SPAREBANKEN ØST (SPOG) Q1 2025 earnings summary

Executive summary

• Delivered a solid Q1 2025 with high net interest income, stable low costs, and high capital adequacy; remains among Norway's most solid larger banks with low risk in lending portfolios.

• Net profit after tax was NOK 107.4 million, down from NOK 148.5 million in Q1 2024, mainly due to one-off positive effects in the prior year.

• Net interest income was NOK 219.9 million (1.81% of avg. assets), slightly lower than Q1 2024, reflecting margin pressure.

• Lending volume declined marginally by 0.6% in the quarter and by 4.5% over 12 months; deposit growth was 6.6% YoY.

• Maintains very low loan losses and non-performing loans, with a robust capital base and strong liquidity.

Financial highlights

• Net interest income: NOK 219.9m (Q1 2024: NOK 224.0m); net commission income: NOK 12.2m (Q1 2024: NOK 9.1m).

• Net profit after tax: NOK 107.4m (Q1 2024: NOK 148.5m); EPS: NOK 1.38 (Q1 2024: NOK 1.94).

• Cost/income ratio improved to 30.4% (excl. financial investments: 41.0%).

• Loan losses remained very low at NOK 2–5.7 million (0.00–0.06% of net loans).

• Return on equity: 9.55% (Q1 2024: 13.37%).

Outlook and guidance

• Expects loan growth in line with national credit growth over time and targets a long-term ROE of 10%.

• High competition for mortgage customers expected to pressure lending margins; deposit margins may decline with lower rates and competition.

• Expects new EU capital rules (CRR3/Basel IV) from April 2025 to improve competitive conditions and increase lending capacity.

• Cost control remains good, but inflation, wage growth, and higher IT costs expected to impact expenses.

• Losses are expected to remain low; strong capital position provides room for growth and dividends.