SparebankenØst
SPAREBANKEN ØST
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Sparebanken Øst
Trond Tostrup CEO
Kjell Engen CFO
Sparebanken Øst
Presentation for investors, October 2008
SparebankenØst
SPAREBANKEN ØST
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History
Market area
About the bank
Financials
Liquidity
Risk factors
ICAAP
Agenda
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SPAREBANKEN ØST
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Founded January 11. 1843. Independent savings bank, headoffice in Drammen
Market area: Central eastern Norway, 23 branch offices
Vision: Sparebanken Øst wants to be a leading savings bank insouth-eastern Norway
Moody's rating A1/P1/C
Sparebanken Øst
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SPAREBANKEN ØST
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Primary
Secondary
National (internet)
Market area
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Deposits
Loans
Transaction of payments
Credit cards (not given priority)
Insurance (Life and Non-Life)
Fund products
Products
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"Home turf"
Traditional banking model
Internet supplement
Secondary market
"The Bank with all the banks"
Tailored bricks/mortar and net profilefor growth target groups
National market
Low price internet only
Retail banking and market approach
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DinBANK.no – brand name for low price Internet banking
Targets retail customers in Norway
Adaptation to changing market conditions
Scale advantage, low operating cost
Organized as branch, not subsidiary
Products:
Loans (mortgages within 70 % LTV) totalling 2.28 bill.
Deposits 446.7 mill.
Debit cards
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Wholly-owned subsidiary located in Oslo.
Financing of cars by promissory note.
Share capital NOK 40 mill.
Subordinated debt granted by mother NOK 25 mill
Net loans NOK 880.9 mill as of 30.06.08.
Earnings before taxes NOK 7.4 mill as of 30.06.08.
Retained earnings 2007 NOK 8.5 mill. (No dividends paid.)
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Two new non-life and life insurance companies in Bergen,operating from June 2008.
Owned by 15 independent savings banks:
Sparebanken Vest 44.30%
Sparebanken Øst 14.84%
Fana Sparebank 12.42%
Sparebanken Sør 9.96%
Helgeland Sparebank 8.86%
Other Norwegian savings banks 9.62%
Equity approximately NOK 300 mill.
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Sparebanken Øst aims at sufficient capital adequacy ratio,sufficient liquidity and a strong financial result.
The bank's financial targets – in order of priority – are asfollows:
ROE 11%
Long term funding of illiquid assets 105 %
Capital adequacy ratio 12% (Core 10%)
Loan losses < 0.4% of gross lending
Financial targets
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Assets - Sparebanken Øst group
Assets (MNOK)
30.06.08
30.06.07
Change
Cash and claims on central banks
1,195.3
368.5
+224.4%
Net loans to credit institutions
761.6
669.9
+13.7 %
Loans to and receivables from customers
17,505.3
16,515.2
+6.0 %
Individual write-downs
(44.2)
(47.7)
-7.3 %
Write-downs on groups of loans
(12.4)
(25.9)
-52.1 %
Certificates. bonds and securities
2,914.6
2,176.2
+33.9 %
Shares
- of which Eksportfinans
359.5
176,9
349.9
136,5
+2.7 %
+29,6 %
Intangible assets
5.5
27.1
-79.7 %
Fixed assets
259.4
505.7
-48.7 %
Other assets
43.4
73.4
-40.9 %
Pre-paid costs and accrued interest etc.
123.2
88.0
+40.0 %
TOTAL ASSETS
23,111.2
20,694.3
+11.7%
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Liabilities and equity - Sparebanken Øst group
Liabilities and equity (MNOK)
30.06.08
30.06.07
Change
Liabilities to credit institutions
2,696.4
2,464.8
+9.4%
Deposits from customers
7,493.5
6,723.8
+11.5%
Liabilities through issuance of securities
9,870.2
8,750.4
+12.8%
Other liabilities
478.1
392.4
+21.8%
Incurred cost and prepaid income
305.0
202.5
+50.6%
Provisions for incurred costs and liab.
75.7
74.3
+1.9%
Subordinated loan capital
- of which hybrid capital
657.1
298.7
656.2
298.0
+0.1%
+0.2%
Total liabilities
21,576.0
19,264.4
+12.0%
Paid- in equity
413.2
384.4
+7.5%
Retained equity
1,087.1
978.9
+11.1%
Total equity
1,500.3
1,363.3
+10.1%
Profit for the period after taxes
34.9
66.6
-47.6%
TOTAL LIABILITIES AND EQUITY
23,111.2
20,694.3
+5.2%
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Robust liquidity strategy based on conservative limits
105% long-term financing of illiquid assets
Limited total share of short-term financing
Long survival horizon in case of reduced access to new liquidity
Moody's short term rating: P-1
ALCO - regular meetings in order to assess the liquidity situation
Liquidity
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Liquidity situation as of 30.09.08
Long term liquidity strategy
105 % long term financing of illiquid assets
12 months survival without new funding, 105 % will last until spring2009
Liquid assets
Government, bank and corporate bonds
Adequate limits and deposits with central bank
NOK 1.98 bill. deposit with Norges Bank as of 10th of October
NOK 590 mill. limit Norges Bank
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Funding structure as of 30.09.08
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Credit risk factors
Retail – loans to individuals
Low risk profile
Approximately 90 % of portfolio within 80 % of LTV
All loans to DinBank.no within 70 % of LTV
No significant increase in defaulted loans
Corporates
Moderate risk profile
Stable quality in 2007 and 2008
No significant increase in defaulted loans
Moderate growth particularly within corporates
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Retail – loans to individuals
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Credit risk – Retail portfolio as of 30.09.08
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Loans to customers - Sector and industry as of 30.09.08
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Loans to corporates – Industry concentration as of 30.09.08
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Increase in exposures to corporate customers
30.06.05
30.06.06
30.06.07
30.06.08
Gross loans
3,888.1
3,921.5
3,757.7
3,920.1
Growth
0,85%
-4,18%
4,32%
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Portfolio development – Corporates as of 30.06.08
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SPAREBANKEN ØST
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Real estate companies - ratings as of 30.09.08
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Risk factors corporates - 20 largest exposures
Sum of 20 largest exposures is 1.24 bill. as of 30.06.08
None of these are non-performing
No single exposure larger than 10% of Tier 2 capital.(10% of Tier 2 capital for group equals 188.8 mill.)
Distribution:
MNOK 30.0 – 49.9: Total of 352.4 mill., 8 companies
MNOK 50.0 – 99.9: Total of 514.6 mill., 7 companies
MNOK 100.0 – 199.9: Total of 369.2 mill., 3 companies
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Write-downs and Losses on loans
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Credit risk – total loan portfolio as of 30.09.08
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Securities – bonds, as of 30.09.08
Portfolio amounts to a total of NOK 2,79 bill.
Credit risk profile
Government and banks: low credit risk
Corporates: moderate to high credit risk
Interest rate risk
Low (total)
FX risk
Almost non existent
Spread risk
Moderate to high
50 bp increase: NOK 22 mill. loss
200 bp increase: NOK 87 mill. loss
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Securities portfolio as of 30.09.08
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Securities portfolio – maturity dates, as of 30.09.08
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Syndicated loans to credit institutions – 896,2 mill as of 30.09.08
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Syndicated loans to credit institutions (MNOK) –maturity dates as of 30.09.08
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*Subordinated loan capital on call-date
Liquidity – Maturity profile funding as of 30.06.08
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ICAAP
ICAAP as of 30.06.08
Minimum regulatory requirement. 8,00 %
Capital requirement from ICAAP: 11,15 %
Strategic level Sparebanken Øst: 12,00 %
Actual level Sparebanken Øst:
Tier 2: 14.67 %
Tier 1: 12.54 %
Included a loss from 200 bp spread scenario
Tier 2: 14.22 %
Tier 1: 12.01 %
Stress tests indicate 800 mill loss before 8% requirement isbroken.
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Contact information
Sparebanken ØstSparebanken Øst
Bragernes Torg 2
Box 54
N-3001 DRAMMEN
Phone: +47 91 50 32 20
Fax:+47 32 20 11 65
CEO:Trond Tostrup
Phone: +47 32 20 11 01 / fax +47 32 20 11 67
CFO:Kjell Engen
Phone: +47 32 20 11 57 / fax +47 32 20 11 67
Homepage: http://www.oest.no/
E-mail:firmapost@oest.no
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SPAREBANKEN ØST
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