Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q1 2016 Earnings Presentation
76 slides from Sparebank 1 Nord-norge's earnings presentation, Apr 29, 2016
Slide 1: Quarterly presentation Q1 2016
Quarterly presentation Q1 2016 Tromsø/Oslo 29. April 2016 1
Slide 2: 1st quarter report 2016 - Group
1st quarter report 2016 - Group • Profits before tax: NOK 344 mill (356 mill). ROE 11.0 % (12.5%) • 5 % cost reduction compared with 1Q 2015 (ex. restructuring costs) Cost measures under further implementation • Reduced loan losses: NOK 24 mill 1Q 2016 (32 mill), of this NOK mill 20 mill in group wr
Slide 3: Macro and Economic trends
Macro and Economic trends SpareBank @) NORD-NORGE
Slide 4: Northern Norwegian economy; few signs of weakening
Northern Norwegian economy; few signs of weakening • Continued growth in the north • Continued progress for seafood and tourism following a record year in 2015 • The oil and gas sector represents only 2 % of the regional economy – new fields in production increase demand • Residental construction an
Slide 5: Seafood – strong export growth
Seafood – strong export growth • 25% growth in seafood export Export price for fresh or frozen farmed salmon from Northern Norway, 1. quarter 2016 vs. 1. quarter 2015 • Seafood export from Northern Norway is more than 2 billion per month • Salmon prices are peaking in 2016 • 2/3 of sale is to EU Wee
Slide 6: Tourism – continued strong growth for winter tourism
Tourism – continued strong growth for winter tourism • More than 1 million foreign Winter tourism overnight stays in 2015 Guests from abroad 100.000 • Every fourth guest to Northern Norway visited during winter 75.000 • 50% increase in February 2016 50.000 • Most important winter 25.000 markets: 0 ‒
Slide 7: Oil and gas – new fields increase demand
Oil and gas – new fields increase demand • Norne, Snøhvit and Skarv in production ‒ 10% of Norwegian gas production Demand from oil companies ‒ 7% of Norwegian oil production Repurchases will further ‒ Goliat, first oil field in the Barents Sea had increase the total demand ‒ production start-up Mar
Slide 8: Good growth for construction and infrastructure investments
Good growth for construction and infrastructure investments Turnover Order backlog Index 2010 = 100 Northern Norway, mill kr 50.000 15,0 % 300 250 40.000 12,0 % 234 200 30.000 9,0 % 161 150 20.000 6,0 % 100 10.000 3,0 % 50 0 0,0 % 0 2010 2011 2012 2013 2014 Last 12 2010K4 2011K4 2012K4 2013K4 2014K4
Slide 9: Regional house prices lower than the Norwegian average
Regional house prices lower than the Norwegian average House prices, March 2016 Average price, NOK, all units 45.000 9,0 % 40.000 8,0 % 35.000 7,0 % 30.000 6,1 % 6,0 % 5,6 % 5,5 % 25.000 5,0 % 20.000 4,3 % 4,0 % 3,9 % 15.000 3,0 % 10.000 22.065 2,0 % 5.000 1,0 % 40.893 33.682 35.828 19.057 19.640 0
Slide 10: Residential construction is peaking
Residential construction is peaking Housing starts 10 Source: Statistisk Sentralbyrå, «Byggeareal»
Slide 11: Considerable difference in unemployment
Considerable difference in unemployment Registrered unemployed Change March 2015 – March 2016 11 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 12: Stable, low unemployment
Stable, low unemployment Labour market, Northern Norway Registered unemployment, % Unemployment, Northern Norway (%) Unemployment, Norway (%) 12 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 13: Strategy
13 Strategy SpareBank NORD-NORGE
Slide 14: Voluntary workforce reduction process has been implemented
Voluntary workforce reduction process has been implemented 150 50 14
Slide 15: Concentration on core banking reduces earnings volatility
Concentration on core banking reduces earnings volatility 15
Slide 16: Distribution is being concentrated on financial centers
Distribution is being concentrated on 16 financial centers Bank • The physical distribution network has Estate agents been reduced by 21 branches in 2016 Accounting firm • The local presence is now being concentrated on 16 financial centers Product specialists 16
Slide 17: Financial figures
17 Financial figures SpareBank NORD-NORGE O
Slide 18: Main financial targets
Main financial targets • Return on equity at top international level, ROE 1 Q 2016: 11.0 % at present ROE 10 – 11 % As at 31.03.16: • Solidity: CET-1 14.5 % 13.8 % 1Q 2016 vs 1Q 2015: • Yearly cost growth: Maximum: 0 % -5%
Slide 19: Capital adequacy ratio - Group
Capital adequacy ratio - Group • Continued adaption to 50 % payout ratio • Higher payout ratio for ECC holders than for the community owned capital may be considered if P/B < 1 • Further increase in the targeted payout ratio will be considered. However, expected growth and 19 the Group capital situa
Slide 20: Profit and loss account - Group
Profit and loss account - Group (Amounts in NOK million) 31.03.16 31.03.15 31.12.15 Net interest income 386 369 1 512 Net fee-, c ommision and other operating income 213 239 933 Net income from financial investments 80 118 249 Total net income 679 726 2 694 Total costs 311 338 1 461 Result before lo
Slide 21: Quarterly summary – Profit and loss account figures
Quarterly summary – Profit and loss account figures (Amounts in NOK million) 1Q16 4Q15 3Q15 2Q15 1Q15 Net interest income 386 390 385 368 369 Net fee-, commision and other operating income 213 222 233 239 239 Net income from financial investments 80 46 -8 93 118 Total net income 679 658 610 700 726
Slide 22: Net interest income - Group
Net interest income - Group 22 24
Slide 23: Changes in net interest income
Changes in net interest income 11 5 3 450 2 20 4 10 400 350 447 434 300 250 200 Net Deposits Deposits Lending Lending Volume Days Other Net interest margin margin margin margin interest income corporate retail corporate retail income 4Q15 1Q16 23 Including commisions from Sp 1 Boligkreditt. Measured
Slide 24: Net fee-, commission- and other operating income
Net fee-, commission- and other operating income Mill NOK 174 172 165 165 163 161 158 156 148 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Net fee-, commision and other operating income excl 27 commission from Boligkreditt
Slide 25: Income from financial investments
Income from financial investments Group (Amounts in NOK million) 1Q16 4Q15 3Q15 2Q15 31.03.16 Dividends 0 0 1 7 0 Income from joint ventures 87 98 75 114 87 Gains/losses and net value changes on shares -14 -16 -6 -33 -14 Net value changes on bonds, foreign exchange and fin.derivatives 6 -35 -79 4 6
Slide 26: SpareBank 1 Gruppen – result 1. quarter 2016
SpareBank 1 Gruppen – result 1. quarter2016 • The SpareBank 1 Alliance and SpareBank 1 Gruppen represent a considerable business and earnings contribution for SpareBank 1 Nord-Norge Group • Result after tax 1Q 2016; NOK 284 mill (303 mill). SpareBank 1 Nord-Norge Groups share; NOK 55 mill (59 mill)
Slide 27: Group operating costs
Group operating costs NOK mill. 475 3,50 % 450 > 425 7 400 | + 3,00 % 375 + 350 > 325 + 300 + 275 7 250 > 225 7 200 7 175 + 150 + 125 > 100 + 757 50 > 25 + o 4 + 2,50 % + 2,00 % + 1,50 % + 1,00 % 7 0,50 % r 0,00 % 1914 2914 3Q14 4Q14 1Q15 2915 3Q15 4Q15 1916 == Total costs — Perc.of aver.tot.ass. Sp
Slide 28: Losses on loans and guarantees - customers
Losses on loans and guarantees - customers 31
Slide 29: Group companies result before tax
Group companies result before tax (Amounts in NOK 1000) 31.03.16 31.03.15 SpareBank 1 Finans Nord-Norge AS 33 386 29 506 SpareBank 1 Regnskapshuset Nord-Norge AS 3 622 3 359 EiendomsMegler 1 Nord-Norge AS 1 685 4 864 Subsidiaries core operations 38 693 37 729 Other subsidaries -3 683 -12 440 Total 3
Slide 30: Core banking operations
Core banking operations- (excl. income from financial investments) (Amounts in NOK million) 1Q16 4Q15 3Q15 2Q15 1Q15 Net interest income 386 390 385 368 369 Net fee- and commission income 185 198 210 215 210 Other operating income 28 24 23 24 29 Total costs excl restructuring costs 311 346 326 326 3
Slide 31: Lending volume
Lending volume Retail incl. SpareBank 1 Boligkreditt 7,6 % 5,8 % 64 851 60 243 56 938 31.03.14 31.03.15 31.03.16 Corporate and public • Annualised lending growth 1Q: 6.8%; retail: 6.0 3,7 % -0,6 % %, corporate 9.6 % 25 168 25 017 • Considerable SME lending growth 24 270 • The 2016 annual corporate l
Slide 32: Deposit volume
Deposit volume Retail banking market Corporate 6,0 % 8,6 % 28 738 9,8 % 27 110 -1,5 % 24 972 13 752 12 526 13 547 31.03.14 31.03.15 31.03.16 31.03.14 31.03.15 31.03.16 Public Corp 26,8 % 49,9 % -10,5 % Retail Public 56,9 % 8 238 16,3 % 6 137 5 494 31.03.14 31.03.15 31.03.16 32
Slide 33: Credit area
Credit area NORD-NORGE SpareBank @)
Slide 34: The Group's non-performing, impaired and other problem commitments
The Group's non-performing, impaired and other problem commitments 1.100 3,00% 1.000 900 2,50% 800 700 2,00% MNOK 600 1,50% 500 400 1,00% 300 200 0,50% 100 0 0,00% 31.12.12 31.12.13 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 Non-performing commitments 397 486 290 336 358 271 270 256 Other
Slide 35: Distribution on segments shows good diversification
Distribution on segments shows good diversification Loan portfolio including Sp1 Boligkreditt Construction building 2% SPB1 Boligkreditt 27% Other service industry 2% Agriculture, fisheries, fish farming 5% Annet 20% Wage-earners 45% Transport and wholsesale 6% Maritime sector 0% Property management
Slide 36: Portfolio – Commercial Real Estate
Portfolio – Commercial Real Estate Housing Ass.; 5,4 % Above 250 MNOK; Others (small 5,43% 0 - 5 MNOK; commitments) Residential 14,92% ; 25,0 % Development / 100 - 250 Investment; MNOK; 13,5 % 24,21% Combination- Shops / buildings; 10,8 % shopping centres; 20,8 % 5 - 30 MNOK; 32,41% 30 - 100 MNOK; O
Slide 37: Portfolio – Oil related exposure as at 31.03.16
Portfolio – Oil related exposure as at 31.03.16 • Oil related exposure amounts to NOK 2,080 mill Other; 9,6 % Supply base; Industry; 37,8 % • The exposure represents 2.5 % of total lending incl. 8,4 % Næring- and Boligkreditt • Average weighted probability of default 1.05 % • The activity within oil
Slide 38: Portfolio – Offshore Supply Vessels (OSV)
Portfolio – Offshore Supply Vessels (OSV) • OSV lending amounts to NOK 918 mill AHTS; 5,7 % • Average weighted probability of default 0.45 % Standby/area • The portfolio totals 8 vessels* contingency; 42,4 % • Weighted vessel age 5.5 years* • Average weighted contract length 3.5 years* incl. one PSV
Slide 39: Portfolio – Supply bases
Portfolio – Supply bases • Supply base exposure amounts to MNOK 787 Other; 9,6 % Supply base; 37,8 % Industry; • Average weighted probability of default 1.26 % 8,4 % • Customers with very long term contracts with solid and strong partners give good short and long term cash flows Offshore supply; 44,
Slide 40: Portfolio – industry and other
Portfolio – industry and other • The sector “industry and other” amounts to NOK 375 Other; 9,6 % mill, of this industry NOK 176 mill and other NOK 199 Supply base; Industry; 37,8 % mill 8,4 % • Average weighted probability of default industry 2.65 % and other 1.57 % • The exposure consists of financ
Slide 41: Concluding remarks
41 Concluding remarks SpareBank NORD-NORGE O
Slide 42: Why invest in SpareBank 1 Nord-Norge?
Why invest in SpareBank 1 Nord-Norge? 1) Few signs of a weakening Northern Norwegian economy 2) Concentration on core banking operations gives reduced earnings volatility 3) Strong belonging to the region and the partial community ownership imply a strong competitive position 4) The SpareBank 1- All
Slide 43: Contact information
Contact information: SpareBank 1 Nord-Norge P o Box 6800 N- 9298 Tromsø CEO Jan-Frode Janson CFO Rolf Eigil Bygdnes Tel +47 909 75183 Tel +47 905 19 774 SNN home page and internet bank: www.snn.no Equity capital certificates in general: www.egenkapitalbevis.no/en/
Slide 44: Enclosures
44 Enclosures SpareBank NORD-NORGE O
Slide 45: Organisation of the financial services Group
Organisation of the financial services Group SpareBank 1 Nord-Norge Financial Services Group SpareBank 1 Finans Nord-Norge AS SpareBank 1 Gruppen AS Equity stake 100 % Equity stake 19.50 % SpareBank 1 Boligkreditt AS Equity stake 14.45 % EiendomsMegler 1 Nord-Norge AS Equity stake 100 % SpareBank 1
Slide 46: Macro and Economic trends
46 Macro and Economic trends SpareBank NORD-NORGE O
Slide 47: Credit growth corporates
Credit growth corporates Credit growth corporates. 12 mth growth 12 10 8 6 % 4 3,8 2 0 0,0 -2 -4 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016K1 SNN, Corporate clients Norway, Corporates 47
Slide 48: Credit growth households
Credit growth households Credit growth households. 12 mth growth 12 10 7,6 8 6 % 6,0 4 2 0 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016K1 SNN, Retail clients Norway, Households 48
Slide 49: Deposit growth corporates
Deposit growth corporates Deposit growth corporates. 12 mth. growth 10 8 6 4,7 4 % 2 0 -1,5 -2 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016K1 SNN, Corporate clients Norway, Corporates 49
Slide 50: Deposit growth households
Deposit growth households Deposit growth households. 12 mth. growth 10 8 6 6,0 5,0 % 4 2 0 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016K1 SNN, Retail clients Norway, Households 50
Slide 51: Main financial figures
51 Main financial figures SpareBank NORD-NORGE O
Slide 52: Lending margin, Parent bank
Lending margin, Parent bank 3,50 % 2,92 % 2,83 % 3,00 % 2,71 % 2,66 % 2,69 % 2,76 % 2,47 % 2,46 % 2,50 % 2,16 % 2,21 % 2,09 % 2,01 % 2,00 % 2,32 % 2,30 % 2,02 % 1,97 % 1,86 % 1,50 % 1,73 % 1,00 % 0,50 % 0,00 % 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Slide 53: Customer deposit, Parent bank
Customer deposit, Parent bank 1,00 % 0,80 % 0,60 % 0,40 % 0,37 % 0,28 % 0,18 % 0,20 % 0,11 % 0,22 % 0,01 % 0,04 % 0,03 % 0,00 % 0,13 % 0,00 % 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 -0,02 % -0,04 % -0,25 % -0,20 % -0,28 % -0,32 % -0,27
Slide 54: Quarterly results – net interest income
Quarterly results – net interest income (Amounts in NOK million) 1Q16 4Q15 3Q15 2Q15 1Q15 Interest and similar income from loans to and claims on credit institutions 2 6 6 5 3 Interest and similar income from loans to and claims on customers 578 597 618 630 652 Interest and similar income from certi
Slide 55: Total commission and other income
Total commission and other income (Amounts in NOK million) 1Q16 4Q15 3Q15 2Q15 1Q15 Guarantee commissions 5 5 5 5 8 Interbank commissions 4 4 5 4 4 Credit arrangement fee 3 3 2 3 2 Arrangement fee from SpareBank 1 Boligkreditt 48 57 61 66 76 Arrangement fee from SpareBank 1 NN Finans 0 0 1 0 1 Secur
Slide 56: Group operating costs
Group operating costs (Amounts in NOK million) 31.03.16 31.03.15 Change Wages and salaries 132 159 - 27 Pension costs 8 9 -1 Social costs 23 21 2 Total personnel costs 163 189 - 26 Administration costs 93 90 3 Total personnel- and general administration costs 256 279 - 23 Depreciation and write-down
Slide 57: Operating expenses
Operating expenses (in NOK million) 1Q16 4Q15 3Q15 2Q15 1Q15 Wages and salaries 132 249 158 147 159 Pension costs 8 4 11 12 9 Social costs 23 35 22 23 21 Total personnel costs 163 289 190 182 189 Development costs 30 34 28 28 29 Electronic data processing costs 18 16 14 18 18 Marketing costs 15 17 1
Slide 58: Key figures balance sheet
Key figures balance sheet 31.03.16 31.03.15 Change Change % Total assets 88 688 82 128 6 560 8,0% Gross lending 65 357 61 060 4 297 7,0% Loans and advances to customers incl 89 868 85 411 4 457 5,2% SpareBank 1 Boligkreditt and Næringskreditt Deposits from customers 50 523 46 211 4 312 9,3% 58
Slide 59: Key figures
Key figures Net non-performingCommon and impaired commitments Equity Tier I % incl(Group) share of result Returnon Return onequity equity 13,9 % 13,8 % 13,1 % 12,5 % 12,2 % 12,3 % 11,0 % 9,9 % 10,3 % 9,0 % 9,1 % 8,5 % 2011 2012 2013 2014 2015 1Q16 2011 2012 2013 2014 2015 1Q16 Cost/income ratio Cost
Slide 60: Credit area
60 Credit area SpareBank NORD-NORGE O
Slide 61: Lending portfolio - comments
Lending portfolio - comments • Good increase in retail lending, with focus on commitments qualifying for SpareBank 1 Boligkreditt (covered bond company) • Low growth in corporate market lending last 12 months, significant higher last 3 months • The portfolio and new commitments in corporate sector l
Slide 62: Group lending by sector
Group lending by sector (NOK million) 31.03.16 Share 31.03.15 Share Change Change in % Crop production, Forestry and fishing 4 197 4,7 % 4 069 5% 128 3,1 % Manufacturing, electricity and water supply, construction 4 099 4,6 % 3 874 5% 225 5,8 % Wholesale and retail trade, accomodation and food servi
Slide 63: Portfolio - exposure as of 31.03.16, parent bank
Portfolio - exposure as of 31.03.16, parent bank 40.000 35.000 30.000 25.000 NOK mill 20.000 15.000 10.000 5.000 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired Retail market Corporate market 63
Slide 64: Portfolio – changes last 12 months, parent bank
Portfolio – changes last 12 months, parent bank 7.000 6.000 5.000 4.000 3.000 NOK mill 2.000 1.000 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired -1.000 -2.000 SB1 Boligkreditt Retail market Corporate market SB1 Næringskreditt 64
Slide 65: Portfolio - exposure as of 31.03.16
Portfolio - exposure as of 31.03.16 Loans distributed by size of exposure and share of total exposure Share of loanexposure Mar 2016 Share of loanexposure Mar 2015 78% 77% 10% 10% 7% 7% 5% 7% Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Numbers includes SB 1 Bolig- and Næringskreditt 65
Slide 66: Portfolio – LTV mortgage loans as of 31.03.16
Portfolio – LTV mortgage loans as of 31.03.16 100,0 % 91,6 %92,3 % • 96.9 % of exposures are within 90,0 % 80,0 % 85 % of the collaterals market 70,0 % value 60,0 % 50,0 % 40,0 % • Exposures above 85 % total 3.1 % 30,0 % 20,0 % 10,0 % 5,3 % 5,0 % 1,5 % 1,3 % 1,6 % 1,4 % 0,0 % Below 70 % 70 - 85% 85
Slide 67: Loan losses: The Group's write-downs as of Q1 2016
Loan losses: The Group's write-downs as of Q1 2016 Write-downs 1st quarter 1st quarter 2015 2014 2016 2015 Individual write-downs Retail market 2 2 0 25 Corporate market 0 28 165 148 SpareBank 1 Finans Nord-Norge 1 1 8 5 Other group units - 15 -19 16 Total individual write-downs 3 46 154 193 Collect
Slide 68: Liquidity/funding
Liquidity/funding SpareBank NORD-NORGE
Slide 69: Funding instruments 31.03.16
Funding instruments 31.03.16 CHF BOND EMTN, EUR EMTN, SEK 9% 12 % T1 HYBRID, NOK 5% 2% Subordinated loan capital 4% Other liabilities, NOK 0% Bonds, NOK 68 % 69
Slide 70: Maturity profile 31.03.2016
Maturity profile 31.03.2016 Capital markets funding (excl. SPABOL) • Good diversification in terms of maturities • NOK 23,278 mill in capital market funding exclusive of SB1 Boligkreditt • SpareBank 1 Boligkreditt is an important funding source. Mortgage loans of NOK 24,511 mill transferred as at 31
Slide 71: Equity certificate holders
Equity certificate holders 71
Slide 72: Equity Certificates (EC) - holder structure
Equity Certificates (EC) - holder structure 72 75
Slide 73: The largest EC holders
The 20 largest EC holders Number of Share of total Equity Certificate holders Equity Certificates capital PARETO AKSJE NORGE 3.842.327 3,83 % VERDIPAPIRFONDET DNB NORGE (IV) 3.288.114 3,28 % THE NORTHERN TRUST CO. 2.810.663 2,80 % MP PENSJON PK 2.720.503 2,71 % FLPS - PRINC ALL SEC STOCK SUB 2.122.7
Slide 74: The largest EC holders residing in Northern Norway
The 20 largest EC holders residing in Northern Norway Number of Share of total Equity Certificate holders Equity Certificates Equity Certificate capital SPAREBANKSTIFTELSEN SPAREBANK 1 NORD-NORGE 1.411.606 1,41 % KARL DITLEFSEN 547.543 0,55 % NORGES RÅFISKLAG 437.490 0,44 % HANSEN DAHL FISKERI AS 37
Slide 75: SpareBank 1 Group and Alliance
SpareBank 1 Group and Alliance 75
Slide 76: SpareBank 1 Alliance
SpareBank 1 Alliance • Founded 1996 with the goal of achieving Economies of Scale • Key banks in the Alliance trace their history back to the early 19th century • Operates exclusively in Norway with a large local presence – Norway’s most extensive branch network with approx. 350 branches Sparebanken
SpareBank 1 Nord-Norge — Q1 2016 Earnings Presentation on 6ix