SPAREBANK 1 ØSTLANDET (SPOL) Q3 2024 earnings summary

Executive summary

• Return on equity reached 20.4% in 3Q24, supported by strong core banking profitability and a NOK 287 million one-time gain from the Fremtind/Eika insurance merger.

• Q3 2024 profit after tax was NOK 1,080 million, up from NOK 417 million in Q3 2023.

• Net interest income increased quarter-over-quarter and year-over-year, driven by healthy loan growth and higher lending margins.

• Commission income remained strong, with high activity in real estate, savings, and insurance.

• Cost growth was 11.9% year-over-year, with integration of Totens expected to increase costs further, though efficiency gains are targeted.

Financial highlights

• Net interest income for Q3 2024 was NOK 1,105 million, up from NOK 1,098 million in 2Q24 and NOK 941 million in Q3 2023.

• Net commissions and other income totaled NOK 433 million in Q3 2024, up from NOK 358 million in Q3 2023.

• Net profit from financial assets and liabilities surged to NOK 530 million in Q3 2024, mainly due to the insurance merger gain.

• Total operating expenses rose to NOK 596 million in Q3 2024, with merger and personnel costs contributing.

• Loan loss provisions were NOK 106 million in Q3 2024, down from NOK 134 million in Q3 2023.

Outlook and guidance

• Integration with Totens Sparebank is expected to increase costs in the near term, but capital synergies of NOK 300 million are anticipated, with some realized from January 2025.

• The bank targets a CET1 ratio above 16.1% and dividend payout above 50%, with actual CET1 at 16.9% and dividend payout at 60% year-to-date.

• Norges Bank is expected to keep rates at 4.5% for 2024, with gradual reductions anticipated in 2025.

• The macroeconomic environment remains challenging, but credit demand is robust and the bank continues to defend and grow its market share.

• The merger with Totens Sparebank and a new branch in Drammen are expected to support future growth.