Skue Sparebank Q1 2025 presentation: 8.9% ROE amid planned Tinn Sparebank merger

Introduction & Market Context

Skue Sparebank (OB:SKUE) presented its Q1 2025 financial results on May 14, showing a solid performance with an 8.9% return on equity despite challenging market conditions. The Norwegian regional bank reported a profit after tax of 68.6 million NOK while maintaining strong capital ratios well above regulatory requirements.

The bank’s shares traded at 328.35 NOK at the time of the presentation, representing a modest 0.18% increase on the day and positioning the stock between its 52-week range of 228.00 NOK to 365.05 NOK.

Management highlighted continued loan growth and increased competitiveness in the market, while also confirming its intent to merge with Tinn Sparebank, signaling ongoing consolidation in Norway’s regional banking sector.

Quarterly Performance Highlights

Skue Sparebank delivered a solid financial performance in the first quarter of 2025, with profit after tax reaching 68.6 million NOK. The bank maintained a healthy return on equity of 8.9% while keeping its cost-to-income ratio at 41.8%, demonstrating operational efficiency.

As shown in the following key financial metrics table, the bank’s capital position remains robust:

Net interest income reached 133.9 million NOK, while net commission income contributed an additional 23.7 million NOK to the bottom line. However, management noted some pressure on net interest income and negative contributions from financial instrument revaluations during the quarter.

The bank’s income statement provides a comprehensive view of its Q1 performance:

Operating expenses amounted to 66.1 million NOK, which included one-off costs of 0.2 million NOK related to the previous merger with Hjartdal and Gransherad Sparebank. Net loan losses were minimal at 0.3 million NOK, reflecting the bank’s prudent risk management and strong asset quality.

Detailed Financial Analysis

Skue Sparebank’s balance sheet shows total assets under management of 23.5 billion NOK as of March 31, 2025. Gross customer loans reached 19.0 billion NOK, while customer deposits stood at 14.9 billion NOK, resulting in a deposit coverage ratio of 78.3%.

The following balance sheet highlights the bank’s financial position:

The bank’s equity position strengthened during the quarter, as shown in the changes in equity statement:

Cash flow from operating activities was positive at 196.6 million NOK, while investing activities consumed 65.9 million NOK. Financing activities generated 279.9 million NOK, resulting in a net increase in cash and cash equivalents of 410.6 million NOK for the period.

Capital Position & Risk Management

Skue Sparebank maintains a strong capital position, with a Common Equity Tier 1 (CET1) ratio of 22.03%, significantly above regulatory requirements. The Tier 1 capital ratio stands at 23.05%, while the total capital ratio reached 24.42%.

The bank’s liquidity position is equally robust, with a Liquidity Coverage Ratio (LCR) of 201.6% and a Net Stable Funding Ratio (NSFR) of 140.7%, both well above regulatory minimums.

The following table details the bank’s capital adequacy metrics:

Non-performing loans over 90 days amounted to 68.7 million NOK, representing a small fraction of the total loan portfolio. The bank’s loan portfolio remains well-diversified across personal and business customers, with appropriate provisions for potential losses.

Strategic Initiatives & Outlook

The most significant strategic development is Skue Sparebank’s announced intention to merge with Tinn Sparebank, which would further strengthen its market position in the region. This follows the successful integration of Hjartdal and Gransherad Sparebank, demonstrating the bank’s commitment to strategic consolidation.

Management acknowledged the continued political turmoil and economic effects of changes in international trade but expressed confidence in the bank’s risk management practices. The outlook remains cautiously optimistic, with the bank focusing on maintaining its strong capital position while pursuing growth opportunities.

The top 20 equity certificate holders account for 41.68% of ownership, with Eika Egenkapitalbevis being the largest holder at 8.28%. This ownership structure provides stability while maintaining sufficient market liquidity.

Forward-Looking Statements

Skue Sparebank’s management expects to continue delivering solid financial performance while advancing its merger plans with Tinn Sparebank. The bank’s strong capital and liquidity positions provide a solid foundation for navigating potential economic uncertainties while pursuing strategic growth initiatives.

With a share price of 328.35 NOK, representing an increase from the 315.15 NOK reported in the presentation materials, the market appears to view the bank’s Q1 2025 performance and strategic direction positively. The bank’s earnings per share of 6.20 NOK reflects its continued ability to generate shareholder value in a challenging banking environment.

Full presentation:

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