Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q1 2011 Earnings Presentation
56 slides from Sparebank 1 Ostlandet's earnings presentation, May 2011
Slide 1: SpareBank 1 SR-Bank Group Investor Presentation – May 2011
SpareBank 1 SR-Bank Group Investor Presentation – May 2011
Slide 2: Disclaimer
Disclaimer This presentation is the property of SpareBank 1 SR-Bank. By receiving this presentation, each recipient (i) acknowledges that the offering is being made only outside the United States to non-U.S. persons in reliance upon Regulation S under the U.S. Securities Act Of 1933 and (ii) is deem
Slide 3: Norwegian Economy
Norwegian Economy SpareBank 4 SR-BANK
Slide 4: Key Economic Indicators
Norwegian Economy Key Economic Indicators Norway Norway Economic Indicators (%) 2006A 2007A 2008A 2009 A 2010 A 2011 E GDP Growth, year on year (mainland) 4.9 5.6 1.8 -1.3 2.2 3.3 Inflation, CPI 2.3 0.8 3.8 2.1 2.5 1.8 Private Consumption, real 4.8 5.4 1.6 0.2 3.6 3.7 Interest Rate (3m Money Market)
Slide 5: A unique situation with a budget surplus
Norwegian Economy A unique situation with a budget surplus… Government surplus (in per cent of nominal GDP) 2011 projections Norway 8.7 Sweden -0.6 Germany -2.9 Denmark -3.9 Euro Area -4.6 France -6.1 U.S -8.1 U.K. -8.8 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 Source: OECD Economic Outlook no. 88, October
Slide 6: Solid net financial position
Norwegian Economy ..causes a solid net financial position General gov net financial liabilities (in per cent of nominal GDP) 2011 projections 150 % 100 % 50 % 0% Greece Italy U.S France Euro area U.K. Germany Spain Denmark Sweden Norway -50 % -100 % -150 % -200 % Source: OECD Economic Outlook no. 88
Slide 7: Smaller impact of the crisis than Nordic neighbours
Norwegian Economy Norwegian Economy A smaller impact of the recent crisis than the Nordic neighbours Unemployment rates GDP growth rates 12 10 9.9 5 9.7 8 8.4 3 7.9 7.2 6 1 4 3.6 -1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2 -3 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -
Slide 8: SpareBank 1 alliance and SpareBank 1 SR-Bank
SpareBank 1 - alliance & SpareBank 1 SR-Bank 8
Slide 9: Strong alliance of Norwegian retail banks
SpareBank 1 - alliance Strong alliance of Norwegian retail banks • Founded 1996 - Economies of Scale • Local presence – extensive branch network • 2nd largest mortgage lender in the Norwegian Retail Market • Market leader in its local markets - “The neighbourhood bank” with market shares from 30 - 5
Slide 10: Simplified structure
SpareBank 1 - alliance Simplified structure SpareBank 1 SpareBank 1 SpareBank 1 Cooperating Sparebanken SR-Bank SMN Nord-Norge Savings Banks Hedmark (19,5 %) (19,5 %) (19,5 %) (19,5 %) (12 %) Dynamic ownership based on volume SpareBank 1 Boligkreditt SpareBank 1 (Covered Bonds Company) Gruppen Allia
Slide 11: Market Shares in Norway
SpareBank 1 - alliance Market Shares in Norway Lending Deposits 11
Slide 12: Group Structure
Group Structure Retail market Corporate market Capital market EiendomsMegler 1 SpareBank 1 SR-Forvaltning SR Investering AS SR-Eiendom AS SR-Finans AS ASA (100%) (100%) (100%) (100%) • Real-estate agency • Leasing • Asset • Investment in long- management - Houses • Financing term equity - Commercial
Slide 13: Recommended by the customer
Recommended by the customer SPAREBANK 1 SR-BANK'S STRATEGY OUR PURPOSE We shall be southern and western SpareBank 1 SR-Bank shall create value for Norway's most attractive supplier of the region of which we are part financial services Based on: OUR VALUES • Good customer experiences • Strong team sp
Slide 14: SpareBank 1 SR-Bank
SpareBank 1 SR-Bank Creating values for more than 170 years 1839 1849 1859 1869 1879 1889 1899 1909 1919 1929 1939 1949 1959 1969 1979 1989 1999 2009 Southwestern Norway’s leading bank group • Profit before tax as at Q1 2011: NOK 336 million • Total assets on-balance sheet: NOK 133 billion • 54 offi
Slide 15: Financial Performance – Q1 2011
Financial Performance – Q1 2011 15
Slide 16: Highlights Q1 2011
Highlights Q1 2011 • Profit before tax was NOK 336 million (NOK 395 million) • Profit after tax was NOK 265 million (NOK 298 million), corresponding to a return on equity after tax of 11.2% (14.8%) • Reduced net interest income as a result of margin pressure • Lending growth of 12.5% and growth in d
Slide 17: Key figures
Key figures Return on equity Cost ratio 60,0 % 14,8 % * 53,5 % 11,2 % * 40,2 % 5,3 % 31.03.09 31.03.10 31.03.11 31.03.09 31.03.10 31.03.11 Deposit-to-loan Earnings per EC 59,8 % 55,3 % * 54,9 % 1,6 1,3 0,5 31.03.09 31.03.10 31.03.11 31.03.09 31.03.10 31.03.11 * Figures from 2010 inclusive of net con
Slide 18: Income statement
Income statement MNOK Q1 11 Q4 10 Q3 10 Q2 10 Q1 10 Net interest income 424 442 436 427 437 Net commission and other income 281 283 264 294 260 Net return on investment securities 128 183 137 172 79 Total income 833 908 837 893 776 Total operating expenses 446 423 408 423 312 Operating profit before
Slide 19: Key figures
Key figures Q1 11 Q4 10 Q3 10 Q2 10 Q1 10 Return on equity after tax (%) 11,2 16,9 14,3 16,5 14,8 Net interest margin (%) 1,28 1,31 1,34 1,34 1,42 Cost ratio (%) 53,5 46,6 48,7 47,4 40,2 Impairment losses on loans and guarantees in % of gross loans incl. SpareBank 1 Boligkreditt* 0,15 0,22 0,14 0,17
Slide 20: Income profile
Income profile 800 700 219 228 600 207 251 254 232 253 219 500 43 57 186 53 32 29 43 28 24 400 MNOK 22 300 465 455 442 437 427 436 424 200 407 349 100 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Net commission and other income Commission income SpareBank 1 Boligkreditt and SpareBank 1 Næ
Slide 21: Lending and deposit margins
Lending and deposit margins 2,03 % 2,09 % 2,13 % 1,97 % 1,96 % 2,00 % 1,98 % 1,62 % 1,52 % 1,63 % 1,51 % 1,53 % 1,45 % 1,33 % 1,32 % 1,26 % 1,22 % 1,19 % Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Lending margin CM Lending margin RM incl. SpareBank 1 Boligkreditt 0,63 % 0,56 % 0,50 % 0,42
Slide 22: Lending volume and 12 month growth
Lending volume and 12 month growth Including portfolio in SB1 Boligkreditt and SB1 Næringskreditt Corporate Market 50.000 25 % 40.000 19,1 % 20 % 30.000 15 % Per 31.03.2011: MNOK 10,9 % 20.000 10 % • 12 month growth 4.8 % incl. Kvinnherad 10.000 4,8 % 5% • 12 month growth 3.0 % excl. Kvinnherad 3,7
Slide 23: Loans by industry
Loans by industry Increased share of retail lending Industry, Power/water supply and construction: 5 (4,6) Commodity trade/hotels: Agriculture/forestry/fishi 2,1 (2,5) ng: 2,8 (3) Shipping/offshore: 6,6 (7,3) Retail customers: 40 (40,1) Real estate: 16,6 (17,5) Service industry: 3,7 (4,4) Pub. mgm.,
Slide 24: Deposits volume and 12 month growth
Deposits volume and 12 month growth Corporate Market 25.000 20,1 % 20 % 13,3 % 20.000 10 % • Per 31.03.2011: 4,7 % 3,3 % 15.000 MNOK 3,7 % 2,0 % 0% • 12 month growth 20.1 % (incl. 10.000 -7,1 % Kvinnherad aquisition in Q4 2010) -6,5 % -10 % • 12 month growth 17.4 % (excl. 5.000 -21,6 % -20 % Kvinnhe
Slide 25: Net commission income and other income
Net commission income and other income MNOK Q1 11 Q4 10 Q3 10 Q2 10 Q1 10 Payment facilities 48 50 53 50 48 Savings/placements 38 34 29 41 32 Insurance products 33 33 25 29 27 Commission income real estate (EM1) 94 87 93 109 76 Guarantee commission 19 15 17 13 12 Arrangement- and customer fees 12 12
Slide 26: Net return on investment securities
Net return on investment securities MNOK Q1 11 Q4 10 Q3 10 Q2 10 Q1 10 Dividend 6 0 1 46 0 Investment income, associates 51 94 70 54 49 Securities gains/losses 17 53 32 41 21 - of which capital change in shares and certificates 28 71 12 45 7 - of which capital change in certificates and bonds -11 -1
Slide 27: Subsidiaries
Subsidiaries MNOK 31.03.11 31.03.10 EiendomsMegler 1 SR-Eiendom AS Number of sales 1.795 1.492 Operating profit before taxes 12,3 4,7 SpareBank 1 SR-Finans AS Total assets (BNOK) 5,0 5,1 Operating profit before taxes -17,9 10,4 SR-Forvaltning ASA Portfolio (BNOK) 6,5 5,9 Operating profit before taxe
Slide 28: Ownership interests
Ownership interests MNOK 31.03.11 31.03.10 SpareBank 1 Gruppen AS (19,5 %int erest ownership) Profit after tax 27,9 23,6 BN Bank ASA (23,5 %int erest ownership) Profit after tax 2,9 7,1 Amortised 7,3 1,6 SpareBank 1 Boligkreditt AS (28,6 %int erest ownership) Profit after tax 8,3 9,0 SpareBank 1 Nær
Slide 29: Operating expenses
Operating expenses Development last 12 months 450 10 7 6 10 9 8 11 400 350 73 300 250 MNOK 446 200 150 312 100 50 0 Normalised Non-recurring costs EM1 and Vågen Higher payroll costs Higher payroll Higher ICT costs Marketing Other Q1 2011 (inclusive of related to the (higher level of from Kvinnherad
Slide 30: Impairment losses on loans last 5 years
Impairment losses on loans last 5 years 500 0,5 Collective impairment losses on loans 0,41 400 Individual impairment 0,4 0,38 losses on loans Loss ratio in % of average 98 91 300 gross loans 0,3 0,23 24 0,19 Percentage 200 0,2 MNOK 288 277 100 210 0,1 0,01 80 0 10 0 -54 -29 -38 -100 -0,1 -0,13 -200
Slide 31: Low level of distressed commitments
Low level of distressed commitments Gross non-performing commitments Problem commitments (not non-performing) MNOK % 0,42 % MNOK % 0,42 % 1,26 % 0,40 % 0,35 % 1,01 % 0,81 % 309 0,73 % 0,72 % 286 291 977 286 720 0,14 % 0,10 % 0,27 % 520 494 568 78 66 30% 22% 26% 132 23% 35% 31% 18% 31% 30% 28% 37% 12
Slide 32: Capital strength
Capital strength • At the end of Q1 2011 the core capital 13,0 ratio was 10.2 % - up from 9.4 % at 11,1 11,0 the same time last year 11,0 10,2 10,2 9,4 9,7 8,7 8,8 9,0 8,0 • Due to transitional rules the minimum Percentage 7,0 requirement for capital adequacy for 2011 may be reduced to 80 per cent 5
Slide 33: Liquidity and Funding
Liquidity and Funding SpareBank 4 SR-BANK
Slide 34: Available Funding Programmes
Available Funding Programmes Swap with CB Domestic EMTN Boligkreditt Næringskreditt Covered Covered Gov’t Bonds vs. Certificate of Deposits/ Euro medium-term debt Description Covered Bonds Debentures instruments Bonds Bonds (Mortgages) (commercials) Senior unsecured/ Senior unsecured/ Senior Senior
Slide 35: Funding and liquidity management
Funding and liquidity management Funding next 12 months Funding per year 4,500 12,000 NOK Billions NOK Billions 4,000 10,000 3,500 3,000 8,000 2,500 6,000 2,000 1,500 4,000 1,000 2,000 0,500 0,000 0,000 jun. 11 jul. 11 aug. 11 nov. 11 jan. 12 okt. 11 feb. 12 mai. 11 sep. 11 des. 11 mar. 12 apr. 11 2
Slide 36: Liquidity buffer and bondportfolio
Liquidity buffer and bondportfolio Liquidity buffer Bond portfolio Of which, securities NOK Billions Market value classified to Asset class MNOK Share amortised cost MNOK Norwegian other 195 1% 100 Norwegian bank/finance 1.988 11 % 354 Norwegian state/municipal 2.091 12 % 108 Foreign bank/finance 1.
Slide 37: Outlook - 2011
Outlook - 2011 SpareBank 4 SR-BANK
Slide 38: Outlook
Outlook • The upswing in the Norwegian economy has gained a foothold and Norges Bank has signalled that the key rate will gradually increase towards a more normal level. • A good underlying development for business and the population in the region with continued low unemployment. • Even though conti
Slide 39: Conversion to limited savings bank
Conversion to limited savings bank • On 25 November 2010 the Supervisory Board unanimously approved the Board of Directors' recommendation to apply to the Ministry of Finance for authorisation to convert to a limited savings bank. • The Financial Supervisory Authority of Norway made a positive recom
Slide 40: Appendix
SpareBank 4 SR-BANK
Slide 41: Equity certificate - ROGG
Equity certificate - ROGG • Owner shares as at 31.03.11: – From Rogaland, Agder-fylkene and Hordaland: 46,1 % (46,9 %) – Non-domestic: 9,7 % (6,7 %) – Largest 10: 33,6 % (30,6 %) – Largest 20: 40,6 % (37,1 %) • No. of ROGG owners as at 31.03.11: 12 116 (12 466) • Employees in the group owned 3,5 % o
Slide 42: 20 largest equity certificate holders
20 largest equity certificate holders 20 largest EC holders per 31.03.11 Number Stake Gjensidige Forsikring 20.713.065 16,3% SpareBank 1-stiftinga Kvinnherad 6.069.934 4,8% Odin Norge 3.205.372 2,5% Odin Norden 3.065.553 2,4% Clipper AS 1.685.357 1,3% Frank Mohn AS 1.666.142 1,3% Trygve Stangeland 1
Slide 43: Price performance 1996 – Q1 2011
Price performance 1996 – Q1 2011 - dividend reinvested 43
Slide 44: Savings/placements – portfolio development
Savings/placements – portfolio development 14.000 • As at 31.03.2011, assets under management amounted to NOK 12.000 12.9 billion – Up from NOK 11.9 billion at 10.000 31.03.2010 – 57 517 current savings contracts MNOK (54 290 savings contracts as at 8.000 31.03.10) – The average per savings contract
Slide 45: Cost ratio per 31.03.2011
Cost ratio per 31.03.2011 100 % 93,6 % 87,5 % 80 % 60 % 55,8 % 53,5 % 52,9 % 49,2 % 40 % 40,2 % 36,4 % 31,1 % 24,4 % 20 % 0% 31.03.2010 31.03.2011 45
Slide 46: Impairment losses on loans and guarantees
Impairment losses on loans and guarantees Q1 Q4 Q3 Q2 Q1 Losses on loans in income statement (MNOK) 2011 2010 2010 2010 2010 Corporate customers 74 66 37 41 56 Retail customers 6 2 3 2 3 Change in collective impairment losses on loans -29 3 3 8 10 Net impairment losses on loans 51 71 43 51 69 Net im
Slide 47: Risk profile of SpareBank 1 SR-Bank
Risk profile of SpareBank 1 SR-Bank High share of commitments with low risk SpareBank 1 SR-Bank's portfolio distributed by riskgroups • 93% of the bank's loan exposure 100 % 92,6 % 90,3 % satisfies the criteria for low and the lowest risk. Expected losses in this 80 % portion of the portfolio are ve
Slide 48: Risk profile of SpareBank 1 SR-Bank
Risk profile of SpareBank 1 SR-Bank Moderate risk profile and stable development of the portfolio quality over the past quarter Development of SpareBank 1 SR-Bank's portfolio distributed by riskgroups 100 % 1,9 % 2,2 % 2,4 % 1,6 % 1,6 % • The group's moderate risk profile 7,7 % 7,8 % 7,4 % 5,5 % 5,8
Slide 49: Risk profile of corporate market portfolio
Risk profile of corporate market portfolio Portfolio quality is good and the development has been stable over the past quarter Development in corporate market's portfolio distributed by riskgroups 100 % 5,0 % 5,8 % 6,4 % 4,2 % 4,2 % 90 % 14,5 % 15,5 % 19,8 % 20,4 % 20,0 % 80 % • The quality of the c
Slide 50: Portfolio of commercial property for rental
Portfolio of commercial property for rental Portfolio is dominated by commitments with low risk SpareBank 1 SR-Bank's portfolio in commercial property for rent distributed • The portfolio of commercial by riskgroups property for rental represents the 100 % group's largest concentration in a 90 % sin
Slide 51: Norwegian Mortgage Market
Norwegian Mortgage Market Key Characteristics Size of the • Total mortgage market around NOK 1,840 billion at YE 12 Months Household Credit Growth market 2010 (approx USD 330bn) Rate (% of Household debt) • Banks and credit institutions are the dominant supplier of mortgages with over 88% market sha
Slide 52: Norwegian Mortgage Market
Norwegian Mortgage Market Nominal and real house price development Index of House Prices, Norway (Jan 2000 = 100) 215 208 195 175 168 155 135 119 115 95 75 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Index of House Prices CPI Deflated Disp.Inc Deflated Source: Norges Eiendomsmeglerforbund
Slide 53: Risk Profile in the Retail Market Portfolio
Risk profile in the Retail Market Portfolio Low risk portfolio and limited loss potential • The quality of the retail market (incl SpareBank 1 Boligkreditt) Total portfolio under management portfolio is very good. Its performance is characterised by sustained stability. Including portfolio in SpareB
Slide 54: Loan to Value ratio – LTV
Loan to Value ratio – LTV Residential mortgages The figure below include the portfolio transferred to SpareBank 1 Boligkreditt AS. • Lending is consistently moderate seen in light of the value of assets pledged (incl SpareBank 1 Boligkreditt) Total portfolio under management as collateral. Less than
Slide 55: SpareBank 1 Alliance structure
SpareBank 1 Alliance structure SpareBank 1 SpareBank 1 SpareBank 1 Sparebanken Samarbeidende LO SR-Bank SMN Nord-Norge Hedmark Sparebanker (10%) (19,5%) (19,5%) (19,5%) (12%) (19,5%) SpareBank 1 Gruppen AS Owned directly SpareBank 1 ODIN by the banks: Skadeforsikring AS Forvaltning AS Alliance coope
Slide 56: Contact details
Contact details Headoffice/ Arne Austreid Inge Reinertsen Administration: CEO CFO Bjergsted Terrasse 1 -- -- Postboks 250 Telephone: Telephone: 4066 Stavanger 900 77 334 909 95 033 E-mail: E-mail: arne.austreid@sr-bank.no inge.reinertsen@sr-bank.no Vidar Torsøe Investor relations E-mail: sparebank1@