Annual report for 2012 for DNB ASA.

In a meeting on Wednesday, 13 March 2013, the Board of Directors of DNB ASA approved the annual accounts for 2012.

Annual report 2012 DNB

The DNB Group's annual report for 2012 has been published on newsweb.no (http://www.newsweb.no/newsweb/search.do?siteLanguage=en)

The report is also available on dnb.no/about us (https://www.dnb.no/en/about_us.html?la=EN&site=DNB_NO)

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

In the first quarter of 2013, the DNB Group will record a negative effect of basis swaps connected to funding of approximately NOK 233 million.

For the full year 2012, there was a negative effect of basis swaps of approximately NOK 1 687 million.
Basis swaps are derivative contracts entered into in connection with long-term funding in international capital markets where the relevant currency is converted to Norwegian kroner. These swaps are hedging instruments, and over the lifetime of the derivatives the mark-to-market adjustments will have zero effect. Over time, the accounting effects will thus be reversed.

Contact persons, Investor Relations:
Per Sagbakken: +47 23268400
Jan Erik Gjerland: +47 23268408

Shareholders in DNB ASA are invited to attend the Annual General Meeting.

Shareholders in DNB ASA are invited to attend the Annual General Meeting to be held at 3.00 pm on Tuesday, 30 April 2013 at DNB’s premises in Dronning Eufemias gate 30, Bjørvika, Oslo, Norway.
The Notice of Annual General Meeting is attached: The Notice of Annual General Meeting

Following the ruling of the Norwegian Supreme Court on 22 March 2013, DNB will make provisions of approximately NOK 450 million in the first quarter of 2013 to cover compensation payments to customers who have made debt-financed investments in certain structured products. The amount represents the estimated total compensation to which the affected customers may be entitled and includes the previously announced amount of NOK 60 million. The provisions will be classified as other expenses.

Fixed-rate loans in DNB are recorded at fair value through profit or loss. There were insignificant effects of mark-to-market adjustments in the first quarter of 2013.

As previously announced, basis swaps will have a negative effect of NOK 233 million in the first quarter of 2013.

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Contact persons in Investor Relations in DNB:
Jan Erik Gjerland, tel. +47 23 26 84 08 or mobile +47 46 930 410
Thor Tellefsen, tel. +47 23 26 84 04 or mobile +47 915 44 385

The Annual General Meeting in DNB ASA was held on 30 April 2013 in Oslo.

The General Meeting endorsed the Election Committee's proposal for the election of twelve members and ten deputies to the Supervisory Board, two members to the Election Committee and four members and two deputies to the Control Committee. The General Meeting also approved the Election Committee's proposal for remuneration rates for the Supervisory Board, Control Committee and Election Committee.

In addition, the Annual General Meeting in DNB ASA approved the Board of Directors' proposal for the 2012 annual report and accounts, including the distribution of a dividend for 2012 of NOK 2.10 per share

to registered shareholders as at 30 April 2013, to be distributed as from 13 May 2012. The shares in DNB ASA will be quoted ex-dividend on 2 May 2013.

The General Meeting authorised the Board of Directors of DNB ASA to acquire own shares for a total face value of up to NOK 732,959,487, corresponding to 4.5 per cent of share capital. The shares may be

purchased through the stock market. Each share may be purchased at a price between NOK 10 and NOK 150. Acquired shares shall be sold in accordance with regulations on the reduction of capital. The authorisation will be valid for a period of 12 months from 30 April 2013.

An agreement has been signed with the Norwegian Ministry of Trade and Industry for the redemption of a proportional share of government holdings to ensure that the government's percentage ownership does not change as a result of the redemption of repurchased shares.

The minutes of the Annual General Meeting will be published on www.dnb.no/agm.

DNB Bank ASA is currently considering issuing a new Tier 2 bond of minimum NOK 1 billion.

The bond will have a maturity of 10 years and be callable after 5 years (5+5). The bond issue was authorised by the Board of Directors of DNB Bank ASA on 21 December 2012. The approval and accompanying guidelines related to the issue were given in a letter from the Financial Supervisory Authority of Norway (Finanstilsynet) on 20 December 2012.

Arranger: DNB Markets.

Contacts at DNB Bank ASA:
Thor Tellefsen, head of Long-term Funding, tel: +47915 44 385

In the second quarter of 2013, the DNB Group will record a negative effect of basis swaps connected to funding of NOK 89 million.

For the full year 2012 and the first quarter of 2013, there were negative effects of basis swaps of approximately NOK 1687 million and NOK 233 million, respectively. Basis swaps are derivative contracts entered into in connection with long-term funding in international capital markets where the relevant currency is converted to Norwegian kroner. These swaps are hedging instruments, and over the lifetime of the derivatives the mark-to-market adjustments will have zero effect. Over time, the accounting effects will thus be reversed.

Contact persons, Investor Relations:
Per Sagbakken: +47 23268400
Jan Erik Gjerland: +47 23268408

DNB recorded profits of NOK 3 798 million in the second quarter of 2013, down NOK 816 million from the second quarter of 2012. The bank continued to strengthen its Tier 1 capital and capital adequacy.

“DNB recorded a significant underlying increase in profits, in spite of somewhat lower lending growth, which reflected both weaker market developments and the fact that several of our large customers use the bond market for financing. There was continued strong demand for home mortgages, with an average growth of 7.0 per cent from the second quarter of 2012,” says Rune Bjerke, group chief executive.

In order to strengthen capital adequacy and meet current and future capital requirements, DNB
has raised lending rates. This contributed to a NOK 846 million increase in net interest income for the quarter. New capital requirements introduced by the authories had to be met by DNB by 1 July 2013, and the Group has also been informed that an additional significant increase in Tier 1 capital will be necessary to ensure compliance with the new regulations. DNB has already built up capital of
NOK 53 billion over the past five years to meet existing capital requirements.

“Some people maintain that Norwegian banks have not yet been presented with strict capital adequacy regulations. This is wrong. We have received written marching orders from the authorities to build far more capital through 2013 and to give this our highest priority. DNB’s common equity Tier 1 capital has been increased by approximately NOK 11 billion over the past 12 months, which corresponds to more than NOK 200 million each week. This capital build-up increases the financial strength of the bank, though stricter capital requirements come at a cost for both employees, shareholders and customers,” says Bjerke.

Rise in income, but lower return on equity

In spite of higher income, DNB’s return on equity has been reduced. The reasons for this are that the Group has higher capital yielding returns and that the increased Tier 1 capital must be deposited in central banks at low interest rates. Return on equity was 11.6 per cent, down from 15.9 per cent in
the second quarter of 2012. Adjusted for the effect of basis swaps, return on equity was reduced from 13.3 to 11.8 per cent.

Impairment losses on loans and guarantees totalled NOK 937 million, up NOK 252 million from the second quarter of 2012 and NOK 199 million from the first quarter of 2013.

“The Norwegian economy remains strong, though there was a rise in impairment in a number of segments, which could indicate a certain weakening of the Norwegian economy. Impairment losses within shipping were still relatively high compared with other segments served by the bank, but significantly lower than in the preceding quarters. We still believe that impairment losses in 2013 will remain within the guided level, which is NOK 3-4 billion,” says Bjerke.

The common equity Tier 1 capital ratio was 10.8 per cent, while the capital adequacy ratio was 12.4 per cent, both including 50 per cent of interim profits.

Group staff reduced by 1 000 full-time positions

The number of full-time positions in DNB has been reduced by more than 1 000 since the second quarter of 2012. This is an important contribution to bringing down costs and meeting the capital requirements through an increase in profits. The downsizing will continue as planned, with an aim to reduce staff by an additional 500 full-time positions by 2015. During the second quarter, provisions for restructuring measures affecting employees totalled NOK 459 million. Restructuring costs totalled NOK 569 million for the quarter.

Operating expenses rose by NOK 558 million from the second quarter of 2012. Adjusted for restructuring expenses and other non-recurring effects, operating expenses were reduced by
NOK 71 million or 1.4 per cent.

Key figures for the second quarter of 2013

• Pre-tax operating profits before impairment were NOK 6.1 billion (6.7)
• Profit for the period was NOK 3.8 billion (4.6)
• Earnings per share were NOK 2.33 (2.84)
• Return on equity was 11.6 per cent (15.9)
• The ordinary cost/income ratio was 48.0 per cent (43.1)

Comparable figures for the second quarter of 2012 in parentheses.

Contact person:

Thomas Midteide, group executive vice president, Corporate Communications, tel.: + 47 962 32 017

The quarterly report, presentation and Fact Book can be downloaded from www.dnb.no/investor-relations