SADG - Profit warning for 2nd quarter 2010
(Thomson Reuters ONE) -
SADG - Profit warning for 2nd quarter 2010
As of June 1, 2010, a new Managing Director took charge of Sandnes Sparebank.
In connection with the reporting of revised financial statements as of June
30, 2010, a thorough review and risk assessment was made of the Bank's
Corporate and Retail credit portfolio.
The result of this review is that the Board of Directors and management of the
Bank, means that it is necessary to make a significant increase in individual
write-downs of some existing doubtful loans in the major customer segment of the
Corporate Market business. The write-downs resulted in a loss for the first half
of 2010.
The Bank's liquidity situation is good. Tier-1 capital ratio for the group is
expected to be 11.5% as of the 2(nd) quarter 2010.
Further information about the write-downs
It should be emphasized that this only applies to corporate loans that have been
defined as doubtful since the 4(th) quarter of 2008, and which have previously
been subject to individual write-downs. The write down on one of these loans was
reversed in 2(nd) quarter of 2009, but has now been provided for again. This is
a large customer, but only a small part of it is regarded as doubtful.
The Bank's retail customer portfolio has been reviewed, as already mentioned,
but was not affected by further individual write-downs.
For the 2(nd) quarter 2010, individual write-downs by the Parent Bank were
increased by NOK 112 million. In total, the Bank's doubtful loans amount to NOK
1.490 million.
The reason for the increase is negative performance by some existing doubtful
corporate loans.
No negative performances have been identified with respect to the Bank's other
corporate loans.
Outlook for 2010 and commenced measures for improved profitability
The net interest income of the Group has been under pressure, due to increasing
funding costs through the 2(nd) quarter, and is expected to be approximately
1.3% in the 2(nd) quarter, and approximately 1.4% for the first half of 2010 as
a whole.
The Bank undertook a general rate increase effective from June 10, 2010. In
addition, a margin increase has been implemented for the major customer segment,
effective from July 2010.
This will contribute to strengthen net interest income during the 3(rd) quarter.
As of the 2(nd) quarter 2010, other operating income is 26% lower than for the
2(nd) quarter of 2009, which is due to lower dividends on the Bank's investments
and negative fair value adjustments of the Bank's financial instruments,
primarily due to higher credit spreads.
The Group experienced an increase in total operating cost of 13% relative to the
2(nd) quarter of 2009. This is primarily due to large individual items, the
majority of which is non-recurring items.
The financial statements for the first half of the year have not been completed,
as they are subject to a limited audit, but profits before taxes are expected to
be in the range NOK - 55 to - 65 million.
For the next half, the Bank will, as previously communicated, actively sharpen
the focus of its business on the retail market and the small and medium business
segment. This work has already been commenced during the summer, and has
resulted in some of the Bank's loans to major customers having been redeemed. We
will work actively to effect a further reduction of this exposure going forward.
The Bank is also implementing a new profitability program focusing on both
increasing income and reducing operating costs. In addition to increased
profitability, focus will be sharpened and the service of our various customer
groups improved. The profitability program will be presented in further detail
in 3(rd) quarter 2010.
Normalized profits are expected for the 3(rd) and 4(th) quarter of 2010, which
will result in small profits for the Group on an annual basis.
2(nd) quarter results will be made public by Sandnes Sparebank on Thursday
12(th) August.
Contact persons:
Svein Ivar Førland, CEO, telephone: 90 64 41 91
Terje Frafjord, CFO, telephone: 92 83 54 30
[HUG#1435656]
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Source: Sandnes Sparebank via Thomson Reuters ONE
Unternehmensinformation / Kurzprofil:
Datum: 04.08.2010 - 08:51 Uhr
Sprache: Deutsch
News-ID 38637
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contact information:
Town:
Sandnes
Kategorie:
Business News
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