SpareBank 1 SR-Bank ASA: Strong result with higher income, moderate losses and good cost control

SpareBank 1 SR-Bank achieved a pre-tax profit of NOK 2,601 million for 2014 compared with NOK 2,347 million for 2013. The return on equity after tax was 14.2% in 2014 compared with 14.0% in 2013. Pre-tax profit for the fourth quarter in isolation was NOK 553 million (NOK 674 million). This corresponds to a return on equity after tax of 11.7% (16.2%).

The Group's net interest income, including commissions and its share of the profits from SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, amounted to NOK 2,983 million compared with NOK 2,833 million in 2013. Costs grew by just 1.8% in 2014, while the cost/income ratio, measured as operating costs in relation to income, improved from 44.9% in 2013 to 41.8% in 2014.

"The group's employees have dealt with the restructuring processes constructively and well. Customer behaviour has changed significantly in the last few years, especially in relation to the increased use of digital channels. In the last twelve months we have both introduced new customer processes and eliminated others. This has resulted in a need to bring in new, different expertise, which we have managed in combination with reducing the number of full time equivalents. We are now well-equipped to continue satisfying our customers' need for advice, capital, products and services," says the chief executive of SpareBank 1 SR-Bank, Arne Austreid.

Key figures as at 31 December

• Pre-tax profit: NOK 2,601 million (NOK 2,347 million)
• Net profit for the period: NOK 2,095 million (NOK 1,860 million)
• Return on equity after tax: 14.2% (14.0%)
• Earnings per share: NOK 8.20 (NOK 7.28)
• The Board proposes a dividend of NOK 2 (NOK 1.60) per share.
• Net interest income: NOK 2,404 million (NOK 2,119 million)
• Net commissions and other operating income: NOK 1,732 million (NOK 1,824 million)
• Net income from financial investments: NOK 778 million (NOK 555 million)
• Operating costs: NOK 2,056 million (NOK 2,019 million)
• Impairment losses on loans: NOK 257 million (NOK 132 million)
• Total lending growth over last 12 months: 4.7% (5.3%)
• Growth in deposits over last 12 months: 13.7% (6.0%)
• Tier 1 capital ratio: 12.3% (12.8%)
• Common equity tier 1 capital ratio: 11.5% (11.1%)

(As at 31 December 2013 in brackets)

The Group recognised NOK 257 million in net impairment losses on loans in 2014 (NOK 132 million). This corresponded to 0.20% (0.11%) of gross loans. Impairments on groups of loans increased by NOK 75 million in 2014 and reflect cyclical changes in the region.

"Falling oil prices have naturally created greater uncertainty and presented new challenges for a number of actors, especially within the oil services industry. Nonetheless, the business survey of economic activity that we recently published shows that the majority of the region's companies believe they will be able to adjust to the new situation, which means that most companies expect a relatively good year in 2015 as well. Many companies in the region sell a significant proportion of their goods and services in markets abroad. Weaker Norwegian kroner exchange rates improve their competitiveness and profitability. We therefore anticipate a moderate level of losses in the coming quarters," says Arne Austreid.

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

Stavanger, 4 February 2015

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.
Stian Helgøy, Vice President Investor Relations, Tel. (+47) 906 52 173.