Stock and press releases

Third quarter 2013

DNB recorded profits of NOK 4 881 million in the third quarter of 2013, up NOK 1 341 million from the third quarter of 2012. Adjusted for the effect of basis swaps, there was a NOK 1 093 million rise in profits. Wider lending spreads were the main factor behind the rise in profits and contributed to the necessary build-up of capital to meet stricter capital requirements. In October, the Ministry of Finance issued new regulations regarding a counter-cyclical capital buffer of between 0 and 2.5 per cent. In addition, the Ministry announced new rules governing the weighting of banks’ home mortgages in the capital adequacy calculations, while retaining the current transitional rules linked to the so-called Basel I floor. The requirements, which apply solely in Norway, entail that DNB appears more weakly capitalised than its international competitors, even though this is not the case in real terms. Compliance with the requirements necessitates a further significant increase in Tier 1 capital. DNB’s common equity Tier 1 capital has been increased by NOK 10.5 billion over the past twelve months. The common equity Tier 1 capital ratio, calculated according to the transitional rules, rose from 10.0 per cent in the third quarter of 2012 to 11.0 per cent, including 50 per cent of interim profits. Return on equity increased from 11.9 per cent to 14.4 per cent during the same period. Adjusted for the effect of basis swaps, return on equity was up from 13.2 to 14.9 per cent. DNB is well capitalised, but will build additional capital organically in order to meet the authorities’ requirements. Parallel to this, efforts to influence the regulatory framework will be continued.

DNB’s Investor Relations team is pleased to invite you to our

CAPITAL MARKETS DAY

Thursday 21 November 2013

Time: 9:00 am – 1:30 pm

Location: Hilton on Park Lane, 22 Park Lane, London W1K 1BE

Registration from 8:30 am – 9:00 am

We will provide you with insight into the most important issues for DNB in today’s rapidly changing business environment. Topics such as strategic direction, financial ambitions, regulation and capital management will be addressed.

REGISTRATION

We encourage you to register online at https://www.deltager.no/dnb_cmd_london2013. The closing date for registration is 18 November 2013. The event will also be webcasted.

We look forward to seeing you in London.

for DNB,

Per Sagbakken,

Head of Investor Relations / Long-term funding

DNB’s 3Q 2013 results will be published at 07:30 am CET on Thursday, 24 October 2013. We would like to invite you to participate in the following presentations:

0930 CET Press conference & live web-TV
Press conference (in Norwegian only) will be held on Thursday 24 October at 9:30 am CET at DNB’s head office, Bjørvika, Dronning Eufemias gate 30, Oslo. For those who are unable to attend the presentation in Bjørvika, there will be a live web-TV of the conference (in Norwegian only). For further information, please visit www.dnb.no/ir.
To register your attendance in Oslo, please RVSP to [email protected]

1400 CET Analyst Conference Call
A conference call for analyst will be held Thursday 24 October at 2:00 pm CET. To attend the conference call we kindly ask you to dial in 10 minutes before start on +47 23 18 45 32. A replay will be available after the conference call. More details on the conference call can be found on our website www.dnb.no/ir.

Friday 25 October 0730 for 0745 GMT Analyst Meeting in London
An analyst meeting in London will be held on Friday 25 October at 07:30 for 07:45 am GMT at Nomura, One Angel Lane, London, EC4R 3AB, United Kingdom
To register your attendance in London, please RVSP to [email protected]

Contact
For further information, please contact:
Per Sagbakken, Head of Investor Relations, phone +47 23268400 or
Jan Erik Gjerland, e-mail: [email protected], phone +47 23268408.

In the third quarter of 2013, the DNB Group will record a negative effect of basis swaps connected to funding of NOK 223 million.

For the full year 2012 and the first half of 2013, there were negative effects of basis swaps of approximately NOK 1687 million and NOK 321 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.

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Contact persons, Investor Relations: Per Sagbakken: +47 23268400

On Thursday, 21 November 2013, the DNB Group will arrange a Capital Markets Day in London from 9:00 a.m. to 2:00 p.m. local time. The event will also be webcasted.

Further information about the agenda and practical details will be presented later.

Best regards,
Per Sagbakken, head of IR/Long-term Funding, tel. +47 23 26 84 00

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