SpareBank 1 SR-Bank ASA (SRBANK): A good annual result characterised by solid underlying operations, one-off income and a high level of activity

SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 3,817 million for 2019 compared with NOK 2,892 million in the preceding year. This profit is characterised by significant one-off income, increased operating income and increases in costs as a result of high levels of activity during the year when compared with 2018.

The return on equity after tax was 14.0 % compared with 11.3 % in 2018. With the effects of the Fremtind Forsikring AS merger taken into account, the return on equity after tax was 12.1 %.

Impairment losses on loans and guarantees totalled NOK 235 million for the full year, compared with NOK 324 million in 2018.

The pre-tax profit for the quarter in isolation was NOK 626 million, compared with NOK 676 million for the corresponding period the year before. This corresponds to a return on equity after tax of 8.3%, compared with 10.1% for the fourth quarter of 2018. The quarter is characterised by lower financial income, somewhat higher impairments on lending and one-off costs.

‘During the year, we have created a good basis for profitable growth, enhanced access to more customers and new revenues. Growth in lending in recent years has been stronger outside of Rogaland, and has primarily been in and around Oslo and Bergen, as well as neighbouring municipalities,’ says CEO Arne Austreid.

The increase in costs for the year totalled 11.2% and was due to high levels of activity during the year combined with significant variable salary costs as a result of the good profit recorded for the year overall. The cost ratio in 2019 was 37.9%. Adjusted for the impact of the merger with Fremtind Forsikring AS, the cost ratio was 40.8%.

Preliminary annual result for 2019

• Pre-tax profit: NOK 3,817 million (NOK 2,892 million)
• Net profit for the year: NOK 3,124 million (NOK 2,296 million)
• Return on equity after tax: 14.0% (11.3%)
• Earnings per share: NOK 12.22 (NOK 8.98)
• Net interest income: NOK 3,987 million (NOK 3,439 million)
• Net commissions and other operating income: NOK 1,416 million (NOK 1,437 million)
• Net income from financial investments: NOK 1,127 million (NOK 569 million)
• Operating costs: NOK 2,478 million (NOK 2,229 million)
• Cost/income ratio: 37.9% (40.9%)
• Net loan loss provisions: NOK 235 million (NOK 324 million)
• Total lending growth over last 12 months: 4.9% (7.6%)
• Growth in deposits over last 12 months: 4.3% (3.6%)
• Common equity tier 1 capital ratio: 17.0% (14.7%)
• Tier 1 capital ratio: 18.6% (15.9%)
• The board proposes a dividend of NOK 5.50 (NOK 4.50)
  (As at 31 December 2018 in brackets)

Financial performance – Q4 2019

• Pre-tax profit: NOK 626 million (NOK 676 million)
• Net profit for the quarter: NOK 485 million (NOK 527 million)
• Return on equity after tax: 8.3% (10.1%)
• Earnings per share: NOK 1.90 (NOK 2.06)
• Net interest income: NOK 1,062 million (NOK 926 million)
• Net commissions and other operating income: NOK 359 million (NOK 350 million)
• Net income from financial investments: NOK 22 million (NOK 68 million)
• Operating costs: NOK 678 million (NOK 576 million)
• Net loan loss provisions: NOK 139 million (NOK 92 million)
  (Q4 2018 in brackets)

The group’s long-term return on equity target is a minimum of 12%. Factors such as profitable lending growth, moderate impairments on loans and financial liabilities, growth in other operating income, gains from financial investments, and greater cost-effectiveness will contribute to the group also achieving this goal in 2020.

The full interim report as at 31 December 2019 is available for download from www.sr-bank.no.

Stavanger, 5 February 2020

Contact persons:
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

This information is disclosed in compliance with section 5-12 of the Securities Trading Act.