Sparebank 1 Ostlandet · OSL:SPOL
Sparebank 1 Ostlandet — SpareBank 1 SR-Bank — Q4 2019 Earnings Presentation
48 slides from Sparebank 1 Ostlandet's earnings presentation, 2020
Slide 1: SpareBank 1 SR-Bank
= PrareBbank 1 SR-BANK
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 us a finance group for the South of Norway
Digitalization and growth makes us a finance group for the South of Norway Åsane Bergen Sotra Fana +4% Oslo 134 132 Husnes Stord 128 Ølen Aksdal +19% Haugesund 32 Karmsund 29 27 Åkra Kopervik Finnøy +20% 20 +79% Jørpeland 18 18 Randaberg 16 15 Stavanger Sola +37% Sandnes 10 Ålgård 7 8 Bryne 6 Nærbø
Slide 4: A good annual result characterised by solid underlying operations
A good annual result characterised by solid underlying operations, one- off income and a high level of activity 14.0% 37.9% Return on equity after tax 2019 (11.3%) Cost to income 2019 (40,9%) 12.1% excluding merger effect Fremtind Forsikring AS 40.8% excluding merger effect Fremtind Forsikring AS Pr
Slide 5: Key figures 2019 and financial targets for 2020
Key figures 2019 and financial targets for 2020 Return on equity CET 1 Impairment losses 14,0% 17,0%** 16,7% NOK 324 million 11,3% 12,0%* 14,7% NOK 235 million 12,1%* 2018 2019 Target 2020 2018 2019 Target 2020 2018 2019 Growth in cost Growth in loan Dividend share 11,2% 7,6% 5,0% - 7,0% ~ 50% 45% 4
Slide 6: Key figures – quarterly development
Key figures – quarterly development Return on equity CET 1 21,2% 16,2% 17,0%** 14,7% 14,7% 14,4% 14,4% 10,1% 10,5% 8,3% 12,8%* Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Cost ratio Earnings per share 42,9% 42,7% 47,0% 4,48 39,0%* 35,6% 3,52 2,06 2,32 1,90 29,8% 2,68* Q4 18 Q1 19 Q2
Slide 7: Key Figures – annual development
Key Figures – annual development Return on equity CET 1 14,0% 17,0% 15,1% 14,7% 11,0% 11,3% 12,1%* 2017 2018 2019 2017 2018 2019 Cost ratio Earnings per share 12,22 40,7% 40,9% 40,8%* 8,16 8,98 37,9% 2017 2018 2019 2017 2018 2019 *Excluding merger effect Fremtind Forsikring AS. ** The EU’s capital a
Slide 8: Income statement
Income statement Group Income Statement (MNOK) 31.12.2019 31.12.2018 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Net interest income 3.987 3.439 1.062 1.019 968 938 926 Net commission and other income 1.416 1.437 359 332 384 341 350 Net income on investment securities 1.127 569 22 89 340 676 68 Total in
Slide 9: Change in profit 31.12.2018 – 31.12.2019
Change in profit 31.12.2018 – 31.12.2019 558 89 3.817 -249 493 34 2.892 31.12.2018 Net interest income incl. Other income Net income on Total operating expenses Impairments on loans and 31.12.2019 commission from investment securities financial commitments covered bond companies 9
Slide 10: Key figures
Key figures 31.12.2019 31.12.2018 Q4 19 Q3 19 Q2 19 Q1 19 Q4 18 Return on equity after tax (%) 14,0 11,3 8,3 10,5 16,2 21,2 10,1 Net interest margin (%) 1,61 1,54 1,64 1,61 1,58 1,60 1,59 Impairments on loans in % of gross loans incl. covered bond 0,11 0,17 0,26 0,13 -0,04 0,10 0,18 companies Loans
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 +527 Total other operating expenses +249 5.403 2.478 4.876 2.229 1.421 1.382 1.352 1.351 1.276 1.279 678 1.006 353 1.349 373 323 583 602 615 932 334 333 576
Slide 12: Lending and deposit margins
Lending and deposit margins Lending margins* Deposit margins 2,78% 2,77% 2,77% 2,85% 2,81% 2,74% 2,73% 2,72% 2,73% 0,63% 0,53% 1,79% 0,41% 1,69% 1,50% 1,51% 1,50% 0,30% 1,40% 1,36% 1,36% 0,24% 0,22% 0,24% 1,32% 0,14% 0,08% 0,04% 0,03% -0,01% -0,06% -0,05% 0,05% -0,09% -0,15% -0,18% Q4 17 Q1 18 Q2 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% 3,1% 3,0% 2,9% 3,2% 3,6% 4,0% 4,5% 4,8% 4,8% 5,2% 2,4% 3,8% 126 128 129 130 132 134 136 125 125 66 68 71 74 74 75 75 61 63 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 1
Slide 14: Loan portfolio as at 31.12.2019
Loan portfolio as at 31.12.2019 • Gross loans (incl. covered bond Agriculture / forestry / fishing 3,7% 3,4% companies) as at 31 December 2019 is 1,9% increased to NOK 211.4 billion from NOK Supply and construction 1,9% 201.4 billion at the same time the year 1,3% Renewable / Green engagement 1,4% b
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 and stable portfolio. ‐ 89% of the exposure is within 85% of the a
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 % 20,7% 10,0% 8,3% 4,4% 2,3% 0,2% -1,1% 6,0% -5,0% 3,1% 3,9% 3,9% 3,7% 2,9% 3,9% 4,3% 4,2% -10,2% 53 52 51 52 55 54 54 50 54 49 50 46 49 48 48 48 49 50
Slide 17: Net commission and other income
Net commission and other income MNOK 31.12.2019 31.12.2018 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Payment facilities 271 260 66 77 66 62 66 Savings/placements 192 196 47 46 53 46 47 Insurance products 192 189 50 48 48 46 46 Commission income real estate broking 399 382 101 91 108 99 98 Guarantee co
Slide 18: Net income on investment securities
Net income on investment securities MNOK 31.12.2019 31.12.2018 Q4 19 Q3 19 Q2 19 Q1 19 Q4 18 Dividends 31 12 0 4 8 19 0 Investment income, associates 875 366 15 98 226 536 113 Securities gains/losses 96 84 20 -24 4 96 -44 - of which capital change in shares and certificates 111 163 36 -6 19 62 11 -
Slide 19: Subsidiaries
Subsidiaries Subsidiaries MNOK 31.12.2019 31.12.2018 EiendomsMegler 1 SR-Eiendom AS Number of sales 6.441 6.487 Operating profit before tax 6 11 SR-Forvaltning AS Capital under management (BNOK) 13 11 Operating profit before tax 25 35 FinStart Nordic AS Operating profit before tax* 27 60 SpareBank 1
Slide 20: Ownership interests
Ownership interests Ownership interests MNOK 31.12.2019 31.12.2018 SpareBank 1 Gruppen AS Interest ownership 19,5% 19,5 % Profit after tax 252 289 Profit effect merger 460 IA SpareBank 1 Boligkreditt AS Interest ownership 2,2% 4,8 % Profit after tax 6 -3 SpareBank 1 Næringskreditt AS Interest owners
Slide 21: Operating expenses
Operating expenses MNOK 31.12.2019 31.12.2018 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Payroll and pensions 1.211 1.067 328 307 294 282 270 Other staff expenses 261 230 68 68 63 62 60 Total personnel expenses 1.472 1.297 396 375 357 344 330 IT expenses 364 331 91 91 92 90 85 Marketing 90 88 31 20 20
Slide 22: Growth in cost 2018 - 2019, and financial target 2020
Growth in cost 2018 - > 2019, and financial target 2020 +4,0% 2.578 25 +11,2% 75 2.478 100 60 90 2.229 Cost 2018 New ventures One-off costs/ Continued business Cost 2019 Scaling new ventures Continued business Cost 2020 variable pay 22
Slide 23: Impairments on loans and financial commitments / 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 0,26% 1,55% 1,53% 1,46% 1,40% 1,43% 0,18% 139 0,10% 0,13% 3.250 3.232 92 2.935 2.874
Slide 24: Impairments on loans and financial commitments
Impairments on loans and financial commitments Impairments on loans and financial commitments in the income statement (MNOK) 31.12.2019 31.12.2018 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Corporate customers 211 324 121 82 -33 41 96 Retail customers 24 0 18 -16 14 8 -4 Total impairments 235 324 139 6
Slide 25: Funding
Funding • NSFR* 118% • LCR** 155% • NOK 19.2 billion net refinancing need over the next 12 months • Deposit to loans ratio 50.1% 22 Annual funding maturity 20 18 16 14 NOK Billion 12 10 8 6 4 2 0 2020 2021 2022 2023 2024 2025 2026 2027+ Funding ex CB Covered Bonds *The net stable funding ratio (NSFR
Slide 26: Solid capital ratio
Solid capital ratio • The EU’s capital adequacy regulations (CRR/CRD IV) came into force on 31 December 2019. These entail, among ROE ROE ROE ROE other things, a reduction in the capital requirements for 10,0% 11,0% 11,3% 14,0%* loans to small and medium-sized enterprises (SME) and 20,4% the elimina
Slide 27: MREL
MREL MREL requirement of 32,9% • SR-Bank must meet a minimum requirement for own funds and eligible liabilities (MREL) of 32.9%. 5,5 % • The requirement applies from 31 March 2020, although SR-Bank can include 1,7 % Recapitalization senior debt issued before January 2020 until the requirement regard
Slide 28: Outlook
Outlook • Expectations of growth in the Norwegian economy in 2020 will contribute to positive growth in the group’s market areas • Continued high consumption, increasing business investments and growth in exports will help the Norwegian economy grow. This could contribute to new jobs and lower unemp
Slide 29: Appendix
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 29
Slide 30: Lower unemployment (NAV) due to solid growth in the Norwegian economy
Lower unemployment (NAV) due to solid growth in the Norwegian economy Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly 6 5 4 3 2 1 0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Aust-Agder Rogaland Hordaland Vest-Agder Norge, SSB AKU-arbeidsledighet Norge Source: NAV og
Slide 31: Norwegian house prices have increased by 2,6% last 12 months
Norwegian house prices have increased by 2,6% last 12 months Prices continue to increase most in Oslo, Bergen close to national average, lower in Agder and Stavanger House prices. NOK per sqm. Average all homes. Monthly 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2003 2005 2007 2009 20
Slide 32: Increased petroleum activity on the NCS
Increased petroleum activity on the NCS Activity declined in 2015-2017, but has increased thereafter and expected to increase slighty in 2020 • Overall activity on the Norwegian Continental Petroleum activity on Norwegian Continental Shelf. BNOK (2020 NOK). Shelf (NCS) had a marked increase for many
Slide 33: Retail trade in Norway increasing
Retail trade in Norway increasing Muted growth in Norway in 2019 - highest growth in Oslo Retail sales (excl. auto), change in turn-over from same 8-month period previous year 12,0 % 10,0 % 8,0 % 6,0 % 4,0 % 2,0 % 0,0 % -2,0 % -4,0 % 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Norge Rogal
Slide 34: Appendix: Risk
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 34
Slide 35: 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 35
Slide 36: 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 37: Commitment limits 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 38: 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. 60,7% 63,3 % Portfolio quality improved last year. 29,7% 28,7 % 9,7% 8,4 % • The loan portfolio consists mainly of small and medium-sized loans. 0.00 - 0.50 0.50 - 2.50 2.50 - 99.9 Probabil
Slide 39: 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 2,8% 2,7% 2,4% 2,5% 2,7% 16,7% 16,9% 13,5% 13,6% 14,5% 22,5% 21,9% 19,2% 19,7% 19,0% 53,7% 53,4% 55,4% 56,7% 53,9% 80,5% 80,4% 84,1% 83,9%
Slide 40: Appendix: SpareBank 1 SR-Bank
APPENDIX 1) Macro 2) Risk 3) SpareBank 1 SR-Bank 40
Slide 41: 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: 27 Commercial bank located in Holding company for
Slide 42: 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 43: 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 • Return on equity of 12.0% after tax in 2020. The longer term (2021) and development. Our growth will give us the ability to provide target is a minimum of 1
Slide 44: Balance sheet
Balance sheet Balance sheet (MNOK) 31.12.2019 31.12.2018 Cash and balances with central banks 104 717 Balances with credit institutions 3.142 1.696 Net loans to customers 205.688 190.878 Certificates, bonds and other fixed-income securities 32.792 29.340 Financial derivatives 5.933 5.268 Shares, own
Slide 45: SRBANK share
SRBANK share Development in Price/Book Relativ share price development • International ownership is 27.9% 130 130 1,41,4 130 per 4. quarter 2019. 120 Index 100 = dec 31st 2018 110 110 1,21,2 110 100 9090 1,01,0 NOK • Total market value at 4. quarter NOK 90 p/B p/B 70 0,8 2019 is NOK 25.6 billion. 70
Slide 46: 20 largest shareholders as at 31 December 2019
20 largest shareholders as at 31 December 2019 Investor Number Stake Sparebankstiftelsen SR-Bank 72.419.305 28,3% • Ownership interests as at 31 December 2019: Folketrygdfondet 19.650.845 7,7% • From Rogaland, Agder and Vestland: 42.9% State Street Bank and Trust Co, U.S.A. Nominee 14.306.844 5,6% (
Slide 47: SR-Bank as of 31.12.2019
SR-Bank as of 31.12.2019 Sparebank 1 SR-Bank share 2019 2018 2017 2016 2015 2014 2013 • Number of shares issued Share price 100,00 89,20 87,00 60,75 39,30 52,50 60,25 255.8 million Stock value (MNOK) 25.575 22.813 22.250 15.537 10.051 13.427 15.409 Book value per share, NOK (group) 89,90 82,27 77,24
Slide 48: 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