Norwegian bank eases non-performing loans from John Fredriksen

The Norwegian bank is Norway's largest consumer loan consumer and recorded a pre-tax profit of NOK 579 million in the third quarter of the year. Last year, earnings were NOK 577 million before taxes.

As profits rise, loan growth declines. Loan growth in the third quarter reached NOK 1.6 billion, compared to NOK 1.8 billion in the third quarter of last year.

Lamps on debt

A few seconds before Bank Norwegian publishes the third quarter results, the bank sends a message stating that it is selling a defaulted loan portfolio in Finland to Axactor, a debt-dominated investment firm dominated by John Fredriksen. The outstanding portfolio is approximately 160 million euros, or 1.5 billion crowns.

"The transaction will generate cost savings and eliminate any uncertainty about the recovery of outstanding receivables," the company said in a statement.

At Axactor, it's the complete jubilee:

"The acquisition of the portfolio is the largest ever made by Axactor, it transfers the agreement with Norway to Sweden in 2017 and generates an immediate revenue stream for our new platform in Finland", said the director of Axactor, Endre Rangnes.

In its quarterly report, Bank Norwegian writes that the expected credit losses of the Finnish portfolios showed that the bank had recorded losses lower than it should have in the first half due to a pattern error. The bank is now making a one-time adjustment, in which the underlying credit quality of the portfolio is not changed.

The biggest losses are in Finland

With the exception of Norway, Finland is the country where the Norwegian Bank earns the most money. So far this year, Finnish activity has generated pre-tax profit of NOK 285 million. In comparison, Norwegian activity yielded NOK 1.1 billion before taxes.

Despite revenues more than twice as high in Norway as in Finland, loan losses in Finland are the largest. So far this year, loan losses amounted to NOK 297 million.

In Norway, loan losses amounted to NOK 179 million.

Doubling loan losses

Revenues totaled NOK 1.19 billion for the quarter, compared to NOK 988 million for the same period last year.

Loan write-downs and losses amounted to NOK 299 million in the quarter, compared to NOK 141 million in the same period last year.

Executive Director Tine Wollebekk said in a comment:

– The third quarter reflects a satisfactory underlying result, based on an increase in net interest income and tight cost control, said CEO Tine Wollebekk in his quarterly report.

Lower growth in Norway

For many years, Bank Norway has clearly recorded the strongest growth in consumer home loans in Norway, with loan growth ranging from 30 to 40% per annum. After a successful implementation in neighboring countries like Sweden, Denmark and Finland, much of the growth abroad comes from the bank and the bank is currently recording an annual growth rate of around 20 %.

In Norway, the growth rate is between 10 and 15% (at the end of the second quarter, red year). The bank is currently seeing the strongest growth in credit cards, while the rate of decline in consumer loans in Norway is decreasing.

The changes come at the same time that the Ministry of Finance has consulted a new regulation on the tightening of the consumer credit market. That is to say that the previous guidelines – that the banks did not have to follow in Slavic – will be obliged to follow. Among other things, it is whether loan applications need to be checked against a new debt register, the requirements for linear deductions and the in-depth control of clients' ability to pay.

The hearing has a deadline of December 6th.

In Norway, total loans of just over NOK 18 billion remain the main consumer credit – more than NOK 12 billion.

Stock market

Norwegian Norway Holding's parent company, Norwegian Finns Holding, has been subject to stock market fluctuations since June 2016, despite good profitability and steady growth in its loans. This fall, the stock fell more than the market in general, and the slowdown began a few weeks before the new regulation was sent for consultation in September.

Since the end of August this year, the stock is down about 18%.

In an analysis released in September, SEB predicted steady growth in bank lending starting next year and downgraded the "team" purchase.

Will take the Norwegian bank in London

Last week, the Norwegian bank received a letter from a foreign shareholder with more than five percent of the company's shares. The shareholder asked an extraordinary general meeting to consider a proposal for a secondary listing application of the company's shares on the main market of the London Stock Exchange.

There is only one foreign shareholder with more than five percent shares in the bank. It's a nominated account of the big American bank Goldman Sachs.

"The board will review the request in consultation with its advisors and shareholder and will keep the market informed of any decision made by the board based on the request," said Bank Norwegian. (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.