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Sbanken ASA: Improved profitability and strong growth within savings

Bergen, 13 November 2020. The Sbanken group generated a profit before tax of NOK 274.4 million in the third quarter of 2020. Net interest income increased by NOK 2.0 million, while net fee and commission income fell by NOK 20.0 million compared to the third quarter of 2019. Return on equity was 12.2 per cent.

At quarter-end, customer lending totalled NOK 83.6 billion, corresponding to an annual lending growth rate of 2.4 per cent. Mortgages with an average loan-to-value of 53 per cent accounted for 95 per cent of overall customer lending. The volume of fixed rate mortgages increased to 7.5 per cent of overall mortgage lending.

· Net interest margin up 15 basis points from previous quarter
· Favouring profitable growth – strong competition within mortgages
· FuM increased to NOK 19.3 billion – NCCF market share 25 per cent
· Proposed dividend authorisation for 2019 of up to NOK 3.15 per share

“This quarter, the bank delivered improved profitability, underpinned by increased net interest margin, strong cost control and reduced losses. Net fee and commission income did not exhibit its usual seasonal spike, as customers’ foreign travel activity remained low amid the pandemic. In recent rate cut decisions, we have made a conscious decision to emphasise profitable lending growth, something that resulted in increased churn for lower yielding mortgages, especially in the first half of the quarter. Within savings we have delivered a strong quarter with record high inflow from fixed monthly savings agreements,” says Øyvind Thomassen, CEO of Sbanken.

Net interest income increased to NOK 422.2 (420.8) million. Compared to the previous quarter, net interest income increased by NOK 38.2 million as the impact of early effectuated lending rate cuts abated. The net interest margin for the quarter was 1.66 per cent, up 15 basis points from the previous quarter.

Operating expenses were reduced to NOK 166.8 (175.9) million. The net cost of losses amounted to NOK 28.4 million, equivalent to a loan loss ratio of 0.14 per cent.

At the end of the quarter, Sbanken had a CET1 capital ratio of 16.8 per cent, 4.3 percentage points above the regulatory CET1 requirement of 12.5 per cent. In light of the bank’s strong capital position, the Board of Directors have decided to call an Extraordinary General Meeting on 16 December to consider an authorisation to decide on the distribution of dividends for 2019. The proposed dividend limit is set at NOK 3.15 per share, equivalent to 49.6 per cent of net profit for 2019. The authorisation is proposed to apply from 1 January 2021 and until the Annual General Meeting in 2021.

“While the outlook for the Norwegian economy is showing clear signs of improvement, the recent increase in coronavirus infections serves as a reminder that uncertainty still persists. The bank is well positioned to reach its year-end employment and cost targets, which in combination with continued growth in savings, provides a strong foundation to deliver attractive returns in the coming quarters,” Thomassen concludes.

The full interim report can also be found on https://sbanken.no/IR/IR-english/.

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