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Sbanken ASA: Well positioned in demanding market conditions

Bergen, 15 May 2020. The Sbanken group generated a profit before tax of NOK 239.0 million in the first quarter of 2020. Net interest income increased by NOK 75.5 million while net fee and commission income increased 2.8 per cent compared to the first quarter of 2019. Return on equity for the quarter was 11.2 per cent and 12.5 per cent adjusted for non-recurring items.

At quarter-end, total customer lending was NOK 83.0 billion, compared to NOK 78.2 billion at the end of the first quarter of 2019. Home loans with an average loan-to-value of 53.4 per cent accounted for 94.3 per cent of total customer lending. The conservative balance sheet, combined with a solid capital position, ensures that the group is well positioned to navigate through the COVID-19 pandemic.

· Gaining market share – quarterly lending growth of 1.9 per cent
· Strong net interest margin
· Solid capital situation – CET1 at 16.1 per cent
· Conservative balance sheet – 94.3 per cent home loans with low LTV

“The outbreak of the coronavirus affects us all. We are doing our utmost to support our customers through an uncertain time, in addition to taking care of our staff and ensuring normal operations. In this quarter, the bank has brought expedient rate cuts to our customers and granted instalment deferrals to 2 200 mortgage customers. Within home loans, we are delivering quarterly growth of 2.5 per cent and increasing our market share. The bank has a resilient, fully digital business model and is well placed to strengthen its market position in the uncertain environment that currently surrounds us,” says Øyvind Thomassen, CEO of Sbanken.

Net interest income increased to NOK 430.6 (355.1) million as a result of increased mortgage lending and improved net interest margin. The net interest margin for the quarter was 1.85 per cent, up from 1.57 per cent in the first quarter of 2019.

Operating expenses amounted to NOK 183.8 million, of which NOK 8.6 million in severance pay related to cost-cutting initiatives. The net cost of losses amounted to NOK 51.0 million, including a discretionary credit loss provision of NOK 19.5 million to account for increased macroeconomic uncertainty. The loan loss ratio for the quarter was 0.25 per cent and underlying loss ratio was 0.15 per cent. The loss ratio for home loans was 0.03 per cent.

At the end of the quarter, Sbanken had a CET1 capital ratio of 16.1 per cent, compared to 15.6 per cent at 31 December 2019. This incorporates the revised dividend decision, announced 14 April, to not distribute dividend for 2019 at this point in time. Following the reduction in the countercyclical buffer to 1 per cent, Sbanken’s has a regulatory CET1 requirement of 12.5 per cent and a capital ratio target of 13.0 per cent.

“The outlook for the Norwegian economy has radically changed, and we are currently seeing a sharp rise in unemployment and record low interest rates. Sbanken is however uniquely positioned to handle adverse effects from the pandemic and capitalise on the opportunities that lie ahead,” Thomassen concludes.

A detailed financial report for the group and for Sbanken ASA is attached to this notice. The report for the wholly-owned subsidiary, Sbanken Boligkreditt AS, is distributed separately.

Contact details,

Investor Relations
Jesper M. Hatletveit, Head of IR, Sbanken ASA, +47 959 40 045
Henning Nordgulen, CFO, Sbanken ASA, +47 952 65 990

Media Contact
Kristian K. Fredheim, Head of Communications, Sbanken ASA, +47 924 47 407

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act