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Introduction & Market Context
SpareBank 1 Nord-Norge (OB:NONG) presented its first quarter 2025 results on May 16, 2025, showcasing continued profitability and growth despite some regional economic challenges. The bank, which serves Norway’s northern region, reported profit growth while maintaining its position as a market leader in a resource-rich, export-oriented area.
The bank’s stock closed at 148.12 NOK on May 15, 2025, representing a 1.3% increase on the day and trading near its 52-week high, indicating positive market sentiment ahead of the earnings release.
Quarterly Performance Highlights
SpareBank 1 Nord-Norge reported a profit before tax of 1,008 million NOK for Q1 2025, up from 916 million NOK in the same period last year, representing a 10% increase. The bank achieved this while maintaining a solid return on equity of 17.2%, though slightly down from 17.8% in Q1 2024.
As shown in the following financial highlights table, the bank improved its cost efficiency with a cost/income ratio of 31.6%, down from 33.2% in the comparable period:
The bank’s core capital ratio stood at 16.3%, slightly lower than the 16.6% reported previously but still well above regulatory requirements. Loan losses increased to 57 million NOK compared to 36 million NOK in the same period last year, reflecting some economic challenges in certain sectors.
Detailed Financial Analysis
The consolidated financial results show stable performance across key metrics. Net interest income reached 1,007 million NOK in Q1 2025, up from 986 million NOK in Q1 2024. However, the net interest margin decreased slightly to 2.93% from 3.04% a year earlier, indicating some pressure on margins.
The comprehensive financial table below provides a detailed breakdown of the bank’s performance:
SpareBank 1 Nord-Norge’s subsidiaries contributed significantly to the group’s results, with a combined profit before tax of 87.4 million NOK, up from 79.7 million NOK in the same period last year. SpareBank 1 Finans Nord-Norge AS was the largest contributor with 70.7 million NOK, while EiendomsMegler 1 Nord-Norge AS showed remarkable improvement, turning a loss of 0.8 million NOK last year into a profit of 10.5 million NOK this quarter.
The following chart illustrates the bank’s consistent performance across key financial metrics over recent quarters:
A detailed analysis of the quarter-over-quarter profit development shows the various factors affecting the bank’s performance from Q4 2024 to Q1 2025:
The bank continues to maintain a strong deposit base, with deposits growing at an annualized rate of 10.4% as of March 31, 2025. The deposit distribution shows 53% from personal customers, 39% from business customers, and 9% from public sector clients.
Strategic Initiatives & Regional Outlook
SpareBank 1 Nord-Norge maintains a positive outlook for the regional economy despite some challenges. The bank expects continued housing price growth in the region, although it noted that housing construction is at its lowest level in 10 years, which could create supply constraints.
The bank’s analysis of the regional economy shows varying conditions across different sectors. Aquaculture and tourism are performing well (marked in green), while real estate, fisheries, construction, retail, and power sectors face more challenging conditions (marked in yellow):
For 2025, SpareBank 1 Nord-Norge has set ambitious growth targets, expecting market growth of 4-7% in the personal banking segment and 3-6% in the business banking segment. The bank aims to gain market share in both segments, leveraging its strong regional position.
The bank’s organizational structure, showing its subsidiaries and alliance companies, provides insight into its diversified business model:
Forward-Looking Statements
SpareBank 1 Nord-Norge has established clear long-term financial targets, including maintaining a cost/income ratio below 40%, achieving a return on equity above 13%, and maintaining a dividend payout ratio above 50%. The bank’s core capital target is set at 15.8%.
Looking ahead, the bank expects to maintain good net interest income throughout 2025 and achieve its return on equity targets. Management noted that the bank is well-positioned in terms of capital adequacy, though it has experienced higher cost growth than desired over the past two years.
The bank highlighted several reasons for investors to consider SpareBank 1 Nord-Norge, including its market leadership in a resource-rich region, ambitious financial goals with top-tier return on equity, and shareholder-friendly dividend policy combined with strong solidity.
As the bank’s CFO Bengt Olsen explained in the presentation, expected regulatory changes will have offsetting effects on capital requirements, with the implementation of CRR3 adding approximately 0.45 percentage points to the CET1 ratio, while the risk weight floor for residential mortgages will reduce it by about 0.60 percentage points:
SpareBank 1 Nord-Norge continues to demonstrate resilience in a challenging economic environment, maintaining strong profitability while supporting the development of Norway’s northern region through both its banking operations and community initiatives.
Full presentation:
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