MELHUS SPAREBANK (MELG) Q3 2024 earnings summary

Executive summary

• Net profit after tax for Q3 2024 was NOK 96.8 million, down from NOK 116.2 million in 2023, but up NOK 4.2 million year-over-year when adjusted for a one-time apartment sale last year.

• Return on equity was 9.24% compared to 11.8% last year (9.99% adjusted), reflecting lower profitability.

• Loan growth including Eika Boligkreditt (EBK) was 2.41% over 12 months, down from 5.73% in 2023.

• Cost-to-income ratio (excl. value changes) increased to 47.2% from 35.2% last year (46% adjusted).

• The bank remains well-capitalized with a consolidated CET1 ratio of 17.2%, above the regulatory requirement of 15.3%.

Financial highlights

• Net interest income for Q3 was NOK 65.5 million, stable compared to NOK 65.1 million in Q3 2023.

• Total operating income (excl. value changes) was NOK 58.8 million, down from NOK 79.4 million last year.

• Operating expenses rose to NOK 112.7 million from NOK 100.4 million, mainly due to higher personnel and IT costs.

• Credit losses on loans and guarantees were NOK 13.4 million, slightly up from NOK 13.0 million last year, with Q3 losses mainly from business customer bankruptcies.

• Net interest margin YTD was 2.29%, up from 2.21% last year.

Outlook and guidance

• Norges Bank is expected to keep the policy rate unchanged at 4.5% through 2024.

• The bank targets cost-to-income below 45%, loan growth of 6–8%, and ROE of 10% long-term.

• Anticipates improved private economy due to wage growth and lower inflation, with gradual recovery in construction activity.

• Maintains ambition for growth in quality customers across all product areas despite reduced credit growth in society.