Interim Financial Statements for third quarter and first nine months of 2017

Transcription

1 SG FINANS AS 2017 Interim Financial Statements for third quarter and first nine months of 2017 (Unaudited figures)

2 Report of the Board of Directors as of September 30 th, 2017 In the first nine months of 2017, SG Finans has: - established new financing to clients for MNOK (MNOK for the same period in 2016), an increase of 0,2 %. - net banking income of MNOK (MNOK 984). - total loan losses of MNOK 8,8 or 0,04 % of average funded assets (MNOK 39,4 / 0,17 %). - total comprehensive income of MNOK 536 (MNOK 376). - total assets of MNOK (MNOK ). - capital adequacy ratio of 16,3 % (14,8 %) for tier 1 capital and 20,3 % (19,0 %) for total capital. Business activities In the first nine months of 2017 SG Finans has established new financing in Scandinavia of MNOK compared to MNOK for the same period in This is an increase of 0,2 %. Margins for new financing are broadly at the same level as in the same period in The market share within equipment finance in Norway is 27,3 % at September 30 th, an increase since year-end SG Finans increases the market share within financing of high-tech and industrial equipment, while the market share is lower for financing of transport equipment. SG Finans maintains its position as market leader in equipment finance in Norway. We see continued growth in new financing of equipment in Denmark, and we increase our market share in the Danish market to 12%. In Sweden new financing volumes are lower compared to last year, further to changes in the sales organisation. We expect financing volumes to pick up again in Sweden. Within Factoring, SG Finans is market leader in Norway with a market share of 40 % in ordinary factoring. Total assets are at September 30 th MNOK ,5 which is 3,8 % lower than MNOK ,6 at end September The main evolution in total assets comes from a change in ALM principles with subsequent reversal of fixed rate investments, while new financing contribute to further underlying growth. 346 people were employed in SG Finans at the end of the third quarter. This is a reduction of 10 staff since year end Results SG Finans has Net Banking income of MNOK 1 158,4 in the first nine months of 2017 compared to MNOK 984,2 in the same period in The main increase in Net Interest Income comes from the realisation of positive market value on reversed fixed rate investments. Operating expenses amount to MNOK 444,0 in the period ending September 30 th 2017, compared to MNOK 436,6 in the same period in The increase in operating expenses is mainly due to increased costs related to fees and temporary staff. Total loan losses year to date amount to MNOK 8,8. This represents 0,04 % of average funded assets. Total loan losses for the same period in 2016 were MNOK 39,4 and 0,17 % of average funded assets. The operating profit is MNOK 705,7 in the first nine months of 2017, compared to MNOK 508,1 in the first nine months of last year. The main contributors to the MNOK 197,6 increase in 1

3 operating profit are the increased net interest income, reversals of allowances for loan losses and income on contracts previously written down. SG Finans AS produces a net result after tax of MNOK 534,9 for the period from January 1 st to September 30 th, This compares to a net result after tax of MNOK 377,9 in the same period last year. Risk management and Capital adequacy Based on the capital situation and buffers compared to tier 1 level targets at the end of 2016, the Board initiated measures to strengthen tier 1 ratio during As part of these measures, SG Finans has reversed fixed rate investments linked to asset and liability management. The reversal of these investments leads to a reduction in the balance sheet of NOK 4 bn at the end of September. Further, the reversal has given an increase in interest income in the period of MNOK 163,4. The Board assesses the capital situation as adequate further to the measures initiated, and the company has good access to funding from its parent company as well as external lenders. The regulatory capital as of 30 th of September is MNOK 5 608,5. The regulatory capital consists of MNOK 4 508,5 tier one capital, and MNOK 1 100,0 tier two capital. The basis for the calculation of capital requirements and adequacy at the end of September was MNOK ,9. The capital adequacy at end of September 2017 was 20,3 %. Tier 1 capital ratio was 16,3 %. The capital coverage is satisfactory compared to regulatory minimum requirements and the company s internal requirements and guidelines for solidity and capital adequacy. As part of the company s capital management procedures, stress testing of all relevant risks are performed and the change in the capital requirement under various stress scenarios is evaluated. The capital adequacy is considered satisfactory also considering the results of the performed stress tests. Lysaker, November 15 th, 2017 Jochen Jehmlich Chairman Ellen Altenborg Tommy Pedersen Jacques Bensen Anett Carlsson Philippe Dairien Carsten Thorne Managing Director 2

4 INCOME STATEMENT Amounts in NOK thousand Notes Q Q YTD 2017 YTD Total interest income 3, Total interest expenses 3, Net interest income Commission and fees income Commission and fees expenses Net commission and fee income Net gains/losses on financial instruments at fair value Net change in value and gains on foreign currency Total income on other activity Net banking income Total payroll, fees and other staff costs Total other operating expenses Gross operating proft Losses on loans Operating profit Taxes Profit for the period Other comprehensive income Items that could be reclassified Exchange differences on translation of foreign operations Taxes Items that cannot be reclassified Actuarial gains and losses Taxes Other comprehensive income for the period Attributable to: Equity holder of the parent Total comprehensive income of the period

5 STATEMENT OF FINANCIAL POSITION Amounts in NOK thousand Notes Assets Cash and deposits with central banks Deposits with financial institutions Loans to financial institutions Financial derivatives 15, Loans to customers Repayment loans Factoring receivables Factoring loans Financial lease agreements 8, Total loans before allowances Allowances on doubtful loans 7, Net loans to customers Repossessed assets Shares and primary capital certificates Deferred tax asset Other intangible assets Machinery, tools and equipment, means of transport Other assets Prepayments and accrued income Total assets Amounts in NOK thousand Notes Liabilities Loans and deposits from financial institutions with agreed maturity Deposits from and debt to customers with termination rights Financial derivatives 15, Retention of margin and other customer accounts Other liabilities Accruals and deferred income Pension liabilities Current tax liability Subordinated debt Total Liabilities Equity Share capital Share premium account Other equity including profit for the year Total equity Total liabilities and equity Lysaker, November 15th, 2017 Jochen Jehmlich Ellen Altenborg Tommy Pedersen Chairman Jacques Bensen Anett Carlsson Philippe Dairien Carsten Thorne Managing Director 4

6 STATEMENT OF CHANGES IN EQUITY Amounts in NOK thousand Share capital Share premium Retained earnings Translation differences Actuarial gains and losses Total Equity Profit for the period Other comprehensive income Dividends Total equity Equity Profit for the period Other comprehensive income Dividends 0 Total equity

7 CASH FLOW STATEMENT Amounts in NOK thousand YTD 2017 YTD 2016 Operations Interest income Interest expenses Other receipts Operating expenses Receipts on previous losses Paid taxes Net cash flow from operations New investments leasing Proceeds from sale of leasing Decrease in loans ( net ) Decrease ( increase ) in other receivables Decrease ( increase ) in advance payments Net cash flow from current financial activity Decrease ( increase) in tangible assets Shares and primary capital certificates 0-60 Net cash flow from investment activity Increase (decrease) in customers' credit balances Payment of dividends Increase (decrease) in loans from credit institutions Increase (decrease) in debt Increase (decrease) accrued costs Currency exchange without cash effect Net cash flow from long term financial activity Net cash flow Cash at the 1st of January Cash at end of period Reconciliation cash at end of period Cash and deposits with central banks 8 11 Deposits with financial institutions Cash at end of period

8 NOTES 1. ACCOUNTING PRINCIPLES SG Finans AS is a Scandinavian finance company and its business is carried out through a broad, Scandinavian distribution network with 15 regional and sales offices in Norway, 5 offices in Sweden and 2 in Denmark. SG Finans AS forms a part of of Société Générale SA, a group listed on the stock exchange with head office in Paris, France. The Group consolidated financial statement is prepared by Société Générale SA, and is available on The company is a limited company incorporated and domiciled in Norway. Its registered office is in Strandveien 18, Lysaker. The interim financial statements for the period ended September 30th 2017 were authorised for issue by the Board of directors on November 15th, SG Finans AS's activities are neither seasonal nor cyclical in nature, its period results were not affected by any seasonal or cyclical factors. The interim financial statements for SG Finans AS for the 9 month period ending September 30th, 2017 are prepared and presented in accordance with the revised IAS 34 Interim Financial Reporting. The interim financial statements do not include all the information and disclosures required in the annual financial statement, and should be read in conjunction with the financial statement as at 31 December IFRS, IFRIC interpretation and amendments applied by SG Finans AS as at January 1st, 2017 Accounting standards, amendments or interpretation No new standards adopted. Adoption date by the European Union Effective date Accounting standards, Amendments or interpretation to be applied in the future Not all of the accounting standards and interpretations published by the IASB (International Accounting Standards Board) have been adopted by the European Union at September 30, These accounting standards and interpretations are required to be applied from annual periods beginning on January 1, 2017 at the earliest or on the date of their adoption by the European Union. Accordingly, they were not applied by SG Finans AS as of September Accounting standards, Amendments or interpretation adopted by the European Union on September 30, 2017 Adoption date by the European Union Effective date Accounting standards, amendments or interpretations IFRS 9 Financial Instruments IFRS 15 Revenue from Contracts with Customers Accounting standards, amendments or interpretations not yet adopted by the European Union on September 30, 2017 Accounting standards, amendments or interpretations Adoption date by the IASB Effective date IFRS 16 Leases Amendments to IAS 12: recognition of Deferred Tax Assets for Unrealised losses Amendments to IAS 7: disclosure initiative Annual Improvements to IFRS Standards Cycle

9 2. IMPORTANT ACCOUNTING ESTIMATES AND DISCRETIONARY EVALUATION The preparation of interim financial statements in conformity with generally accepted accounting principles requires that occasionally management must make estimates and assumptions. Estimates and discretionary evaluations are regularly assessed and are based on historic experience and other factors, including the expectations of future events that are considered to be probable under the current circumstances. The company prepares estimates and makes presumptions and assumptions connected to the future. The accounting estimates that are based on this will seldom be entirely in accordance with the final outcome. Some accounting principles are considered to be especially important to enlighten the company s financial position because they require the management to make difficult or subjective assessments and determine estimates that are, for the most part, uncertain at the time the estimates are made. 3. NET INTEREST INCOME Amounts in NOK thousand Q Q YTD 2017 YTD 2016 Interest income from financial institutions, valued at amortised cost Interest income from customers, valued at amortised cost Other interest income Total interest income Interest expenses to financial institutions, valued at amortised cost Interest expenses to customers, valued at amortised cost Interest expenses on subordinated debt Other interest expenses Total interest expenses Net interest income NET FEES AND INCOME ON OTHER ACTIVITY Amounts in NOK thousand Q Q YTD 2017 YTD 2016 Commission and fees income from loans and similar to customers Commission and fees income Commission and fees expenses from loans and similar to customers Other commission and fees expenses Commission and fees expenses Net commission and fees income Sales gains Income from extension of leasing contracts Other income Total income other activity NET GAINS ON FINANCIAL INSTRUMENTS AT FAIR VALUE Amounts in NOK thousand Q Q YTD 2017 YTD 2016 Net gains/losses on financial derivatives, trading Change in fair value on financial derivatives, hedging Change in fair value on hedged fixed interest contracts Net gains/losses on financial instruments at fair value through P&L

10 6. OPERATING EXPENSES Amounts in NOK thousand Q Q YTD 2017 YTD 2016 Payroll Pensions Social security costs Other staff cost Total payroll, fees and other staff costs Rent and other office costs Fees and temporary staff Travel and marketing Other operating costs Intragroup services Depreciation and gain/loss Total other operating expenses Total operating expenses LOSSES AND ALLOWANCES RECOGNISED IN THE PROFIT AND LOSS ACCOUNTS Amounts in NOK thousand Q Q YTD 2017 YTD 2016 Allowances on doubtful loans Allowances on doubtful loans as of Exchange rate adjustments (opening balance) Actual losses that are covered by previous allowances Reclassification of previous allowances Allowances on doubtful loans in the period = Allowances on doubtful loans at end of period Losses on loans Write-downs for loan losses at end of period Exchange rate adjustments (opening balance) Write-downs for loan losses as at Total actual losses Income on actual losses = Losses on loans LEASING (FINANCIAL LEASING ASSETS) Amounts in NOK thousand Purchase cost Exchange rate difference (opening balance) Inflow during the year Outflow during the year Purchase costs at end of period Accumulated ordinary depreciation Exchange rate difference Ordinary depreciation during the year Reversed depreciation sold assets Accumulated depreciation at end of period Book value leasing assets at end of period Customer receivables Other accruals Book value in the balance sheet at end of period Customer receivables are ordinary leasing receivables and advancement on leasing rent. Up front fees constitute other accruals. 9

11 Overview of future minimum finance lease rental: Within 1 year to 5 years Future minimum finance lease rental Average interest 3,33 % 3,68 % Present value of minimum lease payments Unearned finance income RISK CLASSIFICATION Amounts in NOK thousand Whereof Days outstanding status Net loans to customers past due, non-doubtful Not past due > > 1 year Total Amounts in NOK thousand Whereof Days outstanding status Net loans to customers past due, non-doubtful Not past due > > 1 year Total Credit exposure: Amounts in NOK thousand Net loans to customers Positive market value derivatives Guarantee liabilities and loan commitments Total credit exposure DOUBTFUL LOANS Amounts in NOK thousand Gross doubtful loans Write-downs on impaired assets Net doubtful loans INCOME TAX The company calculates the tax payable based on an estimated effective tax rate. For 2016 the effective tax rate was 51,0 % at year end and the expected effective tax rate for 2016 was 25 %. For 2017 this is expected to be 24,2 %. Deferred tax assets are for interim based on an estimate for the year. The estimate is prepared based on previous years' development in the leasing portfolio, adjusted for year acquisitions and disposals. Expected changes in the deferred tax is recognized by 75 % for the period ending 30 September The main contributer to the fluctuation in effective tax rate is exchange rate effects from the portfolio. Amounts in NOK thousand Q Q YTD 2017 YTD 2016 Current income tax expense Gross deferred tax expense Income tax expense for the period

12 12. INFORMATION ON RELATED PARTIES Amounts in NOK thousand Assets/interest income Loans to Group companies Interest income Liability/interest expense Loans from Group companies Other liabilities Interest expense Subordinated debt Interest expense on subordinated debt Funding is primarily provided by the parent company Société Générale, on the basis of a framework agreement and limits. All transactions are made on market terms. 13. EMPLOYEE BENEFITS For the period ending 30 September 2017, it is not obtained a new actuary estimate. It is therefore not presented any effect of actuarial gains and losses in other comprehensive income. The company considers the possible effect of actuarial gains and losses as immaterial for the assessment of the financial position for the 9 month period ending 30 September At year end 2016 the actuarial gains and losses recognised in other comprehensive income was TNOK 2 863, giving a negative effect on the equity of TNOK CAPITAL ADEQUACY Amounts in NOK thousand Common Equity Tier 1 capital Share capital Share premium account Other equity Independently reviewed interim profits net of any foreseeable charge and dividend Common Equity Tier 1 capital before regulatory adjustment Common equity Tier 1 capital: Regulatory adjustment Deferred tax assets 0 0 Intangible assets (net of related tax liability) Negative amounts resulting from the calculation of expected loss Total regulatory adjustments to Common Equity Tier Common Equity Tier 1 capital Tier 1 capital Subordinated debt Tier 2 capital Total capital Amount below the thresholds for deductions Deferred tax assets arising from temporary differences Standardised method Local and regional authorities (including muncipalities) Institutions Corporate Engagements in default Total Credit risk, standardised method IRB method Corporate - small and medium sized businesses Corporate - other Total Credit risk, IRB method

13 Credit risk weighted assets Operational risk, basic indicator approach Additional requirement according to Basel II floor Total calculation basis Capital ratios Common Equity Tier 1 16,3 % 14,8 % Tier 1 16,3 % 14,8 % Total capital 20,3 % 19,0 % Capital ratios excluding transitional rule (Basel II floor) Common Equity Tier 1 16,3 % 15,0 % Tier 1 16,3 % 15,0 % Total capital 20,3 % 19,3 % Capital ratio requirements Common Equity Tier 1 4,5 % 4,5 % Tier 1 6,0 % 6,0 % Total capital 8,0 % 8,0 % Institution specific buffer requirement 6,7 % 7,0 % of which: capital conservation buffer 2,5 % 2,5 % of which: countercyclical buffer 1,2 % 1,5 % of which: systemic risk buffer 3,0 % 3,0 %...of which: systemically important institution buffer 0,0 % 0,0 % Pilar 1 capital requirements and capital buffers Common Equity Tier 1 11,2 % 11,5 % Tier 1 12,7 % 13,0 % Total capital 14,7 % 15,0 % Capital surplus, nominal amounts Common Equity Tier 1 capital above minimum capital requirements and capital buffers Tier 1 capital above minimum capital requirements and capital buffers Total capital above minimum capital requirements and capital buffers Pilar 2 - Internal capital adequacy assesment Prudential pilar 2 capital requirement: 1,50% of calculation basis Capital buffer above prudential pilar 2 capital requirement Common Equity Tier Tier Total capital SG Finans has been validated to calculate capital requirements and capital adequacy according to Advanced Internal Rating Based Approach for the major portfolios. The capital adequacy calculations are consequently based on SG Finans internal parameters a.o. for PD ("Probability of Default"), LGD ("Loss given Default"), M ("Maturity) for these portfolios. According to the transition rule, the capital requirement shall not be reduced below 80% of the level calculated using the Basel II Standard method. The impact of the transition rule adjustment factor is presented in the note on capital adequacy. The capital requirement for Operational Risk is calculated according to the Basic Indicator / Standard Approach for operational risk. The entity does not take Market Risk positions, and the capital requirement for market risk is nil. 12

14 15. METHOD FOR CALCULATION OF FAIR VALUE OF FINANCIAL INSTRUMENTS Regarding financial instruments recorded at fair value, see description in note 1 Accounting Principles. Lending (loans and financial leasing) to and receivables on customers: The pricing of lending (loans and financial leasing) is based on market prices. Stipulated prices include additions to cover credit risk. The value of impaired engagements is determined by discounting expected future cash flows. We therefore assess that the recorded value is a fair estimate of fair value for loans and receivables valued at amortised cost. Loans from financial institutions and deposits from customers: Fair value is determined to be equal recorded value for loans from financial institutions and deposits from customers valued at amortised cost. SG Finans uses the following hierarchy related to determining and disclosing the fair value of financial instruments: 1) Quoted (unadjusted) prices in active markeds for identical assets or liabilities (level 1) 2) Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly (level 2) 3) Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data (level 3) Amounts in NOK thousand Financial assets Level 1 Level 2 Financial derivatives Financial lease agreements Total assets Amounts in NOK thousand Financial liabilities Level 1 Level 2 Financial derivatives Total liabilities Amounts in NOK thousand Financial assets Level 1 Level 2 Financial derivatives Financial lease agreements Total assets Amounts in NOK thousand Financial liabilities Level 1 Level 2 Financial derivatives Total liabilities SG Finans does not have any financial instruments classified in level OFFSETTING The company has established CSA agreements (collateral security agreement) with its main counterparts.the agreements involve a mutual commitment to provide collateral for derivatives trading between the parties. Amounts in NOK thousand Financial derivatives - assets Gross amount Amounts that are offset 0 0 Net amount in financial position Financial instruments on balance sheet Cash collateral in the balance sheet Net position Amounts in NOK thousand Financial derivatives - liabilities Gross amount Amounts that are offset 0 0 Net amount in financial position Financial instruments on balance sheet Cash collateral in the balance sheet 0 0 Net position 0-0 SG Finans has set-off rights for leasing agreements where customers also have entered into factoring arrangements with the company. 13

15 17. CONTINGENCIES SG Finans has a commercial dispute estimated at MNOK 2, primary to cover expenses to lawyers. 18. ASSETS PLEDGED AND RECEIVED AS SECURITY In June 2014 SG Finans signed a collateral secured loan drawn over a 2 and 4 year funding period with an aggregate value of 250 MEUR. The lender holds encumbrance, MEUR 332,5 in the transport portfolio. 19. EVENTS AFTER THE REPORTING PERIOD The company is at the date of issue,15 November 2017, not familiar with matters that are likely to change the assessment of the financial position as at 30 September

16 SG FINANS AS SG Finans AS is Norway s leading finance company within equipment leasing and factoring. The company s products are marketed under the trademarks Societe Generale Equipment Finance and Societe Generale Factoring. The company is a part of the French Societe Generale Group, one of Europe s largest financial corporations. SG Finans has a strong local presence with 50 years history and 21 offices in Norway, Sweden and Denmark. The head office for the Scandinavian businesses is located at Lysaker (Oslo/Norway). The company has total managed assets of NOK 37 billion and 360 skilled employees, all working to provide our customers and partners with solutions for their business. HEAD OFFICE SCANDINAVIA SG FINANS AS STRANDVEIEN 18 POST BOX LYSAKER TELEPHONE: OFFICES IN NORWAY BERGEN - BODØ - DRAMMEN - FREDRIKSTAD - HAMAR - HARSTAD HAUGESUND - KRISTIANSAND - OSLO/LYSAKER (HEAD OFFICE) SANDEFJORD - SKIEN - STAVANGER - TROMSØ - TRONDHEIM - ÅLESUND OFFICES IN SWEDEN GOTHENBURG - MALMØ - STOCKHOLM - UMEÅ OFFICES IN DENMARK COPENHAGEN - VEJLE