SRBNK: A stronger quarterly result with higher income and lower impairment losses

SpareBank 1 SR-Bank ASA (SRBANK) achieved a pre-tax profit of NOK 705 million for the fourth quarter of 2020, compared with NOK 626 million for the same quarter last year. The quarter’s results were characterised by growth, good profitability, efficient operations and a lower level of impairment losses compared with the year’s other quarters. 

The return on equity after tax for the quarter was 9.7%, compared with 8.3% for the same quarter last year, which is also an improvement from the previous quarter when the return on equity after tax was 8.2%.

Impairment losses on loans and guarantees amounted to NOK 270 million in the fourth quarter of 2020, compared with NOK 139 million in the same quarter last year and NOK 369 million in the previous quarter. Total impairment losses for the year amounted to NOK 2,030 million.

“Low mortgage rates and grant schemes for companies that suffered a drop in earnings have stemmed an economic downturn that could have been more severe. Lending growth in the retail market was good for both the quarter and the full year, while it was almost unchanged for lending to the corporate market,” says Benedicte Schilbred Fasmer, CEO of SpareBank 1 SR-Bank.

The group’s operating costs for the fourth quarter of 2020 amounted to NOK 629 million, down from NOK 678 million for the same period last year. Operating costs for the full year amounted to NOK 2,386 million, which represents an improvement of NOK 92 million compared with 2019. Parts of this reduction can be attributed to the effects of Covid-19 measures, which resulted in less activity in several areas. Efficiency has also been improved due to new technology and more manual processes having been robotised.

“We have handled a difficult year very well. The majority of our customers have also done the same. The interaction between our advisers and our customers has never been more vital in arriving at good solutions for both parties. We are well-equipped to contribute to a good close partnership with our customers in order to continue managing the consequences of the pandemic. Many of our customers expect more activity in the coming year, which indicates growing optimism,” says Benedicte Schilbred Fasmer, CEO of SpareBank 1 SR-Bank.

The net pre-tax profit for the full year 2020 was NOK 1,821 million and after tax it was NOK 1,590 million. The return on equity after tax for 2020 was 6.4%.

Q4 2020

• Pre-tax profit: NOK 705 million (NOK 626 million)
• Net profit for the quarter: NOK 608 million (NOK 485 million)
• Return on equity after tax: 9.7% (8.3%)
• Earnings per share: NOK 2.38 (NOK 1.90)
• Net interest income: NOK 994 million (NOK 1,062 million)
• Net commissions and other operating income: NOK 370 million (NOK 359 million)
• Net income from financial investments: NOK 240 million (NOK 22 million)
• Operating costs: NOK 629 million (NOK 678 million)
• Impairments on loans and financial liabilities: NOK 270 million (NOK 139 million)
• Total lending growth over past 12 months: 3.7% (4.9%)
• Growth in deposits over past 12 months: 14.6% (4.3%)
• Common Equity Tier 1 capital ratio: 18.3% after deduction of decided 2019 dividend (17.0%)
  (Q4 2019 in brackets) 

At the end of the fourth quarter of 2020, the Common Equity Tier 1 capital ratio was 18.3%, compared with 17.0% at the same time last year. The stated capital ratio was calculated based on the fact that a dividend of NOK 5.50 will be paid out for the 2019 financial year. This is in line with the authorisation the board received from the annual general meeting in April 2020. The board has exercised this authorisation and decided a dividend of NOK 5.50 per share based on the 2019 financial year. The board will also ask the annual general meeting for authorisation to decide on the payment of a dividend for the 2020 financial year of up to NOK 3.10 if the authorities’ regulations permit this.

The group’s Common Equity Tier 1 capital ratio target is 16.7%, which is significantly above the authorities’ requirement of 15.2%.

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

Stavanger, 11 February 2021

Contact persons:
Benedicte Schilbred Fasmer, CEO, Tel. +47 950 60 034
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.