powerpoint presentation · ratio of deposits to net loans and earnings per share earnings per...
TRANSCRIPT
Q2 RESULTS DNB GROUP
SECOND QUARTER 2015
AS OF 10 JULY 2015
INVESTOR MEETINGS
ZÜRICH & GENÈVE Terje Turnes (CRO)
Jan Erik Gjerland (IR)
Second quarter 2015
Pre-tax operating profit before impairment in NOK billion
7.4 (6.7)
Cost/income ratio in per cent
42.8 (43.8)
Return on equity in per cent
12.1 (12.4)
Common equity Tier 1 capital ratio in per cent (transitional rules)
13.0 (12.1)
Figures in parentheses refer to 2Q14
Earnings per share in NOK
3.04 (2.80)
2
Profit figures Pre-tax operating profit before impairment
NOK million
Pre-tax operating profit before impairment
excl. basis swaps NOK million
Profit for the period NOK million
Profit for the period
excl. basis swaps NOK million
3
6 7227 626
6 964
9 273
7 396
2Q14 3Q14 4Q14 1Q15 2Q15
6 6897 177
6 456
7 462 7 450
2Q14 3Q14 4Q14 1Q15 2Q15
4 553
5 6204 965
6 533
5 062
2Q14 3Q14 4Q14 1Q15 2Q15
4 5295 292
4 5945 211 5 101
2Q14 3Q14 4Q14 1Q15 2Q15
Return on equity and cost/income ratio Return on equity excl. basis swaps 1)
Per cent
Return on equity 1)
Per cent
Cost/income ratio Per cent
Cost/income ratio excl. basis swaps Per cent
1) Return on equity is calculated on the assumption that additional Tier 1 capital is classified as a liability
4
12.4
14.8
12.6
16.1
12.1
2Q14 3Q14 4Q14 1Q15 2Q15
12.314.0
11.712.9 12.2
2Q14 3Q14 4Q14 1Q15 2Q15
43.840.4 42.2
37.0
42.8
2Q14 3Q14 4Q14 1Q15 2Q15
43.941.8
44.1 42.2 42.6
2Q14 3Q14 4Q14 1Q15 2Q15
Ratio of deposits to net loans and earnings per share
Earnings per share NOK
Ratio of deposits to net loans Per cent
5
64.4 64.065.4 65.2 65.0
64.3 63.9 63.5 64.1 64.4
30 June
2014
30 Sept.
2014
31 Dec.
2014
31 March
2015
30 June
2015
2.80
3.45
3.05
4.01
3.04
2Q14 3Q14 4Q14 1Q15 2Q15
The ratio of deposits to net loans excl. short-term money market investments
Customer segments
2 363
872
3 371
2 393
869
2 865
2 402
790
2 414
2Q15
1Q15
2Q14
Personal customers Large corporates and
international customers
Small and medium-
sized enterprises
Pre-tax operating profit after impairment NOK million
6
Development in loans
1 330
1 369
1 491
1 3301 358
1 422
30 June 13 30 Sept. 13 31 Dec. 13 31 March 14 30 June 14 30 Sept. 14 31 Dec. 14 31 March 15 30 June 15
Loans at end of period Loans adjusted for exchange rate movements
NOK billion
7
Development in loans and RWA
NOK billion
8
1 330
1 369
1 491
1 098 1 095
1 141
30 June 13 30 Sept. 13 31 Dec. 13 31 March 14 30 June 14 30 Sept. 14 31 Dec. 14 31 March 15 30 June 15
Loans at end of period RWA
Development in deposits – adjusted for short-term money market investments
849
881
960
849873
906
30 June 13 30 Sept. 13 31 Dec. 13 31 March 14 30 June 14 30 Sept. 14 31 Dec. 14 31 March 15 30 June 15
Deposits adjusted for short-term money market investments
Deposits adjusted for short-term money market investments and exchange rate movements
NOK billion
9
Development in average interest rate spreads
2.322.42 2.42 2.42 2.39
2.31 2.32 2.322.21
(0.24) (0.29) (0.30) (0.29) (0.27)(0.17) (0.15) (0.11)
(0.02)
1.28 1.29 1.30 1.25 1.27 1.25 1.27 1.28 1.28
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Lending spread
Deposit spread
Combined spread
- weighted average
Per cent
10
Development in commissions and fees
NOK million
1 961 2 114 2 113
2 252 2 167 1)
2 482 1)
2Q10 2Q11 2Q12 2Q13 2Q14 2Q15
Sale of insurance products Money transfer and banking services
Asset management and custodial services Investment banking services
Real estate broking Net commissions and fees
+ 14.5% growth
1) The figures for 2014 and 2015 are adjusted for income from public sector activities within life insurance that are in the
process of being wound up.
11
Income statement
12
1st half 1st half
Amounts in NOK million 2Q15 1Q15 4Q14 3Q14 2Q14 2015 2014
Net interest income 8 728 8 587 8 700 8 228 7 867 17 315 15 559
Net commissions and fees 2 489 2 212 2 313 2 229 2 242 4 701 4 426
Net gains on financial instruments at fair value 1 174 3 400 279 1 817 1 132 4 574 3 221
Net financial and risk result, DNB Livsforsikring 158 52 185 136 183 209 288
Net insurance result, DNB Forsikring 153 99 129 121 139 252 241
Other operating income 221 361 446 256 391 582 788
Net other operating income, total 4 194 6 124 3 352 4 560 4 087 10 318 8 965
Total income 12 923 14 711 12 052 12 788 11 954 27 633 24 523
Operating expenses 5 312 5 215 5 045 5 088 5 150 10 527 10 318
Restructuring costs and non-recurring effects 215 223 42 74 83 438 106
Pre-tax operating profit before impairment 7 396 9 273 6 964 7 626 6 722 16 668 14 099
Net gains on fixed and intangible assets 45 12 42 13 (3) 56 (3)
Impairment of loans and guarantees 667 575 821 183 554 1 241 634
Pre-tax operating profit 6 774 8 710 6 184 7 456 6 165 15 483 13 462
Tax expense 1 695 2 130 1 236 1 828 1 600 3 825 3 399
Profit from operations held for sale, after taxes (17) (47) 16 (8) (11) (64) (30)
Profit for the period 5 062 6 533 4 965 5 620 4 553 11 594 10 032
Profit attributable to shareholders 4 952 6 519 4 965 5 620 4 553 11 471 10 032
Net gains on financial instruments
13
1Q15 - 2Q14 -
Amounts in NOK million 2Q15 1Q15 2Q14 2Q15 2Q15
Customer revenues in DNB Markets 573 622 446 (49) 127
Trading in foreign exchange/fixed income/equities in
DNB Markets713 468 337 245 376
Changes in credit spreads on bonds in DNB Markets (132) 140 150 (272) (282)
The bank's own equity investments 12 (193) (29) 206 41
Exchange rate effects, additional Tier 1 capital (191) 170 - (361) (191)
Other mark-to-market adjustments 252 384 195 (132) 57
1 228 1 590 1 099 (362) 128
Basis swaps (54) 1 810 33 (1 864) (87)
Net gains on financial instruments at fair value 1 174 3 400 1 132 (2 226) 42
Change
Net gains on financial instruments at fair value, excl.
basis swaps
7 867
8 728
442
322 90
58 21 (72)
2Q14 Exchange
rate
effects
Lending
and
deposit
volumes
Interest
rate
instruments
Commitment
fees etc.
Lending
and
deposit
spreads
Other
net
interest
income
2Q15
Changes in net interest income
14
From 2nd quarter 2014 to 2nd quarter 2015 NOK million
Changes in net interest income
15
8 587
8 728154 88 24 14 (14) (126)
1Q15 Lending
and
deposit
volumes
Interest
days
Interest
rate
instruments
Other
net
interest
income
Exchange
rate
effects
Lending
and
deposit
spreads
2Q15
From 1st quarter 2015 to 2nd quarter 2015 NOK million
16
Continued growth in net interest income
15,000
20,000
25,000
30,000
35,000
2010 2011 2012 2013 2014
Net interest income
NOK million
Expected lending growth of 3-4
per cent
Stable development in volume-
weighted spreads
Net interest income expectations for 2015
CAGR
8.5%
17 * Personal customers and SMEs, ** Large Corporates and International
Deposit repricing potential across customer
segments
Total = NOK 522 billion
Deposits in retail banking* LCI** maturing volumes and spreads public clients NOK billion, bps
62%
38%
Deposits with repricing potential
Low-yielding deposits / other
7
15
22
-99
-110
-136
2015 2016 2017
Volume Average spread
Total
NOK 536 billion
May March April Average
maturity
4 087 4 194
247 128 (25) (49) (87)
(108)
2Q14 Net
commissions
and fees
Net gains on
other financial
instruments
Net financial
and risk result
from DNB
Livsforsikring
Other
operating
income
Basis
swaps
Profit
from
associated
companies
2Q15
From 2nd quarter 2014 to 2nd quarter 2015
Changes in net other operating income
18
NOK million
6 124
4 194
277 106 17 (104)
(362)
(1 864)
1Q15 Net
commissions
and fees
Net
financial and
risk result from
DNB
Livsforsikring
Other
operating
income
Profit
from
associated
companies
Net
gains on other
financial
instruments
Basis
swaps
2Q15
From 1st quarter 2015 to 2nd quarter 2015
Changes in net other operating income
19
NOK million
20
Sound growth in other quality earnings
Corporate finance
Revenues in NOK million
344 340
551
1Q
13
2Q
13
3Q
13
4Q
13
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
2Q
15
Expect underlying growth of 5% in net commissions and fees
35
46
10
27
2012 2013 2014 Q115
CAGR
55%
22
30
20
27
34
37
2012 2013 2014 Q215
Private banking
Assets under management, NOK billion
New pension products
Assets under management, NOK billion
Investments Deposits
Changes in operating expenses
21
Change in
Amounts in NOK million 2Q15 Change 2Q14 per cent
Total adjusted operating expenses 5 312 162 5 150 3.1
Of which :
Exchange rate effects for units outside Norway 86
Currency-adjusted operating expenses 5 226 76 5 150 1.5
Total adjusted operating expenses 5 312 162 5 150
Income-related costs
Ordinary depreciation on operational leasing 15
Expenses directly related to operations
IT expenses 124
Pension expenses 23
Fees 21
Properties and premises (57)
Other costs 37
Non-recurring effects 215 132 83
Restructuring costs, employees 134 59 75
Other restructuring costs and non-recurring effects 3 (5) 8
IT restructuring 78 78 0
Operating expenses 5 527 294 5 233 5.6
Changes in operating expenses
22
Change in
Amounts in NOK million 2Q15 Change 1Q15 per cent
Total adjusted operating expenses 5 312 97 5 215 1.9
Expenses directly related to operations
IT expenses 100
Properties and premises (17)
Other costs 15
Non-recurring effects 215 (8) 223
Restructuring costs, employees 134 83 50
Other restructuring costs and non-recurring effects 3 (62) 64
IT restructuring 78 (30) 108
Operating expenses 5 527 89 5 438 1.6
Our customers prefer digital banking
Digital 86%
Manual 14%
Savings agreements
Digital, 64%
Manual, 36%
Consumer loans
Digital, 50%
Manual, 50%
Car loans
Digital 11%
Manual 89%
Insurance
Sales digital vs. traditional Share of customer traffic
23
Text message banking:
25 %
Online banking:
30%
Branch office: 1%
Call Center: 2%
Mobile banking:
42%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2013 2014 2015
24
Key takeaways Number of manual transactions in branches
Modernising the way we do banking
• Fundamentally changing the way we
operate our branches:
o Eliminated manual cash handling
o Moving manual banking transactions to digital
channels
• Continued reduction in number of branches
Reduction so far:
67%
Goal:
75%
25
Keeping our best-in-class cost-efficiency position
40
45
50
55
60
65
70
75
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
European banks (top 50)* Nordic peer group DNB
Cost/income DNB vs peer groups Per cent
C/I ambition for 2017
~40%
Combination of
top-line growth and
cost focus
* Based on total assets Source: SNL Financial
26
DNB’s Exposure (EAD*) as of 30 June 2015 =
NOK1912bn**
Commercial real estate 11%
Shipping 7% Logistics
1%
Oil, gas and offshore
7%
Energy 3%
Other corporate customers
6%
Public sector 1%
Fishing and fish farming
2% Trade 3% Manufacturing
5%
Telecom and media
2%
Services 2%
Residential mortgages
43%
Private individuals 7%
*EAD = Exposure at Default
**NOK1912bn is excluding NOK 27.3bn of credit inst exposure
Impairment of loans and guarantees
27
1st half 1st half
Amounts in NOK million 2Q15 1Q15 4Q14 3Q14 2Q14 2015 2014
Personal customers 58 (34) (67) 84 53 24 101
- Mortgage loans (17) (81) (141) 33 (5) (98) (21)
- Consumer finance 75 46 74 51 58 122 122
Small and medium-sized enterprises 284 308 450 165 157 592 222
Large corporates and international customers 425 256 496 18 292 682 511
- Nordic Corporates Division (5) (15) 333 (3) 97 (20) 40
- International Corporates Divison 93 (39) 166 86 (17) 54 39
- Shipping, Offshore and Logistics Division 302 242 (21) (116) 152 544 304
- Energy Division 43 12 5 5 (2) 56 22
- Baltics and Poland 47 50 1 39 53 98 84
- Other units (56) 7 13 8 9 (50) 22
Total individual impairment 767 530 879 267 502 1 298 834
Total collective impairment of loans (101) 44 (58) (84) 52 (57) (200)
Impairment of loans and guarantees 667 575 821 183 554 1 241 634
Total impairment in relation to average volumes
(annualised) 0.18 0.16 0.23 0.05 0.16 0.17 0.10
18.419.5 19.7
20.7
16.4 16.114.9
17.3
13.913.1
1.55 1.50 1.501.38
1.19
1.05 1.01 0.960.83
0.77
31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 March 30 June 30 Sept. 31 Dec. 31 March 30 June
2010 2011 2012 2013 2014 2015
DNB Group As a percentage of net loans
Per cent
NOK billion
1) Includes non-performing commitments and commitments subject to individual impairment.
Accumulated individual impairment is deducted.
Net non-performing and net doubtful loans and
guarantees 1)
28
No visible effect on credit card defaults
29
8.0 %
6.1 %
4.6 %
0%
2%
4%
6%
8%
10%
12%
DNB has a well-diversified oil-related portfolio ~8% of total Group EaD to oil-related portfolios
30
Investment
grade or
similar
20.1
60%
Sub-IG or
similar
5.3
16%
Seismic
1.4
4%
Leveraged
Buyout
(LBO)
6.8
20%
Other
0.1
0%
OSV
23.5
42.6%
Rig
18.0
32.7%
FPSO/FSO
5.2
9.8%
Subsea
constructi
on
4.2
7.9%
Other
3.5
6.6%
OSV: Offshore Service Vessels, F(P)SO: Floating (Production) Storage Offloading.
LNG: Liquid Natural Gas. IG: Investment grade. All figures as at 30 June 2015.
Oilfield Services –
NOK 34bn
(1.7% of total Group EaD)
NOK bn and per cent of NOK 34bn
Oil & Gas exposure –
NOK 74bn
(3.8% of total Group EaD)
NOK bn and per cent of NOK 76bn
Offshore exposure –
NOK 55bn
(2.8% of total Group EaD)
NOK bn and per cent of NOK 55bn
Exploration
&
Production
IG
23.6
32%
Exploration
& Prod.
Sub-IG
4.0
5%
Reserve
Based
Lending
(RBL)
10.1
14%
Exploration
Financing
(EFF)
2.9
4%
Midstream
incl LNG
21.1
28%
Refining &
petchem
11.7
16%
Other
0.9
1%
Oil-related portfolio
- 59% of portfolio is low risk and 37% is medium risk
31
DNB’s oil-related portfolio split by sub-segment in terms of exposure (EaD) and by risk grade
NOK 153bn as at 30 June 2015 (and NOK 160bn as at 31 Mar 2015)
56 63 62 58
14 10 15 14
0.26 0.27 0.26 1.03 0.05 0.02 0.02 0.02
18
18 16
16
25 32
40 35
1.47 0.31 0.30 3.96 0.00 1.17 1.29 1.20
16
20 18
16
6 7
7 6
0.10 0.11 0.75 0.63 0.04 0.00 0.00 0.01
0
20
40
60
80
100
120
140
Sep-14 Dec-14 Mar-15 Jun-15 Sep-14 Dec-14 Mar-15 Jun-15 Sep-14 Dec-14 Mar-15 Jun-15 Sep-14 Dec-14 Mar-15 Jun-15
Grade 1-4 "Low risk" Grade 5-7 "Medium" Grade 8-10 "High" Grade 11-12 "Doubtful & NPL"
Oilfield Services Offshore Oil & Gas
EaD: Exposure at Default, PD: Probability of default. Risk grade system, please see backup slide for details.
DNB's risk classification system, where 1 represents the lowest risk and 10 the highest risk. Figures from Fact book as at
30 June 2015.
30 June 31 Dec. 30 June 31 Dec.
Amounts in NOK billion 2015 2014 2015 2014
Deposits with central banks 159 59 156 54
Due from credit institutions 248 373 545 608
Loans to customers 1 491 1 439 710 723
Other assets 744 779 585 613
Total assets 2 642 2 649 1 996 1 998
Due to credit institutions 229 214 308 269
Deposits from customers 970 942 923 903
Short-term debt securities issued 172 207 172 207
Long-term debt securities issued 604 605 165 160
Other liabilities and provisions 494 523 286 332
Additional Tier 1 capital 8 8
Other equity 166 159 135 128
Total liabilities and equity 2 642 2 649 1 996 1 998
Ratio of deposits to net loans (%) 65.0 65.4 130.0 124.8
Adjusted ratio of deposits to net loans (%) 1) 64.4 63.5 128.7 121.0
Total combined assets 2 939 2 936 1 996 1 998
Currency-adjusted loans to customers 1 479 702
Currency-adjusted deposits from customers 961 913
DNB Group DNB Bank ASA
Balance sheets
32
1) Excluding short-term money market deposits
1) Common equity Tier 1 capital includes 50 per cent of interim profits in all quarters, apart from the leverage ratio figures. Annual figures
are exclusive of dividend payments. A 10 percentage point change in retained earnings corresponds to a 10 basis point change in the
CET1 ratio at end-June 2015
2) The calculations at end-June 2015 have been altered in accordance with the proposed new rules
3) Average weights used by Swedish banks on corporate loans and loans secured by real estate
Common equity Tier 1 capital ratio 1)
33
Leverage ratio Per cent
Estimate applying average weights
used by Swedish banks 3) Per cent
Transitional rules Per cent
Future Basel III estimate Per cent
12.1 12.6 12.7 12.7 13.0
30 June
2014
30 Sept.
2014
31 Dec.
2014
31 March
2015
30 June
2015
5.35.7 6.0 5.7 5.8
30 June
2014
30 Sept.
2014
31 Dec.
2014
31 March
2015
30 June
2015
14.415.0 15.1 14.6 15.0
30 June
2014
30 Sept.
2014
31 Dec.
2014
31 March
2015
30 June
2015
17.318.0 18.3 18.8 19.4
30 June
2014
30 Sept.
2014
31 Dec.
2014
31 March
2015
30 June
2015
2)
2)
Changes in the common equity Tier 1 capital ratio
34
Per cent From 31 Dec 2014 to 30 June 2015
12.7
13.00.5
0.20.1 (0.1)
(0.3)
31 Dec .
2014
50% of profit for
the period
Volume reducing
measures
Other effects Exchange rate
effect on
existing portfolio
Lending growth 30 June
2015
The minimum 14% common equity Tier 1 capital
target by year-end 2016 remains firm
35
Financial restructuring Realisation of capital gains
IRB approvals
(does not apply
under transitional
rules)
Capital-efficient
products Asset disposal
CET 1 ratio CET 1
RWA
Active portfolio
management
The Group’s financial ambitions stay firm
36
Build-up of
adequate
common equity
Tier 1 capital
through dynamic
management of
balance sheet
items
Stable volume-
weighted spreads
Commissions and
fees – underlying
growth of 5 per
cent
Flat nominal costs
in the period
ahead (excluding
restructuring costs
and exchange rate
effects)
Impairment
expected to stay
below NOK 3
billion
– no noticeable
effects from oil
and gas thus far
Q2 APPENDIX
Economic growth in Norway is slowing down
- but the landing is soft and at a comfortable level
38
1.2 %
2.4 %
3.5 %
4.5 %
2010 2011 2012 2013 2014 2015e 2016e 2017e 2018e
Mainland GDP growth Unemployment rate
1) Source: Statistics Norway/DNB Markets forecasts.
Consensus’ forecast GDP’15=1.6%, GDP’16=2.0, GDP’17=2.1%, Consensus’ unemployment 2015e=4.0%, 2016e=4.0%,
2017e=4.3% as of June 2015
GDP growth and unemployment Year on year, per cent
Fiscal policy
Large public wealth gives ample leeway to
smooth business cycles
39 Source: Thomson Datastream, DNB Markets, Norges Bank
Two powerful tools to ensure a stable
macroeconomic development
0
50
100
150
200
250
300
2001 2003 2005 2007 2009 2011 2013 2015e
Structural, non-oil deficit
4 per cent return on the fund
capital
88
National budget structural, non-oil deficit 2015 prices, NOK billion
Monetary policy
Higher interest rates in Norway
than in the rest of Europe
-1
0
1
2
3
4
5
6
7
2008 2010 2012 2014 2016 2018
ECB Sweden Norway
Central bank rates Per cent
Houseprice inflation – Norway - deflated at different levels
40
Houseprice inflation – main cities and Norway - in NOK1000/square meter
41