SOON
SpareBank 1 Sørøst-Norges profit in the third quarter of 2023 was NOK 303million. This is an increase of NOK 45 million, or 17%, from thecorrespondingquarter of 2022. The result is driven by strong underlying operations. Loangrowth is still low, but it has picked up at the end of the quarter.
The return on equity for the quarter was 9.4%, compared with 12.4% in theprevious quarter. The deviation from the previous quarter is primarily due tofinancial items and reversals of provisions made in the second quarter, aswellas a poor result in the third quarter for SpareBank 1 Gruppen.
Net interest income including commission income from mortgage creditinstitutions grew by 3.3% in the third quarter and 20% in the past 12 months.Inthe current year, the policy rate has been increased from 2.75 % to 4.25 % bythe end of the third quarter of 2023. The bank has adjusted customer interestrates based on changes in the policy rate set by Norges Bank. The most recentinterest rate change in September 2023 took effect from October 12 forcorporatecustomers and will take effect from November 28 for retail customers.
Lending growth has been weak in the quarter and the past year. But it haspickedup towards the end of the quarter. In the third quarter, lending growth was0.3%, compared with 0.5% in the same period last year, and for the past 12months it is -0.8%, compared with 4.1% for the same period last year. TheGroup's growth ambitions stand. The Group's ambition is to outperform marketgrowth in the region, although it will focus on profitable growth based on theGroup's financial targets.
Other commission and other income (pro forma) have increased by NOK 8 millioncompared to 2022. Lower activity in the real estate brokerage business andsomewhat reduced activity in the accounting firm have resulted in a reductionofother income by NOK 24 million in the quarter.
Net profit from finance has decreases by NOK 43 million compared with theprevious quarter. This is mainly due to the dividend income recognized in thesecond quarter, as well as a negative change in value on derivatives and thefair value of fixed-rate loans.
Compared to the previous year, the operating expenses in the group haveincreased by 10% (NOK 82 million), excluding one-time costs. Operatingexpensesin the parent bank during the same period have increased by 8.4 % (NOK 56million). The increase is mainly due to higher ICT costs, consultant expensesfor implementation and compliance with regulatory requirements, as well asunderlying salary and price growth. The increased operating expenses insubsidiary companies are a result of the acquisition of Grenland Gruppen AS,with full effect from 2023, as well as general price and wage inflation.
The Group's financial target is for a cost-income ratio of less than 40%. Thecost-income ratio per third quarte was 42.2% (45.6%) for the Group and 33.8%(39.8%) for the parent bank excluding one-time costs.
The loan portfolio is of good quality, as evidenced by low loan losses. 99.0%ofthe loan portfolio is classified in stages 1 and 2. In the quarter, the costoflosses on loans amounted to NOK 19 million. By the end of the third quarter,NOK15 million of the loss cost has been recognized as income. Changes inmodel-calculated provisions for losses, stages 1 and 2, contribute positivelybyNOK 20 million. The scenario weighting and safety margin from the secondquarterhave been carried forward into the third quarter.
A general rise in market rates is expected to improve the Group's interestratemargin and earnings.
At the end of the quarter, the consolidated Common Equity Tier 1 capital ratiowas 18.7%. Since the financial statements have not been reviewed by anauditor,the result year to date is not included in the calculation. If we assume adividend share of 50 percent, the common equity tier 1 capital ratio for thegroup is 19.7%.
Highlights of the third quarter of 2023 (figures in brackets concern the thirdquarter of 2022)o Ordinary profit after tax of NOK 303 million (NOK 258 million)o Net interest income, inclusive of mortgage credit institutions, of NOK548million (NOK 457 million) o Net income from financial assets NOK 9 million (NOK 1 million)o Profit contributions from SpareBank 1 Gruppen and BN Bank ASA of NOK-3.6million (NOK 5.1 million) and NOK 13.6 million (NOK 11.5 million),respectivelyo Losses on loans and guarantees of NOK 19 million (NOK 7 million) o Return on equity 9.4% (8.4%), adjusted for one-time effects in 2022(8.9%)o Lending and deposit growth in the past quarter was 0.3% (0.5%) and-2.3%(-2.1%), respectivelyo Common Equity Tier 1 capital ratio 18,7%
Highlights for Q32023 (figures in brackets relate to pro forma for Q32022)o Ordinary profit after tax of NOK 1010 million (NOK 724 million)o Net interest income, inclusive of mortgage credit institutions, of NOK1601million (NOK 1293 million) o Net income from financial assets NOK 94 million (NOK 48 million)o Profit contributions from SpareBank 1 Gruppen and BN Bank ASA of NOK8.4million (NOK 14.9 million) and NOK 38.9 million (NOK 32.5 million),respectivelyo Losses on loans and guarantees of NOK -15 million (NOK 11 million) o Return on equity 10.7% (8.2%), adjusted for one-time effects in 2022(9.1%)o Lending and deposit growth in the past 12 months of -0.8% (4.1%) and-0.1%(1.5%), respectively
The full quarterly report can be downloaded from the Bank's websitesparebank1sorost.no*) Figures in brackets indicate the amount for the corresponding period in2022pro forma for SpareBank 1 Sørøst-Norge.
Sandefjord, 25.10.2023
Contact people:
Per Halvorsen, CEO, Tel. +4793407441 Roar Snippen, CFO/IR, Tel. +4797610360
This information must be disclosed pursuant to section 5-12 of the SecuritiesTrading Act.
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