- Sound lending and deposit growth
- Improved net interest
- Growth in commission income from payment transfers and sale of securities products and insurance
- Lower costs
Group profit adjusted for the change in value of the bank’s debt securities amounted to MNOK 314, compared with MNOK 301 in 2012. The result shows a return on equity after tax of 8.9%. Adjusted for the profit impact of debt valuation, return on equity is 9.7%.
Net interest income amounted to MNOK 594, which is up MNOK 84 or 16.5% compared with last year. The increase is due to improved margins during the latter part of last year. In addition to this, there is also the impact of growth in the total business volume and the positive impact of the interest rate adjustment implemented in the 2nd quarter of this year.
Commission income from payment transfer services and sale of securities products and insurance is up 14.2% or MNOK 10.6. Income from the estate agency business was down, due to fewer units sold compared with last year.
Group costs amounted to MNOK 366, which is equivalent to 1.06% of the average total assets. In the same period last year, the equivalent figures were MNOK 365 and 1.14% of the average total assets. Costs relative to income also show a positive trend.
Losses on loans have been charged to the accounts with net MNOK 52, which is equivalent to 0.18% of the gross loans. In the same period last year, the equivalent figures were MNOK 33 and 0.13% of the gross loans. The increase in net losses is mainly due to one single commitment.
Net bad and doubtful loans amounted to MNOK 626, which is equivalent to 1.60% of the loans. This is a reduction of MNOK 16 compared with the 2nd quarter.
At the end of the quarter, total assets stood at BNOK 46.8, compared with NBNOK 43.2 in the same period last year.
This gives a growth of 8.4%.
In the last twelve months, lending growth was 7.3%, with 10.4% in the retail banking market and 0.7% in the corporate market. The percentage of loans to the retail banking market is now 70.5%.
In the last twelve months, deposit growth was 9.2%, with 8.4% in the retail banking market and 10.2% in the corporate market.
Deposit-to-loan ratio is now 55.9% in the Group and 76.7% in the parent bank.
The bank has a very satisfactory liquidity situation with a liquidity indicator for long-term funding of 107.4 at the end of the period. New long-term borrowing is achieved through issuance of covered bonds and senior debt.
Total equity and related capital is BNOK 3.5, of which MNOK 200 is hybrid capital. In the 4th quarter of last year, MNOK 600 of the Savings Bank’s fund was converted to equity certificates. The certificates are owned by Sparebankstiftelsen Sparebanken Sør. At the end of the 3rd quarter, pure core capital adequacy was 12.1%. Profit for the year has not been included. However, if the profit year-to-date was included, pure core capital adequacy would have been a strong 12.6%, well above the regulatory requirement of 9%.
Moody’s has given the bank an A3 rating. On 3 July, Moody’s put Sparebanken Sør’s A3 rating under assessment for upgrading as a result of the forthcoming merger with Sparebanken Pluss. Moody’s expects to conclude its assessment in the 1st half-year 2014, when the merger is likely to be in place.
Subsidiary Sør Boligkreditt AS has an Aaa rating from Moody’s on covered bonds.
Underlying operations in the bank are still good. Net interest is showing a strong trend and costs are well under control. This trend is expected to continue together with good growth and good access to funding.
The work of preparing the merger between Sparebanken Sør and Sparebanken Pluss will have top priority in the months ahead. The new bank plans to use the many good opportunities for change and improving the efficiency of operations that will come as a result of the merger. This will form the basis for a cost-effective bank with a strong competitive position.
The interim report will be published on our website, and will be available from Oslo Stock Exchange www.newsweb.no.
30. October 2013