition plan of SpareBank 1 SR-Bank launched in Q1-2024 (link) The plan includes industry targets and trajectories for commercial real estate, shipping, oil and gas and agriculture
Slide 34: Lending volume and financing sustainable activities
Lending volume and financing sustainable activities Sustainable lending volume is 19.8% of total Target: Finance NOK 50 billion in sustainable activities lending volume by the end of 2030 Lending volume 31.03.24 2021 2030 19,8 % 61,4 % 0 bill 25 bill 50 bill 75 bill 100 bill 125 bill 150 bill 175 bi
Slide 35: Green Bond Framework Highlights
Green Bond Framework Highlights Projects Manage- Use of Evaluation External ment of Reporting Proceeds and Review Proceeds Selection Green Bond committee SR-Bank intends to make and The Green Bonds proceeds will ISS has issued a Second Party Green buildings, renewable established. Evaluation and kee
Slide 36: Appendix
1 SR-Bank 2 SR-Boligkreditt 3 Norwegian economy 4 Sustainability and Green Bond framework 5 Appendix SR-Bank SR-Boligkreditt
Slide 37: Finance group for South of Norway
Finance group for South of Norway Knarvik Åsane Lending volume in NOK billion Askøy Bergen Sotra Fana Nydalen Oslo Skøyen Ensjø Husnes Stord Ølen Tysvær Haugesund Bygenes Jørpeland Randaberg Stavanger Sola Sandnes Gjesdal Bryne Varhaug Arendal Egersund Grimstad Flekkefjord Kristiansand Lyngdal Farsu
Slide 38: Profile of the loan portfolio
Profile of the loan portfolio Loan portfolio distributed by Loan portfolio distributed by size of loan risk class • SpareBank 1 SR-Bank has a solid loan portfolio. Probability of • The loan portfolio consists Default (PD) % mainly of small and medium-sized loans. Probability of default (PD) through
Slide 39: Lending to oil and offshore
Lending to oil and offshore 2.9% (NOK 8.1 billion) of total lending volume is related to oil operations Offshore ‐ Lending volume NOK 4.1 billion, 1.5% of the bank's total lending (NOK billion) ‐ Exposure primarily to industrial-oriented shipping companies with integrated organization (Offshore serv
Slide 40: Risk profile – Lending in Retail, SME & Agriculture and Corporate Customers
Risk profile – Lending in Retail, SME & Agriculture and Corporate Customers - Portfolio distributed by risk class Retail SME & Agriculture Corporate 14.6% 14.1% 15.2% 14.1% 15.0% 14.0% 14.6% 16.5% 14.0% 13,8 % 14,4 % 14,8 % 43.1% 44.7% 46.5% 54.9% 52.9% 57.5% PD 0.00-0.50 PD 0.50-2.50 PD 2.50-99.9 P
Slide 41: Net commission and other income
Net commission and other income Net commission and other income Change in net commission and other income (MNOK) 74 74 41 SR-Bank SR-Boligkreditt
Slide 42: Net income on financial investments
Net income on financial investments Net income on financial investments Change in net income on financial investments 74 74 When a basisswap is defined as a hedging instrument, changes in “basis spread” is recognized through other comprehensive income. 42 SR-Bank SR-Boligkreditt
Slide 43: Ownership interests
Ownership interests (MNOK) Ownership interests MARKETS FORSIKRING KREDITT FACTORING FORVALTNING *Companies in which FinStart Nordic AS owns stakes of between 20-50% must, because of accounting rules, be measured as associated companies in the consolidated financial statements. The profit contributio
Slide 44: Balance sheet
Balance sheet 44 SR-Bank SR-Boligkreditt
Slide 45: Sustainability within SR-Bank
Sustainability within SR-Bank • he group’s sustainabi ity princip es are based on the U ustainab e eve opment Goa s • We support the U G oba ompact’s ten princip es for sustainabi ity • We are a founding signatory of the UN Principles for Responsible Banking 45 SR-Bank SR-Boligkreditt
Slide 46: ESG ratings
ESG ratings • "Prime status" and rating C by ISS-ESG (January 2023) • Sustainalytics: "Low risk "; low risk experiencing material financial impact from ESG factors; 38 out of 460 regional banks by Sustainalytics (October 2023) • MSCI ESG Rating: "Level AAA" (April 2024) • CDP: score B (January 2024)
Slide 47: ISS second party opinion
ISS second party opinion ISS has issued a positive Second Party Opinion on SR-Bank Green Bond Framework 47 SR-Bank SR-Boligkreditt
Slide 48: EU Taxonomy Assessment – performed by ISS-ESG
EU Taxonomy Assessment – performed by ISS-ESG 48 SR-Bank SR-Boligkreditt
Slide 49: Allocation Report
Allocation Report Eligible Green Loan Portfolio Green Funding* Amount Instument Instrument Issuance Due Amount (NOK m) (Type / Crncy) (ISIN) Date Date (NOK m) Green Residential Buidlings 33.633 € Covered XS2063288190 okt.19 okt.26 5.848 SR Bank 11.937 € Senior Non‐Preferred XS2363982344 jul.21 jul.2
Slide 50: Impact Report – Q1 2023
Impact Report – Q1 2023 50 SR-Bank SR-Boligkreditt
Slide 51: SRBNK share
SRBNK share • International ownership Development in Price/Book Relative share price development is 21.4% per 140 1,5 1. quarter 2024 200 Index 100 = mar 31st 2023 130 1,4 180 120 1,3 • Total market value at 110 1,2 160 1. quarter 2024 is NOK 100 1,1 140 NOK p/B 120 35.9 billion 90 1,0 100 80 0,9 70
Slide 52: 20 largest shareholders as at 31 March 2024
20 largest shareholders as at 31 March 2024 • Ownership interests: • From Rogaland, Agder, Vestland, Oslo and Akershus: 63.0% (64.4%) • International: 21.4% (22.0%) • 10 largest: 49.7% (48.5%) • 20 largest: 57.8% (56.7%) • Number of shareholders: 18.850 (18.185) • Employees owning 1.8% (1.8%) as at
Slide 53: Contact Details
Contact Details Management Christen Tranes Gate 35 Tel: +47 915 02002 Benedicte Schilbred Fasmer Postboks 250 www.sr-bank.no CEO 4068 Stavanger +47 950 60 034 benedicte.fasmer@sr-bank.no Inge Reinertsen CFO +47 909 95 033 inge.reinertsen@sr-bank.no Investor Relations Morten Forgaard Investor Relatio