Q3 RESULTS DNB GROUP THIRD QUARTER Roadshow London, Edinburgh and Dublin

Transcription

1 Q3 RESULTS DNB GROUP THIRD QUARTER 2015 Roadshow London, Edinburgh and Dublin

2 Third quarter 2015 Pre-tax operating profit before impairment in NOK billion 8.1 (7.6) Cost/income ratio in per cent 39.6 (40.4) Return on equity in per cent 14.7 (14.8) Earnings per share in NOK 3.83 (3.45) Common equity Tier 1 capital ratio in per cent 1) (transitional rules) 13.1 (12.6) Figures in parentheses refer to 3Q14 1) Assuming 50 percent retained earnings. Based on a dividend payout ratio of 30 per cent, the common equity Tier 1 capital ratio was 13.4 per cent as at 30 September 2

3 Clarifications Pillar 2/CET1 Requirements from FSA 1) Takeaways 15,0 13,0 13,5 Dividend policy is unchanged with ambitions above 50% payout ratio when the requirement has been reached For 2015 the ambition is to maintain a dividend level at approximately the same level as for 2014 Initiatives to reach the requirements will be presented at our capital markets day CMD Dec Dec ) Assuming current buffer requirements, including counter-cyclical buffer 3

4 Profit figures Pre-tax operating profit before impairment NOK million Pre-tax operating profit before impairment excl. basis swaps NOK million Q14 4Q14 1Q15 2Q15 3Q15 Profit for the period NOK million 3Q14 4Q14 1Q15 2Q15 3Q15 Profit for the period excl. basis swaps NOK million Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 4

5 Return on equity and cost/income ratio Return on equity 1) Return on equity excl. basis swaps 1) Per cent Per cent Q14 4Q14 1Q15 2Q15 3Q15 Cost/income ratio Per cent 3Q14 4Q14 1Q15 2Q15 3Q15 Cost/income ratio excl. basis swaps Per cent Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 1) Return on equity is calculated on the assumption that additional Tier 1 capital is classified as a liability 5

6 Ratio of deposits to net loans and earnings per share Ratio of deposits to net loans Per cent Earnings per share NOK Sept Dec March June Sept Q14 4Q14 1Q15 2Q15 3Q15 The ratio of deposits to net loans excl. short-term money market investments 6

7 Customer segments NOK million Pre-tax operating profit after impairment Sale of portfolios 3Q15 2Q15 3Q Personal customers Small and mediumsized enterprises Large corporates and international customers 7

8 Development in loans NOK billion Sept Dec March June Sept Dec March June Sept. 15 Loans at end of period Loans adjusted for exchange rate movements 8

9 Development in deposits adjusted for short-term money market investments NOK billion Sept Dec March June Sept Dec March June Sept. 15 Deposits adjusted for short-term money market investments Deposits adjusted for short-term money market investments and exchange rate movements 9

10 Development in average interest rate spreads customer segments Per cent Lending spread Combined spread - weighted average (0.32) (0.33) (0.33) (0.31) (0.19) (0.17) (0.13) (0.02) 0.08 Deposit spread 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Margin calculations for finance leases were adjusted in the third quarter of Figures for previous periods have been restated accordingly. 10

11 Development in commissions and fees NOK million % YoYgrowth ) ) 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 Real estate broking Investment banking services Asset management and custodial services Money transfer and banking services Sale of insurance products Net commissions and fees 1) The figures for 2014 and 2015 are adjusted for income from public sector activities within life insurance that are in the process of being wound up 11

12 Income statement Jan.-Sept. Jan.-Sept. Amounts in NOK million 3Q15 2Q15 1Q15 4Q14 3Q Net interest income Net commissions and fees Net gains on financial instruments at fair value Net financial and risk result, DNB Livsforsikring Net insurance result, DNB Forsikring Other operating income Net other operating income, total Total income Operating expenses (5 103) (5 312) (5 215) (5 045) (5 088) (15 630) (15 406) Restructuring costs and non-recurring effects (216) (215) (223) (42) (74) (654) (181) Pre-tax operating profit before impairment Net gains on fixed and intangible assets (3) Impairment of loans and guarantees 392 (667) (575) (821) (183) (849) (817) Pre-tax operating profit Tax expense (2 136) (1 695) (2 130) (1 236) (1 828) (5 961) (5 227) Profit from operations held for sale, after taxes (14) (17) (47) 16 (8) (79) (39) Profit for the period Profit attributable to shareholders

13 Net gains on financial instruments Change 2Q15-3Q14 - Amounts in NOK million 3Q15 2Q15 3Q14 3Q15 3Q15 Customer revenues in DNB Markets (65) 54 Trading revenues in DNB Markets (excl. CVA/DVA and credit spread effects) (42) Credit spread effects on bonds in DNB Markets (582) (132) 200 (450) (782) Financial guarantees (5) 18 Basis swaps 933 (54) CVA/DVA (414) 252 (108) (667) (306) Other mark-to-market adjustments 798 (139) Net gains on financial instruments at fair value

14 Changes in net interest income NOK million From 3rd quarter 2014 to 3rd quarter (23) Q14 Exchange rate effects Lending and deposit volumes Lending and deposit spreads Other net interest income 3Q15 14

15 Changes in net other operating income NOK million From 3rd quarter 2014 to 3rd quarter (76) (149) (356) Q14 Basis swaps Other operating income Net commissions and fees Net gains on other financial instruments 3Q15 15

16 Changes in operating expenses Change in Amounts in NOK million 3Q15 Change 3Q14 per cent Total adjusted operating expenses (5 103) (15) (5 088) (0.3) Of which : Exchange rate effects for units outside Norway (167) Currency-adjusted operating expenses (4 936) 152 (5 088) 3.0 Total adjusted operating expenses (5 103) (15) (5 088) Income-related costs Ordinary depreciation on operational leasing (24) Expenses directly related to operations Pension expenses (21) Fees (18) Properties and premises 78 Other costs (30) Non-recurring effects (216) (142) (74) Restructuring costs, employees (63) (31) (33) Other restructuring costs and non-recurring effects (97) (55) (41) IT restructuring (56) (56) 0 Operating expenses (5 319) (157) (5 162) (3.0) 16

17 Changes in operating expenses Change in Amounts in NOK million 3Q15 Change 2Q15 per cent Total adjusted operating expenses (5 103) 209 (5 312) 3.9 Of which : Exchange rate effects for units outside Norway (72) Currency-adjusted operating expenses (5 031) 281 (5 312) 5.3 Total adjusted operating expenses (5 103) 209 (5 312) Expenses directly related to operations IT expenses 110 Marketing expenses 39 Performance-based pay 37 Other costs 23 Non-recurring effects (216) (1) (215) Restructuring costs, employees (63) 71 (134) Other restructuring costs and non-recurring effects (97) (94) (3) IT restructuring (56) 22 (78) Operating expenses (5 319) 208 (5 527)

18 Impairment of loans and guarantees Jan.-Sept. Jan.-Sept. Amounts in NOK million 3Q15 2Q15 1Q15 4Q14 3Q Personal customers 942 (58) (84) 918 (185) - Mortgage loans (33) 107 (12) - Consumer finance 932 (75) (46) (74) (51) 811 (173) Small and medium-sized enterprises (129) (284) (308) (450) (165) (721) (387) Large corporates and international customers (527) (425) (256) (496) (18) (1 209) (529) - Nordic Corporates Division (6) 5 15 (333) 3 14 (37) - International Corporates Division (22) (93) 39 (166) (86) (77) (124) - Shipping, Offshore and Logistics Division (379) (302) (242) (923) (188) - Energy Division (88) (43) (12) (5) (5) (144) (27) - Baltics and Poland (12) (47) (50) (1) (39) (110) (123) - Other units (19) 56 (7) (13) (8) 30 (30) Total individual impairment 285 (767) (530) (879) (267) (1 013) (1 101) Total collective impairment of loans (44) Impairment of loans and guarantees 392 (667) (575) (821) (183) (849) (817) Total impairment in relation to average volumes 1) (annualised) 0.10 (0.18) (0.16) (0.23) (0.05) (0.08) (0.08) 1) Excluding the sale of non-performing loan portfolios, the ratio was (0.18) for 3Q15 Excluding the sale of non-performing loan portfolios, the ratio was (0.17) for YTD

19 Net non-performing and net doubtful loans and guarantees 1) Per cent NOK billion Dec. 31 Dec. 31 Dec. 31 Dec. 31 March 30 June 30 Sept. 31 Dec. 31 March 30 June 30 Sept DNB Group As a percentage of net loans 1) Includes non-performing commitments and commitments subject to individual impairment. Accumulated individual impairment is deducted 19

20 Balance sheets DNB Group DNB Bank ASA 30 Sept. 31 Dec. 30 Sept. 31 Dec. Amounts in NOK billion Deposits with central banks Due from credit institutions Loans to customers Other assets Total assets Due to credit institutions Deposits from customers Short-term debt securities issued Long-term debt securities issued Other liabilities and provisions Additional Tier 1 capital 8 8 Other equity Total liabilities and equity Ratio of deposits to net loans (%) Adjusted ratio of deposits to net loans (%) 1) Total combined assets Currency-adjusted loans to customers Currency-adjusted deposits from customers ) Excluding short-term money market deposits 20

21 Common equity Tier 1 capital ratio 1) Transitional rules Per cent Leverage ratio 2) Per cent Sept Dec March 2015 Future Basel III estimate 2) Per cent 30 June Sept Sept Dec March June Sept Estimate applying average weights used by Swedish banks 2) 3) Per cent Sept Dec March June Sept Sept Dec March June Sept ) Common equity Tier 1 capital includes 50 per cent of interim profits in all quarters, apart from the leverage ratio figures. Annual figures are exclusive of dividend payments. A 10 percentage point change in retained earnings corresponds to a 15 basis point change in the CET1 ratio at end-september ) The calculations from end-june 2015 have been altered in accordance with the proposed new rules 3) Average weights used by Swedish banks on corporate loans and loans secured by real estate 21

22 Changes in the common equity Tier 1 capital ratio Per cent From 31 Dec to 30 Sept (0.5) 0.7 (0.3) Dec % of profit for the period Exchange rate effect on equity Capital efficiency gains Other effects Exchange rate effect on existing portfolio Lending growth 30 Sept

23 Welcome to DNBs Capital Markets Day London 25 November 2015

24 Appendix The Norwegian Economy Capital requirements Loan book and asset quality

25 Percent A solid Norwegian economy - Expect expansionary fiscal policy, but no crisis package is expected by the Government budget Annual budget deficit/surplus for ) General government net financial liabilities 1) (As a percentage of nominal GDP 2015*) Norwegian Pension/Oil Fund: EUR 760 bn (as of today) Expected development 2016 Net oil revenues Oil fund accrued interest Government spending EUR 22 bn EUR 23 bn EUR 21 bn (2014: EUR 16 bn) Estimated Norwegian budget surplus 2016: > 5% 2) Source: Proposed National Budget 2016 Note: Current account balance as a percentage share of country GDP; forecasts for ) Source: OECD Economic Outlook No. 97, June ) Source: DNB Markets 25

26 Lower oil-price and lower oil investments Oil price development Oil investments 2012 prices. NOK billion E Oil investments DNB Markets Forecast Source: Thomson Datastream,, Norges Bank. SSB, DNB Markets forecast 26

27 but, weaker currency and stronger mainland investments Relative man-hour cost in common FX Index = : Isolated effect of 14 % weaker NOK Mainland investments (ex Oil sector) 2012 prices. NOK billions E Mainland investments Forecast Source: Thomson Datastream, DNB Markets, Norges Bank, SSB 27

28 giving a soft landing for Norwegian economy GDP growth and unemployment Year on year, per cent 5,0 % 3,6 % 2,1 % 1,4 % e 2016e 2017e 2018e Mainland GDP growth Unemployment rate Source: Statistics Norway/DNB Markets forecasts 28

29 Appendix The Norwegian Economy Capital requirements Loan book and asset quality

30 CET 1 Capital Requirements 15,0 % 11.8 % 12.7 % 13,5 % 1,5 % 1,5 % 1,5% 9,0 % 10,0 % 1,0 % 1,0 % 2,0 % 2,0 % 3,0 % 3,0 % 3,0 % 2,5 % 2,5 % 2,5 % 2,5 % 4,5 % 4,5 % 4,5 % 4,5 % Source: Norges Bank CET1 Minimum Requirement Systemic Risk Buffer Countercyclical Buffer Conservation Buffer SIFIs Pillar 2 requirement As at 30 September 2015 (including 70% of YTD 2015 profit) CET 1 ratio is 13.4% 30

31 Agenda The Norwegian Economy Financial performance, targets and capital Loan book and asset quality

32 Loan Book EAD by segments as at 30 September ) Private individuals 7% Commercial real estate 11% Shipping 7% Logistics 1% Oil, gas and offshore 7% Energy 3% Other corporate customers 6% Residential mortgages 42% Services 2% Telecom and media 2% Manufacturing 5% Trade 3% Public sector 2% Fishing and fish farming 2% 32

33 Development in Loan to Value, Residential Mortgages Per cent 31% 33% 16% 13% 7% >85 31 March June Sept Collateral categories 33

34 No visible effect on credit card defaults 12% 10% 10.3 % 8% 8.0 % 6% 6.1 % 4.6 % 4% 2% 0% 34

35 DNB has a well-diversified oil-related portfolio ~9% of total Group EaD to oil-related portfolios Oil & Gas exposure NOK 77bn (3.9% of total Group EaD) NOK bn and per cent of NOK 77bn Offshore exposure NOK 62bn (3.1% of total Group EaD) NOK bn and per cent of NOK 62bn Oilfield Services NOK 37bn (1.85% of total Group EaD) NOK bn and per cent of NOK 36bn Other; 0,7; 1% Refining & petchem; 10,7; 14 % Midstream incl LNG; 22,7; 30 % Exploration Financing (EFF); 3,5; 5 % Reserve Based Lending (RBL); 11,0; 14 % Exploration & Production IG; 23,8; 31 % Exploration & Prod. Sub-IG; 4,8; 6 % Subsea construct.; 4,1; 7 % FPSO/FS O 4,9; 8 % Other; 6,2; 10 % Rig; 21,7; 35 % OSV; 24,6; 40 % Seismic; 1,6; 5 % Sub-inv. grade or similar; 5,5; 15 % Leveraged Buy Out (LBO); 8,1; 22 % Other; 0,4; 1 % Investment grade; 21,0; 58 % OSV: Offshore Service Vessels, F(P)SO: Floating (Production) Storage Offloading. LNG: Liquid Natural Gas. IG: Investment grade. All figures as at 30 September

36 Oil-related portfolio - 58 % is low risk and 37 % medium risk DNB s oil-related portfolio split by sub-segment By exposure (EaD) and risk grade Total oil related segments 100 NOK billion March June Sept Dec March June Sept PD 0.01% - PD 0.75% - PD 3.0% - NOK billion Offshore PD 0.01% - PD 0.75% - PD 3.0% Net non-performing and net doubtful commitments 31 March June Sept Dec March June Sept Net non-performing and net doubtful commitments Oil and Gas NOK billion March PD 0.01% - PD 0.75% - PD 3.0% - Oilfield services June Sept Dec March June Sept Net non-performing and net doubtful commitments NOK billion March 2014 PD 0.01% - PD 0.75% - PD 3.0% - 30 June Sept Dec March June Sept Net non-performing and net doubtful commitments EaD: Exposure at Default, PD: Probability of default. Risk grade system, please see backup slide for details. DNB's risk classification system, where 1 represents the lowest risk and 10 the highest risk. Figures from Fact book as at 30 Sep