Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q1 2014 Earnings Presentation
63 slides from Sparebank 1 Sor-norge Asa's earnings presentation, May 2014
Slide 1: Investor Update 1st quarter 2014
Investor Update 1st quarter 2014 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 of SpareBank Introduction to SpareBank 11 SR-Bank SR-Bank ASA ASA Financials Solvency and liquidity position Appendix Page 3
Slide 4: A unique situation with a continuing budget surplus
A unique situation with a continuing budget surplus… Economic Indicators (%) 2009 2010 2011 2012 2013E 2014P GDP growth - mainland -1.6 1.7 2.5 3.4 1.8 2.1 Household consumption growth 0.0 3.8 2.5 3.0 2.3 2.3 Investment growth – mainland -13.2 -4.5 6.3 4.5 2.7 1.7 Investment growth oil & gas 3.4 -9.
Slide 5: Stavanger is the oil capital of Norway
Stavanger is the oil capital of Norway and a major player in Europe …and the third largest discovery ever on the Norwegian Continental Shelf was Major oil companies are located in Stavanger… made 140 km from our headquarters in 2011 Employees Production (BOE/day) 4000 5000 1 461 000 3000 Estimated r
Slide 6: 48 branch offices in one of Norway's most prosperous regions
48 branch offices in one of Norway’s most prosperous regions 1 Rogaland Population 452,000 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 P
Slide 7: One of Norway's most prosperous regions
One of Norway’s most prosperous regions Strong growth prospects in the region Planned infrastructure project total 100-150BNOK • Norway’s most rapidly growing population – currently 24 % of the country’s • New infrastructure projects creating business opportunities in Rogaland, total population Hord
Slide 8: The SpareBank 1 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: - Competitiveness Purpose - Profitability - Capital streng
Slide 9: SRBANK's activities
SRBANK’s activities Divisions of SpareBank 1 SR- Capital Markets Retail Market Corporate Market Administration & Support Bank ASA Number of man-years: 35 Number of man-years : 470 Number of man-years : 164 Number of man-years : 214 Fully owned companies Number of man-years : 221 Number of man-years
Slide 10: Increased interest and trading volume
Increased interest and trading volume Development in Price/Book Relative share price development • Converted from equity certificates to 70 1,2 180 OSEBX shares in 2012. 65 1,1 170 60 160 SRBANK Index 100 = 1. jan 1 55 150 • «Top-20» company 50 0,9 140 NOK p/B based on market cap 45 0,8 130 40 0,7 1
Slide 11: 20 largest shareholders as at March 2014
20 largest shareholders as at March 2014 • International Investor Number Stake ownership Sparebankstiftelsen SR-Bank 72.419.305 28,3 % increased from Gjensidige Forsikring ASA 26.483.470 10,4 % 14.1% at the Morgan Stanley & Co, U.S.A. 10.743.895 4,2 % end of 2013 to Folketrygdfondet 9.848.137 3,9 %
Slide 12: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Appendix Page Page 12 12
Slide 13: A good result, significantly affected by non-recurring effects
A good result, significantly affected by non-recurring effects Pre-tax profit for the quarter increased to NOK 787 million from NOK 501 million last year - Capital gain on the bank’s stake in Nets Holding AS improves the result by NOK 202 million - Return on equity after tax 18.4% (12.3%) The ne
Slide 14: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 capital ratio 18,4 % 15,6 % 16,2 % 11,1 % 11,2 % 12,8 % 10,1 % 10,3 % 10,5 % 12,3 % 11,8 % Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Cost ratio Earnings per share (NOK) 2,58 48,2 % 49,1 % 44,1 % 2,22 40,8 % 42,4 % 2,02 1,79
Slide 15: Key figures
Key figures Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Return on equity after tax (%) 18,4 16,2 15,6 11,8 12,3 Net interest margin (%) 1,40 1,46 1,49 1,43 1,27 Impairment losses on loans and guarantees in % of gross loans 0,18 0,17 0,11 0,09 0,09 -incl. SB1 Boligkreditt and SB1 Næringskreditt 0,12 0,12 0,08 0,06
Slide 16: Income statement
Income statement Group Income Statement (MNOK) Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Net interest income 547 574 568 526 451 Net commission and other income 480 489 466 465 404 Net income on investment securities 319 195 137 62 161 Total income 1.346 1.258 1.171 1.053 1.016 Total operating expenses 505 534
Slide 17: Change in profit 31.03.2013 – 31.03.2014
Page Page 17 17 100 200 300 400 500 600 700 800 900 0 31.03.2013 501 Net interest income incl. 96 39 commission from covered 135 bond companies 37 Other income Change in profit 31.03.2013 – 31.03.2014 Net income on 158 investment securities Total operating expenses - 15 Impairment losses on - 29 loa
Slide 18: Consolidated income profile
Consolidated income profile 1200 1000 322 299 315 314 800 34 37 278 29 2 167 167 165 MNOK 600 30 151 126 400 568 574 547 526 451 200 0 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Net interest income Commission income SB1 Boligkreditt and SB1 Næringskreditt Profit before tax SB1 Boligkreditt and SB1 Næringskreditt
Slide 19: Change in net interest income and commission income
Change in net interest income and commission income BK and NK 31.03.2013 – 31.03.2014 750 85 -8 - 33 39 712 700 -8 0,1 0,9 165 650 59 600 577 547 550 126 500 1.742 451 2.119 2.119 450 400 Net fundingcost Other Lending volume Lending margin Guarantee fund levy 31.03.2013 Deposit volume Deposit margin
Slide 20: Lending and deposit margins
Lending and deposit margins Lending margins 2,88% 2,99% 2,93% 2,92% 2,57% 2,64% 2,28% 2,33% 2,13% 2,21% 2,21% 2,20% 2,06% 1,85% 1,88% 1,61% 1,63% 1,36% Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Corporate market Retail market Deposit margins 0,25% 0,07% -0,03% -0,04% -0,27% -0,15% -0,15%
Slide 21: Lending volume and 12 months growth
Lending volume and 12 months growth Corporate Market 60 000 50 000 15% 15 % 40 000 9,2 % MNOK 7,6 % 10% 10 % 30 000 6,0 % 5,5 % 5,0 % 4,5 % 4,6 % 20 000 4,0 % 5% 5% 10 000 0,7 % 0 0% 0% Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Volume Growth % Retail Market 120 000 100 000 15 % 15% 80 00
Slide 22: Loan portfolio as at 31.03.2014
Loan portfolio as at 31.03.2014 • Gross loans as of 31 March 2014 amount to 2,9 % NOK 166.6 billion compared with NOK Agriculture / forestry / fishing 2,9 % 160.4 billion at the same time last year. 4,0 % Industry, Power/water supply and construction 3,7 % 1,9 % • 12-month growth in loans of 3.8%. R
Slide 23: Loan to value ratio on home mortgage loans
Loan to value ratio on home mortgage loans Total-distributed • The proportion of loans with a loan-to- 100 % value ratio of less than 85% is very high and it currently stands at 91.4%. 80 % 71,7 % 66,6 % 60 % • 98.2% of gross exposure is within 85% of 40 % the assessed value of collateral. This 24,8
Slide 24: 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 % 3,4 % 4,4 % 3,2 % 1,9 % 1,3 % 12,0 % 9,5 % 10,0 % 14,1 % 13,5 % 80 % • The risk profile has improved. T
Slide 25: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market* • Growth in deposits last 12 months at 8.5%. – An increase from NOK 68.6 billion to 40000 20% 20% 12,6 % NOK 74.4 billion. 30000 15% 15% Mill kr 7,3 % 6,6 % 10% 10% 20000 4,9 % 2,8 % 1,7 % 5% 5% • The deposits volume in the corporate -0,3 % 10000
Slide 26: Operating expenses
Operating expenses MNOK Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Personnel expenses 287 297 283 294 285 Restructuring costs 0 26 1 3 7 Non-recurring effect, pension-related items 7 0 0 0 0 Total personnel expenses 294 323 284 297 292 IT expenses 66 65 63 63 59 Marketing 17 21 17 29 19 Other administrative expe
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 0,17% 0,18% 0,09% 0,09% 0,11% 1,25% 1,24% 1,26% 1,14% 1,17% 0,87% 0,88% 0,91% 0,85% 0,12% 0,12% 0,81% 0,06% 0,06% 0,08% 689 791 912 985 2 884 80 52 830 630 32 490 467
Slide 28: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Appendix Page Page 28 28
Slide 29: Deposit coverage ratio and market funding
Deposit coverage ratio and market funding Deposit coverage ratio • Development in deposit coverage ratio 100,0 % reflects our funding strategy with a greater 80,0 % 66,8 % 67,6 % share of senior funding and the slightly 66,2 % 63,6 % 61,7 % 61,1 % 60,6 % 59,6 % 61,2 % reduced use of covered bond fun
Slide 30: Significantly improved funding structure since 2008
Significantly improved funding structure since 2008 Average life of long term funding (excl. covered bonds) • Funding indicator 1 (ratio of illiquid assets financed by debt with a duration 4,0 60 of more than 1 year) is increased to 110,3% for the parent bank and 107,7% on consolidated basis. 3,5 50
Slide 31: An established borrower in the Euromarket
An established borrower in the Euromarket SHBASS 2¼ 06/14/2018 Corp DNBNO 3⅞ 06/29/2020 Corp 120 120 120 NDASS 4 06/29/2020 Corp 120 NDASS 1⅜ 04/12/2018 Corp SPAROG 2 05/14/2018 Corp SPAROG 2⅛ 02/03/2020 Corp 100 100 100 100 SEB 4¼ 02/21/2018 Corp 80 80 80 80 Bps. Bps. Bps. Bps. 60 60 60 60 40 40 40
Slide 32: Stronger capital ratio - Basel I floor taken into account
Stronger capital ratio - Basel I floor taken into account 16% • All figures according to "transitional rule" that the minimum requirement for IRB 14% 14,5 % capital ratio can be reduced to maximum 80 % in relation to the Basel I rules will be in 12,9 % 12% 13,0 % force until the end of 2017. 11,0 %
Slide 33: Common equity tier 1 being strengthened in line with stricter requirements
Common equity tier 1 being strengthened in line with the stricter regulatory requirements • The new capital requirements entail a need 16,00% 16,00% to continue increasing common equity tier 1 capital 14,00% 10,0 -13,0 % 14,00% ROE Countercyclical buffer ROE 18,4 %* 1,0 % • Common equity tier 1 capi
Slide 34: Stronger core equity tier 1 capital ratio on unweighted balance sheet
Stronger core equity tier 1 capital ratio calculated on basis of unweighted balance sheet 9% • Core equity tier 1 capital ratio calculated on 8,1 % basis of unweighted balance sheet as of 31 7,7 % 8% March 2014 was 8.1% - 0.4 percentage points stronger than last year. 7% 6,4 % 6,3 % 6% 5,8 % • Measu
Slide 35: Outlook
Outlook Norwegian economic growth has slowed somewhat in the last year, but is expected to remain moderate going forward. Meanwhile, good activity in the petroleum sector, major infrastructure projects and increasing house building are helping to ensure good conditions for the region's business
Slide 36: Agenda
Agenda Introduction to SpareBank 1 SR-Bank ASA Financials Solvency and liquidity position Appendix Page Page 36 36
Slide 37: Our vision: Recommended by customers
Our vision: Recommended by customers Primary objective Financial targets • SpareBank 1 SR-Bank ASA is commited to value • ROE above 13% at a normalised level of interest rates creation in the bank`s core market area • Sustainable contribution to the value creation process • Top 50% ROE and cost/inco
Slide 38: SpareBank 1 Alliance
SpareBank 1 Alliance 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, dividends IT solutions, marketing and branding Sales, loan por
Slide 39: 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 2013 governments financial liabilities (in per cent of GDP) 200 180 160 140 120 100 1995 1997 1999 2001 2003 2005 2007 2009 2011 Norway United States Denmark Sweden Germany Finland Unit
Slide 40: Norwegian Economy – international context
Norwegian Economy – international context Unemployment rates GDP growth rates Source: OECD Economic Outlook no.92 and Statistics Norway Page Page 40 40 Source: OECD Economic Outlook no.93 and Statistics Norway
Slide 41: 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 42: Norwegian Housing and Mortgage Market
Norwegian Housing and Mortgage Market Population Change and Completed Housing Units Page Page 42 42 Source: Statistics Norway and Norwegian Central Bank
Slide 43: 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) 220,0 203 200,0 180,0 160,0 140,0 125 120,0 100,0 80,0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 House Price Index Nominal House Price Inde
Slide 44: 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 45: Balance sheet
Balance sheet Balance sheet (MNOK) 31.03.2014 31.03.2013 Cash and balances with central banks 770 802 Balances with credit institutions 1.092 1.055 Net loans to customers 121.037 111.551 Certificates, bonds and other fixed-income securities 20.868 20.286 Financial derivatives 4.339 4.536 Shares, own
Slide 46: Net commission and other income
Net commission and other income MNOK Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Payment facilities 57 59 66 56 52 Savings/placements 45 39 40 37 35 Insurance products 42 41 41 42 40 Commission income real estate (EM1) 100 108 101 127 97 Guarantee commission 27 23 29 26 26 Arrangement- and customer fees 31 45 15
Slide 47: Net income on investment securities
Net income on investment securities MNOK Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Dividend 18 -2 3 32 0 Investment income, associates 81 95 130 31 99 Securities gains/losses 205 13 -38 -55 -1 - of which capital change in shares and certificates* 220 42 11 -28 21 - of which capital change in certificates and bo
Slide 48: Subsidiaries
Subsidiaries MNOK 31.03.14 31.03.13 EiendomsMegler 1 SR-Eiendom AS Number of sales 1.772 1.701 Operating profit before tax 9,2 7,8 SpareBank 1 SR-Finans AS Total assets (BNOK) 6,5 6,1 Operating profit before tax 35,6 36,3 SR-Forvaltning AS Portfolio (BNOK) 6,9 6,4 Operating profit before tax 6,3 4,8
Slide 49: Ownership interests
Ownership interests MNOK 31.03.14 31.03.13 SpareBank 1 Gruppen AS (19,5 % interest ownership) Profit after tax 48,5 61,4 Adjusted profit previous years -4,2 -1,6 SpareBank 1 Boligkreditt AS (26,2 % interest ownership) Profit after tax 10,3 19,8 Adjusted profit previous years 1,9 0,0 SpareBank 1 Næri
Slide 50: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees Losses on loans in income statement (MNOK) Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Corporate customers 53 87 9 22 27 Retail customers -1 -7 23 3 -2 Change in collective impairment losses on loans 2 -30 0 0 0 Net impairment losses on loans 54 50 32 25 25 31.03 31.12 30
Slide 51: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk group • 95.6% of the loan portfolio satisfies the criteria for low and the lowest risk. 100 % 95,6 % 93,4 % Expected losses in this portion of the 80 % portfolio are very limited at 0.04%. 60 % • Exposure to high or the highest risk 40 % account
Slide 52: Low concentration of individual LGRs in the lending portfolio
Low concentration of individual LGRs in the lending portfolio Distributed by loss given realisation (LGR) • At the end of Q1, SpareBank 1 SR-Bank had a total of 19 commitments with 100 % estimated loss potential exceeding NOK 100 million. 86,9 % 85,8 % • These commitments represent 80 % approximatel
Slide 53: 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 portfolio is considered very good and 100 % 0,2 % 0,3 % 0,2 % 0,2 % 0,2 % 0,6 % 0,4 % 0,6 % 0,5 % 0,6 % with low potential losses. 98 % 96 % • The development is character
Slide 54: 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 100 % reduce the risk associated with new 80 % mortgages. These include stricter 57,8 % equity requirements and liquidity 60 % 57,0 % assessments whe
Slide 55: 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% 31.03.2012 30.09.2012 31.03.2013 30.09.2013 31.03.2014 31.03.2012 30.09.2012
Slide 56: Low exposure to the shipping segment
Low exposure to the shipping segment • Lending to conventional shipping is low Dry cargo; Gas; 2,9 % 6,5 % (5,0 %) and represents 1.4% of total loans Product- (3,1 %) /chemicaltanks; 9,7 % (8,5 %) Other; • Lending to the offshore sector 2,3 % (3,4 %) represents 5.2% of total loans Seismic; 5,9 % (5,
Slide 57: Lending to commercial property
Lending to commercial property • Lending to commercial property Housing cooperative; 4,7 % constitutes 15.5% of total loans, which is (5,0 %) Real estate an increase of 0.3% compared with the management; same time last year. 4,2 % (3,7 %) • The portfolio is characterised by lending to commercial pro
Slide 58: Liquidity portfolio
Liquidity portfolio Liquidity buffer – survival period Liquidity portfolio 20 Of which, securities 18 Market classified to 16 value, amortised 14 Category MNOK Share % cost, MNOK 12 Norwegian government/municipal 801 4% 0 10 SSA/Foreign guaranteed BNOK 3.679 21 % 0 8 Covered bonds (Norwegian/foreign
Slide 59: Investments in bonds and certificates
Investments in bonds and certificates Risk category Rating Market value Share • Most of the bond portfolio is managed as Very low risk AAA, AA+, AA og AA- 16.966 81,8 % part of the liquidity management Low risk A+, A og A- 294 1,4 % activities. Bonds held for liquidity Moderat risk BBB+, BBB og BBB-
Slide 60: Rating
Rating Moody’s Fitch Long-term debt A2 Long-term IDR A- Outlook Stable Outlook Stable Updated 30 August 2013 Updated 9 April 2014 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 2013 31.03.2014 Page 60
Slide 61: SRBANK as at 31 March 2014
SRBANK as at 31 March 2014 • Ownership interests: –From Rogaland, Agder-counties and Hordaland: 49.2% 31.03.2014 2013 2012 2011 2010 –International: 18.9% Share price 60,75 60,25 37,20 40,70 57,00 –10 largest: 58.2% –20 largest: 65.7% Stock value (MNOK) 15.537 15.409 9.514 5.182 7.257 • Number of ow
Slide 62: 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 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