SECOND QUARTER 2015
Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although SpareBank 1 SR-Bank believes that the expectations reflected in such forward- looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors. Important factors that may cause such a difference for SpareBank 1 SR-Bank include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the regulatory environment and other government actions and (iv) change in interest rate and foreign exchange rate levels. This presentation does not imply that SpareBank 1 SR-Bank has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided. 2
The leading financial group in the southwest of Norway 1 Rogaland Population 467.000 2 Market share 37% Year of establishment 1839 Market strategy Market leader Unemployment rate 3.1% 2 Hordaland Population 512.000 Market share 6% Year of establishment 2006 Market strategy Entry/growth Unemployment rate 2.7% 1 3 Agder Population 296.000 Market share 9% 3 Year of establishment 2002 Market strategy Growth Unemployment rate 3.3% 3 Source: Nav, SSB og SpareBank 1 SR-Bank
A good result distinguished by investment in new activities and modest losses Pre-tax profit for the quarter is NOK 552 million compared to NOK 684 million last year - Return on equity after tax 10.8% Pre-tax profit year-to-date is NOK 1.180 million compared to NOK 1.471 million last year - Return on equity after tax 11.7% 12 months lending growth of 7.6%* 12 months deposits growth of 11.1% - Growth of 12% in other capital under management in the last 12 months Growth in costs of 6% over the last 12 months - 3.3% adjusted for increased costs associated with among acquisition of Swedbank’s Stavanger office and three accounting offices Low impairment losses on loans - 0.18% of gross lending recognised on the balance sheet as at 30 June 2015 Common equity tier 1 capital ratio increased to 12.3% from 11.4% last year - IRB Advanced approval for the corporate market portfolio * 12 months lending growth excluding currency effect is 6.6% 4
Key figures – quarterly development Return on equity CET 1 capital ratio 12,3 % 12,1 % 14,5 % 11,5 % 11,4 % 11,3 % 12,7 % 12,2 % 11,7 % 10,8 % Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Earnings per share (NOK) Cost/income ratio 2,09 1,94 47,3 % 1,78 1,75 1,69 45,1 % 44,6 % 42,5 % 40,9 % Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 5
Income statement 30.06 30.06 Group Income Statement (MNOK) 15 14 Q2 15 Q1 15 Q4 14 Q3 14 Q2 14 Net interest income 1.266 1.128 639 627 655 621 581 Net commission and other income 807 924 399 408 405 403 444 Net income on investment securities 305 520 94 211 116 142 201 Total income 2.378 2.572 1.132 1.246 1.176 1.166 1.226 Total operating expenses 1.066 1.006 536 530 530 520 501 Operating profit before losses 1.312 1.566 596 716 646 646 725 Impairment losses on loans and guarantees 132 95 44 88 93 69 41 Operating profit before tax 1.180 1.471 552 628 553 577 684 Tax expense 253 278 121 132 105 123 150 Net profit 927 1.193 431 496 448 454 534 6
7 Change in profit 30.06.2014 – 30.06.2015 1.000 1.200 1.400 1.600 200 400 600 800 0 1.471 30.06.2014 Net interest income incl. commission 3 from covered bond companies 18 Other income - 215 Net income on investment securities -60 Total operating expenses Impairment losses on loans and - 37 guarantees 1.180 30.06.2015
Key figures 30.06 30.06 15 14 Q2 15 Q1 15 Q4 14 Q3 14 Q2 14 Return on equity after tax (%) 11,7 16,5 10,8 12,7 11,7 12,2 14,5 Net interest margin (%) 1,44 1,40 1,44 1,45 1,51 1,48 1,41 Impairment losses on loans and guarantees in % of gross loans 0,18 0,15 0,12 0,25 0,27 0,20 0,13 -incl. covered bond companies 0,15 0,11 0,10 0,20 0,22 0,16 0,10 Non-performing and other problem commitments in % of gross loans 0,78 0,81 0,78 0,81 0,66 0,77 0,81 -incl. covered bond companies 0,64 0,65 0,64 0,66 0,54 0,62 0,65 Cost to income ratio 44,8 39,1 47,3 42,5 45,1 44,6 40,9 Annual growth in loans to customers, gross 7,6 3,6 7,6 7,3 4,7 3,5 3,6 incl. covered bond companies (%) Annual growth in deposits from customers (%) 11,1 11,5 11,1 15,5 13,7 14,9 11,5 Total assets (BNOK) 181,9 167,3 181,9 176,9 174,9 168,3 167,3 Portfolio of loans in covered bond companies (BNOK) 31,2 33,3 31,2 34,1 32,9 32,9 33,3 Risk weighted assets (BNOK) 120,4 113,7 120,4 117,6 120,2 117,3 113,7 Earnings per share (NOK) 3,63 4,67 1,69 1,94 1,75 1,78 2,09 Book value per share (NOK) 62,56 57,63 62,56 62,40 60,28 59,21 57,63 Number of shares issued (million) 255,8 255,8 255,8 255,8 255,8 255,8 255,8 8
Consolidated income profile 1200 1.108 1.045 1.052 1.094 1.060 1000 324 315 310 333 324 800 34 73 28 20 22 90 66 84 93 120 MNOK 600 400 655 639 621 627 581 200 0 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Net interest income Commission income from covered bond companies Profit before tax from covered bond companies Net commission and other income 9
Lending and deposit margins Lending margins 2,99% 2,88% 2,93% 2,92% 2,89% 2,90% 2,80% 2,66% 2,58% 2,21% 2,21% 2,20% 2,06% 2,08% 1,97% 1,95% 1,95% 1,64% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Corporate market Retail market Deposit margins -0,25% -0,43% -0,45% -0,44% -0,45% -0,47% -0,46% -0,47% -0,50% -0,38% -0,48% -0,49% -0,55% -0,57% -0,63% -0,64% -0,68% -0,79% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Corporate market Retail market Definition: Average customer interest rate against 3-month moving average for 3-month NIBOR. Lending margins include loan portfolio in covered 10 bond companies
Lending volume and 12 months growth Corporate Market (incl. Capital Markets) 60 000 50 000 13,8% 15% 12,8% 40 000 MNOK 10% 30 000 5,6% 20 000 4,6% 4,5% 4,0% 5% 2,5% 10 000 1,4% 0,7% 0 0% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Volume Growth % Retail Market 120 000 100 000 15% 80 000 MNOK 10% 60 000 6,5% 5,9% 5,1% 40 000 4,9% 4,8% 4,6% 4,7% 4,1% 3,8% 5% 20 000 0 0% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Volume Growth % * 12 months lending growth in Corporate Market excluding currency effect is 11.3% 11 Figures incl. loan portfolio in covered bond companies
Loan portfolio as at 30.06.2015 • Gross loans as at 30 June 2015 amount 2,9% Agriculture / forestry / fishing 2,8% to NOK 181.4 billion compared with NOK 3,6% 168.6 billion at the same time last year. Industry, Power/water supply and construction 3,6% 1,7% Retail trade, hotels and restaurants 1,4% • 12-month growth in loans of 7.6%. 1,3% Shipping 2,1% • Loans to retail customers (incl. covered 4,8% Offshore/Oil and gas 5,7% bond company) account for 62.4% of 15,8% Real estate total loans. 15,6% 4,1% Service industry 4,6% • Loans to the commercial property sector 1,3% Pub. mgm., financial services and others account for 15.6% of total loans. 1,2% 0,4% Other 0,3% 44,5% Retail customers 45,5% 19,4% SB1 Boligkreditt 16,9% 0,4% SB1 Næringskreditt 0,3% 0,0 %5,0 % 10,0 % 15,0 % 20,0 % 25,0 % 30,0 % 35,0 % 40,0 % 45,0 % 50,0 % 30.06.2014 30.06.2015 Loans before individual write-downs, nominal amounts. Sector allocation in accordance with the standard categories from Statistics Norway. 12
Loan to value ratio on home mortgage loans • The proportion of loans with a loan-to- 100% value ratio of less than 85% is high and 90% stable. 80% 67,8% 67,2% 70% • 90.3% of the exposure is within 85% of 60% the assessed value of collateral. 50% 40% 30% 23,7% 23,1% 20% 6,1% 10% 5,2% 3,6% 3,4% 0% Below 70 % 70 - 85 % 85 - 100 % Above 100 % 30.06.15 30.06.14 In a total-distributed loan to value ratio, the entire loan is allocated to one and the same interval. The figures include the loan portfolio in the covered bond company (SpareBank 1 Boligkreditt AS and SR-Boligkreditt AS). 13
Deposits volume and 12 month growth Corporate Market* • Last 12 months deposits increased by 50000 NOK 9.1 billion to 90.8 billion. 20,3% 26,1% 24,1% 25% 40000 18,9% 17,7% • Corresponds to an increase in the 12,6% MNOK 30000 15% period of 11.1%. 6,6% 20000 1,7% 5% -2,1% 10000 0 -5% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Volume Growth % Retail Market 50000 40000 15% MNOK 8,9% 30000 7,8% 7,9% 6,7% 6,2% 5,6% 5,9% 5,2% 20000 2,6% 5% 10000 0 -5% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Volume Growth % * Includes also the Capital Markets Division. 14
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