Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q2 2020 Earnings Presentation
53 slides from Sparebank 1 Ostlandet's earnings presentation, 2020
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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: Digitalization and growth makes SR-Bank a finance group for the South of Norway
Digitalization and growth makes SR-Bank a finance Åsane Bergen group for the South of Norway Sotra Fana +4% Oslo 134 135 Husnes Stord 130 Ølen Aksdal +22% Haugesund 34 Karmsund 30 28 Åkra Kopervik Finnøy +21% 20 +61% 19 20 Randaberg Jørpeland 17 16 Stavanger +47% Sola 12 Sandnes 9 10 Ålgård 7 Nærbø
Slide 4: A result marked by good operations but high impairments
A result marked by good operations but high impairments 3.7% 5.4% Return on equity after tax year-to-date 2020 12 months lending growth Pre-tax profit is NOK 513 million Of which retail market 5.8% and corporate market 5.3% 37.9% 8.3% Cost to income ratio year-to-date 2020 12 months deposit growth 1
Slide 5: Key figures and financial targets for 2020
Key figures and financial targets for 2020 CET 1 Growth in costs Growth in loans 17,0% 18,3% 16,7% 11,2% 5,4% 4,9% 3,0% - 5,0% < 0,0% 2019 30.06.2020 Target 2020 -1,9% 2019 30.06.2020 Estimate 2020 2019 30.06.2020 Target 2020 5
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 17,0% 17,7%* 18,3%* 16,2% 14,4% 14,4% 10,5% 8,3% 3,4% 4,0% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Cost to income ratio Earnings per share 42,7% 47,0% 3,52 42,3% 35,6% 34,2% 2,32 1,90 0,86 1,00 Q2 19 Q3 19 Q4 19 Q1 20 Q2
Slide 7: Income statement
Income statement Group Income Statement (MNOK) 30.06.2020 30.06.2019 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Net interest income 2.107 1.906 1.026 1.081 1.062 1.019 968 Net commission and other income 690 725 344 346 359 332 384 Net income on investment securities 269 1.016 297 -28 22 89 340 Total i
Slide 8: Change in profit 30.06.2019 – 30.06.2020
Change in profit 30.06.2019 – 30.06.2020 185 2.432 -19 23 -747 513 -1.361 30.06.2019 Net interest income Other income Net income on Total operating expenses Impairments on loans and 30.06.2020 incl. commission from investment securities financial commitments covered bond company 8
Slide 9: Operating profit before losses and excl. income on investment securities
Operating profit before losses and excl. income on investment securities (Rolling 12-month figures) 3.207 3.167 3.124 3.064 3.114 2.884 2.925 2.825 2.199 1.555 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Operating profit before losses and excl. income on investment securities, rolling 12-month figures Net profit
Slide 10: Key figures
Key figures 30.06.2020 30.06.2019 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Return on equity after tax (%) 3,7 18,8 4,0 3,4 8,3 10,5 16,2 Net interest margin (%) 1,57 1,59 1,50 1,64 1,64 1,61 1,58 Impairments on loans in % of gross loans incl. covered bond 1,29 0,03 1,53 1,05 0,26 0,13 -0,04 company L
Slide 11: Consolidated income and cost profile
Consolidated income and cost profile Income profile Cost profile Net interest income* Total personnel expenses Net commission and other income +166 Total other operating expenses -23 2.797 1.185 1.162 2.631 1.421 1.427 1.370 687 1.352 1.351 706 678 484 353 343 484 373 323 344 602 615 592 570 282 245
Slide 12: Lending and deposit margins
Lending and deposit margins Lending margins* Deposit margins 3,17% 3,02% 2,74% 2,74% 2,77% 2,82% 2,78% 2,72% 2,71% 0,67% 0,56% 0,45% 0,42% 1,85% 0,29% 0,31% 0,23% 0,22% 1,51% 1,51% 1,46% 1,48% 0,17% 1,39% 1,32% 1,33% 1,28% 0,06% 0,07% 0,09% -0,01% 0,11% -0,06% -0,11% -0,13% -0,43% Q2 18 Q3 18 Q4 18
Slide 13: Lending volume and 12 months growth
Lending volume and 12 months growth Retail Market Corporate Market (incl. Capital Market) 17,8% 15,7% 12,2% 11,8% 9,6% 10,3% 4,0% 4,5% 4,8% 4,8% 5,3% 5,8% 5,2% 5,6% 5,3%* 2,9% 3,2% 3,6% 130 132 134 136 137 140 126 128 129 71 74 74 75 75 78 78 66 68 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2
Slide 14: Loan portfolio as at 30.06.2020
Loan portfolio as at 30.06.2020 • Gross loans (incl. covered bond company) Agriculture / forestry / fishing 3,7% 3,3% as at 30 June 2020 is increased to NOK 2,0% 218.6 billion from NOK 207.5 billion at Supply and construction 2,0% the same time the year before. 1,5% Renewable / Green engagement 1,4%
Slide 15: Loan to value ratio and RWA on home mortgage loans
Loan to value ratio and RWA on home mortgage loans Loan to value ratio on home mortgage loans RWA home mortgages • The proportion of loans with a loan-to- value ratio of less than 85% is high. • RWA on home mortgages reflects a solid portfolio with a moderate loan-to- value ratio and low potential l
Slide 16: Deposit volume and 12 month growth
Deposit volume and 12 month growth Retail Market Corporate Market (incl. Capital Market) Volume in NOK Billion Volume in NOK Billion Growth % Growth % 8,3% 7,3% 4,4% 2,3% 4,5% 0,2% -1,1% -5,0% -10,2% 6,0% 8,4% 9,1% 3,9% 3,7% 2,9% 3,9% 4,3% 4,2% 56 60 53 52 51 52 55 54 54 54 52 49 48 48 48 49 50 50 Q
Slide 17: Net commission and other income
Net commission and other income MNOK 30.06.2020 30.06.2019 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Payment facilities 130 128 61 69 66 77 66 Savings/placements 96 99 48 48 47 46 53 Insurance products 101 94 50 51 50 48 48 Commission income real estate broking 189 207 104 85 101 91 108 Guarantee comm
Slide 18: Net income on investment securities
Net income on investment securities MNOK 30.06.2020 30.06.2019 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Dividends 17 27 17 0 0 4 8 Investment income, associates 387 762 145 242 15 98 226 Securities gains/losses -176 100 122 -298 20 -24 4 - of which capital change in shares and certificates -94 81 27
Slide 19: Subsidiaries
Subsidiaries Subsidiaries MNOK 30.06.2020 30.06.2019 EiendomsMegler 1 SR-Eiendom AS Number of sales 3.181 3.372 Operating profit before tax 26 19 SR-Forvaltning AS Capital under management (BNOK) 12 13 Operating profit before tax 10 12 FinStart Nordic AS Operating profit before tax* -87 10 SpareBank
Slide 20: Ownership interests
Ownership interests Ownership interests MNOK 30.06.2020 30.06.2019 SpareBank 1 Gruppen AS Interest ownership 19,5% 19,5% Profit after tax -7 224 Profit effect merger 340 460 SpareBank 1 Boligkreditt AS Interest ownership 2,2% 4,8% Profit after tax 1 5 SpareBank 1 Næringskreditt AS Interest ownership
Slide 21: Operating expenses
Operating expenses MNOK 30.06.2020 30.06.2019 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Payroll and pensions 555 576 277 278 328 307 294 Other staff expenses 123 125 53 70 68 68 63 Total personnel expenses 678 701 330 348 396 375 357 IT expenses 190 181 98 92 91 91 91 Marketing 38 39 17 21 31 20 20 Ot
Slide 22: Impairments on loans and financial commitments / Loans defined as Stage 3
Impairments on loans and financial commitments / Loans and financial commitments defined as Stage 3 Impairments on loans and financial commitments Changes in gross loans and financial commitments defined as Stage 3 831 1,53% 1,84% 1,30% 1,30% 1,40% 4.836 1,19% 560 1.152 1,05% 3.612 3.250 3.232 2.961
Slide 23: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) 30.06.2020 30.06.2019 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Corporate customers 1.315 8 771 544 121 82 -33 Retail customers 76 22 60 16 18 -16 14 Total impairments 1.391 30
Slide 24: Lending to oil and offshore
Lending to oil and offshore 6.4% (BNOK 15.4) of total EAD* is related to oil operations • Oil services ‐ EAD NOK 3.7 billion, 1.6% of the bank's total EAD ‐ Funding of operating capital through current and fixed assets, as well as Oil and gas; guarantees MNOK 2.484 Oil service; MNOK 3.743 • Explorat
Slide 25: Customer assistance status 2020
Customer assistance status 2020 Government guaranteed liquidity loans Compensation scheme ("cash support") • As at 4 June 2020, 327 liquidity loans totalling NOK 1.2 billion had • Support granted to SR-Bank customers: been granted or were being processed NOK 101 million as at 24 June 2020 • 293 liqu
Slide 26: Measures implemented within credit
Measures implemented within credit Changes are being implemented that will reduce the risk premium and help improve the group’s robustness in order to give it financial leeway in the event of crises. In order to reduce unsystematic risk the group has decided to make the general changes described bel
Slide 27: Funding
Funding • NSFR* 122% • LCR** 159% • NOK 18.6 billion net refinancing need over the next 12 months • Deposit to loans ratio 51.8% • MREL requirement 31,4% which entails issuance of NOK 20 billion in senior non-preferred debt 32 Annual funding maturity 30 28 26 24 22 20 NOK Billion 18 16 14 12 10 8 6
Slide 28: Solid capital ratio
Solid capital ratio • The EU’s capital adequacy regulations (CRR/CRD IV) came ROE ROE ROE ROE into force on 31 December 2019. These entail, among 11.0% 11.3% 14.0% 3.7% other things, a reduction in the capital requirements for 21,8% loans to small and medium-sized enterprises (SME) and CET 1 20,4% 1
Slide 29: Outlook
Outlook • Given both the low oil prices and the ongoing Covid-19 situation, uncertainty remains about how both the Norwegian and the global economy will develop, and the picture is changing continuously. In Norway, there has been a positive development in the last quarter. • In the longer term, lowe
Slide 30: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 30
Slide 31: Increased unemployment (NAV) as a result of Covid-19, but reduction last quarter
Increased unemployment (NAV) as a result of Covid-19, but reduction last quarter Fully unemployed increased from 2% to 10%. Since then, it has fallen to 5%. Still highest in Oslo. 16 Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 14 12 10 8 6 4 2 0 2002 2004 2006 2008 2010
Slide 32: Norwegian house prices have increased by 3,5% last 12 months
Norwegian house prices have increased by 3,5% last 12 months Impact from Covid-19 led to lower sales, but since then sales and prices have picked up House prices. NOK per sqm. Average all homes. Monthly 90.000 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2004 2006 2008 2010 2012 2014 20
Slide 33: Lower petroleum prices and increased uncertainty dampen 2020 activity
Lower petroleum prices and increased uncertainty dampen 2020 activity Still uncertain how much petroleum activity in 2020 will be affected by Covid-19, but it will probably fall somewhat • Overall activity on the Norwegian Continental Petroleum activity on Norwegian Continental Shelf. BNOK (2020 NOK
Slide 34: Retail trade in Norway increased in 2019 and Covid-19 impacts 2020
Retail trade in Norway increased in 2019 and Covid-19 impacts 2020 Covid-19 has had a big impact. Groceries increased a lot in the beginning. Gradually, other goods have also increased Retail sales (excl. auto), change in turn-over from same 2-month period previous year 12,0 % 10,0 % 8,0 % 6,0 % 4,0
Slide 35: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 35
Slide 36: Lending to commercial real estate
Lending to commercial real estate 13.3% (BNOK 31.8) of total EAD* is related to commercial real estate • Commercial real estate for lease ‐ EAD NOK 22.4 billion, 9.3% of the bank’s total EAD ‐ The portfolio is characterised by lending to commercial Real estate Development management and projects for
Slide 37: Lending to retail trade, hotels and restaurants
Lending to retail trade, hotels and restaurants 2.1% (BNOK 5.1) of total EAD* is related to retail trade, hotels and restaurants • Retail trade ‐ EAD NOK 3.7 billion, 1.6% of the bank's total EAD Tourism; Operation of hotels MNOK 115 • Operation of hotels and restaurants and restaurants; MNOK 1.199
Slide 38: Lending to shipping
Lending to shipping 2.5% (BNOK 6.1) of total EAD* is related to shipping • Product- /chemical tank ‐ EAD NOK 3.6 billion, 1.5% of the bank's total EAD Gas; MNOK 431 • Dry-bulk ‐ EAD NOK 2.0 billion, 0.9% of the bank's total EAD • Gas ‐ EAD NOK 0.4 billion, 0.2% of the bank's total EAD Dry-bulk; MNOK
Slide 39: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 39
Slide 40: SpareBank 1 SR-Bank has a moderate risk profile
SpareBank 1 SR-Bank has a moderate risk profile in which no single event should be capable of seriously harming the bank's financial position 40
Slide 41: Risk management principles
• The core purpose of the banking industry is to create value by assuming deliberate and acceptable risk ‐ SpareBank 1 SR-Bank therefore invests significant resources in developing risk management systems, processes and expertise that are in line with leading international practice • The bank's prim
Slide 42: Limits on commitments and property financing requirements
• The bank sets specific limits for the size of commitments as well as requirements concerning industry diversification ‐ The maximum total exposure to an individual customer must be significantly lower than the regulatory requirements ‐ The maximum unsecured exposure to an individual customer must
Slide 43: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class • SpareBank 1 SR-Bank has a solid loan portfolio. 63,4% 64,2% Portfolio quality improved last year. 28,2% 28,7% 8,3% 7,1% • The loan portfolio consists mainly of small and medium-sized loans. 0.00 - 0.50 0.50 - 2.50 2.50 - 99.9 Probability
Slide 44: Risk profile – Lending to the retail and corporate market
Risk profile – Lending to the retail and corporate market Retail market portfolio distributed by risk class Corporate lending portfolio distributed by risk class 2,4% 2,5% 2,8% 2,7% 2,4% 13,5% 13,6% 14,5% 14,5% 13,3% 19,2% 19,7% 19,0% 18,1% 15,9% 55,4% 56,7% 53,9% 53,9% 57,5% 84,1% 83,9% 82,8% 82,8%
Slide 45: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 45
Slide 46: SpareBank 1 SR-Bank ASA
SpareBank 1 SR-Bank ASA Business divisions Fully owned companies Partly owned companies BN Bank SpareBank 1 Gruppen EiendomsMegler 1 SR-Boligkreditt Capital Market (35.0%) (19.5%) Leading real estate broker Covered Bond Funding Number of man-years: 24 Commercial bank located in Holding company for t
Slide 47: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 Samarbeidende SpareBank 1 LO/fagforbund SR-Bank SMN Nord Norge Sparebanker AS Østlandet tilknyttet LO 19,5% 19,5% 19,5% 19,5% 12,4% 9,6% Products, commissions, dividends Sales, loan portfolios, capital Companies where SR-Bank has direct owners
Slide 48: Our purpose: Strength to growth and development
Our purpose: Strength to growth and development Objectives Financial goals • The purpose for SpareBank 1 SR-Bank is to add strength to growth • The longer term target for return on equity is a minimum of 12%. and development. Our growth will give us the ability to provide • Top 50% return on equity
Slide 49: Balance sheet
Balance sheet Balance sheet (MNOK) 30.06.2020 30.06.2019 Cash and balances with central banks 645 725 Balances with credit institutions 8.752 3.417 Net loans to customers 211.779 197.319 Certificates, bonds and other fixed-income securities 38.921 32.035 Financial derivatives 10.229 5.304 Shares, ow
Slide 50: SRBANK share
SRBANK share Development in Price/Book Relativ share price development • International ownership is 23.0% 130 1,4 per 2. quarter 2020. 120 120 Index 100 = jun 30th 2019 110 1,2 100 100 1,0 90 • Total market value at 2. quarter NOK p/B 80 80 2020 is NOK 17.9 billion. 0,8 70 60 0,6 60 OSEBX Price 50 P
Slide 51: 20 largest shareholders as at 30 June 2020
20 largest shareholders as at 30 June 2020 Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • Ownership interests as at 30 June 2020: Folketrygdfondet 21.179.990 8,3% • From Rogaland, Agder and Vestland: 44.1% Brown Brothers Harriman & Co, U.S.A. Nominee 6.612.187 2,6% (43.0%) Stat
Slide 52: SR-Bank as of 30.06.2020
SR-Bank as of 30.06.2020 SpareBank 1 SR-Bank share 30.06.2020 2019 2018 2017 2016 2015 2014 • Number of shares issued Share price 69,90 100,00 89,20 87,00 60,75 39,30 52,50 255.8 million Stock value (MNOK) 17.877 25.575 22.813 22.250 15.537 10.051 13.427 Book value per share, NOK (group) 91,32 89,90
Slide 53: Contact Details
Contact Details Address Christen Tranes Gate 35 Tel: +47 915 02002 Postboks 250 www.sr-bank.no 4068 Stavanger Management Arne Austreid CEO Tel.: +47 900 77 334 E-post: arne.austreid@sr-bank.no Inge Reinertsen CFO Tel.: +47 909 95 033 E-post: inge.reinertsen@sr-bank.no Investor Relations Stian Helgøy