Pareto Bank Asa · OSL:PARB
Pareto Bank Asa — Q4 2016 Earnings Presentation
40 slides from Pareto Bank Asa's earnings presentation, 2017
Slide 1: Pareto Bank Financial Results Fourth Quarter 2016
PARETO BANK Financial Results Fourth Quarter 2016
Slide 2: Table of Contents
TABLE OF CONTENTS 1 FOURTH QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 3: Fourth Quarter Highlights
FOURTH QUARTER HIGHLIGHTS 1 Profit after tax of NOK 67.1m (NOK 27.4m) in Q4-16 2 Profit after tax of NOK 247.3m (NOK 174.6m) in 2016 3 Return on Equity of 15.3 % (8.6 %) in Q4-16* 4 Return on Equity of 15.9 % (14.8 %) in 2016* 5 Attractive business opportunities within real estate financing has led
Slide 4: On Target in 2016
ON TARGET IN 2016 31.12.2016 STATUS 31.12.2016 TARGET GROWTH LENDING Attractive growth in residential NOK 823m NOK 800m property development with strong net interest margin High margins and cost efficiency 15.9 % > 15.0 % * ROE yield high returns ADEQUACY High earnings, balance sheet CAPITAL 17.2 %
Slide 5: Equity Issues and Exchange Listings
EQUITY ISSUES AND EXCHANGE LISTINGS 1 2 PRIVATE EXCHANGE • Significantly strengthened capital base through equity issues in 2016 PLACEMENT LISTING • Increased solidity gives flexibility to grow profitably while exceeding capital NOK 203m Oslo Axess requirements by a reasonable margin March 2016 May
Slide 6: Significantly Strengthened CET1 Capital
SIGNIFICANTLY STRENGTHENED CET1 CAPITAL CET1 ratio development Key comments on capital • The NFSA has required that the bank meet a minimum CET1 ratio of 15.0 % by CET1 Target 2016 = 15% year-end 2016, and the bank has significantly exceeded this requirement • The countercyclical capital buffer has
Slide 7: Solid Foundation and Strong Performance
SOLID FOUNDATION AND STRONG PERFORMANCE Result after tax (NOKm) Return on Equity * CET1 ratio ** 16.5% 15.6% 15.9% 247.3 17.2 % 13.3% 13.2 % 174.6 11.5 % 12.1 % 165.8 8.9% 11.1 % 122.4 79.7 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Net interest income (NOKm) Cost/inc
Slide 8: The Share
THE SHARE * Share price development since March 2014** EPS, DPS (NOK) & Dividend Yield Book equity per share (NOK) 31.14 4.08 28.01 3.81 3.91 24.68 3.1 % 21.58 Price as of 31.12: Return 2016 2.73 2.6 % 44 % 2.4 % NOK 38.10 1.00 0.60 0.60 0.0- % 2013 2014 2015 2016 DPS EPS Dividend yield 2013 2014 20
Slide 9: Largest Shareholders as of 31.12.2016
LARGEST SHAREHOLDERS AS OF 31.12.2016 # Investor Country Type 31.12.2016 # of shares % total 1 Pareto AS NOR Corporate 8,921,873 15.22% 2 Pecunia Forvaltning AS NOR Corporate 5,861,859 10.00% 3 Saga Tankers ASA NOR Corporate 4,989,516 8.51% • The Company has 58.619.688 shares 4 Arne Helge Fredly LUX
Slide 10: Table of Contents
TABLE OF CONTENTS 1 FOURTH QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 11: Norway's Leading Project Bank
NORWAY’S LEADING PROJECT BANK BUSINESS AREAS PROJECTS / CREDITS AREA EXPOSURE AVG. PRINCIPAL 1. Construction financing Real NOKm estate 2. Project financing 63 % 25-50 3. Commercial property financing 1. Securities financing Securities & NOKm Corporates 2. Bridge financing 25 % 5-30 3. M&A financing
Slide 12: Portfolio Composition Overview
PORTFOLIO COMPOSITION | OVERVIEW * Gross credit exposure (NOKm) Σ = NOK 11,488m Gross total lending (NOKm) Σ = NOK 8,816m MAIN BUSINESS AREAS Real Estate 6,843 60% Real Estate 5,486 62% Corporates 979 9% Corporates 733 8% Real estate financing Real focused on residential Securities 1,934 17% Securit
Slide 13: Shipping & Offshore: Revised Policy & Strategy
SHIPPING & OFFSHORE | REVISED POLICY & STRATEGY 9% Policy and strategy • The bank continues its focus on the strong Norwegian shipping & offshore industry after having considered several strategic alternatives • A more restrictive credit policy already applies and will apply going forward • Maximum
Slide 14: Shipping & Offshore: Diversified Loans
12% SHIPPING & OFFSHORE | DIVERSIFIED LOANS * Key comments Total S&O credit exposure & Loan to value (NOKm)* Σ = NOK 1,407m LTV* Share • 3 new loans in 2016 Product 269 51% 19% • 25 loans and one guarantee, financing a total of 39 Bulk 250 62% 18% vessels Chemical 219 46% 16% • Largest exposure is U
Slide 15: Real Estate: Attractive Business Opportunities
REAL ESTATE | ATTRACTIVE BUSINESS OPPORTUNITIES 57% Q4-16: Real Estate credit exposure (NOKm) Σ = NOK 6,843m Q4-15: Real Estate credit exposure (NOKm) Σ = NOK 5,649m Residential property 3,440 50% Residential property 2,661 47% Lots 1,575 23% Lots 1,170 21% Offices 606 9% Offices 646 11% Commercial
Slide 16: Real Estate: Strong Market Position
REAL ESTATE | STRONG MARKET POSITION * 60 % Real Estate credit exposure (NOKm) Σ = NOK 6,843m Geographical residential property exposure (NOKm) ** 1% 1% Residential property 3,440 50% 4% Oslo West Oslo North 19% 23% Oslo East Lots 1,575 23% Oslo Nordstrand Akershus South Akershus North Offices 606 9
Slide 17: Securities: Renegotiation of Agreement
SECURITIES | RENEGOTIATION OF AGREEMENT 18% Q4-16: Total securities exposure (NOKm) Σ = NOK 1,934m Key comments • Pareto Securities has informed the bank that their Swedish Primarily listed stocks* 1,469 76% subsidiary is expanding its current securities financing services into the Norwegian retail
Slide 18: Securities Financing
SECURITIES FINANCING * 17% Total securities exposure (NOKm) Σ = NOK 1,934m Securities financing Overview Primarily listed 1,469 76% stocks** • Total exposure of NOK 1,934m • 383 customers of which 46 have a credit facility of above NOK 10m Bonds 407 21% • Real time follow-up and any breach of margin
Slide 19: Corporates: A Market with Opportunities
CORPORATES | A MARKET WITH OPPORTUNITIES 9% Ambition Products Pareto Bank will become a leading provider of tailor-made BRIDGE LOANS and transaction based financing solutions to Bridging of liquidity for clients who have both bought and investors/owners/family offices and small and medium- sold asse
Slide 20: Corporate Financing
9% CORPORATE FINANCING * Total corporate finance exposure by industry (NOKm) Σ = NOK 979m Corporate financing Overview • Total exposure of NOK 979m • 36 customers with credit facilities/guarantees in the range of NOK 0.2m to NOK 145m 12% • Exposure to a variety of industries 0% 4% Real estate Techno
Slide 21: Table of Contents
TABLE OF CONTENTS 1 FOURTH QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 22: Fourth Quarter Highlights
FOURTH QUARTER HIGHLIGHTS Key figures Q4-16 Profit after tax (NOKm) 68.4 67.1 PROFIT NOK 67.1m 63.7 I AFTER TAX (NOK 27.4m) 48.2 27.4 NET INTEREST NOK 117.3m II INCOME (NOK 96.1m) Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 RETURN ON 15.3 % III EQUITY * (8.6 %) Return on Equity * 16.8 % 17.3 % 15.3 % 14.4 % COST
Slide 23: Quarterly Income Statement
QUARTERLY INCOME STATEMENT P&L (NOKm) Key comments • The principle of assessing financial Q4-16 Q4-15 2016 2015 instruments at fair value may cause profits to fluctuate between quarters Net Interest income 117.3 96.1 415.9 344.3 Total other operating income 9.0 -5.4 42.0 12.4 • For Q4-16 total net g
Slide 24: Growing Net Interest Income
GROWING NET INTEREST INCOME Net interest income (NOK 1,000) Net interest margins (vs. 3M NIBOR) * Q4-16 1,215 117,338 7,094 72 Q4-15 Q4-16 -1,169 5.57% 5.73% 12,505 5.41% 5.12% Q4-15 96,090 1,531 -0.45% -0.32% Lending margin Deposit margin Net margin Lending & Lending & Amorti- Invested Long-term Lo
Slide 25: Continuously Improving Operational Figures
CONTINUOUSLY IMPROVING OPERATIONAL FIGURES Active repricing: Improving net interest margins (vs. 3M NIBOR) Key comments • Strong growth on an improved net margin 5.5 % 5.6 % 5.6 % 5.6 % 5.6 % 5.7 % 5.7 % • Improved margin on fixed-rate deposits 5.4 % 5.5 % 5.4 % 5.1 % 5.2 % 5.1 % 5.3 % 5.0 % 4.9 % 5
Slide 26: Strong Balance Sheet
STRONG BALANCE SHEET BS (NOKm) Key comments Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 • High turnover rate: approximately 30% of Cash and deposits with central banks 57.1 57.0 752.0 57.0 459.2 Lending to and deposits with credit institutions 747.3 1,036.5 202.5 796.0 362.5 the loan portfolio matures within a ye
Slide 27: Table of Contents
TABLE OF CONTENTS 1 FOURTH QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 28: Commitments by Size
COMMITMENTS BY SIZE Q4-16 Σ = NOK 11,488m Q4-15 Σ = NOK 10,320m Key comments • A conservative policy with respect to size <5 535 5% <5 540 5% • Maximum size on a single customer 10 % of total capital (NOK 217m) 5 - 10 733 6% 5 - 10 663 6% • Maximum size on group / consolidated basis 15 % of total ca
Slide 29: Commitments by Risk Classification
COMMITMENTS BY RISK CLASSIFICATION Q4-16 Σ = NOK 11,488m Q4-15 Σ = NOK 10,320m Key comments None / very low risk 5,437 47% None / very low risk 4,568 44% • 84 % of the portfolio is considered to Low risk 4,239 Low risk have low to none/very low risk risk 37% 4,266 41% Moderate risk 1,391 12% Moderat
Slide 30: Loan Portfolio Quality
LOAN PORTFOLIO QUALITY Net non-performing and impaired loans * Cumulative group provisions % of gross lending Nominal (NOKm) and % of gross lending 0.51% 0.52% 1.58% 0.52% 0.51% 0.48% 45.7 45.7 1.33% 43.7 1.23% 40.7 40.7 0.42% 0.40% 0.41% 0.96% 0.94% 0.37% 0.34% 30.7 30.7 0.72% 0.30% 28.7 0.31% 26.7
Slide 31: Table of Contents
TABLE OF CONTENTS 1 FOURTH QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 32: Funding Overview
FUNDING | OVERVIEW * Sources (NOKm) Σ = NOK 12,941m Historical development in deposits vs. lending (NOKm) Deposits 7,647 59% 102% 98% 95% 96% Senior debt 2,886 22% 91% 90% 89% 87% 85% 86% 86% 83% T1 & T2 debt 430 3% 81% 8,908 8,754 8,368 8,326 7,931 Other debt 153 1% 7,596 7,347 7,487 7,162 7,246 7,
Slide 33: Funding: Customer Deposits
FUNDING | CUSTOMER DEPOSITS * Deposit allocation Fixed rate deposits (NOKm) - time to maturity (months) Σ = NOK 1,761m >25 180 mths. Depositors (#) 3,857 2,244 15 - 25 296 mths. 8 - 14 377 mths. 5-7 Amount (NOKm) 2,665 4,953 203 mths. 3-4 279 mths. 0% 20% 40% 60% 80% 100% 0-2 426 Retail Corporate mt
Slide 34: Funding: Market Funding
FUNDING | MARKET FUNDING * Market funding maturities - net of own holdings (NOKm) Credit spreads (bps) 200 180 160 200 140 120 110 100 80 970 60 677 730 40 500 20 120 0 2017 2018 2019 2020 2021 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Senior Call on
Slide 35: Surplus Liquidity
SURPLUS LIQUIDITY * Comfortable liquidity buffer (NOKm) Bond portfolio (NOKm) Σ = NOK 3,315m 5,000 4,500 Drawing facility Level 2A+B assets 5% 4,000 Financials & unrated covered 3,500 Level 2A+B assets 3,000 Government & PSEs Level 1 covered 2,500 Liquidity portfolio Covered bonds 2,000 Senior finan
Slide 36: Capital Ratios and Requirements
CAPITAL RATIOS AND REQUIREMENTS Pareto Bank capital ratios and requirements * Key comments • Rights issue of MNOK 200 in December ACTUAL REQUIREMENT 31.12.2016 31.12.2016 2016 has strengthened the bank’s CET1 capital significantly 21.5 % • The bank’s CET1 and total capital 18.5 % requirements are 15
Slide 37: Table of Contents
TABLE OF CONTENTS 1 FOURTH QUARTER HIGHLIGHTS 2 BUSINESS AREAS 3 FINANCIAL HIGHLIGHTS 4 CREDIT RISK 5 FUNDING AND CAPITAL 6 AMBITIONS FOR 2017
Slide 38: Financial Targets for 2017
FINANCIAL TARGETS FOR 2017 Attractive niche market PROFITABLE GROWTH 10.0% development and continued opportunities within residential property ON EQUITY Cost effective RETURN > 13.0% and commercially oriented bank ADEQUACY CAPITAL * 15.5 % CET1 ratio well above NFSA requirements The payout ratio DIV
Slide 39: Portfolio Goals for 2017
PORTFOLIO GOALS FOR 2017 BUSINESS AREAS MARKET STATUS GROWTH TARGETS Signs of margin Still strong deal flow Net growth of Real pressure and increased approximately High natural repayment estate risk-taking rate on loans NOK 600m Potential within Net growth of Limited competition Securities & corpora
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(Pareto bank