Investor Relations

Q2: A strong result characterised by growth, increased income and significantly lower impairment provisions

Key figures Q2 2021

• Pre-tax profit: NOK 959 million (NOK 266 million)
• Net profit for the quarter: NOK 816 million (NOK 256 million)
• Return on equity after tax: 13.2% (4.0%)
• Earnings per share: NOK 3.13 (NOK 0.91)
• Net interest income: NOK 1,001 million (NOK 1,026 million)
• Net commissions and other operating income: NOK 454 million (NOK 344 million)
• Net income from financial investments: NOK 243 million (NOK 297 million)
• Operating costs: NOK 681 million (NOK 570 million)
• Impairments on loans and financial liabilities: NOK 58 million (NOK 831
million)
(Q2 2020 in brackets)

Key figures H1 2021

• Pre-tax profit: NOK 1,839 million (NOK 513 million)
• Net profit for the period: NOK 1,534 million (NOK 477 million)
• Return on equity after tax: 12.4% (3.7%)
• Earnings per share: NOK 5.87 (NOK 1.68)
• Net interest income: NOK 1,996 million (NOK 2,107 million)
• Net commissions and other operating income: NOK 856 million (NOK 690 million)
• Net income from financial investments: NOK 459 million (NOK 269 million)
• Operating costs: NOK 1,293 million (NOK 1,162 million)
• Impairments on loans and financial liabilities: NOK 179 million (NOK 1,391 million)
• Total lending growth over past 12 months: 3.3% (5.4%)
• Growth in deposits over past 12 months: 22.5% (8.3%)
• Common Equity Tier 1 capital ratio: 17.9% (18.3%)
(H1 2020 figures in brackets)

SpareBank 1 SR-Bank ASA (SRBNK) achieved a pre-tax profit of NOK 959 million for the second quarter of 2021, compared with NOK 266 million for the same quarter last year.

The result is characterised by growth, increased income, and significantly lower impairment losses compared with previous quarters.

The return on equity after tax was 13.2% for the quarter, compared with 4.0% for the same quarter last year and 11.6% for the previous quarter.Impairment provisions on loans and guarantees amounted to NOK 58 million, compared with NOK 831 million in the same quarter last year and NOK 121 million in the previous quarter.

“We closely follow up our corporate customers on an ongoing basis and have observed that most of them are doing well, and even expect increased activity going forward. Some of these customers are offshore shipping companies. Those shipping companies that needed restructuring have now been restructured and appear to be better off to meet the future. Our overall lending exposure to companies within oil and offshore is at its lowest level compared with the last 5 years. Going forward, I expect this share to continue falling, both as a consequence of less investments in this sector and our transition to a clearer ESG profile for our overall lending,” says Benedicte Schilbred Fasmer, CEO of SpareBank 1 SR-Bank.

At the end of the quarter, the group’s cost/income ratio was 39.1%, up from 37.9% at the same time last year. The increase was primarily due to more activity in EiendomsMegler 1 and SpareBank 1 SR-Bank ForretningsPartner combined with the acquisition of Tveit Regnskap AS, which was included in the consolidated accounts from 15 April.

“SR-Forvaltning, EiendomsMegler 1 and SpareBank 1 SR-Bank ForretningsPartner all significantly improved their results this quarter compared with the same quarter last year. EiendomsMegler 1 improved its profit by more than 80% compared with last year’s quarter thanks to an offensive business model and a marked increase in activity levels in the housing market, particularly in Rogaland,” says Benedicte Schilbred Fasmer, CEO of SpareBank 1 SR-Bank.

The pre-tax profit for the first half of 2021 was NOK 1,839 million and after tax it was NOK 1,534 million. The return on equity after tax was 12.4% for the first half of 2021.

At the end of the second quarter of 2021, the Common Equity Tier 1 capital ratio was 17.9%, compared with 18.3% at the same time last year. On 28 April 2021, the annual general meeting granted the board special authorisation to approve payment of a dividend for the 2020 financial year of up to NOK 3.10, if the government’s rules permit this a later date. No potential

dividend for 2020 accounting year has been included in the stated Tier 1
capital ratio.

On 23 July, the European Central Bank decided not to extend the dividend restrictions for European banks, which will remain in effect until 30 September 2021. Assuming that the Norwegian authorities come to the same conclusion, the board will consider exercising its authority to pay dividends for the 2020 financial year by no later than 29 October this year.

The group’s Common Equity Tier 1 capital ratio target is 16.7%, which is significantly above the authorities’ requirement of 15.2%.