Sparebanken More · OSL:MORG
Sparebanken More — Sparebanken Møre — Q3 2014 Earnings Presentation
50 slides from Sparebanken More's earnings presentation, Oct 22, 2014
Slide 1: Sparebanken Møre - the Group, 3rd quarter 2014
Sparebanken Møre - the Group Presentation 3rd. quarter 2014
Slide 2: Agenda
Agenda Summary Introduction Deposits and Loans Funding and Hedging Results Equity and ECs Future prospects Macroeconomic overview 2
Slide 3: Summary - results
Summary - results Historical performance – in NOK and ROE 600 530 Results in NOK Favourable operating environment, a strong 496 550 458 450 500 county in a strong Norwegian economy 450 94 379 166 74 Maintained high level of net interest income 338 335 333 400 320 350 272 272 265 264 300 Strong
Slide 4: High and stable return – based on our business model
Summary High and stable return – based on our business model Reported ROE – historical development 35 Sparebanken Møre Less volatile key figures for Sparebanken Møre 30 Sparebanken Vest compared with peers Sparebank 1 SMN 25 Sparebank 1 SR Consequences of policy Sparebank 1 Nord Norge decisions
Slide 5: Introduction to the bank and the market
Introduction to the bank and the market 5
Slide 6: Introduction to Sparebanken Møre
Introduction Introduction to Sparebanken Møre Independent savings bank Head office in Ålesund 30 branches in Møre og Romsdal county NOK 55.4 billion in total assets, about 170 000 customers 261,530 386 man years inhabitants Established in 1843 Listed on the Oslo Stock Exchange since 19
Slide 7: Full service bank in Møre og Romsdal
Introduction Full service bank in Møre og Romsdal Key business Corporate Retail Capital Adm/ areas Market Market Market support Fully Møre Boligkreditt AS Møre Eiendomsmegling AS owned The company has a license to operate as a Real estate brokerage towards retail and companies mortgage company and i
Slide 8: Sparebanken Møre – a brief overview
Introduction Sparebanken Møre – a brief overview Sparebanken Møre is the 7th largest Norwegian bank – the bank serves customers from the county of Møre og Romsdal The population of Møre og Romsdal is just above 260 000, and the population in the municipalities where the bank is located is 200 00
Slide 9: Sparebanken Møre's market area
Introduction Sparebanken Møre's market area Møre og Romsdal county 261,530 inhabitants The 3rd largest GDP per employee among 19 counties in Norway Norway's 3rd largest export county Diversified business structure Sparebanken Møre with 30% market share Diversified business structure in the
Slide 10: Møre og Romsdal – Diversified industries
Introduction Møre og Romsdal – Diversified industries Norwegian maritime areas are rich in natural resources, and play a very important role in commercial activities in Møre og Romsdal Oil and The petroleum sector is responsible for 1/4 of the total investments in Norway offshore Nyhamna in Mø
Slide 11: Summary
Introduction Summary Sparebanken Møre •Seventh largest savings bank in Norway, solid financial performance with total assets Møre og Romsdal of NOK 55.4 billion •Population of just above •Market leader in main market, 260,000 the county of Møre og •Dominant industrial and Romsdal Norway commercial s
Slide 12: Deposits and loans
Deposits and loans
Slide 13: Moderate growth
Deposits and loans Moderate growth NOK mill. 55379 Growth during the last 12 54627 55000 51632 months 50000 48468 47363 46122 44441 43434 • Total assets 4.1 % 45000 40305 40000 37676 • Loans (net) 4.6 % 35000 30000 27081 28056 28152 • Deposits 3.1 % 24551 25325 25000 20000 15000 10000 5000 0 Deposit
Slide 14: Breakdown of gross lending
Deposits and loans Breakdown of gross lending NOK mill. Annual net lending growth 50000 47669 46428 43740 2010: 5.1 % 45000 40701 38083 2011: 7.0 % 40000 2012: 7.8 % 35000 30.454 31.547 2013: 6.2 % 30000 27.650 25.296 23.647 25000 Q3 14: 4.6 % 20000 15000 Lending growth last 12 months 10000 Gross, r
Slide 15: Loans by sector
Deposits and loans Loans by sector Other 9,1 % CRE 11,6 % Service 3,8 % Offshore Supply 2,3 % Retail 66,2 % Fisheries 7,0 % Other 9.1% Financial Other industry 0.7 1.3 Agriculture 1.0 services Building/construction 1.4 Fishing Industry 0.9 Furniture 0.1 Retail/wholesale trade 1.3 Ship Yards 1.8 Othe
Slide 16: Breakdown of deposits
Deposits and loans Breakdown of deposits NOK mill. 30000 28056 28152 Annual deposit growth 27081 25325 705 853 722 2010: 12.7 % 24551 25000 693 2011: 3.2 % 1.531 2012: 6.9 % 20000 15.996 16.655 2013: 3.6 % 15.221 14.307 13.274 15000 Q3 14: 3.1% 10000 Deposit growth last 12 months 5000 10.325 11.155
Slide 17: Funding and hedging
Funding and hedging
Slide 18: Good access to the market
Funding and hedging Good access to the market Margins Since the beginning of 2012 we have mainly seen funding 220 margins been reduced. By the end of Q3 margins in the long-term bond market are at the lowest we have seen 200 since January 2008 180 Covered Bonds issued by Møre Boligkreditt AS has
Slide 19: High deposit to loan ratio
Funding and hedging High deposit to loan ratio - total financing by quarter end Deposits from customers are the Group`s most important source of funding and we maintain a high deposit to loan ratio (59.4 % in the Group). Sparebanken Møre 500 experiences the market access as very good 1350 408 In
Slide 20: The quality of the liquidity portfolio is good
Funding and hedging The quality of the liquidity portfolio is good - with a high level of LCR Rating Market Country Market Currency Market Value Value Value AAA 5.600.891 Norway 4.041.884 NOK 5.646.381 AA+ 161.662 Sweden 777.048 EUR 767.428 AA 173.729 Germany 334.226 AA- 124.224 Finland 307.715 A 10
Slide 21: Off balance activity - quarterly
Funding and hedging Off balance activity - quarterly NOK MILL 40000 Low risk profile in the interest rate, 35000 equity and FX markets 30000 Sparebanken Møre has no trading 25000 portfolio in these or other similar 20000 markets/instruments 15000 Client's positions are hedged in the 10000 market
Slide 22: Number of commercial payments
Funding and hedging Number of commercial payments No of payments per currency 100000 90000 THB GBP LTL 3% 4% 4% Others EUR 80000 21541 23047 2% 28 % 22028 DKK 70000 21097 6% 21213 60000 SEK 8% 50000 40000 68370 67664 30000 56771 60259 53994 20000 PLN 9% NOK 10000 USD 27 % 9% 0 Outgoing Incoming 22
Slide 23: Results
Results 23
Slide 24: Main figures
Results Main figures 30.09. 2014 30.09.2013 Change during last 12 months From the Profit and Loss Account NOK mill. % NOK mill. % NOK mill. P. points % Net interest income/av. int. margin 811 2.00 761 1.96 50 0.04 6.6 Net return, financial investments 48 0.12 15 0.04 33 0.08 220.0 Nets AS 94 0.23 94
Slide 25: Result as a percentage of average assets
Results Result as a percentage of average assets 2,25 2,2 1,95 1,93 1,75 Result from ordinary 1,65 1,68 1,63 1,63 operations before 1,54 1,52 1,53 1,59 losses 1,41 1,44 1,44 1,45 1,32 1,40 1,34 1,35 1,27 1,3 1,25 1,23 1,32 1,2 Result before taxation 1,15 1,09 1,10 1,14 0,86 0,83 0,75 0,55 0,34 0,25
Slide 26: Higher net interest income
Results Higher net interest income AS A PERCENTAGE OF AVERAGE ASSETS Net interest income is higher than 2,03 1,96 2,00 1,96 2,00 previous year despite: 2,00 1,93 Strong competition on loan and deposits More liquidity on the balance sheet 1,50 with higher quality Still low interest rate level w
Slide 27: Other operating income
Results Other operating income AS A PERCENTAGE OF AVERAGE ASSETS 1,00 Higher other operating income, compared with 2013: Capital gains from the sale of Nets AS 0,75 Mark to market valuation of the liquidity portfolio Higher commission income 0,50 Lower dividend and lower income from FX and I
Slide 28: Strong development in cost/income
Results Strong development in cost/income - well below the target 60 55 49,5 50 48,8 48,7 45,3 45,7 45 39,4 40 35,4 35 30 25 20 15 10 5 0 28
Slide 29: Losses at a very low level
Results Losses at a very low level per. cent of average assets Losses totalled NOK 15 million 0,20 • Corporate: NOK 7 million • Retail NOK -1 million • Collective impairmentNOK 9 million 0,15 Total impairments amounted to 0,10 NOK 306 million by 30.09.2014 0,05 0,10 0,10 0,09 0,07 0,07 0,04 0,00 29
Slide 30: Losses - details
Results Losses - details Total NOK million Corporate 30 30 25 25 20 20 15 15 10 10 15 5 5 9 7 6 3 2 0 0 1 1 0 0 0 0 -1 -2 -4 -5 -5 30
Slide 31: Problem Loans and impairments - continued positive development
Results Problem Loans and impairments - continued positive development Problem loans & Impairments 3,5 % 70,0 % The volume of Problem 59,9 % Loans has declined over the 3,0 % 60,0 % last years 2,5 % 50,0 % As a percentage of gross loans this figure ended at 2,0 % 40,0 % 1.08% by the end of Q3 20
Slide 32: Equity and ECs
Equity and ECs 32
Slide 33: Equity and related capital: Strong capital
Equity Equity and related capital: Strong capital % NOK mill. 18,00 17,02 6000 5680 17,00 15,85 5600 5296 16,00 1,49 14,63 5200 499 499 15,00 13,72 2,99 1,43 4709 14,00 13,35 13,57 4800 0,93 299 999 2,30 804 13,00 3,11 4400 4175 1,67 1,56 1,75 3925 353 12,00 0,37 4000 125 125 0,35 3658 479 1002 11,0
Slide 34: IRB approval from FSA
Equity IRB approval from FSA Core Capital 18,00 16,00 15,48 14,65 Sparebanken Møre will maintain a strong 13,68 14,00 11,55 12,03 12,01 2,98 2,30 financial position as the leading bank in the 12,00 3,13 1,71 1,65 1,61 region and will follow the announced 10,00 8,00 schedule related to core capital
Slide 35: Summing up and outlook
Future prospects Summing up and outlook From the CEO: The stability of the macroeconomic factors for Møre og Romsdal will contribute to a low level of losses this year Overall lending growth for 2014 is expected to be good and line with our plans, moderate growth in the longer term Long-term f
Slide 36: Dividend policy
Equity Dividend policy “Sparebanken Møre’s aim is to achieve financial results which provide a good and stable return on the Bank’s equity. The results shall ensure that the owners of the equity receive a competitive, long-term return in the form of dividends and increase in the value of the equity.
Slide 37: Dividend and EC-price
Equity Dividend and EC-price • The PCCs/ECs of Sparebanken Møre have been listed at Oslo Stock Exchange since 1989 • Total EC capital: NOK 989 million by September 2014 Dividend pr. EC: 1990 10 2002 15 1991 0 2003 16 1992 0 2004 18 1993 13 2005 20 1994 12 2006 20 1995 13 2007 23 1996 13 2008 20 1997
Slide 38: Macroeconomic Overview
Macroeconomic Overview 38
Slide 39: The Norwegian economy remains strong. However, growth will be moderate in 2014-2015
Economic environment The Norwegian economy remains strong. However, growth will be moderate in 2014-2015 The Norwegian economy is characterised by: Low unemployment Record high house prices Increased private demand High activity in the oil sector Strong public sector growth Low interest
Slide 40: Growth has stabilised over the past year
Economic environment - Norway Growth has stabilised over the past year 22.10.2014 side 40
Slide 41: High household debt is the main domestic risk factor
Economic environment - Norway High household debt is the main domestic risk factor 22.10.2014 side 41
Slide 42: High credit growth in the county, but low debt burden
Economic environment – Norway and Møre og Romsdal High credit growth in the county, but low debt burden* Annual credit growth 2012-2013 Debt burden households 2013 (NOK million) 42 *Source: Sparebank1 Markets/Statistics Norway
Slide 43: Key characteristics
Housing market in Norway Key characteristics Home ownership • Among the highest in the world – around 80% of households own their own home • Very limited buy-to-let market FSA lending guidelines • LTV should normally not exceed 85% • Interest-only loans should normally not be granted if LTV exceeds
Slide 44: Differences in housing types and prices
Housing – Norway and Møre og Romsdal Differences in housing types and prices Housing-type distribution Housing type distribution - Norway - Detached vs apartment Other 3% 100% Apartment Detached Apartment 23% 80% 72% 60% 44% 42% 39% Detached 40% 29% 26% 53% 23% Semi-detached 20% 10% 21% 0% Ålesund B
Slide 45: Differences in development of housing prices
Housing – Norway and Møre og Romsdal county Differences in development of housing prices Year-over-year average growth in Norwegian Detached housing prices by end of September 2014 is Norway Møre og Romsdal County 3.6 per cent. 45 40 NOK 1000 per sqm. 35 The average national price growth in Norway 3
Slide 46: The business sector in Møre og Romsdal is doing well
Economic environment – Møre og Romsdal The business sector in Møre og Romsdal is doing well The most important drivers of growth The Private Service Sector in M & R and activity in 2014 and forward: Volume index: 2012 = 100 140 135 Private consumption 130 125 Public expenditures 120 115 The const
Slide 47: The long term outlook for the manufacturing sector has improved
Economic environment – Møre og Romsdal The long term outlook for the manufacturing sector has improved The Manufacturing Sector in M & R The outlook for the manufacturing 140 Volume index: 2012 = 100 135 industry is still positive due to: 130 125 120 The weakening of the NOK 115 110 Growth in
Slide 48: Moderate production growth in Møre og Romsdal
Economic environment – Møre og Romsdal Moderate production growth in Møre og Romsdal - growth will vary among the sectors Growth in traditional exports Number of unemployed in Møre og Romsdal (sadj) Higher demand for private services Increased activity in the public sector High production wi
Slide 49: Contact
Contact Head Office Treasury and Markets Division Head of Division Runar Sandanger, EVP: runar.sandanger@sbm.no + 47 70 11 31 73 Keiser Wilhelmsgt. 29-33 + 47 95 04 36 60 P.O.Box 121 6001 Ålesund Chief Economist Inge Furre: inge.furre@sbm.no + 47 70 11 31 44 Tel: +47 70 11 30 00 Reuters Dealing: MOR
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