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Introduction & Market Context
Sparebanken Vest (OB:SVEG) presented its first quarter 2025 financial results on April 30, 2025, showcasing strong performance across key metrics while advancing its strategic merger to create "Sparebanken Norge." The presentation, delivered by CEO Jan Erik Kjerpeseth, highlighted the bank’s continued profitability, conservative loan book management, and progress toward becoming Norway’s largest savings bank.
The bank reported that all key financial targets were exceeded during the quarter, with particularly strong return on equity figures. This performance comes as the bank continues preparations for its merger while maintaining its position as one of Norway’s most efficient banking operations.
As shown in the following financial highlights chart, Sparebanken Vest achieved significant margins above its targets across all key metrics:
Quarterly Performance Highlights
Sparebanken Vest reported a return on equity after tax of 21.3% in Q1 2025, substantially exceeding its target of 13.0%. This continues a trend of strong performance, with ROE consistently above target throughout recent years. The bank’s Common Equity Tier 1 (CET1) ratio stood at 17.9%, comfortably above the 16.05% target, while the cost/income ratio was 27.7%, better than the 30% target.
The bank’s historical ROE performance demonstrates consistent outperformance of targets over time, positioning it favorably among peers:
Profit before tax increased to NOK 1,415 million in Q1 2025, up from NOK 1,256 million in Q1 2024. This improvement was driven by higher net interest income, increased commission income, and contributions from affiliated companies, partially offset by higher costs related to merger activities and the consolidation of Frende Kapitalforvaltning.
The following bridge chart illustrates the key drivers behind the profit growth from Q1 2024 to Q1 2025:
Detailed Financial Analysis
Key performance indicators showed generally positive trends across quarters, with some metrics experiencing slight declines in Q1 2025. The bank maintained strong capital ratios while delivering robust returns per equity certificate.
Net interest income reached NOK 1,533 million in Q1 2025, slightly down from NOK 1,586 million in Q4 2024 but up from NOK 1,462 million in Q1 2024. The net interest margin was 1.77% in Q1 2025, showing a decline from 1.84% in Q4 2024, though the bank attributed the overall increase in net interest income to good loan and deposit growth over the past 12 months.
Loan growth remained strong in both personal and corporate segments. Personal loans reached NOK 220.3 billion in Q1 2025, representing a 9.3% 12-month growth rate (5.6% excluding Bulder). Corporate loans grew to NOK 69.7 billion, with a 9.1% 12-month growth rate.
Deposit growth showed divergent trends between customer segments. Personal deposits increased to NOK 82.1 billion in Q1 2025, with a robust 13.8% 12-month growth rate (6.4% excluding Bulder). However, corporate deposits declined to NOK 53.0 billion, representing a 4.1% decrease over 12 months, which the bank attributed to lower credit spreads making market financing more attractive for corporate customers.
Operating costs increased to NOK 547 million in Q1 2025 from NOK 443 million in Q1 2024. The bank noted that underlying cost growth was approximately 4.8%, with the remainder attributable to merger costs (NOK 50 million) and the consolidation of Frende Kapitalforvaltning (NOK 24 million).
Strategic Initiatives
Sparebanken Vest is progressing toward creating "Sparebanken Norge" through a merger that will establish Norway’s largest savings bank. Post-merger, the combined entity will serve 797,500 customers, employ 1,604 full-time equivalents, and manage gross loans of NOK 453 billion.
The bank announced a strategic partnership with Tietoevry aimed at consolidating its position as Norway’s most cost-effective bank and strengthening its digital capabilities.
Bulder, the bank’s digital banking brand, continued to show strong growth with loan volume increasing by NOK 10.3 billion over the last 12 months to reach NOK 64.0 billion. Bulder achieved a marginal ROE between 13-14% in the quarter, exceeding its 9-11% target. The digital bank now serves 117,400 customers and has achieved 65% brand awareness.
Eiendomsmegler Vest, the bank’s real estate agency, showed significant improvement in performance, brokering approximately 40% more homes compared to Q1 2024. Market share increased to 13.1% from 11.9% in Q1 2024, and the agency achieved an operating margin of 14.7% and profit before tax of NOK 13 million, compared to a loss of NOK 3 million in Q1 2024.
Loan Book Quality and Risk Management
Sparebanken Vest emphasized its conservative loan book structure, with 76% of loans to personal customers (54% excluding Bulder and 22% through Bulder) and 24% to corporate customers. Geographically, 55% of loans are in the Vestland region, with 18% in Rogaland and 14% in Oslo and Akershus.
The bank maintained an exceptionally low level of non-performing and impaired loans at 0.37% in Q1 2025, which it highlighted as the lowest in the sector compared to peers ranging from 0.71% to 1.60%.
Capital adequacy remained strong, with the CET1 ratio at 17.9% and leverage ratio at 6.3% in Q1 2025, both well above regulatory requirements. The bank noted that it has been proposed as a Systemically Important Financial Institution (SIFI), which could impact future capital requirements.
Sparebanken Vest’s stock closed at NOK 136.98 on April 29, 2025, representing a 0.28% increase. The stock has traded between NOK 120.00 and NOK 149.98 over the past 52 weeks.
Full presentation:
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