Årsrapport 2025

The bank delivered a historically strong result for 2025, with a return on equity of 11,7 %. This result is the best ever in terms of both the amount and return on equity. A key explanation for the strong performance is the relatively stable and high interest rate level throughout the year. Solid dividends from Eika Gruppen and a positive development in securities also contributed to the favourable performance. In addition, the bank recorded high loan growth and an increasing market share in our primary market area. In the corporate market, we see a growth of 10,7 % over the past year. In the retail market, we have a total loan growth of 10,9 % over the past year, while the general loan growth in the retail market in our market area has been 4,1 % in the same period.

The past year can be characterized as a more normal year for many. However, persistently high prices for groceries and other input factors, combined with a relatively stable and high interest rate level throughout the year, have nevertheless contributed to a relatively tight financial situation for many of the bank’s customers. Signals and expectations going forward are relatively positive, with prospects for a somewhat lower interest rate level and continued real wage growth.

The profit for the year was NOK 362,4 million before tax and NOK 307,2 million after tax.

The financial statements are reported in accordance with IFRS® Accounting Standards as adopted by the EU. The annual financial statements are prepared under the going concern assumption, an assumption that is in place given current equity. The Board is not aware of any major elements of uncertainly that could be of significance to the assessment of the bank’s annual financial statements.

The Board is of the view that the annual report provides an accurate overview of the bank’s assets and liabilities, financial position and financial result as of 31.12.2025. All figures in parenthesis refer to the corresponding period in 2024.

The bank’s net interest income was NOK 409,1 million (NOK 413,8 million) – a reduction of NOK 4,7 million from 2024. Measured as a percentage of the average total assets, interest income decreased from 2,29 % in 2024 to 2,06 % in 2025. This is partly due to somewhat lower average lending rates compared with the previous year. The money market rate showed a slightly declining trend through last year. Norges Bank reduced the policy rate twice during last year – from 4,50% to 4,00%.

The money market rate (measured by 3-month Nibor) showed a downward trend during 2025. The average 3-month Nibor was 4,39 % in 2025 – down from 4,72 % in 2024 and up from 4,15 % in 2023. In other words, the interest rate level is somewhat down from the peak in 2024. According to Norges Bank's latest interest rate trajectory, a cautious decline in the interest rate level is expected going forward. However, published interest rate trajectories are based on forecasts and will always be associated with some degree of uncertainty.

Other income in 2025 totalled NOK 116,0 million (NOK 106,6 million). This gives a net increase of NOK 9,4 million. Other income amounts to 0,58 % (0,59 %) of average total assets.

Commission income increased by NOK 10,9 million to NOK 126,9 million (NOK 116,0 million). Income from credit services (mainly commissions from Eika Boligkreditt) is at a higher level in 2025 compared to the previous year. Commissions from Eika Boligkreditt alone increased by NOK 11,0 million from 2024 to 2025. The increased margin on loans in EBK is due to a relatively stable interest rate level through 2025. In addition, growth has been high throughout the period. Savings show a positive development in 2025 compared with the previous year. Payment services and guarantee commissions show an overall stable development in 2025. Insurance shows a minor decline from the previous year.

Other operating income shows a stable development and amounts to NOK 0,5 million (NOK 0,5 million). Commission expenses increased in 2025 and amount to NOK 11,4 million (NOK 9,8 million).

Earnings from financial investments amounted to NOK 60,6 million (NOK 22,3 million) in 2025. This equals 0,31 % (0,12 %) of average total assets. Increased earnings in 2025 are mainly due to significantly higher dividends from Eika Gruppen. Returns on securities are also at a markedly higher level compared with the previous year. Slightly lower credit risk led to a positive value change of NOK 4,1 million in the bank’s bond portfolio. The value adjustment on the shares in Brage Finans amounts to NOK 4,5 million.

The bank’s operating expenses for 2025 were NOK 228,3 million (NOK 212,5 million). This is an increase of NOK 15,8 million, corresponding to 7,4%. The bank’s operating expenses amount to 1,15 % (1,18 %) of average total assets. The cost/income ratio was 39,0 % (39,2%). We are focused on continuous cost improvement, while also offering good services and the right level of service to our customers. The bank’s objective is a cost ratio below 40,0 %, and the development in recent years has been positive.

Personnel costs totalled NOK 129,9 million (NOK 115,6 million). Costs for salaries and personnel were up by NOK 14,2 million, equivalent to 12,3 %. The average number of FTEs in 2025 has been 3,7 higher than the previous year. In addition, the wage settlement as well as general cost growth contributed to a certain increase. The bank’s extended management team has also conducted management development courses divided into several modules during 2024 and into 2025.

Other operating expenses amounted to NOK 89,7 million (NOK 84,0 million). Operating expenses increased by NOK 5,7 million, corresponding to 6,8 %. The costs associated with the bank’s operation of IT systems are a significant item in the bank’s operating expenses. The IT systems are standardised, and the management and operation of these systems have largely been outsourced to external service providers. The bank converted to a new core banking solution in November 2022. IT costs increased by NOK 3,7 million in 2025 compared to the previous year.

Marketing is up by NOK 1,8 million and amounted to NOK 16,0 million in 2025. Generally high activity through the year, new sponsorships in Gjesdal, and the establishment of a new office in Nærbø explain the increase from the previous year.

Net losses on loans were minus NOK 4,9 million (minus NOK 6,0 million). Group write-downs (stage 1 and 2) have been reduced by NOK 6,5 million to NOK 18,6 million during the year. This amounts to 0,11 % of gross lending at year-end.

Gross non-performing commitments (more than 90 days) amounted to NOK 21,5 million (NOK 30,0 million). Gross other defaulted exposures (doubtful) amounted to NOK 80,5 million (NOK 83,9 million). Total defaulted (more than 90 days) and other defaulted exposures (doubtful) is thus reduced from NOK 113,9 million to NOK 102,0 million. Total individual write-downs (stage 3) amounted to NOK 9,0 million (NOK 7,6 million).

At the end of each quarter, the bank performs a detailed review of the loan portfolio to reveal impairment indicators and assess any need for write-downs. The bank’s assessments of the amounts for write-downs and provisions, both for individual loans and for groups of loans, involve judgement. This assessment relates both to probability of default and loss given default.

The Board of Directors proposes the following allocation of the profit after tax of NOK 307 211:

Customer dividends for 2025 that are not collected by October 31, 2026, will be reallocated to charitable purposes/gift fund.

On 12 November 2020, Jæren Sparebank applied to the Financial Supervisory Authority of Norway for permission to amend the articles of association to enable the payment of dividends to customers from primary capital. The amendment to the articles of association was discussed at a meeting of the Board of Trustees on 9 November 2020. On 11 January 2021, the bank received a letter from the Financial Supervisory Authority of Norway approving the application to amend the articles of association. The calculation and payment of dividends to customers apply as from the allocation in the financial statements for 2021.

It is proposed that customer dividends and gifts are distributed with NOK 81,1 million in customer dividends and NOK 10,0 million allocated to the gift fund in the bank. The gift fund is administered by a separate gift committee established by the bank, and awards shall be made in accordance with its own guidelines. Gift awards shall be made on the initiative of the bank. Gift funds shall be provided for purposes that have a public benefit, support good business practice and contribute to the sustainable development of the local environment.

The bank’s total assets at the end of 2025 amounted to NOK 20,9 billion. Total assets have increased by NOK 2 083,4 million over the last 12 months - equivalent to an increase of 11,1 %. The bank’s business capital at the end of 2025 was NOK 29,4 billion. The business capital increased by NOK 3 185,1 million over the last 12 months – equivalent to an increase of 12,1 %. The business capital consists of the bank’s total assets, in addition to transferred volumes in Eika Boligkreditt.

Total gross lending in the balance sheet increased by NOK 1 367,0 million to NOK 16,7 billion during the year. This represents an increase of 8,9 %. Including Eika Boligkreditt, gross lending increased by 10,9 % to NOK 25,2 billion. The lending growth for Eika Boligkreditt alone was 14,9 % in 2025. Gross lending to the retail market increased by NOK 757,9 million to NOK 10,4 billion during the year. This represents an increase of 7,9 %. Including Eika Boligkreditt, lending in the retail market increased by NOK 1 859,6 million – equivalent to 10,9 %. Gross lending to the corporate market increased by 10,7 % to NOK 6,3 billion. The growth target for 2025 was above 5,0 % growth. In the strategic plan for the period 2026-2028, the growth target has been changed to over 7,0 % growth.

The transferred volume in Eika Boligkreditt amounted to NOK 8 492,3 million at the end of 2025. The volume increased by NOK 1 101,7 million during 2025 – equivalent to 14,9 %. Eika Boligkreditt is a stable and important source of funding for the bank. Eika Boligkreditt has access to more affordable funding with longer terms to maturity than we can achieve as a local savings bank. The transfer ratio to Eika Boligkreditt at the end of 2025 was 45,0 %, up from 43,4 % the previous year.

Deposits from customers increased by NOK 1 227,7 million to NOK 13,5 billion during the year. This represents an increase of 10,4 %. Deposits from the retail market increased by 9,2 % to NOK 9,4 billion, while deposits from the corporate market increased by 13,5 % to NOK 4,1 billion. We see good stability for deposits. The deposit spread is considered good, with relatively few large customer deposits in the portfolio.

The deposit-to-loan ratio at year-end was 81,0 % (79,9 %). The deposit-to-loan ratio within the retail market was 90,5 % (89,4 %), while the ratio within the corporate market was 65,3 % (63,7 %). The deposit-to-loan ratio including volume transferred to Eika Boligkreditt was 53,7 % (53,9 %). The bank’s long-term objective is a minimum deposit-to-loan ratio of 70,0 %. Taking into account the transferred volume in Eika Boligkreditt, the minimum deposit-to-loan ratio shall be a minimum of 50,0 %.

The Board of Directors generally assesses the risk of losses on loans and guarantees for retail and agricultural customers to be low. The credit risk for the bank’s other business customer commitments is largely in the low and moderate risk groups, while the risk is higher for the doubtful and non-performing commitments. For those of these commitments that have indications of impairment, individual write-downs are made based on a specific assessment.

Liquidity risk is the risk of there being inadequate liquidity to be able to meet obligations upon maturity. The bank has a low to moderate liquidity risk. The market for external funding is closely monitored to ensure that sufficient funding is always available.

The bank has NOK 4,2 billion in borrowings from the bond market. This is NOK 604,5 million more than at the beginning of 2025. The bank prioritises long-term borrowings with an appropriate maturity spread. The bank works actively to achieve a good and even maturity distribution of deposits taken in the market. The remaining maturity of bond loans is from just under two months to just over 5 years, with an average maturity of approximately 3 years. At year-end, the bank’s liquidity situation was assessed to be good. The credit facility in DNB is NOK 250,0 million at year-end. At year-end, the bank’s LCR (liquidity coverage requirement) is 169,7 and the bank’s NSFR (net stable funding ratio) is 132,7.

The transfer of loans to Eika Boligkreditt during 2025 increased by NOK 1 101,7 million to NOK 8 492,3 million. The increase during the year was 14,9 %. The bank’s borrowings via the bond market amounted to NOK 4 227,6 million at the end of 2025. The Board assesses the bank’s liquidity situation as good in relation to the maturity structure both in the short and long term.

The bank's market risk consists of interest rate risk, price risk and currency risk. Interest rate risk arises when there are differences in interest rate fixing between the asset and liability sides and off-balance sheet items. Total interest rate risk is regularly reported to the Board. The interest rate sensitivity in the bank's portfolio is reasonably stable compared to last year. The bank's net result effect in a scenario where short-term interest rates increase by 3 percentage points gives a total interest rate risk of NOK 9,6 million as of 31.12.2025. Similarly, a decrease of 3 percentage points gives a total interest rate risk of minus NOK 12,2 million.

The bank's loan portfolio has an interest rate maturity of less than one year. Fixed-rate loans to customers are swapped to floating rates. For larger fixed-rate loans, an interest rate swap agreement is entered into per loan. For smaller loans, the interest rate swap agreement will cover several loans. Both fixed-rate loans and interest rate swap agreements are recorded at fair value in the accounts. Customer deposits have an interest rate maturity of one year or less. The duration of the bond portfolio is 0,16 as of 31.12.2025. According to the market policy, the bank should not have more than 0,50 in duration on the bond portfolio.

Price risk is related to shares, equity funds, and bonds. For these investments, the Board has adopted limits in the market policy. Exposure is regularly reported to the Board. These securities are valued at fair value in the accounts.

Regarding currency risk, the bank has a small cash holding in connection with the purchase and sale of travel currency. The bank owns shares in USD (Visa) with a book value of NOK 31,3 million as of 31.12.2025. The bank otherwise has no asset or liability items in the balance sheet related to currency.

Operational risk is the risk of loss resulting from inadequate or failing internal processes or systems, human errors or external events. The bank places emphasis on targeted measures to reduce operational risk.

The bank’s book equity at year-end amounted to NOK 2 807,3 million. Of this, equity certificate capital and the share premium reserve totalled NOK 548,6 million.

Consolidated net own funds amount to NOK 2 889,3 million at the end of the year. Common Equity Tier 1 (CET1) capital ratio, taking account of proportional consolidation in the cooperative group, is calculated at 18,1 % (18,0 %) at year-end. The CET1 capital ratio of the parent bank is calculated at 22,7 % (22,7 %). The figures take into account the year’s retained earnings. In 2025, balance sheet lending growth in absolute terms was highest within the retail market, where the risk weighting is at a lower level compared with the corporate market. Taking into account the volume transferred to Eika Boligkreditt, overall growth in 2025 was clearly higher within the retail market. The consolidated leverage ratio (LR) was 8,1 % (8,8 %) at year-end.

The bank has a Pillar 2 requirement of 1,8 percentage points at the consolidated level. As a result, the bank has an overall minimum CET1 requirement of 15,0 % given the current level of buffer requirements as well as taking into account that the Pillar 2 requirement can be partly covered by subordinated bonds and perpetual bonds. The bank’s internal minimum target for CET1 capital ratio at the consolidated level is 16,0 %. The bank satisfies these requirements by a good margin, which contributes to establishing a good basis for the continued growth and development of the bank in the years to come.

The bank is governed by the rules pertaining to capital adequacy in the Financial Institutions Act with associated regulations. Compliance with the minimum capital adequacy requirements is a condition for the bank’s business activities and therefore of vital importance to the day-to-day operation of the business.

Earnings per equity capital certificate amounted to NOK 31,10 in 2025, up from NOK 27,70 in 2024. The Board of Directors proposes payment of cash dividend of NOK 20,00 per equity capital certificate, which is equivalent to a distribution ratio of approximately 64 %. The total cash dividend is NOK 98,7 million. The corresponding distribution ratio in the previous year was approximately 72 %. The cash dividend was then also NOK 98.7 million – equivalent to NOK 20.00 per equity certificate. Based on the market price at year-end (NOK 388,95), a dividend of NOK 20,00 implies a direct return of approximately 5,1 %. In 2024, the direct return was approximately 6,1 %. At that time, the price at the end of the year was NOK 328,00.

The bank finds that a minimum of 60 % of the equity certificate holders’ share of profit may be paid out as cash dividend. On determining the dividend, consideration is given to the expected profit trend in a normalised market situation, external framework conditions and the need for CET1 capital in relation to growth and applicable buffer requirements.

Adjusted for dividend, the value of the bank’s equity capital certificates increased by 24,7 % during 2025 and ended at a price equivalent to NOK 388,95 per equity capital certificate. By comparison, the Oslo Stock Exchange Equity Certificate Index (OSEEX) was up 35,1 % for the same period. The market capitalisation at the end of the year was NOK 1 919 million and the price/book equity ratio was 1,38. The number of equity capital certificates issued was 4 932 523.

The long-term target for the bank’s return on equity after tax was a minimum of 11,0 % in 2025. In the strategic plan for the period 2026-2028, the minimum target has been continued at 11,0 %. The annual profit after tax is equivalent to a return on equity after tax of 11,7 %. This is an increase from 10,9 % for the previous year.

There is still uncertainty in the world related to wars, unrest and geopolitical instability. In addition, a relatively high domestic price level, a weak NOK exchange rate and a relatively high interest rate level contribute to challenges for many – both households and businesses. However, the interest rate level is now cautiously moving downwards after Norges Bank has cut the policy rate twice. In addition, many households are now experiencing real wage growth.

The bank is in a good position in terms of the market, liquidity and capital adequacy. The foundation remains solid for further development of the position as the local bank for Jæren going forward.

To conclude, the Board of Directors would like to express our thanks to all employees and elected representatives for their valuable contribution and fruitful cooperation throughout last year. A sound foundation has been laid for the further development of the bank as a strong and visible local bank for Jæren. The Board of Directors would also like to thank all customers and business partners for the confidence they have shown in the bank during the past year.