Third quarter The Sparebanken Vest Group. Managing Director Stein Klakegg 27 October 2010

Transcription

1 Third quarter 2010 The Sparebanken Vest Group Managing Director Stein Klakegg 27 October

2 Improved profit performance - increased market shares for deposits and lendings Growth in nominal net interest and good position for further growth Low write-downs Better accumulated return on equity in 2010 Meets new capital requirements (Basel III) by a good margin New online banking solution as a platform for better advisory services and distribution 80% of general insurance premiums recouped through Frende Continued improvement in profit performance for Eiendomsmegler Vest 2

3 Improved profit performance and financial strength Operating profit/loss before writedowns and tax Third quarter At 30 Sept NOK 218 mill. NOK 249 mill. NOK 712 mill. NOK 557 mill. Pre-tax profit NOK 189 mill. NOK 156 mill. NOK 632 mill. NOK 352 mill. Profit/diluted profit per equity certificate NOK 1.32 NOK 1.53 NOK 4.79 NOK 3.16 Net interest 1.47% 1,52% 1.51% 1.58% Cost ratio 1.23% 1.16% 1.18% 1.27% Return on equity (ROE) annualised 10.0% 10.6% 12.2% 7.5% Deposits/loans ratio (end of quarter) 55.8% 54.6% Liquidity indicator (end of quarter) 102.9% 102.0% Core capital adequacy, end of quarter 10.6% 8.6% Capital adequacy, end of quarter 11.5% 10.1% Core capital adequacy, end of quarter (Basel II fully implemented) 13.5% 9.6% Total capital adequacy, end of quarter (Basel II fully implemented) 14.6% 11.1% The capital adequacy figures include 50% of the profit for the period 3

4 Return on equity and credit spread effect 12.2% per year as of 3 Q Fair valuation of liabilities (FVO) part of the implementation of IFRS in 2005 Different principles used by Norwegian banks The principle equalises ROE 15,8 % 15,4 % 18,0 % 17,9 % 15,8 % 16,2 % 11,8 % 8,0 % 12,2 % 13,4 % 12,2 % 10,9 % 11,3 % 11,0 % 20,00 % 18,00 % 16,00 % 14,00 % 12,00 % 10,00 % 8,00 % 6,00 % 4,9 % 1,8 % 4,00 % 2,00 % 0,00 % Pr Pr pr ROE accounted ROE adjusted for FVO - effect 4

5 Good underlying profit development - pre-tax profit One-off items (AFP in Q1 & Nordito in Q2) 5

6 Pre-tax profit as of 30 September 2010 up by NOK 280 million

7 Quarterly profit up by NOK 33 million

8 Increase in nominal net interest Comments Nominal net interest + NOK 29 million in relation to 3Q 09 + NOK 58 million so far this year The quarter's net interest 1.47 (1.52)% per year Affected by Increasing Nibor and credit spreads Increased liquidity costs Covered bonds Issue and refinancing subordinated bond Net interest per quarter (including full consolidation of Sparebanken Vest Boligkreditt AS) ,53 % 297 1,52 % 343 1,64 % 382 1,71 % 341 1,53 % 378 1,69 % 357 1,52 % 377 1,58 % 372 1,54 % 376 1,51 % 386 1,47 % 1 Q 08 2 Q 08 3 Q 08 4 Q 08 1 Q 09 2 Q 09 3 Q 09 4 Q 09 1 Q 10 2 Q 10 3 Q 10 Net interest income and credit commissions (NOKm) Net interest income and credit commissions per capital unit (% p.a.) 3,50 % 3,00 % 2,50 % 2,00 % 1,50 % 1,00 % 0,50 % 0,00 % 8

9 Produktmargin Interest margin maintained Comments Interest margin per quarter 2,50 % Minor re-pricing with effect from mid-july Falling lending margin rising deposit margin 2,00 % 1,50 % 1,00 % 0,50 % * Product margins and interest margins (parent bank and housing credit company) measured against the bank's intra-group interest 0,00 % 1 Q 2 Q 3 Q 4 Q Q Q Q Q Q Q Q Q 1 Q 2 Q 3 Q Loan 0,90 0,80 0,72 0,56 0,67 0,62 0,56 0,72 0,99 1,28 1,21 1,39 1,36 1,20 1,14 Deposit 1,28 1,43 1,58 1,67 1,42 1,55 1,75 1,66 1,32 0,97 0,96 0,80 0,83 0,95 1,00 Interest margin 2,18 2,23 2,30 2,23 2,09 2,17 2,31 2,38 2,31 2,25 2,17 2,19 2,19 2,15 2,14 9

10 Revenues increasing - 4% this quarter and 13% so far this year MNOK Nominal net interest increasing Good underlying income development from banking services Stable earnings from financial instruments Continued good earnings in Eiendomsmegler Vest Q Q Q Q Q Q Q Q Q Q Q Net interest income Net banking services Net financial instrumets Other income Associated cpmpanies 10

11 Productivity improving Expenses in % per year of average funds under management Cost-income ratio 2,00 % 90,0 % 1,50 % 1,00 % 1,25 % 1,45 % 1,27 % 1,27 % 1,33 % 1,31 % 1,16 % 1,30 % 1,03 % 1,28 % 1,23 % 80,0 % 70,0 % 60,0 % 50,0 % 67,7 % 60,3 % 68,1 % 63,3 % 76,9 % 57,3 % 52,2 % 59,3 % 53,0 % 54,0 % 59,6 % 40,0 % 30,0 % 0,50 % 20,0 % 10,0 % 0,00 % 1 Q Q Q Q Q Q Q Q Q Q Q ,0 % 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3 Q

12 % Strengthened deposits/loans ratio in the parent bank - growth in deposits over the last 12 months 11.9% (RM 7.8% and CM 17.6%) Development in deposits Deposits/loans ratio NOKbn 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0 14,3 23,3 4Q ,6 24,0 1Q ,8 25,6 2Q ,0 24,3 3Q ,1 25,4 4Q 2008 CM 15,2 25,4 1Q ,5 26,9 2Q 2009 RM 17,8 25,5 3Q ,8 26,1 4Q ,1 26,2 1Q ,3 28,2 2Q ,0 27,5 3Q ,0 110,0 100,0 90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0 57,4 59,1 Financing ratio - deposits as a percentage of lendings Financing ratio parent bank 58,0 60,0 53,2 59,1 52,8 66,0 56,9 62,9 54,6 63,4 54,5 62,4 54,0 69,5 56,3 71,3 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1Q 2Q 3Q Liquidity indicator as of 2Q 2010: % 55,8 12

13 Retail Market accounts for more than 70% of the credit portfolio - growth in lendings over the last 12 months 9.6% (RM 9.9% and CM 8.9%) Loans Good diversification in the CM portfolio bn 80,0 70,0 60,0 50,0 40,0 14,5 15,8 17,2 18,9 21,1 21,1 21,2 21,4 22,2 22,9 23,7 23,3 1,0 % 0,8 % 0,6 % 0,5 % 1,4 % 1,0 % 0,3 % 1,4 % 1,8 % 1,9 % 3,8 % 4,4 % Retail market Real estate Shipping Other Primary industries Building and construction Shipyard 30,0 20,0 10,0 50,2 51,5 52,8 54,2 55,2 55,8 57,0 58,0 60,1 61,1 62,4 63,7 10,4 % Wholesale and retail trade Fish farming Fisheries and seafood industry Energy 0,0 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q CM RM 70,7 % Mainland transportation Agriculture and forestry Hotels and restaurants 13

14 RM portfolio 94% of RM exposed to housing loans Good security coverage 100,00 % 90,00 % 6 % 94 % 94% of the RM portfolio consists of loans secured by mortgages in real property 33% of the housing loans are flexible loans (overdraft facilities), the rest are ordinary instalment loans Flexible loans are furnished for up to 75% of a home's market value *Including the housing credit company, group figures 33 % 67 % Other Retail Mortgages Instalment loans Flexi-mortgages 80,00 % 70,00 % 60,00 % 50,00 % 40,00 % 30,00 % 20,00 % 10,00 % 0,00 % LTV <= 75 % LTV > 75 % Ordinary instalment loans are normally furnished for up to 90% of a home's value Around 95% of all housing loans are within 75% of homes' value 14

15 Risk profile - low in the retail market, moderate in the corporate market Expected loss: Debt-servicing ability + security coverage (PD/LGD) High RM share makes positive contribution to the overall low risk profile Still some uncertainty linked to the development of certain industries in the CM Around 80% of the portfolio has low risk 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % 6,2 % 4,9 % 6,7 % 7,4 % 6,8 % 5,7 % 5,7 % 6,8 % 5,9 % 5,4 % 5,7 % 14,2 % 14,9 % 16,0 % 16,8 % 17,1 % 15,7 % 14,8 % 15,5 % 15,3 % 14,9 % 14,3 % 80,1 % 79,7 % 78,0 % 76,4 % 77,1 % 78,6 % 78,4 % 77,1 % 78,0 % 80,2 % 79,5 % 1Q Q Q Q Q Q Q Q Q Q 2010 Q < 0,2 % 0,2 % > < 0,75 % > 0,75 % 15

16 Capitalised write-downs NOKm Provisions in % of loans Unchanged percentage provided for and low write-downs in 3 Q - reduced default of payment in CM Capitalised write-downs and percentage provided for Default of payment for more than 90 days ,43 % 233 0,29 % 0,24 % 0,23 % 0,22 % 0,21 % 0,28 % ,64 % 0,63 % 0,62 % 0,63 % 0,60 % 0,51 % 0,49 % Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2007 Group write-downs Individual write-downs Percentage provided for 0,60 % 0,50 % 0,40 % 0,30 % 0,20 % 0,10 % 0,00 % 1,40 % 1,20 % 1,00 % 0,80 % 0,60 % 0,40 % 0,20 % 0,00 % Q Q Q Q Q Q Default rate 90 days, Retail Default rate 90 days, Corporate Default rate 90 days, Total Q Q Q

17 Continued low losses Write-downs per quarter Comments Third quarter: Write-downs NOK 29 (93) million 0.13 (0.46)% per year of average gross lendings Realised losses NOK 21 (34) million NOK 14 (20) million covered by previous write-downs So far this year: Write-downs NOK 80 (205) million 0.13 (0.35)% per year of average gross lendings Realised losses NOK 60 (80) million NOK 36 (54) million covered by previous write-downs 17

18 Rating Status - Moody s: Outlook changed from negative to stable Moodys Fitch Long-term Short-term Outlook Long-term Short-term Outlook Sparebanken Vest A2 P-1 Stable A- F2 Stable Sparebanken Vest Boligkreditt AS Covered bond programme Moodys Rating Aaa Fitch Rating AAA 18

19 Good liquidity buffer with low credit risk - reflects the bank's control parameters Mill Months 6 0 1Q Q Q Q Q Q Q Q Q Q Q State Local and regional authorities Banks Other Covered bonds Equities Interbank "Used as collateral in NB" Structural liquidity 19

20 Milliarder Capital market financing - highly-diversified financing profile Total borrowings from the capital market of 14 NOK 48.3 billion 12 SPV Boligkreditt has issued NOK 16.4 billion in 10 covered bonds** in the market 8 NOK 7.7 billion of 6 which was used in the swap arrangement* 4 with Norges Bank Refinancing takes place 2 12 months prior to final 0 maturity 16 Group's maturity structure at 30 September * The swap arrangement with Norges Bank is included as the final due date ** Covered bonds with a nominal value of NOK 500 million issued on 30 September 2010 are not included in the due date structure for 3 Q 20

21 The bank's capital adequacy/financial strength - above the bank's Basel II capital adequacy targets (9% core, 12% own funds) Capital ratios - transitional scheme Capital ratios - Basel II 11,8 % 11,6 % 11,4 % 11,4 % 1,2 % 1,2 % 1,0 % 0,9 % 13,2 % 13,3 % 13,8 % 1,4 % 1,3 % 1,2 % 14,5 % 1,1 % 10,6 % 10,5 % 10,4 % 10,5 % 11,8 % 12,0 % 12,6 % 13,4 % Q Q Q Q Q Q Q Q Core capital Additional capital Core capital Additional capital The figures for the quarter include 50% of the accumulated profit after tax Technical adjustment of the capital adequacy formulas for dealing with defaulting CM customers reduces financial strength pursuant to the transitional rules and improves financial strength pursuant to BASEL II The volume development in the CM and accumulated profits make a positive contribution to the bank's financial strength

22 New regulations and status Sparebanken Vest - meets the current Basel III requirements by a good margin Common Equity Tier 1 Capital Tier Capital Minimum 4.5% 6.0% 8.0% Conservation Buffer 2.5% 2.5% 2.5% Minimum + Conservation buffer Counter cyclical buffer range 0 2.5% 7.0% 8.5% 10.5% SPV BASEL II* 11.7% 13.5% 14.6% SPV Transition* 9.2% 10.6% 11.5% *including 50% of the accumulated profit after tax 22

23 Norway's best online bank? Launched 8 September Increase customers interest in their own finances Direct sales of certain products Based on self-service to a great extent 23

24 Easy to save through SPV Aksje ( SPV Stock Fund ) & SPV Rente ( SPV Interest Fund ) New product: Fund-of-funds Easier for customers to understand Increase in other income 24

25 Brage Finans making excellent progress The leasing company Brage Finans is now operative All licences are in place and its owner banks have contributed capital The first leasing agreement has been signed Offers leasing, loans secured by the purchased object and insurance, though the owner banks or directly Owned by ten independent savings banks. Sparebanken Vest is the biggest owner 25

26 Development of product and supplier strategy - in collaboration with a number of other independent savings banks Fully-integrated financial services group that offers a wide range of financial services Profit/loss 1 Owned by eight independent savings banks and Sparebanken Vest (40%) Issued covered bonds for a total of NOK 950 million -0.4 MNOK Business areas: online trading, stockbroking and corporate finance 20 employees, around 11,000 customers -4.5 MNOK Frende Skade - premiums worth around NOK 534 million at the end of the third quarter divided between 54,000 customers Frende Liv - profit performance ahead of plan New technology and efficient operation in both companies employees MNOK Market leader in Western Norway Good inflow of orders continued in the third quarter 24.3 MNOK Wholly-owned company that manages housing loans financed by issuing covered bonds - lendings of NOK 19 billion 64.4 MNOK Owned by nine independent savings banks and Sparebanken Vest (49.9%) Expected to be fully operative in December 2010 Head office in Bergen, all licences in place -1.5 MNOK 1 For associated companies, Sparebanken Vest s share of companies' profit/loss after tax as of 3 Q 2010 is shown. 26

27 mar. 08 jun. 08 sep. 08 des. 08 mar. 09 jun. 09 sep. 09 des. 09 mar. 10 jun. 10 sep. 10 Customers Frende Skadeforsikring (strategic change of insurance supplier) - almost 80% of the volume recouped in less than two years Sparebanken Vest Frende's biggest distributor Development in Frende Skadeforsikring Frende Forsikring became operative in spring 2008 Frende Skade has exceeded NOK 534 million in premiums Sparebanken Vest's share of total premiums in Frende Skade is NOK 268 million Premium basis NOKm Sparebanken Vest had 67,000 insurance customers under Sparebank 1 Skadeforsikring, and now has just over 29,000 customers in Frende Skade Premium basis Customers 27

28 Strengthening our market position in Western Norway The RM segment The CM segment 20 % 19 % 18 % 17 % 16 % 15 % 14 % 13 % 12 % Deposits 16,7 16,8 17,2 17,6 18,1 18,7 18,5 17,0 17,5 17,7 Loans 14,0 14,6 15,0 15,3 15,3 16,0 16,3 16,4 16,7 16,7 20 % 18 % 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % Deposits 12,3 % 11,1 % 10,9 % 9,4 % 9,4 % 9,2 % 10,7 % 10,7 % 10,8 % 14,0 % Loans 8,2 % 8,3 % 7,7 % 6,5 % 5,9 % 6,2 % 7,1 % 7,7 % 7,8 % 8,3 % 28

29 High, stable customer loyalty and satisfaction despite increased competition High customer satisfaction Market position All-time high score for customer satisfaction for RM, and high and improving score for CM According to a nationwide survey by EPSI Norge (October 2010), Sparebanken Vest's score would put it in a good third place among retail customers and equal second among corporate customers CL RM CL CM Source: TNS Gallup 29

30 Prospects External factors Low international/national growth Debt situation in Europe Consolidation of fiscal policy Tensions in international trade Divergent industry structure in Western Norway Sparebanken Vest Marked improvement in ROE in 2010 Pressure on net interest Low losses Uncertainty relating to the interest level and credit spreads 30

31 Appendix

32 Highly-diversified CM portfolio Real Estate 10,4 % 2 % 2 % Commercial apartment letting Housing cooperatives Corporate market 32 % 21 % Resort/holiday homes Hotel 2 % 3 % 2 % 1 % Real estate Shipping 4 % 2 % 2 % Industrial Shop/shopping centre 5 % 6 % 5 % 6 % 3 % 4 % 13 % 15 % 35 % Other Primary industries Building and construction Shipyard Wholesale and retail trade Fish farming Fisheries and seafood industry Energy Mainland transportation 22 % 21 % 14 % Shipping 4,4 % 1 % 2 % 2 % 13 % 1 % 2 % Office Other commercial Non-classified Container Ferry/cruise Reefer Offshore Agriculture and forestry Hotels and restaurants 30 % Tank Bulk, small Bulk, large 27 % Non-classified Wellboat 32 *Volume without subsidiaries

33 Capitalised write-downs and percentage provided for - by segment RM CM ,12 % ,11 % ,08 % ,07 % ,07 % ,06 % ,08 % ,10 % ,10 % ,12 % ,13 % ,12 % ,12 % ,12 % ,12 % ,11 % ,12 % 0,10 % 0,08 % 0,06 % 0,04 % 0,02 % 0,00 % ,37 % ,09 % ,98 % ,74 % ,76 % ,75 % ,73 % ,85 % ,28 % ,46 % ,54 % ,88 % ,97 % ,95 % ,96 % ,07 % ,10 % 1,60 % 1,10 % 0,60 % 0,10 % -0,40 % Individual write-downs RM Group write-downs RM Individual write-downs CM Group write-downs CM Percentage providet for RM Percentage providet for CM 33

34 Risk profile - expected losses RM (debt-servicing ability + security) - a high percentage of the portfolio has low risk 100 % 90 % 1,5 % 1,4 % 1,9 % 1,7 % 1,6 % 1,6 % 1,6 % 1,5 % 1,3 % 1,2 % 1,2 % 4,5 % 4,1 4,8 % 4,6 % 4,3 % 4,2 % 4,1 % 3,9 3,7 3,3 3,4 80 % 70 % 60 % 50 % 40 % 94,0 % 94,5 % 93,3 % 93,7 % 94,1 % 94,2 % 94,2 % 94,6 % 95,0 % 95,4 % 95,3 % 30 % 20 % 10 % 0 % 1Q Q Q Q Q Q Q Q Q Q 2010 Q < 0,2 % 0,2 % > < 0,75 % > 0,75 % 34

35 Risk profile - expected losses CM (debt-servicing ability + security) - moderate risk profile 100 % 90 % 18,1 % 13,8 % 18,3 % 20,2 % 18,8 % 15,0 % 15,5 % 18,8 % 16,7 % 15,0 % 16,1 % 80 % 70 % 60 % 39,4 % 41,6 % 40,9 % 39,6 % 38,8 % 42,1 % 48,0 % 46,5 % 44,9 % 41,5 % 39,9 % 50 % 40 % 30 % 20 % 42,5 % 44,6 % 40,9 % 40,2 % 42,5 % 43,0 % 36,5 % 34,7 % 38,5 % 43,5 % 44,0 % 10 % 0 % 1Q Q Q Q Q Q Q Q Q Q 2010 Q < 0,2 % 0,2 % > < 0,75 % > 0,75 % 35

36 SVEG compared with the equity certificate index (OSEEX) Total return from 2006 (%) SVEG OSEEX

37 Biggest owners at 30 September 2010 The twenty biggest owners No of ECs Proportion of equity certificate capital % SPAREBANKSTIFTELSEN SAUDA 2,987, FRANK MOHN AS 1,085, MP PENSJON 900, SKAGEN VEST 890, BERGEN KOMMUNALE PENSJONSKASSE 840, ODIN NORGE 792, ODIN NORDEN 760, HERFO FINANS AS 722, HOLBERG NORGE 657, KLP LK AKSJER 493, VERDIPAPIRFONDET 435, KLP AKSJENORGE 328, KLP AKSJENORDEN 328, GOLDMAN SACHS & CO *) 237, VPF NORDEA KAPITAL 205, HELGELAND SPAREBANK 197, PROFOND AS 181, VPF NORDEA AVKASTNING 168, VPF NORDEA NORGE 166, SKUDENES & AAKRA SPAREBANK 164, Total 12,541,

38 38