Second quarter and first half-year Sparebanken Vest Group. CEO Stein Klakegg 19 August 2010

Transcription

1 Second quarter and first half-year 2010 Sparebanken Vest Group CEO Stein Klakegg 19 August

2 Western Norway's leading finance company Committed and independent bank for individuals and businesses in Western Norway Approx customers Over 800 employees in 63 branches from Selje in the north to Sandnes in the south NOK 105 billion in assets Stock exchange listed since

3 Strategic Business Development New leasing company 3

4 New leasing company completes offshoot strategy Sparebanken West along with nine other savings banks Further strengthening of Bergen as a financial centre Operational in Q licence granted 4

5 Best half-year result in the bank's history The best ever result for the first half-year Increase in nominal net interest Improved results for financial instruments Lower loss write-downs Lower costs Positive one-off effects Income growth in the bank s subsidiaries and strategic investments Improved return on equity Successful issue of equity certificates and subordinated bonds State Finance Fund redeemed Greater liquidity and capital adequacy 5

6 Profit improvement and greater financial strength Operating profit/loss before write-downs and tax Second quarter First half-year NOK 272 mill. NOK 219 mill. NOK 494 mill. NOK 308 mill. Pre-tax profit NOK 237 mill. NOK 166 mill. NOK 443 mill. NOK 196 mill. Profit/diluted profit per equity certificate NOK 1.90 NOK 1.59 NOK 3.60 NOK 1.63 Net interest 1.51% 1.69% 1.52% 1.62% Accounting cost-income ratio 54.0% 57.3% 53.5% 65.7% Return on equity (ROE) annualised 14.6 % 11.6 % 13.4% 5.9% Deposits/loans ratio, end of quarter 56.3% 56.9% 56.3% 56.9% Liquidity indicator, end of quarter 107.6% 107.6% 107.6% 107.6% Core capital adequacy, end of quarter 10.4% 8.6% 10.4% 8.6% Capital adequacy, end of quarter 11.4% 10.2% 11.4% 10.2% Core capital adequacy, end of quarter (Basel II fully implemented) Capital adequacy, end of quarter (Basel II fully implemented) 12.6% 9.9% 12.6% 9.9% 13.8% 11.5% 13.8% 11.5% The capital adequacy figures include 50% of the profit for the period 6

7 Return on equity and credit spread effect of FVO ROE in Q2: 14.6% p.a. The fair valuation of debt (FVO) - part of the IFRS implementation in ,8 % 15,4 % 18,0 % 17,9 % 15,8 % 16,2 % 13,4 % 20,0 % 18,0 % 16,0 % 14,0 % Principles vary between Norwegian banks The principle evens out ROE 11,8 % 8,0 % 12,2 % 10,9 % 11,3 % 12,0 % 10,0 % 8,0 % 6,0 % 4,9 % 1,8 % 4,0 % 2,0 % Pr Pr ,0 % ROE accounted ROE adjusted for FVO - effect 7

8 The positive earnings trend continues Quarters Half-years 8

9 9 Pre-tax profit more than doubled in first half-year

10 10 Quarterly result up by NOK 71 million - Frende Liv in profit earlier than planned

11 Nominal net interest income maintained for the quarter up for the half-year Comments Net interest income per quarter (incl. full consolidation of Sparebanken Vest Boligkreditt AS) Nominal net interest income virtually unchanged from 2 Q 2009 NOK 29 million up from 30 June 2009 Quarterly net interest income 1.51 (1.69)% Influenced by Increasing Nibor and credit spreads Covered bonds Issue and refinancing of subordinated bonds 11

12 Interest margin maintained Comments Interest margin per quarter*) No re-pricing in the quarter Minor re-pricing with effect from mid-july Diminishing lending margin - increasing contribution margin Marginal change in interest margin *Product margins and interest margins (parent bank and housing credit company) measured in relation to the bank s intra-group interest 12

13 Increased earnings - 15% for the quarter and 18% for the half-year Nominal net interest income maintained Increased earnings from financial instruments one-off effect Nordito / PBS of NOK105 million Increased revenues from banking services Revenue growth for the half-year of NOK 165 million (18%) 13

14 Productivity improves Cost/Income ratio Annual operating costs as % of average total assets 90,0 % 80,0 % 70,0 % 60,0 % 50,0 % 40,0 % 67,7 % 60,3 % 68,1 % 63,3 % 76,9 % 57,3 % 52,2 % 59,3 % 53,0 % 54,0 % 2,00 % 1,50 % 1,00 % 0,50 % 0,00 % 1,25 % 1 Q ,45 % 2 Q ,27 % 3 Q ,27 % 4 Q ,33 % 1 Q ,31 % 2 Q ,16 % 3 Q ,30 % 4 Q ,03 % 1 Q ,28 % 2 Q ,0 % 20,0 % 10,0 % 0,0 % 1Q Q Q Q Q Q Q Q Q Q 2010 Net decrease of 20 full-time equivalents excl. Sauda compared with 2Q 2009 Reduced costs in existing operations, combined with improved distribution and increased product breadth. AFP effect: NOK 62 million in 1 Q Nordito effect: NOK 105 million in 2 Q 14

15 % Satisfactory growth in deposits and strengthened financing ratio - growth during the past 12 months 9.1% (RM 4.7% and CM 15.7%) Deposit growth (NOK billion) Financing ratio 120,0 110,0 100,0 90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0 57,4 1 Q ,1 2 Q 2008 Financing ratio - deposits as a percentage of lendings Financing ratio parent bank 58,0 3 Q ,0 53,2 4 Q ,1 52,8 1 Q ,0 56,9 2 Q ,9 54,6 3 Q ,4 54,5 4 Q ,4 54,0 1Q 2010 Liquidity indicator as of 2Q 2010: % 69,5 56,3 2Q

16 Total assets passed NOK 100 billion - balanced growth in lendings and good diversification Loans Distribution of portfolio by sector 1,9 % 1,8 % 1,9 % 1,0 % 1,4 % 1,0 % Total by sector 0,8 % 0,6 % 0,5 % 0,3 % Retail market Real estate Shipping Other 3,8 % Primary industries 4,6 % Building and construction Shipyard Wholesale and retail trade Fish farming 10,5 % Fisheries and seafood industry Energy 69,8 % Mainland transportation Agriculture and forestry Hotels and restaurants 16

17 The retail market portfolio 92% of RM exposure is housing loans Good security coverage 68 % 8 % 92 % 32 % Other Retail Mortgages Instalment loans Flexi-mortgages 100,00 % 90,00 % 80,00 % 70,00 % 60,00 % 50,00 % 40,00 % 30,00 % 20,00 % 10,00 % 0,00 % LTV <= 75 % LTV > 75 % 92% av RM portfolio consists of housing loans 32% of RM loans are in the form of flexible loans (overdraft facilities). The rest are ordinary repayable loans. Flexible loans are normally granted within 75% of the market value of the home. Ordinary repayable loans are normally within 90% of the value of the home, but a 100% loan-to-value ratio is accepted for first-time buyers in the BSU programme. About 94% of all housing loans are within 75% of the value of the home. 17 Including housing credtit company, group figures

18 Improved risk profile - low in the retail market, moderate in the corporate market A large RM-share contributes to keeping the overall risk profile low A slight improvement in the business cycle has a positive effect on the risk profile in the corporate market About 80% of the portfolio has low risk 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % Expected loss: debt servicing ability + security coverage (PD/LGD) 6,2 % 4,9 % 6,7 % 7,4 % 6,8 % 5,7 % 5,7 % 6,8 % 5,9 % 5,4 % 14,9 % 16,0 % 16,8 % 17,1 % 15,7 % 14,8 % 15,5 % 15,3 % 14,9 % 14,3 % 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 < 0,2 % 0,2 % > < 0,75 % > 0,75 % 18

19 Capitalised write-downs NOKm Provisions in % of loans Low write-downs and stable default Capitalised write-downs and percentage provided for Default of payment in excess of 90 days 600 0,60 % 0,63 % 0,62 % 0,63 % ,43 % 233 0,29 % 0,24 % 0,23 % 0,22 % 0,21 % 0,28 % ,51 % 0,49 % Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q ,60 % 0,50 % 0,40 % 0,30 % 0,20 % 0,10 % 0,00 % Default ratio RM 0.39 % 0.38 % 0.36 % 0.38 % 0.42 % CM 1.12 % 0.75 % 0.75 % 1.26 % 1.23 % Total 0.59 % 0.48 % 0.47 % 0.63 % 0.65 % Slightly higher payment defaults in CM caused by three medium-sized loans in different industries Group write-downs Individual write-downs Percentage provided for 19

20 Losses remain low Write-downs by quarter Comments Second quarter: Write-downs: NOK 35 (53) million 0.16 (0.28)% p.a. of average gross lendings Realised losses: NOK 20 (37) million NOK 11 (33) million of which covered by previous write-downs First half-year: Write-downs: NOK 51 (112) million 0.12 (0.30)% p.a. of average gross lendings Realised losses: NOK 39 (46) million NOK 22 (34) million of which covered by previous write-downs 20

21 Enhanced liquidity Mill Months 6 0 1Q 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 21

22 NOKbn Well diversified funding structure Maturity structure, Group as of 30 June 2010 Credit spread widening in the second quarter and in first halfyear Total borrowing from the capital market of NOK 48.7 billion 30% as covered bonds SPV Boligkreditt issued NOK 14.5 billion in the market Of which NOK 7.7 billion has been used in the swap arrangement with Norges Bank

23 Capital adequacy in excess of the bank's solvency targets Capital ratio Capital ratio - Basel II 10,2 % 1,6 % 11,8 % 11,6 % 11,4 % 1,2 % 1,2 % 1,0 % 11,5 % 1,6 % 13,2 % 13,3 % 1,4 % 1,3 % 13,8 % 1,2 % 8,6 % 10,6 % 10,5 % 10,4 % 9,9 % 11,8 % 12,0 % 12,6 % Q2 09 Q4 09 Q1 10 Q2 10 Tier 1 Tier 2 Q2 09 Q4 09 Q1 10 Q2 10 Tier 1 Tier 2 The figures include 50% of the profit for the period

24 High level of activity in the capital market for Sparebanken Vest Sparebanken Vest Issue of new equity certificates (SVEG) Issue of subordinated bonds Issue of NOK 618 million in equity certificates Private placement with subsequent repair offering and private placement with employees of the company - owner fraction increased from 9.5% to 19.7% Measures to increase liquidity in SVEG have paid off -Increased listed capital, split 1:2 and market-maker agreements Subordinated bonds worth NOK 400 million issued NOK 960 million in subordinated bonds from the State Finance Fund redeemed Sparebanken Vest Boligkreditt First international issue in SPV Boligkreditt worth EUR 500 million successfully completed 24

25 Frende Forsikring and Norne Securities - strong distribution capacity together with strategic partners All branches offer insurance Frende has been a success, and has been well received by both customers and employees Norne Securities provides brokerage and consultancy services in the securities field -Sparebanken Sør, Spareskillingsbanken, Flekkefjord Sparebank, Søgne & Greipstad Sparebank, Lillesand Sparebank -Sparebanken Vest, Fana Sparebank, Haugesund Sparebank, Skudenes & Aakra Sparebank, Voss Sparebank, Luster Sparebank, Etne Sparebank - Sparebanken Øst - Helgeland Sparebank 14 savings banks with total assets of NOK 220 billion A total of 650,000 customers (retail and corporate markets) A total of 165 offices 25

26 Developing product and supplier strategies - in collaboration with a number of other independent savings banks Fully-integrated financial services group offering a broad range of financial services Profit after tax 1 as of 2 Q 2010 Housing credit company owned by eight independent savings banks in the Frende collaboration and Sparebanken Vest (40%) In full operation from the second quarter of 2010 Issued covered bonds worth NOK 750 million NOK -0.5 mill. Three business areas: online trading, stockbroking and corporate finance. All three business areas are growing, increasing workload / turnover 20 employees, about 11,000 customers NOK -2.2 mill. Frende Skade Premiums increased by150% in 2009; NOK 500 million as of June ,000 customers Frende Liv In profit earlier than expected New technology and efficient operations in both companies employees. NOK mill. Market leader in Western Norway, 23% market share in Hordaland county Good performance, Increased turnover in 2 Q Kyte Næringsmegling (DS); 30% market share. Turnover influenced by increase in incoming orders and access to financing also in 2 Q NOK 13.0 mill. Wholly-owned company that manages housing loans financed by issuing covered bonds. Important instrument in the group s financing In the second quarter an international issue of covered bonds of EUR 500 million NOK 31.6 mill. New leasing company Formed in May 2010 along with 9 other Savings Banks - operational Q Will provide financing solutions for priority assets such as machinery, offices, computers, Head office in Bergen, with new jobs N.A. 1 Sparebanken Vest s share of profit from associated companies 26

27 mar. 08 jun. 08 sep. 08 des. 08 mar. 09 jun. 09 sep. 09 des. 09 mar. 10 jun. 10 Customers Frende Skadeforsikring strategic change of insurance supplier - nearly 60% of the volume regained in just under two years Sparebanken Vest the largest distributor in Frende Developments in Frende Skadeforsikring Frende Forsikring became operational in spring 2008 Frende Skade: NOK 500 million in premiums basis Sparebanken Vest s share on withdrawal from SpareBank 1 Skadeforsikring in mid amounted to premiums of approx. NOK 430 million; at present the bank has accumulated premiums of NOK 256 million in Frende Skadeforsikring after just under two years of operation Premium basis NOK m In mid-2007, Sparebanken Vest had 67,000 insurance customers through SpareBank 1 Skadeforsikring, and today it has just over 27,000 customers through Frende Skadeforsikring - Premium basis Customers - 27

28 Strengthened market position in Western Norway Retail market Corporate market 20 % 18 % 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % Total deposits 16,7 % 16,8 % 17,2 % 17,6 % 18,1 % 18,7 % 18,5 % 17,0 % 17,7 % Total lending 14,0 % 14,6 % 15,0 % 15,3 % 15,3 % 16,0 % 16,2 % 16,4 % 16,7 % 20 % 18 % 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % Total deposits 12,3 % 11,1 % 10,9 % 9,4 % 9,4 % 9,2 % 10,7 % 10,7 % 14,0 % Total lending 8,2 % 8,3 % 7,7 % 6,5 % 5,9 % 6,2 % 7,1 % 7,7 % 8,0 % 28

29 High and stable customer loyalty and satisfaction despite increased competition Good customer satisfaction Stable market position Stable customer satisfaction in both the corporate and retail markets According to the Norsk kundebarometer survey in the financial newspaper Dagens Næringsliv on 20 April 2010, the score of 75 would have put Sparebanken Vest in a good third place Q 2 Q CSI RM CSI CM Kilde: TNS Gallup Stronger position in Rogaland county Established in Haugesund, Stavanger and Sandnes Merged with Sauda Sparebank New offices in Hinna and Sola Intense competition in the retail market, growing in the business market. Pressure on margins. 29

30 Prospects - Growth and profit development is affected by External circumstances Low and uneven international growth Moderate economic recovery The debt situation in Europe Divergent industry structure in Western Norway Sparebanken Vest Strengthened market position Effects related to the offshoot strategy Higher credit spreads Lower losses Improved ROE in

31 Appendix

32 Well-diversified portfolio CM Real Estate 10,5 % 2 % 3 % 2 % 2 % 1 % 3 % 3 % 3 % 6 % 6 % 5 % 6 % 13 % Corporate market 15 % 35 % Real estate Shipping Other Primary industries Building and construction Shipyard Wholesale and retail trade Fish farming Fisheries and seafood industry Energy Mainland transportation Agriculture and forestry Hotels and restaurants 32 % 21 % 27 % 20 % 1 % 3 % 2 % 22 % 14 % 5 % Shipping 4,6 % 13 % 1 % 2 % 30 % 1 % 1 % Commercial apartment letting Housing cooperatives Resort/holiday homes Hotel Industrial Shop/shopping centre Office Other commercial Non-classified Container Ferry/cruise Reefer Offshore Tank Bulk, small Bulk, small 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 % ,12 % 0,10 % 0,08 % 0,06 % 0,04 % 0,02 % ,37 % ,09 % ,98 % ,74 % ,76 % ,75 % ,73 % ,85 % ,28 % ,46 % ,54 % ,88 % ,97 % ,95 % ,96 % ,00 % 1,50 % 1,00 % 0,50 % - 0,00 % - 0,00 % Group write-downs RM Individual write-downs RM Group write-downs CM Individual write-downs CM Percentage providet for RM Percentage providet for CM 33

34 Risk profile expected loss RM (debt servicing ability + security coverage) - a substantial part 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 % 4,5 % 4,1 4,8 % 4,6 % 4,3 % 4,2 4,1 3,9 3,7 3,3 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 % 30 % 20 % 10 % 0 % 1Q Q Q Q Q Q Q Q Q Q 2010 < 0,2 % 0,2 % > < 0,75 % > 0,75 % 34

35 Risk profile expected loss CM (debt servicing ability + security coverage) - 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 % 80 % 70 % 60 % 39,4 % 41,6 % 40,9 % 39,6 % 38,8 % 42,1 % 48,0 % 46,5 % 44,9 % 41,5 % 50 % 40 % 30 % 20 % 42,5 % 44,6 % 40,9 % 40,2 % 42,5 % 43,0 % 36,5 % 34,7 % 38,5 % 43,5 % 10 % 0 % 1Q Q Q Q Q Q Q Q Q Q 2010 < 0,2 % 0,2 % > < 0,75 % > 0,75 % 35

36 Rating - Status Moodys Fitch Long-term Short-term Outlook Long-term Short-term Outlook Sparebanken Vest A2 P-1 Negative A- F2 Stable Sparebanken Vest Boligkreditt AS Covered bond programme Moodys Rating Aaa Fitch Rating AAA 36

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

38 Major holders of equity certificate capital as of 30 June 2010 The twenty biggest owners No of ECs Proportion of equity share capital % SPARBANKSTIFTELSEN SAUDA ,84 FRANK MOHN AS ,03 MP PENSJON ,54 ODIN NORDEN ,42 ODIN NORGE ,42 HERFO FINANS AS ,35 BERGEN KOMMUNALE PENSJONSKASSE ,24 HOLBERG NORGE ,05 SKAGEN VEKST ,02 KLP LK AKSJER ,29 VERDIPAPIRFONDET ,62 KLP AKSJENORGE ,52 KLP AKSJENORDEN ,52 GOLDMAN SACHS & CO*) ,10 VPF NORDEA NORGE ,93 HELGELAND SPAREBANK ,91 PROFOND AS ,84 VPF NORDEA KAPITAL ,81 SKUDENES & AAKRA SPAREBANK ,76 BOREA NOTERTE III AS ,72 Total ,93 38

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