Improved banking operations and securities markets contribute to a healthy profit for the 1st half of 2009
SpareBank 1 SR-Bank reported a pre-tax profit of NOK 490 million in the first half of 2009, NOK 25 million lower than the same time last year. Return on equity after tax was 12.6 per cent.
For the second quarter of 2009 in isolation, the pre-tax profit was NOK 378 million and return on equity after tax 19.9 per cent.
"The result reflects both the bank's strong position and that the performance of the Norwegian economy and our region has been better than feared at the beginning of the year. Provisions for losses in the first and second quarters have been reduced compared with fourth quarter 2008," says Terje Vareberg, chief executive officer of SpareBank 1 SR-Bank.
Among other things, the recession has been softened by high activity in the oil sector, with high investments and an oil price nearly double the levels seen at the start of the year. The housing market has improved, which helped EiendomsMegler 1 SR-Eiendom AS post a healthy profit, and the demand for home mortgage loans rose in the first half of 2009.
"It is particularly pleasing to note that underlying banking operations are performing well. Net interest income is at about the same level as last year despite the fact that our financing costs have increased. This shows that our efforts to adjust pricing of loans and credit in accordance with higher risk and higher financing costs have begun to yield results. Over time these efforts, together with measures to adjust capacity in line with business growth opportunities, will continue to have a positive impact on the bank's performance," says Vareberg.
Key figures for the first half of 2009 (first half of 2008 in parentheses):
- Profit before tax: NOK 490 million (NOK 515 million)
- Return on equity after tax: 12.6% (13.1%)
- Net provisions for losses: NOK 209 million (NOK 27 million)
- Net interest income: NOK 756 million (NOK 771 million)
- Net commission and other income: NOK 451 million (NOK 421 million)
- Net return on financial investments: NOK 259 million (NOK 74 million)
- Growth in lending so far this year: 2.9%. Growth in lending in the last 12 months: 12.6% (20.1%)
- Growth in deposits so far this year: 2.6%. Growth in deposits in the last 12 months: -6.2% (18.7%)
- Earnings per primary capital certificate: NOK 2.38 (NOK 2.49)
- Core capital ratio: 7.0% (6.4% at 31.12.2008)
"The capital adequacy ratio has increased from 6.4 per cent at the end of the year to 7.0 per cent at 30 June 2009. The core capital ratio is to be strengthened further to increase both the bank's financial strength and lending capacity. We aim to increase it by a minimum of nine per cent. An injection of capital from the Norwegian State Finance Fund is an alternative that is under consideration," says Vareberg.
The entire quarterly report may be downloaded from www.sr-bank.no
Stavanger, 12 August 2009
Terje Vareberg, Chief Executive Officer, telephone +47 911 00 448
Erling Øverland, Chief Financial Officer, telephone +47 915 56 542
Thor-Christian Haugland, Executive Vice President Communications, telephone + 47 480 31 633