SpareBank 1 SMN

Good financial performance and many new retail customers

SpareBank 1 SMN achieved a profit of NOK 311m in the first quarter of the current year compared with NOK 441m in the same period last year. The decline in profit is mainly due to an increase in collectively assessed impairment write-downs. The bank is experiencing a large influx of new customers.

 

The quarter shows a good result for core business with increased income and reduced costs, a continued low level of defaults and low individual losses, a strong financial position and good growth in lending and deposits. The bank's subsidiaries are also on a positive trend.

 

"We are pleased with our first quarter result. The entire group is performing well. At the same time the result is affected by increased collective impairment write-downs. In view of the market situation in oil-related activity, collectively assessed impairment write-downs represent a buffer to meet possible future losses in this sector. Individual losses and defaults are however still at a very low level, reflecting good times across business and industry in general" says Group CEO Finn Haugan at SpareBank 1 SMN.

 

3,400 new retail customers

SpareBank 1 SMN increased its lending to retail customers by 9.5 per cent to NOK 82.3bn in the twelve months to end-March. This growth is higher than market growth and the bank has strengthened its market position. Over the course of the quarter 3,400 new customers have established customer relationships with the bank.

 

"The influx of new customers is particularly high at present. Good digital customer solutions combined with access to local advisors are in demand", says Finn Haugan.

 

Lending to corporate clients was reduced by 1.2 per cent to NOK 47.2bn. The decline is in keeping with the bank's capital plan and moreover reflects reduced demand for funding from business and industry. The bank has very good customer growth among small and medium sized businesses.

 

Accounts for first quarter 2016 - key figures:

• Pre-tax profit: NOK 383m (567m in Q1 2015)
• Post-tax profit: NOK 311m (441m)
• Return on equity: 8.9% (14.1%)
• Growth in lending: 5.4% (10.0%)
• Growth in deposits: 5.4% (10.9%)
• Loan losses: NOK 170m (22m)
• CET1 capital ratio: 13.6% (12.3%)
• Earnings per EC: NOK 1.49 (2.18)

 

Stable net interest income

Net interest income totalled NOK 469m in the first quarter of the current year, an increase of NOK 2m from the same quarter of last year. Increased lending to retail customers and increased deposits from retail customers and corporates alike made a positive contribution, while reduced home mortgage loan margins pushed down the net figure. We have adjusted margins in the corporate portfolio and higher margins are expected in the forthcoming quarters.

 

The bank's capital plan targets a CET1 capital ratio of at least 14.5 per cent by 31 December 2016. As of end-March 2016 the CET1 ratio stands at 13.6 per cent. The bank expects and assumes that the target will be reached without launching a stock issue.

 

Increased losses

The bank has found cause to increase collectively assessed impairment write-downs by a further NOK 150m. This is due to an increased risk of default in light of the negative development in the offshore market. A continued negative development could necessitate further collective write-downs. The bank anticipates that loss write-downs could rise to NOK 450m-500m in 2016.

 

"We have financed 67 offshore vessels of a limited number of shipping companies, mainly in Sunnmøre. We are working closely with these clients to find good solutions to enable them to come through the crisis in the sector," says Finn Haugan.

 

 

Trondheim, 29 April 2016

 

Contact persons at SpareBank 1 SMN:

Group CEO Finn Haugan on [phone]

Executive Vice President, Finance, Kjell Fordal on [phone]

http://quarterlyreport.smn.no

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Source: SpareBank 1 SMN via Globenewswire

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