SpareBank 1 Østlandet’s profit after tax was NOK 579 (350) million for the second quarter of 2023. The return on equity was 12.2 (7.7) per cent.
The year-on-year improvement in profit was mainly due to increased net interest income from higher loan and deposit volumes, improved deposit margins and increased income from payment services. Results from financial holdings also improved compared with the same period last year. At the same time, a sharp rise in money market rates curbed the rise in net interest income this quarter.
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Strong development in core operations
“We are very pleased with the results. Despite a weak macroeconomic backdrop, we have seen our core operations continue to develop strongly, with good growth in both the retail and corporate markets", says Richard Heiberg, CEO of SpareBank 1 Østlandet.
Good growth for lending and deposits
Current social trends are full of contrasts, unpredictable and challenging. In Eastern Norway, businesses and households are less optimistic than they have been for a long time. However, unemployment remains low and the housing market is stable, which is underpinning economic activity. The Bank is seeing good demand for financing, advice and expertise. The Group’s total lending growth in the quarter was 2.0 (3.1) per cent, while deposit volumes increased by 5.5 (6.5) per cent.
Stronger customer relationships – a good starting point for further growth
"Customer satisfaction is very high, even during a more challenging period. This is backed up by the Bank’s customer surveys (TRIM), where the results have improved still further since the previous survey. We believe in the importance of supporting local people and businesses, we share our profits with our customers and we are there when they need good advice. The Bank wants to help its customers with good solutions, including those experiencing tougher times.
New branched opened in Økern
At the beginning of June, the Bank opened its new branch office in Økern based on the ambition of increasing our focus on the Oslo region. The branch in Økern Portal is located in a growth area for both business and retail customers. The aim is for this initiative to provide us with good opportunities to take additional market shares in Oslo. Good interactions with advisers at our branches help build strong customer relationships.
Good, stable risk development, although loss provisions are somewhat higher
We are not seeing any systematic increase in defaults or need for instalment deferrals among customers. The Bank’s actual losses remain very low, but we are further strengthening model-based provisions and increasing individual provisions for a small number of customers. The total loss cost in the quarter amounted to NOK 86 million (net receipts on losses of NOK 59 million). Looking ahead, macroeconomic conditions are likely to contribute to more customers experiencing financial challenges, which is reflected in the Bank’s strengthening of model-based loss provisions in the last few quarters.
Lower CO2 emissions in the loan portfolio
The Group has intensified its efforts to reduce emissions in its loan portfolio with a target of achieving net zero emissions from 2050. At the end of the quarter, the Bank’s green loans amounted to NOK 36.1 (29.7) billion. Green lending now accounts for 18.5 (16.2) per cent of the Bank’s total lending.
Outlook
“The Bank’s overall opportunities for growth are considered good. We have a well-established market position in the country’s most attractive market area. The Bank’s capital situation is solid. Customer satisfaction is high, and we have a competent organisation based where customers want to meet us. The Norwegian savings bank model has proved to be solid in challenging times,” says Heiberg.
Second quarter of 2023 (Consolidated figures.* Figures in brackets concern the corresponding period in 2022)
• Profit after tax: NOK 579 (350) million
• Return on equity: 12.2 (7.7) per cent
• Earnings per equity capital certificate: NOK 3.37 (2.02)
• Net interest income: NOK 852 (634) million
• Net commissions and other operating income: NOK 412 (426) million
• Net result from financial assets and liabilities: NOK 117 (-120) million
• Total operating expenses: NOK 534 (520) million
• Impairment losses on loans and guarantees: NOK 86 million (net reversal of NOK 59 million)
• Lending growth in the last quarter, including mortgages transferred to the covered bond companies: 2.0 (3.1) per cent
• Deposit growth in the last quarter: 5.5 (6.5) per cent
• Lending growth in the past 12 months, including mortgages transferred to the covered bond companies: 5.9 (9.6) per cent
• Deposit growth in the past 12 months: 5.9 (8.1) per cent
• Common Equity Tier 1 capital ratio: 17.9 (18.0) per cent
• The Bank’s green lending (including lending transferred to credit institutions) amounted to NOK 36.1 billion
(NOK 29.7 billion)
Contact information:
Richard Heiberg, Group CEO, Tel.: +47 902 06 018
Geir-Egil Bolstad, CFO, Tel.: +47 918 82 071
Bjørn-Erik Orskaug, Head of Investor Relations, Tel.: +47 922 39 185
Siv Stenseth, EVP Communication and Social Affairs, Tel.: +47 958 46 991
This information must be disclosed pursuant to section 5-12 of the Securities Trading Act.
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