Morrow Bank (MORROW) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 2024 results with 12% year-over-year loan growth to NOK 12.5 billion, driven by Finland and Sweden, and pre-tax profit rising 16% to NOK 67 million.

• ROE improved to 8.5% and cost/income ratio remained industry-leading at 26%.

• Loan loss ratio declined to 5.1% as credit policies tightened and collection processes improved.

• Acquisition of a NOK/SEK 700 million Swedish performing loan portfolio, expected to be neutral for 2024 KPIs and accretive from 2025.

• Outperformed peers in growth and cost efficiency, but valuation multiples remain low.

Financial highlights

• Loan book grew 1.9% sequentially and 12.3% year-over-year, mainly in Finland and Sweden.

• Total income increased 3.1% quarter-over-quarter to NOK 305.2 million, with net interest income at NOK 287.4 million and net interest margin at 9.3%.

• Operating expenses remained stable at NOK 80 million for the third consecutive quarter.

• Loan losses were flat at NOK 158 million, with loan loss ratio improving to 5.1%.

• After-tax profit increased to NOK 51 million in Q2 2024.

Outlook and guidance

• Targeting continued balanced loan book growth of around 10% per year, with cost/income ratio at or below 26%.

• Loan loss ratio expected to fall below 5% in Q3 and reach 4.0–4.5% by Q4 2025.

• ROTE target of 10–12% for Q4 2025, with potential upside to 15–20% if capital requirements align with Swedish peers.

• Guidance currently excludes additional inorganic growth; updates expected in Q3.

• Ongoing IT platform transition to complete in Q1 2025, expected to reduce IT ownership costs.