SpareBank 1 Midt-Norge posted a pre-tax profit of NOK 221 million, a post-tax profit of NOK 176 million and a post-tax return on equity of 18.2%

 | Source: Sparebank 1 SMN Sparebank 1 SMN

(Consolidated figures. Figures in parenthesis refer to last year's first quarter unless otherwise stated)
 
SpareBank 1 Midt-Norge achieved a profit of NOK 176 million after tax in the first quarter 2007 (215m), equivalent to a return on equity of 18.2% (24.7%). The profit measured 1.10% (1.61%) of average total assets.
 
The strong growth seen in 2006 continued into 2007. Overall lending growth of 18% over the last 12 months and matching deposit growth of 17% indicate that the Bank is continuing to take market shares. The last 12 months' growth in "other savings products" was 15% while the insurance portfolio has grown by as much as 43%. The good growth is attributable to continued satisfactory market conditions, a solid effort by a competent staff and the Bank's market and operating concept which is enabling the Bank to strengthen its position as the leading bank in Central Norway for businesses and private individuals.
 
Net profit is NOK 39 million down compared with the first quarter 2006 when the Bank recorded larger loss recoveries as well as substantial gains on disposal of real estate, mainly in Molde.
 
The good performance is due mainly to:
 
  • Strong growth in lending (18%) and deposits (17%), thereby maintaining net interest income at last year's level despite a continued market-related fall in the interest margin
  • A strong increase in commission income on sales of savings products, capital market products and estate agency services. Commission income rose by a total of NOK 31 million or 23% compared with the first quarter 2006.
  • A strong result for SpareBank 1 Gruppen AS. A projected result of NOK 241 million is the best quarterly performance ever.
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    The income side shows:
     
  • A reduced net interest margin of 1.58% (1.88%) is due to lower lending margins in both the corporate and retail market. This is attributable both to intense competition and to the fact that the lower risk profile established in the Bank's loan portfolio is driving down margins. The reduction is in line with the Bank's plans and has produced the expected lending growth and more robust earnings.
  • Net interest income and other operating income rose by 23% to NOK 163 million. The increase is mainly on sales and portfolio commission, savings and capital market products and on estate agency.
  • SpareBank 1 Gruppen AS has a projected quarterly result of NOK 241 million after tax. With its 19.5% stake in SpareBank 1 Gruppen, the Bank's share of SpareBank 1 Gruppen's result is NOK 48 million.
  • Overall the Bank's subsidiaries increased their income. This is particularly true of EiendomsMegler 1 which carried through a strategy of expansion in 2006.
  • Capital gains on securities and gains on currency trading and financial instruments totalled NOK 29 million (83 million).
    •  
    The cost side shows:
     
  • Operating expenses of NOK 263 million (242m). Cost growth at the parent bank was limited to NOK 4 million. The growth in costs is thus largely a consequence of the push forward by the Bank's subsidiaries - especially EiendomsMegler 1 Midt-Norge. The most significant cost-side elements are:
    • o higher staff costs at the parent bank, resulting mainly from wage growth and partly from the focus on the occupational pensions market
    o an offensive expansion on the part of the subsidiaries - particularly EiendomsMegler 1 Midt-Norge
     
  • The Group's cost-income ratio was 57% (59%) exc. capital gains.
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    Low losses and reduced defaults
     
  • Net recovery of losses in the first quarter came to NOK 9 million (net recovery of NOK 22m)
  • The corporate area recorded a net recovery of NOK 11 million (net recovery of NOK 26m) and the retail area a net loss of NOK 2 million (NOK 4m)
  • Individual impairments amounted to NOK 148 million at end-March (202 million). The reduction of NOK 54 million over the last 12 months is mainly due to write-backs of losses on individual exposures and write-off of previous periods' impairment provisions.
  • Defaults in both the corporate market and the retail market are falling, particularly in the corporate market. Of defaults in excess of 90 days totalling NOK 176 million (326 million), 18% (25%) are loss provisioned. Other doubtful exposures total NOK 294 million (261 million), of which 39% (45%) are loss provisioned. Total problem loans (defaulted and doubtful) have fallen by NOK 117 million over the last 12 months
  • Collective impairments at end-March total NOK 184 million, having fallen by NOK 94 million since the first quarter 2006.
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    The bank's assets totalled NOK 64.2 billion at end-March 2007, NOK 10.1 billion higher than 12 months previously.
     
    Total outstanding loans came to NOK 54.7 billion at end-March, having risen by NOK 8.3 billion over the previous 12 months. Customer deposits totalled NOK 31.0 billion, an increase of NOK 4.5 billion on the figure 12 months previously.
     
    In line with a resolution adopted at a meeting of the Supervisory Board on 21 March, a dividend issue was carried out whereby the Bank's PCC holders, instead of receiving a cash dividend of NOK 6 per PCC, could opt to receive dividend certificates denominated at NOK 66. As much as 71% of the Bank's PCC capital participated in the dividend issue. The ample subscription confirms that the dividend issue is viewed as attractive.
     
    Commenting, CEO Finn Haugan states that he is very pleased with the trend in operations in the first quarter 2007, as previously. Sound growth in lending and deposits along with continuing excellent sales of savings and insurance products indicate that the Bank is gaining market shares across the entire region. "It is also gratifying to note that the Bank's dividend issue has proved highly successful with an acceptance rate as high as 71%", he continues. "With intense competition is pushing down interest margins, it is important for the Bank to maintain the level of income generated by lending and deposits,. The good volume trend and the good sales of other products confirm that a solid job is still being done by the Bank's many highly competent staff. I am also very pleased with the solid performance posted by SpareBank 1 Gruppen AS and can, as Board Chairman, note with satisfaction that we have been quick to replace Gunn Wærstad as managing director at SpareBank 1 Gruppen AS. SpareBank 1 Gruppen's new managing director, Eldar Mathisen, will take up duties as early as in June this year," says Finn Haugan in conclusion.
     
    Trondheim, 26 April 2007
     
     
    SpareBank 1 Midt-Norge
    Please direct any queries to:
    CEO Finn Haugan on + 47 900 41 002
    Executive Director Kjell Fordal on + 47 905 41 672
     
    About us
     
    SpareBank 1 Midt-Norge is the region's foremost financial services provider. We  are the market leader in retail and corporate banking, with a presence in 71 localities across the region. Our aim is to be the recommended bank for customers in Central Norway, and as a local, independent bank we feel a particular responsibility for stimulating growth and prosperity in the region. We build our business on closeness to the customer, easy accessibility, a full product range and integrated financial advice.
     
    Headquartered in Trondheim, the Group has some 800 staff and includes the following subsidiaries: SpareBank 1 Finans Midt-Norge AS, EiendomsMegler 1 Midt-Norge AS, Allegro Finans ASA and Midt-Norge Regnskap AS.
     
    SpareBank 1 Midt-Norge is one of six owners of SpareBank 1 Gruppen AS.
     
    For further information, visit our website at
    http://www.smn.no
     
    The report and the presentation can be downloaded from the following links:

    Attachments

    First Quarter 2007 Presentation Q1 2007