Interim report
Q1 2016
CONTENTS
2
Introduction
Financial development
Income
Expenses
Loan impairment charge and loans in default
Deposits, loans and balance sheet
Summary and future prospects
Tables
The largest bank in the county of Sogn og Fjordane
Total assets of NOK 47,2 billion
Merchant bank oriented towards the retail- and corporate banking
market
22 sales offices in the county of Sogn og Fjordane + one sales
office in Bergen
Co-owner and distributor of products from Frende Forsikring and
SB1 Finans
Eigedomsmekling Sogn og Fjordane AS is a wholly-owned
subsidiary
267 full-time employees
Active contributor to the local communities in the county
MARKED LEADER
SSF is the largest
bank in the county
with 22 offices
and 23 “bank in
grocery stores”
The biggest
competitor is
Sparebanken Vest
with 7 branches
Three large
national banks and
four small saving
banks are located
in the county
HIGHLIGHTS 31.03.2016
Pre-tax profit of NOK 72 million (95 million)
Comprehensive income of NOK 63 million (75 million)
Net interest income of NOK 172 million (188 million)
Net gain on financial instruments of NOK -16 million (-19 million)
Operating expenses of NOK 101 million (96 million)
Impairment charge of NOK 9 million (7 million)
Annualized return equity of 7,1% (9,1%)
The whole fee payable to the Norwegian Banks` Guarantee Fund was
expenced in Q1 2016 resulting NOK 15 million in reduced net interest
income. Adjusted numbers are marked in the following slides.
The figures illustrate the comprehensive result after taxation for the Group in NOK million
FINANCIAL DEVELOPMENT
76
94
56
105
75
63
74
0
20
40
60
80
100
120
FINANCIAL DEVELOPMENT
62
134
76
98
95
72
87
0
20
40
60
80
100
120
140
160
CORE BUSINESS (quarterly)
The figure illustrates the result from the core business. Gain/losses from financial instruments and loan impairment charge are excluded.
115
123
135
112
122
120
132
119
97
112
0
20
40
60
80
100
120
140
160
RETURN ON EQUITY
The figure illustrates the return on equity after taxation (comprehensive income)
9,9 %
2,8 %
13,9 %
11,8 %
10,6 %
10,8 %
7,1 %
8,3 %
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
10,0 %
12,0 %
14,0 %
16,0 %
NET INTEREST INCOME
The figure illustrates the net interest income in NOK million and as a percent of average total assets.
176
175
185
189
188
183
189
193
172
187
1,
79
1,70
1,
73
1,76
1,76
1,67
1,68
1,
69
1,48
1,61
0
20
40
60
80
100
120
140
160
180
200
1,00
1,10
1,20
1,30
1,40
1,50
1,60
1,70
1,80
1,90
2,00
Mill. NOK
% of avg. total assets
MARGINS OF LENDING AND DEPOSIT
The figures illustrate the average interest towards the customers less the average of 3 months NIBOR (quarterly).
2,94 2,86
3,223,34
3,14
3,423,51 3,533,43
3,32 3,32 3,19 3,23
3,023,112,99 3,04
1,75
1,921,99
2,15 2,09
2,312,42 2,44 2,41
2,25 2,20 2,21 2,23
1,94 1,97 1,87 1,76 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00
Q
1-12
Q
2-12
Q
3-12
Q
4-12
Q
1-13
Q
2-13
Q
3-13
Q
4-13
Q
1-14
Q
2-14
Q
3-14
Q
4-14
Q
1-15
Q
2-15
Q
3-15
Q
4-15
Q
1-16
Lending margins against 3 months NIBOR
CM/PS/FS
RM
0,02 -0,08 -0,25 -0,48-0,48 -0,60-0,55-0,54-0,56 -0,42-0,35-0,33 -0,31 -0,050,00 0,160,23 -0,21 -0,36-0,38 -0,62 -0,69 -0,78-0,78-0,81-0,82 -0,66 -0,54 -0,60 -0,64 -0,27-0,29 -0,15 0,00 Q 1 -1 2 Q 2 -1 2 Q 3 -1 2 Q 4 -1 2 Q 1 -1 3 Q 2 -1 3 Q 3 -1 3 Q 4 -1 3 Q 1 -1 4 Q 2 -1 4 Q 3 -1 4 Q 4 -1 4 Q 1 -1 5 Q 2 -1 5 Q 3 -1 5 Q 4 -1 5 Q 1 -1 6 -1,00 -0,50 0,00 0,50Deposit margins against 3 months NIBOR
OTHER OPERATING INCOME (quarterly)
The figures illustrate other operating income (excl. income from financial instruments) in NOK million and as a percentage of average total assets
29
31
33
29
30
30
30
31
27
0,29 % 0,30 % 0,31 %
0,27 % 0,28 % 0,27 % 0,27 % 0,27 %
0,23 %
0,00 % 0,05 % 0,10 % 0,15 % 0,20 % 0,25 % 0,30 % 0,35 % 0,40 % 0,45 %
0 5 10 15 20 25 30 35
TOTAL INCOME (quarterly)
176 175 185 189 188 183 189 193 172 187
29 31 33 29 30 30 30
31
27
27
-10
60
-19
8 5
-56
-16 -16 195
214
278
223 199 221 224 168
183
198
-100 -50 0 50 100 150 200 250 300
OPERATING EXPENSES AS A % OF INCOME
56,3 %
38,6 %
47,8 %
44,2 %
48,3 %
55,6 %
51,4 %
0,0 %
10,0 %
20,0 %
30,0 %
40,0 %
50,0 %
60,0 %
70,0 %
80,0 %
OPERATING EXPENSES AS A % OF INCOME
(excl. income from financial instr.)
54,6 %
50,5 %
50,1 %
44,2 %
44,0 %
51,1 %
47,6 %
0,0 %
10,0 %
20,0 %
30,0 %
40,0 %
50,0 %
60,0 %
OPERATING EXPENSES (quarterly)
The figure illustrates the operating expenses as a percentage of average total assets
91
84
83
106
96
93
87
105
101
0,91 %
0,81 % 0,79 %
1,00 %
0,89 %
0,85 %
0,78 %
0,93 %
0,87 %
0,00 % 0,20 % 0,40 % 0,60 % 0,80 % 1,00 %
1,20 %
1,40 %
0 20 40 60 80 100 120
LOAN IMPAIRMENT CHARGE
The figures illustrate the development of impairment charge of loans and guarantees in NOK million
8
6
20
7
7
9
0
5
10
15
20
25
LOAN IMPAIRMENT CHARGE
The figures illustrates the development in impairment charge of loans and guaranties as a percentage of gross loans.
0,03 %
0,02 %
0,06 %
0,02 %
0,02 %
0,02 %
0,00 %
0,01 %
0,02 %
0,03 %
0,04 %
0,05 %
0,06 %
0,07 %
LOANS IN DEFAULT
The figure illustrates the quarterly development of loans in default (more than 90 days) as a percentage of gross loans to the respective sectors (RM and CM/PS/FS)
0,23 %0,28 %0,25 %0,19 %0,23 %0,28 %0,24 %0,24 %0,17 %0,19 %0,19 %0,18 %0,16 % 3,14%
3,05% 3,11%
2,90%
3,19%
2,78%
2,96% 2,94%
3,10%
0,81%
2,31%
3,08%
2,14%
1,14 %1,14 %1,11 %
1,02 %1,12 %1,03 %1,04 %1,03 %1,02 %
0,37 %
0,79 %
1,01 %
0,73 %
0,00 %
0,50 %
1,00 %
1,50 %
2,00 %
2,50 %
3,00 %
3,50 %
TOTAL ASSETS
The figure illustrate the development of total assets in NOK billion
35,2
37,1
39,6
42,6
45,9
47,2
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
50,0
LOANS - DEPOSITS
The figure illustrates the 12 months development of gross loans and deposits in NOK billion
30,5
32,7
34,8
37,5
40,2
40,8
17,8
19,0
20,6
22,4
23,0
23,4
58,23 %
58,29 %
59,19 %
59,87 %
57,24 %
57,25 %
50,00 % 52,00 % 54,00 % 56,00 % 58,00 % 60,00 % 62,00 % 64,00 %
0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 45,0
2011 2012 2013 2014 2015 Q1.16
LOANS - DEPOSITS (growth)
The figure illustrates the yearly growth. The percentage for the quarter is the growth for the past12 months.
5,
8
%
6,
9
%
6,
6
%
7,
6
%
7,
1
%
1,
6
%
6,
2
%
7,
0
%
8,
3
%
8,
9
%
2,
4
%
1,
7
%
0,0 % 1,0 % 2,0 % 3,0 % 4,0 % 5,0 % 6,0 % 7,0 % 8,0 % 9,0 % 10,0 %2011 2012 2013 2014 2015 Q1.16
LOANS TO CUSTOMERS
The figure illustrates the mixture and development of gross loans to the respective sectors (RM and CM/PS/FS)
3
5
,3
2
4
,9
1
0
,4
3
8
,1
2
7
,3
1
0
,8
4
0
,8
2
9
,6
1
1
,2
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
Gross loans
RM
CM/PS/FS
At Q1.2014
At Q1.2015
At Q1.2016
LOANS BY SECTOR
68,5 %
70,3 %
71,6 %
72,6 %
72,5 %
31,5 %
29,7 %
28,4 %
27,4 %
27,5 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
2012
2013
2014
2015
Q1.16
DEPOSITS FROM CUSTOMERS
The figure illustrates the mixture and development of deposits from the respective sectors (RM and CM/PS/FS)
2
1
,0
1
2
,4
8
,6
2
2
,6
1
3
,5
9
,1
2
3
,4
1
4
,7
8
,7
0,0
5,0
10,0
15,0
20,0
25,0
Total deposits
RM
CM/PS/FS
GROSS LOANS - FUNDING
The figure illustrate how gross loans are funded
58,2 %
58,3 %
59,2 %
59,9 %
57,2 %
57,3 %
8,2 %
15,6 %
18,7 %
21,1 %
23,0 %
23,5 %
33,5 %
26,1 %
22,1 %
19,0 %
19,8 %
19,2 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
2011
2012
2013
2014
2015
Q1.16
CAPITAL ADEQUACY RATIO
11,2 %
12,2 %
12,4 %
13,2 %
13,7 %
13,5 %
1,4 %
0,0 %
0,0 %
0,0 %
1,0 %
0,6 %
2,2 %
2,0 %
2,0 %
13,8 %
14,6 %
14,4 %
15,5 %
15,7 %
15,4 %
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
10,0 %
12,0 %
14,0 %
16,0 %
18,0 %
2011
2012
2013
2014
2015
At Q1 16
The figure illustrates the maturity structure for the different sources of funding (NOK million)
LIQUIDITY BUFFER
SUMMARY AND FUTURE PROSPECTS
Comprehensive income at Q1 2016, adjusted for the change in the accounting
treatment of the fee to the Norwegian Banks` Guarantee Fund, was at the same
level as Ql 2015
Moderate loan impairment charge
Core business according to expectations
Deposits and loans to customers rose solidly, primarily from RM
Somewhat lower deposits/ gross lending ratio
Operating expenses rose more than in past years due to planned
heavy investment in new IT systems.
Operating expense ratio of 51,1%- adjusted for the Fee: 47,6%
Return on equity 7,1% annualised- adjusted for the Fee: 8,3%
Capital adequacy ratio 15,4%
Satisfactory capital adequacy ratio, solid growth, stable customer margins, low
costs and a strong market position
KEY FIGURES – PROFIT AND LOSS
INCOME STATEMENT
31/03/2016
31/03/2015
31/12/2015
Net interest income *)
172
188
754
Dividends and gains/losses on financial instruments
-16
-19
-62
Other operating income
27
30
121
Operating expenses
101
96
382
Profit/loss before loan impairment charge (incl. securities)
81
103
430
Profit/loss before loan impairment charge (excl. securities)
97
122
493
Loan impairment charge
9
7
99
Profit/loss before taxation
72
95
331
Taxation
23
28
87
Profit/loss after taxation
49
68
245
Other comprehensive income
15
7
107
Comprehensive income
63
75
352
KEY FIGURES – BALANCE
31/03/2016
31/03/2015
31/12/2015
Assets
Gross loans and advances to customers
40,808
38,108
40,154
Impairment provisions
289
163
289
Security investments (shares, commercial paper and bonds)
5,561
4,443
5,467
Debt and equity
Deposits from and debt to customers
23,365
22,632
22,984
Debt securities and debt to credit institutions
19,149
16,249
18,179
Equity
3,574
3,331
3,571
Total assets
47,200
43,524
45,936
KEY FIGURES
ProfitabilityNet interest income as a % of average total assets (1) 1.48% 1.76% 1.70%
Dividends and gains/losses on financial instruments -0.14% -0.18% -0.14%
Other operating income (excl. inc. from fin. instr.) as a % of average total assets 0.23% 0.28% 0.27%
Operating expenses as a % of average total assets 0.87% 0.89% 0.86%
Profit/loss before impairment charge as a % of average total assets 0.69% 0.95% 0.97%
Profit/loss before tax as a % of average total assets 0.62% 0.88% 0.75%
Comprehensive income as a % of average total assets 0.54% 0.69% 0.79%
Oper. exp. as a % of oper. income excl. inc. from fin. instr. 51.10% 44.01% 43.66%
Oper. exp. as a % of oper. income incl. inc. from fin. instr. 55.62% 48.33% 47.00%
Impairment charge as a % of gross loans 0.02% 0.02% 0.25%
Return on equity before tax 8.07% 11.64% 10.13%
Return on equity (comprehensive income) 7.09% 9.13% 10.77%
Financial strength
Capital adequacy ratio 15.42% 15.65% 15.71%
Core capital adequacy ratio 13.47% 13.53% 13.73%
Core Tier 1 capital adequacy ratio 13.47% 13.53% 13.73%
Equity ratio 7.57% 7.65% 7.77%
Balance sheet history
Growth in total assets (year-on-year) 8.45% 7.58% 7.81%
Growth in gross customer lending (year-on-year) 7.09% 8.07% 7.12%
Growth in customer deposits (year-on-year) 3.24% 7.72% 2.41%
Deposits as a % of consolidated gross lending 57.25% 59.39% 57.24%
Deposits as a % of parent company’s gross lending 81.17% 80.27% 81.75%
Employees
Full-time equivalent administrative staff 265 266 271
Full-time equivalent cleaning, canteen staff, etc. 2 3 2
31/03/2016 31/03/2015 31/12/2015
The whole fee payable to the Norwegian Banks’ Guarantee Fund was expensed in Q1 2016, whereas previously it was expensed over the course of the whole year. This reduced the net interest margin in Q1 2016 by NOK 15 million, or 0.13 percentage points, in comparison with the past accounting practice.
