SpareBank 1 SR-Bank ASA: A strong result ensures continued good lending capacity

Greater efficiency and increased income strengthens the bank's core equity tier 1 capital to 11.1%. Continued low losses and good financial income mean SpareBank 1 SR-Bank is well-positioned for continued growth in an expanding region.

SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 2,347 million for 2013 compared with NOK 1,761 million for 2012. The return on equity after tax increased from 12.4% in 2012 to 14.0% in 2013. Pre-tax profit for the fourth quarter in isolation was NOK 674 million (NOK 458 million). This corresponds to a return on equity after tax of 16.2% (11.2%).

"I am very satisfied with the work being done in all parts of our business. Despite strong competition and significant changes in customer behaviour, we are managing to strengthen our position. A significant increase in operating income of NOK 735 million is a result of good, systematic work in all of our business areas. Efficiency has increased and we expect further improvements when the effect of the reduced number of full-time equivalents increases. The result we have presented is inevitably good," says SpareBank 1 SR-Bank's CEO, Arne Austreid.

Net interest income, including income from commissions and its share of the profits from SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, amounted to NOK 2,833 million compared with NOK 2,209 million in 2012. The underlying growth in costs was reduced to 2.5% in 2013, while the cost/income ratio, measured as operating costs in relation to income, was improved from 49.9% to 44.9%.

"Over the last two years we have strengthened our equity by no less than NOK 4 billion. The owners contributed NOK 1.5 billion through a share issue in 2012, and around NOK 2.5 billion has been supplied to equity in the form of retained earnings in 2012 and 2013. For 2013 alone, the Board of Directors proposes retaining 78% of a solid profit, which will make an important contribution to enabling us to continue supplying our expanding region with capital," says Arne Austreid.

Key figures as of 31 December

• Pre-tax profit: NOK 2,347 million (NOK 1,761 million)
• Net profit for the period: NOK 1,860 million (NOK 1,361 million)
• Return on equity after tax: 14.0% (12.4%)
• Earnings per share: NOK 7.27 (NOK 5.32)
• The Board proposes a dividend of NOK 1.60 (NOK 1.50) per share.
• Net interest income: NOK 2,119 million (NOK 1,742 million)
• Net commissions and other operating income: NOK 1,824 million (NOK 1,466 million)
• Net income from financial investments: NOK 555 million (NOK 578 million)
• Operating costs: NOK 2,019 million (NOK 1,888 million)
• Impairment losses on loans: NOK 132 million (NOK 137 million)
• Overall lending growth over the last 12 months: 5.3% (7.8%)
• Growth in deposits over the last 12 months: 6.0% (5.5%)
• Tier 1 capital ratio: 12.8% (12.1%)
• Core equity Tier 1 capital ratio: 11.1% (10.0%)

(As of 31 December 2012 in brackets)

Loan losses remain low. Businesses in the region are generally experiencing high levels of activity and good profitability. The companies draw a positive picture for 2014, from the companies' perspective, in a recently published survey of expectations for Rogaland.

"We are financially strong and profitable. In accordance with the new requirements, we must, like other banks, further reinforce our financial strength and funding. We will do this through continued good earnings from a business model with good breadth, more efficient operations and a moderate level of dividends," concludes Arne Austreid.

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

Stavanger, 7 February 2014

Contact people:
Arne Austreid, CEO, Tel. (+47) 900 77 334.
Inge Reinertsen, CFO, Tel. (+47) 909 95 033.
Thor-Christian Haugland, Executive Vice President Communications, Tel. (+47) 480 31 633.
Vidar Torsøe, Vice President Investor Relations, Tel. (+47) 970 80 656.