Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q2 2013 Earnings Presentation
63 slides from Sparebank 1 Sor-norge Asa's earnings presentation, 2013
Slide 1: Investor Presentation 2nd quarter 2013
Investor Presentation Markedsoppdatering og strategiske vurderinger Juni 2011 2nd quarter 2013 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 Presentation of of SpareBank SpareBank 11 SR-Bank SR-Bank ASA ASA Financials Solvency and liquidity position Norway's Economy and Housing market Appendix Page 3
Slide 4: SR-Bank has strong brand recognition, high market share and strengthened capital
SR-Bank has a strong brand recognition, high market share in Norway's most prosperous region, and a strengthened capital position Yearly average ROE 19% • A leading 38% market share in the Rogaland region of 17,3 % 16,8 % 16,5 %16,3 % Norway – an area with one of the highest GDP per capita in 17% 15
Slide 5: SpareBank 1 SR-Bank ASA - Market area
SpareBank 1 SR-Bank ASA - Market area 1 Rogaland Population 440,000 Retail market 38 % Market share Corporate market 21 % Year of establishment 1839 Market strategy Market leader 2 Oil & Gas, Oil service, Important business segments Supply Unemployment rate 2.0 % 2 Hordaland Population 485,000 Retai
Slide 6: 53 local bank offices in one of Norway's most prosperous regions
53 local bank offices in one of Norway’s most prosperous regions Strong growth prospects in the region 100 – 150 BNOK are planned to be spent on infrastructure • Norway’s most rapidly growing population – currently 24 % of the country’s • New infrastructure projects creating business opportunities i
Slide 7: Stavanger is the oil capital in Norway and a major player in Europe
Stavanger is the oil capital in Norway and a major player in Europe …and the third largest discovery ever on the NCS was made 140 km from our Major oil companies are located in Stavanger… headquarter in 2011 Employees Production (BOE/day) 4000 5000 1 461 000 3000 Estimated reserve - 400 420 000 2000
Slide 8: SR-Bank's activities are well diversified
SR-Bank’s activities are well diversified Divisions of SpareBank 1 SR- Capital Markets Retail Market Corporate Market Administration & Support Bank ASA Number of man-years: 39 Number of man-years : 498 Number of man-years : 180 Number of man-years : 216 Fully owned companies Number of man-years : 22
Slide 9: The SpareBank 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 10: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is commited to value • ROE 13-15 % in a normalized market creation in the bank’s core market area • Sustainable contribution to the value creation process • Top 50 % ROE and cost/income in a Nordic ben
Slide 11: 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 12: SRBANK pr 30.06.2013
SRBANK pr 30.06.2013 Development in Price/Book 2012 Relative share price development 2012 • Significantly greater liquidity in the share in the P/B NOK first half-year • International ownership increased in the quarter from 6.3 % to 9.9 % Trading volume development 2010-2012 per 30.06.2013 Page 12
Slide 13: 20 largest shareholders as at 30 June 2013
20 largest shareholders as at 30 June 2013 • International Investor Number Stake ownership Sparebankstiftelsen SR-Bank 76.835.551 30,0 % Gjensidige Forsikring ASA 26.483.470 10,4 % increased in the Folketrygdfondet 7.909.328 3,1 % quarter from SpareBank 1-stiftinga Kvinnherad 6.226.583 2,4 % 6.3 % t
Slide 14: Agenda
Agenda Presentation of SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Norway's Economy and Housing market Appendix Page Page 14 14
Slide 15: Good result characterised by growth, low losses and efficient operations
Good result characterised by growth, low losses and efficient operations Year-to-date pre-tax profit of NOK 1,012 million (NOK 798 million) – Return on equity after tax: 12.1% (12.3%) Pre-tax profit for the quarter of NOK 511 million (NOK 405 million) – Return on equity after tax: 11.8 % (11.8 %) Le
Slide 16: Key figures
Key figures Return on equity CET 1 capital ratio 13,6 % 11,8 % 12,3 % 11,8 % 11,2 % 10,0 % 10,1 % 10,3 % 9,2 % 9,4 % Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Impairment losses on loans Cost ratio (MNOK) 51,0 % 43,2 50,1 % 49,1 % 48,2 % 46,0 % 34,2 26,0 25,2 25,0 Q2 12 Q3 12 Q4 12
Slide 17: Income statement
Income statement 30.06 30.06 Group Income Statement (MNOK) 13 12 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Net interest income 977 814 526 451 480 448 413 Net commission and other income 869 681 465 404 411 374 379 Net income on investment securities 223 289 62 161 97 192 87 Total income 2.069 1.784 1.053 1.016
Slide 18: Key figures
Key figures 30.06 30.06 13 12 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Return on equity after tax (%) 12,1 12,3 11,8 12,3 11,2 13,6 11,8 Net interest margin (%) 1,35 1,21 1,43 1,27 1,36 1,28 1,22 Impairment losses on loans and guarantees in % of gross loans 0,09 0,13 0,09 0,09 0,1 0,16 0,13 -incl. SB1 Boligkre
Slide 19: Consolidated income profile strengthened over time
Consolidated income profile strenghtened over time 1000 900 314 800 290 278 700 286 295 2 21 600 30 151 34 121 MNOK 32 126 500 88 84 400 300 526 480 451 448 200 413 100 0 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Net interest income Commission income SB1 Boligkreditt and SB1 Næringskreditt Profit before tax SB1
Slide 20: Deposits volume and month growth
Deposits volume and 12 month growth Corporate Market 19,5 % 40 000 16,0 % 20% 30 000 15% MNOK 20 000 6,8 % 10% 3,0 % 2,8 % 3,2 % 2,2 % 10 000 5% 0 0% -3,0 % -3,4 % - 10 000 -5% Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Volume Growth % Retail Market 45 000 40 000 20% 35 000 15,1 % 30 000
Slide 21: Lending and deposit margins
Lending and deposit margins Lending margins 2,88% 2,57% 2,64% 2,28% 2,33% 2,01% 2,00% 2,13% 1,97% 2,06% 1,85% 1,88% 1,61% 1,63% 1,36% 1,06% 1,02% 0,99% Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Corporate market Retail market Deposit margins 0,65% 0,69% 0,59% 0,25% 0,14% 0,05% 0,08% 0,07%
Slide 22: Lending volume and months growth
Lending volum and 12 months growth Corporate Market 50 000 40 000 15% 11,9 % 11,5 % 10,0 % 9,2 % 30 000 MNOK 7,6 % 10% 6,0 % 5,5 % 20 000 5,0 % 4,0 % 5% 10 000 0 0% Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Volume Growth % Retail Market 120 000 17,1 % 17,1 % 100 000 15% 12,1 % 80 000 10,
Slide 23: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans Total-distributed • There is an increasing proportion of loans within a 70 % loan to value ratio 80% 69,9 % 71,5 % during the last year and a diminishing proportion of loans that have a loan to 60% value ratio exceeding 85 %. 40% 18,9 % 20,0 % • 97.9 % of t
Slide 24: Loan portfolio as at 30.06.2013
Loan portfolio as at 30.06.2013 Industry, Power/water supply MNOK and construction: Agriculture / forestry / fishing: 4.834 Agriculture / 3,9 (4,0) Retail trade, hotels Industry, Power/water supply and forestry / fishing: and restaurants: construction: 6.265 3,0 (2,8) 1,9 (2,0) Retail trade, hotels
Slide 25: Net commission and other income
Net commission and other income 30.06 30.06 MNOK 13 12 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Payment facilities 108 97 56 52 47 61 50 Savings/placements 72 71 37 35 36 33 36 Insurance products 82 69 42 40 51 36 35 Commission income real estate (EM1) 223 223 127 96 99 105 124 Guarantee commission 53 44 26 27
Slide 26: Net income on investment securities
Net income on investment securities 30.06 30.06 MNOK 13 12 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Dividend 32 24 32 0 0 1 21 Investment income, associates 130 153 31 99 22 90 53 Securities gains/losses -56 45 -55 -1 23 62 -23 - of which capital change in shares and certificates -7 -20 -28 21 46 35 -34 - of w
Slide 27: 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 0,13% 0,16% 0,10% 0,09% 0,09% 1,41% 1,31% 1,25% 0,09% 0,11% 0,07% 1,14% 1,14% 0,06% 0,06% 0,94% 0,90% 0,87% 0,79% 0,81% 909 860 912 0 787 884 43 34 26 25 25 517 564 4
Slide 28: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees 30.06 30.06 Losses on loans in income statement (MNOK) 13 12 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Corporate customers 49 89 22 27 28 44 24 Retail customers 1 9 3 -2 -2 -1 10 Change in collective impairment losses on loans 0 -30 0 0 0 0 0 Net impairment losses on lo
Slide 29: Agenda
Agenda Presentation of SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Norway's Economy and Housing market Appendix Page Page 29 29
Slide 30: Deposit coverage ratio and market funding
Deposit coverage ratio and market funding Deposit coverage ratio • Good liquidity and good access to market 100,0 % funding 80,0 % 66,8 % 67,6 % 66,2 % 60,2 % 61,9 % 63,2 % 61,7 % 61,1 % 63,6 % 60,0 % • NOK 6.6 billion has been issued in new borrowing in the year-to-date 40,0 % 20,0 % • Net refinanc
Slide 31: Improved access to long-term funding in the Euromarket
Improved access to long-term funding in the Euromarket iTraxx Senior 5Y Southern Others 400 Europe 4% Asia Nordics 3% 7% 3% 350 Germany /Austria Switzer- 35 % land 300 6% 250 EUR 5,5 years MS + 105 UK EUR 5,5 years MS + 155 42 % 200 Germany Others /Austria 150 3% 30 % Southern Europe 100 3% France A
Slide 32: Liquidity buffer and bond portfolio
Liquidity buffer and bond portfolio Liquidity buffer – survival period Bond portfolio Of which, 18 securities 16 classified to Market value, amortised cost, 14 Bond investments MNOK Share % MNOK 12 Norwegian government/municipal 694 6% 0 10 SSA/Foreign guaranteed 2.871 23 % 0 BNOK 8 Covered bonds (N
Slide 33: Solid equity - which will be further improved going forward
Solid equity - which will be further improved going forward 16 • Core equity capital ratio as per 30 June 2013 was 10.3% - up by 0.3% in the year-to-date. 14 14,4 13,2 12,9 13,4 12 12,5 11,9 12,7 12,0 • Tier 1 capital ratio was 12.0% 11,5 11,4 10 10,9 Percentage 10,1 • Due to transitional rules the
Slide 34: Equity to be further strengthened towards 2016
Equity to be further strengthened towards 2016 Proposed new Norwegian capital regime • Strong history of delivering attractive total returns on assets for owners – Among the best in the Nordic region for the last 15 years • Continued regulatory uncertainty, although minimum requirements and time hor
Slide 35: Outlook
Outlook The international uncertainty persists and there are signs of negative consequences for the Norwegian economy as well. A high level of activity in the petroleum sector, major infrastructure projects and increasing house building are, however, contributing to a high level of activity and low
Slide 36: Agenda
Agenda Presentation of SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Norway's Economy and Housing market Appendix Page Page 36 36
Slide 37: Norwegian Economy
Norwegian Economy Economic Indicators (%) 2009 2010 2011 2012 2013E 2014P GDP growth - mainland -1.6 1.7 2.5 3.4 2.4 3.0 Household consumption growth 0.0 3.8 2.5 3.0 3.5 4.3 Investment growth – mainland -13.2 -4.5 8.5 3.7 3.9 3.9 Investment growth oil & gas 3.4 -9.5 14.1 14.5 8.9 4.2 Inflation rate,
Slide 38: 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 Regional overview of GDP per capita 200 180 160 140 120 GDP per capita, EUR 100 Above 50,000 1995 1997 1999 2001 2003 2005 2007 2009 2011 Norway United States Denmark 43,750 – 50,000 Sw
Slide 39: Norwegian Housing and Mortgage Market
Norwegian Housing and Mortgage Market 10000 Population Change and Completed Housing Units 70.000 60.000 5000 50.000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 40.000 30.000 -5000 20.000 -10000 10.000 -15000 0 Completed housing units less newly formed households (left hand axis) Po
Slide 40: Nominal and real house price development
Norwegian Housing and Mortgage Market - Nominal and real house price development 240,0 Index of House Prices, Norway, Monthly (Jan 2002 = 100) 220,0 209 200,0 180,0 160,0 140,0 127,1 120,0 100,0 80,0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 House Price Index Nominal House Price In
Slide 41: Agenda
Agenda Presentation of SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Norway's Economy and Housing market Appendix Page Page 41 41
Slide 42: Rating
Rating Moody’s Fitch Long-term debt A2 Long-term IDR A- Outlook Stable Outlook Stable Updated 5. March 2013 Updated 19. February 2013 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 30.06.13 Page Page
Slide 43: SRBANK as at 30 June 2013
SRBANK as at 30 June 2013 30.06.13 2012 2011 2010 2009 • Ownership interests: –From Rogaland, Agder-counties and Hordaland: 57.2 % Market price 47,50 37,20 40,70 57,00 50,00 –International: 10.1 % –10 largest: 55.2 % –20 largest: 61.1 % Stock value (MNOK) 12.148 9.514 5.182 7.257 6.047 • Number of o
Slide 44: Balance sheet
Balance sheet Balance sheet (MNOK) 30.06.13 30.06.12 Cash and balances with central banks 1.762 290 Balances with credit institutions 2.612 1.160 Net loans to customers 114.493 104.597 Certificates, bonds and other fixed-income securities 19.852 22.539 Financial derivatives 4.936 4.102 Shares, owner
Slide 45: Subsidiaries
Subsidiaries MNOK 30.06.13 30.06.12 EiendomsMegler 1 SR-Eiendom AS Number of sales 3.863 3.795 Operating profit before tax 30,9 72,2 SpareBank 1 SR-Finans AS Total assets (BNOK) 6,2 5,8 Operating profit before tax 81,7 51,6 SR-Forvaltning AS Portfolio (BNOK) 6,8 6,1 Operating profit before tax 10,7
Slide 46: Ownership interests
Ownership interests MNOK 30.06.13 30.06.12 SpareBank 1 Gruppen AS (19,5 % interest ownership) Profit after tax 78,4 52,1 Adjusted profit previous years -1,6 9,3 SpareBank 1 Boligkreditt AS (29,9 % interest ownership) Profit after tax 20,7 49,1 SpareBank 1 Næringskreditt AS (27,8 % interest ownership
Slide 47: Operating expenses
Operating expenses 30.06 30.06 MNOK 13 12 Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Personnel expenses 589 554 297 292 297 276 279 Non-recurring effect, pension-related items 0 -35 0 0 -5 -5 -35 Total personnel expenses 589 519 297 292 292 271 244 IT expenses 122 107 63 59 59 61 49 Marketing 48 42 29 19 23 16 2
Slide 48: Savings/placements – portfolio development
Savings/placements – portfolio development 16000 • Assets under management of NOK 13.0 billion as at 30 June 2013 14000 — Increase from NOK 11.6 billion as at 30 June 2012 12000 — 51 797 active savings contracts – approximately NOK 45.0 million in monthly savings 10000 8000 • Most of the assets are
Slide 49: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk group • 93.3 % of the bank's loan exposure 100% 91,5 % 93,3 % satisfies the criteria for low and the lowest risk. Expected losses in this 80% portion of the portfolio are very limited 60% at 0.03 %. 40% • Exposure to high or the highest risk 20%
Slide 50: Low concentration of individual LGRs in the lending portfolio
Low concentration of individual LGRs in the lending portfolio • At the end of the second quarter of Distributed by loss given realisation (LGR) 100% 2013, SpareBank 1 SR-Bank had a total of 27 commitments with a loss potential 90% 85,9 % exceeding NOK 100 million. 83,7 % 80% • These commitments repr
Slide 51: Lending to the retail market – risk profile
Lending to the retail market – risk profile Retail market portfolio distributed by risk group • The quality of the retail market 0,2 % 0,2 % 0,2 % 0,2 % 0,2 % portfolio is considered very good and 100% 0,8 % 0,9 % 0,8 % 0,6 % 0,4 % with low potential losses. 98% 96% 99,3 % 99,3 % • The development i
Slide 52: Loan to value ratio on home mortgage loans (excl Boligkreditt)
Loan to value ratio on home mortgage loans (excl Boligkreditt) Total-distributed • SpareBank 1 SR-Bank has in the last year introduced restrictions to reduce 60% 56,9 % the risk associated with new 50,9 % mortgages. These include stricter 50% mortgage deposit requirements and 40% 28,6 % 28,6 % liqui
Slide 53: Lending to the corporate market – risk profile
Lending to the corporate market – risk profile Development in corporate market’s portfolio distributed by risk group • The quality of the corporate market portfolio is considered to be good. 100% 3,7 % 3,7 % 3,9 % 3,4 % 2,3 % 18,7 % 16,1 % 16,2 % 14,1 % 15,7 % 80% • The risk profile has seen a relat
Slide 54: Historical LTV development for home mortgage loans
Historical LTV development for home mortgage loans Total incl. SpareBank 1 Boligkreditt AS 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% 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2011Q2 2011Q3
Slide 55: Low exposure to the shipping segment
Low exposure to the shipping segment • Lending to conventional shipping is low and represents 1.2 % of total loans Dry cargo; Gas; 3,3 % (3,6 %) Product- 4,6 % (4,1 %) /chemicaltanks; 8,5 % (8,5 %) Other; • Lending to the offshore sector 3,5 % (3,4 %) represents 5.3 % of total loans Seismic; 6,9 % (
Slide 56: Lending to property management
Lending to property management • Lending to property management constitutes 15.7 % of total loans, which Housing cooperative; 4,9 % is a reduction of 0.4 % compared with (5,9 %) Real estate the same time last year. management; 4,0 % (1.7 %) • The portfolio is characterised by lending Development and
Slide 57: Investments in bonds and certificates
Investments in bonds and certificates Risk profile – bonds • Most of the bond portfolio is managed as Total portfolio part of the bank's liquidity management M arket value Percent Risk category Rating NOK million Total activities. Bonds held for liquidity Government swap scheme AAA 6.805 34 % purpos
Slide 58: Norwegian Housing and Mortgage Market Key Characteristics
Norwegian Housing and Mortgage Market Key Characteristics Market • Total mortgage market approx NOK 2,000 billion (approx USD Household Credit Growth Rate 360bn, €260bn) (12 month growth rate) • Banks and credit institutions are the dominant supplier of mortgages with over 90% market share • Typical
Slide 59: 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 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 (2) (4) (6) Norway (mainland) Sweden
Slide 60: Norwegian Economy ..has translated into a solid net financial position
Norwegian Economy ..has translated into a solid net financial position 2013 governments financial liabilities (in per cent of GDP) Page 60 Source: OECD Economic Outlook no. 92
Slide 61: Aggregate Household Debt Burden
Aggregate Household Debt Burden Total Debt burden in per cent of household income (after tax) Norway: • All HH debts included in the statistic, question of int’l comparability • High home ownership (mortgage debt rather than rent commitments) • Generous benefits (pensions, healthcare, education, chi
Slide 62: SpareBank 1 Alliance's ownership structure allows for efficient cooperation
SpareBank 1 Alliance’s ownership structure allows for efficient business cooperation Owners of the Sparebanken alliance Samspar Samspar Hedmark • All credit decisions are made at the 19.5 % 19.5 % 19.5 % 19.5 % 12.0 % 10.0 % local banks • Economies of scale related to expenses, Products, commissions
Slide 63: Contact Details
Contact Details Address Management Investor Relations Arne Austreid Vidar Torsøe Bjergsted Terrasse 1 CEO VP Investor Relations Postboks 250 4066 Stavanger Tel. Tel. +47 900 77 334 +47 970 80 656 Tel. E-mail. E-mail. arne.austreid@sr-bank.no vidar.torsoe@sr-bank.no +47 915 02002 Inge Reinertsen Shor