English

SpareBank 1 SR-Bank - Good underlying operations, weak development in securities markets

Report this content

 
  • Group profit of NOK 87 million (NOK 128 million) before tax
  • Capital loss of NOK 11 million (+ NOK 32 million)
  • Profit from underlying operations of NOK 154 million (NOK 147 million) before losses.
  • Stabile interest margin at 2.08 % (2.07 %).
  • Good cost-effectiveness, cost percentage at 1.69 (1.66).
  • Weak growth in lending, 12-month growth at 4 % (10 %).
  • Growth in deposits, 12-month growth at 8 % (11 %).
  • Net loss of NOK 47 million (NOK 43 million) incl. NOK 19 million write-down of Pan Fish shares
  • USD 75 million worth of perpetual capital securities issued in April, will strengthen core capital from the 2nd quarter.
  • Profit per primary capital certificate after tax of NOK 5.10 (NOK 7.50).
  • Return on equity capital after tax of 9.7 % (13.4 %).
  • Group total assets exceed NOK 50 billion
 
Result
The SpareBank 1 SR-Bank group achieved a pre-tax profit of NOK 87 million after the first quarter, compared with NOK 128 million for the corresponding period in 2002.  The main reason for the reduction in profit is NOK 43 million less in capital gains compared with the first quarter of 2002.  The underlying operations contributed a profit before losses of NOK 154 million so far this year, an improvement of NOK 7 million compared with last year.  Group return on equity capital amounts to 9.7 % after tax, compared with 13.4 % after the first quarter of 2002.
 
The group's interest margin was at 2.08 % at the end of the first quarter of 2003, approximately unchanged compared with the same period last year.  Net commission income is up by 6 % compared with last year.  So far this year, the return on the bank's current portfolio of shares and primary capital certificates has been -4.3 % compared with +8.6 % as of the first quarter of last year.
 
Cost-effectiveness remains good.  At the end of the first quarter, costs in relation to total assets amounted to 1.69 % compared with 1.66 % last year.  So far this year, the group has entered net losses of NOK 47 million, NOK 4 million higher than for the first quarter of 2002.  Net losses amount to approx. 0.4 % of gross lending on an annual basis.  The default volume has increased slightly in the last quarter.
 
The 12-month growth in lending of 4 % is at roughly the same level as at the end of 2002.  The development in deposit volume indicates a 12-month growth of 8 %, compared with 15 % at the end of last year.  Deposit to loan ratio has been reduced from 60.8 % at the end of 2002 to 59.1 % as of 31 March 2003.
 
The bank's capital is 7.03 % and capital adequacy ratio of 10.67 %, excl. profit so far this year.  In April SpareBank 1 SR-Bank issued perpetual capital securities in the amount of USD 75 million.  Perpetual capital securities are a special form of subordinated loan which, on certain conditions, can count as core capital.  As of 31 March 2003, this would have improved the group's core capital and capital adequacy ratios by 1.2 and 1.6 percentage points respectively.
 
 
Other operating income
Other operating income amounted to NOK 83 million in the first quarter of 2003.  Net commission income totaled NOK 67 million, which is NOK 4 million more than in the corresponding period last year.  Income from sale of mutual funds/unit trusts fell by NOK 4 million compared with the first quarter of 2002 due to weak development in the securities markets and market demand for share-related products.  The other elements under net commission income increased.  Income from money transfer services shows an increase of 7 %, insurance 18 % and underwriting commissions climbed by 43 % compared with the same period in 2002.
 
Total dividends and income from ownership interests declined by NOK 3 million compared with last year.  This is largely due to the fact that the investment in the Odin Pengemarked money market fund has not yielded a dividend this year, while the fund had yielded a dividend of NOK 4 million at this time last year.  In addition, the ordinary dividend from share investments, long-term shareholdings and primary capital certificates was NOK 2 million lower in the first quarter of 2003 compared with the corresponding period last year.
 
The contribution from SpareBank 1 Gruppen so far this year is NOK -4 million, compared with NOK -6 million in the first quarter of 2002.  EnterCard AS has been sold to FöreningsSparbanken AB and SpareBank 1 Gruppen AS entered a profit of NOK 56.6 million in March.  The non-life and life insurance companies have exhibited a positive trend compared with the first quarter of 2002.  Measures implemented so far in connection with the streamlining process in SpareBank 1 Gruppen AS are expected to yield an effect of approx. NOK 100 million in 2003.
 
Operating costs
The group's operating costs amount to NOK 213 million so far this year.  This constitutes 1.69 % in relation to the total assets, compared with 1.66 % at this point last year.  The corresponding figures for the parent bank to date this year and last year are 1.46 % and 1.43 % respectively. In nominal terms, the group's operating costs have risen by NOK 11 million (+5 %) compared with the first quarter of 2002.  The cost percentage in the parent back amounted to 56.5 % at the end of the first quarter.
 
Loans, deposits and investments
The development in gross lending has resulted in a growth rate of 4 % over the past 12 months up to NOK 50.8 billion.  The 12-month growth has stabilized and is unchanged compared with the end of 2002.  Volume in the private market has increased by 7 % over the past year, while the business market has shown a negative growth of 1 %.  The volume distribution between the private and business markets is 66%/34 %.
 
Customer deposits have grown by 8 % over the past 12 months, down from 15 % at the turn of the year.  The volume was reduced by NOK 0.4 billion during the first quarter.  This reduction is largely the result of fluctuations in deposit volume for major customers in the public sector and in power and water utilities.  The 12-month growth rates in the private and business markets were 9 % and 6 % respectively as of 31 March 2003.  Changes in volume in the first quarter of 2003 have contributed to a reduction in deposit coverage from 60.8 % at the end of 2002 to 59.1 % as of 31 March this year.
 
Capital adequacy ratio
The capital adequacy ratio for the group was 10.67 % at the end of March, excl. the profit for the year, and 11.79 % for the parent bank.  The core capital for the group and the parent bank were at 7.03 % and 7.30 % respectively.  In April the bank issued perpetual capital securities in the amount of USD 75 million.  Up to 15 % of the core capital can consist of perpetual capital securities, perpetual capital securities in excess of this will be included as subordinated loans in the capital adequacy ratio.
 
Subsidiaries
Westbroker Finans AS has a profit before tax of NOK 2 million so far this year.  At this time last year the company had a profit of NOK 5 million.  The reduction is due to reported losses of NOK 3 million so far this year.  The company's activities are aimed at leasing and project financing.  So far in 2003, the pre-tax profit in EiendomsMegler 1 is NOK 2 million, compared with NOK 1 million for the same period last year.  The total number of sales has increased in both the private and commercial markets compared with last year.
 
The bank's primary capital certificates
At the end of March the price of the bank's primary capital certificates was NOK 170, compared with NOK 180 at the end of 2002.  Dividends of NOK 10 per certificate have been disbursed during the period.  The number of owners of primary capital certificates was 6,410 as of 31 March 2003, roughly unchanged from the end of 2002.  During the course of the first quarter, the bank purchased 15,000 of its own primary capital certificates, and now holds a total of 83,890 primary capital certificates.  The percentage of certificates held by foreign owners was 16.8 % at the end of the quarter, while 46.3 % of the owners were linked to Rogaland.  The 20 largest owners held 38.2 % of the bank's primary capital certificates.
 
In a meeting held on 27 March 2003, the supervisory board authorized the board of directors to issue fund emission for up to NOK 150 million by means of transfer from the equalization reserve to the primary capital.  The board has also been authorized to make the specific changes in the articles of association required by the capitalization issue. 
 
Outlook for the future
The economic development for the current year is still uncertain for parts of the business community in our market area.  Growth in lending is expected to remain low in 2003.  Nevertheless, the board expects a satisfactory development for the group in 2003.
 
# # #
 
The full Q1 Results, including financial tables can be downloaded from the following link:

Stavanger, 29 April 2003 <!-- hugin-supplied --><br> The Board of Directors of Sparebanken Rogaland <!-- hugin-supplied --><br> <!-- hugin-supplied --><br> <!-- hugin-supplied --><br> Questions may be directed to Managing Director Terje Vareberg, tel. +47 51 50 95 53, mobile +47 911 00 448, Deputy Managing Director Sveinung Hestnes, tel. +47 51 50 95 58, mobile +47 908 53 165, Director of Finance Tor Dahle, tel. +47 51 50 95 56, mobile +47 915 47 503 or spokesperson Thor-Christian Haugland, tel. +47 51 50 92 81, mobile +47 48 03 16 33.

Subscribe

Documents & Links