Presentation of. 1st QUARTER REPORT Oslo, Tromsø, 26 April 2007

Transcription

1 Presentation of 1st QUARTER REPORT 2007 Oslo, Tromsø, 26 April 2007

2 SpareBank 1 Nord-Norge Finnmark Alta Berlevåg Breivikbotn Båtsfjord Hammerfest Havøysund Honningsvåg Karasjok Kautokeino Kirkenes Kjøllefjord Lakselv Tana Vadsø Varangerbotn Vardø Øksfjord Hålogaland Andenes Borkenes Bø Evenskjer Hamnvik Harstad Kabelvåg Leknes Lødingen Melbu Myre, Øksnes Narvik Ramberg Reine Risøyhamn Sortland Stokmarknes Svolvær Troms Bardufoss, Målselv Brøstadbotn Burfjord Finnsnes Gryllefjord Hansnes Langnes, Jekta Longyearbyen Lyngseidet Nord-Lenangen Nordkjosbotn Olderdalen Oteren, Storfjord Setermoen, Bardu Senjahopen Sjøvegan Skaland Skibotn, Storfjord Skjervøy Sommarøy Stonglandseidet Storslett Storsteinnes Sørreisa Tennevoll Tromsdalen, Amfi Tromsø Tromsø lufthavn UNN, Tromsø Øverbygd Nordland Bodø City Nord Fauske Hamarøy Leinesfjord, Steigen Misvær Moldjord Mørkved Rognan Røst Værøy Ørnes, Meløy Helgeland Brønnøysund Mo i Rana Mosjøen Nesna Sandnessjøen Sollfjellsjøen, Dønna SpareBank 1 Nord-Norge Group: Head Office: Tromsø Organisation: 5 regions Location: 83 branches Man years, Group: 782

3 SpareBank 1 Nord-Norge the region s leading bank Assets NOK 55.7 billion Good profitability High job satisfaction among staff The Bank s strong involvement in the local community strengthens its market position. Very good results in SpareBank 1 Gruppen AS The SpareBank 1 alliance this strategic and operational platform for the Bank functions well and is well accepted by the market Key statistics Rating Aa3 (Moody s) and A (Fitch Ratings) Loans NOK 47.6 billion Deposits NOK 29.0 billion Number of branches 83 Number of customers Retail banking Corporate Clubs/associations Insurance

4 Organisation of the financial services group Group Parent Bank SpareBank 1 Nord-Norge Invest ASA Investment company Equity stake 100 % SpareBank 1 Gruppen Fin.Services Group Equity stake 19.5% SpareBank 1 Finans Nord- Norge AS Leasing/factoring Equity stake 100% Tromsø Bodø Eiendomsdrift AS Real estate management Equity stake 100 % SpareBank 1 Nord-Norge Securities ASA Securities firm Equity stake 55 % EiendomsMegler 1 Nord-Norge AS Real estate brokerage Equity stake 100 % Tromsø Kirkenes Bodø Helgeland Alta Hammerfest

5 Financial targets: Capital adequacy ratio SpareBank 1 Nord-Norge shall be a financially strong bank with a capital adequacy ratio which reflects the risks involved within the Bank s market area. Capital adequacy ratio of 12 % and a core capital coverage of 9 % minimum. The confidence level shall be 99,9%.

6 Group capital adequacy ratio (Amounts in NOK million) Core capital Supplementary capital in addition to the core capital Deduction items: Subord. loan-and equity cap. participations in other fin.inst Capital adequacy reserves Net equity and related capital resources Total risk-weighted assets base % Total risk-weighted assets base IRB - 95 % Core capital adequacy ratio* 8,63 % 9,69 % 9,77 % Capital adequacy ratio* 10,39 % 11,15 % 10,36 % * Figures for 1st. quarter 2007 are calculated in accordance with IRB Figures for 2006 are calculated in accordance with NGAAP, not restated in accordance with IFRS Including 50 per cent of the result for 1st quarter 2007, the capital adequacy ratio will be %. The change in core capital coverage from 2006 is affected by the following factors: In accordance with the new capital adequacy rules and regulations, the items of deduction relating to the equity capital are to be allotted between core capital and supplementary capital on a 50/50 basis (previously only supplementary capital) (-) Increased calculation basis without the share of the profit for the year having been factored in (-) Risk-weighted calculation basis to be reduced as a result of IRB; still only a 5 per cent impact due to transitional rules and regulations

7 Financial targets: Profitability Profitability SpareBank 1 Nord-Norge s return on equity shall reflect the risk pertaining to the Bank s business operations and the general level of interest rates The targeted after-tax return is minimum 6 percentage points above the yield on long-term government bonds The profitability shall be comparable to that of peer banks

8 Main features 1st quarter 2007 (2006) Very good result Pre-tax operating result NOK 229 million (NOK 227 million) After-tax return on equity capital 19.5 per cent (22.5%) Earnings per Primary Capital Certificate (PCC) NOK (NOK 13.86) Very good result from SpareBank 1 Gruppen AS. The Bank s share of SpareBank 1 Gruppen AS s result amounted to NOK 48 million (NOK 21 million) Overall cost ratio 49.0 per cent (49.3%) Low credit losses: Net losses amounted to NOK 2 million (2006; a net income of NOK 6 million) Total result from financial investments: NOK 67 million (NOK 65 million) 12 month lending growth: 12.3 per cent (11.3%) 12 month deposit growth: 13.6 per cent (9.2%) Overall deposit coverage ratio: 60.8 per cent (60.2%)

9 Group profit and loss account - IFRS (Amounts in NOK million) Change Net interest income % 2.16 % Net fee- and commission income % 0.69 % Income from financial investments % 0.54 % Other income % 0.21 % Total net income % 3.59 % Total costs % 1.77 % Result before losses and write-downs % 1.82 % 0 Net losses and write-downs % % Result before tax % 1.87 % 0 Tax % 0.51 % Period result % 1.36 %

10 Income from financial investments (Amounts in NOK million) Group - IFRS Change Dividends Income from joint ventures Gains/losses and net value changes on certificates and bonds Gains/losses and net value changes on shares Gains/losses and net value changes on foreign exchange and fin. derivatives Gains/losses and net value changes on other financial assets Value changes on hedged objects in portfolio hedge of interest rate risk Income from financial investments

11 Profit before tax Group Companies SpareBank 1 Finans Nord-Norge AS 4,759 3,347 SpareBank 1 Nord-Norge Invest AS Eiendomsdrift AS 115 6,961 Eiendomsmegler 1 Nord-Norge AS 481 1,834 SpareBank 1 NN Securities ASA (55%) 1,379 2,600 TOTAL 6,029 14,847

12 Quarterly Summary - Profit and loss account figures (Amounts in NOK million) Q1-07 Q4-06 Q3-06 Q2-06 Q1-06 Interest income Net fee- and commission income Income from financial investments Other operating income Total income Total costs Profit before losses Losses Profit before tax Tax Minority interest Profit for the period

13 Group operating income In comparison with 2006, the changed result is primarily ascribable to the following factors: Increase in net interest income Increase in net fee- and commission income Increase in net income from financial investments Increase in other (non-interest) income Increase in costs Increase in net loan losses TOTAL + NOK 22 million + NOK 3 million + NOK 2 million - NOK 10 million - NOK 7 million - NOK 8 million + NOK 2 million

14 Net interest- and credit commission income - Group Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 NOK million Perc.of aver.tot.ass % 3.00 % 2.00 % 1.00 % 0.00 % Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 NOK million Perc.of aver.tot.ass % 2.48 % 2.45 % 2.39 % 2.16 % 2.15 % 2.16 % 2.14 % 2.05 %

15 Lending, Parent bank corporate market 2,00 1,80 1,60 1,40 1,20 1,00 0,80 0,60 0,40 0,20 - NOK dec.04 jan.05 feb.05 mar.05 apr.05 may.05 jun.05 jul.05 aug.05 sep.05 oct.05 nov.05 dec.05 jan.06 feb.06 mar.06 apr.06 may.06 jun.06 jul.06 aug.06 sep.06 oct.06 nov.06 dec.06 jan.07 feb.07 mar.07 Interest contribution Loan volum corporate Loan contribution corporate

16 Lending, Parent bank retail market 2,00 1,80 1,60 1,40 1,20 1,00 0,80 0,60 0,40 0,20 - NOK dec.04 jan.05 feb.05 mar.05 apr.05 may.05 jun.05 jul.05 aug.05 sep.05 oct.05 nov.05 dec.05 jan.06 feb.06 mar.06 apr.06 may.06 jun.06 jul.06 aug.06 sep.06 oct.06 nov.06 dec.06 jan.07 feb.07 mar.07 Interest contribution Loan volum retail banking Loan contribution retail banking

17 Customer deposits, Parent bank corporate market Deposit volum corporate Deposit contribution corporate , , ,60 1,40 1,20 1,00 0,80 0,60 0, , NOK dec.04 jan.05 feb.05 mar.05 apr.05 may.05 jun.05 jul.05 aug.05 sep.05 oct.05 nov.05 dec.05 jan.06 feb.06 mar.06 apr.06 may.06 jun.06 jul.06 aug.06 sep.06 oct.06 nov.06 dec.06 jan.07 feb.07 mar.07 Interest contribution

18 Customer deposits, Parent bank retail market ,50 2,00 1,50 1,00 0,50 - NOK dec.04 jan.05 feb.05 mar.05 apr.05 may.05 jun.05 jul.05 aug.05 sep.05 oct.05 nov.05 dec.05 jan.06 feb.06 mar.06 apr.06 may.06 jun.06 jul.06 aug.06 sep.06 oct.06 nov.06 dec.06 jan.07 feb.07 mar.07 Interest contribution Deposit volum retail banking Deposit contribution retail banking

19 Financial targets: Effectiveness Effectiveness SpareBank 1 Nord-Norge s target is a cost-income ratio of 50% The effectiveness shall be comparable to the level of competing banks in Norway

20 NOK mill Group operating costs Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q % 3.00 % 2.50 % 2.00 % 1.50 % 1.00 % 0.50 % 0.00 % % NOK million % of av.tot.ass. Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 NOK million % of av.tot.ass % 1.95 % 1.95 % 1.94 % 1.77 % 1.75 % 1.70 % 1.70 % 1.60 %

21 (Amounts in NOK million) Group operating costs Change Wages and salaries Pension costs Social costs Administration costs Total personnel- and general administration costs Depreciation and write-downs of fixed assets Operating costs buildings Other operating costs Total operating costs Total costs

22 Group development man-years Parent Bank Group

23 Market areas Financial targets: Market areas and customer groups Nord-Norge represents SpareBank 1 Nord-Norge s primary market area. In particular, marketing efforts will be focused on Nordland (Helgeland). Customers who move away from the region will be actively followed up by the Bank. Customer groups Retail banking customers represent SpareBank 1 Nord-Norge s most important customer group SNN shall be the Bank for these people during all phases of their lives. SpareBank 1 Nord-Norge also targets small and medium-sized businesses, the public sector, clubs and associations.

24 Financial targets: Market share and income targets Market shares SpareBank 1 Nord-Norge s target is to achieve market shares of minimum 30% in Nord-Norge within all product areas Business areas SpareBank 1 Nord-Norge offers a broad range of products and services within the areas of financing, saving and placement, insurance, and payments transmission services. The Bank makes every effort to further develop a diversified product range as well as new business areas.

25 Key figures balance sheet (Amounts in NOK million) BALANCE SHEET Change Change % Total assets 55,715 48,506 7, % Gross lending 47,649 42,426 5, % Deposits 28,994 25,526 3, %

26 Group lending portfolio according to markets Retail Corporate and public 35 % % (40 %) (38 %) 65 % (62 %) 66 % (60 %) (NOK Million) Change Change % Retail 31,264 27,724 3, % Corporate and public 16,385 14,702 1, % TOTAL 47,649 42,426 5, % Numbers in brackets include credit lines, not drawn

27 Credit growth households 18 % Households, retail 12 month growth 15 % 12 % 9 % 6 % Jul 05 Okt 05 Jan 06 Apr 06 Jul 06 Okt 06 Jan 07 Norway, households SNN, retail clients Sources: SSB, Kredittindikatoren, 30. March 2007 and SNN, Bare 10. April 2007

28 Credit growth corporate marked Corporate marked 12 month growth 20 % 15 % 10 % 5 % 0 % Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Norway, corporate marked SNN corporate marked Sources: SSB, Kredittindikatoren, 30. March 2007 and SNN, Bare 10. April 2007

29 Group corporate lending by sector (NOK million) Share Share Change Agriculture and forestry % % 47 Fishing vessels 1,384 9 % % 418 Fish farming % % -80 Extraction of crude oil and natural gas 22 0 % 12 0 % 10 Mining 55 0 % 37 0 % 18 Fishing industry % % 26 Other industries % % -32 Power and water supply % % -6 Building and construction % % 83 Retail trade % % -5 Wholesale trade % % 113 Hotel and restaurant % % -29 Intern. shipping and pipeline transport 1 0 % 1 0 % 0 Transport and communication 1,154 7 % 1,288 9 % -134 Finance and insurance % 31 0 % 137 Property Housing cooperatives % % 196 Property project 1,354 8 % 1,201 8 % 153 Property hiring out 3, % 3, % 86 Real estate business % % 306 Business services 1,041 6 % 1,108 7 % -67 Other sectors % % 110 Insurance, fund management and financial services 87 1 % % -16 TOTAL 16, % 14, % 1,334 As at total exposure represents NOK 20.5 bill (NOK 16.6 bill as at ).

30 Group deposits according to markets Retail Public Corporate % 32 % 12 % 55 % 16 % 52 % (NOK Million) Change Change % Retail 15,127 14,106 1, % Public 4,586 3,081 1, % Corporate 9,281 8, % TOTAL 28,994 25,526 3, %

31 Good deposit growth and sales of other savings products Growth/portfolio Unit trust Savings-linked insurance Investment management (incl. NNI) Structured products Properties Total savings products Bank deposits* Growth 1 q Growth 1 q ,189 5,677 29, % 4.3 % * As at February 07, the 12-month growth rate for private households and the corporate sector was 8.3 % and 31.0 % respectively Growth 1. Q Portfolio as at ,804 1, % growth 1 q % 3.6 % -5.9 % -1.2 % 0 % Growth in Norway 4.3 % n.a. n.a. n.a. n.a. n.a. *

32 The credit area

33 The credit area Management targets have been made within the following areas; Risk-adjusted return in the retail banking- and corporate banking market Concentration risk Breakdown between retail banking- and corporate banking market commitments Largest individual commitment Maximum exposure involving the Bank s 20 largest customers Proportion of risk-adjusted capital per sector Operational targets Proportion of high-risk commitments Probability of default Maximum expected losses Maximum unexpected losses

34 The credit area: Strategy Growth with appropriate risk: Retail banking market a two-part strategy: Maintain current business and develop more business from existing customers Capture new market shares, especially where the Bank s market share is low Corporate customers Strong emphasis on SMB segments Cultivate and develop existing customer base ( across-the-board sales) New larger corporate customers providing risk is low General points relating to both markets: Correct pricing in relation to risk Avoid detrimental concentration within certain sectors and areas

35 This is due to: Favourable risk development in the Bank s lending portfolio 1. Good development within Nord-Norge s economy and within our customers financial position 2. Systematic work on the high-risk part of the portfolio individual commitments have been terminated individual commitments have been identified as losses and specific write-downs have been made 3. New corporate customers have largely been low-risk customers. 4. Enhanced quality in the use of the Bank s portfolio management system (Porto)

36 Risk change Portfolio migration SNN total New loan committments Red. due to loss of 1) customers 2) Change in score and exposure 3) Net change 1Q 06-1Q 07 Total exposure A Low risk B Risk change C D Medium E Risk change risk F High G risk H Risk change I Doubtful loans J Bad loans K Total Customers to whom loans have been granted during the period, but who did not have loans outstanding as at Customers who had loans outstanding as at , but not as at Change in volume and/or score for the rest of the customers in the portfolio

37 Risk change Portfolio migration Corporate market New loan committments 1) Red. due to loss of customers 2) Change in score and exposure 3) Net change 1Q 06-1Q 07 Total exposure A 1, ,891 3,665 Low risk B 1,133-1, ,475 Risk change C ,045 2,803 3,398 D ,883 Medium E Risk change risk F , High G risk H Risk change I Doubtful loans J Bad loans K Total 3,935-1,680 1,652 3,907 20,506

38 Portfolio migration Risk change Retail market New loan committments 1) Red. due to loss of customers 2) Change in score and exposure 3) Net change 1Q 06-1Q 07 Total exposure A ,774 Low risk B 1, ,751 2,279 13,898 Risk change C ,539 3,992 D ,857 Medium E ,484 Risk change risk F , High G risk H Risk change I Doubtful loans J Bad loans K Total 3,393-1,936 2,737 4,194 34,075

39 Lending by risk class Low risk Medium risk High risk Comm in default and write downs Volume development (EAD) Low risk Medium risk High risk Commitments in default and write downs Total

40 Losses on loans and guarantees - Group % 0.80 % 0.60 % 0.40 % 0.20 % 0.00 % % Net losses Net losses, % of gross lending Individual write-downs imp. value Collective write-downs imp. value Recoveries, previously confirmed losses Net losses Net losses, % of gross lending 0,45 % 0,73 % 0,86 % 0,45 % 0,16 % -0,11 % 0,02 %

41 Group - lending key figures - as a percentage of gross lending Net losses 0.02 % % 0.16 % 0.45 % 0.86 % 0.73 % 0.45 % Write downs for imp. value 0.76 % 0.81 % 1.17 % 1.70 % 2.24 % 2.02 % 1.70 % Individual write-downs 0.38 % 0.42 % 0.65 % 0.85 % 1.36 % 1.06 % 0.79 % Collective write-downs 0.38 % 0.39 % 0.52 % 0.85 % 0.87 % 0.96 % 0.91 % Total bad and doubtful comm % 1.64 % 2.31 % 2.65 % 3.11 % 3.20 % 2.11 % Net bad and doubtful comm % 1.22 % 1.68 % 1.80 % 1.75 % 2.13 % 1.32 %

42 PCC*-holder policy *Primary Capital Certificates

43 PCC holder structure % largest PCC Holders 20 largest PCC Holders Holders residing in North Norway Foreign Holders

44 The 20 largest PCC holders Number Share of total PCC Holders of PCCs PCC Capital Swedbank - client account 1,541, % Frank Mohn AS 398, % Terra Utbytte 303, % MP Pensjon 298, % Tonsenhagen Forretningssentrum AS 244, % Mellon Bank Agent 221, % Framo Development AS 200, % Citibank International 170, % Troms Kraft AS 164, % National Financial Services Citibank N.A. 158, % JPMorgan Chase Bank - client account 142, % Karl Ditlefsen 125, % Trond Mohn 120, % Sparebankstiftelsen 117, % State Street Bank - client account 115, % Fred Olsen & Co's Pensjonskasse 102, % Stichting Shell Pensjon 98, % Bergen Kommunale Pensjonskasse 96, % Ringerikes Sparebank 94, % JPMorgan Chase Bank Omnibus 92, % TOTAL 4,805, %

45 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov The Bank s PCC price development NOK Dec-06 Jan-07 Feb-07 Mar-07

46 Economic outlook

47 The economic situation in Northern Norway 3 counties and 88 municipalities Nordland: Troms: Finnmark: Northern Norway inhabitants inhabitants inhabitants inhabitants Employment in the region: N-Norway Total Public sector 43 % (34 %) Private services 26 % (33 %) Tourism 10 % ( 9 %) Marine sector 5 % ( 1 %) Manufacturing 5 % (13 %) Other sectors 11 % (10 %)

48 Good prospects for the main industrial and commercial sectors 1. Marine sector - Comprehensive restructuring; good market prospects in due course 2. Industry - Many small businesses based on the development of competence 3. Building and construction - Experiencing shortage of raw materials and skilled labour 4. The energy region of the future Oil and gas and renewable resources 5. Tourism at a crossroads with regard to markets and products, and with regard to its attraction as an industry 6. Private service sector - Key role for increased wealth creation 7. Effects of Tromso possibly hosting the Winter Olympics in 2018

49 Good prospects for the main industrial and commercial sectors 1. Marine sector comprehensive restructuring; good market prospects in due course 2. Industry many small businesses based on the development of competence 3. Building and construction experiencing lack of raw materials and shortage of skilled labour 4. A future energy region petroleum and renewable resources 5. Tourism at a crossroads with regard to markets and products, and with regard to its attraction as an industry 6. The private service sector a key role for increased wealth creation

50 Northwest Russia - platform for economic development: An open Norwegian-Russian border Resources; fish, minerals, oil/gas

51 Northern Norway - the competitive arena DnB NOR s trademark in Norland county A major bank with a strong local presence DnB s brand for the blue-collar customer Nordic giant Owned by Danske Bank, strong growth ambitions in Norway First choice for the self-service-minded customer Independent regional savings bank in the Helgeland area In addition, there are six local savings banks in Hålogaland and Svenska Handelsbanken s branch in Tromsø.

52 Summary Group: NOK million Change Change % PROFIT AND LOSS ACCOUNT Result from ordinary operations ,9% BALANCE SHEET Total assets ,9% Gross lending ,3% Deposits ,6% KEY FIGURES Change Change % Capital adequacy ratio 10,4% 11,2% -0,8% After-tax return on equity capital 19,5% 22,4% -2,9% Cost as a perc.of overall contrib.margin 49,0% 49,3% -0,3% Man-years Parent bank: Earnings per PCC (NOK) 14,21 13,86 0,35