SpareBank 1 SR-Bank ASA (srbank) A good result characterised by greater activity and lower losses
SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 1,160 million for the first half of 2017, compared with NOK 973 million for the same period last year. The results were affected by greater activity throughout the group, which is reflected by both higher income and a moderate rise in operating costs. The return on equity after tax was 9.9% compared with 9.3% for the same period in 2016. Impairments to cover losses on loans and guarantees totalled NOK 299 million, compared with NOK 455 million in the same period last year.
The pre-tax profit for the quarter seen in isolation was NOK 648 million, compared with NOK 486 million last year, which is equivalent to a return on equity after tax of 11%, compared with 9.4% for the second quarter of 2016.
The group's total operating costs for the first half of 2017 amounted to NOK 1,067 million, which represents an increase of NOK 61 million.
The increase can largely be attributed to greater activity in most areas of the group, as well as the introduction of the financial activity tax, which alone accounted for NOK 21 million.
"I am very satisfied with the results for the quarter seen in isolation and with the overall results for the first half of the year. Impairment losses on loans were lower than in the preceding quarters, which is first and foremost due to several of the offshore-related companies that set the tone having carried out successful restructuring processes. We have also noted that activity levels in the rest of the business sector have increased. At the same time, most of the business areas in the group are seeing higher earnings," says Arne Austreid, the chief executive of SpareBank 1 SR-Bank.
First half-year 2017
- Pre-tax profit: NOK 1,160 million (NOK 973 million)
- Net profit for the period: NOK 917 million (NOK 792 million)
- Return on equity after tax: 9.9% (9.3%)
- Earnings per share: NOK 3.59 (NOK 3.10)
- Net interest income: NOK 1,523 million (NOK 1,409 million)
- Net commissions and other operating income: NOK 771 million (NOK 741 million)
- Net income from financial investments: NOK 232 million (NOK 284 million)
- Operating costs: NOK 1,067 million (NOK 1,006 million)
- Normalised growth in costs: 0.9% (-5%)
- Impairment losses on loans: NOK 299 million (NOK 455 million)
- Total lending growth over last 12 months: 0.5% (1.1%)
- Growth in deposits over last 12 months: 11.3% (-1.3%)
- Common equity tier 1 capital ratio: 14.7% (13.5%)
- Tier 1 capital ratio: 15.7% (14.4%)
(H1 2016 figures in brackets)
"There are many signs of improvement in the region. Unemployment is now falling and the housing market in Rogaland is starting to normalise. Our estate agents sold 3,519 homes in the first half of the year, compared with 3,060 homes in the same period last year. At the same time, our Business Barometer shows that a clear majority of companies in the region expect growth going forward," says Arne Austreid.
The group recognised NOK 299 million in net impairment losses on loans in the first half of 2017, compared with NOK 455 million for the same period last year. The impairment losses on loans in the first half of 2017 were generally linked to individual commitments within oil-related activities.
"However, offshore-related activities still face a challenging market. I expect impairments in the rest of the year to be on a par with those in the first half of the year. We continue to monitor our customers closely to ensure further robustness in our overall lending portfolio," concludes Arne Austreid.
The full half-yearly report is available for download from www.sr-bank.no.
Stavanger, 9 August 2017
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