Sparebanken Øst (OB:SPOG) Net Profit Margin Rises to 14.3%, Reinforcing Efficiency Narrative

Sparebanken Øst (OB:SPOG) has just posted its Q3 2025 results, with total revenue coming in at 235.9 million NOK and basic EPS of 1.41 NOK for the quarter. Looking back, the company has seen revenue fluctuate over recent quarters, ranging from 234.4 million NOK to 328.3 million NOK, while EPS has moved from 1.38 NOK to 2.78 NOK per share. Margins remain a key area for investors, with these results providing further texture to the bank’s ongoing performance story.

See our full analysis for Sparebanken Øst.

Next, we will see how the latest numbers compare to the widely followed narratives and expectations for Sparebanken Øst. We will also consider whether they change the story going forward.

Curious how numbers become stories that shape markets? Explore Community Narratives

Net Profit Margin Hits 14.3%

• Sparebanken Øst’s net profit margin moved up to 14.3% (from 13.7% last year), outpacing its own historical average and indicating more efficient operations than before.
• The prevailing market view highlights the combination of stable profitability and high earnings quality, supported by trailing 12-month net income of 455.7 million NOK and basic EPS of 7.29 NOK.
  • Consensus narrative shows that projected earnings growth of 18.1% per year is ahead of the broader Norwegian market, which may help support valuation even though revenue is expected to decline by 0.8% annually.
  • At the same time, the bank’s ability to defend margins while sector competition increases (reflected by a sector-average cost-to-income ratio between 36% and 37% in recent quarters) adds weight to the positive narrative, but exposes it to sector headwinds if interest rates or sector profitability worsen.
• For a deeper analysis of how this profit margin compares to industry norms and a more balanced perspective, review analyst insights and data in the full consensus breakdown. 📊 Read the full Sparebanken Øst Consensus Narrative.

Valuation: 20% Below Fair Value

• Trading at 73.72 NOK per share, the stock is currently about 20.4% under an internally modeled fair value estimate of NOK 92.02 and a DCF fair value of 103.90 NOK, reflecting a potential value gap that contrasts with its price-to-earnings ratio of 10.1x, which is slightly higher than industry comparables.
• The prevailing market view notes this valuation discount, but emphasizes that premium multiples and higher-risk funding sources (59% of liabilities) mean the possible upside carries risk.
  • Consensus analysis highlights that a lower allowance for bad loans (30% coverage) and forecasts for mild revenue declines over the next three years complicate the case for a straightforward return to fair value.
  • A current dividend yield of 8.74% appears attractive, yet projections indicate it may not be fully covered by future earnings, raising further caution among income-focused investors.

Funding Mix and Asset Quality Under Watch

• Allowance for bad loans remains low, at 30% of total non-performing loans, while the share of higher-risk funding is relatively high (59% of liabilities), drawing attention to the bank’s balance sheet resilience compared to peers.
• The prevailing market view suggests this combination is a double-edged sword:
  • While the bank has demonstrated earnings strength and margin stability, its funding structure is more risk-prone than some Norwegian competitors, meaning that market shocks or rising defaults could have a greater impact.
  • Dividend coverage risk, given the high headline yield but lack of expected earnings coverage, further signals the need for careful ongoing monitoring by investors focused on safety and income.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Sparebanken Øst's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Despite Sparebanken Øst's earnings momentum and margins, persistent balance sheet risks and limited dividend coverage raise questions about its financial resilience.

If you want to focus on companies with stronger balance sheets and greater financial reliability, use our solid balance sheet and fundamentals stocks screener (1937 results) to spot alternatives built to weather uncertainty.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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