DNB recorded profits of NOK 6 084 million in the second quarter of 2018, up NOK 847 million
from the second quarter of 2017. Loans to personal customers have increased by NOK 36 billion during the past year.
The Norwegian economy is still on the right course and contributed to yet another strong performance by DNB. Low losses and stable income are the main factors influencing the results for the first half of the year.
“Though times are good, this does not automatically generate results. We are gratified that we are an attractive bank for those who wish to realise their housing dream and for those who venture to start their own business. In order to retain this position, we must continue to deliver the best customer experiences,” says group chief executive Rune Bjerke.
Personal customers and businesses borrow more
An increasing number of personal customers come to DNB to borrow money for a new home and other purposes. Over the past 12 months, loans to personal customers have increased by NOK 36 billion or 5.0 per cent. In the second quarter, there was an increase of just over NOK 6 billion.
Businesses also borrow more from DNB. Lending to the SME segment has increased by NOK 23 billion over the past year. In the second quarter, there was also a rise in lending to large corporates. This gave overall lending growth of NOK 16 billion to corporate customers in the quarter.
“We are expanding according to plan in the personal customer market. We are also full of respect for all business owners who are stepping on the gas. During a period of international unrest, the Norwegian business community has really gained momentum. It is also gratifying that 40 per cent of those who start their own business in Norway, choose DNB as their bank,” says Bjerke.
For the first time, DNB’s lending to the SME segment passed NOK 300 billion at end-June.
Sound underlying activity
The merger between Vipps, BankID and BankAxept has now been completed, and the transaction has had a total positive effect on profits of NOK 464 million. DNB owns 44.3 per cent of the new company.
Interest income is increasing in step with the loan portfolio. There was an increase of NOK 21 million in the second quarter compared with the corresponding quarter last year. The increase for the first half of the year was NOK 507 million. Lending spreads narrowed somewhat during the second quarter due to increased money market rates.
Other operating income was down NOK 538 million, mainly due to a negative development in the value of the bank’s basis swaps. Commission and fee income from DNB Markets and real estate broking made a positive contribution, reflecting an active quarter for these units.
Operating expenses decreased by NOK 231 million compared with the second quarter of 2017. The reduction was mainly due to the fact that operations in the Baltics were no longer included in the accounts, but also reflected lower IT and marketing expenses.
Lower losses
Macroeconomic prospects have also contributed to the healthy performance of an increasing number of companies. Though some companies in the offshore industry are still in a vulnerable position, developments in general have resulted in reversals on impairment losses for DNB.
Lower losses also contribute to a higher return on equity, which was 11.8 per cent in the quarter.
“Overall, we are pleased with the quarter. We are still aspiring to reach our return on equity target of
12 per cent, but have never made it a secret that the bar has been set high. However, thanks to continued sound growth and lower losses, the goal is within reach," concludes Bjerke.
Financial key figures for the second quarter of 2018
- Pre-tax operating profit before impairment was NOK 7.1 billion (7.4)
- Profit for the period was NOK 6.1 billion (5.2)
- The common equity Tier 1 capital ratio (transitional rules) was 16.2 per cent (15.8)
- Earnings per share were NOK 3.65 (3.07)
- Return on equity was 11.8 per cent (10.4)
- The cost/income ratio was 43.1 per cent (43.1)
Comparable figures for the second quarter of 2017 in parentheses.
