Equity story. February 2018

Transcription

1 Equity story February

2 e 2018e 2019e 2020e e 2018e 2019e 2020e e 2019e 2020e Positive macroeconomic development in Norway - decline in housing prices slowing down Mainland GDP and unemployment rate Per cent Mainland business investments 1Q08=100, three quarters moving average Housing prices Index, 2006= (1) (2) Mainland GDP, YoY Household disposable income, NOK billion (rhs) Unemployment rate Average housing prices (lhs) Source: Statistics Norway, Eiendomsverdi, Real Estate Norway, Finance Norway, Datastream/DNB Markets 2

3 Norway is in a strong financial position Use of fiscal and monetary policy measures reduces volatility Norwegian sovereign wealth fund National budget s structural non-oil deficit NOK billion (2017 prices) NOK billion NOK billion * Market value of fund (lhs) Net cash flow from oil-related industries (rhs) Financial returns incl. dividends (rhs) per cent return on the fund capital Structural non-oil deficit 0 *Nov Source: Norwegian Ministry of Finance, Norges Bank 3

4 DNB is the market leader in Norway Retail market Loans from financial institutions Deposits Policyholders' funds Mutual fund investments 25% 29% 43% 33% Corporate market Loans from financial institutions Deposits Policyholders' funds 1) Mutual fund investments 23% 38% 20% 25% DNB's market shares 1) Includes the public sector 1) Includes the public sector. Source: Statistics Norway and Finance Source: Statistics Norway Norway and Finance Norway 4

5 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 5

6 We have transformed our retail distribution through digitalisation Mobile platform driving growth in digital banking Annual visits to our digital platforms million Transforming our branch network Number of branch offices Desktop Mobile 6

7 Transforming the way we do business building future infrastructure, digital services and platforms Personal advisers Mobile banking New services APIs Cloud platform with applications Core systems The illustration is conceptual 7

8 DNB is in a new phase after years of capital build-up Well positioned for future regulatory changes CET1 ratio * above the target level for year-end 2017 Per cent Leverage ratio is well above the requirement Per cent at year-end 2017 ~ Management buffer ~ 1.0 Pillar 2 ~ Countercyclical buffer ~ 1.6 General capital requirement 12.0 CET1 ratio target CET1 ratio 31 Dec DNB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 *Based on transitional rules 8

9 Dividend per share increased by 25 per cent to NOK 7.10 Dividend per share and payout ratio Dividend per share (NOK) Payout ratio (per cent) % % % 30% 25% 25% Cash dividend of 55 per cent and total distribution to shareholders of 73 per cent of profits in 2017 Completed buy-backs for 1.0 per cent of registered shares 1) 2) and announced a third programme for 0.5 per cent in accordance with the authorisation given at the Annual General Meeting in April 2017 The proposed dividend of NOK 1.5 billion from DNB Livsforsikring (75 per cent of profits) will strengthen DNB s total payout capacity from April 2018 Dividend per share (lhs) Total payout ratio (rhs) 1) Including the agreed share to be redeemed by the Norwegian government to keep its holding unchanged at 34 per cent 2) The Norwegian FSA has approved the authorisation, provided that the targeted capital level is met and that the sum of the amounts spent on dividends and the repurchase of shares does not exceed 75 per cent of the annual profit for

10 DNB portfolio and income split Distribution of exposure at default by industry segment 4Q 2017 Commercial real estate 10 % Shipping 5 % Oil, gas and offshore 6 % Oil, gas and offshore 2) 6 % Net gains on financial instruments at fair value 9 % Total income split 4Q 2017 Other income 5 % tgages and other osures, personal customers **) 54 % Power and renewables 2 % Healthcare 2 % Public sector 4) 1 % Fishing and fish farming 2 % Trade 3 % Net Commission and fee 17 % Net interest income 69 % Residential property 5 % Technology, media and telecom 2 % Manufacturing Residential property 5 % 3) 5 % >80 per cent of income from Norway 10

11 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 ~10.6%* STRATEGIC BUSINESS INITIATIVES INVESTMENT BANKING CUSTOMER INCOME FROM DNB MARKETS DEFINED CONTRIBUTION AND ASSET MANAGEMENT PAYMENT INITIATIVES ROE YTD 3Q2017 Core business initiatives Strategic business initiatives Cost initiatives Cost of risk run rate ~17 bps ** ROE 2019 NON-LIFE INSURANCE *Adjustments for MTM effects and gain from the demerger of Vipps **Basis points of EAD 11

12 Strong growth for personal customers and SMEs, while rebalancing continues in LCI LCI rebalancing continued at a high pace in 4Q. Expected to continue at a slower pace in 2018 The deposits-to-loans ratio was slightly up Lending growth was 1.5 per cent in Expected growth of 3-4 per cent in 2018 Loans per customer segment 1) NOK billion Average loans and deposits in the customer segments 1) NOK billion Personal customers SMEs Large corporates and international customers 31 Dec Dec Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Performing loans Deposits 1) Excluding Baltics 12

13 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 % of mortgages and 30% of SME loan book can be repriced 0.75 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 Net interest margin (per cent) Key policy rate* (per cent) *Source: Norges Bank 13

14 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 14

15 Cost efficiency is important to remain competitive in a changing landscape Reduced cost/income ratio from 56% to 44% over the past 10 years Leading in revenue per FTE Cost/income NOK billion Revenue per FTE* NOK million, ,2% Total income Total costs C/I (%) *Source: Arctic Securities 2017 DNB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 15

16 Portfolio quality: Rebalancing in LCI* results in a less cyclical portfolio 2.2 per cent of DNB s portfolio is exposed to the offshore industry Total group loan portfolio EAD NOK billion As at 31 December 2017 Reduced exposure in cyclical industries Exposure at default, NOK billion Oil, gas and offshore Offshore 2 % Oil, gas and oilfield services 4 % Manufacturing 4 % Shipping 5 % Other corporate customers 18 % Mortgages and other exposures, personal customers 52 % Shipping Residential property 5 % Commercial real estate 10 % *Large Corporates & International 16

17 Reduction in non-performing and doubtful loans Impairment and non-performing loans Dec March June Sept Dec March June Sept Dec Net non-performing and net doubtful loans and guarantees (NOK million) Total impairment in relation to average volumes, annualised Impairment guiding

18 ROE > 12 per cent towards year-end 2019 Return on equity Per cent NOK billion % % % 11.7 % % 13.8 % 14.5 % 10.1 % 10.8 % >12% Average equity (lhs) ROE ROE ambition 18

19 The road ahead: Financial ambitions towards year-end 2019 > 12 per cent ROE Overriding target > 50 per cent payout ratio Dividend policy < 40 per cent C/I ratio Key performance indicator ~16.1 per cent CET1 ratio* as capital level *Based on transitional rules 19

20 Shareholder distribution Top 20 shareholders 3Q17 to 4Q17 Ownership according to nationality as at 31 December 2017 Shares in Ownership in per cent Change from 3Q17 Norwegian government/ministry of Trade, Industry and Fisheries 1) DNB Savings Bank Foundation Folketrygdfondet Fidelity International BlackRock Institutional Trust Company, N.A The Vanguard Group, Inc Deutsche Asset Management Investment GmbH Schroder Investment Management Ltd. (SIM) Capital World Investors MFS Investment Management T. Rowe Price Associates, Inc Storebrand Kapitalforvaltning AS KLP Forsikring DNB Asset Management AS Janus Henderson Investors SAFE Investment Company Limited State Street Global Advisors (US) Nordea Funds Oy Edinburgh Partners Limited Columbia Threadneedle Investments (UK) Total largest shareholders Other shareholders Total Luxembourg 4.8% UK 8.9% US 18.7% International investors: 43% Other international 10.3% Other Norwegian 15.0% Norwegian government/ministry of Trade, Industry and Fisheries 34.2% DNB Savings Bank Foundation 8.0% Norwegian investors: 57% The owners of shares in nominee accounts are determined on the basis of third-party analyses. 1) DNB has completed two buy-back programmes totalling 1 per cent of outstanding shares. According to an agreement, the Norwegian government will redeem shares on a proportional basis so that its current holding will remain at 34 per cent. 20

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