Full-year 2010 TIME FOR CUSTOMERS. 9 February 2011

Transcription

1 Full-year 2 TIME FOR CUSTOMERS 9 February 211

2 Performance compared to guidance Core earnings before impairment Guidance: DKK 8-1,m. Revised guidance (/9/3): DKK 9-1,m. Performance: DKK 933m. Impairment of loans etc. Guidance: percent of loans and guarantees. Revised guidance (/6/3): approx. 1. percent of loans and guarantees Performance:.99 percent (DKK 454m.) Costs Guidance: Zero-growth in 2 and 211 Performance: Zero-growth in 2 achieved 2

3 Macroeconomics and market trends: Cautious return to growth Danish GDP growth driven by export Investments and consumption still at moderate level moderate demand for financing Unemployment stabilised household customers have made through the crisis well Continued challenges for several industries 3

4 Full-year key performance indicators NII under pressure High customer activity net fee income at record level Zero-growth in costs achieved Declining impairment charges Satisfactory result before expenses regarding sector-targeted solutions SPAR NORD BANK Realized Realized 29 2 Change in pct. Net interest income Netfees, charges and commissions Market-value adjustments Other income Core income Ex. operational leasing Earnings from operational leasing Core income Staff costs Costs ex. depriciations from operational leasing Depriciations from operational leasing Total costs Core earnings before impairment Impairments of loans and advances, etc Core earnings Investment income Profit/loss on ordinary activities Sector Fund Profit before tax

5 key performance indicators Share of sector-loss on Amagerbanken booked in (DKK 8m.) NII sustained at Q3-level Hike in interest level leads to reduction in market-value adjustments Extraordinary expenses relating to repurchase and resale of distressed structured bond -effect on impairment charges SPAR NORD BANK Realized Realized Change Q3 2 2 in pct. Net interest income Netfees, charges and commissions Market-value adjustments Other income Core income Ex. operational leasing Earnings from operational leasing Core income Staff costs Costs ex. depriciations from operational leasing Depriciations from operational leasing Total costs Core earnings before impairment Impairments of loans and advances, etc Core earnings Investment income Profit/loss on ordinary activities Sector Fund Profit before tax

6 NII under pressure from different sides Reduced net interest income from bonds portfolio Higher interest expenses relating to hybrid core capital Pct. 6, 5,5 5, 4,5 4, Interest margin (DKK) (3 mth. moving ave.) 5,44 5,44 5,44 5,52 5,5 5,53 5,44 5,41 5,35 5,3 5,35 5,35 5,38 3,5 Low interest-level in general 3, Dec 9 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Net interest income and loans volume DKKb Net interest income 2.5 4,5 43,2 38,3 38, , Net interest income Bank loans Q3 8 8 Q1 9 Q2 9 Q3 9 9 Q1 Q2 Q3 6

7 High activity level on housing loans and investment Netfees, charges and commissions Positive trend in pooled pension schemes and asset management Growth in service to institutional customers High activity in housing area Remortgaging Net provision of mortgage-loans: DKK 4.bn. Securities trading and custody accounts Q3 / : 8 pct. Assets management Q3 / : 17 pct Q3 / : pct Q1 Q2 Q3 9 Loan transaction fees Other fees, charges and commissions Q3 / : 2 pct. 2 Q3 / : -6 pct Q1 Q2 Q Q1 Q2 Q Q1 Q2 Q Q1 Q2 Q3 9 7

8 Market-value adjustments: A good year for bonds Market-value adjustments Growth in market-value adjustments in the Markets division primarily attributable to bonds Market-value adjustments on shares in sector-companies at satisfactory level, e.g. Danish Ship Finance, DLR Kredit and PRAS Declining activity in customers hedging of interest risk and FX risk 29 2 Change Market-valued adjustments in Trading, Financial Markets & The International Division Tangible assets Currency trade and -agio Total

9 Financial credit risk kept at low level 99 percent of bonds portfolio attributable to investment grade issuers No exposure to Portugal, Italy, Ireland, Greece or Spain Receivables from credit institutions markedly reduced AA 26% A 8% 2 BB 1% A 14% Not rated % 2 Not allocated 1% AAA 34% AAA 65% AA 41% Bonds shown by rating () * 29 2 AAA AA A BBB 2 BB 123 CCC 11 CC 12 Not rated 2 Bonds * Incl. spots and forwards Receivables from credit institutions shown by rating () 29 2 AAA AA A BBB 1 Not rated Not allocated Receivables from credit institutions

10 Strong focus secures zero cost-growth Phase 1 (2) Approx positions cut General cost consciousness Management focus 2.5,63 Costs and Cost/Income ratio,71,65,62,64,8 Phase 2 (211-) Revision of work flows and processes Assessment of product portfolio Management focus , Goal of zero-growth in 211 re-iterated Goal of a Cost/Income Ratio of.55 in 213 Costs () 29 2 Change in pct. Staff costs Operating expenses Depriciations from other assets Costs ex. depriciations from operational leasing Depriciations from operational leasing Total costs

11 Staff costs 4 percent up in spite of staff cuts 96 positions cut in Q1 full effect from 211 Net reduction of 59 positions (FTE) continued growth in some business areas Extraordinary severance pay and disestablishment costs amount to DKK 11m. 1.5 Staff costs Collective agreement pay-rises of 3.7 percent Full-time employees 29 Q3 2 2 Difference Local Banks Trad. Fin. Markets & Int. Div Finans Nord Business development Others Total

12 Operating expenses reduced by 4 percent launched initiatives are paying off Decline or zero-growth in most categories of operating expenses Growth in attributable to repurchase and resale of distressed structured bond Operating expenses () 29 2 Change Staff-related expenses Travel expenses Marketing costs IT expenses Cost of premises Other administrative expenses Operating expenses Operating expenses Operating expenses 8 Y/Y: -4 pct. 25 Q/Q: 25 pct Q

13 Impairment charges reduced but still at high level Impairment and impairment in pct. Pct. Overall impairment of loans etc. of DKK 454m. (29: DKK 584m.) 8 6, Impairment percentage of.99 (29: 1.22) Impairment charges attributable to corporate customers: DKK 397m. impairment percentage of 1.3. Hereof DKK 7m. attributable to agriculture -5 -,45 -,26 1,22,49, Impairment -,6 25 Impairment charges attributable to household customers: DKK 45m. impairment percentage of Q3 8 8 Q1 9 Q2 9 Q3 9 9 Q1 Q2 Q3 13

14 Non-performing loans at low level comfortable cover ratio Impairment of loans, advances and guarantee debtors Y/Y: -7 pct Impairment in % of loans, adv. and guarantees Pct. 2,4 2,4 2,5 2,6 2,2 9 Q1 Q2 Q3 9 Q1 Q2 Q3 Spar Nord ex. sector fund Sector fund Provision for loss re. Bank Package I written off at end-2 2 Non-performing loans Y/Y: 2 pct. 15 Cover-ratio (ex. impairments related to sector-targeted solutions) Q1 Q2 Q3 9 Q1 Q2 Q3 14

15 Loan book diversified exposure Household customers account for 33 percent of exposure compared to 28 percent sector average (29) Low exposure to commercial real estate sustained Exposure to agriculture reduced and continues to be a focus point The group's loans, advances and guarantees shown by line of business Impairments Line of Business Spar Nord Bank Spar Nord Bank Share of credit exposure against the industry, "Agriculture, forestry etc." Pct Spar Nord 8,8 7,9 Finans Nord 3,7 4, Total 12,5 11,9 Pct Public sector 1,4 2,3, Agriculture, forestry etc. 12,5 11,9 23,4 Fishing,5,3,7 Industry and raw materials extraction 4,2 3,8 5,2 Energy supply 2,6 3,,1 Construction and civil engineering 4,4 4,9 5,5 Trade 7,7 8,4 13,2 Transportation, hotels and restaurants 7, 6,6 7,6 Information and communication,2,2,4 Financing and insurance activities 4,5 7,9 5,9 Real estate 11,,7 9,4 Other business 7,3 6,7 7,7 Corporate customers, total 63,3 66,7 79,1 Personal customers, total 36,7 33,3 2,9 Total,,, 15

16 Disappointing loss on liquidation portfolio Investment portfolio under continued reduction primarily made up by liquidation portfolio of structured bonds 29 2 Change Interest and currency holdings Listed shareholdings Unlisted shareholdings (Erhvervsinvest etc.) Earnings from inv. portfolios Change Bonds of which CDO Spar nord issued bonds 5 5 Listed shares Unlisted shares Total

17 Modest customer demand for financing In spite of customer growth bank lending is on the same level as one year ago growth in business lending, decline in household lending Bank deposits have declined as a consequence of low interest level corporate customers place liquidity in securities Guarantees reduced in due to fewer pending mortgage registrations Growth in overall business volume driven by growth in pooled pension schemes and reverse transactions Bank loans Bank deposits Guarantees Business Volume 5 Q3 / : -1 pct. 5 Q3 / : -3 pct. Q3 / : -32 pct. Q3 / : -2 pct. DKKb DKKb DKKb DKKb Q1 Q2 Q3 9 Q1 Q2 Q3 9 Q1 Q2 Q3 9 Q1 Q2 Q3 17

18 Capital ratios comfortably above targets Solvency ratio of 13.4 (end-29: 14.2) Reduction in solvency ratio is mainly attributable to call of subordinated loan of DKK 25m. (October) Individual solvency requirement: 8.5 percent Excess coverage: DKK 2.1bn. Capital requirement DKK 3.7bn. Core capital after deduc. DKK 5.8bn. Pct Core capital 8,8 8,6 8,9 9,3 9,3 Hybrid capital,9,8,8 3,9 3,8 Core capital ratio 9,7 9,4 9,7 13,2 13,2 Subordinated debt 3, 3,4 3,1 2,6 2, Deductions -1,9-1,7-1,5-1,7-1,8 Solvency ratio,8 11,1 11,3 14,2 13,4 2 Core capital ratio 13,2 13,2 1.5 Subordinated loan capital (Maturity) Capital targets: Core capital ratio, excl. hybrid: 8, Core capital ratio, incl. hybrid: 12, Pct. 9,7 3,9 3,8 9,4 9,7,9,8,8 8,8 8,6 8,9 9,3 9, Core capital Hybrid capital Subordinated loan capital Hybrid capital 18

19 Focus on liquidity in spite of excess coverage of DKK 5.2bn. Excess coverage relative to strategic target reduced by DKK 2.2bn. (y/y) Growth in overall lending higher than growth in deposits Funding for DKK 2.1 falls due in 211 refinancing expected to take place in H1 Strategic target DKKb Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 6. Senior funding maturity Senior loans Step-up notes Issued bonds DKKb Cash deposits 33,8 31,9 31,2 Seniorfunding 5,4 7,2 7,3 Core capital and sub. capital 5,4 6,6 6,7 Stable long term funding 44,6 45,7 45,2 Loans and advances 45,4 38,3 4, Strategic target (>) -,8 7,4 5,2 19

20 Outlook for 211 Another year marked by moderate socio-economic growth and modest demand for financing Growth in lending and volume to come from increase in market-share Increased competition for attracting good customers moderate pressure on margins Growth in NII driven by growth in market-share Growth in net fee income fuelled by volume growth and sustained high activity in housing and capital-market-related fees Market-value adjustments under pressure from marginally increasing interest level Zero cost growth Core earnings before impairment of DKK 85-1,5m. Impairment percentage of 1. 2

21 New strategy: TIME FOR CUSTOMERS Time to capitalize on recent years investment in distribution power Time make more potential people aware of Spar Nord s existence and qualities Time for more proactive customer acquisition Time to bring special competencies better into play Leasing Trading/Markets TIME FOR CUSTOMERS 21

22 New strategy: TIME FOR CUSTOMERS 22