Customer dividend and solid results

Says CEO Geir Bergskaug, who can present a result for the 4th quarter of NOK 566 million before taxes. This contributes to an annual result before taxes of NOK 1,615 million.

– With a 2022 marked by market turbulence and challenging times for many, it is extra pleasing to be able to share the surplus when the bank is doing well. The board has proposed setting aside 226 million NOK of the bank's surplus for customer dividends and 149 million NOK for public donations for 2023.

Negligible sustainability risk

At the end of 2022, the bank received a new ESG rating from the reputable company Sustainalytics. The bank's sustainability risk went from "low risk" in 2021 to "negligible risk" in 2022.

– I am very proud of the work being done in the sustainability area throughout the bank. This is a strong recognition, which is good for customers, society and the bank, says Bergskaug, who has big ambitions for the bank's role.

– We are meant to make a difference for sustainable development in the region and be part of the green shift. The challenge going forward will be to integrate ESG in a good way in the business areas, develop and sell sustainable products and services, and issue sustainable bonds in line with market and customer expectations. We have set a goal to reduce carbon emissions from the loan and investment portfolio by 40 percent by the end of 2030, and full carbon neutrality by 2050.
Increased policy rate led to increased revenues

The interest rate increases by the Norwegian Central Bank in 2022 have given increased revenues for the banks. In total for 2022, Sparebanken Sør's net interest income was NOK 2,368 million, an increase from NOK 1,939 million the previous year.

– Naturally, the interest rate level affects the banks' interest margin, and when interest rates rise, net interest also rises. This gives a good result in 2022 and contributes positively to our first year of distributing customer dividends and a record-high allocation to the bank's charity fund.

The bank has had a positive loan and deposit growth in 2022 and has a deposit coverage of 53 percent.

Market turmoil has a big impact

In 2022, the bank had a net loan loss of NOK 74 million, compared to a net inflow of losses of NOK 18 million in 2021.

– Through 2022, there has been marked changes in macroeconomic conditions which involve negative changes in framework conditions for both corporate customers and the retail sector. This has resulted in increased model-based loan loss provisions. We still have a low rate of non-performing loans and have not experienced larger confirmed losses, explains Bergskaug.

The preliminary annual report shows negative net financial revenues of NOK 82 million, while the fourth quarter alone shows positive net financial revenues of NOK 46 million.

– For the full year, it is not surprising that the very unsettled financial markets lead to a decrease in financial revenues. The positive contribution in the fourth quarter is mainly due to falling credit spreads leading to an accounting gain on the bank's liquidity portfolio.

Total assets, equity capital and dividend

The group's total asset was NOK 157 billion at the end of the year, an increase from NOK 144 billion the year before. The group's equity was NOK 15.8 billion, up from NOK 14.9 billion the year before.

The board proposes to allocate NOK 226 million to customer dividends, NOK 149 million to the charity fund and a dividend of NOK 6.0 per equity certificate.

Highlights from preliminary annual report (2021 in parenthesis)

• Profit before tax: NOK 1 615 mill (NOK 1 549 mill.)
• Return on equity: 8.7 percent (9.0 percent)
• Net interest income: NOK 2 368 mill. (NOK 1 939 mill.)
• Net profits financial instruments: NOK -82 mill. (NOK 0 mill.)
• Income from associated companies and subsidiaries: NOK 125 mill. (NOK 174 mill.)
• Opertating expenses: NOK 1 145 mill. (NOK 1 018 mill.)
• Net loss on loans: NOK 74 mill. (NOK -18 mill.)
• Lending growth of 6.2 percent
• Deposit growth of 3.9 percent

Highlights from Q4 2022 (Q4 2021 in parenthesis)

• Profit before tax: NOK 566 mill (NOK 412 mill.)
• Return on equity: 12.8 percent (9.4 percent)
• Net interest income: NOK 683 mill. (NOK 506 mill.)
• Net profits financial instruments: NOK 46 mill. (NOK -26 mill.)
• Income from associated companies and subsidiaries: MOK 46 mill. (NOK 66 mill.)
• Opertating expenses: NOK 311 mill. (NOK 268 mill.)
• Net loss on loans: NOK 15 mill. (NOK 2 mill.)