Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q3 2024 Earnings Presentation
34 slides from Pareto Bank Asa's earnings presentation, Oct 24, 2024
Slide 1: Financial Results – Third Quarter 2024
PARETO BANK Financial Results – Third Quarter 2024
Slide 2: Highlights, Financials, Business Area Update & Outlook
Highlights Financials Business Area Update & Outlook 2
Slide 3: Third Quarter 2024 Highlights
THIRD QUARTER 2024 Highlights • Profit after tax NOK 173.2m (NOK 155.2m in Q3-23). • Return on equity after tax 13.7% (13.9%). • Net interest income up to NOK 313.1m (NOK 281.3m). • Lending at the end of quarter stood at NOK 19,419m (NOK 18,260m). Average lending was up 2% quarter-on- quarter. • Swe
Slide 4: Key Figures
KEY FIGURES Profit after tax (NOKm) Return on Equity * CET1 ratio 176.1 178.2 173.2 18.7% 18.6% 165.0 18.2% 18.3% 155.2 17.9% 13.9% 13.8% 14.3% 14.2% 13.7% Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Net interest income (NOKm) Cost/Income ratio Loss rati
Slide 5: Financials
Highlights Financials Business Area Update & Outlook 5
Slide 6: Income Statement
INCOME STATEMENT P&L (NOKm) Q3-24 Q3-23 YTD-24 YTD-23 • Interest income increased with higher average lending Net interest income 313.1 281.3 915.8 815.3 volumes. Margins fairly stable quarter-on-quarter. Net other operating income 2.1 3.0 17.0 -5.3 Total net income 315.1 284.3 932.8 810.0 • NOK 0.9
Slide 7: Change in Quarterly Net Interest Income
CHANGE IN QUARTERLY NET INTEREST INCOME (NOKm) 4.5 10.3 - 5.6 1.0 2.8 313.1 - - - - 303.0 - 0.4 - 10.4 - 3.2 220.0 Q2-24 Lending Lending Fee Surplus liquidity Deposit Deposit Market Interest Q3-24 volume rate income and other * volume rate funding days 7 *) Other net interest income includes fee pai
Slide 8: Interest Margins
INTEREST MARGINS Lending and deposit margin 5.7% 5.7% 5.5% 5.5% 5.1% 4.7% 4.6% 4.6% 4.6% 4.5% 1.1% 0.8% 0.7% 0.6% 0.5% Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Lending margin Deposit margin Net interest margin 8 Note: Lending and deposit margins relative to average 3M NIBOR. Net interest margin is total net in
Slide 9: Quarterly Change in Stage 2, 3 and Impairments
QUARTERLY CHANGE IN STAGE 2, 3 AND IMPAIRMENTS Stage 2 and 3 and provisions for stage 3 lending (NOKm) Impairments and losses on loans and guarantees (NOKm) 42.1 30.3 30.9 1,012 26.0 619 734 832 939 15.3 1,013 853 836 713 468 134 162 113 92 108 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Stage 3 Stage 2 Stage 3 p
Slide 10: Solidity and Capital Requirements
SOLIDITY AND CAPITAL REQUIREMENTS • Long-term CET1 target 16.7%, in line with the NFSA expectation. • Pareto Bank will hold a buffer above this 17.8% 18.3% target. 16.7% NFSA expectation 16.7% • The impact of CRR3 is still uncertain: Lower capital requirements for operational risk and Minimum homes
Slide 11: Business Area Update & Outlook
Highlights Financials Business Area Update & Outlook 11
Slide 12: A Niche Player Financing Medium-Sized Enterprises
A NICHE PLAYER FINANCING MEDIUM-SIZED ENTERPRISES Exposure (NOKm) SHIP FINANCING NOK 1,972m 8% RESIDENTIAL FINANCING NOK 3,123m 13% 37% COMMERCIAL PROPERTY RESIDENTIAL DEVELOPMENT FINANCING FINANCING NOK 3,122m 13% NOK 8,685m 28% CORPORATE FINANCING NOK 6,430m 12
Slide 13: Quarterly Exposure per Business Area
QUARTERLY EXPOSURE PER BUSINESS AREA (NOKbn) 9.24 8.69 8.34 8.41 8.22 6.34 6.43 6.04 6.06 6.07 3.16 3.20 3.12 3.32 3.24 3.12 2.97 3.11 2.56 2.30 1.81 1.97 1.50 1.38 1.54 Residential development financing Residential financing Commercial property financing Corporate financing Ship financing Q3-23 Q4-
Slide 14: Residential Property Financing
RESIDENTIAL PROPERTY FINANCING Residential property exposure (NOKm) Total NOK 11,809m RELATIVELY UNCHANGED VOLUM EXPECTED IN Q4-24. 1,560 • Good deal flow of attractive customers and projects in Q3- Land w/ houses 24. Project completions and loan redemptions had effect on growth, and will continue t
Slide 15: Commercial Property Financing
COMMERCIAL PROPERTY FINANCING Commercial property exposure (NOKm) Total NOK 3,122m FLAT LENDING VOLUME EXPECTED FOR Q4-24. • Continued low risk appetite and financing demand. • Commercial property prices have stabilized. • Transaction activity is slowly picking up given prospects of 3,122 interest r
Slide 16: Corporate Financing
CORPORATE FINANCING Corporate exposure (NOKm) Total NOK 6,430m (Q2-24: NOK 6,338m) STRONGER GROWTH EXPECTED IN Q4-24. 18% Real Estate Investment Company 4% IT/Telecommunications 42% • High activity in Q3-24 increases volume in the quarter 4% Logistics and expectations for the next. 5% Consulting Se
Slide 17: Ship Financing
SHIP FINANCING Shipping exposure (NOKm) Total NOK 1,972m (Q2-24: NOK 1,808m) FLAT LENDING VOLUME EXPECTED FOR Q4-24. Offshore Subsea 470 LTV 43% • Continued activity and financing demand within offshore. Offshore Supply 380 LTV 35% Subdued demand in shipping. Steep repayment profiles on loans affect
Slide 18: Total Return
TOTAL RETURN Price Annual Equity Total Return 450 Change Return 400 Pareto 229% 408% 16.6% Bank 350 OSEBX 160% 160% 9.5% Index 300 DNB 97% 233% 12.1% 250 200 150 100 50 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 -50 OSEBX DNB PARB 18
Slide 19: Appendix
APPENDIX (Pareto bank
Slide 20: Long-Term Ambitions
LONG-TERM AMBITIONS ROE Dividend 15% min. 50% 14.63% 52.9% 13.99% 14.07% 49.4% 50.1% 13.75% 2021 2022 2023 YTD 2024 2021 2022 2023 20
Slide 21: Largest Shareholders
LARGEST SHAREHOLDERS 30 September 2024 Name Shares % Total • The Company has 76,782,423 shares outstanding. One class 1 Pareto AS 15,356,484 20.00% of shares where each share carries one voting right. 2 Société Générale 6,943,049 9.04% • Diversified investor base with 3,658 shareholders. 3 AWC AS 4,
Slide 22: The Share
THE SHARE Earnings per share (NOK) Book value per share (NOK) 2.15 2.08 1.89 61.74 59.67 57.36 Q3-23 Q2-24 Q3-24 Q3-23 Q2-24 Q3-24 22
Slide 23: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Q3-24 Q2-24 Q1-24 Q4-23 Q3-23 Net interest income 313.1 303.0 299.8 297.3 281.3 Net other operating income 2.1 12.5 2.4 12.1 3.0 Total net income 315.1 315.5 302.2 309.4 284.3 Total operating expenses 57.7 56.3 55.6 51.1 50.4 Operating profit before 257.4 259.3
Slide 24: Quarterly Balance Sheet
QUARTERLY BALANCE SHEET (NOKm) Q3-24 Q2-24 Q1-24 Q4-23 Q3-23 Loans to credit institutions 1,930 1,432 1,174 1,651 2,498 Loans to customers 19,419 19,585 18,928 18,518 18,260 Bonds and other securities 4,240 5,331 5,923 5,422 4,245 Shareholdings in associated companies 22 22 22 22 23 Other assets 217
Slide 25: Margins and Interest Contribution
MARGINS AND INTEREST CONTRIBUTION Margins per business area Interest contribution per business area Estimated annualized margins including commissions, excluding front and back-end fees over 3M NOKm, estimated interest contribution including commissions, excluding front and back-end fees over 3M Nib
Slide 26: Real Estate Financing Exposure
REAL ESTATE FINANCING EXPOSURE Geographical residential property exposure Total NOK 11,809m* Geographical commercial property exposure Total NOK 3,122m* 10% 8% 4% 5% 5% 11% 36% Oslo Oslo 40% Akershus Sweden 7% Vestfold Vestland Sweden Akershus Østfold Telemark Other Other 18% 32% 22% 26 *) Residenti
Slide 27: Branch Established in Sweden
BRANCH ESTABLISHED IN SWEDEN Exposure in Sweden (NOKm) Total NOK 2,056m Solid track record and market rationale • Ten years of experience in financing real estate projects for both Norwegian and Swedish customers in Sweden. Large network of clients and partners established. • Attractive niche of med
Slide 28: Liquidity Buffer
LIQUIDITY BUFFER Low credit and market risk (NOKm) Comments • Cash on hand. 81 • Highly liquid bonds. 1,278 • Low credit risk. • No interest rate or foreign exchange risk. Cash (Norges Bank & DNB) • Access to central bank Bonds issued by government & PSEs facilities and repo market. Covered bonds 2,
Slide 29: Funding
FUNDING Sources (NOKm) Deposits & senior debt NOKm, Deposits 12,057 Percent customer deposits of net lending to customers Senior debt 7,284 65.4% 66.4% AT1 & T2 debt 1,250 64.5% 62.8% 62.1% Other debt 498 7,366 7,570 7,284 7,756 Equity capital 4,740 7,718 Key funding and liquidity ratios • Deposits
Slide 30: Customer Deposits
CUSTOMER DEPOSITS Deposits by size (NOKm) Deposits by product (NOKm) > NOK 20m 2,843 163 NOK 10 - 20m 1,035 179 300 NOK 5 - 10m 965 284 Floating rate retail 168 NOK 2 - 5m 1,007 2,011 2,711 NOK 0 - 2m 931 2,479 Floating rate corporate 2,362 - 1,000 2,000 3,000 4,000 Floating rate Fixed rate 4,503 Sa
Slide 31: Market Funding
MARKET FUNDING Market funding maturities (NOKm) * Cost of new market funding 250 135 575 105 120 0 300 83 2000 55 1400 1400 38 1305 1150 30 3M 6M 12M 2Y 3Y 5Y 2025 2026 2027 2028 2029 Floating rate coupon for new bond issue per maturity (basis points over 3M Nibor) Senior Call on Subordinated Capita
Slide 32: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Risk classification (NOKm) Historical risk classification 7,327 None / very low risk 9,354 53% 52% 50% 47% 11,239 45% Low risk 10,504 40% 40% 37% 37% 2,057 34% Moderate risk 3,127 501 Some risk 308 13% 2 12% High risk 10% 11% 9% 0 241 Very high risk 184 Q3-23 Q4-23
Slide 33: Commitments by Size
COMMITMENTS BY SIZE Commitment size per customer (NOKm) Distribution of commitments by size (NOKm) 585 2% < 10 524 23% 4,923 10 - 50 22% 5,187 5,523 50 - 100 < 10 5,250 10 - 50 3,660 50 - 100 100 - 150 1,870 100 - 150 150 - 200 1,875 10% 150 - 200 200 - 250 2,810 > 250 1,509 200 - 250 2,388 22% 3,29
Slide 34: Pareto Bank
( Pareto bank