SPAREBANK 1 ØSTLANDET (SPOL) Q1 2025 earnings summary

Executive summary

• First full quarter as a merged bank delivered solid results, with return on equity at 14.1%, profit after tax of NOK 867 million, and robust growth in lending and deposits, supported by the Totens Sparebank merger.

• Net interest income increased year-over-year, driven by high retail market activity and robust mortgage demand.

• Commission income grew over 14% year-over-year (pro forma), with real estate and insurance contributing significantly.

• Retail market activity was exceptionally high, with real estate brokering, Private Banking, and new branch initiatives contributing to growth.

• The merger is progressing ahead of schedule, with positive developments in employee and customer metrics.

Financial highlights

• Net profit after tax for Q1 2025 was NOK 867 million, up from NOK 823 million in Q1 2024.

• Net interest income (including commissions from covered bond companies) reached NOK 1,278 million, up from NOK 1,225 million in Q1 2024.

• Net commissions and other income (excluding covered bond companies) were NOK 351 million, up from NOK 307 million in Q1 2024.

• Cost/income ratio improved to 41.6%.

• Earnings per equity certificate (ECC) were NOK 4.44.

Outlook and guidance

• The bank targets a return on equity of at least 13% and a dividend payout ratio of at least 50% of annual profits.

• Merger costs ahead are estimated at NOK 150 million, mainly related to technical integration expected by June 2026.

• Cost control and efficiency are emphasized, with a new cost target to be communicated in early 2026.

• Norges Bank is expected to cut policy rates twice in 2025, supporting household consumption and investment.

• The Board views long-term growth prospects as strong, supported by a solid capital position and high customer satisfaction.