Sparebanken Møre

Earnings Release • Aug 10, 2017

Good growth for Sparebanken Møre

Good growth for Sparebanken Møre

After the first six months of the year, Sparebanken Møre can

report good growth and low level of losses. Retail lending

increased by 8 % compared with the same period last year,

while the bank has grown by 13.3 % in the corporate market.

"We have had a goal of growth and we are pleased with the

development, which confirms we are an attractive,

competitive bank for both retail customers and the corporate

sector in our region," says the chief executive of

Sparebanken Møre, Trond Lars Nydal. The county's largest

bank has also experienced good growth in deposits with a

growth rate of 6.1 % in the last 12 months.

Pre-tax profit for the first half of 2017 amounted to NOK

349 million, compared with NOK 410 million for the same

period last year. The largest deviation was the NOK 33

million reduction in other operating income. This was due to

the extraordinary proceeds of NOK 38 million that were

recognised in the second quarter of last year in connection

with the sales contract between Visa Europe Ltd. and Visa

Inc.

Net interest income under pressure

Profit after tax for the second quarter amounted to NOK 130

million, compared with NOK 181 million for the same period

last year. Net interest income in NOK was at the same level

as last year, while other operating income was NOK 43

million lower (NOK 5 million lower when adjusted for the

Visa transaction).

"Net interest income is under pressure due to strong

competition for both loans and deposits. It has also been

influenced by reduced risk in parts of our portfolio in the

last year. At the same time we are experiencing good,

managed growth and we now have a robust customer portfolio,"

says Nydal.

The bank has increased lending to customers by NOK 4.8

billion in the last 12 months, and at the end of the second

quarter its total lending amounted to NOK 56 billion. The

bank expects lending growth to slow in the remainder of the

year.

Stable cost level

Sparebanken Møre can refer to a stable level of costs and

solid operations. Operating costs increased by NOK 4 million

compared with the same period last year, NOK 3 million of

which was due to higher employers' National Insurance

contributions due to the recently introduced financial

industry tax. The Bank is also focusing on the development

of future-oriented IT solutions.

"We have a continuous focus on improving and simplifying

banking for our customers. Among other things, we recently

launched a new and improved mobile bank, which ensures easy

access to banking services at all times. We strongly believe

that investing in smart solutions and capable advisers will

benefit both customers and the bank," says Nydal.

He underscores the bank's commitment of a maximum cost

income ratio of 45 %.

Low level of losses and positive prospects

Sparebanken Møre can still present a low level of losses. In

the second quarter, NOK 6 million was recognised in losses

on loans and guarantees. Collective impairments were reduced

by NOK 40 million. Reversal of losses amounted to NOK 2

million in the retail segment, while individual losses

amounting to NOK 48 million were recognised in the corporate

segment.

Nydal reports that the economic outlook for Møre og Romsdal

has improved during the spring and summer, and that

unemployment fell by around 500 people in the first half of

the year. He expects a low level of losses in the rest of

2017 as well.

"Production is rising in industries such as fishing,

traditional exports, building and construction, and tourism.

The downturn in oil-related industries has become more

subdued and there is also a high level of activity in the

public sector. The main reasons for the improvement are the

adaptability in the corporate sector, low level of interest

rates, a weak NOK exchange rate, and an expansionary fiscal

policy", says Nydal.

Our customers have never been more satisfied

Sparebanken Møre has recently conducted a survey showing

that the satisfaction of its retail customers has never been

higher. The customers are particularly satisfied with the

expertise of the advisors and their ability to understand

the customers' needs.

"I am pleased to see that our focus areas are giving

tangible results, both in terms of good and increasing

scores in satisfaction surveys - and not least in an

increasing number of customers. We focus strongly on

expertise, aiming to be the best in class in giving good and

personal financial advices. Our strong local presence

provides us with a closeness, knowledge and accessibility

which increase the quality of our services", says Trond Lars

Nydal.

Key figures for Q2 2017

* Net interest income: NOK 268 million/1.71 %

(NOK 268 million/1.79 %)

* Profit before losses: NOK 180 million (NOK 227 million)

* Profit after tax: NOK 130 million (NOK 181 million)

* Return on equity: 10.0 % (14.7 %)

* Cost income ratio: 45.6 % (39.2 %)

* Earnings per equity certificate (Group): NOK 6.50

(NOK 9.10)

Comparable figures for Q2 2016 in brackets.

Key figures for H1 2017

* Net interest income: NOK 529 million/1.69 %

(NOK 538 million/1.80 %)

* Profit before losses: NOK 357 million (NOK 405 million)

* Profit after tax: NOK 261 million (NOK 315 million)

* Return on equity: 10.0 % (12.9 %)

* Cost income ratio: 45.7 % (42.1 %)

* Earnings per equity certificate (Group): NOK 13.10

(NOK 15.80)

* Core Tier 1 capital ratio: 14.3 % (14.5 %)

* Lending growth in the last 12 months: 9.5 % (1.5 %)

* Deposit growth in the last 12 months: 6.1 % (5.5 %)

Comparable figures for H1 2016 in brackets.