Presentation Transcript

1. Bransjeseminaromegenkapitalbevis

   Fridtjof Berents
2. «Det er bare ikke nok … det er ikke nok….»
3. Buffer building continues to 2015… *Adjusted for announced equity issues Source: Company reports, Arctic Securities
4. … thoughwith a betterstartingpoint Source: DNB
5. Implications for growth (at least for some)…
6. … And pricing Norwegian mortgage margins (3m mortgage rate vs 3m NIBOR) have increased from December as NIBOR has come down. Banks lowered their mortgage rate (~20bps) following Norges Bank’s rate cut mid-March. Source: Company websites, Norges Bank
7. “Look to Sweden” (if Roosevelt was a banker…) SHB, SWED and NDA reduced rates to customers by 13-15bps late August. Source: Compricer, DI, Riksbank, Arctic Securities
8. Butdon’tforgetthe LCR…
9. … As it is not all about higher funding cost… Møre’s funding gap has declined in recent years, while other saving bank has recorded an uptick *Funding gap = Lending – Equity – Subordinated loan capital - Deposits Source: Company reports, Arctic Securities
10. Though it is important … Maturing pre-crisis funding has a negative impact on saving bank’s NII as funding costs have increased Holding all other effects constant (repricing to customers, increased liquidity portfolio, longer maturity...), refinancing will contribute to a 3-5% negative NII drag compared with today’s level. Our funding model assumes existing covered bonds are refinanced with new covered bonds, while seniors are refinanced with new senior debt. Refinancing effect on NII (as % of NII)
11. With thecheapestsource tapping themarket most often… MORG has been less relianton senior fundingamongothershelped by higherdepositcoverage. The spreadbetweencovered and senior funding has increased in recentyears and now stands at ~100bps Funding profile MING Funding profile MORG Source: Bloomberg, Arctic Securities
12. With more to come (“Manna from heaven”) Norwegian saving banks have transferred a smaller part of total lending to covered bond companies than DNB Source: Company reports, Arctic Securities
13. Costdicipline part of «new normal»…. MORG has a cost/income ratio in the low end compared with peers and roughly in line with the bank’s 50% target Source: Company reports, Arctic Securities
14. Alliance vs. Non-Alliance MING’s Cost/Income ratio is adversely affected by higher share of non-interest related income where the cost level generally is higher (e.g. real estate brokerage and accounting services) Source: Company reports, Arctic Securities
15. With cost development being a function of cost of living … * Adjusted for one-off relating to pension booked in Q2/11, Q4/11 and Q2/12 Source: Company reports, Arctic Securities
16. … at least to some extent… House pricedevelopment in different regions Source:
17. Appendix
18. Around 60% ofloans to private customers Møre’s total loans amounted to NOK 42bn end Q2/12 Important industries in the region include fisheries, fish and fish products, shipbuilding, shipping/offshore, furniture and tourism The region’s strong link to fisheries is evident in the Møre’s lending portfolio with 7% of total loans SMN’s total loans amounted to NOK 101bn end Q2/12 Real estate operations, shipping/offshore and primary industries are among important sectors Lending profile MING Lending profile MORG Source: Company reports, Arctic Securities
19. Depositsremain a vital fundingsource With 63%, Møre has the highest deposits/lending ratio among peers
20. Loan losses among Norwegian banks have beenlowsincemid 2000 We expect loan losses to remain moderate in the medium term among others supported by the low interest rate environment The amount of problem commitments has come down in recent years for both MING and NONG MORG has a somewhat higher share of NPLs than MING Loan losses in % of total loans. Norwegian saving banks.1995-2011. Source: The Norwegian Saving Banks Association, Arctic Securities
21. ROE down compared with pre-crisis levels ROE has come down in the aftermath of the financial crisis as among others banks have boosted their capital position Source: Company reports, Arctic Securities
22. Limited liquidity remains a problem in the saving bank space Over the last year liquidity has improved (vs the 2007-2012 average) as average bid-ask spreads have narrowed somewhat. Source: Bloomberg, Arctic Securities
23. Saving banks liquidity: Volume Average volume in SRBANK has picked up following the transaction to a limited liability company (ASA) Significantly higher trading volumes in SRBANK and MING than other saving bank peers Source: Bloomberg, Arctic Securities
24. Relative performance last 6m: Savings banks vs DNB Saving banks are lagging DNB YTD by over 20 percentage points. Source: Bloomberg, Arctic Securities
25. Savings bank valuation (Arctic estimates) All savings banks trading below book value Source: Factset, Arctic Securities
26. Disclaimer The information and views presented in this presentation are prepared by Arctic Securities ASA (“Arctic”) an investment banking firm domiciled in Norway, under the supervision of The Financial Supervisory Authority of Norway (Finanstilsynet), and member of The Oslo Stock Exchange. This document has been prepared in accordance with the guidelines from the Norwegian Securities Dealers Association. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this presentation may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. 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