SpareBank 1 SR-Bank ASA (SRBANK); A good result characterised by solid operations and lower losses

SpareBank 1 SR-Bank posted a pre-tax profit of NOK 668 million at the end of the first quarter, compared with NOK 512 million for the same period last year. The result was characterized by increased income, a moderate rise in costs and significantly lower impairment losses on loans compared with the same period last year. Its return on equity after tax was 10.3%, compared with 8.7% for the same period in 2017. The bank's common equity tier 1 capital ratio was 15.0% as at 31 March 2018.

"I am very satisfied with the result. The markets for our core activities have improved. We are gradually seeing the results of this through increased demand for, for example, loan products, both from corporate and retail customers. In March, we established a branch in Oslo. Together with our operations in Rogaland, Hordaland and the Agder counties, we are now well positioned to compete for good, new and profitable customers in an even larger market,” says Arne Austreid, the chief executive of SpareBank 1 SR-Bank.

The group's operating costs amounted to NOK 539 million in the first quarter of 2018, compared with NOK 519 million for the same period last year. The increase was due to a higher level of activity in the group due to aggressive, planned market activities combined with some administrative measures designed to adjust to stricter requirements concerning the group’s documentation and management of personal data, especially in relation to anti-money laundering measures.

“I am proud of the pace of innovation in the group. We are systematically working in many areas to improve our overall customer services. FinStart Nordic AS has now started the job of investing in strategic important start-up companies within fintech, as well as developing its own ideas. A significant number of relevant start-up companies are already being assessed, at the same time as FinStart Nordic has started exploring and developing its own ideas that will both benefit customers and improve the group's efficiency,” says Arne Austreid.

Q1 2018

• Pre-tax profit: NOK 668 million (NOK 512 million)
• Net profit for the quarter: NOK 518 million (NOK 403 million)
• Return on equity after tax: 10.3% (8.7%)
• Earnings per share: NOK 2.03 (NOK 1.58)
• Net interest income: NOK 800 million (NOK 739 million)
• Net commissions and other operating income: NOK 368 million (NOK 371 million)
• Net income from financial investments: NOK 113 million (NOK 89 million)
• Operating costs: NOK 539 million (NOK 519 million)
• Impairment losses on loans: NOK 74 million (NOK 168 million)
• Total lending growth over last 12 months: 3.1% (-0.4%)
• Growth in deposits over last 12 months: 7.0% (7.0%)
• Common equity tier 1 capital ratio: 15.0% (14.7%)
• Tier 1 capital ratio: 16.0% (15.6%)
  (Q1 2017 figures in brackets)

The group recognised NOK 74 million in net impairment losses on loans in the first quarter, compared with NOK 168 million in the same period last year and NOK 93 million in the fourth quarter of 2017. This is a significant reduction and is the result of our main market showing marked improvements with respect to both activity and employment.

“Some oil service companies are still experiencing low levels of activity. Nonetheless, optimism is rising. A number of large contracts have been awarded to the shipbuilding industry in the region, which has had a big effect on the mood of the oil service companies. The follow-up of companies that are still experiencing challenges with respect to profitability is close and thorough. The aim is to ensure continued good credit quality in the bank’s loan portfolio. We expect lower impairment losses on loans compared with last year going forward,” concludes Arne Austreid.

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

Stavanger, 26 April 2018

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