SpareBank 1 SR-Bank - Quarterly report as of 30 June 2003

 
  • Group profit for the first half year of NOK 277 million (NOK 195 million) before tax.
  • Profit from underlying operations of NOK 325 million (NOK 320 million) before losses.
  • Interest margin strengthened to 2.10% (2.07 %).
  • Net profit on securities and foreign exchange of NOK 64 million (- NOK 8 million).
  • Profit improvement in SpareBank 1 Gruppen AS.
  • Net loss of NOK 105 million (NOK 93 million), 0.4% of gross lending on a yearly basis.
  • Growth in lending last 12 months of 6% (6%).
  • Growth in deposits last 12 months of 3% (18%).
  • Good deposit coverage 60.2 % (61.8%).
  • Profit per primary capital certificate after tax of NOK 16.6 (NOK 11.3).
  • Return on equity after tax of 15.1% (10.0%).
 
Result
The SpareBank 1 SR-Bank group achieved a pre-tax profit of NOK 277 million in the first half year of 2003, compared with NOK 195 million for the corresponding period last year. Net profit on securities and foreign exchange was NOK 72 million more than in the first half year of 2002. The underlying operations contributed a profit before losses of NOK 325 million so far this year, an improvement of NOK 5 million compared with last year. Group return on equity amounts to 15.1% after tax, compared with 10.0% after the first half year of 2002. The second quarter seen separately provided a pre-tax profit of NOK 190 million, compared with NOK 67 million in the second quarter of 2002.
 
The group's ordinary operations show an interest margin of 2.10%, up from the first half year of 2002 (2.07%). Commission income is in line with the first half year of 2002. In the second quarter the bank again had positive new net sales of mutual funds/unit trusts of NOK 15 million. Commission income from insurance still shows a nice increase (20%). Cost-effectiveness is good and costs are developing in line with the bank's objectives. The bank's ambition is to further improve cost-effectiveness in the second half year. Net losses (NOK 105 million) are in line with losses in the first half year of 2002. Default has increased by NOK 176 million which is mainly due to a few larger commitments where earlier specified loss allocations are deemed to be sufficient to cover any losses. Growth in lending is 6% on a 12-month basis, but was slightly increasing in the second quarter. The deposit volume shows a 12-month growth of 3%. 
 
In relation to the first half year of 2002, the profit increase of NOK 82 million before tax is mainly due to the following changes:
 
* Net profit on securities and foreign exchange: + NOK 72 million
* Net interest income:  + NOK 27 million
* Income from ownership interests:  + NOK 22 million
* Dividend, money market fund: - NOK 15 million
* Increased operating costs: - NOK 18 million
 
Other operating income
After the first half year of 2003 the group has net commission income of a total of NOK 142 million, which is NOK 4 million less than the corresponding period last year. Income from mutual funds/unit trusts have been reduced by 15 million compared with the first half year of 2002. This reduction is partly offset by NOK 6 million more in insurance income, an increase in other service charges and income from guarantees on NOK 6 million. The contribution from money transfer services of NOK 66 million so far this year has increased by 1% compared with the first half year of 2002.
 
Net profit on exchange so far this year is NOK 64 million, which is NOK 72 million more than in the corresponding period last year.
 
The ownership interest in SpareBank 1 Gruppen AS ("Income from ownership interest") provided a negative contribution of NOK 1 million, while this so far last year amounted to NOK -23 million. SpareBank 1 Skadeforsikring og Livsforsikring in particular improved results, combined with lower amortization of goodwill, while Bank 1 Oslo has a negative result of  NOK 39 million before tax, mainly due to losses on loans to the business market.
 
Operating costs
The group's costs have increased from NOK 413 million in the first half year of 2002 to NOK 431 million so far this year (+4%), and amount to 58.0% of the income (excluding profit on exchange), compared with 57.8% in the first half year of 2002. In the second quarter of 2003 seen separately, costs constituted 56.4% of the income.
 
The group's personnel costs increased by 2% (+ NOK 5 million) compared with the first half year of 2002. The growth in the parent bank was 3%. In the past 12 months the group's man-years have increased from 814 to 822. 
 
Compared with the first half year of 2002, the IT costs show the highest nominal growth with an increase of NOK 9 million (+15%). This is mainly due to higher costs from Sparebankutvikling AS (the development collaboration among the SpareBank 1 banks), plus higher costs from EDB Fellesdata AS than last year. The cost development is in line with the bank's objective.
 
Loans and deposits
Gross lending has increased by 6% in the past 12 months to NOK 47.2 billion. So far this year the growth is 4%. The 12-month growth has gradually increased from 4% at the beginning of the year. In volume, the growth in the past 12 months amounts to NOK 2.5 billion. In the private market the 12-month growth is now 8% (7% at the beginning of the year). Business market lending has increased by 1% in the past 12 months. Both as of December 2002 and March 2003, the 12-month growth was negative at 1%. The volume distribution between the private and business markets is 66%/34%.
 
In the past 12 months customer deposits have increased by 3% to NOK 28.4 billion. At the beginning of the year the 12-month growth was 15%. In the private market the 12-month growth is now 8%, compared with 11% at the beginning of the year. The 12-month growth in the business market is -3%, down from +20 % at the beginning of the year.
 
Capital adequacy ratio
The capital adequacy ratio for the group was 11.97%, excluding profit for the year, at the end of June, and 12.31% for the parent bank. The core capital adequacy ratio for the group and the parent bank was 8.03% and 8.39% respectively. In the second quarter the bank strengthened its core capital through the issue of perpetual capital securities in the amount of NOK 529 million.
 
Subsidiaries
Pre-tax profit for EiendomsMegler 1 Rogaland AS is NOK 9 million so far this year and in line with last year. Compared with last year the increase in the number of sales is about 7%, both in the private and business markets. Westbroker Finans AS, where operations are directed towards leasing and project financing, reports a pre-tax loss of NOK 9 million so far this year. So far last year the profit was NOK 8 million. The loss is due to the entering of a loss of NOK 19 million in connection with a property commitment. SR-Forvaltning ASA, the bank's company for asset management, shows a pre-tax profit of NOK 1 million in the first half year of 2003.
 
The bank's primary capital certificates
At the end of June the price of the bank's primary capital certificate was NOK 215, compared with NOK 180 at the beginning of the year. In the course of the first half year the bank bought 29,800 of its own primary capital certificate, and as of 30 June 2003 it holds a total of 98,690 primary capital certificates. On 2 July of this year, however, 49,968 of its own primary capital certificates were sold. The bank exercised its authorization from the supervisory board to sell its own primary capital certificates to employees instead of increasing the primary capital in connection with the employee issue for 2003.
 
As of 30 June 2003 the number of owners of primary capital certificates was 6,398. The percentage of certificates owned by foreigners was 17.8% at the end of June, while 46.6% of the owners were linked to Rogaland. The 20 largest owners held 38.5% of the certificates.
 
Outlook for the future
The board expects a satisfactory profit performance for the group in the second half year.
 
 
Stavanger, 11 August 2003
The Board of Directors of Sparebanken Rogaland
 
 
The full report including tables can be downloaded from the enclosed link.

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

About Us

SpareBank 1 SR-Bank is Norway’s second largest savings bank and operates in the Rogaland, Agder and Hordaland markets. We provide financial products and services, including loans and deposits, mutual funds and asset management, insurance and pension savings, payment and financing services, real estate brokerage and services related to the money and capital market. The head office is in Stavanger.