Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 Østlandet — Q1 2019 Earnings Presentation
53 slides from Sparebank 1 Ostlandet's earnings presentation, May 8, 2019
Slide 1: Company presentation First quarter 2019
Company presentation First quarter 2019 8 May 2019
Slide 2: Strong financial results in 1Q-2019
Strong financial results in 1Q-2019 Summary first quarter 2019 • Lower volume growth in the quarter, but still strong customer growth • Strong competition in mortgages • Strong deposit growth • Improved profits in real estate brokerage and accounting services • Financial targets for 2019 with higher
Slide 3: Revised cost target for 2019
Revised cost target for 2019 Financial targets 2019 and actual performance Profitability Return on equity at least 10 % √ 21.2 % Dividends 50 % pay-out ratio* √ 50 % Solidity CET 1 at 16 % √ 16.9 % Costs Growth in operating costs in parent bank within 2 %** 7.8 % ! 3 * Profit after tax and minority
Slide 4: The bank and the market area
The bank and the market area SpareBank a @STLANDET
Slide 5: SpareBank 1 Østlandet at a glance
SpareBank 1 Østlandet at a glance Norway's fourth largest savings bank with a broad and diversified customer base History from 1845 – known as Sparebanken Hedmark ("SBHE") until 1 April 2017. Norway's fourth largest savings bank * with total adjusted assets (incl. covered bonds) of NOK 169 billion.
Slide 6: SpareBank 1 Østlandet - present where the growth is
SpareBank 1 Østlandet - present where the growth is Considerable population growth in the Greater Capital Area Population projection 2018-2040 Population projection, municipalities 2018-2040 SpareBank 1 Østlandet’s branch network 2,000,000 +19% (0.8% yearly) 1,750,000 Oppland Hedmark 1,500,000 1,250
Slide 7: Population growth a major driver in the housing market
Population growth a major driver in the housing market The housing market in Eastern Norway The Capital Region • The population growth is stabilizing in Oslo and increasing in the surrounding municipalities – especially in Romerike • Improved infrastructure and reduced travel time to downtown Oslo •
Slide 8: The Capital Region: Highest growth in the surrounding municipalities
The Capital Region: Highest growth in the surrounding municipalities Population growth and population per municipality 3.0 % Highest growth in the municipalities Ås surrounding Oslo • In contrast to the centralization Forecast yearly population growth 2018-2025 2.5 % Ullensaker tendency in the Inlan
Slide 9: The Inland Region: Highest population growth in urban areas
The Inland Region: Highest population growth in urban areas Population growth and population per municipality Higher population growth in the 1.4 % urban areas Stange Hamar • A municipality breakdown of Jevnaker 0.9 % population shows a stronger growth Gjøvik Lunner Vestre Toten Elverum in the more
Slide 10: Stable expectations for 2019 among the consumers
Stable expectations for 2019 among the consumers Consumer confidence in Eastern Norway Total 2018 Total 2018 Total Total 2017 Total 2017 Oppland & Hedmark Consumer confidence 13 Total 13 13 20 13 Oslo & Akershus 18 Man 17 18 16 16 Woman 7 9 15 14 Own economy this year 21 13 13 17 18-29 years 25 22 1
Slide 11: Housing prices levelling out on record high turnover
Housing prices levelling out on record high turnover Housing price developments for relevant areas compared with Norway Housing prices by area, 12-month growth (per cent) Housing prices, indexed** 30.0% APRIL 2019 30.0% 150.00 150.00 • Nominal +0.8 %/seasonally adjusted +0.0 % 25.0% • Balanced 25.0%
Slide 12: Positive expectations among the businesses in Eastern Norway
Positive expectations among the businesses in Eastern Norway Business confidence indicator Eastern Norway Total 2018 Total 2018 40 Total 2017 Total 2017 35 Total 29 Business confidence Tourism 20 29 44 Oppland & Hedmark 31 30 29 29 29 29 Oslo & Akershus 45 Private services Turnover 30 47 25 25 24 23
Slide 13: Confirmed high economic activity going in to 2019
Confirmed high economic activity going in to 2019 High output in the Capital Region and low unemployment throughout Growth in production, q/q and forecast for 6 months (per cent) Registered unemployment rate, NAV (per cent) 5.0 5.0 4 4 4.5 4.5 3 3 4.0 4.0 2 2 3.5 3.5 1 1 3.0 3.0 2.5 2.5 0 2013 0 201
Slide 14: Steady customer growth after the merger
Steady customer growth after the merger Numbers of customers in parent bank • The Bank still attracts new customers and sees a net growth of app. 3,400 350 40 customers (1 %) in 1Q-19 338 339 340 38 • RM shows a net growth of 3.900 customers 340 336 337 • CM shows a net reduction of 500 customers 33
Slide 15: Norway's first bank with customer dividends pays out again
Norway’s first bank with customer dividends pays out to the customers again Customer dividends for 2010 – NOK 222 million • Customer dividends were distributed for a second time to retail and corporate customers in April 2019. • A total of NOK 222 million was distributed to customers with deposits a
Slide 16: The Bank's ESG initiatives bear fruit
The Bank’s ESG initiatives bear fruit SpareBank 1 Østlandet receives solid ESG ratings • In the survey “Sustainable Brand Index 2019”, customers named SpareBank 1 Norway’s most sustainable banks. • In 1Q-19, the Bank received its first ESG rating from Sustainalytics. Sustainalytics rates SpareBank 1
Slide 17: News from the ESG area
News from the ESG area “Green agricultural loans” • SpareBank 1 Østlandet is one of the country's leading agricultural banks and concerned with our farmer's welfare. • Through the Bank’s credit policy, the Bank aims to stimulate to environmentally smart choices among our customers. • The product “Gr
Slide 18: Financial Accounts 1Q-2019
Financial Accounts 1Q-2019
Slide 19: Financial accounts show significant improvements from last year
Financial accounts show significant improvements from last year (1Q-18 in brackets) Increased profitability Profit after tax at NOK 757 million (NOK 314 million). Higher return on equity ROE at 21.2 % (9.9 %). CET 1 ratio 16.9 % (16.2 %). Solid capitalization Leverage ratio at 7.4 % (7.3 %). Decreas
Slide 20: Profit contributions from subsidiaries
Profit contributions from subsidiaries 1Q 2019 (1Q 2018) SpareBank 1 Finans Østlandet - Profit before tax NOK 38.8 million (NOK 44.6 million) - High and stable lending growth - Higher loan losses in 1Q-19 explain the reduction in profits EiendomsMegler 1 Hedmark - Profit before tax NOK -2.5 million
Slide 21: Contribution from joint ventures
Contribution from joint ventures 1Q 2019 (1Q 2018) SpareBank 1 Gruppen - Profit before tax NOK 283.7 million (NOK 278 million) - Ownership 12.40 % SpareBank 1 Boligkreditt AS - Profit before tax NOK 107 million (NOK 34.7 million) - Ownership 21.61 % - Last year negative financial effects from cross-
Slide 22: Income statement 1Q 2019
Income statement 1Q 2019 Group 1Q 2019 1Q 2018 2018 Net interest income 508 495 2,074 Net commission income 274 281 1,106 Other income 67 42 181 Total operating expenses 494 449 1,881 Result bank operation before losses 355 369 1,480 Impairment losses on loans and guarantees -33 5 35 Result bank ope
Slide 23: Special items 1Q 2019 - 1
Special items 1Q 2019 - 1 Description and effects • On January 28 January the Bank received a binding ruling from The Norwegian Tax Administration stating that the customer dividend paid by the bank is tax deductible. Tax deductibility of customer • The Supervisory Board decided on 28 March 2019 to
Slide 24: Special items 1Q 2019 - 2
Special items 1Q 2019 - 2 Description and effects • Fremtind Forsikring AS was established 1 January 2019 as a consequence of the merger between SpareBank 1 Skadeforsikring AS and DNB Skadeforsikring AS. • DNB ASA increased its ownership 1 January 2019 to 35 % in Fremtind. DNB ASA owns a call option
Slide 25: Key financials – quarterly (1)
Key financials – quarterly (1) Net interest income and commission fees from covered Pre-tax profit (NOK million) bond companies (NOK million) 810 633 602 599 606 592 518 461 409 347 1Q-18 2Q-18 3Q-18 4Q-18 1Q-19 1Q-18 2Q-18 3Q-18 4Q-18 1Q-19 Impairments on loans and guarantees (NOK million) Total op
Slide 26: Key financials – quarterly (2)
Key financials – quarterly (2) Return on equity CET 1 ratio 21.2 % 16 % 16 % 17 % 17 % 16 % 12.9 % 9.9 % 10.8 % 9.1 % 1Q-18 2Q-18 3Q-18 4Q-18 1Q-19 1Q-18 2Q-18 3Q-18 4Q-18 1Q-19 Lending growth (including loans transferred to Deposit growth last 12 months covered bond companies) last 12 months 9.5 %
Slide 27: Net interest income – influenced by reclassification
Net interest income – influenced by reclassification Net interest income incl. commissions from covered bond companies 1400 1.81% 1.90% • In the subsidiary SB1 Finans Østlandet 1.75% 1.76% there has been a reclassification of 1200 1.73% 1.80% 1.65% 1.70% certain items from net interest income to 100
Slide 28: Lending growth according to market growth last quarter
Lending growth according to market growth last quarter Lending volume (Group, NOK billion) 160 138 140 141 132 135 • Total lending in the Group, including 140 39 40 41 42 120 loans transferred to covered bond 39 100 companies, increased last quarter with NOK 0.9 bn. 80 60 • This is equivalent to a 0
Slide 29: Lending margins
Lending margins Retail and corporate divisions (parent bank) 2.53% 2.49% 2.51% 2.50% 2.48% • A softening of the lending margins the last quarter, both within the CM and RM. • This follows a reduction of the Nibor of 10 bps through the quarter • The customers were informed of 1.76% the interest rate
Slide 30: Loan book dominated by retail and SME lending
Loan book dominated by retail and SME lending Lending to customers per sector (% and NOK million) Lending to customers per sector (volume/share in %) Changes last 12 months Private customers 63,228/44.8% 5.4 % Loans transferred to Boligkreditt 40,919/ 29.0% 7.7 % Real estate 14,616/ 10.4% 5.9 % Indu
Slide 31: Well diversified growth in corporate loan portfolio
Well diversified growth in corporate loan portfolio Corporate lending growth YoY – sector (NOK million) 31 -23 -40 81 -70 193 -191 362 369 398 2,499 579 810 31
Slide 32: The highest lending growth outside Oslo
The highest lending growth outside Oslo Lending to customers per geographic area and change last 12 months (% and NOK million) Lending to customers by geographic area (volume/share in %) Changes last 12 months Hedmark 50,110/35.6 % 5.7 % Oslo 37,610/ 27.6 % 3.2 % Akershus 33,983/24.1 % 7.4 % Rest of
Slide 33: The credit growth within the retail market is highest in Hedmark and Akershus
The credit growth within the retail market is highest in Hedmark and Akershus Lending to customers per geographic area and change last 12 months (% and NOK million) – Retail market Lending to retail customers by geographic area (volume/share in %) Changes last 12 months Hedmark 34,385/ 33.4 % 7.1 %
Slide 34: The credit growth within the corporate market is highest in New market areas
The credit growth within the corporate market is highest in «New market areas» Lending to customers per geographic area and change last 12 months (% and NOK million) – Corporate market Lending to retail customers by geographic area (volume/share in %) CM Changes last 12 months Hedmark 15,724 /41.5 %
Slide 35: The concentration risk is low
The concentration risk is low Retail and corporate loans by size (% share)* Retail market Corporate market 38.3% 34.7% 25.4% 23.7% 18.5% 13.5% 12.1% 9.3% 10.0% 10.3% 4.2% 35 * Including loans transferred to the covered bond companies
Slide 36: High quality credit process leads to low and stable LTV
High quality credit process leads to low and stable LTV Percentage of granted mortgages and average LTV per county Percentage of granted volume Average LTV at the time of grant 78% 73% 72% 69% 70% 70% 66% 66% 66% 67% 67% 63% 64% 62% 62% 62% 61% 62% 60% 58% 33% 34% 31% 30% 30% 30% 31% 30% 28% 29% 27%
Slide 37: Mortgage regulation – The Bank is utilising the flexibility quota
Mortgage regulation – The Bank is utilising the flexibility quota Exposure per LTV bucket in the residential mortgage portfolio 94.9 % Mortgages - Utilisation of flexibility quota in 1Q-2019: City of Oslo Other areas 6.5 % (8 % quota) 6.2 % (10 % quota) • The mortgage regulation* constrains the lend
Slide 38: Satisfactory deposit coverage and higher deposit growth
Satisfactory deposit coverage and higher deposit growth Deposit volume and deposit growth, Group Deposit volume (NOK billion) 71 70 71 72 66 • Deposit growth of 1.2 % from 4Q 18. • Deposit growth last 12 months 9.5% (5.3 %) • Deposit growth - retail 6.2 %. • Deposit growth - corporates 14.1 %. • Dep
Slide 39: Deposit margins
Deposit margins Retail and corporate divisions (parent bank) 0.33% 0.32% 0.30% • Increased deposit margins in the 0.28% parent bank in first quarter. 0.29% 0.23% 0.28% • Slight reduction in in corporate deposit margins, due to large low 0.22% 0.22% margin deposits entering first quarter. • The last
Slide 40: Increased commissions and other income compared to last year
Increased commissions and other income compared to last year Net commissions and other income (NOK million) 300 256 • Reclassification from “Net Interest 246 234 250 Income” to “Other Income” for Total 12 224 41 SpareBank 1 Finans Østlandet, has 217 18 8 Other income 9 16 10 15 a positive impact of
Slide 41: Group operating costs
Group operating costs Operating costs per quarter (NOK million) 600 600 506 494 468 457 500 500 449 • The operating costs are reduced with 70 38 54 36 2.4 % compared to last quarter, but 47 45 23 400 Total is 9.9 % higher than 1Q-18. 400 23 32 24 Total Other operating 130 expenses 127 300 Depreciati
Slide 42: Operating costs in the Parent Bank according to plan
Operating costs in the Parent Bank according to plan Operating Costs per quarter (NOK million) • The Board has adopted financial targets for 2019 with higher cost focus. Cost reducing measures are implemented. • The operating costs in 1Q-19 were NOK 25 million higher than in 1Q-18. This is an increa
Slide 43: Stable development in staff levels
Stable development in staff levels Headcount (FTE) • The staffing in the Group is stable. 1,126 1,146 1,139 1,141 1,111 • Slight decrease in staffing in the Parent Bank. 418 433 453 442 450 693 693 693 697 691 1Q-18 2Q-18 3Q-18 4Q-18 1Q-19 Parent bank Subsidiaries # Fulltime equivalents (FTE) 43
Slide 44: The contribution from financial items has increased
The contribution from financial items has increased Net income from financial assets and liabilities (NOK millions) • Net profit from ownership interests of 61 NOK 316 million is specified above (“Contribution from joint ventures”). • Net income from other financial assets and liabilities has increa
Slide 45: Still very low impairments on loans and guarantees
Still very low impairments on loans and guarantees Impairments on loans and guarantees (NOK million) 12 11 5 7 • Impairments on loans and guarantees reversal of NOK 33 • Parent bank NOK -45 million • SB1 Finans Østlandet NOK 12 million -33 • Validation of the LGD model implied reduced 1Q-18 2Q-18 3Q
Slide 46: Low levels of problem loans
Low levels of problem loans Non-performing and other doubtful commitments 600 1.12% 1.20% 500 1.00% 400 0.80% • The proportion of problem loans 0.80% 0.61% 0.59% decreases further in 1Q-19 and 300 233 0.60% 234 287 0.45% 0.42% we are now at all time low. 200 0.40% 0.42% 0.41% 314 272 308 257 254 0.3
Slide 47: Low impairments and low net exposure in Stage 3
Low impairments and low net exposure in Stage 3 Specification of impairments and net exposure (NOK million) Maximum exposure net of accumulated impairments (on and off- Impairments per segment - quarterly balance sheet items) 1Q-19 4Q-18 3Q-18 2Q-18 1Q-18 Stage 1 Stage 2 Stage 3 Total Personal custo
Slide 48: CET 1 close to target
CET 1 close to target Core equity tier 1 ratio (Group) • The CET 1 was 16.9 % by the end of 1Q-19. The target for CET 1 is 16.0 %. • The repair offering and the employee offering in January 2019, raised a gross proceed of NOK 37.3 million. 17 % 17 % 17 % 17 % 17 % • An increase in LGD buffers in the
Slide 49: SPOL
SPOL 31.03.2019 EC's • An extraordinary quarter resulted in extraordinary key figures Market price (NOK) 82.40 • A normalization should be expected Market capitalisation (NOK million ) 9,544 during the course of 2019. Book equity per EC 1) 85.26 Earnings per EC, NOK 2) 4.50 Price/Earnings per EC 3)
Slide 50: Well positioned to serve a growth region
Well positioned to serve a growth region Summary 50
Slide 51: Contact details
Richard Heiberg CEO Tel.: +47 902 06 018 richard.heiberg@sb1ostlandet.no Geir-Egil Bolstad Contact details CFO Tel.: +47 918 82 071 geir-egil.bolstad@sb1ostlandet.no Runar Hauge Investor relations Tel.: +47 482 95 659 runar.hauge@sb1ostlandet.no 51
Slide 52: 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 Østlandet believes that the expectations reflected in such forward-looking statements are reasonable, no a
Slide 53: Together to create
Together to create Proficient | Nearby | Engaged
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