Stock and press releases

In the fourth quarter of 2012, the DNB Group will record a positive effect of basis swaps connected to funding of approximately NOK 235 million. For the full year 2012, there will be a negative effect of basis swaps of approximately NOK 1 687 million. In the fourth quarter of 2011, a positive effect of NOK 2 069 million was recorded, while there was a positive effect of NOK 3 031 million for the full year 2011. 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

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

DNB recorded profits of NOK 3 507 million in the third quarter of 2012, up from NOK 2 493 million in the third quarter of 2011. There was a rise in profits in all of the bank’s business areas, and write-downs were reduced by more than 55 per cent. 

“We are very pleased with the Group’s third quarter performance. All business areas delivered healthy profits. There was also an increase of more than 80 per cent in other operating income, adjusted for basis swaps, which is largely attributable to the positive financial market trend,” says Rune Bjerke, group chief executive.

DNB is experiencing continued strong growth in both home mortgages and lending to small and medium-sized businesses, while there is lower growth in lending to large corporates and international customers. Average lending volumes rose by 6.9 per cent from the third quarter of 2011. There was a 1 per cent increase from the second to the third quarter of 2012.

Deposits increased by 19.5 per cent from the third quarter of 2011, while there was a 5 per cent rise in deposits from the second to the third quarter of 2012.

Lending spreads widened slightly, while deposit spreads narrowed somewhat from the preceding quarter. Overall, spreads remained stable.

Lower write-downs
Write-downs on loans and guarantees totalled NOK 521 million, down 55.5 per cent from the third quarter of 2011. Total write-downs in the Baltics and Poland were also reduced from 5.2 per cent of lending in the third quarter of 2011 to 0.43 per cent.

“The strong Norwegian economy is a factor behind the low level of write-downs. There was a decline in write-downs in most segments, with the exception of shipping. As expected, write-downs are increasing in this segment due to the challenging market situation,” says Bjerke. 

Increase in Tier 1 capital
The Group’s common equity Tier 1 capital ratio is continuing to rise and stood at 10.0 per cent at end-September 2012.

In the second quarter of the year, the effects of basis swaps (derivative contracts) had a positve effect on DNB’s profits. In the third quarter, the situation was the opposite, and such derivative contracts had a negative effect of NOK 566 million. These effects vary considerably from quarter to quarter, however, over time the effect will be neutral.

Fewer full-time positions
The number of full-time positions was reduced by 166 in the third quarter. During the quarter, DNB entered into agreements to sell its Swedish subsidiary SalusAnsvar AB and the branch network in Poland. It is expected that some 390 employees will be transferred to the new owners in connection with the two transactions.   
 
Key figures for the third quarter of 2012
• Pre-tax operating profits before write-downs were NOK 5.3 billion (5.2)
• Profit for the period was NOK 3.5 billion (2.5)
• Earnings per share were NOK 2.15 (1.53)
• Return on equity was 11.4 per cent (8.8)
• The ordinary cost/income ratio was 48.8 per cent (48.2)

Comparable figures for the third quarter of 2011 in parentheses.

Contact persons:
Trond Bentestuen, group executive vice president, Marketing, Communications and eBusiness,
tel.: +47 950 28 448
Thomas Midteide, executive vice president, External Communication, tel.: + 47 962 32 017

The quarterly report, presentation and Supplementary Information for Investors and Analysts can be downloaded from www.dnb.no/investor-relations

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

In the third quarter of 2012, the DNB Group will record approximately NOK 570 million as an unrealised loss arising from basis swaps connected to funding. In the third quarter of 2011, a positive effect of NOK 1 398 million was recognised. There was a corresponding negative effect of NOK 2 432 million in the first quarter of 2012 and a positive effect of NOK 1 078 million in the second quarter of 2012. 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. Mark-to-market adjustments of basis swaps will vary significantly depending of developments in financial markets, and this will lead to volatility in the P/L from quarter to quarter. These swaps are hedging instruments, and over the lifetime of the derivatives the mark-to-market adjustments will have zero effect. 

Investor contacts:
Jan Erik Gjerland, Investor Relations: +47 46930410
Trond Sannes Marthinsen, Investor Relations: +47 23268403 or +47 99034820

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

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DNB Bank Group notes the announcements made today by the European Banking Authority and The Financial Supervisory Authority of Norway regarding the final assessment of the capital exercise and fulfilment of the EBA December 2011 Recommendation, which shows the following result for DNB Bank Group.

DNB Bank Group meets the 9% Core Tier 1 ratio including the sovereign buffer as stated in the EBA December 2011 recommendation.

EBA Results DNB

Background on the EBA capital exercise
The EBA Recommendation on the creation of temporary capital buffers to restore market confidence was adopted by the Board of Supervisors on 8 December 2011 to address the difficult situation in the EU banking system, especially with regard to the sovereign exposures, by restoring stability and confidence in the markets. The Recommendation was part of a suite of measures agreed at EU level.

The Recommendation called on National Authorities to require banks included in the sample to strengthen their capital positions by building up an exceptional and temporary buffer such that their Core Tier 1 capital ratio reaches a level of 9% by the end of June 2012. In addition, banks were required to an exceptional and temporary capital buffer against sovereign debt exposures to reflect market prices as at the end of September 2011. The amount of the sovereign capital buffer has not been revised.

The initial sample of the Capital Exercise included 71 banks. However, the 6 Greek banks were treated separately as the country is currently under an EU/IMF assistance programme. Moreover, four banks (Öesterreichische Volksbank AG, Dexia, WestLB AG and Bankia) from the original sample have been identified as undergoing a significant restructuring process, and are being monitored separately. Therefore, the final assessment published today refers to 61 banks.

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Investor contact: Jan Erik Gjerland, Investor Relations: +47 46930410

DNB is increasing its initiatives within the offshore and energy sector and has opened an office in Rio. The bank has already entered into several contracts from its new office in Brazil.

DNB is one of the largest banks within the energy sector and is continuing its initiatives within this sector. Last year, the bank opened an office in Aberdeen, and DNB also has energy teams in Houston, Singapore, Sweden and London, as well as in Oslo, Stavanger and Bergen.

”We have had a presence in Rio since 1968, but now the time is right to establish a more visible DNB office. Our role will be to advise our Norwegian and international clients on how to succeed in Brazil. This region is an important growth area for many of our customers, and it is therefore natural that we are by their side when they establish their operations here,” says Kristin H. Holth, head of DNB in the Americas.

The main initiatives for the Rio office will be within offshore and energy, and the office will be led by Arne Christian Haukeland.

”To have a Norwegian bank with local in-depth expertise and a local DNB team is very beneficial for Norwegian customers who are planning to expand their activities in Brazil. In addition, this makes us attractive for both local and international customers due to our extensive offshore and energy experience,” says Haukeland.

During the past six months, the office has been the financial adviser in several large contracts for both Brazilian and international companies. 

Preliminary results 2012 and fourth quarter 2012:  7 February

Annual General Meeting:  30 April

Ex-dividend date:  2 May

First quarter 2013:  26 April

Second quarter 2013:  11 July

Third quarter 2013:  24 October

DNB Bank ASA will present its results on the same dates.

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