FOURTH QUARTER AND THE YEAR 2016 JAN ERIK KJERPESETH CEO SPAREBANKEN VEST

Transcription

1 FOURTH QUARTER AND THE YEAR 2016 JAN ERIK KJERPESETH CEO SPAREBANKEN VEST

2 A MORE RESULT ORIENTED BANK - INCREASED PROFITABILITY AND EFFICIENCY Return on equity as percentage Costs as % of average assets under management 11.3% 14.1%. 13.7% 1,73 1,64 1, % 4.9% 8.0% 8.7% 11.7% 1,31 1,27 1,2 1,22 0,99 1,1 1,06 0,95 0, %

3 RETURN ON EQUITY PAST TEN YEARS - MORE EQUITY LEADS TO HIGHER RETURN Reported return on equity Leverage ratio at the end of Q % 11.4% 6.4% 4.9% Snitt Saving Sparebanker* banks Snitt Commercial forretningsbanker* banks Snitt Saving Sparebanker* banks Snitt Commercial forretningsbanker* banks *Savings banks: SVEG, MING, SRBANK, MORG, NONG. Commercial banks: DNB, SWED, SHB, NDA, SEB, DANSKE. Sources: Interim reports and Sparebank 1 Markets.

4 RANKING OF NORWEGIAN MOBILE BANKING SOLUTIONS Sparebanken Vest 4,45 Danske Bank 3,9 SPBK Sogn og Fjordane 3,55 Handelsbanken 3,45 Sparebank 1 3,4 Skandiabanken 3,35 Nordea 3,1 DNB 3,05 Average of customers rating in itunes (iphone) and Google Play (Android)* Figures from 7 December *A total of 14,683 respondents.

5 SPAREBANKEN VEST Market area Brief information about Sparebanken Vest Established in 1823 and listed on Oslo Børs since 1995 Norway s second oldest savings bank Third biggest Norwegian-owned bank Head office in Bergen, Hordaland Thirty-five branch offices in Hordaland, Sogn og Fjordane and Rogaland The Group offers a wide range of services, incl. insurance, stockbroking and estate agency activities Over NOK 160 billion in assets under management, and more than 260,000 retail customers and 10,000 corporate customers Return on equity target: > 11% 5

6 KEY DEVELOPMENTS, THE YEAR 2016 Ambitious measures to prepare for the digital shift Sparebanken Vest is changing to meet the future MEASURES Strong result for 2016: NOK 1,956 (NOK 1,396 mill.) Stabel nominal net interest 1.43 % (1.46 %) High return on equity of 13.1% (11.0%) Higher contribution from associated companies: NOK 113 million (NOK 70 mill.) A Core Tier 1 ratio of 14.9% provides a basis for higher distribution Low losses*: NOK 39 million (NOK 185 mill.) Good underlying cost development: NOK 1,270 million (NOK 1,443 mill.) *Corrected for the sale of a monitored portfolio, the loss cost for 2016 is NOK 97 million.

7 THE BOARD OF DIRECTORS PROPOSAL FOR THE ALLOCATION OF PROFIT Basis for dividend NOK 1,496 mill. Equity certificate holders NOK 369 mill. Primary Capital NOK 1,126 mill. Dividend NOK 4.5 NOK 266 mill. Equalisation reserve NOK 103 mill. Donations NOK 100 mill. Primary capital NOK 1,026 mill. Distribution percentage of 71.9% to equity certificate holders

8 Good financial strength provides a basis for attractive dividend Moderate risk and low losses A proactive digital strategy

9 IMPROVED CAPITAL ADEQUACY CORE TIER 1 RATIO OF 14.9% Basel 1 floor IRB 9

10 CORE TIER 1 RATIO ABOVE TARGET OF 14.5% Core Tier 1 ratio taking into account Basel I floor Comments Good development in Core Tier 1 capital due to: 14.5% 13,7 13,8 14,1 14,8 14,9 Limited growth in total assets Accumulated equity through operations Will meet requirement for higher countercyclical buffer through profit accumulation Dividend strategy Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 The distribution percentage shall be between 50 and 80% of the equity certificate holders share of the profit. Dividend NOK 4.50 Donations NOK 100 million 10

11 ACCUMULATED NOK 9 BILL. IN EQUITY SINCE Equity Profit performance Egenkapital Equity Resultatutvikling Profit performance 11

12 DEVELOPMENT IN DIVIDEND AND DONATIONS Dividend per equity certificate (NOK) Donations (MNOK) 12

13 Good financial strength provides a basis for attractive dividend Moderate risk and low losses Proactive digital strategy

14 PERFORMANCE AND EXPECTATION INDEX 67,7 68,6 68,8 68,9 67,5 67,9 66,1 66,6 65,4 64,3 64,5 65,9 63,8 64,7 64,8 64,9 65,0 63,2 63,3 63,0 62,8 63,2 62,8 62,2 59,8 61,7 61,6 59,1 60,7 57,9 59,8 57,8 57,3 57,9 62,0 62,3 60,6 59,4 58, Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q4 56,4 Result index Expectation index

15 STRONG POSITION IN THE RETAIL MARKET - WELL-DIVERSIFIED POSITION IN THE CORPORATE MARKET Loan portfolio NOK bill. Breakdown by sector in the corporate market, NOK 32.2 bill. 15

16 BREAKDOWN IN LENDING, CORPORATE MARKET - GROWTH IN COMMITMENTS UNDER NOK 150 MILL. By volume* Breakdown by sector in the corporate market, NOK 32 bill mill mill over 150 mill Q4 15 Q4 16 * Measured by commitments excl. the Jonsvoll company. Breakdown by sector refers to gross lending. 16

17 STABLE LEVEL OF DEFAULTS AND POTENTIAL BAD DEBT* % % ,256 1,267 1,215 1,241 1,218 3% 600 2% % 0.99 % 0.96 % 0.96 % 0.92 % Q Q Q Q Q Retail market Corporate market Share of total portfolio 1% 0% *) Includes all defaults, not just defaults of payment. Includes commitments with individual write-downs, calculated as a percentage of the total lending volume. 17

18 Capitalised write-downs (MNOK) ROBUST PROVISION LEVEL 0.77% 0.76% 0.76% 0.78% 0,77% 0,9 % 0,8 % ,7 % 0,6 % 0,5 % 0,4 % 0,3 % 0,2 % Write-downs as % of gross lending 0,1 % 0,0 % Q Q Q Q Q Individual write-downs Group write-downs Write-downs as % of gross lendings

19 LOW INDIVIDUAL LOSSES - LOSS EXPECTATION MILLION FOR 2017 Quarterly development Breakdown in Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Ind. Write downs Group provisions Ind. Write downs Group Provisions 19

20 Good financial strength provides a basis for attractive dividend Moderate risk and low losses Proactive digital strategy

21 Bank customers now expect the same level of service from their banks that they get from Netflix, Facebook and Spotify

22 A FUTURE WHERE DIGITAL CHANNELS WILL BE IN FOCUS Traditional bank digitalised The service model is built around branch offices and direct banking, supported by efficient digital tools The digital strategy is used to support traditional banking services Online and mobile banking solutions handle day-to-day banking services, advisory services are provided through other channels Digital bank supported by traditional services A fully digital bank in terms of the user experience, organisation and culture The traditional elements of the brand are retained and used to support the strategy For example, the whole loan process can be carried out by the customer in the digital bank, and advisory services provided at the office are based on self-service solutions.

23 The banks that will succeed in future are the ones that invest in hands-on, in-house development, focusing on the digital user experience.

24 THREE-PART STRATEGY In-house development: Opportunities for a differentiated customer experience What we perceive to be our core services

25 THREE-PART STRATEGY In-house development: Opportunities for a differentiated customer experience What we perceive to be our core services Purchase of off-the-shelf solutions: Product/service as hygiene factor only

26 THREE-PART STRATEGY SnapCash In-house development: Opportunities for a differentiated customer experience What we perceive to be our core services Purchase of off-the-shelf solutions: Product/service as hygiene factor only Active non-action: Mobile payments over and above transactions between friends ( Vennebetaling ) and SPING

27 SOME OF THE THINGS WE SUCCEED IN.. Transactions between friends ('vennebetaling') Time to market First bank to include chat function in the mobile banking solution Mobile banking solution best in the country? Use BankID to become a customer New corporate online banking solution Robots have taken over 27 processes

28 USE OF DIGITAL CHANNELS 28

29 Ranking in App store (average of App store and Google play) Sparebanken Vest's mobile banking is ranked number 1 in the App store and Google Play Wordcloud Word cloud based on comments from Google Play on why Sparebanken Vest Norway's best mobile banking

30 HIGHER PROPORTION OF DIGITAL SALES Self-serviced Manned One of three travel insurance policies sold online during the summer months. From 2014 to 2016, the self-service proportion increased from 5% to 18%. Travel insurance From 2014 to 2016, the self-service proportion of fund savings agreements increased from 13% to 50%. Fund savings agreements From 2014 to 2016, the self-service proportion of BSU increased from 18% to 55%. Youth savings account (BSU)

31 INCREASE IN SAVINGS AND INVESTMENTS Development in assets under management NOK bill. Net increase in saving and investment agreements NOK mill. 7, ,0 6, ,6 2,2 2,8 3,

32 81% OF BSU ACCOUNTS OPENED DIGITALLY IN DECEMBER As many as 64% of those who opened a BSU account in the mobile banking solution also started a savings agreement. Serviced Self-Serviced The proportion increased to 80% in December after the robot started suggesting automatic saving when the account was opened.

33 TRANSFERRED FROM CREDIT CARD Introduced "transfer of credit" also in the ordinary screen in mobile banking Resulted in an increase of 21% in December 2016 against December 2015 and 53% higher than in December 2014

34 NY PROCESS IS AUTOMATED EACH 14 DAYS Our robots gives us 14 Reduced response time Lower cost 27 Increased Quality Increased digital sale solved cases Automated processes As of 30 January

35 WHAT DO WE ACHIEVE BY IN-HOUSE IT? - Hands-on development of customer experiences - Time-to-market (self-managed, autonomous teams with high degree of decision-making authority) - Easier to experiment, test and adjust solutions - Expertise in own systems remains with us - Incentives for optimisation and rationalisation - Ownership that leads to high degree of personal initiative, commitment and proactive contributions

36 CHANGE IN COST STRUCTURE AND EXPERTISE PROFILE Number of branch offices Historical development : 3 offices 2012: 4 offices 2013: 11 offices 2014/15: 9 offices 2016: 9 offices År 2011 År 2016 Shift in resources and expertise About 130 full-time equivalents out About 30 new full-time equivalents in 36

37 COST DEVELOPMENT % COST REDUCTION IN THE PARENT BANK 13 % Costs ex IT IT** 1305* MNOK -6,5 % 1277 MNOK Average annual cost growth : 0.5% annual reduction *) The 2012 figures are exclusive of non-recurring effects related to pensions totalling NOK 301 million and bonuses in the parent bank. The planned development in the parent bank is exclusive of bonuses. All figures have been revised pursuant to IAS19R. **) IT costs are the total costs of the IT department in the parent bank, including payroll expenses, external fees, ICT costs and other operating costs in the department.

38 INCREASED EFFICIENCY THROUGH COST REDUCTION AND HEALTHY GROWTH Development in full-time equivalents Costs as % of average assets under management 1,73 1, , ,31 1,27 1,2 1, ,99 1,1 1,06 0,95 0,79 År 2011 År 2012 År 2013 År 2014 År 2015 År

39 Better customer experiences Sparebanken Vest is one of three finalists competing for the title of Best Customer Service in 2016

40 GOOD GROWTH IN THE RETAIL MARKET Retail market Lending NOK billion Corporate market Lending NOK 32.2 billion 7.9 % 4,20% 1,6 % 0,80% Q4 Growth lending Av.Growth last three years Q4 Growth lending Av.Growth last three years 40

41 DEVELOPMENT IN MARGINS - CONTINUED PRESSURE ON LENDING MARGINS, STRENGTHENED DEPOSIT MARGINS Lending Deposits 2,83 3,04 3,03 2,95 2,95 0,36 2,01 1,90 1,93 1,70 1,62 0,15 0,21 0,18 0,30 0,24 0,31 0,15 0,11 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 0,02 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Retail Corporate Retail Corporate Measured against average 3-month NIBOR. 41

42 VERY STRONG PROFIT PERFORMANCE BY FRENDE FORSIKRING The companies pre-tax profit/loss NOK mill. Profit contribution, associated companies Norne Verd Brage Frende NOKm Q Q Frende Forsikring Norne Securities Brage Finans Verd Boligkreditt Profit contribution associated companies Året 2015 Året

43 FRENDE FORSIKRING CONTINUE TO GROW Results In NOK mill. Comments 311 ROE 2016: - Holding 21,8 % - Liv 33,7 % Skade 17,9 % Over customers Value in SPV balance 466 Mill. NOK År 2012 År 2013 År 2014 År 2015 År 2016 Resultat Frende før EBITDA skatt Frende SPV sin SPVs andel Share 43

44 Summary of results, fourth quarter and the year 2016

45 RETURN ON EQUITY Return on equity as percentage Return on equity excl. non-recurring effects* 20,0 12,4 12,3 15,0 10,7 9,8 9,6 10,7 8,8 8,6 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 *Non-recurring effects, fourth quarter 2016: Basis swaps NOK -38 million Non recurring third quarter 2016: Life Insurance 245 million, sales of surveillance portfolio 58 million * Non Recurring second quarter 2016: Restructuring costs 55 million, VISA yield 94 million, the sale of property 20 million. 45

46 PROFIT AND BOOK VALUE OF EQUITY CERTIFICATES Profit per equity certificate Book equity per equity certificate 50,6 2,44 49,5 1,54 1,73 47,3 0,99 1,08 45,6 45,5 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q

47 KEY FIGURES Fourth quarter The year 2016 PRE-TAX PROFIT PROFIT, BANKING OPERATIONS* GOOD COST DEVELOPMENT NOK 361 MILL. (341) NOK 399 MILL. (341) NOK 386 MILL. (371) NOK 1,956 MILL. (1,396) NOK 1,547 MILL. (1,403) NOK 1,270 MILL. (1,443) RETURN ON EQUITY ABOVE TARGET 8.6% (10.7%) 13.1% (11.0%) PROPOSED DIVIDEND NOK 4.50 (1.1) STRONGER CORE TIER 1 RATIO 14.9% (13.7%) *Profit adjusted for non-recurring items, the winding-up of the bank s defined benefit pension scheme, sale of the shareholding in Visa and the sale of a monitored portfolio, in total NOK 409 million for the year Non Recurring fourth quarter 2016: Basis swaps -38 MNOK 47

48 OUTLOOK 76% retail market portfolio means lower risk Low direct exposure to the oil and offshore sector MEASURES Return on equity more than 11% Growth in line with capital plan %? Estimated losses for 2017 between NOK 200 and 250 million Flat cost development for 2017 Solid capital base above official requirements at all times Attractive dividend policy and expectation of a high direct return from 2017

49 WE ARE HERE.