Stock and press releases

In the third quarter of 2014, the DNB Group will record a positive effect of basis swaps connected to funding of approximately NOK 449 million.

In the third quarter of 2013, there was a negative effect of basis swaps of NOK 223 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.

For further information, please contact Investor Relations in DNB:
Per Sagbakken: +47 23268400
Jan Erik Gjerland: +47 23268408

DNB recorded profits of NOK 4 654 million in the second quarter of 2014, up NOK 856 million from the second quarter of 2013. The rise in profits contributes to building up equity in the bank in accordance with the authorities’ requirements. DNB is now among the world’s best capitalised banks.

“As a result of the strong profits achieved in the second quarter, we are on schedule to fulfil the capital requirements for banks. The rise in profits from the second quarter of 2013 reflects higher lending volumes, wider lending spreads, reduced restructuring expenses and lower impairment losses on loans,” says Rune Bjerke, group chief executive.

Higher lending volumes boost interest income

Net interest income rose by NOK 387 million from the second quarter of 2013. Impairment losses on loans and guarantees came to NOK 554 million for the quarter, significantly lower than the NOK 937 million recorded in the second quarter of 2013, but higher than in the two preceding quarters. Lower impairment losses on loans to large corporates and international businesses were the main reason behind the reduction in impairment from the second quarter of 2013. The increase from the first quarter of 2014 reflected reduced reversals on both previous individual impairment losses and collective impairment losses. There was a continued positive trend in new impairment losses.

DNB’s common equity Tier 1 capital ratio was 12.1 per cent at end-June 2014, including 50 per cent of interim profits. If DNB had been able to report based on the Swedish authorities’ regulations, the Group could have reported a common equity Tier 1 capital ratio of as much as 17.3 per cent.

“DNB is now among the best capitalised banks in the world. This provides vital security for both customers, employees and shareholders. During the quarter, DNB was also classified as a systemically important bank by the Norwegian authorities, which emphasises the importance of being present for individuals, companies and local communities throughout Norway. This classification also entails an additional own funds requirement for systemically important banks, which means that we must continue to increase our equity considerably in order to reach the target,” says Bjerke.

Narrower lending spread than in the previous quarter

Average lending spreads narrowed from 2.42 per cent in the first quarter of 2014 to 2.39 per cent in
the second quarter, while deposit spreads improved somewhat, from -0.29 per cent to -0.27 per cent. Operating expenses were reduced by 7.6 per cent from the year-earlier period, mainly due to restructuring expenses in 2013, while the cost/income ratio was 43.8 per cent, well below the 45 per cent target.

“The increase in the bank’s lending volumes is a positive sign, especially with respect to small and medium-sized enterprises. This could mean that the economic downturn Norway has experienced over the past year, is more moderate than many feared. Petroleum investment will probably decline slightly in the period ahead, but is expected to remain at a high level. However, the recent rise in housing prices, along with continued income growth in the household sector and low real interest rates, will probably contribute to a new upturn in housing investment. The significant rise in public administration investment is another factor that could cause renewed growth in mainland investment next year,” says Bjerke.

Key figures for the second quarter of 2014

• Pre-tax operating profit before impairment was NOK 6.7 billion (6.1)
• Profit for the period was NOK 4.7 billion (3.8)
• Earnings per share were NOK 2.86 (2.33)
• Return on equity was 12.7 per cent (11.6)
• The ordinary cost/income ratio was 43.8 per cent (48.0)

Comparable figures for the second quarter of 2013 in parentheses.

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

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

On Thursday, 27 November 2014, the DNB Group will host a Capital Markets Day in London.
The event will also be webcasted.

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

Best regards,
Per Sagbakken, head of Investor Relation, tel. +47 23 26 84 00

In the second quarter of 2014, the DNB Group will record a positive effect of basis swaps connected to funding of approximately NOK 33 million.

In the second quarter of 2013, there was a negative effect of basis swaps of NOK 88 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.

For further information, please contact Investor Relations in DNB:
Per Sagbakken: +47 23268400
Jan Erik Gjerland: +47 23268408

DNB Livsforsikring ASA is hosting a seminar in London today discussing important topics for its business, of which main takeaway is that:

• The Life insurance company’s share of longevity reservation is kept at a minimum (≈20 per cent)
• The Life insurance company will be sufficiently capitalized under Solvency II without further capital injection
• The Life insurance company’s pre-tax profits is expected to be above NOK mill 300 per quarter towards 2016.

Attached is the presentation given by Anders Skjævestad, CEO of DNB Livsforsikring ASA.

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For further question, please contact:
Anders Skjævestad, Head of Life insurance, +47 934 07 403
Jan Erik Gjerland, Investor relations, +47 23 26 84 08

DNB is pleased to invite you to attend a lunch-seminar to discuss the traditional life insurance operation at its London Branch.

Date: Friday 13 June 2014
Time: 12:00 noon GMT till 13:30 GMT. Lunch will be served.
Venue: DNB London Branch, 20 St. Dunstan's Hill, London EC3R 8HY, England
Speaker: Anders Skjævestad, head of DNB Livsforsikring

Topics covered include longevity, asset management strategy, profitability and capitalisation of DNB’s traditional life insurance operation.

Please register your attendance by sending an e-mail to: [email protected]

For further information, please contact:
Per Sagbakken, head of Investor Relations, phone +47 23 26 84 00 or
Jan Erik Gjerland, e-mail: [email protected], phone +47 23 26 84 08.

Best regards
The DNB IR-team