Sparebank 1 Sor-norge Asa · OSL:SB1NO
Sparebank 1 Sor-norge Asa — SpareBank 1 SR-Bank — Q3 2020 Earnings Presentation
51 slides from Sparebank 1 Sor-norge Asa'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 +3% Nydalen Oslo 134 135 Ensjø Husnes 131 Stord Ølen Aksdal +24% 35 Haugesund 31 28 Åkra Kopervik Finnøy +20% +63% 21 22 19 Randaberg Jørpeland 17 16 Stavanger* +12% 13 Sola Sandnes 9 8 Ålgård 7 B
Slide 4: A stronger result with growth and good underlying operations
A stronger result with growth and good underlying operations 8.2% Return on equity after tax for the quarter 4.9% Pre-tax profit is NOK 603 million 12 months lending growth Of which retail market 6.6% and corporate market 2.7% NOK 369 million Impairments on gross lending and financial commitments fo
Slide 5: Key figures and financial targets for 2020
Key figures and financial targets for 2020 CET 1 Growth in costs (12 months) Growth in loans (12 months) 17,0% 18,5% 16,7% 11,2% 4,9% 4,9% 3,0% - 5,0% < 0,0% 2019 30.09.2020 Target 2020 -2,4% 2019 30.09.2020 Estimate 2020 2019 30.09.2020 Target 2020 5
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 17,7% 18,3%* 18,5%* 17,0% 14,2% 10,5% 8,3% 8,2% 3,4% 4,0% Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Cost to income ratio Earnings per share 42,7% 47,0% 2,32 42,3% 38,0% 1,90 1,97 34,2% 0,86 1,00 Q3 19 Q4 19 Q1 20 Q2 20 Q3 2
Slide 7: Income statement
Income statement Group Income Statement (MNOK) 30.09.2020 30.09.2019 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Net interest income 3.148 2.925 1.041 1.026 1.081 1.062 1.019 Net commission and other income 1.026 1.057 336 344 346 359 332 Net income on investment securities 459 1.105 190 297 -28 22 89 T
Slide 8: Change in profit 30.09.2019 – 30.09.2020
Change in profit 30.09.2019 – 30.09.2020 205 3.191 -13 43 -646 1.116 -1.664 30.09.2019 Net interest income Other income Net income on Total operating expenses Impairments on loans and 30.09.2020 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) 3.167 3.124 3.114 3.160 3.064 2.884 2.925 2.199 1.555 1.467 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Operating profit before losses and excl. income on investment securities, rolling 12-month figures Net profit
Slide 10: Key figures
Key figures 30.09.2020 30.09.2019 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Return on equity after tax (%) 5,2 16,0 8,2 4,0 3,4 8,3 10,5 Net interest margin (%) 1,54 1,60 1,48 1,50 1,64 1,64 1,61 Impairments on loans in % of gross loans incl. covered bond 1,08 0,06 0,67 1,53 1,05 0,26 0,13 company Loa
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 +192 Total other operating expenses -43 4.174 1.800 1.757 3.982 1.421 1.427 1.370 1.377 1.017 1.351 1.029 678 723 722 353 343 344 330 615 323 592 570 595 282
Slide 12: Lending and deposit margins
Lending and deposit margins Lending margins* Deposit margins 3,17% 3,02% 3,00% 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% 1,73% 0,22% 1,51% 1,46% 1,48% 1,39% 1,32% 1,33% 0,11% 1,28% 0,06% 0,07% 0,09% 0,17% -0,01% -0,06% -0,13% -0,18% -0,24% -0,43% Q3 18 Q4 18 Q1 19
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% 10,3% 5,3% 5,8% 6,6% 5,2% 5,6% 5,3% 3,2% 3,6% 4,0% 4,5% 4,8% 4,8% 2,7%* 136 137 140 143 128 129 130 132 134 71 74 74 75 75 78 78 77 68 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3
Slide 14: Loan portfolio as at 30.09.2020
Loan portfolio as at 30.09.2020 • Gross loans (incl. covered bond company) Agriculture / forestry / aquaculture 3,7% 3,4% as at 30 September 2020 is increased to 2,0% NOK 220.2 billion from NOK 209.9 billion Supply and construction 2,0% at the same time the year before. 1,5% Renewable / Green engage
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 % 9,1% 9,4% 12,3% 8,4% 4,3% 4,2% 6,0% 7,3% 3,7% 2,9% 3,9% 4,4% 4,5% 2,3% 0,2% -1,1% -5,0% 60 59 -10,2% 55 54 54 56 55 52 51 52 52 49 48 48 48 49 50 50
Slide 17: Net commission and other income
Net commission and other income MNOK 30.09.2020 30.09.2019 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Payment facilities 184 205 54 61 69 66 77 Savings/placements 144 145 48 48 48 47 46 Insurance products 154 142 53 50 51 50 48 Commission income real estate broking 296 298 107 104 85 101 91 Guarantee c
Slide 18: Net income on investment securities
Net income on investment securities MNOK 30.09.2020 30.09.2019 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Dividends 18 31 1 17 0 0 4 Investment income, associates 534 860 147 145 242 15 98 Securities gains/losses -140 76 36 122 -298 20 -24 - of which capital change in shares and certificates -56 75 38
Slide 19: Subsidiaries
Subsidiaries Subsidiaries MNOK 30.09.2020 30.09.2019 EiendomsMegler 1 SR-Eiendom AS Number of sales 5.074 4.948 Operating profit before tax 41 19 SR-Forvaltning AS Capital under management (BNOK) 13 13 Operating profit before tax 14 18 FinStart Nordic AS Operating profit before tax* -89 25 SpareBank
Slide 20: Ownership interests
Ownership interests Ownership interests MNOK 30.09.2020 30.09.2019 SpareBank 1 Gruppen AS Interest ownership 19,5% 19,5% Profit share after tax 107 264 Profit effect merger 340 460 SpareBank 1 Boligkreditt AS Interest ownership 2,2 % 4,8% Profit share after tax 2 6 SpareBank 1 Næringskreditt AS Inte
Slide 21: Operating expenses
Operating expenses MNOK 30.09.2020 30.09.2019 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Payroll and pensions 852 883 297 277 278 328 307 Other staff expenses 183 193 60 53 70 68 68 Total personnel expenses 1.035 1.076 357 330 348 396 375 IT expenses 285 272 95 98 92 91 91 Marketing 54 59 16 17 21 31 2
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 1,53% 1,84% 1,57% 1,30% 1,30% 1,40% 4.836 1,05% 1.152 4.133 3.612 3.250 3.232 1.166 8
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) 30.09.2020 30.09.2019 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Corporate customers 1.675 90 360 771 544 121 82 Retail customers 85 6 9 60 16 18 -16 Total impairments 1.760 96 3
Slide 24: Lending to oil and offshore
Lending to oil and offshore 6.0% (BNOK 14.5) of total EAD* is related to oil operations • Oil services ‐ EAD NOK 3.9 billion, 1.6% of the bank's total EAD Oil and gas; ‐ Funding of operating capital through current and fixed assets, as well as MNOK 2.527 guarantees Oil service; MNOK 3.913 • Explorat
Slide 25: Funding
Funding • NSFR* 123% • LCR** 154% • NOK 19.8 billion net refinancing need over the next 12 months • Deposit to loans ratio 52.2% • MREL subordination requirement 27,4% according to BRRD2 proposal as of 15 Oct 2020 from Ministry of Finance 34 Annual funding maturity 32 30 28 26 24 22 NOK Billion 20 1
Slide 26: 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% 5.2% other things, a reduction in the capital requirements for 22,0% loans to small and medium-sized enterprises (SME) and CET 1 20,4% 2
Slide 27: Outlook
Outlook • Economic development has been positive in Norway the last six months. Uncertainty still prevail given both low oil price and the ongoing Covid-19 situation, but the Norwegian state is particularly well-equipped to contribute financially. Extensive measures aimed at both the retail and corp
Slide 28: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 28
Slide 29: Increased unemployment (NAV) as a result of Covid-19, but lower after April
Increased unemployment (NAV) as a result of Covid-19, but lower after April Fully unemployed increased from 2% to 10%. Since then, it has fallen to 4,4%. Still highest in Oslo. Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 14 12 10 8 6 4 2 0 2002 2004 2006 2008 2010 2012 2
Slide 30: Norwegian house prices have increased by 6% last 12 months
Norwegian house prices have increased by 6% last 12 months Impact from Covid-19 dampened the market for some time, but sales and prices have picked up last months 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 2003 2004 2005 200
Slide 31: Lower petroleum prices and increased uncertainty dampen activity
Lower petroleum prices and increased uncertainty dampen activity Activity on the Norwegian Continental Shelf probably near unchanged in 2020, then down in 2021 before levelling out Petroleum activity on Norwegian Continental Shelf. BNOK (2020 NOK). • Overall activity on the Norwegian Continental As
Slide 32: 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 33: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 33
Slide 34: Lending to commercial real estate
Lending to commercial real estate 13.0% (BNOK 31.5) of total EAD* is related to commercial real estate • Commercial real estate for lease ‐ EAD NOK 22.3 billion, 9.2% of the bank’s total EAD Real estate management and Development ‐ The portfolio is characterised by lending to commercial projects for
Slide 35: Lending to retail trade, hotels and restaurants
Lending to retail trade, hotels and restaurants 1.8% (BNOK 4.5) of total EAD* is related to retail trade, hotels and restaurants • Retail trade ‐ EAD NOK 3.2 billion, 1.3% of the bank's total EAD Tourism; MNOK 118 • Operation of hotels and restaurants ‐ EAD NOK 1.2 billion, 0.5% of the bank's total
Slide 36: Lending to shipping
Lending to shipping 2.5% (BNOK 6.0) of total EAD* is related to shipping • Product tank ‐ EAD NOK 1.0 billion, 0.4% of the bank's total EAD Other shipping; MNOK 826 Product tank; • Chemical tank MNOK 980 ‐ EAD NOK 1.8 billion, 0.8% of the bank's total EAD • Dry-bulk Gas; MNOK 545 ‐ EAD NOK 1.9 billi
Slide 37: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 37
Slide 38: 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 38
Slide 39: Risk management principles and market areas
• 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 40: 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 41: Risk profile of the loan portfolio
Risk profile of the loan portfolio Distributed by risk class 62,7% 64,4 % • SpareBank 1 SR-Bank has a solid loan portfolio. 28,7% 27,3 % Portfolio quality improved last year. 8,6% 8,3 % • The loan portfolio consists mainly of small and 0.00 - 0.50 0.50 - 2.50 2.50 - 99.9 medium-sized loans. Probabil
Slide 42: 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 2,5 % 2,8 % 2,7 % 2,4 % 2,5 % 15,9 % 13,6 % 14,5 % 14,5 % 13,3 % 13,4 % 19,7 % 19,0 % 18,1 % 19,3 % 56,7 % 53,9 % 53,9 % 57,5 % 53,9 % 83,
Slide 43: Appendix
APPENDIX 1) Macro 2) Loan portfolio 3) Risk 4) SpareBank 1 SR-Bank 43
Slide 44: 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 45: 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 46: 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 47: Balance sheet
Balance sheet Balance sheet (MNOK) 30.09.2020 30.09.2019 Cash and balances with central banks 657 404 Balances with credit institutions 7.248 1.898 Net loans to customers 214.490 202.223 Certificates, bonds and other fixed-income securities 38.398 32.327 Financial derivatives 10.710 6.765 Shares, ow
Slide 48: SRBANK share
SRBANK share Development in Price/Book Relativ share price development • International ownership is 22.3% 130 1,4 130 Index 100 = sep 30th 2019 per 3. quarter 2020. 120 120 110 1,2 110 100 100 1,0 90 90 • Total market value at 3. quarter NOK p/B 80 80 2020 is NOK 19.8 billion. 0,8 70 70 60 Price 60
Slide 49: 20 largest shareholders as at 30 September 2020
20 largest shareholders as at 30 September 2020 Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3 % • Ownership interests as at 30 September 2020: Folketrygdfondet 21.179.990 8,3 % • From Rogaland, Agder and Vestland: 44.1% (43.0%) Brown Brothers Harriman & Co, U.S.A. Nominee 6.612.1
Slide 50: SR-Bank as of 30.09.2020
SR-Bank as of 30.09.2020 SpareBank 1 SR-Bank share 30.09.2020 2019 2018 2017 2016 2015 2014 • Number of shares issued Share price 77,40 100,00 89,20 87,00 60,75 39,30 52,50 255.8 million Stock value (MNOK) 19.795 25.575 22.813 22.250 15.537 10.051 13.427 Book value per share, NOK (group) 93,51 89,90
Slide 51: 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