DnB NOR Group. Bjørn Erik Næss, chief financial officer. Goldman Sachs European Financials Conference, June

Transcription

1 DnB NOR Group Bjørn Erik Næss, chief financial officer Goldman Sachs European Financials Conference, June

2 Agenda DnB NOR and the Norwegian economy Basel III new regulations Actions ahead of Basel III / Funding 2

3 DnB NOR - Norway's leading financial services group The Bank: 30% market share of the retail market 35% market share of the corporate market lending Credit Ratings: Moody's: Aa3 (stable), S&P: A+ (stable) Norway's largest life insurance company Market capitalisation of NOK 105 billion (EUR 13.2 billion) The Norwegian government has 34% ownership 3

4 1st quarter 2010 Sound pre-tax operating profit before write-downs: NOK 4.9 billion (6.1) Continued positive cost trend Lower than expected write-downs on loans: NOK 0.9 billion (1.6) Profit to DnB NOR's shareholders: NOK 3.1 billion (3.1) Return on equity: 12.5 per cent (15.8) 4

5 Norway is of vital importance to DnB NOR More than 80 per cent of our income stems from Norway More than 80 per cent of our lending stems from Norway More than 85 per cent of our deposits stems from Norway 10 bp losses in Norway in Q bp losses in Norway in

6 Relatively sound outlook for the Norwegian economy 6

7 In relative terms, the Norwegian economy is performing very well % Expected GDP growth, % Norway Euro zone Sweden UK 3,5 2 2,8 2,2 2 2,2 1,4 0,5 1,4 0,5 1,3-0,5-1,5-4 -4,7-4, F210 F2011 Source: DnB NOR Markets May 2010 Norway: Mainland GDP 7

8 The Norwegian economy is more than oil - good terms of trade also for the mainland economy Terms of trade Export/import prices 1996= Norway w/ oil Norway mainland Sweden Denmark Q Q Q Q Q Q

9 Average unemployment in Europe before the financial turmoil was higher than worst case scenario for Norway Unemployment, % of labour force % Norway Sweden Euro zone UK ,4 10,4 10,5 10,1 9, ,5 6,2 5,7 2,5 8,3 9,1 7,6 7,8 3,2 3,5 8,8 7,4 3,9 8,3 7,0 3,7 7,8 6,5 3, F2010 F2011 F2012 F2013 Source: DnB NOR Markets May

10 The Norwegian state finances are strong debt is not an issue General government surplus (% of GDP) Forecast 2010 Petroleum Fund (% of GDP) Norw ay Denm ark Sweden Japan -5,4-8 -8,2 9, Euro Zone -6, UK -13,3 25 USA -10, F2009 F2010 F2011 F2012 F2013 F2014 F Source: OECD 10

11 11 Basel III new regulations

12 DnB NOR will be among the least affected of the European banks Capital deductions - Deductions for insurance subsidiaries already accounted for - Deferred tax assets and goodwill fully deducted Capital level - Already compliant - High-quality composition Counterparty risk - Minimal exposure to derivative markets 12

13 Only proposed changes in net stable funding ratio will create a shortfall Leverage ratio - Strong capitalisation and business model Deposit guarantee scheme - Already above EUR and well funded Liquidity coverage ratio - Compliant as of today? Net stable funding ratio - Shortfall, deposit haircuts are unreasonably high 13

14 A very robust and high-quality capital structure Tier 1 capital ratio Nordic peers 1Q2010, Basel II Core Tier 1 Hybrid 11.2 % 1, % 4, % 2, % 2, % 1,2 9.4 % 0, % 1, % 1,1 10,1 9,3 12,1 11,7 12,3 8,6 11,0 12,6 Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 DnB NOR DnB NOR* DnB NOR** * Full implementation of IRB **Full IRB and Swedish model for calibrating insurance exposure 14

15 The strongest leverage ratio among Nordic peers Leverage ratio* Nordic peers 1Q2010 5,4 % 3,8 % 3,7 % 3,8 % 4,4 % 4,3 % Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 DnB NOR * Tier 1/total assets 15

16 16 Actions ahead of Basel III/Funding

17 Strengthened capitalisation levels through retained earnings and NOK 14 bln share issue in ) Including 50 per cent of profit for the period 17

18 Funding Deposit coverage as of March 2010 DnB NOR Group 52 % DnB NOR Bank 92 % (Excluding DnB NOR Boligkreditt) DnB NOR Bank is a well established international borrower: EMTN program of US MTN program of USCP program of ECP/CD program of EUR 45 billion USD 8 billion USD 14 billion EUR 10 billion Capital market funding focuses on well diversified funding sources, by geography and types of instrument Covered Bonds form an important part of the funding profile: Covered Bond program of EUR 40 billion 18

19 Raised level of long-term funding, tightened internal limits for short-term funding Average residual maturity, long-term senior debt and covered bonds (years) Share of stable long-term funding* Internal target** ** * Deposits from customers, subordinated debt, covered bonds and senior debt > 12 months residual maturity ** Internal target for stable long-term funding increased from 88% to 90% in

20 Stable access to long-term funding longer maturities at competitive prices 2010 NOK billion Maturity Covered bonds Senior bonds Spread (3-month Euribor) Total bp 2009 NOK billion Maturity Spread Covered bonds Covered bonds, Norges Bank (central bank) Senior bonds Total bp 2008 NOK billion Maturity Spread Covered bonds Covered bonds, Norges Bank (central bank) Senior bonds Total bp 20

21 DnB NOR Boligkreditt a well established international covered bond issuer International Covered Bond issuance Euro mn 3 years (2010) Euro mn 3 years (2011) Euro mn 5 years (2012) Euro mn 5 years (2013) Euro mn 5 years (2015) Euro mn 7 years (2017) Registered Covered Bonds: 2008: Euro mn 25 issues Ave. mat: 11 years 2009: Euro mn 20 issues Ave. mat: 13 years 2010: Euro 720 mn 18 issues Ave. mat: 15 years CHF market : CHF mn 6 issues Mat : 5 10 years 21

22 Financial ambitions Ambitions 2012 Long-term ambitions NOK billion in pre-tax operating profits before write-downs Return on equity above 13 per cent NOK 2 billion in cost reductions Be among the best capitalised banks in the Nordics Cost/income ratio below 46 per cent Long-term AA rating Approx 50 per cent dividend 22

23 Thank you