First half accounts 2017 at SpareBank 1 SMN: Solid operations and high growth brought a good profit performance

Solid operations and high growth brought a good profit performance

SpareBank 1 SMN recorded a net profit of NOK 759m in the first half of the current year compared with NOK 771m in the same period last year. The bank notes a large influx of new customers, both private individuals and small businesses.

SpareBank 1 SMN's first half-year features a good result for the banking business, with strong growth in the number of new customers and good sales in all product areas. Losses are down and the financial position is very strong. The result is affected by the fact that return on financial interests is NOK 174m lower than in the same period last year.

"We are well pleased with the performance so far this year. The fact that as many as 6,750 personal customers and 450 firms have opted for us as their new main bank in the first half-year is a fine acknowledgement of the bank's strategy. We view this as an expression of confidence and confirmation that our chosen strategy as a digital bank with a local and personal signature has been well received by our customers", says Finn Haugan, Group CEO at SpareBank 1 SMN.

Market position strengthened
The bank increased its lending to personal customers by as much as 10.5 per cent to NOK 94.1bn in the twelve months to end-June. Lending to corporate customers rose by 4.8 per cent to NOK 49.7bn. The growth stems mainly from small businesses. The bank notes a good influx of customers among small and medium-sized businesses, which is in line with its desire for differentiated lending growth.

"The growth in lending is solidly based and is in evidence despite our having tightened our lending somewhat to households and parts of the business sector. It is also highly gratifying to note the success of the bank's strategy of income diversification. Activity is high across all parts of the Group, and we have once again strengthened our leading market position in Trøndelag and in Møre and Romsdal," says Finn Haugan.

Capital target reached
The bank has strengthened its CET1 capital by a billion kroner in the first half-year, and now has a capital ratio of 15.0%. Hence the targeted ratio of 15.0% has already been attained.

Net interest income rose by NOK 101m to NOK 1,043m compared with the same period last year. The increase is due mainly to growth in lending and increased margins.

Group costs increased by NOK 153m, most of which relates to a business acquisition by SpareBank 1 SMN Regnskapshuset and increased activity at SpareBank 1 SMN Markets. Parent bank costs are virtually unchanged relative to target. The increase is mainly down to a new tax on financial sector employers. The target of zero growth in parent bank costs in 2017 is upheld.

Lower losses
Losses are considerably reduced compared with the same period last year with a decline of NOK 112m to NOK 175m. The losses relate mainly to a small number of exposures in the offshore sector.

"The decline is in keeping with our expectations at the start of the year. We expect lower losses in 2017 than in 2016. Developments in the offshore sector nonetheless remain a matter of much uncertainty. The residential mortgage loan portfolio continues to show very low losses, and we see no indications of any increase ahead. Activity in our catchment area is high and unemployment is at a stable low level," says CEO Finn Haugan.

First half accounts 2017 - key figures:

• Pre-tax profit: NOK 961m (930m in 1st half 2016)
• Post-tax profit: NOK 759m (771m)
• Return on equity: 9.9% (10.9%)
• Growth in lending: 8.5% (6.5%)
• Growth in deposits: 12.7% (1.3%)
• Loan losses: NOK 175m (287m)
• CET1 capital ratio: 15.0% (14.1%)
• Earnings per EC: NOK 3.65 (3.71)

Trondheim, 8 August 2017

Contact persons at SpareBank 1 SMN:
Executive Vice President, Finance, Kjell Fordal on +47 905 41 672
Executive Director, Rolf Jarle Brøske on +47 911 12 475