DNB: "Significantly lower activity in the financial markets"

DNB achieved a pre-tax profit of NOK 7.2 billion in the third quarter of the year. In advance, analysts expected NOK 7.4 billion in pre-tax profits, according to TDN Direkt, which collected data from 20 brokerages.

Significant recovery of losses

Loan losses amounted to NOK 11 million for the quarter, while analysts were expecting NOK 303 million. According to the company's quarterly report, the oil and gas sector has experienced significant write-offs of oil and gas losses.

It also dropped significantly compared to the same period last year, when the bank recorded a loan loss of NOK 867 million. Thus, the positive trend of the previous quarter continues.

"We are seeing many similar trends to Norges Bank, the speed of the Norwegian economy is good, oil prices are higher, investments are on the rise, wage growth and unemployment are going up. In the right direction, when economic development is in good shape, the banks' losses are also less important, while the outlook for higher interest rates has had a chance effect on real estate prices. said DNB CEO Rune Bjerke.

– significantly lower activity

Total revenues amounted to NOK 12.5 billion, which is less than the expected US $ 13 billion, according to estimates by TDN Direkt.

In the third quarter, net interest income amounted to NOK 9.1 billion, an increase of nearly NOK 150 million compared to the same quarter last year.

"However, other income decreased by NOK 579 million, from NOK 3.9 billion to NOK 3.3 billion, mainly due to changes in the classification under the new IFRS9 accounting rules and a sharply lower activity. on the financial markets during the quarter, "says the quarterly report.

Full Broker Brake

DNB's brokerage business, DNB Markets, had a difficult third quarter, with profits almost halved compared to the same period last year.

The business sector's turnover decreased by more than NOK 600 million, to NOK 1.1 billion (1.75), while the pre-tax result amounted to NOK 450 million. compared to NOK 1.1 billion in the third quarter of 2017.

The decline in investment banking and fixed income, foreign currency and commodities brokerage will decline, while interest rate, foreign exchange and commodities brokerage products will decline. will be more than halved, at about 300 million crowns (660).

Serve less on loans

At the same period last year, the total business turnover of the DNB group rose to just under 13 billion.

The main driver of DNB's growth – net interest income on loans and deposits – has lost momentum over the past year as a result of rising money market rates and rising bank lending.

DNB and the big banks were expecting Norges Bank's interest rate hike in September of this year, setting interest rates on mortgages and deposits. On existing loans, the new interest rate will only apply six weeks later, ie early November.

This means that revenue growth over the last few months is due to the increase in the number of new loans and that the improvement of the profit on the loans and deposits with the DNB will only be available towards the end of the year.

DNB had a core capital ratio of 16.5% at the end of the third quarter. Return on equity was 10.9% in the third quarter, compared with 11.2% in the same period last year.

Until this year, the share of DNB has increased by about 10%. It is slightly more than the main index of the Oslo Stock Exchange, which has risen by almost 7% this year, and the progress made by DNB reflect, as usual, the prospects for development of the Norwegian economy in the future.

(Conditions)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our business using a link directly to our pages. The copy or any other form of use of all or part of the content may only be done by written authorization or as permitted by law. For other terms please see here.