DNB's results for 2nd quarter 2015

Strong quarter for DNB

DNB recorded profits of NOK 5 062 million in the second quarter of 2015, up NOK 508 million from 2014. Higher volumes, wider deposit spreads and an increase in net commissions and fees contributed to the sound performance.

Frontpage 2nd quarter 2015 report DNB“We are very satisfied with the Group’s second quarter results. We have a robust portfolio and low impairment losses on loans, and doubtful loans and guarantees show a downward trend. In addition, we are succeeding in increasing non-lending income, for example from real estate brokerage and interest rate and currency hedging. We observe that our customers appreciate that DNB can provide a total range of financial services,” says Rune Bjerke, group chief executive.

Easier money transfers with DNB
At the beginning of June, DNB launched Vipps, a mobile app that conveniently and simply transfers money between people. Initial reactions show that this is something customers have been waiting for. After just five weeks, the app has been downloaded more than 390 000 times, and more than 285 000 people have started using it.

"Vipps is a success. The response from customers has been overwhelming, and we believe that this will further reinforce our position within payment transfers. DNB is at the forefront of digital development, but we find that our customers are actually one step ahead of us. Such an exciting situation challenges us to deliver continuous innovation," says Bjerke.
Sound portfolio, with reduction in non-performing loans
There was an average increase in DNB’s loan portfolio of 9.6 per cent parallel to a 7.3 per cent increase in deposit volumes from the second quarter of 2014. The strong rise in volumes was partly due to exchange rate movements. Lending spreads narrowed slightly during the quarter, while deposit spreads widened. The cost/income ratio for the quarter was 42.8 per cent. Impairment losses on loans and guarantees totalled NOK 667 million, increasing by NOK 113 million from the second quarter of 2014.

“We have previously estimated that impairment losses on loans will be in the range of NOK 3-4 billion in 2015. This is probably a bit too high. Based on the Group’s performance in the first half of the year and what we know today, we expect impairment losses to total just under NOK 3 billion,” says Bjerke.

Non-performing and doubtful loans and guarantees were reduced by NOK 3.0 billion from end-June 2014, totalling NOK 13.1 billion at end-June 2015. DNB Markets performed very well during the quarter and was a strong contributor, along with DNB Eiendom, to the 14.5 per cent* increase in commissions and fees. During the quarter, DNB Eiendom consolidated its position as Norway’s largest real estate broker. DNB Livsforsikring also reported strong profits.

“Buffers” in the Norwegian economy
There is still moderate growth in the global economy, and the Norwegian economy looks set to enter a period with considerably lower growth than in the past 6-7 years.

“The Norwegian economy has important buffers which nevertheless ensure a soft landing. Interest rate cuts are helping to sustain households’ purchasing power and to keep the Norwegian krone weak. A weak krone means higher profitability and improved competitiveness for exporters, who are also experiencing an increase in demand from other countries,” says Bjerke.

Key figures for the second quarter of 2015

• Pre-tax operating profits before impairment were NOK 7.4 billion (6.7)
• Profit for the period was NOK 5.1 billion (4.6)
• Earnings per share were NOK 3.04 (2.80)
• Return on equity was 12.1 per cent (12.4)
• The ordinary cost/income ratio was 42.8 per cent (43.8)
• The common equity Tier 1 capital ratio (transitional rules) was 13.0 per cent (12.1)

Comparable figures for 2014 in parentheses.

This information is subject to the disclosure requirements pursuant to section 5-12 of the
Norwegian Securities Trading Act.

*The figure has been adjusted for income from public sector activities within life insurance that are in the process of being wound up.
Contact person:
Thomas Midteide, group executive vice president, Corporate Communications, tel.: + 47 962 32 017
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