SPAREBANKEN MØRE (MORG) Q1 2025 earnings summary

Executive summary

• Q1 2025 profit after tax was NOK 232 million, down from NOK 254 million in Q1 2024, with ROE at 11.2% compared to 13.1% last year.

• Net interest income declined 4.5% year-over-year to NOK 485 million, reflecting margin pressure, especially in the corporate segment.

• Operating expenses rose 10.5% to NOK 252 million, mainly due to higher personnel costs, with cost/income ratio at 44.5%.

• Loans and deposits grew by 6.6% and 6.4% respectively over the past 12 months, outpacing market averages.

• Loan losses remained low at NOK 13 million (0.05% of loans and guarantees).

Financial highlights

• Net interest income: NOK 485 million (1.87% of average assets), down from NOK 508 million (2.07%) in Q1 2024.

• Total income: NOK 567 million, down from NOK 578 million year-over-year.

• Profit per equity certificate (EC) was NOK 2.13, down from NOK 2.41 in Q1 2024.

• CET1 ratio at 17.0%, leverage ratio at 7.3%, and deposit-to-loan ratio at 57.6%.

• Operating expenses increased to NOK 252 million; profit before impairment was NOK 315 million, down from NOK 350 million.

Outlook and guidance

• Expectation of more subdued house price growth in coming quarters after a 7.0% national increase over the past year.

• Global uncertainty, especially from US trade policy, may impact growth; Norwegian economy remains robust with low unemployment and rising household purchasing power.

• Norges Bank expects three rate cuts in 2025, but market volatility is anticipated.

• Implementation of CRR3 in Q2 will boost CET1 by 3.0 p.p., but risk-weighted floor increase in Q3 will reduce CET1 by 1.5 p.p.

• Long-term targets: ROE >13%, C/I <40%, CET1 at or above regulatory requirements, and dividend payout around 50% of annual profit if solvency allows.