FOURTH QUARTER 2017 AND THE YEAR 2017 JAN ERIK KJERPESETH CEO SPAREBANKEN VEST

Transcription

1 FOURTH QUARTER 2017 AND THE YEAR 2017 JAN ERIK KJERPESETH CEO SPAREBANKEN VEST

2 2017: A YEAR MARKED BY GOOD GROWTH, LOW LOSSES AND HIGHER MARGINS

3 GOOD GROWTH IN THE RETAIL AND CORPORATE MARKETS Retail market Lending NOK billion Corporate market Lending NOK 35.9 billion 3

4 LOW RISK WEIGHT AND GOOD LENDING MARGIN IN THE RETAIL MARKET Commitments and risk-weighted balance in NOK bill. Lending margins RWA* Commitments *) Risk weight based on regulatory IRB. 4

5 LOWER RISK WEIGHT AND BETTER MARGIN IN THE CORPORATE MARKET Commitments and risk-weighted balance in NOK bill. Lending margin as a percentage** , , , RWA* Commitments *) Risk weight based on regulatory IRB. **) 3-month Nibor as the reference interest rate. 5

6 A MORE PERFORMANCE-ORIENTED BANK - SOUND OPERATIONS RESULT IN STRONG PROFIT PERFORMANCE Return on equity as a percentage Costs as % of average assets under management 6

7 KEY DEVELOPMENTS Return on equity as a percentage* Profit per equity certificate** Dividend per equity certificate** Core Tier 1 capital as a percentage Write-downs in NOK millions* Donations in NOK millions *) For 2016, corrections have been made for the winding up of the pension scheme in the amount of NOK 243 million, the sale of a monitored portfolio of NOK 58 million, the taking to income of NOK 108 mill. in dividend from VISA and NOK 68 mill. in restructuring costs. **) An equity certificate issue whereby 27.3 million new equity certificates were issued was carried out in

8 Low losses and moderate risk Growth that creates value Clear competitive advantages

9 LOW WRITE-DOWNS ON LOANS AND GUARANTEES Quarterly development Comments NOK 35 million was taken to income as writedowns on losses and guarantees in the fourth quarter This is due to the good quality of the lending portfolio and a better market outlook for Western Norway A correction of NOK 11 million has been made in the evaluation of fixed-interest loans in the retail market. The actual figure taken to income in the quarter is therefore NOK 24 million 9

10 STABLE LEVELS OF PROVISIONS Write-downs as % of gross lending 0,9 % 0,8 % 0,7 % 0,6 % 0,5 % 0,4 % 0,3 % 0,2 % 0,1 % 0,77% 0,75% 0,77% 0,77% 0,70% Capitalised write-downs (MNOK) 0,0 % Q416 Q117 Q217 Q317 Q417 0 Individual write-downs Group write-downs Write-downs as % of gross lendings 10

11 STABLE DEFAULT LEVEL AND POTENTIAL BAD DEBT* % % % 600 2% ,92% 0,96% 0,97% 0,96% 0,92% Q Q Q Q Q Retail Corporate % of total 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. 11

12 LOW RISK IN THE RETAIL MARKET PORTFOLIO - 96% OF LENDING PORTFOLIO SECURED BY RESIDENTIAL MORTGAGE Lending broken down by LTV ratio Lending broken down by region 94,0 % 74% (75) 4,7 % 1,4 % LTV <= 70 % % LTV > 85 % (15) 15% 8% (7) (5) Hordaland Rogaland Sogn og Fjordane 3% 2% Other regions in Norway Other countries 12

13 Oslo Stavanger Bergen Norge HOUSE PRICES HAVE LEVELLED OUT Indexed house prices, 2003 = 100 Comments House prices peaked in April House prices have fallen by 6.1% since then, but with big regional differences: Index Fall of 12.5% in Oslo Fall of 8% in Bergen Flat development in Stavanger Record-high house-building is an important driver of the fall in prices in Oslo and Bergen, but more stringent requirements in the housing loan regulations has also affected developments, particularly in Oslo Sources: Eiendom Norge, Finn, Eiendomsverdi AS, Macrobond, Sparebanken Vest. 13

14 THE BANK IS WELL-EQUIPPED TO DEAL WITH A FALL IN HOUSE PRICES - WELL ABOVE THE CAPITAL REQUIREMENTS EVEN IN THE EVENT OF A 50% FALL IN HOUSE PRICES Access to covered bond financing Effect on capital adequacy Overcollateralisation 135% 130% 125% 120% 115% 110% 105% 100% Core Tier 1 capital 15,5 % 15,0 % 14,5 % 14,0 % 13,5 % 13,0 % 12,5 % 12,0 % 11,5 % 11,0 % Fall in house prices Overcollateralisation (OC) OC minimum requirement (102 %) Fall in house prices CET1 capital ratio CET1 capital ratio incl. losses CET1-requirement if large fall in house prices (CCyB = 0 %) 14

15 REGULATORY CAPITAL REQUIREMENTS MET BY A GOOD MARGIN Core Tier 1 capital Leverage ratio 7,3 7,1 7,2 7,3 7,3 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 The dotted line shows regulatory capital requirements. 15

16 ESTIMATED CAPITAL ADEQUACY, BASEL IV - CORE TIER 1 CAPITAL ADEQUACY INCREASE OF AROUND 3 PERCENTAGE POINTS* Basel IV capital requirements versus current regulations Comments 15 % 18 % New, more risk-sensitive method based on LTV for credit secured by real estate New floor of 72.5% of the new standard method for IRB banks Current regulations Basel IV *) Based on the Financial Supervisory Authority of Norway s qualitative impact study of December 2017, figures as of Q

17 STABLE DEVELOPMENT IN PILLAR II CAPITAL REQUIREMENTS Pillar 2 capital requirements Comments 0,7 % 0,1 % 0,3 % 0,7 % 0,7 % 0,3 % 0,3 % Credit risk Market risk Owner risk FSA - Discretion? Calculations based on the Financial Supervisory Authority of Norway s circular 12/2016 on credit risk and market risk New method out for consultation on the calculation of insurance company owner risk gives a 0.3 percentage point Pillar II addition Most of the bank s Pillar II capital requirement is based on the Financial Supervisory Authority of Norway's discretion 17

18 Low losses and moderate risk Growth that creates value Clear competitive advantages

19 STRONG POSITION IN THE RETAIL MARKET - WELL-DIVERSIFIED IN THE CORPORATE MARKET Loan portfolio NOK bill. Breakdown by sector in the corporate market, NOK 35.9 bill. 24 % 76 % Corporate Retail 19

20 SUCCESSFUL LAUNCH OF THE FAMILY BANK 16% INCREASE IN THE NUMBER OF NEW RETAIL CUSTOMERS AND 4,500 NEW FAMILY CUSTOMERS 24% INCREASE IN THE NUMBER OF NEW CUSTOMERS UNDER THE AGE OF 18

21 INCREASE IN SAVINGS AND INVESTMENTS - 29% GROWTH IN INCOME IN THE PAST YEAR Development in assets under management NOK billions Income from funds NOK millions 10,3 18 9,6 17 8,8 16 8,3 15 7,7 14 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q

22 INCREASED LENDING MARGINS Lending Deposits 2,95 3,09 3,05 3,04 3,06 0,36 1,62 1,78 1,88 1,95 1,95 0,31 0,21 0,22 0,12 0,08 0,13 0,03 0,03 0,03 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Retail Corporate Retail Corporate Measured against average 3-month Nibor. 22

23 NET INTEREST IMPROVED IN PAST YEAR - GROWTH IN NUMBER OF CUSTOMERS AND REDUCED NIBOR Development in nominal net interest Net interest as % of assets under management 23

24 STRONG GROWTH IN FRENDE FORSIKRING Development in ROE Development in number of customers* *) Shows the number of customers in thousands. 24

25 GROWTH AMBITIONS IN 2018 Expected credit growth in the retail market (C2) Expected credit growth in the corporate market (C2) 5.3% 4.0% Our growth target 9.0% Our growth target 6.0% 25

26 NEW DIVIDEND POLICY PREDICTABLE AND INVESTOR-FRIENDLY During a phase where Sparebanken Vest has accumulated capital, the bank has had a dividend policy with different distribution percentages This has been attractive to investors as long as the bank was priced below P/B 1 Now that Sparebanken Vest has achieved the correct capital level and the P/B is above 1, the bank's Board has decided to change the dividend policy in order to avoid dilution effects The new dividend policy is in line with that of other comparable savings banks The distribution level will be adapted to the bank's possibility for growth that creates value 26

27 Low losses and moderate risk Growth that creates value Clear competitive advantages

28 BE THE BEST SAVINGS BANK IN NORWAY

29 Customers Equity certificate holders Among the best in terms of customer satisfaction Among the best in terms of ROE Society Employees Strongest social commitment to Western Norway The most exciting place to work for those who want to develop their personal and professional competence (Q12) 29

30 OUR VALUE PROPOSAL A personal signature Simple digital services Social commitment to Western Norway

31 A SOFTWARE COMPANY WITH A PERSONAL SIGNATURE Traditional bank digitalised Focus on offices and advisers, supported by efficient digital tools Digital bank with a personal signature A fully digital bank in terms of the user experience, organisation and culture 31

32 Better customer experiences Sparebanken Vest number 1 on customer service among banks in 2017 Source: Kantar TNS s annual customer service survey, Total of 20,000 respondents

33 SUCCESSFUL SHIFT IN COST STRUCTURE - 5.6% COST REDUCTION IN THE PARENT BANK 9% Costs excl. IT IT* NOK 1,305 mill. -9.8% NOK 1,232 mill *) 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. 33

34 RANKED AS THE BEST NORWEGIAN MOBILE BANKING SOLUTION Sparebanken Vest 4,5 Nordea 4,3 Danske 4 Sparebank 1 3,4 Sbanken 3,3 DNB 3 Handelsbanken* 2,7 Average of customers rating in itunes (iphone) and Google Play (Android)** *) Handelsbanken has launched a new mobile banking solution and therefore has few respondents so far. **) Figures from 15 January A total of 63,307 respondents. 34

35 BECOME A CORPORATE CUSTOMER IN 2 MINUTES Comments New online solution for becoming a corporate customer with BankID signature launched in autumn Limited liability companies, sole proprietorships and clubs and organisations can now fill in forms online using a digital signature 700 enterprises and organisations have become customers online since September

36 STRONG INCREASE IN DIGITAL SALES Youth savings account (BSU) Fund savings agreements Comments Visa Gold General insurance 42% increase in youth savings accounts 73% increase in fund savings agreements 39% increase in Visa Gold 44% increase in general insurance

37 Digital application and approval process for credit cards and consumer loans launched in the mobile banking solution

38 NEXT UP IS A TOP-UP LOAN FUNCTION IN THE MOBILE BANKING SOLUTION Comments The goal is to ensure an equally simple user experience as for credit cards and consumer loans Fully-automated process Will be launched in first halfyear

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40 HJERTEBANK (HEARTBEAT) FOR THE WHOLE OF WESTERN NORWAY 6 Hjertebank events in 2017: Bergen, Florø, Knarvik, Husnes, Odda and Haugesund NOK 1 million allocated, total NOK 6 million 2,586 nominations, 48 winners 5,000 attended the concerts

41 HJERTEBANK FOR EMPLOYEES All employees were given NOK 4,000 to donate among 15 Hjertebank projects as a Christmas present New window with a new project every working day in December where the person who proposed the project presented a video they had made themselves Thomas Skogstrand and his Team Rynkeby received the biggest sum. He is cycling to Paris this year for the Children s Cancer Society. He was awarded a total of NOK 548,000

42 NEW KIT CAMPAIGN FOR clubs received new football kits in ,342 kits distributed

43 Allocation of profit and goals for 2018

44 THE BOARD OF DIRECTORS' PROPOSAL FOR THE ALLOCATION OF PROFIT Basis for dividend NOK 1,283 mill. Equity certificate holders NOK 297 mill. Other equity NOK 986 mill. Dividend NOK 3.75 NOK 221 mill. Equalisation reserve NOK 76 mill. Donations NOK 150 mill. Primary capital NOK 836 mill. Distribution percentage of 74.4% to equity certificate holders 71.1% will be retained to strengthen capital adequacy. 44

45 FINANCIAL TARGETS FOR 2018 Return on equity as a percentage* Growth in lending 11,0 % 11,0 % 10,7 % 8,0 % 8,3 % 5,6 % Target 2018 Core Tier 1 capital as a percentage Target 2018 Costs parent bank** 14,9 % 15,0 % 15,0 % Cost development 0 % Target 2018 *) For 2016, corrections have been made for the winding up of the pension scheme in the amount of NOK 243 million, the sale of a monitored portfolio of NOK 58 million, the taking to income of NOK 108 mill. in dividend from VISA and NOK 68 mill. in restructuring costs. **) Excluding non-recurring effects and financial tax 45

46 OVERALL GOALS: VALUE CREATION FOR THE OWNERS Total return on equity certificates, past 5 years* Comments Ambition to be among the best in terms of ROE Changed divided policy to equal distribution percentage to equity certificate capital and primary capital to prevent dilution effects Dividend between 25% and 50% of the equity certificate holders share of profits from 2018 Increased ownership among the bank s employees through a new SVEG programme introduced in 2017 *) At the end of Q Contingent on reinvestment of 100% of dividend payments. 46

47 WE ARE HERE. 47