sr-bank sr-boligkreditt...sr-bank sr-boligkreditt estimate 2018 2018 impairments 7,6% target 2018...
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SR-Bank SR-Boligkreditt1
SR-BoligkredittSR-Bank
2
Disclaimer
This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance.
Although SpareBank 1 SR-Bank believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors.
Important factors that may cause such a difference for SpareBank 1 SR-Bank include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the regulatory environment and other government actions and (iv) change in interest rate and foreign exchange rate levels.
This presentation does not imply that SpareBank 1 SR-Bank has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided.
SR-Bank SR-Boligkreditt3
2
SR-Bank1
4
3
House market
SR-Boligkreditt
Norwegian economy
5 Appendix
SR-Bank SR-Boligkreditt
SR-Bank at a glance
4
• Second largest Norwegian bank
• Market cap: NOK 22.8 Billion
• Total assets: NOK 234.1 Billion
• Total lending: NOK 201.4 Billion
• Total deposits: NOK 98.8 Billion
• No. of branches: 36
• Employees: 1.178
• 1839: The first bank that today forms part of SR-Bank was established.
• 1976: 24 savings banks merge to form Sparebanken Rogaland.
• 1994: SR-Bank (Sparebanken Rogaland) lists its primary capital certificates on the Oslo Stock Exchange.
• 1996: SR-Bank is one of the founders of SpareBank 1, an alliance.
• 2012: SR-Bank converted from a savings bank to a public limited company (“limited liability savings bank”).
Banks Market share
1 DnB Bank 28.6
2 Nordea Bank Norge (Swedish) 12.0
3 Danske Bank (Danish) 6.1
4 Handelsbanken (Swedish) 5.1
5 SR-Bank 4.7
Source: Finans Norge (2017), Statistics Norway
GDP per capita, EUR
Above 50,000
43,750 – 50,000
Below 37,500
• Norway’s largest export region
• Unemployment rate on national average
SR-Bank’s market area
37,500 – 43,750
SR-Bank SR-Boligkreditt
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
0,0
0,2
0,4
0,6
0,8
1,0
1,2
Dec. 13 Jun. 14 Dec. 14 Jun. 15 Dec. 15 Jun. 16 Dec. 16 Jun. 17 Dec. 17 Jun. 18 Dec. 18
Millio
ns
Mill
ion
s
Volume (# shares) (r.s.)Volume (20 days moving average)(l.s.)
50
60
70
80
90
100
110
120
Dec. 17 Feb. 18 Apr. 18 Jun. 18 Aug. 18 Oct. 18 Dec. 18
Ind
ex 1
00
= d
ec
31
st 2
01
7
OSEBX
SRBANK0,4
0,6
0,8
1,0
1,2
1,4
30
40
50
60
70
80
90
100
110
Dec. 17 Feb. 18 Apr. 18 Jun. 18 Aug. 18 Oct. 18 Dec. 18
p/BN
OK
PriceP/B
SRBANK share
5
Development in Price/Book Relativ share price development
Trading volume development
• International ownership is 26.6 % per 4. quarter 2018.
• Total market value at 4. quarter 2018 is NOK 22.8 billion.
SR-Bank SR-Boligkreditt
Key figures – quarterly development
6
11,4%10,3%
12,3% 12,6%
10,1%
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
Return on equity15,1% 15,0% 14,8% 14,7% 14,7%
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
CET 1
41,0% 42,1% 40,1% 38,9%42,9%
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
Cost to income ratio
2,22,0
2,4 2,5
2,1
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
Earnings per share
SR-Bank SR-Boligkreditt
Key figures – annual development
7
Impairment losses in % of gross loans incl. portfolio in covered bond companies
11,2 %12,4 %
14,0 %
11,7 %10,6 % 10,0 %
11,0 % 11,3 %
2011 2012 2013 2014 2015 2016 2017 2018
Return on equity
8,3 %10,0 %
11,1 % 11,5 %13,3 %
14,7 % 15,1 % 14,7 %
2011 2012 2013 2014 2015 2016 2017 2018
CET 1
50,0 % 49,9 %44,9 %
41,8 % 42,1 % 40,9 % 40,7 % 40,9 %
2011 2012 2013 2014 2015 2016 2017 2018
Cost to income ratio
0,10 % 0,09 % 0,08 %
0,15 %
0,23 %
0,42 %
0,29 %
0,17 %
2011 2012 2013 2014 2015 2016 2017 2018
Impairment losses on loans
SR-Bank SR-Boligkreditt
Estimate 2018 2018
Impairments
7,6%
Target 2018 2018 Target 2019
Growth in loans
4,0 % - 6,0 %
Key figures 2018, financial targets and estimates for 2019
8
*Normalized growth in costs is excluded costs in EiendomsMegler 1, Regnskapshuset SR, FinStart Nordic, Oslo office and moving costs to new head office**Estimate of impairment in 2018 were adjusted from MNOK 400 - 500 to MNOK 300 -400 per 30.06.2018
400 - 500 mill kr**
4,0 % - 6,0 %
324 mill kr
11,0% 11,3% 11,5%
Target 2018 2018 Target 2019
Return on equity
15,0% 14,7% 14,6%
Target 2018 2018 Target 2019
CET 1
50% 50% 50%
Estimate 2018 2018 Estimate 2019
Dividend share
~~
< 3,0 % 2,9 %
3,2 %
1,7 %
Target 2018 2018 Target 2019
Growth in costs
Normalized growth in costs*
< 5,0 %
SR-Bank SR-Boligkreditt
Key figures
9
31.12.2018 31.12.2017 Q4 18 Q3 18 Q2 18 Q1 18 Q4 17
Return on equity after tax (%) 11,3 11,0 10,1 12,6 12,3 10,3 11,4
Net interest margin (%) 1,54 1,52 1,59 1,53 1,52 1,50 1,50
Impairments on loans in % of gross loans incl. covered bond companies
0,17 0,29 0,18 0,12 0,21 0,16 0,26
Loans and financial commitments in Stage 3 in % of gross loans incl. covered bond companies*
1,46 1,13 1,46 1,45 1,54 1,15 1,13
Cost to Income ratio 40,9 40,7 42,9 38,9 40,1 42,1 41,0
Annual growth in loans to customers, gross incl. covered bond companies (%)
7,6 2,6 7,6 6,1 5,0 3,1 2,6
Annual growth in deposits from customers (%) 3,6 11,0 3,6 1,7 6,1 7,0 11,0
Total assets (BNOK) 234,1 216,6 234,1 226,0 224,0 217,4 216,6
Portfolio of loans in covered bond companies (BNOK) 9,3 14,6 9,3 13,4 14,6 14,6 14,6
Risk weighted assets (BNOK) 130,9 120,2 130,9 129,2 126,8 122,8 120,2
Liquidity Coverage Ratio (LCR) (%) 167 168 167 151 157 177 168
Earnings per share (NOK) 8,98 8,16 2,06 2,48 2,41 2,03 2,18
Book value per share (NOK) 82,27 77,24 82,27 80,02 77,28 79,24 77,24
*IFRS 9 has replaced IAS 39 as of 1 January 2018. Figures before 1 January 2018 is total non-performing and impaired loans according to IAS 39 in % of gross loans incl. covered bond companies. Loans in Stage 3 are loans with a significant increase in credit risk since being granted and have objective evidence of a loss on the balance sheet date.
SR-Bank SR-Boligkreditt
Income statement
10
Group Income Statement (MNOK) 31.12.2018 31.12.2017 Q4 18 Q3 18 Q2 18 Q1 18 Q4 17
Net interest income 3.439 3.162 926 871 842 800 819
Net commission and other income 1.437 1.524 350 349 370 368 367
Net income on investment securities 569 634 68 175 213 113 204
Total income 5.445 5.320 1.344 1.395 1.425 1.281 1.390
Total operating expenses 2.229 2.167 576 542 572 539 570
Operating profit before impairments 3.216 3.153 768 853 853 742 820
Impairments on loans and financial commitments 324 543 92 59 99 74 120
Operating profit before tax 2.892 2.610 676 794 754 668 700
Tax expense 596 524 149 160 137 150 141
Net profit 2.296 2.086 527 634 617 518 559
SR-Bank SR-Boligkreditt
Lending and deposit margins
11
*SpareBank 1 SR-Finans AS was merged into SpareBank 1 SR-Bank from 1 January 2017. The figures (lending margins) are therefore not entirely comparable. Lending margins for the corporate market also changed in 2017 compared with what was previously reported due to the internal correction of net interest income.Definition: Average customer interest rate against 3-month moving average for 3-month NIBOR. Lending margins include loan portfolio in covered bond companies
-0,03%
0,04%
-0,08% -0,09%
-0,15%-0,18%
-0,09%-0,06% -0,05%
0,34%
0,24%
0,13%
0,03%-0,01%
0,04%
0,24% 0,22% 0,24%
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
Deposit margins
Corporate market Retail market
2,76% 2,71% 2,71% 2,74% 2,78% 2,74% 2,73% 2,72% 2,77%
1,38%
1,59%1,69%
1,78% 1,79%1,69%
1,50% 1,51% 1,50%
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
Lending margins*
Corporate market Retail market
SR-Bank SR-Boligkreditt
Lending volume and 12 months growth
12
Figures incl. loan portfolio in covered bond companies.
0,2 % 0,8 %1,7 % 2,1 %
3,1 % 3,0 % 2,9 % 3,2 % 3,6 %
0%
5%
10%
15%
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
MN
OK
Retail Market
Volume Growth %
-3,5 % -2,8 % -1,9 %-0,7 %
2,4 %3,8 %
9,6 %
12,2 %
15,7 %
-5%
0%
5%
10%
15%
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
MN
OK
Corporate Market (incl. Capital Markets)
Volume Growth %
SR-Bank SR-Boligkreditt
60,7%
0,0%
0,9%
6,0%
15,9%
5,7%
1,8%
1,6%
1,8%
2,0%
3,4%
63,1%
0,2%
1,0%
4,6%
14,7%
5,3%
2,0%
1,6%
2,3%
2,2%
3,0%
0,0 % 10,0 % 20,0 % 30,0 % 40,0 % 50,0 % 60,0 % 70,0 %
Retail customers
Other
Pub. mgm., financial services and others
Service industry
Commercial real estate
Offshore/Oil and gas
Shipping
Retail trade, hotels and restaurants
Industry and power/water
Supply and construction
Agriculture / forestry / fishing
31.12.2017 31.12.2018
Loan portfolio as at 31.12.2018
13
• Gross loans (incl. covered bond companies) as at 31 December 2018 amount to NOK 201.4 billion compared with NOK 187.1 billion at the same time the year before.
• 12-month growth in loans of 7.6%.
• Loans to retail customers (incl. covered bond company) account for 60.7% of total loans.
Share in SpareBank 1 BoligkredittLoans before impairments, nominal amounts.Sector allocation in accordance with the standard categories from Statistics Norway.
SR-Bank SR-Boligkreditt
Deposits volume and 12 month growth
14
• Last 12 months deposits increased by NOK 3.4 billion to NOK 98.8 billion.
‐ Corresponds to an increase in the period of 3.6%.
• Increased deposit growth in the corporate market (incl. capital market) in 2017 is due to larger deposits from public sector.
‐ Deposit growth is 4.8% at 4. quarter 2018 excl. deposits from public sector.
* Includes also the Capital Markets Division.
-10,0%
14,0%
22,7%24,7%
20,7%
10,0% 8,3%
0,2% 4,4%
-15%
-5%
5%
15%
25%
0
10.000
20.000
30.000
40.000
50.000
60.000
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
MN
OK
Corporate Market*
Volume Growth %
1,8% 1,3% 1,9% 3,2% 3,1% 3,9% 3,9% 3,7% 2,9%
-5%
0%
5%
10%
15%
20%
0
10.000
20.000
30.000
40.000
50.000
60.000
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
MN
OK
Retail Market
Volume Growth %
SR-Bank SR-Boligkreditt
2
118
7499
5992
0,26%0,16%
0,21%0,12%
0,18%
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
Impairments on loans and financial commitments
Impairment on loans and financial commitments, MNOK
Collective impairment on loans, MNOK
Impairment in % of average gross loans incl. from covered bond companies
IAS 39 IFRS 9
Impairments on loans and financial commitments
15
*IFRS 9 Financial Instruments replaced IAS 39 from 1 January 2018.Loans in Stage 3 are loans with a significant increase in credit risk since being granted and have objective evidence of a loss on the balance sheet date. Historical figures are changed due to updated source of data.
555
1.562
2.018
2.816 2.699 2.133
164
166 157
802
1,13% 1,15%
1,54%1,45% 1,46%
31.12.17 31.03.18 30.06.18 30.09.18 31.12.18
Changes in gross loans and financial commitments
Financial commitments in Stage 3, MNOK
Loans in Stage 3, MNOK
Doubtful commitments, MNOK
Non-performing loans, MNOK
Stage 3 in % of gross loans incl. from covered bond companies
Non-performing and doubtful commitments in % of gross loans incl. from covered bond companies
IAS 39 IFRS 9
SR-Bank SR-Boligkreditt
Impairments on loans and financial commitments
16
Impairments in income statement (MNOK) 31.12.2018 31.12.2017 Q4 18 Q3 18 Q2 18 Q1 18 Q4 17
Impairments Corporate customers 324 482 96 62 100 66 89
Impairments Retail customers 0 59 -4 -3 -1 8 29
Change in collective impairments on loans 2 0 2
Net impairments on loans 324 543 92 59 99 74 120
Impairments on loans and financial commitments (MNOK) 31.12.2018 31.12.2017 31.12.2018 30.09.2018 30.06.2018 31.03.2018 31.12.2017
Impairments Corporate customers 1168 546 1168 1300 1274 1221 546
Impairments Retail customers 166 93 166 167 192 184 93
Collective impairments on loans 678 691
Total impairments on loans and financial commitments 1.334 1.317 1.334 1.467 1.466 1.405 1.330
IFRS 9 Financial Instruments replaced IAS 39 from 1 January 2018.
SR-Bank SR-Boligkreditt
14,7 % 15,1 % 14,7 %
15,6 % 16,0 % 15,9 %
17,5 % 17,9 % 17,6 %
4,5 % 4,5 %
2,5 % 2,5 %
3,0 % 3,0 %
2,0 % 2,0 %
2,0 % 1,7 %
1,0 % 0,9 %
2016 2017 2018 2018 1. kv. 2019
Ren kjernekapitaldekning i % Kjernekapitaldekning Kapitaldekning
CET 114,6 %
1Q 2019
Solid capital ratio
17
Management buffer
Pillar 2
Countercyclical buffer
Systemic risk buffer
Capital conservation buffer
The regulatory minimum requirements
ROE 11,0 %
ROE 10,0 %
ROE 11,3 %
CET 115,0 %
• SR-Bank is compliant with regulatory capital requirements as at 31.12.2018.
• SR-Bank’s Pillar 2 requirement has been set at 1.7%, with effect from 31 March 2019.
• In 2019, the Basel I-floor is expected to be removed and a discount for small and medium-sized loans will be introduced. Calculated positive effect for CET 1 is 1.3%.
• The countercyclical buffer will increase from 2.0% to 2.5% in the fourth quarter of 2019.
• SR-Bank is not defined as a systemically important financial institution (SIFI).
‐ The Financial Supervisory Authority of Norway has recommended that all undertakings that lend more than 10% of their total lending to the corporate market in one or more defined regions should be regarded as systemically important. SR-Bank ASA is covered by this proposal.
• The leverage ratio was 7.7% as at 31 December 2018, well above the minimum requirement being discussed and recommended internationally.
CET 1 capital ratio Tier 1 capital ratio Capital ratio
SR-Bank SR-Boligkreditt
Solid capital
18
Peer figures as at 31 December 2018
7,7 %7,5 %
5,1 % 5,1 % 5,1 %
4,4 %4,6 %
SR-Bank DnB Nordea SEB Swedbank SHB DanskeBank
Leverage ratio
55,9 %
40,9 %
28,3 % 27,9 % 28,4 %
23,8 %
20,9 %
SR-Bank DnB Nordea SEB Swedbank SHB DanskeBank
Risk weighted density
SR-Bank SR-Boligkreditt
Main features from Ministry of Finance regulation based on «BRRD»:
• Requirements enter into force 1 January 2019.
• Issuers shall be fully MREL compliant by 31 December 2022.
• The FSA will set requirements individually for each bank.
• Total capital requirement including MREL = (P1 + P2 + Combined buffer requirements) x 2 - Countercyclical buffer x 1.
• Covered bonds issuers are exempt from MREL, also when the owning bank is consolidating. The FSA states, however, that the exposure the owning bank has towards the covered bonds issuer will be included when setting MREL requirements.
Uncertain outcome for SR-Bank:
• Negotiations in the EU on «BRRD2» suggest a maximum level of MREL and compliance of requirements by 31 December 2024.
• Removal of the Basel I-floor and introduction of a discount for small and medium-sized loans will reduce risk-weighted assets.
• Should SR-Bank be defined as systemic important the MREL-requirement will increase with 4 percentage points.
MREL
19
MREL based on Ministry of Finance
Recapitalizationamount
Loss absorptionamount
SR-Bank SR-Boligkreditt
Funding
20
‐ NSFR* 121%
‐ LCR** 167%
‐ NOK 11.6 billion net refinancing need over the next 12 months
‐ Deposits to loans ratio 51,4%
*The net stable funding ratio (NSFR) is defined as available stable funding relative to necessary stable funding. NSFR is calculated in accordance with guidelines from the Financial Supervisory Authority of Norway.**High quality liquid assets divided by total net cash outflow in a 30-day, serious stress scenario.
Annual funding maturity
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
18,0
20,0
22,0
2019 2020 2021 2022 2023 2024 2025 2026+
NO
K B
illio
n
Funding ex. CB Covered Bonds
SR-Bank SR-Boligkreditt
An established borrower in the Euromarket
21
Issuer / Ticker Coupon Amount Maturity ISIN
SR-Bank / SRBANK 2,125% EUR 500mn 27-February-2019 XS0965489239SR-Bank / SRBANK 2,125% EUR 500mn 03-February-2020 XS0876758664SR-Bank / SRBANK 2,125% EUR 750mn 14-April-2021' XS1055536251SR-Bank / SRBANK 0,375% EUR 500mn 10-February-2022 XS1516271290SR-BOL / SRBANK 0,500% EUR 500mn 28-September-2020 XS1297977115SR-BOL / SRBANK 0,125% EUR 750mn 8-September-2021 XS1429577791SR-BOL / SRBANK 0,750% EUR 600mn 18-January-2023 XS1344895450SR-BOL / SRBANK 0,375% EUR 500mn 3-October-2024 XS1692489583SR-BOL / SRBANK 0,750% EUR 750mn 17-October-2025 XS1894534343SR-BOL / SRBANK 2,500% USD 600mn 12-April-2022 XS1596016847SR-BOL / SRBANK Nibor3m+34 NOK 5.000mn 25-November-2019 NO0010779176SR-BOL / SRBANK Nibor3m+35 NOK 5.000mn 10-September-2020 NO0010740152SR-BOL / SRBANK Nibor3m+29 NOK 5.000mn 17-November-2022 NO0010841380
SR-BOL / SRBANK Nibor3m+29 NOK 5.000mn 29-May-2023 NO0010823255
-15
-5
5
15
25
35
45
55
-15
-5
5
15
25
35
45
55
Bp
s.
Bp
s.
Senior UnsecuredNDASS 3¼ 07/05/2022
SHBASS 2⅝ 08/23/2022
SRBANK 0 ⅜ 02/10/22
DNBNO 4¼ 01/18/2022
-15
-5
5
15
-15
-5
5
15
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18
Bp
s.
Bp
s.
Covered BondDNBNO 0¼ 04/18/2023
SPABOL 0⅜ 03/09/2023
SRBANK0 ¾ 01/23
SR-Bank SR-Boligkreditt22
2
SR-Bank1
4
3
House market
SR-Boligkreditt
Norwegian economy
5 Appendix
SR-Bank SR-Boligkreditt23
2
SR-Bank1
4
3
House market
SR-Boligkreditt
Norwegian economy
5 Appendix
SR-Bank SR-Boligkreditt
Housing and mortgage market – Key characteristics
24
Source: Statistics Norway, Ministry of Finance
Mortgage market • Scheduled repayment mortgages: 83.4%, flexible: 16.6%
• Typical maturity: 25-30 years
• First priority security market with high doc. standard
Home ownership • Approx. 80% of households owner occupied (little buy to let)
• Between 50 and 60% are detached one-family houses
Social security • Generous unemployment benefits
• Unemployment benefit represents ca 60% of final salary for 2 years
Regulation • Loan to value: 85% (75% legal limit for cover pool)
o 60 % for secondary home in Oslo
o 60 % for flexible mortgages / revolving credits
• Stress test: 5 % mortgage interest rate increase
• Max total debt of 5x a borrower’s income before tax
Interest payments
• 90-95% of mortgages are variable rate
• Interest rates can be reset at the lender’s discretion, by giving the debtor 6 weeks notice
Tax incentives • 23 % of interest paid is tax deductible
• Low effective real estate tax (lower net worth tax on real estate than financial assets)
Household credit growth (12 months growth rate)
0
2
4
6
8
10
12
2010 2011 2012 2013 2014 2015 2016 2017 2018
Households
SR-Bank SR-Boligkreditt
Housing market - prices
25
Source: Finn.no, Eiendom Norge and Eiendomsverdi
90
100
110
120
130
140
150
160
170
2014 2015 2016 2017 2018
House prices (Index 31 Dec 2013=100)
Stavanger region Bergen Oslo
Norway Kristiansand
-15
-10
-5
0
5
10
15
20
25
30
2014 2015 2016 2017 2018
Index change 12 month (%)
Stavanger region Bergen Oslo
Norway Kristiansand
3.667
4.225
2.946
7.098
4.187
Stavanger Bergen Kristiansand Oslo Norway
Prices by City per Square Meter (EUR)
SR-Bank SR-Boligkreditt
Housing market - drivers
26
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
55.000
60.000
1.000
1.500
2.000
2.500
3.000
3.500
4.000
2003 2006 2009 2012 2015 2018
Norwegian housing market (monthly)
Dwellings started (seasonal adjusted), 6 monthsaverageDwellings completed, 6 months average
Dwellings under construction, right hand axis
Demand Supply Market
4.200
4.400
4.600
4.800
5.000
5.200
5.400
2.200
2.300
2.400
2.500
2.600
2.700
2.800
2003 2006 2009 2012 2015 2018
Norwegian population and employment (in 1000)
Employment Population. Right hand axis
6.000
8.000
10.000
12.000
14.000
16.000
18.000
20.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
10.000
2003 2006 2009 2012 2015 2018
Dwellings for sale, sold and unsold (12 month average)
For sale Sold Unsold. Right hand axis
SR-Bank SR-Boligkreditt
Debt serving burden reduced due to lower interest rates
27
Source: Thomson Reuters Datastream
• Household credit growth has been somewhat higher than growth in
private net disposable income. The household credit to personal
income has therefore increased
• Lower interest rates are dampening cost of debt servicing
• Norwegian households’ debt servicing as a percent of disposable
income are reduced despite growth in housing prices
0
50
100
150
200
250
0
2
4
6
8
10
12
14
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Household credit to personal income and debt-servicing, annual figures
Lending rate (%) Debt servicing to disposable income (%) Credit to disposable income (%), rhs
SR-Bank SR-Boligkreditt28
2
SR-Bank1
4
3
House market
SR-Boligkreditt
Norwegian economy
5 Appendix
SR-Bank SR-Boligkreditt
Overview SR-Boligkreditt
29
• SR-Boligkreditt is a wholly owned subsidiary of SR-Bank and a dedicated covered bond company. Its objective is to purchase mortgages and to finance these by issuing covered bonds.
• Loans are transferred to SR-Boligkreditt as true sale on a non-recourse basis.
• Rated Aaa by Moody’s
- Cover Bond anchor: SR-Bank, rated A1 (negative)
- CR assessment: Aa3, TPI leeway of 4 notches.
- Minimum OC-requirement 0.5 %
- The minimum level of over-collateralization is set at 2 % in SR-Boligkreditt's Covered Bond Programme.
• SR-Boligkreditt has implemented the common Harmonised Transparency Template of the European Covered Bond Council which is available on website: www.sr-bank.no/sr-boligkreditt
SR-Bank SR-Boligkreditt
Eligibility criteria
Type of properties • Primary residential property in Norway (including detached houses, terraced houses, apartments and cooperative housing units)
• The mortgage property shall not be "buy-to-let"• No holiday homes
Collateral • First priority mortgages• Max LTV 75 % or less at the time of transfer (max 60 % for flexible loans/revolving credits)• The valuation of the mortgage property must be no less than 24 months old and carried out by an
independent third party• Quarterly valuation from independent 3rd party
Credit criteria • No adverse credit history the previous year• Probability of default max 2.50 %
Type of products • Amortising loans (straight line or annuity)• Non-amortising loans (Flexible loans/revolving credits)• No fixed rate loans
Loan volume • A maximum loan volume per customer of NOK 12 million (~€1.3 million)
30
SR-Bank SR-Boligkreditt
Cover pool characteristics
Assets/status • 100 % first lien mortgages on Norwegian private residential properties• 100 % performing loans
Cover pool • NOK 62.9 bn: Residential mortgages 58.2 bn (92.5 %), Substitute assets 4.7 bn (7.5 %)
Loans and rate • 34,748 loans at a weighted average interest rate of 2.6 %
Average loan balance • 1,686,952
Weighted average original LTV • 58.9 %
Weighted average current LTV • 59.6 %
Weighted average seasoning • 8.3
Weighted average life • 15.9 years
Principal payement frequency • Amortizing 73.7 %, Non-amortizing 26.3 %
Rate type • 100 % floating rate loans
OC-level • 12.8 %
OC-level if house price drop 20 % • 3.8 %
31
SR-Bank SR-Boligkreditt
Cover pool characteristics
32
100 %
0 %0 %
Loan performance
Performing loans
Delinquent loans (arrears 31 to90 days)
Gross non performing loans(arrears 90 days +)
15,8 %
11,5 %
17,0 %20,4 %
28,3 %
6,6 %
0,4 %
0-40 % 40-50 % 50-60 % 60-70 % 70-80 % 80-100 % 100 % +
Current LTV
2 %
8 %
75 %
12 %
3 %
By geography
Aust-Agder
Vest-Agder
Rogaland
Hordaland
Other
74 %
6 %
15 %
5 %
By property type
Detached House
Semi Detached House
Apartment
Apartment in housingcooperatives
SR-Bank SR-Boligkreditt33
2
SR-Bank1
4
3
House market
SR-Boligkreditt
Norwegian economy
5 Appendix
SR-Bank SR-Boligkreditt
Robust economy supported by a large sovereign wealth fund and a sound framework for annual spending
34
Sources: Statistics Norway, Thomson Reuters Datastream and Central Bank of Norway
Economic Indicators (%) 2011 2012 2013 2014 2015 2016 2017 2018E 2019P 2020P 2021P
GDP mainland, annual change (%) 1,9 3,7 2,3 2,2 1,4 1,1
2,0 2,0 2,7 2,4 2,0
Household consumption, annual change (%) 2,3 3,5 2,8 2,1 2,6 1,3 2,2 2,0 2,4 2,6 2,4
Public consumption, annual change (%) 1,0 1,6 1,0 2,7 2,4 2,1 2,5 1,8 1,7 1,8 1,7
Investment mainland, annual change (%) 5,0 7,4 2,9 0,4 -0,2 10,7 7,0 -0,8 1,9 2,7 1,4
Investment public sector, annual change (%)1,1
-1,8 11,8 4,4 0,2 6,7 3,6 5,2 - 0,6 1,0
Investment offshore oil and gas, annual change (%) 11,4 14,6 19,0 -1,8 -12,2 -16,0 -3,8 3,1 13,2 0,5 0,2
Oil price, USD/bbl. Actual111 112
109 99 53 45 55 72 58
Inflation rate (CPI) % 1,2 0,8 2,1 2,0 2,1 3,6 1,8 2,7 1,8 1,6 1,9
3 month NIBOR % 2,9 2,2 1,8 1,7 1,3 1,1
0,9 1,1
1,3 1,8 2,3
Mortgage rate % 3,6 3,9 4,0 3,9 3,2 2,6 2,6 2,6 2,9 3,2 3,7
Household savings ratio 5,9 7,1 7,4 8,2 10,3 7,1 6,9 6,5 6,7 7,6 8,2
Unemployment rate (registered at labour office)** 2,6 2,6 2,7 2,7 3,0 3,0 2,7 2,4 2,4 2,3 2,3
HH sector real disposable income, annual change (%) 4,1 4,4 3,9 2,9 5,5 -1,7 1,7 1,7 2,5 3,1 2,5
Current account surplus, share of GDP (%) 12,4 12,5 10,3 10,5 8,1 4,0 5,7 9,2 8,4 8,9 9,2
Sovereign Wealth Fund, share of GDP-mainland (%)* 150 160 190 230 270 270 290 290
SR-Bank SR-Boligkreditt
PMI
35
40
45
50
55
60
65
70
Q4
20
14
Q3
20
15
Q4
20
15
Q1
20
16
Q3
20
16
Q4
20
16
Q2
20
17
Q3
20
17
Q4
20
17
Q2
20
18
Q3
20
18
Q4
20
18
Business survey per county. Main index
Agder Rogaland Hordaland Oslo Total Neutral (50)
SR-Bank SR-Boligkreditt
Employment in Norway and the region (Rogaland, Hordaland and Agder)
Public sector 36% (34%)
Manufactoring, extraction (oil and gas and mining 10%
(15%)
Personal services19% (18%)
Retail 13%(13%)
Construction 9% (8%)
Transportation and storage 6% (5%)
Tourism 3% (4%)
Primary industries 3% (2%)Other 1%
(1%)
36
Source: Statistics Norway (2017)
SR-Bank SR-Boligkreditt
Increasing petroleum activity on the NCS in 2019
37
Source: Norwegian Petroleum Directorate / BP Statistical review of World Energy 2017
28%
33%
24%
5%
7%
3%
Global primary energy consumption
0
50
100
150
200
250
300
350
400
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Petroleum activity on NCS
Investments
Operating costs
Other costs incl. expl.
Total
0
20
40
60
80
100
120
140
2014 2015 2016 2017 2018 2019
Break-even
Break even new projects Oil price brent
SR-Bank SR-Boligkreditt
Retail trade increasing in Norway
38
Source: SSB
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Retail sales (excl. auto), annual change in turn-over from same 2-month period previous year
Norge Rogaland Hordaland Agder Oslo
SR-Bank SR-Boligkreditt
Lower unemployment rate
39
Source: NAV og SSB
0
1
2
3
4
5
6
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Norwegian unemployment rate, %, registered (NAV), seasonal adj., monthly
Norway Rogaland Hordaland Vest-Agder Norway, broader measure (SSB AKU)
SR-Bank SR-Boligkreditt
Weak NOK increases competitiveness
40
90
100
110
120
130
140
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Norwegian labour costs relative to trading partners (Index 1995=100)
Measured in domestic currency Measured in common currency
Source: Thomson Reuters DatastreamSource: Central Bank of Norway
5
6
7
8
9
10
11
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Norwegian krone vs key currencies
NOK per USD NOK per EUR
SR-Bank SR-Boligkreditt
Norwegian exports
41
Statistics Norway
26% 26%
10%
8%7%
9%
6%
Oil Gas Fish Machinery andtransportation
Metals Fuels and electricity Chemical products
Norwegian exports 2018 Increase in value of 18 % from 2017 (mainland + 9 %)
SR-Bank SR-Boligkreditt
• Cash flow from the petroleum sector (taxes, ownership) is channeled into the
sovereign wealth fund
• Fiscal spending rule is 3 % of the fund.
Government finances and the sovereign wealth fund
42
Source: Central Bank of Norway
-40.000
0
40.000
80.000
120.000
160.000
1999 2002 2005 2008 2011 2014 2017
Norway BOP and gov't budget (BNOK), quarterly figures
Balance of payments (BOP), current account surplus
Government budget balance (transfer to/from the oil fund)
0%
50%
100%
150%
200%
250%
300%
350%
400%
0
1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
7.000.000
8.000.000
9.000.000
1996 1999 2002 2005 2008 2011 2014
Norwegian oil fund and GDP (BNOK), quarterly figures
Government pension fund global (oil fund) Oil fund to GDP (%), rhs
Oil fund to GDP mainland (%), rhs
SR-Bank SR-Boligkreditt43
2
SR-Bank1
4
3
House market
SR-Boligkreditt
Norwegian economy
5 Appendix
SR-Bank SR-Boligkreditt
Net commission and other income
MNOK 31.12.2018 31.12.2017 Q4 18 Q3 18 Q2 18 Q1 18 Q4 17
Payment facilities 260 262 66 72 59 63 65
Savings/placements 196 198 47 49 48 52 47
Insurance products 189 208 46 47 47 49 52
Commission income real estate broking 382 389 98 94 109 81 94
Guarantee commission 108 107 25 29 20 34 27
Arrangement- and customer fees 99 93 22 17 32 28 28
Accounting services SpareBank 1 Regnskapshuset SR 99 96 24 20 28 27 23
Other 16 22 6 2 4 4 -5
Net commission and other income excl. covered bond companies
1.349 1.375 334 330 347 338 331
Commission income SB1 Boligkreditt and SB1 Næringskreditt
88 149 16 19 23 30 36
Net commission and other income incl. covered bond companies
1.437 1.524 350 349 370 368 367
44
SR-Bank SR-Boligkreditt
Net income on investment securities
MNOK 31.12.2018 31.12.2017 Q4 18 Q3 18 Q2 18 Q1 18 Q4 17
Dividends 12 11 0 0 1 11 0
Investment income, associates 366 425 113 94 102 57 154
Securities gains/losses 65 127 -51 42 69 5 24
- of which capital change in shares and certificates 163 136 11 56 90 6 44
- of which capital change in certificates and bonds -249 -152 -57 -70 -50 -72 -70
- of which derivatives; bonds and certificates 151 143 -5 56 29 71 50
Currency/interest gains/loans* 126 71 6 39 41 40 26
- of which currency customer- and own-account trading 135 104 24 21 48 42 35
- of which value change basis swap spread -38 -32 -33 10 -13 -2 -5
- of which counterparty risk derivatives including CVA 0 2 -1 1 0 0 0
- of which IFRS-effects 29 -3 16 7 6 0 -4
Net income on investment securities 569 634 68 175 213 113 204
45
*On 1 January 2018, the group changed its accounting policies for recognising the effects of basis swaps due to the implementation of IFRS 9. The effects of basis swaps related to contracts signed after 1 January 2018 will be recognised through other comprehensive income.
SR-Bank SR-Boligkreditt
Subsidiaries
Subsidiaries MNOK 31.12.2018 31.12.2017
EiendomsMegler 1 SR-Eiendom AS Number of sales 6.487 6.565
Operating profit before tax 11 27
SR-Forvaltning AS Capital under management (BNOK) 11 11
Operating profit before tax 35 33
FinStart Nordic AS* Operating profit before tax 60 6
SpareBank 1 Regnskapshuset SR AS Operating profit before tax** 4 4
SR-Boligkreditt AS Operating profit before tax 375 273
Other Operating profit before tax -12 -19
Total subsidiaries Operating profit before tax 472 324
46
*In September 2017, SR-Investering AS changed its name to FinStart Nordic AS. Start up on 1 January 2018. The company will be a start-up factory for new ideas and the venture will challenge the bank's own business models.** The result to Regnskapshuset SR includes amortization of intangible assets of NOK 1.9 million (NOK 1.9 million per 31.12.2017).
SR-Bank SR-Boligkreditt
Ownership interests
Ownership interests MNOK 31.12.2018 31.12.2017
SpareBank 1 Gruppen AS Interest ownership 19,5 % 19,5 %
Profit after tax 289 353
Adjusted profit previous years 0 -4
SpareBank 1 Boligkreditt AS* Interest ownership 4,8 % 8,0 %
Profit after tax -3 -25
SpareBank 1 Næringskreditt AS Interest ownership 14,4 % 19,2 %
Profit after tax 9 13
BN Bank ASA Interest ownership 23,5 % 23,5 %
Profit after tax 65 70
SpareBank 1 Kredittkort AS Interest ownership 17,9 % 17,9 %
Profit after tax 23 15
SpareBank 1 Betaling AS** Interest ownership 19,8 % 19,7 %
Profit after tax -11 -7
Adjusted profit previous years -6 -7
Other Profit after tax 0 17
Total ownership interests Profit after tax 366 425
47
*From 1 January 2018, the company has changed its accounting policies for the recognition of the effects of basis swaps due to the implementation of IFRS 9. The effects of basis swaps are now recognised through other comprehensive income in SpareBank 1 Boligkreditt AS and thereby do not affect the company's after tax profit or the group's share of the profit. ** As of 1 November 2018 SpareBank 1 Betaling owns a stock share of 22,04 % in VBB AS, where VBB AS is a result of the fusion between Vipps AS, BankID AS and Bank Axcept AS.
SR-Bank SR-Boligkreditt
Operating expenses
MNOK 31.12.2018 31.12.2017 Q4 18 Q3 18 Q2 18 Q1 18 Q4 17
Total personnel expenses 1.297 1.263 330 322 326 319 333
IT expenses 331 317 85 80 83 83 82
Marketing 88 73 26 22 24 16 20
Other administrative expenses 99 88 26 24 25 24 26
Total administrative expenses 518 478 137 126 132 123 128
Depreciation 82 74 20 17 27 18 17
Operating expenses from real estate 33 34 8 7 8 10 8
Other operating expenses 299 318 81 70 79 69 84
Total other operating expenses 414 426 109 94 114 97 109
Total operating expenses 2.229 2.167 576 542 572 539 570
48
SR-Bank SR-Boligkreditt
Loan to value ratio on home mortgage loans
49
• The proportion of loans with a loan-to- value ratio of less than 85% is high.
‐ 89.1% of the exposure is within 85% of the assessed value of collateral.
In a total-distributed loan to value ratio, the entire loan is allocated to one and the same interval.The figures include the loan portfolio in the covered bond companies (SpareBank 1 Boligkreditt AS and SR-Boligkreditt AS).
60,6%
28,4%
7,2%3,8%
58,8%
30,3%
7,1%3,8%
0%
20%
40%
60%
80%
100%
Below 70 % 70 - 85 % 85 - 100 % Above 100 %
31.12.17 31.12.18
SR-Bank SR-Boligkreditt
Contact details and financial calendar
For further information, please contact:
Morten Forgaard Bjørn Endre Oftedal
Direct line: +47 51 50 94 64 +47 51 50 94 50
Mobile: +47 91 62 14 25 +47 45 24 60 03
E-mail: [email protected] [email protected]
Dag Hjelle Lene Vaaland
Direct line: +47 51 50 94 37 +47 51 50 93 45
Mobile: +47 90 95 00 88 +47 90 62 52 10
E-mail: [email protected] [email protected]
Web-site: www.sr-bank.no/sr-boligkreditt
50
Financial calendar
Q4 18 Interim report 8 February 2018
Q1 19 Interim report 9 May 2019
Q2 19 Interim report 8 August 2019
Q3 19 Interim report 31 October 2019
Postal address:
Bjergsted Terrasse 1, Postboks 250
4066 Stavanger