Hi, and welcome to the 2nd quarter presentation for Spider Bank 1 SMN. Today, we have a little one man show for you. But first, I'd just like to make a note that you can send questions and we'll try to address these at the end of the presentations. You can either do it done by chat or to irsmn.no. So then the show starts with our CFO, Kjell Fordau.
Thank you, Trond, and good afternoon. We start with a picture from the beautiful Norwegian mountainside in our region. We are very happy to deliver Another strong quarter with our return on equity above 14% for the 2nd time in a row. And it's a highly satisfactory result driven by And cost control and not to forget low loan losses. This quarter is more quality in the figures than last quarter when we had some one offs.
We see that we have strong contribution from all parts of the organization from product companies, from subsidiaries and from the divisions in the bank itself. Loan losses are substantially reduced. And as you can see from the previous quarters, we have been hit by rather high loan losses, but now we are back on a level that we certainly can live with and live very well with. The bank is very well capitalized. We are we have capacity for profitable growth and for a good dividend payouts in the time to come.
Figures, SEK755 1,000,000 this quarter after tax as opposed to SEK7.19 12 months ago, but that time, we had very much win back from the situation due to the mark to market evaluations of the securities portfolio after the corona situation. Return on equity, 14.3%, It's at a very high level. We see that the corona situation is coming to some kind of an end. The society is reopening, and we can see that the Unemployment figures are back at the very low level that we are used to. And we also see that there is a healthy market for housing.
Most of the industries we in our region is performing well. And as you can see, We have 58% loans to mortgages or to private customers and then a very well diversified loan portfolio to 2 different industries in our region. The personal banking Consists of the banking operation of our private customers, mainly mortgages and real estate brokerage. And we are very happy to see improvement in both areas and especially happy to see that there is high growth and High activity in the housing market, which gives loan growth and increased profitability in the real estate brokerage business. You can see the Head of Corporate Banking is smiling and that I think is due to A significant drop in the level of loan losses, which I will come back to in some detail later on.
But you also see that all the Business line targeting corporate customers is performing very well. Spider Bank 1 Markets, another very good Quarter, not as good as the previous one, but certainly satisfactory. Accounting company is also performing well. Same with the finance, Spider Bank 1 Finance, which It's the car funding and leasing company. Important part of our bank's Business model is to own companies together with our friends in other banks and predominantly Spider Bank 1 Banks.
And we have a very good return on this investment. The return on It's one part, the other is the commission we get from the selling of the products. But here you can see the Spiribank 1 group has a very, Very strong profitability driven by non life insurance in Fremtind for Schickling, lower cost and very low damage levels and also improved profitability in the bank we own 35% of as the Spider Bank 1 BN Bank. We are doing a continuously turnaround to become Even better when it comes to digitalization, which is the reason for our success in the market and our reduced cost level. We see that the level of sales that is done through digital means is improving.
And we also see that the customers approve that we are a very, very attractive bank. We do some investments in order to improve the profitability in the years to come. Together with all the other Norwegian banks, we are establishing a Nordic platform for payments through the Vipps. And also as a smaller lever together with some of the other Sberbank 1 banks, We're investing in mobility market to take part in car subscription as this market is transforming from self ownership to subscription systems. As a partly community owned bank, 40% of the bank is owned by the community, We are able to do the nation in order to underpin and support the region we are a part of.
And we are This time, we are putting aside NOK 100,000,000 to be there to help the society to reopen and support different topics in that respect. All of this we think is underpinning that Spider Bank 1, Ming, is an attractive investment with high return, Strong position, good brand, underlying value as we see is realized in the Speyerbank 1 license and a good position for consolidation in the banking industry. Profitable and solid. And as we can see, the reason for the increased profitability is to a large extent that the loan losses is at a much lower level. But still, these figures are delivered with ordinary loan losses.
So there is Very few one offs that is influencing the figures this time. Growth is telling the story of whether we are attractive to the customers. And we have for a long time had a very strong Growth story when it comes to mortgages or to loans to individuals, 7% over the last 12 months, 2.2% over the last 3 months, saying that we are attractive and that we have a concept that is accepted by the customers. The new Pennants from last quarter and up to this quarter is that we also have a growth in the corporate sector, 9.9% over the last 12 months. We have had a history of lower growth in corporate sector due to capital regulations, But now we are back again and are able to compete in this important part of the banking area.
Margins are improved this quarter, and that is the reason for that we have improved Market net interest income level. The improvement this quarter is due to lower funding costs in Eibor 3 months is 20 basis points lower this quarter than last quarter. And we are able to have strong growth also with increased margins. It is expected that the interest rate level will increase from next month and going forward, which we feel is a positive happening for our net interest income in the years to come. Deposits growth, very strong as for all banks, I have to say, and that is a result of the corona situation.
In the private market, it's very much a question of not having all the things to use the money for, which creates savings. And in the corporate sector, we see that there is good liquidity with the corporate customers, which is positive, of course, and that we have success in the market for public We have today deposit to loan ratio, 58%. It's not very many quarters since we were down at 50%. It's making a more robust and solid bank. When the market the interest rate is decreasing, NIBOR 3 months, we have a positive effect on the Lending Margins and a Negative Effect on the Deposit Margins, obviously.
One of the strong sides of the bank, strength of our bank is that we have a very, very high Level of commission income. The commission the ordinary commission income is larger than the net interest income, And it's reflecting that we have a high level of cross selling. Our customers Have many of the bank's products, which is good for the bank's profitability, but also good for the satisfaction All the customers, 1 stop troughing is an attractive concept. The biggest growth and the so on is It's connected to a state agency, securities business and accounting services, but it's also important to see the continuously growth in guarantee commission from insurance companies. As we learned earlier on, we have a high level of profitability from the insurance companies, but also we have Cost has been a big topic for very, very many years.
And as we can see, we have a zero growth in the parent company saying that the continuous The digitalization is taking effect. We have been through a project that is called 1 SMN in order to reduce the cost. And when we have 0 growth in the cost and growing balance sheet and Growing number of customers and an inflation, of course, here as everywhere, we have an improved efficiency of the bank. When it comes to the market, it's a reflection of the income level, where there is a high level of variable Salaries, so the decrease there has to do with a lower income this quarter than the previous quarter. And to some extent, the same applies to the other subsidiaries.
It's activity based cost increase. It's a one man show today, and that is a quality because we don't need to have our Head of Corporate to explain the loan losses because that is a much easier story. The loan losses are €39,000,000 Most of it is corporate. Half of that is still some offshore exposure loan losses. The other is different customers that hasn't performed too well.
And you can see that the retail and Sberbank 1 Finance Losses is very close to 0. There is and we see now and can Maybe conclude that we will not have any significant corona related loan losses through this crisis and that is very good to have as an experience of a crisis like this. When it comes to the CIT-one ratio, it's 18.3%. We have a target of 16.9%, which is including full countercyclical buffer and management buffer. And we today have So CIT-one of 1.4% above that level, very well capitalized.
The dividend we are planning to pay out from 2020 in Q4 this year is deducted from the capital station itself. So we are very well capitalized, have the ability to grow if we find, which I think we will find profitable projects to fund. And we're also able to stick to our Dividend policy of paying out 50% of the profit for this year. And as we can see, the leverage ratio is showing that we also Measured in that way, have a very, very high capitalization these days. That was a brief walk through of the figures.
And then Trond, you can lead us through the questions.
Thank you, Christian. We do have some questions from our viewers. First one goes on growth. It's been a growth story this quarter. How do you expect that going forward in start with lending?
Yes. We have a positive view On the market, we see that there is high growth in the mortgage market. We see that our concept is working That we are able to continue with this growth 7% to 10% that we had over the last years. When it comes to corporate lending, we see that we have improved our ability to compete. We have capital.
We have very good funding sources. So we also have a positive view. I won't put any figures to it, but we have a Positive view going forward.
And deposits, can you I guess it's hard to maintain the growth in the corporate But
it's deposits, it's a different story. We have very high growth through this period of Capital or money, excess capacity for the individuals. It is expected that the growth will be slightly slower going forward. Certainly, much of Of the excess cash in the corporates, it's probably they will be used something, but we have over market share and Important for us. Good.
Margins,
very much related to that.
No, we as I mentioned in my speech here, we are Very focused on having a concept that is so that the customers will Like to pay high healthy margins, have a good concept. We see that an increased Interest rate level will make it possible to increase the special deposit margins And also the return on the equity itself. So it's generally a positive view on that even though that is, of course, Different to say, difficult to say.
Costs. Do you think you can maintain the zero growth cost in the parent bank.
We have been through a project for improving the efficiency in the bank, and We have still some of the measures planned for to be implemented. So we plan for that, a low growth at least in the quarters to come. Good. Then we'll finish on a that used to
be a very hot topic, Losses, very low levels this quarter. There's a pre oil price crisis levels. Do you expect that to continue?
We Expect that we in the coming quarters will have low loan losses. We will not come back to the levels we were, and I don't think I'm able to quantify it more than that, but it's we certainly believe that this is a new level.
So You're targeting still growing, higher margins, low losses and 0 cost growth. Yes. It's a good prospect. Thank you all for watching. We'll see you again in 3 months.
Thank you.