SpareBank 1 SMN recorded a net profit of NOK 771m in the first half of the current year compared with NOK 871m in the same period last year. The bank has increased its loan impairment write-downs in keeping with indications given after the previous quarter.
The first half-year shows a good result for core business with increased incomes and reduced costs, a continued low level of defaults, increased losses, a strong financial position and good growth in home mortgage lending. The bank's subsidiaries are on a positive trend, and financial assets yielded high returns in the period.
"We are pleased with our first half performance. Underlying operations at the bank are good. We note good, sound growth in home financing. The growth comes despite the tighter lending practices we introduced early in 2016" says Group CEO Finn Haugan at SpareBank 1 SMN.
"Profits are affected by increased losses, essentially on oil related activity in Sunnmoere. However, we see no clear indications of ripple effects from this sectoral crisis. Unemployment in the region remains low, house prices continue to show a moderate increase and the level of defaults at the bank is still very low" says Mr Haugan.
Strengthened market position
The bank increased its lending to retail borrowers by 10.2 per cent to NOK 85.2bn in the twelve months to end-June. The bank has accordingly further strengthened its leading market position in the region. According to Statistics Norway the general level of market growth was 5.9 per cent on a national basis.
"The influx of new retail customers continues and was even higher in the second quarter than in the preceding quarter. This may be because our concept of excellent digital customer solutions combined with access to local advisers to serve any special needs that arise has gained even greater clarity in comparison with some of our competitors" says Finn Haugan.
Lending to corporate clients was broadly unchanged with an increase of 0.4 per cent to NOK 47.4bn. This is in keeping with the bank's capital plan and also reflects reduced demand for funding from business and industry. The bank has good customer growth among small and medium sized businesses.
Accounts for first half 2016 - key figures:
- Pre-tax profit: NOK 930m (1,080m in first half 2015)
- Post-tax profit: NOK 771m (871m)
- Return on equity: 10.9% (13.7%)
- Growth in lending: 6.5% (8.4%)
- Growth in deposits: 1.3% (11.4%)
- Loan losses: NOK 287m (56m)
- CET1 capital ratio: 14.1% (12.7%)
- Earnings per EC: NOK 3.71 (4.31)
Stable net interest income
Net interest income totalled NOK 942m in the first half of the current year, an increase of NOK 8m from the same period last year. Increased volumes of loans and deposits alike as well as increased margins on deposits push up the total, while reduced margins on home mortgage loans make the opposite contribution.
The bank's capital plan targets a CET1 capital ratio of at least 14.5 per cent by 31 December 2016. As at end-June 2016 the CET1 ratio stands at 14.1 per cent. The bank expects and assumes that the target will be reached without launching a stock issue.
Increased losses
While defaults remain at a low level, losses rose by NOK 118m in the second quarter to reach NOK 287m at the half-year mark. This is in all essentials down to a small number of exposures in oil related activity. The increase is in keeping with the bank's estimate after the previous quarter entailing an estimated loss in the region of NOK 450m-500m for the full year 2016.
"Some of our offshore clients in Sunnmoere are facing challenges. We are working closely with these clients to find good solutions to enable them work their way through the sectoral crisis. The solutions we are working on will be of a lasting nature, thereby limiting the risk to the bank" says Finn Haugan.
Trondheim, 11 August 2016
Contact persons at SpareBank 1 SMN:
Group CEO Finn Haugan on +47 900 41 002
Executive Vice President, Finance, Kjell Fordal on +47 905 41 672
Executive Vice President, Corporate Communications, Hans Tronstad on +47 941 78 322
About SpareBank 1 SMN
SpareBank 1 SMN is the region's leading financial services group. It is the market leader in the retail and corporate segments, with a total of 49 offices located at 42 sites across the region's municipalities.
We aim to be the recommended bank for customers in Troendelag and in Moere and Romsdal. Being a local, independent savings bank we feel a special responsibility for stimulating growth and prosperity in the region. We base our business on closeness to our customers, good accessibility, a full product range and comprehensive financial advisory services.
Our head office is located in Trondheim. The Group employs about 1,200 full-time equivalents and includes the following subsidiaries: SpareBank 1 Markets, SpareBank 1 SMN Finans Midt-Norge, EiendomsMegler 1 Midt-Norge, Allegro Finans and SpareBank 1 Regnskapshuset SMN. SpareBank 1 SMN is the largest shareholder in BN Bank with a 33% stake. SpareBank 1 SMN is one of six owners of SpareBank 1 Gruppen.
http://quarterlyreport.smn.no/2016/ (http://quarterlyreport.smn.no/2016/)
Report (http://hugin.info/144/R/2034574/757691.pdf)
Presentation (http://hugin.info/144/R/2034574/757692.pdf)
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: SpareBank 1 SMN via Globenewswire
