Morrow Bank (MORROW) Q3 2024 earnings summary

Executive summary

• Achieved strong quarterly growth and profitability, with gross loan growth of 24.6%-25% and record total income of NOK 321 million, up 5.2% quarter-on-quarter.

• Cost/income ratio improved to 25.7%, supported by a 13% reduction in FTEs and automation.

• Profit before tax reached NOK 72 million, up 50% year-over-year and 7% from the previous quarter; profit after tax was NOK 54.1 million.

• Return on equity increased to 10.1%, meeting targets ahead of plan.

• Application for a Swedish banking license submitted, initiating redomiciliation to Sweden to enhance competitiveness.

Financial highlights

• Gross loan balance grew to NOK 15.5 billion, with significant growth in Sweden (+90.2%) and Finland (+7.6%), offset by a decline in Norway.

• Total income increased 21.7% year-over-year and 5.2% sequentially, mainly from organic growth and net gains on market-based instruments.

• Net interest income for Q3 2024 was NOK 301.9 million, with a net interest margin of 8.5%.

• Loan loss ratio declined to 4.8%, reflecting improved credit quality and stricter credit policies.

• Cost/income ratio improved to 25.7%, with a target of 23% by year-end 2026.

Outlook and guidance

• Medium-term targets extended to year-end 2026: 5% annual organic loan growth, cost/income ratio of 23%, and return on target equity of 12-14%.

• Full effect of recent loan acquisitions on income and cost/income ratio expected from Q4 2024.

• Loan loss ratio targeted at 4%-4.5% by year-end 2026.

• Anticipates continued growth, further portfolio acquisitions, and possible dividend payouts.

• Redomiciliation and acquisitions could lift return on equity to 20%.