SpareBank 1 SMN:Solid profit performance and increased market shares

SpareBank 1 SMN recorded a post-tax profit of NOK 519m in the third quarter of 2020 compared with NOK 488m in the same quarter last year. The quarter was marked by high growth, increased market shares and greater financial strength.

The post-tax profit for the first nine months of the year was NOK 1,528 compared with NOK 2,217m in the same period last year. The change is mainly due to increased provision for losses in the wake of the corona crisis.

The subsidiaries EiendomsMegler 1 Midt-Norge, SpareBank 1 Regnskapshuset SMN, SpareBank 1 Finans Midt-Norge and SpareBank 1 Markets all show good results for the third quarter, and account for a increasing share of the group’s earnings.

"Despite turbulent market conditions caused by the corona pandemic, SpareBank 1 SMN presents good interim results with increased incomes and lower cost growth. Growth in both lending and deposits is high among personal customers and businesses alike. Incomes from other financial products are also rising. Market shares are growing and we are reinforcing our position as the leading finance house in Central Norway. Higher losses and lower financial return nonetheless entail reduced profit”, says Group CEO Jan-Frode Janson at SpareBank 1 SMN.

Lending growth of NOK 14bn
With lending growth of NOK 14bn, corresponding to 8.5 per cent, SpareBank 1 SMN has strengthened its market position. General growth in the market in the same period was just over 4 per cent.

Lending to personal customers has grown by 8.7 per cent in the 12 months to end-September, to which the agreement with the LO (Norwegian Confederation of Trade Unions) has made an important contribution. Lending to corporate clients rose in the same period by 8.5 per cent thanks to increased demand from small and medium-sized business in the region.

6,000 personal customers and 1,000 companies opted for SpareBank 1 SMN as their new main bank in the first nine months. Satisfied customers were also reflected in the recent EPSI annual rating of customer satisfaction in which SpareBank 1 SMN markedly improved its score from the previous year and came out right at the top among the banks rated.

Strengthened financial soundness
SpareBank 1 SMN is well capitalised with a CET1 ratio of 17.6 per cent as at 30 September 2020. This is well above the target level of 15.4 per cent.

"Increased financial soundness gives us more muscle to assist people and businesses through the pandemic and out of the economic consequences it is having for the region. In addition, strong results enable us to pass dividend on to the regional community, which is our largest owner. This year alone we have earmarked more than NOK 100m of our social dividend to assisting the cultural, sports and voluntary sectors through a demanding period”, says Jan-Frode Janson.

Loan losses totalled NOK 231m compared with NOK 170m in the previous quarter. 90 per cent of losses as per this year’s third quarter are losses on loans to corporates. Defaults remain low.

«Great uncertainty persists as regards the pandemic and how its economic consequences will pan out for business and industry and for jobs in our region. We continue to see individual segments that face major challenges, and we expect a long time to pass before the situation normalises and growth fully recovers”, says Mr Janson.

The enhancement programme ‘One SMN’ will realise synergies between the group’s business lines in addition to increased digitalisation, more efficient work processes and ambitious cost reductions. Group costs were reduced by NOK 22m from the previous quarter to NOK 685m. The ambition is to reduce annual costs by a minimum of NOK 200m.

See the enclosed quarterly report and presentation.

Key figures

• Pre-tax profit: NOK 1,823m (2,612m as per first nine months of 2019)
• Post-tax profit: NOK 1,528m (2,217m)
• Return on equity: 10.4% (16.0%)
• Growth in lending: 8.5% (4.8%)
• Growth in deposits: 14.0% (7.9%)
• Loan losses: NOK 709m (198m)
• CET1 ratio: 17.6% (15.1%)

Trondheim, 30 October 2020

Contact persons at SpareBank 1 SMN:
Executive Director, Finance, Kjell Fordal on +47 905 41 672
Head of Corporate Communications, Hans Tronstad on +47 941 78 322

https://quarterlyreport.smn.no/2020/

Attachments

• Presentation
• Quarterly report
• Supplementary information Q3