SPV FIRST QUARTER April Jan Erik Kjerpeseth Managing Director

Transcription

1 SPV FIRST QUARTER April 2014 Jan Erik Kjerpeseth Managing Director

2 KEY DEVELOPMENTS IN THE FIRST QUARTER INCREASED OPERATING PROFIT PRE-TAX OPERATING PROFIT NOK 526 MILL. (273) GOOD RETURN ON EQUITY RETURN ON EQUITY 19.8% / 10.4% COST TREND IN LINE WITH TARGET COST RATIO 38.8% / 54.4% CAPITAL ACCUMULATION ACCORDING TO PLAN IMPROVED RESULTS FROM ASSOCIATED COMPANIES CORE TIER 1 CAPITAL 11.3%* CONTRIBUTION 18 Mill. (9) Figures in brackets: first quarter 2013 *includes 50% of the profit for the period

3 KEY FIGURES 1Q Q Pre-tax profit 526 MNOK 273 MNOK MNOK Profit per equitiy certificate 2,66 kr 1,33 kr 6,13 kr Net interest (annualised) 1,67 % 1,47 % 1,67 % Cost ratio 38,8 % 54,5 % 48,8 % Return on equity (annualised) 19,8 % 10,4 % 11,7 % Core Tier 1 11,3 % 10,4 % 11,2 % Core Tier 1 (IRB) 13,4 % 13,7 % 14,2 %

4 PRE-TAX PROFIT - UP NOK 253 MILLION Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Driven by increased net interest, low costs and an adjustment of the shareholding in Nets of NOK 166 mill.

5 GOOD RETURN ON EQUITY %, 11.9% EXCL. NETS 19,8 12,7 14,0 10,4 9,8 11,9 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Return on equity above target of 11%

6 PROFIT/BOOK VALUE OF EQUITY CERTIFICATES Profit per equity certificate Book equity per equity certificate 2,66 53,9 54,7 54,4 1,33 1,62 1,85 1, ,6 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Book equity first quarter adjusted for dividend of NOK 3 per certificate

7 STABLE NET INTEREST IN THE FIRST QUARTER Development in net interest and credit commission income 700 3,5 % ,0 % NOKm ,39% 439 1,44% 458 1,46% 478 1,51% 459 1,47% 1,72% 1,73% 1,71% 1,67% 2,5 % 2,0 % 1,5 % 1,0 % Per capital unit % p.a ,5 % 0 Q Q Q Q Q Q Q Q Q Net interest income and credit commisions (NOKm) Net interest income and credit commisions per capital unit (% p.a.) 0,0 % Nominal net interest up NOK 107 mill., fee to the Norwegian Banks' Guarantee Fund of NOK 12 mill, corresponding to -3.5 bp

8 LENDING MARGINS LARGELY UNCHANGED 4,00 3,50 3,40 3,30 3,29 3,27 3,00 2,69 2,69 2,90 2,94 2,92 2,50 2,00 1,50 2,28 2,18 2,23 2,20 1,73 1,89 1,96 2,17 2,17 2,44 2,58 2,58 2,54 1,00 1,41 1,22 1,09 1,09 0,50 - Q1-14 Q4-13 Q3-13 Q2-13 Q1-13 Q4-12 Q3-12 Q2-12 Q1-12 Q4-11 Q3-11 Q2-11 Q1-11 Retail Corporate

9 DEPOSIT MARGINS UNCHANGED IN THE CORPORATE MARKET - SOMEWHAT WEAKER IN THE RETAIL MARKET IN LINE WITH REDUCED NIBOR 1,00 0,80 0,63 0,82 0,77 0,60 0,40 0,20 - (0,20) (0,40) 0,46 0,32 0,43 0,57 0,55 0,02 (0,05) (0,17) (0,16) (0,23) (0,28) (0,44) (0,48) (0,46) (0,48) (0,51) (0,50) (0,60) (0,80) (1,00) (0,44) (0,55) (0,61) (0,63) (0,69) (0,76) Q1-14 Q4-13 Q3-13 Q2-13 Q1-13 Q4-12 Q3-12 Q2-12 Q1-12 Q4-11 Q3-11 Q2-11 Q1-11 Retail Corporate

10 CONTRIBUTION TO PROFITS OF NOK 18 MILL. FROM ASSOCIATED COMPANIES INCREASE OF NOK 9 MILL. NOKm Q Q Frende Forsikring Norne Securities Brage Finans Verd Boligkreditt Net profit from associated companies

11 TARGETED COST MEASURES PAYING OFF Cost/Income As percentage Full-time equivalents employees Group ,4 50,9 46,7 43,9 47, Q1 13 Q2 13 Q3 13 Q4 13 Q Kv Kv Kv Kv Kv. 14 In the process of recruiting 15 new IT consultants, external fees will be reduced - positive effect on net operating expenses

12 COST TREND IN LINE WITH TARGET - REDUCED COSTS IN PARENT BANK COMPARED WITH 2012 Planned development* Development pr * 2 % 1.385* 1.385* -3,1 % Q Q Subsidiaries Parent Bank** On track to reaching the target of a 2% average annual cost growth in the parent bank up until 2015

13 DEFAULTS AND OTHER POTENTIAL BAD DEBT* - DEVELOPMENT IN DEFAULTS AND OTHER POTENTIAL BAD DEBT (NOK MILL.) IN RM, CM AND AS PROPORTION OF TOTAL VOLUME OF LENDINGS ,00% ,00% ,00% 2,00% 600 1,37% 1,32% 1,26% 1,22% 1,34% 1,29% 1,21% 1,22% 1,34% 400 1,00% Q Q Q Q Q Retail market Corporate Share of total portfolio 0,00% *) Includes all defaults, not only default of payment. Includes commitments with individual write-downs. Calculated as % of total volume of lendings

14 PERCENTAGE UNCHANGED FROM Q4 Write downs as % 0,8 % 0,7 % 0,6 % 0,5 % 0,4 % 0,3 % 0,2 % 0,1 % 0,60% ,58% ,61% ,76% ,79% Write downs in NOK mkr 0,0 % 0 Q Q Q Q Q Individual write downs Group Write downs Write down as % of gross lendings

15 CHANGE IN PROFIT PERFORMANCE FIRST QUARTER

16 LIQUIDITY AND FINANCING PROPORTION OF RM LOANS TRANSFERRED TO SPAREBANKEN VEST BOLIGKREDITT: 53% Development assets Development liabilities 100 % % 80 % % 60 % % 40 % 30 % % Q Q Q Q Q 2014 State Local and county authoroties Banks Others Covered bonds Equities Interbank "Used as collateral in NB" 10 % 0 % 1Q Q Q Q Q 2014 Debt to financial institutions and short term instruments Covered bonds and swap arrangement with Norges Bank Hybrid capital (Tier 1) and subordinated debt (Tier 2) Senior debt

17 SOMEWHAT LOWER GROWTH IN LENDINGS IN THE RETAIL MARKET - CM GROWTH IN LINE WITH TARGET SO FAR IN 2014 Retail market Deposits: NOK 37 bill. Lendings NOK 86 bill. Corporate market Deposits: NOK 25 bill. Lendings NOK 28 bill. 6,0 % 6,8 % 6,5 % Target Lendings 12 mnd growth deposit 12 mnd growth lending 0,9 % 1,1 % 1Q deposit 1Q lending Target Lendings 12 mnd growth deposit 12 mnd Growth lending 1 Q deposit 1Q lending

18 BREAKDOWN OF LENDINGS CORPORATE MARKET By volume* In NOK bill. By sector % 10 % 6 % Agriculture, forestry and fisheries Industry % 10 % 6 % Construction, power and water supply Wholesale and retail trade, hotels and restaurants Shipping 6 % 11 % Transport 0-50 mill mill Over 150 mill Real estate Greater focus on increasing volume in the SME segment * Measured by commitment

19 COMPOSITION OF DEPOSITS LARGE PROPORTION FROM STABLE DEPOSITS Breakdown of deposits In NOK bill. Breakdown of deposits By sector 15 % % 48 % Retail SME Large Corporate Financial 14 % Over Stable deposits, covered by deposits guarantee scheme, treated favourably in LCR and NSFR

20 FINANCIAL STRENGTH - CAPITAL LEVEL ABOVE COMBINED MINIMUM AND BUFFER REQUIREMENTS Basel 1 floor* IRB* 20,0 % 20,0 % 18,0 % 16,0 % 14,0 % 12,0 % 12,4 % 12,6 % 12,7 % 0,2 % 0,2 % 0,3 % 1,7 % 1,7 % 1,6 % 14,3 % 14,3 % 1,1 % 1,0 % 2,0 % 2,0 % 18,0 % 16,0 % 14,0 % 12,0 % 16,4 % 0,3 % 2,2 % 18,1 % 16,7 % 16,8 % 1,4 % 0,3 % 0,4 % 2,2 % 2,2 % 2,5 % 16,9 % 1,2 % 2,3 % 10,0 % 10,0 % 8,0 % 6,0 % 10,5 % 10,6 % 10,8 % 11,2 % 11,3 % 8,0 % 6,0 % 13,9 % 14,2 % 14,3 % 14,2 % 13,4 % 4,0 % 4,0 % 2,0 % 2,0 % 0,0 % 2013 Q Q Q Q Q Total Capital 12,4 % 12,6 % 12,7 % 14,3 % 14,3 % Additional Capital (Tier 2) 0,2 % 0,2 % 0,3 % 1,1 % 1,0 % Hybrid Capital (Tier 1) 1,7 % 1,7 % 1,6 % 2,0 % 2,0 % Core Tier 1 Capital 10,5 % 10,6 % 10,8 % 11,2 % 11,3 % 0,0 % 2013 Q Q Q Q Q Total Capital 16,4 % 16,7 % 16,8 % 18,1 % 16,9 % Additional Capital (Tier 2) 0,3 % 0,3 % 0,4 % 1,4 % 1,2 % Hybrid Capital (Tier 1) 2,2 % 2,2 % 2,2 % 2,5 % 2,3 % Core Tier 1 Capital 13,9 % 14,2 % 14,3 % 14,2 % 13,4 % * The figures for the quarter include 50% of the accumulated profit after tax, with the exception of the fourth quarter

21 INCREASED CAPITAL REQUIREMENTS MET THROUGH OPERATIONS FORECAST FOR CAPITAL ACCUMULATION UP UNTIL 2016 Core Tier 1 capital, taking into account the Basel I floor, increases in step with the regulatory minimum and buffer requirements Assumptions 14,0 % 12,0 % 10,6 % 11,2 % 11,3 % 11,8 % 12,5 % 12 % 13,0 % 13 % Margin assumptions adjusted for changes in interest rates adopted in Q Taking into account gain on sale of Nets 10,0 % 8,0 % 9,6 % 9 % 9 % 10 % Growth on a par with 2013 Retail market 6% Corporate market 2.5% 6,0 % 4,0 % 4 % 4 % Costs in line with cost targets 2,0 % Normalised losses (25 bp) 0,0 % Q Core Tier 1 Capital Basel 1 floor Dividend policy maintained (50% / 5%) Combined minimum requirement and buffer requirement Core Tier 1 Capital 21

22 BASEL I FLOOR OR FLOOR ON RISK WEIGHTS? - POTENTIALLY POSITIVE EFFECT FOR SPAREBANKEN VEST Corporate Risk weights IRB and Core Tier Retail 20 % 25 % 30 % 35 % 60 % 17,6 % 16,2 % 15,0 % 13,9 % 65 % 17,1 % 15,7 % 14,6 % 13,6 % 70 % 16,6 % 15,3 % 14,2 % 13,3 % Norwegian interpretation of the Basel I floor is related to the calculation base, and provides SPV an estimated capital ratio of 13% in 2016 The government seems to want to impose "floor" for average risk weight of the segments before the Basel I floor is discontinued. For SPV such floors in PM and CM should be 35% and 75% respectively for Core Tier 1 to equal the current interpretation of the Basel I floor (shown in gray) 75 % 16,1 % 14,9 % 13,9 % 13,0 %

23 OUTLOOK FOR SPAREBANKEN VEST Digital development and regulatory changes are key operating conditions Assessment of strategic measures to ensure the bank's targets in progress - Customer promise and ROE> 11% Interest margins under pressure On schedule to reach target of 2% cost growth in the parent bank Associated companies contribution to profits is expected to increase in 2014 An uncertain macroeconomic situation could lead to a somewhat higher risk level in the region in the longer term 23

24 WE ARE HERE.