Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q2 2015 Earnings Presentation
48 slides from Sparebank 1 Ostlandet's earnings presentation, 2015
Slide 1: Second Quarter 2015
SECOND QUARTER 2015 SpareBank SR-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
The leading financial group in the southwest of Norway 1 Rogaland Population 467.000 Market share 37% 2 Year of establishment 1839 Market strategy Market leader Unemployment rate 3.1% 2 Hordaland Population 512.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment
Slide 4: A good result distinguished by investment in new activities and modest losses
A good result distinguished by investment in new activities and modest losses Pre-tax profit for the quarter is NOK 552 million compared to NOK 684 million last year - Return on equity after tax 10.8% Pre-tax profit year-to-date is NOK 1.180 million compared to NOK 1.471 million last year - Retu
Slide 5: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 12,1 % 12,3 % 14,5 % 11,4 % 11,3 % 11,5 % 12,2 % 12,7 % 11,7 % 10,8 % Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Cost/income ratio Earnings per share (NOK) 2,09 1,94 47,3 % 1,78 1,75 45,1 % 1,69 44,6 % 42,5 % 4
Slide 6: Income statement
Income statement 30.06 30.06 Group Income Statement (MNOK) 15 14 Q2 15 Q1 15 Q4 14 Q3 14 Q2 14 Net interest income 1.266 1.128 639 627 655 621 581 Net commission and other income 807 924 399 408 405 403 444 Net income on investment securities 305 520 94 211 116 142 201 Total income 2.378 2.572 1.132
Slide 7: Change in profit 30.06.2014 – 30.06.2015
7 0 200 400 600 800 1.000 1.200 1.400 1.600 30.06.2014 1.471 Net interest income incl. commission 3 from covered bond companies 18 Other income Net income on investment securities - 215 Total operating expenses -60 Change in profit 30.06.2014 – 30.06.2015 Impairment losses on loans and - 37 guarante
Slide 8: Key figures
Key figures 30.06 30.06 15 14 Q2 15 Q1 15 Q4 14 Q3 14 Q2 14 Return on equity after tax (%) 11,7 16,5 10,8 12,7 11,7 12,2 14,5 Net interest margin (%) 1,44 1,40 1,44 1,45 1,51 1,48 1,41 Impairment losses on loans and guarantees in % of gross loans 0,18 0,15 0,12 0,25 0,27 0,20 0,13 -incl. covered bon
Slide 9: Consolidated income profile
Consolidated income profile 1200 1.045 1.052 1.094 1.108 1.060 1000 315 324 324 310 333 800 34 28 73 20 22 90 93 84 66 120 MNOK 600 400 621 655 627 639 581 200 0 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Net interest income Commission income from covered bond companies Profit before tax from covered bond compan
Slide 10: Lending and deposit margins
Lending and deposit margins Lending margins 2,88% 2,99% 2,93% 2,92% 2,90% 2,89% 2,80% 2,66% 2,58% 2,06% 2,21% 2,21% 2,20% 2,08% 1,97% 1,95% 1,95% 1,64% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Corporate market Retail market Deposit margins -0,25% -0,43% -0,45% -0,44% -0,47% -0,45% -0,47
Slide 11: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 50 000 12,8% 13,8% 15% 40 000 MNOK 10% 30 000 5,6% 20 000 4,0% 4,5% 4,6% 5% 10 000 1,4% 2,5% 0,7% 0 0% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Volume Growth % Retail Market 120 000 100 000 15% 80 000 MN
Slide 12: Loan portfolio as at 30.06.2015
Loan portfolio as at 30.06.2015 • Gross loans as at 30 June 2015 amount 2,9% Agriculture / forestry / fishing 2,8% to NOK 181.4 billion compared with NOK 168.6 billion at the same time last year. Industry, Power/water supply and construction 3,6% 3,6% Retail trade, hotels and restaurants 1,7% 1,4% •
Slide 13: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans • The proportion of loans with a loan-to- 100% value ratio of less than 85% is high and 90% stable. 80% 67,2% 67,8% 70% • 90.3% of the exposure is within 85% of 60% the assessed value of collateral. 50% 40% 30% 23,1% 23,7% 20% 10% 6,1% 5,2% 3,6% 3,4% 0% Bel
Slide 14: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by NOK 9.1 billion to 90.8 billion. 50000 24,1% 20,3% 26,1% 25% 40000 18,9% 17,7% • Corresponds to an increase in the 30000 12,6% MNOK 15% period of 11.1%. 20000 6,6% 1,7% 5% 10000 -2,1% 0 -5% Q2 13 Q3 13 Q4 13
Slide 15: Net commission and other income
Net commission and other income 30.06 30.06 MNOK 15 14 Q2 15 Q1 15 Q4 14 Q3 14 Q2 14 Payment facilities 114 113 56 58 57 66 56 Savings/placements 97 85 48 49 42 45 40 Insurance products 94 86 47 47 46 45 44 Commission income real estate broking 217 228 113 104 101 105 128 Guarantee commission 67 53
Slide 16: Net income on investment securities
Net income on investment securities 30.06 30.06 MNOK 15 14 Q2 15 Q1 15 Q4 14 Q3 14 Q2 14 Dividends 15 25 8 7 1 10 7 Investment income, associates 234 218 101 133 138 150 137 Securities gains/losses -95 229 -50 -45 -37 -52 24 - of which capital change in shares and certificates 0 230 -4 4 24 -22 10 -
Slide 17: Subsidiaries
Subsidiaries MNOK 30.06.15 30.06.14 EiendomsMegler 1 SR-Eiendom AS Number of sales 3.723 3.976 Operating profit before tax 30 36 SpareBank 1 SR-Finans AS Total assets (BNOK) 7 6 Operating profit before tax 75 74 SR-Forvaltning AS Total assets under management (BNOK) 9 7 Operating profit before tax 1
Slide 18: Ownership interests
Ownership interests MNOK 30.06.15 30.06.14 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 128 153 Adjusted profit previous years 0 -4 SpareBank 1 Boligkreditt AS Interest ownership 20,1 % 20,4 % Profit after tax 57 18 Adjusted profit previous years 0 2 SpareBank 1 Næringskr
Slide 19: Operating expenses
Operating expenses 30.06 30.06 MNOK 15 14 Q2 15 Q1 15 Q4 14 Q3 14 Q2 14 Personnel expenses 603 580 300 303 303 304 293 Restructuring- and non-recurring costs 7 7 0 7 5 3 0 Total personnel expenses 610 587 300 310 308 307 293 IT expenses 145 133 73 72 75 69 67 Marketing 47 46 26 21 29 21 29 Other adm
Slide 20: 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 0,27% 0,25% 0,20% 0,13% 0,12% 0,22% 0,20% 0,16% 0,10% 0,10% 0,81% 0,77% 0,81% 0,78% 0,66% 20 0,66% 0,64% 0,65% 0,62% 0,54% 62 21 552 533 729 716 513 68 19 51 48 31 2
Slide 21: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 30.06 30.06 Losses on loans in income statement (MNOK) 15 14 Q2 15 Q1 15 Q4 14 Q3 14 Q2 14 Corporate customers 81 101 19 62 27 39 48 Retail customers 12 2 6 6 4 9 3 Change in collective impairment losses on loans 39 -8 19 20 62 21 -10 Net impairment losses o
Slide 22: Funding
Funding • Well diversified funding. – Higher deposit coverage. Deposits to loans ratio 100,0 % • Greater share of senior funding last year. 80,0 % 63,6% ‒ 6 outstanding euro-benchmarks with due dates 60,6% 59,6% 61,2% 60,4% 59,1% 57,5% 59,4% 60,4% 60,0 % in each of the years 2016- 2021. 40,0 % ‒ Iss
Slide 23: Stronger capital ratio
Stronger capital ratio • SpareBank 1 SR-Bank is compliant with 18% capital requirements per 30.06.2015. 16% • SpareBank 1 SR-Bank received IRB 14% 15,3% 14,6% Advanced approval for the corporate 12,9% 13,1% market portfolio in the first quarter of 12% 13,2% 12,0% 2015. 10% • The use of different ris
Slide 24: RWA home mortgages
RWA home mortgages • RWA on home mortgages reflects a solid and stable portfolio. 22,1 % 22,5 % • The shift that occurs from Q1 2015 is due to restrictions imposed by the 16,4 % 16,2 % 16,3 % Norwegian FSA. The restrictions implies new requirements on how to calculate PD and LGD. 30.06.2014 30.09.20
Slide 25: Common equity tier 1 being strengthened in line with stricter regulatory requirements
Common equity tier 1 being strengthened in line with stricter regulatory requirements • New capital requirements entail a need to continue increasing common equity tier 1 16,00% 11,0 -13,5 % 16,00% ROE ROE capital going forward. ROE 11,7 % 14,00% 14,2 % 14,00% 14,0 % • Norges Bank has decided that t
Slide 26: 2015 - Outlook
2015 - Outlook Uncertainty, especially in the petroleum sector, has increased due to lower oil prices. From record high levels, oil investments are expected to be reduced with approximately 15% in 2015. Major infrastructure projects and high activity in house building are helping to ensure good
Slide 27: Appendix
39 APPENDIX SpareBank SR-BANK
Slide 28: Unemployment (registered, percent)
28 0,5 1,5 2,5 3,5 4,5 0 1 2 3 5 4 jan.99 jul.99 jan.00 Source: NAV jul.00 jan.01 jul.01 jan.02 jul.02 jan.03 jul.03 jan.04 jul.04 jan.05 jul.05 jan.06 jul.06 jan.07 jul.07 jan.08 jul.08 jan.09 jul.09 Unemployment (registered, percent) Rogaland somewhat above the national average jan.10 jul.10 jan.1
Slide 29: House prices NOK per square meter
29 - 10.000 20.000 30.000 40.000 50.000 60.000 jan.03 mai.03 sep.03 jan.04 mai.04 sep.04 jan.05 mai.05 sep.05 jan.06 mai.06 sep.06 jan.07 Source: Finn.no, Eiendom Norge and Eiendomsverdi mai.07 sep.07 jan.08 mai.08 sep.08 jan.09 mai.09 sep.09 jan.10 mai.10 sep.10 jan.11 mai.11 sep.11 House prices NO
Slide 30: Reduced petroleum activity in 2015
Reduced petroleum activity in 2015 Lower investments, whereas operating expenditures are more stable • Investments levelled out in 2014 200 following several years of growth. 180 Investments expected to be reduced by 15% in 2015 160 140 • Operating expenditures (opex) are more stable - and are expec
Slide 31: Moderate risk profile in which no single event should seriously harm the bank
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 • The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk • SpareBank 1 SR-Bank therefore invests significant r
Slide 32: A well diversified portfolio
SpareBank 1 SR-Bank has a well diversified portfolio 8.9% (8.6%) of total EAD is related to oil operations SpareBank 1 SR-Bank* has total BNOK 207.1 (201.4) EAD per 31.05.2015 BNOK 18.3 (17.6) EAD is related to oil operations Oil service; 2.6% (2.6%) Corporate market excl. oil operations; 25.0% (24.
Slide 33: Oil services - total NOK 5.3 billion
Oil services - total NOK 5.3 billion NOK 5.2 billion as at 31.12.2014 Exploration and concept studies Oil services • EAD NOK 0.6 billion • EAD NOK 5.3 billion, 2.6% of the bank's total EAD • Average weighted probability of default 2.5% • Average weighted probability of default for the oil services p
Slide 34: Offshore - total NOK 10.4 billion
Offshore - total NOK 10.4 billion NOK 9.9 billion as at 31.12.2014 Offshore Service Vessels Offshore • EAD NOK 7.5 billion, average weighted • EAD NOK 10.4 billion, 5.0% of the bank's total EAD probability of default is 1.1%, weighted • Average weighted probability of default for the offshore portfo
Slide 35: Oil and gas - total NOK 2.6 billion
Oil and gas - total NOK 2.6 billion NOK 2.2 billion as at 31.12.2014 Exploration financing Exploration and production companies • EAD NOK 963 million • EAD NOK 2.6 billion, 1.3% of the bank's total EAD • Average weighted probability of default • Average weighted probability of default for the oil an
Slide 36: Lending to commercial property
Lending to commercial property Letting of real estate - oil operations Lending to commercial property • EAD NOK 3.5 billion 1.7% of total EAD, • EAD NOK 28.4 billion 15.6% of the bank’s total EAD which of; • The portfolio is characterised by lending to commercial properties for • Oil operations: EAD
Slide 37: SRBANK's activities
SRBANK’s activities Divisions of Capital Markets Retail Market Corporate Market Administration & Support SpareBank 1 SR-Bank ASA Number of man-years : 36 Number of man-years : 454 Number of man-years : 163 Number of man-years : 205 Fully owned companies Number of man-years : 200 Number of man-years
Slide 38: SpareBank 1 Alliance Banking Cooperation
SpareBank 1 Alliance Owners of the alliance • All credit decisions are made at the local banks • Economies of scale related to expenses, IT solutions, marketing and branding Samspar 19,5 % 19,5 % 19,5 % 19,5 % 11,0 % 9,6 % 1,4 % Products, commissions, dividends Sales, loan portfolios, capital Compan
Slide 39: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is committed to value creation in • Return on equity of 12% after tax in 2015. In the long-term, the bank`s core market area under prevailing market conditions, the target is a minimum of 12%. • Sustai
Slide 40: Balance sheet
Balance sheet Balance sheet (MNOK) 30.06.2015 30.06.2014 Cash and balances with central banks 2.841 1.985 Balances with credit institutions 2.224 2.333 Net loans to customers 149.472 134.680 Certificates, bonds and other fixed-income securities 16.116 16.610 Financial derivatives 4.878 4.653 Shares,
Slide 41: Risk profile of the loan portfolio
Risk profile of the loan portfolio • SpareBank 1 SR-Bank has a stable and Distributed by risk class low risk portfolio. 100% 80% 58,0% 56,4% 60% • More than half of the bank’s loan 40% 31,8% 31,9% exposure has a PD* below 0.5 %. 20% 10,3% 11,6% 0% 0.00 - 0.50 0.50 - 2.50 2.50 - 99.9 • Single loan ex
Slide 42: Risk profile – Lending to the retail market
Risk profile – Lending to the retail market Retail market portfolio distributed by risk class • The quality of the retail market portfolio is considered to be good and 100% 3,2% 3,1% 3,2% 2,9% 2,6% 20,5% 20,1% 20,2% 18,6% 17,2% 80% has low potential losses. 60% 40% 76,4% 76,8% 76,6% 78,5% 80,2% • Th
Slide 43: Risk profile - Corporate lending
Risk profile - Corporate lending • The quality of the corporate market Corporate lending portfolio distributed by risk class portfolio is good. 100% 26,4% 24,9% 26,7% 24,9% 22,7% 80% 60% • The share of customers with PD* 52,8% 56,7% 56,0% 55,8% 56,5% 40% below 2.5% has increased, mainly due 20% to a
Slide 44: A strengthened framework to meet increased economic uncertainty
A strengthened framework to meet increased economic uncertainty Uncertainty regarding the outlook for the Norwegian economy has increased due to lower oil prices. SpareBank 1 SR-Bank faces this uncertainty with a solid portfolio, a solid framework for lending and continuous focus on managing and con
Slide 45: SRBANK share price and trading development
SRBANK Development in Price/Book Relative share price development • International 125 ownership is 19.3% 65 1,2 120 per 2. quarter 2015. 1,1 60 115 1,0 Index 100 = Jan. 1st 2014 110 0,9 55 • Total market value at 105 NOK p/B 0,8 100 2. quarter 2015 is 50 0,7 95 NOK 13,4 billion. 0,6 90 45 Price OSEB
Slide 46: 20 largest shareholders as at June 2015
20 largest shareholders as at June 2015 • International ownership is 19.3% per 2. Investor Number Stake quarter 2015. Sparebankstiftelsen SR-Bank 72.419.305 28,3% Gjensidige Forsikring ASA 26.748.416 10,5% State Street Bank and Trust Co, U.S.A. Nominee 9.763.859 3,8% SpareBank 1-stiftinga Kvinnherad
Slide 47: SRBANK as at June 2015
SRBANK as at June 2015 • Ownership interests: 30.06.2015 2014 2013 2012 2011 – From Rogaland, Agder-counties and Hordaland: 49.1% Share price 52,25 52,50 60,25 37,20 40,70 – International: 19.3% – 10 largest: 54.5% – 20 largest: 62.4% Stock value (MNOK) 13.363 13.427 15.409 9.514 5.182 • Number of s
Slide 48: Contact Details
Contact Details Management Arne Austreid CEO Tel.: +47 900 77 334 E-mail: arne.austreid@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 Adress E-mail: inge.reinertsen@sr-bank.no Bjergsted Terrasse 1 Postboks 250 Investor Relations 4066 Stavanger Stian Helgøy Investor Relations Tlf: +47 915 02002