Sparebanken Sør (SOR) investor relations material

Executive summary

• Q1 2025 net profit after tax was NOK 529 million, down from NOK 573 million in Q1 2024, with solid net interest income and positive commission income development.

• Result before tax was NOK 545 million in Q1 2025, down from NOK 620 million in Q1 2024, with return on equity at 13.4% excluding merger costs.

• Earnings per equity certificate were NOK 4.9.

• The merger with Sparebanken Vest is progressing, with legal merger set for May 2, 2025.

• Cost/income ratio was 41.5% (38.3% excluding merger costs); loan losses remained low.

Financial highlights

• Net interest income was NOK 800 million, down NOK 24 million year-over-year; commission income increased by NOK 13 million to NOK 98 million.

• Net financial income decreased by NOK 17 million to NOK 22 million; income from associated companies rose by NOK 22 million to NOK 27 million.

• Net loan losses were NOK 10 million (Q1 2024: NOK 6 million); total impairments at 0.36% of gross loans.

• Net loans to customers: NOK 134.9 billion, up 4.7% year-over-year; customer deposits: NOK 74.4 billion, up 5.5%.

• Total income was NOK 948 million, down NOK 8 million year-over-year.

Outlook and guidance

• Cost synergies from the merger are estimated at NOK 350–400 million annually from 2027–2028.

• Capital synergies are estimated at NOK 2 billion, with additional Basel IV effects of NOK 2.1 billion.

• The bank targets ROE above 12%, cost/income ratio below 40%, and a dividend payout ratio of ~50%.

• Expectation of Norges Bank rate cut in 2025, with pent-up housing demand likely to boost activity.

• Merger with Sparebanken Vest expected to enhance efficiency, earnings robustness, and customer experience.