bond investor presentation - dnb · 1,757 1,806 1,981 1,935 1q09 1q10 1q11 1q12 1q13 1q14 net...
TRANSCRIPT
DNB GROUP Rune Bjerke (CEO) 16 May 2014
Bond Investor presentation
Requirement
Setting direction towards 2016
Return on equity
above12 per cent
CET1 capital ratio
13.5-14.0
per cent
Target
2
Our portfolio is well diversified
3
Pre-tax operating profit before impairment (NOK bn)
DNB delivers healthy profit
4
Pre-tax operating profit before impairment in NOK billion 7.4 (5.1) Cost/income ratio in per cent 41.3 (52.0)
Return on equity in per cent
15.5 (10.0)
Common equity Tier 1 capital ratio in per cent (transitional rules) 11.9 (10.6)1)
Figures in parentheses refer to 1Q13 1) Including 50 per cent of profit for the period 5
Results from first quarter of 2014 confirm the positive trend
Earnings per share 3.39 (1.96)
Growth in all customer segments
6 08.05.2014
Annualised 1Q growth of 2.5% for lending and 9% for deposits NOK billion
7
Lending Deposits
1 298
1 341 1 344
1 306
1 315 1 324
31March
30June
30Sept.
31Dec.
31March
30June
30Sept.
31Dec.
31March
2012 2013 2014 Loans at end of period Loans adjusted for exchange rate movements
811
868900
816845
881
797
854874
31March
30June
30Sept.
31Dec.
31March
30June
30Sept.
31Dec.
31March
2012 2013 2014 Deposits at end of period Deposits adjusted for exchange rate movements
Ambition of 3-4 per cent annual lending growth maintained
Combined spread down due to higher volume growth in deposits than lending Per cent
8
1.831.98 2.01
2.18 2.212.32
2.42 2.42 2.42
0.04(0.11) (0.13)
(0.27) (0.30) (0.24) (0.29) (0.30) (0.29)
1.16 1.18 1.18 1.22 1.201.28 1.29 1.30 1.25
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
Lending spread
Deposit spread
Combined spread- weighted average
DNB expects stable combined spreads
1,757 1,806 1,981 1,935
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14Net commissions and fees Corporate finance, credit and securities broking etc.
Asset management and custodial services Real estate broking
Money transfer and banking services Sale of insurance products
1 9562 185
Upward trend in commissions & fees – especially the “capital light” products/services are growing
9
NOK million
+12% growth
The cost-income-ratio is now below 45 per cent
10
48,3 47,6 47,1
49,1
45,7
41,3
2009 2010 2011 2012 2013 1Q 2014
Underlying nominal costs are expected to be stable in the period up to 2016, and the Group’s cost/income ratio will remain highly competitive
Positive development in asset quality – decline in net non-performing and net doubtful loans and guarantees 1)
11
19.1 18.419.5 19.7 19.9
23.3 22.920.7
16.4
1.711.55 1.50 1.50 1.48
1.71 1.701.38
1.19
1.050.88
1.10 1.16 1.101.37 1.39
1.100.91
31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 March 30 June 30 Sept. 31 Dec. 31 March
2009 2010 2011 2012 2013 2014
Baltics and Poland
DNB Group excl. Baltics and Poland
As a percentage of net loans
As a percentage of net loans excl. Baltics and Poland
Per cent
NOK billion
1) Includes non-performing loans and guarantees and loans and guarantees subjectto individual impairment. Accumulated individual impairment is deducted.
Positive development in impairment levels driven by shipping recoveries and strong underlying development
12
Credit quality will improve further, and losses are expected to be well below normalised levels
NOK millions.
Positive development in impairment levels driven by shipping recoveries and strong underlying development
13
Credit quality will improve further, and losses are expected to be well below normalised levels
NOK millions. Per cent
On track to reach all required capital levels - Comparison with Nordic Peers
14
5.2
3.8 4.3
3.7 3.7 3.8
9.7
7.6
6.4 5.5
6.7 6.8
11.9 10.8 10.3
8.9
10.5 11.3
14.2
15.7
18.3 19.5
14.6 14.0
Common equi ty tier1 /total assets ("leverage ratio") Common equity tier1 /to tal lending Common equity tier1 ratio transitional rules Common equity tier1 ratio Basel III
Per cent
1) DNB's risk weights are conservative set due to requirements from the Norwegian FSA. Applying average risk weights on mortgages and corporate portfolio as used by Swedish peers, the CET1-ratio would increase by approximately 3.3%-points.
17.51)
DNB SEB Swedbank Handelsbanken Nordea Danske bank
75%
85%
95%
105%
115%
125%
135%
2003 2005 2007 2009 2011 2013
DNB has Significantly Improved The Long Term Funding Structure Since the Financial Turmoil Started in 2007
Average life of long term funding (Senior debt and covered bonds)
Share of stable long-term funding*
* Deposits from customers, subordinated debt, covered bonds and senior debt > 12 months residual maturity.
128%
2,4
4,4
1
2
3
4
5
2008 2009 2010 2011 2012 2013 2014
15
Strong Growth in Deposits
Percent
16
Issuance of Long Term Debt - Significantly reduced needs compared with 2011 / 2012
17
2014 NOK mrd Løpetid
OMF / Covered Bonds 14,5 7,2Senior 14,6 5,4Sum 29,1 6,3
Ansvarlig lån 0,0 0,0Totalt 29,1 6,3
2013 NOK mrd Løpetid
OMF / Covered Bonds 59,7 6,3Senior 12,6 5,6Sum 72,3 6,2
Ansvarlig lån 7,5 5,0Totalt 79,8 6,1
2012 NOK mrd Løpetid
OMF / Covered Bonds 60,1 8,0Senior 42,2 6,9Sum 102,3 7,6
Ansvarlig lån 5,5 5,0Totalt 107,8 7,4
LTRO 9,0 3,0
2011 NOK mrd Løpetid
OMF / Covered Bonds 98,3 6,5Senior 27,8 8,8Sum 126,1 7,0
LTRO 15,7 3,0
10.6 %13.6 %
11.4 % 11.7 % 13.2 %15.5 %
2009 2010 2011 2012 2013 1Q 2014
8.5 % 9.2 % 9.4 %10.7 % 11.8 % 11.9 %
2009 2010 2011 2012 2013 1Q 2014
On track towards 2016 targets
Target Return on equity
> 12 per cent
Return on equity
CET 1 capital ratio (transition rules)
18
Requirement CET1 capital ratio
13.5-14.0 per cent
Long term dividend policy 50 per cent
Temporary pay out ratio during capital build up period:
Minimum 25 per cent
DNB’s Large Corporates & Institutions Harald Serck-Hanssen (LCI) 16 May 2014
Investor presentation
Large corporates and international (LCI)
Nordic Corporates
Business Management and Products
SOL International Corporates
Energy
Industries
Geographies
Central Europe Middle East & Africa
Baltic Division
Americas
Asia
Northern Europe 20
Exposure at Default Profit
LCI - Creating more with less
21
Employees Full Time Equivalents* NOK Billion* NOK Million*
3 000
3 500
4 000
4 500
5 000
1Q12 1Q13 1Q14500
600
700
800
900
1Q12 1Q13 1Q14800
1 200
1 600
2 000
2 400
1Q12 1Q13 1Q14
2 4372 610
2 789 2 7422 629
1 8442 028
2 474
2 8552 739
10,0 % 10,4 %12,7 %
14,5 % 13,7 %
1Q13 2Q13 3Q13 4Q13 1Q14
Pre-tax operating profit before impairment
Pre-tax operating profit
REKA
LCI - With steady increase in pre-tax operating profit
BNO
K
22
LCI - Increasing lending margins
Lending = performing loans to customers. Deposits = deposits from customers, principal amount
441 445 454 461 459
331 338 354 361379
2,13 % 2,14 % 2,15 % 2,16 % 2,20 %
-0,17 % -0,19 % -0,19 % -0,17 % -0,17 %
1Q13 2Q13 3Q13 4Q13 1Q14
Lending Deposits Margin Lending Margin Deposits
BNO
K
23
LCI - Stable portfolio quality with reduced concentration of risk
24
376
271
32 17
369
239
40 17
409
245
28 12
050
100150200250300350400450
PD 0.01% - PD 0.75% - PD 3.00% - Net non-perfoming and
net doubtfulcommitments1Q 2012 1Q 2013 1Q 2014
Distribution by Probability of Default Large Corporates and International, NOK billion
Exposure at Default, 30 largest corporates Per cent of large corporates (EAD)
LCI - Reducing net non-performing and net doubtful commitments
25
LCI - Industry sector strategies
26
Shipping, offshore & logistics Energy Seafood
Healthcare Media Telecoms Technology
Retail industries Public sector Service Real estate and construction Finance Manufacturing
industries
Packaging
Global scope
Selective international scope
Norwegian/Nordic/ North European scope
DNB Group with a diversified corporate banking portfolio
27
Commercial real estate 11.8% (11.1%) Shipping
6.3% (7.0%)
Logistics1.0% (1.1%)
Oil, gas and offshore6.2% (6.5%)
Energy3.3% (3.0%)
Other corporate customers
5.2% (6.1%)
Public sector1.5% (1.6%)
Fishing and fish farming
2.4% (2.4%)
Trade2.7% (2.5%)
Manufacturing4.6% (4.2%)
Telecom and media1.7% (1.5%)
Services2.2% (1.9%)
Residential mortgages44.6% (44.6%)
Private individuals6.4% (6.4%)
1) Distribution of exposure at default based on internal segmentation of customers, including net non-performing and net doubtful loans and guarantees. Comparable figures as at 31 March 2013 in parentheses.
Shipping and commercial real estate portfolio is reduced
28
• Rebalancing targets achieved
• Commercial real estate exposure reduced. • Exit from Sweden, Finland and Denmark on track
• Shipping exposure reduced – on track for the 6 per
cent limit in 2015
• Market positions still strong
Shipping and commercial real estate portfolio Per cent of group EAD*
Execution on 2012 guiding
16,5
17,0
17,5
18,0
18,5
19,0
19,5
20,0
DNB’s maritime business is profitable - shipping losses on the way down
29 Maritime business = The LCI division Shipping, Offshore and Logistics (SOL)
SOL’s Pre-tax operating profit Shipping, Offshore and Logistics, NOK million
LCI - The shipping, Offshore and Logistic (SOL) portfolio is diversified
30
Chemical and product tankers; 7,4%
Container; 12,8%
Crude oil tankers; 9,8%
Cruise; 4,1%
Dry cargo; 10,7% Gas; 13,4%
Logistics; 4,3%
Offshore; 23,9%
Other non-shipping; 7,3%
Other shipping; 3,0% RoRo/PCC; 3,3%
Exposure at default according to sector1)
And from a macro perspective, things are looking better
31
LCI - Robust Energy Portfolio
• Total DNB Group exposure (EAD) to the energy sector per 1Q14 is NOK 131,9 billion
• Our portfolio is well diversified, has high credit quality and is profitable
• DNB’s oil and gas related portfolio is robust enough to tolerate oil prices well below current forward curve levels
• Consistent high return on allocated capital • Globally, the energy outlook is positive with
significant levels of investments expected in the coming years
Midstream
Oil and gas
Oilfield services
Power and heat
Other energy
Capital efficient with high returns Well diversified portfolio Energy EAD split per 1Q14, NOK billions
32
LCI - The Baltics and Russia on good track
33
Large corporates and international (LCI) going forward
• Increase customer profitability
– prioritising the right customers
• Increase sale of capital efficient products
• Leverage on industry expertise
34