Industry perspectives Finance Norways Capital Markets Day 10 th of - - PowerPoint PPT Presentation
Industry perspectives Finance Norways Capital Markets Day 10 th of March, 2016 Rune Bjerke, CEO DNB Norwegian banking in a nutshell The financial sector has NOK 5 300 billion in AuM 3% of the work force 7% of GDP 105
Finance Norway’s Capital Markets Day
10th of March, 2016
Rune Bjerke, CEO DNB
1 Source: The Norwegian Savings Banks Association, Finance Norway
2
3 Source: DNB Markets
CET1
Transitional rules, per cent
Leverage ratio
Per cent, per Q4 2015 Large European Banks Nordic peers NONG DNB MORG SRBANK MING 10 8.2 8.2 6.7 6.1 4.7 4.0
– in absolute numbers and compared to peers
5 10 15 Q109 Q111 Q113 Q115
4
– Manageable overall lending exposure
SPOG HELG NONG MORG MING SRBANK DNB
Source: DNB Markets
Non oil-related lending exposure (in % of EaD) at year-end 2015
Per cent Direct oil-related exposure Non oil-related lending exposure 91.2 91.3 95.2 95.8 97.5 100 100
5 Source: Rystad Energy, E24, Wall Street Journal, Statoil
50 57 66 38 77 80 40 50 33 35 59 52 Johan Castberg Gina Krog Johan Sverdrup Ivar Aasen Gudrun Oseberg Future
Price break-even when sanctioned vs March 2016
USD per barrel, Brent blend
– Project break-even levels are significantly down
Average LTV
Per cent
6 Source: Oliver Wyman
– Sound loan-to-value structure and Norwegians pay their debt
Repayment period of mortgage contracts
Number of years on average
Source: Oliver Wyman
18 30 143 22 Denmark Norway Finland Sweden 50 75 63 60 Sweden Denmark Finland Norway
7 Source: DNB Markets Source: Statistics Norway, Norwegian Seafood Export Council
Other industries with strong growth
2014 versus 2015
increase in foreign overnight stays
growth in seafood exports
90 110 130 2003 2007 2011 2015
Relative manufacturing wage costs
Measured in same currency, index 2003 = 100
– other industries ready to step out of oil’s shadow
8
– Regional differences and wriggle room to smooth business cycle
Unemployment rate by county
February 2015 vs. February 2016. NAV1 numbers 200 150 100 50 Britain United States Finland Denmark Sweden Germany Australia South Korea
Norway
Main interest rate Government budget deficit Fiscal space
The wriggle room ranking 2015
1: Norwegian Labour and Welfare Administration. Source: Statistics Norway Source: The Economist
Significant increase in unemployment >5 % Slight increase in unemployment 0 – 5 % Lower unemployment < 0 % Total unemployment: EU: 10.3 % Norway: 4.4 %
9
– A competitive advantage in modern banking
Online banking users
Per cent, 2014 44 49 57 58 82 83 86 89 91 DEN FIN NOR EU-28 GER UK FRA SWE ISL
Source: European Banking Federation
Sale of long-term savings schemes, DNB
# of agreements sold across channels 2014 2013 2015 Branch Digital 53% 47% 76% 24% 87% 13%
10 Source: DNB Markets
Cost/Income ratio
Yearly moving average Norwegian banks, per cent
Source: National banking associations
Number of branches
Nordic countries
*Including 59 branches closing H1’16
40 50 60 2008 2009 2010 2011 2012 2013 2014 Norwegian banks Nordic peers 43.3 48.0 900 1400 1900 2005 2007 2009 2011 2013 2015 Norway* Sweden Denmark Finland
11 Source: Norwegian FSA, Norges Bank, European Banking Federation
Return on equity, Norwegian banks
Annual average in per cent (illustration) 20 15 10 5 2014 2013 2012 2011 2010 2009 2008 2007 ROE EU-28 banks 10-year Government bond Germany 20 15 10 5 2014 2013 2012 2009 2008 2010 2011 2007 ROE Norwegian banks 10-year government bonds
Return on equity, EU 28 banks
Annual average in per cent (illustration)
– Higher, more stable ROE and lower loan losses than European peers
12 Source: Survey Finance Norway, March 2016. Respondents: 62 banks (66 % saving banks, 21 % regional banks, 13 % domestic banks)
– a robust and profitable industry is fairly optimistic going forward
Expected ROE for 2016
Per cent 29 51 20 Decrease Increase Stable
Expected loan loss provisions
Number of respondents 4 34 24 Large decrease Moderate decrease Moderate increase Stable Large increase