results - sparebanken sør | rådgivning · results reduced losses q3 and 9 months 2012 . ......

Sparebanken

SØR

%

€ @

Growth

Net interest

Costs

Reduced losses RESULTS Q3 AND 9 MONTHS 2012

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1825 Sparebanken Sør has its origin from 1825, when Arendal Sparebank was set up as one of the first six banks in Norway.

1973 In 1973 the bank merged with four other savings banks in Aust-Agder, and formed Aust-Agder Sparebank.

2012 Sparebanken Sør is an independent savings bank with total assets BNOK 43.2 and 317,1 man-years as at 31. september 2012.

1984 Sparebanken Sør was established in 1984 after a merger between Aust-Agder Sparebank, 2 other savings banks in Aust-Agder and 9 from Vest-Agder.

2007 In 2007 we opened a branch in Bø and 8. october 2008 our first branch in Grenland.

Going forward -> We have supported businesses and people in the region to realize their dreams for more than 180 years, and have thus influenced the local history… As an independent savings bank close to customers and with local decision- making we will continue to be the most important and best bank for the counties of Agder and Telemark.

Aust Agder 108,000 inhabitants 9,212 square km 12 branches

Telemark 169,000 inhabitants 15,299 square km 7 branches

Vest Agder 172,000 inhabitants 7,276 square km 11 branches

Sparebanken SØR

Where you are

http://no.wikipedia.org/wiki/Fil:VestAgder-kommuner.gif

http://no.wikipedia.org/wiki/Fil:Aust-Agder-kommuner.gif

http://upload.wikimedia.org/wikipedia/commons/7/73/Telemarkkommuner.gif

Highlights

Sparebanken SØR Q3 2012

Still solid growth in lending and deposits

Good cost discipline

Targeted work has given redused losses

Positive development in underlying operations

Valuation of financial instruments affects negatively

Key figures - Group

Result Q3 2012 Q3 2011 9M 2012 9M 2011 2011

Net interest and credit commission income

187 162 510 478 631

Net commission income 40 38 122 111 153

Other income 5 9 15 40 38

Operating costs 119 115 365 344 483

Losses on loans, guarantees 10 18 33 64 71

Result ordinary operations 103 76 249 221 268

Valuation fin.instruments - 49 35 - 49 33 57

Pre-tax profit 54 111 200 254 325

Balance Sheet 9M 2012 9M 2011 2011

Net loans 36.152 32.850 33.581

Deposits 20.048 17.911 19.028

Total assets 43.222 40.348 41.860



Increased result from underlying operations

Pre-tax profit incl. financial items Result from ordinary operations

Valuation of financial instruments affects negatively in Q3, but underlying operations shows positive development.

111

71

39

107

54

Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

76

47 69 77

103

Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012


Key figures

2,1 6,1

9,9 11,9

2010 2011 Q3 2011 Q3 2012

Deposit growth (12 months)

6,1 6,9 8,4 10,1

2010 2011 Q3 2011 Q3 2012

0,39 0,05 0,21 0,03

2010 2011 Q3 2011 Q3 2012

1,26 1,16 1,23 1,10

2010 2011 Q3 2011 Q3 2012

Losses as % of net loans

Lending growth (12 months)

Costs as a % of av. total assets

* Costs annualized as % of average total assets

Costs

Costs vs inflation

Costs vs volume Stable development on costs in combination with sound volume growth.

Development on costs lower than inflation.

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Costs KPI-JAE

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Costs Growth total assets

* Source SSB


1,26 1,16 1,23 1,10

2010 2011 Q3 2011 Q3 2012

Cost ratio

Profit and loss

1.218

432

1.382

463

9M 2011 9M 2012 Q3 2011 Q3 2012

Interest income

740

270

872

276

9M 2011 9M 2012 Q3 2011 Q3 2012

344

115

365

119

9M 2011 9M 2012 Q3 2011 Q3 2012

254 111

200 54

9M 2011 9M 2012 Q3 2011 Q3 2012

Operating costs

Interest costs

Pre-tax profit


740

270

872

276

9M 2011 9M 2012 Q3 2011 Q3 2012

1.218

432

1.382

463

9M 2011 9M 2012 Q3 2011 Q3 2012

Interest income

Development - 3 months Nibor Increased volumes and increased margins on loans contributes positively.

NIBOR development gives lower funding costs


Interest income Interest costs

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Net interest Nibor

30.725 30.985 31.243 32.040 32.850 33.581 34.218 35.406 36.152

16.877 17.319 16.612 17.457 17.911 19.028 19.039 20.303 20.048

54,9 % 55,9 % 53,2 % 54,5 % 54,5 % 56,7 % 55,6 % 57,3 % 55,5 %

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Loans Deposits Deposit coverage

Development deposits - loans

Deposit coverage down for the quarter but up from same time last year

* Deposit coverage as % of net loans


Lending and deposit margins

1,87 % 1,93 % 1,86 % 1,68 %

1,51 % 1,50 %

2,11 % 2,23 %

2,40 %

0,53 % 0,35 % 0,35 %

0,47 % 0,57 %

0,48 % -0,05 %

-0,22 % -0,32 %

1,39 % 1,37 % 1,34 % 1,25 % 1,18 % 1,13 %

1,33 % 1,34 % 1,43 %

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Margin on loans Margin on deposits Weighted average

* Margin relative to 3 months NIBOR

Increased lending margins, but still lower deposit margins

1,43 %


166 165 159 157 162 153 156 167 187

1,80 % 1,77 %

1,69 %

1,63 % 1,64 %

1,48 % 1,46 %

1,56 %

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Nominal Net interest

1,73 %

Net interest

* Quarterly net interest annualized as % of average total assets

Approaching previous levels


Costs

125 122 115 114 115 139 121 125 119

1,36 % 1,32 % 1,22 % 1,18 % 1,16 %

1,34 %

1,13 % 1,17 %

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Nominal Cost ratio

* Quarterly costs annualized as % of average total assets ** Normalized, adjusted for AFP in 2010

Cost discipline

1,10 %


Income

162

38

44

Net interest Comm.income Other income

187

40

-44

Net interest Comm.income Other income

Commission income + 5.3 %

Other income – 200.0 %

Net interest + 15.4 %

Q3 2011 Q3 2012

Total 244 MNOK

Total 183 MNOK


Loans

Distribution RBM/CM Distribution Corporate Market

31,4 %

68,6 %

CM RBM

46 %

17 %

9 %

6 %

7 %

5 %

4 % 4 % 2 %

0 %

Commercial properties Building and construction

Wholesale and retail trade Industry

Financial services Sundry/Other industries

Primary industries Transport

Hotel and restaurant Public sector

Well-diversified portfolio that reflects the business activity in the region. So far this year, the largest growth in CM, is in Transport and Wholesale and retail trade.


Lending distribution – development

58,6 % 61,2 % 64,8 % 67,2 % 68,2 % 68,6 %

41,4 % 38,8 % 35,2 % 32,8 % 31,8 % 31,4 %

24,3 % 21,5 %

16,8 % 15,4 % 14,5 % 14,5 %

2007 2008 2009 2010 2011 Q3 2012

RBM CM Commercial properties

Altered ratio between RBM and CM reduces risk in the portfolio

Greater diversification in CM reduces exposure to individual industries


65,3 %

19,5 % 15,2 %

63,6 %

18,1 % 18,3 %

Lowest/low Medium High/highest

2011 2012

90,3 %

6,9 % 2,8 %

91,0 %

5,7 % 3,3 %

Lowest/low Medium High/highest

2011 2012

Risk portfolio

Portfolio according to risk groups RBM

Portfolio according to risk groups CM

RBM Sør has a high proportion of loans with low risk

RBM Sør has a low proportion of loans with high risk

CM Sør has a moderate to high proportion of loans with low risk

CM Sør has a moderate to low proportion of loans with high risk

68.4% of portfolio

31.6% of portfolio


* Increased risk is mainly due to calibration of models

Net non-performing and doubtful commitments

277 321 254 165 193 247 159 245 238

79

100

102

245 222

190

235

183 190

1,16 %

1,36 %

1,14 %

1,28 % 1,26 % 1,30 %

1,15 % 1,21 % 1,18 %

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Non-performing Doubtful Non-performing and doubtful as %

Decrease in Q3 and so far this year


Deposit coverage

Group Group ex Sør Boligkreditt

55,9 54,5 56,7 55,5

2010 2011 9M 2011 9M 2012

68,9 71,9 74,3 73,9

2010 2011 9M 2011 9M 2012

Deposit coverage just below target level at > 56 % but increase ac.to last year

High deposit coverage in Group ex Sør Boligkreditt at ~ 74 %

* Deposit coverage as % of net loans


Equity

Capital/Core capital adequacy ratio Return on equity

14,0 14,2 13,0 13,2

15,5 15,6 14,3

13,2

2010 2011 9M 2011 9M 2012

8,0 10,1

6,4 5,5

9,6

13,2

9M 2011 9M 2012 Q3 2011 Q3 2012

Tier 1 Capital 12.3 % - required > 9 %

Repayment of subordinated loan 300 MNOK in Q1 reduces capital adequacy

Return on Equity 9.6 % so far this year and 13.2 % in Q3 adjusted for valuation of debt

* Return on Equity annualized, with and without financial items


Certificates and bonds

Assets Rating

Total portfolio BNOK 5.8 – Liquidity buffers BNOK 3.3

88 % investment grade – Liquidity buffers 100 % AAA/AA

Gov. 23 %

Local gov. 9 %

CB 43 %

Energy 3 %

Finance 10 %

Ind IG 2 %

Ind HY 7 %

Sub.loans 3 %

AAA/AA 76,0 %

A 11,9 %

BBB 5,1 %

BB 4,1 %

B 2,9 %


Maturity structure - debt

0

250

500

750

1.000

1.250

October November December January February Mars

2012/2013

0

1.000

2.000

3.000

4.000

5.000

2013 2014 2015 2016 2017 2018 >2018

Sparebanken Sør Sør Boligkreditt Gov.repo

Good access to new funding at reasonable market prices. Improved maturity structure provides greater security under volatile market conditions. Funding > 12 months constitutes 86.9 %. Stable maturities on average funding.


Stable access to long-term funding

2012

2011

BNOK Maturity Margin (bp)

3 month NIBOR

Covered bonds 2,2 4,4 55

Senior bonds 2,3 5,5 174

Total 4,5 4,9 115

BNOK Maturity Margin (bp)

3 month NIBOR

Covered bonds 2,5 4,8 55

Senior bonds 3,9 3,4 83

Total 6,4 3,9 72


Summary Q3 2012

Total

Income

Costs

Growth

Funding

Solid improvement of net interest in the quarter

Good cost discipline and positive development on losses

Continued growth in deposits and loans

Easy access to new funding and balanced maturity structure.

Underlying operations shows improvement but valuation of financial instruments reduces the quarterly result.


Future prospects

Macro

Income

Growth

Costs

Regulatory issues

Implemented interest rate increases will also give positive effects in Q4.

Successful set-up and warm welcome in Skien gives expectations of continued growth.

Expectations of some increased costs as a result of initiatives – IRB and Digital channels.

Increased requirements for equity and liquidity buffers are challenging Norwegian banks.

Expectations of continued positive development in Norwegian economy, but the situation i Europe contributes to uncertenty.


Sparebanken

SØR

LOANS

ABCenter

€ SØR MARKETS

We contribute to a better life in the region

INSURANCE

SAWINGS

Norne

Frende Brage

results - sparebanken sør | rådgivning · results reduced losses q3 and 9 months 2012 . ......

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