Rogaland Sparebank (ROGS) Q2 2024 earnings summary

Executive summary

• Sandnes Sparebank and Hjelmeland Sparebank merged to form Rogaland Sparebank, creating a bank with 39.7 bn NOK in AUM, 34 bn NOK in lending, and 17 bn NOK in deposits, with a strong presence in Rogaland and a 74% retail market share.

• The merger was completed on August 1, 2024, resulting in a business volume of approximately NOK 40 billion and over 180 employees.

• The first half of 2024 saw historically strong results, with profit after tax of NOK 226 million, up NOK 57.3 million year-over-year, and ROE after tax at 12.8%.

• The merger is accompanied by a new branding strategy, increased market visibility, and a unified culture.

• The bank maintains a strong position in Rogaland, benefiting from robust local economic conditions and a diversified loan portfolio.

Financial highlights

• Lending grew 8.0% year-over-year, with total lending up NOK 2.3 bn and deposits up 6.3%.

• Net interest margin increased to 1.94% (from 1.75% YoY), with parent bank NIM at 2.49%.

• Operating profit after tax reached NOK 226 million for H1 2024, up from NOK 169 million in H1 2023.

• Costs from banking operations decreased to NOK 169.6 million (from 187.0 YoY), with cost-to-income ratio at 35% for H1 2024.

• Dividend from Eika Gruppen for 2023 was NOK 28.4 million (down from 44.8).

Outlook and guidance

• Merger costs with Hjelmeland Sparebank will mainly be booked in 2H24, estimated at NOK 35 million, expected to be fully covered by badwill.

• Internal CET1 target increases to 16.8% from August 2024, with preliminary Basel IV estimates increasing CET1 by 2.6%.

• Financial targets for 2024 include ROE of 10%, CET1 of 16.8%, and dividend payout of 50–75%.

• The bank expects a stable net interest margin in the coming quarters, assuming interest rates remain steady.

• Local macroeconomic conditions remain favorable, with low unemployment and high activity in the energy sector supporting regional growth.