01.02.06 << back
SpareBank 1 Midt-Norge. Excellent result for 2005. Profit of NOK 919 million before tax (NOK 723 after tax)
(Consolidated figures. Figures in parenthesis refer to the preceding year unless otherwise stated)

SpareBank 1 Midt-Norge recorded a post-tax profit of NOK 717 million (455 million) in 2005, corresponding to a return on equity of 24.1% (20.0%). The profit measured 1.51% (1.22%) of average total assets.

SpareBank 1 Midt-Norge recorded strong growth in all business areas in 2005. Lending to retail and corporate customers rose by NOK 4.4 billion or 11%, and deposits rose by NOK 2.0 billion or 8% (pro forma figures including Romsdals Fellesbank). Groth in portfolio values of savings products other than ordinary bank deposits totalled as much as NOK 1.9 billion, an increase of 65% compared with the start of the year. A 14% increase in premium volume was recorded on overall sales of personal and non-life insurances.
The substantial improvement over 2004 is mainly ascribable to the following factors:
 
  • Inclusion of Romsdals Fellesbank's result as from the second quarter
  • A strong increase in commission income
  • High trading gains on the bank's securities.
  • An excellent result for the SpareBank 1 Group and a satisfactory trend at the bank's subsidiaries.
  • Reduction in net loan losses.
  • Write-back of previous loss provisions after a settlement was reached in the Finance Credit affair.
The income side shows:
 
  • The introduction of a more assertive competitive strategy in the retail market as from the second quarter of 2005. This generated quicker lending growth in well secured home mortgage loans. The quicker lending growth was achieved mainly by actively exploiting the expected fall in the net interest margin to generate lending growth. This enabled a reduction in the net interest ratio from 2.33% to 2.01%, in line with expectations.
  • Net commission income and other operating income totalled rose by 27% to NOK 538 million.
  • Commission income reported by the subsidiaries also showed a substantial increase: at Allegro Finans the increase was NOK 32 million, at EiendomsMegler 1 NOK 10 million and at Midt-Norge Regnskap NOK 3 million.
  • Overall gains and dividends on securities, currency trading and financial instruments and assets came to NOK 148 million, an increase of NOK 63 million over 2004.
  • The SpareBank 1 Group reported an overall profit of NOK 679 million (252 million). SpareBank 1 Midt-Norge has a 17.63% stake in the SpareBank 1 Group. SpareBank 1 Midt-Norges's share of SpareBank 1 Gruppen's result was NOK 119 million
 
The cost side shows:
  • Operating expenses totalled NOK 906 million (NOK 724 million). NOK 75 million of the total expenses were accounted for by Romsdals Fellesbank. Operating expenses include an imputed expense of NOK 28.5 million, charged to the fourth quarter accounts, which is equivalent to the discount on PCCs sold to the bank's employees in connection with the placing carried out in the summer of 2005. The bank's equity capital was increased by the same margin. The growth in the parent bank's operating expenses, disregarding Romsdals Fellesbank's cost base and the imputed cost mentioned above, refers to growth in wages and prices (NOK 20 million), the integration of Romsdals Fellesbank (NOK 21 million), costs of IT development and the establishment of new offices (NOK 9 million).
  • The growth in costs related to the subsidiaries refers essentially to the establishment of new sales offices by EiendomsMegler 1 in Molde, Ålesund and Kristiansund.
  • The cost-income ratio (excluding imputed costs and income from the securities area) was 53% (54%), which is well within the bank's cost target.
Losses and defaults:
  • Loan losses were taken to income in a net amount of NOK 38 million. Of this, NOK 73 million refers to the compensation and insurance settlement in connection with the Finans Credit bankruptcy. The net loss on other corporate customers came to NOK 58 million (72 million), while a net income of NOK 2 million was recorded on retail customers (loss of NOK 13 million).
  • Collective write-downs were reduced by NOK 16 million in 2005 due to the improved quality of the loan portfolio.
  • Individual write-downs measured 0.5% (0.8%) of gross outstanding loans.
  • Doubtful loans were reduced by NOK 303 million to NOK 623 million, due to write-off of loans to retail customers and a targeted focus on individual customers in the corporate market.
(The balance sheet, including loans and deposits, is commented on based on pro forma figures since Romsdals Fellesbank was only consolidated into the SpareBank 1 Midt-Norge Group on 31 March 2005.)
 
The Group's assets totalled NOK 54 billion at end-2005, NOK 8 billion more than at the end of 2004.
 
Total outstanding loans came to NOK 45.4 billion, having risen by 11% over the year. Customer deposits at end-2005 totalled NOK 27 billion, an increase of 8%.
 
The Board of Directors has resolved to recommend the bank's Supervisory Board to distribute a cash dividend of NOK 5.50 per PCC. The Board has also decided to recommend the Supervisory Board to set aside NOK 89 million to donation fund. This corresponds to 25% of the profit after allocation to dividends.
 
Commenting on the accounts, CEO Finn Haugan says that 2005 was the bank's best ever trading year. Operating parameters were favourable for Norwegian banks in 2005, as previously. What is special in our case is that we have taken over and integrated Romsdals Fellesbank, a move which might normally have weakened our profit performance. That this did not happen was due to a magnificent effort on the part of all employees in the Group, says Mr Haugan. This is confirmed by the very strong growth achieved by the bank in 2005 in well secured home mortgage loans, in sales of insurance and savings products and in the corporate market in general. It is also highly gratifying that SpareBank Gruppen AS posted an unprecedented result of NOK 679 million before tax and that all the bank's subsidiaries show solid performances, says Finn Haugan in conclusion.
 
Trondheim, 1 February 2006
 
SpareBank 1 Midt-Norge:
Any questions should be directed to:
CEO Finn Haugan, tlf.:
Executive Director Kjell Fordal, tlf.:
 
 
About SpareBank 1 Midt-Norge
 
SpareBank 1 Midt-Norge is the region's leading financial group. We are the market leader in personal and corporate banking, and have 71 offices and branches across the region. Our aim is to be the recommended bank for customers in Central Norway, and as a local and independent savings bank we feel a special responsibility for stimulating growth and development in the region. We base our business on proximity to our customers, accessibility, a full product range and comprehensive financial advisory services.
 
Our head office is in Trondheim. The Group has about 800 employees and includes the following subsidiaries: SpareBank 1 Finans Midt-Norge, Eiendomsmegler 1 Midt-Norge, Allegro Finans AS and Midt-Norge Regnskap AS.
 
SpareBank 1 Midt-Norge is one of six owners of SpareBank 1 Gruppen AS.
 
For further information, please visit our website
http://www.smn.no
 
 
Presentation of 4rd Quarter 2005:
http://hugin.info/144/R/1032390/165994.pdf
 
4th Quarter Report 2005:
http://hugin.info/144/R/1032388/165993.pdf
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