SpareBank 1 SR-Bank ASA:  Greater efficiency, low losses and moderate growth produce a good result

The Group achieved a pre-tax profit of NOK 1,471 million in the first half of 2014, compared with NOK 1,012 million in the same period last year. The profit is characterised by positive effects in several areas, such as increased income from ordinary operations and from financial investments, as well as reduced costs and low losses. Return on equity after tax was 16.5%, compared with 12.1% for the same period in 2013. The pre-tax profit for the quarter in isolation was NOK 684 million (NOK 511 million), equivalent to a return on equity after tax of 14.5% (11.8%).

"Over the course of time, we have introduced a number of measures intended to increase efficiency, by both reducing costs and increasing income. I am very pleased to note that we can see a reduction in costs, measured both in per cent and in nominal kroner. This has become necessary as we adapt to changes in customer behaviour, especially our customers' greatly increased use of digital channels. We have been pursuing continuous change for 175 years, and we will continue to do so, to ensure good profitability for the Group," says Arne Austreid, CEO of SpareBank 1 SR-Bank.

The group's net interest income, including income from commissions and its share of the profits from SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, amounted to NOK 1,462 million compared with NOK 1,286 million in the first half of 2013. The first half profits reflect the non-recurring effect of NOK 202 million in the first quarter, relating to the bank's stake in Nets Holding AS. Even without this write-up, profit from normal operations improved by NOK 243 million, compared with the same period last year.

Key figures for the first half year

• Pre-tax profit: NOK 1,471 million (NOK 1,012 million)
• Profit after tax: NOK 1,193 million (NOK 777 million)
• Return on equity after tax: 16.5% (12.1%)
• Earnings per share: NOK 4.67 (NOK 3.04)
• Net interest income NOK 1,128 million (NOK 977 million).
• Net commission and other income NOK 924 million (NOK 869 million).
• Net income from financial investments: NOK 520 million (NOK 223 million)
• Operating costs: NOK 1,006 million (NOK 1,007 million)
• Impairment losses on loans: NOK 95 million (NOK 50 million)
• Overall lending growth over the last 12 months: 3.6% (6.1%)
• Growth in deposits over past 12 months: 11.5% (2.8%)
• Tier 1 capital ratio: 13.2 % (12.0 %)
• Core equity capital ratio: 11.4% (10.3%)

(1.    Figures for first half 2013 are shown in brackets)

Activity in the region continues to be high, which we expect to continue through the coming quarters. Over very many years, the region's trade and industry has shown that it has both the willingness and the ability to adapt to fluctuations. Good profitability is therefore expected among the companies in our markets. This means that losses on lending will continue to be low in the coming quarters.

"There is great competition for customers in our region. Even so, we are experiencing a growth in customer numbers, both retail and corporate. We have the capacity for growth. We therefore decided in June to invest further in Bergen and Hordaland by establishing two new branches. We have also made some adjustments to our branches in Rogaland, so as to streamline our work in the marketplace by having fewer but larger centres of expertise," concludes Arne Austreid.

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

Stavanger, 13 August 2014

Contact persons:
Arne Austreid, Chief Executive Officer, telephone +47 900 77 334
Inge Reinertsen, Chief Financial Officer, telephone +47 909 95 033.