SpareBank 1 SMN recorded a post-tax profit of NOK 963m in the first half 2014, an increase of NOK 357m compared with the same period last year.
The first-half accounts reflect a sound trend in core business, low loan losses, strengthened core capital in keeping with the bank's capital plan and a gain of NOK 148m on the sale of the bank's stake in Nets Holding.
"We are well satisfied with the profit growth in the first half-year. Lending activity is as expected with good growth in mortgage lending and planned low growth in commercial lending. After a period of self-imposed restrictions, the board of directors has adopted higher limits for the bank's lending activity. This means that we expect higher growth ahead in lending to the business sector. We feel assured that the bank will meet the new core capital requirements without issuing stock", says CEO Finn Haugan at SpareBank 1 SMN.
First half accounts 2014 - highlights:
- Pre-tax profit: NOK 1,165m (782m as of 1st half 2013)
- Post-tax profit: NOK 963m (606m)
- Return on equity: 16.8% (11.9%)
- Growth in lending: 5.1% (8.4%)
- Growth in deposits: 7.4% (7.3%)
- Loan losses: NOK 32m (38m)
- Common equity tier 1 (CET1) ratio: 11.4% (10.3%)
- Earnings per equity certificate: NOK 4.77 (2.99)
Strengthened net interest income
Net interest income amounted to NOK 843m in the first half 2014, a substantial increase of NOK 97m from the same period last year. Lending margins have risen due to tighter capital requirements for Norwegian banks. Commission income and other operating income rose by 9 per cent to NOK 780m. Strong growth is in all essentials ascribable to increased commissions from SpareBank 1 Boligkreditt resulting from higher margins on home mortgage loans. The bank's subsidiaries show continued good earnings.
Lower growth in lending
As targeted in the bank's capital plan, growth in lending to large corporates is considerably reduced. Overall lending to the business sector rose by a mere 0.4 per cent compared with the same period last year.
Loans to retail borrowers increased by 8.2 per cent in the 12 months to end-June and the bank strengthened its leading market position. In comparison, credit growth among households in the same period was 6.5 per cent according to Statistics Norway. Growth has been particularly high in Trondheim. The bank acquired 1,750 new retail customers in the first half 2014.
"The high growth in the retail market reflects the bank's competitive terms in an active housing market. Reduced growth in the corporate market is as planned, but we are now normalising our lending activity in that market", says Finn Haugan.
The bank has low losses and a low default rate, reflecting both the region's economy and the bank's portfolio quality. Net losses measure a mere 0.06 per cent of aggregate lending as of the first half 2014.
More efficient
Cost growth in the parent bank comes to 1.7 per cent in the 12 months to end-June, which is in keeping with the bank's efficiency enhancement plan. A project launched with the aim of ensuring continual improvement will also contribute to enhancing the bank's efficiency. Increased digitalisation will enable further cost reductions, and new initiatives will be assessed and put in place.
At the end of the first half 2014 SpareBank 1 SMN's assets totalled NOK 148bn, including loans transferred to the co-owned SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt.
Increased stake in SpareBank 1 SMN Markets
As mentioned in the stock exchange notice of 11 August 2014, SpareBank 1 SMN Markets in Trondheim will be fully integrated with SpareBank 1 Markets in Oslo. As the vendor of its market activity, SpareBank 1 SMN will receive settlement in the form of shares in SpareBank 1 Markets, and will be the main shareholder in the integrated company with a stake of 73.3 per cent after a stock issue planned in September 2014. The coordinated business will continue largely as at present.
"After wide-ranging improvement measures at SpareBank 1 Markets, the coordinated business will be profitable at the expected income level. Fully integrated with the markets business at SpareBank 1 SMN, the company emerges with greater capacity and a strengthened array of services. The new venture is long term in nature with rock solid owners behind it, and the ongoing collaboration with the owner banks will continue with even greater focus on realising business potentials", says Finn Haugan who becomes new Board chair at SpareBank 1 Markets.
Stable outlook
"We expect 2014 to be a good year for SpareBank 1 SMN. The business sector in Trøndelag and in Møre and Romsdal is on a satisfactory trend, and appears in the main to show robust earnings and good adaptability. House sales have picked up and losses and defaults at the bank are expected to remain at a very low level", says Finn Haugan.
Trondheim, 13 August 2014.
Contact persons at SpareBank 1 SMN:
Group CEO Finn Haugan on +47 900 41 002
Executive Vice President, Finance, Kjell Fordal on +47 905 41 672
Executive Vice President, Corporate Communications, Hans Tronstad on +47 941 78 322
About SpareBank 1 SMN
SpareBank 1 SMN is the region's leading financial services group. It leads the market in the retail and corporate segments, with a total of 49 offices located across the region's municipalities.
We aim to be the recommended bank for customers in Trøndelag and in Møre and Romsdal. Being a local, independent savings bank we feel a special responsibility for stimulating growth and prosperity in the region. We base our business on closeness to our customers, good accessibility, a full product range and comprehensive financial advisory services.
Our head office is in Trondheim. The Group employs about 1,200 full-time equivalents and includes the following subsidiaries: SpareBank 1 SMN Finans, EiendomsMegler 1 Midt-Norge, Allegro Finans and SpareBank 1 Regnskapshuset SMN. The bank is the largest shareholder in BN Bank with a 33% stake.
SpareBank 1 SMN is one of six owners of SpareBank 1 Gruppen. For further information, visit our website at www.smn.no.
