Good operations in Q3

The return on equity was 9.4 per cent, and the Group now has total assets of NOK 80.4 billion.

"Our quarterly result is characterised by good operations, despite market turbulence as a result of the corona pandemic and the fall in oil prices. Combined with strong solidity, stable long-term financing and dedicated advisors who work actively throughout our market area, we are well equipped to continue to be a strong and committed supporter of individuals, companies and local communities in the future," says Trond Lars Nydal, CEO of Sparebanken Møre.

Good cost control
Net interest income was 12.8 per cent lower than in the corresponding quarter last year, partly due to a very low interest rate level. Other income increased by 22 percent, mainly as a consequence of increased value of the bond portfolio as well as fixed income and foreign exchange transactions with customers.

Expenses in the quarter amounted to NOK 149 million, which is NOK 12 million lower than the same period last year. Expenses as a share of revenues accounted for 39 per cent.

"The bank operates efficiently and has over time worked systematically on measures that increase both efficiency and profitability. We have experienced that a long-term and steady course yields results," says Nydal.

Proximity and relationships are valued
Sparebanken Møre has a lending volume of more than NOK 65 billion to customers in the retail and corporate sectors. The 12-month growth rate in loans has slowed gradually over the past year, and ended at 2.7 per cent at the end of the 3rd quarter.

"Although the growth rate has slowed somewhat, we are experiencing a good influx of new customers. Our close and personal service is appreciated, and combined with good digital solutions, this is a strong competitive advantage for us. Our experience is that more and more customers are keen to choose locally, and that the importance of a fixed point of contact and a secure relationship with the bank has intensified in recent months," says Nydal.

He adds that the bank prioritises profitable growth, and that lending growth is expected to pick up through the fourth quarter and end up higher at the end of 2020 than at the end of the third quarter. Deposit growth over the past 12 months ended at 8.8 per cent and is expected to remain high going forward.

Low number of bankruptcies
The quarter was charged with NOK 36 million in losses on loans and guarantees. Converted on an annual basis, this amounts to 0.18 per cent of average total assets. Losses in the corporate segment increased by NOK 45 million in the quarter, while there was a reduction of NOK 9 million in the retail segment. The level of defaults is low, and the number of bankruptcies so far in 2020 is lower for both the county and the bank than at the same time last year.

Although the economic situation is still serious for several industries, key figures indicate that production and demand in the county continued to rise through Q3. From August to September, unemployment in Møre og Romsdal fell from 3.7 to 3.1 per cent of the labour force. In comparison, unemployment was 3.7 per cent nationwide.

Less need for instalment deferrals
The bank reports few customers who need repayment deferrals. In the retail market, many customers have improved their liquidity and good saving capacity, and several have chosen to increase their mortgage repayments as a result of the low interest rate level.

Recently, the bank also took the temperature of the situation through a survey among its own corporate customers.

"Parts of our business portfolio were granted a repayment deferral this spring due to COVID-19. The survey conducted in September shows that a very low proportion are in need of additional interest-only periods. This is a positive sign that our customer portfolio is both robust and adaptable," says Trond Lars Nydal, CEO of Sparebanken Møre.

Key figures – Q3 2020

• Profit before loss: NOK 234 million (NOK 253 million)
• Profit after tax: NOK 153 million (NOK 181 million)
• Return on equity: 9.4 per cent (11.8 per cent)
• Net interest income: NOK 306 million/1.54 per cent (NOK 351 million/1.91 per cent)
• Cost-to-income ratio: 39.0 per cent (39.0 per cent)
• Profit per equity certificate (Group): NOK 7.38 (NOK 8.80)

Comparable figures for Q3 2019 in brackets.

Key figures – as of Q3 2020

• Profit before loss: NOK 654 million (NOK 715 million)
• Profit after tax: NOK 420 million (NOK 524 million)
• Return on equity: 8.6 per cent (11.6 per cent)
• Net interest income: NOK 914 million/1.56 per cent (NOK 975 million/1.78 per cent)
• Cost-to-income ratio: 42.0 per cent (40.1 per cent)
• CET1 capital: 17.5 per cent (15.4 per cent)
• Profit per equity certificate (Group): NOK 20.00 (NOK 25.60)
• Growth in lending over the past 12 months: 2.7 per cent (6.7 per cent)
• Growth in deposits over the past 12 months: 8.8 per cent (4.2 per cent)

Comparable figures as of Q3 2019 in brackets.

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