SPAREBANK 1 NORD-NORGE (NONG) Q4 2023 earnings summary

Executive summary

• FY2023 profit before tax rose to NOK 3,273 million from NOK 2,364 million; profit after tax was NOK 2,548 million and ROE reached 16.4%, above the 13% target.

• Q4 profit before tax was NOK 928 million versus NOK 841 million; quarterly ROE reached a record 18.8%.

• FY lending grew 7.7% including transferred loans, led by Corporate Market growth of 15.5%; underlying losses remained low despite higher provisions for selected exposures.

Financial highlights

• FY net interest income was NOK 3,627 million versus NOK 2,556 million; total income was NOK 5,297 million versus NOK 4,064 million.

• FY costs were NOK 1,908 million versus NOK 1,637 million; result before losses was NOK 3,389 million and loan losses were NOK 116 million, producing pre-tax profit of NOK 3,273 million.

• FY net fee, commission and other operating income was NOK 1,487 million versus NOK 1,234 million, including a one-time NOK 229 million gain on transfer of the capital markets business.

• Q4 total income was NOK 1,612 million versus NOK 1,320 million; costs were NOK 593 million versus NOK 457 million and net profit was NOK 756 million versus NOK 663 million.

Outlook and guidance

• FY24 lending growth expected at 2–5% in Retail Market and 4–7% in Corporate Market; market-share gains remain an ambition.

• Cost/income target remains at or below 40%; wage, inflation, growth and ICT pressures are expected to contribute to higher costs.

• Interest rates are expected to remain high before gradually declining in autumn 2024; lower underlying growth is anticipated and 2024 is expected to be more demanding for Northern Norway.

• Mortgage margins face pressure from slower underlying growth and stronger competition; lower NIBOR could reduce deposit margins over time.