Interim report Q3 2015
CONTENTS Introduction Financial development Income Expenses Loan impairment charge and loans in default Deposits, loans and balance sheet Summary and future prospects Tables 2
SPAREBANKEN SOGN OG FJORDANE The largest bank in the county of Sogn og Fjordane Total assets of NOK 45,0 billion Merchant bank oriented towards the retail- and corporate banking market 22 sales offices in the county of Sogn og Fjordane + one sales office in Bergen 23 bank in grocery store agreements in Sogn og Fjordane 271 full-time employees Active contributor to the local communities in the county
MARKED LEADER SSF is the largest bank in the county with 22 offices and 23 bank in grocery stores The biggest competitor is Sparebanken Vest with 7 branches Three large national banks and four small saving banks are located in the county
HIGHLIGHTS 30.09.2015 Pre-tax profit of NOK 268 million (407 million) Comprehensive income of NOK 227 million (289 million) Net interest income of NOK 560 million (536 million) Net gain on financial instruments of NOK -6 million (59 million) Operating expenses of NOK 276 million (258 million) Impairment charge of NOK 99 million (24 million) Annualized return equity of 9,3% (12,9%) Figures in brackets refer to corresponding period last year
FINANCIAL DEVELOPMENT 400 Comprehensive income 350 300 250 252 226 289 227 200 150 100 50 0 142 102 The figures illustrate the comprehensive result after taxation for the Group in NOK million
FINANCIAL DEVELOPMENT 120 100 80 60 40 20 0 COMPREHENSIVE RESULT (quarterly) 105 92 93 95 93 88 75 29 60 The figure illustrates the comprehensive result (quarterly) in NOK million.
FINANCIAL DEVELOPMENT Profit before taxation 500 450 400 350 300 250 200 150 100 50 0 231 129 345 308 407 268
CORE BUSINESS (quarterly) 160 140 120 132 121 115 123 135 112 122 120 132 100 80 60 40 20 0 The figure illustrates the result from the core business. Gain/losses from financial instruments and loan impairment charge are excluded.
RETURN ON EQUITY 16,0 % 14,0 % 12,0 % 10,0 % 9,9 % 13,9 % 11,8 % 10,6 % 9,3 % 8,0 % 6,0 % 4,0 % 2,8 % 2,0 % 0,0 % The figure illustrates the return on equity after taxation (comprehensive income)
175 185 176 175 185 189 188 183 189 1,81 1,88 1,79 1,70 1,73 1,76 1,76 1,67 1,68 NET INTEREST INCOME % of avg. total Mill. 2,00 200 1,90 180 1,80 160 1,70 140 1,60 120 1,50 100 1,40 80 1,30 60 1,20 40 1,10 20 1,00 0 The figure illustrates the net interest income in NOK million and as a percent of average total assets.
MARGINS OF LENDING AND DEPOSIT 4,00 Lending margins against 3 months NIBOR 1,00 Deposit margins against 3 months NIBOR 3,50 3,00 3,22 3,34 3,42 3,513,53 3,43 3,323,323,19 3,14 3,23 2,94 3,02 3,11 2,86 0,50 0,51 0,50 0,41 2,50 2,00 1,50 1,00 2,47 2,342,23 2,31 2,422,44 2,41 2,25 2,202,212,23 1,75 1,921,992,15 2,09 1,941,97 1,12 1,06 1,17 0,00-0,50 0,43 0,39 0,32 0,02-0,08-0,05 0,00-0,25-0,42-0,35-0,33-0,31-0,21-0,48-0,48-0,60-0,55-0,54-0,56-0,27-0,29-0,36-0,38 0,50-0,54-0,62-0,60-0,64-0,69-0,78-0,78-0,81-0,82-0,66 0,00-1,00 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13 Q4-12 Q3-12 Q2-12 Q1-12 Q4-11 Q3-11 Q2-11 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13 Q4-12 Q3-12 Q2-12 Q1-12 Q4-11 Q3-11 Q2-11 CM/PS/FS RM CM/PS/FS RM The figures illustrate the average interest towards the customers less the average of 3 months NIBOR (quarterly).
OTHER OPERATING INCOME (quarterly) 40 35 30 35 30 29 31 33 29 30 30 30 0,45 % 0,40 % 25 0,37 % 0,35 % 20 15 10 0,31 % 0,29 % 0,30 % 0,31 % 0,27 % 0,28 % 0,27 % 0,27 % 0,30 % 0,25 % 5 0 0,20 % The figures illustrate other operating income (excl. income from financial instruments) in NOK million and as a percentage of average total assets
TOTAL INCOME (quarterly) 300 278 250 200 201 35 234 30 195 214 29 31 60 223 199 221 224 5 8 5 33 29 30 30 30 150 100 175 185 176 175 185 189 188 183 189 50 0-9 -10-19 -50 Net interest Other operating income Financial instruments
OPERATING EXPENSES AS A % OF INCOME 80,0 % 70,0 % 60,0 % 54,3 % 50,0 % 40,0 % 45,8 % 42,3 % 47,4 % 37,5 % 42,9 % 30,0 % 20,0 % 10,0 % 0,0 % Green part of column refers to time effect implementing AFP
OPERATING EXPENSES AS A % OF INCOME (excl. income from financial instr.) 60,0 % 56,9 % 50,0 % 49,9 % 48,7 % 51,0 % 41,0 % 42,5 % 40,0 % 30,0 % 20,0 % 10,0 % 0,0 % Green part of column refer to time effect implementing AFP
OPERATING EXPENSES (quarterly) 120 1,40 % 106 100 80 60 78 0,81 % 93 91 0,95 % 0,91 % 84 83 0,81 % 0,79 % 1,00 % 96 0,89 % 93 0,85 % 87 0,78 % 1,20 % 1,00 % 0,80 % 0,60 % 40 0,40 % 20 0,20 % 0 0,00 % The figure illustrates the operating expenses as a percentage of average total assets
LOAN IMPAIRMENT CHARGE 100 90 90 85 99 80 70 60 50 40 33 31 30 24 20 10 0 The figures illustrate the development of impairment charge of loans and guarantees in NOK million
LOAN IMPAIRMENT CHARGE 0,50 % 0,40 % 0,30 % 0,32 % 0,28 % 0,25 % 0,20 % 0,10 % 0,10 % 0,09 % 0,06 % 0,00 % The figures illustrates the development in impairment charge of loans and guaranties as a percentage of gross loans (yearly and quarterly). Quarterly numbers are not annualized.
LOANS IN DEFAULT 3,50 % 3,00 % 3,32% 3,15% 3,14% 3,05% 3,11% 2,90% 3,19% 3,10% 2,96% 2,94% 2,78% 2,50 % 2,31% 2,00 % 1,50 % 1,27 % 1,15 %1,14 %1,14 % 1,11 % 1,02 % 1,12 % 1,03 %1,04 %1,03 %1,02 % 1,00 % 0,81% 0,79 % 0,50 % 0,24 %0,21 %0,23 % 0,28 % 0,25 % 0,19 % 0,23 % 0,28 % 0,37 % 0,24 %0,24 % 0,17 % 0,19 %0,19 % 0,00 % RM CM/P S/FS TOTAL The figure illustrates the quarterly development of loans in default (more than 90 days) as a percentage of gross loans to the respective sectors (RM and CM/PS/FS)
TOTAL ASSETS 50,0 45,0 40,0 35,0 32,8 35,2 37,1 39,6 42,6 45,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 2010 2011 2012 2013 2014 Q3.15 The figure illustrate the development of total assets in NOK billion
LOANS - DEPOSITS 45,0 64,00 % 40,0 62,00 % 35,0 30,0 25,0 58,01 % 58,23 % 58,29 % 59,19 % 59,87 % 59,33 % 60,00 % 58,00 % 20,0 15,0 10,0 5,0 34,8 32,7 28,9 30,5 16,8 17,8 19,0 20,6 37,5 39,4 22,4 23,4 56,00 % 54,00 % 52,00 % 0,0 2010 2011 2012 2013 2014 Q3.15 Gross loans Deposits Deposit as a % of gross lending 50,00 % The figure illustrates the 12 months development of gross loans and deposits in NOK billion
3,4 % 5,8 % 6,2 % 6,9 % 7,0 % 6,6 % 7,6 % 8,9 % 7,3 % 8,3 % 15,1 % 18,6 % LOANS - DEPOSITS (growth) 20,0 % 18,0 % 16,0 % 14,0 % 12,0 % 10,0 % 8,0 % 6,0 % 4,0 % 2,0 % 0,0 % 2010 2011 2012 2013 2014 Q3.15 Gross loans Deposits The figure illustrates the yearly growth. The percentage for the quarter is the growth for the past12 months.
10,1 10,5 10,8 24,0 26,3 28,6 34,1 36,8 39,4 LOANS TO CUSTOMERS 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 Gross loans RM CM/PS/FS Q3.13 Q3.14 Q3.15 The figure illustrates the mixture and development of gross loans to the respective sectors (RM and CM/PS/FS)
LOANS BY SECTOR 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % 34,1 % 31,5 % 29,7 % 28,4 % 27,5 % 65,9 % 68,5 % 70,3 % 71,6 % 72,5 % 2011 2012 2013 2014 Q3.15 RM CM/PS/FS
8,0 9,6 9,2 12,0 13,0 14,2 19,9 22,6 23,4 DEPOSITS FROM CUSTOMERS 25,0 20,0 15,0 10,0 5,0 0,0 Total deposits RM CM/PS/FS Q3.13 Q3.14 Q3.15 The figure illustrates the mixture and development of deposits from the respective sectors (RM and CM/PS/FS)
GROSS LOANS - FUNDING 100 % 90 % 80 % 38,4 % 33,5 % 26,1 % 22,1 % 19,0 % 19,1 % 70 % 60 % 3,6 % 8,2 % 15,6 % 18,7 % 21,1 % 21,5 % 50 % 40 % 30 % 58,0 % 58,2 % 58,3 % 59,2 % 59,9 % 59,4 % 20 % 10 % 0 % 2010 2011 2012 2013 2014 Q3.15 Deposits Covered bonds Others The figure illustrate how gross loans are funded
CAPITAL ADEQUACY RATIO 18,0 % 16,0 % 14,0 % 12,0 % 10,0 % 12,9 % 10,9 % 13,8 % 1,1 % 11,2 % 15,5 % 15,6 % 14,6 % 14,4 % 1,0 % 0,6 % 2,2 % 2,1 % 1,4 % 1,4 % 0,0 % 13,2 % 12,2 % 12,4 % 0,0 % 13,5 % 8,0 % 6,0 % 4,0 % 2,0 % 0,0 % 2010 2011 2012 2013 2014 At Q3.15 Core tier 1 capital Hybrid capital Subordinated dept
MATURITY STRUCTURE OF FUNDING.000.500.000.500.000.500.000 500 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Senior bonds and commercial papers Loans from other credit institutions incl. central bank Covered bonds Subordinated debt and hybrid capital (call date) The figure illustrates the maturity structure for the different sources of funding (NOK million)
12000 LIQUIDITY BUFFER Liquidity buffer including current reserve capacity for issuing covered bonds Liquidity buffer 10000 8000 6000 4000 2000 0 sep 15 okt 15 nov 15 des 15 jan 16 feb 16 mar 16 apr 16 mai 16 jun 16 jul 16 aug 16 sep 16 okt 16 nov 16 des 16 jan 17 feb 17 mar 17 The figure illustrates the liquidity buffer given no new funding and growth in customer deposits and loans according to plan
SUMMARY AND FUTURE PROSPECTS Comprehensive income at Q3 2015 lower than at Q3 2014 Mainly due to: Higher loan impairment charge arising from one loan to a company in the oil sector Lower contributions from shares Underlying performance of banking operations in line with expectations Good development in net interest income Deposits and loans to customers rose solidly, in both RM and CM Expenses rose more than in the past Reflects decision to invest heavily in new IT solutions Operating expense ratio of 42.5% Return on equity 9.3% annualised Capital adequacy ratio 15.6% Satisfactory capital adequacy ratio, solid growth, good customer margins and a strong market position Good position to continue growing and developing
KEY FIGURES PROFIT AND LOSS INCOME STATEMENT 30/09/2015 30/09/2014 31/12/2014 Net interest income 560 536 726 Dividends and gains/losses on financial instruments -6 59 63 Other operating income 90 93 122 Operating expenses 276 258 364 Profit/loss before loan impairment charge (incl. securities) 367 430 547 Profit/loss before loan impairment charge (excl. securities) 374 372 484 Loan impairment charge 99 24 73 Profit/loss before taxation 268 407 474 Tax expense 74 98 111 Profit/loss after taxation 194 308 363 Other comprehensive income 33-20 -46 Comprehensive income 227 289 318
KEY FIGURES BALANCE 30/09/2015 30/09/2014 31/12/2014 BALANCE SHEET Assets Gross loans and advances to customers 39,435 36,760 37,485 Impairment provisions 283 180 190 Security investments (shares, commercial paper and bonds) 5,105 5,289 4,252 Debt and equity Deposits from and debt to customers 23,396 22,631 22,443 Debt securities and debt to credit institutions 16,856 15,279 15,711 Equity 3,446 3,240 3,269 Total assets 45,000 42,584 42,609 Average total assets 43,949 41,169 41,571
KEY FIGURES KEY FIGURES Profitability Net interest income as a % of average total assets 1.70% 1.74% 1.75% Dividends and gains/losses on financial instruments -0.02% 0.19% 0.15% Other operating income (excl. inc. from fin. instr.) as a % of average total 0.27% 0.30% 0.29% assets Operating expenses as a % of average total assets 0.84% 0.84% 0.88% Profit/loss before impairment charge as a % of average total assets 1.11% 1.39% 1.32% Profit/loss before tax as a % of average total assets 0.81% 1.32% 1.14% Comprehensive income as a % of average total assets 0.69% 0.93% 0.76% Oper. exp. as a % of oper. income excl. inc. from fin. instr. 42.53% 40.95% 42.93% Oper. exp. as a % of oper. income incl. inc. from fin. instr. 42.94% 37.47% 39.95% Impairment charge as a % of gross loans 0.25% 0.06% 0.20% Return on equity before tax 10.93% 18.11% 15.84% Return on equity (comprehensive income) 9.26% 12.86% 10.61% Financial strength Capital adequacy ratio 15.64% 15.05% 15.45% Core capital adequacy ratio 13.51% 13.66% 13.23% Core Tier 1 capital adequacy ratio 13.51% 12.37% 13.23% Equity ratio 7.66% 7.61% 7.67% Balance sheet history Growth in total assets (year-on-year) 5.67% 10.67% 7.74% Growth in gross customer lending (year-on-year) 7.28% 7.85% 7.61% Growth in customer deposits (year-on-year) 3.38% 13.69% 8.85% Deposits as a % of consolidated gross lending 59.33% 61.57% 59.87% Deposits as a % of parent company's gross lending 83.51% 82.09% 80.72% Employees 30/09/2015 30/09/2014 31/12/2014 Full-time equivalent administrative staff 268 260 266 Full-time equivalent cleaning, canteen staff, etc. 3 3 3
CORE BUSINESS MNOK Q4.13 Q1.14 Q2.14 Q3.14 Q4.14 Q1.15 Q2.15 Q3.15 Net interest income 185 176 175 185 189 188 183 189 Net commision income 23 22 22 23 22 23 20 22 Other income 7 8 9 10 7 7 10 8 Operating expenses 93 91 84 83 106 96 93 87 Basic operations before imp. charge 122 115 122 135 112 122 120 132 Loan impairment charge 12 7 8 9 50 7 5 87 Basic operations after imp. charge 110 108 114 126 62 115 115 45 Excl. dividends and changes in values of financial instruments