Sparebanken Møre compensates for low interest rates and strong competition in the market through efficient banking operations and losses at a low level.
The profit after tax for the quarter amounted to NOK 120 million, a reduction of NOK 2 million compared with the corresponding period last year. Total assets ended at NOK 60.1 billion by quarter end.
Lending and deposit growth
"The market is characterised by tough competition, for both lending and deposits. Even though we registered a slightly lower growth in lending during the first three months of the year, we remain satisfied with a growth of 6.8 per cent within the retail market the last 12 months. This confirms that we are a competitive and prioritised choice," says CEO Olav Arne Fiskerstrand.
The bank also shows deposit growth of 4.4 per cent over the last year. At the end of Q1, the deposit to loan ratio ended at 57.8 per cent.
Strong financial position
Net interest income decreased by NOK 5 million to NOK 250 million. Other operating income was NOK 11 million lower than in the first quarter of last year. The main reason for this is reduced income from interest hedging transactions with customers. Nevertheless, operating costs remain low and costs in relation to income amounted to 48.4 percent in the first quarter.
"Our operations are cost-effective and losses are low. As only 2.2 percent of our lending portfolio is linked to offshore/supply, we anticipate that the level of losses will also remain low in the coming period," says Fiskerstrand. He adds that several business sectors in the county are experiencing increasing activity levels and benefits from the weak Norwegian krone and continuing low interest rates.
At the end of March, the rating agency Moody's assigned a long-term Issuer Rating of A2 with stable outlook to the bank and also confirmed that no other ratings were changed. The rating agency highlighted that the bank's financials will remain broadly resilient in the face of a modest slowdown in Norway’s economic performance.
"A good and stable rating contributes to the bank being able to offer both retail and corporate customers good products and services at the right price and thus provides security for our customers. The rating also confirms our financial strength. This is also confirmed by our Core Tier 1 capital, which increased from 13.6 per cent in the first quarter of 2015, to 14.2 per cent this year," Fiskerstrand says.
New payment solution
In February, Sparebanken Møre launched the SKULS payment service for mobile banking. The service allows customers to transfer money using mobile telephone numbers. The payee will receive an SMS and enters the account number that the money will be deposited to.
"We have taken a digital leap forward with SKULS, which makes everyday banking simpler for our customers. They can transfer money to anyone simply by entering a mobile number or they can select a payee from their contact list. Neither the payer nor the payee need to download an additional app," says Fiskerstrand.
He explains that individual customers have different finances and different needs, both with regard to advice and banking preferences.
"Our customers need to be able to use the bank in the way they want. For us, it is not about investing in either offices or digital solutions – we need to be good in both areas," emphasizes Olav Arne Fiskerstrand.
Key figures for Q1 2016
- Net interest income: NOK 250 million/1.67% (NOK 255 million/1.80%)
- Profit before losses: NOK 158 million (NOK 175 million)
- Profit after tax: NOK 120 million (NOK 122 million)
- Return on equity: 10.0% (10.5%)
- Costs in relation to income: 48.4% (45.9%)
- Core Tier 1 capital ratio: 14.2% (13.6%)
- Lending growth in the last 12 months: 2.0% (9.5%)
- Deposit growth in the last 12 months: 4.4% (0.2%)
- Earnings per equity certificate as of Q1 (parent bank): NOK 12.75 (NOK 12.90)
Comparable figures for Q1 2015 in brackets.
- Olav Arne Fiskerstrand, CEO, Mobile: +47 900 18 299
- Runar Sandanger, EVP, Head of Treasury and Market, Mobile: +47 950 43 660
- Tone S. Gjerdsbakk, Chief Information Officer, Mobile: +47 990 44 346