SpareBank 1 SR-Bank - Historically good results - high recoveries on losses and high return on financial investments
- Group profit before taxes: NOK 1 096 million (NOK 821 million)
- Return on equity after tax: 24.1% (20.3%)
- Lending growth: +13.5% (+11.3%) last 12 months, of which RM: 12.4% and CM: 15.8%.
- Deposit growth: +13.5% (+17.0 %) last 12 months, of which RM: 4.0 % and CM: 23.3 %.
- Net recovered losses: NOK 70 million (losses NOK 81 million)
- Net return on financial investments: NOK 349 million (NOK 190 million)
- Net commission income: NOK 377 million (NOK 341 million)
- Earnings per primary capital certificate: NOK 21 (NOK 15)
- The Board of Directors proposes a dividend of NOK 14 (NOK 9.2) per primary capital certificate.
- The Board of Directors proposes appropriating NOK 92 million (NOK 60 million) for the endowment fund.
(Figures for corresponding period in 2004 are shown in brackets.)
Results
The SpareBank 1 SR-Bank Group posted a profit before tax of NOK 1 096 million, an improvement of NOK 275 million on 2004. Return on equity capital after tax was 24.1% in 2005, compared with 20.3% in 2004. The improved earnings compared with 2004 are largely due to net recoveries on losses and a high return on financial investments. Profit after tax amounted to NOK 856 million (NOK 612 million) in 2005.
The Group's net interest income in 2005 was NOK 1 118 million (NOK 1 129 million). Measured in relation to average total assets, this gives a net interest margin of 1.75% (2.03%).
Net commission income in 2005 amounted to NOK 377 million, up NOK 36 million (10.6%) on 2004. Income from commissions on saving/investment products and on guarantees contributed most to this improvement in earnings.
Other operating income in 2005 amounted to NOK 199 million (NOK 190 million). This income is largely attributable to real estate brokering.
In 2005, the net return on financial investments was NOK 349 million, an increase of NOK 159 million on 2004. This includes an increase in the fair value assessment of the Group's ownership interest in Energivekst AS of NOK 21 million (NOK 44 million for the year to date including dividend) and an increase of NOK 74 million in the profit attributable to SpareBank 1 Gruppen AS.
Total operating costs for 2005 amounted to NOK 1 012 million, an increase of NOK 64 million (6.8%) on 2004. Cost percentages for the group and the parent bank (NAS) respectively were 53% (53.2%) and 48.4% (49.9%).
At the end of the 4th quarter of 2005, the group had net recoveries on losses of NOK 70 million. This includes NOK 76 million in net recoveries as a result of the settlement with KPMG and Lloyds in the Finance Credit case. In 2004 the group posted net losses of NOK 81 million.
Lending and deposits
Over the past 12 months, gross lending has increased by 13.5%, which breaks down into 12.4% in the retail market and 15.8% in the corporate market. Growth in both the retail and the corporate market picked up in the last quarter.
Twelve-month growth in the volume of deposits was 13.5%, breaking down into 4% in the retail market and 23.3% in the corporate market. The deposit-to-loan ratio was 60.8% at 31 December 2005. This is a reduction from 62.9% at the end of the 3rd quarter 2005. The deposit-to-loan ratio was unchanged from the previous year-end.
Capital adequacy
The group's capital adequacy ratio was 11.8% at the end of the 4th quarter 2005, and the core capital ratio was 9.0%. Capital adequacy calculations are based on group accounts according to Norwegian Accounting Standards (NAS).
Subsidiaries
In 2005, Eiendomsmegler 1 Rogaland AS achieved a profit before tax of NOK 25.4 million (NOK 23.7 million). Total income was NOK 192.4 million (NOK 181.9 million). The market was characterised by a high level of activity and strong competition.
The pre-tax profit of SpareBank 1 SR-Finans AS in 2005 was NOK 20.5 million (NOK 20.8 million). At 31 December 2005 the company had total assets of NOK 2 122 million, an increase of 18.3% on the same date in 2004.
SR-Forvaltning ASA posted a pre-tax profit of NOK 24.7 million, an increase of NOK 11.5 million on 2004. At the end of the 4th quarter of 2005, the company managed capital of NOK 4 347 million, against NOK 2 964 million at 31 December 2004, representing an increase of 46.7%.
The bank's primary capital certificates
At the end of 2005, the price of the bank's primary capital certificates was NOK 230, compared with NOK 144 at the end of 2004. The bank's primary capital certificates provided an effective rate of return, including dividend paid, of 66.1% in 2005.
Market comments
Competition in the financial market is increasing in most areas as a result of new participants and increased efforts from existing competitors. In the light of the bank's establishment of an office in Bergen, coupled with further investment in Agder, Rogaland, new business areas and expertise-building, the Board of Directors expects a strengthening of the group's position in 2006. To contribute to the long-term value creation of the region a new wholly-owned company, SR Investering AS, was established at the end of 2005. The company has been set up with an initial capital of NOK 200 million.
Outlook
The economic outlook at the start of 2006 appears positive for most business areas, and the Board anticipates satisfactory activity and solid results for the business sector in 2006.
Stavanger, 2 February 2006
The Board of Directors of Sparebanken Rogaland
The press release (including tables) can be downloaded from the following link:
Any questions should be directed to Managing Director Terje Vareberg, telephone +47 51 50 95 53/+47 911 00 448, Deputy Managing Director Sveinung Hestnes, telephone +47 51 50 95 58/+47 908 53 165, Tor Dahle, telephone +47 51 50 95 56/+47 915 47 503 or Director of Information and Public Relations Thor-Christian Haugland, telephone +47 51 50 92 81 /+47 480 31 633.