Sparebanken Møre

Earnings Release • Jan 26, 2017

A good ending to a good 2016 for Sparebanken Møre

A good ending to a good 2016 for Sparebanken Møre

Sparebanken Møre leaves behind another year of

efficient operations, growth and low level of losses.

The preliminary accounting figures for 2016 show a

profit for the year after tax of NOK 574 million, an

increase of NOK 71 million on the year before.

The Group's profit after tax was NOK 116 million for

the fourth quarter and thus the Group experienced a

good end to a year that was characterized by positive

development and growth from the beginning. Total

income in the quarter ended on a par with last year,

while costs were NOK 19 million higher. This was

mainly due to costs in the same quarter in 2015 being

reduced by NOK 24 million due to a non-recurring

effect from changes to the Bank's pensions scheme.

"In a strongly competitive market with tight margins,

we are pleased to declare that we ended the year with

strong figures in the fourth quarter as well. The Bank

is very sound and we satisfy the regulatory

requirements by a good margin. This provides us with a

good basis for providing good advice, smart solutions

and reliability for our customers also in the future,"

says the chief executive of Sparebanken Møre, Olav

Arne Fiskerstrand.

Strong deposit growth

Deposits from customers increased by NOK 3.2 billion

last year and totalled NOK 32.6 billion at the end of

the year. The strongest growth was seen in the public

sector and the corporate segment.

"The growth reflects good liquidity, but also the

level-headed attitude of our customers. A high deposit-

to-loan ratio and total assets of NOK 61.6 billion

make us a strong source of capital in the county. This

provides security for our customers, owners and

region," says Fiskerstrand. The Core Tier 1 capital

ratio was 14.7 % at the end of the year.

Efficient operations

In 2016, the Bank also gained many new loan customers

and at year-end the lending volume totalled NOK 52.7

billion. This reflects growth of 6.6 % in the retail

market, while lending to corporate customers dropped

by 4.8 %.

"We grew steadily in the retail market throughout the

year, which shows that we are both attractive and

competitive. The decline in the corporate segment was,

among other things, due to the repayment of debt in

the maritime sector and the Bank's ambition to

increase its core capital adequacy."

Even though the competition is strong and net interest

income is slightly falling, total income rose by NOK

60 million compared with the year before. One of the

reasons for this was capital gains of NOK 24 million

in the bond portfolio, compared with capital losses of

NOK 51 million in 2015. A heavy focus on costs has

also resulted in low costs over time for the Bank.

Low level of losses and risk

While several industries can look back on a very

active year and good results, the low oil price has

presented challenges for oil-related industries.

"We take the challenges in the offshore sector

extremely seriously, even though our debt to asset

ratio is low and we have a good quality portfolio in

this segment. As a regional savings bank we have a

social responsibility and goal to be a committed

supporter of business and industry in our region,

Nordvestlandet. It is in situations like this we see

the great benefits of geographical proximity and local

knowledge. Being close to the situation means we can

do good, preventive work and be there for our

customers," says Fiskerstrand.

In the fourth quarter, the Bank increased collective

impairments by NOK 14 million and at year-end total

impairments for losses amounted to NOK 360 million.

Booked losses on loans and guarantees amount to NOK 22

million in the income statement for 2016.

Supporting the local community

Good results for the Bank benefit the county's

inhabitants, and the Board recommends allocating NOK

141 million to various projects within culture,

sports, local communities, infrastructure, skills and

business development.

"Half of the Bank's profit is returned to the region

through social dividends and in the last 3 years

Sparebanken Møre has supported almost 2 000 clubs and

organisations. We are proud to be an active and

significant contributor to prosperity, good childhood

environments and development in Møre og Romsdal," says

Fiskerstrand.

A cash dividend of NOK 14.00 per equity certificate is

also being recommended.

Future prospects

Møre og Romsdal's economic outlook have stabilised

during the autumn and winter. Most businesses and

industries are seeing increased activity due to the

weak Norwegian krone, low interest rates and an

expansive fiscal policy, and the rise in oil prices

has helped to reduce uncertainty for oil-related

industries. The situation will nonetheless be

challenging in 2017 and unemployment might continue to

rise slightly.

In Sparebanken Møre it is anticipated that the growth

in lending within the retail market will decrease

somewhat during the year, while the growth in the

corporate market will increase. Overall, a good result

is expected for 2017.

"With a good result for the year, professional

expertise and local knowledge, we have the very best

starting point for being a good local bank for people

and businesses with links to the county also in 2017,"

concludes Fiskerstrand.

Key figures - Q4 2016

(Comparable figures for Q4 2015 in brackets)

* Net interest income: NOK 279 million/1.83 %

(NOK 285 million/1.91 %)

* Profit before losses: NOK 181 million

(NOK 201 million)

* Profit after tax: NOK 116 million (NOK 128 million)

* Return on equity: 9.2 % (10.7 %)

* Cost in relation to income: 44.2 % (38.1 %)

Key figures - 2016 accounts

(Comparable figures for 2015 in brackets)

* Net interest income: NOK 1 082 million/1.79 %

(NOK 1 098 million/1.89 %)

* Profit before losses: NOK 777 million

(NOK 742 million)

* Profit after tax: NOK 574 million

(NOK 503 million)

* Return on equity: 11.6 % (10.7 %)

* Cost in relation to income: 43.0 % (43.0 %)

* Core Tier 1 capital ratio: 14.7 % (14.1 %)

* Lending growth in the last 12 months: 2.7 % (4.9 %)

* Deposit growth in the last 12 months: 10.8 % (3.5 %)

* Earnings per equity certificate (Group): NOK 28.80

(NOK 25.25)

Contact

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

Runar Sandanger, EVP, Head of Treasury & Markets,

Mobile: +47 950 43 660

Tone S. Gjerdsbakk, Chief Information Officer, Mobile:

+47 990 44 346