3rd Quarter 2013

Press release

DNB 3rd Quarter 2013

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.