SpareBank 1 SR-Bank ASA (SRBANK): Strong result with income growth and good cost control
SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 2,892 million for 2018 compared with NOK 2,610 million for 2017. The result was due to higher ordinary operating income, a moderate increase in the group’s operating costs and significantly lower impairment on loans than in 2017.
The return on equity after tax was 11.3% compared with 11.0% in 2017, while the common equity tier 1 capital ratio was 14.7%, compared with 15.1% as at 31 December 2017.
The pre-tax profit for the quarter in isolation was NOK 676 million, compared with NOK 700 million for the corresponding period in 2017. This corresponds to a return on equity after tax of 10.1%, compared with 11.4% for the fourth quarter of 2017.
Impairment on loans and guarantees totalled NOK 324 million for the full year, compared with NOK 543 million in 2017.
“We took some strategically important steps during the year. FinStart Nordic AS made its first six investments in companies, which will strength our overall customer offer. We also established a presence in Oslo and have already been well received by both retail customers and corporate customers,” says chief executive Arne Austreid.
The group maintains good control over its costs and is one of the most efficient financial institutions in terms of costs measured as a percentage of income. The cost/income ratio for the full year was 40.9%.
“I am very pleased with the results we managed to achieve in 2018. The 11.3% return on equity shows that our business model is robust and profitable. The business sector and people in Southern and Western Norway have demonstrated an admirable ability to adapt and are now well equipped for a higher level of activity going forward. We stood side by side with our customers and achieved profitable operations during some challenging years. This was possible thanks to more than twelve hundred competent and motivated employees who work hard every day to create good customer experiences,” says Arne Austreid.
Financial performance – Q4 2018
- Pre-tax profit: NOK 676 million (NOK 700 million)
- Net profit for the quarter: NOK 527 million (NOK 559 million)
- Return on equity after tax: 10.1% (11.4%)
- Earnings per share: NOK 2.06 (NOK 2.18)
- Net interest income: NOK 926 million (NOK 819 million)
- Net commissions and other operating income: NOK 350 million (NOK 367 million)
- Net income from financial investments: NOK 68 million (NOK 204 million)
- Operating costs: NOK 576 million (NOK 570 million)
- Impairment on loans: NOK 92 million (NOK 120 million)
(Q4 2017 in brackets)
Preliminary annual result for 2018
- Pre-tax profit: NOK 2,892 million (NOK 2,610 million)
- Net profit for the year: NOK 2,296 million (NOK 2,086 million)
- Return on equity after tax: 11.3% (11.0%)
- Earnings per share: NOK 8.98 (NOK 8.16)
- Net interest income: NOK 3,439 million (NOK 3,162 million)
- Net commissions and other operating income: NOK 1,437 million (NOK 1,524 million)
- Net income from financial investments: NOK 569 million (NOK 634 million)
- Operating costs: NOK 2,229 million (NOK 2,167 million)
- Cost/income ratio: 40.9% (40.7%)
- Impairment on loans: NOK 324 million (NOK 543 million)
- Total lending growth over last 12 months: 7.6% (2.6%)
- Growth in deposits over last 12 months: 3.6% (11.0%)
- Common equity tier 1 capital ratio: 14.7% (15.1%)
- Tier 1 capital ratio: 15.9% (16.0%)
- The board proposes a dividend of NOK 4.50 (NOK 4.25)
(As at 31 December 2017 in brackets)
The common equity tier 1 capital ratio was 14.7% at the end of 2018, taking into account the dividend of NOK 4.50 compared with NOK 4.25 in 2017. The revised common equity tier 1 capital ratio target is 14.6%. The target will be achieved through good profitability, balanced growth and competitive dividends.
The full interim report as at 31 December is available for download from www.sr-bank.no.
Stavanger, 8 February 2019
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 subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.