SKUE SPAREBANK (SKUE) Q3 2024 earnings summary

Executive summary

• Strong Q3 2024 results driven by robust lending growth and significant positive one-off effects from the Hjartdalbanken merger completed August 1, 2024.

• Underlying banking operations continue to show positive development.

• Pre-tax profit for the first nine months was NOK 328.0 million, up 56.2% year-over-year; Q3 pre-tax profit was NOK 172.9 million, up NOK 105.8 million from Q3 2023.

• The merger resulted in negative goodwill of NOK 91.7 million, reducing other operating expenses; one-off merger costs totaled NOK 4.4 million year-to-date.

• Return on equity (excl. hybrid capital) was 13.6% YTD, up from 10.2% last year.

Financial highlights

• Net interest income YTD was NOK 330.5 million, up 11.6% year-over-year; net commission income was NOK 53.9 million, up 17.4%.

• Cost/income ratio improved to 15.6% YTD (39.9% last year), mainly due to negative goodwill from the merger; adjusted for one-offs, cost ratio was 37.5%.

• Lending growth (including Eika Boligkreditt) was 39.0% year-to-date; deposit growth 36.6%.

• Net loan losses were NOK 13.9 million YTD, with increased model-based provisions due to macroeconomic uncertainty.

• Earnings per equity certificate increased to NOK 26.3 from NOK 21.5 year-over-year.

Outlook and guidance

• Technical merger completion is expected in 2025, with additional merger-related costs of approximately NOK 15 million anticipated.

• Policy rate expected to decrease during 2025, with money markets pricing in several rate cuts.

• Inflation is expected to decline, and the economy is anticipated to approach a neutral cycle.

• The merger has strengthened competitiveness and growth opportunities, especially in Buskerud and Telemark.

• Dividend payout ratio for 2023 was 66.6%; target payout ratio is 50%.