Financial unrest and increase in loss provisions have impact on the result
In 2008, SpareBank 1 SR-Bank recorded a profit of NOK 643 million, down NOK 613 million from the record level in 2007. This gave a return on equity of 8.0% (19.4%).
"Seen as a whole, this is a satisfactory result, in light of the turbulence we experienced last year. The result of underlying operations before losses was better than in the preceding year. The growth in lending, especially to our corporate customers, clearly shows that we stand ready to support our customers", says Terje Vareberg, Chief Executive Officer of SpareBank 1 SR-Bank.
The acquisition of Glitnir Bank ASA, now BNbank ASA, made a positive contribution to the result, whilst the financial unrest had an impact inasmuch as there was a marked decline in the value of the group's securities and a negative contribution attributable to SpareBank 1 Gruppen.
"The financial turmoil and weaker economic development resulted in loan loss provisions rising to a more normal level, after several years with extremely low losses", says Vareberg.
Pre-tax profit in the 4th quarter of 2008 was NOK 10 million (NOK 308 million). Profit after tax was NOK 31 million (NOK 254 million) giving a return on equity of 2.0% (17.7%) in the 4th quarter. This reflects the impact of increased loss provisions on loans and guarantees and the recording of NOK 414 million in badwill related to the acquisition of a 20% stake in Glitnir Bank ASA. The 4th quarter profit is also influenced by the negative contribution attributable to SpareBank 1 Gruppen.
Key figures 2008:
- Group profit before tax: NOK 643 million (NOK 1,256 million).
- Return on equity after tax: 8.0 % (19.4 %).
- Result of underlying operations before losses: NOK 1,085 million (NOK 941 million).
- Net interest income: NOK 1,644 million (NOK 1,340 million).
- Net commission and other income: NOK 796 million (NOK 895 million).
- Net return on investment securities: NOK 42 million (NOK 388 million).
- Losses on loans and guarantees: NOK 386 million (NOK 10 million).
- Customer support continues: Growth in loans 20.2 % (19.8 %) over last 12 months, which breaks down into 13.7 % RM and 30.0 % CM.
- Net increase of 10,000 customers through 2008.
- Growth in deposits: 8.2 % (18.0 %) over last 12 months, which breaks down into 14.3% RM and 3.6% CM.
- Earnings per primary capital certificate: NOK 3.60 (NOK 7.85).
- The Board proposes a dividend of NOK 1.00 (NOK 4.75) per primary capital certificate.
- The Board proposes an allocation of NOK 20 million (NOK 95 million) to the endowment fund for public benefit.
(Corresponding figures for 2007 are shown in parentheses)
The effects of the financial crisis and the impact on the real economy will affect social development in 2009 as well. Lower activity, especially in the commercial sector, will bring about lower growth in lending.
"The lending portfolio's quality is good. We are following up our customers more closely than ever. Together, we find good solutions in a demanding market. This, together with a fall in interest rates and the measures introduced by the authorities to stimulate Norway's economy, mean that both the bank and its customers are well prepared to meet the challenges that 2009 will present", says Vareberg.
The full report can be downloaded from the following link: www.sr-bank.no
Stavanger, 13 February 2009
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