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Sparebank 1 Smn Prim Cap
2/12/2025
Good afternoon. My name is Trond Søros. I'm the CFO here at Sparebank NSMN. And I will guide you through this short presentation of the figures for fourth quarter of 24 and also the preliminary figures for the whole year of 2024. As this overview slide shows, 2024 was a very good year for SpiderBank and SMM. A profit of nearly $4.6 billion and a return on equity, which of course varied from quarter to quarter, but for the whole year as a whole, ended up with 16.6%. The one-time effect from the insurance merger gain last quarter had, of course, a good contribution to this. But even when we exclude it, the return on equity is 15%. That is a result that we are very pleased with. The year 2024 was also a very good year of good growth, with growth above market growth on both sides of the balance sheet, both within the retail and the corporate market. And growth is always a continuous balance against margin. We should not only grow, but the growth should also be profitable. And we managed this balance well in 2024 as well. After several years now with very low loan losses, partly due to reversals within the offshore segment, 2024 ended with losses of 176 million Norwegian kroners, still below a long-term average and considered to be at a moderate level. We are very comfortable with the risk in our loan portfolio. where still 67% is towards wage earners, mainly here in central part of Norway. The capital situation remains solid, even though there are some regulatory challenges ahead, with both an increased risk floor for mortgages and CRR3. We find room for a record high dividend, at least when it comes to in kroner, with a dividend of 12,5 kroner per equity certificate. And considering this, the group has a CET1 ratio at the end of the year of 18.3%. I will come back to the fourth quarter in more detail. And although also this quarter in isolation, seen in isolation, contributed well to the good annual result with a return of equity of 14.4%, which is a good result in a quarter with no major one-time effects. And if any, they are on the cost side. Even considering the surprise of an increased risk rate floor for mortgages just before Christmas, our goal for return on equity and the rest of our long-term financial goals remain unchanged. And for the year 2024, we achieved all main goals, and for some of them with a good margin as well. Although we are slightly behind the efficiency target for our subsidiaries, Sparebank 1 Regnskapshuset and Enomsmörg Bledén, the real estate broker. We aim here at SpiderMonkey and SMN to have a payout ratio of about around half of the profit for the year. And this long-term financial goal remains unchanged. This year, we are distributing a bit more. We have found room to distribute 61% of the group's result, which corresponds, as I said, to a cash dividend of 12.5 kroner per equity certificate. With an applying the same distribution rate to the community capital, it means and leads to a community dividend of 896 million Norwegian kroners, of which 240 million is transferred to the annual distribution of funds to charitable purposes, and 656 million to Sparabanksstiftelsen 1 SMN. So a closer look at the details for the fourth quarter and starting on the activity side. Here we saw that the retail market had good growth at the end of the year with 1.5% loan growth in the fourth quarter. which means that in total this part of the portfolio grew by 5% last year. Very pleased to see that much of this growth and that the growth is particularly strong within the Sunnmörö region, which is one of our focus areas. In the retail market, we have been focusing on growing in a balanced way and therefore very pleased to see that the growth also was good when it comes to deposits in the fourth quarter with 1.3%, which gave an annual growth of 7.5% for 2024. And that means that we have been successful in increasing the deposit coverage ratio that has increased by three percentage points in this segment over the last two years. Corporate market growth can be somewhat more volatile from quarter to quarter, which we saw this quarter, where we was a bit of target. And growth ended down by 0.4% percentage points. But strong growth overall for 2024, where we ended up at 7.5%, with the majority of the growth this year coming towards commercial real estate. Strong deposit growth also in this segment in the fourth quarter with 2.5%, driven by deposit growth both here in Trondheim and in the capital, Oslo, which contributed to a total deposit growth for 2024 of 10.7%. Looking closer at the results for the fourth quarter, it showed a profit of 1.05 billion, which is our fifth consecutive quarter now with over 1 billion in profit. Despite some negative margin drift in the fourth quarter, volume growth led to a good net interest income, up 1.3% from last quarter and 0.8% if you take into account commissions from the covered bond companies in the alliance as well. Commission income, excluding commissions from the same cover bond companies, is up almost 7% from quarter to quarter, mainly driven by payments this quarter. For the whole year, the same commission income is up over 15%, which we are very pleased with. and to see, and it is driven by good contribution from all product companies and also a strong top-line growth in both Sparerbank 1 Regnskapshuset and Sparerbank 1, our real estate broker. Loan losses, only five basis points this quarter, totaling 30 million Norwegian kroner. Most of this is model losses in stage one and stage two in the corporate loan book. And over quarters now, we have seen a steadily improving result in Sparebank 1-gruppen, driven by good insurance results, which make a good contribution from associated companies in this quarter. Overall, this means, as I said, a profit of 1.05 billion in the quarter and a return of equity on 14.4%. Sparrow Monkey and SMN has a broad and well-diversified income platform. And as mentioned, we see good development in the fourth quarter as well when it comes to commissions. In the fourth quarter, as stated, income from the payment area contributed particularly well. So somewhat weaker contributions from accounting and real estate brokerage in the quarters in the second half of the year. But compared to 2023, there is a good top line growth in both companies, resulting in a good annual result in the brokerage firm, while the accounting house and accountancy firm is somewhat behind the target due to investments in specialized departments, which is expected to generate income in the future and in the long term, and some declining top line results in the second half as well. A closer look at the costs. The group's cost increased with 91 million from the previous quarter. Most of this, 78 million, is in the bank and is mainly related to VELT tax, which has increased to 38 million Norwegian kroners and has to be booked in this quarter. and also an increased employer's tax, which is an increase due to recalculated tax related to the period of 2019 to 2024 due to the incorrect application of the regional employer's tax rate. Adjusting for the increased wealth tax and the one-time effect related to employer's tax in the fourth quarter, cost growth in the bank is 4.5% in 2024. And we expect the cost growth in the bank to further decrease in 2025. And as a part of the ongoing efficiency work, the number of full-time equivalents in the bank will remain unchanged in 2025. When it comes to results from associated companies, as stated, we have now seen several quarters in a row with better results from Sparebankengruppen, especially driven by improved results from insurance. And together with the continued good results in the other associated companies, this gives a good contribution of 226 million Norwegian kroners in this quarter. Losses in the quarter ended at 30 million Norwegian kroners down from last quarter, and 28 million of these losses are model losses, as stated, and 2 million is in increased individual right downs. This constitutes five basis points of the portfolio. For the year as a whole, losses came in at 176 million, which constitutes seven basis points. The group has a very strong capital situation at the end of the year with a CET1 ratio of 18.3 percent after the distribution of 61 percent of the result. This is somewhat up from the previous quarter. due to a slightly higher included share of the result than included throughout the year. But at the same time, the percentage change in the calculation basis is somewhat higher than the loan growth, partly due to the result of 2024 being included in the operational risk calculations. Unweighted capital, the leverage ratio was at 7%, and together with strong earnings, that makes the group undoubtedly very solid. So, to end, we will still make an argument that an investment in SpareBank and SMN and an investment in our equity certificate is an attractive investment. This is an investment in a profitable group, which is solid and with a very shareholder-friendly dividend policy. We are market leader in the central part of a strong region of Norway, the central part of Norway. High share of commission's income from both subsidiaries and product companies in the Alliance. And there are still significant value from ownership both within and outside the Spiderbanken Alliance. We still believe that we are very well positioned when it comes to further structural changes in the savings bank industry in Norway. And we are a visible and engaged community builder with a very strong brand in our region. Thank you.