Rogaland Sparebank Q1 2025 presentation: ROE climbs to 13.8% as retail focus pays off

Introduction & Market Context

Rogaland Sparebank (Rogaland Sparebank) reported strong first-quarter results on May 8, 2025, with profit after tax increasing to MNOK 139.3, up from MNOK 91.1 in the same period last year. The Norwegian regional bank, which operates primarily in the Nord-Jæren and Ryfylke regions, has maintained its strategic focus on retail lending while successfully integrating Hjelmeland Sparebank following their merger in September 2024.

The bank’s stock closed at NOK 131.60 on May 7, 2025, representing a 1.23% increase for the day and reflecting investor confidence ahead of the earnings announcement. With a 52-week range of NOK 92.00 to NOK 144.98, the stock has shown resilience despite broader market volatility.

Quarterly Performance Highlights

Rogaland Sparebank reported a significant improvement in profitability, with return on equity (ROE) reaching 13.8% in Q1 2025, compared to 10.3% in Q1 2024. This continues the bank’s upward profitability trend, which has been building steadily since 2021.

As shown in the following chart of quarterly performance metrics, the bank delivered strong results across key indicators:

The bank’s profit per equity certificate (EPS) increased to NOK 3.7, up from NOK 2.8 in the same quarter last year. Total (EPA:TTEF) lending grew by 6.4% year-over-year, while the net interest margin improved slightly to 1.99% from 1.94% in Q1 2024.

The profitability improvement is particularly evident when examining the ROE trend over recent quarters, as illustrated in this chart:

Detailed Financial Analysis

Rogaland Sparebank’s net interest margin has remained stable at a high level, providing a solid foundation for the bank’s overall performance. The Q1 2025 NIM of 1.99% represents a slight improvement over the previous quarter (1.94%) and continues the positive trend seen over recent years.

The following chart shows the stability and strength of the bank’s net interest margin:

Other income sources also contributed positively to the bank’s performance. Commission income has shown steady growth, particularly in insurance sales and product distribution. However, the bank noted lower commission income from its real estate operations due to the start-up of the new Aktiv Rogaland realtor business.

The breakdown of gross commission income demonstrates the diversification of revenue streams:

Operating costs increased to MNOK 101 in Q1 2025, up from MNOK 82 in Q1 2024, partly due to the merger with Hjelmeland Sparebank. Despite this increase, the cost ratio of banking operations remained at a manageable 39% in the first quarter of 2025.

The following chart details the operating cost development:

Asset quality remains strong, with loan losses at MNOK 6.5, representing just 0.08% of the loan portfolio. Non-performing and doubtful loans stood at 1.11% of total loans, a level the bank describes as stable with a natural increase related to the added lending volume post-merger.

Strategic Initiatives

Rogaland Sparebank has continued to shift its lending portfolio toward retail customers, which now represent 76% of total lending. This strategic focus on retail and SME lending has allowed the bank to grow its loan book while optimizing capital usage, as these segments typically require less regulatory capital.

The bank has established clear financial targets for its 2025-2028 strategy period, focusing on profitability, dividends, growth, and capital strength:

The integration of Hjelmeland Sparebank, which was completed in September 2024, has contributed to the bank’s growth, adding 14.9% to year-over-year lending when included in the figures. The merger has strengthened Rogaland Sparebank’s presence in the Ryfylke region.

Another strategic initiative is the bank’s 100% ownership of Aktiv Eiendom Rogaland, which allows it to offer integrated banking and real estate services throughout its market area. This integration supports the bank’s positioning as a comprehensive financial services provider for local customers.

Forward-Looking Statements

Rogaland Sparebank enters the remainder of 2025 with a strong capital position, reporting a Common Equity Tier 1 (CET1) ratio of 16.8%, well above the regulatory requirement of 15.3%. This solid capitalization provides a foundation for continued growth while maintaining the bank’s internal management buffer of 1.5% above regulatory requirements.

As shown in the following capital position overview, the bank is well-equipped for further growth:

The bank’s liquidity position remains strong, with a Liquidity Coverage Ratio (LCR) of 359% and a Net Stable Funding Ratio (NSFR) of 131%, both well above regulatory requirements. This robust liquidity provides flexibility for the bank’s future operations and growth initiatives.

Management highlighted the bank’s continued commitment to its local community, noting record-high dividends to customers and society amounting to NOK 127 million. This community focus, combined with the bank’s strategic emphasis on being "local, fast, and personal," positions Rogaland Sparebank to continue building on its strong start to 2025.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.