Sparebanken Sør (SOR) Q3 2024 earnings summary

Executive summary

• Sparebanken Sør reported strong Q3 2024 results, with net interest income rising to NOK 838 million and profit before tax reaching NOK 637 million, up from NOK 605 million in Q3 2023.

• The planned merger with Sparebanken Vest, unanimously approved and targeted for May 2025, aims to create Norway's leading nationwide savings bank and enhance efficiency, earnings, and customer offerings.

• The bank maintains high return on equity (11.7% in Q3 2024), a low cost/income ratio (33.9%), and strong cost control.

• Loan and deposit growth over the past 12 months were 4.9% and 5.4%, respectively.

• Solid capital position with CET1 ratio at 16.7% and leverage ratio at 9.3% at quarter-end.

Financial highlights

• Q3 2024 net interest income rose 7% year-over-year to NOK 838 million; net commission income increased to NOK 104 million.

• Profit before tax for Q3 2024 was NOK 637 million, up from NOK 605 million in Q3 2023; profit for the period reached NOK 487 million.

• Year-to-date net interest income reached NOK 2,486 million, with profit for the period at NOK 1,564 million.

• Income from associated companies surged to NOK 42 million in Q3 2024, compared to NOK 6 million in Q3 2023.

• Operating expenses rose to NOK 338 million in Q3 2024, up NOK 40 million year-over-year, mainly due to wage growth and increased FTEs.

Outlook and guidance

• The merger with Sparebanken Vest is expected to generate annual cost synergies of NOK 350–400 million from 2027/2028 and capital synergies of NOK 2 billion, plus NOK 2.1 billion from Basel IV effects.

• Financial targets include ROE >11% in 2024 and >12% by end of 2025, CET1 capital ratio >16.2%, and cost/income ratio <40%.

• The key policy rate is expected to remain high through 2024, with inflation trending down but wage growth sustaining price pressure.

• The bank targets loan growth above regional credit growth.