SpareBank 1 SR-Bank ASA: Good underlying operations, but weaker result due to increased losses
SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 973 million for the first half of 2016, compared with NOK 1,180 million for the same period last year. The result was characterised by increased income and lower costs, although provisions for losses are rising. Its common equity tier 1 capital ratio at 30 June 2016 was 13.5%. The return on equity after tax was 9.3% compared with 11.7% for the same period in 2015. The pre-tax profit for the quarter seen in isolation was NOK 486 million, compared with NOK 552 million last year, which is equivalent to a return on equity after tax of 9.4%, compared with 10.8% for the first half of 2015.
The group's operating costs amounted to NOK 1,006 million in the first half of 2016, which represents a reduction of NOK 60 million compared with the same period last year.
"I am pleased with the result of our underlying operations. In the last 12 months we have reduced our costs by 5.6%, at the same time as our net interest income has increased by 5.4%. Our financial income is still being affected by unstable financial markets. The NOK 94 million one-off effect related to our share of Visa Europe Ltd’s sale to Visa Inc. has contributed to our total income showing a good increase for the quarter," says Arne Austreid, the chief executive of SpareBank 1 SR-Bank.
- Pre-tax profit: NOK 973 million (NOK 1,180 million)
- Net profit for the quarter: NOK 792 million (NOK 927 million)
- Return on equity after tax: 9.3% (11.7%)
- Earnings per share: NOK 3.10 (NOK 3.63)
- Net interest income: NOK 1,409 million (NOK 1,266 million)
- Net commissions and other operating income: NOK 741 million (NOK 807 million)
- Net income from financial investments: NOK 284 million (NOK 305 million)
- Operating costs: NOK 1,006 million (NOK 1,066 million)
- Impairment losses on loans: NOK 455 million (NOK 132 million)
- Total lending growth over last 12 months: 1.1% (7.6%)
- Growth in deposits over last 12 months: -1.3% (11.1%)
- Common equity tier 1 capital ratio: 13.5% (12.3%)
- Tier 1 capital ratio: 14.4% (13.1%)
(Figures for H1 2015 are shown in parentheses)
The group recognised NOK 455 million in net impairment losses on loans in the first half of 2016, compared with NOK 132 million last year. The increase in impairment losses is largely due to impairment losses relating to four individual commitments within the oil services sector, as well as NOK 93 million in increased collective impairment losses.
"Because of the more demanding times and continued low oil prices, we have chosen to increase collective impairment losses in this quarter as well. The quarter's individual provisions for losses are in part a consequence of the prevailing market conditions, but also of unforeseen events. In the coming quarters I expect we will have to carry out write-downs on loans at about the same level we have had to so far this year. Closely monitoring customers and preventive work are still important means as far as our ability to reduce future losses is concerned," concludes Arne Austreid.
The full half-yearly report is available for download from www.sr-bank.no.
Stavanger, 10 August 2016
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