Sparebanken More · OSL:MORG
Sparebanken More — Sparebanken Møre — Q1 2015 Earnings Presentation
50 slides from Sparebanken More's earnings presentation, May 2015
Slide 1: Sparebanken Møre - the Group, 1st quarter 2015
Sparebanken Møre - the Group Presentation 1st. quarter 2015
Slide 2: Agenda
Agenda Summary Introduction Deposits and Loans Funding and Hedging Results Equity and ECs Future prospects Macroeconomic overview 2
Slide 3: Historical performance – in NOK and ROE
Summary Historical performance – in NOK and ROE Results in NOK 650 623 Favourable operating environment, a 600 530 strong county in a strong Norwegian 550 500 458 economy 450 450 400 379 Maintained high level of net interest 333338335 350 income 300 265272 264272 250 205 215 Strong cost-effici
Slide 4: High and stable return – based on our business model
Summary High and stable return – based on our business model Reported ROE – historical development 35 Sparebanken Møre Less volatile key figures for Sparebanken Møre 30 Sparebanken Vest compared with peers Sparebank 1 SMN 25 Sparebank 1 SR Consequences of policy Sparebank 1 Nord Norge decisions
Slide 5: Introduction to the bank and the market
Introduction to the bank and the market 5
Slide 6: Introduction to Sparebanken Møre
Introduction Introduction to Sparebanken Møre Independent savings bank Head office in Ålesund 30 branches in Møre og Romsdal county NOK 58.3 billion in total assets, about 170 000 customers 263,523 380 man years inhabitants Established in 1843 Listed on the Oslo Stock Exchange since 19
Slide 7: Full service bank in Møre og Romsdal
Introduction Full service bank in Møre og Romsdal Key business Corporate Retail Capital Adm/ areas Market Market Market support Fully Møre Boligkreditt AS Møre Eiendomsmegling AS owned The company has a license to operate as a Real estate brokerage towards retail and companies mortgage company and i
Slide 8: Sparebanken Møre – a brief overview
Introduction Sparebanken Møre – a brief overview Sparebanken Møre is the 8th largest Norwegian bank – the bank serves customers from the county of Møre og Romsdal The population of Møre og Romsdal is just above 260 000, and the population in the municipalities where the bank is located is 200 00
Slide 9: Sparebanken Møre's market area
Introduction Sparebanken Møre's market area Møre og Romsdal county 263,523 inhabitants The 3rd largest GDP per employee among 19 counties in Norway Norway's 3rd largest export county Diversified business structure Sparebanken Møre with 30% market share Diversified business structure in the
Slide 10: Møre og Romsdal – Diversified industries
Introduction Møre og Romsdal – Diversified industries Norwegian maritime areas are rich in natural resources, and play a very important role in commercial activities in Møre og Romsdal Oil and The petroleum sector has been responsible for 1/4 of the total investments in offshore Norway Nyhamna
Slide 11: Summary
Introduction Summary Sparebanken Møre •Seventh largest savings bank in Norway, solid financial performance with total assets Møre og Romsdal of NOK 58.3 billion •Population of just above •Market leader in main market, 260,000 the county of Møre og •Dominant industrial and Romsdal Norway commercial s
Slide 12: Deposits and loans
Deposits and loans
Slide 13: Good growth
Deposits and loans Good growth NOK mill. 58253 60000 56305 Growth during the last 12 54627 55000 51632 50454 months 48468 48884 50000 46241 45000 43434 • Total assets 7.2 % 40305 40000 • Loans (net) 9.5 % 35000 30000 27081 28068 28389 28477 • Deposits 0.2 % 25325 25000 20000 15000 10000 5000 0 Depos
Slide 14: Breakdown of gross lending
Deposits and loans Breakdown of gross lending NOK mill. 55000 50.769 Annual net lending growth 49.191 50000 46547 2012: 7.8 % 43.740 45000 40.701 2013: 6.2 % 40000 2014: 5.7 % 35000 32.806 32.245 30.454 30000 27.650 Q1 15: 9.5 % 25.296 25000 20000 Lending growth last 12 months 15000 Gross, retail ba
Slide 15: Loans by sector
Deposits and loans Loans by sector Other 10,9 % CRE 12,3 % Service 2,7 % Offshore Supply Retail 64,6 % 3,0 % Fisheries 6,5 % Other 10.9% Financial Other industry 1.3 1.9 Agriculture 0.7 services Building/construction 1.3 Fishing Industry 0.7 Furniture 0.1 Retail/wholesale trade 1.9 Ship Yards 2.5 Ot
Slide 16: Breakdown of deposits
Deposits and loans Breakdown of deposits NOK mill. 30000 28389 28477 28056 27081 853 697 755 Annual deposit growth 25325 705 25000 2011: 3.2 % 693 2012: 6.9 % 2013: 3.6 % 20000 15.996 17.024 17.072 15.221 2014: 1.1 % 14.307 15000 Q1 15: 0.2 % 10000 Deposit growth last 12 months 5000 10.325 11.155 11
Slide 17: Funding and hedging
Funding and hedging
Slide 18: Good access to the market
Funding and hedging Good access to the market Margins Since the beginning of 2012 we have mainly seen funding margins been reduced. By the end of Q1 2015 margins in the long-term bond market are at the lowest we have seen since 2009 Covered Bonds issued by Møre Boligkreditt AS has replaced senio
Slide 19: High deposit to loan ratio
Funding and hedging High deposit to loan ratio - total financing by quarter end Deposits from customers are the Group`s most important source of funding and we maintain a high deposit to loan ratio (56.8 % in the Group). Sparebanken Møre experiences the market access as very 1963 good 500 5755 88
Slide 20: The quality of the liquidity portfolio is good
Funding and hedging The quality of the liquidity portfolio is good - with a high level of LCR Rating Market Value Issuer Origin Market Value Currency Market Value AAA 4.027.406 Norway 2.726.828 NOK 4.247.324 AA+ 417.113 Sweden 573.143 EUR 539.326 AA 30.186 Int`l Org. 322.236 AA- 42.260 Finland 268.6
Slide 21: Off balance activity - quarterly
Funding and hedging Off balance activity - quarterly NOK MILL 40000 Low risk profile in the interest 35000 rate, equity and FX markets 30000 Sparebanken Møre has no trading 25000 portfolio in these or other similar 20000 markets/instruments 15000 Client's positions are hedged in the market 10000
Slide 22: Number of commercial payments
Funding and hedging Number of commercial payments 100000 90000 80000 24189 21541 23047 70000 22028 21097 21213 60000 50000 40000 68370 67664 68979 30000 56771 60259 53994 20000 10000 0 Outgoing Incoming 22
Slide 23: Results
Results 23
Slide 24: Main figures
Results Main figures Q1 2015 Q1 2014 Change during last 12 months From the Profit and Loss Account NOK mill. % NOK mill. % NOK mill. P. points % Net interest income/av. int. margin 273 1.93 269 1.98 4 -0.05 1.5 Net return, financial investments 20 0.14 17 0.12 3 0.02 17.6 Other income 47 0.33 43 0.3
Slide 25: Result as a percentage of average assets
Results Result as a percentage of average assets 2,25 2,2 1,95 1,93 1,75 1,65 1,68 1,63 Result from ordinary 1,54 1,57 operations before 1,41 1,52 1,53 1,44 1,44 1,45 1,54 losses 1,32 1,40 1,36 1,34 1,35 1,27 1,3 1,3 1,25 1,23 1,32 1,2 Result before taxation 1,15 1,09 1,10 1,14 0,86 0,83 0,75 0,55 0
Slide 26: Higher net interest income
Results Higher net interest income AS A PERCENTAGE OF AVERAGE ASSETS 2,00 Net interest income is higher in NOK than previous year despite: Strong competition on loan and 1,50 deposits More liquidity on the balance sheet with higher quality Still low interest rate level with low 1,00 2,03 1,96
Slide 27: Other operating income
Results Other operating income AS A PERCENTAGE OF AVERAGE ASSETS 1,00 Higher other operating income, compared with Q1 2014: Higher income from hedging 0,75 activity in the interest rate market High income from guarantees High income from financial 0,50 instruments Lower dividend income and 0
Slide 28: Strong development in cost/income
Results Strong development in cost/income - well below the target 60 55 49,5 50 48,8 45,3 45,7 45 43,5 43,2 40,1 40 35,4 35 30 25 20 15 10 5 0 28
Slide 29: Losses at a very low level
Results Losses at a very low level AS A PERCENTAGE OF AVERAGE ASSETS Losses totalled NOK 8 million 0,20 • Corporate: NOK -2 million • Retail NOK 0 million • Collective impairments NOK 10 million 0,15 Total impairments amounted to 0,10 NOK 315 million by 31.03.2014 0,05 0,10 0,10 0,09 0,07 0,06 0,04
Slide 30: Losses - details
Results Losses - details Total NOK million Corporate 30 30 25 25 20 20 15 15 10 10 5 10 5 8 0 0 1 1 2 -2 0 -1 0 -1 0 -1 0 0 -3 -5 -5 -10 -10 -15 -15 -20 -20 30
Slide 31: Problem Loans and impairments - continued positive development
Results Problem Loans and impairments - continued positive development Problem loans & Provisions 3,5 % 90,0 % 81,0 % The volume of Problem Loans 3,0 % 80,0 % has declined over the last 70,0 % years 2,5 % 60,0 % As a percentage of gross loans 2,0 % 50,0 % this figure ended at 0.77 % by the end o
Slide 32: Equity and ECs
Equity and ECs 32
Slide 33: Equity and related capital: Strong capital
Equity Equity and related capital: Strong capital % NOK mill. 17,80 6000 5680 5690 5650 18,00 17,02 5600 17,00 501 15,82 1,65 499 525 16,00 1,49 5200 14,65 2,54 4709 15,00 4800 860 13,57 2,99 1,40 807 14,00 0,93 299 999 2,38 4400 4175 13,00 3,11 1,56 4000 12,00 479 1002 3600 11,00 1,60 494 10,00 6,4
Slide 34: IRB approval from FSA
Equity IRB approval from FSA Core Capital 20,00 18,00 15,5 16,1 Sparebanken Møre will maintain a 16,00 14,4 14,00 13,7 3,0 2,5 strong financial position as the 12,0 12,0 2,4 12,00 1,7 1,6 3,2 leading bank in the region and will 10,00 follow the announced schedule 8,00 13,6 6,00 10,4 10,4 10,6 12,5
Slide 35: Summing up and outlook
Future prospects Summing up and outlook From the CEO: The macroeconomic environment for Møre og Romsdal are still satisfying and will help to keep the level of losses low and within the bank's plans this year It is expected that overall lending growth in 2015 will be weaker than what we have see
Slide 36: Dividend policy
Equity Dividend policy “Sparebanken Møre’s aim is to achieve financial results which provide a good and stable return on the Bank’s equity. The results shall ensure that the owners of the equity receive a competitive, long-term return in the form of dividends and increase in the value of the equity.
Slide 37: Dividend and EC-price
Equity Dividend and EC-price • The PCCs/ECs of Sparebanken Møre have been listed at Oslo Stock Exchange since 1989 • Total EC capital: NOK 989 million by March 2015 Dividend pr. EC: 1990 10 2002 15 1991 0 2003 16 1992 0 2004 18 1993 13 2005 20 1994 12 2006 20 1995 13 2007 23 1996 13 2008 20 1997 13
Slide 38: Macroeconomic Overview
Macroeconomic Overview 38
Slide 39: The Norwegian economy is strong. However, growth will be low in 2015 and unemployment will rise
Economic environment The Norwegian economy is strong. However, growth will be low in 2015 and unemployment will rise The Norwegian economy is characterised by: Low but rising unemployment Record high house prices Increased private demand Strong public sector growth Low interest rates Howev
Slide 40: Growth will be lower in 2015
Economic environment - Norway Growth will be lower in 2015 05.05.2015 side 40
Slide 41: High household debt is the main domestic risk factor
Economic environment - Norway High household debt is the main domestic risk factor 05.05.2015 side 41
Slide 42: High credit growth in the county, but low debt burden
Economic environment – Norway and Møre og Romsdal High credit growth in the county, but low debt burden* Annual credit growth 2012-2013 Debt burden households 2013 (NOK million) 42 *Source: Sparebank1 Markets/Statistics Norway
Slide 43: Key characteristics
Housing market in Norway Key characteristics Home ownership • Among the highest in the world – around 80% of households own their own home • Very limited buy-to-let market FSA lending • LTV should normally not exceed 85% guidelines • Interest-only loans should normally not be granted if LTV exceeds
Slide 44: Differences in housing types and prices
Housing – Norway and Møre og Romsdal Differences in housing types and prices Household housing-type distribution Housing type distribution - Norway - Detached vs apartment Other 3% 100% Apartment Detached Apartment 23% 80% 72% 60% 44% 42% 39% Detached 40% 29% 26% 53% 23% Semi- 20% 10% detached 21% 0
Slide 45: Differences in development of housing prices
Housing – Norway and Møre og Romsdal county Differences in development of housing prices Detached Year-over-year average growth in Norwegian Norway Møre og Romsdal County housing prices by March 2015 is 7.9 per cent, 45 compared to 7.2 per cent in Møre og Romsdal. 40 NOK 1000 per sqm. 35 Price growt
Slide 46: The business sector in Møre og Romsdal is doing well
Economic environment – Møre og Romsdal The business sector in Møre og Romsdal is doing well The most important drivers of growth and activity in 2015 and forward: Private consumption Public expenditures The construction sector Food production and fish exports The maritime cluster Main reasons f
Slide 47: The long term outlook for the manufacturing sector has improved
Economic environment – Møre og Romsdal The long term outlook for the manufacturing sector has improved The long term outlook for the manufacturing sector is positive due to: The weakening of the NOK Growth in world trade Unemployment in Møre og Romsdal will stabilise around 2 ½ - 2 ¾ per cen
Slide 48: Moderate production growth in Møre og Romsdal - growth will vary among the sectors
Economic environment – Møre og Romsdal Moderate production growth in Møre og Romsdal - growth will vary among the sectors Growth in traditional exports Number of unemployed in Møre og Romsdal (sadj) Higher demand for private services Increased activity in the public sector High production in
Slide 49: Contact
Contact Head Office Treasury and Markets Division Head of Division Runar Sandanger, EVP: runar.sandanger@sbm.no + 47 70 11 31 73 Keiser Wilhelmsgt. 29-33 + 47 95 04 36 60 P.O.Box 121 6001 Ålesund Chief Economist Inge Furre: inge.furre@sbm.no + 47 70 11 31 44 Tel: +47 70 11 30 00 Reuters Dealing: MOR
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