Sparebank 1 Smn Prim Cap

Good afternoon and welcome to this presentation of the financial results for Sparerbanken and SMN for the second quarter of 2024. My name is Trond Søroas and I'm the CFO here at SMN. With a return on equity of 15.6% after the first six months of the year, Sparerbanken and SMN has just put behind both the first half of the year and the second quarter, which we are very satisfied with. If we focus on the second quarter, it was a quarter where we really demonstrated the strength and width of our business model. The quarter is characterized by good growth on both sides of the balance sheet, still strong net interest income, solid other income, a flat cost development in the bank, and solid contributions from most of our affiliated companies. So even with an increase in loan losses, two modest eight basis points, the quarter ended with a profit of just above one billion Norwegian kroners and a return on equity of 15.4%. And that with a capital returning 18.5% in CET1. Our long-term financial targets are firm and will also this quarter be met with a good margin because second quarter of 2024 joins the ranks of strong results who have contributed to high value creation over time. I mentioned at the outset that we are very satisfied with the growth in the quarter. For the retail market, it meant a loan growth of 1.6% in this quarter. The special feature of this quarter was that a large proportion of the growth came towards the end of the quarter, and in that sense contributed to the fact that the distance between the average lending volume and the lending volume at the end of the period was larger than normal. Second quarter is traditionally a very strong deposit quarter for the retail market. But although we are very happy with 5.4% increase in deposits in the quarter. With a stable reference rate neighbor, the full effect of the latest interest hike improved lending margins in the quarter and weakened deposit margins. A somewhat greater decrease for the latter, where we experienced the competition to be somewhat higher. Also, a growth of 1.6% in lending when it comes to corporate loan book. Much of this towards commercial real estate with low LTVs. A very strong deposit growth of 6.3%, mainly driven by deposit growth from the public sector. This also influenced the margin picture for deposits in the corporate market. And also here we see that the lending margins are somewhat lower. Net interest income is down quarter on quarter as a result of lower deposit margin reducing the total margin. And also the result of the fact that we on average have higher lending volume transferred to covered bond companies and an increase in debt issuance. Real net interest income, net interest income plus the provisions from the covered bond companies is adjusted for a small reclassification between the net interest income and the securities line, almost flat from quarter to quarter, and contributes with that to a large extent to the profit of 1.015 billion in the quarter and a return on equity of 15.4%. Both commission income and costs are in this quarter equally influenced with 17 million by the takeover of Flex Green Fleet. However, adjusted for that, commission income are very solid in this quarter, a quarter that might be our best ever, with strong contributions from both provision from sale and income in our subsidiaries, especially our accounting firm and real estate broker firm. Flat cost development in the parent bank quarter on quarter, while stronger activity in subsidiaries lead to higher cost in them. The group's cost in this quarter is also influenced by the takeover of Flex Green Fleet. However, adjusted for this effect and the effect of insurance settlement in the first quarter, costs on the group level are slightly down quarter on quarter. After a relatively turbulent cost year in 2023, we aim for a more normalized increase in costs going forward, but have said and will say again that the cost growth in 2024 will somewhat exceed wage and price growth. Also, good contributions from affiliated companies in this quarter, although of a profit share in Sparobank Engruppen, is affected by a large degree of the write-down of the shareholding in Kredi Nord. It is very gratifying to see that BM Bank is still delivering results that meet our return requirements, and also that Sparabanken Markets, in a market that must be regarded as normalized, is well ahead of its income and profit forecast after the merger with the market environments in both Sparabanken SR Bank and Sparabanken NordNorge. Losses close to doubling from previous quarter, but still at the moderate level of eight basis points. Losses in this quarter stems from increased provisions in stage three and mainly from a write-down on a larger corporate blow. And then finally, a quick glance at solvency. Still very solid and small changes from last quarter with a CET1 ratio of 18.5%. and a leverage ratio of 7.1%. So to sum it up, an investment in our equity certificate, Ming, is an investment in a group that has focus on long-term profitability with efficient operations with synergies in the group, solidly capitalized, and a very shareholder-friendly dividend policy. We are the leading finance center in mid-Norway. We seek sustainable growth in an attractive region of the country. We have a diversified customer portfolio and also a strong income platform. The brand is strong but still have development potential and we have an ownership model and a local presence that creates customer loyalty. Still substantial underlying value through ownership positions in and outside the Sparta Bank Alliance. And still very well positioned in regards to consolidation in the Sparta Bank market in Norway. Thank you so much.