Q2 2026 Sparebank 1 SR Bank ASA Earnings Call
Speaker #1: Now, which is our accounting firm, and by doing so, we concentrate even more on the core banking business—releasing capital, reducing costs, and sharpening focus on core business.
[Company Representative] (Sparebank 1 Sør-Norge): which is our accounting firm. By doing so, we concentrate even more on the core banking business, releasing capital, reducing cost, and sharpening focus on core business. As we grow as a bank, we also grow significantly on mutual fund savings, and this chart shows an extensive growth, both with net subscription and the total asset under management, which lies in the SpareBank 1 Forvaltning, which is the joint company for firms within the alliance. We have an ownership stake in that company of almost 43%, which clearly shows our strong position, because we have what we call a dynamic ownership model. You own account related to how large share of the business you provide to the company. Being the largest of the 12 alliance banks, we clearly also show that we are the largest of the contributors to this company.
Inge Reinertsen: which is our accounting firm. By doing so, we concentrate even more on the core banking business, releasing capital, reducing cost, and sharpening focus on core business. As we grow as a bank, we also grow significantly on mutual fund savings, and this chart shows an extensive growth, both with net subscription and the total asset under management, which lies in the SpareBank 1 Forvaltning, which is the joint company for firms within the alliance. We have an ownership stake in that company of almost 43%, which clearly shows our strong position, because we have what we call a dynamic ownership model. You own account related to how large share of the business you provide to the company. Being the largest of the 12 alliance banks, we clearly also show that we are the largest of the contributors to this company.
Speaker #1: As we grow as a bank, we also see significant growth in mutual fund savings, and this chart shows extensive growth in both net subscriptions and total assets under management. These assets lie in SpareBank 1 Forvaltning, which is the joint company for funds within the alliance.
Speaker #1: We have an ownership stake in that company of almost 43%, which clearly shows our strong position because we have what we call a dynamic ownership model.
Speaker #1: You own an account related to how large a share of the business you provide to the company. So, being the largest of the 12 alliance banks, we clearly also show that we are the largest of the contributors to this company.
Speaker #1: The macroeconomic environment is still benign in Norway—low unemployment rate, good wage growth, both in nominal and real terms, and housing prices fairly stable on the positive side—which also adds some growth into our, especially, retail lending.
[Company Representative] (Sparebank 1 Sør-Norge): The macroeconomic environment is still benign in Norway. Low unemployment rate, good wage growth, both in nominal and real terms, and housing prices fairly stable on the positive sides, which also add some growth into our, especially retail lending. The PMI is still positive within our area. Of course, everything related to energy is very important not only to Norway and the southwest coast, but to the entire European community, and this also underpins the strong macroeconomic situation for Norway as a country. One year and a half after the merger, we are well on track on delivering on the synergy target. It was originally NOK 300 million. We have increased it to NOK 550 million, which means that we have already exceeded the original ambition, and we are well on track, both on the cost, the operational synergies and the personal synergies.
Inge Reinertsen: The macroeconomic environment is still benign in Norway. Low unemployment rate, good wage growth, both in nominal and real terms, and housing prices fairly stable on the positive sides, which also add some growth into our, especially retail lending. The PMI is still positive within our area. Of course, everything related to energy is very important not only to Norway and the southwest coast, but to the entire European community, and this also underpins the strong macroeconomic situation for Norway as a country. One year and a half after the merger, we are well on track on delivering on the synergy target. It was originally NOK 300 million. We have increased it to NOK 550 million, which means that we have already exceeded the original ambition, and we are well on track, both on the cost, the operational synergies and the personal synergies.
Speaker #1: The PMIs are still positive within our area. Of course, everything related to energy is very important, not only to Norway and the southwest coast, but to the entire European community. This also underpins the strong macroeconomic situation for Norway as a country.
Speaker #1: One year and a half after the merger, we are well on track delivering on the synergy target. It was originally 300 million; we have increased it to 550 million, which means that we have already exceeded the original ambition. We are well on track both on the cost and operational synergies, as well as the personnel synergies.
Speaker #1: We're a bit behind schedule on funding synergies, but the only explanation for that is we've had extensive growth in deposits and thereby reduced the need for market funding.
[Company Representative] (Sparebank 1 Sør-Norge): A bit behind schedule on funding synergies, but the only explanation for that is that we have had an extensive growth in deposits and thereby reduced the need for market funding. That will be also realized down the road. Financial targets remains unchanged. Long-term target of about 14% return on equity. We believe this quarter surely shows that we are on track to deliver and with a very good development in all lines within the P&L. Returning 12.7% this quarter. If we expect the goodwill from merger, it is on 13.6%, but the 14% ambition is to be read across compared to the 12.7%. Very strong growth within this quarter, 2.6%, and this is in a quarter where we have made the largest change in organizational charts since the crisis in the beginning of the 1990s.
Inge Reinertsen: A bit behind schedule on funding synergies, but the only explanation for that is that we have had an extensive growth in deposits and thereby reduced the need for market funding. That will be also realized down the road. Financial targets remains unchanged. Long-term target of about 14% return on equity. We believe this quarter surely shows that we are on track to deliver and with a very good development in all lines within the P&L. Returning 12.7% this quarter. If we expect the goodwill from merger, it is on 13.6%, but the 14% ambition is to be read across compared to the 12.7%. Very strong growth within this quarter, 2.6%, and this is in a quarter where we have made the largest change in organizational charts since the crisis in the beginning of the 1990s.
Speaker #1: So that will also be realized down the road. Financial targets remain unchanged. The long-term target is about a 14% return on equity. We believe this quarter surely shows that we are on track to deliver, with very good development in all lines within the P&L.
Speaker #1: Returning 12.7% this quarter, if we expect goodwill from the merger, it is on 13.6%, but the 14% ambition is to be read across compared to the 12.7%.
Speaker #1: Very strong growth within this quarter, 2.6%, and this is in a quarter where we have made the largest change in our organizational chart since the crisis at the beginning of the 1990s.
Speaker #1: So, it's kind of not obvious that we would have this growth, and it surely shows that the organization has responded very well to the changes.
[Company Representative] (Sparebank 1 Sør-Norge): It's kind of not obvious that we would have this growth, and it surely shows that the organization has responded very well to the changes. Deposit growth even higher than the lending growth on 6.4%. Very low impairment losses standing at 5 basis points, which is well below what we regard as a normalized level. A very solid capital position standing at 17.5%, and included in that is that we have also subtracted 45 basis points as we were allowed to initiate a new share buyback program of 1%, which was started a week ago. Thereby, we have subtracted 45 basis points as if this share buyback program was already concluded. High cost efficiency with a low cost-to-income ratio standing at 27.8%, which shows that we are very effective and of course that underpins the strong delivery on return on equity.
Inge Reinertsen: It's kind of not obvious that we would have this growth, and it surely shows that the organization has responded very well to the changes. Deposit growth even higher than the lending growth on 6.4%. Very low impairment losses standing at 5 basis points, which is well below what we regard as a normalized level. A very solid capital position standing at 17.5%, and included in that is that we have also subtracted 45 basis points as we were allowed to initiate a new share buyback program of 1%, which was started a week ago. Thereby, we have subtracted 45 basis points as if this share buyback program was already concluded. High cost efficiency with a low cost-to-income ratio standing at 27.8%, which shows that we are very effective and of course that underpins the strong delivery on return on equity.
Speaker #1: Deposit growth is even higher than lending growth, at 6.4%. Impairment losses are very low, standing at 5 basis points, which is well below what we regard as a normalized level.
Speaker #1: And a very solid capital position standing at 17.5%, and included in that is that we have also subtracted 45 basis points as we were allowed to initiate a new share buyback program of 1%, which was started a week ago and thereby we have been we have subtracted 45 basis points as if this share buyback program was already concluded.
Speaker #1: High cost efficiency, with a low cost-to-income ratio standing at 27.8%, which shows that we are very effective, and of course, that underpins the strong delivery on return on equity.
Speaker #1: And that was the highlights, and now I will pass the word to Mr. Eirik Monsen, who will give you some further details. So please, Eirik.
[Company Representative] (Sparebank 1 Sør-Norge): That was the highlights. Now I will pass the word to Mr. Eirik Børve Monsen, who will give you some further details. Please, Eirik. I will just hand the screen over to you like this. Thank you. What happened? Does it look like a success? It is working. Now it is. Okay. In Q2 2026, we have a pre-tax profit of NOK 2 billion and 92 million. It is an improvement from last quarter and also from Q2 last year.
Inge Reinertsen: That was the highlights. Now I will pass the word to Mr. Eirik Børve Monsen, who will give you some further details. Please, Eirik. I will just hand the screen over to you like this. Thank you. What happened? Does it look like a success? It is working. Now it is. Okay.
Speaker #2: Yes.
Speaker #1: And the screen, over to you. Is this okay?
Speaker #2: Thank you.
Speaker #1: Hi. That was not a success. Now it is. Yeah, okay.
Speaker #2: Okay.
Speaker #1: So, in the second quarter of ’26, we have a pre-tax profit of 2 billion and 82 million. It’s an improvement from last quarter and also from the second quarter last year.
Eirik Børve Monsen: In Q2 2026, we have a pre-tax profit of NOK 2 billion and 92 million. It is an improvement from last quarter and also from Q2 last year. Net interest income, we have a slight decrease in the net interest income from Q1 to Q2, fully explained by margin pressure. We have NIBOR of 33 basis points higher in Q2 compared to Q1. In addition, on the retail side, we have not been able to raise the interest rates after the Central Bank increased the interest rate in May. There is an 8-week notice period in Norway, so the effect will not take place on the interest rate on the retail side before early in Q3. Net commission and other income, we have a good increase on all the areas, especially the real estate is delivering a very solid quarter. As I said, a good increase in all areas.
Speaker #1: Net interest income, we have a slightly decrease in the net interest income from Q1 to Q2. Fully explained by margin pressure, we have a number of 33 basis points higher in the second quarter compared to the second in the second quarter compared to the first quarter.
Eirik Børve Monsen: Net interest income, we have a slight decrease in the net interest income from Q1 to Q2, fully explained by margin pressure. We have NIBOR of 33 basis points higher in Q2 compared to Q1. In addition, on the retail side, we have not been able to raise the interest rates after the Central Bank increased the interest rate in May. There is an 8-week notice period in Norway, so the effect will not take place on the interest rate on the retail side before early in Q3. Net commission and other income, we have a good increase on all the areas, especially the real estate is delivering a very solid quarter. As I said, a good increase in all areas.
Speaker #1: And in addition, on the retail side, we have not been able to raise the interest rates after the central bank increased the interest rate in May.
Speaker #1: There is an eight-week notice period in Norway, so the effect will not take place on the interest rates on the retail side before early in Q3.
Speaker #1: Net commission and other income—we have a good increase in all areas. Especially, real estate is delivering a very solid quarter, but as I said, there is a good increase in all areas.
Speaker #1: When it comes to income from ownership interests, we also have a good increase, especially from SpareBank 1 Gruppen, which contributes with an increased contribution in the second quarter. But also BN Bank, SpareBank 1 Forvaltning, and SpareBank 1 Betaling have improved contributions in the second quarter.
Eirik Børve Monsen: When it comes to income from ownership interests, we also have a good increase, especially from SpareBank 1 Gruppen, contributes with an increased contribution in Q2. BN Bank, SpareBank 1 Forvaltning, and SpareBank 1 Betaling have improved contribution in Q2. When it comes to financial investments, the derivative portfolio is more or less unchanged in value in Q2. The decrease from Q1 is explained by a reduction. I am sorry, an increase. There was a higher increase in the value in Q1. Sorry. When it comes to operational expense, could you jump down to the synergy for me, please?
Eirik Børve Monsen: When it comes to income from ownership interests, we also have a good increase, especially from SpareBank 1 Gruppen, contributes with an increased contribution in Q2. BN Bank, SpareBank 1 Forvaltning, and SpareBank 1 Betaling have improved contribution in Q2. When it comes to financial investments, the derivative portfolio is more or less unchanged in value in Q2. The decrease from Q1 is explained by a reduction. I am sorry, an increase. There was a higher increase in the value in Q1. Sorry. When it comes to operational expense, could you jump down to the synergy for me, please?
Speaker #1: When it comes to financial investments, the derivative portfolio is more or less unchanged in value in the second quarter. So, the decrease from the first quarter is explained by a reduction—I'm sorry, an increase.
Speaker #1: That was a higher increase in the value in the first quarter. Sorry. When it comes to operational expense, could you jump down to the synergy?
Speaker #1: Yes, we will fund the synergy for.
[Company Representative] (Sparebank 1 Sør-Norge): We will find the synergy for-
Inge Reinertsen: We will find the synergy for-
Speaker #2: First, when it comes to cost, a short status on the synergy effects. After the merger, we have now completed the operational synergies, and when it comes to personnel synergies, we are ahead of plan.
Eirik Børve Monsen: First, when it comes to cost, a short status on the synergy effects after the merger. We are now having all completed the operational synergies. When it comes to personnel synergies, we are ahead of plan. We are taking out 31 FTEs in Q2, and in total, we are now taking out 121 FTEs of the 150 we have said that we will take out by the end of this year. When it comes to funding synergies, we are slightly behind plan, which is explained by higher saving growth in H1 of this year, which has resulted that we have not been able to issue as much as planned on the certificate program, in the European certificate program, by the end of Q2.
Eirik Børve Monsen: First, when it comes to cost, a short status on the synergy effects after the merger. We are now having all completed the operational synergies. When it comes to personnel synergies, we are ahead of plan. We are taking out 31 FTEs in Q2, and in total, we are now taking out 121 FTEs of the 150 we have said that we will take out by the end of this year. When it comes to funding synergies, we are slightly behind plan, which is explained by higher saving growth in H1 of this year, which has resulted that we have not been able to issue as much as planned on the certificate program, in the European certificate program, by the end of Q2.
Speaker #2: We are taking out 31 FDs in the second quarter, and in total we have now taken out 121 FDs of the 150 we have said that we will take out by the end of this year.
Speaker #2: When it comes to funding synergies, we are slightly behind plan, which is explained by higher savings growth in the first half of this year. As a result, we have not been able to issue as much as planned on the certificate program in the European Certificate Program.
Speaker #2: By the end of the second quarter, we saw good lending growth in Q2 and also an expectation of savings going slightly down, especially public savings, in the second half.
Eirik Børve Monsen: Good lending growth in Q2, and also an expectation of savings going slightly down, especially the public savings in H2, means that we are expecting to fulfill more of these funding synergies in H2 of this year. If you move one more, please. When it comes to operating expense, we have an increase from Q1 to Q2 of 1.1%. In this personnel cost, there is an included wage
Eirik Børve Monsen: Good lending growth in Q2, and also an expectation of savings going slightly down, especially the public savings in H2, means that we are expecting to fulfill more of these funding synergies in H2 of this year. If you move one more, please. When it comes to operating expense, we have an increase from Q1 to Q2 of 1.1%. In this personnel cost, there is an included wage
Speaker #2: This means that we are expecting to realize more of these funding synergies in the second half of this year. And if you would move to the next slide, please.
Speaker #2: When it comes to operating expenses, we have an increase from the first to the second quarter of 1.1%. In this personnel cost, there is an included wage increase.
[Company Representative] (Sparebank 1 Sør-Norge): wage increase.
Inge Reinertsen: wage increase.
Speaker #1: Wage increase as central wage increase of 2.3 percentage points, with effect from the 1st of May. And when it comes to operating expense, change from second quarter last year to second quarter this year, adjusted for one-offs last year when it comes to mergers and the settlement we had with TietoEvry.
Eirik Børve Monsen: wage increase, a central wage increase of 2.3 percentage points with effect from 1 May. When it comes to operating expense change from Q2 last year to Q2 this year, adjusted for one-offs last year when it comes to mergers and the settlement we had with GIEK, Edwin, we have an increase of 2.7 percentage points. In this number, we have wage growth of 4.3%. We have a general high inflation on the services we are buying during the last 12 months. Also we have the growth that we already have mentioned absorbed in these numbers. In addition, also mentioned that all the personnel we are now taking out, we have some costs related to this reduction in personnel, and this is also included in the numbers shown here. We have not made a separate provision for this. Next slide.
Eirik Børve Monsen: wage increase, a central wage increase of 2.3 percentage points with effect from 1 May. When it comes to operating expense change from Q2 last year to Q2 this year, adjusted for one-offs last year when it comes to mergers and the settlement we had with GIEK, Edwin, we have an increase of 2.7 percentage points. In this number, we have wage growth of 4.3%. We have a general high inflation on the services we are buying during the last 12 months. Also we have the growth that we already have mentioned absorbed in these numbers. In addition, also mentioned that all the personnel we are now taking out, we have some costs related to this reduction in personnel, and this is also included in the numbers shown here. We have not made a separate provision for this. Next slide.
Speaker #1: We have an increase of 2.7 percentage points in this number. We have wage growth of 4.3%. We have generally high inflation in services we are buying during the last 12 months, and also, we have the growth that we already mentioned absorbed in these numbers.
Speaker #1: In addition, I also want to mention that for all the personnel we have now taken out, we have some costs related to this reduction in personnel, and this is also included in the numbers shown here.
Speaker #1: We have not made a separate provision for this next slide. Low credit losses 54 million or 5 basis points well below the target. We are indicated in a normal quarter.
Eirik Børve Monsen: Low credit losses, 54 million or five basis points, well below the target. We are indicated in a normal quarter, we will be between 12 and 15 points. When it comes to capital, the CET1 ratio is 17.51 percentage points, so a buffer of 77 basis points down to the minimum requirements. We have now been allowed to again include the 50% of the result in this CET ratio. In addition, we have now last week started a new buyback program, 1% of the shares in SpareBank 1 Sør-Norge. That means part of being allowed to do that, we need to include the effect on the CET1 ratio beforehand, before we start the program. So in the second 17.51 potential points. We have also taken out 45 basis points related to this buyback program.
Eirik Børve Monsen: Low credit losses, 54 million or five basis points, well below the target. We are indicated in a normal quarter, we will be between 12 and 15 points. When it comes to capital, the CET1 ratio is 17.51 percentage points, so a buffer of 77 basis points down to the minimum requirements. We have now been allowed to again include the 50% of the result in this CET ratio. In addition, we have now last week started a new buyback program, 1% of the shares in SpareBank 1 Sør-Norge. That means part of being allowed to do that, we need to include the effect on the CET1 ratio beforehand, before we start the program. So in the second 17.51 potential points. We have also taken out 45 basis points related to this buyback program.
Speaker #1: We will be between 12 and 15 points. And when it comes to capital, the CET1 ratio is 17.51%. So, a buffer of 77 basis points down to the minimum requirements.
Speaker #1: We have now been allowed to again include the 50% of the result in this CT ratio. And in addition, we have now, last week, started a new buyback program of 1% of the shares in SpareBank 1 Sør-Norge.
Speaker #1: And that means, as part of being allowed to do that, we need to include the effect on the CT1 ratio beforehand, before we start the program.
Speaker #1: So, in the 17.51 potential points, we have also taken out 45 basis points related to this buyback program.
Speaker #2: Yeah. Thank you, Eirik. I believe that was the highlights from the second quarter, and we are now open for questions from the participants.
[Company Representative] (Sparebank 1 Sør-Norge): Yeah. Thank you, Eirik. I believe that was the highlights from the second quarter. Please, we are now open for questions from the participants. Please just raise your hand, and we will do our best to answer. Yeah, we have one hand from Mr. Thomas Svendsen. Please, Thomas.
Inge Reinertsen: Yeah. Thank you, Eirik. I believe that was the highlights from the second quarter. Please, we are now open for questions from the participants. Please just raise your hand, and we will do our best to answer. Yeah, we have one hand from Mr. Thomas Svendsen. Please, Thomas.
Speaker #2: So please just raise your hand and we will do our best to answer. There, we have one hand from Mr. Thomas Svensson. Please, Thomas.
Speaker #3: Yes, hi. Good afternoon. Just a question regarding the gross stage 3 freelance. There was quite a significant increase quarter over quarter. Could you give some more details on that, and what should we expect on this stage 3 freelance in the quarters ahead?
Thomas Svendsen: Yes. Hi. Good afternoon. Just a question to the gross Stage 3 loans. There were done quite much Q over Q. Could you give some more details on that, on what should we expect on this Stage 3 loans in the quarters ahead?
Thomas Svendsen: Yes. Hi. Good afternoon. Just a question to the gross Stage 3 loans. There were done quite much Q over Q. Could you give some more details on that, on what should we expect on this Stage 3 loans in the quarters ahead?
Speaker #2: That has been there are always some changes. You have some engagement being kind of classified as running again. You also can have some being finally closed.
[Company Representative] (Sparebank 1 Sør-Norge): There are always some changes. You have some engagement being classified as running again. You also can have some being finally closed. I believe also, Thomas, this surely shows that we have a very strong portfolio and still it is within what we can expect to be normal variations around a low level. Of course, clearly the 54 million in provisions is underpinned by this reduction in the Stage 3 commitments.
Inge Reinertsen: There are always some changes. You have some engagement being classified as running again. You also can have some being finally closed. I believe also, Thomas, this surely shows that we have a very strong portfolio and still it is within what we can expect to be normal variations around a low level. Of course, clearly the 54 million in provisions is underpinned by this reduction in the Stage 3 commitments.
Speaker #2: So, I believe you also, Thomas, this surely shows that we have a very strong portfolio, and still it is within what we can kind of expect to be normal variations around a low level.
Speaker #2: But of course, clearly the 54 million in provisions is underpinned by this reduction in the stage three commitments.
Speaker #3: Okay. A second question on net interest income. Do you think it's logical to assume that the price changes from mid-July should be enough to get this item to rebound quarter over quarter in Q3?
Thomas Svendsen: Okay. Second question on net interest income. Do you think it is logical to assume that the price changes from mid-July should be enough to get this item rebound Q-over-Q in Q3? So pick up in Q3 should be logical based on that?
Thomas Svendsen: Okay. Second question on net interest income. Do you think it is logical to assume that the price changes from mid-July should be enough to get this item rebound Q-over-Q in Q3? So pick up in Q3 should be logical based on that?
Speaker #3: So, a pickup in Q3 should be logical based on that.
Speaker #2: If we look at the change in the NIBOR during the quarter, I believe that was 33 basis points. So even with a full rate hike on the mortgages, it would kind of not fully offset.
[Company Representative] (Sparebank 1 Sør-Norge): If we look at the change in the NIBOR during the quarter, I believe that was 33 basis points. Even with a full rate hike on the mortgages, it would not fully offset. I believe that shows that there is a fierce competition amongst the banks at all time. To be resilient when it comes to this competition, we need to be cost effective. So we always do our very best on individual engagements, especially within the corporate sector and on this kind of collective rate adjustments to increase the total interest margin. It is not only changing the interest rate on the lending side, it is also, of course, avoiding changing too much on the deposit side and thereby to gain net margin. But we always prepare for even more fierce competition. The only way to offset that is being very cost effective.
Inge Reinertsen: If we look at the change in the NIBOR during the quarter, I believe that was 33 basis points. Even with a full rate hike on the mortgages, it would not fully offset. I believe that shows that there is a fierce competition amongst the banks at all time. To be resilient when it comes to this competition, we need to be cost effective. So we always do our very best on individual engagements, especially within the corporate sector and on this kind of collective rate adjustments to increase the total interest margin. It is not only changing the interest rate on the lending side, it is also, of course, avoiding changing too much on the deposit side and thereby to gain net margin. But we always prepare for even more fierce competition. The only way to offset that is being very cost effective.
Speaker #2: And I believe that kind of shows that there is fierce competition amongst the banks at all times. And to be resilient when it comes to this competition, we need to be cost-effective.
Speaker #2: So, we always do our very best on individual engagements, especially within the corporate sector. And on this kind of collective rate adjustment to increase the total interest margin, it's not only about changing the interest rate on the lending side—it's also, of course, about avoiding changing too much on the deposit side, and thereby gaining net margin.
Speaker #2: But we always prepare for even more fierce competition, and the only way to offset that is by being very cost-effective. That's why we also monitor the synergies and our ability to deliver post-merger as closely as we do.
[Company Representative] (Sparebank 1 Sør-Norge): That is why we also monitor the synergies and our ability to deliver a post-merger as closely as we do. We will always be very committed in having economies of scale, being one of the largest banks, also to be one of the most efficient banks.
Inge Reinertsen: That is why we also monitor the synergies and our ability to deliver a post-merger as closely as we do. We will always be very committed in having economies of scale, being one of the largest banks, also to be one of the most efficient banks.
Speaker #2: And we will always be very committed to having economies of scale—being one of the largest banks—so we can also be one of the most efficient banks.
Speaker #3: Okay, understood. Thank you.
Thomas Svendsen: Okay, understood. Thank you.
Thomas Svendsen: Okay, understood. Thank you.
Speaker #2: Thank you, Thomas. I believe I also saw one more hand, but it disappeared. Here it is. Please, Mr. Simonos.
[Company Representative] (Sparebank 1 Sør-Norge): Thank you, Thomas. I believe I also saw one more hand, but it disappeared. Here it is. Please, Mr. Simen Aas.
Morten Forgaard: Thank you, Thomas. I believe I also saw one more hand, but it disappeared. Here it is. Please, Mr. Simen Aas.
Speaker #1: Yes, thank you, guys. I just have a question about funding from me. I was a bit late to the call—sorry for that—so if you already answered this, apologies. But could you just give us some color on the very strong corporate market deposit volume growth, and what's the driver of that?
Simen Aas: Yes. Thank you, guys. Just a question about funding for me. I was a bit late on the call, sorry for that, if you already answered it. Could you just give us some color on the very strong corporate market deposit volume growth, and what is the driver of that? In that, I understand that the growth from deposits is one of the reasons for why your funding synergies are lagging. Are you still confident to achieve these synergies by 2027 despite this? Give us some timeline on that will also be very helpful. Thank you. That is my two questions.
Simen Aas: Yes. Thank you, guys. Just a question about funding for me. I was a bit late on the call, sorry for that, if you already answered it. Could you just give us some color on the very strong corporate market deposit volume growth, and what is the driver of that? In that, I understand that the growth from deposits is one of the reasons for why your funding synergies are lagging. Are you still confident to achieve these synergies by 2027 despite this? Give us some timeline on that will also be very helpful. Thank you. That is my two questions.
Speaker #1: And then, in that, I understand that the growth from deposits is one of the reasons why your funding synergies are lagging. But are you still confident you will achieve these synergies by 2027 despite this? And if you could give us some timeline on that, it would also be very helpful.
Speaker #1: Thank you. Those are my two questions.
Speaker #2: Eirik, please. Yeah, the deposit growth, as you see, is 23.7% adjusted for public municipalities. Municipality deposits is 9.7%. So, we have had a higher increase in municipality deposits in the first half.
[Company Representative] (Sparebank 1 Sør-Norge): Eirik, please.
Inge Reinertsen: Eirik, please.
Eirik Børve Monsen: Yeah, the deposit growth, as you see, is 23.7%, adjusted for public-
Eirik Børve Monsen: Yeah, the deposit growth, as you see, is 23.7%, adjusted for public-
[Company Representative] (Sparebank 1 Sør-Norge): Municipalities
Inge Reinertsen: Municipalities
Eirik Børve Monsen: Yeah. Municipality deposits, it is 9.7%. We have had a higher increase in municipality deposits in the H1, which also results, as you said, that we have not been able to issue as much of the certificate program as planned. However, now with the increased lending growth in the Q2 and also an expectation of the public deposits going down in the H2, we expect to be able to increase or issue more of this certificate program. We cannot say how much we will be able to issue. We have, by end of Q2, issued one billion euros in this certificate program, and we have guided on ending between two and three billion euros. At least we will be able to increase it quite a lot. The full effect is supposed to be from 2027.
Eirik Børve Monsen: Yeah. Municipality deposits, it is 9.7%. We have had a higher increase in municipality deposits in the H1, which also results, as you said, that we have not been able to issue as much of the certificate program as planned. However, now with the increased lending growth in the Q2 and also an expectation of the public deposits going down in the H2, we expect to be able to increase or issue more of this certificate program. We cannot say how much we will be able to issue. We have, by end of Q2, issued one billion euros in this certificate program, and we have guided on ending between two and three billion euros. At least we will be able to increase it quite a lot. The full effect is supposed to be from 2027.
Speaker #2: Which also results, as you said, in that we have not been able to issue as much of the certificate program as planned. However, now with the increased lending growth in the second quarter and also an expectation of public deposits going down in the second half, we expect to be able to increase or issue more of these certificate programs.
Speaker #2: So we cannot say how much we will be able to issue. We have, by the end of Q2, issued €1 billion in this certificate program.
Speaker #2: And we have guided on ending between 2 and 3 billion euros. So at least we will be able to increase it quite a lot.
Speaker #2: And the full effect is supposed to be from 2027.
Speaker #1: Yeah, so we are kind of on track, even on synergies, on that side. But due to a surprisingly high deposit growth, we've had less need for market funding.
[Company Representative] (Sparebank 1 Sør-Norge): Yeah. We are on track even on synergies on that side. Due to the surprisingly high deposit growth, we have had less need for market funding. Of course, over time, we will level that out and of course, use the cheapest sources of funding, aware that with some kind of volatility in the short term. Yes.
Inge Reinertsen: Yeah. We are on track even on synergies on that side. Due to the surprisingly high deposit growth, we have had less need for market funding. Of course, over time, we will level that out and of course, use the cheapest sources of funding, aware that with some kind of volatility in the short term. Yes.
Speaker #1: But of course over time we will level that out and of course use the kind of the cheapest sources of funding available, but with some kind of volatility in the short term.
Speaker #1: Okay, that's very helpful. Thank you.
Simen Aas: Okay. That is very helpful. Thank you.
Simen Aas: Okay. That is very helpful. Thank you.
Speaker #2: Thank you very much. Next is Mr. Harman Salk. Please, Harman.
[Company Representative] (Sparebank 1 Sør-Norge): Thank you very much. Next one is Mr. Håkon Salte. Please, Håkon.
Morten Forgaard: Thank you very much. Next one is Mr. Håkon Salte. Please, Håkon.
Speaker #1: Yes, thank you. Good afternoon. Just a question on pricing. One of your closest peers said that they repriced retail mortgages by 25 basis points on average.
Håkon Salte: Yes. Thank you. Good afternoon. Just a question on pricing. One of your closest peers said that they repriced retail mortgages by 25 basis points on average. Do you think it is fair to assume that you are near that or at the same level on the mortgage side?
Herman Zahl: Yes. Thank you. Good afternoon. Just a question on pricing. One of your closest peers said that they repriced retail mortgages by 25 basis points on average. Do you think it is fair to assume that you are near that or at the same level on the mortgage side?
Speaker #1: Do you think it's fair to assume that you are sort of near that or at the same level on the mortgage side?
Speaker #2: On that topic, I will be deliberately a little less specific than my peer, and that is due to the fact that the competition authorities monitor very closely any sign of signaling on pricing in the market.
[Company Representative] (Sparebank 1 Sør-Norge): On that topic, I will be deliberately a little less specific than my peer, and that is due to the fact that the competition authorities, they monitor very closely any sign of signaling on pricing in the market. Of course, we adjust as much as possible on the lending side. We adjust as little as possible on the deposit side, and thereby trying to utilize every change in interest rates to gain net margin. But at all time, you have a fierce competition and it is our ability to grow the net interest income measured in NOK is the combination of our volume growth and our ability to reprice, and that is partly collective repricing in the retail market and individual pricing in the corporate market. So we like to be as transparent as possible, but I cannot be more specific than that.
Inge Reinertsen: On that topic, I will be deliberately a little less specific than my peer, and that is due to the fact that the competition authorities, they monitor very closely any sign of signaling on pricing in the market. Of course, we adjust as much as possible on the lending side. We adjust as little as possible on the deposit side, and thereby trying to utilize every change in interest rates to gain net margin. But at all time, you have a fierce competition and it is our ability to grow the net interest income measured in NOK is the combination of our volume growth and our ability to reprice, and that is partly collective repricing in the retail market and individual pricing in the corporate market. So we like to be as transparent as possible, but I cannot be more specific than that.
Speaker #2: Of course, we adjust as much as possible on the lending side. We adjust as little as possible on the deposit side, and thereby try to utilize every change in interest rate to gain net margin.
Speaker #2: But at all times, you have fierce competition, and it is our ability to grow the net interest income measured in kroner. It is the combination of our volume growth and our ability to reprice.
Speaker #2: And that is partly collective repricing in the retail market and individual pricing in the corporate market. So we like to be as transparent as possible, but I cannot be more specific than that.
Speaker #2: That is kind of left to the analysts to do their calculations and projections on how it will impact the net interest income.
[Company Representative] (Sparebank 1 Sør-Norge): That is left to the analysts to do their calculations and predictions on how it will impact on the net interest income.
Inge Reinertsen: That is left to the analysts to do their calculations and predictions on how it will impact on the net interest income.
Speaker #1: Yeah. Okay. Thank you, I understand that. Can I just try to rephrase it? Do you think this repricing has been, for you and in the market, quite similar to the recent other interest rate hikes in the interest rate upcycle?
Håkon Salte: Yeah. Okay. Thank you.
Herman Zahl: Yeah. Okay. Thank you.
[Company Representative] (Sparebank 1 Sør-Norge): Thank you.
Inge Reinertsen: Thank you.
Håkon Salte: Could I just try to rephrase it? Do you think this repricing has been, for you and in the market, quite similar to recent, the other interest rates, hikes in the interest rate up cycle?
Herman Zahl: Could I just try to rephrase it? Do you think this repricing has been, for you and in the market, quite similar to recent, the other interest rates, hikes in the interest rate up cycle?
Speaker #2: I believe there was an analysis from the Central Statistics Bureau saying that, altogether, the banks on average were able to give 16 basis points to the customers instead of 25.
[Company Representative] (Sparebank 1 Sør-Norge): I believe there was an analysis from Statistics Norway saying that altogether, the banks on average were able to give 16 basis points to the customers instead of 25. As I mentioned, we always position ourselves that competition could become even more fierce, and our defense is to be as cost-effective as possible to be able to scale our business without adding new cost. We believe we have a very strong position. If the competition becomes less fierce, we will of course welcome that. If it should become more fierce, it will be more difficult for other banks to cope with than it should be for us.
Inge Reinertsen: I believe there was an analysis from Statistics Norway saying that altogether, the banks on average were able to give 16 basis points to the customers instead of 25. As I mentioned, we always position ourselves that competition could become even more fierce, and our defense is to be as cost-effective as possible to be able to scale our business without adding new cost. We believe we have a very strong position. If the competition becomes less fierce, we will of course welcome that. If it should become more fierce, it will be more difficult for other banks to cope with than it should be for us.
Speaker #2: As I mentioned, we always position ourselves with the expectation that competition could become even more fierce, and our kind of defense is to be as cost-effective as possible, to be able to scale our business without adding new cost.
Speaker #2: And we believe we have a very strong position. So if the competition becomes less fierce, we will of course welcome that. And if it should become more fierce, it will be kind of more difficult for other banks to cope with than it should be for us.
Speaker #1: Okay. Thank you.
Speaker #2: Yeah. Thank you, Harman. I don't see any more hands. So, yeah. Then I will just end this session by thanking you all for participating and wishing you a good afternoon.
Håkon Salte: Okay. Thank you.
Herman Zahl: Okay. Thank you.
[Company Representative] (Sparebank 1 Sør-Norge): Thank you, Håkon. I don't see any more hands. I will just end this session with thanking you all for participating and wishing you a good afternoon. Thank you and goodbye.
Inge Reinertsen: Thank you, Håkon. I don't see any more hands. I will just end this session with thanking you all for participating and wishing you a good afternoon. Thank you and goodbye.
