Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q3 2016 Earnings Presentation
29 slides from Pareto Bank Asa's earnings presentation, Dec 1, 2016
Slide 1: Pareto Bank Financial Results Third Quarter 2016
PARETO BANK Financial Results Third Quarter 2016 1 December 2016 Swedbank
Slide 2: Table of Contents
TABLE OF CONTENTS 1 HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 FUNDING AND CAPITAL
Slide 3: Highlights
HIGHLIGHTS 1 Record profit after tax of NOK 68.4m. 2 Return on Equity of 17.3 %.* 3 Lending growth NOK 582m on a strong net margin. Lending growth NOK 977m YTD-16 compared to a growth target NOK 800m for 2016. 4 Attractive business opportunities within real estate financing has led to strong growth.
Slide 4: Financial Targets and Dividend Policy
FINANCIAL TARGETS AND DIVIDEND POLICY 30.09.2016 STATUS 31.12.2016 TARGET Cost effective 16.4 % > 15.0 % * ROE and commercially oriented bank ADEQUACY CAPITAL 14.5 % 15.0 % ** Expect to reach approx. 17.0 % following the rights issue The actual payout ratio DIVIDEND POLICY 30-50 % 30-50 % *** will d
Slide 5: Table of Contents
TABLE OF CONTENTS 1 HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 FUNDING AND CAPITAL
Slide 6: Norway's Leading Project Bank
NORWAY’S LEADING PROJECT BANK BUSINESS AREAS PROJECTS / CREDITS AREA EXPOSURE AVG. PRINCIPAL 1. Construction financing Real NOKm estate 2. Project financing 58 % 25-50 3. Commercial property financing 1. Securities financing Securities & NOKm Corporates 2. Bridge financing 27 % 5-30 3. M&A financing
Slide 7: Portfolio Composition | Overview
PORTFOLIO COMPOSITION | OVERVIEW * Gross credit exposure (NOKm) Σ = NOK 11,309m Gross total lending (NOKm) Σ = NOK 8,960m MAIN BUSINESS AREAS Real Estate 6,607 58% Real Estate 5,586 62% Corporates 1,036 9% Corporates 884 10% Real estate financing Real focused on residential Securities 1,981 18% Secu
Slide 8: Real Estate | Strong Market Position
REAL ESTATE | STRONG MARKET POSITION * 5857% % Real Estate credit exposure (NOKm) Σ = NOK 6,607m Geographical residential property exposure (NOKm) ** 1% Residential property 3,122 47% 3% Oslo West Oslo North Lots 1,518 23% 16% 24% Oslo East Oslo Nordstrand 1% Akershus South Offices 627 9% Asker & Bæ
Slide 9: Real Estate | Attractive Business Opportunities
REAL ESTATE | ATTRACTIVE BUSINESS OPPORTUNITIES 57% Q3-16: Real Estate credit exposure (NOKm) Σ = NOK 6,607m Q4-15: Real Estate credit exposure (NOKm) Σ = NOK 5,649m Residential property 3,122 47% Residential property 2,661 47% Lots 1,518 23% Lots 1,170 21% Offices 627 9% Offices 646 11% Commercial
Slide 10: Corporate Financing
9% CORPORATE FINANCING * 9% Total corporate finance exposure by industry (NOKm) Σ = NOK 1,036m Corporate financing Overview • Total exposure of NOK 1,036m • 33 customers with credit facilities/guarantees in the range of 0% 11% NOK 1m to NOK 212m • Exposure to a variety of industries Real estate 13%
Slide 11: Corporate Financing | An Opportunity
CORPORATE FINANCING | AN OPPORTUNITY 9% Ambition • Pareto Bank will become a leading provider of tailor-made and transaction based financing solutions to investors/owners/family offices and small and medium-sized enterprises (SMEs) What we do • Bridge financing to wealthy investors, owners, family o
Slide 12: Securities Financing
SECURITIES FINANCING * 18% 18% Total securities exposure (NOKm) Σ = NOK 1,981m Securities financing Overview Primarily listed 1,519 77% stocks** • Total exposure of NOK 1,981m • 377 customers of which only 48 have a credit facility of above NOK 10m Bonds 431 22% • Real time follow-up and any breach
Slide 13: Shipping & Offshore | Diversified Loans
12% 13% SHIPPING & OFFSHORE | DIVERSIFIED LOANS * Key comments Total S&O credit exposure (NOKm) Σ = NOK 1,344m • 26 loans financing a total of 36 vessels Product 258 19% • Largest exposure is USD 12.6m; average size USD 6.5m Bulk 235 17% • At origination only one loan has been approved with a Chemic
Slide 14: Shipping & Offshore | Revision of Strategy
SHIPPING & OFFSHORE | REVISION OF STRATEGY 9% Status • Total credit exposure within Shipping & Offshore has been reduced by NOK 189m from NOK 1,533m (15 % of total exposure) in Q4-15 to NOK 1,344m (12 % of total exposure) in Q3-16 • Exposure to the offshore segments is 1.3 % of total credit exposure
Slide 15: Table of Contents
TABLE OF CONTENTS 1 HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 FUNDING AND CAPITAL
Slide 16: Solid Foundation and Strong Performance
SOLID FOUNDATION AND STRONG PERFORMANCE Result after tax (NOKm) Return on Equity * CET1 ratio ** 16.5% 15.6% 16.4% 174.6 180.3 14.5 % 165.8 13.2 % 13.3% 12.1 % 11.1 % 11.5 % 122.4 8.9% 79.7 2012 2013 2014 2015 YTD-16 2012 2013 2014 2015 YTD-16 2012 2013 2014 2015 YTD-16 Net interest income (NOKm) Co
Slide 17: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS Key figures Q3-16 Profit after tax (NOKm) 68.4 PROFIT NOK 68.4m 63.7 I AFTER TAX (NOK 50.7m) 50.7 48.2 27.4 NET INTEREST NOK 108.0m II INCOME (NOK 90.3m) Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 RETURN ON 17.3 % III EQUITY * (17.7 %) Return on Equity * 17.7 % 17.3 % 16.8 % 14.4 % COST
Slide 18: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Key comments • The principle of assessing financial Q3-16 Q3-15 1.1-30.09 1.1-30.09 2015 instruments at fair value may cause 2016 2015 profits to fluctuate between quarters Net Interest income 108.0 90.3 298.6 248.2 344.3 Total other operating income 13.3 0.3 33
Slide 19: Growing Net Interest Income
GROWING NET INTEREST INCOME Net interest income (NOK 1,000) Net interest margins (vs. 3M NIBOR) * 751 Q3-16 7,722 2,123 108,015 -3,053 5.55% 5.66% 11,201 5.25% 5.02% Q3-15 Q3-16 Q3-15 90,257 -985 -0.53% -0.41% Lending margin Deposit margin Net margin Lending & Lending & Amorti- Invested Long-term Lo
Slide 20: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Q3-16 Σ = NOK 11,309m Q3-15 Σ = NOK 9,689m Key comments None / very low risk 5,397 48% None / very low risk 4,659 48% • 85 % of the portfolio is considered to Low risk 4,199 Low risk have low to moderate risk 37% 3,341 34% Moderate risk 1,284 11% Moderate risk 1,43
Slide 21: Loan Portfolio Quality
LOAN PORTFOLIO QUALITY Net non-performing and impaired loans * Cumulative group provisions % of gross lending Nominal (NOKm) and % of gross lending 0.51% 1.58% 0.52% 0.51% 0.48% 45.7 43.7 1.23% 40.7 40.7 0.40% 0.41% 0.96% 0.94% 0.42% 0.37% 0.34% 30.7 30.7 0.31% 28.7 0.57% 0.30% 26.7 0.26% 24.7 0.47%
Slide 22: Table of Contents
TABLE OF CONTENTS 1 HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 FUNDING AND CAPITAL
Slide 23: Funding | Overview
FUNDING | OVERVIEW * Sources (NOKm) Σ = NOK 13,643m Historical development in deposits vs. lending (NOKm) Deposits 7,631 56% 102% 98% 95% 96% Senior debt 3,868 28% 91% 90% 88% 89% 86% 85% 86% 86% 84% 83% T1 & T2 debt 310 2% 81% 8,908 8,368 8,326 7,931 Other debt 271 2% 7,596 7,347 7,487 7,171 7,162
Slide 24: Funding | Market Funding
FUNDING | MARKET FUNDING * Market funding maturities - net of own holdings (NOKm) Credit spreads (bps) 200 180 110 160 200 140 120 100 1,185 80 1,000 839 60 40 350 20 0 0 2016 2017 2018 2019 2020 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Senior Call on Subor
Slide 25: Capital Ratios and Requirements
CAPITAL RATIOS AND REQUIREMENTS Pareto Bank capital ratios and requirements * Key comments ACTUAL REQUIREMENT 30.09.2016 31.12.2016 • The bank’s total capital requirement is 18.5 % by end-of-year 2016 18.5 % 17.6 % 2.0 % • The bank’s CET1 requirement is 15.0 % 1.5 % by end-of-year 2016 1.5 % 1.6 % •
Slide 26: Rights Issue in Combination with Tier 2 Bond
RIGHTS ISSUE IN COMBINATION WITH TIER 2 BOND BACKGROUND At the extraordinary general meeting on 10 October 2016, The Board of Directors’ proposed issue of a Tier 2 bond as well as a Tier 1 bond to replace the T1 bond PARB12 failed to win a 2/3 majority of the shareholders. The bank subsequently ente
Slide 27: Rights Issue MNOK 200 + Tier 2 Bond MNOK 120
RIGHTS ISSUE MNOK 200+ TIER 2 BOND MNOK 120 Comments + MNOK 120 Tier 2 bond Q4-16 4,000 + MNOK 200 rights issue Q4-16 ÷ MNOK 110 call T1 bond Q1-17 = MNOK 210 total increase in capital 2,800 • With increased capital, maximum lending capacity increases by up to MNOK 1,600 in 2017 and MNOK 1,200 per y
Slide 28: Capital Ratios After Rights Issue and T2 Bond
CAPITAL RATIOS AFTER RIGHTS ISSUE AND T2 BOND Comments • Under the assumption that the bank will grow at its maximum capacity 21.2 % (MNOK 1,600 in 2017 and by MNOK 1,200 per year in 2018 and 2019) 2.6 % 19.1 % 18.8 % 18.6 % 18.5 % 2.5 % • The bank’s total capital 1.6 % 2.3 % 2.0 % 1.8 % requirement
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