SPAREBANK 1 HELGELAND (HELG) Q2 2024 earnings summary

Executive summary

• Result before tax reached 364 million NOK for H1 2024, up from 331 million NOK year-over-year, with a return on equity of 12.0% adjusted for hybrid capital.

• Q2 2024 result before tax was 185 million NOK, up from 179 million NOK in Q1, mainly due to low loan losses and slightly lower net interest income and financial investment returns.

• Q2 2024 saw strong lending growth, low loan losses, and stable cost control, despite a slight decline in net interest income.

• Forvaltningskapital (total assets) stood at 37.9 billion NOK at the end of June 2024.

• Annualized return on equity after tax (excluding hybrid capital) was 11.7% in Q2, compared to 12.3% in Q1.

Financial highlights

• Net interest income for Q2 2024 was 249 million NOK, down 5 million NOK sequentially; net interest margin at 2.69%.

• Net commission and other income increased to 45 million NOK in Q2, up 4 million NOK from the previous quarter; H1 total was 86 million NOK, up 4 million NOK year-over-year.

• Loan losses were 6 million NOK in Q2, a sharp decrease from 53 million NOK in Q1; H1 loan losses were 59 million NOK (0.31% of gross loans), up from 47 million NOK last year.

• Operating expenses were 109 million NOK in Q2, with a cost/income ratio of 31.6%; H1 cost/income ratio was 33.8%, improved from 34.8% last year.

• Net profit after tax for Q2 2024 was 139 million NOK; earnings per equity certificate for H1 was 8.1 NOK, up from 7.3 NOK year-over-year.

Outlook and guidance

• Profitability target of 11% after-tax ROE expected to be met in 2024.

• Anticipates a slight reduction in net interest margin for the remainder of 2024 due to strong price competition and higher funding costs.

• Stable commission income and cost/income ratio below 40% expected to continue.

• Loan losses for 2024 may be somewhat higher than in 2023 due to market uncertainty and high interest rates.

• Continued strong activity in the Helgeland region, especially in the corporate market, driven by large infrastructure and industrial projects.