Profit growth and strengthened financial position at SpareBank 1 SMN

SpareBank 1 SMN recorded a profit of NOK 1,400m in 2013, an increase of NOK 323m compared with the previous year. The preliminary annual accounts for 2013 reflect a solid profit trend in the banks core business, low cost growth, low loan losses and a strengthened financial position. High growth in lending to small and medium businesses and households and reduced growth to large companies is as planned. 2013 proved to be another good year for SpareBank 1 SMN. The profit growth confirms that the bank is well on the way to meeting new requirements on equity capital, and is a good indication that we will be in a position to deliver competitive return at higher levels of equity capital in the years ahead, says SpareBank 1 SMN's Group CEO, Finn Haugan. In keeping with the banks capital plan, the board of directors recommends a cash dividend of NOK 1.75 per equity certificate. This gives a payout ratio of 25%, which is half the level defined in the banks dividend policy. A provision of NOK 35m is recommended for non-profit causes in 2014. The board of directors has adopted a revised capital plan in which the bank plans for a common equity tier 1 (CET1) ratio of at least 13.5% by 30 June 2016. As of end-2013 the level is 11.1%. Over the last five years the bank has built up CET1 capital worth NOK 4.5bn. The board's assumption is that the capital target will be reached without launching an ordinary stock issue, but may consider recommending a private placing on market terms with the foundation Sparebankstiftelsen SMN. Accounts for 2013 - highlights: ·      Pre-tax profit: NOK 1,758m (1,355m in 2012) ·      Post-tax profit: NOK 1,400m (1,077m) ·      Return on equity: 13.3% (11.7%) ·      Growth in lending: 6.8% (10.2%) ·      Growth in deposits: 7.3% (9.2%) ·      Loan losses: NOK 101m (58m) ·      CET1 capital: 11.1% (10.0%) ·      Earnings per equity certificate: NOK 6.92 (5.21) ·      Recommended dividend: NOK 1.75 per equity certificate (1.50) Strengthened net interest income Net interest income was NOK 1,616m in 2013, an increase of NOK 139m over the previous year. Lending margins have risen as a result of tighter capital requirements for Norwegian banks. Commission income and other operating income increased by 28% to NOK 1,463m compared with 2012. Strong growth is essentially ascribable to increased commissions from SpareBank 1 Boligkreditt due to higher margins on home mortgage loans. The banks subsidiaries show continued good earnings. Lower lending growth As targeted in the bank's capital plan, the growth in lending to large corporate clients is considerably reduced, while lending to SMBs continues to increase. As of the fourth quarter 2013, twelve-month growth in lending to corporates overall was 2.8%. Lending to retail borrowers rose by 9.5% over the last 12 months, and the bank has strengthened its leading market position. In comparison, credit growth amongst households in the same period was 7.0%, according to Statistics Norway. The improvement project Best for customer experience, launched just over a year ago, has revealed a large potential for increased market shares and, by the same token, continued income growth through a stronger focus on organisational measures and adviser performance. This will give us renewed impetus in 2014, says Finn Haugen. The bank has low losses and a low default rate that reflects both the region's economy and the bank's portfolio quality. Net losses make up a mere 0.09% of total outstanding loans. Cost growth at the parent bank has been reduced and was negative in 2013, which is in keeping with the bank's efficiency improvement plan. As of end-2013 SpareBank 1 SMN's total assets stood at NOK 147bn, including loans transferred to the co-owned SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt. No cyclical shift in sight We see no indications that business and industry in Trøndelag and in Møre and Romsdal face a change in the economic climate. Businesses in the region show broadly speaking sound profits, and prospects for 2014 appear good. The board of directors expect 2014 to be another good year for the bank, says Finn Haugen. Trondheim, 5 February 2014. Contact persons at SpareBank 1 SMN: Group CEO Finn Haugan on +47 900 41 002 Executive Vice President, Finance, Kjell Fordal on +47 905 41 672 Executive Vice President, Corporate Communications, Hans Tronstad on +47 941 78 322 About SpareBank 1 SMN SpareBank 1 SMN is the region's leading financial services group. Market leader in the retail and corporate segments, with a total of 50 offices located across the region's municipalities. We aim to be the recommended bank for customers in Trøndelag and in Møre and Romsdal. Being a local, independent savings bank we feel a special responsibility for stimulating growth and prosperity in the region. We base our business on closeness to our customers, good accessibility, a full product range and comprehensive financial advisory services. Our head office is in Trondheim. The Group employs about 1,200 full-time equivalents and includes the following subsidiaries: SpareBank 1 SMN Finans, EiendomsMegler 1 Midt-Norge, Allegro Finans and SpareBank 1 SMN Regnskap. The bank is the largest shareholder in BN Bank with a 33% stake. SpareBank 1 SMN is one of six owners of SpareBank 1 Gruppen. For further information, visit our website at www.smn.no. Fourt quarter report 2013: http://hugin.info/144/R/1759178/594891.pdf Supplementary Information: http://hugin.info/144/R/1759178/594893.pdf Presentation Fourth quarter 2013: http://hugin.info/144/R/1759178/594892.pdf This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: SpareBank 1 SMN via GlobeNewswire [HUG#1759178]