A good result despite of continued pressure on net interest income

SpareBank 1 SR-Bank achieved a profit before tax of NOK 336 million as at 31 March 2011. The NOK 59 million reduction in profit compared with the same period last year is attributed to the effect of the contractual pension (AFP) items totalling NOK 73 million last year. The return on equity after tax was 11.2 per cent, compared with 14.8 per cent for the same period last year.

"This is a good result marked by generally good underlying operations in the bank and our subsidiaries. It is satisfying to see an increasing loan demand and noticeably higher level of activity in the business sector," says Arne Austreid, CEO of SpareBank 1 SR-Bank.

The corporate market showed an 4.8 per cent increase in lending over the past 12 months, compared with close to zero growth for the previous year. The retail market showed lending growth of 17.1 per cent and growth in deposits of 13.9 per cent over the past 12 months. This is significantly over the national average for the period and is attributed primarily to higher customer acquisition.

"There is a great deal of optimism among the households in the region, which is having a major impact on the residential housing market. We are continuing to acquire market shares in a retail market marked by strong competition. This development is of great importance to additional earnings growth in the future," says Austreid.

Key figures as at 31 March 2011 (comparable 2010 figures in brackets)

• Profit before tax: NOK 336 million (NOK 395 million)
• Return on equity after tax: 11.2% (14.8%)
• Earnings per equity certificate: NOK 1.32 (NOK 1.55)
• Net interest income: NOK 424 million (NOK 437 million)
• Net commission and other income: NOK 281 million (NOK 260 million)
• Net return on investment securities: NOK 128 million (NOK 79 million)
• Operating expenses: NOK 446 million (NOK 312 million, NOK 385 million included AFP reversal)
• Impairment losses on loans: NOK 51 million (NOK 69 million)
• Growth in lending (including loans transferred to SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS) over past 12 months: 12.5% (5.8%)
• Growth in deposits over past 12 months: 17.5 % (-0.9 %)
• Core capital ratio: 10.2% (9.4%)

The underlying banking operations performed well in the first quarter. The interest margin has, however, declined somewhat as a result of the competition situation and higher financing costs. Continuous attention will be focused on the underlying structure of costs in order to secure a strong market position and a well diversified income foundation for long term profitability.

"The group's strong market position makes us well-equipped for continued profitable growth. Overall we expect 2011 to be a good year for SpareBank 1 SR-Bank," says Arne Austreid.

The entire quarterly report may be downloaded from www.sr-bank.no

Stavanger, 28 April 2011

Contact persons:
Arne Austreid, Chief Executive Officer, phone +47 900 77 334
Inge Reinertsen, Chief Financial Officer, phone +47 909 95 033
Thor-Christian Haugland, Executive Vice President Communications, phone + 47 480 31 633
Vidar Torsøe, Vice President, Investor Relations, phone +47 970 80 656