Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q4 2014 Earnings Presentation
61 slides from Sparebank 1 Sor-norge Asa's earnings presentation, February 2015
Slide 1: Investor Update 4th quarter 2014
Investor Update 4th quarter 2014 Preliminary annual accounts Page 1
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: Agenda
Agenda Presentation IntroductionoftoSpareBank SpareBank1 SR-Bank ASA ASA 1 SR-Bank Financials Solvency and liquidity position Appendix Page 3
Slide 4: A unique situation with a continuing budget surplus
A unique situation with a continuing budget surplus… Economic Indicators (%) 2010 2011 2012 2013 2014P 2015P GDP growth - mainland 1.7 2.6 3.4 2.0 1.9 2.4 Household consumption growth 3.8 2.6 3.0 2.1 2.1 3.4 Investment growth – mainland* -4.5 6.3 4.5 4.7 0.9 2.5 Investment growth oil & gas -9.5 11.3
Slide 5: One of Norway's most prosperous regions
One of Norway’s most prosperous regions The third largest discovery ever on the NCS was made 140 km …and activity is expected to continue at high levels from our headquarter in 2011 4000 250 Investments on NCS 3000 “Johan Sverdrup” compared to existing oil fields on the Norwegian 200 2000 Produced r
Slide 6: 48 branch offices in one of Norway's most prosperous regions
48 branch offices in one of Norway’s most prosperous regions 1 Rogaland Population 452,000 Market share 37% Year of establishment 1839 2 Market strategy Market leader Unemployment rate 2.4% 2 Hordaland Population 498,000 Market share 6% Year of establishment 2006 1 Market strategy Entry/growth Unemp
Slide 7: The SpareBank 1 Alliance – 2nd largest mortgage lender in Norway
The SpareBank 1 Alliance – 2nd largest mortgage lender in Norway Founded in 1996 based on efficiency and local market focus Geographic overview Ensure the independence and regional foothold of the individual member banks by maximizing their: - Purpose Competitiveness - Profitability - Capital streng
Slide 8: SRBANK's activities
SRBANK’s activities Divisions of SpareBank 1 SR- Capital Markets Retail Market Corporate Market Administration & Support Bank ASA Number of man-years: 32 Number of man-years : 463 Number of man-years : 161 Number of man-years : 210 Fully owned companies Number of man-years : 194 Number of man-years
Slide 9: Increased international interest in SRBANK
Increased international interest in SRBANK • Converted from Development in Price/Book Relative share price development equity certificates to shares in 2012. 65 1,2 120 OSEBX 1,1 115 60 SRBANK Index 100 = Jan. 1st 1 110 • «Top-20» company 55 0,9 105 p/B NOK based on market 0,8 100 50 0,7 cap of dome
Slide 10: 20 largest shareholders as at December 2014
20 largest shareholders as at December 2014 Investor Number Stake • International Sparebankstiftelsen SR-Bank 72.419.305 28,3% ownership increased Gjensidige Forsikring ASA 26.748.416 10,5% from 14.1% at 2013 State Street Bank and Trust Co, U.S.A. Nominee 8.643.971 3,4% to 22.4% at 2014 Morgan Stanl
Slide 11: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Appendix Page Page 11 11
Slide 12: Strong result with higher income, moderate losses and good cost control
Strong result with higher income, moderate losses and good cost control Pre-tax profit for 4Q is NOK 553 million compared to NOK 674 million last year - Return on equity after tax 11.7% (16.2%) Pre-tax profit year-to-date increased to NOK 2.601 million from NOK 2.347 million last year - Return o
Slide 13: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 18,4% 16,2% 11,1% 11,2% 11,4% 11,3% 11,5% 14,5% 12,2% 11,7% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Cost/income ratio Earnings per share (NOK) 2,58 2,22 2,09 44,6% 45,1% 42,4% 1,78 1,75 40,9% 37,5% Q4 13 Q1
Slide 14: Key figures – annual development
Key figures – annual development Return on equity CET 1 capital ratio 14,0% 14,2% 11,1% 11,5% 12,4% 10,0% 2012 2013 2014 2012 2013 2014 Cost ratio Earnings per share (NOK) 8,20 49,9% 7,28 44,9% 41,8% 5,33 2012 2013 2014 2012 2013 2014 Page Page 14 14
Slide 15: Key figures
Key figures 31.12 31.12 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Return on equity after tax (%) 14,2 14,0 11,7 12,2 14,5 18,4 16,2 Net interest margin (%) 1,45 1,42 1,51 1,48 1,41 1,40 1,46 Impairment losses on loans and guarantees in % of gross loans 0,20 0,11 0,27 0,20 0,13 0,18 0,17 -incl. covered bon
Slide 16: Income statement
Income statement 31.12 31.12 Group Income Statement (MNOK) 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Net interest income 2.404 2.119 655 621 581 547 574 Net commission and other income 1.732 1.824 405 403 444 480 489 Net income on investment securities 778 555 116 142 201 319 195 Total income 4.914 4.498
Slide 17: Change in profit 31.12.2013 – 31.12.2014
Page Page 17 17 1.000 1.500 2.000 2.500 3.000 0 500 31.12.2013 2.347 Net interest income incl. commission 142 from covered bond companies Other income 51 Net income on investment securities 223 Change in profit 31.12.2013 – 31.12.2014 Total operating expenses -37 Impairment losses on loans and guara
Slide 18: Consolidated income profile
Consolidated income profile 1200 1000 322 315 315 324 310 800 37 34 29 28 20 90 167 93 165 120 MNOK 600 400 621 655 574 547 581 200 0 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Net interest income Commission income from covered bond companies Profit before tax from covered bond companies Net commission and other
Slide 19: Lending and deposit margins
Lending and deposit margins Lending margins 2,88% 2,99 % 2,92% 2,90% 2,64% 2,93% 2,89% 2,80% 2,57% 2,21% 2,21% 2,20% 2,06% 2,08% 1,97% 1,85% 1,88% 1,95% Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Corporate market Retail market Deposit margins -0,27% -0,40% -0,43% -0,32% -0,45% -0,44% -0,4
Slide 20: Lending volume and growth
Lending volume and 12 months growth Corporate Market 60 000 50 000 15% 40 000 MNOK 10% 30 000 20 000 5,0% 5,5% 5,6% 4,0% 4,5% 4,6% 5% 2,5% 10 000 1,4% 0,7% 0 0% Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Volume Growth % Retail Market 120 000 100 000 15% 80 000 MNOK 9,0% 10% 60 000 7,8% 6,
Slide 21: Loan portfolio as at 31.12.2014
Loan portfolio as at 31.12.2014 • Gross loans as at 31 December 2014 amount to NOK 174.5 billion 2,9% Agriculture / forestry / fishing 2,9% compared with NOK 166.7 billion at 3,9% the same time last year. Industry, Power/water supply and construction 3,5% Retail trade, hotels and restaurants 1,7% 1,
Slide 22: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans Total-distributed • The proportion of loans with a loan- to- value ratio of less than 85% is high and stable. 100 % • 91.3% of the exposure is within 85% of the assessed value of 90 % collateral. This means that only 80 % 8.7% of exposure exceeds 85% of 70
Slide 23: Lending to the corporate market – risk profile
Lending to the corporate market – risk profile • The quality of the corporate market portfolio is good. Corporate lending – historical PD 100% • The share of customers with PD* 24,4% 25,1% 26,4% 24,9% 26,7% 80% above 2.5% increased slightly during the second half of 2014, 60% 54,5% 54,0% 52,8% mainl
Slide 24: Deposits volume and growth
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by NOK 9.8 billion to 81.5 billion. 50000 24,1 % 20,3 % 25% 18,9 % 20% – Corresponds to an increase in the 40000 period of 13.7%. 12,6 % 15% 30000 MNOK 6,6 % 10% 20000 4,9 % 1,7 % 5% 10000 -2,2 % -2,1 % 0% 0 -5
Slide 25: Operating expenses
Operating expenses 31.12 31.12 MNOK 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Personnel expenses 1.187 1.159 303 304 293 287 297 Restructuring costs 13 37 10 3 0 0 26 Non-recurring effect, pension-related items 2 0 -5 0 0 7 0 Total personnel expenses 1.202 1.196 308 307 293 294 323 IT expenses 277 250 75
Slide 26: 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% 0,18% 0,20% 0,17% 0,13% 0,22% 0,16% 1,06% 0,12% 0,13% 0,90% 0,10% 0,81% 0,77% 0,76% 0,66% 0,66% 0,65% 0,62% 0,54% 62 439 21 462 552 533 80 513 52 51 48 830 31 6
Slide 27: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Appendix Page Page 27 27
Slide 28: Deposits to loans ratio and market funding
Deposits to loans ratio and market funding • Development in deposits to loans ratio reflects our funding strategy with a Deposits to loans ratio greater share of senior funding and the reduced use of covered bond funding. 100,0 % 80,0 % 61,7% 61,1% 63,6% 60,6% 59,6% 61,2% 60,4% 59,1% 57,5% • Good li
Slide 29: An established borrower in the Euromarket
An established borrower in the Euromarket SEB 2 02/19/2021 Corp DNBNO 3⅞ 06/29/2020 Corp 120 120 120 POHBK 2 03/03/2021 Corp 120 NDASS 4 06/29/2020 Corp SPAROG2 ⅛ 02/20 Corp SPAROG 2⅛ 04/21 Corp 100 100 100 100 NDASS 2 02/17/2021 Corp 80 80 80 80 Bps. Bps. Bps. 60 60 60 60 Bps. 40 40 40 40 20 20 20
Slide 30: Significantly improved funding structure since 2008
Significantly improved funding structure since 2008 Average maturity of long term funding (excl. covered bonds) • Funding indicator 1 (ratio of illiquid assets financed by issued securities 4,5 70,0 with a duration of more than 1 year) is 109,0% for the parent bank and 4,0 60,0 110,7% on consolidate
Slide 31: Stronger capital ratio
Stronger capital ratio 16% • SpareBank 1 SR-Bank is compliant with all capital requirements per 31.12.2014. 14% 14,1% 14,5% • The use of different risk weights in the 13,1% Nordic countries makes comparisons of 12% 12,8% 12,3% 12,2% actual financial strength difficult. 10% – The Basel I floor is als
Slide 32: RWA home mortgages
RWA home mortgages (incl. SpareBank 1 Boligkreditt) • RWA on home mortgages is stable. The shift that occurs from Q1 2014 is 25,0 % due to increased regulatory LGD from 10% to 20%. 20,0 % • FSA has indicated that there may be 17,0% imposed further restrictions, from 16,4% 16,2% 16,3% 2015, on how to
Slide 33: Common equity tier 1 being strengthened in line with stricter requirements
Common equity tier 1 being strengthened in line with stricter regulatory requirements • New capital requirements entail a need to continue increasing common equity 16,00% 16,00% tier 1 capital going forward. 10,0 -13,0% 14,00% ROE 14,00% ROE 14,2% 14,0% • SpareBank 1 SR-Bank is not defined as ROE 12
Slide 34: Strengthened CET1 capital ratio calculated on basis of total assets
Strengthened core equity tier 1 capital ratio calculated on basis of total assets 9% 8,0% 7,9% • Core equity tier 1 capital ratio calculated 8% 7,9% on basis of total assets as at 31 December 2014 was 7.9%. 7% 6,6% 6,2% 5,9% • Measured according to this expression 6% of financial strength, SpareBank
Slide 35: From record high levels, oil investments expected to be reduced in 2015
2015 From record high levels, oil investments are expected to be somewhat reduced in 2015. A continued high level of investment involves strong activity in the petroleum sector, but uncertainty has increased due to lower oil prices. Major infrastructure projects and high activity in house buildi
Slide 36: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Appendix Page Page 36 36
Slide 37: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is commited to • ROE above 13% at a normalised level of value creation in the bank`s core market area interest rates • Sustainable contribution to the value creation • Top 50% ROE and cost/income in a
Slide 38: SpareBank 1 Alliance
SpareBank 1 Alliance Owners of Sparebanken the alliance Samspar Hedmark • All credit decisions are made at the 19,5% 19,5% 19,5% 19,5% 11,0% 9,6% 1,4% local banks • Economies of scale related to Products, commissions, dividends expenses, IT solutions, marketing and branding Sales, loan portfolios, c
Slide 39: Norwegian Economy - A unique situation with a continuing budget surplus
Norwegian Economy - A unique situation with a continuing budget surplus… GDP per capita in PPS, index, EU 27 = 100 2013 governments financial liabilities (in per cent of GDP) 200 150 180 100 160 50 140 0 120 -50 100 -100 1995 1997 1999 2001 2003 2005 2007 2009 2011 -150 Norway United States Denmark
Slide 40: Norwegian Economy – international context
Norwegian Economy – international context Unemployment rates 14 12 10 8 6 4 2 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Norway Sweden Denmark UK US Euro area GDP growth rates 6 4 2 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (2) (4) (6) Norway (mainlan
Slide 41: Norwegian Housing and Mortgage Market Key Characteristics
Norwegian Housing and Mortgage Market Key Characteristics Market • Total mortgage market approx NOK 2,300 billion (approx USD Household Credit Growth Rate 380bn, €280bn) (12 month growth rate) • Banks and credit institutions are the dominant supplier of mortgages with over 90% market share 14% • Typ
Slide 42: Norwegian Housing and Mortgage Market
Norwegian Housing and Mortgage Market Population Change and Completed Housing Units Page Page 42 42 Source: Statistics Norway and Norwegian Central Bank
Slide 43: Nominal and real house price development
Norwegian Housing and Mortgage Market - Nominal and real house price development Index of House Prices, Norway, Monthly (Jan 2003 = 100) 220 210 200 180 160 140 128 120 100 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 House price index (nominal) House price index adjusted with aver
Slide 44: Aggregate Household Debt Burden
Aggregate Household Debt Burden Total Debt burden in per cent of household income (after tax) Norway: 250 • All HH debts included in the statistic, question of int’l 200 comparability • High home ownership (mortgage 150 debt rather than rent commitments) • Generous benefits (pensions, healthcare, ed
Slide 45: Balance sheet
Balance sheet Balance sheet (MNOK) 31.12.2014 31.12.2013 Cash and balances with central banks 1.847 1.265 Balances with credit institutions 2.222 1.253 Net loans to customers 140.920 119.525 Certificates, bonds and other fixed-income securities 15.261 21.065 Financial derivatives 7.340 4.923 Shares,
Slide 46: Net commission and other income
Net commission and other income 31.12 31.12 MNOK 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Payment facilities 236 233 57 66 56 57 59 Savings/placements 172 151 42 45 40 45 39 Insurance products 177 164 46 45 44 42 41 Commission income real estate broking 434 433 101 105 128 100 108 Guarantee commission 10
Slide 47: Net income on investment securities
Net income on investment securities 31.12 31.12 MNOK 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Dividends 36 33 1 10 7 18 -2 Investment income, associates 506 355 138 150 137 81 95 Securities gains/losses 140 -81 -37 -52 24 205 13 - of which capital change in shares and certificates* 232 46 24 -22 10 220 4
Slide 48: Subsidiaries
Subsidiaries MNOK 31.12.14 31.12.13 EiendomsMegler 1 SR-Eiendom AS Number of sales 7.540 7.246 Operating profit before tax 55,5 41,9 SpareBank 1 SR-Finans AS Total assets (BNOK) 7,0 6,4 Operating profit before tax 145,9 149,0 SR-Forvaltning AS Total assets under management (BNOK) 9,3 7,7 Operating p
Slide 49: Ownership interests
Ownership interests MNOK 31.12.14 31.12.13 SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 % Profit after tax 360,5 218,1 Adjusted profit previous years -4,2 -1,6 SpareBank 1 Boligkreditt AS Interest ownership 20,1 % 26,2 % Profit after tax 47,0 64,7 Adjusted profit previous years 1,9 1,8 Spar
Slide 50: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 31.12 31.12 Losses on loans in income statement (MNOK) 14 13 Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Corporate customers 167 145 27 39 48 53 87 Retail customers 15 17 4 9 3 -1 -7 Change in collective impairment losses on loans 75 -30 62 21 -10 2 -30 Net impairment los
Slide 51: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • SpareBank 1 SR-Bank has a stable 100% and low risk portfolio. 80% 56,3% 56,3% 60% • More than half of the bank’s loan 40% 32,5% 33,1% exposure has a PD* below 0.5%. 11,3% 10,6% 20% 0% • 68% is loans constituting gross 0.00 - 0.50 0.50 -
Slide 52: Low concentration of individual LGRs in the lending portfolio
Low concentration of individual LGRs in the lending portfolio • At the end of Q4 2014, SpareBank 1 Distributed by loss given realisation (LGR) SR-Bank had a total of 25 commitments with a loss potential 100% exceeding NOK 100 million. • These commitments represent 5.9% 82,0% 81,6% of the loan exposu
Slide 53: Lending to the retail market - risk profile
Lending to the retail market - risk profile Retail market portfolio – historical PD • The quality of the retail market portfolio is considered very good and 100% 3,4% 3,4% 3,2% 3,1% 3,2% has low potential losses. 80% 21,6% 21,6% 20,5% 20,1% 20,2% 60% • The proportion of loans with a PD* 40% below 0.
Slide 54: Historical LTV development for home mortgage loans
Historical LTV development for home mortgage loans Total home mortgages incl. loans in cover pool SpareBank 1 SR-Bank ASA 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 31.12.2012 30.06.2013 31.12.2013 30.06.2014 31.12.2014 31.12.2012 30.06.2013 31.12.2013 30
Slide 55: Lending to commercial property
Lending to commercial property Letting of real estate - oil operations Lending to commercial property • EAD NOK 3,4 billion 1,7% of the • EAD NOK 27,2 billion 13,5% of the group’s total EAD group’s total EAD, which of; • The portfolio is characterised by lending to commercial • Oil operations: EAD N
Slide 56: Liquidity portfolio
Liquidity portfolio Liquidity buffer – survival period Liquidity portfolio 20 Of which, 18 securities 16 Market classified to value, amortised 14 Category MNOK Share % cost, MNOK 12 BNOK 10 Norwegian government/municipal 29 0% 0 8 SSA/Foreign guaranteed 3.454 24 % 0 6 Covered bonds (Norwegian/foreig
Slide 57: Investments in bonds and certificates
Investments in bonds and certificates Risk category Rating Market value Share • Most of the bond portfolio is managed Very low risk AAA, AA+, AA og AA- 13.992 92,4 % as part of the liquidity management Low risk A+, A og A- 113 0,7 % activities. Bonds held for liquidity Moderate risk BBB+, BBB og BBB
Slide 58: Rating
Rating Moody’s Fitch Long-term debt A2 Long-term IDR A- Outlook Negative Outlook Stable Updated 11 December 2014 Updated 19 November 2014 Ratinghistory AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 Moody's A-/A3 Fitch BBB/Baa BB/Ba B 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Page
Slide 59: SRBANK as at 31 December 2014
SRBANK as at 31 December 2014 • Ownership interests: 2014 2013 2012 2011 2010 –From Rogaland, Agder-counties and Hordaland: 48.9% –International: 22.4% Share price 52,50 60,25 37,20 40,70 57,00 –10 largest: 56.8% –20 largest: 64.4% Stock value (MNOK) 13.427 15.409 9.514 5.182 7.257 • Number of share
Slide 60: Dividend policy
Dividend policy “The financial objective of SpareBank 1 SR-Bank ASA is to achieve earnings that yield adequate, stable returns on the bank’s equity, thereby creating value for owners through competitive returns in the form of dividends and share appreciation. In determining the level of the annual d
Slide 61: Contact Details
Contact Details Address Management Investor Relations Arne Austreid Stian Helgøy Bjergsted Terrasse 1 CEO Investor Relations Postboks 250 4066 Stavanger Tel. Tel. +47 900 77 334 +47 906 52 173 Tel. E-mail. E-mail. arne.austreid@sr-bank.no stian.helgoy@sr-bank.no +47 915 02002 Inge Reinertsen Short-/