SpareBank 1 SMN recorded a profit of NOK 1,647m in 2016, which is NOK 241m better than the previous year. The Board of Directors of the bank recommends a dividend payout of NOK 3.00 per equity certificate (EC).

The Directors' recommendation to the Supervisory Board means that 37 per cent of the net profit will be distributed to the owners and the community. This is in keeping with the bank's capital plan, and represents an increase of 32 per cent over the previous year. The Directors recommend an allocation of NOK 220m to non-profit causes, of which NOK 160m will be added to the foundation Sparebankstiftelsen SMN and NOK 60m will be distributed as donations.

The profit posted by the bank is attributable to good sales, many new customers and efficiency enhancements both at the parent bank and co-owned product companies. In addition to increasing its operating revenues, the bank achieved good return on financial investments. The goal of zero cost growth at the parent bank was attained. An increase in loan losses in 2016 compared with 2015 is in keeping with the forecast for the year.

"We are well pleased with the profit performance in 2016, and the bank has strengthened its position as the leading bank in Trøndelag and in Møre and Romsdal. The high growth is proof of the success of the bank's strategy. We succeed by managing to combine an offensive digital reorganisation with skilled advisers across our 48 office locations," says Finn Haugan, Group CEO at SpareBank 1 SMN.

Capital target attained
The bank had set a CET1 target of a minimum of 14.5 per cent to be attained by the end of 2016. The actual figure reached was 14.9 per cent. The Directors have now adopted a new capital target of 15.0 per cent by the end of 2017.

"The bank is well equipped to contribute to new growth and necessary readjustment in our region. We have succeeded in attaining our capital target through good banking operations. Additionally we have retained profit for some years by reducing dividend payouts. The Directors assume and expect a normalised dividend level in 2017, i.e. a payout ratio of 50 per cent," says Finn Haugan.

Accounts for 2016 - key figures:

  • Pre-tax profit: NOK 1,983m (1,776m in 2015)
  • Post-tax profit: NOK 1,647m (1,406m)
  • Return on equity: 11.3% (10.7%)
  • Growth in lending: 8.0% (5.8%)
  • Growth in deposits: 4.8% (5.6%)
  • Loan losses: NOK 516m (169m)
  • CET1 capital ratio: 14.9% (13.6%)
  • Earnings per EC: NOK 7.91 (7.02)
  • Recommended dividend: NOK 3.00 per EC (NOK 2.25)

15,000 new personal customers
SpareBank 1 SMN increased its lending to personal customers by 10.7 per cent to NOK 89.4bn last year. This is above the growth for the market in general, and over the course of the year the bank acquired 15,000 new personal customers.

Loans to corporate customers increased by 3.2 per cent to NOK 48.1bn. In keeping with the bank's capital plan, growth in lending to larger customers has been reduced concurrent with good growth among small and medium-sized businesses. The bank acquired 2,000 new corporate customers last year.

A more efficient bank
The bank has achieved its goal of zero growth in costs in the period 2014 to 2016. The goal is retained for 2017, and steps will be taken which can also bring a decline in totally costs compared with the preceding years.

Changing customer behaviour and new technology will pave the way for further efficiency enhancement. The number of FTEs has in the two years to the end of 2016 been reduced by 90 to 630. The reduction will continue at least at the same pace.

A new distribution strategy calls for continuation of the bank's strong local presence, but on a more efficient and differentiated footing than previously. The bank is intensifying its focus on digital distribution of products and services as well as on the use of robotics to automate routine work processes.

Lower losses in 2017
Defaults remain at a low level. Losses in the fourth quarter totalled NOK 99m, bringing the overall loss for the year to NOK 516m. The losses refer very largely to a small number of loan exposures in oil-related activity.

"The level of losses is consistent with our forecasts for 2016. Times are still challenging for the supplier industry in the offshore segment. We envisage new loss provisioning in this sector in 2017, but at a lower level than last year. There is no indication that the offshore crisis has fed through to the wider business sector in our region to any extent worth mentioning," says Finn Haugan.

Trondheim, 7 February 2017

Contact person at SpareBank 1 SMN:
Executive Vice President, Finance, Kjell Fordal on +47 905 41 672

http://quarterlyreport.smn.no/2016/

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)

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Source: SpareBank 1 SMN via Globenewswire