Stock and press releases

DNB recorded profits of NOK 13 657 million in 2012, an increase of NOK 678 million or 5.2 per cent compared with 2011. The Tier 1 capital ratio increased to 10.7 per cent, from 9.4 per cent at year-end 2011. The Board of Directors has proposed a dividend of NOK 2.10 per share.

All of DNB’s business areas recorded a rise in profits in 2012, primarily due to higher net interest income, a rise in other operating income and lower taxes.

“All business areas performed well in 2012, and we are very pleased with the Group’s annual profits. The greater part of profits is still used to strengthen the bank’s Tier 1 capital ratio in line with the authorities’ coming capital adequacy requirements. In consequence of new regulations from the European and Norwegian authorities, banks need to further widen their spreads through 2013. Moreover, loans will probably be higher priced for both companies and consumers,” says Rune Bjerke, group chief executive.

The common equity Tier 1 capital ratio (calculated according to the Basel II transitional rules) was 10.7 per cent at end-December 2012, up from 9.4 per cent at year-end 2011. The Board of Directors has proposed a dividend for 2012 of NOK 2.10 per share, which corresponds to approximately 25 per cent of earnings per share.

Reduced lending growth and lower impairment losses
Lending growth was relatively brisk in the second half of 2011, but the rate of growth abated throughout 2012. In terms of NOK, deposits increased significantly more than loans from 2011 to 2012, which gave a marked increase in the ratio of deposits to net loans, from 57.8 per cent at end-December 2011 to 62.5 per cent at year-end 2012.

Impairment losses on loans and guarantees were reduced by NOK 265 million from 2011. At NOK 3 179 million, impairment was roughly on a level with estimates presented through 2012. Impairment losses increased within shipping, but were significantly reduced in the Baltics and Poland.

“In addition to our strong profit performance, we are pleased to note that DNB continues to strengthen its corporate reputation. DNB was best bank in Norway on Ipsos MMI’s Norwegian corporate reputation list. A strong reputation and satisfied customers are both prerequisites for profitable growth in DNB,” says Bjerke.

DNB’s fourth quarter performance
DNB recorded profits of NOK 3 810 million in the fourth quarter of 2012, down NOK 279 million or 6.8 per cent from the fourth quarter of 2011. Adjusted for the effect of basis swaps (derivative contracts whose effect on the income statement is cancelled out over their term to maturity), there was an increase in profits of NOK 1 042 million or approximately 40 per cent.

Average lending volumes increased by 3.4 per cent from the fourth quarter of 2011. However, lending growth slowed during the final quarters of 2012, and lending volume in the fourth quarter of 2012 was 0.4 per cent below the third-quarter figure.

Impairment losses on loans and guarantees totalled NOK 1 190 million, an increase from both the fourth quarter of 2011 and the third quarter of 2012. The increase mainly reflected higher impairment within shipping due to the weaker economic situation.
 
Future prospects
“In spite of weaker international growth, we believe that the Norwegian economy will show a continued strong trend. We expect a further increase in home mortgages, but forthcoming changes in capital adequacy requirements entail some uncertainty. In the corporate market, we will give priority to small and medium-sized companies and continue our initiatives within sectors such as energy, offshore and telecommunications,” says Bjerke.

The Group will continue to build up capital and improve its capital adequacy ratios. Portfolio quality is expected to remain strong, with impairment of loans approximately on a level with 2012.

Key figures for the fourth quarter of 2012
• Pre-tax operating profits before impairment were NOK 5.7 billion (6.8)
• Profit for the period was NOK 3.8 billion (4.1)
• Earnings per share were NOK 2.34 (2.51)
• Return on equity was 12.0 per cent (13.8)
• The ordinary cost/income ratio was 47.5 per cent (42.0)

Comparable figures for the fourth quarter of 2011 in parentheses.

Key figures for 2012
• Pre-tax operating profits before impairment were NOK 20.8 billion (21.8)
• Profit for the period was NOK 13.7 billion (13.0)
• Earnings per share were NOK 8.39 (7.98)
• Return on equity was 11.2 per cent (11.4)
• The ordinary cost/income ratio was 49.5 per cent (47.1)

Comparable figures for 2011 in parentheses.

Contact person:
Thomas Midteide, group executive vice president, Corporate Communications, 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.

DNB is adapting to changes in the market and is changing the Group’s organisational structure. Both customer behaviour and regulatory changes for the banking industry make it essential to adapt to the new banking reality.

”We have been very successful in the market over the past few years. DNB has become a well liked bank and a considerably stronger brand. Parallel to this, we have recorded profitable growth within our priority areas. However, both the regulatory framework for the financial services industry and customer needs are subject to rapid change. In order to maximise our competitive power in the future, we are adapting our organisation to reflect these changes,” says group chief executive Rune Bjerke.

Separating personal and corporate banking
Over the past year, Norwegian bank customers have really entered the digital era. In 2012, DNB recorded ten million online bank visits every single month, and mobile banking services were used some seven million times a month. The new business area Personal Banking Norway will serve the bank’s personal customers in all channels, both digital and physical. Corporate Banking Norway will serve small and medium-sized companies and increase its focus on the largest industries in this segment. 

Over the past year, DNB has been very successful in making Norwegians save more. The bank will further strengthen its focus on savings and asset management by establishing the business area Wealth Management, which will include Private Banking and Asset Management.

The largest product units, such as DNB Finans, DNB Livsforsikring and DNB Skadeforsikring, will be organised under Products and Business Development.

IT and Operations in one unit
In step with new, wide-reaching regulations, the complexity of the financial services industry has increased. DNB is thus establishing Risk Management as a separate support unit.

DNB will organise the IT development units and the largest internal users of the IT systems in one and the same support unit, IT and Operations.

DNB’s new group management team
Trond Bentestuen, head of Personal Banking Norway (member of the group management)
Kjerstin R. Braathen, head of Corporate Banking Norway (member of the group management)
Harald Serck-Hanssen, head of Large Corporates and International (member of the group management)
Ottar Ertzeid, head of Markets (member of the group management team)
Tom Rathke, head of Wealth Management (member of the group management)
Kari Olrud Moen, head of Products and Business Development (member of the group management)
Liv Fiksdahl, head of IT and Operations (member of the group management)
Bjørn Erik Næss, head of Group Finance (member of the group management)
Trygve Young, head of Risk Management (member of the group management)
Solveig Hellebust, head of HR (member of the group management)
Thomas Midteide, head of Corporate Communications (in group management meetings)
Leif Teksum, head of Relations (in group management meetings)

The group executive vice presidents have been appointed today, while the new organisation will become operative with effect from 1 April. DNB expects its financial accounts reporting to follow the new structure as from 1 January 2014.

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

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