Gjensidige Bank Investor Presentation Q November 2015

Transcription

1 Gjensidige Bank Investor Presentation Q November 2015

2 Content The Norwegian Economy Gjensidige Insurance Group and Gjensidige Bank in brief Financial performance Funding overview Gjensidige Bank Boligkreditt AS Appendix 2

3 The Norwegian Economy

4 Trends in the economy Limited downturn expected in Norwegian economy* Inflation (CPI-ATE) Unemployment rate Real GDP growth mainland 3,0 5,0 2,5 4,5 4,0 2,0 3,5 3,0 GDP growth and inflation% 1,5 1,0 0,5 2,5 2,0 1,5 1,0 0,5 Unemployment rate % 0, ,0 * Source Statistics Norway 11 September

5 Robust retail credit market High unemployment rate and negative gross lending in 1991, but only 1,72% credit loss 15,0 Unemployment Growth in gross lending Retail losses in percent of gross lending Unemployment and credit growth in % 13,0 11,0 9,0 7,0 5,0 3,0 1,0-1,0-3,0-5,0 1989M M M M M M M M M M M M M08 1,80 1,30 0,80 0,30 (0,20) (0,70) Retail loss in % of gross lending 5

6 Key features of Norwegian housing market Home ownership Among the highest in the world - around 80% of households own their own home Buy-to-let market is very limited I Norway Social benefit system Best social security benefits for unemployed people in the world (according to OECD) On average unemployment benefit approx. 62 % of previous salary Unemployment benefits paid for minimum of 104 weeks Tax incentives All interest expenses are tax deductible in Norway at capital gains tax rate (27%) Preferential treatment of properties when calculating the wealth tax (1.0%) Capital gain on a dwelling is tax-free after one year of occupancy by the owner Personal liability Mortgage lending in Norway Lending guidelines Borrowers personally liable for their debt - also after foreclosure/forced sale Strong incentive to service debt reflected in low arrears Transparent and reliable information about borrowers available to the lenders 95% of residential mortgage loans granted by banks/mortgage companies Typical legal maturity years, on average years ~90% of residential mortgages have variable interest rate Banks allowed to increase interest rates with a six weeks notice to the borrower No sub-prime market in Norway Maximum LTV 85% (since Q4 2011, 90% before) In the interest-only loans maximum LTV 70% Debt service ability is stress tested for a 5%-point increase in interest rates 6

7 Housing market 12-months growth rate Actual Outlook 17,2 11,1 6,7 2,1-0,6-7, Source: Pengepolitisk rapport 1/2015, Norges Bank (published 19. March 2015) 7

8 Gjensidige Bank

9 Gjensidige in brief Nordic and Baltic presence Market Top 5 Norway 76% Denmark 63% Sweden 83% Finland 89% Baltic states 70% Gjensidige Insurance Group - Leading Nordic general insurance company - Market leader in Norway with 25.2% market share* years history - Earned premiums ~ NOK 21bn - Pre-tax profit NOK 5.4bn in Market Capitalization ~ NOK 66bn #5 #1 #8 #5 Gjensidige Bank - Fully owned by Gjensidige Forsikring ASA - Established in Online retail bank with Norwegian presence only - Day-to-day banking services, mortgages, savings products and car and consumer financing - Distribution via call center, mobile, tablet, group portal, and the Group s 20 financial offices - Approximately 121,000 customers - Customer Assets ~ NOK 34bn Consolidated market shares for the 5 largest players in each market. Position in each country based on Q22015 Norway, Sweden, Baltics, Q32014 Denmark, Q42014 Finland * Source: Finance Norway, non-life insurance, 3rd quarter

10 Ownership Structure 100 per cent owned by Gjensidige Forsikring ASA Gjensidige Forsikring ASA S&P Rating A 100% ownership Gjensidige Bank ASA S&P Rating A- 100% ownership Gjensidige Bank Boligkreditt ASA S&P Rating AAA 10

11 Financials targets and outcome TARGET FULL YEAR 2014 YTD ) Pre-Tax Earnings & After-Tax ROE Support the Groups target for return on equity NOK 254m 9.6% NOK 221m 10.1% C/I Ratio YoY Improvement 54% 50% YoY Customer Footings Growth 1) Above average market growth Assets 14% Deposits 12% Assets 30% Deposits 5% Capital Adequacy Ratio >14.5% 15.7% (CET1 13.9%) 15.2% (CET1 11.5%) Standard & Poor's Rating >A- (Covered Bond Program AAA) A- (Covered Bond Program AAA) A- (Covered Bond Program AAA) 1) Customer Footings = Total of Customer Assets & Customer Deposits 2) Period:

12 Customer assets 30 per cent growth in customer asset YoY Customer assets (NOKbn) Household lending growth (%) Market Growth (household) Gjensidige Bank 34, ,2 27, ,1 15,0 17, ,6 15 6, Q3'15 LTV 64% for the Mortgage portfolio Source: Statistics Norway, Household 12 months percentage growth 90% of the portfolio is secured lending primarily sourced from members of Tekna, NITO & YS 12

13 Total income Full year income up by NOK 64m or 11 per cent from prior year Total income (NOKm) 2014 total income by type NII Fees Other Income Financial Instruments Net Interest Income 93 % 23% % NOK 663m Fees 4 % Other Income Financial 3 % Instruments 0 % 13

14 Development in net interest income and interest rate spreads Average interest rate spreads (%) Net interest income (NOKm) 3,6 3,6 3,7 3,5 3,3 3,4 3,4 Lending 2,9 2,7 140 Deposit repricing and NIBOR ,4 2,3 2,2 2,1 2,0 2,4 2,3 2,2 2,0 NIM 1) Deposit repricing and NIBOR (1,3) (1,4) (1,4) (1,2) (1,1) (1,1) (0,9) Deposit (0,5) (0,5) Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Lending & Deposit Spread Definition: Average customer interest rate against 3-month moving average for 3-month NIBOR. 1) NIM = Total net interest income in per cent of average total asset 14

15 Total expenses Full year expenses of NOK 358m or 5 per cent higher than prior year Total expenses (NOKm) Cost/Income ratio (%) 2013 and 2014 growth primarily driven by the car finance investment and volume growth! % % YTD 2014 YTD YTD 2015 YTD 2014: , YTD 2015:

16 Non-performing loans Improved NPL ratio and prudent reserve-building NPL ratio (%) NPL coverage (%) 40,0 1) 2) Gross Outstanding (BNOK) NPL Ratio % NPL (MNOK) NPL Coverage % 1, ,0 35,0 1, ,0 Gross Outstanding - BNOK 30,0 25,0 20,0 15,0 10,0 5,0 -! NPL Ratio 1.0% 1,4 1,2 1,0 0,8 0,6 0,4 0,2 - NPL Ratio % Non-Performing Loans - MNOK ! NPL Coverage 110% 100,0 80,0 60,0 40,0 20,0 - NPL Coverage % 1) NPL Ratio: Non-performing loans / Gross outstanding loans. Non-performing loans are loans >90 days past due, NPL Coverage: Loan loss reserves / Non-performing loans 16

17 Loss and provisions Full year loss and provisions of NOK 52m or 23 per cent lower than prior year Loss and provisions (NOKm) Loss rates (%) 109 Change from US GAAP to IFRS post acquisition of Citibank unsecured loans portfolio 0,8 94 0, , ,3 0,2 0, YTD 2014 YTD YTD 2015 YTD 2014: , YTD 2015:

18 Earnings performance Increased earnings YoY Full year earnings and ROE YTD earnings change Pre-Tax Earnings 6,2 3,8 2,0 113 After-Tax ROE 10,5 9,6 8, , As reported: NOK 16m or 8% Normalised for MtM: NOK 48m or 26% : 16 MNOK 2015: (17) MNOK (20) -7 (70) (120) (85) (76) Acquisition of Citibank Norwegian consumer finance portfolio FY-08 FY-09 FY-10 FY-11 FY-12 FY-13 FY-14 YTD 2014 YTD YTD 2014 CUSTOMER INCOME MtM EXPENSES LOSS & PROVISIONS YTD 2015 YTD 2014: , YTD 2015: DECREASE EARNINGS INCREASE EARNINGS 18

19 Quarterly earnings and returns development Sustainable earnings growth Pre-tax earnings (NOKm) Rolling 12 months - ROE (%) Pre-Tax Earnings - As Reported Pre-Tax Earnings - Excluding MtM Gain / (Loss) Afte-Tax ROE - As Reported Afte-Tax ROE - Excluding MtM Gain / (Loss) 86 12, , MtM Loss NOK 22m 10,0 8,0 9,3 MtM Loss NOK 22m , , ,0 - N-11 J-12 M-12 M-12 J-12 S-12 N-12 J-13 M-13 M-13 J-13 S-13 N-13 J-14 M-14 M-14 J-14 S-14 N-14 J-15 M-15 M-15 J-15 S-15 Q4 14: Fixed Asset WO NOK 14m and mark-to-market loss NOK 7m. Q3 15: Mark-to-market loss NOK 22m. 19

20 Capital development Strong and committed owner to support bank s growth ambitions Equity T1 Capital T2 Capital Total Capital Ratio CET1 Ratio CET 1 Ratio 11.5 per cent - CET 1 Ratio is excluding retained earnings of NOK161m 3,5 3,0 16,1 15,0 13,6 14,6 14,6 15,7 13,9 15,2 11,5 15,0 - S&P RAC Ratio 18.5% (as of June 2015) Bank is using the standardized approach for calculating risk weighted assets: 2,5 2,0 0,25 0,35 0,30 10,0 - Mortgage book 35% - Unsecured loans 75% - Car Finance 75% 1,5 5,0 Leverage Ratio 5.7% (CRD IV) 1,0 0,5 1,2 1,3 1,4 1,8 2,0 2,0 - Strong and committed owner to support bank s growth ambitions Equity Injection NOK 341m (growth & regulatory change) Equity Injection NOK 50m (growth & regulatory change) Q3'15-5,0 - Retained earnings since start-up has been kept in the bank (no dividend payment) 1) Q3 15 CET1 Ratio and Equity base is excluding retained earnings 20

21 Loans and funding structure per LCR 72% (Sep 2015) NSFR 115% (Sep 2015) Balance sheet NOK 36.9bn Liquidity indicators and funding maturity Commercial 1.0% Cash & Other Net Bond Portfolio Other Money Market Funding 44% 16.4 bn Deposit / Loan Ratio L1 AVG Funding Maturity ,0 8,0 7,0 Net Household Lending 91% 33.6 bn Assets Customer Deposit 47% 17.5 bn Equity Equity & Liabilities Deposit / Loan Ratio & Liquidity Indicator 1 % ,2 4,1 3,9 2,8 1, Q3'15 6,0 5,0 4,0 3,0 2,0 1,0 Average maturity funding (years) 21

22 High quality liquidity reserve per Liquidity portfolio by asset type Liquidity portfolio distribution Treasury Bills 16 % Bank Deposits 17 % 77% Muni 3 % Money Market Fund 0 % NOK 4.1bn Covered Bond (GBB) 32 % Covered Bond 32 % 17% 3% 4% 0% AAA AA Not rated MM Fund Bank 22

23 Development in liquidity reserve per ,0 Liquidity Reserve (BNOK) 17 % of Total Assets Large liquidity buffer amounting to NOK 4.1bn and representing 11% of total assets. 5, ,0 3, Covers debt payments the next 31 months. Liquidity reserve placements are managed through: 8 - LCR focused investment mandate Liquidity Portfolio BNOK 2,0 1,0-2,7 4,3 4,8 4,5 3,4 3,1 3,3 3,9 4,1 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3' % of Total Assets - NOK limits per counterpart - Max 3.5 year average maturity on bond portfolio 23

24 Development in deposits per Deposit development (NOKbn) Deposit mix Deposit Balance - BNOK Deposit to Loan Ratio% 20, ,0 16,7 17, ,0 14,0 14, ,0 10,0 9,1 9,8 11, NOK 17.5bn Above NOK 2m 22 % Deposit Balance BNOK 8,0 6,0 4,0 2,0-6,1 6, Q3' Deposit to Loan Ratio% Below NOK 2m 78 % 24

25 Money market funding and maturity profile per Development in market liabilities NOK 16.5bn Maturity profile (NOKm) Covered Senior T2 & T1 Senior Bond Covered Bond T2 & T1 3% 3% 2% 2% 4% 4% 17% 25% 26% 25% 25% 26% 27% 22% 22% 26% 29% Average Maturity 3.9 Years! 83% 75% 74% 75% 75% 72% 70% 75% 76% 70% 67% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3' Tier 1 and Tier 2 capital presented at first call date. 25

26 Gjensidige Bank Boligkreditt AS Investor Presentation Q October 2015

27 Gjensidige Bank Boligkreditt AS in brief Ownership structure The company was established in Its purpose is to raise funds for Gjensidige Bank Group. Covered bond rated AAA by Standard & Poor`s. GB Mortgage Bank is a wholly-owned subsidiary of Gjensidige Bank ASA and, operationally, an integrated part of the parent company. Cover pool consisting of 100% prime Norwegian residential mortgages High quality cover pool reflected by the weighted average LTV of 50.7% Strong legal framework for covered bonds in Norway with LTV limit of 75% for residential mortgages Gjensidige Forsikring ASA (S&P Rating A / Strong ERM) 100% Gjensidige Bank ASA (S&P Rating A-) 100% Gjensidige Bank Boligkreditt AS (Covered Bonds) 27

28 Operating model and roles Gjensidige Bank ASA - Loan origination - Servicing - Accounting - IT - Administrative, legal issues, etc - Risk Mgmt, debt collection - Product development - Service production - Funding provider - Capital markets - Support function - Loan selection Gjensidige Bank Boligkreditt AS - Mortgages are originated within Gjensidige Bank s distribution network following the bank's credit policy. - Lending criteria - Pool management and analysis - Investor reporting - Bond issuing INVESTORS Loans are sold to GBB Issues under the program 28

29 Characteristics of the cover pool Q Cover Pool MNOK 16,346 10,692 Substitute assets MNOK Gross loans to/claims from customers MNOK 15,691 10,172 Issued covered bonds MNOK 12,350 8,648 Weighted average loan-to-value ratio (LTV) Per cent Loans to customers Number 9,971 7,320 Weighted average remaining life Month Share of flexible loan (balance) Per cent Loans in default (> 90 days) MNOK 0 3 Loans with floating interest rate Per cent All loans are secured by mortgages on homes in Norway with a concentration in Oslo and Akershus 29

30 Transferred loans & geographical distribution Share of loans transferred Geographical distribution % Share of Customer Asset transferred from GB % Share of Mortgage Asset transferred from GB Central Norway 10 % 56% 55% 51% 51% 52% 50% 55% 55% Eastern Norway 16 % Northern Norway 5 % 45% 45% 42% 42% 43% 46% 45% 44% 41% 45% 46% Western Norway 22 % Southern Norway 2 % 38% 37% 37% Oslo 22 % Akershus 23 % 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 30

31 Loan-to-value Conservative and high quality Cover Pool Balance Distribution LTV Development WA indexed LTV (%) 24% 23% 31%! 66% within 60% LTV 54% 54% 55% 56% 54% 53% 53% 50% 50% 51% 19% 3% 0-40% 40-50% 50-60% 60-75% 75-90% Above 90% Security in summer houses are not included in calculation of Loan-to-value 0% 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 31

32 Maturity profile NOK 12.4bn issued covered bonds Maturity profile (NOKm) Average time to maturity of funding Years , ,4 4,1 4,0 3,8 3,9 4,0 3,9 3,9 3,9 3, Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 32

33 Full year 2014 and 3rd quarter financials Income statement (Figures in NOK 1000) YTD 2015 Q Full Year 2014 Net interest income 112,864 36, ,990 Net commission income and other operating income 1,855 0,495 2,015 Total income 114,719 37, ,005 Operating expenses (8,204) (2,862) (8,312) Profit before loss 106,516 34, ,693 Write-downs and losses 1,464 1,801 Profit before tax expense 107,979 34, ,495 Balance sheet (Figures in NOK 1000) Loans to and claims from customers 15,690,872 10,172,026 Liabilities opened for the issue of securities 12,485,890 8,788,570 Financing from Gjensidige Bank 2,492,633 1,197,501 Equity 1,322, ,738 Capital adequacy ratio 19.6 % 18.4 % Common equity Tier 1 capital ratio 19.6 % 18,4 % 33

34 Gjensidige Bank Boligkreditt AS High quality cover pool Cover Pool (NOK Thousand) 2Q Q Q Q Q Q Q Q Q Q 2015 Residential mortgages 1) 9,481,950 9,818,344 10,241,467 10,557,369 9,774,093 9,854,942 10,140,253 12,119,486 14,194,327 15,681,308 Substitute assets 878, , , , , , , , , ,766 - Bank deposit Gjensidige Bank ASA 393, , , , , , , , , ,438 - Treasury bills 396, , , , , ,588 19,975 19,924 19,974 - Covered bonds 90,803 90,806 90,771 90,769 90,806 90,764 90,647 90,400 50,426 50,276 - Interest rate swaps 74, ,078 - Other -1, TOTAL 10,360,798 10,719,669 11,166,300 11,411,637 10,475,331 10,453,299 10,692,489 12,736,613 14,720,037 16,346,074 1) Quarterly evaluation by Eiendomsverdi Overcollateralization 31.1 % 30.7 % 25.5 % 28.2 % 26.2 % 38.5 % 23.6 % 22.5 % 35.4 % 31.1 % 1) Quarterly evaluation by Eiendomsverdi 34

35 Stress test and overcollateralisation Stress Test House Price Decline Current 20% Decline in house prices 30% Decline in house prices 40% Decline in house prices WA indexed LTV 50.7% 62.4% 71.3% 83.2% Eligible Overcollateralisation 31.1% 28.2% 22.7% 14.2% Minimum overcollateralisation 10% Bank will hold the amount of overcollateralisation required to maintain the current rating for covered bond 35

36 NOK 12.4bn issued covered bonds ISIN NUMBER CURRENCY RATE ISSUED MATURITY EXT. MATURITY FACE VALUE BOOK VALUE ISIN NUMBER CURRENCY RATE ISSUED MATURITY EXT. MATURITY FACE VALUE BOOK VALUE NO NOK Floating , ,000 NO NOK Floating , ,580 NO NOK Floating , ,090 NO NOK Floating , ,500 NO NOK Floating , ,920 NO NOK Floating ,000 99,942 NO NOK Floating , ,663 NO NOK Floating , ,400 NO NOK Floating , ,475 NO NOK Floating , ,040 NO NOK Floating , ,260 NO NOK Floating , ,768 NO NOK Floating , ,146 NO NOK Floating , ,520 NO NOK Floating , ,354 NO NOK Floating , ,150 NO NOK Floating , ,240 NO NOK Floating , ,150 NO NOK Floating , ,124 NO NOK Fixed , ,100 NO NOK Fixed , ,220 NO NOK Fixed , ,079 NO NOK Floating , ,640 NO NOK Floating , ,160 NO NOK Floating , ,070 NO NOK Floating , ,645 NO NOK Floating , ,663 NO NOK Fixed , ,565 NO NOK Fixed ,000 95,099 Amortisation (14,734) Interest rate swaps 116,317 Total liabilities through the issuance of securities 12,350,000 12,485,890 Own Bonds Amortisation own bonds Total debt incurred through the issue of securities excluding own securities 12,350,000 12,485,890 NO NOK Floating , ,745 The bonds are listed on the Oslo Alternative Bond Market (ABM) 36

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38 Appendix

39 Gjensidige Bank Group Full year 2014 and YTD financials Million NOK YTD 2014 YTD 2015 B/(W) B/(W) % Full Year 2013 Full Year 2014 B/(W) B/(W) % Net Interest Income % % Total Income % % Expenses (19) (8%) (17) (5%) Provisioning & Losses (12) (29%) 2) % Pre-Tax Earnings % % Pre-Tax Earnings (excl. MtM) % % Customer Assets 26,422 34,305 7,884 30% 24,194 27,547 3,353 14% Customer Deposits 16,620 17, % 14,938 16,703 1,765 12% Net Interest Margin 1) 2.1% 2.2% 8 bps 2.4% 2.2% (25 bps) After-Tax ROE 10.5% 10.1% (40 bps) 12.0% 13.2% 119 bps Cost / Income Ratio 50% 50% 82 bps 57% 54% 298 bps 1) Net interest margin = net interest income/average total assets 2) The increase is driven by growth in car financing and transitioning of the reporting model for write-downs and losses. 39

40 Gjensidige Bank ASA Organisation CEO Hans Haren Business Planning & Analysis Business MIS Accounting & Treasury Risk & Capital Management CFO Teemu Alaviitala Compliance Øyvind Stavseng Jenssen HR Gjensidige Group Risk Management Jurgita Petkeviciute Sales Ole Bjørn Harang Marketing & CRM Alexander von Hirsch Car Finance Trond Nyhus Product Stig Heide Credit Risk Rajeev Prabhu Technology Lene Steinum Operations & Customer Service Nina Mydske Treasury & Branch Manager Tor Egil Nedrebø Marketing & Sales New customer acquisition Distribution Partners Outbound Sales Marketing & Sales Cross-Sales Existing Customers Web Coordination Marketing & Sales New customer acquisition Car Dealers Product & Pricing Secured Lending Unsecured Lending Deposits Cards Insurance Customer Program Legal Fraud Internal Controls Collections Underwriting Credit Risk Mgmt & MIS - Scoring & Reporting - Policy Management IT Development IT Operations Datawarehouse Dev Information Security COB Operations Depot Customer Service Outbound Sales Team Treasury Branch Manager for the Førde office 40

41 Disclaimer The information contained herein has been prepared by and is the sole responsibility of Gjensidige Bank ASA and Gjensidige Bank Boligkreditt AS ( the Company ). Such information is confidential and is being provided to you solely for your information and may not be reproduced, retransmitted, further distributed to any other person or published, in whole or in part, for any purpose. Failure to comply with this restriction may constitute a violation of applicable securities laws. The information and opinions presented herein are based on general information gathered at the time of writing and are therefore subject to change without notice. While the Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. These materials contain statements about future events and expectations that are forward-looking statements. Any statement in these materials that is not a statement of historical fact including, without limitation, those regarding the Company s financial position, business strategy, plans and objectives of management for future operations is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company will operate in the future. The Company assumes no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. The information in this presentation is subject to verification, completion and change. The contents of this presentation have not been independently verified. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its owners, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of the Company, any selling equity holder, any member of the underwriting syndicate, or any of their respective affiliates, advisors or representatives or any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Investors and prospective investors in securities of any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such company and the nature of the securities. Any decision to purchase securities in the context of a proposed offering of securities, if any, should be made solely on the basis of information contained in an offering circular or prospectus published in relation to such an offering. 41