SPAREBANK 1 SØRØST-NORGE (SOON) Q2 2024 earnings summary

Executive summary

• Achieved solid Q2 and H1 results with stable operations, strong growth, and high solvency despite a challenging market.

• Merger integration is complete for BV, Telemark, and Modum banks; merger with SpareBank 1 SR-Bank ASA is progressing as planned, with regulatory approvals and implementation scheduled for 01.10.2024.

• Systematic efforts have resulted in renewed growth in both retail and corporate segments, with lending and deposit growth over the past 12 months at 1.9% and 0.9%, respectively.

• Net interest income increased to NOK 1,062 million for H1 2024, driven by improved interest and deposit margins.

• Return on equity for H1 2024 was 11.5%, up from 11.3% year-over-year.

Financial highlights

• Q2 2024 profit before loss and tax: NOK 451 million; H1 2024 profit after tax: NOK 738 million, up from NOK 707 million year-over-year.

• Net interest income Q2: NOK 571 million, up 7.6% year-over-year and 2.2% sequentially; H1: NOK 1,062 million.

• Net commission and other income: NOK 204 million in Q2; NOK 434 million in H1, slightly down year-over-year.

• Total operating expenses: NOK 684 million in H1, up from NOK 626 million year-over-year, mainly due to increased FTEs, wage growth, and merger costs.

• Losses on loans and guarantees: NOK 19 million in H1, compared to a net reversal of NOK -34 million last year.

Outlook and guidance

• Bank remains focused on "business as usual" and expects continued profitable growth in both retail and corporate markets.

• The policy rate is expected to remain unchanged in 2024, supporting stable net interest income.

• Credit growth is expected to remain weak in H2 2024, but lending activity is anticipated to pick up in Q3, especially in retail and property segments.

• The loan portfolio quality is considered good, with low credit risk and a high proportion of retail loans.

• The merger with SpareBank 1 SR-Bank ASA is expected to enhance competitiveness, profitability, and dividend capacity.