Sparebank 1 Nord-norge · OSL:NONG
Sparebank 1 Nord-norge — FY2018 Earnings Presentation
70 slides from Sparebank 1 Nord-norge's earnings presentation, Feb 6, 2019
Slide 1: Preliminary accounts 2018
Preliminary accounts 2018 Tromsø/Oslo 6 February 2019
Slide 2: Preliminary annual accounts 2018
Preliminary annual accounts 2018 Pre-tax profit ROE Loan losses 1 920 MNOK 12.9 % 22 MNOK CET-1 ratio Proposed cash dividend Community dividend 14.5 % 4 NOK 465 MNOK per EC-certificate 2
Slide 3: Key financial figures - development
Key financial figures - development CET 1 incl floor Return on equity capital 13,1 % 12,9 % 12,9 % 15,0 % 14,9 % 12,2 % 12,0 % 14,5 % 13,9 % 9,1 % Target 13,4 % Target > 12 % 14,5 % 12,5 % 2013 2014 2015 2016 2017 31.12.18 2013 2014 2015 2016 2017 31.12.18 Payout ratio (%) C/I ratio 59,8 % 60,5 % 56
Slide 4: Northern Norwegian economy: record low unemployment and steady growth
Northern Norwegian economy: – record low unemployment and steady growth Sector Status Outlook While the rest of Norway is experiencing decrease, Macro increasingly more tourists are coming to North-Norway Seafood In particular hotels in Troms and Finnmark have seen an increase compared to autumn las
Slide 5: Decreasing population is limiting further growth
Decreasing population is limiting further growth 8000 6000 4000 2000 0 -2000 -4000 -6000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Nettoinnvandring Net immigration Nettoinnflytting Net migration Fødselsoverskudd Births surplus Folketilvekst Population growt
Slide 6: Number 1 position in the retail and SME market
Number 1 position in the retail and SME market 1 PM Bank • Main bank: 35 % 1 SME Bank • Main bank: 41 % 2 Large corporates - Bank 1 Real estate • Market share: 37 % 1 Accounting services • Market share: 15 % 3 Secured financing/leasing • Market share: 19 % 6 Source: Kantar TNS (posisjonsundersøkelse
Slide 7: Focus on SME is showing good results
Focus on SME is showing good results Main bank in the SME market (%) 42 42 41 41 40 38 37 37 36 35 34 35 34 32 33 30 30 17 16 14 15 14 12 12 10 10 8 8 8 7 7 8 6 6 7 7 4 4 5 4 4 3 3 4 4 4 2001 2003 2005 2007 2009 2011 2013 2015 2017 SpareBank 1 DNB Anne spb. Nordea Danske Bank Annen bank Source: KANT
Slide 8: Continued growth in market share, but decreasing lending growth
Continued growth in market share, but decreasing lending growth Retail market Business 90.000 9,3 % 9,0 % 80.000 8,4 % 8,2 % 70.000 7,0 % 60.000 10,1 % 60.000 8,6 % 50.000 8,2 % 50.000 5,9 % 5,4 % 40.000 40.000 30.000 30.000 20.000 20.000 1,2 % 10.000 10.000 0 -3,0 % 0 2012 2013 2014 2015 2016 2017
Slide 9: Subsidiaries – high investments and good profitability
Subsidiaries – high investments and good profitability Resultat Endring Selskap før skatt fra 2017 SpareBank 1 Finans Nord-Norge NOK 175 mill + 168 mill SpareBank 1 Regnskapshuset Nord-Norge NOK 22 mill + 6 mill Eiendomsmegler 1 Nord-Norge NOK 14 mill - 4 mill 9
Slide 10: One stop shop for financial services – physically and digitally
«One stop shop» for financial services – physically and digitally Real Estate Acconting Markets (Interest rate, currency, commodities) Pension Insurance Debt Collection Finance Private banking Payment (credit, leasing, factoring, EK) Presence, digital solutions and knowledge of Northern Norway 10
Slide 11: Community dividend provide proximity and visibility
Community dividend provide proximity and visibility Share of Voice in media (Dec 18) Others Øvrige 28 % SNN DNB 61 % 11 % Distribution of editorial publicity in the Group's core area. Source: Retriever 11
Slide 12: SpareBank 1 Alliance – more than 20 years of cooperation
SpareBank 1 Alliance – more than 20 years of cooperation Products Technology Cooperation 12
Slide 13: Frenemies – the new standard in Norwegian banking
«Frenemies» – the new standard in Norwegian banking 13
Slide 14: Innovation + trust = international success
Innovation + trust = international success Young people’s top 10 brands Vipps 76,8 % Netflix 74,9 % Spotify 68,4 % YouTube 67,5 % Rema 1000 67,3 % Apple 66,7 % IKEA 61,8 % Kiwi 61,7 % Coca Cola 61,3 % Source: YouGovs Brandindex (18-34 years) 14
Slide 15: Business Strategy: Regional Proximity – National Power
Business Strategy: Regional Proximity – National Power Regional Proximity Nasjonal strength Cooperation Physcial presence customised Specialists «Frenemies» Strong, local branding Analysis Payment and ID Community dividend Digital solutions Insurance Full financial service offer Innovation 15
Slide 16: Ownership of strategy and the Group
Ownership of strategy and the Group 79.207 116.876 79.985 Equity certificates: 84.537 102.852 80.371 35.487 63.159 Top management 78.013 77.081 owns a total value of 53 MNOK 81% of employees are owners 16
Slide 17: Consolidated statement of profit or loss
Consolidated statement of profit or loss (Amounts i n NOK mi l l i on) 31.12.18 31.12.17 Net interest income 1 896 1 770 Net fee-, commision and other operating income 1 057 992 Net income from financial investments 463 552 Total net income 3 416 3 314 Total costs 1 474 1 366 Result before losses an
Slide 18: Quarterly summary
Quarterly summary (Amounts in NOK million) 4Q18 3Q18 2Q18 1Q18 4Q17 Net interest income 496 484 467 449 461 Net fee-, commision and other operating income 278 254 275 250 265 Net income from financial investments 80 121 188 74 194 Total net income 854 859 930 773 920 Total costs 387 373 371 343 373
Slide 19: Changes profit and loss last quarter
Changes profit and loss last quarter 18 - 41 18 - 14 -2 (Amounts in NOK million) 494 473 3Q18 NII incl provision NCI excl provision Investment income Costs Losses 4Q18 commission loans from commission loans 19
Slide 20: Ambitious long-term cost target: C/I < 40%
Ambitious long-term cost target: C/I < 40% NOK mill. 1.461 1.474 1.328 1.320 1.366 1.209 54% 47% 44% 43% 43% 41% 2013 2014 2015 2016 2017 2018 (Amounts in NOK million) Cost/income Group 20
Slide 21: Net loan losses, customer loans and guarantees
Net loan losses, customer loans and guarantees Mill kr 0,23 % 0,22 % 0,17 % 0,02 % 200 213 184 22 2015 2016 2017 31.12.18 Net losses Net losses in % of gross lending incl Boligkreditt
Slide 22: Good segment diversification
Good segment diversification A high share of retail- and primary industry lending Real Power- , water supply and construction 2 % represent a risk mitigating Estate 10 % Commision loans 29 % Industries 2 % factor. Agriculture and fisheries 5 % The Group has a well diversified corporate market An
Slide 23: Lending volume
Lending volume Retail incl. commission loans 28 % Retail incl. commission loans 82 381 Business/ incl. 76 158 72 % 69 647 commission 9,3 % 8,2 % loans 31.12.16 31.12.17 31.12.18 Corporate/public market Retail excl. 39 % commission 31 736 loans 29 327 61 % Business excl. 26 640 10,1 % 8,2 % commissio
Slide 24: Deposit volume
Deposit volume Business Retail banking market 34 179 32 304 30 561 5,7 % 5,8 % 16 588 15,8 % 19 212 14 574 13,8 % 31.12.16 31.12.17 31.12.18 31.12.16 31.12.17 31.12.18 Public Business 30,0 % Retail 53,4 % 2,5 % 18,3 % 8 735 8 957 10 594 Public 16,6 % 31.12.16 31.12.17 31.12.18 24
Slide 25: Board's proposal for profit allocation of the Group's result
Board’s proposal for profit allocation of the Group’s result Dividend 4.00 kr: (adjusteed for interest on hybrid Tier-1 capital) 56.9% NOK 402 mill Equity certificate owners: NOK 706 mill Retained share of profits 46.4% 43.1% NOK 304 mill NOK 1 522 mill: Group profit 53.6% Community dividend 56.9% N
Slide 26: Dividend: Target and historical figures
Dividend: Target and historical figures • Excess capital will not be used for activites outside the core business • Allocation of extraordinary dividend from SpareBank 1 Gruppen associated with the insurance merger, assessment: ‒ Possible need for increased solvency as a result of regulatory changes
Slide 27: Financial targets
Financial targets ROE CET-1 ratio > 12 % 14.5 % Dividend payout ratio C/I ratio > 50 % < 40 % 27
Slide 28: Financial outlook
Financial outlook Increased deposit and lendings rates from 4Q 2018, but increased NIBOR reduces the effect. Increased interest rates in 2019 are expected to provide NRI a basis for further repricing of lending and deposit rates, including stricter risk pricing of loans and credits. ROE targeted: To
Slide 29: SpareBank 1 Nord-Norge
SpareBank 1 Nord-Norge CEO Jan-Frode Janson CFO Rolf Eigil Bygdnes E-mail: jfj@snn.no E-mail: reb@snn.no Tel. + 47 909 75 183 Tel. + 47 905 19 774 URLs Website and netbanking: www.snn.no Equity certificate in general: www.egenkapitalbevis.no Financial calendar: Preliminary annual accounts 2018: 6 Fe
Slide 30: Appendix
Appendix 1. About SpareBank 1 Nord-Norge 2. Financial figures – additional information 3. Credit area 4. Liquidity 5. Northern Norway: Macro and economic trends 6. SpareBank 1 Group and alliance 30
Slide 31: Company structure
Company structure Associated companies and jointed ventures Subsidiaries and second tier subsidiaries SpareBank 1 SpareBank 1 SpareBank 1 Finans Eiendomsmegler 1 SpareBank 1 Gruppen AS Boligkreditt AS Næringskreditt AS Nord-Norge AS Nord-Norge AS 19,5 % | Financial services Loan/ consumer finance/ l
Slide 32: Equity Certificates (EC) – geographic holder structure
Equity Certificates (EC) – geographic holder structure 10,3 13,8 13,8 20,3 28,6 32,0 33,0 34,6 35,7 36,5 37,5 37,0 37,5 64,1 65,6 65,5 61,1 53,2 49,1 48,1 46,8 45,6 42,9 44,7 44,2 43,4 25,5 20,6 20,7 18,6 18,2 19,0 18,9 18,6 18,7 19,6 19,1 18,9 18,8 2012 2013 2014 2015 2016 1Q17 2Q17 3Q17 4Q17 1Q18
Slide 33: The 20 largest EC holders
The 20 largest EC holders Number Share of EC Holders of ECs EC Capital PARETO AKSJE NORGE VERDIPAPIRFOND V/PARETO ASSET MANAGEMENT AS 3.260.063 3,25% State Street Bank and Trust Comp A/C CLIENT OMNIBUS F, REF: OM06 3.058.928 3,05% GEVERAN TRADING CO LTD 2.693.280 2,68% MP PENSJON PK 2.584.322 2,57%
Slide 34: The 20 largest EC holders residing in Northern Norway
The 20 largest EC holders residing in Northern Norway Number of Share of total Equity Certificate holders Equity Certificates Equity Certificate capital SPAREBANKSTIFTELSEN SPAREBANK 1 NO 1.411.606 1,41 % KARL DITLEFSEN 547.543 0,55 % ODD ERIK HANSEN INVEST AS 400.000 0,40 % LARS WORKINN 294.180 0,2
Slide 35: Why invest in SpareBank 1 Nord-Norge?
Why invest in SpareBank 1 Nord-Norge? 1 Number 1-position in an attractive growth region 2 Ambitious cost and modernization measures provide profitable operations 3 Focus on core business has implied reduced risk Considerable underlying values through high relative ownership in SpareBank 1 Gruppen,
Slide 36: Financial figures – additional information
Financial figures – additional information 36
Slide 37: Net interest income - Group
Net interest income - Group 543 561 536 527 NOK mill 516 525 65 59 75 60 66 76 484 496 461 467 450 449 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Net interest income Commissions from Boligkreditt 37
Slide 38: Quarterly results – net interest income
Quarterly results – net interest income (Amounts i n NOK mi l l i on) 4Q18 3Q18 2Q18 1Q18 4Q17 Interest and similar income from loans to and claims on credit institutions 6 3 3 3 21 Interest and similar income from loans to and claims on customers 696 656 646 611 619 Interest and similar income from
Slide 39: Net fee-, commision- and other operating income
Net fee-, commision- and other operating income NOK mill 215 213 189 190 195 174 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 39
Slide 40: Net fee- and other operating income
Net fee- and other operating income 4Q18 3Q18 2Q18 1Q18 4Q17 (Amounts i n NOK mi l l i on) Payment facilities 84 77 61 60 60 Insurance products 37 42 36 40 35 Guarantee commissions 4 4 3 4 3 Real estate broking 34 34 41 26 29 Portefolio commission 13 8 11 12 11 Other commissions 21 23 26 18 21 Commi
Slide 41: Income from financial investments
Income from financial investments Group (Amounts in NOK million) 4Q18 3Q18 2Q18 1Q18 4Q17 Dividends 1 2 2 1 0 Income from joint ventures 112 93 100 63 167 Gains/losses from shares in subsidiaries 0 6 0 0 0 Gains/losses and net value changes on shares -15 23 81 -1 30 Net value changes on bonds, forei
Slide 42: Operating expenses
Operating expenses (Amounts in NOK million) 4Q18 3Q18 2Q18 1Q18 4Q17 Wages and salaries 148 144 146 139 150 Pension costs 17 12 12 11 3 Social costs 35 29 27 28 30 Total personnel costs 200 185 185 178 183 Development costs 38 30 39 33 19 Electronic data processing costs 21 25 31 24 31 Marketing cos
Slide 43: Group companies result before tax
Group companies result before tax (Amounts i n NOK 1000) 31.12.18 31.12.17 SpareBank 1 Finans Nord-Norge AS 175 041 7 002 SpareBank 1 Regnskapshuset Nord-Norge AS 22 366 16 321 EiendomsMegler 1 Nord-Norge AS 14 074 18 118 Subsidiaries core operations 211 481 41 441 Other subsidaries - 792 -1 990 Tot
Slide 44: Key figures balance sheet
Key figures balance sheet (Amounts (Beløp i millinkroner) NOK million) 31.12.18 31.12.18 31.12.17 31.12.17 Change Endring i kr Change Endring i %% Forvaltningskapital Total assets 106 106156 156 97 97186 186 88970 970 9,2% 9,2% Brutto utlån 80 863 75 003 5 860 7,8% Total lending 80 863 75 003 5 860
Slide 45: Credit area
45 Credit area SpareBank NORD-NORGE
Slide 46: Portfolio - exposure as of 31.12.18, parent bank
Portfolio - exposure as of 31.12.18, parent bank 50.000 47.045 45.000 40.000 34.677 35.000 30.000 26.298 NOK mill 25.000 20.000 15.000 9.550 10.000 5.000 427 1.210 699 1.585 139 261 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired Retail market Corporate market SB1 Bolig
Slide 47: Portfolio – changes last 12 months, parent bank
Portfolio – changes last 12 months, parent bank 4.000 3.759 3.500 3.000 2.500 2.410 2.000 NOK mill 1.500 1.267 1.000 427 491 500 309 53 -16 0 Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired -500 -8 -543 47-1.000 SB1 Boligkreditt Retail market Corporate market SB1 Næringsk
Slide 48: Portfolio - exposure distributed by size
Portfolio - exposure distributed by size Loans distributed by size of exposure and share of total exposure Share of loanexposure Dec 2018 Share of loanexposure Dec 2017 79,0 % 80,6 % 10,3 % 9,5 % 4,9 % 4,6 % 5,9 % 5,2 % Below 10 mnok 10 - 100 mnok 100 - 250 mnok Above 250 mnok Numbers include SB 1 B
Slide 49: Portfolio – LTV mortgage loans
Portfolio – LTV mortgage loans 100,0 % 92,2 % 92,5 % • 97.5 % of exposures are 90,0 % within 85 % of the 80,0 % collaterals market value 70,0 % 60,0 % 50,0 % • Exposures above 85 % are 40,0 % 2.5 % 30,0 % 20,0 % 10,0 % 5,4 % 5,0 % 1,2 % 1,2 % 1,2 % 1,3 % 0,0 % Below 70 % 70 - 85% 85 - 100 % Above 10
Slide 50: Portfolio – Commercial Real Estate
Portfolio – Commercial Real Estate Housing Ass.; 2,5 % Residential Development; 2,2 % Above 250 mnok; Residential Investment; 5,4 % Plot; 0,5 % 0 - 5 mnok; 14,7 % 22,4 % Offices; 24,6 % Industry; 6,0 % Combination- buildings; 6,5 % 100 - 250 mnok; 20,0 % Hotels; 7,8 % 5 - 30 mnok; Others (small 19,5
Slide 51: Portfolio – Oil related exposure, Group
Portfolio – Oil related exposure, Group Industry Other • Oil related exposure amounts to NOK 1,102 6,3 % 0,8 % Supply base mill 27,9 % • The exposure represents 0.97 % of total lending incl. Næring- and Boligkreditt • Average weighted probability of default 1.14 % • A total of NOK 25 mill are non-pe
Slide 52: The Group's loan losses
The Group's loan losses Losses 2018 2017 4th quarter 4th quarter 2018 (iso) 2017 (iso) Individual losses Retail market 2 -3 3 -1 Corporate market -64 109 12 87 SpareBank 1 Finans Nord-Norge 10 125 0 6 Total individual losses -52 261 15 93 Collective losses and other value change items 55 -77 -21 -15
Slide 53: Liquidity
53 Liquidity SpareBank NORD-NORGE
Slide 54: Funding instruments 31.12.2018
Funding instruments 31.12.2018 Currency Bonds 34 % NOK Bonds 59 % Subordinated Loan Capital 4% T1 Hybrid 3% 54
Slide 55: Maturity profile 31.12.2018
Maturity profile 31.12.2018 Capital markets funding (excl. SPABOL/SPACOM) • NOK 25 775 mill in capital market funding exclusive of 6.000 SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt 5.000 • SpareBank 1 Boligkreditt and 4.000 SpareBank 1 Næringskreditt is important funding sources. Mill NO
Slide 56: Liquidity portfolio 31.12.2018
Liquidity portfolio 31.12.2018 Gov. 20 % Covered bonds 68 % Public sector 12 % 56
Slide 57: Macro and Economic trends
57 Macro and Economic trends SpareBank NORD-NORGE
Slide 58: Stable, low unemployment
Stable, low unemployment 58 Source: NAV, «Hovedtall for arbeidsmarkedet»
Slide 59: Seafood – export growth
Seafood – export growth • Growth in seafood export value from Northern Norway of 9,3 % per November. • Good prices and weak norwegian kroner contribute. • 1st half 2018 was the best ever for cod fisheries, and cod is important for Northern Norway. 59 Source: Norwegian Seafood Council
Slide 60: Tourism – growth in foreign overnight stays
Tourism – growth in foreign overnight stays • Aminor decrease in number of overnight stays. • Foreign overnight stays plays a more important role, but the growth is now slowing down in Finnmark and Nordland. Still growth in Troms, especially from winter tourism. • Optimistic prospects for world econ
Slide 61: Oil and gas – new fields increase activity
Oil and gas – new fields increase activity • Five fields in production: Norne, Snøhvit, Skarv, Goliat and Aasta Hansteen. • Alta/Gotha ‒ Appraisal for development • Johan Castberg ‒ Building has started, production start-up planned in 2022/2023 • 2019 is promising years for discovering ‒ Several pro
Slide 62: Lower growth in retail sales than the Norwegian average
Lower growth in retail sales, and currently growth is lower than the Norwegian average Source: SSB, retail sales 62
Slide 63: Housing prices: Lower price level and growth rate in Northern Norway
Housing prices: Lower price level and growth rate in Northern Norway – implies lower downside risk 63 Source: Eiendom Norge, Finn.no and Eiendomsverdi AS, «Boligprisstatistikk»
Slide 64: Credit growth corporates
64 Credit growth corporates -4,0 Credit growth corporates. 12 mth growth 8,2% — 5,6% NY 201503 2016K1 2016K3 2017K1 ——=SNN, Corporate clients 2017K3 2018K1 2018K3 —— Norway, Corporates SpareBank NORD-NORGE O
Slide 65: Credit growth households
Credit growth households Credit growth households. 12 mth growth 12 10 82% 8 6 =. x 4 54% 2 0) 201504 2016K2 2016K4 2017K2 2017K4 2018K2 2018K4 ——SNN, Retail clients —— Norway, Households SpareBank @) NORD-NORGE
Slide 66: Deposit growth corporates
Deposit growth corporates 66
Slide 67: Deposit growth households
Deposit growth households 67
Slide 68: SpareBank 1 Group and Alliance
SpareBank 1 Group and Alliance 68
Slide 69: SpareBank 1 Alliance: National champion, regional focus
SpareBank 1 Alliance: National champion, regional focus The SpareBank 1 alliance consists of 14 banks; independent in each their region. Decisions are made close to the customer, and each bank continues to develop its link with its local community SpareBank 1 Nord-Norge (Tromsø) Operate exclusiv
Slide 70: SpareBank 1 Alliance
SpareBank 1 Alliance SpareBank 1 SpareBank 1 SpareBank 1 SR- SpareBank 1 Samspar LO Nord-Norge SMN Bank Østlandet Products, commissions, dividends Sales, loan portfolio, capital SpareBank 1 Nord-Norges direct ownership SpareBank 1 Gruppen AS SpareBank 1 SpareBank 1 SpareBank 1 BN Bank ODIN Forvaltni
SpareBank 1 Nord-Norge — FY2018 Earnings Presentation on 6ix