SpareBank 1 Østfold Akershus Q2 2025 slides: Profit surges 64% on strong financial instruments

Introduction & Market Context

SpareBank 1 Østfold Akershus (OB:SOAG) presented its second quarter and first half 2025 results on August 15, 2025, revealing significant profit growth driven primarily by gains from financial instruments. The Norwegian regional bank maintained its solid capital position while achieving strong growth in both loans and deposits in the private market segment.

The bank’s shares closed at NOK 417.75 on August 13, 2025, trading well above its 52-week low of NOK 343 but below its 52-week high of NOK 448.

Quarterly Performance Highlights

SpareBank 1 Østfold Akershus reported a profit before tax of NOK 280 million for Q2 2025, representing a substantial 64% increase from NOK 171 million in the same quarter last year. The impressive growth was primarily driven by financial instruments, which contributed NOK 105 million to the year-over-year improvement.

As shown in the following chart breaking down the profit drivers compared to Q2 2024:

On a sequential basis, profit before tax increased by NOK 135 million from Q1 2025, with financial instruments again being the main contributor (NOK 97 million). The bank also benefited from reduced losses (NOK 20 million improvement) and lower operating expenses (NOK 8 million reduction).

For the first half of 2025, the bank reported a profit before tax of NOK 425 million, up from NOK 351 million in the first half of 2024. This 21% increase was primarily driven by financial instruments (NOK 86 million contribution), partially offset by higher operating expenses (NOK 25 million increase).

The bank’s return on equity reached 14.7% in 2024 and remained strong at 14.3% for the first half of 2025, comfortably exceeding the bank’s target of 11%. Ordinary operations have shown consistent growth over recent years.

Capital and Funding Position

SpareBank 1 Østfold Akershus maintained its strong capital position with a Core Tier 1 Capital Ratio of 19.61% in Q2 2025, significantly above both the regulatory requirement and the bank’s own target of 16.07%. This represents an improvement from 17.41% at the end of 2024.

The bank’s funding structure remains solid with a well-distributed maturity profile for external funding. The weighted average duration of external funding stands at 3.10 years. The deposit coverage ratio improved to 86.5% in Q2 2025 from 81.1% at the end of 2024, reflecting strong deposit growth.

Loan and Deposit Growth

SpareBank 1 Østfold Akershus reported strong loan growth in both private and business market segments. The 12-month loan growth in the private market was 7.8%, while the business market saw 7.9% growth. The quarterly growth rates for Q2 2025 were 1.5% for private market and 3.4% for business market.

The bank’s deposit growth was particularly strong in the private market, with a 12-month growth rate of 13.1% and a quarterly growth of 7.0% in Q2 2025. In contrast, the business market saw a 12-month decline of 0.8% in deposits, although Q2 2025 showed a strong quarterly growth of 7.6%.

The loan portfolio maintains a conservative profile with 75.6% of loans in the private market and 24.4% in the business market. Within the business market segment, 61% of loans are to real estate rental, 15% to real estate projects, 6% to agriculture, and 18% to other business sectors.

Net Interest Income and Margins

The bank’s net interest income as a percentage of average total assets was 2.61% in Q2 2025, slightly lower than the 2.74% recorded in Q2 2024. Including credit company provisions, the net interest income ratio improved to 2.35% in Q2 2025 from 1.96% in Q2 2024.

Lending margins against NIBOR were 2.30% for private market and 1.00% for business market in Q2 2025, showing a slight decrease from previous quarters. Deposit margins against NIBOR for the private market continued their declining trend, reaching 1.50% in Q2 2025 compared to 2.11% in Q2 2024.

Asset Quality and Risk Profile

The bank’s loan portfolio quality remains strong, with 89% of loans classified in Stage 1 (lowest risk), 9.8% in Stage 2, and only 1.7% in Stage 3 (highest risk). However, Stage 3 loans account for 37% of total loss provisions, reflecting a prudent approach to risk management.

Loan losses turned positive in Q2 2025, with a reversal of NOK 7 million compared to a loss of NOK 1 million in Q2 2024. This contributed positively to the quarterly profit. The loss ratio for Q2 2025 was -0.07%, compared to 0.01% in Q2 2024.

Cost Efficiency

The bank’s cost ratio increased to 49.8% in the first half of 2025 from 45.8% in 2024. However, excluding financial items, the cost ratio improved to 38.4% from 40.0%, indicating better operational efficiency. Personnel costs represent the largest portion of expenses at 59%, followed by ICT costs at 15%.

Forward-Looking Statements

In its presentation, SpareBank 1 Østfold Akershus highlighted good loan growth, particularly in the private market segment, as a key achievement for the first half of 2025. The bank also emphasized its strong profitability, which was supported by contributions from SpareBank 1 Gruppen.

With its solid capital position, strong deposit growth, and improving asset quality, the bank appears well-positioned to navigate potential economic challenges while continuing to deliver on its financial targets.

Full presentation:

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