Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — Q3 2018 Earnings Presentation
65 slides from Sparebank 1 Nord-norge's earnings presentation, Oct 26, 2018
Slide 1: Quarterly presentation 30.09.18
Quarterly presentation 30.09.18 Tromsø/Oslo 26 October 2018
Slide 2: Interim report 30.09.18 - Group
Interim report 30.09.18 - Group PRE-TAX PROFIT 1 447 MNOK (1 254 MNOK) RETURN ON EQUITY 13.3 % (12.6 %). 3Q ISO: 13.3% C/I-RATIO 42.4% (41.5 %) LOAN LOSSES 28 MNOK (147 MNOK) CET1 RATIO 14.7 % (15.4 %) 2
Slide 3: Key financial figures - development
Key financial figures - development CET 1 incl floor Return on equity capital 15,0 % 13,1 % 12,9 % 13,3 % 14,9 % 12,2 % 14,7 % 12,0 % 13,9 % Target: 9,1 % > 12 % 13,4 % Target: 14.5 % 12,5 % 2013 2014 2015 2016 2017 30.09.18 2013 2014 2015 2016 2017 30.09.18 Payout ratio (%) Cost/income Group 59,8 %
Slide 4: Northern Norwegian economy: Record low unemployment and high growth
Northern Norwegian economy: Record low unemployment and high growth Sector Status Outlook Macro Seafood Tourism Construction Retail Oil and gas 4
Slide 5: Continued increasing markets shares, but decreasing lending growth
Continued increasing markets shares, but decreasing lending growth Corporate/public market Main bank in SMB (%) 42 42 41 41 40 32 687 36 38 37 37 27 208 35 35 25 673 34 34 32 33 6,0 % 20,1 % 30 30 30.09.16 30.09.17 30.09.18 Lending growth corporate: 3Q ISO: 3.2 % (2Q: 5.2 %) 17 16 15 14 14 Retail in
Slide 6: Subsidiaries – high investments and good results
Subsidiaries – high investments and good results Pre-tax Change Company profit from 2017 SpareBank 1 Finans Nord-Norge 121.3 MNOK + 66.7 MNOK SpareBank 1 Regnskapshuset Nord-Norge 22.2 MNOK + 6.9 MNOK Eiendomsmegler 1 Nord-Norge 16.6 MNOK + 1.9 MNOK 6
Slide 7: Non-life insurance merger – make underlying values visible
Non-life insurance merger – make underlying values visible and triggers market power Conversion ratio 80/20 SpareBank 1/DNB Ownership distribution 65/35 after sale of shares to DNB. DNB has an option to increase its stake to 40 % SpareBank 1 Nord-Norges (SNN) share of increase in equity in SpareBank
Slide 8: Vipps – Norwegian payment system and identification with global potential
Vipps – Norwegian payment system and identification with global potential The merger between Vipps, BankAxept og BankID was completed Q3 2018 Brand recognition among young people (18-34 years) High innovation rate within all three brands, including a new Vipps-app Significant international potential
Slide 9: Business Strategy – regional proximity and national strength
Business Strategy – regional proximity and national strength Full service Presence Specialists Analysis Payment and ID branches Community Branding Digital solutions Innovation Insurance dividend Group Alliance Cooperation 9
Slide 10: Broad and growing ownership among Supervisory Board, management and employees
Broad and growing ownership among members of the Supervisory Board, management and employees 116.876 79.115 76.989 77.921 35.395 Number of equity certificates as of 30.09.18 More than 90 % of the employees in the Group own equity certificates 75.985 84.537 80.187 102.760 63.159 10
Slide 11: Changes in Group Management – new CFO
Changes in Group Management – new CFO Bengt Olsen (48) replaces Rolf Eigil Bygdnes (62) Appointment during Q1 2019 Background: Master in international economics (Norway/Germany) Deputy Managing Director and CFO of DIPS AS Supervisory board member of SpareBank 1 Nord-Norge Banking experience 11
Slide 12: Quarterly summary – Profit and loss account figures
Quarterly summary – Profit and loss account figures (Amounts in NOK million) 3Q18 2Q18 1Q18 4Q17 3Q17 Net interest income 484 467 449 461 450 Net fee-, commision and other operating income 254 275 250 265 255 Net income from financial investments 121 188 74 194 119 Total net income 859 930 773 920 8
Slide 13: Changes profit and loss last quarter
Changes profit and loss last quarter 15 - 19 - 67 28 -2 (Amounts in NOK million) 539 494 2Q18 NII incl provision NCI excl provision from Investment income Costs Losses 3Q18 commission loans commission loans 13
Slide 14: Ambitious long-term cost target: C/I < 40 %
Ambitious long-term cost target: C/I < 40 % NOK mill. 373 371 373 325 342 343 44,4 % 43,4 % 40,2 % 41,5 % 40,5 % 39,9 % 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Total costs Cost/income Group
Slide 15: Losses on loans and guarantees - customers
Losses on loans and guarantees - customers Mill kr 0,23 % 0,22 % Good quality in loan portfolio Positive risk migration in 0,17 % underlying portfolio 3Q 18 ISO: Negative loan losses Low loan losses expected in the near future 0,03 % 200 213 184 28 2015 2016 2017 30.09.18 15 Net losses Net losses in
Slide 16: Distribution on segments shows good diversification
Distribution on segments shows good diversification A high share of retail- and primary industry lending represent a risk mitigating factor The Group has a well diversified corporate market loan portofolio No specific concerns related to the bank’s loans to commercial property due to low interest ra
Slide 17: Regulatory uncertainty
Regulatory uncertainty: Dividend: The possibility for dividend based on interim financial reports is proposed to be removed Capital requirements: The «Basel 1 floor» is expected to be removed and the “SME discount” will be implemented. The FSAN has proposed changes in the identification of SIFI. The
Slide 18: Financial targets
Financial targets CET1 ratio > 12 % ROE 14,5 % C/I ratio Payout ratio < 40 % > 50 % 18
Slide 19: Financial outlook
Financial outlook Increased deposit and lending rates from mid Q4 2018. Higher interest rates in 2019 is expected to provide a basis for further repricing of lending NRI and deposit rates Targeted top-level profitability among comparable banks, currently > ROE > 12 % 12% Targeted core capital covera
Slide 20: SpareBank 1 Nord-Norge
SpareBank 1 Nord-Norge CEO Jan-Frode Janson CFO Rolf Eigil Bygdnes E-mail: jfj@snn.no E-mail: reb@snn.no Tel. + 47 909 75 183 Tel. + 47 905 19 774 URLs Website and netbanking: www.snn.no Equity certificate in general: www.egenkapitalbevis.no Financial calendar: Preliminary annual accounts 2018: 6 Fe
Slide 21: Appendix
Appendix 1. About SpareBank 1 Nord-Norge 2. Financial figures – additional information 3. Credit area 4. Liquidity 5. Northern Norway: Macro and economic trends 6. SpareBank 1 Group and alliance 21
Slide 22: SpareBank 1 Nord-Norge Group – number 1 in the north
SpareBank 1 Nord-Norge Group – number 1 in the north 1 PM Bank • Main bank: 34 % 1 SMB Bank • Main bank: 41 % 2 Large corporates - Bank 1 Real estate • Market share: 37 % 1 Accounting services • Market share: 15 % 3 Secured financing/leasing • Market share: 19 % 22 Source: Kantar TNS (posisjonsunder
Slide 23: Company structure
Company structure Subsidiaries and second tier Associated companies and jointed ventures subsidiaries SpareBank 1 SpareBank 1 SpareBank 1 Finans SpareBank 1 Gruppen AS Næringskreditt AS Eiendomsmegler 1 Boligkreditt AS Nord-Norge AS Nord-Norge AS 19.5 % | Financial services 16.85 % | Coverede Bond 1
Slide 24: Equity Certificates (EC) – geographic holder structure
Equity Certificates (EC) – geographic holder structure 10,3 13,8 13,8 20,3 28,6 32,0 33,0 34,6 35,7 37,5 36,5 37,0 64,1 65,6 65,5 61,1 53,2 49,1 48,1 46,8 45,6 42,9 44,7 44,2 25,5 19,0 20,6 20,7 18,6 18,2 18,9 18,6 18,7 19,6 18,9 18,8 2012 2013 2014 2015 2016 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Holde
Slide 25: The 20 largest EC holders
The 20 largest EC holders Number Share of EC Holders of ECs EC Capital PARETO AKSJE NORGE VERDIPAPIRFOND V/PARETO ASSET MANAGEMENT AS 3.144.433 3,13% STATE STREET BANK AND TRUST COMP A/C CLIENT OMNIBUS F, REF: OM06 3.089.198 3,08% GEVERAN TRADING CO LTD 2.693.280 2,68% THE NORTHERN TRUST COMP, LONDO
Slide 26: The 20 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 NO 1.411.606 1,41 % KARL DITLEFSEN 547.543 0,55 % ODD ERIK HANSEN INVEST AS 400.000 0,40 % LARS WORKINN 294.180 0,2
Slide 27: Why invest in SpareBank 1 Nord-Norge?
Why invest in SpareBank 1 Nord-Norge? 1 Number 1-position in an attractive growth region 2 Ambitious cost and modernization measures provide profitable operations 3 Focus on core business has implied reduced risk Considerable underlying values through high relative ownership in SpareBank 1 Gruppen,
Slide 28: Financial figures – additional information
Financial figures – additional information 28
Slide 29: Net interest income - Group
Net interest income - Group 542 525 527 NOK mill 536 516 58 75 60 494 66 76 57 484 461 467 437 450 449 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Net interest income Commissions from Boligkreditt 29
Slide 30: Quarterly results – net interest income
Quarterly results – net interest income (Amounts i n NOK mi l l i on) 3Q18 2Q18 1Q18 4Q17 3Q17 Interest and similar income from loans to and claims on credit institutions 3 3 3 21 1 Interest and similar income from loans to and claims on customers 656 646 611 619 612 Interest and similar income from
Slide 31: Net fee-, commission- and other operating income
Net fee-, commission- and other operating income NOK mill 215 191 189 190 195 174 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 31
Slide 32: Net fee- and other operating income
Net fee- and other operating income 3Q18 2Q18 1Q18 4Q17 3Q17 (Amounts i n NOK mi l l i on) Payment facilities 77 61 60 60 74 Insurance products 42 36 40 35 41 Guarantee commissions 4 3 4 3 4 Real estate broking 34 41 26 29 32 Portefolio commission 8 11 12 11 11 Other commissions 23 26 18 21 23 Commi
Slide 33: Income from financial investments
Income from financial investments Group (Amounts in NOK million) 3Q18 2Q18 1Q18 4Q17 3Q17 Dividends 2 2 1 0 0 Income from joint ventures 93 100 63 167 109 Gains/losses from shares in subsidiaries 6 0 0 0 0 Gains/losses and net value changes on shares 23 81 -1 30 7 Net value changes on bonds, foreign
Slide 34: Operating expenses
Operating expenses (Amounts in NOK million) 3Q18 2Q18 1Q18 4Q17 3Q17 Wages and salaries 144 146 139 150 143 Pension costs 12 12 11 3 13 Social costs 29 27 28 30 28 Total personnel costs 185 185 178 183 184 Development costs 30 39 33 19 33 Electronic data processing costs 25 31 24 31 21 Marketing cos
Slide 35: Group companies result before tax
Group companies result before tax (Amounts i n NOK 1000) 30.09.18 30.09.17 SpareBank 1 Finans Nord-Norge AS 121 293 54 659 SpareBank 1 Regnskapshuset Nord-Norge AS 22 240 15 312 EiendomsMegler 1 Nord-Norge AS 16 647 14 757 Subsidiaries core operations 160 180 84 728 Other subsidaries - 396 - 376 Tot
Slide 36: Key figures balance sheet
Key figures balance sheet (Amounts in NOK million) 30.09.18 30.09.17 Change Change % Total assets 103 672 93 542 10 130 10,8% Gross lending 81 989 73 902 8 087 10,9% Loans and advances to customers incl commission 113 739 101 844 11 895 11,7% loans Deposits from customers 61 474 57 163 4 311 7,5% 36
Slide 37: Lending volume
Lending volume Retail incl. commission loans Retail incl. 29 % commission loans 81 052 Business/ incl. 74 636 71 % commission 67 750 10,2 % 8,6 % loans 30.09.16 30.09.17 30.09.18 Retail excl. Corporate/public market 39 % commission loans 61 % Business excl. 32 687 commission 27 208 25 673 loans 6,0
Slide 38: Deposit volume
Deposit volume Business Retail banking market 34 188 18 841 32 207 14 479 16 234 30 320 6,2 % 6,2 % 16,1 % 12,1 % 30.09.16 30.09.17 30.09.18 30.09.16 30.09.17 30.09.18 Public Business 30,6 % Retail 8 838 8 722 -1,3 % -3,2 % 8 445 55,6 % Public 30.09.16 30.09.17 30.09.18 13,7 % 38
Slide 39: Credit area
39 Credit area SpareBank NORD-NORGE
Slide 40: Portfolio - exposure as of 30.09.18, parent bank
Portfolio - exposure as of 30.09.18, parent bank 50.000 47.434 45.000 40.000 35.000 33.194 30.000 26.942 NOK mill 25.000 20.000 15.000 9.705 10.000 5.000 1.144 1.526 429 627 124 246 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired Retail market Corporate market SB1 Bolig
Slide 41: Portfolio – changes last 12 months, parent bank
Portfolio – changes last 12 months, parent bank 4.000 3.513 3.500 2.945 3.000 2.686 2.500 2.000 1.878 NOK mill 1.500 1.000 500 429 63 22 0 -87 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired -17 -158 -500 SB1 Boligkreditt Retail market Corporate market SB1 Næringskreditt
Slide 42: Portfolio - exposure distributed by size
Portfolio - exposure distributed by size Loans distributed by size of exposure and share of total exposure Share of loanexposure Sept 2018 Share of loanexposure Sept 2017 79,2 % 80,6 % 9,5 % 9,5 % 5,0 % 4,6 % 6,4 % 5,2 % Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Numbers include SB 1
Slide 43: Portfolio – LTV mortgage loans
Portfolio – LTV mortgage loans 92,5 % • 97.6 % of exposures are 92,2 % within 85 % of the collaterals market value • Exposures above 85 % are 2.4 % 5,4 % 5,0 % 1,2 % 1,2 % 1,2 % 1,3 % 30.09.2018 30.09.2017 Each loan is distributed in the different intervals. The numbers include the Group's share of
Slide 44: Portfolio – Commercial Real Estate
Portfolio – Commercial Real Estate Housing Ass.; 4,0 % 0 - 5 MNOK; Others (small Above 250 Residential 11,5 % commitments); MNOK; 14,8 % Development / 17,8 % Investment; 7,0 % Shops / Combination- shopping buildings; 11,2 % centres; 22,0 % 100 - 250 MNOK; 20,1 % 5 - 30 MNOK; 30,2 % Hotels; 8,0 % Off
Slide 45: Portfolio – Oil related exposure
Portfolio – Oil related exposure • Oil related exposure amounts to NOK 1,163 Industry; 7,5 % Other; 0,9 % Supply base; mill 27,0 % • The exposure represents 1.02 % of total lending incl. Næring- and Boligkreditt • Average weighted probability of default 1.28 % • A total of NOK 25 mill are non-perfor
Slide 46: Losses on loans and guarantees and non-performing commitments
Losses on loans and guarantees and non-performing commitments Mill kr Mill kr 0,96 % 0,93 % 0,23 % 0,22 % 0,17 % 0,57 % 644 632 0,38 % 0,35 % 215 380 174 178 0,03 % 372 374 218 254 200 213 184 28 2015 2016 2017 30.09.18 3Q17 4Q17 1Q18 2Q18 3Q18 Net losses Net losses in % of gross lending incl Boligk
Slide 47: Liquidity
47 Liquidity SpareBank NORD-NORGE
Slide 48: Funding instruments 30.09.2018
Funding instruments 30.09.2018 Currency Bonds 32 % NOK Bonds 60 % Subordinated Loan Capital 5% T1 Hybrid 3% 48
Slide 49: Maturity profile 30.09.2018
Maturity profile 30.09.2018 Capital markets funding (excl. SPABOL/SPACOM) • NOK 26 439 mill in capital market funding exclusive of 6.000 SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt 5.000 • SpareBank 1 Boligkreditt and 4.000 SpareBank 1 Næringskreditt is important funding sources. Mill NO
Slide 50: Liquidity portfolio 30.09.2018
Liquidity portfolio 30.09.2018 Gov. Covered bonds 21 % 66 % Public sector 13 % 50
Slide 51: Macro and Economic trends
51 Macro and Economic trends SpareBank NORD-NORGE
Slide 52: Lower housing prices in Northern Norway, and lower downside risk
Lower housing prices in Northern Norway, and lower downside risk House prices (September 2018) Average price, NOK per m2, all units 71 005 45 845 41 134 36 265 31 837 4,1 % 3,2 % 2,7 % 2,7 % 2,2 % Tromsø Bodø/Fauske Northern Norway Oslo Norway Average price, NOK per m2, all units Price increase y/y,
Slide 53: Stable, low unemployment
Stable, low unemployment 53 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 54: Seafood – export growth
Seafood – export growth • Growth in seafood export value from Northern Norway of 13,5 % per August. • Good prices and weak norwegian kroner contribute. • 1st half 2018 was the best ever for cod fisheries, and cod is important for Northern Norway. 54 Source: Norwegian Seafood Council
Slide 55: Tourism – growth in overnight stays
Tourism – growth in overnight stays • Number of overnight stays is on a high level. • Foreign overnight stays plays a more important role, but the growth is now slowing down in Finnmark and Nordland. Still growth in Troms, especially from winter tourism. • Optimistic prospects for world economy and
Slide 56: Oil and gas – new fields increase activity
Oil and gas – new fields increase activity • Four fields in production: Norne, Snøhvit, Skarv and Goliat Demand from oil companies ‒ First oilfield open in Barents Sea. Repurchases will further increase the total demand • Aasta Hansteen ‒ Production start-up in 2018 • Alta/Gotha ‒ Test production in
Slide 57: Lower growth in retail sales
Lower growth in retail sales, and now growth is lower than Norwegian average Source SSB, retail sales 57
Slide 58: Credit growth corporates
Credit growth corporates 58 Credit growth corporates. 12 mth growth — 20,1% 63% 2015Q2 NS 2015Q4 2016K2 2016K4 ——SNN, Corporate clients 2017K2 2017K4 ——Norway, Corporates 2018K1 SpareBank NORD-NORGE O
Slide 59: Credit growth households
Credit growth households Credit growth households. 12 mth growth 12 10 9,2% 8 6 © * 4 5,7% 2 ie) 201503 2016K1 2016K3 2017K1 2017K3 2018K1 2018K3 ——SNN, Retail clients —— Norway, Households 59 SpareBank NORD-NORGE O
Slide 60: Deposit growth corporates
Deposit growth corporates 60
Slide 61: Deposit growth households
Deposit growth households 61
Slide 62: SpareBank 1 Group and the alliance
SpareBank 1 Group and the alliance 62
Slide 63: SpareBank 1 Alliance: National champion with regional focus
SpareBank 1 Alliance: National champion with regional focus The SpareBank 1 Alliance consists of 14 banks; independent in each region Operate exclusively in Norway – with Norway’s most extensive branch network Physical branch structure is changing and SpareBank 1 banks SpareBank 1 Nord-Norge are at
Slide 64: SpareBank 1 Alliance: Achieving benefits of scale, while being local
SpareBank 1 Alliance: Achieving benefits of scale, while being local The savings banks are independent banks with very strong regional focus, and operate solely in the regions where they have been active for almost 200 years The largest Norwegian savings banks established the SpareBank 1 Alliance in
Slide 65: The SpareBank 1 Alliance
The SpareBank 1 Alliance SAMSPAR SpareBank 1 Gruppen AS Banksamarbeidet DA SpareBank 1 Betaling AS SpareBank 1 Forsikring AS EiendomsMegler 1 (Life insurance) SpareBank 1 Kredittkort AS Norge AS (Credit card) SpareBank 1 Skadeforsikring AS SpareBank 1 (Non-life insurance) Kundesenter AS SpareBank 1
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