Sparebank 1 Midt-Norge - Results 2nd. quarter 2002

 

 

 

Unless otherwise stated, figures in parenthesis refer to last year.

 

Sparebanken Midt-Norge achieved a net profit of NOK 119 million in the first half-year, NOK 17 million lower than in the same period last year.

 

The decline in profit performance is essentially ascribable to lower currency gains and to losses on securities. Ordinary banking operations are on a positive trend.

 

Profit measured 1.04% (1.24%) of average total assets.

 

Return on equity for the first half-year was 10.8% (12.8%).

 

The second quarter in isolation produced a net profit of NOK 29 million compared with NOK 90 million in the first quarter. The decline is essentially ascribable to losses on securities and to lower gains on disposals of long-term shareholdings.

 

Net interest and credit commission income totalled NOK 424 million (NOK 399 million).

 

The interest margin was 2.53% in the first half of 2002 (2.54%). The margin for the full year 2001 was 2.61%. 

 

Net interest income for the first half-year is negatively affected by higher market interest rates without corresponding adjustments to rates charged to customers. A general interest rate increase will be effected as from 25 August 2002.

 

Capital gains

The bank's portfolio of short-term investments and primary capital certificates produced a negative return and dividend of NOK 7 million (NOK 23 million) in the first half of 2002. In the second quarter in isolation the loss came to NOK 32 million. Prices fell by 5.9 per cent, compared with a value fall of 11.6 per cent on Oslo Børs in the same period. 

 

Currency gains came to NOK 7 million (17 million) and return on money market funds to NOK 7 million (14 million).

 

Commission income and other operating income

Net commission income and other operating income came to NOK 140 million (142 million). Higher other incomes in 2001 are ascribable to gain on property disposals in the first half of that year. Ordinary commission income and income from subsidiaries remains on a positive trend.

 

Overall profit reported by the bank's subsidiaries came to NOK 6.6 million (7.2 million) after tax. Eiendomsmegler 1 achieved a profit of NOK 3.8 million (8.8 million), SpareBank 1 Finans NOK 3.3 million (4.3 million) and Midt-Norge Regnskap NOK 1.1 million (0.5 million). Allegro Finans ASA report a loss of NOK 0.3 million (-2.2 million) and the bank's property company a loss of NOK 1.2 million (-4.2 million).

 

SpareBank 1 Group

The bank's stake in the Spare-Bank 1 Group AS is regarded as participation in a joint venture, and is accounted for by the equity method in the bank's accounts. SpareBank 1 Midt-Norge's stake is 13%. SpareBank 1 Group's first half result was a negative NOK 170 million (-148 million), and SpareBank 1 Midt-Norge's share of this was NOK -22.4 million (-19.2 million). Falling securities prices are the main reason for the poor results for the SpareBank 1 Group.

 

Operating expenses

The group's overall operating expenses totalled NOK 350 million in the first half-year (NOK 326 million).

 

Personnel expenses came to NOK 172 million (168 million). Resource use at the parent bank fell by an average of about 25 posts (FTEs) compared with the same period last year. The cost reduction this involves was neutralised by ordinary wage growth. Resource use at the subsidiaries rose by about five posts (FTEs) in the period.

 

Other first half operating expenses came to NOK 178 million (158 million). The increase is explained by the introduction of VAT on services and higher other administration costs.

 

As of 30 June 2002 the group employed 694 staff (FTEs), an increase of 16 FTEs since the start of the year. Of this figure the parent bank accounted for 586 FTEs compared with 570 FTEs at the start of the year. 

 

Relative operating expenses measured 2.09% (2.08%) of average total assets. Group expenses measured 65% (58%) of income and parent bank expenses 62% (56%). The deterioration is largely explained by income reductions due to losses on short-term share investments. 

 

Write-down of long-term share-holdings and gain on disposal of fixed assets

Net write-downs and gains on disposals of long-term sharehold-ings totalled NOK 36 million (11 million) in the first half-year. Disposal gains totalled NOK 43 million, write-downs of long-term shareholdings NOK 6 million. Of the gain, disposal of Midnor AS shares accounted for NOK 30 million and disposal of EC Dahl Eiendom shares for NOK 11 million. 

 

Loan losses and defaults

Loan losses totalled NOK 53 million (49 million). 

 

Of the losses, NOK 35 million (31) are specified losses referring to business customers and NOK 7 million (8) specified losses on retail customers. A provision of NOK 11 (11) million has been made for unspecified losses. 

 

Specified loss provisions as at 30 June 2002 totalled NOK 407 million, NOK 10 million less than at year-end. Unspecified loss provisions came to NOK 399 million, 1.3% of total outstanding loans. 

 

Loans in default for more than 90 days were reduced by NOK 62 million to NOK 570 million in the first half-year. Loans in default

between 30 and 90 days rose by NOK 41 million and now total NOK

314 million. This brings overall defaults in excess of 30 days to

NOK 884 million, NOK 21 million less than at the start of 2002.

 

The bank's assets totalled NOK 34 billion as of 30 June 2002, NOK

0.7 billion (2%) less than at the end of 2001.

 

Total lending rose by NOK 0.7 billion (2.4%) in the first half to

reach NOK 30 billion at mid-year. Lending to the retail market rose

by 5%, while lending to the business market fell by 0.3%.

 

The bank has introduced a more restrictive pricing and lending

policy in regard to the business sector which, together with re-

duced demand for loans, has curtailed lending growth.

 

Lending grew by NOK 1.8 billion (6.6%) in the 12 months to end-

June.in the Loans to the retail market accounted for 57% of ordinary

loans to customers as of 31 June 2002.

 

Customer deposits rose by NOK 0.6 billion (3.6%) in the first half-

year to reach NOK 18.5 billion as at 30 June 2002.

 

Retail customer deposits rose by NOK 1.1 billion (10.2%) in the first

half and business customer deposits fell by NOK 0.2 billion (3.0%).

 

The strong growth in the retail market in the second quarter was

due to holiday pay disbursed to households.

 

Deposits rose by NOK 0.5 billion (2.8%) in the 12 months to end-

June.

 

The value of equity and fixed income funds sold to our customers

came to NOK 1,200 million at mid-year, NOK 75 million lower than at the turn of the year. Gross new sales amounted to NOK 68 million, while redemptions and value changes came to a negative NOK 143 million. The bank's overall unit-linked, pension saving and life annuity portfolio rose from NOK 292 million to reach NOK 368

million as of mid-year.

 

The bank's insurance portfolio continues on a marginally rising

trend, both for life and non-life products.

 

As of end-June the capital adequacy ratio was 11.4% and core

capital adequacy 8.3%.

 

The Directors expect the positive trend in ordinary banking opera-

tions to continue. They are closely monitoring developments in the

region's business sector. Steps are being taken on a continual

basis to improve portfolio quality. The Directors do not anticipate an

improvement in securities markets short term.