DNB recorded profits of NOK 20 617 million in 2014, an increase of NOK 3 105 million from 2013. The increase largely reflected a positive development in the bank’s basis swaps. Increased net interest income, reduced costs and low impairment losses on loans also contributed to the rise in profits.
“Our strong profit performance enables us to continue to build up equity and further improve the bank’s financial strength. It also demonstrates that there is a continued positive development for Norwegian companies and private individuals, who enjoy a strong financial position. This is good news for our customers, shareholders, employees and not least society at large,” says Rune Bjerke, group chief executive.
High level of customer activity pays off
The reason for the healthy profits is the high level of customer activity in DNB over the past year. Interest rate cuts and strong competition led to considerable activity in the housing market. In 2014, the bank entered into more than 150 000 residential mortgage contracts (including refinancings) and sold close to 23 000 homes in Norway after holding a total of 42 854 showings.
“We find that there is fierce competition for each and every customer and this puts more pressure on us to constantly improve. Our goal is to be the most accessible bank in Norway, and last year we were in direct dialogue with our customers close to six million times over the telephone, in branch offices, through chat and Facebook. That is a new record,” says Bjerke.
The bank increased its focus on business start-ups last year and helped more than 1 600 entrepreneurs start their own business. “We need innovation and new ventures in Norway. Many of our customers want to start their own business. We have established a separate department with special advisers who can answer all the different questions people have when starting up their own business,” says Bjerke.
Financial results for the full year 2014: Increase in volumes and equity
Net interest income increased by 7.6 per cent from 2013, partly due to higher deposit and lending volumes. There was an average increase of NOK 50.8 billion in the healthy loan portfolio, while average deposits rose by NOK 100.4 billion compared with 2013. The rise in volumes was exacerbated by exchange rate volatility towards the end of the year. DNB’s common equity Tier 1 capital increased by NOK 14 billion in 2014, and the common equity Tier 1 capital ratio rose from 11.8 to 12.7 per cent. The Board of Directors has been committed to continuing to build up equity quickly to meet the authorities’ requirements and thus proposes a dividend of NOK 3.80 per share, which corresponds to approximately 30 per cent of profits.
Total operating expenses were down 5.5 per cent from 2013. Adjusted for non-recurring effects, there was a 1.3 per cent rise in costs, which was significantly lower than wage inflation and clearly proves that the measures that have been initiated have been very effective. DNB aims to keep ongoing operating expenses flat.
Fourth quarter 2014: Marked by volatility
DNB recorded profits of NOK 4 965 million in the fourth quarter of 2014, down NOK 735 million from the fourth quarter of 2013. Adjusted for the effect of basis swaps, there was a NOK 1 696 million reduction in profits. A reduction in net other operating income and an increase in impairment losses on loans contributed to the decline in profits. Higher lending and deposit volumes and lower funding costs helped raise profits. There was an unusually high level of income in the fourth quarter of 2013 due to an increase in value of the Nets shares of NOK 705 million.
No economic crisis in Norway
“DNB’s most recent sentiment survey among Norwegian companies shows that although they are a bit less optimistic, only one out of ten companies expects their profitability to be weaker in 2015 than in 2014. We know that oil industry investments will decline, and low oil prices will naturally have negative consequences for some companies. At the same time, the depreciation of the Norwegian krone will give a long-awaited boost to large parts of the Norwegian manufacturing industry and to the travel industry. Record-low interest rates and continued strong purchasing power mean that Norwegians can afford to save more without reducing the current high level of demand for goods and services”, says Bjerke. “There is no reason to use the C-word to describe the Norwegian economy,” he concludes.
Key figures for the fourth quarter of 2014 (2013 figures in parentheses)
- Pre-tax operating profits before impairment were NOK 7.0 billion (6.8)
- Profit for the period was NOK 5.0 billion (5.7)
- Earnings per share were NOK 3.05 (3.50)
- Return on equity was 12.6 per cent (16.3)
- The ordinary cost/income ratio was 42.2 per cent (40.4)
Key figures for the full year 2014:
- Pre-tax operating profits before impairment were NOK 28.7 billion (24.7)
- Profit for the year was NOK 20.6 billion (17.5)
- The common equity Tier 1 capital ratio was 12.7 per cent (11.8)
- Earnings per share were NOK 12.67 (10.75)
- Return on equity was 13.8 per cent (13.1)
- The ordinary cost/income ratio was 41.9 per cent (45.7)
- The proposed dividend is NOK 3.80 per share (2.70)
Comparable figures for 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
