Sparebanken Møre

Earnings Release • Oct 20, 2016

Strengthened capital in Sparebanken Møre

Strengthened capital in Sparebanken Møre

Sparebanken Møre posted a profit after tax of NOK 152

million in the third quarter of 2016, compared with

NOK 114 million in the same quarter last year. The

Bank has also increased its core Tier 1 capital ratio

to 14.9 %.

The return on equity was 12.1 %, compared with 9.6 %

for the corresponding quarter last year. The Bank's

total assets now amount to NOK 61.8 billion.

"We are continuing to build the Number 1 Bank in and

for Møre og Romsdal through good growth, good cost

efficiency and low level of losses," says the chief

executive of Sparebanken Møre, Olav Arne Fiskerstrand.

Increased Core Tier 1 capital

At the end of the third quarter, Sparebanken Møre's

core Tier 1 capital ratio was 14.9 %, compared with

13.3 % at the same time last year. This is well above

the Bank's minimum target of 13.0 %.

"We are very pleased that we have strengthened our

core Tier 1 capital significantly in recent years and

that we are well above the regulatory requirements.

The Bank benefits from strong financial solidity,

which was also confirmed by Moody's in August. The

rating agency stated that we will retain our good A2

rating, while also confirming its earlier assessment

that the rating outlook for the Bank is stable," says

Fiskerstrand.

Strong deposit growth

The Bank has registered high deposit growth in the

last year. Deposits from customers rose by 10.5 %,

compared with 3.5 % last year.

Overall, lending grew by 0.6 % with an increase of 6.2

% for retail customers and a decrease of 9.8 % for

corporate customers. At the end of the third quarter,

the retail market accounted for 70.1 % of the Group's

total lending portfolio.

"We are constantly gaining new customers in the retail

market, which reflects the Bank's strong position in

our market area. Growth in corporate lending has

decreased, in part as a consequence of declining

economic growth, the uneven playing field for

Norwegian and foreign banks, and the Bank's ambition

to increase its core capital ratio," says

Fiskerstrand.

Strong cost control

He stresses that the lasting low interest rates,

fierce competition for banking customers, an uncertain

macro-economic picture, and changed customer behaviour

set high standards regarding sound and efficient

banking operations.

Although net interest income decreased slightly during

the period, total income has increased from NOK 316

million last year to NOK 352 million this year. The

improvement is partly attributable to capital gains

from the bond portfolio. Costs are at about the same

level as last year and ended at 42.3 % in relation to

income at the end of the quarter.

"Cost efficiency has been highly prioritized in

Sparebanken Møre for many years. This is in turn

reflected in our results. We have worked thoroughly to

reduce losses and defaults. At the end of the third

quarter, net problem loans amounted to 0.30 % of gross

lending," says Fiskerstrand.

Losses on lending and guarantees amounted to NOK 5

million in the third quarter.

Sharing expertise

Fiskerstrand highlights the importance and necessity

of good credit work and having the right expertise in

all parts of the Bank. He also emphasizes the fact

that expertise should be shared with others. The Bank

was recently nominated for the Finansstafetten

['Financial Relay'] award for teaching personal

economics in schools.

Last school year, around 50 authorised advisers from

Sparebanken Møre visited more than 100 classrooms

contributing to 2 600 lower secondary school pupils`

knowledge about various economic topics. This amounts

to around 81 % of 9th graders in the county.

"Teaching personal economics is something we give a

high priority to and view as an important social

responsibility. The Bank's advisers hold valuable

expertise requested by schools - and needed by

teenagers. We know that payment behaviour that are

established at a young age are often followed through

into adulthood. We also know that a lack of knowledge

increases the risk of making poor and expensive

economic choices. This is precisely why it is

important to introduce the right attitudes and give

them the right information as early as possible," says

Olav Arne Fiskerstrand.

Key figures for Q3 2016

* Net interest income: NOK 278 million/1.82 %

(NOK 283 million/1.93 %)

* Profit before losses: NOK 204 million

(NOK 170 million)

* Profit after tax: NOK 152 million (NOK 114 million)

* Return on equity: 12.1 % (9.6 %)

* Cost income ratio: 42.3 % (46.4 %)

* Core Tier 1 capital ratio: 14.9 % (13.3 %)

* Lending growth in the last 12 months: 0.6 % (8.3 %)

* Deposit growth in the last 12 months: 10.5 % (3.5 %)

* Earnings per equity certificate as at Q3: NOK 22.95

(NOK 18.80)

Comparable figures for Q3 2015 in brackets.

This information is subject to the disclosure

requirements pursuant to section 5-12 of the Norwegian

Securities Trading Act.

Contact

* Olav Arne Fiskerstrand, CEO, Mobile: +47 900 18 299

* Runar Sandanger, EVP, Mobile: +47 950 43 660

* Tone S. Gjerdsbakk, Chief Information Officer,

Mobile: +47 990 44 346