Equity story. October 2018

Transcription

1 Equity story October

2 Positive macroeconomic development in Norway Mainland GDP and unemployment rate Per cent Mainland business investments 1Q08=100, three quarters moving average Housing prices and activity level (1) e 2019e 2020e e 2019e 2020e Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 (2) Mainland GDP, YoY Unemployment rate Homes sold 12m avg, thousand (RHS) Housing prices, Index 2015=100 (LHS) Source: Statistics Norway, Eiendomsverdi, Real Estate Norway, Finance Norway, Datastream/DNB Markets 2

3 DNB is the market leader in Norway Retail market Loans from financial institutions Deposits Policyholders' funds Mutual fund investments 24% 29% 40% 35% Corporate market Loans from financial institutions Deposits Policyholders' funds 1) Mutual fund investments 21% 39% 19% 28% DNB's market shares 1) Includes the public sector Source: Statistics Norway and Finance Norway 3

4 Norway is a digital front runner enabling change 96% of Norwegians use the Internet 6% of payments are made in cash No. 1 global ICT infrastructure 91% of Norwegians use online banking services 4

5 We have remodelled our retail distribution through digitalisation Mobile platform driving growth in digital banking Annual visits to our digital platforms million Reduced our branch network Number of branch offices Desktop Mobile 5

6 Strategic positioning for the future Strategic positioning Expanding business models Sustainability Signed agreement to sell down to 20 per cent ownership in Luminor Norwegian Competition Authority approved the merge of non-life insurance operations in DNB and SpareBank 1 Gruppen Launch of new digital channels in B2B DNB Accounting New strategic technology partnership with 11:FS, including joint venture Foundry Established the DNB Lending fund Ranked as the third best bank in the world on ESG issues by Sustainalytics DNB closed its first green certified shipping loan 6

7 A return on equity above 12 per cent remains our main priority > 12 per cent towards year-end 2019 Bridge to ROE bps bps >12.0% bps STRATEGIC BUSINESS INITIATIVES ~10.6%* INVESTMENT BANKING CUSTOMER INCOME FROM DNB MARKETS DEFINED CONTRIBUTION AND ASSET MANAGEMENT PAYMENT INITIATIVES NON-LIFE INSURANCE ROE YTD 3Q2017 Core business initiatives Strategic business initiatives Cost initiatives Cost of risk run rate ~17 bps ** ROE 2019 *Adjustments for MTM effects and gain from the demerger of Vipps **Basis points of EAD 7

8 ROE > 12 per cent towards year-end 2019 Return on equity Per cent NOK billion % % % 14.5 % >12% % 11.4 % 11.7 % 10.1 % 10.8 % 10.9 % Sept Average equity (lhs) ROE ROE ambition 8

9 Revenue growth from strategic business initiatives will build return on equity Revenues from strategic business initiatives have increased by 41% since 2012 NOK billion CAGR 7.2% IBD fees Other customer revenues Markets Asset management and defined contribution Non-life insurance 9

10 Solid growth in the Personal Customers and SME segments Growth rate in 3Q18 in loans to customers of 0.1 per cent (3.0 YTD annualised, 4.0 currency adjusted) - PC: 0.9 per cent in 3Q (3.9 YTD annualised) - SME: 1.8 per cent in 3Q (6.7 YTD annualised) - LCI: -2.5 per cent in 3Q (-1.3 YTD annualised, currency adjusted 1.2) Average loans increased by 2.3 per cent from 2Q18 and deposits by 1.2 per cent. Strong development in deposits in PC and SME. Loans per customer segment NOK billion Average loans and deposits in the customer segments 1) NOK billion Personal customers SMEs Large corporates and international customers 30 Sept June Sept ) 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Performing loans Deposits 1) Excluding the Baltics 10

11 Stable margins over time despite low interest rate environment Optimising margins in a competitive market Net interest margin and key policy rate Per cent Positive outlook for the key policy rate provides greater flexibility A large portion of our portfolio can be repriced 90% of mortgages and 30% of SME loan book can be repriced A marginal portion of the deposit book in NOK is fixed-rate, whereas 75% of total NOK deposits can be repriced SMEs and large corporates have individually priced margins 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Net interest margin (per cent) Key policy rate* (per cent) *Source: Norges Bank 11

12 Cost efficiency is important to remain competitive in a changing landscape Reduced annual cost/income ratio from 56 to 44 per cent over the past 10 years Leading in revenue per FTE 42.7 per cent cost/income ratio in 3Q18 Cost/income NOK billion Revenue per FTE NOK million, 2Q % Total income Total cost C/I (%) 2017 DNB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 12

13 DNB portfolio and income split Distribution of exposure at default by industry segment 30 September 2018 Total income split 3Q18 Other corporate customers 4 % Commercial real estate 9 % Shipping 4 % Oil, gas and offshore 5 % Power and renewables 2 % Healthcare 2 % Net gains on financial instruments at fair value 5 % Other income 5 % Public sector 1 % Fishing, fish farming and farming 2 % Net commissions and fees 20 % Personal customers 53 % Residential property 6 % Services 3 % Technology, media and telecom 2 % Trade 3 % Manufacturing 4 % Net interest income 73 % Around 80 per cent from Norwegian units 13

14 Portfolio quality: Rebalancing in LCI 1) results in a less cyclical portfolio 1.9 per cent of DNB s portfolio is exposed to the offshore industry Total group loan portfolio EAD NOK 1868 billion 2) As at 30 September 2018 Other 18.6 % Reduced exposure in cyclical industries Exposure at default, NOK billion Oil, gas and offshore Q18 Shipping 3.8 % Offshore 1.9 % Oil, gas and oilfield services 3.5 % Manufacturing 4.0 % Personal customers 53.4 % Shipping Q18 Residential property 5.6 % Commercial real estate 9.3 % ) Large Corporates & International 2) Excluding credit institutions 14

15 Dividend per share increased by 25 per cent to NOK 7.10 for 2017 Dividend per share and payout ratio % Cash dividend of 55 per cent and total distribution to shareholders of 73 per cent of profits in % New authorisation for 2018 approved at AGM for buy-backs of up to 3.5 per cent of outstanding shares. Initially DNB has applied for and got approval by the FSA for up to 2 per cent % 25% 30% 30% Buy-back programme of 1.5 per cent initiated in the second quarter of Dividend per share (NOK) Total payout ratio (per cent) 15

16 Financial ambitions towards year-end 2019 > 12 per cent ROE > 50 per cent payout ratio Overriding target Dividend policy < 40 per cent C/I ratio ~ 16.3 per cent CET1 ratio 1) Key performance indicator Capital level 1) Based on transitional rules 16

17 Shareholder distribution Top 20 shareholders As at 30 September 2018 Ownership according to nationality As at 30 September 2018 Shares (1 000) Ownership (per cent) Quarterly change in shares (1 000) Norwegian Government/ Ministry of Trade, Industry and Fisheries 1) (8 307) DNB Savings Bank Foundation Folketrygdfondet 2) Fidelity International (550) BlackRock The Vanguard Group DWS Investment Schroder Investment Management (313) Capital World Investors Storebrand Kapitalforvaltning T. Rowe Price UK 7.8% Luxembourg 4.8% Other international 10.0% Norwegian Government/ Ministry of Trade, Industry and Fisheries 34.2% KLP Forsikring (107) MFS Investment Management DNB Asset Management Nordea Funds SAFE Investment Company (811) Davis Selected Advisers Newton Investment Management (760) US 20.4% DNB Savings Bank Foundation 8.2% State Street Global Advisors LSV Asset Management (21) Total largest shareholders (2 458) Other shareholders Total (1 709) International investors: 43% Other Norwegian 14.7% Norwegian investors: 57% 1) DNB has completed three buy-back programmes totalling 1.5 per cent of outstanding shares. According to an agreement, the Norwegian government will redeem shares on a proportional basis so that its holding will remain at 34 per cent. 2) Folketrygdfondet s ownership fluctuates due to lending of shares. 17

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