SpareBank 1 SMN: Steady course through the crisis

SpareBank 1 SMN recorded a post-tax profit of NOK 290m in the first quarter of 2020 compared with NOK 1,046m in the same period last year. The quarterly accounts show sound core operations, but are coloured by the corona crisis with increased loan losses, falling securities values and losses incurred in SpareBank 1 Gruppen.

“SpareBank 1 SMN is indisputably solid and solvent and therefore well equipped to help customers in need of assistance. We are keeping a cool head, and are playing our part in ensuring that viable firms make it through the crisis, and that people can manage their everyday finances,” says Group CEO Jan-Frode Hanson at SpareBank 1 SMN.

During the corona crisis more than 5,000 customers of SMN have been granted mortgage payment holidays for up to six months, customers needing ready funds have been duly supplied, and customers have received advances of unemployment benefit pending processing of their benefit claims by the Norwegian Labour and Welfare Service (NAV). Dedicated advisers at SMN have worked all out to assist customers who have been hit particularly hard by the crisis.

“In addition we are making an extra effort to strengthen towns and local communities in Central Norway and have set aside NOK 100m of last year’s net profit to the voluntary sector. When the community, which is our largest owner, faces a crisis, it is more important than ever to step up for those affected. This has been well received, with more than 1,700 applications for social dividend so far this year, which is an increase of 50 per cent from the same period last year,” says Mr Janson.

Market position strengthened
The bank expanded its lending to personal customers by 7.6 per cent in the period, thereby strengthening its market position in Central Norway. The bank continues to successfully recruit new customers through its agreement with the Norwegian Confederation of Trade Unions (LO). Lending to corporates increased by 2.7 per cent. 1,500 personal customers and 250 businesses chose SpareBank 1 SMN as their new main bank in the quarter.

Net interest income increased by NOK 61m to NOK 710m compared with the same period last year. The increase stems mainly from a higher lending volume and better return on the bank’s equity. Commission income and other operating income rose by NOK 19m to NOK 570m. Through its broad product offering, the group ensures good commission income and a high proportion of multi-product customers.

Increased losses
Losses on loans totalled NOK 308m compared with NOK 67m in the first quarter of last year, and measure 0.73 per cent of total lending. 84 per cent of losses in the first quarter are losses on loans to corporate clients. Losses on loans to personal customers have risen slightly but this is mainly due to changed accounting policies.

Group costs increased by 1.8 per cent to NOK 716m. This is substantially lower growth than in previous quarters. The board of directors has set a target limiting annual growth in costs to 2 per cent. The target applies across the entire group.

An improvement programme, known as ‘One SMN’, has been established to exploit the power inherent in the group. The programme will prioritise synergies between the group’s business lines, digitalisation, process efficiencies and general cost reductions.

Key figures

• Pre-tax profit: NOK 357m (1,155m as per first quarter 2019)
• Post-tax profit: NOK 290m (1,046m)
• Return on equity: 5.7% (23.3%)
• Growth in lending: 6.0% (6.6%)
• Growth in deposits: 8.7% (6.8%)
• Loan losses: NOK 308m (67m)
• CET1 ratio: 16.3% (14.8%)

Trondheim, 8 May 2020

Contact persons at SpareBank 1 SMN:
Executive Director, Finance, Kjell Fordal on +47 905 41 672
Head of Corporate Communications, Hans Tronstad on +47 941 78 322

https://quarterlyreport.smn.no/

Attachments

• Report Q1
• Supplementary information
• Presentation Q1

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