In the second quarter of 2023, Sparebanken Vest has a pre-tax profit of NOK 1,030 (720) million and a return on equity of 15.1 (12.1) per cent.
For the first half of 2023, the bank’s profit before tax is NOK 1,974 (1,569) million and the return on equity is 16.1 (14.3) per cent.
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Net interest income in the quarter was NOK 1,232 (930) million. The increase compared to last year is explained by solid lending growth and higher interest rates.
"The second quarter is characterised by solid banking operations. Net interest income and other income have improved, and losses remain moderate. Costs are rising in pace with general consumer price developments. The bank has a solid capital base. However, the outlook for the rest of 2023 remains uncertain. War in Europe, high inflation, a weak NOK exchange rate, higher interest rates and high wage settlements are affecting the market, says Jan Erik Kjerpeseth, CEO of Sparebanken Vest.
Strong growth in loans and deposits
Gross lending increased by NOK 26.8 (22.1) billion to NOK 241.1 (214.3) billion from the second quarter of 2022, corresponding to a growth of 12.5 per cent over the last twelve months. The overall growth in loans in the quarter was 3.9 per cent.
"The growth in lending to the retail market is strongly driven by developments in the mobile banking concept Bulder. Already in July, Bulder reached the target for the year of NOK 36 billion in loans. The growth in the retail market division in Sparebanken Vest is increasingly following general market developments, says Kjerpeseth.
Total deposits from customers amounted to NOK 123.7 (106.4) billion, corresponding to an increase of 16.2 (19.8) per cent in the last twelve months. Growth in deposits in the quarter was 6.9 per cent. Deposits break down into NOK 67.5 (62.4) billion for retail customers and NOK 56.2 (44.0) billion for corporate customers.
A well-capitalized bank
In the second quarter, the CET1 ratio was a solid 18.6 (18.5) per cent. This means that the Bank has a margin of 3.1 percentage points to the sum of minimum capital and buffer capital requirements. A change in the capital mix requirement the bank must apply to meet the Pillar 2 requirement is expected to increase the Bank’s margin to the CET1 requirement by about 65bps. During the second half of the year, the Board of Directors will consider proposing to the General Meeting an additional distribution for gifts and dividends.
Low losses and reduction in non-performing and high-risk loans
At the end of the second quarter, retail customers accounted for approximately 76 per cent of the bank’s credit portfolio. Around 99% of this portfolio consists of loans secured by residential mortgages.
Loans in default and potential bad debt in the retail market amounted to a total of NOK 295 (301) million. This corresponds to 0.16% (0.19%) of gross lending to the retail market. Developments support low risk in the portfolio.
Loans in default and potential bad debt in the corporate market amounted to a total of NOK 1,135 (1,169) million. This corresponds to 1.95% (2.20%) of gross lending to the corporate market. The risk profile is considered moderate. Good portfolio management and moderate exposure in industries vulnerable to cyclical fluctuations help to reduce the risk of loss.
Defaults and other potential bad debt amounted to 0.59% (0.69%) for the retail and corporate markets combined.
“Sparebanken Vest has a robust and conservative loan book with a 76 per cent share of loans to the retail market, of which 99 per cent are residential mortgages. Moderate credit risk, a diversified corporate market portfolio, good credit performance and a high retail market share result in low losses over time”, says Kjerpeseth.
Cost-to-income ratio among the lowest in the industry
Operating expenses in the quarter amounted to NOK 448 (420) million. The increase compared to last year is mainly due to increased costs for external consultants (NOK 6 million), increased ICT costs (NOK 6 million) and an increase in other operating expenses (NOK 17 million). Under other operating expenses, the bank has expensed about NOK 13 million in one-off costs in the quarter related to the disposal of the bank’s ATMs to external suppliers.
- Operating expenses as a percentage of net operating revenues (cost-to-income) were 30.2, which is among the lowest in the industry," says Kjerpeseth.
Highlights second quarter 2023 results (second quarter 2022 in brackets)
• Good return on equity of 15.1% (12.1%) – above target of 13%
• Growth and higher interest rates increased nominal net interest income to NOK 1,232 (930) million
• A conservative loan book gave low losses of NOK 29 (19) million
• Low cost-to-income ratio of 30.2% (36.6%)
• Good growth in lending and deposits over the last 12 months of 12.5% and 16.2%, respectively
• Bulder recorded a lending volume of NOK 34.5 billion at the end of the quarter, the goal of NOK 36 billion by the end of 2023 was reached in July
• Sound CET1 ratio of 18.6% (18.5%)
Highlights first half-year 2023 results (first half-year 2022 in brackets)
• Higher pre-tax profit: NOK 1,974 (1,569) million
• Strong return on equity: 16.1% (14.3%)
• Higher net interest income: NOK 2,407 (1,817) million
• Profit per equity certificate: NOK 5.98 (4.84)
Sparebanken Vests will present its financial figures for the second quarter of 2023 at 13.30 CET on Wednesday 9 August. From 14.45 CET., the bank’s Capital Markets Day will be held. Presentations of both quarterly results and the Capital Markets Day can be followed here (in Norwegian):
Webcast | Sparebanken Vest
Questions for both the quarterly presentation and the Capital Markets Day may be sent to: investorrelations@spv.no.
A recording of the presentation will be made available on the same website later in the day on August 9.
For more information, please contact:
Jan Erik Kjerpeseth, CEO: +47 951 98 430
Frank Johannesen, CFO: +47 952 65 971
Brede Borgen Kristiansen, Director of Finance and Investor Relations: +47 479 06 402
Hanne Dankertsen, Director of Communications: +47 994 49 173
Sparebanken Vest is Norway’s second largest savings bank with more than 750 dedicated and skilled employees. Since 1823, we have built up the trust of Western Norwegians, which means that we have a solid market position. We are present in 35 locations in Vestland, Rogaland and Møre og Romsdal. Through our affiliated product companies, we are a complete financial house for all our personal and corporate customers. We are proud to be an independent financial group headquartered in Bergen with a central role in much of the value creation that takes place in Western Norway.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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