Sparebanken Sør (SOR) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered strong results with profit before tax of NOK 648 million and profit for the period at NOK 504 million, up NOK 77 million year-over-year, supported by a stable, low-risk lending portfolio and strong regional market position.

• Return on equity after tax reached 12.5% for the quarter and 13.3% for the first half, reflecting improved profitability and high cost efficiency.

• Significant customer dividend of NOK 427 million distributed, with NOK 208 million for non-profit purposes, strengthening customer loyalty and market position.

• Regional economic conditions remain positive, with 3.6% housing price growth in Agder and very low unemployment, though unemployment is slowly increasing.

• Net interest income and commission income both improved year-over-year, with positive contributions from associated companies.

Financial highlights

• Net interest income rose 12% year-over-year to NOK 823 million in Q2; net commission income increased to NOK 116 million.

• Cost/income ratio at a low 34.3%, among the best in the Norwegian market.

• EPS increased to NOK 4.6 in Q2; profit per equity certificate YTD at NOK 9.9.

• Annualized loan growth of 7.1% in the quarter; deposit growth of 6.6% year-over-year.

• CET1 ratio at 16.7%, leverage ratio at 9.2%, and LCR at 170%.

Outlook and guidance

• Expecting gradual flattening of net interest margin, with lending and deposit growth as main drivers for future net interest income.

• ROE target set at over 12% by end of 2025, supported by capital relief from Basel IV/CRR and strong market position.

• Focus remains on cost control, technology investments, ESG leadership, and customer dividends.

• Key policy rate expected to remain high through 2024; economic uncertainty persists, especially in construction.