MELHUS SPAREBANK (MELG) Q2 2024 earnings summary

Executive summary

• Net profit after tax for Q2 2024 was NOK 67.6 million, compared to NOK 86.6 million in Q2 2023; adjusted for a one-time apartment sale in 2023, profit improved by NOK 3.1 million year-over-year.

• The period was marked by strong competition in the mortgage market, resulting in low lending growth in the retail segment, but recent measures have led to positive momentum.

• Credit losses totaled NOK 6.8 million YTD, down from NOK 9.9 million last year, mainly due to a few corporate bankruptcies.

• Return on equity was 9.8% in Q2 2024, versus 13.8% last year (10.7% adjusted for one-offs).

Financial highlights

• Net interest income for Q2 2024 was NOK 64.7 million, up from NOK 62.0 million in Q2 2023; net interest margin was 2.28% versus 2.18% last year.

• Total operating income (excluding value changes) was NOK 169.6 million for Q2 2024.

• Cost/income ratio (excl. value changes) rose to 47.9% from 34.2% in Q2 2023 (38.9% adjusted for one-offs).

• Total assets under management including EBK reached NOK 14.2 billion.

• Earnings per equity certificate (EK-bevis) for Q2 2024 was NOK 7.47, down from NOK 10.52 in Q2 2023.

Outlook and guidance

• Interest rates are expected to remain at current levels, with improved household finances anticipated due to wage growth and lower inflation.

• The bank maintains ambitions for growth in quality customers across all product areas, despite reduced credit growth in society.

• Long-term targets remain: cost/income ratio below 45%, loan growth of 6–8%, and ROE of 10%.