Quarterly presentation Q Tromsø/Oslo 11. August 2016

Transcription

1 Quarterly presentation Q Tromsø/Oslo 11. August 2016

2 Interim report for Q2 - Group 2 PROFIT BEFORE TAX: RETURN ON EQUITY: REDUCED COSTS: MODERATE LOAN LOSSES: CET-1 RATIO: CORE BUSINESS MACRO: NOK 768 mill (NOK 684 mill) 12.4 % (11.7 %) (- 3.8 %) compared with first half of 2015 (excl. restructuring costs) NOK 88 mill (NOK 68 mill) 14.2 % (13.4 %) Cultivation of core business almost complete Still few signs of weakening in northern Norwegian economy

3 Few signs of weakening in northern Norwegian economy GROWTH SEAFOOD TOURISM OIL Continued export growth in the north Seafood exports grew by 27% in the first half of the year. Increase for both salmon and white fish. Growth continues, 25% growth in foreign overnight stays increased earnings Relatively small oil sector (around 2% of the economy), and a new field opened 3 HOUSING EMPLOYMENT GOING FORWARD Housing and civil engineering investments at record high levels Stable, low unemployment rate 2.4% as per May Healthy personal finances both savings and consumption increasing. Prospect of moderate growth in 2016: Norway's downturn could have a stronger impact, continued weak NOK exchange rate is important for northern Norwegian business

4 Strategy: Significant measures implemented o Near doubled equity during last 6 years o Capital ratio well above regulatory minimum requirement o No need for equity issue o o Cultivation of core business almost complete: o o o o o SNN Invest wound up Nord II investment fund sold Phasing out of business market activities in BN Bank Venture in Russia sold Bank's share in Bank 1 Oslo sold Physical presence adjusted to customers' use of banking services: o o Concentration on 16 financial centres 21 branches closed 4 o Cost reducing measures implemented

5 Common Equity Tier 1 capital adequacy ratio* CET 1 incl floor 13,1 % 13,4 % 13,5 % 13,9 % 13,8 % 14,2 % 13,2 % CET 1 excl floor 16,3 % 14,2 % 14,2 % 14,9 % 15,2 % 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 Leverage ratio - LR 6,0 % 5,8 % 5,9 % 6,0 % 6,1 % 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 * Included 50 % of result. Q4 after dividend payout 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 Expected minimum regulatory CET 1 level ,0 % 1,5 % Lower limit Pilar 2 2,5 % 1,5 % 3,0 % 4,5 % Capital conservation buffer Counter cyclical buffer Systemic risk buffer Lower limit Common Equity Tier 1

6 Quarterly summary Profit and loss account figures (Amounts in NOK million) 2Q16 1Q16 4Q15 3Q15 2Q15 Net interest income Net fee-, commision and other operating income Net income from financial investments Total net income Total costs Result before losses and write-downs Net losses and write-downs Result before tax Return on equity capital 13,8 % 11,0 % 5,2 % 7,8 % 11,1 % Cost/income 39,5 % 45,8 % 68,5 % 55,1 % 48,0 %

7 Changes in net interest income Net interest income 1Q16 Deposits margin corporate Deposits margin retail Lending margin corporate Lending margin retail Volume Days Other Net interest income 2Q16 Including commisions from Boligkreditt. Measured against average funding cost

8 Net fee-, commission- and other operating income Mill NOK Q14 3Q14 4Q14 1Q15 2Q15 Net fee-, commision and other operating income excl commission from Boligkreditt 3Q15 4Q15 1Q16 2Q16

9 Income from financial investments Group (Amounts in NOK million) 2Q16 1Q16 4Q15 3Q Dividends Income from joint ventures Gains/losses and net value changes on shares Net value changes on bonds, foreign exchange and fin.derivatives Gains/losses and net value changes on loans Income from financial investments

10 Group operating costs NOK mill ,43 % 1,42 % 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3,50 % 3,00 % 2,50 % 2,00 % 1,50 % 1,00 % 0,50 % 0,00 % Total costs Perc.of aver.tot.ass. 0

11 Losses and non-performing commitments Net losses on loans and guarantees Non-performing- and other problem commitments 0,59% 321 0,81% 0,74% 0,58% 0,49% 0,64% ,26% 172 0,21% 0,22% 0,19% 0,19% Net losses Net losses in % of gross lending incl Boligkreditt 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 Non-performing commitments Other problem commitments Gross non-performing and impaired commitments in % of gross lending incl. Acency loans

12 Group companies result before tax (Amounts in NOK 1000) SpareBank 1 Finans Nord-Norge AS SpareBank 1 Regnskapshuset Nord-Norge AS EiendomsMegler 1 Nord-Norge AS Subsidiaries core operations Other subsidaries Total

13 Lending volume 28 % 38 % Retail incl. SpareBank 1 Boligkreditt 6,8 % 7,6 % 72 % Retail incl. SpareBank 1 Boligkreditt Business/ Public 62 % Retail excl. SpareBank 1 Boligkreditt Business/ Public Annualised lending growth first half: 9.3 %: retail 8,7 %, business market 10,9 % Considerable SME lending growth Reduced lending growth is expected Business/public market 1,8 % 4,0 %

14 Deposit volume Retail banking market 6,5 % Business 8,0 % ,5 % 1,8 % Public 47,2 % Business 25,9 % 2,3 % Public 18,4 % Retail 55,7 %

15 Future outlook NRI COSTS LOSSES FINANCIAL STRENGTH DIVIDEND STRATEGY MACRO Continued strong competition. Slightly higher funding costs in Q3 and Q4 (assuming constant conditions in the capital market) Average targeted cost increase 0 %. Reduced costs compared with 2015 expected in 2016 and 2017 (excl. restructuring costs) Lending losses expected to remain moderate Target of 14.5 % CET-1 ratio expected to be achieved in 2016 Adjustment to dividend payout ratio of 50 % continues. A higher dividend payout ratio for equity certificate holders compared with the community-owned capital will be considered if P/B<1 Phasing out of non-core business activities will be completed Still few signs of weakening in northern Norwegian economy 15

16 Why invest in SpareBank 1 Nord-Norge? o o o o o The northern Norwegian macroeconomy is showing few signs of weakening Focus on core business is reducing volatility in the results Strong regional base and community part-ownership providing a very good competitive position The SpareBank 1 Alliance is contributing to modernisation and higher income. Significant underlying value of ownership. Good financial strength - owner-friendly dividend policy 16

17 Contact information: SpareBank 1 Nord-Norge P o Box 6800 N-9298 Tromsø CEO Jan-Frode Janson CFO Rolf Eigil Bygdnes Tel Tel Homepage and internet bank: Equity capital certificates in general:

18 Enclosures Presentasjon text

19 Organisation of the financial services Group SpareBank 1 Nord-Norge Financial Services Group Nord-Norge Eiendom IV AS Equity stake 100 % Alsgården AS Equity stake 100 % SpareBank 1 Finans Nord-Norge AS Equity stake 100 % EiendomsMegler 1 Nord-Norge AS Equity stake 100 % SpareBank 1 Nord-Norge Forvaltning ASA Equity stake 100 % SpareBank 1 Regnskapshuset Nord-Norge AS Equity stake 100 % SpareBank 1 Nord-Norge Portefølje AS Equity stake 100 % Fredrik Langesg 20 AS Equity stake 100 % SpareBank 1 Gruppen AS Equity stake % SpareBank 1 Boligkreditt AS Equity stake % SpareBank 1 Næringskreditt AS Equity stake % BN Bank ASA Equity stake % SpareBank 1 Kredittkort AS Equity stake % SpareBank 1 Mobilbetaling AS Eierandel 19.70% Alliansesamarbeidet SpareBank 1 DA Equity stake %

20 20 Macro and Economic trends

21 Seafood strong export growth 27% growth in seafood export from Northern Norway, 1. quarter 2016 vs. 1. quarter 2015 Seafood export from Northern Norway is more than 2 billion per month Salmon prices are peaking in 2016 God development for white fish 2/3 of sale is to EU Export price for fresh or frozen farmed salmon 21 Source: Norsk Sjømatråd, 5th April 2016 and Statistisk Sentralbyrå, «Eksport av laks og Utenrikshandel med varer»

22 Tourism strong growth for foreign overnight stays Foreign overnight stays takes an increasing portion of the tourism industry in Northern Norway Strong contribution from winter tourism Weak norwegian kroner is positive for the tourism industry 22 Source: Statistisk Sentralbyrå, «Overnattinger»

23 Oil and gas new fields increase demand Norne, Snøhvit and Skarv in production 10% of Norwegian gas production 7% of Norwegian oil production Goliat, first oil field in the Barents Sea had production start-up March 2016 Aasta Hansteen og Polarled Polarled pipeline completed in 2015 Production start-up in 2018 Several promising oil discoveries in the Barents Sea: Johan Castberg investment decision in 2017 Alta/Gotha Wisting Demand from oil companies Repurchases will further increase the total demand Supplies to Northern Norway Figure: Petro Foresight 2030, February 2016

24 Good growth for construction and infrastructure investments Turnover Northern Norway, mill kr ,0 % ,0 % ,0 % ,0 % ,0 % Last 12 mths/t5 0,0 % Omsetn Turnover (mill 2010 kr) Vekst/år Growth (%) /year (%) Norway 24 Source: Statistisk Sentralbyrå, «Omsetning i bygge- og anleggsvirksomhet og Ordreindeks for bygge- og anleggsvirksomhet»

25 Residential construction is peaking 25 Source: Statistisk Sentralbyrå, «Byggeareal»

26 Regional house prices lower than the Norwegian average 26 Source: Eiendom Norge, Finn.no and Eiendomsverdi AS, «Boligprisstatistikk»

27 Considerable regional differences in unemployment change 27 Source: NAV, «Hovedtall for arbeidsmarkedet»

28 Stable, low unemployment 28 Source: NAV, «Hovedtall for arbeidsmarkedet»

29 29 Credit growth corporates

30 30 Credit growth households

31 31 Deposit growth corporates

32 32 Deposit growth households

33 33 Main financial figures

34 Key figures Net non-performing Common and impaired Equity commitments Tier I % incl (Group) share of result Return on on equity 12,3 % 12,5 % 13,9 % 14,2 % 13,1 % 12,2 % 12,4 % 9,9 % 10,3 % 8,5 % 9,0 % 9,1 % Q Q16 Cost/income ratio (Group) Cost/income ratio Net non-performing Loans default and and impaired other problem commitments loans s a (Group) percentage of total loans 57,0 % 53,8 % 47,2 % 44,4 % 54,2 % 42,4 % 1,6 % 1,8 % 1,5 % 0,9 % 0,8 % 0,9 % Q Q16

35 Main financial targets as at Return on equity at top international level, at present ROE % ROE 1H 2016: 12.4 % Solidity: CET % As at : 14.2 % Yearly cost growth: Maximum 0 % 1H 2016 vs 1H 2015: % 35

36 ,0 % ,1 % 45,8 % 39,5 % ,5 % Profit development Total income NOK mill Net interest income NOK mill Pre-tax operating profit NOK mill Cost/income ratio Per cent 36

37 Profit and loss account - Group (Amounts in NOK million) Net interest income Net fee-, commision and other operating income Net income from financial investments Total net income Total costs Result before losses and write-downs Net losses and write-downs Result before tax Tax Result non-current assets held for sale Minority interests Result for the period Return on equity capital 12,4 % 11,7 % 9,1 %

38 Quarterly results net interest income (Amounts in NOK million) 2Q16 1Q16 4Q15 3Q15 2Q15 Interest and similar income from loans to and claims on credit institutions Interest and similar income from loans to and claims on customers Interest and similar income from certificates, bonds and other interest-bearing securities Interest and similiar income Interest and similar costs on liabilities to credit institutions Interest and similar costs relating to deposits from and liabilities to customers Interest and similar costs related to the issuance of securities Interest and similar costs on subordinated loan capital Payments made to The Norwegian Banks' Guarantee Fund Total interest costs Net interest income

39 Net interest income - Group Mill NOK Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Net interest income Commissions from Boligkreditt 9

40 Lending margin, Parent bank The interest margin is defined as the difference between the customer lending interest rate and average 3 month NIBOR

41 Customer deposit, Parent bank The interest margin is defined as the difference between average 3 month NIBOR and the customer deposit interest rate

42 Total commission and other income 2Q16 1Q16 4Q15 3Q15 2Q15 (Amounts in NOK million) Payment transmission income Commissions insurance Guarantee commissions Estate agency Assets management Other commissions Commissions ex. Boligkreditt Boligkreditt Total commision income Commission costs Accountancy services Other income Total other income Total commission- and other income

43 Group operating costs (Amounts in NOK million) Change Wages and salaries Pension costs Social costs Total personnel 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

44 Operating expenses (in NOK million) 2Q16 1Q16 4Q15 3Q15 2Q15 Wages and salaries Pension costs Social costs Total personnel costs Development costs Electronic data processing costs Marketing costs Travel - and training costs Communications Postage Consultancy services Cost involving the handling of cash Office-related costs Collection costs Ordinary depreciation Operating costs - premises/buildings Other operating costs incl rent Other costs Total operating expenses

45 Core banking operations- (excl. income from financial investments) (Amounts in NOK million) 2Q16 1Q16 4Q15 3Q15 2Q15 Net interest income Net fee- and commission income Other operating income Total costs excl restructuring costs Underlying banking operations Restructuring costs Net losses and write-downs Underlying banking operations after losses

46 Key figures balance sheet Change Change % Total assets ,3% Gross lending ,6% Loans and advances to customers incl SpareBank 1 Boligkreditt and Næringskreditt ,9% Deposits from customers ,4%

47 Credit area o o Portfolio Commitments in default and losses 47

48 Lending portfolio - comments o Good increase in retail lending, with focus on commitments qualifying for SpareBank 1 Boligkreditt (covered bond company) o Low growth in corporate market lending last 12 months, increased growth last 6 months o o o The portfolio and new commitments in corporate sector lending are diversified Increase in non-performing/impaired commitments Increased collective write-downs based on macroeconomic outlook o Moderate individual losses as of 1 st half

49 NOK mill Portfolio - exposure as of , parent bank Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired Retail market Corporate market 49

50 NOK mill Portfolio changes last 12 months, parent bank Næringskreditt Boligkreditt Low risk Medium risk High risk Default/impaired -304 (11) (234) SB1 Boligkreditt Retail market Corporate market SB1 Næringskreditt 50

51 Portfolio - exposure as of Loans distributed by size of exposure and share of total exposure Share of loanexposure Jun 2016 Share of loanexposure Jum % 77% 11% 10% 6% 7% 5% 6% Below 10 mnok mnok mnok Above 250 mnok Numbers includes SB 1 Bolig- and Næringskreditt 51

52 Portfolio LTV mortgage loans as of % of exposures are within 85 % of the collaterals market value Exposures above 85 % are 2.9 % 100,0 % 90,0 % 80,0 % 70,0 % 60,0 % 50,0 % 40,0 % 30,0 % 20,0 % 10,0 % 0,0 % 92,0 % 92,3 % 5,1 % 5,0 % 1,4 % 1,3 % 1,5 % 1,4 % Below 70 % 70-85% % Above 100 % Each loan is distributed in the different intervals. The numbers include the Group's share of SB1 Boligkreditt portfolio. 52

53 Portfolio Commercial Real Estate Others (small commitments); 26,5 % Housing Ass.; 5,2 % Residential Development / Investment; 14,5 % MNOK; 23,45% Above 250 MNOK; 5,23% 0-5 MNOK; 15,37% Combinationbuildings; 8,0 % Shops / shopping centres; 21,5 % MNOK; 23,04% 5-30 MNOK; 32,91% Offices; 14,5 % Industry; 5,0 % Hotels; 4,9 % 53 About 50 % of portfolio is rental involving own operations 71.3 % of the portfolio are commitments smaller than NOK 100 mill No significant commitments where tenants have significant oil related business

54 Portfolio Oil related exposure as of Oil related exposure amounts to NOK 2,035 mill The exposure represents 2.2 % of total lending incl. Næring- and Boligkreditt Industry; 8,3 % Other; 9,8 % Supply base; 38,0 % Average weighted probability of default 1.07 % A total of NOK mill are non-performing or impaired commitments The activity within oil and offshore consists of a small customer portfolio handled by a small group of advisors Offshore supply; 43,9 % 54

55 Portfolio Offshore Supply Vessels (OSV) OSV amounts to NOK 893 mill AHTS; 5,8 % Average weighted probability of default 0.49 % Total amount of 8 vessels* Weighted age 5.5 years* PSV; 51,8 % Average weighted contract length 3.3 years* incl. one vessel laid up SNN is participant in syndicates on 6 vessels* Standby/area contingency; 42,3 % *Exclusive of barges 55

56 Portfolio Supply bases Supply base exposure amounts to NOK 773 mill Average weighted probability of default 1.54 % Industry; 8,3 % Other; 9,8 % Supply base; 38,0 % Customers with long term contracts with solid and strong partners gives good cash flows in the short and long term Offshore supply; 43,9 % 56

57 Portfolio Industry and Other The sector Industry and Other amounts to NOK 369 mill, divided into Industry NOK 169 mill and Other NOK 200 mill Average weighted probability of default: Industry 2.13 % and Other 0.59 % Industry; 8,3 % Other; 9,8 % Supply base; 38,0 % A total of NOK mill non-performing or impaired commitments The exposure consists of financing of real estate, transport equipment and working capital Offshore supply; 43,9 % 57

58 Loan losses: The Group's write-downs as of Q Write-downs 1st half st half nd quarter 2015 (iso) 2015 Individual write-downs Retail market Corporate market SpareBank 1 Finans Nord-Norge Other group units Total individual write-downs Collective write downs and other value change items Effects from consolidations Total write-down on loans and guarantees

59 59 Liquidity

60 Funding instruments T1 HYBRID, NOK 2% SUBORDINATED LOAN CAPITAL 4% OTHER LIABILITIES, NOK 0% EMTN, SEK 6% CHF BOND 10% EMTN, EUR 13% 60 BONDS, NOK 65%

61 Maturity profile Capital markets funding (excl. SPABOL) Good diversification in terms of maturities NOK mill in capital market funding exclusive of SB1 Boligkreditt SpareBank 1 Boligkreditt is an important funding source. Mortgage loans of NOK mill transferred as at Amount of gross maturities of capital market funding next 12 months is NOK mill 61

62 62 Ownership

63 Equity Certificates (EC) - holder structure 100,00 7,7 7,7 8,7 10,3 10,2 11,3 10,0 13,8 14,8 15,5 13,8 16,6 16,2 19,3 18,7 20,3 20,6 21,9 80,00 60,00 67,2 66,8 65,7 64,1 64,4 64,1 65,8 65,6 64,2 63,9 63,1 65,5 65,1 62,8 63,3 61,1 60,6 59,1 40,00 20,00 25,1 25,5 25,6 25,5 25,4 24,6 24,2 20,6 21,0 20,6 20,3 20,7 18,7 17,9 18,1 18,6 18,8 19,0 0,00 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Holders residing in Northern Norway Other Norwegian holders Foreign holders 3

64 The 20 largest EC holders 4 Number of Share of total Equity Certificate holders Equity Certificates capital PARETO AKSJE NORGE ,63 % VERDIPAPIRFONDET DNB NORGE (IV) ,29 % THE NORTHERN TRUST ,02 % MP PENSJON PK ,71 % FLPS - PRINC ALL SEC STOCK SUB ,12 % MERRILL LYNCH PROF. CLEARING CORP ,91 % POPE ASSET MANAGEMENT ,68 % METEVA AS ,61 % STATE STREET BANK AND TRUST CO ,56 % FORSVARETS PERSONELLSERVICE ,56 % SPAREBANKSTIFTELSEN SPAREBANK 1 NORD-NORGE ,41 % DNB LIVSFORSIKRING ASA ,21 % PERESTROIKA AS ,19 % EIKA UTBYTTE ,03 % THE BANK OF NEW YORK MELLON ,01 % BERGEN KOMMUNALE PENSJONSKASSE ,00 % PARETO AS ,97 % SANLAM UNIVERSAL FUNDS PLC ,87 % STATE STREET BANK AND TRUST ,74 % NORDENFJELSKE BYKREDITTS STIFTELSE ,65 % The 20 largest EC holders ,17 %

65 5 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 NORD-NORGE ,41 % KARL DITLEFSEN ,55 % NORGES RÅFISKLAG ,44 % HANSEN DAHL FISKERI AS ,37 % SPAREBANKSTIFTELSEN HELGELAND ,28 % ODD ERIK HANSEN INVEST AS ,28 % LARS WORKINN ,25 % TOR OVESEN ,21 % OLE ALFRED ROLF OVESEN ,20 % GADD HOLDING AS ,18 % TROMSØ SKOTØIMAGASIN A/S ,17 % ENTREPRENØRCOMPANIET NORD AS ,17 % AGNAR HOLDING AS ,16 % RIGAMONTI A/S ,16 % TROMSTRYGD ,15 % BRØDRENE KARLSEN HOLDING AS ,12 % HEMMING LEONHARTH ANDERSEN ,11 % GEIR ANDRE STEILAND ,11 % COOP NORD BA ,10 % AS FERDIGHUS ,10 % The 20 largest EC holders residing in Northern Norway ¹) ,50 % 1) Postal code > 7999

66 66 SpareBank 1 Group and Alliance

67 The SpareBank 1 Alliance SAM-SPAR 67 SpareBank 1 Mobilbetaling AS (mcash) SpareBank 1 Kredittkort AS (Credit card) SpareBank 1 Boligkreditt AS (Covered bond issuer) SpareBank 1 Næringskreditt AS (Covered bond issuer) SpareBank 1 Markets AS BN Bank ASA SpareBank 1 Gruppen AS (SB1G) SpareBank 1 Forsikring AS (Life insurance) SpareBank 1 Skadeforsikring AS (Non-life insurance) ODIN Forvaltning AS (Fund management) SpareBank 1 Medlemskort AS (LOfavør) Conecto AS (Debt collection) SpareBank 1 Gruppen Finans AS (Factoring Portfolio) Banksamarbeidet DA (BS) EiendomsMegler 1 Norge AS SpareBank 1 Kundesenter AS SpareBank 1 Verdipapirservice AS SpareBank 1 ID AS SpareBank 1 Axept AS

68 The idea behind the SpareBank 1 Alliance The banks in the alliance want to: Achieve critical level of competence Share development costs Achieve economies of scale Retain their own name and continue as independent legal entities Still be able to exploit each bank s proximity to their local market 68

69 The SpareBank 1 Alliance lending composition As per 1st quarter 2016 % 15 Deposit and lending growth four largest SB1-banks % 0 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 Lending growth Deposit growth Total lending: approx. NOK 715 bn. Mortgages: approx. NOK 480 bn. Share of mortgages bought by Boligkreditt (covered bond issuer): approx. 36 % 69

70 The SpareBank 1 Alliance market position As per 1st quarter nd largest banking group in the market More than 20 % national market share in residential mortgages Regional market leader in large parts of the country: 30-50% market shares MNOK ,600 1,400 1,200 1, , DNB Lending SpareBank Nordea 84 Corporate Retail Handelsbanken % Market share loans (%) SB1 Alliance, Norway Retail Corporate Swedbank DNB 11.8% SEB SpareBank % 10.9% Handelsbanken Total assets 4.6% 28.4% 19.1% Nordea 13.0% Danske Bank Q SpareBank 1 is a Norwegian-only, retailed focused institution

71 Pre-tax operating profit. SpareBank 1 Gruppen As per 2nd quarter (MNOK) Return on equity as per 2nd quarter: % % For the full year (MNOK) Return on equity for the full year: % % % %