Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q2 2020 Earnings Presentation
52 slides from Sparebank 1 Nord-norge's earnings presentation, August 2020
Slide 1: Quarterly accounts 2Q 2020
Quarterly accounts 2Q 2020 NORD-NORGE SpareBank 4.
Slide 2: Quarterly accounts Q2 2020
Quarterly accounts Q2 2020 CET-1 ratio 16,9 % (15,3 %) Pre-tax profit 1 035 MNOK (1 635) C/I-ratio 39,2 % (31,5 %) ROE 12,9 % (22,7 %) Losses 201 MNOK (-2) 2
Slide 3: Solid number 1 position in Northern Norway
Solid number 1 position in Northern Norway Main bank retail Main bank SME 1) SNN 1) SNN 2) DNB 2) DNB 3) Other savings bank 35% 3) Other savings bank 36% Accounting Real estate Secured financing 1) Regnkapshuset 1) EM1 1) Santander 2) Azets 2) DNB 2) SNN Finans 3) Intu Nord 20% 3) Rede 36% 3) DNB 23
Slide 4: Group companies - result before tax
Group companies - result before tax 30.06.20 30.06.19 SpareBank 1 Finans Nord-Norge AS 62 505 75 769 SpareBank 1 Regnskapshuset Nord-Norge AS 19 316 26 158 EiendomsMegler 1 Nord-Norge AS 19 807 11 109 Subsidiaries core operations 101 628 113 036 Other subsidaries 1 381 - 494 Total 103 009 112 542 4
Slide 5: Tough year for the tourism industry
Tough year for the tourism industry • Fewer overnight stays • Lower demand for air BnB • However: travellers from Norway and Finland chosed Northern Norway this summer • Despite this, we see reduced revenue in tourism in 2020 5
Slide 6: No significant increase in bankruptcies so far
No significant increase in bankruptcies so far • Number of bankruptcies* in Northern Norway are still at low levels • A small increased number of bankruptcies in Northern Norway so far in 2020 • The industries construction, accommodation and catering and retail trade make up a significant proportion
Slide 7: The seafood industry less exposed from corona
The seafood industry less exposed from corona Export value of fish from Northern Export value of fish from Norway Norway, Mill NOK as of May 2020 per month (BNOK) 8.000 12 7.000 10 6.000 5.000 8 MNOK 4.000 6 3.000 4 2.000 1.000 2 0 2013 2014 2015 2016 2017 2018 2019 2020 0 M05 M05 M05 M05 M05 M05 M0
Slide 8: Unemployment bounce back
8 1% 2% 3% 4% 5% 6% 7% 8% 9% 11% 10% jan.15 Source: SSB mar.15 mai.15 jul.15 sep.15 nov.15 jan.16 mar.16 mai.16 jul.16 sep.16 nov.16 jan.17 mar.17 mai.17 jul.17 sep.17 nov.17 jan.18 Unemployment bounce back mar.18 Registered unemployment mai.18 jul.18 sep.18 nov.18 jan.19 mar.19 mai.19 jul.19 sep.19
Slide 9: Moderat growth in house prices
Moderat growth in house prices House prices, June 2020 Average price, NOK per m2, all units Housing starts 80.000 15% 3.750 70.000 13% 3.500 3.250 3.334 60.000 11% 75.112 3.000 9% 2.750 50.000 2.625 7% 2.500 40.000 5,4 % 2.250 48.839 39.539 43.407 5% 30.000 3,9 % 2.000 3,2 % 33.476 3,5 % 3% 2,4 % 1.
Slide 10: Lower demand for interest-only mortgage and coronaloans
Lower demand for interest-only mortgage and coronaloans Coronaloans, per week Mortgage-only, per week 35 120.000.000 600 2.000.000 30 100.000.000 500 25 1.500.000 80.000.000 400 20 60.000.000 300 1.000.000 15 40.000.000 200 10 500.000 5 20.000.000 100 0 - 0 - 14 15 16 17 18 19 20 21 22 23 24 25 26 2
Slide 11: SpareBank 1 Nord-Norge is an important CSV-player
SpareBank 1 Nord-Norge is an important CSV-player Distribution of the community dividend in 2019 • The board set aside 10 MNOK for corona measures. 228 community- 1% and sports groups have received 4% 4% Sports support under this scheme 4% Culture • Community dividend for non-profit 5% 37% Business
Slide 12: Ambitions for growth and increased market share
Ambitions for growth and increased market share Expected growth for SpareBank 1 Nord-Norge in 2020: Retail market: 2-5 % Corporate market: 5-8 % Future growth is still highly uncertain due to the corona situation Corporate growth is from companies and industries with low exposure to corona 12
Slide 13: Why invest in SpareBank Nord-Norge?
Why invest in SpareBank 1 Nord-Norge? #1 Market leader in a ROE Ambitious, top class resourceful region financial targets High relative Implements new KPI Owner friendly ownership in measures to maintain dividend policy and SpareBank 1 Group, top class ROE strong capitalization other alliance compan
Slide 14: Group financial highlights and key figures
Group financial highlights and key figures (Amounts i n NOK mi l l i on a nd i n % of a vera ge a s s ets ) 30.06.20 % 30.06.19 % 31.12.19 % From the profit and loss account Net interest income 1 067 1,84 % 979 1,81 % 2 097 1,92 % Net fee- and other operating income 576 0,99 % 548 1,02 % 1 116 1,02
Slide 15: A good second quarter in a demanding year
A good second quarter in a demanding year CET 1 incl floor Cost/income Group Return on equity capital 17,2 % 16,7 % 16,9 % 15,9 % 43,1 % 39,8 % 41,6 % 14,5 % 14,6 % 36,9 % 13,0 % 11,4 % 2018 2019 1Q20 2Q20 2018 2019 1Q20 2Q20 2018 2019 1Q20 2Q20 15
Slide 16: Improvement in result before tax last quarter
Improvement in result before tax last quarter 16
Slide 17: Low individual losses – increased ECL provisions
Low individual losses – increased ECL provisions 0,16 % 201 0,10 % 119 0,01 % 0,01 % 0,00 % 13 11 -2 30.06.19 30.09.19 31.12.19 31.03.20 30.06.20 Net losses Net losses in % of gross lending incl. intermediary loans 17
Slide 18: Somewhat weaker lending growth in retail market, but strong corporate growth
Somewhat weaker lending growth in retail market, but strong corporate growth Retail market incl. commission loans 6,2 % 3,9 % Retail incl. 30 % commission loans Corporate incl. 70 % commission loans 79 218 84 156 87 417 30.06.18 30.06.19 30.06.20 Corporate incl. commission loans Retail excl. 42 % co
Slide 19: Positive development in lending margins
Positive development in lending margins 2,68 % 2,51 % 2,48 % 2,45 % 2,35 % 2,40 % 2,35 % 2,35 % 2,30 % 2,04 % 1,52 % 1,48 % 1,53 % 1,44 % 1,44 % 1,36 % 1,35 % 1,32 % 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Lending margin corporate Lending margin retail 19
Slide 20: Continued strong deposit growth
Continued strong deposit growth Retail banking market 9,8 % 5,8 % Public 10 % Corporate 34 % 37 390 41 069 Retail 35 326 56 % 30.06.18 30.06.19 30.06.20 Public market Corporate market 22,5 % 7,6 % 4,7 % -29,2 % 20 383 24 963 18 937 9 510 9 953 7 049 30.06.18 30.06.19 30.06.20 30.06.18 30.06.19 30.06
Slide 21: Weaker deposit margins due to falling NIBOR
Weaker deposit margins due to falling NIBOR 1,00 % 0,84 % 0,78 % 0,70 % 0,48 % 0,52 % 0,53 % 0,46 % 0,64 % 0,69 % 0,45 % 0,52 % 0,48 % 0,38 % 0,29 % 0,01 % 0,36 % -0,26 % -0,31 % -0,28 % -0,29 % -0,28 % -0,27 % -0,28 % -0,29 % -0,37 % -0,32 % 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Deposit marg
Slide 22: The profitability measures goal remains
The profitability measures goal remains ROE Effect of profitability 12 % measures year 200 MNOK end 2021: C/I ratio < 40 % Maximum cost 2020: 2% increase*: 2021: 0% 22 *) Ex. new business areas
Slide 23: Long term financial targets
Long term financial targets > 12 % ROE Main target > 50 % < 40 % 15,0 % Dividend payout C/I-ratio Tier 1 Capital ratio 23
Slide 24: Financial outlook
Financial outlook Weak net interest income in Q2, since the lending rate was lowered faster than the NIBOR rate fell, and before the deposit rate was lowered. Tough price competition in retail market and low policy interest rates will put pressure on NRI net interest income in 2020 ROE target: Top-l
Slide 25: SpareBank 1 Nord-Norge
SpareBank 1 Nord-Norge CEO Liv B. Ulriksen CFO for finans Bengt Olsen E-mail: liv.bortne.ulriksen@snn.no E-mail: bengt.olsen@snn.no Tel. + 47 957 31 130 Tel. + 47 975 89 560 URLs Website and internet bank: www.snn.no Equity certificate in general: www.egenkapitalbevis.no Financial calendar: Q2 2020
Slide 26: Appendix
Appendix NORD-NORGE
Slide 27: Company structure
Company structure Subsidiaries and second tier Associated companies and joint ventures subsidiaries SpareBank 1 SpareBank 1 SpareBank 1 Finans Eiendomsmegler 1 SpareBank 1 Gruppen AS Boligkreditt AS Næringskreditt AS Nord-Norge AS Nord-Norge AS 19,5 % | Financial services 18,65 % | Covered Bond comp
Slide 28: Geographical distribution of ownership
Geographical distribution of ownership 20,3 28,6 32,0 35,7 37,5 37,7 35,5 35,8 33,4 38,3 61,1 53,2 46,7 48,4 45,6 43,4 42,4 43,4 45,7 45,7 18,6 18,2 18,7 19,1 19,3 19,0 18,8 18,6 20,0 19,6 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Holders residing in North Norway Other Norwegian holders Fore
Slide 29: The 20 largest EC holders
The 20 largest EC holders Number Share of EC Holders of ECs EC Capital PARETO AKSJE NORGE VERDIPAPIRFOND 3.341.931 3,33% PARETO INVEST AS 3.167.268 3,15% State Street Bank and Trust Comp 2.853.894 2,84% GEVERAN TRADING CO LTD 2.790.356 2,78% The Northern Trust Comp, London Br 2.658.042 2,65% MP PENS
Slide 30: Net interest income - Group
Net interest income - Group Measured against funding cost 30
Slide 31: Cost development – Group
Cost development – Group 41,2 % 43,1 % 39,8 % 39,2 % 1.474 1.640 1.366 796 2017 2018 2019 30.06.20 Group operating costs Cost/income Group 31
Slide 32: Operating expenses - Group
Operating expenses - Group 32
Slide 33: Net fee- and other operating income - Group
Net fee- and other operating income - Group (Amounts in NOK million) 2Q20 1Q20 4Q19 3Q19 2Q19 Payment facilities 68 73 76 89 79 Insurance products 44 43 42 42 42 Guarantee commissions 8 7 7 7 9 Real estate broking 40 30 32 29 49 Portfolio commissions 11 12 9 11 8 Other commisions 27 22 26 34 11 Comm
Slide 34: Lending portfolio - comments
Lending portfolio - comments • Moderate growth within retail lending last 12 months, with focus on commitments qualifying for SpareBank 1 Boligkreditt (covered bond company) • Good growth in corporate market lending last 12 months • The portfolio and new commitments in corporate sector lending are d
Slide 35: Portfolio - exposure as of 30.06.20 (Group level)
Portfolio - exposure as of 30.06.20 (Group level) 100 % 0,29% 0,53% 1,47% 1,41% 2,94% 2,05% 4,40% 90 % 22,72% 18,43% 80 % 70 % 60 % 50 % 100 % 100,00% 96,26% 40 % 73,82% 75,69% 30 % 20 % 10 % 0% Retail market Corporate market SB1 Boligkreditt SB1 Næringskreditt SNN Finans Low risk Medium risk High r
Slide 36: Portfolio – changes last 12 months (Group level)
Portfolio – changes last 12 months (Group level) 3.286 3.711 1.598 1.500 1.300 1.100 900 700 500 449 300 100 -100 Retail market SB1 Boligkreditt Corporate market SB1 Næringskreditt SNN Finans Group -300 -360 -500 Low risk Medium risk High risk Non-performing/impaired 36
Slide 37: Portfolio - exposure distributed by size
Portfolio - exposure distributed by size Share of loanexposure June 2020 Share of loan exposure June 2019 75,9 % 78,9 % 11,0 % 9,9 % 6,3 % 5,4 % 6,8 % 5,8 % Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Loans distributed by size of exposure and share of total exposure Numbers include Spa
Slide 38: Portfolio – LTV mortgage loans
Portfolio – LTV mortgage loans 100,0 % 91,5 % 91,9 % 90,0 % • 97.3 % of exposures are within 80,0 % 85 % of the collaterals market 70,0 % value 60,0 % 50,0 % • Exposures above 85 % are 2.7 % 40,0 % • Each loan is distributed in the 30,0 % different LTV intervals. 20,0 % • The numbers include the Gro
Slide 39: Reduced need for interest-only mortgage
Reduced need for interest-only mortgage Interest-only loans 3,6 % Substantial reduction in the number of loans that 7,5 % run with a grace period. Customers terminate the grace period and return to ordinary repayment. 9,7 % As of the end of July, approximately 4.400 current loans have been granted a
Slide 40: Limited impact from Covid-19 and drop in oilprice
Limited impact from Covid-19 and drop in oilprice Affected by drop in oilprice • Oilrelated sector Affected by Covid-19: Loan portfolio • Commercial real estate related to shopping 0,7 % centres, retail and hotels 7,1 % • Service industries • Industry, including traditional fishing industry • Touris
Slide 41: Diversified portfolio in commercial real estate
Diversified portfolio in commercial real estate Plot 1,8 % 0 - 5 mnok Above 250 Offices 9,5 % Residential mnok Development 17,7 % 14,9 % Housing Ass. 15,0 % 6,0 % 5 - 30 Residential mnok Investment Others (small 100 - 250 26,7 % 4,5 % commitments) mnok 19,5 % 24,4 % Industry 4,3 % Shops / Combinatio
Slide 42: Largest single-customers within segments
Largest single-customers within segments 5 largest tourism/hotels 5 largest passenger transportation Type Volume (mill.) Risk-group Type Volume (mill.) Risk-group Hotel 261.9 Medium Transportation 350.0 Medium Hotel 169.0 Medium Transportation 300.0 Very low Hotel 116.5 Low Transportation 150.0 Medi
Slide 43: Low oil related exposure
Low oil related exposure Other 0,5 % Industry 5,5 % • Oil related exposure amounts to NOK 999 mill • The exposure represents 0.74 % of total Supply base 28,0 % exposure including covered bond companies • Average weighted probability of default 0.75 % • A total of NOK 48 mill are non-performing or im
Slide 44: Oil related portfolio – Offshore Supply Vessels (OSV)
Oil related portfolio – Offshore Supply Vessels (OSV) AHTS 6% • OSV exposure amounts to NOK 660 mill • Average weighted probability of default 0.80 % • Total amount of 7 vessels* Standby/Area contingency • Weighted age 8.5 years* 41 % • Average weighted contract length 3.4 years* • SNN is participan
Slide 45: Oil related portfolio – Supply bases
Oil related portfolio – Supply bases Other 0,5 % Industry 5,5 % • Supply base exposure amounts to NOK 279 Supply base mill 28,0 % • Average weighted probability of default 0.26 % • Customers with long term contracts with solid and strong partners gives good cash flows in the short and long term Offs
Slide 46: Oil related portfolio – Industry and Other
Oil related portfolio – Industry and Other Other 0,5 % Industry 5,5 % • The sector “Industry and Other” amounts to NOK 59 mill, including Industry NOK 54 mill and Other Supply base NOK 5 mill 28,0 % • Average weighted probability of default: “Industry” 3.54 % and “Other” 0.96 % • A total of NOK 47.9
Slide 47: Loan losses (Group level)
Loan losses (Group level) Losses 2020 Q2 20 Q1 20 2019 Q4 19 Q3 19 Q2 19 Individual losses Corporate market 15.0 10.5 4.5 17.5 4.2 9.3 5.4 Individual losses Retail market 4.9 1.5 3.3 10.0 6.7 -0.8 4.4 Collective losses and other value change items 181.1 70.1 111.1 -16.1 -12.7 6.2 5.8 Total losses on
Slide 48: Funding instruments 30.06.2020
Funding instruments 30.06.2020 Currency Bonds 35 % NOK Bonds 56 % Other Liabilities 2% Subordinated Loan Capital 4% T1 Hybrid 3% 48
Slide 49: Maturity profile 30.06.2020
Maturity profile 30.06.2020 Capital markets funding (excl. SPABOL/SPACOM) 7.000 6.000 5.000 NOK 25 769 mill in capital market funding exclusive of SpareBank 1 Boligkreditt and 4.000 SpareBank 1 Næringskreditt Mill NOK SpareBank 1 Boligkreditt and SpareBank 1 3.000 Næringskreditt is important funding
Slide 50: Ambitious targets for climate risk and sustainability
Ambitious targets for climate risk and sustainability • Climate risk is part of the Group’s risk strategy. • Sustainability is a part of all core processes through its own policy on sustainability and corporate social responsibility. These include goals to contribute to a greener securities market a
Slide 51: SpareBank 1 Alliance: National champion, regional focus
SpareBank 1 Alliance: National champion, regional focus • The SpareBank 1 alliance consists of 14 banks; independent in each their region. Decisions are made close to the SpareBank 1 Nord-Norge (Tromsø) customer, and each bank continues to develop its link with its local community • Operate exclusiv
Slide 52: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 SpareBank 1 LO Nord-Norge SMN SR-Bank Østlandet SamSpar 9,6 % 19,5 % 19,5 % 19,5 % 12,4 % 19,5 % Products, commisions, dividends Sale, loan portfolie, capital SpareBank 1 Nord-Norges, direct ownership SpareBank 1 Gruppen AS SpareBa
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