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Introduction & Market Context
SpareBank 1 Nord-Norge (OB:NONG) presented its second quarter 2025 results on August 7, revealing strong financial performance with pre-tax profit jumping 16% quarter-over-quarter. The Norwegian regional bank continues to benefit from its dominant position in Northern Norway, a region experiencing economic growth particularly in tourism and strategic sectors.
The bank’s stock closed at 147.06 NOK before the presentation and was trading up 0.56% during the session, reflecting positive market reception to the results.
Quarterly Performance Highlights
SpareBank 1 Nord-Norge reported a pre-tax profit of 1,170 MNOK for Q2 2025, representing a 16% increase from Q1 2025 and a 20.2% increase from Q2 2024. The bank achieved an impressive return on equity of 20.3% for the quarter, significantly exceeding its long-term target of 13%.
As shown in the comprehensive financial overview below, the bank maintained strong performance across key metrics:
The Q2 improvement was driven by higher investment income and significantly lower losses, which more than offset a slight increase in costs. The bank’s cost/income ratio remained stable at 31.8%, well below its target of 40%.
The following waterfall chart illustrates the key factors contributing to the 16% increase in earnings before tax from Q1 to Q2 2025:
Net interest income remained stable at 1,067 MNOK in Q2 2025, virtually unchanged from 1,061 MNOK in Q1 2025. However, the bank noted that higher NIBOR rates in Q2 compared to Q1 put some pressure on interest margins.
As shown in the following chart, net interest income has stabilized at historically high levels after steady growth through 2023 and 2024:
Loan Portfolio and Credit Quality
SpareBank 1 Nord-Norge continues to demonstrate strong credit quality with very low loan losses. Net losses for the first half of 2025 totaled just 27 MNOK, a significant improvement from 51 MNOK in the same period of 2024.
The following chart illustrates the bank’s consistently low loss levels over recent quarters:
The bank’s lending portfolio showed healthy growth, with retail lending increasing by 7.8% year-over-year to 101,620 MNOK as of June 30, 2025. Corporate lending grew at a more moderate pace of 2.3% to 52,985 MNOK. The overall lending split remains at 66% retail and 34% corporate.
Deposit growth was also solid, with retail deposits increasing 6.2% year-over-year, corporate deposits up 2.9%, and public sector deposits showing strong growth of 28.1%.
Regional Economic Context
SpareBank 1 Nord-Norge’s performance is underpinned by the economic strength of Northern Norway. The presentation highlighted significant growth in tourism, with guest nights increasing 63% from 2014 to 2024, and international flight movements at Tromsø Airport surging 191% during the same period.
The bank provided a detailed sector-by-sector assessment of the regional economy, showing generally positive status and outlook across key industries:
This positive regional economic backdrop supports the bank’s optimistic outlook for continued growth. The bank expects retail market lending to grow by 4-7% in 2025 and corporate market lending to increase by 3-6%, with aims to gain market share despite high interest rates pressuring some segments.
Risk Management and Capital Position
SpareBank 1 Nord-Norge maintains a strong capital position with a CET1 ratio of 16.2% as of June 30, 2025, comfortably above its target of 15.8%. The bank’s risk exposure is well-diversified across sectors, with a predominance of low and medium risk exposures:
The bank’s solidity metrics show consistent improvement over time, with total equity reaching 19,339 MNOK as of June 30, 2025:
Strategic Position and Outlook
SpareBank 1 Nord-Norge reaffirmed its position as the market leader in Northern Norway. The bank outlined three key investment theses: its dominant position in a resource-rich region, ambitious financial targets with new KPI measures to maintain top-class ROE, and an owner-friendly dividend policy supported by strong capitalization.
The financial outlook presented by the bank was generally positive, though with some cautionary notes:
The bank expects to achieve its ROE target in 2025 while maintaining its dividend policy with a payout ratio above 50%. Management also highlighted cost measures being implemented that will take full effect by 2027, aimed at further improving efficiency.
Conclusion
SpareBank 1 Nord-Norge’s Q2 2025 results demonstrate the bank’s continued strong performance in a competitive market. With pre-tax profit up 16% quarter-over-quarter, an ROE exceeding 20%, and a solid capital position, the bank appears well-positioned to achieve its long-term financial targets while benefiting from the economic growth in Northern Norway.
The bank’s focus on maintaining its market leadership, managing costs, and capitalizing on regional economic strengths provides a solid foundation for continued performance, though management acknowledges some pressure on interest margins due to higher NIBOR rates.
Full presentation:
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