The first three months provided a good start of the year for Sparebanken Møre. The quarter's profit amounted to NOK 132 million, which is NOK 48 million higher than in the corresponding quarter in 2013. The bank's good earnings combined with its sustained focus on costs contributed to this good start.
"This result means we have already laid a good foundation for 2014. We have maintained a good level of earnings in an active banking market, which reinforces our competitiveness in Møre og Romsdal. Our efforts to rationalise internal operations in 2013 are still producing effects, and I expect these effects to continue materialising throughout the year," says CEO Olav Arne Fiskerstrand.
Net interest income in the first quarter was NOK 269 million, an increase of NOK 33 million in relation to the same period last year. Total earnings are around 18 % higher than in the first quarter of 2013, and costs are NOK 12 million lower, which represents a reduction of almost 8 %. Recognised losses were on a par with the first quarter of last year and amount to NOK 6 million, which represents 0.04 % of total assets compared to 0.05 % in the first quarter of 2013. The return on equity for the first quarter of 2014 was 12.1 % compared to 9.6 % for the same period last year. Primary capital has increased by 2.45 percentage points in the last 12 months to 17.35 %. Core tier 1 capital increased by 2.40 percentage points in the same period to 12.80 %, which includes 50 % of the year-to-date result.
"The level of costs in the first quarter was well within the bank's internal targets. We continue to deliver a good, stable return on equity, which also exceeds the targets we have set. At the same time we have a good capital base and meet the authorities' requirements by a good margin," says Fiskerstrand.
Sale of stakes in Nets
Sparebanken Møre is one of the 186 Norwegian and Danish banks that have signed a contract to sell their stakes in the Nordic payment systems company, Nets. The bank's stake is around 0.86 %. The actual transaction is expected to be completed during the second quarter of 2014 and is contingent on the necessary approval of the authorities. The accounting gain from this transaction for Sparebanken Møre will amount to about NOK 80 million and this gain will be included in the bank's ordinary result once the transaction has been completed.
The financial strength to meet strong competition
Lending growth in the last 12 months has totalled 2.9 %. Deposits have grown by 1.5 %. The annual growth in the retail market has especially been good at 8.8 %. At the end of the first quarter of 2014, retail market loans accounted for more than 66 % of Sparebanken Møre's total lending.
"We have noticed a slight flattening out of the growth in the retail market in relation to year-end 2013, but I am satisfied that we are maintaining our good position in this segment in our county. I think the competition between the banks in our region is very strong for both lending and deposits. We want to be a competitive alternative for customers in Møre og Romsdal, and we monitor developments in the market closely," says Fiskerstrand.
Sparebanken Møre chose to lower interest rates at the start of April. Fiskerstrand stresses that a good capital base due to the measures taken in relation to the equity situation in 2013 will also benefit customers.
"The bank's financial strength means that we will also be very competitive in the future and take the steps necessary to defend our position as the preferred bank in Møre og Romsdal," says Olav Arne Fiskerstrand.
Leading the way in new communication channels
In the first quarter of 2014, Sparebanken Møre became the first bank in Norway to implement a full-blown video chat solution that enables it to provide customers with face-to-face advice wherever they are. Using this solution a customer can meet their adviser without having to visit the bank's premises.
"We think offering customers our new, innovative ways of communicating with the bank is important when it comes to creating and developing good, long-term customer relationships. Technological developments are providing great opportunities, and we want to facilitate good communication solutions that also make individual lives easier. We have been very successful with 'TabletBank', which we launched last year, and I am sure that this service will also be received well. The feedback from customers who have already used the service has been unanimously positive. We want to be close to our customers, and this allows us to achieve this with regards to customers who are not where our branches are. The launch of this solution is in line with Sparebanken Møre's ambition to offer modern, future-oriented services to our customers," concludes Olav Arne Fiskerstrand.
Key figures for Q1 2014
Net interest income amounted to NOK 269 million/1.98 % (NOK 236 million/1.85 %)
Profit before losses and tax amounted to NOK 186 million (NOK 124 million)
Profit after tax was NOK 132 million (NOK 84 million)
Return on equity was 12.1 % (9.6 %)
Cost income ratio was 43.5 % (55.5 %)
Earnings per equity certificate in year-to-date: NOK 11.77 (NOK 8.30)
Comparable figures for Q1 2013 in brackets.
Olav Arne Fiskerstrand, CEO, Mobile: (+47) 900 18 299
Runar Sandanger, EVP, Head of Treasury and Markets, Mobile: (+47) 950 43 660