SpareBank 1 SR-Bank (srbank); A good result in a still demanding market

SpareBank 1 SR-Bank posted a pre-tax profit of NOK 512 million at the end of the first quarter, compared with NOK 487 million for the same period last year. The results are characterised by higher net interest income, increased income from the subsidiaries EiendomsMegler 1 and Regnskapshuset, and write-downs on loans on a par with the level in previous quarters. The bank's common equity tier 1 capital ratio was 14.7% as at 31 March 2017. Its return on equity after tax was 8.7% compared with 9.0% for the same period in 2016.

"The results are good, although write-downs on the bank's loans are still at an elevated level because the market in the oil and gas sector remains demanding. I am very satisfied that earnings are rising. I would especially like to highlight that we are now selling significantly more homes through EiendomsMegler 1, and primarily in the Stavanger region. This suggests that the level of activity in the region is rising," says Arne Austreid, the chief executive of SpareBank 1 SR-Bank.

The group's operating costs amounted to NOK 519 million in the first quarter of 2017, compared with NOK 492 million for the same period last year. The increase is primarily due to the introduction of the financial activity tax from 1 January 2017. This amounts to 5% of personnel costs and accounts for the entire increase in personnel costs in the quarter. Costs are also rising in EiendomsMegler 1 due to the increased activity in the company. 

"The group is adapting well to the significant change we are expecting in customer behaviour in the future due to increased digitisation. During the quarter we acquired two new fintech companies, BOOST AI AS and Vester AS.  BOOST is a company that has developed and delivered a chatbot, which will increase our availability and service rate for customers. Vester will be Norway's first digital platform for loan broking between individuals and small and medium-sized companies," says Arne Austreid. 

Q1 2017

• Pre-tax profit: NOK 512 million (NOK 487 million)
• Net profit for the quarter: NOK 403 million (NOK 386 million)
• Return on equity after tax: 8.7% (9.0%)
• Earnings per share: NOK 1.58 (NOK 1.51)
• Net interest income: NOK 739 million (NOK 698 million)
• Net commissions and other operating income: NOK 371 million (NOK 352 million)
• Net income from financial investments: NOK 89 million (NOK 79 million)
• Operating costs: NOK 519 million (NOK 492 million)
• Impairment losses on loans: NOK 168 million (NOK 150 million)
• Total lending growth over last 12 months: -0.4% (2.9%)
• Growth in deposits over last 12 months: 7.0% (1.2%)
• Common equity tier 1 capital ratio:  14.7% (13.4%)
• Tier 1 capital ratio: 15.6% (14.3%)
  (Q1 2016 figures in brackets)

The group recognised NOK 168 million in net impairment losses on loans in the first quarter, compared with NOK 162 million in the previous quarter. The write-downs still relate to commitments linked to the oil and gas sector.

"Despite the region seeing increased activity and a general change in mood in the business sector, some oil service companies still face a demanding market. This means that we will follow up these companies closely to ensure that the quality of credit in the bank's loan portfolio remains good," concludes Arne Austreid.

The full interim report is available for download from www.sr-bank.no.

Stavanger, 27 April 2017

Contact people:
Arne Austreid, CEO, Tel. +47 900 77 334
Inge Reinertsen, CFO, Tel. +47 909 95 033
Stian Helgøy, Vice President Investor Relations, Tel. (+47) 906 52 173.
Thor-Christian Haugland, Executive Vice President Communications, Tel. +47 480 31 633