Satisfied customers and high return on equity in the third quarter

30 Oct 2024 12:52 CET

Norway's most satisfied bank customers and efficient operations provide a high
return on equity for Sparebanken Vest. In the third quarter of 2024, the bank
has a profit before tax of NOK 1,585 (1,157) million and a return on equity of
21.4 (16.1) percent.

Good lending growth and higher interest rates increase nominal net interest to
NOK 1,574 (1,393) million. Net interest as a percentage of average assets under
management is 1.87 (1.85) percent.

In EPSI's latest measurement of customer satisfaction, Sparebanken Vest comes
out on top with the most satisfied business customers in the country, while
Bulder has the country's most satisfied personal customers.
- We deliver good growth, a cost-effective operation and low losses. At the same
time, we have the country's most satisfied bank customers, says CEO of
Sparebanken Vest, Jan Erik Kjerpeseth.

Good lending growth and satisfied customers in both segments
Gross lending increased by NOK 28.9 (29.6) billion to NOK 277.2 (248.3) billion
from the third quarter of 2023, corresponding to twelve-month growth of 11.6
(13.5) percent. Growth in lending in the quarter was 1.6 (2.0) per cent.

Loan growth in the personal customer portfolio excl. Bulder in isolation is
about 4.3 (3.8) percent in the last 12 months and 1.5 (minus 0.1) percent in the
quarter. In the quarter, lending growth in the personal customer portfolio excl.
Bulder continues to show a positive development compared to 2023.

Lending through the Bulder concept in isolation amounts to NOK 57.6 (42.1)
billion at the end of the quarter. Lending growth in the Bulder concept in the
last 12 months is NOK 15.5 (20.1) billion, and in the last quarter NOK 1.5 (7.6)
billion. The growth in the concept was somewhat lower than in previous quarters
but has picked up in the last half of the quarter and further into the fourth
quarter.

Gross lending to business customers amounts to NOK 66.1 (59.0) billion,
corresponding to a growth in lending over the last 12 months of 12.0 (8.7)
percent and last quarter of 0.8 (1.6) percent. Lending growth to business
customers is somewhat more uneven against a background of greater individual
commitment. In addition to this, the bank continues to observe demand from
business customers, despite relatively low market growth.

Good deposit growth
Deposits from customers are NOK 133.6 (123.5) billion, corresponding to
twelve-month growth of 8.2 (14.2) percent. Growth in deposits in the quarter is
minus 0.4 (minus 0.1) percent. The deposits are divided by NOK 77.4 (67.2)
billion for personal customers and NOK 56.2 (56.3) billion for business
customers.
- The third quarter is normally a quarter with negative deposit growth for
personal customers as personal customers receive holiday pay and tax refund in
the second quarter and subsequent withdrawals from accounts in the third
quarter, says Kjerpeseth.

Within the Bulder concept, the deposit volume has increased by NOK 7.2 (2.7)
billion in the last 12 months and NOK 0.7 (1.5) billion in the last quarter. The
deposit coverage in the Bulder concept in isolation is 24.8 (15.1) percent at
the end of the quarter. More and more customers are using Bulder as a daily
bank.

Robust lending portfolio results in low losses
Robust lending portfolio and good credit risk management result in low losses of
NOK 12 (20) million. At the end of the third quarter, retail customers make up
approx. 76 percent of the bank's credit portfolio. About 99 per cent of this
portfolio consists of loans secured by housing.

Defaults and potential bad debt to personal customers total NOK 339 (289)
million. Defaults and potential bad debt to corporate customers total NOK 943
(1,171) million. Good portfolio management, close follow-up and moderate
exposure in cyclical industries help to reduce the risk of loss. Together with
conservative provisions, this provides a good starting point for continued low
losses.

Cost-to-income ratio among the lowest in the industry
In the quarter, operating costs are NOK 435 (436) million. Operating costs as a
percentage of net operating income (cost-to-income) was 21.4 (27.5) percent.

In the quarter, the cost line external fees incurred costs related to the merger
with Sparebanken Sør of around NOK 10 million. IT costs have been reduced by NOK
11 million compared to the third quarter of 2023. This is partly due to the fact
that throughout 2023 the bank was in a transition phase related to invoicing on
a new agreement with a core banking supplier, and that the bank has worked
systematically over time with cost-reducing measures in the IT area.
- A cost-to-income ratio of 21.4 in the quarter is among the lowest in the
industry, says Kjerpeseth.

Solid capital position
The bank's consolidated CET1 ratio is 18.0 (17.6) per cent at the end of the
quarter, including 50 per cent profit accumulation so far this year. The CET1
ratio has strengthened 0.2 percentage points in the quarter. CET1 ratio without
profit accumulation is 16.4 (16.4) per cent.

The bank's current requirement for CET1 is 14.8 per cent. With a CET1 ratio of
18 per cent, the bank has a margin of 3.2 percentage points to the requirement
at the end of the quarter.

The board of the bank has adopted a capital adequacy target of 16.05 per cent
for CET1, which also takes into account a margin of 1.25 percentage points,
above and beyond all regulatory minimum and buffer requirements. At the end of
the quarter, the bank has a margin to the solvency target of approximately 2.0
percentage points.
- We deliver a very strong equity return in combination with a good margin for
regulatory capital requirements, says Kjerpeseth.

Merger with Sparebanken Sør
The general meetings of Sparebanken Vest and Sparebanken Sør decided on 2
October 2024 to merge the two banks. The merger requires the necessary approvals
from the authorities and is planned to be completed on 1 May 2025. The new bank
will be called Sparebanken Norge.

Borea Asset Management part of the Frende group
The acquisition of 70% of the shares in Borea Asset Management was approved by
Finanstilsynet and completed in October 2024. Borea Asset Management is thus
part of the Frende group. Sparebanken Norge will own approximately 90% of the
shares in Frende Kapitalforvaltning, which in turn owns 70% of the shares in
Borea Asset Management.

Third quarter 2024
• Very strong ROE: 21.4% (16.1%)
• Good growth and higher interest rates increased nominal net interest income:
NOK 1,574 (1,393) million
• Robust lending portfolio and good credit risk management gave low losses: NOK
12 (20) million
• Efficient cost management contributed to a low cost ratio: 21.4% (27.5%)
• Good growth in lending and deposits in the last 12 months: 11.6% and 8.2%,
respectively
• Sound CET1 ratio: 18.0% (17.6%), well above the capital adequacy target of
16.05%

Sparebanken Vests will present its financial figures for the third quarter of
2024 at 09.00 CET on 31 October 2024.
The presentation will be available
here: https://www.spv.no/om-oss/investor-relations/webcast   
  
Questions for the quarterly presentation may be sent to:
investorrelations@spv.no

An English texted recording of the presentation will be made later in the week
here: https://www.spv.no/english/investor-relations/webcast

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, Operations 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 approximately 800
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 36 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.    

More information:
Access the news on Oslo Bors NewsWeb site

630731_Interim Report Sparebanken Vest Q3 2024.pdf
630731_Quarterly presentation Sparebanken Vest Q3 2024.pdf