Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q2 2018 Earnings Presentation
57 slides from Sparebank 1 Ostlandet's earnings presentation, 2018
Slide 1: Second Quarter 2018
osc SECOND QUARTER 2018 Together we achieve the impossible
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 474.000 financial group Market share 36% Year of establishment 1839 in the Market strategy Market leader southwest of Unemployment rate 3.0% Norway Hordaland Population 523.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment rate 2
Slide 4: A good result marked by good operations, lower losses and higher financial income
A good result marked by good operations, lower losses and higher financial income • Pre-tax profit for the quarter is NOK 754 million compared to NOK 648 million last year ‐ Return on equity after tax 12.3% • Pre-tax profit year-to-date is NOK 1.422 million compared to NOK 1.160 million last year ‐
Slide 5: Financial targets and estimates for 2018
Financial targets and estimates for 2018 Return on equity CET 1 Growth in loans 11,0% 11,4% 11,0% 4,0% - 6,0% 15,1% 14,8% 15,0% 5,0% 2,6% 2017 30.06.2018 Target 2018 2017 30.06.2018 Target 2018 2017 30.06.2018 Target 2018 Growth in costs* MNOK 543 Impairment losses** Dividend share 6,6 % million MNO
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 12,9% 14,7% 14,8% 15,1% 15,0% 14,8% 12,3% 11,0% 11,4% 10,3% Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Cost ratio Earnings per share 41,3% 41,0% 42,1% 40,1% 2,39 2,41 37,7% 2,18 2,01 2,03 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17
Slide 7: Income statement
Income statement Group Income Statement (MNOK) 30.06.2018 30.06.2017 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Net interest income 1.642 1.523 842 800 819 820 784 Net commission and other income 738 771 370 368 367 386 400 Net income on investment securities 326 232 213 113 204 198 143 Total income 2.706 2.526
Slide 8: Change in profit 30.06.2017 – 30.06.2018
Change in profit 30.06.2017 – 30.06.2018 1.600 126 1.422 1.400 94 - 44 97 - 11 1.200 1.160 1.000 800 600 400 200 0 30.06.2017 Net interest income incl. Other income Net income on Total operating expenses Impairment losses on 30.06.2018 commission from investment securities loans and guarantees cover
Slide 9: Key figures
Key figures 30.06.2018 30.06.2017 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Return on equity after tax (%) 11,4 9,9 12,3 10,3 11,4 12,9 11,0 Net interest margin (%) 1,51 1,52 1,52 1,50 1,50 1,54 1,52 Impairment losses on loans and guarantees in % of gross loans incl. 0,18 0,33 0,21 0,16 0,26 0,27 0,29 covered b
Slide 10: Consolidated income profile
Consolidated income profile 1.206 1.186 1.212 1.184 1.168 347 331 347 361 338 39 36 23 39 30 820 819 800 842 784 Q2 17 Q3 17 Q4 17 Q1 18 Q2 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 2,75% 2,73% 2,76% 2,71% 2,74% 2,78% 2,74% 2,73% 0,34% 2,71% 0,29% 0,24% 0,24% 0,13% 0,12% 0,03% 1,78% 1,79% 1,69% 1,69% -0,01% 0,04% 1,55% 1,59% 1,45% 1,50% 1,38% 0,04% -0,03% -0,08% -0,09% -0,09% -0,12% -0,12% -0,15% -0,18% Q2 16 Q3 16 Q4
Slide 12: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 70 000 60 000 15% 50 000 9,6 % 10% MNOK 40 000 30 000 3,8 % 5% 2,4 % 20 000 -0,5 % -0,7 % -2,3 % -2,8 % -1,9 % 0% 10 000 -3,5 % 0 -5% Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Volume Growth % Retail Market 140 0
Slide 13: Loan portfolio as at 30.06.2018
Loan portfolio as at 30.06.2018 • Gross loans (incl. covered bond companies) as at Agriculture / forestry / fishing 2,9% 30 June 2018 amount to NOK 193.5 billion 3,1% compared with NOK 184.3 billion at the same 3,7% Industry, Power/water supply and construction 3,6% time the year before. Retail trad
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. ‐ 89.7% of the exposure is within 85% of the assessed value of collateral. 80% 64,9% 60,8% 60% 40% 28,9% 25,3% 20% 6,2% 6,5% 3,6% 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 6.1 Corporate Market* billion to 105.8 billion. 22,7% 24,7% 50.000 20,7% 25% ‐ Corresponds to an increase in the period of 40.000 14,0% 10,0% 15% 6.1%. MNOK 30.000 8,3% 5% • Increased deposit growth in the corporate marke
Slide 16: Net commission and other income
Net commission and other income MNOK 30.06.2018 30.06.2017 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Payment facilities 122 126 59 63 65 71 63 Savings/placements 100 100 48 52 47 51 49 Insurance products 96 104 47 49 52 52 52 Commission income real estate broking 190 205 109 81 94 90 112 Guarantee commission 54
Slide 17: Net income on investment securities
Net income on investment securities MNOK 30.06.2018 30.06.2017 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Dividends 12 9 1 11 0 2 4 Investment income, associates 159 144 102 57 154 127 81 Securities gains/losses 74 57 69 5 24 46 32 - of which capital change in shares and certificates 96 35 90 6 44 57 28 - of whi
Slide 18: Subsidiaries
Subsidiaries Subsidiaries MNOK 30.06.2018 30.06.2017 EiendomsMegler 1 SR-Eiendom AS Number of sales 3.288 3.519 Operating profit before tax 12 21 SR-Forvaltning AS Capital under management (BNOK) 11 11 Operating profit before tax 18 17 FinStart Nordic AS* Operating profit before tax 23 7 SpareBank 1
Slide 19: Ownership interests
Ownership interests Ownership interests MNOK 30.06.2018 30.06.2017 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 117 139 Adjusted profit previous years 0 -5 SpareBank 1 Boligkreditt AS* Interest ownership 8,0 % 13,9 % Profit after tax -2 -27 SpareBank 1 Næringskreditt AS I
Slide 20: Operating expenses
Operating expenses MNOK 30.06.2018 30.06.2017 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Personnel expenses 645 618 326 319 323 312 312 Restructuringcosts 0 0 0 0 10 0 0 Total personnel expenses 645 618 326 319 333 312 312 IT expenses 166 161 83 83 82 74 86 Marketing 40 37 24 16 20 16 21 Other administrative exp
Slide 21: Impairment losses on loans / Non-performing and doubtful commitments
Impairment losses on loans/ Non-performing and doubtful commitments Impairment losses on loans Non-performing and doubtful commitments 1,51% 1,21% 1,18% 1,13% 1,14% 0,29% 0,27% 0,26% 0,21% 0,16% 1.393 1.352 2.497 1.562 1.723 130 126 118 118 830 824 74 555 438 429 1 -2 2 -19 Q2 17 Q3 17 Q4 17 Q1 18 Q
Slide 22: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees Losses on loans in income statement (MNOK) 30.06.2018 30.06.2017 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Corporate customers 166 277 100 66 89 116 115 Retail customers 26 20 18 8 29 10 15 Change in collective impairment losses on loans 2 2 -2 1 Total impairment IFRS 9
Slide 23: Funding
Funding • Well diversified funding. Deposits to loans ratio • Net Stable Funding Ratio* is 119% on 100,0% consolidated basis. 80,0% 57,2% 58,3% 60,5% 59,0% 55,3% 57,2% 59,1% • Good liquidity 60,0% 55,4% 54,5% – Net refinancing need over the next 12 months is 40,0% NOK 10.9 billion. 20,0% – Liquidity
Slide 24: Solid capital ratio
Solid capital ratio ROE ROE ROE • SpareBank 1 SR-Bank is compliant with capital 10,0 % 11,0 % 11,4 % requirements as at 30.06.2018. • The Pillar 2 requirement for SpareBank 1 SR-Bank CET 1 17,9 % 17,8 % 15,0 % 17,5 % is 2.0%. 16,0 % 15,6 % 15,7 % • SpareBank 1 SR-Bank is not defined as a 1,0 % Manag
Slide 25: 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 26: We are investing in the future through the startup-factory FinStart Nordic
We are investing in the future through the startup- factory FinStart Nordic • Lease signed, Kvadraturen in Oslo – move in during August together with some of the companies we have invested in. • We have attracted highly qualified staff, faster than we had expected. • Investments have been made. The
Slide 27: Some demanding years are now behind us in Southern and Western Norway
January 2016: Some demanding years are now behind us in Southern and Western Norway • Business optimism is growing – 62% expect growth next year. • Surprisingly strong order books and increased investment. • Job growth, lower unemployment and competition for labour. May 2018: • The organisation has
Slide 28: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 28
Slide 29: Lower unemployment rate
Lower unemployment rate 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 Norway Rogaland Hordaland Vest-Agder Norway, SSB AKU-unempl. rate 29 Source: NAV og SSB
Slide 30: 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 Stavanger og omegn Bergen Kristiansand Oslo Norge 30 Kilde: Fin
Slide 31: Petroleum activity on the NCS turning from decline to upswing
Petroleum activity on the NCS turning from decline to upswing 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%
Slide 32: Retail trade increasing in Norway by 2-4%
Retail trade increasing in Norway by 2-4% Highest growth in Oslo and growth is picking up in Rogaland 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% Norway Rogaland Hordaland Agder Oslo 32 Source: SSB
Slide 33: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 33
Slide 34: SpareBank 1 SR-Bank has a well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 6.4% (7.1%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 215.9 (209.3) EAD per 30.06.2018 BNOK 13.9 (14.8) EAD is related to oil operations Corporate market excl. oil operations; 28,5 % (26,6 %) Oil service; 1,7 %
Slide 35: Oil services - total NOK 3.6 billion
Oil services - total NOK 3.6 billion (NOK 4.3 billion as at 31.12.2017) • Exploration and concept studies Oil services ‐ EAD NOK 0.3 billion ‐ EAD NOK 3.6 billion, 1.7% of the bank's total EAD ‐ Average weighted probability of default 2.7% ‐ Average weighted probability of default for the oil servic
Slide 36: Oil and gas - total NOK 1.6 billion
Oil and gas - total NOK 1.6 billion (NOK 1.7 billion as at 31.12.2017) • Exploration financing Exploration and production companies ‐ EAD NOK 0.2 billion ‐ EAD NOK 1.6 billion, 0.7% of the bank's total EAD ‐ Average weighted probability of default 1.1% ‐ Average weighted probability of default for t
Slide 37: Offshore - total NOK 8.7 billion
Offshore - total NOK 8.7 billion (NOK 8.7 billion as at 31.12.2017) • Offshore Service Vessels Offshore ‐ EAD NOK 6.1 billion, average weighted probability of default is 2.7%, ‐ EAD NOK 8.7 billion, 4.0% of the bank's total EAD weighted average age is 8.7 years, average weighted contract ‐ Average w
Slide 38: Offshore Service Vessels – total NOK 6.1 billion
Offshore Service Vessels – total NOK 6.1 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 39: 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 6.1 billion of 3 30 which; 4 8 • NOK 5.7 billion consists of 13 restructured 5 11 commitments 6
Slide 40: Lending to commercial property
Lending to commercial property Lending to commercial property Housing cooperative; 2,4 % (4,7 %) • NOK 29.7 billion, 15.3% of the bank’s total loans. Real estate management; 3,7 % (1,9 %) • The portfolio is characterised by lending to commercial properties for leasing with long-term contracts and fi
Slide 41: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 41
Slide 42: 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 42
Slide 43: Risk management principles and market areas
• 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 44: Commitment limits 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 45: 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% • 61.1% of the bank’s loan exposure has a PD* 80% 61,3% 61,1 % below 0.5%. 60% 40% 29,6% 29,2 % • Single loan exposures less than NOK 10 million 20% 9,1% 9,7 % aggregates 67.6% of tota
Slide 46: 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% 2,6% 2,7% 2,6% 2,5% 16,3% 16,4% 16,6% 16,7% 16,3% losses. 80% 60% • The proportion of loans with a PD* b
Slide 47: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and RWA home mortgages stable portfolio. 21,7 % 21,6 % 21,7 % 21,5 % 21,3 % 20,0 % 15,0 % 10,0 % 5,0 % 0,0 % 30.06.17 30.09.17 31.12.17 31.03.18 30.06.18 Home mortgages as defined in the Norwegian IRB framework; residential property must ma
Slide 48: 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 22,3% 24,4% 27,6% 25,0% 23,5% 80% sets limit on what is funded and conditions for 60% particular funding purp
Slide 49: Appendix
APPENDIX 1) Macro 2) Oil related portfolio 3) Risk 4) SpareBank 1 SR-Bank 49
Slide 50: 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: 24 Commercial bank located in Ho
Slide 51: 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 Companies directly owned by SR-Bank SpareBank 1 Gruppen AS Selskaper hvor SR-Bank har
Slide 52: 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 53: Balance sheet
Balance sheet Balance sheet (MNOK) 30.06.2018 30.06.2017 Cash and balances with central banks 711 747 Balances with credit institutions 4.279 8.335 Net loans to customers 177.586 163.703 Certificates, bonds and other fixed-income securities 29.468 28.451 Financial derivatives 4.096 5.354 Shares, own
Slide 54: SRBANK share
SRBANK share • International ownership is Development in Price/Book Relativ share price development 23.1 % per 2. quarter 2018. 150 Index 100 = june 30th 2017 100 1,4 Price 90 P/B 130 • Total market value at 2. 80 1,2 quarter 2018 is NOK 22.1 110 70 1,0 NOK billion. p/B 60 0,8 90 OSEBX 50 0,6 70 40
Slide 55: 20 largest shareholders as at June 2018
20 largest shareholders as at June 2018 • Ownership interests: Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • From Rogaland, Agder-counties and Hordaland: 44.7% Folketrygdfondet 18.326.329 7,2% (46.2%) State Street Bank and Trust Co, U.S.A. Nominee 10.111.983 4,0% • Internation
Slide 56: SR-Bank pr 30.06.2018
SR-Bank pr 30.06.2018 30.06.2018 2017 2016 2015 2014 2013 Share price 86,40 87,00 60,75 39,30 52,50 60,25 Stock value (MNOK) 22.097 22.250 15.537 10.051 13.427 15.409 Book value per share, NOK (group) 77,28 77,24 71,54 66,14 60,28 55,00 Earnings per share 4,44 8,16 6,87 6,83 8,20 7,28 Dividend per s
Slide 57: 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