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DnB NOR Bank passes the EU-wide stress test with good margin. The solid performance is due to a robust Norwegian economy, a strong capital position, a low risk profile and no exposure to debt-ridden sovereigns in the Euro-zone.

DnB NOR Bank was subject to the 2011 EU-wide stress test conducted by the European Banking Authority (EBA), in cooperation with the Norwegian FSA (Finanstilsynet), the European Central Bank (ECB), the European Commission (EC) and the European Systemic Risk Board (ESRB).

DnB NOR Bank notes the announcements made today by the EBA and Finanstilsynet on the EU-wide stress test and fully acknowledges the outcomes of this exercise.
The EU-wide stress test, carried out across 91 banks covering over 65% of the EU banking system total assets, seeks to assess the resilience of European banks to severe shocks and their specific solvency to hypothetical stress events under certain restrictive conditions.

The assumptions and methodology were established to assess banks' capital adequacy against a 5% Core Tier 1 capital benchmark and are intended to restore confidence in the resilience of the banks tested. The adverse stress test scenario was set by the ECB and covers a two-year time horizon (2011-2012). The stress test has been carried out using a static balance sheet assumption as at December 2010. The stress test does not take into account future business strategies and management actions and is not a forecast of DnB NOR Bank profits.

As a result of the assumed shock, the estimated consolidated Core Tier 1 capital ratio of DnB NOR Bank would change to 9.0% under the adverse scenario in 2012 compared to 8.3% as of end of 2010. DnB NOR Bank will produce significant positive results even under the adverse scenario, and combined with the static balance sheet assumption, this explains why DnB NOR shows a strengthening of the Core Tier 1 ratio. 

Details on the results observed for DnB NOR Bank is available at www.dnbnor.no (http://www.dnbnor.no/).

The EU-wide stress test requires that the results and weaknesses identified, which will be disclosed to the market, are acted on to improve the resilience of the financial system. Following completion of the EU-wide stress test, the results determine that DnB NOR Bank meets the capital benchmark set out for the purpose of the stress test. The bank will continue to ensure that appropriate capital levels will be maintained.

Contact persons for analysts:
Per Sagbakken, head of IR/Long-term Funding, tel.: +47 90 66 11 59
Thor Tellefsen, IR/Long-term Funding, tel.: +47 91 54 43 85

Contact persons for the press:
Bjørn Erik Næss, CFO, tel.: +47 41 50 52 01
Trond Bentestuen, group executive vice president, Corporate Communications, tel.: +47 95 02 84 48

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

DnB NOR achieved a profit of NOK 3 546 million in the second quarter of 2011, an increase of NOK 723 million from the second quarter of 2010. 

"We are very pleased with these profit figures. This is our second best quarterly performance since the financial crisis, surpassed only by the particularly healthy profits recorded in the fourth quarter of 2010. Rising interest rate levels and low write-downs had a positive impact on the quarter, though there is still intense competition for both loans and deposits in the Norwegian market," says Rune Bjerke, group chief executive.

DnB NOR is in the process of reversing the falling trend in its market shares of lending. There was a NOK 47.5 billion increase in lending volumes from end-June 2010. Lending spreads contracted by 0.05 percentage points from the second quarter of 2010, while deposit spreads remained relatively unchanged.

Write-downs remain low
There was a generally low level of write-downs in the second quarter, with a further reduction in write-downs in DnB NORD. Write-downs on loans and guarantees totalled NOK 457 million for the quarter, down NOK 421 million from the second quarter of 2010.

"The low level of write-downs once again demonstrates the sound quality of our loan portfolio. In addition, the Norwegian economy is generally in good shape. There is a continued decline in the level of individual write-downs, which is lower than normalised losses for the Group as a whole," says Bjerke.

Individual write-downs in DnB NORD were reduced by close to 72 per cent, from NOK 653 million in the second quarter of 2010 to NOK 184 million in the corresponding period in 2011.

Good first half year
DnB NOR recorded a profit of NOK 6 397 million in the first half of 2011, an increase from NOK 5 740 million in the first half of 2010.

There was a NOK 47.5 billion increase in lending from end-June 2010. Lending spreads were stable measured against the 3-month money market rate. Net interest income increased by NOK 761 million during the period, mainly due to rising volumes.

Further growth expected
"Norway is doing well, with low unemployment and strong growth, both in GDP and in the population. This provides a sound basis for our growth ambitions, as we are influenced by increased investment willingness among our customers. In the personal customer market, intense competition and pressure on home mortgage margins will continue," says Bjerke.

DnB NOR anticipates rising growth both in Norway and internationally over the next six months and expects greater financial market activity to compensate for pressure on margins and ensure a continued high level of income in DnB NOR Markets. In the longer term, it is expected that growth in the Baltic States will again surpass average European levels.

Key figures for the second quarter of 2011
· Pre-tax operating profits before write-downs were NOK 5.1 billion (5.2)
· Profit for the period was NOK 3.5 billion (2.8)
· Earnings per share were NOK 2.18 (2.01)
· Return on equity was 12.6 per cent (12.8)
· The ordinary cost/income ratio was 49.2 per cent (50.3)

Comparable figures for the second quarter of 2010 in parentheses.

Contact persons:
Trond Bentestuen, group executive vice president, Corporate Communications, 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.dnbnor.no (http://www.dnbnor.no/)

 

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On 16 June 2011, the Supervisory Board elected Jarle Bergo as a new member of the Board of Directors of DnB NOR ASA. Sverre Finstad and Carl A. Løvvik were elected as new board members to represent the employees, with Hans-Kristian Sætrum and Jørn O. Kvilhaug as new deputies.

All with a term of office of up to two years.

The Board of Directors in DnB NOR ASA now has the following composition:

Members representing the shareholders (term):
Jarle Bergo (2013)
Bente Brevik (2012)
Tore Olaf Rimmereid (2012)
Bjørn Sund, vice-chairman (2012)
Anne Carine Tanum, chairman (2012)

Members representing the employees (term):
Ingjerd Skjeldrum (2012)
Sverre Finstad (2013)
Carl A. Løvvik (2013)

Deputies representing the employees (term):
Hans-Kristian Sætrum (2013)
Jorunn Løvås (2012)
Jørn O. Kvilhaug (2013)

 

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

DnB NOR is arranging a Capital Markets Day in Oslo on 15 June 2011 at 9.00 am CET.

The presentations are enclosed and are available on dnbnor.no (https://www.dnbnor.no/about-us/investor-relations.html/?LA=EN).

On the Capital Markets Day, an account will be given of the Group's current position and its future ambitions and opportunities. In addition, the Group's financial status and new target figures will be presented, along with a more detailed description of its ambitions in Norway and internationally. The current status of the integration process with DnB NORD and the Group's future strategy in the Baltic States and Poland will also be explained.

The presentations will be shown on Web TV. More information is available on dnbnor.no (https://www.dnbnor.no/about-us/investor-relations.html/?LA=EN). Press release is enclosed.

Confirming that there is a good future left for the North Sea oil business, DnB NOR is to become the first international energy bank to establish an office in Aberdeen.

The announcement was made at a recent gathering of the Norwegian British Chamber of Commerce in Aberdeen by Trine Loe, the Head of DnB NOR's London office. Having taken up the role recently following successfully establishing DnB NOR's branch in Chile, Loe is excited about growing the bank's presence in the UK. "Aberdeen is an obvious location for us to continue the expansion of our international network. We already service a substantial client base in the city and we want to continue our close relationships with them as well as develop new relationships in the local business market. There are very close links between Norway and Scotland, which have grown stronger as the North Sea develops into a mature oil province. Most local business people in Aberdeen know that they can travel to Stavanger and Bergen faster than to London and Edinburgh."

DnB NOR is Norway's largest financial institution and has come through the credit crunch relatively unscathed with a good financial performance, strong capital ratios and an appetite to continue its international growth strategy. As a leading bank focusing on shipping, energy and seafood markets globally, it has a client profile and banking expertise which reflects the strengths of the local Aberdeen economy.

Having recruited local well known oil & gas banker Kendal Milne around three years ago, he is poised to lead the bank's growth in the Aberdeen market now that the banking business is putting the credit crunch behind it. Along with Norwegian Bente Fladmark who is already known to a large section of the Aberdeen business community, they are busily engaged in the preparations to open the new office.

Milne commented, "DnB NOR is a long term relationship bank. Having built up a good client base over the last few years in Aberdeen we are now following our clients into the local market and the new representative office will continue to provide them with the very high standards of service they have been accustomed to. There are a large number of businesses located in Scotland who fall within our areas of strategic expertise and we look forward to developing good relationships with many of them."

Contacts
DnB NOR Press Office: Thomas Midteide  +479623 2017
Aberdeen: Kendal Milne +44 207 621 6091 / +44 7970 767329
Stavanger: Bjorn Inge Vikse  +47 9085 5294

DnB NOR recorded a profit of NOK 2 851 million in the first quarter of 2011, which is about the same as in the first quarter of 2010. There were sound underlying operations and a healthy profit trend in all business areas. 

"The Group delivered a sound profit performance in the first quarter of the year, in spite of negative effects of changes in market values and non-recurring items. All of our business areas delivered better operating profits than in the first quarter of 2010, and the level of write-downs remains low", says Rune Bjerke, group chief executive.

The Group recorded a rise in income of NOK 431 million or 4.8 per cent from the first quarter
of 2010. Excluding changes in mark-to-market adjustments of liabilities and associated instruments, the increase in income was approximately NOK 1 billion.

Write-downs on loans and guarantees totalled NOK 892 million for the quarter, down NOK 55 million from the first quarter of 2010. There is a general trend towards a lower write-down level, and write-downs in the first quarter mainly related to a limited number of commitments.

Profits in the Baltic region and Poland
DnB NOR acquired all shares in the bank DnB NORD in December 2010. For the first time in a long while, the operations in the Baltic States and Poland show a small profit of NOK 26 million.

"The macroeconomic situation in the Baltic States and developments in our own operations in this region improved significantly. Write-downs on loans in the Baltic States and Poland were reduced by more than NOK 180 million from the first quarter of 2010, and we expect this positive trend to continue through 2011," says Bjerke. Write-downs for the entire DnB NORD operation declined by more than NOK 340 million.

DnB NORD is in the process of being further integrated into DnB NOR, and operations at the head office in Copenhagen are being wound up. 

Rise in lending volumes
Average lending volumes, adjusted for exchange rate movements, rose by 6.4 per cent from the year-earlier period. Lending spreads widened by 0.04 percentage points from the first quarter of 2010, while deposit spreads remained stable.

"According to our estimates, lending growth will be between 5 and 7 per cent in 2011, and the increase in lending during the first three months of the year is in line with these estimates. Due to higher levels of activity in the market, we anticipate balanced growth and a continued positive trend in all of the Group's business areas in 2011," says Bjerke.

DnB NOR will present updated financial target figures at its Capital Markets Day on 15 June 2011.

Key figures for the first quarter of 2011

· Pre-tax operating profits before write-downs were NOK 4.7 billion (4.9) · Profit for the period was NOK 2.9 billion (2.9) · Earnings per share were NOK 1.76 (1.92) · Return on equity was 10.3 per cent (12.5) · The ordinary cost/income ratio was 50.5 per cent (49.5)

Comparable figures for the first quarter of 2010 in parentheses.

Contact persons:
Trond Bentestuen, group executive vice president, Corporate Communications, 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 dnbnor.no (http://www.dnbnor.no?LA=EN)