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Higher income and lower costs

The first half of 2014 has resulted in higher income and lower costs for Sparebanken Møre compared with the first six months of last year. This, combined with a continued low level of losses, means the bank can present a half year result of NOK 263 million, which is NOK 62 million higher than for the corresponding period in 2013.

"The good start of 2014 we presented in the first quarter continued into the second quarter of the year. In a highly competitive market, we are managing to maintain stable net interest income and satisfactory overall earnings. We have successfully held costs down and they are currently at a level well below our internal target. I am very pleased with this. These low costs are an important contribution to a good half year result. Growth within the retail market also shows that we have competitive terms in the market," says CEO Olav Arne Fiskerstrand.

Net interest income for the first half of the year was NOK 537 million, which is NOK 43 million higher than after the first half of 2013. Mark to market valuation of the bank's liquidity portfolio has contributed to total income being NOK 71 million higher than after the corresponding period last year. Costs have been reduced by a total of NOK 13 million, which represents a reduction of 4.3 %. The cost/income ratio for the first half of the year was 43.6 %. Losses remain stable, with an increase of NOK 1 million compared to the first half of 2013. Losses in the first half of the year amounted to NOK 14 million, which represents 0.05 % of average total assets. Sparebanken Møre still has a strong capital base with primary capital of 16.40 % and core tier 1 capital of 12.30 %, including 50 % of the result in the year-to-date. Core tier 1 capital has increased by 1.70 percentage points in the last 12 months.

"We have noted that the general macroeconomic conditions in our county have remained stable since the start of 2014. There is no indication that they will change significantly during the year. Output and demand in the county is expected to remain high and the unemployment rate will remain stable. This scenario is positive for Sparebanken Møre and we expect low lending losses in the last half of 2014 as well," says Fiskerstrand.

Comprehensive strategy work

Sparebanken Møre has just completed a comprehensive strategy process and adopted a new long-term strategic plan for the coming years. The bank's annual process lasts for several months and includes all employees in the Group.

"Our new strategic plan, which we call 'Møre 2018', lays out the framework for Sparebanken Møre`s work for the next few years. This plan takes into account all the factors in our region that are of relevance to us as a local and regional savings bank. We are focused on the competitive situation, changes in general regulatory conditions and the fast-paced technological development. Not least, we are focused on how to run the bank, providing good customer experience in the best possible manner. Our vision remains, Sparebanken Møre will be the number one bank in Møre og Romsdal," says Fiskerstrand.

A large part of the strategic plan naturally focuses on financial developments. Growth estimates and our level of financial strength have been thoroughly analysed and targets set.

"The banking market is highly competitive. This is in part due to the generally low level of interest rates. Sparebanken Møre's focus will continue to be on generating growth in commitments that provide a good return on the bank's capital given the level of risk associated with the commitment. We have revised our growth estimates and expect more moderate lending growth in both the corporate and retail markets going forward. The last few years have been characterised by strong growth, especially in the retail market, but we believe there will be some overall flattening out. The double digit growth we have seen in the last few years will not continue," says Fiskerstrand.

Significance of new home mortgage requirements

On 1 July 2014, the Financial Supervisory Authority of Norway set stricter requirements for the banks' calculation of risk in relation to home mortgages. In the second quarter, Sparebanken Møre received permission from the Financial Supervisory Authority of Norway to use the IRB approach for calculating minimum primary capital requirements for credit risk in relation to corporate commitments. The application to use the IRB approach for the mass market, which includes home mortgages, will be decided by the supervisory authorities now as the new requirements for home mortgage models are in place.

"Generally, Sparebanken Møre wants banks operating in the same market to have the same competitive conditions. The new requirements do not result in full harmonisation between us and our competitors with international ties. Without wanting to get ahead of the Financial Supervisory Authority of Norway's final decision concerning our IRB application, we are now in the home stretch when it comes to receiving full IRB approval for our risk models. The new requirements entail only minor changes to the bank's models and will be implemented in the second half of the year. At the end of the first half of the year we have core tier 1 capital of 12.30 %. Our calculations show that, assuming full IRB approval and given the new requirements for home mortgage models, our core tier 1 capital will be 14.00 %. We are and shall remain a very sound savings bank, which these calculations confirm," concludes Olav Arne Fiskerstrand.

Key figures for the second quarter of 2014

  • Net interest income amounted to NOK 268 million/2.01 % (NOK 258 million/2.00 %)
  • Profit before losses and tax amounted to NOK 186 million (NOK 164 million)
  • Profit after tax was NOK 131 million (NOK 116 million)
  • Return on equity was 12.1 % (12.9 %)
  • Cost income ratio was 43.4 (46.9)
  • Earnings per equity certificate in year-to-date: NOK 15.95 (NOK 13.10)

Comparable figures for the second quarter of 2013 in brackets.


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

Runar Sandanger, CFO, Mobile: (+47) 950 43 660

Interim report 2. quarter 2014 - Sparebanken Møre

Interim report 2. quarter 2014 - Møre Boligkreditt

Presentation 2. quarter 2014