Proposing record-high customer dividends
– The 2023 results show that we are a solid bank. We’re able to increase the distribution of customer dividends and public donations, which is likely to be welcomed during a challenging time for both retail and corporate customers.
Says CEO Geir Bergskaug, presenting a result for the 4th quarter of NOK 543 million before taxes. The quarterly results contributes to an annual result before taxes of NOK 2,227 million.
– The board has proposed customer dividends of NOK 417 million, a significant increase from last year’s NOK 226 million. Many customers are experiencing challenging times. It is therefore gratifying to be able to share the surplus when the bank is doing well.
It is also proposed to increase the allocation for public donations from last year’s NOK 149 million, to NOK 208 million in the year Sparebanken Sør celebrates its 200th anniversary.
8,300 new investors
In Q4 2023, the bank significantly increased its shareholder base through the sale of equity certificates by its largest owner, the Sparebankstiftelsen Sparebanken Sør. The sale had been planned since the spring of 2022, when the bank increased its equity certificate capital ratio from 15 to 40 percent through the conversion of primary capital into equity certificates capital.
– The offering of equity capital certificates in December was a tremendous success. The shareholder base now consists of over 10,000 investors. We also have several new large and solid shareholders at the top of the shareholder list - in addition to Sparebankstiftelsen Sparebanken Sør. At the end of 2023, the equity certificate price was NOK 144, and we can confidently state that Sparebanken Sør now has significantly strengthened the equity capital certificates, Bergskaug explains.
The sale was done through three separate offerings: one directed at institutional investors, one towards retail investors, and one towards the bank’s employees.
– The offering provided us with a broad and solid shareholder base, with several large and long-term investors, providing the bank with strengthened access to capital and increased liquidity in the equity certificates. It was also particularly pleasing to see the enormous interest in the retail offering, where 8,300 investors subscribed for a total of nearly NOK 2 billion, resulting in a significant oversubscription.
Increased revenues provide increased customer dividends
The many interest rate increases by Norges Bank in 2022, continued through 2023. This has resulted in increased net interest income for Norwegian banks. In total for 2023, net interest income for Sparebanken Sør amounted to NOK 3,043 million, increasing from NOK 2,368 million in 2022.
– Naturally, the level of interest rates affects banks' interest margin, and when interest rates rise, net interest also increases. This resulted in strong results in 2023, enabling an increased percentage for customer dividends and a record-high allocation for the bank’s gift fund, contributing to sustainable growth and development in the region.
The bank had a positive loan and deposit growth in 2023, and a deposit-to-loan ratio of 54.3 percent.
Solid asset quality and low loan losses
The bank’s net loan losses amounted to NOK 49 million in 2023, lower than the NOK 74 million the preceding year.
- The challenging macroeconomic environment is taking its toll on both on corporates and households. In 2023, this resulted in an increase in model-based loan loss provisions, as was the case in 2022. Net loan losses was NOK 49 million last year, compared to NOK 79 million in 2022. We’re still seeing low default rates in our loan portfolio, and we have not seen any large realised losses, explains Bergskaug.
The temporary annual results show positive net financial income of NOK 3 million, while the fourth quarter results in isolation show negative net financial income of NOK 13 million.
Total assets and dividend
The group’s total assets were NOK 157 billion at the end of 2023, unchanged from the previous year. The group’s equity was NOK 16.8 billion, increasing from NOK 15.8 billion the year before.
The board proposes an allocation of NOK 417 million to customer dividends, up from NOK 226 million last year, NOK 208 million to public donations, up from NOK 149 million last year and a dividend of NOK 10.0 kroner per equity certificate, which represents 61 percent of the result per equity certificate (group).
Highlights from 2023 (2022 in parentheses):
- Profit before tax: NOK 2,227 million (NOK 1,615 million)
- Return on equity: 11.3 percent (8.7 percent)
- Net interest income: NOK 3,043 million (NOK 2,368 million)
- Net commission income: NOK 400 million (NOK 417 million)
- Net profits financial instruments: NOK 3 million (NOK -82 million)
- Income from associated companies and subsidiaries: NOK 99 million (NOK 125 million)
- Operating expenses: NOK 1,297 million (NOK 1,145 million)
- Net losses on loans: NOK 49 million (NOK 74 million)
- Growth in lending: 3.0 percent
- Growth in deposits: 5.6 percent
Highlights from Q4 2023 (Q4 2022 in parentheses):
- Profit before tax: NOK 543 million (NOK 566 million)
- Return on equity: 10.5 percent (12.8 percent)
- Net interest income: NOK 815 million (NOK 683 million)
- Net commission income: NOK 105 million (NOK 115 million)
- Net profits financial instruments: NOK -13 million (NOK 46 million)
- Income from associated companies and subsidiaries: NOK 33 million (NOK 46 million)
- Operating expenses: NOK 370 million (NOK 311 million)
- Net losses on loans: NOK 31 million (NOK 15 million)