SpareBank 1 SR-Bank ASA (SRBANK); A good result marked by good operations, lower losses and higher financial income

SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 1,422 million in the first half of 2018, compared with NOK 1,160 million in the same period last year. The results were marked by good operations, a busier corporate market, lower losses and a significant contribution from the bank's financial investments. The return on equity after tax was 11.4%, compared with 9.9% in the same period in 2017. Impairment losses on loans and guarantees totalled NOK 173 million, compared with NOK 299 million in the same period last year.

The pre-tax profit for the quarter seen in isolation was NOK 754 million, compared with NOK 648 million last year, which is equivalent to a return on equity after tax of 12.3%, compared with 11% for the second quarter of 2017.

The group’s operating costs amounted to NOK 1,111 million, an increase of NOK 44 million compared with the same period last year. The cost/income ratio was 41.1%, down from 42.2% in the first half of 2017.

Net income from financial investments amounted to NOK 326 million, which is an increase of NOK 94 million compared with the same period last year. The increase was mainly due to the positive effect of the merger agreement concluded between Vipps AS, BankAxept AS and BankID Norge AS. The accounting effect amounted to approximately NOK 70 million.

“The group's results for both the quarter in isolation and the first half of the year were good. We take a proactive approach in the market and are steadily gaining more new customers. This year we have strengthened our position within the corporate market, especially the SME segment, with more than 1,200 new corporate customers. Our digital solutions that are designed to meet small business needs have been welcomed. We gained many of our new customers thanks to our venture in the Oslo area, which is a new market for us,” says Arne Austreid, the chief executive of SpareBank 1 SR-Bank.

 H1 2018

• Pre-tax profit: NOK 1,422 million (NOK 1,160 million)
• Net profit for the quarter: NOK 1,135 million (NOK 917 million)
• Return on equity after tax: 11.4% (9.9%)
• Earnings per share: NOK 4.44 (NOK 3.59)
• Net interest income: NOK 1,642 million (NOK 1,523 million)
• Net commissions and other operating income: NOK 738 million (NOK 771 million)
• Net income from financial investments: NOK 326 million (NOK 232 million)
• Operating costs: NOK 1,111 million (NOK 1,067 million)
• Impairment losses on loans: NOK 173 million (NOK 299 million)
• Total lending growth over last 12 months: 5.0% (0.5%)
• Growth in deposits over last 12 months: 6.1% (11.3%)
• Common equity tier 1 capital ratio: 14.8% (14.7%)
• Tier 1 capital ratio: 15.7% (15.7%)
  (H1 2017 figures in brackets)

“We are investing in new technology, both directly through the development of existing systems and processes and indirectly through the purchase of stakes in various companies. These investments, made through our wholly owned subsidiary FinStart Nordic, are in start-up companies that have developed various new technologies that could generally help improve our services for customers going forward. FinStart Nordic, which is currently moving into premises in the centre of Oslo, now has an organisation in place that in the future will be able to supply companies we invest in with the expertise they need,” says Arne Austreid.

The group recognised NOK 173 million in net impairment losses on loans in the first half of 2018, compared with NOK 299 million for the same period last year.

"Some offshore-related companies 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,” concludes Arne Austreid.

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

Stavanger, 8 August 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