FOURTH QUARTER AND THE YEAR /3 FEBRUARY 2015 JAN ERIK KJERPESETH MANAGING DIRECTOR

Transcription

1 FOURTH QUARTER AND THE YEAR /3 FEBRUARY 2015 JAN ERIK KJERPESETH MANAGING DIRECTOR

2 KEY DEVELOPMENTS IMPROVED ORDINARY BANKING OPERATIONS* STRENGTHENED CAPITALISATION GOOD COST DEVELOPMENT AND POSITIVE CONTRIBUTIONS FROM ASSOCIATED COMPANIES OFFENSIVE MEASURES TO ADDRESS FUTURE TRENDS *Profit performance adjusted for financial instruments and non-recurring items 2

3 KEY FIGURES Fourth quarter The year 2015 PRE-TAX PROFIT PROFIT ORDINARY BANKING OPERATIONS* GOOD COST DEVELOPMENT NOK 341 MILL. (356) NOK 341 MILL. (356) NOK 371 MILL. (366) NOK 1,396 MILL. (1,439) NOK 1,403 MILL. (1,102) NOK 1,443 MILL. (1,470) RETURN ON EQUITY ON TARGET 10.7% (12.2%) 11% (13.7%) PROPOSED DIVIDEND 1.1 (4.0) STRONGER CORE TIER 1 CAPITAL RATIO 13.7% (12.2%) *Profit performance adjusted for financial instruments and non-recurring items 3

4 RETURN ON EQUITY Return on equity Comments 12,2 13,6 11,1 10,7 8,9 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Return on equity for the year* Positively affected by good contributions from associated companies and stable nominal net interest Average equity NOK 9.8 bill. Non-recurring effects in the quarter: NOK 73 mill. reduction in fair value of fixed-interest loans NOK 76 mill. net gain on tangible fixed assets Comments 11,1 % 9,8 % Return on equity above target at 11% Better underlying operations in the past year Reduced costs and slightly higher net interest make a positive contribution Year 2014 Year 2015 *Profit performance adjusted for financial instruments and non-recurring items 4

5 EQUITY CERTIFICATES Profit per equity certificate Comments 1,79 1,88 1,59 1,54 1,31 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Book equity per equity certificate The profit per equity certificate is somewhat lower due to slightly more outstanding equity certificates Outstanding equity certificates in the quarter of NOK 34.7 mill. Weighted owner fraction for the fourth quarter isolated: 20.12% Weighted owner fraction for full year ,6 % Result pr equity certificate for full year 2015 NOK 6,32 Comments 58,7 56,5 58,1 59,4 46,6 New book equity per equity certificate after issue of equity certificate capital Book equity of NOK 10.7 billion Owner fraction: 25.6% (UB) Outstanding equity certificates: NOK 59 mill. (UB) Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 *Profit performance adjusted for financial instruments and non-recurring items 5

6 CHANGE IN MARGINS REDUCED NIBOR AND REPRICING OF CUSTOMER INTEREST RATES Lending Deposits 3,18 3,09 2,4 2,36 2,84 2,92 2,83 2,03 2,07 2,01-0,23-0,06 0,05 (0,06) 0,01-0,09 0,15 0,02 (0,47) -0,54 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Personmarked Retail Bedriftsmarked Corporate Q4-14 Q1-15 Q2-15 Q3 15 Q4 15 Personmarked Retail Bedriftsmarked Corporate 6

7 GROWTH IN LENDING, RETAIL AND CORPORATE MARKET PER QUARTER Corporate market Lending NOK 31.6 billion Retail market Lending NOK 98.4 billion 10,0 % 10,0 % 8,0 % 8,0 % 6,0 % 6,0 % 4,0 % 2,0 % 2,3 % 2,3 % 4,0 % 2,8 % 2,0 % 2,0 % 1,6 % 1,8 % 1,8 % 0,0 % -2,0 % -0,7 % 1. kvartal quarter 2. kvartal quarter 3. kvartal quarter 4. kvartal quarter 0,0 % 1. kvartal quarter 2. kvartal quarter 3. kvartal quarter 4. kvartal quarter Pr. kvartal 2015 Pr quarter 2015 Pr. Pr kvartal quarter Pr kvartal quarter eks ex valutaeffekt currency effects eks ex valutaeffekt currency effects 7

8 STRENGTHENING THE RETAIL MARKED POSITION - GROWHT IN DESIRED SEGMENT Corporate market Lending NOK 31.6 billion Retail market Lending NOK 98.4 billion 8,1 % 7% 3,8 % 2,5 % Growth Target Tall per tredje kvartal 2015 Average growth last three years Growth Target 8 Average growth last three years

9 DEVELOPMENT IN NET INTEREST, FOURTH QUARTER - INCREASED DEPOSIT MARGIN COMPENSATES FOR REDUCED LENDING MARGIN Other assets and liabilities Guarantee fund levy Bonds Deposit margin Lending volume Deposit volume Lending margin

10 ASSOCIATED COMPANIES THE COMPANIES' PROFIT/LOSS AFTER TAX, ,3 188,3 10,8 6,3 7,2 21,3 24,3-4,3 Norne Verd Brage Frende

11 PROFIT CONTRIBUTION, ASSOCIATED COMPANIES NOK million Q Q Frende Forsikring Norne Securities Brage Finans Verd Boligkreditt Jonsvollkvartalet Share of profit/loss from associated companies

12 COST DEVELOPMENT % COST REDUCTION IN THE PARENT BANK 4 % Cost ex IT IT** 1305* MNOK -8 % 1240 MNOK The goal of average annual cost growth of max. 2% in was achieved result: 1.7% annual reduction *) The 2012 figures are exclusive of non-recurring effects related to pensions totalling NOK 301 million and bonuses in the parent bank. The planned development in the parent bank is exclusive of bonuses. All figures have been revised pursuant to IAS19R. **) IT costs are the total costs of the IT department in the parent bank, including payroll expenses, external fees, ICT costs and other operating costs in the department.

13 STRONG POSITION IN RETAIL MARKET - MORE THAN 70% OF THE PORTFOLIO IN HORDALAND Loan portfolio Total loanbook by geographic area 8 % 5 % 24 % 16 % 24% 76 % 71 % 76% BM CM PM RM Hordaland Rogaland Sogn og Fjordane Øvrig Other

14 GROSS LENDING RETAIL MARKET - 94% WITHIN LTV RATIO OF 70%, 74% OF THE PORTFOLIO IN HORDALAND LOANS BROKEN DOWN BY LTV RATIO BROKEN DOWN BY REGION 94,0 % 74% (75) 14% 7% 4,4 % 5% 1,6 % (15) (7) 0% (5) LTV <= 70 % % LTV > 85 % HORDALAND ROGALAND SOGN OG RESTEN OFAV UTLAND ABROAD FJORDANE NORWAY NORGE Figures as of the end of the third quarter 2015 Gross lending in NOK bill. in brackets 14

15 BREAKDOWN OF LENDING, CORPORATE MARKET Breakdown of gross lending in NOK bill. Breakdown by sector 15,34 17,06 7,02 7,45 4,18 4,61 1: : : 150m Over NOK 150 mill. is largely Jonsvoll 15

16 DEFAULTS AND POTENTIAL BAD DEBT* - THE INCREASE IN CM IS MAINLY DUE TO ONE LARGE COMMITMENT ,00% ,00% ,00% ,00% ,98% 0,94% 0,92% 0,87% 0,99% Q Q Q Q Q Retail market Corporate market Share of total portfolio 1,00% 0,00% *) Includes all defaults, not just defaults of payment. Includes commitments with individual write-downs, calculated as a percentage of the total lending volume. 16

17 INCREASED PERCENTAGE PROVIDED FOR IN THE FOURTH QUARTER - GROUP WRITE-DOWNS INCREASED BY MORE THAN NOK 100 MILL. IN ,9 % ,8 % 0,70% 0,70% 0,70% 0,72% 0,77% ,7 % Percentage provided for 0,6 % 0,5 % 0,4 % 0,3 % Write-downs, NOK mill. 0,2 % ,1 % 0,0 % - Q Q Q Q Q Ind. Ind. nedskrivninger Write downs utlån Gruppenedskrivninger Group Write downs Avsetningsgrad Wite downs as % of gross lending 17

18 DEVELOPMENT IN WRITE-DOWNS OF LOANS Quarterly development The year Q1 15 Q2 15 Q3 15 Q4 15 Ind. write Nedskrivninger downs Gruppenedskrivninger Group write downs Ind. Nedskrivninger write downs Gruppenedskrivninger Group write downs

19 IMPROVED CAPITAL ADEQUACY IN THE FOURTH QUARTER - NEW EQUITY CERTIFICATE CAPITAL NOK 750 MILL., PROFIT AND REDUCED RWA Basel 1 floor* IRB * 20,0 % 18,0 % 16,0 % 14,0 % 12,0 % 15,6 % 15,7 % 15,6 % 15,3 % 2,0 % 2,0 % 1,4 % 1,4 % 1,9 % 1,9 % 1,4 % 1,3 % 16,9 % 1,9 % 1,3 % 20,0 % 18,0 % 16,0 % 14,0 % 12,0 % 17,9 % 2,3 % 1,6 % 16,3 % 2,1 % 1,4 % 16,7 % 16,4 % 2,1 % 2,0 % 1,4 % 1,4 % 18,6 % 2,0 % 1,4 % 10,0 % 10,0 % 8,0 % 6,0 % 12,2 % 12,8 % 13,2 % 13,0 % 15,1 % 8,0 % 6,0 % 14,0 % 12,8 % 13,2 % 13,0 % 15,1 % 4,0 % 4,0 % 2,0 % 2,0 % 0,0 % 2014 Q Q Q Q Q4 Total Capital 15,6 % 15,7 % 15,6 % 15,3 % 16,9 % Additional Capital (Tier 2) 2,0 % 2,0 % 1,9 % 1,9 % 1,9 % Hybrid Capital (Tier 1) 1,4 % 1,4 % 1,4 % 1,3 % 1,3 % Core Tier 1 Capital 12,2 % 12,8 % 13,2 % 13,0 % 15,1 % 0,0 % 2014 Q Q Q Q Q4 Total Capital 17,9 % 16,3 % 16,7 % 16,4 % 18,6 % Additional Capital (Tier 2) 2,3 % 2,1 % 2,1 % 2,0 % 2,0 % Hybrid Capital (Tier 1) 1,6 % 1,4 % 1,4 % 1,4 % 1,4 % Core Tier 1 Capital 14,0 % 12,8 % 13,2 % 13,0 % 15,1 % 19

20 TARGET OF 14.5% CORE TIER 1 CAPITAL AT THE END OF CAPITAL ACCUMULATION ACCORDING TO PLAN Capital adequacy target Q And going forward ICAAP 13,7 14,5 13,7 % 1,5 % - 0,2 % - 0,5 % 14,5 % Q4 15 Q4 16 Q4 15 Resultatakkumulering Profit from operations Dividend Utbytte Growth Vekst Q

21 CAPITAL PLANNING ICAAP LEVEL CONSIDERABLY ABOVE MINIMUM AND BUFFER REQUIREMENTS Core Tier 1 capital taking into account Basel I floor Assumptions (ICAAP ) 16,0 % 14,0 % 12,0 % 10,0 % 8,0 % 11,2 % 9% 12,2 % 10% 13,7 % 11% 14,5 % 14,5 % 14,5 % 11,5 % 11,5 % 11,5 % Increased lending margins CM Growth: Retail market 5.0% Corporate market 2.5% 6,0 % 4,0 % 2,0 % 0,0 % Q Core Equity Basel 1 floor Forecast Core Equity Basel 1 floor Combined Pilar 1 minimum and Buffer requirements Annual expected loss cost of bp of gross lending (NOK mill.) Continued capital accumulation in 2016 and potential increased distribution capacity in

22 LEVERAGE RATIO - ABOVE MINIMUM REQUIREMENTS 8% 7% 6% 5% 4% 3% 2% 1% 0% Uvektet kjernekapitalandel (leverage ratio) Leverage Ratio Minimumskrav requirementbasel-komiteen Comitee Forslag fra Norges Bank Proposal from central bank of Norway 8% 7% 6% 5% 4% 3% 2% 1% 0% 22

23 THE BOARD'S PROPOSED ALLOCATION OF PROFIT 90.4% WILL BE RETAINED TO STRENGTHEN CAPITAL ADEQUACY Basis for dividend NOK 980 mill. Equity certificate holders NOK 192 mill. Primary Capital NOK 788 mill. Dividend NOK 1.1 NOK 65 mill. Equalisation reserve NOK 127 mill. Donations NOK 20 mill. Primary capital NOK 768 mill. Distribution percentage of 33.8% to equity certificate owners * The owner fraction used for the allocation of profit (19.6%) is lower than as of 31 Dec (25.6%) because issued equity counts 10/360 in the weighted owner fraction for the allocation of profit

24 STATUS FINANCIAL TARGETS 2015 Lending growth in retail and corporate markets* Target 6% / 2.5% Status 8.1% / 6.1% Return on equity > 11% 11% Cost development 2% -1.8% Capital accumulation 13.7% 13.7% *Year-on-year growth 24

25 CUSTOMER 2016

26 SIGNIFICANT CHANGES IN FRAMEWORK CONDITIONS - A PERIOD OF GREAT CHANGE WHERE THE NEED FOR CHANGES HAS NEVER BEEN GREATER Changed customer behaviour Tighter regulation SPV Increased digitalisation 26

27 SUBSTANTIAL INCREASE IN THE USE OF NEW CHANNELS Use of Sparebanken Vest's channels Fysisk Bank offices bankkontor Digitale channels kanaler Assistert Assisted selvbetjening selfservice Telefon- Telephone/sms og SMS-bank!Bank offices' refers to the number of over-the-counter transactions at the branch offices; visits relating to advisory services are not included. 'Assisted selfservice' refers to the number of enquiries to the customer centres 27

28 WHILE THERE IS A DECREASE IN THE USE OF OFFICES Change Q Q Q % fewer corporate customers used over-the-counter services 10% of corporate customers used over-the counter services 67% fewer retail customers used overthe-counter services 5% of retail customers used over-the counter services Source: Internal data 28

29 STRATEGIC CHALLENGES VS GOALS - 'CUSTOMER 2016' IS ABOUT MEASURES TO REACH GOALS Consequences for: Organisation Customer focus Strategic challenges Strategic goals Financial targets Customer 2016 Service concepts Distribution Measures and effects Technological goals Expertise needs Staffing Tools Implementation Restructuring and communication

30 Risk Manage ment Operasjo nelle tjenester Personm arked Daglig ledelse CSR Innovasjo n og kundeoppl evelse Bedriftsm arked FOUR MAJOR GROUPS OF MEASURES New organization and new customer service concepts Increased investment in technology Increased impact of technology investments Reduced staffing and adjusted competence

31 CUSTOMER 2016 CHANGES THROUGHOUT THE BANK - TO ENSURE INCREASED CUSTOMER ORIENTATION AND MARKET POWER Changed customer behaviour, increased digitalisation and tighter regulation Requires greater innovation and restructuring Entails increased investment and development costs Which changes the cost structure And requires changes in staffing quantitative and qualitative

32 NEW ORGANISATION GEARED FOR INCREASED CUSTOMER ORIENTATION AND MARKET POWER General management Risk management CSR Operational services Innovation and customer experience Retail market Corporate market The Managing Director will be in charge of Innovation and Customer Experience until the position has been filled. The vacancy will be advertised

33 Datagathering Innovasion Robots Digital development

34 SPV CHANGES ITS CUSTOMER SERVICE TO REMAIN COMPETITIVE OVER TIME Number of branch offices Historical development : 3 offices 2012: 4 offices 2013: 11 offices 2014/15: 9 offices 2016: 9 offices Year År Year År Shift in resources and expertise 100 full-time equivalents out 30 new full-time equivalents in 34

35 OUTLOOK Sparebanken Vest is changing to meet the future Sparebanken Vest will reduce the number of branch offices from 44 to 35 and the number of full-time equivalents by about 100 by the end of Sparebanken Vest's target maximum lending growth for 2016 is 5% in the retail market and 2.5% in the corporate market. Flat cost development in 2016 and 2017 Repricing of the lending portfolio in the corporate market is expected to have effect from the first quarter 2016 Further positive development expected in associated companies The future loss level will largely follow cyclical developments, and is expected to be in the region of NOK mill. in 2016

36 WE ARE HERE

37 PROFIT PERFORMANCE AND RETURN ON EQUITY, Q4 Pre-tax profit Return on equity ,2 13,6 11,1 8,9 10,7 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Profit per equity certificate 1,79 1,88 1,59 1,54 1,31 Book equity per equity certificate 58,7 56,5 58,1 59,4 46,6 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q

38 PRE-TAX PROFIT Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15

39 GROWTH IN THE RETAIL AND CORPORATE MARKETS HIGHER GROWTH IN THE CORPORATE MARKET IN Q4 Retail market Deposits: NOK 41.6 bill. Lending NOK 98.4 bill. Corporate market Deposits: NOK 22.3 bill. Lending NOK 31.6 bill. 8,1 % 10,9 % 6% 5,3 % 2,5 % 2,40% 2,10% 2,10% 0,80% Mål vekst 12 mnd vekst innskudd 12 mnd vekst utlån 4 Kv. vekst innskudd 4 Kv. Vekst utlån Mål vekst -17,2 % 12 mnd vekst12 mnd vekst innskudd utlån 4 Kv. vekst innskudd 4 Kv. Vekst utlån 39

40 CAPITAL ADEQUACY 13,7 % 1,3 % 0,2 % 0,3 % 14,5 % Q4 15 Resultatakkumulering Utbytte Vekst Q4 16

41 RESOURCE ALLOCATION FOLLOWS EXPECTATIONS OF THE FUTURE (2) - FLAT COST DEVELOPMENT GOING FORWARD 4% Costs excl. IT 1305* MNOK -8% IT** 1240 MNOK The cost reduction must be achieved by cutting about 100 full-time equivalents and 9 offices Greater focus on digital services, including 34% increase in investment budget for MNOK *) The 2012 figures are exclusive of non-recurring effects related to pensions totalling NOK 301 million and bonuses in the parent bank. The planned development in the parent bank is exclusive of bonuses. All figures have been revised pursuant to IAS19R. **) IT costs are the total costs of the IT department in the parent bank, including payroll expenses, external fees, ICT costs and other operating costs in the department.

42 PERFORMANCE AND EXPECTATION INDEX ,7 68,6 67,5 67,9 68,8 68,9 66,1 66, ,3 64,5 65,9 63,8 65,4 64,7 64,8 64,9 65,0 63,2 63,3 63,0 62,8 63,2 62,8 62,2 59,1 59,8 61,7 61,6 60,7 57,9 59,8 57,8 57,3 57, Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1 Resultatindeks Forventningsindeks

43 TARGETED COST-CUTTING MEASURES HAVE PRODUCED RESULTS Cost ratio excl. financial instruments As a percentage Full-time equivalents Parent bank 51,6 51, ,3 47, År 2012 År 2013 År 2014 År 2015 År 2012 År 2013 År 2014* År *) 2014 figures adjusted for merger with SPV Eiendomsforvaltning 43