SpareBank 1 SMN: Directors recommend dividend reduction to meet the cumulative effects of the crisis

The board of directors of SpareBank 1 SMN recommend revising the dividend payout from last year’s profit from 53.5 per cent to 41.2 per cent. New dividend is recommended at NOK 5.00 per equity certificate.

SpareBank 1 SMN’s board of directors is following the crisis in the Norwegian economy closely, and is taking the consequences for our region seriously. The board considers the recommended change in the payout ratio to reflect a good balance between the need for stability and predictability for the bank’s owners and investors on the one hand, and the group’s social responsibility towards its customers and local communities in Central Norway on the other. This recommendation further bolsters an already strong financial position, enabling SpareBank 1 SMN once again to keep its cool and to accompany personal customers and firms alike safely through the crisis.

The economic ripple effects of the crisis could be far-reaching. SpareBank 1 SMN has capital and liquidity that puts the group in a solid position, well-prepared to meet these challenges. The bank’s equity capital is well in excess of government requirements, and provides scope to absorb future losses. This robustness enables the bank to initiate immediate measures for customers experiencing problems as a result of the crisis. For example, the bank is opening the way for mortgage payment holidays and for advances of unemployment benefit. The group’s solid position enables it to maintain normal lending activity in a demanding market.

Finanstilsynet (Norway’s FSA) has asked all Norwegian banks to reappraise their distribution of net profit in light of the economic crisis that has arisen. The board has accordingly revised its original recommendation for distribution of last year’s net profit.

The original assessment was made on 5 February, before the consequences of the crisis for the Norwegian economy had arisen. At that point a dividend payout of NOK 6.50 per equity certificate was recommended, corresponding to a payout ratio of 53.5 per cent of the group’s net profit. NOK 474 million was allocated to social dividend, comprising NOK 200 million to dividend payout and NOK 274 million to the foundation Sparebankstiftelsen SMN.

In their reappraisal of the payout ratio, the board of directors emphasise that SpareBank 1 SMN should be even better prepared to safely negotiate a long lasting crisis. At the same time, the board takes heed of the government’s expectations of reduced dividend, and upholds the bank’s most important social mission which is to ensure an ample supply of capital to people and businesses in the region.

SpareBank 1 SMN also aims to be a sound investment for its owners and investors by delivering the best possible results and pursuing an attractive and prudent dividend policy. The board accordingly considers it appropriate to reduce the dividend payout to NOK 5.00 per equity certificate. This provides a payout ratio of 41.2 per cent, which is equivalent to a 23 per cent reduction on the original recommendation.

The social dividend is reduced from NOK 474 million to NOK 364 million, in keeping with the bank’s dividend policy. The reduction in the payout ratio of about NOK 300 million strengthens the bank’s financial position by about 0.3 percentage points.

Contact:

CFO Kjell Fordal, phone +47 905 41 672
Head of Communications Hans Tronstad, phone +47 941 78 322

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