SKUE SPAREBANK (SKUE) Q2 2024 earnings summary

Executive summary

• Achieved solid growth in lending and stable margins, resulting in a strong first half-year result.

• Pre-tax profit for H1 2024 was NOK 155.1 million, up 8.6% year-over-year; after-tax profit was NOK 120.5 million, up 5.4%.

• Return on equity (excluding hybrid capital) held steady at 10% compared to the same period last year.

• Cost reductions and good cost control contributed positively, despite one-time merger-related expenses.

• The bank is well-positioned for future growth, especially following the upcoming merger with Hjartdalbanken.

Financial highlights

• Net interest income for H1 2024 rose 5.9% year-over-year to NOK 204.2 million; net interest margin was 2.33%.

• Net commission income increased 7.2% to NOK 32.7 million.

• Cost/income ratio improved to 36.1% (35.9% adjusted for one-offs), down from 38.7% last year.

• Net loan losses were NOK 10.2 million, with increased model-based provisions due to macroeconomic uncertainty.

• Total assets at quarter-end were NOK 17.86 billion, up 2.8% year-to-date.

Outlook and guidance

• Long-term target to pay at least 50% of equity certificate holders' share of profit as dividends.

• Minimum return on equity target set at 9% (excluding hybrid capital); actual for Q2 2024 is 10%.

• Maximum cost/income ratio target of 43%, with current performance well below this.

• Expecting weak economic growth in Norway, with lower demand and rising unemployment.

• The merger with Hjartdalbanken (effective August 1) is expected to provide growth opportunities beyond market average in Buskerud and Telemark.