SpareBank 1 SMN

Earnings Release • Aug 11, 2022

SpareBank 1 SMN: Strong growth and a good profit performance

SpareBank 1 SMN: Strong growth and a good profit performance

SpareBank 1 SMN delivered a profit of NOK 880m before tax in the second quarter, compared with NOK 942m in the same quarter last year. The result reflects solid operations, substantially reduced losses and good growth in all business lines.

Despite turbulent times in the market featuring rising inflation, higher inflation and sizeable market fluctuations, SpareBank 1 SMN continues its trend of reliable operations and sound growth. The profit decline from the same quarter last year is largely attributable to lower return on financial assets and a weaker performance by SpareBank 1 Gruppen. SpareBank 1 Markets has consolidated its position as one of the country’s leading brokerages, and increased its profit to NOK 79m before tax compared with NOK 62m in last year’s second quarter.

Return on equity was 12.9 per cent, and the bank has strengthened its financial position with a CET1 ratio of 18.8 per cent at quarter-end.

“The profit performance reflects solid underlying operations, and the fact that most of our activity is based in a region not as heavily impacted by strong fluctuations internationally. In addition, it is extremely pleasing to note the improved prospects seen by the offshore industry after a long period of toil, thus enabling us to recover some loss provisions,” says Group CEO Jan-Frode Janson.

A net recovery of NOK 48m was recorded on losses on loans and guarantees in the second quarter, compared with a loss provision of NOK 39m in the same quarter last year. Higher earnings and improved prospects for the oil and offshore segment have enabled recovery of earlier loss write-downs.

Overall lending rose 8.7 per cent and deposits rose 12.4 per cent in the last 12 months. Loans to personal customers rose 8.1 in that period, while lending to corporate clients rose 10.1 per cent.

“As in previous crises we have seen a good influx of new customers by virtue of keeping a cool head and standing up for people and firms in the region through the pandemic and the disquiet following the Russian invasion of Ukraine. Our clear objective is to grow and to win market shares both through expanding the customer base and through structural action”, says Mr Janson.

In June SpareBank 1 SMN and SpareBank 1 Søre Sunnmøre drew up an agreement of intent to merge the two banks. The goal is to build and even stronger regional bank with clear-cut growth ambitions in Sunnmøre and in Fjordane. A final decision on the merger is planned for November 2022.

Net interest income came to NOK 801m, compared with NOK 698m in the same quarter last year. This is NOK 44m higher than in the first quarter and NOK 104m better than in the second quarter 2021. Operating expenses totalled NOK 758m, which is a decline from the first quarter when operating expenses totalled NOK 762m.

EiendomsMegler 1 Midt-Norge is performing well despite a slight decline in activity in the housing market. The company delivered a pre-tax profit of NOK 38m compared with NOK 41m in the same period last year. Operating income climbed to NOK 134m, compared with NOK 131m in the same period last year.

SpareBank 1 Regnskapshuset SMN posted a profit of NOK 30m before tax. This is somewhat weaker than in the same period last year when the pre-tax profit was NOK 33m. The company has invested in further acquisitions, new services and a new IT platform, and is now well positioned to gain more customers and establish a broader income platform in step with increased digitalisation in the accounting industry.

Key figures for the second quarter 2022:

(Consolidated figures. Figures in parenthesis refer to the same period of 2021 unless otherwise stated)

• Pre-tax profit: NOK 880m (942m)

• Post-tax profit: NOK 702 (755m)

• Return on equity: 12.9% (14.3%)

• CET1 ratio: 18.8% (18.3%)

• Growth in lending: 2.8% (2.0%)

• Growth in deposits: 8.6% (7.6%)

• Lending to personal customers: 2.7% (2.2%)

• Lending to corporate customers: 2.9% (1.5%)

• Net result of ownership interests: NOK 77m (212m)

• Losses on loans and guarantees: + NOK 48m (- 39m)

• Earnings per equity certificate: NOK 3.20 (3.51)

• Book value per equity certificate: NOK 102.91 (100.18)

Contacts:

CFO Trond Søraas on +47 922 36 803

Executive Vice President Rolf Jarle Brøske on +47 911 12 475

Quarterlyreport.smn.no

The above information is disclosable pursuant to Section 5-12 of the Securities Trading Act