HØLAND OG SETSKOG SPAREBANK (HSPG) Q2 2024 earnings summary

Executive summary

• Result after tax was NOK 21.4 million, down from NOK 25.8 million year-over-year, with underlying operations solid but impacted by significant loan losses related to the Boligpartner bankruptcy.

• Gross lending including Eika Boligkreditt (EBK) reached NOK 7.4 billion, up 3.2% over 12 months; customer deposits totaled NOK 5.1 billion, up 1.5%.

• The bank maintains strong capital adequacy, with a consolidated CET1 ratio of 17.5% and total capital ratio of 23.9%.

• The business is primarily exposed to residential mortgages and housing construction, with a stable used housing market but weak new housing starts.

Financial highlights

• Net interest income for H1 2024 was NOK 65.6 million, down from NOK 68.0 million year-over-year.

• Net commission income (excluding EBK) was NOK 16.5 million, slightly up from NOK 16.3 million.

• Operating expenses decreased to NOK 46.1 million from NOK 47.3 million, with a cost/income ratio (adjusted) of 53.1%.

• Loan losses and provisions totaled NOK 23.8 million, up from NOK 19.5 million, mainly due to the Boligpartner bankruptcy.

• Return on equity was 3.22% for H1 2024, down from 6.63% year-over-year.

Outlook and guidance

• Norges Bank signals that the interest rate peak has been reached, with possible rate cuts in autumn; the bank expects continued pressure in the new housing market.

• The bank focuses on customer service, competence development, and efficiency to ensure long-term profitability.