SpareBank 1 SR-Bank ASA; A good result with efficient operations and increased financial income

SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 1,633 million for the first three quarters of the year, compared with NOK 1,669 million for the same period last year. The result was characterised by further improvements in efficiency via increased operating income and lower operating costs. At the same time, the bank also significantly increased its income from financial investments. Its common equity tier 1 capital ratio as at 30 September 2016 was 13.8%. The return on equity after tax was 10.2%. The net profit for the quarter seen in isolation was NOK 660 million, compared with NOK 489 million last year. This corresponds to a return on equity after tax of 12.2%, compared with 9.3% for the third quarter in 2015.

The group's operating costs amount to NOK 1,492 million in the year-to-date, compared with NOK 1,495 million for the same period last year. Last year's costs were affected by, among other things, non-recurring effects related to changes in the bank's pension scheme, which alone reduced personnel costs by NOK 63 million.

"I am very satisfied with the overall result the group has achieved for the quarter seen in isolation and for the year-to-date. A good, sustained effort is being made throughout the organisation to get costs down further and raise operating income. In the last quarter, the bank's financial investments have contributed income of no less than NOK 231 million, compared with NOK 12 million for the same period last year," says Arne Austreid, the chief executive of SpareBank 1 SR-Bank.

As at 30 September 2016

• Pre-tax profit: NOK 1,633 million (NOK 1,669 million)
• Net profit: NOK 1,326 million (NOK 1,304 million)
• Return on equity after tax: 10.2% (10.9%)
• Earnings per share: NOK 5.19 (NOK 5.10)
• Net interest income: NOK 2,138 million (NOK 1,915 million)
• Net commissions and other operating income: NOK 1,088 million (NOK 1,160 million)
• Net income from financial investments: NOK 515 million (NOK 317 million)
• Operating costs: NOK 1,492 million (NOK 1,495 million)
• Impairment losses on loans: NOK 616 million (NOK 228 million)
• Total lending growth over last 12 months: 0.1% (7.4%)
• Growth in deposits over last 12 months: -2.0% (9.5%)
• Common equity tier 1 capital ratio: 13.8% (12.2%)
• Tier 1 capital ratio: 14.7% (13.1%)
  (As at 30 September 2015 in brackets)                                

The group recognised NOK 616 million in net impairment losses on loans at the end of the third quarter of 2016, compared with NOK 228 million last year. The increase in impairment losses is largely linked to some single commitments within oil-related activities, as well as a NOK 138 million increase in collective impairment losses. Net impairment losses for the quarter seen in isolation were NOK 161 million, compared with NOK 305 million the previous quarter.

"The situation in the region is still demanding. At the same time, more and more companies are reporting that they expect a cautious improvement going forward. Nonetheless, I expect we will have to implement further impairment losses in the coming quarters, in line with what we have communicated earlier. We maintain a close relationship with our customers through close follow-up and are spending a lot of time on preventive work aimed at reducing future losses," concludes Arne Austreid.

The full interim report is available for download from www.sr-bank.no.

Stavanger, 27 October 2016

Contact people:
Arne Austreid, CEO, Tel. +47 900 77 334
Inge Reinertsen, CFO, Tel. +47 909 95 033
Stian Helgøy, Vice President Investor Relations, Tel. +47 906 52 173
Thor-Christian Haugland, Executive Vice President Communications, Tel. +47 480 31 633

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