A milestone year for BankNordik

Transcription

1 Investor Presentation A milestone year for BankNordik 27 February 2017 Árni Ellefsen, CEO

2 Disclaimer This presentation contains statements regarding future results, which are subject to risks and uncertainties. Consequently, actual results may differ significantly from the results indicated or implied in these statements. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly, none of BankNordik, or any of its principal shareholders or subsidiary undertakings or any of such person s officers or employees or advisers accept any liability whatsoever arising directly or indirectly from the use of this document. Annual Report 2016 Page 2

3 Overview Highlights Update on strategic initiatives Financials Banking Insurance Expenditures Impairment charges Capital ratios Long-term financial objectives Outlook 2016 Appendices Retail banking Private banking Corporate banking Insurance Annual Report 2016 Page 3

4 Highlights Satisfactory 2016 financial results 2016 financial highlights Operating income down 13% YoY to DKK 640m (DKK 734m) Operating costs down 8% to DKK 459m (DKK 499m) Net loan impairment charges were a reversal of DKK 12m (net charge of DKK 20m) Operating profit amounted to DKK 191m (DKK 194m) Profit before tax increased to DKK 277m* (DKK 332m loss) CET1 capital ratio of 16.0% and solvency ratio of 18.3% at 31 December 2016 *Includes capital gain related to the sale of Vørður 2016 operational highlights Vørður deal completed for a capital gain of DKK 84m Run-off of corporate loan book in Denmark nearing completion remaining book value of approx. DKK 230m Annual Report 2016 Page 4

5 Vørður deal closed and run-off of corporate activities in Denmark nearing completion Update on strategic initiatives Sale of Vørður completed in September 2016 Winding up of corporate activities in Denmark Settled 15% Remaining 85% Proceeds amounted to DKK 300m, with transactions costs amounting to DKK 45m (primarily due to currency restrictions imposed by the Icelandic government) Capital gain of DKK 84m recognised under discontinued operations related to Vørður in the income statement Danish corporate loan book reduced by close to DKK 70m in Q Approx. DKK 230m remain on the books The rate of settlement reduced as run-off nears completion Capital gain included DKK 23m from favourable currency fluctuations, previously recognised under the foreign currency translation reserve Annual Report 2016 Page 5

6 Solid 2016 financial results Figures in DKKm Profit & Loss Key Metrics Index Q Q Index Net interest income Net fee and commission income Net insurance income Other operating income Operating income Operating costs Sector costs Profit before impairment charges Impairment charges, net Operating profit Non-recurring items Market value adjustments Profit before tax, continued Profit before tax, discontinued (Vørður) Profit before tax, total Index Q Q Index Loans and advances 9,141 10, , Deposits and other debt 12,669 12, Operating cost / income, % Solvency ratio, % CET1 capital ratio, % Annual Report 2016 Page 6

7 Interest income affected by controlled run-off and further margin pressure Comments QoQ changes in NII Net interest income (NII) down DKK 3m from Q to Q and down by DKK 55m from 2015 to 2016 YoY drop in NII mainly owing to the winding up of corporate activities in Denmark and continued margin pressure QoQ fall in NII due to further pressure on interest margins Lending volumes down DKK 1.5bn YoY and DKK 231m QoQ. DKKm Q , ,0 0, ,6 0.9 Lending Lending Deposit Deposit Liquidity volume interest volume interest mgmt ,0 Sub. debt 0,0 Other Q Loans and deposits DKKbn Loans Deposits YoY changes in NII DKKm , Q Q Q Q Q Q Lending volume Lending Deposit interest volume Deposit Liquidity interest mgmt. Sub. debt Other 2016 Annual Report 2016 Page 7

8 Fee and commission income down YTD Comments Net fee and commission up by DKK 5m QoQ: Insurance commission increased due to prevision income from NordikLív Other fee and commission income increased, supported by seasonal variations Net fee and commission income fell DKK 34m YoY: Gradual reduction in fee and commission income from corporate operations in Denmark consistent with the controlled run-off Less investment activity in 2016 Pull-back of mortgage broking activity to normal levels after a period of high remortgaging activity in 2015 QoQ changes in fee and commission income DKKm YoY changes in fee and commission income DKKm Q Investment Loan, and trading guarantee, comm. insurance comm , ,0 0.8 Mortgage broking services , Dividends 0.2 Other fee and comm. income , Q Investment Loan, and trading guarantee, comm. insurance comm. Mortgage broking services Dividends Other fee and comm. income 2016 Annual Report 2016 Page 8

9 Trygd: Q4 weather conditions causing high insurance claims Comments Net premium income up by DKK 3m in 2016 compared to 2015 and up DKK 1m from Q to Q Net claims up DKK 10m from 2015 to 2016 and up DKK 18m from Q to Q due to an extraordinarily high level of claims in December Profit before tax of DKK 0m in 2016 relative to DKK 8m in 2015 and a loss of DKK 15m in Q compared to a profit of DKK 3m in Q Trygd is expected to continue attracting new customers and growing premium income in 2017 Premium and claims DKKm Premium income, net Profit before tax DKKm Claims, net Q Q Q Q Annual Report 2016 Page 9

10 Operating costs down DKK 40m in 2016 Comments Operating costs were close to flat from Q to Q and down by DKK 40m from 2015 to 2016 Decline in staff costs YoY mainly due to the windingup of corporate activities in Denmark DKK 12m in amortisation of intangible assets related to customer relations discontinued fully written off in Q Reduction in advisory services expenditures related to previous year s strategic initiatives Average number of employees (FTE) Group excl. Vørður and Trygd Trygd Vørður QoQ changes in operating costs DKKm YoY changes in operating costs DKKm Q Staff IT Other expenses Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Staff IT Advisory services Amort. int. assets Other expenses 2016 Annual Report 2016 Page 10

11 Net reversal of impairment charges in 2016 Conservative portfolio structure Net impairment charges were a reversal of DKK 4m in Q The private sector accounts for 66% of the loan portfolio, excluding the Danish corporate portfolio No individual sector accounts for more than 6% of the loan portfolio, excluding the Danish corporate portfolio BankNordik provides 1 st lien mortgage loans to the private sector in the Faroe Islands, obtaining a high degree of security A large part of the real estate exposure (6%) relates to financing of state-owned real estate in Greenland Net impairment charges DKKm Loans by sector - excl. Danish corporate sector 66% 3% DKK 8.9bn Public sector Corporate sector Private sector 31% Q116 Q216 Q316 Q416 7% 6% 3% DKK 2.75bn 6% 5% 5% Real estate HoReCa Agri. & fishing Trade Manufacturing & mining Other Annual Report 2016 Page 11

12 Capital position strengthened in 2016 Comments QoQ changes in CET1 ratio CET1 ratio up by 2.1 percentage points YoY despite proposed extraordinary dividends The Group has strengthened its core capital position considerably in recent years % BankNordik continuously monitors the regulatory environment to anticipate and adapt to impending capital requirements Q Net income Tax assets RWA Other Exp. dividend Q Capital ratio development Solvency ratio CET1 ratio YoY changes in CET1 ratio % Net income RWA Significant investments Intang. assets Exp. dividend Other 2016 Annual Report 2016 Page 12

13 Long-term financial objectives 2020 financial objectives Comments The Group targets 10% ROE and 62% cost/income by 2020 BankNordik s long-term capital ratio targets have been met In 2016, ROE was affected by: The sale of Vørður Non-recurring items related to redundancies Reversal of impairment charges The Group is likely to re-evaluate its capital ratio targets once the requirements related to the MREL become known Progress Key metrics Return on equity Cost/income ratio CET1 capital ratio Total capital ratio 6.3%* 12.0% (8.1%)** 2020 target 10% 68% 72% 62% 13.9% 16.0% 13% 16.8% 18.3% 16.5% *Equity and income adj. for goodwill and goodwill impairments, respectively **Annualised figures. 8.1% ROE excludes capital gains from Vørður Annual Report 2016 Page 13

14 Outlook for 2017 FY2017 guidance Management expects profit before impairment charges, value adjustments and tax to be in the range of DKK m in 2017 (2016: DKK 179m) Net impairment charges on loans for 2017 are expected to be less than DKK 20m (2016: reversal of DKK 12m) Annual Report 2016 Page 14

15 Questions? Árni Ellefsen, CEO Side 15

16 Appendices Group Banking Personal Banking Corporate Banking Banking, Faroe Islands Banking, Denmark Banking, Greenland Insurance, Trygd Credit quality of loan portfolio Annual Report 2016 Page 16

17 Group Income statement, Group DKKm Index 16/15 Q Q Q Q Q Net interest income Net fees, commission income & dividends Net insurance income Other operating income (less reclassification) Operating income Operating costs* Sector costs Profit before impairment charges Impairment charges Reversals of acquired OEI impairments (Reclassified from Other operating income) Impairment charges, net Operating profit Impairment charges, intangible assets Non-recurring items (Reclassified from Staff costs and administrative expences) Profit before value adjustments and tax Market value adjustments** Profit before tax, continuing operations Profit before tax, discontinued operations (Vörður) Profit before tax, total Operating cost/income, % Number of FTE, end of period * Comprises Staff costs and administrative expences and Amortisation, depreciation and impairment charges (less reclassification to nonrecurring items) ** Incl. Net income from investments accounted for under the equity method Annual Report 2016 Page 17

18 Banking Income statement, Banking DKKm Index 16/15 Q Q Q Q Q Net interest income Net fees, commission income & dividends Other operating income Operating income Operating cost Sector costs Profit before impairment charges Impairment charges, net Operating profit Impairment charges, intangible assets Non-recurring items Profit before value adjustments and tax Market value adjustments Profit before tax Loans and advances Deposits and other debt Operating cost/income, % Number of FTE, end of period Annual Report 2016 Page 18

19 Personal Banking Income statement, Personal banking DKKm Index 16/15 Q Q Q Q Q Net interest income Net fees, commission income & dividends Other operating income Operating income Operating cost Sector costs Profit before impairment charges Impairment charges, net Operating profit Impairment charges, intangible assets Non-recurring items Profit before value adjustments and tax Market value adjustments Profit before tax Loans and advances Deposits and other debt Operating cost/income, % Number of FTE, end of period Annual Report 2016 Page 19

20 Corporate Banking Income statement, Corporate Banking DKKm Index 16/15 Q Q Q Q Q Net interest income Net fees, commission income & dividends Other operating income Operating income Operating cost Sector costs Profit before impairment charges Impairment charges, net Operating profit Impairment charges, intangible assets Non-recurring items Profit before value adjustments and tax Market value adjustments Profit before tax Loans and advances Deposits and other debt Operating cost/income, % Number of FTE, end of period Annual Report 2016 Page 20

21 Banking, Faroe Islands Income statement, Faroe Islands DKKm Index 16/15 Q Q Q Q Q Net interest income Net fees, commission income & dividends Other operating income Total Operating income Operating cost Sector costs Profit before impairment charges Impairment charges, net Operating profit Non-recurring items Profit before value adjustments and tax Market value adjustments Profit before tax Loans and advances Deposits and other debt Operating cost/income, % Number of FTE, end of period Annual Report 2016 Page 21

22 Banking, Denmark Income statement, Denmark DKKm Index 16/15 Q Q Q Q Q Net interest income Net fees, commission income & dividends Other operating income Total Operating income Operating cost Sector costs Profit before impairment charges Impairment charges, net Operating profit Impairment charges, intangible assets Non-recurring items Profit before value adjustments and tax Market value adjustments Profit before tax Loans and advances Deposits and other debt Operating cost/income, % Number of FTE, end of period Annual Report 2016 Page 22

23 Banking, Greenland Income statement, Greenland DKKm Index 16/15 Q Q Q Q Q Net interest income Net fees, commission income & dividends Other operating income Total Operating income Operating cost Sector costs Profit before impairment charges Impairment charges, net Operating profit Impairment charges, intangible assets Non-recurring items Profit before value adjustments and tax Market value adjustments Profit before tax Loans and advances Deposits and other debt Operating cost/income, % Number of FTE, end of period Annual Report 2016 Page 23

24 Insurance, Trygd Income statement, Trygd DKKm Index 16/15 Q Q Q Q Q Premium income, net of reinsurance Claims, net of reinsurance Net insurance income Net income from investment activities Operating income Operating cost Profit before tax Combined ratio Claims ratio Number of FTE, end of period Annual Report 2016 Page 24

25 Credit quality of the loan portfolio Credit classification according to the Danish FSA s method Annual Report 2016 Page 25