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SpareBank 1 SR-Bank ASA: A good result with good underlying operations and moderate losses

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SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 628 million in the first quarter of 2015, compared with NOK 787 million for the same period last year. The group achieved a return on equity after tax of 12.7% for the first quarter, compared with 18.4% in the first quarter of last year. The profit was achieved through both good underlying operations, good returns on financial investments, and moderate losses. The result for the first quarter of 2014 was affected by the non-recurring effect of the NOK 202 million write-up of the bank's then stake in Nets Holding AS.

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 784 million compared with NOK 741 million in the first quarter of 2014.

At the end of the first quarter, costs had grown by 5% over the last 12 months. The increase in costs was due to the aggressive measures that were taken at the start of 2015 involving the acquisition of Swedbank's branch in Stavanger, acquiring three accounting branches, and the development of new technological systems, which will improve and increase the efficiency of customer follow-up. The cost/income ratio, measured as costs as a percentage of income, improved from 44.1% (adjusted for the write-up of the shares in Nets Holding AS) in the first quarter of 2014 to 42.5% at the end of the first quarter of the year.

"We still face major challenges, both with respect to technological developments that lead to changes in customer behaviour and due to changeable times in the region. In my opinion, the continuous changes we make every day make us well-equipped to continue delivering good results. Our employees' expertise helps enable us to focus on new business and market areas, it ensures a high level of quality in our loan portfolio, and it helps to make processes more efficient," says the chief executive of SpareBank 1 SR-Bank, Arne Austreid.

Key figures as of 31 March

  • Pre-tax profit: NOK 628 million (NOK 787 million)

  • Net profit for the period: NOK 496 million (NOK 659 million)

  • Return on equity after tax: 12.7% (18.4%)

  • Earnings per share: NOK 1.94 (NOK 2.58)

  • Net interest income: NOK 627 million (NOK 547 million)

  • Net commissions and other operating income: NOK 408 million (NOK 480 million)

  • Net income from financial investments: NOK 211 million (NOK 319 million)

  • Operating costs: NOK 530 million (NOK 505 million)

  • Impairment losses on loans: NOK 88 million (NOK 54 million)

  • Total lending growth over last 12 months: 7.3% (3.8%)

  • Growth in deposits over last 12 months: 15.5% (8.5%)

  • Tier 1 capital ratio: 12,9 % (13.0%)

  • Common equity tier 1 capital ratio: 12,1 % (11.2%)

    (As of 31 March 2014 in brackets)

The group recognised NOK 88 million in net impairment losses on loans in the first quarter of 2015 (NOK 54 million). This corresponded to 0.25% (0.18%) of gross loans. Write-downs of groups of loans accounted for NOK 20 million of total write-downs and reflect cyclical changes in the region.

"Cyclical changes have had an impact in the region, primarily through lower activity for companies in the petroleum industry. Solid expertise and a great ability to restructure in most of these companies are helping to ensure that the negative effects are less than expected. At the same time we are seeing good activity, growth and greater profitability in many companies in other industries in the region," says Arne Austreid.

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

Stavanger, 28 April 2015

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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