Good result, significant customer growth and a higher level of customer activity

In the first half of 2011, SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 752 million, compared with NOK 814 million in the same period last year.  Return on equity after tax was 11.9% in the first half of 2011 (15.6%).  For Q2 2011 seen in isolation, the pre-tax profit amounted to NOK 416 million (NOK 419 million). This represents a return on equity of 12.6% (16.5%) for the quarter.

"Due to the tough competition and higher funding costs, net interest is still under pressure. But continued market growth, a broader product range per customer and even more effective operations will ensure that we are among the most profitable financial institutions also in the future", says Arne Austreid, Chief Executive Officer of SpareBank 1 SR-Bank.

As reported in the last quarterly report, the level of activity in trade and industry is now good. Over the last 12 months, the Corporate Market Division's lending rose by 11.1%, whilst at the same time, deposits increased by 19.5%. Losses and write-downs are low, aggregating NOK 64 million, compared with NOK 120 million in the same period last year.

The result of greater focus on broad scale sales of the group's products is very gratifying. Other income rose by NOK 52 million to NOK 606 million, compared with the first half of the preceding year. 

"Despite the current unrest in the financial markets we expect that the level of activities in the companies in the region will continue to rise. The Business Climate Survey for Rogaland indicates a record high investment level on the Norwegian Continental Shelf this year and for several years to come. This is of paramount importance to the activity level and to optimism shown by trade and industry and households in our part of the country", says Arne Austreid.

Key figures as at 30 June 2011 (as at 30 June 2010 in parentheses)

• Profit before/after tax: NOK 752 million (NOK 814 million) / NOK 570 million (NOK 636 million)
• Return on equity after tax: 11.9% (15.6%)
• Net interest income: NOK 851 million (NOK 864 million)
• Operating expenses: NOK 842 million (NOK 735 million)
• Growth in lending last 12 months: 14.5% (6.0%)
• Growth in deposits last 12 months: 15.8% (3.1%)
• Core capital ratio: 10.0% (9.1%)

Underlying banking operations are good. The number of customers is still rising significantly. During the first half of 2011, the bank registered almost 6,000 new customers. Taking into account the one-off effects related to investments in new market areas and business areas, such as the acquisition of Kvinnherad Sparebank, and the higher level of activity in Eiendomsmegler 1 and the Capital Market Division, the cost-effectiveness is good, with a year-on-year growth of approximately 5%.

"Funding costs are expected to increase in the coming quarters. This increase will likely lead to increased lending rates to the market. SpareBank 1 SR-Bank has good liquidity and is well positioned to continue to meet the expected  growth in our part of the country ", says Arne Austreid.

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

Stavanger, 10 August 2011

Contact persons:

Arne Austreid, CEO, telephone +47 900 77 334
Inge Reinertsen, CFO, telephone +47 909 95 033
Thor-Christian Haugland, Executive Vice President Communications, telephone +47 480 316 33
Vidar Torsøe, Vice President Investor Relations, telephone +47 970 80 656