Sparebanken Møre

Earnings Release • Apr 27, 2017

Continued growth in Sparebanken Møre

Continued growth in Sparebanken Møre

Growth and efficient operations have given Sparebanken Møre

a good start to 2017. The Group's total assets now amount to

NOK 63.1 billion.

After the first three months of the year, Sparebanken Møre's

profit after tax amounts to NOK 131 million, compared with

NOK 134 million at the same time last year. Core Tier 1

capital ratio has risen from 14.2% to 14.9%.

Increasing market shares

"Over the last 12 months, we have seen lending growth of 8%

in the retail market, which is higher than the annualised

rate at the end of 2016. In a time of tough competition,

this is confirmation that we are both attractive and

competitive. After a period of somewhat lower growth to the

corporate market, we are now seeing rising growth in this

market too," says the chief executive of Sparebanken Møre,

Trond Lars Nydal.

Deposits also grew by a strong 9.8% the last 12 months. At

the end of the first quarter, the Bank had a deposit

coverage ratio of 60.5%. In addition to deposits, there is

growing demand from the Bank's customers for other

investments. Our Discretionary Portfolio Management

Department, which offers the Bank's customers professional

management services, enjoyed a very good start to the new

year.

"Our local managers monitor the portfolio continuously and

have delivered strong returns over time. The fact that

customers are receiving good returns is also reflected in

the level of activity. In the first quarter, we saw growth

in volume of more than 10% and in total we now have NOK 3.3

billion for our customers under management," says Nydal.

Strong competition

Net interest income has declined by NOK 9 million since the

same quarter last year and amounted to NOK 261 million.

Other operating income was NOK 10 million higher than last

year, primarily due to capital gains of NOK 16 million in

the bond portfolio, compared with NOK 1 million at the same

time last year.

"The generally low level of interest rates in the market,

lower risk in parts of the portfolio, and strong competition

for both loans and deposits are all factors affecting the

performance of net interest income. In addition to growth,

it is important that we compensate with efficient

operations. We have enjoyed a low level of costs for a long

time and this will be an important focus area going forward

as well," says Nydal.

Operating costs rose by NOK 2 million compared with the same

period last year and amounted to NOK 150 million. Excluding

the recently introduced financial industry tax, which

resulted in extra costs of NOK 3 million for the Bank in the

quarter, costs are on a par with previous quarters.

Expecting low losses

Sparebanken Møre recognised NOK 2 million in losses on loans

and guarantees in the first quarter, while total impairments

for losses amounted to NOK 335 million at the end of the

quarter. Net problem loans have fallen by NOK 20 million in

the last 12 months. Nydal expects the level of losses to

remain low.

"The level of non-performing loans is very low and the

quality of our portfolio is good. We are also now seeing

that large parts of the corporate sector in the county are

experiencing increased activity as a result of the weak

Norwegian krone, low interest rates, and an expansionary

fiscal policy. The rise in oil prices in the last year has

also helped to reduce uncertainty for oil-related

industries," says Nydal.

Simpler with Vipps

In February, Sparebanken Møre and 105 other Norwegian banks

decided to cooperate on developing and and distributing

Vipps into a common Norwegian mobile phone payment solution.

The partnership is a joint response to increased

international competition and an active measure towards

ensuring we have a Norwegian financial industry that can

offer simple, cost-effective, and secure solutions for

payments via mobile phones.

The products that will soon be available include Vipps

Business for organisation, associations, and small and

medium-sized companies. Vipps Business will replace SPING,

the Bank's current solution for this target group.

"Sparebanken Møre is the largest bank in Møre og Romsdal and

an important supporter of more than 3,500 organisations and

associations in the county. Even though SPING was a good

solution to our customers, many have expressed the view that

they would prefer a single solution and a single provider.

The fact that Norwegian banks now cooperate on this will

make the market more transparent for both the payers and the

payees," says the chief executive, Trond Lars Nydal.

Key figures for Q1 2017

- Net interest income: NOK 261 million/1.69% (NOK 270

million/1.80%)

- Profit before losses: NOK 177 million (NOK 178

million)

- Profit after tax: NOK 131 million (NOK 134 million)

- Return on equity: 10.1% (11.2%)

- Cost income ratio: 45.9% (45.4%)

- Core Tier 1 capital ratio: 14.9% (14.2%)

- Lending growth in the last 12 months: 5% (2%)

- Deposit growth in the last 12 months: 9.8% (4.4%)

- Earnings per equity certificate as at Q1 (Parent

Bank): NOK 12.60 (NOK 13.60)

Comparable figures for Q1 2016 in brackets.

Contact

- Trond Lars Nydal, CEO, Mobile: +47 951 79 977

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

- Tone S. Gjerdsbakk, Chief Information Officer,

Mobile: +47 990 44 346